PROSPECTUS
January 28, 2024
The Advisors’ Inner Circle Fund III
SouthernSun Small Cap Fund
Class N Shares: SSSFX
Class I Shares: SSSIX
SouthernSun U.S. Equity Fund
Class N Shares: SSEFX
Class I Shares: SSEIX
INVESTMENT ADVISER:
SOUTHERNSUN ASSET MANAGEMENT, LLC
The
U.S. Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy or accuracy of this prospectus.
Any
representation to the contrary is a criminal offense.
About This Prospectus
This prospectus has been arranged into different sections so that you can easily review this important information. For detailed information about each Fund, please see:
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More Information About the Funds’ Investment Objectives and Strategies |
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Class N Shares
Class I Shares
Russell 2000 Index (reflects no deduction for fees, expenses, or taxes)
Russell 2000 Value Index (reflects no deduction for fees, expenses, or taxes)
The SouthernSun Small Cap Fund (the “Small Cap Fund” or the “Fund”) seeks to provide long-term capital appreciation.
This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund. You may be required to pay commissions and/or other forms of compensation to a broker for transactions in shares of the Fund, which are not reflected in the table or the example below.
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Class N Shares |
Class I Shares |
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Management Fees |
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Distribution and/or Service (12b-1) Fees |
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Other Expenses |
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Shareholder Servicing Fees |
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Other Operating Expenses |
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Total Annual Fund Operating Expenses1 |
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1 |
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1
This Example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Fund for the time periods indicated and then either redeem or do not redeem your shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and that the Fund’s operating expenses (including one year of capped expenses in each period) remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
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|
1 Year |
3 Years |
5 Years |
10 Years |
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Class N Shares |
$ |
$ |
$ |
$ |
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Class I Shares |
$ |
$ |
$ |
$ |
The
Fund pays transaction costs, such as commissions, when it buys and sells
securities (or “turns over” its portfolio). A higher portfolio turnover rate may
indicate higher transaction costs and may result in higher taxes when Fund
shares are held in a taxable account. These costs, which are not reflected in
total annual fund operating expenses or in the example, affect the Fund’s
performance. During its most recent fiscal year, the Fund’s portfolio turnover
rate was
Under normal circumstances, the Fund invests at least 80% of its net assets, plus any borrowings for investment purposes, measured at the time of purchase in small-capitalization securities. The Adviser seeks to achieve the Fund’s investment objective by investing primarily in common stocks of small-capitalization U.S. companies that the Adviser selects using a research-driven, value-oriented investment strategy. The Fund defines small-capitalization securities to include securities of issuers with a market capitalization at the time of purchase within the capitalization range of companies in the Russell 2000 Index during the most recent 12-month period (based on month-end data). This capitalization range will change over time. While the market capitalization range of the Russell 2000 Index changes throughout the year, as of November 30, 2023, the range of the Russell 2000 Index was $20.9 million to $14.6 billion. The Fund also may invest in companies that are incorporated, domiciled, or have a majority of their revenue derived from outside the U.S. and whose equity securities trade on U.S.
2
exchanges. The Fund does not trade in equity securities via non-U.S. exchanges.
The Fund typically invests in 20-30 companies that the Adviser believes are niche dominant and attractively valued with financial flexibility and uniquely fitted management teams. When selecting companies for investment, the Adviser seeks opportunities that it believes have the following characteristics:
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● |
Financial Flexibility: The Adviser seeks companies that have strong balance sheets, while generating discretionary cash flow and organic revenue growth (revenue growth not obtained through mergers or acquisitions). |
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● |
Management Adaptability: The Adviser seeks management teams with measurable, transparent goals that are held accountable for performance. As long-term owners of businesses, the Adviser is looking for like-minded management teams that know how to adapt and innovate. |
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● |
Niche Dominance: The Adviser seeks companies that it believes possess meaningful competitive advantages over peers with attractive opportunities in their target markets. |
Under normal market conditions, the majority of the Fund’s assets will be allocated to equity securities. The Fund may hold assets in cash and cash equivalents, and at times these holdings may be significant. Under normal market conditions, the Fund’s holdings in cash and cash equivalents will not exceed 20% of the Fund’s net assets. The Fund’s cash level at any point typically relates to the Adviser’s individual security selection process, and therefore may vary, depending on the Adviser’s desired security weightings or other factors. The Fund may also allocate a greater percentage of its portfolio to investments in a particular sector, such as the industrials sector.
The Fund generally seeks to buy and hold stocks for the long-term, and sells holdings that the Adviser believes have exceeded their intrinsic market value, become too large a position, experienced a change in fundamentals or are subject to other factors that the Adviser believes may contribute to underperformance. The Fund generally seeks to hold positions in companies as they increase in market capitalization, potentially beyond the small-capitalization range, as long as the Adviser considers the company to remain an attractive investment with capital appreciation potential. Because of this, the Fund may from time to time hold less than 80% of its net assets in equity securities of small-capitalization companies due to subsequent market action.
3
The Fund is non-diversified, which means that it can invest a greater percentage of its assets in any one issuer than a diversified fund.
As
with all mutual funds, there is no guarantee that the Fund will achieve its
investment objective.
Market Risk — The prices of and the income generated by the Fund’s securities may decline in response to, among other things, investor sentiment, general economic and market conditions, regional or global instability, and currency and interest rate fluctuations. In addition, the impact of any epidemic, pandemic or natural disaster, or widespread fear that such events may occur, could negatively affect the global economy, as well as the economies of individual countries, the financial performance of individual companies and sectors, and the markets in general in significant and unforeseen ways. Any such impact could adversely affect the prices and liquidity of the securities and other instruments in which the Fund invests, which in turn could negatively impact the Fund’s performance and cause losses on your investment in the Fund. Market risk may affect a single issuer, an industry, a sector or the equity or bond market as a whole.
Management Risk — The value of the Fund may decline if the Adviser’s judgments about the attractiveness, relative value or potential appreciation of a particular security or strategy prove to be incorrect.
Focused Investment Risk — A significant portion of the Fund’s holdings may be focused in a relatively small number of securities, which may make the Fund more volatile and subject to greater risk than a more diversified fund.
Sector Emphasis Risk — The securities of companies in the same business sector, if comprising a significant portion of the Fund’s portfolio,
4
may in some circumstances react negatively to market conditions, interest rates and economic, regulatory or financial developments and adversely affect the value of the portfolio to a greater extent than if such securities comprised a lesser portion of the Fund’s portfolio or the Fund’s portfolio was diversified across a greater number of industry sectors.
Industrials Sector Risk — A fund with substantial holdings in the industrials sector may be subject to greater risks than a portfolio without such a focus. The Fund is subject to the risk that the securities of issuers in the industrials sector will underperform the market as a whole due to legislative or regulatory changes, adverse market conditions and/or increased competition affecting the industrials sector. The prices of the securities of companies operating in the industrials sector may fluctuate due to the level and volatility of commodity prices, the exchange value of the dollar, import controls, worldwide competition, liability for environmental damage, depletion of resources, and mandated expenditures for safety and pollution control devices.
Small-Capitalization Stock Risk — Small capitalization companies in which the Fund may invest may be more vulnerable to adverse business or economic events than larger, more established companies. In particular, small capitalization companies may have limited product lines, markets and financial resources and may depend upon a relatively small management group. Therefore, small capitalization stocks may be more volatile than those of larger companies. Small capitalization stocks may be traded over-the-counter or listed on an exchange.
Value Style Risk — Value investing focuses on companies with stocks that appear undervalued in light of factors such as the company’s earnings, book value, revenues or cash flow. If the Adviser’s assessment of market conditions, or a company’s value or prospects for exceeding earnings expectations is wrong, the Fund could suffer losses or produce poor performance relative to other funds. In addition, “value stocks” can continue to be undervalued by the market for long periods of time.
Liquidity Risk — The risk that certain securities may be difficult or impossible to sell at the time and the price that the Fund would like. The Fund may have to accept a lower price to sell a security, sell other securities to raise cash, or give up an investment opportunity, any of which could have a negative effect on Fund management or performance.
Foreign Company Risk — Investing in foreign companies poses additional risks since political and economic events unique to a country or region will affect those markets and their issuers. These risks will not necessarily affect the U.S. economy or similar issuers located in the
5
U.S. Offerings of securities of foreign companies may not be registered with the U.S. Securities and Exchange Commission (the “SEC”) and foreign companies are generally not subject to the regulatory controls imposed on U.S. issuers and, as a consequence, there is generally less publicly available information about foreign securities than is available about domestic securities. Income from foreign securities owned by the Fund may be reduced by a withholding tax at the source, which tax would reduce income received from the securities comprising the Fund’s portfolio. Foreign securities may also be more difficult to value than securities of U.S. issuers. In addition, periodic U.S. Government restrictions on investments in issuers from certain foreign countries may require the Fund to sell such investments at inopportune times, which could result in losses to the Fund.
Before the Fund commenced operations, the Fund acquired the assets and liabilities of the AMG SouthernSun Small Cap Fund (the “Small Cap Predecessor Fund”) (the “Small Cap Reorganization”). After being approved by shareholders of the Small Cap Predecessor Fund, the Small Cap Reorganization occurred on February 16, 2021. As a result of the Small Cap Reorganization, Class N Shares and Class I Shares of the Fund assumed the performance and accounting history of Class N Shares and Class I Shares of the Small Cap Predecessor Fund, respectively, prior to the date of the Small Cap Reorganization. Accordingly, performance figures for Class N Shares and Class I Shares of the Fund for periods prior to the date of the Small Cap Reorganization represent the performance of Class N Shares and Class I Shares of the Small Cap Predecessor Fund, respectively. In addition, Class N Shares and Class I Shares of the Small Cap Predecessor Fund acquired the performance and accounting history of Investor Class Shares and Institutional Class Shares, respectively, of the SouthernSun Small Cap Fund (the “Northern Lights Small Cap Fund” and, together with the Small Cap Predecessor Fund, the “Predecessor Funds”), a series of Northern
6
Lights Fund Trust, on March 31, 2014. Accordingly, performance figures for Class N Shares and Class I Shares of the Fund for the periods prior to March 31, 2014, represent the performance of Investor Class Shares and Institutional Class Shares of the Northern Lights Small Cap Fund, respectively. The Predecessor Funds’ performance figures have not been adjusted to reflect the Fund’s expenses. If the Predecessor Funds’ performance information had been adjusted to reflect the Fund’s expenses, the performance may have been higher or lower for a given period depending on the expenses incurred by the Predecessor Funds for that period.
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Year |
Return |
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2014 |
- |
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2015 |
- |
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2016 |
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2017 |
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2018 |
- |
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2019 |
|
|
2020 |
|
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2021 |
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2022 |
- |
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2023 |
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|
|
|
|
|
|
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This table compares the Fund’s average annual total returns for the periods ended December 31, 2023 to those of an appropriate broad based index.
7
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1 Year |
5 Years |
10 Years |
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Return Before Taxes |
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Class N Shares |
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Class I Shares |
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Return After Taxes on Distributions |
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Class N Shares |
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Return After Taxes on Distributions and Sale of Fund Shares |
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Class N Shares |
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Russell 2000 Index (reflects no deduction for fees, expenses, or taxes) |
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Russell 2000 Value Index (reflects no deduction for fees, expenses, or taxes) |
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Investment Adviser
SouthernSun Asset Management, LLC serves as investment adviser to the Fund.
Portfolio Manager
Phillip W. Cook, Chief Investment Officer and Portfolio Manager, has managed the Fund since 2021.
For important information about the purchase and sale of Fund shares, taxes and financial intermediary compensation, please turn to “Summary Information about the Purchase and Sale of Fund Shares, Taxes and Financial Intermediary Compensation” on page 17 of the prospectus.
