ck0001970751-20221231
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Prospectus
December 15,
2023 |
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Patient
Opportunity Trust |
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Class
A |
LGOAX |
Class
C |
LMOPX |
Class
FI |
LMOFX |
Class
R |
LMORX |
Class
I |
LMNOX |
Class
IS |
MVISX |
The
U.S. Securities and Exchange Commission has not approved or disapproved these
securities or determined whether this Prospectus is accurate or complete. Any
statement to the contrary is a crime.
The
Fund is being registered in order to serve as the surviving fund in a “shell
reorganization” with a series of another registered investment company and will
not commence a public offering until the completion of the
reorganization.The
reorganization is expected to occur on or about January 19, 2024.
Table
of Contents
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Converting
shares |
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Additional
Information about Transactions |
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Appendix A - Financial
Intermediary Sales Charge Variations |
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Patient Opportunity
Trust – Summary Section
Investment
objective
The
Patient Opportunity Trust (the “Fund”) seeks long term growth of
capital.
Fees and expenses of the
Fund
The
accompanying table describes the fees and expenses that you may pay if you buy,
hold, and sell shares of the Fund. You may qualify for sales charge discounts if
you and your family invest, or agree to invest in the future, at least $25,000
in the Fund. More information about these and other discounts is available from
your financial intermediary and under “Choosing a class of shares to buy,” in
Appendix A to this Prospectus and in the Fund’s statement of additional
information (“SAI”). You may pay other fees, such as brokerage commissions and other fees
to financial intermediaries, which are not reflected in the table and Example
below.
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Shareholder
Fees (fees
paid directly from your investment) |
| Class A |
Class C |
Class FI |
Class
R |
Class I |
Class
IS |
Maximum
sales charge (load) imposed on purchases (as a % of offering
price) |
5.75%¹ |
None |
None |
None |
None |
None |
Maximum
deferred sales charge (load) (as a % of the lower of net asset value at
purchase or redemption) |
1.00%¹ |
1.00%² |
None |
None |
None |
None |
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Annual
Fund Operating Expenses
(expenses that you pay each year as a percentage of the value of your
investment) |
| Class A |
Class C |
Class FI |
Class R |
Class
I |
Class
IS |
Management
fees |
0.77% |
0.77% |
0.77% |
0.77% |
0.77% |
0.77% |
Distribution
and service (12b-1) fees |
0.25% |
1.00% |
0.25% |
0.50% |
None |
None |
Other
expenses3 |
0.51% |
0.49% |
0.58% |
0.49% |
0.50% |
0.53% |
Total
annual fund operating expenses |
1.53% |
2.26% |
1.60% |
1.76% |
1.27% |
1.30% |
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Fees
waived and/or expenses reimbursed4,5 |
-0.01% |
0.00% |
0.00% |
0.00% |
-0.02% |
-0.01% |
Total
annual fund operating expenses after waiving fees and/or reimbursing
expenses |
1.52% |
2.26% |
1.60% |
1.76% |
1.25% |
1.29% |
1There
is no front-end sales charge on purchases of $1 million or more. There is a
contingent deferred sales charge (“CDSC”) of 1.00% if you redeem Class A shares
within 18 months of purchases of $1 million or more. This CDSC is waived for
certain investors as defined in the “More about Contingent Deferred Sales
Charges” section on page 35.
2A
CDSC of 1.00% will be charged if you redeem within one year of purchasing Class
C shares. This charge is waived for certain investors as defined in the “More
about Contingent Deferred Sales Charges” section on page
35.
3Other
Expenses are based on other expenses for the Patient Opportunity Trust, a series
of Trust for Advised Portfolios (the “Predecessor Fund”), for the fiscal year
ended December 31, 2023.
4Patient
Capital Management, LLC (the “Adviser”) has contractually agreed to waive fees
and/or reimburse operating expenses (other than front-end or contingent deferred
loads, taxes, interest expense, brokerage commissions, acquired fund fees and
expenses, expenses incurred in connection with any merger or reorganization,
portfolio transaction expenses, dividends paid on short sales, extraordinary
expenses such as litigation, Rule 12b-1 fees, intermediary servicing fees, or
any other class-specific expenses) in order to limit the total annual fund
operating expenses (after fee waivers and/or expense reimbursements) to 0.88% of
average daily net assets for all share classes of the Fund. This contractual
limit may be referred to as the “Expense Cap.” The Adviser may request
recoupment from the Fund of previously waived fees and reimbursed expenses under
the Expense Cap for three years from the date such fees and expenses were waived
or paid, provided that such recoupment does not cause the Fund’s expense ratio
(after recoupment is taken into account) to exceed the lower of: (1) the Expense
Cap in place at the time such amounts were waived or paid, or (2) the Fund’s
Expense Cap at the time of the recoupment. The Expense Cap will remain in effect
through at least April 30,
2025.
5The
Adviser has also contractually agreed to reimburse operating expenses applicable
to Class I (other than management fees, front-end or contingent deferred loads,
taxes, interest expense, brokerage commissions, acquired fund fees and expenses,
expenses incurred in connection with any merger or reorganization, portfolio
transaction expenses, dividends paid on short sales, or extraordinary expenses
such as litigation) in order to limit the total annual fund operating expenses
for Class I (after fee waivers and/or expense reimbursements) to 0.93% of
average daily net assets attributable to Class I shares. This contractual limit
may be referred to as the “Class I Expense Cap.” The Adviser may request
recoupment from Class I of previously waived fees and
reimbursed
expenses under the Class I Expense Cap for three years from the date such fees
and expenses were waived or paid, provided that such recoupment does not cause
the Class I expense ratio (after recoupment is taken into account) to exceed the
lower of: (1) the Class I Expense Cap in place at the time such amounts were
waived or paid, or (2) the Class I Expense Cap at the time of the recoupment.
The Class I Expense Cap will remain in effect through at least April 30,
2025.
Example
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. The
example also assumes that your investment has a 5% return each year and the
Fund’s operating expenses remain the same (taking into account the Expense Cap
and the Class I Expense Cap (for Class I only) for the first year of each
period) and you reinvest all distributions and dividends without a sales charge.
The example does not include the brokerage commissions that investors may pay on
their purchases and sales of shares.
Although your
actual costs may be higher or lower, based on these assumptions your costs would
be:
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Number
of years you own your shares |
| 1 year |
3 years |
5 years |
10 years |
Class A
(with or without redemption at end of period) |
$721 |
$1,030 |
$1,360 |
$2,293 |
Class
C (with redemption at end of period) |
$329 |
$706 |
$1,210 |
$2,595 |
Class
C (without redemption at end of period) |
$229 |
$706 |
$1,210 |
$2,595 |
Class FI
(with or without redemption at end of period) |
$163 |
$505 |
$871 |
$1,900 |
Class
R (with or without redemption at end of period) |
$179 |
$554 |
$954 |
$2,073 |
Class I
(with or without redemption at end of period) |
$127 |
$401 |
$695 |
$1,532 |
Class
IS (with or without redemption at end of period) |
$131 |
$411 |
$712 |
$1,567 |
Portfolio
turnover
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 shares are
held in a taxable account. These costs, which are not reflected in annual fund
operating expenses or in the example, affect the Fund’s performance. The
Predecessor Fund’s portfolio turnover rate for the fiscal year ended
December 31, 2022 was 40% of the average value of its
portfolio.
Principal investment
strategies
The
Fund normally makes investments that, in the portfolio managers’ opinion, offer
the opportunity for long-term growth of capital. The portfolio managers exercise
a flexible strategy in the selection of investments, not limited by investment
style or asset class. The investment strategy typically involves identifying
instances where the Adviser believes the capital markets have mispriced
investment opportunities and exploiting price discrepancies and inefficiencies
in the market. The Fund may invest without limit in the common stock of U.S. and
foreign issuers (including securities denominated in foreign currencies) of all
sizes and in other U.S. and foreign securities, including emerging markets, and
including: securities convertible into common stock; securities issued through
private placements; preferred securities; warrants and rights; securities issued
by investment companies, including open-end mutual funds, closed-end funds, unit
investment trusts, and foreign investment companies; U.S. government securities;
securities issued by exchange-traded funds (“ETFs”); securities issued by real
estate investment trusts (“REITs”) and other issuers that invest, deal, or
otherwise engage in transactions in real estate; debt securities; sovereign
debt; currencies; derivative instruments including options, futures, forward
contracts, swaps (including buying and selling credit default swaps), caps,
floors, collars, indexed securities, currency related derivatives;
commodity-linked derivatives; and other instruments, including repurchase
agreements. Further, the Fund may engage in short sales of securities and other
instruments to a substantial degree both for speculative and hedging purposes.
While investing in a particular market sector is not a strategy of the Fund, its
portfolio may be significantly invested in one or more sectors as a result of
the investment selection decisions made pursuant to its strategy. The Fund may
be significantly invested in the following sectors: communications services,
consumer discretionary, consumer staples, energy, financials, health care,
industrials, information technology, materials, real estate, and
utilities.
The
Adviser assesses a company’s competitive strategy, financial and managerial
acumen, and valuation, and makes an investment decision based on an assessment
of its expected value. The Adviser may sell an investment when (i) the
investment reaches the Adviser’s assessment of its fair value; (ii) an
investment opportunity arises that offers, in the Adviser’s opinion, a higher
risk-adjusted expected return; or (iii) the facts surrounding the Adviser’s
assessment of the company change or are no longer applicable.
Subject
to the requirements of the federal securities laws as to all Fund borrowing
limitations, the Fund may also borrow money for investment purposes, in amounts
up to 10% of the Fund’s net assets measured as of the time of the borrowing,
which is a practice known as leveraging. The Fund may invest in debt and other
securities of any credit rating, including rated below investment grade,
commonly known as “junk” bonds or high yield bonds, and in unrated
securities.
The
Fund may seek investment exposure to bitcoin indirectly by investing up to 15%
of the Fund’s net assets in the Grayscale Bitcoin Trust, an entity that holds
bitcoin. Grayscale Bitcoin Trust is a privately offered investment vehicle, the
shares of which are also available over-the-counter. Bitcoin is a digital
commodity that is not issued by a government, bank, or central organization.
Bitcoin exists on an online, peer-to-peer computer network that hosts a public
transaction ledger where bitcoin transfers are recorded (the “Blockchain”).
Bitcoin has no physical existence beyond the record of transactions on the
Blockchain. The Grayscale Bitcoin Trust invests principally in bitcoin. The Fund
will not invest more than 15% of its net assets measured at the time of
investment in the Grayscale Bitcoin Trust.
Except
as to the investment in the Grayscale Bitcoin Trust, as noted above, the Fund
does not seek to and will not invest directly or indirectly in cryptocurrencies
or in cryptocurrency derivatives (e.g., bitcoin futures). The Fund does not
track the price movements of any cryptocurrency and the Fund will not invest in
initial coin offerings (“ICOs”).
The
Fund is non-diversified under the Investment Company Act of 1940 (the “1940
Act”), which means it may invest a larger percentage of its assets in a smaller
number of issuers than a diversified fund.
Principal risks
Risk
is inherent in all investing. The value of your investment in the Fund, as well
as the amount of return you receive on your investment, may fluctuate
significantly. You may lose part or all of your investment in the Fund or your
investment may not perform as well as other similar investments.
The Fund’s investment strategies and portfolio investments differ from those of
many other mutual funds. The Fund’s flexible investment strategy may make it
difficult for an investor to evaluate the future risk profile of an investment
in the Fund because of the portfolio managers’ ability to significantly change
the composition of the Fund’s investments. The Adviser may devote a significant
portion of the Fund’s assets to pursuing an investment opportunity or strategy,
including through the use of derivatives that create a form of investment
leverage in the Fund. This approach to investing may make the Fund a more
volatile investment than other mutual funds and cause the Fund to perform less
favorably than other mutual funds under similar market or economic
conditions.
An investment
in the Fund is not a deposit of a bank and is not insured or guaranteed by the
Federal Deposit Insurance Corporation or any other government
agency. The
following is a summary description of the principal risks of investing in the
Fund.
Stock
market and equity securities risk. The securities markets are volatile and the market prices of the
Fund’s securities may decline generally. Securities fluctuate in price based on
changes in a company’s financial condition and overall market and economic
conditions. Local, regional, or global events such as war, acts of terrorism,
the spread of infectious illness or other public health issues, recessions, or
other events could have a significant impact on the securities markets and on
specific securities. If the market prices of the securities owned by the Fund
fall, the value of your investment in the Fund will decline.
Issuer
risk. An issuer may perform poorly, and therefore, the value of its
securities may decline, which would negatively affect the Fund. The value of a
security can go up or down more than the market as a whole and can perform
differently from the value of the market as a whole, often due to disappointing
earnings reports by the issuer, unsuccessful products or services, loss of major
customers, major litigation against the issuer or changes in government
regulations affecting the issuer or the competitive environment. The Fund may
experience a substantial or complete loss on an individual
security.
Market
sector risk.
The Fund may be significantly overweight in certain companies, industries or
market sectors, which may cause the Fund’s performance to be more sensitive to
developments affecting those companies, industries or market sectors. While the
Fund’s sector exposure is expected to vary over time, the Fund anticipates that
it may be subject to some or all of the risks described
below:
Communication
services sector risk.
Communication services companies are particularly vulnerable to the potential
obsolescence of products and services due to technological advancement and the
innovation of competitors. Companies in the communication services sector may
also be affected by other competitive pressures, such as pricing competition, as
well as research and development costs, substantial capital requirements and
government regulation. Additionally, fluctuating domestic and international
demand, shifting demographics and often unpredictable changes in consumer tastes
can drastically affect a communication services company's profitability. While
all companies may be susceptible to network security breaches, certain companies
in the communication services sector may be particular targets of hacking and
potential theft of proprietary or consumer information or disruptions in
service, which could have a material adverse effect on their
businesses.
Consumer
discretionary sector risk.
Consumer
discretionary companies are companies that provide non-essential goods and
services, such as retailers, media companies and consumer services. These
companies manufacture products and provide discretionary services directly to
the consumer, and the success of these companies is tied closely to the
performance of the overall domestic and international economy, interest rates,
competition and consumer confidence.
Consumer
staples sector risk.
Companies in the consumer staples sector are subject to government regulation
affecting the permissibility of using various food additives and production
methods, which regulations could affect company profitability. Tobacco companies
may be adversely affected by the adoption of proposed legislation and/or by
litigation. Also, the success of food and soft drinks may be strongly affected
by fads, marketing campaigns and other factors affecting supply and
demand.
Energy
sector risk.
Issuers
in energy-related industries can be significantly affected by fluctuations in
energy prices and supply and demand of energy fuels. Markets for various
energy-related commodities can have significant volatility, and are subject to
control or manipulation by large producers or purchasers. Companies in the
energy sector may need to make substantial expenditures, and to incur
significant amounts of debt, in order to maintain or expand their reserves. Oil
and gas exploration and production can be significantly affected by natural
disasters, as well as changes in exchange rates, interest rates, government
regulation, world events and economic conditions. These companies may be at risk
for environmental damage claims.
Financials
sector risk.
Financial
services companies are subject to extensive governmental regulation, which may
limit both the amounts and types of loans and other financial commitments they
can make, the interest rates and fees they can charge, the scope of their
activities, the prices they can charge and the amount of capital they must
maintain. Profitability is largely dependent on the availability and cost of
capital funds and can fluctuate significantly when interest rates change or due
to increased competition. In addition, deterioration of the credit markets
generally may cause an adverse impact in a broad range of markets, including
U.S. and international credit and interbank money markets generally, thereby
affecting a wide range of financial institutions and
markets.
Health
care sector risk. The health care sector may be affected by government regulations
and government healthcare programs, increases or decreases in the cost of
medical products and services and product liability claims, among other factors.
Many health care companies are heavily dependent on patent protection, and the
expiration of a patent may adversely affect their profitability. Health care
companies are subject to competitive forces that may result in price
discounting, and may be thinly capitalized and susceptible to product
obsolescence.
Industrials
sector risk.
The industrials sector can be significantly affected by, among other things,
worldwide economy growth, supply and demand for specific products and services
and for industrial sector products in general, product obsolescence, rapid
technological developments, international political and economic developments,
claims for environmental damage or product liability, tax policies, and
government regulation.
Information
technology sector risk.
Information
technology companies may also be smaller and less experienced companies, with
limited product lines, markets or financial resources and fewer experienced
management or marketing personnel. Information technology company stocks,
especially those which are Internet related, have experienced extreme price and
volume fluctuations that are often unrelated to their operating
performance.
Materials
sector risk.
Companies in the materials sector could be affected by, among other things,
commodity prices, government regulation, inflation expectations, resource
availability, and economic cycles.
Real
estate sector risk.
An investment in a real property company may be subject to risks similar to
those associated with direct ownership of real estate, including, by way of
example, the possibility of declines in the value of real estate, losses from
casualty or condemnation, and changes in local and general economic conditions,
supply and demand, interest rates, environmental liability, zoning laws,
regulatory limitations on rents, property taxes, and operating expenses. Some
real property companies have limited diversification because they invest in a
limited number of properties, a narrow geographic area, or a single type of
property.
Utilities
sector risk.
Utility companies are affected by supply and demand, operating costs, government
regulation, environmental factors, liabilities for environmental damage and
general civil liabilities, and rate caps or rate changes. Although rate changes
of a regulated utility usually fluctuate in approximate correlation with
financing costs, due to political and regulatory factors rate changes ordinarily
occur only following a delay after the changes in financing costs. This factor
will tend to favorably affect a regulated utility company's earnings and
dividends in times of decreasing costs, but conversely, will tend to adversely
affect earnings and dividends when costs are rising. The value of regulated
utility equity securities may tend to have an inverse relationship to the
movement of interest rates. Certain utility companies have experienced full or
partial deregulation in recent years. These utility companies are frequently
more similar to industrial companies in that they are subject to greater
competition and have been permitted by regulators to diversify outside of their
original geographic regions and their traditional lines of business. These
opportunities may permit certain utility companies to earn more than their
traditional regulated rates of return. Some companies, however, may be forced to
defend their core business and may be less profitable. In addition, natural
disasters,
terrorist attacks, government intervention or other factors may render a utility
company's equipment unusable or obsolete and negatively impact
profitability.
Market
Risk.
Financial market risks affect the value of individual instruments in which the
Fund invests. When the value of the Fund’s investments goes down, your
investment in the Fund decreases in value and you could lose money. Factors such
as economic growth and market conditions, interest rate levels, and political
events affect the markets. Periods of market volatility may occur in response to
market events and other economic, political, and global macro factors. For
example, in recent years, the COVID-19 pandemic, the large expansion of
government deficits and debt as a result of government actions to mitigate the
effects of the pandemic, Russia’s invasion of Ukraine, and the rise of inflation
have resulted in extreme volatility in the global economy and in global
financial markets. These and other similar events could be prolonged and could
adversely affect the value and liquidity of the Fund’s investments, impair the
Fund’s ability to satisfy redemption requests, and negatively impact the Fund’s
performance.
In
the past several years, financial markets in the United States, Europe, Asia and
elsewhere, have experienced increased volatility, depressed valuations,
decreased liquidity and heightened uncertainty. Governmental and
non-governmental issuers have defaulted on, or been forced to restructure, their
debts. These conditions may continue, recur, worsen or spread.
Economies and financial markets throughout the world are becoming
increasingly interconnected. As a result, whether or not the Fund invests in
securities of issuers located in or with significant exposure to countries
experiencing economic and financial difficulties, the value and liquidity of the
Fund’s investments may be negatively affected.
Portfolio
management risk. The value of your investment may decrease if the Adviser’s judgment
about the attractiveness or value of, or market trends affecting a particular
security, industry, sector or region, or about market movements is incorrect, or
if there are imperfections, errors or limitations in the tools and data used by
the Adviser. In addition, the Fund’s investment strategies or policies may
change from time to time. Those changes may not lead to the results intended by
the Adviser and could have an adverse effect on the value or performance of the
Fund.
Bitcoin
risk.
The value of the Fund’s indirect investment in bitcoin through the Grayscale
Bitcoin Trust is subject to fluctuations in the value of bitcoin. The value of
bitcoin is determined by the supply of and demand for bitcoin in the global
market for the trading of bitcoin, which consists of transactions on electronic
bitcoin exchanges. Pricing on bitcoin exchanges and other venues can be volatile
and can adversely affect the value of the exposure to bitcoin. Currently, there
is relatively small use of bitcoin in the retail and commercial marketplace in
comparison to the relatively large use of bitcoin by speculators, thus
contributing to price volatility that could adversely affect the Fund’s
investment. Bitcoin transactions are irrevocable, and stolen or incorrectly
transferred bitcoin may be irretrievable. As a result, any incorrectly executed
bitcoin transactions could adversely affect the value of the Fund’s investment
in the Grayscale Bitcoin Trust.
Cryptocurrency
regulatory risk. Cryptocurrency generally operates without central authority (such
as a bank) and is not backed by any government. Federal, state and/or foreign
governments may restrict the use and exchange of cryptocurrency, and regulation
in the U.S. is still developing. Ongoing and future regulatory actions may
alter, perhaps to a materially adverse extent, the nature of an investment in
cryptocurrency. A determination that cryptocurrency or any other digital asset
is a “security” may adversely affect the value of
cryptocurrency.
Derivatives
risk.
Using derivatives can increase the Fund’s losses and reduce opportunities for
gains when market prices, interest rates, currencies, or the derivatives
themselves, behave in a way not anticipated by the Fund. Using derivatives also
can have a leveraging effect and increase Fund volatility. Certain derivatives
have the potential for unlimited loss, regardless of the size of the initial
investment. Derivatives may be difficult to sell, unwind or value, and the
counterparty may default on its obligations to the Fund. Derivatives are
generally subject to the risks applicable to the assets, rates, indices or other
indicators underlying the derivative. The value of a derivative may fluctuate
more than the underlying assets, rates, indices or other indicators to which it
relates. Use of derivatives may have different tax consequences for the Fund
than an investment in the underlying security, and those differences may affect
the amount, timing and character of income distributed to shareholders.
Options
on securities may be subject to greater fluctuations in value than an investment
in the underlying securities. Purchasing and writing put and call options are
highly specialized activities and entail greater than ordinary investment risks.
Credit
default swap contracts involve heightened risks and may result in losses to the
Fund. Credit default swaps may be illiquid and difficult to value, and they
increase credit risk since the Fund has exposure to both the issuer whose credit
is the subject of the swap and the counterparty to the swap.
Rule
18f-4 under the 1940 Act provides a comprehensive regulatory framework for the
use of derivatives by funds and imposes requirements and restrictions on funds
using derivatives. The rule may affect the availability, liquidity or
performance of derivatives, and may not effectively limit the risk of loss from
derivatives.
Leveraging
risk. The value of your investment may be more volatile if the Fund
borrows or uses derivatives or other investments that have a leveraging effect
on the Fund’s portfolio. Other risks also will be compounded. This is because
leverage generally magnifies the effect of a change in the value of an asset and
creates a risk of loss of value on a larger pool of assets than the Fund would
otherwise have had. The Fund may also have to sell assets at inopportune times
to satisfy its obligations. The use of leverage is considered to be a
speculative investment practice and may result in the loss of a substantial
amount, and possibly all, of the Fund’s assets.
Growth
and value investing risk. Growth or value securities as a group may be out of favor and
underperform the overall equity market while the market concentrates on other
types of securities. Growth securities typically are very sensitive to market
movements because their market prices tend to reflect future expectations. When
it appears those expectations will not be met, the prices of growth securities
typically fall. The value approach to investing involves the risk that stocks
may remain undervalued. Although the Fund will not concentrate its investments
in any one industry or industry group, it may, like many growth or value funds,
weight its investments toward certain industries, thus increasing its exposure
to factors adversely affecting issuers within those
industries.
Large
capitalization company risk. Large capitalization companies may fall out of favor with investors
based on market and economic conditions. In return for the relative stability
and low volatility of large capitalization companies, the Fund’s value may not
rise as much as the value of funds that focus on companies with smaller market
capitalizations.
Small
and medium capitalization company risk. The Fund will be exposed to additional risks as a result of its
investments in the securities of small and medium capitalization companies.
Small and medium capitalization companies may fall out of favor with investors;
may have limited product lines, operating histories, markets or financial
resources; or may be dependent upon a limited management group. The prices of
securities of small and medium capitalization companies generally are more
volatile than those of large capitalization companies and are more likely to be
adversely affected than large capitalization companies by changes in earnings
results and investor expectations or poor economic or market conditions,
including those experienced during a recession. Securities of small and medium
capitalization companies may underperform large capitalization companies, may be
harder to sell at times and at prices the portfolio managers believe appropriate
and may offer greater potential for losses.
Illiquid
investment risk. Some assets held by the Fund may be impossible or difficult to sell,
particularly during times of market turmoil. These illiquid assets may also be
difficult to value. If the Fund is forced to sell an illiquid asset to meet
redemption requests or other cash needs, the Fund may be forced to sell at a
loss.
Foreign
investments and emerging markets risk.
The Fund’s investments in securities of foreign issuers or issuers with
significant exposure to foreign markets involve additional risk. Foreign
countries in which the Fund may invest may have markets that are less liquid,
less regulated and more volatile than U.S. markets. The value of the Fund’s
investments may decline because of factors affecting the particular issuer as
well as foreign markets and issuers generally, such as unfavorable or
unsuccessful government actions, reduction of government or central bank support
and political or financial instability. Lack of information may also affect the
value of these securities.
The
risks of foreign investments are heightened when investing in issuers in
emerging market countries. Emerging market countries tend to have economic,
political and legal systems that are less fully developed and are less stable
than those of more developed countries. They are often particularly sensitive to
market movements because their market prices tend to reflect speculative
expectations. Low trading volumes may result in a lack of liquidity and in
extreme price volatility. In addition to the lack of liquidity, as compared to
domestic investments, emerging market investments also face risks related to
market manipulation, limited reliable access to capital, political risk,
atypical foreign investment structures, lack of shareholder rights and remedies,
and incomplete or inaccurate auditing and reporting
standards.
Currency
risk.
The value of investments in securities denominated in foreign currencies
increases or decreases as the rates of exchange between those currencies and the
U.S. dollar change. Currency conversion costs and currency fluctuations could
erase investment gains or add to investment losses. Currency exchange rates can
be volatile, and are affected by factors such as general economic conditions,
the actions of the U.S. and foreign governments or central banks, the imposition
of currency controls and speculation. Currency
markets generally are not as regulated as securities markets and currency
transactions are subject to settlement, custodial and other operational
risks.
Sovereign
debt risk. Sovereign government and supranational debt involve many of the
risks of foreign and emerging markets investments as well as the risk of debt
moratorium, repudiation or renegotiation and the Fund may be unable to enforce
its rights against the issuers.
Cryptocurrency
tax risk. Many
significant aspects of the U.S. federal income tax treatment of investments in
bitcoin are uncertain and an investment in bitcoin may produce income that if
directly earned by a regulated investment company (“RIC”)
would
not be treated as qualifying income for purposes of the applicable qualifying
income requirement necessary for the Fund to qualify as a RIC under Subchapter M
of the Internal Revenue Code of 1986, as amended (the “Code”). The Fund may
invest directly in the Grayscale Bitcoin Trust, which is expected to be treated
as a grantor trust for U.S.
federal
income tax purposes, and therefore an investment by the Fund in Grayscale
Bitcoin Trust will generally be treated as a direct investment by the Fund in an
undivided interest in bitcoin for such purposes. To the extent the Fund invests
in the Grayscale Bitcoin Trust, it will seek to restrict its income from such
investments to a maximum of 10% of its gross income (when combined with its
other investments that produce non-qualifying income) to comply with the
qualifying income requirement necessary for the Fund to qualify as a RIC under
Subchapter M of the Code. However, the Fund may generate more non-qualifying
income than anticipated, may not be able to generate qualifying income in a
particular taxable year at levels sufficient to meet the qualifying income
requirement, or may not be able to accurately predict the non-qualifying income
from these investments. Accordingly, the extent to which the Fund invests in the
Grayscale Bitcoin Trust directly may be limited by the qualifying income
requirement, which the Fund must continue to satisfy to maintain its status as a
RIC. Failure to comply with the qualifying income requirement could cause the
Fund to fail to qualify as a RIC and become subject to federal income tax
thereby diminishing the returns for shareholders.
In
2014, the Internal Revenue Service (“IRS”) released Notice 2014-21, 2014-16
I.R.B. 938 (the “Notice”) discussing certain aspects of the treatment of
“convertible” virtual currency (that is, digital assets that have an equivalent
value in fiat currency or that act as a substitute for fiat currency) for U.S.
federal income tax purposes. The IRS stated in the Notice that such a digital
asset (i) is “property,” (ii) is not “currency” for purposes of the Code rules
relating to foreign currency gain or loss and (iii) may be held as a capital
asset. In 2019, the IRS released Revenue Ruling 2019-24, 2019-44 I.R.B. 1044 and
a set of “Frequently Asked Questions” (the “Ruling & FAQs”) that provide
some additional guidance.
The IRS and Treasury department have also recently released proposed regulations
addressing information reporting of digital assets (the “Proposed Regulations”)
(and collectively the Notice, Ruling & FAQs, and the Proposed Regulations,
the “Existing IRS Guidance”). The Proposed Regulations also provide guidance
with respect to the calculation of gain or loss and the basis of digital assets
under section 1001 and 1012 of the Code. The Proposed Regulations with respect
to the computation of gain or loss are proposed to apply to taxable years for
all sales and acquisitions of digital assets on or after January 1 of the
calendar year immediately following the adoption of final regulations, however,
taxpayers may rely on the Proposed Regulations.
