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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Capital One Financial Corporation | NYSE:COF | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
-0.43 | -0.27% | 159.32 | 159.70 | 155.36 | 159.70 | 1,159,124 | 17:29:01 |
SUMMARY SECTION
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1
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MORE ABOUT THE FUND'S INVESTMENT OBJECTIVE, STRATEGIES AND RISKS
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9
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MANAGEMENT OF THE FUND
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17
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PURCHASE OF SHARES
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18
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YOUR ACCOUNT WITH THE FUND
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22
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SERVICE FEES – OTHER PAYMENTS TO THIRD PARTIES
|
31
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DIVIDENDS AND DISTRIBUTIONS
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31
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FEDERAL INCOME TAX CONSEQUENCES
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32
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FINANCIAL HIGHLIGHTS
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33
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Class A Shares
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Class I Shares
|
|
Shareholder Fees
(fees paid directly from your investment)
|
||
Maximum sales charge (load) imposed on purchases
(as a percentage of offering price)
|
5.50%
|
None
|
Maximum deferred sales charge (load)
(as a percentage of the lesser of the value redeemed or the amount invested)
|
1.00%
1
|
None
|
Redemption fee if redeemed within 60 days of purchase
(as a percentage of amount
redeemed)
|
2.00%
|
2.00%
|
Wire fee
|
$20
|
$20
|
Overnight check delivery fee
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$15
|
$15
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Retirement account fees (annual maintenance and full redemption requests)
|
$15
|
$15
|
Annual Fund Operating Expenses
(expenses that you pay each year as a percentage of the value of your investment)
|
||
Management fees
2
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1.20%
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1.20%
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Distribution and/or service (Rule 12b-1) fees
|
0.25%
|
None
|
Other expenses
|
||
Other expenses of the Fund
|
0.64%
|
0.64%
|
Other expenses of the Subsidiary
3
|
0.08%
|
0.08%
|
Acquired fund fees and expenses
2
|
0.20%
|
0.20%
|
Total annual fund operating
expenses
4
|
2.37%
|
2.12%
|
Fee waiver and/or expense reimbursements
5
|
(0.09)%
|
(0.09)%
|
Total annual fund operating
expenses
(after fee waiver and/or expense reimbursements)
4,
6
|
2.28%
|
2.03%
|
1.
|
No sales charge applies on investments of $1 million or more, but a contingent deferred sales charge ("CDSC") of 1% will be imposed on certain redemptions of such shares within 18 months of the date of purchase.
|
2.
|
Management fees include a management fee paid to the Advisor (as defined in this Prospectus) by the Subsidiary (as defined in this Prospectus) at the annual rate of 1.20% of the Subsidiary’s average daily net assets. The Advisor has contractually agreed, for so long as the Fund invests in the Subsidiary, to waive the management fee it receives from the Fund in an amount equal to the management fee paid to the Advisor by the Subsidiary pursuant to the investment advisory agreement between the Subsidiary and the Advisor. This undertaking may not be terminated by the Advisor as long as the investment advisory agreement between the Subsidiary and the Advisor is in place unless the Advisor obtains the prior approval of the Fund’s Board of Trustees.
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3.
|
This item does not include management fees paid by the Subsidiary to the Advisor, which are included in “Management fees” in the table above. Subsidiary expenses include other fees and expenses of the Subsidiary (as defined in this Prospectus), which are borne indirectly by the Fund as a result of investing through the Subsidiary.
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4.
|
The total annual fund operating expenses and total annual fund operating expenses (after fee waiver and/or expense reimbursements) do not correlate to the ratio of expenses to average net assets appearing in the financial highlights table, which reflects only the operating expenses of the Fund and does not include acquired fund fees and expenses.
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5
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The Advisor has contractually agreed to waive its fees and/or pay for operating expenses of the Fund to ensure that total annual fund operating expenses (excluding, as applicable, any Subsidiary expenses front-end or contingent deferred loads, acquired fund fees and expenses, leverage interest (as determined in accordance with Form N-1A), taxes, brokerage commissions and expenses incurred in connection with any merger or reorganization or extraordinary expenses such as litigation expenses) do not exceed 2.00% and 1.75% of the average daily net assets of the Fund's Class A and Class I shares, respectively. This agreement is effective until April 30, 2014, and may be terminated before that date only by the Trust's Board of Trustees. The Advisor is permitted to seek reimbursement from the Fund, subject to certain limitations, for fees it waived and Fund expenses it reimbursed for the three years from the date of any such waiver or reimbursement.
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6.
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The total annual fund operating expenses (after fee waiver and/or expense reimbursements) shown in the table above exceed the contractual expense limitations shown in footnote 5 because they include estimated acquired fund fees and expenses, whereas the contractual expense limitations are based on operating expenses and do not include acquired fund fees and expenses.
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1 Year
|
3 Years
|
5 Years
|
10 Years
|
|
Class A shares
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$768
|
$1,241
|
$1,738
|
$3,101
|
Class I shares
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$206
|
$655
|
$1,131
|
$2,445
|
1 Year
|
3 Years
|
5 Years
|
10 Years
|
|
Class A shares
|
$668
|
$1,241
|
$1,738
|
$3,101
|
Class I shares
|
$206
|
$655
|
$1,131
|
$2,445
|
|
·
|
Core Volatility
: These indexes in general seek to provide returns that are positively correlated with volatility (principally volatility of the broad equity markets) and negatively correlated with the S&P 500 Index.
|
|
·
|
Dynamic Volatility
: These indexes seek to have dynamic exposure to volatility, which means they are expected to change their exposures to volatility based on market conditions. These indexes seek to build long volatility exposures during periods of extended high volatility in the broader equity markets and to reduce exposure to volatility during periods of low volatility in the broader equity markets.
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|
·
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Carry
: These indexes seek to create positive returns in both extended and short-term positive equity markets. The Fund intends to use these indexes to help offset the costs of utilizing the core and dynamic volatility strategies. These may include indexes that seek to take advantage of certain structural market inefficiencies, but the Advisor may in its discretion select indexes based on other types of strategies in order to create positive returns.
|
|
·
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Strategy research with respect to the algo underlying each index,
|
|
·
|
Evaluation of return and risk expectations relative to specific indexes given the investment environment,
|
|
·
|
Current index exposure positioning and risk assessment of each index, and
|
|
·
|
Portfolio construction and optimization.
|
|
·
|
Volatility of the portfolio,
|
|
·
|
Vega of the portfolio (i.e., sensitivity to the change in volatility), and
|
|
·
|
Beta of the portfolio (i.e., the portion of the portfolio’s returns that are correlated with the broad equity markets).
|
·
|
Management risk
. The Fund seeks to achieve positive absolute returns in extended adverse equity markets while minimizing the cost of providing such protection in other market environments. The Fund is structured primarily as a hedging instrument and not primarily to achieve positive absolute returns during normal market conditions or periods of change between normal and adverse market conditions, and may experience losses during such periods. Furthermore, the investment process used by the Advisor could fail to achieve the Fund's investment objective and cause your investment to lose value. Accordingly, an investment in the Fund involves special risks, including some not traditionally associated with mutual funds, and as a result may not be suitable for all investors.
|
·
|
Rule based algorithm risk.
The indexes with respect to which the Fund invests may not achieve their desired objectives, which may negatively affect the performance of the Fund. In addition, because the Fund’s investments with respect to indexes depend upon index algos that are dynamic, it is possible that the Fund will not achieve its desired objectives. For example, changes in market volatility could be so sudden and severe that certain indexes incur substantial losses before the index algos re-align to market conditions or the Advisor rebalances the portfolio.
|
·
|
Derivatives risk.
Derivatives include instruments and contracts that are based on, and are valued in relation to, one or more underlying securities, financial benchmarks or indices, such as futures, options, swaps and forward contracts. Derivatives can be highly volatile, illiquid and difficult to value, and changes in the value of a derivative held by the Fund may not correlate with the underlying instrument or the Fund’s other investments. Many of the risks applicable to trading the instruments underlying derivatives are also applicable to derivatives trading. However, there are additional risks associated with derivatives trading that are possibly greater than the risks associated with investing directly in the underlying instruments. These additional risks include, but are not limited to illiquidity risk, operational leverage risk and counterparty credit risk. A small investment in derivatives could have a potentially large impact on the Fund’s performance.
|
·
|
Swap
a
greement risk.