8
Class N Shares
Class I Shares
Russell 2500® Index (reflects no deduction for fees, expenses, or taxes)
Russell 2500® Value Index (reflects no deduction for fees, expenses, or taxes)
The SouthernSun U.S. Equity Fund (the “U.S. Equity Fund” or the “Fund”) seeks to provide long-term capital appreciation.
This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund. You may be required to pay commissions and/or other forms of compensation to a broker for transactions in shares of the Fund, which are not reflected in the table or the example below.
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|
Class N Shares |
Class I Shares |
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Management Fees |
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|
|
Distribution and/or Service (12b-1) Fees |
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|
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Other Expenses |
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Shareholder Servicing Fees |
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|
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Other Operating Expenses |
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Total Annual Fund Operating Expenses |
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Less Fee Reductions and/or Expense Reimbursements1 |
( |
( |
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Total Annual Fund Operating Expenses After Fee Reductions and/or Expense Reimbursements |
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1 |
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9
This Example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Fund for the time periods indicated and then either redeem or do not redeem your shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and that the Fund’s operating expenses (including one year of capped expenses in each period) remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
|
|
1 Year |
3 Years |
5 Years |
10 Years |
|
Class N Shares |
$ |
$ |
$ |
$ |
|
Class I Shares |
$ |
$ |
$ |
$ |
The
Fund pays transaction costs, such as commissions, when it buys and sells
securities (or “turns over” its portfolio). A higher portfolio turnover rate may
indicate higher transaction costs and may result in higher taxes when Fund
shares are held in a taxable account. These costs, which are not reflected in
total annual fund operating expenses or in the example, affect the Fund’s
performance. During its most recent fiscal year, the Fund’s portfolio turnover
rate was
Under normal circumstances, the Fund invests at least 80% of its net assets, plus any borrowings for investment purposes, in equity securities (common stocks) of U.S. companies. The Fund considers a company to be a U.S. company if (i) it is organized inside the U.S. or maintains a principal place of business inside the U.S.; or (ii) its securities are traded principally inside the U.S.; or (iii) during its most recent fiscal year, it derived at least 50% of its revenues or profits from goods produced or sold, investments made, or services performed inside the U.S. or it has at least 50% of its assets inside the U.S. The Adviser seeks to achieve the Fund’s investment objective by investing primarily in common stocks of small to middle capitalization U.S. companies that the Adviser
10
selects using a research-driven, value-oriented investment strategy. The Fund defines the investable universe of small to middle capitalization securities to include securities of issuers with a market capitalization at the time of purchase within the capitalization range of companies in the Russell 2500 Index during the most recent 12 month period (based on month-end data). This capitalization range will change over time. While the market capitalization range of the Russell 2500 Index changes throughout the year, as of November 30, 2023, the range of the Russell 2500 Index was $20.9 million to $19.8 billion.
The Fund typically invests in 20-40 companies that the Adviser believes are niche dominant and attractively valued with financial flexibility and uniquely fitted management teams. When selecting companies for investment, the Adviser seeks opportunities that it believes have the following characteristics:
|
● |
Financial Flexibility: The Adviser seeks companies that have strong balance sheets while generating discretionary cash flow and organic revenue growth (revenue growth not obtained through mergers or acquisitions). |
|
● |
Management Adaptability: The Adviser seeks management teams with measurable, transparent goals that are held accountable for performance. As long-term owners of businesses, the Adviser is looking for like-minded management teams that know how to adapt and innovate. |
|
● |
Niche Dominance: The Adviser seeks companies that it believes possess meaningful competitive advantages over peers with attractive opportunities in their target markets. |
Under normal market conditions, the majority of the Fund’s assets will be allocated to equity securities. The Fund may hold assets in cash and cash equivalents, and at times these holdings may be significant. Under normal market conditions, the Fund’s holdings in cash and cash equivalents will not exceed 20% of the Fund’s net assets. The Fund’s cash level at any point typically relates to the Adviser’s individual security selection process, and therefore may vary, depending on the Adviser’s desired security weightings or other factors. The Fund may also allocate a greater percentage of its portfolio to investments in a particular sector, such as the industrials sector.
The Fund generally seeks to buy and hold stocks for the long-term, and sells holdings that the Adviser believes have exceeded their intrinsic market value, become too large a position, experienced a change in fundamentals or are subject to other factors that the Adviser believes may contribute to underperformance.
11
The Fund generally seeks to hold positions in companies as they increase in market capitalization, potentially beyond the small to mid-capitalization range, as long as the Adviser considers the company to remain an attractive investment with capital appreciation potential.
The Fund is non-diversified, which means that it can invest a greater percentage of its assets in any one issuer than a diversified fund.
As
with all mutual funds, there is no guarantee that the Fund will achieve its
investment objective.
Market Risk — The prices of and the income generated by the Fund’s securities may decline in response to, among other things, investor sentiment, general economic and market conditions, regional or global instability, and currency and interest rate fluctuations. In addition, the impact of any epidemic, pandemic or natural disaster, or widespread fear that such events may occur, could negatively affect the global economy, as well as the economies of individual countries, the financial performance of individual companies and sectors, and the markets in general in significant and unforeseen ways. Any such impact could adversely affect the prices and liquidity of the securities and other instruments in which the Fund invests, which in turn could negatively impact the Fund’s performance and cause losses on your investment in the Fund. Market risk may affect a single issuer, an industry, a sector or the equity or bond market as a whole.
Management Risk — The value of the Fund may decline if the Adviser’s judgments about the attractiveness, relative value or potential appreciation of a particular security or strategy prove to be incorrect.
Focused Investment Risk — A significant portion of the Fund’s holdings may be focused in a relatively small number of securities, which may
12
make the Fund more volatile and subject to greater risk than a more diversified fund.
Sector Emphasis Risk — The securities of companies in the same business sector, if comprising a significant portion of the Fund’s portfolio, may in some circumstances react negatively to market conditions, interest rates and economic, regulatory or financial developments and adversely affect the value of the portfolio to a greater extent than if such securities comprised a lesser portion of the Fund’s portfolio or the Fund’s portfolio was diversified across a greater number of industry sectors.
Industrials Sector Risk — A fund with substantial holdings in the industrials sector may be subject to greater risks than a portfolio without such a focus. The Fund is subject to the risk that the securities of issuers in the industrials sector will underperform the market as a whole due to legislative or regulatory changes, adverse market conditions and/or increased competition affecting the industrials sector. The prices of the securities of companies operating in the industrials sector may fluctuate due to the level and volatility of commodity prices, the exchange value of the dollar, import controls, worldwide competition, liability for environmental damage, depletion of resources, and mandated expenditures for safety and pollution control devices.
Small- and Mid-Capitalization Companies Risk — The small- and mid-capitalization companies in which the Fund may invest may be more vulnerable to adverse business or economic events than larger, more established companies. In particular, investments in these small- and mid-sized companies may pose additional risks, including liquidity risk, because these companies tend to have limited product lines, markets and financial resources, and may depend upon a relatively small management group. Therefore, small- and mid-cap stocks may be more volatile than those of larger companies. These securities may be traded over-the-counter or listed on an exchange.
Value Style Risk — Value investing focuses on companies with stocks that appear undervalued in light of factors such as the company’s earnings, book value, revenues or cash flow. If the Adviser’s assessment of market conditions, or a company’s value or prospects for exceeding earnings expectations is wrong, the Fund could suffer losses or produce poor performance relative to other funds. In addition, “value stocks” can continue to be undervalued by the market for long periods of time.
Liquidity Risk — The risk that certain securities may be difficult or impossible to sell at the time and the price that the Fund would like. The Fund may have to accept a lower price to sell a security, sell
13
other securities to raise cash, or give up an investment opportunity, any of which could have a negative effect on Fund management or performance.
Before the Fund commenced operations, the Fund acquired the assets and liabilities of the AMG SouthernSun U.S. Equity Fund (the “U.S. Equity Predecessor Fund”) (the “U.S. Equity Reorganization”). After being approved by shareholders of the U.S. Equity Predecessor Fund, the U.S. Equity Reorganization occurred on February 16, 2021. As a result of the U.S. Equity Reorganization, Class N Shares and Class I Shares of the Fund assumed the performance and accounting history of Class N Shares and Class I Shares of the U.S. Equity Predecessor Fund, respectively. Accordingly, performance figures for Class N Shares and Class I Shares of the Fund for periods prior to the date of the U.S. Equity Reorganization represent the performance of Class N Shares and Class I Shares of the U.S. Equity Predecessor Fund, respectively. In addition, Class N Shares and Class I Shares of the U.S. Equity Predecessor Fund acquired the performance and accounting history of Investor Class Shares and Institutional Class Shares, respectively, of the SouthernSun U.S. Equity Fund (the “Northern Lights U.S. Equity Fund” and, together with the U.S. Equity Predecessor Fund, the “Predecessor Funds”), a series of Northern Lights Fund Trust, on March 31, 2014. Accordingly, performance figures for Class N Shares and Class I Shares of the Fund for the periods prior to March 31, 2014, represent the performance of Investor Class Shares and Institutional Class Shares of the Northern Lights U.S. Equity Fund, respectively. The Predecessor Funds’ performance figures have not been adjusted to reflect the Fund’s expenses. If the Predecessor Funds’ performance information had been adjusted to reflect the Fund’s expenses, the performance may have been higher or lower for a given period depending on the expenses incurred by the Predecessor Funds for that period.
14
|
Year |
Return |
|
2014 |
|
|
2015 |
- |
|
2016 |
|
|
2017 |
|
|
2018 |
- |
|
2019 |
|
|
2020 |
|
|
2021 |
|
|
2022 |
- |
|
2023 |
|
|
|
|
|
|
|
|
|
|
This table compares the Fund’s average annual total returns for the periods ended December 31, 2023 to those of an appropriate broad based index.
15
|
|
1 Year |
5 Years |
10 Years |
|
Return Before Taxes |
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|
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|
Class N Shares |
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Class I Shares |
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|
|
|
Return After Taxes on Distributions |
|||
|
Class N Shares |
|
|
|
|
Return After Taxes on Distributions and Sale of Fund Shares |
|||
|
Class N Shares |
|
|
|
|
Russell 2500® Index (reflects no deduction for fees, expenses, or taxes) |
|
|
|
|
Russell 2500® Value Index (reflects no deduction for fees, expenses, or taxes) |
|
|
|
Investment Adviser
SouthernSun Asset Management, LLC serves as investment adviser to the Fund.
Portfolio Manager
Phillip W. Cook, Chief Investment Officer and Portfolio Manager, has managed the Fund since 2021.
For important information about the purchase and sale of Fund shares, taxes and financial intermediary compensation, please turn to “Summary Information about the Purchase and Sale of Fund Shares, Taxes and Financial Intermediary Compensation” on page 17 of the prospectus.
16
Summary Information about the Purchase and Sale of Fund Shares, Taxes and Financial Intermediary Compensation
You may generally purchase or redeem shares on any day that the New York Stock Exchange (“NYSE”) is open for business.
To purchase shares of a Fund for the first time, you must invest at least $2,000 for Class N Shares ($1,000 for IRAs) and $100,000 for Class I Shares ($25,000 for IRAs). Subsequent investments must be at least $100 for Class N Shares and Class I Shares.
The Funds may accept investments of smaller amounts in their sole discretion. If you received shares of a Fund as a result of its reorganization, you will not be subject to the Fund’s minimum investment requirements.
If you own your shares directly, you may redeem your shares by contacting the Funds directly by mail at: SouthernSun Funds P.O. Box 588, Portland, ME 04112 (Express Mail Address: SouthernSun Funds, c/o Atlantic Shareholder Services, Three Canal Plaza, Ground Floor, Portland, ME 04101) or calling the Funds at 833-658-4739.