However,
the Existing IRS Guidance does not address other significant aspects of the U.S.
federal income tax treatment of digital assets, including (i) whether
convertible virtual currencies are properly treated as “commodities” for U.S.
federal income tax purposes; (ii) whether convertible virtual currencies are
properly treated as “collectibles” for U.S. federal income tax purposes; and
(iii) the proper method of determining a holder’s holding period for convertible
virtual currencies acquired at different times or at varying prices. Other tax
issues include the income and withholding taxation of incidental rights received
through a fork in the blockchain, airdrops offered to bitcoin holders and other
similar events, including situations where such rights are disclaimed, as is
expected with respect to Grayscale Bitcoin Trust’s intended treatment of such
events. The uncertainty surrounding the U.S. federal income tax treatment of
digital currencies and other digital assets could affect the performance of the
Fund. Moreover, although the Revenue Ruling and FAQs address the treatment of
hard forks, there continues to be uncertainty with respect to the timing and
amount of the income inclusions.
There
is limited guidance from the IRS with respect to the treatment of bitcoin for
U.S. federal income tax purposes. In any event, there can be no assurance that
the IRS will not alter its positions or otherwise provide further guidance,
potentially retroactive in effect, with respect to digital assets in the future
or that a court would uphold the treatment set forth in the Existing
IRS Guidance
or in other guidance. For these reasons, the Fund’s investment in the Grayscale
Bitcoin Trust could result in unexpected and potentially retroactive recognition
of taxable income, which could increase distributions to shareholders and
subject to the Fund to excise tax and income tax liability and potential loss in
value, with effects that would be directly or indirectly negative or contrary to
the Fund’s tax position and investment strategy, and result in the Fund altering
its investment strategy, potentially resulting in substantial investment losses
for shareholders. It is also unclear what additional guidance on the treatment
of digital assets for U.S. federal income tax purposes may be issued in the
future. Any such alteration of the current IRS positions or additional guidance
could have an adverse effect on the value of
bitcoin.
Commodities
risk. Investing in commodity-linked instruments may subject the Fund to
greater volatility than investments in traditional securities. The value of
commodity-linked instruments may be affected by changes in overall market
movements, commodity index volatility, prolonged or intense speculation by
investors, changes in interest rates or factors affecting a particular industry
or commodity, such as drought, floods, other weather phenomena, livestock
disease, embargoes, tariffs and international economic, political and regulatory
developments. The prices of commodities can also fluctuate widely due to supply
and demand disruptions in major producing or consuming regions. To the extent
the Fund focuses its investments in a particular commodity, the Fund will be
more susceptible to risks associated with the particular commodity. No active
trading market may exist for certain commodities investments. The Fund’s ability
to gain exposure to commodities using derivatives, and other means, may be
limited by tax considerations.
Convertible
securities risk.
Convertible securities are subject to both stock market risk associated with
equity securities and the credit and interest rate risks associated with fixed
income securities. Credit risk is the risk that the issuer or obligor will not
make timely payments of principal and interest. Changes in an issuer’s credit
rating or the market’s perception of
an issuer’s creditworthiness may also affect the value of the Fund’s
investment in that issuer. As the market price of the equity security underlying
a convertible security falls, the convertible security tends to trade on the
basis of its yield and other fixed income characteristics. As the market price
of the equity security underlying a convertible security rises, the convertible
security tends to trade on the basis of its equity conversion
features.
REIT
risk. The
value of REITs may be affected by the condition of the economy as a whole and
changes in the value of the underlying real estate, the creditworthiness of the
issuer of the investments and property taxes, interest rates, liquidity of the
credit markets and the real estate regulatory environment. REITs that
concentrate their holdings in specific businesses, such as apartments, offices
or retail space, will be affected by conditions affecting those businesses.
The Fund will indirectly bear its proportionate share of any
management and other expenses that may be charged by the REITs in which it
invests, in addition to the expenses paid by the Fund.
Warrants
risk. Warrants can provide a greater potential for profit or loss than an
equivalent investment in the underlying security. Prices of warrants do not
necessarily move in tandem with the prices of the underlying securities and
therefore, are highly volatile and speculative investments.
Short
positions risk. Short positions involve leverage and there is no limit on the amount
of loss on a security that is sold short. The Fund may suffer significant losses
if assets that the Fund sells short appreciate rather than depreciate in value.
The amount of any gain will be decreased, and the amount of any loss increased,
by the amount of the premium, dividends, interest, or expenses the Fund may be
required to pay in connection with the short position.
Special
risks of companies undergoing reorganization, restructuring or a
spin-off. Investing in companies undergoing reorganization, restructuring or a
spin-off involves special risks including that the transaction may not be
completed on the terms or time frame contemplated (if at all), it may be
difficult to obtain information on the financial condition of such companies,
the issuer’s management may be addressing a type of situation with which it has
little experience, and the fact that the market prices of such securities are
subject to above-average price volatility.
Investment
company and ETF risk. Investing in securities issued by investment companies and ETFs
involves risks similar to those of investing directly in the securities and
other assets held by the investment company or ETF. The Fund will indirectly
bear its pro rata share of the fees and expenses incurred by an investment
company in which it invests, including advisory fees, and will pay brokerage
commissions in connection with the purchase and sale of shares of ETFs. As a
result, with respect to the Fund’s investment in other investment companies,
shareholders will be subject to two layers of fees and expenses in connection
with their investment in the Fund.
Closed-End
Fund Risk.
Shares of closed-end funds frequently trade at a price per share that
is less than the net asset value (“NAV”) per share. There can be no assurance
that the market discount on shares of any closed-end fund purchased by the Fund
will ever decrease or that when the Fund seeks to sell shares of a closed-end
fund it can receive the NAV of those shares. Closed-end funds have lower levels
of daily transaction volume when compared to open-end companies. There are
greater risks involved in investing in securities with limited market liquidity.
To the extent the Fund invests in closed-end funds, it will indirectly bear its
proportionate share of any fees and expenses payable directly by the closed-end
fund. Therefore, the Fund would incur higher expenses, which may be duplicative,
than if the Fund did not invest in closed-end funds.
Valuation
risk. The sales price the Fund could receive for any particular portfolio
investment may differ from the Fund’s valuation of the investment, particularly
for securities that trade in thin or volatile markets or that are valued using a
fair value methodology. Investors who purchase or redeem Fund shares on days
when the Fund is holding fair-valued securities may receive fewer or more shares
or lower or higher redemption proceeds than they would have received if the Fund
had not fair-valued the security or had used a different valuation methodology.
The Fund’s ability to value its investments may be impacted by technological
issues and/or errors by pricing services or other third party service
providers.
Fixed
income securities risk. Fixed income securities are subject to a number of risks, including
credit, market and interest rate risks. Credit risk is the risk that the issuer
or obligor will not make timely payments of principal and interest. Changes in
an issuer’s credit rating or the market’s perception of an issuer’s
creditworthiness may also affect the value of the Fund’s investment in that
issuer. The Fund is subject to greater levels of credit risk to the extent it
holds below investment grade debt securities, or “junk bonds”. Market risk is
the risk that the fixed income markets may become volatile and less liquid, and
the market value of an investment may move up or down, sometimes quickly or
unpredictably. Interest rate risk is the risk that the value of a fixed income
security will fall when interest rates rise. A rise in rates tends to have a
greater impact on the prices of longer term or duration securities. Interest
rates have been historically low, so the Fund faces a heightened risk that
interest rates may rise. A general rise in interest rates may cause investors to
move out of fixed income securities on a large scale, which could adversely
affect the price and liquidity of fixed income securities.
Market
and interest rate risk.
The market prices of the Fund’s fixed income securities may go up or down,
sometimes rapidly or unpredictably, due to general market conditions, such as
real or perceived adverse economic or political
conditions, inflation, changes in interest rates, lack of liquidity
in the bond markets or adverse investor sentiment. Local, regional, or global
events such as war, acts of terrorism, the spread of infectious illness or other
public health issues, recessions, or other events could have a significant
impact on the securities markets and on specific securities. When market prices
fall, the value of your investment will go down. The value of your investment
will generally go down when interest rates rise. A rise in rates tends to have a
greater impact on the prices of longer term or duration securities. Interest
rates have been historically low, so the Fund faces a heightened risk that
interest rates may rise. A general rise in interest rates may cause investors to
move out of fixed income securities on a large scale, which could adversely
affect the price and liquidity of fixed income securities and could also result
in increased redemptions from the Fund.
Credit
risk. If an issuer or guarantor of a debt security held by the Fund or a
counterparty to a financial contract with the Fund defaults or is downgraded, or
is perceived to be less creditworthy, or if the value of the assets underlying a
security declines, the value of your investment will typically decline.
Subordinated securities are more likely to suffer a credit loss than
non-subordinated securities of the same issuer and will be disproportionately
affected by a default, downgrade or perceived decline in
creditworthiness.
High
yield (“junk”) bonds risk. High yield bonds are generally subject to greater credit risks than
higher-grade bonds. High yield bonds are considered speculative, tend to be less
liquid and are more difficult to value than higher grade securities. High yield
bonds tend to be volatile and more susceptible to adverse events and negative
sentiments and may be difficult to sell at a desired price, or at all, during
periods of uncertainty or market turmoil.
Cyber-security
risk. Cyber-security incidents may allow an unauthorized party to gain
access to Fund assets, customer data (including private shareholder
information), or proprietary information, or cause the Fund, the Adviser and/or
its service providers (including, but not limited to, fund accountants,
custodians, sub-custodians, transfer agents and Financial Intermediaries) to
suffer data breaches, data corruption or lose operational
functionality.
Prepayment
or call risk. Many fixed income securities give the issuer the option to repay or
call the security prior to its maturity date. Issuers often exercise this right
when interest rates fall. Accordingly, if the Fund holds a fixed income security
subject to prepayment or call risk, it will not benefit fully from the increase
in value that other fixed income securities generally experience when interest
rates fall. Upon prepayment of the security, the Fund would also be forced to
reinvest the proceeds at then current yields, which would be lower than the
yield of the security that was paid off. In addition, if the Fund purchases a
fixed income security at a premium (at a price that exceeds its stated par or
principal value), the Fund may lose the amount of the premium paid in the event
of prepayment.
Extension
risk. When interest rates rise, repayments of fixed income securities,
particularly asset- and mortgage-backed securities, may occur more slowly than
anticipated, extending the effective duration of these fixed income securities
at below market interest rates and causing their market prices to decline more
than they would have declined due to the rise in interest rates alone. This may
cause the Fund’s share price to be more volatile. Duration is a measure of the
underlying portfolio’s price sensitivity to changes in prevailing interest
rates. Generally, the longer a portfolio’s duration, the more sensitive it will
be to changes in interest rates. For example, if interest rates rise by 1%, a
fund with a two-year effective duration would expect the value of its portfolio
to decrease by 2% and a fund with a ten-year effective duration would expect the
value of its portfolio to decrease by 10%, all other factors being
equal.
Non-diversification
risk. The
Fund is non-diversified under the 1940 Act, which means that it may invest more
of its assets in the securities of a single issuer or a smaller number of
issuers than if it were a diversified fund. As a result, the Fund may be more
exposed to the risks associated with and developments affecting an individual
issuer or a smaller number of issuers than a fund that invests more widely,
which may increase the Fund’s volatility.
U.S.
government securities risk.
U.S. government securities, which may be backed by the U.S.
Department of the Treasury or the full faith and credit of the U.S., and may
include U.S. Treasury bills, Treasury Inflation-Protected Securities, notes and
bonds, are guaranteed only as to the timely payment of interest and principal
when held to maturity. The market prices for such securities are not
guaranteed and will fluctuate. Certain U.S. government agency securities
are backed by the right of the issuer to borrow from the U.S. Department of the
Treasury, or are supported only by the credit of the issuing agency or
instrumentality, and in some cases there may be some risk of default by the
issuer.
Operational
risk. Your ability to transact with the Fund or the valuation of your
investment may be negatively impacted because of the operational risks arising
from factors such as processing errors and human errors, inadequate or failed
internal or external processes, failures in systems and technology, changes in
personnel, and errors caused by third party service providers or trading
counterparties. Although the Fund attempts to minimize such failures through
controls and oversight, it is not possible to identify all of the operational
risks that may affect the Fund.
Performance
The bar chart
and table provide some indication of the risks of investing in the
Fund. The Fund has adopted the historical performance of the
Predecessor Fund as a result of the reorganization of the Predecessor Fund into
the Fund that is expected to occur on or about January 19, 2024 (the
“Reorganization”). Prior to the Reorganization, the Fund was a “shell” fund with
no assets and had not yet commenced operations. The Fund has the same investment
objective and investment strategies as the Predecessor Fund, and is managed by
the same portfolio managers as the Predecessor Fund.
The
bar chart shows changes in the Predecessor Fund’s performance from year to year
for Class A shares. The table shows the average annual total returns of each
class of the Predecessor Fund that has been in operation for at least one full
calendar year and also compares the Predecessor Fund’s performance with the
average annual total returns of a broad-based measure of market performance.
Performance for classes other than those shown may vary from the performance
shown to the extent the expenses for those classes differ. The Fund makes
updated performance information, including its current NAV, available at the
Fund’s website, www.patientcapitalmanagement.com/opportunity-trust,
or by calling the Fund at 800-655-0324.
On
February 27, 2017, the Predecessor Fund acquired the assets and assumed the
liabilities of the Legg Mason Opportunity Trust (the “Prior Predecessor Fund”),
an open-end fund that had substantially similar investment strategies and the
same portfolio management team. Class A, Class C, Class FI, Class R, and Class I
shares of the Fund have assumed the performance, financial and other historical
information of the Prior Predecessor Fund’s corresponding class of shares;
therefore, the performance of the Fund reflects the performance of the Prior
Predecessor Fund prior to February 27, 2017.
The
past performance of the Predecessor Fund and the Prior Predecessor Fund (before
and after taxes) is not necessarily an indication of how the Fund will perform
in the future. Sales charges are not reflected in
the accompanying bar chart, and if those charges were included, returns would be
less than those shown.
Calendar Years Ended
December 31
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Highest
and Lowest Return Quarters during the period of time shown in the bar
chart
|
Highest
Return Quarter |
06/30/2020 |
47.47% |
Lowest
Return Quarter |
03/31/2020 |
-38.96% |
The
year-to-date return for Class A
shares of the Predecessor Fund as of September 30, 2023 was
18.00%.
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Average
annual total returns
(for periods ended December 31,
2022) |
Class
A |
1 year |
5 years |
10 years |
Class
Inception |
Since
Class Inception |
Return before
taxes |
-39.76% |
-0.49% |
8.67% |
2/3/2009 |
12.02% |
Return after
taxes on distributions |
-41.39% |
-1.10% |
8.30% |
2/3/2009 |
11.74% |
Return after
taxes on distributions and sale of fund shares |
-22.29% |
-0.34% |
7.11% |
2/3/2009 |
10.34% |
Other
Classes (Return before taxes only) |
1 year |
5 years |
10 years |
Class
Inception |
Since
Class Inception |
Class
C |
-37.13% |
-0.05% |
8.49% |
12/30/1999 |
4.76% |
Class
FI |
-36.15% |
0.63% |
9.26% |
02/13/2004 |
4.43% |
Class
R |
-36.24% |
0.44% |
8.96% |
12/28/2006 |
2.92% |
Class
I |
-35.92% |
0.96% |
9.60% |
06/26/2000 |
5.75% |
Class
IS |
-35.88% |
N/A |
N/A |
08/22/2018 |
-3.64% |
|
|
|
| Class
A Inception |
Since
Class A Inception |
S&P
500 Index
(reflects no deduction for
fees, expenses or taxes) |
-18.11% |
9.42% |
12.56% |
2/3/2009 |
13.82% |
The after-tax returns are shown
only for Class A shares, are calculated using the historical highest individual
federal marginal income tax rates and do not reflect the impact of state and
local taxes. Actual after-tax returns
depend on an investor’s tax situation and may differ from those shown, and the
after-tax returns shown are not relevant to investors who hold their Fund shares
through tax-deferred arrangements, such as 401(k) plans or IRAs.
After-tax returns for classes
other than Class A will vary from returns shown for Class
A. In certain cases, the figure
representing “Return after Taxes on Distributions and Sale of Fund Shares” may
be higher than other return figures for the same period. A higher after-tax
return results when a capital loss occurs upon redemption and provides an
assumed tax deduction that benefits the
investor.
Management
Investment
adviser:
Patient Capital Management, LLC.
Portfolio
managers:
Samantha
McLemore, CFA, is the founder and Chief Investment Officer of the Adviser and
has served as a Portfolio Manager of the Fund (and the Predecessor Fund and
Prior Predecessor Fund) since 2014 as an employee of the Adviser and the
Previous Adviser. She served as Assistant Portfolio Manager of the Prior
Predecessor Fund from 2008 to 2014.
Christina
Malbon, CFA, has served as Assistant Portfolio Manager of the Fund (and the
Predecessor Fund) since
April
2023 as an employee of the Adviser and the Previous Adviser, and served as a
Senior Research Analyst of the Prior Predecessor Fund since 2013.
Purchase
and sale of Fund shares
You
may purchase or redeem shares of the Fund each day the New York Stock Exchange
is open, at the Fund’s NAV determined after receipt of your request in good
order, subject to any applicable sales charge.
The
Fund’s initial and subsequent investment minimums generally are set forth in the
accompanying table:
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Investment
minimum initial/additional investment ($) |
| Class
A |
Class
C |
Class FI |
Class
R |
Class
I |
Class
IS |
General |
1,000/50 |
1,000/50 |
N/A |
N/A |
1 million/None* |
N/A |
Uniform
Gifts or Transfers to Minor Accounts |
1,000/50 |
1,000/50 |
N/A |
N/A |
1 million/None* |
N/A |
IRAs |
250/50 |
250/50 |
N/A |
N/A |
1 million/None* |
N/A |
SIMPLE
IRAs |
None/None |
None/None |
N/A |
N/A |
1 million/None* |
N/A |
Automatic
Investment Plans |
50/50 |
50/50 |
N/A |
N/A |
1 million/None* |
N/A |
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Investment
minimum initial/additional investment ($) |
| Class
A |
Class
C |
Class FI |
Class
R |
Class
I |
Class
IS |
Clients
of Eligible Financial Intermediaries |
None/None |
N/A |
None/None |
None/None |
None/None |
None/None |
Eligible
Investment Programs |
None/None |
N/A |
None/None |
None/None |
None/None |
None/None |
Retirement
Plans with omnibus accounts held on the books of the Fund and certain
rollover IRAs |
None/None |
None/None |
None/None |
None/None |
None/None |
None/None |
Other
Retirement Plans |
None/None |
None/None |
N/A |
N/A |
1 million/None* |
N/A |
Institutional
Investors |
1,000/50 |
1,000/50 |
N/A |
N/A |
1 million/None |
1
million/None |
*Available
to investors investing directly with the
Fund. |
Your
Financial Intermediary may impose different investment minimums. Please contact
them for additional details.
For
more information about how to purchase or redeem shares, and to learn which
classes of shares are available to you, you should contact your Financial
Intermediary, or, if you hold your shares or plan to purchase shares through the
Fund, you should contact the Fund by phone at 800-655-0324, or by mail at
Patient Opportunity Trust, c/o U.S. Bank Global Fund Services, LLC, P.O. Box
701, Milwaukee, Wisconsin 53202.
Tax
information
The
Fund’s distributions are generally taxable as qualified dividend income,
ordinary income or capital gain. Some distributions may be treated as a return
of capital for tax purposes. If you are investing through a tax-deferred
arrangement, such as a 401(k) plan or IRA, you will generally not be subject to
federal income taxation on Fund distributions until you begin receiving
distributions from your tax-deferred arrangement.
Payments
to Broker/Dealers and other Financial Intermediaries
The
Fund and its related companies may pay broker/dealers or other Financial
Intermediaries (such as a bank or an insurance company) for the sale of Fund
shares, shareholder services and other purposes. These payments create a
conflict of interest by influencing your broker/dealer or other intermediary or
its employees or associated persons to recommend the Fund over another
investment. Ask your financial adviser or salesperson or visit your Financial
Intermediary’s or salesperson’s website for more information.
Investment
Objectives, Investment Strategies and Principal Risks
Investment
Objectives and Strategies
The
Fund’s investment objective is long-term growth of capital. The Fund is designed
for long-term investors. The Fund’s investment objective may be changed by the
Board without shareholder approval and on 60 days’ notice to shareholders. There
is no assurance that the Fund will meet its investment objective.
The
portfolio managers exercise a flexible strategy in the selection of investments,
not limited by investment style or asset class. The investment strategy
typically involves identifying instances where the Adviser believes the capital
markets have mispriced investment opportunities and exploiting price
discrepancies and inefficiencies in the market.
The
investment process has three stages: (i) idea generation, where the Adviser
seeks to identify potential investments; (ii) security analysis, where the
Adviser assesses a company’s competitive strategy, financial and managerial
acumen, and valuation; and (iii) decision making, where the Adviser makes an
investment decision based on an assessment of expected value. After this
analysis, the portfolio managers make decisions to purchase, sell, or hold an
investment based on their assessment of its expected rate of return relative to
that of the market. The Adviser may sell an investment when one of the following
occurs: (i) the investment reaches the Adviser’s assessment of its fair value;
(ii) an investment opportunity emerges that offers, in the Adviser’s opinion, a
higher risk-adjusted expected return; or (iii) the Adviser’s investment case has
changed or is no longer applicable (for example, changes in the macro/regulatory
environment, changes in a company’s fundamentals and/or adverse changes in a
company’s corporate governance policies).
The
Fund is non-diversified under the 1940 Act, which means it may invest a larger
percentage of its assets in a smaller number of issuers than a diversified
fund.
The
following are the Fund’s investment strategies and policies which may be changed
from time to time without shareholder approval, unless specifically stated
otherwise in this Prospectus or in the SAI.
Cash
management. The
Fund may hold cash pending investment, and may invest in money market
instruments and may enter into repurchase agreements and reverse repurchase
agreements for cash management purposes. The amount of assets the Fund may hold
for cash management purposes will depend on market conditions and the need to
meet expected redemption requests.
Corporate
debt. Corporate
debt securities are fixed income securities usually issued by businesses to
finance their operations. Various types of business entities may issue these
securities, including corporations, trusts, limited partnerships, limited
liability companies and other types of non-governmental legal entities. Notes,
bonds, debentures and commercial paper are the most common types of corporate
debt securities, with the primary difference being their maturities and secured
or unsecured status. Commercial paper has the shortest term and is usually
unsecured. The broad category of corporate debt securities includes debt issued
by U.S. or foreign companies of all kinds, including those with small, mid and
large capitalizations. Corporate debt may be rated investment grade or below
investment grade and may carry variable or floating rates of interest.
Defensive
investing. The
Fund may depart from its principal investment strategies in response to adverse
market, economic or political conditions by taking temporary defensive
positions, including by investing in any type of money market instruments,
short-term debt securities or cash without regard to any percentage limitations.
Although the manager has the ability to take defensive positions, it may choose
not to do so for a variety of reasons, even during volatile market conditions.
While the Fund is in a defensive position, it may not achieve its investment
objective.
Derivatives.
The
Fund may use options, forwards, futures, structured notes, swaps (including
buying and selling credit default swaps), caps, floors and collars. Derivatives
are financial instruments whose value depends upon, or is derived from, the
value of something else, such as one or more underlying investments, indexes or
currencies. Derivatives may be used by the Fund for any of the following
purposes:
•As
a hedging technique in an attempt to manage risk in the Fund’s portfolio
•As
a substitute for buying or selling securities
•As
a means of changing investment characteristics of the Fund’s
portfolio
•As
a cash flow management technique
•As
a means of attempting to enhance returns
•As
a means of providing additional exposure to types of investments or market
factors
The
Fund may purchase or write put and call options. An option is an agreement that,
for a premium payment or fee, gives the option holder (the purchaser) the right
but not the obligation to buy (a “call option”) or sell (a “put option”) the
underlying asset (or settle for cash in an amount based on an underlying asset,
rate, or index) at a specified price (the “exercise price”) during a period of
time or on a specified date. Investments in options are considered speculative.
The
Fund from time to time may sell protection on debt securities by entering into
credit default swaps. In these transactions, the Fund is generally required to
pay the par (or other agreed-upon) value of a referenced debt security to the
counterparty in the event of a default on or downgrade of the debt security
and/or a similar credit event. In return, the Fund receives from the
counterparty a periodic stream of payments over the term of the contract. If no
default occurs, the Fund keeps the stream of payments and has no payment
obligations. As the seller, the Fund would effectively add leverage to its
portfolio because, in addition to its net assets, the Fund would be subject to
loss on the par (or other agreed-upon) value it had undertaken to pay. Credit
default swaps may also be structured based on an index or the debt of a basket
of issuers, rather than a single issuer, and may be customized with respect to
the default event that triggers purchase or other factors (for example, a
particular number of defaults within a basket, or defaults by a particular
combination of issuers within the basket, may trigger a payment obligation).
The
Fund may buy credit default swaps to hedge against the risk of default of debt
securities held in its portfolio or for other reasons. As the buyer of a credit
default swap, the Fund would make the stream of payments described in the
preceding paragraph to the seller of the credit default swap and would expect to
receive from the seller a payment in the event of a default on the underlying
debt security or other specified event.
Using
derivatives, especially for non-hedging purposes, may involve greater risks to
the Fund than investing directly in securities, particularly as these
instruments may be very complex and may not behave in the manner anticipated by
the fund. Certain derivative transactions may have a leveraging effect on the
Fund.
Use
of derivatives or similar instruments may have different tax consequences for
the Fund than an investment in the underlying security, and those differences
may affect the amount, timing and character of income distributed to
shareholders.
Instead
of, and/or in addition to, investing directly in particular securities, the Fund
may use derivatives and other synthetic instruments that are intended to provide
economic exposure to securities, issuers or other measures of market or economic
value. The Fund may use one or more types of these instruments without limit.
Equity
investments. Equity
securities include exchange-traded and over-the-counter (“OTC”) common and
preferred stocks, depositary receipts, warrants and rights, securities
convertible into common stocks, and securities of other investment companies,
exchange-traded funds ETFs and of REITs. Convertible securities may be purchased
to gain additional exposure to a company or for their income or other features.
Fixed
income investments. Fixed
income securities represent obligations of corporations, governments and other
entities to repay money borrowed. Fixed income securities are commonly referred
to as “debt,” “debt obligations,” “bonds” or “notes.” The issuer of the fixed
income security usually pays a fixed, variable or floating rate of interest, and
repays the amount borrowed, usually at the maturity of the security. Some fixed
income securities, however, do not pay current interest but are sold at a
discount from their face values. Other fixed income securities may make periodic
payments of interest and/or principal. Some fixed income securities are
partially or fully secured by collateral supporting the payment of interest and
principal.
Foreign
and emerging market securities. The
Fund may invest its assets in securities of foreign issuers, including
mortgage-backed securities and asset-backed securities issued by foreign
entities. The Fund’s investments in foreign securities may also include
securities denominated in foreign currencies. The value of the Fund’s foreign
securities may decline because of unfavorable government actions, political
instability or the more limited availability of accurate information about
foreign issuers. The Fund may invest in foreign securities issued by issuers
located in emerging market countries. To the extent the Fund invests in these
securities, the risks associated with investments in foreign issuers will
generally be more pronounced.
U.S.
government securities. U.S.
government securities are obligations of, or guaranteed by, the U.S. Government,
its agencies or government-sponsored entities. U.S. government securities
include issues by non-governmental entities (like financial institutions) that
carry direct guarantees from U.S. government agencies as part of government
initiatives in response to the market crisis or otherwise. Although the U.S.
Government guarantees principal and interest payments on securities issued by
the U.S. Government and some of its agencies, such as securities issued by the
Government National Mortgage Association (“Ginnie Mae”), this guarantee does not
apply to losses resulting from declines in the market value of these securities.
Some of the U.S. government securities that the Fund may hold are not guaranteed
or backed by the full faith and credit of the U.S. Government, such as those
issued by Fannie Mae (formally known as the Federal National Mortgage
Association) and Freddie Mac (formally known as the Federal Home Loan Mortgage
Corporation).
High
yield securities.
The Fund may invest a portion of its assets in high yield securities (“junk
bonds”).
Non-U.S.
currency transactions. The
Fund may engage in non-U.S. currency exchange transactions in an effort to
protect against uncertainty in the level of future exchange rates or to enhance
returns based on expected changes in exchange rates. Non-U.S. currency exchange
transactions may take the form of options, futures, options on futures, swaps,
warrants, structured notes, forwards or spot (cash) transactions. The value of
these non-U.S. currency transactions depends on, and will vary based on
fluctuations in, the value of the underlying currency relative to the U.S.
dollar. Currency
markets generally are not as regulated as securities markets and currency
transactions are subject to settlement, custodial and other operational
risks.
Preferred
stock and convertible securities. The
Fund may invest in preferred stock and convertible securities. Preferred stock
represents an interest in a company that generally entitles the holder to
receive, in preference to the holders of common stock, dividends and a fixed
share of the proceeds resulting from a liquidation of the company. Preferred
stocks may pay fixed or adjustable rates of return. Convertible fixed income
securities convert into shares of common stock of their issuer. Preferred stock
and convertible fixed income securities share investment characteristics of both
fixed income and equity securities. However, the value of these securities tends
to vary more with fluctuations in the underlying common stock and less with
fluctuations in interest rates and tends to exhibit greater volatility.
Real
estate investment trusts.
The Fund may invest in REITs. REITs are pooled investment vehicles that invest
primarily in income producing real estate or real estate related loans or
interests. REITs are generally classified as equity REITs, mortgage REITs or a
combination of equity and mortgage REITs. Unlike corporations, U.S. REITs are
not taxed on income distributed to their shareholders, provided they comply with
the applicable requirements of the Code. The Fund will indirectly bear its
proportionate share of any management and other expenses that may be charged by
the REITs in which it invests, in addition to the expenses paid by the Fund.
