07/07/2022 | Press release | Distributed by Public on 07/07/2022 10:29
S&P 500
|
Morningstar Large-Cap
|
||||
Fund
|
Value Index
|
S&P 500 Index
|
Value Category
|
||
1-year
|
7.97%
|
3.25%
|
0.21%
|
2.23%
|
|
5-year
|
9.82%
|
10.05%
|
13.66%
|
9.55%
|
|
10-year
|
10.86%
|
11.49%
|
13.67%
|
10.68%
|
|
15-year
|
7.08%
|
6.83%
|
9.28%
|
6.78%
|
*
|
Figures are from the Fund's prospectus dated February 28, 2022. The Advisor has contractually agreed to waive its fees and/or absorb expenses of the Fund to ensure that Net Annual Fund Operating Expenses do not exceed 0.70% (excluding acquired funds fees and expenses, interest, taxes and extraordinary expenses) through at least February 28, 2023. In addition, the Advisor has voluntarily agreed to waive a portion of its investment advisory fee contingent upon the Fund's performance versus the S&P 500 Value Index. While the Advisor may discontinue its voluntary waiver any time after February 28, 2023, it has no current intention of doing so.
|
Randall R. Eley
|
Thomas B. Murray
|
Chief Investment Officer
|
Portfolio Manager
|
Beginning
|
Ending
|
Expenses Paid
|
|
Account Value
|
Account Value
|
During Period*
|
|
11/1/21
|
4/30/22
|
11/1/21 - 4/30/22
|
|
Actual
|
$1,000.00
|
$1,020.90
|
$2.51
|
Hypothetical (5% return before expenses)
|
$1,000.00
|
$1,022.32
|
$2.51
|
*
|
Expenses are equal to the Fund's annualized expense ratio of 0.50%, multiplied by the average account value over the period, multiplied by 181 (days in most recent fiscal half-year)/365 days to reflect the one-half year expense.
|
Shares
|
COMMON STOCKS - 97.98%
|
Value
|
|||||
Beverage and Tobacco Product Manufacturing - 5.05%
|
|||||||
3,850
|
Altria Group, Inc.
|
$
|
213,944
|
||||
69,650
|
Coca-Cola Co.
|
4,500,087
|
|||||
3,300
|
PepsiCo, Inc.
|
566,643
|
|||||
5,280,674
|
|||||||
Broadcasting (except Internet) - 0.10%
|
|||||||
5,757
|
Warner Bros. Discovery, Inc. (a)
|
104,490
|
|||||
Building Material and Garden Equipment - 0.68%
|
|||||||
3,600
|
Lowe's Cos., Inc.
|
711,828
|
|||||
Chemical Manufacturing - 17.02%
|
|||||||
4,300
|
AbbVie, Inc.
|
631,584
|
|||||
13,300
|
Amgen, Inc.
|
3,101,427
|
|||||
9,400
|
Bristol-Myers Squibb Co.
|
707,538
|
|||||
52,850
|
Dow, Inc.
|
3,514,525
|
|||||
13,650
|
Gilead Sciences, Inc.
|
809,991
|
|||||
10,500
|
Johnson & Johnson
|
1,894,830
|
|||||
54,900
|
Merck & Co., Inc.
|
4,869,081
|
|||||
46,252
|
Pfizer, Inc.
|
2,269,586
|
|||||
17,798,562
|
|||||||
Computer and Electronic Product Manufacturing - 6.61%
|
|||||||
27,550
|
Cisco Systems, Inc.
|
1,349,399
|
|||||
99,500
|
Intel Corp.
|
4,337,205
|
|||||
11,700
|
Medtronic PLC - ADR
|
1,221,012
|
|||||
6,907,616
|
Shares
|
COMMON STOCKS - 97.98%
|
Value
|
|||||
Credit Intermediation and Related Activities - 8.55%
|
|||||||
2,500
|
American Express Co.
|
$
|
436,775
|
||||
39,200
|
Bank of America Corp.
