See accompanying notes to financial statements.
See accompanying notes to financial statements.
See accompanying notes to financial statements.
See accompanying notes to financial statements.
1. Organization
The FSI Low Beta Absolute Return Fund (the “Fund”) is a continuously offered, non-diversified, closed-end management investment company, organized as a Delaware statutory trust on August 3, 2012. The Fund is authorized to issue 1,000,000 units at the net asset value per unit. The Fund’s investment objective is to seek attractive risk-adjusted rates of return, “Alpha,” with a risk profile and volatility that is similar to that of the Barclays U.S. Aggregate Bond Index. On April 19, 2013, the Fund was initially seeded through the sale of 1,000 units for $100,000 to Gary W. Gould, Managing Principal of Financial Solutions, Inc. and Principal Executive Officer and Trustee of the Fund. The Fund commenced operations on July 1, 2013.
2. Significant Accounting Policies
The following is a summary of the Fund’s significant accounting policies. The policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”).
Security Valuation – The Fund computes its net asset value as of the last business day of each month. In determining its net asset value, the Fund values its investments as of such month-end. The Board of Trustees (the “Board”) has approved procedures pursuant to which the Fund’s Valuation Committee will value its investments in Underlying Funds at fair value. As a general matter, the fair value of the Fund’s interest in an Underlying Fund will represent the amount that the Fund could reasonably expect to receive from an Underlying Fund if the Fund’s interest were redeemed at the time of valuation, based on information reasonably available at the time the valuation is made and that the Fund believes to be reliable. In accordance with these procedures, fair value as of each month-end ordinarily will be the value determined as of such month-end for each Underlying Fund in accordance with the Underlying Fund’s valuation policies and reported at the time that the Valuation Committee values the Underlying Fund. In the unlikely event that an Underlying Fund does not report a month-end value to the Fund on a timely basis, the Valuation Committee would determine the fair value of such Underlying Fund based on the most recent value reported by the Underlying Fund, as well as any other relevant information available at the time the Fund values its portfolio. Using the nomenclature of the hedge fund industry, any value reported as “estimated” or “final” values will reasonably reflect market values of securities for which market quotations are available or fair value as of the date the Valuation Committee values the Underlying Fund.
GAAP establishes a single authoritative definition of fair value, sets out a framework for measuring fair value and requires additional disclosures about fair value measurement.
Various inputs are used in determining the value of the Fund’s investments. These inputs are summarized in the three broad levels listed below:
| | · | Level 1 – quoted prices in active markets for identical assets |
| | · | Level 2 – other significant observable inputs (including quoted prices of similar securities, interest rates, prepayment speeds, credit risk, etc.) |
| | · | Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments) |
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NOTES TO FINANCIAL STATEMENTS (Continued)
The inputs or methodology used for valuing securities are not necessarily an indication of the risks associated with investing in those securities. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety is determined based on the lowest level input that is significant to the fair value measurement.
The following is a summary of the inputs used to value the Fund’s investments by security type, as of February 28, 2014:
| | | Level 1 | | | Level 2 | | | Level 3 | | | Total | |
| Investments in Securities: | | | | | | | | | | | | |
| Underlying Funds | | | | | | | | | | | | |
| Event Driven Strategies | | $ | - | | | $ | - | | | $ | 5,997,149 | | | $ | 5,997,149 | |
| Global Macro | | | - | | | | 716,894 | | | | - | | | | 716,894 | |
| Long/Short Equity Strategies | | | - | | | | 6,548,897 | | | | 3,455,901 | | | | 10,004,798 | |
| Multi Strategies | | | - | | | | 6,882,609 | | | | 2,626,419 | | | | 9,509,028 | |
| Relative Value Strategies: Fixed Income | | | | | | | | | | | | | | | | |
| Hedge and Fixed Income Arbitrage | | | - | | | | 2,145,938 | | | | 1,138,108 | | | | 3,284,046 | |
| Relative Value Strategies: General | | | - | | | | 2,313,069 | | | | 2,094,044 | | | | 4,407,113 | |
| Money Market Funds | | | - | | | | 2,367,980 | | | | - | | | | 2,367,980 | |
| Total | | $ | - | | | $ | 20,975,387 | | | $ | 15,311,621 | | | $ | 36,287,008 | |
| | | | | | | | | | | | | | | | | |
| Other Financial Instruments: | | | | | | | | | | | | | | | | |
| Futures Contracts | | $ | 18,181 | | | $ | - | | | $ | - | | | $ | 18,181 | |
As of February 28, 2014, the Fund did not have any transfers in and out of any Level. It is the Fund’s policy to recognize transfers into and out of any Level at the end of the reporting period.