If you own your shares through an account with a broker or other financial intermediary, contact that broker or financial intermediary to redeem your shares. Your broker or financial intermediary may charge a fee for its services in addition to the fees charged by the Funds.
Tax Information
Each Fund intends to make distributions that may be taxed as qualified dividend income, ordinary income or capital gains, unless you are investing through a tax-deferred arrangement, such as a 401(k) plan or IRAs, in which case your distribution will be taxed when withdrawn from the tax-deferred account.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase shares of a Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund and its related companies may pay the intermediary for the sale of Fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend a Fund over another investment. Ask your salesperson or visit your financial intermediary’s web site for more information.
17
More Information About the Funds’ Investment Objectives and Strategies
The investment objective of the Small Cap Fund is to seek to provide long-term capital appreciation. The investment objective of the U.S. Equity Fund is to seek to provide long-term capital appreciation. The investment objective of each Fund is not a fundamental policy and may be changed by the Board without shareholder approval.
The investments and strategies described in this prospectus are those that the Funds use under normal conditions. During unusual economic or market conditions, or for temporary defensive or liquidity purposes, each Fund may, but is not obligated to, invest up to 100% of its assets in money market instruments and other cash equivalents that would not ordinarily be consistent with its investment objective. If a Fund invests in this manner, it may cause the Fund to forgo greater investment returns for the safety of principal and the Fund may therefore not achieve its investment objective. A Fund will only do so if the Adviser believes that the risk of loss outweighs the opportunity to pursue the Fund’s investment objective.
This prospectus describes the Funds’ principal investment strategies, and the Funds will normally invest in the types of securities and other investments described in this prospectus. In addition to the securities and other investments and strategies described in this prospectus, each Fund also may invest to a lesser extent in other securities, use other strategies and engage in other investment practices that are not part of its principal investment strategies. These investments and strategies, as well as those described in this prospectus, are described in detail in the Funds’ Statement of Additional Information (the “SAI”) (for information on how to obtain a copy of the SAI see the back cover of this prospectus). Of course, there is no guarantee that a Fund will achieve its investment goals.
More Information About Risk
Investing in each Fund involves risk and there is no guarantee that a Fund will achieve its goals. The Adviser’s judgments about the markets, the economy, or companies may not anticipate actual market movements, economic conditions or company performance, and these judgments may affect the return on your investment. In fact, no matter how good of a job the Adviser does, you could lose money on your investment in a Fund, just as you could with other investments.
18
The value of your investment in a Fund is based on the value of the securities the Fund holds. These prices change daily due to economic and other events that affect particular companies and other issuers. These price movements, sometimes called volatility, may be greater or lesser depending on the types of securities a Fund owns and the markets in which they trade. The effect on a Fund of a change in the value of a single security will depend on how widely the Fund diversifies its holdings. Each Fund is non-diversified, meaning that it may invest a large percentage of its assets in a single issuer or a relatively small number of issuers.
Focused Investment Risk (Small Cap Fund and U.S. Equity Fund) — A significant portion of the Fund’s holdings may be focused in a relatively small number of securities, which may make the Fund more volatile and subject to greater risk than a more diversified fund.
Foreign Company Risk (Small Cap Fund) — Investments in securities of foreign companies can be more volatile than investments in U.S. companies. Diplomatic, political, or economic developments, including nationalization or appropriation, could affect investments in foreign companies. Foreign securities markets generally have less trading volume and less liquidity than U.S. markets. In addition, the value of securities denominated in foreign currencies, and of dividends from such securities, can change significantly when foreign currencies strengthen or weaken relative to the U.S. dollar. Financial statements of foreign issuers are governed by different accounting, auditing, and financial reporting standards than the financial statements of U.S. issuers and may be less transparent and uniform than in the United States. Thus, there may be less information publicly available about foreign issuers than about most U.S. issuers. Transaction costs are generally higher than those in the United States and expenses for custodial arrangements of foreign securities may be somewhat greater than typical expenses for custodial arrangements of similar U.S. securities. Some foreign governments levy withholding taxes against dividend and interest income. Although in some countries a portion of these taxes are recoverable, the non-recovered portion will reduce the income received from the securities comprising the portfolio. Additionally, periodic U.S. Government restrictions on investments in issuers from certain foreign countries may result in the Fund having to sell such prohibited securities at inopportune times. Such prohibited securities may have less liquidity as a result of such U.S. Government designation and the market price of such prohibited securities may decline, which may cause the Fund to incur losses.
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Liquidity Risk (Small Cap Fund and U.S. Equity Fund) — Certain securities may be difficult or impossible to sell at the time and the price that a Fund would like. A Fund may have to accept a lower price to sell a security, sell other securities to raise cash, or give up an investment opportunity, any of which could have a negative effect on Fund management or performance.
Market Risk (Small Cap Fund and U.S. Equity Fund) — The market price of securities and other investments owned by a Fund may go up or down, sometimes rapidly or unpredictably. Securities may decline in value due to factors affecting securities markets generally or particular industries represented in the securities markets. The value of a security may decline due to general market conditions which 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. They may also decline due to factors which affect a particular industry or industries, such as labor shortages or increased production costs and competitive conditions within an industry. In addition, the impact of any epidemic, pandemic or natural disaster, or widespread fear that such events may occur, could negatively affect the global economy, as well as the economies of individual countries, the financial performance of individual companies and sectors, and the markets in general in significant and unforeseen ways. Any such impact could adversely affect the prices and liquidity of the securities and other instruments in which the Fund invests, which in turn could negatively impact the Fund’s performance and cause losses on your investment in the Fund. Recent examples include pandemic risks related to COVID-19 and aggressive measures taken worldwide in response by governments, including closing borders, restricting international and domestic travel, and the imposition of prolonged quarantines of large populations, and by businesses, including changes to operations and reducing staff. During a general downturn in the securities markets, multiple asset classes may decline in value simultaneously.
Management Risk (Small Cap Fund and U.S. Equity Fund) — The Fund is subject to the risk that the Adviser’s judgments about the attractiveness, value, or potential appreciation of the Fund’s investments may prove to be incorrect. The portfolio securities selected by the Adviser may decline in value or not increase in value when the stock market in general is rising. In addition, the prices of common stocks move up and down in response to corporate earnings and developments, economic and market conditions and anticipated events. Individual issuers may report poor results or be negatively affected by industry and/or economic
20
trends and developments. The Fund’s investment success depends on the skill of the Adviser in evaluating, selecting and monitoring the portfolio assets. If the Adviser’s conclusions about growth rates or securities values are incorrect, the Fund may not perform as anticipated.
Small-Capitalization Companies Risk (Small Cap Fund and U.S. Equity Fund) — The risk that small-capitalization companies in which a Fund may invest may be more vulnerable to adverse business or economic events than larger, more established companies. In particular, small-capitalization companies may have limited product lines, markets and financial resources and may depend upon a relatively small management group. Therefore, small-capitalization stocks may be more volatile than those of larger companies. Small-capitalization stocks may be traded over-the-counter or listed on an exchange.
Mid-Capitalization Companies Risk (U.S. Equity Fund) — The risk that mid-capitalization companies in which the Fund may invest may be more vulnerable to adverse business or economic events than larger, more established companies. In particular, mid-capitalization companies may have limited product lines, markets and financial resources and may depend upon a relatively small management group. Therefore, mid-capitalization stocks may be more volatile than those of larger companies. Mid-capitalization stocks may be traded over-the-counter or listed on an exchange.
Non-Diversified Fund Risk (Small Cap Fund and U.S. Equity Fund) — The Fund is classified as “non-diversified,” which means it may invest a larger percentage of its assets in a smaller number of issuers than a diversified fund. To the extent that the Fund invests its assets in a smaller number of issuers, the Fund will be more susceptible to negative events affecting those issuers than a diversified fund.
Sector Emphasis Risk (Small Cap Fund and U.S. Equity Fund) — The securities of companies in the same business sector, if comprising a significant portion of the Fund’s portfolio, may in some circumstances react negatively to market conditions, interest rates and economic, regulatory or financial developments and adversely affect the value of the portfolio to a greater extent than if such securities comprised a lesser portion of the Fund’s portfolio or the Fund’s portfolio was diversified across a greater number of industry sectors. Some industry sectors have particular risks that may not affect other sectors.
Industrials Sector Risk (Small Cap Fund and U.S. Equity Fund) — A Fund with substantial holdings in the industrials sector may be subject to greater risks than a portfolio without such a focus. The industrials sector includes manufacturers and distributors of capital goods such as aerospace and
21
defense, building projects, electrical equipment and machinery and companies that offer construction and engineering services. It also includes providers of commercial and professional services including printing, environmental and facilities services, office services and supplies, security and alarm services, human resource and employment services, research and consulting services. It also includes companies that provide transportation services. A Fund is subject to the risk that the securities of such issuers will underperform the market as a whole due to legislative or regulatory changes, adverse market conditions and/or increased competition affecting the industrials sector. The prices of the securities of companies operating in the industrials sector may fluctuate due to the level and volatility of commodity prices, the exchange value of the dollar, import controls, worldwide competition, liability for environmental damage, depletion of resources, and mandated expenditures for safety and pollution control devices.
Value Style Risk (Small Cap Fund and U.S. Equity Fund) — Value investing focuses on companies with stocks that appear undervalued in light of factors such as the company’s earnings, book value, revenues or cash flow. If the Adviser’s assessment of market conditions, or a company’s value or prospects for exceeding earnings expectations, is wrong, the Fund could suffer losses or produce poor performance relative to other funds. In addition, “value stocks” can continue to be undervalued by the market for long periods of time.
Information about Portfolio Holdings
A description of the Funds’ policies and procedures with respect to the circumstances under which the Funds disclose their portfolio holdings is available in the SAI. Each Fund will disclose its portfolio holdings as of the last day of each fiscal quarter or semi-annual period on or about 45 calendar days following the end of such period on the internet at www.southernsunam.com. In addition, each Fund (i) may disclose the top 10 portfolio holdings at any time following the disclosure of portfolio holdings, and (ii) may disclose statistical information regarding such Fund’s portfolio allocation characteristics on or about 10 business days after each quarter-end, in each case by posting the information on the internet at www.southernsunam.com. The Adviser may exclude any portion of a Fund’s portfolio holdings from such publication when deemed in the best interest of the Fund. The portfolio holdings information placed on the Funds’ website generally will remain there until such information is included in a filing with the SEC.
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Investment Adviser
SouthernSun Asset Management, LLC (the “Adviser”), a limited liability company organized under the laws of Delaware in 1989, serves as the investment adviser to the Funds. The Adviser is located at 240 Madison Avenue, Suite 800 Memphis, TN 38103. The Adviser is wholly owned by its employees, directly or indirectly. As of November 30, 2023, the Adviser had approximately $855.8 million in assets under management.
The Adviser makes investment decisions for the Funds and continuously reviews, supervises and administers each Fund’s investment program. The Board oversees the Adviser and establishes policies that the Adviser must follow in its management activities with respect to the Funds.
