The Advisors Inner Circle Fund III
Rayliant Quantamental China Equity ETF
ANNUAL REPORT | SEPTEMBER 30, 2021 |
Investment Adviser:
Rayliant Asset Management
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THE ADVISORS INNER CIRCLE FUND III |
RAYLIANT QUANTAMENTAL CHINA EQUITY ETF SEPTEMBER 30, 2021 |
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Trustees and Officers of the Advisors Inner Circle Fund III |
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The Fund files its complete schedule of investments with the Securities and Exchange Commission (the SEC) for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. The Funds Form N-PORT is available on the SECs website at https://www.sec.gov, and may be reviewed and copied at the SECs Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to Fund securities, as well as information relating to how a Fund voted proxies relating to fund securities during the most recent period ended September 30, is available (i) without charge, upon request, by calling 1-866-898-1688; and (ii) on the SECs website at https://www.sec.gov.
THE ADVISORS INNER CIRCLE FUND III |
RAYLIANT QUANTAMENTAL CHINA EQUITY ETF SEPTEMBER 30, 2021 (UNAUDITED) |
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Dear Shareholders,
We are pleased to provide the first annual report for the Rayliant Quantamental China Equity Fund, covering the period since the Funds launch on December 30, 2020, through September 30, 2021.
As anyone reading financial news over the last nine months will note, it has been an interesting time to commence investment in Chinese equities. After posting strong returns in 2020 on the heels of its first-in, first-out experience with the macroeconomic shock of COVID-19, Chinas markets faced a series of challenges in 2021, including a number of headline-grabbing hurdles of its own making, which we will discuss in greater detail below. The result has been a decline in Chinese stocks so far this year, with the benchmark CSI 300 Index, tracking onshore Chinese equities, off by 2.20% since the Funds launch. By contrast, the Fund was effectively flat over this period, declining just 0.36%, outperforming the CSI 300 by +1.84% and outperforming the MSCI China All Shares Index, which includes offshore Chinese listings, by +7.60%. This experience underscores the tremendous opportunity offered by Chinese stocksnot just as a source of growth and diversification for global investors, but also as a market in which stock pickers with a systematic approach, built on an understanding of investor behavior and informed by local fundamental insights, can add significant value. 1
The year began with a debate on the part of Chinese policymakers as to whether 2020s rapid economic rebound had actually been too fast, triggering market fears of monetary tightening, as well as anxiety over authorities plans to pursue a policy of deleveraging. Softer macro data in Q2 allayed concern over the removal of accommodative stimulus, and investors attention soon shifted to what was probably the biggest development for Chinese stocks in 2021: a series of sharp regulatory interventions, targeting the countrys tech sector and promising to impose Common Prosperity within the nations economy. Although prominent in the headlines throughout the last two quarters, this regulatory shockperhaps best understood as Chinas version
1 Note: Diversification does not ensure a profit or guarantee against a loss. The performance data quoted here represent past performance, and are not indicative of future results. The CSI 300 benchmark is a capitalization-weighted index designed to track the performance of the largest 300 stocks traded on the Shanghai and Shenzhen Stock Exchanges, represented here by the China AMC CSI 300 Index ETF (510330.SH).
1
THE ADVISORS INNER CIRCLE FUND III |
RAYLIANT QUANTAMENTAL CHINA EQUITY ETF SEPTEMBER 30, 2021 (UNAUDITED) |
of ESG, pairing a hammer-wielding visible hand to work in coordination with the markets invisible oneactually had a limited effect on the Fund, as most of the impact of regulations was on offshore China growth stocks listed in the US and Hong Kong, whereas the Funds focus is on mainland-listed A shares. The collapse of major property developer China Evergrande and widespread power shortages rounded out macro headwinds that kept Chinese equity returns in check through the first three quarters of the year. The silver lining was that such developments, alongside low inflation, virtually assured fiscal and monetary support through at least the remainder of 2021.
Against this challenging backdrop, the Funds strategy did what it was designed to do: identify high-quality companies, featuring solid fundamentals and strong growth at reasonable valuations, and exploit mispricings that arise from the behavioral bias of other investors in Chinas retail-dominated market. Indeed, the very events that prompted anxiety on the part of those tracking Chinese equities throughout 2021 created opportunity for the Fund. For example, although exposure of onshore stocks to the tech crackdown referenced above was relatively low, fear-based selling inevitably spilled into Chinas mainland market, resulting in attractive valuations for A shares in the IT sector. Bargains included some domestic chip makers who will actually benefit from state support as policymakers push semiconductor self-sufficiency in the nations ongoing technological competition with the United States. Likewise, the energy shock experienced in the latter half of Q3driven in part by Chinas effort to hit ambitious carbon emission targets and skyrocketing coal pricesultimately highlights the risks of reliance on coal power and the importance of renewables and more efficient energy utilization. Such recognition is likely to spur further growth in the nations new energy sector, an area in which Chinese firms are already taking an increasing lead. Even China Evergrandes liquidity crunch, certainly a negative for other over-levered developers, created opportunity in high-quality banks, as investors rushed to sell even those financial firms with no real exposure to property market deleveraging.
Since the Funds inception, although allocation decisions have added modestly to outperformance, the greatest driver of the Funds gains over the benchmark has been strong stock selection, with picks among Industrials, Consumer Staples, and Materials sectors adding the most value, consistent with the most attractive opportunities in China often arising in what individual investors would likely regard as boring segments of the market. The only meaningful sector-level detractor was selection among Information Technology shares. At the factor level, exposure to stocks with favorable sentiment and quality
2
THE ADVISORS INNER CIRCLE FUND III |
RAYLIANT QUANTAMENTAL CHINA EQUITY ETF SEPTEMBER 30, 2021 (UNAUDITED) |
growth provided the greatest contribution to outperformance through September. By contrast, signals related to quality struggled, particularly in the third quarter, when we observed the highest-quality firms by our models actually underperforming their low-quality counterparts. Of course, this has only made those high-quality stocks deeper bargains and, to the extent fundamentals prevail in the long runwhich investment theory, our own experience, and decades of data suggest they willthis ultimately positions the portfolio well to capture behavioral mispricings in the days to come.
Along those lines, looking ahead, we expect positions established throughout 2021 in the wake of dislocations described above to outperform as markets have time to rationally process the aforementioned threads of Chinas ongoing story. We believe such market shocks, while sometimes frustrating in the short run, create mispricings that ultimately reward investors in high-quality firms whose valuations are misunderstood by domestic retail traders and those foreign fund managers lacking knowledge of the local nuances required to spot emerging opportunities in a complex and rapidly growing market. We thank you for your allocation to the Fund and look forward to continuing as your trusted partner in China equity investing.
Sincerely,
Jason Hsu, PhD |
Phillip Wool, PhD |
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Chairman & CIO |
Managing Director |
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Rayliant Global Advisors |
Head of Investment Solutions |
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Rayliant Global Advisors |
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Mark Schlarbaum |
Vivek Viswanathan, PhD |
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Managing Director |
Senior Managing Director |
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Head of Trading & Capital Markets |
Head of Research |
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Rayliant Global Advisors |
Rayliant Global Advisors |
Definition of the Comparative Index
The MSCI China All Shares Index captures large and mid-cap representation across China A-shares, B-shares, H-shares, Red-chips, P-chips and foreign listings (e.g. ADRs). The index aims to reflect the opportunity set of China share classes listed in Hong Kong, Shanghai, Shenzhen and outside of China. It is based on the concept of the integrated MSCI China equity universe with China A-shares included.
3
THE ADVISORS INNER CIRCLE FUND III |
RAYLIANT QUANTAMENTAL CHINA EQUITY ETF SEPTEMBER 30, 2021 (UNAUDITED) |
Comparison of Change in the Value of a $10,000 Investment in the Rayliant Quantamental China Equity ETF versus the MSCI China All Shares Index (Net) (USD).
TOTAL RETURN FOR THE PERIOD ENDED SEPTEMBER 30, 2021* |
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Cumulative Inception to Date* | ||
Rayliant Quantamental China Equity ETF |
-0.36% | |
MSCI China All Shares Index (Net) (USD) |
-7.96% |
* The Rayliant Quantamental China Equity ETF commenced operations on December 30, 2020.
Fee waivers were in effect during the period; if they had not been in effect, performance would have been lower.
The performance data quoted herein represents past performance and the return and value of an investment in the Fund will fluctuate so that, when redeemed, may be worth less than its original cost.
The Funds performance assumes the reinvestment of dividends and capital gains. Index returns assume reinvestment of dividends and, unlike a funds returns, do not reflect any fees or expenses. If such fees and expenses were included in the index returns, the performance would have been lower.
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THE ADVISORS INNER CIRCLE FUND III |
RAYLIANT QUANTAMENTAL CHINA EQUITY ETF SEPTEMBER 30, 2021 (UNAUDITED) |
Please note that one cannot invest directly in an unmanaged index.
There are no assurances that the Fund will meet its stated objectives.
The Funds holdings and allocations are subject to change because it is actively managed and should not be considered recommendations to buy individual securities.
Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
See definition of comparative index on page 3.
5
THE ADVISORS INNER CIRCLE FUND III |
RAYLIANT QUANTAMENTAL CHINA EQUITY ETF SEPTEMBER 30, 2021 |
SECTOR WEIGHTINGS (Unaudited)
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Percentages are based on total investments.
SCHEDULE OF INVESTMENTS |
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COMMON STOCK 99.8% |
Shares | Value | |||||||
CHINA 99.8% |
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Communication Services 2.4% |
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Focus Media Information Technology, Cl A |
279,372 | $ | 316,858 | |||||
G-bits Network Technology Xiamen, Cl A |
10,500 | 636,573 | ||||||
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953,431 | ||||||||
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Consumer Discretionary 10.4% |
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Bafang Electric Suzhou, Cl A |
5,200 | 211,094 | ||||||
Changzhou Xingyu Automotive Lighting Systems, Cl A |
2,500 | 70,112 | ||||||
China Tourism Group Duty Free, Cl A |
9,900 | 398,822 | ||||||
Ecovacs Robotics, Cl A |
17,600 | 414,230 | ||||||
Fuyao Glass Industry Group, Cl A |
32,800 | 214,720 | ||||||
Haier Smart Home, Cl A |
220,278 | 892,512 | ||||||
Jason Furniture Hangzhou, Cl A |
13,400 | 124,574 | ||||||
Nanjing Chervon Auto Precision Technology, Cl A |
63,700 | 187,922 | ||||||
Ningbo Huaxiang Electronic, Cl A |
56,800 | 191,240 | ||||||
Oppein Home Group, Cl A |
12,400 | 251,439 | ||||||
SAIC Motor, Cl A |
26,200 | 77,455 | ||||||
TCL Technology Group, Cl A |
360,500 | 349,664 | ||||||
Yantai Tayho Advanced Materials, Cl A |
130,695 | 390,829 | ||||||
Zhejiang Cfmoto Power, Cl A |
8,600 | 191,974 | ||||||
Zhejiang Supor, Cl A |
26,000 | 188,172 | ||||||
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4,154,759 | ||||||||
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Consumer Staples 14.5% |
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By-health, Cl A |
22,300 | 97,575 | ||||||
Chongqing Brewery, Cl A |
21,200 | 431,062 |
The accompanying notes are an integral part of the financial statements.