Securities
of other investment companies. The
Fund may invest in securities of other investment companies to the extent
permitted under the 1940 Act. The return on investments in other registered
investment companies will be reduced by the operating expenses, including
investment advisory expenses, of such companies, and by any sales charges or
other distribution and/or service fees or charges incurred in purchasing or
selling shares of such companies, in addition to the fund’s own fees and
expenses. As such, there is a layering of fees and expenses.
Closed-End
Fund Risk. Shares
of closed-end funds frequently trade at a price per share that is less than the
NAV per share. There can be no assurance that the market discount on shares of
any closed-end fund purchased by the Fund will ever decrease or that when the
Fund seeks to sell shares of a closed-end fund it can receive the NAV of those
shares. Closed-end funds have lower levels of daily transaction volume when
compared to open-end companies. There are greater risks involved in investing in
securities with limited market liquidity. Closed-end funds may also issue senior
securities (including preferred stock and debt obligations) for the purpose of
leveraging the closed-end fund’s common shares in an attempt to enhance the
current return to such closed-end fund’s common shareholders. The Fund’s
investment in the common shares of closed-end funds that are financially
leveraged may create an opportunity for greater total return on its investment,
but at the same time may be expected to exhibit more volatility in market price
and NAV than an investment in shares of investment companies without a leveraged
capital structure.
To
the extent the Fund invests in closed-end funds, it will indirectly bear its
proportionate share of any fees and expenses payable directly by the closed-end
fund. Therefore, the Fund would incur higher expenses, which may be duplicative,
than if the Fund did not invest in closed-end funds.
Short
sales. The
Fund may engage in short sales to the extent permitted by applicable law. A
short sale is a transaction in which the Fund sells a security it does not own,
typically in anticipation of a decline in the market price of that security. To
effect a short sale, the Fund arranges through a broker to borrow the security
it does not own to be delivered to a buyer of such security. In borrowing the
security to be delivered to the buyer, the Fund will become obligated to replace
the security borrowed at the time of replacement, regardless of the market price
at that time. A short sale results in a gain when the price of the securities
sold short declines between the date of the short sale and the date on which a
security is purchased to replace the borrowed security. Conversely, a short sale
will result in a loss if the price of the security sold short increases. Short
selling is a technique that may be considered speculative and involves risk
beyond the amount of money used to secure each transaction.
When
the Fund makes a short sale, the broker effecting the short sale typically holds
the proceeds as part of the collateral securing the Fund’s obligation to cover
the short position. The Fund may use securities it owns to meet any such
collateral obligations. Generally, the Fund may not keep, and must return to the
lender, any dividends or interest that accrue on the borrowed security during
the period of the loan. Depending on the arrangements with a broker or a
custodian, the Fund may or may not receive any payments (including interest) on
collateral it designates as security for the broker.
In
response to certain market conditions, regulatory authorities in various
countries, including the United States, may from time to time enact temporary
rules prohibiting short sales of certain securities. The length of the bans and
type of
securities
covered vary from country to country. Investors should be aware that
prohibitions on effecting short sales may apply to the Fund, and while the
prohibitions remain in effect, they may prevent the Fund from fully implementing
its investment strategies.
Sovereign
debt. The
Fund may invest in sovereign debt, including emerging market sovereign debt.
Sovereign debt securities may include:
•Fixed
income securities issued or guaranteed by governments, governmental agencies or
instrumentalities and their political subdivisions;
•Fixed
income securities issued by government-owned, controlled or sponsored entities;
•Interests
in entities organized and operated for the purpose of restructuring the
investment characteristics of instruments issued by any of the above
issuers;
•Brady
Bonds, which are debt securities issued under the framework of the Brady Plan as
a means for debtor nations to restructure their outstanding external
indebtedness;
•Participations
in loans between governments and financial institutions; and
•Fixed
income securities issued by supranational entities such as the World Bank. A
supranational entity is a bank, commission or company established or financially
supported by the national governments of one or more countries to promote
reconstruction or development.
Sovereign
government and supranational debt involve many of the risks of foreign and
emerging markets investments as well as the risk of debt moratorium, repudiation
or renegotiation and the Fund may be unable to enforce its rights against the
issuers.
Structured
notes and indexed securities. The
Fund may invest in various types of structured instruments, including securities
that have demand, tender or put features, or interest rate reset features. These
may include instruments issued by structured investment or special purpose
vehicles or conduits, and may be asset-backed or mortgage-backed securities.
Structured instruments may take the form of participation interests or receipts
in underlying securities or other assets, and in some cases are backed by a
financial institution serving as a liquidity provider. The interest rate or
principal amount payable at maturity on a structured instrument may vary based
on changes in one or more specified reference factors, such as currencies,
interest rates, commodities, indices or other financial indicators. Changes in
the underlying reference factors may result in disproportionate changes in
amounts payable under a structured instrument. Some of these instruments may
have an interest rate swap feature which substitutes a floating or variable
interest rate for the fixed interest rate on an underlying security. Structured
instruments are a type of derivative instrument and the payment and credit
qualities of these instruments derive from the assets embedded in the structure.
For structured securities that have embedded leverage features, small changes in
interest or prepayment rates may cause large and sudden price movements.
Structured instruments are often subject to heightened illiquidity
risk.
Variable
and floating rate securities. Variable
rate securities reset at specified intervals, while floating rate securities
reset whenever there is a change in a specified index rate. In most cases, these
reset provisions reduce the impact of changes in market interest rates on the
value of the security. However, the value of these securities may decline if
their interest rates do not rise as much, or as quickly, as other interest
rates. Conversely, these securities will not generally increase in value if
interest rates decline. The Fund may also invest in inverse floating rate debt
instruments (“inverse floaters”). Interest payments on inverse floaters vary
inversely with changes in interest rates. Inverse floaters pay higher interest
(and therefore generally increase in value) when interest rates decline, and
vice versa. An inverse floater may exhibit greater price volatility than a fixed
rate obligation of similar credit quality.
Bitcoin.
The Fund may seek investment exposure to bitcoin indirectly by investing in the
Grayscale Bitcoin Trust, an entity that holds bitcoin. Grayscale Bitcoin Trust
is a privately offered investment vehicle, the shares of which are also
available over-the-counter. Bitcoin is a digital commodity that is not issued by
a government, bank, or central organization. Bitcoin exists on an online,
peer-to-peer computer network that hosts a public transaction ledger where
bitcoin transfers are recorded (the “Blockchain”). Bitcoin has no physical
existence beyond the record of transactions on the Blockchain. The Grayscale
Bitcoin Trust invests principally in bitcoin. The Fund will not make any
additional investments in the Grayscale Bitcoin Trust if, as a result of the
investment, its aggregate investment in bitcoin exposure would be more than 15%
of its assets at the time of investment.
Except
as to the investment in the Grayscale Bitcoin Trust, as noted above, the Fund
does not seek to and will not invest directly or indirectly in cryptocurrencies
or in cryptocurrency derivatives (e.g., bitcoin futures). The Fund does not
track the price movements of any cryptocurrency and the Fund will not invest in
ICOs.
Principal
Risks
Stock
market and equity securities risk.
The securities markets are volatile and the market prices of the Fund’s
securities may decline generally. Securities fluctuate in price based on changes
in a company’s financial condition and
overall
market and economic conditions. The value of a particular security may decline
due to factors that affect a particular industry or industries, such as an
increase in production costs, competitive conditions or labor shortages; or due
to general market conditions, such as real or perceived adverse economic
conditions, changes in the general outlook for corporate earnings, changes in
interest or currency rates or generally adverse investor sentiment. Local,
regional, or global events such as war, acts of terrorism, the spread of
infectious illness or other public health issues, recessions, or other events
could have a significant impact on the securities markets and on specific
securities. If the market prices of the securities owned by the Fund fall, the
value of your investment in the Fund will decline.
Issuer
risk.
The value of a security can be more volatile than the market as a whole and can
perform differently from the value of the market as a whole. The value of a
company’s securities may deteriorate because of a variety of factors, including
disappointing earnings reports by the issuer, unsuccessful products or services,
loss of major customers, major litigation against the issuer or changes in
government regulations affecting the issuer or the competitive environment.
Market
sector risk.
The Fund may be significantly overweight in certain companies, industries or
market sectors, which may cause the Fund’s performance to be more sensitive to
developments affecting those companies, industries or market sectors. While the
Fund’s sector exposure is expected to vary over time, the Fund anticipates that
it may be subject to some or all of the risks described below:
Communication
services sector risk.
Communication services companies are particularly vulnerable to the potential
obsolescence of products and services due to technological advancement and the
innovation of competitors. Companies in the communication services sector may
also be affected by other competitive pressures, such as pricing competition, as
well as research and development costs, substantial capital requirements and
government regulation. Additionally, fluctuating domestic and international
demand, shifting demographics and often unpredictable changes in consumer tastes
can drastically affect a communication services company's profitability. While
all companies may be susceptible to network security breaches, certain companies
in the communication services sector may be particular targets of hacking and
potential theft of proprietary or consumer information or disruptions in
service, which could have a material adverse effect on their
businesses.
Consumer
discretionary sector risk.
Consumer
discretionary companies are companies that provide non-essential goods and
services, such as retailers, media companies and consumer services. These
companies manufacture products and provide discretionary services directly to
the consumer, and the success of these companies is tied closely to the
performance of the overall domestic and international economy, interest rates,
competition and consumer confidence.
Consumer
staples sector risk.
Companies in the consumer staples sector are subject to government regulation
affecting the permissibility of using various food additives and production
methods, which regulations could affect company profitability. Tobacco companies
may be adversely affected by the adoption of proposed legislation and/or by
litigation. Also, the success of food and soft drinks may be strongly affected
by fads, marketing campaigns and other factors affecting supply and
demand.
Energy
sector risk.
Issuers
in energy-related industries can be significantly affected by fluctuations in
energy prices and supply and demand of energy fuels. Markets for various
energy-related commodities can have significant volatility, and are subject to
control or manipulation by large producers or purchasers. Companies in the
energy sector may need to make substantial expenditures, and to incur
significant amounts of debt, in order to maintain or expand their reserves. Oil
and gas exploration and production can be significantly affected by natural
disasters, as well as changes in exchange rates, interest rates, government
regulation, world events and economic conditions. These companies may be at risk
for environmental damage claims.
Financials
sector risk.
Financial
services companies are subject to extensive governmental regulation, which may
limit both the amounts and types of loans and other financial commitments they
can make, the interest rates and fees they can charge, the scope of their
activities, the prices they can charge and the amount of capital they must
maintain. Profitability is largely dependent on the availability and cost of
capital funds and can fluctuate significantly when interest rates change or due
to increased competition. In addition, deterioration of the credit markets
generally may cause an adverse impact in a broad range of markets, including
U.S. and international credit and interbank money markets generally, thereby
affecting a wide range of financial institutions and markets.
Health
care sector risk.
The health care sector may be affected by government regulations and government
healthcare programs, increases or decreases in the cost of medical products and
services and product liability claims, among other factors. Many health care
companies are heavily dependent on patent protection, and the expiration of a
patent may adversely affect their profitability. Health care companies are
subject to competitive forces that may result in price discounting, and may be
thinly capitalized and susceptible to product obsolescence.
Industrials
sector risk.
The industrials sector can be significantly affected by, among other things,
worldwide economy growth, supply and demand for specific products and services
and for industrial sector products in general, product obsolescence, rapid
technological developments, international political and economic developments,
claims for environmental damage or product liability, tax policies, and
government regulation.
Information
technology sector risk.
Information
technology companies may also be smaller and less experienced companies, with
limited product lines, markets or financial resources and fewer experienced
management or marketing personnel. Information technology company stocks,
especially those which are Internet related, have experienced extreme price and
volume fluctuations that are often unrelated to their operating
performance.
Materials
sector risk.
Companies in the materials sector could be affected by, among other things,
commodity prices, government regulation, inflation expectations, resource
availability, and economic cycles.
Real
estate sector risk.
An investment in a real property company may be subject to risks similar to
those associated with direct ownership of real estate, including, by way of
example, the possibility of declines in the value of real estate, losses from
casualty or condemnation, and changes in local and general economic conditions,
supply and demand, interest rates, environmental liability, zoning laws,
regulatory limitations on rents, property taxes, and operating expenses. Some
real property companies have limited diversification because they invest in a
limited number of properties, a narrow geographic area, or a single type of
property.
Utilities
sector risk.
Utility companies are affected by supply and demand, operating costs, government
regulation, environmental factors, liabilities for environmental damage and
general civil liabilities, and rate caps or rate changes. Although rate changes
of a regulated utility usually fluctuate in approximate correlation with
financing costs, due to political and regulatory factors rate changes ordinarily
occur only following a delay after the changes in financing costs. This factor
will tend to favorably affect a regulated utility company's earnings and
dividends in times of decreasing costs, but conversely, will tend to adversely
affect earnings and dividends when costs are rising. The value of regulated
utility equity securities may tend to have an inverse relationship to the
movement of interest rates. Certain utility companies have experienced full or
partial deregulation in recent years. These utility companies are frequently
more similar to industrial companies in that they are subject to greater
competition and have been permitted by regulators to diversify outside of their
original geographic regions and their traditional lines of business. These
opportunities may permit certain utility companies to earn more than their
traditional regulated rates of return. Some companies, however, may be forced to
defend their core business and may be less profitable. In addition, natural
disasters, terrorist attacks, government intervention or other factors may
render a utility company's equipment unusable or obsolete and negatively impact
profitability.
Market
Risk.
Market
risks,
including political, regulatory, market and, economic or other developments, and
developments that impact specific economic sectors, industries or segments of
the market, can affect the value of the Fund’s shares. Local, regional, or
global events such as war, acts of terrorism, natural
disasters,
the spread of infectious illness or other public health issues, recessions, or
other events could have a significant impact on the market generally and on
specific securities. The Fund is subject to the risk that the prices of, and the
income generated by, securities held by the Fund may decline significantly
and/or rapidly in response to adverse issuer, political, regulatory, general
economic and market conditions, or other developments, such as regional or
global economic instability (including terrorism and related geopolitical
risks), interest rate fluctuations, and those events directly involving the
issuers that may cause broad changes in market value, public perceptions
concerning these developments, and adverse investor sentiment. Such events may
cause the value of securities owned by the Fund to go up or down, sometimes
rapidly or unpredictably. Changes in the economic climate, investor perceptions
and stock market volatility also can cause the prices of the Fund’s fixed-income
investments to decline regardless of the conditions of the issuers held by the
Fund. There is also a risk that policy changes by the U.S. Government and/or
Federal Reserve, such as increasing interest rates, could cause increased
volatility in financial markets and higher levels of Fund redemptions, which
could have a negative impact on the Fund. These events may lead to periods of
volatility and increased redemptions, which could cause the Fund to experience a
loss when selling securities to meet redemption requests by shareholders. The
risk of loss increases if the redemption requests are unusually large or
frequent.
Prices
may fluctuate widely over short or extended periods in response to company,
market or economic news. Markets also tend to move in cycles, with periods of
rising and falling prices. If there is a general decline in the securities and
other markets, your investment in the Fund may lose value, regardless of the
individual results of the securities and other instruments in which the Fund
invests.
In
the past several years, financial markets in the United States, Europe, Asia and
elsewhere have experienced increased volatility, depressed valuations, decreased
liquidity and heightened uncertainty. Governmental and non-governmental issuers
have defaulted on, or been forced to restructure, their debts. These conditions
may continue, recur, worsen or spread.
The
U.S. Government and the Federal Reserve, as well as certain foreign governments
and central banks, took steps to support financial markets, including by keeping
interest rates at historically low levels for an extended period. The Federal
Reserve recently concluded its market support activities and began to raise
interest rates. Such actions, including additional interest rate increases,
could negatively affect financial markets generally, increase market volatility
and reduce the value and liquidity of securities in which the Fund
invests.
Policy
and legislative changes in the United States and in other countries are
affecting many aspects of financial regulation, and may in some instances
contribute to decreased liquidity and increased volatility in the financial
markets.
The
impact of these changes on the markets, and the practical implications for
market participants, may not be fully known for some time.
Economies
and financial markets throughout the world are becoming increasingly
interconnected. As a result, whether or not the Fund invests in securities of
issuers located in or with significant exposure to countries experiencing
economic and financial difficulties, the value and liquidity of the Fund’s
investments may be negatively affected.
Periods
of market volatility may occur in response to market events and other economic,
political, and global macro factors. The COVID-19 pandemic, Russia’s invasion of
Ukraine, and higher inflation have resulted in extreme volatility in the
financial markets, economic downturns around the world, and severe losses,
particularly to some sectors of the economy and individual issuers, and reduced
liquidity of certain instruments. These events have caused significant
disruptions to business operations, including business closures; strained
healthcare systems; disruptions to supply chains and employee availability;
large fluctuations in consumer demand; large expansion of government deficits
and debt as a result of government actions to mitigate the effects of such
events; and widespread uncertainty regarding the long-term effects of such
events. Such events could be prolonged and could adversely affect the value and
liquidity of the Fund’s investments, impair the Fund’s ability to satisfy
redemption requests, and negatively impact the Fund’s performance. Other market
events may cause similar disruptions and effects.
Portfolio
management risk.
The value of your investment may decrease if the portfolio manager’s judgment
about the attractiveness or value of, or market trends affecting a particular
security, industry, sector or region, or about market movements is incorrect, or
if there are imperfections, errors or limitations in the tools and data used by
the portfolio manager. In addition, the Fund’s investment strategies or policies
may change from time to time. Those changes may not lead to the results intended
by the portfolio manager and could have an adverse effect on the value or
performance of the Fund.
Bitcoin
risk.
The value of the Fund’s indirect investment in bitcoin through the Grayscale
Bitcoin Trust is subject to fluctuations in the value of bitcoin. Bitcoin is not
pegged to a currency nor the value of any underlying asset; its value is
determined by the supply of and demand for bitcoin in the global market for the
trading of bitcoin. The global supply of bitcoin consists of transactions on
electronic bitcoin exchanges. The electronic bitcoin exchanges are not subject
to any government regulation or oversight. Pricing on bitcoin exchanges and
other venues can be volatile and can adversely affect the value of the exposure
to bitcoin. Currently, there is relatively small use of bitcoin in the retail
and commercial marketplace in comparison to the relatively large use of bitcoin
by speculators, thus contributing to price volatility that could adversely
affect the Fund’s investment in the Grayscale Bitcoin Trust. Bitcoin
transactions are irrevocable, and stolen or incorrectly transferred bitcoin may
be irretrievable. As a result, any incorrectly executed bitcoin transactions
could adversely affect the value of the Fund’s investment in the Grayscale
Bitcoin Trust.
Bitcoin
is generally not subject to the same degree of regulation as are registered U.S.
securities. The reporting, accounting and auditing standards for bitcoin may
differ from the standards for registered U.S. securities. Furthermore,
countries, including the U.S., may in the future curtail or outlaw the
acquisition, use or sale of bitcoin.
Investments
such as bitcoin that trade in thin or volatile markets or that are valued using
a fair value methodology may differ from the Fund’s valuation of the investment.
Shares of the Grayscale Bitcoin Trust, which are intended to reflect the price
of bitcoin assets, less fees and expenses, may trade at a premium or discount to
the NAV of the Grayscale Bitcoin Trust. Shares purchased on the primary market,
directly through the Grayscale Bitcoin Trust, may not be sold for one year,
increasing the illiquid investment risk of the Fund.
Cryptocurrency
regulatory risk.
Cryptocurrency generally operates without central authority (such as a bank) and
is not backed by any government. Federal, state and/or foreign governments may
restrict the use and exchange of cryptocurrency, and regulation in the U.S. is
still developing. Ongoing and future regulatory actions may alter, perhaps to a
materially adverse extent, the nature of an investment in cryptocurrency.
Depending on its characteristics, a digital asset may be considered a “security”
under the federal securities laws. The test for determining whether a particular
digital asset is a “security” is complex and difficult to apply, and the outcome
is difficult to predict. A determination that cryptocurrency or any other
digital asset is a “security” may adversely affect the value of cryptocurrency.
Derivatives
risk.
Derivatives involve special risks and costs and may result in losses to the
Fund, even when used for hedging purposes. Using derivatives can increase losses
and reduce opportunities for gains when market prices, interest rates or
currencies, or the derivatives themselves, behave in a way not anticipated by
the Fund, especially in abnormal market conditions. Using derivatives also can
have a leveraging effect (which may increase investment losses) and increase the
Fund’s volatility, which is the degree to which the Fund’s share price may
fluctuate within a short time period. Certain derivatives have the potential for
unlimited loss, regardless of the size of the initial investment. The other
parties to certain derivatives transactions present the same types of credit
risk as issuers of fixed income securities. Derivatives also tend to involve
greater illiquid investment risk and they may be difficult to value. The Fund
may be unable to terminate or sell its derivative positions. In fact, many
over-the-counter derivatives will not have liquidity beyond the counterparty to
the instrument. Use of derivatives or similar instruments may have different tax
consequences for the Fund than an
investment
in the underlying security, and those differences may affect the amount, timing
and character of income distributed to shareholders. The Fund’s use of
derivatives may also increase the amount of taxes payable by shareholders.
When
the Fund purchases an option, it may lose the premium paid for it if the price
of the underlying security or other assets decreased or remained the same (in
the case of a call option) or increased or remained the same (in the case of a
put option). If a put or call option purchased by the Fund were permitted to
expire without being sold or exercised, its premium would represent a loss to
the Fund. To the extent that the Fund writes or sells an option, if the decline
or increase in the underlying asset is significantly below or above the exercise
price of the written option, the Fund could experience a substantial loss.
Investments
by the Fund in structured securities, a type of derivative, raise certain tax,
legal, regulatory and accounting issues that may not be presented by direct
investments in securities. These issues could be resolved in a manner that could
hurt the performance of the Fund.
Swap
agreements tend to shift the Fund’s investment exposure from one type of
investment to another. For example, the Fund may enter into interest rate swaps,
which involve the exchange of interest payments by the Fund with another party,
such as an exchange of floating rate payments for fixed interest rate payments
with respect to a notional amount of principal. If an interest rate swap
intended to be used as a hedge negates a favorable interest rate movement, the
investment performance of the Fund would be less than what it would have been if
the Fund had not entered into the interest rate swap.
Credit
default swap contracts involve heightened risks and may result in losses to the
Fund. Credit default swaps may be illiquid and difficult to value. If the Fund
buys a credit default swap, it will be subject to the risk that the credit
default swap may expire worthless, as the credit default swap would only
generate income in the event of a default on the underlying debt security or
other specified event. As a buyer, the Fund would also be subject to credit
risk relating to the seller’s payment of its obligations in the event of a
default (or similar event). If the Fund sells a credit default swap, it
will be exposed to the credit risk of the issuer of the obligation to which the
credit default swap relates. As a seller, the Fund would also be subject to
leverage risk, because it would be liable for the full notional amount of the
swap in the event of a default (or similar event).
The
absence of a central exchange or market for swap transactions may lead, in some
instances, to difficulties in trading and valuation, especially in the event of
market disruptions. Recent legislation requires certain swaps to be executed
through a centralized exchange or regulated facility and be cleared through a
regulated clearinghouse. Although this clearing mechanism is generally expected
to reduce counterparty credit risk, it may disrupt or limit the swap market and
may not result in swaps being easier to trade or value. As swaps become more
standardized, the Fund may not be able to enter into swaps that meet its
investment needs. The Fund also may not be able to find a clearinghouse willing
to accept a swap for clearing. In a cleared swap, a central clearing
organization will be the counterparty to the transaction. The Fund will assume
the risk that the clearinghouse may be unable to perform its obligations.
The
Fund will be required to maintain its positions with a clearing organization
through one or more clearing brokers. The clearing organization will require the
Fund to post margin and the broker may require the Fund to post additional
margin to secure the Fund’s obligations. The amount of margin required may
change from time to time. In addition, cleared transactions may be more
expensive to maintain than over-the-counter transactions and may require the
Fund to deposit larger amounts of margin. The Fund may not be able to recover
margin amounts if the broker has financial difficulties. Also, the broker may
require the Fund to terminate a derivatives position under certain
circumstances. This may cause the Fund to lose money.
Risks
associated with the use of derivatives are magnified to the extent that an
increased portion of the Fund’s assets are committed to derivatives in general
or are invested in just one or a few types of derivatives.
The
U.S. government and foreign governments have adopted (and may adopt further)
regulations governing derivatives markets, including mandatory clearing and
on-facility execution of certain derivatives, margin and reporting requirements.
Rule 18f-4 under the 1940 Act governs the use of derivative investments by
funds. Among other things, Rule 18f-4 requires funds that invest in derivatives
above a specified amount to adopt and implement a derivatives risk management
program that a derivatives risk manager administers and that the Fund’s Board of
Trustees oversees, and to comply with an outer limit on Fund leverage risk based
on value at risk. Funds that use derivative instruments in a limited amount are
not subject to the full requirements of Rule 18f-4, but must adopt and implement
policies and procedures reasonably designed to manage the Fund’s derivatives
risk. Funds are subject to reporting and recordkeeping requirements regarding
their derivatives use. The rule may affect the availability, liquidity or
performance of derivatives and may not effectively limit the risk of loss from
derivatives.
Leveraging
risk.
The value of your investment may be more volatile if the Fund borrows or uses
derivatives or other investments that have a leveraging effect on the Fund’s
portfolio. Other risks also will be compounded. This is because
leverage
generally magnifies the effect of a change in the value of an asset and creates
a risk of loss of value on a larger pool of assets than the Fund would otherwise
have had. The Fund may also have to sell assets at inopportune times to satisfy
its obligations. The use of leverage is considered to be a speculative
investment practice and may result in the loss of a substantial amount, and
possibly all, of the Fund’s assets. The Adviser expects that the implementation
of the Fund’s investment strategies, which may include a significant level of
investment in derivatives, could have the effect of creating leverage in the
Fund in that the Fund’s potential exposure may be greater than its net
assets.
Growth
risk.
Growth securities as a group may be out of favor and underperform the overall
equity market while the market concentrates on other types of securities. Growth
securities typically are very sensitive to market movements because their market
prices tend to reflect future expectations. When it appears those expectations
will not be met, the prices of growth securities typically fall.
Large
capitalization company risk.
Large capitalization companies may fall out of favor with investors based on
market and economic conditions. In return for the relative stability and low
volatility of large capitalization companies, the Fund’s value may not rise as
much as the value of funds that focus on companies with smaller market
capitalizations.
Small
and medium capitalization company risk.
The Fund will be exposed to additional risks as a result of investments in the
securities of small and medium capitalization companies. Small and medium
capitalization companies may fall out of favor with investors; may have limited
product lines, operating histories, markets or financial resources; or may be
dependent upon a limited management group. The prices of securities of small and
medium capitalization companies generally are more volatile than those of large
capitalization companies and are more likely to be adversely affected than large
capitalization companies by changes in earnings results and investor
expectations or poor economic or market conditions, including those experienced
during a recession. Securities of small and medium capitalization companies may
underperform large capitalization companies, may be harder to sell at times and
at prices the portfolio managers believe appropriate and may offer greater
potential for losses.
Illiquid
investment risk. Illiquid
investment risk exists when particular investments are impossible or difficult
to sell. Although most of the Fund’s investments must be liquid at the time of
investment, investments may become illiquid after purchase by the Fund,
particularly during periods of market turmoil. Markets may become illiquid when,
for instance, there are few, if any, interested buyers or sellers or when
dealers are unwilling or unable to make a market for certain securities. When
the Fund holds illiquid investments, the portfolio may be harder to value,
especially in changing markets, and if the Fund is forced to sell these
investments to meet redemption requests or for other cash needs, the Fund may
suffer a loss. The Fund may experience heavy redemptions that could cause the
Fund to liquidate its assets at inopportune times or at a loss or depressed
value, which could cause the value of your investment to decline. In addition,
when there is illiquidity in the market for certain investments, the Fund, due
to limitations on illiquid investments, may be unable to achieve its desired
level of exposure to a certain sector. Further, certain securities, once sold,
may not settle for an extended period (for example, several weeks or even
longer). The Fund will not receive its sales proceeds until that time, which may
constrain the Fund’s ability to meet its obligations (including obligations to
redeeming shareholders).
Foreign
investments and emerging market risk.
The Fund’s investments in securities of foreign issuers or issuers with
significant exposure to foreign markets involve additional risk. Foreign
countries in which the Fund may invest may have markets that are less liquid,
less regulated and more volatile than U.S. markets. The value of the Fund’s
investments may decline because of factors affecting the particular issuer as
well as foreign markets and issuers generally, such as unfavorable or
unsuccessful government actions, reduction of government or central bank support
and political or financial instability. Lack of information may also affect the
value of these securities.
The
value of the Fund’s foreign investments may also be affected by foreign tax
laws, special U.S. tax considerations and restrictions on receiving the
investment proceeds from a foreign country. Dividends or interest on, or
proceeds from the sale or disposition of, foreign securities may be subject to
non-U.S. withholding or other taxes.
In
some foreign countries, less information is available about issuers and markets
because of less rigorous accounting and regulatory standards than in the United
States. It may be difficult for the Fund to pursue claims against a foreign
issuer in the courts of a foreign country. Some securities issued by non-U.S.
governments or their subdivisions, agencies and instrumentalities may not be
backed by the full faith and credit of such governments. Even where a security
is backed by the full faith and credit of a government, it may be difficult for
the Fund to pursue its rights against the government. Some non-U.S. governments
have defaulted on principal and interest payments, and more may do so. In
certain foreign markets, settlement and clearance procedures may result in
delays in payment for or delivery of securities not typically associated with
settlement and clearance of U.S. investments. To the extent the Fund focuses its
investments in a single country or only a few countries in a particular
geographic region, economic, political, regulatory or other conditions affecting
such country or region may have a greater impact on Fund performance relative to
a more geographically diversified fund.