For its services to the Funds, the Adviser is entitled to a fee, which is calculated daily and paid monthly, at the following annual rates based on the average daily net assets of the Funds:
|
Fund |
Advisory Fee |
|
Small Cap Fund |
0.75% |
|
U.S. Equity Fund |
0.75% |
For each Fund, the Adviser has contractually agreed to waive its fees and/or reimburse expenses to the extent necessary to keep total annual fund operating expenses (excluding distribution and/or service (12b-1) fees, interest, taxes, brokerage commissions and other costs and expenses relating to the securities that are purchased and sold by the Fund, dividend and interest expenses on securities sold short, fees and expenses incurred in connection with tax reclaim recovery services, other expenditures which are capitalized in accordance with generally accepted accounting principles, non-routine expenses, and solely with respect to the Small Cap Fund, shareholder servicing fees and acquired fund fees and expenses (collectively, “excluded expenses”)) from exceeding certain levels as set forth below until January 31, 2025 (each, a “contractual expense limit”). This agreement may be terminated by: (i) the Board, for any reason at any time; or (ii) the Adviser, upon ninety (90) days’ prior written notice to the Trust, effective as of the close of business on January 31, 2025.
|
Fund |
Contractual Expense Limit |
|
Small Cap Fund |
1.25% |
|
U.S. Equity Fund |
1.09% |
In addition, the Adviser may receive from the Fund the difference between the total annual fund operating expenses (not including excluded expenses) and a Fund’s contractual expense limit to recoup
23
all or a portion of its prior fee waivers or expense reimbursements made during the rolling three-year period preceding the recoupment if at any point total annual fund operating expenses (not including excluded expenses) are below the contractual expense limit (i) at the time of the fee waiver and/or expense reimbursement and (ii) at the time of the recoupment.
For the fiscal year ended September 30, 2023, the Adviser received advisory fees (after fee reductions) as a percentage of the average daily net assets of each Fund as follows:
|
Fund |
Advisory Fees Paid |
|
Small Cap Fund |
0.75% |
|
U.S. Equity Fund |
0.69% |
A discussion regarding the basis for the Board’s approval of the Funds’ investment advisory agreement is available in the Funds’ Annual Report to Shareholders dated September 30, 2023, which covers the period from October 1, 2022 to September 30, 2023.
Portfolio Manager
Phillip W. Cook, Chief Investment Officer and Portfolio Manager, joined the Adviser in 2006. He is responsible for all aspects of research and analysis, portfolio construction and risk management for both of the firm’s investment strategies. In addition, he is Managing Partner of the firm’s Management Team. Prior to joining the Adviser, Mr. Cook served as Analyst to the Chairman and CEO of Trivest Partners, a Miami-based private equity firm focused on middle-market LBOs. He received his B.S. in International Business, summa cum laude, from Auburn University. He also serves on the Board of Su Casa Family Ministries.
While Mr. Cook is the portfolio manager for the Funds, he is supported by the Adviser’s investment team, which includes Michael S. Cross, James P. Dorman and Treadwell B. Thompson. The investment team provides all analysis and company-specific research for current and future portfolio holdings in the Funds. Members of the team also provide input regarding portfolio management and construction; however, ultimate authority for all material investment decisions is maintained by the portfolio manager.
Michael S. Cross, Principal, joined the Adviser in 2008. His responsibilities include the research and analysis of investment opportunities, monitoring of existing portfolio companies, and he provides input on portfolio management and construction. Prior to joining the Adviser,
24
Mr. Cross was an officer of Cummins, Inc. and responsible for leading one of Cummins’ business units. He has global experience in Sales, Marketing, Finance, Accounting, Logistics, Operations and General Management. Mr. Cross received his B.S. from Vanderbilt University and an M.B.A. from Vanderbilt’s Owen School with concentrations in Finance, Accounting and Management Information Systems. He has also passed the CPA exam. Mr. Cross serves on the Board of the Neighborhood Christian Center.
James P. Dorman, Principal, joined the Adviser in 2010. His responsibilities include the research and analysis of investment opportunities and monitoring of existing portfolio companies, and he provides input on portfolio management and construction. Prior to joining SouthernSun, Mr. Dorman was the Managing Director of Finance at Mercury Investment Management and was a financial advisor in the Corporate Reporting department at FedEx Corporation. He began his career as a CPA at PricewaterhouseCoopers LLP, where he focused on financial audits for both public and private companies in the financial services sector. Mr. Dorman received his bachelor’s degree in accounting from Auburn University and his M.B.A. from the University of Tennessee. Mr. Dorman is a Chartered Financial Analyst (CFA) charterholder.
Treadwell B. Thompson, Principal, joined the Adviser in 2014. His responsibilities include the research and analysis of investment opportunities and monitoring of existing portfolio companies, and he provides input on portfolio management and construction. Prior to joining the Adviser, Mr. Thompson was an analyst at Mercer Capital, where he determined valuations for businesses in a wide variety of industries and conducted related industry research. Mr. Thompson graduated from Vanderbilt University with a B.A. in History and subsequently received his M.S. in Accounting from Rhodes College. Mr. Thompson is also a licensed CPA.
The SAI provides additional information about the portfolio manager’s compensation, other accounts managed, and ownership of Fund shares.
Purchasing and Selling Fund Shares
This section tells you how to purchase and sell (sometimes called “redeem”) shares of the Funds.
For information regarding the federal income tax consequences of transactions in shares of the Funds, including information about cost basis reporting, see “Taxes.”
25
How to Choose a Share Class
Each Fund offers two classes of shares, Class N Shares and Class I Shares, to both individual and institutional investors. Each share class has its own investment minimums and cost structure, as summarized below. Contact your financial intermediary or the Funds for more information about the Fund’s share classes and how to choose between them.
|
Fund Name |
Class Name |
Investment
|
Fees |
|
Small Cap Fund |
Class N Shares |
Initial: $2,000 ($1,000 for IRAs)
Subsequent: $100 |
0.25% Rule 12b-1 Fee, Shareholder Servicing Fee of up to 0.15% |
|
Class I Shares |
Initial: $100,000 ($25,000 for IRAs)
Subsequent: $100 |
No Rule 12b-1 Fee, Shareholder Servicing Fee of up to 0.15% | |
|
U.S. Equity Fund |
Class N Shares |
Initial: $2,000 ($1,000 for IRAs)
Subsequent: $100 |
0.25% Rule 12b-1 Fee, Shareholder Servicing Fee of up to 0.15% |
|
Class I Shares |
Initial: $100,000 ($25,000 for IRAs)
Subsequent: $100 |
No Rule 12b-1 Fee, Shareholder Servicing Fee of up to 0.15% |
Class N Shares and Class I Shares are offered to investors who purchase shares directly from the Fund or through certain financial intermediaries such as financial planners, investment advisors, broker-dealers or other financial institutions. An investor may be eligible to purchase more than one share class. However, if you purchase shares through a financial intermediary, you may only purchase that class of shares which your financial intermediary sells or services. Your financial intermediary can tell you which class of shares is available through the intermediary.
The Fund reserves the right to accept investments of smaller amounts in its sole discretion.
How to Purchase Fund Shares
General Information — The Funds do not issue share certificates. You will receive quarterly account statements and a confirmation of each transaction. You should verify the accuracy of all transactions in your account as soon as you receive your account statement. During unusual market conditions, the Funds may temporarily suspend or discontinue any service or privilege.
26
To purchase shares directly from the Funds through their transfer agent, complete and send in the application. If you need an application or have questions, please call 866-392-2626.
If you purchase shares directly from the Funds, you will receive a confirmation of each transaction and quarterly statements detailing Fund balances and all transactions completed during the prior quarter. Automatic reinvestments of distributions and systematic investments and withdrawals may be confirmed only by quarterly statement. You should verify the accuracy of all transactions in your account as soon as you receive your confirmations and quarterly statements.
All investments must be made by check, wire or Automated Clearing House (“ACH”). All checks must be made payable in U.S. dollars and drawn on U.S. financial institutions. The Funds do not accept purchases made by third-party checks, credit cards, credit card checks, cash, traveler’s checks, money orders or cashier’s checks.
The Funds reserve the right to reject any specific purchase order for any reason. The Funds are not intended for short-term trading by shareholders in response to short-term market fluctuations. For more information about the Funds’ policy on short-term trading, see “Excessive Trading Policies and Procedures.”
The Funds do not generally accept investments by non-U.S. persons. Non-U.S. persons may be permitted to invest in the Funds subject to the satisfaction of enhanced due diligence. Please contact the Funds for more information.
By Mail
You can open an account with the Funds by sending a check and your account application to the address below. You can add to an existing account by sending the Funds a check and, if possible, the “Invest by Mail” stub that accompanies your confirmation statement. Be sure your check identifies clearly your name, your account number and the Fund name. Make your check payable to the applicable Fund.
Regular Mail Address
SouthernSun
Funds
P.O. Box 588
Portland, ME 04112
27
Express Mail Address
SouthernSun
Funds
c/o Atlantic Shareholder Services
Three Canal Plaza, Ground
Floor
Portland, ME 04101
The Funds do not consider the U.S. Postal Service or other independent delivery services to be their agents. Therefore, deposit in the mail or with such services of purchase orders does not constitute receipt by the Funds’ transfer agent. The share price used to fill the purchase order is the next price calculated by a Fund after the Funds’ transfer agent receives and accepts the order in good order at its office, not at the P.O. Box provided for regular mail delivery.
By Wire
To open an account by wire, call 866-392-2626 for details. To add to an existing account by wire, wire your money using the wiring instructions set forth below (be sure to include the Fund name and your account number). The share price used to fill the purchase order is the next price calculated by the Funds after the Funds’ transfer agent receives and accepts the wire in good order.
Wiring Instructions
UMB
Bank NA
Kansas City, MO
ABA # 101000695
For Credit To:
Atlantic
Shareholder Services, LLC FBO The Advisors’ Inner Circle Fund III
Acct #
9872572734
Ref: Fund name/account number/account name
Purchases In-Kind
Subject to the approval of the Funds, an investor may purchase shares of each Fund with liquid securities and other assets that are eligible for purchase by a Fund (consistent with the Fund’s investment policies and restrictions) and that have a value that is readily ascertainable in accordance with the valuation procedures used by the Funds. These transactions will be effected only if the Adviser deems the security to be an appropriate investment for a Fund. Assets purchased by a Fund in such transactions will be valued in good faith by the Adviser, subject
28
to Board oversight. The Funds reserve the right to amend or terminate this practice at any time.
Minimum Purchases
To purchase Class N Shares of each Fund for the first time, you must invest at least $2,000 ($1,000 for IRAs). To purchase Class I Shares of each Fund for the first time, you must invest at least $100,000 ($25,000 for IRAs). Subsequent investments must be made in amounts of at least $100. The Funds may accept investments of smaller amounts in their sole discretion.
By Systematic Investment Plan (via ACH)
You may not open an account via ACH. However, once you have established a direct account with the Funds, you can set up an automatic investment plan via ACH by mailing a completed application to the Funds. These purchases can be made monthly, quarterly, semi-annually or annually in amounts of at least $100. To cancel or change a plan, contact the Funds by mail at: SouthernSun Funds, P.O. Box 588, Portland, ME 04112 (Express Mail Address: SouthernSun Funds, c/o Atlantic Shareholder Services, Three Canal Plaza, Ground Floor, Portland, ME 04101). Please allow up to 15 days to create the plan and 3 days to cancel or change it.
Cancelled or Failed Payments
The Funds accept checks and ACH transfers at full value subject to collection. If the Funds do not receive your payment for shares or you pay with a check or ACH payment that does not clear, your purchase will be canceled within two business days of notification from your bank that the funds did not clear. You will be responsible for any actual losses and expenses incurred by the Funds or the transfer agent. The Funds and their agents have the right to reject or cancel any purchase or redemption request due to non-payment.
29
Fund Codes
The Funds’ reference information, which is listed below, will be helpful to you when you contact a Fund to purchase shares, check daily NAV, or obtain additional information.
|
Fund Name |
Share
|
Ticker
|
CUSIP |
Fund
|
|
Small Cap Fund |
Class N |
SSSFX |
00774Q163 |
248-802 |
|
|
Class I |
SSSIX |
00774Q155 |
248-801 |
|
U.S. Equity Fund |
Class N |
SSEFX |
00774Q189 |
248-804 |
|
|
Class I |
SSEIX |
00774Q171 |
248-803 |
General Information
You may generally purchase shares on any day that the NYSE is open for business (a “Business Day”). Shares cannot be purchased by Federal Reserve wire on days that either the NYSE or the Federal Reserve is closed.
