UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-22027
FundVantage Trust
(Exact name of registrant as specified in charter)
301 Bellevue Parkway
Wilmington, DE 19809
(Address of principal executive offices) (Zip code)
Joel L. Weiss
BNY Mellon Investment Servicing (US) Inc.
103 Bellevue Parkway
Wilmington, DE 19809
(Name and address of agent for service)
Registrant’s telephone number, including area code: 302-791-1851
Date of fiscal year end: April 30
Date of reporting period: October 31, 2015
Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget (“OMB”) control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 100 F Street, NE, Washington, DC 20549. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.
Item 1. Reports to Stockholders.
The Report to Shareholders is attached herewith.
BRADESCO LATIN AMERICAN EQUITY FUND
Semi-Annual Report
Performance Data
October 31, 2015
(Unaudited)
Average Annual Total Returns for the Periods Ended October 31, 2015 | ||||||||
Six Months† | 1 Year | Since Inception | ||||||
Institutional Class | -23.07% | -35.20% | -20.14%* | |||||
MSCI EM (Emerging Markets) Latin America Net | ||||||||
Total Return Index | -24.61% | -34.83% | -19.43%** | |||||
Retail Class | -23.21% | -35.41% | -30.41%* | |||||
MSCI EM (Emerging Markets) Latin America Net | ||||||||
Total Return Index | -24.61% | -34.83% | -29.70%** |
† | Not Annualized. |
* | Institutional Class Shares and Retail Class Shares of the Bradesco Latin American Equity Fund (“the “Fund”) commenced operations on December 20, 2013 and June 9, 2014, respectively. |
** | Benchmark performance is from each class shares respective commencement date and is not the commencement date of the benchmark itself. |
The performance data quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment in the Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. The table does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares. Current performance may be lower or higher. Performance data current to the most recent month-end may be obtained by calling (866) 640-5705.
The Fund’s total gross and net operating expense ratio, as stated in the current prospectus dated September 1, 2015, is 3.28% and 1.76%, 3.53% and 2.01%, respectively, of the Fund’s average daily net assets for Institutional Class and Retail Class Shares, respectively, which may differ from the actual expenses incurred by the Fund for the period covered by this report. A 2.00% redemption fee applies to shares redeemed within 30 days of purchase. The redemption fee is not reflected in the returns shown above. BRAM US LLC (“BRAM US” or the “Adviser”) has contractually agreed to waive or otherwise reduce its annual compensation received from the Fund to the extent necessary to ensure that the Fund’s “Total Annual Fund Operating Expenses”, excluding taxes, any class specific fees and expenses (such as Rule12b-1 distribution fees, shareholder service fees or transfer agency fees) “Acquired Fund” fees and expenses, interest, extraordinary items and brokerage commissions, do not exceed 1.75% of average daily net assets of the Fund (the “Expense Limitation”). The Expense Limitation will remain in place until August 31, 2016, unless the Board of Trustees of the FundVantage Trust (the “Trust”) approves its earlier termination. The Adviser may recoup any expenses or fees it has reimbursed within a three-year period from the year in which the Adviser reduced its compensation and/or assumed expenses of the Fund. No recoupment will occur unless the Fund’s expenses are below the Expense Limitation.
The Fund intends to evaluate performance as compared to that of the MSCI EM (Emerging Markets) Latin America Net Total Return Index (net of foreign withholding taxes). The MSCI EM Latin America Net Total Return Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of emerging markets in Latin America. The MSCI EM Latin America Net Total Return Index consists of the following 5 emerging market country indexes: Brazil, Chile, Colombia, Mexico, and Peru. An index is unmanaged and it is not possible to invest in an index.
The Fund is non-diversified which means it may be invested in a limited number of issuers geographically particularly Latin America and more susceptible to any economic, political and regulatory events. The Fund invests primarily in
1
BRADESCO LATIN AMERICAN EQUITY FUND
Semi-Annual Report
Performance Data (Concluded)
October 31, 2015
(Unaudited)
markets of emerging countries which are riskier and may be considered speculative. In addition, many emerging securities markets have far lower trading volumes, currency devaluation risk and less liquidity than developed markets. The Fund may invest in derivatives (futures, options, and swaps), depositary receipts and small to mid-capitalization companies all of which may cause greater volatility and less liquidity. Funds that invest in derivatives are subject to the risks of the underlying securities which may be more sensitive to changes in market conditions and may amplify risks. The use of certain derivatives may also have a leveraging effect which may increase the volatility of the Fund and reduce its returns.
Foreign securities are subject to political, social, or economic risks including instability in the country of the issuer of a security, variation in international trade patterns, the possibility of the imposition of exchange controls, expropriation, confiscatory taxation, limits on movement to currency or other assets and nationalization of assets.
2
BRADESCO LATIN AMERICAN HARD CURRENCY BOND FUND
Semi-Annual Report
Performance Data
October 31, 2015
(Unaudited)
Average Annual Total Returns for the Periods Ended October 31, 2015 | ||||||||
Six Months† | 1 Year | Since Inception | ||||||
Institutional Class | -7.85% | -9.41% | -2.22%* | |||||
CS Latin America Corporate Index 0-6Y A/B Buckets | -3.74% | -5.04% | 0.20%** | |||||
Retail Class | -7.94% | -9.63% | -7.16%* | |||||
CS Latin America Corporate Index 0-6Y A/B Buckets | -3.74%* | -5.04% | -3.77%** |
† | Not Annualized. |
* | Institutional Class Shares and Retail Class Shares of the Bradesco Latin American Hard Currency Bond Fund (the “Fund”) commenced operations on December 20, 2013 and June 9, 2014, respectively. |
** | Benchmark performance is from each class shares respective commencement date and is not the commencement date of the benchmark itself. |
The performance data includes adjustments in accordance with accounting principles generally accepted in the United States of America and, consequently, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset values and returns for shareholder transactions.
The performance data quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment in the Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. The table does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares. Current performance may be lower or higher. Performance data current to the most recent month-end may be obtained by calling (866) 640-5705.
The Fund’s total gross and net operating expense ratio, as stated in the current prospectus dated September 1, 2015, is 2.84% and 1.53%, 3.09% and 1.78%, respectively, of the Fund’s average daily net assets for Institutional Class and Retail Class Shares, respectively, which may differ from the actual expenses incurred by the Fund for the period covered by this report. A 2.00% redemption fee applies to shares redeemed within 30 days of purchase. The redemption fee is not reflected in the returns shown above. BRAM US LLC (“BRAM US” or the “Adviser”) has contractually agreed to waive or otherwise reduce its annual compensation received from the Fund to the extent necessary to ensure that the Fund’s “Total Annual Fund Operating Expenses”, excluding taxes, any class specific fees and expenses (such as Rule12b-1 distribution fees, shareholder service fees or transfer agency fees), “Acquired Fund” fees and expenses, interest, extraordinary items and brokerage commissions, do not exceed 1.50% of average daily net assets of the Fund (the “Expense Limitation”). The Expense Limitation will remain in place until August 31, 2016, unless the Board of Trustees of the FundVantage Trust (the “Trust”) approves its earlier termination. The Adviser may recoup any expenses or fees it has reimbursed within a three-year period from the year in which the Adviser reduced its compensation and/or assumed expenses of the Fund. No recoupment will occur unless the Fund’s expenses are below the Expense Limitation.
The Fund intends to evaluate performance as compared to that of the Credit Suisse (“CS”) Latin America Corporate Index 0-6Y A/B Buckets. The CS Latin America Corporate Index 0-6Y A/B Buckets is a subset index of the CS-Latin America Corporate Index (“LACI”). It contains bonds with less than 6 years to maturity and rated “B-” or higher [composite of Moody’s, S&P, and Fitch ratings as determined by Credit Suisse’s methodology]. CS LACI Index is a diversified basket of liquid, tradable Latin American corporate bond issues that are denominated in US dollars. This index provides a region-specific benchmark that represents characteristics, pricing, and total return performance of different asset classes within the Latin American corporate bond universe. The index is divided into three different categories, including supranational, quasi-sovereign, and corporate bonds and can be broken down by country of issuance. An index is unmanaged and it is not possible to invest in an index.
3
BRADESCO LATIN AMERICAN HARD CURRENCY BOND FUND
Semi-Annual Report
Performance Data (Concluded)
October 31, 2015
(Unaudited)
The Fund is non-diversified which means it may be invested in a limited number of issuers particularly in Latin America and more susceptible to any economic, political and regulatory events. The Fund invests primarily in markets of emerging countries which are riskier and may be considered speculative as well as derivatives which may amplify volatility. In addition, many emerging securities markets have far lower trading volumes, currency devaluation risk and less liquidity than developed markets. The Fund invests in below investment grade bonds (known as “junk bonds”) and may be less liquid and subject to greater volatility. The Fund is subject to the same risks as the underlying bonds in the portfolio such as credit, prepayment, sovereign debt, call and interest rate risk. As interest rates rise the value of bond prices will decline.
Foreign securities are subject to political, social, or economic risks including instability in the country of the issuer of a security, variation in international trade patterns, the possibility of the imposition of exchange controls, expropriation, confiscatory taxation, limits on movement to currency or other assets and nationalization of assets.
4
BRADESCO FUNDS
Fund Expense Disclosure
October 31, 2015
(Unaudited)
As a shareholder of the Bradesco Funds (each a “Fund” and together, the “Funds”), you incur two types of costs: (1) transaction costs, including redemption fees; and (2) ongoing costs, including management fees and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in a Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
This example is based on an investment of $1,000 invested at the beginning of the six-month period from May 1, 2015, through October 31, 2015 and held for the entire period.
Actual Expenses
The first line for each Fund in the accompanying tables provide information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line for each Fund in the accompanying tables provide information about hypothetical account values and hypothetical expenses based on such Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund(s) and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that the expenses shown in the accompanying tables are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as redemption fees. Therefore, the second line of the accompanying tables are useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
5
BRADESCO FUNDS
Fund Expense Disclosure (Concluded)
October 31, 2015
(Unaudited)
Bradesco Latin American Equity Fund | ||||||
Beginning Account Value | Ending Account Value October 31, 2015 | Expenses Paid During Period* | ||||
Institutional Class | ||||||
Actual | $1,000.00 | $ 769.30 | $ 7.78 | |||
Hypothetical (5% return before expenses) | 1,000.00 | 1,016.34 | 8.87 | |||
Retail Class | ||||||
Actual | $1,000.00 | $ 767.90 | $ 8.89 | |||
Hypothetical (5% return before expenses) | 1,000.00 | 1,015.08 | 10.13 | |||
Bradesco Latin American Hard Currency Bond Fund | ||||||
Beginning Account Value | Ending Account Value October 31, 2015 | Expenses Paid During Period** | ||||
Institutional Class | ||||||
Actual | $1,000.00 | $ 921.50 | $7.25 | |||
Hypothetical (5% return before expenses) | 1,000.00 | 1,017.60 | 7.61 | |||
Retail Class | ||||||
Actual | $1,000.00 | $ 920.60 | $8.44 | |||
Hypothetical (5% return before expenses) | 1,000.00 | 1,016.34 | 8.87 |
* | Expenses are equal to an annualized expense ratio for the six-month period ended October 31, 2015 of 1.75% and 2.00% for the Institutional Class and the Retail Class Shares, respectively, multiplied by the average account value over the period, multiplied by the number of days in the most recent period (184), then divided by 366 to reflect the period. The Fund’s ending account values on the first line in the table are based on the actual six month total returns for the Fund of (23.07)% and (23.21)% for the Institutional Class and the Retail Class Shares, respectively. |
** | Expenses are equal to an annualized expense ratio for the six-month period ended October 31, 2015 of 1.50% and 1.75% for the Institutional Class and the Retail Class Shares, respectively, multiplied by the average account value over the period, multiplied by the number of days in the most recent period (184), then divided by 366 to reflect the period. The Fund’s ending account values on the first line in the table are based on the actual six month total returns for the Fund of (7.85)% and (7.94)% for the Institutional Class and the Retail Class Shares, respectively. |
6
BRADESCO LATIN AMERICAN EQUITY FUND
Portfolio Holdings Summary Table
October 31, 2015
(Unaudited)
The following table presents a summary by sector of the portfolio holdings of the Fund:
% of Net Assets | Value | |||||||||
COMMON STOCK: | ||||||||||
Beverages | 14.5 | % | $ | 1,752,623 | ||||||
Commercial Services | 6.5 | 781,675 | ||||||||
Banks | 6.1 | 737,431 | ||||||||
Consumer Services | 5.8 | 698,216 | ||||||||
Food | 5.7 | 689,692 | ||||||||
Holding Companies-Diversified | 5.6 | 681,701 | ||||||||
Airline | 5.5 | 669,142 | ||||||||
Chemicals | 4.6 | 559,412 | ||||||||
Electric | 4.5 | 542,423 | ||||||||
Insurance | 4.4 | 538,683 | ||||||||
Telecommunications | 3.7 | 452,374 | ||||||||
REITS | 2.4 | 292,629 | ||||||||
Building Materials | 2.1 | 252,924 | ||||||||
Materials | 1.7 | 200,925 | ||||||||
Transportation | 1.6 | 197,939 | ||||||||
Media | 1.4 | 174,840 | ||||||||
Utilities | 1.0 | 119,360 | ||||||||
Retails | 1.0 | 119,345 | ||||||||
Preferred Stocks | 17.5 | 2,113,505 | ||||||||
Registered Investment Company | 4.1 | 497,331 | ||||||||
Other Assets in Excess of Liabilities | 0.3 | 39,240 | ||||||||
|
|
|
| |||||||
NET ASSETS | 100.0 | % | $ | 12,111,410 | ||||||
|
|
|
|
Portfolio holdings are subject to change at any time.
The accompanying notes are an integral part of the financial statements.
7
BRADESCO LATIN AMERICAN EQUITY FUND
Portfolio of Investments
October 31, 2015
(Unaudited)
Number of Shares | Value | |||||||
COMMON STOCKS — 78.1% |
| |||||||
Belgium — 0.5% |
| |||||||
Anheuser-Busch InBev NV, SP ADR | 550 | $ | 65,632 | |||||
|
| |||||||
Brazil — 28.5% |
| |||||||
AMBEV SA, SP ADR | 129,000 | 628,230 | ||||||
BB Seguridade Participacoes SA | 78,100 | 538,683 | ||||||
BRF SA, ADR | 31,400 | 481,362 | ||||||
Localiza Rent a Car SA | 40,200 | 271,019 | ||||||
Rumo Logistica Operadora Multimodal SA* | 104,000 | 197,939 | ||||||
Ultrapar Participacoes SA | 32,200 | 559,412 | ||||||
Valid Solucoes e Servicos de Seguranca em Meios de Pagamento e Identificacao SA | 44,973 | 510,656 | ||||||
WEG SA | 69,500 | 259,506 | ||||||
|
| |||||||
3,446,807 | ||||||||
|
| |||||||
Chile — 7.8% |
| |||||||
Banco Santander Chile, ADR | 6,600 | 125,334 | ||||||
Colbun SA | 450,000 | 119,360 | ||||||
Empresa Nacional de Electricidad SA | 185,515 | 232,415 | ||||||
Empresas CMPC SA | 81,400 | 200,925 | ||||||
SACI Falabella | 17,800 | 119,345 | ||||||
Vina Concha Y Toro SA | 86,500 | 147,133 | ||||||
|
| |||||||
944,512 | ||||||||
|
| |||||||
Colombia — 0.9% |
| |||||||
Grupo De Inversiones Suramericana SA | 8,600 | 109,185 | ||||||
|
| |||||||
Mexico — 38.2% |
| |||||||
Alfa SAB de CV, Class A | 151,000 | 313,010 |
Number of Shares | Value | |||||||
COMMON STOCKS — (Continued) |
| |||||||
Mexico — (Continued) |
| |||||||
America Movil SAB de CV, SP ADR, Class L | 25,400 | $ | 452,374 | |||||
Banregio Grupo Financiero SAB de CV | 41,000 | 219,473 | ||||||
Cemex SAB de CV, SP ADR* | 40,083 | 252,924 | ||||||
Concentradora Fibra Danhos SA de CV REIT | 125,450 | 292,629 | ||||||
Fomento Economico Mexicano SAB de CV, SP ADR | 9,200 | 911,628 | ||||||
Gruma SAB de CV, Class B | 13,500 | 208,330 | ||||||
Grupo Aeroportuario del Centro Norte SAB de CV, ADR | 7,000 | 287,910 | ||||||
Grupo Aeroportuario Del Sureste SAB de CV, Class B | 24,600 | 381,232 | ||||||
Grupo Financiero Banorte SAB de CV, Class O | 22,600 | 120,992 | ||||||
Grupo Televisa SA, SP ADR | 6,000 | 174,840 | ||||||
Infraestructura Energetica Nova SAB de CV | 64,500 | 310,008 | ||||||
Rassini SAB de CV | 91,700 | 359,188 | ||||||
Wal-mart de Mexico SAB de CV | 128,000 | 339,028 | ||||||
|
| |||||||
4,623,566 | ||||||||
|
| |||||||
Peru — 2.2% |
| |||||||
Credicorp Ltd. | 2,400 | 271,632 | ||||||
|
| |||||||
TOTAL COMMON STOCKS (Cost $11,007,761) |
| 9,461,334 | ||||||
|
|
The accompanying notes are an integral part of the financial statements.
8
BRADESCO LATIN AMERICAN EQUITY FUND
Portfolio of Investments (Concluded)
October 31, 2015
(Unaudited)
Number of Shares | Value | |||||||
PREFERRED STOCKS — 17.5% |
| |||||||
Brazil — 16.3% | ||||||||
Itau Unibanco Holding SA, ADR | 118,200 | $ | 809,670 | |||||
Itausa - Investimentos Itau Sa | 467,200 | 872,241 | ||||||
Petroleo Brasileiro SA, SP ADR* | 29,000 | 115,710 | ||||||
Suzano Papel e Celulose SA | 20,400 | 87,545 | ||||||
Vale SA, SP ADR | 24,600 | 88,560 | ||||||
|
| |||||||
1,973,726 | ||||||||
|
| |||||||
Colombia — 1.2% | ||||||||
Banco Davivienda SA | 17,000 | 139,779 | ||||||
|
| |||||||
TOTAL PREFERRED STOCKS (Cost $3,399,063) |
| 2,113,505 | ||||||
|
| |||||||
REGISTERED INVESTMENT COMPANY — 4.1% |
| |||||||
Dreyfus Government Cash Management Fund, Institutional Shares, 0.01%(a) | 497,331 | 497,331 | ||||||
|
| |||||||
TOTAL REGISTERED INVESTMENT COMPANY |
| 497,331 | ||||||
|
| |||||||
TOTAL INVESTMENTS - 99.7% |
| 12,072,170 | ||||||
OTHER ASSETS IN EXCESS OF LIABILITIES - 0.3% | 39,240 | |||||||
|
| |||||||
NET ASSETS - 100.0% |
| $ | 12,111,410 | |||||
|
|
(a) | Rate periodically changes. Rate disclosed is the daily yield on October 31, 2015. |
* | Non-income producing. |
ADR | American Depository Receipt | |
REIT | Real Estate Investment Trust | |
SP ADR | Sponsored American Depository Receipt |
The accompanying notes are an integral part of the financial statements.
9
BRADESCO LATIN AMERICAN HARD CURRENCY BOND FUND
Portfolio Holdings Summary Table
October 31, 2015
(Unaudited)
The following table presents a summary by security type of the portfolio holdings of the Fund:
% of Net Assets | Value | |||||||||
SECURITY TYPE: | ||||||||||
Corporate Bonds and Notes | 81.6 | % | $ | 11,586,230 | ||||||
Government Bonds | 11.3 | 1,602,800 | ||||||||
Registered Investment Company | 5.1 | 718,980 | ||||||||
Other Assets in Excess of Liabilities | 2.0 | 287,061 | ||||||||
|
|
|
| |||||||
NET ASSETS | 100.0 | % | $ | 14,195,071 | ||||||
|
|
|
|
Portfolio holdings are subject to change at any time.
The accompanying notes are an integral part of the financial statements.
10
BRADESCO LATIN AMERICAN HARD CURRENCY BOND FUND
Portfolio of Investments
October 31, 2015
(Unaudited)
Par Value | Value | |||||||
CORPORATE BONDS AND NOTES — 81.6% |
| |||||||
Austria — 0.1% | ||||||||
Oas Investments GmbH | $ | 200,000 | $ | 14,000 | ||||
|
| |||||||
Brazil — 33.5% | ||||||||
Banco do Brasil SA | 700,000 | 610,750 | ||||||
Banco Santander Brasil SA | 200,000 | 202,100 | ||||||
BM&FBovespa SA | 1,000,000 | 1,020,000 | ||||||
Embraer SA | 500,000 | 501,250 | ||||||
Hypermarcas SA | 1,000,000 | 1,002,500 | ||||||
Itau Unibanco Holding SA | 200,000 | 200,000 | ||||||
Itau Unibanco Holding SA | 300,000 | 283,500 | ||||||
Itau Unibanco Holding SA | 200,000 | 187,176 | ||||||
Samarco Mineracao SA | 500,000 | 415,625 | ||||||
Votorantim Cimentos SA | 400,000 | 335,120 | ||||||
|
| |||||||
4,758,021 | ||||||||
|
| |||||||
Cayman Islands — 19.4% |
| |||||||
BFF International Ltd. | 500,000 | 538,000 | ||||||
BR Malls International Finance Ltd. | 400,000 | 354,000 | ||||||
Cosan Overseas Ltd. | 600,000 | 501,000 |
Par Value | Value | |||||||
CORPORATE BONDS AND NOTES — (Continued) |
| |||||||
Cayman Islands — (Continued) |
| |||||||
Suzano Trading Ltd. | $ | 900,000 | $ | 902,700 | ||||
Vale Overseas Ltd. | 500,000 | 456,000 | ||||||
|
| |||||||
2,751,700 | ||||||||
|
| |||||||
Chile — 4.3% | ||||||||
Banco Santander Chile | 400,000 | 404,546 | ||||||
Corpbanca SA | 200,000 | 204,508 | ||||||
|
| |||||||
609,054 | ||||||||
|
| |||||||
Colombia — 3.1% | ||||||||
Bancolombia SA | 400,000 | 434,000 | ||||||
|
| |||||||
Luxembourg — 2.3% |
| |||||||
Klabin Finance SA | 360,000 | 323,280 | ||||||
|
| |||||||
Mexico — 12.5% | ||||||||
Alfa SAB de CV | 500,000 | 525,625 | ||||||
America Movil SAB de CV | 300,000 | 330,188 | ||||||
Cemex SAB de CV | 500,000 | 505,500 | ||||||
Grupo Bimbo Sab de CV | 400,000 | 416,612 | ||||||
|
| |||||||
1,777,925 | ||||||||
|
| |||||||
Netherlands — 3.2% |
| |||||||
Cimpor Financial Operations BV | 200,000 | 131,750 |
The accompanying notes are an integral part of the financial statements.
11
BRADESCO LATIN AMERICAN HARD CURRENCY BOND FUND
Portfolio of Investments (Continued)
October 31, 2015
(Unaudited)
Par Value | Value | |||||||
CORPORATE BONDS AND NOTES — (Continued) |
| |||||||
Netherlands — (Continued) |
| |||||||
Petrobras Global Finance BV | $ | 400,000 | $ | 325,500 | ||||
|
| |||||||
457,250 | ||||||||
|
| |||||||
Virgin Islands — 3.2% | ||||||||
Gerdau Trade, Inc. 5.75%, 01/30/2021 | 500,000 | 461,000 | ||||||
|
| |||||||
TOTAL CORPORATE BONDS AND NOTES | 11,586,230 | |||||||
|
| |||||||
GOVERNMENT BONDS — 11.3% |
| |||||||
Brazilian Government | 1,480,000 | 1,439,300 | ||||||
|
| |||||||
Brazilian Government | 200,000 | 163,500 | ||||||
|
| |||||||
TOTAL GOVERNMENT BONDS | 1,602,800 | |||||||
|
|
Shares | Value | |||||||
REGISTERED INVESTMENT COMPANY — 5.1% |
| |||||||
Dreyfus Government Cash |
| 718,980
|
| 718,980 | ||||
TOTAL REGISTERED INVESTMENT COMPANY | 718,980 | |||||||
TOTAL INVESTMENTS - 98.0% | 13,908,010 | |||||||
OTHER ASSETS IN EXCESS OF LIABILITIES - 2.0% | 287,061 | |||||||
|
| |||||||
NET ASSETS - 100.0% | $ | 14,195,071 | ||||||
|
|
(a) | Investment with a total aggregate value of $14,000 or 0.1% of net assets was in default as of October 31, 2015. |
(b) | This security is callable. |
(c) | Security is perpetual. Date shown is next call date. |
(d) | Rate periodically changes. Rate disclosed is the daily yield on October 31, 2015. |
The accompanying notes are an integral part of the financial statements.
12
BRADESCO LATIN AMERICAN HARD CURRENCY BOND FUND
Portfolio of Investments (Concluded)
October 31, 2015
(Unaudited)
FUTURES CONTRACTS | ||||||||||||||||||||
Long Contracts | Expiration Date | Number of Contract | Notional Cost | Unrealized Appreciation /(Depreciation) | ||||||||||||||||
U.S.Treasury Long Bond | December 2015 | 1 | $ | 158,531 | $ | (2,095) | ||||||||||||||
Short Contracts | ||||||||||||||||||||
U.S. 5 Year Treasury Note | December 2015 | (1) | $ | (120,703 | ) | $ | 930 | |||||||||||||
|
| |||||||||||||||||||
Total Futures Contracts | $ | (1,165 | ) | |||||||||||||||||
|
|
The accompanying notes are an integral part of the financial statements.
13
BRADESCO FUNDS
Statements of Assets and Liabilities
October 31, 2015
(Unaudited)
Bradesco Latin American Equity Fund | Bradesco Latin American Hard Currency Bond Fund | |||||||||||||||||||||||
Assets | ||||||||||||||||||||||||
Investments, at value (Cost $14,904,155 and $15,200,102, respectively) | $ | 12,072,170 | $ | 13,908,010 | ||||||||||||||||||||
Futures receivable | — | 108,999 | ||||||||||||||||||||||
Deposit with broker for futures contracts | — | 2,831 | ||||||||||||||||||||||
Receivable for investments sold | 580,442 | — | ||||||||||||||||||||||
Dividends and interest receivable | 8,768 | 185,708 | ||||||||||||||||||||||
Receivable from Investment Adviser | 5,947 | 10,571 | ||||||||||||||||||||||
Prepaid expenses and other assets | 30,844 | 36,088 | ||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||
Total assets | 12,698,171 | 14,252,207 | ||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||
Payable for investments purchased | 506,072 | 1,106 | ||||||||||||||||||||||
Payable for printing fees | 23,438 | 8,039 | ||||||||||||||||||||||
Payable for transfer agent fees | 20,231 | 17,292 | ||||||||||||||||||||||
Payable for administration and accounting fees | 15,112 | 13,404 | ||||||||||||||||||||||
Payable for audit fees | 13,111 | 8,695 | ||||||||||||||||||||||
Payable for custodian fees | 3,451 | 3,933 | ||||||||||||||||||||||
Payable for legal fees | 796 | 741 | ||||||||||||||||||||||
Payable for distribution fees | 18 | 19 | ||||||||||||||||||||||
Accrued expenses | 4,532 | 3,907 | ||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||
Total liabilities | 586,761 | 57,136 | ||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||
Net Assets | $ | 12,111,410 | $ | 14,195,071 | ||||||||||||||||||||
|
|
|
| |||||||||||||||||||||
Net Assets Consisted of: | ||||||||||||||||||||||||
Capital stock, $0.01 par value | $ | 18,436 | $ | 15,691 | ||||||||||||||||||||
Paid-in capital | 18,115,665 | 15,908,587 | ||||||||||||||||||||||
Accumulated net investment income/(loss) | (18,272 | ) | 30,716 | |||||||||||||||||||||
Accumulated net realized loss from investments, foreign currency transactions, futures contracts and translation of assets and liabilities denominated in foreign currency | (3,171,460 | ) | (466,666 | ) | ||||||||||||||||||||
Net unrealized depreciation on investments and futures contracts* | (2,832,959 | ) | (1,293,257 | ) | ||||||||||||||||||||
|
|
|
| |||||||||||||||||||||
Net Assets | $ | 12,111,410 | $ | 14,195,071 | ||||||||||||||||||||
|
|
|
| |||||||||||||||||||||
Institutional Class: | ||||||||||||||||||||||||
Net asset value, offering and redemption price per share ($12,031,446 / 1,831,345) and ($14,106,158 / 1,559,272 shares) | $ | 6.57 | $ | 9.05 | ||||||||||||||||||||
|
|
|
| |||||||||||||||||||||
Retail Class: | ||||||||||||||||||||||||
Net asset value, offering and redemption price per share ($79,964 / 12,205) and ($88,913 / 9,807 shares) | $ | 6.55 | $ | 9.07 | ||||||||||||||||||||
|
|
|
|
* | Primary risk exposure is interest rate contracts. |
The accompanying notes are an integral part of the financial statements.
14
BRADESCO FUNDS
Statements of Operations
For the Six Months Ended October 31, 2015
(Unaudited)
Bradesco Latin American Equity Fund | Bradesco Latin American Hard Currency Bond Fund | |||||||||
Investment Income | ||||||||||
Dividends | $ | 186,817 | $ | — | ||||||
Less: foreign taxes withheld | (16,666 | ) | — | |||||||
Interest | 39 | 362,016 | ||||||||
|
|
|
| |||||||
Total investment income | 170,190 | 362,016 | ||||||||
|
|
|
| |||||||
Expenses | ||||||||||
Advisory fees (Note 2) | 69,059 | 55,655 | ||||||||
Administration and accounting fees | 40,342 | 38,102 | ||||||||
Transfer agent fees (Note 2) | 26,825 | 26,824 | ||||||||
Printing and shareholder reporting fees | 23,437 | 13,695 | ||||||||
Registration and filing fees | 19,119 | 18,514 | ||||||||
Legal fees | 17,712 | 11,915 | ||||||||
Audit fees | 10,264 | 4,814 | ||||||||
Custodian fees (Note 2) | 10,231 | 9,963 | ||||||||
Trustees’ and officers’ fees (Note 2) | 6,968 | 691 | ||||||||
Distribution fees (Retail Class) (Note 2) | 106 | 116 | ||||||||
Other expenses | 4,317 | 4,481 | ||||||||
|
|
|
| |||||||
Total expenses | 228,380 | 184,770 | ||||||||
|
|
|
| |||||||
Less: waivers and reimbursements (Note 2) | (107,420 | ) | (73,344 | ) | ||||||
|
|
|
| |||||||
Net expenses after waivers and reimbursements | 120,960 | 111,426 | ||||||||
|
|
|
| |||||||
Net investment income | 49,230 | 250,590 | ||||||||
|
|
|
| |||||||
Net realized and unrealized loss from investments | ||||||||||
Net realized loss from investments | (1,313,443 | ) | (248,548 | ) | ||||||
Net realized loss from foreign currency transactions | (68,608 | ) | (21,366 | ) | ||||||
Net realized loss from futures contracts* | — | (50,644 | ) | |||||||
Net change in unrealized appreciation/(depreciation) on investments | (2,295,081 | ) | (1,155,424 | ) | ||||||
Net change in unrealized appreciation/(depreciation) on foreign currency translations | (846 | ) | — | |||||||
Net change in unrealized appreciation/(depreciation) on futures contracts* | — | (1,165 | ) | |||||||
|
|
|
| |||||||
Net realized and unrealized loss on investments | (3,677,978 | ) | (1,477,147 | ) | ||||||
|
|
|
| |||||||
Net decrease in net assets resulting from operations | $ | (3,628,748 | ) | $ | (1,226,557 | ) | ||||
|
|
|
|
* | Primary risk exposure is interest rate contracts. |
The accompanying notes are an integral part of the financial statements.
15
BRADESCO LATIN AMERICAN EQUITY FUND
Statements of Changes in Net Assets
For the Six Months Ended October 31, 2015 (Unaudited) | For the Year Ended April 30, 2015 | |||||||||
Increase/(Decrease) in net assets from operations: | ||||||||||
Net investment income | $ | 49,230 | $ | 63,539 | ||||||
Net realized loss from investments and foreign currency transactions | (1,382,051 | ) | (1,904,417 | ) | ||||||
Net change in unrealized appreciation/(depreciation) on investments and foreign currency translations | (2,295,927 | ) | (566,064 | ) | ||||||
|
|
|
| |||||||
Net decrease in net assets resulting from operations | (3,628,748 | ) | (2,406,942 | ) | ||||||
|
|
|
| |||||||
Less Dividends and Distributions to Shareholders: | ||||||||||
Net investment income: | ||||||||||
Institutional Class | — | (17,181 | ) | |||||||
|
|
|
| |||||||
Total from net investment income | — | (17,181 | ) | |||||||
|
|
|
| |||||||
Increase in Net Assets Derived from Capital Share Transactions (Note 4) | 20,802 | 17,119,767 | ||||||||
|
|
|
| |||||||
Total increase/(decrease) in net assets | (3,607,946 | ) | 14,695,644 | |||||||
|
|
|
| |||||||
Net assets | ||||||||||
Beginning of period | 15,719,356 | 1,023,712 | ||||||||
|
|
|
| |||||||
End of period | $ | 12,111,410 | $ | 15,719,356 | ||||||
|
|
|
| |||||||
Accumulated net investment loss, end of period | $ | (18,272 | ) | $ | (67,502 | ) | ||||
|
|
|
|
The accompanying notes are an integral part of the financial statements
16
BRADESCO LATIN AMERICAN HARD CURRENCY BOND FUND
Statements of Changes in Net Assets
For the Six Months Ended October 31, 2015 (Unaudited) | For the Year Ended April 30,2015 | |||||||||
Increase/(Decrease) in net assets from operations: | ||||||||||
Net investment income | $ | 250,590 | $ | 300,757 | ||||||
Net realized loss from investments, foreign currency transactions and futures contracts | (320,558 | ) | (96,884 | ) | ||||||
Net change in unrealized appreciation/(depreciation) on investments, foreign currency translations and futures contracts | (1,156,589 | ) | (287,924 | ) | ||||||
|
|
|
| |||||||
Net decrease in net assets resulting from operations | (1,226,557 | ) | (84,051 | ) | ||||||
|
|
|
| |||||||
Less Dividends and Distributions to Shareholders from: | ||||||||||
Net investment income: | ||||||||||
Institutional Class | (256,354 | ) | (281,401 | ) | ||||||
Retail Class | (1,519 | ) | (2,140 | ) | ||||||
|
|
|
| |||||||
Total from net investment income | (257,873 | ) | (283,541 | ) | ||||||
|
|
|
| |||||||
Net realized capital gains: | ||||||||||
Institutional Class | — | (65,450 | ) | |||||||
Retail Class | — | (670 | ) | |||||||
|
|
|
| |||||||
Total from net realized capital gains | — | (66,120 | ) | |||||||
|
|
|
| |||||||
Net decrease in net assets from dividends and distributions to shareholders | (257,873 | ) | (349,661 | ) | ||||||
|
|
|
| |||||||
Increase in Net Assets Derived from Capital Share Transactions (Note 4) | 219,900 | 11,189,553 | ||||||||
|
|
|
| |||||||
Total increase/(decrease) in net assets | (1,264,530 | ) | 10,755,841 | |||||||
|
|
|
| |||||||
Net assets | ||||||||||
Beginning of period | 15,459,601 | 4,703,760 | ||||||||
|
|
|
| |||||||
End of period | $ | 14,195,071 | $ | 15,459,601 | ||||||
|
|
|
| |||||||
Accumulated net investment income, end of period | $ | 30,716 | $ | 37,999 | ||||||
|
|
|
|
The accompanying notes are an integral part of the financial statements.
17
BRADESCO LATIN AMERICAN EQUITY FUND
Financial Highlights
Contained below is per share operating performance data for Institutional Class Shares outstanding, total investment return, ratios to average net assets and other supplemental data for each of the respective periods. 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). This information has been derived from information provided in the financial statements and should be read in conjunction with the financial statements and the notes thereto.
Institutional Class | |||||||||||||||
For the Six Months Ended October 31, 2015 (Unaudited) | For the Year Ended April 30, 2015 | For the Period December 20, 2013* to April 30, 2014 | |||||||||||||
Per Share Operating Performance | |||||||||||||||
Net asset value, beginning of period | $ | 8.54 | $ | 10.24 | $ | 10.00 | |||||||||
|
|
|
|
|
| ||||||||||
Net investment income(1) | 0.03 | 0.06 | 0.06 | ||||||||||||
Net realized and unrealized gain/(loss) on investments | (2.00 | ) | (1.75 | )(2) | 0.18 | ||||||||||
|
|
|
|
|
| ||||||||||
Net increase/(decrease) in net assets resulting from operations | (1.97 | ) | (1.69 | ) | 0.24 | ||||||||||
|
|
|
|
|
| ||||||||||
Dividends and distributions to shareholders from: | |||||||||||||||
Net investment income | — | (0.01 | ) | — | |||||||||||
|
|
|
|
|
| ||||||||||
Net asset value, end of period | $ | 6.57 | $ | 8.54 | $ | 10.24 | |||||||||
|
|
|
|
|
| ||||||||||
Total investment return(3) | (23.07 | )% | (16.51 | )%(2) | 2.40 | % | |||||||||
Ratio/Supplemental Data | |||||||||||||||
Net assets, end of period (000’s omitted) | $ | 12,031 | $ | 15,637 | $ | 1,024 | |||||||||
Ratio of expenses to average net assets | 1.75 | %(4) | 1.75 | % | 1.75 | %(4) | |||||||||
Ratio of expenses to average net assets without waivers and expense reimbursements(5) | 3.31 | %(4) | 3.27 | % | 23.40 | %(4) | |||||||||
Ratio of net investment income to average net assets | 0.71 | %(4) | 0.60 | % | 1.70 | %(4) | |||||||||
Portfolio turnover rate | 50.77 | %(6) | 120.72 | % | 15.55 | %(6) |
* | Commencement of operations. |
(1) | The selected per share data was calculated using the average shares outstanding method for the period. |
(2) | During the year, the Adviser reimbursed the Fund for a loss on an investment not meeting the Fund’s investment guidelines. Had this reimbursement not occurred, the Net realized and unrealized gain/(loss) on investments and the Total investment return would have been $(1.83) and (17.29)%, respectively. |
(3) | Total investment return is calculated assuming a purchase of shares on the first day and a sale of shares on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total returns for periods less than one year are not annualized. |
(4) | Annualized. |
(5) | During the period, certain fees were waived and/or reimbursed. If such fee waivers and/or reimbursements had not occurred, the ratios would have been as indicated (See Note 2). |
(6) | Not annualized. |
The accompanying notes are an integral part of the financial statements.
18
BRADESCO LATIN AMERICAN EQUITY FUND
Financial Highlights
Contained below is per share operating performance data for Retail Class Shares outstanding, total investment return, ratios to average net assets and other supplemental data for the respective period. The total return in the table represents the rate that an investor would have earned or lost on an investment in the Fund (assuming reinvestment of all dividends and distributions). This information has been derived from information provided in the financial statements and should be read in conjunction with the financial statements and the notes thereto.
|
Retail Class | ||||||||||
For the Six Months Ended October 31, 2015 (Unaudited) | For the Period June 9, 2014* to April 30, 2015 | |||||||||
Per Share Operating Performance | ||||||||||
Net asset value, beginning of period | $ | 8.53 | $ | 10.86 | ||||||
|
|
|
| |||||||
Net investment income(1) | 0.01 | 0.02 | ||||||||
Net realized and unrealized loss on investments | (1.99 | ) | (2.35 | )(2) | ||||||
|
|
|
| |||||||
Net decrease in net assets resulting from operations | (1.98 | ) | (2.33 | ) | ||||||
|
|
|
| |||||||
Net asset value, end of period | $ | 6.55 | $ | 8.53 | ||||||
|
|
|
| |||||||
Total investment return(3) | (23.21 | )% | (21.46 | )%(2) | ||||||
Ratio/Supplemental Data | ||||||||||
Net assets, end of period (000’s omitted) | $ | 80 | $ | 83 | ||||||
Ratio of expenses to average net assets | 2.00 | %(4) | 2.00 | %(4) | ||||||
Ratio of expenses to average net assets without waivers and expense reimbursements(5) | 3.54 | %(4) | 4.58 | %(4) | ||||||
Ratio of net investment income to average net assets | 0.40 | %(4) | 0.25 | %(4) | ||||||
Portfolio turnover rate | 50.77 | %(6) | 120.72 | %(7) |
* | Commencement of operations. |
(1) | The selected per share data was calculated using the average shares outstanding method for the period. |
(2) | During the period, the Adviser reimbursed the Fund for a loss on an investment not meeting the Fund’s investment guidelines. Had this reimbursement not occurred, the Net realized and unrealized gain/(loss) on investments and the Total investment return would have been $(2.49) and (22.65)%, respectively. |
(3) | Total investment return is calculated assuming a purchase of shares on the first day and a sale of shares on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total returns for periods less than one year are not annualized. |
(4) | Annualized. |
(5) | During the period, certain fees were waived and/or reimbursed. If such fee waivers and/or reimbursements had not occurred, the ratios would have been as indicated (See Note 2). |
(6) | Not annualized. |
(7) | Reflects portfolio turnover for the Fund for the year ended April 30, 2015. |
The accompanying notes are an integral part of the financial statements.
19
BRADESCO LATIN AMERICAN HARD CURRENCY BOND FUND
Financial Highlights
Contained below is per share operating performance data for Institutional Class Shares outstanding, total investment return, ratios to average net assets and other supplemental data for each of the respective periods. 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). This information has been derived from information provided in the financial statements and should be read in conjunction with the financial statements and the notes thereto.
|
Institutional Class | |||||||||||||||
For the Six Months Ended October 31, 2015 (Unaudited) | For the Year Ended April 30, 2015 | For the Period December 20 2013* to April 31, 2014 | |||||||||||||
Per Share Operating Performance | |||||||||||||||
Net asset value, beginning of period | $ 10.01 | $ 10.34 | $10.00 | ||||||||||||
|
|
|
|
|
| ||||||||||
Net investment income(1) | 0.16 | 0.25 | 0.13 | ||||||||||||
Net realized and unrealized gain/(loss) on investments | (0.95 | ) | (0.24 | ) | 0.28 | ||||||||||
|
|
|
|
|
| ||||||||||
Net increase/(decrease) in net assets resulting from operations | (0.79 | ) | 0.01 | 0.41 | |||||||||||
|
|
|
|
|
| ||||||||||
Dividends and distributions to shareholders from: | |||||||||||||||
Net investment income | (0.17 | ) | (0.27 | ) | (0.07 | ) | |||||||||
Net realized gains | — | (0.07 | ) | — | |||||||||||
|
|
|
|
|
| ||||||||||
Total dividends and distributions to shareholders | (0.17 | ) | (0.34 | ) | (0.07 | ) | |||||||||
|
|
|
|
|
| ||||||||||
Net asset value, end of period | $ 9.05 | $ 10.01 | $10.34 | ||||||||||||
|
|
|
|
|
| ||||||||||
Total investment return(2) | (7.85 | )% | 0.07 | % | 4.10 | % | |||||||||
Ratio/Supplemental Data | |||||||||||||||
Net assets, end of period (000’s omitted) | $14,106 | $15,362 | $4,704 | ||||||||||||
Ratio of expenses to average net assets | 1.50 | %(3) | 1.50 | % | 1.50 | %(3) | |||||||||
Ratio of expenses to average net assets without waivers and expense reimbursements(4) | 2.49 | %(3) | 2.81 | % | 7.61 | %(3) | |||||||||
Ratio of net investment income to average net assets | 3.38 | %(3) | 2.48 | % | 3.59 | %(3) | |||||||||
Portfolio turnover rate | 11.87 | %(5) | 109.19 | % | 6.52 | %(5) |
* | Commencement of operations. |
(1) | The selected per share data was calculated using the average shares outstanding method for the period. |
(2) | Total investment return is calculated assuming a purchase of shares on the first day and a sale of shares on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total returns for periods less than one year are not annualized. |
(3) | Annualized. |
(4) | During the period, certain fees were waived and/or reimbursed. If such fee waivers and/or reimbursements had not occurred, the ratios would have been as indicated (See Note 2). |
(5) | Not annualized. |
The accompanying notes are an integral part of the financial statements.
20
BRADESCO LATIN AMERICAN HARD CURRENCY BOND FUND
Financial Highlights
Contained below is per share operating performance data for Retail Class Shares outstanding, total investment return, ratios to average net assets and other supplemental data for the respective period. The total return in the table represents the rate that an investor would have earned or lost on an investment in the Fund (assuming reinvestment of all dividends and distributions). This information has been derived from information provided in the financial statements and should be read in conjunction with the financial statements and the notes thereto.
Retail Class | ||||||||||
For the Six Months Ended October 31, 2015 (Unaudited) | For the Period June 9, 2014* to April 30, 2015 | |||||||||
Per Share Operating Performance | ||||||||||
Net asset value, beginning of period | $10.03 | $ | 10.53 | |||||||
|
|
|
| |||||||
Net investment income(1) | 0.14 | 0.20 | ||||||||
Net realized and unrealized loss on investments | (0.94 | ) | (0.41 | ) | ||||||
|
|
|
| |||||||
Net decrease in net assets resulting from operations | (0.80 | ) | (0.21 | ) | ||||||
|
|
|
| |||||||
Dividends and distributions to shareholders from: | ||||||||||
Net investment income | (0.16 | ) | (0.22 | ) | ||||||
Net realized gains | — | (0.07 | ) | |||||||
|
|
|
| |||||||
Total dividends and distributions to shareholders | (0.16 | ) | (0.29 | ) | ||||||
|
|
|
| |||||||
Net asset value, end of period | $ 9.07 | $ | 10.03 | |||||||
|
|
|
| |||||||
Total investment return(2) | (7.94 | )% | (1.97 | )% | ||||||
Ratio/Supplemental Data | ||||||||||
Net assets, end of period (000’s omitted) | $ 89 | $ | 97 | |||||||
Ratio of expenses to average net assets | 1.75 | %(3) | 1.75 | %(3) | ||||||
Ratio of expenses to average net assets without waivers and expense reimbursements(4) | 2.73 | %(3) | 3.11 | %(3) | ||||||
Ratio of net investment income to average net assets | 2.92 | %(3) | 2.27 | %(3) | ||||||
Portfolio turnover rate | 11.87 | %(5) | 109.19 | %(5) |
* | Commencement of operations. |
(1) | The selected per share data was calculated using the average shares outstanding method for the period. |
(2) | Total investment return is calculated assuming a purchase of shares on the first day and a sale of shares on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total returns for periods less than one year are not annualized. |
(3) | Annualized. |
(4) | During the period, certain fees were waived. If such fee waivers had not occurred, the ratios would have been as indicated (See Note 2). |
(5) | Not annualized. |
The accompanying notes are an integral part of the financial statements.
21
BRADESCO FUNDS
Notes to Financial Statements
October 31, 2015
(Unaudited)
1. Organization and Significant Accounting Policies
The Bradesco Latin American Equity Fund and the Bradesco Latin American Hard Currency Bond Fund (each a “Fund” and together the “Funds”) are non-diversified, open-end management investment companies registered under the Investment Company Act of 1940, as amended (the “1940 Act”). The Funds commenced operations on December 20, 2013. The Funds are each a separate series of FundVantage Trust (the “Trust”) which was organized as a Delaware statutory trust on August 28, 2006. The Trust is a “series trust” authorized to issue an unlimited number of separate series or classes of shares of beneficial interest. Each series is treated as a separate entity for certain matters under the 1940 Act, and for other purposes, and a shareholder of one series is not deemed to be a shareholder of any other series. The Funds are each authorized to issue and offer Class A, Class C, Institutional Class and Retail Class Shares. As of October 31, 2015, Class A and Class C shares had not been issued for the Funds.
The Funds are investment companies and follow accounting and reporting guidance in the Financial Accounting Standards Board Accounting Standards Codification Topic 946.
Portfolio Valuation — Each Fund’s net asset value (“NAV”) is calculated once daily at the close of regular trading hours on the New York Stock Exchange (“NYSE”) (typically 4:00 p.m. Eastern time) on each day the NYSE is open. Securities held by each Fund are valued using the closing price or the last sale price on a national securities exchange or the National Association of Securities Dealers Automatic Quotation System (“NASDAQ”) market system where they are primarily traded. Equity securities listed on any national or foreign exchange market system will be valued at the last sale price. Equity securities traded in the over-the-counter market are valued at their closing price. If there were no transactions on that day, securities traded principally on an exchange will be valued at the mean of the last bid and ask prices prior to the market close. Prices for equity securities normally are supplied by an independent pricing service approved by the FundVantage Trust’s Board of Trustees (“Board of Trustees”). Fixed income securities are valued based on market quotations, which are furnished by an independent pricing service. Fixed income securities having remaining maturities of 60 days or less are generally valued at amortized cost, provided such amount approximates fair value. Debt securities are valued on the basis of broker quotations or valuations provided by a pricing service, which utilizes information with respect to recent sales, market transactions in comparable securities, quotations from dealers, and various relationships between securities in determining value. Valuations developed through pricing techniques may materially vary from the actual amounts realized upon sale of the securities. Any assets held by the Funds that are denominated in foreign currencies are valued daily in U.S. dollars at the foreign currency exchange rates that are prevailing at the time that the Funds determine the daily NAV per share. Foreign securities may trade on weekends or other days when the Funds do not calculate NAV. As a result, the market value of these investments may change on days when you cannot buy or sell shares of the Funds. Foreign securities are valued based on prices from the primary market in which they are traded and are translated from the local currency into U.S. dollars using current exchange rates. Investments in any mutual fund are valued at their respective NAVs as determined by those mutual funds each business day (which may
22
BRADESCO FUNDS
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
use fair value pricing as disclosed in their prospectuses). Securities that do not have a readily available current market value are valued in accordance with procedure adopted by the Trust’s Board of Trustees. The Board of Trustees has adopted methods for valuing securities and other assets in circumstances where market quotes are not readily available and has delegated to the Adviser the responsibility for applying the valuation methods. Relying on prices supplied by pricing services or dealers or using fair valuation may result in values that are higher or lower than the values used by other investment companies and investors to price the same investments.
Fair Value Measurements — The inputs and valuations techniques used to measure fair value of each Fund’s investments are summarized into three levels as described in the hierarchy below:
● | Level 1 — quoted prices in active markets for identical securities; |
● | Level 2 — other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.); and |
● | Level 3 — significant unobservable inputs (including each Fund’s own assumptions in determining the fair value of investments). |
The fair value of a Fund’s bonds are generally based on quotes received from brokers of independent pricing services. Bonds with quotes that are based on actual trades with a sufficient level of activity on or near the measurement date are classified as Level 2 assets.
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. Transfers in and out are recognized at the value at the end of the period.
Significant events (such as movement in the U.S. securities market, or other regional and local developments) may occur between the time that foreign markets close (where the security is principally traded) and the time that each Fund calculates its NAV (generally, the close of the NYSE) that may impact the value of securities traded in these foreign markets. As a result, each Fund fair values foreign securities using an independent pricing service which considers the correlation of the trading patterns of the foreign security to the intraday trading in the U.S. markets for investments such as American Depositary Receipts, financial futures, exchange traded funds and certain indexes as well as prices for similar securities. Such fair valuations are categorized as Level 2 in the hierarchy.
23
BRADESCO FUNDS
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
The following is a summary of the inputs used, as of October 31, 2015, in valuing each Fund’s investments carried at fair value:
Bradesco Latin American Equity Fund | ||||||||||||||||
Total Value at 10/31/15 | Level 1 Quoted Price | Level 2 Other Significant Observable Inputs | Level 3 Significant Unobservable Inputs | |||||||||||||
Common Stocks | $ | 9,461,334 | $ | 9,461,334 | $ | — | $ | — | ||||||||
Preferred Stocks | 2,113,505 | 2,113,505 | — | — | ||||||||||||
Registered Investment Company | 497,331 | 497,331 | — | — | ||||||||||||
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Total | $ | 12,072,170 | $ | 12,072,170 | $ | — | $ | — | ||||||||
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Bradesco Latin American Hard Currency Bond Fund | ||||||||||||||||
Total Value at 10/31/15 | Level 1 Quoted Price | Level 2 Other Significant Observable Inputs | Level 3 Significant Unobservable Inputs | |||||||||||||
Corporate Bonds and Notes | $ | 11,586,230 | $ | — | $ | 11,586,230 | $ | — | ||||||||
Government Bonds | 1,602,800 | — | 1,602,800 | — | ||||||||||||
Registered Investment Company | 718,980 | 718,980 | — | — | ||||||||||||
Derivatives: | ||||||||||||||||
Interest Rate Contracts | ||||||||||||||||
Futures Contracts | 930 | 930 | ||||||||||||||
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Total Assets | $ | 13,908,940 | $ | 719,910 | $ | 13,189,030 | $ | — | ||||||||
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Derivatives: | ||||||||||||||||
Interest Rate Contracts | ||||||||||||||||
Futures Contracts | $ | (2,095 | ) | $ | (2,095 | ) | $ | — | $ | — | ||||||
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Total Liabilities | $ | (2,095 | ) | $ | (2,095 | ) | $ | — | $ | — | ||||||
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At the end of each quarter, management evaluates the classification of Levels 1, 2 and 3 assets and liabilities. Various factors are considered, such as changes in liquidity from the prior reporting period; whether or not a broker is willing to execute at the quoted price; the depth and consistency of prices from third party pricing services; and the existence of contemporaneous, observable trades in the market. Additionally, management evaluates the classification of Level 1 and Level 2 assets and liabilities on a quarterly basis for changes in listings or delistings on national exchanges.
24
BRADESCO FUNDS
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
Due to the inherent uncertainty of determining the fair value of investments that do not have readily available market value, the fair value of each Fund’s investments may fluctuate from period to period. Additionally, the fair value of investments may differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially from the values each Fund may ultimately realize. Further, such investments may be subject to legal and other restrictions on resale or otherwise less liquid than publicly traded securities.
For fair valuations using significant unobservable inputs, U.S. generally accepted accounting principles (“U.S. GAAP”) require each Fund to present a reconciliation of the beginning to ending balances for reported market values that presents changes attributable to total realized and unrealized gains or losses, purchase and sales, and transfers in and out of Level 3 during the period. Transfers in and out between Levels are based on values at the end of the period. U.S. GAAP also requires each Fund to disclose amounts and reasons for all transfers in and out of Level 1 and Level 2 fair value measurements. A reconciliation of Level 3 investments is presented only when a Fund had an amount of Level 3 investments at the end of the reporting period that was meaningful in relation to its net assets. The amounts and reasons for all transfers in and out of each Level within the three-tier hierarchy are disclosed when such Fund had an amount of total transfers during the reporting period that was meaningful in relation to its net assets as of the end of the reporting period.
For the six months ended October 31, 2015, there were no significant transfers among Levels 1, 2 and 3 for the Funds.
Futures Contracts — The Funds may use futures contracts for hedging or speculative purposes consistent with its investment objective. Upon entering into a futures contract, the Funds must deposit initial margin in addition to segregating cash or liquid assets sufficient to meet its obligation to purchase or provide securities, or to pay the amount owed at the expiration of an index-based futures contract. Such liquid assets may consist of cash, cash equivalents, liquid debt or equity securities or other acceptable assets. Pursuant to the futures contract, the Funds agree to receive from, or pay to the broker, an amount of cash equal to the daily fluctuation in value of the contract. Such a receipt of payment is known as “variation margin” and is recorded by the Funds as an unrealized gain or loss. When the contract is closed, the Funds record a realized gain or loss equal to the difference between the proceeds from (or cost of) the closing transactions and the Funds’ basis in the contract. Futures contracts have market risks, including the risk that the change in the value of the contract may not correlate with changes in the value of the underlying securities. Use of long futures contracts subjects the Funds to risk of loss in excess of the amount shown on the Consolidated Statement of Assets and Liabilities, up to the notional value of the futures contract. Use of short futures contracts subjects the Funds to unlimited risk of loss.
25
BRADESCO FUNDS
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
For the six months ended October 31, 2015, the Bradesco Latin American Hard Currency Bond Fund’s average volume of derivatives was as follows:
Long Futures Notional Cost | Short Futures Notional Cost | |
$52,844 | $(2,194,857) |
Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes at the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates and those differences could be material.
Investment Transactions, Investment Income and Expenses — Investment transactions are recorded on trade date for financial statement preparation purposes. Realized gains and losses on investments sold are recorded on the identified cost basis. Interest income is recorded on the accrual basis. Accretion of discounts and amortization of premiums are recorded on a daily basis using the effective yield method except for short term securities, which records discounts and premiums on a straight-line basis. Dividends are recorded on the ex-dividend date. General expenses of the Trust are generally allocated to each fund in proportion to its relative daily net assets. Expenses directly attributable to a particular fund in the Trust are charged directly to that fund. The Funds’ investment income, expenses (other than class specific expenses) and unrealized and realized gains and losses are allocated daily to each class of shares based upon the relative proportion of net assets of each class at the beginning of the day.
Foreign Currency Translation — Assets and liabilities initially expressed in non-U.S. currencies are translated into U.S. dollars based on the applicable exchange rates at the date of the last business day of the financial statement period. Purchases and sales of securities, interest income, dividends, variation margin received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rates in effect on the transaction date.
Each Fund does not separately report the effect of changes in foreign exchange rates from changes in market prices of securities held. Such changes are included with the net realized gain or loss and change in unrealized appreciation or depreciation on investment securities in a Fund’s Statement of Operations. Other foreign currency transactions resulting in realized and unrealized gain or loss are reported separately as net realized gain or loss and change in unrealized appreciation or depreciation on foreign currencies in a Fund’s Statement of Operations.
Dividends and Distributions to Shareholders — Dividends from net investment income, if any, are declared and paid at least annually to shareholders of the Bradesco Latin American Equity Fund and dividends from net investment income, if any, are declared and paid quarterly to shareholders of
26
BRADESCO FUNDS
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
the Bradesco Latin American Hard Currency Bond Fund. Distributions from net realized capital gains, if any, will be declared and paid at least annually to shareholders and recorded on ex-date for both Funds. Income dividends and capital gain distributions are determined in accordance with U.S. federal income tax regulations, which may differ from U.S. GAAP. These differences include the treatment of non-taxable dividends, expiring capital loss carry forwards and losses deferred due to wash sales and excise tax regulations. Permanent book and tax basis differences relating to shareholder distributions will result in reclassifications within the components of net assets.
U.S. Tax Status — No provision is made for U.S. income taxes as it is each Fund’s intention to continue to qualify for and elect the tax treatment applicable to regulated investment companies under Subchapter M of the Internal Revenue Code of 1986, as amended, and make the requisite distributions to its shareholders which will be sufficient to relieve it from U.S. income and excise taxes.
Other — In the normal course of business, each Fund may enter into contracts that provide general indemnifications. Each Fund’s maximum exposure under these arrangements is dependent on claims that may be made against each Fund in the future, and, therefore, cannot be estimated; however, based on experience, the risk of material loss for such claims is considered remote.
Currency Risk — Each Fund invests in securities of foreign issuers, including American Depositary Receipts. These markets are subject to special risks associated with foreign investments not typically associated with investing in U.S. markets. Because the foreign securities in which each Fund may invest generally trade in currencies other than the U.S. dollar, changes in currency exchange rates will affect each Fund’s NAV, the value of dividends and interest earned and gains and losses realized on the sale of securities. Because the NAV for each Fund is determined on the basis of U.S. dollars, each Fund may lose money by investing in a foreign security if the local currency of a foreign market depreciates against the U.S. dollar, even if the local currency value of each Fund’s holdings goes up. Generally, a strong U.S. dollar relative to these other currencies will adversely affect the value of each Fund’s holdings in foreign securities.
Foreign Securities Market Risk — Securities of many non-U.S. companies may be less liquid and their prices more volatile than securities of comparable U.S. companies. Securities of companies traded in many countries outside the U.S., particularly emerging markets countries, may be subject to further risks due to the in experience of local investment professionals and financial institutions, the possibility of permanent or temporary termination of trading and greater spreads between bid and asked prices of securities. In addition, non-U.S. stock exchanges and investment professionals are subject to less governmental regulation, and commissions may be higher than in the United States. Also, there may be delays in the settlement of non-U.S. stock exchange transactions.
Emerging Markets Risk — The Bradesco Latin American Equity Fund and the Bradesco Latin American Hard Currency Bond Fund invests in emerging market instruments which are subject to certain
27
BRADESCO FUNDS
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
credit and market risks. The securities and currency markets of emerging market countries are generally smaller, less developed, less liquid and more volatile than the securities and currency markets of the United States and other developed markets. Disclosure and regulatory standards in many respects are less stringent than in other developed markets. There also may be a lower level of monitoring and regulation of securities markets in emerging market countries and the activities of investors in such markets and enforcement of existing regulations may be extremely limited. Political and economic structures in many of these countries may be in their infancy and developing rapidly, and such countries may lack the social, political and economic stability characteristics of more developed countries.
Debt Investment Risk — Debt investments are affected primarily by the financial condition of the companies or other entities that have issued them and by changes in interest rates. There is a risk that an issuer of a Fund’s debt investments may not be able to meet its financial obligations (e.g., may not be able to make principal and/or interest payments when they are due or otherwise default on other financial terms) and/or go bankrupt. Securities such as high-yield/high-risk bonds, e.g., bonds with low credit ratings by Moody’s (Ba or lower) or Standard & Poor’s (BB and lower) or if unrated are of comparable quality as determined by the manager, are especially subject to credit risk during periods of economic uncertainty or during economic downturns and are more likely to default on their interest and/or principal payments than higher rated securities. Debt investments may be affected by changes in interest rates. Debt investments with longer durations tend to be more sensitive to changes in interest rates, making them more volatile than debt investments with shorter durations or floating or adjustable interest rates. The value of debt investments may fall when interest rates rise.
2. Transactions with Affiliates and Related Parties
BRAM US LLC (“BRAM US” or the “Adviser”) serves as investment adviser to each Fund pursuant to an investment advisory agreement with the Trust (the “Advisory Agreement”). For its services, the Adviser is paid a monthly fee at the annual rate of 1.00% of the Bradesco Latin American Equity Fund’s average daily net assets, and 0.75% of the Bradesco Latin American Hard Currency Bond Fund’s average daily net assets. The Adviser has contractually agreed to reduce its investment advisory fee and/or reimburse certain expenses of each Fund to the extent necessary to ensure that the “Total Annual Fund Operating Expenses”, excluding taxes, any class specific fees and expenses (such as Rule 12b-1 distribution fees, shareholder service fees or transfer agency fees), “Acquired Fund“ fees and expenses, interest, extraordinary items and brokerage commissions, do not exceed 1.75% and 1.50% (on an annual basis) of the Bradesco Latin American Equity Fund and the Bradesco Latin American Hard Currency Bond Fund’s average daily net assets (the “Expense Limitations”), respectively. The Expense Limitations will remain in place with respect to each Fund until August 31, 2016, unless the Board of Trustees of the Trust approves its earlier termination. The Adviser is entitled to recover, subject to approval by the Board of Trustees, such amounts reduced or reimbursed for a period of up to three (3) years from the year in which the Adviser reduced its compensation and/or assumed expenses for each Fund. No recoupment will occur with respect to a Fund unless such Fund’s expenses are below the Expense Limitation.
28
BRADESCO FUNDS
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
For the six months ended October 31, 2015, investment advisory fees accrued and waived were $69,059 and $55,655 for the Bradesco Latin American Equity Fund and the Bradesco Latin American Hard Currency Bond Fund, respectively. Additionally, the Adviser reimbursed fees of $38,361 and $17,689 for the Bradesco Latin American Equity Fund and the Bradesco Latin American Hard Currency Bond Fund, respectively.
As of October 31, 2015, the amounts of potential recoupment by the Adviser were as follows:
Expiration
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04/30/2017 | 04/30/2018 | 04/30/2019 | |||||||||||||
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Bradesco Latin American Equity Fund | $53,081 | $ | 161,787 | $ | 107,420 | ||||||||||
Bradesco Latin American Hard Currency Bond Fund | $56,142 | $ | 158,963 | $ | 73,344 |
BNY Mellon Investment Servicing (US) Inc. (“BNY Mellon”) serves as administrator and transfer agent for the Funds. For providing administrative and accounting services, BNY Mellon is entitled to receive a monthly fee equal to an annualized percentage rate of each Funds’ average daily net assets and is subject to certain minimum monthly fees. For providing transfer agency services, BNY Mellon is entitled to receive a monthly fee, subject to certain minimum, and out of pocket expenses.
The Bank of New York Mellon (the “Custodian”) provides certain custodial services to the Funds. The Custodian is entitled to receive a monthly fee, subject to certain minimum, and out of pocket expenses.
BNY Mellon and the Custodian have the ability to recover such amounts previously waived if each Fund terminates its agreements with BNY Mellon or the Custodian within three years of signing the agreements.
Foreside Funds Distributors LLC (the “Underwriter”) provides principal underwriting services to the Funds pursuant to an underwriting agreement between the Trust and the Underwriter.
The Trustees of the Trust who are not officers or employees of an investment adviser, sub-adviser or other service provider to the Trust receive compensation in the form of an annual retainer and per meeting fees for their services as a Trustee. The remuneration paid to the Trustees by the Funds during the six months ended October 31, 2015 was $2,158 and $2,177 for the Bradesco Latin American Equity Fund and Bradesco Latin American Hard Currency Bond Fund, respectively. Certain employees of BNY Mellon serve as Officers of the Trust. They are not compensated by the Funds or the Trust.
29
BRADESCO FUNDS
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
3. Investment in Securities
For the six months ended October 31, 2015, aggregate purchases and sales of investment securities (excluding short-term investments) of the Funds were as follows:
Purchases | Sales | |||||||
Bradesco Latin American Equity Fund | $ | 6,905,205 | $ | 6,565,315 | ||||
Bradesco Latin American Hard Currency Bond Fund | 3,457,135 | 1,629,434 |
4. Capital Share Transactions
For the six months ended October 31, 2015 and the year ended April 30, 2015, transactions in capital shares (authorized shares unlimited) were as follows:
Bradesco Latin American Equity Fund | ||||||||||||||||||||
For the Six Months Ended | ||||||||||||||||||||
October 31, 2015 (Unaudited) | For the Year Ended April 30, 2015 | |||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||
Institutional Class | ||||||||||||||||||||
Sales | — | $ | — | 1,729,667 | $ | 17,000,000 | ||||||||||||||
Reinvestments | — | — | 1,678 | 14,632 | ||||||||||||||||
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Net Increase | — | $ | — | 1,731,345 | $ | 17,014,632 | ||||||||||||||
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Retail Class | ||||||||||||||||||||
Sales | 2,504 | $ | 20,802 | 9,701 | $ | 105,135 | ||||||||||||||
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Net Increase | 2,504 | $ | 20,802 | 9,701 | $ | 105,135 | ||||||||||||||
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Total Net Increase | 2,504 | $ | 20,802 | 1,741,046 | $ | 17,119,767 | ||||||||||||||
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30
BRADESCO FUNDS
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
Bradesco Latin American Hard Currency Bond Fund | ||||||||||||||||
For the Six Months Ended | ||||||||||||||||
October 31, 2015 (Unaudited) | For the Year Ended April 30, 2015 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Institutional Class | ||||||||||||||||
Sales | 800,010 | $ | 7,208,092 | 1,072,919 | $ | 11,022,743 | ||||||||||
Reinvestments | 23,857 | 218,827 | 28,734 | 287,587 | ||||||||||||
Redemptions | (800,010 | ) | (7,208,092 | ) | (21,221 | ) | (222,744 | ) | ||||||||
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Net Increase | 23,857 | $ | 218,827 | 1,080,432 | $ | 11,087,586 | ||||||||||
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Retail Class | ||||||||||||||||
Sales | 1 | $ | 10 | 9,497 | $ | 100,000 | ||||||||||
Reinvestments | 116 | 1,063 | 193 | 1,967 | ||||||||||||
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Net Increase | 117 | $ | 1,073 | 9,690 | $ | 101,967 | ||||||||||
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Total Net Increase | 23,974 | $ | 219,900 | 1,090,122 | $ | 11,189,553 | ||||||||||
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There is a 2.00% redemption fee that may be charged on shares redeemed which have been held for 30 days or less. The redemption fee is retained by the Funds for the benefit of the remaining shareholders and recorded as paid-in-capital. For the six months ended October 31, 2015, there were no redemption fees charged.
5. Federal Tax Information
The Funds have followed the authoritative guidance on accounting for and disclosure of uncertainty in tax positions, which requires the Funds to determine whether a tax position is more likely than not to be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The Funds have determined that there was no effect on the financial statements from following this authoritative guidance. In the normal course of business, the Funds are subject to examination by federal, state and local jurisdictions, where applicable, for tax years for which applicable statutes of limitations have not expired.
For the year ended April 30, 2015, the tax character of distributions paid by the Bradesco Latin American Equity Fund and the Bradesco Latin American Hard Currency Bond Fund was $17,181 and $349,661, respectively of ordinary income dividends. Distributions from net investment income and short-term capital gains are treated as ordinary income for federal income tax purposes.
31
BRADESCO FUNDS
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
As of April 30, 2015, the components of distributable earnings on a tax basis were as follows:
Capital Loss Carryforward | Undistributed Ordinary Income | Undistributed Long-Term Gain | Unrealized Depreciation | Qualified Late-Year Losses | |||||||||||||||||||||
Bradesco Latin American Equity Fund | $ | (25,272 | ) | $ | — | $ | — | $(1,468,759) | $ | (899,912 | ) | ||||||||||||||
Bradesco Latin American Hard Currency Bond Fund . | $ | — | $ | 47,092 | $ | — | $ (145,761) | $ | (146,108 | ) |
The differences between the book and tax basis components of distributable earnings relate primarily to the timing and recognition of income and gains for federal income tax purposes. Foreign currency and short-term capital gains are reported as ordinary income for federal income tax purposes.
As of October 31, 2015, the federal tax cost, aggregate gross unrealized appreciation and depreciation of securities held by the Funds were as follows:
Federal Tax Cost | Gross Unrealized Appreciation | Gross Unrealized Depreciation | Net Unrealized Depreciation | |||||||||||||
Bradesco Latin American Equity Fund | $ | 14,904,155 | $ | 193,893 | $ | (3,025,878 | ) | $ | (2,831,985 | ) | ||||||
Bradesco Latin American Hard Currency Bond Fund | 15,200,102 | 27,124 | (1,319,216 | ) | (1,292,092 | ) |
Pursuant to federal income tax rules applicable to regulated investment companies, the Fund may elect to treat certain capital losses between November 1 and April 30 and late year ordinary losses ((i) ordinary losses between January 1 and April 30, and (ii) specified ordinary and currency losses between November 1 and April 30) as occurring on the first day of the following tax year. For the year ended April 30, 2015, any amount of losses elected within the tax return will not be recognized for federal income tax purposes until May 1, 2015. For the fiscal year ended April 30, 2015, the Funds deferred to May 1, 2015 the following losses:
Late-Year Ordinary Losses Deferral | Short-Term Capital Loss Deferral | Long-Term Capital Loss Deferral | |||||||||||||
Bradesco Latin American Equity Fund | $ | 67,503 | $ | 832,409 | $ | — | |||||||||
Bradesco Latin American Hard Currency Bond Fund | — | 108,566 | 37,542 |
Accumulated capital losses represent net capital loss carryforwards as of April 30, 2015 that may be available to offset future realized capital gains and thereby reduce future capital gains distributions.
32
BRADESCO FUNDS
Notes to Financial Statements (Concluded)
October 31, 2015
(Unaudited)
As of April 30, 2015, the Bradesco Latin American Equity Fund had a short-term capital loss carryforwards of $25,272. The Bradesco Latin American Hard Currency Bond Fund did not have any capital loss carryforwards.
6. Subsequent Events
Management has evaluated the impact of all subsequent events on each Fund through the date the financial statements were issued and has determined that there were no subsequent events requiring recognition or disclosure in the financial statements.
33
BRADESCO FUNDS
Other Information
(Unaudited)
Proxy Voting
Policies and procedures that the Funds use to determine how to vote proxies relating to portfolio securities as well as information regarding how the Funds voted proxies relating to portfolio securities for the most recent 12-month period ended June 30 are available without charge, upon request, by calling (866) 670-5705 and on the Securities and Exchange Commission’s (“SEC”) website at http:// www.sec.gov.
Quarterly Portfolio Schedules
The Trust files its complete schedule of portfolio holdings with the SEC for the first and third fiscal quarters of each fiscal year (quarters ended July 31 and January 31) on Form N-Q. The Trust’s Forms N-Q are available on the SEC’s website at http://www.sec.gov and may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. Information on the operation of the SEC’s Public Reference Room may be obtained by calling 1-800-SEC-0330.
Approval of Advisory Agreement
At an in-person meeting held on June 23-24, 2015 (the “Meeting”), the Board of Trustees (“Board” or “Trustees”) of FundVantage Trust (“Trust”), including a majority of the Trustees who are not “interested persons” as defined in the Investment Company Act of 1940, as amended (“1940 Act”) (the “Independent Trustees”), unanimously approved the continuation of the advisory agreement (the “Agreement”) between the Trust, on behalf of the Bradesco Latin American Equity Fund (“Equity Fund”) and Bradesco Latin American Hard Currency Bond Fund (“Bond Fund”) (each a “Fund” and collectively, the “Funds”), and BRAM US LLC (“BRAM US” or the “Adviser”) for an additional one year period.
In determining whether to approve the Agreement, the Trustees considered information provided by the Adviser in accordance with Section 15(c) of the 1940 Act. The Trustees considered information that the Adviser provided regarding (i) services performed for the Funds, (ii) the size and qualifications of the Adviser’s portfolio management staff, (iii) any potential or actual material conflicts of interest which may arise in connection with a portfolio manager’s management of the Funds, (iv) investment performance, (v) the capitalization and financial condition of the Adviser, (vi) brokerage selection procedures (including soft dollar arrangements, if any), (vii) the procedures for allocating investment opportunities between the Funds and other clients, (viii) results of any regulatory examination, including any recommendations or deficiencies noted, (ix) any litigation, investigation or administrative proceeding which may have a material impact on the Adviser’s ability to service the Funds, (x) compliance with the Funds’ investment objectives, policies and practices (including codes of ethics and proxy voting policies), and (xi) compliance with federal securities laws and other regulatory requirements. The Trustees noted the reports and discussions with the Funds’ portfolio managers at Board meetings throughout the year covering matters including: the
34
BRADESCO FUNDS
Other Information
(Unaudited)
relative performance of the Funds; compliance with the investment objectives, policies, strategies and limitations for the Funds; the compliance of management personnel with the applicable code of ethics; and the adherence to fair value pricing procedures as established by the Board. The Trustees also noted that they had previously received and reviewed a memorandum from legal counsel regarding the legal standard applicable to their review of the Agreement.
Representatives from BRAM attended the Meeting both in person and via teleconference. The representatives from BRAM discussed the firm’s history, track record and investment services in connection with the proposed approval of the Agreement and answered questions from the Board.
The Trustees considered the investment performance information for the Funds. With respect to the Equity Fund, the Trustees reviewed performance information for the Equity Fund’s Institutional Class shares for the year-to-date, one year and since inception periods ended March 31, 2015 as compared to the Lipper expense universe of institutional Latin America and emerging markets Funds (“Equity Fund Lipper Peer Group”). The Trustees also received performance information for the Equity Fund’s Institutional Class shares for the one year and since inception periods ended April 30, 2015 as compared to the MSCI EM (Emerging Market) Latin America Index and a separate account managed by the Equity Fund’s portfolio managers through BRAM-Bradesco Asset Management S.A. DTVM (“BRAM Brazil”), an affiliate of the Adviser, in a substantially similar manner as the Equity Fund (“Equity Fund Comparable Account”). With respect to the Bond Fund, the Trustees reviewed performance information for the Bond Fund’s Institutional Class shares for the year-to-date, one year and since inception periods ended March 31, 2015 as compared to the Lipper Emerging Market Hard Currency Debt Index category (“Debt Fund Lipper Peer Group”). The Trustees also received performance information for the Debt Fund’s Institutional Class shares for the one year and since inception periods ended April 30, 2015 as compared to the CS (Credit Suisse) Latam Corporate 0-6Y A/B Index and a separate account managed by the Bond Fund’s portfolio managers through BRAM Brazil in a substantially similar manner as the Bond Fund (“Bond Fund Comparable Account”).
The Trustees also reviewed commentary provided by the Adviser regarding the performance data and the various factors contributing to the Funds’ performance. They concluded that the investment performance of the Funds was within an acceptable range of performance relative to other mutual funds with similar investment objectives, strategies and policies based on the information provided at the Meeting.
The Adviser provided information regarding its advisory fees and an analysis of these fees in relation to the delivery of services to the Funds and any other ancillary benefits resulting from the Adviser’s relationship with the Funds. The Trustees considered the fees that are charged to the Bond Fund Comparable Account and the Equity Fund Comparable Account, and evaluated the explanations provided by the Adviser as to the differences in the fees charged to the Funds and such similarly managed accounts. The Trustees reviewed fees charged by other advisers that manage comparable mutual funds with similar strategies. The Trustees concluded that the advisory fee and services provided by the Adviser are sufficiently consistent with those of other advisers which manage mutual funds with investment objectives, strategies and policies similar to those of the Fund as measured by the information provided at the Meeting.
35
BRADESCO FUNDS
Other Information
(Unaudited)
With respect to comparative performance information and advisory fees and expenses, the Board considered, among other data, the specific factors set forth below with respect to the Funds:
Equity Fund. With respect to advisory fees and expenses, the Trustees noted that the net total expense ratio and the gross advisory fee of the Equity Fund’s Institutional Class shares were higher than, and in line with, respectively, the net total expense ratio and the gross advisory fee of the median of funds with a similar share class in the EM Fund Lipper Peer Group with $250 million or less in assets. The Trustees noted that due to the limited operating history of the Equity Fund, the net total expense ratio presented was based on the estimates reflected in the Fund’s most recent prospectus. The Trustees also discussed the limitations of the comparative expense information of the Equity Fund, given the potential varying nature, extent and quality of the services provided by the advisers of other portfolios included in the EM Fund Lipper Peer Group. With respect to performance, the Trustees noted that the Institutional Class shares of the Equity Fund underperformed the MSCI EM (Emerging Market) Latin America Index for the one year and since inception periods ended April 30, 2015. The Trustees also noted that the Equity Fund performed in line with the Equity Fund Comparable Account for the one year period ended April 30, 2015 and underperformed for the since inception period. The Trustees further noted that the Equity Fund’s Institutional Class shares underperformed the median of the Equity Fund Lipper Peer Group for the year-to-date, one year and since inception periods ended March 31, 2015.
Bond Fund. With respect to advisory fees and expenses, the Trustees noted that the net total expense ratio and the gross advisory fee of the Bond Fund’s Institutional Class shares were higher than, and in line with, respectively, the net total expense ratio and the gross advisory fee of the median of funds with a similar share class in the Debt Fund Lipper Peer Group with $250 million or less in assets. The Trustees noted that due to the limited operating history of the Bond Fund, the net total expense ratio presented was based on the estimates reflected in the Fund’s most recent prospectus. The Trustees also discussed the limitations of the comparative expense information of the Bond Fund, given the potential varying nature, extent and quality of the services provided by the advisers of other portfolios included in the Bond Fund Lipper Peer Group. With respect to performance, the Trustees noted that the Institutional Class shares of the Bond Fund underperformed the CS (Credit Suisse) Latam Corporate 0-6Y A/B Index for the one year and since inception periods ended April 30, 2015 and outperformed the Bond Fund Comparable Account for the same periods. The Trustees also noted that the Bond Fund’s Institutional Class shares underperformed the median of the Bond Fund Lipper Peer Group for the year-to-date and one year periods ended March 31, 2015, and outperformed for the since inception period ended March 31, 2015.
The Board considered the level and depth of knowledge of the Adviser, including the professional experience and qualifications of senior personnel. In evaluating the quality of services provided by the
36
BRADESCO FUNDS
Other Information
(Unaudited)
Adviser, the Board took into account its familiarity with the Adviser’s senior management through Board meetings, discussions and reports during the preceding year. The Trustees also took into account the compliance policies and procedures of BRAM, and reports regarding BRAM’s compliance operations from the Trust’s Chief Compliance Officer. The Board also considered any potential conflicts of interest that may arise in a portfolio manager’s management of the Funds’ investments on the one hand, and the investments of other accounts, on the other. The Trustees reviewed the services provided to the Funds by the Adviser and concluded that the nature, extent and quality of the services to be provided were appropriate and consistent with the terms of the Agreement. They also concluded that the Adviser has sufficient personnel, with the appropriate education and experience, to serve the Funds effectively and had demonstrated its ability to attract and retain qualified personnel.
The Trustees considered the costs of the services provided by the Adviser, the compensation and benefits received by the Adviser in providing services to the Funds as well as the Adviser’s profitability. The Trustees were provided with the Adviser’s most recent unaudited balance sheet and income statement as of April 30, 2015. The Trustees noted that the Adviser’s level of profitability is an appropriate factor to consider, and the Trustees should be satisfied that the Adviser’s profits are sufficient to continue as a healthy concern generally and as investment adviser of the Funds specifically. The Trustees concluded that the Adviser’s advisory fee level was reasonable in relation to the nature and quality of the services provided, taking into account the fees charged by other advisers for managing comparable mutual funds with similar strategies. The Trustees also concluded that the overall expense ratio of the Fund was reasonable, taking into account the growth and size of the Funds and the quality of services provided by the Adviser and the expense limitations agreed to by the Adviser.
The Trustees considered the extent to which economies of scale would be realized relative to fee levels as the Funds grow and whether the advisory fee levels reflect these economies of scale for the benefit of shareholders. The Board noted that economies of scale may be achieved at higher asset levels for the Funds for the benefit of fund shareholders, but that the advisory fee did not currently include breakpoint reductions as asset levels increase.
In voting to approve the continuation of the Agreement with respect to each Fund, the Board considered all factors it deemed relevant and the information presented to the Board by the Adviser. In arriving at its decision, the Board did not identify any single factor as being of paramount importance and each member of the Board gave varying weights to each factor according to his or her own judgment. The Board determined that the approval of the Agreement would be in the best interest of each Fund and its shareholders. As a result, the Board, including a majority of the Independent Trustees, unanimously approved the continuation of the Agreement with respect to each Fund for an additional one year period.
37
BRADESCO FUNDS
Other Information
(Unaudited) (Concluded)
Change In Independent Registered Public Accounting Firm
BBD, LLP (“BBD”) was previously the independent registered public accounting firm for the Bradesco Latin American Equity Fund and Bradesco Latin American Hard Currency Bond Fund (together, the “Funds”), each a series of FundVantage Trust (the “Trust”). On September 22, 2015, BBD’s appointment as independent registered public accounting firm was terminated and Tait, Weller & Baker LLP (“TWB”) was selected as independent registered public accounting firm of the Funds for the fiscal year ending April 30, 2016. The decision to change independent registered public accounting firms was approved by the Funds’ audit committee and Board of Trustees.
During the Funds’ two most recently completed fiscal years ended April 30, 2015 and April 30, 2014 and through September 22, 2015, there were no (1) disagreements between the Funds and BBD on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of BBD, would have caused it to make reference to the subject matter of the disagreements in connection with its reports, or (2) reportable events.
BBD’s reports on the Funds’ financial statements for the Funds’ two most recently completed fiscal years ended April 30, 2015 and April 30, 2014 did not contain any adverse opinion or disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope, or accounting principles.
38
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Investment Adviser
BRAM US LLC
Park Avenue, 32nd Floor
New York, New York, 10022
Administrator
BNY Mellon Investment Servicing (US) Inc.
301 Bellevue Parkway
Wilmington, DE 19809
Transfer Agent
BNY Mellon Investment Servicing (US) Inc.
4400 Computer Drive
Westborough, MA 01581
Principal Underwriter
Foreside Funds Distributors LLC
400 Berwyn Park
899 Cassatt Road
Berwyn, PA 19312
Custodian
The Bank of New York Mellon
225 Liberty Street
New York, NY 10286
Independent Registered Public Accounting Firm
Tait, Weller & Baker LLP
1818 Market Street, Suite 2400
Philadelphia, PA 19103
Legal Counsel
Pepper Hamilton LLP
3000 Two Logan Square
18th and Arch Streets
Philadelphia, PA 19103
BRA-1015
BRADESCO LATIN AMERICAN
EQUITY FUND
BRADESCO LATIN AMERICAN HARD
CURRENCY
BOND FUND
of
FundVantage Trust
Institutional Class
Retail Class
SEMI-ANNUAL
REPORT
October 31, 2015
(Unaudited)
This report is submitted for the general information of the shareholders of the Bradesco Latin American Equity Fund and the Bradesco Latin American Hard Currency Bond Fund. It is not authorized for distribution unless preceded or accompanied by a current prospectus for the Bradesco Latin American Equity Fund and the Bradesco Latin American Hard Currency Bond Fund.
DUPONT CAPITAL EMERGING MARKETS FUND
Semi-Annual Investment Adviser’s Report
October 31, 2015
(Unaudited)
Dear Fund Shareholder,
The DuPont Capital Emerging Markets Fund returned -18.40% for the six month period ending October 31, 2015 as compared to -17.75% for the MSCI Emerging Markets Net Dividend Income Index, an underperformance of -0.65% (net of fees) as compared to the performance of the index.
Economic developments in China drove performance for emerging markets equity during the period. China’s decision to allow its currency to weaken, coupled with signs of slower economic growth in the country, caused significant turmoil in global financial markets. Both emerging markets equities and currencies dropped sharply. After appearing to stabilize at the end of the second quarter, commodity prices fell further due to concerns regarding both weak demand and increasing supply. Copper fell -14%, and oil dropped -21% with the price per barrel falling below $50. China’s currency adjustments, slower than expected growth, and recent interventions into local financial markets have damaged long-held confidence in the Chinese government’s ability to manage the world’s second largest economy.
China and commodity dependent countries such as Brazil, Colombia, and Peru were among the worst performers due to increasing concern over Chinese growth and capital flight from emerging markets. Brazil is also struggling with a difficult combination of weak economic growth, the fallout from a massive corruption scandal at their state run oil company, and a very unpopular presidential administration. Countries seen as less dependent on Chinese economic growth generally held up better than the overall market. The stock markets of Hungary, India, and Mexico managed to outperform the overall index due to relatively strong domestic economies.
At the sector level, the Fund’s relative performance was negatively impacted by an over allocation to the energy and materials sectors, and an under allocation to the consumer staples and health care sectors. Companies in the energy and materials sectors struggled due to falling commodity prices while companies involved in producing consumer staples and health care products held up better due to the perceived safety of their earnings and dividends. The Fund’s positioning is the result of the large valuation differential between these sectors of the market. Companies perceived as safe or high growth are currently in favor, and investors are willing to pay a higher valuation for their shares. Conversely, companies perceived as being sensitive to changes in economic growth conditions are, in our opinion, materially undervalued. We expect the large valuation gap between these sectors will close as emerging economies continue to grow.
From a country perspective, relative performance was negatively impacted by stock selection in India, Mexico, and Thailand. Within India and Mexico, the Fund is under allocated to such sectors as consumer staples and health care, which fell less than the overall market. Underperformance within Thailand was the result of an over allocation to the country’s energy sector. Favorable stock selection in China and Korea partially offset these negative impacts. The Fund has been defensively positioned within the Chinese financial sector due to concerns regarding the local stock market, which is not part of the benchmark. The local Chinese stock market fell sharply during the period, benefiting relative performance. Within Korea, favorable stock selection across multiple sectors benefited performance.
1
DUPONT CAPITAL EMERGING MARKETS FUND
Semi-Annual Investment Adviser’s Report (Continued)
October 31, 2015
(Unaudited)
The outlook for China has dominated emerging markets equity performance this year. We expect Chinese growth and stability to remain at the forefront of investors’ minds given its status as the world second largest economy and an outsized consumer of commodities and capital goods.
Investment Environment and Outlook
Our base case scenario for China is that while we believe China will experience economic growth we do not expect China to experience an economic crisis. The primary driver of the weaker Chinese growth has been a material slowdown in fixed investment, particularly real estate and manufacturing. We generally expect fixed investment in these areas to continue to be weak in the near-term. However, we expect this will be somewhat offset by increased fixed investment in government directed infrastructure spending. We expect consumption expenditures, which have generally experienced solid growth, to continue apace. Taken together, we believe this should allow for moderate growth for the overall economy.
We believe the volatility generated by China’s decision in 2015 to allow its currency to weaken will subside. The Chinese government has realized the significant impact of their actions and has taken strong measures to reintroduce stability in the currency market. While these measures will likely have longer-term implications, we think volatility should subside in the near-term.
We believe emerging markets equities are attractively valued on an absolute basis, as well as relative to developed markets. Within emerging markets, valuations within the cyclical sectors are particularly attractive. While the low valuation of emerging markets equities has not prevented the significant negative returns seen this year, we believe it should provide a favorable backdrop for future returns.
We appreciate your investment in the Fund and look forward to communicating with you in the future.
DuPont Capital Management Corporation
This letter is intended to assist shareholders in understanding how the Fund performed during the six months ended October 31, 2015 and reflects the views of the investment adviser at the time of this writing. These views may change and do not guarantee future performance of the Fund or the markets.
2
DUPONT CAPITAL EMERGING MARKETS FUND
Semi-Annual Investment Adviser’s Report (Concluded)
October 31, 2015
(Unaudited)
Portfolio composition is subject to change. The current and future portfolio holdings of the Fund are subject to investment risks.
Mutual fund investing involves risks, including possible loss of principal. The Fund invests primarily in markets of emerging countries which are riskier than more developed markets and may be considered speculative. Emerging markets are riskier than more developed markets because they tend to develop unevenly or may never fully develop. Emerging markets are more likely to experience hyperinflation and currency valuations, which adversely affect returns to U.S. investors. In addition, many emerging markets have far lower trading volumes and less liquidity than developed markets.
Foreign securities are subject to political, social, and economic risks including instability in the country of the issuer of a security, variation in international trade patterns, the possibility of the imposition of exchange controls, expropriation, confiscatory taxation, limits on movement to currency or other assets and nationalization of assets. The value of debt securities generally falls when interest rates rise. The Fund may invest without limit in below-investment grade debt securities commonly called “high yield” securities or “junk bonds.” Such securities may have greater default risk, less liquidity, and greater price volatility than investment-grade bonds.
3
DUPONT CAPITAL EMERGING MARKETS FUND
Semi-Annual Report
Performance Data
October 31, 2015
(Unaudited)
Average Annual Total Returns for the Periods Ended October 31, 2015 | ||||||||||||||||||
Six Months† | 1 Year | 3 Year | Since Inception* | |||||||||||||||
Class I Shares | -18.40% | -17.91 | % | -8.23 | % | -6.82% | ||||||||||||
MSCI Emerging | ||||||||||||||||||
Markets Net | ||||||||||||||||||
Dividend Index | -17.75% | -14.53 | % | -2.87 | % | -3.23%** |
† | Not Annualized. |
* | The DuPont Capital Emerging Markets Fund (the “Fund”) commenced operations on December 6, 2010. |
** | Benchmark performance is from inception date of the Fund only and is not the inception date of the benchmark itself. |
The performance data quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment in the Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. The table does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares. Current performance may be lower or higher. Performance data current to the most recent month-end may be obtained by calling (888) 447-0014.
The Fund’s total operating expense ratio, as stated in the current prospectus dated September 1, 2015, is 1.37% of the Fund’s average daily net assets, which may differ from the actual expenses incurred by the Fund for the period covered by this report. DuPont Capital Management Corporation (the “Adviser”) has contractually agreed to reduce its investment advisory fee and/or reimburse certain expenses of the Fund to the extent necessary to ensure that the Fund’s total operating expenses, excluding taxes, “Acquired Fund” fees and expenses, interest, extraordinary items, and brokerage commissions do not exceed 1.60% (on an annual basis) of the Fund’s average daily net assets (the “Expense Limitation”). The Expense Limitation will terminate on August 31, 2016, unless the Board of Trustees of FundVantage Trust approves an earlier termination. Total returns would be lower had such fees and expenses not been waived and/or reimbursed.
A 2.00% redemption fee applies to shares redeemed within 60 days of purchase. The redemption fee is not reflected in the returns shown above.
The Fund intends to evaluate performance as compared to that of the MSCI Emerging Markets Net Dividend Index. The MSCI Emerging Markets Net Dividend Index is a float-adjusted market capitalization index consisting of 21 emerging economies. It is impossible to invest directly in an index.
4
DUPONT CAPITAL EMERGING MARKETS DEBT FUND
Semi-Annual Investment Adviser’s Report
October 31, 2015
(Unaudited)
Dear Fund Shareholder,
The DuPont Capital Emerging Markets Debt Fund returned +3.66% for the six month period ending October 31, 2015 compared to -0.97% for the JP Morgan Emerging Markets Bond Index Global Diversified, an outperformance of +4.63% as compared to the performance of the index.
Emerging Markets Debt (EMD), like most other fixed income sectors, exhibited high levels of volatility due to uncertainty over global economic growth, declines in oil and other commodities, geopolitical tensions in many regions, weakness in most currencies relative to the U.S. dollar, and uncertainty over when the Federal Reserve will begin raising rates. Despite the volatility, U.S. dollar EMD held up over the six-month period, outpacing both high yield and investment grade corporates. EMD local currency faced significant headwinds due to weaker economic growth in many EM countries and concerns about future growth in China. U.S. Treasury prices declined slightly during the period, but a higher yield and reasonable valuations helped insulate EMD from large losses. Overall, investors continued to be attracted to EMD’s valuations and yields relative to other fixed income sectors.
EM U.S.Dollar sovereigns outperformed local-currency EMD.Within U.S.Dollar sovereigns, non-investment grade countries significantly outperformed the higher quality, investment grade sovereigns. Some of the best performing countries included Ukraine, Argentina, Belarus, and Russia, while Zambia, Ecuador, Gabon, and Iraq pulled back with combined negative returns in excess of -11%. Spreads widened by 53 basis points (bps) during the last six months to 393 bps over Treasuries, while the yield of the index rose by 62 bps to close at 6.02%. A large overweight to Ukraine, including positions in both sovereign bonds and two strategically important banks, was the top contributor to the Fund’s positive relative performance during the period. Ukraine saw a surge in performance in excess of +60%, which resulted from the agreement between the country and its creditors to restructure their government bonds and the debt of their most important banks. The Fund also benefited from positions in Chinese corporates and an underweight to the worst performing countries. Small allocations to Mexico and Brazil local currency bonds detracted from the Fund’s return. As mentioned earlier, most local currency bonds performed poorly due to the strength of the U.S dollar.
The Fund’s top over-weights include Mexico, China, Brazil, Ukraine, and Venezuela. In local currency bonds, the largest positions are in Mexico and Brazil. The Fund had a yield advantage compared to the benchmark, primarily due to over-weights to Venezuela and Ukraine, and the local currency exposure to Mexico and Brazil for the period.
Investment Environment and Outlook
Volatility in financial markets, including EMD, remained high during the period. Credit spreads widened, yields rose, and most EM currencies declined relative to the US Dollar. EMD valuations are much more attractive now than earlier in the year, however, we feel returns for the asset class may be low over the
5
DUPONT CAPITAL EMERGING MARKETS DEBT FUND
Semi-Annual Investment Adviser’s Report (Concluded)
October 31, 2015
(Unaudited)
next few months as it is likely EMD will continue to face short-term headwinds. Weaker global growth, low commodity prices, volatile equity markets, and unstable currencies could lead investors to shy away from the asset class. However, we believe allocations to the asset class could potentially increase as investors monitor the market for an attractive entry point. Despite these headwinds, our long-term outlook for EMD remains positive. We believe EMD remains attractive relative to other investment alternatives and see opportunity for additional inflows as investors seek higher yields and the potential for capital appreciation. In hard currency EMD, the risk-adjusted returns for Ukraine, Venezuela, and Brazil remain attractive to us. We are maintaining a small position in local currency, currently around 6%. We remain cautious of the sector as the dollar could continue to strengthen if US economic growth remains healthy and the Fed increases interest rates.
We appreciate your investment in the Fund and look forward to communicating with you in the future.
DuPont Capital Management Corporation
This letter is intended to assist shareholders in understanding how the Fund performed during the six months ended October 31, 2015 and reflects the views of the investment adviser at the time of this writing. These views may change and do not guarantee the future performance of the Fund or the markets.
Portfolio composition is subject to change. The current and future portfolio holdings of the Fund are subject to investment risks.
Mutual fund investing involves risks, including possible loss of principal. The Fund invests primarily in markets of emerging countries which are riskier than more developed markets and may be considered speculative. Emerging markets are riskier than more developed markets because they tend to develop unevenly or may never fully develop. Emerging markets are more likely to experience hyperinflation and currency valuations, which adversely affect returns to U.S. investors. In addition, many emerging securities markets have far lower trading volumes and less liquidity than developed markets.
Foreign securities are subject to political, social, and economic risks including instability in the country of the issuer of a security, variation in international trade patterns, the possibility of the imposition of exchange controls, expropriation, confiscatory taxation, limits on movement to currency or other assets and nationalization of assets. The value of debt securities generally falls when interest rates rise. The Fund may invest without limit in below-investment grade debt securities commonly called “high yield” securities or “junk bonds.” Such securities may have greater default risk, less liquidity, and greater price volatility than investment-grade bonds.
6
DUPONT CAPITAL EMERGING MARKETS DEBT FUND
Semi-Annual Report
Performance Data
October 31, 2015
(Unaudited)
Total Returns for the Periods Ended October 31, 2015 | ||||||||||||||||
Six Months† | 1 Year | Since Inception* | ||||||||||||||
Class I Shares | 3.66% | 3.29 | % | 6.25% | ||||||||||||
J.P. Morgan EMBI Global | ||||||||||||||||
Diversified Index | -0.97% | 0.39 | % | 5.41%** |
† | Not Annualized. |
* | The DuPont Capital Emerging Markets Debt Fund (the “Fund”) commenced operations on September 27, 2013. |
** | Benchmark performance is from inception date of the Fund only and is not the inception date of the benchmark itself. |
The performance data quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment in the Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. The table does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares. Current performance may be lower or higher. Performance data current to the most recent month-end may be obtained by calling (888) 447-0014.
The Fund’s total gross and net operating expense ratio, as stated in the current prospectus dated September 1, 2015, is 2.25% and 0.89% respectively of the Fund’s average daily net assets, which may differ from the actual expenses incurred by the Fund for the period covered by this report. DuPont Capital Management Corporation (the “Adviser”) has contractually agreed to reduce its investment advisory fee and/or reimburse certain expenses of the Fund to the extent necessary to ensure that the Fund’s total operating expenses, excluding taxes, “Acquired Fund” fees and expenses, interest, extraordinary items, and brokerage commissions do not exceed 0.89% (on an annual basis) of the Fund’s average daily net assets (the “Expense Limitation”). The Expense Limitation will terminate on August 31, 2016, unless the Board of Trustees of FundVantage Trust approves an earlier termination. Total returns would be lower had such fees and expenses not been waived and/or reimbursed.
A 2.00% redemption fee applies to shares redeemed within 60 days of purchase. The redemption fee is not reflected in the returns shown above.
The Fund intends to evaluate performance as compared that of the J.P. Morgan Emerging Markets Bond Index Global Diversified Index (EMBI Global), currently covers 27 emerging market countries. Included in the EMBI Global are U.S.-dollar-denominated Brady bonds, Eurobonds, traded loans, and local market debt instruments issued by sovereign and quasi-sovereign entities. It is impossible to invest directly in an index.
7
DUPONT CAPITAL FUNDS
Fund Expense Disclosure
October 31, 2015
(Unaudited)
As a shareholder of the Fund(s), you incur two types of costs: (1) transaction costs, including redemption fees; and (2) ongoing costs, including management fees and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
These examples are based on an investment of $1,000 invested at the beginning of the six-month period from May 1, 2015 through October 31, 2015 and held for the entire period.
Actual Expenses
The first line for each Fund in the accompanying table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line for each Fund in the accompanying table provides information about hypothetical account values and hypothetical expenses based on each Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not your Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Funds and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that the expenses shown in the accompanying table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as redemption fees. Therefore, the second line of the accompanying table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
8
DUPONT CAPITAL FUNDS
Fund Expense Disclosure (Concluded)
October 31, 2015
(Unaudited)
DuPont Capital Emerging Markets Fund | ||||||
Beginning Account Value |
Ending Account Value |
Expenses Paid | ||||
Class I | ||||||
Actual | $1,000.00 | $ 816.00 | $6.98 | |||
Hypothetical (5% return before expenses) | 1,000.00 | 1,017.44 | 7.76 | |||
DuPont Capital Emerging Markets Debt Fund | ||||||
Beginning Account Value |
Ending Account Value |
Expenses Paid | ||||
Class I | ||||||
Actual | $1,000.00 | $1,036.60 | $4.56 | |||
Hypothetical (5% return before expenses) | 1,000.00 | 1,020.66 | 4.52 |
* | Expenses are equal to an annualized expense ratio for the six-month period ended October 31, 2015 of 1.53% for Class I Shares of the DuPont Capital Emerging Markets Fund, multiplied by the average account value over the period, multiplied by the number of days in the most recent period (184), then divided by 366 to reflect the period. The DuPont Capital Emerging Markets Fund’s ending account value on the first line in the table is based on the actual total return for the six month period ended October 31, 2015 for the Fund of (18.40)%. |
** | Expenses are equal to an annualized expense ratio for the six-month period ended October 31, 2015 of 0.89% for Class I Shares of the DuPont Capital Emerging Markets Debt Fund, multiplied by the average account value over the period, multiplied by the number of days in the most recent period (184), then divided by 366 to reflect the period. The DuPont Capital Emerging Markets Debt Fund’s ending account value on the first line in the table is based on the actual total return for the six month period for the Fund of 3.66%. |
9
DUPONT CAPITAL EMERGING MARKETS FUND
Portfolio Holdings Summary Table
October 31, 2015
(Unaudited)
The following table presents a summary by industry of the portfolio holdings of the Fund:
% of Net Assets | Value | |||||||||
INDUSTRY CATEGORIES: | ||||||||||
Commercial Banks | 21.9 | % | $ | 13,748,174 | ||||||
Semiconductors & Semiconductor Equipment | 9.8 | 6,132,141 | ||||||||
Oil, Gas & Consumable Fuels | 9.3 | 5,859,925 | ||||||||
Wireless Telecommunication Services | 5.7 | 3,591,907 | ||||||||
Automobiles | 3.9 | 2,472,913 | ||||||||
Exchange Traded Funds | 3.7 | 2,324,120 | ||||||||
Chemicals | 3.6 | 2,241,073 | ||||||||
Metals & Mining | 3.5 | 2,196,790 | ||||||||
Machinery | 3.2 | 2,040,850 | ||||||||
Construction Materials | 3.2 | 1,983,019 | ||||||||
Technology Hardware, Storage & Peripherals | 2.4 | 1,521,856 | ||||||||
Auto Components | 2.2 | 1,370,912 | ||||||||
Beverages | 2.1 | 1,313,736 | ||||||||
Industrial Conglomerates | 2.0 | 1,259,764 | ||||||||
Hotels, Restaurants & Leisure | 1.8 | 1,132,976 | ||||||||
Airlines | 1.8 | 1,104,525 | ||||||||
Internet Software & Services | 1.6 | 1,012,433 | ||||||||
Insurance | 1.5 | 967,672 | ||||||||
Real Estate Management & Development | 1.4 | 891,444 | ||||||||
Electronic, Equipment, Instruments & Components | 1.4 | 870,647 | ||||||||
Media | 1.3 | 819,029 | ||||||||
Aerospace & Defense | 1.2 | 772,163 | ||||||||
Textiles, Apparel & Luxury Goods | 1.2 | 768,764 | ||||||||
Food & Staples Retailing | 1.2 | 741,193 | ||||||||
Road & Rail | 1.1 | 666,168 | ||||||||
Water Utilities | 1.0 | 655,220 | ||||||||
IT Services | 1.0 | 634,919 | ||||||||
Multiline Retail | 0.9 | 567,955 | ||||||||
Household Durables | 0.6 | 407,411 | ||||||||
Electric Equipment | 0.6 | 350,372 | ||||||||
Diversified Telecommunication Services | 0.5 | 333,498 | ||||||||
Marine | 0.4 | 247,978 | ||||||||
Other Assets in Excess of Liabilities | 3.0 | 1,858,169 | ||||||||
|
|
|
| |||||||
NET ASSETS | 100.0 | % | $ | 62,859,716 | ||||||
|
|
|
|
Portfolio holdings are subject to change at any time.