|
1,398,656
|
|||||
30,000
|
Bank of New York Mellon Corp.
|
1,261,800
|
|||||
28,650
|
Capital One Financial Corp.
|
3,570,363
|
|||||
9,650
|
Citigroup, Inc.
|
465,226
|
|||||
3,700
|
JPMorgan Chase & Co.
|
441,632
|
|||||
10,400
|
U.S. Bancorp
|
505,024
|
|||||
19,600
|
Wells Fargo & Co.
|
855,148
|
|||||
8,934,624
|
|||||||
Electrical Equipment, Appliance, and Component Manufacturing - 1.12%
|
|||||||
12,950
|
Emerson Electric Co.
|
1,167,831
|
|||||
Food Manufacturing - 3.10%
|
|||||||
48,850
|
Kraft Heinz Co.
|
2,082,475
|
|||||
17,900
|
Mondelez International, Inc. - Class A
|
1,154,192
|
|||||
3,236,667
|
|||||||
General Merchandise Stores - 1.53%
|
|||||||
7,000
|
Target Corp.
|
1,600,550
|
|||||
Health and Personal Care Stores - 8.78%
|
|||||||
50,800
|
CVS Health Corp.
|
4,883,404
|
|||||
101,350
|
Walgreens Boots Alliance, Inc.
|
4,297,240
|
|||||
9,180,644
|
|||||||
Insurance Carriers and Related Activities - 7.69%
|
|||||||
30,650
|
American International Group, Inc.
|
1,793,332
|
|||||
76,450
|
MetLife, Inc.
|
5,021,236
|
|||||
2,400
|
UnitedHealth Group, Inc.
|
1,220,520
|
|||||
8,035,088
|
|||||||
Merchant Wholesalers, Durable Goods - 2.33%
|
|||||||
16,900
|
3M Co.
|
2,437,318
|
Shares
|
COMMON STOCKS - 97.98%
|
Value
|
|||||
Petroleum and Coal Products Manufacturing - 8.03%
|
|||||||
26,400
|
Chevron Corp.
|
$
|
4,136,088
|
||||
11,350
|
ConocoPhillips
|
1,084,152
|
|||||
37,250
|
Exxon Mobil Corp.
|
3,175,563
|
|||||
8,395,803
|
|||||||
Professional, Scientific, and Technical Services - 2.83%
|
|||||||
22,400
|
International Business Machines Corp.
|
2,961,504
|
|||||
Rail Transportation - 1.06%
|
|||||||
4,750
|
Union Pacific Corp.
|
1,112,877
|
|||||
Real Estate - 0.41%
|
|||||||
3,650
|
Simon Property Group, Inc.
|
430,700
|
|||||
Securities, Commodity Contracts, and Other Financial Investments
|
|||||||
and Related Activities - 3.44%
|
|||||||
450
|
BlackRock, Inc.
|
281,106
|
|||||
4,600
|
Goldman Sachs Group, Inc.
|
1,405,254
|
|||||
23,750
|
Morgan Stanley
|
1,914,012
|
|||||
3,600,372
|
|||||||
Semiconductor and Other Electronic Component Manufacturing - 1.52%
|
|||||||
900
|
Broadcom, Inc.
|
498,951
|
|||||
6,400
|
Texas Instruments, Inc.
|
1,089,600
|
|||||
1,588,551
|
|||||||
Telecommunications - 4.76%
|
|||||||
23,800
|
AT&T, Inc.
|
448,868
|
|||||
97,850
|
Verizon Communications, Inc.
|
4,530,455
|
|||||
4,979,323
|
|||||||
Transportation Equipment Manufacturing - 6.46%
|
|||||||
20,000
|
General Dynamics Corp.
|
4,730,600
|
|||||
1,600
|
Lockheed Martin Corp.
|
691,392
|
|||||
14,000
|
Raytheon Technologies Corp.