Swap agreements are a type of derivative instrument. Swaps can be highly volatile, illiquid and difficult to value, and changes in the value of a swap held by the Fund may not correlate with the underlying instrument or the Fund's other investments. The value of a swap depends largely upon price movements in the underlying instrument. Many of the risks applicable to trading the underlying instrument are also applicable to a swap. However, there are additional risks associated with a swap that are possibly greater than the risks associated with investing directly in the underlying instruments. These additional risks include, but are not limited to: illiquidity risk; operational leverage risk; and counterparty credit risk. Counterparty credit risk is particularly relevant to a swap because they involve instruments that are traded between counterparties based on contractual relationships and are not traded on an exchange. As a result, the Fund is subject to the risk that a counterparty will not perform its obligations under the related contracts. There can be no assurance that a counterparty will not default and that the Fund will not sustain a loss on a transaction as a result. Additionally, swaps involve economic leverage, which could increase investment losses and increase the volatility of these instruments as they may fluctuate in value more than the underlying instrument. Some swaps have the potential for unlimited loss, regardless of the size of the Fund’s initial investment.
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·
|
Subsidiary risk
. By investing in the Subsidiary, the Fund will be indirectly exposed to the risks associated with the Subsidiary’s investments. The Subsidiary is not registered under the 1940 Act and, unless otherwise noted in this Prospectus, are not subject to all of the investor protections of the 1940 Act. Changes in the laws of the United States, the U.S. states or the Cayman Islands, under which the Fund and the Subsidiary are organized and operated, as applicable, could prevent the Fund or the Subsidiary from operating as described in this Prospectus and could negatively affect the Fund and its shareholders.
|
·
|
Tax risk
. To qualify for the tax treatment available to regulated investment companies under the Internal Revenue Code of 1986, as amended (the “Code”), the Fund must derive at least 90% of its gross income for each taxable year from sources treated as “qualifying income.” Income derived from direct investments in commodities is not “qualifying income.” In addition, the Internal Revenue Service (the “IRS”) has issued a revenue ruling concluding that income and gains from certain commodity-linked derivatives do not constitute “qualifying income.” It is possible that the Fund will from time to time make investments in commodities and commodity-linked derivatives directly, rather than through the Subsidiary, and therefore it is possible that some of the Fund’s income will not constitute “qualifying income.” The IRS has issued private letter rulings concluding that certain income derived by a regulated investment company from a wholly owned subsidiary, such as the Subsidiary, that invests in commodities and commodity-linked derivatives constitutes “qualifying income.”
|
|
Each of these private letter rulings applies only to the taxpayer that requested it and may not be used or cited as precedent.
The IRS has suspended the issuance of such rulings and is reviewing its policy in this area. The Fund has not applied for or received such a ruling from the IRS, and has not determined whether to seek such a ruling if the IRS were to resume issuing such rulings. The Fund intends to take the position that income from its investments in the Subsidiary will constitute “qualifying income” even in the event that the Subsidiary does not distribute all of its income on an annual basis. In the absence of a ruling, however, there can be no certainty in this regard, and the Fund has not sought an opinion from counsel regarding this position. It is possible that, as a consequence of its current review of this area, the IRS will reverse its prior position and publish guidance under which it will take the position that these items would not constitute “qualifying income.” The tax treatment of the Fund’s investment in the Subsidiary could also be adversely affected by future legislation or Treasury regulations. If income derived by the Fund from its investments in the Subsidiary does not constitute “qualifying income,” the Fund may not qualify as a regulated investment company under the Code; in that case, the Fund would be subject to U.S. federal income tax at regular corporate rates on its taxable income, including its net capital gain, even if such income were distributed to its shareholders, and all distributions out of earnings and profits would be taxed to shareholders as dividend income. If future legislation, Treasury regulations or IRS guidance prevents the Fund from treating its income from its investments in the Subsidiary as “qualifying income,” the Fund and the Advisor will consider what action to take, including potentially liquidating the Fund.
|
·
|
Leveraging risk
. The use of leverage may increase Fund volatility and compound other risks. This is because leverage generally magnifies the effect of any increase or decrease in the value of the Fund’s underlying assets or creates investment risk with respect to a larger pool of assets than the Fund would otherwise have, potentially resulting in the loss of all assets. Engaging in such transactions may cause the Fund to liquidate positions when it may not be advantageous to do so to satisfy its obligations or meet asset segregation requirements.
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·
|
Credit risk
. Failure of an issuer or guarantor of a fixed income security, or the counterparty to a derivative transaction, to make timely interest or principal payments or otherwise honor its obligations, could cause the Fund to lose money.
|
·
|
Commodity sector risk
. Exposure to the commodities markets may subject the Fund to greater volatility than investments in traditional securities. Prices of commodities and related contracts may fluctuate significantly over short periods for a variety of factors, including changes in supply and demand relationships, weather, fiscal, monetary and exchange control programs, acts of terrorism, tariffs and international economic, political, military and regulatory developments. The commodity markets are subject to temporary distortions or other disruptions. U.S. futures exchanges and some foreign exchanges have regulations that limit the amount of fluctuation in futures contract prices, which may occur during a single business day. Once a limit price has been reached in a particular contract, no trades may be made at a different price. Limit prices have the effect of precluding trading in a particular contract or forcing the liquidation of contracts at disadvantageous times or prices. These circumstances could adversely affect the value of the Fund's commodity-linked investments.
|
·
|
Currency risk
. The Fund may invest indirectly in currency indices or baskets. Investments in foreign currencies or financial instruments related to foreign currencies are subject to the risk that those currencies will decline in value relative to the U.S. dollar. Similarly, investments that speculate on the appreciation of the U.S. dollar are subject to the risk that the U.S. dollar may decline in value relative to foreign currencies. In the case of hedged positions, the Fund is subject to the risk that the U.S. dollar will decline relative to the currency being hedged.
|
·
|
Market sector risk
. The Fund's investment strategy may result in significant over or under exposure to certain industries or market sectors, which may cause the Fund's performance to be more or less sensitive to developments affecting those industries or sectors.
|
·
|
Liquidity risk
. When there is little or no active trading market for specific types of investments, the Fund may have difficulty selling the investments at or near their perceived value. In such a market, the value of such investment and the Fund's share price may fall dramatically.
|
·
|
CFTC regulation risk.
The Fund is subject to applicable CFTC requirements, including registration, disclosure and operational requirements under the Commodity Exchange Act. The Advisor is registered as a commodity trading advisory and a commodity pool operator with respect to the Fund. In addition, the Advisor may be subject to substantially the same requirements with regard to the subsidiary. Compliance with CFTC regulations may increase the expenses of the Fund. Certain of the CFTC requirements that will apply to the Fund have not yet been adopted, and it is unclear what the effect of those requirements would be on the Fund when they are adopted.
|
·
|
Market risk
. The market value of a investment may decline due to general market conditions that are not specifically related to a particular company, such as real or perceived adverse economic conditions, changes in the general outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. An investment’s market value also may decline because of factors that affect a particular industry or industries, such as labor shortages or increased production costs and competitive conditions within an industry.
|
·
|
Interest rate risk
. Prices of fixed income securities tend to move inversely with changes in interest rates. Typically, a rise in rates will adversely affect such securities and, accordingly, the Fund's share price. The longer the effective maturity and duration of the Fund's portfolio, the more the Fund's share price is likely to react to interest rates.
|
·
|
Call risk
. Some bonds give the issuer the option to call, or redeem, the bonds before their maturity date. If an issuer "calls" its bond during a time of declining interest rates, the Fund might have to reinvest the proceeds in an investment offering a lower yield, and therefore might not benefit from any increase in value as a result of declining interest rates. During periods of market illiquidity or rising interest rates, prices of "callable" issues are subject to increased price fluctuation.
|
·
|
Government securities risk
. Not all obligations of the U.S. government, its agencies and instrumentalities are backed by the full faith and credit of the U.S. Treasury. Some obligations are backed only by the credit of the issuing agency or instrumentality, and in some cases there may be some risk of default by the issuer. Any guarantee by the U.S. government or its agencies or instrumentalities of a security held by the Fund does not apply to the market value of such security or to shares of the Fund itself. In addition, because many types of U.S. government securities trade actively outside the United States, their prices may rise and fall as changes in global economic conditions affect the demand for these securities.
|
·
|
Non-diversification risk
. Because the Fund may invest a relatively high percentage of its assets in a limited number of positions, the Fund's performance may be more vulnerable to changes in the market value of a single position and more susceptible to risks associated with a single economic, political or regulatory occurrence than a diversified fund.
|
Minimum Investments
|
To Open
Your Account
|
To Add to
Your Account
|
Class A Shares
|
||
Direct Regular Accounts
|
$1,000
|
$50
|
Traditional and Roth IRA Accounts
|
$250
|
$50
|
Automatic Investment Plan
|
$250
|
$50
|
Gift Account For Minors
|
$250
|
$50
|
Class I Shares
|
||
All Accounts
|
$1,000,000
|
$100,000
|
|
·
|
Core Volatility Indexes
: These indexes in general seek to provide returns that are positively correlated with volatility (principally volatility of the broad equity markets) and negatively correlated with the S&P 500 Index.