The accompanying notes are an integral part of the financial statements.
10
DUPONT CAPITAL EMERGING MARKETS FUND
Portfolio of Investments
October 31, 2015
(Unaudited)
Number of Shares | Value | |||||||
COMMON STOCKS — 92.1% |
| |||||||
Brazil — 6.0% | ||||||||
AMBEV SA | 265,400 | $ | 1,313,736 | |||||
Embraer SA | 105,300 | 772,163 | ||||||
Even Construtora e Incorporadora SA | 392,800 | 407,411 | ||||||
Iochpe Maxion SA | 95,400 | 395,794 | ||||||
Marcopolo SA, Pref. | 1,298,500 | 656,565 | ||||||
WEG SA | 68,800 | 256,893 | ||||||
|
| |||||||
3,802,562 | ||||||||
|
| |||||||
Chile — 1.0% | ||||||||
Aguas Andinas SA, | 1,245,923 | 655,220 | ||||||
|
| |||||||
China — 20.2% | ||||||||
Air China Ltd., Class H | 956,000 | 920,834 | ||||||
Anhui Conch Cement Co., Ltd., Class H | 163,500 | 498,888 | ||||||
China Construction Bank Corp., Class H | 2,728,000 | 1,977,134 | ||||||
China Mobile, Ltd. | 177,668 | 2,130,221 | ||||||
China Overseas Land & Investment, Ltd. | 276,000 | 891,444 | ||||||
China Overseas Property Holdings, Ltd.* | 1 | — | ||||||
CIMC Enric Holdings, Ltd. | 710,000 | 467,393 | ||||||
CNOOC, Ltd. | 811,000 | 916,034 | ||||||
Dongfeng Motor Group | 778,000 | 1,116,742 | ||||||
Haitian International Holdings, Ltd. | 151,000 | 264,205 | ||||||
Industrial & Commercial Bank of China, Ltd. | 1,065,000 | 675,536 | ||||||
NetEase, Inc., ADR | 7,005 | 1,012,433 | ||||||
Pacific Basin Shipping, Ltd. | 838,344 | 247,978 |
Number of Shares | Value | |||||||
COMMON STOCKS — (Continued) |
| |||||||
China — (Continued) |
| |||||||
PetroChina Co., Ltd., | 1,003,181 | $ | 785,394 | |||||
Shenzhou International | 156,000 | 768,764 | ||||||
|
| |||||||
12,673,000 | ||||||||
|
| |||||||
Czech Republic — 1.5% |
| |||||||
Komercni Banka AS | 4,555 | 943,967 | ||||||
|
| |||||||
Hungary — 1.6% | ||||||||
OTP Bank PLC | 51,437 | 995,396 | ||||||
|
| |||||||
India — 6.5% | ||||||||
Coal India, Ltd. | 179,248 | 875,475 | ||||||
HCL Technologies, Ltd. | 47,670 | 634,919 | ||||||
ICICI Bank, Ltd., SP ADR | 89,990 | 775,714 | ||||||
Oil India, Ltd. | 148,576 | 921,737 | ||||||
Reliance Industries Ltd., SP GDR(a) | 30,169 | 865,850 | ||||||
|
| |||||||
4,073,695 | ||||||||
|
| |||||||
Indonesia — 2.7% | ||||||||
Astra International Tbk PT | 1,082,400 | 465,301 | ||||||
Bank Mandiri Persero Tbk PT | 733,800 | 464,400 | ||||||
Bank Rakyat Indonesia Persero Tbk PT | 801,800 | 613,662 | ||||||
Indo Tambangraya Megah Tbk PT | 238,000 | 146,718 | ||||||
|
| |||||||
1,690,081 | ||||||||
|
| |||||||
Malaysia — 1.7% | ||||||||
Genting Bhd | 299,696 | 516,610 | ||||||
Malayan Banking Bhd | 283,636 | 543,752 | ||||||
|
| |||||||
1,060,362 | ||||||||
|
|
The accompanying notes are an integral part of the financial statements.
11
DUPONT CAPITAL EMERGING MARKETS FUND
Portfolio of Investments (Continued)
October 31, 2015
(Unaudited)
Number of Shares | Value | |||||||
COMMON STOCKS — (Continued) |
| |||||||
Mexico — 3.2% |
| |||||||
Cemex SAB de CV, SP ADR* | 113,276 | $ | 714,772 | |||||
Grupo Financiero Inbursa SAB de CV | 380,000 | 761,482 | ||||||
Ternium SA, SP ADR | 38,231 | 549,379 | ||||||
|
| |||||||
2,025,633 | ||||||||
|
| |||||||
Pakistan — 1.2% | ||||||||
Lucky Cement Ltd., GDR | 41,538 | 769,359 | ||||||
|
| |||||||
Panama — 0.3% | ||||||||
Copa Holdings SA, Class A | 3,636 | 183,691 | ||||||
|
| |||||||
Peru — 0.7% | ||||||||
Cia de Minas Buenaventura SA, ADR | 67,479 | 432,540 | ||||||
|
| |||||||
Poland — 2.2% | ||||||||
Bank Handlowy w Warszawie SA | 21,685 | 440,913 | ||||||
Bank Pekao SA | 24,927 | 969,351 | ||||||
|
| |||||||
1,410,264 | ||||||||
|
| |||||||
Russia — 4.9% | ||||||||
Globaltrans Investment PLC, GDR* | 158,704 | 666,168 | ||||||
Magnit PJSC, SP GDR | 16,330 | 741,193 | ||||||
Novolipetsk Steel OJSC, GDR | 61,017 | 747,361 | ||||||
PhosAgro OAO, GDR | 65,557 | 900,170 | ||||||
|
| |||||||
3,054,892 | ||||||||
|
| |||||||
South Africa — 7.2% | ||||||||
Barclays Africa Group, Ltd. | 62,500 | 800,990 | ||||||
MTN Group, Ltd. | 63,436 | 722,194 | ||||||
Naspers, Ltd. | 5,610 | 819,029 | ||||||
Reunert, Ltd. | 117,064 | 570,813 |
Number of Shares | Value | |||||||
COMMON STOCKS — (Continued) |
| |||||||
South Africa — (Continued) |
| |||||||
Sasol, Ltd. | 20,266 | $ | 649,357 | |||||
Telkom SA SOC, Ltd. | 63,509 | 333,498 | ||||||
Tsogo Sun Holdings, Ltd. | 343,947 | 616,366 | ||||||
|
| |||||||
4,512,247 | ||||||||
|
| |||||||
South Korea — 15.9% |
| |||||||
Hyundai Department Store Co., Ltd. | 5,174 | 567,955 | ||||||
Hyundai Mobis | 6,521 | 1,370,912 | ||||||
Hyundai Motor Co. | 6,522 | 890,870 | ||||||
LG Chem, Ltd. | 5,044 | 1,340,903 | ||||||
POSCO, ADR | 11,679 | 467,510 | ||||||
Samsung Electronics Co., Ltd. | 2,742 | 3,288,828 | ||||||
Samsung Life Insurance Co., Ltd. | 10,135 | 967,672 | ||||||
Shinhan Financial Group Co., Ltd. | 29,407 | 1,122,326 | ||||||
|
| |||||||
10,016,976 | ||||||||
|
| |||||||
Taiwan — 10.3% | ||||||||
Advanced Semiconductor Engineering, Inc. | 444,000 | 512,578 | ||||||
Asustek Computer, Inc. | 95,000 | 850,193 | ||||||
Chicony Electronics Co., Ltd. | 282,202 | 671,663 | ||||||
Chipbond Technology Corp. | 391,000 | 556,452 | ||||||
CTBC Financial Holding Co., Ltd. | 1,618,295 | 886,594 | ||||||
Hon Hai Precision Industry Co., Ltd. | 327,550 | 870,647 | ||||||
Novatek Microelectronics Corp. | 173,692 | 591,210 |
The accompanying notes are an integral part of the financial statements.
12
DUPONT CAPITAL EMERGING MARKETS FUND
Portfolio of Investments (Concluded)
October 31, 2015
(Unaudited)
Number of Shares | Value | |||||
COMMON STOCKS — (Continued) |
| |||||
Taiwan — (Continued) | ||||||
Taiwan Semiconductor Manufacturing Co., Ltd., SP ADR | 53,874 | $ | 1,183,073 | |||
Teco Electric And Machinery Co., Ltd. | 402,000 | 350,372 | ||||
|
| |||||
6,472,782 | ||||||
|
| |||||
Thailand — 2.7% | ||||||
Bangkok Bank PCL NVDR | 127,600 | 599,576 | ||||
Kasikornbank PCL NVDR | 84,370 | 408,035 | ||||
PTT Exploration & Production PCL | 340,000 | 699,360 | ||||
|
| |||||
1,706,971 | ||||||
|
| |||||
Turkey — 2.3% | ||||||
Enka Insaat Ve Sanayi AS | 389,201 | 688,951 | ||||
Turkcell Iletisim Hizmetleri AS* | 186,085 | 739,492 | ||||
|
| |||||
1,428,443 | ||||||
|
| |||||
TOTAL COMMON STOCKS (Cost $61,209,952) | 57,908,081 | |||||
|
| |||||
PREFERRED STOCKS — 1.2% | ||||||
Brazil — 1.2% | ||||||
Itau Unibanco Holding SA | 112,090 | 769,346 | ||||
|
| |||||
TOTAL PREFERRED STOCKS (Cost $1,186,067) | 769,346 | |||||
|
| |||||
EXCHANGE TRADED FUNDS — 3.7% | ||||||
iShares MSCI Emerging | ||||||
Market Index Fund | 66,651 | 2,324,120 | ||||
|
| |||||
TOTAL EXCHANGE TRADED FUNDS (Cost $2,376,018) | 2,324,120 | |||||
|
|
Value | ||||||
TOTAL INVESTMENTS - 97.0% | $ | 61,001,547 | ||||
OTHER ASSETS IN EXCESS OF LIABILITIES - 3.0% | 1,858,169 | |||||
|
| |||||
NET ASSETS - 100.0% | $ | 62,859,716 | ||||
|
|
(a) | Security exempt from registration under Rule 144A of the Securities Act of 1933, as amended. This security was purchased in accordance with the guidelines approved by the Fund’s Board of Trustees and may be resold, in transactions exempt from registration, to qualified institutional buyers. At October 31, 2015 this security amounted to $865,850 or 1.4% of net assets. This security has been determined by the Adviser to be a liquid security. |
* | Non-income producing. |
ADR | American Depository Receipt | |
GDR | Global Depository Receipt | |
NVDR | Non-voting Depository Receipt | |
PCL | Public Company Limited | |
PLC | Public Limited Company | |
SP ADR | Sponsored American Depository Receipt | |
SP GDR | Sponsored Global Depository Receipt |
The accompanying notes are an integral part of the financial statements.
13
DUPONT CAPITAL EMERGING MARKETS DEBT FUND
Portfolio Holdings Summary Table
October 31, 2015
(Unaudited)
The following table presents a summary by security type of the portfolio holdings of the Fund:
% of Net Assets | Value | |||||||||
SECURITY TYPE: | ||||||||||
Foreign Government Bonds and Notes | 55.9 | % | $ | 3,595,520 | ||||||
Corporate Bonds and Notes | 33.7 | 2,172,111 | ||||||||
Other Assets in Excess of Liabilities | 10.4 | 669,475 | ||||||||
|
|
|
| |||||||
NET ASSETS | 100.0 | % | $ | 6,437,106 | ||||||
|
|
|
|
Portfolio holdings are subject to change at any time.
The accompanying notes are an integral part of the financial statements.
14
DUPONT CAPITAL EMERGING MARKETS DEBT FUND
Portfolio of Investments
October 31, 2015
(Unaudited)
Par* Value | Value | |||||||
CORPORATE BONDS AND NOTES — 33.7% |
| |||||||
Austria — 0.0% | ||||||||
OGX Austria GmbH | $ | 200,000 | $ | 20 | ||||
Cayman Islands — 3.1% |
| |||||||
Evergrande Real Estate Group Ltd. | 200,000 | 202,260 | ||||||
|
| |||||||
Chile — 3.1% | ||||||||
Corp Nacional del Cobre de Chile | 200,000 | 199,489 | ||||||
|
| |||||||
Indonesia — 4.3% | ||||||||
Perusahaan Penerbit SBSN Indonesia | 250,000 | 276,875 | ||||||
|
| |||||||
Israel — 3.6% | ||||||||
Israel Electric Corp., Ltd. | 200,000 | 230,240 | ||||||
|
| |||||||
Netherlands — 4.9% | ||||||||
Majapahit Holding BV | 150,000 | 168,188 | ||||||
Petrobras Global Finance BV | 100,000 | 72,875 | ||||||
Petrobras Global Finance BV | 100,000 | 72,000 | ||||||
|
| |||||||
313,063 | ||||||||
|
| |||||||
Russia — 5.1% | ||||||||
Gazprom OAO Via Gaz Capital SA | 150,000 | 170,880 |
Par* Value | Value | |||||||
CORPORATE BONDS AND NOTES — (Continued) |
| |||||||
Russia — (Continued) | ||||||||
Russian Agricultural Bank OJSC Via RSHB Capital SA | $ | 150,000 | $ | 159,711 | ||||
|
| |||||||
330,591 | ||||||||
|
| |||||||
Turkey — 3.3% | ||||||||
Export Credit Bank of Turkey | 200,000 | 209,428 | ||||||
|
| |||||||
Ukraine — 0.9% | ||||||||
Commercial Bank Privatbank JSC Via Standard Bank | 100,000 | 60,520 | ||||||
|
| |||||||
Venezuela — 5.4% | ||||||||
Petroleos de Venezuela SA | 300,000 | 106,020 | ||||||
Petroleos de Venezuela SA | 200,000 | 70,680 | ||||||
Petroleos de Venezuela SA | 350,000 | 121,625 | ||||||
Petroleos de Venezuela SA | 150,000 | 51,300 | ||||||
|
| |||||||
349,625 | ||||||||
|
| |||||||
TOTAL CORPORATE BONDS AND NOTES | 2,172,111 | |||||||
|
|
The accompanying notes are an integral part of the financial statements.
15
DUPONT CAPITAL EMERGING MARKETS DEBT FUND
Portfolio of Investments (Continued)
October 31, 2015
(Unaudited)
Par* Value | Value | |||||||||||
FOREIGN GOVERNMENT BONDS & NOTES — 55.9% |
| |||||||||||
Brazil — 7.0% | ||||||||||||
Banco Nacional de Desenvolvimento Economico e Social | $ | 250,000 | $ | 221,250 | ||||||||
Brazil Notas do Tesouro Nacional Serie F | BRL | 75,000 | 18,406 | |||||||||
Brazil Notas do Tesouro Nacional Series F | BRL | 1,000,000 | 209,586 | |||||||||
|
| |||||||||||
449,242 | ||||||||||||
|
| |||||||||||
Colombia — 3.3% | ||||||||||||
Colombia Government International Bond | 150,000 | 214,500 | ||||||||||
|
| |||||||||||
Croatia — 3.3% | ||||||||||||
Croatia Government International Bond | 200,000 | 211,750 | ||||||||||
|
| |||||||||||
Dominican Republic — 3.3% |
| |||||||||||
Dominican Republic International Bond | 200,000 | 211,000 | ||||||||||
|
| |||||||||||
Egypt — 1.4% | ||||||||||||
Egypt Government International Bond | 100,000 | 89,600 | ||||||||||
|
|
Par* Value | Value | |||||||||||
FOREIGN GOVERNMENT BONDS & NOTES — (Continued) |
| |||||||||||
Greece — 1.3% | ||||||||||||
Hellenic Republic Government Bond | EUR | 100,000 | $ | 75,286 | ||||||||
Hellenic Republic Government Bond | EUR | 10,000 | 6,609 | |||||||||
|
| |||||||||||
81,895 | ||||||||||||
|
| |||||||||||
Hungary — 1.1% | ||||||||||||
Hungary Government International Bond | 50,000 | 68,182 | ||||||||||
|
| |||||||||||
Mexico — 7.0% | ||||||||||||
Mexican Bonos | MXN | 1,200,000 | 92,992 | |||||||||
Mexican Bonos | MXN | 2,000,000 | 166,837 | |||||||||
Mexico Government International Bond | 200,000 | 190,000 | ||||||||||
|
| |||||||||||
449,829 | ||||||||||||
|
| |||||||||||
Morocco — 3.1% | ||||||||||||
Morocco Government International Bond | 200,000 | 201,400 | ||||||||||
|
| |||||||||||
Pakistan — 1.5% | ||||||||||||
Pakistan Government International Bond | 100,000 | 94,657 | ||||||||||
|
| |||||||||||
Panama — 3.4% | ||||||||||||
Panama Government International Bond | 250,000 | 222,500 | ||||||||||
|
|
The accompanying notes are an integral part of the financial statements.
16
DUPONT CAPITAL EMERGING MARKETS DEBT FUND
Portfolio of Investments (Continued)
October 31, 2015
(Unaudited)
Par* Value | Value | |||||||
FOREIGN GOVERNMENT BONDS & NOTES — (Continued) |
| |||||||
Philippines — 4.1% | ||||||||
Philippine Government International Bond | $ | 200,000 | $ | 265,095 | ||||
|
| |||||||
Romania — 1.8% | ||||||||
Romanian Government International Bond | 50,000 | 54,375 | ||||||
Romanian Government International Bond | 50,000 | 59,173 | ||||||
|
| |||||||
113,548 | ||||||||
|
| |||||||
Serbia — 0.2% | ||||||||
Republic of Serbia | 16,306 | 16,641 | ||||||
|
| |||||||
Sri Lanka — 3.1% | ||||||||
Sri Lanka Government International Bond | 200,000 | 200,819 | ||||||
|
| |||||||
Ukraine — 8.9% | ||||||||
Ukraine Government International Bond | 250,000 | 195,000 | ||||||
Ukreximbank Via Biz Finance PLC | 250,000 | 222,720 | ||||||
Ukreximbank Via Biz Finance PLC | 210,000 | 154,392 | ||||||
|
| |||||||
572,112 | ||||||||
|
|
Par* Value | Value | |||||||
FOREIGN GOVERNMENT BONDS & NOTES — (Continued) |
| |||||||
Venezuela — 2.1% | ||||||||
Venezuela Government International Bond | $ | 300,000 | $ | 132,750 | ||||
|
| |||||||
TOTAL FOREIGN GOVERNMENT BONDS & NOTES | 3,595,520 | |||||||
|
| |||||||
TOTAL INVESTMENTS - 89.6% | 5,767,631 | |||||||
OTHER ASSETS IN EXCESS OF LIABILITIES - 10.4% | 669,475 | |||||||
|
| |||||||
NET ASSETS - 100.0% | $ | 6,437,106 | ||||||
|
|
(a) | Investments with a total aggregate value of $20 or 0.00% of net assets were in default as of October 31, 2015. |
(b) | Securities exempt from registration under Rule 144A of the Securities Act of 1933, as amended. These securities were purchased in accordance with the guidelines approved by the Fund’s Board of Trustees and may be resold, in transactions exempt from registration, to qualified institutional buyers. At October 31, 2015 these securities amounted to $2,190,821 or 34% of net assets. This security has been determined by the Adviser to be a liquid security. |
(c) | Floating or variable rate security. Rate disclosed is as of October 31, 2015. |
(d) | Multi-Step Coupon. Rate disclosed is as of October 31, 2015. |
* | Par amount denominated in USD unless otherwise noted. |
The accompanying notes are an integral part of the financial statements.
17
DUPONT CAPITAL EMERGING MARKETS DEBT FUND
Portfolio of Investments (Concluded)
October 31, 2015
(Unaudited)
Forward foreign currency contracts outstanding as of October 31, 2015 were as follows:
Currency Purchased | Currency Sold | Expiration | Counterparty | Unrealized Appreciation /(Depreciation) | ||||||||||||||
BRL 700,000 | USD | 181,399 | 11/04/15 | BRC | $ (194) | |||||||||||||
USD 199,983 | BRL | 700,000 | 11/04/15 | BRC | 18,778 | |||||||||||||
USD 126,303 | EUR | 112,709 | 12/10/15 | SSB | 2,285 | |||||||||||||
USD 226,017 | BRL | 900,000 | 02/02/16 | BRC | (75) | |||||||||||||
Net unrealized appreciation on forward foreign currency contracts: | $20,794 |
BRC | Barclays | |
BRL | Brazilian Real | |
EUR | Euro | |
MXN | Mexican Peso | |
PLC | Public Limited Company | |
SSB | State Street Bank | |
USD | United States Dollar |
The accompanying notes are an integral part of the financial statements.
18
DUPONT CAPITAL FUNDS
Statements of Assets and Liabilities
October 31, 2015
(Unaudited)
DuPont Capital Fund | DuPont Capital | |||||||||||||||
Assets | ||||||||||||||||
Investments, at value (Cost $64,772,037 and $6,337,400, respectively) | $ 61,001,547 | $5,767,631 | ||||||||||||||
Cash | 2,604,607 | 352,261 | ||||||||||||||
Foreign Currency (Cost $536,960 and $75,733, respectively) | 534,167 | 67,917 | ||||||||||||||
Forward foreign currency contracts appreciation* | — | 21,063 | ||||||||||||||
Receivable for investments sold | — | 150,534 | ||||||||||||||
Dividends and interest receivable | 197,172 | 102,792 | ||||||||||||||
Receivable from Investment Adviser | — | 12,191 | ||||||||||||||
Prepaid expenses and other assets | 88,830 | 12,882 | ||||||||||||||
Total assets | 64,426,323 | 6,487,271 | ||||||||||||||
Liabilities | ||||||||||||||||
Payable for investments purchased | 1,329,946 | 19,636 | ||||||||||||||
Payable for transfer agent fees | 70,838 | 7,557 | ||||||||||||||
Forward foreign currency contracts depreciation* | — | 269 | ||||||||||||||
Payable to Investment Adviser | 67,679 | — | ||||||||||||||
Payable for administration and accounting fees | 25,638 | 12,747 | ||||||||||||||
Payable for capital shares redeemed | 32,444 | — | ||||||||||||||
Payable for custodian fees | 13,443 | 931 | ||||||||||||||
Payable for audit fees | 11,464 | — | ||||||||||||||
Accrued expenses | 15,155 | 9,025 | ||||||||||||||
Total liabilities | 1,566,607 | 50,165 | ||||||||||||||
Net Assets | $ 62,859,716 | $6,437,106 | ||||||||||||||
Net Assets Consisted of: | ||||||||||||||||
Capital stock, $0.01 par value | $ 93,326 | $ 6,652 | ||||||||||||||
Paid-in capital | 153,479,581 | 6,654,472 | ||||||||||||||
Accumulated net investment income | 643,792 | 227,848 | ||||||||||||||
Accumulated net realized gain/(loss) from investments and foreign currency transactions | (87,551,712 | ) | 106,512 | |||||||||||||
Net unrealized appreciation/(depreciation) on investments, forward foreign currency contracts and translation of assets and liabilities denominated in foreign currency | (3,805,271 | ) | (558,378 | ) | ||||||||||||
Net Assets | $ 62,859,716 | $6,437,106 |
Class I: | ||||||||||||||||
Net asset value, offering and redemption price per share ($62,859,716 / | $6.74 | $9.68 |
* | Primary risk exposure is foreign currency contracts |
The accompanying notes are an integral part of the financial statements.
19
DUPONT CAPITAL FUNDS
Statements of Operations
For the Six Months Ended October 31, 2015
(Unaudited)
DuPont Capital Emerging Markets Fund | DuPont Capital Emerging Markets Debt Fund | |||||||||
Investment Income | ||||||||||
Dividends | $ | 2,672,805 | $ | — | ||||||
Interest | 155 | 349,715 | ||||||||
Less: foreign taxes withheld. | (309,825 | ) | — | |||||||
|
|
|
| |||||||
Total investment income | 2,363,135 | 349,715 | ||||||||
|
|
|
| |||||||
Expenses | ||||||||||
Advisory fees (Note 2) | 619,522 | 21,096 | ||||||||
Custodian fees (Note 2) | 70,902 | 8,988 | ||||||||
Administration and accounting fees | 65,198 | 35,845 | ||||||||
Printing and shareholder reporting fees | 47,826 | 1,191 | ||||||||
Transfer agent fees (Note 2) | 27,857 | 14,037 | ||||||||
Audit fees | 17,799 | 8,356 | ||||||||
Legal fees | 16,852 | 200 | ||||||||
Trustees’ and officers’ fees (Note 2) | 15,733 | 8,390 | ||||||||
Registration and filing fees | 9,222 | 2,520 | ||||||||
Other expenses | 9,673 | 1,260 | ||||||||
|
|
|
| |||||||
Total expenses | 900,584 | 101,883 | ||||||||
|
|
|
| |||||||
Less: waivers and reimbursements (Note 2) | — | (70,590 | ) | |||||||
|
|
|
| |||||||
Net expenses after waivers and reimbursements | 900,584 | 31,293 | ||||||||
|
|
|
| |||||||
Net investment income | 1,462,551 | 318,422 | ||||||||
|
|
|
| |||||||
Net realized and unrealized gain/(loss) from investments | ||||||||||
Net realized gain/(loss) from investments | (10,270,278 | ) | 87,170 | |||||||
Net realized loss from foreign currency transactions | (303,754 | ) | (5,950 | ) | ||||||
Net realized gain from forward foreign currency contracts* | — | 8,225 | ||||||||
Net change in unrealized appreciation/(depreciation) on investments | (17,201,685 | ) | (201,152 | ) | ||||||
Net change in unrealized appreciation/(depreciation) on foreign currency translations | (6,187 | ) | (9,750 | ) | ||||||
Net change in unrealized appreciation/(depreciation) on forward foreign currency contracts* | — | 30,058 | ||||||||
|
|
|
| |||||||
Net realized and unrealized loss on investments | (27,781,904 | ) | (91,399 | ) | ||||||
|
|
|
| |||||||
Net increase/(decrease) in net assets resulting from operations | $ | (26,319,353 | ) | $ | 227,023 | |||||
|
|
|
|
* | Primary risk exposure is foreign currency contracts |
The accompanying notes are an integral part of the financial statements.
20
DUPONT CAPITAL EMERGING MARKETS FUND
Statements of Changes in Net Assets
For the Six Months Ended October 31, 2015 (Unaudited) | For the Year Ended April 30, 2015 | |||||||||||||||
Increase/(decrease) in net assets from operations: | ||||||||||||||||
Net investment income | $ | 1,462,551 | $ | 7,262,875 | ||||||||||||
Net realized loss from investments and foreign currency transactions | (10,574,032 | ) | (46,817,355 | ) | ||||||||||||
Net change in unrealized appreciation/(depreciation) on investments and foreign currency translations | (17,207,872 | ) | 11,262,468 | |||||||||||||
|
|
|
| |||||||||||||
Net decrease in net assets resulting from operations | (26,319,353 | ) | (28,292,012 | ) | ||||||||||||
|
|
|
| |||||||||||||
Less Dividends and Distributions to Shareholders from: | ||||||||||||||||
Net investment income: | ||||||||||||||||
Class I | — | (5,917,672 | ) | |||||||||||||
|
|
|
| |||||||||||||
Net decrease in net assets from dividends and distributions to shareholders | — | (5,917,672 | ) | |||||||||||||
|
|
|
| |||||||||||||
Decrease in Net Assets Derived from Capital Share Transactions (Note 4) | (77,814,667 | ) | (291,403,521 | ) | ||||||||||||
|
|
|
| |||||||||||||
Total decrease in net assets | (104,134,020 | ) | (325,613,205 | ) | ||||||||||||
|
|
|
| |||||||||||||
Net assets | ||||||||||||||||
Beginning of period | 166,993,736 | 492,606,941 | ||||||||||||||
|
|
|
| |||||||||||||
End of period | $ | 62,859,716 | $ | 166,993,736 | ||||||||||||
|
|
|
| |||||||||||||
Accumulated net investment income/(loss), end of period | $ | 643,792 | $ | (818,759 | ) | |||||||||||
|
|
|
|
The accompanying notes are an integral part of the financial statements.
21
DUPONT CAPITAL EMERGING MARKETS DEBT FUND
Statements of Changes in Net Assets
For the Six Months Ended October 31, 2015 (Unaudited) | For the Year Ended to April 30, 2015 | |||||||||
Increase/(decrease) in net assets from operations: | ||||||||||
Net investment income | $ | 318,422 | $ | 498,428 | ||||||
Net realized gain from investments and foreign currency transactions | 89,445 | 207,399 | ||||||||
Net change in unrealized appreciation/(depreciation) on investments, forward foreign currency contracts and foreign currency translations | (180,844 | ) | (516,653 | ) | ||||||
|
|
|
| |||||||
Net increase in net assets resulting from operations | 227,023 | 189,174 | ||||||||
|
|
|
| |||||||
Less Dividends and Distributions to Shareholders from: | ||||||||||
Net investment income: | ||||||||||
Class I | (322,527 | ) | (314,756 | ) | ||||||
Net realized capital gains: | ||||||||||
Class I | — | (215,182 | ) | |||||||
|
|
|
| |||||||
Net decrease in net assets from dividends and distributions to shareholders | (322,527 | ) | (529,938 | ) | ||||||
|
|
|
| |||||||
Increase/(Decrease) in Net Assets Derived from Capital Share Transactions (Note 4) | (893,990 | ) | 363,816 | |||||||
|
|
|
| |||||||
Total increase/(decrease) in net assets | (989,494 | ) | 23,052 | |||||||
|
|
|
| |||||||
Net assets | ||||||||||
Beginning of period | 7,426,600 | 7,403,548 | ||||||||
|
|
|
| |||||||
End of period | $ | 6,437,106 | $ | 7,426,600 | ||||||
|
|
|
| |||||||
Accumulated net investment income, end of period | $ | 227,848 | $ | 231,953 | ||||||
|
|
|
|
The accompanying notes are an integral part of the financial statements.
22
DUPONT CAPITAL EMERGING MARKETS FUND
Financial Highlights
Contained below is per share operating performance data for Class I Shares outstanding, total investment return, ratios to average net assets and other supplemental data for the respective period. 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). This information has been derived from information provided in the financial statements and should be read in conjunction with the financial statements and the notes thereto.
For the Six Months Ended October 31, 2015 (Unaudited) | For the Year Ended April 30, 2015 | For the Year Ended April 30, 2014 | For the Year Ended April 30, 2013 | For the Year Ended April 30, 2012 | For the Period December 6, 2010* to April 30, 2011 | |||||||||||||||||||||||||
Per Share Operating Performance | ||||||||||||||||||||||||||||||
Net asset value, beginning of period | $ | 8.28 | $ | 8.79 | $ | 9.23 | $ | 9.26 | $ | 10.39 | $ | 10.00 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Net investment income | 0.09 | (1) | 0.17 | (1) | 0.11 | (1) | 0.11 | (1) | 0.12 | 0.01 | ||||||||||||||||||||
Net realized and unrealized gain/(loss) on investments | (1.63 | ) | (0.53 | ) | (0.44 | ) | (0.05 | ) | (1.19 | ) | 0.38 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Net increase/(decrease) in net assets resulting from operations | (1.54 | ) | (0.36 | ) | (0.33 | ) | 0.06 | (1.07 | ) | 0.39 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Dividends and distributions to shareholders from: | ||||||||||||||||||||||||||||||
Net investment income | — | (0.15 | ) | (0.11 | ) | (0.09 | ) | (0.06 | ) | — | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Net asset value, end of period | $ | 6.74 | $ | 8.28 | $ | 8.79 | $ | 9.23 | $ | 9.26 | $ | 10.39 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Total investment return(2) | (18.40 | )% | (3.97 | )% | (3.61 | )% | 0.59 | % | (10.19 | )% | 3.90 | % | ||||||||||||||||||
Ratio/Supplemental Data | ||||||||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $ | 62,860 | $ | 166,994 | $ | 492,607 | $ | 467,901 | $ | 270,324 | $ | 96,162 | ||||||||||||||||||
Ratio of expenses to average net assets | 1.53 | %(3) | 1.35 | % | 1.31 | % | 1.32 | % | 1.41 | % | 1.56 | %(3) | ||||||||||||||||||
Ratio of expenses to average net assets without waivers and expense reimbursements, if any | 1.53 | %(3) | 1.35 | % | 1.31 | % | 1.32 | % | 1.41 | % | 1.62 | %(3)(4) | ||||||||||||||||||
Ratio of net investment income to average net assets | 2.48 | %(3) | 1.95 | % | 1.20 | % | 1.21 | % | 1.30 | % | 0.29 | %(3) | ||||||||||||||||||
Portfolio turnover rate | 31.4 | %(5) | 86.4 | % | 69.9 | % | 118.5 | % | 148.6 | %(6) | 60.0 | %(5) |
* | Commencement of operations. |
(1) | The selected per share data was calculated using the average shares outstanding method for the period. |
(2) | Total investment return is calculated assuming a purchase of shares on the first day and a sale of shares on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total returns for periods less than one year are not annualized. |
(3) | Annualized. |
(4) | During the period, certain fees were waived and/or reimbursed. If such fee waivers and/or reimbursements had not occurred, the ratios would have been as indicated (See Note 2). |
(5) | Not annualized. |
(6) | Portfolio turnover rate excludes securities received from processing two subscriptions-in-kind. |
The accompanying notes are an integral part of the financial statements.
23
DUPONT CAPITAL EMERGING MARKETS DEBT FUND
Financial Highlights
Contained below is per share operating performance data for Class I Shares outstanding, total investment return, ratios to average net assets and other supplemental data for the respective period. 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). This information has been derived from information provided in the financial statements and should be read in conjunction with the financial statements and the notes thereto.
Class I | |||||||||||||||
For the Six Months Ended October 31, 2015 (Unaudited) | For the Year Ended April 30, 2015 | For the Period Ended September 27, 2013* to April 30, 2014 | |||||||||||||
Per Share Operating Performance | |||||||||||||||
Net asset value, beginning of period | $ 9.77 | $10.26 | $10.00 | ||||||||||||
|
|
|
|
|
| ||||||||||
Net investment income(1) | 0.43 | 0.67 | 0.40 | ||||||||||||
Net realized and unrealized gain/(loss) on investments | (0.07) | (0.43) | 0.26 | ||||||||||||
|
|
|
|
|
| ||||||||||
Net increase in net assets resulting from operations | 0.36 | 0.24 | 0.66 | ||||||||||||
|
|
|
|
|
| ||||||||||
Dividends and distributions to shareholders from: | |||||||||||||||
Net investment income | (0.45) | (0.44) | (0.40) | ||||||||||||
Net realized capital gains | — | (0.29) | — | ||||||||||||
|
|
|
|
|
| ||||||||||
Total dividends and distributions to shareholders | (0.45) | (0.73) | (0.40) | ||||||||||||
|
|
|
|
|
| ||||||||||
Net asset value, end of period | $ 9.68 | $ 9.77 | $10.26 | ||||||||||||
|
|
|
|
|
| ||||||||||
Total investment return(2) | 3.66% | 2.41% | 6.72% | ||||||||||||
Ratio/Supplemental Data | |||||||||||||||
Net assets, end of period (000’s omitted) | $6,437 | $7,427 | $7,404 | ||||||||||||
Ratio of expenses to average net assets | 0.89 | %(3) | 0.89 | % | 0.89 | %(3) | |||||||||
Ratio of expenses to average net assets without waivers and expense reimbursements(4) | 2.90 | %(3) | 2.25 | % | 4.42 | %(3) | |||||||||
Ratio of net investment income to average net assets | 9.05 | %(3) | 6.70 | % | 6.83 | %(3) | |||||||||
Portfolio turnover rate | 8.6 | %(5) | 23.7 | % | 21.6 | %(5) |
* | Commencement of operations. |
(1) | The selected per share data was calculated using the average shares outstanding method for the period. |
(2) | Total investment return is calculated assuming a purchase of shares on the first day and a sale of shares on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total returns for periods less than one year are not annualized. |
(3) | Annualized. |
(4) | During the period, certain fees were waived and/or reimbursed. If such fee waivers and/or reimbursements had not occurred, the ratios would have been as indicated (See Note 2). |
(5) | Not annualized. |
The accompanying notes are an integral part of the financial statements.
24
DUPONT CAPITAL FUNDS
Notes to Financial Statements
October 31, 2015
(Unaudited)
1. Organization and Significant Accounting Policies
The DuPont Capital Emerging Markets Fund and the DuPont Capital Emerging Markets Debt Fund (each a “Fund” and together the “Funds”) are diversified, open-end management investment companies registered under the Investment Company Act of 1940, as amended (the “1940 Act”). The DuPont Capital Emerging Markets Fund commenced operations on December 6, 2010 and the DuPont Capital Emerging Markets Debt Fund commenced operations on September 27, 2013. The Funds are each a separate series of FundVantage Trust (the “Trust”) which was organized as a Delaware statutory trust on August 28, 2006. The Trust is a “series trust” authorized to issue an unlimited number of separate series or classes of shares of beneficial interest. Each series is treated as a separate entity for certain matters under the 1940 Act, and for other purposes, and a shareholder of one series is not deemed to be a shareholder of any other series. The Funds are each authorized to issue and offer Class I Shares.
The Funds are investment companies and follow accounting and reporting guidance in the Financial Accounting Standards Board Accounting Standards Codification Topic 946.
Portfolio Valuation — Each Fund’s net asset value (“NAV”) is calculated once daily at the close of regular trading hours on the New York Stock Exchange (“NYSE”) (typically 4:00 p.m. Eastern time) on each day the NYSE is open. Securities held by each Fund are valued using the closing price or the last sale price on a national securities exchange or the National Association of Securities Dealers Automatic Quotation System (“NASDAQ”) market system where they are primarily traded. Equity securities listed on any national or foreign exchange market system will be valued at the last sale price. Equity securities traded in the over-the-counter market are valued at their closing price. If there were no transactions on that day, securities traded principally on an exchange will be valued at the mean of the last bid and ask prices prior to the market close. Prices for equity securities normally are supplied by an independent pricing service approved by the Trust’s Board of Trustees (“Board of Trustees”). Fixed income securities are valued based on market quotations, which are furnished by an independent pricing service approved by the Board of Trustees. Fixed income securities having remaining maturities of 60 days or less are generally valued at amortized cost, provided such amounts approximates market value. Debt securities are valued on the basis of broker quotations or valuations provided by a pricing service, which utilizes information with respect to recent sales, market transactions in comparable securities, quotations from dealers, and various relationships between securities in determining value. Due to continued volatility in the current market, valuations developed through pricing techniques may materially vary from the actual amounts realized upon sale of the securities. Any assets held by the Funds that are denominated in foreign currencies are valued daily in U.S. dollars at the foreign currency exchange rates that are prevailing at the time that the Funds determine the daily NAV per share. Foreign securities may trade on weekends or other days when the Funds do not calculate NAV. As a result, the market value of these investments may change on days when you cannot buy or sell shares of the Funds. Foreign securities are valued based on prices from the primary market in which they are traded and are translated from the local currency into U.S. dollars using current exchange rates. Forward exchange contracts are valued at the forward
25
DUPONT CAPITAL FUNDS
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
rate. Investments in any mutual fund are valued at their respective NAVs as determined by those mutual funds each business day (which may use fair value pricing as disclosed in their prospectuses). Securities that do not have a readily available current market value are valued in accordance with the procedure adopted by the Trust’s Board of Trustees. The Board of Trustees has adopted methods for valuing securities and other assets in circumstances where market quotes are not readily available and has delegated to the Adviser the responsibility for applying the valuation methods. Relying on prices supplied by pricing services or dealers or using fair valuation may result in values that are higher or lower than the values used by other investment companies and investors to price the same investments.
Fair Value Measurements — The inputs and valuations techniques used to measure fair value of each Fund’s investments are summarized into three levels as described in the hierarchy below:
● Level 1 — | quoted prices in active markets for identical securities; | |
● Level 2 — | other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.); and | |
● Level 3 — | significant unobservable inputs (including each Fund’s own assumptions in determining the fair value of investments). |
The fair value of each Fund’s bonds is generally based on quotes received from brokers of independent pricing services. Bonds with quotes that are based on actual trades with a sufficient level of activity on or near the measurement date are classified as Level 2 assets.
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. Transfers in and out are recognized at the value at the end of the period.
Significant events (such as movement in the U.S. securities market, or other regional and local developments) may occur between the time that foreign markets close (where the security is principally traded) and the time that each Fund calculates its NAV (generally, the close of the NYSE) that may impact the value of securities traded in these foreign markets. As a result, each Fund fair values foreign securities using an independent pricing service which considers the correlation of the trading patterns of the foreign security to the intraday trading in the U.S. markets for investments such as American Depositary Receipts, financial futures, exchange traded funds and certain indexes as well as prices for similar securities. Such fair valuations are categorized as Level 2 in the hierarchy.
26
DUPONT CAPITAL FUNDS
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
The following is a summary of the inputs used, as of October 31, 2015, in valuing each Fund’s investments carried at fair value:
DuPont Capital Emerging Markets Fund | ||||||||||||||
Total Value at 10/31/15 | Level 1 Quoted Prices | Level 2 Other Significant Observable Inputs | Level 3 | |||||||||||
Common Stocks | ||||||||||||||
Brazil | $ | 3,802,562 | $ | 3,802,562 | $ | — | $ — | |||||||
Chile | 655,220 | 655,220 | — | — | ||||||||||
China | 12,673,000 | 1,012,433 | 11,660,567 | — | ||||||||||
Czech Republic | 943,967 | — | 943,967 | — | ||||||||||
Hungary | 995,396 | — | 995,396 | — | ||||||||||
India | 4,073,695 | 1,641,564 | 2,432,131 | — | ||||||||||
Indonesia | 1,690,081 | — | 1,690,081 | — | ||||||||||
Malaysia | 1,060,362 | — | 1,060,362 | — | ||||||||||
Mexico | 2,025,633 | 2,025,633 | — | — | ||||||||||
Pakistan | 769,359 | — | 769,359 | — | ||||||||||
Panama | 183,691 | 183,691 | — | — | ||||||||||
Peru | 432,540 | 432,540 | — | — | ||||||||||
Poland | 1,410,264 | — | 1,410,264 | — | ||||||||||
Russia | 3,054,892 | 1,647,531 | 1,407,361 | — | ||||||||||
South Africa | 4,512,247 | 1,187,179 | 3,325,068 | — | ||||||||||
South Korea | 10,016,976 | 467,510 | 9,549,466 | — | ||||||||||
Taiwan | 6,472,782 | 1,183,073 | 5,289,709 | — | ||||||||||
Thailand | 1,706,971 | — | 1,706,971 | — | ||||||||||
Turkey | 1,428,443 | — | 1,428,443 | — | ||||||||||
Preferred Stocks | 769,346 | 769,346 | — | — | ||||||||||
Exchange Traded Funds | 2,324,120 | 2,324,120 | — | — | ||||||||||
|
|
|
|
|
|
| ||||||||
Total Investments | $ | 61,001,547 | $ | 17,332,402 | $ | 43,669,145 | $ — | |||||||
|
|
|
|
|
|
|
27
DUPONT CAPITAL FUNDS
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
DuPont Capital Emerging Markets Debt Fund | ||||||||||||||
Total Value at 10/31/15 | Level 1 Quoted Price | Level 2 Other Significant Observable Inputs | Level 3 Significant | |||||||||||
Corporate Bonds and Notes | $ | 2,172,111 | $ | — | $ | 2,172,111 | $ — | |||||||
Foreign Government Bonds & Notes | 3,595,520 | — | 3,595,520 | — | ||||||||||
Derivatives: | ||||||||||||||
Foreign Currency Contracts | ||||||||||||||
Forward Foreign Currency Contracts | 21,063 | — | 21,063 | — | ||||||||||
|
|
|
|
|
|
| ||||||||
Total Assets | $ | 5,788,694 | $ | — | $ | 5,788,694 | $ — | |||||||
|
|
|
|
|
|
| ||||||||
Total Value at 10/31/15 | Level 1 Quoted Price | Level 2 Other Significant Observable Inputs | Level 3 Significant | |||||||||||
Derivatives: | ||||||||||||||
Foreign Currency Contracts | ||||||||||||||
Forward Foreign Currency Contracts | $ | (269 | ) | $ | — | $ | (269 | ) | $ — | |||||
|
|
|
|
|
|
| ||||||||
Total Liabilities | $ | (269 | ) | $ | — | $ | (269 | ) | $ — | |||||
|
|
|
|
|
|
|
At the end of each quarter, management evaluates the classification of Levels 1, 2 and 3 assets and liabilities. Various factors are considered, such as changes in liquidity from the prior reporting period; whether or not a broker is willing to execute at the quoted price; the depth and consistency of prices from third party pricing services; and the existence of contemporaneous, observable trades in the market. Additionally, management evaluates the classification of Level 1 and Level 2 assets and liabilities on a quarterly basis for changes in listings or delistings on national exchanges.
Due to the inherent uncertainty of determining the fair value of investments that do not have readily available market value, the fair value of each Fund’s investments may fluctuate from period to period. Additionally, the fair value of investments may differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially from the values each Fund may ultimately realize. Further, such investments may be subject to legal and other restrictions on resale or otherwise less liquid than publicly traded securities.
28
DUPONT CAPITAL FUNDS
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
For fair valuations using significant unobservable inputs, U.S. generally accepted accounting principles (“U.S. GAAP”) require each Fund to present a reconciliation of the beginning to ending balances for reported market values that presents changes attributable to total realized and unrealized gains or losses, purchase and sales, and transfers in and out of Level 3 during the period. Transfers in and out between Levels are based on values at the end of the period. U.S. GAAP also requires each Fund to disclose amounts and reasons for all transfers in and out of Level 1 and Level 2 fair value measurements. A reconciliation of Level 3 investments is presented only when each Fund had an amount of Level 3 investments at the end of the reporting period that was meaningful in relation to its net assets. The amounts and reasons for all transfers in and out of each Level within the three-tier hierarchy are disclosed when each Fund had an amount of total transfers during the reporting period that was meaningful in relation to its net assets as of the end of the reporting period.
For the six months ended October 31, 2015, there were transfers from Level 1 to Level 2 of $1,384,881 due to foreign fair value adjustments in the DuPont Capital Emerging Markets Fund. The DuPont Capital Emerging Markets Debt Fund had no transfers between Levels 1, 2 and 3.
Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes at the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates and those differences could be material.
Investment Transactions, Investment Income and Expenses — Investment transactions are recorded on trade date for financial statement preparation purposes. Realized gains and losses on investments sold are recorded on the identified cost basis. Interest income is recorded on the accrual basis. Accretion of discounts and amortization of premiums are recorded on a daily basis using the effective yield method except for short term securities, which records discounts and premiums on a straight-line basis. Dividends are recorded on the ex-dividend date. General expenses of the Trust are generally allocated to each Fund in proportion to its relative daily net assets. Expenses directly attributable to a particular Fund in the Trust are charged directly to that Fund.
Foreign Currency Translation — Assets and liabilities initially expressed in non-U.S. currencies are translated into U.S. dollars based on the applicable exchange rates at the date of the last business day of the financial statement period. Purchases and sales of securities, interest income, dividends, variation margin received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rates in effect on the transaction date.
Each Fund does not separately report the effect of changes in foreign exchange rates from changes in market prices of securities held. Such changes are included with the net realized gain or loss and change in unrealized appreciation or depreciation on investment securities in the Statement of Operations.
29
DUPONT CAPITAL FUNDS
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
Other foreign currency transactions resulting in realized and unrealized gain or loss are reported separately as net realized gain or loss and change in unrealized appreciation or depreciation on foreign currencies in the Statement of Operations.
Dividends and Distributions to Shareholders — Dividends from net investment income, if any, are declared and paid at least annually to shareholders of the DuPont Capital Emerging Markets Fund and dividends from net investment income are declared daily and paid monthly to shareholders of the DuPont Capital Emerging Markets Debt Fund. Distributions from net realized capital gains, if any, will be declared and paid at least annually to shareholders and recorded on ex-date for both Funds. Income dividends and capital gain distributions are determined in accordance with U.S. federal income tax regulations, which may differ from U.S. GAAP. These differences include the treatment of non-taxable dividends, expiring capital loss carryforwards and losses deferred due to wash sales and excise tax regulations. Permanent book and tax basis differences relating to shareholder distributions will result in reclassifications within the components of net assets.
U.S. Tax Status — No provision is made for U.S. income taxes as it is each Fund’s intention to continue to qualify for and elect the tax treatment applicable to regulated investment companies under Subchapter M of the Internal Revenue Code of 1986, as amended, and make the requisite distributions to its shareholders which will be sufficient to relieve it from U.S. income and excise taxes.
Other — In the normal course of business, each Fund may enter into contracts that provide general indemnifications. Each Fund’s maximum exposure under these arrangements is dependent on claims that may be made against each Fund in the future, and, therefore, cannot be estimated; however, based on experience, the risk of material loss for such claims is considered remote.
Forward Foreign Currency Contracts — A forward foreign currency contract (“Forward Contract”) is a commitment to buy or sell a specific amount of a foreign currency at a negotiated price on a specified future date. Forward Contracts can help a fund manage the risk of changes in currency exchange rates. These contracts are marked-to-market daily at the applicable forward currency translation rates. A fund records realized gains or losses at the time the Forward Contract is closed. A Forward Contract is extinguished through a closing transaction or upon delivery of the currency or entering an offsetting contract. The fund’s maximum risk of loss from counterparty credit risk related to Forward Contracts is the fair value of the contract.
30
DUPONT CAPITAL FUNDS
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
For the six months ended October 31, 2015, the DuPont Capital Emerging Markets Debt Fund’s average monthly volume of forward foreign currency contracts was as follows:
Forward Foreign Currency Contracts - Payable (Value At Trade Date) | Forward Foreign Currency Contracts - Receivable (Value At Trade Date) | |
$(302,175) | $302,175 |
Currency Risk — Each Fund invests in securities of foreign issuers, including American Depositary Receipts. These markets are subject to special risks associated with foreign investments not typically associated with investing in U.S. markets. Because the foreign securities in which each Fund may invest generally trade in currencies other than the U.S. dollar, changes in currency exchange rates will affect each Fund’s NAV, the value of dividends and interest earned and gains and losses realized on the sale of securities. Because the NAV for each Fund is determined on the basis of U.S. dollars, each Fund may lose money by investing in a foreign security if the local currency of a foreign market depreciates against the U.S. dollar, even if the local currency value of each Fund’s holdings goes up. Generally, a strong U.S. dollar relative to these other currencies will adversely affect the value of each Fund’s holdings in foreign securities.
Foreign Securities Market Risk — Securities of many non-U.S. companies may be less liquid and their prices more volatile than securities of comparable U.S. companies. Securities of companies traded in many countries outside the U.S., particularly emerging markets countries, may be subject to further risks due to the inexperience of local investment professionals and financial institutions, the possibility of permanent or temporary termination of trading and greater spreads between bid and asked prices of securities. In addition, non-U.S. stock exchanges and investment professionals are subject to less governmental regulation, and commissions may be higher than in the United States. Also, there may be delays in the settlement of non-U.S. stock exchange transactions.
Emerging Markets Risk — The DuPont Capital Emerging Markets Fund and the DuPont Capital Emerging Markets Debt Fund invest in emerging market instruments which are subject to certain credit and market risks. The securities and currency markets of emerging market countries are generally smaller, less developed, less liquid and more volatile than the securities and currency markets of the United States and other developed markets. Disclosure and regulatory standards in many respects are less stringent than in other developed markets. There also may be a lower level of monitoring and regulation of securities markets in emerging market countries and the activities of investors in such markets and enforcement of existing regulations may be extremely limited. Political and economic structures in many of these countries may be in their infancy and developing rapidly, and such countries may lack the social, political and economic stability characteristics of more developed countries.
31
DUPONT CAPITAL FUNDS
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
Debt Investment Risk — Debt investments are affected primarily by the financial condition of the companies or other entities that have issued them and by changes in interest rates. There is a risk that an issuer of a Fund’s debt investments may not be able to meet its financial obligations (e.g., may not be able to make principal and/or interest payments when they are due or otherwise default on other financial terms) and/or go bankrupt. Securities such as high-yield/high-risk bonds, e.g., bonds with low credit ratings by Moody’s (Ba or lower) or Standard & Poor’s (BB and lower) or if unrated are of comparable quality as determined by the manager, are especially subject to credit risk during periods of economic uncertainty or during economic downturns and are more likely to default on their interest and/or principal payments than higher rated securities. Debt investments may be affected by changes in interest rates. Debt investments with longer durations tend to be more sensitive to changes in interest rates, making them more volatile than debt investments with shorter durations or floating or adjustable interest rates. The value of debt investments may fall when interest rates rise.
2. Transactions with Affiliates and Related Parties
DuPont Capital Management Corporation (“DuPont Capital” or the “Adviser”) serves as investment adviser to each Fund pursuant to an investment advisory agreement with the Trust. For its services, the Adviser is paid a monthly fee at the annual rate of 1.05% of the DuPont Capital Emerging Markets Fund’s average daily net assets; and 0.60% of the DuPont Capital Emerging Markets Debt Fund’s average daily net assets. The Adviser has contractually agreed to reduce its investment advisory fee and/or reimburse certain expenses of each Fund to the extent necessary to ensure that the Funds’ total operating expenses, excluding taxes, “Acquired Fund” fees and expenses, interest, extraordinary items, and brokerage commissions do not exceed 1.60% and 0.89% (on an annual basis) of the DuPont Capital Emerging Markets Fund and DuPont Capital Emerging Markets Debt Fund’s average daily net assets (the “Expense Limitation”), respectively. The Expense Limitations will remain in place until August 31, 2016, unless the Board of Trustees of FundVantage Trust (the “Trust”) approves its earlier termination. The Adviser is entitled to recover, subject to approval by the Board of Trustees, such amounts reduced or reimbursed for a period of up to three (3) years from the year in which the Adviser reduced its compensation and/or assumed expenses for each Funds. No recoupment will occur unless each Funds expenses are below the Expense Limitation.
For the six months ended October 31, 2015, the Adviser earned advisory fees of $619,522 and $21,096 for the DuPont Capital Emerging Markets Fund and DuPont Capital Emerging Markets Debt Fund, respectively. For the six months ended October 31, 2015, the Adviser waived fees and reimbursed expenses of $70,590 for the DuPont Capital Emerging Markets Debt Fund.
32
DUPONT CAPITAL FUNDS
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
As of October 31, 2015, the amount of potential recoupment by the Adviser was as follows:
Expiration | Expiration | Expiration | |||||||||||||
DuPont Capital Emerging Markets Debt Fund |
$ |
123,234 |
| $ | 101,163 | $ | 70,590 |
BNY Mellon Investment Servicing (US) Inc. (“BNY Mellon”) serves as administrator and transfer agent for the Funds. For providing administrative and accounting services, BNY Mellon is entitled to receive a monthly fee equal to an annualized percentage rate of each Funds’ average daily net assets and is subject to certain minimum monthly fees. For providing transfer agent services, BNY Mellon is entitled to receive a monthly fee, subject to certain minimum, and out of pocket expenses.
The Bank of New York Mellon (the “Custodian”) provides certain custodial services to the Funds. The Custodian is entitled to receive a monthly fee, subject to certain minimum, and out of pocket expenses.
BNY Mellon and the Custodian have the ability to recover such amounts previously waived if each Fund terminates its agreements with BNY Mellon or the Custodian within three years of signing the agreements.
Foreside Funds Distributors LLC (the “Underwriter”) provides principal underwriting services to the Funds pursuant to an underwriting agreement between the Trust and the Underwriter.
The Trustees of the Trust who are not officers or employees of an investment adviser, sub-adviser or other service provider to the Trust receive compensation in the form of an annual retainer and per meeting fees for their services as a Trustee. The remuneration paid to the Trustees by the Funds during the six months ended October 31, 2015 was $6,566. Certain employees of BNY Mellon serve as Officers of the Trust. They are not compensated by the Funds or the Trust.
3. Investment in Securities
For the six months ended October 31, 2015, aggregate purchases and sales of investment securities (excluding U.S. Government and agency short-term investments and other short-term investments) of the Funds were as follows:
Purchases | Sales | |||||||
DuPont Capital Emerging Markets Fund. | $ | 35,860,772 | $ | 110,731,066 | ||||
DuPont Capital Emerging Markets Debt Fund | 558,422 | 1,894,075 |
33
DUPONT CAPITAL FUNDS
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
4. Capital Share Transactions
For the six months ended October 31, 2015 and the year ended April 30, 2015, transactions in capital shares (authorized shares unlimited) were as follows:
DuPont Capital Emerging Markets Fund | ||||||||||||||||
For the Six Months Ended October 31, 2015 (Unaudited) | For the Year Ended April 30, 2015 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Class I | ||||||||||||||||
Sales | 471,575 | $ 3,252,108 | 1,808,289 | $ 15,541,131 | ||||||||||||
Reinvestments | — | — | 711,136 | 5,475,752 | ||||||||||||
Redemptions | (11,302,328 | ) | (81,066,775 | ) | (38,366,720 | ) | (312,420,404 | ) | ||||||||
Net decrease | (10,830,753 | ) | $(77,814,667 | ) | (35,847,295 | ) | $(291,403,521 | ) |
* | There is a 2.00% redemption fee that may be charged on the shares redeemed which have been held for 60 days or less. The redemption fees are retained by each Fund for the benefit of the remaining shareholders and recorded as paid-in-capital. |
DuPont Capital Emerging Markets Debt Fund | ||||||||||||||||
For the Six Months Ended October 31, 2015 (Unaudited) | For the Year Ended April 30, 2015 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Class I | ||||||||||||||||
Sales | — | $ — | 31,250 | $ 291,254 | ||||||||||||
Reinvestments | 24,434 | 225,768 | 53,366 | 529,936 | ||||||||||||
Redemptions | (119,102 | ) | (1,119,758 | ) | (46,484 | ) | (457,374 | ) | ||||||||
Net increase/(decrease) | (94,668 | ) | $ (893,990 | ) | 38,132 | $ 363,816 |
As of October 31, 2015, the following Funds had shareholders that held 10% or more of the outstanding shares of the Funds:
DuPont Capital Emerging Markets Fund (Unaffiliated Shareholders) | 90 | % | ||||
DuPont Capital Emerging Markets Debt Fund (Unaffiliated Shareholder) | 100 | % |
34
DUPONT CAPITAL FUNDS
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
5. Federal Tax Information
The Funds have followed the authoritative guidance on accounting for and disclosure of uncertainty in tax positions, which requires the Funds to determine whether a tax position is more likely than not to be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. Each Fund has determined that there was no effect on the financial statements from following this authoritative guidance. In the normal course of business, the Funds are subject to examination by federal, state and local jurisdictions, where applicable, for tax years for which applicable statutes of limitations have not expired.
For the year ended April 30, 2015, the tax character of distributions paid by the DuPont Capital Emerging Markets Fund and DuPont Capital Emerging Markets Debt Fund were $5,917,671 and $529,938 of ordinary income dividends, respectively. For the year ended April 30, 2014, the tax character of distributions paid by the DuPont Capital Emerging Markets Fund and DuPont Capital Emerging Markets Debt Fund were $5,372,890 and $286,696 of ordinary income dividends, respectively. Distributions from net investment income and short-term capital gains are treated as ordinary income for federal income tax purposes.
As of April 30, 2015, the components of distributable earnings on a tax basis were as follows:
Capital Loss Carryforward | Undistributed Ordinary Income | Undistributed Long-Term Gain | Unrealized Appreciation/ (Depreciation) | Qualified Late-Year Losses | ||||||||||||
DuPont Capital Emerging Markets Fund | $ | (33,705,006 | ) | $ 18,145 | $ — | $9,166,754 | $ | (39,873,731 | ) | |||||||
DuPont Capital Emerging Markets Debt Fund | $ | — | $222,744 | $17,068 | $ (368,326 | ) | $ | — |
The differences between the book and tax basis components of distributable earnings relate primarily to the timing and recognition of income and gains for federal income tax purposes. Foreign currency and short-term capital gains are reported as ordinary income for federal income tax purposes.
At October 31, 2015, the federal tax cost, aggregate gross unrealized appreciation/(depreciation) of securities held by the Funds were as follows:
Federal Tax Cost | Unrealized Appreciation | Unrealized Depreciation | Net Unrealized Depreciation | |||||||||||||
DuPont Capital Emerging Markets Fund | $64,772,037 | $4,170,175 | $ | (7,940,665 | ) | $(3,770,490 | ) | |||||||||
DuPont Capital Emerging Markets Debt Fund | 6,337,400 | 282,806 | (852,575 | ) | (569,769 | ) |
35
DUPONT CAPITAL FUNDS
Notes to Financial Statements (Concluded)
October 31, 2015
(Unaudited)
Pursuant to federal income tax rules applicable to regulated investment companies, the Fund may elect to treat certain capital losses between November 1 and April 30 and late year ordinary losses ((i) ordinary losses between January 1 and April 30, and (ii) specified ordinary and currency losses between November 1 and April 30) as occurring on the first day of the following tax year. For the year ended April 30, 2015, any amount of losses elected within the tax return will not be recognized for federal income tax purposes until May 1, 2015. For the year ended April 30, 2015, the DuPont Capital Emerging Markets Fund had late-year ordinary loss deferrals of $836,903, long-term loss deferrals of $29,348,768 and short-term loss deferrals of $9,688,060. The DuPont Capital Emerging Markets Debt Fund had no loss deferrals.
Accumulated capital losses represent net capital loss carryforwards as of April 30, 2015 that may be available to offset future realized capital gains and thereby reduce future capital gains distributions. As of April 30, 2015, the DuPont Capital Emerging Markets Fund had capital loss carryforwards of $33,705,006, of which $25,353,326 are long-term losses and $8,351,680 are short-term losses and have an unlimited period of capital loss carryforward. As of April 30, 2015, the DuPont Capital Emerging Markets Debt Fund had no capital loss carryforwards.
6. Subsequent Events
Management has evaluated the impact of all subsequent events on each Fund through the date the financial statements were issued and has determined that there were no subsequent events requiring recognition or disclosure in the financial statements.
36
DUPONT CAPITAL FUNDS
Other Information
(Unaudited)
Proxy Voting
Policies and procedures that the Funds use to determine how to vote proxies relating to portfolio securities as well as information regarding how the Funds voted proxies relating to portfolio securities for the most recent 12-month period ended June 30 are available without charge, upon request, by calling (888) 447-0014 and on the Securities and Exchange Commission’s (“SEC”) website at http:// www.sec.gov.
Quarterly Portfolio Schedules
The Trust files its complete schedule of portfolio holdings with the SEC for the first and third fiscal quarters of each fiscal year (quarters ended July 31 and January 31) on Form N-Q. The Trust’s Forms N-Q are available on the SEC’s website at http://www.sec.gov and may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. Information on the operation of the SEC’s Public Reference Room may be obtained by calling 1-800-SEC-0330.
Approval of Advisory Agreement
At an in-person meeting held on June 23-24, 2015 (the “Meeting”), the Board of Trustees (“Board” or “Trustees”) of FundVantage Trust (“Trust”), including a majority of the Trustees who are not “interested persons” as defined in the Investment Company Act of 1940, as amended (“1940 Act”) (the “Independent Trustees”), unanimously approved the continuation of the advisory agreement (the “Agreement”) between DuPont Capital Management Corporation (the “Adviser” or “DuPont”) and the Trust on behalf of the DuPont Capital Emerging Markets Fund (“EM Fund”) and the DuPont Capital Emerging Markets Debt Fund (“EM Debt Fund”) (each a “Fund” and collectively, the “Funds”) for an additional one year period. In determining whether to continue the Agreement, the Trustees considered information provided by the Adviser in accordance with Section 15(c) of the 1940 Act. The Trustees considered information that the Adviser provided regarding (i) services performed for the Funds, (ii) the size and qualifications of the Adviser’s portfolio management staff, (iii) any potential or actual material conflicts of interest which may arise in connection with a portfolio manager’s management of the Funds, (iv) investment performance, (v) the capitalization and financial condition of DuPont, (vi) brokerage selection procedures (including soft dollar arrangements, if any), (vii) the procedures for allocating investment opportunities between the Funds and other clients, (viii) results of any regulatory examination, including any recommendations or deficiencies noted, (ix) any litigation, investigation or administrative proceeding which may have a material impact on DuPont’s ability to service the Funds, (x) compliance with the Funds’ investment objectives, policies and practices (including codes of ethics and proxy voting policies), and compliance with federal securities laws and other regulatory requirements. The Trustees noted the reports and discussions with portfolio managers provided at Board meetings throughout the year covering matters such as the relative performance of the Funds; compliance with the investment objectives, policies, strategies and limitations for the Funds; the compliance of management
37
DUPONT CAPITAL FUNDS
Other Information
(Unaudited)
personnel with the applicable code of ethics; and the adherence to fair value pricing procedures as established by the Board. The Trustees also noted that they had previously received and reviewed a memorandum from legal counsel regarding the legal standard applicable to their review of the Agreement.
Representatives from DuPont attended the Meeting in person and discussed DuPont’s history, performance and investment strategy in connection with the proposed continuation of the Agreement and answered questions from the Board.
The Trustees considered the investment performance information for the Funds and the Adviser. The Trustees reviewed performance information for the Funds as compared to their respective benchmark indices and Lipper categories for the year to date, one year, two year, three year and since inception periods ended March 31, 2015, as applicable. The Trustees also received performance information for the Funds for the one year, three year and since inception periods ended April 30, 2015, as applicable, as compared to their respective benchmark indices and comparable separately managed account composite (gross of fees). They concluded that the performance of each of the Funds was within an acceptable range of performance relative to other mutual funds with similar investment objectives, strategies and policies based on the information provided at the Meeting.
The Adviser provided information regarding its advisory fees and an analysis of these fees in relation to the services provided or proposed to be provided to the Funds and any other ancillary benefits resulting from the Adviser’s relationship with the Funds. For each Fund, the Trustees also reviewed information regarding the fees the Adviser charges to other clients and evaluated explanations provided by the Adviser as to differences in fees charged to the Funds and other similarly managed accounts. The Trustees also discussed the limitations of the comparative expense information of the Funds, given the potential varying nature, extent and quality of the services provided by the advisers of other portfolios included in the Funds’ respective Lipper categories. The Trustees reviewed fees charged by other advisers that manage comparable mutual funds with similar strategies to those of the Funds. The Trustees concluded that the advisory fees and services provided by the Adviser are sufficiently consistent with those of other advisers which manage mutual funds with investment objectives, strategies and policies similar to those of the Funds as measured by the information provided by the Adviser.
With respect to comparative performance information and advisory fees and expenses, the Board considered, among other data, the specific factors set forth below with respect to the Funds:
EM Fund. With respect to advisory fees and expenses, the Trustees noted that the Fund’s gross advisory fee was higher than, and the Fund’s net total expense ratio was lower than, the median gross advisory fee and net total expense ratio of the Lipper Emerging Markets Fund category with $500 million or less in assets. With respect to performance, the Trustees noted that the EM Fund underperformed each of the MSCI Emerging Markets Index (Net) and the median of the Lipper Emerging Markets Fund category for the one year, two year, three year and since inception periods ended March 31, 2015 and
38
DUPONT CAPITAL FUNDS
Other Information
(Unaudited)
outperformed for the year-to-date period ended March 31, 2015. With respect to the Fund’s comparable separately managed account composite, the Trustees noted that the Fund underperformed the gross returns of the composite for the one year and three year periods ended April 30, 2015.
EM Debt Fund. With respect to advisory fees and expenses, the Trustees noted that the Fund’s gross advisory fee the Fund’s net total expense ratio were lower than the median gross advisory fee and net total expense ratio of the Lipper Emerging Markets Hard Currency Debt Fund category with $250 million or less in assets. With respect to performance, the Trustees noted that the EM Debt Fund underperformed the median of the Lipper Emerging Markets Hard Currency Debt Fund category for the year-to-date, one year and since inception periods ended March 31, 2015. The Trustees noted that the EM Debt Fund also underperformed the J.P. Morgan EMBI Global Diversified Index for the one year and since inception periods ended April 30, 2015. With respect to the Fund’s comparable separately managed account composite, the Trustees noted that the Fund outperformed the gross returns of the composite for the one year period ended April 30, 2015.
The Board then considered the level and depth of knowledge of DuPont, including the professional experience and qualifications of senior personnel. In evaluating the quality of services to be provided by DuPont, the Board took into account its familiarity with DuPont’s senior management through Board meetings, discussions and reports during the preceding year. The Board also took into account DuPont’s compliance policies and procedures and reports regarding DuPont’s compliance operations from the Trust’s Chief Compliance Officer. The Board also considered any potential conflicts of interest that may arise in a portfolio manager’s management of the Funds’ investments on the one hand, and the investments of other accounts, on the other. The Trustees reviewed the services provided to the Funds by DuPont and concluded that the nature, extent and quality of the services provided were appropriate and consistent with the terms of the Agreement, that the quality of the services appeared to be consistent with industry norms and that the Funds are likely to benefit from the continued receipt of those services. They also concluded that DuPont has sufficient personnel, with the appropriate education and experience, to serve the Funds effectively and had demonstrated their ability to attract and retain qualified personnel.
The Trustees considered the costs of the services provided by DuPont, the compensation and benefits received by DuPont in providing services to the Funds, as well as DuPont’s profitability. The Trustees noted that DuPont’s level of profitability is an appropriate factor to consider, and the Trustees should be satisfied that DuPont’s profits are sufficient to continue as a healthy concern generally and as investment adviser of the Funds specifically. The Trustees concluded that DuPont’s advisory fee level was reasonable in relation to the nature and quality of the services provided, taking into account the current size and projected growth of the Funds.
The Trustees considered the extent to which economies of scale would be realized relative to fee levels as the Funds grows, and whether the advisory fee levels reflect these economies of scale for the benefit of shareholders. The Board noted that economies of scale may be achieved at higher asset levels
39
DUPONT CAPITAL FUNDS
Other Information
(Unaudited) (Concluded)
for the Funds for the benefit of fund shareholders, but because such economies of scale did not yet exist and were not likely to exist in the near term, it was not appropriate to incorporate a mechanism for sharing the benefit of such economies with Funds shareholders in the advisory fee structure at this time.
In voting to approve the continuation of the Agreement, the Board considered all factors it deemed relevant and the information presented to the Board by DuPont. In arriving at its decision, the Board did not identify any single factor as being of paramount importance and each member of the Board gave varying weights to each factor according to his or her own judgment. The Board determined that the continuation of the Agreement would be in the best interests of the Funds and its shareholders. As a result, the Board, including a majority of the Independent Trustees, unanimously approved the continuation of the Agreement with respect to the Funds for an additional one year period.
40
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Investment Adviser
DuPont Capital Management Corporation
One Righter Parkway
Suite 3200
Wilmington, DE 19803
Administrator
BNY Mellon Investment Servicing (US) Inc.
301 Bellevue Parkway
Wilmington, DE 19809
Transfer Agent
BNY Mellon Investment Servicing (US) Inc.
4400 Computer Drive
Westborough, MA 01581
Principal Underwriter
Foreside Funds Distributors LLC
400 Berwyn Park
899 Cassatt Road
Berwyn, PA 19312
Custodian
The Bank of New York Mellon
225 Liberty Street
New York, NY 10286
Independent Registered Public Accounting Firm
PricewaterhouseCoopers LLP
Two Commerce Square, Suite 1700
2001 Market Street
Philadelphia, PA 19103-7042
Legal Counsel
Pepper Hamilton LLP
3000 Two Logan Square
18th and Arch Streets
Philadelphia, PA 19103
DUP-1015
DUPONT CAPITAL
EMERGING MARKETS
FUND
DUPONT CAPITAL
EMERGING MARKETS
DEBT FUND
of
FundVantage Trust
Class I
SEMI-ANNUAL
REPORT
October 31, 2015
(Unaudited)
This report is submitted for the general information of the shareholders of the DuPont Capital Emerging Markets Fund and the DuPont Capital Emerging Markets Debt Fund. It is not authorized for distribution unless preceded or accompanied by a current prospectus for the DuPont Capital Emerging Markets Fund and the DuPont Capital Emerging Markets Debt Fund.
EIC VALUE FUND
Semi-Annual Investment Adviser’s Report
October 31, 2015
(Unaudited)
Dear Fellow Shareholder,
Thank you for reviewing our semi-annual report. In it, we discuss our perspective on the market, the EIC Value Fund’s (the “Fund”) performance, and some of our recent purchase and sale activity in the Fund. A listing of the Fund’s investments and other financial information follow our comments.
Perspective on the Market
2015 has been a challenging year for value-oriented managers like us since growth strategies, traditionally viewed as more volatile because of higher price/earnings multiples, have been less impacted by the market’s decline. As a result, the divergence between growth and value has been unusually wide, approaching 9% year to date, as shown below:
Periods Ending October 31, 2015 | ||||||||||||||||||||
Index | 3 Months | 6 Months | YTD | 12 Months | ||||||||||||||||
Russell 3000® Growth | -1.2% | 2.0% | 6.4% | 8.7% | ||||||||||||||||
Russell 3000® Value | -2.0% | -2.5% | -2.3% | 0.2% | ||||||||||||||||
Difference | 0.8% | 4.5% | 8.7% | 8.5% | ||||||||||||||||
Source: Morningstar DirectSM |
The largest contributor to the difference between growth and value was the technology sector, where a few large companies included in the Russell 3000® Growth Index – Apple, Facebook, and Google – rose, while most declined. Apple, Facebook and Google are not part of value benchmarks, and the Fund doesn’t own them. Among technology stocks included in the Russell 3000® Value Index, about two-thirds of them fell, and a few large firms, including Hewlett Packard, IBM, Intel, and Yahoo (none of which the Fund owns), had more significantly negative impacts.
The second largest contribution to the growth-value divergence arose from the consumer discretionary sector, principally due to a strong showing from Amazon, but also because of increases in Netflix, Home Depot, Nike, and Starbucks. Broadly speaking, stocks like these sell at prices that are very difficult to justify under our valuation approach and reflect high investor expectations regarding future growth, which may or may not materialize.
Finally, the decline in energy prices has impacted the energy sector, as well as many industrial firms that provide services to energy companies. Both groups are over-represented in value indices and strategies, because of more modest price/earnings multiples and growth expectations, and under-represented in growth indices and strategies.
We believe the key takeaway from the above is that the environment has become somewhat hostile to earnings growth, whether because of declines in energy prices, the foreign exchange impact from the strong dollar, or tepid demand; thus, stock price declines have been quite broadly distributed. The comparatively few companies able to counter this environment – whether due to technology, beneficial impacts on demand from low-cost financing, reduced commodity costs, or unusually strong consumer niches – have been accorded relatively high price/earnings multiples, making them unsuitable for value-oriented strategies and particularly subject to disappointment should earnings growth decelerate or reverse.
1
EIC VALUE FUND
Semi-Annual Investment Adviser’s Report (Continued)
October 31, 2015
(Unaudited)
The corollary to gains by the relatively few stocks showing earnings growth is that stock declines have generally been accompanied by a fairly broad earnings set-back. In addition, within the financial sector earnings continue to be pressured by low interest rates. Improved net interest margins always seem to be “just around the corner,” while financial institution earnings may become even more challenged as the good news from improved credit standards recedes with time amidst increasingly aggressive lending practices.
Gains in wages and median incomes remain low, hindering underlying demand growth. As a result, growth in some sectors, such as automotive and housing-related industries, has been largely dependent on unusually cheap credit. Corporations have partially masked the difficult underlying environment by engaging in activities that create the appearance of earnings growth such as stock buybacks, acquisitions, and aggressive tax management. Moreover, managements and investors have increasingly accepted the use of metrics that avoid generally accepted accounting principles (GAAP) by pro-forma add-backs of stock-based compensation, intangible amortization, restructuring charges, write-offs from poor past decisions, and other costs deemed to be “one-time” events.
All of the above has undermined earnings quality during a period when stock prices are historically high.
Fund Performance
For the six months ending October 31, 2015, the Fund’s Institutional Class shares fell 4.95% net of expenses. The Russell 3000® Value Index, the Fund’s primary benchmark, declined 2.50%, while the S&P 500® Index increased 0.77%.
On the surface, the Fund’s six-month return appears to have diverged from its historical pattern of declining less than the indices in down markets. Appearances, however, can be deceiving. In August and September, when the bulk of the market correction occurred, the Fund decreased 7.80%, holding up better than the Russell 3000® Value and S&P 500® Indices, which dropped 8.75% and 8.36%, respectively. Conversely, during October’s rebound, the Fund gained 4.82%, losing ground to the Russell 3000® Value Index, which gained 7.39%, and the S&P 500®, which rose 8.44%.
Performance attribution for the six-month period follows. Fund results are compared to the Russell 3000® Value Index unless otherwise noted.
We don’t target sector weightings, either in an absolute sense or relative to market indices; they are instead principally a residual of stock selection. Nevertheless, it is at times instructive to see how sector allocations affected performance.
To that end, only three of the ten sectors in the Russell 3000® Value Index posted positive returns for the six months. The health care sector was the top performer, rising 1.2%, followed by financials, up 0.9%, and utilities, up 0.1%. We were overweight health care relative to the index but underweight financials and utilities.
In contrast, energy and materials were far and away the poorest performing sectors over the six-month period, dropping 16.5% and 12.7%, respectively. Fortunately, we were underweight energy and had no exposure to materials.
On balance, our sector allocations were a positive contributor to Fund performance.
2
EIC VALUE FUND
Semi-Annual Investment Adviser’s Report (Continued)
October 31, 2015
(Unaudited)
Our security selection in the financial sector also helped. Our holdings gained a combined 2.9%, versus 0.9% for the index’s financials. Our two property-casualty insurers, Chubb Corporation, up 27.2%, and Travelers, up 13.0%, were standout performers, as was Mack-Cali Realty Corp., which gained 23.2%.
Likewise, our stock selection in the information technology sector was a plus. Our five technology holdings, led by eBay, up 13.8%, and Microsoft, up 9.6%, increased a collective 2.6%, compared to a 0.8% decline for the index’s tech stocks. Other Fund holdings of note included Molson Coors, up 14.2%, PepsiCo, up 9.1%, CVS Health, up 5.6%, and Baxalta, up 5.2%.
Our energy holdings – especially Diamond Offshore Drilling and Southwestern Energy Corporation – were a significant contributor to the Fund’s underperformance over the six-month period. While the plunge in oil prices has caused huge volatility in the energy sector and created long-term investment opportunities, the future direction of energy prices remains uncertain. Predicting where they go from here rests outside of our skill set. Accordingly, we’re attempting to strike a balance between risk and return: taking into account all of our recent energy trades, we now have approximately 10% of the Fund invested in the sector, spread across five holdings. Within the framework of a well-diversified portfolio of 34 names, we’re fairly comfortable with the size and scope of our overall energy allocation, though we expect continued volatility.
Our security selection in the consumer staples sector also adversely affected Fund performance. For the six months ending October 31, 2015, our consumer staple holdings decreased 5.6%, while the Russell 3000® Value Index’s consumer staples fell 0.6%. In particular, Wal-Mart, one of the Fund’s top-ten holdings, decreased 25.7% on earnings guidance offered during the company’s annual investment community meeting. The most important piece of new information was that fiscal 2017 earnings (ending January 2017) are expected to decline 6% to 12% versus fiscal 2016. While Wal-Mart had not previously issued guidance for fiscal year 2017, the consensus among analysts was that earnings would rebound after only one down year in fiscal 2016, attributable primarily to increased wages for low-level workers and e-commerce investments. According to Wal-Mart management, the fiscal year ‘17 shortfall will be largely due to continued spending on payroll and e-commerce initiatives to battle Amazon.
Unquestionably, Amazon has registered extraordinary sales growth and is proving a formidable competitor to Wal-Mart (and many other retailers). As an investment, however, Amazon has focused on gaining market share, sacrificing margins and profitability in the process. Meanwhile, Wal-Mart has and continues to attempt to strike a balance between growth and profitability. By virtue of its size, at nearly 10% of total US retail sales, Wal-Mart will never grow at the rate of Amazon, but the spending reset is clearly an admission that they focused too much on profitability and not enough on sales growth. If executed properly, we believe the increased spending on e-commerce and personnel could have a positive effect on customer experience and online sales, both of which should aid overall growth.
Initially, we thought management could implement these changes in 12 months, give or take, before the company resumed growth. It now looks like it will take much longer, and the risk is that the spending initiatives don’t re-ignite sales, necessitating additional steps by management.
While Wal-Mart’s return to growth has been delayed and the near-term price decline is disappointing, they do not materially change our opinion of the company. Importantly, Wal-Mart has actually grown domestic sales over the last few years and, in fact, has resumed modest same-store sales growth. Despite the lower earnings guidance, implied margins and returns on capital are still strong, and Wal-Mart continues to generate good free cash flow.
3
EIC VALUE FUND
Semi-Annual Investment Adviser’s Report (Continued)
October 31, 2015
(Unaudited)
Indeed, it announced a new $20 billion share buyback authorization at the meeting. Lastly, at the current price, shares are trading at 15x what we believe are depressed forward earnings, an attractive price for a company of this quality, particularly in the current market environment, where opportunities are scarce. All in all, we think Wal-Mart’s current stock price offers a sufficient margin of safety to compensate us for the risk, and we continue to hold it in the Fund.
Finally, Exelon Corp., a utility holding company, fell 16.4% over the six-month period, versus a 0.1% gain for the index’s utilities. Exelon owns the regulated electric utilities for the cities of Chicago (ComEd), Philadelphia (PECO), and Baltimore (BGE). Earlier this year, Exelon agreed in principal to buy Potomac Electric Power Company (PEPCO), which serves the Washington, DC, area. The deal, which would extend Exelon’s reach in the Mid-Atlantic States, has been approved by regulators and should close soon. More than half of Exelon’s profits come from these regulated utilities, with the rest derived from its non-regulated generation business, where it is the nation’s largest nuclear generation firm.
Nuclear generation produces virtually no carbon emissions and carries significantly lower operating costs than gas or coal generation. In turn, lower costs lead to higher margins and returns on capital than typical for electricity producers, giving Exelon a competitive advantage. Conversely, revenues and profits from unregulated generation can be volatile and are leveraged to fossil fuel prices, particularly natural gas. As the most prevalent marginal generation fuel, natural gas drives the marginal electricity price. Low natural gas prices have depressed wholesale electricity prices, negatively impacting Exelon’s revenues and profitability, pushing the stock lower. Nevertheless, we view Exelon’s exposure to depressed natural gas prices (via wholesale electricity) as a potentially significant plus. If and when natural gas prices increase, we think Exelon should benefit.
Notably, we tend to be systematically underweight in utilities because they are slow growers, earn low returns on capital, and tend to be highly leveraged. In fact, Exelon is currently our only utility stock, while the Russell 3000® Value Index has approximately 6% in the utility sector.
Portfolio Activity
During the six months ending October 31, 2015, we sold a number of stocks from the Fund and trimmed a few others. We also initiated new positions in Whole Foods Market and Franklin Resources, and added to several existing holdings. We’ll begin with a recap of the noteworthy sales and trims.
Companies that borrow at today’s low interest rates to make acquisitions take on more risk by leveraging their balance sheets but, nonetheless, are often rewarded with stock-price increases. We sold CVS Health from the Fund in June of this year for precisely that reason – the stock rose despite announcements of two recent acquisitions, Omnicare and Target’s pharmacy business, that will significantly increase CVS’s debt.
Similarly, we sold Chubb Corporation in July when it gained on the news that it would be acquired by Ace Limited (using debt and newly issued stock). We have become increasingly wary of companies resorting to financial engineering to drive earnings, which we view as less sustainable than earnings coming from top-line growth.
The Fund’s position in Molson Coors rose significantly following the announcement of a plan by Anheuser Busch to purchase SABMiller. If that deal is completed, regulators will probably require the combined entity to divest its interest in the MillerCoors joint venture. Molson Coors is the logical acquirer, and analysts speculate it could do so
4
EIC VALUE FUND
Semi-Annual Investment Adviser’s Report (Concluded)
October 31, 2015
(Unaudited)
at a favorable price that would enhance earnings, thus the increase in Molson Coors’ stock price. While this is feasible, the ultimate outcome and benefits to Molson Coors are unclear. Since the stock rose, approaching full value, we sold it from the Fund in September.
Pressured by activist investors, eBay agreed to spin off its higher-growth PayPal division to shareholders. Given the high multiple accorded to PayPal, we sold our position from the Fund and largely redeployed proceeds back into eBay, which generates higher cash flow but is priced lower because of slower revenue and earnings growth.
Finally, we trimmed Microsoft, which increased on a favorable earnings announcement. As the stock price moved up, the margin of safety and the probability of being right about the available upside narrowed relative to the downside risk. Thus, we thought it prudent to trim the holding.
Turning to the buy side, we initiated a new position in Whole Foods Market, a good business that we feel is conservatively and prudently managed, with a path to continued growth. Same-store sales have weakened, which is a concern, but the company has ample opportunity for store expansion. Whole Foods’ financial condition and operating metrics are quite strong, and the stock is attractively priced given its characteristics.
We also purchased a new position in Franklin Resources, an investment management firm, using proceeds from the sale of our holding in T. Rowe Price. We view Franklin as the more attractively priced opportunity of the two, thus the swap.
As stress continued to impact the energy sector, we adjusted our exposure by selling ConocoPhillips, while adding modestly to Chevron and Exxon Mobil. Finally, because of price declines during the six months, we added to existing positions in American Express, Bed Bath & Beyond, Taiwan Semiconductor and Wal-Mart.
As a net result of the above activity, our sales exceeded purchases, and our cash position rose slightly. As of October 31, 2015, the Fund had nearly 12% in cash reserves versus approximately 10% at the end of April. Notably, the Fund’s cash position is a residual of the stock-selection process. We do not allocate to cash tactically; it is not a market timing device. Rather, the cash level is primarily a function of the availability of undervalued stocks. The recent correction in stock prices puts them roughly back to October of 2014 levels, which were no bargain. In light of the actual earnings setbacks and earnings quality issues discussed in this letter, attractive opportunities remain challenging to find, though a little less so given recent market volatility.
This letter is intended to assist shareholders in understanding how the Fund performed during the six months ended October 31, 2015 and reflects the views of the investment adviser at the time of this writing. Of course, these views may change and do not guarantee the future performance of the Fund or the markets.
The above commentary is for informational purposes only and does not represent an offer, recommendation or solicitation to buy, hold or sell any security. The specific securities identified and described do not represent all of the securities purchased or sold and you should not assume that investments in the securities identified and discussed will be profitable.
Portfolio composition is subject to change. The current and future portfolio holdings of the Fund are subject to investment risk.
5
EIC VALUE FUND
Semi-Annual Report
Performance Data
October 31, 2015
(Unaudited)
Average Annual Total Returns for the Periods Ended October 31, 2015 | ||||||||||||||||
Six | Since | |||||||||||||||
Months† | 1 Year | 3 Years | Inception* | |||||||||||||
Class A (with sales charge) | -10.26% | -6.90% | 7.21% | 7.02% | ||||||||||||
Class A (without sales charge) | -5.03% | -1.49% | 9.27% | 8.38% | ||||||||||||
Russell 3000® Value Index | -2.50% | 0.24% | 14.29% | 11.02%** | ||||||||||||
S&P 500® Index | 0.77% | 5.20% | 16.20% | 12.67%** | ||||||||||||
Class C (with CDSC charge) | -6.40% | -3.23% | 8.44% | 8.23% | ||||||||||||
Class C (without CDSC charge) | -5.46% | -2.28% | 8.44% | 8.23% | ||||||||||||
Russell 3000® Value Index | -2.50% | 0.24% | 14.29% | 12.54%** | ||||||||||||
S&P 500® Index | 0.77% | 5.20% | 16.20% | 13.87%** | ||||||||||||
Institutional Class Shares | -4.95% | -1.32% | 9.50% | 8.53% | ||||||||||||
Russell 3000® Value Index | -2.50% | 0.24% | 14.29% | 10.55%** | ||||||||||||
S&P 500® Index | 0.77% | 5.20% | 16.20% | 12.20%** |
† | Not Annualized. |
* | Class A Shares, Class C Shares and Institutional Class Shares of the EIC Value Fund (the “Fund”) commenced operations on May 19, 2011, July 18, 2011 and May 1, 2011, respectively. |
** | Benchmark performance is from commencement date of the class only and is not the commencement date of the benchmark itself. |
The performance data quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment in the Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. The table does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares. Current performance may be lower or higher. Performance data current to the most recent month-end may be obtained by calling (855) 430-6487.
The returns shown for Class A Shares reflect a deduction for the maximum front-end sales charge of 5.50%. The returns shown for Class C shares reflect a maximum deferred sales charge of 1.00%. All of the Fund’s share classes apply a 2.00% fee to the value of shares redeemed within 30 days of purchase. This redemption fee is not reflected in the returns shown above. The Fund’s total annual gross and net operating expenses, as stated in the current prospectus dated September 1, 2015, are 1.23% and 1.30% for Class A Shares, 1.98% and 2.05% for Class C Shares and 0.98% and 1.05% for Institutional Class Shares, respectively, of the Class’ average daily net assets. The ratios may differ from the actual expenses incurred by the Fund for the period covered by this report. Equity Investment Corporation (the “Adviser”) has contractually agreed to waive or otherwise reduce its annual compensation received from the Fund to the extent necessary to ensure that the Fund’s “Total Annual Fund Operating Expenses,” excluding taxes, any class-specific fees and expenses (such as Rule 12b-1 distribution fees or shareholder service fees), “Acquired Fund” fees and expenses, interest, extraordinary items and brokerage commissions, exceed 1.00% of average daily net assets of the Fund (the “Expense Limitation”). The Expense Limitation will remain in place until August 31, 2016, unless the Board of Trustees of FundVantage Trust (“the Trust”) approves its earlier termination. Total returns would be lower had such fees and expenses not been waived and/or reimbursed. Furthermore, the Adviser may recoup any expenses or fees it has reimbursed within a three-year period from the year in which the Adviser reduced its compensation and/or assumed expenses of the Fund which is reflected in the net expense ratio.
6
EIC VALUE FUND
Semi-Annual Report
Performance Data (Concluded)
October 31, 2015
(Unaudited)
Mutual fund investing involves risk, including possible loss of principal. Value investing involves the risk that the Fund’s investing in companies believed to be undervalued will not appreciate as anticipated. The Fund may invest in the stocks of smaller-and medium-sized companies which may be more vulnerable to adverse business or economic events than larger, more established companies.
The Fund intends to evaluate performance as compared to that of the S&P 500® Index and the Russell 3000® Value Index. The S&P 500® is a widely recognized, unmanaged index of 500 common stocks which are generally representative of the U.S. stock market as a whole. The Russell 3000® Value Index is an unmanaged index that measures the performance of the 3,000 largest U.S. stocks, representing about 98% of the total capitalization of the entire U.S. stock market. It is impossible to invest directly in an index.
7
EIC VALUE FUND
Fund Expense Disclosure
October 31, 2015
(Unaudited)
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs including sales charges (loads) on purchase payments (if any) or redemption fees; and (2) ongoing costs, including management fees, distribution and/or service (Rule 12b-1) fees (if any) and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
These examples are based on an investment of $1,000 invested at the beginning of the six-month period from May 1, 2015 through October 31, 2015 and held for the entire period.
Actual Expenses
The first line of each accompanying table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Examples for Comparison Purposes
The second line of each accompanying table provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not your Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare these 5% hypothetical examples with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that the expenses shown in the accompanying tables are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) on purchase payments (if any) or redemption fees. Therefore, the second line of each accompanying table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
8
EIC VALUE FUND
Fund Expense Disclosure (Concluded)
October 31, 2015
(Unaudited)
EIC Value Fund | ||||||
Beginning Account Value May 1, 2015 | Ending Account Value October 31, 2015 | Expenses Paid During Period* | ||||
Class A | ||||||
Actual | $1,000.00 | $ 949.70 | $ 6.13 | |||
Hypothetical (5% return before expenses) | 1,000.00 | 1,018.85 | 6.34 | |||
Class C | ||||||
Actual | $1,000.00 | $ 945.40 | $ 9.78 | |||
Hypothetical (5% return before expenses) | 1,000.00 | 1,015.08 | 10.13 | |||
Institutional Class | ||||||
Actual | $1,000.00 | $ 950.50 | $ 4.90 | |||
Hypothetical (5% return before expenses) | 1,000.00 | 1,020.11 | 5.08 |
* | Expenses are equal to the Fund’s annualized expense ratio for the six-month period ended October 31, 2015 of 1.25%, 2.00%, and 1.00% for Class A, Class C, and Institutional Class Shares, respectively, multiplied by the average account value over the period, multiplied by the number of days in the most recent period (184), then divided by 366 to reflect the period. The Fund’s ending account values on the first line in each table are based on the actual six month total returns for the Fund of (5.03%), (5.46%), and (4.95%) for Class A, Class C, and Institutional Class Shares, respectively. |
9
EIC VALUE FUND
Portfolio Holdings Summary Table
October 31, 2015
(Unaudited)
The following table presents a summary by sector of the portfolio holdings of the Fund:
% of Net Assets | Value | |||||||
COMMON STOCKS: | ||||||||
Consumer, Non-cyclical | 24.0 | % | $ | 74,178,358 | ||||
Financial | 22.0 | 67,885,952 | ||||||
Consumer, Cyclical | 13.0 | 40,344,353 | ||||||
Technology | 7.9 | 24,428,182 | ||||||
Energy | 5.4 | 16,619,962 | ||||||
Communications | 5.2 | 16,184,417 | ||||||
Utilities | 3.4 | 10,435,239 | ||||||
REITs-Diversified | 1.7 | 5,401,059 | ||||||
REITs-Office Property | 1.4 | 4,310,656 | ||||||
Exchange Traded Fund | 4.3 | 13,265,850 | ||||||
Short-Term Investment | 11.5 | 35,568,657 | ||||||
Other Assets in Excess of Liabilities | 0.2 | 706,553 | ||||||
|
|
|
| |||||
NET ASSETS | 100.0 | % | $ | 309,329,238 | ||||
|
|
|
|
Portfolio holdings are subject to change at any time.
The accompanying notes are an integral part of the financial statements.
10
EIC VALUE FUND
Portfolio of Investments
October 31, 2015
(Unaudited)
Number of Shares | Value | |||||||
COMMON STOCKS — 84.0% |
| |||||||
Communications — 5.2% |
| |||||||
Cisco Systems, Inc. | 218,255 | $ | 6,296,657 | |||||
eBay, Inc.* | 354,400 | 9,887,760 | ||||||
|
| |||||||
16,184,417 | ||||||||
|
| |||||||
Consumer, Cyclical — 13.0% |
| |||||||
Bed Bath & Beyond, Inc.* | 123,800 | 7,382,194 | ||||||
Honda Motor Co. Ltd., SP ADR | 261,050 | 8,648,586 | ||||||
Target Corp. | 160,655 | 12,399,353 | ||||||
Wal-Mart Stores, Inc. | 208,145 | 11,914,220 | ||||||
|
| |||||||
40,344,353 | ||||||||
|
| |||||||
Consumer, Non-cyclical — 24.0% |
| |||||||
Baxalta, Inc. | 148,500 | 5,117,310 | ||||||
Baxter International, Inc. | 148,500 | 5,552,415 | ||||||
Express Scripts Holding Co.* | 129,060 | 11,148,203 | ||||||
GlaxoSmithKline PLC, SP ADR | 97,745 | 4,208,900 | ||||||
Johnson & Johnson | 84,790 | 8,566,334 | ||||||
Medtronic PLC | 133,875 | 9,896,040 | ||||||
PepsiCo, Inc. | 141,800 | 14,490,542 | ||||||
Procter & Gamble Co. (The) | 120,890 | 9,233,578 | ||||||
Whole Foods Market, Inc. | 199,100 | 5,965,036 | ||||||
|
| |||||||
74,178,358 | ||||||||
|
| |||||||
Energy — 5.4% | ||||||||
Chevron Corp. | 59,330 | 5,391,910 | ||||||
Diamond Offshore Drilling, Inc. | 94,065 | 1,870,012 | ||||||
Exxon Mobil Corp. | 95,030 | 7,862,782 | ||||||
Southwestern Energy Co.* | 135,440 | 1,495,258 | ||||||
|
| |||||||
16,619,962 | ||||||||
|
|
Number of Shares | Value | |||||||
COMMON STOCKS — (Continued) |
| |||||||
Financial — 22.0% | ||||||||
American Express Co. | 122,800 | $ | 8,996,328 | |||||
Franklin Resources, Inc. | 228,750 | 9,323,850 | ||||||
PNC Financial Services Group, Inc. (The) | 110,945 | 10,013,896 | ||||||
SunTrust Banks, Inc. | 117,750 | 4,888,980 | ||||||
Torchmark Corp. | 95,175 | 5,521,102 | ||||||
Travelers Cos., Inc. (The) | 85,400 | 9,640,806 | ||||||
US Bancorp | 230,975 | 9,742,526 | ||||||
Wells Fargo & Co. | 180,245 | 9,758,464 | ||||||
|
| |||||||
67,885,952 | ||||||||
|
| |||||||
REITs-Diversified — 1.7% |
| |||||||
Annaly Capital | 542,820 | 5,401,059 | ||||||
|
| |||||||
REITs-Office Property — 1.4% |
| |||||||
Mack-Cali Realty Corp. REIT | 198,100 | 4,310,656 | ||||||
|
| |||||||
Technology — 7.9% | ||||||||
Microsoft Corp. | 202,410 | 10,654,862 | ||||||
QUALCOMM, Inc. | 103,000 | 6,120,260 | ||||||
Taiwan Semiconductor Manufacturing Co., Ltd., | 348,500 | 7,653,060 | ||||||
|
| |||||||
24,428,182 | ||||||||
|
| |||||||
Utilities — 3.4% | ||||||||
Exelon Corp. | 373,755 | 10,435,239 | ||||||
|
| |||||||
TOTAL COMMON STOCKS | 259,788,178 | |||||||
|
|
The accompanying notes are an integral part of the financial statements.
11
EIC VALUE FUND
Portfolio of Investments (Concluded)
October 31, 2015
(Unaudited)
Number of Shares | Value | |||||||
EXCHANGE TRADED FUND — 4.3% |
| |||||||
Energy Select Sector SPDR Fund | 195,000 | $ | 13,265,850 | |||||
|
| |||||||
TOTAL EXCHANGE TRADED FUND | 13,265,850 | |||||||
|
| |||||||
SHORT-TERM INVESTMENT — 11.5% |
| |||||||
Money Market Fund — 11.5% |
| |||||||
Dreyfus Institutional Reserves Treasury Prime Fund, Institutional Shares 0.00%(a) | 35,568,657 | 35,568,657 | ||||||
|
| |||||||
TOTAL SHORT-TERM INVESTMENT | 35,568,657 | |||||||
|
| |||||||
TOTAL INVESTMENTS - 99.8% |
| 308,622,685 | ||||||
OTHER ASSETS IN EXCESS OF LIABILITIES - 0.2% | 706,553 | |||||||
|
| |||||||
NET ASSETS - 100.0% | $ | 309,329,238 | ||||||
|
|
* | Non-income producing. |
(a) | Rate periodically changes. Rate disclosed is the daily yield on October 31, 2015. |
REIT | Real Estate Investment Trust | |
SP ADR | Sponsored American Depository Receipt | |
SPDR | Standard & Poor’s Depositary Receipt |
The accompanying notes are an integral part of the financial statements.
12
EIC VALUE FUND
Statement of Assets and Liabilities
October 31, 2015
(Unaudited)
Assets | ||||
Investments, at value (Cost $279,909,006) | $ | 308,622,685 | ||
Cash | 650,036 | |||
Receivable for investments sold | 1,000,138 | |||
Receivable for capital shares sold | 579,362 | |||
Dividends and interest receivable | 171,677 | |||
Prepaid expenses and other assets | 130,721 | |||
|
| |||
Total assets | 311,154,619 | |||
|
| |||
Liabilities | ||||
Payable for investments purchased | 650,036 | |||
Payable for capital shares redeemed | 810,797 | |||
Payable to Adviser | 199,923 | |||
Payable for distribution fees | 50,251 | |||
Payable for administration and accounting fees | 34,718 | |||
Payable for transfer agent fees | 33,767 | |||
Payable for shareholder servicing fees | 11,708 | |||
Payable for custodian fees | 6,441 | |||
Accrued expenses | 27,740 | |||
|
| |||
Total liabilities | 1,825,381 | |||
|
| |||
Net Assets | $ | 309,329,238 | ||
|
| |||
Net Assets Consisted of: | ||||
Capital stock, $0.01 par value | $ | 234,272 | ||
Paid-in capital | 272,114,848 | |||
Accumulated net investment income | 2,545,370 | |||
Accumulated net realized gain from investments | 5,721,069 | |||
Net unrealized appreciation on investments | 28,713,679 | |||
|
| |||
Net Assets | $ | 309,329,238 | ||
|
| |||
Class A: | ||||
Net asset value, redemption price per share | $13.21 | |||
Maximum offering price per share (100/94.5 of $13.21) | $13.98 | |||
Class C: | ||||
Net asset value, offering and redemption price per share | $13.00 | |||
Institutional Class: | ||||
Net asset value, offering and redemption price per share | $13.26 |
The accompanying notes are an integral part of the financial statements.
