ck0001261788-20220630
Fulcrum Diversified Absolute Return
Fund
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Super
Institutional Class |
FARYX |
Institutional
Class |
FARIX |
Advisor
Class* |
FARAX
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*
As
of the date of this Prospectus, the Advisor Class is closed and holds no assets,
but
may accept new investments in the future.
PROSPECTUS
October 31,
2022
Neither
the U.S. Securities and Exchange Commission nor the U.S. Commodities and Futures
Trading Commission has approved or disapproved these securities or determined if
this Prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
SUMMARY
SECTION
Investment Objective
The investment objective of
the Fulcrum Diversified Absolute Return Fund (the “Fund”) is to achieve
long-term absolute returns.
Fees and Expenses of the
Fund
The following table describes
the fees and expenses that you may pay if you buy, hold, and sell shares of the
Fund. 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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Annual
Fund Operating Expenses
(expenses
that you pay each year as a percentage of the value of your
investment) |
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| Super
Institutional Class |
| Institutional
Class |
| Advisor
Class |
|
Management
Fees |
| 0.90 |
% |
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| 0.90 |
% |
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| 0.90 |
% |
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Distribution
and Service (Rule 12b-1) Fees |
| None |
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| None |
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| 0.25 |
% |
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Other
Expenses |
| 0.47 |
% |
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| 0.51 |
% |
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| 0.62 |
% |
(1) |
Shareholder
Servicing Fees |
None |
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| 0.00 |
% |
(2)
(3) |
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| 0.15 |
% |
(2) |
| |
Other
Expenses of the Subsidiary |
0.02 |
% |
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| 0.02 |
% |
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| 0.02 |
% |
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| |
Remainder
of Other Expenses
of
the Fund |
0.45 |
% |
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| 0.49 |
% |
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| 0.45 |
% |
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Total
Annual Fund Operating Expenses |
| 1.37 |
% |
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| 1.41 |
% |
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| 1.77 |
% |
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Less:
Fee Waiver and/or Expense Reimbursement |
| -0.29 |
% |
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| -0.28 |
% |
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| -0.29 |
% |
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Total
Annual Fund Operating Expenses after Fee Waiver and/or Expense
Reimbursement(4)(5) |
| 1.08 |
% |
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| 1.13 |
% |
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| 1.48 |
% |
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(1)Based on estimated
expenses for the current fiscal year.
(2)The Fund has a shareholder
servicing plan that permits up to 0.10% for Institutional Class and up to 0.15%
for Advisor Class to be paid from the Fund for service organizations providing
recordkeeping services to certain shareholders.
(3)Shareholder servicing fees
for the year ended June 30, 2022 totaled less than 0.01% of the average net
assets of the Institutional Class.
(4)Fulcrum Asset Management
LLP (the “Adviser”) has contractually agreed to waive a portion or all of its
management fees and pay Fund expenses (excluding shareholder servicing fees,
acquired fund fees and expenses (“AFFE”), taxes, interest expense, dividends on
securities sold short and extraordinary expenses) in order to limit the annual
fund operating expenses to 1.05%, 1.05% and 1.30% of average daily net assets of
the Super Institutional Class, Institutional Class and Advisor Class shares,
respectively (the “Expense Caps”). If any excluded expenses are incurred,
the Fund’s total annual operating expenses will be higher than the Expense Caps.
This arrangement is in effect through at least October 31,
2023 and may be terminated or amended at any time only by the
Trust for Advised Portfolios (the “Trust”) Board of Trustees (the “Board”). The
Adviser may request recoupment of previously waived fees and paid expenses from
the Fund within three years from the date they were waived or paid, subject to,
if different, the Expense Cap at the time of waiver/payment or the Expense Cap
at the time of recoupment, whichever is lower.
(5)The Adviser has
contractually agreed to waive the management fee it receives from the Fund in an
amount equal to the management fee paid to the Adviser by the Subsidiary
(defined below). This undertaking will continue in effect for so long as the
Fund invests in the Subsidiary and may be terminated only with the approval of
the Board.
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 and then redeem all of your shares at
the end of those periods. The amounts calculated in the Example would be the
same even if the assumed investment was not redeemed at the end of each period.
The Example also assumes that your investment has a 5% return each year and that
the Fund’s operating expenses remain the same (taking into account the Expense
Caps only in the first year). Although your actual costs may be higher
or lower, based on these assumptions, your costs would
be:
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| 1
Year |
3
Years |
5
Years |
10
Years |
Super
Institutional Class |
$110 |
$405 |
$722 |
$1,621 |
Institutional
Class |
$115 |
$419 |
$744 |
$1,667 |
Advisor
Class |
$151 |
$529 |
$932 |
$2,060 |
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 Fund 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 portfolio turnover ratio
is calculated including cash and long-term derivative positions, as they
represent a significant percentage of the Fund’s holdings, but does not include
short-term derivative positions. For the fiscal year ended June 30, 2022, the
Fund’s portfolio turnover rate was 129% of the average value of its
portfolio.
Principal Investment Strategies of the
Fund
In
seeking to achieve its aim of long-term absolute returns, the Fund aims to hold
a diversified portfolio and achieve long-term absolute returns in all market
conditions over rolling five-year periods, with lower volatility than equity
markets and in excess of inflation. The Fund implements its strategy by
investing globally either directly, or through derivatives, in a broad range of
instruments, including, but not limited to, equity, fixed income, currency,
commodity, credit derivative and cash instruments. The Fund has no limits with
respect to the credit rating, maturity or duration of the fixed income
securities in which it may invest. Fixed income securities may include floating
rate and variable rate products.
Derivatives,
including futures, forwards, options and swaps, are utilized for investment and
for hedging purposes. Derivatives are financial contracts whose value depends
upon, or is derived from, the value of an underlying asset, reference rate, or
index, and may relate to equity securities, fixed income securities, interest
rates, commodities, or currency exchange rates and related indexes. Swaps may
include, but are not limited to, currency swaps, equity index swaps, interest
rate swaps and credit default index swaps.
The
Fund is managed with an aim to limit forward looking volatility to 12%, which is
expected to be lower than the volatility of equity markets. Forward looking
volatility refers to the estimated volatility that a portfolio is taking based
on short term volatility forecasts, such as those implied from option prices. By
aiming to limit forward looking volatility to 12%, exposure to equities,
commodities and credit, for example, are as a result limited at times of market
stress when volatility typically spikes and the probability of losses is
especially high. On an intra-day basis, forward looking volatility may exceed
12%, but a risk reduction is implemented such that it falls below 12% by the
close of each trading day.
The
Fund may also invest up to 25% of its assets in a subsidiary that is invested in
derivative instruments (the “Subsidiary”), which is wholly-owned by the Fund and
is organized under the laws of the Cayman Islands. The Subsidiary pursues the
same investment objective as the Fund. The Subsidiary invests primarily in
commodity futures and options and other commodity-linked derivative instruments,
but it may also invest in financial futures, options and swaps, fixed income
securities, including those that are not registered pursuant to the Investment
Company Act of 1940 (the “1940 Act”), and other investments intended to serve as
margin or collateral for the Subsidiary’s derivative positions. The Fund invests
in the Subsidiary with the intent of gaining exposure to the
commodities markets while
meeting the requirements applicable to a regulated investment company (“RIC”)
under Subchapter M of the Internal Revenue Code of 1986 (the “Internal Revenue
Code”). Unlike the Fund, the Subsidiary may invest without limitation in
commodity-linked derivatives.
Under normal circumstances, the Fund
anticipates that it could allocate 50% or more of its total assets in global
securities outside of the United States (or derivatives with similar economic
characteristics). In doing so, the Fund allocates its assets among various
regions and countries, including emerging markets.
Principal Risks of Investing in the
Fund
Losing all or a portion of your investment is a risk of
investing in the Fund. An investment in the Fund is not a
deposit with a bank and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. The
following risks could affect the value of your investment:
Commodities
Risk. Exposure
to the commodities markets may subject the Fund to greater volatility than
investments in traditional securities. The value of commodity-linked
derivative investments may be affected by changes in overall market movements,
commodity index volatility, changes in interest rates, or sectors affecting a
particular industry or commodity, such as drought, floods, weather, embargoes,
tariffs and international economic, political and regulatory
developments.
Counterparty
Risk.
Many derivative contracts are privately negotiated in the over-the-counter
market. Fund transactions involving a counterparty are subject to the risk that
the counterparty or a third party will not fulfill its obligation to the
Fund. Counterparty risk may arise because of the counterparty’s financial
condition (i.e.,
financial difficulties, bankruptcy, or insolvency), market activities and
developments, or other reasons, whether foreseen or not. A counterparty’s
inability to fulfill its obligation may result in significant financial loss to
the Fund.
Currency
Risk. The
risk that changes in currency exchange rates will negatively affect securities
denominated in, and/or receiving revenues in, foreign currencies. The liquidity
and trading value of foreign currencies could be affected by global economic
factors, such as inflation, interest rate levels, and trade balances among
countries, as well as the actions of sovereign governments and central banks.
Adverse changes in currency exchange rates (relative to the U.S. dollar) may
erode or reverse any potential gains from the Fund’s investments in securities
denominated in a foreign currency or may widen existing losses. The Fund’s net
currency positions may expose it to risks independent of its securities
positions.
Derivatives
Risk.
A small investment in derivatives could have a potentially large impact on the
Fund’s performance. The use of derivatives involves risks different from,
or possibly greater than, the risks associated with investing directly in the
underlying assets. Derivatives can be highly volatile, illiquid and
difficult to value, and there is a risk that changes in the value of a
derivative held by the Fund will not correlate with the Fund’s other
investments. Gains or losses from speculative positions in a derivative may
be much greater than the derivative’s original cost and potential losses may be
substantial.
Emerging
Market Risk.
The Fund intends to have exposure to emerging markets. Emerging markets are
riskier than more developed markets because they tend to develop unevenly and
may never fully develop. In addition, investments in securities and instruments
traded in emerging markets, or that provide exposure to such securities or
markets, can involve additional risks relating to political, economic, or
regulatory conditions not associated with investments in U.S. securities and
instruments. For example, emerging markets may be subject to greater market
volatility, lower trading volume and liquidity, greater social, political and
economic uncertainty, governmental controls on foreign investments and
limitations on repatriation of invested capital, lower disclosure, corporate
governance, auditing and financial reporting standards, fewer protections of
property rights, restrictions on the transfer of securities or currency, and
settlement and trading practices that differ from those in U.S. markets.
Equity
Risk. The
risks that could affect the value of the Fund’s shares and the total return on
your investment include the possibility that the equity securities held by the
Fund will experience sudden, unpredictable drops in value or long periods of
decline in value.
Fixed
Income Securities Risk.
The risks of investing in debt or fixed income securities include (without
limitation): (i) credit risk, i.e.,
the risk that the issuer or obligor will not make timely payments of principal
and interest or may fail to pay all or a portion of the payment of principal
and/or interest on a security; (ii) maturity risk, i.e.,
a debt security with a longer maturity may fluctuate in value more than one with
a shorter maturity; (iii) market risk, i.e.,
low demand for debt securities may negatively impact their price; (iv) interest
rate risk, i.e.,
when interest rates go up, the value of a debt security goes down, and when
interest rates go down, the value of a debt security goes up; (v) selection
risk, i.e.,
the securities selected by the Adviser may underperform the market or other
securities selected by other funds; (vi) call risk, i.e.,
during a period of falling interest rates, the issuer may redeem a security by
repaying it early, which may reduce the Fund’s income, if the proceeds are
reinvested at lower interest rates; (vii) credit ratings sensitivity risk, i.e.,
the value of your investment in the Fund may change in response to changes in
the credit ratings of debt securities in the Fund’s portfolio; and (viii)
floating rate loan risk, the value of the collateral securing a floating rate
loan can decline, be insufficient to meet the obligations of the borrower, or be
difficult to liquidate and as a result, a floating rate loan may not be fully
collateralized and can decline significantly in value.
Foreign
Investments Risk.
Foreign investments, including American Depositary Receipts (“ADRs”), often
involve special risks not present in U.S. investments that can increase the
chances that the Fund will lose money. These risks include:
•The
Fund generally holds its foreign securities and cash in foreign banks and
securities depositories, which may be recently organized or new to the foreign
custody business and may be subject to only limited or no regulatory
oversight.
•Changes
in foreign currency exchange rates can affect the value of the Fund’s
portfolio.
•The
economies of certain foreign markets may not compare favorably with the economy
of the United States with respect to such issues as growth of gross national
product, reinvestment of capital, resources and balance of payments
position.