6
THE ADVISORS INNER CIRCLE FUND III |
RAYLIANT QUANTAMENTAL CHINA EQUITY ETF SEPTEMBER 30, 2021 |
SCHEDULE OF INVESTMENTS |
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COMMON STOCK (continued) |
Shares | Value | |||||||
CHINA (continued) |
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Consumer Staples (continued) |
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Inner Mongolia Yili Industrial Group, Cl A |
52,900 | $ | 309,007 | |||||
Jiangsu Kings Luck Brewery JSC, Cl A |
17,400 | 122,129 | ||||||
Jiangsu Yanghe Brewery Joint-Stock, Cl A |
10,500 | 270,195 | ||||||
JiuGui Liquor, Cl A |
6,700 | 257,172 | ||||||
Kweichow Moutai, Cl A |
5,100 | 1,446,080 | ||||||
Luzhou Laojiao, Cl A |
4,200 | 144,195 | ||||||
Shandong Yisheng Livestock & Poultry Breeding, Cl A * |
192,861 | 326,913 | ||||||
Shanxi Xinghuacun Fen Wine Factory, Cl A |
21,373 | 1,044,807 | ||||||
Tongwei, Cl A |
41,600 | 328,340 | ||||||
Tsingtao Brewery, Cl A |
11,100 | 138,501 | ||||||
Vats Liquor Chain Store Management JSC, Cl A |
57,000 | 284,647 | ||||||
Wuliangye Yibin, Cl A |
15,700 | 533,688 | ||||||
Yifeng Pharmacy Chain, Cl A |
7,700 | 62,135 | ||||||
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5,796,446 | ||||||||
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Energy 2.3% |
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China Petroleum & Chemical, Cl A |
1,325,400 | 915,910 | ||||||
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915,910 | ||||||||
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Financials 20.5% |
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Bank of Jiangsu, Cl A |
202,300 | 182,427 | ||||||
Bank of Nanjing, Cl A |
96,100 | 134,754 | ||||||
China Merchants Bank, Cl A |
287,600 | 2,248,128 | ||||||
China Pacific Insurance Group, Cl A |
64,400 | 270,811 | ||||||
CITIC Securities, Cl A |
274,500 | 1,075,203 | ||||||
East Money Information, Cl A |
26,200 | 139,525 | ||||||
Guosen Securities, Cl A |
309,900 | 567,558 | ||||||
Guotai Junan Securities, Cl A |
152,600 | 421,577 | ||||||
Industrial Bank, Cl A |
304,900 | 864,529 | ||||||
Orient Securities, Cl A |
42,100 | 98,694 | ||||||
Ping An Bank, Cl A |
243,200 | 675,639 | ||||||
Ping An Insurance Group of China, Cl A |
185,800 | 1,392,204 | ||||||
Postal Savings Bank of China, Cl A |
105,300 | 82,883 | ||||||
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8,153,932 | ||||||||
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Health Care 10.7% |
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Beijing Wantai Biological Pharmacy Enterprise, Cl A |
2,900 | 99,752 | ||||||
Chongqing Zhifei Biological Products, Cl A |
29,200 | 719,323 | ||||||
Guangzhou Kingmed Diagnostics Group, Cl A |
4,601 | 73,014 | ||||||
Hubei Jumpcan Pharmaceutical, Cl A |
159,250 | 412,313 |
The accompanying notes are an integral part of the financial statements.
7
THE ADVISORS INNER CIRCLE FUND III |
RAYLIANT QUANTAMENTAL CHINA EQUITY ETF SEPTEMBER 30, 2021 |
SCHEDULE OF INVESTMENTS |
||||
COMMON STOCK (continued) |
Shares | Value | |||||||
CHINA (continued) |
||||||||
Health Care (continued) |
||||||||
Jiangsu Nhwa Pharmaceutical, Cl A |
45,200 | $ | 97,908 | |||||
Jointown Pharmaceutical Group, Cl A |
51,500 | 123,523 | ||||||
Qingdao Haier Biomedical, Cl A |
4,307 | 75,743 | ||||||
Shanghai Pharmaceuticals Holding, Cl A |
135,000 | 400,147 | ||||||
Shenyang Xingqi Pharmaceutical, Cl A |
8,400 | 166,204 | ||||||
Shenzhen Mindray Bio-Medical Electronics, Cl A |
8,900 | 531,490 | ||||||
Sonoscape Medical, Cl A |
59,200 | 371,490 | ||||||
WuXi AppTec, Cl A |
38,640 | 914,811 | ||||||
Zhejiang Orient Gene Biotech, Cl A |
11,900 | 288,576 | ||||||
|
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4,274,294 | ||||||||
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Industrials 13.9% |
||||||||
China International Marine Containers Group, Cl A |
184,400 | 509,429 | ||||||
China State Construction Engineering, Cl A |
699,680 | 520,369 | ||||||
Contemporary Amperex Technology, Cl A |
7,000 | 570,206 | ||||||
COSCO SHIPPING Holdings, Cl A * |
194,612 | 521,056 | ||||||
CTS International Logistics, Cl A |
32,200 | 63,462 | ||||||
Eve Energy, Cl A |
5,400 | 82,857 | ||||||
Gongniu Group, Cl A |
7,800 | 197,296 | ||||||
NARI Technology, Cl A |
35,400 | 196,965 | ||||||
Shanghai International Port Group, Cl A |
524,700 | 495,107 | ||||||
Shanghai M&G Stationery, Cl A |
19,400 | 204,340 | ||||||
Shenzhen Inovance Technology, Cl A |
36,179 | 353,157 | ||||||
Sichuan Road & Bridge, Cl A (A)(B) |
120,300 | 157,318 | ||||||
Weichai Power, Cl A |
107,200 | 285,025 | ||||||
Xiamen C & D, Cl A |
224,400 | 290,670 | ||||||
Xiamen ITG Group, Cl A |
152,100 | 183,821 | ||||||
Xiamen Xiangyu, Cl A |
497,210 | 591,660 | ||||||
Zhuzhou Kibing Group, Cl A |
112,400 | 301,812 | ||||||
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5,524,550 | ||||||||
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Information Technology 13.6% |
||||||||
All Winner Technology, Cl A |
25,900 | 290,944 | ||||||
Beijing Yuanliu Hongyuan Electronic Technology, Cl A |
5,500 | 128,680 | ||||||
BOE Technology Group, Cl A |
1,003,400 | 785,121 | ||||||
Fujian Star-net Communication, Cl A |
69,900 | 267,946 | ||||||
Gigadevice Semiconductor Beijing, Cl A |
28,910 | 649,467 | ||||||
Hundsun Technologies, Cl A |
62,577 | 555,378 | ||||||
SG Micro, Cl A |
1,600 | 82,487 |
The accompanying notes are an integral part of the financial statements.
8
THE ADVISORS INNER CIRCLE FUND III |
RAYLIANT QUANTAMENTAL CHINA EQUITY ETF SEPTEMBER 30, 2021 |
SCHEDULE OF INVESTMENTS |
||||
COMMON STOCK (continued) |
Shares | Value | |||||||
CHINA (continued) |
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Information Technology (continued) |
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Shanghai Baosight Software, Cl A |
23,060 | $ | 235,817 | |||||
Shanghai Friendess Electronic Technology, Cl A |
1,400 | 95,158 | ||||||
Shengyi Technology, Cl A |
119,000 | 399,371 | ||||||
Sino Wealth Electronic, Cl A |
24,911 | 240,812 | ||||||
Tianjin Zhonghuan Semiconductor, Cl A |
50,400 | 358,204 | ||||||
Unigroup Guoxin Microelectronics, Cl A |
11,600 | 371,689 | ||||||
Will Semiconductor Shanghai, Cl A |
12,300 | 462,365 | ||||||
Wuxi Lead Intelligent Equipment, Cl A |
25,000 | 270,452 | ||||||
Yealink Network Technology, Cl A |
16,698 | 210,213 | ||||||
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5,404,104 | ||||||||
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Materials 10.1% |
||||||||
Aluminum Corp of China, Cl A * |
281,500 | 338,027 | ||||||
Angang Steel, Cl A |
229,530 | 171,063 | ||||||
Baoshan Iron & Steel, Cl A |
292,900 | 394,830 | ||||||
China Jushi, Cl A |
85,611 | 233,195 | ||||||
Huafon Chemical, Cl A |
116,900 | 220,433 | ||||||
LB Group, Cl A |
46,800 | 208,185 | ||||||
Luxi Chemical Group, Cl A |
36,300 | 105,739 | ||||||
Shandong Hualu Hengsheng Chemical, Cl A |
129,650 | 661,508 | ||||||
Shandong Sun Paper Industry JSC, Cl A |
56,700 | 105,072 | ||||||
Shanghai Putailai New Energy Technology, Cl A |
11,500 | 306,477 | ||||||
Sinoma Science & Technology, Cl A |
16,600 | 91,051 | ||||||
Wanhua Chemical Group, Cl A |
38,400 | 635,141 | ||||||
Zhejiang Huayou Cobalt, Cl A |
7,400 | 118,556 | ||||||
Zhejiang Wansheng, Cl A |
37,400 | 139,077 | ||||||
Zijin Mining Group, Cl A |
203,200 | 317,677 | ||||||
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4,046,031 | ||||||||
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Real Estate 0.7% |
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Greenland Holdings, Cl A |
394,940 | 287,607 | ||||||
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287,607 | ||||||||
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Utilities 0.7% |
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ENN Natural Gas, Cl A |
98,900 | 280,120 | ||||||
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280,120 | ||||||||
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TOTAL COMMON STOCK | ||||||||
(Cost $41,305,293) |
|
39,791,184 | ||||||
|
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|||||||
TOTAL INVESTMENTS 99.8% | ||||||||
(Cost $41,305,293) |
|
$ | 39,791,184 | |||||
|
|
The accompanying notes are an integral part of the financial statements.