13
EIC VALUE FUND
Statement of Operations
For the Six Months Ended October 31, 2015
(Unaudited)
Investment Income | ||||
Dividends | $ | 3,726,584 | ||
Less: foreign taxes withheld | (47,176 | ) | ||
|
| |||
Total investment income | 3,679,408 | |||
|
| |||
Expenses | ||||
Advisory fees (Note 2) | 1,227,716 | |||
Distribution fees (Class C) (Note 2) | 219,692 | |||
Administration and accounting fees (Note 2) | 105,396 | |||
Distribution fees (Class A) (Note 2) | 99,326 | |||
Transfer agent fees (Note 2) | 76,868 | |||
Shareholder servicing fees (Class C) (Note 2) | 73,231 | |||
Registration and filing fees | 38,155 | |||
Printing and shareholder reporting fees | 37,474 | |||
Custodian fees (Note 2) | 15,882 | |||
Legal fees | 13,842 | |||
Audit fees | 13,228 | |||
Other expenses | 833 | |||
|
| |||
Total expenses before recoupment | 1,921,643 | |||
|
| |||
Plus: Net expenses recouped (Note 2) | 107,561 | |||
|
| |||
Net expenses after recoupment | 2,029,204 | |||
|
| |||
Net investment income | 1,650,204 | |||
|
| |||
Net realized and unrealized gain/(loss) from investments: | ||||
Net realized loss from investments | (215,534 | ) | ||
Net change in unrealized appreciation/(depreciation) on investments | (18,618,848 | ) | ||
|
| |||
Net realized and unrealized loss on investments | (18,834,382 | ) | ||
|
| |||
Net decrease in net assets resulting from operations | $ | (17,184,178 | ) | |
|
|
The accompanying notes are an integral part of the financial statements.
14
EIC VALUE FUND
Statements of Changes in Net Assets
For the Six Months Ended October 31, 2015 (Unaudited) | For the Year Ended April 30, 2015 | |||||||||||
Increase in net assets from operations: | ||||||||||||
Net investment income | $ 1,650,204 | $ 2,685,790 | ||||||||||
Net realized gain/(loss) from investments | (215,534 | ) | 13,470,516 | |||||||||
Net change in unrealized appreciation/(depreciation) on investments | (18,618,848 | ) | 7,174,199 | |||||||||
|
|
|
| |||||||||
Net increase/(decrease) in net assets resulting from operations | (17,184,178 | ) | 23,330,505 | |||||||||
|
|
|
| |||||||||
Less Dividends and Distributions to Shareholders from: | ||||||||||||
Net investment income: | ||||||||||||
Class A | — | (585,643 | ) | |||||||||
Class C | — | (95,226 | ) | |||||||||
Institutional Class | — | (1,761,398 | ) | |||||||||
|
|
|
| |||||||||
Total net investment income | — | (2,442,267 | ) | |||||||||
|
|
|
| |||||||||
Net realized capital gains: | ||||||||||||
Class A | — | (2,708,245 | ) | |||||||||
Class C | — | (1,908,882 | ) | |||||||||
Institutional Class | — | (5,602,971 | ) | |||||||||
|
|
|
| |||||||||
Total net realized capital gains | — | (10,220,098 | ) | |||||||||
|
|
|
| |||||||||
Net decrease in net assets from dividends and distributions to shareholders | — | (12,662,365 | ) | |||||||||
|
|
|
| |||||||||
Increase/(Decrease) in Net Assets Derived from Capital Share Transactions (Note 4) | (11,378,349 | ) | 72,541,924 | |||||||||
|
|
|
| |||||||||
Total increase/(decrease) in net assets | (28,562,527 | ) | 83,210,064 | |||||||||
|
|
|
| |||||||||
Net assets | ||||||||||||
Beginning of period | 337,891,765 | 254,681,701 | ||||||||||
|
|
|
| |||||||||
End of period | $309,329,238 | $337,891,765 | ||||||||||
|
|
|
| |||||||||
Accumulated net investment income, end of period | $ 2,545,370 | $ 895,166 | ||||||||||
|
|
|
|
The accompanying notes are an integral part of the financial statements.
15
EIC VALUE FUND
Financial Highlights
Contained below is per share operating performance data for Class A Shares outstanding, total investment return, ratios to average net assets and other supplemental data for the respective period. 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). This information has been derived from information provided in the financial statements and should be read in conjunction with the financial statements and the notes thereto.
Class A | ||||||||||||||||||||||||||||
For the | For the Year Ended April 30, 2015 | For the Year Ended April 30, 2014 | For the Year Ended April 30, 2013 | For the Period May 19, 2011* to April 30, 2012 | ||||||||||||||||||||||||
Per Share Operating Performance | ||||||||||||||||||||||||||||
Net asset value, beginning of period | $ | 13.91 | $ | 13.37 | $ | 11.91 | $ | 10.65 | $ | 10.00 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Net investment income(1) | 0.07 | 0.12 | 0.12 | 0.12 | 0.08 | |||||||||||||||||||||||
Net realized and unrealized gain/(loss) on investments | (0.77 | ) | 0.98 | 1.70 | 1.22 | 0.61 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Net increase/(decrease) in net assets resulting from operations | (0.70 | ) | 1.10 | 1.82 | 1.34 | 0.69 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Dividends and distributions to shareholders from: | ||||||||||||||||||||||||||||
Net investment income | — | (0.10 | ) | (0.11 | ) | (0.08 | ) | (0.04 | ) | |||||||||||||||||||
Net realized capital gains | — | (0.46 | ) | (0.25 | ) | — | (2) | — | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Total dividends and distributions to shareholders. | — | (0.56 | ) | (0.36 | ) | (0.08 | ) | (0.04 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Net asset value, end of period | $ | 13.21 | $ | 13.91 | $ | 13.37 | $ | 11.91 | $ | 10.65 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Total investment return(3) | (5.03 | )% | 8.22 | % | 15.46 | % | 12.73 | % | 6.97 | % | ||||||||||||||||||
Ratio/Supplemental Data | ||||||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $ | 72,298 | $ | 85,653 | $ | 130,805 | $ | 83,932 | $ | 33,969 | ||||||||||||||||||
Ratio of expenses to average net assets | 1.25 | %(4) | 1.25 | % | 1.25 | % | 1.25 | % | 1.25 | %(4) | ||||||||||||||||||
Ratio of expenses to average net assets without waivers, expense reimbursements and recoupments, if any(5) | 1.18 | %(4) | 1.18 | % | 1.24 | % | 1.35 | % | 2.07 | %(4) | ||||||||||||||||||
Ratio of net investment income to average net assets | 1.00 | %(4) | 0.90 | % | 0.95 | % | 1.12 | % | 0.81 | %(4) | ||||||||||||||||||
Portfolio turnover rate | 20.85 | %(6) | 26.89 | % | 19.08 | % | 12.06 | % | 12.68 | %(7) |
* | Commencement of operations. |
(1) | The selected per share data was calculated using the average shares outstanding method for the period. |
(2) | Amount is less than $0.005 per share. |
(3) | Total investment return is calculated assuming a purchase of shares on the first day and a sale of shares on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total return for periods less than one year are not annualized. Total investment return does not reflect the impact of the maximum front-end sales load of 5.50%. If reflected, the return would be lower. |
(4) | Annualized. |
(5) | During the period, certain fees were waived, reimbursed and/or recouped. If such fee waivers, reimbursements and/or recoupments had not occurred, the ratios would have been as indicated (See Note 2). |
(6) | Not annualized. |
(7) | Reflects portfolio turnover of the Fund for the year ended April 30, 2012. |
The accompanying notes are an integral part of the financial statements.
16
EIC VALUE FUND
Financial Highlights
Contained below is per share operating performance data for Class C Shares outstanding, total investment return, ratios to average net assets and other supplemental data for the respective period. 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). This information has been derived from information provided in the financial statements and should be read in conjunction with the financial statements and the notes thereto.
Class C | ||||||||||||||||||||||||||||
For the Six Months | For the Year Ended April 30, 2015 | For the Year Ended April 30, 2014 | For the Year Ended April 30, 2013 | For the | ||||||||||||||||||||||||
Per Share Operating Performance | ||||||||||||||||||||||||||||
Net asset value, beginning of period | $ | 13.75 | $ | 13.24 | $ | 11.84 | $ | 10.61 | $ | 9.88 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Net investment income/(loss)(1) | 0.02 | 0.02 | 0.03 | 0.04 | (0.01 | ) | ||||||||||||||||||||||
Net realized and unrealized gain/(loss) on investments | (0.77 | ) | 0.97 | 1.67 | 1.22 | 0.77 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Net increase/(decrease) in net assets resulting from operations | (0.75 | ) | 0.99 | 1.70 | 1.26 | 0.76 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Dividends and distributions to shareholders from: | ||||||||||||||||||||||||||||
Net investment income | — | (0.02 | ) | (0.05 | ) | (0.03 | ) | (0.03 | ) | |||||||||||||||||||
Net realized capital gains | — | (0.46 | ) | (0.25 | ) | — | (2) | — | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Total dividends and distributions to shareholders | — | (0.48 | ) | (0.30 | ) | (0.03 | ) | (0.03 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Net asset value, end of period. | $ | 13.00 | $ | 13.75 | $ | 13.24 | $ | 11.84 | $ | 10.61 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Total investment return(3) | (5.46 | )% | 7.49 | % | 14.52 | % | 11.93 | % | 7.75 | % | ||||||||||||||||||
Ratio/Supplemental Data | ||||||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $ | 55,815 | $62,378 | $ | 48,016 | $ | 31,129 | $ | 13,756 | |||||||||||||||||||
Ratio of expenses to average net assets | 2.00 | %(4) | 2.00 | % | 2.00 | % | 2.00 | % | 2.00 | %(4) | ||||||||||||||||||
Ratio of expenses to average net assets without waivers, expense reimbursements and recoupments, if any(5) | 1.93 | %(4) | 1.93 | % | 1.99 | % | 2.10 | % | 2.69 | %(4) | ||||||||||||||||||
Ratio of net investment income/(loss) to average net assets | 0.25 | %(4) | 0.15 | % | 0.21 | % | 0.38 | % | (0.01 | )%(4) | ||||||||||||||||||
Portfolio turnover rate. | 20.85 | %(6) | 26.89 | % | 19.08 | % | 12.06 | % | 12.68 | %(7) |
* | Commencement of operations. |
(1) | The selected per share data was calculated using the average shares outstanding method for the period. |
(2) | Amount is less than $0.005 per share. |
(3) | Total investment return is calculated assuming a purchase of shares on the first day and a sale of shares on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total returns for periods less than one year are not annualized. Total return does not reflect any applicable sales charge. |
(4) | Annualized. |
(5) | During the period, certain fees were waived, reimbursed and/or recouped. If such fee waivers, reimbursements and/or recoupments had not occurred, the ratios would have been as indicated (See Note 2). |
(6) | Not annualized. |
(7) | Reflects portfolio turnover of the Fund for the year ended April 30, 2012. |
The accompanying notes are an integral part of the financial statements.
17
EIC VALUE FUND
Financial Highlights
Contained below is per share operating performance data for Institutional Class Shares outstanding, total investment return, ratios to average net assets and other supplemental data for the respective period. 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). This information has been derived from information provided in the financial statements and should be read in conjunction with the financial statements and the notes thereto.
Institutional Class | ||||||||||||||||||||||||
For the | For the Year Ended April 30, 2015 | For the Year Ended April 30, 2014 | For the Year Ended April 30, 2013 | For the Year Ended April 30, 2012* | ||||||||||||||||||||
Per Share Operating Performance | ||||||||||||||||||||||||
Net asset value, beginning of period | $ | 13.95 | $ | 13.41 | $ | 11.94 | $ | 10.67 | $ | 10.00 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Net investment income(1) | 0.08 | 0.16 | 0.15 | 0.15 | 0.11 | |||||||||||||||||||
Net realized and unrealized gain/(loss) on investments | (0.77 | ) | 0.98 | 1.70 | 1.22 | 0.61 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Net increase/(decrease) in net assets resulting from operations | (0.69 | ) | 1.14 | 1.85 | 1.37 | 0.72 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Dividends and distributions to shareholders from: | ||||||||||||||||||||||||
Net investment income | — | (0.14 | ) | (0.13 | ) | (0.10 | ) | (0.05 | ) | |||||||||||||||
Net realized capital gains | — | (0.46 | ) | (0.25 | ) | — | (2) | — | ||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Total dividends and distributions to shareholders | — | (0.60 | ) | (0.38 | ) | (0.10 | ) | (0.05 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Net asset value, end of period | $ | 13.26 | $ | 13.95 | $ | 13.41 | $ | 11.94 | $ | 10.67 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Total investment return(3) | (4.95 | )% | 8.54 | % | 15.68 | % | 12.99 | % | 7.24 | % | ||||||||||||||
Ratio/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $ | 181,216 | $189,860 | $75,860 | $53,367 | $18,754 | ||||||||||||||||||
Ratio of expenses to average net assets | 1.00 | %(4) | 1.00 | % | 1.00 | % | 1.00 | % | 1.00 | % | ||||||||||||||
Ratio of expenses to average net assets without waivers, expense reimbursements and recoupments, if any(5) | 0.93 | %(4) | 0.93 | % | 0.99 | % | 1.10 | % | 2.40 | % | ||||||||||||||
Ratio of net investment income to average net assets | 1.25 | %(4) | 1.14 | % | 1.21 | % | 1.37 | % | 1.13 | % | ||||||||||||||
Portfolio turnover rate | 20.85 | %(6) | 26.89 | % | 19.08 | % | 12.06 | % | 12.68 | % |
* | The Institutional Class commenced operations on May 1, 2011. |
(1) | The selected per share data was calculated using the average shares outstanding method for the period. |
(2)Amount | is less than $0.005 per share. |
(3) | Total investment return is calculated assuming a purchase of shares on the first day and a sale of shares on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total returns for periods less than one year are not annualized. |
(4)Annualized. |
(5) | During the period, certain fees were waived, reimbursed and/or recouped. If such fee waivers, reimbursements and/or recoupments had not occurred, the ratios would have been as indicated (See Note 2). |
(6) | Not annualized. |
The accompanying notes are an integral part of the financial statements.
18
EIC VALUE FUND
Notes to Financial Statements
October 31, 2015
(Unaudited)
1. Organization and Significant Accounting Policies
The EIC Value Fund (the “Fund”) is a diversified, open-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”), which commenced operations on May 1, 2011. The Fund is a separate series of FundVantage Trust (the “Trust”) which was organized as a Delaware statutory trust on August 28, 2006. The Trust is a “series trust” authorized to issue an unlimited number of separate series or classes of shares of beneficial interest. Each series is treated as a separate entity for certain matters under the 1940 Act, and for other purposes, and a shareholder of one series is not deemed to be a shareholder of any other series. The Fund offers separate classes of shares, Class A, Class C, Institutional Class and Retail Class Shares. Class A Shares are sold subject to a front-end sales charge. Front-end sales charges may be reduced or waived under certain circumstances. A contingent deferred sales charge (“CDSC”) may be applicable to the redemption of Class A Shares. A CDSC, as a percentage of the lower of the original purchase price or net asset value at redemption, of up to 1.00% may be imposed on full or partial redemptions of Class A Shares made within eighteen months (effective September 1, 2012) of purchase where $1 million or more of Class A Shares were purchased without an initial sales charge and (ii) the Fund’s principal underwriter, Foreside Funds Distributors LLC (the “Underwriter”), paid a commission to the selling broker-dealer for such sale. A CDSC of up to 1.00% is assessed on redemptions of Class C Shares made within eighteen months (effective January 1, 2012) after a purchase. As of October 31, 2015, the Retail Class Shares have not been issued.
The Fund is an investment company and follows accounting and reporting guidance in the Financial Accounting Standards Board Accounting Standards Codification Topic 946.
Portfolio Valuation — The Fund’s net asset value (“NAV”) is calculated once daily at the close of regular trading hours on the New York Stock Exchange (“NYSE”) (typically 4:00 p.m. Eastern time) on each day the NYSE is open. Securities held by the Fund are valued using the closing price or the last sale price on a national securities exchange or the National Association of Securities Dealers Automatic Quotation System (“NASDAQ”) market system where they are primarily traded. Equity securities traded in the over-the-counter market are valued at their closing prices. If there were no transactions on that day, securities traded principally on an exchange or on NASDAQ will be valued at the mean of the last bid and ask prices prior to the market close. Fixed income securities having a remaining maturity of greater than 60 days are valued using an independent pricing service. Fixed income securities having a remaining maturity of 60 days or less are valued at amortized cost, provided such amount approximates market value. Foreign securities are valued based on prices from the primary market in which they are traded and are translated from the local currency into U.S. dollars using current exchange rates. Investments in other open-end investment companies are valued based on the NAV of the investment companies (which may use fair value pricing as discussed in their prospectuses). If market quotations are unavailable or deemed unreliable, securities will be valued in accordance with procedures adopted by the Trust’s Board of Trustees. Relying on prices supplied by pricing services or dealers or using fair valuation may
19
EIC VALUE FUND
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
result in values that are higher or lower than the values used by other investment companies and investors to price the same investments.
Fair Value Measurements — The inputs and valuation techniques used to measure fair value of the Fund’s investments are summarized into three levels as described in the hierarchy below:
● Level 1 | — | quoted prices in active markets for identical securities; | ||
● Level 2 | — | other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.); and | ||
● Level 3 | — | significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments). |
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
The following is a summary of the inputs used, as of October 31, 2015, in valuing the Fund’s investments carried at fair value:
Total Value at 10/31/15 | Level 1 Quoted Prices | Level 2 Other Significant Observable Inputs | Level 3 Significant Unobservable Inputs | |||||||||||||
Common Stocks* | $ | 259,788,178 | $ | 259,788,178 | $ | — | $ | — | ||||||||
Exchange Traded Funds | 13,265,850 | 13,265,850 | — | — | ||||||||||||
Short-Term Investment | 35,568,657 | 35,568,657 | — | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total Investments | $ | 308,622,685 | $ | 308,622,685 | $ | — | $ | — | ||||||||
|
|
|
|
|
|
|
|
* | Please refer to Portfolio of Investments for further details on portfolio holdings. |
At the end of each quarter, management evaluates the classification of Levels 1, 2 and 3 assets and liabilities. Various factors are considered, such as changes in liquidity from the prior reporting period; whether or not a broker is willing to execute at the quoted price; the depth and consistency of prices from third party pricing services; and the existence of contemporaneous, observable trades in the market. Additionally, management evaluates the classification of Level 1 and Level 2 assets and liabilities on a quarterly basis for changes in listings or delistings on national exchanges.
Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of the Fund’s investments may fluctuate from period to period. Additionally, the fair value of investments may differ significantly from the values that would have been
20
EIC VALUE FUND
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
used had a ready market existed for such investments and may differ materially from the values the Fund may ultimately realize. Further, such investments may be subject to legal and other restrictions on resale or are otherwise less liquid than publicly traded securities.
For fair valuations using significant unobservable inputs, U.S. generally accepted accounting principles (“U.S. GAAP”) require the Fund to present a reconciliation of the beginning to ending balances for reported market values that presents changes attributable to total realized and unrealized gains or losses, purchase and sales, and transfers in and out of Level 3 during the period. Transfers in and out between Levels are based on values at the end of the period. U.S. GAAP also requires the Fund to disclose amounts and reasons for all transfers in and out of Level 1 and Level 2 fair value measurements. A reconciliation of Level 3 investments is presented only when the Fund had an amount of Level 3 investments at the end of the reporting period that was meaningful in relation to its net assets. The amounts and reasons for all transfers in and out of each Level within the three-tier hierarchy are disclosed when the Fund had an amount of total transfers during the reporting period that was meaningful in relation to its net assets as of the end of the reporting period.
For the period ended October 31, 2015, there were no transfers between Levels 1, 2 and 3 for the Fund.
Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes at the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates and those differences could be material.
Investment Transactions, Investment Income and Expenses — Investment transactions are recorded on trade date for financial statement preparation purposes. Realized gains and losses on investments sold are recorded on the identified cost basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date. Estimated components of distributions received from real estate investment trusts may be considered income, return of capital distributions or capital gain distributions. Return of capital distributions are recorded as a reduction of cost of the related investments. Distribution (12b-1) fees and shareholder services fees relating to a specific class are charged directly to that class. General expenses of the Trust are generally allocated to each fund in proportion to its relative daily net assets. Expenses directly attributable to a particular fund in the Trust are charged directly to that fund. The Funds’ investment income, expenses (other than class specific expenses) and unrealized and realized gains and losses are allocated daily to each class of shares based upon the relative proportion of net assets of each class at the beginning of the day.
Dividends and Distributions to Shareholders — Dividends from net investment income and distributions from net realized capital gains, if any, are declared, recorded on ex-date and paid at least annually to
21
EIC VALUE FUND
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
shareholders. Income dividends and capital gain distributions are determined in accordance with U.S. federal income tax regulations, which may differ from U.S. GAAP. These differences include the treatment of non-taxable dividends, expiring capital loss carryforwards and losses deferred due to wash sales and excise tax regulations. Permanent book and tax basis differences relating to shareholder distributions will result in reclassifications within the components of net assets.
U.S. Tax Status — No provision is made for U.S. income taxes as it is the Fund’s intention to continue to qualify for and elect the tax treatment applicable to regulated investment companies under Subchapter M of the Internal Revenue Code of 1986, as amended, and make the requisite distributions to its shareholders which will be sufficient to relieve it from U.S. income and excise taxes.
Other — In the normal course of business, the Fund may enter into contracts that provide general indemnifications. The Fund’s maximum exposure under these arrangements is dependent on claims that may be made against the Fund in the future, and therefore, cannot be estimated; however, based on experience, the risk of material loss for such claims is considered remote.
2. Transactions with Affiliates and Related Parties
Equity Investment Corporation (“EIC” or the “Adviser”) serves as investment adviser to the Fund pursuant to an investment advisory agreement with the Trust (the “Advisory Agreement”). For its services, the Adviser is paid a monthly fee at the annual rate of 0.75% of the Fund’s average daily net assets. The Adviser has contractually agreed to waive or otherwise reduce its annual compensation received from the Fund to the extent necessary to ensure that the Fund’s “Total Annual Fund Operating Expenses,” excluding taxes, any class-specific fees and expenses (such as Rule 12b-1 distribution fees or shareholder service fees), “Acquired Fund” fees and expenses, interest, extraordinary items and brokerage commissions, exceed 1.00% of average daily net assets of the Fund (the “Expense Limitation”). The Expense Limitation will remain in place until August 31, 2016, unless the Board of Trustees approves its earlier termination. Subject to approval by the Board of Trustees, the Adviser may recoup any expenses or fees it has reimbursed within a three-year period from the year in which the Adviser reduced its compensation and/or assumed expenses of the Fund. No recoupment will occur unless the Fund’s expenses are below the Expense Limitation. As of October 31, 2015, the amount of potential recovery was as follows:
Expiration |
April 30, 2016 |
$2,017 |
For the period ended October 31, 2015, the Adviser earned advisory fees of $1,227,716, and recouped fees of $107,561 waived in prior periods.
22
EIC VALUE FUND
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
BNY Mellon Investment Servicing (US) Inc. (“BNY Mellon”) serves as administrator and transfer agent for the Fund. For providing administrative and accounting services, BNY Mellon is entitled to receive a monthly fee equal to an annual percentage rate of the Fund’s average daily net assets, subject to certain minimum monthly fees. For providing transfer agent services, BNY Mellon is entitled to receive a monthly fee, subject to certain minimum, and out of pocket expenses.
The Bank of New York Mellon (the “Custodian”) provides certain custodial services to the Fund. The Custodian is entitled to receive a monthly fee, subject to certain minimum, and out of pocket expenses.
Foreside Funds Distributors LLC (the “Underwriter”) provides principal underwriting services to the Fund.
The Trust and the Underwriter are parties to an underwriting agreement. The Trust has adopted a distribution plan for Class A and Class C Shares in accordance with Rule 12b-1 under the 1940 Act. Pursuant to the Class A and Class C Shares plan, the Fund compensates the Underwriter for direct and indirect costs and expenses incurred in connection with advertising, marketing and other distribution services in an amount not to exceed 0.25% and 1.00% (0.75% Rule 12b-1 distribution fee and 0.25% shareholder service fee) on an annualized basis of the average daily net assets of the Fund’s Class A and Class C Shares, respectively.
The Trustees of the Trust who are not officers or employees of an investment adviser or other service provider to the Trust receive compensation in the form of an annual retainer and per meeting fees for their services as a Trustee. The remuneration paid to the Trustees by the Fund during the six months ended October 31, 2015 was $8,474. Certain employees of BNY Mellon serve as Officers of the Trust. They are not compensated by the Fund or the Trust.
3. Investment in Securities
For the period ended October 31, 2015, aggregate purchases and sales of investment securities (excluding short-term investments) of the Fund were as follows:
Purchases | Sales | |||||||
Investment Securities | $ | 59,485,583 | $ | 72,636,733 |
23
EIC VALUE FUND
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
4. Capital Share Transactions
For the six months ended October 31, 2015 and the year ended April 30, 2015, transactions in capital shares (authorized shares unlimited) were as follows:
For the Six Months Ended | ||||||||||||||||
October 31, 2015 | For the Year Ended | |||||||||||||||
(Unaudited) | April 30, 2015 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Class A | ||||||||||||||||
Sales | 620,191 | $ | 8,450,555 | 2,620,678 | $ | 35,984,103 | ||||||||||
Reinvestments | — | — | 217,630 | 3,010,927 | ||||||||||||
Redemption Fees* | — | 689 | — | 1,904 | ||||||||||||
Redemptions | (1,303,903 | ) | (17,467,475 | ) | (6,467,061 | ) | (89,457,487 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Net decrease | (683,712 | ) | $ | (9,016,231 | ) | (3,628,753 | ) | $ | (50,460,553 | ) | ||||||
|
|
|
|
|
|
|
| |||||||||
Class C | ||||||||||||||||
Sales | 224,486 | $ | 2,988,412 | 1,247,837 | $ | 17,023,666 | ||||||||||
Reinvestments | — | — | 138,449 | 1,899,521 | ||||||||||||
Redemption Fees* | — | 542 | — | 1,304 | ||||||||||||
Redemptions | (469,811 | ) | (6,290,218 | ) | (475,094 | ) | (6,510,018 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Net increase/(decrease) | (245,325 | ) | $ | (3,301,264 | ) | 911,192 | $ | 12,414,473 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Institutional Class | ||||||||||||||||
Sales | 2,773,712 | $ | 37,457,571 | 10,068,275 | $ | 139,955,946 | ||||||||||
Reinvestments | — | — | 488,937 | 6,781,569 | ||||||||||||
Redemption Fees* | — | 1,927 | — | 3,848 | ||||||||||||
Redemptions | (2,719,645 | ) | (36,520,352 | ) | (2,605,086 | ) | (36,153,359 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Net increase | 54,067 | $ | 939,146 | 7,952,126 | $ | 110,588,004 | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Total net increase/(decrease) | (874,970 | ) | $ | (11,378,349 | ) | 5,234,565 | $ | 72,541,924 | ||||||||
|
|
|
|
|
|
|
|
* | There is a 2.00% redemption fee that may be charged on shares redeemed which have been held for 30 days or less. The redemption fees are retained by the Fund for the benefit of the remaining shareholders and recorded as paid-in-capital. |
24
EIC VALUE FUND
Notes to Financial Statements (Concluded)
October 31, 2015
(Unaudited)
5. Federal Tax Information
The Fund has followed the authoritative guidance on accounting for and disclosure of uncertainty in tax positions, which requires the Fund to determine whether a tax position is more likely than not to be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The Fund has determined that there was no effect on the financial statements from following this authoritative guidance. In the normal course of business, the Fund is subject to examination by federal, state and local jurisdictions, where applicable, for tax years for which applicable statutes of limitations have not expired.
For the year ended April 30, 2015, the tax character of distributions paid by the Fund was $2,442,267 of ordinary income dividends and $10,220,098 of long-term capital gains dividends. Distributions from net investment income and short term gains are treated as ordinary income for federal income tax purposes.
As of April 30, 2015, the components of distributable earnings on a tax basis were as follows:
Capital Loss | Undistributed | Undistributed | Unrealized | |||
$ — | $895,166 | $5,936,603 | $47,332,527 |
The differences between the book and tax basis components of distributable earnings relate primarily to the timing and recognition of income and gains for federal income tax purposes. Short-term capital gains are reported as ordinary income for federal income tax purposes.
As of October 31, 2015, the federal tax cost, aggregate gross unrealized appreciation and depreciation of securities held by the Fund were as follows:
Federal tax cost | $ | 279,909,006 | ||||
|
| |||||
Gross unrealized appreciation | $ | 38,851,146 | ||||
Gross unrealized depreciation | (10,137,467 | ) | ||||
|
| |||||
Net unrealized appreciation | $ | 28,713,679 | ||||
|
|
Accumulated capital losses represent net capital loss carryforwards as of April 30, 2015 that may be available to offset future realized capital gains and thereby reduce future capital gains distributions. As of April 30, 2015, the Fund did not have any capital loss carryforwards.
6. Subsequent Events
Management has evaluated the impact of all subsequent events on the Fund through the date the financial statements were issued, and has determined that there were no subsequent events requiring recognition or disclosure in the financial statements.
25
EIC VALUE FUND
Other Information
(Unaudited)
Proxy Voting
Policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities as well as information regarding how the Fund voted proxies relating to portfolio securities for the most recent 12-month period ended June 30 are available without charge, upon request, by calling (855) 430-6487 and on the Securities and Exchange Commission’s (“SEC”) website at http:// www.sec.gov.
Quarterly Portfolio Schedules
The Trust files its complete schedule of portfolio holdings with the SEC for the first and third fiscal quarters of each fiscal year (quarters ended July 31 and January 31) on Form N-Q. The Trust’s Forms N-Q are available on the SEC’s website at http://www.sec.gov and may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. Information on the operation of the SEC’s Public Reference Room may be obtained by calling 1-800-SEC-0330.
26
[THIS PAGE INTENTIONALLY LEFT BLANK.]
Investment Adviser
Equity Investment Corporation
3007 Piedmont Road, NE
Suite 200
Atlanta, GA 30305
Administrator
BNY Mellon Investment Servicing (US) Inc.
301 Bellevue Parkway
Wilmington, DE 19809
Transfer Agent
BNY Mellon Investment Servicing (US) Inc.
4400 Computer Drive
Westborough, MA 01581
Principal Underwriter
Foreside Funds Distributors LLC
400 Berwyn Park
899 Cassatt Road
Berwyn, PA 19312
Custodian
The Bank of New York Mellon
225 Liberty Street
New York, NY 10286
Independent Registered Public Accounting Firm
Ernst & Young LLP
One Commerce Square
2005 Market Street, Suite 700
Philadelphia, PA 19103-7096
Legal Counsel
Pepper Hamilton LLP
3000 Two Logan Square
18th and Arch Streets
Philadelphia, PA 19103
EIC-1015
of
FundVantage Trust
Class A
Class C
Institutional Class
SEMI-ANNUAL
REPORT
October 31, 2015
(Unaudited)
This report is submitted for the general information of the shareholders of the EIC Value Fund. It is not authorized for distribution unless preceded or accompanied by a current prospectus for the EIC Value Fund.
ESTABROOK INVESTMENT GRADE FIXED INCOME FUND
Semi-Annual Report
Performance Data
October 31, 2015
(Unaudited)
Average Annual Total Returns for the Periods Ended October 31, 2015 | ||||||||||
Six Months† | 1 Year | 3 Years | 5 Years | Since Inception* | ||||||
Class I | -0.31% | 0.37% | 1.53% | 2.80% | 3.12% | |||||
Barclays Intermediate Government/Credit Bond Index | 0.25% | 1.86% | 1.37% | 2.31% | 2.67%** | |||||
Barclays U.S. Aggregate Bond Index | -0.10% | 1.96% | 1.65% | 3.03% | 3.28%** |
† | Not Annualized. |
* | The Estabrook Investment Grade Fixed Income Fund (the “Fund”) commenced operations on July 23, 2010. |
** | Benchmark performance is from the inception date of the Fund only and is not the inception date of the benchmark itself. |
The performance data quoted represents past performance and does not guarantee future results. Current performance may be lower or higher. Performance data current to the most recent month-end may be obtained by calling (888) 447-7443. The investment return and principal value of an investment will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. The table does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
The Fund’s total annual Fund gross and net operating expense ratios are 1.34% and 0.70%, respectively, for Class I Shares of the Fund’s average daily net assets. These ratios are stated in the current prospectus dated September 1, 2015, and may differ from the actual expenses incurred by the Fund for the period covered by this report. Estabrook Capital Management LLC (the “Adviser”) has contractually agreed to reduce its investment advisory fee and/or reimburse certain expenses of the Fund to the extent necessary to ensure that the Fund’s total operating expenses, excluding taxes, any class-specific fees and expenses (such as Rule 12-b1 distribution fees, shareholders service fees, or transfer agency fees), “Acquired Fund” fees and expenses, interest, extraordinary items, and brokerage commissions, do not exceed 0.70% (on an annual basis) of the average daily net assets of the Fund (the “Expense Limitation”). The Expense Limitation will remain in place until August 31, 2016, unless the Board of Trustees of FundVantage Trust approves an earlier termination. The Adviser is entitled to recover, subject to approval by the Board of Trustees, such amounts reduced or reimbursed for a period of up to three (3) years from the year in which the Adviser reduced its compensation and/or assumed expenses for the Fund. No recoupment will occur unless the Fund’s expenses are below the Expense Limitation..
A 1% redemption fee applies to shares redeemed within 90 days of purchase. This redemption fee is not reflected in the returns shown above.
The Fund intends to evaluate performance as compared to that of the Barclays Intermediate Government/Credit Bond Index (“Barclays Int. Gov./Cr. Index”). The Fund uses the Barclays U.S. Aggregate Bond Index (“Barclays U.S. Aggregate Bond Index”) as a secondary index. The Barclays Int. Gov./Cr. Index is an unmanaged market index that tracks performance of intermediate term U.S. government and corporate bonds. The Barclays U.S. Aggregate Bond Index is an intermediate term, broad-based index comprised of most U.S traded investment grade bonds. Barclays U.S. Aggregate Bond Index covers the USD-denominated, investment-grade (rated Baa3 or above by Moody’s), fixed-rate, and taxable areas of the bond market. This is the broadest measure of the taxable U.S. bond market,
1
ESTABROOK INVESTMENT GRADE FIXED INCOME FUND
Semi-Annual Report
Performance Data (Concluded)
October 31, 2015
(Unaudited)
including most Treasury, agency, corporate, mortgage-backed, asset-backed, and international dollar-denominated issues, all with maturities of 1 year or more. It is impossible to invest directly in an index.
The Fund is subject to the same risks as the underlying bonds in the portfolio such as credit, call and interest rate risk. As interest rates rise the value of bond prices will decline. The Fund may invest in high yield debt (also known as junk bonds) which may cause greater volatility and less liquidity. You may lose money by investing in the Fund.
2
ESTABROOK INVESTMENT GRADE FIXED INCOME FUND
Fund Expense Disclosure
October 31, 2015
(Unaudited)
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including redemption fees; and (2) ongoing costs, including management fees and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
This example is based on an investment of $1,000 invested at the beginning of the six-month period from May 1, 2015 through October 31, 2015 and held for the entire period.
Actual Expenses
The first line of the accompanying table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not your Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that the expenses shown in the accompanying table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as redemption fees. Therefore, the second line of the accompanying table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
3
ESTABROOK INVESTMENT GRADE FIXED INCOME FUND
Fund Expense Disclosure (Concluded)
October 31, 2015
(Unaudited)
Estabrook Investment Grade Fixed Income Fund – Class I | |||||||||||||||
Beginning Account Value May 1, 2015 | Ending Account Value October 31, 2015 | Expenses Paid During Period* | |||||||||||||
Actual | $ | 1,000.00 | $ | 996.90 | $ | 3.51 | |||||||||
Hypothetical (5% return before expenses) | 1,000.00 | 1,021.62 | 3.56 |
* | Expenses are equal to the Fund’s annualized expense ratio for the six-month period ended October 31, 2015 of 0.70%, multiplied by the average account value over the period, multiplied by the number of days in the most recent period (184) then divided by 366 days to reflect the period. The Fund’s ending account value on the first line in the table is based on the actual six-month total return for the Fund of (0.31)%. |
4
ESTABROOK INVESTMENT GRADE FIXED INCOME FUND
Portfolio Holdings Summary Table
October 31, 2015
(Unaudited)
The following table presents a summary by security type of the portfolio holdings of the Fund:
% of Net Assets | Value | |||||||||
Corporate Bonds and Notes | 74.5 | % | $ | 24,781,754 | ||||||
U.S. Treasury Obligations | 24.0 | 7,963,443 | ||||||||
Other Assets in Excess of Liabilities | 1.5 | 497,960 | ||||||||
|
|
|
| |||||||
NET ASSETS | 100.0 | % | $ | 33,243,157 | ||||||
|
|
|
|
Portfolio holdings are subject to change at any time.
The accompanying notes are an integral part of the financial statements.
5
ESTABROOK INVESTMENT GRADE FIXED INCOME FUND
Portfolio of Investments
October 31, 2015
(Unaudited)
Par Value | Value | |||||||
CORPORATE BONDS AND NOTES — 74.5% |
| |||||||
Advertising Agencies — 1.5% |
| |||||||
Interpublic Group of Cos, Inc. (The) 4.200%, 04/15/2024 | $ | 500,000 | $ | 498,780 | ||||
|
| |||||||
Aerospace/Defense — 1.5% |
| |||||||
Boeing Co. (The) Callable 07/30/2025 at 100 | 500,000 | 484,602 | ||||||
|
| |||||||
Airlines — 0.6% | ||||||||
Delta Air Lines | 200,000 | 200,500 | ||||||
|
| |||||||
Applications Software — 3.0% |
| |||||||
Microsoft Corp. | 250,000 | 248,880 | ||||||
Microsoft Corp. | 250,000 | 250,193 | ||||||
Microsoft Corp. | 500,000 | 505,952 | ||||||
|
| |||||||
1,005,025 | ||||||||
|
| |||||||
Auto/Truck Parts & Equipment-Original — 1.3% |
| |||||||
Delphi Corp. | 400,000 | 418,500 | ||||||
|
| |||||||
Auto-Cars/Light Trucks — 10.0% |
| |||||||
Ford Motor Credit Co., LLC | 650,000 | 643,548 | ||||||
Ford Motor Credit Co., LLC | 400,000 | 404,293 | ||||||
Ford Motor Credit Co., LLC | 400,000 | 398,033 |
Par Value | Value | |||||||
CORPORATE BONDS AND NOTES — (Continued) |
| |||||||
Auto-Cars/Light Trucks — (Continued) |
| |||||||
General Motors Co. | $ | 500,000 | $ | 508,305 | ||||
General Motors Financial Co., Inc. | 500,000 | 495,142 | ||||||
General Motors Financial Co., Inc. Callable 02/10/2022 at 100 | 600,000 | 585,914 | ||||||
Harley-Davidson Financial Services, Inc. | 300,000 | 303,524 | ||||||
|
| |||||||
3,338,759 | ||||||||
|
| |||||||
Beverages-Non-alcoholic — 0.8% |
| |||||||
PepsiCo, Inc. | 250,000 | 255,093 | ||||||
|
| |||||||
Cable/Satellite TV — 1.5% |
| |||||||
DIRECTV Holdings, LLC | 500,000 | 515,576 | ||||||
|
| |||||||
Commercial Banks Non-US — 0.8% |
| |||||||
Abbey National Treasury Services PLC (London) | 250,000 | 258,234 | ||||||
|
| |||||||
Commercial Banks-Eastern US — 1.3% |
| |||||||
CIT Group, Inc. | 400,000 | 419,000 | ||||||
|
|
The accompanying notes are an integral part of the financial statements.
6
ESTABROOK INVESTMENT GRADE FIXED INCOME FUND
Portfolio of Investments (Continued)
October 31, 2015
(Unaudited)
Par Value | Value | |||||||
CORPORATE BONDS AND NOTES — (Continued) |
| |||||||
Computers — 3.0% | ||||||||
Apple, Inc. | $ | 500,000 | $ | 501,414 | ||||
Apple, Inc. | 500,000 | 508,006 | ||||||
|
| |||||||
1,009,420 | ||||||||
|
| |||||||
Diversified Banking Institutions — 19.5% |
| |||||||
Bank of America Corp. | 250,000 | 284,368 | ||||||
Citigroup, Inc. | 1,500,000 | 1,497,062 | ||||||
Goldman Sachs Group, Inc. (The) | 500,000 | 504,462 | ||||||
Goldman Sachs Group, Inc. (The) | 500,000 | 495,000 | ||||||
Goldman Sachs Group, Inc. (The) | 700,000 | 700,336 | ||||||
JPMorgan Chase & Co. | 300,000 | 301,101 | ||||||
JPMorgan Chase & Co. | 100,000 | 98,968 | ||||||
JPMorgan Chase & Co. Callable 05/01/2020 at 100 | 250,000 | 250,750 | ||||||
Morgan Stanley | 350,000 | 347,330 |
Par Value | Value | |||||||
CORPORATE BONDS AND NOTES — (Continued) |
| |||||||
Diversified Banking Institutions — (Continued) |
| |||||||
Morgan Stanley | $ | 500,000 | $ | 491,875 | ||||
Morgan Stanley | 500,000 | 499,375 | ||||||
UBS AG | 500,000 | 500,092 | ||||||
UBS AG | 500,000 | 499,332 | ||||||
|
| |||||||
6,470,051 | ||||||||
|
| |||||||
Diversified Financial Services — 1.5% |
| |||||||
General Electric Capital Corp. | 500,000 | 504,948 | ||||||
|
| |||||||
Electronic Components-Semiconductor — 1.5% |
| |||||||
Intel Corp. | 250,000 | 254,007 | ||||||
Texas Instruments, Inc. | 250,000 | 247,593 | ||||||
|
| |||||||
501,600 | ||||||||
|
| |||||||
Enterprise Software/Services — 1.5% |
| |||||||
Oracle Corp. | 500,000 | 500,414 | ||||||
|
| |||||||
Fiduciary Banks — 1.5% | ||||||||
Citizens Financial Group, Inc. | 500,000 | 491,250 | ||||||
|
|
The accompanying notes are an integral part of the financial statements.
7
ESTABROOK INVESTMENT GRADE FIXED INCOME FUND
Portfolio of Investments (Continued)
October 31, 2015
(Unaudited)
Par Value | Value | |||||||
CORPORATE BONDS AND NOTES — (Continued) |
| |||||||
Finance-Auto Loans — 6.9% |
| |||||||
Ally Financial, Inc. 3.600%, 05/21/2018 | $ | 750,000 | $ | 759,375 | ||||
Ally Financial, Inc. 4.750%, 09/10/2018 | 500,000 | 520,000 | ||||||
Ally Financial, Inc. 3.750%, 11/18/2019 | 500,000 | 506,500 | ||||||
Ally Financial, Inc. 4.625%, 05/19/2022 | 500,000 | 520,000 | ||||||
|
| |||||||
2,305,875 | ||||||||
|
| |||||||
Finance-Credit Card — 0.6% |
| |||||||
American Express Credit Corp. 1.300%, 07/29/2016 | 200,000 | 200,824 | ||||||
|
| |||||||
Hotels&Motels — 0.8% | ||||||||
Wyndham Worldwide Corp. | 250,000 | 253,062 | ||||||
|
| |||||||
Life/Health Insurance — 2.3% |
| |||||||
Lincoln National Corp. | 600,000 | 502,125 | ||||||
Prudential Financial, Inc. 1.101%, 08/15/2018 (c) | 250,000 | 250,679 | ||||||
|
| |||||||
752,804 | ||||||||
|
| |||||||
Multi-line Insurance — 2.3% |
| |||||||
Genworth Holdings, Inc. | 475,000 | 211,375 |
Par Value | Value | |||||||
CORPORATE BONDS AND NOTES — (Continued) |
| |||||||
Multi-line Insurance — (Continued) |
| |||||||
MetLife, Inc. | $ | 200,000 | $ | 315,000 | ||||
Metlife, Inc. | 250,000 | 252,344 | ||||||
|
| |||||||
778,719 | ||||||||
|
| |||||||
Multimedia — 0.6% | ||||||||
NBC Universal Media, LLC 2.875%, 04/01/2016 | 200,000 | 201,944 | ||||||
|
| |||||||
Oil Companies-Exploration&Production — 0.6% |
| |||||||
Anadarko Petroleum Corp. 5.950%, 09/15/2016 | 200,000 | 207,358 | ||||||
|
| |||||||
Pipelines — 0.7% | ||||||||
Enterprise Products Operating LLC | 235,000 | 248,219 | ||||||
|
| |||||||
Reinsurance — 1.2% | ||||||||
Berkshire Hathaway, Inc. 1.550%, 02/09/2018 | 400,000 | 403,318 | ||||||
|
| |||||||
REITS-Office Property — 0.6% |
| |||||||
BioMed Realty LP | 200,000 | 201,663 | ||||||
|
| |||||||
REITS-Shopping Centers — 1.4% |
| |||||||
DDR Corp. 7.500%, 04/01/2017 | 200,000 | 215,515 |
The accompanying notes are an integral part of the financial statements.
8
ESTABROOK INVESTMENT GRADE FIXED INCOME FUND
Portfolio of Investments (Continued)
October 31, 2015
(Unaudited)
Par Value | Value | |||||||
CORPORATE BONDS AND NOTES — (Continued) |
| |||||||
REITS-Shopping Centers — (Continued) |
| |||||||
Kimco Realty Corp. | $ | 250,000 | $ | 251,820 | ||||
|
| |||||||
467,335 | ||||||||
|
| |||||||
REITS-Warehouse/Industry — 1.5% |
| |||||||
Prologis LP | 500,000 | 504,198 | ||||||
|
| |||||||
Retail-Discount — 0.8% |
| |||||||
Wal-Mart Stores, Inc. 1.125%, 04/11/2018 | 250,000 | 250,612 | ||||||
|
| |||||||
Retail-Mail Order — 1.1% |
| |||||||
QVC, Inc. | 400,000 | 379,959 | ||||||
|
| |||||||
Super-Regional Banks-US — 1.5% |
| |||||||
Wells Fargo & Co. 2.600%, 07/22/2020 | 500,000 | 504,306 | ||||||
|
| |||||||
Transport-Rail — 0.8% | ||||||||
CSX Corp. | 250,000 | 249,806 | ||||||
|
| |||||||
TOTAL CORPORATE BONDS AND |
| 24,781,754 | ||||||
|
| |||||||
U.S. TREASURY OBLIGATIONS — 24.0% |
| |||||||
Sovereign — 24.0% | ||||||||
2.000%, 07/31/2022 | 750,000 | 756,094 | ||||||
2.000%, 08/15/2025 | 2,200,000 | 2,170,738 | ||||||
2.125%, 06/30/2022 | 475,000 | 482,929 |
Par Value | Value | |||||||
U.S. TREASURY OBLIGATIONS — (Continued) |
| |||||||
Sovereign — (Continued) |
| |||||||
0.250%, 12/31/2015 | $ | 500,000 | $ | 500,078 | ||||
0.500%, 06/30/2016 | 500,000 | 500,430 | ||||||
0.500%, 07/31/2016 | 1,000,000 | 1,000,729 | ||||||
0.500%, 09/30/2016 | 750,000 | 750,371 | ||||||
0.625%, 10/15/2016 | 400,000 | 400,651 | ||||||
1.000%, 05/31/2018 | 1,400,000 | 1,401,423 | ||||||
|
| |||||||
7,963,443 | ||||||||
|
| |||||||
TOTAL U.S. TREASURY OBLIGATIONS |
| 7,963,443 | ||||||
|
| |||||||
TOTAL INVESTMENTS - 98.5% |
| 32,745,197 | ||||||
OTHER ASSETS IN EXCESS OF LIABILITIES - 1.5% |
| 497,960 | ||||||
|
| |||||||
NET ASSETS - 100.0% |
| $ | 33,243,157 | |||||
|
|
The accompanying notes are an integral part of the financial statements.
9
ESTABROOK INVESTMENT GRADE FIXED INCOME FUND
Portfolio of Investments (Concluded)
October 31, 2015
(Unaudited)
(a) | Securities exempt from registration under Rule 144A of the Securities Act of 1933, as amended. These securities were purchased in accordance with the guidelines approved by the Fund’s Board of Trustees and may be resold, in transactions exempt from registration, to qualified institutional buyers. At October 31, 2015, these securities amounted to $794,774 or 2.4% of net assets. These securities have been determined by the Adviser to be liquid securities. |
(b) | Fix-to Float Security. Rate shown is as of October 31, 2015. |
(c) | Variable or Floating Rate Security. Rate shown is as of October 31, 2015. |
(d) | Security is a perpetual bond and has no definite maturity date. |
REIT | Real Estate Investment Trust | |
PLC | Public Limited Company |
Please note that securities are classified according to the Bloomberg Sub-Industry Categories. The Fund’s investment adviser has selected this classification system because they believe that it best reflects the industry and risks associated with each position.
The accompanying notes are an integral part of the financial statements.
10
ESTABROOK INVESTMENT GRADE FIXED INCOME FUND
Statement of Assets and Liabilities
October 31, 2015
(Unaudited)
Assets | ||||
Investments, at value (Cost $32,873,539) | $ | 32,745,197 | ||
Cash | 1,016,663 | |||
Receivable for investments sold | 7,000 | |||
Dividends and interest receivable | 260,019 | |||
Receivable from Investment Adviser | 2,558 | |||
Prepaid expenses and other assets | 18,777 | |||
|
| |||
Total assets | 34,050,214 | |||
|
| |||
Liabilities | ||||
Payable for investments purchased | 749,620 | |||
Payable for capital shares redeemed | 16,311 | |||
Payable for transfer agent fees | 13,741 | |||
Payable for administration and accounting fees | 8,045 | |||
Payable for custodian fees | 2,343 | |||
Accrued expenses | 16,997 | |||
|
| |||
Total liabilities | 807,057 | |||
|
| |||
Net Assets | $ | 33,243,157 | ||
|
| |||
Net Assets Consisted of: | ||||
Capital stock, $0.01 par value | $ | 32,866 | ||
Paid-in capital | 33,377,247 | |||
Accumulated net investment loss | (16,921 | ) | ||
Accumulated net realized loss from investments | (21,693 | ) | ||
Net unrealized depreciation on investments | (128,342 | ) | ||
|
| |||
Net Assets | $ | 33,243,157 | ||
|
| |||
Class I: | ||||
Shares outstanding | 3,286,579 | |||
|
| |||
Net asset value, offering and redemption price per share ($33,243,157 / 3,286,579 shares) | $ | 10.11 | ||
|
|
The accompanying notes are an integral part of the financial statements.
11
ESTABROOK INVESTMENT GRADE FIXED INCOME FUND
Statement of Operations
For the Six Months Ended October 31, 2015
(Unaudited)
Investment Income | ||||
Interest | $ | 503,224 | ||
|
| |||
Total investment income | 503,224 | |||
|
| |||
Expenses | ||||
Advisory fees (Note 2) | 108,906 | |||
Administration and accounting fees (Note 2) | 31,812 | |||
Transfer agent fees (Note 2) | 23,307 | |||
Legal fees | 18,556 | |||
Audit fees | 13,978 | |||
Trustees’ and officers’ fees (Note 2) | 12,324 | |||
Printing and shareholder reporting fees | 9,572 | |||
Custodian fees (Note 2) | 6,571 | |||
Registration and filing fees | 4,603 | |||
Other expenses | 4,406 | |||
|
| |||
Total expenses before waivers and reimbursements | 234,035 | |||
|
| |||
Less: waivers and reimbursements (Note 2) | (116,752 | ) | ||
|
| |||
Net expenses after waivers and reimbursements | 117,283 | |||
|
| |||
Net investment income | 385,941 | |||
|
| |||
Net realized and unrealized loss from investments: | ||||
Net realized loss from investments | (63,399 | ) | ||
Net change in unrealized appreciation/(depreciation) on investments | (427,111 | ) | ||
|
| |||
Net realized and unrealized loss on investments | (490,510 | ) | ||
|
| |||
Net decrease in net assets resulting from operations | $ | (104,569 | ) | |
|
|
The accompanying notes are an integral part of the financial statements.
12
ESTABROOK INVESTMENT GRADE FIXED INCOME FUND
Statements of Changes in Net Assets
For the Six Months Ended October 31, 2015 (Unaudited) | For the Year Ended April 30, 2015 | |||||||||
Increase/(decrease) in net assets from operations: | ||||||||||
Net investment income | $ | 385,941 | $ | 770,464 | ||||||
Net realized gain/(loss) from investments | (63,399 | ) | 153,761 | |||||||
Net change in unrealized appreciation/(depreciation) on investments | (427,111 | ) | (298,125 | ) | ||||||
|
|
|
| |||||||
Net increase/(decrease) in net assets resulting from operations | (104,569 | ) | 626,100 | |||||||
|
|
|
| |||||||
Less Dividends and Distributions to Shareholders from: | ||||||||||
Net investment income: | ||||||||||
Class I | (386,021 | ) | (770,464 | ) | ||||||
Net realized capital gains: | ||||||||||
Class I | — | (209,879 | ) | |||||||
|
|
|
| |||||||
Net decrease in net assets from dividends and distributions to shareholders | (386,021 | ) | (980,343 | ) | ||||||
|
|
|
| |||||||
Increase/(Decrease) in Net Assets Derived from Capital Share Transactions (Note 4) | (12,404 | ) | 105,674 | |||||||
|
|
|
| |||||||
Total decrease in net assets | (502,994 | ) | (248,569 | ) | ||||||
|
|
|
| |||||||
Net assets | ||||||||||
Beginning of period | 33,746,151 | 33,994,720 | ||||||||
|
|
|
| |||||||
End of period | $ | 33,243,157 | $ | 33,746,151 | ||||||
|
|
|
| |||||||
Accumulated net investment loss, end of period | $ | (16,921 | ) | $ | (16,841 | ) | ||||
|
|
|
|
The accompanying notes are an integral part of the financial statements.
13
ESTABROOK INVESTMENT GRADE FIXED INCOME FUND
Financial Highlights
Contained below is per share operating performance data for Class I Shares outstanding, total investment return, ratios to average net assets and other supplemental data for the respective period. 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). This information has been derived from information provided in the financial statements and should be read in conjunction with the financial statements and the notes thereto.
Class I | ||||||||||||||||||||||||||||||
For the Six Months Ended October 31, 2015 (Unaudited) | For the Year Ended April 30, 2015 | For the Year Ended April 30, 2014 | For the Year Ended April 30, 2013 | For the Year Ended April 30, 2012 | For the Period July 23, 2010* to April 30, 2011 | |||||||||||||||||||||||||
Per Share Operating Performance | ||||||||||||||||||||||||||||||
Net asset value, beginning of period | $ | 10.26 | $ | 10.37 | $ | 10.66 | $ | 10.09 | $ | 10.06 | $ | 10.00 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Net investment income(1) | 0.12 | 0.24 | 0.26 | 0.32 | 0.32 | 0.17 | ||||||||||||||||||||||||
Net realized and unrealized gain/(loss) on investments | (0.15 | ) | (0.05 | ) | (0.23 | ) | 0.57 | 0.03 | 0.06 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Net increase/(decrease) in net assets resulting from operations | (0.03 | ) | 0.19 | 0.03 | 0.89 | 0.35 | 0.23 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Dividends and distributions to shareholders from: | ||||||||||||||||||||||||||||||
Net investment income | (0.12 | ) | (0.24 | ) | (0.26 | ) | (0.32 | ) | (0.32 | ) | (0.17 | ) | ||||||||||||||||||
Net realized capital gains | — | (0.06 | ) | (0.06 | ) | — | — | — | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Total dividends and distributions to shareholders | (0.12 | ) | (0.30 | ) | (0.32 | ) | (0.32 | ) | (0.32 | ) | (0.17 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Net asset value, end of period | $ | 10.11 | $ | 10.26 | $ | 10.37 | $ | 10.66 | $ | 10.09 | $ | 10.06 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Total investment return(2) | (0.31 | )% | 1.85 | % | 0.38 | % | 8.99 | % | 3.52 | % | 2.29 | % | ||||||||||||||||||
Ratio/Supplemental Data | ||||||||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $ | 33,243 | $ | 33,746 | $ | 33,995 | $ | 31,737 | $ | 17,464 | $ | 13,034 | ||||||||||||||||||
Ratio of expenses to average net assets | 0.70 | %(3) | 0.70 | % | 0.70 | % | 0.70 | % | 0.70 | % | 0.70 | %(3) | ||||||||||||||||||
Ratio of expenses to average net assets without waivers and expense reimbursements(4) | 1.40 | %(3) | 1.34 | % | 1.41 | % | 1.69 | % | 2.49 | % | 2.65 | %(3) | ||||||||||||||||||
Ratio of net investment income to average net assets | 2.30 | %(3) | 2.28 | % | 2.50 | % | 3.07 | % | 3.18 | % | 2.24 | %(3) | ||||||||||||||||||
Portfolio turnover rate | 45.77 | %(5) | 89.75 | % | 132.74 | % | 94.83 | % | 50.01 | % | 98.85 | %(5) |
* | Commencement of operations. |
(1) | The selected per share data was calculated using the average shares outstanding method for the period. |
(2) | Total investment return is calculated assuming a purchase of shares on the first day and a sale of shares on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total returns for periods less than one year are not annualized. |
(3) | Annualized. |
(4) | During the period, certain fees were waived and/or reimbursed. If such fee waivers and/or reimbursements had not occurred, the ratios would have been as indicated (See Note 2). |
(5) | Not annualized. |
The accompanying notes are an integral part of the financial statements.
14
ESTABROOK INVESTMENT GRADE FIXED INCOME FUND
Notes to Financial Statements
October 31, 2015
(Unaudited)
1. Organization and Significant Accounting Policies
Estabrook Investment Grade Fixed Income Fund (the “Fund”) is a diversified, open-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”), which commenced investment operations on July 23, 2010. The Fund is a separate series of FundVantage Trust (the “Trust”) which was organized as a Delaware statutory trust on August 28, 2006. The Trust is a “series trust” authorized to issue an unlimited number of separate series or classes of shares of beneficial interest. Each series is treated as a separate entity for certain matters under the 1940 Act, and for other purposes, and a shareholder of one series is not deemed to be a shareholder of any other series. The Fund offers separate classes of shares: Class A, Class C, Class I and Class R Shares. As of October 31, 2015, Class A, Class C and Class R Shares had not been issued.
The Fund is an investment company and follows accounting and reporting guidance in the Financial Accounting Standards Board Accounting Standards Codification Topic 946.
Portfolio Valuation — The Fund’s net asset value (“NAV”) is calculated once daily at the close of regular trading hours on the New York Stock Exchange (“NYSE”) (typically 4:00 p.m., Eastern time) on each day the NYSE is open. Securities held by the Fund are valued at their last sale price on the NYSE on the day the security is valued. Lacking any sales on such day, the security will be valued at the mean between the last asked price and the last bid price prior to the market close. Securities listed on other exchanges (and not subject to restriction against sale by the Fund on such exchanges) will be similarly valued, using quotations on the exchange on which the security is traded most extensively. Unlisted securities that are quoted on the National Association of Securities Dealers National Market System, for which there have been sales of such securities on such day, shall be valued at the official closing price on such system on the day the security is valued. If there are no such sales on such day, the value shall be the mean between the last asked price and the last bid price prior to market close. The value of such securities quoted on the National Association of Securities Dealers Automatic Quotation System (“NASDAQ”) market system, but not listed on the National Market System, shall be valued at the mean between closing asked price and the closing bid price. Unlisted securities that are not quoted on the NASDAQ and for which over-the-counter market quotations are readily available will be valued at the mean between the current bid and asked prices for such security in the over-the-counter market. Fixed income and preferred securities are valued based on market quotations, which are furnished by an independent pricing service. Fixed income securities having a remaining maturity of 60 days or less are generally valued at amortized cost, provided such amount approximates fair value. Debt securities are valued on the basis of broker quotations or valuations provided by a pricing service, which utilizes information with respect to recent sales, market transactions in comparable securities, quotations from dealers, and various relationships between securities in determining value. Due to continued volatility in the current market, valuations developed through pricing techniques may materially vary from the actual amounts realized upon sale of the securities. Investments in other open-end investment companies are valued based on the NAV of the investment companies (which may use fair value pricing as discussed in their prospectuses).
15
ESTABROOK INVESTMENT GRADE FIXED INCOME FUND
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
If market quotations are unavailable or deemed unreliable, securities will be valued in accordance with procedures adopted by the Trust’s Board of Trustees. Relying on prices supplied by pricing services or dealers or using fair valuation may result in values that are higher or lower than the values used by other investment companies and investors to price the same investments.
Fair Value Measurements — The inputs and valuation techniques used to measure fair value of the Fund’s investments are summarized into three levels as described in the hierarchy below:
· Level 1 — | quoted prices in active markets for identical securities; | |||
· Level 2 — | other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.); and | |||
· Level 3 — | significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments). |
The fair value of the Fund’s bonds is generally based on quotes received from brokers of independent pricing services. Bonds with quotes that are based on actual trades with a sufficient level of activity on or near the measurement date are classified as Level 2 assets.
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
The following is a summary of the inputs used, as of October 31, 2015, in valuing the Fund’s investments carried at fair value:
Total Value at 10/31/15 | Level 1 Quoted Price | Level 2 Other Significant Observable Inputs | Level 3 Significant Unobservable Inputs | |||||||||||||||
Corporate Bonds and Notes | $ | 24,781,754 | $ | — | $ | 24,781,754 | $ | — | ||||||||||
U.S. Treasury Obligations | 7,963,443 | — | 7,963,443 | — | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Total Investments | $ | 32,745,197 | $ | — | $ | 32,745,197 | $ | — | ||||||||||
|
|
|
|
|
|
|
|
At the end of each quarter, management evaluates the classification of Levels 1, 2 and 3 assets and liabilities. Various factors are considered, such as changes in liquidity from the prior reporting period; whether or not a broker is willing to execute at the quoted price; the depth and consistency of prices from third party pricing services; and the existence of contemporaneous, observable trades in the market. Additionally, management evaluates the classification of Level 1 and Level 2 assets and liabilities on a quarterly basis for changes in listings or delistings on national exchanges.
16
ESTABROOK INVESTMENT GRADE FIXED INCOME FUND
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of the Fund’s investments may fluctuate from period to period. Additionally, the fair value of investments may differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially from the values the Fund may ultimately realize. Further, such investments may be subject to legal and other restrictions on resale or otherwise less liquid than publicly traded securities.
For fair valuations using significant unobservable inputs, U.S. generally accepted accounting principles (“U.S. GAAP”) require the Fund to present a reconciliation of the beginning to ending balances for reported market values that presents changes attributable to total realized and unrealized gains or losses, purchase and sales, and transfers in and out of Level 3 during the period. Transfers in and out between Levels are based on values at the end of the period. U.S. GAAP also requires the Fund to disclose amounts and reasons for all transfers in and out of Level 1 and Level 2 fair value measurements. A reconciliation of Level 3 investments is presented only when the Fund had an amount of Level 3 investments at the end of the reporting period that was meaningful in relation to its net assets. The amounts and reasons for all transfers in and out of each Level within the three-tier hierarchy are disclosed when the Fund had an amount of total transfers during the reporting period that was meaningful in relation to its net assets as of the end of the reporting period.
For the six months ended October 31, 2015, there were no transfers between Levels 1, 2 and 3 for the Fund.
Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes at the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates and those differences could be material.
Investment Transactions, Investment Income and Expenses — Investment transactions are recorded on trade date for financial statement preparation purposes. Realized gains and losses on investments sold are recorded on the identified cost basis. Gains and losses on principal paydowns from mortgage backed securities are recorded as interest income on the Statement of Operations. Interest income is recorded on the accrual basis. Accretion of discounts and amortization of premiums are recorded on a daily basis using the effective yield method except for short term securities, which records discounts and premiums on a straight-line basis. Dividends are recorded on the ex-dividend date. General expenses of the Trust are generally allocated to each fund in proportion to its relative daily net assets. Expenses directly attributable to a particular fund in the Trust are charged directly to such fund.
Dividends and Distributions to Shareholders — Dividends from net investment income are declared and paid monthly to shareholders. Distributions, if any, of net short-term capital gain and net capital gain
17
ESTABROOK INVESTMENT GRADE FIXED INCOME FUND
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
(the excess of net long-term capital gain over the short-term capital loss) realized by the Fund, after deducting any available capital loss carryovers are declared and paid to its shareholders annually. Income dividends and capital gain distributions are determined in accordance with U.S. federal income tax regulations, which may differ from U.S. GAAP. These differences include the treatment of non-taxable dividends, expiring capital loss carryforwards and losses deferred due to wash sales and excise tax regulations. Permanent book and tax basis differences relating to shareholder distributions will result in reclassifications within the components of net assets.
U.S. Tax Status — No provision is made for U.S. income taxes as it is the Fund’s intention to continue to qualify for and elect the tax treatment applicable to regulated investment companies under Subchapter M of the Internal Revenue Code of 1986, as amended, and make the requisite distributions to its shareholders which will be sufficient to relieve it from U.S. income and excise taxes.
Other — In the normal course of business, the Fund may enter into contracts that provide general indemnifications. The Fund’s maximum exposure under these arrangements is dependent on claims that may be made against the Fund in the future, and therefore, cannot be estimated; however, based on experience, the risk of material loss for such claims is considered remote.
2. Transactions with Affiliates and Related Parties
Estabrook Capital Management LLC (“Estabrook” or the “Adviser”) serves as the investment adviser to the Fund pursuant to an investment advisory agreement with the Trust (the “Advisory Agreement”). Estabrook Capital Management LLC (the “Adviser”) has contractually agreed to reduce its investment advisory fee and/or reimburse certain expenses of the Fund to the extent necessary to ensure the Fund’s total operating expenses, excluding taxes, any class-specific fees and expenses (such as Rule 12b-1 distribution fees, shareholder service fees, or transfer agency fees), “Acquired Fund” fees and expenses, interest, extraordinary items, and brokerage commissions, do not exceed 0.70% (on an annual basis) of the average daily net assets of the Fund (the “Expense Limitation”). The Expense Limitation will remain in place until August 31, 2016, unless the Board of Trustees of FundVantage Trust (the “Trust”) approves its earlier termination. The Adviser is entitled to recover, subject to approval by the Board of Trustees, such amounts reduced or reimbursed for a period of up to three (3) years from the year in which the Adviser reduced its compensation and/or assumed expenses for the Fund. No recoupment will occur unless the Fund’s expenses are below the Expense Limitation. At October 31, 2015, the amount of potential recovery by the Adviser was as follows:
Expiration April 30, 2016 | Expiration April 30, 2017 | Expiration April 30, 2018 | Expiration April 30, 2019 | |||
$246,984 | $223,993 | $217,797 | $116,752 |
18
ESTABROOK INVESTMENT GRADE FIXED INCOME FUND
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
For the six months ended October 31, 2015, the Adviser earned advisory fees of $108,906 and waived and reimbursed fees of $116,752.
BNY Mellon Investment Servicing (US) Inc. (“BNY Mellon”) serves as administrator and transfer agent for the Fund. For providing administrative and accounting services, BNY Mellon is entitled to receive a monthly fee equal to an annual percentage rate of the Fund’s average net assets and is subject to certain minimum monthly fees. For providing transfer agency services, BNY Mellon is entitled to receive a monthly fee, subject to certain minimum, and out of pocket expenses.
The Bank of New York Mellon (the “Custodian”) provides certain custodial services to the Fund. The Custodian is entitled to receive a monthly fee, subject to certain minimum, and out of pocket expenses.
Foreside Funds Distributors LLC (the “Underwriter”) provides principal underwriting services to the Fund pursuant to an underwriting agreement between the Trust and the Underwriter.
The Trustees of the Trust who are not officers or employees of an investment adviser, sub-adviser or other service provider to the Trust receive compensation in the form of an annual retainer and per meeting fees for their services as a Trustee. The remuneration paid to the Trustees by the Fund during the six months ended October 31, 2015 was $2,557. Certain employees of BNY Mellon serve as Officers of the Trust. They are not compensated by the Fund or the Trust.
3. Investment in Securities
For the six months ended October 31, 2015, aggregate purchases and sales of investment securities (excluding short-term investments) of the Fund were as follows:
Purchases | Sales | |||||||||
Investment Securities | $ | 10,359,260 | $ | 12,820,293 | ||||||
U.S. Government Securities | 4,407,070 | 1,918,980 |
19
ESTABROOK INVESTMENT GRADE FIXED INCOME FUND
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
4. Capital Share Transactions
For the six months ended October 31, 2015 and the year ended April 30, 2015 transactions in capital shares (authorized shares unlimited) were as follows:
For the | ||||||||||||||||
Six Months Ended | For the | |||||||||||||||
October 31, 2015 | Year Ended | |||||||||||||||
(Unaudited) | April 30, 2015 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Class I Shares | ||||||||||||||||
Sales | 5,546 | $ | 56,533 | 52,699 | $ | 545,731 | ||||||||||
Reinvestments | 38,123 | 386,021 | 94,256 | 971,527 | ||||||||||||
Redemption Fees* | — | — | — | 1 | ||||||||||||
Redemptions | (45,042 | ) | (454,958 | ) | (136,649 | ) | (1,411,585 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Net increase | (1,373 | ) | $ | (12,404 | ) | 10,306 | $ | 105,674 | ||||||||
|
|
|
|
|
|
|
|
* | There is a 1.00% redemption fee that may be charged on shares redeemed which have been held for 90 days or less. The redemption fees are retained by the Fund for the benefit of the remaining shareholders and recorded as paid-in-capital. |
5. Federal Tax Information
The Fund has followed the authoritative guidance on accounting for and disclosure of uncertainty in tax positions, which requires the Fund to determine whether a tax position is more likely than not to be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The Fund has determined that there was no effect on the financial statements from following this authoritative guidance. In the normal course of business, the Fund is subject to examination by federal, state and local jurisdictions, where applicable, for tax years for which applicable statutes of limitations have not expired.
For the year ended April 30, 2015, the tax character of distributions paid by the Fund was $828,122 of ordinary income dividends and $152,221 of long-term capital gains dividends. For the year ended April 30, 2014, the tax character of distributions paid by the Fund was $779,824 of ordinary income dividends and $201,465 of long-term capital gains dividends. Distributions from net investment income and short-term capital gains were treated as ordinary income for federal income tax purposes.
20
ESTABROOK INVESTMENT GRADE FIXED INCOME FUND
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
As of April 30, 2015, components of distributable earnings on a tax basis were as follows:
Capital Loss Carryforward | Undistributed Ordinary Income | Undistributed Long-Term Gain | Unrealized Appreciation | Qualified Late-Year Losses | ||||
$ — | $— | $103,594 | $281,928 | $(61,888) |
The differences between the book and tax basis components of distributable earnings relate primarily to the timing and recognition of income and gains for federal income tax purposes. Short-term capital gains are reported as ordinary income for federal income tax purposes.
As of October 31, 2015, the federal tax cost, aggregate gross unrealized appreciation and depreciation of securities held by the Fund were as follows:
Federal tax cost | $ | 32,873,539 | ||||
|
| |||||
Gross unrealized appreciation | $ | 277,823 | ||||
Gross unrealized depreciation | (406,165 | ) | ||||
|
| |||||
Net unrealized depreciation | $ | (128,342 | ) | |||
|
|
Pursuant to federal income tax rules applicable to regulated investment companies, the Funds may elect to treat certain capital losses between November 1 and April 30 and late year ordinary losses ((i) ordinary losses between January 1 and April 30, and (ii) specified ordinary and currency losses between November 1 and April 30) as occurring on the first day of the following tax year. For the year ended April 30, 2015, any amount of losses elected within the tax return will not be recognized for federal income tax purposes until May 1, 2015. For the year ended April 30, 2015 the Fund had short term capital loss deferrals of $61,888.
Accumulated capital losses represent net capital loss carryforwards as of April 30, 2015 that may be available to offset future realized capital gains and thereby reduce future capital gains distributions. As of April 30, 2015 the Fund did not have any capital loss carryforwards.
6. Debt Investment Risk
Debt investments are affected primarily by the financial condition of the companies or other entities that have issued them and by changes in interest rates. There is a risk that an issuer of a Fund’s debt investments may not be able to meet its financial obligations (e.g., may not be able to make principal and/or interest payments when they are due or otherwise default on other financial terms) and/or go bankrupt. Securities such as high-yield/high-risk bonds, e.g., bonds with low credit ratings by Moody’s (Ba or lower) or Standard & Poor’s (BB and lower) or if unrated are of comparable quality as determined by the manager, are especially subject to credit risk during periods of economic uncertainty or during economic downturns and are more likely to default on their interest and/or principal payments than higher
21
ESTABROOK INVESTMENT GRADE FIXED INCOME FUND
Notes to Financial Statements (Concluded)
October 31, 2015
(Unaudited)
rated securities. Debt investments may be affected by changes in interest rates. Debt investments with longer durations tend to be more sensitive to changes in interest rates, making them more volatile than debt investments with shorter durations or floating or adjustable interest rates. The value of debt investments may fall when interest rates rise.
7. Subsequent Events
Management has evaluated the impact of all subsequent events on the Fund through the date the financial statements were issued and has determined that there were no subsequent events requiring recognition or disclosure in the financial statements.
22
ESTABROOK INVESTMENT GRADE FIXED INCOME FUND
Other Information
(Unaudited)
Proxy Voting
Policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities as well as information regarding how the Fund voted proxies relating to portfolio securities for the most recent 12-month period ended June 30 are available without charge, upon request, by calling (888) 447-7443 and on the Securities and Exchange Commission’s (“SEC”) website at http:// www.sec.gov.
Quarterly Portfolio Schedules
The Trust files its complete schedule of portfolio holdings with the SEC for the first and third fiscal quarters of each fiscal year (quarters ended July 31 and January 31) on Form N-Q. The Trust’s Forms N-Q are available on the SEC’s website at http://www.sec.gov and may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. Information on the operation of the SEC’s Public Reference Room may be obtained by calling 1-800-SEC-0330.
Approval of Investment Advisory Agreement
At an in-person meeting held on June 23-24, 2015 (the “Meeting”), the Board of Trustees (the “Board” or “Trustees”) of FundVantage Trust (“Trust”), including a majority of the Trustees who are not “interested persons” as defined in the Investment Company Act of 1940, as amended (“1940 Act”) (the “Independent Trustees”), unanimously approved the continuation of the advisory agreement (“Agreement”) between Estabrook Capital Management LLC (the “Adviser” or “Estabrook”) and the Trust on behalf of the Estabrook Investment Grade Fixed Income Fund (the “Fund”) for an additional one year period. In determining whether to continue the Agreement, the Trustees considered information provided by the Adviser in accordance with Section 15(c) of the 1940 Act. The Trustees considered information that the Adviser provided regarding (i) services performed for the Fund, (ii) the size and qualifications of the Adviser’s portfolio management staff, (iii) any potential or actual material conflicts of interest which may arise in connection with a portfolio manager’s management of the Fund, (iv) investment performance, (v) the capitalization and financial condition of the Adviser, (vi) brokerage selection procedures (including soft dollar arrangements, if any), (vii) the procedures for allocating investment opportunities between the Fund and other clients, (viii) results of any regulatory examination, including any recommendations or deficiencies noted, (ix) any litigation, investigation or administrative proceeding which may have a material impact on the Adviser’s ability to service the Fund, (x) compliance with the Fund’s investment objective, policies and practices (including codes of ethics and proxy voting policies), and (xi) compliance with federal securities laws and other regulatory requirements. The Trustees noted the reports and discussions with portfolio managers at Board meetings throughout the year covering matters such as the relative performance of the Fund; compliance with the investment objectives, policies, strategies and limitations for the Fund; the compliance of management personnel with the applicable code of ethics; and the adherence to fair value pricing
23
ESTABROOK INVESTMENT GRADE FIXED INCOME FUND
Other Information (Continued)
(Unaudited)
procedures as established by the Board. The Trustees also noted that they had previously received and reviewed a memorandum from legal counsel regarding the legal standard applicable to their review of the Agreement.
Representatives from Estabrook attended the meeting both in person and via teleconference. The representatives discussed Estabrook’s history, performance and investment strategy in connection with the proposed continuation of the Agreement and answered questions from the Board.
The Trustees considered the investment performance of the Fund and the Adviser. The Trustees reviewed the historical performance charts for the Fund, the Fund’s benchmark, the Barclay’s Intermediate U.S. Government/Credit Bond Index and the Lipper Core Bond Fund category for the year-to-date, one year, two year, three year and since inception periods ended March 31, 2015. The Trustees noted that the Fund’s Class I shares, currently the Fund’s only operational share class, underperformed its benchmark for the year to date, one year and two year periods ended March 31, 2015 and outperformed for the three year and since inception periods ended March 31, 2015. The Trustees further noted that the Fund underperformed the median of the Lipper Core Bond Fund category for the year to date, one year and two year periods ended March 31, 2015, but outperformed for the three year period ended March 31, 2015. The Trustees concluded that the performance of the Fund was within an acceptable range of performance relative to other mutual funds with similar investment objectives, strategies and policies based on the information provided at the Meeting.
The Adviser provided information regarding its advisory fees and an analysis of these fees in relation to the delivery of services to the Fund and any other ancillary benefit resulting from the Adviser’s relationship with the Fund. The Trustees also reviewed a peer comparison of advisory fees and total expenses for the Fund versus other similarly managed funds. The Trustees noted that the Fund’s net expense ratio and gross advisory fee were higher than the median of the net expense ratios and gross advisory fee of funds in the Lipper Core Bond Fund category with $250 million or less in assets. The Trustees also noted that Estabrook does not manage any products other than the Fund with a similar strategy. The Trustees concluded that the advisory fee and services provided by the Adviser are sufficiently consistent with those of other advisers which manage mutual funds with investment objectives, strategies and policies similar to those of the Fund based on the information provided at the Meeting.
The Board considered the level and depth of knowledge of the Adviser, including the professional experience and qualifications of senior personnel. In evaluating the quality of services provided by the Adviser, the Board took into account its familiarity with the Adviser’s senior management through Board meetings, discussions and reports during the preceding year. The Board also took into account the Adviser’s compliance policies and procedures and reports regarding the Adviser’s compliance operations from the Trust’s Chief Compliance Officer. The Board also considered any potential conflicts of interest that may arise in a portfolio manager’s management of the Fund’s investments on the one hand, and the investments of other accounts, on the other. The Trustees reviewed the services provided to the Fund by the Adviser
24
ESTABROOK INVESTMENT GRADE FIXED INCOME FUND
Other Information (Concluded)
(Unaudited)
and concluded that the nature, extent and quality of the services provided were appropriate and consistent with the terms of the Agreement, that the quality of the services appeared to be consistent with industry norms and that the Fund is likely to benefit from the continued receipt of those services. They also concluded that the Adviser has sufficient personnel, with the appropriate education and experience, to serve the Fund effectively and had demonstrated their ability to attract and retain qualified personnel.
The Trustees considered the costs of the services provided by the Adviser, the compensation and benefits received by the Adviser in providing services to the Fund, as well as its profitability. The Trustees were provided with the Adviser’s most recent balance sheet and income statement. The Trustees noted that the Adviser’s level of profitability is an appropriate factor to consider, and the Trustees should be satisfied that the Adviser’s profits are sufficient to continue as a healthy concern generally and as investment adviser of the Fund specifically. The Trustees noted that the Adviser waived a portion of its advisory fee with respect to the Fund in order to maintain the stated cap on Fund operating expenses pursuant to a contractual expense limitation agreement. The Trustees noted that the Adviser’s contractual advisory fee level was reasonable in relation to the nature and quality of the services provided, taking into account the fees charged by other advisers for managing comparable mutual funds with similar strategies. The Trustees also concluded that the overall expense ratio of the Fund was reasonable, taking into account the quality of services provided by the Adviser and the current size and projected growth of the Fund during the renewal term.
The Trustees considered the extent to which economies of scale would be realized relative to fee levels as the Fund grows, and whether the advisory fee levels reflect these economies of scale for the benefit of shareholders. The Trustees noted that economies of scale may be achieved at higher asset levels for the Fund for the benefit of fund shareholders but that because such economies of scale did not yet exist and were not likely to exist in the near term, it was not appropriate to incorporate a mechanism for sharing the benefit of such economies with Fund shareholders in the advisory fee structure at this time.
In voting to approve the continuation of the Agreement, the Board considered all factors it deemed relevant and the information presented to the Board by the Adviser. In arriving at its decision, the Board did not identify any single factor as being of paramount importance and each member of the Board gave varying weights to each factor according to his or her own judgment. The Board determined that the continuation of the Agreement would be in the best interests of the Fund and its shareholders. As a result, the Board, including a majority of the Independent Trustees, unanimously approved the continuation of the Agreement for an additional one year period.
25
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[THIS PAGE INTENTIONALLY LEFT BLANK.]
Investment Adviser
Estabrook Capital Management LLC
900 Third Avenue, 10th Floor
New York, NY 10022
Administrator and Fund Accounting Agent
BNY Mellon Investment Servicing (US) Inc.
301 Bellevue Parkway
Wilmington, DE 19809
Transfer Agent and Dividend Disbursing Agent
BNY Mellon Investment Servicing (US) Inc.
4400 Computer Drive
Westborough, MA 01581
Principal Underwriter
Foreside Funds Distributors LLC
400 Berwyn Park
899 Cassatt Road
Berwyn, PA 19312
Custodian
The Bank of New York Mellon
225 Liberty Street
New York, NY 10286
Independent Registered Public Accounting Firm
PricewaterhouseCoopers LLP
Two Commerce Square, Suite 1700
2001 Market Street
Philadelphia, PA 19103-7042
Legal Counsel
Pepper Hamilton LLP
3000 Two Logan Square
18th and Arch Streets
Philadelphia, PA 19103
EST-1015
ESTABROOK INVESTMENT
GRADE FIXED INCOME
FUND
of
FundVantage Trust
Class I
SEMI-ANNUAL
REPORT
October 31, 2015
(Unaudited)
This report is submitted for the general information of the shareholders of the Estabrook Investment Grade Fixed Income Fund. It is not authorized for distribution unless preceded or accompanied by a current prospectus for the Estabrook Investment Grade Fixed Income Fund.
INSIGHT INVESTMENT GRADE BOND FUND
of
FundVantage Trust
Institutional Class
SEMI-ANNUAL REPORT
October 31, 2015
(Unaudited)
This report is submitted for the general information of the shareholders of the Insight Investment Grade Bond Fund. It is not authorized for distribution unless preceded or accompanied by a current prospectus for the Insight Investment Grade Bond Fund.
INSIGHT INVESTMENT GRADE BOND FUND
(formerly Cutwater Investment Grade Bond Fund)
Semi-Annual Report
Performance Data
October 31, 2015
(Unaudited)
Average Annual Total Returns for the Periods Ended October 31, 2015 | ||||||||
Six Months† | 1 Year | 3 Year | Since Inception* | |||||
Institutional Class | -0.77% | 1.20% | 2.33% | 3.91% | ||||
Barclays U.S. Aggregate Bond Index | -0.47% | 2.94% | 1.71% | 3.42%** |
† | Not Annualized. |
* | The Insight Investment Grade Bond Fund (the “Fund”) commenced operations on December 2, 2010. |
** | Benchmark performance is from inception date of the Fund only and is not the inception date of the benchmark itself. |
The performance data quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment in the Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. The graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares. Current performance may be lower or higher. Performance data current to the most recent month-end may be obtained by calling (866) 678-6242.
The Fund’s total annual gross operating expense ratio for Institutional Class shares of the Fund, as stated in the current prospectus dated September 1, 2015, is 1.27% of the Fund’s average daily net assets, which may differ from the actual expenses incurred by the Fund for the period covered by this report. Cutwater Investor Services Corp. (d/b/a Insight Investment and referred to herein as the “Adviser”) has voluntarily agreed to reduce its investment advisory fee and/or reimburse certain expenses of the Fund to the extent necessary to ensure that the Fund’s total operating expenses (excluding any class-specific fees and expenses, interest, extraordinary items and brokerage commissions) do not exceed 0.85% (on an annual basis) of the Fund’s average daily net assets (the “Expense Limitation”). Such Expense Limitation will continue until the Adviser notifies the Fund of a change in its voluntary Expense Limitation or its discontinuation. This Expense Limitation may be discontinued at any time at the discretion of the Adviser. Total returns would be lower had such fees and expenses not been waived and/or reimbursed.
A 1.00% redemption fee applies to shares redeemed within 60 days of purchase. The redemption fee is not reflected in the returns shown above.
The Fund intends to evaluate performance as compared to that of the Barclays U.S. Aggregate Bond Index. The Barclays U.S. Aggregate Bond Index is an unmanaged index which represents the U.S. investment grade bond market. References to an index over a specific period are provided for your information only and should not be considered indicative of an investment in the Insight Investment Grade Bond Fund. Note that an index is unmanaged and the information contained herein does not reflect any investment management fees or transaction costs. It is impossible to invest directly in an index.
All mutual fund investing involves risk, including possible loss of principal. The Fund is subject to the risks of the fixed-income securities in its portfolio such as credit, prepayment and interest rate risk. As interest rates rise, the value of bond prices will decline and an investor may lose money.
3
INSIGHT INVESTMENT GRADE BOND FUND
(formerly Cutwater Investment Grade Bond Fund)
Fund Expense Disclosure
October 31, 2015
(Unaudited)
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including redemption fees; and (2) ongoing costs, including management fees and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
This example is based on an investment of $1,000 invested at the beginning of the six-month period from May 1, 2015 through October 31, 2015 and held for the entire period.
Actual Expenses
The first line of the accompanying table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not your Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that the expenses shown in the accompanying table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as redemption fees. Therefore, the second line of the accompanying table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Insight Investment Grade Bond Fund | ||||||
Beginning Account Value May 1, 2015 | Ending Account Value October 31, 2015 | Expenses Paid During Period* | ||||
Institutional Class | ||||||
Actual | $ 1,000.00 | $ 992.30 | $4.26 | |||
Hypothetical (5% return before expenses) | 1,000.00 | 1,020.86 | 4.32 |
* | Expenses are equal to an annualized expense ratio for the six-month period ended October 31, 2015 of 0.85% for the Institutional Shares of the Fund, multiplied by the average account value over the period, multiplied by the number of days in the most recent period (184), then divided by 366 to reflect the period. The Fund’s ending account value on the first line in the table is based on the actual six month total returns for the Fund of (0.77%). |
4
INSIGHT INVESTMENT GRADE BOND FUND
(formerly Cutwater Investment Grade Bond Fund)
Portfolio Holdings Summary Table
October 31, 2015
(Unaudited)
The following table presents a summary by security type of the portfolio holdings of the Fund:
% of Net Assets | Value | |||||||||
Corporate Bonds and Notes | 50.3 | % | $ | 19,346,704 | ||||||
Residential Mortgage-Backed Securities | 14.7 | 5,671,006 | ||||||||
U.S. Treasury Obligations | 11.4 | 4,381,335 | ||||||||
Asset Backed Securities | 9.3 | 3,587,919 | ||||||||
Commercial Mortgage-Backed Securities | 7.9 | 3,036,955 | ||||||||
Registered Investment Company | 3.4 | 1,291,548 | ||||||||
Municipal Bonds | 1.7 | 663,043 | ||||||||
Preferred Stock | 1.4 | 537,875 | ||||||||
Liabilities in Excess of Other Assets | (0.1 | ) | (38,590 | ) | ||||||
|
|
|
|
| ||||||
NET ASSETS | 100.0 | % | $ | 38,477,795 | ||||||
|
|
|
|
|
Portfolio holdings are subject to change at any time.
The accompanying notes are an integral part of the financial statements.
5
INSIGHT INVESTMENT GRADE BOND FUND
(formerly Cutwater Investment Grade Bond Fund)
Portfolio of Investments
October 31, 2015
(Unaudited)
Moody’s/ Standard & Poor’s Rating(a) | Principal Amount (000’s) | Value | ||||||||
CORPORATE BONDS AND NOTES — 50.3% | ||||||||||
Agriculture — 0.2% | ||||||||||
Altria Group, Inc., Co. Gty., 2.85%, 08/09/22 | Baa1/BBB+ | $ | 56 | $ | 55,356 | |||||
|
| |||||||||
Airlines — 1.5% | ||||||||||
American Airlines 2013-2 Class B Pass Through Trust, 5.60%, 01/15/22 144A | NR/BBB- | 371 | 381,321 | |||||||
British Airways 2013-1 Class B Pass Through Trust, 5.625%, 12/20/21 144A | Baa2/BBB | 200 | 208,235 | |||||||
|
| |||||||||
589,556 | ||||||||||
|
| |||||||||
Automotive — 0.8% | ||||||||||
FCA US LLC/CG Co. Issuer, Inc., Sec. Notes, 8.25%, 06/15/21 (b) | B1/BB- | 300 | 321,000 | |||||||
|
| |||||||||
Diversified Financial Services — 17.6% | ||||||||||
AerCap Ireland Capital Ltd./AerCap Global Aviation Trust, Co. Gty., | Ba2/BB+ | 150 | 155,438 | |||||||
AerCap Ireland Capital Ltd./AerCap Global Aviation Trust, Co. Gty., | Ba2/BB+ | 250 | 256,875 | |||||||
Bank of America Corp., Sr. Unsec. Notes, 5.75%, 12/01/17 | Baa1/A- | 210 | 226,905 | |||||||
Bank of America Corp., Sr. Unsec. Notes, 5.875%, 01/05/21 | Baa1/A- | 320 | 365,824 | |||||||
BB&T Corp., Sr. Unsec. Notes, 1.197%, 06/15/18 (b)(c) | A2/A- | 405 | 407,270 | |||||||
Bear Stearns Cos., LLC (The), Sr. Unsec. Notes, 6.40%, 10/02/17 | A3/A | 267 | 290,764 | |||||||
BioMed Realty LP, Co. Gty., REIT, 6.125%, 04/15/20 (b) | Baa2/BBB | 226 | 244,120 | |||||||
Citigroup, Inc., Sub. Notes, 5.30%, 05/06/44 | Baa3/BBB+ | 225 | 238,735 | |||||||
Credit Agricole SA., Sub. Notes, 4.375%, 03/17/25 144A | Baa3/BBB | 310 | 305,638 | |||||||
EPR Properties, Co. Gty., REIT, 5.75%, 08/15/22 (b) | Baa2/BBB- | 358 | 379,929 | |||||||
GE Capital International Funding Co., Co. Gty., 2.342%, 11/15/20 144A | A1/AA+ | 215 | 215,617 | |||||||
General Electric Capital Corp., Co. Gty., 5.30%, 02/11/21 | A2/AA | 75 | 85,615 | |||||||
General Electric Capital Corp., Co. Gty., 5.25%, 06/15/23 (b)(c)(d) | Baa1/A+ | 400 | 418,000 | |||||||
Goldman Sachs Group, Inc. (The), Sr. Unsec. Notes, 2.375%, 01/22/18 | A3/A- | 91 | 92,418 | |||||||
HSBC Capital Funding LP/Jersey Channel Islands, Ltd., Co. Gty., | Baa1/BBB- | 325 | 490,750 | |||||||
ING Bank NV, Sub. Notes, 4.125%, 11/21/23 (b)(c) | Baa2/BBB | 350 | 359,625 | |||||||
JPMorgan Chase & Co., Jr. Sub. Notes, 7.90%, 04/30/18 (b)(c)(d) | Baa3/BBB- | 387 | 402,093 | |||||||
Morgan Stanley, Jr. Sub. Notes, 5.45%, 07/15/19 (b)(c)(d) | Ba1/BB | 365 | 359,069 | |||||||
Morgan Stanley, Sr. Unsec. Notes, 5.50%, 07/24/20 | A3/A- | 425 | 477,428 | |||||||
Morgan Stanley, Sr. Unsec. Notes, 4.30%, 01/27/45 | A3/A- | 40 | 38,336 | |||||||
Santander UK Group Holdings PLC, Sr. Unsec. Notes, 2.875%, 10/16/20 | Baa1/BBB | 130 | 129,931 | |||||||
Sinochem Overseas Capital Co., Ltd., Co. Gty., 6.30%, 11/12/40 144A | A3/A- | 211 | 252,645 | |||||||
State Street Corp., Sr. Unsec. Notes, 3.55%, 08/18/25 | A2/A+ | 75 | 77,002 | |||||||
US Bank N.A., Sr. Unsec. Notes, 0.803%, 10/28/19 (b)(c) | A1/AA- | 490 | 487,591 | |||||||
|
| |||||||||
6,757,618 | ||||||||||
|
| |||||||||
Energy — 2.6% | ||||||||||
BG Energy Capital PLC, Co. Gty., 6.50%, 11/30/72 (b)(c) | Baa1/BBB | 300 | 318,401 | |||||||
CITGO Petroleum Corp., Sr. Sec. Notes, 6.25%, 08/15/22 144A(b) | B3/B+ | 350 | 343,000 | |||||||
Hess Corp., Sr. Unsec. Notes, 5.60%, 02/15/41 | Baa2/BBB | 150 | 146,862 | |||||||
Noble Energy, Inc., Sr. Unsec. Notes, 8.25%, 03/01/19 | Baa2/BBB | 146 | 170,074 | |||||||
|
| |||||||||
978,337 | ||||||||||
|
| |||||||||
Food — 1.1% | ||||||||||
JBS USA LLC/JBS USA Finance, Inc., Sr. Unsec. Notes, | Ba2/BB+ | 200 | 193,500 |
The accompanying notes are an integral part of the financial statements.
6
INSIGHT INVESTMENT GRADE BOND FUND
(formerly Cutwater Investment Grade Bond Fund)
Portfolio of Investments (Continued)
October 31, 2015
(Unaudited)
Moody’s/ Standard & Poor’s Rating(a) | Principal Amount (000’s) | Value | ||||||||
CORPORATE BONDS AND NOTES — (Continued) | ||||||||||
Food — (Continued) | ||||||||||
Kraft Heinz Foods Co., Co. Gty., 5.20%, 07/15/45 144A(b) | Baa3/BBB- | $ | 45 | $ | 47,708 | |||||
Sysco Corp., Co. Gty., 2.60%, 10/01/20 (b) | A2/A- | 175 | 176,792 | |||||||
|
| |||||||||
418,000 | ||||||||||
|
| |||||||||
Healthcare — 1.7% | ||||||||||
Actavis Funding SCS, Co. Gty., 4.75%, 03/15/45 (b) | Baa3/BBB- | 30 | 28,689 | |||||||
Fresenius Medical Care US Finance, Inc., Co. Gty., 5.75%, 02/15/21 144A | Ba2/BB+ | 325 | 352,625 | |||||||
Medtronic, Inc., Co. Gty., 4.625%, 03/15/45 | A3/A | 140 | 147,177 | |||||||
Memorial Sloan-Kettering Cancer Center, Sr. Unsec. Notes, 4.20%, 07/01/55 | Aa3/AA- | 115 | 109,146 | |||||||
|
| |||||||||
637,637 | ||||||||||
|
| |||||||||
Industrial — 3.3% | ||||||||||
ADT Corp. (The), Sr. Unsec. Notes, 6.25%, 10/15/21 | Ba2/BB- | 175 | 189,000 | |||||||
Case New Holland Industrial, Inc., Co. Gty., 7.875%, 12/01/17 | Ba1/BB+ | 170 | 183,812 | |||||||
CNH Industrial Capital LLC, Co. Gty., 3.875%, 07/16/18 144A | Ba1/BB | 90 | 90,225 | |||||||
ERAC USA Finance LLC, Co. Gty., 4.50%, 02/15/45 144A(b) | Baa1/BBB+ | 215 | 199,891 | |||||||
Heathrow Funding Ltd., Sr. Sec. Notes, 4.875%, 07/15/23 144A | NR/A- | 100 | 109,489 | |||||||
Penske Truck Leasing Co. LP/PTL Finance Corp., Sr. Unsec. Notes, | Baa3/BBB- |
| 201 |
|
| 196,198 |
| |||
Samarco Mineracao SA, Sr. Unsec. Notes, 5.75%, 10/24/23 144A | Baa3/BB+ | 275 | 244,668 | |||||||
Sydney Airport Finance Co. Pty Ltd., Sr. Sec. Notes, 3.375%, 04/30/25 144A(b) | Baa2/BBB | 70 | 66,850 | |||||||
|
| |||||||||
1,280,133 | ||||||||||
|
| |||||||||
Insurance — 5.3% | ||||||||||
ACE INA Holdings, Inc., Co. Gty., 3.35%, 05/03/26 (b) | A3/(P)A | 35 | 35,118 | |||||||
ACE INA Holdings, Inc., Co. Gty., 4.35%, 11/03/45 (b) | A3/(P)A | 25 | 25,308 | |||||||
Allstate Corp. (The), Jr. Sub. Notes, 6.50%, 05/15/67 (b)(c) | Baa1/BBB | 325 | 359,125 | |||||||
American Financial Group, Inc., Sr. Unsec. Notes, 9.875%, 06/15/19 | Baa1/BBB+ | 130 | 160,579 | |||||||
American International Group, Inc., Jr. Sub. Notes, 8.175%, 05/15/68 (b)(c) | Baa2/BBB | 325 | 429,000 | |||||||
Liberty Mutual Group, Inc., Co. Gty., 7.00%, 03/07/67 144A(b)(c) | Baa3/BB+ | 208 | 199,420 | |||||||
Prudential Financial, Inc., Jr. Sub. Notes, 5.20%, 03/15/44 (b)(c) | Baa2/BBB+ | 400 | 397,000 | |||||||
SAFG Retirement Services, Inc., Sr. Unsec. Notes, 8.125%, 04/28/23 | Baa1/A- | 145 | 181,950 | |||||||
Travelers Cos., Inc. (The), Jr. Sub. Notes, 6.25%, 03/15/67 (b)(c) | A3/NR | 244 | 248,880 | |||||||
|
| |||||||||
2,036,380 | ||||||||||
|
| |||||||||
Media — 2.3% | ||||||||||
CCO Safari II LLC, Sr. Sec. Notes, 4.464%, 07/23/22 144A(b) | Ba1/BBB- | 220 | 223,190 | |||||||
Numericable-SFR SAS, Sr. Sec. Notes, 6.25%, 05/15/24 144A(b) | B1/B+ | 250 | 250,000 | |||||||
VTR Finance BV, Sr. Sec. Notes, 6.875%, 01/15/24 144A(b) | B1/B+ | 425 | 411,188 | |||||||
|
| |||||||||
884,378 | ||||||||||
|
| |||||||||
Mining — 0.9% | ||||||||||
BHP Billiton Finance USA Ltd., Co. Gty., 6.75%, 10/19/75 144A(b)(c) | A3/A- | 200 | 204,250 | |||||||
Teck Resources Ltd., Co. Gty., 5.20%, 03/01/42 (b) | Ba1/BB | 296 | 158,360 | |||||||
|
| |||||||||
362,610 | ||||||||||
|
|
The accompanying notes are an integral part of the financial statements.
7
INSIGHT INVESTMENT GRADE BOND FUND
(formerly Cutwater Investment Grade Bond Fund)
Portfolio of Investments (Continued)
October 31, 2015
(Unaudited)
Moody’s/ | ||||||||||
Standard & | Principal | |||||||||
Poor’s | Amount | |||||||||
Rating(a) | (000’s) | Value | ||||||||
CORPORATE BONDS AND NOTES — (Continued) | ||||||||||
Pipe Lines Ex Natural Gas — 4.2% | ||||||||||
Columbia Pipeline Group, Inc., Co. Gty., 4.50%, 06/01/25 144A(b) | Baa2/BBB- | $ | 70 | $ | 67,363 | |||||
Energy Transfer Partners LP, Sr. Unsec. Notes, 5.15%, 03/15/45 (b) | Baa3/BBB- | 160 | 127,695 | |||||||
Enterprise Products Operating LLC, Co. Gty., 7.034%, 01/15/68 (b)(c) | Baa2/BBB- | 211 | 222,869 | |||||||
IFM US Colonial Pipeline 2 LLC, Sr. Sec. Notes, 6.45%, 05/01/21 144A(b) | NR/BBB- | 175 | 189,738 | |||||||
Kinder Morgan Energy Partners LP, Co. Gty., 9.00%, 02/01/19 | Baa3/BBB- | 130 | 150,117 | |||||||
Kinder Morgan, Inc., Co. Gty., 5.55%, 06/01/45 (b) | Baa3/BBB- | 365 | 307,276 | |||||||
Regency Energy Partners LP/Regency Energy Finance Corp., Co. Gty., | Baa3/BBB- | 370 | 382,950 | |||||||
Williams Partners LP/ACMP Finance Corp., Sr. Unsec. Notes, | Baa2/BBB | 190 | 171,494 | |||||||
|
| |||||||||
1,619,502 | ||||||||||
|
| |||||||||
Telecommunications — 5.8% | ||||||||||
AT&T, Inc., Sr. Unsec. Notes, 4.50%, 05/15/35 (b) | Baa1/BBB+ | 300 | 280,606 | |||||||
AT&T, Inc., Sr. Unsec. Notes, 4.75%, 05/15/46 (b) | Baa1/BBB+ | 70 | 64,271 | |||||||
Bharti Airtel International Netherlands BV, Co. Gty., 5.35%, 05/20/24 144A | Baa3/BBB- | 360 | 386,748 | |||||||
Frontier Communications Corp., Sr. Unsec. Notes, 8.50%, 04/15/20 | Ba3/BB- | 325 | 334,750 | |||||||
Frontier Communications Corp., Sr. Unsec. Notes, 11.00%, 09/15/25 | Ba3/BB- | 22 | 23,059 | |||||||
QUALCOMM, Inc., Sr. Unsec. Notes, 3.45%, 05/20/25 (b) | A1/A+ | 420 | 403,352 | |||||||
Qwest Corp., Sr. Unsec. Notes, 7.25%, 10/15/35 (b) | Baa3/BBB- | 195 | 194,415 | |||||||
T-Mobile USA, Inc., Co. Gty., 6.625%, 04/01/23 (b) | Ba3/BB | 227 | 231,894 | |||||||
Verizon Communications, Inc., Sr. Unsec. Notes, 2.086%, 09/14/18 (c) | Baa1/BBB+ | 195 | 200,321 | |||||||
Verizon Communications, Inc., Sr. Unsec. Notes, 6.55%, 09/15/43 | Baa1/BBB+ | 8 | 9,576 | |||||||
Verizon Communications, Inc., Sr. Unsec. Notes, 5.012%, 08/21/54 | Baa1/BBB+ | 60 | 55,464 | |||||||
Verizon Communications, Inc., Sr. Unsec. Notes, 4.672%, 03/15/55 | Baa1/BBB+ | 72 | 63,270 | |||||||
|
| |||||||||
2,247,726 | ||||||||||
|
| |||||||||
Utilities — 3.0% | ||||||||||
Black Hills Corp., Sr. Unsec. Notes, 4.25%, 11/30/23 (b) | Baa1/BBB | 100 | 104,573 | |||||||
Duquesne Light Holdings, Inc., Sr. Unsec. Notes, 6.40%, 09/15/20 144A | Baa3/BBB- | 163 | 186,128 | |||||||
Electricite de France SA, Jr. Sub. Notes, 5.25%, 01/29/23 144A(b)(c)(d) | Baa1/BBB | 208 | 206,960 | |||||||
IPALCO Enterprises, Inc., Sr. Sec. Notes, 3.45%, 07/15/20 144A(b) | Baa3/BB+ | 145 | 143,188 | |||||||
Southern Power Co., Sr. Unsec. Notes, 5.25%, 07/15/43 | Baa1/BBB+ | 170 | 170,737 | |||||||
UIL Holdings Corp., Sr. Unsec. Notes, 4.625%, 10/01/20 | Baa2/BBB- | 325 | 346,885 | |||||||
|
| |||||||||
1,158,471 | ||||||||||
|
| |||||||||
TOTAL CORPORATE BONDS AND NOTES (Cost $19,304,923) | 19,346,704 | |||||||||
|
| |||||||||
ASSET BACKED SECURITIES — 9.3% | ||||||||||
AmeriCredit Automobile Receivables Trust, Series 2012-3, Class C, | Aaa/AAA | 201 | 201,655 | |||||||
Carlyle Global Market Strategies CLO Ltd., Series 2014-3A, Class B, | A2/NR | 500 | 494,345 | |||||||
CPS Auto Receivables Trust, Series 2015-B, Class A, 1.65%, 11/15/19 | NR/AA- | 153 | 152,512 | |||||||
Goldentree Loan Opportunities V, Ltd., Series 2007-5A, Class B, CLO, | Aaa/AAA | 500 | 495,660 | |||||||
Jefferson Mill CLO Ltd., Series 2015-1A, Class X, 1.282%, 07/20/27 | Aaa/NR | 250 | 249,906 | |||||||
North End CLO, Ltd., Series 2013-1A, Class B, 1.965%, 07/17/25 | NR/AA | 1,000 | 971,760 |
The accompanying notes are an integral part of the financial statements.