•The
governments of certain countries may prohibit or impose substantial restrictions
on foreign investments in their capital markets or in certain
industries.
•Many
foreign governments do not supervise and regulate stock exchanges, brokers and
the sale of securities to the same extent as does the United States and may not
have laws to protect investors that are comparable to U.S. securities
laws.
•Settlement
and clearance procedures in certain foreign markets may result in delays in
payment for or delivery of securities not typically associated with settlement
and clearance of U.S. investments.
High
Portfolio Turnover Risk. High
portfolio turnover involves correspondingly greater expenses to the Fund,
including brokerage commissions or dealer mark-ups and other transaction costs
on the sale of securities and reinvestments in other securities, which may
result in adverse tax consequences to the Fund’s shareholders.
High
Yield Securities Risk.
Fixed income securities that are rated below investment grade (i.e.,
“junk bonds”) are subject to additional risk factors due to the speculative
nature of these securities, such as the increased possibility of default
liquidation of the security, and changes in value based on public perception of
the issuer. As with any investment, there is a risk of loss, including loss of
principal.
Interest
Rate Risk.
Interest rate risk is the risk that prices of fixed income securities generally
increase when interest rates decline and decrease when interest rates increase.
The Fund may lose money if short term or long term interest rates rise sharply
or otherwise change in a manner not anticipated by the Adviser.
Interest
Rate Swaps Risk.
The Fund may enter into interest rate swaps. In an interest rate swap, the Fund
and another party exchange the right to receive or the obligation to pay
interest on a security or other reference rate. For example, the Fund and
another party might swap the right to receive floating rate payments for fixed
rate payments. There is a risk that, based on movements of interest rates, the
payments made by the Fund under a swap will be greater than the payments it
receives.
Leverage
Risk.
Certain derivative instruments provide the economic effect of financial leverage
by creating additional investment exposure, as well as the potential for greater
loss. If the Fund uses leverage through purchasing derivative instruments, the
Fund has the risk of losing more than its original investment. The net asset
value (“NAV”) of the Fund employing leverage will be more volatile and sensitive
to market movements. Leverage may involve the creation of a liability that
requires the Fund to pay interest.
Manager
Risk.
If the Adviser makes poor investment decisions, it will negatively affect the
Fund’s investment performance.
Market
Events Risk. In
the past several years, financial markets, such as those 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.
Periods
of market volatility may occur in response to pandemics, acts of war, or events
affecting global markets. These types of events could adversely affect the
Fund’s performance. For example, since December 2019, a novel strain of
coronavirus (COVID-19) has spread globally, which has resulted in the temporary
closure of many corporate offices, retail stores, manufacturing facilities and
factories, and other businesses across the world.
In
addition, Russia’s military invasion of Ukraine in February 2022, the resulting
responses by the United States and other countries, and the potential for wider
conflict could increase volatility and uncertainty in the financial markets and
adversely affect regional and global economies.
Subsidiary
Risk.
By investing in the Subsidiary, the Fund is indirectly exposed to the risks
associated with the Subsidiary’s investments. The commodity-related instruments
held by the Subsidiary are generally similar to those that are permitted to be
held by the Fund and are subject to the same risks that apply to similar
investments if held directly by the Fund (see “Commodities Risk” above). There
can be no assurance that the investment objective of the Subsidiary will be
achieved. The Subsidiary is not registered under the 1940 Act, and, unless
otherwise noted in this Prospectus, is not subject to all the investor
protections of the 1940 Act. However, the Fund wholly owns the Subsidiary, and
the Fund and the Subsidiary are both managed by the Adviser, making it unlikely
that the Subsidiary will take action contrary to the interests of the Fund and
its shareholders. The Board has oversight responsibility for the investment
activities of the Fund, including its investment in the Subsidiary, and the
Fund’s role as sole shareholder of the Subsidiary. To the extent applicable to
the investment activities of the Subsidiary, the Subsidiary will be subject to
the same investment restrictions and limitations, and follow the same compliance
policies and procedures, as the Fund.
The
Adviser is a “commodity pool operator” (“CPO”) with respect to the Fund and is
registered with the National Futures Association (“NFA”) and regulated by the
Commodity Futures Trading Commission (“CFTC”). As a result, the Fund is subject
to regulation by the SEC, the CFTC and the NFA, which could increase compliance
costs of the Fund.
Tax
Risk.
In
order to qualify for the favorable U.S. federal income tax treatment generally
available to a RIC, the Fund must, amongst other requirements described in
detail in the SAI, derive at least 90% of its gross income in each taxable year
from certain categories of income (“qualifying income”). Certain of the Fund’s
investments when made directly (including commodity-related
investments
and
certain other non-security based derivatives) may generate income that is not
qualifying income. The Fund’s investment in the Subsidiary is expected to
provide the Fund with exposure to the commodities markets within the limitations
of the federal tax requirements of Subchapter M of the Internal Revenue
Code.
To
the extent the Fund directly invests in commodity-linked derivative instruments
and other similar instruments directly, it will seek to restrict the resulting
income from such instruments that do not generate qualifying income, such as
commodity-linked swaps, to a maximum of 10% of its gross income (when combined
with its other
investments
that produce non-qualifying income) to comply with certain qualifying income
tests necessary for the Fund to qualify as a RIC under Subchapter M of the
Internal Revenue Code. The Fund may be unable to determine the percentage of
qualifying income it has derived for a taxable year until after year-end, may
generate more non-qualifying income than anticipated or may be unable to
generate qualifying income in a particular taxable year at levels sufficient to
limit its non-qualifying income to 10% of the Fund’s gross income. If the Fund
were to fail to meet the qualifying income test for qualification as a RIC, it
would be taxed in the same manner as an ordinary corporation, and distributions
to its shareholders would not be deductible by the Fund in computing its taxable
income, unless certain relief provisions are available (which would generally
require the Fund to pay certain Fund-level taxes). In addition, the Fund may
determine not to make an investment that it otherwise would have made, or may
dispose of an investment it otherwise would have retained, in an effort to meet
the qualifying income test.
See
the “Distributions and Tax Information” section of the SAI for additional
information.
Volatility
Risk.
The Fund may have investments that appreciate or depreciate significantly in
value over short periods of time. This may cause the Fund’s NAV per share to
experience significant increases or declines in value over short periods of
time.
Performance
The following
performance information indicates some of the risks of investing in the
Fund. The bar chart shows the Fund’s Super Institutional Class
Shares’ performance from year to year. The table illustrates how the Fund’s
average annual returns for the periods indicated compare with those of a broad
measure of market performance. The Fund’s past performance,
before and after taxes, does not necessarily indicate how it will perform in the
future.
Updated
performance information is posted on the Fund’s website at www.fulcrumassetfunds.com
or by calling the Fund toll-free at 855-538-5278.
Calendar year ended December
31
During the period of time shown
in the bar chart, the Fund’s highest quarterly return
was 4.86% for the quarter ended March 31, 2020, and the
lowest quarterly return was
-4.39% for the quarter ended December 31, 2018. For
the year-to-date period ended
September 30, 2022, the
Fund’s total return was 2.77%.
Average
Annual Total Returns
For
the Periods Ended December 31, 2021
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1
Year |
| 5
Years |
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Since
Inception
July 31,
2015 |
Super
Institutional Class |
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Return Before
Taxes |
4.30% |
| 4.14% |
| 2.88% |
Return After Taxes on
Distributions |
0.77% |
| 1.89% |
| 1.12% |
Return After Taxes on Distributions and
Sale of Fund Shares |
2.53% |
| 2.22% |
| 1.46% |
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1
Year |
| 5
Years |
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Since
Inception
July 31,
2015 |
Institutional
Class |
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Return Before
Taxes |
4.31% |
| 4.08% |
| 2.84% |
BofA
Merrill Lynch 3-Month US Treasury Bill Index
(reflects
no deduction for fees, expenses, or taxes) |
0.05% |
| 1.14% |
| 0.95% |
Average
Annual Total Returns
For
the Period Ended October 31, 2018 (1)
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Advisor
Class |
January
1, 2018 through
October
31, 2018 |
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Since
Inception
May 11,
2016 |
Return Before
Taxes |
-1.56% |
| 1.09% |
BofA
Merrill Lynch 3-Month US Treasury Bill Index
(reflects no deduction for
fees, expenses, or taxes) |
1.78% |
| 1.03% |
|
(1)
Advisor Class closed on
October 31, 2018 and holds no assets, but may accept new investments in the
future.
After-tax returns 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 your situation and may differ from those shown. Furthermore, the
after-tax returns shown are not relevant to those who hold their shares through
tax-deferred arrangements such as 401(k) plans or individual retirement accounts
(“IRAs”). After-tax returns are shown
only for Super Institutional; after-tax returns for the Institutional Class and
Advisor Class will vary to the extent they have different
expenses.
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:
Fulcrum Asset Management LLP is the Fund’s investment adviser.
Investment
Committee:
The Adviser has established an Investment Committee (the “Committee”) that is
jointly and
primarily responsible for the day-to-day management of the Fund’s portfolio. The
Committee currently is
comprised of Gavyn Davies, Chairman; Andrew Stevens, Chief Executive; Suhail
Shaikh, CFA, Chief Investment Officer; Andrew Bevan, PhD, Fixed Income
Strategist, and Nabeel Abdoula, CFA, Deputy CIO. The Committee has managed the
Fund since its inception in 2016.
Purchase
and Sale of Fund Shares
You
may purchase or redeem Fund shares on any business day by written request via
mail to Fulcrum Diversified Absolute Return Fund, c/o U.S. Bank Global Fund
Services, P.O. Box 701, Milwaukee, Wisconsin 53201-0701, by telephone at
855-538-5278, by wire transfer, or through a financial intermediary. Investors
who wish to purchase or redeem Fund shares through a financial intermediary
should contact the financial intermediary directly.
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| Super
Institutional Class |
Institutional
Class |
Advisor
Class |
Minimum
Initial Investment |
$25,000,000 |
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| $1,000,000 |
|
| $1,000 |
| |
Minimum
Subsequent Investment |
$1,000 |
|
| $100 |
|
| $100 |
| |
Tax
Information
The
Fund’s distributions are taxable, and will be taxed as ordinary income,
qualified dividend income, or capital gains, unless you invest though a
tax-advantaged arrangement, such as a 401(k) plan or an individual retirement
account (“IRA”). Distributions on investments made through tax-advantaged
arrangements may be taxed later upon withdrawal of assets from those
accounts.
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase the Fund through a broker-dealer or other financial intermediary,
the Fund may pay the intermediary for the sale of Fund shares and related
services. These payments may create a conflict of interest by influencing the
broker-dealer or other intermediary and your salesperson to recommend the Fund
over another investment. Ask your salesperson or visit your financial
intermediary’s website for more information.
Investment
Objective
The
investment objective of the Fund aims to achieve long-term absolute returns. The
Fund’s objective is not fundamental, and it may be changed without shareholder
approval.
Principal
Investment Strategies
In
seeking to achieve its aim of long-term absolute returns, the Fund aims to hold
a diversified portfolio and achieve long-term absolute returns in all market
conditions over rolling five-year periods, with lower volatility than equity
markets and in excess of inflation. The Fund implements its strategy by
investing globally either directly, or through derivatives, in a broad range of
instruments, including, but not limited to, equities, fixed income, currencies,
commodities, credit derivatives and cash instruments. The Fund has no limits
with respect to the credit rating, maturity or duration of the fixed income
securities in which it may invest. Fixed income securities may include floating
rate and variable rate products. Derivatives, including futures, forwards,
options and swaps are utilized for investment and for hedging purposes. Swaps
may include, but are not limited to, currency swaps, equity index swaps,
interest rate swaps and credit default index swaps. Derivatives are financial
contracts whose value depends upon, or is derived from, the value of an
underlying asset, reference rate, or index, and may relate to equity securities,
fixed income securities, interest rates, commodities, or currency exchange rates
and related indexes The Fund may also use these derivatives to modify or hedge
the Fund’s exposure to a particular investment market related risk, as well as
to manage the volatility of the Fund. Additionally, the Fund may use derivatives
to manage cash. By investing in derivatives, the Fund attempts to achieve the
economic equivalence it would achieve if it were to invest directly in the
underlying security. In addition, if the Fund acquires shares of investment
companies, shareholders bear both their proportionate share of expenses in the
Fund (including management and advisory fees) and, indirectly, the expenses of
the investment companies.
