ck0001402472-20231231
PROSPECTUS
APRIL
30, 2024
PROSPECTOR
FUNDS, INC.
PROSPECTOR CAPITAL
APPRECIATION FUND (PCAFX)
PROSPECTOR OPPORTUNITY
FUND (POPFX)
www.prospectorfunds.com
A
family of value-oriented mutual funds
The
U.S. Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy of this prospectus. Any representation to
the contrary is a criminal offense.
Investment
Products Offered Are Not
FDIC
Insured
May
Lose Value
Are
Not Bank Guaranteed
TABLE
OF CONTENTS
(This
Page Intentionally Left Blank.)
CAPITAL
APPRECIATION FUND
Investment
Objective
The
investment objective of the Capital Appreciation Fund (the “Capital Appreciation
Fund” or the “Fund”) is capital appreciation.
Fees and Expenses of the
Fund
This
table describes the fees and expenses that you may pay if you buy, hold, and
sell shares of the Capital Appreciation Fund. You may pay other fees, such as
brokerage commissions and other fees to financial intermediaries, which are not
reflected in the tables and example below.
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SHAREHOLDER
FEES
(fees paid directly from your investment) |
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Redemption
Fee (as a percentage of amount redeemed on shares held 60 days or
less) |
2.00% |
| |
ANNUAL
FUND OPERATING EXPENSES
(expenses
that you pay each year as a percentage of the value of your
investment) |
Management
Fees |
1.00% |
Distribution
and Service (12b-1) Fees |
0.03% |
Other
Expenses |
0.73% |
Acquired
Fund Fees and Expenses(1) |
0.01% |
Total
Annual Fund Operating Expenses(2) |
1.77% |
Fee
Waiver and Expense
Reimbursement(3) |
-0.51% |
Total
Annual Fund Operating Expenses After Fee Waiver and Expense
Reimbursement |
1.26% |
(1)Acquired
Fund Fees and Expenses (“AFFE”) are indirect fees and expenses the Fund incurs
from investing in the shares of other mutual funds. (“Acquired Funds”).The
fees represent the Fund’s pro rata portion of the cumulative expenses charged by
the Acquired Funds and are not direct costs paid by Fund
shareholders.
(2)The Total Annual Fund Operating Expenses and Total Annual Fund
Operating Expenses After Fee Waiver and Expense Reimbursement do not correlate
to the ratios of expenses to average net assets in the Fund’s Financial
Highlights because the Financial Highlights reflect only the direct operating
expenses of the Fund and do not include
AFFE.
(3)Prospector
Partners Asset Management LLC (the “Investment Manager”) has contractually
agreed to waive a portion of its fees and/or pay Fund expenses (excluding
interest, AFFE, brokerage commissions and extraordinary expenses) in order to
limit the Total Annual Fund Operating Expenses After Fee Waiver and Expense
Reimbursement for the Fund to 1.25% of its average daily net assets (the
“Expense Cap”) through at least September 30, 2025. The Expense Cap may only be
terminated or amended by the Board of Directors. The Investment Manager is
permitted to recoup fee waivers and/or expense payments made in the prior three
fiscal years from the date the fees were waived and/or Fund expenses were paid.
This reimbursement may be requested by the Investment Manager if the aggregate
amount actually paid by the Fund toward operating expenses for such fiscal year
(taking into account the recoupment) does not exceed the Expense Cap at the time
such reimbursement or waiver was made. For more information on the Expense Cap,
see “Understanding Expenses.”
Example. This Example is intended to help you compare the cost of investing
in the Capital Appreciation Fund with the cost of investing in other mutual
funds. The Example assumes that you invest $10,000 in the Fund for the time
periods indicated and then redeem all of your shares at the end of those
periods. The Example also assumes that your investment has a 5% return each year
and that the Fund’s operating expenses remain the same (taking into account the
Expense Cap only in the first year). Although your actual
costs may be higher or lower, based on these assumptions your costs would
be:
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1
Year |
3
Years |
5
Years |
10
Years |
$128 |
$508 |
$912 |
$2,042 |
Portfolio
Turnover. The
Capital Appreciation Fund pays transaction costs, such as commissions, when it
buys and sells securities (or “turns over” its portfolio). A higher portfolio
turnover rate may indicate higher transaction costs and may result in higher
taxes when Fund shares are held in a taxable account. These costs, which are not
reflected in annual fund operating expenses or in the example, affect the Fund’s
performance. During the most recent fiscal year, the Fund’s portfolio turnover
rate was 41%
of the average value of its portfolio.
Principal Investment
Strategies
Under normal
market conditions, the Capital Appreciation Fund invests primarily in a variety
of equity and equity-related securities, including common stocks, convertible
preferred and convertible debt securities. The Capital
Appreciation Fund attempts to buy investments priced to generate long-term total
returns significantly above those of general stock indices and U.S. treasuries.
Using a value orientation, the Investment Manager invests in positions in the
United States and other developed markets. The Investment Manager’s investment
strategy consists of bottom-up fundamental value analysis with an emphasis on
companies believed to have strong balance sheets whose securities will better
maintain their value relative to peers in declining markets. In evaluating
potential investments, the Investment Manager also considers qualitative
factors, including quality of management, quality of product or service, overall
franchise or brand value, composition of the board of directors, and the
uniqueness of the business model. The Investment Manager looks for the presence
of catalysts to improve internal performance, such as a change in management, a
new management incentive program closely linked to the price of the stock, the
sale of an underperforming asset or business unit, or a positive change in
industry fundamentals.
The
Investment Manager believes that fundamental analysis can identify undervalued
investment opportunities. Substantial gains are possible whenever a security’s
price does not accurately reflect future cash flow and earnings power or where
current or future asset values have not been fully recognized. The Investment
Manager believes that risk can be managed through a careful selection process
that focuses on the relationship between the actual market price of a security
and the intrinsic value of which the security represents an interest. The
Investment Manager's security selection process reflects a defensive investment
style that seeks to participate in rising equity markets while mitigating
downside risk in declining markets.
The
investment program of the Capital Appreciation Fund focuses on value. The
Investment Manager believes that value will typically be manifest in one of four
ways: (1) inexpensive underlying assets as measured by analytical techniques
such as private market value, replacement cost, or mark to market; (2)
attractive corporate financial characteristics such as free cash flow yield,
dividend yield and price/earnings (P/E) ratio; (3) depressed stock price (often
known as contrarian investing); and (4) companies with growth characteristics
selling substantially less expensively compared to their own history or other
similar growers. Suitable securities often look attractive on more than one
measure of value.
Once
a company is identified as a potential investment, the Investment Manager
examines the capital structure to determine whether any attractive convertible
securities are outstanding. In general, convertible securities: (1) have higher
yields than common stocks but lower yields than comparable non-convertible
securities; (2) may be subject to less fluctuation in value than the underlying
common stock because of their income and redemption features; and (3) provide
potential for capital appreciation if the market price of the underlying common
stock increases (and in those cases may be thought of as “equity substitutes”).
Because of the conversion feature, the price of a convertible security will
normally vary in some proportion to changes in the price of the underlying
common stock. The underlying equity need not be a value situation if the
Investment Manager believes that the downside is well protected by the bond-like
characteristics of the particular convertible
security.
The
distressed securities in which the Capital Appreciation Fund may invest include
all types of debt obligations, including corporate bonds, debentures, notes,
municipal bonds and, to the extent permitted by applicable laws and regulations,
securities issued by foreign issuers, including foreign
governments.
The
Fund may invest in restricted securities including, but not limited to, private
placements of equity and/or debt securities of private companies. In particular,
the Fund may invest in unregistered securities which may be sold under Rule 144A
of the Securities Act of 1933, as amended (“144A Securities”).
In
pursuit of its value-oriented strategy, the Capital Appreciation Fund may invest
without regard to market capitalization. The Capital Appreciation Fund may also
engage in currency transactions.
Principal Investment
Risks
The Capital
Appreciation Fund is subject to various risks, any of which could cause an
investor to lose money. Losing all or a portion of your
investment is a risk of investing in the Fund. The following principal risks
could affect the value of your investment.
The
Capital Appreciation Fund’s investments in equity securities will expose the
Fund to:
•Stock
Market Risk,
which is the chance that stock prices overall will decline. Stock markets tend
to move in cycles, with periods of rising prices and periods of falling prices.
When the stock market is subject to significant volatility, the risks associated
with an investment in the Fund may increase. Markets may experience periods of
high volatility and reduced liquidity and, during such periods, the Fund may
experience high levels of shareholder redemptions, and may have to sell
securities at times when the Fund would otherwise not do so, potentially at
unfavorable prices.
•Convertible
Securities Risk,
which is the risk that, with respect to a convertible security and prior to its
conversion to equity, the price of the convertible security will normally vary
with changes in the price of the underlying equity security, and the convertible
security will generally offer interest or dividend yields that are lower than
non-convertible debt securities of similar quality.
The
Capital Appreciation Fund may invest in debt securities, which would expose the
Fund to:
•Interest
Rate Risk,
which is the chance that changes in interest rates will affect the value of
investments in debt securities. When interest rates rise, the value of existing
investments in debt securities tends to fall and this decrease in value may not
be offset by higher income from new investments. Interest rate risk is generally
greater for fixed-income securities with longer maturities or durations, but
increasing interest rates may have an adverse effect on the value of the Fund’s
investment portfolio as a whole. The Fund may be subject to a greater risk of
rising interest rates than would normally be the case due to the recent end of a
period of historically low rates and the effects of potential central bank
monetary policy, and government fiscal policy, initiatives and market reactions
to those initiatives.
•Income
Risk,
which is the chance that the Capital Appreciation Fund’s income will decline
because of falling interest rates.
•Credit
Risk,
which is the chance that a debt issuer will fail to pay interest and principal
in a timely manner, or that negative perceptions of the issuer’s ability to make
such payments will cause the price of that debt to
decline.
•High
Yield Securities Risk, which
is the risk that debt securities in the lower rating categories are subject to a
greater probability of loss in principal and interest than higher-rated
securities and are generally considered to be predominantly speculative with
respect to the issuer’s capacity to pay interest and repay principal. These
securities
may
be subject to greater price volatility due to such factors as specific corporate
developments, interest rate sensitivity and negative perceptions of the lower
rated debt securities market generally and may be more difficult to trade or
dispose of than other types of securities.
The
Capital Appreciation Fund may invest in foreign securities, which would expose
the Fund to:
•Foreign
Securities Risk,
which
is the risk associated with investments in securities of non-U.S. issuers. The
following factors make foreign securities more volatile: political, economic and
social instability; foreign securities may be harder to sell; brokerage
commissions and other fees may be higher for foreign securities; and foreign
companies may not be subject to the same disclosure and reporting standards as
U.S. companies.
•Currency
Risk,
which is the risk that the value of foreign securities may be affected by
changes in currency exchange rates.
The
Capital Appreciation Fund may invest in smaller and mid-sized companies, which
would expose the Fund to:
•Smaller
and Mid-Sized Companies Risk,
which is the risk that the securities of such issuers may be comparatively more
volatile in price than those of companies with larger capitalizations, and may
lack the depth of management and established markets for their products and/or
services that may be associated with investments in larger
issuers.
The
Capital Appreciation Fund may invest in value securities, which would expose the
Fund to:
•Value
Investing Risk, which
is the risk that value securities may not increase in price as anticipated by
the Investment Manager, and may even decline further in value, if other
investors fail to recognize the company’s value, or favor investing in
faster-growing companies, or if the events or factors that the Investment
Manager believes will increase a security’s market value do not
occur.
The
Capital Appreciation Fund may invest in restricted securities, which would
expose the Fund to:
•Restricted
Securities Risk, which
is the risk that
restricted
securities may have terms that limit their resale to other investors or may
require registration under applicable securities laws before they may be sold
publicly. It may not be possible to sell certain restricted securities at any
particular time or at an acceptable price.
An investment in
the Capital Appreciation Fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. Further discussion about other risks of investing in the
Capital Appreciation Fund may be found in the “More Information on Investment
Strategies, Related Risks and Disclosure of Portfolio Holdings” section of this
prospectus.
Performance
The following performance information indicates some of the
risks of investing in the Capital Appreciation Fund. The bar
chart illustrates the variability of the Fund’s returns by showing changes in
the Fund’s performance from year to year. The table illustrates how the Fund’s
average annual returns for 1-year, 5-year, 10-year, and since inception periods
compare with the S&P 500®
Index, a broad measure of market performance as well as the Russell 3000 Value
Total Return Index, an index that reflects the types of securities in which the
Fund invests. The S&P 500®
Index is a widely recognized, managed index of 500 of the largest companies in
the United States as measured by market capitalization. The indices assume
reinvestment of all dividends and distributions. Because an index cannot be
invested in directly, the returns of the indices do not reflect a deduction for
fees, expenses or taxes. The Fund’s past
performance, before and after taxes, is not necessarily an indication of how it
will perform in the future. Updated performance information is
available on the Fund’s website at www.prospectorfunds.com or by calling the Fund
toll-free at 1-877-734-7862.
Capital
Appreciation Fund
Calendar
Year Total Returns as of December 31
During
the period of time shown in the bar chart, the Fund’s highest
quarterly return was 13.91% for the quarter ended
December 31,
2020, and the lowest
quarterly return was -20.90% for the quarter ended
March 31,
2020.
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Average
Annual Total Returns
(for
the period ended December 31, 2023) |
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| Since
Inception |
| 1
Year |
5
Years |
10
Years |
(9/28/07) |
Return Before
Taxes |
11.34% |
11.37% |
7.98% |
6.83% |
Return After
Taxes on Distributions |
10.53% |
9.86% |
6.55% |
5.74% |
Return After
Taxes on Distributions and Sale of Fund
Shares |
7.26% |
8.89% |
6.14% |
5.38% |
S&P
500®
Index (reflects no deduction for fees, expenses or
taxes) |
26.29% |
15.69% |
12.03% |
9.41% |
Russell
3000 Value®
Total Return Index
(reflects
no deduction for fees, expenses or taxes) |
11.66% |
10.84% |
8.28% |
6.69% |
After-tax
returns are calculated using the historical highest individual federal marginal
income tax rates and do not reflect the impact of state and local
taxes. Actual
after-tax returns depend on your situation and may differ from those shown.
Furthermore, the after-tax returns shown are not relevant to those who hold
their shares through tax-deferred arrangements such as 401(k) plans or
individual retirement accounts (“IRAs”).
Management
Investment
Adviser.
Prospector Partners Asset Management, LLC, the Investment Manager, is the
investment adviser of the Fund.
Portfolio
Managers.
The Capital Appreciation Fund is managed by a team of Portfolio Managers as
follows:
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Portfolio
Manager |
Years
of Service with
the Fund |
Primary
Title with the
Investment
Manager |
Kevin
R. O’Brien |
16.5 |
Portfolio
Manager |
Jason
A. Kish |
11 |
Portfolio
Manager |
Steven
R. Labbe |
4 |
Portfolio
Manager |
Purchase
and Sale of Fund Shares
You
may purchase, exchange or redeem Capital Appreciation Fund shares on any
business day by written request via mail (Prospector Funds, c/o U.S. Bank Global
Fund Services, P.O. Box 701, Milwaukee, Wisconsin 53201-0701), by telephone at
(877) 734-7862, or through a financial intermediary. You may also purchase or
redeem Fund shares by wire transfer. Investors who wish to purchase, exchange or
redeem Fund shares through a broker-dealer should contact the broker-dealer
directly. The minimum initial and subsequent investment amounts are shown
below.
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| Minimum
Investment Amount |
| Initial |
Additional |
Regular
Accounts |
$10,000 |
$1,000 |
Automatic
Investment Plans |
$10,000 |
$100 |
IRAs
(Traditional, Roth and SIMPLE) |
$10,000 |
$1,000 |
SEPs,
Coverdell ESAs, and SAR-SEPs |
$10,000 |
$1,000 |
Tax
Information
The
Capital Appreciation Fund’s distributions may be taxed as ordinary income or
capital gains, unless you invest through an IRA, 401(k) plan, or other
tax-deferred account.