The
risks of foreign investments are heightened when investing in issuers in
emerging market countries. Emerging market countries tend to have economic,
political and legal systems that are less fully developed and are less stable
than those of
more
developed countries. They are often particularly sensitive to market movements
because their market prices tend to reflect speculative expectations. Low
trading volumes may result in a lack of liquidity and in extreme price
volatility. Investors should be able to tolerate sudden, sometimes substantial,
fluctuations in the value of their investments. Emerging market countries may
have policies that restrict investment by foreigners or that prevent foreign
investors from withdrawing their money at will. Emerging market investments also
face risks related to market manipulation, limited reliable access to capital,
political risk, atypical foreign investment structures, lack of shareholder
rights and remedies, and incomplete or inaccurate auditing and reporting
standards.
Currency
risk.
The value of investments in securities denominated in foreign currencies
increases or decreases as the rates of exchange between those currencies and the
U.S. dollar change. Currency conversion costs and currency fluctuations could
erase investment gains or add to investment losses. Currency exchange rates can
be volatile, and are affected by factors such as general economic conditions,
the actions of the U.S. and foreign governments or central banks, the imposition
of currency controls and speculation.
Sovereign
debt risk. Sovereign
government and supranational debt involve many of the risks of foreign and
emerging markets investments as well as the risk of debt moratorium, repudiation
or renegotiation and the Fund may be unable to enforce its rights against the
issuers.
Cryptocurrency
tax risk. Many
significant aspects of the U.S. federal income tax treatment of investments in
bitcoin are uncertain and an investment in bitcoin may produce income that if
directly earned by a RIC
would
not be treated as qualifying income for purposes of the applicable qualifying
income requirement necessary for the Fund to qualify as a RIC under Subchapter M
of the Code. The Fund may invest directly in the Grayscale Bitcoin Trust, which
is expected to be treated as a grantor trust for U.S. federal income tax
purposes, and therefore an investment by the Fund in Grayscale Bitcoin Trust
will generally be treated as a direct investment by the Fund in an
undivided interest
in bitcoin for such purposes. To the extent the Fund invests in the Grayscale
Bitcoin Trust, it will seek to restrict its income from such investments to a
maximum of 10% of its gross income (when combined with its other investments
that produce non-qualifying income) to comply with the qualifying income
requirement necessary for the Fund to qualify as a RIC under Subchapter M of the
Code. However, the Fund may generate more non-qualifying income than
anticipated, may not be able to generate qualifying income in a particular
taxable year at levels sufficient to meet the qualifying income requirement, or
may not be able to accurately predict the non-qualifying income from these
investments. Accordingly, the extent to which the Fund invests in the Grayscale
Bitcoin Trust directly may be limited by the qualifying income requirement,
which the Fund must continue to satisfy to maintain its status as a RIC. Failure
to comply with the qualifying income requirement could cause the Fund to fail to
qualify as a RIC and become subject to federal income tax thereby diminishing
the returns for shareholders.
In
2014, the IRS released the Notice discussing certain aspects of the treatment of
“convertible” virtual currency (that is, digital assets that have an equivalent
value in fiat currency or that act as a substitute for fiat currency) for U.S.
federal income tax purposes. The IRS stated in the Notice that such a digital
asset (i) is “property,” (ii) is not “currency” for purposes of the Code rules
relating to foreign currency gain or loss and (iii) may be held as a capital
asset. In 2019, the IRS released Revenue Ruling 2019-24, 2019-44 I.R.B. 1044 and
a set of “Frequently Asked Questions” (the “Ruling & FAQs”) that provide
some additional guidance. The IRS and Treasury department have also recently
released Proposed Regulations (and the Existing IRS Guidance). The Proposed
Regulations also provide guidance with respect to the calculation of gain or
loss and the basis of digital assets under section 1001 and 1012 of the Code.
The Proposed Regulations with respect to the computation of gain or loss are
proposed to apply to taxable years for all sales and acquisitions of digital
assets on or after January 1 of the calendar year immediately following the
adoption of final regulations, however, taxpayers may rely on the Proposed
Regulations.
However,
the Existing IRS Guidance does not address other significant aspects of the U.S.
federal income tax treatment of digital assets, including (i) whether
convertible virtual currencies are properly treated as “commodities” for U.S.
federal income tax purposes; (ii) whether convertible virtual currencies are
properly treated as “collectibles” for U.S. federal income tax purposes; and
(iii) the proper method of determining a holder’s holding period for convertible
virtual currencies acquired at different times or at varying prices. Other tax
issues include the income and withholding taxation of incidental rights received
through a fork in the blockchain, airdrops offered to bitcoin holders and other
similar events, including situations where such rights are disclaimed, as is
expected with respect to Grayscale Bitcoin Trust’s intended treatment of such
events. The uncertainty surrounding the U.S. federal income tax treatment of
digital currencies and other digital assets could affect the performance of the
Fund. Moreover, although the Revenue Ruling and FAQs address the treatment of
hard forks, there continues to be uncertainty with respect to the timing and
amount of the income inclusions.
There
is limited guidance from the IRS with respect to the treatment of bitcoin for
U.S. federal income tax purposes. In any event, there can be no assurance that
the IRS will not alter its positions or otherwise provide further guidance,
potentially retroactive in effect, with respect to digital assets in the future
or that a court would uphold the treatment set forth in the Existing IRS
Guidance or in other guidance. For these reasons, the Fund’s investment in the
Grayscale Bitcoin Trust could
result
in unexpected and potentially retroactive recognition of taxable income, which
could increase distributions to shareholders and subject to the Fund to excise
tax and income tax liability and potential loss in value, with effects that
would be directly or indirectly negative or contrary to the Fund’s tax position
and investment strategy, and result in the Fund altering its investment
strategy, potentially resulting in substantial investment losses for
shareholders. It is also unclear what additional guidance on the treatment of
digital assets for U.S. federal income tax purposes may be issued in the future.
Any such alteration of the current IRS positions or additional guidance could
have an adverse effect on the value of bitcoin.
Commodities
risk.
Investing in commodity-linked instruments may subject the Fund to greater
volatility than investments in traditional securities. The value of
commodity-linked instruments may be affected by changes in overall market
movements, commodity index volatility, prolonged or intense speculation by
investors, changes in interest rates or factors affecting a particular industry
or commodity, such as drought, floods, other weather phenomena, livestock
disease, embargoes, tariffs and international economic, political and regulatory
developments. The prices of commodities can also fluctuate widely due to supply
and demand disruptions in major producing or consuming regions. To the extent
the Fund focuses its investments in a particular commodity, the Fund will be
more susceptible to risks associated with the particular commodity. No active
trading market may exist for certain commodities investments. The Fund’s ability
to gain exposure to commodities using derivatives, and other means, may be
limited by tax considerations.
Convertible
securities risk.
A convertible security is a bond, debenture, note, preferred stock or other
security that may be converted into or exchanged for a prescribed amount of
common stock of the same or a different issuer within a particular period of
time at a specified price or formula. A convertible security entitles the holder
to receive the interest paid or accrued on debt or the dividend paid on
preferred stock until the convertible security matures or is redeemed, converted
or exchanged. Before conversion or exchange, such securities ordinarily provide
a stream of income with generally higher yields than common stocks of the same
or similar issuers, but lower than the yield on non-convertible debt. The value
of a convertible security is usually a function of (1) its yield in
comparison with the yields of other securities of comparable maturity and
quality that do not have a conversion privilege and (2) its worth, at
market value, if converted into or exchanged for the underlying common stock.
Convertible securities are typically issued by smaller capitalized companies
whose stock prices may be volatile. The price of a convertible security often
reflects such variations in the price of the underlying common stock in a way
that non-convertible debt does not.
Convertible
securities are subject to both stock market risk associated with equity
securities and the credit and interest rate risks associated with fixed income
securities. Credit risk is the risk that the issuer or obligor will not make
timely payments of principal and interest. Changes in an issuer’s credit rating
or the market’s perception of an issuer’s creditworthiness may also affect the
value of the Fund’s investment in that issuer. As the market price of the equity
security underlying a convertible security falls, the convertible security tends
to trade on the basis of its yield and other fixed income characteristics. As
the market price of the equity security underlying a convertible security rises,
the convertible security tends to trade on the basis of its equity conversion
features.
REIT
risk. The
Fund may invest in pooled investment vehicles which invest primarily in
income-producing real estate or real estate-related loans or interests, called
real estate investment trusts or REITs. Investments in real estate-related
securities (including REITs) expose the Fund to risks similar to investing
directly in real estate. The value of these investments may be affected by
changes in the value of the underlying real estate, the creditworthiness of the
issuer of the investments and changes in property taxes, interest rates,
liquidity of the credit markets and the real estate regulatory environment. In
addition, the values of REITs are affected by the condition of the economy as a
whole, which affects the occupancy rates of various types of real estate (e.g.,
offices, shopping centers and hotels). The values of many REITs have fallen as a
result of recent economic conditions, and may suffer further decline, or a
prolonged period of little increase, as a result of poor economic conditions and
resulting low occupancy and high foreclosure rates. Turmoil affecting
foreclosures can prolong the depression of real estate prices.
Warrants
risk. Warrants
can provide a greater potential for profit or loss than an equivalent investment
in the underlying security. Prices of warrants do not necessarily move in tandem
with the prices of the underlying securities, and therefore are highly volatile
and speculative investments. They have no voting rights, pay no dividends and
have no rights with respect to the assets of the issuer other than a purchase
option. If a warrant held by the Fund is not exercised by the date of its
expiration, the Fund would lose the entire purchase price of the warrant.
Short
positions risk. Short
positions involve leverage and there is no limit on the amount of loss on a
security that is sold short. The Fund may suffer significant losses if assets
that the Fund sells short appreciate rather than depreciate in value. The amount
of any gain will be decreased, and the amount of any loss increased, by the
amount of the premium, dividends, interest, or expenses the Fund may be required
to pay in connection with the short sale.
Special
risks of companies undergoing reorganization, restructuring or a spin-off.
A
reorganization or other restructuring or a spin-off pending at the time the Fund
invests in a security may not be completed on the terms or within the time frame
contemplated (if at all), resulting in losses to the Fund. Reorganizations,
restructurings and spin-offs that
result
from actual or potential bankruptcies carry additional risk and the securities
of companies involved in these types of activities are generally more likely to
lose value than the securities of more financially stable companies.
Additionally, investments in securities of companies being restructured involve
special risks, including difficulty in obtaining information as to the financial
condition of such issuers, the possibility that the issuer’s management may be
addressing a type of situation with which it has little experience, and the fact
that the market prices of such securities are subject to above-average price
volatility. These occurrences may have more serious consequences for an issuer
undergoing reorganization, restructuring or a spin-off than for other issuers.
Investment
company and ETF risk.
Investing in securities issued by investment companies (including unit
investment trusts) and ETFs involves risks similar to those of investing
directly in the securities and other assets held by the investment company or
ETF. Unlike shares of typical mutual funds or unit investment trusts, shares of
ETFs are traded on an exchange throughout a trading day and bought and sold
based on market values and not at NAV. For this reason, shares could trade at
either a premium or discount to NAV. The trading price of an ETF is expected to
closely track the actual NAV of the ETF, and the Fund will generally gain or
lose value consistent with the performance of the ETF’s portfolio securities.
The Fund will pay brokerage commissions in connection with the purchase and sale
of shares of ETFs. In addition, the Fund will indirectly bear its pro rata share
of the fees and expenses incurred by an investment company in which it invests,
including advisory fees. As a result, with respect to the Fund’s investment in
other investment companies, shareholders will be subject to two layers of fees
and expenses in connection with their investment in the Fund. These expenses are
in addition to the advisory and other expenses that the Fund bears directly in
connection with its own operations. The spread between ask and bid prices quoted
during the course of the day could be considered a premium or discount for the
ETF at closing, which could affect the investment.
ETFs
that invest in commodities may be, or may become, subject to regulatory trading
limits that could hurt the value of their securities. Some commodity ETFs also
invest in commodity futures, which can lose money even when commodity prices are
rising.
Closed-End
Fund Risk.
Shares
of closed-end funds frequently trade at a price per share that is less than the
NAV per share. There can be no assurance that the market discount on shares of
any closed-end fund purchased by the Fund will ever decrease or that when the
Fund seeks to sell shares of a closed-end fund it can receive the NAV of those
shares. Closed-end funds have lower levels of daily transaction volume when
compared to open-end companies. There are greater risks involved in investing in
securities with limited market liquidity. To the extent the Fund invests in
closed-end funds, it will indirectly bear its proportionate share of any fees
and expenses payable directly by the closed-end fund. Therefore, the Fund would
incur higher expenses, which may be duplicative, than if the Fund did not invest
in closed-end funds.
Valuation
risk.
Many factors may influence the price at which the Fund could sell any particular
portfolio investment. The sales price may well differ—higher or lower—from the
Fund’s last valuation, and such differences could be significant, particularly
for illiquid securities and securities that trade in relatively thin markets
and/or markets that experience extreme volatility. If market conditions make it
difficult to value some investments, the Fund may value these investments using
more subjective methods, such as fair value methodologies. Investors who
purchase or redeem Fund shares on days when the Fund is holding fair-valued
securities may receive fewer or more shares, or lower or higher redemption
proceeds, than they would have received if the Fund had not fair-valued the
security or had used a different valuation methodology. The value of foreign
securities, certain fixed income securities and currencies, as applicable, may
be materially affected by events after the close of the markets on which they
are traded, but before the Fund determines its NAV. The Fund’s ability to value
its investments may also be impacted by technological issues and/or errors by
pricing services or other third party service providers.
Fixed
income securities risk.
Fixed income securities are subject to a number of risks, including credit,
market and interest rate risks. Credit risk is the risk that the issuer or
obligor will not make timely payments of principal and interest. Changes in an
issuer’s credit rating or the market’s perception of an issuer’s
creditworthiness may also affect the value of the fund’s investment in that
issuer. The Fund is subject to greater levels of credit risk to the extent it
holds below investment grade debt securities, or “junk bonds”. Market risk is
the risk that the fixed income markets may become volatile and less liquid, and
the market value of an investment may move up or down, sometimes quickly or
unpredictably. Interest rate risk is the risk that the value of a fixed income
security will fall when interest rates rise. A rise in rates tends to have a
greater impact on the prices of longer term or duration securities. Interest
rates have been historically low, so the Fund faces a heightened risk that
interest rates may rise. A general rise in interest rates may cause investors to
move out of fixed income securities on a large scale, which could adversely
affect the price and liquidity of fixed income securities.
Market
and interest rate risk.
The market prices of fixed income and other securities owned by the Fund may go
up or down, sometimes rapidly or unpredictably. If the market prices of the
securities owned by the Fund falls, the value of your investment in the Fund
will decline. The value of a security may fall due to general market conditions,
such as real or perceived adverse economic or political conditions, inflation,
changes in interest or currency rates, lack of liquidity in the bond markets or
adverse investor sentiment. Local, regional, or global events such as war, acts
of terrorism, the spread of
infectious
illness or other public health issues, recessions, or other events could have a
significant impact on the securities markets and on specific securities. Changes
in market conditions will not typically have the same impact on all types of
securities. The value of a security may also fall due to specific conditions
that affect a particular sector of the securities market or a particular issuer.
The
market prices of securities may fluctuate significantly when interest rates
change. When interest rates rise, the value of fixed income securities held by
the Fund, generally goes down. Interest rates have been historically low, so the
Fund faces a heightened risk that interest rates may rise. Generally, the longer
the maturity or duration of a fixed income security, the greater the impact of a
rise in interest rates on the security’s value. However, calculations of
duration and maturity may be based on estimates and may not reliably predict a
security’s price sensitivity to changes in interest rates. Moreover, securities
can change in value in response to other factors, such as credit risk. In
addition, different interest rate measures (such as short- and long-term
interest rates and U.S. and foreign interest rates), or interest rates on
different types of securities or securities of different issuers, may not
necessarily change in the same amount or in the same direction. When interest
rates go down, the Fund’s yield will decline. Also, when interest rates decline,
investments made by the Fund may pay a lower interest rate, which would reduce
the income received by the Fund.
Credit
risk.
If an obligor (such as the issuer itself or a party offering credit enhancement)
for a security held by the Fund fails to pay, otherwise defaults, is perceived
to be less creditworthy, becomes insolvent or files for bankruptcy, a security’s
credit rating is downgraded or the credit quality or value of any underlying
assets declines, the value of your investment in the Fund could decline. If the
Fund enters into financial contracts (such as certain derivatives, repurchase
agreements, reverse repurchase agreements, and when-issued, delayed delivery and
forward commitment transactions), the Fund will be subject to the credit risk
presented by the counterparty. In addition, the Fund may incur expenses in an
effort to protect the Fund’s interests or to enforce its rights. Credit risk is
broadly gauged by the credit ratings of the securities in which the Fund
invests. However, ratings are only the opinions of the companies issuing them
and are not guarantees as to quality. Securities rated in the lowest category of
investment grade (Baa/BBB) may possess certain speculative characteristics.
Credit risk is typically greatest for the Fund’s high yield debt securities,
which are rated below the Baa/BBB categories or unrated securities of comparable
quality (“junk bonds”).
The
Fund may invest in securities which are subordinated to more senior securities
of the issuer, or which represent interests in pools of such subordinated
securities. The Fund is more likely to suffer a credit loss on subordinated
securities than on non-subordinated securities of the same issuer. If there is a
default, bankruptcy or liquidation of the issuer, most subordinated securities
are paid only if sufficient assets remain after payment of the issuer’s
non-subordinated securities. In addition, any recovery of interest or principal
may take more time. As a result, even a perceived decline in creditworthiness of
the issuer is likely to have a greater impact on subordinated
securities.
High
yield (“junk”) bonds risk.
High yield securities, often called “junk” bonds, have a higher risk of issuer
default or may be in default and are considered speculative. Changes in economic
conditions or developments regarding the individual issuer are more likely to
cause price volatility and weaken the capacity of such securities to make
principal and interest payments than is the case for higher grade debt
securities. The value of lower-quality debt securities often fluctuates in
response to company, political, or economic developments and can decline
significantly over short as well as long periods of time or during periods of
general or regional economic difficulty. High yield bonds may also be less
liquid than higher-rated securities, which means the Fund may have difficulty
selling them at times, and it may have to apply a greater degree of judgment in
establishing a price for purposes of valuing Fund shares. High yield bonds
generally are issued by less creditworthy issuers. Issuers of high yield bonds
may have a larger amount of outstanding debt relative to their assets than
issuers of investment grade bonds. In the event of an issuer’s bankruptcy,
claims of other creditors may have priority over the claims of high yield bond
holders, leaving few or no assets available to repay high yield bond holders.
The Fund may incur expenses to the extent necessary to seek recovery upon
default or to negotiate new terms with a defaulting issuer. High yield bonds
frequently have redemption features that permit an issuer to repurchase the
security from the Fund before it matures. If the issuer redeems high yield
bonds, the Fund may have to invest the proceeds in a bond with lower yields and
may lose income.
Cyber-security
risk.
Cyber-security incidents may allow an unauthorized party to gain access to Fund
assets, customer data (including private shareholder information), or
proprietary information, or cause the Fund, the Adviser, the administrator
and/or its service providers (including, but not limited to, fund accountants,
custodians, sub-custodians, transfer agents and Financial Intermediaries) to
suffer data breaches, data corruption or lose operational
functionality.
Prepayment
or call risk.
Many issuers have a right to prepay or call the security prior to its maturity
date. If interest rates fall, an issuer may exercise this right. If this
happens, the Fund will not benefit from the rise in market price that normally
accompanies a decline in interest rates, and will be forced to reinvest
prepayment proceeds at a time when yields on securities available in the market
are lower than the yield on the prepaid security. The Fund may also lose any
premium it paid on the security.
Extension
risk.
When interest rates rise, repayments of fixed income securities, particularly
asset- and mortgage-backed securities, may occur more slowly than anticipated,
extending the effective duration of these fixed income securities at below
market interest rates and causing their market prices to decline more than they
would have declined due to the rise in interest rates alone. This may cause the
Fund’s share price to be more volatile.
Non-diversification
risk. The
Fund is non-diversified under the 1940 Act, which means that it may invest more
of its assets in the securities of a single issuer or a smaller number of
issuers than if it were a diversified fund. As a result, the Fund may be more
exposed to the risks associated with and developments affecting an individual
issuer or a smaller number of issuers than a fund that invests more widely. This
may increase the Fund’s volatility and cause the performance of a relatively
smaller number of issuers to have a greater impact on the Fund’s
performance.
U.S.
government securities risk. U.S.
government securities are obligations of, or guaranteed by, the U.S. Government,
its agencies or government-sponsored entities. U.S. government securities
include issues by non-governmental entities (like financial institutions) that
carry direct guarantees from U.S. government agencies as part of government
initiatives in response to the market crisis or otherwise. Although the U.S.
Government guarantees principal and interest payments on securities issued by
the U.S. Government and some of its agencies, such as securities issued by
Ginnie Mae, this guarantee does not apply to losses resulting from declines in
the market value of these securities. Some of the U.S. government securities
that the Fund may hold are not guaranteed or backed by the full faith and credit
of the U.S. Government, such as those issued by Fannie Mae (formally known as
the Federal National Mortgage Association) and Freddie Mac (formally known as
the Federal Home Loan Mortgage Corporation).
Operational
risk. Your
ability to transact with the Fund or the valuation of your investment may be
negatively impacted because of the operational risks arising from factors such
as processing errors and human errors, inadequate or failed internal or external
processes, failures in systems and technology, changes in personnel, and errors
caused by third party service providers or trading counterparties. Although the
Fund attempts to minimize such failures through controls and oversight, it is
not possible to identify all of the operational risks that may affect the Fund
or to develop processes and controls that completely eliminate or mitigate the
occurrence of such failures. The Fund and its shareholders could be negatively
impacted as a result.
Cash
management and defensive investing risk.
The value of the investments held by the Fund for cash management or defensive
investing purposes can fluctuate. Like other fixed income securities, they are
subject to risk, including market, interest rate and credit risk. If the Fund
holds cash uninvested it will be subject to the credit risk of the depository
institution holding the cash. If the Fund holds cash uninvested, the Fund will
not earn income on the cash. If a significant amount of the Fund’s assets are
used for cash management or defensive investing purposes, it may not achieve its
investment objective.
Value
investing risk. The
value approach to investing involves the risk that value stocks may remain
undervalued. Value stocks as a group may be out of favor and underperform the
overall equity market for a long period of time, while the market concentrates
on growth stocks. Although the Fund will not concentrate its investments in any
one industry or industry group, it may, like many value funds, weight its
investments toward certain industries, thus increasing its exposure to factors
adversely affecting issuers within those industries.
Please
note that there are other factors that could adversely affect your investment
and that could prevent the Fund from achieving its investment objective. More
information about risks appears in the SAI. Before investing, you should
carefully consider the risks that you will assume.
Fund
Management
Investment
Adviser
Patient
Capital Management, LLC, located at One South Street, Suite 2550, Baltimore,
Maryland 21202, serves as investment adviser to the Fund. The Adviser provides
the day-to-day portfolio management of the Fund.
The
Predecessor Fund’s shareholders approved Patient Capital as the new investment
adviser to the Predecessor Fund effective May 26, 2023. Prior to May 26, 2023,
Miller Value Partners, LLC, served as the Predecessor Fund’s investment adviser
(the “Previous Adviser”). The Fund’s portfolio managers are the same portfolio
managers who served the Predecessor Fund as employees of Patient Capital, and
prior to that, as employees of the Previous Adviser.
Under
the investment advisory agreement with the Trust, the Adviser supervises the
management of the Fund’s investments (including cash and short-term instruments)
and business affairs. At its expense, the Adviser will provide office space and
all necessary office facilities, equipment and personnel for servicing the
investments of the Fund. As compensation for its services, the Fund will pay the
Adviser a monthly advisory fee at the annual rate shown in the table below,
based on the Fund’s average daily net assets.
|
| |
Management/Advisory
Fee Rate |
1.00%
of assets up to and including $100 million; 0.75% of assets on the next
$2.5 billion; 0.70% on the next $2.5 billion; 0.675% on the next $2.5
billion; and 0.65% on amounts over $7.6
billion. |
For
the fiscal year ended December 31, 2022, the Previous Adviser received an
aggregate fee of 0.75% of average net assets, after fee waivers, as described
below.
A
discussion regarding the basis for the Board’s approval of the advisory
agreement with Patient Capital Management, LLC will be available in the Fund’s
annual report to shareholders for the period ending December 31,
2023.
Expense
Limitation
The
Fund is responsible for its own operating expenses, subject to the following
limitations.
The
Adviser has contractually agreed to waive fees and/or reimburse operating
expenses (other than front-end or contingent deferred loads, taxes, interest
expense, brokerage commissions, acquired fund fees and expenses, expenses
incurred in connection with any merger or reorganization, portfolio transaction
expenses, dividends paid on short sales, extraordinary expenses such as
litigation, Rule 12b-1 fees, intermediary servicing fees, or any other
class-specific expenses) in order to limit the total annual fund operating
expenses (after fee waivers and/or expense reimbursements) to 0.88% of average
daily net assets for all share classes of the Fund. This contractual limit may
be referred to as the “Expense Cap.” The Adviser may request recoupment from the
Fund of previously waived fees and reimbursed expenses under the Expense Cap for
three years from the date such fees and expenses were waived or paid, provided
that such recoupment does not cause the Fund’s expense ratio (after recoupment
is taken into account) to exceed the lower of: (1) the Expense Cap in place at
the time such amounts were waived or paid, or (2) the Fund’s Expense Cap at the
time of the recoupment. The Expense Cap will remain in effect through at least
April 30, 2025.
The
Adviser has also contractually agreed to reimburse operating expenses applicable
to Class I (other than management fees, front-end or contingent deferred loads,
taxes, interest expense, brokerage commissions, acquired fund fees and expenses,
expenses incurred in connection with any merger or reorganization, portfolio
transaction expenses, dividends paid on short sales, or extraordinary expenses
such as litigation) in order to limit the total annual fund operating expenses
for Class I (after fee waivers and/or expense reimbursements) to 0.93% of
average daily net assets attributable to Class I shares. This contractual limit
may be referred to as the “Class I Expense Cap.” The Adviser may request
recoupment from Class I of previously waived fees and reimbursed expenses under
the Class I Expense Cap for three years from the date such fees and expenses
were waived or paid, provided that such recoupment does not cause the Class I
expense ratio (after recoupment is taken into account) to exceed the lower of:
(1) the Class I Expense Cap in place at the time such amounts were waived or
paid, or (2) the Class I Expense Cap at the time of the recoupment. The Class I
Expense Cap will remain in effect through at least April 30, 2025.
The
agreement related to the Expense Cap and the Class I Expense Cap may be
terminated at any time by the Board upon 60 days’ written notice to the Adviser,
or by the Adviser with the consent of the Board.
Portfolio
managers
The
following individuals are primarily and
jointly
responsible for the day-to-day management of the Fund’s portfolio.
Samantha
McLemore, CFA, has served as a Portfolio Manager of the Fund since 2023, the
Predecessor Fund since 2017, and the Prior Predecessor Fund since 2014. She
served as Assistant Portfolio Manager from 2008 to 2014. Ms.
McLemore
has worked on the Opportunity strategy since 2002 as an employee of the Previous
Adviser. Ms. McLemore also is the sole managing member and Chief Investment
Officer of the Adviser, which she founded in 2020.
Christina
Malbon, CFA, has served as an Assistant Portfolio Manager of the Fund since 2023
and the Predecessor Fund since April 2023, and previously served as a Senior
Research Analyst of the Prior Predecessor Fund since 2013. Ms. Malbon has worked
on the Opportunity strategy since starting with the Previous Adviser in 2013,
working closely with Samantha McLemore in supporting portfolio investment
decisions, research, and trading activities. Ms. Malbon joined Patient Capital
Management in 2020 as a Senior Research Analyst.
The
SAI provides additional information about the Portfolio Managers’ compensation
structure, other accounts that the Portfolio Managers manage and the Portfolio
Managers’ ownership of Fund shares.
Distribution
Quasar
Distributors, LLC (“Quasar” or the “Distributor”), a wholly-owned broker-dealer
subsidiary of Foreside Financial Group, LLC, is located at 111 E. Kilbourn
Avenue, Suite 2200, Milwaukee, Wisconsin 53202, and is the distributor for the
shares of the Fund. Quasar is a registered broker-dealer and a member of the
Financial Industry Regulatory Authority. Shares of the Fund are offered on a
continuous basis.
The
Fund has adopted a Rule 12b-1 distribution plan. Under the plan, the Fund pays
distribution and service fees based on annualized percentages of average daily
net assets, of up to 0.25% for Class A shares; up to 1.00% for Class C shares;
up to 0.25% for Class FI shares; and up to 0.50% for Class R shares. These fees
are an ongoing expense and, over time, will increase the cost of your investment
and may cost you more than other types of sales charges. Class I and Class IS
shares are not subject to Rule 12b-1 distribution and service fees under the
plan.