9
THE ADVISORS INNER CIRCLE FUND III |
RAYLIANT QUANTAMENTAL CHINA EQUITY ETF SEPTEMBER 30, 2021 |
Percentages are based on Net Assets of $39,854,408.
* |
Non-income producing security. |
(A) |
Level 3 security in accordance with fair value hierarchy. |
(B) |
Securities considered illiquid. The total value of such securities as of September 30, 2021 was $157,318 and represented 0.4% of the Net Assets of the Fund. |
Cl Class
JSC Joint Stock Company
A list of open forward foreign currency contracts held by the Fund at September 30, 2021, is as follows:
Counterparty |
Settlement
Date |
Currency
to Deliver |
Currency
To Receive |
Unrealized
Depreciation |
||||||||||||||||||||
Brown Brothers Harriman |
10/08/21 | USD | 1,890 | CNY | 292 | $ | (1) | |||||||||||||||||
|
|
|||||||||||||||||||||||
$ | (1) | |||||||||||||||||||||||
|
|
The following is a summary of the inputs used as of September 30, 2021 when valuing the Funds investments:
Investments in Securities | Level 1 | Level 2 | Level 3 (1) | Total | ||||||||||||
Common Stock |
$ | 39,633,866 | $ | | $ | 157,318 | $ | 39,791,184 | ||||||||
|
|
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Total Investments in Securities |
$ | 39,633,866 | $ | | $ | 157,318 | $ | 39,791,184 | ||||||||
|
|
|||||||||||||||
Other Financial Instruments | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Forward Foreign Currency Contracts* |
||||||||||||||||
Unrealized Depreciation |
| (1) | | (1) | ||||||||||||
|
|
|||||||||||||||
Total Other Financial Instruments |
$ | | $ | (1) | $ | | $ | (1) | ||||||||
|
|
(1) A reconciliation of Level 3 investments and disclosures of significant unobservable inputs are presented when the Fund has a significant amount of Level 3 investments at the beginning and/or end of the period in relation to Net Assets. Management has concluded that Level 3 investments are not material in relation to Net Assets.
* Forwards contracts are valued at unrealized depreciation on the instrument.
For the period ended September 30, 2021, the transfers in and out of Level 3 were due to changes in the availability of observable inputs to determine fair value.
For more information on valuation inputs, see Note 2 Significant Accounting Policies in the Notes to Financial Statements.
Amounts designated as are $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
10
THE ADVISORS INNER CIRCLE FUND III |
RAYLIANT QUANTAMENTAL CHINA EQUITY ETF SEPTEMBER 30, 2021 |
STATEMENT OF ASSETS AND LIABILIITES
|
Assets: |
||||
Investments, at Value (Cost $41,305,293) |
$ | 39,791,184 | ||
Foreign Currency, at Value (Cost $4,606) |
4,619 | |||
Cash |
109,273 | |||
Receivable from Investment Adviser |
20,814 | |||
Deferred Offering Costs (Note 2) |
12,978 | |||
Due from Broker |
3,328 | |||
|
|
|||
Total Assets |
39,942,196 | |||
|
|
|||
Liabilities: |
||||
Audit Fees Payable |
25,000 | |||
Due to Custodian |
21,865 | |||
Payable to Administrator |
10,274 | |||
Legal Fees Payable |
9,073 | |||
Printing Fees Payable |
6,227 | |||
Transfer Agent Fees Payable |
5,000 | |||
Chief Compliance Officer Fees Payable |
2,477 | |||
Payable to Trustees |
77 | |||
Unrealized Loss on Forward Foreign Currency Contracts |
1 | |||
Other Accrued Expenses and Other Payables |
7,794 | |||
|
|
|||
Total Liabilities |
87,788 | |||
|
|
|||
Net Assets |
$ | 39,854,408 | ||
|
|
|||
Net Assets Consist of: |
||||
Paid-in Capital |
$ | 43,194,027 | ||
Total Accumulated Loss |
(3,339,619) | |||
|
|
|||
Net Assets |
$ | 39,854,408 | ||
|
|
|||
Class 1 Class Shares: |
||||
Net Assets |
$ | 39,854,408 | ||
Outstanding Shares of beneficial interest
|
1,600,000 | |||
|
|
|||
Net Asset Value, Offering and Redemption Price Per Share |
$ | 24.91 | ||
|
|
The accompanying notes are an integral part of the financial statements.
11
THE ADVISORS INNER CIRCLE FUND III |
RAYLIANT QUANTAMENTAL CHINA EQUITY ETF FOR THE PERIOD ENDED SEPTEMBER 30, 2021* |
|
Investment Income: |
||||
Dividends |
$ | 508,934 | ||
Less: Foreign Taxes Withheld |
(51,712) | |||
|
|
|||
Total Investment Income |
457,222 | |||
|
|
|||
Expenses: |
||||
Investment Advisory Fees (Note 6) |
98,693 | |||
Administration Fees (Note 5) |
94,694 | |||
Trustees Fees |
14,160 | |||
Chief Compliance Officer Fees (Note 4) |
6,208 | |||
Custodian Fees |
41,055 | |||
Offering Costs (Note 2) |
36,007 | |||
Printing Fees |
25,000 | |||
Audit Fees |
25,000 | |||
Legal Fees |
24,000 | |||
Registration and Filing Fees |
12,900 | |||
Insurance Fees |
11,375 | |||
Transfer Agent Fees |
9,000 | |||
Pricing Fees |
3,125 | |||
|
|
|||
Total Expenses |
401,217 | |||
|
|
|||
Less: |
||||
Waiver of Investment Advisory Fees |
(98,693) | |||
Waiver - Reimbursement from Adviser |
(170,933) | |||
|
|
|||
Net Expenses |
131,591 | |||
|
|
|||
Net Investment Income |
325,631 | |||
|
|
|||
Net Realized Gain (Loss) on: |
||||
Investments |
(2,182,932) | |||
Foreign Currency Transactions |
31,778 | |||
|
|
|||
Net Realized Loss |
(2,151,154) | |||
|
|
|||
Net Change in Unrealized Appreciation (Depreciation) on: |
||||
Investments |
(1,514,109) | |||
Foreign Currency Translation |
13 | |||
|
|
|||
Net Change in Unrealized Depreciation |
(1,514,096) | |||
|
|
|||
Net Realized and Unrealized Loss |
(3,665,250) | |||
|
|
|||
Net Decrease in Net Assets Resulting from Operations |
$ | (3,339,619) | ||
|
|
*Commenced |
operations on December 30, 2020 |
The accompanying notes are an integral part of the financial statements.
12
THE ADVISORS INNER CIRCLE FUND III |
RAYLIANT QUANTAMENTAL CHINA EQUITY ETF |
STATEMENT OF CHANGES IN NET ASSETS
|
Period
Ended September 30, 2021* |
||||
Operations: |
||||
Net Investment Income |
$ | 325,631 | ||
Net Realized Loss on Investments, and Foreign Currency Transactions |
(2,151,154) | |||
Net Change in Unrealized Depreciation on Investments, and Foreign Currency Transactions |
(1,514,096) | |||
|
|
|||
Net Decrease in Net Assets Resulting From Operations |
(3,339,619) | |||
|
|
|||
Capital Share Transactions: |
||||
Shares |
||||
Issued |
43,194,027 | |||
|
|
|||
Net Increase in Net Assets From Capital Share Transactions |
43,194,027 | |||
|
|
|||
Total Increase in Net Assets |
39,854,408 | |||
|
|
|||
Net Assets: |
||||
Beginning of Period |
| |||
|
|
|||
End of Period |
$ | 39,854,408 | ||
|
|
|||
Shares Transactions: |
||||
Shares |
||||
Issued |
1,600,000 | |||
|
|
|||
Net Increase in Shares Outstanding From Share Transactions |
1,600,000 | |||
|
|
*Commenced |
operations on December 30, 2020 |
The accompanying notes are an integral part of the financial statements.
13
THE ADVISORS INNER CIRCLE FUND III |
RAYLIANT QUANTAMENTAL CHINA EQUITY ETF SEPTEMBER 30, 2021 |
|
Selected Per Share Data & Ratios
For a Share Outstanding Throughout the Period |
Class 1 Shares |
||||
Period Ended
September 30, 2021* |
||||
Net Asset Value, Beginning of Period |
$ | 25.00 | ||
|
|
|||
Income (Loss) from Investment Operations: |
||||
Net Investment Income |
0.39 | |||
Net Realized and Unrealized Loss |
(0.48) | |||
|
|
|||
Total from Investment Operations |
(0.09) | |||
|
|
|||
Net Asset Value, End of Period |
$ | 24.91 | ||
|
|
|||
Total Return |
(0.36)% | |||
|
|
|||
Ratios and Supplemental Data |
||||
Net Assets, End of Period (Thousands) |
$39,854 | |||
Ratio of Expenses to Average Net Assets |
0.80% | |||
Ratio of Expenses to Average Net Assets (Excluding Waivers and Reimbursements) |
2.43% | |||
Ratio of Net Investment Income to Average Net Assets |
1.97% | |||
Portfolio Turnover Rate§ |
199% |
* |
Commenced operations on December 30, 2020. |
|
Per share calculations were performed using average shares for the period. |
|
Annualized |
|
Total return is for the period indicated and has not been annualized. Return shown does not reflect the deductions of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. |
§ |
Portfolio turnover is for the period indicated and has not been annualized. |
The accompanying notes are an integral part of the financial statements.
14
THE ADVISORS INNER CIRCLE FUND III |
RAYLIANT QUANTAMENTAL CHINA EQUITY ETF SEPTEMBER 30, 2021 |
|
1. Organization:
The Advisors Inner Circle Fund III (the Trust) is organized as a Delaware statutory trust under a Declaration of Trust dated December 4, 2013. The Trust is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company with 47 funds. The financial statements herein are those of the Rayliant Quantamental China Equity Fund (the Fund). The investment objective of the Fund is to seek long-term capital appreciation. The Fund is classified as a non-diversified investment company. Rayliant Asset Management serves as the Funds investment adviser (the Adviser). The Adviser has registered with the National Futures Association as a Commodity Pool Operator under the Commodities Exchange Act with respect to the Fund. The Fund commenced operations on December 30, 2020. The financial statements of the remaining funds of the Trust are presented separately. The assets of each fund are segregated, and a shareholders interest is limited to the fund in which shares are held.