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase Capital Appreciation Fund shares through a broker-dealer or other
financial intermediary (such as a bank or financial advisor), the Fund and/or
the Investment Manager may pay the intermediary for the sale of Fund shares and
related services. These payments may create conflicts of interest by influencing
the broker-dealer or other intermediary and your salesperson to recommend the
Fund over another investment. Ask your advisor or visit your financial
intermediary’s website for more information.
OPPORTUNITY
FUND
Investment
Objective
The
investment objective of the Opportunity Fund (the “Opportunity Fund” or the
“Fund”) is capital appreciation.
Fees and Expenses of the
Fund
This
table describes the fees and expenses that you may pay if you buy, hold, and
sell shares of the Opportunity Fund. You may pay other fees, such as brokerage
commissions and other fees to financial intermediaries, which are not reflected
in the tables and example below.
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SHAREHOLDER
FEES
(fees paid directly from your investment) |
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Redemption
Fee (as a percentage of amount redeemed on shares held 60 days or
less) |
2.00% |
| |
ANNUAL
FUND OPERATING EXPENSES (expenses
that you pay each year as a percentage of the value of your
investment) |
Management
Fees |
1.00% |
Distribution
and Service (12b-1) Fees |
0.09% |
Other
Expenses |
0.28% |
Acquired
Fund Fees and Expenses(1) |
0.01% |
Total
Annual Fund Operating Expenses(2) |
1.38% |
Fee
Waiver and Expense Reimbursement(3) |
-0.12% |
Total
Annual Fund Operating Expenses After Fee Waiver and Expense
Reimbursement |
1.26% |
(1)Acquired
Fund Fees and Expenses (“AFFE”) are indirect fees and expenses the Fund incurs
from investing in the shares of other mutual funds. (“Acquired Funds”).
The fees represent the Fund’s pro rata portion of the cumulative expenses
charged by the Acquired Funds and are not direct costs paid by Fund
shareholders.
(2)The Total Annual Fund Operating Expenses and Total Annual Fund
Operating Expenses After Fee Waiver and Expense Reimbursement do not correlate
to the ratios of expenses to average net assets in the Fund’s Financial
Highlights because the Financial Highlights reflect only the direct operating
expenses of the Fund and do not include
AFFE.
(3)The
Investment Manager has contractually agreed to waive a portion of its fees
and/or pay Fund expenses (excluding interest, AFFE, brokerage commissions and
extraordinary expenses) in order to limit the Total Annual Fund Operating
Expenses After Fee Waiver and Expense Reimbursement for the Opportunity Fund to
1.25% of its average daily net assets (the “Expense Cap”) through at least
September 30, 2025. The Expense Cap may only be
terminated or amended by the Board of Directors. The Investment Manager is
permitted to recoup fee waivers and/or expense payments made in the prior three
fiscal years from the date the fees were waived and/or Fund expenses were paid.
This reimbursement may be requested by the Investment Manager if the aggregate
amount actually paid by the Fund toward operating expenses for such fiscal year
(taking into account the recoupment) does not exceed the Expense Cap. For more
information on the Expense Cap, see “Understanding
Expenses.”
Example. This Example is intended to help you compare the cost of investing
in the Opportunity Fund with the cost of investing in other mutual funds. The
Example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
Example also assumes that your investment has a 5% return each year and that the
Fund’s operating expenses remain the same (taking into account the Expense Cap
only in the first year). Although your actual
costs may be higher or lower, based on these assumptions your costs would
be:
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1
Year |
3
Years |
5
Years |
10
Years |
$128 |
$425 |
$744 |
$1,647 |
Portfolio
Turnover. The
Opportunity Fund pays transaction costs, such as commissions, when it buys and
sells securities (or “turns over” its portfolio). A higher portfolio turnover
rate may indicate higher transaction costs and may result in higher taxes when
Fund shares are held in a taxable account. These costs, which are not reflected
in annual fund
operating
expenses or in the example, affect the Fund’s performance. During the most
recent fiscal year, the Fund’s portfolio turnover rate was 32% of the average value of its
portfolio.
Principal Investment
Strategies
Under normal
market conditions, the Opportunity Fund invests primarily in a variety of equity
and equity-related securities, including common stocks. The
Opportunity Fund attempts to buy investments priced to generate long-term total
returns significantly above those of general stock indices and U.S. treasuries.
Using a value orientation, the Investment Manager invests in positions in the
United States and other developed markets. The Investment Manager’s investment
strategy consists of bottom-up fundamental value analysis with an emphasis on
companies believed to have strong balance sheets whose securities will better
maintain their value relative to peers in declining markets. In evaluating
potential investments, the Investment Manager considers qualitative factors,
including quality of management, quality of product or service, overall
franchise or brand value, composition of the board of directors, and the
uniqueness of the business model. The Investment Manager looks for the presence
of catalysts to improve internal performance, such as a change in management, a
new management incentive program closely linked to the price of the stock, the
sale of an underperforming asset or business unit, or a positive change in
industry fundamentals.
The
Investment Manager believes that fundamental analysis can identify undervalued
investment opportunities. Substantial gains are possible whenever a security’s
price does not accurately reflect future cash flow and earnings power or where
current or future asset values have not been fully recognized. The Investment
Manager believes that risk can be managed through a careful selection process
that focuses on the relationship between the actual market price of a security
and the intrinsic value of which the security represents an interest. The
Investment Manager's security selection process reflects a defensive investment
style that seeks to participate in rising equity markets while mitigating
downside risk in declining markets.
The
investment program of the Opportunity Fund focuses on value. The Investment
Manager believes that value will typically be manifest in one of four ways: (1)
attractive corporate financial characteristics such as free cash flow yield,
dividend yield and price/earnings (P/E) ratio; (2) inexpensive underlying assets
as measured by analytical techniques such as private market value, replacement
cost, or mark to market; (3) depressed stock price (often known as contrarian
investing); and (4) companies with growth characteristics selling substantially
less expensively compared to their own history or other similar growers.
Suitable securities often look attractive on more than one measure of
value.
In
pursuit of its value-oriented strategy, the Opportunity Fund may invest
substantially in small and mid-cap companies. For the purposes of this
investment policy, small to mid-cap companies are defined as companies with
market capitalizations at the time of purchase in the range of $150 million to
$30 billion. The Investment Manager believes that, within the small to mid-cap
universe of equity securities, incremental returns can be achieved by combining
a disciplined quantitative approach with traditional fundamental analysis. The
Opportunity Fund has no fixed ratio for small and mid-cap securities in its
portfolio, and while its focus is on securities of U.S. companies, it may invest
in securities of non-U.S. issuers as well.
The
Opportunity Fund may also engage in currency
transactions.
Principal Investment
Risks
The Opportunity
Fund is subject to various risks, any of which could cause an investor to lose
money. Losing all or a portion of your investment is a risk of
investing in the Fund. The following principal risks could affect the value of
your investment.
The
Opportunity Fund’s investments in equity securities will expose the Fund to:
•Stock
Market Risk,
which is the chance that stock prices overall will decline. Stock markets tend
to move in cycles, with periods of rising prices and periods of falling prices.
When the stock market is subject to significant volatility, the risks associated
with an investment in the Fund may increase. Markets may experience periods of
high volatility and reduced liquidity and, during such periods, the Fund may
experience high levels of shareholder redemptions, and may have to sell
securities at times when the Fund would otherwise not do so, potentially at
unfavorable prices.
The
Opportunity Fund may invest in debt securities, which would expose the Fund to:
•Interest
Rate Risk,
which is the chance that changes in interest rates will affect the value of
investments in debt securities. When interest rates rise, the value of existing
investments in debt securities tends to fall and this decrease in value may not
be offset by higher income from new investments. Interest rate risk is generally
greater for fixed-income securities with longer maturities or durations, but
increasing interest rates may have an adverse effect on the value of the Fund's
investment portfolio as a whole. The Fund may be subject to a greater risk of
rising interest rates than would normally be the case due to the recent end of a
period of historically low rates and the effects of potential central bank
monetary policy, and government fiscal policy, initiatives and market reactions
to those initiatives.
•Income
Risk,
which is the chance that the Opportunity Fund’s income will decline because of
falling interest rates; and
•Credit
Risk,
which is the chance that a debt issuer will fail to pay interest and principal
in a timely manner, or that negative perceptions of the issuer’s ability to make
such payments will cause the price of that debt to
decline.
The
Opportunity Fund may invest in smaller and mid-sized companies, which would
expose the Fund to:
•Smaller
and Mid-Sized Companies Risk,
which is the risk that the securities of such issuers may be comparatively more
volatile in price than those of companies with larger capitalizations, and may
lack the depth of management and established markets for their products and/or
services that may be associated with investments in larger
issuers.
The
Opportunity Fund may invest in foreign securities, which would expose the Fund
to:
•Foreign
Securities Risk, which is the risk associated with investments in securities of
non-U.S. issuers. The following factors make foreign securities more volatile:
political, economic and social instability; foreign securities may be harder to
sell; brokerage commissions and other fees may be higher for foreign securities;
and foreign companies may not be subject to the same disclosure and reporting
standards as U.S. companies.
•Currency
Risk,
which is the risk that the value of foreign securities may be affected by
changes in currency exchange rates.
The
Opportunity Fund may invest in value securities, which would expose the Fund
to:
•Value
Investing Risk,
which is the risk that value securities may not increase in price as anticipated
by the Investment Manager, and may even decline further in value, if other
investors fail to recognize the company’s value, or favor investing in
faster-growing companies, or if the events or factors that the Investment
Manager believes will increase a security’s market value do not
occur.
An investment
in the Opportunity Fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. Further discussion about other risks of investing in the
Opportunity
Fund may be found in the “More Information on Investment Strategies, Related
Risks and Disclosure of Portfolio Holdings” section of this
prospectus.
Performance
The following performance information indicates some of the
risks of investing in the Opportunity Fund. The bar chart
illustrates the variability of the Fund’s returns by showing changes in the
Fund’s performance from year to year. The table illustrates how the Fund’s
average annual returns for 1-year, 5-year, 10-year, and since inception periods
compare with the Russell 2000®
Index, an index that is a broad measure of market performance, as well as the
Russell Midcap®
Index, an index that reflects the types of securities in which the Fund invests.
The indices assume reinvestment of all dividends and distributions. Because an
index cannot be invested in directly, the returns of the indices do not reflect
a deduction for fees, expenses or taxes. The Fund’s past
performance, before and after taxes, is not necessarily an indication of how it
will perform in the future. Updated performance information is
available on the Fund’s website at www.prospectorfunds.com or by calling the Fund
toll-free at 1-877-734-7862.
Opportunity
Fund
Calendar
Year Total Returns as of December 31
During
the period of time shown in the bar chart, the Fund’s highest
quarterly return was 17.81% for the quarter ended
December 31,
2020, and the lowest
quarterly return was -23.22% for the quarter ended
March 31,
2020.
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Average
Annual Total Returns
(for
the period ended December 31, 2023) |
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| 1
Year |
5
Years |
10
Years |
Since
Inception
(9/28/07) |
Return Before
Taxes |
11.63% |
11.27% |
9.01% |
9.09% |
Return After
Taxes on Distributions |
11.46% |
10.20% |
7.30% |
7.81% |
Return After
Taxes on Distributions and Sale of Fund
Shares |
6.99% |
8.84% |
6.84% |
7.30% |
Russell
2000®
Total
Return Index (reflects no deduction for fees, expenses or
taxes) |
16.93% |
9.97% |
7.16% |
7.24% |
Russell
Midcap®
Total Return Index (reflects
no deduction for fees, expenses or taxes) |
17.23% |
12.68% |
9.42% |
8.56% |
After-tax
returns are calculated using the historical highest individual federal marginal
income tax rates and do not reflect the impact of state and local
taxes. Actual
after-tax returns depend on your situation and may differ from those shown.
Furthermore, the after-tax returns shown are not relevant to those who hold
their shares through tax-deferred arrangements such as 401(k) plans or
individual retirement accounts (“IRAs”).
Management
Investment
Adviser.
Prospector Partners Asset Management, LLC, the Investment Manager, is the
investment adviser of the Fund.
Portfolio
Managers.
The Opportunity Fund is managed by a team of Portfolio Managers as
follows:
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Portfolio
Manager |
Years
of Service with
the Fund |
Primary
Title with the
Investment
Manager |
Kevin
R. O’Brien |
16.5 |
Portfolio
Manager |
Jason
A. Kish |
11 |
Portfolio
Manager |
Steven
R. Labbe |
4 |
Portfolio
Manager |
Purchase
and Sale of Fund Shares
You
may purchase, exchange or redeem Opportunity Fund shares on any business day by
written request via mail (Prospector Funds, c/o U.S. Bank Global Fund Services,
P.O. Box 701, Milwaukee, Wisconsin 53201-0701), by telephone at (877) 734-7862,
or through a financial intermediary. You may also purchase or redeem Fund shares
by wire transfer. Investors who wish to purchase, exchange or redeem Fund shares
through a broker-dealer should contact the broker-dealer directly. The minimum
initial and subsequent investment amounts are shown below.
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| Minimum
Investment Amount |
| Initial |
Additional |
Regular
Accounts |
$10,000 |
$1,000 |
Automatic
Investment Plans |
$10,000 |
$100 |
IRAs
(Traditional, Roth and SIMPLE) |
$10,000 |
$1,000 |
SEPs,
Coverdell ESAs, and SAR-SEPs |
$10,000 |
$1,000 |
Tax
Information
Opportunity
Fund distributions may be taxed as ordinary income or capital gains, unless you
invest through an IRA, 401(k) plan, or other tax-deferred account.
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase Opportunity Fund shares through a broker-dealer or other financial
intermediary (such as a bank or financial advisor), the Fund and/or the
Investment Manager may pay the intermediary for the sale of Fund shares and
related services. These payments may create conflicts of interest by influencing
the broker-dealer or other intermediary and your salesperson to recommend the
Fund over another investment. Ask your advisor or visit your financial
intermediary’s website for more information.
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MORE
INFORMATION ON INVESTMENT STRATEGIES, RELATED RISKS AND DISCLOSURE OF
PORTFOLIO HOLDINGS |
The
Capital Appreciation Fund and the Opportunity Fund (each a “Fund” and together
the “Funds”) are separate series of Prospector Funds, Inc. (the “Company”), an
open-end management investment company that offers separate investment
portfolios.
Investment
Strategies of the Funds and Portfolio Selection
Equity
Securities.
The Funds may invest in common stocks and equity-related instruments, including
preferred stock, convertible preferred stock and convertible debt securities. An
equity security represents a proportionate share of the ownership of a company;
its value is based on the success of the company’s business, any income paid to
stockholders, the value of its assets, and general market conditions. Common
stocks and preferred stocks, and securities convertible into common stock, are
examples of equity securities.
Debt
Securities.
Debt securities (including distressed securities as described below), warrants
and other securities deemed by the Investment Manager to have appropriate
risk/reward characteristics may be included in the Funds’ portfolios. Debt
securities represent the obligation of the issuer to repay a loan of money to
it, and generally pay interest to the holder. Bonds, notes and debentures are
examples of debt securities.
Foreign
Securities.
Each Fund may invest in foreign securities, which may include sovereign debt and
participations in foreign government debt, some of which may be issued by
countries with emerging markets.
Investment
Companies.
Each Fund may invest, to the extent permissible under the Investment Company Act
of 1940, as amended (the “Investment Company Act”), in the securities of
registered open-end and closed-end investment companies, including
exchange-traded funds (“ETFs”). Open-end funds are investment companies that
issue new shares continuously and redeem shares daily. Closed-end funds are
investment companies that typically issue a fixed number of shares that trade on
a securities exchange or over-the-counter. ETFs are typically open-end
investment companies, which may seek to track the performance of a specific
index or be actively managed. ETFs are traded on a securities exchange based on
their market value.