|
|
·
|
Dynamic Volatility Indexes
: These indexes seek to have dynamic exposure to volatility, which means they are expected to change their exposures to volatility based on market conditions. These indexes seek to build long volatility exposures during periods of extended high volatility in the broader equity markets and to reduce exposure to volatility during periods of low volatility in the broader equity markets.
|
|
·
|
Carry Indexes
: These indexes seek to create positive returns in both extended and short-term positive equity markets. The Fund intends to use these indexes to help offset the costs of utilizing the core and dynamic volatility strategies. These may include indexes that seek to take advantage of certain structural market inefficiencies, but the Advisor may in its discretion select indexes based on other types of strategies in order to create positive returns.
|
|
·
|
Strategy research with respect to the algo underlying each index (as described above),
|
|
·
|
Evaluation of return and risk expectations relative to specific indexes given the investment environment,
|
|
·
|
Current index exposure positioning and risk assessment of each index, and
|
|
·
|
Portfolio construction and optimization.
|
|
·
|
Review of academic research, if any, that evaluates the long term sources of return and expected returns associated with various algos,
|
|
·
|
Review of the Advisor’s internal research on the consistency of an algo’s source of return,
|
|
·
|
Review of implementation of each algo and review of the appropriateness of the rules driving exposure changes within each algo, and
|
|
·
|
Review of liquidity and cost associated with each algo’s investments.
|
|
·
|
Volatility of the portfolio,
|
|
·
|
Vega of the portfolio (i.e., sensitivity to the change in volatility), and
|
|
·
|
Beta of the portfolio (i.e., the portion of the portfolio’s returns that are correlated with the broad equity markets).
|
·
|
Management risk
. The Fund seeks to achieve positive absolute returns in extended adverse equity markets while minimizing the cost of providing such protection in other market environments. The Fund is structured primarily as a hedging instrument and not primarily to achieve positive absolute returns during normal market conditions or periods of change between normal and adverse market conditions, and may experience losses during such periods. Furthermore, the investment process used by the Advisor could fail to achieve the Fund's investment objective and cause your investment to lose value. Accordingly, an investment in the Fund involves special risks, including some not traditionally associated with mutual funds, and as a result may not be suitable for all investors.
|
·
|
Rule based algorithm risk.
The indexes with respect to which the Fund invests may not achieve their desired objectives, which may negatively affect the performance of the Fund. In addition, because the Fund’s investments with respect to indexes depend upon index algos that are dynamic, it is possible that the Fund will not achieve its desired objectives. For example, changes in market volatility could be so sudden and severe that certain indexes incur substantial losses before the index algos re-align to market conditions or the Advisor rebalances the portfolio.
|
·
|
Derivatives risk.
Derivatives include instruments and contracts that are based on, and are valued in relation to, one or more underlying securities, financial benchmarks or indices, such as futures, options, swaps and forward contracts. Derivatives can be highly volatile, illiquid and difficult to value, and changes in the value of a derivative held by the Fund may not correlate with the underlying instrument or the Fund’s other investments. Many of the risks applicable to trading the instruments underlying derivatives are also applicable to derivatives trading. However, there are additional risks associated with derivatives trading that are possibly greater than the risks associated with investing directly in the underlying instruments. These additional risks include, but are not limited to illiquidity risk, operational leverage risk and counterparty credit risk. A small investment in derivatives could have a potentially large impact on the Fund’s performance.
|
·
|
Swap
a
greement
r
isk.
Swap agreements are a type of derivative instrument. Swaps can be highly volatile, illiquid and difficult to value, and changes in the value of a swap held by the Fund may not correlate with the underlying instrument or the Fund's other investments. The value of a swap depends largely upon price movements in the underlying instrument. Swap agreements can be individually negotiated and structured to include exposure to a variety of different types of investments market factors or trading strategies. Depending on their structure, swap agreements may increase or decrease the Fund's exposure to long-term or short-term interest rates, foreign currency values, corporate borrowing rates, or other factors such as security prices, baskets of securities, or inflation rates. Swap agreements can take many different forms and are known by a variety of names. Some swaps have the potential for unlimited loss, regardless of the size of the Fund’s initial investments.
|
|
Swap agreements will tend to shift the Fund's investment exposure from one type of investment to another. For example, if the Fund enters into a swap agreement related to an index that is linked to a foreign currency, the swap agreement could increase or decrease the Fund's exposure to U.S. interest rates and decrease or increase its exposure to foreign currency and interest rates. Depending on how they are used, swap agreements may increase or decrease the overall volatility of the Fund's portfolio. The most significant factor in the performance of swap agreements is the change in the specific trading strategy interest rate, currency, individual equity values or other factors that determine the amounts of payments due to and from the Fund. If a swap agreement calls for payments by the Fund, the Fund must be prepared to make such payments when due. In addition, the value of a swap agreement is likely to decline if the counterparty's creditworthiness declines. Such a decrease in value might cause the Fund to incur losses.
|
|
Counterparty Credit Risk
. Swap agreements are traded between counterparties based on contractual relationships. As a result, the Fund is subject to the risk that a counterparty will not perform its obligations under the related contract. Although the Fund expects to enter into transactions only with counterparties believed by the Advisor to be creditworthy, there can be no assurance that a counterparty will not default and that the Fund will not sustain a loss on a transaction as a result. The Fund intends to limit its exposure to a single counterparty to be no more than 25% of its total assets.
|
|
In situations in which the Fund is required to post margin or other collateral with a counterparty, the counterparty may fail to segregate the collateral or may commingle the collateral with the counterparty's own assets. As a result, in the event of the counterparty's bankruptcy or insolvency, the Fund's collateral may be subject to the conflicting claims of the counterparty's creditors and the Fund may be exposed to the risk of being treated as a general unsecured creditor of the counterparty, rather than as the owner of the collateral.
|
|
The Fund is subject to the risk that issuers of the instruments in which it invests and trades may default on their obligations, and that certain events may occur that have an immediate and significant adverse effect on the value of those instruments. There can be no assurance that an issuer will not default, or that an event that has an immediate and significant adverse effect on the value of an instrument will not occur, and that the Fund will not sustain a loss on a transaction as a result.
|
|
Transactions entered into by the Fund may be executed on various U.S. and non-U.S. exchanges, and may be cleared and settled through various clearing houses, custodians, depositories and prime brokers throughout the world. Although the Fund will attempt to execute, clear and settle the transactions through entities believed to be sound, a failure by any such entity may lead to a loss to the Fund.
|
|
Illiquidity
. Swaps may not always be liquid. In volatile markets the Fund may not be able to close out a position without incurring a loss.
|
|
Over-the-Counter Trading
. Swaps agreements are traded over the counter. The risk of nonperformance by the obligor on such an instrument may be greater than the risk associated with an exchange-traded instrument. In addition, the Fund may not be able to dispose of, or enter into a closing transaction with respect to, such an instrument as easily as in the case of an exchange-traded instrument. Significant disparities may exist between "bid" and "asked" prices for instruments that are not traded on an exchange. Instruments not traded on exchanges are not subject to the same type of government regulation as exchange-traded instruments, and many of the protections afforded to participants in a regulated environment may not be available with respect to these instruments.
|
|
Hedging Transactions
. The Fund may employ hedging techniques using swap agreements. Hedging techniques involve risks different than those of underlying investments. In particular, the variable degree of correlation between price movements of swap agreements and price movements in the position being hedged means that losses on the hedge may be greater than gains in the value of the Fund's positions, or that there may be losses on both legs of a transaction. As a result, in volatile markets, the Fund may not be able to close out a transaction in certain of these instruments without incurring losses. The Advisor may use transactions to minimize the risk of total loss to the Fund by offsetting one investment with a contrasting investment. However, such use may limit any potential gain that might result from an increase in the value of the hedged position. Whether the Fund is able to hedge successfully will depend on the Advisor's ability to predict pertinent market movements.
|
·
|
Subsidiary risk
. By investing in the Subsidiary, the Fund will be indirectly exposed to the risks associated with the Subsidiary’s investments. The Subsidiary is not registered under the 1940 Act and, unless otherwise noted in this Prospectus, is not subject to all of the investor protections of the 1940 Act. Thus, the Fund, as an investor in the Subsidiary will not have all of the protections offered to investors in registered investment companies. The Fund, however, wholly owns and controls the Subsidiary. Further, the Advisor acts as the investment advisor for the Subsidiary making it unlikely that the Subsidiary would intentionally take action contrary to the interests of the Fund and its shareholders.
|
|
Changes in the laws of the United States, the U.S. states or the Cayman Islands, under which the Fund and the Subsidiary are organized and operated, as applicable, could prevent the Fund or the Subsidiary from operating as described in this Prospectus and could negatively affect the Fund and its shareholders. In addition, the Cayman Islands currently does not impose any income, corporate, capital gain or withholding taxes on the Subsidiary. If this were to change and the Subsidiary were required to pay Cayman Island taxes, the investment returns of the Fund would be adversely affected.
|
·
|
Tax risk
. To qualify for the tax treatment available to regulated investment companies under the Code, the Fund must derive at least 90% of its gross income for each taxable year from sources treated as “qualifying income.” Income derived from direct investments in commodities is not “qualifying income.” In addition, the IRS has issued a revenue ruling concluding that income and gains from certain commodity-linked derivatives do not constitute “qualifying income.” It is possible that the Fund will from time to time make investments in commodities and commodity-linked derivatives directly, rather than through the Subsidiary, and therefore it is possible that some of the Fund’s income will not constitute “qualifying income.” The IRS has issued private letter rulings concluding that certain income derived by a regulated investment company from a wholly owned subsidiary, such as the Subsidiary, that invests in commodities and commodity-linked derivatives constitutes “qualifying income.”
|
|
Each of these private letter rulings applies only to the taxpayer that requested it and may not be used or cited as precedent.