The
Adviser and/or its affiliates make payments for distribution, shareholder
servicing, marketing and promotional activities and related expenses out of
their profits and other available sources, including profits from their
relationships with the Fund. These payments are not reflected as additional
expenses in the fee table contained in this Prospectus. The recipients of these
payments may include affiliates of the Adviser, as well as non-affiliated
broker/dealers, insurance companies, financial institutions and other Financial
Intermediaries through which investors may purchase shares of the Fund,
including your Financial Intermediary. The total amount of these payments is
substantial, may be substantial to any given recipient and may exceed the costs
and expenses incurred by the recipient for any fund-related marketing or
shareholder servicing activities. The payments described in this paragraph are
often referred to as “revenue sharing payments.” Revenue sharing arrangements
are separately negotiated between the Adviser and/or their affiliates, and the
recipients of these payments.
Revenue
sharing payments create an incentive for an intermediary or its employees or
associated persons to recommend or sell shares of the Fund to you. Contact your
Financial Intermediary for details about revenue sharing payments it receives or
may receive. Revenue sharing payments, as well as payments under the shareholder
services and distribution plan (where applicable), also benefit the Adviser, and
their affiliates to the extent the payments result in more assets being invested
in the Fund on which fees are being charged.
Portfolio
holdings
A
description of the Fund’s policies and procedures with respect to the disclosure
of its portfolio holdings is available in the SAI. Disclosure of the Fund’s
portfolio holdings will be available on the Fund’s website at
www.patientcapitalmanagement.com/opportunity-trust.
Shareholder
Information
Share
price
Shares
of the Fund are sold at NAV per share, plus any applicable sales charge, which
is calculated as of the close of regular trading (generally, 4:00 p.m.,
Eastern Time) on each day that the NYSE is open for unrestricted business.
However, the Fund’s NAV may be calculated earlier if trading on the NYSE is
restricted or as permitted by the SEC. The NYSE is closed on weekends and most
national holidays, including New Year’s Day, Martin Luther King, Jr. Day,
Washington’s Birthday/Presidents’ Day, Good Friday, Memorial Day, Juneteenth
National Independence Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day. The NAV will not be calculated on days when the NYSE is closed
for trading.
Purchase
and redemption requests are priced based on the next NAV per share calculated
after receipt of such requests and any applicable sales charge. The NAV is the
value of the Fund’s securities, cash and other assets, minus all expenses and
liabilities (assets – liabilities = NAV). NAV per share is determined by
dividing NAV by the number of shares outstanding (NAV/ # of shares = NAV per
share). The NAV takes into account the expenses and fees of the Fund, including
management and administration fees, which are accrued daily.
In
calculating the NAV, portfolio securities are valued using current market values
or official closing prices, if available. Each security owned by the Fund that
is listed on a securities exchange is valued at its last sale price on that
exchange on the date as of which assets are valued. Where the security is listed
on more than one exchange, the Fund will use the price of the exchange that the
Fund generally considers to be the principal exchange on which the security is
traded.
When
determining NAV, the value of the Fund’s portfolio investments is based on
readily available market quotations, which generally means a reliable valuation
obtained from an exchange or other market, or fair value as determined by an
independent pricing service and evaluated by the Adviser. If a market quotation
is not readily available or does not otherwise accurately reflect the value of
an investment, an investment will be valued by another method that the Adviser
believes reflects fair value in accordance with the Trust’s valuation policies
and the Adviser’s related procedures. Fair value pricing represents the price
that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date.
Accordingly, the Fund’s NAV may reflect certain portfolio investments’ fair
values rather than their market prices.
Fair
value pricing involves subjective judgments, and it is possible that a fair
value determination for an investment will materially differ from the value that
could be realized upon the sale of the investment.
Fair
value pricing may be applied to non-U.S. securities. The trading hours for most
non-U.S. securities end prior to the close of the NYSE, the time that the Fund’s
NAV is calculated. The occurrence of certain events after the close of non-U.S.
markets, but prior to the close of the NYSE (such as a significant surge or
decline in the U.S. market) often will result in an adjustment to the trading
prices of non-U.S. securities when non-U.S. markets open on the following
business day. If such events occur, the Fund may value non-U.S. securities at
fair value, taking into account such events, when it calculates its NAV. Other
types of securities that the Fund may hold for which fair value pricing might be
required include, but are not limited to: (a) investments which are not
frequently traded and/or the market price of which the Adviser believes may be
stale; (b) illiquid securities, including “restricted” securities and private
placements for which there is no public market; (c) securities of an issuer that
has entered into a restructuring; (d) securities whose trading has been halted
or suspended; and (e) fixed income securities that have gone into default and
for which there is not a current market value quotation.
If
the Fund has portfolio securities that are primarily listed on foreign exchanges
that trade on weekends or other days when the Fund does not price its shares,
the NAV of the Fund’s shares may change on days when shareholders will not be
able to purchase or redeem the Fund’s shares.
Choosing
a class of shares to buy
Set
forth below is information about the manner in which the Fund offers its shares.
For
the variations applicable to shares offered through specific Financial
Intermediaries, please see Appendix A to this Prospectus – Financial
Intermediary Sales Charge Variations (“Appendix A”).
All variations described in Appendix A are applied by the identified Financial
Intermediary. Sales charge variations may apply to purchases, sales and
reinvestments of Fund shares and a shareholder transacting in Fund shares
through an intermediary identified on Appendix A should read the terms and
conditions of Appendix A carefully. A variation that is specific to a particular
Financial Intermediary is not applicable to shares held directly with the Fund
or through another intermediary. Please consult your Financial Intermediary with
respect to any variations listed in Appendix A.
Individual
investors can generally invest in Class A and Class C shares. Individual
investors who invest directly with the Fund and who meet the $1,000,000 minimum
initial investment requirement may purchase Class I shares.
Retirement
Plans, Institutional Investors and Clients of Eligible Financial Intermediaries
should refer to “Additional Share Class Eligibility Information” below for a
description of the classes available to them.
Investors
not purchasing directly from the Fund may purchase shares through a Financial
Intermediary. Please note that if you are purchasing shares through a Financial
Intermediary, your Financial Intermediary may not offer all classes of shares.
Financial Intermediaries making Fund shares available to their clients determine
which share class(es) to make available. Your Financial Intermediary may receive
different compensation for selling one class of shares than for selling another
class, which may depend on, among other things, the type of investor account and
the practices adopted by your Financial Intermediary. Certain Financial
Intermediaries may impose their own investment fees and practices for purchasing
and selling Fund shares, which are not described in this Prospectus or the SAI,
and which will depend on the policies, procedures and trading platforms of the
Financial Intermediary. Consult a representative of your Financial Intermediary
about the availability of Fund shares and the Financial Intermediary’s practices
and other information.
Individual
investors investing through a Financial Intermediary may be eligible to invest
in Class I or Class IS shares, if such Financial Intermediary is acting solely
as an agent on behalf of its customers pursuant to an agreement with the Fund’s
distributor and such investor’s shares are held in an omnibus account on the
books of the Fund. Please contact your Financial Intermediary for more
information.
Please
note that the Fund does not charge any front-end load, deferred sales charge or
other asset-based fee for sales or distribution of Class I shares and Class IS
shares. However, if you purchase Class I or Class IS shares through a Financial
Intermediary acting solely as an agent on behalf of its customers pursuant to an
agreement with the Fund’s distributor, that Financial Intermediary may charge
you a commission in an amount determined and separately disclosed to you by the
Financial Intermediary. Because the Fund is not a party to any commission
arrangement between you and your Financial Intermediary, any purchases and
redemptions of Class I or Class IS shares will be made by the Fund at the
applicable NAV (before imposition of the sales commission). Any commissions
charged by a Financial Intermediary are not reflected in the fees and expenses
listed in the fee table or expense example in this Prospectus nor are they
reflected in the performance in the bar chart and table in this Prospectus
because these commissions are not charged by the Fund.
Each
class has different sales charges and expenses, allowing you to choose a class
that may be appropriate for you.
When
choosing which class of shares to buy, you should consider:
•How
much you plan to invest
•How
long you expect to own the shares
•The
expenses paid by each class detailed in the fee table and example at the front
of this Prospectus
•Whether
you qualify for any reduction or waiver of sales charges
•Availability
of share classes
When
choosing between Class A and Class C shares, keep in mind that, generally
speaking, the larger the size of your investment and the longer your investment
horizon, the more likely it will be that Class C shares will not be as
advantageous as Class A shares. The annual Rule 12b-1 distribution and
service fees (see Distribution section above) on Class C shares may cost you
more over the longer term than the front-end sales charge and service fees you
would have paid for larger purchases of Class A shares. If you are eligible
to purchase Class I shares, you should be aware that Class I shares are not
subject to a front-end sales charge and generally have lower annual expenses
than Class A or Class C shares.
Each
class of shares, except Class IS, is authorized to pay fees for recordkeeping
services to Financial Intermediaries (as defined below). As a result, operating
expenses of classes that incur new or additional recordkeeping fees may increase
over time.
You
may buy shares:
•Through
a Financial Intermediary. The Fund has authorized one or more brokers to receive
on its behalf purchase and redemption orders. Investors may be charged a fee if
they effect transactions through a Financial Intermediary. Such Financial
Intermediaries are authorized to designate other intermediaries to receive
purchase and redemption orders on the Fund’s behalf. Orders will be priced at
the Fund’s NAV, and any applicable sales charge, next computed after the order
is received by an authorized broker or the broker’s authorized designee. The
Fund will be deemed to have received a purchase order (or redemption) when the
Financial Intermediary, or if applicable, the Financial Intermediaries
authorized designee, receives the order.
•Directly
from the Fund.
Your
Financial Intermediary may provide shareholder services that differ from the
services provided by other Financial Intermediaries. Services provided by your
Financial Intermediary may vary by class. You should ask your Financial
Intermediary to explain the shareholder services it provides for each class and
the compensation it receives in connection with each class. Remember that your
Financial Intermediary may receive different compensation depending on the share
class in which you invest.
Your
Financial Intermediary may not offer all classes of shares. You should contact
your Financial Intermediary for further information.
Fund
imposed sales charges and waivers include the following:
•The
front-end sales charges that apply to the purchase of Class A
shares
•The
contingent deferred sales charges that apply to the redemption of Class C shares
and certain Class A shares
•Who
qualifies for lower sales charges on Class A shares
•Who
qualifies for a sales charge waiver
Comparing
the Fund’s classes
The
following table compares key features of the Fund’s classes. You should also
review the fee table and example at the front of this Prospectus carefully
before choosing your share class. Your Financial Intermediary can help you
choose a class that may be appropriate for you. Please contact your Financial
Intermediary regarding the availability of Class FI, Class R, Class I or Class
IS shares or, if you plan to purchase shares through the Fund, contact the Fund.
You may be
required
to provide appropriate documentation confirming your eligibility to invest in
these share classes. Your Financial Intermediary may receive different
compensation depending upon which class you choose.
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| Key features |
Front-end
sales charge |
Contingent deferred sales
charge |
Annual distribution
and service fees |
Class A
|
•Front-end
sales charge
•You
may qualify for reduction or waiver of front-end sales charge
•Generally
lower annual expenses than Class C |
Up
to 5.75%; reduced or waived for large purchases and certain investors. No
charge for purchases of $1 million or more
|
1.00%
on purchases of $1 million or more if you redeem within 18 months of
purchase; waived for certain investors (for additional waiver information
see “More about Contingent Deferred Sales Charges”) |
0.25%
of average daily net assets |
Class
C
|
•No
front-end sales charge
•Contingent
deferred sales charge for only 1 year
•Generally
higher annual expenses than Class A
•Generally
converts to Class A on the next monthly conversion processing date after
the shares have been held for 8 years from the purchase date; please
consult your Financial Intermediary for more information. |
None |
1.00%
if you redeem within 1 year of purchase; waived for certain
investors |
1.00%
of average daily net assets |
Class
FI |
•No
front-end or contingent deferred sales charge
•Only
offered to Clients of Eligible Financial Intermediaries and eligible
Retirement Plans |
None |
None |
0.25%
of average daily net assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| Key features |
Front-end
sales charge |
Contingent deferred sales
charge |
Annual distribution
and service fees |
Class
R
|
•No
front-end or contingent deferred sales charge
•Only
offered to Retirement Plans with omnibus accounts held on the books of the
Fund, Clients of Eligible Financial Intermediaries and Eligible Investment
Programs
|
None |
None |
0.50%
of average daily net assets |
Class
I |
•No
front-end or contingent deferred sales charge
•Only
offered to institutional and other eligible investors
•Generally
lower annual expenses than the other classes, except for Class
IS |
None |
None |
None |
Class
IS
|
•No
front-end or contingent deferred sales charge
•Only
offered to certain Institutional investors, Retirement Plans with omnibus
accounts held on the books of the Fund, and Clients of Eligible Financial
Intermediaries
•Generally
lower annual expenses than the other classes |
None |
None |
None |
Sales
charges
You
can find information about sales charges and breakpoints below, on the Fund’s
website at www.patientcapitalmanagement.com/opportunity-trust,
and
in the SAI, which is also available on the website free of
charge.
For the sales charge variations applicable to shares offered through specific
Financial Intermediaries, please see Appendix A.
Class A
shares
You
buy Class A shares at the offering price, which is the NAV plus a sales
charge. Because of rounding in the calculation of the “offering price”, the
actual sales charge you pay may be more or less than that calculated using the
percentages shown below. You pay a lower rate as the size of your investment
increases to certain levels called breakpoints. You do not pay a sales charge on
the Fund’s distributions or dividends that you reinvest in additional
Class A shares.
The
table below shows the rate of sales charge you pay, depending on the amount of
your investment. It also shows the amount of broker/dealer compensation that
will be paid out of the sales charge if you buy Class A shares from a Financial
Intermediary. Such Financial Intermediaries will receive the sales charge
imposed on purchases of Class A shares and will retain the full amount of
such sales charge. Financial Intermediaries will receive a Rule
12b-1
distribution
and service fee payable on Class A shares at an annual rate of up to 0.25%
of the average daily net assets represented by the Class A shares serviced
by them. These fees are an ongoing expense and, over time, will increase the
cost of your investment and may cost you more than other types of sales
charges.
|
|
|
|
|
|
|
|
|
|
| |
Amount of investment |
Sales charge
as a % of offering price |
Sales charge
as a % of net amount invested |
Broker/dealer
commission as a % of
offering price1 |
Less
than $25,000 |
5.75 |
6.10 |
5.75 |
$25,000
but less than $50,000 |
5.00 |
5.26 |
5.00 |
$50,000
but less than $100,000 |
4.50 |
4.71 |
4.50 |
$100,000
but less than $250,000 |
3.50 |
3.63 |
3.50 |
$250,000
but less than $500,000 |
2.50 |
2.56 |
2.50 |
$500,000
but less than $750,000 |
2.00 |
2.04 |
2.00 |
$750,000
but less than $1 million |
1.50 |
1.52 |
1.50 |
$1
million but less than $5 million1 |
-0- |
-0- |
1.00 |
$5
million but less than $15 million1 |
-0- |
-0- |
0.50 |
$15
million but less than $1 billion1 |
-0- |
-0- |
0.25 |
1 A
Financial Intermediary may be paid a commission of up to 1.00% on Fund
purchases of $1 million or more. Starting in the thirteenth month after
purchase, the annual 12b-1 distribution and service fee of up to 0.25%
will be paid to the Financial Intermediary. The Financial Intermediary
will start receiving the annual 12b-1 distribution and service fee
immediately if no commission is paid at purchase. Please contact your
Financial Intermediary for more
information. |
Investments
of $1,000,000 or more
You
do not pay a front-end sales charge when you make a purchase of $1,000,000 or
more of Class A shares. However, if you redeem these Class A shares
within 18 months of purchase, you will pay a Contingent Deferred Sales Charge
(“CDSC”) of up to 1.00%. Any CDSC is based on the original cost of the shares or
the current market value, whichever is less.
Qualifying
for a reduced Class A sales charge
There
are several ways you can combine multiple purchases of shares of the Fund to
take advantage of the breakpoints in the Class A sales charge schedule. In
order to take advantage of reductions in sales charges that may be available to
you when you purchase Fund shares, you must inform your Financial Intermediary
if you are eligible for a letter of intent or a right of accumulation and if you
own shares of the Fund that are eligible to be aggregated with your purchases.
Certain records, such as account statements, may be necessary in order to verify
your eligibility for a reduced sales charge.
•Rights
of Accumulation (“ROA”) – You may combine your new purchase of Class A shares
with other shares of the Fund you currently own for the purpose of qualifying
for the lower front-end sales charge rates that apply to larger purchases. The
applicable sales charge for the new purchase is based on the total of your
current purchase and the current value, calculated using the current day public
offering price of all other shares you own. You may also combine the account
value of your spouse and children under the age of 21. Only the shares held at
the intermediary or the transfer agent at which you are making the current
purchase can be used for the purposes of a lower sales charge based on Rights of
Accumulation.
If
you hold Fund shares in accounts at two or more Financial Intermediaries, please
contact your Financial Intermediaries to determine which shares may be
combined.
•Letter
of Intent (“LOI”) – By signing an LOI you can reduce your Class A sales charge.
Your individual purchases will be made at the applicable sales charge based on
the amount you intend to invest over a 13-month period. The LOI will apply to
all purchases of any of the shares of the Fund. Any shares purchased within 90
days of the date you sign the letter of intent may be used as credit toward
completion, but the reduced sales charge will only apply to new purchases made
on or after that date. Purchases resulting from the reinvestment of dividends
and capital gains do not apply toward fulfillment of the LOI. Shares equal to
5.75% of the amount of the LOI will be held in escrow during the 13-month
period. If, at the end of that time the total amount of purchases made is less
than the amount intended, you will be required to pay the difference between the
reduced sales charge and the sales charge applicable to the individual purchases
had the LOI not been in effect. This amount will be obtained from redemption of
the escrow shares. Any remaining escrow shares will be released to
you.
If
you establish an LOI with the Fund you can aggregate your accounts as well as
the accounts of your spouse and children under age 21. You will need to provide
written instruction with respect to the other accounts whose purchases should be
considered in fulfillment of the LOI. Only the accounts held at the Financial
Intermediary or the Transfer Agent at which you are making the purchase can be
used toward fulfillment of the LOI.
•Reinstatement
Privileges – If you sell Class A shares of the Fund and withdraw your money from
the Fund, you may reinstate into the same account, within 365 days of the date
of your redemption, without paying a front-end sales charge if you paid a
front-end sales charge when you originally purchased your shares. For purposes
of a CDSC, if you paid a CDSC when you sold your shares, you would be credited
with the amount of the CDSC proportional to the amount reinvested. Reinstated
shares will continue to age, as applicable, from the date that you bought your
original shares. This privilege can be used only once per calendar year per
account. Contact your Financial Intermediary for additional information. You
must identify and provide information to the Fund or your Financial
Intermediary, as applicable, regarding your historical purchases and holdings,
and you should also retain any records necessary to substantiate historical
transactions and costs because the Fund, its transfer agent, and Financial
Intermediaries will not be responsible for providing this
information.
You
must identify and provide information to the Fund or your Financial
Intermediary, as applicable, regarding your historical purchases and holdings,
and you should also retain any records necessary to substantiate historical
transactions and costs because the Fund, its transfer agent, and Financial
Intermediaries will not be responsible for providing this
information.
For
the sales charge variations applicable to shares offered through specific
Financial Intermediaries, please see Appendix A.
Waivers
for certain Class A investors
Class A
front-end sales charges are waived for the following types of investors,
including:
•Investors
purchasing shares directly though the Fund
•Employees
of Financial Intermediaries
•Those
who qualify for the Reinstatement Privilege as discussed above
•Trustees
and officers of the Fund
•Employees
of the Adviser and its subsidiaries
•Investors
investing through eligible Retirement Plans as defined under “Additional Share
Class Eligibility Information” section below
•Investors
who rollover fund shares from a qualified retirement plan into an IRA
administered on the same retirement plan platform
•Purchases
by separate accounts used to fund unregistered variable annuity
contracts
•Purchases
by investors participating in “wrap fee” or asset allocation programs or other
fee-based arrangements sponsored by broker/dealers and other financial
institutions, including Clients of Eligible Financial Intermediaries as defined
under “Additional Share Class Eligibility Information” section
below
•Purchases
by direct retail investment platforms through mutual fund “supermarkets,” where
the sponsor links its client’s account (including IRAs) on such platforms to a
master account in the sponsor’s name
•Sales
through Financial Intermediaries who offer shares to self-directed investment
brokerage accounts that may or may not charge a transaction fee to their
customers
•All
existing retirement plan shareholders and retirement programs who were
authorized to purchase Class A shares at NAV prior to November 20, 2006, are
permitted to purchase additional Class A shares at NAV.
•Investors
who are converted from Class I shares by their program provider
If
you qualify for a waiver of the Class A front-end sales charge, you must
notify your Financial Intermediary or the Fund at the time of purchase and
provide sufficient information at the time of purchase to permit verification
that the purchase qualifies for the front-end sales charge waiver.
For
the sales charge variations applicable to shares offered through specific
Financial Intermediaries, please see Appendix A.
Class
C shares
Class
C shares may be purchased only through Financial Intermediaries and may not be
purchased directly from the Fund.
You
buy Class C shares at NAV with no front-end sales charge. However, if you redeem
your Class C shares within one year of purchase, you will pay a contingent
deferred sales charge of 1.00%.
Financial
Intermediaries selling Class C shares are paid a commission of up to 1.00% of
the purchase price of the Class C shares they sell. Financial Intermediaries
will receive Rule 12b-1 distribution and service fee payments on Class C
shares at an annual rate of up to 1.00% of the average daily net assets
represented by the Class C shares serviced by them following the first year
of purchase. These fees are an ongoing expense and, over time, will increase the
cost of your investment and may cost you more than other types of sales
charges.
Class
C share conversion
Except
as noted below, Class C shares will automatically convert to Class A shares
after the shares have been held for 8 years from the purchase date; the shares
will be converted on the next monthly conversion processing date after the 8
year anniversary of purchase. It is the responsibility of your Financial
Intermediary and not the Fund, the transfer agent, the Distributor or the
Adviser to ensure that you are credited with the proper holding period. If your
Financial Intermediary does not have records verifying that your shares have
been held for at least 8 years, your Financial Intermediary may not convert your
Class C shares to Class A shares. Group retirement plans held in an omnibus
recordkeeping platform through a Financial Intermediary that does not track
participant-level share lot aging may not convert Class C shares to Class A
shares. Customers of certain Financial Intermediaries may be subject to
different terms or conditions, as set by their Financial Intermediary, in
connection with such conversions. These Financial Intermediaries may convert
Class C shares to Class A shares sooner than after 8 years of ownership. Please
refer to Appendix A or contact your Financial Intermediary for more information.
When
Class C shares that a shareholder acquired through a purchase convert, any other
Class C shares that the shareholder acquired as reinvested dividends and
distributions related to those shares also will convert into Class A shares on a
pro rata basis.
All
conversions from Class C shares to Class A shares will be based on the per share
NAV without the imposition of any sales load, fee or other charge. The
conversion from Class C shares to Class A shares is not considered a taxable
event for Federal income tax purposes.
Class
FI shares
You
buy Class FI shares at NAV with no front-end sales charge and no contingent
deferred sales charge when redeemed.
Financial
Intermediaries receive an annual Rule 12b-1 distribution and service fee of up
to 0.25% of the average daily net assets represented by the Class FI shares
serviced by them.
Class
FI shares are only offered to Clients of Eligible Financial Intermediaries and
eligible Retirement Plans.
Class
R shares
You
buy Class R shares at NAV with no front-end sales charge and no contingent
deferred sales charge when redeemed.
Financial
Intermediaries receive an annual Rule 12b-1 distribution and service fee of up
to 0.50% of the average daily net assets represented by the Class R shares
serviced by them.
Class
R shares are only offered to Retirement Plans with omnibus accounts held on the
books of the Fund, Clients of Eligible Financial Intermediaries and Eligible
Investment Programs.
Class
I shares
You
buy Class I shares at NAV with no front-end sales charge and no contingent
deferred sales charge when redeemed.
Class
I shares are not subject to any Rule 12b-1 distribution and service fees.
However, if you purchase Class I shares through a Financial Intermediary acting
solely as an agent on behalf of its customers pursuant to an agreement with the
Fund’s distributor, the Financial Intermediary may charge you a commission in an
amount determined and separately disclosed to you by the Financial
Intermediary.
Class
I shares are only offered to institutional and other eligible investors. Refer
to “Additional Share Class Eligibility Information” below for more details.
Class
IS shares
You
buy Class IS shares at NAV with no front-end sales charge and no contingent
deferred sales charge when redeemed.
Class
IS shares are not subject to any Rule 12b-1 distribution and service fees.
However, if you purchase Class IS shares through a Financial Intermediary acting
solely as an agent on behalf of its customers pursuant to an agreement with the
Fund’s distributor, the Financial Intermediary may charge you a commission in an
amount determined and separately disclosed to you by the Financial
Intermediary.
Class
IS shares are only offered to certain institutional and other eligible
investors. Refer to “Additional Share Class Eligibility Information” below for
more details. In order to purchase Class IS shares, an investor must hold its
shares in one account with the Fund, which account is not subject to payment of
recordkeeping or similar fees by the Fund to any intermediary.
More
about Contingent Deferred Sales Charges
The
contingent deferred sales charge is based on the NAV at the time of purchase or
redemption, whichever is less, and therefore you do not pay a sales charge on
amounts representing appreciation or depreciation. Shareholders who redeem Class
C shares within one year of purchase will pay a contingent deferred sales charge
of 1.00% based on the original cost of the shares or the current market value,
whichever is less. In addition, there is no front-end sales charge on purchases
of $1 million or more for Class A shares, but there is a maximum deferred sales
charge of 1.00% based on the original cost of the shares or the current market
value, whichever is less, if a shareholder redeems within 18 months of such
purchase.
In
addition, you do not pay a contingent deferred sales charge:
•On
shares representing reinvested distributions and dividends
•On
shares no longer subject to the contingent deferred sales charge
Each
time you place a request to redeem shares, the Fund will first redeem any shares
in your account that are not subject to a contingent deferred sales charge and
then redeem the shares in your account that have been held the longest.
If
you redeem shares of the Fund and pay a contingent deferred sales charge, you
may, under certain circumstances, reinvest all or part of the redemption
proceeds within 365 days and receive pro rata credit for any contingent deferred
sales charge imposed on the prior redemption. Please see “Reinstatement
Privileges” section above.
Contingent
deferred sales charge waivers
The
contingent deferred sales charge for each share class will be waived:
•On
payments made through certain systematic withdrawal plans
•On
distributions from eligible Retirement Plans as defined under “Additional Share
Class Eligibility Information” section below
•For
Retirement Plans with omnibus accounts held on the books of the
Fund
•For
involuntary redemptions of small account balances
•For
12 months following the death or disability of a shareholder (as defined in the
Code)
•Shares
purchased through reinvestment of capital gains distributions and dividend
reinvestment when purchasing shares of the same Fund
•For
mandatory post-retirement distributions from retirement plans or
IRAs
•For
tax-free returns of an excess contribution to any retirement plan
To
have your contingent deferred sales charge waived, you or your Financial
Intermediary must let the Fund know at the time you redeem shares that you
qualify for such a waiver.
For
the variations in CDSC waivers applicable to shares offered through specific
Financial Intermediaries, please see Appendix A.
Additional
Share Class Eligibility Information
Retirement
Plans
“Retirement
Plans” include 401(k) plans, 457 plans, employer-sponsored 403(b) plans,
profit-sharing plans, non-qualified deferred compensation plans, employer
sponsored benefit plans (including health savings accounts), other similar
employer-sponsored retirement and benefit plans, and IRAs that are
administered on the same IRA recordkeeping platform and that invest in the Fund
through a single omnibus account with the Fund. Retirement Plans do not include
individual retirement vehicles, such as traditional and Roth IRAs (absent an
exception that is explicitly described in this Prospectus), Coverdell education
savings accounts, individual 403(b)(7) custodial accounts, Keogh plans, SEPs,
SARSEPs, SIMPLE IRAs or similar accounts.
Retirement
Plans with omnibus accounts held on the books of the Fund can generally invest
in Class A, Class C, Class FI, Class R, Class I, and Class IS shares.
Investors
who rollover fund shares from a Retirement Plan into an IRA administered on the
same retirement plan platform may hold and purchase shares of the Fund to the
same extent as the applicable Retirement Plan.
Although
Retirement Plans with omnibus accounts held on the books of the Fund are not
subject to minimum initial investment requirements for any of these share
classes, investment minimums may be imposed by a Financial Intermediary. Please
contact your Financial Intermediary for more information.
Other
Retirement Plans
“Other
Retirement Plans” include Retirement Plans investing through brokerage accounts
and also include Retirement Plans with direct relationships to the Fund that are
neither Institutional Investors nor investing through omnibus accounts. Other
Retirement Plans and individual retirement vehicles, such as IRAs, are treated
like individual investors for purposes of determining sales charges and any
applicable sales charge reductions or waivers.
Other
Retirement Plan investors can generally invest in Class A, Class C, and
Class I shares. Individual retirement vehicles may also choose between these
share classes.
Clients
of Eligible Financial Intermediaries
“Clients
of Eligible Financial Intermediaries” are investors who invest in the Fund
through Financial Intermediaries that (i) charge such investors an ongoing
fee for advisory, investment, consulting or similar services, or (ii) offer
Class A, Class FI, Class R, Class I or Class IS shares through a
no-load network or platform (“Eligible Investment Programs”). Eligible
Investment Programs may also include college savings vehicles such as
Section 529 plans and direct retail investment platforms through mutual
fund “supermarkets,” where the sponsor links its client’s account (including IRA
accounts on such platforms) to a master account in the sponsor’s name. The
Financial Intermediary may impose separate investment minimums.
Clients
of Eligible Financial Intermediaries may generally invest in Class A, Class
FI, Class I or Class IS shares. Participants in Eligible Investment Programs may
be able to convert Class A or Class C shares to Class I or Class IS shares.