A Fund’s price per share will be the next determined NAV per share after the Fund or an authorized institution (as defined below) receives and accepts your purchase order in good order. “Good order” means that the Fund was provided with a complete and signed account application, including the investor’s social security number or tax identification number, and other identification required by law or regulation, as well as sufficient purchase proceeds. Purchase orders that are not in good order cannot be accepted and processed even if money to purchase shares has been submitted by wire, check or ACH.
Each Fund calculates its NAV once each Business Day as of the close of normal trading on the NYSE (normally, 4:00 p.m., Eastern Time). To receive the current Business Day’s NAV, a Fund or an authorized institution must receive and accept your purchase order in good order before the close of normal trading on the NYSE. If your purchase order is not received and accepted in good order before the close of normal trading on the NYSE, you will receive the NAV calculated on the subsequent Business Day on which your order is received and accepted in good order. If the NYSE closes early, as in the case of scheduled half-day trading or unscheduled suspensions of trading, the Funds reserve the right to calculate NAV as of the earlier closing time. The Funds will not accept orders that request a particular day or price for the transaction or any other special conditions. Shares will only be priced on Business Days. Since securities that are traded on foreign exchanges may trade
30
on days that are not Business Days, the value of a Fund’s assets may change on days when you are unable to purchase or redeem shares.
Buying or Selling Shares through a Financial Intermediary
In addition to being able to buy and sell Fund shares directly from the Funds through their transfer agent, you may also buy or sell shares of a Fund through accounts with financial intermediaries, such as brokers and other institutions that are authorized to place trades in Fund shares for their customers. When you purchase or sell Fund shares through a financial intermediary (rather than directly from a Fund), you may have to transmit your purchase and sale requests to the financial intermediary at an earlier time for your transaction to become effective that day. This allows the financial intermediary time to process your requests and transmit them to the Fund prior to the time the Fund calculates its NAV that day. Your financial intermediary is responsible for transmitting all purchase and redemption requests, investment information, documentation and money to a Fund on time. If your financial intermediary fails to do so, it may be responsible for any resulting fees or losses. Unless your financial intermediary is an authorized institution, orders transmitted by the financial intermediary and received by a Fund after the time NAV is calculated for a particular day will receive the following day’s NAV.
Certain financial intermediaries, including certain broker-dealers and shareholder organizations, are authorized to act as agent on behalf of the Funds with respect to the receipt of purchase and redemption orders for Fund shares (“authorized institutions”). Authorized institutions are also authorized to designate other intermediaries to receive purchase and redemption orders on a Fund’s behalf. A Fund will be deemed to have received a purchase or redemption order when an authorized institution or, if applicable, an authorized institution’s designee, receives the order. Orders will be priced at a Fund’s next computed NAV after they are received by an authorized institution or an authorized institution’s designee. To determine whether your financial intermediary is an authorized institution or an authorized institution’s designee such that it may act as agent on behalf of a Fund with respect to purchase and redemption orders for Fund shares, you should contact your financial intermediary directly.
If you deal directly with a financial intermediary, you will have to follow its procedures for transacting with a Fund. Your financial intermediary may charge a fee for your purchase and/or redemption transactions. For more information about how to purchase or sell Fund shares through a
31
financial intermediary, you should contact your financial intermediary directly.
How the Funds Calculate NAV
The NAV of a class of a Fund’s shares is determined by dividing the total value of the Fund’s portfolio investments and other assets attributable to the class, less any liabilities attributable to the class, by the total number of shares outstanding of the class.
In calculating NAV, each Fund generally values its investment portfolio at market price. If market prices are not readily available or they are unreliable, such as in the case of a security value that has been materially affected by events occurring after the relevant market closes, securities are valued at fair value. The Board has designated the Adviser as the Funds’ valuation designee to make all fair value determinations with respect to the Funds’ portfolio investments, subject to the Board’s oversight. The Adviser has adopted and implemented policies and procedures to be followed when making fair value determinations, and it has established a Valuation Committee through which the Adviser makes fair value determinations. The Adviser’s determination of a security’s fair value price often involves the consideration of a number of subjective factors, and is therefore subject to the unavoidable risk that the value that is assigned to a security may be higher or lower than the security’s value would be if a reliable market quotation for the security was readily available.
With respect to non-U.S. securities held by a Fund, the Adviser may take factors influencing specific markets or issuers into consideration in determining the fair value of a non-U.S. security. International securities markets may be open on days when the U.S. markets are closed. In such cases, the value of any international securities owned by a Fund may be significantly affected on days when investors cannot buy or sell shares. In addition, due to the difference in times between the close of the international markets and the time as of which the Fund prices its shares, the value the Adviser assigns to securities may not be the same as the quoted or published prices of those securities on their primary markets or exchanges. In determining fair value prices, the Adviser may consider the performance of securities on their primary exchanges, foreign currency appreciation/depreciation, securities market movements in the United States, or other relevant information related to the securities.
There may be limited circumstances in which a Fund would price securities at fair value for stocks of U.S. companies that are traded on U.S. exchanges – for example, if the exchange on which a portfolio
32
security is principally traded closed early or if trading in a particular security was halted during the day and did not resume prior to the time the Fund calculated its NAV.
Other assets for which market quotations are not readily available will be valued at their fair value as determined in good faith by the Adviser, subject to Board oversight.
How to Sell Your Fund Shares
If you own your shares directly, you may sell your shares on any Business Day by contacting the Funds directly by mail or telephone at 866-392-2626.
If you own your shares through an account with a broker or other institution, contact that broker or institution to sell your shares. Your broker or institution may charge a fee for its services in addition to the fees charged by the Funds.
If you would like to have your redemption proceeds, including proceeds generated as a result of closing your account, sent to a third party or an address other than your own, please notify the Funds in writing.
To protect you and the Funds against fraud, signatures on certain requests must have a Medallion Signature Guarantee. A Medallion Signature Guarantee verifies the authenticity of your signature. You may obtain a Medallion Signature Guarantee from most banking institutions or securities brokers but not from a notary public. Written instructions signed by all registered shareholders with a Medallion Signature Guarantee for each shareholder are required for any of the following:
|
● |
written requests to redeem $100,000 or more; |
|
● |
changes to a shareholder’s record name or account registration; |
|
● |
paying redemption proceeds from an account for which the address has changed within the last 30 days; |
|
● |
sending redemption and distribution proceeds to any person, address or financial institution account not on record; |
|
● |
sending redemption and distribution proceeds to an account with a different registration (name or ownership) from your account; and |
|
● |
adding or changing ACH or wire instructions, the telephone redemption option or any other election in connection with your account. |
33
The transfer agent reserves the right to require Medallion Signature Guarantees on all redemptions.
Accounts held by a corporation, trust, fiduciary or partnership, may require additional documentation along with a signature guaranteed letter of instruction. The Funds participate in the Paperless Legal Program (the “Program”), which eliminates the need for accompanying paper documentation on legal securities transfers. Requests received with a Medallion Signature Guarantee will be reviewed for the proper criteria to meet the guidelines of the Program and may not require additional documentation. Please contact Shareholder Services at 866-392-2626 for more information.
The sale price of each share will be the next determined NAV after a Fund (or an authorized institution) receives and accepts your request in good order.
By Mail
To redeem shares by mail, please send a letter to the Funds signed by all registered parties on the account specifying:
|
● |
The Fund name; |
|
● |
The share class; |
|
● |
The account number; |
|
● |
The dollar amount or number of shares you wish to redeem; |
|
● |
The account name(s); and |
|
● |
The address to which redemption (sale) proceeds should be sent. |
All registered shareholders must sign the letter in the exact name(s) and must designate any special capacity in which they are registered.
Regular Mail Address
SouthernSun
Funds
P.O. Box 588
Portland, ME 04112
Express Mail Address
SouthernSun
Funds
c/o Atlantic Shareholder Services
Three Canal Plaza, Ground
Floor
Portland, ME 04101
34
The Funds do not consider the U.S. Postal Service or other independent delivery services to be their agents. Therefore, deposit in the mail or with such services of sell orders does not constitute receipt by the Funds’ transfer agent. The share price used to fill the sell order is the next price calculated by a Fund after the Funds’ transfer agent receives and accepts the order in good order at the P.O. Box provided for regular mail delivery.
By Telephone
To redeem shares by telephone, you must first establish the telephone redemption privilege (and, if desired, the wire and/or ACH redemption privilege) by completing the appropriate sections of the account application. Call 866-392-2626 to redeem your shares. Based on your instructions, the Funds will mail your proceeds to you, or send them to your bank via wire or ACH.
By Systematic Withdrawal Plan (via ACH)
If you have a direct account with the Funds, you may transfer as little as $100 per month from your account to another financial institution through a Systematic Withdrawal Plan (via ACH). The minimum balance requirements may be modified by a Fund in its sole discretion. To participate in this service, you must complete the appropriate sections of the account application and mail it to the Funds.
Receiving Your Money
Normally, a Fund will send your sale proceeds within one Business Day after it receives your redemption request. A Fund, however, may take up to seven days to pay redemption proceeds. Your proceeds can be wired to your bank account (may be subject to a $10 fee), sent to you by check or sent via ACH to your bank account if you have established banking instructions with a Fund. If you are selling shares that were recently purchased by check or through ACH, redemption proceeds may not be available until your check has cleared or the ACH transaction has been completed (which may take up to 15 days from your date of purchase).
A Fund typically expects to sell portfolio assets and/or hold cash or cash equivalents to meet redemption requests. On a less regular basis, a Fund may also meet redemption requests by using short-term borrowings from its custodian and/or redeeming shares in-kind (as described below). These methods may be used during both normal and stressed market conditions.
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Redemptions In-Kind
The Funds generally pay sale (redemption) proceeds in cash. However, under unusual conditions that make the payment of cash unwise and for the protection of the Funds’ remaining shareholders, the Funds might pay all or part of your redemption proceeds in securities with a market value equal to the redemption price (redemption in-kind). If your shares were redeemed in-kind, you would have to pay transaction costs to sell the securities distributed to you, as well as taxes on any capital gains from the sale as with any redemption. In addition, you would continue to be subject to the risks of any market fluctuation in the value of the securities you receive in-kind until they are sold.
Involuntary Redemptions of Your Shares
If your account balance drops below $500 for Class N Shares of a Fund, or $25,000 for Class I shares of a Fund, you may be required to sell your shares. Involuntary redemptions will be effected only if they are deemed to be in the best interests of a Fund and its shareholders. The Funds generally will provide you at least 60 days’ written notice to give you time to add to your account and avoid the involuntary redemption of your shares. The Funds reserve the right to waive the minimum account value requirement in their sole discretion.
Suspension of Your Right to Sell Your Shares
The Funds may suspend your right to sell your shares or delay payment of redemption proceeds for more than seven days during times when the NYSE is closed, other than during customary weekends or holidays, or as otherwise permitted by the SEC. More information about this is in the SAI.
Share Class Conversions
At no charge, you or your financial intermediary may convert one class of shares of the Funds directly to another class of shares of the Funds, subject to the eligibility requirements and the fees and expenses of the share class of the Fund you convert into. A conversion between share classes of the Funds is not a taxable event.
You may only convert shares between accounts with identical registrations (i.e., the same names and addresses). If you purchase shares through a financial intermediary, you may only convert into a share class which your financial intermediary sells or services. Your financial intermediary can tell you which share classes are available through the intermediary.
36
Telephone Transactions
Purchasing and selling Fund shares over the telephone is extremely convenient, but not without risk. Although the Funds have certain safeguards and procedures to confirm the identity of callers and the authenticity of instructions, the Funds are not responsible for any losses or costs incurred by following telephone instructions they reasonably believe to be genuine. If you or your financial institution transact with the Funds over the telephone, you will generally bear the risk of any loss.