Restricted
Securities.
Each Fund may invest in restricted securities including, but not limited to,
144A Securities. Investment in restricted securities will not be a principal
investment focus of the Opportunity Fund.
Hedging.
Hedging strategies designed to reduce potential loss as a result of certain
economic or market risks, including risks related to fluctuations in interest
rates, currency exchange rates, and broad or specific market movements, may be
used for a Fund. Each Fund may engage in forward foreign currency exchange
contracts and other currency transactions such as currency futures contracts,
currency swaps, options on currencies, or options on currency futures, or it may
engage in other types of transactions, such as the purchase and sale of
exchange-listed and over-the-counter (“OTC”) put and call options on securities,
equity and fixed-income indices and other financial instruments.
Risk
Factors and Special Considerations for the Funds
Stocks.
Individual stock prices tend to go up and down dramatically. These price
movements may result from factors affecting individual companies, industries, or
securities markets. For example, a negative development regarding an individual
company’s earnings, management, or accounting practices may cause its stock
price to decline, or a negative industry-wide event or broad-based market drop
may cause the stock prices of many companies to decline.
Value
Investing.
Value securities may not increase in price as anticipated by the Investment
Manager, and may even decline further in value, if other investors fail to
recognize the company’s value, or favor investing in faster-growing
companies,
or if the events or factors that the Investment Manager believes will increase a
security’s market value do not occur.
The
Funds’ value-oriented strategy may result in the Investment Manager selecting
securities for the Funds that are not widely followed by other investors.
Securities that the Investment Manager considers to be undervalued also may
include those of companies reporting poor earnings, companies whose share prices
have declined sharply (sometimes growth companies that have recently stumbled to
levels considered “cheap” in the Investment Manager’s opinion), turnarounds
(companies that have had poor performance for an extended period of time and
experience a positive reversal), cyclical companies (companies whose share price
performance is highly correlated to the economy), or companies emerging from
bankruptcy, all of which may have a higher risk of being ignored or rejected,
and therefore, undervalued by the market or losing more value.
Distressed
Securities.
The Funds may invest in distressed securities. Distressed securities are stocks,
bonds, and trade or financial claims of companies in, or about to enter or exit,
bankruptcy or financial distress. Debt obligations of distressed companies
typically are unrated, lower-rated, in default or close to default. Also,
securities of distressed companies are generally more likely to become worthless
than the securities of more financially stable companies.
Convertible
Securities.
The Funds may invest in convertible securities, securities that may be exchanged
or converted into a predetermined number of the issuer’s underlying shares or
the shares of another company or that are indexed to an unmanaged market index
at the option of the holder during a specified time period. Convertible
securities may take the form of convertible preferred stock, convertible bonds
or debentures, stock purchase warrants, zero-coupon bonds or liquid-yield option
notes, stock index notes, mandatories, or a combination of the features of these
securities. Prior to conversion, convertible securities have the same general
characteristics as non-convertible debt securities, but generally offer interest
or dividend yields that are lower than non-convertible debt securities of
similar quality. As with all debt securities, the market value of convertible
securities tends to decline as interest rates increase and conversely, increase
as interest rates decline. Convertible securities, however, also appreciate when
the underlying common stock appreciates, and conversely, depreciate when the
underlying common stock depreciates.
The Capital Appreciation Fund is particularly subject to this risk.
High
Yield Securities. The
Funds may invest in “high yield” bonds and preferred securities which are rated
in the lower rating categories (sometimes referred to as below investment grade
bonds, or “junk bonds”) by the various credit rating agencies (or in comparable
non-rated securities). Securities in the lower rating categories are subject to
greater risk of loss in principal and interest than higher-rated securities, and
are generally considered to be predominantly speculative with respect to the
issuer’s capacity to pay interest and repay principal. They are also generally
considered to be subject to greater risk than securities with higher ratings in
the case of deterioration of general economic conditions or rising interest
rates. The Funds may invest in securities that have the lowest ratings or are in
default, and in unrated securities of comparable investment quality. These
securities are considered to have extremely poor prospects of ever attaining any
real investment standing, to have a current identifiable vulnerability to
default, to be unlikely to have the capacity to pay interest and repay principal
when due in the event of adverse business, financial or economic conditions,
and/or to be in default or not current in the payment of interest or principal.
Because investors generally perceive that there are greater risks associated
with the lower-rated securities, the trading market for such securities is
thinner and less active than that for higher-rated securities, which can
adversely affect the prices at which these securities can be sold. In addition,
adverse publicity and investor perceptions about lower-rated securities, whether
or not based on fundamental analysis, may be a contributing factor in a decrease
in the value and liquidity of such lower-rated securities.
Credit
Risk.
This is the risk that the issuer or the guarantor of a debt security, or the
counterparty to a derivatives contract, will be unable or unwilling to make
timely payments of interest or principal or to otherwise honor its obligations.
The degree of risk for a particular security may be reflected in its credit
rating. The degree of risk for a particular security may be reflected in its
credit rating. There is the possibility that the credit rating of a fixed-income
security may be downgraded after purchase, which may adversely affect the value
of the security. Investments in fixed-income securities with lower ratings tend
to have a higher probability that an issuer will default or fail to meet its
payment obligations.
Credit
risk is greater for lower-rated securities. The Funds may invest in foreign
securities, and as such, are subject to increased credit risk because of the
difficulties of requiring foreign entities, including issuers of sovereign debt
obligations, to honor their contractual commitments.
The Capital Appreciation Fund is particularly subject to this risk.
Market
Events.
Changes in economic, tax and regulatory policies, interest rates, high inflation
rates and government instability, war or other political or economic actions or
factors may have an adverse effect on a Fund’s investments. Rates of inflation
have recently risen. The value of assets or income from an investment may be
worth less in the future as inflation decreases the value of money. As inflation
increases, the real value of a Fund’s assets may decline. Events in the
financial sector may result, and have in past years resulted, in reduced
liquidity in credit and fixed income securities markets and heightened
volatility in the U.S. and non-U.S. financial markets. While entire markets have
been impacted, issuers that have exposure to certain markets, including credit
markets, may be, and have been in past years, particularly affected. In
addition, economies and financial markets throughout the world are becoming
increasingly interconnected, which increases the likelihood that events or
conditions in one country or region will adversely impact markets or issuers in
other countries or regions. Political, geopolitical, natural and other events,
including regional and global conflicts, terrorism, trade disputes, government
shutdowns, market closures, supply chain disruptions, natural and environmental
disasters, epidemics, pandemics and other public health crises and related
events have led, and in the future may lead, to economic uncertainty, decreased
economic activity, increased market volatility and other disruptive effects on
U.S. and global economies and markets. It is not known how long such impacts, or
any future impacts of other significant events described above, will continue,
but there could be a prolonged period of global economic slowdown, which may be
expected to impact a Fund and its investments.
Interest
Rate Risk.
This is the risk that changes in interest rates will affect the value of a
Fund’s investments in debt securities. Debt securities are obligations of the
issuer to make payments of principal and/or interest on future dates. Increases
in interest rates may cause the value of a Fund’s investments to decline.
Interest rate risk generally is greater for lower-rated securities or comparable
unrated securities. Interest rate risk is also generally greater for debt
securities with longer maturities; the value of these securities is affected
more by changes in interest rates because when interest rates rise, the
maturities of these types of securities tend to lengthen and the value of the
securities decreases more significantly. In addition, these types of securities
are subject to prepayment when interest rates fall, which generally results in
lower returns because the Funds must reinvest their assets in debt securities
with lower interest rates. However, increasing interest rates may have an
adverse effect on the value of a Fund’s investment portfolio as a whole. The
Funds may be subject to a greater risk of rising interest rates than would
normally be the case due to the recent end of a period of historically low rates
and the effects of potential central bank monetary policy, and government fiscal
policy, initiatives and market reactions to those initiatives. The
Capital Appreciation Fund is particularly subject to interest rate
risk.
Liquidity
Risk. The
Funds’ investments are subject to liquidity risk. Liquidity risk exists when
particular investments are difficult to purchase or sell, possibly preventing a
Fund from selling a security within the desired timeframe or at an advantageous
price. In addition, legal or contractual restrictions on the resale of a
security may affect a Fund’s ability to sell the security when deemed
appropriate or necessary by the Investment Manager. Liquidity risk may be higher
in a rising interest rate environment when the value and liquidity of
fixed-income securities generally decline. Foreign fixed-income securities may
have more liquidity risk because secondary trading markets for these securities
may be smaller and less well-developed and the securities may trade less
frequently than domestic securities. Derivatives and securities involving
substantial market and credit risk tend to involve greater liquidity risk. A
Fund may face liquidity risk as a result of, among other factors, low trading
volumes, legal or contractual restrictions on resale, substantial redemptions of
the Fund’s shares and, with respect to fixed-income securities, rising interest
rates and a decreasing capacity of dealers in the secondary market to make
markets in such securities. Events in the financial sector over the past several
years have resulted in reduced liquidity in credit and fixed-income securities
markets and heightened volatility in the U.S. and non-U.S. financial
markets.
Restricted
Securities.
Restricted securities may have terms that limit their resale to other investors
or may require registration under applicable securities laws before they may be
sold publicly. It may not be possible to sell certain
restricted
securities at any particular time or at an acceptable price. Due to changing
markets or other factors, restricted securities may be subject to a greater
possibility of becoming illiquid than securities that have been registered with
the Securities and Exchange Commission for sale. As required, the Board of
Directors of the Company (the “Board”) has adopted a liquidity risk management
program pursuant to Rule 22e-4 under the Investment Company Act and related
procedures to categorize each Fund’s investments, including 144A Securities, and
identify illiquid investments. A Fund may not purchase an illiquid investment
if, at the time of purchase, the Fund would have more than 15% of its net assets
invested in such illiquid investments. An illiquid investment is any investment
that the Fund reasonably expects cannot be sold or disposed of in current market
conditions in seven calendar days or less without the sale or disposition
significantly changing the market value of the investment. The
Capital Appreciation Fund is particularly subject to this risk.
Smaller
and Mid-Size Companies.
Investing in smaller companies, and to some extent mid-size companies, involves
substantial risks and should be considered speculative. Such companies may be
engaged in business within a narrow geographic region, be less well known to the
investment community, and have more volatile share prices. Also, companies with
smaller market capitalizations often lack management depth, have narrower market
penetrations, less diverse product lines, and fewer resources than larger
companies. Moreover, the securities of such companies often have less market
liquidity and as a result, their stock prices often react more strongly to
changes in the marketplace. In addition, small and mid-size companies may be
unable to generate funds necessary for growth or development or be developing or
marketing new products or services for which markets are not yet established and
may never become established.
The Opportunity Fund is particularly subject to this risk.
Change
in Market Capitalization.
A Fund may intend to invest substantially in companies of a certain market
capitalization range. If a security that is within the range for a Fund at the
time of purchase later falls outside the range, which is most likely to happen
because of market growth or depreciation, the Fund may continue to hold the
security if, in the Investment Manager’s judgment, the security remains
otherwise consistent with the Fund’s investment objective and
strategies.
The Opportunity Fund is particularly subject to this risk.
Foreign
Securities.
Securities of companies located outside the U.S. involve additional risks that
can increase the potential for losses in a Fund to the extent that it invests in
these securities. Certain of these risks also may apply to securities of U.S.
companies with significant foreign operations. These risks can increase the
potential for losses in the Funds and affect share price. Foreign securities may
be issued and traded in foreign currencies. As a result, their values may be
affected by changes in exchange rates between foreign currencies and the U.S.
dollar, as well as between currencies of countries other than the U.S. For
example, if the value of the U.S. dollar goes up compared to a foreign currency,
an investment traded in that foreign currency will go down in value because it
will be worth fewer U.S. dollars. In addition, brokerage commissions and other
fees may be higher for foreign securities, Government supervision and regulation
of foreign stock exchanges, currency markets, trading systems and brokers may be
less structured than in the U.S, and the procedures and rules governing foreign
transactions and custody (holding of the Funds’ assets) may involve delays in
payment, delivery or recovery of money or investments. Foreign companies may not
be subject to the same disclosure, accounting, auditing and financial reporting
standards and practices as U.S. companies. Thus, there may be less information
publicly available about foreign companies. Certain foreign securities may be
less liquid (harder to sell) and more volatile than many U.S. securities. This
means a Fund may, at times, be unable to sell foreign securities at favorable
prices.
Political,
Economic and Regulatory Developments.
Changes
in economic and tax policies, interest rates, high inflation rates, government
instability, war, regional and global conflicts, or other political or economic
actions or factors may have an adverse effect on a Fund’s investments.
Governmental and regulatory actions, including tax law changes, may have
unexpected or adverse consequences on particular markets, strategies, or
investments, including the liquidity of investments. These actions and other
developments may impact a Fund’s ability to invest or remain invested in certain
securities and other assets. Legislation or regulation may also change the way
in which a Fund itself is regulated. The Investment Manager cannot predict the
effects of any new governmental regulation that may be implemented on the
ability of a Fund to invest in certain assets, or affect the Investment
Manager’s ability to access financial markets, and
there
can be no assurance that any new governmental regulation will not adversely
affect a Fund’s ability to achieve its investment objective.
The
political, economic and social structures of some foreign countries in which the
Funds invest may be less stable and more volatile than those in the U.S.
Investments in these countries may be subject to the risks of internal and
external conflicts, currency devaluations, foreign ownership limitations and tax
increases. It is possible that a government may take over the assets or
operations of a company or impose restrictions on the exchange or export of
currency or other assets. Some countries also may have different legal systems
that may make it difficult for the Funds to vote proxies, exercise shareholder
rights, and pursue legal remedies with respect to their foreign investments.
Diplomatic and political developments, including rapid and adverse political
changes, social instability, regional conflicts, terrorism and war, could affect
the economies, industries, and securities and currency markets, and the value of
the Funds’ investments, in non-U.S. countries. These factors are extremely
difficult, if not impossible, to predict and to take into account with respect
to the Funds’ investments. In addition, sanctions and other similar actions
imposed by the U.S. or a foreign country, including those against specific
issuers and individuals, may restrict a Fund’s ability to purchase or sell
foreign securities or access income received on foreign securities, or may
require the Fund to divest its holdings of foreign securities, which could
adversely affect the value and liquidity of such holdings. The imposition of
sanctions and other similar actions could also adversely affect global sectors
and economies and thereby negatively affect the value of a Fund’s investments
beyond any direct exposure to the countries or regions subject to the
sanctions.
The
United Kingdom (“UK”) formally withdrew from the European Union (“EU”) on
January 31, 2020. The UK and the EU negotiated an agreement governing their
future trading and security relationships. This agreement became effective on a
provisional basis on January 1, 2021 and entered into full force on May 1, 2021.
The UK and the EU also negotiated a Memorandum of Understanding (“MoU”), which
creates a framework for voluntary regulatory cooperation in financial services
between the UK and the EU. The impact on the UK and European economies and the
broader global economy of the uncertainties associated with implementing the
agreement and MoU are significant and could have an adverse effect on the value
of a Fund’s investments and its net asset value. These uncertainties include an
increase in the regulatory and customs requirements imposed on cross-border
trade between the UK and the EU, the negotiation and implementation of
additional arrangements between the UK and the EU affecting important parts of
the economy (such as financial services), volatility and illiquidity in markets,
currency fluctuations, the renegotiation of other existing trading and
cross-border cooperation arrangements (whether economic, tax, fiscal, legal,
regulatory or otherwise) of the UK and the EU, and potentially lower growth for
companies in the UK, Europe and globally.