8
INSIGHT INVESTMENT GRADE BOND FUND
(formerly Cutwater Investment Grade Bond Fund)
Portfolio of Investments (Continued)
October 31, 2015
(Unaudited)
Moody’s/ | ||||||||||
Standard & | Principal | |||||||||
Poor’s | Amount | |||||||||
Rating(a) | (000’s) | Value | ||||||||
ASSET BACKED SECURITIES — (Continued) | ||||||||||
Santander Drive Auto Receivables Trust, Series 2015-4, Class A2A, | Aaa/NR | $ | 212 | $ | 212,438 | |||||
Sonic Capital LLC, Series 2011-1A, Class A2, 5.438%, 05/20/41 144A(b) | Baa2/BBB | 106 | 108,722 | |||||||
Spirit Master Funding LLC, Series 2014-2A, Class A, 5.76%, 03/20/42 144A(b) | NR/A+ | 301 | 326,959 | |||||||
TAL Advantage V LLC, Series 2013-1A, Class A, 2.83%, 02/22/38 144A(b) | NR/A | 309 | 310,454 | |||||||
TAL Advantage V LLC, Series 2014-2A, Class A1, 1.70%, 05/20/39 144A(b) | NR/A | 64 | 63,508 | |||||||
|
| |||||||||
TOTAL ASSET BACKED SECURITIES (Cost $3,577,594) | 3,587,919 | |||||||||
|
| |||||||||
COMMERCIAL MORTGAGE-BACKED SECURITIES — 7.9% | ||||||||||
BLCP Hotel Trust, Series 2014-CLRN, Class B, 1.547%, 08/15/29 | NR/AA- | 305 | 301,021 | |||||||
Citigroup Commercial Mortgage Trust, Series 2013-375P, Class D, | Baa1/NR | 350 | 338,357 | |||||||
FREMF Mortgage Trust, Series 2015-K44, Class B, 3.685%, 01/25/48 | NR/NR | 90 | 85,306 | |||||||
Hilton USA Trust, Series 2013-HLT, Class CFX, 3.714%, 11/05/30 144A | Aa3/A- | 227 | 227,314 | |||||||
Merrill Lynch/Countrywide Commercial Mortgage Trust, Series 2006-3, | Ba1/NR | 423 | 426,235 | |||||||
Morgan Stanley Bank of America Merrill Lynch Trust, Series 2012-CKSV, | NR/A | 540 | 531,135 | |||||||
ORES LLC, Series 2014-LV3, Class A, 3.00%, 03/27/24 144A | NR/NR | 61 | 60,842 | |||||||
Resource Capital Corp. Ltd., Series 2014-CRE2, Class A, | Aaa/NR | 298 | 296,563 | |||||||
Wells Fargo Commercial Mortgage Trust, Series 2014-TISH, Class SCH2, | NR/BB | 450 | 437,764 | |||||||
Wells Fargo Commercial Mortgage Trust, Series 2014-TISH, Class WTS2, | NR/BB | 225 | 218,709 | |||||||
Wells Fargo Commercial Mortgage Trust, Series 2015-C31, Class C, | NR/NR | 119 | 113,709 | |||||||
|
| |||||||||
TOTAL COMMERCIAL MORTGAGE-BACKED SECURITIES | 3,036,955 | |||||||||
|
| |||||||||
RESIDENTIAL MORTGAGE-BACKED SECURITIES — 14.7% | ||||||||||
FHLMC Gold Pool # G03508, 6.00%, 07/01/37 | Aaa/AA+ | 61 | 69,783 | |||||||
FHLMC Gold Pool # G08595, 4.00%, 07/01/44 | Aaa/AA+ | 315 | 335,111 | |||||||
FHLMC Gold Pool # G60038, 3.50%, 01/01/44 | Aaa/AA+ | 994 | 1,036,037 | |||||||
FNMA Pool #AB3737, 3.50%, 10/01/41 | Aaa/AA+ | 848 | 884,582 | |||||||
FNMA Pool #AD7136, 5.00%, 07/01/40 | Aaa/AA+ | 222 | 244,854 | |||||||
FNMA Pool #AL0515, 6.00%, 07/01/40 | Aaa/AA+ | 121 | 140,065 | |||||||
FNMA Pool #AS5385, 4.00%, 07/01/45 | Aaa/AA+ | 684 | 729,178 | |||||||
FNMA Pool #AT2762, 2.50%, 05/01/28 | Aaa/AA+ | 186 | 190,593 | |||||||
FNMA Pool #AU1264, 3.00%, 07/01/43 | Aaa/AA+ | 575 | 582,271 | |||||||
FNMA Pool #AV5063, 3.00%, 02/01/29 | Aaa/AA+ | 303 | 315,471 | |||||||
GNMA Pool #694462, 6.00%, 10/15/38 | Aaa/AA+ | 59 | 66,169 | |||||||
GNMA Pool #729349, 4.00%, 07/15/41 | Aaa/AA+ | 129 | 137,374 | |||||||
GNMA Pool #AD6019, 3.50%, 04/20/43 | Aaa/AA+ | 24 | 25,162 | |||||||
GNMA Pool #MA0391, 3.00%, 09/20/42 | Aaa/AA+ | 75 | 77,037 | |||||||
GNMA Pool #MA0534, 3.50%, 11/20/42 | Aaa/AA+ | 228 | 239,509 | |||||||
GNMA Pool #MA2226, 5.00%, 09/20/44 | Aaa/AA+ | 200 | 216,440 | |||||||
GNMA Pool #MA3035, 4.00%, 08/20/45 | Aaa/AA+ | 358 | 381,370 | |||||||
|
| |||||||||
TOTAL RESIDENTIAL MORTGAGE-BACKED SECURITIES | 5,671,006 | |||||||||
|
|
The accompanying notes are an integral part of the financial statements.
9
INSIGHT INVESTMENT GRADE BOND FUND
(formerly Cutwater Investment Grade Bond Fund)
Portfolio of Investments (Continued)
October 31, 2015
(Unaudited)
Moody’s/ Standard & Poor’s Rating(a) | Principal Amount (000’s) | Value | ||||||||
MUNICIPAL BONDS — 1.7% | ||||||||||
American Municipal Power-Ohio, Inc., Build America Bonds, RB, | A1/A | $ | 225 | $ | 264,528 | |||||
State of California, Build America Bonds, GO, 7.55%, 04/01/39 | Aa3/AA- | 270 | 398,515 | |||||||
|
| |||||||||
TOTAL MUNICIPAL BONDS (Cost $589,715) | 663,043 | |||||||||
|
| |||||||||
U.S. TREASURY OBLIGATIONS — 11.4% | ||||||||||
United States Treasury Inflation Indexed Bond, 0.75%, 02/15/45 | Aaa/AA+ | 207 | 184,012 | |||||||
United States Treasury Note, 0.875%, 07/31/19 | Aaa/AA+ | 300 | 295,355 | |||||||
United States Treasury Note, 1.625%, 08/15/22 | Aaa/AA+ | 370 | 364,113 | |||||||
United States Treasury Note, 2.00%, 02/15/25 | Aaa/AA+ | 200 | 197,685 | |||||||
United States Treasury Note, 2.125%, 08/15/21 | Aaa/AA+ | 215 | 219,703 | |||||||
United States Treasury Note, 2.125%, 05/15/25 | Aaa/AA+ | 1,009 | 1,006,872 | |||||||
United States Treasury Note, 2.25%, 11/15/24 | Aaa/AA+ | 550 | 555,901 | |||||||
United States Treasury Note, 2.50%, 08/15/23 | Aaa/AA+ | 350 | 363,189 | |||||||
United States Treasury Bond, 2.75%, 11/15/42 | Aaa/AA+ | 545 | 526,819 | |||||||
United States Treasury Bond, 3.00%, 05/15/45 | Aaa/AA+ | 368 | 372,346 | |||||||
United States Treasury Bond, 5.375%, 02/15/31 | Aaa/AA+ | 215 | 295,340 | |||||||
|
| |||||||||
TOTAL U.S. TREASURY OBLIGATIONS (Cost $4,287,038) | 4,381,335 | |||||||||
|
| |||||||||
Number of Shares | ||||||||||
PREFERRED STOCK — 1.4% | ||||||||||
Diversified Financial Services — 1.4% | ||||||||||
CoBank ACB 144A* | NR/BBB+ | 5,200 | 537,875 | |||||||
|
| |||||||||
TOTAL PREFERRED STOCK (Cost $542,100) | 537,875 | |||||||||
|
| |||||||||
REGISTERED INVESTMENT COMPANY — 3.4% | ||||||||||
BlackRock Liquidity Funds TempCash Portfolio, Institutional Shares, 0.01%(e) | NR/NR | 1,291,548 | 1,291,548 | |||||||
|
| |||||||||
TOTAL REGISTERED INVESTMENT COMPANY (Cost $1,291,548) | 1,291,548 | |||||||||
|
| |||||||||
TOTAL INVESTMENTS - 100.1% (Cost $38,286,341) | 38,516,385 | |||||||||
LIABILITIES IN EXCESS OF OTHER ASSETS - (0.1)% | (38,590 | ) | ||||||||
|
| |||||||||
NET ASSETS - 100.0% | $ | 38,477,795 | ||||||||
|
|
(a) | Ratings for debt securities are unaudited. All ratings are as of October 31, 2015 and may have changed subsequently. |
(b) | This security is callable. |
(c) | Floating or variable rate security. Rate disclosed is as of October 31, 2015. |
(d) | Security is perpetual. Date shown is next call date. |
(e) | Rate periodically changes. Rate disclosed is the daily yield on October 31, 2015. |
* | Non-income producing. |
144A Securities were purchased pursuant to Rule 144A under the Securities Act of 1933 and may not be resold subject to that rule except to qualified institutional buyers. At October 31, 2015, these securities amounted to $12,398,304 or 32.2% of net assets. These securities have been determined by the Adviser to be liquid securities.
The accompanying notes are an integral part of the financial statements.
10
INSIGHT INVESTMENT GRADE BOND FUND
(formerly Cutwater Investment Grade Bond Fund)
Portfolio of Investments (Concluded)
October 31, 2015
(Unaudited)
Legend | ||
CG | Chrysler Group | |
CLO | Collateralized Loan Obligation | |
Co. Gty. | Company Guaranty | |
FHLMC | Federal Home Loan Mortgage Corp. | |
FNMA | Federal National Mortgage Association | |
FREMF | Finnish Real Estate Management Federation | |
GNMA | Government National Mortgage Association | |
GO | General Obligations | |
Jr. | Junior | |
LLC | Limited Liability Company | |
LP | Limited Partnership |
| Ltd. | Limited | ||
N.A. | National Association | |||
NR | Not Rated | |||
PLC | Public Limited Company | |||
RB | Revenue Bond | |||
REIT | Real Estate Investment Trust | |||
Sec. | Secured | |||
Sr. | Senior | |||
Sub. | Subordinated | |||
Unsec. | Unsecured |
The accompanying notes are an integral part of the financial statements.
11
INSIGHT INVESTMENT GRADE BOND FUND
(formerly Cutwater Investment Grade Bond Fund)
Statement of Assets and Liabilities
October 31, 2015
(Unaudited)
Assets | ||||
Investments, at value (Cost $38,286,341) | $ | 38,516,385 | ||
Receivable for investments sold | 198,615 | |||
Dividends and interest receivable | 335,055 | |||
Prepaid expenses and other assets | 12,010 | |||
|
| |||
Total assets | 39,062,065 | |||
|
| |||
Liabilities | ||||
Payable for investments purchased | 514,622 | |||
Payable for administration and accounting fees | 19,366 | |||
Payable for transfer agent fees | 17,611 | |||
Payable for custodian fees | 4,322 | |||
Payable to Investment Adviser | 638 | |||
Accrued expenses | 27,711 | |||
|
| |||
Total liabilities | 584,270 | |||
|
| |||
Net Assets | $ | 38,477,795 | ||
|
| |||
Net Assets Consisted of: | ||||
Capital stock, $0.01 par value | $ | 38,601 | ||
Paid-in capital | 38,301,767 | |||
Accumulated net investment loss | (2,722 | ) | ||
Accumulated net realized loss from investments | (89,895 | ) | ||
Net unrealized appreciation on investments | 230,044 | |||
|
| |||
Net Assets | $ | 38,477,795 | ||
|
|
Institutional Class: | ||||
Net asset value, offering and redemption price per share ($38,477,795 / 3,860,051 shares) | $ | 9.97 | ||
|
|
The accompanying notes are an integral part of the financial statements.
12
INSIGHT INVESTMENT GRADE BOND FUND
(formerly Cutwater Investment Grade Bond Fund)
Statement of Operations
For the Six Months Ended October 31, 2015
(Unaudited)
Investment Income | ||||
Interest | $ | 693,337 | ||
Dividends | 16,228 | |||
|
| |||
Total investment income | 709,565 | |||
|
| |||
Expenses | ||||
Advisory fees (Note 2) | 96,295 | |||
Administration and accounting fees (Note 2) | 46,431 | |||
Transfer agent fees (Note 2) | 26,491 | |||
Audit fees | 26,391 | |||
Legal fees | 14,738 | |||
Trustees’ and officers’ fees (Note 2) | 12,055 | |||
Printing and shareholder reporting fees | 11,266 | |||
Custodian fees (Note 2) | 8,427 | |||
Registration and filing fees | 303 | |||
Other expenses | 4,002 | |||
|
| |||
Total expenses before waivers and reimbursements | 246,399 | |||
|
| |||
Less: waivers and reimbursements (Note 2) | (82,689 | ) | ||
|
| |||
Net expenses after waivers and reimbursements | 163,710 | |||
|
| |||
Net investment income | 545,855 | |||
|
| |||
Net realized and unrealized gain/(loss) from investments: | ||||
Net realized gain from investments | 31,683 | |||
Net change in unrealized appreciation/(depreciation) on investments | (875,045 | ) | ||
|
| |||
Net realized and unrealized loss on investments | (843,362 | ) | ||
|
| |||
Net decrease in net assets resulting from operations | $ | (297,507 | ) | |
|
|
The accompanying notes are an integral part of the financial statements.
13
INSIGHT INVESTMENT GRADE BOND FUND
(formerly Cutwater Investment Grade Bond Fund)
Statements of Changes in Net Assets
For the Six Months Ended October 31, 2015 (Unaudited) | For the Year Ended April 30, 2014 | |||||||||
Increase/(decrease) in net assets from operations: | ||||||||||
Net investment income | $ | 545,855 | $ | 1,116,728 | ||||||
Net realized gain from investments | 31,683 | 476,468 | ||||||||
Net change in unrealized appreciation/(depreciation) on investments | (875,045 | ) | 200,839 | |||||||
|
|
|
| |||||||
Net increase/(decrease) in net assets resulting from operations | (297,507 | ) | 1,794,035 | |||||||
|
|
|
| |||||||
Less Dividends and Distributions to Shareholders from: | ||||||||||
Net investment income: | ||||||||||
Institutional Class | (576,953 | ) | (1,168,769 | ) | ||||||
|
|
|
| |||||||
Net decrease in net assets from dividends and distributions to shareholders | (576,953 | ) | (1,168,769 | ) | ||||||
|
|
|
| |||||||
Increase in Net Assets Derived from Capital Share Transactions (Note 4) | 576,953 | 1,168,769 | ||||||||
|
|
|
| |||||||
Total increase/(decrease) in net assets | (297,507 | ) | 1,794,035 | |||||||
|
|
|
| |||||||
Net assets | ||||||||||
Beginning of period | 38,775,302 | 36,981,267 | ||||||||
|
|
|
| |||||||
End of period | $ | 38,477,795 | $ | 38,775,302 | ||||||
|
|
|
| |||||||
Accumulated net investment income/(loss), end of period | $ | (2,722 | ) | $ | 28,376 | |||||
|
|
|
|
The accompanying notes are an integral part of the financial statements.
14
INSIGHT INVESTMENT GRADE BOND FUND
(formerly Cutwater Investment Grade Bond Fund)
Financial Highlights
Contained below is per share operating performance data for Institutional Class shares outstanding, total investment return, ratios to average net assets and other supplemental data for the respective period. 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). This information has been derived from information provided in the financial statements and should be read in conjunction with the financial statements and the notes thereto.
Institutional Class | ||||||||||||||||||||||||||||||
For the | For the | |||||||||||||||||||||||||||||
Six Months | For the | For the | For the | For the | Period | |||||||||||||||||||||||||
Ended | Year | Year | Year | Year | December 2, | |||||||||||||||||||||||||
October 31, | Ended | Ended | Ended | Ended | 2010* | |||||||||||||||||||||||||
2015 | April 30, | April 30, | April 30, | April 30, | to April 30, | |||||||||||||||||||||||||
(Unaudited) | 2015 | 2014 | 2013 | 2012 | 2011 | |||||||||||||||||||||||||
Per Share Operating Performance | ||||||||||||||||||||||||||||||
Net asset value, beginning of period | $ | 10.20 | $ | 10.03 | $ | 10.47 | $ | 10.31 | $ | 10.01 | $ | 10.00 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Net investment income(1) | 0.14 | 0.30 | 0.33 | 0.29 | 0.32 | 0.11 | ||||||||||||||||||||||||
Net realized and unrealized gain/(loss) on investments | (0.22 | ) | 0.18 | (0.30 | ) | 0.43 | 0.33 | 0.01 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Net increase/(decrease) in net assets resulting from operations | (0.08 | ) | 0.48 | 0.03 | 0.72 | 0.65 | 0.12 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Dividends and distributions to shareholders from: | ||||||||||||||||||||||||||||||
Net investment income | (0.15 | ) | (0.31 | ) | (0.34 | ) | (0.32 | ) | (0.35 | ) | (0.11 | ) | ||||||||||||||||||
Net realized gains | — | — | (0.13 | ) | (0.24 | ) | — | — | ||||||||||||||||||||||
|
|
|
|
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Total dividends and distributions to shareholders | (0.15 | ) | (0.31 | ) | (0.47 | ) | (0.56 | ) | (0.35 | ) | (0.11 | ) | ||||||||||||||||||
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Net asset value, end of period | $ | 9.97 | $ | 10.20 | $ | 10.03 | $ | 10.47 | $ | 10.31 | $ | 10.01 | ||||||||||||||||||
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Total investment return(2) | (0.77 | )% | 4.86 | % | 0.37 | % | 7.17 | % | 6.59 | % | 1.22 | % | ||||||||||||||||||
Ratio/Supplemental Data | ||||||||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $ | 38,478 | $ | 38,775 | $ | 36,981 | $ | 47,339 | $ | 72,511 | $ | 67,962 | ||||||||||||||||||
Ratio of expenses to average net assets | 0.85 | %(3) | 0.85 | % | 0.85 | % | 0.85 | % | 0.85 | % | 0.83 | %(3) | ||||||||||||||||||
Ratio of expenses to average net assets without waivers and expense reimbursements(4) | 1.28 | %(3) | 1.27 | % | 1.24 | % | 0.93 | % | 1.05 | % | 0.90 | %(3) | ||||||||||||||||||
Ratio of net investment income to average net assets | 2.83 | %(3) | 2.94 | % | 3.26 | % | 2.83 | % | 3.19 | % | 2.61 | %(3) | ||||||||||||||||||
Portfolio turnover rate | 21.76 | %(5) | 54.37 | % | 76.18 | % | 154.23 | %(6) | 95.43 | % | 106.84 | %(5) |
* | Commencement of operations. |
(1) | The selected per share data was calculated using the average shares outstanding method for the period. |
(2) | Total investment return is calculated assuming a purchase of shares on the first day and a sale of shares on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total returns for periods less than one year are not annualized. |
(3) | Annualized. |
(4) | During the period, certain fees were waived and/or reimbursed. If such fee waivers and/or reimbursements had not occurred, the ratios would have been as indicated (See Note 2). |
(5) | Not annualized. |
(6) | Portfolio turnover rate excludes securities delivered from processing a redemption-in-kind. |
The accompanying notes are an integral part of the financial statements.
15
INSIGHT INVESTMENT GRADE BOND FUND
(formerly Cutwater Investment Grade Bond Fund)
Notes to Financial Statements
October 31, 2015
(Unaudited)
1. Organization and Significant Accounting Policies
The Insight Investment Grade Bond Fund (the “Fund”), (formerly the Cutwater Investment Grade Bond Fund), is a diversified, open-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”), which commenced investment operations on December 2, 2010. The Fund is a separate series of FundVantage Trust (the “Trust”) which was organized as a Delaware statutory trust on August 28, 2006. The Trust is a “series trust” authorized to issue an unlimited number of separate series or classes of shares of beneficial interest. Each series is treated as a separate entity for certain matters under the 1940 Act, and for other purposes, and a shareholder of one series is not deemed to be a shareholder of any other series. The Fund offers separate classes of shares, Class A, Class C and Institutional Class. As of October 31, 2015, Class A and Class C Shares had not been issued.
The Fund is an investment company and follows accounting and reporting guidance in the Financial Accounting Standards Board Accounting Standards Codification Topic 946.
Portfolio Valuation — The Fund’s net asset value (“NAV”) is calculated once daily at the close of regular trading hours on the New York Stock Exchange (“NYSE”) (typically 4:00 p.m. Eastern time) on each business day the NYSE is open. Securities held by the Fund are valued at their last sale price on the NYSE on the day the security is valued. Lacking any sales on such day, the security will be valued at the mean between the last asked price and the last bid price prior to the market close. Securities listed on other exchanges (and not subject to restriction against sale by the Fund on such exchanges) will be similarly valued, using quotations on the exchange on which the security is traded most extensively. Unlisted securities that are quoted on the National Association of Securities Dealers Market System, for which there have been sales of such securities on such day, shall be valued at the official closing price on such system on the day the security is valued. If there are no such sales on such day, the value shall be the mean between the last asked price and the last bid price prior to market close. The value of such securities quoted on the National Association of Securities Dealers Automatic Quotation System (“NASDAQ”) markets system, but not listed on the National Market System, shall be valued at the mean between closing asked price and the closing bid price. Unlisted securities that are not quoted on the NASDAQ and for which over-the-counter market quotations are readily available will be valued at the mean between the current bid and the asked prices for such security in the over-the-counter market. Fixed income securities are valued based on the market quotations, which are furnished by an independent pricing service. Fixed income securities having a remaining maturity of 60 days or less are generally valued at amortized cost, provided such amount approximates market value. Debt securities are valued on the basis of broker quotations or valuations provided by a pricing service, which utilizes information with respect to recent sales, market transactions in comparable securities, quotations from dealers, and various relationships between securities in determining value. Valuations developed through pricing techniques may materially vary from the actual amounts realized upon sale of the securities. Investments in other open-end investment companies are valued based on the NAV of the investment companies (which may use fair value pricing as discussed in their prospectuses). If market quotations are unavailable or deemed unreliable, securities will be valued in accordance with procedures adopted by the Trust’s Board of Trustees. Relying on prices supplied by pricing services or dealers or using fair valuation may result in values that are higher or lower than the values used by other investment companies and investors to price the same investments.
Fair Value Measurements — The inputs and valuation techniques used to measure fair value of the Fund’s investments are summarized into three levels as described in the hierarchy below:
● Level 1 | — | quoted prices in active markets for identical securities; | ||||
● Level 2 | — | other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.); and | ||||
● Level 3 | — | significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments). |
16
INSIGHT INVESTMENT GRADE BOND FUND
(formerly Cutwater Investment Grade Bond Fund)
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
The fair value of the Fund’s bonds are generally based on the quotes received from brokers or independent pricing services. Bonds with quotes that are based on actual trades with a sufficient level of activity on or near the measurement date are classified as Level 2 assets.
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
The following is a summary of the inputs used, as of October 31, 2015, in valuing the Fund’s investments carried at fair value:
Total��Value at 10/31/15 | Level 1 Quoted Prices | Level 2 Other Significant Observable Inputs | Level 3 Significant Unobservable Inputs | |||||||||||||
Corporate Bonds and Notes | $ | 19,346,704 | $ | — | $ | 19,346,704 | $ | — | ||||||||
Asset Backed Securities | 3,587,919 | — | 3,587,919 | — | ||||||||||||
Commercial Mortgage-Backed Securities | 3,036,955 | — | 3,036,955 | — | ||||||||||||
Residential Mortgage-Backed Securities | 5,671,006 | — | 5,671,006 | — | ||||||||||||
Municipal Bonds | 663,043 | — | 663,043 | — | ||||||||||||
U.S. Treasury Obligations | 4,381,335 | — | 4,381,335 | — | ||||||||||||
Preferred Stock | 537,875 | 537,875 | — | — | ||||||||||||
Registered Investment Company | 1,291,548 | 1,291,548 | — | — | ||||||||||||
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Total Investments | $ | 38,516,385 | $ | 1,829,423 | $ | 36,686,962 | $ | — | ||||||||
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At the end of each quarter, management evaluates the classification of Levels 1, 2 and 3 assets and liabilities. Various factors are considered, such as changes in liquidity from the prior reporting period; whether or not a broker is willing to execute at the quoted price; the depth and consistency of prices from third party pricing services; and the existence of contemporaneous, observable trades in the market. Additionally, management evaluates the classification of Level 1 and Level 2 assets and liabilities on a quarterly basis for changes in listings or delistings on national exchanges.
Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of the Fund’s investments may fluctuate from period to period. Additionally, the fair value of investments may differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially from the values the Fund may ultimately realize. Further, such investments may be subject to legal and other restrictions on resale or are otherwise may be less liquid than publicly traded securities.
For fair valuations using significant unobservable inputs, U.S. generally accepted accounting principles (“U.S. GAAP”) require the Fund to present a reconciliation of the beginning to ending balances for reported market values that presents changes attributable to total realized and unrealized gains or losses, purchase and sales, and transfers in and out of Level 3 during the period. Transfers in and out between Levels are based on values at the end of the period. U.S. GAAP also requires the Fund to disclose amounts and reasons for all transfers in and out of Level 1 and Level 2 fair value measurements. A reconciliation of Level 3 investments is presented only when the Fund had an amount of Level 3 investments at the end of the reporting period that was meaningful in relation to its net assets. The amounts and reasons for all transfers in and out of each Level within the three-tier hierarchy are disclosed when the Fund had an amount of total transfers during the reporting period that was meaningful in relation to its net assets as of the end of the reporting period.
For the six months ended October 31, 2015, there were no transfers between Levels 1, 2 and 3 for the Fund.
17
INSIGHT INVESTMENT GRADE BOND FUND
(formerly Cutwater Investment Grade Bond Fund)
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes at the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates and those differences could be material.
Investment Transactions, Investment Income and Expenses — Investment transactions are recorded on trade date for financial statement preparation purposes. Realized gains and losses on investments sold are recorded on the identified cost basis. Gains and losses on principal paydowns from mortgage backed securities are recorded as interest income on the Statement of Operations. Interest income is recorded on the accrual basis. Accretion of discounts and amortization of premiums are recorded on a daily basis using the effective yield method except for short term securities, which records discounts and premiums on a straight-line basis. Dividends are recorded on the ex-dividend date. Estimated components of distributions received from real estate investment trusts may be considered income, return of capital distributions or capital gain distributions. Return of capital distributions are recorded as a reduction of costs of the related investments. Distribution (12b-1) fees and shareholder services fees relating to a specific class are charged directly to that class. General expenses of the Trust are generally allocated to each fund in proportion to its relative daily net assets. Expenses directly attributable to a particular fund in the Trust are charged directly to that fund. The Fund’s investment income, expenses (other than class specific expenses) and unrealized and realized gains and losses are allocated daily to each class of shares based upon the relative proportion of net assets of each class at the beginning of the day.
Securities Traded on a To-Be-Announced Basis — The Fund may trade securities on a to-be-announced (“TBA”) basis. In a TBA transaction, the Fund commits to purchasing or selling securities which have not yet been issued by the issuer and for which specific information, such as the face amount, maturity date and underlying pool of investments in U.S. government agency mortgage pass-through securities, is not announced. Securities purchased on a TBA basis are not settled until they are delivered to the Fund. Beginning on the date the Fund enters into a TBA transaction, cash, U.S. government securities or other liquid high-grade debt obligations are segregated in an amount equal in value to the purchase price of the TBA security. These securities are subject to market fluctuations and their current value is determined in the same manner as for other securities.
Dividends and Distributions to Shareholders — Dividends from net investment income are declared daily and paid monthly to shareholders. Distributions from net realized capital gains, if any, are declared and paid annually to shareholders. Income dividends and capital gain distributions are determined in accordance with U.S. federal income tax regulations, which may differ from U.S. GAAP. These differences include the treatment of non-taxable dividends, expiring capital loss carryforwards and losses deferred due to wash sales and excise tax regulations. Permanent book and tax basis differences relating to shareholder distributions will result in reclassifications within the components of net assets.
U.S. Tax Status — No provision is made for U.S. income taxes as it is the Fund’s intention to continue to qualify for and elect the tax treatment applicable to regulated investment companies under Subchapter M of the Internal Revenue Code of 1986, as amended, and make the requisite distributions to its shareholders which will be sufficient to relieve it from U.S. income and excise taxes.
Other — In the normal course of business, the Fund may enter into contracts that provide general indemnifications. The Fund’s maximum exposure under these arrangements is dependent on claims that may be made against the Fund in the future, and, therefore, cannot be estimated; however, based on experience, the risk of material loss for such claims is considered remote.
2. Transactions with Affiliates and Related Parties
Cutwater Investor Services Corp., doing business as Insight Investment (the “Adviser”) serves as investment adviser to the Fund pursuant to an investment advisory agreement with the Trust. For its services, the Adviser is paid a monthly
18
INSIGHT INVESTMENT GRADE BOND FUND
(formerly Cutwater Investment Grade Bond Fund)
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
fee at the annual rate of 0.50% of the Fund’s average daily net assets. The Adviser has voluntarily agreed to reduce its investment advisory fee and/or reimburse certain expenses of the Fund to the extent necessary to ensure that the Fund’s total operating expenses (excluding any class-specific fees and expenses, interest, extraordinary items and brokerage commissions) do not exceed 0.85% (on an annual basis) of the Fund’s average daily net assets (the “Expense Limitation”). Such Expense Limitation will continue until the Adviser notifies the Fund of a change in its voluntary Expense Limitation or its discontinuation. This Expense Limitation may be discontinued at any time at the discretion of the Adviser.
For the six months ended October 31, 2015, the Adviser earned advisory fees of $96,295 and waived fees of $82,689.
BNY Mellon Investment Servicing (US) Inc. (“BNY Mellon”) serves as administrator and transfer agent for the Fund. For providing administrative and accounting services, BNY Mellon is entitled to receive a monthly fee equal to an annual percentage rate of the Fund’s average daily net assets and is subject to certain minimum monthly fees. For providing transfer agent services, BNY Mellon is entitled to receive a monthly fee, subject to certain minimum, and out of pocket expenses.
The Bank of New York Mellon (the “Custodian”) provides certain custodial services to the Fund. The Custodian is entitled to receive a monthly fee, subject to certain minimum, and out of pocket expenses.
Foreside Funds Distributors LLC (the “Underwriter”) provides principal underwriting services to the Fund pursuant to an underwriting agreement between the Trust and the Underwriter.
The Trustees of the Trust who are not officers or employees of an investment adviser or other service provider to the Trust receive compensation in the form of an annual retainer and per meeting fees for their services as a Trustee. The remuneration paid to the Trustees by the Fund during the six months ended October 31, 2015 was $2,659. Certain employees of BNY Mellon serve as Officers of the Trust. They are not compensated by the Fund or the Trust.
3. Investment in Securities
For the six months ended October 31, 2015, aggregate purchases and sales of investment securities (excluding short-term investments) of the Fund were as follows:
Purchases | Sales | |||||||||
Investment Securities | $ | 4,333,957 | $ | 2,935,211 | ||||||
U.S. Government Securities | 5,017,875 | 5,115,810 |
19
INSIGHT INVESTMENT GRADE BOND FUND
(formerly Cutwater Investment Grade Bond Fund)
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
4. Capital Share Transactions
For the six months ended October 31, 2015 and the year ended April 30, 2015, transactions in capital shares (authorized shares unlimited) were as follows:
For the Six Months Ended October 31, 2015 (Unaudited) | For the Year Ended April 30, 2015 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Institutional Class: | ||||||||||||||||
Reinvestments | 57,662 | $ | 576,953 | 114,838 | $ | 1,168,769 | ||||||||||
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Net increase | 57,662 | $ | 576,953 | 114,838 | $ | 1,168,769 | ||||||||||
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5. Federal Tax Information
The Fund has followed the authoritative guidance on accounting for and disclosure of uncertainty in tax positions, which requires the Fund to determine whether a tax position is more likely than not to be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The Fund has determined that there was no effect on the financial statements from following this authoritative guidance. In the normal course of business, the Fund is subject to examination by federal, state and local jurisdictions, where applicable, for tax years for which applicable statutes of limitations have not expired.
For the year ended April 30, 2015, the tax character of distributions paid by the Fund was $1,168,769 of ordinary income dividends. Distributions from net investment income and short-term capital gains are treated as ordinary income for federal income tax purposes.
As of April 30, 2015, the components of distributable earnings on a tax basis were as follows:
Capital Loss Carryforward | Undistributed Ordinary Income | Undistributed Long-Term Gain | Unrealized Appreciation | Qualified Late-Year Losses | ||||
$(121,578) | $28,376 | $— | $1,105,089 | $— |
The differences between the book and tax basis components of distributable earnings relate primarily to the timing and recognition of income and gains for federal income tax purposes. Short-term capital gains are reported as ordinary income for federal income tax purposes.
As of October 31, 2015, the federal tax cost, aggregate gross unrealized appreciation and depreciation of securities held by the Fund were as follows:
Federal tax cost | $ | 38,286,341 | ||||
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Gross unrealized appreciation | $ | 870,455 | ||||
Gross unrealized depreciation | (640,411 | ) | ||||
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Net unrealized appreciation | $ | 230,044 | ||||
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Accumulated capital losses represent net capital loss carryforwards as of April 30, 2015 that may be available to offset future realized capital gains and thereby reduce future capital gains distributions. As of April 30, 2015, the Fund’s capital loss carryforward was $121,578, of which $99,391 were short-term losses, $22,187 are long-term losses. All losses will be carried forward indefinitely and will retain their character as short-term and long-term capital losses.
20
INSIGHT INVESTMENT GRADE BOND FUND
(formerly Cutwater Investment Grade Bond Fund)
Notes to Financial Statements (Concluded)
October 31, 2015
(Unaudited)
6. Mortgage-Related And Other Asset-Backed Securities Risk
Mortgage-related and asset-backed securities are subject to certain other risks. The value of these securities will be influenced by the factors affecting the housing market and the assets underlying such securities. As a result, during periods of declining asset value, difficult or frozen credit markets, swings in interest rates, or deteriorating economic conditions, mortgage-related and asset-backed securities may decline in value, face valuation difficulties, become more volatile and/or become illiquid.
7. Debt Investment Risk
Debt investments are affected primarily by the financial condition of the companies or other entities that have issued them and by changes in interest rates. There is a risk that an issuer of a Fund’s debt investments may not be able to meet its financial obligations (e.g., may not be able to make principal and/or interest payments when they are due or otherwise default on other financial terms) and/or go bankrupt. Securities such as high-yield/high-risk bonds, e.g., bonds with low credit ratings by Moody’s (Ba or lower) or Standard & Poor’s (BB and lower) or if unrated are of comparable quality as determined by the manager, are especially subject to credit risk during periods of economic uncertainty or during economic downturns and are more likely to default on their interest and/or principal payments than higher rated securities. Debt investments may be affected by changes in interest rates. Debt investments with longer durations tend to be more sensitive to changes in interest rates, making them more volatile than debt investments with shorter durations or floating or adjustable interest rates. The value of debt investments may fall when interest rates rise.
8. Subsequent Event
Management has evaluated the impact of all subsequent events on the Fund through the date the financial statements were issued, and has determined that there were no subsequent events requiring recognition or disclosure in the financial statements.
21
INSIGHT INVESTMENT GRADE BOND FUND
(formerly Cutwater Investment Grade Bond Fund)
Other Information
(Unaudited)
Proxy Voting
Policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities as well as information regarding how the Fund voted proxies relating to portfolio securities for the most recent 12-month period ended June 30 are available without charge, upon request, by calling (866) 678-6242 and on the Securities and Exchange Commission’s (“SEC”) website at http://www.sec.gov.
Quarterly Portfolio Schedules
The Trust files its complete schedule of portfolio holdings with the SEC for the first and third fiscal quarters of each fiscal year (quarters ended July 31 and January 31) on Form N-Q. The Trust’s Forms N-Q are available on the SEC’s website at http://www.sec.gov and may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. Information on the operation of the SEC’s Public Reference Room may be obtained by calling 1-800-SEC-0330.
22
Investment Adviser
Cutwater Investor Services Corp.
200 Park Avenue, 7th Floor
New York, NY 10166
Administrator
BNY Mellon Investment Servicing (US) Inc.
301 Bellevue Parkway
Wilmington, DE 19809
Transfer Agent
BNY Mellon Investment Servicing (US) Inc.
4400 Computer Drive
Westborough, MA 01581
Principal Underwriter
Foreside Funds Distributors LLC
400 Berwyn Park
899 Cassatt Road
Berwyn, PA 19312
Custodian
The Bank of New York Mellon
225 Liberty Street
New York, NY 10286
Independent Registered Public Accounting Firm
Ernst & Young LLP
One Commerce Square
2005 Market Street, Suite 700
Philadelphia, PA 19103-7096
Legal Counsel
Pepper Hamilton LLP
3000 Two Logan Square
18th and Arch Streets
Philadelphia, PA 19103
INS-1015
LATEEF FUND
Semi-Annual Report
Performance Data
October 31, 2015
(Unaudited)
Average Annual Total Returns for the Periods Ended October 31, 2015 | ||||||||||
Six Months† | 1 Year | 3 Years | 5 Years | Since Inception* | ||||||
Class A Shares (with sales charge) | -3.19% | -0.07% | 11.05% | 11.37% | 6.01% | |||||
Class A Shares (without sales charge) | 1.93% | 5.18% | 12.97% | 12.50% | 6.69% | |||||
Class C Shares | 1.60% | 4.39% | 12.14% | 11.67% | 5.86% | |||||
Class I Shares | 2.04% | 5.38% | 13.24% | 12.77% | 6.96% | |||||
Russell 3000® Index | -0.24% | 4.49% | 16.09% | 14.14% | 6.67%** | |||||
S&P 500® Index | 0.77% | 5.20% | 16.20% | 14.33% | 6.55%** |
† | Not Annualized. |
* | The Lateef Fund (the “Fund”) commenced operations on September 6, 2007. |
** | Benchmark performance is from inception date of the Fund only and is not the inception date of the benchmark itself. |
The performance data quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment in the Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. The table does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares. Current performance may be lower or higher. Performance data current to the most recent month-end may be obtained by calling (866) 499-2151.
The returns shown for Class A Shares reflect a deduction for the maximum front-end sales charge of 5.00%. All of the Fund’s share classes apply a 2.00% redemption fee to the value of shares redeemed within 30 days of purchase. This redemption fee is not reflected in the returns shown above. The Fund’s total annual gross and net operating expenses, as stated in the current prospectus dated September 1, 2015, are 1.39% and 1.24% for Class A Shares, 2.14% and 1.99% for Class C Shares and 1.14% and 0.99% for Class I Shares, respectively, of the Fund’s average daily net assets. These rates may fluctuate and may differ from the actual expenses incurred by the Fund for the period covered by this report. Lateef Investment Management, L.P. (“the Adviser”) has contractually agreed to reduce its investment advisory fee and/or reimburse certain expenses of the Fund to the extent necessary to ensure that the Fund’s total operating expenses (excluding taxes, any class-specific fees and expenses, interest, extraordinary items, “Acquired Fund” fees and expenses and brokerage commissions) do not exceed 0.99% (on an annual basis) of the Fund’s average daily net assets (the “Expense Limitation”). The Expense Limitation shall remain in effect until August 31, 2016, unless the Board of Trustees of FundVantage Trust (the “Trust”) approves its earlier termination. Total returns would be lower had such fees and expenses not been waived and/or reimbursed.
All mutual fund investing involves risk, including possible loss of principal. The Fund is non-diversified, which means that a portion of the Fund’s assets may be invested in one or few companies or sectors. The Fund could fluctuate in value more than a diversified fund.
The Fund intends to evaluate performance as compared to that of the Standard & Poor’s 500® Composite Price Index (“S&P 500®”) and the Russell 3000® Index. The S&P 500® is a widely recognized, unmanaged index of 500 common stocks which are generally representative of the U.S. stock market as a whole. The Russell 3000® Index is an unmanaged index that measures the performance of the 3,000 largest U.S. stocks, representing about 98% of the total capitalization of the entire U.S. stock market. It is impossible to invest directly in an index.
1
LATEEF FUND
Fund Expense Disclosure
October 31, 2015
(Unaudited)
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs including sales charges (loads) on purchase payments (if any) or redemption fees; and (2) ongoing costs, including management fees, distribution and/or service (Rule 12b-1) fees (if any) and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
These examples are based on an investment of $1,000 invested at the beginning of the six-month period from May 1, 2015 through October 31, 2015 and held for the entire period.
Actual Expenses
The first line of the accompanying table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Examples for Comparison Purposes
The second line of the accompanying table provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not your Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare these 5% hypothetical examples with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that the expenses shown in the accompanying table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) on purchase payments (if any) or redemption fees. Therefore, each hypothetical line of the accompanying table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
2
LATEEF FUND
Fund Expense Disclosure (Concluded)
October 31, 2015
(Unaudited)
Lateef Fund | |||||||||||||||
Beginning Account Value May 1, 2015 | Ending Account Value October 31, 2015 | Expenses Paid During Period* | |||||||||||||
Class A Shares | |||||||||||||||
Actual | $ | 1,000.00 | $ | 1,019.30 | $ | 6.29 | |||||||||
Hypothetical (5% return before expenses) | 1,000.00 | 1,018.90 | 6.29 | ||||||||||||
Class C Shares | |||||||||||||||
Actual | $ | 1,000.00 | $ | 1,016.00 | $ | 10.08 | |||||||||
Hypothetical (5% return before expenses) | 1,000.00 | 1,015.13 | 10.08 | ||||||||||||
Class I Shares | |||||||||||||||
Actual | $ | 1,000.00 | $ | 1,020.40 | $ | 5.03 | |||||||||
Hypothetical (5% return before expenses) | 1,000.00 | 1,020.16 | 5.03 |
* | Expenses are equal to an annualized expense ratio for the six-month period ended October 31, 2015 of 1.24%, 1.99%, and 0.99% for Class A, Class C, and Class I Shares, respectively, for the Fund, multiplied by the average account value over the period, multiplied by the number of days in the most recent period (184), then divided by 366 to reflect the period. The Fund’s ending account values on the first line in the table are based on the actual six month total returns for the Fund of 1.93%, 1.60%, and 2.04% for Class A, Class C, and Class I Shares, respectively. |
3
LATEEF FUND
Portfolio Holdings Summary Table
October 31, 2015
(Unaudited)
The following table presents a summary by sector of the portfolio holdings of the Fund:
% of Net Assets | Value | |||||||||
COMMON STOCKS: | ||||||||||
Technology | 25.3 | % | $ | 165,815,947 | ||||||
Communications | 10.6 | 69,434,003 | ||||||||
Consumer, Non-cyclical | 10.2 | 66,982,702 | ||||||||
Industrial | 9.5 | 61,940,047 | ||||||||
Machinery-Diversified | 5.4 | 35,582,389 | ||||||||
Hand/Machine Tools | 4.8 | 31,690,034 | ||||||||
Commercial Services | 4.7 | 30,570,845 | ||||||||
Diversified Financial Services | 4.4 | 28,454,582 | ||||||||
Media | 3.8 | 24,873,082 | ||||||||
Financial | 2.2 | 14,212,770 | ||||||||
Real Estate | 1.7 | 10,951,180 | ||||||||
Lodging | 1.6 | 10,699,342 | ||||||||
Options Written | (0.2 | ) | (1,072,500 | ) | ||||||
Other Assets In Excess of Liabilities | 16.0 | 104,532,267 | ||||||||
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NET ASSETS | 100.0 | % | $ | 654,666,690 | ||||||
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Portfolio holdings are subject to change at any time.
The accompanying notes are an integral part of the financial statements.
4
LATEEF FUND
Portfolio of Investments
October 31, 2015
(Unaudited)
Number of Shares | Value | |||||||
COMMON STOCKS — 84.2% |
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Commercial Services — 4.7% |
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Towers Watson & Co., Class A | 247,417 | $ | 30,570,845 | |||||
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Communications — 10.6% |
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Nielsen Holdings PLC | 656,324 | 31,181,953 | ||||||
Vipshop Holdings, Ltd., ADR* | 1,864,135 | 38,252,050 | ||||||
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69,434,003 | ||||||||
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Consumer, Non-cyclical — 10.2% |
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Celgene Corp.* | 288,951 | 35,457,177 | ||||||
Hologic, Inc.* | 811,259 | 31,525,525 | ||||||
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66,982,702 | ||||||||
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Diversified Financial Services — 4.4% |
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Affiliated Managers Group, Inc.* | 157,853 | 28,454,582 | ||||||
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Financial — 2.2% |
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Progressive Corp. (The) | 429,000 | 14,212,770 | ||||||
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Hand/Machine Tools — 4.8% |
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Stanley Black & Decker, Inc. | 299,019 | 31,690,034 | ||||||
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Industrial — 9.5% |
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Danaher Corp. | 347,489 | 32,424,199 | ||||||
United Parcel Service, Inc., Class B | 286,506 | 29,515,848 | ||||||
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61,940,047 | ||||||||
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Lodging — 1.6% |
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Wynn Resorts, Ltd. | 152,957 | 10,699,342 | ||||||
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Machinery-Diversified — 5.4% |
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Wabtec Corp. | 429,376 | 35,582,389 | ||||||
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Media — 3.8% |
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Madison Square Garden Co. (The), Class A* | 139,345 | 24,873,082 | ||||||
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Number of Shares | Value | |||||||
COMMON STOCKS — (Continued) |
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Real Estate — 1.7% |
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Jones Lang LaSalle, Inc. | 65,690 | $ | 10,951,180 | |||||
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Technology — 25.3% |
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Alphabet, Inc., Class A* | 66,130 | 48,763,601 | ||||||
Autodesk, Inc.* | 668,637 | 36,902,076 | ||||||
Facebook, Inc., Class A* | 455,929 | 46,491,080 | ||||||
IMS Health Holdings, Inc.* | 1,236,561 | 33,659,190 | ||||||
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165,815,947 | ||||||||
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TOTAL COMMON STOCKS |
| 551,206,923 | ||||||
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| |||||||
TOTAL INVESTMENTS - 84.2% |
| 551,206,923 | ||||||
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Contracts | ||||||||
OPTIONS WRITTEN — (0.2)% |
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Call Options — (0.2)% |
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Progressive Corp (The) | (4,290 | ) | (1,072,500 | ) | ||||
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TOTAL OPTIONS WRITTEN |
| (1,072,500 | ) | |||||
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| |||||||
OTHER ASSETS IN EXCESS OF |
| 104,532,267 | ||||||
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| |||||||
NET ASSETS - 100.0% |
| $ | 654,666,690 | |||||
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* | Non-income producing. |
(a) | Primary risk exposure is equity price risk. |
ADR | American Depositary Receipt | |
PLC | Public Limited Company |
The accompanying notes are an integral part of the financial statements.
5
LATEEF FUND
Statement of Assets and Liabilities
October 31, 2015
(Unaudited)
Assets | ||||
Investments, at value (Cost $466,672,146) | $ | 551,206,923 | ||
Cash | 109,930,849 | |||
Receivable for capital shares sold | 710,204 | |||
Prepaid expenses and other assets | 87,594 | |||
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Total assets | 661,935,570 | |||
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Liabilities | ||||
Options written, at value (premiums received $461,112)* | 1,072,500 | |||
Payable for investments purchased | 4,175,487 | |||
Payable for capital shares redeemed | 1,329,787 | |||
Payable to Investment Adviser | 444,058 | |||
Payable for administration and accounting fees | 76,249 | |||
Payable for transfer agent fees | 66,777 | |||
Payable for custodian fees | 16,699 | |||
Payable for audit fees | 15,049 | |||
Accrued expenses | 72,274 | |||
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Total liabilities | 7,268,880 | |||
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Net Assets | $ | 654,666,690 | ||
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Net Assets Consisted of: | ||||
Capital stock, $0.01 par value | $ | 454,959 | ||
Paid-in capital | 449,870,353 | |||
Accumulated net investment loss | (57,564 | ) | ||
Accumulated net realized gain from investments | 120,475,553 | |||
Net unrealized appreciation on investments and written options | 83,923,389 | |||
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Net Assets | $ | 654,666,690 | ||
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* | Primary risk exposure is equity contracts |
Class A Shares: | ||||
Net asset value and redemption price per share ($84,019,544 / 5,887,716 shares) | $ | 14.27 | ||
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Maximum offering price per share (100/95 of $14.27) | $ | 15.02 | ||
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Class C Shares: | ||||
Net asset value, offering and redemption price per share ($46,493,708 / 3,491,691 shares) | $ | 13.32 | ||
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Class I Shares: | ||||
Net asset value, offering and redemption price per share ($524,153,438 / 36,116,498 shares) | $ | 14.51 | ||
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The accompanying notes are an integral part of the financial statements.
6
LATEEF FUND
Statement of Operations
For the Six Months Ended October 31, 2015
(Unaudited)
Investment Income | ||||
Dividends | $ | 1,882,720 | ||
Less: foreign taxes withheld | (36,830 | ) | ||
Interest | 1,557 | |||
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Total investment income | 1,847,447 | |||
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Expenses | ||||
Advisory fees (Note 2) | 3,512,471 | |||
Distribution fees (Class C) (Note 2) | 177,423 | |||
Distribution fees (Class A) (Note 2) | 107,104 | |||
Administration and accounting fees (Note 2) | 241,957 | |||
Transfer agent fees (Note 2) | 165,749 | |||
Shareholder services fees | 59,141 | |||
Custodian fees (Note 2) | 34,285 | |||
Printing and shareholder reporting fees | 27,231 | |||
Legal fees | 22,691 | |||
Registration and filing fees | 14,331 | |||
Audit fees | 13,553 | |||
Trustees’ and officers’ fees (Note 2) | 11,638 | |||
Other expenses | 15,867 | |||
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Total expenses before waivers and reimbursements | 4,403,441 | |||
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Less: waivers and reimbursements (Note 2) | (530,384 | ) | ||
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Net expenses after waivers and reimbursements | 3,873,057 | |||
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Net investment loss | (2,025,610 | ) | ||
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| |||
Net realized and unrealized gain/(loss) from investments: | ||||
Net realized gain from investments | 29,617,125 | |||
Net change in unrealized appreciation/(depreciation) on investments | (8,392,108 | ) | ||
Net change in unrealized appreciation/(depreciation) on written options** | (611,388 | ) | ||
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| |||
Net realized and unrealized gain on investments | 20,613,629 | |||
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| |||
Net increase in net assets resulting from operations | $ | 18,588,019 | ||
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** | Primary risk exposure is equity contracts |
The accompanying notes are an integral part of the financial statements.
7
LATEEF FUND
Statements of Changes in Net Assets
For the Six Months Ended October 31, 2015 (Unaudited) | For the Year Ended April 30, 2015 | |||||||||
Increase in Net Assets from Operations: | ||||||||||
Net investment income/(loss) | $ | (2,025,610 | ) | $ | 1,968,066 | |||||
Net realized gain from investments | 29,617,125 | 123,277,709 | ||||||||
Net change in unrealized appreciation/(depreciation) on investments and written options | (9,003,496 | ) | (70,834,172 | ) | ||||||
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| |||||||
Net increase in net assets resulting from operations: | 18,588,019 | 54,411,603 | ||||||||
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| |||||||
Less Dividends and Distributions to Shareholders from: | ||||||||||
Net investment income: | ||||||||||
Class A Shares | — | (113,342 | ) | |||||||
Class I Shares | — | (2,441,054 | ) | |||||||
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Total net investment income | — | (2,554,396 | ) | |||||||
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Net realized capital gains: | ||||||||||
Class A Shares | — | (8,502,870 | ) | |||||||
Class C Shares | — | (3,874,512 | ) | |||||||
Class I Shares | — | (50,785,735 | ) | |||||||
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Total net realized capital gains | — | (63,163,117 | ) | |||||||
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| |||||||
Net decrease in net assets from dividends and distributions to shareholder | — | (65,717,513 | ) | |||||||
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Decrease in Net Assets Derived from Capital Share Transactions | (120,535,494 | ) | (81,511,410 | ) | ||||||
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Total decrease in net assets | (101,947,475 | ) | (92,817,320 | ) | ||||||
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Net assets | ||||||||||
Beginning of period | 756,614,165 | 849,431,485 | ||||||||
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End of period | $ | 654,666,690 | $ | 756,614,165 | ||||||
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Accumulated net investment income/(loss), end of period | $ | (57,564 | ) | $ | 1,968,046 | |||||
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The accompanying notes are an integral part of the financial statements.
8
LATEEF FUND
Financial Highlights
Contained below is per share operating performance data for Class A Shares outstanding, total investment return, ratios to average net assets and other supplemental data for the respective period. 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). This information has been derived from information provided in the financial statements and should be read in conjunction with the financial statements and the notes thereto.
Class A | ||||||||||||||||||||||||||||||
For the Six Months Ended October 31, 2015 (Unaudited) | For the Year Ended April 30, 2015 | For the Year Ended April 30, 2014 | For the Year Ended April 30, 2013 | For the Year Ended April 30, 2012 | For the Year Ended April 30, 2011 | |||||||||||||||||||||||||
Per Share Operating Performance | ||||||||||||||||||||||||||||||
Net asset value, beginning of period | $ | 14.00 | $ | 14.20 | $ | 12.45 | $ | 11.73 | $ | 10.76 | $ | 9.07 | ||||||||||||||||||
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Net investment income/(loss)(1) | (0.05 | ) | 0.01 | 0.04 | — | (2) | (0.05 | ) | (0.04 | ) | ||||||||||||||||||||
Net realized and unrealized gain on investments | 0.32 | 0.91 | 2.40 | 1.23 | 1.02 | 1.73 | ||||||||||||||||||||||||
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Net increase in net assets resulting from operations | 0.27 | 0.92 | 2.44 | 1.23 | 0.97 | 1.69 | ||||||||||||||||||||||||
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Dividends and distributions to shareholders from: | ||||||||||||||||||||||||||||||
Net investment income | — | (0.01 | ) | — | (2) | (0.02 | ) | — | — | |||||||||||||||||||||
Net realized capital gains | — | (1.11 | ) | (0.69 | ) | (0.49 | ) | — | — | |||||||||||||||||||||
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Total dividends and distributions to shareholders | — | (1.12 | ) | (0.69 | ) | (0.51 | ) | — | — | |||||||||||||||||||||
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Net asset value, end of period | $ | 14.27 | $ | 14.00 | $ | 14.20 | $ | 12.45 | $ | 11.73 | $ | 10.76 | ||||||||||||||||||
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Total investment return(3) | 1.93 | % | 6.54 | % | 19.92 | % | 10.92 | % | 9.02 | % | 18.63 | % | ||||||||||||||||||
Ratio/Supplemental Data | ||||||||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $ | 84,020 | $ | 86,174 | $ | 148,897 | $ | 120,871 | $ | 82,128 | $ | 68,230 | ||||||||||||||||||
Ratio of expenses to average net assets | 1.24 | %(4) | 1.24 | % | 1.24 | % | 1.24 | % | 1.24 | % | 1.30 | % | ||||||||||||||||||
Ratio of expenses to average net assets without waivers and expense reimbursements(5) | 1.39 | %(4) | 1.38 | % | 1.41 | % | 1.45 | % | 1.50 | % | 1.59 | % | ||||||||||||||||||
Ratio of net investment income/(loss) to average net assets | (0.72 | )%(4) | 0.08 | % | 0.31 | % | 0.04 | % | (0.44 | )% | (0.38 | )% | ||||||||||||||||||
Portfolio turnover rate | 27.20 | %(6) | 29.22 | % | 40.77 | % | 28.29 | % | 35.98 | % | 31.77 | % |
(1) | The selected per share data was calculated using the average shares outstanding method for the period. |
(2) | Amount is less than $0.005 per share. |
(3) | Total investment return is calculated assuming a purchase of shares on the first day and a sale of shares on the last day of each period reported and includes reinvestments of dividends and distributions, if any. Total investment return does not reflect the impact of the maximum front-end sales load of 5.00%. If reflected, the return would be lower. |
(4) | Annualized. |
(5) | During the period, certain fees were waived. If such fee waivers had not occurred, the ratios would have been as indicated (See Note 2). |
(6) | Not annualized. |
The accompanying notes are an integral part of the financial statements.
9
LATEEF FUND
Financial Highlights
Contained below is per share operating performance data for Class C Shares outstanding, total investment return, ratios to average net assets and other supplemental data for the respective period. 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). This information has been derived from information provided in the financial statements and should be read in conjunction with the financial statements and the notes thereto.
Class C | ||||||||||||||||||||||||||||||
For the Six Months Ended October 31, 2015 (Unaudited) | For the Year Ended April 30, 2015 | For the Year Ended April 30, 2014 | For the Year Ended April 30, 2013 | For the Year Ended April 30, 2012 | For the Year Ended April 30, 2011 | |||||||||||||||||||||||||
Per Share Operating Performance | ||||||||||||||||||||||||||||||
Net asset value, beginning of period | $ | 13.11 | $ | 13.46 | $ | 11.91 | $ | 11.30 | $ | 10.45 | $ | 8.87 | ||||||||||||||||||
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Net investment loss(1) | (0.10 | ) | (0.09 | ) | (0.06 | ) | (0.08 | ) | (0.12 | ) | (0.10 | ) | ||||||||||||||||||
Net realized and unrealized gain on investments | 0.31 | 0.85 | 2.30 | 1.18 | 0.97 | 1.68 | ||||||||||||||||||||||||
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Net increase in net assets resulting from operations | 0.21 | 0.76 | 2.24 | 1.10 | 0.85 | 1.58 | ||||||||||||||||||||||||
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Dividends and distributions to shareholders from: | ||||||||||||||||||||||||||||||
Net realized capital gains | — | (1.11 | ) | (0.69 | ) | (0.49 | ) | — | — | |||||||||||||||||||||
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Net asset value, end of period | $ | 13.32 | $ | 13.11 | $ | 13.46 | $ | 11.91 | $ | 11.30 | $ | 10.45 | ||||||||||||||||||
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Total investment return(2) | 1.60 | % | 5.65 | % | 19.08 | % | 10.14 | % | 8.13 | % | 17.81 | % | ||||||||||||||||||
Ratio/Supplemental Data | ||||||||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $ | 46,494 | $ | 46,879 | $ | 50,080 | $ | 39,133 | $ | 30,363 | $ | 28,086 | ||||||||||||||||||
Ratio of expenses to average net assets | 1.99 | %(3) | 1.99 | % | 1.99 | % | 1.99 | % | 1.99 | % | 2.05 | % | ||||||||||||||||||
Ratio of expenses to average net assets without waivers and expense reimbursements(4) | 2.14 | %(3) | 2.14 | % | 2.16 | % | 2.19 | % | 2.25 | % | 2.34 | % | ||||||||||||||||||
Ratio of net investment loss to average net assets | (1.47 | )%(3) | (0.67 | )% | (0.44 | )% | (0.71 | )% | (1.19 | )% | (1.13 | )% | ||||||||||||||||||
Portfolio turnover rate | 27.20 | %(5) | 29.22 | % | 40.77 | % | 28.29 | % | 35.98 | % | 31.77 | % |
(1) | The selected per share data was calculated using the average shares outstanding method for the period. |
(2) | Total investment return is calculated assuming a purchase of shares on the first day and a sale of shares on the last day of each period reported and includes reinvestment of dividends and distributions, if any. |
(3) | Annualized. |
(4) | During the period, certain fees were waived. If such fee waivers had not occurred, the ratios would have been as indicated (See Note 2). |
(5) | Not annualized. |
The accompanying notes are an integral part of the financial statements.
10
LATEEF FUND
Financial Highlights
Contained below is per share operating performance data for Class I Shares outstanding, total investment return, ratios to average net assets and other supplemental data for the respective period. 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). This information has been derived from information provided in the financial statements and should be read in conjunction with the financial statements and the notes thereto.
Class I | ||||||||||||||||||||||||||||||
For the Six Months Ended October 31, 2015 (Unaudited) | For the Year Ended April 30, 2015 | For the Year Ended April 30, 2014 | For the Year Ended April 30, 2013 | For the Year Ended April 30, 2012 | For the Year Ended April 30, 2011 | |||||||||||||||||||||||||
Per Share Operating Performance | ||||||||||||||||||||||||||||||
Net asset value, beginning of period | $ | 14.22 | $ | 14.41 | $ | 12.61 | $ | 11.87 | $ | 10.87 | $ | 9.13 | ||||||||||||||||||
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Net investment income/(loss)(1) | (0.03 | ) | 0.05 | 0.08 | 0.03 | (0.02 | ) | (0.01 | ) | |||||||||||||||||||||
Net realized and unrealized gain on investments | 0.32 | 0.92 | 2.43 | 1.25 | 1.02 | 1.75 | ||||||||||||||||||||||||
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Net increase in net assets resulting from operations | 0.29 | 0.97 | 2.51 | 1.28 | 1.00 | 1.74 | ||||||||||||||||||||||||
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Dividends and distributions to shareholders from: | ||||||||||||||||||||||||||||||
Net investment income | — | (0.05 | ) | (0.02 | ) | (0.05 | ) | — | — | |||||||||||||||||||||
Net realized capital gains | — | (1.11 | ) | (0.69 | ) | (0.49 | ) | — | — | |||||||||||||||||||||
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Total dividends and distributions to shareholders | — | (1.16 | ) | (0.71 | ) | (0.54 | ) | — | — | |||||||||||||||||||||
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Net asset value, end of period | $ | 14.51 | $ | 14.22 | $ | 14.41 | $ | 12.61 | $ | 11.87 | $ | 10.87 | ||||||||||||||||||
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Total investment return(2) | 2.04 | % | 6.79 | % | 20.21 | % | 11.22 | % | 9.20 | % | 19.06 | % | ||||||||||||||||||
Ratio/Supplemental Data | ||||||||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $ | 524,153 | $ | 623,561 | $ | 650,454 | $ | 486,440 | $ | 283,124 | $ | 157,616 | ||||||||||||||||||
Ratio of expenses to average net assets | 0.99 | %(3) | 0.99 | % | 0.99 | % | 0.99 | % | 0.99 | % | 1.05 | % | ||||||||||||||||||
Ratio of expenses to average net assets without waivers and expense reimbursements(4) | 1.14 | %(3) | �� | 1.14 | % | 1.16 | % | 1.19 | % | 1.25 | % | 1.34 | % | |||||||||||||||||
Ratio of net investment income/(loss) to average net assets | (0.47 | )%(3) | 0.33 | % | 0.56 | % | 0.29 | % | (0.19 | )% | (0.13 | )% | ||||||||||||||||||
Portfolio turnover rate | 27.20 | %(5) | 29.22 | % | 40.77 | % | 28.29 | % | 35.98 | % | 31.77 | % |
(1) | The selected per share data was calculated using the average shares outstanding method for the period. |
(2) | Total investment return is calculated assuming a purchase of shares on the first day and a sale of shares on the last day of each period reported and includes reinvestment of dividends and distributions, if any. |
(3) | Annualized. |
(4) | During the period, certain fees were waived. If such fee waivers had not occurred, the ratios would have been as indicated (See Note 2). |
(5) | Not annualized. |
The accompanying notes are an integral part of the financial statements.
11
LATEEF FUND
Notes to Financial Statements
October 31, 2015
(Unaudited)
1. Organization and Significant Accounting Policies
The Lateef Fund (the “Fund”) is a non-diversified, open-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”), which commenced investment operations on September 6, 2007. The Fund is a separate series of FundVantage Trust (the “Trust”) which was organized as a Delaware statutory trust on August 28, 2006. The Trust is a “series trust” authorized to issue an unlimited number of separate series or classes of shares of beneficial interest. Each series is treated as a separate entity for certain matters under the 1940 Act, and for other purposes, and a shareholder of one series is not deemed to be a shareholder of any other series. The Fund offers separate classes of shares, Class A, Class C and Class I Shares. Class A Shares are sold subject to a front-end sales charge. Front-end sales charges may be reduced or waived under certain circumstances. A contingent deferred sales charge (“CDSC”) may be applicable to the purchase of Class A Shares. A CDSC, as a percentage of the lower of the original purchase price or net asset value at redemption, of up to 1.00% may be imposed on full or partial redemptions of Class A Shares made within eighteen months of purchase where: (i) $1 million or more of Class A Shares were purchased without an initial sales charge and (ii) the selling broker-dealer received a commission for such sale.
The Fund is an investment company and follows accounting and reporting guidance in the Financial Accounting Standards Board Accounting Standards Codification Topic 946.
Portfolio Valuation — The Fund’s net asset value (“NAV”) is calculated once daily at the close of regular trading hours on the New York Stock Exchange (“NYSE”) (typically 4:00 p.m. Eastern time) on each day the NYSE is open. Securities held by the Fund are valued using the closing price or the last sale price on a national securities exchange or the National Association of Securities Dealers Automatic Quotation System (“NASDAQ”) market system where they are primarily traded. Equity securities traded in the over-the-counter market are valued at their closing prices. If there were no transactions on that day, securities traded principally on an exchange or on NASDAQ will be valued at the mean of the last bid and ask prices prior to the market close. Fixed income securities having a remaining maturity of greater than 60 days are valued using an independent pricing service. Fixed income securities having a remaining maturity of 60 days or less are generally valued at amortized cost, provided such amount approximates fair value. Foreign securities are valued based on prices from the primary market in which they are traded and are translated from the local currency into U.S. dollars using current exchange rates. Investments in other open-end investment companies are valued based on the NAV of the investment companies (which may use fair value pricing as discussed in their prospectuses). If market quotations are unavailable or deemed unreliable, securities will be valued in accordance with procedures adopted by the Trust’s Board of Trustees. Options are valued at last sale price. Relying on prices supplied by pricing services or dealers or using fair valuation may result in values that are higher or lower than the values used by other investment companies and investors to price the same investments.
12
LATEEF FUND
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
Fair Value Measurements — The inputs and valuation techniques used to measure fair value of the Fund’s investments are summarized into three levels as described in the hierarchy below:
● | Level 1 | — | quoted prices in active markets for identical securities; | |||||
● | Level 2 | — | other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.); and | |||||
● | Level 3 | — | significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments). |
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
The following is a summary of the inputs used, as of October 31, 2015, in valuing the Fund’s investments carried at fair value:
Total Value at 10/31/15 | Level 1 Quoted Price | Level 2 Other Significant Observable Inputs | Level 3 Significant Unobservable Inputs | |||||||||||||
Assets: | ||||||||||||||||
Investments in Securities* | $ | 551,206,923 | $ | 551,206,923 | $ | — | $ | — | ||||||||
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Liabilities: | ||||||||||||||||
Written Option on Equity Contracts | $ | (1,072,500 | ) | $ | (1,072,500 | ) | $ | — | $ | — | ||||||
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* Please refer to Portfolio of Investments for further details.
At the end of each quarter, management evaluates the classification of Levels 1, 2 and 3 assets and liabilities. Various factors are considered, such as changes in liquidity from the prior reporting period; whether or not a broker is willing to execute at the quoted price; the depth and consistency of prices from third party pricing services; and the existence of contemporaneous, observable trades in the market. Additionally, management evaluates the classification of Level 1 and Level 2 assets and liabilities on a quarterly basis for changes in listings or delistings on national exchanges.
Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of the Fund’s investments may fluctuate from period to period. Additionally, the fair value of investments may differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially from the values the Fund may ultimately realize. Further, such investments may be subject to legal and other restrictions on resale or are otherwise less liquid than publicly traded securities.
13
LATEEF FUND
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
For fair valuations using significant unobservable inputs, U.S. generally accepted accounting principles (“U.S. GAAP”) require the Fund to present a reconciliation of the beginning to ending balances for reported market values that presents changes attributable to total realized and unrealized gains or losses, purchase and sales, and transfers in and out of Level 3 during the period. Transfers in and out between Levels are based on values at the end of the period. U.S. GAAP also requires the Fund to disclose amounts and reasons for all transfers in and out of Level 1 and Level 2 fair value measurements. A reconciliation of Level 3 investments is presented only when the Fund had an amount of Level 3 investments at the end of the reporting period that was meaningful in relation to its net assets. The amounts and reasons for all transfers in and out of each Level within the three-tier hierarchy are disclosed when the Fund had an amount of total transfers during the reporting period that was meaningful in relation to its net assets as of the end of the reporting period.
For the six months ended October 31, 2015, there were no transfers between Levels 1, 2 and 3 for the Fund.
Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes at the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates and those differences could be material.
Investment Transactions, Investment Income and Expenses — Investment transactions are recorded on trade date for financial statement preparation purposes. Realized gains and losses on investments sold are recorded on the identified cost basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date. Estimated components of distributions received from real estate investment trusts may be considered income, return of capital distributions or capital gain distributions. Return of capital distributions are recorded as a reduction of cost of the related investments. Distribution (12b-1) fees and shareholder services fees relating to a specific class are charged directly to that class. Fund level expenses common to all classes, investment income and realized and unrealized gains and losses on investments are allocated to each class based upon the relative daily net assets of each class. General expenses of the Trust are generally allocated to each fund in proportion to its relative daily net assets. Expenses directly attributable to a particular fund in the Trust are charged directly to that fund. The Fund’s investment income, expenses (other than class specific expenses) and unrealized and realized gains and losses are allocated daily to each class of shares based upon the relative proportion of net assets of each class at the beginning of the day.
Dividends and Distributions to Shareholders — Dividends from net investment income and distributions from net realized capital gains, if any, are declared, recorded on ex-date and paid at least annually to shareholders. Income dividends and capital gain distributions are determined in accordance with U.S. federal income tax regulations, which may differ from U.S. GAAP . These differences include the treatment
14
LATEEF FUND
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
of non-taxable dividends, expiring capital loss carryforwards and losses deferred due to wash sales and excise tax regulations. Permanent book and tax basis differences relating to shareholder distributions will result in reclassifications within the components of net assets.
U.S. Tax Status — No provision is made for U.S. income taxes as it is the Fund’s intention to continue to qualify for and elect the tax treatment applicable to regulated investment companies under Subchapter M of the Internal Revenue Code of 1986, as amended, and make the requisite distributions to its shareholders which will be sufficient to relieve it from U.S. income and excise taxes.
Other — In the normal course of business, the Fund may enter into contracts that provide general indemnifications. The Fund’s maximum exposure under these arrangements is dependent on claims that may be made against the Fund in the future, and therefore, cannot be estimated; however, based on experience, the risk of material loss for such claims is considered remote.
Currency Risk — The Funds invest in securities of foreign issuers, including American Depositary Receipts. These markets are subject to special risks associated with foreign investments not typically associated with investing in U.S. markets. Because the foreign securities in which the Funds may invest generally trade in currencies other than the U.S. dollar, changes in currency exchange rates will affect the Funds’ NAV, the value of dividends and interest earned and gains and losses realized on the sale of securities. Because the NAV for the Funds is determined on the basis of U.S. dollars, the Funds may lose money by investing in a foreign security if the local currency of a foreign market depreciates against the U.S. dollar, even if the local currency value of the Funds’ holdings goes up. Generally, a strong U.S. dollar relative to these other currencies will adversely affect the value of the Funds’ holdings in foreign securities.
Options Written — The Fund is subject to equity and other risk exposure in the normal course of pursuing its investment objectives and may enter into options written to hedge against changes in interest rates, foreign exchange rates and values of equities. Such options may relate to particular securities or domestic stock indices, and may or may not be listed on a domestic securities exchange or issued by the Options Clearing Corporation. An option contract is a commitment that gives the purchaser of the contract the right, but not the obligation, to buy or sell an underlying asset at a specific price on or before a specified future date. On the other hand, the writer of an option contract is obligated, upon the exercise of the option, to buy or sell an underlying asset at a specific price on or before a specified future date. The maximum risk of loss associated with writing put options is limited to the exercised fair value of the option contract. The maximum risk of loss associated with writing call options is potentially unlimited. The Fund also has the additional risk of being unable to enter into a closing transaction at an acceptable price if a liquid secondary market does not exist. The Fund also may write over-the-counter options where completing the obligation depends upon the credit standing of the other party. Option contracts also involve the risk that they may result in loss due to unanticipated developments in market conditions or other causes. Written options are initially recorded as liabilities to the extent of premiums received and subsequently
15
LATEEF FUND
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
marked to market to reflect the current value of the option written. Gains or losses are realized when the option transaction expires or closes. When an option is exercised, the proceeds on sales for a written call option or the purchase cost for a written put option is adjusted by the amount of the premium received. Listed option contracts present minimal counterparty credit risk since they are exchange traded and the exchange’s clearinghouse, as counterparty to all exchange-traded options, guarantees the options against default. The Fund’s maximum risk of loss from counterparty credit risk related to OTC option contracts is limited to the premium paid.
During the six months ended October 31, 2015, the Fund enter into 4,290 written options contracts.
The Fund had transactions in written options for the six months ended October 31, 2015 as follows:
Number of Contracts | Premium | |||||||||||
Outstanding, April 30, 2015 | — | $ | — | |||||||||
Call Options Written | 4,290 | 461,112 | ||||||||||
Call Options Closed | — | — | ||||||||||
Call Options Exercised | — | — | ||||||||||
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Outstanding, October 31, 2015 | 4,290 | $ | 461,112 | |||||||||
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For the six months period ended October 31, 2015, the Lateef Fund’s average monthly volume of written options was as follows:
Written Options (Proceeds) | ||||
$153,704 |
2. Transactions with Affiliates and Related Parties
Lateef Investment Management, L.P. (“Lateef” or the “Adviser”) serves as investment adviser to the Fund pursuant to an investment advisory agreement with the Trust. For its services, the Adviser is paid a monthly fee at the annual rate of 1.00% of the Fund’s average daily net assets under $500 million; 0.95% of the Fund’s average daily net assets of $500 million or more but less than $1 billion; and 0.90% of the Fund’s average daily net assets of $1 billion and over. The Adviser has contractually agreed to reduce its investment advisory fee and/or reimburse certain expenses of the Fund to the extent necessary to ensure that the Fund’s total operating expenses (excluding taxes, any class-specific fees and expenses, interest, extraordinary items, “Acquired Fund” fees and expenses and brokerage commissions) do not exceed 0.99% (on an annual basis) of the Fund’s average daily net assets (the “Expense Limitation”). The Expense Limitation shall remain in effect until August 31, 2016, unless the Board of Trustees of
16
LATEEF FUND
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
FundVantage Trust (the “Trust”) approves its earlier termination. Each class of shares of the Fund pays its respective pro-rata portion of the advisory fee payable by the Fund.
For the six months ended October 31, 2015, the Adviser earned advisory fees of $3,512,471 and waived fees of $530,384.
BNY Mellon Investment Servicing (US) Inc. (“BNY Mellon”) serves as administrator and transfer agent for the Fund. For providing administrative and accounting services, BNY Mellon is entitled to receive a monthly fee equal to an annual percentage rate of the Fund’s average daily net assets and is subject to certain minimum monthly fees. For providing transfer agent services, BNY Mellon is entitled to receive a monthly fee, subject to certain minimum, and out of pocket expenses.
The Bank of New York Mellon (the “Custodian”) provides certain custodial services to the Fund. The Custodian is entitled to receive a monthly fee, subject to certain minimum, and out of pocket expenses.
Foreside Funds Distributors LLC (the “Underwriter”) provides principal underwriting services to the Fund.
The Trust and the Underwriter are parties to an underwriting agreement. The Trust has adopted a distribution plan for Class A and Class C Shares in accordance with Rule 12b-1 under the 1940 Act. Pursuant to the Class A and Class C Shares plan, the Fund compensates the Underwriter for direct and indirect costs and expenses incurred in connection with advertising, marketing and other distribution services in an amount not to exceed 0.25% and 1.00% (0.75% Rule 12b-1 distribution fee and 0.25% shareholder service fee), respectively, on an annualized basis of the average daily net assets of the Fund’s Class A and Class C Shares.
The Trustees of the Trust who are not officers or employees of an investment adviser, sub-adviser or other service provider to the Trust receive compensation in the form of an annual retainer and per meeting fees for their services as a Trustee. The remuneration paid to the Trustees by the Fund during the six months ended October 31, 2015 was $16,263. Certain employees of BNY Mellon serve as Officers of the Trust. They are not compensated by the Fund or the Trust.
3. Investment in Securities
For the six months ended October 31, 2015, aggregate purchases and sales of investment securities (excluding short-term investments) of the Fund were as follows:
Purchases | Sales | |||||||||
Investment Securities | $ | 179,712,336 | $ | 373,379,353 |
17
LATEEF FUND
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
4. Capital Share Transactions
For the six months ended October 31, 2015 and the year ended April 30, 2015, transactions in capital shares (authorized shares unlimited) were as follows:
For the Six Months Ended October 31, 2015 (Unaudited) | For the Year Ended April 30, 2015 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Class A Shares | ||||||||||||||||
Sales | 246,941 | $ | 3,463,443 | 893,719 | $ | 12,868,542 | ||||||||||
Reinvestments | — | — | 460,150 | 6,428,289 | ||||||||||||
Redemption Fees* | — | 889 | — | 4,786 | ||||||||||||
Redemptions | (514,499 | ) | (7,284,734 | ) | (5,681,148 | ) | (81,815,456 | ) | ||||||||
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Net decrease | (267,558 | ) | $ | (3,820,402 | ) | (4,327,279 | ) | $ | (62,513,839 | ) | ||||||
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Class C Shares | ||||||||||||||||
Sales | 167,036 | $ | 2,198,969 | 328,473 | $ | 4,399,451 | ||||||||||
Reinvestments | — | — | 206,751 | 2,712,572 | ||||||||||||
Redemption Fees* | — | 489 | — | 1,929 | ||||||||||||
Redemptions | (250,436 | ) | (3,316,207 | ) | (682,000 | ) | (9,188,505 | ) | ||||||||
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Net decrease | (83,400 | ) | $ | (1,116,749 | ) | (146,776 | ) | $ | (2,074,553 | ) | ||||||
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Class I Shares | ||||||||||||||||
Sales | 2,831,763 | $ | 40,234,063 | 12,830,721 | $ | 187,004,876 | ||||||||||
Reinvestments | — | — | 2,089,674 | 29,610,675 | ||||||||||||
Redemption Fees* | — | 5,755 | — | 26,800 | ||||||||||||
Redemptions | (10,566,440 | ) | (155,838,161 | ) | (16,197,645 | ) | (233,565,369 | ) | ||||||||
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Net decrease | (7,734,677 | ) | $ | (115,598,343 | ) | (1,277,250 | ) | $ | (16,923,018 | ) | ||||||
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Total Net decrease | (8,085,635 | ) | $ | (120,535,494 | ) | (5,751,305 | ) | $ | (81,511,410 | ) | ||||||
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* There is a 2.00% redemption fee that may be charged on shares redeemed which have been held 30 days or less. The redemption fees are retained by the Fund for the benefit of the remaining shareholders and recorded as paid-in capital.
5. Federal Tax Information
The Fund has followed the authoritative guidance on accounting for and disclosure of uncertainty in tax positions, which requires the Fund to determine whether a tax position is more likely than not to be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The Fund has determined that there was no effect on the financial
18
LATEEF FUND
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
statements from following this authoritative guidance. In the normal course of business, the Fund is subject to examination by federal, state and local jurisdictions, where applicable, for tax years for which applicable statutes of limitations have not expired.
For the year ended April 30, 2015, the tax character of distributions paid by the Fund was $5,645,648 of ordinary income dividends and $60,071,865 of long-term capital gains dividends. Distributions from net investment income and short-term capital gains are treated as ordinary income for federal income tax purposes.
As of April 30, 2015, the components of distributable earnings on a tax basis were as follows:
Capital Loss Carryforward | Undistributed Ordinary Income | Undistributed Long-Term Gain | Unrealized Appreciation | |||
$ — | $2,957,189 | $89,869,285 | $92,926,885 |
The differences between the book and tax basis components of distributable earnings relate primarily to the timing and recognition of income and gains for federal income tax purposes. Short term capital gains are reported as ordinary income for federal income tax purposes.
As of October 31, 2015, the federal tax cost, aggregate gross unrealized appreciation and depreciation of securities held by the Fund were as follows:
Federal tax cost | $ | 466,672,146 | ||||
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Gross unrealized appreciation | $ | 91,992,468 | ||||
Gross unrealized depreciation | (7,457,691 | ) | ||||
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Net unrealized appreciation | $ | 84,534,777 | ||||
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Pursuant to federal income tax rules applicable to regulated investment companies, the Funds may elect to treat certain capital losses between November 1 and April 30 and late year ordinary losses ((i) ordinary losses between January 1 and April 30, and (ii) specified ordinary and currency losses between November 1 and April 30) as occurring on the first day of the following tax year. For the year ended April 30, 2015, any amount of losses elected within the tax return will not be recognized for federal income tax purposes until May 1, 2015. For the year ended April 30, 2015, the Fund had no loss deferrals.
Accumulated capital losses represent net capital loss carry forwards as of April 30, 2015 that may be available to offset future realized capital gains and thereby reduce future capital gains distributions. As of April 30, 2015, the Fund did not have any capital loss carry forwards.
19
LATEEF FUND
Notes to Financial Statements (Concluded)
October 31, 2015
(Unaudited)
6. Subsequent Events
Management has evaluated the impact of all subsequent events on the Fund through the date the financial statements were issued, and has determined that there were no subsequent events requiring recognition or disclosure in the financial statements.
20
LATEEF FUND
Other Information
(Unaudited)
Proxy Voting
Policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities as well as information regarding how the Fund voted proxies relating to portfolio securities for the most recent 12-month period ended June 30 are available without charge, upon request, by calling (866) 499-2151 and on the Securities and Exchange Commission’s (“SEC”) website at http:// www.sec.gov.
Quarterly Portfolio Schedules
The Trust files its complete schedule of portfolio holdings with the SEC for the first and third fiscal quarters of each fiscal year (quarters ended July 31 and January 31) on Form N-Q. The Trust’s Forms N-Q will be available on the SEC’s website at http://www.sec.gov and may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. Information on the operation of the SEC’s Public Reference Room may be obtained by calling 1-800-SEC-0330.
21
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Investment Adviser
Lateef Investment Management, L.P.
300 Drakes Landing Road
Suite 210
Greenbrae, CA 94904
Administrator
BNY Mellon Investment Servicing (US) Inc.
301 Bellevue Parkway
Wilmington, DE 19809
Transfer Agent
BNY Mellon Investment Servicing (US) Inc.
4400 Computer Drive
Westborough, MA 01581
Principal Underwriter
Foreside Funds Distributors LLC
400 Berwyn Park
899 Cassatt Road
Berwyn, PA 19312
Custodian
The Bank of New York Mellon
225 Liberty Street
New York, NY 10286
Independent Registered Public Accounting Firm
PricewaterhouseCoopers LLP
Two Commerce Square, Suite 1700
2001 Market Street
Philadelphia, PA 19103-7042
Legal Counsel
Pepper Hamilton LLP
3000 Two Logan Square
18th and Arch Streets
Philadelphia, PA 19103
LAT-1015
LATEEF FUND
of
FundVantage Trust
Class A Shares
Class C Shares
Class I Shares
SEMI-ANNUAL REPORT
October 31, 2015
(Unaudited)
This report is submitted for the general information of the shareholders of the Lateef Fund. It is not authorized for distribution unless preceded or accompanied by a current prospectus for the Lateef Fund.
MOUNT LUCAS U.S. FOCUSED EQUITY FUND
of
FundVantage Trust
Class I Shares
SEMI-ANNUAL REPORT
October 31, 2015
(Unaudited)
This report is submitted for the general information of the shareholders of the Mount Lucas U.S. Focused Equity Fund. It is not authorized for distribution unless preceded or accompanied by a current prospectus for the Mount Lucas U.S. Focused Equity Fund.
MOUNT LUCAS U.S. FOCUSED EQUITY FUND
Semi-Annual Report
Performance Data
October 31, 2015
(Unaudited)
Average Annual Total Returns for the Periods Ended October 31, 2015 | ||||||||||||||||||||
Six Months† | 1 Year | 3 Years | �� | 5 Years | Since Inception | |||||||||||||||
Class I* | -4.90% | -0.12% | 16.91% | 12.55% | 5.34% | |||||||||||||||
S&P 500® Index | 0.77% | 5.20% | 16.20% | 14.33% | 6.17%** |
† | Not annualized. |
* | Mount Lucas U.S. Focused Equity Fund - Class I Shares (the “Fund”) commenced operations on October 1, 2007. |
** | Benchmark performance is from inception date of the Fund only and is not the inception date of the benchmark itself. |
The performance data quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment in the Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. The graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares. Current performance may be lower or higher than the performance quoted. Performance data current to the most recent month-end may be obtained by calling (844) 261-6483.
The Fund’s total annual gross and net operating expenses, as stated in the current prospectus dated September 1, 2015, are 1.23% and 0.95%, respectively, for Class I shares of the Fund’s average daily net assets. Mount Lucas Management LP (the “Adviser”) has contractually agreed to waive fees and/or reimburse expenses in order to limit the Fund’s “Total Annual Fund Operating Expenses” (excluding taxes, “Acquired Fund” fees and expenses, extraordinary items, brokerage commissions and interest) to, as a percentage of average daily net assets, 0.95% with respect to Class I Shares. The Expense Limitation will remain in place until August 31, 2018, unless the Board of Trustees approves its earlier termination. The Adviser may recoup any expenses or fees it has reimbursed within a three-year period from the year in which the Adviser reduced its compensation and/or assumed expenses of the Fund. No recoupment will occur unless the Fund’s expenses are below the Expense Limitation. Performance would have been lower without fee waivers in effect.
The Fund operated as a series of Scotia Institutional Funds prior to the opening of business on March 24, 2014 (the “Predecessor Fund”), at which time, the Predecessor Fund was reorganized into the Fund. Before the Fund commenced operations, all of the assets and liabilities of the Predecessor Fund were transferred to the Fund in a tax free reorganization (the “Reorganization”). The Reorganization occurred at the opening of business on March 24, 2014. As a result of the Reorganization, the Fund assumed the performance and accounting history of the Predecessor Fund prior to the date of the Reorganization. The Fund has the same investment objective and strategies as the Predecessor Fund. The Performance shown for periods prior to March 24, 2014 represents the performance for the Predecessor Fund.
The value of the Fund’s investments in equity securities may fluctuate drastically from day-to-day causing volatility and possible loss of principal. The fund may invest in undervalued securities and is subject to the risk that the securities may not appreciate in value as anticipated.
The Fund is non-diversified and invests in a limited number of securities. As a result, the Fund’s investment performance may be more volatile, as it may be more susceptible to risks associated with a single economic, political, or regulatory event than a fund that invests in a greater number of issuers. The Fund may invest in undervalued securities and is subject to the risk that the securities may not appreciate in value as anticipated.
The Fund intends to evaluate performance as compared to that of the Standard & Poor’s 500® Composite Price Index (“S&P 500®”). The S&P 500® is a widely recognized, unmanaged index of 500 common stocks which are generally representative of the U.S. stock market as a whole. It is impossible to invest directly in an index.
1
MOUNT LUCAS U.S. FOCUSED EQUITY FUND
Fund Expense Disclosure
October 31, 2015
(Unaudited)
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs including sales charges (loads) on purchase payments (if any) or redemption fees; and (2) ongoing costs, including management fees, distribution and/or service (Rule 12b-1) fees (if any) and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
These examples are based on an investment of $1,000 invested at the beginning of the six-month period from May 1, 2015 through October 31, 2015 and held for the entire period.
Actual Expenses
The first line of the accompanying table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Examples for Comparison Purposes
The second line of the accompanying table provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not your Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare these 5% hypothetical examples with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that the expenses shown in the accompanying table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges on purchase payments (if any) or redemption fees. Therefore, the second line of the accompanying table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Mount Lucas U.S. Focused Equity Fund | ||||||
Beginning Account Value | Ending Account Value | Expenses Paid | ||||
May 1, 2015 | October 31, 2015 | During Period* | ||||
Class I | ||||||
Actual | $1,000.00 | $ 951.00 | $4.66 | |||
Hypothetical (5% return before expenses) | 1,000.00 | 1,020.36 | 4.82 |
* | Expenses are equal to the annualized expense ratio for the six-month period ended October 31, 2015 of 0.95% for Class I shares, multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year (184), then divided by 366 to reflect the period. The Fund’s ending account value on the first line in the table is based on the actual six-month total return for the Fund of -4.90% for Class I shares. |
2
MOUNT LUCAS U.S. FOCUSED EQUITY FUND
Portfolio Holdings Summary Table
October 31, 2015
(Unaudited)
The following table presents a summary by sector of the portfolio holdings of the Fund:
% of Net Assets | Value | |||||||
COMMON STOCKS: | ||||||||
Energy | 30.1 | % | $ | 16,080,490 | ||||
Financials | 28.1 | 15,023,215 | ||||||
Consumer Discretionary | 25.8 | 13,743,145 | ||||||
Consumer Staples | 9.7 | 5,159,284 | ||||||
Information Technology | 3.0 | 1,617,409 | ||||||
Health Care | 1.9 | 1,013,958 | ||||||
Industrials | 1.0 | 555,395 | ||||||
Other Assets in Excess of Liabilities | 0.4 | 187,329 | ||||||
|
|
|
| |||||
NET ASSETS | 100.0 | % | $ | 53,380,225 | ||||
|
|
|
|
Portfolio holdings are subject to change at any time.
The accompanying notes are an integral part of the financial statements.
3
MOUNT LUCAS U.S. FOCUSED EQUITY FUND
Portfolio of Investments
October 31, 2015
(Unaudited)
Number of Shares | Value | |||||||
COMMON STOCKS — 99.6% |
| |||||||
Consumer Discretionary — 25.8% |
| |||||||
AutoZone, Inc.* | 741 | $ | 581,248 | |||||
Best Buy Co., Inc. | 111,799 | 3,916,319 | ||||||
Ford Motor Co. | 152,618 | 2,260,273 | ||||||
GameStop Corp., Class A | 50,274 | 2,316,123 | ||||||
Gannett Co., Inc. | 32,077 | 507,458 | ||||||
General Motors Co. | 69,778 | 2,435,950 | ||||||
TEGNA, Inc. | 63,823 | 1,725,774 | ||||||
|
| |||||||
13,743,145 | ||||||||
|
| |||||||
Consumer Staples — 9.7% |
| |||||||
Altria Group, Inc. | 10,449 | 631,851 | ||||||
Clorox Co. (The) | 4,874 | 594,336 | ||||||
Constellation Brands, Inc., Class A | 4,204 | 566,699 | ||||||
Costco Wholesale Corp. | 3,653 | 577,612 | ||||||
CVS Caremark Corp. | 10,703 | 1,057,242 | ||||||
Kroger Co. (The) | 14,661 | 554,186 | ||||||
McCormick & Co., Inc. | 6,634 | 557,123 | ||||||
Reynolds American, Inc. | 12,836 | 620,235 | ||||||
|
| |||||||
5,159,284 | ||||||||
|
| |||||||
Energy — 30.1% | ||||||||
Chesapeake Energy Corp. | 156,607 | 1,116,608 | ||||||
Denbury Resources, Inc. | 293,217 | 1,037,988 | ||||||
Diamond Offshore Drilling, Inc. | 81,051 | 1,611,294 | ||||||
Marathon Petroleum Corp. | 45,771 | 2,370,938 | ||||||
Phillips 66 | 27,297 | 2,430,798 | ||||||
Tesoro Corp. | 48,559 | 5,192,414 | ||||||
Valero Energy Corp. | 35,201 | 2,320,450 | ||||||
|
| |||||||
16,080,490 | ||||||||
|
| |||||||
Financials — 28.1% |
| |||||||
Allstate Corp. (The) | 39,756 | 2,460,101 |
Number of Shares | Value | |||||||
COMMON STOCKS — (Continued) |
| |||||||
Financials — (Continued) |
| |||||||
AvalonBay Communities, Inc. REIT | 3,299 | $ | 576,764 | |||||
Essex Property Trust, Inc. REIT | 2,455 | 541,180 | ||||||
General Growth Properties, Inc. REIT | 19,008 | 550,282 | ||||||
Hartford Financial Services Group, Inc. (The) | 46,776 | 2,163,858 | ||||||
MetLife, Inc. | 43,226 | 2,177,726 | ||||||
Progressive Corp. (The) | 17,671 | 585,440 | ||||||
Public Storage REIT | 2,651 | 608,298 | ||||||
Travelers Cos, Inc. (The) | 47,476 | 5,359,566 | ||||||
|
| |||||||
15,023,215 | ||||||||
|
| |||||||
Health Care — 1.9% |
| |||||||
AmerisourceBergen Corp. | 5,121 | 494,228 | ||||||
CR Bard, Inc. | 2,789 | 519,730 | ||||||
|
| |||||||
1,013,958 | ||||||||
|
| |||||||
Industrials — 1.0% |
| |||||||
Waste Management, Inc. | 10,331 | 555,395 | ||||||
|
| |||||||
Information Technology — 3.0% |
| |||||||
Xerox Corp. | 172,248 | 1,617,409 | ||||||
|
| |||||||
TOTAL COMMON STOCKS |
| 53,192,896 | ||||||
|
| |||||||
TOTAL INVESTMENTS - 99.6% |
| 53,192,896 | ||||||
|
| |||||||
OTHER ASSETS IN EXCESS OF LIABILITIES - 0.4% |
| 187,329 | ||||||
|
| |||||||
NET ASSETS - 100.0% |
| $ | 53,380,225 | |||||
|
|
* | Non-income producing. |
REIT | Real Estate Investment Trust |
The accompanying notes are an integral part of the financial statements.
4
MOUNT LUCAS U.S. FOCUSED EQUITY FUND
Statement of Assets and Liabilities
October 31, 2015
(Unaudited)
Assets | ||||
Investments, at value (Cost $53,473,954) | $53,192,896 | |||
Cash | 132,100 | |||
Receivable for investments sold | 16,257 | |||
Receivable for capital shares sold | 72,000 | |||
Dividends and interest receivable | 30,798 | |||
Prepaid expenses and other assets | 45,658 | |||
|
| |||
Total assets | 53,489,709 | |||
|
| |||
Liabilities | ||||
Payable for capital shares redeemed | 32,126 | |||
Payable for investments purchased | 22,664 | |||
Payable for administration and accounting fees | 12,829 | |||
Payable to Investment Adviser | 11,880 | |||
Payable for audit fees | 6,839 | |||
Payable for transfer agent fees | 3,677 | |||
Other accrued expenses | 19,469 | |||
|
| |||
Total liabilities | 109,484 | |||
|
| |||
Net Assets | $53,380,225 | |||
|
| |||
Net Assets Consisted of: | ||||
Capital stock, $0.01 par value | $ 56,063 | |||
Paid-in capital | 52,094,473 | |||
Accumulated net investment income | 571,517 | |||
Accumulated net realized gain from investments | 939,230 | |||
Net unrealized depreciation on investments | (281,058 | ) | ||
|
| |||
Net Assets | $53,380,225 | |||
|
| |||
Class I: | ||||
Net asset value, offering and redemption price per share ($53,380,225 / 5,606,259 shares) | $9.52 | |||
|
|
The accompanying notes are an integral part of the financial statements.
5
MOUNT LUCAS U.S. FOCUSED EQUITY FUND
Statement of Operations
For the Six Months Ended October 31, 2015
(Unaudited)
Investment Income | ||||
Dividends | $ | 588,933 | ||
Interest | 22 | |||
|
| |||
Total investment income | 588,955 | |||
|
| |||
Expenses | ||||
Advisory fees (Note 2) | 205,530 | |||
Administration and accounting fees (Note 2) | 39,272 | |||
Printing and shareholder reporting fees | 25,599 | |||
Legal fees | 21,739 | |||
Custodian fees (Note 2) | 21,167 | |||
Audit fees | 9,025 | |||
Trustees’ and officers’ fees (Note 2) | 7,896 | |||
Transfer agent fees (Note 2) | 7,244 | |||
Registration and filing fees | 1,393 | |||
Other expenses | 7,955 | |||
|
| |||
Total expenses before waivers | 346,820 | |||
|
| |||
Less: waivers (Note 2) | (86,482 | ) | ||
|
| |||
Net expenses after waivers | 260,338 | |||
|
| |||
Net investment income | 328,617 | |||
|
| |||
Net realized and unrealized gain/(loss) from investments: | ||||
Net realized loss from investments | (491,280 | ) | ||
Net change in unrealized appreciation/(depreciation) on investments | (2,695,456 | ) | ||
|
| |||
Net realized and unrealized loss on investments | (3,186,736 | ) | ||
|
| |||
Net decrease in net assets resulting from operations | $ | (2,858,119 | ) | |
|
|
The accompanying notes are an integral part of the financial statements.
6
MOUNT LUCAS U.S. FOCUSED EQUITY FUND
Statements of Changes in Net Assets
For the Six Months Ended October 31, 2015 (Unaudited) | For the Year Ended April 30, 2015 | |||||||||
Increase/(decrease) in net assets from operations: | ||||||||||
Net investment income | $ | 328,617 | $ | 766,533 | ||||||
Net realized gain/(loss) from investments | (491,280 | ) | 6,191,789 | |||||||
Net change in unrealized appreciation/(depreciation) on investments | (2,695,456 | ) | (2,294,826 | ) | ||||||
|
|
|
| |||||||
Net increase/(decrease) in net assets resulting from operations | (2,858,119 | ) | 4,663,496 | |||||||
|
|
|
| |||||||
Less Dividends and Distributions to Shareholders from: | ||||||||||
Net investment income | ||||||||||
Class I | — | (1,029,379 | ) | |||||||
Net realized gains | ||||||||||
Class I | — | (12,012,384 | ) | |||||||
|
|
|
| |||||||
Net decrease in net assets from dividends and distributions to shareholders | — | (13,041,763 | ) | |||||||
|
|
|
| |||||||
Increase/(Decrease) in Net Assets Derived from Capital Share Transactions (Note 4) | (2,406,761 | ) | 7,857,054 | |||||||
|
|
|
| |||||||
Total decrease in net assets | (5,264,880 | ) | (521,213 | ) | ||||||
|
|
|
| |||||||
Net assets | ||||||||||
Beginning of period | 58,645,105 | 59,166,318 | ||||||||
|
|
|
| |||||||
End of period | $ | 53,380,225 | $ | 58,645,105 | ||||||
|
|
|
| |||||||
Accumulated net investment income, end of period | $ | 571,517 | $ | 242,900 | ||||||
|
|
|
|
The accompanying notes are an integral part of the financial statements.
7
MOUNT LUCAS U.S. FOCUSED EQUITY FUND
Financial Highlights
Contained below is per share operating performance data for Class I Shares outstanding, total investment return, ratios to average net assets and other supplemental data for the respective periods. 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). This information has been derived from information provided in the financial statements and should be read in conjunction with the financial statements and the notes thereto.
