united states
securities and exchange commission
washington, d.c. 20549
form n-csr
certified shareholder report of registered management
investment companies
Investment Company Act file number 811-22756
Advisors Preferred Trust
(Exact name of registrant as specified in charter)
1445 Research Blvd, Suite 530, Rockville, MD 20850
(Address of principal executive offices) (Zip code)
The Corporation Trust Company
1209 Orange Street Wilmington, DE 19801
(Name and address of agent for service)
Registrant's telephone number, including area code: 631-470-2734
Date of fiscal year end: 12/31
Date of reporting period: 6/30/22
Item 1. Reports to Stockholders.
BCM Decathlon Moderate Fund
Class A Shares (DECMX)
Institutional Class Shares (DECIX)
Semi-Annual Report
June 30, 2022
1-833-786-1121
www.advisorspreferred.com
Distributed by Ceros Financial Services, Inc.
BCM Decathlon Moderate Fund
Portfolio Review (Unaudited)
June 30, 2022
The Fund’s performance figures* for the period ended June 30, 2022, as compared to its benchmark:
Six | Since Inception | |
Months | April 19, 2021 | |
BCM Decathlon Moderate Fund - Class A without load | (14.50)% | (10.76)% |
BCM Decathlon Moderate Fund - Class A with load | (18.57)% | (14.30)% |
BCM Decathlon Moderate Fund - Institutional Class | (14.31)% | (10.49)% |
Dow Jones Moderately Conservative U.S. Portfolio Index ** | (14.12)% | (10.39)% |
* | The Performance data quoted is historical. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance data quoted. The principal value and investment return of an investment will fluctuate so that your shares, when redeemed, may be worth more or less than their original cost. The returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemptions of Fund shares. Returns greater than one year are annualized. The total gross estimated operating expenses including underlying funds as stated in the fee table of the Fund’s prospectus dated May 1, 2022 is 1.87% for Class A, and 1.47% for Institutional Class. Class A shares are subject to a maximum sales charge (load) of 4.75%. Investors should consider the investment objectives, risks, and charges and expenses of the Fund carefully before investing. The Fund’s prospectus and summary prospectus contain these as well as other information about the Fund and should be read carefully before investing. A prospectus or summary prospectus and current performance may be obtained by calling 1-833-786-1121. |
** | The Dow Jones Moderately Conservative U.S. Portfolio Index is a weighted average of other stock, bond, and cash indexes. It is reconstructed monthly and represents 40% of the risk of the U.S. equities market. Investors cannot invest directly in an index or benchmark; unmanaged index returns do not reflect any fees, expenses or sales charges. |
Portfolio Composition | % of Net Assets | |||
Exchange Traded Funds | 99.9 | % | ||
Money Market Fund | 1.3 | % | ||
Liabilities in Excess of Other Assets | (1.2 | )% | ||
100.0 | % |
Please refer to the Portfolio of Investments in this report for a detailed listing of the Fund’s holdings.
1
BCM DECATHLON MODERATE FUND |
PORTFOLIO OF INVESTMENTS (Unaudited) |
June 30, 2022 |
Shares | Fair Value | |||||||
EXCHANGE-TRADED FUNDS 99.9% | ||||||||
COMMODITY - 9.8% | ||||||||
796 | SPDR Gold Shares(a) | $ | 134,094 | |||||
EQUITY - 40.9% | ||||||||
1,789 | iShares Global 100 ETF | 114,621 | ||||||
883 | iShares Russell 1000 Value ETF | 128,009 | ||||||
392 | iShares Semiconductor ETF | 137,047 | ||||||
880 | SPDR S&P North American Natural Resources ETF | 43,314 | ||||||
1,089 | Technology Select Sector SPDR Fund | 138,433 | ||||||
561,424 | ||||||||
FIXED INCOME - 49.2% | ||||||||
1,357 | iShares 0-5 Year TIPS Bond ETF | 137,641 | ||||||
1,150 | iShares Government/Credit Bond ETF | 123,660 | ||||||
1,319 | iShares Intermediate Government/Credit Bond ETF | 139,221 | ||||||
6,388 | Nuveen Enhanced Yield US Aggregate Bond ETF | 137,534 | ||||||
5,238 | SPDR Portfolio Aggregate Bond ETF | 138,021 | ||||||
676,077 | ||||||||
TOTAL EXCHANGE-TRADED FUNDS (Cost $1,527,840) | 1,371,595 | |||||||
SHORT-TERM INVESTMENTS 1.3% | ||||||||
MONEY MARKET FUNDS - 1.3% | ||||||||
17,264 | First American Government Obligations Fund, Class X, 1.29% (Cost $17,264)(b) | 17,264 | ||||||
TOTAL INVESTMENTS - 101.2% (Cost $1,545,104) | $ | 1,388,859 | ||||||
LIABILITIES IN EXCESS OF OTHER ASSETS - (1.2)% | (16,589 | ) | ||||||
NET ASSETS - 100.0% | $ | 1,372,270 |
ETF - Exchange-Traded Fund
SPDR - Standard & Poor’s Depositary Receipt
(a) | Non-income producing security. |
(b) | Rate disclosed is the seven day effective yield as of June 30, 2022. |
The accompanying notes are an integral part of these financial statements.
2
BCM Decathlon Moderate Fund |
STATEMENT OF ASSETS AND LIABILITIES (Unaudited) |
June 30, 2022 |
BCM Decathlon | ||||
Moderate Fund | ||||
Assets: | ||||
Investments Securities: | ||||
At Cost | $ | 1,545,104 | ||
At Value | $ | 1,388,859 | ||
Interest Receivable | 26 | |||
Total Assets | 1,388,885 | |||
Liabilities: | ||||
Accrued Distribution Fees | 43 | |||
Accrued Shareholder Servicing Fees | 26 | |||
Accrued Expenses and Other Liabilities | 16,546 | |||
Total Liabilities | 16,615 | |||
Net Assets | $ | 1,372,270 | ||
Composition of Net Assets: | ||||
Net Assets consisted of: | ||||
Paid in Capital | $ | 1,891,307 | ||
Accumulated Loss | (519,037 | ) | ||
Net Assets | $ | 1,372,270 | ||
Net Asset Value, Offering Price and Redemption Price Per Share | ||||
Class A: | ||||
Net Assets | $ | 223,536 | ||
Shares of beneficial interest outstanding (unlimited shares of no par beneficial interest authorized) | 26,189 | |||
Net Asset Value (Net Assets ÷ Shares Outstanding) and Redemption Price Per Share | $ | 8.54 | ||
Maximum Offering Price Per Share (Maximum sales charge of 4.75%)(a) | $ | 8.97 | ||
Institutional Class: | ||||
Net Assets | $ | 1,148,734 | ||
Shares of beneficial interest outstanding (unlimited shares of no par beneficial interest authorized) | 134,432 | |||
Net Asset Value (Net Assets ÷ Shares Outstanding), Offering and Redemption Price Per Share | $ | 8.55 |
(a) | On investments of $50,000 or more, the offering price is reduced. |
The accompanying notes are an integral part of these financial statements.