The IRS has suspended the issuance of such rulings and is reviewing its policy in this area. The Fund has not applied for or received such a ruling from the IRS, and has not determined whether to seek such a ruling if the IRS were to resume issuing such rulings. The Fund intends to take the position that income from its investments in the Subsidiary will constitute “qualifying income” even in the event that the Subsidiary does not distribute all of its income on an annual basis. In the absence of a ruling, however, there can be no certainty in this regard, and the Fund has not sought an opinion from counsel regarding this position. It is possible that, as a consequence of its current review of this area, the IRS will reverse its prior position and publish guidance under which it will take the position that these items would not constitute “qualifying income.” The tax treatment of the Fund’s investment in the Subsidiary could also be adversely affected by future legislation or Treasury regulations. If income derived by the Fund from its investments in the Subsidiary does not constitute “qualifying income,” the Fund may not qualify as a regulated investment company under the Code; in that case, the Fund would be subject to U.S. federal income tax at regular corporate rates on its taxable income, including its net capital gain, even if such income were distributed to its shareholders, and all distributions out of earnings and profits would be taxed to shareholders as dividend income. If future legislation, Treasury regulations or IRS guidance prevents the Fund from treating its income from its investments in the Subsidiary as “qualifying income,” the Fund and the Advisor will consider what action to take, including potentially liquidating the Fund.
|
·
|
For U.S. federal income tax purposes, the Subsidiary will be treated as a corporation. If the Subsidiary were treated as engaged in the conduct of a trade or business in the United States, the Subsidiary will be subject to U.S. federal income tax, at the rates applicable to U.S. corporations, on its net income, if any, that is treated as “effectively connected” with the conduct of such trade or business (“effectively connected income”). In addition, the Subsidiary will subject to a 30% U.S. branch profits tax in respect of its “dividend equivalent amount,” as defined in Section 884 of the Code, attributable to any such effectively connected income. The Fund expects that, in general, the activities of the Subsidiary will be conducted in a manner such that the Subsidiary will not be treated as engaged in the conduct of a U.S. trade or business. In this regard, Section 864(b) of the Code provides that trading in commodities engaged in by a taxpayer for its own account does not constitute the conduct of a trade or business in the United States, provided that the commodities are of a kind customarily dealt in on an organized commodity exchange and the transaction is of a kind customarily consummated at such place. Similarly, proposed regulations provide that trading in commodity swaps generally does not constitute the conduct of a U.S. trade or business. There can be no assurance, however, that the Subsidiary will not recognize any effectively connected income. The imposition of U.S. federal income tax on the Subsidiary’s effectively connected income could significantly reduce the Fund’s returns.
|
·
|
Leveraging risk
. The use of leverage may increase Fund volatility and compound other risks. This is because leverage generally magnifies the effect of any increase or decrease in the value of the Fund’s underlying assets or creates investment risk with respect to a larger pool of assets than the Fund would otherwise have, potentially resulting in the loss of all assets. Engaging in such transactions may cause the Fund to liquidate positions when it may not be advantageous to do so to satisfy its obligations or meet asset segregation requirements.
|
|
The Fund will utilize indirect leverage since the index investments will be funded on a notional basis. The Advisor initially expects that for each dollar invested in the Fund the Fund will obtain approximately three dollars in notional exposure to the underlying indexes. This use of leverage will increase the volatility of the Fund compared to the volatility of the notional portfolio of indexes. This means that the Fund could suffer disproportionate losses compared to losses resulting from investment in the same indexes at notional value.
|
·
|
Credit risk
. Failure of an issuer or guarantor of a fixed income security, or the counterparty to a swap, to make timely interest or principal payments or otherwise honor its obligations, could cause the Fund to lose money. Similarly, a decline or perception of a decline in the credit quality of a bond can cause the bond's price to fall, potentially lowering the Fund's share price.
|
·
|
Commodity sector risk
:
Exposure to the commodities markets may subject the Fund to greater volatility than investments in traditional securities. The values of commodities and commodity-linked investments are affected by events that might have less impact on the values of stocks and bonds. Prices of commodities and related contracts may fluctuate significantly over short periods for a variety of factors, including: changes in supply and demand relationships, weather, fiscal, monetary and exchange control programs, acts of terrorism, tariffs and international economic, political, military and regulatory developments. The commodity markets are subject to temporary distortions or other disruptions due to a variety of factors, including the lack of liquidity in the markets and government regulation and intervention. U.S. futures exchanges and some foreign exchanges have regulations that limit the amount of fluctuation in futures contract prices, which may occur during a single business day. Once a limit price has been reached in a particular contract, no trades may be made at a different price. Limit prices have the effect of precluding trading in a particular contract or forcing the liquidation of contracts at disadvantageous times or prices. These circumstances could adversely affect the value of the Fund's commodity-linked investments.
|
·
|
Currency risk
. The Fund may invest indirectly in currency indices or baskets. Investments related to foreign currencies or financial instruments related to foreign currencies are subject to the risk that those currencies will decline in value relative to the U.S. dollar. Similarly, investments that speculate on the appreciation of the U.S. dollar are subject to the risk that the U.S. dollar may decline in value relative to foreign currencies. In the case of hedged positions, the Fund is subject to the risk that the U.S. dollar will decline relative to the currency being hedged. Currency rates in foreign countries may fluctuate significantly over short periods of time. A decline in the value of foreign currencies relative to the U.S. dollar will reduce the value of securities held by the Fund and denominated in such currencies. Foreign currencies also are subject to risks caused by inflation, interest rates, budget deficits and low savings rates, political factors and government controls.
|
·
|
Market sector risk
. The Fund's investment strategy may result in significantly over or under exposure to certain industries or market sectors, which may cause the Fund's performance to be more or less sensitive to developments affecting those industries or sectors.
|
·
|
Liquidity risk
. When there is little or no active trading market for specific types of investments, the Fund may have difficulty selling the investments at or near their perceived value. In such a market, the value of such investment and the Fund's share price may fall dramatically.
|
·
|
CFTC regulation risk.
The Fund is subject to applicable CFTC requirements, including registration, disclosure and operational requirements under the Commodity Exchange Act. The Advisor is registered as a commodity trading advisory and a commodity pool operator with respect to the Fund. In addition, the Advisor may be subject to substantially the same requirements with regard to the subsidiary. Compliance with CFTC regulations may increase the expenses of the Fund. Certain of the CFTC requirements that will apply to the Fund have not yet been adopted, and it is unclear what the effect of those requirements would be on the Fund when they are adopted.
|
·
|
Market risk
. The market value of an investment may decline due to general market conditions that are not specifically related to a particular company, such as real or perceived adverse economic conditions, changes in the general outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. An investment’s market value also may decline because of factors that affect a particular industry or industries, such as labor shortages or increased production costs and competitive conditions within an industry.
|
·
|
Interest rate risk
. Prices of bonds tend to move inversely with changes in interest rates. Typically, a rise in rates will adversely affect bond prices and, accordingly, the Fund's share price. The longer the effective maturity and duration of the Fund's portfolio, the more the Fund's share price is likely to react to interest rates.
|
·
|
Call risk
. Some bonds give the issuer the option to call, or redeem, the bonds before their maturity date. If an issuer "calls" its bond during a time of declining interest rates, the Fund might have to reinvest the proceeds in an investment offering a lower yield, and therefore might not benefit from any increase in value as a result of declining interest rates. During periods of market illiquidity or rising interest rates, prices of "callable" issues are subject to increased price fluctuation.