2. Significant Accounting Policies:
The following are significant accounting policies, which are consistently followed in the preparation of the financial statements of the Fund. The Fund is an investment company that applies the accounting and reporting guidance issued in Topic 946 by the U.S. Financial Accounting Standards Board (FASB).
Use of Estimates The preparation of financial statements, in conformity with U.S. generally accepted accounting principles (U.S. GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates and such differences could be material.
Security Valuation Securities listed on a securities exchange, market or automated quotation system for which quotations are readily available (except for securities traded on NASDAQ), including securities traded over the counter, are valued at the last quoted sale price on an exchange or market (foreign or domestic) on which they are traded or, if there is no such reported sale on the valuation date, at the most recent quoted bid
15
THE ADVISORS INNER CIRCLE FUND III |
RAYLIANT QUANTAMENTAL CHINA EQUITY ETF SEPTEMBER 30, 2021 |
price. For securities traded on NASDAQ, the NASDAQ official closing price will be used. The prices for foreign securities are reported in local currency and converted to U.S. dollars using currency exchange rates. Prices for most securities held in the Fund are provided daily by recognized independent pricing agents. If a security price cannot be obtained from an independent, third-party pricing agent, the Fund seeks to obtain a bid price from at least one independent broker.
Securities for which market prices are not readily available are valued in accordance with Fair Value Procedures established by the Funds Board of Trustees (the Board). The Funds Fair Value Procedures are implemented through a Fair Value Committee (the Committee) designated by the Board. Some of the more common reasons that may necessitate that a security be valued using Fair Value Procedures include: the securitys trading has been halted or suspended; the security has been de-listed from a national exchange; the securitys primary trading market is temporarily closed at a time when under normal conditions it would be open; the security has not been traded for an extended period of time; the securitys primary pricing source is not able or willing to provide a price; or trading of the security is subject to local government imposed restrictions. When a security is valued in accordance with the Fair Value Procedures, the Committee will determine the value after taking into consideration relevant information reasonably available to the Committee.
For securities that principally trade on a foreign market or exchange, a significant gap in time can exist between the time of a particular securitys last trade and the time at which the Fund calculates its net asset value. The closing prices of such securities may no longer reflect their market value at the time the Fund calculates its net asset value if an event that could materially affect the value of those securities (a Significant Event) has occurred between the time of the securitys last close and the time that the Fund calculates net asset value. A Significant Event may relate to a single issuer or to an entire market sector. If the Adviser of the Fund becomes aware of a Significant Event that has occurred with respect to a security or group of securities after the closing of the exchange or market on which the security or securities principally trade, but before the time at which the Fund calculates its net asset value, it may request that a Committee meeting be called.
In accordance with U.S. GAAP, the Fund discloses fair value of its investments in a hierarchy that prioritizes the inputs to valuation techniques used to measure the fair value. The objective of a fair value
16
THE ADVISORS INNER CIRCLE FUND III |
RAYLIANT QUANTAMENTAL CHINA EQUITY ETF SEPTEMBER 30, 2021 |
measurement is to determine 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 (an exit price). Accordingly, the fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:
|
Level 1 Unadjusted quoted prices in active markets for identical, unrestricted assets or liabilities that the Fund has the ability to access at the measurement date; |
|
Level 2 Other significant observable inputs (includes quoted prices for similar securities, interest rates, prepayment speeds, credit risk, referenced indices, quoted prices in inactive markets, adjusted quoted prices in active markets, adjusted quoted prices on foreign equity securities that were adjusted in accordance with pricing procedures approved by the Board, etc.); and |
|
Level 3 Prices, inputs or exotic modeling techniques which are both significant to the fair value measurement and unobservable (supported by little or no market activity). |
Investments are classified within the level of the lowest significant input considered in determining fair value. Investments classified within Level 3 whose fair value measurement considers several inputs may include Level 1 or Level 2 inputs as components of the overall fair value measurement.
For the period ended September 30, 2021, there have been no significant changes to the Funds fair valuation methodology.
Federal Income Taxes It is the Funds intention to continue to qualify as a regulated investment company for Federal income tax purposes by complying with the appropriate provisions of Subchapter M of the Internal Revenue Code of 1986, as amended. Accordingly, no provision for Federal income taxes has been made in the financial statements.
The Fund evaluates tax positions taken or expected to be taken in the course of preparing the Funds tax returns to determine whether it is more-likely than-not (i.e., greater than 50-percent) that each tax position
17
THE ADVISORS INNER CIRCLE FUND III |
RAYLIANT QUANTAMENTAL CHINA EQUITY ETF SEPTEMBER 30, 2021 |
will be sustained upon examination by a taxing authority based on the technical merits of the position. Tax positions not deemed to meet the more-likely-than-not threshold are recorded as a tax benefit or expense in the current year. The Fund did not record any tax provision in the current period. However, managements conclusions regarding tax positions taken may be subject to review and adjustment at a later date based on factors including, but not limited to, examination by tax authorities (i.e., from commencement of operations, as applicable), on-going analysis of and changes to tax laws, regulations and interpretations thereof.
As of and during the period ended September 30, 2021, the Fund did not have a liability for any unrecognized tax benefits. The Fund recognizes interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the Statement of Operations. During the period, the Fund did not incur any interest or penalties.
Security Transactions and Investment Income Security transactions are accounted for on trade date. Costs used in determining realized gains and losses on the sale of investment securities are based on the specific identification method. Dividend income and expense are recorded on the ex-dividend date. Dividend income is recorded net of unrecoverable withholding tax. Interest income is recognized on the accrual basis from settlement date. Certain dividends and expenses from foreign securities will be recorded as soon as the Fund is informed of the dividend if such information is obtained subsequent to the ex-dividend date.
Foreign Currency Translation The books and records of the Fund are maintained in U.S. dollars. Investment securities and other assets and liabilities denominated in a foreign currency are translated into U.S. dollars on the date of valuation. The Fund does not isolate that portion of realized or unrealized gains and losses resulting from changes in the foreign exchange rate from fluctuations arising from changes in the market prices of the securities. These gains and losses are included in net realized and unrealized gains and losses on investments on the Statement of Operations. Net realized and unrealized gains and losses on foreign currency transactions represent net foreign exchange gains or losses from foreign currency exchange contracts, disposition of foreign currencies, currency gains or losses realized between trade and settlement dates on securities transactions and the difference between the amount of the investment income and foreign withholding taxes recorded on the Funds books and the U.S. dollar equivalent of the amounts actually received or paid.
18
THE ADVISORS INNER CIRCLE FUND III |
RAYLIANT QUANTAMENTAL CHINA EQUITY ETF SEPTEMBER 30, 2021 |
Forward Foreign Currency Exchange Contracts The Fund may enter into forward foreign currency exchange contracts to protect the value of securities held and related receivables and payables against changes in future foreign exchange rates. A forward currency contract is an agreement between two parties to buy and sell currency at a set price on a future date. The market value of the contract will fluctuate with changes in currency exchange rates. The contract is marked-to-market daily using the current forward rate and the change in market value is recorded by the Fund as unrealized gain or loss. The Fund recognizes realized gains or losses when the contract is closed, equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. Any realized or unrealized gains (loss) during the period are presented on the Statement of Operations. Risks may arise from unanticipated movements in the value of a foreign currency relative to the U.S. dollar. Risks may also arise upon entering into these contracts from the potential inability of counterparties to meet the terms of their contracts and are generally limited to the amount of unrealized gain on the contracts at the date of default.
Classes Class specific expenses are borne by that class of shares. Income, realized and unrealized gains (losses), and non-class specific expenses are allocated to the respective class on basis of relative daily net assets.
Expenses Most expenses of the Trust can be directly attributed to a particular fund. Expenses which cannot be directly attributed to a particular fund are apportioned among the funds of the Trust based on the number of funds and/or relative net assets.
Dividends and Distributions to Shareholders Any net realized capital gains are distributed annually. All distributions are recorded on ex-dividend date.
Offering Costs During the period ended September 30, 2021, the Fund commenced operations and incurred offering costs in the amount of $48,985 and expensed $36,007, which are being amortized to expense over a twelve month period. As of September 30, 2021, the Fund had $12,978 remaining to be amortized.
19
THE ADVISORS INNER CIRCLE FUND III |
RAYLIANT QUANTAMENTAL CHINA EQUITY ETF SEPTEMBER 30, 2021 |
3. Offsetting Assets and Liabilities:
The Fund is required to disclose the impact of offsetting assets and liabilities represented in the Statement of Assets and Liabilities to enable users of the financial statements to evaluate the effect or potential effect of netting arrangements on its financial position for recognized assets and liabilities. These recognized assets and liabilities are financial instruments and derivative instruments that are either subject to an enforceable master netting arrangement or similar agreement or meet the following right of setoff criteria: the amounts owed by the Fund to another party are determinable, the Fund has the right to set off the amounts owed with the amounts owed by the other party, the Fund intends to set off, and the Funds right of setoff is enforceable at law.
As of September 30, 2021, the Funds financial instruments and derivative instruments are not subject to a master netting arrangement.
4. Transactions with Affiliates:
Certain officers of the Trust are also employees of SEI Investments Global Funds Services (the Administrator), a wholly owned subsidiary of SEI Investments Company, and/or SEI Investments Distribution Co. (the Distributor). Such officers are paid no fees by the Trust, other than the Chief Compliance Officer (CCO) as described below, for serving as officers of the Trust.
The services provided by the (CCO) and his staff are paid for by the Trust as incurred. The services include regulatory oversight of the Trusts Advisors and service providers as required by SEC regulations. The CCOs services and fees have been approved by and are reviewed by the Board.
5. Administration, Custodian and Transfer Agent Agreements:
The Fund and the Administrator are parties to an Administration Agreement under which the Administrator provides administration services to the Fund. For these services, the Administrator is paid an asset based fee, which will vary depending on the number of share classes and the average daily net assets of the Fund. For the period ended September 30, 2021, the Fund incurred $94,694 for these services.
Brown Brothers Harriman & Co. acts as custodian (the Custodian) for the Fund. The Custodian plays no role in determining the investment policies of the Fund or which securities are to be purchased or sold by the Fund.
20
THE ADVISORS INNER CIRCLE FUND III |
RAYLIANT QUANTAMENTAL CHINA EQUITY ETF SEPTEMBER 30, 2021 |
Brown Brothers Harriman & Co. serves as the transfer agent and dividend disbursing agent for the Fund under a transfer agency agreement with the Trust.