The
Fund is managed with an aim to limit forward looking volatility to 12% which is
expected to be lower than equity markets. Forward looking volatility refers to
the estimated volatility that a portfolio is taking based on short term
volatility forecasts, such as those implied from option prices. When assessing a
portfolio’s risk, it is more insightful to examine the volatility that was taken
at each point in time to achieve a return rather than the volatility that was
realized, thus eliminating the role of luck. By aiming to limit forward looking
volatility to 12%, exposure to equities, commodities and credit, for example,
are as a result limited at times of market stress when volatility typically
spikes and the probability of losses is especially high. On an intra-day basis,
forward looking volatility may exceed 12%, but a risk reduction is implemented
such that it falls below 12% by the close of each trading day.
The
Fund may also invest up to 25% of its assets in the Subsidiary, which is
wholly‑owned by the Fund and is organized under the laws of the Cayman Islands.
The Subsidiary pursues the same investment objective as the Fund. The Subsidiary
invests primarily in commodity futures and options and other commodity-linked
derivative instruments, but it may also invest in financial futures, options and
swaps, fixed income securities, including those that are not registered pursuant
to the 1940 Act, and other investments intended to serve as margin or collateral
for
the
Subsidiary’s derivative positions. The Fund invests in the Subsidiary with the
intent of gaining exposure to the commodities markets while meeting the
requirements applicable to a RIC under Subchapter M of the Internal Revenue
Code. Unlike the Fund, the Subsidiary may invest without limitation in
commodity-linked derivatives.
Under
normal circumstances, the Fund anticipates that it could allocate 50% or more of
its total assets in global securities outside of the United States (or
derivatives with similar economic characteristics). In doing so, the Fund
allocates its assets among various regions and countries, including emerging
markets.
In
response to adverse market, economic, political or other conditions, the Fund
may assume a temporary defensive position and invest, without limitation, in
high quality fixed income securities, money market instruments, and money market
mutual funds, cash or prime quality cash equivalents, in such amounts as the
Adviser deems appropriate under the circumstances, including when the Adviser
believes the Fund needs to retain cash. During such times, the Fund may not
achieve its investment objective. Money market instruments or short-term debt
securities held by the Fund for cash management or defensive investing purposes
can fluctuate in value.
Principal
Risks
Losing
all or a portion of your investment is a risk of investing in the Fund. An
investment in the Fund is not a deposit with a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. The following risks could affect the value of your
investment:
Commodities
Risk. Exposure
to the commodities markets may subject the Fund to greater volatility than
investments in traditional securities. The value of commodity-linked
derivative investments may be affected by changes in overall market movements,
commodity index volatility, changes in interest rates, or sectors affecting a
particular industry or commodity, such as drought, floods, weather, embargoes,
tariffs and international economic, political and regulatory
developments.
Counterparty
Risk.
Many derivative contracts are privately negotiated in the over-the-counter
market. If a privately negotiated over-the-counter contract calls for payments
by the Fund, the Fund must be prepared to make such payments when due. In
addition, if a counterparty’s creditworthiness declines, the Fund may not
receive payments owed under the contract, or such payments may be delayed under
such circumstances and the value of agreements with such counterparty can be
expected to decline, potentially resulting in losses by the Fund. Therefore,
Fund transactions involving a counterparty are subject to the risk that the
counterparty or a third party will not fulfill its obligation to the
Fund. Counterparty risk may arise because of the counterparty’s financial
condition (i.e.,
financial difficulties, bankruptcy, or insolvency), market activities and
developments, or other reasons, whether foreseen or not. A counterparty’s
inability to fulfill its obligation may result in significant financial loss to
the Fund.
Currency
Risk.
The risk that changes in currency exchange rates will negatively affect
securities denominated in, and/or receiving revenues in, foreign currencies. The
liquidity and trading value of foreign currencies could be affected by global
economic factors, such as inflation, interest rate levels, and trade balances
among countries, as well as the actions of sovereign governments and central
banks. Adverse changes in currency exchange rates (relative to the U.S. dollar)
may erode or reverse any potential gains from the Fund’s investments in
securities denominated in a foreign currency or may widen existing losses. The
Fund’s net currency positions may expose it to risks independent of its
securities positions.
Currency
exchange rates may be particularly affected by the relative rates of inflation,
interest rate levels, the balance of payments and the extent of governmental
surpluses or deficits in such foreign countries and in the United States, all of
which are in turn sensitive to the monetary, fiscal and trade policies pursued
by the governments of such foreign countries, the United States and other
countries important to international trade and finance. Governments may use a
variety of techniques, such as intervention by their central bank or imposition
of regulatory controls or taxes, to affect the exchange rates of their
respective currencies. They may also issue a new currency to replace an existing
currency or alter the exchange rate or relative exchange characteristics by
devaluation or revaluation of a currency. The liquidity and trading value of
these foreign currencies could be affected by the actions of sovereign
governments and central banks, which could change or interfere with
theretofore
freely determined currency valuation, fluctuations in response to other market
forces and the movement of currencies across borders.
Derivatives
Risk.
Adverse changes in the value or level of a derivative’s underlying asset or
index can result in a loss to the Fund substantially greater than the amount
invested in the derivative itself. Certain derivatives have the potential for
unlimited loss, regardless of the size of the initial investment. The use of
derivative instruments also exposes the Fund to additional risks and transaction
costs. These instruments come in many varieties and have a wide range of
potential risks and rewards, and may include futures contracts, options (both
written and purchased), swaps, and forward currency contracts. Risks of these
instruments include:
▪that
interest rates, securities prices and currency markets will not move in the
direction that the Adviser anticipates;
▪that
prices of the instruments and the prices of underlying securities, interest
rates or currencies they are designed to reflect do not move together as
expected;
▪that
the skills needed to use these strategies are different than those needed to
select portfolio securities;
▪the
possible absence of a liquid secondary market for any particular instrument and,
for exchange-traded instruments, possible exchange-imposed price fluctuation
limits, either of which may make it difficult or impossible to close out a
position when desired;
▪that
adverse price movements in an instrument can result in a loss substantially
greater than the Fund’s initial investment in that instrument (in some cases,
the potential loss is unlimited);
▪particularly
in the case of privately-negotiated instruments or over-the-counter derivatives,
that the counterparty will not perform its obligations, which could leave the
Fund worse off than if it had not entered into the position;
▪the
inability to close out certain hedged positions to avoid adverse tax
consequences, and the fact that some of these instruments may have uncertain tax
implications for the Fund;
▪the
fact that “speculative position limits” imposed by the CFTC and certain futures
exchanges on net long and short positions may require the Fund to limit or
close-out positions in certain types of instruments; the CFTC has recently
proposed new rules that, if adopted in substantially the same form, will impose
speculative position limits on additional derivative instruments, which may
further limit the Fund’s ability to trade futures contracts and swaps; and
▪the
high levels of volatility some of these instruments may exhibit, in some cases
due to the high levels of leverage an investor may achieve with
them.
Emerging
Market Risk.
The Fund intends to have exposure to emerging markets. Emerging markets are
riskier than more developed markets because they tend to develop unevenly and
may never fully develop. Investments in emerging markets may be considered
riskier. Generally, economic structures in these countries are less diverse and
mature than those in developed countries, and their political systems are less
stable. Investments in emerging market countries may be affected by national
policies that restrict foreign investment in certain issuers or industries.
Sanctions and other intergovernmental actions may be undertaken against an
emerging market country, which may result in the devaluation of the country’s
currency, a downgrade in the country’s credit rating, and a decline in the value
and liquidity of the country’s securities. Sanctions could result in the
immediate freeze of securities issued by an emerging market company or
government, impairing the ability of the Fund to buy, sell, receive or deliver
these securities. The small size of their securities markets and low trading
volumes can make emerging market investments illiquid and more volatile than
investments in developed countries and such securities may be subject to abrupt
and severe price declines. The Fund may be required to establish special custody
or other arrangements before investing. In addition, because the securities
settlement procedures are less developed in these countries, the Fund may be
required to deliver securities before receiving payment and may also be unable
to complete transactions during market disruptions. The possible establishment
of exchange controls or freezes on the convertibility of currency might
adversely affect an investment in foreign securities.
Equity
Risk. The
risks that could affect the value of the Fund’s shares and the total return on
your investment include the possibility that the equity securities held by the
Fund will experience sudden, unpredictable drops in value or long periods of
decline in value. This may occur because of factors that affect the
securities market generally, such as adverse changes in economic conditions, the
general outlook for corporate earnings, interest rates, or investor
sentiment. Equity securities may also lose value because of factors
affecting an entire industry or sector, such as increases in production costs,
or factors directly related to a specific company, such as decisions made by its
management.
Fixed
Income Securities Risk.
The risks of investing in debt or fixed income securities include (without
limitation):
▪Credit
risk.
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.
▪Maturity
risk.
A debt security with a longer maturity may fluctuate in value more than one with
a shorter maturity.
▪Market
risk.
Low demand for debt securities may negatively impact their price. 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. In general, the longer the maturity and the lower the credit
quality of a fixed income security, the more likely its value will
decline.
▪Interest
rate risk.
The value of fixed income securities may decline because of increases in
interest rates. The value of a fixed income security with greater duration will
be more sensitive to changes in interest rates than a similar security with less
duration. Duration is a measure of the sensitivity of the price of a fixed
income security (or a portfolio of fixed income securities) to changes in
interest rates. The prices of fixed income securities with less duration
generally will be less affected by changes in interest rates than the prices of
fixed income securities with greater duration.
▪Selection
risk.
The securities selected by the Adviser may underperform the market or other
securities selected by other funds.
▪Call
risk.
During a period of falling interest rates, the issuer may redeem a security by
repaying it early, which may reduce the Fund’s income, if the proceeds are
reinvested at lower interest rates.
▪Credit
ratings sensitivity risk.
The value of your investment in the Fund may change in response to changes in
the credit ratings of debt securities in the Fund’s portfolio. In addition, an
issuer of a fixed income security may fail to pay all or a portion of the
payment of principal and/or interest on a security.
▪Floating
rate loan risk.
The value of the collateral securing a floating rate loan can decline, be
insufficient to meet the obligations of the borrower, or be difficult to
liquidate. The liquidity of floating rate loans, including the volume and
frequency of secondary market trading in such loans, varies significantly over
time and among individual floating rate loans. During periods of infrequent
trading, valuing a floating rate loan can be more difficult; and buying and
selling a floating rate loan at an acceptable price can also be more difficult
and delayed. Difficulty in selling a floating rate loan can result in a
loss.
▪High
yield securities risk.
Fixed income securities that are rated below investment grade (i.e.,
“junk bonds”) are subject to additional risk factors due to the speculative
nature of these securities, such as the increased possibility of default
liquidation of the security, and changes in value based on public perception of
the issuer. As with any investment, there is a risk of loss, including loss of
principal.
The
Fund invests in multiple asset classes, some of which may have sensitivity to
interest rate changes. Using the present exposure of the strategy, an increase
of 1% in interest rates would result in a loss of approximately 0.5%, with all
other risk factors remaining unchanged. A typical range of durations of the Fund
is between -2 and +4 years. An increase of interest rates of 1%, given these
durations, would result in a gain of 2% and a loss of 4%,
respectively.
Foreign
Investments Risk.
Foreign
investments, including ADRs, often involve special risks not present in U.S.
investments that can increase the chances that the Fund will lose money. These
risks include:
•The
Fund generally holds its foreign securities and cash in foreign banks and
securities depositories, which may be recently organized or new to the foreign
custody business and may be subject to only limited or no regulatory
oversight.
•Changes
in foreign currency exchange rates can affect the value of the Fund’s
portfolio.
•The
economies of certain foreign markets may not compare favorably with the economy
of the United States with respect to such issues as growth of gross national
product, reinvestment of capital, resources and balance of payments
position.
•The
governments of certain countries may prohibit or impose substantial restrictions
on foreign investments in their capital markets or in certain
industries.
•Many
foreign governments do not supervise and regulate stock exchanges, brokers and
the sale of securities to the same extent as does the United States and may not
have laws to protect investors that are comparable to U.S. securities
laws.
•Settlement
and clearance procedures in certain foreign markets may result in delays in
payment for or delivery of securities not typically associated with settlement
and clearance of U.S. investments.
High
Portfolio Turnover Risk. High
portfolio turnover involves correspondingly greater expenses to the Fund,
including brokerage commissions or dealer mark-ups and other transaction costs
on the sale of securities and reinvestments in other securities, which may
result in adverse tax consequences to the Fund’s shareholders.