Payments to Financial Intermediaries
The Funds and/or the Adviser may compensate financial intermediaries for providing a variety of services to the Funds and/or their shareholders. Financial intermediaries include affiliated or unaffiliated brokers, dealers, banks (including bank trust departments), trust companies, registered investment advisers, financial planners, retirement plan administrators, insurance companies, and any other institution having a service, administration, or any similar arrangement with the Funds, their service providers or their respective affiliates. This section briefly describes how financial intermediaries may be paid for providing these services. For more information please see “Payments to Financial Intermediaries” in the SAI.
Distribution Plan
The Funds have adopted a distribution plan under Rule 12b-1 of the Investment Company Act of 1940, as amended, for Class N Shares that allows the Funds to pay distribution and/or service fees for the sale and distribution of Fund shares, and for services provided to shareholders. Because these fees are paid out of a Fund’s assets on an on-going basis, over time these fees will increase the cost of your investment and may cost you more than paying other types of sales charges. The maximum annual Rule 12b-1 fee for Class N Shares of a Fund is 0.25%.
Shareholder Servicing Plan
The Funds have adopted a shareholder servicing plan that provides that the Funds may pay financial intermediaries for shareholder services in an annual amount not to exceed 0.15% based on the average daily net assets of the Funds’ Class N Shares and Class I Shares. The services for which financial intermediaries are compensated may include record-keeping, transaction processing for shareholders’ accounts and other shareholder services.
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Payments by the Adviser
From time to time, the Adviser and/or its affiliates, in their discretion, may make payments to certain affiliated or unaffiliated financial intermediaries to compensate them for the costs associated with distribution, marketing, administration and shareholder servicing support for the Funds. These payments are sometimes characterized as “revenue sharing” payments and are made out of the Adviser’s and/or its affiliates’ own legitimate profits or other resources, and may be in addition to any payments made to financial intermediaries by the Funds. A financial intermediary may provide these services with respect to Fund shares sold or held through programs such as retirement plans, qualified tuition programs, fund supermarkets, fee-based advisory or wrap fee programs, bank trust programs, and insurance (e.g., individual or group annuity) programs. In addition, financial intermediaries may receive payments for making shares of the Funds available to their customers or registered representatives, including providing the Funds with “shelf space,” placing them on a preferred or recommended fund list, or promoting the Funds in certain sales programs that are sponsored by financial intermediaries. To the extent permitted by SEC and Financial Industry Regulatory Authority (“FINRA”) rules and other applicable laws and regulations, the Adviser and/or its affiliates may pay or allow other promotional incentives or payments to financial intermediaries.
The level of payments made by the Adviser and/or its affiliates to individual financial intermediaries varies in any given year and may be negotiated on the basis of sales of Fund shares, the amount of Fund assets serviced by the financial intermediary or the quality of the financial intermediary’s relationship with the Adviser and/or its affiliates. These payments may be more or less than the payments received by the financial intermediaries from other mutual funds and may influence a financial intermediary to favor the sales of certain funds or share classes over others. In certain instances, the payments could be significant and may cause a conflict of interest for your financial intermediary. Any such payments will not change the NAV or price of a Fund’s shares. Please contact your financial intermediary for information about any payments it may receive in connection with the sale of Fund shares or the provision of services to Fund shareholders.
In addition to these payments, your financial intermediary may charge you account fees, commissions or transaction fees for buying or redeeming shares of the Funds, or other fees for servicing your account. Your financial intermediary should provide a schedule of its fees and services to you upon request.
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Other Policies
Excessive Trading Policies and Procedures
The Funds are intended for long-term investment purposes only and discourage shareholders from engaging in “market timing” or other types of excessive short-term trading. This frequent trading into and out of a Fund may present risks to the Fund’s long-term shareholders and could adversely affect shareholder returns. The risks posed by frequent trading include interfering with the efficient implementation of a Fund’s investment strategies, triggering the recognition of taxable gains and losses on the sale of Fund investments, requiring the Fund to maintain higher cash balances to meet redemption requests, and experiencing increased transaction costs.
In addition, because certain of the Funds may invest in foreign securities traded primarily on markets that close prior to the time a Fund determines its NAV, the risks posed by frequent trading may have a greater potential to dilute the value of Fund shares held by long-term shareholders than funds investing exclusively in U.S. securities. In instances where a significant event that affects the value of one or more foreign securities held by a Fund takes place after the close of the primary foreign market, but before the time that the Fund determines its NAV, certain investors may seek to take advantage of the fact that there will be a delay in the adjustment of the market price for a security caused by this event until the foreign market reopens (sometimes referred to as “price” or “time zone” arbitrage). Shareholders who attempt this type of arbitrage may dilute the value of a Fund’s shares if the prices of the Fund’s foreign securities do not reflect their fair value. Although the Adviser has procedures designed to determine the fair value of foreign securities for purposes of calculating the Funds’ NAV when such an event has occurred, fair value pricing, because it involves judgments which are inherently subjective, may not always eliminate the risk of price arbitrage.
In addition, because the Funds may invest in small-cap securities, which often trade in lower volumes and may be less liquid, the Funds may be more susceptible to the risks posed by frequent trading because frequent transactions in the Funds’ shares may have a greater impact on the market prices of these types of securities.
The Funds’ service providers will take steps reasonably designed to detect and deter frequent trading by shareholders pursuant to the Funds’ policies and procedures described in this prospectus and approved by the Board. For purposes of applying these policies, the Funds’ service
39
providers may consider the trading history of accounts under common ownership or control. The Funds’ policies and procedures include:
|
● |
Shareholders are restricted from making more than one (1) “round trip” into or out of a Fund over any rolling two (2) month period. If a shareholder exceeds this amount, the Fund and/or its service providers may, at their discretion, reject any additional purchase orders. The Funds define a “round trip” as a purchase into a Fund by a shareholder, followed by a subsequent redemption out of the Fund, of an amount the Adviser reasonably believes would be harmful or disruptive to the Fund. |
|
● |
Each Fund reserves the right to reject any purchase request by any investor or group of investors for any reason without prior notice, including, in particular, if the Fund or the Adviser reasonably believes that the trading activity would be harmful or disruptive to the Fund. |
The Funds and/or their service providers seek to apply these policies to the best of their abilities uniformly and in a manner they believe is consistent with the interests of the Funds’ long-term shareholders. The Funds do not knowingly accommodate frequent purchases and redemptions by Fund shareholders. Although these policies are designed to deter frequent trading, none of these measures alone nor all of them taken together eliminate the possibility that frequent trading in a Fund will occur. Systematic purchases and redemptions are exempt from these policies.
Financial intermediaries (such as investment advisers and broker-dealers) often establish omnibus accounts in the Funds for their customers through which transactions are placed. The Funds have entered into “information sharing agreements” with these financial intermediaries, which permit the Funds to obtain, upon request, information about the trading activity of the intermediary’s customers that invest in the Funds. If the Funds or their service providers identify omnibus account level trading patterns that have the potential to be detrimental to the Funds, the Funds or their service providers may, in their sole discretion, request from the financial intermediary information concerning the trading activity of its customers. Based upon a review of that information, if the Funds or their service providers determine that the trading activity of any customer may be detrimental to the Funds, they may, in their sole discretion, request the financial intermediary to restrict or limit further trading in the Funds by that customer. If the Funds are not satisfied that the intermediary has taken appropriate action, the Funds may terminate the intermediary’s ability to transact in Fund
40
shares. When information regarding transactions in the Funds’ shares is requested by the Funds and such information is in the possession of a person that is itself a financial intermediary to a financial intermediary (an “indirect intermediary”), any financial intermediary with whom the Funds have an information sharing agreement is obligated to obtain transaction information from the indirect intermediary or, if directed by the Funds, to restrict or prohibit the indirect intermediary from purchasing shares of the Funds on behalf of other persons.
The Funds and their service providers will use reasonable efforts to work with financial intermediaries to identify excessive short-term trading in omnibus accounts that may be detrimental to the Funds. However, there can be no assurance that the monitoring of omnibus account level trading will enable the Funds to identify or prevent all such trading by a financial intermediary’s customers. Please contact your financial intermediary for more information.
Customer Identification and Verification
To help the government fight the funding of terrorism and money laundering activities, federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account.
What this means to you: when you open an account, a Fund will ask your name, address, date of birth, and other information that will allow the Fund to identify you. This information is subject to verification to ensure the identity of all persons opening a mutual fund account.
The Funds are required by law to reject your new account application if the required identifying information is not provided.
In certain instances, the Funds are required to collect documents to fulfill their legal obligation. Documents provided in connection with your application will be used solely to establish and verify your identity.
Attempts to collect the missing information required on the application will be performed by either contacting you or, if applicable, your broker or financial intermediary. If this information cannot be obtained within a reasonable timeframe established in the sole discretion of the Funds, your application will be rejected.
Subject to the Funds’ right to reject purchases as described in this prospectus, upon receipt of your application in good order (or upon receipt of all identifying information required on the application), your investment will be accepted and your order will be processed at the next-determined NAV per share.
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The Funds reserve the right to close or liquidate your account at the next-determined NAV and remit proceeds to you via check if they are unable to verify your identity. Attempts to verify your identity will be performed within a reasonable timeframe established in the sole discretion of the Funds. Further, the Funds reserve the right to hold your proceeds until your original check clears the bank, which may take up to 15 days from the date of purchase. In such an instance, you may be subject to a gain or loss on Fund shares and will be subject to corresponding tax implications.
Anti-Money Laundering Program
Customer identification and verification is part of the Funds’ overall obligation to deter money laundering under federal law. The Funds have adopted an anti-money laundering compliance program designed to prevent the Funds from being used for money laundering or the financing of illegal activities. In this regard, the Funds reserve the right to: (i) refuse, cancel or rescind any purchase order; (ii) freeze any account and/or suspend account services; or (iii) involuntarily close your account in cases of threatening conduct or suspected fraudulent or illegal activity. These actions will be taken when, in the sole discretion of Fund management, they are deemed to be in the best interest of a Fund or in cases when a Fund is requested or compelled to do so by governmental or law enforcement authority. If your account is closed at the request of governmental or law enforcement authority, you may not receive proceeds of the redemption if the Fund is required to withhold such proceeds.
Unclaimed Property
Each state has unclaimed property rules that generally provide for escheatment (or transfer) to the state of unclaimed property under various circumstances. Such circumstances include inactivity (e.g., no owner-initiated contact for a certain period), returned mail (e.g., when mail sent to a shareholder is returned by the post office, or “RPO,” as undeliverable), or a combination of both inactivity and returned mail. Once it flags property as unclaimed, the applicable Fund will attempt to contact the shareholder, but if that attempt is unsuccessful, the account may be considered abandoned and escheated to the state.
Shareholders that reside in the state of Texas may designate a representative to receive escheatment notifications by completing and submitting a designation form that can be found on the website of the Texas Comptroller. While the designated representative does not have any rights to claim or access the shareholder’s account
42
or assets, the escheatment period will cease if the representative communicates knowledge of the shareholder’s location and confirms that the shareholder has not abandoned his or her property. A completed designation form may be mailed to the Funds (if shares are held directly with the Funds) or to the shareholder’s financial intermediary (if shares are not held directly with the Funds).
More information on unclaimed property and how to maintain an active account is available through your state or by calling 866-392-2626.
Dividends and Distributions
Each Fund distributes its net investment income and makes distributions of its net realized capital gains, if any, at least annually. If you own Fund shares on a Fund’s record date, you will be entitled to receive the distribution.