|
·
|
Government securities risk
. Not all obligations of the U.S. government, its agencies and instrumentalities are backed by the full faith and credit of the U.S. Treasury. Some obligations are backed only by the credit of the issuing agency or instrumentality, and in some cases there may be some risk of default by the issuer. Any guarantee by the U.S. government or its agencies or instrumentalities of a security held by the Fund does not apply to the market value of such security or to shares of the Fund itself. In addition, because many types of U.S. government securities trade actively outside the United States, their prices may rise and fall as changes in global economic conditions affect the demand for these securities.
|
·
|
Non-diversification risk
. The Fund is non-diversified, which means that a relatively high percentage of the Fund's assets may be invested in a limited number of positions. Therefore, the Fund's performance may be more vulnerable to changes in the market value of a single position and more susceptible to risks associated with a single economic, political or regulatory occurrence than a diversified fund.
|
|
·
|
Class A shares generally incur sales loads at the time of purchase and are subject to a distribution/service fee.
|
|
·
|
Class I shares do not incur any sales loads or distribution or service fees.
|
Class A Shares—Sales Charge Schedule
|
|||
Your Investment
|
Front-End Sales Charge As a % Of Offering Price*
|
Front-End Sales Charge As a % Of Net Investment
|
Dealer Reallowance
As a % Of
Offering Price
|
Up to $50,000
|
5.50%
|
5.82%
|
5.00%
|
$50,000-$99,999
|
4.75%
|
4.99%
|
4.25%
|
$100,000-$249,999
|
3.75%
|
3.90%
|
3.25%
|
$250,000-$499,999
|
2.75%
|
2.83%
|
2.25%
|
$500,000-$999,999
|
2.00%
|
2.04%
|
1.75%
|
$1 million or more
|
See below**
|
See below**
|
See below**
|
|
*
|
The offering price includes the sales charge.
|
|
**
|
See the "Large Order Net Asset Value Purchase Privilege" section on page 20.
|
|
·
|
you assure the Fund in writing that you intend to invest at least $50,000 in Class A shares of the Fund over the next 13 months ("Letter of Intent") (see below); or
|
|
·
|
the amount of Class A shares you already own in the Fund plus the amount you're investing now in Class A shares is at least $50,000 ("Cumulative Discount").
|
|
·
|
reinvesting dividends or distributions;
|
|
·
|
participating in an investment advisory or agency commission program under which you pay a fee to an investment advisor or other firm for portfolio management or brokerage services;
|
|
·
|
for financial intermediaries who have entered into an agreement with the Fund’s Distributor to offer shares to self-directed investment brokerage accounts that may or may not charge a transaction fee to its customers;
|
|
·
|
a current trustee of the Trust; or
|
|
·
|
an employee (including the employee's spouse, domestic partner, children, grandchildren, parents, grandparents, siblings and any dependent of the employee, as defined in Section 152 of the Code) of the Advisor or of a broker-dealer authorized to sell shares of the Fund.
|
Minimum Investments
|
To Open
Your Account
|
To Add to
Your Account
|
Class A Shares
|
||
Direct Regular Accounts
|
$1,000
|
$50
|
Traditional and Roth IRA Accounts
|
$250
|
$50
|
Automatic Investment Plan
|
$250
|
$50
|
Gift Account For Minors
|
$250
|
$50
|
Class I Shares
|
||
All Accounts
|
$1,000,000
|
$100,000
|
Through a broker-
dealer or other
financial
intermediary
|
The Fund is offered through certain approved financial intermediaries (and their agents). The Fund is also offered directly. An order placed with a financial intermediary or its authorized agent is treated as if such order were placed directly with the Fund, and will be executed at the next NAV (plus sales charge, if applicable) calculated by the Fund. Your financial intermediary will hold your shares in a pooled account in its (or its agent's) name. The Fund or the Advisor may pay your financial intermediary (or its agent) to maintain your individual ownership information, maintain required records, and provide other shareholder services. The financial intermediary which offers shares may require payment of additional fees from its individual clients. If you invest through your financial intermediary, the policies and fees may be different than those described in this Prospectus. For example, the financial intermediary may charge transaction fees or set different minimum investments. Your financial intermediary is responsible for processing your order correctly and promptly, keeping you advised of the status of your account, confirming your transactions and ensuring that you receive copies of the Fund's Prospectus. Please contact your financial intermediary to determine whether it is an approved financial intermediary of the Fund or for additional information.
|
||
By mail
|
The Fund will not accept payment in cash, including cashier's checks. Also, to prevent check fraud, the Fund will not accept third-party checks, Treasury checks, credit card checks, traveler's checks, money orders or starter checks for the purchase of shares. All checks must be made in U.S. dollars and drawn on U.S. financial institutions.
To buy shares directly from the Fund by mail, complete an account application and send it together with your check for the amount you wish to invest to the Fund at the address indicated below. To make additional investments once you have opened your account, write your account number on the check and send it to the Fund together with the most recent confirmation statement received from the Transfer Agent. If your check is returned for insufficient funds, your purchase will be canceled and a $25 fee will be assessed against your account by the Transfer Agent.
|
||
Regular Mail
Ramius Funds
P.O. Box 2175
Milwaukee, Wisconsin 53201
|
Overnight Delivery
Ramius Funds
803 West Michigan Street
Milwaukee, Wisconsin 53233-2301
|
||
|
|
||
The Fund does not consider the U.S. Postal Service or other independent delivery services to be its agents.
|
By telephone
|
To make additional investments by telephone, you must authorize telephone purchases on your account application. If you have given authorization for telephone transactions and your account has been open for at least 15 days, call the Transfer Agent toll-free at 1-877-6RAMIUS (1-877-672-6487) and you will be allowed to move money in amounts of at least $100 from your bank account to the Fund account upon request. Only bank accounts held at U.S. institutions that are ACH members may be used for telephone transactions. If your order is placed before 4:00 p.m. (Eastern Time) shares will be purchased in your account at the NAV (plus sales charge, if applicable) calculated on that day. For security reasons, requests by telephone will be recorded.
|
||
By wire
|
To open an account by wire transfer, a completed account application must be received by the Fund before your wire can be accepted. You may mail or send by overnight delivery your account application to the Transfer Agent. Upon receipt of your completed account application, an account will be established for you. The account number assigned to you will be required as part of the wiring instruction that should be provided to your bank to send the wire. Your bank must include the name of the Fund, the account number, and your name so that monies can be correctly applied. Your bank should transmit funds by wire to:
UMB Bank, n.a.
ABA Number 101000695
For credit to Ramius Funds
A/C # 98 719 16448
For further credit to:
"Ramius Strategic Volatility Fund"
Your account number
Name(s) of investor(s)
Social security or taxpayer ID numbers
Before sending your wire, please contact the Transfer Agent at 1-877-6RAMIUS (1-877-672-6487) to notify it of your intention to wire funds. This will ensure prompt and accurate credit upon receipt of your wire. Your bank may charge a fee for its wiring service.
Wired funds must be received prior to 4:00 p.m. (Eastern Time) to be eligible for same-day pricing.
The Fund and UMB Bank, n.a. are not responsible for the consequences of delays resulting from the banking or Federal Reserve wire system, or from incomplete wiring instructions.
|
Through a broker-dealer
or
other financial intermediary
|
If you purchased your shares through an approved financial intermediary, your redemption order must be placed through the same financial intermediary. The financial intermediary must receive and transmit your redemption order to the Transfer Agent prior to 4:00 p.m. (Eastern Time) on a business day for the redemption to be processed at the current day's NAV. Orders received after 4:00 p.m. (Eastern Time) or on a day when the Fund does not value its shares will be transacted at the next business day's NAV. Please keep in mind that your approved financial intermediary may charge additional fees for its services.
|
By mail
|
You may redeem shares purchased directly from the Fund by mail. Send your written redemption request to Ramius Funds at the address indicated below. Your request must be in good order and contain the Fund name, the name(s) on the account, your account number and the dollar amount or the number of shares to be redeemed. The redemption request must be signed by all shareholders listed on the account. Additional documents are required for certain types of shareholders, such as corporations, partnerships, executors, trustees, administrators, or guardians (
i.e.