The following is a reconciliation of Level 3 investments for which significant unobservable inputs were used to determine fair value.
| Balance as of 8/31/13 | | $ | 5,833,888 | |
| Purchases | | | 8,921,303 | |
| Change in unrealized appreciation (depreciation) | | | 556,430 | |
| | | | | |
| Balance as of 2/28/14 | | $ | 15,311,621 | |
Significant unobservable valuation inputs for material Level 3 investments as of February 28, 2014 are as follows:
| | | Value at | | Valuation Technique/ |
| Investment in Securities | | 2/28/2014 | | Unobservable Input |
| | | | | |
| Hedge Funds | | | | |
| | | | | |
| Candlewood Structures Credit | | | | Unadjusted NAV as practical expedient; |
| Harvest Fund, Ltd., Series 1 | | $ | 474,058 | | not redeemable within 4 months |
| | | | | | |
| Candlewood Structures Credit | | | | | Unadjusted NAV as practical expedient; |
| Harvest Fund, Ltd., Series 2 | | | 268,319 | | not redeemable within 5 months |
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NOTES TO FINANCIAL STATEMENTS (Continued)
| | | Value at | | Valuation Technique/ |
| Investment in Securities | | 2/28/2014 | | Unobservable Input |
| | | | | | |
| Hedge Funds (Continued) | | | | | |
| | | | | | |
| Candlewood Structures Credit | | | | | Unadjusted NAV as practical expedient; |
| Harvest Fund, Ltd., Series 3 | | $ | 252,972 | | not redeemable within 6 months |
| | | | | | |
| Candlewood Structures Credit | | | | | Unadjusted NAV as practical expedient; |
| Harvest Fund, Ltd., Series 4 | | | 155,492 | | not redeemable within 10 months |
| | | | | | |
| Eminence Fund, Ltd., | | | | | Unadjusted NAV as practical expedient; |
| Class A, Series 1 (2014) | | | 1,034,471 | | not redeemable within 10 months |
| | | | | | |
| Greylock Global Opportunity Fund | | | | | Unadjusted NAV as practical expedient; |
| (Offshore), Ltd., Class A, Series 1 | | | 1,138,108 | | not redeemable within 10 months |
| | | | | | |
| Harvey SMidCap Offshore Fund, Ltd., | | | | | Unadjusted NAV as practical expedient; |
| Class A Sub-Class 1, Series 1 | | | 936,098 | | not redeemable within 6 months |
| | | | | | |
| Harvey SMidCap Offshore Fund, Ltd., | | | | | Unadjusted NAV as practical expedient; |
| Class A Sub-Class 1, Series 0114 | | | 363,061 | | not redeemable within 10 months |
| | | | | | |
| Kawa Off-Shore Feeder Fund, Ltd., | | | | | Unadjusted NAV as practical expedient; |
| Ordinary Shares, Lead Series | | | 1,058,410 | | not redeemable within 8 months |
| | | | | | |
| Millenium International, Ltd., | | | | | Unadjusted NAV as practical expedient; |
| Class EE Sub Class III, Series 01A | | | 1,342,274 | | not redeemable within 7 months |
| | | | | | |
| Miura Global Fund, Ltd., | | | | | Unadjusted NAV as practical expedient; |
| Class AA Sub Class II, Series 0713 | | | 602,669 | | not redeemable within 4 months |
| | | | | | |
| Miura Global Fund, Ltd., | | | | | Unadjusted NAV as practical expedient; |
| Class AA Sub Class II, Series 0913 | | | 519,602 | | not redeemable within 6 months |
| | | | | | |
| Pine River Fixed Income Fund, Ltd., | | | | | Unadjusted NAV as practical expedient; |
| Class A, Series 49 | | | 538,043 | | not redeemable within 4 months |
| | | | | | |
| Pine River Fixed Income Fund, Ltd., | | | | | Unadjusted NAV as practical expedient; |
| Class A, Series 53 | | | 497,591 | | not redeemable within 7 months |
| | | | | | |
| Pluscios Offshore Fund, SPC, | | | | | Unadjusted NAV as practical expedient; |
| Class F, Series 0713 | | | 3,708,126 | | not redeemable within 10 months |
| | | | | | |
| Scoggin Worldwide Distressed Fund Ltd., | | | | | Unadjusted NAV as practical expedient; |
| Class Q, Series 0913.1 | | | 1,138,182 | | not redeemable within 10 months |
| | | | | | |
| Whitebox Multi-Strategy Fund, Ltd., | | | | | Unadjusted NAV as practical expedient; |
| Class E, Series E-10 | | | 1,077,182 | | not redeemable within 6 months |
| | | | | | |
| Whitebox Multi-Strategy Fund, Ltd., | | | | | Unadjusted NAV as practical expedient; |
| Class E, Series 01-14 | | | 206,963 | | not redeemable within 10 months |
Unit Valuation – The net asset value per unit of the Fund is calculated monthly by dividing the total value of the Fund’s assets, less liabilities, by the number of units outstanding. The offering price and redemption price per unit of the Fund is equal to the net asset value per unit.