|
1,328,740
|
|||||
6,750,732
|
Shares
|
COMMON STOCKS - 97.98%
|
Value
|
|||||
Utilities - 6.91%
|
|||||||
16,900
|
Constellation Energy Corp.
|
$
|
1,000,649
|
||||
12,500
|
Duke Energy Corp.
|
1,377,000
|
|||||
53,400
|
Exelon Corp.
|
2,498,052
|
|||||
32,050
|
Southern Co.
|
2,352,150
|
|||||
7,227,851
|
|||||||
TOTAL COMMON STOCKS (Cost $95,823,217)
|
102,443,605
|
||||||
MONEY MARKET FUND - 1.96%
|
|||||||
2,049,071
|
Invesco STIT-Treasury Portfolio - Institutional Class, 0.23% (b)
|
2,049,071
|
|||||
TOTAL MONEY MARKET FUND (Cost $2,049,071)
|
2,049,071
|
||||||
Total Investments in Securities (Cost $97,872,288) - 99.94%
|
104,492,676
|
||||||
Other Assets in Excess of Liabilities - 0.06%
|
64,629
|
||||||
TOTAL NET ASSETS - 100.00%
|
$
|
104,557,305
|
ADR
|
American Depository Receipt
|
PLC
|
Public Limited Company
|
(a)
|
Non-income producing security.
|
(b)
|
Rate shown is the 7-day annualized yield as of April 30, 2022.
|
ASSETS
|
||||
Investments in securities, at value (identified cost $97,872,288)
|
$
|
104,492,676
|
||
Receivables
|
||||
Fund shares sold
|
42,220
|
|||
Dividends and interest
|
173,404
|
|||
Return of capital
|
737
|
|||
Prepaid expenses
|
12,495
|
|||
Total assets
|
104,721,532
|
|||
LIABILITIES
|
||||
Payables
|
||||
Fund shares redeemed
|
65,694
|
|||
Administration fees
|
32,545
|
|||
Audit fees
|
31,414
|
|||
Transfer agent fees and expenses
|
9,221
|
|||
Advisory fees (Note 4)
|
7,953
|
|||
Fund accounting fees
|
6,313
|
|||
Shareholder reporting
|
3,767
|
|||
Custody fees
|
3,111
|
|||
Chief Compliance Officer fee
|
2,438
|
|||
Trustee fees and expenses
|
717
|
|||
Legal fees
|
328
|
|||
Accrued other expenses
|
726
|
|||
Total liabilities
|
164,227
|
|||
NET ASSETS
|
$
|
104,557,305
|
||
CALCULATION OF NET ASSET VALUE PER SHARE
|
||||
Net assets applicable to shares outstanding
|
$
|
104,557,305
|
||
Shares issued and outstanding
|
||||
[unlimited number of shares (par value $0.01) authorized]
|
7,078,575
|
|||
Net asset value, offering and redemption price per share
|
$
|
14.77
|
||
COMPONENTS OF NET ASSETS
|
||||
Paid-in capital
|
$
|
91,759,923
|
||
Total distributable earnings
|
12,797,382
|
|||
Net assets
|
$
|
104,557,305
|
INVESTMENT INCOME
|
||||
Dividends (Net of foreign taxes withheld of $1,106)
|
$
|
1,549,741
|
||
Interest
|
494
|
|||
Total investment income
|
1,550,235
|
|||
EXPENSES
|
||||
Advisory fees (Note 4)
|
283,786
|
|||
Administration fees (Note 4)
|
95,353
|
|||
Transfer agent fees and expenses (Note 4)
|
45,154
|
|||
Fund accounting fees (Note 4)
|
19,188
|
|||
Registration fees
|
12,544
|
|||
Audit fees
|
10,414
|
|||
Custody fees (Note 4)
|
10,202
|
|||
Chief Compliance Officer fee (Note 4)
|
7,438
|
|||
Trustee fees and expenses
|
6,684
|
|||
Reports to shareholders
|
4,163
|
|||
Legal fees
|
3,858
|
|||
Other expenses
|
3,193
|
|||
Insurance expense
|
1,771
|
|||
Total expenses
|
503,748
|
|||
Less: advisory fee waiver (Note 4)
|
(245,761
|
)
|
||