, corporate resolutions dated within 60 days, or trust documents indicating proper authorization).
|
||
Regular Mail
Ramius Fund
P.O. Box 2175
Milwaukee, Wisconsin 53201
|
Overnight Delivery
Ramius Funds
803 West Michigan Street
Milwaukee, Wisconsin 53233-2301
|
||
A Medallion signature guarantee must be included if any of the following situations apply:
·
You wish to redeem more than $50,000 worth of shares;
·
When redemption proceeds are sent to any person, address or bank account not on record;
·
If a change of address was received by the Transfer Agent within the last 15 days;
·
If ownership is changed on your account; or
·
When establishing or modifying certain services on your account.
|
|||
By telephone
|
To redeem shares by telephone, call the Fund at 1-877-6RAMIUS (1-877-672-6487) and specify the amount of money you wish to redeem. You may have a check sent to the address of record, or, if previously established on your account, you may have proceeds sent by wire or electronic funds transfer through the ACH network directly to your bank account. Wire transfers are subject to a $20 fee paid by the shareholder and your bank may charge a fee to receive wired funds. Checks sent via overnight delivery are also subject to a $15 charge. You do not incur any charge when proceeds are sent via the ACH network; however, credit may not be available for two to three business days. If you are authorized to perform telephone transactions (either through your account application form or by subsequent arrangement in writing with the Fund), you may redeem shares worth up to $50,000 by instructing the Fund by phone at 1-877-6RAMIUS (1-877-672-6487). Unless noted on the initial account application, a Medallion signature guarantee is required of all shareholders in order to qualify for or to change telephone redemption privileges.
|
Note:
The Fund and all of its service providers will not be liable for any loss or expense in acting upon instructions that are reasonably believed to be genuine. To confirm that all telephone instructions are genuine, the caller must verify the following:
·
The Fund account number;
·
The name in which his or her account is registered;
·
The social security or tax identification number under which the account is registered; and
·
The address of the account holder, as stated in the account application form.
|
Redemption Fee
|
You will be charged a redemption fee of 2.00% of the value of the Fund's shares being redeemed if you redeem your shares of the Fund within 60 days of purchase. The "first in, first out" (FIFO) method is used to determine the holding period; this means that if you bought shares on different days, the shares purchased first will be redeemed first for the purpose of determining whether the redemption fee applies. The redemption fee is deducted from the sale proceeds and is retained by the Fund for the benefit of its remaining shareholders. The fee will not apply to redemptions (i) due to shareholder's death or disability, (ii) from certain omnibus accounts with systematic or contractual limitations, (iii) of shares acquired through reinvestments of dividends or capital gains distributions, (iv) through certain employer-sponsored retirement plans or employee benefit plans or, with respect to any plan, to comply with minimum distribution requirements, (v) effected pursuant to an automatic non-discretionary rebalancing program, (vi) effected pursuant to the SWP, (vii) effected pursuant to asset allocation programs, wrap fee programs, and other investment programs offered by financial institutions where investment decisions are made on a discretionary basis by investment professionals or (viii) by the Fund with respect to accounts falling below the minimum initial investment amount. The Fund reserves the right to waive this fee in other circumstances if the Advisor determines that doing so is in the best interests of the Fund.
Although the Fund aims to apply the redemption fee uniformly, the redemption fee may not apply in certain circumstances where it is not currently practicable for the Fund to impose the fee, such as redemptions of shares held in certain omnibus accounts or retirement plans that cannot implement the redemption fee.
|
|
Monitoring Trading Practices
|
The Fund may monitor trades in an effort to detect short-term trading activities. If, as a result of this monitoring, the Fund believes that a shareholder has engaged in excessive short-term trading, it may, in its discretion, ask the shareholder to stop such activities or refuse to process purchases in the shareholder's accounts. In making such judgments, the Fund seeks to act in a manner that it believes is consistent with the best interest of shareholders. Due to the complexity and subjectivity involved in identifying abusive trading activity, there can be no assurance that the Fund's efforts will identify all trades or trading practices that may be considered abusive.
|
|
·
|
vary or waive any minimum investment requirement;
|
|
·
|
refuse, change, discontinue, or temporarily suspend account services, including purchase or telephone redemption privileges, for any reason;
|
|
·
|
reject any purchase request for any reason (generally, the Fund does this if the purchase is disruptive to the efficient management of the Fund due to the timing of the investment or an investor's history of excessive trading);
|
|
·
|
delay paying redemption proceeds for up to seven calendar days after receiving a request, if an earlier payment could adversely affect the Fund;
|
|
·
|
reject any purchase or redemption request that does not contain all required documentation; and
|
|
·
|
subject to applicable law, the Fund may, with prior notice, adopt other policies from time to time requiring mandatory redemption of shares in certain circumstances.
|
Class A
|
|||||
Per share operating performance.
|
For the Period
|
||||
For a capital share outstanding throughout the period.
|
October 1, 2012*
|
||||
to December 31, 2012
|
|||||
Net asset value, beginning of period
|
$ | 10.00 | |||
Income from Investment Operations:
|
|||||
Net investment loss
1,2
|
(0.05 | ) | |||
Net realized and unrealized loss on investments
|
(0.97 | ) | |||
Total from investment operations
|
(1.02 | ) | |||
Less Distributions:
|
|||||
From net investment income
|
(0.02 | ) | |||
Total distributions
|
(0.02 | ) | |||
Net asset value, end of period
|
$ | 8.96 | |||
Total return
3
|
(10.18 | )% | 4 | ||
Ratios and Supplemental Data:
|
|||||
Net assets, end of period (in thousands)
|
$ | 1 | |||
Ratios including the expenses and income of the Subsidiary:
|
|||||
Ratio of gross expenses to average net assets
|
2.17 | % | 5,6 | ||
Ratio of net expenses to average net assets
|
2.08 | % | 5,6 | ||
Ratio of net investment loss to average net assets
|
(1.95 | )% | 5,6 | ||
Ratios excluding the expenses and income of the Subsidiary:
|
|||||
Ratio of gross expenses to average net assets
|
2.09 | % | 5,6 | ||
Ratio of net expenses to average net assets
|
2.00 | % | 5,6 | ||
Ratio of net investment loss to average net assets
|
(1.90 | )% | 5,6 | ||
Portfolio turnover rate
|
- | % |
*
|
Commencement of operations.
|
1
|
Based on average shares outstanding for the period.
|
2
|
Recognition of net investment income by the fund is affected by the timing of the declaration of dividends of the underlying investment companies in which the fund invests. The per share amount does not include net investment income of the investment companies in which the fund invests.
|
3
|
Does not include payment of maximum sales charge of 5.50% or contingent deferred sales charge ("CDSC"). On sales of $50,000 or more, the sales charge is reduced. Contingent deferred sales charge of 1% is imposed on certain redemptions within 18 months of the date of purchase. If the sales charges were included, total return would be lower. These returns include Rule 12b-1 fees of up to 0.25% and do not reflect the deduction of taxes that a shareholder would pay on the redemption of Fund shares.
|
4
|
Not annualized.
|
5
|
Annualized.
|
6
|
Does not include expenses of the investment companies in which the fund invests.
|
Class I
|
|||||
Per share operating performance.
|
|||||
For a capital share outstanding throughout the period.
|
|||||
For the Period
|
|||||
October 1, 2012*
|
|||||
to December 31, 2012
|
|||||
Net asset value, beginning of period
|
$ | 10.00 | |||
Income from Investment Operations:
|
|||||
Net investment loss
1,2
|
(0.04 | ) | |||
Net realized and unrealized loss on investments
|
(0.98 | ) | |||
Total from investment operations
|
(1.02 | ) | |||
Less Distributions:
|
|||||
From net investment income
|
(0.02 | ) | |||
Total distributions
|
(0.02 | ) | |||
Redemption fee proceeds
|
- | 3 | |||
Net asset value, end of period
|
$ | 8.96 | |||
Total return
|
(10.18 | )% | 4 | ||
Ratios and Supplemental Data:
|
|||||
Net assets, end of period (in thousands)
|
$ | 77,331 | |||
Ratios including the expenses and income of the Subsidiary:
|
|||||
Ratio of gross expenses to average net assets
|
1.92 | % | 5,6 | ||
Ratio of net expenses to average net assets
|
1.83 | % | 5,6 | ||
Ratio of net investment loss to average net assets
|
(1.70 | )% | 5,6 | ||
Ratios excluding the expenses and income of the Subsidiary:
|
|||||
Ratio of gross expenses to average net assets
|
1.84 | % | 5,6 | ||
Ratio of net expenses to average net assets
|
1.75 | % | 5,6 | ||
Ratio of net investment loss to average net assets
|
(1.65 | )% | 5,6 | ||
Portfolio turnover rate
|
- | % |
*
|
Commencement of operations.
|
1
|
Based on average shares outstanding for the period.
|
2
|
Recognition of net investment income by the fund is affected by the timing of the declaration of dividends of the underlying investment companies in which the fund invests. The per share amount does not include net investment income of the investment companies in which the fund invests.
|
3
|
Amount represents less than $0.01 per share.
|
4
|
Not annualized.
|
5
|
Annualized.
|
6
|
Does not include expenses of the investment companies in which the fund invests.