Recent
examples of developments include conflict, loss of life and disaster connected
to ongoing armed conflict between Russia and Ukraine in Europe and Hamas and
Israel in the Middle East. Future market disruptions are impossible to predict
but could be significant and have a severe adverse effect on the regions and
beyond, including significant negative impacts on the economy and the markets
for certain securities and commodities, such as oil and natural
gas.
Real
Estate Investment Trusts (“REITs”). A
Fund may invest in REITs, which may be subject to certain risks associated with
the direct ownership of real property, including declines in the value of real
estate, risks related to general and local economic conditions, overbuilding and
increased competition, increases in property taxes and operating expenses, and
variations in rental income. REITs are dependent upon management skills, are not
diversified, and are subject to heavy cash flow dependency, default by borrowers
and self-liquidation. When interest rates decline, the value of a REIT’s
investment in fixed-rate obligations can be expected to rise. Conversely, when
interest rates rise, the value of a REIT’s investment in fixed-rate obligations
can be expected to decline. A Fund will indirectly bear its proportionate share
of expenses incurred by REITs in which the Fund invests in addition to the
expenses incurred directly by the Fund.
Cyber
Security Risk.
As the use of the Internet and other technologies has become more prevalent in
the course of business, the Funds and their service providers, including the
Investment Manager, have become more susceptible to operational and financial
risks associated with cyber security. Cyber security incidents can result from
deliberate attacks such as gaining unauthorized access to digital systems (e.g.,
through “hacking” or malicious software coding) for purposes of misappropriating
assets or sensitive information, corrupting data, or causing operational
disruption, or from
unintentional
events, such as the inadvertent release of confidential information. Cyber
security failures or breaches of a Fund or its service providers or the issuers
of securities in which a Fund invests have the ability to cause disruptions and
impact business operations, potentially resulting in financial losses, the
inability of Fund shareholders to transact business, violations of applicable
privacy and other laws, regulatory fines, penalties, reputational damage,
reimbursement or other compensation costs, and/or additional compliance costs.
While measures have been developed which are designed to reduce the risks
associated with cyber security incidents, there can be no assurance that those
measures will be effective, particularly since a Fund does not control the cyber
security defenses or plans of its service providers, financial intermediaries
and companies with which those entities do business and companies in which the
Fund invests.
Cyber
security incidents, both intentional and unintentional, may allow an
unauthorized party to gain access to Fund or shareholder assets, Fund or
customer data (including private shareholder information), or proprietary
information, or cause a Fund, the Investment Manager, and/or a Fund’s service
providers (including, but not limited to, fund accountants, custodians,
sub-custodians, transfer agents and financial intermediaries) to suffer data
breaches, data corruption or lose operational functionality, or prevent Fund
shareholders from purchasing, redeeming, or exchanging shares or receiving
distributions. The Funds and the Investment Manager have limited ability to
prevent or mitigate cyber security incidents affecting third-party service
providers. Cyber security incidents may result in financial losses to a Fund and
its shareholders, and substantial costs may be incurred in seeking to prevent or
minimize future cyber security incidents.
Other
Investment Policies of the Funds
To
a limited extent, the Funds may engage in the additional investment activities
described below.
Cash
Reserves.
The Funds’ portfolios will normally be invested primarily in equity and
equity-related securities. However, a Fund is not required to be fully invested
in such securities and may maintain a significant portion of its total assets in
cash and cash reserves, including, but not limited to, U.S. Government
securities, money-market funds, repurchase agreements and other high quality
money market instruments. From time to time, cash and cash reserves may also
include foreign securities, including but not limited to, short-term obligations
of foreign governments or other high quality foreign money-market instruments.
The Investment Manager believes that a certain amount of liquidity in a Fund’s
portfolio is desirable both to meet operating requirements and to take advantage
of new investment opportunities. Under adverse market conditions, when a Fund is
unable to find sufficient investments meeting its criteria, cash and cash
reserves may comprise a significant percentage of the Fund’s total assets. Each
Fund’s investment program will largely represent case-by-case investment
decisions concerning individual securities. As a result, the size of a Fund’s
cash reserve is more likely to reflect the Investment Manager’s ability to find
investments meeting the Investment Manager’s purchase criteria rather than a
market outlook. When a Fund holds a significant portion of assets in cash and
cash reserves, it may not meet its investment objective.
Future
Developments.
A Fund may take advantage of other investment practices and invest in new types
of securities and financial instruments that are not currently contemplated for
use by the Fund, or are not available but may be developed, to the extent such
investment practices, securities and financial instruments are consistent with
the Fund’s investment objective and legally permissible for the Fund. Such
investment practices, if they arise, may involve risks that exceed those
involved in the activities described above.
More
detailed information about the Funds, their policies and risks can be found in
the Statement of Additional Information (“SAI”).
A
description of the Funds’ policies and procedures regarding the release of
portfolio holdings information is available in the SAI.
Investment
Manager
Prospector
Partners Asset Management LLC, located at 370 Church Street, Guilford,
Connecticut 06437, is the Funds’ investment manager. The Investment Manager is
registered as an investment adviser with the Securities and Exchange Commission.
John D. Gillespie, the managing member of the Investment Manager, has more than
thirty years’ experience in investment advisory services, including experience
managing the portfolios of open-end and closed-end registered investment
companies. Prospector Partners, LLC, an affiliate of the Investment Manager,
serves as adviser to private investment funds and institutional
accounts.
Subject
to policies adopted by the Board, the Investment Manager directs the purchase or
sale of investment securities in the day-to-day management of the Funds’
investment portfolios. The Investment Manager, at its own expense and without
reimbursement from either Fund, furnishes office space and all necessary office
facilities, equipment and executive personnel for making the investment
decisions necessary for managing each Fund and maintaining its organization.
Pursuant to an investment advisory contract, each Fund pays the Investment
Manager an annual management fee for managing such Fund’s assets equal to 1.00%
of the Fund’s average daily net assets. For the fiscal year ended December 31,
2023, after fee waivers and expense reimbursements, the Investment Manager
received management fees of 0.49% of the Capital Appreciation Fund’s average
daily net assets and 0.88% of the Opportunity Fund’s average daily net assets.
See the section entitled “Understanding Expenses” for additional
information.
A
description of the basis for the Board approving the investment advisory
contract with the Investment Manager is available in the Funds’ Annual Report
for the fiscal year ended December 31, 2023.
Understanding
Expenses
Each
Fund pays for its expenses out of its own assets. The Investment Manager or
other service providers may waive all or any portion of their fees and reimburse
certain expenses of a Fund.
The
Investment Manager has contractually agreed to waive a portion of its fees
and/or pay Fund expenses (excluding interest, acquired fund fees and expenses,
brokerage commissions and extraordinary expenses) in order to limit the Total
Annual Fund Operating Expenses After Fee Waiver and Expense Reimbursement for
each of the Funds to 1.25% of their respective average daily net assets. This
Expense Cap will remain in effect through at least September 30, 2025, and may
only be terminated or amended by the Board. The Investment Manager is permitted
to recoup fee waivers and/or expense payments made in the prior three fiscal
years from the date the fees were waived and/or Fund expenses were paid. This
reimbursement may be requested by the Investment Manager if the aggregate amount
actually paid by each Fund toward operating expenses for such fiscal
year (taking into account the recoupment) does not exceed the Expense
Cap.
Any
fee waiver or expense reimbursement will increase investment returns of such
Fund for the period during which the waiver or reimbursement is in
effect.
Portfolio
Managers
The
Capital Appreciation Fund and the Opportunity Fund are managed by a team
consisting of Kevin R. O’Brien, Jason A. Kish and Steven R. Labbe. Biographical
information about Mr. O’Brien, Mr. Kish and Mr. Labbe is set forth
below.
Biographies
Kevin
R. O’Brien
Mr.
O’Brien has been a portfolio manager at the Investment Manager since 2007. Mr.
O’Brien has been a portfolio manager or securities analyst for more than thirty
years. In April 2003, Mr. O’Brien became a portfolio manager of Prospector
Partners, LLC. In addition, from April 2003 through August 2005, Mr. O’Brien
served as a Managing Director of White Mountains Advisors, LLC. From April 1996
through April 2003, Mr. O’Brien was an employee of Neuberger Berman, where he
began as an investment analyst (1996-1999), served as Vice President
(1999-2001), and Managing Director (2001-2003). At the end of Mr. O’Brien’s
tenure at Neuberger Berman, Mr. O’Brien’s responsibilities included the
co-management of equity assets of institutional investors and mutual funds. At
Neuberger Berman, Mr. O’Brien served as co-manager of the Neuberger Berman
Genesis Fund. Mr. O’Brien was responsible for following stocks in the financial
services, consumer, and technology sectors. From 1991 through 1996, Mr. O’Brien
was an employee of Alex, Brown & Sons, where he was an analyst following the
financial services industry. His coverage universe included property-casualty
insurance, specialty finance, asset management, and diversified financial
services. Mr. O’Brien received a B.S. magna cum laude from Central Connecticut
State University in 1986. Additionally, Mr. O’Brien received a Chartered
Financial Analyst designation in 1995.
Jason
A. Kish
Mr.
Kish is a portfolio manager at the Investment Manager and has been a portfolio
manager or securities analyst for more than twenty-five years. Mr. Kish joined
Prospector Partners, LLC, an affiliate of the Investment Manager, in December
1997. He began as a junior analyst, covering all industries, eventually
serving as the property-casualty analyst and became the Director of Research in
2010. From 1995 to 1997, Mr. Kish worked as an auditor at Coopers &
Lybrand, LLP in Hartford, CT. Mr. Kish received a B.S.B.A. from Providence
College in 1995. He received his Certified Public Accountant designation in 2000
and his Chartered Financial Analyst designation in 2004.
Steven
R. Labbe
Mr.
Labbe is a portfolio manager at the Investment Manager and has been a portfolio
manager or securities analyst for more than twenty-five years. Mr. Labbe joined
Prospector Partners, LLC, an affiliate of the Investment Manager, in March,
2012. He began as an analyst, covering the insurance industry and gradually
increased his coverage to asset managers, exchanges, and brokers; he became a
portfolio manager in July, 2020. From 1996 to 2012, Mr. Labbe was employed as an
analyst with Langen McAlenney, a division of Janney Montgomery Scott, covering
the insurance industry. Mr. Labbe received a B.S. degree in Mathematics, from
Central Connecticut State University in December 1995. He received his Chartered
Financial Analyst designation in 2001.
The
SAI provides additional information about the portfolio managers’ compensation,
other accounts that they manage and their ownership of each Fund’s
shares.
Conflicts
of Interest
Prospector
Partners, LLC, an affiliate of the Investment Manager, acts as the general
partner, managing member or investment manager to other pooled investment
vehicles as well as investment adviser for institutional accounts. Although it
is the policy of the Investment Manager and its affiliates (the “Investment
Manager Entities”) to treat all clients fairly and equitably, and the Investment
Manager has adopted policies and procedures designed to ensure that no
particular client will be disadvantaged by the activities of other clients,
there may be inherent conflicts of interest that may, from time to time affect
the Funds. The Board reviews potential conflicts to ensure that such Fund is not
disadvantaged. In addition, the Codes of Ethics of the Investment Manager and
the Funds contain additional provisions designed to ensure that conflicts of
interest are minimized among the Funds and other clients of the Investment
Manager Entities.
As
a consequence of size, investment powers and founding documents, the individual
accounts, funds, partnerships, and limited liability companies managed or
advised by the Investment Manager Entities may pursue strategies not available
to
a
Fund and as a consequence, may invest in securities in which a Fund does not
participate. In some circumstances, a Fund may pursue strategies or purchase
investments that are not purchased for other accounts of the Investment Manager
Entities. As a result of pursuing different strategies and objectives, the
performance of these accounts may be materially better or worse than that of a
Fund.
This
section discusses how to buy or sell shares in the Funds offered in this
prospectus.
Buying
Shares
Minimum
Purchase Requirements:
For
all accounts, there is an initial investment minimum of $10,000, and, for any
additional investment, there is a minimum of $100 for Automatic Investment Plans
(“AIPs”) and $1,000 for other types of shareholders.
PLEASE
NOTE THAT YOU MAY ONLY BUY SHARES OF A FUND IF THEY ARE ELIGIBLE FOR SALE IN
YOUR STATE OR JURISDICTION.
Retirement
and Employee Benefit Plans
Shares
are also available to:
•Coverdell
Education Savings Accounts (Coverdell ESAs);
•Simplified
Employee Pension Plans (SEPs, including SAR-SEPs), traditional IRAs, ROTH IRAs,
SIMPLE IRAs, individual 403(b) plans, 401(k) plans, 457 plans,
employer-sponsored 403(b) plans, profit sharing plans and money purchase pension
plans, and
•Defined
benefit plans and non-qualified deferred compensation plans where plan level or
omnibus accounts are held on the books of the Funds (group retirement plans)
with assets of $1,000,000 or more.
Information
About Your Account
Each
Fund is a no-load fund, which means that you may purchase or redeem shares
directly at their net asset value (“NAV”) per share without paying a sales
charge. However, you may be charged a fee or have higher investment minimums if
you buy or sell shares through a securities dealer, bank or financial
institution.
Opening
an Account.
You may purchase shares by check, ACH, or wire. All checks must be in U.S.
Dollars drawn on a domestic bank and should be made payable to “Prospector
Funds, Inc.” The Funds will not accept payment in cash or money orders. To
prevent check fraud, the Funds will not accept third party checks, Treasury
checks, credit card checks, traveler’s checks or starter checks for the purchase
of shares. The Funds are unable to accept post-dated checks or any conditional
order or payment.
The
Transfer Agent will charge a fee, currently $25, against a shareholder’s
account, in addition to any losses sustained by a Fund, for any payment that is
returned. It is the policy of the Funds not to accept applications under certain
circumstances, or in amounts, considered disadvantageous to shareholders. The
Funds reserve the right to reject any application.
The
Funds do not consider the U.S. Postal Service or other independent delivery
services to be their agents. Therefore, deposit in the mail or with such
services, or receipt at the U.S. Bancorp Fund Services, LLC (the “Transfer
Agent”) post office box, of purchase applications, orders or redemption requests
does not constitute receipt by the Transfer Agent of the Funds. The timing of
the receipt of a purchase order or redemption request is determined by the
Transfer Agent based on when the order or request is received at the Transfer
Agent’s offices.
Anti-Money
Laundering Program
Customer
identification and verification are part of the Company’s overall obligation to
deter money laundering under the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (USA
PATRIOT Act). The Company has appointed an Anti-Money Laundering Compliance
Officer and adopted an Anti-Money Laundering Compliance Program designed to
prevent the Funds from being used for money laundering or the financing of
terrorist activities. In this regard, the Company reserves the right, to the
extent permitted by law, to (1) refuse, cancel or rescind any purchase or
exchange order, (2) freeze any account and/or suspend account services or (3)
close an account in cases of threatening conduct or suspected fraudulent or
illegal activity. These actions will be taken when, in the sole discretion of
the Company’s management, they are deemed to be in the best interest of the
Funds or when the Funds are requested or compelled to do so by governmental or
law enforcement authority. If an account is closed at the request of
governmental or law enforcement authority, the shareholder may not receive
proceeds of the redemption if a Fund is required to withhold such
proceeds.
Account
Application and Customer Identity and Verification
To
help the government fight the funding of terrorism and money laundering
activities, Federal law requires financial institutions to obtain, verify, and
record information that identifies each person who opens an
account.
When
you open an account, the Company will ask for your name, address, date of birth,
social security number, and other information or documents that will allow us to
identify you. If you are opening an account in the name of a legal entity
(e.g.,
partnership, limited liability company, business trust or corporation), you must
also supply the identity of the beneficial owners of the legal entity. If you do
not supply the required information, the Company will attempt to contact you or,
if applicable, your broker or financial adviser. If the fund cannot obtain the
required information within a timeframe established in the Fund’s sole
discretion, your application will be rejected.