3
BCM Decathlon Moderate Fund |
STATEMENT OF OPERATIONS (Unaudited) |
For the Six Months Ended June 30, 2022 |
BCM Decathlon | ||||
Moderate Fund | ||||
Investment Income: | ||||
Dividend Income | $ | 29,366 | ||
Interest Income | 84 | |||
Total Investment Income | 29,450 | |||
Expenses: | ||||
Investment Advisory Fees | 23,652 | |||
Distribution (12b-1) Fees - Class A | 257 | |||
Shareholder Services Fees - Class A | 269 | |||
Total Expenses | 24,178 | |||
Net Investment Income | 5,272 | |||
Realized and Unrealized Loss on Investments: | ||||
Net Realized Loss from Investments | (358,085 | ) | ||
Net Change in Unrealized Depreciation on Investments | (146,434 | ) | ||
Net Realized and Unrealized Loss on Investments | (504,519 | ) | ||
Net Decrease in Net Assets Resulting From Operations | $ | (499,247 | ) |
The accompanying notes are an integral part of these financial statements.
4
BCM Decathlon Moderate Fund |
STATEMENTS OF CHANGES IN NET ASSETS |
BCM Decathlon Moderate Fund | ||||||||
For the Six | For the Period* | |||||||
Months Ended | Ended | |||||||
June 30, 2022 | December 31, 2021 | |||||||
(Unaudited) | ||||||||
Increase (Decrease) in Net Assets from Operations: | ||||||||
Net Investment Income | $ | 5,272 | $ | 35,021 | ||||
Net Realized Gain (Loss) from Investments | (358,085 | ) | 47,912 | |||||
Net Change in Unrealized Depreciation on Investments | (146,434 | ) | (9,811 | ) | ||||
Net Increase (Decrease) in Net Assets Resulting From Operations | (499,247 | ) | 73,122 | |||||
Distributions to Shareholders: | ||||||||
From Distributable Earnings: | ||||||||
Class A | (697 | ) | (3,091 | ) | ||||
Institutional Class | (4,877 | ) | (85,927 | ) | ||||
Total Distributions to Shareholders | (5,574 | ) | (89,018 | ) | ||||
Shares of Beneficial Interest Transactions: | ||||||||
Class A Shares: | ||||||||
Proceeds from Shares Issued | 108,864 | 183,089 | ||||||
Distributions Reinvested | 697 | 3,091 | ||||||
Cost of Shares Redeemed | (38,546 | ) | — | |||||
71,015 | 186,180 | |||||||
Institutional Class Shares: | ||||||||
Proceeds from Shares Issued | 1,117,605 | 4,653,473 | ||||||
Distributions Reinvested | 3,759 | 85,073 | ||||||
Cost of Shares Redeemed | (4,212,382 | ) | (11,736 | ) | ||||
(3,091,018 | ) | 4,726,810 | ||||||
Net Increase (Decrease) from Beneficial Interest Transactions | (3,020,003 | ) | 4,912,990 | |||||
Net Increase (Decrease) in Net Assets | (3,524,824 | ) | 4,897,094 | |||||
Net Assets: | ||||||||
Beginning of Period | 4,897,094 | — | ||||||
End of Period | $ | 1,372,270 | $ | 4,897,094 | ||||
Share Activity: | ||||||||
Class A Shares: | ||||||||
Shares Issued | 11,810 | 18,143 | ||||||
Shares Reinvested | 81 | 309 | ||||||
Shares Redeemed | (4,154 | ) | — | |||||
Net increase in shares of beneficial interest outstanding | 7,737 | 18,452 | ||||||
Institutional Class Shares: | ||||||||
Shares Issued | 115,894 | 463,059 | ||||||
Shares Reinvested | 438 | 8,491 | ||||||
Shares Redeemed | (452,299 | ) | (1,151 | ) | ||||
Net increase (decrease) in shares of beneficial interest outstanding | (335,967 | ) | 470,399 |
* | For the period April 19, 2021 (commencement of operations) through December 31, 2021. |
The accompanying notes are an integral part of these financial statements.
5
BCM Decathlon Moderate Fund |
FINANCIAL HIGHLIGHTS |
The table below sets forth financial data for one share of beneficial interest outstanding throughout each period presented. |
BCM Decathlon Moderate Fund | ||||||||
Class A | ||||||||
For the | For the Period * | |||||||
Six Months Ended | Ended | |||||||
June 30, 2022 | December 31, 2021 | |||||||
(Unaudited) | ||||||||
Net Asset Value, Beginning of Period | $ | 10.02 | $ | 10.00 | ||||
From Operations: | ||||||||
Net investment income (a) | 0.00 | (h) | 0.08 | |||||
Net gain (loss) from investments (realized and unrealized) | (1.45 | ) | 0.12 | |||||
Total from operations | (1.45 | ) | 0.20 | |||||
Distributions to shareholders from: | ||||||||
Net investment income | (0.03 | ) | (0.07 | ) | ||||
Net realized gains | — | (0.11 | ) | |||||
Total distributions | (0.03 | ) | (0.18 | ) | ||||
Net Asset Value, End of Period | $ | 8.54 | $ | 10.02 | ||||
Total Return (b) | (14.50 | )% (f) | 1.96 | % (e)(f) | ||||
Ratios/Supplemental Data | ||||||||
Net assets, end of period (in 000’s) | $ | 223 | $ | 185 | ||||
Ratio of expenses to average net assets (c) | 1.61 | % (g) | 1.49 | % (g) | ||||
Ratio of net investment income to average net assets (c,d) | 0.09 | % (g) | 1.10 | % (g) | ||||
Portfolio turnover rate | 162 | % (f) | 293 | % (f) |
* | For the period April 19, 2021 (commencement of operations) through December 31, 2021. |
(a) | Per share amounts are calculated using the average shares method, which more appropriately presents the per share data for the period. |
(b) | Total returns are historical in nature and assume changes in share price, reinvestment of dividends and capital gains distributions, if any, and excludes sales charges. |
(c) | The ratios of expenses to average net assets and net investment income to average net assets do not reflect the expenses of the underlying investment companies in which the Fund invests. |
(d) | Recognition of net investment income by the Fund is affected by the timing and declaration of dividends by the underlying investment companies in which the Fund invests. |
(e) | Includes adjustments in accordance with accounting principles generally accepted in the United States and consequently the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset values and returns for shareholder transactions. |
(f) | Not annualized. |
(g) | Annualized. |
(h) | Amount is less than $0.005. |
The accompanying notes are an integral part of these financial statements.