High
Yield Securities Risk.
Fixed income securities that are rated below investment grade (i.e.,
“junk bonds”) are subject to additional risk factors due to the speculative
nature of these securities, such as the increased possibility of default
liquidation of the security, and changes in value based on public perception of
the issuer. As with any investment, there is a risk of loss, including loss of
principal.
Interest
Rate Risk.
Interest rate risk is the risk that prices of fixed income securities generally
increase when interest rates decline and decrease when interest rates increase.
The Fund may lose money if short term or long term interest rates rise sharply
or otherwise change in a manner not anticipated by the Adviser.
Interest
Rate Swaps Risk.
The Fund may enter into interest rate swaps. In an interest rate swap, the Fund
and another party exchange the right to receive or the obligation to pay
interest on a security or other reference rate. For example, they might swap the
right to receive floating rate payments for fixed rate payments. There is a risk
that, based on movements of interest rates, the payments made by the Fund under
a swap will be greater than the payments it receives. Prices of longer term
securities generally change more in response to interest rate changes than
prices of shorter term securities. The Fund may lose money if short term or long
term interest rates rise sharply or otherwise change in a manner not anticipated
by the Adviser.
Leverage
Risk.
Certain Fund transactions, such as its use of futures, forward contracts, swaps
or mortgage rolls, may give rise to a form of leverage. The Fund may be more
volatile than if the Fund had not been leveraged because leverage tends to
exaggerate the effect of any increase or decrease in the value of the Fund’s
portfolio securities. The Fund cannot assure that the use of leverage will
result in a higher return on investment, and using leverage could result in a
net loss. In addition, use of leverage by the Fund may cause the Fund to
liquidate portfolio positions when it may not be advantageous to do so to
satisfy its obligations or to meet segregation requirements. Increases and
decreases in the value of the Fund’s portfolio may be magnified when the Fund
uses leverage.
Manager
Risk.
The skill of the Adviser will play a significant role in the Fund’s ability to
achieve its investment objective. The Fund’s ability to achieve its investment
objective depends on the ability of the Adviser to correctly identify economic
trends, especially with regard to accurately forecasting inflationary and
deflationary periods. In addition, the Fund’s ability to achieve its investment
objective depends on the Adviser’s ability to select stocks,
particularly
in volatile stock markets. The Adviser could be incorrect in its analysis of
industries, companies and the relative attractiveness of growth and value stocks
and other matters.
Market
Events Risk. Market
event risk is the risk that the markets on which the Fund’s investments trade
will increase or decrease in value. 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, such as those 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 pandemics, acts of war, or events
affecting global markets. These types of events could adversely affect the
Fund’s performance. For example, since December 2019, a novel strain of
coronavirus (COVID-19) has spread globally, which has resulted in the temporary
closure of many corporate offices, retail stores, manufacturing facilities and
factories, and other businesses across the world. The extent to which COVID-19
may negatively affect the Fund’s performance or the duration of any potential
business disruption is uncertain. Any potential impact on performance will
depend to a large extent on future developments and new information that may
emerge regarding the duration and severity of COVID-19 and the actions taken by
authorities and other entities to contain COVID-19 or treat its
impact.
Russia’s
military invasion of Ukraine in February 2022, the resulting responses by the
United States and other countries, and the potential for wider conflict could
increase volatility and uncertainty in the financial markets and adversely
affect regional and global economies. The United States and other countries have
imposed broad-ranging economic sanctions on Russia, certain Russian individuals,
banking entities and corporations, and Belarus as a response to Russia’s
invasion of Ukraine, and may impose sanctions on other countries that provide
military or economic support to Russia. The extent and duration of Russia’s
military actions and the repercussions of such actions (including any
retaliatory actions or countermeasures that may be taken by those subject to
sanctions, including cyber attacks) are impossible to predict, but could result
in significant market disruptions, including in certain industries or sectors,
such as the oil and natural gas markets, and may negatively affect global supply
chains, inflation and global growth. These and any related events could
significantly impact the Fund’s performance and the value of an investment in
the Fund, even if the Fund does not have direct exposure to Russian issuers or
issuers in other countries affected by the invasion.
Subsidiary
Risk.
By investing in the Subsidiary, the Fund is indirectly exposed to the risks
associated with the Subsidiary’s investments. The commodity-related instruments
held by the Subsidiary are generally similar to those that are permitted to be
held by the Fund and are subject to the same risks that apply to similar
investments if held directly by the Fund (see “Commodities Risk” above). There
can be no assurance that the investment
objective
of the Subsidiary will be achieved. The Subsidiary is not registered under the
1940 Act, and, unless otherwise noted in this Prospectus, is not subject to all
the investor protections of the 1940 Act. However, the Fund wholly owns the
Subsidiary, and the Fund and the Subsidiary are both managed by the Adviser,
making it unlikely that the Subsidiary will take action contrary to the
interests of the Fund and its shareholders. The Board has oversight
responsibility for the investment activities of the Fund, including its
investment in the Subsidiary, and the Fund’s role as sole shareholder of the
Subsidiary. To the extent applicable to the investment activities of the
Subsidiary, the Subsidiary will be subject to the same investment restrictions
and limitations, and follow the same compliance policies and procedures, as the
Fund. Unlike the Fund, the Subsidiary will not seek to qualify as a RIC under
Subchapter M of the Internal Revenue Code. Changes in the laws of the United
States and/or the Cayman Islands could result in the inability of the Fund
and/or the Subsidiary to operate as described in this prospectus and the SAI and
could adversely affect the Fund.
The
Adviser is a CPO with respect to the Fund and is registered with and regulated
by the CFTC. As a result, the Fund is subject to regulation by the SEC, the CFTC
and the NFA, which could increase compliance costs of the Fund.
Tax
Risk. In
order to qualify for the favorable U.S. federal income tax treatment generally
available to a RIC, the Fund must, amongst other requirements described in
detail in the SAI, derive at least 90% of its gross income in each taxable year
from qualifying income. Certain of the Fund’s investments when made directly
(including commodity-related investments and certain other non-security based
derivatives) may generate income that is not qualifying income. The Fund’s
investment in the Subsidiary is expected to provide the Fund with exposure to
the commodities markets within the limitations of the federal tax requirements
of Subchapter M of the Internal Revenue Code. The “Subpart F” income (defined in
Section 951 of the Internal Revenue Code to include passive income, including
from commodity-linked derivatives) of the Fund attributable to its investment in
the Subsidiary is “qualifying income” to the Fund to the extent that such income
is derived with respect to the Fund’s business of investing in stock, securities
or currencies. The Fund expects its “Subpart F” income attributable to its
investment in the Subsidiary to be derived with respect to the Fund’s business
of investing in stock, securities or currencies, and accordingly to be treated
as “qualifying income.” The Advisor intends to conduct the Fund’s investments in
the Subsidiary in a manner consistent with the terms and conditions of
applicable Treasury regulations, and will monitor the Fund’s investments in the
Subsidiary to ensure that no more than 25% of the Fund’s assets are invested in
the Subsidiary.
To
the extent the Fund directly invests in commodity-linked derivative instruments
and other similar instruments, directly, it will seek to restrict the resulting
income from such instruments that do not generate qualifying income, such as
commodity-linked swaps, to a maximum of 10% of its gross income (when combined
with its other investments that produce non-qualifying income) to comply with
certain qualifying income tests necessary for the Fund to qualify as a RIC under
Subchapter M of the Internal Revenue Code. The Fund may be unable to determine
the percentage of qualifying income it has derived for a taxable year until
after year-end, might generate more non-qualifying income than anticipated or
might not be able to generate qualifying income in a particular taxable year at
levels sufficient to limit its non-qualifying income to 10% of the Fund’s gross
income. If the Fund were to fail to meet the qualifying income test for
qualification as a RIC, it would be taxed in the same manner as an ordinary
corporation, and distributions to its shareholders would not be deductible by
the Fund in computing its taxable income, unless certain relief provisions are
available (which would generally require the Fund to pay certain Fund-level
taxes). In addition, the Fund may determine not to make an investment that it
otherwise would have made, or may dispose of an investment it otherwise would
have retained, in an effort to meet the qualifying income test. See the
“Distributions and Tax Information” section of the SAI for additional
information.
Volatility
Risk.
The Fund may have investments that appreciate or decrease significantly in value
over short periods of time. This may cause the Fund’s NAV per share to
experience significant increases or declines in value over short periods of
time.
A
complete description of the Fund’s policies and procedures with respect to the
disclosure of the Fund’s portfolio holdings is available in the Fund’s SAI and
on the Fund’s website at www.fulcrumassetfunds.com.
Investment
Adviser
Fulcrum
Asset Management LLP is the Fund’s investment adviser and is located at Marble
Arch House, 66 Seymour Street, London W1H 5BT, United Kingdom.
The Adviser is an SEC-registered investment advisory firm formed in 2004. As of
July 31, 2022, the Adviser had assets under management of approximately $5.8
billion.
The
Adviser is responsible for the day-to-day management of the Fund in accordance
with the Fund’s investment objective and policies. The Adviser also performs
certain administrative services and provides most of the personnel needed to
fulfill its obligations under its advisory agreement. For its services, the Fund
pays the Adviser a monthly management fee that is calculated at the annual rate
of 0.90% of the Fund’s average daily net assets. For the fiscal year ended June
30, 2022, the Adviser received an aggregate fee of 0.62% of average net assets,
after fee waivers. The Adviser has contractually agreed to waive the management
fee it receives from the Fund in an amount equal to the management fee paid to
the Adviser by the Subsidiary. This undertaking will continue in effect for so
long as the Fund invests in the Subsidiary and may be terminated only with the
approval of the Board. The Adviser does not charge a performance fee or fulcrum
fee for its management of the Fund.
A
discussion regarding the basis of the Board’s most recent approval of the
investment advisory agreement will be available in the Fund’s semi-annual report
to shareholders for the reporting period ending December 31, 2022. A discussion
regarding the basis of the Board’s previous approval of the investment advisory
agreement is available in the Fund’s semi-annual report to shareholders for the
reporting period ended December 31, 2021.
Investment
Committee
The
Adviser has established an Investment Committee (the “Committee”) that is
jointly and
primarily responsible for the day-to-day management of the Fund’s portfolio. The
Committee currently is
comprised of Gavyn Davies, Andrew Stevens, Suhail Shaikh, CFA, Andrew Bevan,
PhD, and Nabeel Abdoula, CFA.
Gavyn
Davies,
Founding Partner, Chairman of Fulcrum, Chairman of the Investment Committee,
over 40 years of experience
•Founded
Fulcrum in 2004
•BBC,
Chairman, 2001-2004
•Goldman
Sachs, Chief Economist, Managing Director then Partner, 1986-2001
•Simon
& Coates then Phillips & Drew, Economist, 1979-1986
•Policy
Unit at 10 Downing Street, Economic Policy Economist (1974) then adviser to the
Prime Minister (1976-1979)
•St
John’s College (University of Cambridge), then Research at Balliol College
(University of Oxford), until 1974
Andrew
Stevens,
Founding Partner, Chief Executive, Chairman of the Risk Committee, over
25 years of experience
•Founded
Fulcrum in 2004
•Goldman
Sachs, Investment Management, Executive Director, 1992-2004
•Harvard
Business School, MBA, 1990-1992
•Burns
Fry, New York, Mergers & Acquisitions, Associate, 1988-1990
•BA
Finance, Georgetown University, 1984-1988
Suhail
Shaikh,
CFA
Partner,
Chief Investment Officer, over 15 years of experience
•Joined
Fulcrum in 2005
•Goldman
Sachs, Associate, Investment Strategy Group, 2002-2005
•Goldman
Sachs, Analyst, Global Equity then Global Fixed Income & Currency Asset
Management, 2000‑2002
•CFA
Charterholder since 2003
•BSc
Management, London School of Economics & Political Sciences,
1997-2000
Andrew
Bevan,
PhD
Partner, Fixed Income Strategist, over 35 years of experience
•Joined
Fulcrum in 2006
•Goldman
Sachs, Managing Director, Head of Global Markets Research,
1994-2005
•Bear
Stearns, Managing Director, Head of Financial Analytics and Structured
Transactions Group, 1990-1994
•Reading
University, First Class BA Economics, 1978; City University Business School,
PhD International Monetary Economics, 1986; Kings College London, PhD
Theology, 2002
Nabeel
Abdoula,
CFA
Partner, Deputy CIO, over 10 years of experience
•Joined
Fulcrum in 2011
•Goldman
Sachs, Investment Strategy Group, 2007-2011
•CFA
Charterholder since 2011
•BSc
in Mathematics, Operational Research, Statistics and Economics, Warwick
University, 2003-2007
The
SAI provides additional information about the Committee members’ compensation,
other accounts managed by the Committee members and the Committee members’
ownership of securities in the Fund.