6. Investment Advisory Agreement:
Under the terms of an investment advisory agreement, the Adviser provides investment advisory services to the Fund at a fee calculated at an annual rate of 0.60% of the Funds average daily net assets. The Adviser has contractually agreed to reduce fees and reimburse expenses to the extent necessary to keep total annual fund operating expenses after fee reductions and/or expense reimbursements (excluding any class specific expenses, dividend and interest expenses on securities sold short, interest, taxes, acquired fund fee expenses and non-routine expenses) from exceeding 0.80% with respect to Class 1 Shares of the Funds average daily net assets until January 31, 2022 (the Expense Limitation). The Adviser may recover all or a portion of its fee reductions or expense reimbursements, up to the expense cap in place at the time the expenses were waived, within a three-year period from the year in which it reduced its fee or reimbursed expenses if the Funds total annual fund operating expenses are below the Expense Limitation. This agreement may be terminated by the Board for any reason at any time, or by the Adviser, upon ninety (90) days prior written notice to the Trust, effective as of the close of business on January 31, 2022.
For the period ended September 30, 2021, the Adviser waived fees of $269,626 subject to recapture that expire in 2024.
7. Investment Transactions:
For the period ended September 30, 2021, the Fund made purchases of $85,649,097 and sales of $42,160,872 in investment securities other than long-term U.S. Government and short-term securities.
8. Federal Tax Information:
The amount and character of income and capital gain distributions to be paid, if any, are determined in accordance with Federal income tax regulations, which may differ from U.S. GAAP. As a result, net investment income (loss) and net realized gain/(loss) on investment transactions for a reporting period may differ significantly from distributions during the year. Book/tax differences may be temporary or permanent. The permanent differences are primarily attributed to different treatment for gains and losses on foreign currency transactions.
21
THE ADVISORS INNER CIRCLE FUND III |
RAYLIANT QUANTAMENTAL CHINA EQUITY ETF SEPTEMBER 30, 2021 |
The fund has no permanent differences.
As of September 30, 2021, the components of Distributable Earnings on a tax basis were as follows:
Undistributed Ordinary Income |
$ | 357,409 | ||
Capital Loss Carryforward Short Term |
(1,456,302 | ) | ||
Unrealized Depreciation |
(2,240,739 | ) | ||
Other Temporary Differences |
13 | |||
|
|
|
||
Total Accumulated Loss |
$ | (3,339,619 | ) | |
|
|
|
Fund may use its tax basis capital loss carryforward listed below to offset taxable capital gains realized in subsequent years for federal income tax purposes. If a Fund incurs or has incurred net capital losses in taxable years beginning after December 22, 2010 (post-RIC Mod losses), those losses will be carried forward to one or more subsequent taxable years without expiration; any such carryforward losses will retain their character as short-term or long-term. As of September 30, 2021, the Fund has the following post-RIC mod loss, which do not expire:
Short-Term
Loss |
Long-Term
Loss |
Total | ||||||||||
$ | 1,456,302 | $ | | $ | 1,456,302 | |||||||
Rayliant Quantamental China Equity ETF |
For Federal income tax purposes, the difference between Federal tax cost and book cost primarily relate to wash sales. The Federal tax cost and aggregate gross unrealized apprecition and depreciation for investments held by the Fund at September 30, 2021 were as follows:
Federal Tax Cost |
Aggregate Gross
Unrealized Appreciation |
Aggregate Gross
Unrealized Depreciation |
Net Unrealized
Depreciation |
|||||||||
$ 42,031,923 | $ | 1,299,265 | $ | (3,540,004) | $ | (2,240,739) |
9. Concentration of Risks:
As with all mutual funds, there is no guarantee that the Fund will achieve its investment objective. You could lose money by investing in the Fund. A Fund share is not a bank deposit and it is not insured or guaranteed by the FDIC or any government agency. The principal risk factors affecting shareholders investments in the Fund are set forth below.
22
THE ADVISORS INNER CIRCLE FUND III |
RAYLIANT QUANTAMENTAL CHINA EQUITY ETF SEPTEMBER 30, 2021 |
Risk of Investing in China The Chinese economy is generally considered an emerging market and demonstrates significantly higher volatility from time to time in comparison to developed markets. China may be subject to considerable degrees of economic, political and social instability. The Chinese economy is also export-driven and highly reliant on trade. Adverse changes in the economic conditions of its primary trading partners such as the United States, Japan and South Korea would adversely impact the Chinese economy and the relevant Fund investments. The economy of China also differs from the United States economy in such respects as structure, general development, government involvement, wealth distribution, rate of inflation, growth rate, allocation of resources and capital reinvestment, among others. Under Chinas political and economic system, the central government may exercise control over the Chinese economy through administrative regulation and/or state ownership. In addition, expropriation, including nationalization, confiscatory taxation, political, economic or social instability or other developments could adversely affect and diminish the values of the Chinese companies in which the Fund invests, however, over the past few decades, the Chinese government has undertaken reform of economic and market practices and has expanded the sphere of private ownership of property in China.
The Fund may invest in shares of Chinese companies traded on stock markets in China or Hong Kong. These stock markets may experience high levels of volatility from time to time. The Hong Kong stock market may behave differently from the China stock markets and there may be little to no correlation between the performance of the Hong Kong stock market and the China stock markets.
Equity Market Risk The risk that stock prices will fall over short or extended periods of time, sometimes rapidly and unpredictably. The value of equity securities will fluctuate in response to factors affecting a particular company, as well as broader market and economic conditions. Broad movements in financial markets may adversely affect the price of the Funds investments, regardless of how well the companies in which the Fund invests perform. In addition, the impact of any epidemic, pandemic or natural disaster, or widespread fear that such events may occur, could negatively affect the global economy, as well as the economies of individual countries, the financial performance of individual companies and sectors, and the markets in general in significant and unforeseen ways. Any such impact could adversely affect the prices and liquidity of the securities and other instruments in which the Fund invests, which in turn could negatively impact the Funds performance and cause losses on your investment in the Fund. Moreover, in the event of a
23
THE ADVISORS INNER CIRCLE FUND III |
RAYLIANT QUANTAMENTAL CHINA EQUITY ETF SEPTEMBER 30, 2021 |
companys bankruptcy, claims of certain creditors, including bondholders, will have priority over claims of common stock holders such as the Fund.
Stock Connect Investing Risk Trading through Stock Connect is subject to a number of restrictions that may affect the Funds investments and returns. For example, trading through Stock Connect is subject to daily quotas that limit the maximum daily net purchases on any particular day, which may restrict or preclude the Funds ability to invest in China A Shares through Stock Connect. In addition, China A Shares purchased through Stock Connect generally may not be sold, purchased or otherwise transferred other than through Stock Connect in accordance with applicable rules. A primary feature of Stock Connect is the application of the home markets laws and rules applicable to investors in China A Shares. Therefore, the Funds investments in China A Shares purchased through Stock Connect are generally subject to Chinese securities regulations and listing rules, among other restrictions. While overseas investors currently are exempt from paying capital gains or value added taxes on income and gains from investments in China A Shares purchased through Stock Connect, these tax rules could be changed, which could result in unexpected tax liabilities for the Fund. Stock Connect will only operate on days when both the China and Hong Kong markets are open for trading and when banks in both markets are open on the corresponding settlement days. There may be occasions when the Fund may be subject to the risk of price fluctuations of China A Shares during the time when Stock Connect is not trading. Moreover, further developments to Stock Connect are likely and there can be no assurance as to the programs continued existence or whether future developments regarding the program may restrict or adversely affect the Funds investments or returns. In addition, the application and interpretation of the laws and regulations of Hong Kong and China, and the rules, policies or guidelines published or applied by relevant regulators and exchanges in respect of Stock Connect are uncertain, and they may have a detrimental effect on the Funds investments and returns.
Foreign Company Risk Investing in foreign companies, including direct investments and investments through ADRs, poses additional risks since political and economic events unique to a country or region will affect those markets and their issuers. These risks will not necessarily affect the U.S. economy or similar issuers located in the United States. Securities of foreign companies may not be registered with the U.S. Securities and Exchange Commission (the SEC) and foreign companies are generally not subject to the same level of regulatory controls imposed on U.S. issuers and, as a consequence, there is generally less publicly available information about
24
THE ADVISORS INNER CIRCLE FUND III |
RAYLIANT QUANTAMENTAL CHINA EQUITY ETF SEPTEMBER 30, 2021 |
foreign securities than is available about domestic securities. Income from foreign securities owned by the Fund may be reduced by a withholding tax at the source, which tax would reduce income received from the securities comprising the Funds portfolio. Foreign securities may also be more difficult to value than securities of U.S. issuers and foreign markets and securities may be less liquid. While ADRs provide an alternative to directly purchasing the underlying foreign securities in their respective national markets and currencies, investments in ADRs continue to be subject to many of the risks associated with investing directly in foreign securities.
Emerging Markets Securities Risk Investments in emerging markets securities are considered speculative and subject to heightened risks in addition to the general risks of investing in foreign securities. Unlike more established markets, emerging markets may have governments that are less stable, markets that are less liquid and economies that are less developed. In addition, the securities markets of emerging market countries may consist of companies with smaller market capitalizations and may suffer periods of relative illiquidity; significant price volatility; restrictions on foreign investment; and possible restrictions on repatriation of investment income and capital. Furthermore, foreign investors may be required to register the proceeds of sales, and future economic or political crises could lead to price controls, forced mergers, expropriation or confiscatory taxation, seizure, nationalization or creation of government monopolies.
Foreign Currency Risk As a result of the Funds investments in securities denominated in, and/or receiving revenues in, foreign currencies, the Fund will be subject to currency risk. Currency risk is the risk that foreign currencies will decline in value relative to the U.S. dollar, in which case the dollar value of an investment in the Fund would be adversely affected.
Large Capitalization Risk The risk that larger, more established companies may be unable to respond quickly to new competitive challenges such as changes in technology and consumer tastes. Larger companies also may not be able to attain the high growth rates of successful smaller companies.
Small and Medium Capitalization Companies Risk The risk that small and medium capitalization companies in which the Fund may invest may be more vulnerable to adverse business or economic events than larger, more established companies. In particular, small and medium capitalization companies may have limited product lines, markets and financial resources and may depend upon a relatively small management group. Therefore, small
25
THE ADVISORS INNER CIRCLE FUND III |
RAYLIANT QUANTAMENTAL CHINA EQUITY ETF SEPTEMBER 30, 2021 |
capitalization and medium capitalization stocks may be more volatile than those of larger companies. Small capitalization and medium capitalization stocks may be traded over-the-counter or listed on an exchange.