6
BCM Decathlon Moderate Fund |
FINANCIAL HIGHLIGHTS |
The table below sets forth financial data for one share of beneficial interest outstanding throughout each period presented.
BCM Decathlon Moderate Fund | ||||||||
Institutional Class | ||||||||
For the | For the Period * | |||||||
Six Months Ended | Ended | |||||||
June 30, 2022 | December 31, 2021 | |||||||
(Unaudited) | ||||||||
Net Asset Value, Beginning of Period | $ | 10.02 | $ | 10.00 | ||||
From Operations: | ||||||||
Net investment income (a) | 0.01 | 0.08 | ||||||
Net gain (loss) from investments (realized and unrealized) | (1.44 | ) | 0.13 | |||||
Total from operations | (1.43 | ) | 0.21 | |||||
Distributions to shareholders from: | ||||||||
Net investment income | (0.04 | ) | (0.08 | ) | ||||
Net realized gains | — | (0.11 | ) | |||||
Total distributions | (0.04 | ) | (0.19 | ) | ||||
Net Asset Value, End of Period | $ | 8.55 | $ | 10.02 | ||||
Total Return (b) | (14.31 | )% (e) | 2.11 | % (e) | ||||
Ratios/Supplemental Data | ||||||||
Net assets, end of period (in 000’s) | $ | 1,149 | $ | 4,712 | ||||
Ratio of expenses to average net assets (c) | 1.24 | % (f) | 1.24 | % (f) | ||||
Ratio of net investment income to average net assets (c,d) | 0.29 | % (f) | 1.13 | % (f) | ||||
Portfolio turnover rate | 162 | % (e) | 293 | % (e) |
* | For the period April 19, 2021 (commencement of operations) through December 31, 2021. |
(a) | Per share amounts are calculated using the average shares method, which more appropriately presents the per share data for the period. |
(b) | Total returns are historical in nature and assume changes in share price, reinvestment of dividends and capital gains distributions, if any, and excludes sales charges. |
(c) | The ratios of expenses to average net assets and net investment income to average net assets do not reflect the expenses of the underlying investment companies in which the Fund invests. |
(d) | Recognition of net investment income by the Fund is affected by the timing and declaration of dividends by the underlying investment companies in which the Fund invests. |
(e) | Not annualized. |
(f) | Annualized. |
The accompanying notes are an integral part of these financial statements.
7
BCM Decathlon Moderate Fund
NOTES TO FINANCIAL STATEMENTS (Unaudited)
June 30, 2022
1. | ORGANIZATION |
BCM Decathlon Moderate Fund (“Fund”) is a diversified series of shares of Advisors Preferred Trust (the “Trust”), a statutory trust organized under the laws of the State of Delaware on August 15, 2012 and registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. The Fund seeks income and capital appreciation. The Fund commenced operations on April 19, 2021.
The Fund currently offers two classes of shares: Class A and Institutional Class. Class A shares of the Fund are offered at net asset value (“NAV”) plus a maximum sales charge of 4.75%. Institutional Class shares of the Fund are offered at net asset value. Each class represents an interest in the same assets of the Fund and classes are identical except for differences in their ongoing service and distribution charges. All classes of shares have equal voting privileges except that each class has exclusive voting rights with respect to its service and/or distribution plans. The Fund’s income, expenses (other than class specific shareholder servicing and distribution fees) and realized and unrealized gains and losses are allocated proportionately each day based upon the relative net assets of each class.
2. | SIGNIFICANT ACCOUNTING POLICIES |
The following is a summary of significant accounting policies followed by the Fund in preparation of its financial statements. These policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”). 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 at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. The Fund is an investment company and accordingly follows the Investment Company accounting and reporting guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 946 Financial Services – Investment Companies.
Securities Valuation – Securities listed on an exchange are valued at the last reported sale price at the close of the regular trading session of the exchange on the business day the value is being determined, or in the case of securities listed on NASDAQ, at the NASDAQ Official Closing Price (“NOCP”). In the absence of a sale, such securities shall be valued at the mean between the current bid and ask prices on the day of valuation. Short-term debt obligations, excluding U.S. Treasury Bills, having 60 days or less remaining until maturity, at time of purchase, may be valued at amortized cost.
The Fund may hold securities, such as private investments, interests in commodity pools, other non-traded securities or temporarily illiquid securities, for which market quotations are not readily available or are determined to be unreliable. These securities will be valued using the “fair value” procedures approved by the Trust’s Board of Trustees (the “Board”). The Board has delegated execution of these procedures to a fair value committee composed of one or more representatives from each of the (i) Trust, (ii) administrator, and (iii) advisor and/or sub-advisor. The committee may also enlist third party consultants such as a valuation specialist at a public accounting firm, valuation consultant or financial officer of a security issuer on an as-needed basis to assist in determining a security-specific fair value. The Board reviews and ratifies the execution of this process and the resultant fair value prices at least quarterly to assure the process produces reliable results.
Fair Valuation Process – As noted above, the fair value committee is composed of one or more representatives from each of the (i) Trust, (ii) administrator, and (iii) advisor and/or sub-advisor. The applicable investments are valued collectively via inputs from each of these groups. For example, fair value determinations are required for the following securities: (i) securities for which market quotations are insufficient or not readily available on a particular business day (including securities for which there is a short and temporary lapse in the provision of a price by the regular pricing source), (ii) securities for which, in the judgment of the advisor or sub-advisor, the prices or values available do not represent the fair value of the instrument. Factors which may cause the advisor or sub-advisor to make such a judgment include, but are not limited to, the following: only a bid price or an asked price is available; the spread between bid and asked prices is substantial; the frequency of sales; the thinness of
8
BCM Decathlon Moderate Fund
NOTES TO FINANCIAL STATEMENTS (Continued) (Unaudited)
June 30, 2022
the market; the size of reported trades; and actions of the securities markets, such as the suspension or limitation of trading; (iii) securities determined to be illiquid; (iv) securities with respect to which an event that will affect the value thereof has occurred (a “significant event”) since the closing prices were established on the principal exchange on which they are traded, but prior to a Fund’s calculation of its net asset value. Specifically, interests in commodity pools or managed futures pools are valued on a daily basis by reference to the closing market prices of each futures contract or other asset held by a pool, as adjusted for pool expenses. Restricted or illiquid securities, such as private investments or non-traded securities are valued via inputs from the advisor or sub-advisor based upon the current bid for the security from two or more independent dealers or other parties reasonably familiar with the facts and circumstances of the security (who should take into consideration all relevant factors as may be appropriate under the circumstances). If the advisor or sub-advisor is unable to obtain a current bid from such independent dealers or other independent parties, the fair value committee shall determine the fair value of such security using the following factors: (i) the type of security; (ii) the cost at date of purchase; (iii) the size and nature of a Fund’s holdings; (iv) the discount from market value of unrestricted securities of the same class at the time of purchase and subsequent thereto; (v) information as to any transactions or offers with respect to the security; (vi) the nature and duration of restrictions on disposition of the security and the existence of any registration rights; (vii) how the yield of the security compares to similar securities of companies of similar or equal creditworthiness; (viii) the level of recent trades of similar or comparable securities; (ix) the liquidity characteristics of the security; (x) current market conditions; and (xi) the market value of any securities into which the security is convertible or exchangeable.