Please contact your Financial Intermediary for more information.
Institutional
Investors
“Institutional
Investors” may include corporations, banks, trust companies, insurance
companies, investment companies, foundations, endowments, defined benefit plans
and other similar entities. The Financial Intermediary may impose additional
eligibility requirements or criteria to determine if an investor, including the
types of investors listed above, qualifies as an Institutional Investor.
Institutional
Investors may invest in Class I or Class IS shares if they meet the $1,000,000
minimum initial investment requirement. Institutional Investors may also invest
in Class A and Class C shares, which have different investment minimums,
fees and expenses.
Class A
shares — Retirement Plans
Retirement
Plans may buy Class A shares. Under programs for current and prospective
Retirement Plan investors sponsored by Financial Intermediaries, the front-end
sales charge and contingent deferred sales charge for Class A shares are
waived where:
•Such
Retirement Plan’s record-keeper offers only load-waived shares
•Fund
shares are held on the books of the Fund through an omnibus account
Financial
Intermediaries selling Class A shares to Retirement Plans with a direct
omnibus relationship with the Fund will not be paid a commission on the purchase
price of Class A shares sold by them. However, for certain Retirement Plans
that
are permitted to purchase shares at NAV, the Financial Intermediary may be paid
a commission of up to 1.00% of the purchase price of the Class A shares
that are purchased with regular ongoing plan contributions. Please contact your
Financial Intermediary for more information.
Class
C shares — Retirement Plans
Retirement
Plans with omnibus accounts held on the books of the Fund may buy Class C shares
at NAV without becoming subject to a contingent deferred sales charge. The
Adviser does not pay Financial Intermediaries selling Class C shares to
Retirement Plans with omnibus accounts held on the books of the Fund a
commission on the purchase price of Class C shares sold by them. Instead,
immediately after purchase, these Financial Intermediaries may be paid an annual
Rule 12b‑1 distribution and service fee of up to 1.00% of the average daily net
assets represented by the Class C shares serviced by them. Please see the SAI
for more details.
Retirement
Plan programs with exchange features in effect prior to November 20, 2006,
remain eligible for exchange from Class C shares to Class A shares in
accordance with the program terms. Please see the SAI for more details.
Class
FI shares
Class
FI shares are offered only to Clients of Eligible Financial Intermediaries and
Retirement Plans.
Class
R shares
Class
R shares are offered only to Retirement Plans with omnibus accounts held on the
books of the Fund (either at the plan level or at the level of the Financial
Intermediary), to Clients of Eligible Financial Intermediaries and through
Eligible Investment Programs.
You
buy Class R shares at NAV with no front-end sales charge and no contingent
deferred sales charge when redeemed. Financial Intermediaries receive an annual
Rule 12b-1 distribution and service fee of up to 0.50% of the average daily net
assets represented by the Class R shares serviced by them.
Class
I shares
Class
I shares are offered only to Institutional Investors and individual investors
(investing directly with the Fund) who meet the $1,000,000 minimum initial
investment requirement, Retirement Plans with omnibus accounts held on the books
of the Fund and certain rollover IRAs, Clients of Eligible Financial
Intermediaries, investors investing through a Financial Intermediary acting
solely as agent on behalf of its customers pursuant to an agreement with the
Fund’s distributor, and other investors authorized by the Adviser.
Investors
who qualify as Clients of Eligible Financial Intermediaries or who participate
in Eligible Investment Programs made available through their Financial
Intermediaries (such as investors in fee-based advisory or mutual fund “wrap”
programs) are eligible to purchase Class I shares, among other share classes. In
such cases your ability to hold Class I shares may be premised on your
continuing participation in a fee-based advisory or mutual fund wrap program.
Your
Financial Intermediary may reserve the right to redeem your Class I shares or
convert them to Class A shares of the Fund, as applicable, if you terminate your
fee-based advisory or mutual fund wrap program and are no longer eligible for
Class I shares. You may be subject to a front-end sales charge in connection
with such conversion, and you will be subject to the annual distribution and/or
service fee applicable to Class A shares. Any redemption may generate a taxable
gain or loss and significantly change the asset allocation of your account.
Please contact your Financial Intermediary for more information.
Certain
waivers of these requirements for individuals associated with the Fund, the
Adviser or its affiliates are discussed in the SAI.
Class
IS shares
Class
IS shares may be purchased only by Retirement Plans with omnibus accounts held
on the books of the Fund (either at the plan level or at the level of the
Financial Intermediary), certain rollover IRAs and Institutional Investors,
Clients of Eligible Financial Intermediaries, investors investing through a
Financial Intermediary acting solely as agent on behalf of its customers
pursuant to an agreement with the Fund’s distributor, and other investors
authorized by the Adviser. In order to purchase Class IS shares, an investor
must hold its shares in one account with the Fund, which is not subject to
payment of recordkeeping or similar fees by the Fund to any
intermediary.
Investors
who qualify as Clients of Eligible Financial Intermediaries or who participate
in Eligible Investment Programs made available through their Financial
Intermediaries (such as investors in fee-based advisory or mutual fund “wrap”
programs) are eligible to purchase, directly or via exchange, Class IS shares,
among other share classes. In such cases your ability to hold Class IS shares
may be premised on your continuing participation in a fee-based advisory or
mutual fund wrap program.
Your
Financial Intermediary may reserve the right to redeem your Class IS shares or
convert them for Class A shares of the Fund, as applicable, if you terminate
your fee-based advisory or mutual fund wrap program and are no longer eligible
for Class IS shares. You may be subject to a front-end sales charge in
connection with such conversion, and you will be subject to the annual
distribution and/or service fee applicable to Class A shares. Any redemption may
generate a taxable gain or loss and significantly change the asset allocation of
your account. Please contact your Financial Intermediary for more information.
Certain
waivers of these requirements for individuals associated with the Fund, the
Adviser or its affiliates are discussed in the SAI.
Other
considerations
Plan
sponsors, plan fiduciaries and other Financial Intermediaries may choose to
impose qualification requirements that differ from the Fund’s share class
eligibility standards. In certain cases this could result in the selection of a
share class with higher distribution and service fees than otherwise would have
been charged. The Fund is not responsible for, and has no control over, the
decision of any plan sponsor, plan fiduciary or Financial Intermediary to impose
such differing requirements. Please consult with your plan sponsor, plan
fiduciary or Financial Intermediary for more information about available share
classes.
Your
Financial Intermediary may not offer all share classes. Please contact your
Service Agent for additional details.
Buying
shares
|
|
|
|
| |
Generally |
You
may buy shares at their NAV next determined after receipt by your
Financial Intermediary or the transfer agent of your purchase request in
good order, plus any applicable sales charge.
The
Fund may not be available for sale in certain states. Prospective
investors should inquire as to whether the Fund is available for sale in
their state of residence.
You
must provide the following information for your order to be
processed:
•Name
of fund being bought
•Class
of shares being bought
•Dollar
amount or number of shares being bought (as applicable)
•Account
number (if existing account) |
Through
a Financial Intermediary |
You
should contact your Financial Intermediary to open a brokerage account and
make arrangements to buy shares. Your Financial Intermediary
may charge an annual account maintenance fee. |
Through
the Fund |
Please
complete the account application and send it with your check payable to
the Patient Opportunity Trust to the following address:
Regular
Mail
Patient
Opportunity Trust
c/o
U.S. Bank Global Fund Services
P.
O. Box 701
Milwaukee,
WI 53201-0701
Overnight
Delivery
Patient
Opportunity Trust
c/o
U.S. Bank Global Fund Services
615
East Michigan Street, 3rd Floor
Milwaukee,
Wisconsin 53202 |
|
|
|
|
| |
|
The
Fund does not consider the U.S. Postal Service or other independent
delivery services to be its agents. Therefore, deposit in the mail or with
such services, or receipt at U.S. Bancorp Fund Services, LLC post office
box, of purchase orders or redemption requests does not constitute receipt
by the transfer agent of the Fund. Receipt of purchase orders or
redemption requests is based on when the order is received on the Transfer
Agent’s premises.
Subsequent
purchases should be sent to the same address. To make additional
investments once you have opened your account, write your account number
on the check and send it together with the Invest by Mail form from your
most recent confirmation statement received from the Transfer Agent. If
you do not have the Invest by Mail form include the Fund name, your name,
address, and account number on a separate piece of paper along with your
check made payable to the Fund to pay for the shares.
For
more information, please call the Patient Opportunity Trust at
800-655-0324 between 8 a.m. and 7 p.m. Central time (9 a.m. and 8 p.m.
Eastern time). |
By
telephone purchase
|
Investors
may purchase additional shares of the Fund by calling 800-655-0324. You
automatically have the ability to make telephone and/or internet
purchases, unless you specifically decline. If your account has been open
for at least 7 business days, telephone orders will be accepted via
electronic funds transfer from your bank account through the Automated
Clearing House (ACH) network through an authorized bank
or
through a Financial Intermediary authorized by the Fund to receive
purchase orders.
You
must have banking information established on your account prior to making
a purchase. If your order is received prior to 4 p.m. Eastern time, your
shares will be purchased at the net asset value, plus applicable sales
charge, calculated on the day your order is placed. |
By
wire |
If
you are making your initial investment in the Fund, before wiring funds,
the Transfer Agent must have a completed account application. You can mail
or overnight deliver your account application to the Transfer Agent at the
above address. Upon receipt of your completed account application, your
account will be established and a service representative will contact you
to provide your new account number and wiring instructions. If you do not
receive this information within one business day, contact the Transfer
Agent. You may then instruct your bank to send the wire. Prior to sending
the wire, please call the Fund at 800-655-0324 to advise them of the wire
and to ensure proper credit upon receipt. Your bank must include the name
of the Fund, your name and your account number so that monies can be
correctly applied. Your bank should transmit immediately available funds
by wire to:
U.S.
Bank National Association
777
East Wisconsin Avenue
Milwaukee,
Wisconsin 53202
ABA
No. 075000022
Credit:
U.S. Bancorp Fund Services, LLC
Account
No. 112-952-137
Further
Credit: Patient Opportunity Trust
Shareholder
Registration
Shareholder
Account Number |
|
If
you are making a subsequent purchase, your bank should wire funds as
indicated above. Before each wire purchase, you should be sure to notify
the Transfer Agent. It
is essential that your bank include complete information about your
account in all wire transactions.
If you have questions about how to invest by wire, you may call the
Transfer Agent at 800-655-0324. Your bank may charge you a fee for sending
a wire payment to the Fund.
Wired
funds must be received prior to 4:00 p.m. Eastern time to be eligible for
same day pricing. Neither the Fund nor U.S. Bank National Association are
responsible for the consequences of delays resulting from the banking or
Federal Reserve wire system or from incomplete wiring
instructions. |
Through
an Automatic
Investment
Plan (“AIP”)
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You
may authorize your Financial Intermediary or the transfer agent to
transfer funds automatically from (i) a regular bank account, (ii) cash
held in a brokerage account with a Financial Intermediary, or (iii)
certain money market funds, in order to buy shares on a regular basis. If
you wish to enroll in the AIP, complete the appropriate section on the
Account application. Your signed Account application must be received at
least 7 business days prior to the initial
transaction. |
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•Amounts
transferred must meet the applicable minimums (see “Purchase and Sale of
Fund shares”)
•Amounts
may be transferred monthly, every alternate month, quarterly,
semi-annually or annually
•A
$25 fee will be imposed if your AIP transaction is returned for any
reason.
The
Fund may terminate or modify this privilege at any time. You may terminate
your participation in the AIP at any time by notifying the Transfer Agent
sufficiently in advance of the next withdrawal. Please contact your
financial institution to determine if it is an Automated Clearing House
(“ACH”) network member. Your financial institution must be an ACH member
in order for you to participate in the AIP.
The
AIP is a method of using dollar cost averaging as an investment strategy
that involves investing a fixed amount of money at regular time intervals.
However, a program of regular investment cannot ensure a profit or protect
against a loss as a result of declining markets. By continually investing
the same amount, you will be purchasing more shares when the price is low
and fewer shares when the price is high. Please call 800-655-0324 for
additional information regarding the Fund’s AIP.
For
more information, please contact your Financial Intermediary or the Fund,
or consult the SAI. |
Redeeming
shares
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Generally |
You
may redeem shares at their NAV next determined after receipt by your
Financial Intermediary or the transfer agent of your redemption request in
good order, less any applicable contingent deferred sales charge.
Redemptions made through your Financial Intermediary may be subject to
transaction fees or other conditions as set by your Financial
Intermediary. If the shares are held by a fiduciary or
corporation, partnership or similar entity, other documents may be
required. |
Redemption
proceeds |
The
Fund typically sends the redemption proceeds on the next business day (a
day when the NYSE is open for normal business) after the redemption
request is received in good order and prior to market close, regardless of
whether the redemption proceeds are sent via check, wire, or ACH transfer.
While not expected, payment of redemption proceeds may take up to seven
days. Under unusual circumstances, the Fund may suspend redemptions, or
postpone payment for more than seven days, as permitted by federal
securities law. If you did not purchase your shares with a wire payment,
before selling recently purchased shares, please note that if the Transfer
Agent has not yet collected payment for the shares you are selling, it may
delay sending the proceeds until the payment is collected, which may take
up to 15 calendar days from the purchase date.
Your
redemption proceeds may be delayed, or your right to receive redemption
proceeds suspended if the NYSE is closed (other than on weekends or
holidays) or trading is restricted, if an emergency exists, or otherwise
as permitted by order of the SEC. |
| If
you have a brokerage account with a Financial Intermediary, your
redemption proceeds will be sent to your Financial Intermediary. Your
redemption proceeds can be sent by check to your address of record or by
wire or electronic transfer (ACH) to your pre-designated bank account.
There is a $15 wire charge per wire which will be deducted from your
account balance on dollar specific trades or from the proceeds on complete
redemptions and share specific trades. There is no charge for proceeds
sent via the ACH network; however, most ACH transfers require two to three
days for the bank account to receive credit. Telephone redemptions cannot
be made if you notify the Transfer Agent of a change of address within 30
days before the redemption request. To change the bank account designated
to receive wire or electronic transfers, you will be required to deliver a
new written authorization and may be asked to provide other documents.
In other cases, unless you direct otherwise, your proceeds
will be paid by check mailed to your address of record.
The
Fund typically expects to meet redemption requests by paying out proceeds
from cash or cash equivalent portfolio holdings, or by selling portfolio
holdings. In stressed market conditions, redemption methods may include
paying redemption proceeds to you in whole or in part by a distribution of
securities from the Fund’s portfolio (a “redemption in-kind”). You may pay
transaction costs to dispose of the securities, and you may receive less
for them than the price at which they were valued for purposes of the
redemption. |
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By
mail
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Contact
your Financial Intermediary or, if you hold shares directly with the Fund,
write to the Fund at the following address:
Regular
Mail
Patient
Opportunity Trust
c/o
U.S. Bank Global Fund Services
P.
O. Box 701
Milwaukee,
WI 53201-0701
Overnight
Delivery
Patient
Opportunity Trust
c/o
U.S. Bank Global Fund Services
615
East Michigan Street, 3rd Floor
Milwaukee,
Wisconsin 53202
The
Fund does not consider the U.S. Postal Service or other independent
delivery services to be its agents. Therefore, deposit in the mail or with
such services, or receipt at U.S. Bancorp Fund Services, LLC post office
box, of purchase orders or redemption requests does not constitute receipt
by the transfer agent of the Fund. Receipt of purchase orders or
redemption requests is based on when the order is received on the Transfer
Agent’s premises.
Your
written request must provide the following:
•The
Fund name, the class of shares being redeemed and your account
number
•The
dollar amount or number of shares being redeemed
•Signature
of each owner exactly as the account is registered
•Signature
guarantees, as applicable (see “Additional Information about
Transactions”)
•If
you have an IRA or other retirement plan, you must indicate on your
written redemption request whether or not to withhold federal income tax.
Redemption requests failing to indicate an election to have tax withheld
will be subject to 10% withholding. |
Telephone
and/or internet purchases |
You
automatically have the ability to make telephone and/or internet
purchases, redemptions or exchanges, unless you specifically decline.
Contact your Financial Intermediary or, if you hold shares directly with
the Fund, call the Fund at 800-655-0324 between 8 a.m. and 7 p.m. Central
time (9 a.m. and 8 p.m. Eastern time) for more information. Please have
the following information ready when you call:
•Name
of Fund being redeemed
•Class
of shares being redeemed
•Account
number |
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•Before
executing an instruction received by telephone, the Transfer Agent will
use reasonable procedures to confirm that the telephone instructions are
genuine. The telephone call may be recorded and the caller may be asked to
verify certain personal identification information. If the Fund or its
agents follows these procedures, they cannot be held liable for any loss,
expense or cost arising out of any telephone redemption request that is
reasonably believed to be genuine. This includes fraudulent or
unauthorized requests. The Fund may change, modify or terminate these
telephone redemption privileges at any time upon at least 60 days’ written
notice to shareholders. If an account has more than one owner or
authorized person, the Fund will accept telephone instructions from any
one owner or authorized person. Once a telephone transaction has been
placed, it cannot be canceled or modified after the close of regular
trading on the NYSE (generally, 4:00 p.m., Eastern time). Telephone trades
must be received by or prior to market close in order to receive that
day’s NAV. During periods of high market activity, shareholders may
encounter higher than usual call wait times. Please allow sufficient time
to ensure that you will be able to complete your telephone transaction
prior to market close.
Shares
held in IRA or other retirement accounts may be redeemed by telephone.
Investors will be asked whether or not to withhold federal income taxes
from any distribution. |
Systematic
Withdrawal Plan (“SWP”) |
You
may be permitted to schedule automatic redemptions of a portion of your
shares. To qualify, you must own shares of the Fund with a value of at
least $10,000 ($5,000 for Retirement Plan accounts) and each automatic
redemption must be at least $50.
The
following conditions apply:
•Redemptions
may be made monthly, every alternate month, quarterly, semi-annually or
annually
•If
your shares are subject to a CDSC, the charge will be required to be paid
upon redemption. However, the charge will be waived if your automatic
redemptions are equal to or less than 2% per month of your account balance
on the date the redemptions commence, up to a maximum of 12% in one
year
•You
must inform your Financial Intermediary or the Transfer Agent at the time
you establish your Systematic Withdrawal that you are eligible for any
CDSC waiver
•You
should elect to have all dividends and distributions
reinvested
If
you elect this method of redemption, the Fund will send a check directly
to your address of record, or will send the payments directly to a
pre-authorized bank account by electronic funds transfer via the ACH
network. For payment through the ACH network, your bank must be an ACH
member and your bank account information must be maintained on your Fund
account. This SWP may be terminated or modified by a shareholder or the
Fund at any time without charge or penalty. You may also elect to
terminate your participation in this SWP at any time by contacting the
Transfer Agent sufficiently in advance of the next withdrawal.
A
withdrawal under the SWP involves a redemption of Fund shares, and may
result in a gain or loss for federal income tax purposes. In addition, if
the amount withdrawn exceeds the dividends credited to your account, the
account ultimately may be depleted. To establish the SWP, complete the
“Systematic Withdrawal Plan” section of the Fund’s account application.
Please call 800-655-0324 for additional information regarding the Fund’s
SWP. |
Converting
shares
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Generally |
Investors
currently owning Class A, Class C, or Class FI shares who qualify as
Clients of Eligible Financial Intermediaries and participate in Eligible
Investment Programs made available through their Financial Intermediaries
(such as investors in fee-based advisory or mutual fund “wrap” programs or
invested through no-load networks or platforms), may be eligible to
convert to Class I or Class IS shares under certain limited circumstances.
Investors currently owning Class C shares who qualify as above, may
convert to Class A shares under certain limited circumstances. Please
refer to the section of this Prospectus titled “Additional Share Class
Eligibility Information” or contact your Financial Intermediary for more
information.
Investors
who hold Class I or IS shares of the Fund through a fee-based program, but
who subsequently become ineligible to participate in the program or
withdraw from the program, may be subject to conversion of their Class I
or IS shares by their program provider to another class of shares of the
Fund having expenses (including Rule 12b-1 fees) that may be higher than
the expenses of the Class I or Class IS shares. Investors should contact
their program provider to obtain information about their eligibility for
the provider’s program and the class of shares they would receive upon
such a conversion.
A
conversion of shares of one class directly for shares of another class of
the same Fund normally should not be taxable for federal income tax
purposes. You should talk to your tax advisor before making a
conversion. |
Additional
Information about Transactions
When
you buy or redeem shares, your request must be in good order. This means you
have provided the following information, without which your request may not be
processed:
•Name
of the Fund
•Your
account number
•In
the case of a purchase, the class of shares being bought
•In
the case of a redemption, the class of shares being redeemed (if you own more
than one class)
•Dollar
amount or number of shares being bought or redeemed
•In
certain circumstances, the signature of each owner exactly as the account is
registered (see “Redeeming Shares”)
All
checks must be in U.S. Dollars drawn on a domestic bank. The Fund will not
accept payment in cash or money orders. The Fund does not accept postdated
checks or any conditional order or payment. To prevent check fraud, the Fund
will not accept third party checks, Treasury checks, credit card checks,
traveler’s checks or starter checks for the purchase of shares. A service fee of
$25 will be deducted from a shareholder’s Fund account, in addition to any loss
sustained by the Fund, for any purchases that do not clear.
Shares
of the Fund have not been registered for sale outside of the United States. The
Fund generally does not sell shares to investors residing outside the United
States, even if they are United States citizens or lawful permanent residents,
except to investors with United States military APO or FPO
addresses.
In
certain circumstances, such as during periods of market volatility, severe
weather and emergencies, shareholders may experience difficulties placing
redemption orders by telephone. In that case, shareholders should consider using
the Fund’s other redemption procedures described under “Redeeming Shares.”
The
Transfer Agent or the Fund will employ reasonable procedures to confirm that any
telephone exchange or redemption request is genuine, which may include recording
calls, asking the caller to provide certain personal identification information,
sending you a written confirmation or requiring other confirmation procedures
from time to time. If these procedures are followed, neither the Fund nor its
agents will bear any liability for these transactions.
The
Trust reserves the right in its sole discretion to:
•Suspend
the continued offering of shares
•Reject
any purchase order in whole or in part when in the judgment of the Adviser or
the Distributor such rejection is in the best interest of the Fund
•Suspend
telephone transactions
•Suspend
or postpone redemptions of shares on any day when trading on the NYSE is
restricted or as otherwise permitted by the SEC
•Transfer
your mutual fund account to your state of residence if no activity occurs within
your account during the “inactivity period” specified in your state’s abandoned
property laws
The
Adviser reserves the right to:
•reduce
or waive the minimum for initial and subsequent investments for certain
fiduciary accounts or under circumstances where certain economies can be
achieved in sales of the Fund’s shares
It
is important that the Fund maintains a correct address for each investor. An
incorrect address may cause an investor’s account statements and other mailings
to be returned to the Fund. Based upon statutory requirements for returned mail,
the Fund will attempt to locate the investor or rightful owner of the account.
If the Fund is unable to locate the investor, then it will determine whether the
investor’s account can legally be considered abandoned. The Fund is legally
obligated to escheat (or transfer) abandoned property to the appropriate state’s
unclaimed property administrator in accordance with statutory requirements. Your
mutual fund account may be transferred to your state of residence if no activity
occurs within your account during the “inactivity period” specified in your
State’s abandoned property laws. The investor’s last known address of record
determines which state has jurisdiction. Investors with a state of residence in
Texas have the ability to designate a representative to receive legislatively
required unclaimed property due diligence notifications. Please contact the
Texas Comptroller of Public Accounts for further information.
For
your protection, the Fund or your Financial Intermediary may request additional
information in connection with large redemptions, unusual activity in your
account, or otherwise to ensure your redemption request is in good order. Please
contact your Financial Intermediary or the Fund for more information.
Householding
In
an effort to decrease costs, the Fund intends to reduce the number of duplicate
prospectuses, supplements, and certain other shareholder documents you receive
by sending only one copy of each to those addresses shared by two or more
accounts and to shareholders we reasonably believe are from the same family or
household. Once implemented, if you would like to discontinue householding for
your accounts, please call toll-free at 800-655-0324 to request individual
copies of documents. Once the Fund receives notice to stop householding, we will
begin sending individual copies thirty days after receiving your request. This
policy does not apply to account statements.
Signature
guarantees
A
signature guarantee, from either a Medallion program member or a non-Medallion
program member, is required if you:
•Are
changing ownership on your account
•Are
redeeming shares and sending the proceeds to an address or bank not currently on
file
•Are
redeeming shares and the account address has changed within the last 15 calendar
days
•Are
redeeming shares and want the check paid to someone other than the account
owner(s)
•Are
transferring the redemption proceeds to an account with a different registration
•Make
a redemption request in excess of $50,000
The
Fund or the Adviser may waive any of the above requirements in certain
instances. In addition to the situations described above, the Fund, the Adviser,
and/or the Transfer Agent reserve the right to require a signature guarantee in
other instances based on the circumstances relative to the particular
situation.
Non-financial
transactions, including establishing or modifying certain services on an
account, may require a signature guarantee, signature verification from a
Signature Validation Program member, or other acceptable form of authentication
from a financial institution source.
Signature
guarantees will generally be accepted from domestic banks, brokers, dealers,
credit unions, national securities exchanges, registered securities
associations, clearing agencies and savings associations, as well as from
participants in the New York Stock Exchange Medallion Signature Program and the
Securities Transfer Agents Medallion Program (“STAMP”). A notary public is not
an acceptable signature guarantor.
Anti-money
laundering
In
compliance with the USA PATRIOT Act of 2001, please note that the Transfer Agent
will verify certain information on your account application as part of the
Trust’s Anti-Money Laundering Program. As requested on the account application,
you must supply your full name, date of birth, social security number and
permanent street address. If you are opening the account in the name of a legal
entity (e.g., partnership, limited liability company, business trust,
corporation, etc.), you must also supply the identity of the beneficial owners.
Mailing addresses containing only a P.O. Box will not be accepted. Accounts may
be restricted and/or closed, and the monies withheld, pending verification of
this information or as otherwise required under these and other federal
regulations.
Mandatory
redemptions for non-direct accounts
“Non-direct
accounts” include omnibus accounts and accounts jointly maintained by the
Financial Intermediary and the Fund.
The
Fund reserves the right to ask you to bring your non-direct account up to a
minimum investment amount determined by your Financial Intermediary if the
aggregate value of the Fund shares in your account falls below $500 for any
reason (including solely due to declines in NAV and/or failure to invest at
least $500 within a reasonable period). You will be notified in writing and will
have 60 days to make an additional investment to bring your account value up to
the required level. If you choose not to do so within this 60-day period, the
Fund may close your account and send you the redemption proceeds. If your share
class is no longer offered, you may not be able to bring your account up to the
minimum investment amount. Some shareholders who hold accounts in multiple
classes of the same Fund may have those accounts aggregated for the purposes of
these calculations. If your account is closed, you will not be eligible to have
your account reinstated without imposition of any sales charges that may apply
to your new purchase. Please contact your Financial Intermediary for more
information. Any redemption of Fund shares may result in tax consequences to you
(see “Taxes” for more information).
All
accounts
The
Fund may, with prior notice, change the minimum size of accounts subject to
mandatory redemption, which may vary by class, or implement fees for small
non-direct accounts.
Subject
to applicable law, the Fund may, with prior notice, adopt other policies from
time to time requiring mandatory redemption of shares in certain circumstances.
For
more information, please contact your Financial Intermediary or the Fund or
consult the SAI.
Tools
to Combat Frequent Transactions
The
Board has adopted policies and procedures to prevent frequent transactions in
the Fund. The Fund discourages excessive, short-term trading and other abusive
trading practices that may disrupt portfolio management strategies and harm the
Fund’s performance. Shareholders that purchase and hold Fund shares directly
with the Fund will be restricted to no more than four “round trips” during any
12 month period. A round trip is an redemption out of the Fund followed by a
purchase back into the the Fund. The Fund may take other steps to reduce the
frequency and effect of frequent trading activities in the Fund. These steps may
include imposing a redemption fee, monitoring trading practices and using fair
value pricing. Although these efforts are designed to discourage abusive trading
practices, these tools cannot eliminate the possibility that such activity may
occur. Further, while the Fund makes efforts to identify and restrict frequent
trading, the Fund receives purchase and sale orders through Financial
Intermediaries and cannot always know or detect frequent trading that may be
facilitated by the use of intermediaries or the use of group or omnibus accounts
by those intermediaries. The Fund seeks to exercise its judgment in implementing
these tools to the best of its abilities in a manner that the Fund believes is
consistent with shareholder interests.
The
Fund monitors selected trades in an effort to detect excessive short-term
trading activities. If, as a result of this monitoring, the Fund believes that a
shareholder has engaged in excessive short-term trading, it may, in its
discretion, ask the shareholder to stop such activities or refuse to process
purchases in the shareholder’s accounts. In making such judgments, the Fund
seeks to act in a manner that it believes is consistent with the best interests
of shareholders. Due to the complexity and subjectivity involved in identifying
abusive trading activity and the volume of shareholder transactions the Fund
handles, there can be no assurance that the Fund’s efforts will identify all
trades or trading practices that may be considered abusive. In addition, the
Fund’s ability to monitor trades that are placed by individual shareholders
within group or omnibus accounts maintained by Financial Intermediaries is
limited because the Fund does not have simultaneous access to the underlying
shareholder account information.
In
compliance with Rule 22c-2 under the 1940 Act, the Distributor, on behalf of the
Fund, has entered into written agreements with the Fund’s Financial
Intermediaries, under which the intermediary must, upon request, provide the
Fund with certain shareholder and identity trading information so that the Fund
can enforce its market timing policies.