|
|
·
|
Free of charge from the SEC's EDGAR database on the SEC's Internet website at http://www.sec.gov;
|
|
·
|
For a fee, by writing to the Public Reference Room of the SEC, Washington, DC 20549-1520; or
|
|
·
|
For a fee, by electronic request at the following e-mail address: publicinfo@sec.gov.
|
THE TRUST
|
2
|
INVESTMENT STRATEGIES AND POLICIES
|
2
|
MANAGEMENT OF THE FUND
|
25
|
PORTFOLIO TRANSACTIONS AND BROKERAGE
|
39
|
PORTFOLIO TURNOVER
|
41
|
PROXY VOTING POLICY
|
41
|
ANTI-MONEY LAUNDERING PROGRAM
|
42
|
PORTFOLIO HOLDINGS INFORMATION
|
42
|
DETERMINATION OF NET ASSET VALUE
|
44
|
PURCHASE AND REDEMPTION OF FUND SHARES
|
46
|
FEDERAL INCOME TAX MATTERS
|
47
|
DIVIDENDS AND DISTRIBUTIONS
|
55
|
GENERAL INFORMATION
|
55
|
FINANCIAL STATEMENTS
|
58
|
APPENDIX "A"
|
59
|
APPENDIX "B"
|
60
|
|
·
|
The Fund may own an unlimited amount of the securities of any registered open-end fund or registered unit investment trust that is affiliated with the Fund, so long as any such Underlying Fund has a policy that prohibits it from acquiring any securities of registered open-end funds or registered unit investment trusts in reliance on certain sections of the 1940 Act.
|
|
·
|
The Fund and its "affiliated persons" may own no more than 3% of the outstanding stock of any fund, subject to the following restrictions:
|
|
•
|
the Underlying Fund is not obligated to redeem more than 1% of its total outstanding securities during any period less than 30 days; and
|
|
•
|
the purchase or acquisition of the Underlying Fund is made pursuant to an arrangement with the Underlying Fund or its principal underwriter whereby the Fund is obligated either to (i) seek instructions from its shareholders with regard to the voting of all proxies with respect to the Underlying Fund and to vote in accordance with such instructions, or (ii) to vote the shares of the Underlying Fund held by the Fund in the same proportion as the vote of all other shareholders of the Underlying Fund.
|
|
·
|
Any Underlying Fund must have a policy that prohibits it from acquiring any securities of registered open-end funds or registered unit investment trusts in reliance on certain sections of the 1940 Act.
|
1.
|
Issue senior securities, borrow money or pledge its assets, except that (i) the Fund may borrow from banks in amounts not exceeding one-third of its net assets (including the amount borrowed); and (ii) this restriction shall not prohibit the Fund from engaging in options transactions or short sales and in investing in financial futures and reverse repurchase agreements;
|
2.
|
Act as underwriter, except to the extent the Fund may be deemed to be an underwriter in connection with the sale of securities in its investment portfolio;
|
3.
|
Invest 25% or more of its total assets, calculated at the time of purchase and taken at market value, in any one industry (other than securities issued by the U.S. Government , its agencies or instrumentalities);
|
4.
|
Purchase or sell real estate or interests in real estate or real estate limited partnerships (although the Fund may purchase and sell securities which are secured by real estate and securities of companies which invest or deal in real estate such as real estate investment trusts (REITs);
|
5.
|
Make loans of money, except (a) for purchases of debt securities consistent with the investment policies of the Fund, (b) by engaging in repurchase agreements or, (c) through the loan of portfolio securities in an amount up to 33 1/3% of the Fund's net assets; or
|
6.
|
Purchase or sell physical commodities, unless acquired as a result of ownership of securities or other instruments; provided the Fund may purchase or sell commodity contracts or options on such contracts in compliance with applicable commodities laws and in a manner consistent with its intent to be treated as a regulated investment company under the Code. This restriction shall not prevent the Fund from purchasing or selling commodity-linked derivative instruments, including but not limited to swap agreements and commodity-linked structured notes, options and forward and futures contracts with respect to indices or individual commodities, or from investing in securities or other instruments backed by physical commodities or by indices.
|
Name, Address, Year of Birth and Position(s) held with Trust
|
Term of Office
c
and Length of Time Served
|
Principal Occupation During the Past Five Years and Other Affiliations
|
Number of Portfolios in the Fund Complex
Overseen by Trustee
|
Other Directorships Held by the Trustee During the Past Five Years
|
“Independent” Trustees:
|
||||
Charles H. Miller
a
(born 1947)
Trustee
|
Since November 2007
|
Retired as of 2013. Executive Vice President, Client Management and Development, Access Data Corporation, a Broadridge company, a provider of technology and services to asset management firms (1997-2012)
|
63
|
None
|
Ashley Toomey Rabun
a
(born 1952)
Trustee and Chairperson of the Board
|
Since November 2007
|
President and Founder, InvestorReach, Inc. a financial services consulting firm (1996-present)
|
63
|
None
|
William H. Young
a
(born 1950)
Trustee
|
Since November 2007
|
Independent financial services consultant (1996-present); Interim CEO, Unified Fund Services (now Huntington), a mutual fund service provider (2003-2006); Senior Vice President, Oppenheimer Management Company (1983-1996). Board Member Emeritus-NICSA
|
63
|
None
|
Interested Trustees:
|
||||
John P. Zader
a †
(born 1961)
Trustee and President
|
Since November 2007 as Trustee and December 2007 as President
|
CEO, UMB Fund Services, Inc., a mutual and hedge fund service provider, and the transfer agent, fund accountant, and co-administrator for the Fund, and affiliate of the Fund’s custodian (2006-present); Consultant to Jefferson Wells International, a provider of professional services for multiple industries, including financial services organizations (2006); Senior Vice President and Chief Financial Officer, U.S. Bancorp Fund Services, LLC, a mutual and hedge fund service provider (1988-2006)
|
63
|
None
|
Name, Address, Year of Birth and Position(s) held with Trust
|
Term of Office
c
and Length of Time Served
|
Principal Occupation During the Past Five Years and Other Affiliations
|
Number of Portfolios in the Fund Complex
Overseen by Trustee
|
Other Directorships Held by the Trustee During the Past Five Years
|
Eric M. Banhazl
b†
(born 1957)
Trustee and Vice President
|
Since January 2008 as Trustee and December 2007 as Vice President
|
President, Mutual Fund Administration Corp. (2006 – present).
|
63
|
None
|
Officers of the Trust:
|
||||
Rita Dam
b
(born 1966)
Treasurer and Assistant Secretary
|
Since December 2007
|
Vice President, Mutual Fund Administration Corp. (2006 – present).
|
N/A
|
N/A
|
Joy Ausili
b
(born 1966)
Secretary and Assistant Treasurer
|
Since December 2007
|
Vice President, Mutual Fund Administration Corp. (2006 – present).
|
N/A
|
N/A
|
Terrance P. Gallagher, CPA, JD
a
(born 1958)
Vice President
|
Since December 2007
|
Executive Vice President, UMB Fund Services, Inc. (2007 – present); Director of Compliance, Unified Fund Services Inc. (2004 – 2007); Partner, The Academy of Financial Services Studies and Precision Marketing Partners (1998 - 2004); Senior Vice President, Chief Financial Officer and Treasurer of AAL Capital Management and The AAL Mutual Funds (1987 - 1998)
|
N/A
|
N/A
|
Todd Cipperman
b
(born 1966)
Chief Compliance Officer (“CCO”)
|
Since December 2009
|
Founder and Principal, Cipperman & Company/Cipperman Compliance Services (2004 – present)
|
N/A
|
N/A
|
a
|
Address for certain Trustees and certain officers: 803 West Michigan Street, Milwaukee, WI 53233-2301.
|
b
|
Address for Mr. Banhazl, Ms. Ausili and Ms. Dam: 2220 E. Route 66, Suite 226, Glendora, CA 91740. Address for Mr. Cipperman: 500 Swedesford Road, Suite 104, Wayne, PA 19087.
|
c
|
Trustees and officers serve until their successors have been duly elected.
|
†
|
Mr. Zader is an "interested person" of the Trust by virtue of his position with UMB Fund Services, Inc., the transfer agent, fund accountant and co-administrator of the Fund, and the Fund's custodian, UMB Bank, n.a. Mr. Banhazl is deemed to be an "interested person" of the Trust by virtue of his position with Mutual Fund Administration Corp., the Fund's co-administrator.
|
Name of Person/Position
|
Aggregate Compensation
From the Fund
1
|
Pension or Retirement Benefits Accrued as Part of Fund’s Expenses
|
Estimated Annual Benefits Upon Retirement
|
Total Compensation from Trust
(48 funds) Paid
to Trustees
1
|
Independent Trustees
|
||||
Charles H. Miller, Trustee
|
$2,000
|
None
|
None
|
$68,000
|
Ashley Toomey Rabun, Trustee and Chairperson
|
$2,000
|
None
|
None
|
$72,000
|
William H. Young, Trustee and Audit Committee Chair
|
$2,000
|
None
|
None
|
$68,000
|
1
|
Estimated annual compensation
.