Valuation of Fund of Funds - The Fund may invest in portfolios of open-end or closed-end investment companies (the “Underlying Funds”). The Underlying Funds value securities in their portfolios for which market quotations are readily available at their market values (generally the last reported sale price) and all other securities and assets at their fair value by the methods established by the board of directors/trustees of the Underlying Funds.
The shares of many closed-end investment companies and exchange traded funds (“ETFs”), after their initial public offering, frequently trade at a price per share, which is different than the net asset value per share. The difference represents a market premium or market discount of such shares. There can be no assurances that the market discount or market premium on shares of any closed-end investment company or ETF purchased by the Fund will not change.
The Fund utilizes various methods to measure the fair value of all of its investments on a recurring basis. GAAP establishes a hierarchy that prioritizes inputs to valuation methods. The three levels of input are:
Level 1 – Unadjusted quoted prices in active markets for identical assets and liabilities that the Fund has the ability to access.
Level 2 – Observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates and similar data.
Level 3 – Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available, representing the Fund’s own assumptions about the assumptions a market participant would use in valuing the asset or liability, and would be based on the best information available.
The availability of observable inputs can vary from security to security and is affected by a wide variety of factors, including, for example, the type of security, whether the security is new and not yet established in the marketplace, the liquidity of markets, and other characteristics particular to the security. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3.
9
BCM Decathlon Moderate Fund
NOTES TO FINANCIAL STATEMENTS (Continued) (Unaudited)
June 30, 2022
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 in its entirety.
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The following table summarizes the inputs used as of June 30, 2022 for the Fund’s assets measured at fair value:
Assets * | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Investments: | ||||||||||||||||
Exchange-Traded Funds | $ | 1,371,595 | $ | — | $ | — | $ | 1,371,595 | ||||||||
Short-Term Investment | 17,264 | — | — | 17,264 | ||||||||||||
Total Investments | $ | 1,388,859 | $ | — | $ | — | $ | 1,388,859 |
* | Refer to the Portfolio of Investments for asset classes. |
The Fund did not hold any Level 3 securities during the period.
Security Transactions and Investment Income – Security transactions are accounted for on the trade date. Interest income is recognized on an accrual basis. Discounts are accreted and premiums are amortized on securities purchased over the lives of the respective securities using the effective yield method. Dividend income is recorded on the ex-dividend date. Realized gains or losses from sales of securities are determined by comparing the identified cost of the security lot sold with the net sales proceeds. The accounting records are maintained in U.S. Dollars.
Dividends and Distributions to Shareholders – Dividends from net investment income, if any, are declared and paid quarterly. Distributable net realized capital gains, if any, are declared and distributed annually. Dividends and distributions to shareholders are recorded on the ex-dividend date. Dividends from net investment income and distributions from net realized gains are determined in accordance with federal income tax regulations, which may differ from GAAP. These “book/tax” differences are considered either temporary (e.g., deferred losses, capital loss carryforwards) or permanent in nature. To the extent these differences are permanent in nature, such amounts are reclassified within the composition of net assets based on their federal tax-basis treatment; temporary differences do not require reclassification. These reclassifications have no effect on net assets, results from operations or net asset values per share of the Fund.
Federal Income Tax – It is the Fund’s policy to qualify as a regulated investment company by complying with the provisions of Subchapter M of the Internal Revenue Code that are applicable to regulated investment companies and to distribute substantially all of its taxable income and net realized gains to shareholders. Therefore, no federal income tax provision is required.
The Fund recognizes the tax benefits of uncertain tax positions only where the position is “more likely than not” to be sustained assuming examination by tax authorities. Management has analyzed the Fund’s tax positions and has concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions taken on returns filed for open tax year ended December 31, 2021 or expected to be taken in the Fund’s December 31, 2022 tax returns. The Fund has identified its major tax jurisdictions as U.S. Federal and foreign jurisdictions where the Fund makes significant investments; however, the Fund is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next twelve months.
The Fund recognizes interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the Statement of Operations. During the period, the Fund did not incur any interest or penalties.
10
BCM Decathlon Moderate Fund
NOTES TO FINANCIAL STATEMENTS (Continued) (Unaudited)
June 30, 2022
Expenses – Expenses of the Trust that are directly identifiable to a specific fund are charged to that fund. Expenses, which are not readily identifiable to a specific fund, are allocated in such a manner as deemed equitable, taking into consideration the nature and type of expense and the relative sizes of the funds in the Trust.
Indemnification – The Trust indemnifies its officers and trustees for certain liabilities that may arise from the performance of their duties to the Trust. Additionally, in the normal course of business, the Fund enters into contracts that contain a variety of representations and warranties and which provide general indemnities. 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 risk of loss due to these warranties and indemnities appears to be remote.
Exchange-Traded Funds (“ETFs”) – The Fund invests in ETFs. ETFs are typically a type of index bought and sold on a securities exchange. An ETF trades like common stock and typically represents a fixed portfolio of securities. The Fund may purchase an ETF to temporarily gain exposure to a portion of the U.S. or a foreign market. The risks of owning an ETF generally reflect the risks of owning the underlying securities they are designed to track, although the lack of liquidity on an ETF could result in it being more volatile. Additionally, ETFs have fees and expenses that reduce their value.
Mutual Fund and Exchange Traded Notes (“ETNs”) Risk: Mutual funds and ETNs are subject to investment advisory or management and other expenses, which will be indirectly paid by the Fund. Each is subject to specific risks, depending on investment strategy. Also, each may be subject to leverage risk, which will magnify losses. ETNs are subject to default risks.
Market Risk: Unexpected local, regional or global events, such as war; acts of terrorism; financial, political or social disruptions; natural, environmental or man-made disasters; the spread of infectious illnesses or other public health issues; and recessions and depressions could have a significant impact on the Fund and its investments and may impair market liquidity. Such events can cause investor fear, which can adversely affect the economies of nations, regions and the market in general, in ways that cannot necessarily be foreseen. An outbreak of infectious respiratory illness known as COVID-19, which is caused by a novel coronavirus (SARS-CoV-2), was first detected in China in December 2019 and subsequently spread globally. This coronavirus has resulted in, among other things, travel restrictions, closed international borders, enhanced health screenings at ports of entry and elsewhere, disruption of and delays in healthcare service preparation and delivery, prolonged quarantines, significant disruptions to business operations, market closures, cancellations and restrictions, supply chain disruptions, lower consumer demand, and significant volatility and declines in global financial markets, as well as general concern and uncertainty. The impact of COVID-19 has adversely affected, and other infectious illness outbreaks that may arise in the future could adversely affect, the economies of many nations and the entire global economy, individual issuers and capital markets in ways that cannot necessarily be foreseen. Public health crises caused by the COVID-19 outbreak may exacerbate other pre-existing political, social and economic risks in certain countries or globally. The duration of the COVID-19 outbreak and its effects cannot be determined with certainty.