You will receive dividends and distributions in the form of additional Fund shares unless you elect to receive payment in cash. To elect cash payment, you must notify a Fund in writing prior to the date of the distribution. Your election will be effective for dividends and distributions paid after the Fund receives your written notice. To cancel your election, simply send the Fund written notice.
Taxes
Please consult your tax advisor regarding your specific questions about U.S. federal, state and local income taxes. Below is a summary of certain important tax issues that affect the Funds and their shareholders. This summary is based on current tax laws, which may change. This summary does not apply to shares held in an IRA or other tax-qualified plans, which are generally not subject to current tax. Transactions relating to shares held in such accounts may, however, be taxable at some time in the future.
Each Fund has elected and intends to qualify each year for treatment as a RIC under the Code. If it meets certain minimum distribution requirements, a RIC is not subject to tax at the fund level on income and gains from investments that are timely distributed to shareholders. However, a Fund’s failure to qualify as a RIC or to meet minimum distribution requirements would result (if certain relief provisions were not available) in fund-level taxation and, consequently, a reduction in income available for distribution to shareholders.
Each Fund intends to distribute substantially all of its net investment income and net realized capital gains, if any. The dividends and distributions you receive may be subject to federal, state, and local
43
taxation, depending upon your tax situation. Distributions you receive from each Fund may be taxable whether or not you reinvest them. Income distributions, other than distributions of qualified dividend income, and distributions of short-term capital gains are generally taxable at ordinary income tax rates. Distributions reported by the Funds as long-term capital gains and as qualified dividend income are generally taxable at the rates applicable to long-term capital gains currently set at a maximum tax rate for individuals at 20% (lower rates apply to individuals in lower tax brackets). A Fund’s investment strategies may limit its ability to make distributions eligible for treatment as qualified dividend income. Once a year the Funds (or their administrative agent) will send you a statement showing the types and total amount of distributions you received during the previous year.
You should note that if you purchase shares just before a distribution, the purchase price would reflect the amount of the upcoming distribution. In this case, you would be taxed on the entire amount of the distribution received, even though, as an economic matter, the distribution simply constitutes a return of your investment. This is known as “buying a dividend” and should generally be avoided by taxable investors.
Each sale of Fund shares may be a taxable event. For tax purposes, an exchange of your Fund shares for shares of a different fund is the same as a sale. Assuming a shareholder holds Fund shares as a capital asset, the gain or loss on the sale of Fund shares generally will be treated as a short-term capital gain or loss if you held the shares for 12 months or less or as long-term capital gain or loss if you held the shares for longer. Any loss realized upon a taxable disposition of Fund shares held for six months or less will be treated as long-term, rather than short-term, to the extent of any long-term capital gain distributions received (or deemed received) by you with respect to Fund shares. All or a portion of any loss realized upon a taxable disposition of Fund shares will be disallowed if you purchase other substantially identical shares within 30 days before or after the disposition. In such a case, the basis of the newly purchased shares will be adjusted to reflect the disallowed loss.
U.S. individuals with income exceeding $200,000 ($250,000 if married and filing jointly) are subject to a 3.8% tax on their “net investment income,” including interest, dividends, and capital gains (including capital gains realized on the sale of shares of a Fund).
The Funds (or their administrative agent) must report to the Internal Revenue Service (“IRS”) and furnish to Fund shareholders cost basis information for Fund shares. In addition to reporting the gross proceeds from the sale of Fund shares, the Funds (or their administrative agent)
44
are also required to report the cost basis information for such shares and indicate whether these shares had a short-term or long-term holding period. For each sale of Fund shares, the Funds will permit shareholders to elect from among several IRS-accepted cost basis methods, including the average cost basis method. In the absence of an election, the Funds will use the first-in, first-out method as the default cost basis method. The cost basis method elected by the Fund shareholder (or the cost basis method applied by default) for each sale of Fund shares may not be changed after the settlement date of each such sale of Fund shares. Fund shareholders should consult their tax advisors to determine the best IRS-accepted cost basis method for their tax situation and to obtain more information about how cost basis reporting applies to them. Shareholders also should carefully review the cost basis information provided to them and make any additional basis, holding period or other adjustments that are required when reporting these amounts on their federal income tax returns.
To the extent a Fund invests in foreign securities, it may be subject to foreign withholding taxes with respect to dividends or interest the Fund receives from sources in foreign countries. If more than 50% of the total assets of a Fund consists of foreign securities, such Fund will be eligible to elect to treat some of those taxes as a distribution to shareholders, which would allow shareholders to offset some of their U.S. federal income tax. A Fund (or its administrative agent) will notify you if it makes such an election and provide you with the information necessary to reflect foreign taxes paid on your income tax return.
Because each shareholder’s tax situation is different, you should consult your tax advisor about the tax implications of an investment in the Funds.
More information about taxes is in the SAI.
Additional Information
The Trust enters into contractual arrangements with various parties, including, among others, the Funds’ investment adviser, custodian, transfer agent, accountants, administrator and distributor, who provide services to the Funds. Shareholders are not parties to, or intended (or “third-party”) beneficiaries of, any of those contractual arrangements, and those contractual arrangements are not intended to create in any individual shareholder or group of shareholders any right to enforce the terms of the contractual arrangements against the service providers or to seek any remedy under the contractual arrangements against the service providers, either directly or on behalf of the Trust.
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This prospectus and the SAI provide information concerning the Trust and the Funds that you should consider in determining whether to purchase shares of the Funds. The Funds may make changes to this information from time to time. Neither this prospectus, the SAI or any document filed as an exhibit to the Trust’s registration statement, is intended to, nor does it, give rise to an agreement or contract between the Trust or the Funds and any shareholder, or give rise to any contract or other rights in any individual shareholder, group of shareholders or other person other than any rights conferred explicitly by federal or state securities laws that may not be waived.
Financial Highlights
The financial highlights tables that follow are intended to help you understand each Fund’s financial performance for the past five fiscal years. Some of this information reflects financial information for a single Fund share. The total returns in the tables represent the rate that an investor would have earned (or lost) on an investment in a Fund (assuming reinvestment of all dividends and distributions).
The information provided below has been audited by PricewaterhouseCoopers LLP, independent registered public accounting firm of each Fund and Predecessor Fund. The financial statements and the unqualified opinion of PricewaterhouseCoopers LLP are included in the 2023 Annual Report of the Funds, which is available upon request by calling the Funds at 866-392-2626.
The financial information shown prior to February 16, 2021 is that of the Predecessor Small Cap Fund and Predecessor U.S. Equity Fund.
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Small Cap Fund
|
|
For the fiscal year ended September 30, |
|||||||||||||||||||
|
Class N |
2023 |
2022 |
2021 ^ |
2020 |
2019 |
|||||||||||||||
|
Net Asset Value, Beginning of Year |
$ | 26.60 | $ | 31.13 | $ | 21.28 | $ | 22.59 | $ | 25.59 | ||||||||||
|
Income (Loss) from Investment Operations: |
||||||||||||||||||||
|
Net Investment Income (Loss)* |
(0.10 | ) | (0.13 | ) | 0.01 | (0.01 | )(1) | 0.00 | (1)(2) | |||||||||||
|
Net Realized and Unrealized Gain (Loss) |
3.73 | (0.96 | ) | 9.90 | (0.02 | ) | (2.10 | ) | ||||||||||||
|
Total from Investment Operations |
3.63 | (1.09 | ) | 9.91 | (0.03 | ) | (2.10 | ) | ||||||||||||
|
Dividends and Distributions: |
||||||||||||||||||||
|
Net Investment Income |
— | (0.01 | ) | — | (0.01 | ) | — | |||||||||||||
|
Net Realized Gains |
(2.53 | ) | (3.43 | ) | (0.06 | ) | (1.27 | ) | (0.90 | ) | ||||||||||
|
Total Dividends and Distributions |
(2.53 | ) | (3.44 | ) | (0.06 | ) | (1.28 | ) | (0.90 | ) | ||||||||||
|
Net Asset Value, End of Year |
$ | 27.70 | $ | 26.60 | $ | 31.13 | $ | 21.28 | $ | 22.59 | ||||||||||
|
Total Return |
13.88 | %† | (4.31 | )%† | 46.63 | %† | (0.72 | )%(1)(3) | (7.46 | )%(1)(3) | ||||||||||
|
Ratios and Supplemental Data |
||||||||||||||||||||
|
Net Assets, End of Year (Thousands) |
$ | 36,078 | $ | 34,619 | $ | 41,132 | $ | 31,784 | $ | 40,279 | ||||||||||
|
Ratio of Net Expenses to Average Net Assets |
1.33 | % | 1.30 | % | 1.25 | % | 1.25 | % | 1.24 | %(4) | ||||||||||
|
Ratio of Gross Expenses to Average Net Assets(5) |
1.33 | % | 1.31 | % | 1.30 | % | 1.25 | % | 1.24 | % | ||||||||||
|
Ratio of Net Investment Income (Loss) to Average Net Assets |
(0.33 | )% | (0.43 | )% | 0.05 | % | (0.05 | )%(1) | 0.02 | %(1) | ||||||||||
|
Portfolio Turnover Rate |
40 | % | 37 | % | 45 | % | 25 | % | 29 | % | ||||||||||
Amounts designated as “—” are either not applicable, $0 or have been rounded to $0.
|
* |
Per share calculations were performed using average shares for the period. |
|
^ |
On February 16, 2021, the AMG SouthernSun Small Cap Fund (the “Small Cap Predecessor Fund”) was reorganized into the Advisors’ Inner Circle Fund III SouthernSun Small Cap Fund (the “Small Cap Fund”). Information presented prior to February 16, 2021 is that of the Small Cap Predecessor Fund. |
|
† |
Return is for the period indicated and has not been annualized. Total return would have been lower had certain expenses not been waived and assumed by the Adviser during the period. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. |
|
(1) |
Total returns and net investment income (loss) would have been lower had certain expenses not been offset. |
|
(2) |
Less than $0.005 per share. |
|
(3) |
The total return is calculated using the published Net Asset Value as of fiscal year end. |
|
(4) |
Includes reduction from broker recapture amounting to less than 0.01% for the fiscal year ended 2019. |
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(5) |
Excludes the impact of expense reimbursement or fee waivers and expense reductions such as brokerage credits, but includes expense repayments and non-reimbursable expenses, if any, such as interest, taxes, and extraordinary expenses. |
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Small Cap Fund
|
|
For the fiscal year ended September 30, |
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|
Class I |
2023 |
2022 |
2021 ^ |
2020 |
2019 |
|||||||||||||||
|
Net Asset Value, Beginning of Year |
$ | 27.31 | $ | 31.85 | $ | 21.73 | $ | 23.04 | $ | 26.02 | ||||||||||
|
Income (Loss) from Investment Operations: |
||||||||||||||||||||
|
Net Investment Income (Loss)* |
(0.02 | ) | (0.05 | ) | 0.10 | 0.04 | (1) | 0.06 | (1) | |||||||||||
|
Net Realized and Unrealized Gain (Loss) |
3.81 | (0.98 | ) | 10.10 | (0.01 | ) | (2.14 | ) | ||||||||||||
|
Total from Investment Operations |
3.79 | (1.03 | ) | 10.20 | 0.03 | (2.08 | ) | |||||||||||||
|
Dividends and Distributions: |
||||||||||||||||||||
|
Net Investment Income |
— | (0.08 | ) | (0.02 | ) | (0.07 | ) | — | ||||||||||||
|
Net Realized Gains |
(2.53 | ) | (3.43 | ) | (0.06 | ) | (1.27 | ) | (0.90 | ) | ||||||||||
|
Total Dividends and Distributions |
(2.53 | ) | (3.51 | ) | (0.08 | ) | (1.34 | ) | (0.90 | ) | ||||||||||
|
Net Asset Value, End of Year |
$ | 28.57 | $ | 27.31 | $ | 31.85 | $ | 21.73 | $ | 23.04 | ||||||||||
|
Total Return |
14.13 | %† | (4.04 | )%† | 47.00 | %† | (0.45 | )%(1)(2) | (7.25 | )%(1)(2) | ||||||||||
|
Ratios and Supplemental Data |
||||||||||||||||||||
|
Net Assets, End of Year (Thousands) |
$ | 290,917 | $ | 253,638 | $ | 255,677 | $ | 136,123 | $ | 104,143 | ||||||||||
|
Ratio of Net Expenses to Average Net Assets |
1.08 | % | 1.05 | % | 1.00 | % | 1.00 | % | 0.99 | %(3) | ||||||||||
|
Ratio of Gross Expenses to Average Net Assets(4) |
1.08 | % | 1.06 | % | 1.04 | % | 1.00 | % | 0.99 | % | ||||||||||
|
Ratio of Net Investment Income (Loss) to Average Net Assets |
(0.08 | )% | (0.18 | )% | 0.31 | % | 0.20 | %(1) | 0.27 | %(1) | ||||||||||
|
Portfolio Turnover Rate |
40 | % | 37 | % | 45 | % | 25 | % | 29 | % | ||||||||||
Amounts designated as “—” are either not applicable, $0 or have been rounded to $0.