Fund
Expenses
The
Fund is responsible for its own operating expenses. However, the Adviser
has contractually agreed to waive all or a portion of its management fees and
pay Fund expenses (excluding shareholder servicing fees, AFFE, taxes, interest
expense, dividends on securities sold short and extraordinary expenses) in order
to limit annual fund operating expenses to 1.05%, 1.05% and 1.30% of average
daily net assets of the Fund’s Super Institutional Class, Institutional Class
and Advisor Class shares, respectively, through at least October 31, 2023, and
this arrangement may be amended or terminated only by the Trust’s Board. If any
excluded expenses are incurred, the Fund’s total annual operating expenses will
be higher than the Expense Caps. The Adviser may request recoupment of
previously waived fees and paid expenses from the Fund within three years from
the date they were waived or paid, subject to, if different, the Expense Cap at
the time of waiver/payment or the Expense Cap at the time of recoupment,
whichever is lower.
The
Adviser’s Prior Performance
The
performance information shown below represents the prior performance of a United
Kingdom (“U.K.”) registered UCITS fund referred to as the TM
Fulcrum Diversified Absolute Return Fund (the “UCITS Fund”)
and managed by the Adviser with substantially similar investment objectives,
policies and strategies as the Fund. There are no other investment funds advised
by the Adviser, that are marketed in the U.S., that have investment strategies
that are substantially similar to the Fund.
The
UCITS
Fund’s
performance is provided to illustrate the past performance of the Adviser’s
absolute return strategy as measured against a broad based market index. The
performance information below was originally calculated in U.K. sterling and has
been converted to U.S. dollars. The
UCITS Fund’s performance does not
represent
the historical performance of the Fund.
You
should not consider this performance data to be an indication of future
performance of the Fund.
All
returns are presented after the deduction of all fees and expenses, including
investment advisory fees, brokerage commissions and execution costs paid by the
UCITS Fund without provision for federal or state income taxes. The UCITS Fund
does not reflect any sales loads or placement fees, as such fees are not
assessed on the UCITS Fund.
The
UCITS Fund is not a registered mutual fund in the U.S., although it is regulated
in the U.K. under the Financial Conduct Authority’s UCITS Directive and was not
subject to the same types of expenses as the Fund or to the diversification
requirements, specific tax restrictions and investment limitations imposed on
the Fund by the 1940 Act, or the Internal Revenue Code, which, if applicable,
may have adversely affected the performance results of the UCITS
Fund.
The
performance results below are based on the official NAV per share of the UCITS
Fund. Investors should also be aware that the use of a methodology different
from that used above to calculate performance could result in different
performance data. The methodology used to calculate the UCITS Fund’s performance
information differs from the SEC required methodology. The performance returns
are easily demonstrable and are calculated by an independent third party
administrator. To calculate the U.S. dollar equivalent performance, the Adviser
converts the daily U.K. sterling-based NAV to U.S. dollars using each day’s
prevailing exchange rate.
The
performance data below is for the UCITS Fund – the TM Fulcrum Diversified
Absolute Return Fund and is not the performance results of the Fulcrum
Diversified Absolute Return Fund.
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Period |
TM
Fulcrum Diversified Absolute
Return
Fund
Average
Annual Total Returns
($
net) |
ICE
BofA
Merrill
Lynch
3-Month
U.S. Treasury Bill Index (1) |
Number
of Accounts |
Assets
(in
millions) |
One
Year Ended 12/31/2021 |
5.10% |
0.05% |
1 |
$1,046 |
Since
Inception 3/31/2012 to 12/31/2021 |
3.30% |
0.64% |
1 |
$1,046 |
|
|
|
| |
(1)
The ICE BofA 3 Month U.S. Treasury Index measures the performance of a single
issue of outstanding treasury bill which matures closest to, but not beyond,
three months from the rebalancing date. The issue is purchased at the beginning
of the month and held for a full month; at the end of the month that issue is
sold and rolled into a newly selected issue.
Pricing
of Fund Shares
Shares
of the Fund are sold at NAV per share, which is calculated as of the close of
regular trading (generally, 4:00 p.m., Eastern Time) on each day that the
New York Stock Exchange (“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. 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.
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 related Adviser 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.
Trading
in Foreign Securities
Quotations
of foreign securities denominated in foreign currency are converted to U.S.
dollar equivalents using foreign exchange quotations received from independent
dealers. The occurrence of certain events after the close of foreign markets,
but prior to the time the Fund’s NAV per share is calculated (such as a
significant surge or decline in the U.S. or other markets) often will result in
an adjustment to the trading prices of foreign securities when foreign markets
open on the following business day. If such events occur, the Fund will value
foreign securities at fair value, taking into account such events, in
calculating the NAV per share. In such cases, use of fair valuation can reduce
an investor’s ability to seek to profit by estimating the Fund’s NAV per share
in advance of the time the NAV per share is calculated. The Adviser anticipates
that the Fund’s portfolio holdings will be fair valued when market quotations
for those holdings are considered unreliable.
How
to Buy Shares
The
minimum initial investment amount for the Super Institutional Class is
$25,000,000, for the Institutional Class is $1,000,000 and for the Advisor Class
is $1,000. The minimum subsequent investment amount for the Super
Institutional Class is $1,000, for the Institutional Class is $100 and for the
Advisor Class is $100.
The
Fund’s minimum investment requirements may be waived from time to time by the
Adviser, and for the following types of shareholders:
•current
and retired employees, directors/trustees and officers of the Trust, the Adviser
and its affiliates and certain family members of each of them (i.e.,
spouse, domestic partner, child, parent, sibling, grandchild and grandparent, in
each case including in-law, step and adoptive relationships);
•any
trust, pension, profit sharing or other benefit plan for current and retired
employees, directors/trustees and officers of the Adviser and its
affiliates;
•current
employees of U.S. Bancorp Fund Services, LLC (the “Transfer Agent”),
broker-dealers who act as selling agents for the Fund, intermediaries that have
marketing agreements in place with the Adviser and the immediate family members
of any of them;
•existing
clients of the Adviser, their employees and immediate family members of such
employees;
•registered
investment advisers who buy through a broker-dealer or service agent who has
entered into an agreement with the Fund’s distributor; and
•qualified
broker-dealers who have entered into an agreement with the Fund
distributor.
You
may purchase shares of the Fund by check, by wire transfer, via electronic funds
transfer through the Automated Clearing House (“ACH”) network through an
authorized bank or through one or more brokers authorized by the Fund to receive
purchase orders. If you have any questions or need further information about how
to purchase shares of the Fund, you may call a customer service representative
of the Fund toll-free at 855-538-5278. The Fund reserves the right to reject any
purchase order. For example, a purchase order may be delayed over several days
if, in the Adviser’s opinion, it is so large that it would disrupt the
management of the Fund. Orders may also be rejected from persons believed by the
Fund to be “market timers.” If the Fund were to reject a purchase order,
notification would likely occur no later than the next business day after
receipt of order.
All
checks must be in U.S. dollars drawn on a domestic U.S. 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.
To
buy shares of the Fund, complete an account application and send it together
with your check for the amount you wish to invest in the Fund to the address
below. 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. If your payment is returned for any reason, your purchase will be
canceled and a $25 fee will be assessed against your account by the Transfer
Agent. You may also be responsible for any loss sustained by the Fund.
All
purchase requests must be received in “good order.” Good order generally means
that your purchase request includes the name of the Fund; the dollar amount of
shares to be purchased; your account application or investment stub; and a check
payable to the name of the Fund.
In
addition to cash purchases, Fund shares may be purchased by tendering payment
in-kind in the form of shares of stock, bonds or other securities. Any
securities used to buy Fund shares must be readily marketable, their acquisition
consistent with the Fund’s objective and otherwise acceptable to the Adviser and
the Board. For further information, you may call a customer service
representative of the Fund toll-free at 855-538-5278.
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 should 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
should also supply the identity of the beneficial owners. Mailing addresses
containing only a P. O. Box will not be accepted. Please contact the Transfer
Agent at 855-538-5278 if you need additional assistance when completing your
account application.
If
the Transfer Agent does not have a reasonable belief of the identity of an
investor, the account application will be rejected or the investor will not be
allowed to perform a transaction on the account until such information is
received. In the rare event that the Transfer Agent is unable to verify your
identity, the Fund reserves the right to redeem your account at the current
day’s NAV.
Shares
of the Fund have not been registered for sale outside of the United States. The
Adviser generally does not sell shares to investors residing outside of 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.
The Fund reserves the right to refuse purchases from shareholders who must file
a Form W-8.
Purchasing
Shares by Mail
Please
complete the account application and mail it with your check, payable to the
Fulcrum Diversified Absolute Return Fund to the Transfer Agent at the following
address:
Regular
Mail
Fulcrum
Diversified Absolute Return Fund
c/o
U.S. Bank Global Fund Services
P.O.
Box 701
Milwaukee,
Wisconsin 53201-0701
You
may not send an account application via overnight delivery to a United States
Postal Service post office box. If you wish to use an overnight delivery
service, send your account application and check to the Transfer Agent at the
following address:
Overnight
Express Mail
Fulcrum
Diversified Absolute Return Fund
c/o
U.S. Bank Global Fund Services
615
East Michigan Street, 3rd
Floor
Milwaukee,
Wisconsin 53202
NOTE:
The
Fund does not consider the U.S. Postal Service or other independent delivery
services to be its agents. Therefore, a deposit in the mail or with such
services, or receipt at U.S. Bancorp Fund Services, LLC’s post office box, of
purchase orders or redemption requests does not constitute receipt by the
Transfer Agent. Receipt constitutes physical possession of the purchase order or
redemption request by the transfer agent.
Purchasing
Shares by Telephone
If
you accepted telephone options on your account application or by subsequent
arrangement in writing with the Fund and your account has been open for at least
seven business days, you may purchase additional shares by calling the Fund
toll-free at 855-538-5278. You may not make your initial purchase of the
Fund shares by telephone. Telephone orders will be accepted via electronic
funds transfer from your pre-designated bank account through the ACH
network. You must have banking information established on your account
prior to making a telephone purchase. Only bank accounts held at domestic
institutions that are ACH members may be used for telephone
transactions. If your order is received prior to 4:00 p.m., Eastern Time,
shares will be purchased at the appropriate share price next
calculated. For security reasons, requests by telephone may be
recorded. Once a telephone transaction has been placed, it cannot be
cancelled or modified after the close of regular trading on the NYSE (generally,
4:00 p.m. Eastern time).
Purchasing
Shares 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. You may then instruct your bank to send
the wire. Prior to sending the wire, please call the Fund at 855-538-5278 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: Fulcrum Diversified Absolute Return Fund
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 855-538-5278. 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.
Automatic
Investment Plan
Once
your account has been opened with the initial minimum investment, you may make
additional purchases of Advisor Class shares at regular intervals (i.e.,
monthly or quarterly) through the Automatic Investment Plan (“AIP”). The AIP is
not available for Super Institutional and Institutional Class shares. The AIP
provides a convenient method to have monies deducted from your bank account, for
investment into the Fund, on a monthly or quarterly basis. In order to
participate in the AIP, each purchase must be in the amount of $100 or more for
the Advisor Class, and your financial institution must be a member of the ACH
network. If your bank rejects your payment, the Transfer Agent will charge a $25
fee to your account. To begin participating in the AIP, please complete the
Automatic Investment Plan section on the account application or call the
Transfer Agent at 855-538-5278 if you have questions about the Plan. Any request
to change or terminate your AIP should be submitted to the Transfer Agent at
least five calendar days prior to the automatic investment date.
Retirement
Accounts
The
Fund offers prototype documents for a variety of retirement accounts for
individuals and small businesses. Please call 855-538-5278 for information
on:
•Individual
Retirement Plans, including Traditional IRAs and Roth IRAs.
•Small
Business Retirement Plans, including Simple IRAs and SEP IRAs.
There
may be special distribution requirements for a retirement account, such as
required distributions or mandatory federal income tax withholdings. For more
information, call the number listed above. Direct shareholder accounts may be
charged a $15 annual account maintenance fee for each retirement account up to a
maximum of $30 annually and a $25 fee for transferring assets to another
custodian or for closing a retirement account. Fees charged by other
institutions may vary.