3. | INVESTMENT TRANSACTIONS |
For the six months ended June 30, 2022, the cost of purchases and proceeds from sales of portfolio securities, other than short-term investments, amounted to $5,827,304 and $8,657,639.
4. | INVESTMENT ADVISORY AGREEMENTS AND TRANSACTIONS WITH RELATED PARTIES |
Advisors Preferred LLC (“Advisor”), serves as investment advisor to the Fund. The Advisor has engaged Beaumont Capital Management, LLC (the “Sub-Advisor”) to serve as the sub-advisor to the Fund whereby the Sub-Advisor will direct investment activities of the Fund. The Sub-Advisor is paid by the Advisor and not the Fund.
11
BCM Decathlon Moderate Fund
NOTES TO FINANCIAL STATEMENTS (Continued) (Unaudited)
June 30, 2022
Pursuant to an Investment Advisory Agreement with the Fund, the Advisor, under the oversight of the Board, directs the daily operations of the Fund and supervises the performance of administrative and professional services provided by others. As compensation for its services and the related expenses borne by the Advisor, the Fund pays the Advisor an investment advisory fee, computed and accrued daily and paid monthly, at an annual rate of 1.24% of the Fund’s average daily net assets. For the six months ended June 30, 2022, the Fund paid $23,652 in advisory fees from which the Advisor pays all operating expenses of the Fund, with the exception of Rule 12b-1 distribution fees, brokerage fees and commissions, and non-recurring and extraordinary expenses.
Ultimus Fund Solutions, LLC (“UFS”), provides administration, fund accounting, and transfer agent services to the Trust. Pursuant to separate servicing agreements with UFS, UFS provides administration, fund accounting and transfer agent services to the Fund. Certain officers of the Trust are also officers of UFS, and are not paid any fees directly by the Fund for serving in such capacities.
In addition, certain affiliates of UFS provide services to the Fund as follows:
BluGiant, LLC (“Blu Giant”), an affiliate of UFS, provides EDGAR conversion and filing services as well as print management services for the Fund on an ad-hoc basis.
The Trust has adopted a Distribution Plan and Agreement (the “Rule 12b-1 Plan”) pursuant to Rule 12b-1 under the 1940 Act for the Fund’s Class A shares pursuant to which the Fund pays fees to Ceros Financial Services, Inc. (“Ceros” or “Distributor”), an affiliate of the Advisor, to provide distribution and/or shareholder services to the Fund. Under the Rule 12b-1 Plan, Class A shares of the Fund may pay an account maintenance fee for account maintenance services and/or distribution fee at an annual rate of up to 0.25% of the Fund’s average net assets attributable to Class A shares as compensation to the Distributor for providing account maintenance and distribution services to shareholders. The Rule 12b-1 Plan is a compensation plan, which means that compensation is provided regardless of 12b-1 expenses incurred. During the six months ended June 30, 2022 pursuant to the Rule 12b-1 Plan, the Class A shares of the Fund paid $257, which was paid out to brokers and dealers.
The Distributor acts as the Fund’s principal underwriter in a continuous public offering of the Fund’s shares. For the six months ended June 30, 2022, the Distributor received $3,185 in underwriting commissions for sales of shares of the Fund, of which $504 was retained by the principal underwriter.
Each Trustee who is not an “interested person” of the Trust or Advisor is compensated at a rate of $50,000 per year plus $2,500 minimum per meeting for certain special meetings, which varies based on the matters submitted, as well as for reimbursement for any reasonable expenses incurred attending the meetings, paid quarterly. The “interested persons” who serve as Trustees of the Trust receive no compensation for their services as Trustees. None of the executive officers receive compensation from the Trust. Interested trustees of the Trust are also officers or employees of the Advisor and its affiliates.
During the six months ended June 30, 2022, Ceros, a registered broker/dealer and an affiliate of the Advisor, executed trades on behalf of the Fund and received $2,015 in trade commissions.
5. AGGREGATE UNREALIZED APPRECIATION AND DEPRECIATION – TAX BASIS
The identified cost of investments in securities owned by the Fund for federal income tax purposes and its respective gross unrealized appreciation and depreciation at June 30, 2022, were as follows:
Gross Unrealized | Gross Unrealized | Net Unrealized | ||||||||||||
Tax Cost | Appreciation | (Depreciation) | (Depreciation) | |||||||||||
$ | 1,545,104 | $ | — | $ | (156,245 | ) | $ | (156,245 | ) |
12
BCM Decathlon Moderate Fund
NOTES TO FINANCIAL STATEMENTS (Continued) (Unaudited)
June 30, 2022
6. | DISTRIBUTION TO SHAREHOLDERS AND TAX COMPONENTS OF CAPITAL |
The tax character of fund distributions paid for the period ended December 31, 2021, was as follows:
Fiscal Year Ended | ||||
December 31, 2021 | ||||
Ordinary Income | $ | 91,634 | ||
Long-Term Capital Gain | — | |||
Return of Capital | — | |||
$ | 91,634 |
* | The difference between ordinary distributions paid from book and ordinary distributions paid from tax relates to allowable foreign tax credits of $2,616 for the period ended December 31, 2021, which have been passed through to the Fund’s underlying shareholders and are deemed dividends for tax purposes. |
As of December 31, 2021, the components of accumulated earnings/ (deficit) on a tax basis were as follows:
Undistributed | Undistributed | Post October Loss | Capital Loss | Other | Unrealized | Total | ||||||||||||||||||||
Ordinary | Long-Term | and | Carry | Book/Tax | Appreciation/ | Accumulated | ||||||||||||||||||||
Income | Gains | Late Year Loss | Forwards | Differences | (Depreciation) | Earnings/(Deficits) | ||||||||||||||||||||
$ | — | $ | — | $ | (4,405 | ) | $ | — | $ | — | $ | (9,811 | ) | $ | (14,216 | ) |
Capital losses incurred after October 31 within the fiscal year are deemed to arise on the first business day of the following fiscal year for tax purposes. The Fund incurred and elected to defer such capital losses of $4,405.