Net expenses
|
257,987
|
|||
Net investment income
|
1,292,248
|
|||
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS
|
||||
Net realized gain on investments
|
5,444,607
|
|||
Net change in unrealized appreciation/(depreciation) on investments
|
(4,665,004
|
)
|
||
Net realized and unrealized gain on investments
|
779,603
|
|||
Net Increase in Net Assets Resulting from Operations
|
$
|
2,071,851
|
Six Months Ended
|
||||||||
April 30, 2022
|
Year Ended
|
|||||||
(Unaudited)
|
October 31, 2021
|
|||||||
INCREASE/(DECREASE) IN NET ASSETS FROM:
|
||||||||
OPERATIONS
|
||||||||
Net investment income
|
$
|
1,292,248
|
$
|
2,775,604
|
||||
Net realized gain on investments
|
5,444,607
|
3,451,834
|
||||||
Net change in unrealized appreciation/(depreciation) on investments
|
(4,665,004
|
)
|
28,872,845
|
|||||
Net increase in net assets resulting from operations
|
2,071,851
|
35,100,283
|
||||||
DISTRIBUTIONS TO SHAREHOLDERS
|
||||||||
Total distributions to shareholders
|
(5,104,318
|
)
|
(11,248,220
|
)
|
||||
CAPITAL SHARE TRANSACTIONS
|
||||||||
Net increase/(decrease) in net assets derived from
|
||||||||
net change in outstanding shares (a)
|
6,626,932
|
(8,968,551
|
)
|
|||||
Total increase in net assets
|
3,594,465
|
14,883,512
|
||||||
NET ASSETS
|
||||||||
Beginning of period
|
100,962,840
|
86,079,328
|
||||||
End of period
|
$
|
104,557,305
|
$
|
100,962,840
|
Six Months Ended
|
||||||||||||||||
April 30, 2022
|
Year Ended
|
|||||||||||||||
(Unaudited)
|
October 31, 2021
|
|||||||||||||||
Shares
|
Paid-in Capital
|
Shares
|
Paid-in Capital
|
|||||||||||||
Shares sold
|
772,252
|
$
|
11,633,920
|
1,302,996
|
$
|
17,787,735
|
||||||||||
Shares issued on reinvestments of distributions
|
349,126
|
5,097,237
|
887,808
|
11,195,257
|
||||||||||||
Shares redeemed
|
(671,529
|
)
|
(10,104,225
|
)
|
(2,761,539
|
)
|
(37,951,543
|
)
|
||||||||
Net increase/(decrease)
|
449,849
|
$
|
6,626,932
|
(570,735
|
)
|
$
|
(8,968,551
|
)
|
Six Months Ended
|
||||||||||||||||||||||||
April 30, 2022
|
Year Ended October 31,
|
|||||||||||||||||||||||
(Unaudited)
|
2021
|
2020
|
2019
|
2018
|
2017
|
|||||||||||||||||||
Net asset value, beginning of period
|
$
|
15.23
|
$
|
11.96
|
$
|
14.51
|
$
|
15.33
|
$
|
15.25
|
$
|
13.00
|
||||||||||||
Income from investment operations:
|
||||||||||||||||||||||||
Net investment income
|
0.19
|
0.42
|
0.42
|
0.30
|
0.33
|
0.36
|
||||||||||||||||||
Net realized and unrealized
|
||||||||||||||||||||||||
gain/(loss) on investments
|
0.12
|
4.43
|
(2.65
|
)
|
0.87
|
1.06
|
2.25
|
|||||||||||||||||
Total from investment operations
|
0.31
|
4.85
|
(2.23
|
)
|
1.17
|
1.39
|
2.61
|
|||||||||||||||||
Less distributions:
|
||||||||||||||||||||||||
From net investment income
|
(0.40
|
)
|
(0.44
|
)
|
(0.32
|
)
|
(0.31
|
)
|
(0.36
|
)
|
(0.29
|
)
|
||||||||||||
From net realized gain on investments
|
(0.37
|
)
|
(1.14
|
)
|
-
|
(1.68
|
)
|
(0.95
|
)
|
(0.07
|
)
|
|||||||||||||
Total distributions
|
(0.77