Investment Income – Dividend income is recorded on the ex-dividend date.
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NOTES TO FINANCIAL STATEMENTS (Continued)
Security Transactions – Investment transactions are accounted for on the trade date. Gains and losses on securities sold are determined on a specific identification basis.
Distributions to Unitholders – Distributions to unitholders arising from net investment income and net realized capital gains, if any, are declared and paid at least annually. The amount of distributions from net investment income and net realized gains are determined in accordance with federal income tax regulations, which may differ from GAAP. These differences are due primarily to differing treatments of income and gain on various investment securities held by the Fund, timing differences and differing characterizations of distributions made by the Fund. Dividends and distributions to unitholders are recorded on the ex-dividend date. The tax character of distributions paid to unitholders during the six months ended February 28, 2014 was ordinary income.
Futures Contracts – The Fund may enter into futures contracts as part of its investment strategy and for hedging purposes. When the Fund purchases or sells a futures contract, no price is paid to or received by the Fund upon the purchase or sale of the futures contract. Instead, the Fund is required to deposit with the futures commission merchant an amount of cash or qualifying securities currently ranging from 5% to 10% of the contract amount. This is called the “initial margin deposit.” Subsequent payments, known as “variation margin,” are made or received by the Fund, depending on the fluctuations in the fair value of the underlying investment. The Fund recognizes an unrealized gain or loss equal to the variation margin. If market conditions move unexpectedly, the Fund may not achieve the anticipated benefits of the futures contracts and may realize a loss. The margin deposits for futures contracts and the variation margin receivable or payable are reported on the Statement of Assets and Liabilities. Additionally, the Fund is required to maintain, on a daily basis, cash or liquid securities in an amount equal to the current market value of the U.S. Treasury futures in which it invests minus any amounts paid to brokers toward such position.
Estimates – The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates.
Federal Income Tax – The Fund has qualified and intends to continue to qualify as a “regulated investment company” under Subchapter M of the Internal Revenue Code of 1986 (the “Code”). Qualification generally will relieve the Fund of liability for federal income taxes to the extent 100% of its net investment income and net realized gains are distributed in accordance with the Code. Accordingly, no provision for income tax has been made.
In order to avoid imposition of the excise tax applicable to regulated investment companies, it is also the Fund's intention to declare as dividends in each calendar year at least 98% of its net investment income (earned during the calendar year) and 98.2% of its net realized capital gains (earned during the twelve months ended October 31) plus undistributed amounts from prior years.
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NOTES TO FINANCIAL STATEMENTS (Continued)
The following information is computed on a tax basis for each item as of February 28, 2014:
| Tax cost of portfolio investments | | $ | 36,355,574 | |
| Gross unrealized appreciation | | $ | - | |
| Gross unrealized depreciation | | | (68,566 | ) |
| Net unrealized depreciation | | | (68,566 | ) |
| Accumulated ordinary income | | | 1,448,307 | |
| Other gains | | | 635,596 | |
| Distributable earnings | | $ | 2,015,337 | |
The difference between the federal income tax cost of portfolio investments and the financial statement cost is due to certain timing differences in the recognition of capital gains or losses under income tax regulations and GAAP. These “book/tax” differences are temporary in nature and are primarily due to futures contracts and holdings classified as passive foreign investment companies (PFICs).