Permanent book and tax differences, primarily attributable to the book/tax basis treatment of non-deductible expenses and distributions in excess, resulted in reclassifications for the Fund for the fiscal year ended December 31, 2021, as follows:
Paid | ||||||
In | Accumulated | |||||
Capital | Earnings (Losses) | |||||
$ | (1,680 | ) | $ | 1,680 |
7. | CONTROL OWNERSHIP |
The beneficial ownership, either directly or indirectly, of more than 25% of the voting securities of a fund creates presumption of control of the fund pursuant to Section 2(a)(9) of the 1940 Act. As of June 30, 2022, National Financial Services LLC and Pershing LLC held approximately 28% and 26%, respectively, of the Fund for the benefit of its customers.
8. SUBSEQUENT EVENTS
Subsequent events after the date of the Statement of Assets and Liabilities have been evaluated through the date the financial statements were issued. Management has determined that no events or transactions occurred requiring adjustment or disclosure in the financial statements other than the following.
Effective July 15, 2022, the Fund was renamed BCM Market Neutral Fund and seeks capital gains as its investment objective. Effective August 1, 2022, the Fund was renamed Decathlon Market Neutral Fund.
13
BCM Decathlon Moderate Fund
EXPENSE EXAMPLE (Unaudited)
June 30, 2022
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs including sales charges (loads) on purchase payments; (2) ongoing costs, including management fees; distribution and/or service (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from January 1, 2022 through June 30, 2022.
Table 1. Actual Expenses
The “Actual Expenses” table below provides information about actual account values and actual expenses. You may use the information below; together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Table 2. Hypothetical Example for Comparison Purposes
The “Hypothetical” table below provides information about hypothetical account values and hypothetical expenses based on the BCM Decathlon Moderate Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balances or expenses you paid for the period. You may use this information to compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), or redemption fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
BCM Decathlon Moderate Fund | ||||
Table 1 | ||||
Actual Expenses | Annualized Expense Ratio | Beginning Account Value 1/1/2022 | Ending Account Value 6/30/2022 | Expenses Paid During Period * 1/1/2022-6/30/2022 |
Class A | 1.61% | $1,000.00 | $855.00 | $7.41 |
Institutional Class | 1.24% | $1,000.00 | $856.90 | $5.71 |
Table 2 | ||||
Hypothetical (5% return before expenses) | Annualized Expense Ratio | Beginning Account Value 1/1/2022 | Ending Account Value 6/30/2022 | Expenses Paid During Period * 1/1/2022-6/30/2022 |
Class A | 1.61% | $1,000.00 | $1,016.81 | $8.05 |
Institutional Class | 1.24% | $1,000.00 | $1,018.65 | $6.11 |
* | Expenses are equal to the average account value over the period, multiplied by the Fund’s annualized expense ratio, multiplied by the number of days in the period (181) divided by the numbers of days in the fiscal year (365). |
14
BCM Decathlon Moderate Fund
SUPPLEMENTAL INFORMATION (Unaudited)
June 30, 2022
Approval of the Amended Investment Advisory and Amended Sub-Advisory Agreement for BCM Decathlon Moderate Fund
At a video conference meeting held on February 28, 2022 (the “Meeting”), held in accordance with relief granted by the U.S. Securities and Exchange Commission (the “SEC”) to ease certain governance obligations required under the Investment Company Act of 1940, as amended (the “1940 Act”) in light of travel concerns related to the COVID-19 pandemic (the “SEC Relief Order”) the Board of Trustees (the “Board”) of Advisors Preferred Trust (the “Trust”), including a majority of Trustees who are not “interested persons” (the “Independent Trustees”), as such term is defined under Section 2(a)(19) of the 1940 Act, considered the amended investment advisory agreement (the “Advisory Agreement”) between Advisors Preferred, LLC (the “Adviser”) and the Trust, on behalf of BCM Decathlon Moderate Fund (“BCM Moderate”); and considered an amended sub-advisory agreement (the “Sub-Advisory Agreement”) between the Adviser and Beaumont Capital Management, LLC (the “Sub-Adviser” or “Beaumont”).
In connection with the Board’s consideration and approval of the amended Advisory Agreement and Sub-Advisory Agreement, (together the “Advisory Agreements”) the Adviser and Sub-Adviser provided the Board in advance of the Meeting with written materials, which included information regarding: (a) a description of the investment management personnel of the Adviser and Sub-Adviser; (b) the Adviser’s and Sub-Adviser’s operations and the Adviser’s financial condition; (c) the Adviser’s proposed brokerage practices (including any soft dollar arrangements); (d) the level of the advisory fees proposed to be charged compared with the fees charged to comparable mutual funds or accounts; (e) the Fund’s anticipated level of profitability to the Adviser’s and Sub-Adviser’s from related operations; (f) the Adviser’s and Sub-Adviser’s compliance policies and procedures; and (g) information regarding the performance of BCM Moderate as compared to the respective benchmarks and Morningstar categories. The Board’s review of the materials and deliberations are presented contemporaneously given the overlapping considerations, paralleled issues and conclusions drawn by the Board. The Board members relied upon the advice of independent legal counsel and their own business judgment in determining the material factors to be considered in evaluating the Advisory Agreements.
The Trustees also re-considered their prior deliberations made on February 23, 2021, when they approved the original sub-advisory agreement and the current advisory agreement. The Trustees also re-considered their prior deliberations made on August 24, 2021, when they approved the Current Sub-Advisory Agreement as well as deliberating upon updated and supplemental information.
Moreover, each Trustee may have afforded different weight to the various factors in reaching conclusions with respect to the Agreements. The Board reviewed the quality of work and abilities of the Adviser and its relationship with Beaumont and the performance of BCM Moderate. In light of Fund’s performance and the compliance/review relationship with the Beaumont, the Board concluded that the Adviser had sufficient quality and depth of personnel, resources, investment methods and compliance policies and procedures essential to performing its duties to BCM Moderate. The Board conducted some of their deliberations on a joint basis for the Adviser and Beaumont given the close working relationship of the Adviser and Sub-Adviser.
Nature, Extent and Quality of Services. With respect to the nature, extent and quality of services to be provided or historically provided, the Trustees reviewed the Adviser’s and the Sub-Adviser’s Form ADV, a description of the manner in which investment decisions have been made or will be made for the Fund by the Sub-Adviser, a description of the services provided by the Adviser and those services provided by the Sub-
15
BCM Decathlon Moderate Fund
SUPPLEMENTAL INFORMATION (Unaudited)
June 30, 2022
Adviser and those executed by the Adviser, a review of the experience of professional personnel performing services for the Fund, including the team of individuals that primarily monitor and execute the investment and administration process. The Trustees noted they had previously been supplied with a certification from each of the Adviser and Sub-Adviser certifying that each has adopted a Code of Ethics containing provisions reasonably necessary to prevent Access Persons, as that term is defined in Rule 17j-1 under the 1940 Act, from engaging in conduct prohibited by Rule 17j-1(b) and that each the of the Adviser and Sub-Adviser has adopted procedures reasonably necessary to prevent Access Persons from violating such Code of Ethics. The Trustees also noted the financial resources of the Adviser and Sub-Adviser continue to appear adequate.