The
Fund employs fair value pricing selectively, as discussed above under “Share
Price”, to ensure greater accuracy in its daily NAV and to prevent dilution by
frequent traders or market timers who seek to take advantage of temporary market
anomalies.
Record
ownership
If
you hold shares through a Financial Intermediary, your Financial Intermediary
may establish and maintain your account and be the shareholder of record. In the
event that the Fund holds a shareholder meeting, your Financial Intermediary, as
record holder, will be entitled to vote your shares and may seek voting
instructions from you. If you do not give your
Financial
Intermediary voting instructions, your Financial Intermediary, under certain
circumstances, may nonetheless be entitled to vote your shares.
Dividends,
Other Distributions and Taxes
Dividends
and other distributions
The
Fund generally pays dividends and distributes capital gain, if any, once a year
in December and at such other times as necessary. The Fund may pay additional
distributions and dividends in order to avoid a federal tax.
All
distributions will be reinvested in additional Fund shares unless you choose one
of the following options: (1) receive distributions of net capital gain in
cash, while reinvesting net investment income distributions in additional Fund
shares; (2) receive all distributions in cash; or (3) reinvest net capital
gain distributions in additional Fund shares, while receiving distributions of
net investment income in cash.
If
you hold shares directly with the Fund and you elect to receive dividends and/or
distributions in cash, you have the option to receive such dividends and/or
distributions via a direct deposit to your bank account by check.
If
you elect to receive distributions and/or capital gains paid in cash, and the
U.S. Postal Service cannot deliver the check, or if a check remains outstanding
for six months, the Fund reserves the right to reinvest the distribution check
in your account, at the Fund’s current NAV, and to reinvest all subsequent
distributions. You may change the distribution option on your account at any
time by writing or calling the Transfer Agent at least 5 days prior to record
date of the next distribution.
Please
contact your Financial Intermediary or the Fund to discuss what options are
available to you for receiving your dividends and other distributions.
The
Board reserves the right to revise the dividend policy or postpone the payment
of dividends, if warranted in the Board’s judgment, due to unusual
circumstances.
Taxes
The
following discussion is very general, applies only to shareholders who are U.S.
persons, and does not address shareholders subject to special rules, such as
those who hold fund shares through an IRA, 401(k) plan or other tax-advantaged
account. Except as specifically noted, the discussion is limited to federal
income tax matters, and does not address state, local, foreign or non-income
taxes. Further information regarding taxes, including certain federal income tax
considerations relevant to non-U.S. persons, is included in the SAI. Because
each shareholder’s circumstances are different and special tax rules may apply,
you should consult your tax adviser about federal, state, local and/or foreign
tax considerations that may be relevant to your particular situation. This
summary is based on current tax law, which may be changed by legislative,
judicial or administrative action.
The
Fund has elected and intends to continue to qualify each year for treatment as a
RIC. 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, the 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.
In
general, the Fund intends to distribute, at least annually, substantially all of
its net investment income and net capital gains. For federal income tax
purposes, distributions of investment income are generally taxable as ordinary
income or qualified dividend income. Taxes on distributions of capital gains (if
any) are determined by how long the Fund owned the investments that generated
them, rather than how long a shareholder has owned his or her shares. Sales of
assets held by the Fund for more than one year generally result in long-term
capital gains and losses, and sales of assets held by the Fund for one year or
less generally result in short-term capital gains and losses. Distributions of
the Fund’s net capital gain (the excess of net long-term capital gains over net
short-term capital losses) that are reported by the Fund as capital gain
dividends will be taxable as long-term capital gains, which for non-corporate
shareholders are subject to tax at reduced rates of up to 20% (lower rates apply
to individuals in lower tax brackets). Distributions of short-term capital gain
will generally be taxable as ordinary income. Dividends and distributions are
generally taxable to you whether you receive them in cash or reinvest them in
additional shares.
Distributions
reported by the Fund as “qualified dividend income” are generally taxed to
non-corporate shareholders at rates applicable to long-term capital gains,
provided holding period and other requirements are met. “Qualified dividend
income” generally is income derived from dividends paid by U.S. corporations or
certain foreign corporations that are either incorporated in a U.S. possession
or eligible for tax benefits under certain U.S. income tax treaties. In
addition, dividends that the Fund received in respect of stock of certain
foreign corporations may be qualified dividend income if that stock is readily
tradable on an established U.S. securities market. Certain of the Fund’s
investment strategies may limit its ability to distribute dividends eligible to
be treated as qualified dividend income. A portion of the dividends received
from the Fund (but none of its capital gain distributions) may qualify for the
dividends-received deduction for corporations.
A
RIC that receives business interest income may pass through its net business
interest income for purposes of the tax rules applicable to the interest expense
limitations under Section 163(j) of the Code. A RIC’s total “Section 163(j)
Interest Dividend” for a tax year is limited to the excess of the RIC’s business
interest income over the sum of its business interest expense and its other
deductions properly allocable to its business interest income. A RIC may, in its
discretion, designate all or a portion of ordinary dividends as Section 163(j)
Interest Dividends, which would allow the recipient shareholder to treat the
designated portion of such dividends as interest income for purposes of
determining such shareholder’s interest expense deduction limitation under
Section 163(j) of the Code. This can potentially increase the amount of a
shareholder’s interest expense deductible under Section 163(j) of the Code. In
general, to be eligible to treat a Section 163(j) Interest Dividend as interest
income, you must have held your shares in the Fund for more than 180 days during
the 361-day period beginning on the date that is 180 days before the date on
which the share becomes ex-dividend with respect to such dividend. Section
163(j) Interest Dividends, if so designated by the Fund, will be reported to
your financial intermediary or otherwise in accordance with the requirements
specified by the IRS.
You
may want to avoid buying shares when the Fund is about to declare a dividend or
capital gain distribution because it will be taxable to you even though it may
economically represent a return of a portion of your investment.
A
tax is imposed at the rate of 3.8% on net investment income of U.S. individuals
with income exceeding specified thresholds, and to all or a portion of
undistributed net investment income of certain estates and trusts. Net
investment income generally includes for this purpose dividends and capital gain
distributions paid by the Fund and gain on the redemption of fund
shares.
A
dividend declared by the Fund in October, November or December and paid during
January of the following year will, in certain circumstances, be treated as paid
in December for tax purposes.
Each
sale, exchange, or redemption of shares of the Fund is considered a taxable
event and will generally result in capital gain or loss if you hold your Fund
shares as capital assets. The gain or loss generally will be treated as
short-term capital gain or loss if you held the shares twelve months or less,
long term capital gain or loss if you held the shares for longer. Any capital
loss on the sale of Fund shares held for six months or less is treated as
long-term capital loss to the extent that capital gain dividends were paid with
respect to such Fund shares. You are responsible for any tax liabilities
generated by your transaction. The Code limits the deductibility of capital
losses in certain circumstances. An exchange of shares of one class directly for
shares of another class of the Fund generally should not be a taxable exchange
for U.S. federal income tax purposes. You should talk to your tax advisor before
making an exchange.
Some
foreign governments levy withholding taxes against dividend and interest income.
Although in some countries a portion of these taxes is recoverable, the
non-recovered portion will reduce the income received from the securities
comprising the portfolio of the Fund. If the Fund meets certain requirements
with respect to its holdings, it may elect to “pass through” to shareholders
foreign taxes that it pays, in which case each shareholder will include the
amount of such taxes in computing gross income, but will be eligible to claim a
credit or deduction for such taxes, subject to generally applicable limitations
on such deductions and credits. The Fund’s investment in certain foreign
securities, foreign currencies or foreign currency derivatives may accelerate
Fund distributions to shareholders and increase the distributions taxed to
shareholders as ordinary income.
The
Fund may invest in U.S. REITs. REITs pool investors’ funds for investment
primarily in income producing real estate or real estate related loans or
interests. Under the Code, an entity that qualifies as a REIT for U.S. federal
income tax purposes is generally not taxed on net income and gains it
distributes to its shareholders if it complies with several requirements
relating to its organization, ownership, assets and income, and a requirement
that it generally distribute to its shareholders at least 90% of its taxable
income (other than net capital gain) for each taxable year.
Investments
in REIT equity securities may require the Fund to accrue and distribute income
not yet received. To generate sufficient cash to make the requisite
distributions, the Fund may be required to sell securities in its portfolio
(including when it is not advantageous to do so) that it otherwise would have
continued to hold. The Fund’s investments in REIT equity securities may at other
times result in the Fund’s receipt of cash in excess of the REIT’s earnings; if
the Fund distributes these amounts, these distributions could constitute a
return of capital to the Fund’s shareholders for federal income tax purposes.
Dividends paid by a REIT, other than capital gain distributions, will be taxable
as ordinary income up to the amount of the REIT’s current and accumulated
earnings and profits.
Capital
gain dividends paid by a REIT to the Fund will be treated as long-term capital
gains by the Fund and, in turn, may be distributed by the Fund to its
shareholders as a capital gain distribution. Dividends received by the Fund from
a REIT generally will not constitute qualified dividend income or qualify for
the dividends received deduction.
If
the REIT is operated in a manner such that it fails to qualify as a REIT, an
investment in the REIT would become subject to double taxation, meaning the
taxable income of the REIT would be subject to federal income tax at the regular
corporate rate without any deduction for dividends paid to shareholders and the
dividends would be taxable to shareholders as ordinary income (or possibly as
qualified dividend income) to the extent of the REIT’s current and accumulated
earnings and profits.
“Qualified
REIT dividends” (i.e., ordinary REIT dividends other than capital gain dividends
and portions of REIT dividends designated as qualified dividend income eligible
for capital gain tax rates) are eligible for a 20% deduction by non-corporate
taxpayers. This deduction, if allowed in full, equates to a maximum effective
tax rate of 29.6% (37% top rate applied to income after 20% deduction).
Distributions by the Fund to its shareholders that are attributable to qualified
REIT dividends received by the Fund and which the Fund properly reports as
“section 199A dividends,” are treated as “qualified REIT dividends” in the hands
of non-corporate shareholders. A section 199A dividend is treated as a qualified
REIT dividend only if the shareholder receiving such dividend holds the
dividend-paying RIC shares for at least 46 days of the 91-day period beginning
45 days before the shares become ex-dividend, and is not under an obligation to
make related payments with respect to a position in substantially similar or
related property. The Fund is permitted to report such part of its dividends as
section 199A dividends as are eligible, but is not required to do so.
Unless
later extended or made permanent, this 20% deduction will no longer be available
for taxable years beginning after December 31, 2025.
REITs
in which the Fund invests often do not provide complete and final tax
information to the Fund until after the time that the Fund issues a tax
reporting statement. As a result, the Fund may at times find it necessary to
reclassify the amount and character of its distributions to you after it issues
your tax reporting statement. When such reclassification is necessary, the Fund
(or its administrative agent) will send you a corrected, final Form 1099-DIV to
reflect the reclassified information. If you receive a corrected Form 1099-DIV,
use the information on this corrected form, and not the information on the
previously issued tax reporting statement, in completing your tax
returns.
The
Fund’s investments in Grayscale Bitcoin Trust, when made directly, may not
produce qualifying income to the Fund for purposes of qualifying as a RIC. To
the extent the Fund invests in such investments directly, the Fund intends to
seek to restrict its income from such instruments that do not generate
qualifying income to a maximum of 10% of its gross income (when combined with
its other investments that produce non-qualifying income).
After
the end of each year, your Financial Intermediary will provide you with
information about the distributions and dividends you received and any
redemption of shares during the previous year. Because each shareholder’s
circumstances are different and special tax rules may apply, you should consult
your tax adviser about your investment in the Fund.
Additional
information concerning taxation of the Fund and its shareholders is contained in
the SAI. Tax consequences are not the primary consideration of the Fund in
making investment decisions. You should consult your own tax adviser concerning
federal, state and local taxation of distributions from the Fund.
Financial
Highlights
As
a result of the Reorganization, the Fund has adopted the financial and
performance history of the Predecessor Fund. The financial highlights for the
Predecessor Fund are included below. The information for the years ended
December 31 has been audited by BBD, LLP, the Predecessor Fund’s prior
independent registered public accounting firm, and BBD, LLP’s report, along with
the Predecessor Fund’s financial statements, are included in the Predecessor
Fund’s December 31, 2022 Annual
Report,
which is available upon request and on the Fund’s website at
www.patientcapitalmanagement.com/opportunity-trust. Information for the
six-month period ended June 30, 2023 is unaudited.
The
financial highlights tables are intended to help you understand the Predecessor
Fund’s financial performance for the fiscal years shown. Certain information
reflects financial results for a single share. The total returns in each table
represent the rate that an investor would have earned or lost on an investment
in the Predecessor Fund (assuming reinvestment of all dividends and
distributions).
For
a share of beneficial interest outstanding throughout each year ended December
31:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Class
A Shares |
2023* |
|
| 2022 |
|
| 2021 |
|
| 2020 |
|
| 2019 |
|
| 2018 |
| |
Net
asset value, beginning of period |
$ |
21.67 |
|
|
| $ |
38.25 |
|
|
| $ |
39.99 |
|
|
| $ |
28.85 |
|
|
| $ |
21.54 |
|
|
| $ |
23.88 |
|
| |
Income
(loss) from operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Net
investment income (loss)1 |
(0.09) |
|
|
| (0.17) |
|
|
| (0.07) |
|
|
| (0.01) |
|
|
| — |
|
2 |
| (0.13) |
|
| |
Net
realized and unrealized gain (loss) |
5.56 |
|
|
| (13.53) |
|
|
| (1.22) |
|
|
| 11.15 |
|
|
| 7.31 |
|
|
| (2.21) |
|
| |
Total
income (loss) from
operations |
5.47 |
|
|
| (13.70) |
|
|
| (1.29) |
|
|
| 11.14 |
|
|
| 7.31 |
|
|
| (2.34) |
|
| |
Less
distributions from: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Net
investment income |
— |
|
|
| (0.06) |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
| |
Net
realized gain |
— |
|
|
| (2.82) |
|
|
| (0.45) |
|
|
| — |
|
|
| — |
|
|
| — |
|
| |
Total
distributions |
— |
|
|
| (2.88) |
|
|
| (0.45) |
|
|
| — |
|
|
| — |
|
|
| — |
|
| |
Net
asset value, end of period |
$ |
27.14 |
|
|
| $ |
21.67 |
|
|
| $ |
38.25 |
|
|
| $ |
39.99 |
|
|
| $ |
28.85 |
|
|
| $ |
21.54 |
|
| |
Total
return3 |
25.24 |
% |
|
| -36.09 |
% |
|
| -3.24 |
% |
|
| 38.61 |
% |
|
| 33.94 |
% |
|
| -9.80 |
% |
| |
Net
assets, end of period (000s) |
$ |
606,600 |
|
|
| $ |
512,731 |
|
|
| $ |
874,473 |
|
|
| $ |
941,942 |
|
|
| $ |
705,372 |
|
|
| $ |
221,842 |
|
| |
Ratios
to average net assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Gross
expenses4 |
2.10 |
% |
6 |
| 1.53 |
% |
|
| 1.21 |
% |
|
| 1.28 |
% |
|
| 1.47 |
% |
|
| 1.39 |
% |
| |
Net
expenses4 |
2.10 |
|
6 |
| 1.52 |
|
5 |
| 1.21 |
|
5 |
| 1.28 |
|
5 |
| 1.47 |
|
5 |
| 1.39 |
|
5 |
|
Net
investment income (loss) |
(0.71) |
|
6 |
| (0.59) |
|
|
| (0.17) |
|
|
| (0.04) |
|
|
| 0.02 |
|
|
| (0.49) |
|
| |
Portfolio
turnover rate |
13 |
% |
7 |
| 40 |
% |
|
| 55 |
% |
|
| 64 |
% |
|
| 35 |
% |
|
| 30 |
% |
| |
*
For the six months ended June 30, 2023 (unaudited).
1 Per
share amounts have been calculated using the average shares method.
2
Amount is less than $0.01 per share.
3 Performance
figures, exclusive of sales charges, may reflect fee waivers and/or expense
reimbursements. In the absence of fee waivers and/or expense reimbursements, the
total return would have been lower. Past performance is no guarantee of future
results.
4 Does
not include fees and expenses of the Underlying Funds in which the Fund
invests.
5 Effective
April 30, 2020, the Adviser agreed to waive fees and/or reimburse operating
expenses, (other than front-end or contingent deferred loads, taxes, interest
expense, brokerage commissions, acquired fund fees and expenses, expenses
incurred in connection with any merger or reorganization, portfolio transaction
expenses, dividends paid on short sales, extraordinary expenses such as
litigation, Rule 12b-1 fees, intermediary servicing fees, or any other
class-specific expenses) through April 30, 2023, so that such annual operating
expenses will not exceed 0.88%. Prior to April 30, 2020, the limit was 1.20% and
established at the class level (inclusive of 12b-1 and shareholder servicing
fees). Interest expenses were 0.33%, 0.05%, 0.10%, 0.28% and 0.21% for the years
ended December 31, 2022, 2021, 2020, 2019 and 2018, respectively. Excluding
interest, the net expense ratios were 1.19%, 1.16%, 1.18%, 1.19% and 1.18% for
the years ended December 31, 2022, 2021, 2020, 2019 and 2018,
respectively.
6 Annualized.
7 Not
annualized.
For
a share of beneficial interest outstanding throughout each year ended December
31:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Class
C Shares |
2023* |
|
| 2022 |
|
| 2021 |
|
| 2020 |
|
| 2019 |
|
| 2018 |
| |
Net
asset value, beginning of period |
$ |
19.50 |
|
|
| $ |
35.02 |
|
|
| $ |
36.92 |
|
|
| $ |
26.84 |
|
|
| $ |
20.19 |
|
|
| $ |
22.55 |
|
| |
Income
(loss) from operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Net
investment loss1 |
(0.16) |
|
|
| (0.37) |
|
|
| (0.37) |
|
|
| (0.23) |
|
|
| (0.29) |
|
|
| (0.30) |
|
| |
Net
realized and unrealized gain (loss) |
4.98 |
|
|
| (12.33) |
|
|
| (1.08) |
|
|
| 10.31 |
|
|
| 6.94 |
|
|
| (2.06) |
|
| |
Total
income (loss) from operations |
4.82 |
|
|
| (12.70) |
|
|
| (1.45) |
|
|
| 10.08 |
|
|
| 6.65 |
|
|
| (2.36) |
|
| |
Less
distributions from: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Net
realized gain |
— |
|
|
| (2.82) |
|
|
| (0.45) |
|
|
| — |
|
|
| — |
|
|
| — |
|
| |
Total
distributions |
— |
|
|
| (2.82) |
|
|
| (0.45) |
|
|
| — |
|
|
| — |
|
|
| — |
|
| |
Net
asset value, end of period |
$ |
24.32 |
|
|
| $ |
19.50 |
|
|
| $ |
35.02 |
|
|
| $ |
36.92 |
|
|
| $ |
26.84 |
|
|
| $ |
20.19 |
|
| |
Total
return2 |
-24.72 |
% |
|
| -36.57 |
% |
|
| -3.95 |
% |
|
| 37.56 |
% |
|
| 32.94 |
% |
|
| -10.47 |
% |
| |
Net
assets, end of period (000s) |
$ |
75,488 |
|
|
| $ |
71,844 |
|
|
| $ |
152,662 |
|
|
| $ |
204,214 |
|
|
| $ |
216,364 |
|
|
| $ |
559,251 |
|
| |
Ratios
to average net assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Gross
expenses3 |
2.86 |
% |
5 |
| 2.26 |
% |
|
| 1.95 |
% |
|
| 2.03 |
% |
|
| 2.22 |
% |
|
| 2.13 |
% |
| |
Net
expenses3 |
2.86 |
|
4,5 |
2.26 |
|
4 |
| 1.95 |
|
4 |
| 2.03 |
|
4 |
| 2.22 |
|
4 |
| 2.13 |
|
4 |
|
Net
investment loss |
(1.47) |
|
5 |
| (1.35) |
|
|
| (0.89) |
|
|
| (0.88) |
|
|
| (1.25) |
|
|
| (1.24) |
|
| |
Portfolio
turnover rate |
13 |
% |
6 |
| 40 |
% |
|
| 55 |
% |
|
| 64 |
% |
|
| 35 |
% |
|
| 30 |
% |
| |
*
For the six months ended June 30, 2023 (unaudited).
1 Per
share amounts have been calculated using the average shares method.
2 Performance
figures, exclusive of CDSC, may reflect fee waivers and/or expense
reimbursements. In the absence of fee waivers and/or expense reimbursements, the
total return would have been lower. Past performance is no guarantee of future
results.
3 Does
not include fees and expenses of the Underlying Funds in which the Fund
invests.
4 Effective
April 30, 2020, the Adviser agreed to waive fees and/or reimburse operating
expenses, (other than front-end or contingent deferred loads, taxes, interest
expense, brokerage commissions, acquired fund fees and expenses, expenses
incurred in connection with any merger or reorganization, portfolio transaction
expenses, dividends paid on short sales, extraordinary expenses such as
litigation, Rule 12b-1 fees, intermediary servicing fees, or any other
class-specific expenses) through April 30, 2023, so that such annual operating
expenses will not exceed 0.88%. Prior to April 30, 2020, the limit was 1.97% and
established at the class level (inclusive of 12b-1 and shareholder servicing
fees). Interest expenses were 0.33%, 0.05%, 0.10%, 0.28% and 0.21% for the years
ended December 31, 2022, 2021, 2020, 2019 and 2018, respectively. Excluding
interest, the expense ratios were 1.93%, 1.90%, 1.93%, 1.94% and 1.92% for the
years ended December 31, 2022, 2021, 2020, 2019 and 2018,
respectively.
5 Annualized.
6 Not
annualized.
For
a share of beneficial interest outstanding throughout each year ended December
31:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Class
FI Shares |
2023* |
|
| 2022 |
|
| 2021 |
|
| 2020 |
|
| 2019 |
|
| 2018 |
| |
Net
asset value, beginning of period |
$ |
22.43 |
|
|
| $ |
39.38 |
|
|
| $ |
41.19 |
|
|
| $ |
29.74 |
|
|
| $ |
22.22 |
|
|
| $ |
24.64 |
|
| |
Income
(loss) from operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Net
investment (loss)1 |
(0.10) |
|
|
| (0.21) |
|
|
| (0.11) |
|
|
| (0.05) |
|
|
| (0.09) |
|
|
| (0.14) |
|
| |
Net
realized and unrealized gain (loss) |
5.75 |
|
|
| (13.92) |
|
|
| (1.25) |
|
|
| 11.50 |
|
|
| 7.61 |
|
|
| (2.28) |
|
| |
Total
income (loss) from operations |
5.65 |
|
|
| (14.13) |
|
|
| (1.36) |
|
|
| 11.45 |
|
|
| 7.52 |
|
|
| (2.42) |
|
| |
Less
distributions from: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Net
realized gain |
— |
|
|
| (2.82) |
|
|
| (0.45) |
|
|
| — |
|
|
| — |
|
|
| — |
|
| |
Total
distributions |
— |
|
|
| (2.82) |
|
|
| (0.45) |
|
|
| — |
|
|
| — |
|
|
| — |
|
| |
Net
asset value, end of period |
$ |
28.08 |
|
|
| $ |
22.43 |
|
|
| $ |
39.38 |
|
|
| $ |
41.19 |
|
|
| $ |
29.74 |
|
|
| $ |
22.22 |
|
| |
Total
return2 |
25.23 |
% |
|
| -36.15 |
% |
|
| -3.32 |
% |
|
| 38.50 |
% |
|
| 33.84 |
% |
|
| -9.82 |
% |
| |
Net
assets, end of period (000s) |
$ |
8,115 |
|
|
| $ |
7,033 |
|
|
| $ |
14,291 |
|
|
| $ |
14,458 |
|
|
| $ |
14,026 |
|
|
| $ |
13,278 |
|
| |
Ratios
to average net assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Gross
expenses3 |
2.16 |
% |
5 |
| 1.60 |
% |
|
| 1.29 |
% |
|
| 1.35 |
% |
|
| 1.53 |
% |
|
| 1.41 |
% |
| |
Net
expenses3 |
2.15 |
|
4,5 |
1.60 |
|
4 |
| 1.29 |
|
4 |
| 1.35 |
|
4 |
| 1.53 |
|
4 |
| 1.41 |
|
4 |
|
Net
investment loss |
(0.76) |
|
5 |
| (0.67) |
|
|
| (0.24) |
|
|
| (0.19) |
|
|
| (0.34) |
|
|
| (0.53) |
|
| |
Portfolio
turnover rate |
13 |
% |
6 |
| 40 |
% |
|
| 55 |
% |
|
| 64 |
% |
|
| 35 |
% |
|
| 30 |
% |
| |
*
For the six months ended June 30, 2023 (unaudited).
1 Per
share amounts have been calculated using the average shares method.
2 Performance
figures may reflect fee waivers and/or expense reimbursements. In the absence of
fee waivers and/or expense reimbursements, the total return would have been
lower. Past performance is no guarantee of future results.
3 Does
not include fees and expenses of the Underlying Funds in which the Fund
invests.
4 Effective
April 30, 2020, the Adviser agreed to waive fees and/or reimburse operating
expenses, (other than front-end or contingent deferred loads, taxes, interest
expense, brokerage commissions, acquired fund fees and expenses, expenses
incurred in connection with any merger or reorganization, portfolio transaction
expenses, dividends paid on short sales, extraordinary expenses such as
litigation, Rule 12b-1 fees, intermediary servicing fees, or any other
class-specific expenses) through April 30, 2023, so that such annual operating
expenses will not exceed 0.88%. Prior to April 30, 2020, the limit was 1.26% and
established at the class level (inclusive of 12b-1 and shareholder servicing
fees). Interest expenses were 0.33%, 0.05%, 0.10%, 0.28% and 0.21% for the years
ended December 31, 2022, 2021, 2020, 2019 and 2018, respectively. Excluding
interest, the expense ratios were 1.27%, 1.24%, 1.25%, 1.25% and 1.20% for the
years ended December 31, 2022, 2021, 2020, 2019 and 2018,
respectively.
5 Annualized.
6 Not
annualized.
For
a share of beneficial interest outstanding throughout each year ended December
31:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Class
R Shares |
2023* |
|
| 2022 |
|
| 2021 |
|
| 2020 |
|
| 2019 |
|
| 2018 |
| |
Net
asset value, beginning of period |
$ |
21.50 |
|
|
| $ |
37.99 |
|
|
| $ |
39.82 |
|
|
| $ |
28.81 |
|
|
| $ |
21.57 |
|
|
| $ |
23.98 |
|
| |
Income
(loss) from operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Net
investment loss1 |
(0.11) |
|
|
| (0.27) |
|
|
| (0.20) |
|
|
| (0.09) |
|
|
| (0.14) |
|
|
| (0.21) |
|
| |
Net
realized and unrealized gain (loss) |
5.51 |
|
|
| (13.40) |
|
|
| (1.18) |
|
|
| 11.10 |
|
|
| 7.38 |
|
|
| (2.20) |
|
| |
Total
income (loss) from operations |
5.40 |
|
|
| (13.67) |
|
|
| (1.38) |
|
|
| 11.01 |
|
|
| 7.24 |
|
|
| (2.41) |
|
| |
Less
distributions from: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Net
realized gain |
— |
|
|
| (2.82) |
|
|
| (0.45) |
|
|
| — |
|
|
| — |
|
|
| — |
|
| |
Total
distributions |
— |
|
|
| (2.82) |
|
|
| (0.45) |
|
|
| — |
|
|
| — |
|
|
| — |
|
| |
Net
asset value, end of period |
$ |
26.90 |
|
|
| $ |
21.50 |
|
|
| $ |
37.99 |
|
|
| $ |
39.82 |
|
|
| $ |
28.81 |
|
|
| $ |
21.57 |
|
| |
Total
return2 |
25.06 |
% |
|
| -36.27 |
% |
|
| -3.48 |
% |
|
| 38.22 |
% |
|
| 33.57 |
% |
|
| -10.05 |
% |
| |
Net
assets, end of period (000s) |
$ |
3,920 |
|
|
| $ |
3,254 |
|
|
| $ |
8,055 |
|
|
| $ |
8,195 |
|
|
| $ |
7,122 |
|
|
| $ |
5,778 |
|
| |
Ratios
to average net assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Gross
expenses3 |
2.34 |
% |
5 |
| 1.76 |
% |
|
| 1.47 |
% |
|
| 1.53 |
% |
|
| 1.76 |
% |
|
| 1.67 |
% |
| |
Net
expenses3 |
2.33 |
|
4,5 |
1.76 |
|
4 |
| 1.47 |
|
4 |
| 1.53 |
|
4 |
| 1.76 |
|
4 |
| 1.67 |
|
4 |
|
Net
investment loss |
(0.94) |
|
5 |
| (0.90) |
|
|
| (0.44) |
|
|
| (0.32) |
|
|
| (0.54) |
|
|
| (0.79) |
|
| |
Portfolio
turnover rate |
13 |
% |
6 |
| 40 |
% |
|
| 55 |
% |
|
| 64 |
% |
|
| 35 |
% |
|
| 30 |
% |
| |
*
For the six months ended June 30, 2023 (unaudited).
1 Per
share amounts have been calculated using the average shares method.
2 Performance
figures may reflect fee waivers and/or expense reimbursements. In the absence of
fee waivers and/or expense reimbursements, the total return would have been
lower. Past performance is no guarantee of future results.
3 Does
not include fees and expenses of the Underlying Funds in which the Fund
invests.