When
your application is in “proper form” (as defined below) and includes all
required information, your application will normally be accepted and your order
will be processed at the NAV next calculated after receipt of your application
in proper form. The Company may reject your application under its Anti-Money
Laundering Program. If your application is accepted, the Company will then
attempt to verify your identity using the information you have supplied and
other information about you that is available from third parties, including
information available in public and private databases, such as consumer reports
from credit reporting agencies.
The
Company will try to verify your identity within a timeframe established in the
Company’s sole discretion. If the Company cannot do so, it reserves the right to
close your account at the NAV next calculated after the Company decides to close
your account, and to remit proceeds to you via check, but only if your check
first clears the bank. If your account is closed, you may be subject to a gain
or loss on shares and will be subject to any related taxes.
Market
Timing
Market
Timing Generally.
The Board has adopted policies and procedures with respect to frequent purchases
and redemptions of Fund shares by Fund shareholders. It is the Company’s policy
to discourage short-term or frequent trading, often referred to as “market
timing.” Frequent trading in the Funds, such as by traders seeking short-term
profits from market momentum, time zone arbitrage, and other timing strategies,
may interfere with the management of the Funds’ portfolios and result in
increased administrative and brokerage costs and potential dilution in the value
of shares. As money is moved in and out, the Funds may incur expenses related to
buying and selling portfolio securities and these expenses are borne by the
Funds’ shareholders.
Specifically,
focus is placed on identifying frequent redemption transactions that may be
harmful to the Funds or their shareholders. These transactions are analyzed for
offsetting purchases within a predetermined period of time. If frequent trading
trends are detected, an appropriate course of action is taken, which course of
action will be determined by consideration of, among other things, shareholder
account transaction history. The Company reserves the right to restrict or
reject, or cancel within one business day, without any prior notice, any
purchase or exchange order, including transactions that, in the judgment of the
Investment Manager, represent excessive trading, may be disruptive to the
management of a Fund’s portfolio, may increase a Fund’s transaction costs,
administrative costs or taxes, and those that may otherwise be detrimental to
the interests of a Fund and its shareholders. The Company also reserves the
right to refuse, restrict or cancel purchase orders not accompanied by payment
and to take such other actions in response to potential market timing activity
as are described below. The Company’s right to cancel or revoke such purchase
orders would be limited to within one business day following receipt by the
Company of such purchase orders.
Market
Timing Consequences.
If information regarding your trading activity in a Fund is brought to the
attention of the Investment Manager and based on that information, a Fund or the
Investment Manager, in its sole discretion, concludes that your trading may be
detrimental to such Fund, the Company may temporarily or permanently bar your
future purchases in the Fund or the Company, or alternatively, may limit the
amount, number or frequency of any future purchases and/or the method by which
you may request future purchases and redemptions (including purchases and/or
redemptions by an exchange or transfer between the Fund and any other mutual
fund). The Company may refuse to sell shares to persons determined by the
Company to be potential market timers, even if any pre-determined limitations
established on behalf of a Fund have not been reached.
In
considering an investor’s trading activity, the Company may consider, among
other factors, the investor’s trading history both directly and, if known,
through financial intermediaries, in a Fund, in other mutual funds, or in
accounts under common control or ownership.
Due
to its investment in the securities of foreign issuers, which may have more
limited trading markets and investing in foreign securities presents the risk of
arbitrage marketing timing, the Funds may be subject to greater risk of market
timing activity than funds investing in securities of certain domestic
issuers.
Market
Timing and Redemptions through Financial Intermediaries.
You are an investor subject to the Company’s policies and procedures regarding
frequent trading (including its policies described below with respect to the
application of the 2% short-term trading redemption fee), whether you are a
direct shareholder of a Fund or you are investing indirectly in a Fund through a
financial intermediary such as a broker-dealer, a bank, an insurance company
separate account, an investment advisor, an administrator or trustee of an
Internal Revenue Service (IRS) recognized tax-deferred savings plan such as a
401(k) retirement plan and a 529 college savings plan that maintains a master
account (an Omnibus Account) with the Fund for trading on behalf of its
customers.
Risks
from Market Timers.
Depending on various factors, including the size of each Fund, the amount of
assets the Investment Manager typically maintains in cash or cash equivalents,
the dollar amount and number and frequency of trades and the types of securities
in which a Fund typically invests, short-term or frequent trading may interfere
with the
efficient
management of the Fund’s portfolio, increase the Fund’s transaction costs,
administrative costs and taxes and/or impact such Fund’s
performance.
In
addition, to the extent that the nature of a Fund’s portfolio holdings exposes
the Fund to “arbitrage market timers,” the value of the Fund’s shares may be
diluted if redeeming shareholders receive proceeds (and buying shareholders
receive shares) based upon net asset values which do not reflect appropriate
fair value prices. Arbitrage market timing occurs when an investor seeks to take
advantage of the possible delay between the change in the value of a mutual
fund’s portfolio holdings and the reflection of the change in the fund’s NAV per
share. As noted above, since the Funds may invest in foreign securities, they
may be particularly vulnerable to arbitrage market timing. Arbitrage market
timing in foreign investments may occur because of time zone differences between
the foreign markets on which the Funds’ international portfolio securities trade
and the time as of which the Funds’ NAV is calculated. Arbitrage market timers
may purchase shares of a Fund based on events occurring after foreign market
closing prices are established, but before calculation of such Fund’s NAV. One
of the objectives of the Company’s fair value pricing procedures is to minimize
the possibilities of this type of arbitrage market timing (please see “Valuation
- Foreign Securities - Potential Impact of Time Zones and Market Holidays”
below).
Since
the Funds may invest in securities that are, or may be, restricted, traded
infrequently, thinly traded, or relatively illiquid (“relatively illiquid
securities”), they may be particularly vulnerable to arbitrage market timing. An
arbitrage market timer may seek to take advantage of a possible differential
between the last available market prices for one or more of those relatively
illiquid securities that are used to calculate the Funds’ NAV and the latest
indications of market values for those securities. One of the objectives of the
Company’s fair value pricing procedures is to minimize the possibilities of this
type of arbitrage market timing (please see “Fair Valuation - Individual
Securities” below).
The
Company is currently using several methods designed to reduce the risks
associated with market timing. These methods include:
•Committing
staff of the Company or the Company’s agent to selectively review, on a
continuing basis, recent trading activity in order to identify trading activity
that may be contrary to the Company’s policies regarding frequent
trading;
•Assessing
a redemption fee for short-term trading;
•Monitoring
potential price differentials following the close of trading in foreign markets
and changes in indications of value for relatively illiquid traded securities to
determine whether the application of fair value pricing procedures is warranted;
and
•Seeking
the cooperation of financial intermediaries to assist the Company in identifying
market timing activity.
Though
these methods involve judgments that are inherently subjective and involve some
selectivity in their application, the Company seeks to make judgments and
applications that are consistent with the interests of the Company’s
shareholders. There is no assurance that the Company or its agents will gain
access to any or all information necessary to detect market timing in Omnibus
Accounts. While the Company will seek to take actions (directly and with the
assistance of financial intermediaries) that will detect market timing, the
Company cannot represent that such trading activity can be minimized or
completely eliminated.
Revocation
of Market Timing Trades. Transactions
placed in violation of the Company’s policies regarding frequent trading are not
necessarily deemed accepted by the Company and may be cancelled or revoked by
the Company following receipt by the Company. The Company’s right to cancel or
revoke such purchase orders would be limited to within one business day
following receipt by the Company of such purchase orders.
Redemption
Fee
Redemption
Fee Assessment.
You may redeem shares of each Fund at the NAV per share minus any applicable
redemption fee. A short-term trading redemption fee will be assessed on any
Fund’s shares that, sixty (60) calendar days or less following the date of their
purchase, are sold (1) by redemption, whether voluntary or involuntary, unless
such involuntary redemption is because you have a low balance, (2) through a
systematic withdrawal plan or (3) by exchange. This redemption fee will equal
2.00% of the amount redeemed (using standard rounding criteria). To calculate
redemption fees, after first redeeming any shares associated with reinvested
distributions, the Company will use the first-in-first-out (FIFO) method to
determine the holding period. Under this method, the date of redemption (or
exchange) will be compared with the earliest purchase date of shares held in the
account. The redemption fee, if applicable, will automatically be assessed at
the time of the transaction and may be collected by deduction from the
redemption proceeds.
This
redemption fee is imposed to discourage short-term trading and is paid into the
Fund whose shares are redeemed or exchanged to help offset the transaction costs
and administrative expenses associated with short-term trading. This redemption
fee is not intended to accommodate short-term trading and the Company will
monitor the assessment of redemption fees against your account. Based on the
frequency of redemption fees assessed against your account with the Company, the
Investment Manager may in its sole discretion determine that your trading
activity may be detrimental to a Fund as described in the section entitled
“Market Timing” above and elect to (1) reject or limit the amount, number,
frequency or method for requesting future purchases into the Company and/or (2)
reject or limit the amount, number, frequency or method for requesting future
redemptions out of a Fund.
Waiver/Exceptions/Changes.
The redemption fee is mandatory. The redemption fee may not apply to redemptions
or exchanges by other mutual funds, Omnibus Account owners and certain
comprehensive fee programs where the beneficial owner has limited investment
discretion with respect to its shares in a Fund. In addition, the Company
reserves the right to modify or eliminate the redemption fee or impose waivers
at any time. You will receive 60 days’ notice of any material changes, unless
otherwise provided by law.
Limitations
on Collection.
Currently, the Company is very limited in its ability to ensure that the
redemption fee is assessed by financial intermediaries on behalf of their
customers. For example, where a financial intermediary is not able to determine
if the redemption fee applies and/or is not able to assess or collect the fee,
or omits to collect the fee at the time of redemption or exchange, the Fund
whose shares are redeemed or exchanged will not receive the redemption fee.
Further, if a Fund’s shares are redeemed or exchanged by a financial
intermediary at the direction of its customer(s), the Funds may not know: (1)
whether a redemption fee is applicable; and/or (2) the identity of the customer
who should pay the redemption fee.
If
a financial intermediary that maintains an account with the Transfer Agent for
the benefit of its customer accounts agrees in writing to assess and collect
redemption fees for the Funds from applicable customer accounts, no redemption
fees will be charged directly to the financial intermediary’s account by the
Funds. Certain financial intermediaries that collect a redemption fee on behalf
of the Funds from applicable customer accounts may not be able to assess a
redemption fee under certain circumstances due to operational limitations
(i.e.,
on a Fund’s shares transferred to the financial intermediary and subsequently
liquidated). Customers purchasing shares through a financial intermediary should
contact the institution or refer to the customer’s account agreement or plan
document for information about how the redemption fee for transactions for the
financial intermediary’s omnibus account or the customer’s account is treated
and about the availability of exceptions to the imposition of the redemption
fee.
Involuntary
Redemptions. The
Company reserves the right to close your account and redeem your shares in a
Fund (1) if the account value falls below the Fund’s minimum account level of
$10,000, (2) to reimburse the Funds for any loss sustained by reason of a
failure to make full payment for shares purchased, (3) to collect any charge
relating to transactions effected for the benefit of your account which charge
is applicable to the Fund’s shares as provided in this prospectus, (4) if you
are deemed to engage in activities that are illegal (such as late trading) or
are otherwise believed by the Investment Manager to be detrimental to the Fund
(such as by market timing), or (5) for other good reasons as
determined
by the Investment Manager, in its sole discretion. Note that an involuntary
redemption may result in tax consequences. See “Dividends, Distributions and
Shareholder Taxes” below.
How
to Invest in a Fund
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Opening
an Account |
Adding
to an Account |
By
Mail
Regular
Mail
•Complete
the application.
•Make
check payable to “Prospector Funds, Inc.”
•Mail
application and check to:
Prospector
Funds, Inc.
c/o
U.S. Bank Global Fund Services
P.O.
Box 701
Milwaukee,
WI 53201-0701
Overnight
Mail
Prospector
Funds, Inc.
c/o
U.S. Bank Global Fund Services
615
East Michigan Street, 3rd
Floor
Milwaukee,
WI 53202-5207 |
By
Mail
•Make
check payable to “Prospector Funds, Inc.” Be sure to include your account
number and the Fund in which you intend to invest on the
check.
•Fill
out investment slip or provide the relevant information in
writing.
•Mail
check with investment slip or other writing to the applicable address on
the left. |
By
Wire
•Mail
your completed application to the applicable address above. Upon receipt
of your completed account application, the Transfer Agent will establish
an account for you. The account number assigned will be required as part
of the instruction that should be provided to your bank to send the
wire.
•Your
bank must include the name of the Fund(s) you are purchasing, the account
number, and your name so that monies can be correctly
applied.
•Your
bank should transmit immediately available funds by wire to the address
provided under “Adding to an Account” located immediately adjacent to the
section. |
By
Wire
Wire
funds to:
U.S.
Bank N.A.
777
East Wisconsin Avenue
Milwaukee,
WI 53202
ABA
#075000022
Credit:
U.S. Bancorp Fund Services, LLC
Account
#112-952-137
FFC:
[Name of Fund]
[Your
Name & Account Number]
Prior
to sending subsequent investments, please call Fund Shareholder
Servicing (“Shareholder Services”) toll free at (877) 734-7862 to
notify the Fund of your wire transfer. This will ensure prompt and
accurate credit upon receipt of your wire. Your bank may charge a fee for
sending a wire to the Funds
Wired
funds must be received prior to the close of regular trading (generally
4:00 p.m., Eastern Time,) on each day that the New York Stock Exchange
(“NYSE”) is open for business, to be eligible for same day pricing. The
Funds and U.S. Bank N.A. are not responsible for the consequences of
delays resulting from the banking or Federal Reserve wire system, or from
incomplete wiring instructions. |
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Opening
an Account |
Adding
to an Account |
By
Telephone
Initial
purchases of shares may not be made by telephone.
|
By
Telephone
Investors
may purchase additional shares of the Funds by calling (877) 734-7862.
Unless you have declined telephone options on the account application and
your account has been open for at least 7 business days, telephone orders
will be accepted via electronic funds transfer from your bank account
through the Automated Clearing House (“ACH”) network. You must have
banking information established on your account prior to making a
purchase. If your order is received prior to the close of regular trading
(generally 4:00 p.m. Eastern Time) on each day that the NYSE is open for
business, your shares will be purchased at the net asset value calculated
on the day your order is placed.
Once
a telephone transaction has been placed, it cannot be cancelled or
modified after the close of regular trading on the NYSE (generally, 4:00
p.m. Eastern Time). For security reasons, requests by telephone will be
recorded.
During
periods of high market activity, you may encounter higher than usual wait
times. Please allow sufficient time to ensure that you will be able to
complete your telephone transaction prior to market close. If you are
unable to contact the Funds by telephone, you may make your request in
writing.
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Opening
an Account |
Adding
to an Account |
By
Automatic Investment Plan (AIP)
Initial
purchases may not be made by the AIP. You must first open an account with
the initial minimum investment. See “Adding to an Account” to the
right. |
By
Automatic Investment Plan (AIP)
This
plan offers a convenient way for you to invest in a Fund by automatically
transferring money from your checking or savings account each month to buy
shares.
Once
your account has been opened with the initial minimum investment, you may
make additional purchases at regular intervals through the Automatic
Investment Plan.
In
order to participate in the AIP, each purchase must be in the amount of
$100 or more, and your financial institution must be a member of the ACH
network. If your bank rejects your payment, the Funds’ Transfer Agent will
charge a $25 fee to your account.
To
begin participating in the AIP, please complete the Automatic Investment
Plan section on the account application or call the Funds’ Transfer Agent
at (877) 734-7862 for additional information.