Purchasing
and Selling Shares through a Broker
You
may buy and sell shares of the Fund through certain brokers and financial
intermediaries (and their agents) (collectively, “Brokers”) that have made
arrangements with the Fund to sell its shares. When you place your order with
such a Broker, your order is treated as if you had placed it directly with the
Transfer Agent, and you will pay or receive the next applicable price calculated
by the Fund. The Fund will be deemed to have received a purchase or redemption
order when an authorized broker, or, if applicable, a broker’s designee receives
the order. The Broker holds your shares in an omnibus account in the Broker’s
name, and the Broker maintains your individual ownership records. The Adviser
may pay the Broker for maintaining these records as well as providing other
shareholder services. The Broker may charge you a fee for handling your order.
The Broker is responsible for processing your order correctly and promptly,
keeping you advised regarding the status of your individual account, confirming
your transactions and ensuring that you receive copies of the Fund’s
Prospectus.
How
to Sell Shares
You
may sell (redeem) your Fund shares on any day the Fund and the NYSE are open for
business either directly to the Fund or through your financial
intermediary.
In
Writing
You
may redeem your shares by simply sending a written request to the Transfer
Agent. You should provide your account number and state whether you want all or
some of your shares redeemed. The letter should be signed by all of the
shareholders whose names appear on the account registration and include a
signature guarantee(s), if necessary. 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. You should send your
redemption request to:
|
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Regular
Mail |
Overnight
Express Mail |
Fulcrum
Diversified Absolute Return Fund |
Fulcrum
Diversified Absolute Return Fund |
c/o
U.S. Bank Global Fund Services |
c/o
U.S. Bank Global Fund Services |
P.O.
Box 701 |
615
East Michigan Street, 3rd
Floor |
Milwaukee,
Wisconsin 53201-0701 |
Milwaukee,
Wisconsin 53202 |
NOTE:
The
Fund does not consider the U.S. Postal Service or other independent delivery
services to be its agents. Therefore, a deposit in the mail or with such
services, or receipt at U.S. Bancorp Fund Services, LLC’s post office box, of
purchase orders or redemption requests does not constitute receipt by the
Transfer Agent. Receipt constitutes physical possession of the purchase order or
redemption request by the transfer agent.
By
Telephone
If
you accepted telephone options on your account application, you may redeem all
or some of your shares, up to $50,000, by calling the Transfer Agent at
855-538-5278 before the close of trading on the NYSE. This is normally
4:00 p.m., Eastern Time. Redemption proceeds will be processed on the next
business day and sent to the address that appears on the Transfer Agent’s
records or via ACH to a previously established bank account. If you request,
redemption proceeds will be wired on the next business day to the bank account
you designated on the account application. The minimum amount that may be wired
is $1,000. A wire fee of $15 will be deducted from your redemption proceeds for
complete redemption and any redemption to redeem a specific number of shares. In
the case of a partial redemption, the fee will be deducted from the remaining
account balance. Telephone redemptions cannot be made if you notified the
Transfer Agent of a change of address within 15 calendar days before the
redemption request.
Shares
held in IRA or other retirement accounts may be redeemed by telephone at
855-538-5278. Investors will be asked whether or not to withhold taxes from any
distribution.
You
may request telephone redemption privileges after your account is opened by
calling the Transfer Agent at 855-538-5278 for instructions.
You
may encounter higher than usual call wait times during periods of high market
activity. Please allow sufficient time to ensure that you will be able to
complete your telephone transaction prior to market close. If you are unable to
contact the Fund by telephone, you may mail your redemption request in writing
to the address noted above. Once a telephone transaction has been accepted, it
may not be canceled or modified after the close of regular trading on the NYSE
(generally, 4:00 p.m., Eastern time).
Payment
of 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. 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.
Systematic
Withdrawal Plan
As
another convenience, you may redeem through the Systematic Withdrawal Plan
(“SWP”). Under the SWP, shareholders or their financial intermediaries may
request that a payment drawn in a predetermined amount be sent to them on a
monthly, quarterly or annual basis. In order to participate in the SWP, your
account balance must be at least $10,000 and each withdrawal amount must be for
a minimum of $100. If you elect this method of redemption, the Fund will send a
check directly to your address of record or will send the payment directly to
your bank account via electronic funds transfer through the ACH network. For
payment through the ACH network, your bank must be an ACH member and your bank
account information must be previously established on your account. The SWP may
be terminated at any time by the Fund. You may also elect to terminate your
participation
in the SWP by communicating in writing or by telephone to the Transfer Agent no
later than five days before the next scheduled withdrawal at:
|
|
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| |
Regular
Mail |
Overnight
Express Mail |
Fulcrum
Diversified Absolute Return Fund |
Fulcrum
Diversified Absolute Return Fund |
c/o
U.S. Bank Global Fund Services |
c/o
U.S. Bank Global Fund Services |
P.O.
Box 701 |
615
East Michigan Street, 3rd
Floor |
Milwaukee,
Wisconsin 53201-0701 |
Milwaukee,
Wisconsin 53202 |
A
withdrawal under the SWP involves a redemption of 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 a SWP, an investor must complete the appropriate
sections of the account application. For additional information on the SWP,
please call the Transfer Agent at 855-538-5278.
Redemption
“In-Kind”
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”). If the Fund pays your redemption
proceeds by a distribution of securities, you could incur brokerage or other
charges in converting the securities to cash and will bear any market risks
associated with such securities until they are converted into cash.
Signature
Guarantees
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. A
notary public is not an acceptable signature guarantor.
A
signature guarantee from either a Medallion program member or a non-Medallion
program member is required in the following situations:
•If
ownership is changed on your account
•When
redemption proceeds are payable or sent to any person, address or bank account
not on record
•When
a redemption request is received by the Transfer Agent and the account address
has changed within the last 15 calendar days
•For
all redemptions in excess of $50,000 from any shareholder account, including
IRAs
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.
Other
Information about Redemptions
The
Fund may redeem the shares in your account if the value of your account is less
than the minimum initial investment amount as a result of redemptions you have
made. This does not apply to retirement plan or Uniform Gifts or Transfers to
Minors Act accounts. You will be notified that the value of your account is less
than $500 before the Fund makes an involuntary redemption. You will then have
30 days in which to make an additional investment to bring the value of
your account to at least $500 before the Fund takes any action.
The
Fund will make distributions of dividends and capital gains, if any, at least
annually, typically in December. The Fund may make an additional payment of
dividends or distributions of capital gains if it deems it necessary for federal
income tax purposes or otherwise desirable at any other time of the
year.
All
distributions will be reinvested in Fund shares unless you choose one of the
following options: (1) receive dividends in cash while reinvesting capital
gain distributions in additional Fund shares; (2) reinvest dividends in
additional Fund shares and receive capital gains in cash; or (3) receive
all distributions in cash.
If
you elect to receive distributions 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 per share, and to reinvest all subsequent distributions. If
you wish to change your distribution option, notify the Transfer Agent in
writing or by telephone at least 5 days prior to the payment date for the
distribution.
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. The Fund takes steps to reduce the frequency and effect of
these activities in the Fund. These steps include monitoring trading practices
and using fair value pricing. The Fund has the ability to impose a redemption
fee, in consultation with the Board and conditional upon the Board’s approval.
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 Fund’s Distributor, on behalf
of the Fund, has entered into written agreements with each of 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, 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.
Below
are some important U.S. federal income tax issues that affect the Fund and its
shareholders. The following summary 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. The
summary is based on current tax law, which may be changed by legislative,
judicial or administrative action.
The
Fund has elected and intends 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.
The
Fund will typically make any distributions of dividends and capital gains
semi-annually. Dividends of net investment income and distributions from
the Fund’s net short-term capital gains are taxable to you as ordinary income
or, in some cases, as qualified dividend income. Distributions from the Fund’s
net capital gain (the excess of its net long-term capital gains over its net
short-term capital losses) are generally taxable to non-corporate shareholders
at rates of up to 20%, regardless of how long the shareholders held their
respective shares in the Fund. You will be taxed in the same manner whether you
receive your dividends and capital gain distributions in cash or reinvest them
in additional Fund shares.
Distributions
that the Fund reports as “qualified dividend income” may be eligible to be taxed
to non-corporate shareholders at rates of up to 20% if requirements, including
holding period requirements, are satisfied. In general, the Fund may report its
dividends as qualified dividend income to the extent derived from dividends paid
to the Fund 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 receives 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 strategy may limit its ability to
report distributions 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
tax of 3.8% applies to all or a portion of 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. This
3.8% tax also applies to all or a portion of the undistributed net investment
income of certain shareholders that are estates and trusts.
Any
dividend or capital gain distribution paid by the Fund has the effect of
reducing the NAV per share on the ex-dividend date by the amount of the dividend
or capital gain distribution. You should note that a dividend or capital gain
distribution paid on shares purchased shortly before that dividend or capital
gain distribution was declared will be subject to income taxes even though the
dividend or capital gain distribution represents, in substance, a partial return
of capital to you. This is known as “buying a dividend” and should be avoided by
taxable investors.
Although
distributions are generally taxable when received, certain distributions
declared in October, November, or December to shareholders of record on a
specified date in such a month but paid the following January are taxable as if
received in December of the year in which the dividend is declared.
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 Internal Revenue 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). This can potentially increase the amount of a
shareholder’s interest expense deductible under Section 163(j). 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 Internal Revenue Service (“IRS”).
The
Fund (or its administrative agent) will send you a report annually summarizing
the amount and tax aspects of your distributions.
By
law, the Fund must withhold as backup withholding a percentage of your taxable
distributions and redemption proceeds if you (1) have provided the Fund either
an incorrect tax identification number or no number at all, (2) are subject to
backup withholding by the IRS for failure to properly report payments of
interest or dividends, (3) have failed to certify to the Fund that you are not
subject to backup withholding, or (4) have not certified to the Fund that you
are a U.S. person (including a U.S. resident alien). The backup withholding rate
is 24%. Backup withholding will not, however, be applied to payments that have
been subject to the 30% withholding tax applicable to shareholders who are
neither citizens nor residents of the United States.
The
Fund is required to report to the IRS all distributions of taxable income and
capital gains as well as gross proceeds from the redemption of Fund shares,
except in the case of exempt shareholders, which includes most corporations. The
Fund is also required to report tax basis information for such shares and
indicate whether these shares had a short-term or long-term holding period. If a
shareholder has a different basis for different shares of the Fund in the same
account (e.g., if a shareholder purchased shares in the same account at
different times for different prices), the Fund calculates the basis of the
shares sold using its default method unless the shareholder has properly elected
to use a different method. The Fund’s default method for calculating basis is
first-in, first-out (“FIFO”). A shareholder may elect, on an account-by-account
basis, to use a method other than FIFO by following procedures established by
the Fund or its administrative agent. If such an election is made on or prior to
the date of the first exchange or redemption of shares in the account and on or
prior to the date that is one year after the shareholder receives notice of the
Fund’s default method, the new election will generally apply as if the FIFO
method had never been in effect for such account. Shareholders should consult
their tax advisers concerning the tax consequences of the Fund’s default method
or electing another method of basis calculation. Shareholders also should
carefully review any cost basis information provided to them and make any
additional basis, holding period or other adjustments that are required when
reporting these amounts on their federal income tax returns.
If
you sell, exchange or redeem your Fund shares, it is considered a taxable event
for you. Depending on the purchase price and the sale, exchange or redemption
price of the shares you sell, exchange or redeem, you may have a gain or a loss
on the transaction, which should generally be treated as a capital gain or loss
assuming you hold Fund shares as capital assets. Capital gain or loss realized
upon a sale or exchange of Fund shares held for twelve months or less is
generally treated as short-term capital gain or loss, except that 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 Internal Revenue 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 federal income tax purposes. You should consult
your tax advisor before making an exchange.
To
the extent the Fund invests in foreign securities, it may be subject to foreign
withholding taxes with respect to dividends or interest the Fund received from
sources in foreign countries. If more than 50% of the total assets of the Fund
consists of foreign securities, the Fund will be eligible to elect to treat some
of those taxes as a distribution to shareholders, which would allow shareholders
to offset some of their U.S. federal income tax. The Fund (or its administrative
agent) will notify you if it makes such an election and provide you with the
information necessary to reflect foreign taxes paid on your income tax
return.