|
)
|
(1.58
|
)
|
(0.32
|
)
|
(1.99
|
)
|
(1.31
|
)
|
(0.36
|
)
|
||||||||||||
Net asset value, end of period
|
$
|
14.77
|
$
|
15.23
|
$
|
11.96
|
$
|
14.51
|
$
|
15.33
|
$
|
15.25
|
||||||||||||
Total return
|
2.09
|
%‡
|
43.39
|
%
|
-15.83
|
%
|
9.07
|
%
|
9.44
|
%
|
20.43
|
%
|
||||||||||||
Ratios/supplemental data:
|
||||||||||||||||||||||||
Net assets, end of period (thousands)
|
$
|
104,557
|
$
|
100,963
|
$
|
86,079
|
$
|
119,054
|
$
|
85,308
|
$
|
81,873
|
||||||||||||
Ratio of expenses to average net assets:
|
||||||||||||||||||||||||
Before fees waived and
|
||||||||||||||||||||||||
expenses absorbed
|
0.98
|
%†
|
0.98
|
%
|
1.01
|
%
|
0.96
|
%
|
1.00
|
%
|
1.06
|
%
|
||||||||||||
After fees waived and
|
||||||||||||||||||||||||
expenses absorbed
|
0.50
|
%†
|
0.50
|
%
|
0.54
|
%
|
0.70
|
%
|
0.70
|
%
|
0.50
|
%
|
||||||||||||
Ratio of net investment income
|
||||||||||||||||||||||||
to average net assets:
|
||||||||||||||||||||||||
Before fees waived and
|
||||||||||||||||||||||||
expenses absorbed
|
2.03
|
%†
|
2.27
|
%
|
2.52
|
%
|
2.10
|
%
|
1.86
|
%
|
1.90
|
%
|
||||||||||||
After fees waived and
|
||||||||||||||||||||||||
expenses absorbed
|
2.51
|
%†
|
2.75
|
%
|
2.99
|
%
|
2.36
|
%
|
2.16
|
%
|
2.46
|
%
|
||||||||||||
Portfolio turnover rate
|
33.68
|
%‡
|
34.47
|
%
|
45.46
|
%
|
23.83
|
%
|
40.62
|
%
|
37.01
|
%
|
†
|
Annualized.
|
‡
|
Not annualized.
|
A.
|
Security Valuation: All investments in securities are recorded at their estimated fair value, as described in note 3.
|
|
B.
|
Federal Income Taxes: It is the Fund's policy to comply with the requirements of Subchapter M of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its taxable income to its shareholders. Therefore, no Federal income or excise tax provision is required.
|
|
The Fund recognizes the tax benefits of uncertain tax positions only where the position is "more likely than not" to be sustained assuming examination by tax authorities. The tax returns of the Fund's prior three fiscal years are open for examination. Management has reviewed all open tax years in major jurisdictions and has concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions taken or expected to be taken on a tax return. The Fund identifies its major tax jurisdictions as U.S. Federal and the state of Wisconsin. The Fund is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next twelve months.
|
||
C.
|
Securities Transactions, Income and Distributions: Securities transactions are accounted for on the trade date. Realized gains and losses on securities sold are determined on a first-in, first-out basis. Interest income is recorded on an accrual basis. Dividend income, income and capital gain distributions from underlying funds, and distributions to shareholders are recorded on the ex-dividend date.
|
|
Common expenses of the Trust are typically allocated among the funds in the Trust based on a fund's respective net assets, or by other equitable means.