4 Effective
April 30, 2020, the Adviser agreed to waive fees and/or reimburse operating
expenses, (other than front-end or contingent deferred loads, taxes, interest
expense, brokerage commissions, acquired fund fees and expenses, expenses
incurred in connection with any merger or reorganization, portfolio transaction
expenses, dividends paid on short sales, extraordinary expenses such as
litigation, Rule 12b-1 fees, intermediary servicing fees, or any other
class-specific expenses) through April 30, 2023, so that such annual operating
expenses will not exceed 0.88%. Prior to April 30, 2020, the limit was 1.55% and
established at the class level (inclusive of 12b-1 and shareholder servicing
fees). Interest expenses were 0.33%, 0.05%, 0.10%, 0.28% and 0.21% for the years
ended December 31, 2022, 2021, 2020, 2019 and 2018, respectively. Excluding
interest, the expense ratios were 1.43%, 1.42%, 1.43%, 1.48% and 1.46% for the
years ended December 31, 2022, 2021, 2020, 2019 and 2018,
respectively.
5 Annualized.
6 Not
annualized.
For
a share of beneficial interest outstanding throughout each year ended December
31:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Class
I Shares |
2023* |
|
| 2022 |
|
| 2021 |
|
| 2020 |
|
| 2019 |
|
| 2018 |
| |
Net
asset value, beginning of period |
$ |
24.02 |
|
|
| $ |
41.95 |
|
|
| $ |
43.73 |
|
|
| $ |
31.48 |
|
|
| $ |
23.44 |
|
|
| $ |
25.91 |
|
| |
Income
(loss) from operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Net
investment income (loss)1 |
(0.06) |
|
|
| (0.11) |
|
|
| 0.02 |
|
|
| 0.07 |
|
|
| 0.01 |
|
|
| (0.07) |
|
| |
Net
realized and unrealized gain (loss) |
6.16 |
|
|
| (14.85) |
|
|
| (1.33) |
|
|
| 12.18 |
|
|
| 8.03 |
|
|
| (2.40) |
|
| |
Total
income (loss) from operations |
6.10 |
|
|
| (14.96) |
|
|
| (1.31) |
|
|
| 12.25 |
|
|
| 8.04 |
|
|
| (2.47) |
|
| |
Less
distributions from: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Net
investment income |
— |
|
|
| (0.15) |
|
|
| (0.02) |
|
|
| — |
|
|
| — |
|
|
| — |
|
| |
Net
realized gain |
— |
|
|
| (2.82) |
|
|
| (0.45) |
|
|
| — |
|
|
| — |
|
|
| — |
|
| |
Total
distributions: |
— |
|
|
| (2.97) |
|
|
| (0.47) |
|
|
| — |
|
|
| — |
|
|
| — |
|
| |
Net
asset value, end of period |
$ |
30.12 |
|
|
| $ |
24.02 |
|
|
| $ |
41.95 |
|
|
| $ |
43.73 |
|
|
| $ |
31.48 |
|
|
| $ |
23.44 |
|
| |
Total
return2 |
25.40 |
% |
|
| -35.92 |
% |
|
| -3.01 |
% |
|
| 38.91 |
% |
|
| 34.30 |
% |
|
| -9.53 |
% |
| |
Net
assets, end of period (000s) |
$ |
629,222 |
|
|
| $ |
535,204 |
|
|
| $ |
1,135,832 |
|
|
| $ |
1,077,438 |
|
|
| $ |
736,467 |
|
|
| $ |
517,820 |
|
| |
Ratios
to average net assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Gross
expenses3 |
1.85 |
% |
5 |
| 1.27 |
% |
|
| 0.98 |
% |
|
| 1.04 |
% |
|
| 1.23 |
% |
|
| 1.15 |
% |
| |
Net
expenses3 |
1.83 |
|
4,5 |
1.25 |
|
4 |
| 0.98 |
|
4 |
| 1.03 |
|
4 |
| 1.21 |
|
4 |
| 1.14 |
|
4 |
|
Net
investment income (loss) |
(0.44) |
|
5 |
| (0.33) |
|
|
| 0.05 |
|
|
| 0.23 |
|
|
| 0.02 |
|
|
| (0.23) |
|
| |
Portfolio
turnover rate |
13 |
% |
6 |
| 40 |
% |
|
| 55 |
% |
|
| 64 |
% |
|
| 35 |
% |
|
| 30 |
% |
| |
*
For the six months ended June 30, 2023 (unaudited).
1 Per
share amounts have been calculated using the average shares method.
2 Performance
figures may reflect fee waivers and/or expense reimbursements. In the absence of
fee waivers and/or expense reimbursements, the total return would have been
lower. Past performance is no guarantee of future results.
3 Does
not include fees and expenses of the Underlying Funds in which the Fund
invests.
5 Effective
April 30, 2020, the Adviser agreed to waive fees and/or reimburse operating
expenses, (other than front-end or contingent deferred loads, taxes, interest
expense, brokerage commissions, acquired fund fees and expenses, expenses
incurred in connection with any merger or reorganization, portfolio transaction
expenses, dividends paid on short sales, extraordinary expenses such as
litigation, Rule 12b-1 fees, intermediary servicing fees, or any other
class-specific expenses) through April 30, 2023, so that such annual operating
expenses will not exceed 0.93%. Separately, the Adviser has agreed to waive fees
and/or reimburse operating expenses such that the previously described annual
operating expenses, plus intermediary servicing fees and other class-specific
expenses, will not exceed 0.93% for Class I. Interest expenses were 0.33%,
0.05%, 0.10%, 0.28% and 0.21% for the years ended December 31, 2022, 2021, 2020,
2019 and 2018, respectively. Excluding interest, the net expense ratios were
0.92%, for the year ended December 31, 2022 and 0.93% for the years ended 2021,
2020, 2019 and 2018.
5 Annualized.
6 Not
annualized.
For
a share of beneficial interest outstanding throughout each period ended December
31:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Class
IS Shares |
2023* |
|
| 2022 |
|
| 2021 |
|
| 2020 |
|
| 2019 |
|
|
2018** |
|
Net
asset value, beginning of period |
$ |
24.04 |
|
|
| $ |
42.05 |
|
|
| $ |
43.82 |
|
|
| $ |
31.52 |
|
|
| $ |
23.44 |
|
|
| $ |
32.06 |
|
|
Income
(loss) from operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Net
investment income1 |
(0.06) |
|
|
| (0.07) |
|
|
| 0.07 |
|
|
| 0.08 |
|
|
| 0.23 |
|
|
| 0.01 |
|
|
Net
realized and unrealized gain (loss) |
6.19 |
|
|
| (14.92) |
|
|
| (1.35) |
|
|
| 12.22 |
|
|
| 7.85 |
|
|
| (8.63) |
| |
Total
gain (loss) from operations |
6.13 |
|
|
| (14.99) |
|
|
| (1.28) |
|
|
| 12.30 |
|
|
| 8.08 |
|
|
| (8.62) |
| |
Less
distributions from: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Net
investment income |
— |
|
|
| (0.20) |
|
|
| (0.04) |
|
|
| — |
|
|
| — |
|
|
| — |
| |
Net
realized gain |
— |
|
|
| (2.82) |
|
|
| (0.45) |
|
|
| — |
|
|
| — |
|
|
| — |
| |
Total
distributions: |
— |
|
|
| (3.02) |
|
|
| (0.49) |
|
|
| — |
|
|
| — |
|
|
| — |
| |
Net
asset value, end of period |
$ |
30.17 |
|
|
| $ |
24.04 |
|
|
| $ |
42.05 |
|
|
| $ |
43.82 |
|
|
| $ |
31.52 |
|
|
| $ |
23.44 |
| |
Total
return2 |
25.45 |
% |
|
| -35.90 |
% |
|
| -2.93 |
% |
|
| 39.02 |
% |
|
| 34.47 |
% |
|
| -26.89 |
% |
5 |
Net
assets, end of period (000s) |
$ |
518 |
|
|
| $ |
1,146 |
|
|
| $ |
795 |
|
|
| $ |
734 |
|
|
| $ |
605 |
|
|
| $ |
73 |
|
|
Ratios
to average net assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Gross
expenses3 |
1.74 |
% |
5 |
| 1.30 |
% |
|
| 0.90 |
% |
|
| 0.97 |
% |
|
| 1.13 |
% |
|
| 1.09 |
% |
6 |
Net
expenses3 |
1.74 |
|
4,5 |
1.29 |
|
4 |
| 0.90 |
|
4 |
| 0.96 |
|
4 |
| 1.09 |
|
4 |
| 1.05 |
|
4,6 |
Net
investment income (loss) |
(0.41) |
|
5 |
| (0.23) |
|
|
| 0.14 |
|
|
| 0.25 |
|
|
| 0.81 |
|
|
| 0.09 |
|
6 |
Portfolio
turnover rate |
13 |
% |
6 |
| 40 |
% |
|
| 55 |
% |
|
| 64 |
% |
|
| 35 |
% |
|
| 30 |
% |
5 |
*
For the six months ended June 30, 2023 (unaudited).
** Commenced
operations on August 22, 2018.
1 Per
share amounts have been calculated using the average shares method.
2 Performance
figures may reflect fee waivers and/or expense reimbursements. In the absence of
fee waivers and/or expense reimbursements, the total return would have been
lower. Past performance is no guarantee of future results.
3 Does
not include fees and expenses of the Underlying Funds in which the Fund
invests.
4
Effective April 30, 2020, the Adviser agreed to waive fees and/or reimburse
operating expenses, (other than front-end or contingent deferred loads, taxes,
interest expense, brokerage commissions, acquired fund fees and expenses,
expenses incurred in connection with any merger or reorganization, portfolio
transaction expenses, dividends paid on short sales, extraordinary expenses such
as litigation, Rule 12b-1 fees, intermediary servicing fees, or any other
class-specific expenses) through April 30, 2023, so that such annual operating
expenses will not exceed 0.88%. Prior to April 30, 2020, the limit was 0.83% and
established at the class level (inclusive of 12b-1 and shareholder servicing
fees). Interest expenses were 0.33%, 0.05%, 0.10% and 0.26% for the years ended
December 31, 2022, 2021, 2020 and 2019, respectively, and 0.22% (annualized) for
the period ended December 31, 2018. Excluding interest, the net expense ratios
were 0.96%, 0.85%, 0.86% and 0.83% for the years ended December 31, 2022, 2021,
2020 and 2019, respectively, and 0.83% (annualized) for the period ended
December 31, 2018.
5
Not annualized.
6
Annualized.
Appendix
A
Financial
Intermediary Sales Charge Variations
The
availability of certain initial or deferred sales charge waivers and discounts
may depend on the particular Financial Intermediary or type of account through
which you purchase or hold Fund shares.
Intermediaries
may have different policies and procedures regarding the availability of
front-end sales charge (load) waivers or contingent deferred (back-end) sales
charge (load) (“CDSC”) waivers, which are discussed below. In all instances, it
is the purchaser’s responsibility to notify the Fund or the purchaser’s
Financial Intermediary at the time of purchase of any relationship or other
facts qualifying the purchaser for sales charge (load) waivers or discounts. For
waivers and discounts not available through a particular Financial Intermediary,
shareholders will have to purchase Fund shares directly from the Fund or through
another intermediary to receive these waivers or discounts. Please see “Choosing
a class of shares to buy” on page 27 of this Prospectus for information about
such waivers and discounts.
Merrill
Lynch, Pierce, Fenner & Smith Incorporated (“Merrill Lynch”)
Shareholders
purchasing Fund shares through a Merrill Lynch platform or account will be
eligible only for the following sales charge waivers (front-end sales charge
waivers and contingent deferred, or back-end, sales charge waivers) and
discounts, which may differ from those disclosed elsewhere in this Fund’s
Prospectus or SAI.
|
| |
Front-end
Sales Charge Waivers on Class A Shares available at Merrill
Lynch
The
front-end sales charge on Class A shares of the Fund available through
Merrill Lynch are waived for the following purchases: |
•Employer-sponsored
retirement, deferred compensation and employee benefit plans (including
health savings accounts) and trusts used to fund those plans, provided
that the shares are not held in a commission-based brokerage account and
shares are held for the benefit of the plan |
•Shares
purchased by a 529 Plan (does not include 529 Plan units or 529-specific
share classes or equivalents) |
•Shares
purchased through a Merrill Lynch affiliated investment advisory
program |
•Shares
exchanged due to the holdings moving from a Merrill Lynch affiliated
investment advisory program to a Merrill Lynch brokerage (non-advisory)
account pursuant to Merrill Lynch’s policies relating to sales load
discounts and waivers |
•Shares
purchased by third party investment advisors on behalf of their advisory
clients through Merrill Lynch’s platform |
•Shares
of funds purchased through the Merrill Edge Self-Directed
platform |
•Shares
purchased through reinvestment of capital gains distributions and dividend
reinvestment when purchasing shares of the same fund |
•Shares
exchanged from Class C (i.e. level-load) shares of the same fund pursuant
to Merrill Lynch’s policies relating to sales load discounts and
waivers |
•Employees
and registered representatives of Merrill Lynch or its affiliates and
their family members |
•Directors
or Trustees of the Fund, and employees of the Fund’s investment adviser or
any of its affiliates, as described in this Prospectus |
•Eligible
shares purchased from the proceeds of redemptions within the Fund,
provided (1) the repurchase occurs within 90 days following the
redemption, (2) the redemption and purchase occur in the same account, and
(3) redeemed shares were subject to a front-end or deferred sales charge
(known as Rights of Reinstatement). Automated transactions (i.e.
systematic purchases and withdrawals) and purchases made after shares are
automatically sold to pay Merrill Lynch’s account maintenance fees are not
eligible for reinstatement |
|
| |
CDSC
Waivers on Class A and Class C Shares available at Merrill
Lynch |
•Death
or disability of the shareholder |
•Shares
sold as part of a systematic withdrawal plan as described in the Fund’s
Prospectus |
•Return
of excess contributions from an IRA Account |
•Shares
sold as part of a required minimum distribution for IRA and retirement
accounts pursuant to Internal Revenue Code |
•Shares
sold to pay Merrill Lynch fees but only if the transaction is initiated by
Merrill Lynch |
•Shares
acquired through a right of reinstatement |
•Shares
held in retirement brokerage accounts, that are exchanged for a lower cost
share class due to transfer to a fee based account or platform (applicable
to A and C shares only) |
•Shares
received through an exchange due to the holdings moving from a Merrill
Lynch affiliated investment advisory program to a Merrill Lynch brokerage
(non-advisory) account pursuant to Merrill Lynch’s policies relating to
sales load discounts and waivers |
|
| |
Front-end
Sales Charge Discounts Available at Merrill Lynch: Breakpoints, Rights of
Accumulation & Letters of Intent |
•Breakpoints
as described in this Prospectus. |
•Rights
of Accumulation (ROA) which entitle shareholders to breakpoint discounts
as described in the Fund's prospectus will be automatically calculated
based on the aggregated holding of the Fund’s assets held by accounts
(including 529 program holdings, where applicable) within the purchaser’s
household at Merrill Lynch. Eligible fund family assets not held at
Merrill Lynch may be included in the ROA calculation only if the
shareholder notifies his or her financial advisor about such assets
|
•Letters
of Intent (LOI) which allow for breakpoint discounts based on anticipated
purchases within the Fund, through Merrill Lynch, over a 13-month period
of time |
Morgan
Stanley Wealth Management (“Morgan Stanley”)
Effective
July 1, 2018, shareholders purchasing Fund shares through a Morgan Stanley
Wealth Management transactional brokerage account will be eligible only for the
following front-end sales charge waivers with respect to Class A shares, which
may differ from and may be more limited than those disclosed elsewhere in this
Fund’s Prospectus or SAI.
|
| |
Front-end
Sales Charge Waivers on Class A Shares available at Morgan Stanley Wealth
Management |
•Employer-sponsored
retirement plans (e.g., 401(k) plans, 457 plans, employer-sponsored 403(b)
plans, profit sharing and money purchase pension plans and defined benefit
plans). For purposes of this provision, employer-sponsored retirement
plans do not include SEP IRAs, Simple IRAs, SAR-SEPs or Keogh
plans |
•Shares
purchased through a Morgan Stanley self-directed brokerage
account |
•Shares
purchased through reinvestment of dividends and capital gains
distributions when purchasing shares of the same fund |
•Morgan
Stanley employee and employee-related accounts according to Morgan
Stanley’s account linking rules |
•Shares
purchased from the proceeds of redemptions within the same fund family,
provided (i) the repurchase occurs within 90 days following the
redemption, (ii) the redemption and purchase occur in the same account,
and (iii) redeemed shares were subject to a front-end or deferred sales
charge. |
•Class
C (i.e., level-load) shares that are no longer subject to a contingent
deferred sales charge and are converted to Class A shares of the same fund
pursuant to Morgan Stanley Wealth Management’s share class conversion
program |
Raymond
James & Associates, Inc., Raymond James Financial Services & Raymond
James affiliates (“Raymond James”)
Effective
March 1, 2019, shareholders purchasing fund shares through a Raymond James
platform or account will be eligible only for the following load waivers
(front-end sales charge waivers and contingent deferred, or back-end, sales
charge waivers) and discounts, which may differ from those disclosed elsewhere
in this Fund’s prospectus or SAI.
Front-end
sales load waivers on Class A shares available at Raymond James
•Shares
purchased in an investment advisory program.
•Shares
purchased through reinvestment of capital gains distributions and dividend
reinvestment when purchasing shares of the same fund (but not any other fund
within the fund family).
•
Employees and registered representatives of Raymond James or its affiliates and
their family members as designated by Raymond James.
•Shares
purchased from the proceeds of redemptions within the same fund family, provided
(1) the repurchase occurs within 90 days following the redemption, (2) the
redemption and purchase occur in the same account, and (3) redeemed shares were
subject to a front-end or deferred sales load (known as Rights of
Reinstatement).
•A
shareholder in the Fund’s Class C shares will have their shares converted at NAV
to Class A shares (or the appropriate share class) of the Fund if the shares are
no longer subject to a CDSC and the conversion is in line with the policies and
procedures of Raymond James.
CDSC
Waivers on Classes A, B and C shares available at Raymond James
•Death
or disability of the shareholder.
•Shares
sold as part of a systematic withdrawal plan as described in the fund’s
prospectus.
•Return
of excess contributions from an IRA Account.
•Shares
sold as part of a required minimum distribution for IRA and retirement accounts
for mandatory post-retirement distributions from retirement plans or IRAs.
•Shares
sold to pay Raymond James fees but only if the transaction is initiated by
Raymond James.
•Shares
acquired through a right of reinstatement.
Front-end
load discounts available at Raymond James: breakpoints, and/or rights of
accumulation
•Breakpoints
as described in this prospectus.
•Rights
of accumulation which entitle shareholders to breakpoint discounts will be
automatically calculated based on the aggregated holding of fund family assets
held by accounts within the purchaser’s household at Raymond James. Eligible
fund family assets not held at Raymond James may be included in the rights of
accumulation calculation only if the shareholder notifies his or her financial
advisor about such assets.
Janney
Montgomery Scott LLC (“Janney”)
Effective
May 1, 2020, if you purchase fund shares through a Janney Montgomery Scott LLC
(“Janney”) brokerage account, you will be eligible for the following load
waivers (front-end sales charge waivers and contingent deferred sales charge
(“CDSC”), or back-end sales charge, waivers) and discounts, which may differ
from those disclosed elsewhere in this Fund’s Prospectus or SAI.
Front-end
sales charge* waivers on Class A shares available at Janney
•Shares
purchased through reinvestment of capital gains distributions and dividend
reinvestment when purchasing shares of the same fund (but not any other fund
within the fund family).
•Shares
purchased by employees and registered representatives of Janney or its
affiliates and their family members as designated by Janney.
•Shares
purchased from the proceeds of redemptions within the same fund family, provided
(1) the repurchase occurs within ninety (90) days following the redemption, (2)
the redemption and purchase occur in the same account, and (3) redeemed shares
were subject to a front-end or deferred sales load (i.e., right of
reinstatement).
•Employer-sponsored
retirement plans (e.g., 401(k) plans, 457 plans, employer-sponsored 403(b)
plans, profit sharing and money purchase pension plans and defined benefit
plans). For purposes of this provision, employer-sponsored retirement plans do
not include SEP IRAs, Simple IRAs, SAR-SEPs or Keogh plans.
•Shares
acquired through a right of reinstatement.
•Class
C shares that are no longer subject to a contingent deferred sales charge and
are converted to Class A shares of the same fund pursuant to Janney’s policies
and procedures.
CDSC
waivers on Class A and C shares available at Janney
•Shares
sold upon the death or disability of the shareholder.
•Shares
sold as part of a systematic withdrawal plan as described in the fund’s
Prospectus.
•Shares
purchased in connection with a return of excess contributions from an IRA
account.
•Shares
sold as part of a required minimum distribution for IRA and other retirement
accounts or mandatory post-retirement distributions from retirement plans or
IRAs.
•Shares
sold to pay Janney fees but only if the transaction is initiated by
Janney.
•Shares
acquired through a right of reinstatement.
•Shares
exchanged into the same share class of a different fund.
Front-end
sales charge* discounts available at Janney: breakpoints, rights of
accumulation,
and/or
letters of intent
•Breakpoints
as described in the fund’s Prospectus.
•Rights
of accumulation (“ROA”), which entitle shareholders to breakpoint discounts,
will be automatically calculated based on the aggregated holding of fund family
assets held by accounts within the purchaser’s household at Janney. Eligible
fund family assets not held at Janney may be included in the ROA calculation
only if the shareholder notifies his or her financial advisor about such
assets.
•Letters
of intent which allow for breakpoint discounts based on anticipated purchases
within a fund family, over a 13-month time period. Eligible fund family assets
not held at Janney Montgomery Scott may be included in the calculation of
letters of intent only if the shareholder notifies his or her financial advisor
about such assets.
*Also
referred to as an “initial sales charge.”
Oppenheimer
& Co. Inc. (“OPCO”)
Effective
February 26, 2020, shareholders purchasing Fund shares through an OPCO platform
or account are eligible only for the following load waivers (front-end sales
charge waivers and contingent deferred, or back-end, sales charge waivers) and
discounts, which may differ from those disclosed elsewhere in this Fund’s
prospectus or SAI.
Front-end
Sales Load Waivers on Class A Shares available at OPCO
–Employer-sponsored
retirement, deferred compensation and employee benefit plans (including health
savings accounts) and trusts used to fund those plans, provided that the shares
are not held in a commission-based brokerage account and shares are held for the
benefit of the plan
–Shares
purchased by or through a 529 Plan
–Shares
purchased through a OPCO affiliated investment advisory program
–Shares
purchased through reinvestment of capital gains distributions and dividend
reinvestment when purchasing shares of the same fund (but not any other fund
within the fund family)
–Shares
purchased form the proceeds ofredemptions within the same fund family, provided
(1) the repurchase occurs within 90 days following the redemption, (2) the
redemption and purchase occur in the same amount, and (3) redeemed shares were
subject to a front-end or deferred sales load (known as Rights of
Restatement)
–A
shareholder in the Fund’s Class C shares will have their shares converted at NAV
to Class A shares ( or the appropriate share class) of the Fund if the shares
are no longer subject to a CDSC and the conversion is in line with the policies
and procedures of OPCO
–Employees
and registered representatives of OPCO or its affiliates and their family
members
–Directors
or Trustees of the Fund, and employees of the Fund’s investment adviser or any
of its affiliates, as described in this prospectus
CDSC
Waivers on A, Band C Shares available at OPCO
–Death
or disability of the shareholder
–Shares
sold as part of a systematic withdrawal plan as described in the Fund’s
prospectus
–Return
of excess contributions from an IRA Account
–Shares
sold as part of a required minimum distribution for IRA and retirement accounts
or mandatory post-retirement distributions from retirement plans or IRAs
–Shares
sold to pay OPCO fees but only if the transaction is initiated by
OPCO
–Shares
acquired through a right of reinstatement
Front-end
load Discounts Available at OPCO: Breakpoints, Rights of Accumulation
&
Letters
of Intent
–Breakpoints
as described in this prospectus
–Rights
of Accumulation (ROA) which entitle shareholders to breakpoint discounts will be
automatically calculated based on the aggregated holding of fund family assets
held by accounts within the purchaser’s household at OPCO. Eligible fund family
assets not held at OPCO may be included in the ROA calculation only if the
shareholder notifies his or her financial advisor about such assets
Baird
Effective
June 15, 2020, shareholders purchasing fund shares through a Baird platform or
account will only be eligible for the following sales charge waivers (front-end
sales charge waivers and CDSC waivers) and discounts, which may differ from
those disclosed elsewhere in this prospectus or the SAI.
Front-End
Sales Charge Waivers on Investors A-shares Available at Baird
•Shares
purchased through reinvestment of capital gains distributions and dividend
reinvestment when purchasing share of the same fund
•Share
purchase by employees and registers representatives of Baird or its affiliate
and their family members as designated by Baird
•A
shareholder in the Fund’s Investor C Shares will have their share converted at
NAV to Investor A shares of the fund if the shares are no longer subject to CDSC
and the conversion is in line with the policies and procedures of
Baird
•Employer-sponsored
retirement plans or charitable accounts in a transactional brokerage account at
Baird, including 401(k) plans, 457 plans, employer-sponsored 403(b) plans,
profit sharing and money purchase pension plans and defined benefit plans. For
purposes of this provision, employer-sponsored retirement plans do not include
SEP IRAs, Simple IRAs or SAR-SEPs
CDSC
Waivers on Investor A and C shares Available at Baird
•Shares
sold due to death or disability of the shareholder
•Shares
sold as part of a systematic withdrawal plan as described in the Fund’s
Prospectus
•Shares
bought due to returns of excess contributions from an IRA Account
•Shares
sold as part of a required minimum distribution for IRA and retirement accounts
or mandatory post-retirement distributions from retirement plans or IRAs
•Shares
sold to pay Baird fees but only if the transaction is initiated by
Baird
•Shares
acquired through a right of reinstatement
Front-End
Sales Charge Discounts Available at Baird: Breakpoints and/or Rights of
Accumulations
•Breakpoints
as described in this prospectus
•Rights
of accumulations which entitles shareholders to breakpoint discounts will be
automatically calculated based on the aggregated holding of the Fund’s assets
held by accounts within the purchaser’s household at Baird. Eligible Fund assets
not held at Baird may be included in the rights of accumulations calculation
only if the shareholder notifies his or her financial advisor about such
assets
•Letters
of Intent (LOI) allow for breakpoint discounts based on anticipated purchases of
the Fund through Baird, over a 13-month period of time
Investment
Adviser
Patient
Capital Management, LLC
One
South Street, Suite 2550
Baltimore,
Maryland 21202
Distributor
Quasar
Distributors, LLC
111
E. Kilbourn Avenue, Suite 2200
Milwaukee,
Wisconsin 53202
Custodian
U.S.
Bank National Association
Custody
Operations
1555
North Rivercenter Drive, Suite 302
Milwaukee,
Wisconsin 53212
Transfer
Agent
U.S.
Bancorp Fund Services, LLC
615
East Michigan Street
Milwaukee,
Wisconsin 53202
Independent
Registered Public Accounting Firm
Cohen
& Company, Ltd.
1835
Market Street, Suite 310
Philadelphia,
Pennsylvania 19103
Legal
Counsel
Morgan,
Lewis & Bockius LLP
1111
Pennsylvania Avenue NW
Washington,
D.C. 20004
Privacy
Notice
The
Fund collects non-public information about you from the following
sources:
•Information
we receive about you on applications or other forms;
•Information
you give us orally; and/or
•Information
about your transactions with us or others
We
do not disclose any non-public personal information about our customers or
former customers without the customer’s authorization, except as permitted by
law or in response to inquiries from governmental authorities. We may share
information with affiliated and unaffiliated third parties with whom we have
contracts for servicing the Fund. We will provide unaffiliated third parties
with only the information necessary to carry out their assigned
responsibilities. We maintain physical, electronic and procedural safeguards to
guard your personal information and require third parties to treat your personal
information with the same high degree of confidentiality.
In
the event that you hold shares of the Fund through a Financial Intermediary,
including, but not limited to, a broker‑dealer, bank, or trust company, the
privacy policy of your Financial Intermediary would govern how your non-public
personal information would be shared with unaffiliated third
parties.
FOR
MORE INFORMATION
You
can find more information about the Fund in the following
documents:
Statement
of Additional Information
The
SAI provides additional details about the investments and techniques of the Fund
and certain other additional information. A current SAI is on file with the SEC
and is incorporated into this Prospectus by reference. This means that the SAI
is legally considered a part of this Prospectus even though it is not physically
within this Prospectus.
Annual
and Semi-Annual Reports
Additional
information about the Fund’s investments is available in the Fund’s annual and
semi-annual reports to shareholders and in Form N-CSR. In the Fund’s annual
report, you will find a discussion of the market conditions and investment
strategies that significantly affected the Fund’s performance during its last
fiscal year. In Form N-CSR, you will find the Fund’s annual and semi-annual
financial statements.
The
SAI and the Annual and Semi-Annual shareholder reports will be available free of
charge on the Fund’s website at
www.patientcapitalmanagement.com/opportunity-trust. You can obtain a free copy
of the SAI and and the Annual and Semi-Annual shareholder reports, request other
information, or make general inquiries about the Fund by calling the Fund at
800-655-0324 or by writing to:
Patient
Opportunity Trust
c/o
U.S. Bank Global Fund Services
P.O.
Box 701
Milwaukee,
Wisconsin 53201-0701
Reports
and other information about the Fund are available:
•Free
of charge from the SEC’s EDGAR database on the SEC’s website at
http://www.sec.gov; or
•For
a duplicating fee, by electronic request at the following e-mail address:
[email protected].
(The
Trust’s SEC Investment Company Act file number is 811‑32859.)