Any
request to change or terminate your Automatic Investment Plan should be
submitted to the Transfer Agent 5 calendar days prior to effective
date. |
Through
a Financial Professional
Contact
your financial professional. If for any reason a financial professional is
not able to accommodate your purchase request, please call Shareholder
Services toll free at (877) 734-7862 to find out how you can purchase Fund
shares. |
Through
a Financial Professional
Contact
your financial professional. |
Account
Requirements.
For further information regarding the Company’s requirements for opening and
sending instructions for individual, sole proprietorship, and joint accounts
with respect to a Fund, as well as business entity and trust accounts please
call Shareholder Services toll free at (877) 734-7862 and a representative from
Shareholder Services will help you.
Canceled
or Failed Payments.
The Company accepts checks and ACH transfer at full value subject to collection.
The Transfer Agent will charge a $25 fee against a shareholder’s account, in
addition to any loss sustained by a Fund, for any payment that is not received
or that is returned. It is the policy of the Funds not to accept applications
under certain circumstances or in amounts considered disadvantageous to
shareholders. The Company reserves the right to reject any application on behalf
of a Fund.
Future
Trade Date Requests.
The Company does not accept requests to hold a purchase, redemption, or exchange
transaction for a future date.
Proper
Form.
“Proper Form” is defined as including all required information and an acceptable
form of payment in U.S. funds or arrangements for payments in U.S. funds through
a broker.
Additional
Purchase Information.
Each Fund reserves the right to reject, in its sole discretion, any account
application or purchase order for any reason and reserves the right to waive or
reduce the minimum investment amounts. Applications or purchase orders will not
be accepted unless they are in proper form.
EACH
FUND RESERVES THE RIGHT TO LIMIT OR SUSPEND THE OFFERING OF ITS SHARES TO
EXISTING OR NEW INVESTORS FOR ANY REASON. THE INVESTMENT MANAGER MAY DECIDE TO
SUSPEND THE OFFERING OF A FUND’S SHARES INCLUDING AT SUCH TIMES AS IT DETERMINES
THAT ANY INCREASE IN THE NET ASSETS OF THE FUND THROUGH SUBSCRIPTIONS WOULD BE
DETRIMENTAL TO THE INTERESTS OF THE EXISTING SHAREHOLDERS.
Shareholder
Services
By
Mail.
U.S. Bancorp Fund Services, LLC, the Transfer Agent, is located at P.O. Box 701,
Milwaukee, WI 53201-0701.
By
Telephone. Call
toll-free from anywhere in the United States: (877) 734-7862 (Monday through
Friday 9:00 a.m. to 8:00 p.m., Eastern Time).
Online.
Visit us online 24 hours a day, 7 days a week, at www.prospectorfunds.com for
the most complete source of Fund information.
Exchange
Privileges.
You may exchange some or all of your Fund shares between identically registered
accounts of another series of the Company, subject to any redemption fee, as
long as any applicable minimum investment requirements of the Fund for which
shares are being exchanged are met. Before effecting an exchange, you should
read the prospectus for the Fund into which you will be investing. The minimum
exchange amount is $1,000. Account minimums for each account involved in the
exchange will still apply. Exchanges can be requested by mail or telephone.
There is a $5 fee for telephone exchanges. The Funds follow reasonable
procedures to confirm that telephone instructions are genuine. The Funds will
not be liable for following telephone instructions reasonably believed to be
genuine. An exchange is a taxable event for federal tax purposes. The Funds
reserve the right to change or eliminate the exchange privilege. If a Fund
changes that privilege, you will receive advance notice. The exchange privilege
may not be used for short-term or excess trading or trading strategies harmful
to the Funds. Exchanges may be subject to a redemption fee if shares are
exchanged sixty (60) calendar days or less from their purchase
date.
Distribution
Options.
You may reinvest distributions you receive from a Fund in an existing account
for the Fund. You also can have your distributions deposited in a bank account,
or mailed by check. Deposits to a bank account may be made by electronic funds
transfer. Please indicate on your account application the distribution option
you have chosen, otherwise we will reinvest your distributions in the relevant
Fund. If you wish to change the distribution option on your account, please
write or call the Transfer Agent at (877) 734-7862. Any change should be
submitted 5 days prior to the next distribution.
Telephone
Privileges.
Your account will be coded for the telephone redemption option unless you
decline this feature on your account application. Telephone redemption proceeds
will be sent by check to the address on your account or will be sent by wire or
ACH if you submitted a voided check or savings deposit slip to establish bank
information in your account.
For
your protection against fraudulent telephone transactions, the Funds will use
reasonable procedures to verify your identity such as requiring you to provide
the Fund account number; the name and social security number, or tax
identification number, under which your account is registered; and the address
of the account holder, as stated in the account application form. As long as
these procedures were followed, the Funds will not be liable for any loss or
cost to you if they act on instructions reasonably believed to be authorized by
you. If an account has more than one owner or authorized person, a Fund will
accept telephone instructions from any one owner or authorized person. Once a
telephone
transaction
has been placed, it cannot be canceled or modified after the next close of
regular trading on the NYSE (generally, 4:00 p.m. Eastern Time) following that
telephone transaction. Telephone transactions may be difficult during periods of
extreme market or economic conditions. If this is the case, please send your
request by mail or overnight courier.
If
you accepted telephone privileges on your account application and included a
voided check with which to establish your bank information, you may purchase
shares on demand with an ACH transfer directly from your bank account. If you
have telephone privileges on your account and want to discontinue them, please
contact us for instructions. You may reinstate these privileges at any time in
writing. Your request may require a signature guarantee, signature verification
from a Signature Validation Program member, or other acceptable form of
authentication from a financial institution source.
Security
Considerations.
You may give up some level of security by choosing to buy shares by telephone
rather than by mail. The Company has established procedures designed to give
reasonable assurance that telephone instructions are genuine, including
recording the transactions, testing the identity of the shareholder placing the
order and sending prompt written confirmation of transactions to the shareholder
of record. If these procedures are followed, the Company and its service
providers are not liable for acting upon instructions communicated by telephone
that they believe to be genuine.
Selling
Shares
You
can sell your shares at any time. Please keep in mind that a redemption fee may
apply.
What
You Need to Know When Selling Shares.
You may sell your shares on any day the NYSE is open for business. The Company
processes redemption orders promptly. Redemption proceeds, minus any redemption
fee, will not be sent to you until your shares have been paid for in full. This
means if you purchased your shares by check or electronic funds transfer through
the ACH network, the redemption payment will be delayed until the Company has
received acknowledgment to its satisfaction that the payment has cleared and the
funds have been posted. This could take up to 15 calendar days. This delay will
not apply if you purchased your shares via wire payment. For redemptions paid in
cash, each Fund typically expects to meet redemption requests using the Fund’s
then-existing holdings of cash or cash equivalents. Subject to market conditions
and other considerations, at times, such as during stressed market conditions, a
Fund may use proceeds from the sale of securities to meet redemption requests.
Unless otherwise prohibited by law, each Fund also reserves the right to pay
redemptions in kind, using portfolio securities to pay redemption proceeds.
Payment is sent to the address of record.
All
requests received in good order by the Funds before the close of trading on the
NYSE (normally 4:00 p.m. Eastern Time) will be processed on that day. “Good
order” means your instruction includes the name of the Fund, the account number,
the dollar amount or number of shares to be redeemed and the signature(s) of the
registered owner(s) exactly as the shares are registered and with signature(s)
guaranteed, if applicable. All redemption requests should be sent to the address
below under “By Mail”. Payment for shares redeemed will be sent to you typically
within one or two business days, but no later than the seventh calendar day
after receipt of the redemption request by the Transfer Agent. Investors may
have a check sent to the address of record, proceeds may be wired to a
shareholder’s bank account of record, or funds may be sent via electronic funds
transfer through the ACH network, also to the bank account of record. Wires are
subject to a $15 fee paid by the investor. The investor does not incur any
charge when proceeds are sent via the ACH system and credit is usually available
within 2-3 days.
How
to Sell Your Shares
By
Telephone:
Unless
you decline the telephone transactions option on the account application, and if
your account has been open for at least 15 days, you may redeem up to $100,000
per day by calling Shareholder Services toll free at (877) 734-7862. Shares held
in IRA plans may not be redeemed by telephone. Once a telephone transaction has
been placed, it cannot be
cancelled
or modified after the next close of regular trading on the NYSE (generally, 4:00
p.m. Eastern Time) following that telephone transaction. During periods of high
market activity, you may encounter higher than usual wait times. Please allow
sufficient time to ensure that you will be able to complete your telephone
transaction prior to market close.
You
may give up some level of security by choosing to sell shares by telephone
rather than by mail. The Company has established procedures designed to give
reasonable assurance that telephone instructions are genuine, including
recording the transactions, testing the identity of the shareholder placing the
order and sending prompt written communication of transactions to the
shareholder of record. If these procedures are followed, the Company and its
service providers are not liable for acting upon instructions communicated by
telephone that they believe to be genuine.
By
Mail:
Send
a letter of instruction including the account number, the Fund from which you
would like to redeem shares, the dollar value or number of shares you wish to
redeem, and any necessary signature guarantees (see next page) to:
Regular
Mail
Prospector
Funds, Inc.
c/o
U.S. Bank Global Fund Services
P.O.
Box 701
Milwaukee,
WI 53201-0701
Overnight
Prospector
Funds, Inc.
c/o
U.S. Bank Global Fund Services
615
East Michigan Street, 3rd
Floor
Milwaukee,
WI 53202-5207
By
Wire:
Be
sure to fill out the appropriate areas of the account application. Proceeds may
be wired to your pre-designated bank account.
By
Systematic Withdrawal Plan:
You
may redeem your Fund shares through the Systematic Withdrawal Plan (the “Plan”).
Under the Plan, you may choose to receive a specified dollar amount, generated
from the redemption of shares in your account, on a monthly, quarterly or annual
basis. In order to participate in the Plan, your account balance must be at
least $10,000 and each payment should be a minimum of $100. If you elect this
method of redemption, the Fund will send a check to your address of record, or
will send the payment via electronic funds transfer through the ACH network,
directly to your bank account. For payment through the ACH network, your bank
must be an ACH member and your bank account information must be maintained on
your Fund account. The Funds may modify or terminate the Plan at any time.
A
withdrawal under the Plan involves a redemption of shares and may result in a
gain or loss for federal income tax purposes. In addition, if the amount
withdrawn exceeds the dividends credited to your account, the account ultimately
may be depleted.
Shares
sold under the Plan may be subject to a redemption fee if sold sixty (60)
calendar days or less from their purchase date.
Redeeming
shares through the Plan may reduce or exhaust the shares in your account if
payments exceed distributions received from a Fund. This is especially likely to
occur if there is a market decline. If a withdrawal amount exceeds the value of
your account, your account will be closed and the remaining balance in your
account will be sent to you. Because the amount withdrawn under the Plan may be
more than your actual yield or income, part of the payment may be a return of
your investment.
To
discontinue the Plan, change the amount and schedule of withdrawal payments, or
suspend one payment, we must receive instructions from you at least five
calendar days before a scheduled payment. The Company may discontinue the Plan
by notifying you in writing and will discontinue the Plan automatically if all
shares in your account are withdrawn or if the Company receives notification of
the shareholder’s death or incapacity.
For
further information on the Plan, please call Shareholder Services toll free at
(877) 734‑7862.
Through
a Financial Professional:
Contact
your financial professional. If for any reason a financial professional is not
able to accommodate your sale request, please call Shareholder Services toll
free at (877) 734-7862 to find out how you can sell Fund shares.
Signature
Guarantees.
A signature guarantee, from either a Medallion program member or a non-Medallion
program member, must be provided if:
•You
are making a written request to redeem shares worth more than
$100,000;
•Ownership
is being changed on your account;
•Redemption
proceeds are payable or sent to any person, address or bank account not on
record;
•A
redemption request has been received by the Transfer Agent, and the address of
the account associated with the request has changed within the previous 30
calendar days.
In
addition to the situations described above, the Funds and/or the Transfer Agent
reserve the right to require a signature guarantee or other acceptable signature
authentication in other instances based on the circumstances relative to the
particular situation. If applicable, shareholders should submit a guarantee of
their signature(s) by an eligible institution acceptable to the Transfer Agent,
such as a domestic bank or trust company, broker, dealer, clearing agency or
savings association, as well as from participants in a medallion program
recognized by the Securities Transfer Association. The three recognized
medallion programs are Securities Transfer Agents Medallion Program, Stock
Exchanges Medallion Program and New York Stock Exchange, Inc. Medallion
Signature Program. A
notary public cannot provide a signature guarantee.
The Funds reserve the right to waive any signature requirement at their
discretion.
Non-financial
transactions, including establishing or modifying certain services on an
account, may require a signature guarantee, signature verification from a
Signature Validation Program member, or other acceptable form of authentication
from a financial institution source.
Involuntary
Redemption.
If your account falls below the stated investment minimums or if the Company is
unable to verify your identity, the Company may redeem your shares. See
“Accounts with Low Balances” below. Your account will not be redeemed if the
balance falls below the minimum due to investment losses.
Accounts
with Low Balances.
If the value of your account falls below $10,000 because you sell some of your
shares, we may mail you a notice asking you to bring the account back up to its
applicable minimum investment amount. If you choose not to do so within 30 days,
we may close your account and mail the proceeds to the address of record. You
will not be charged a redemption fee if your account is closed for this
reason.
In-Kind
Redemptions.
Although the Funds expect to make redemptions in cash, they reserve the right to
make the redemption a distribution in-kind. These redemptions “in-kind” usually
occur when the amount to be redeemed is large enough to affect a Fund’s
operations (for example, if it represents more than 1% of the Fund’s assets).
This is done to protect the interests of the Fund’s remaining shareholders. An
in-kind payment means you receive portfolio securities rather than cash. If this
occurs, you will incur transaction costs when you sell the
securities.
Shareholder
Information, Inactive Accounts and Unclaimed Property.
It is important that each Fund maintains a correct address for each shareholder.
An incorrect address may cause a shareholder’s account statements and other
mailings to be returned to the Fund. Based upon statutory requirements for
returned mail, the Fund will attempt to locate the shareholder or rightful owner
of the account. If the Fund is unable to locate the shareholder, then the Fund
will determine whether the shareholder’s account can legally be considered
abandoned. Your account with the Funds may be transferred to your state of
residence if no activity occurs within your account during the “inactivity
period” specified in your state’s abandoned property laws. Each Fund is legally
obligated to escheat (or transfer) abandoned property to the appropriate state’s
unclaimed property administrator in accordance with statutory requirements. The
shareholder’s last known address of record determines which state has
jurisdiction. Shareholders owning shares of the Funds directly with the Funds
(i.e.,
the
account is not held through a broker or other intermediary) should contact the
Funds at least annually to ensure their account remains in active status.
Shareholders may contact the Funds at (877) 734‑7862.
Shareholders
who are residents of the state of Texas may designate a representative to
receive legislatively required unclaimed property due diligence notifications.
Please contact the Funds to complete a Texas Designation of Representative
form.
IRA
Redemptions.
Shareholders who have an IRA or other retirement plan and for whom U.S. Bank
N.A. acts as IRA custodian, must indicate on their written redemption request
whether or not to withhold federal income tax. Redemption requests failing to
indicate an election not to have tax withheld will generally be subject to 10%
withholding. For this reason, IRA redemption requests cannot be made by
telephone.
Account
Policies
Calculating
Share Price.
The price at which you buy or sell a Fund’s shares is the NAV per share. The NAV
per share price is calculated by adding the value of such Fund’s investments,
cash and other assets, deducting liabilities, and then dividing that amount by
the total number of shares outstanding. The NAV per share is calculated after
the close of regular trading of the NYSE, normally 4:00 p.m., Eastern Time, each
business day the NYSE is open. The NAV is not calculated on days the NYSE is
closed for trading. Requests to buy and sell shares are processed at the NAV
next calculated after we receive your request in proper form. A Fund may change
the time it calculates its NAV in an emergency.