|
* |
Per share calculations were performed using average shares for the period. |
|
^ |
On February 16, 2021, the AMG SouthernSun Small Cap Fund (the “Small Cap Predecessor Fund”) was reorganized into the Advisors’ Inner Circle Fund III SouthernSun Small Cap Fund (the “Small Cap Fund”). Information presented prior to February 16, 2021 is that of the Small Cap Predecessor Fund. |
|
† |
Return is for the period indicated and has not been annualized. Total return would have been lower had certain expenses not been waived and assumed by the Adviser during the period. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. |
|
(1) |
Total returns and net investment income (loss) would have been lower had certain expenses not been offset. |
|
(2) |
The total return is calculated using the published Net Asset Value as of fiscal year end. |
|
(3) |
Includes reduction from broker recapture amounting to less than 0.01% for the fiscal year ended 2019. |
|
(4) |
Excludes the impact of expense reimbursement or fee waivers and expense reductions such as brokerage credits, but includes expense repayments and non-reimbursable expenses, if any, such as interest, taxes, and extraordinary expenses. |
48
U.S. Equity Fund
|
|
For the fiscal year ended September 30, |
|||||||||||||||||||
|
Class N |
2023 |
2022 |
2021 ^ |
2020 |
2019 |
|||||||||||||||
|
Net Asset Value, Beginning of Year |
$ | 14.37 | $ | 17.18 | $ | 11.98 | $ | 11.90 | $ | 14.40 | ||||||||||
|
Income (Loss) from Investment Operations: |
||||||||||||||||||||
|
Net Investment Income* |
0.02 | 0.01 | 0.09 | 0.07 | (1) | 0.07 | (1) | |||||||||||||
|
Net Realized and Unrealized Gain (Loss) |
2.26 | (0.56 | ) | 5.17 | 0.14 | (1.85 | ) | |||||||||||||
|
Total from Investment Operations |
2.28 | (0.55 | ) | 5.26 | 0.21 | (1.78 | ) | |||||||||||||
|
Dividends and Distributions: |
||||||||||||||||||||
|
Net Investment Income |
(0.04 | ) | (0.08 | ) | (0.06 | ) | (0.13 | ) | (0.05 | ) | ||||||||||
|
Net Realized Gains |
(2.45 | ) | (2.18 | ) | — | — | (0.67 | ) | ||||||||||||
|
Total Dividends and Distributions |
(2.49 | ) | (2.26 | ) | (0.06 | ) | (0.13 | ) | (0.72 | ) | ||||||||||
|
Net Asset Value, End of Year |
$ | 14.16 | $ | 14.37 | $ | 17.18 | $ | 11.98 | $ | 11.90 | ||||||||||
|
Total Return |
17.46 | %† | (4.15 | )%† | 43.95 | %† | 1.64 | %(1)(2) | (11.50 | )%(1)(2) | ||||||||||
|
Ratios and Supplemental Data |
||||||||||||||||||||
|
Net Assets, End of Year (Thousands) |
$ | 3,541 | $ | 3,528 | $ | 4,991 | $ | 4,588 | $ | 7,206 | ||||||||||
|
Ratio of Net Expenses to Average Net Assets |
1.34 | % | 1.34 | % | 1.33 | % | 1.32 | %(3) | 1.19 | %(3) | ||||||||||
|
Ratio of Gross Expenses to Average Net Assets(4) |
1.40 | % | 1.50 | % | 1.49 | % | 1.37 | % | 1.25 | % | ||||||||||
|
Ratio of Net Investment Income to Average Net Assets |
0.16 | % | 0.03 | % | 0.52 | % | 0.60 | %(1) | 0.58 | %(1) | ||||||||||
|
Portfolio Turnover Rate |
39 | % | 27 | % | 36 | % | 11 | % | 18 | % | ||||||||||
Amounts designated as “—” are either not applicable, $0 or have been rounded to $0.
|
* |
Per share calculations were performed using average shares for the period. |
|
^ |
On February 16, 2021, the AMG SouthernSun U.S. Equity Fund (the “U.S. Equity Predecessor Fund”) was reorganized into the Advisors’ Inner Circle III SouthernSun U.S. Equity Fund (the “U.S. Equity Fund”). Information presented prior to February 16, 2021 is that of the U.S. Equity Predecessor Fund. |
|
† |
Return is for the period indicated and has not been annualized. Total return would have been lower had certain expenses not been waived and assumed by the Adviser during the period. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. |
|
(1) |
Total returns and net investment income (loss) would have been lower had certain expenses not been offset. |
|
(2) |
The total return is calculated using the published Net Asset Value as of fiscal year end. |
|
(3) |
Includes reduction from broker recapture amounting to 0.02% and 0.06%, for the fiscal years ended 2020 and 2019, respectively. |
|
(4) |
Excludes the impact of expense reimbursement or fee waivers and expense reductions such as brokerage credits, but includes expense repayments and non-reimbursable expenses, if any, such as interest, taxes, and extraordinary expenses. |
49
U.S. Equity Fund
|
|
For the fiscal year ended September 30, |
|||||||||||||||||||
|
Class I |
2023 |
2022 |
2021 ^ |
2020 |
2019 |
|||||||||||||||
|
Net Asset Value, Beginning of Year |
$ | 14.32 | $ | 17.12 | $ | 11.94 | $ | 11.86 | $ | 14.44 | ||||||||||
|
Income (Loss) from Investment Operations: |
||||||||||||||||||||
|
Net Investment Income* |
0.06 | 0.04 | 0.12 | 0.10 | (1) | 0.10 | (1) | |||||||||||||
|
Net Realized and Unrealized Gain (Loss) |
2.25 | (0.54 | ) | 5.15 | 0.13 | (1.87 | ) | |||||||||||||
|
Total from Investment Operations |
2.31 | (0.50 | ) | 5.27 | 0.23 | (1.77 | ) | |||||||||||||
|
Dividends and Distributions: |
||||||||||||||||||||
|
Net Investment Income |
(0.04 | ) | (0.12 | ) | (0.09 | ) | (0.15 | ) | (0.14 | ) | ||||||||||
|
Net Realized Gains |
(2.45 | ) | (2.18 | ) | — | — | (0.67 | ) | ||||||||||||
|
Total Dividends and Distributions |
(2.49 | ) | (2.30 | ) | (0.09 | ) | (0.15 | ) | (0.81 | ) | ||||||||||
|
Net Asset Value, End of Year |
$ | 14.14 | $ | 14.32 | $ | 17.12 | $ | 11.94 | $ | 11.86 | ||||||||||
|
Total Return |
17.77 | %† | (3.88 | )%† | 44.29 | %† | 1.86 | %(1)(2) | (11.27 | )%(1)(2) | ||||||||||
|
Ratios and Supplemental Data |
||||||||||||||||||||
|
Net Assets, End of Year (Thousands) |
$ | 42,477 | $ | 36,437 | $ | 42,723 | $ | 34,672 | $ | 79,813 | ||||||||||
|
Ratio of Net Expenses to Average Net Assets |
1.09 | % | 1.09 | % | 1.08 | % | 1.07 | %(3) | 0.94 | %(3) | ||||||||||
|
Ratio of Gross Expenses to Average Net Assets(4) |
1.15 | % | 1.25 | % | 1.24 | % | 1.12 | % | 1.00 | % | ||||||||||
|
Ratio of Net Investment Income to Average Net Assets |
0.41 | % | 0.28 | % | 0.76 | % | 0.85 | %(1) | 0.81 | %(1) | ||||||||||
|
Portfolio Turnover Rate |
39 | % | 27 | % | 36 | % | 11 | % | 18 | % | ||||||||||
Amounts designated as “—” are either not applicable, $0 or have been rounded to $0.
|
* |
Per share calculations were performed using average shares for the period. |
|
^ |
On February 16, 2021, the AMG SouthernSun U.S. Equity Fund (the “U.S. Equity Predecessor Fund”) was reorganized into the Advisors’ Inner Circle Fund III SouthernSun U.S. Equity Fund (the “U.S. Equity Fund”). Information presented prior to February 16, 2021 is that of the U.S. Equity Predecessor Fund. |
|
† |
Return is for the period indicated and has not been annualized. Total return would have been lower had certain expenses not been waived and assumed by the Adviser during the period. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. |
|
(1) |
Total returns and net investment income (loss) would have been lower had certain expenses not been offset. |
|
(2) |
The total return is calculated using the published Net Asset Value as of fiscal year end. |
|
(3) |
Includes reduction from broker recapture amounting to 0.02% and 0.06%, for the fiscal years ended 2020 and 2019, respectively. |
|
(4) |
Excludes the impact of expense reimbursement or fee waivers and expense reductions such as brokerage credits, but includes expense repayments and non-reimbursable expenses, if any, such as interest, taxes, and extraordinary expenses. |
50
The Advisors’ Inner Circle Fund III
SOUTHERNSUN FUNDS
Investment Adviser
SouthernSun
Asset Management, LLC
240 Madison Avenue, Suite 800
Memphis, Tennessee
38103
Distributor
SEI
Investments Distribution Co.
One Freedom Valley Drive
Oaks, Pennsylvania
19456
Legal Counsel
Morgan,
Lewis & Bockius LLP
2222 Market Street
Philadelphia, Pennsylvania
19103
More information about the Funds is available, without charge, through the following:
Statement of Additional Information (“SAI”): The SAI, dated January 28, 2024, as it may be amended from time to time, includes detailed information about the Funds and The Advisors’ Inner Circle Fund III. The SAI is on file with the U.S. Securities and Exchange Commission (the “SEC”) and is incorporated by reference into this prospectus. This means that the SAI, for legal purposes, is a part of this prospectus.
Annual and Semi-Annual Reports: These reports list the Funds’ holdings and contain information from the Adviser about investment strategies, and recent market conditions and trends and their impact on Fund performance. The reports also contain detailed financial information about the Funds.
To Obtain an SAI, Annual or Semi-Annual Report, or More Information:
|
By Telephone: |
866-392-2626 |
|
By Mail: |
SouthernSun
Funds |
|
By Internet: |
https://southernsunam.com/ |
From the SEC: You can also obtain the SAI or the Annual and Semi-Annual Reports, as well as other information about The Advisors’ Inner Circle Fund III, from the EDGAR Database on the SEC’s website at: http://www.sec.gov. You may also obtain this information, upon payment of a duplicating fee, by e-mailing the SEC at the following address: [email protected].
The Trust’s Investment Company Act registration number is 811-22920.
SAM-PS-001-0500