Geographic Focus Risk To the extent that it focuses its investments in a particular country or geographic region, the Fund may be more susceptible to economic, political, regulatory or other events or conditions affecting issuers and countries within that country or geographic region. As a result, the Fund may be subject to greater price volatility and risk of loss than a fund holding more geographically diverse investments.
Sector Focus Risk Because the Fund may, from time to time, be more heavily invested in particular sectors, the value of its shares may be especially sensitive to factors and economic risks that specifically affect those sectors. As a result, the Funds share price may fluctuate more widely than the value of shares of a mutual fund that invests in a broader range of sectors.
Financials Sector Risk Performance of companies in the financials sector may be adversely impacted by many factors, including, among others, government regulations, economic conditions, credit rating downgrades, changes in interest rates, and decreased liquidity in credit markets. The impact of more stringent capital requirements, recent or future regulation of any individual financial company, or recent or future regulation of the financials sector as a whole cannot be predicted. In recent years, cyber attacks and technology malfunctions have become increasingly frequent in this sector and have caused significant losses to companies in this sector, which may negatively impact the Fund.
Consumer Discretionary Sector Risk Companies in the consumer discretionary sector are subject to the performance of the overall international economy, interest rates, competition and consumer confidence. Success depends heavily on disposable household income and consumer spending. The impact of any epidemic, pandemic or natural disaster, or widespread fear that such events may occur, could negatively affect the overall international economy and, in turn, negatively affect companies in the consumer discretionary sector.
Preferred Stock Risk Preferred stocks in which the Fund may invest are sensitive to interest rate changes, and are also subject to equity risk, which is the risk that stock prices will fall over short or extended periods of time. The
26
THE ADVISORS INNER CIRCLE FUND III |
RAYLIANT QUANTAMENTAL CHINA EQUITY ETF SEPTEMBER 30, 2021 |
rights of preferred stocks on the distribution of a companys assets in the event of a liquidation are generally subordinate to the rights associated with a companys debt securities.
REIT Risk REITs are susceptible to the risks associated with direct ownership of real estate, such as the following: declines in property values; increases in property taxes, operating expenses, interest rates or competition; overbuilding; zoning changes; and losses from casualty or condemnation.
Value Style Risk Value investing focuses on companies with stocks that appear undervalued in light of factors such as the companys earnings, book value, revenues or cash flow. If the Advisers assessment of market conditions, or a companys value or prospects for exceeding earnings expectations, is wrong, the Fund could suffer losses or produce poor performance relative to other funds.
American Depositary Receipts Risk ADRs are certificates evidencing ownership of shares of a foreign issuer that are issued by depositary banks and generally trade on an established market. ADRs are subject to many of the risks associated with investing directly in foreign securities, including, among other things, political, social and economic developments abroad, currency movements and different legal, regulatory and tax environments.
Management Risk The success of the Funds strategy is dependent on the Advisers ability and its stock selection process to correctly identify the Funds investments. The portfolio securities selected by the Adviser may decline in value or not increase in value when the stock market in general is rising, in which case the Fund could experience losses regardless of the overall performance of the U.S. equity market.
Quantitative Investing Risk Funds that are managed according to a quantitative model can perform differently from the market as a whole based on the factors used in the model, the weight placed on each factor and changes from the factors historical trends. Due to the significant role technology plays in a quantitative model, use of a quantitative model carries the risk of potential issues with the design, coding, implementation or maintenance of the computer programs, data and/or other technology used in the quantitative model. These issues could negatively impact investment returns.
27
THE ADVISORS INNER CIRCLE FUND III |
RAYLIANT QUANTAMENTAL CHINA EQUITY ETF SEPTEMBER 30, 2021 |
Derivatives Risk The Funds use of futures contracts and swaps is subject to leverage risk, correlation risk, liquidity risk and market risk. Leverage risk and liquidity risk are described below. Market risk is the risk that the market value of an investment may move up and down, sometimes rapidly and unpredictably. Correlation risk is the risk that changes in the value of the derivative may not correlate perfectly with the underlying asset, rate or index. The Funds use of swap agreements is also subject to credit risk and valuation risk. Valuation risk is the risk that the derivative may be difficult to value and/ or valued incorrectly. Credit risk is described elsewhere in this section. Each of the above risks could cause the Fund to lose more than the principal amount invested in a derivative instrument. Some derivatives have the potential for unlimited loss, regardless of the size of the Funds initial investment. The other parties to certain derivative contracts present the same types of credit risk as issuers of fixed income securities. The Funds use of derivatives may also increase the amount of taxes payable by shareholders. Both U.S. and non-U.S. regulators are in the process of adopting and implementing regulations governing derivatives markets, the ultimate impact of which remains unclear.
Securities Lending Risk Securities lending involves the risk that the Fund may lose money because the borrower of the loaned securities fails to return the securities in a timely manner or at all. The Fund could also lose money in the event of a decline in the value of the collateral provided for loaned securities or a decline in the value of any investments made with cash collateral. These events could also trigger adverse tax consequences for the Fund.
Liquidity Risk The risk that certain securities may be difficult or impossible to sell at the time and the price that the Fund would like. The Fund may have to lower the price of the security, sell other securities instead or forego an investment opportunity, any of which could have a negative effect on Fund management or performance.
Leverage Risk The Funds use of derivatives may result in the Funds total investment exposure substantially exceeding the value of its portfolio securities and the Funds investment returns depending substantially on the performance of securities that the Fund may not directly own. The use of leverage can amplify the effects of market volatility on the Funds share price and may also cause the Fund to liquidate portfolio positions when it would not be advantageous to do so in order to satisfy its obligations. The Funds use of leverage may result in a heightened risk of investment loss.
28
THE ADVISORS INNER CIRCLE FUND III |
RAYLIANT QUANTAMENTAL CHINA EQUITY ETF SEPTEMBER 30, 2021 |
ETF Risks The Fund is an exchange-traded fund (ETF) and, as a result of this structure, it is exposed to the following risks:
Trading Risk Shares of the Fund may trade on NYSE Arca, Inc. (the Exchange) above or below their NAV. The NAV of shares of the Fund will fluctuate with changes in the market value of the Funds holdings. In addition, although the Funds shares are currently listed on the Exchange, there can be no assurance that an active trading market for shares will develop or be maintained. Trading in Fund shares may be halted due to market conditions or for reasons that, in the view of the Exchange, make trading in shares of the Fund inadvisable.
Cash Transactions Risk Like other ETFs, the Fund sells and redeems its shares only in large blocks called Creation Units and only to Authorized Participants. Unlike many other ETFs, however, the Fund expects to effect its creations and redemptions at least partially for cash, rather than in-kind securities. Thus, an investment in the Fund may be less tax-efficient than an investment in other ETFs as the Fund may recognize a capital gain that it could have avoided by making redemptions in-kind. As a result, the Fund may pay out higher capital gains distributions than ETFs that redeem in-kind. Further, paying redemption proceeds at least partially in cash rather than through in-kind delivery of portfolio securities may require the Fund to dispose of or sell portfolio investments to obtain the cash needed to distribute redemption proceeds at an inopportune time.
Limited Authorized Participants, Market Makers and Liquidity Providers Risk Because the Fund is an ETF, only a limited number of institutional investors (known as Authorized Participants) are authorized to purchase and redeem shares directly from the Fund. In addition, there may be a limited number of market makers and/or liquidity providers in the marketplace. To the extent either of the following events occur, Fund shares may trade at a material discount to net asset value (NAV) and possibly face delisting: (i) Authorized Participants exit the business or otherwise become unable to process creation and/or redemption orders and no other Authorized Participants step forward to perform these services, or (ii) market makers and/or liquidity providers exit the business or significantly reduce their business activities and no other entities step forward to perform their functions.
Creation Units The Fund issues and redeems Shares at NAV and only in large blocks of Shares (each block of Shares for a Fund is a Creation Unit of 25,000 Shares, or multiples thereof).
29
THE ADVISORS INNER CIRCLE FUND III |
RAYLIANT QUANTAMENTAL CHINA EQUITY ETF SEPTEMBER 30, 2021 |
Except when aggregated in Creation Units, Shares are not redeemable securities of a Fund. Shares of a Fund may only be purchased or redeemed by certain Authorized Participants. An Authorized Participant is either (i) a broker-dealer or other participant in the clearing process through the Continuous Net Settlement System of the National Securities Clearing Corporation or (ii) a Depository Trust Company (DTC) participant and, in each case, must have executed a Participant Agreement with the Distributor. Most retail investors will not qualify as Authorized Participants or have the resources to buy and sell whole Creation Units. Therefore, they will be unable to purchase or redeem the Shares directly from a Fund. Rather, most retail investors will purchase Shares in the secondary market with the assistance of a broker and will be subject to customary brokerage commissions or fees when buying or selling Shares. If a Creation Unit is purchased or redeemed for cash, a higher transaction fee will be charged.
The following table discloses Creation Unit breakdown as of September 30, 2021:
Creation Unit
Shares |
Creation Transaction
Fee |
Value |
Redemption
Transaction Fee |
|||||||||||||
Rayliant Quantamental China Equity ETF | 25,000 | $ | 1,000 | $ | 622,750 | $ | 1,000 |
Investments in Investment Companies Risk When the Fund invests in an investment company, including ETFs, in addition to directly bearing the expenses associated with its own operations, it will bear a pro rata portion of the investment companys expenses. Further, while the risks of owning shares of an investment company generally reflect the risks of owning the underlying investments of the investment company, the Fund may be subject to additional or different risks than if the Fund had invested directly in the underlying investments. For example, the lack of liquidity in an ETF could result in its share price being more volatile than that of the underlying portfolio securities.
Non-Diversification Risk The Fund is classified as non-diversified, which means it may invest a larger percentage of its assets in a smaller number of issuers than a diversified fund. To the extent that the Fund invests its assets in a smaller number of issuers, the Fund will be more susceptible to negative events affecting those issuers than a diversified fund. The Fund intends to satisfy the diversification requirements necessary to qualify as a regulated investment company (RIC) under the Internal Revenue Code of 1986, as amended (the Code).
30
THE ADVISORS INNER CIRCLE FUND III |
RAYLIANT QUANTAMENTAL CHINA EQUITY ETF SEPTEMBER 30, 2021 |
New Fund Risk Because the Fund is new, investors in the Fund bear the risk that the Fund may not be successful in implementing its investment strategy, may not employ a successful investment strategy, or may fail to attract sufficient assets under management to realize economies of scale, any of which could result in the Fund being liquidated at any time without shareholder approval and at a time that may not be favorable for all shareholders. Such liquidation could have negative tax consequences for shareholders and will cause shareholders to incur expenses of liquidation.