A
Fund’s assets are generally valued at their market value. Investments for which
market quotations or market-based valuations are not readily available, or are
available but deemed unreliable, are valued at fair value in accordance with
policies and procedures approved by the Board. For example, if an event occurs
after the closing of the trading market that materially affects the values,
assets may be valued at their fair value. If a Fund holds securities listed
primarily on a foreign exchange that trades on days when the Fund is not open
for business, the NAV of the Fund’s shares may change on days that you cannot
buy or sell shares.
Generally,
trading in corporate bonds, U.S. government securities and money market
instruments is substantially completed each day at various times before the
close of the NYSE. The value of these securities used in computing the NAV per
share is determined as of such times. Occasionally, events affecting the values
of these securities may occur between the times at which they are determined and
the close of the NYSE that will not be reflected in the computation of the NAV
per share. A Fund may rely on third party pricing vendors to monitor for events
materially affecting the value of these securities during this period. If an
event occurs the third party pricing vendors will provide revised values to the
Fund.
The
Board has designated the Investment Manager as its “valuation designee” under
Rule 2a-5 of the Investment Company Act. The valuation designee is responsible
for making fair value determinations for the Funds’ portfolio investments,
subject to the Board’s oversight. The Board has approved the procedures adopted
by the Investment Manager to fair value Fund investments whose market prices are
not “readily available” or are deemed to be unreliable.
Fair
Valuation - Individual Securities. Since
the Funds may invest in securities that are traded infrequently, thinly traded,
or relatively illiquid, there is the possibility of a differential between the
last available market prices for one or more of those securities and the latest
indications of market values for those securities. In certain circumstances, a
fair value determination may also be made if, in the Investment Manager’s
judgment, the market value of a security does not represent the fair market
value of the security. The Company has approved procedures adopted by the
Investment Manager to determine the fair value of individual securities and
other assets for which market prices are not readily available or which may not
be reliably priced (such as in the case of trade suspensions or halts, price
movement limits set by certain foreign markets, and thinly-traded securities).
Fair value determinations are then made in good faith by the Investment Manager.
Some methods for valuing these securities may include: fundamental analysis
(earnings multiple, etc.), matrix pricing, discounts from market prices of
similar securities, or discounts applied due to the nature and duration of
restrictions on the disposition of the securities.
There
can be no assurance that a Fund could obtain the fair value assigned to a
security if it were able to sell the security at approximately the time at which
the Fund determines its NAV per share.
Exchange
Traded Securities.
Securities traded or dealt in upon a national securities exchange other than the
National Association of Securities Dealers Automated Quotation System (NASDAQ)
shall be valued at the last quoted sales price or, in the absence of a sale, at
the last bid price. In the case of a security traded on NASDAQ, the security
shall be valued at the NASDAQ Official Closing Price.
Non-Exchange
Traded Securities.
Securities not traded or dealt on any securities exchange for which OTC market
quotations are readily available generally shall be valued at the last quoted
sales price (if adequate trading volume is present) or, otherwise, at the last
bid price.
Fixed
Income Securities.
Fixed-income securities shall be valued at prices supplied by an independent
pricing source or by one the Funds’ pricing service providers based on broker or
dealer supplied valuations or matrix pricing (a method of valuing securities by
reference to the value of other securities with similar characteristics, such as
rating, interest rate, and maturity).
Money
Market Instruments.
Money market instruments with a remaining maturity of 60 days or less shall be
valued at prices supplied by an independent pricing source, or an approved
third-party pricing service. Municipal daily or weekly variable rate demand
instruments may be priced at par plus accrued interest.
Securities
Traded on More Than One Exchange.
If a security is traded or dealt on more than one exchange, or on one or more
exchanges and in the OTC market, quotations from the market in which the
security is primarily traded shall be used.
Currencies
and Related Items.
The value of foreign currencies shall be translated into U.S. dollars based on
the foreign exchange rate in effect at the close of the NYSE (generally 4:00
p.m. Eastern Time) on the day that the value of the foreign currency is
determined. If no sale is reported at that time, the foreign currency will be
valued at the most recent bid price.
Options
and Futures Contracts. Options
and futures contracts listed for trading on a securities exchange or board of
trade shall be valued at the last quoted sales price or, in the absence of a
sale, at the mean of the last bid and asked prices. Options not listed for
trading on a securities exchange or board of trade for which OTC market
quotations are readily available shall be valued at the current bid
price.
Security
Valuation - Foreign Securities - Computation of U.S. Equivalent Value.
The
Funds generally determine the value of a foreign security as of the close of
trading on the foreign stock exchange on which the security is primarily traded,
or as of the close of trading on the NYSE, if earlier. The value is then
converted into its U.S. dollar equivalent at the foreign exchange rate in effect
at the close of the NYSE (generally 4:00 p.m. Eastern Time) on the day that the
value
of
the foreign security is determined. If no sale is reported at that time, the
foreign security will be valued at the last bid price.
Valuation
- Foreign Securities - Potential Impact of Time Zones and Market Holidays.
Trading
in securities on foreign securities stock exchanges and OTC markets, such as
those in Europe and Asia, may be completed well before the close of business on
the NYSE on each day that the NYSE is open. Occasionally, events occur between
the time at which trading in a foreign security is completed and the close of
the NYSE that might call into question the availability (including the
reliability) of the value of a foreign portfolio security held by a Fund. As a
result, the Funds may be susceptible to what is referred to as “time zone
arbitrage.” Certain investors in the Funds may seek to take advantage of
discrepancies in the value of the Funds’ portfolio securities as determined by
the foreign market at its close and the latest indications of value attributable
to the portfolio securities at the time the Funds’ NAV is computed. Trading by
these investors, often referred to as “arbitrage market timers,” may dilute the
value of a Fund’s shares, if such discrepancies in security values actually
exist. To attempt to minimize the possibilities for time zone arbitrage, the
Investment Manager monitors price movements following the close of trading in
foreign stock markets to assist in determining if an event has occurred that
might call into question the availability (including the reliability) of the
values of foreign securities between the times at which they are determined and
the close of the NYSE.
If
such an event occurs, the foreign securities may be valued using fair value
procedures established by the Investment Manager. In certain circumstances,
these procedures include the use of independent pricing services. The intended
effect of applying fair value pricing is to compute a NAV that accurately
reflects the value of a Fund’s portfolio at the time that the NAV is calculated,
to discourage potential arbitrage market timing in a Fund’s shares, to mitigate
the dilutive impact of such attempted arbitrage market timing and to be fair to
purchasing, redeeming and existing shareholders. However, the application of
fair value pricing procedures may, on occasion, worsen rather than mitigate the
potential dilutive impact of shareholder trading.
Trading
takes place in various foreign markets on days that are not business days for
the NYSE, and on which a Fund’s NAV is not calculated. Thus, the calculation of
a Fund’s NAV does not take place contemporaneously with the determination of the
prices of many of the foreign portfolio securities used in the calculation. If
events affecting the last determined values of these foreign securities occur
(determined through the monitoring process described above), the securities will
be valued at fair value determined in good faith in accordance with the Fund’s
fair value procedures established by the Investment Manager.
Statements,
Reports and Prospectuses.
You will receive quarterly account statements that show all your transactions
during the quarter. You will also receive written notification after each
transaction affecting your account.
You
also will receive financial reports for the Fund(s) in which you are invested
every six months as well as an annual updated prospectus. At any time you may
view current prospectuses and financial reports on our website.
Investment
Representative Account Access.
If there is a dealer or other investment representative of record on your
account, he or she will be able to obtain your account information, conduct
transactions for your account, and also will receive copies of all notifications
and statements and other information about your account directly from the
Transfer Agent.
Street
or Nominee Accounts.
You may transfer your shares from the street or nominee name account of one
dealer to another, as long as both dealers have an agreement with the Company or
the Investment Manager. We will process the transfer after we receive
authorization in proper form from your delivering securities
dealer.
Joint
Accounts.
Unless you specify a different registration, shares issued to two or more owners
are registered as “joint tenants with rights of survivorship” (shown as “Jt
WROS” on your account statement). To make any ownership changes to jointly owned
shares, or to sever a joint tenancy in jointly owned shares, all owners must
agree in writing.
Householding.
In an effort to decrease costs, the Funds intend to reduce the number of
duplicate prospectuses, supplements, and certain other shareholder documents you
receive by sending only one copy of each to those addresses shared by two or
more accounts and to shareholders we reasonably believe are from the same family
or household. Once implemented, if you would like to discontinue householding
for your accounts, please call toll-free at 1-877-734-7862 to request individual
copies of these documents. Once a Fund receives notice to stop householding, we
will begin sending individual copies thirty days after receiving your request.
This policy does not apply to account statements.
Additional
Policies.
Please note that the Company maintains additional policies and reserves certain
rights, including:
•The
Company may restrict, reject or cancel any purchase orders.
•The
Company may modify, suspend, or terminate telephone privileges at any
time.
•The
Company may make material changes to or discontinue the exchange privilege on 60
days’ notice or as otherwise provided by law.
•The
Company may stop offering shares of a Fund completely or may offer shares only
on a limited basis, for a period of time or permanently.
•Normally,
redemption proceeds are paid out by the next business day, but payment may take
up to seven days if making immediate payment would adversely affect the
Funds.
•In
unusual circumstances, we may temporarily suspend redemptions or postpone the
payment of proceeds, as allowed by federal securities laws.
•For
redemptions over a certain amount, the Company may pay redemption proceeds in
securities or other assets rather than cash if the manager determines it is in
the best interest of a Fund, consistent with applicable law.
•You
may buy shares of a Fund only if they are eligible for sale in your state or
jurisdiction.
•To
permit investors to obtain the current price, dealers are responsible for
transmitting all orders to the Company promptly.
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DIVIDENDS,
DISTRIBUTIONS AND SHAREHOLDER TAXES |
Income
and Capital Gain Distributions.
Each Fund intends to make distributions from its net investment income at least
annually. Such distributions will be payable in cash or in additional shares of
the Fund. Capital gains, if any, may be distributed at least annually, in
additional shares or in cash, at the election of the shareholder. The amount of
distribution will vary, and there is no guarantee a Fund will pay either income
dividends or a capital gain distribution.
Tax
Considerations.
Each Fund generally intends to operate in a manner such that it will not be
liable for federal income tax. You will normally have to pay federal income tax,
and any state or local income taxes, on the distributions you receive from a
Fund, even if you reinvest them in additional shares. Distributions of net
capital gains from the sale of investments that a Fund owned for more than one
year and that are properly designated as capital gain dividends are taxable as
long-term capital gains. Distributions of dividends to a Fund’s non-corporate
shareholders may be treated as “qualified dividend income,” which is taxed at
reduced rates, if such distributions are derived from, and designated by the
Fund as, “qualified dividend income” and provided that holding period and other
requirements are met by both the shareholder and the Fund. “Qualified dividend
income” generally is income derived from dividends from U.S. corporations and
“qualified foreign corporations.” Other distributions by the Fund are generally
taxable to you as ordinary income. Dividends declared in October, November, or
December and paid in January of the following year are
taxable
as if they had been paid the previous December. A distribution by a Fund reduces
the net asset value of the Fund’s shares by the amount of the distribution. If
you purchase shares prior to a distribution, you are taxed on the distribution
even though the distribution represents a return of a portion of your
investment.
Investment
income received by a Fund from sources within foreign countries may be subject
to foreign income taxes withheld at the source. To the extent that a Fund is
liable for foreign income taxes withheld at the source, it intends, if possible,
to operate so as to meet the requirements of the Internal Revenue Code of 1986,
as amended (the “Code”), to “pass-through” to the Fund’s shareholders credits
for foreign income taxes paid (or to permit shareholders to claim a deduction
for such foreign taxes), but there can be no assurance that a Fund will be able
to do so. Furthermore, a shareholder’s ability to claim a foreign tax credit or
deduction for foreign taxes paid by a Fund may be subject to certain limitations
imposed by the Code as a result of which a shareholder may not be permitted to
claim a credit or deduction for all or a portion of the amount of such
taxes.
Under
certain circumstances, if a Fund realizes losses (e.g.,
from fluctuations in currency exchange rates) after paying a dividend, all or a
portion of the dividend may subsequently be characterized as a return of
capital. Returns of capital are generally nontaxable, but will reduce a
shareholder’s basis in shares of a Fund. If that basis is reduced to zero (which
could happen if the shareholder does not reinvest distributions and returns of
capital are significant), any further returns of capital will be taxable as
capital gains.
The
sale or exchange of a Fund’s shares is a taxable transaction for federal income
tax purposes.
If
you are neither a citizen nor resident of the United States, each Fund will
withhold U.S. federal income tax at the rate of 30% on certain types of income
dividends and other payments that are subject to such withholding. You may be
subject to a lower withholding rate under an applicable tax treaty if you supply
the appropriate documentation required by the Fund.
Each
Fund is required to apply backup withholding on distributions and redemption
proceeds otherwise payable to any noncorporate shareholder (including a
shareholder who is neither a citizen nor a resident of the United States) who
does not furnish to the Fund certain information and certifications or, in the
case of distributions, who is otherwise subject to backup withholding. Backup
withholding is not an additional tax. Rather, the federal income tax liability
of persons subject to backup withholding will be offset by the amount of tax
withheld.
Each
January, each Fund will send you a statement that shows the tax status of
distributions you received the previous year, as applicable. For further
information about the tax consequences of investing in a Fund, please see the
SAI. Consult your tax adviser about the federal, state, and local tax
consequences in your particular circumstances.
If
you elect to receive distributions and/or capital gains paid in cash, and the
U.S. Postal Service cannot deliver the check, or if a check remains outstanding
for six months, each Fund reserves the right to reinvest the distribution check
in your account, at the Fund's current net asset value, and to reinvest all
subsequent distributions.
As
of January 1, 2012, federal law requires the mutual fund companies report their
shareholders’ cost basis, gain/loss, and holding period to the IRS on the
shareholders’ Consolidated Form 1099s when “covered” shares of the mutual funds
are sold. Covered shares are any fund and/or dividend reinvestment plan shares
acquired on or after January 1, 2012.
The
Company has chosen average cost as the default tax lot identification method for
reporting their shareholders’ cost basis.
|
| |
DISTRIBUTION
OF FUND SHARES |
The
Distributor
Quasar
Distributors, LLC (the “Distributor”), Three Canal Plaza, Suite 100, Portland,
Maine 04101, serves as the principal underwriter and national distributor for
the shares of each of the Funds pursuant to a Distribution Agreement with the
Company effective September 14, 2007 (the “Distribution Agreement”). The
Distributor is registered as a broker-dealer under the Securities Exchange Act
of 1934, as amended, and each state’s securities laws, as applicable, and is a
member of the Financial Industry Regulatory Authority.
Distribution
and Service (Rule 12b-1) Fees.
The Company has adopted a distribution and service plan pursuant to Rule 12b-1
under the Investment Company Act that allows each Fund to reimburse distribution
and service fees at an annual rate of up to 0.25% of the Fund’s average daily
net assets (“Rule 12b-1 fee”) for the sale, distribution, and servicing of their
shares. The Plan is characterized as a reimbursement plan since the distribution
fee will be paid to the Distributor as reimbursement for, or in anticipation of,
expenses incurred for distribution related activity. Because these fees are paid
out of each Fund’s assets on an on-going basis, over time, these fees will
increase the cost of your investment and may cost you more than paying other
types of sales charges.
Payments
to Financial Advisors and Their Firms.
The Investment Manager, the Company, each Fund, or any of their agents may enter
into arrangements with financial intermediaries that market and sell shares of
the Funds, through which investors may purchase or redeem such Fund’s shares.