For the Six Months Ended October 31, 2015 (Unaudited) | For the Year Ended April 30, 2015 | For the Seven Months Ended April 30, 2014(1) | For the Year Ended September 30, 2013 | For the Year Ended September 30, 2012 | For the Year Ended September 30, 2011 | For the Year Ended September 30, 2010 | |||||||||||||||||||||||||||||
Per Share Operating Performance | |||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $ | 10.01 | $ | 11.92 | $ | 11.19 | $ | 8.72 | $ | 7.09 | $ | 7.69 | $ | 6.49 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||
Net investment income(2) | 0.06 | 0.15 | 0.14 | 0.17 | 0.12 | 0.14 | 0.07 | ||||||||||||||||||||||||||||
Net realized and unrealized gain/(loss) on investments | (0.55 | ) | 0.79 | 2.08 | 2.43 | 1.66 | (0.81 | ) | 1.19 | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||
Net increase/(decrease) in net assets resulting from operations | (0.49 | ) | 0.94 | 2.22 | 2.60 | 1.78 | (0.67 | ) | 1.26 | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||
Dividends and distributions to shareholders from: | |||||||||||||||||||||||||||||||||||
Net investment income | — | (0.22 | ) | (0.13 | ) | (0.13 | ) | (0.16 | ) | (0.05 | ) | (0.07 | ) | ||||||||||||||||||||||
Net realized gains | — | (2.63 | ) | (1.36 | ) | — | — | — | — | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||
Total dividends and distributions to shareholders | — | (2.85 | ) | (1.49 | ) | (0.13 | ) | (0.16 | ) | (0.05 | ) | (0.07 | ) | ||||||||||||||||||||||
|
|
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|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||
Adviser Contribution | — | — | — | — | 0.01 | 0.12 | — | ||||||||||||||||||||||||||||
|
|
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|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||
Redemption fees added to paid-in capital(2) | — | — | — | — | — | 0.00 | (3) | 0.01 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||
Net asset value, end of period | $ | 9.52 | $ | 10.01 | $ | 11.92 | $ | 11.19 | $ | 8.72 | $ | 7.09 | $ | 7.69 | |||||||||||||||||||||
|
|
|
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|
|
|
|
| ||||||||||||||||||||||
Total investment return(4) | (4.90 | )% | 8.81 | % | 20.54 | % | 30.16 | % | 25.38 | %(5) | (7.25 | )%(5) | 19.60 | % | |||||||||||||||||||||
Ratio/Supplemental Data | |||||||||||||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $ | 53,380 | $ | 58,645 | $ | 59,166 | $ | 45,540 | $ | 26,060 | $ | 17,003 | $ | 9,588 | |||||||||||||||||||||
Ratio of expenses to average net assets | 0.95 | %(6) | 0.95 | % | 0.95 | %(6) | 0.95 | % | 0.95 | % | 0.95 | % | 0.95 | % | |||||||||||||||||||||
Ratio of expenses to average net assets without waivers and expense reimbursements(7) | 1.27 | %(6) | 1.23 | % | 1.18 | %(6) | 1.25 | % | 1.74 | % | 1.74 | % | 3.39 | % | |||||||||||||||||||||
Ratio of net investment income to average net assets | 1.20 | %(6) | 1.31 | % | 2.09 | %(6) | 1.70 | % | 1.50 | % | 1.68 | % | 0.95 | % | |||||||||||||||||||||
Portfolio turnover rate | 46.84 | %(8) | 102.75 | % | 53.87 | %(8) | 103.55 | % | 118.67 | % | 102.57 | % | 120.20 | % |
(1) | The Fund changed its fiscal year end to April 30. |
(2) | Calculated based on the average number of shares outstanding during the period. |
(3) | Amount is less than $0.005 per share. |
(4) | Total investment return is calculated assuming a purchase of shares on the first day and a sale of shares on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total return for periods less than one year are not annualized. |
(5) | Absent a capital contribution between the Predecessor Fund and the investment adviser to the Predecessor Fund, total returns would have been 25.23% and (8.82)% for the years ended September 30, 2012 and 2011, respectively. |
(6) | Annualized. |
(7) | During the period, certain fees were waived and/or reimbursed. If such fee waivers and/or reimbursements had not occurred, the ratios would have been as indicated (See Note 2). |
(8) | Not annualized. |
The accompanying notes are an integral part of the financial statements.
8
MOUNT LUCAS U.S. FOCUSED EQUITY FUND
Notes to Financial Statements
October 31, 2015
(Unaudited)
1. Organization and Significant Accounting Policies
The Mount Lucas U.S. Focused Equity Fund (the “Fund”) is a diversified, open-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”). The Fund is a separate series of FundVantage Trust (the “Trust”) which was organized as a Delaware statutory trust on August 28, 2006. The Trust is a “series trust” authorized to issue an unlimited number of separate series or classes of shares of beneficial interest. Each series is treated as a separate entity for certain matters under the 1940 Act, and for other purposes, and a shareholder of one series is not deemed to be a shareholder of any other series. The Fund offers separate classes of shares, Class I and Class II. As of October 31, 2015, Class II Shares have not been issued.
Immediately prior to the opening of business on March 24, 2014, the Fund, a series of the Trust, acquired substantially all of the assets and liabilities of the Mount Lucas U.S. Focused Equity Fund, a series of Scotia Institutional Funds (the “Predecessor Fund”) pursuant to an Agreement and Plan of Reorganization. As a result of the reorganization, the Fund is the accounting successor to the Predecessor Fund. The fiscal year end of the Predecessor Fund was September 30. As part of the Trust, the Fund changed its fiscal year end to April 30 to reflect the fiscal year end of the other series of the Trust.
The Fund is an investment company and follows accounting and reporting guidance in the Financial Accounting Standards Board Accounting Standards Codification Topic 946.
Portfolio Valuation — The Fund’s net asset value (“NAV”) is calculated once daily at the close of regular trading hours on the New York Stock Exchange (“NYSE”) (typically 4:00 p.m. Eastern time) on each day the NYSE is open. Securities held by the Fund are valued using the closing price or the last sale price on a national securities exchange or the National Association of Securities Dealers Automatic Quotation System (“NASDAQ”) market system where they are primarily traded. Equity securities traded in the over-the-counter market are valued at their closing prices. If there were no transactions on that day, securities traded principally on an exchange or on NASDAQ will be valued at the mean of the last bid and ask prices prior to the market close. Fixed income securities having a remaining maturity of greater than 60 days are valued using an independent pricing service. Fixed income securities having a remaining maturity of 60 days or less are generally valued at amortized cost, provided such amount approximates fair value. Foreign securities are valued based on prices from the primary market in which they are traded and are translated from the local currency into U.S. dollars using current exchange rates. Investments in other open-end investment companies are valued based on the NAV of the investment companies (which may use fair value pricing as discussed in their prospectuses). If market quotations are unavailable or deemed unreliable, securities will be valued in accordance with procedures adopted by the Trust’s Board of Trustees. Relying on prices supplied by pricing services or dealers or using fair valuation may result in values that are higher or lower than the values used by other investment companies and investors to price the same investments.
Fair Value Measurements — The inputs and valuation techniques used to measure fair value of the Fund’s investments are summarized into three levels as described in the hierarchy below:
· Level 1 — | quoted prices in active markets for identical securities; | |||
· Level 2 — | other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.); and | |||
· Level 3 — | significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments). |
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
9
MOUNT LUCAS U.S. FOCUSED EQUITY FUND
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
The following is a summary of the inputs used, as of October 31, 2015, in valuing the Fund’s investments carried at fair value:
Total Value at 10/31/15 | Level 1 Quoted Price | Level 2 Other Significant Observable Inputs | Level 3 Significant Unobservable Inputs | |||||||||||||
Common Stocks* | $ | 53,192,896 | $ | 53,192,896 | $ | — | $ | — | ||||||||
|
|
|
|
|
|
|
|
* Please refer to Portfolio of Investments for details on portfolio holdings.
At the end of each quarter, management evaluates the classification of Levels 1, 2 and 3 assets and liabilities. Various factors are considered, such as changes in liquidity from the prior reporting period; whether or not a broker is willing to execute at the quoted price; the depth and consistency of prices from third party pricing services; and the existence of contemporaneous, observable trades in the market. Additionally, management evaluates the classification of Level 1 and Level 2 assets and liabilities on a quarterly basis for changes in listings or delistings on national exchanges.
Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of the Fund’s investments may fluctuate from period to period. Additionally, the fair value of investments may differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially from the values the Fund may ultimately realize. Further, such investments may be subject to legal and other restrictions on resale or otherwise less liquid than publicly traded securities.
For fair valuations using significant unobservable inputs, U.S. generally accepted accounting principles (“U.S. GAAP”) require the Fund to present a reconciliation of the beginning to ending balances for reported market values that presents changes attributable to total realized and unrealized gains or losses, purchase and sales, and transfers in and out of Level 3 during the period. Transfers in and out between Levels are based on values at the end of the period. U.S. GAAP also requires the Fund to disclose amounts and reasons for all transfers in and out of Level 1 and Level 2 fair value measurements. A reconciliation of Level 3 investments is presented only when the Fund had an amount of Level 3 investments at the end of the reporting period that was meaningful in relation to its net assets. The amounts and reasons for all transfers in and out of each Level within the three-tier hierarchy are disclosed when the Fund had an amount of total transfers during the reporting period that was meaningful in relation to its net assets as of the end of the reporting period.
For the six months ended October 31, 2015 there were no transfers between Levels 1, 2 and 3 for the Fund.
Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes at the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates and those differences could be material.
Investment Transactions, Investment Income and Expenses — Investment transactions are recorded on trade date for financial statement preparation purposes. Realized gains and losses on investments sold are recorded on the identified cost basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date. Estimated components of distributions received from real estate investment trusts may be considered income, return of capital distributions or capital gain distributions. Return of capital distributions are recorded as a reduction of cost of the related investment. General expenses of the Trust are generally allocated to each fund in proportion to its relative daily net assets. Expenses directly attributable to a particular fund in the Trust are charged directly to that fund.
10
MOUNT LUCAS U.S. FOCUSED EQUITY FUND
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
Dividends and Distributions to Shareholders — Dividends from net investment income and distributions from net realized capital gains, if any, are declared, recorded on ex-date and paid at least annually to shareholders. Income dividends and capital gain distributions are determined in accordance with U.S. federal income tax regulations, which may differ from U.S. GAAP . These differences include the treatment of non-taxable dividends, expiring capital loss carryforwards and losses deferred due to wash sales and excise tax regulations. Permanent book and tax basis differences relating to shareholder distributions will result in reclassifications within the components of net assets.
U.S. Tax Status — No provision is made for U.S. income taxes as it is the Fund’s intention to continue to qualify for and elect the tax treatment applicable to regulated investment companies under Subchapter M of the Internal Revenue Code of 1986, as amended, (the “Code”) and make the requisite distributions to its shareholders which will be sufficient to relieve it from U.S. income and excise taxes.
Other — In the normal course of business, the Fund may enter into contracts that provide general indemnifications. The Fund’s maximum exposure under these arrangements is dependent on claims that may be made against the Fund in the future, and therefore, cannot be estimated; however, based on experience, the risk of material loss for such claims is considered remote.
2. Transactions with Affiliates and Related Parties
Mount Lucas Management LP (“Mount Lucas” or the “Adviser”) serves as investment adviser to the Fund pursuant to an investment advisory agreement with the Trust. For its services, the Adviser is entitled to an investment advisory fee of 0.75% (on an annualized basis), which is calculated daily and paid monthly based on the average daily net assets of the Fund.
The Adviser has contractually agreed to reduce its investment advisory fee and/or reimburse certain expenses of the Fund to the extent necessary to ensure that the Fund’s total operating expenses (excluding taxes, “Acquired Fund” fees and expenses, extraordinary items, brokerage commissions and interest) do not exceed 0.95% (on an annual basis) of the Fund’s average daily net assets of Class I Shares (the “Expense Limitation”). The Expense Limitation shall remain in effect until August 31, 2018, unless the Board of Trustees of the Trust approves its earlier termination.
Subject to approval by the Board of Trustees, the Adviser may recoup any expenses or fees it has reimbursed within a three-year period from the year in which the Adviser reduced its compensation and/or assumed expenses of the Fund. No recoupment will occur unless the Fund’s expenses are below the Expense Limitation. As of October 31, 2015, the amount of potential recovery was as follows:
Expiration | ||||
April 30, 2017 | April 30, 2018 | April 30, 2019 | ||
$22,635 | $164,223 | $86,482 |
For the six months ended October 31, 2015, the Adviser earned advisory fees of $205,530 and waived fees of $86,482.
11
MOUNT LUCAS U.S. FOCUSED EQUITY FUND
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
BNY Mellon Investment Servicing (US) Inc. (“BNY Mellon”) serves as administrator and transfer agent for the Fund. For providing administrative and accounting services, BNY Mellon is entitled to receive a monthly fee equal to an annual percentage rate of the Fund’s average daily net assets and is subject to certain minimum monthly fees. For providing transfer agency services, BNY Mellon is entitled to receive a monthly fee, subject to certain minimum, and out of pocket expenses.
The Bank of New York Mellon (the “Custodian”) provides certain custodial services to the Fund. The Custodian is entitled to receive a monthly fee, subject to certain minimum, and out of pocket expenses.
Foreside Funds Distributors LLC (the “Underwriter”) provides principal underwriting services to the Fund pursuant to an underwriting agreement between the Trust and the Underwriter.
The Trustees of the Trust who are not officers or employees of an investment adviser or other service provider to the Trust receive compensation in the form of an annual retainer and per meeting fees for their services as a Trustee. The remuneration paid to the Trustees by the Fund during the six months ended October 31, 2015 was $2,993. Certain employees of BNY Mellon serve as Officers of the Trust. They are not compensated by the Fund or the Trust.
3. Investment in Securities
For the six months ended October 31, 2015, aggregate purchases and sales of investment securities (excluding short-term investments) of the Fund were as follows:
Purchases | Sales | |||||||
Investment Securities | $ | 25,318,171 | $ | 26,792,937 |
4. Capital Share Transactions
For the six months ended October 31, 2015 and the year ended April 30, 2015, transactions in capital shares (authorized shares unlimited) were as follows:
For the Six Months Ended October 31, 2015 (Unaudited) | For the Year Ended April 30, 2015 | |||||||||||||||
Shares | Value | Shares | Value | |||||||||||||
Class I | ||||||||||||||||
Sales | 464,686 | $ | 4,467,629 | 1,133,300 | $ | 12,139,727 | ||||||||||
Reinvestments | — | — | 1,331,058 | 12,831,397 | ||||||||||||
Redemptions | (715,460 | ) | (6,874,390 | ) | (1,572,859 | ) | (17,114,070 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Net Increase/(Decrease) | (250,774 | ) | $ | (2,406,761 | ) | 891,499 | $ | 7,857,054 | ||||||||
|
|
|
|
|
|
|
|
5. Federal Tax Information
The Fund has followed the authoritative guidance on accounting for and disclosure of uncertainty in tax positions, which requires the Fund to determine whether a tax position is more likely than not to be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The Fund has determined that there was no effect on the financial statements from following this authoritative guidance. In the normal course of business, the Fund is subject to examination by federal, state and local jurisdictions, where applicable, for tax years for which applicable statutes of limitations have not expired.
12
MOUNT LUCAS U.S. FOCUSED EQUITY FUND
Notes to Financial Statements (Concluded)
October 31, 2015
(Unaudited)
For the year ended April 30, 2015, the tax character of distributions paid by the Fund was $2,459,636 of ordinary income dividends and $10,582,127 of long-term capital gains dividends. For period ended April 30, 2014, the tax character of distributions paid by the Fund was $1,963,279 of ordinary income dividends and $4,199,090 of long-term capital gains dividends. For the year ended September 30, 2013, the tax character of distributions paid by the Fund was $426,207 of ordinary income dividends. Distributions from net investment income and short-term capital gains are treated as ordinary income for federal income tax purposes.
As of April 30, 2015, the components of distributable earnings on a tax basis were as follows:
Capital Loss Carryforward | Undistributed Ordinary Income | Undistributed Long-Term Gain | Unrealized Appreciation | Other Book/Tax Differences | ||||||||||||||||
$ — | $747,026 | $1,175,596 | $2,169,118 | $(3,932) |
The differences between the book and tax basis unrealized depreciation are attributable primarily to the tax deferral of losses on wash sales. Other book/tax differences are attributed to the treatment of organizational and start-up costs
As of October 31, 2015, the federal tax cost, aggregate gross unrealized appreciation and depreciation of securities held by the Fund were as follows:
Federal tax cost | $ | 53,473,954 | ||||
|
| |||||
Gross unrealized appreciation | $ | 3,702,767 | ||||
Gross unrealized depreciation | (3,983,825 | ) | ||||
|
| |||||
Net unrealized depreciation | $ | (281,058 | ) | |||
|
|
Accumulated capital losses represent net capital loss carry forwards as of October 31, 2015 that may be available to offset future realized capital gains and thereby reduce future capital gains distributions. As of October 31, 2015, the Fund did not have any capital loss carryforwards.
6. Subsequent Events
Management has evaluated the impact of all subsequent events on the Fund through the date the financial statements were issued, and has determined that there were no subsequent events requiring recognition or disclosure in the financial statements.
13
MOUNT LUCAS U.S. FOCUSED EQUITY FUND
Other Information
(Unaudited)
Proxy Voting
Policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities as well as information regarding how the Fund voted proxies relating to portfolio securities for the most recent 12-month period ended June 30 are available without charge, upon request, by calling (844) 261-6483 and on the Securities and Exchange Commission’s (“SEC”) website at http://www.sec.gov.
Quarterly Portfolio Schedules
The Trust will file its complete schedule of portfolio holdings with the SEC for the first and third fiscal quarters of each fiscal year on Form N-Q. The Trust’s Forms N-Q will be available on the SEC’s website at http://www.sec.gov and may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. Information on the operation of the SEC’s Public Reference Room may be obtained by calling 1-800-SEC-0330.
14
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Investment Adviser
Mount Lucas Management LP
405 South State Street
Newtown, PA 18940
Administrator
BNY Mellon Investment Servicing (US) Inc.
301 Bellevue Parkway
Wilmington, DE 19809
Transfer Agent
BNY Mellon Investment Servicing (US) Inc.
4400 Computer Drive
Westborough, MA 01581
Principal Underwriter
Foreside Funds Distributors LLC
400 Berwyn Park
899 Cassatt Road
Berwyn, PA 19312
Custodian
The Bank of New York Mellon
225 Liberty Street
New York, NY 10286
Independent Registered Public Accounting Firm
Ernst & Young LLP
One Commerce Square
2005 Market Street, Suite 700
Philadelphia, PA 19103-7096
Legal Counsel
Pepper Hamilton LLP
3000 Two Logan Square
18th and Arch Streets
Philadelphia, PA 19103
LUC-1015
PACIFIC CAPITAL FUNDS
Pacific Capital Tax-Free Securities Fund
Semi-Annual Report
Performance Data
October 31, 2015 (Unaudited)
Credit Quality as of October 31, 2015 (as a percentage of total investments)
Credit quality ratings are primarily sourced from Moody’s but in the event that Moody’s has not assigned a rating, the Fund will use S&P or Fitch. If these ratings are in conflict, S&P will be used before Fitch. If none of the major rating agencies have assigned a rating, the Fund will assign a rating of NR (non-rated security). The ratings represent their (Moody’s, S&P, and Fitch) opinions as to the quality of the underlying securities in the fund, and not the fund itself. The ratings range from AAA (extremely strong capacity to meet financial commitment) to D (in default). Ratings are relative and subjective and are not absolute standards of quality. A pre-refunded bond is secured by an escrow fund of U.S. government obligations (i.e. Treasury securities) and assumes the superior credit rating of the government obligation. The ratings do not predict performance and are subject to change. | Investment Style
High-quality, intermediate-term, tax-exempt
Investment Objective
The Pacific Capital Tax-Free Securities Fund (the “Fund”) seeks high current income that is exempt from federal and Hawaii income tax by normally investing at least 80% of its net assets in investment grade municipal obligations. The Fund normally invests greater than 50% of its assets in Hawaii municipal obligations — debt securities issued by or on behalf of the State of Hawaii and its political subdivisions, agencies and instrumentalities that pay interest which is exempt from Hawaii income tax as well as federal income tax.
Investment Considerations
Income received from the Fund may be subject to certain state and local taxes and, depending on one’s tax status, to the federal alternative minimum tax. Bonds offer a relatively stable level of income, although bond prices will fluctuate, providing the potential for principal gain or loss. Generally, bond prices and values fall when interest rates rise, and vice versa. The longer the average maturity of the Fund’s portfolio, the greater the fluctuation in value. Since the Fund invests significantly in securities of issuers in Hawaii, it will also be affected by a variety of Hawaii’s economic and political factors. The values of any of the Fund’s investments may also decline in response to events affecting the issuer or its credit rating. | |||||
Investment Process
| ||||||
● | Top-down macroeconomic analysis of interest rate trends
| |||||
● | Bottom-up credit research to identify high quality bonds | |||||
Investment Management
| ||||||
Advised by Asset Management Group of Bank of Hawaii (“AMG”)
| ||||||
● | As of October 31, 2015, AMG manages $1.1 billion in mutual fund assets. In addition, AMG personnel also manage approximately $1.5 billion in assets on behalf of Bank of Hawaii clients. |
1
PACIFIC CAPITAL FUNDS
Pacific Capital Tax-Free Securities Fund
Semi-Annual Report
Performance Data (Concluded)
October 31, 2015 (Unaudited)
Average Annual Total Returns for the Periods Ended October 31, 2015 | ||||||||||||||||||||
Six Months* | 1 Year | 3 Year | 5 Year | 10 Year | ||||||||||||||||
Class Y | 1.71% | 2.34% | 2.39% | 3.63% | 3.88% | |||||||||||||||
Barclays Capital Hawaii | ||||||||||||||||||||
Municipal | ||||||||||||||||||||
Bond Index
|
| 1.73%
|
|
| 2.88%
|
|
| 2.74%
|
|
| 3.96%
|
|
| 4.64%
|
|
*Not Annualized
Past performance does not guarantee future results. The performance data quoted represents past performance and current returns may be lower or higher. The investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. The graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. To obtain performance information current to the most recent month end, please call (888) 678-6034.
The Fund’s total annual gross and net operating expense ratio for Class Y Shares, as disclosed in the Fund’s prospectus dated October 14, 2015, are 0.32% and 0.12%, respectively, of the Fund’s average daily net assets. These rates may fluctuate and may differ from the actual expenses incurred by the Fund for the period covered in this report. The Adviser has agreed to waive its advisory fee (the “Waiver”) until August 31, 2016. The Waiver may not be terminated at any time prior to that date without the consent of the Board of Trustees of FundVantage Trust (the “Trust”). Additional information pertaining to the Fund’s expense ratio for the period ended October 31, 2015 can be found in the financial highlights.
Before the Fund commenced operations, all of the assets of the Tax-Free Securities Fund, a series of Pacific Capital Funds (the “Predecessor Fund”), were transferred to the Fund in a tax-free reorganization (the “Reorganization”). Performance presented prior to June 28, 2010 reflects the performance of the Predecessor Fund.
Total returns reflect the waiver of advisory fees. Had these waivers not been in effect, performance quoted would have been lower.
The performance of the Fund is measured against the Barclays Capital Hawaii Municipal Bond Index, a rules-based, market-value weighted index engineered for the long-term tax-exempt Hawaii bond market. The index has four main sectors: general obligation bonds, revenue bonds, insured bonds and prerefunded bonds. The index is unmanaged and does not reflect the deduction of fees associated with a mutual fund, such as investment management and fund accounting fees. The Fund’s performance reflects the deduction of fees for these services. Investors cannot invest directly in an index.
The Fund is distributed by Foreside Funds Distributors LLC. The Asset Management Group of Bank of Hawaii is the investment adviser to the Fund and receives a fee for its services.
All mutual fund investing involves risk, including possible loss of principal. The Fund is non-diversified, which means that a portion of the Fund’s assets may be invested in one or few companies or sectors. The Fund could fluctuate in value more than a diversified fund.
2
PACIFIC CAPITAL FUNDS
Pacific Capital Tax-Free Short Intermediate Securities Fund
Semi-Annual Report
Performance Data
October 31, 2015 (Unaudited)
Credit Quality as of October 31, 2015 (as a percentage of total investments)
Credit quality ratings are primarily sourced from Moody’s but in the event that Moody’s has not assigned a rating, the Fund will use S&P or Fitch. If these ratings are in conflict, S&P will be used before Fitch. If none of the major rating agencies have assigned a rating, the Fund will assign a rating of NR (non-rated security). The ratings represent their (Moody’s, S&P, and Fitch) opinions as to the quality of the underlying securities in the fund, and not the fund itself. The ratings range from AAA (extremely strong capacity to meet financial commitment) to D (in default). Ratings are relative and subjective and are not absolute standards of quality. A pre-refunded bond is secured by an escrow fund of U.S. government obligations (i.e. Treasury securities) and assumes the superior credit rating of the government obligation. The ratings do not predict performance and are subject to change. | Investment Style
High-quality, short-intermediate term, tax-exempt
Investment Objective
The Pacific Capital Tax-Free Short Intermediate Securities Fund (the “Fund”) seeks high current income that is exempt from federal and Hawaii income tax by normally investing at least 80% of its net assets in investment grade municipal obligations. The Fund normally invests greater than 50% of its assets in Hawaii municipal obligations — debt securities issued by or on behalf of the State of Hawaii and its political subdivisions, agencies and instrumentalities that pay interest which is exempt from Hawaii income tax as well as federal income tax. The Fund seeks to provide greater price stability than a long-term bond fund.
Investment Considerations
Income received from the Fund may be subject to certain state and local taxes and, depending on one’s tax status, to the federal alternative minimum tax. Bonds offer a relatively stable level of income, although bond prices will fluctuate, providing the potential for principal gain or loss. Generally, bond prices and values fall when interest rates rise, and vice versa. Intermediate term, higher-quality bonds generally offer less risk than longer-term bonds and a lower rate of return. Since the Fund invests significantly in securities of issuers in Hawaii, it will also be affected by a variety of Hawaii’s economic and political factors. The values of any of the Fund’s investments may also decline in response to events affecting the issuer or its credit rating. | |||||
Investment Process
| ||||||
● | Top-down macroeconomic analysis of interest rate trends
| |||||
● | Bottom-up credit research to identify high quality bonds | |||||
Investment Management
| ||||||
Advised by Asset Management Group of Bank of Hawaii (“AMG”)
| ||||||
● | As of October 31, 2015, AMG manages $1.1 billion in mutual fund assets. In addition, AMG personnel also manage approximately $1.5 billion in assets on behalf of Bank of Hawaii clients. |
3
PACIFIC CAPITAL FUNDS
Pacific Capital Tax-Free Short Intermediate Securities Fund
Semi-Annual Report
Performance Data (Concluded)
October 31, 2015 (Unaudited)
Average Annual Total Returns for the Periods Ended October 31, 2015 | |||||||||||||||||||||||||||
Six Months* | 1 Year | 3 Year | 5 Year | 10 Year | |||||||||||||||||||||||
Class Y | 0.92 | % | 1.13 | % | 0.91 | % | 1.21 | % | 2.12 | % | |||||||||||||||||
Barclays Capital Hawaii | |||||||||||||||||||||||||||
3-Year Municipal Bond Index | 1.14 | % | 1.22 | % | 1.22 | % | 1.54 | % | 2.96 | % |
*Not Annualized
Past performance does not guarantee future results. The performance data quoted represents past performance and current returns may be lower or higher. The investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. The graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. To obtain performance information current to the most recent month end, please call (888) 678-6034.
The Fund’s total annual gross and net operating expense ratio for Class Y Shares, as disclosed in the Fund’s prospectus dated October 14, 2015, are 0.34% and 0.14%, respectively, of the Fund’s average daily net assets. These rates may fluctuate and may differ from the actual expenses incurred by the Fund for the period covered in this report. The Adviser has agreed to waive its advisory fee (the “Waiver”) until August 31, 2016. The Waiver may not be terminated at any time prior to that date without the consent of the Board of Trustees of FundVantage Trust (the “Trust”). Additional information pertaining to the Fund’s expense ratio for the period ended October 31, 2015 can be found in the financial highlights.
Before the Fund commenced operations, all of the assets of the Tax-Free Short Intermediate Securities Fund, a series of Pacific Capital Funds (the “Predecessor Fund”), were transferred to the Fund in a tax-free reorganization (the “Reorganization”). Performance presented prior to June 28, 2010 reflects the performance of the Predecessor Fund.
Total returns reflect the waiver of advisory fees. Had these waivers not been in effect, performance quoted would have been lower.
The performance of the Fund is measured against the Barclays Capital Hawaii 3-Year Municipal Bond Index, which is the 2-4 year component of the Barclays Capital Hawaii Municipal Bond Index and is a rules-based, market-value weighted index engineered for the Hawaii tax-exempt bond market. The index has four main sectors: general obligation bonds, revenue bonds, insured bonds, and prerefunded bonds. The index is unmanaged and does not reflect the deduction of fees associated with a mutual fund, such as investment management and fund accounting fees. The Fund’s performance reflects the deduction of fees for these services. Investors cannot invest directly in an index.
The Fund is distributed by Foreside Funds Distributors LLC. The Asset Management Group of Bank of Hawaii is the investment adviser to the Fund and receives a fee for its services.
All mutual fund investing involves risk, including possible loss of principal. The Fund is non-diversified, which means that a portion of the Fund’s assets may be invested in one or few companies or sectors. The Fund could fluctuate in value more than a diversified fund.
4
PACIFIC CAPITAL FUNDS
Fund Expense Disclosure
October 31, 2015
(Unaudited)
As a shareholder of the Fund(s), you incur two types of costs: (1) transaction costs, and (2) ongoing costs, including management fees and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
These examples are based on an investment of $1,000 invested at the beginning of the six-month period from May 1, 2015 through October 31, 2015 and held for the entire period.
Actual Expenses
The first line for each Fund in the accompanying table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line of the table under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Examples for Comparison Purposes
The second line for each Fund in the accompanying table provides information about hypothetical account values and hypothetical expenses based on each Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund(s) and other funds. To do so, compare these 5% hypothetical examples with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs. Therefore, the second line of the accompanying table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
5
PACIFIC CAPITAL FUNDS
Fund Expense Disclosure (Concluded)
October 31, 2015
(Unaudited)
Beginning Account Value May 1, 2015 | Ending Account Value October 31, 2015 | Expenses Paid During Period* | Expense Ratio During Period** | ||||||||||||||||||||||
Pacific Capital Tax-Free Securities Fund | |||||||||||||||||||||||||
Actual Fund Return | Class Y | $ | 1,000.00 | $ | 1,017.10 | $ | 0.51 | 0.10 | % | ||||||||||||||||
Hypothetical Fund Return (5% return before expenses) | Class Y | 1,000.00 | 1,024.63 | 0.51 | 0.10 | % | |||||||||||||||||||
Pacific Capital Tax-Free Short Intermediate Securities Fund | |||||||||||||||||||||||||
Actual Fund Return | Class Y | $ | 1,000.00 | $ | 1,009.20 | $ | 0.96 | 0.19 | % | ||||||||||||||||
Hypothetical Fund Return (5% return before expenses) | Class Y | 1,000.00 | 1,024.18 | 0.97 | 0.19 | % |
* | Expense are equal to an annualized expense ratio for the six-month period ended October 31, 2015, multiplied by average account value over the period, multiplied by the number of days in the most recent period (184), then divided by 366 to reflect the period. The Funds’ ending account values on the first line in each table are based on the actual six month total returns of 1.71% for the Pacific Capital Tax-Free Securities Fund and 0.92% for the Pacific Capital Tax-Free Short Intermediate Securities Fund. |
** | Annualized. |
6
PACIFIC CAPITAL FUNDS
Pacific Capital Tax-Free Securities Fund
Portfolio of Investments
October 31, 2015
(Unaudited)
Principal Amount ($) | Value ($) | |||||||
MUNICIPAL BONDS — 96.7% |
| |||||||
Arizona — 2.7% |
| |||||||
Phoenix Civic Improvement Corp., Civic Plaza, Convertible CAB, Series B, 5.50%, 07/01/31, (NATL-RE, FGIC Insured) | 5,000,000 | 6,224,900 | ||||||
|
| |||||||
California — 1.5% | ||||||||
Norwalk-La Mirada Unified School District GO, CAB, Series B, 0.00%, 08/01/27, (AGM-CR, FGIC Insured) | 5,000,000 | 3,303,950 | ||||||
|
| |||||||
Florida — 0.6% | ||||||||
Orlando Utilities Commission, Water and Electric Revenue, Series D, ETM, 6.75%, 10/01/17 | 1,235,000 | 1,334,850 | ||||||
|
| |||||||
Georgia — 1.1% | ||||||||
Municipal Electric Authority Power Revenue, Series W, Unrefunded Portion, 6.60%, 01/01/18, (NATL-RE, IBC, BNYM Insured) | 2,455,000 | 2,619,534 | ||||||
|
| |||||||
Guam — 1.0% | ||||||||
Territory Of Guam, Series A, Prerefunded 11/15/19 at 100, 6.75%, 11/15/29 | 1,775,000 | 2,174,038 | ||||||
|
| |||||||
Hawaii — 80.5% | ||||||||
County of Kauai GO, Series A, 5.00%, 08/01/22 | 315,000 | 380,048 |
Principal Amount ($) | Value ($) | |||||||
MUNICIPAL BONDS — (Continued) |
| |||||||
Hawaii — (Continued) |
| |||||||
County of Kauai GO, Series A, Callable 08/01/21 at 100, 3.25%, 08/01/23 | 1,000,000 | 1,059,100 | ||||||
County of Kauai GO, Series A, Callable 08/01/22 at 100, 3.13%, 08/01/27 | 1,295,000 | 1,337,567 | ||||||
County Of Maui Hi, 5.00%, 06/01/23 | 300,000 | 368,169 | ||||||
Hawaii County GO, Series A, 5.25%, 07/15/17 | 500,000 | 539,640 | ||||||
Hawaii County GO, Series A, Callable 07/15/18 at 100, 6.00%, 07/15/26 | 1,655,000 | 1,873,212 | ||||||
Hawaii County GO, Series A, Callable 03/01/20 at 100, 4.00%, 03/01/28 | 2,470,000 | 2,650,285 | ||||||
Hawaii County GO, Series A, Callable 09/01/22 at 100, 5.00%, 09/01/29 | 500,000 | 578,645 | ||||||
Hawaii Housing Finance & Development Corp., Multi-Family Housing, Iwilei Apartments, Series A, Callable 07/01/22 at 100, 3.75%, 01/01/31, (FHLMC Insured) | 3,460,000 | 3,516,225 | ||||||
Hawaii Housing Finance & Development Corp., Series B, Callable 07/01/21 at 100, 3.88%, 07/01/25, (GNMA/FNMA Insured) | 3,890,000 | 4,132,464 |
The accompanying notes are an integral part of the financial statements.
7
PACIFIC CAPITAL FUNDS
Pacific Capital Tax-Free Securities Fund
Portfolio of Investments (Continued)
October 31, 2015
(Unaudited)
Principal Amount ($) | Value ($) | |||||||
MUNICIPAL BONDS — (Continued) |
| |||||||
Hawaii — (Continued) | ||||||||
Hawaii State Airports System Revenue, AMT, Callable 08/01/23 at 100, | 400,000 | 449,884 | ||||||
Hawaii State Airports System Revenue, Series A, Callable 07/01/20 at 100, | 1,450,000 | 1,681,028 | ||||||
Hawaii State Airports System Revenue, Series A, Callable 07/01/20 at 100, | 1,000,000 | 1,160,760 | ||||||
Hawaii State Airports System Revenue, AMT, Callable 07/01/21 at 100, | 3,500,000 | 4,000,605 | ||||||
Hawaii State Airports System Revenue, Series B, AMT-Refunding, | 1,100,000 | 1,134,122 | ||||||
Hawaii State Airports System Revenue, Series A, Callable 07/01/20 at 100, | 2,000,000 | 2,313,720 | ||||||
Hawaii State Department of Budget & Finance Revenue, Hawaii Pacific Health Obligation, | 500,000 | 568,385 |
Principal Amount ($) | Value ($) | |||||||
MUNICIPAL BONDS — (Continued) |
| |||||||
Hawaii — (Continued) | ||||||||
Hawaii State Department of Budget & Finance Revenue, Hawaii Pacific Health Obligation, Callable 07/01/23 at 100, | 1,330,000 | 1,549,317 | ||||||
Hawaii State Department of Budget & Finance, Series A, Queens Health System, Callable 07/01/25 at 100, | 8,000,000 | 9,060,000 | ||||||
Hawaii State Department of Budget & Finance, Special Purpose Revenue, Kahala Nui, Callable 11/15/22 at 100, | 1,390,000 | 1,535,338 | ||||||
Hawaii State Department of Budget & Finance, Special Purpose Revenue, Kahala Nui, Callable 11/15/22 at 100, | 550,000 | 592,476 | ||||||
Hawaii State Department of Hawaiian Home Lands Revenue, | 500,000 | 508,830 | ||||||
Hawaii State Department of Hawaiian Home Lands Revenue, | 775,000 | 844,308 | ||||||
Hawaii State GO, Series DI, Prerefunded 03/01/16 at 100, | 445,000 | 452,053 |
The accompanying notes are an integral part of the financial statements.
8
PACIFIC CAPITAL FUNDS
Pacific Capital Tax-Free Securities Fund
Portfolio of Investments (Continued)
October 31, 2015
(Unaudited)
Principal Amount ($) | Value ($) | |||||||
MUNICIPAL BONDS — (Continued) |
| |||||||
Hawaii — (Continued) | ||||||||
Hawaii State GO, Series DI, Unrefunded portion, Callable 03/01/26 at 100, | 555,000 | 563,797 | ||||||
Hawaii State GO, Series DJ, Unrefunded portion, Callable 04/01/17 at 100, | 890,000 | 947,432 | ||||||
Hawaii State GO, Series DJ, Prerefunded 04/01/17 at 100, | 110,000 | 117,018 | ||||||
Hawaii State GO, Series DJ, Prefunded 04/01/17 at 100, | 4,575,000 | 4,866,885 | ||||||
Hawaii State GO, Series DJ, Prerefunded 04/01/17 at 100, | 980,000 | 1,042,524 | ||||||
Hawaii State GO, Series DJ, Unrefunded portion, Callable 04/01/17 at 100, | 140,000 | 149,034 | ||||||
Hawaii State GO, Series DK, | 4,000,000 | 4,267,160 | ||||||
Hawaii State GO, Series DK, Callable 05/01/18 at 100, | 3,000,000 | 3,285,240 |
Principal Amount ($) | Value ($) | |||||||
MUNICIPAL BONDS — (Continued) |
| |||||||
Hawaii — (Continued) | ||||||||
Hawaii State GO, Series DK, Prerefunded 05/01/18 at 100, | 2,390,000 | 2,642,145 | ||||||
Hawaii State GO, Series DK, Unrefunded portion, Callable 05/01/18 at 100, | 785,000 | 859,198 | ||||||
Hawaii State GO, Series DT, | 1,900,000 | 1,988,160 | ||||||
Hawaii State GO, Series DT, | 3,000,000 | 3,462,060 | ||||||
Hawaii State GO, Series DZ, Callable 12/01/21 at 100, | 4,500,000 | 5,316,570 | ||||||
Hawaii State GO, Series DZ, Callable 12/01/21 at 100, | 2,000,000 | 2,351,600 | ||||||
Hawaii State GO, Series DZ, Callable 12/01/21 at 100, | 3,000,000 | 3,518,010 | ||||||
Hawaii State GO, Series DZ, Callable 12/01/21 at 100, | 2,800,000 | 3,274,740 | ||||||
Hawaii State GO, Series EE, Callable 11/01/22 at 100, | 2,885,000 | 3,430,525 | ||||||
Hawaii State GO, Series EE, Callable 11/01/22 at 100, | 745,000 | 882,676 | ||||||
Hawaii State GO, Series EH, | 900,000 | 1,097,055 | ||||||
Hawaii State GO, Series EH, Callable 08/01/23 at 100, | 1,000,000 | 1,212,550 |
The accompanying notes are an integral part of the financial statements.
9
PACIFIC CAPITAL FUNDS
Pacific Capital Tax-Free Securities Fund
Portfolio of Investments (Continued)
October 31, 2015
(Unaudited)
Principal Amount ($) | Value ($) | |||||||
MUNICIPAL BONDS — (Continued) |
| |||||||
Hawaii — (Continued) | ||||||||
Hawaii State GO, Series EL, | 1,000,000 | 1,218,950 | ||||||
Hawaii State GO, Series EO, Callable 08/01/24 at 100, | 1,700,000 | 2,067,557 | ||||||
Hawaii State GO, Series EP, | 1,000,000 | 1,231,360 | ||||||
Hawaii State GO, Series ET, | 1,000,000 | 1,145,800 | ||||||
Hawaii State Harbor System Revenue, Series A, | 185,000 | 197,837 | ||||||
Hawaii State Harbor System Revenue, Series A, Callable 07/01/20 at 100, | 220,000 | 246,569 | ||||||
Hawaii State Harbor System Revenue, Series A, Callable 07/01/20 at 100, | 3,000,000 | 3,445,320 | ||||||
Hawaii State Harbor System Revenue, Series A, AMT, | 1,105,000 | 1,139,741 | ||||||
Hawaii State Highway Revenue, Series A, | 500,000 | 589,810 | ||||||
Hawaii State Highway Revenue, Series A, Callable 01/01/22 at 100, | 5,490,000 | 6,394,697 |
Principal Amount ($) | Value ($) | |||||||
MUNICIPAL BONDS — (Continued) |
| |||||||
Hawaii — (Continued) | ||||||||
Hawaii State Highway Revenue, Series A, Callable 01/01/22 at 100, | 1,120,000 | 1,298,259 | ||||||
Honolulu City & County Board of Water Supply System Revenue, Series A, Callable 07/01/16 at 100, | 1,500,000 | 1,542,105 | ||||||
Honolulu City & County Board of Water Supply System Revenue, Series A, Callable 07/01/24 at 100, | 300,000 | 360,123 | ||||||
Honolulu City & County Board of Water Supply System Revenue, Series A, Callable 07/01/22 at 100, | 3,125,000 | 3,689,562 | ||||||
Honolulu City & County Board of Water Supply System Revenue, Series B, AMT, Callable 07/01/16 at 100, | 1,300,000 | 1,341,145 | ||||||
Honolulu City & County Board of Water Supply, System Revenue, Series A, Callable 07/01/24 at 100, | 1,500,000 | 1,830,750 |
The accompanying notes are an integral part of the financial statements.
10
PACIFIC CAPITAL FUNDS
Pacific Capital Tax-Free Securities Fund
Portfolio of Investments (Continued)
October 31, 2015
(Unaudited)
Principal Amount ($) | Value ($) | |||||||
MUNICIPAL BONDS — (Continued) |
| |||||||
Hawaii — (Continued) | ||||||||
Honolulu City & County GO, Series A, | 1,015,000 | 1,139,804 | ||||||
Honolulu City & County GO, Series A, Callable 07/01/17 at 100, | 4,000,000 | 4,293,400 | ||||||
Honolulu City & County GO, Series A, | 2,000,000 | 2,424,540 | ||||||
Honolulu City & County GO, Series A, Callable 04/01/19 at 100, | 1,110,000 | 1,263,213 | ||||||
Honolulu City & County GO, Series A, Callable 11/01/22 at 100, | 1,000,000 | 1,189,090 | ||||||
Honolulu City & County GO, Series A, Callable 11/01/22 at 100, | 1,865,000 | 2,146,895 | ||||||
Honolulu City & County GO, Series A, Callable 10/01/25 at 100, | 3,000,000 | 3,485,790 | ||||||
Honolulu City & County GO, Series A, Callable 10/01/25 at 100, | 1,000,000 | 1,151,780 | ||||||
Honolulu City & County GO, Series A, Refunding, Callable 11/01/22 at 100, | 1,000,000 | 1,033,910 |
Principal Amount ($) | Value ($) | |||||||
MUNICIPAL BONDS — (Continued) |
| |||||||
Hawaii — (Continued) | ||||||||
Honolulu City & County GO, Series B, Callable 11/01/22 at 100, | 2,000,000 | 2,434,820 | ||||||
Honolulu City & County GO, Series C, Refunding, Callable 10/01/25 at 100, | 2,000,000 | 2,434,420 | ||||||
Honolulu City & County GO, Series D, Callable 09/01/19 at 100, | 250,000 | 273,048 | ||||||
Honolulu City & County Waste Water System Revenue, 1st Bond Resolution, Series A, Callable 07/01/17 at 100, | 3,500,000 | 3,759,770 | ||||||
Honolulu City & County Waste Water System Revenue, Junior Series A, Refunding, Callable 07/01/25 at 100, | 4,000,000 | 4,728,920 | ||||||
Honolulu City & County Waste Water System Revenue, Senior 1st Bond Resolution, Refunding, Callable 07/01/25 at 100, | 3,000,000 | 3,677,460 |
The accompanying notes are an integral part of the financial statements.
11
PACIFIC CAPITAL FUNDS
Pacific Capital Tax-Free Securities Fund
Portfolio of Investments (Continued)
October 31, 2015
(Unaudited)
Principal Amount ($) | Value ($) | |||||||
MUNICIPAL BONDS — (Continued) |
| |||||||
Hawaii — (Continued) |
| |||||||
Honolulu City & County Waste Water System Revenue, Series B-1, Callable 07/01/16 at 100, 5.00%, 07/01/32, (NATL-RE Insured) | 4,015,000 | 4,142,276 | ||||||
Honolulu City & County, GO, 5.00%, 04/01/18 | 4,790,000 | 5,278,580 | ||||||
Honolulu City & County, GO, 5.00%, 04/01/18 | 210,000 | 231,580 | ||||||
Honolulu City & County, GO, 5.00%, 10/01/18 | 1,000,000 | 1,118,650 | ||||||
Honolulu City & County, GO, 5.00%, 12/01/18 | 1,000,000 | 1,125,690 | ||||||
Honolulu City & County, GO, 5.00%, 08/01/19 | 175,000 | 200,573 | ||||||
Honolulu City & County, GO, 5.00%, 10/01/19 | 1,000,000 | 1,150,440 | ||||||
Honolulu City & County, GO, 5.00%, 10/01/22 | 1,000,000 | 1,211,320 | ||||||
Honolulu City & County, GO, Series B, Callable 12/01/20 at 100, 5.00%, 12/01/25 | 2,000,000 | 2,347,220 | ||||||
Maui County GO, 5.00%, 06/01/20 | 3,075,000 | 3,605,622 | ||||||
Maui County GO, Refunding, 5.00%, 06/01/21 | 1,400,000 | 1,673,518 | ||||||
Maui County GO, Series B, 4.00%, 06/01/16 | 1,000,000 | 1,021,770 | ||||||
State Of Hawaii, 4.00%, 11/01/17 | 1,450,000 | 1,546,266 | ||||||
State Of Hawaii, 5.00%, 12/01/19 | 265,000 | 306,647 |
Principal Amount ($) | Value ($) | |||||||
MUNICIPAL BONDS — (Continued) |
| |||||||
Hawaii — (Continued) |
| |||||||
State Of Hawaii State Highway Fund, 4.00%, 01/01/19 | 380,000 | 416,845 | ||||||
University of Hawaii Revenue, Series A-2, 4.00%, 10/01/19 | 1,170,000 | 1,295,178 | ||||||
University of Hawaii Revenue, Series B, Refunding, 4.00%, 10/01/24 | 665,000 | 760,188 | ||||||
University of Hawaii Revenue, Series B, Refunding, Callable 10/01/25 at 100, 5.00%, 10/01/35 | 1,000,000 | 1,149,030 | ||||||
University of Hawaii Revenue, Series B-2, 5.00%, 10/01/18 | 1,310,000 | 1,459,825 | ||||||
University of Hawaii System Revenue, Series A, Callable 07/15/16 at 100, 5.00%, 07/15/24, (AGM-CR, MBIA Insured) | 470,000 | 485,609 | ||||||
University of Hawaii System Revenue, Series A, Callable 10/01/19 at 100, 5.25%, 10/01/34 | 1,000,000 | 1,134,480 | ||||||
|
| |||||||
182,398,312 | ||||||||
|
| |||||||
Illinois — 1.9% | ||||||||
Illinois Municipal Electric Agency Power Supply Revenue, Series C, 5.25%, 02/01/21, | 3,665,000 | 4,292,668 | ||||||
|
|
The accompanying notes are an integral part of the financial statements.
12
PACIFIC CAPITAL FUNDS
Pacific Capital Tax-Free Securities Fund
Portfolio of Investments (Continued)
October 31, 2015
(Unaudited)
Principal Amount ($) | Value ($) | |||||||
MUNICIPAL BONDS — (Continued) |
| |||||||
Massachusetts — 1.3% |
| |||||||
Massachusetts State Department of Transportation, Metropolitan Highway System Revenue, Contract Assistance, Series B, Callable 01/01/20 at 100, 5.00%, 01/01/23 | 2,500,000 | 2,881,975 | ||||||
|
| |||||||
New Jersey — 0.2% | ||||||||
Passaic Valley Sewage Commissioner System Revenue Refunding, Series G, | 300,000 | 356,304 | ||||||
|
| |||||||
Ohio — 0.5% | ||||||||
Ohio State, Infrastructure Improvement GO, Series A, | 1,000,000 | 1,193,660 | ||||||
|
| |||||||
Texas — 3.0% | ||||||||
Galveston County GO, CAB, Series RD, 0.00%, 02/01/24, (NATL-RE, FGIC Insured) | 2,630,000 | 2,098,188 | ||||||
Houston Water and Sewer System Revenue, Unrefunded Balance CAB, Junior Series A, | 2,000,000 | 1,414,360 | ||||||
San Antonio Electric & Gas Revenue, Series A, | 2,000,000 | 2,191,400 |
Principal Amount ($) | Value ($) | |||||||
MUNICIPAL BONDS — (Continued) |
| |||||||
Texas — (Continued) |
| |||||||
Texas State Transportation Commission Mobility Fund GO, Callable 04/01/24 at 100, | 1,000,000 | 1,196,040 | ||||||
|
| |||||||
6,899,988 | ||||||||
|
| |||||||
Washington — 2.4% | ||||||||
Clark County School District No 117 Camas, Callable 12/01/17 at 100, | 285,000 | 310,510 | ||||||
King County School District No. 403 Renton GO, Callable 12/01/16 at 100, 5.00%, 12/01/24, | 3,000,000 | 3,150,540 | ||||||
Port of Seattle Revenue, Callable 02/01/16 at 100, 5.00%, 02/01/25, (XLCA Insured) | 2,000,000 | 2,021,500 | ||||||
|
| |||||||
5,482,550 | ||||||||
|
| |||||||
TOTAL MUNICIPAL BONDS | 219,162,729 | |||||||
|
|
The accompanying notes are an integral part of the financial statements.
13
PACIFIC CAPITAL FUNDS
Pacific Capital Tax-Free Securities Fund
Portfolio of Investments (Concluded)
October 31, 2015
(Unaudited)
Shares | Value ($) | |||||||
REGISTERED INVESTMENT COMPANY — 1.9% |
| |||||||
Dreyfus Tax Exempt Cash Management Fund, Institutional Shares, 0.00%(a) | 4,435,892 | 4,435,892 | ||||||
TOTAL REGISTERED INVESTMENT COMPANY | 4,435,892 | |||||||
TOTAL INVESTMENTS - 98.6% | 223,598,621 | |||||||
OTHER ASSETS IN EXCESS OF LIABILITIES - 1.4% | 3,086,168 | |||||||
|
| |||||||
NET ASSETS - 100.0% | $ | 226,684,789 | ||||||
|
|
(a) | Rate periodically changes. Rate disclosed is the daily yield on October 31, 2015. |
Portfolio holdings are subject to change at any time.
AGM | Assured Guaranty Municipal Corp. | |
AGM-CR | Assured Guaranty Municipal Corp. Custodial Receipts | |
AMBAC | American Municipal Bond Assurance Corp. | |
AMT | Subject to Alternative Minimum Tax | |
BAM | Build America Mutual | |
BNYM | Bank of New York Mellon | |
CAB | Capital Appreciation Bond | |
ETM | Escrowed to Maturity | |
FGIC | Financial Guaranty Insurance Co. | |
FHLMC | Federal Home Loan Mortgage Corp. | |
FNMA | Federal National Mortgage Association | |
GNMA | Government National Mortgage Association | |
GO | General Obligation | |
IBC | Insurance Bond Certificate | |
MBIA | Municipal Bond Investors Assurance | |
NATL-RE | National Reinsurance Corp. | |
XLCA | XL Capital Assurance |
The accompanying notes are an integral part of the financial statements.
14
PACIFIC CAPITAL FUNDS
Pacific Capital Tax-Free Short Intermediate Securities Fund
Portfolio of Investments
October 31, 2015
(Unaudited)
Principal Amount ($) | Value ($) | |||||||
MUNICIPAL BONDS — 98.1% |
| |||||||
Alaska — 0.4% | ||||||||
Alaska State GO, Series A, 5.00%, 08/01/18 | 500,000 | 557,265 | ||||||
|
| |||||||
Arizona — 0.8% | ||||||||
Mesa City, Utility Systems Revenue, ETM, 5.25%, 07/01/16, | 1,000,000 | 1,033,000 | ||||||
|
| |||||||
Colorado — 0.4% | ||||||||
Boulder County Sales and Use Tax Revenue, Open Space, 5.00%, 12/15/18, | 500,000 | 557,245 | ||||||
|
| |||||||
Connecticut — 1.4% | ||||||||
State of Connecticut Special Tax Revenue, 5.00%, 11/01/18 | 1,000,000 | 1,120,440 | ||||||
State of Connecticut Special Tax Revenue, Series B, | 500,000 | 561,705 | ||||||
|
| |||||||
1,682,145 | ||||||||
|
| |||||||
Florida — 0.6% | ||||||||
JEA Electric System Revenue, Sub-Series A, | 650,000 | 726,928 | ||||||
|
| |||||||
Georgia — 0.9% | ||||||||
Georgia State GO, Series I, | 1,000,000 | 1,087,820 | ||||||
|
|
Principal Amount ($) | Value ($) | |||||||
MUNICIPAL BONDS — (Continued) |
| |||||||
Hawaii — 67.6% | ||||||||
County of Kauai GO, Series A, | 150,000 | 154,360 | ||||||
County of Kauai GO, Series A, | 295,000 | 317,281 | ||||||
County of Kauai GO, Series A, | 500,000 | 506,480 | ||||||
Hawaii County GO, Series A, | 400,000 | 405,000 | ||||||
Hawaii County GO, Series A, | 1,155,000 | 1,246,569 | ||||||
Hawaii County GO, Series A, Callable 07/15/18 at 100, | 120,000 | 132,842 | ||||||
Hawaii County GO, Series B, | 1,215,000 | 1,255,350 | ||||||
Hawaii County GO, Series B, | 1,000,000 | 1,039,030 | ||||||
Hawaii County GO, Series B, | 300,000 | 322,518 | ||||||
Hawaii County GO, Series B, | 1,000,000 | 1,079,930 |
The accompanying notes are an integral part of the financial statements.
15
PACIFIC CAPITAL FUNDS
Pacific Capital Tax-Free Short Intermediate Securities Fund
Portfolio of Investments (Continued)
October 31, 2015
(Unaudited)
Principal Amount ($) | Value ($) | |||||||
MUNICIPAL BONDS — (Continued) |
| |||||||
Hawaii — (Continued) | ||||||||
Hawaii State Airports System Revenue, AMT, Callable 08/01/2023 at 100, | 210,000 | 238,348 | ||||||
Hawaii State Airports System Revenue, Refunding, AMT, | 2,000,000 | 2,320,600 | ||||||
Hawaii State Airports System Revenue, Refunding, AMT, Callable 07/01/21 at 100, | 500,000 | 544,260 | ||||||
Hawaii State Airports System Revenue, Series A, | 1,320,000 | 1,556,874 | ||||||
Hawaii State Department of Budget & Finance, Pacific Health Obligation, | 680,000 | 727,185 | ||||||
Hawaii State Department of Budget & Finance, Pacific Health Obligation, | 680,000 | 752,304 | ||||||
Hawaii State Department of Budget & Finance, Series A, Queens Health System, | 2,000,000 | 2,074,680 | ||||||
Hawaii State Department of Budget & Finance, Series A, Queens Health System, | 600,000 | 649,242 |
Principal Amount ($) | Value ($) | |||||||
MUNICIPAL BONDS — (Continued) |
| |||||||
Hawaii — (Continued) | ||||||||
Hawaii State Department of Budget & Finance, Series A, Queens Health System, | 400,000 | 440,416 | ||||||
Hawaii State Department of Hawaiian Home Lands, Kapolei Office, Series A, | 500,000 | 500,000 | ||||||
Hawaii State Department of Transportation, AMT, | 600,000 | 644,496 | ||||||
Hawaii State GO, Refunding Series DR, | 500,000 | 510,855 | ||||||
Hawaii State GO, Refunding Series DT, | 500,000 | 500,000 | ||||||
Hawaii State GO, Refunding Series DY, | 745,000 | 751,966 | ||||||
Hawaii State GO, Refunding, Series EF, | 750,000 | 814,612 | ||||||
Hawaii State GO, Refunding, Series EF, | 500,000 | 561,010 | ||||||
Hawaii State GO, Refunding, Series EK, | 2,000,000 | 2,070,340 | ||||||
Hawaii State GO, Refunding, Series EL, | 1,000,000 | 1,042,050 |
The accompanying notes are an integral part of the financial statements.
16
PACIFIC CAPITAL FUNDS
Pacific Capital Tax-Free Short Intermediate Securities Fund
Portfolio of Investments (Continued)
October 31, 2015
(Unaudited)
Principal Amount ($) | Value ($) | |||||||
MUNICIPAL BONDS — (Continued) |
| |||||||
Hawaii — (Continued) |
| |||||||
Hawaii State GO, Refunding, Series EP, | 500,000 | 573,265 | ||||||
Hawaii State GO, Refunding, Series EP, | 500,000 | 585,800 | ||||||
Hawaii State GO, Refunding, Series EP, | 1,000,000 | 1,193,050 | ||||||
Hawaii State GO, Refunding, Series EP, | 1,000,000 | 1,207,210 | ||||||
Hawaii State GO, Series DQ, | 375,000 | 401,254 | ||||||
Hawaii State GO, Series DT, | 1,500,000 | 1,500,000 | ||||||
Hawaii State GO, Series DT, | 200,000 | 217,230 | ||||||
Hawaii State GO, Series EA, | 1,000,000 | 1,131,650 | ||||||
Hawaii State GO, Series EE, | 1,020,000 | 1,168,971 | ||||||
Hawaii State GO, Series EH, Callable 08/01/23 at 100, | 1,000,000 | 1,212,550 |
Principal Amount ($) | Value ($) | |||||||
MUNICIPAL BONDS — (Continued) |
| |||||||
Hawaii — (Continued) |
| |||||||
Hawaii State GO, Unrefunded Balance, Series DJ, Callable 04/01/17 at 100, | 1,880,000 | 1,999,944 | ||||||
Hawaii State Harbor System Revenue, Series A, | 650,000 | 665,320 | ||||||
Hawaii State Highway Revenue, | 1,000,000 | 1,121,960 | ||||||
Hawaii State Highway Revenue, Series A, | 2,000,000 | 2,009,560 | ||||||
Hawaii State Highway Revenue, Series A, | 325,000 | 338,507 | ||||||
Hawaii State Highway Revenue, Series A, | 2,000,000 | 2,060,020 | ||||||
Hawaii State Highway Revenue, Series A, | 995,000 | 1,064,093 | ||||||
Hawaii State Highway Revenue, Series A, | 500,000 | 577,055 | ||||||
Hawaii State Highway Revenue, Series A, | 1,000,000 | 1,177,440 | ||||||
Hawaii State Highway Revenue, Series A, | 1,000,000 | 1,127,880 |
The accompanying notes are an integral part of the financial statements.
17
PACIFIC CAPITAL FUNDS
Pacific Capital Tax-Free Short Intermediate Securities Fund
Portfolio of Investments (Continued)
October 31, 2015
(Unaudited)
Principal Amount ($) | Value ($) | |||||||
MUNICIPAL BONDS — (Continued) |
| |||||||
Hawaii — (Continued) |
| |||||||
Hawaii State Highway Revenue, Series B, | 500,000 | 557,700 | ||||||
Hawaii State Housing Finance & Development Corp., Series A, | 555,000 | 565,906 | ||||||
Hawaii State Housing Finance & Development Corp., Series A, | 565,000 | 583,945 | ||||||
Honolulu City & County Board of Water Supply System Revenue, AMT, Series B, Callable 7/01/16 at 100, | 1,335,000 | 1,377,253 | ||||||
Honolulu City & County Board of Water Supply System Revenue, Junior Series A, | 800,000 | 913,728 | ||||||
Honolulu City & County Board of Water Supply System Revenue, Junior Series A, | 1,000,000 | 1,166,700 | ||||||
Honolulu City & County Board of Water Supply System Revenue, Series A, | 320,000 | 373,344 |
Principal Amount ($) | Value ($) | |||||||
MUNICIPAL BONDS — (Continued) |
| |||||||
Hawaii — (Continued) |
| |||||||
Honolulu City & County Board of Water Supply System Revenue, Series A, | 650,000 | 782,210 | ||||||
Honolulu City & County Board of Water Supply System Revenue, Series A, | 500,000 | 608,385 | ||||||
Honolulu City & County Board of Water Supply System Revenue, Series A, Unrefunded Portion, Callable 07/01/16 at 100, | 1,070,000 | 1,100,035 | ||||||
Honolulu City & County GO, Series A, | 255,000 | 262,099 | ||||||
Honolulu City & County GO, Series A, | 1,000,000 | 1,042,970 | ||||||
Honolulu City & County GO, Series A, | 1,000,000 | 1,083,360 | ||||||
Honolulu City & County GO, Series A, | 1,000,000 | 1,118,650 | ||||||
Honolulu City & County GO, Series A, | 1,500,000 | 1,684,440 | ||||||
Honolulu City & County GO, Series A, | 750,000 | 797,992 |
The accompanying notes are an integral part of the financial statements.
18
PACIFIC CAPITAL FUNDS
Pacific Capital Tax-Free Short Intermediate Securities Fund
Portfolio of Investments (Continued)
October 31, 2015
(Unaudited)
Principal Amount ($) | Value ($) | |||||||
MUNICIPAL BONDS — (Continued) |
| |||||||
Hawaii — (Continued) |
| |||||||
Honolulu City & County GO, Series A, Prerefunded, | 245,000 | 251,840 | ||||||
Honolulu City & County GO, Series B, | 625,000 | 647,031 | ||||||
Honolulu City & County GO, Series B, | 1,000,000 | 1,146,130 | ||||||
Honolulu City & County GO, Series B, | 500,000 | 588,340 | ||||||
Honolulu City & County GO, Series B, | 955,000 | 1,143,431 | ||||||
Honolulu City & County GO, Series D, Callable 09/01/19 at 100, | 1,000,000 | 1,154,600 | ||||||
Honolulu City & County Wastewater System Revenue, | 1,150,000 | 1,275,166 | ||||||
Honolulu City & County Wastewater System Revenue, | 480,000 | 530,683 | ||||||
Honolulu City & County Wastewater System Revenue, 1st Bond Resolution, Refunding, Senior Series A, | 1,000,000 | 1,142,160 |
Principal Amount ($) | Value ($) | |||||||
MUNICIPAL BONDS — (Continued) |
| |||||||
Hawaii — (Continued) |
| |||||||
Honolulu City & County Wastewater System Revenue, 1st Bond Resolution, Refunding, Senior Series A, | 1,000,000 | 1,166,700 | ||||||
Honolulu City & County Wastewater System Revenue, 1st Bond Resolution, Refunding, Senior Series A, | 1,000,000 | 1,186,780 | ||||||
Honolulu City & County Wastewater System Revenue, 1st Bond Resolution, Senior Series A, Callable 07/01/2022 at 100, | 500,000 | 600,310 | ||||||
Honolulu City & County Wastewater System Revenue, 1st Bond Resolution, Senior Sub-Series A, | 905,000 | 927,426 | ||||||
Honolulu City & County Wastewater System Revenue, 1st Bond Resolution, Series-B, | 150,000 | 159,148 |
The accompanying notes are an integral part of the financial statements.
19
PACIFIC CAPITAL FUNDS
Pacific Capital Tax-Free Short Intermediate Securities Fund
Portfolio of Investments (Continued)
October 31, 2015
(Unaudited)
Principal Amount ($) | Value ($) | |||||||
MUNICIPAL BONDS — (Continued) |
| |||||||
Hawaii — (Continued) |
| |||||||
Honolulu City & County Wastewater System Revenue, Senior 1st Bond Resolution, Series B, | 500,000 | 583,105 | ||||||
Honolulu City & County Wastewater System Revenue, Senior 1st Bond Resolution, Series B, | 500,000 | 566,400 | ||||||
Honolulu City & County Wastewater System Revenue, Senior Series A, | 1,000,000 | 1,143,710 | ||||||
Honolulu City & County Wastewater System Revenue, Senior Series A, | 1,320,000 | 1,435,962 | ||||||
Honolulu City & County Wastewater System Revenue, Senior Series A, | 1,005,000 | 1,139,047 | ||||||
Honolulu City & County, GO, | 175,000 | 192,850 | ||||||
Honolulu City & County, GO, | 25,000 | 27,569 | ||||||
Honolulu City & County, GO, | 1,000,000 | 1,150,440 |
Principal Amount ($) | Value ($) | |||||||
MUNICIPAL BONDS — (Continued) |
| |||||||
Hawaii — (Continued) |
| |||||||
Maui County GO, Series B, | 250,000 | 277,248 | ||||||
Maui County GO, Refunding, | 2,245,000 | 2,293,874 | ||||||
Maui County GO, Refunding, | 500,000 | 510,885 | ||||||
Maui County GO, Refunding, | 300,000 | 332,697 | ||||||
Maui County GO, Refunding, | 100,000 | 114,354 | ||||||
Maui County GO, Refunding, | 530,000 | 621,457 | ||||||
Maui County GO, Refunding, | 200,000 | 239,074 | ||||||
Maui County GO, Unrefunded Portion, Callable 11/09/15 at 100, | 410,000 | 410,279 | ||||||
State of Hawaii State Highway Fund, | 750,000 | 802,080 | ||||||
University of Hawaii Revenue, Series A, | 625,000 | 646,131 | ||||||
University of Hawaii Revenue, Series A, | 230,000 | 236,576 |
The accompanying notes are an integral part of the financial statements.
20
PACIFIC CAPITAL FUNDS
Pacific Capital Tax-Free Short Intermediate Securities Fund
Portfolio of Investments (Continued)
October 31, 2015
(Unaudited)
Principal Amount ($) | Value ($) | |||||||
MUNICIPAL BONDS — (Continued) |
| |||||||
Hawaii — (Continued) | ||||||||
University Of Hawaii Revenue, Series B, | 500,000 | 571,625 | ||||||
83,725,182 | ||||||||
Idaho — 0.9% | ||||||||
Madison County School District No 321 Rexburg GO, Refunding, Series A, | 1,000,000 | 1,085,130 | ||||||
Illinois — 0.2% | ||||||||
Winnebago County School District No 122 Harlem-Loves Park GO, ETM, | 215,000 | 214,942 | ||||||
Indiana — 0.8% | ||||||||
Indiana Finance Authority Revenue Refunding Facilities, Prerefunded 07/01/18 at 100, | 865,000 | 959,631 | ||||||
Iowa — 0.4% | ||||||||
University of Iowa Facilities Corp. Revenue, Medical Education & Biomed Research Facility, | 435,000 | 466,255 | ||||||
Kansas — 1.2% | ||||||||
City of Wichita GO, Series E, | 1,460,000 | 1,554,039 |
Principal Amount ($) | Value ($) | |||||||
MUNICIPAL BONDS — (Continued) |
| |||||||
Maryland — 1.4% | ||||||||
Maryland State GO, Series C, | 1,500,000 | 1,685,865 | ||||||
Massachusetts — 0.9% | ||||||||
Commonwealth of Massachusetts GO, Series C, Prerefunded 08/01/17 at 100, | 1,000,000 | 1,079,530 | ||||||
Michigan — 2.0% | ||||||||
Garden City Hospital Finance Authority, Series A, Callable 08/15/17 at 100, | 2,000,000 | 2,153,740 | ||||||
Michigan Municipal Bond Authority Revenue, Prerefunded Portion Clean Water Revolving, Callable 10/01/16 at 100, | 295,000 | 307,623 | ||||||
Michigan Municipal Bond Authority Revenue, Unrefunded Portion Clean Water Revolving, Callable 10/01/16 at 100, | 70,000 | 72,916 | ||||||
2,534,279 | ||||||||
Missouri — 0.8% | ||||||||
Kansas City Special Obligation Refunding & Improvement Revenue, Series B, | 450,000 | 496,359 |
The accompanying notes are an integral part of the financial statements.
21
PACIFIC CAPITAL FUNDS
Pacific Capital Tax-Free Short Intermediate Securities Fund
Portfolio of Investments (Continued)
October 31, 2015
(Unaudited)
Principal Amount ($) | Value ($) | |||||||
MUNICIPAL BONDS — (Continued) |
| |||||||
Missouri — (Continued) |
| |||||||
St Charles County School District No R-IV Wentzville GO, Refunding, | 500,000 | 549,965 | ||||||
|
| |||||||
1,046,324 | ||||||||
|
| |||||||
Nevada — 2.1% |
| |||||||
Clark County GO, Refunding Infrastructure Improvement, Series B, | 585,000 | 634,134 | ||||||
Nevada System of Higher Education, Series B, Prerefunded 01/01/16 at 100, | 1,900,000 | 1,914,668 | ||||||
|
| |||||||
2,548,802 | ||||||||
|
| |||||||
New York — 0.4% |
| |||||||
New York City GO, Series J, | 470,000 | 522,607 | ||||||
|
| |||||||
Ohio — 0.4% |
| |||||||
Reynoldsburg City Capital Facilities GO, Prerefunded 12/01/15 at 100, | 550,000 | 551,606 | ||||||
|
|
Principal Amount ($) | Value ($) | |||||||
MUNICIPAL BONDS — (Continued) |
| |||||||
Oklahoma — 1.4% |
| |||||||
Cleveland County Educational Facilities Authority Revenue, | 500,000 | 534,695 | ||||||
Cleveland County Educational Facilities Authority Revenue, | 500,000 | 551,635 | ||||||
Oklahoma Development Finance Authority Health Refunding, INTEGRIS Baptist Medical Center, Series C, | 455,000 | 471,912 | ||||||
Oklahoma Water Resources Board Loan Revenue, Series A, | 200,000 | 234,866 | ||||||
|
| |||||||
1,793,108 | ||||||||
|
| |||||||
Oregon — 0.5% |
| |||||||
Oregon State GO, University System Revenue, Series A, | 100,000 | 103,540 | ||||||
Portland City, Water System Revenue, First Lien, Series A, | 460,000 | 508,654 | ||||||
|
| |||||||
612,194 | ||||||||
|
| |||||||
Texas — 7.0% |
| |||||||
Austin City of Water & Wastewater System Revenue, Refunding, Series A, | 500,000 | 589,535 |
The accompanying notes are an integral part of the financial statements.
22
PACIFIC CAPITAL FUNDS
Pacific Capital Tax-Free Short Intermediate Securities Fund
Portfolio of Investments (Continued)
October 31, 2015
(Unaudited)
Principal Amount ($) | Value ($) | |||||||
MUNICIPAL BONDS — (Continued) |
| |||||||
Texas — (Continued) |
| |||||||
Bexar County GO, Edgewood Independent School District, | 450,000 | 513,130 | ||||||
Carrollton City Improvement Revenue GO, | 870,000 | 933,684 | ||||||
Dallas Independent School District GO, Refunding, Series A, | 1,000,000 | 1,029,380 | ||||||
Dallas Independent School District GO, Refunding, Series A, | 1,000,000 | 1,146,020 | ||||||
Harris County GO, Refunding Road, Series A, | 1,000,000 | 1,177,460 | ||||||
La Joya Independent School District GO, School Building, Prerefunded 02/15/18 at 100, | 590,000 | 646,304 | ||||||
Texas State GO, Unrefunded Portion Transportation Commission, | 905,000 | 962,875 |
Principal Amount ($) | Value ($) | |||||||
MUNICIPAL BONDS — (Continued) |
| |||||||
Texas — (Continued) |
| |||||||
University of Texas, Finance System Revenue, Series B, Prerefunded 08/15/16 at 100, | 500,000 | 518,585 | ||||||
Ysleta Independent School District GO, Refunding, | 1,000,000 | 1,109,050 | ||||||
|
| |||||||
8,626,023 | ||||||||
|
| |||||||
Utah — 0.9% |
| |||||||
Utah State Board of Regents, Student Loan Series EE-2, | 1,000,000 | 1,086,560 | ||||||
|
| |||||||
Virginia — 0.9% |
| |||||||
Virginia Public School Authority Revenue, Series II, | 1,000,000 | 1,066,010 | ||||||
|
| |||||||
Washington — 2.4% |
| |||||||
County of King GO, Callable 12/01/22 at 100, | 1,000,000 | 1,219,090 | ||||||
Klickitat County Public Utility District No 1, Series B, Prerefunded 12/01/16 at 100, | 1,315,000 | 1,383,051 |
The accompanying notes are an integral part of the financial statements.
23
PACIFIC CAPITAL FUNDS
Pacific Capital Tax-Free Short Intermediate Securities Fund
Portfolio of Investments (Continued)
October 31, 2015
(Unaudited)
Principal Amount ($) | Value ($) | |||||||
MUNICIPAL BONDS — (Continued) |
| |||||||
Washington — (Continued) |
| |||||||
Klickitat County Public Utility District No 1, Series B, Unrefunded 12/01/16 at 100, | 185,000 | 194,265 | ||||||
Snohomish County School District GO, Callable 12/01/16 at 100, | 200,000 | 209,924 | ||||||
|
| |||||||
3,006,330 | ||||||||
|
| |||||||
Wisconsin — 1.4% | ||||||||
Milwaukee City GO, Promissory & Corporate Notes, Series N2, | 400,000 | 463,992 | ||||||
Wisconsin State GO, Series 3, | 1,000,000 | 1,215,940 | ||||||
|
| |||||||
1,679,932 | ||||||||
|
| |||||||
TOTAL MUNICIPAL BONDS | 121,488,752 | |||||||
|
|
Shares | Value ($) | |||||||
REGISTERED INVESTMENT COMPANY — 0.6% |
| |||||||
Dreyfus Tax Exempt Cash Management Fund, Institutional Shares, | 757,840 | $ | 757,840 | |||||
|
| |||||||
TOTAL REGISTERED INVESTMENT COMPANY | 757,840 | |||||||
|
| |||||||
TOTAL INVESTMENTS - 98.7% |
| 122,246,592 | ||||||
OTHER ASSETS IN EXCESS OF LIABILITIES - 1.3% |
| 1,553,248 | ||||||
|
| |||||||
NET ASSETS - 100.0% | $ | 123,799,840 | ||||||
|
|
(a) | Floating or variable rate security. Rate disclosed is as of October 31, 2015. |
Portfolio holdings are subject to change at any time.
The accompanying notes are an integral part of the financial statements.
24
PACIFIC CAPITAL FUNDS
Pacific Capital Tax-Free Short Intermediate Securities Fund
Portfolio of Investments (Concluded)
October 31, 2015
(Unaudited)
AGM | Assured Guaranty Municipal Corp. | |
AMBAC | American Municipal Bond | |
Assurance Corp. | ||
AMT | Alternative Minimum Tax | |
ETM | Escrowed to Maturity | |
FGIC | Financial Guaranty Insurance Co. | |
FNMA | Federal National Mortgage Association | |
GNMA | Government National Mortgage Association | |
GO | General Obligation | |
GTD STD LNS | Guaranteed Student Loans | |
ID SLSTAX GTY | Idaho Sales Tax Guaranty | |
MAC | Municipal Assurance Corp | |
NATL-RE | National Reinsurance Corp. | |
NATL SCH BN GTY | National School Board Guarantee | |
PSF-GTD | Permanent School Fund Guaranteed | |
ST AID DIR DEP | State Aid Direct Deposit |
The accompanying notes are an integral part of the financial statements.
25
PACIFIC CAPITAL FUNDS
Statements of Assets and Liabilities
October 31, 2015
(Unaudited)
Pacific Capital Tax-Free Securities Fund | Pacific Capital Tax-Free Short Intermediate Securities Fund | |||||||||
Assets | ||||||||||
Investments, at value (Cost $212,798,957 and $120,721,817, respectively) | $223,598,621 | $122,246,592 | ||||||||
Receivable for investments sold | 632 | 32,736 | ||||||||
Receivable for capital shares sold | 254,648 | 92,774 | ||||||||
Dividends and interest receivable | 2,949,584 | 1,521,270 | ||||||||
Prepaid expenses and other assets | 20,390 | 9,316 | ||||||||
|
|
|
| |||||||
Total assets | 226,823,875 | 123,902,688 | ||||||||
|
|
|
| |||||||
Liabilities | ||||||||||
Payable for distributions to shareholders | 71,576 | 16,061 | ||||||||
Due to Custodian | 632 | 32,729 | ||||||||
Payable for administration and accounting fees | 14,763 | 4,204 | ||||||||
Payable for transfer agent fees | 10,273 | 10,801 | ||||||||
Payable for custodian fees | 7,066 | 6,299 | ||||||||
Accrued expenses | 34,776 | 32,754 | ||||||||
|
|
|
| |||||||
Total liabilities | 139,086 | 102,848 | ||||||||
|
|
|
| |||||||
Net Assets | $226,684,789 | $123,799,840 | ||||||||
|
|
|
| |||||||
Net Assets Consist of: | ||||||||||
Capital stock, $0.01 par value | $ 220,983 | $ 121,002 | ||||||||
Paid-in capital | 217,500,987 | 122,369,936 | ||||||||
Undistributed net investment income | — | 49 | ||||||||
Accumulated net realized loss from investments | (1,836,845 | ) | (215,922 | ) | ||||||
Net unrealized appreciation on investments | 10,799,664 | 1,524,775 | ||||||||
|
|
|
| |||||||
Net Assets | $226,684,789 | $123,799,840 | ||||||||
|
|
|
| |||||||
Class Y: | ||||||||||
Outstanding shares | 22,098,307 | 12,100,203 | ||||||||
Net asset value, offering and redemption price per share | $ 10.26 | $ 10.23 |
The accompanying notes are an integral part of the financial statements.
26
PACIFIC CAPITAL FUNDS
Statements of Operations
For the Six Months Ended October 31, 2015
(Unaudited)
Pacific Capital Tax-Free Securities Fund | Pacific Capital Tax-Free Short Intermediate Securities Fund | |||||||||
Investment Income | ||||||||||
Interest | $ | 3,432,364 | $ | 773,080 | ||||||
|
|
|
| |||||||
Total investment income | 3,432,364 | 773,080 | ||||||||
|
|
|
| |||||||
Expenses | ||||||||||
Advisory fees (Note 2) | 222,011 | 126,306 | ||||||||
Administration and accounting fees (Note 2) | 38,170 | 27,797 | ||||||||
Printing and shareholder reporting fees | 18,900 | 7,332 | ||||||||
Audit fees | 15,652 | 13,155 | ||||||||
Transfer agent fees (Note 2) | 15,029 | 22,437 | ||||||||
Custodian fees (Note 2) | 9,213 | 8,737 | ||||||||
Trustees’ and officers’ fees (Note 2) | 6,652 | 19,487 | ||||||||
Legal fees | 846 | 8,843 | ||||||||
Registration and filing fees | 283 | 1,808 | ||||||||
Other expenses | 4,407 | 9,817 | ||||||||
|
|
|
| |||||||
Total expenses before waivers and reimbursements | 331,163 | 245,719 | ||||||||
|
|
|
| |||||||
Less: waivers and reimbursements (Note 2) | (222,011 | ) | (126,306 | ) | ||||||
|
|
|
| |||||||
Net expenses after waivers and reimbursements | 109,152 | 119,413 | ||||||||
|
|
|
| |||||||
Net investment income. | 3,323,212 | 653,667 | ||||||||
|
|
|
| |||||||
Net realized and unrealized gain/(loss) from investments: | ||||||||||
Net realized gain/(loss) from investments | (93,114 | ) | 1,926 | |||||||
Net change in unrealized appreciation/(depreciation) on investments | 635,118 | 490,203 | ||||||||
|
|
|
| |||||||
Net realized and unrealized gain on investments | 542,004 | 492,129 | ||||||||
|
|
|
| |||||||
Net increase in net assets resulting from operations | $ | 3,865,216 | $ | 1,145,796 | ||||||
|
|
|
|
The accompanying notes are an integral part of the financial statements.
27
PACIFIC CAPITAL FUNDS
Pacific Capital Tax-Free Securities Fund
Statements of Changes in Net Assets
Six Months Ended October 31, 2015 (Unaudited) | Year Ended April 30, 2015 | |||||||||
Increase/(decrease) in net assets from operations: | ||||||||||
Net investment income | $ | 3,323,212 | $ | 6,760,871 | ||||||
Net realized loss from investments | (93,114 | ) | (65,824 | ) | ||||||
Net change in unrealized appreciation/(depreciation) on investments | 635,118 | 1,348,966 | ||||||||
|
|
|
| |||||||
Net increase in net assets resulting from operations | 3,865,216 | 8,044,013 | ||||||||
|
|
|
| |||||||
Less Dividends and Distributions to Shareholders from: | ||||||||||
Net investment income | (3,323,212 | ) | (6,760,871 | ) | ||||||
|
|
|
| |||||||
Net decrease in net assets from dividends and distributions to shareholders | (3,323,212 | ) | (6,760,871 | ) | ||||||
|
|
|
| |||||||
Increase/(Decrease) in Net Assets Derived from Capital Share Transactions (Note 4) | 14,853,870 | (8,765,366 | ) | |||||||
|
|
|
| |||||||
Total increase/(decrease) in net assets | 15,395,874 | (7,482,224 | ) | |||||||
|
|
|
| |||||||
Net assets | ||||||||||
Beginning of period | 211,288,915 | 218,771,139 | ||||||||
|
|
|
| |||||||
End of period | $ | 226,684,789 | $ | 211,288,915 | ||||||
|
|
|
| |||||||
Undistributed net investment income, end of period | $ | — | $ | — | ||||||
|
|
|
|
The accompanying notes are an integral part of the financial statements.
28
PACIFIC CAPITAL FUNDS
Pacific Capital Tax-Free Short Intermediate Securities Fund
Statements of Changes in Net Assets
Six Months Ended October 31, 2015 (Unaudited) | Year Ended April 30, 2015 | |||||||||
Increase/(decrease) in net assets from operations: | ||||||||||
Net investment income | $ | 653,667 | $ | 1,385,546 | ||||||
Net realized gain/(loss) from investments | 1,926 | (23,541 | ) | |||||||
Net change in unrealized appreciation/(depreciation) on investments | 490,203 | 285,828 | ||||||||
|
|
|
| |||||||
Net increase in net assets resulting from operations | 1,145,796 | 1,647,833 | ||||||||
|
|
|
| |||||||
Less Dividends and Distributions to Shareholders from: | ||||||||||
Net investment income | (653,667 | ) | (1,385,546 | ) | ||||||
|
|
|
| |||||||
Net decrease in net assets from dividends and distributions to shareholders | (653,667 | ) | (1,385,546 | ) | ||||||
|
|
|
| |||||||
Increase/(Decrease) in Net Assets Derived from Capital Share Transactions (Note 4) | (9,186,535 | ) | 23,560,620 | |||||||
|
|
|
| |||||||
Total increase/(decrease) in net assets | (8,694,406 | ) | 23,822,907 | |||||||
|
|
|
| |||||||
Net assets | ||||||||||
Beginning of period | 132,494,246 | 108,671,339 | ||||||||
|
|
|
| |||||||
End of period | $ | 123,799,840 | $ | 132,494,246 | ||||||
|
|
|
| |||||||
Undistributed net investment income, end of period | $ | 49 | $ | 49 | ||||||
|
|
|
|
The accompanying notes are an integral part of the financial statements.
29
PACIFIC CAPITAL FUNDS
Pacific Capital Tax-Free Securities Fund
Financial Highlights
Contained below is per share operating performance data for Class Y Shares outstanding, total investment return, ratios to average net assets and other supplemental data for the respective periods. 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). This information has been derived from information provided in the financial statements and should be read in conjunction with the financial statements and the notes thereto.
Class Y | For the Six Months Ended October 31, 2015 (Unaudited) | For the Year Ended April 30, 2015 | For the Year Ended April 30, 2014 | For the Year Ended April 30, 2013 | For the Year Ended April 30, 2012 | For the Nine Months Ended April 30, 2011† | For the Year Ended July 31, 2010 | ||||||||||||||||||||||||||||
Per Share Operating Performance | |||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $ | 10.24 | $ | 10.18 | $ | 10.51 | $ | 10.41 | $ | 9.92 | $ | 10.16 | $ | 9.97 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||
Net investment income | 0.15 | 0.33 | 0.33 | 0.34 | 0.38 | 0.34 | 0.37 | ||||||||||||||||||||||||||||
Net realized and unrealized gain/(loss) from investments | 0.02 | 0.06 | (0.33 | ) | 0.11 | 0.49 | (0.25 | ) | 0.20 | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||
Net increase in net assets resulting from operations | 0.17 | 0.39 | — | 0.45 | 0.87 | 0.09 | 0.57 | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||
Dividends and distributions to shareholders from: | |||||||||||||||||||||||||||||||||||
Net investment income | (0.15 | ) | (0.33 | ) | (0.33 | ) | (0.35 | ) | (0.38 | ) | (0.33) | (0.38 | ) | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||
Net asset value, end of period | $ | 10.26 | $ | 10.24 | $ | 10.18 | $ | 10.51 | $ | 10.41 | $9.92 | $ | 10.16 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||
Total investment return(a) | 1.71 | % | 3.87 | % | 0.11 | % | 4.40 | % | 8.92 | % | 0.89 | %(b) | 5.77 | % | |||||||||||||||||||||
Ratio/Supplemental Data | |||||||||||||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $ | 226,685 | $ | 211,289 | $ | 218,771 | $ | 303,624 | $ | 251,290 | $209,482 | $ | 270,644 | ||||||||||||||||||||||
Ratio of expenses to average net assets | 0.10 | %* | 0.12 | % | 0.11 | % | 0.10 | % | 0.15 | % | 0.13 | %* | 0.71 | % | |||||||||||||||||||||
Ratio of expenses to average net assets without waivers and expense reimbursements(c) | 0.30 | %* | 0.32 | % | 0.31 | % | 0.30 | % | 0.35 | % | 0.33 | %* | 0.87 | % | |||||||||||||||||||||
Ratio of net investment income to average net assets | 2.99 | %* | 3.21 | % | 3.30 | % | 3.28 | % | 3.71 | % | 4.49 | %(b)* | 3.80 | % | |||||||||||||||||||||
Portfolio turnover rate | 17.34 | %** | 16.60 | % | 5.35 | % | 14.78 | % | 29.36 | % | 12.26 | %** | 12.10 | % |
† | The Fund changed its fiscal year end to April 30. |
(a) | Total investment return is calculated assuming a purchase of shares on the first day and a sale of shares on the last day of each period reported and includes reinvestments of dividends and distributions, if any. Total returns for periods less than one year are not annualized. |
(b) | During the period, the Fund received a distribution from a ‘fair fund’ established by the Securities and Exchange Commission in connection with a consent order against BISYS Fund Services, Inc. Had this settlement not occurred, the ratio of net investment income to average net assets and total investment return for the Fund would have been 4.08% and 0.59%, respectively. |
(c) | During the period, certain fees were waived and/or reimbursed. If such fee waivers and/or reimbursements had not occurred, the ratios would have been as indicated (See Note 2). |
* | Annualized. |
** | Not Annualized. |
The accompanying notes are an integral part of the financial statements.
30
PACIFIC CAPITAL FUNDS
Pacific Capital Tax-Free Short Intermediate Securities Fund
Financial Highlights
Contained below is per share operating performance data for Class Y Shares outstanding, total investment return, ratios to average net assets and other supplemental data for the respective periods. 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). This information has been derived from information provided in the financial statements and should be read in conjunction with the financial statements and the notes thereto.
Class Y | For the Six Months Ended October 31, 2015 (Unaudited) | For the Year Ended April 30, 2015 | For the Year Ended April 30, 2014 | For the Year Ended April 30, 2013 | For the Year Ended April 30, 2012 | For the Nine Months Ended April 30, 2011† | For the Year Ended July 31, 2010 | ||||||||||||||||||||||||||||
Per Share Operating Performance | |||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $ | 10.19 | $ | 10.17 | $ | 10.30 | $ | 10.33 | $ | 10.28 | $ | 10.39 | $ | 10.32 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||
Net investment income | 0.05 | 0.10 | 0.12 | 0.17 | 0.19 | 0.16 | 0.15 | ||||||||||||||||||||||||||||
Net realized and unrealized gain/(loss) from investments | 0.04 | 0.02 | (0.13 | ) | (0.03 | ) | 0.05 | (0.11 | ) | 0.06 | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||
Net increase/(decrease) in net assets resulting from operations | 0.09 | 0.12 | (0.01 | ) | 0.14 | 0.24 | 0.05 | 0.21 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||
Dividends and distributions to shareholders from: | |||||||||||||||||||||||||||||||||||
Net investment income | (0.05 | ) | (0.10 | ) | (0.12 | ) | (0.17 | ) | (0.19 | ) | (0.16 | ) | (0.14 | ) | |||||||||||||||||||||
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Net asset value, end of period | $ | 10.23 | $ | 10.19 | $ | 10.17 | $ | 10.30 | $ | 10.33 | $ | 10.28 | $ | 10.39 | |||||||||||||||||||||
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| ||||||||||||||||||||||
Total investment return(a) | 0.92 | % | 1.23 | % | (0.09 | )% | 1.39 | % | 2.37 | % | 0.45 | %(b) | 2.10 | % | |||||||||||||||||||||
Ratio/Supplemental Data | |||||||||||||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $ | 123,800 | $ | 132,494 | $ | 108,671 | $ | 62,564 | $ | 52,442 | $ | 57,831 | $ | 68,291 | |||||||||||||||||||||
Ratio of expenses to average net assets | 0.19 | %* | 0.13 | % | 0.19 | % | 0.25 | % | 0.30 | % | 0.30 | %* | 0.77 | % | |||||||||||||||||||||
Ratio of expenses to average net assets without waivers and expense reimbursements(c) | 0.39 | %* | 0.33 | % | 0.39 | % | 0.45 | % | 0.50 | % | 0.50 | %* | 0.88 | % | |||||||||||||||||||||
Ratio of net investment income to average net assets | 1.04 | %* | 1.02 | % | 1.15 | % | 1.62 | % | 1.86 | % | 2.06 | %(b)* | 1.46 | % | |||||||||||||||||||||
Portfolio turnover rate | 11.85 | %** | 24.07 | % | 26.98 | % | 23.97 | % | 40.55 | % | 13.20 | %** | 22.81 | % |
† | The Fund changed its fiscal year end to April 30. |
(a) | Total investment return is calculated assuming a purchase of shares on the first day and a sale of shares on the last day of each period reported and includes reinvestments of dividends and distributions, if any. Total returns for periods less than one year are not annualized. |
(b) | During the period, the Fund received a distribution from a ‘fair fund’ established by the Securities and Exchange Commission in connection with a consent order against BISYS Fund Services, Inc. Had this settlement not occurred, the ratio of net investment income to average net assets and total investment return for the Fund would have been 1.86% and 0.35%, respectively. |
(c) | During the period, certain fees were waived and/or reimbursed. If such fee waivers and/or reimbursements had not occurred, the ratios would have been as indicated (See Note 2). |
* | Annualized. |
** | Not Annualized. |
The accompanying notes are an integral part of the financial statements.
31
PACIFIC CAPITAL FUNDS
Notes to Financial Statements
October 31, 2015
(Unaudited)
1. Organization and Significant Accounting Policies
The Pacific Capital Tax-Free Securities Fund and Pacific Capital Tax-Free Short Intermediate Securities Fund (each a “Fund” and together the “Funds”) are non-diversified open-end management investment companies registered under the Investment Company Act of 1940, as amended (the “1940 Act”). The Funds are each a separate series of FundVantage Trust (the “Trust”) which was organized as a Delaware statutory trust on August 28, 2006. The Trust is a “series trust” authorized to issue an unlimited number of separate series or classes of shares of beneficial interest. Each series is treated as a separate entity for certain matters under the 1940 Act, and for other purposes, and a shareholder of one series is not deemed to be a shareholder of any other series. The Funds are each authorized to issue and offer Class Y shares.
The Funds are investment companies and follow accounting and reporting guidance in the Financial Accounting Standards Board Accounting Standards Codification Topic 946.
Portfolio Valuation — Each Fund’s net asset value (“NAV”) is calculated once daily at the close of regular trading hours on the New York Stock Exchange (“NYSE”) (typically 4:00 p.m. Eastern time) on each day the NYSE is open. Securities held by each Fund are valued using the closing price or the last sale price on a national securities exchange or the National Association of Securities Dealers Automatic Quotation System (“NASDAQ”) market system where they are primarily traded. Equity securities traded in the over-the-counter market are valued at their closing prices. If there were no transactions on that day, securities traded principally on an exchange or on NASDAQ will be valued at the mean of the last bid and ask prices prior to the market close. Fixed income securities having a remaining maturity of greater than 60 days are valued using an independent pricing service. Fixed income securities having a remaining maturity of 60 days or less are generally valued at amortized cost, provided such amount approximates fair value. Debt securities are valued on the basis of broker quotations or valuations provided by a pricing service, which utilizes information with respect to recent sales, market transactions in comparable securities, quotations from dealers, and various relationships between securities in determining value. Valuations developed through pricing techniques may materially vary from the actual amounts realized upon sale of the securities. Foreign securities are valued based on prices from the primary market in which they are traded and are translated from the local currency into U.S. dollars using current exchange rates. Investments in other open-end investment companies are valued based on the NAV of such investment companies (which may use fair value pricing as discussed in their prospectuses). If market quotations are unavailable or deemed unreliable, securities will be valued in accordance with procedures adopted by the Trust’s Board of Trustees. Relying on prices supplied by pricing services or dealers or using fair valuation may result in values that are higher or lower than the values used by other investment companies and investors to price the same investments.
32
PACIFIC CAPITAL FUNDS
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
Fair Value Measurements — The inputs and valuation techniques used to measure fair value of the Funds’ investments are summarized into three levels as described in the hierarchy below:
● | Level 1 | — | quoted prices in active markets for identical securities; | |||
● | Level 2 | — | other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.); and | |||
● | Level 3 | — | significant unobservable inputs (including a Fund’s own assumptions in determining the fair value of investments). |
The fair value of a Fund’s bonds are generally based on quotes received from brokers of independent pricing services. Bonds with quotes that are based on actual trades with a sufficient level of activity on or near the measurement date are classified as Level 2 assets.
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
The following is a summary of the inputs used, as of October 31, 2015, in valuing the Funds’ investments carried at fair value:
Funds | Total Value at 10/31/15 | Level 1 Quoted Price | Level 2 Other Significant Observable Inputs | Level 3 Significant Unobservable Inputs | ||||||||||||
Pacific Capital Tax-Free Securities Fund | ||||||||||||||||
Municipal Bonds | $ | 219,162,729 | $ | — | $ | 219,162,729 | $ | — | ||||||||
Registered Investment Company | 4,435,892 | 4,435,892 | — | — | ||||||||||||
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Total | $ | 223,598,621 | $ | 4,435,892 | $ | 219,162,729 | $ | — | ||||||||
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Pacific Capital Tax-Free Short Intermediate Securities Fund | ||||||||||||||||
Municipal Bonds | $ | 121,488,752 | $ | — | $ | 121,488,752 | $ | — | ||||||||
Registered Investment Company | 757,840 | 757,840 | — | — | ||||||||||||
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Total | $ | 122,246,592 | $ | 757,840 | $ | 121,488,752 | $ | — | ||||||||
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33
PACIFIC CAPITAL FUNDS
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
At the end of each quarter, management evaluates the classification of Levels 1, 2 and 3 assets and liabilities. Various factors are considered, such as changes in liquidity from the prior reporting period; whether or not a broker is willing to execute at the quoted price; the depth and consistency of prices from third party pricing services; and the existence of contemporaneous, observable trades in the market. Additionally, management evaluates the classification of Level 1 and Level 2 assets and liabilities on a quarterly basis for changes in listings or delistings on national exchanges.
Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of a Fund’s investments may fluctuate from period to period. Additionally, the fair value of investments may differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially from the values a Fund may ultimately realize. Further, such investments may be subject to legal and other restrictions on resale or otherwise less liquid than publicly traded securities.
For fair valuations using significant unobservable inputs, U.S. generally accepted accounting principles (“U.S. GAAP”) require the Funds to present a reconciliation of the beginning to ending balances for reported market values that presents changes attributable to total realized and unrealized gains or losses, purchase and sales, and transfers in and out of Level 3 during the period. Transfers in and out between Levels are based on values at the end of the period. U.S. GAAP also requires the Funds to disclose amounts and reasons for all transfers in and out of Level 1 and Level 2 fair value measurements. A reconciliation of Level 3 investments is presented only when the Funds have an amount of Level 3 investments at the end of the reporting period that was meaningful in relation to its net assets. The amounts and reasons for all transfers in and out of each Level within the three-tier hierarchy are disclosed when the Funds have an amount of total transfers during the reporting period that was meaningful in relation to its net assets as of the end of the reporting period.
For the six months ended October 31, 2015, there were no transfers between Levels 1, 2 and 3.
Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes at the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates and those differences could be material.
Investment Transactions, Investment Income and Expenses — Investment transactions are recorded on trade date for financial statement preparation purposes. Realized gains and losses on investments sold are recorded on the identified cost basis. Interest income is recorded on the accrual basis. Accretion of discounts and amortization of premiums are recorded on a daily basis using the effective yield method except for short term securities, which records discounts and premiums on a straight-line basis. Dividends are recorded on the ex-dividend date. General expenses of the Trust are generally allocated to each Fund in proportion to its relative daily net assets. Expenses directly attributable to a particular fund in the Trust are charged directly to that fund.
34
PACIFIC CAPITAL FUNDS
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
Dividends and Distributions to Shareholders — Dividends from net investment income are declared daily and paid monthly to shareholders. Distributions, if any, of net short-term capital gain and net capital gain (the excess of net long-term capital gain over the short-term capital loss) realized by a Fund, after deducting any available capital loss carryovers are declared and paid to its shareholders annually. Income dividends and capital gain distributions are determined in accordance with U.S. federal income tax regulations, which may differ from U.S. GAAP. These differences include the treatment of non-taxable dividends, expiring capital loss carryforwards and losses deferred due to wash sales and excise tax regulations. Permanent book and tax basis differences relating to shareholder distributions will result in reclassifications within the components of net assets.
U.S. Tax Status — No provision is made for U.S. income taxes as it is each Fund’s intention to continue to qualify for and elect the tax treatment applicable to regulated investment companies under Subchapter M of the Internal Revenue Code of 1986, as amended, and make the requisite distributions to such Fund’s shareholders, which will be sufficient to relieve it from U.S. income and excise taxes.
Other — In the normal course of business, a Fund may enter into contracts that provide general indemnifications. A Fund’s maximum exposure under these arrangements is dependent on claims that may be made against it in the future, and, therefore, cannot be estimated; however, based on experience, the risk of material loss for such claims is considered remote.
2. Transactions with Affiliates and Related Parties
Investment advisory services are provided to the Funds by the Asset Management Group of Bank of Hawaii (the “Adviser”). Under terms of an advisory agreement, each Fund is charged an annual fee of 0.20% which is computed daily and paid monthly based upon average daily net assets. The Adviser has agreed to waive its advisory fee (the “Waiver”). The Waiver will remain in effect until August 31, 2016. The Waiver may not be terminated at any time prior to that date without the consent of the Board of Trustees of FundVantage Trust (the “Trust”).
Fee rates for the period May 1, 2015 through October 31, 2015, were as follows:
Maximum Annual Advisory Fee | Net Annual Fees Paid After Contractual Waivers | |||
Pacific Capital Tax-Free Securities Fund | 0.20% | 0.00% | ||
Pacific Capital Tax-Free Short Intermediate Securities Fund | 0.20% | 0.00% |
35
PACIFIC CAPITAL FUNDS
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
BNY Mellon Investment Servicing (US) Inc. (“BNY Mellon”) serves as administrator and transfer agent for the Funds. For providing administrative and accounting services, BNY Mellon is entitled to receive a monthly fee equal to an annual percentage rate of each Fund’s average daily net assets and is subject to certain minimum monthly fees. For providing transfer agency services, BNY Mellon is entitled to receive a monthly fee, subject to certain minimum, and out of pocket expenses.
The Bank of New York Mellon (the “Custodian”) provides certain custodial services to the Funds. The Custodian is entitled to receive a monthly fee, subject to certain minimum, and out of pocket expenses.
Foreside Funds Distributors LLC (the “Underwriter”) provides principal underwriting services to the Funds.
The Trustees of the Trust who are not officers or employees of an investment adviser, sub-adviser or other service provider to the Trust receive compensation in the form of an annual retainer and per meeting fees for their services as a Trustee. The remuneration paid to the Trustees by the Fund during the period ended October 31, 2015 was $6,884 for the Pacific Capital Tax-Free Securities Fund and $3,948 for the Pacific Capital Tax-Free Short Intermediate Securities Fund. Certain employees of BNY Mellon serve as Officers of the Trust. They are not compensated by the Fund or the Trust.
3. Investment in Securities
For the six months ended October 31, 2015, aggregate purchases and sales of investment securities (excluding short-term investments) of the Funds were as follows:
Purchases | Sales | |||||||
Pacific Capital Tax-Free Securities Fund | $51,113,415 | $37,243,049 | ||||||
Pacific Capital Tax-Free Short Intermediate Securities Fund | 14,532,226 | 22,201,432 |
36
PACIFIC CAPITAL FUNDS
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
4. Capital Share Transactions
For the six months ended October 31, 2015, and the year ended April 30, 2015, transactions in capital shares (authorized shares unlimited) were as follows:
For the Six Months Ended October 31, 2015 (Unaudited) | For the Year Ended April 30, 2015 | |||||||||||||||
Shares | Amount |
Shares | Amount | |||||||||||||
Pacific Capital Tax-Free Securities Fund | ||||||||||||||||
Class Y | ||||||||||||||||
Sales | 3,549,745 | $ | 36,152,919 | 3,845,839 | $ | 39,529,904 | ||||||||||
Reinvestments | 4,447 | 45,389 | 9,416 | 97,044 | ||||||||||||
Redemptions | (2,093,404 | ) | (21,344,438 | ) | (4,705,924 | ) | (48,392,314 | ) | ||||||||
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|
|
| |||||||||
Net increase/(decrease) | 1,460,788 | $ | 14,853,870 | (850,669 | ) | $ | (8,765,366 | ) | ||||||||
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|
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| |||||||||
Pacific Capital Tax-Free Short Intermediate Securities Fund | ||||||||||||||||
Class Y | ||||||||||||||||
Sales | 881,553 | $ | 8,979,687 | 4,995,737 | $ | 50,916,174 | ||||||||||
Reinvestments | 295 | 3,006 | 636 | 6,485 | ||||||||||||
Redemptions | (1,786,699 | ) | (18,169,228 | ) | (2,681,690 | ) | (27,362,039 | ) | ||||||||
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|
|
|
|
|
| |||||||||
Net increase/(decrease) | (904,851 | ) | $ | (9,186,535 | ) | 2,314,683 | $ | 23,560,620 | ||||||||
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|
|
5. Federal Tax Information
The Funds have followed the authoritative guidance on accounting for and disclosure of uncertainty in tax positions, which requires the Funds to determine whether a tax position is more likely than not to be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The Funds have determined that there was no effect on the financial statements from following this authoritative guidance. In the normal course of business, the Funds are subject to examination by federal, state, and local jurisdictions, where applicable, for tax years for which applicable statutes of limitations have not expired.