The Fund recognizes the tax benefits or expenses of uncertain tax positions only when the position is “more likely than not” to be sustained assuming examination by tax authorities. Management has reviewed the Fund’s tax positions for the current tax year and the open tax year ended August 31, 2013 and has concluded that no provision for unrecognized tax benefits or expenses is required in these financial statements.
3. Investment Transactions
During the six months ended February 28, 2014, cost of purchases and proceeds from sales of investment securities, other than short-term investments, were $20,168,000 and $0, respectively.
4. Transactions with Related Parties and Other Service Providers
INVESTMENT ADVISORY AGREEMENT
The Fund’s investments are managed by Financial Solutions, Inc. (the “Adviser”) pursuant to the terms of an Investment Advisory Agreement. Under the Investment Advisory Agreement, the Adviser receives an advisory fee from the Fund at an annual rate of 1.11% of the Fund’s average monthly net assets and pays any sub-advisory fees out of the fees it receives.
The Adviser has contractually agreed, until April 30, 2015, to reduce its advisory fees and to reimburse the Fund’s operating expenses to the extent necessary so that the Fund’s annual ordinary operating expenses (after fee reductions and/or expenses reimbursements, and exclusive of taxes, interest, portfolio transaction expenses, acquired fund fees and expenses and extraordinary expenses) do not exceed an amount equal to 1.60% of the Fund’s average monthly net assets. Prior to December 15, 2013, a service provider to the Fund voluntarily agreed to waive a portion of its fees. During the six months ended February 28, 2014, advisory fee reductions and other waivers were as follows:
| Advisory Fee Reductions | | Other Fee Waivers | | Total |
| $41,913 | | $2,944 | | $44,857 |
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NOTES TO FINANCIAL STATEMENTS (Continued)
Advisory fee reductions and expense reimbursements or Fund operating expenses reimbursed by the Adviser are subject to repayment by the Fund for a period of three fiscal years following the end of the fiscal year in which such reduction or reimbursement was incurred, provided that the repayments do not cause the Fund’s current expenses to exceed the expense limit in effect at the time of the reduction or reimbursement. After this agreement to reduce advisory fees and /or reimburse expenses is in effect for at least one (1) year, the agreement may be terminated, upon sixty (60) days’ written notice, and without payment of any penalty prior to the completion of its term by the Board, on behalf of the Fund. No such termination shall affect the obligation (including the amount of the obligation) of the Fund to repay fee reductions and/or expense reimbursements with respect to periods prior to such termination. As of February 28, 2014, the Adviser may in the future recover advisory fee reductions totaling $57,135. The Adviser may recover a portion of this amount no later than the dates as stated below:
| August 31, 2016 | | August 31, 2017 |
| $15,222 | | $41,913 |
SUB-ADVISERS
Meritage Capital, LLC (“Meritage”) and Pluscios Management LLC (“Pluscios”) serve as sub-advisers to the Fund. The Adviser pays Meritage and Pluscios any sub-advisory fees out of the fees it receives pursuant to the investment advisory agreement. Meritage and Pluscios have each executed an agreement with the Adviser under which each agrees to waive a portion of its sub-advisory fees payable to it by the Adviser (each a “Sub-Advisory Waiver Agreement”). Each Sub-Advisory Waiver Agreement provides that the applicable Sub-Adviser will waive its annual contractual fee in an amount equal to the value of annual advisory fees waived and/or Fund expenses reimbursed by the Adviser (as a percentage of the annual advisory fee) under the Adviser Waiver Agreement (“Adviser Waiver”) up to a maximum of 50% of the Sub-Adviser’s annual contractual fee through April 30, 2015 (each a “Sub-Adviser Waiver”). Pursuant to each Sub-Advisory Agreement, if the Adviser recoups all or a portion of the Adviser Waiver for any period permitted under the Adviser Waiver Agreement (the “Recoupment Period”), the Adviser shall use that recoupment to reimburse a Sub-Adviser in an amount equal to its Sub-Adviser Waiver for the Recoupment Period. If the amount of the recoupment paid by the Fund is less than the Adviser Waiver for the Recoupment Period, the Adviser shall reimburse the Sub-Adviser in an amount equal to the Sub-Advisory Waiver for the Recoupment Period multiplied by the ratio of the recoupment amount to the Adviser Waiver.