The Trustees considered that the Sub-Adviser is primarily responsible for portfolio investment management, rather than the Adviser. The Board considered the Sub-Adviser’s skills and experience relating to the similar strategies it manages, and its portfolio management and research techniques. The Board also noted that the CCO of the Trust had previously reviewed the compliance manual and procedures of the Sub-Adviser and found them to be appropriate. The Board concluded that the Sub-Adviser has sufficient quality and depth of personnel, resources, investment methods and compliance policies and procedures essential to performing its duties under the Sub-Advisory Agreement and that the nature, overall quality, and extent of the management services to be provided and already provided by the Sub-Adviser is expected to remain satisfactory and reliable.
Performance. The Trustees reviewed performance information from the commencement of operations on April 19, 2021 through December 31, 2021 for the Fund. They noted that the Fund had outperformed its index, the Dow Jones Moderately Conservative Portfolio Index, while slightly underperforming an estimate of the Sub-Adviser’s separate account composite for clients with a strategy similar to that of the Fund. The Trustees noted that the long-term performance record suggests that the Sub-Adviser will be able to continue to produce satisfactory performance.
Fees and Expenses. As to the costs of the services provided to the Fund by the Adviser and Sub-Adviser, the Board reviewed and discussed the near unitary-style advisory fee and total operating expenses of the Fund compared to Morningstar respective category respective peer groups. The Trustees noted that the unitary-style advisory fee of 1.24% for the Fund was within the range of the reasonable management fees of the Morningstar Tactical Asset Allocation, Morningstar World Allocation, and Morningstar Equity Long/Short categories. The Trustees acknowledge that after payment of certain Fund expenses, the advisory fee retained by the Adviser will be 0.25% of a Fund’s daily net assets with breakpoints if assets of the Fund grow such that the Adviser would retain less. The Board reviewed the projected expense ratio of 1.84% for Class A Shares and 1.44% for Institutional Class Shares. In both classes, the ratios were above the peer group average, and well below the maximum peer group expense ratios when compared to Morningstar Tactical Asset Allocation and Morningstar World Allocation categories; and below average when compared to the Morningstar Equity Long/Short category.
The Board acknowledged the projected net sub-advisory fee of approximately 0.49% paid by the Adviser to the Sub-Adviser remained unchanged from their prior review. The Board noted that the Sub-Adviser charges between 0.30% and 0.50% for separately managed accounts with similar strategies, but with far lower regulatory burdens making a pure comparison difficult. The Trustees reviewed and considered the split of the advisory fee between the Adviser and Sub-Adviser (the Sub-Adviser being paid by the Adviser, not the Fund), and determined it was acceptable and reasonable for the services provided to the Fund by the Sub-Adviser.
16
BCM Decathlon Moderate Fund
SUPPLEMENTAL INFORMATION (Unaudited)
June 30, 2022
Profitability. The Board refreshed their review of the levels of profits anticipated by the Adviser and Sub-Advisor forthe Fund, noting that prior projections were likely too optimistic.
Adviser Profitability. The Board noted that with expected assets of $80 million for the first year, the Adviser expects to realize a 13% profit for the advisory services; and for year two, with projected assets of $104 million, the Adviser expects profits for advisory services to be 14%; and 11% and 12%, respectively for year one and two when considering the totality of the relationship with the Fund. After further discussion, the Board determined the projected profitability of the Adviser from its relationship with the Fund was not excessive.
Sub-Adviser Profitability. With respect to the Sub-Adviser’s profitability, the Trustees reviewed the projected profitability of Beaumont, with respect to the Fund. The Board noted that the Sub-Adviser had more-optimistic overall projections than the Adviser, with expected assets of $75 million for the Fund for the first year, the Sub-Adviser would achieve approximately 39% profit margin. For year two, with projected assets of $150 million for the Fund, the Board noted the Sub-Adviser projected profit margins of approximately 45% from sub-advising; and 5% and 11%, respectively for year one and two when considering the totality of the relationship with the Fund.
After further discussion, the Board concluded that, based on the services provided or to be provided by the Sub-Adviser, the anticipated level of profit from the Sub-Adviser’s relationship with the Fund was not excessive.
Economies of Scale. As to the extent to which the Fund will realize economies of scale, the Adviser reported $500 million to be the minimum asset level to reach such economies of scale. The Board discussed the Adviser’s expectations for growth and concluded that any material economies of scale would not be achieved in the near term. The Trustees agreed to revisit economies of scale as assets of the Fund grow.
Conclusion. Counsel assisted the Board throughout the Advisory Agreement and Sub-Advisory Agreement review process. The Board members relied upon the advice of independent counsel, and their own business judgment in determining the material factors to be considered in evaluating each of the Advisory Agreements and the weight to be given to each such factor. Accordingly, having requested and received such information from the Adviser and Sub-Adviser as the Board believed to be reasonably necessary to evaluate the terms of each of the Advisory Agreements as appropriate; the Board, including a majority of the Independent Trustees, determined that, with respect to each of the Advisory Agreements, separately: (a) the terms of the Advisory Agreement and Sub-Advisory Agreement are reasonable; (b) the advisory fee was not unreasonable; and (c) each Advisory Agreement is in the best interests of the Fund and its shareholders or prospective shareholders. In considering the approval of each of the Advisory Agreements, the Board did not identify any one factor as all important, but rather considered these factors collectively and determined that approval of each of the Advisory Agreements was in the best interests of the Fund and its shareholders or prospective shareholders. Moreover, the Board noted that each Trustee may have afforded different weight to the various factors in reaching his conclusions with respect to each Advisory Agreement.
17
BCM Decathlon Moderate Fund
SUPPLEMENTAL INFORMATION (Unaudited) (Continued)
June 30, 2022
SHAREHOLDER ACTION BY WRITTEN CONSENT IN LIEU OF MEETING
As of the record day of February 28, 2022, a shareholder representing ownership of 289,062.45 shares (which is 62.5% of the Fund shares) voted by written consent to approve an amended subadvisory agreement between Advisors Preferred, LLC and Beaumont Capital Management, LLC; and an amended investment advisory agreement between Advisors Preferred, LLC and the Trust, on behalf of the Fund. Because the affirmative vote of 62.5% of the Fund’s shares constituted a majority of the outstanding voting securities of the Fund, no other shareholders were asked to vote, nor required to vote.