The tax character of distributions paid during the year ended April 30, 2015, were as follows:
Net Investment Income | Net Long-Term Capital Gains | Total Taxable Distributions | Tax Exempt Distributions | Total Distributions Paid* | ||||||||||||||
Pacific Capital Tax-Free Securities Fund | $30,761 | $— | $30,761 | $ | 6,774,046 | $ | 6,804,807 | |||||||||||
Pacific Capital Tax-Free Short Intermediate Securities Fund | 2,736 | — | 2,736 | 1,387,697 | 1,390,433 |
* | Distributions will not tie to Statement of Changes because distributions are recognized when actually paid for tax purposes. |
37
PACIFIC CAPITAL FUNDS
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
Distributions from net investment income and short-term capital gains are treated as ordinary income for federal income tax purposes.
As of April 30, 2015, the components of accumulated earnings/(deficit) on a tax basis were as follows:
Undistributed Tax-Exempt Income | Qualified Late-Year Losses | Distributions Payable | Capital Loss Carryforwards | Unrealized Appreciation | Total Accumulated Earnings | |||||||||||||||||||
Pacific Capital Tax-Free Securities Fund | $56,236 | $(98,854 | ) | $(56,236) | $(1,644,877 | ) | $10,164,546 | $8,420,815 | ||||||||||||||||
Pacific Capital Tax-Free Short Intermediate Securities Fund | 11,225 | (4,070 | ) | (11,176) | (213,778 | ) | 1,034,572 | 816,773 |
The differences between the book and tax basis components of distributable earnings relate primarily to the timing and recognition of income and gains for federal income tax purposes. Short-term capital gain is reported as ordinary income for federal income tax purposes.
The cost for federal income tax purposes, gross unrealized appreciation, gross unrealized depreciation and net unrealized appreciation as of October 31, 2015 is as follows:
Tax Cost of Securities | Unrealized Appreciation | Unrealized Depreciation | Net Unrealized Appreciation | |||||||||||||
Pacific Capital Tax-Free Securities Fund | $ | 212,798,957 | $ | 10,848,717 | $ | (49,053) | $ | 10,799,664 | ||||||||
Pacific Capital Tax-Free Short Intermediate Securities Fund | 120,721,817 | 1,526,927 | (2,152) | 1,524,775 |
Pursuant to federal income tax rules applicable to regulated investment companies, the Funds may elect to treat certain capital losses between November 1 and April 30 and late year ordinary losses ((i) ordinary losses between January 1 and April 30, and (ii) specified ordinary and currency losses between November 1 and April 30) as occurring on the first day of the following tax year. For the year ended April 30, 2015, any amount of losses elected within the tax return will not be recognized for federal income tax purposes until May 1, 2015. For the year ended April 30, 2015, the Funds deferred to May 1, 2015 the following losses:
Short-Term Capital Loss Deferral | Long-Term Capital Loss Deferral | |||||||
Pacific Capital Tax-Free Securities Fund | $1,929 | $96,925 | ||||||
Pacific Capital Tax-Free Short Intermediate Securities Fund | 874 | 3,196 |
38
PACIFIC CAPITAL FUNDS
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
Accumulated capital losses represent net capital loss carryforwards as of April 30, 2015 that may be available to offset future realized capital gains and thereby reduce future capital gains distributions. Under the Regulated Investment Company Modernization Act of 2010 (the “Modernization Act”), the Funds are permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period. Any losses incurred during those future taxable years will be required to be utilized prior to any losses incurred in pre-enactment taxable years. Additionally, post-enactment capital losses that are carried forward will retain their character as either short-term or long-term capital losses rather than being considered all short-term as under the previous law.
As of April 30, 2015, the Funds had pre-enactment net capital loss carryforwards to offset future net capital gains, if any, to the extent provided by Treasury regulations. To the extent that these carryforwards are used to offset future capital gains, it is probable that the gains that are offset will not be distributed to shareholders.
Expires April 30, | ||||||||||||||||||
2016 ($) | 2017 ($) | 2018 ($) | 2019 ($) | |||||||||||||||
Pacific Capital Tax-Free Securities Fund | — | — | (237,475 | ) | — | |||||||||||||
Pacific Capital Tax-Free Short Intermediate Securities Fund | (49,093 | ) | (15,122 | ) | (75,378 | ) | (17,645 | ) |
6. Concentration of Credit Risk
The Funds primarily invest in debt obligations issued by the state of Hawaii and its political subdivisions, agencies, and public authorities to obtain funds for various public purposes. The Funds are more susceptible to factors adversely affecting issues of Hawaii municipal securities than is a municipal bond fund that is not concentrated in these issuers to the same extent.
Debt Investment Risk — Debt investments are affected primarily by the financial condition of the companies or other entities that have issued them and by changes in interest rates. There is a risk that an issuer of a Fund’s debt investments may not be able to meet its financial obligations (e.g., may not be able to make principal and/or interest payments when they are due or otherwise default on other financial terms) and/or go bankrupt. Securities such as high-yield/high-risk bonds, e.g., bonds with low credit ratings by Moody’s (Ba or lower) or Standard & Poor’s (BB and lower) or if unrated are of comparable quality as determined by the manager, are especially subject to credit risk during periods of economic uncertainty or during economic downturns and are more likely to default on their interest and/or principal payments than higher rated securities. Debt investments may be affected by changes in interest rates. Debt investments with longer durations tend to be more sensitive to changes in interest rates, making them more volatile than debt investments with shorter durations or floating or adjustable interest rates. The value of debt investments may fall when interest rates rise.
39
PACIFIC CAPITAL FUNDS
Notes to Financial Statements (Concluded)
October 31, 2015
(Unaudited)
7. Subsequent Events
Management has evaluated the impact of all subsequent events on the Funds through the date that the financial statements were issued, and has determined that there were no following subsequent events requiring recognition or disclosure in the financial statements.
40
PACIFIC CAPITAL FUNDS
Other Information
(Unaudited)
Proxy Voting
Policies and procedures that the Funds use to determine how to vote proxies relating to portfolio securities as well as information regarding how the Funds voted proxies relating to portfolio securities for the most recent 12-month period ended June 30 are available without charge, upon request, by calling (888) 678-6034 and on the Securities and Exchange Commission’s (“SEC”) website at http://www.sec.gov.
Quarterly Portfolio Schedules
The Trust files its complete schedule of portfolio holdings with the SEC for the first and third fiscal quarters of each fiscal year on Form N-Q. The Trust’s Forms N-Q are available on the SEC’s website at http://www.sec.gov and may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. Information on the operation of the SEC’s Public Reference Room may be obtained by calling 1-800-SEC-0330.
41
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[THIS PAGE INTENTIONALLY LEFT BLANK.]
Investment Adviser
Asset Management Group of Bank of Hawaii
130 Merchant Street, Suite 370
Honolulu, HI 96813
Administrator
BNY Mellon Investment Servicing (US) Inc.
301 Bellevue Parkway
Wilmington, DE 19809
Transfer Agent
BNY Mellon Investment Servicing (US) Inc.
4400 Computer Drive
Westborough, MA 01581
Principal Underwriter
Foreside Funds Distributors LLC
400 Berwyn Park
899 Cassatt Road
Berwyn, PA 19312
Custodian
The Bank of New York Mellon
225 Liberty Street
New York, NY 10286
Independent Registered Public Accounting Firm
PricewaterhouseCoopers LLP
Two Commerce Square, Suite 1700
2001 Market Street
Philadelphia, PA 19103-7042
Legal Counsel
Pepper Hamilton LLP
3000 Two Logan Square
18th and Arch Streets
Philadelphia, PA 19103
PAC-1015
Pacific Capital Tax-Free Securities
Fund
Pacific Capital Tax-Free Short
Intermediate Securities Fund
SEMI-ANNUAL REPORT
October 31, 2015
(Unaudited)
This report is submitted for the general information of the shareholders of the Pacific Capital Funds. It is not authorized for distribution unless preceded or accompanied by a current prospectus for the Pacific Capital Funds.
PEMBERWICK FUND
Semi-Annual Report
Performance Data
October 31, 2015
(Unaudited)
Average Annual Total Returns for the Periods Ended October 31, 2015 | ||||||||||||||||||||
Six Months† | 1 Year | 3 Year | 5 Year | Since Inception* | ||||||||||||||||
Pemberwick Fund | 0.26% | 0.61% | 0.77% | 1.13% | 1.23% | |||||||||||||||
Barclays Capital 1-3 Year Government/Credit Index | 0.31% | 0.87% | 0.84% | 0.98% | 1.27% |
† | Not Annualized. |
* | The Pemberwick Fund (the “Fund”) commenced operations on February 1, 2010. Benchmark performance is from the commencement date of the Fund only and is not the commencement date of the benchmark itself. The benchmark does not reflect any expenses or transaction costs. |
The performance data quoted represents past performance and does not guarantee future results. Current performance may be lower or higher. Performance data current to the most recent month-end may be obtained by calling (888) 447-4785. The investment return and principal value of an investment will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. The table does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
The Fund’s total annual operating expense ratio, as stated in the current prospectus dated September 1, 2015, is 0.74% of the Fund’s average daily net assets, which may differ from the actual expenses incurred by the Fund for the period covered by this report. Pemberwick voluntarily waives 35 basis points (0.35%) of the annual investment advisory fee Pemberwick is entitled to receive from the Fund, as a percentage of average daily net assets, pursuant to the advisory agreement between Pemberwick and the Fund. Such waiver will continue until Pemberwick notifies the Fund of a change in its voluntary waiver or its discontinuation. This waiver can be discontinued at any time at the discretion of Pemberwick.
The Fund intends to evaluate performance as compared to that of the Barclays Capital 1-3 Year Government/Credit Index. The Barclays Capital 1-3 Year Government/Credit Index is an unmanaged market index and should not be considered indicative of any Pemberwick investment. It is impossible to invest directly in an index.
All mutual fund investing involves risk, including possible loss of principal. The Fund is subject to the risks of the fixed-income securities held in its portfolio such as credit, prepayment and interest rate risk. As interest rates rise, the value of bond prices will decline and an investor may lose money. The Fund is non-diversified, which means that a large portion of the Fund’s assets may be invested in one or few issuers or sectors. The Fund could fluctuate in value more than a diversified fund.
1
PEMBERWICK FUND
Fund Expense Disclosure
October 31, 2015
(Unaudited)
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs and (2) ongoing costs, including management fees, and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
This example is based on an investment of $1,000 invested at the beginning of the six-month period from May 1, 2015, through October 31, 2015 and held for the entire period.
Actual Expenses
The first line of the accompanying table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not your Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare these 5% hypothetical examples with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that the expenses shown in the accompanying table are meant to highlight your ongoing costs only and do not reflect any transactional costs. Therefore, the second line of the accompanying table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
2
PEMBERWICK FUND
Fund Expense Disclosure (Concluded)
October 31, 2015
(Unaudited)
Pemberwick Fund | |||||||||||||||
Beginning Account Value May 1, 2015 | Ending Account Value October 31, 2015 | Expenses Paid During Period* | |||||||||||||
Actual | $ | 1,000.00 | $ | 1,002.60 | $ | 1.96 | |||||||||
Hypothetical (5% return before expenses) | 1,000.00 | 1,023.18 | 1.98 |
* | Expenses are equal to an annualized expense ratio for the six-month period ended October 31, 2015 of 0.39% for the Fund, multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year (184) then divided by 366 days. The Fund’s ending account values on the first line in each table are based on the actual six month total return for the Fund of 0.26%. |
3
PEMBERWICK FUND
Portfolio Holdings Summary Table
October 31, 2015
(Unaudited)
The following table presents a summary by security type of the portfolio holdings of the Fund:
% of Net Assets | Value | |||||||
SECURITY TYPE: | ||||||||
Corporate Bonds and Notes | 64.9 | % | $ | 106,376,921 | ||||
U.S. Treasury Obligations | 26.5 | 43,395,674 | ||||||
U.S. Government Agency Obligations | 3.5 | 5,790,688 | ||||||
Collateralized Mortgage Obligations | 1.5 | 2,448,658 | ||||||
Other Assets In Excess of Liabilities | 3.6 | 5,842,927 | ||||||
|
|
|
| |||||
NET ASSETS | 100.0 | % | $ | 163,854,868 | ||||
|
|
|
|
Portfolio holdings are subject to change at any time.
The accompanying notes are an integral part of the financial statements.
4
PEMBERWICK FUND
Portfolio of Investments
October 31, 2015
(Unaudited)
Par Value($) | Value($) | |||||||
CORPORATE BONDS AND NOTES — 64.9% |
| |||||||
Basic Materials — 0.0% |
| |||||||
Praxair, Inc. | 15,000 | 15,821 | ||||||
Praxair, Inc. | 15,000 | 14,912 | ||||||
Praxair, Inc. | 30,000 | 29,681 | ||||||
|
| |||||||
60,414 | ||||||||
|
| |||||||
Communications — 2.6% |
| |||||||
AT&T, Inc. | 15,000 | 14,979 | ||||||
AT&T, Inc. | 2,000,000 | 2,003,178 | ||||||
Cisco Systems, Inc. | 50,000 | 50,260 | ||||||
Cisco Systems, Inc. | 25,000 | 27,522 | ||||||
Cisco Systems, Inc. | 30,000 | 30,439 | ||||||
eBay, Inc. | 50,000 | 49,711 | ||||||
Verizon Communications, Inc. | 2,000,000 | 1,993,750 | ||||||
Walt Disney Co. (The) | 60,000 | 60,011 | ||||||
Walt Disney Co. (The) | 17,000 | 16,996 | ||||||
Walt Disney Co. (The) | 30,000 | 32,941 | ||||||
|
| |||||||
4,279,787 | ||||||||
|
| |||||||
Consumer, Cyclical — 2.6% |
| |||||||
Daimler Finance North America, LLC | 2,000,000 | 2,022,644 |
Par Value($) | Value($) | |||||||
CORPORATE BONDS AND NOTES — (Continued) |
| |||||||
Consumer, Cyclical — (Continued) |
| |||||||
Home Depot, Inc. (The) | 30,000 | 30,484 | ||||||
McDonald’s Corp. | 25,000 | 26,375 | ||||||
McDonald’s Corp. | 10,000 | 10,858 | ||||||
Toyota Motor Credit Corp. | 30,000 | 30,084 | ||||||
Toyota Motor Credit Corp. | 68,000 | 68,769 | ||||||
VF Corp. | 35,000 | 38,153 | ||||||
Volkswagen International Finance NV | 2,000,000 | 1,943,536 | ||||||
Wal-Mart Stores, Inc. | 100,000 | 101,075 | ||||||
Wal-Mart Stores, Inc. | 30,000 | 30,133 | ||||||
|
| |||||||
4,302,111 | ||||||||
|
| |||||||
Consumer, Non-cyclical — 2.2% |
| |||||||
Amgen, Inc. | 1,000,000 | 998,685 | ||||||
Bottling Group, LLC | 80,000 | 88,500 | ||||||
Coca-Cola Co. (The) | 35,000 | 35,014 | ||||||
Coca-Cola Co. (The) | 30,000 | 30,324 | ||||||
Danaher Corp. | 14,000 | 14,059 | ||||||
Diageo Capital PLC | 2,000,000 | 2,167,776 |
The accompanying notes are an integral part of the financial statements.
5
PEMBERWICK FUND
Portfolio of Investments (Continued)
October 31, 2015
(Unaudited)
Par Value($) | Value($) | |||||||
CORPORATE BONDS AND NOTES — (Continued) |
| |||||||
Consumer, Non-cyclical — (Continued) |
| |||||||
GlaxoSmithKline Capital PLC | 15,000 | 15,115 | ||||||
GlaxoSmithKline Capital, Inc. | 15,000 | 16,586 | ||||||
Johnson & Johnson | 54,000 | 54,043 | ||||||
PepsiCo, Inc. | 30,000 | 29,950 | ||||||
Procter & Gamble Co. (The) | 100,000 | 100,188 | ||||||
|
| |||||||
3,550,240 | ||||||||
|
| |||||||
Energy — 2.3% | ||||||||
BP Capital Markets PLC | 3,150,000 | 3,181,311 | ||||||
Chevron Corp. | 35,000 | 35,136 | ||||||
Chevron Corp. | 15,000 | 15,012 | ||||||
Chevron Corp. | 50,000 | 50,126 | ||||||
Chevron Corp. | 20,000 | 22,285 | ||||||
ConocoPhillips | 25,000 | 28,220 | ||||||
ConocoPhillips | 20,000 | 22,944 | ||||||
ConocoPhillips Co. | 30,000 | 29,987 | ||||||
EOG Resources, Inc. | 15,000 | 16,781 | ||||||
Exxon Mobil Corp. | 100,000 | 100,866 |
Par Value($) | Value($) | |||||||
CORPORATE BONDS AND NOTES — (Continued) |
| |||||||
Energy — (Continued) |
| |||||||
Halliburton Co. | 70,000 | 70,033 | ||||||
Occidental Petroleum Corp. | 60,000 | 59,899 | ||||||
Statoil ASA | 30,000 | 29,888 | ||||||
Statoil ASA | 10,000 | 10,068 | ||||||
Statoil ASA | 15,000 | 16,645 | ||||||
|
| |||||||
3,689,201 | ||||||||
|
| |||||||
Financial — 47.4% | ||||||||
American Express Bank FSB | 950,000 | 1,024,963 | ||||||
American Express Credit Corp. | 100,000 | 101,823 | ||||||
American Express Credit Corp. | 2,025,000 | 2,018,878 | ||||||
American Express Credit Corp. | 95,000 | 95,436 | ||||||
Bank of America Corp. | 10,000 | 10,110 | ||||||
Bank of America Corp. | 2,000,000 | 2,081,724 | ||||||
Bank of America Corp. | 1,815,000 | 1,893,648 | ||||||
Bank of America Corp. | 50,000 | 54,187 | ||||||
Bank Of America Corp. | 230,000 | 247,285 |
The accompanying notes are an integral part of the financial statements.
6
PEMBERWICK FUND
Portfolio of Investments (Continued)
October 31, 2015
(Unaudited)
Par Value($) | Value($) | |||||||
CORPORATE BONDS AND NOTES — (Continued) |
| |||||||
Financial — (Continued) |
| |||||||
Bank of America Corp. | 1,625,000 | 1,756,682 | ||||||
Bank of America Corp. | 60,000 | 60,747 | ||||||
Bank of New York Mellon Corp. (The) | 25,000 | 25,008 | ||||||
Bank of New York Mellon Corp. (The) | 29,500 | 29,435 | ||||||
Bank Of New York Mellon Corp. (The) | 29,500 | 29,801 | ||||||
Bank of New York Mellon Corp. (The) | 30,000 | 32,734 | ||||||
Bank of Nova Scotia (The) | 2,000,000 | 1,995,112 | ||||||
BB&T Corp. | 120,000 | 120,588 | ||||||
Berkshire Hathaway Finance Corp. | 17,000 | 17,044 | ||||||
Berkshire Hathaway Finance Corp. | 8,000 | 8,001 | ||||||
Berkshire Hathaway Finance Corp. | 60,000 | 65,946 | ||||||
Berkshire Hathaway, Inc. | 50,000 | 50,415 | ||||||
BlackRock, Inc. | 25,000 | 27,898 | ||||||
Boston Properties LP | 15,000 | 15,679 |
Par Value($) | Value($) | |||||||
CORPORATE BONDS AND NOTES — (Continued) |
| |||||||
Financial — (Continued) |
| |||||||
Capital One Bank USA NA | 650,000 | 649,947 | ||||||
Capital One Bank USA NA | 6,592,000 | 6,558,269 | ||||||
Capital One NA | 1,000,000 | 985,105 | ||||||
Capital One NA | 500,000 | 504,585 | ||||||
Caterpillar Financial Services Corp. | 20,000 | 20,179 | ||||||
Caterpillar Financial Services Corp. | 60,000 | 60,478 | ||||||
Caterpillar Financial Services Corp. | 20,000 | 20,002 | ||||||
Caterpillar Financial Services Corp. | 15,000 | 15,053 | ||||||
Caterpillar Financial Services Corp. | 20,000 | 20,127 | ||||||
Charles Schwab Corp. (The) | 55,000 | 55,024 | ||||||
Charles Schwab Corp. (The) | 40,000 | 40,451 | ||||||
Chubb Corp. (The) | 35,000 | 38,629 | ||||||
Citigroup, Inc. | 8,000,000 | 7,969,448 | ||||||
Credit Suisse | 3,900,000 | 3,896,272 | ||||||
Credit Suisse | 1,000,000 | 1,003,026 |
The accompanying notes are an integral part of the financial statements.
7
PEMBERWICK FUND
Portfolio of Investments (Continued)
October 31, 2015
(Unaudited)
Par Value($) | Value($) | |||||||
CORPORATE BONDS AND NOTES — (Continued) |
| |||||||
Financial — (Continued) |
| |||||||
Credit Suisse | 1,000,000 | 996,102 | ||||||
Daimler Finance North America, LLC | 1,000,000 | 993,234 | ||||||
Deutsche Bank AG | 709,000 | 762,079 | ||||||
General Electric Capital Corp. | 277,000 | 277,080 | ||||||
General Electric Capital Corp. | 110,000 | 112,496 | ||||||
General Electric Capital Corp. | 75,000 | 79,190 | ||||||
General Electric Capital Corp. | 80,000 | 87,937 | ||||||
General Electric Capital Corp. | 20,000 | 22,730 | ||||||
General Electric Capital Corp. | 1,000,000 | 1,176,250 | ||||||
Goldman Sachs Group, Inc. (The) | 20,000 | 20,196 | ||||||
Goldman Sachs Group, Inc. (The) | 70,000 | 70,545 | ||||||
Goldman Sachs Group, Inc. (The) | 1,000,000 | 1,000,113 |
Par Value($) | Value($) | |||||||
CORPORATE BONDS AND NOTES — (Continued) |
| |||||||
Financial — (Continued) |
| |||||||
Goldman Sachs Group, Inc. (The) | 1,000,000 | 1,006,944 | ||||||
Goldman Sachs Group, Inc. (The) | 950,000 | 1,031,354 | ||||||
Goldman Sachs Group, Inc. (The) | 30,000 | 33,036 | ||||||
Goldman Sachs Group, Inc. (The) | 4,240,000 | 4,264,439 | ||||||
Goldman Sachs Group, Inc. (The) | 130,000 | 151,580 | ||||||
HSBC Finance Corp. | 2,000,000 | 1,996,786 | ||||||
HSBC USA, Inc. | 2,000,000 | 1,995,326 | ||||||
John Deere Capital Corp. | 50,000 | 50,282 | ||||||
John Deere Capital Corp. | 40,000 | 40,241 | ||||||
John Deere Capital Corp. | 18,000 | 18,080 | ||||||
John Deere Capital Corp. | 20,000 | 20,098 | ||||||
Morgan Stanley | 942,000 | 944,574 | ||||||
Morgan Stanley | 4,000,000 | 4,334,672 | ||||||
Morgan Stanley | 2,725,000 | 2,762,946 | ||||||
National City Bank | 4,000,000 | 3,989,444 |
The accompanying notes are an integral part of the financial statements.
8
PEMBERWICK FUND
Portfolio of Investments (Continued)
October 31, 2015
(Unaudited)
Par Value($) | Value($) | |||||||
CORPORATE BONDS AND NOTES — (Continued) |
| |||||||
Financial — (Continued) |
| |||||||
National City Bank | 2,075,000 | 2,064,967 | ||||||
PACCAR Financial Corp. | 30,000 | 30,219 | ||||||
PACCAR Financial Corp. | 30,000 | 30,030 | ||||||
PNC Funding Corp. | 5,000,000 | 5,007,290 | ||||||
State Street Corp. | 10,000 | 10,070 | ||||||
State Street Corp. | 15,000 | 15,849 | ||||||
State Street Corp. | 92,000 | 91,802 | ||||||
Toyota Motor Credit Corp. | 40,000 | 40,339 | ||||||
Travelers Cos, Inc. (The) | 40,000 | 41,411 | ||||||
UBS AG | 2,000,000 | 1,996,554 | ||||||
UBS AG | 2,000,000 | 1,998,650 | ||||||
US Bancorp | 15,000 | 15,212 | ||||||
US Bancorp | 75,000 | 75,797 | ||||||
US Bank NA | 2,000,000 | 2,000,576 | ||||||
Wachovia Corp. | 100,000 | 104,486 | ||||||
Wells Fargo & Co. | 2,000,000 | 2,037,774 | ||||||
Wells Fargo & Co. | 40,000 | 40,039 |
Par Value($) | Value($) | |||||||
CORPORATE BONDS AND NOTES — (Continued) |
| |||||||
Financial — (Continued) |
| |||||||
Wells Fargo & Co. | 200,000 | 200,489 | ||||||
Wells Fargo & Co. | 50,000 | 54,289 | ||||||
|
| |||||||
77,693,336 | ||||||||
|
| |||||||
Health Care — 3.4% | ||||||||
AbbVie, Inc. | 3,000,000 | 3,029,949 | ||||||
AbbVie, Inc. | 2,000,000 | 2,002,836 | ||||||
Merck & Co., Inc. | 488,000 | 488,305 | ||||||
Merck & Co., Inc. | 14,000 | 14,006 | ||||||
Pfizer, Inc. | 50,000 | 50,036 | ||||||
|
| |||||||
5,585,132 | ||||||||
|
| |||||||
Industrial — 2.0% | ||||||||
Boeing Co. (The) | 50,000 | 49,500 | ||||||
Emerson Electric Co. | 45,000 | 49,861 | ||||||
General Dynamics Corp. | 2,030,000 | 2,026,983 | ||||||
Honeywell International, Inc. | 25,000 | 26,464 | ||||||
Honeywell International, Inc. | 50,000 | 54,594 | ||||||
Illinois Tool Works, Inc. | 31,000 | 30,998 | ||||||
Illinois Tool Works, Inc. | 50,000 | 50,419 | ||||||
United Parcel Service, Inc. | 30,000 | 30,162 |
The accompanying notes are an integral part of the financial statements.
9
PEMBERWICK FUND
Portfolio of Investments (Continued)
October 31, 2015
(Unaudited)
Par Value($) | Value($) | |||||||
CORPORATE BONDS AND NOTES — (Continued) |
| |||||||
Industrial — (Continued) |
| |||||||
United Technologies Corp. 1.78%, 05/04/2018 (b) | 1,000,000 | 997,082 | ||||||
|
| |||||||
3,316,063 | ||||||||
|
| |||||||
Technology — 2.2% | ||||||||
Apple, Inc. | 49,000 | 49,023 | ||||||
Apple, Inc. | 18,000 | 18,045 | ||||||
Apple, Inc. | 41,000 | 40,898 | ||||||
Hewlett-Packard Co. | 1,500,000 | 1,502,324 | ||||||
Hewlett-Packard Co. | 1,500,000 | 1,527,063 | ||||||
Intel Corp. | 47,000 | 47,596 | ||||||
Intel Corp. | 50,000 | 50,233 | ||||||
International Business Machines Corp. | 120,000 | 120,003 | ||||||
Microsoft Corp. | 60,000 | 59,753 | ||||||
Microsoft Corp. | 34,000 | 34,041 | ||||||
Microsoft Corp. | 30,000 | 32,692 | ||||||
National Semiconductor Corp. | 25,000 | 27,130 | ||||||
Oracle Corp. | 60,000 | 60,581 | ||||||
Oracle Corp. | 15,000 | 15,309 |
Par Value($) | Value($) | |||||||
CORPORATE BONDS AND NOTES — (Continued) |
| |||||||
Technology — (Continued) |
| |||||||
Oracle Corp. | 30,000 | 30,410 | ||||||
|
| |||||||
3,615,101 | ||||||||
|
| |||||||
Utilities — 0.2% | ||||||||
Duke Energy Carolinas, LLC | 35,000 | 37,914 | ||||||
Duke Energy Florida, Inc. | 25,000 | 27,510 | ||||||
Georgia Power Co. | 25,000 | 25,118 | ||||||
PacifiCorp | 25,000 | 27,586 | ||||||
PECO Energy Co. | 28,000 | 28,101 | ||||||
Public Service Electric & Gas Co. | 30,000 | 30,110 | ||||||
Southern California Edison Co. | 7,000 | 7,003 | ||||||
Southern California Edison Co. | 45,000 | 49,633 | ||||||
Wisconsin Electric Power Co. | 25,000 | 25,043 | ||||||
Wisconsin Power & Light Co. | 25,000 | 27,518 | ||||||
|
| |||||||
285,536 | ||||||||
|
| |||||||
TOTAL CORPORATE BONDS AND NOTES | 106,376,921 | |||||||
|
|
The accompanying notes are an integral part of the financial statements.
10
PEMBERWICK FUND
Portfolio of Investments (Continued)
October 31, 2015
(Unaudited)
Par Value($) | Value($) | |||||||
COLLATERALIZED MORTGAGE OBLIGATIONS — 1.5% |
| |||||||
Federal Home Loan Mortgage Corporation REMICS — 0.6% |
| |||||||
Series 2542, Class ES | 12,182 | 12,517 | ||||||
Series 2564, Class HJ | 8,565 | 8,815 | ||||||
Series 2617, Class TK | 31,913 | 32,936 | ||||||
Series 2617, Class GR | 17,858 | 18,432 | ||||||
Series 2611, Class UH | 16,081 | 16,621 | ||||||
Series 2627, Class MC | 29,431 | 30,337 | ||||||
Series 2649, Class KA | 22,684 | 23,475 | ||||||
Series 2693, Class PE | 27,719 | 28,660 | ||||||
Series 2746, Class EG | 30,630 | 31,675 | ||||||
Series 2780, Class JG | 888 | 908 | ||||||
Series 2814, Class GB | 5,046 | 5,300 | ||||||
Series 2989, Class TG | 50,471 | 54,446 | ||||||
Series 3002, Class YD | 20,002 | 21,554 | ||||||
Series 2526, Class FI | 95,066 | 97,472 | ||||||
Series 2655, Class QA | 121 | 121 | ||||||
Series 2827, Class TE | 21,020 | 21,275 |
Par Value($) | Value($) | |||||||
COLLATERALIZED MORTGAGE OBLIGATIONS — (Continued) |
| |||||||
Federal Home Loan Mortgage Corporation REMICS — (Continued) |
| |||||||
Series 2881, Class AE | 21,261 | 22,781 | ||||||
Series 2933, Class HD | 31,748 | 35,119 | ||||||
Series 4305, Class KA | 125,092 | 130,041 | ||||||
Series 3843, Class GH | 84,072 | 88,588 | ||||||
Series 3786, Class NA | 130,650 | 141,246 | ||||||
Series 4305, Class A | 140,802 | 148,489 | ||||||
|
| |||||||
970,808 | ||||||||
|
| |||||||
Federal National Mortgage Association REMICS — 0.7% |
| |||||||
Series 2003-92, Class PE | 25,637 | 26,531 | ||||||
Series 2003-80, Class YE | 8,876 | 9,034 | ||||||
Series 2005-40, Class YG | 44,890 | 48,411 | ||||||
Series 2011-122, Class A | 118,532 | 121,724 | ||||||
Series 2007-27, Class MQ | 12,266 | 13,674 | ||||||
Series 2005-12, Class JE | 5,160 | 5,173 | ||||||
Series 2005-16, Class PE | 8,879 | 9,051 | ||||||
Series 2005-48, Class AR | 33,084 | 35,313 |
The accompanying notes are an integral part of the financial statements.
11
PEMBERWICK FUND
Portfolio of Investments (Continued)
October 31, 2015
(Unaudited)
Par Value($) | Value($) | |||||||
COLLATERALIZED MORTGAGE OBLIGATIONS — (Continued) |
| |||||||
Federal National Mortgage Association REMICS — (Continued) |
| |||||||
Series 2005-62, Class CQ | 15,153 | 16,021 | ||||||
Series 2005-64, Class PL | 73,354 | 82,499 | ||||||
Series 2005-68, Class PG | 49,128 | 55,195 | ||||||
Series 2010-64, Class EH | 8,646 | 8,725 | ||||||
Series 2005-83, Class LA | 28,520 | 31,824 | ||||||
Series 2014-23, Class PA | 151,123 | 157,987 | ||||||
Series 2007-39, Class NA | 10,453 | 10,772 | ||||||
Series 2013-83, Class CA | 127,952 | 135,426 | ||||||
Series 2009-47, Class PA | 25,053 | 26,540 | ||||||
Series 2011-113, Class NE | 88,981 | 92,115 | ||||||
Series 2006-57, Class AD | 170,446 | 184,857 | ||||||
|
| |||||||
1,070,872 | ||||||||
|
| |||||||
Government National Mortgage Association — 0.2% |
| |||||||
Series 2013-88, Class WA | 99,353 | 107,765 | ||||||
Series 2002-22, Class GF | 51,250 | 60,073 | ||||||
Series 2002-51, Class D | 62,034 | 71,315 | ||||||
Series 2008-50, Class NA | 19,948 | 21,119 |
Par Value($) | Value($) | |||||||
COLLATERALIZED MORTGAGE OBLIGATIONS — (Continued) |
| |||||||
Government National Mortgage Association — (Continued) |
| |||||||
Series 2007-11, Class PE | 36,261 | 40,754 | ||||||
Series 2013-113, Class UB | 103,385 | 105,952 | ||||||
|
| |||||||
406,978 | ||||||||
|
| |||||||
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (Cost $2,417,096) | 2,448,658 | |||||||
|
| |||||||
U.S. GOVERNMENT AGENCY OBLIGATIONS — 3.5% |
| |||||||
Federal Home Loan Bank — 0.5% |
| |||||||
3.13%, 03/11/2016 | 165,000 | 166,715 | ||||||
0.50%, 09/28/2016 | 305,000 | 305,224 | ||||||
4.75%, 12/16/2016 | 170,000 | 178,079 | ||||||
0.75%, 08/28/2017 | 150,000 | 150,007 | ||||||
|
| |||||||
800,025 | ||||||||
|
| |||||||
Federal Home Loan Mortgage Corporation — 1.2% |
| |||||||
5.25%, 04/18/2016 | 400,000 | 408,967 | ||||||
2.50%, 05/27/2016 | 580,000 | 587,054 | ||||||
1.00%, 03/08/2017 | 140,000 | 140,787 | ||||||
0.75%, 07/14/2017 | 595,000 | 595,185 | ||||||
5.50%, 04/01/2021 | 38,780 | 41,886 | ||||||
5.50%, 11/01/2021 | 18,720 | 20,245 | ||||||
5.50%, 04/01/2023 | 32,712 | 35,830 | ||||||
4.00%, 02/01/2026 | 78,765 | 84,002 |
The accompanying notes are an integral part of the financial statements.
12
PEMBERWICK FUND
Portfolio of Investments (Continued)
October 31, 2015
(Unaudited)
Par Value($) | Value($) | |||||||
U.S. GOVERNMENT AGENCY OBLIGATIONS — (Continued) |
| |||||||
Federal Home Loan Mortgage Corporation — (Continued) |
| |||||||
4.00%, 06/01/2026 | 28,395 | 30,288 | ||||||
4.50%, 06/01/2029 | 24,803 | 26,863 | ||||||
4.50%, 12/01/2029 | 47,299 | 51,232 | ||||||
4.50%, 04/01/2030 | 25,657 | 27,942 | ||||||
|
| |||||||
2,050,281 | ||||||||
|
| |||||||
Federal National Mortgage Association — 1.8% |
| |||||||
2.25%, 03/15/2016 | 500,000 | 503,744 | ||||||
5.00%, 03/15/2016 | 35,000 | 35,611 | ||||||
5.25%, 09/15/2016 | 295,000 | 307,242 | ||||||
5.00%, 02/13/2017 | 200,000 | 211,252 | ||||||
1.13%, 04/27/2017 | 205,000 | 206,388 | ||||||
5.38%, 06/12/2017 | 550,000 | 590,854 | ||||||
1.13%, 07/20/2018 | 730,000 | 732,470 | ||||||
6.00%, 09/01/2019 | 4,985 | 5,164 | ||||||
5.50%, 06/01/2020 | 8,839 | 9,221 | ||||||
5.00%, 05/01/2023 | 20,378 | 22,443 | ||||||
5.50%, 01/01/2024 | 18,883 | 20,529 | ||||||
5.00%, 12/01/2025 | 41,367 | 45,560 | ||||||
5.50%, 05/01/2028 | 33,032 | 36,900 | ||||||
4.00%, 08/01/2029 | 40,055 | 43,010 |
Par Value($) | Value($) | |||||||
U.S. GOVERNMENT AGENCY OBLIGATIONS — (Continued) |
| |||||||
Federal National Mortgage Association — (Continued) |
| |||||||
5.50%, 04/01/2037 | 45,426 | 51,200 | ||||||
7.00%, 04/01/2037 | 12,603 | 14,918 | ||||||
5.00%, 10/01/2039 | 92,830 | 103,876 | ||||||
|
| |||||||
2,940,382 | ||||||||
|
| |||||||
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS (Cost $5,751,186) | 5,790,688 | |||||||
|
| |||||||
U.S. TREASURY OBLIGATIONS — 26.5% |
| |||||||
U.S. Treasury Notes — 26.5% |
| |||||||
0.38%, 11/15/2015 | 700,000 | 700,078 | ||||||
0.38%, 03/31/2016 | 500,000 | 500,348 | ||||||
0.50%, 07/31/2017 | 490,000 | 488,583 | ||||||
0.63%, 05/31/2017 | 890,000 | 889,850 | ||||||
0.63%, 08/31/2017 | 1,105,000 | 1,103,389 | ||||||
0.63%, 09/30/2017 | 720,000 | 718,488 | ||||||
0.63%, 11/30/2017 | 1,100,000 | 1,096,183 | ||||||
0.63%, 04/30/2018 | 1,840,000 | 1,826,128 | ||||||
0.75%, 06/30/2017 | 500,000 | 500,788 | ||||||
0.75%, 10/31/2017 | 1,405,000 | 1,404,726 | ||||||
0.75%, 12/31/2017 | 1,520,000 | 1,517,725 | ||||||
0.75%, 02/28/2018 | 450,000 | 448,679 | ||||||
0.75%, 03/31/2018 | 525,000 | 523,168 | ||||||
0.88%, 11/30/2016 | 300,000 | 301,305 | ||||||
0.88%, 12/31/2016 | 410,000 | 411,823 | ||||||
0.88%, 01/31/2017 | 2,130,000 | 2,139,777 |
The accompanying notes are an integral part of the financial statements.
13
PEMBERWICK FUND
Portfolio of Investments (Concluded)
October 31, 2015
(Unaudited)
Par Value($) | Value($) | |||||||
U.S. TREASURY OBLIGATIONS — (Continued) |
| |||||||
U.S. Treasury Notes — (Continued) |
| |||||||
0.88%, 02/28/2017 | 400,000 | 401,760 | ||||||
0.88%, 04/30/2017 | 675,000 | 677,619 | ||||||
0.88%, 01/31/2018 | 920,000 | 920,587 | ||||||
1.00%, 08/31/2016 | 720,000 | 723,464 | ||||||
1.00%, 09/30/2016 | 790,000 | 794,073 | ||||||
1.00%, 10/31/2016 | 1,220,000 | 1,226,656 | ||||||
1.00%, 03/31/2017 | 1,170,000 | 1,176,779 | ||||||
1.00%, 05/31/2018 | 1,115,000 | 1,116,321 | ||||||
1.00%, 06/30/2019 | 575,000 | 569,718 | ||||||
1.00%, 08/31/2019 | 240,000 | 237,195 | ||||||
1.00%, 09/30/2019 | 440,000 | 434,365 | ||||||
1.13%, 03/31/2020 | 300,000 | 295,852 | ||||||
1.25%, 10/31/2018 | 1,645,000 | 1,654,692 | ||||||
1.25%, 11/30/2018 | 700,000 | 703,669 | ||||||
1.25%, 01/31/2019 | 1,585,000 | 1,590,511 | ||||||
1.38%, 11/30/2015 | 320,000 | 320,329 | ||||||
1.38%, 06/30/2018 | 505,000 | 510,389 | ||||||
1.38%, 07/31/2018 | 800,000 | 808,562 | ||||||
1.38%, 12/31/2018 | 870,000 | 877,091 | ||||||
1.38%, 02/28/2019 | 1,160,000 | 1,167,952 | ||||||
1.38%, 01/31/2020 | 200,000 | 199,599 | ||||||
1.50%, 06/30/2016 | 1,390,000 | 1,400,656 | ||||||
1.50%, 07/31/2016 | 1,050,000 | 1,058,716 | ||||||
1.50%, 08/31/2018 | 430,000 | 435,940 | ||||||
1.50%, 12/31/2018 | 460,000 | 465,552 | ||||||
1.50%, 02/28/2019 | 175,000 | 176,917 | ||||||
1.50%, 05/31/2019 | 820,000 | 827,298 | ||||||
1.63%, 03/31/2019 | 540,000 | 547,787 | ||||||
1.75%, 05/31/2016 | 1,165,000 | 1,174,587 | ||||||
1.88%, 09/30/2017 | 280,000 | 286,059 |
Par Value($) | Value($) | |||||||
U.S. TREASURY OBLIGATIONS — (Continued) |
| |||||||
U.S. Treasury Notes — (Continued) |
| |||||||
1.88%, 10/31/2017 | 455,000 | 465,066 | ||||||
2.00%, 01/31/2016 | 250,000 | 251,159 | ||||||
2.00%, 04/30/2016 | 1,635,000 | 1,648,848 | ||||||
2.13%, 12/31/2015 | 400,000 | 401,305 | ||||||
2.13%, 02/29/2016 | 515,000 | 518,366 | ||||||
2.25%, 07/31/2018 | 180,000 | 186,211 | ||||||
2.38%, 03/31/2016 | 770,000 | 776,903 | ||||||
2.38%, 07/31/2017 | 300,000 | 308,793 | ||||||
2.63%, 04/30/2016 | 250,000 | 252,920 | ||||||
3.00%, 09/30/2016 | 380,000 | 388,844 | ||||||
3.13%, 10/31/2016 | 330,000 | 338,721 | ||||||
3.13%, 01/31/2017 | 90,000 | 92,920 | ||||||
3.13%, 04/30/2017 | 200,000 | 207,500 | ||||||
3.25%, 12/31/2016 | 200,000 | 206,385 | ||||||
TOTAL U.S. TREASURY OBLIGATIONS (Cost $43,250,956) | 43,395,674 | |||||||
|
| |||||||
TOTAL INVESTMENTS - 96.4% |
| 158,011,941 | ||||||
OTHER ASSETS IN EXCESS OF LIABILITIES - 3.6% | 5,842,927 | |||||||
|
| |||||||
NET ASSETS - 100.0% | $ | 163,854,868 | ||||||
|
|
(a) | Variable or Floating Rate Security. Rate shown is as of October 31, 2015. |
(b) | Multi-Step Coupon. Rate disclosed is as of October 31, 2015. |
LLC | Limited Liability Company | |
PLC | Public Limited Company | |
REMICS | Real Estate Mortgage Investment Conduit |
The accompanying notes are an integral part of the financial statements.
14
PEMBERWICK FUND
Statement of Assets and Liabilities
October 31, 2015
(Unaudited)
Assets | ||||
Investments, at value (Cost $157,515,100) | $ | 158,011,941 | ||
Cash | 6,311,366 | |||
Receivable for investments sold | 100,689 | |||
Receivable for capital shares sold | 3,000,000 | |||
Dividends and interest receivable | 744,736 | |||
Prepaid expenses and other assets | 15,067 | |||
|
| |||
Total assets | 168,183,799 | |||
|
| |||
Liabilities | ||||
Payable for investments purchased | 4,237,835 | |||
Payable for administration and accounting fees | 27,121 | |||
Payable to Investment Adviser | 20,438 | |||
Payable for transfer agent fees | 11,904 | |||
Payable for custodian fees | 5,723 | |||
Accrued expenses | 25,910 | |||
|
| |||
Total liabilities | 4,328,931 | |||
|
| |||
Net Assets | $ | 163,854,868 | ||
|
| |||
Net Assets Consisted of: | ||||
Capital stock, $0.01 par value | $ | 163,249 | ||
Paid-in capital | 163,939,260 | |||
Accumulated net investment loss | (28,534 | ) | ||
Accumulated net realized loss from investments | (715,948 | ) | ||
Net unrealized appreciation on investments | 496,841 | |||
|
| |||
Net Assets | $ | 163,854,868 | ||
|
| |||
Shares Outstanding | 16,324,932 | |||
Net asset value, offering and redemption price per share ($163,854,868 / 16,324,932 shares) | $ 10.04 |
The accompanying notes are an integral part of the financial statements.
15
PEMBERWICK FUND
Statement of Operations
For the Six Months Ended October 31, 2015
(Unaudited)
Investment Income | ||||
Interest | $ | 1,041,320 | ||
|
| |||
Total investment income | 1,041,320 | |||
|
| |||
Expenses | ||||
Advisory fees (Note 2) | 412,840 | |||
Administration and accounting fees (Note 2) | 102,478 | |||
Transfer agent fees (Note 2) | 27,300 | |||
Trustees’ and officers’ fees (Note 2) | 15,895 | |||
Audit fees | 15,750 | |||
Custodian fees (Note 2) | 12,597 | |||
Printing and shareholder reporting fees | 11,331 | |||
Legal fees | 9,689 | |||
Registration and filing fees | 490 | |||
Other expenses | 6,106 | |||
|
| |||
Total expenses before waivers | 614,476 | |||
|
| |||
Less: waivers (Note 2) | (289,028 | ) | ||
|
| |||
Net expenses after waivers | 325,448 | |||
|
| |||
Net investment income | 715,872 | |||
|
| |||
Net realized and unrealized gain/(loss) from investments: | ||||
Net realized gain from investments | 278,473 | |||
Net change in unrealized appreciation/(depreciation) on investments | (709,231 | ) | ||
|
| |||
Net realized and unrealized loss on investments | (430,758 | ) | ||
|
| |||
Net increase in net assets resulting from operations | $ | 285,114 | ||
|
|
The accompanying notes are an integral part of the financial statements.
16
PEMBERWICK FUND
Statements of Changes in Net Assets
For the Six Months Ended October 31, 2015 (Unaudited) | For the Year Ended April 30, 2015 | |||||||||
Increase/(Decrease) in net assets from operations: | ||||||||||
Net investment income | $ | 715,872 | $ | 1,567,887 | ||||||
Net realized gain from investments | 278,473 | 100,557 | ||||||||
Net change in unrealized appreciation/(depreciation) on investments | (709,231 | ) | (346,071 | ) | ||||||
|
|
|
| |||||||
Net increase in net assets resulting from operations | 285,114 | 1,322,373 | ||||||||
|
|
|
| |||||||
Less Dividends and Distributions to Shareholders from: | ||||||||||
Net investment income | (743,833 | ) | (1,629,122 | ) | ||||||
|
|
|
| |||||||
Net decrease in net assets from dividends and distributions to shareholders | (743,833 | ) | (1,629,122 | ) | ||||||
|
|
|
| |||||||
Increase in Net Assets Derived from Capital Share Transactions (Note 4) | (5,666,103 | ) | 2,398,597 | |||||||
|
|
|
| |||||||
Total increase/(decrease) in net assets | (6,124,822 | ) | 2,091,848 | |||||||
|
|
|
| |||||||
Net assets | ||||||||||
Beginning of period | 169,979,690 | 167,887,842 | ||||||||
|
|
|
| |||||||
End of period | $ | 163,854,868 | $ | 169,979,690 | ||||||
|
|
|
| |||||||
Accumulated net investment loss, end of period | $ | (28,534 | ) | $ | (573 | ) | ||||
|
|
|
|
The accompanying notes are an integral part of the financial statements.
17
PEMBERWICK FUND
Financial Highlights
Contained below is per share operating performance data, total investment return, ratios to average net assets and other supplemental data for the respective period. 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). This information has been derived from information provided in the financial statements and should be read in conjunction with the financial statements and the notes thereto.
For the Six Months Ended October 31, 2015 (Unaudited) | For the Year Ended April 30, 2015 | For the Year Ended April 30, 2014 | For the Year Ended April 30, 2013 | For the Year Ended April 30, 2012 | For the Year Ended April 30, 2011 | ||||||||||||||||||||||||||||
Per Share Operating Performance | |||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $ | 10.06 | $ | 10.08 | $ | 10.12 | $ | 10.03 | $ | 10.16 | $ | 10.00 | |||||||||||||||||||||
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|
|
| ||||||||||||||||||||||
Net investment income(1) | 0.04 | 0.09 | 0.10 | 0.11 | 0.13 | 0.13 | |||||||||||||||||||||||||||
Net realized and unrealized gain/(loss) on investments | (0.01 | ) | (0.02 | ) | (0.03 | ) | 0.11 | (0.12 | )(2) | 0.17 | |||||||||||||||||||||||
|
|
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|
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|
|
|
|
| ||||||||||||||||||||||
Net increase in net assets resulting from operations | 0.03 | 0.07 | 0.07 | 0.22 | 0.01 | 0.30 | |||||||||||||||||||||||||||
|
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|
|
|
| ||||||||||||||||||||||
Dividends and distributions to shareholders from: | |||||||||||||||||||||||||||||||||
Net investment income | (0.05 | ) | (0.09 | ) | (0.11 | ) | (0.13 | ) | (0.14 | ) | (0.14 | ) | |||||||||||||||||||||
Tax return of capital | — | — | — | — | — | — | (3) | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||
Total dividends and distributions to shareholders | (0.05 | ) | (0.09 | ) | (0.11 | ) | (0.13 | ) | (0.14 | ) | (0.14 | ) | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||
Net asset value, end of period | $ | 10.04 | $ | 10.06 | $ | 10.08 | $ | 10.12 | $ | 10.03 | $ | 10.16 | |||||||||||||||||||||
|
|
|
|
|
|
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|
|
|
|
| ||||||||||||||||||||||
Total investment return(4) | 0.26 | % | 0.74 | % | 0.68 | % | 2.19 | % | 0.12 | % | 3.01 | % | |||||||||||||||||||||
Ratios/Supplemental Data | |||||||||||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $ | 163,855 | $ | 169,980 | $ | 167,888 | $ | 119,793 | $ | 119,521 | $ | 162,714 | |||||||||||||||||||||
Ratio of expenses to average net assets | 0.39 | %(5) | 0.39 | % | 0.41 | % | 0.45 | % | 0.45 | % | 0.42 | % | |||||||||||||||||||||
Ratio of expenses to average net assets without waivers and expense reimbursements(6) | 0.74 | %(5) | 0.74 | % | 0.76 | % | 0.80 | % | 0.80 | % | 0.77 | % | |||||||||||||||||||||
Ratio of net investment income to average net assets | 0.87 | %(5) | 0.91 | % | 1.00 | % | 1.10 | % | 1.07 | % | 1.31 | % | |||||||||||||||||||||
Portfolio turnover rate | 30.41 | %(7) | 35.46 | % | 35.29 | % | 27.96 | % | 23.14 | % | 22.46 | % |
(1) | The selected per share data was calculated using the average shares outstanding method for the period. |
(2) | Includes payments by affiliate which equaled $0.03 per share. |
(3) | Amount is less than $0.005 per share. |
(4) | Total investment return is calculated assuming a purchase of shares on the first day and a sale of shares on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total returns for periods less than one year are not annualized. |
(5) | Annualized. |
(6) | During the period, certain fees were waived. If such fee waivers had not occurred, the ratios would have been as indicated (See Note 2). |
(7) | Not annualized. |
The accompanying notes are an integral part of the financial statements.
18
PEMBERWICK FUND
Notes to Financial Statements
October 31, 2015
(Unaudited)
1. Organization and Significant Accounting Policies
The Pemberwick Fund (the “Fund”) is a non-diversified, open-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”), which commenced investment operations on February 1, 2010. The Fund is a separate series of FundVantage Trust (the “Trust”) which was organized as a Delaware statutory trust on August 28, 2006. The Trust is a “series trust” authorized to issue an unlimited number of separate series or classes of shares of beneficial interest. Each series is treated as a separate entity for certain matters under the 1940 Act, and for other purposes, and a shareholder of one series is not deemed to be a shareholder of any other series. The Fund offers one class of shares and is not subject to a front-end sales charge.
The Fund is an investment company and follows accounting and reporting guidance in the Financial Accounting Standards Board Accounting Standards Codification Topic 946.
Portfolio Valuation — The Fund’s net asset value (“NAV”) is calculated once daily at the close of regular trading hours on the New York Stock Exchange (“NYSE”) (typically 4:00 p.m., Eastern time) on each day the NYSE is open. Securities held by the Fund are valued at their last sale price on the NYSE on the day the security is valued. Lacking any sales on such day, the security will be valued at the mean between the last asked price and the last bid price prior to the market close. Securities listed on other exchanges (and not subject to restriction against sale by the Fund on such exchanges) will be similarly valued, using quotations on the exchange on which the security is traded most extensively. Unlisted securities that are quoted on the National Association of Securities Dealers National Market System, for which there have been sales of such securities on such day, shall be valued at the official closing price on such system on the day the security is valued. If there are no such sales on such day, the value shall be the mean between the last asked price and the last bid price prior to market close. The value of such securities quoted on the National Association of Securities Dealers Automatic Quotation System (“NASDAQ”) market system, but not listed on the National Market System, shall be value at the mean between closing asked price and the closing bid price. Unlisted securities that are not quoted on NASDAQ and for which over-the-counter market quotations are readily available will be valued at the mean between the current bid and asked prices for such securities in the over-the-counter market. Fixed income securities are valued based on market quotations, which are furnished by an independent pricing service. Fixed income securities having a remaining maturity of 60 days or less are generally valued at amortized cost, provided such amount approximates market value. Debt securities are valued on the basis of broker quotations or valuations provided by a pricing service, which utilizes information with respect to recent sales, market transactions in comparable securities, quotations from dealers, and various relationships between securities in determining value. Valuations developed through pricing techniques may materially vary from the actual amounts realized upon sale of the securities. Investments in other open-end investment companies are valued based on the NAV of the investment companies (which may use fair value pricing as discussed in their prospectuses). If market quotations are unavailable or deemed unreliable, securities will be valued in accordance with procedures adopted by the Trust’s Board of Trustees. Relying on prices supplied by pricing services or dealers or using fair valuation may result in values that are higher or lower than the values used by other investment companies and investors to price the same investments.
19
PEMBERWICK FUND
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
Fair Value Measurements — The inputs and valuations techniques used to measure fair value of the Fund’s net assets are summarized into three levels as described in the hierarchy below:
● | Level 1 — | quoted prices in active markets for identical securities; | ||
● | Level 2 — | other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.); and | ||
● | Level 3 — | significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments). |
The fair value of a Fund’s bonds are generally based on quotes received from brokers or independent pricing services. Bonds with quotes that are based on actual trades with a sufficient level of activity on or near the measurement date are classified as Level 2 assets.
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
The following is a summary of the inputs used, as of October 31, 2015, in valuing the Fund’s assets carried at fair value:
Total Value at 10/31/15 | Level 1 Quoted Price | Level 2 Other Significant Observable Inputs | Level 3 Significant Unobservable Inputs | |||||||||||||||||
Corporate Bonds and Notes | $ | 106,376,921 | $ | — | $ | 106,376,921 | $ | — | ||||||||||||
Collateralized Mortgage Obligations | 2,448,658 | — | 2,448,658 | — | ||||||||||||||||
U.S. Government Agency Obligations | 5,790,688 | — | 5,790,688 | — | ||||||||||||||||
U.S. Treasury Obligations | 43,395,674 | — | 43,395,674 | — | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Total Investments* | $ | 158,011,941 | $ | — | $ | 158,011,941 | $ | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
* Please refer to Portfolio of Investments for details on portfolio holdings. |
|
At the end of each quarter, management evaluates the classification of Levels 1, 2 and 3 assets and liabilities. Various factors are considered, such as changes in liquidity from the prior reporting period; whether or not a broker is willing to execute at the quoted price; the depth and consistency of prices
20
PEMBERWICK FUND
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
from third party pricing services; and the existence of contemporaneous, observable trades in the market. Additionally, management evaluates the classification of Level 1 and Level 2 assets and liabilities on a quarterly basis for changes in listings or delistings on national exchanges.
Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of the Fund’s investments may fluctuate from period to period. Additionally, the fair value of investments may differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially from the values the Fund may ultimately realize. Further, such investments may be subject to legal and other restrictions on resale or otherwise less liquid than publicly traded securities.
For fair valuations using significant unobservable inputs, U.S. generally accepted accounting principles (“U.S. GAAP”) require the Funds to present a reconciliation of the beginning to ending balances for reported market values that presents changes attributable to total realized and unrealized gains or losses, purchase and sales, and transfers in and out of Level 3 during the period. Transfers in and out between Levels are based on values at the end of the period. U.S. GAAP also requires the Fund to disclose amounts and reasons for all transfers in and out of Level 1 and Level 2 fair value measurements. A reconciliation of Level 3 investments is presented only when the Funds had an amount of Level 3 investments at the end of the reporting period that was meaningful in relation to its net assets. The amounts and reasons for all transfers in and out of each Level within the three-tier hierarchy are disclosed when the Funds had an amount of total transfers during the reporting period that was meaningful in relation to its net assets as of the end of the reporting period.
For the six months ended October 31, 2015, there were no transfers between Levels 1, 2 and 3 for the Fund.
Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes at the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates and those differences could be material.
Investment Transactions, Investment Income and Expenses — Investment transactions are recorded on trade date for financial statement preparation purposes. Realized gains and losses on investments sold are recorded on the identified cost basis. Gains and losses on principal paydowns from mortgage backed securities are recorded as interest income on the Statement of Operations. Interest income is recorded on the accrual basis. Accretion of discounts and amortization of premiums are recorded on a daily basis using the effective yield method except for short term securities, which records discounts and premiums on a straight-line basis. Dividends are recorded on the ex-dividend date. Estimated components of distributions received from real estate investment trusts may be considered income, return of capital
21
PEMBERWICK FUND
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
distributions or capital gain distributions. Return of capital distributions are recorded as a reduction of cost of the related investments. General expenses of the Trust are generally allocated to each fund in proportion to its relative daily net assets. Expenses directly attributable to a particular fund in the Trust are charged directly to such fund.
Dividends and Distributions to Shareholders — Dividends from net investment income are declared daily and paid monthly to shareholders. Distributions, if any, of net short-term capital gain and net capital gain (the excess of net long-term capital gain over the short-term capital loss) realized by the Fund, after deducting any available capital loss carryovers are declared and paid to its shareholders annually. Income dividends and capital gain distributions are determined in accordance with U.S. federal income tax regulations, which may differ from U.S. GAAP. These differences include the treatment of non-taxable dividends, expiring capital loss carryforwards and losses deferred due to wash sales and excise tax regulations. Permanent book and tax basis differences relating to shareholder distributions will result in reclassifications within the components of net assets.
U.S. Tax Status — No provision is made for U.S. income taxes as it is the Fund’s intention to continue to qualify for and elect the tax treatment applicable to regulated investment companies under Subchapter M of the Internal Revenue Code of 1986, as amended, and make the requisite distributions to its shareholders which will be sufficient to relieve it from U.S. income and excise taxes.
Other — In the normal course of business, the Fund may enter into contracts that provide general indemnifications. The Fund’s maximum exposure under these arrangements is dependent on claims that may be made against the Fund in the future, and therefore, cannot be estimated; however, based on experience, the risk of material loss for such claims is considered remote.
2. Transactions with Affiliates and Related Parties
Pemberwick Investment Advisors LLC (“Pemberwick” or the “Advisor”) serves as the investment advisor to the Fund pursuant to an investment advisory agreement with the Trust. For its services, the Advisor earns a monthly fee at the annual rate of 0.50% of the Fund’s average daily net assets. The Advisor may, in its discretion, voluntarily waive its fees or reimburse certain Fund expenses; however; the Advisor is not required to do so. For the six months ended October 31, 2015, the Advisor earned fees of $412,840 and waived fees of 0.35% of the Fund’s average daily net assets totaling $289,028.
Pemberwick has retained the services of J.P. Morgan Investment Management Inc. (“Sub-Advisor”) as the sub-advisor to the Fund. The Sub-Advisor provides certain investment services, information, advice, assistance and facilities and performs research, statistical and investment services pursuant to a sub-advisory agreement between the Advisor and the Sub-Advisor. The Sub-Advisor is compensated by the Advisor and not the Fund.
22
PEMBERWICK FUND
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
BNY Mellon Investment Servicing (US) Inc. (“BNY Mellon”), serves as administrator and transfer agent for the Fund. For providing administrative and accounting services, BNY Mellon is entitled to receive a monthly fee equal to an annual percentage rate of the Fund’s average net assets and is subject to certain minimum monthly fees. For providing transfer agency services, BNY Mellon is entitled to receive a monthly fee, subject to certain minimum, and out of pocket expenses.
The Bank of New York Mellon (the “Custodian”) provides certain custodial services to the Fund. The Custodian is entitled to receive a monthly fee, subject to certain minimum, and out of pocket expenses.
Foreside Funds Distributors LLC (the “Underwriter”) provides principal underwriting services to the Fund.
The Trustees of the Trust who are not officers or employees of an investment adviser, sub-adviser or other service provider to the Trust receive compensation in the form of an annual retainer and per meeting fees for their services as a Trustee. The remuneration paid to the Trustees by the Fund during the six months ended October 31, 2015 was $5,273. Certain employees of BNY Mellon serve as Officers of the Trust. They are not compensated by the Fund or the Trust.
3. Investment in Securities
For the six months ended October 31, 2015, aggregate purchases and sales of investment securities (excluding short-term investments) of the Fund were as follows:
Purchases | Sales | |||||||
U.S. Government Securities | $ | 8,099,408 | $ | 8,515,016 | ||||
Other Securities | 37,611,020 | 40,125,189 |
23
PEMBERWICK FUND
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
4. Capital Share Transactions
For the six months ended October 31, 2015 and the year ended April 30, 2015, transactions in capital shares (authorized shares unlimited) were as follows:
For the Six Months Ended October 31, 2015 (Unaudited) | For the Year Ended April 30, 2015 | |||||||||||||||
Shares | Value | Shares | Value | |||||||||||||
Sales | 942,746 | $ | 9,461,733 | 6,348,311 | $ | 63,908,851 | ||||||||||
Reinvestments | 74,072 | 743,833 | 161,124 | 1,622,818 | ||||||||||||
Redemptions | (1,580,354 | ) | (15,871,669 | ) | (6,271,648 | ) | (63,133,072 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Net Increase/(Decrease) | (563,536 | ) | $ | (5,666,103 | ) | 237,787 | $ | 2,398,597 | ||||||||
|
|
|
|
|
|
|
|
5. Federal Tax Information
The Fund has followed the authoritative guidance on accounting for and disclosure of uncertainty in tax positions, which requires the Fund to determine whether a tax position is more likely than not to be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The Fund has determined that there was no effect on the financial statements from following this authoritative guidance. In the normal course of business, the Fund is subject to examination by federal, state, and local jurisdictions, where applicable, for tax years for which applicable statutes of limitations have not expired.
For the year ended April 30,2015, the tax character of distributions paid by the Fund was $1,627,258 of ordinary income dividends. Distributions from net investment income and short-term capital gains are treated as ordinary income for federal income tax purposes.
As of April 30, 2015, the components of distributable earnings on a tax basis were as follows:
Capital Loss | Undistributed | Unrealized | Qualified | Other | |||||||||||||||||||
$ | (987,225 | ) | $ | 1,759 | $ | 1,198,876 | $ | — | $ | (2,332 | ) |
The differences between the book and tax basis components of distributable earnings relate primarily to the timing and recognition of income and gains for federal income tax purposes. Short-term capital gains are reported as ordinary income for federal income tax purposes.
24
PEMBERWICK FUND
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
As of October 31, 2015, the federal tax cost, aggregate gross unrealized appreciation and depreciation of securities held by the Fund were as follows: |
Federal tax cost | $ | 157,515,100 | ||||
|
| |||||
Gross unrealized appreciation | $ | 665,633 | ||||
Gross unrealized depreciation | (168,792 | ) | ||||
|
| |||||
Net unrealized appreciation | $ | 496,841 | ||||
|
|
Pursuant to the federal income tax rules applicable to regulated investment companies, the Fund may elect to treat certain capital losses between November 1 and April 30 and late year ordinary losses ((i) ordinary losses between January 1 and April 30, and (ii) specified ordinary and currency losses between November 1 and April 30) as occurring on the first day of the following tax year. For the year ended April 30, 2015, any amount of losses elected within the tax return will not be recognized for federal income tax purposes until May 1, 2015. For the fiscal year ended April 30, 2015, the Fund had no loss deferrals.
Accumulated capital losses represent net capital loss carryovers as of April 30, 2015 that may be available to offset future realized capital gains and thereby reduce future capital gains distributions. Under the Regulated Investment Company Modernization Act of 2010, the Fund is permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period. Any losses incurred during those future taxable years will be required to be utilized prior to any losses incurred in pre-enactment taxable years. Additionally, post-enactment capital losses that are carried forward will retain their character as either short-term or long-term capital losses rather than being considered all short-term as under the previous law.
As of April 30, 2015, the Fund had pre-enactment capital loss carryforwards of $20,817. If not utilized against future capital gains, $10,862 and $9,955 of this capital loss carryforward will expire in 2018 and 2019, respectively. In addition, the Fund had post-enactment capital loss carryforwards of $966,408, of which $190,861 are short-term losses and $775,547 are long-term losses and have an unlimited period of capital loss carryforward.
6. Significant Risks
Mortgage-Related And Other Asset-Backed Securities Risk — Mortgage-related and asset-backed securities are subject to certain other risks. The value of these securities will be influenced by the factors affecting the housing market and the assets underlying such securities. As a result, during periods of declining asset value, difficult or frozen credit markets, swings in interest rates, or deteriorating economic conditions, mortgage-related and asset-backed securities may decline in value, face valuation difficulties, become more volatile and/or become illiquid.
25
PEMBERWICK FUND
Notes to Financial Statements (Concluded)
October 31, 2015
(Unaudited)
Debt Investment Risk — Debt investments are affected primarily by the financial condition of the companies or other entities that have issued them and by changes in interest rates. There is a risk that an issuer of a Fund’s debt investments may not be able to meet its financial obligations (e.g., may not be able to make principal and/or interest payments when they are due or otherwise default on other financial terms) and/or go bankrupt. Securities such as high-yield/high-risk bonds, e.g., bonds with low credit ratings by Moody’s (Ba or lower) or Standard & Poor’s (BB and lower) or if unrated are of comparable quality as determined by the manager, are especially subject to credit risk during periods of economic uncertainty or during economic downturns and are more likely to default on their interest and/or principal payments than higher rated securities. Debt investments may be affected by changes in interest rates. Debt investments with longer durations tend to be more sensitive to changes in interest rates, making them more volatile than debt investments with shorter durations or floating or adjustable interest rates. The value of debt investments may fall when interest rates rise.
7. Subsequent Event
Management has evaluated the impact of all subsequent events on the Fund through the date the financial statements were issued and has determined that there were no subsequent events requiring recognition or disclosure in the financial statements.
26
PEMBERWICK FUND
Other Information
(Unaudited)
Proxy Voting
Policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities as well as information regarding how the Fund voted proxies relating to portfolio securities for the most recent 12-month period ended June 30 are available without charge, upon request, by calling (888) 447-4785 and on the Securities and Exchange Commission’s (“SEC”) website at http://www.sec.gov.
Quarterly Portfolio Schedules
The Trust will file its complete schedule of portfolio holdings with the SEC for the first and third fiscal quarters of each fiscal year (quarters ended July 31 and January 31) on Form N-Q. The Trust’s Forms N-Q will be available on the SEC’s website at http://www.sec.gov and may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. Information on the operation of the SEC’s Public Reference Room may be obtained by calling 1-800-SEC-0330.
27
Investment Adviser
Pemberwick Investment Advisors LLC
340 Pemberwick Road
Greenwich, CT 06831
Sub-Advisor
J.P. Morgan Investment Management Inc.
245 Park Ave.
New York, NY 10167
Administrator
BNY Mellon Investment Servicing (US) Inc.
301 Bellevue Parkway
Wilmington, DE 19809
Transfer Agent
BNY Mellon Investment Servicing (US) Inc.
4400 Computer Drive
Westborough, MA 01581
Principal Underwriter
Foreside Funds Distributors LLC
400 Berwyn Park
899 Cassat Road
Berwyn, PA 19312
Custodian
The Bank of New York Mellon
225 Liberty Street
New York, NY 10286
Independent Registered Public Accounting Firm
PricewaterhouseCoopers LLP
Two Commerce Square, Suite 1700
2001 Market Street
Philadelphia, PA 19103-7042
Legal Counsel
Pepper Hamilton LLP
3000 Two Logan Square
18th and Arch Streets
Philadelphia, PA 19103
PEMBERWICK FUND
of
FundVantage Trust
SEMI-ANNUAL
REPORT
October 31, 2015
(Unaudited)
This report is submitted for the general information of the shareholders of the Pemberwick Fund. It is not authorized for distribution unless preceded or accompanied by a current prospectus for the Pemberwick Fund.
POLEN GROWTH FUND
Semi-Annual Report
Performance Data
October 31, 2015
(Unaudited)
Average Annual Total Returns for the Periods Ended October 31, 2015 | ||||||||||||
Six Months† | 1 Year | 3 Year | 5 Year | Since | ||||||||
Institutional Shares | 12.52% | 22.55% | 19.25% | 15.37% | 17.13% | |||||||
S&P 500® Index | 0.77% | 5.20% | 16.20% | 14.33% | 15.12%*** | |||||||
Russell 1000® Growth Index | 2.48% | 9.18% | 17.94% | 15.30% | 16.57%*** | |||||||
Six Months† | 1 Year | 3 Year | 5 Year | Since | ||||||||
Investor Shares | 12.35% | 22.26% | 18.96% | N/A | 14.72% | |||||||
S&P 500® Index | 0.77% | 5.20% | 16.20% | N/A | 13.32%*** | |||||||
Russell 1000® Growth Index | 2.48% | 9.18% | 17.94% | N/A | 14.27%*** |
† | Not Annualized. |
* | The Polen Growth Fund (the “Fund”) Institutional Shares commenced operations on September 15, 2010. |
** | The Investor Shares commenced operations on December 30, 2010. |
*** | Benchmark performance is from the inception date of the Class only and is not the inception date of the benchmark itself. |
The performance data quoted represents past performance and does not guarantee future results. Current performance may be lower or higher. Performance data current to the most recent month-end may be obtained by calling (888) 678-6024. The investment return and principal value of an investment will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. The table does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
The Fund’s total annual gross and net operating expense ratios, as stated in the current prospectus dated September 1, 2015, are 1.25% and 1.00%, respectively, for the Institutional Shares and 1.50% and 1.25%, respectively, for the Investor Shares of the Fund’s average daily net assets, which may differ from the actual expenses incurred by the Fund for the period covered by this report. Polen Capital Management, LLC (“PCM” or the “Adviser”), has contractually agreed to reduce its investment advisory fee and/or reimburse certain expenses of the Fund to the extent necessary to ensure that the Fund’s total operating expenses (excluding taxes, any class-specific fees and expenses, interest, extraordinary items, “Acquired Fund” fees and expenses and brokerage commissions) do not exceed 1.00% (on an annual basis) with respect to average daily net assets of the Fund. Total returns would be lower had such fees and expenses not been waived and/or reimbursed. This agreement will terminate on August 31, 2016, unless the Board of Trustees of the FundVantage Trust (the “Trust”) approves an earlier termination.
A 2.00% redemption fee applies to shares redeemed within 60 days of purchase. This redemption fee is not reflected in the returns shown above.
The Fund intends to evaluate performance as compared to that of the S&P 500® and the Russell 1000® Growth Index. The S&P 500® Index is a widely recognized, unmanaged index of 500 common stocks which are generally representative of the U.S. stock market as a whole. The Russell 1000® Growth Index is an unmanaged index that measures the performance of the large-cap growth segment of the U.S. equity universe. It includes those Russell 1000® Growth Index companies with higher price-to-book ratios and higher forecasted growth values. It is impossible to invest directly in an index.
1
POLEN GROWTH FUND
Semi-Annual Report
Performance Data
October 31, 2015
(Unaudited)
All mutual fund investing involves risk, including possible loss of principal. The Fund is non-diversified, which means that a large portion of the Fund’s assets may be invested in one or few companies or sectors. The Fund could fluctuate in value more than a diversified fund.
2
POLEN GLOBAL GROWTH FUND
Semi-Annual Report
Performance Data
October 31, 2015
(Unaudited)
Total Returns for the Periods Ended October 31, 2015† | ||||||||
Six Months | Since | |||||||
Institutional Shares | 6.22% | 9.30% | ||||||
MSCI All Country World ® Index (“ACWI”)(Gross Dividend) | -4.50% | -1.19%*** | ||||||
Since | ||||||||
Investor Shares | 5.72% | |||||||
MSCI All Country World ® Index (“ACWI”)(Gross Dividend) | -1.64%*** |
† | Not Annualized. |
* | The Polen Global Growth Fund (the “Fund”) Institutional Shares commenced operations on December 30, 2014. |
** | The Polen Global Growth Fund (the “Fund”) Investor Shares commenced operations on July 6, 2015. |
*** | Benchmark performance is from the inception date of the Class only and is not the inception date of the benchmark itself. |
The performance data quoted represents past performance and does not guarantee future results. Current performance may be lower or higher. Performance data current to the most recent month-end may be obtained by calling (888) 678-6024. The investment return and principal value of an investment will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. The table does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
The Fund’s total annual gross and net operating expense ratios, as stated in the current prospectus dated September 1, 2015, are 1.46% and 1.10%, respectively, for the Institutional Shares and 1.71% and 1.35%, respectively, for the Investor Shares of the Fund’s average daily net assets, which may differ from the actual expenses incurred by the Fund for the period covered by this report. Polen Capital Management, LLC (“PCM” or the “Adviser”), has contractually agreed to reduce its investment advisory fee and/or reimburse certain expenses of the Fund to the extent necessary to ensure that the Fund’s total operating expenses (excluding taxes, any class-specific fees and expenses, interest, extraordinary items, “Acquired Fund” fees and expenses and brokerage commissions) do not exceed 1.10% (on an annual basis) with respect to average daily net assets of the Fund. Total returns would be lower had such fees and expenses not been waived and/or reimbursed. This agreement will terminate on August 31, 2018, unless the Board of Trustees of the FundVantage Trust (the “Trust”) approves an earlier termination. The Adviser is entitled to recover, subject to approval by the Board of Trustees, such amounts reduced or reimbursed for a period of up to three (3) years from the year in which the Adviser reduced its compensation and/or assumed expenses for the Fund. No recoupment will occur unless the Fund’s expenses are below the Expense Limitation.
A 2.00% redemption fee applies to shares redeemed within 60 days of purchase. This redemption fee is not reflected in the returns shown above.
The Fund intends to evaluate performance as compared to that of the MSCI ACWI Index, which captures large and mid-cap representation across 23 Developed Markets (DM) and 23 Emerging Markets (EM) countries. With 2,466 constituents, the index covers approximately 85% of the global investable equity opportunity set. Indexes are unmanaged and it is not possible to invest directly in an index.
3
POLEN GLOBAL GROWTH FUND
Semi-Annual Report
Performance Data
October 31, 2015
(Unaudited)
All mutual fund investing involves risk, including possible loss of principal. The Fund is non-diversified, which means that a large portion of the Fund’s assets may be invested in one or few companies or sectors. The Fund could fluctuate in value more than a diversified fund.
The Fund may invest a substantial amount of its assets in issuers located in a limited number of countries. If the Fund concentrates its investments in this manner, it assumes the risk that economic, political and social conditions in those countries will have a significant impact on its investment performance. The Fund’s investment performance may also be more volatile if it concentrates its investments in certain countries, especially emerging market countries.
4
POLEN GROWTH FUNDS
Funds Expense Disclosure
October 31, 2015
(Unaudited)
As a shareholder of the Fund(s), you incur two types of costs: (1) transaction costs, including redemption fees; and (2) ongoing costs, including management fees, distribution and/or service (Rule 12b-1) fees (if any) and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund(s) and to compare these costs with the ongoing costs of investing in other mutual funds.
These examples are based on an investment of $1,000 invested at the beginning of the six-month period from May 1, 2015 through October 31, 2015 and held for the entire period.
Actual Expenses
The first line of each accompanying table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Examples for Comparison Purposes
The second line of each accompanying table provides information about hypothetical account values and hypothetical expenses based on a Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not your Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund(s) and other funds. To do so, compare these 5% hypothetical examples with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that the expenses shown in the accompanying table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as redemption fees. Therefore, each hypothetical line of the accompanying table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
5
POLEN GROWTH FUNDS
Funds Expense Disclosure (Concluded)
October 31, 2015
(Unaudited)
Polen Growth Fund | |||||||||||||||
Beginning Account Value May 1, 2015 | Ending Account Value October 31, 2015 | Expenses Paid During Period | |||||||||||||
Institutional Class* | |||||||||||||||
Actual | $1,000.00 | $1,125.20 | $5.34 | ||||||||||||
Hypothetical (5% return before expenses) | 1,000.00 | 1,020.11 | 5.08 | ||||||||||||
Investor Class* | |||||||||||||||
Actual | $1,000.00 | $1,123.50 | $6.67 | ||||||||||||
Hypothetical (5% return before expenses) | 1,000.00 | 1,018.85 | 6.34 | ||||||||||||
Polen Global Growth Fund | |||||||||||||||
Beginning Account Value May 1, 2015 | Ending Account Value October 31, 2015 | Expenses Paid During Period | |||||||||||||
Institutional Class** | |||||||||||||||
Actual | $1,000.00 | $1,062.20 | $5.70 | ||||||||||||
Hypothetical (5% return before expenses) | 1,000.00 | 1,019.61 | 5.58 | ||||||||||||
Investor Class*** | |||||||||||||||
Actual | $1,000.00 | $1,057.20 | $4.44 | ||||||||||||
Hypothetical (5% return before expenses) | 1,000.00 | 1,018.35 | 6.85 |
* | Expenses are equal to an annualized expense ratio for the six-month period ended October 31, 2015 of 1.00% for Institutional Class and 1.25% for Investor Class, multiplied by the average account value over the period, multiplied by the number of days in the most recent period (184), then divided by 366 to reflect the period. The Fund’s ending account values on the first line of each table are based on the actual six month total returns for the Fund of 12.52% and 12.35% for Institutional Class and Investor Class, respectively. |
** | Expenses are equal to an annualized expense ratio for the six-month period ended October 31, 2015 of 1.10% for Institutional Class, multiplied by the average account value over the period, multiplied by the number of days in the most recent period (184), then divided by 366 to reflect the period. The Institutional Class ending account values on the first line of the table is based on the actual six month total return of 6.22%. |
*** | Expenses are equal to the annualized expense ratio for the period beginning July 6, 2015, commencement of operations, to October 31, 2015 of 1.35% for Investor Class, multiplied by the average account value over the period, multiplied by the number of days in the most recent period (117), then divided by 366 to reflect the period. The Investor Class ending account values on the first line of the table is based on the actual total returns for the Fund since commencement of operations of 5.72%. For comparative purposes, the Hypothetical expenses are as if the Investor Class had been in existence from May 1, 2015, and are equal to the Investor Class annualized expense ratio, multiplied by the average account value over the period, multiplied by the number of days in the most recent six-month period (184), then divided by 366 to reflect the period. |
6
POLEN GROWTH FUND
Portfolio Holdings Summary Table
October 31, 2015
(Unaudited)
The following table presents a summary by sector of the portfolio holdings of the Fund:
% of Net Assets | Value | |||||||||
COMMON STOCKS: | ||||||||||
Internet Content & Information | 13.3% | $ 95,292,071 | ||||||||
Credit Services | 9.2 | 65,511,896 | ||||||||
Biotechnology | 8.4 | 59,641,708 | ||||||||
Information Technology Services | 7.7 | 55,335,966 | ||||||||
Footwear & Accessories | 7.2 | 51,579,304 | ||||||||
Restaurants | 6.3 | 45,098,203 | ||||||||
Leisure | 5.7 | 40,429,326 | ||||||||
Medical Devices | 5.1 | 36,593,626 | ||||||||
Apparel Stores | 4.7 | 33,352,244 | ||||||||
Software Infrastructure | 4.4 | 31,750,457 | ||||||||
Business Services | 4.4 | 31,635,131 | ||||||||
Packaged Foods | 4.2 | 30,201,489 | ||||||||
Consumer Electronics | 4.0 | 28,658,609 | ||||||||
Specialty Retail | 4.0 | 28,653,963 | ||||||||
Software Application | 4.0 | 28,371,732 | ||||||||
Industrial Distribution | 3.3 | 23,225,248 | ||||||||
Other Assets In Excess of Liabilities | 4.1 | 29,615,834 | ||||||||
NET ASSETS | 100.0% | $714,946,807 |
Portfolio holdings are subject to change at any time.
The accompanying notes are an integral part of the financial statements.
7
POLEN GROWTH FUND
Portfolio of Investments
October 31, 2015
(Unaudited)
Number of Shares | Value | |||||||
COMMON STOCKS — 95.9% |
| |||||||
Apparel Stores — 4.7% | ||||||||
TJX Cos., Inc. (The) | 455,694 | $ | 33,352,244 | |||||
|
| |||||||
Biotechnology — 8.4% | ||||||||
Celgene Corp.* | 192,335 | 23,601,428 | ||||||
Regeneron Pharmaceuticals, Inc.* | 64,659 | 36,040,280 | ||||||
|
| |||||||
59,641,708 | ||||||||
|
| |||||||
Business Services — 4.4% |
| |||||||
Automatic Data Processing, Inc. | 363,664 | 31,635,131 | ||||||
|
| |||||||
Consumer Electronics — 4.0% |
| |||||||
Apple, Inc. | 239,821 | 28,658,609 | ||||||
|
| |||||||
Credit Services — 9.2% | ||||||||
MasterCard, Inc., Class A | 138,945 | 13,754,166 | ||||||
Visa, Inc., Class A | 667,153 | 51,757,730 | ||||||
|
| |||||||
65,511,896 | ||||||||
|
| |||||||
Footwear & Accessories — 7.2% |
| |||||||
NIKE, Inc., Class B | 393,645 | 51,579,304 | ||||||
|
| |||||||
Industrial Distribution — 3.3% |
| |||||||
Fastenal Co. | 593,086 | 23,225,248 | ||||||
|
| |||||||
Information Technology Services — 7.7% |
| |||||||
Accenture PLC, Class A | 302,155 | 32,391,016 | ||||||
Gartner, Inc.* | 253,060 | 22,944,950 | ||||||
|
| |||||||
55,335,966 | ||||||||
|
| |||||||
Internet Content & Information — 13.3% |
| |||||||
Alphabet, Inc., Class A* | 39,717 | 29,286,919 | ||||||
Alphabet, Inc., Class C* | 58,865 | 41,841,831 | ||||||
Facebook, Inc., Class A* | 236,965 | 24,163,321 | ||||||
|
| |||||||
95,292,071 | ||||||||
|
|
Number of Shares | Value | |||||||
COMMON STOCKS — (Continued) |
| |||||||
Leisure — 5.7% | ||||||||
Priceline Group, Inc. (The)* | 27,801 | $ | 40,429,326 | |||||
|
| |||||||
Medical Devices — 5.1% | ||||||||
Abbott Laboratories | 816,822 | 36,593,626 | ||||||
|
| |||||||
Packaged Foods — 4.2% | ||||||||
Nestle SA, SP ADR | 396,241 | 30,201,489 | ||||||
|
| |||||||
Restaurants — 6.3% | ||||||||
Starbucks Corp. | 720,764 | 45,098,203 | ||||||
|
| |||||||
Software Application — 4.0% |
| |||||||
Adobe Systems, Inc.* | 320,006 | 28,371,732 | ||||||
|
| |||||||
Software Infrastructure — 4.4% |
| |||||||
Oracle Corp. | 817,468 | 31,750,457 | ||||||
|
| |||||||
Specialty Retail — 4.0% | ||||||||
O’Reilly Automotive, Inc.* | 103,721 | 28,653,963 | ||||||
|
| |||||||
TOTAL COMMON STOCKS | 685,330,973 | |||||||
|
| |||||||
TOTAL INVESTMENTS - 95.9% |
| 685,330,973 | ||||||
OTHER ASSETS IN EXCESS OF LIABILITIES - 4.1% | 29,615,834 | |||||||
|
| |||||||
NET ASSETS - 100.0% | $ | 714,946,807 | ||||||
|
|
* | Non-income producing. |
PLC | Public Limited Corporation | |
SP ADR | Sponsored American Depository Receipt |
The accompanying notes are an integral part of the financial statements.
8
POLEN GLOBAL GROWTH FUND
Portfolio Holdings Summary Table
October 31, 2015
(Unaudited)
The following table presents a summary by sector of the portfolio holdings of the Fund:
% of Net Assets | Value | |||||||||
COMMON STOCKS: | ||||||||||
Internet Software & Services | 14.8% | $1,312,634 | ||||||||
IT Services | 14.8 | 1,311,653 | ||||||||
Biotechnology | 8.1 | 718,834 | ||||||||
Specialty Retail | 7.7 | 683,101 | ||||||||
Textiles, Apparel & Luxury Goods | 5.4 | 478,915 | ||||||||
Hotels, Restaurants & Leisure | 4.7 | 415,715 | ||||||||
Food Products | 4.6 | 408,143 | ||||||||
Health Care Equipment & Supplies | 3.9 | 345,005 | ||||||||
Insurance | 3.3 | 291,994 | ||||||||
Internet & Catalog Retail | 2.8 | 244,312 | ||||||||
Household Products | 2.7 | 237,046 | ||||||||
Software | 2.5 | 221,014 | ||||||||
Technology Hardware, Storage & Peripherals | 2.3 | 206,496 | ||||||||
Semiconductors & Semiconductor Equipment | 2.3 | 199,566 | ||||||||
Professional Services | 1.9 | 169,465 | ||||||||
Trading Companies & Distributors | 1.8 | 158,363 | ||||||||
Pharmaceuticals | 1.7 | 154,009 | ||||||||
Other Assets In Excess of Liabilities | 14.7 | 1,300,793 | ||||||||
NET ASSETS | 100.0% | $8,857,058 |
Portfolio holdings are subject to change at any time.
The accompanying notes are an integral part of the financial statements.
9
POLEN GLOBAL GROWTH FUND
Portfolio of Investments
October 31, 2015
(Unaudited)
Number of Shares | Value | |||||||
COMMON STOCKS — 85.3% |
| |||||||
Australia — 2.0% |
| |||||||
CSL, Ltd. | 2,708 | $ | 180,001 | |||||
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180,001 | ||||||||
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| |||||||
Cayman Islands — 5.1% |
| |||||||
Alibaba Group Holding, Ltd., SP ADR* | 2,368 | 198,510 | ||||||
Tencent Holdings, Ltd. | 13,200 | 248,812 | ||||||
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| |||||||
447,322 | ||||||||
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| |||||||
China — 2.2% |
| |||||||
Baidu, Inc., SP ADR* | 1,037 | 194,406 | ||||||
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194,406 | ||||||||
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| |||||||
Denmark — 1.7% |
| |||||||
Novo Nordisk A/S, SP ADR | 2,896 | 154,009 | ||||||
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| |||||||
154,009 | ||||||||
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| |||||||
Hong Kong — 3.3% |
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AIA Group, Ltd. | 49,800 | 291,994 | ||||||
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291,994 | ||||||||
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| |||||||
Ireland — 3.7% |
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Accenture PLC, Class A | 3,030 | 324,816 | ||||||
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| |||||||
324,816 | ||||||||
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Israel — 2.5% |
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Check Point Software Technologies, Ltd.* | 2,602 | 221,014 | ||||||
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| |||||||
221,014 | ||||||||
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| |||||||
Switzerland — 6.5% |
| |||||||
Nestle SA, Registered Shares | 5,344 | 408,143 | ||||||
SGS SA | 89 | 169,465 | ||||||
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| |||||||
577,608 | ||||||||
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| |||||||
United Kingdom — 4.9% |
| |||||||
ARM Holdings PLC | 12,672 | 199,566 | ||||||
Reckitt Benckiser Group PLC | 2,429 | 237,046 | ||||||
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| |||||||
436,612 | ||||||||
|
|
Number of Shares | Value | |||||||
COMMON STOCKS — (Continued) |
| |||||||
United States — 53.4% |
| |||||||
Abbott Laboratories | 7,701 | $ | 345,005 | |||||
Alphabet, Inc., Class C* | 664 | 471,759 | ||||||
Apple, Inc. | 1,728 | 206,496 | ||||||
Automatic Data Processing, Inc. | 3,072 | 267,233 | ||||||
Celgene Corp.* | 1,375 | 168,726 | ||||||
Facebook, Inc., Class A* | 1,953 | 199,147 | ||||||
Fastenal Co. | 4,044 | 158,363 | ||||||
MasterCard, Inc., Class A | 2,633 | 260,641 | ||||||
NIKE, Inc., Class B | 3,655 | 478,915 | ||||||
O’Reilly Automotive, Inc.* | 1,405 | 388,145 | ||||||
Priceline Group, Inc. (The)* | 168 | 244,312 | ||||||
Regeneron Pharmaceuticals, Inc.* | 664 | 370,107 | ||||||
Starbucks Corp. | 6,644 | 415,715 | ||||||
TJX Cos, Inc. (The) | 4,030 | 294,956 | ||||||
Visa, Inc., Class A | 5,916 | 458,963 | ||||||
|
| |||||||
4,728,483 | ||||||||
|
| |||||||
TOTAL COMMON STOCKS | 7,556,265 | |||||||
|
| |||||||
TOTAL INVESTMENTS - 85.3% | 7,556,265 | |||||||
OTHER ASSETS IN EXCESS OF LIABILITIES - 14.7% | 1,300,793 | |||||||
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| |||||||
NET ASSETS - 100.0% | $ | 8,857,058 | ||||||
|
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* | Non-income producing. |
PLC | Public Limited Corporation | |
SP ADR | Sponsored American Depository Receipt |
The accompanying notes are an integral part of the financial statements.
10
POLEN GROWTH FUNDS
Statements of Assets and Liabilities
October 31, 2015
(Unaudited)
Polen Growth Fund | Polen Global Growth Fund | |||||||||
Assets | ||||||||||
Investments, at value (Cost $517,810,770 and $6,859,488, respectively) | $ | 685,330,973 | $ | 7,556,265 | ||||||
Cash | 32,989,475 | 1,297,615 | ||||||||
Receivable for investments sold | 870,231 | — | ||||||||
Receivable for capital shares sold | 14,714,653 | 38,400 | ||||||||
Dividends and interest receivable | 644,043 | 8,055 | ||||||||
Receivable from Investment Adviser | — | 15,575 | ||||||||
Prepaid expenses and other assets | 69,230 | 18,986 | ||||||||
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|
| |||||||
Total assets | 734,618,605 | 8,934,896 | ||||||||
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| |||||||
Liabilities | ||||||||||
Payable for investments purchased | 17,809,324 | — | ||||||||
Payable for capital shares redeemed | 1,268,368 | — | ||||||||
Payable to Investment Adviser | 447,620 | — | ||||||||
Payable for administration and accounting fees | 68,428 | 13,123 | ||||||||
Payable for transfer agent fees | 26,410 | 13,630 | ||||||||
Payable for audit fees | 10,793 | 11,642 | ||||||||
Payable for printing fees | 10,357 | 9,472 | ||||||||
Payable for custodian fees | 9,692 | 8,520 | ||||||||
Payable for legal fees | 1,624 | 7,997 | ||||||||
Payable for Trustees and Officers | — | 6,722 | ||||||||
Accrued expenses | 19,182 | 6,732 | ||||||||
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| |||||||
Total liabilities | 19,671,798 | 77,838 | ||||||||
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| |||||||
Net Assets | $ | 714,946,807 | $ | 8,857,058 | ||||||
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| |||||||
Net Assets Consisted of: | ||||||||||
Capital stock, $0.01 par value | $ | 347,789 | $ | 8,105 | ||||||
Paid-in capital | 516,778,356 | 8,247,923 | ||||||||
Accumulated net investment income/(loss) | (304,617 | ) | 597 | |||||||
Accumulated net realized gain/(loss) from investments and foreign currency transactions | 30,605,076 | (96,324 | ) | |||||||
Net unrealized appreciation on investments and translation of assets and liabilities denominated in foreign currency | 167,520,203 | 696,757 | ||||||||
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| |||||||
Net Assets | $ | 714,946,807 | $ | 8,857,058 | ||||||
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| |||||||
Institutional Class: | ||||||||||
Net asset value, offering and redemption price per share | $ | 20.58 | $ | 10.93 | ||||||
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| |||||||
Investor Class: | ||||||||||
Net asset value, offering and redemption price per share | $ | 20.38 | $ | 10.91 | ||||||
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|
|
The accompanying notes are an integral part of the financial statements.
11
POLEN GROWTH FUNDS
Statements of Operations
For the Six Months Ended October 31, 2015
(Unaudited)
Polen Growth Fund | Polen Global Growth Fund* | |||||||||
Investment Income | ||||||||||
Dividends | $ | 2,154,256 | $ | 22,134 | ||||||
Interest | 929 | 31 | ||||||||
Less: foreign taxes withheld | (2,684 | ) | (48 | ) | ||||||
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| |||||||
Total investment income | 2,152,501 | 22,117 | ||||||||
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|
|
| |||||||
Expenses | ||||||||||
Advisory fees (Note 2) | 2,405,525 | 23,154 | ||||||||
Administration and accounting fees | 174,411 | 36,064 | ||||||||
Transfer agent fees (Note 2) | 133,981 | 20,145 | ||||||||
Distribution fees (Investor Shares) (Note 2) | 51,593 | 55 | ||||||||
Custodian fees (Note 2) | 24,836 | 7,906 | ||||||||
Trustees’ and officers’ fees (Note 2) | 14,484 | 3,343 | ||||||||
Audit fees | 13,483 | 12,433 | ||||||||
Legal fees | 12,979 | 3,790 | ||||||||
Printing and shareholder reporting fees | 12,969 | 4,844 | ||||||||
Registration and filing fees | 401 | 15,347 | ||||||||
Other expenses | 6,535 | 1,294 | ||||||||
|
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|
| |||||||
Total expenses before waivers and reimbursements | 2,851,197 | 128,375 | ||||||||
|
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| |||||||
Less: waivers and reimbursements (Note 2) | (394,079 | ) | (98,356 | ) | ||||||
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| |||||||
Net expenses after waivers and reimbursements | 2,457,118 | 30,019 | ||||||||
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| |||||||
Net investment loss | (304,617 | ) | (7,902 | ) | ||||||
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| |||||||
Net realized and unrealized gain/(loss) from investments | ||||||||||
Net realized gain/(loss) from investments | 4,339,320 | (94,910 | ) | |||||||
Net realized loss from foreign currency transactions | — | (1,414 | ) | |||||||
Net change in unrealized appreciation/(depreciation) on investments | 61,458,213 | 615,520 | ||||||||
Net change in unrealized appreciation/(depreciation) on foreign currency translations | — | (131 | ) | |||||||
|
|
|
| |||||||
Net realized and unrealized gain on investments | 65,797,533 | 519,065 | ||||||||
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|
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| |||||||
Net increase in net assets resulting from operations | $ | 65,492,916 | $ | 511,163 | ||||||
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|
|
|
* The Polen Global Growth Fund commenced operations on December 30, 2014.
The accompanying notes are an integral part of the financial statements.
12
POLEN GROWTH FUND
Statements of Changes in Net Assets
For the Six Months Ended October 31, 2015 (Unaudited) | For the Year Ended April 30, 2015 | |||||||||
Increase/(decrease) in Net Assets from Operations: | ||||||||||
Net investment income/(loss) | $ | (304,617 | ) | $ | 239,517 | |||||
Net realized gain from investments | 4,339,320 | 37,906,568 | ||||||||
Net change in unrealized appreciation/(depreciation) on investments | 61,458,213 | 24,775,320 | ||||||||
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|
|
| |||||||
Net increase in net assets resulting from operations | 65,492,916 | 62,921,405 | ||||||||
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| |||||||
Less Dividends and Distributions to Shareholders from: | ||||||||||
Net investment income: | ||||||||||
Institutional Class | — | (319,864 | ) | |||||||
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| |||||||
Total net investment income | — | (319,864 | ) | |||||||
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|
| |||||||
Net realized capital gains: | ||||||||||
Institutional Class | — | (22,648,001 | ) | |||||||
Investor Class | — | (2,035,860 | ) | |||||||
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|
| |||||||
Total net realized capital gains | — | (24,683,861 | ) | |||||||
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|
| |||||||
Net decrease in net assets from dividends and distributions to shareholders | — | (25,003,725 | ) | |||||||
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|
|
| |||||||
Increase/(Decrease) in Net Assets Derived from Capital Share Transactions (Note 4) | 243,190,418 | 36,804,644 | ||||||||
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|
|
| |||||||
Total increase/(decrease) in net assets | 308,683,334 | 74,722,324 | ||||||||
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| |||||||
Net assets | ||||||||||
Beginning of period | 406,263,473 | 331,541,149 | ||||||||
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| |||||||
End of period | $ | 714,946,807 | $ | 406,263,473 | ||||||
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| |||||||
Accumulated net investment income/(loss), end of period | $ | (304,617 | ) | $ | — | |||||
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|
|
|
The accompanying notes are an integral part of the financial statements.
13
POLEN GLOBAL GROWTH FUND
Statements of Changes in Net Assets
For the Six Months Ended October 31, 2015 (Unaudited) | For the Period Ended April 30, 2015* | |||||||||
Increase/(decrease) in Net Assets from Operations: | ||||||||||
Net investment income/(loss) | $ | (7,902 | ) | $ | 4,370 | |||||
Net realized loss from investments and foreign currency transactions | (96,324 | ) | (958 | ) | ||||||
Net change in unrealized appreciation/(depreciation) on investments | 615,389 | 81,368 | ||||||||
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| |||||||
Net increase in net assets resulting from operations | 511,163 | 84,780 | ||||||||
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| |||||||
Increase in Net Assets Derived from Capital Share Transactions (Note 4) | 5,270,332 | 2,990,783 | ||||||||
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| |||||||
Total increase/(decrease) in net assets | 5,781,495 | 3,075,563 | ||||||||
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Net assets | ||||||||||
Beginning of period | 3,075,563 | — | ||||||||
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| |||||||
End of period | $ | 8,857,058 | $ | 3,075,563 | ||||||
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| |||||||
Accumulated net investment income, end of period | $ | 597 | $ | 8,499 | ||||||
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|
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* The Polen Global Growth Fund commenced operations on December 30, 2014.
The accompanying notes are an integral part of the financial statements.
14
POLEN GROWTH FUND
Financial Highlights
Contained below is per share operating performance data for Institutional Class Shares outstanding, total investment return, ratios to average net assets and other supplemental data for the respective period. 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). This information has been derived from information provided in the financial statements and should be read in conjunction with the financial statements and the notes thereto.
Institutional Class | ||||||||||||||||||||||||||||||
For the Six Months Ended October 31, 2015 (Unaudited) | For the Year Ended April 30, 2015 | For the Year Ended April 30, 2014 | For the Year Ended April 30, 2013 | For the Year Ended April 30, |
For the Period to April 30, 2011 | |||||||||||||||||||||||||
Per Share Operating Performance | ||||||||||||||||||||||||||||||
Net asset value, beginning of period | $ 18.29 | $ 16.45 | $ 14.17 | $ 13.79 | $ 12.10 | $10.00 | ||||||||||||||||||||||||
Net investment income/(loss)(1) | (0.01 | ) | 0.02 | 0.03 | 0.03 | — | (2) | (0.02 | ) | |||||||||||||||||||||
Net realized and unrealized gain on investments | 2.30 | 3.09 | 2.48 | 0.40 | 1.68 | 2.11 | ||||||||||||||||||||||||
Net increase in net assets resulting from operations | 2.29 | 3.11 | 2.51 | 0.43 | 1.68 | 2.09 | ||||||||||||||||||||||||
Dividends and distributions to shareholders from: | ||||||||||||||||||||||||||||||
Net investment income | — | (0.02 | ) | (0.04 | ) | — | — | — | ||||||||||||||||||||||
Net realized capital gains | — | (1.25 | ) | (0.20 | ) | (0.06 | ) | — | (2) | — | (2) | |||||||||||||||||||
Total dividends and distributions to shareholders | — | (1.27 | ) | (0.24 | ) | (0.06 | ) | — | — | |||||||||||||||||||||
Redemption fees | — | (2) | — | (2) | 0.01 | 0.01 | 0.01 | 0.01 | ||||||||||||||||||||||
Net asset value, end of period | $ 20.58 | $ 18.29 | $ 16.45 | $ 14.17 | $ 13.79 | $12.10 | ||||||||||||||||||||||||
Total investment return(3) | 12.52 | % | 19.17 | % | 17.84 | % | 3.19 | % | 13.97 | % | 21.00 | % | ||||||||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $627,130 | $376,718 | $252,108 | $294,408 | $215,387 | $5,168 | ||||||||||||||||||||||||
Ratio of expenses to average net assets | 1.00 | %(4) | 1.00 | % | 1.00 | % | 1.00 | % | 1.00 | % | 1.00 | %(4) | ||||||||||||||||||
Ratio of expenses to average net assets without waivers and expense reimbursements(5) | 1.16 | %(4) | 1.25 | % | 1.27 | % | 1.26 | % | 1.44 | % | 8.23 | %(4) | ||||||||||||||||||
Ratio of net investment income/(loss) to average net assets | (0.10 | )%(4) | 0.10 | % | 0.17 | % | 0.24 | % | (0.01 | )% | (0.27 | )%(4) | ||||||||||||||||||
Portfolio turnover rate | 5.17 | %(6) | 33.44 | % | 39.52 | % | 51.04 | % | 35.48 | % | 25.55 | %(6) |
* | Commencement of operations. |
(1) | The selected per share data was calculated using the average shares outstanding method for the period. |
(2) | Amount is less than $0.005 per share. |
(3) | Total investment return is calculated assuming a purchase of shares on the first day and a sale of shares on the last day of the relevant period reported and includes reinvestments of dividends and distributions, if any. Total returns for periods less than one year are not annualized. |
(4) | Annualized. |
(5) | During the period, certain fees were waived and/or reimbursed. If such fee waivers and/or reimbursements had not occurred, the ratios would have been as indicated (See Note 2). |
(6) | Not annualized. |
The accompanying notes are an integral part of the financial statements.