|
||
The Fund distributes substantially all net investment income, if any, and net realized gains, if any, annually. Distributions from net realized gains for book purposes may include short-term capital gains. All short-term capital gains are included in ordinary income for tax purposes.
|
||
The amount of dividends and distributions to shareholders from net investment income and net realized capital gains is determined in accordance with Federal income tax regulations, which differs from accounting principles generally accepted in the United States of America. To the extent these book/tax differences are permanent, such amounts are reclassified within the capital accounts based on their Federal tax treatment.
|
D.
|
Reclassification of Capital Accounts: Accounting principles generally accepted in the United States of America require that certain components of net assets relating to permanent differences be reclassified between financial and tax reporting. These reclassifications have no effect on net assets or net asset value per share.
|
|
E.
|
Use of Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets during the reporting period. Actual results could differ from those estimates.
|
|
F.
|
Events Subsequent to the Fiscal Period End: In preparing the financial statements as of April 30, 2022, management considered the impact of subsequent events for the potential recognition or disclosure in the financial statements. Management has determined there were no subsequent events that would need to be disclosed in the Fund's financial statements.
|
Level 1 -
|
Unadjusted quoted prices in active markets for identical assets or liabilities that the Fund has the ability to access.
|
|
Level 2 -
|
Observable inputs other than quoted prices included in level 1 that are observable for the asset or liability, either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates and similar data.
|
|
Level 3 -
|
Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available, representing the Fund's own assumptions about the assumptions a market participant would use in valuing the asset or liability, and would be based on the best information available.
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||||
Common Stocks
|
|||||||||||||||||
Finance and Insurance
|
$
|
16,999,722
|
$
|
-
|
$
|
-
|
$
|
16,999,722
|
|||||||||
Information
|
5,083,813
|
-
|
-
|
5,083,813
|
|||||||||||||
Management of Companies and Enterprises
|
3,570,363
|
-
|
-
|
3,570,363
|
|||||||||||||
Manufacturing
|
51,305,018
|
-
|
-
|
51,305,018
|
|||||||||||||
Mining, Quarrying, and Oil and Gas Extraction
|
1,084,152
|
-
|
-
|
1,084,152
|
|||||||||||||
Real Estate and Rental and Leasing
|
430,700
|
-
|
-
|
430,700
|
|||||||||||||
Retail Trade
|
15,629,110
|
-
|
-
|
15,629,110
|
|||||||||||||
Transportation and Warehousing
|
1,112,877
|
-
|
-
|
1,112,877
|
|||||||||||||
Utilities
|
7,227,850
|
-
|
-
|
7,227,850
|
|||||||||||||
Total Common Stocks
|
102,443,605
|
-
|
-
|
102,443,605
|
|||||||||||||
Money Market Fund
|
2,049,071
|
-
|
-
|
2,049,071
|
|||||||||||||
Total Investments in Securities
|
$
|
104,492,676
|
$
|
-
|
$
|
-
|
$
|
104,492,676
|
Expires
|
Amount
|
||||
10/31/2022
|
$
|
152,691
|
|||
10/31/2023
|
322,112
|
||||
10/31/2024
|
284,842
|
||||
4/30/2025
|
142,566
|
||||
$
|
902,211
|
Six Months Ended
|
Year Ended
|
||||||||
April 30, 2022
|
October 31, 2021
|
||||||||
Ordinary income
|
$
|
2,866,361
|
$
|
3,122,164
|
|||||
Long-term capital gains
|
2,237,957
|
8,126,056
|
Cost of investments (a)
|
$
|
89,732,297
|
|||
Gross tax unrealized appreciation
|
14,922,890
|
||||
Gross tax unrealized depreciation
|
(3,832,222
|
)
|
|||
Net tax unrealized appreciation (a)
|
11,090,668
|
||||
Undistributed ordinary income
|
2,501,259
|
||||
Undistributed long-term capital gain
|
2,237,922
|
||||
Total distributable earnings
|
4,739,181
|
||||
Total accumulated earnings/(losses)
|
$
|
15,829,849
|
(a)
|
The difference between book-basis and tax-basis net unrealized appreciation is attributable primarily to the tax deferral of losses on wash sales.