LIQUIDITY RISK MANAGEMENT PROGRAM
The Fund has adopted and implemented a written liquidity risk management program as required by Rule 22e-4 (the “Liquidity Rule”) under the Investment Company Act. The program is reasonably designed to assess and manage the Fund’s liquidity risk, taking into consideration, among other factors, the Fund’s investment strategies and the liquidity of portfolio investments during normal and reasonably foreseeable stressed conditions; short and long-term cash flow projections; and cash holdings and access to other funding sources.
During the six months ended June 30, 2022, the Trust’s Liquidity Program Administrator (“LPA”) and the Board reviewed the Fund’s investments and they determined that, generally, the Fund held adequate levels of cash and highly liquid investments to meet shareholder redemption activities in accordance with applicable requirements. Accordingly, the Board and the LPA concluded that (i) the Fund’s liquidity risk management program is reasonably designed to prevent violations of the Liquidity Rule and (ii) the Fund’s liquidity risk management program has been effectively implemented.
18
PRIVACY NOTICE
Rev. May 2014
FACTS | WHAT DOES ADVISORS PREFERRED TRUST DO WITH YOUR PERSONAL INFORMATION? | |
Why? | Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do. | |
What? | The types of personal information we collect and share depend on the product or service you have with us. This information can include: | |
■ Social Security number | ■ Purchase History | |
■ Assets | ■ Account Balances | |
■ Retirement Assets | ■ Account Transactions | |
■ Transaction History | ■ Wire Transfer Instructions | |
■ Checking Account Information | ||
When you are no longer our customer, we continue to share your information as described in this notice. | ||
How? | All financial companies need to share customers’ personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers’ personal information; the reasons Advisors Preferred Trust chooses to share; and whether you can limit this sharing. |
Does Advisors | ||
Preferred Trust | Can you limit this | |
Reasons we can share your personal information | share? | sharing? |
For our everyday business purposes – such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus | Yes | No |
For our marketing purposes – to offer our products and services to you | No | We don’t share |
For joint marketing with other financial companies | No | We don’t share |
For our affiliates’ everyday business purposes – information about your transactions and experiences | No | We don’t share |
For our affiliates’ everyday business purposes – information about your creditworthiness | No | We don’t share |
For nonaffiliates to market to you | No | We don’t share |
Questions? | Call 1-866-862-9686 |
19
Who we are | |
Who is providing this notice? | Advisors Preferred Trust |
What we do | |
How does Advisors Preferred Trust protect my personal information? | To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include computer safeguards and secured files and buildings.
Our service providers are held accountable for adhering to strict policies and procedures to prevent any misuse of your nonpublic personal information. |
How does Advisors Preferred Trust collect my personal information? | We collect your personal information, for example, when you
■ Open an account
■ Provide account information
■ Give us your contact information
■ Make deposits or withdrawals from your account
■ Make a wire transfer
■ Tell us where to send the money
■ Tells us who receives the money
■ Show your government-issued ID
■ Show your driver’s license
We also collect your personal information from other companies. |
Why can’t I limit all sharing? | Federal law gives you the right to limit only
■ Sharing for affiliates’ everyday business purposes – information about your creditworthiness
■ Affiliates from using your information to market to you
■ Sharing for nonaffiliates to market to you
State laws and individual companies may give you additional rights to limit sharing. |
Definitions | |
Affiliates | Companies related by common ownership or control. They can be financial and nonfinancial companies.
■ Advisors Preferred Trust does not share with our affiliates. |
Nonaffiliates | Companies not related by common ownership or control. They can be financial and nonfinancial companies.
■ Advisors Preferred Trust does not share with nonaffiliates so they can market to you. |
Joint marketing | A formal agreement between nonaffiliated financial companies that together market financial products or services to you.
■ Advisors Preferred Trust doesn’t jointly market. |
20
PROXY VOTING POLICY
Information regarding how the Fund voted proxies relating to portfolio securities for the most recent twelve month period ended June 30 as well as a description of the policies and procedures that the Fund uses to determine how to vote proxies is available without charge, upon request, by calling 1-833-786-1121 or by referring to the Security and Exchange Commission’s (“SEC”) website at http://www.sec.gov.
PORTFOLIO HOLDINGS
The Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT, within sixty days after the end of the period. Form N-PORT reports are available on the SEC’s website at http://www.sec.gov. The information on Form N-PORT is available without charge, upon request, by calling 1-833-786-1121.
INVESTMENT ADVISOR |
Advisors Preferred LLC |
1445 Research Blvd., Suite 530 |
Rockville, MD 20850 |
SUB-ADVISOR |
Beaumont Capital Management, LLC |
125 Newbury Street, 4th Floor |
Boston, MA 02116 |
ADMINISTRATOR |
Ultimus Fund Solutions, LLC |
225 Pictoria Drive, Suite 450 |
Cincinnati, OH 45246 |
BCM-SAR22 |
(b) Not applicable.
Item 2. Code of Ethics. Not applicable.
Item 3. Audit Committee Financial Expert. Not applicable.
Item 4. Principal Accountant Fees and Services. Not applicable.
Item 5. Audit Committee of Listed Companies. Not applicable to open-end investment companies.
Item 6. Schedule of Investments. Schedule of investments in securities of unaffiliated issuers is included under Item 1.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Funds. Not applicable to open-end investment companies.
Item 8. Portfolio Managers of Closed-End Management Investment Companies. Not applicable to open-end investment companies.
Item 9. Purchases of Equity Securities by Closed-End Funds. Not applicable to open-end investment companies.
Item 10. Submission of Matters to a Vote of Security Holders. None.
Item 11. Controls and Procedures.
(a) Based on an evaluation of the Registrant’s disclosure controls and procedures as of a date within 90 days of filing date of this Form N-CSR, the principal executive officer and principal financial officer of the Registrant have concluded that the disclosure controls and procedures of the Registrant are reasonably designed to ensure that the information required in filings on Form N-CSR is recorded, processed, summarized, and reported by the filing date, including that information required to be disclosed is accumulated and communicated to the Registrant’s management, including the Registrant’s principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.
(b) There were no significant changes in the Registrant’s internal control over financial reporting that occurred during the Registrant’s last fiscal half-year that have materially affected, or are reasonably likely to materially affect, the Registrant’s internal control over financial reporting.
Item 12. Disclosure of Securities Lending Activities for Closed-End Management Investment Companies. Not applicable.
Item 13. Exhibits.
(a)(1) Not applicable.
(a)(3) Not applicable for open-end investment companies.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Advisors Preferred Trust
By (Signature and Title)
/s/ Catherine Ayers-Rigsby
Catherine Ayer-Rigsby, President/Principal Executive Officer
Date 8/29/22
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By (Signature and Title)
/s/Catherine Ayers-Rigsby
Catherine Ayers-Rigsby, President/Principal Executive Officer
Date 8/29/22
By (Signature and Title)
/s/ Christine Casares
Christine Casares, Treasurer/Principal Financial Officer
Date 8/29/22