15
POLEN GROWTH FUND
Financial Highlights
Contained below is per share operating performance data for Investor Class Shares outstanding, total investment return, ratios to average net assets and other supplemental data for the respective period. 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). This information has been derived from information provided in the financial statements and should be read in conjunction with the financial statements and the notes thereto.
Investor Class | ||||||||||||||||||||||
For the Six Months Ended | For the | For the Year Ended April 30, 2014 | For the Year Ended April 30, 2013 | For the Year Ended April 30, |
For the to April 30, | |||||||||||||||||
Per Share Operating Performance | ||||||||||||||||||||||
Net asset value, beginning of period | $ 18.14 | $ 16.35 | $ 14.09 | $ 13.74 | $ 12.09 | $11.44 | ||||||||||||||||
Net investment loss(1) | (0.03) | (0.02 | ) | (0.01 | ) | — | (2) | (0.03 | ) | (0.02) | ||||||||||||
Net realized and unrealized gain on investments | 2.27 | 3.06 | 2.47 | 0.40 | 1.67 | 0.66 | ||||||||||||||||
Net increase in net assets resulting from operations | 2.24 | 3.04 | 2.46 | 0.40 | 1.64 | 0.64 | ||||||||||||||||
Dividends and distributions to shareholders from: | ||||||||||||||||||||||
Net investment income | — | — | (0.01 | ) | — | — | — | |||||||||||||||
Net realized capital gains | — | (1.25 | ) | (0.20 | ) | (0.06 | ) | — | (2) | — | ||||||||||||
Total dividends and distributions to shareholders | — | (1.25 | ) | (0.21 | ) | (0.06 | ) | �� — | — | |||||||||||||
Redemption fees | —(2) | — | (2) | 0.01 | 0.01 | 0.01 | 0.01 | |||||||||||||||
Net asset value, end of period | $ 20.38 | $ 18.14 | $ 16.35 | $ 14.09 | $ 13.74 | $12.09 | ||||||||||||||||
Total investment return(3) | 12.35% | 18.87 | % | 17.59 | % | 2.98 | % | 13.65 | % | 5.68% | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $87,817 | $29,545 | $79,433 | $100,859 | $101,396 | $7,133 | ||||||||||||||||
Ratio of expenses to average net assets | 1.25%(4) | 1.25 | % | 1.25 | % | 1.25 | % | 1.25 | % | 1.25%(4 | ) | |||||||||||
Ratio of expenses to average net assets without waivers and expense reimbursements(5) | 1.42%(4) | 1.50 | % | 1.52 | % | 1.51 | % | 1.74 | % | 6.35%(4 | ) | |||||||||||
Ratio of net investment loss to average net assets | (0.36)%(4) | (0.14 | )% | (0.08 | )% | (0.01 | )% | (0.26 | )% | (0.50)%( | 4) | |||||||||||
Portfolio turnover rate | 5.17%(6) | 33.44 | % | 39.52 | % | 51.04 | % | 35.48 | % | 22.55%(6 | ) |
* | Commencement of operations. |
(1) | The selected per share data was calculated using the average shares outstanding method for the period. |
(2) | Amount is less than $0.005 per share. |
(3) | Total investment return is calculated assuming a purchase of shares on the first day and a sale of shares on the last day of the relevant period reported and includes reinvestments of dividends and distributions, if any. Total returns for periods less than one year are not annualized. |
(4) | Annualized. |
(5) | During the period, certain fees were waived and/or reimbursed. If such fee waivers and/or reimbursements had not occurred, the ratios would have been as indicated (See Note 2). |
(6) | Not annualized. |
The accompanying notes are an integral part of the financial statements.
16
POLEN GLOBAL GROWTH FUND
Financial Highlights
Contained below is per share operating performance data for each Institutional Class Shares outstanding, total investment return, ratios to average net assets and other supplemental data for the respective period. 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). This information has been derived from information provided in the financial statements and should be read in conjunction with the financial statements and the notes thereto.
Institutional Class | ||||
For the | For the Period December 30, 2014* to April 30, 2015 | |||
Per Share Operating Performance | ||||
Net asset value, beginning of period | $10.29 | $10.00 | ||
Net investment income/(loss)(1) | (0.02) | 0.02 | ||
Net realized and unrealized gain on investments | 0.66 | 0.27 | ||
Net increase in net assets resulting from operations | 0.64 | 0.29 | ||
Dividends and distributions to shareholders from: | ||||
Net investment income | — | — | ||
Redemption fees | — | — | ||
Net asset value, end of period | $10.93 | $10.29 | ||
Total investment return(2) | 6.22% | 2.90% | ||
Ratio/Supplemental Data | ||||
Net assets, end of period (000’s omitted) | $8,704 | $3,076 | ||
Ratio of expenses to average net assets(3) | 1.10% | 1.10% | ||
Ratio of expenses to average net assets without waivers and expense reimbursements(3)(4) | 4.71% | 9.78% | ||
Ratio of net investment income/(loss) to average net assets(3) | (0.29)% | 0.47% | ||
Portfolio turnover rate | 9.74%(5) | — |
* | Commencement of operations. |
(1) | The selected per share data was calculated using the average shares outstanding method for the period. |
(2) | Total investment return is calculated assuming a purchase of shares on the first day and a sale of shares on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total returns for periods less than one year are not annualized. |
(3) | Annualized. |
(4) | During the period, certain fees were waived and/or reimbursed. If such fee waivers and/or reimbursements had not occurred, the ratios would have been as indicated (See Note 2). |
(5) | Not annualized. |
The accompanying notes are an integral part of the financial statements.
17
POLEN GLOBAL GROWTH FUND
Financial Highlights
Contained below is per share operating performance data for Investor Class Shares outstanding, total investment return, ratios to average net assets and other supplemental data for the respective period. 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). This information has been derived from information provided in the financial statements and should be read in conjunction with the financial statements and the notes thereto.
Investor Class | |||||
For the Period | |||||
Per Share Operating Performance | |||||
Net asset value, beginning of period | $10.32 | ||||
Net investment loss(1) | (0.02) | ||||
Net realized and unrealized gain on investments | 0.61 | ||||
Net increase in net assets resulting from operations | 0.59 | ||||
Dividends and distributions to shareholders from: | |||||
Net investment income | — | ||||
Net asset value, end of period | $10.91 | ||||
Total investment return(2) | 5.72% | ||||
Ratio/Supplemental Data | |||||
Net assets, end of period (000’s omitted) | $ 153 | ||||
Ratio of expenses to average net assets | 1.35%(3) | ||||
Ratio of expenses to average net assets without waivers and expense reimbursements(4) | 4.73%(3) | ||||
Ratio of net investment loss to average net assets | (0.52)%(3) | ||||
Portfolio turnover rate | 9.74%(5) |
* | Commencement of operations. |
(1) | The selected per share data was calculated using the average shares outstanding method for the period. |
(2) | Total investment return is calculated assuming a purchase of shares on the first day and a sale of shares on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total returns for periods less than one year are not annualized. |
(3) | Annualized. |
(4) | During the period, certain fees were waived and/or reimbursed. If such fee waivers and/or reimbursements had not occurred, the ratios would have been as indicated (See Note 2). |
(5) | Not annualized. |
The accompanying notes are an integral part of the financial statements.
18
POLEN GROWTH FUNDS
Notes to Financial Statements
October 31, 2015
(Unaudited)
1. Organization and Significant Accounting Policies
The Polen Growth Fund and the Polen Global Growth Fund (the “Funds”) are non-diversified, open-end management investment companies registered under the Investment Company Act of 1940, as amended, (the “1940 Act”), which commenced investment operations on September 15, 2010 and December 30, 2014, respectively. The Funds are separate series of FundVantage Trust (the “Trust”) which was organized as a Delaware statutory trust on August 28, 2006. The Trust is a “series trust” authorized to issue an unlimited number of separate series or classes of shares of beneficial interest. Each series is treated as a separate entity for certain matters under the 1940 Act, and for other purposes, and a shareholder of one series is not deemed to be a shareholder of any other series. The Funds offer two separate classes of shares, Investor Class and Institutional Class.
The Funds are investment companies and follow accounting and reporting guidance in the Financial Accounting Standards Board Accounting Standards Codification Topic 946.
Portfolio Valuation — The Funds’ net asset value (“NAV”) is calculated once daily at the close of regular trading hours on the New York Stock Exchange (“NYSE”) (typically 4:00 p.m. Eastern time) on each day the NYSE is open. Securities held by the Funds are valued using the closing price or the last sale price on a national securities exchange or the National Association of Securities Dealers Automatic Quotation System (“NASDAQ”) market system where they are primarily traded. Equity securities traded in the over-the-counter market are valued at their closing prices. If there were no transactions on that day, securities traded principally on an exchange or on NASDAQ will be valued at the mean of the last bid and ask prices prior to the market close. Fixed income securities having a remaining maturity of greater than 60 days are valued using an independent pricing service. Fixed income securities having a remaining maturity of 60 days or less are generally valued at amortized cost, provided such amount approximates fair value. Foreign securities are valued based on prices from the primary market in which they are traded and are translated from the local currency into U.S. dollars using current exchange rates. Investments in other open-end investment companies are valued based on the NAV of the investment companies (which may use fair value pricing as discussed in their prospectuses). If market quotations are unavailable or deemed unreliable, securities will be valued in accordance with procedures adopted by the Trust’s Board of Trustees. Relying on prices supplied by pricing services or dealers or using fair valuation may result in values that are higher or lower than the values used by other investment companies and investors to price the same investments.
Fair Value Measurements — The inputs and valuation techniques used to measure fair value of the Funds’ investments are summarized into three levels as described in the hierarchy below:
● | Level 1 — | quoted prices in active markets for identical securities; |
19
POLEN GROWTH FUNDS
Notes to Financial Statements
October 31, 2015
(Unaudited)
● | Level 2 — | other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.); and | ||
● | Level 3 — | significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments). |
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
Significant events (such as movement in the U.S. securities market, or other regional and local developments) may occur between the time that foreign markets close (where the security is principally traded) and the time that each Fund calculates its NAV (generally, the close of the NYSE) that may impact the value of securities traded in these foreign markets. As a result, each Fund fair values foreign securities using an independent pricing service which considers the correlation of the trading patterns of the foreign security to the intraday trading in the U.S. markets for investments such as American Depositary Receipts, financial futures, exchange traded funds and certain indexes as well as prices for similar securities. Such fair valuations are categorized as Level 2 in the hierarchy.
The following is a summary of the inputs used, as of October 31, 2015, in valuing the Funds’ investments carried at fair value:
Funds | Total Value at 10/31/15 | Level 1 Quoted Price | Level 2 Other Significant Observable Inputs | Level 3 Significant Unobservable Inputs | ||||||||||||
Polen Growth Fund | ||||||||||||||||
Investments in Securities* | $ | 685,330,973 | $ | 685,330,973 | $ | — | $ | — | ||||||||
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Polen Global Growth Fund | ||||||||||||||||
Australia | $ | 180,001 | $ | — | $ | 180,001 | $ | — | ||||||||
Cayman Islands | 447,322 | 198,510 | 248,812 | — | ||||||||||||
China | 194,406 | 194,406 | — | — | ||||||||||||
Denmark | 154,009 | 154,009 | — | — | ||||||||||||
Hong Kong | 291,994 | — | 291,994 | — | ||||||||||||
Ireland | 324,816 | 324,816 | — | — | ||||||||||||
Israel | 221,014 | 221,014 | — | — |
20
POLEN GROWTH FUNDS
Notes to Financial Statements
October 31, 2015
(Unaudited)
Total Value at 10/31/15 | Level 1 Quoted Price | Level 2 Other Significant Observable Inputs | Level 3 Significant Unobservable Inputs | |||||||||||||
Polen Global Growth Fund | ||||||||||||||||
(Continued) | ||||||||||||||||
Switzerland | $ | 577,608 | $ | — | $ | 577,608 | $ | — | ||||||||
United Kingdom | 436,612 | — | 436,612 | — | ||||||||||||
United States | 4,728,483 | 4,728,483 | — | — | ||||||||||||
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Total | $ | 7,556,265 | $ | 5,821,238 | $ | 1,735,027 | $ | — | ||||||||
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* Please refer to Portfolio of Investments for details on portfolio holdings.
At the end of each quarter, management evaluates the classification of Levels 1, 2 and 3 assets and liabilities. Various factors are considered, such as changes in liquidity from the prior reporting period; whether or not a broker is willing to execute at the quoted price; the depth and consistency of prices from third party pricing services; and the existence of contemporaneous, observable trades in the market. Additionally, management evaluates the classification of Level 1 and Level 2 assets and liabilities on a quarterly basis for changes in listings or delistings on national exchanges.
Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of the Funds’ investments may fluctuate from period to period. Additionally, the fair value of investments may differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially from the values the Funds may ultimately realize. Further, such investments may be subject to legal and other restrictions on resale or otherwise less liquid than publicly traded securities.
For fair valuations using significant unobservable inputs, U.S. generally accepted accounting principles (“U.S. GAAP”) require the Funds to present a reconciliation of the beginning to ending balances for reported market values that present changes attributable to total realized and unrealized gains or losses, purchase and sales, and transfers in and out of Level 3 during the period. Transfers in and out between Levels are based on values at the end of the period. U.S. GAAP also requires the Funds to disclose amounts and reasons for all transfers in and out of Level 1 and Level 2 fair value measurements. A reconciliation of Level 3 investments is presented only when the Funds had an amount of Level 3 investments at the end of the reporting period that was meaningful in relation to their net assets. The amounts and reasons for all transfers in and out of each Level within the three-tier hierarchy are disclosed when the Funds had an amount of total transfers during the reporting period that was meaningful in relation to their net assets as of the end of the reporting period.
21
POLEN GROWTH FUNDS
Notes to Financial Statements
October 31, 2015
(Unaudited)
For the period ended October 31, 2015, there were no transfers between Levels 1, 2 and 3 for the Funds.
Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes at the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates and those differences could be material.
Investment Transactions, Investment Income and Expenses — Investment transactions are recorded on trade date for financial statement preparation purposes. Realized gains and losses on investments sold are recorded on the identified cost basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date. Estimated components of distributions received from real estate investment trusts may be considered income, return of capital distributions or capital gain distributions. Return of capital distributions are recorded as a reduction of cost of the related investments. Distribution (12b-1) fees relating to a specific class are charged directly to that class. Fund level expenses common to all classes, investment income and realized and unrealized gains and losses on investments are generally allocated to each class of each Fund based upon the relative daily net assets of each class of each Fund. General expenses of the Trust are generally allocated to each Fund in proportion to its relative daily net assets. Expenses directly attributable to a particular Fund in the Trust are charged directly to that Fund. The Funds’ investment income, expenses (other than class specific expenses) and unrealized and realized gains and losses are allocated daily to each class of shares based upon the relative proportion of net assets of each class at the beginning of the day.
Foreign Currency Translation — Assets and liabilities initially expressed in non-U.S. currencies are translated into U.S. dollars based on the applicable exchange rates at the date of the last business day of the financial statement period. Purchases and sales of securities, interest income, dividends, variation margin received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rates in effect on the transaction date. The Funds do not separately report the effect of changes in foreign exchange rates from changes in market prices of securities held. Such changes are included with the net realized gain or loss and change in unrealized appreciation or depreciation on investment securities in the Statement of Operations. Other foreign currency transactions resulting in realized and unrealized gain or loss are reported separately as net realized gain or loss and change in unrealized appreciation or depreciation on foreign currencies in the Statement of Operations.
Dividends and Distributions to Shareholders — Dividends from net investment income and distributions from net realized capital gains, if any, are declared and paid at least annually to shareholders and are recorded on ex-date. Income dividends and capital gain distributions are determined in accordance with U.S. federal income tax regulations, which may differ from U.S. GAAP. These differences include the treatment of non-taxable dividends, expiring capital loss carryforwards and losses deferred due to wash sales and excise tax regulations. Permanent book and tax basis differences relating to shareholder distributions will result in reclassifications within the components of net assets.
22
POLEN GROWTH FUNDS
Notes to Financial Statements
October 31, 2015
(Unaudited)
U.S. Tax Status — No provision is made for U.S. income taxes as it is the Funds’ intention to continue to qualify for and elect the tax treatment applicable to regulated investment companies under Subchapter M of the Internal Revenue Code of 1986, as amended, and make the requisite distributions to its shareholders which will be sufficient to relieve it from U.S. income and excise taxes.
Other — In the normal course of business, the Funds may enter into contracts that provide general indemnifications. The Funds’ maximum exposure under these arrangements is dependent on claims that may be made against the Funds in the future, and therefore, cannot be estimated; however, based on experience, the risk of material loss for such claims is considered remote.
Currency Risk — The Funds invest in securities of foreign issuers, including American Depositary Receipts. These markets are subject to special risks associated with foreign investments not typically associated with investing in U.S. markets. Because the foreign securities in which the Funds may invest generally trade in currencies other than the U.S. dollar, changes in currency exchange rates will affect the Funds’ NAV, the value of dividends and interest earned and gains and losses realized on the sale of securities. Because the NAV for the Funds is determined on the basis of U.S. dollars, the Funds may lose money by investing in a foreign security if the local currency of a foreign market depreciates against the U.S. dollar, even if the local currency value of the Funds’ holdings goes up. Generally, a strong U.S. dollar relative to these other currencies will adversely affect the value of the Funds’ holdings in foreign securities.
Foreign Securities Market Risk — Securities of many non-U.S. companies may be less liquid and their prices more volatile than securities of comparable U.S. companies. Securities of companies traded in many countries outside the U.S., particularly emerging markets countries, may be subject to further risks due to the inexperience of local investment professionals and financial institutions, the possibility of permanent or temporary termination of trading and greater spreads between bid and asked prices of securities. In addition, non-U.S. stock exchanges and investment professionals are subject to less governmental regulation, and commissions may be higher than in the United States. Also, there may be delays in the settlement of non-U.S. stock exchange transactions.
2. Transactions with Affiliates and Related Parties
Polen Capital Management, LLC (“PCM” or the “Adviser”) serves as investment adviser to the Funds pursuant to an investment advisory agreement with the Trust. For its services, the Adviser is paid a monthly fee at the annual rate of 1.00% and 0.85% of the average daily net assets of the Polen Growth Fund and the Polen Global Growth Fund, respectively. The Adviser has contractually agreed to reduce its investment advisory fee and/or reimburse certain expenses of the Funds to the extent necessary to ensure that the
23
POLEN GROWTH FUNDS
Notes to Financial Statements
October 31, 2015
(Unaudited)
Funds’ total operating expenses (excluding taxes, any class-specific fees and expenses, interest, extraordinary items, “Acquired Fund” fees and expenses and brokerage commissions) do not exceed (on an annual basis) 1.00% of the Polen Growth Fund’s and 1.10% of the Polen Global Growth Fund’s, average daily net assets (the “Expense Limitations”). The Expense Limitations will remain in place until August 31, 2016 with respect to the Polen Growth Fund and August 31, 2018 with respect to the Polen Global Growth Fund, unless the Board of Trustees approves its earlier termination. With regard to the Polen Global Growth Fund, the Adviser is entitled to recover, subject to approval by the Board of Trustees, such amounts reduced or reimbursed for a period of up to three (3) years from the year in which the Adviser reduced its compensation and/or assumed expenses for the Fund. No recoupment will occur unless the Fund’s expenses are below the Expense Limitation. As of October 31, 2015, the amount of potential recovery was as follows:
Expiration
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04/30/2018 | 04/30/2019 | |||||||
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Polen Global Growth Fund | $80,469 | $98,356 |
For the period ended October 31, 2015, the Adviser waived fees of $394,079 and $98,356 for the Polen Growth Fund and Polen Global Growth Fund, respectively.
BNY Mellon Investment Servicing (US) Inc. (“BNY Mellon”) serves as administrator and transfer agent for the Funds. For providing administrative and accounting services, BNY Mellon is entitled to receive a monthly fee equal to an annual percentage rate of the Funds’ average daily net assets and is subject to certain minimum monthly fees. For providing transfer agency services, BNY Mellon is entitled to receive a monthly fee, subject to certain minimum, and out of pocket expenses.
The Bank of New York Mellon (the “Custodian”) provides certain custodial services to the Funds. The Custodian is entitled to receive a monthly fee, subject to certain minimum, and out of pocket expenses.
Foreside Funds Distributors LLC (the “Underwriter”) provides principal underwriting services to the Funds.
The Trust and the Underwriter are parties to an underwriting agreement. The Trust has adopted a distribution plan for Investor Shares in accordance with Rule 12b-1 under the 1940 Act. Pursuant to the Investor Shares plan, the Funds compensate the Underwriter for direct and indirect costs and expenses incurred in connection with advertising, marketing and other distribution services in an amount not to exceed 0.25% on an annualized basis of the average daily net assets of the Funds’ Investor Shares.
The Trustees of the Trust who are not officers or employees of an investment adviser, sub-adviser or other service provider to the Trust receive compensation in the form of an annual retainer and per
24
POLEN GROWTH FUNDS
Notes to Financial Statements
October 31, 2015
(Unaudited)
meeting fees for their services as a Trustee. The remuneration paid to the Trustees by the Funds during the six months ended October 31, 2015 was $11,339 and $1,977 for the Polen Growth Fund and Polen Global Growth Fund, respectively. Certain employees of BNY Mellon serve as Officers of the Trust. They are not compensated by the Funds or the Trust.
3. Investment in Securities
For the period ended October 31, 2015, aggregate purchases and sales of investment securities (excluding short-term investments) of the Funds were as follows:
Purchases | Sales | |||||||||
Polen Growth Fund | $ | 259,558,671 | $ | 24,421,811 | ||||||
Polen Global Growth Fund | $ | 4,731,226 | $ | 461,722 |
4. Capital Share Transactions
For the six months period ended October 31, 2015 and the period ended April 30, 2015, transactions in capital shares (authorized shares unlimited) were as follows:
Polen Growth Fund | ||||||||||||||||
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For the Six Months Ended (Unaudited) |
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| For the Year Ended April 30, 2015 |
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Shares | Amount | Shares | Amount | |||||||||||||
Institutional Class | ||||||||||||||||
Sales | 12,193,031 | $ | 236,546,232 | 8,166,603 | $ | 141,505,419 | ||||||||||
Reinvestments | — | — | 1,202,308 | 21,136,582 | ||||||||||||
Redemption Fees* | — | 12,145 | — | 13,873 | ||||||||||||
Redemptions | (2,316,669 | ) | (44,434,144 | ) | (4,099,281 | ) | (71,472,126 | ) | ||||||||
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Net increase | 9,876,362 | $ | 192,124,233 | 5,269,630 | $ | 91,183,748 | ||||||||||
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Investor Class | ||||||||||||||||
Sales | 3,239,093 | $ | 61,605,028 | 200,075 | $ | 3,427,055 | ||||||||||
Reinvestments | — | — | 116,473 | 2,032,445 | ||||||||||||
Redemption Fees* | — | 1,294 | — | 1,657 | ||||||||||||
Redemptions | (559,023 | ) | (10,540,137 | ) | (3,547,006 | ) | (59,840,261 | ) | ||||||||
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Net increase/(decrease) | 2,680,070 | $ | 51,066,185 | (3,230,458 | ) | $ | (54,379,104 | ) | ||||||||
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Total net increase | 12,556,432 | $ | 243,190,418 | 2,039,172 | $ | 36,804,644 | ||||||||||
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25
POLEN GROWTH FUNDS
Notes to Financial Statements
October 31, 2015
(Unaudited)
Polen Global Growth Fund** | ||||||||||||||||
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For the Six Months Ended October 31, 2015 (Unaudited) |
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Shares | Amount | Shares | Amount | |||||||||||||
Institutional Class | ||||||||||||||||
Sales | 500,193 | $ | 5,151,239 | 298,890 | $ | 2,990,783 | ||||||||||
Reinvestments | — | — | — | — | ||||||||||||
Redemptions | (2,564 | ) | (26,293 | ) | — | — | ||||||||||
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Net increase | 497,629 | $ | 5,124,946 | 298,890 | $ | 2,990,783 | ||||||||||
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Investor Class | ||||||||||||||||
Sales | 14,004 | $ | 145,386 | — | $ | — | ||||||||||
Reinvestments | — | — | — | — | ||||||||||||
Redemptions | — | — | — | — | ||||||||||||
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Net increase | 14,004 | $ | 145,386 | — | $ | — | ||||||||||
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Total net increase | 511,633 | $ | 5,270,332 | 298,890 | $ | 2,990,783 | ||||||||||
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* | There is a 2.00% redemption fee that may be charged on shares redeemed within the first 60 days of their acquisition. The redemption fees are retained by the Funds for the benefit of the remaining shareholders and recorded as paid-in capital. |
** | The Polen Global Growth Fund commenced operations on December 30, 2014. |
5. Federal Tax Information
The Funds have followed the authoritative guidance on accounting for and disclosure of uncertainty in tax positions, which requires the Funds to determine whether a tax position is more likely than not to be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The Funds have determined that there was no effect on the financial statements from following this authoritative guidance. In the normal course of business, the Funds are subject to examination by federal, state and local jurisdictions, where applicable, for tax years for which applicable statutes of limitations have not expired.
For the year ended April 30, 2015, the tax character of distributions paid by the Polen Growth Fund was $3,659,972 of ordinary income dividends and long-term capital gains of $21,343,753. Distributions from net investment income and short-term capital gains are treated as ordinary income for federal income tax purposes. There were no distributions paid by the Polen Global Growth Fund.
26
POLEN GROWTH FUNDS
Notes to Financial Statements (Concluded)
October 31, 2015
(Unaudited)
As of April 30, 2015 the components of distributable earnings on a tax basis were as follows:
Capital Loss Carryforward | Undistributed Ordinary Income | Undistributed Long-Term Gain | Unrealized Appreciation | |||||||
Polen Growth Fund | $— | $ — | $27,328,520 | $104,999,226 | ||||||
Polen Global Growth Fund | $— | $8,499 | $ — | $ 81,368 |
The differences between the book and tax basis components of distributable earnings relate primarily to the timing and recognition of income and gains for federal income tax purposes. Foreign currency and short-term capital gains are reported as ordinary income for federal income tax purposes.
As of October 31, 2015, the federal tax cost, aggregate gross unrealized appreciation and depreciation of securities held by each Fund were as follows:
Federal Tax Cost | Gross Unrealized Appreciation | Gross Unrealized Depreciation | Net Unrealized Appreciation | |||||||||||||
Polen Growth Fund | $ | 517,810,770 | $ | 170,102,078 | $ | (2,581,875 | ) | $ | 167,520,203 | |||||||
Polen Global Growth Fund | 6,859,488 | 757,521 | (60,744 | ) | 696,777 |
Accumulated capital losses represent net capital loss carryforwards as of April 30, 2015 that may be available to offset future realized capital gains and thereby reduce future capital gains distributions. As of April 30, 2015, the funds did not have any capital loss carryforwards.
6. Subsequent Event
Management has evaluated the impact of all subsequent events on the Funds through the date the financial statements were issued and has determined that there were no subsequent events requiring recognition or disclosure in the financial statements.
27
POLEN GROWTH FUNDS
Other Information
(Unaudited)
Proxy Voting
Policies and procedures that the Funds use to determine how to vote proxies relating to portfolio securities as well as information regarding how the Funds voted proxies relating to portfolio securities for the most recent 12-month period ended June 30 are available without charge, upon request, by calling (888) 678-6024 and on the Securities and Exchange Commission’s (“SEC”) website at http://www.sec.gov.
Quarterly Portfolio Schedules
The Trust files its complete schedule of portfolio holdings with the SEC for the first and third fiscal quarters of each fiscal year (quarters ended July 31 and January 31) on Form N-Q. The Trust’s Forms N-Q are available on the SEC’s website at http://www.sec.gov, and may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. Information on the operation of the SEC’s Public Reference Room may be obtained by calling 1-800-SEC-0330.
Approval of Advisory Agreement
At an in-person meeting held on September 21-22, 2015 (the “Meeting”), the Board of Trustees (the “Board” or “Trustees”) of FundVantage Trust (“Trust”), including a majority of the Trustees who are not “interested persons” as defined in the Investment Company Act of 1940, as amended (“1940 Act”) (the “Independent Trustees”), unanimously approved the continuation of the advisory agreement (“Agreement”) between Polen Capital Management, LLC (the “Adviser” or “Polen”) and the Trust on behalf of the Polen Growth Fund (the “Fund”) for an additional one year period. In determining whether to continue the Agreement, the Trustees considered information provided by the Adviser in accordance with Section 15(c) of the 1940 Act. The Trustees considered information that the Adviser provided regarding (i) services performed for the Fund, (ii) the size and qualifications of the Adviser’s portfolio management staff, (iii) any potential or actual material conflicts of interest which may arise in connection with a portfolio manager’s management of the Fund, (iv) investment performance, (v) the capitalization and financial condition of the Adviser, (vi) brokerage selection procedures (including soft dollar arrangements, if any), (vii) the procedures for allocating investment opportunities between the Fund and other clients, (viii) results of any regulatory examination, including any recommendations or deficiencies noted, (ix) any litigation, investigation or administrative proceeding which may have a material impact on the Adviser’s ability to service the Fund, (x) compliance with the Fund’s investment objective, policies and practices (including codes of ethics and proxy voting policies), and (xi) compliance with federal securities laws and other regulatory requirements. The Trustees noted the reports and discussions with portfolio managers at Board meetings throughout the year covering matters such as the relative performance of the Fund; compliance with the investment objectives, policies, strategies and limitations for the Fund; the compliance of management personnel
28
POLEN GROWTH FUNDS
Other Information (Continued)
(Unaudited)
with the applicable code of ethics; and the adherence to fair value pricing procedures as established by the Board. At the Meeting, the Trustees also received and reviewed a memorandum from legal counsel regarding the legal standard applicable to their review of the Agreement.
Representatives from Polen attended the meeting telephonically and discussed Polen’s history, performance and investment strategy in connection with the proposed continuation of the Agreement and answered questions from the Board.
The Trustees considered the investment performance of the Fund and the Adviser. The Trustees reviewed the historical performance charts for the year to date, one year, two year, three year and since inception periods ended June 30, 2015 for (i) the Investor Class and Institutional Class shares of the Fund; (ii) the Russell 1000 Growth Index; (iii) the S&P 500 Index and (iv) the Lipper Large Cap Growth Fund category, the Fund’s applicable Lipper peer group. The Trustees also received performance information for the Fund’s Institutional Class shares as compared to the Fund’s comparable separately managed account composite (gross of fees) for the one year and three year periods ended June 30, 2015. The Trustees noted that both the Institutional Class shares and Investor Class shares of the Fund had outperformed each of the Russell 1000 Growth Index, the S&P 500 Index and the median of the Lipper Large Cap Growth Fund category for the year-to date, one year and two year periods ended June 30, 2015 and had underperformed for the three year period ended June 30, 2015. The Trustees further noted that the Investor Class shares of the Fund had underperformed the Russell 1000 Growth Index and the S&P 500 Index and outperformed the median of the Lipper Large Cap Growth Fund category for the since inception period as of June 30, 2015. The Trustees also noted that the Institutional Class shares of the Fund had underperformed the Russell 1000 Growth Index and outperformed the S&P 500 Index and the median of the Lipper Large Cap Growth Fund category for the since inception period as of June 30, 2015. With respect to the Fund’s comparable separately managed account composite, the Trustees noted that the Fund’s Institutional Class shares underperformed the gross returns of the composite for the one year and three year periods ended June 30, 2015. The Trustees concluded that the performance of the Fund was within an acceptable range of performance relative to other mutual funds with similar investment objectives, strategies and policies based on the information provided at the Meeting.
The Adviser provided information regarding its advisory fees and an analysis of these fees in relation to the delivery of services to the Fund and any other ancillary benefit resulting from the Adviser’s relationship with the Fund. The Trustees considered the fees that the Adviser charges to its separately managed accounts, and evaluated the explanations provided by the Adviser as to differences in fees charged to the Fund and such accounts. The Trustees also reviewed a peer comparison of advisory fees and total expenses for the Fund versus other similarly managed funds. The Trustees noted that the net total expense ratio and gross advisory fee of the Fund’s Institutional Class and Investor Class shares were higher than the median of the net total expense ratio and gross advisory fee of funds with similar share classes in the Lipper Large Cap Growth Fund category with $500 million or less in assets. The Trustees concluded that the advisory fee and services provided by the Adviser are sufficiently consistent with those of other advisers which manage mutual funds with investment objectives, strategies and policies similar to those of the Fund based on the information provided at the Meeting.
29
POLEN GROWTH FUNDS
Other Information (Continued)
(Unaudited)
The Board considered the level and depth of knowledge of the Adviser, including the professional experience and qualifications of senior personnel. In evaluating the quality of services provided by the Adviser, the Board took into account its familiarity with the Adviser’s senior management through Board meetings, discussions and reports during the preceding year. The Board also took into account the Adviser’s compliance policies and procedures and reports regarding the Adviser’s compliance operations from the Trust’s Chief Compliance Officer. The Board also considered any potential conflicts of interest that may arise in a portfolio manager’s management of the Fund’s investments on the one hand, and the investments of other accounts, on the other. The Trustees reviewed the services provided to the Fund by the Adviser and concluded that the nature, extent and quality of the services provided were appropriate and consistent with the terms of the Agreement, that the quality of the services appeared to be consistent with industry norms and that the Fund is likely to benefit from the continued receipt of those services. They also concluded that the Adviser has sufficient personnel, with the appropriate education and experience, to serve the Fund effectively and had demonstrated their ability to attract and retain qualified personnel.
The Trustees considered the costs of the services provided by the Adviser, the compensation and benefits received by the Adviser in providing services to the Fund, as well as its profitability. The Trustees were provided with the Adviser’s audited financial statements for the years ended December 31, 2014 and December 31, 2013. The Trustees noted that the Adviser’s level of profitability is an appropriate factor to consider, and the Trustees should be satisfied that the Adviser’s profits are sufficient to continue as a healthy concern generally and as investment adviser of the Fund specifically. The Trustees concluded that the Adviser’s contractual advisory fee level was reasonable in relation to the nature and quality of the services provided, taking into account the fees charged by other advisers for managing comparable mutual funds with similar strategies. The Trustees also concluded that the overall expense ratio of the Fund was reasonable, taking into account the quality of services provided by the Adviser and the current size and projected growth of the Fund during the renewal term.
The Trustees considered the extent to which economies of scale would be realized relative to fee levels as the Fund grows, and whether the advisory fee levels reflect these economies of scale for the benefit of shareholders. The Trustees noted that economies of scale may be achieved at higher asset levels for the Fund for the benefit of fund shareholders but that because such economies of scale did not yet exist and were not likely to exist in the near term, it was not appropriate to incorporate a mechanism for sharing the benefit of such economies with Fund shareholders in the advisory fee structure at this time.
In voting to approve the continuation of the Agreement, the Board considered all factors it deemed relevant and the information presented to the Board by the Adviser. In arriving at its decision, the Board did not identify any single factor as being of paramount importance and each member of the Board gave
30
POLEN GROWTH FUNDS
Other Information (Concluded)
(Unaudited)
varying weights to each factor according to his or her own judgment. The Board determined that the continuation of the Agreement would be in the best interests of the Fund and its shareholders. As a result, the Board, including a majority of the Independent Trustees, unanimously approved the continuation of the Agreement for an additional one year period.
31
Investment Adviser
Polen Capital Management, LLC
1825 NW Corporate Blvd.
Suite 300
Boca Raton, FL 33431
Administrator
BNY Mellon Investment Servicing (US) Inc.
301 Bellevue Parkway
Wilmington, DE 19809
Transfer Agent
BNY Mellon Investment Servicing (US) Inc.
4400 Computer Drive
Westborough, MA 01581
Principal Underwriter
Foreside Funds Distributors LLC
400 Berwyn Park
899 Cassatt Road
Berwyn, PA 19312
Custodian
The Bank of New York Mellon
225 Liberty Street
New York, NY 10286
Independent Registered Public Accounting Firm
PricewaterhouseCoopers LLP
Two Commerce Square, Suite 1700
2001 Market Street
Philadelphia, PA 19103-7042
Legal Counsel
Pepper Hamilton LLP
3000 Two Logan Square
18th and Arch Streets
Philadelphia, PA 19103
POL-1015
Polen Growth Fund
Polen Global Growth
Fund
of
FundVantage Trust
Institutional Class
Investor Class
SEMI-ANNUAL
REPORT
October 31, 2015
(Unaudited)
This report is submitted for the general information of the shareholders of the Polen Growth Fund and the Polen Global Growth Fund. It is not authorized for distribution unless preceded or accompanied by a current prospectus for the Polen Growth Fund and the Polen Global Growth Fund.
PRIVATE CAPITAL MANAGEMENT VALUE FUND
Semi-Annual Investment Adviser’s Report
October 31, 2015
(Unaudited)
Dear Fellow Shareholder:
It has been a volatile six months for the stock market and a disappointing one for the Private Capital Management Value Fund (the “Fund”). For the six months ended October 31, 2015, Class I shares (VFPIX) returns were -9.12% compared the S&P 500 Index’s 0.77% and the Russell 2000 Index’s -4.12%. After a strong start for the first six months of fiscal 2015, the Fund’s portfolio experienced a number of headwinds that pressured stock prices in our portfolio. This letter sets forth our view of what is going on broadly with the stock market, and then addresses specifically what impacted the Fund’s results most significantly.
Financial markets were particularly volatile during the fiscal third quarter. By way of reference, the Dow Jones Industrial Average declined by more than 16% from its peak in May to its trough in late August. Broadly speaking, the two most significant factors causing investors to take flight were concerns over the depth and breadth of the increasingly apparent slowdown in China’s economy – brought into stark relief by a rather stunning decline in its stock market – juxtaposed against anticipation and/or concern that the Federal Reserve imminently would begin raising interest rates.
Most market participants are loath to see an end of the era of zero interest rates. Some of this concern is quite simplistic, translating into little more than the old saw that one should not “fight the Fed” when owning equities. More nuanced fears perhaps are founded in the worldwide deflation in commodity prices, which some see as the harbinger of a global recession. Investors are concerned that the Fed might act myopically, too focused on comparatively strong U.S. growth and relatively low unemployment to properly consider the possibility of a global economic slowdown. The concomitant worry was that an already strong dollar would continue appreciating, which diminishes the competitiveness of American products overseas and further reduces the value of foreign revenue and earnings.
We now know that the Fed demurred on the rate increase, specifically citing concern for the global economy, while pushing the earliest “lift-off” date into December. Meanwhile the Chinese stock market stabilized as investors deduced that while real, China’s economic slowdown was more likely than not a reset to a lower growth rate – think 4% to 6% rather than the prior government target of 7.5%. Such a slowdown would be disappointing by recent Chinese standards but hardly suggestive of the imminent arrival of the Four Horsemen of the Apocalypse.
We continue to believe that the “tightening” regime envisioned by the Fed is financially inconsequential to equities, psychologically important to investors and economically inimical to bonds. Said another way, to our way of thinking:
● A 1% short-rate (which is likely more than a year away) has virtually no effect on the discretionary cash flow value (DCF) of a business asset. From the standpoint of a private equity investor contemplating the purchase of an entire company, we believe the Fed’s tightening cycle presents far more opportunity than threat.
1
PRIVATE CAPITAL MANAGEMENT VALUE FUND
Semi-Annual Investment Adviser’s Report (Continued)
October 31, 2015
(Unaudited)
● We nevertheless expect that the process of raising rates will continue to engender concern among equity investors, particularly given economic uncertainty in Asia and significant developing economies such as Brazil.
● In the short run, it is unclear how long-term rates will respond to Fed policy. Worldwide economic sluggishness/choppiness, aided by weak commodity prices, suggests benign input-cost inflation. If the Fed is deemed to be “prudent” with its pace of tightening, we expect long-bonds could do OK for a while. The short end of the yield curve, however, should reprice down significantly.
We anticipated much of the above when we raised cash and pruned the Fund portfolio’s multinational exposure about a year ago. It is therefore intensely frustrating to have foreseen the storyline relatively well, but underperformed our expectations so significantly. This remains a very humbling business.
From a stock-specific standpoint, the most significant negative contributors over the past six months were dispersed broadly. Within technology, Quantum has been a long-term disappointment. Simply put, Quantum can be described as a tale of two businesses: a declining tape storage business and a very rapidly growing Scale-Out Storage business. Management is tasked with running the former to maximize cash flow which is redeployed into the latter in furtherance of its growth. Our investment case is predicated on the growth of Scale-Out, forecast publicly by the company to be around 50% this year, to overcome the decline in tape. This outcome, in our opinion, would change the overall corporate revenue trajectory and equity valuation substantially. We did not expect that tape storage would experience the sharp leg down that it did in the June quarter. While Scale-Out continued its growth trajectory, overall corporate results were quite disappointing and the stock suffered accordingly. That said, we continue to believe that the long-term fundamentals for Scale-Out will transcend the near-term weakness in the company’s legacy data protection business.
Our experience with specialty chemical manufacturer Tronox can only be described as frustrating. When we identified the stock it was a vertically integrated producer of titanium dioxide (TiO2), a chemical with important commercial properties for customers seeking to create either opacity or bright white colorants (think paint). There is no good substitute for TiO2 and after years of market over-supply, the fundamental outlook for both pricing and volume was steadily improving. The “kicker” was a massive and uniquely valuable set of tax attributes. In short, the former corporate owner of Tronox had been found guilty of fraudulently conveying environmental liabilities to Tronox prior to spinning the company off to shareholders back in 2006. The government sued the successor parent company (Anadarko) and won a multi-billion dollar settlement. By a quirk in the legal process, the government received the money but Tronox received the tax-loss attributes, bringing its total potential tax asset to approximately $10 billion. This was a long and convoluted process and we were quite certain that we had an analytical edge in the analysis.
2
PRIVATE CAPITAL MANAGEMENT VALUE FUND
Semi-Annual Investment Adviser’s Report (Continued)
October 31, 2015
(Unaudited)
Although Tronox is a North American producer, it now is apparent that we underestimated the degree by which the slowdown in China would cause TiO2 inventory to back-up into the rest of Asia, and eventually into Europe. A perfect storm ensued as a weak euro/strong dollar motivated the largest European manufacturer (Huntsman) to sell into the U.S. market at or near its cash breakeven point. The net result was a significant reversal in previously improving trends for TiO2. Further complicating the matter, earlier this year Tronox successfully completed a large acquisition that, in theory and in practice, has been meaningfully accretive to shareholder value. Although the acquired asset has performed well, the $1.6 billion transaction resulted in a substantial increase in the company’s financial leverage. While investors initially viewed the transaction positively – since it was significantly cash flow accretive and accelerated utilization of the company’s tax benefits – the current focus on China and uncertainty as to the length and depth of the renewed TiO2 down-cycle has resulted in heightened marketplace concern over the company’s debt load. The net result has been a precipitous decline in the stock price.
Much of the investment thesis for Tronox remains intact. Management is taking aggressive actions to reduce its corporate cost structure during the down cycle, which should result in significantly greater operating leverage when market conditions improve. We remain cognizant, however, that due to the aforementioned acquisition, the company’s capital structure is now heavily leveraged. However, there are no significant debt maturities until 2020, and the company continues to pay out over $110 million in annual dividends (which could be eliminated if necessary to conserve cash).
After a long period of sustained outperformance, our two large specialty pharmaceutical holdings, Allergan and Valeant Pharmaceuticals, were buffeted (the latter dramatically) by a number of investor concerns that began within a political context. Both companies have an extremely low tax rate: Allergan’s was facilitated through an inversion transaction with former PCM holding Warner Chilcott; Valeant is a Canadian corporation, with its positive tax attributes sustained by many elements of its organizational structure.
Within this context, the Allergan story is pretty easy. Unspecific – and to our mind unjustified – political noise caused the stock to decline significantly. It has, however, significantly recovered and the company has been reported to be in merger discussions with Pfizer. Unfortunately, the situation with Valeant has been far more difficult, distressing, and injurious to performance.
A complete explanation of what has transpired in Valeant would take longer than this letter allows but perhaps a recap of our experience with the company and some high-level thoughts can put our position in perspective. Back in 2010 we invested in a Canadian specialty pharmaceutical company called Biovail. The company had an important and valuable stable of neurological/psychotropic drugs. However, its stock was underfollowed and undervalued due to a controversial history, relatively modest new product
3
PRIVATE CAPITAL MANAGEMENT VALUE FUND
Semi-Annual Investment Adviser’s Report (Continued)
October 31, 2015
(Unaudited)
pipeline and Canadian domicile. We believed, correctly as it turned out, that the product portfolio was durable and mispriced and the Biovail’s tax structure was a potentially important strategic asset for an acquirer.
Biovail was subsequently acquired through a reverse stock-for-stock merger with Valeant. This marked our introduction to CEO Michael Pearson; we were given the opportunity to vet him and his strategy in detail. Ultimately we decided – in a move somewhat unusual for us – to remain invested in the successor company.
Pearson undertook an acquisition program that created vast shareholder value, almost in a straight line, for the next four years. During this advance, we managed the Fund’s exposure to the position by taking over three times our initial cost out of the portfolio. Even with these partial sales, Valeant remained a top five position for the Fund at the end of June.
Given our considerable history with the company, everything at Valeant appeared to be tracking according to plan – until, in rapid succession, the train was derailed. The bad news began when a prominent U.S. senator began questioning claimed abusive pharmaceutical price increases.
The issue of drug pricing – specifically how much of Valeant’s growth was coming from increases in unit volume versus pricing action – was one that we had carefully followed for years. It is important to note that drug pricing is complex and virtually all drug companies periodically engage in raising prices. Despite the depth of our analysis, and our conviction in the accuracy of our conclusions, we clearly underestimated the stock market consequence that would flow first from the political developments and then from one of the most shockingly effective bear raids that we have ever witnessed or endured.
Just as the drug pricing discussion was garnering further congressional interest, a website specializing in short-selling published an extraordinary attack on Valeant and its management. It alleged to have discovered a “smoking gun” and that Valeant was engaged in “Enron-like” accounting deceptions at a consolidated (but not owned) ���specialty pharmacy” affiliate named Philidor. To make matters worse, the very existence of this method of drug distribution caught many investors unaware; ignorance begat fear which begat panic, all of which resulted in the collapse of Valeant’s stock to a level not seen since late 2013.
We have carefully analyzed the accusations relating to the structure and organizational processes of the Philidor relationship. To be absolutely clear, we can find no evidence of the “channel stuffing, Enron-esque” fraud that was alleged. Having disproved the most damning allegations, our work unfortunately did reveal an imperfect storyline that ultimately led to Valeant severing its ties with Philidor as a distributor of its products.
The closing of Philidor will impact Valeant’s results. The company is providing Philidor customers with products at nominal expense (and receiving no insurance reimbursement) until an alternative distribution channel can be put in place over the next quarter or two. That cost does not trouble us at all. Our great concern is with the knock-on scrutiny of all aspects of the Valeant’s business.
4
PRIVATE CAPITAL MANAGEMENT VALUE FUND
Semi-Annual Investment Adviser’s Report (Continued)
October 31, 2015
(Unaudited)
While this situation has been painful, distressing and very disappointing, it is not our job to make ourselves feel better by eliminating the controversy and window dressing Valeant out of the portfolio. The company owns very valuable, long-duration assets that have not been permanently impaired – or even diminished – by the stupidity of recent events. We believe that CEO Michael Pearson either will be exonerated or replaced through a transparent and highly motivated investigation that includes independent directors.
We have written this extremely long letter for several reasons. First and foremost, we wanted to communicate transparently about our disappointing performance. As succinctly as possible, we wanted you to understand the details behind the largest drivers of our underperformance AND why we intend to stay the course. We trust our process and as an organization we have been through similar journeys before.
We are not arrogant about our insight, complacent about our conclusions or in any way sanguine about recent developments in the portfolio. We are, however, a research driven firm that must remain unemotional and measured in our management of your capital. Our job as value investors requires a contrarian bent and a strong stomach. While both have been tested in recent months, our empirical conclusion is that the positions we have discussed in this letter have experienced reversals in stock price far out of proportion to any softness in company specific fundamentals. As such, while very frustrated, we remain confident in the positioning of the Fund’s portfolio for long-term value creation.
We appreciate your continued support.
Private Capital Management
5
PRIVATE CAPITAL MANAGEMENT VALUE FUND
Semi-Annual Investment Adviser’s Report (Concluded)
October 31, 2015
(Unaudited)
Mutual Fund investing involves risk and it is possible to lose money by investing in a fund. The Fund is non-diversified and may invest a larger portion of its assets in the securities of a single issuer than a more diversified fund causing its value to fluctuate more widely. The Fund may engage in strategies that are considered risky or invest in stocks of companies that are undervalued which may cause greater volatility and less liquidity. The above commentary is for informational purposes only and investors should consider the investment objectives, risks, charges, and expenses of the Fund carefully before investing. This report is not authorized for distribution unless preceded or accompanied by a current prospectus for the Private Capital Management Value Fund. The prospectus contains this and other important information about the Fund. Read it carefully before investing.
Shares of the Private Capital Management Value Fund are distributed by Foreside Funds Distributors LLC, not an adviser affiliate. |
This letter is intended to assist shareholders in understanding how the Fund performed during the six months ended October 31, 2015 and reflects the views of the investment adviser at the time of this writing. Of course, these views may change and do not guarantee the future performance of the Fund or the markets.
Portfolio composition is subject to change. The current and future portfolio holdings of the Fund are subject to investment risks.
6
PRIVATE CAPITAL MANAGEMENT VALUE FUND
Semi-Annual Investment Adviser’s Report
Performance Data
October 31, 2015
(Unaudited)
Average Annual Total Returns for the Periods Ended October 31, 2015 | ||||||||||||||||||||
Six | 1 Year | 3 Years | 5 Years | Since | ||||||||||||||||
Class A Shares | -13.80% | -7.01% | 12.85% | 10.24% | 10.94% | |||||||||||||||
Class A Shares | -9.26% | -2.12% | 14.80% | 11.37% | 12.06% | |||||||||||||||
S&P 500® Index | 0.77% | 5.20% | 16.20% | 14.33% | 14.59%* | * | ||||||||||||||
Russell 2000® Index | -4.12% | 0.34% | 13.90% | 12.06% | 12.48%* | * |
† | Not Annualized. |
* | Class A Shares of the Private Capital Management Value Fund (the “Fund”) commenced operations on October 6, 2010. |
** | Benchmark performance is from the commencement date of Class A Shares (October 6, 2010) only and is not the inception date of the benchmark itself. |
Class A Shares of the Fund have a 5.00% maximum sales charge.
The performance data quoted represents past performance and does not guarantee future results. Current performance may be lower or higher. Performance data current to the most recent month-end may be obtained by calling (888) 568-1267. The investment return and principal value of an investment will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. The table does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
Class A Shares total annual gross and net operating expense ratios are 1.70% and 1.25%, respectively, of the Fund’s average daily net assets. These ratios are stated in the current prospectus dated September 1, 2015, and may differ from the actual expenses incurred by the Fund for the period covered by this report. Private Capital Management, LLC (the “Adviser”), has contractually agreed to reduce its investment advisory fee and/or reimburse certain expenses of the Fund to the extent necessary to ensure that the Fund’s total operating expenses excluding taxes, any class-specific fees and expenses (such as Rule 12b-1 distribution fees, shareholder service fees, or transfer agency fees), “Acquired Fund” fees and expenses, interest, extraordinary items and brokerage commissions do not exceed 1.00% (on an annual basis) of the Fund’s average daily net assets (the “Expense Limitation”). This agreement will terminate on August 31, 2016, unless the Board of Trustees of FundVantage Trust approves an earlier termination. The Adviser is entitled to recover, subject to approval by the Board of Trustees, such amounts reduced or reimbursed for a period of up to three (3) years from the year in which the Adviser reduced its compensation and/or assumed expenses for the Fund. No recoupment will occur unless the Fund’s expenses are below the Expense Limitation. Total return would be lower had such fees and expenses not been waived and/or reimbursed.
A 2.00% redemption fee applies to shares redeemed within 30 days of purchase. This redemption fee is not reflected in the returns shown above.
The Fund intends to evaluate performance as compared to that of Standard & Poor’s 500® Composite Stock Price Index (“S&P 500® Index”) and the Russell 2000® Index. The S&P 500® Index is a widely recognized, unmanaged index of 500 common stocks which are generally representative of the U.S. stock market as a whole. The Russell 2000® Index is an unmanaged index measuring the performance of the 2,000 smallest companies in the Russell 3000® Index, which is made up of 3,000 of the biggest U.S. stocks. It is impossible to invest directly in an index.
7
PRIVATE CAPITAL MANAGEMENT VALUE FUND
Semi-Annual Investment Adviser’s Report
Performance Data (Concluded)
October 31, 2015
(Unaudited)
Average Annual Total Returns for the Periods Ended October 31, 2015 | ||||||||||||||||||||
Six | 1 Year | 3 Years | 5 Years | 10 Years | ||||||||||||||||
Class I Shares* | -9.12% | -1.85% | 15.10% | 11.63% | 4.99% | |||||||||||||||
S&P 500® Index | 0.77% | 5.20% | 16.20% | 14.33% | 7.85% | |||||||||||||||
Russell 2000® Index | -4.12% | 0.34% | 13.90% | 12.06% | 7.47% | |||||||||||||||
† | Not Annualized. |
* | Performance shown for the period from October 31, 2005 to May 28, 2010 is the performance of a corporate defined contribution plan account (the “Predecessor Account”), which transferred its assets to the Fund in connection with the Fund’s commencement of operations on May 28, 2010. Performance from May 28, 2010 to October 31, 2015 is from the performance of the Class I Shares. The Predecessor Account was not registered as a mutual fund under the Investment Company Act of 1940, as amended (the “1940 Act”), and therefore was not subject to certain investment restrictions, limitations and diversification requirements imposed by the 1940 Act and the Internal Revenue Code of 1986, as amended. If the Predecessor Account had been registered under the 1940 Act, its performance may have been different. |
The performance data quoted represents past performance and does not guarantee future results. Current performance may be lower or higher. Performance data current to the most recent month-end may be obtained by calling (888) 568-1267. The investment return and principal value of an investment will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. The table does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
Class I Shares total annual gross and net operating expense ratios are 1.45% and 1.00%, respectively, of the Fund’s average daily net assets. These ratios are stated in the current prospectus dated September 1, 2015, and may differ from the actual expenses incurred by the Fund for the period covered by this report. Private Capital Management, LLC (the “Adviser”), has contractually agreed to reduce its investment advisory fee and/or reimburse certain expenses of the Fund to the extent necessary to ensure that the Fund’s total operating expenses excluding taxes, any class-specific fees and expenses (such as Rule 12b-1 distribution fees, shareholder service fees, or transfer agency fees), “Acquired Fund” fees and expenses, interest, extraordinary items and brokerage commissions) do not exceed 1.00% (on an annual basis) of the Fund’s average daily net assets (the “Expense Limitation”). This agreement will terminate on August 31, 2016, unless the Board of Trustees of FundVantage Trust approves an earlier termination. The Adviser is entitled to recover, subject to approval by the Board of Trustees, such amounts reduced or reimbursed for a period of up to three (3) years from the year in which the Adviser reduced its compensation and/or assumed expenses for the Fund. No recoupment will occur unless the Fund’s expenses are below the Expense Limitation. Total return would be lower had such fees and expenses not been waived and/or reimbursed.
A 2.00% redemption fee applies to shares redeemed within 30 days of purchase. This redemption fee is not reflected in the returns shown above.
The Fund intends to evaluate performance as compared to that of Standard & Poor’s 500® Composite Stock Price Index (“S&P 500® Index”) and the Russell 2000® Index. The S&P 500® Index is a widely recognized, unmanaged index of 500 common stocks which are generally representative of the U.S. stock market as a whole. The Russell 2000® Index is an unmanaged index measuring the performance of the 2,000 smallest companies in the Russell 3000® Index, which is made up of 3,000 of the biggest U.S. stocks. It is impossible to invest directly in an index.
8
PRIVATE CAPITAL MANAGEMENT VALUE FUND
Fund Expense Disclosure
October 31, 2015
(Unaudited)
As a shareholder of the Fund you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments, if any, and redemption fees; and (2) ongoing costs, including management fees, distribution and/or service (Rule 12b-1) fees, if any, and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
These examples are based on an investment of $1,000 invested at the beginning of the six-month period from May 1, 2015, through October 31, 2015 and held for the entire period.
Actual Expenses
The first line of the accompanying table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Examples for Comparison Purposes
The second line of the accompanying table provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not your Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare these 5% hypothetical examples with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that the expenses shown in the accompanying table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), if any, and redemption fees. Therefore, each hypothetical line of the accompanying table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
9
PRIVATE CAPITAL MANAGEMENT VALUE FUND
Fund Expense Disclosure (Concluded)
October 31, 2015
(Unaudited)
Private Capital Management Value Fund | |||||||||||||||
Beginning Account Value |
Ending Account Value |
Expenses Paid | |||||||||||||
Class A | |||||||||||||||
Actual | $ | 1,000.00 | $ | 907.40 | $ | 5.99 | |||||||||
Hypothetical (5% return before expenses) | 1,000.00 | 1,018.85 | 6.34 | ||||||||||||
Class I | |||||||||||||||
Actual | $ | 1,000.00 | $ | 908.80 | $ | 4.80 | |||||||||
Hypothetical (5% return before expenses) | 1,000.00 | 1,020.11 | 5.08 |
* | Expenses are equal to an annualized expenses ratio for the six-month period ended October 31, 2015 of 1.25% and 1.00% for Class A and Class I Shares, respectively, for the Fund, multiplied by the average account value over the period, multiplied by the number of days in the most recent period (184), then divided by 366 to reflect the period. The Fund’s ending account values on the first line in each table are based on the actual six month total return for the Fund of -9.26% and -9.12% for Class A and Class I Shares, respectively. |
10
PRIVATE CAPITAL MANAGEMENT VALUE FUND
Portfolio Holdings Summary Table
October 31, 2015
(Unaudited)
The following table presents a summary by sector of the portfolio holdings of the Fund:
% of Net Assets | Value | |||||||||
COMMON STOCKS: | ||||||||||
Consumer Discretionary | 27.2 | % | $ | 21,628,089 | ||||||
Health Care | 13.2 | 10,524,534 | ||||||||
Financials | 12.9 | 10,282,057 | ||||||||
Information Technology | 12.9 | 10,261,368 | ||||||||
Materials | 7.2 | 5,747,801 | ||||||||
Industrials | 5.7 | 4,511,064 | ||||||||
Utilities | 2.9 | 2,309,481 | ||||||||
Consumer Staples | 2.2 | 1,744,448 | ||||||||
Energy | 1.9 | 1,510,628 | ||||||||
Other Assets in Excess of Liabilities
|
| 13.9
|
|
| 11,103,805
|
| ||||
|
|
|
| |||||||
NET ASSETS | 100.0 | % | $ | 79,623,275 | ||||||
|
|
|
|
Portfolio holdings are subject to change at any time.
The accompanying notes are an integral part of the financial statements.
11
PRIVATE CAPITAL MANAGEMENT VALUE FUND
Portfolio of Investments
October 31, 2015
(Unaudited)
Number of Shares | Value | |||||||
COMMON STOCKS — 86.1% |
| |||||||
Consumer Discretionary — 27.2% |
| |||||||
Advance Auto Parts, Inc. | 10,975 | $ | 2,177,769 | |||||
American Public Education, Inc.* | 67,297 | 1,462,364 | ||||||
Ascena Retail Group, Inc.* | 169,850 | 2,262,402 | ||||||
Cabela’s, Inc.* | 36,120 | 1,414,820 | ||||||
Carrols Restaurant Group, Inc.* | 210,300 | 2,473,128 | ||||||
Fiesta Restaurant Group, Inc.* | 30,745 | 1,087,143 | ||||||
Fogo De Chao, Inc.* | 78,820 | 1,190,182 | ||||||
Gildan Activewear, Inc. (Canada) | 51,350 | 1,475,286 | ||||||
GNC Holdings, Inc., Class A | 32,175 | 957,206 | ||||||
Jamba, Inc.* | 120,713 | 1,599,447 | ||||||
Rent-A-Center, Inc. | 60,000 | 1,103,400 | ||||||
Stoneridge, Inc.* | 142,717 | 1,811,079 | ||||||
Visteon Corp.* | 23,965 | 2,613,863 | ||||||
|
| |||||||
21,628,089 | ||||||||
|
| |||||||
Consumer Staples — 2.2% |
| |||||||
SpartanNash Co. | 62,525 | 1,744,448 | ||||||
|
| |||||||
Energy — 1.9% |
| |||||||
Golar LNG, Ltd. (Bermuda) | 25,200 | 731,052 | ||||||
Noble Corp. PLC (United Kingdom) | 57,875 | 779,576 | ||||||
|
| |||||||
1,510,628 | ||||||||
|
| |||||||
Financials — 12.9% |
| |||||||
Anchor Bancorp Wisconsin, Inc.* | 21,000 | 861,420 | ||||||
Charter Financial Corp. | 56,000 | 733,600 | ||||||
INTL FCStone, Inc.* | 76,583 | 2,449,890 | ||||||
Northrim BanCorp, Inc. | 29,700 | 820,314 |
Number of Shares | Value | |||||||
COMMON STOCKS — (Continued) |
| |||||||
Financials — (Continued) |
| |||||||
Oppenheimer Holdings, Inc., Class A | 60,734 | $ | 1,114,469 | |||||
Raymond James Financial, Inc. | 19,600 | 1,080,156 | ||||||
State Bank Financial Corp. | 34,000 | 727,600 | ||||||
Suffolk Bancorp | 16,500 | 493,185 | ||||||
Synovus Financial Corp. | 24,014 | 759,563 | ||||||
Valley National Bancorp | 65,059 | 683,120 | ||||||
Willis Group Holdings PLC (Ireland) | 12,525 | 558,740 | ||||||
|
| |||||||
10,282,057 | ||||||||
|
| |||||||
Health Care — 13.2% |
| |||||||
Alere, Inc.* | 51,750 | 2,386,710 | ||||||
Allergan PLC (Ireland)* | 9,512 | 2,934,167 | ||||||
Universal Health Services, Inc., Class B | 13,900 | 1,697,051 | ||||||
Valeant Pharmaceuticals International, Inc. (Canada)* | 20,250 | 1,898,842 | ||||||
Zimmer Holdings, Inc. | 15,375 | 1,607,764 | ||||||
|
| |||||||
10,524,534 | ||||||||
|
| |||||||
Industrials — 5.7% |
| |||||||
Aerojet Rocketdyne Holdings, Inc.* | 62,450 | 1,057,903 | ||||||
Air Transport Services Group, Inc.* | 125,900 | 1,232,561 | ||||||
MSA Safety, Inc. | 13,575 | 590,241 | ||||||
Progressive Waste Solutions Ltd. (Canada) | 56,005 | 1,346,920 | ||||||
Triumph Group, Inc. | 6,085 | 283,439 | ||||||
|
| |||||||
4,511,064 | ||||||||
|
| |||||||
Information Technology — 12.9% |
| |||||||
ACI Worldwide, Inc.* | 53,000 | 1,269,350 |
The accompanying notes are an integral part of the financial statements.
12
PRIVATE CAPITAL MANAGEMENT VALUE FUND
Portfolio of Investments (Concluded)
October 31, 2015
(Unaudited)
Number of Shares | Value | |||||||
COMMON STOCKS — (Continued) |
| |||||||
Information Technology — (Continued) |
| |||||||
CA, Inc. | 48,732 | $ | 1,350,364 | |||||
Electro Rent Corp. | 54,880 | 569,654 | ||||||
Everi Holdings, Inc.* | 89,671 | 419,660 | ||||||
Imation Corp.* | 184,640 | 372,973 | ||||||
Mentor Graphics Corp. | 59,495 | 1,618,264 | ||||||
Quantum Corp.* | 1,489,078 | 1,250,826 | ||||||
QuinStreet, Inc.* | 309,174 | 1,715,916 | ||||||
VASCO Data Security International, Inc.* | 89,130 | 1,694,361 | ||||||
|
| |||||||
10,261,368 | ||||||||
|
| |||||||
Materials — 7.2% |
| |||||||
Celanese Corp. | 16,525 | 1,174,101 | ||||||
Pope Resources LP | 12,100 | 739,310 | ||||||
Real Industry, Inc.* | 224,200 | 2,129,900 | ||||||
Tronox Ltd., Class A (Australia) | 274,475 | 1,704,490 | ||||||
|
| |||||||
5,747,801 | ||||||||
|
| |||||||
Utilities — 2.9% |
| |||||||
National Fuel Gas Co. | 43,965 | 2,309,481 | ||||||
|
| |||||||
TOTAL COMMON STOCKS | 68,519,470 | |||||||
|
|
Value | ||||
TOTAL INVESTMENTS - 86.1% (Cost $53,848,847) | $ | 68,519,470 | ||
OTHER ASSETS IN EXCESS OF LIABILITIES - 13.9% | 11,103,805 | |||
|
| |||
NET ASSETS - 100.0% | $ | 79,623,275 | ||
|
|
* Non-income producing. |
PLC Public Limited Company |
The accompanying notes are an integral part of the financial statements.
13
PRIVATE CAPITAL MANAGEMENT VALUE FUND
Statement of Assets and Liabilities
October 31, 2015
(Unaudited)
Assets | ||||
Investments, at value (Cost $53,848,847) | $ | 68,519,470 | ||
Cash | 10,633,079 | |||
Receivable for investments sold | 837,831 | |||
Receivable for capital shares sold | 129,016 | |||
Dividends and interest receivable | 13,639 | |||
Prepaid expenses and other assets | 27,091 | |||
|
| |||
Total assets | 80,160,126 | |||
|
| |||
Liabilities | ||||
Payable for investments purchased | 384,563 | |||
Payable to Investment Adviser | 41,667 | |||
Payable for transfer agent fees | 30,787 | |||
Payable for capital shares redeemed | 30,598 | |||
Payable for administration and accounting fees | 13,570 | |||
Payable for custodian fees | 2,180 | |||
Accrued expenses | 33,486 | |||
|
| |||
Total liabilities | 536,851 | |||
|
| |||
Net Assets | $ | 79,623,275 | ||
|
| |||
Net Assets Consisted of: | ||||
Capital Stock, $0.01 par value | $ | 50,969 | ||
Paid-in capital | 62,224,691 | |||
Accumulated net investment income | 88,895 | |||
Accumulated net realized gain from investments | 2,588,097 | |||
Net unrealized appreciation on investments | 14,670,623 | |||
|
| |||
Net Assets | $ | 79,623,275 | ||
|
|
Class A: | ||||
Net asset value and redemption price per share ($8,569,917 / 553,329 shares) | $ | 15.49 | ||
|
| |||
Maximum offering price per share (100/95 of $15.49) | $ | 16.30 | ||
|
| |||
Class I: | ||||
Net asset value, offering and redemption price per share ($71,053,358 / 4,543,570 shares) | $ | 15.64 | ||
|
|
The accompanying notes are an integral part of the financial statements.
14
PRIVATE CAPITAL MANAGEMENT VALUE FUND
Statement of Operations
For the Six Months Ended October 31, 2015
(Unaudited)
Investment Income | ||||
Dividends | $ | 343,761 | ||
Less: foreign taxes withheld | (1,637 | ) | ||
|
| |||
Total investment income | 342,124 | |||
|
| |||
Expenses | ||||
Advisory fees (Note 2) | 363,534 | |||
Transfer agent fees (Note 2) | 43,173 | |||
Administration and accounting fees (Note 2) | 35,721 | |||
Legal fees | 19,540 | |||
Printing and shareholder reporting fees | 15,215 | |||
Audit fees | 13,710 | |||
Distribution fees (Class A) (Note 2) | 10,876 | |||
Trustees’ and officers’ fees (Note 2) | 10,482 | |||
Custodian fees (Note 2) | 8,072 | |||
Registration and filing fees | 6,589 | |||
Other expenses | 7,047 | |||
|
| |||
Total expenses before waivers and reimbursements | 533,959 | |||
|
| |||
Less: waivers (Note 2) | (119,156 | ) | ||
|
| |||
Net expenses after waivers | 414,803 | |||
|
| |||
Net investment loss | (72,679 | ) | ||
|
| |||
Net realized and unrealized loss from investments: | ||||
Net realized loss from investments | (1,834,072 | ) | ||
Net change in unrealized appreciation/(depreciation) on investments | (6,047,416 | ) | ||
|
| |||
Net realized and unrealized loss on investments | (7,881,488 | ) | ||
|
| |||
Net decrease in net assets resulting from operations | $ | (7,954,167 | ) | |
|
|
The accompanying notes are an integral part of the financial statements.
15
PRIVATE CAPITAL MANAGEMENT VALUE FUND
Statements of Changes in Net Assets
For the Six Months Ended October 31, 2015 (Unaudited) | For the Year Ended April 30, 2015 | |||||||||
Increase/(decrease) in net assets from operations: | ||||||||||
Net investment income/(loss) | $ | (72,679 | ) | $ | 15,005 | |||||
Net realized gain/(loss) from investments | (1,834,072 | ) | 7,444,070 | |||||||
Net change in unrealized appreciation/(depreciation) on investments | (6,047,416 | ) | 3,277,028 | |||||||
|
|
|
| |||||||
Net increase/(decrease) in net assets resulting from operations | (7,954,167 | ) | 10,736,103 | |||||||
|
|
|
| |||||||
Less Dividends and Distributions to Shareholders from: | ||||||||||
Net realized capital gains: | ||||||||||
Class A | — | (260,620 | ) | |||||||
Class I | — | (3,069,861 | ) | |||||||
|
|
|
| |||||||
Total net realized capital gains | — | (3,330,481 | ) | |||||||
|
|
|
| |||||||
Net decrease in net assets from dividends and distributions to shareholders | — | (3,330,481 | ) | |||||||
|
|
|
| |||||||
Increase in Net Assets Derived from Capital Share Transactions (Note 4) | 16,465,561 | 8,093,941 | ||||||||
|
|
|
| |||||||
Total increase in net assets | 8,511,394 | 15,499,563 | ||||||||
|
|
|
| |||||||
Net assets | ||||||||||
Beginning of period | 71,111,881 | 55,612,318 | ||||||||
|
|
|
| |||||||
End of period | $ | 79,623,275 | $ | 71,111,881 | ||||||
|
|
|
| |||||||
Accumulated net investment income, end of period | $ | 88,894 | $ | 161,574 | ||||||
|
|
|
|
The accompanying notes are an integral part of the financial statements.
16
PRIVATE CAPITAL MANAGEMENT VALUE FUND
Financial Highlights
Contained below is per share operating performance data for Class A Shares outstanding, total investment return, ratios to average net assets and other supplemental data for the respective period. 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). This information has been derived from information provided in the financial statements and should be read in conjunction with the financial statements and the notes thereto. |
Class A | ||||||||||||||||||||||||||||||
For the Six Months Ended October 31, 2015 (Unaudited) | For the Year Ended April 30, 2015 | For the Year Ended April 30, 2014 | For the Year Ended April 30, 2013 | For the Year Ended April 30, 2012 | For the Period October 6, 2010* to April 30, 2011 | |||||||||||||||||||||||||
Per Share Operating Performance | ||||||||||||||||||||||||||||||
Net asset value, beginning of period | $ | 17.07 | $ | 15.16 | $ | 13.60 | $ | 12.12 | $ | 12.61 | $ | 10.10 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Net investment income/(loss)(1) | (0.03 | ) | (0.03 | ) | (0.02 | ) | 0.07 | (0.03 | ) | (0.04 | ) | |||||||||||||||||||
Net realized and unrealized gain/(loss) on investments | (1.55 | ) | 2.88 | 2.45 | 1.48 | (0.16 | ) | 2.57 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Net increase/(decrease) in net assets resulting from operations | (1.58 | ) | 2.85 | 2.43 | 1.55 | (0.19 | ) | 2.53 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Dividends and distributions to shareholders from: | ||||||||||||||||||||||||||||||
Net investment income | — | — | — | (0.07 | ) | — | (0.02 | ) | ||||||||||||||||||||||
Net realized capital gains | — | (0.94 | ) | (0.87 | ) | — | (0.30 | ) | — | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Total dividends and distributions to shareholders | — | (0.94 | ) | (0.87 | ) | (0.07 | ) | (0.30 | ) | (0.02 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Redemption fees | — | (2) | — | — | (2) | — | — | (2) | — | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Net asset value, end of period | $ | 15.49 | $ | 17.07 | $ | 15.16 | $ | 13.60 | $ | 12.12 | $ | 12.61 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Total investment return(3) | (9.26 | )% | 19.11 | % | 18.04 | % | 12.92 | % | (1.16 | )% | 25.08 | % | ||||||||||||||||||
Ratio/Supplemental Data | ||||||||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $ | 8,570 | $ | 8,042 | $ | 7,643 | $ | 4,921 | $ | 2,922 | $ | 1,162 | ||||||||||||||||||
Ratio of expenses to average net assets | 1.25 | %(4) | 1.25 | % | 1.25 | % | 1.25 | % | 1.25 | % | 1.25 | %(4) | ||||||||||||||||||
Ratio of expenses to average net assets without waivers and expense reimbursements(5) | 1.54 | %(4) | 1.69 | % | 1.74 | % | 1.88 | % | 1.93 | % | 2.02 | %(4) | ||||||||||||||||||
Ratio of net investment income/(loss) to average net assets | (0.40 | )%(4) | (0.20 | )% | (0.15 | )% | 0.62 | % | (0.26 | )% | (0.59 | )%(4) | ||||||||||||||||||
Portfolio turnover rate | 8.23 | %(6) | 31.11 | % | 19.69 | % | 11.81 | % | 18.19 | %(7) | 21.71 | %(6)(7) |
* | Commencement of operations. |
(1) | The selected per share data was calculated using the average shares outstanding method for the period. |
(2) | Amount is less than $0.005 per share. |
(3) | Total investment return is calculated assuming a purchase of shares on the first day and a sale of shares on the last day of each period reported and includes reinvestments of dividends and distributions, if any. Total returns for periods less than one year are not annualized. Total investment return does not reflect the impact of the maximum front-end sales load of 5.00%. If reflected, the return would be lower. |
(4) | Annualized. |
(5) | During the period, certain fees were waived. If such fee waivers had not occurred, the ratios would have been as indicated (See Note 2). |
(6) | Not annualized. |
(7) | Portfolio turnover rate excludes securities received from processing subscription-in-kind. |
The accompanying notes are an integral part of the financial statements.
17
PRIVATE CAPITAL MANAGEMENT VALUE FUND
Financial Highlights
Contained below is per share operating performance data for Class I Shares outstanding, total investment return, ratios to average net assets and other supplemental data for the respective period. 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). This information has been derived from information provided in the financial statements and should be read in conjunction with the financial statements and the notes thereto. |
Class I | ||||||||||||||||||||||||||||||
For the Six Months Ended October 31, 2015 (Unaudited) | For the Year Ended April 30, 2015 | For the Year Ended April 30, 2014 | For the Year Ended April 30, 2013 | For the Year Ended April 30, 2012 | For the Period May 28, 2010* to April 30, 2011 | |||||||||||||||||||||||||
Per Share Operating Performance | ||||||||||||||||||||||||||||||
Net asset value, beginning of period | $ | 17.21 | $ | 15.24 | $ | 13.64 | $ | 12.15 | $ | 12.61 | $ | 10.00 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Net investment income/(loss)(1) | (0.01 | ) | 0.01 | 0.02 | 0.10 | — | (2) | — | (2) | |||||||||||||||||||||
Net realized and unrealized gain/(loss) on investments | (1.56 | ) | 2.90 | 2.45 | 1.49 | (0.16 | ) | 2.64 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Net increase/(decrease) in net assets resulting from operations | (1.57 | ) | 2.91 | 2.47 | 1.59 | (0.16 | ) | 2.64 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Dividends and distributions to shareholders from: | ||||||||||||||||||||||||||||||
Net investment income | — | — | — | (0.10 | ) | — | (2) | (0.03 | ) | |||||||||||||||||||||
Net realized capital gains | — | (0.94 | ) | (0.87 | ) | — | (0.30 | ) | — | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Total dividends and distributions to shareholders | — | (0.94 | ) | (0.87 | ) | (0.10 | ) | (0.30 | ) | (0.03 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Redemption fees | — | (2) | — | — | (2) | — | — | (2) | — | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Net asset value, end of period | $ | 15.64 | $ | 17.21 | $ | 15.24 | $ | 13.64 | $ | 12.15 | $ | 12.61 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Total investment return(3) | (9.12 | )% | 19.41 | % | 18.29 | % | 13.21 | % | (0.91 | )% | 26.39 | %(4) | ||||||||||||||||||
Ratio/Supplemental Data | ||||||||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $ | 71,053 | $ | 63,069 | $ | 47,969 | $ | 40,765 | $ | 43,024 | $ | 43,914 | ||||||||||||||||||
Ratio of expenses to average net assets | 1.00 | %(5) | 1.00 | % | 1.00 | % | 1.00 | % | 1.00 | % | 1.00 | %(5) | ||||||||||||||||||
Ratio of expenses to average net assets without waivers and expense reimbursements(6) | 1.30 | %(5) | 1.45 | % | 1.49 | % | 1.62 | % | 1.67 | % | 1.84 | %(5) | ||||||||||||||||||
Ratio of net investment income/(loss) to average net assets | (0.15 | )%(5) | 0.05 | % | 0.10 | % | 0.86 | % | (0.01 | )% | — | %(5)(7) | ||||||||||||||||||
Portfolio turnover rate | 8.23 | %(8) | 31.11 | % | 19.69 | % | 11.81 | % | 18.19 | %(9) | 21.71 | %(8)(9) |
* | Commencement of operations. |
(1) | The selected per share data was calculated using the average shares outstanding method for the period. |
(2) | Amount is less than $0.005 per share. |
(3) | Total investment return is calculated assuming a purchase of shares on the first day and a sale of shares on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total returns for periods less than one year are not annualized. |
(4) | Total investment return represents performance for Class I Shares since its commencement of operations on May 28, 2010, and does not include performance of the Predecessor Account. |
(5) | Annualized. |
(6) | During the period, certain fees were waived. If such fee waivers had not occurred, the ratios would have been as indicated (See Note 2). |
(7) | Amount is less than 0.005%. |
(8) | Not annualized. |
(9) | Portfolio turnover rate excludes securities received from processing subscription-in-kind. |
The accompanying notes are an integral part of the financial statements.
18
PRIVATE CAPITAL MANAGEMENT VALUE FUND
Notes to Financial Statements
October 31, 2015
(Unaudited)
1. Organization and Significant Accounting Policies
The Private Capital Management Value Fund (the “Fund”) is a non-diversified, open-end management investment company registered under the Investment Company Act of 1940, as amended, (the “1940 Act”), which commenced investment operations on May 28, 2010. The Fund is a separate series of FundVantage Trust (the “Trust”) which was organized as a Delaware statutory trust on August 28, 2006. The Trust is a “series trust” authorized to issue an unlimited number of separate series or classes of shares of beneficial interest. Each series is treated as a separate entity for certain matters under the 1940 Act, and for other purposes, and a shareholder of one series is not deemed to be a shareholder of any other series. The Fund offers separate classes of shares, Class A, Class C, Class I and Class R Shares. Class A Shares are sold subject to a front-end sales charge. Front-end sales charges may be reduced or waived under certain circumstances. A contingent deferred sales charge (“CDSC”) of up to 1.00% may apply for investments of $750,000 or more of Class A Shares (and therefore no initial sales charge was paid) and shares are redeemed within 12 months after initial purchase. The CDSC shall not apply to those purchases of Class A Shares of $750,000 or more where a selling broker-dealer did not receive a commission. As of October 31, 2015, Class C and Class R Shares had not been issued.
The Fund is an investment company and follows accounting and reporting guidance in the Financial Accounting Standards Board Accounting Standards Codification Topic 946.
Portfolio Valuation — The Fund’s net asset value (“NAV”) is calculated once daily at the close of regular trading hours on the New York Stock Exchange (“NYSE”) (typically 4:00 p.m. Eastern time) on each day the NYSE is open. Securities held by the Fund are valued using the closing price or the last sale price on a national securities exchange or the National Association of Securities Dealers Automatic Quotation System (“NASDAQ”) market system where they are primarily traded. Equity securities traded in the over-the-counter market are valued at their closing prices. If there were no transactions on that day, securities traded principally on an exchange or on NASDAQ will be valued at the mean of the last bid and ask prices prior to the market close. Fixed income securities having a remaining maturity of greater than 60 days are valued using an independent pricing service. Fixed income securities having a remaining maturity of 60 days or less are generally valued at amortized cost, provided such amount approximates fair value. Foreign securities are valued based on prices from the primary market in which they are traded and are translated from the local currency into U.S. dollars using current exchange rates. Investments in other open-end investment companies are valued based on the NAV of the investment companies (which may use fair value pricing as discussed in their prospectuses). If market quotations are unavailable or deemed unreliable, securities will be valued in accordance with procedures adopted by the Trust’s Board of Trustees. Relying on prices supplied by pricing services or dealers or using fair valuation may result in values that are higher or lower than the values used by other investment companies and investors to price the same investments.
19
PRIVATE CAPITAL MANAGEMENT VALUE FUND
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
Fair Value Measurements — The inputs and valuation techniques used to measure fair value of the Fund’s investments are summarized into three levels as described in the hierarchy below:
● Level 1 — | quoted prices in active markets for identical securities; | |
● Level 2 — | other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.); and | |
● Level 3 — | significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments). |
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
The following is a summary of the inputs used, as of October 31, 2015, in valuing the Fund’s investments carried at fair value:
Total Value at 10/31/15 | Level 1 Quoted Price | Level 2 Other Significant Observable Inputs | Level 3 Significant Unobservable Inputs | |||||||||||||
Investments in Securities* | $ | 68,519,470 | $ | 68,519,470 | $ | — | $ | — | ||||||||
|
|
|
|
|
|
|
|
* Please refer to Portfolio of Investments for further details on portfolio holdings. |
At the end of each quarter, management evaluates the classification of Levels 1, 2 and 3 assets and liabilities. Various factors are considered, such as changes in liquidity from the prior reporting period; whether or not a broker is willing to execute at the quoted price; the depth and consistency of prices from third party pricing services; and the existence of contemporaneous, observable trades in the market. Additionally, management evaluates the classification of Level 1 and Level 2 assets and liabilities on a quarterly basis for changes in listings or delistings on national exchanges.
Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of the Fund’s investments may fluctuate from period to period. Additionally, the fair value of investments may differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially from the values the Fund may ultimately realize. Further, such investments may be subject to legal and other restrictions on resale or otherwise less liquid than publicly traded securities.
For fair valuations using significant unobservable inputs, U.S. generally accepted accounting principles (“U.S. GAAP”) require the Fund to present a reconciliation of the beginning to ending balances for reported
20
PRIVATE CAPITAL MANAGEMENT VALUE FUND
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
market values that presents changes attributable to total realized and unrealized gains or losses, purchase and sales, and transfers in and out of Level 3 during the period. Transfers in and out between Levels are based on values at the end of the period. U.S. GAAP also requires the Fund to disclose amounts and reasons for all transfers in and out of Level 1 and Level 2 fair value measurements. A reconciliation of Level 3 investments is presented only when the Fund had an amount of Level 3 investments at the end of the reporting period that was meaningful in relation to its net assets. The amounts and reasons for all transfers in and out of each Level within the three-tier hierarchy are disclosed when the Fund had an amount of total transfers during the reporting period that was meaningful in relation to its net assets as of the end of the reporting period.
For the six months ended October 31, 2015, there were no transfers between Levels 1, 2 and 3.
Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes at the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates and those differences could be material.
Investment Transactions, Investment Income and Expenses — Investment transactions are recorded on trade date for financial statement preparation purposes. Realized gains and losses on investments sold are recorded on the identified cost basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date. Estimated components of distributions received from real estate investment trusts may be considered income, return of capital distributions or capital gain distributions. Return of capital distributions are recorded as a reduction of cost of the related investments. Distribution (12b-1) fees relating to a specific class are charged directly to that class. Fund level expenses common to all classes, investment income and realized and unrealized gains and losses on investments are generally allocated to each class based upon the relative daily net assets of each class. General expenses of the Trust are generally allocated to each fund in proportion to its relative daily net assets. Expenses directly attributable to a particular fund in the Trust are charged directly to that fund. The Funds’ investment income, expenses (other than class specific expenses) and unrealized and realized gains and losses are allocated daily to each class of shares based upon the relative proportion of net assets of each class at the beginning of the day.
Dividends and Distributions to Shareholders — Dividends from net investment income and distributions from net realized capital gains, if any, are declared, recorded on ex-date and paid at least annually to shareholders. Income dividends and capital gain distributions are determined in accordance with U.S. federal income tax regulations, which may differ from U.S. GAAP. These differences include the treatment of non-taxable dividends, expiring capital loss carryforwards and losses deferred due to wash sales and excise tax regulations. Permanent book and tax basis differences relating to shareholder distributions will result in reclassifications within the components of net assets.
21
PRIVATE CAPITAL MANAGEMENT VALUE FUND
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
U.S. Tax Status — No provision is made for U.S. income taxes as it is the Fund’s intention to continue to qualify for and elect the tax treatment applicable to regulated investment companies under Subchapter M of the Internal Revenue Code of 1986, as amended, and make the requisite distributions to its shareholders which will be sufficient to relieve it from U.S. income and excise taxes.
Other — In the normal course of business, the Fund may enter into contracts that provide general indemnifications. The Fund’s maximum exposure under these arrangements is dependent on claims that may be made against the Fund in the future, and therefore, cannot be estimated; however, based on experience, the risk of material loss for such claims is considered remote.
Currency Risk — The Fund invests in securities of foreign issuers, including American Depositary Receipts. These markets are subject to special risks associated with foreign investments not typically associated with investing in U.S. markets. Because the foreign securities in which the Fund may invest generally trade in currencies other than the U.S. dollar, changes in currency exchange rates will affect the Fund’s NAV, the value of dividends and interest earned and gains and losses realized on the sale of securities. Because the NAV for the Fund is determined on the basis of U.S. dollars, the Fund may lose money by investing in a foreign security if the local currency of a foreign market depreciates against the U.S. dollar, even if the local currency value of the Fund’s holdings goes up. Generally, a strong U.S. dollar relative to these other currencies will adversely affect the value of the Fund’s holdings in foreign securities.
2. Transactions with Affiliates and Related Parties
Private Capital Management, LLC (the “Adviser”) serves as the investment adviser to the Fund pursuant to an investment advisory agreement with the Trust (the “Advisory Agreement”). For its services, the Adviser is paid a monthly fee at the annual rate of 0.90% of the Fund’s average daily net assets. The Adviser has contractually agreed to reduce its investment advisory fee and/or reimburse certain expenses of the Fund to the extent necessary to ensure that the Fund’s total operating expenses excluding taxes, any class-specific fees and expenses (such as Rule 12b-1 distribution fees, shareholder service fees, or transfer agency fees), “Acquired Fund” fees and expenses, interest, extraordinary items and brokerage commissions) do not exceed 1.00% (on an annual basis) of the Fund’s average daily net assets (the “Expense Limitation”). The Expense Limitation will remain in place until August 31, 2016, unless the Board of Trustees approves its earlier termination. The Adviser is entitled to recover, subject to approval by the Board of Trustees, such amounts reduced or reimbursed for a period of up to three (3) years from the year in which the Adviser reduced its compensation and/or assumed expenses for the Fund. No recoupment will occur unless the Fund’s expenses are below the Expense Limitation.
22
PRIVATE CAPITAL MANAGEMENT VALUE FUND
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
As of October 31, 2015, the amount of potential recovery was as follows:
Expiration | ||||||
4/30/2016 |
4/30/2017 | 4/30/2018 | 4/30/2019 | |||
$271,563 |
$266,144 |
$273,334 |
$119,156 |
For the six months ended October 31, 2015, the Adviser earned fees of $363,534, and waived fees of $119,156. As of October 31, 2015, investment advisory fees payable to the Adviser were $41,667.
BNY Mellon Investment Servicing (US) Inc. (“BNY Mellon”) serves as administrator and transfer agent for the Fund. For providing administrative and accounting services, BNY Mellon is entitled to receive a monthly fee equal to an annual percentage rate of the Fund’s average daily net assets and is subject to certain minimum monthly fees. For providing transfer agency services, BNY Mellon is entitled to receive a monthly fee, subject to certain minimum, and out of pocket expenses.
The Bank of New York Mellon (the “Custodian”) provides certain custodial services to the Fund. The Custodian is entitled to receive a monthly fee, subject to certain minimum, and out of pocket expenses.
Foreside Funds Distributors LLC (the “Underwriter”) provides principal underwriting services to the Fund.
The Trust and the Underwriter are parties to an underwriting agreement. The Trust has adopted a distribution plan for Class A Shares in accordance with Rule 12b-1 under the 1940 Act. Pursuant to the Class A Shares plan, the Fund compensates the Underwriter for direct and indirect costs and expenses incurred in connection with advertising, marketing and other distribution services in an amount not to exceed 0.25% on an annualized basis of the average daily net assets of the Fund’s Class A Shares.
The Trustees of the Trust who are not officers or employees of an investment adviser, sub-adviser or other service provider to the Trust receive compensation in the form of an annual retainer and per meeting fees for their services as a Trustee. The remuneration paid to the Trustees by the Fund during the six months ended October 31, 2015 was $3,479. Certain employees of BNY Mellon serve as Officers of the Trust. They are not compensated by the Fund or the Trust.
23
PRIVATE CAPITAL MANAGEMENT VALUE FUND
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
3. Investment in Securities
For the six months ended October 31, 2015, aggregate purchases and sales of investment securities (excluding short-term investments) of the Fund were as follows:
Purchases | Sales | |||||||
Investment Securities |
$ |
20,627,306 |
|
$ |
5,429,909 |
|
4. Capital Share Transactions
For the six months ended October 31, 2015 and the year ended April 30, 2015, transactions in capital shares (authorized shares unlimited) were as follows:
For the Six Months Ended October 31, 2015 (Unaudited) | For the Year Ended April 30, 2015 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Class A | ||||||||||||||||
Sales | 101,819 | $ | 1,701,762 | 253,507 | $ | 4,121,934 | ||||||||||
Reinvestments | — | — | 15,985 | 258,803 | ||||||||||||
Redemption Fees* | — | 130 | — | — | ||||||||||||
Redemptions | (19,678 | ) | (332,258 | ) | (302,533 | ) | (4,852,369 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Net increase/(decrease) | 82,141 | $ | 1,369,634 | (33,041 | ) | $ | (471,632 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Class I | ||||||||||||||||
Sales | 1,090,887 | $ | 18,618,138 | 977,060 | $ | 16,001,028 | ||||||||||
Reinvestments | — | — | 175,840 | 2,867,941 | ||||||||||||
Redemption Fees* | — | 1,030 | — | — | ||||||||||||
Redemptions | (211,518 | ) | (3,523,241 | ) | (636,096 | ) | (10,303,396 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Net increase | 879,369 | $ | 15,095,927 | 516,804 | $ | 8,565,573 | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Total net increase | 961,510 | $ | 16,465,561 | 483,763 | $ | 8,093,941 | ||||||||||
|
|
|
|
|
|
|
|
* | There is a 2.00% redemption fee that may be charged on shares redeemed within the first 30 days of their acquisition. The redemption fees are retained by the Fund for the benefit of the remaining shareholders and recorded as paid-in capital. |
5. Federal Tax Information
The Fund has followed the authoritative guidance on accounting for and disclosure of uncertainty in tax positions, which requires the Fund to determine whether a tax position is more likely than not to be sustained upon examination, including resolution of any related appeals or litigation processes, based
24
PRIVATE CAPITAL MANAGEMENT VALUE FUND
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
on the technical merits of the position. The Fund has determined that there was no effect on the financial statements from following this authoritative guidance. In the normal course of business, the Fund is subject to examination by federal, state and local jurisdictions, where applicable, for tax years for which applicable statutes of limitations have not expired.
For the year ended April 30, 2015, the tax character of distributions paid by the Fund was $3,330,481 of long-term capital gains dividends. For the year ended April 30, 2014, the tax character of distributions paid by the Fund was $3,044,303 of long-term capital gains dividends. Distributions from net investment income and short-term capital gains are treated as ordinary income for federal income tax purposes.
As of April 30, 2015, the components of distributable earnings on a tax basis were as follows:
Capital Loss Carryforward | Undistributed Ordinary Income | Undistributed Long-Term Gain | Unrealized Appreciation/ (Depreciation) | Qualified Late-Year Losses | ||||
$ — | $14,170 | $4,784,147 | $20,503,465 | $— |
The differences between the book and tax basis components of distributable earnings relate primarily to the timing and recognition of income and gains for federal income tax purposes.
At October 31, 2015, the federal tax cost, aggregate gross unrealized appreciation and depreciation of securities held by the Fund were as follows:
Federal tax cost | $ | 53,848,847 | ||||
|
| |||||
Gross unrealized appreciation | $ | 18,828,680 | ||||
Gross unrealized depreciation | (4,158,057 | ) | ||||
|
| |||||
Net unrealized appreciation | $ | 14,670,623 | ||||
|
|
Pursuant to federal income tax rules applicable to regulated investment companies, the Fund may elect to treat certain capital losses between November 1 and April 30 and late year ordinary losses ((i) ordinary losses between January 1 and April 30, and (ii) specified ordinary and currency losses between November 1 and April 30) as occurring on the first day of the following tax year. For the year ended April 30, 2015, any amount of losses elected within the tax return will not be recognized for federal income tax purposes until May 1, 2015. For the year ended April 30, 2015, the Fund had no capital loss deferrals.
Accumulated capital losses represent net capital loss carryforwards as of April 30, 2015 that may be available to offset future realized capital gains and thereby reduce future capital gains distributions. As of April 30, 2015, the Fund did not have any capital loss carryforwards.
25
PRIVATE CAPITAL MANAGEMENT VALUE FUND
Notes to Financial Statements (Concluded)
October 31, 2015
(Unaudited)
6. Subsequent Events
Management has evaluated the impact of all subsequent events on the Fund through the date that the financial statements were issued, and has determined that there were no subsequent events requiring recognition or disclosure in the financial statements.
26
PRIVATE CAPITAL MANAGEMENT VALUE FUND
Other Information
(Unaudited)
Proxy Voting
Policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities as well as information regarding how the Fund voted proxies relating to portfolio securities for the most recent 12-month period ended June 30 are available without charge, upon request, by calling (888) 568-1267 and on the Securities and Exchange Commission’s (“SEC”) website at http://www.sec.gov.
Quarterly Portfolio Schedules
The Trust files its complete schedule of portfolio holdings with the SEC for the first and third fiscal quarters of each fiscal year (quarters ended July 31 and January 31) on Form N-Q. The Trust’s Forms N-Q are available on the SEC’s website at http://www.sec.gov and may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. Information on the operation of the SEC’s Public Reference Room may be obtained by calling 1-800-SEC-0330.
Approval of Advisory Agreement
At an in-person meeting held on June 23-24, 2015, the Board of Trustees ( “Board” or “Trustees”) of FundVantage Trust (“Trust”), including a majority of the Trustees who are not “interested persons” as defined in the Investment Company Act of 1940, as amended (“1940 Act”) (the “Independent Trustees”), unanimously approved the continuation of the advisory agreement between Private Capital Management, LLC (the “Adviser” or “PCM”) and the Trust on behalf of the Private Capital Management Value Fund (the “Fund”) (“Agreement”). In determining whether to continue the Agreement, the Trustees considered information provided by the Adviser in accordance with Section 15(c) of the 1940 Act. The Trustees considered information that the Adviser provided regarding (i) services performed for the Fund, (ii) the size and qualifications of their portfolio management staff, (iii) any potential or actual material conflicts of interest which may arise in connection with a portfolio manager’s management of the Fund, (iv) investment performance, (v) the capitalization and financial condition of the Adviser, (vi) brokerage selection procedures (including soft dollar arrangements, if any), (vii) the procedures for allocating investment opportunities between the Fund and other clients, (viii) results of any regulatory examination, including any recommendations or deficiencies noted, (ix) any litigation, investigation or administrative proceeding which may have a material impact on the Adviser’s ability to service the Fund, and (x) compliance with the Fund’s investment objectives, policies and practices (including codes of ethics and proxy voting policies), federal securities laws and other regulatory requirements. The Trustees noted the reports provided at Board meetings throughout the year covering matters such as the relative performance of the Fund; compliance with the investment objectives, policies, strategies and limitations for the Fund; the compliance of management personnel with the applicable code of ethics; and the adherence to fair value pricing procedures as established by the Board. The Trustees also noted that they had previously received and reviewed a memorandum from legal counsel regarding the legal standard applicable to their review of the Agreement.
27
PRIVATE CAPITAL MANAGEMENT VALUE FUND
Other Information (Continued)
(Unaudited)
Representatives from PCM attended the meeting in person and discussed PCM’s history, performance and investment strategy in connection with the proposed continuation of the Agreement and answered questions from the Board.
The Board considered the overall investment performance of the Fund and the Adviser. The Trustees reviewed the historical performance charts for the calendar year-to-date, one year, two year, three year and since inception periods ended March 31, 2015 for (i) the Fund’s Class A and Class I shares; (ii) the Russell 2000 Index; (iii) the S&P 500 Index; and (iv) the Lipper Mid-Cap Core Fund category, the Fund’s applicable Lipper peer group. The Trustees noted that the Fund’s Class A and Class I shares outperformed the S&P 500 Index for the year to date, one year and two year periods ended March 31, 2015 and underperformed for the three year and since inception periods. The Trustees noted that the Fund’s Class A shares outperformed the Russell 2000 Index for the one year, two year and since inception periods ended March 31, 2015 and underperformed for the year to date and three year periods. The Trustees noted that the Fund’s Class I shares outperformed the Russell 2000 Index for the one year and two year periods ended March 31, 2015 and underperformed for the year to date, three year and since inception periods. The Trustees further noted that the Fund’s Class A and Class I shares outperformed the median of the Lipper peer group for the one year and two year periods ended March 31, 2015 and underperformed for the year to date and three year periods. On a since inception basis through March 31, 2015, the Funds’ Class A shares outperformed the median of the Lipper peer group and the Fund’s Class I shares underperformed the median of the Lipper peer group, due in part to the differing inception dates of the Fund’s share classes.
The Trustees also reviewed the historical performance information for the one year, three year, five year, ten year and since inception periods ended April 30, 2015 for (i) the Fund’s Class I shares, including the performance of a corporate defined contribution plan, which transferred its assets to the Fund in connection with the Fund’s commencement of operations on May 28, 2010 (“Fund and Predecessor Account”); (ii) the Russell 2000 Index; (iii) the S&P 500 Index and (iv) the Adviser’s Value Equity Commission composite for its separately managed accounts business (“Composite”). The Trustees noted that the Fund and Predecessor Account outperformed the S&P 500 Index for the one year, three year and since inception periods ended April 30, 2015 and underperformed for the five year and ten year periods. They further noted that the Fund and Predecessor Account outperformed the Russell 2000 Index for the one year, three year, five year and since inception periods ended April 30, 2015, and underperformed for the ten year period. The Trustees noted that the Fund and Predecessor Account outperformed the Composite for the three year, five year and ten year periods ended April 30, 2015, and underperformed for the one year and since inception periods. The Trustees considered the short-term and long-term performance of the Fund. The Trustees took note of the various periods where the Fund outperformed, underperformed or performed in line with its respective Lipper peer group and benchmark. They concluded that the performance of the Fund was within an acceptable range of performance relative to other mutual funds with similar investment objectives, strategies and policies as measured by the information provided at the Meeting.
28
PRIVATE CAPITAL MANAGEMENT VALUE FUND
Other Information (Continued)
(Unaudited)
The Adviser provided information regarding its advisory fees and an analysis of these fees in relation to the delivery of services to the Fund and any other ancillary benefit resulting from the Adviser’s relationship with the Fund. The Trustees considered the fees that the Adviser charges to its separately managed accounts, and evaluated the explanations provided by the Adviser as to differences in fees charged to the Fund and separately managed accounts. The Trustees also reviewed a peer comparison of advisory fees and total expenses for the Fund versus other similarly managed funds. The Trustees noted that the gross advisory fee of the Fund’s Class A shares and Class I shares were higher than the median of the gross advisory fees of funds with similar share classes in the Lipper Mid-Cap Core category with $250 million or less in assets. They further noted that the net total expense ratios of the Fund’s Class shares and Class I shares were lower than the median of the net total expenses ratios of funds with similar share classes in the same categories. The Trustees concluded that the advisory fees and services provided by the Adviser are consistent with those of other advisers which manage mutual funds with investment objectives, strategies and policies similar to those of the Fund based on the information provided at the Meeting.
The Board considered the level and depth of knowledge of the Adviser, including the professional experience and qualifications of senior personnel. In evaluating the quality of services to be provided by the Adviser, the Board took into account its familiarity with the Adviser’s senior management through Board meetings, discussions and reports during the preceding year. The Board also took into account the Adviser’s compliance policies and procedures and reports regarding the Adviser’s compliance operations from the Trust’s Chief Compliance Officer. The Board also considered any potential conflicts of interest that may arise in a portfolio manager’s management of the Fund’s investments on the one hand, and the investments of other accounts, on the other. The Trustees reviewed the services provided to the Fund by the Adviser and concluded that the nature, extent and quality of the services provided were appropriate and consistent with the terms of the Agreement, that the quality of the services appeared to be consistent with industry norms and that the Fund is likely to benefit from the continued receipt of those services. They also concluded that the Adviser has sufficient personnel, with the appropriate education and experience, to serve the Fund effectively and had demonstrated their ability to attract and retain qualified personnel.