10. Other:
At September 30, 2021, the records of the Trust reflected that 100% of the Funds total shares outstanding were held by four Authorized Participants, in the form of Creation Units. However, the individual shares comprising such Creation Units are listed and traded on the Exchange and have been purchased and sold by persons other than Authorized Participants.
11. Subsequent Events:
On September 7, 2021, Brown Brothers Harriman & Co. (BBH), the Fund custodian, announced that it had entered into an agreement with State Street Bank and Trust Company (State Street) to sell BBHs Investor Services business to State Street (the Transaction). The Transaction is subject to certain closing conditions, including regulatory and customary approvals, and it is expected to be consummated by the end of calendar year 2021 (the Closing Date). Consequently, as a result of the Transaction, it is expected that State Street will replace BBH as the Fund custodian effective as of the Closing Date.
The Fund has evaluated the need for additional disclosures (other than what is disclosed in the preceding paragraph) and/or adjustments resulting from subsequent events through the date the financial statements were issued. Based on this evaluation, no additional disclosures and/or adjustments were required to the financial statements as of September 30, 2021.
31
THE ADVISORS INNER CIRCLE FUND III |
RAYLIANT QUANTAMENTAL CHINA EQUITY ETF SEPTEMBER 30, 2021 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
|
To the Board of Trustees of The Advisors Inner Circle Fund III and
Shareholders of Rayliant Quantamental China Equity ETF
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities of Rayliant Quantamental China Equity ETF (the Fund) (one of the series constituting The Advisors Inner Circle Fund III (the Trust)), including the schedule of investments, as of September 30, 2021, and the related statements of operations, changes in net assets and financial highlights for the period from December 30, 2020 (commencement of operations) through September 30, 2021 and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund (one of the series constituting The Advisors Inner Circle Fund III) at September 30, 2021, and the results of its operations, the changes in its net assets and its financial highlights for the period from December 30, 2020 (commencement of operations) through September 30, 2021, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements are the responsibility of the Trusts management. Our responsibility is to express an opinion on the Funds financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Trust in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Trust is not required to have, nor were we engaged to perform, an audit of the Trusts internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Trusts internal control over financial reporting. Accordingly, we express no such opinion.
32
THE ADVISORS INNER CIRCLE FUND III |
RAYLIANT QUANTAMENTAL CHINA EQUITY ETF SEPTEMBER 30, 2021 |
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of September 30, 2021, by correspondence with the custodian. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
We have served as the auditor of one or more Rayliant Asset Management companies since 2021.
Philadelphia, Pennsylvania
November 24, 2021
33
THE ADVISORS INNER CIRCLE FUND III |
RAYLIANT QUANTAMENTAL CHINA EQUITY ETF SEPTEMBER 30, 2021 |
DISCLOSURE OF FUND EXPENSES (Unaudited)
|
All mutual funds have operating expenses. As a shareholder of a mutual fund, your investment is affected by these ongoing costs, which include (among others) costs for Fund management, administrative services, and shareholder reports like this one. It is important for you to understand the impact of these costs on your investment returns.
Operating expenses such as these are deducted from the mutual funds gross income and directly reduce your final investment return. These expenses are expressed as a percentage of the mutual funds average net assets; this percentage is known as the mutual funds expense ratio.
The following examples use the expense ratio and are intended to help you understand the ongoing costs (in dollars) of investing in your Fund and to compare these costs with those of other mutual funds. The examples are based on an investment of $1,000 made at the beginning of the period shown and held for the entire period from April 1, 2021 to September 30, 2021.
The table on the next page illustrates your Funds costs in two ways:
Actual Fund Return. This section helps you to estimate the actual expenses after fee waivers that your Fund incurred over the period. The Expenses Paid During Period column shows the actual dollar expense cost incurred by a $1,000 investment in the Fund, and the Ending Account Value number is derived from deducting that expense cost from the Funds gross investment return.
You can use this information, together with the actual amount you invested in the Fund, to estimate the expenses you paid over that period. Simply divide your ending starting account value by $1,000 to arrive at a ratio (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply that ratio by the number shown for your Fund under Expenses Paid During Period.
Hypothetical 5% Return. This section helps you compare your Funds costs with those of other mutual funds. It assumes that the Fund had an annual 5% return before expenses during the year, but that the expense ratio (Column 3) for the period is unchanged. This example is useful in making comparisons because the Securities and Exchange Commission requires all mutual funds to make this 5% calculation. You can assess your Funds comparative cost by
34
THE ADVISORS INNER CIRCLE FUND III |
RAYLIANT QUANTAMENTAL CHINA EQUITY ETF SEPTEMBER 30, 2021 |
DISCLOSURE OF FUND EXPENSES (Unaudited) - continued
|
comparing the hypothetical result for your Fund in the Expenses Paid During Period column with those that appear in the same charts in the shareholder reports for other mutual funds.
Note : Because the return is set at 5% for comparison purposes NOT your Funds actual return the account values shown may not apply to your specific investment
Beginning
Account Value 4/01/21 |
Ending
Account Value 9/30/21 |
Annualized
Expense Ratios |
Expenses Paid
During Period* |
|||||||||||||
Class 1 Class Shares |
||||||||||||||||
Actual Fund Return |
$ | 1,000.00 | $969.60 | 0.80 | % | $ | 3.95 | |||||||||
Hypothetical 5% Return |
1,000.00 | 1,021.06 | 0.80 | 4.05 |
* Expenses are equal to the Funds annualized expense ratio (including dividend and interest expense on short sales), multiplied by the average account value over the period, multiplied by 183/365 (to reflect the one-half year period).
35
THE ADVISORS INNER CIRCLE FUND III |
RAYLIANT QUANTAMENTAL CHINA EQUITY ETF SEPTEMBER 30, 2021 |
TRUSTEES AND OFFICERS OF THE ADVISORS INNER CIRCLE FUND III (UNAUDITED)
|
Set forth below are the names, years of birth, positions with the Trust, length of term of office, and the principal occupations for the last five years of each of the persons currently serving as Trustees and Officers of the Trust. Unless otherwise noted, the business address of each Trustee is SEI Investments Company, One Freedom Valley Drive, Oaks Pennsylvania 19456. Trustees who are deemed not to be interested persons of the Trust are referred to as Independent Trustees. Mr. Doran is a Trustee who may be deemed to be interested person of the Trust as that term is defined in the 1940 Act by virtue of their affiliation with the Trusts Distributor. The Trusts Statement of Additional Information (SAI) includes additional information about the Trustees and Officers. The SAI may be obtained without charge by calling 1-844-523-8637. The following chart lists Trustees and Officers as of December 31, 2020
Name and Year of Birth |
Position with Trust and Length of
Time Served 1 |
Principal Occupations in the Past Five Years | ||
INTERESTED TRUSTEES3 4 |
||||
William M. Doran (Born: 1940) |
Chairman of
Board of Trustees (since 2014) |
Self-Employed Consultant since 2003. Partner at Morgan, Lewis & Bockius LLP (law firm) from 1976 to 2003. Counsel to the Trust, SEI Investments, SIMC, the Administrator and the Distributor. Secretary of SEI Investments since 1978.
|
||
INDEPENDENT TRUSTEES3 |
||||
Jon C. Hunt (Born: 1951) |
Trustee and Lead Independent Trustee
(since 2014) |
Retired since 2013. Consultant to Management, Convergent Capital Management, LLC (CCM) from 2012 to 2013. Managing Director and Chief Operating Officer, CCM from 1998 to 2012.
|
||
Thomas P. Lemke (Born: 1954) |
Trustee
(since 2014) |
Retired since 2013. Executive Vice President and General Counsel, Legg Mason, Inc. from 2005 to 2013.
|
||
Nichelle Maynard-Elliott (Born: 1968) |
Trustee
(since 2021) |
Independent Director since 2018. Executive Director, M&A at Praxair Inc. from 2011-2019.
|
1 |
Each Trustee shall hold office during the lifetime of this Trust until the election and qualification of his or her successor, or until he or she sooner dies, resigns, or is removed in accordance with the Trusts Declaration of Trust. |
2 |
Directorships of Companies required to report to the Securities and Exchange Commission under the Securities Exchange Act of 1934 (i.e., public companies) or other investment companies under the 1940 Act. |
3 |
Trustees oversee 47 funds in The Advisors Inner Circle Fund III. |
4 |
Denotes Trustees who may be deemed to be interested persons of the Fund as that term is defined in the 1940 Act by virtue of their affiliation with the Distributor and/or its affiliates. |
36
THE ADVISORS INNER CIRCLE FUND III |
RAYLIANT QUANTAMENTAL CHINA EQUITY ETF SEPTEMBER 30, 2021 |
TRUSTEES AND OFFICERS OF THE ADVISORS INNER CIRCLE FUND III (UNAUDITED)
|
Other Directorships Held in the Past Five Years 2 |
Current Directorships: Trustee of Gallery Trust, Schroder Series Trust, Schroder Global Series Trust, Delaware Wilshire Private Markets Master Fund, Delaware Wilshire Private Markets Fund, Delaware Wilshire Private Markets Tender Fund, SEI Daily Income Trust, SEI Institutional International Trust, SEI Institutional Investments Trust, SEI Institutional Managed Trust, SEI Asset Allocation Trust, SEI Tax Exempt Trust, Adviser Managed Trust, New Covenant Funds, SEI Insurance Products Trust and SEI Catholic Values Trust. Director of SEI Investments, SEI Investments (Europe), Limited, SEI InvestmentsGlobal Funds Services, Limited, SEI Investments Global, Limited, SEI Investments (Asia), Limited, SEI Global Nominee Ltd., SEI InvestmentsUnit Trust Management (UK) Limited and SEI Investments Co. Director of the Distributor.
Former Directorships: Trustee of OConnor EQUUS (closed-end investment company) to 2016. Trustee of SEI Liquid Asset Trust to 2016. Trustee of Winton Series Trust to 2017. Trustee of The Advisors Inner Circle Fund, The Advisors Inner Circle Fund II, Bishop Street Funds, The KP Funds and Winton Diversified Opportunities Fund (closed-end investment company) to 2018. |
Current Directorships: Trustee of City National Rochdale Funds, Gallery Trust, Schroder Series Trust, Schroder Global Series Trust, Delaware Wilshire Private Markets Master Fund, Delaware Wilshire Private Markets Fund and Delaware Wilshire Private Markets Tender Fund. Director of Chiron Capital Allocation Fund Ltd.