Meritage and Pluscios serve as investment managers of Centennial Global Macro Fund Segregated Portfolio, Series D and Pluscios Offshore Fund, SPC, Class F, respectively. During the six months ended February 28, 2014, purchases of hedge funds managed by Meritage and Pluscios were as follows:
| Centennial Global Macro Fund Segregated Portfolio, Series D 0913 | $ | 164,500 |
| Pluscios Offshore Fund, SPC, Class F, Series 0913 | | 1,500,000 |
| Pluscios Offshore Fund, SPC, Class F, Series 0114 | | 1,734,000 |
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NOTES TO FINANCIAL STATEMENTS (Continued)
MUTUAL FUND SERVICESUltimus Fund Solutions, LLC (“Ultimus”) provides fund administration, fund accounting, compliance and transfer agency services to the Fund. Ultimus also provides a Principal Financial Officer, a Chief Compliance Officer and an Anti-Money Laundering Officer to the Fund, as well as certain additional compliance support functions. Pursuant to a services agreement with Ultimus, the Fund pays Ultimus customary fees for its services. Ultimus earned $10,750 in fund services fees during the six months ended February 28, 2014.
Prior to December 16, 2013, Atlantic Fund Services, LLC provided these same services to the Fund for customary fees.
DISTRIBUTION AGREEMENT
Foreside Fund Services, LLC (the “Distributor”) serves as the Fund’s principal underwriter. The Distributor is not affiliated with the Adviser or with Ultimus.
TRUSTEE COMPENSATION
Each Trustee who is not an interested person of the Trust (“Independent Trustee”) receives from the Fund an annual retainer fee of $10,000 for service to the Fund. Each Independent Trustee is also reimbursed for all reasonable out-of-pocket expenses incurred in connection with their duties as a Trustee, including travel and related expenses incurred in attending Board meetings. No officer of the Fund is compensated by the Fund.
5. Derivatives Risk and Transactions
In seeking risk adjusted rates of return, the Fund may invest in U.S. Treasury futures to provide exposure to the market value change of a high quality fixed income portfolio. The price of a futures contract may change rapidly in response to changes in the markets and the general economic environment as well as in the value of the underlying asset, index, interest rate or other investment on which the futures are based. Futures may entail investment exposures that are greater than their cost would suggest, meaning that a small investment in futures could have a large potential effect on the performance of the Fund. Changes in the liquidity of U.S. Treasury futures (i.e., due to, among other things, price fluctuation or position limitations imposed by U.S. commodity exchanges) and rising interest rates may cause the value of U.S. Treasury futures to decline.
The Fund’s positions in derivative instruments as of February 28, 2014 are recorded in the following locations in the Statement of Assets and Liabilities:
| | | | | Fair Value | | | Gross Notional Amount Outstanding | |
| Type of Derivative | | Location | | Asset Derivatives | | | Liability Derivatives | | | February 28, 2014 | |
Interest rate contracts –
Futures contracts purchased | | Variation margin receivable | | $ | 18,181 | | | $ | - | | | $ | 36,020,578 | |
The average monthly notional amount of futures contracts purchased during the six months ended February 28, 2014 was $11,933,852.
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NOTES TO FINANCIAL STATEMENTS (Continued)
The Fund’s transactions in derivative instruments during the six months ended February 28, 2014 are recorded in the following locations in the Statement of Operations:
| Type of Derivative | | Location | | | | Location | | Net Change in Unrealized Appreciation/ Depreciation | |
Equity contracts –
Futures contracts | | Net realized gains from futures contracts | | $ | 617,415 | | Net change in unrealized appreciation/ depreciation on futures contracts | | $ | 18,181 | |
6. Offering of Fund Units; Repurchase Offers
Fund units may be purchased by investors who meet certain eligibility requirements set forth in the Fund’s current prospectus as of the first business day of each calendar month; however, Fund units may be offered more or less frequently as determined by the Board in its sole discretion. Fund units are sold at the current net asset value per unit. Generally, the minimum initial investment in the Fund is $50,000 and the minimum additional investment is $5,000. The Fund may accept investments for lesser amounts under certain circumstances, including where a unitholder has significant assets under the management of the Adviser or an affiliate and other special circumstances that may arise. There are no initial or subsequent investment minimums for accounts maintained by financial institutions for the benefit of their clients who purchase units through investment programs such as employee benefit plans. Certain selling broker-dealers and financial advisers may impose higher minimums.