These financial intermediaries employ financial advisors and receive
compensation for selling shares of a Fund. This compensation is paid from
various sources, including any Rule 12b-1 fee that you or a Fund may pay. In
addition, the Investment Manager or other Fund agent, as applicable, may, at its
own expense, compensate financial intermediaries in connection with the sale or
expected sale of a Fund’s shares. In the case of payments received by financial
intermediaries that employ a financial advisor, the individual financial advisor
may receive some or all of the amounts paid to the financial intermediary that
employs him or her. Payments to financial intermediaries may create an incentive
for the financial institution to recommend that you purchase a Fund’s
shares.
|
| |
What
is a Financial Intermediary?
A
financial intermediary is a firm that receives compensation for selling
shares of a Fund offered in this prospectus and/or provides services to a
Fund’s shareholders. Financial intermediaries may include, among others,
your broker, your financial planner or advisor, banks, pension plan
consultants and insurance companies. Financial intermediaries employ
financial advisors who deal with you and other investors on an individual
basis.
|
Your
financial advisor’s firm receives compensation from the Funds in several
ways from various sources, which include some or all of the
following:
•Rule
12b-1 fees;
•additional
distribution support;
•defrayal
of costs for educational seminars and training; and
•payments
related to providing shareholder recordkeeping, communication and/or
transfer agency services.
Please
read the prospectus carefully for information on this
compensation.
|
In
addition to financial intermediaries that market and sell a Fund’s shares,
certain brokerage firms and other companies that provide services of the type
described above may receive fees from a Fund, the Investment Manager or the
Distributor in respect of such services. These companies also may be appointed
as agents for or authorized by a Fund to accept on their behalf purchase and
redemption requests that are received in good order. Subject to a Fund’s
approval, certain of
these
companies may be authorized to designate other entities to accept purchase and
redemption orders on behalf of the Fund.
Although
a Fund may use brokers and dealers who sell shares of the Fund to effect
portfolio transactions, each Fund does not consider the sale of Fund shares a
factor when selecting brokers or dealers to effect portfolio
transactions.
Investors
cannot invest directly in an index, although they may invest in the underlying
securities.
The
S&P 500®
Index is an unmanaged, capitalization-weighted index generally representative of
the U.S. market for large capitalization stocks. This Index cannot be invested
in directly.
The
Russell 2000®
Index An unmanaged small-cap index that measures the performance of the 2,000
smallest companies in the Russell 3000 Index. This index cannot be invested in
directly.
The
Russell Midcap®
Index is an unmanaged mid-cap index that measures the performance of the 800
smallest companies in the Russell 1000 Index. This index cannot be invested in
directly.
The
Russell 3000 Value®
Index
is a market-capitalization weighted index based on the Russell 3000 Index, which
measures how U.S. stocks in the equity value segment perform by including only
value stocks. This index cannot be invested in directly
The
financial highlights tables below are intended to help you understand the Funds’
financial performance for the fiscal periods shown. Certain information reflects
financial results for a single share of the applicable Fund. The total returns
in the table represent the rate that an investor would have earned or lost on an
investment in the Fund assuming reinvestment of all dividends and distributions.
The information in the tables was derived from the financial statements audited
by Ernst & Young, LLP, whose report, along with the Funds’ financial
statements, is included in the Funds’ Annual
Report dated December 31, 2023,
which is available upon request and without charge.
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|
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|
|
|
|
|
| |
| Capital
Appreciation Fund |
| |
| Year
Ended December 31, |
| |
| 2023 |
| 2022 |
| 2021 |
| 2020 |
| 2019 |
| |
For
a Fund share outstanding |
|
|
|
|
|
|
|
|
|
| |
throughout
the year |
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
| |
NET
ASSET VALUE: |
|
|
|
|
|
|
|
|
|
| |
Beginning
of year |
$ |
19.28 |
|
| $ |
21.26 |
|
| $ |
19.60 |
|
| $ |
18.80 |
|
| $ |
16.34 |
|
| |
|
|
|
|
|
|
|
|
|
|
| |
OPERATIONS: |
|
|
|
|
|
|
|
|
|
| |
Net
investment income(1) |
0.11 |
|
| 0.11 |
|
| 0.09 |
|
| 0.12 |
|
| 0.14 |
|
| |
Net
realized and unrealized |
|
|
|
|
|
|
|
|
|
| |
gain
(loss) on investments |
2.06 |
|
| (0.93) |
|
| 4.32 |
|
| 1.07 |
|
| 3.47 |
|
| |
Total
from operations |
2.17 |
|
| (0.82) |
|
| 4.41 |
|
| 1.19 |
|
| 3.61 |
|
| |
|
|
|
|
|
|
|
|
|
|
| |
LESS
DISTRIBUTIONS: |
|
|
|
|
|
|
|
|
|
| |
From
net investment income |
(0.11) |
|
| (0.11) |
|
| (0.20) |
|
| (0.02) |
|
| (0.12) |
|
| |
From
net realized gains |
(0.53) |
|
| (1.05) |
|
| (2.55) |
|
| (0.37) |
|
| (1.03) |
|
| |
Total
distributions |
(0.64) |
|
| (1.16) |
|
| (2.75) |
|
| (0.39) |
|
| (1.15) |
|
| |
|
|
|
|
|
|
|
|
|
|
| |
NET
ASSET VALUE: |
|
|
|
|
|
|
|
|
|
| |
End
of year |
$ |
20.81 |
|
| $ |
19.28 |
|
| $ |
21.26 |
|
| $ |
19.60 |
|
| $ |
18.80 |
|
| |
|
|
|
|
|
|
|
|
|
|
| |
TOTAL
RETURN(3) |
11.34 |
% |
| (4.07) |
% |
| 23.25 |
% |
| 6.40 |
% |
| 22.33 |
% |
| |
|
|
|
|
|
|
|
|
|
|
| |
SUPPLEMENTAL
DATA AND RATIOS: |
|
|
|
|
|
|
|
|
|
| |
Net
assets, end of year (in thousands) |
$ |
33,428 |
|
| $ |
27,445 |
|
| $ |
29,839 |
|
| $ |
26,163 |
|
| $ |
29,371 |
|
| |
Ratio
of expenses to average net assets: |
|
|
|
|
|
|
|
|
|
| |
Before
expense reimbursement |
1.76 |
% |
| 1.76 |
% |
| 1.78 |
% |
| 2.00 |
% |
| 1.95 |
% |
| |
After
expense reimbursement |
1.25 |
% |
| 1.25 |
% |
| 1.25 |
% |
| 1.25 |
% |
| 1.29 |
% |
(2) |
|
Ratio
of net investment income (loss) |
|
|
|
|
|
|
|
|
|
| |
to
average net assets: |
|
|
|
|
|
|
|
|
|
| |
Before
expense reimbursement |
0.09 |
% |
| 0.07 |
% |
| (0.17) |
% |
| (0.09) |
% |
| 0.08 |
% |
| |
After
expense reimbursement |
0.60 |
% |
| 0.58 |
% |
| 0.36 |
% |
| 0.66 |
% |
| 0.74 |
% |
| |
Portfolio
turnover rate |
41 |
% |
| 33 |
% |
| 32 |
% |
| 40 |
% |
| 25 |
% |
| |
(1)Per
share amounts calculated using the Pre-ROC method of calculation. The Pre-ROC
method of calculation subtracts the prior undistributed net investment income
per share from the current year undistributed net investment income per share
and adds in current year income distribution amounts per share.
(2)On
September 5, 2019, the Adviser lowered the limit of annual operating expenses
from 1.30% to 1.25% of average daily net assets.
(3)Total
return is a measure of the change in the value of an investment in the Fund over
the years covered and assumes the reinvestment of capital gains and income
distributions. Returns shown reflect waivers of fee and operating expenses in
effect. In the absence of such waivers, total return would be reduced. The
returns do not reflect the deduction of taxes that a shareholder would pay on
Fund distributions or the redemption of Fund shares.
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| Opportunity
Fund |
| |
| Year
Ended December 31, |
| |
| 2023 |
| 2022 |
| 2021 |
| 2020 |
| 2019 |
| |
For
a Fund share outstanding |
|
|
|
|
|
|
|
|
|
| |
throughout
the year |
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
| |
NET
ASSET VALUE: |
|
|
|
|
|
|
|
|
|
| |
Beginning
of year |
$ |
23.14 |
|
| $ |
25.63 |
|
| $ |
22.78 |
|
| $ |
22.18 |
|
| $ |
18.47 |
|
| |
|
|
|
|
|
|
|
|
|
|
| |
OPERATIONS: |
|
|
|
|
|
|
|
|
|
| |
Net
investment income(1) |
0.15 |
|
| 0.17 |
|
| 0.11 |
|
| 0.13 |
|
| 0.23 |
|
| |
Net
realized and unrealized |
|
|
|
|
|
|
|
|
|
| |
gain
(loss) on investments |
2.53 |
|
| (1.71) |
|
| 4.99 |
|
| 1.06 |
|
| 4.49 |
|
| |
Total
from operations |
2.68 |
|
| (1.54) |
|
| 5.10 |
|
| 1.19 |
|
| 4.72 |
|
| |
|
|
|
|
|
|
|
|
|
|
| |
LESS
DISTRIBUTIONS: |
|
|
|
|
|
|
|
|
|
| |
From
net investment income |
(0.03) |
|
| (0.17) |
|
| (0.10) |
|
| (0.17) |
|
| (0.23) |
|
| |
From
net realized gains |
(0.12) |
|
| (0.78) |
|
| (2.15) |
|
| (0.42) |
|
| (0.78) |
|
| |
Total
distributions |
(0.15) |
|
| (0.95) |
|
| (2.25) |
|
| (0.59) |
|
| (1.01) |
|
| |
|
|
|
|
|
|
|
|
|
|
| |
NET
ASSET VALUE: |
|
|
|
|
|
|
|
|
|
| |
End
of year |
$ |
25.67 |
|
| $ |
23.14 |
|
| $ |
25.63 |
|
| $ |
22.78 |
|
| $ |
22.18 |
|
| |
|
|
|
|
|
|
|
|
|
|
| |
TOTAL
RETURN(3) |
11.63 |
% |
| (6.20) |
% |
| 22.88 |
% |
| 5.43 |
% |
| 25.73 |
% |
| |
|
|
|
|
|
|
|
|
|
|
| |
SUPPLEMENTAL
DATA AND RATIOS: |
|
|
|
|
|
|
|
|
|
| |
Net
assets, end of year (in thousands) |
$ |
231,689 |
|
| $ |
210,587 |
|
| $ |
241,130 |
|
| $ |
224,011 |
|
| $ |
142,685 |
|
| |
Ratio
of expenses to average net assets: |
|
|
|
|
|
|
|
|
|
| |
Before
expense reimbursement |
1.37 |
% |
| 1.34 |
% |
| 1.34 |
% |
| 1.39 |
% |
| 1.50 |
% |
| |
After
expense reimbursement |
1.25 |
% |
| 1.25 |
% |
| 1.25 |
% |
| 1.25 |
% |
| 1.29 |
% |
(2) |
|
Ratio
of net investment income |
|
|
|
|
|
|
|
|
|
| |
to
average net assets: |
|
|
|
|
|
|
|
|
|
| |
Before
expense reimbursement |
0.51 |
% |
| 0.58 |
% |
| 0.28 |
% |
| 0.63 |
% |
| 0.85 |
% |
| |
After
expense reimbursement |
0.63 |
% |
| 0.67 |
% |
| 0.37 |
% |
| 0.77 |
% |
| 1.06 |
% |
| |
Portfolio
turnover rate |
32 |
% |
| 44 |
% |
| 29 |
% |
| 52 |
% |
| 27 |
% |
| |
(1)Per
share amounts calculated using the Pre-ROC method of calculation. The Pre-ROC
method of calculation subtracts the prior undistributed net investment income
per share from the current year undistributed net investment income per share
and adds in current year income distribution amounts per share.
(2)On
September 5, 2019, the Adviser lowered the limit of annual operating expenses
from 1.30% to 1.25% of average daily net assets.
(3)Total
return is a measure of the change in the value of an investment in the Fund over
the years covered and assumes the reinvestment of capital gains and income
distributions. Returns shown reflect waivers of fee and operating expenses in
effect. In the absence of such waivers, total return would be reduced. The
returns do not reflect the deduction of taxes that a shareholder would pay on
Fund distributions or the redemption of Fund shares.
PROSPECTOR
FUNDS, INC.
PRIVACY
POLICY
COLLECTION
AND USE OF SHAREHOLDER INFORMATION
Prospector
Funds, Inc. and the IRA custodian collect only relevant information about the
Fund’s shareholders that the law allows or requires us to have in order to
conduct our business and properly service you.
We
collect financial and other personal information about you from the following
sources:
•Information
you provide on applications or other forms (for example, your name, address,
social security number and birth date);
•Information
derived from your transactions with us (for example, transaction amount, account
balance and account number); and
•Information
you provide to us if you access account information or conduct account
transactions online (for example, password, account number, e-mail address,
alternate telephone number).
KEEPING
INFORMATION
SECURE
We
maintain physical, electronic and procedural safeguards to protect your
financial and other personal information, and we continually assess new
technology with the aim of adding new safeguards to those we have in
place.
LIMITING
EMPLOYEE ACCESS TO INFORMATION
We
limit access to personally identifiable information to only those employees with
a business reason to know such information.
USE
OF PERSONAL AND FINANCIAL INFORMATION BY US AND THIRD PARTIES
We
do not sell non-public personal information about current or former customers or
their accounts to any third parties, and do not disclose such information to
third parties unless necessary to process a transaction, service an account, or
as otherwise permitted by law.
Those
who may receive this information include the companies that provide Transfer
Agent, technology and administrative services, as well as the investment adviser
who is an affiliate of the Fund.
ACCURACY
OF INFORMATION
We
strive to keep our records of your information accurate, and we take immediate
steps to correct errors. If there are any inaccuracies in your statements or in
any other communications from us, please contact us or contact your investment
professional.
Questions
If
you have any questions about the Funds or your account, you can write to us at
Prospector Funds, Inc., c/o U.S. Bank Global Fund Services, P.O. Box 701,
Milwaukee, WI 53201-0701. You can also call us toll free from anywhere in the
United States at (877) 734-7862 (Monday through Friday 9:00 a.m. to 8:00
p.m., Eastern Time), or visit us online 24 hours a day, 7 days a week, at
www.prospectorfunds.com. For your protection and to help ensure we provide you
with quality service, all calls may be monitored or recorded.
Prospector
Funds, Inc.
You
can learn more about the Funds in the following documents:
Annual/Semi-Annual
Report to Shareholders.
Additional information about each Fund’s investments is available in such Fund’s
Annual and Semi-Annual Reports to Shareholders and in Form N-CSR In a Fund’s
Annual
Report
you will find a discussion of recent market conditions and Fund strategies that
significantly affected that Fund’s performance during its last fiscal year;
financial statements, detailed performance information, portfolio holdings and
the report of the independent registered public accounting firm. In Form N-CSR,
you will find the Funds’ annual and semi-annual financial statements. You may
obtain these reports at no cost through your investment representative or by
writing to the address above or by calling the number below. Annual and
Semi-Annual Reports to Shareholders are also available online at
www.prospectorfunds.com.
Statement
of Additional Information (SAI).
Contains more information about the Funds, their investments and policies. It is
incorporated by reference and is legally a part of this prospectus.
For
a free copy of the SAI, please contact your investment representative, call us
at the number listed below, or write to us at the address listed above. You
may also download/view the SAI online at www.prospectorfunds.com.
You
can also obtain information about the Funds by visiting the EDGAR Database on
the Securities and Exchange Commission’s website at www.sec.gov. You can obtain
copies of this information, after paying a duplicating fee, by electronic
request at the following email address: [email protected].
Prospector
Funds, Inc.
(877)
734-7862
www.prospectorfunds.com
Investment
Company Act File Number 811-22077