|
|
·
|
Ms. Rabun has substantial senior executive experience in mutual fund marketing and distribution and serving in senior executive and board positions with mutual funds, including multiple series trusts similar to the Trust.
|
|
·
|
Mr. Miller has significant senior executive experience with respect to marketing and distribution of mutual funds, including multiple series trusts similar to the Trust.
|
|
·
|
Mr. Young has broad senior executive experience with respect to the operations and management of mutual funds and administrative service providers, including multiple series trusts similar to the Trust.
|
|
·
|
Mr. Banhazl has significant experience serving in senior executive and board positions for mutual funds and with respect to the organization and operation of mutual funds and multiple series trusts similar to the Trust.
|
|
·
|
Mr. Zader has substantial experience serving in senior executive positions at mutual fund administrative service providers.
|
|
·
|
The function of the Audit Committee, with respect to each series of the Trust, is to review the scope and results of the Trust’s annual audit and any matters bearing on the audit or the Fund’s financial statements and to assist the Board’s oversight of the integrity of the Fund’s pricing and financial reporting. The Audit Committee is comprised of all of the Independent Trustees and is chaired by Mr. Young. It does not include any Interested Trustees. The Audit Committee is expected to meet at least twice
a year with respect to each series of the Trust. During the period from October 1, 2012 (commencement date) through December 31, 2012, the Audit Committee did not meet with respect to the Fund.
|
|
·
|
The Derivatives Committee reviews the types of investments in derivatives made by various series of the Trust. The Derivatives Committee conducts meetings periodically in order to inform the Board of Trustees about various series’ derivatives positions, related valuation issues and such other matters related to derivatives as the Committee shall determine. The Derivatives Committee is comprised of Messrs. Young and Miller and is chaired by Mr. Young. The Derivatives Committee meets as needed and met once during the period from October 1, 2012 (commencement date) through December 31, 2012.
|
|
·
|
The Nominating Committee is responsible to review matters pertaining to composition, committees, and operations of the Board and meets from time to time and meets at least annually. The Nominating Committee will consider nominees properly recommended by the Trust’s shareholders. Shareholders who wish to recommend a nominee should send nominations that include, among other things, biographical data and the qualifications of the proposed nominee to the Trust’s Secretary. The Independent Trustees comprise the Nominating Committee, and the Committee is chaired by Mr. Miller. The Nominating Committee meets as needed. During the October 1, 2012 (commencement date) through December 31, 2012, the Nominating Committee did not meet with respect to the Fund.
|
|
·
|
The function of the Valuation Committee is to value securities held by any series of the Trust for which current and reliable market quotations are not readily available. Such securities are valued at their respective fair values as determined in good faith by the Valuation Committee and the actions of the Valuation Committee are subsequently reviewed by the Board. The Valuation Committee is comprised of all the Trustees and is chaired by Mr. Miller, but action may be taken by any one of the Trustees
.
The Valuation Committee meets as needed with respect to each any series of the Trust. During the October 1, 2012 (commencement date) through December 31, 2012, the Valuation Committee did not meet with respect to the Fund.
|
Dollar Range of Equity
Securities in the Fund
(None, $1-$10,000, $10,001-$50,000, $50,001-$100,000, Over $100,000)
|
Aggregate Dollar Range of Equity Securities in all Registered Investment Companies Overseen by Trustee in Family of Investment Companies
|
|
Charles H. Miller, Independent Trustee
|
None
|
$1-$10,000
|
Ashley Toomey Rabun, Independent Trustee
|
None
|
None
|
William H. Young, Independent Trustee
|
None
|
$1-$10,000
|
John P. Zader, Interested Trustee
|
None
|
None
|
Eric M. Banhazl, Interested Trustee
|
None
|
$10,001-$50,000
|
Class A
|
% Ownership as of
April 2, 2013
|
Ramius Alternative Solutions LLC
New York, NY 10022
|
100%
|
Class I
|
|
Genworth Financial Trust Co.
Phoenix, AZ 85012
|
93%
|
Class A
|
% Ownership as of
April 2, 2013
|
Ramius Alternative Solutions LLC
New York, NY 10022
|
100%
|
Class I
|
|
Genworth Financial Trust Co.
Phoenix, AZ 85012
|
93%
|
Advisory Fees Accrued
|
Advisory Fees Waived
|
Advisory Fee Retained
|
|
For the period October 1, 2012 (commencement of operations)
through December 31, 2012
|
$188,982
|
$13,315
|
$175,667
|
With Advisory Fee based on performance
|
||||
Type of Accounts
|
Number of
Accounts
|
Total
Assets
|
Number of
Accounts
|
Total
Assets
|
Registered Investment Companies
|
3 |
$174 million
|
- |
$ -
|
Other Pooled Investments
|
24 |
$1.9 billion
|
12 |
$1.5 billion
|
Other Accounts
|
9 |
$426 million
|
2 |
$162 million
|
With Advisory Fee based on performance
|
||||
Type of Accounts
|
Number of
Accounts
|
Total
Assets
|
Number of
Accounts
|
Total
Assets
|
Registered Investment Companies
|
3 |
$174 million
|
- |
$ -
|
Other Pooled Investments
|
24 |
$1.9 billion
|
12 |
$1.5 billion
|
Other Accounts
|
9 |
$426 million
|
2 |
$162 million
|
Name of Portfolio Manager
|
Dollar Range of Securities in the Fund
(None, $1-$10,000, $10,001-$50,000, $50,001-
$100,000,
$100,001 - $500,000, $500,001 -
$1,000,000, Over $1,000,000)
|
Stuart Davies
|
None
|
Vikas Kapoor
|
None
|
For the period October 1, 2012 (commencement date) through December 31, 2012
|
$17,993
|
Class
|
Amount of
Commissions
|
Amount
Received
|
Class A
|
$0
|
$0
|
12b-1 Fees
|
|
Broker-Dealers
|
$1
|
Total
|
$1
|
Broker Commissions
|
|
For the period October 1, 2012 (commencement date) through December 31, 2012
|
$58,186
|
Net Assets
|
=
|
NAV
|
Shares Outstanding
|
$896
|
=
|
$8.96
|
100
|
$77,330,894
|
=
|
8.96
|
8,629,470
|
|
A.
|
The impact on the value of the returns of the Fund;
|
|
B.
|
The attraction of additional capital to the Fund;
|
|
C.
|
Alignment of Management's (as defined below) interests with Fund Owners' (as defined below) interests, including establishing appropriate incentives for Management;
|
|
D.
|
The costs associated with the proxy;
|
|
E,
|
Impact on redemption or withdrawal rights;
|
|
F.
|
The continued or increased availability of portfolio information; and
|
|
G.
|
Industry and business practices.
|
II
.
|
Specific Policies
|
|
A.
|
Routine Matters
|
|
(2)
|
To elect or re-elect Board members.
|
|
(3)
|
To appoint or elect auditors.
|
|
(4)
|
To set time and location of annual meeting.
|
|
(5)
|
To establish a master/feeder structure without a significant increase in fees or expenses.
|
(6)
|
To change the fiscal year or term of the Fund.
|
(7)
|
To change in the name of a Fund.
|
|
B.
|
Non-Routine Matters
|
|
(1)
|
Structure, Management and Investment Authority
|
|
(a)
|
Approval or Renewal of Investment Advisory Agreements
|
|
i.
|
proposed and current fee schedules
|
|
ii.
|
performance history of the Fund
|
|
iii.
|
continuation of management talent
|
|
iv.
|
alignment of interests between Management and Owners
|
|
(b)
|
Termination or Liquidation of the Fund
|
|
i.
|
terms of liquidation
|
|
ii.
|
past performance of the Fund
|
|
iii.
|
strategies employed to save the Fund
|
|
(2)
|
Share Classes and Voting Rights
|
|
(a)
|
To establish a class or classes with terms that may disadvantage other classes.
|
|
(b)
|
To introduce unequal voting rights.
|
|
(c)
|
To change the amendment provisions of an entity by removing investor approval requirements.
|
III.
|
Conflicts of Interest
|
|
A.
|
the Fund's sponsor is a client or proposed client of the Adviser (or its affiliates)
|
|
B.
|
the Adviser (or its affiliates) provides financing services to the Fund; and
|
|
C.
|
an employee of the Adviser has a close personal or business relationship with the Fund's sponsor.
|
IV.
|
Procedures for Proxies
|
V.
|
Record of Proxy Voting
|
1 Year Capital One Financial Chart |
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