Because the Fund is a closed-end fund, unitholders do not have the right to require the Fund to redeem any or all of their Units. To provide a limited degree of liquidity to unitholders, the Fund may from time to time offer to repurchase Units pursuant to written repurchase offers, but is not obligated to do so. Repurchases will be made at such times, in such amounts and on such terms as may be determined by the Board, in its sole discretion, pursuant to written repurchase offers. In determining whether the Fund should offer to repurchase units, the Board will consider a variety of operational, business and economic factors. The Board convenes quarterly to consider whether or not to authorize a repurchase offer. The Board expects that repurchase offers, if authorized, will be made no more frequently than on a quarterly basis and will typically have a valuation date as of March 31, June 30, September 30 or December 31(or, if any such date is not a Business Day, on the last Business Day of such calendar quarter). As of February 28, 2014, the Board has not authorized a repurchase offer.
7. Investment Risks
An investment in the Fund should be considered a speculative investment that entails a high degree of risk. It is possible that an investor may lose some or all of its investment and that the Fund may not achieve its investment objective. The Fund is classified as non-diversified and may invest a significant portion of its assets in Underlying Funds and the Fund may be susceptible to the economic and regulatory factors affecting these Underlying Funds and/or the fund industry.
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NOTES TO FINANCIAL STATEMENTS (Continued)
The Underlying Funds invest in a variety of different assets and employ a number of different strategies which in turn subject their investors, including the Fund, to certain risks including those associated with: (1) investing in equities, fixed income securities, convertible securities, derivatives, commodities, mortgage-backed securities, currencies and foreign securities; (2) participating in short sale transactions; and (3) employing arbitrage and leverage. The Fund may also implement leverage and invest directly in derivatives which will directly expose the Fund to the risks associated with the employment of leverage and investments in derivatives.
The Fund may make additional investments and effect withdrawals from the Underlying Funds only at certain specific times and may not be able to withdraw its investment in an Underlying Fund promptly after it has made a decision to do so. This may result in a loss to the Fund and adversely affect its investment return. The Fund’s inability to withdraw an investment in an Underlying Fund may also prevent the Fund from making an offer to repurchase units. Fund unitholders do not have the right to require the Fund to redeem or repurchase its units and may not have access to the money they invest for an indefinite period of time. Repurchases will be made at such times, and in such amounts, and on such terms as may be determined by the Fund’s Board, in its sole discretion.
The units are not, and are not expected to be, listed for trading on any securities exchange and, to the Fund’s knowledge, there is no, nor will there be, a secondary trading market for the units. Units are subject to substantial restrictions on transferability and resale, and may not be transferred or resold except as permitted under the Fund’s Agreement and Declaration of Trust, as may be amended or amended and restated from time to time. A unitholder should not expect to be able to sell its units regardless of how the Fund performs. Because a unitholder may be unable to sell its units, the unitholder will be unable to reduce its exposure on any market downturn.
8. Contingencies and Commitments
The Fund indemnifies the Trust's officers and Trustees for certain liabilities that might arise from their performance of their duties to the Fund. Additionally, in the normal course of business the Fund enters into contracts that contain a variety of representations and warranties and which provide general indemnifications. The Fund’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Fund that have not yet occurred. However, based on experience, the Fund expects the risk of loss to be remote.
9. Subsequent Events
The Fund is required to recognize in the financial statements the effects of all subsequent events that provide additional evidence about conditions that existed as of the date of the Statement of Assets and Liabilities. For non-recognized subsequent events that must be disclosed to keep the financial statements from being misleading, the Fund is required to disclose the nature of the event as well as an estimate of its financial effect, or a statement that such an estimate cannot be made. Management has evaluated subsequent events through the issuance of these financial statements and has noted no such events.
FSI LOW BETA ABSOLUTE RETURN FUND
OTHER INFORMATION (Continued)
A description of the policies and procedures that the Fund uses to vote proxies relating to portfolio securities is available without charge upon request by calling toll-free 1-877-379-7380, or on the SEC’s website at http://www.sec.gov. Information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available without charge upon request by calling toll-free 1-877-379-7380, or on the SEC’s website at http://www.sec.gov.
The Trust files a complete listing of portfolio holdings for the Fund with the SEC as of the end of the first and third quarters of each fiscal year on Form N-Q. These filings are available upon request by calling 1-877-379-7380. Furthermore, you may obtain a copy of the filings on the SEC's website at http://www.sec.gov. The Trust's Forms N-Q may also be reviewed and copied at the SEC's Public Reference Room in Washington, DC, and information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330.