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 its investment decisions. If you have a tax-advantaged retirement
account, you will generally not be subject to federal taxation on any dividends
and capital gain distributions until you begin receiving your distributions from
your retirement account. You
should consult your own tax adviser concerning federal, state and local taxation
of distributions from the Fund.
Description
of Classes
The
Trust has adopted a multiple class plan that allows the Fund to offer one or
more classes of shares of the Fund. The Fund offers three classes of shares –
Super Institutional, Institutional Class and Advisor Class. The different
classes of shares represent investments in the same portfolio of securities, but
the classes are subject to different expenses as discussed below.
More
about Super Institutional Class Shares
Super
Institutional Class shares of the Fund are offered without any sales charge on
purchases or sales and without any ongoing distribution fee. The minimum initial
investment for Super Institutional Class shares is $25,000,000.
Super
Institutional Class shares are available for purchase exclusively by
(1) eligible institutions (e.g.,
a financial institution or any of its clients, a corporation, trust, estate, or
educational, religious or charitable institution) with assets of at least
$25,000,000, (2) tax-exempt retirement plans with assets of at least
$25,000,000 (including 401(k) plans, 457 plans, employer-sponsored 403(b) plans,
profit sharing and money purchase plans, defined benefit plans and non-qualified
deferred compensation plans), (3) qualified state tuition plan
(529 plan) accounts and (4) high net worth/ultra high net worth
individuals/families. The minimum asset requirements may be waived from time to
time by the Advisor.
Super
Institutional Class share participants in tax-exempt retirement plans must
contact the plan’s administrator to purchase shares. For plan administrator
contact information, participants should contact their respective employer’s
human resources department. Transactions generally are effected on behalf of a
tax-exempt retirement plan participant by the administrator or a custodian,
trustee or record keeper for the plan by their administrator or financial
advisor. Super Institutional Class shares institutional clients may purchase
shares either directly or through an authorized dealer.
More
about Institutional Class Shares
Institutional
Class shares are charged a shareholder servicing fee of up to 0.10%.
Institutional Class shares do not carry a sales charge. The minimum initial
investment for Institutional Class shares is $1,000,000 for those in (1) below;
the minimum initial investment is waived for those in (2) and (3) below.
The
following persons are eligible to invest in Institutional Class
shares:
1.Institutional
investors including banks, savings institutions, credit unions and other
financial institutions, insurance companies, investment companies, investment
advisers, broker-dealers and financial advisers acting for their own accounts or
for the accounts of their clients;
2.Full-time
employees, agents, employees of agents, retirees and directors (trustees), and
members of their families (i.e.,
parent, child, spouse, domestic partner, sibling, set or adopted relationships,
grandparent, grandchild and UTMA accounts naming qualifying persons) of the
Adviser and its affiliated companies; and
3.Shareholders
investing through accounts at approved broker-dealers who act as selling agents
for the Fund.
More
about Advisor Class Shares
Advisor
Class shares are charged a 0.25% Rule 12b-1 distribution and service fee and a
shareholder servicing fee of up to 0.15%.
Rule 12b-1
Plan
The
Trust has adopted a plan pursuant to Rule 12b-1 for the Fund’s Advisor Class
that allows the Fund to pay fees for the sale, distribution and servicing of its
Advisor Class. The plan provides for a distribution and servicing fee of up
to 0.25% of the Advisor Class average daily net assets. Because these fees
are paid out over the life of the
Fund’s
Advisor Class, over time, these fees (to the extent they are accrued and paid)
will increase the cost of your investment and may cost you more than paying
other types of sales charges. Super Institutional and Institutional Class shares
of the Fund are not subject to Rule 12b-1 fees.
Shareholder
Servicing Plan
The
Trust has also adopted a Shareholder Service Plan under which the Fund’s
Institutional Class and Advisor Class shares may pay a fee of up to 0.10% and up
to 0.15%, respectively, of the average daily net assets of the Fund’s
Institutional Class and Advisor Class, for sub-administration, sub-transfer
agency and other shareholder services associated with shareholders whose shares
are held of record in omnibus, other group accounts or accounts traded through
registered securities clearing agents provided to the Fund by intermediaries
such as banks, broker-dealers, financial advisers or other financial
institutions. Because the Fund pays shareholder service fees on an ongoing
basis, your investment cost over time may be higher than paying other types of
sales charges.
The
Fund has policies and procedures in place for the monitoring of payments to
broker-dealers and other financial intermediaries for distribution-related and
non-distribution activities such as sub-transfer agent, administrative, and
other shareholder servicing services.
Additional
Payments to Dealers
If
you purchase shares of the Fund through a broker-dealer or other financial
intermediary (such as a bank), the Fund and its related companies may pay the
intermediary for the sale of Fund shares and related services. These payments
may create a conflict of interest by influencing the broker-dealer or other
intermediary and your salesperson to recommend the Fund over another investment.
Ask your salesperson or visit your financial intermediary’s website for more
information.
Distributor
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.
Service
Fees – Other Payments to Third Parties
In
addition to Rule 12b-1 fees, the Adviser, out of its own resources, and without
additional cost to the Fund or its shareholders, may provide additional cash
payments or non-cash compensation to intermediaries who sell shares of the Fund.
Such payments and compensation are in addition to Rule 12b‑1 and service
fees paid by the Fund. These additional cash payments are generally made to
intermediaries that provide shareholder servicing, marketing support and/or
access to sales meetings, sales representatives and management representatives
of the intermediary. Cash compensation may also be paid to intermediaries
for inclusion of the Fund on a sales list, in other sales programs or as an
expense reimbursement in cases where the intermediary provides shareholder
services to the Fund’s shareholders. The Adviser may also pay cash
compensation in the form of finder’s fees that vary depending on the Fund and
the dollar amount of the shares sold.
Inactive
Accounts
The
Fund is legally obligated to escheat (or transfer) abandoned property to the
appropriate state’s unclaimed property administrator in accordance with
statutory requirements. The investor’s last known address of record determines
which state has jurisdiction. 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.
Fund
Mailings
Statements
and reports that the Fund sends to you include the following:
•Confirmation
statements (after every transaction that affects your account balance or your
account registration);
•Annual
and semi-annual shareholder reports (every six months); and
•Monthly
account statements.
It
is important that the Fund maintain 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 they will determine whether
the investor’s account can legally be considered abandoned. 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.
Householding
In
an effort to decrease costs, the Fund intends to reduce the number of duplicate
prospectuses, proxy statements and other similar documents you receive by
sending only one copy of each to those addresses shared by two or more accounts
and to shareholders the Transfer Agent reasonably believes are from the same
family or household. Once implemented, if you would like to discontinue
householding for your accounts, please call toll-free at 855-538-5278 to request
individual copies of these documents. Once the Transfer Agent receives notice to
stop householding, the Transfer Agent will begin sending individual copies
thirty days after receiving your request. This policy does not apply to account
statements.
General
Policies
Some
of the following policies are mentioned above. In general, the Fund
reserves the right to:
•Refuse,
change, discontinue, or temporarily suspend account services, including
purchase, or telephone redemption privileges, for any reason;
•Reject
any purchase request for any reason. Generally, the Fund will do this if
the purchase is disruptive to the efficient management of the Fund (due to the
timing of the investment or an investor’s history of excessive
trading);
•Redeem
all shares in your account if your balance falls below the minimum investment
amount due to redemption activity. If, within 30 days of the Fund’s written
request, you have not increased your account balance, you may be required to
redeem your shares. The Fund will not require you to redeem shares if the
value of your account drops below the investment minimum due to fluctuations of
NAV;
•Delay
paying redemption proceeds for more than seven calendar days after receiving a
request under the circumstances described below; and
•Reject
any purchase or redemption request that does not contain all required
documentation.
Before
redeeming recently purchased shares, please note that if the Transfer Agent has
not yet collected payment for the shares you are redeeming, it may delay sending
the proceeds until the payment is collected, which may take up to fifteen
calendar days from the purchase date. This delay will not apply if you purchased
your shares via wire payment. Furthermore, there are certain times when you may
be unable to redeem the Fund’s shares or receive proceeds. Specifically, the
Fund may suspend the right to redeem shares or postpone the date of payment upon
redemption for more than seven calendar days for:
•any
period during which the NYSE is closed (other than customary week-end or holiday
closings) or trading on the NYSE is restricted;
•any
period during which an emergency exists as a result of which disposal by the
Fund of securities owned by it is not reasonably practicable or it is not
reasonably practicable for the Fund fairly to determine the value of its net
assets; or
•such
other periods as the SEC may permit for the protection of the Fund’s
shareholders.
If
you did not decline telephone options on the account application or in a letter
to the Fund, you may be responsible for any fraudulent telephone orders as long
as the Fund has taken reasonable precautions to verify your
identity. 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 follow 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. If an account has more than one owner or authorized person, the Fund
will accept telephone instructions from any one owner or authorized person. In
addition, once you place a telephone transaction request, it cannot be canceled
or modified after the close of regular trading on the NYSE (generally, 4:00 p.m.
Eastern time).
The
financial highlights tables are intended to help you understand the 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 Fund
(assuming reinvestment of all dividends and distributions). The information has
been audited by BBD, LLP, whose report, along with the Fund’s financial
statements, are included in the Fund’s annual report, which is available upon
request.
|
| |
Fulcrum
Diversified Absolute Return Fund |
Consolidated
Financial Highlights |
Super
Institutional Class |
For
a capital share outstanding throughout the years presented
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| For
the Year ended June 30, 2022 |
| For
the Year ended June 30, 2021 |
| For
the Year ended June 30, 2020 |
| For
the Year ended June 30, 2019 |
| For
the Year ended June 30, 2018 |
|
Net
asset value, beginning of year |
$ |
10.03 |
|
| $ |
9.78 |
|
| $ |
9.00 |
|
| $ |
9.69 |
|
| $ |
9.73 |
| |
|
|
|
|
|
|
|
|
|
| |
Income
(loss) from investment operations: |
|
|
|
|
|
|
|
|
| |
Net
investment income (loss)
(1) |
(0.08) |
|
| (0.10) |
|
| 0.02 |
|
| (0.02) |
|
| (0.08) |
| |
Net
realized and unrealized gain on investments |
0.06 |
|
| 1.08 |
|
| 0.76 |
|
| 0.10 |
|
| 0.36 |
| |
Total
from investment operations |
(0.02) |
|
| 0.98 |
|
| 0.78 |
|
| 0.08 |
|
| 0.28 |
| |
|
|
|
|
|
|
|
|
|
| |
Less
distributions: |
|
|
|
|
|
|
|
|
| |
From
net investment income |
(0.81) |
|
| (0.41) |
|
|
(0.00)∧ |
| (0.77) |
|
| (0.12) |
| |
From
net realized gain on investments |
— |
|
| (0.32) |
|
| — |
|
| — |
|
| (0.20) |
| |
Total
distributions |
(0.81) |
|
| (0.73) |
|
| (0.00) |
| (0.77) |
|
| (0.32) |
| |
|
|
|
|
|
|
|
|
|
| |
Net
asset value, end of year |
$ |
9.20 |
|
| $ |
10.03 |
|
| $ |
9.78 |
|
| $ |
9.00 |
|
| $ |
9.69 |
| |
|
|
|
|
|
|
|
|
|
| |
Total
return |
0.02 |
% |
| 10.60 |
% |
| 8.69 |
% |
| 1.21 |
% |
| 2.96 |
% |
|
|
|
|
|
|
|
|
|
|
| |
SUPPLEMENTAL
DATA AND RATIOS: |
|
|
|
|
|
|
|
|
| |
Net
assets, end of year (in thousands) |
$ |
85,504 |
|
| $ |
108,011 |
|
| $ |
167,280 |
|
| $ |
183,278 |
|
| $ |
178,578 |
| |
Ratio
of expenses to average net assets |
|
|
|
|
|
|
|
|
| |
Before
fees waived by the Adviser(2) |
1.37 |
% |
| 1.29 |
% |
| 1.16 |
% |
| 1.17 |
% |
| 1.19 |
% |
|
After
fees waived by the Adviser(2) |
1.08 |
% |
| 1.10 |
% |
| 1.06 |
% |
| 1.06 |
% |
| 1.06 |
% |
|
Ratio
of net investment income (loss) to average net assets |
|
|
|
|
|
|
|
|
| |
Before
fees waived by the Adviser (3) |
-1.14 |
% |
| -1.16 |
% |
| 0.07 |
% |
| -0.35 |
% |
| -0.97 |
% |
|
After
fees waived by the Adviser(3) |
-0.85 |
% |
| -0.97 |
% |
| 0.17 |
% |
| -0.24 |
% |
| -0.84 |
% |
|
Portfolio
turnover rate(4) |
129 |
% |
| 140 |
% |
(5) |
88 |
% |
| 81 |
% |
| 11 |
% |
|
∧
Amount
represents less than $0.01 per share.