Former Directorships: Trustee of OConnor EQUUS (closed-end investment company) to 2016. Member of Independent Committee of Nuveen Commodities Asset Management to 2016. Trustee of Winton Series Trust to 2017. Trustee of Winton Diversified Opportunities Fund (closed-end investment company) to 2018. |
Current Directorships: Trustee of Gallery Trust, Schroder Series Trust, Schroder Global Series Trust, Delaware Wilshire Private Markets Master Fund, Delaware Wilshire Private Markets Fund, Delaware Wilshire Private Markets Tender Fund, JP Morgan Active Exchange-Traded Funds (33 Portfolios) and Symmetry Panoramic Trust (8 Portfolios). Director of Chiron Capital Allocation Fund Ltd.
Former Directorships: Trustee of Munder Funds to 2014. Trustee of Victory Funds to 2015. Trustee of OConnor EQUUS (closed-end investment company) to 2016. Trustee of Winton Series Trust and AXA Premier VIP Trust to 2017. Trustee of Winton Diversified Opportunities Fund (closed-end investment company) to 2018. |
Current Directorships: Trustee of Gallery Trust, Schroder Series Trust, Schroder Global Series Trust, Delaware Wilshire Private Markets Master Fund, Delaware Wilshire Private Markets Fund, Delaware Wilshire Private Markets Tender Fund. Director of Chiron Capital Allocation Fund Ltd. Director of Element Solutions Inc., Director of Xerox Holdings Corporation, and Director Nominee for Lucid Group, Inc. |
37
THE ADVISORS INNER CIRCLE FUND III |
RAYLIANT QUANTAMENTAL CHINA EQUITY ETF SEPTEMBER 30, 2021 |
TRUSTEES AND OFFICERS OF THE ADVISORS INNER CIRCLE FUND III (UNAUDITED)
|
Name and
Year of Birth |
Position with Trust and Length of
Time Served 1 |
Principal Occupations in the Past Five Years | ||
INDEPENDENT TRUSTEES (continued)3 |
||||
Jay C. Nadel (Born: 1958) |
Trustee
(since 2016) |
Self-Employed Consultant since 2004. Executive Vice President, Bank of New York Broker Dealer from 2002 to 2004. Partner/Managing Director, Weiss Peck & Greer/Robeco from 1986 to 2001.
|
||
Randall S. Yanker (Born: 1960) |
Trustee
(since 2014) |
Co-Founder and Senior Partner, Alternative Asset Managers, L.P. since 2004.
|
||
OFFICERS |
||||
Michael Beattie (Born: 1965) |
President
(since 2014) |
Director of Client Service, SEI Investments Company, since 2004.
|
||
James Bernstein (Born: 1962) |
Vice President
(since 2017) Secretary (since 2020) |
Attorney, SEI Investments, since 2017.
Prior Positions: Self-employed consultant, 2017. Associate General Counsel & Vice President, Nationwide Funds Group and Nationwide Mutual Insurance Company, from 2002 to 2016. Assistant General Counsel & Vice President, Market Street Funds and Provident Mutual Insurance Company, from 1999 to 2002.
|
||
John Bourgeois (Born: 1973) |
Assistant Treasurer (since 2017) |
Fund Accounting Manager, SEI Investments, since 2000.
|
1 |
Each Trustee shall hold office during the lifetime of this Trust until the election and qualification of his or her successor, or until he or she sooner dies, resigns, or is removed in accordance with the Trusts Declaration of Trust. |
2 |
Directorships of Companies required to report to the Securities and Exchange Commission under the Securities Exchange Act of 1934 (i.e., public companies) or other investment companies under the 1940 Act. |
3 |
Trustees oversee 47 funds in The Advisors Inner Circle Fund III. |
38
THE ADVISORS INNER CIRCLE FUND III |
RAYLIANT QUANTAMENTAL CHINA EQUITY ETF SEPTEMBER 30, 2021 |
TRUSTEES AND OFFICERS OF THE ADVISORS INNER CIRCLE FUND III (UNAUDITED)
|
Other Directorships Held in the Past Five Years 2 |
Current Directorships: Chairman of the Board of Trustees of City National Rochdale Funds. Trustee of Gallery Trust, Schroder Series Trust, Schroder Global Series Trust, Delaware Wilshire Private Markets Master Fund, Delaware Wilshire Private Markets Fund and Delaware Wilshire Private Markets Tender Fund. Director of Chiron Capital Allocation Fund Ltd.
Former Directorships: Trustee of Winton Series Trust to 2017. Director of Lapolla Industries, Inc. to 2017. Trustee of Winton Diversified Opportunities Fund (closed-end investment company) to 2018.
|
Current Directorships: Trustee of Gallery Trust, Schroder Series Trust, Schroder Global Series Trust, Delaware Wilshire Private Markets Master Fund, Delaware Wilshire Private Markets Fund and Delaware Wilshire Private Markets Tender Fund. Independent Non-Executive Director of HFA Holdings Limited. Director of Chiron Capital Allocation Fund Ltd.
Former Directorships: Trustee of OConnor EQUUS (closed-end investment company) to 2016. Trustee of Winton Series Trust to 2017. Trustee of Winton Diversified Opportunities Fund (closed-end investment company) to 2018.
|
None.
|
None.
|
None.
|
39
THE ADVISORS INNER CIRCLE FUND III |
RAYLIANT QUANTAMENTAL CHINA EQUITY ETF SEPTEMBER 30, 2021 |
TRUSTEES AND OFFICERS OF THE ADVISORS INNER CIRCLE FUND III (UNAUDITED)
|
Name and Year of Birth |
Position(s) with Trust and
Length of Time Served |
Principal Occupation in the Past Five Years | ||
OFFICERS (continued) |
||||
Russell Emery (Born: 1962) |
Chief Compliance Officer
(since 2014) |
Chief Compliance Officer of SEI Structured Credit Fund, LP since 2007. Chief Compliance Officer of The Advisors Inner Circle Fund, The Advisors Inner Circle Fund II, Bishop Street Funds, The KP Funds, The Advisors Inner Circle Fund III, Gallery Trust, Schroder Series Trust, Schroder Global Series Trust, SEI Institutional Managed Trust, SEI Asset Allocation Trust, SEI Institutional International Trust, SEI Institutional Investments Trust, SEI Daily Income Trust, SEI Tax Exempt Trust, Adviser Managed Trust, New Covenant Funds, SEI Insurance Products Trust and SEI Catholic Values Trust. Chief Compliance Officer of OConnor EQUUS (closed-end investment company) to 2016. Chief Compliance Officer of SEI Liquid Asset Trust to 2016. Chief Compliance Officer of Winton Series Trust to 2017. Chief Compliance Officer of Winton Diversified Opportunities Fund (closed-end investment company) to 2018.
|
||
Eric C. Griffith (Born: 1969) |
Vice President and Assistant Secretary (since 2020) |
Counsel at SEI Investments since 2019. Vice President and Assistant General Counsel, JPMorgan Chase & Co., from 2012 to 2018.
|
||
Matthew M. Maher (Born: 1975) |
Vice President and Assistant Secretary (since 2018) |
Counsel at SEI Investments since 2018. Attorney, Blank Rome LLP, from 2015 to 2018. Assistant Counsel & Vice President, Bank of New York Mellon, from 2013 to 2014. Attorney, Dilworth Paxson LLP, from 2006 to 2013.
|
40
THE ADVISORS INNER CIRCLE FUND III |
RAYLIANT QUANTAMENTAL CHINA EQUITY ETF SEPTEMBER 30, 2021 |
TRUSTEES AND OFFICERS OF THE ADVISORS INNER CIRCLE FUND III (UNAUDITED)
|
Other Directorships Held in the Past Five Years |
None.
|
None.
|
None.
|
41
THE ADVISORS INNER CIRCLE FUND III |
RAYLIANT QUANTAMENTAL CHINA EQUITY ETF SEPTEMBER 30, 2021 |
TRUSTEES AND OFFICERS OF THE ADVISORS INNER CIRCLE FUND III (UNAUDITED)
|
Name and Year of Birth |
Position(s) with Trust and
Length of Time Served |
Principal Occupation in the Past Five Years | ||
OFFICERS (continued) |
||||
Andrew Metzger (Born: 1980) |
Treasurer, Controller and Chief Financial Officer
(since 2021) |
Director of Fund Accounting, SEI Investments, since 2020. Senior Director, Embark, from 2019 to 2020. Senior Manager, PricewaterhouseCoopers LLP, from 2002 to 2019.
|
||
Robert Morrow (Born: 1968) |
Vice President
|
Account Manager, SEI Investments, since 2007. | ||
Alexander F. Smith (Born: 1977) |
Vice President and Assistant Secretary (since 2020) |
Counsel at SEI Investments since 2020. Associate Counsel & Manager, Vanguard, 2012 to 2020. Attorney, Stradley Ronon Stevens & Young, LLP, 2008 to 2012.
|
||
Bridget E. Sudall (Born: 1980) |
Privacy Officer
|
Senior Associate and AML Officer, Morgan Stanley Alternative Investment Partners, from 2011 to 2015. Investor Services Team Lead, Morgan Stanley Alternative Investment Partners, from 2007 to 2011. |
42
THE ADVISORS INNER CIRCLE FUND III |
RAYLIANT QUANTAMENTAL CHINA EQUITY ETF SEPTEMBER 30, 2021 |
TRUSTEES AND OFFICERS OF THE ADVISORS INNER CIRCLE FUND III (UNAUDITED)
|
Other Directorships Held in the Past Five Years |
None.
|
None.
|
None.
|
None.
|
43
Rayliant Quantamental China Equity ETF
1299 Ocean Avenue, Suite 700
Santa Monica, CA 90401
1-866-898-1688
Investment Adviser:
Rayliant Asset Management
1299 Ocean Avenue, Suite 700
Santa Monica, CA 90401
Administrator:
SEI Investments Global Funds Services
One Freedom Valley Drive
Oaks, Pennsylvania 19456
Distributor:
SEI Investments Distribution Co.
One Freedom Valley Drive
Oaks, Pennsylvania 19456
Legal Counsel:
Morgan, Lewis & Bockius LLP
1701 Market Street
Philadelphia, Pennsylvania 19103
This information must be preceded or accompanied by a current prospectus for the Fund described.
RAY-AR-001-0100