|
1.
|
THE NATURE, EXTENT AND QUALITY OF THE SERVICES PROVIDED AND TO BE PROVIDED BY THE ADVISOR UNDER THE ADVISORY AGREEMENT. The Board considered the nature, extent and quality of the Advisor's overall services provided to the Fund, as well as its specific responsibilities in all aspects of day-to-day investment management of the Fund. The Board considered the qualifications, experience and responsibilities of the portfolio managers, as well as the responsibilities of other key personnel of the Advisor involved in the day-to-day activities of the Fund. The Board also considered the resources and compliance structure of the Advisor, including information regarding its compliance program, its chief compliance officer and the Advisor's compliance record, as well as the Advisor's cybersecurity program, liquidity risk management program, business continuity plan, and risk management process. Additionally, the Board considered how the Advisor's business continuity plan has operated throughout the COVID-19 pandemic. The Board further considered the prior relationship between the Advisor and the Trust, as well as the Board's knowledge of the Advisor's operations, and noted that during the course of the prior year they had met with certain personnel of the Advisor by videoconference to discuss the Fund's performance and investment outlook as well as various marketing and compliance topics. The Board concluded that the Advisor had the quality and depth of personnel, resources, investment processes and compliance policies and procedures essential to performing its duties under the Advisory Agreement and that they were satisfied with the nature, overall quality and extent of such management services.
|
|
2.
|
THE FUND'S HISTORICAL PERFORMANCE AND THE OVERALL PERFORMANCE OF THE ADVISOR. In assessing the quality of the portfolio management delivered by the Advisor, the Board reviewed the short-term and long-term performance of the Fund as of June 30, 2021, on both an absolute basis and a relative basis in comparison to its peer funds utilizing Morningstar classifications, appropriate securities market benchmarks, a cohort that is comprised of similarly managed funds selected by an independent third-party consulting firm engaged by the Board to assist it in its 15(c) review (the "Cohort"), and the Advisor's similarly managed accounts. While the Board considered both short-term and long-term performance, it placed greater emphasis on longer term performance. When reviewing performance against the comparative Morningstar peer group universe, the Board took into account that the investment objectives and strategies of the Fund, as well as its level of risk tolerance, may differ significantly from funds in the
|
peer universe. When reviewing the Fund's performance against broad market benchmarks, the Board took into account the differences in portfolio construction between the Fund and such benchmarks as well as other differences between actively managed funds and passive benchmarks, such as objectives and risks. In assessing periods of relative underperformance or outperformance, the Board took into account that relative performance can be significantly impacted by performance measurement periods and that some periods of underperformance may be transitory in nature while others may reflect more significant underlying issues.
|
||
The Board noted that the Fund underperformed the average of its Morningstar peer group and Cohort for the one-, three-, and five-year periods and outperformed for the ten-year period ended June 30, 2021.
|
||
The Board reviewed the performance of the Fund against broad-based securities market benchmarks noting that it had underperformed each for the one-, three-, five-, and ten-year periods ended June 30, 2021.
|
||
The Board also considered any differences in performance between the Advisor's separately managed accounts and the performance of the Fund, noting that the Fund underperformed the similarly managed composite for the one-, three-, five-, and ten-year periods ended June 30, 2021.
|
||
3.
|
THE COSTS OF THE SERVICES TO BE PROVIDED BY THE ADVISOR AND THE STRUCTURE OF THE ADVISOR'S FEE UNDER THE ADVISORY AGREEMENT. In considering the advisory fee and total expenses of the Fund, the Board reviewed comparisons to the Morningstar peer funds, the Cohort, and the Advisor's similarly managed accounts for other types of clients, as well as all expense waivers and reimbursements for the Fund. When reviewing fees charged to other separately managed accounts, the Board took into account the type of account and the differences in the management of that account that might be germane to the difference, if any, in the fees charged to such accounts.