(1)Computed
using the average shares method
(2)The
ratios of expenses to average net assets include interest and brokerage
expenses. For the periods ended June 30, 2018, June 30, 2019, June 30, 2020,
June 30, 2021 and June 30, 2022, excluding interest and brokerage expenses, the
ratios of expenses to average net assets, before fees waived by the Adviser,
were 1.18%, 1.16%, 1.15%, 1.24% and 1.33%, respectively. Excluding interest and
brokerage expenses, the ratios of expenses to average net assets, after fees
waived by the Adviser, were 1.05%, 1.05%, 1.05%, 1.05% and 1.04%,
respectively.
(3)The
ratios of net investment income (loss) to average net assets include interest
and brokerage expenses. For the periods ended June 30, 2018, June 30, 2019, June
30, 2020, June 30, 2021 and June 30, 2022, excluding interest and brokerage
expenses, the ratios of net investment income (loss) to average net assets,
before fees waived by the Adviser, were -0.96%, -0.34%, 0.08%, -1.12% and
-1.11%, respectively. Excluding interest and brokerage expenses, the ratios of
net investment income (loss) to average net assets, after fees waived by the
Adviser, were -0.83%, -0.23%, 0.18%, -0.93% and -0.82%,
respectively.
(4)Portfolio
turnover is calculated on the basis of the Fund as a whole without
distinguishing between the classes of shares issued. The ratio is calculated
including cash and long-term derivative positions, as they represent a
significant percentage of the Fund’s holdings.
(5)The
portfolio turnover ratio for the year ended June 30, 2021 has been restated to
reflect the inclusion of cash equivalents transactions deemed long-term
investments.
|
| |
Fulcrum
Diversified Absolute Return Fund |
Consolidated
Financial Highlights |
Institutional
Class |
For
a capital share outstanding throughout the years presented
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| For
the Year ended June 30, 2022 |
| For
the Year ended June 30, 2021 |
| For
the Year ended June 30, 2020 |
| For
the Year ended June 30, 2019 |
| For
the Year ended June 30, 2018 |
|
Net
asset value, beginning of year |
10.01 |
| $ |
9.76 |
|
| $ |
8.99 |
|
| $ |
9.69 |
|
| $ |
9.73 |
| |
|
|
|
|
|
|
|
|
|
| |
Income
(loss) from investment operations: |
|
|
|
|
|
|
|
|
| |
Net
investment loss (1) |
(0.06) |
|
| (0.10) |
|
|
(0.00)∧ |
| (0.03) |
|
| (0.08) |
| |
Net
realized and unrealized gain on investments |
0.03 |
| 1.08 |
| 0.77 |
|
| 0.1 |
|
| 0.36 |
| |
Total
from investment operations |
(0.03) |
| 0.98 |
| 0.77 |
|
| 0.07 |
|
| 0.28 |
| |
|
|
|
|
|
|
|
|
|
| |
Less
distributions: |
|
|
|
|
|
|
|
|
| |
From
net investment income |
(0.81) |
|
| (0.41) |
|
| — |
|
| (0.77) |
|
| (0.12) |
| |
From
net realized gain on investments |
— |
|
| (0.32) |
|
| — |
|
| — |
|
| (0.20) |
| |
Total
distributions |
(0.81) |
|
| (0.73) |
|
| — |
|
| (0.77) |
|
| (0.32) |
| |
|
|
|
|
|
|
|
|
|
| |
Net
asset value, end of year |
$ |
9.17 |
|
| $ |
10.01 |
|
| $ |
9.76 |
|
| $ |
8.99 |
|
| $ |
9.69 |
| |
|
|
|
|
|
|
|
|
|
| |
Total
return |
-0.09 |
% |
| 10.58 |
% |
| 8.57 |
% |
| 1.09 |
% |
| 2.96 |
% |
|
|
|
|
|
|
|
|
|
|
| |
SUPPLEMENTAL
DATA AND RATIOS: |
|
|
|
|
|
|
|
|
| |
Net
assets, end of year (in thousands) |
$ |
73,478 |
|
| $ |
1,990 |
|
| $ |
1,340 |
|
| $ |
2,743 |
|
| $ |
1,438 |
| |
Ratio
of expenses to average net assets |
|
|
|
|
|
|
|
|
| |
Before
fees waived by the Adviser(2) |
1.41 |
% |
| 1.32 |
% |
| 1.19 |
% |
| 1.24 |
% |
| 1.19 |
% |
|
After
fees waived by the Adviser (2) |
1.13 |
% |
| 1.11 |
% |
| 1.09 |
% |
| 1.13 |
% |
| 1.06 |
% |
|
Ratio
of net investment loss to average net assets |
|
|
|
|
|
|
|
|
| |
Before
fees waived by the Adviser
(3) |
-0.93 |
% |
| -1.19 |
% |
| -0.11 |
% |
| -0.46 |
% |
| -0.97 |
% |
|
After
fees waived by the Adviser (3) |
-0.65 |
% |
| -0.98 |
% |
| -0.01 |
% |
| -0.35 |
% |
| -0.84 |
% |
|
Portfolio
turnover rate(4) |
129 |
% |
| 140 |
% |
(5) |
88 |
% |
| 81 |
% |
| 11 |
% |
|
∧
Amount
represents less than $0.01 per share.
(1)Computed
using the average shares method
(2)The
ratios of expenses to average net assets include interest and brokerage
expenses. For the periods ended June 30, 2018, June 30, 2019, June 30, 2020,
June 30, 2021 and June 30, 2022, excluding interest and brokerage expenses, the
ratios of expenses to average net assets, before fees waived by the Adviser,
were 1.18%, 1.23%, 1.18%, 1.26% and 1.41%, respectively. Excluding interest and
brokerage expenses, the ratios of expenses to average net assets, after fees
waived by the Adviser, were 1.05%, 1.12%, 1.08%, 1.05% and 1.13%,
respectively.
(3)The
ratios of net investment loss to average net assets include interest and
brokerage expenses. For the periods ended June 30, 2018, June 30, 2019, June 30,
2020, June 30, 2021 and June 30, 2022, excluding interest and brokerage
expenses, the ratios of net investment loss to average net assets, before fees
waived by the Adviser, were -0.96%, -0.45%, -0.10%, -1.14% and -0.92%,
respectively. Excluding interest and brokerage expenses, the ratios of net
investment loss to average net assets, after fees waived by the Adviser, were
-0.83%, -0.34%, 0.00%, -0.93% and -0.64%, respectively.
(4)Portfolio
turnover is calculated on the basis of the Fund as a whole without
distinguishing between the classes of shares issued. The ratio is calculated
including cash and long-term derivative positions, as they represent a
significant percentage of the Fund’s holdings.
(5)The
portfolio turnover ratio for the year ended June 30, 2021 has been restated to
reflect the inclusion of cash equivalents transactions deemed long-term
investments.
|
| |
Fulcrum
Diversified Absolute Return Fund |
Consolidated
Financial Highlights |
Advisor
Class |
On
October 31, 2018, all outstanding shares in the Advisor Class were exchanged to
the Institutional Class.
The
Advisor Class is currently closed, but may accept new investments in the
future.
For
a capital share outstanding throughout the periods presented
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| For
the Year ended June 30, 2018 |
| For
the Year ended June 30, 2017 |
| For
the Period May 11, 2016* through June 30,
2016 |
|
Net
asset value, beginning of period |
$ |
9.70 |
|
| $ |
9.55 |
|
| $ |
9.52 |
| |
|
|
|
|
|
| |
Income
(loss) from investment operations: |
|
|
|
|
| |
Net
investment loss(1) |
(0.11) |
|
| (0.11) |
|
| (0.02) |
| |
Net
realized and unrealized gain on investments |
0.37 |
|
| 0.29 |
|
| 0.05 |
|
(7) |
Total
from investment operations |
0.26 |
|
| 0.18 |
|
| 0.03 |
| |
|
|
|
|
|
| |
Less
distributions: |
|
|
|
|
| |
From
net investment income |
(0.10) |
|
| (0.03) |
|
| — |
| |
From
net realized gain on investments |
(0.20) |
|
| — |
|
| — |
| |
Total
distributions |
(0.30) |
|
| (0.03) |
|
| — |
| |
|
|
|
|
|
| |
Net
asset value, end of period |
$ |
9.66 |
|
| $ |
9.70 |
|
| $ |
9.55 |
| |
|
|
|
|
|
| |
Total
return |
2.71 |
% |
| 1.92 |
% |
| 0.32 |
% |
(2) |
|
|
|
|
|
| |
SUPPLEMENTAL
DATA AND RATIOS: |
|
|
|
|
| |
Net
assets, end of period (in thousands) |
$ |
105 |
|
| $ |
102 |
|
| $ |
100 |
| |
Ratio
of expenses to average net assets |
|
|
|
|
| |
Before
fees waived by the Adviser(4) |
1.44 |
% |
| 1.45 |
% |
| 1.85 |
% |
(3) |
After
fees waived by the Adviser(4) |
1.31 |
% |
| 1.35 |
% |
| 1.46 |
% |
(3) |
Ratio
of net investment loss to average net assets |
|
|
|
|
| |
Before
fees waived by the Adviser
(5) |
-1.22 |
% |
| -1.23 |
% |
| -1.65 |
% |
(3) |
After
fees waived by the Adviser(5) |
-1.09 |
% |
| -1.13 |
% |
| -1.26 |
% |
(3) |
Portfolio
turnover rate(6) |
11 |
% |
| 4 |
% |
| 54 |
% |
(2) |
*Inception
date
(1)Computed
using the average shares method
(2)Not
annualized
(3)Annualized
(4)The
ratios of expenses to average net assets include interest and brokerage
expenses. For the periods ended June 30, 2016, June 30, 2017 and June 30,
2018, excluding interest and brokerage expenses, the ratios of expenses to
average net assets, before fees waived by the Adviser, were 1.84%, 1.44%, and
1.43% respectively. Excluding interest and brokerage expenses, the ratios of
expenses to average net assets, after fees waived by the Adviser, were 1.45%,
1.34%, and 1.30% respectively.
(5)The
ratios of net investment loss to average net assets include interest and
brokerage expenses. For the periods ended June 30, 2016, June 30, 2017 and
June 30, 2018, excluding interest and brokerage expenses, the ratios of net
investment loss to average net assets, before fees waived by the Adviser, were
-1.64%, -1.22%, and -1.21% respectively. Excluding interest and brokerage
expenses, the ratios of net investment loss to average net assets, after fees
waived by the Adviser, were -1.25%, -1.12%, and -1.08%
respectively.
(6)Portfolio
turnover is calculated on the basis of the Fund as a whole without
distinguishing between the classes of shares issued. The ratio is calculated
including cash and long-term derivative positions, as they represent a
significant percentage of the Fund’s holdings.
(7)The
amount of net realized and unrealized gain on investment per share for the
period ended June 30, 2016 does not accord amounts in the Consolidated
Statement of Operations due to the timing of purchases and sales of Fund shares
in relation to fluctuating market values.
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.
Investment
Adviser
Fulcrum
Asset Management LLP
Marble
Arch House
66
Seymour Street
London
W1H 5BT
United
Kingdom
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
BBD,
LLP
1835
Market Street, 3rd
Floor
Philadelphia,
Pennsylvania 19103
Legal
Counsel
Morgan,
Lewis & Bockius, LLP
1111
Pennsylvania Avenue NW
Washington,
D.C. 20004
Fulcrum
Diversified Absolute Return Fund
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
The
Fund’s annual and semi-annual reports (collectively, the “Shareholder Reports”)
provide the most recent financial reports and portfolio listings. The annual
report contains a discussion of the market conditions and investment strategies
that affected the Fund’s performance during the Fund’s last fiscal
year.
The
SAI and the Shareholder Reports are available free of charge on the Fund’s
website at www.fulcrumassetfunds.com. You can obtain a free copy of the SAI and
Shareholder Reports, request other information, or make general inquires about
the Fund by calling the Fund at 855‑538-5278 or by writing to:
Fulcrum
Diversified Absolute Return Fund
c/o
U.S. Bank Global Fund Services
P.O.
Box 701
Milwaukee,
Wisconsin 53201-0701
www.fulcrumassetfunds.com
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 811‑21422.)