|
|
The Board noted that the Advisor had contractually agreed to limit the annual expense ratio for the Fund to no more than 0.70%, excluding certain operating expenses and class-level expenses (the "Expense Cap"). Additionally, the Board noted that the Advisor had voluntarily agreed to waive a portion of its advisory fees in the event, at the end of any month, the Fund's trailing three-year and/or five-year average annual total return was less than that of a specific index. The Board noted that the Fund's total net expense ratio was below the average and median of both its Morningstar peer group and its Cohort. The Board also considered that the contractual management fee was in line with the Morningstar peer group median, slightly below the Morningstar peer group average, and below the Cohort median and average. The Board considered the advisory fee waivers and the reimbursement of Fund expenses necessary to maintain the Expense Cap.
|
||
The Board also considered the services the Advisor provided to its separately managed account clients, comparing the fees charged for those management services to the management fees charged to the Fund. The Board found that the management fees charged to the Fund were in some cases higher than the fees charged to the Advisor's similarly managed account clients due to the increased services provided to the Fund.
|
||
The Board determined that it would continue to monitor the appropriateness of the advisory fee for the Fund and concluded that, at this time, the fee to be paid to the Advisor was fair and reasonable.
|
4.
|
ECONOMIES OF SCALE. The Board also considered whether economies of scale were being realized by the Advisor that should be shared with shareholders. The Board further noted that the Advisor has contractually agreed to reduce its advisory fees or reimburse Fund expenses so that the Fund does not exceed the specified Expense Cap. The Board noted that at current asset levels, it did not appear that there were additional significant economies of scale being realized by the Advisor that should be shared with shareholders and concluded that it would continue to monitor economies of scale in the future as circumstances changed and assuming asset levels continue to increase.
|
|
5.
|
THE PROFITS TO BE REALIZED BY THE ADVISOR AND ITS AFFILIATES FROM THEIR RELATIONSHIP WITH THE FUND. The Board reviewed the Advisor's financial information and took into account both the direct benefits and the indirect benefits to the Advisor from advising the Fund. The Board considered the profitability to the Advisor from its relationship with the Fund and considered any additional material benefits derived by the Advisor from its relationship with the Fund, such as "soft dollar" benefits that may be received in exchange for Fund brokerage. The Board also considered that the Fund does not charge Rule 12b-1 fees. After such review, the Board determined that the profitability to the Advisor with respect to the Advisory Agreement was not excessive, and that the Advisor had maintained adequate resources and profit levels to support the services it provides to the Fund.
|
(a)
|
Not applicable to registrants who are not listed issuers (as defined in Rule 10A-3 under the Securities Exchange Act of 1934).
|
(b)
|
Not applicable.
|
(a)
|
Schedule of Investments is included as part of the report to shareholders filed under Item 1 of this Form.
|
(b)
|
Not Applicable.
|
(a)
|
The Registrant's President/Chief Executive Officer/Principal Executive Officer and Vice President/Treasurer/Principal Financial Officer have reviewed the Registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended, (the "Act")) as of a date within 90 days of the filing of this report, as required by Rule 30a-3(b) under the Act and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934. Based on their review, such officers have concluded that the disclosure controls and procedures are effective in ensuring that information required to be disclosed in this report is appropriately recorded, processed, summarized and reported and made known to them by others within the Registrant and by the Registrant's service provider.
|
(b)
|
There were no changes in the Registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the Act) that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Registrant's internal control over financial reporting.
|
(a)
|
(1) Any code of ethics or amendment thereto, that is the subject of the disclosure required by Item 2, to the extent that the registrant intends to satisfy Item 2 requirements through filing an exhibit. Not Applicable.
|
(b)
|
Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Furnished herewith.
|