The Trustees considered the costs of the services provided by the Adviser, the compensation and benefits received by the Adviser in providing services to the Fund, as well as the Adviser’s profitability. The Trustees were provided with the most recent statement of financial condition (i.e., balance sheet) and statement of operations and change in member equity for the Adviser for the year ended December 31, 2014. The Trustees noted that the Adviser’s level of profitability is an appropriate factor to consider, and the Trustees should be satisfied that the Adviser’s profits are sufficient to continue as a healthy concern generally and as investment adviser of the Fund specifically. The Trustees concluded that the Adviser’s contractual advisory fee level was reasonable in relation to the nature and quality of the services provided, taking into account the current size and projected growth of the Fund.
29
PRIVATE CAPITAL MANAGEMENT VALUE FUND
Other Information (Concluded)
(Unaudited)
The Trustees considered the extent to which economies of scale would be realized relative to fee levels as the Fund grows, and whether the advisory fee levels reflect these economies of scale for the benefit of shareholders. The Board noted that economies of scale may be achieved at higher asset levels for the Fund for the benefit of fund shareholders, but that the advisory fee did not currently include breakpoint reductions as asset levels increased.
At this time, the Trustees determined to approve the continuation of the Agreement for an additional one year period. In voting to approve the continuation of the Agreement, the Board considered all factors it deemed relevant and the information presented to the Board by the Adviser. In arriving at its decision, the Board did not identify any single factor as being of paramount importance and each member of the Board gave varying weights to each factor according to his or her own judgment. The Board determined that the continuation of the Agreement would be in the best interests of the Fund and its shareholders. As a result, the Board, including a majority of the Independent Trustees, unanimously approved the continuation of the Agreement for an additional one year period.
30
Investment Adviser
Private Capital Management, LLC
8889 Pelican Bay Boulevard
Suite 500
Naples, FL 34108
Administrator
BNY Mellon Investment Servicing (US) Inc.
301 Bellevue Parkway
Wilmington, DE 19809
Transfer Agent
BNY Mellon Investment Servicing (US) Inc.
4400 Computer Drive
Westborough, MA 01581
Principal Underwriter
Foreside Funds Distributors LLC
400 Berwyn Park
899 Cassatt Road
Berwyn, PA 19312
Custodian
The Bank of New York Mellon
225 Liberty Street
New York, NY 10286
Independent Registered Public Accounting Firm
PricewaterhouseCoopers LLP
Two Commerce Square, Suite 1700
2001 Market Street
Philadelphia, PA 19103-7042
Legal Counsel
Pepper Hamilton LLP
3000 Two Logan Square
18th and Arch Streets
Philadelphia, PA 19103
PRI-1015
PRIVATE CAPITAL
MANAGEMENT VALUE
FUND
of
FundVantage Trust
Class A
Class I
SEMI-ANNUAL
REPORT
October 31, 2015
(Unaudited)
This report is submitted for the general information of the shareholders of the Private Capital Management Value Fund. It is not authorized for distribution unless preceded or accompanied by a current prospectus for the Private Capital Management Value Fund.
QUALITY DIVIDEND FUND
Semi-Annual Investment Adviser’s Report
October 31, 2015
(Unaudited)
Dear Shareholder,
During the six-month period ended October 31, 2015, the Quality Dividend Fund (the “Fund”) Class A Shares (without the sales charge) were down 4.13%, compared to a 0.77% increase for the Standard & Poor’s 500® Index (“S&P 500”). Since inception on September 30, 2013, the Fund’s Class A Shares (without the sales charge) have risen at an annualized rate of 7.80% versus 13.00% for the S&P 500. Weakness in energy and concerns about the possibility of the Fed beginning to raise short-term lending rates have been headwinds in 2015. This was especially evident in our investment in Master Limited Partnerships (MLP’s), which suffered sharp declines related both to concerns over rising interest rates and the struggling price of oil. Real Estate Investment Trust (REITs) also experienced declines amid Fed-related concerns. Exposure to MLP’s and REIT’s combined accounted for 25% of the portfolio for much of the past 6 months. The Fund carried a market weight in Energy, which also weighed on price returns.
While the impact of these forces can be difficult for short-term price performance, our focus remains on Fund holdings achieving the objectives of maintaining and growing an attractive level of income. As of October 31, 2015, the average yield of the Fund’s holdings was 4.3%, and 23 of the 26 holdings had announced dividend increases for the year, with the increases averaging 7.2%.
Changes
There have been 6 changes to the Fund in the last 6 months. The changes had the objectives of reducing exposure to areas of risk and upgrading the quality of the portfolio when price weakness provided opportunities to pick up stocks at attractive yields. Given the dual impact of interest rates and weakness in Energy, we exited two MLP positions, selling Enbridge Energy Partners LP and Energy Transfer Partners LP. We also removed Royal Dutch Plc to further reduce exposure to energy. Additional removals included Iron Mountain, which failed to raise its dividend, BCE Inc. and Consolidated Edison. Additions included Ford Motor Company, Coca-Cola Company, Duke Energy Corp. and Wells Fargo and Company.
1
QUALITY DIVIDEND FUND
Semi-Annual Investment Adviser’s Report (Concluded)
October 31, 2015
(Unaudited)
Outlook
We feel the Fund is positioned well to continue pursuing its objectives. On average, portfolio constituents are paying out 63% of their earnings in dividends, providing ample cushion for maintaining current dividends. Reduced exposure to Energy and MLP’s has decreased risk posed by continuing low oil prices. The average projected earnings growth of 6.8% more than supports 3-year projected dividend growth of 6.3%. The average P/E of the holdings stands at 15.1x, well below the S&P 500 P/E of 16.5x. We believe the low relative valuation, manageable dividend payout ratio and solid earnings growth align well with the Fund’s objectives of achieving current income and providing long-term growth of capital.
Sincerely,
Larry Baker, CFA
Portfolio Manager
Richard E. Cripps, CFA
Portfolio Manager
Michael S. Scherer
Portfolio Manager
Investments cannot be made directly in an Index. Unmanaged index returns assume reinvestment of any and all distributions and do not reflect fees, expenses, or sales charges.
This letter is intended to assist shareholders in understanding how the Fund performed during the six-month period ended October 31, 2015 and reflects the views of the investment adviser at the time of this writing. Of course, these views may change and do not guarantee the future performance of the Fund or the markets.
The above commentary is for informational purposes only and does not represent an offer, recommendation or solicitation to buy, hold or sell any security. The specific securities identified and described do not represent all of the securities purchased or sold and you should not assume that investments in the securities identified and discussed will be profitable.
Portfolio composition is subject to change. The current and future portfolio holdings of the Fund are subject to investment risk.
2
QUALITY DIVIDEND FUND
Semi-Annual Report
Performance Data
October 31, 2015
(Unaudited)
Average Annual Total Returns for the Periods Ended October 31, 2015† | ||||||||||||||
Six | 1 Year | Since Inception | ||||||||||||
Class A (with sales charge) | -9.63% | -6.31% | 4.79% | |||||||||||
Class A (without sales charge) | -4.13% | -0.61% | 7.80% | |||||||||||
Class C | -4.58% | -1.38% | 7.02% | |||||||||||
S&P 500 Index | 0.77% | 5.20% | 13.00% | * | ||||||||||
S&P 500 Index | 0.77% | 5.20% | 13.00% | ** |
† | The Quality Dividend Fund (“the Fund”) Class A Shares commenced operations on September 30, 2013; Class C Shares commenced operations on October 1, 2013. |
†† | Not annualized. |
* | Benchmark performance is from the inception date of Class A Shares of the Fund (September 30, 2013) only and is not the inception date of the benchmark itself. |
** | Benchmark performance is from the inception date of Class C Shares of the Fund (October 1, 2013) only and is not the inception date of the benchmark itself. |
The performance data quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment in the Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. The graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares. Current performance may be lower or higher. Performance data current to the most recent month end may be obtained by calling (888) 201-5799.
The returns of Class A shares reflect a deduction for the maximum front end sales charge of 5.75%.
The Fund’s total annual gross and net operating expenses, as stated in the current prospectus dated September 16, 2015, are 1.63% and 1.25%, respectively, for Class A Shares and 2.38% and 2.00%, respectively, for Class C Shares of the Fund’s average daily net assets. These rates may fluctuate and may differ from the actual expenses incurred by the Fund for the period covered by this report. Choice Financial Partners, Inc., d/b/a EquityCompass Strategies (“EquityCompass” or the “Adviser”) has contractually agreed to reduce its investment advisory fee and/or reimburse certain expenses of the Fund to the extent necessary to ensure that the Fund’s total operating expenses (excluding taxes, any class-specific fees and expenses, “Acquired Fund” fees and expenses, interest, extraordinary items and brokerage commissions) do not exceed 0.99% of average daily net assets of the Fund (the “Expense Limitation”). The Expense Limitation will remain in effect until September 30, 2016, unless the Board of Trustees of FundVantage Trust (the “Trust”) approves its earlier termination. The Adviser is entitled to recover, subject to approval by the Board of Trustees, such amounts reduced or reimbursed for a period of up to three (3) years from the year in which the Adviser reduced its compensation and/or assumed expenses for the Fund. No recoupment will occur unless the Fund’s expenses are below the Expense Limitation. Total fees would be higher had such fees and expenses not been waived and/or reimbursed.
A 1.00% redemption fee applies to shares redeemed within 60 days of purchase. The redemption fee is not reflected in the returns shown above.
3
QUALITY DIVIDEND FUND
Semi-Annual Report
Performance Data (Concluded)
October 31, 2015
(Unaudited)
The Fund intends to evaluate performance as compared to that of the S&P 500. The S&P 500 is a widely recognized, unmanaged index of 500 common stocks which are generally representative of the U.S. stock market as a whole. It is impossible to invest directly in an index.
Mutual fund investing involves risk, including possible loss of principal. The Fund’s dividend income and distributions will fluctuate, and at times the Fund may underperform other funds that invest more broadly or that have different investment styles. Some of the assets in which the Fund may invest entail special risks. Foreign stocks may be affected by currency fluctuations, social and political instability, and lax regulatory and financial reporting standards. Master Limited Partnerships (“MLPs”) may fluctuate abruptly in value and be difficult to liquidate. Real Estate Investment Trusts (“REITs”) entail risks related to real estate, such as tenant defaults, declining occupancy rates, and falling property values due to deteriorating economic conditions. Listed REIT stocks may fluctuate erratically in market price while non-listed REITs may be illiquid.
4
QUALITY DIVIDEND FUND
Fund Expense Disclosure
October 31, 2015
(Unaudited)
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments, if any, and redemption fees; and (2) ongoing costs, including management fees, distribution and/or service (Rule 12b-1) fees, if any, and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
These examples are based on an investment of $1,000 invested at the beginning of the six-month period from May 1, 2015 through October 31, 2015 and held for the entire period.
Actual Expenses
The first line of each accompanying table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Examples for Comparison Purposes
The second line of each accompanying table provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not your Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare these 5% hypothetical examples with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that the expenses shown in the accompanying table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), if any, or redemption fees. Therefore, the second line of the accompanying table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
5
QUALITY DIVIDEND FUND
Fund Expense Disclosure (Concluded)
October 31, 2015
(Unaudited)
Quality Dividend Fund | |||||||||||||||
Beginning Account Value | Ending Account Value October 31, 2015 | Expenses Paid During Period* | |||||||||||||
Class A | |||||||||||||||
Actual | $ | 1,000.00 | $ | 958.70 | $ | 6.11 | |||||||||
Hypothetical (5% return before expenses) | 1,000.00 | 1,018.90 | 6.29 | ||||||||||||
Class C | |||||||||||||||
Actual | $ | 1,000.00 | $ | 954.20 | $ | 9.78 | |||||||||
Hypothetical (5% return before expenses) | 1,000.00 | 1,015.13 | 10.08 |
* | Expenses are equal to an annualized expense ratio for the six-month period ended October 31, 2015 of 1.24% and 1.99% for Class A and Class C Shares, respectively, for the Fund, multiplied by the average account value over the period, multiplied by the number of days in the most recent period (184), then divided by 366 to reflect the period. The Fund’s ending account values on the first line in the table are based on the actual six month total returns for the Fund of (4.13%) and (4.58%) for Class A and Class C Shares, respectively. |
6
QUALITY DIVIDEND FUND
Portfolio Holdings Summary Table
October 31, 2015
(Unaudited)
The following table presents a summary by sector of the portfolio holdings of the Fund:
% of Net Assets | Value | |||||||
COMMON STOCKS: | ||||||||
REITs | 11.8% | $ 6,803,019 | ||||||
Pharmaceuticals | 10.9 | 6,317,656 | ||||||
Commercial Banks | 7.8 | 4,485,826 | ||||||
Household Products | 7.8 | 4,485,006 | ||||||
Electric Utilities | 7.3 | 4,198,496 | ||||||
Diversified Telecommunication Services | 7.1 | 4,073,777 | ||||||
Oil, Gas & Consumable Fuels | 6.8 | 3,919,657 | ||||||
Software | 4.4 | 2,556,409 | ||||||
Chemicals | 4.3 | 2,463,729 | ||||||
Hotels, Restaurants & Leisure | 4.2 | 2,416,069 | ||||||
Tobacco | 3.9 | 2,280,720 | ||||||
Beverages | 3.9 | 2,268,690 | ||||||
Automobiles | 3.8 | 2,213,266 | ||||||
Communications Equipment | 3.8 | 2,191,129 | ||||||
Multiline Retail | 3.6 | 2,098,370 | ||||||
Machinery | 3.4 | 1,952,628 | ||||||
Computers & Peripherals | 2.9 | 1,655,724 | ||||||
Exchange Traded Fund | 1.1 | 671,682 | ||||||
Other Assets in Excess of Liabilities | 1.2 | 672,096 | ||||||
NET ASSETS | 100.0% | $57,723,949 |
Portfolio holdings are subject to change at any time.
The accompanying notes are an integral part of the financial statements.
7
QUALITY DIVIDEND FUND
Portfolio of Investments
October 31, 2015
(Unaudited)
Number of Shares | Value | |||||||
COMMON STOCKS — 97.7% |
| |||||||
Automobiles — 3.8% |
| |||||||
Ford Motor Co. | 149,444 | $ | 2,213,266 | |||||
|
| |||||||
Beverages — 3.9% |
| |||||||
Coca-Cola Co. (The) | 53,570 | 2,268,690 | ||||||
|
| |||||||
Chemicals — 4.3% |
| |||||||
Dow Chemical Co. (The) | 47,682 | 2,463,729 | ||||||
|
| |||||||
Commercial Banks — 7.8% |
| |||||||
Bank of Montreal (Canada) | 39,324 | 2,284,331 | ||||||
Wells Fargo & Co. | 40,663 | 2,201,495 | ||||||
|
| |||||||
4,485,826 | ||||||||
|
| |||||||
Communications Equipment — 3.8% |
| |||||||
Cisco Systems, Inc. | 75,949 | 2,191,129 | ||||||
|
| |||||||
Computers & Peripherals — 2.9% |
| |||||||
Seagate Technology PLC (Ireland) | 43,503 | 1,655,724 | ||||||
|
| |||||||
Diversified Telecommunication Services — 7.1% |
| |||||||
AT&T, Inc. | 60,625 | 2,031,544 | ||||||
Verizon Communications, Inc. | 43,563 | 2,042,233 | ||||||
|
| |||||||
4,073,777 | ||||||||
|
| |||||||
Electric Utilities — 7.3% |
| |||||||
Duke Energy Corp. | 29,162 | 2,084,208 | ||||||
Southern Co. (The) | 46,880 | 2,114,288 | ||||||
|
| |||||||
4,198,496 | ||||||||
|
| |||||||
Hotels, Restaurants & Leisure — 4.2% |
| |||||||
McDonald’s Corp. | 21,524 | 2,416,069 | ||||||
|
| |||||||
Household Products — 7.8% |
| |||||||
Kimberly-Clark Corp. | 18,681 | 2,236,302 | ||||||
Procter & Gamble Co. (The) | 29,441 | 2,248,704 | ||||||
|
| |||||||
4,485,006 | ||||||||
|
|
Number of Shares | Value | |||||||
COMMON STOCKS — (Continued) |
| |||||||
Machinery — 3.4% |
| |||||||
Caterpillar, Inc. | 26,752 | $ | 1,952,628 | |||||
|
| |||||||
Multiline Retail — 3.6% |
| |||||||
Target Corp. | 27,188 | 2,098,370 | ||||||
|
| |||||||
Oil, Gas & Consumable Fuels — 6.8% |
| |||||||
Buckeye Partners L.P. † | 30,651 | 2,079,057 | ||||||
Kinder Morgan, Inc. | 67,298 | 1,840,600 | ||||||
|
| |||||||
3,919,657 | ||||||||
|
| |||||||
Pharmaceuticals — 10.9% |
| |||||||
GlaxoSmithKline PLC, SP ADR | 48,312 | 2,080,315 | ||||||
Johnson & Johnson | 21,237 | 2,145,574 | ||||||
Pfizer, Inc. | 61,850 | 2,091,767 | ||||||
|
| |||||||
6,317,656 | ||||||||
|
| |||||||
REITs — 11.8% |
| |||||||
Digital Realty Trust, Inc. | 33,156 | 2,452,218 | ||||||
Omega Healthcare Investors, Inc. | 63,518 | 2,192,641 | ||||||
Welltower, Inc. | 33,269 | 2,158,160 | ||||||
|
| |||||||
6,803,019 | ||||||||
|
| |||||||
Software — 4.4% |
| |||||||
Microsoft Corp. | 48,564 | 2,556,409 | ||||||
|
| |||||||
Tobacco — 3.9% |
| |||||||
Philip Morris International, Inc. | 25,800 | 2,280,720 | ||||||
|
| |||||||
TOTAL COMMON STOCKS | 56,380,171 | |||||||
|
|
The accompanying notes are an integral part of the financial statements.
8
QUALITY DIVIDEND FUND
Portfolio of Investments (Concluded)
October 31, 2015
(Unaudited)
Number of Shares | Value | |||||||
EXCHANGE TRADED FUND — 1.1% |
| |||||||
SPDR S&P Dividend ETF | 8,639 | $ | 671,682 | |||||
|
| |||||||
TOTAL EXCHANGE TRADED FUND (Cost $635,576) | 671,682 | |||||||
|
| |||||||
TOTAL INVESTMENTS - 98.8% |
| 57,051,853 | ||||||
|
| |||||||
OTHER ASSETS IN EXCESS OF LIABILITIES - 1.2% | 672,096 | |||||||
|
| |||||||
NET ASSETS - 100.0% | $ | 57,723,949 | ||||||
|
|
L.P. | Limited Partnership | |
PLC | Public Limited Company | |
REIT | Real Estate Investment Trust | |
SP ADR | Sponsored American Depository Receipt | |
† | Master Limited Partnerships |
The accompanying notes are an integral part of the financial statements.
9
QUALITY DIVIDEND FUND
Statement of Assets and Liabilities
October 31, 2015
(Unaudited)
Assets | ||||
Investments, at value (Cost $55,677,698) | $57,051,853 | |||
Cash | 511,694 | |||
Receivable for investments sold | 42,797 | |||
Receivable for capital shares sold | 141,367 | |||
Dividends and interest receivable | 206,085 | |||
Prepaid expenses and other assets | 31,332 | |||
Total assets | 57,985,128 | |||
Liabilities | ||||
Payable for investments purchased | 135,462 | |||
Payable for distribution fees | 21,412 | |||
Payable for Investment Adviser | 18,794 | |||
Payable for capital shares redeemed | 18,314 | |||
Payable for transfer agent fees | 16,182 | |||
Payable for administration and accounting fees | 13,254 | |||
Payable for custodian fees | 9,988 | |||
Payable for shareholder servicing fees | 4,693 | |||
Accrued expenses | 23,080 | |||
Total liabilities | 261,179 | |||
Net Assets | $57,723,949 | |||
Net Assets Consisted of: | ||||
Capital stock, $0.01 par value | $ 52,137 | |||
Paid-in capital | 56,881,554 | |||
Accumulated net investment income | 209,166 | |||
Accumulated net realized loss from investments | (793,063 | ) | ||
Net unrealized appreciation on investments | 1,374,155 | |||
Net Assets | $57,723,949 | |||
Class A: | ||||
Net asset value and redemption price per share ($35,236,335 / 3,188,615 shares) | $11.05 | |||
Maximum offering price per share (100/94.25 of $11.05) | $11.72 | |||
Class C: | ||||
Net asset value, offering and redemption price per share ($22,487,614 / 2,025,042 shares) | $11.10 |
The accompanying notes are an integral part of the financial statements.
10
QUALITY DIVIDEND FUND
Statement of Operations
For the Six Months Ended October 31, 2015
(Unaudited)
Investment Income | ||||
Dividends | $ | 1,067,275 | ||
Less: foreign taxes withheld | (19,665 | ) | ||
Interest | 23 | |||
|
| |||
Total investment income | 1,047,633 | |||
|
| |||
Expenses | ||||
Advisory fees (Note 2) | 169,189 | |||
Distribution fees (Class C) (Note 2) | 80,791 | |||
Distribution fees (Class A) (Note 2) | 43,565 | |||
Administration and accounting fees (Note 2) | 35,575 | |||
Transfer agent fees (Note 2) | 20,399 | |||
Custodian fees (Note 2) | 17,934 | |||
Shareholder Servicing fees (Class C) | 26,931 | |||
Trustees’ and officers’ fees (Note 2) | 15,723 | |||
Printing and shareholder reporting fees | 14,744 | |||
Legal fees | 13,809 | |||
Audit fees | 12,414 | |||
Registration and filing fees | 5,668 | |||
Other expenses | 2,584 | |||
|
| |||
Total expenses before waivers | 459,326 | |||
|
| |||
Less: waivers (Note 2) | (28,877 | ) | ||
|
| |||
Net expenses after waivers | 430,449 | |||
|
| |||
Net investment income | 617,184 | |||
|
| |||
Net realized and unrealized loss from investments: | ||||
Net realized loss from investments | (1,498,473 | ) | ||
Net change in unrealized appreciation/(depreciation) on investments | (1,571,976 | ) | ||
|
| |||
Net realized and unrealized loss on investments | (3,070,449 | ) | ||
|
| |||
Net decrease in net assets resulting from operations | $ | (2,453,265 | ) | |
|
|
The accompanying notes are an integral part of the financial statements.
11
QUALITY DIVIDEND FUND
Statements of Changes in Net Assets
For the Six Months Ended October 31, 2015 (Unaudited) | For the Year Ended April 30, 2015 | |||||||||
Increase in net assets from operations | ||||||||||
Net investment income | $ | 617,184 | $ | 854,857 | ||||||
Net realized gain/(loss) from investments | (1,498,473 | ) | 1,095,201 | |||||||
Net change in unrealized appreciation/(depreciation) on investments | (1,571,976 | ) | 1,505,181 | |||||||
|
|
|
| |||||||
Net increase/(decrease) in net assets resulting from operations | (2,453,265 | ) | 3,455,239 | |||||||
|
|
|
| |||||||
Less Dividends and Distributions to Shareholders from: | ||||||||||
Net investment income: | ||||||||||
Class A | (386,590 | ) | (683,408 | ) | ||||||
Class C | (172,425 | ) | (155,091 | ) | ||||||
|
|
|
| |||||||
Total net investment income | (559,015 | ) | (838,499 | ) | ||||||
|
|
|
| |||||||
Net realized capital gain: | ||||||||||
Class A | — | (327,448 | ) | |||||||
Class C | — | (160,307 | ) | |||||||
|
|
|
| |||||||
Total net realized capital gain | — | (487,755 | ) | |||||||
|
|
|
| |||||||
Net decrease in net assets from dividends and distributions to shareholders | (559,015 | ) | (1,326,254 | ) | ||||||
|
|
|
| |||||||
Increase in Net Assets Derived from Capital Share Transactions (Note 4) | 4,287,647 | 25,485,806 | ||||||||
|
|
|
| |||||||
Total increase in net assets | 1,275,367 | 27,614,791 | ||||||||
|
|
|
| |||||||
Net assets | ||||||||||
Beginning of period | 56,448,582 | 28,833,791 | ||||||||
|
|
|
| |||||||
End of period | $ | 57,723,949 | $ | 56,448,582 | ||||||
|
|
|
| |||||||
Accumulated net investment income, end of period | $ | 209,166 | $ | 150,997 | ||||||
|
|
|
|
The accompanying notes are an integral part of the financial statements.
12
QUALITY DIVIDEND FUND
Financial Highlights
Contained below is per share operating performance data for each Class A Share outstanding, total investment return, ratios to average net assets and other supplemental data for the respective period. 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). This information has been derived from information provided in the financial statements and should be read in conjunction with the financial statements and the notes thereto.
Class A | ||||||||||||
For the | For the Year Ended April 30, 2015 | For the Period September 30, 2013* to April 30, 2014 | ||||||||||
Per Share Operating Performance | ||||||||||||
Net asset value, beginning of period | $ 11.66 | $ 11.02 | $ 10.00 | |||||||||
Net investment income(1) | 0.14 | 0.27 | 0.16 | |||||||||
Net realized and unrealized gain/(loss) on investments | (0.63) | 0.79 | 0.96 | |||||||||
Net increase/(decrease) in net assets resulting from operations | (0.49) | 1.06 | 1.12 | |||||||||
Dividends and distributions to shareholders from: | ||||||||||||
Net Investment Income | (0.12) | (0.28) | (0.10) | |||||||||
Net realized capital gain | — | (0.14) | — | |||||||||
Total dividends and distributions | (0.12) | (0.42) | (0.10) | |||||||||
Redemption Fees | —(2) | —(2) | —(2) | |||||||||
Net asset value, end of period | $ 11.05 | $ 11.66 | $ 11.02 | |||||||||
Total investment return(3) | (4.13)% | 9.65% | 11.27% | |||||||||
Ratio/Supplemental Data | ||||||||||||
Net assets, end of period (000’s omitted) | $35,236 | $35,629 | $20,745 | |||||||||
Ratio of expenses to average net assets | 1.24%(4) | 1.24% | 1.24%(4) | |||||||||
Ratio of expenses to average net assets without waivers and expense reimbursements(5) | 1.34%(4) | 1.62% | 2.97%(4) | |||||||||
Ratio of net investment income to average net assets | 2.48%(4) | 2.33% | 2.65%(4) | |||||||||
Portfolio turnover rate | 30.20%(6) | 67.56% | 10.71%(6) |
* | Commencement of operations. |
(1) | The selected per share data was calculated using the average shares outstanding method for the period. |
(2) | Amount is less than $0.005 per share. |
(3) | Total investment return is calculated assuming a purchase of shares on the first day and a sale of shares on the last day of each period reported and includes reinvestments of dividends and distributions, if any. Total returns for periods less than one year are not annualized. Total investment return does not reflect the impact of the maximum front-end sales load of 5.75%. If reflected, the return would be lower. |
(4) | Annualized. |
(5) | During the period, certain fees were waived and/or reimbursed. If such fee waivers and/or reimbursements had not occurred, the ratios would have been as indicated (See Note 2). |
(6) | Not annualized. |
The accompanying notes are an integral part of the financial statements.
13
QUALITY DIVIDEND FUND
Financial Highlights (Continued)
Contained below is per share operating performance data for each Class C Share outstanding, total investment return, ratios to average net assets and other supplemental data for the respective period. 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). This information has been derived from information provided in the financial statements and should be read in conjunction with the financial statements and the notes thereto.
Class C | ||||||||||||
For the | For the Year Ended April 30, 2015 | For the Period October 1, 2013* to April 30, 2014 | ||||||||||
Per Share Operating Performance | ||||||||||||
Net asset value, beginning of period | $ 11.73 | $ 11.02 | $ 10.00 | |||||||||
Net investment income(1) | 0.10 | 0.18 | 0.12 | |||||||||
Net realized and unrealized gain/(loss) on investments | (0.64) | 0.80 | 0.96 | |||||||||
Net increase/(decrease) in net assets resulting from operations | (0.54) | 0.98 | 1.08 | |||||||||
Dividends and distributions to shareholders from: | ||||||||||||
Net investment income | (0.09) | (0.13) | (0.06) | |||||||||
Net realized capital gain | — | (0.14) | — | |||||||||
Total dividends and distributions | (0.09) | (0.27) | (0.06) | |||||||||
Redemption Fees | —(2) | —(2) | —(2) | |||||||||
Net asset value, end of period | $ 11.10 | $ 11.73 | $ 11.02 | |||||||||
Total investment return(3) | (4.58)% | 8.91% | 10.84% | |||||||||
Ratio/Supplemental Data | ||||||||||||
Net assets, end of period (000’s omitted) | $22,488 | $20,820 | $8,089 | |||||||||
Ratio of expenses to average net assets | 1.99%(4) | 1.99% | 1.99%(4) | |||||||||
Ratio of expenses to average net assets without waivers and expense reimbursements(5) | 2.09%(4) | 2.35% | 3.72%(4) | |||||||||
Ratio of net investment income to average net assets | 1.73%(4) | 1.58% | 1.46%(4) | |||||||||
Portfolio turnover rate | 30.20%(6) | 67.56% | 10.71%(6) |
* | Commencement of operations. |
(1) | The selected per share data was calculated using the average shares outstanding method for the period. |
(2) | Amount is less than $0.005 per share. |
(3) | Total investment return is calculated assuming a purchase of shares on the first day and a sale of shares on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total returns for periods less than one year are not annualized. |
(4) | Annualized. |
(5) | During the period, certain fees were waived and/or reimbursed. If such fee waivers and/or reimbursements had not occurred, the ratios would have been as indicated (See Note 2). |
(6) | Not annualized. |
The accompanying notes are an integral part of the financial statements.
14
QUALITY DIVIDEND FUND
Notes to Financial Statements
October 31, 2015
(Unaudited)
1. Organization and Significant Accounting Policies
The Quality Dividend Fund (the “Fund”) is a diversified, open-end management investment company registered under the Investment Company Act of 1940, as amended, (the “1940 Act”), which commenced investment operations on September 30, 2013. The Fund is a separate series of FundVantage Trust (the “Trust”) which was organized as a Delaware statutory trust on August 28, 2006. The Trust is a “series trust” authorized to issue an unlimited number of separate series or classes of shares of beneficial interest. Each series is treated as a separate entity for certain matters under the 1940 Act, and for other purposes, and a shareholder of one series is not deemed to be a shareholder of any other series. The Fund offers separate classes of shares; Class A, Class C and Institutional Class Shares. Class A shares are subject to a front end sales charge. Front-end sales charges may be reduced or waived under certain circumstances. A contingent deferred sales charge (“CDSC”), as a percentage of the lower of the original purchase price or net asset value at redemption, of 1.00% may be imposed on full or partial redemptions of Class A Shares made within twelve months of purchase where (i) $1 million or more of Class A Shares was purchased without an initial sales charge and (ii) the selling broker-dealer received a commission for such sale. A CDSC of 1% may apply to Class C Shares when shares are redeemed within 12 months after initial purchase. As of October 31, 2015, Institutional Class Shares have not been issued.
The Fund is an investment company and follows accounting and reporting guidance in the Financial Accounting Standards Board Accounting Standards Codification Topic 946.
Portfolio Valuation — The Fund’s net asset value (“NAV”) is calculated once daily at the close of regular trading hours on the New York Stock Exchange (“NYSE”) (typically 4:00 p.m. Eastern time) on each day the NYSE is open. Securities held by the Fund are valued using the closing price or the last sale price on a national securities exchange or the National Association of Securities Dealers Automatic Quotation System (“NASDAQ”) market system where they are primarily traded. Equity securities traded in the over-the-counter (“OTC”) market are valued at their closing prices. If there were no transactions on that day, securities traded principally on an exchange or on NASDAQ will be valued at the mean of the last bid and ask prices prior to the market close. Fixed income securities having a remaining maturity of greater than 60 days are valued using an independent pricing service. Fixed income securities having a remaining maturity of 60 days or less are generally valued at amortized cost, provided such amount approximates fair value. Foreign securities are valued based on prices from the primary market in which they are traded and are translated from the local currency into U.S. dollars using current exchange rates. Investments in other open-end investment companies are valued based on the NAV of the investment companies (which may use fair value pricing as discussed in their prospectuses). If market quotations are unavailable or deemed unreliable, securities will be valued in accordance with procedures adopted by the Trust’s Board of Trustees. Options are valued at last sale price. Relying on prices supplied by pricing services or dealers or using fair valuation may result in values that are higher or lower than the values used by other investment companies and investors to price the same investments.
15
QUALITY DIVIDEND FUND
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
Fair Value Measurements — The inputs and valuation techniques used to measure fair value of the Fund’s investments are summarized into three levels as described in the hierarchy below:
● | Level 1 | — | quoted prices in active markets for identical securities; | |||
● | Level 2 | — | other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.); and | |||
● | Level 3 | — | significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments). |
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
The following is a summary of the inputs used, as of October 31, 2015, in valuing the Fund’s investments carried at fair value:
Total Market Value at 10/31/15 | Level 1 Quoted Price | Level 2 Other Significant Observable Inputs | Level 3 Significant Unobservable Inputs | |||||
Investments in Securities* |
$57,051,853 |
$57,051,853 |
$ — |
$ — |
* Please refer to Portfolio of Investments for further details.
At the end of each quarter, management evaluates the classification of Levels 1, 2 and 3 assets and liabilities. Various factors are considered, such as changes in liquidity from the prior reporting period; whether or not a broker is willing to execute at the quoted price; the depth and consistency of prices from third party pricing services; and the existence of contemporaneous, observable trades in the market. Additionally, management evaluates the classification of Level 1 and Level 2 assets and liabilities on a quarterly basis for changes in listings or delistings on national exchanges.
Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of the Fund’s investments may fluctuate from period to period. Additionally, the fair value of investments may differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially from the values the Fund may ultimately realize. Further, such investments may be subject to legal and other restrictions on resale or otherwise less liquid than publicly traded securities.
16
QUALITY DIVIDEND FUND
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
For fair valuations using significant unobservable inputs, U.S. generally accepted accounting principles (“U.S. GAAP”) require the Fund to present a reconciliation of the beginning to ending balances for reported market values that presents changes attributable to total realized and unrealized gains or losses, purchase and sales, and transfers in and out of Level 3 during the period. Transfers in and out between Levels are based on values at the end of the period. U.S. GAAP also requires the Fund to disclose amounts and reasons for all transfers in and out of Level 1 and Level 2 fair value measurements. A reconciliation of Level 3 investments is presented only when the Fund had an amount of Level 3 investments at the end of the reporting period that was meaningful in relation to its net assets. The amounts and reasons for all transfers in and out of each Level within the three-tier hierarchy are disclosed when the Fund had an amount of total transfers during the reporting period that was meaningful in relation to its net assets as of the end of the reporting period.
For the six months ended October 31, 2015, there were no transfers between Levels 1, 2 and 3 for the Fund.
Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes at the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates and those differences could be material.
Investment Transactions, Investment Income and Expenses — Investment transactions are recorded on trade date for financial statement preparation purposes. Realized gains and losses on investments sold are recorded on the identified cost basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date. Estimated components of distributions received from real estate investment trusts may be considered income, return of capital distributions or capital gain distributions. Return of capital distributions are recorded as a reduction of cost of the related investments. Distribution (12b-1) fees and shareholder services fees relating to a specific class are charged directly to that class. General expenses of the Trust are generally allocated to each fund in proportion to its relative daily net assets. Expenses directly attributable to a particular fund in the Trust are charged directly to that fund. The Fund’s investment income, expenses (other than class specific expenses) and unrealized and realized gains and losses are allocated daily to each class of shares based upon the relative proportion of net assets of each class at the beginning of the day.
MLP Common Units — Master Limited Partnership (“MLP”) common units represent limited partnership interests in the MLP. Common units are generally listed and traded on the U.S. securities exchanges or OTC with their value fluctuating predominantly based on the success of the MLP. Unlike owners of common stock of a corporation, owners of MLP common units have limited voting rights and have no ability to annually elect directors. MLPs generally distribute all available cash flow (cash flow from operations less maintenance capital expenditures) in the form of quarterly distributions. Common unit holders have first
17
QUALITY DIVIDEND FUND
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
priority to receive quarterly cash distributions up to the minimum quarterly distribution and have arrearage rights. In the event of liquidation, common unit holders have preference over subordinated units, but not debt holders or preferred unit holders, to remaining assets of the MLP.
Dividends and Distributions to Shareholders — Dividends from net investment income are declared and paid quarterly to shareholders. Distributions, if any, of net short-term capital gain and net capital gain (the excess of net long-term capital gain over the short-term capital loss) realized by the Fund, after deducting any available capital loss carryovers are declared and paid to its shareholders annually. Income dividends and capital gain distributions are determined in accordance with U.S. federal income tax regulations, which may differ from U.S. GAAP. These differences include the treatment of non-taxable dividends, expiring capital loss carryforwards and losses deferred due to wash sales and excise tax regulations. Permanent book and tax basis differences relating to shareholder distributions will result in reclassifications within the components of net assets.
U.S. Tax Status — No provision is made for U.S. income taxes as it is the Fund’s intention to continue to qualify for and elect the tax treatment applicable to regulated investment companies under Subchapter M of the Internal Revenue Code of 1986, as amended, and make the requisite distributions to its shareholders which will be sufficient to relieve it from U.S. income and excise taxes.
Other — In the normal course of business, the Fund may enter into contracts that provide general indemnifications. The Fund’s maximum exposure under these arrangements is dependent on claims that may be made against the Fund in the future, and, therefore, cannot be estimated; however, based on experience, the risk of material loss for such claims is considered remote.
2. Transactions with Affiliates and Related Parties
Choice Financial Partners, Inc., doing business as EquityCompass Strategies (“EquityCompass” or the “Adviser”) serves as investment adviser to the Fund pursuant to an investment advisory agreement with the Trust. For its services, the Adviser is paid a monthly fee at the annual rate of 0.60% of the Fund’s average daily net assets. The Adviser has contractually agreed to reduce its investment advisory fee and/or reimburse certain expenses of the Fund to the extent necessary to ensure that the Fund’s total operating expenses (excluding taxes, any class-specific fees and expenses, “Acquired Fund” fees and expenses, interest, extraordinary items and brokerage commissions) do not exceed 0.99% of average daily net assets of the Fund (the “Expense Limitation”). The Expense Limitation will remain in effect until September 30, 2016 unless the Board of Trustees approves its earlier termination. The Adviser is entitled to recover, subject to approval by the Board of Trustees, such amounts reduced or reimbursed for a period of up to three (3) years from the year in which the Adviser reduced its compensation and/or assumed expenses for the Fund. No recoupment will occur unless the Fund’s expenses are below the Expense Limitation.
18
QUALITY DIVIDEND FUND
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
At October 31, 2015, the amount of potential recovery was as follows:
Expiration
| ||||
April 30, 2017 | April 30, 2018 | April 30, 2019 | ||
$132,314 |
$153,735 |
$28,877 |
For the six months ended October 31, 2015, the Adviser earned advisory fees of $169,189 and waived fees of $28,877.
BNY Mellon Investment Servicing (US) Inc. (“BNY Mellon”) serves as administrator and transfer agent for the Fund. For providing administrative and accounting services, BNY Mellon is entitled to receive a monthly fee equal to an annual percentage rate of the Fund’s average daily net assets, subject to certain minimum monthly fees. For providing transfer agent services, BNY Mellon is entitled to receive a monthly fee, subject to certain minimum, and out of pocket expenses.
The Bank of New York Mellon (the “Custodian”) provides certain custodial services to the Fund. The Custodian is entitled to receive a monthly fee, subject to certain minimum, and out of pocket expenses.
BNY Mellon and the Custodian have the ability to recover amounts previously waived if the Fund terminates its agreements with BNY Mellon or the Custodian within three years of signing the agreements.
Foreside Funds Distributors LLC (the “Underwriter”) provides principal underwriting services to the Fund.
The Trust and the Underwriter are parties to an underwriting agreement. The Trust has adopted a distribution plan for Class A and Class C Shares in accordance with Rule 12b-1 under the 1940 Act. Pursuant to the Class A and Class C Shares plan, the Fund compensates the Underwriter for direct and indirect costs and expenses incurred in connection with advertising, marketing and other distribution services in an amount not to exceed 0.25% and 1.00%, on an annualized basis, of the average daily net assets of the Fund’s Class A and Class C Shares, respectively.
The Trustees of the Trust who are not officers or employees of an investment adviser or other service provider to the Trust receive compensation in the form of an annual retainer and per meeting fees for their services as a Trustee. The remuneration paid to the Trustees by the Fund during the six months ended October 31, 2015 was $3,011. Certain employees of BNY Mellon serve as Officers of the Trust. They are not compensated by the Fund or the Trust.
19
QUALITY DIVIDEND FUND
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
3. Investment in Securities
For the six months ended October 31, 2015, aggregate purchases and sales of investment securities (excluding short-term investments) of the Fund were as follows:
Purchases | Sales | |||
Investment Securities |
$21,111,634 |
$16,776,590 |
4. Capital Share Transactions
For the six months ended October 31, 2015 and the year ended April 30, 2015, transactions in capital shares (authorized shares unlimited) were as follows:
For the Six Months Ended October 31, 2015 (Unaudited) | For the Year Ended April 30, 2015 | |||||||||||||||
Shares |
Amount |
Shares |
Amount | |||||||||||||
Class A | ||||||||||||||||
Sales | 351,922 | $ | 3,902,814 | 1,419,661 | $ | 16,286,939 | ||||||||||
Reinvestments | 29,178 | 309,861 | 74,734 | 859,829 | ||||||||||||
Redemption Fees* | — | 119 | — | 7,881 | ||||||||||||
Redemptions | (247,188 | ) | (2,731,276 | ) | (322,569 | ) | (3,645,849 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Net Increase | 133,912 | $ | 1,481,518 | 1,171,826 | $ | 13,508,800 | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Class C | ||||||||||||||||
Sales | 333,782 | $ | 3,739,413 | 1,079,022 | $ | 12,398,779 | ||||||||||
Reinvestments | 12,642 | 134,937 | 23,868 | 276,019 | ||||||||||||
Redemption Fees* | — | 71 | — | 3,274 | ||||||||||||
Redemptions | (96,782 | ) | (1,068,292 | ) | (61,684 | ) | (701,066 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Net Increase | 249,642 | $ | 2,806,129 | 1,041,206 | $ | 11,977,006 | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Total Net Increase | 383,554 | $ | 4,287,647 | 2,213,032 | $ | 25,485,806 | ||||||||||
|
|
|
|
|
|
|
|
* There is a 1.00% redemption fee that may be charged on shares redeemed which have been held for 60 days or less. The redemption fees are retained by the Fund for the benefit of the remaining shareholders and recorded as paid-in capital.
5. Federal Tax Information
The Fund has followed the authoritative guidance on accounting for and disclosure of uncertainty in tax positions, which requires the Fund to determine whether a tax position is more likely than not to
20
QUALITY DIVIDEND FUND
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. Tax positions not deemed to meet the more-likely-than-not threshold would be recorded as tax benefit or expense in the current year. The Fund has determined that there was no effect on the financial statements from following this authoritative guidance. In the normal course of business, the Fund is subject to examination by federal, state and local jurisdictions, where applicable, for tax years for which applicable statutes of limitations have not expired.
For the year ended April 30, 2015, the tax character of distributions paid by the Fund was $1,324,626 of ordinary income dividends and $1,628 of long-term capital gains dividends. For the period ended April 30, 2014, the tax character of distributions paid by the Fund was $146,116 of ordinary income dividends. Distributions from short-term capital gains are treated as ordinary income for federal income tax purposes.
As of April 30, 2015, the components of distributable earnings on a tax basis were as follows:
Capital Loss Carryforward | Undistributed | Undistributed | Unrealized Appreciation | Other Temporary | ||||
$ — | $106,254 | $727,203 | $2,978,540 | $(9,459) |
The differences between the book and tax basis components of distributable earnings relate primarily to the timing and recognition of income and gains for federal income tax purposes. Short-term capital gains are reported as ordinary income for federal income tax purposes.
As of October 31, 2015, the federal tax cost, aggregate gross unrealized appreciation and depreciation of securities held by the Fund were as follows:
Federal tax cost | $ | 55,677,698 | ||||
|
| |||||
Gross unrealized appreciation | $ | 3,845,996 | ||||
Gross unrealized depreciation | (2,471,841 | ) | ||||
|
| |||||
Net unrealized appreciation | $ | 1,374,155 | ||||
|
|
Pursuant to federal income tax rules applicable to regulated investment companies, the Fund may elect to treat certain capital losses between November 1 and April 30 and late year ordinary losses ((i) ordinary losses between January 1 and April 30, and (ii) specified ordinary and currency losses between November 1 and April 30) as occurring on the first day of the following tax year. For the year ended April 30, 2015, the Fund had no loss deferrals and no late year ordinary loss.
Accumulated capital losses represent net capital loss carryforwards as of April 30, 2015 that may be available to offset future realized capital gains and thereby reduce future capital gains distributions. As of April 30, 2015, the Fund did not have any capital loss carryforwards.
21
QUALITY DIVIDEND FUND
Notes to Financial Statements (Concluded)
October 31, 2015
(Unaudited)
6. Subsequent Events
Management has evaluated the impact of all subsequent events on the Fund through the date the financial statements were issued, and has determined that there were no subsequent events requiring recognition or disclosure in the financial statements.
22
QUALITY DIVIDEND FUND
Other Information
(Unaudited)
Proxy Voting
Policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities as well as information regarding how the Fund voted proxies relating to portfolio securities for the most recent 12-month period ended June 30 are available without charge, upon request, by calling (888) 201-5799 and on the Securities and Exchange Commission’s (“SEC”) website at http://www.sec.gov.
Quarterly Portfolio Schedules
The Trust files its complete schedule of portfolio holdings with the SEC for the first and third fiscal quarters of each fiscal year (quarters ended July 31 and January 31) on Form N-Q. The Trust’s Forms N-Q are available on the SEC’s website at http://www.sec.gov and may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. Information on the operation of the SEC’s Public Reference Room may be obtained by calling 1-800-SEC-0330
Approval of Advisory Agreement
At an in-person meeting held on September 21-22, 2015 (the “Meeting”), the Board of Trustees (the “Board” or “Trustees”) of FundVantage Trust (“Trust”), including a majority of the Trustees who are not “interested persons” as defined in the Investment Company Act of 1940, as amended (“1940 Act”) (the “Independent Trustees”), unanimously approved the continuation of the advisory agreement (the “Agreement”) between Choice Financial Partners, Inc., d/b/a EquityCompass Strategies, (“EquityCompass” or the “Adviser”) and the Trust on behalf of the Quality Dividend Fund (the “Fund”). In determining whether to continue the Agreement, the Trustees considered information provided by the Adviser in accordance with Section 15(c) of the 1940 Act. The Trustees considered information that the Adviser provided regarding (i) services performed for the Fund, (ii) the size and qualifications of their portfolio management staff, (iii) any potential or actual material conflicts of interest which may arise in connection with a portfolio manager’s management of the Fund, (iv) investment performance, (v) the capitalization and financial condition of the Adviser, (vi) brokerage selection procedures (including soft dollar arrangements, if any), (vii) the procedures for allocating investment opportunities between the Fund and other clients, (viii) results of any regulatory examination, including any recommendations or deficiencies noted, (ix) any litigation, investigation or administrative proceeding which may have a material impact on the Adviser’s ability to service the Fund, and (x) compliance with the Fund’s investment objectives, policies and practices (including codes of ethics and proxy voting policies), federal securities laws and other regulatory requirements. The Trustees noted the reports provided at Board meetings throughout the year covering matters such as the relative performance of the Fund; compliance with the investment objectives, policies, strategies and limitations for the Fund; the compliance of management personnel with the applicable code of ethics; and the adherence to fair value pricing procedures as established by the Board. The Trustees also received and reviewed a memorandum from legal counsel regarding the legal standards applicable to their review of the Agreement.
23
QUALITY DIVIDEND FUND
Other Information
(Unaudited) (Continued)
Representatives from EquityCompass attended the Meeting in-person and discussed EquityCompass’ history, performance and investment strategy in connection with the proposed continuation of the Agreement and answered questions from the Board.
The Trustees considered the investment performance for the Fund and EquityCompass. The Trustees reviewed the historical performance charts which showed the performance of the Fund as compared to its respective benchmark index and Lipper categories for the year-to-date, one year and since inception periods ended June 30, 2015, as applicable. The Trustees considered the short term and long term performance of the Fund, as applicable. The Trustees noted that they considered performance reports provided at Board meetings throughout the year. The Trustees noted that the Class A and Class C shares of the Fund had underperformed the median of the Lipper Global Equity Income Fund category, the Fund’s applicable Lipper peer group, for the year-to-date period ended June 30, 2015 and outperformed the median of the category for the one year and since inception periods ended June 30, 2015. The Trustees also received performance information for the Fund’s Class A shares as compared to the S&P 500 Total Return Index and to the Fund’s comparable separately managed account composite (gross of fees), for the one year and since inception periods ended June 30, 2015. The Trustees noted that the Fund’s Class A shares underperformed the S&P 500 Total Return Index and the gross returns of the separately managed account composite for the one year and since inception periods ended June 30, 2015.
The Trustees noted that while absolute performance was positive for since inception through June 30, 2015, the Fund’s relative performance lagged (i) the benchmark for the one year and since inception periods ended June 30, 2015, and (ii) the median of its applicable Lipper peer group for the year to date period ended June 30, 2015. The Trustees considered explanations provided by the Adviser regarding the various factors contributing to the relative underperformance of the Fund during the applicable periods, including, among other things, differences in the Fund’s investment strategies and portfolio construction in comparison to the peer funds included in its applicable Lipper peer group. The Board discussed with the Adviser the reasons behind such results for the Fund, including the steps being undertaken by the Adviser to seek to improve such performance. The Trustees considered other factors that supported the continuation of the Agreement, including that the Adviser’s investment decisions, such as security selection and sector allocation, contributing to such underperformance were consistent with the Fund’s investment objective and policies. Taking note of the Adviser’s discussion of (i) the various factors contributing to the Fund’s performance and (ii) its continuing commitment to the Fund’s current investment strategy, the Trustees concluded that, although the Fund had underperformed the S&P 500 Index and the median of the Lipper Global Equity Income Fund category for certain measurement periods as noted above, the
24
QUALITY DIVIDEND FUND
Other Information
(Unaudited) (Continued)
performance of the Fund was within an acceptable range of performance relative to other mutual funds with similar investment objectives, strategies and policies based on the information provided at the Meeting.
The Trustees noted that the representatives of the Adviser had provided information regarding its advisory fees and an analysis of these fees in relation to the services provided to the Fund and any other ancillary benefit resulting from the Adviser’s relationship with the Fund. The Trustees also reviewed information regarding the fees that the Adviser charges to its separately managed accounts, and evaluated the explanations provided by the Adviser as to differences in fees charged to the Fund and separately managed accounts. The Trustees also reviewed a peer comparison of advisory fees and total expenses for the Fund versus the universe of funds with similar share classes in the Lipper Global Equity Income Fund category with $250 million or less in assets. The Trustees noted that the gross advisory fee and net total expense ratio of the Fund’s Class A and Class C shares were lower than, or directly in line with, the median of the gross advisory fee and net total expense ratio of the funds with a similar share class in the Lipper Global Equity Income Fund category with $250 million or less in assets. The Trustees concluded that the advisory fees and services provided by the Adviser are consistent with those of other advisers which manage mutual funds with investment objectives, strategies and policies similar to those of the Fund based on the information provided at the Meeting.
The Board then considered the level and depth of knowledge of the Adviser, including the professional experience and qualifications of senior personnel. In evaluating the quality of services to be provided by the Adviser, the Board took into account its familiarity with the Adviser’s senior management through Board meetings, discussions and reports during the preceding year. The Board also took into account the Adviser’s compliance policies and procedures and reports regarding the Adviser’s compliance operations from the Trust’s Chief Compliance Officer. The Board also considered any potential conflicts of interest that may arise in a portfolio manager’s management of the Fund’s investments on the one hand, and the investments of other accounts, on the other. The Trustees reviewed the services provided to the Fund by the Adviser and concluded that the nature, extent and quality of the services provided were appropriate and consistent with the terms of the Agreement, that the quality of the proposed services appeared to be consistent with industry norms and that the Fund is likely to benefit from the continued provision of those services. They also concluded that the Adviser has sufficient personnel, with the appropriate education and experience, to serve the Fund effectively and had demonstrated their ability to attract and retain qualified personnel.
The Trustees considered the costs of the services provided by the Adviser, the compensation and benefits received by the Adviser in providing services to the Fund, as well as the Adviser’s profitability. The Trustees noted that the Adviser’s level of profitability is an appropriate factor to consider, and the Trustees should be satisfied that the Adviser’s profits are sufficient to continue as a healthy concern generally and as investment adviser of the Fund specifically. The Trustees concluded that the Adviser’s advisory fee level was reasonable in relation to the nature and quality of the services provided, taking into account the current size and projected growth of the Fund.
25
QUALITY DIVIDEND FUND
Other Information
(Unaudited) (Concluded)
The Trustees considered the extent to which economies of scale would be realized relative to fee levels as the Fund grows, and whether the advisory fee levels reflect these economies of scale for the benefit of shareholders. The Board noted that economies of scale may be achieved at higher asset levels for the Fund for the benefit of fund shareholders, but that the advisory fee did not currently include breakpoint reductions as asset levels increase.
In voting to approve the continuation of the Agreement, the Board considered all factors it deemed relevant and the information presented to the Board by the Adviser. In arriving at its decision, the Board did not identify any single factor as being of paramount importance and each member of the Board gave varying weights to each factor according to his or her own judgment. The Board determined that the continuation of the Agreement would be in the best interests of the Fund and its shareholders. As a result, the Board, including a majority of the Independent Trustees. unanimously approved the continuation of the Agreement for an additional one year period.
26
[THIS PAGE INTENTIONALLY LEFT BLANK.]
Investment Adviser
Choice Financial Partners, Inc.
d/b/a EquityCompass Strategies
501 North Broadway
St. Louis, MO 63102
Administrator
BNY Mellon Investment Servicing (US) Inc.
301 Bellevue Parkway
Wilmington, DE 19809
Transfer Agent
BNY Mellon Investment Servicing (US) Inc.
4400 Computer Drive
Westborough, MA 01581
Principal Underwriter
Foreside Funds Distributors LLC
400 Berwyn Park
899 Cassatt Road
Berwyn, PA 19312
Custodian
The Bank of New York Mellon
225 Liberty Street
New York, NY 10286
Independent Registered Public Accounting Firm
Ernst & Young LLP
One Commerce Square
2005 Market Street, Suite 700
Philadelphia, PA 19103-7096
Legal Counsel
Pepper Hamilton LLP
3000 Two Logan Square
18th and Arch Streets
Philadelphia, PA 19103
QUALITY DIVIDEND
FUND
of
FundVantage Trust
Class A (QDVAX)
Class C (QDVCX)
SEMI-ANNUAL
REPORT
October 31, 2015
(Unaudited)
This report is submitted for the general information of the shareholders of the Quality Dividend Fund. It is not authorized for distribution unless preceded or accompanied by a current prospectus for the Quality Dividend Fund.
QUA-1015
SKYBRIDGE DIVIDEND VALUE FUND
Semi-Annual Report
Performance Data
October 31, 2015
(Unaudited)
Average Annual Total Returns for the Periods Ended October 31, 2015 | ||||||||||||
Six | 1 Year | Since | ||||||||||
Class A (with sales charge)* | -7.73% | -0.36% | 1.27% | |||||||||
Class A (without sales charge)* | -2.08% | 5.68% | 7.46% | |||||||||
S&P 500® Index | -0.25% | 5.20% | 7.43%(a | ) | ||||||||
Class C (with CDSC charge)* | -3.38% | 3.97% | 0.12% | |||||||||
Class C (without CDSC charge)* | -2.41% | 4.97% | 11.51% | |||||||||
S&P 500® Index | -0.25% | 5.20% | 12.10%(a | ) | ||||||||
Class I** | -1.89% | 6.01% | 8.08% | |||||||||
S&P 500® Index
|
| -0.25%
|
|
| 5.20%
|
|
| 10.16%(a
| )
|
† | Not Annualized. |
* | Class A Shares and Class C Shares of the SkyBridge Dividend Value Fund (the “Fund”) commenced operations on June 13, 2014 and October 17, 2014, respectively. |
** | Class I Shares of the Fund commenced operations on April 7, 2014. |
(a) | Benchmark performance is from inception date of the Class only and is not the inception date of the benchmark itself. |
The performance data quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment in the Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. The table does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares. Current performance may be lower or higher. Performance data current to the most recent month-end may be obtained by calling (888) 919-6885.
The returns shown for Class A Shares reflect a deduction for the maximum front-end sales charge of 5.75%. The returns shown for Class C reflect a 1.00% contingent deferred sales charge (“CDSC”). The Fund’s total annual gross and net operating expenses, as stated in the current prospectus dated September 1, 2015, are 1.89% and 1.26% for Class A Shares, 2.64% and 2.01% for Class C Shares and 1.64% and 1.01% for Class I Shares, respectively, of the Fund’s average daily net assets. These ratios may differ from the actual expenses incurred by the Fund for the period covered by this report. SkyBridge Capital II, LLC (“SkyBridge” or the “Adviser”) has contractually agreed to reduce its management fee and/or reimburse certain expenses of the Fund to the extent necessary to ensure that the Fund’s total operating expenses (excluding taxes, “Acquired Fund” fees and expenses, interest, extraordinary items and brokerage commissions) do not exceed (on an annual basis) 1.25% with respect to Class A shares, 2.00% with respect to Class C shares and 1.00% with respect to Class I shares of average daily net assets of the Fund (the “Expense Limitation”). The Expense Limitation will remain in place until August 31, 2018, unless the Board of Trustees of FundVantage Trust (the “Trust”) approves its earlier termination. The Adviser is entitled to recover, subject to approval by Board of Trustees, such amounts reduced or reimbursed for a period of up to three (3) years from the year in which the Adviser reduced its compensation and/or assumed expenses for the Fund. No recoupment will occur unless the Fund’s expenses are below the Expense Limitation.
Mutual fund investing involves risk including the possible loss of principal. The Fund’s long term “buy and hold” strategy under certain market conditions may cause it to be more susceptible to general market declines. The Fund seeks to invest in securities with dividend yield potential with both growth and value characteristics. Value investing
1
SKYBRIDGE DIVIDEND VALUE FUND
Semi-Annual Report
Performance Data (Concluded)
October 31, 2015
(Unaudited)
involves the risk that companies believed to be undervalued may not appreciate as anticipated. There are no guarantees a company will continue to pay or increase its dividend. The Fund may invest in small to mid-capitalization companies which may be more volatile and less liquid than stocks of larger companies.
The Fund intends to evaluate performance as compared to that of the S&P 500® Index. The S&P 500® Index is a widely recognized, unmanaged index of 500 common stocks which are generally representative of the U.S. stock market as a whole. It is not possible to invest in an index.
2
SKYBRIDGE DIVIDEND VALUE FUND
Fund Expense Disclosure
October 31, 2015
(Unaudited)
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs including sales charges (loads) on purchase payments (if any) or redemption fees; and (2) ongoing costs, including management fees, distribution and/or service (Rule 12b-1) fees (if any) and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
These examples are based on an investment of $1,000 invested at the beginning of the six-month period from May 1, 2015 through October 31, 2015 and held for the entire period.
Actual Expenses
The first line of the accompanying table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Examples for Comparison Purposes
The second line of the accompanying table provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not your Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare these 5% hypothetical examples with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that the expenses shown in the accompanying table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) on purchase payments (if any) or redemption fees. Therefore, the second line of the accompanying table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
3
SKYBRIDGE DIVIDEND VALUE FUND
Fund Expense Disclosure (Concluded)
October 31, 2015
(Unaudited)
SkyBridge Dividend Value | |||||||||||||||
Beginning Account Value | Ending Account Value October 31, 2015 | Expenses Paid During Period* | |||||||||||||
Class A | |||||||||||||||
Actual | $ | 1,000.00 | $ | 979.20 | $ | 6.22 | |||||||||
Hypothetical (5% return before expenses) | 1,000.00 | 1,018.85 | 6.34 | ||||||||||||
Class C | |||||||||||||||
Actual | $ | 1,000.00 | $ | 975.90 | $ | 9.93 | |||||||||
Hypothetical (5% return before expenses) | 1,000.00 | 1,015.08 | 10.13 | ||||||||||||
Class I | |||||||||||||||
Actual | $ | 1,000.00 | $ | 981.10 | $ | 4.98 | |||||||||
Hypothetical (5% return before expenses) | 1,000.00 | 1,020.11 | 5.08 |
* | Expenses are equal to an annualized expense ratio for the six-month period ended October 31, 2015 of 1.25%, 2.00% and 1.00% for Class A, Class C and Class I Shares, respectively, for the Fund, multiplied by the average account value over the period, multiplied by the number of days in the most recent period (184), then divided by 366 to reflect the period. The Funds’ ending account values on the first line in the table are based on the actual six month total returns for the Fund of (2.08)%, (2.41)% and (1.89)% for Class A, Class C and Class I Shares, respectively. |
4
SKYBRIDGE DIVIDEND VALUE FUND
Portfolio Holdings Summary Table
October 31, 2015
(Unaudited)
The following table presents a summary by sector of the portfolio holdings of the Fund:
% of Net Assets | Value | |||||||||
COMMON STOCKS: | ||||||||||
Consumer Discretionary | 22.4 | % | $ | 42,376,720 | ||||||
Consumer Staples | 18.7 | 35,255,254 | ||||||||
Industrials | 16.4 | 30,912,692 | ||||||||
Energy | 15.1 | 28,424,999 | ||||||||
Information Technology | 13.8 | 25,984,817 | ||||||||
Telecommunication Services | 6.5 | 12,378,838 | ||||||||
Health Care | 6.5 | 12,253,986 | ||||||||
Short-Term Investment | 1.3 | 2,374,209 | ||||||||
Liabilities in Excess of Assets | (0.7 | ) | (1,296,828 | ) | ||||||
|
|
|
| |||||||
NET ASSETS | 100.0 | % | $ | 188,664,687 | ||||||
|
|
|
|
Portfolio holdings are subject to change at any time.
The accompanying notes are an integral part of the financial statements.
5
SKYBRIDGE DIVIDEND VALUE FUND
Portfolio of Investments
October 31, 2015
(Unaudited)
Number of Shares | Value | |||||||
COMMON STOCKS — 99.4% |
| |||||||
Consumer Discretionary — 22.4% |
| |||||||
Abercrombie & Fitch Co., Class A | 289,800 | $ | 6,140,862 | |||||
Coach, Inc. | 148,448 | 4,631,578 | ||||||
GameStop Corp., Class A | 161,660 | 7,447,676 | ||||||
Garmin Ltd. (Switzerland) | 137,416 | 4,874,145 | ||||||
Mattel, Inc. | 263,935 | 6,487,522 | ||||||
McDonald’s Corp. | 65,902 | 7,397,500 | ||||||
Tupperware Brands Corp. | 91,684 | 5,397,437 | ||||||
|
| |||||||
42,376,720 | ||||||||
|
| |||||||
Consumer Staples — 18.7% |
| |||||||
Altria Group, Inc. | 122,787 | 7,424,930 | ||||||
Coca-Cola Co. (The) | 155,099 | 6,568,443 | ||||||
Philip Morris International, Inc. | 81,805 | 7,231,562 | ||||||
Procter & Gamble Co. (The) | 77,158 | 5,893,328 | ||||||
Reynolds American, Inc. | 168,398 | 8,136,991 | ||||||
|
| |||||||
35,255,254 | ||||||||
|
| |||||||
Energy — 15.1% |
| |||||||
Chevron Corp. | 59,615 | 5,417,811 | ||||||
CVR Energy, Inc. | 168,923 | 7,510,317 | ||||||
Exxon Mobil Corp. | 75,686 | 6,262,260 | ||||||
Helmerich & Payne, Inc. | 86,005 | 4,839,501 | ||||||
National Oilwell Varco, Inc. | 116,767 | 4,395,110 | ||||||
|
| |||||||
28,424,999 | ||||||||
|
| |||||||
Health Care — 6.5% |
| |||||||
Merck & Co., Inc. | 111,060 | 6,070,540 | ||||||
Pfizer, Inc. | 182,834 | 6,183,446 | ||||||
|
| |||||||
12,253,986 | ||||||||
|
| |||||||
Industrials — 16.4% |
| |||||||
Caterpillar, Inc. | 78,995 | 5,765,845 | ||||||
Emerson Electric Co. | 112,170 | 5,297,789 | ||||||
General Electric Co. | 251,633 | 7,277,226 |
Number of Shares | Value | |||||||
COMMON STOCKS — (Continued) |
| |||||||
Industrials — (Continued) |
| |||||||
Lockheed Martin Corp. | 31,665 | $ | 6,960,917 | |||||
Pitney Bowes, Inc. | 271,715 | 5,610,915 | ||||||
|
| |||||||
30,912,692 | ||||||||
|
| |||||||
Information Technology — 13.8% |
| |||||||
CA, Inc. | 201,872 | 5,593,873 | ||||||
Intel Corp. | 201,633 | 6,827,293 | ||||||
International Business Machines Corp. | 39,276 | 5,501,782 | ||||||
Microsoft Corp. | 153,151 | 8,061,869 | ||||||
|
| |||||||
25,984,817 | ||||||||
|
| |||||||
Telecommunication Services — 6.5% |
| |||||||
AT&T, Inc. | 188,068 | 6,302,159 | ||||||
Verizon Communications, Inc. | 129,622 | 6,076,679 | ||||||
|
| |||||||
12,378,838 | ||||||||
|
| |||||||
TOTAL COMMON STOCKS |
| 187,587,306 | ||||||
|
|
The accompanying notes are an integral part of the financial statements.
6
SKYBRIDGE DIVIDEND VALUE FUND
Portfolio of Investments (Concluded)
October 31, 2015
(Unaudited)
Number of Shares | Value | |||||||
SHORT-TERM INVESTMENT — 1.3% |
| |||||||
Money Market Fund — 1.3% |
| |||||||
Dreyfus Government Cash Management Fund, Institutional Shares, | 2,374,209 | $ | 2,374,209 | |||||
|
| |||||||
TOTAL SHORT-TERM INVESTMENT | 2,374,209 | |||||||
|
| |||||||
TOTAL INVESTMENTS - 100.7% |
| 189,961,515 | ||||||
LIABILITIES IN EXCESS OF OTHER ASSETS - (0.7)% | (1,296,828 | ) | ||||||
|
| |||||||
NET ASSETS - 100.0% | $ | 188,664,687 | ||||||
|
|
(a) | Rate periodically changes. Rate disclosed is the daily yield on October 31, 2015. |
The accompanying notes are an integral part of the financial statements.
7
SKYBRIDGE DIVIDEND VALUE FUND
Statement of Assets and Liabilities
October 31, 2015
(Unaudited)
Assets | ||||
Investments, at value (Cost $191,019,049) | $ | 189,961,515 | ||
Cash | 382,263 | |||
Receivable for capital shares sold | 803,581 | |||
Dividends receivable | 259,337 | |||
Prepaid expenses and other assets | 73,559 | |||
|
| |||
Total assets | 191,480,255 | |||
|
| |||
Liabilities | ||||
Payable for investments purchased | 2,263,665 | |||
Payable for capital shares redeemed | 290,016 | |||
Payable for transfer agent fees | 101,844 | |||
Payable to Investment Adviser | 99,748 | |||
Payable for administration and accounting fees | 21,631 | |||
Payable for distribution fees | 21,048 | |||
Payable for custodian fees | 8,627 | |||
Accrued expenses | 8,989 | |||
|
| |||
Total liabilities | 2,815,568 | |||
|
| |||
Net Assets | $ | 188,664,687 | ||
|
| |||
Net Assets Consisted of: | ||||
Capital stock, $0.01 par value | $ | 172,980 | ||
Paid-in capital | 185,281,053 | |||
Accumulated net investment income | 85,582 | |||
Accumulated net realized gain from investments | 4,182,606 | |||
Net unrealized depreciation on investments | (1,057,534 | ) | ||
|
| |||
Net Assets | $ | 188,664,687 | ||
|
| |||
Class A: | ||||
Net asset value, redemption price per share | $10.91 | |||
Maximum offering price per share (100/94.25 of $10.91) | $11.58 | |||
Class C: | ||||
Net asset value, offering and redemption price per share | $10.88 | |||
Class I: | ||||
Net asset value, offering and redemption price per share | $10.91 |
The accompanying notes are an integral part of the financial statements.
8
SKYBRIDGE DIVIDEND VALUE FUND
Statement of Operations
For the Six Months Ended October 31, 2015
(Unaudited)
Investment Income | ||||
Dividends | $ | 2,636,054 | ||
Interest | 98 | |||
|
| |||
Total investment income | 2,636,152 | |||
|
| |||
Expenses | ||||
Advisory fees (Note 2) | 536,162 | |||
Transfer agent fees (Note 2) | 123,337 | |||
Administration and accounting fees (Note 2) | 51,686 | |||
Distribution fees (Class C) (Note 2) | 50,414 | |||
Distribution fees (Class A) (Note 2) | 49,481 | |||
Registration and filing fees | 38,723 | |||
Legal fees | 21,590 | |||
Custodian fees (Note 2) | 17,135 | |||
Shareholder servicing fees (Class C) (Note 2) | 16,805 | |||
Audit fees | 10,127 | |||
Printing and shareholder reporting fees | 9,867 | |||
Trustees’ and officers’ fees (Note 2) | 9,165 | |||
Other expenses | 32,467 | |||
|
| |||
Total expenses before waivers and reimbursements | 966,959 | |||
|
| |||
Less: waivers and reimbursements (Note 2) | (135,744 | ) | ||
|
| |||
Net expenses after waivers and reimbursements | 831,215 | |||
|
| |||
Net investment income | 1,804,937 | |||
|
| |||
Net realized and unrealized gain/(loss) from investments: | ||||
Net realized gain from investments | 1,125,626 | |||
Net change in unrealized appreciation/(depreciation) on investments | (3,446,792 | ) | ||
|
| |||
Net realized and unrealized loss on investments | (2,321,166 | ) | ||
|
| |||
Net decrease in net assets resulting from operations | $ | (516,229 | ) | |
|
|
The accompanying notes are an integral part of the financial statements.
9
SKYBRIDGE DIVIDEND VALUE FUND
Statements of Changes in Net Assets
For the Six Months Ended October 31, 2015 (Unaudited) | For the Year Ended April 30, 2015 | |||||||||
Increase/(decrease) in net assets from operations: | ||||||||||
Net investment income | $ | 1,804,937 | $ | 1,139,955 | ||||||
Net realized gain from investments | 1,125,626 | 3,185,683 | ||||||||
Net change in unrealized appreciation/(depreciation) on investments | (3,446,792 | ) | 2,387,773 | |||||||
|
|
|
| |||||||
Net increase/(decrease) in net assets resulting from operations | (516,229 | ) | 6,713,411 | |||||||
|
|
|
| |||||||
Less Dividends and Distributions to Shareholders from: | ||||||||||
Net investment income: | ||||||||||
Class A | (434,183 | ) | (453,613 | ) | ||||||
Class C | (130,012 | ) | (27,052 | ) | ||||||
Class I | (1,186,731 | ) | (639,935 | ) | ||||||
|
|
|
| |||||||
Total net investment income | (1,750,926 | ) | (1,120,600 | ) | ||||||
|
|
|
| |||||||
Net realized capital gains: | ||||||||||
Class A | — | (56,905 | ) | |||||||
Class C | — | (3,802 | ) | |||||||
Class I | — | (68,170 | ) | |||||||
|
|
|
| |||||||
Total net realized capital gains | — | (128,877 | ) | |||||||
|
|
|
| |||||||
Increase in Net Assets Derived from Capital Share Transactions (Note 4) | 90,462,579 | 94,888,639 | ||||||||
|
|
|
| |||||||
Total increase in net assets | 88,195,424 | 100,352,573 | ||||||||
|
|
|
| |||||||
Net assets | ||||||||||
Beginning of period | 100,469,263 | 116,690 | ||||||||
|
|
|
| |||||||
End of period | $ | 188,664,687 | $ | 100,469,263 | ||||||
|
|
|
| |||||||
Accumulated net investment income, end of period | $ | 85,582 | $ | 31,571 | ||||||
|
|
|
|
The accompanying notes are an integral part of the financial statements.
10
SKYBRIDGE DIVIDEND VALUE FUND
Financial Highlights
Contained below is per share operating performance data for Class A Shares outstanding, total investment return, ratios to average net assets and other supplemental data for the respective period. 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). This information has been derived from information provided in the financial statements and should be read in conjunction with the financial statements and the notes thereto. |
Class A | ||||||||||
For the Six Months Ended October 31, 2015 (Unaudited) | For the Period June 13, 2014* to April 30, 2015 | |||||||||
Per Share Operating Performance | ||||||||||
Net asset value, beginning of period | $ | 11.27 | $ | 10.47 | ||||||
|
|
|
| |||||||
Net investment income(1) | 0.13 | 0.23 | ||||||||
Net realized and unrealized gain/(loss) on investments | (0.37 | ) | 0.78 | |||||||
|
|
|
| |||||||
Net increase/(decrease) in net assets resulting from operations | (0.24 | ) | 1.01 | |||||||
|
|
|
| |||||||
Dividends and distributions to shareholders from: | ||||||||||
Net investment income | (0.12 | ) | (0.19 | ) | ||||||
Net realized capital gain | — | (0.02 | ) | |||||||
|
|
|
| |||||||
Total dividends and distributions to shareholders | (0.12 | ) | (0.21 | ) | ||||||
|
|
|
| |||||||
Net asset value, end of period | $ | 10.91 | $ | 11.27 | ||||||
|
|
|
| |||||||
Total investment return(2) | (2.08 | )% | 9.74 | % | ||||||
Ratio/Supplemental Data | ||||||||||
Net assets, end of period (000’s omitted) | $ | 45,415 | $ | 37,732 | ||||||
Ratio of expenses to average net assets | 1.25 | %(3) | 1.25 | %(3) | ||||||
Ratio of expenses to average net assets without waivers and expense reimbursements(4) | 1.44 | %(3) | 1.76 | %(3) | ||||||
Ratio of net investment income to average net assets | 2.44 | %(3) | 2.48 | %(3) | ||||||
Portfolio turnover rate | 7.97 | %(5) | 122.00 | %(6) |
* | Commencement of operations. |
(1) | The selected per share data was calculated using the average shares outstanding method for the period. |
(2) | Total investment return is calculated assuming a purchase of shares on the first day and a sale of shares on the last day of each period reported and includes reinvestments of dividends and distributions, if any. Total returns for periods less than one year are not annualized. Total investment return does not reflect the impact of the maximum front-end sales load of 5.75%. If reflected, the return would be lower. |
(3) | Annualized. |
(4) | During the period, certain fees were waived and/or reimbursed. If such fee waivers and/or reimbursements had not occurred, the ratios would have been as indicated (See Note 2). |
(5) | Not annualized. |
(6) | Reflects portfolio turnover of the fund for the year ended April 30, 2015. |
The accompanying notes are an integral part of the financial statements.
11
SKYBRIDGE DIVIDEND VALUE FUND
Financial Highlights (Continued)
Contained below is per share operating performance data for Class C Shares outstanding, total investment return, ratios to average net assets and other supplemental data for the respective period. 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). This information has been derived from information provided in the financial statements and should be read in conjunction with the financial statements and the notes thereto. |
Class C | ||||||||||
For the Six Months Ended October 31, 2015 (Unaudited) | For the Period October 17, 2014* to April 30, 2015 | |||||||||
Per Share Operating Performance | ||||||||||
Net asset value, beginning of period | $ | 11.25 | $ | 9.95 | ||||||
|
|
|
| |||||||
Net investment income(1) | 0.09 | 0.08 | ||||||||
Net realized and unrealized gain/(loss) on investments | (0.37 | ) | 1.33 | |||||||
|
|
|
| |||||||
Net increase/(decrease) in net assets resulting from operations | (0.28 | ) | 1.41 | |||||||
|
|
|
| |||||||
Dividends and distributions to shareholders from: | ||||||||||
Net investment income | (0.09 | ) | (0.09 | ) | ||||||
Net realized capital gain | — | (0.02 | ) | |||||||
|
|
|
| |||||||
Total dividends and distributions to shareholders | (0.09 | ) | (0.11 | ) | ||||||
|
|
|
| |||||||
Net asset value, end of period | $ | 10.88 | $ | 11.25 | ||||||
|
|
|
| |||||||
Total investment return(2) | (2.41 | )% | 14.26 | % | ||||||
Ratio/Supplemental Data | ||||||||||
Net assets, end of period (000’s omitted) | $ | 20,545 | $ | 6,819 | ||||||
Ratio of expenses to average net assets | 2.00 | %(3) | 2.00 | %(3) | ||||||
Ratio of expenses to average net assets without waivers and expense | 2.18 | %(3) | 2.32 | %(3) | ||||||
Ratio of net investment income to average net assets | 1.69 | %(3) | 1.46 | %(3) | ||||||
Portfolio turnover rate | 7.97 | %(5) | 122.00 | %(6) |
* | Commencement of operations. |
(1) | The selected per share data was calculated using the average shares outstanding method for the period. |
(2) | Total investment return is calculated assuming a purchase of shares on the first day and a sale of shares on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total returns for periods less than one year are not annualized. |
(3) | Annualized. |
(4) | During the period, certain fees were waived and/or reimbursed. If such fee waivers and/or reimbursements had not occurred, the ratios would have been as indicated (See Note 2). |
(5) | Not annualized. |
(6) | Reflects portfolio turnover of the fund for the year ended April 30, 2015. |
The accompanying notes are an integral part of the financial statements.
12
SKYBRIDGE DIVIDEND VALUE FUND
Financial Highlights (Continued)
Contained below is per share operating performance data for Class I Shares outstanding, total investment return, ratios to average net assets and other supplemental data for the respective period. 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). This information has been derived from information provided in the financial statements and should be read in conjunction with the financial statements and the notes thereto. |
Class I | |||||||||||||||
For the Six Months Ended October 31, 2015 (Unaudited) | For the Year Ended April 30, 2015 | For the Period April 7, 2014* to April 30, 2014 | |||||||||||||
Per Share Operating Performance | |||||||||||||||
Net asset value, beginning of period | $ | 11.26 | $ | 10.23 | $ | 10.00 | |||||||||
|
|
|
|
|
| ||||||||||
Net investment income(1) | 0.14 | 0.29 | — | (2) | |||||||||||
Net realized and unrealized gain/(loss) on investments | (0.36 | ) | 0.98 | 0.23 | |||||||||||
|
|
|
|
|
| ||||||||||
Net increase/(decrease) in net assets resulting from operations | (0.22 | ) | 1.27 | 0.23 | |||||||||||
|
|
|
|
|
| ||||||||||
Dividends and distributions to shareholders from: | |||||||||||||||
Net investment income | (0.13 | ) | (0.22 | ) | — | ||||||||||
Net realized capital gain | — | (0.02 | ) | — | |||||||||||
|
|
|
|
|
| ||||||||||
Total dividends and distributions to shareholders | (0.13 | ) | (0.24 | ) | — | ||||||||||
|
|
|
|
|
| ||||||||||
Net asset value, end of period | $ | 10.91 | $ | 11.26 | $ | 10.23 | |||||||||
|
|
|
|
|
| ||||||||||
Total investment return(3) | (1.89 | )% | 12.54 | % | 2.30 | % | |||||||||
Ratio/Supplemental Data | |||||||||||||||
Net assets, end of period (000’s omitted) | $ | 122,705 | $ | 55,918 | $ | 117 | |||||||||
Ratio of expenses to average net assets | 1.00 | %(4) | 1.00 | % | 1.00 | %(4) | |||||||||
Ratio of expenses to average net assets without waivers and expense reimbursements(5) | 1.19 | %(4) | 1.63 | % | 646.65 | %(4) | |||||||||
Ratio of net investment income to average net assets | 2.69 | %(4) | 2.70 | % | 0.79 | %(4) | |||||||||
Portfolio turnover rate | 7.97 | %(6) | 122.00 | % | 1.98 | %(6) |
* | Commencement of operations. |
(1) | The selected per share data was calculated using the average shares outstanding method for the period. |
(2) | Amount is less than $0.005 per share. |
(3) | Total investment return is calculated assuming a purchase of shares on the first day and a sale of shares on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total returns for periods less than one year are not annualized. |
(4) | Annualized. |
(5) | During the period, certain fees were waived and/or reimbursed. If such fee waivers and/or reimbursements had not occurred, the ratios would have been as indicated (See Note 2). |
(6) | Not annualized. |
The accompanying notes are an integral part of the financial statements.
13
SKYBRIDGE DIVIDEND VALUE FUND
Notes to Financial Statements
October 31, 2015
(Unaudited)
1. Organization and Significant Accounting Policies
The SkyBridge Dividend Value Fund (the “Fund”) is a diversified, open-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”), which commenced operations on April 7, 2014. The Fund is a separate series of FundVantage Trust (the “Trust”) which was organized as a Delaware statutory trust on August 28, 2006. The Trust is a “series trust” authorized to issue an unlimited number of separate series or classes of shares of beneficial interest. Each series is treated as a separate entity for certain matters under the 1940 Act, and for other purposes, and a shareholder of one series is not deemed to be a shareholder of any other series. The Fund offers Class A, Class C and Class I Shares. Class A Shares are sold subject to a front-end sales charge. Front-end sales charges may be reduced or waived under certain circumstances. A contingent deferred sales charge (“CDSC”) may be applicable to the purchase of Class A Shares. A CDSC, as a percentage of the lower of the original purchase price or net asset value at redemption, of up to 1.00% may be imposed on full or partial redemptions of Class A Shares made within eighteen months of purchase where: (i) $1 million or more of Class A Shares were purchased without an initial sales charge and (ii) the selling broker-dealer received a commission for such sale. A CDSC of up to 1.00% will be assessed when Class C Shares are redeemed within 18 months after initial purchase. The CDSC shall not apply to those purchases of Class C Shares where the selling broker-dealer did not receive a commission.
The Fund is an investment company and follows accounting and reporting guidance in the Financial Accounting Standards Board Accounting Standards Codification Topic 946.
Portfolio Valuation — The Fund’s net asset value (“NAV”) is calculated once daily at the close of regular trading hours on the New York Stock Exchange (“NYSE”) (typically 4:00 p.m. Eastern time) on each day the NYSE is open. Securities held by the Fund are valued using the closing price or the last sale price on a national securities exchange or the National Association of Securities Dealers Automatic Quotation System (“NASDAQ”) market system where they are primarily traded. Equity securities traded in the over-the-counter market are valued at their closing prices. If there were no transactions on that day, securities traded principally on an exchange or on NASDAQ will be valued at the mean of the last bid and ask prices prior to the market close. Fixed income securities having a remaining maturity of greater than 60 days are valued using an independent pricing service. Fixed income securities having a remaining maturity of 60 days or less are generally valued at amortized cost, provided such amount approximates fair value. Foreign securities are valued based on prices from the primary market in which they are traded and are translated from the local currency into U.S. dollars using current exchange rates. Investments in other open-end investment companies are valued based on the NAV of the investment companies (which may use fair value pricing as discussed in their prospectuses). If market quotations are unavailable or deemed unreliable, securities will be valued in accordance with procedures adopted by the Trust’s Board of Trustees. Relying on prices supplied by pricing services or dealers or using fair valuation may result in values that are higher or lower than the values used by other investment companies and investors to price the same investments.
14
SKYBRIDGE DIVIDEND VALUE FUND
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
Fair Value Measurements — The inputs and valuation techniques used to measure fair value of the Fund’s investments are summarized into three levels as described in the hierarchy below:
● | Level 1 | — | quoted prices in active markets for identical securities; | |||
● | Level 2 | — | other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.); and | |||
● | Level 3 | — | significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments). |
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
The following is a summary of the inputs used, as of October 31, 2015, in valuing the Fund’s investments carried at fair value:
Total Value at 10/31/15 | Level 1 Quoted Prices | Level 2 Other Significant Observable Inputs | Level 3 Significant Unobservable Inputs | |||||||||||||
Common Stocks* | $ | 187,587,306 | $ | 187,587,306 | $ | — | $ | — | ||||||||
Short-Term Investment | 2,374,209 | 2,374,209 | — | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total Investments | $ | 189,961,515 | $ | 189,961,515 | $ | — | $ | — | ||||||||
|
|
|
|
|
|
|
|
* | Please refer to Portfolio of Investments for further details on portfolio holdings. |
At the end of each quarter, management evaluates the classification of Levels 1, 2 and 3 assets and liabilities. Various factors are considered, such as changes in liquidity from the prior reporting period; whether or not a broker is willing to execute at the quoted price; the depth and consistency of prices from third party pricing services; and the existence of contemporaneous, observable trades in the market. Additionally, management evaluates the classification of Level 1 and Level 2 assets and liabilities on a quarterly basis for changes in listings or delistings on national exchanges.
Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of the Fund’s investments may fluctuate from period to period. Additionally, the fair value of investments may differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially from the values the Fund may ultimately realize. Further, such investments may be subject to legal and other restrictions on resale or otherwise less liquid than publicly traded securities.
15
SKYBRIDGE DIVIDEND VALUE FUND
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
For fair valuations using significant unobservable inputs, U.S. generally accepted accounting principles (“U.S. GAAP”) require the Fund to present a reconciliation of the beginning to ending balances for reported market values that presents changes attributable to total realized and unrealized gains or losses, purchase and sales, and transfers in and out of Level 3 during the period. Transfers in and out between Levels are based on values at the end of the period. U.S. GAAP also requires the Fund to disclose amounts and reasons for all transfers in and out of Level 1 and Level 2 fair value measurements. A reconciliation of Level 3 investments is presented only when the Fund had an amount of Level 3 investments at the end of the reporting period that was meaningful in relation to its net assets. The amounts and reasons for all transfers in and out of each Level within the three-tier hierarchy are disclosed when the Fund had an amount of total transfers during the reporting period that was meaningful in relation to its net assets as of the end of the reporting period.
For the six months ended October 31, 2015, there were no transfers between Levels 1, 2 and 3 for the Fund.
Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes at the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates and those differences could be material.
Investment Transactions, Investment Income and Expenses — Investment transactions are recorded on trade date for financial statement preparation purposes. Realized gains and losses on investments sold are recorded on the identified cost basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date. Distribution (12b-1) fees and shareholder services fees relating to a specific class are charged directly to that class. General expenses of the Trust are generally allocated to each fund in proportion to its relative daily net assets. Expenses directly attributable to a particular fund in the Trust are charged directly to that fund. The Fund’s investment income, expenses (other than class specific expenses) and unrealized and realized gains and losses are allocated daily to each class of shares based upon the relative proportion of net assets of each class at the beginning of the day.
Dividends and Distributions to Shareholders — Dividends from net investment income are declared and paid quarterly to shareholders. Distributions, if any, of net short-term capital gain and net capital gain (the excess of net long-term capital gain over the short-term capital loss) realized by the Fund, after deducting any available capital loss carryovers, are declared and paid to its shareholders annually. Income dividends and capital gain distributions are determined in accordance with U.S. federal income tax regulations, which may differ from U.S. GAAP. These differences include the treatment of non-taxable dividends, expiring capital loss carryforwards and losses deferred due to wash sales and excise tax regulations. Permanent book and tax basis differences relating to shareholder distributions will result in reclassifications within the components of net assets.
16
SKYBRIDGE DIVIDEND VALUE FUND
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
U.S. Tax Status — No provision is made for U.S. income taxes as it is the Fund’s intention to continue to qualify for and elect the tax treatment applicable to regulated investment companies under Subchapter M of the Internal Revenue Code of 1986, as amended, and make the requisite distributions to its shareholders which will be sufficient to relieve it from U.S. income and excise taxes.
Other — In the normal course of business, the Fund may enter into contracts that provide general indemnifications. The Fund’s maximum exposure under these arrangements is dependent on claims that may be made against the Fund in the future, and therefore, cannot be estimated; however, based on experience, the risk of material loss for such claims is considered remote.
2. Transactions with Affiliates and Related Parties
SkyBridge Capital II, LLC (“SkyBridge” or the “Adviser”) serves as investment adviser to the Fund pursuant to an investment advisory agreement with the Trust (the “Advisory Agreement”). For its services, the Adviser is paid a monthly fee at the annual rate of 0.75% of the Fund’s average daily net assets. The Adviser has contractually agreed to reduce its management fee and/or reimburse certain expenses of the Fund to the extent necessary to ensure that the Fund’s total operating expenses (excluding taxes, “Acquired Fund” fees and expenses, interest, extraordinary items and brokerage commissions) do not exceed (on an annual basis) 1.25% with respect to Class A shares, 2.00% with respect to Class C shares and 1.00% with respect to Class I shares of average daily net assets of the Fund (the “Expense Limitation”). The Expense Limitation will remain in place until August 31, 2018, unless the Board of Trustees of FundVantage Trust (the “Trust”) approves its earlier termination. The Adviser is entitled to recover, subject to approval by the Board of Trustees, such amounts reduced or reimbursed for a period of up to three (3) years from the year in which the Adviser reduced its compensation and/or assumed expenses for the Fund. No recoupment will occur unless the Fund’s expenses are below the Expense Limitation. As of October 31, 2015, the amount of potential recovery was as follows:
Expiration
| ||||
April 30, 2017 | April 30, 2018 | April 30, 2019 | ||
$25,454 | $250,547 | $135,744 |
For the six months ended October 31, 2015, the Adviser earned advisory fees of $536,162 and waived fees of $135,744.
BNY Mellon Investment Servicing (US) Inc. (“BNY Mellon”) serves as administrator and transfer agent for the Fund. For providing administrative and accounting services, BNY Mellon is entitled to receive a monthly fee equal to an annual percentage rate of the Fund’s average daily net assets, subject to certain minimum monthly fees. For providing transfer agency services, BNY Mellon is entitled to receive a monthly fee, subject to certain minimum, and out of pocket expenses.
17
SKYBRIDGE DIVIDEND VALUE FUND
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
The Bank of New York Mellon (the “Custodian”) provides certain custodial services to the Fund. The Custodian is entitled to receive a monthly fee, subject to certain minimum, and out of pocket expenses.
Foreside Funds Distributors LLC (the “Underwriter”) provides principal underwriting services to the Fund.
The Trust and the Underwriter are parties to an underwriting agreement. The Trust has adopted a distribution plan for Class A and Class C Shares in accordance with Rule 12b-1 under the 1940 Act. Pursuant to the Class A and Class C Shares plan, the Fund compensates the Underwriter for direct and indirect costs and expenses incurred in connection with advertising, marketing and other distribution services in an amount not to exceed 0.25% and 1.00% (0.75% Rule 12b-1 distribution fee and 0.25% shareholder service fee), respectively, on an annualized basis of the average daily net assets of the Fund’s Class A and Class C Shares.
The Trustees of the Trust who are not officers or employees of an investment adviser, sub-adviser or other service provider to the Trust receive compensation in the form of an annual retainer and per meeting fees for their services as a Trustee. The remuneration paid to the Trustees by the Fund during the six months ended October 31, 2015 was $4,529. Certain employees of BNY Mellon serve as Officers of the Trust. They are not compensated by the Fund or the Trust.
3. Investment in Securities
For the six months ended October 31, 2015, aggregate purchases and sales of investment securities (excluding short-term investments) of the Fund were as follows:
Purchases | Sales | |||||||
Investment Securities |
|
$102,020,209 |
|
|
$11,263,774 |
|
18
SKYBRIDGE DIVIDEND VALUE FUND
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
4. Capital Share Transactions
For the six months ended October 31, 2015 and the year ended April 30, 2015, transactions in capital shares (authorized shares unlimited) were as follows:
For the Six Months Ended October 31, 2015 (Unaudited) | For the Year Ended April 30, 2015 | |||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||
Class A* | ||||||||||||||||||||
Sales | 963,204 | $ | 10,318,111 | 3,419,174 | $ | 36,289,524 | ||||||||||||||
Reinvestments | 39,411 | 407,617 | 47,974 | 510,449 | ||||||||||||||||
Redemptions | (189,460 | ) | (1,997,784 | ) | (119,050 | ) | (1,273,790 | ) | ||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Net increase | 813,155 | $ | 8,727,944 | 3,348,098 | $ | 35,526,183 | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Class C** | ||||||||||||||||||||
Sales | 1,326,361 | $ | 14,205,058 | 604,496 | $ | 6,561,314 | ||||||||||||||
Reinvestments | 8,033 | 82,748 | 2,868 | 30,854 | ||||||||||||||||
Redemptions | (51,771 | ) | (544,480 | ) | (1,046 | ) | (11,148 | ) | ||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Net increase | 1,282,623 | $ | 13,743,326 | 606,318 | $ | 6,581,020 | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Class I*** | ||||||||||||||||||||
Sales | 6,909,560 | $ | 74,550,929 | 5,134,934 | $ | 54,735,869 | ||||||||||||||
Reinvestments | 73,583 | 757,039 | 57,576 | 613,448 | ||||||||||||||||
Redemptions | (699,719 | ) | (7,316,659 | ) | (239,536 | ) | (2,567,881 | ) | ||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Net increase | 6,283,424 | $ | 67,991,309 | 4,952,974 | $ | 52,781,436 | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Total Net Increase | 8,379,202 | $ | 90,462,579 | 8,907,390 | $ | 94,888,639 | ||||||||||||||
|
|
|
|
|
|
|
|
* | Class A Shares commenced operations on June 13, 2014. |
** | Class C Shares commenced operations on October 17, 2014. |
*** | Class I Shares commenced operations on April 7, 2014. |
5. Federal Tax Information
The Fund has followed the authoritative guidance on accounting for and disclosure of uncertainty in tax positions, which requires the Fund to determine whether a tax position is more likely than not to be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The Fund has determined that there was no effect on the financial statements from following this authoritative guidance. In the normal course of business, the Fund is subject to examination by federal, state and local jurisdictions, where applicable, for tax years for which applicable statutes of limitations have not expired.
19
SKYBRIDGE DIVIDEND VALUE FUND
Notes to Financial Statements (Concluded)
October 31, 2015
(Unaudited)
For the year ended April 30, 2015, the tax character of distributions paid by the Fund was $1,249,477 of ordinary income dividends. Distributions from short-term capital gains are treated as ordinary income for federal income tax purposes.
As of April 30, 2015, the components of distributable earnings on a tax basis were as follows:
Capital Loss | Undistributed | Undistributed | Unrealized | |||
$ — | $3,223,214 | $4,363 | $2,250,232 |
The differences between the book and tax basis components of distributable earnings relate primarily to the timing and recognition of income and gains for federal income tax purposes. Short-term capital gains are reported as ordinary income for federal income tax purposes.
As of October 31, 2015, the federal tax cost, aggregate gross unrealized appreciation and depreciation of securities held by the Fund were as follows:
Federal tax cost | $ | 191,019,049 | ||||
|
| |||||
Gross unrealized appreciation | $ | 9,502,926 | ||||
Gross unrealized depreciation | (10,560,460 | ) | ||||
|
| |||||
Net unrealized depreciation | $ | (1,057,534 | ) | |||
|
|
Pursuant to the federal income tax rules applicable to regulated investment companies, the Fund may elect to treat certain capital losses between November 1 and April 30 and late year ordinary losses ((i) ordinary losses between January 1 and April 30, and (ii) specified ordinary and currency losses between November 1 and April 30) as occurring on the first day of the following tax year. For the year ended April 30, 2015, the Fund had no short-term capital loss deferrals and no long-term capital loss deferrals.
Accumulated capital losses represent net capital loss carryforwards as of April 30, 2015 that may be available to offset future realized capital gains and thereby reduce future capital gains distributions. As of April 30, 2015, the Fund did not have any capital loss carryforwards.
6. Subsequent Events
Management has evaluated the impact of all subsequent events on the Fund through the date the financial statements were issued, and has determined that there were no subsequent events requiring recognition or disclosure in the financial statements.
20
SKYBRIDGE DIVIDEND VALUE FUND
Other Information
(Unaudited)
Proxy Voting
Policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities as well as information regarding how the Fund voted proxies relating to portfolio securities for the most recent 12-month period ended June 30 are available without charge, upon request, by calling (888) 919-6885 and on the Securities and Exchange Commission’s (“SEC”) website at http:// www.sec.gov.
Quarterly Portfolio Schedules
The Trust files its complete schedule of portfolio holdings with the SEC for the first and third fiscal quarters of each fiscal year (quarters ended July 31 and January 31) on Form N-Q. The Trust’s Forms N-Q are available on the SEC’s website at http://www.sec.gov and may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. Information on the operation of the SEC’s Public Reference Room may be obtained by calling 1-800-SEC-0330.
21
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[THIS PAGE INTENTIONALLY LEFT BLANK.]
Investment Adviser
SkyBridge Capital II, LLC
527 Madison Avenue, 16th Floor
New York, New York 10022
Administrator
BNY Mellon Investment Servicing (US) Inc.
301 Bellevue Parkway
Wilmington, DE 19809
Transfer Agent
BNY Mellon Investment Servicing (US) Inc.
4400 Computer Drive
Westborough, MA 01581
Principal Underwriter
Foreside Funds Distributors LLC
400 Berwyn Park
899 Cassatt Road
Berwyn, PA 19312
Custodian
The Bank of New York Mellon
225 Liberty Street
New York, NY 10286
Independent Registered Public Accounting Firm
Ernst & Young LLP
One Commerce Square
2005 Market Street, Suite 700
Philadelphia, PA 19103-7096
Legal Counsel
Pepper Hamilton LLP
3000 Two Logan Square
18th and Arch Streets
Philadelphia, PA 19103
SKY-1015
SkyBridge Dividend
Value Fund
of
FundVantage Trust
Class A
Class C
Class I
SEMI-ANNUAL
REPORT
October 31, 2015
(Unaudited)
This report is submitted for the general information of the shareholders of the SkyBridge Dividend Value Fund. It is not authorized for distribution unless preceded or accompanied by a current prospectus for the SkyBridge Dividend Value Fund.
WHV INTERNATIONAL EQUITY FUND
Semi-Annual Report
Performance Data
October 31, 2015
(Unaudited)
Average Annual Total Returns for the Periods Ended October 31, 2015
| ||||||||||||||||||||||||
Six Months† | 1 Year | 3 Years | 5 Years | Since Inception | ||||||||||||||||||||
Class A Shares (with sales charge)* | -21.11% | -23.89 | % | -3.81% | -2.14% | 1.77% | ||||||||||||||||||
Class A Shares (without sales charge)* | -16.30% | -19.24 | % | -1.89% | -0.98% | 2.73% | ||||||||||||||||||
MSCI EAFE Index (Gross) | -6.25% | 0.37 | % | 8.48% | 5.28% | 6.95%* | * |
† | Not Annualized |
* | Class A Shares of the WHV International Equity Fund (the “Fund”) commenced operations on July 31, 2009. |
** | Benchmark performance is from the inception date of Class A Shares of the Fund (July 31, 2009) only and is not the inception date of the benchmark itself. |
Class A Shares of the Fund have a 5.75% maximum sales charge.
The performance data quoted represents past performance and does not guarantee future results. Current performance may be lower or higher. Performance data current to the most recent month-end may be obtained by calling (888) 948-4685. The investment return and principal value of an investment will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. The table does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
1
WHV INTERNATIONAL EQUITY FUND
Semi-Annual Report
Performance Data
October 31, 2015
(Unaudited)
Total Returns for the Periods Ended October 31, 2015 | ||||||||||||
Six Months† | Since Inception | |||||||||||
Class C Shares* | -16.66% | -18.78% | ||||||||||
MSCI EAFE Index (Gross) | -6.25% | 0.54% | ** |
† | Not Annualized |
* | Class C Shares of the Fund commenced operations on November 13, 2014. |
** | Benchmark performance is from the inception date of Class C Shares of the Fund (November 13, 2014) only and is not the inception date of the benchmark itself. |
The performance data quoted represents past performance and does not guarantee future results. Current performance may be lower or higher. Performance data current to the most recent month-end may be obtained by calling (888) 948-4685. The investment return and principal value of an investment will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. The table does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
2
WHV INTERNATIONAL EQUITY FUND
Semi-Annual Report
Performance Data
October 31, 2015
(Unaudited)
Average Annual Total Returns for the Periods Ended October 31, 2015
| ||||||||||||||||||||||||
Six Months† | 1 Year | 3 Years | 5 Years | Since Inception | ||||||||||||||||||||
Class I Shares* | -16.23% | -19.04 | % | -1.65% | -0.74% | 9.19% | ||||||||||||||||||
MSCI EAFE Index (Gross) | -6.25% | 0.37 | % | 8.48% | 5.28% | 9.12%* | * |
† | Not Annualized |
* | Class I Shares of the Fund commenced operations on December 19, 2008. |
** | Benchmark performance is from the inception date of Class I Shares of the Fund (December 19, 2008) only and is not the inception date of the benchmark itself. |
The performance data quoted represents past performance and does not guarantee future results. Current performance may be lower or higher. Performance data current to the most recent month-end may be obtained by calling (888) 948-4685. The investment return and principal value of an investment will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. The table does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
3
WHV INTERNATIONAL EQUITY FUND
Semi-Annual Report
Performance Data (Concluded)
October 31, 2015
(Unaudited)
The Fund’s total annual operating expense ratios are 1.45% for Class A Shares, 2.20% for Class C Shares, and 1.20% for Class I Shares of the Fund’s average daily net assets. These ratios are stated in the current prospectus dated September 1, 2015, and may differ from the actual expenses incurred by the Fund for the period covered by this report. WHV Investments, Inc. (the “Adviser”) has contractually agreed to reduce its investment advisory fee and/or reimburse certain expenses of the Fund to the extent necessary to ensure that the Fund’s total operating expenses (excluding taxes, any class-specific fees and expenses, interest, extraordinary items, “Acquired Fund” fees and expenses and brokerage commissions) do not exceed 1.25% (on an annual basis) of the Fund’s average daily net assets (the “Expense Limitation”). The Expense Limitation will remain in place until August 31, 2016 unless the Board of Trustees of FundVantage Trust (the “Trust”) approves its earlier termination. The Adviser is entitled to recover, subject to approval by the Board of Trustees, such amounts reduced or reimbursed for a period of up to three years from the year on which the Adviser reduced its compensation and/or assumed expenses for the Fund. Total returns would be lower had such fees and expenses not been waived and/or reimbursed, or been higher had such fees and expenses been recouped.
The Fund evaluates its performance as compared to that of the MSCI EAFE® Index [Europe, Australasia, Far East], which is a free float-adjusted market capitalization index that is designed to measure developed market equity performance, excluding the U.S. & Canada. It is impossible to invest directly in an index. As of October 31, 2015, the MSCI EAFE Index consisted of the following 21 developed market country indices: Australia, Austria, Belgium, Denmark, Finland, France, Germany, Hong Kong, Ireland, Israel, Italy, Japan, the Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland and the United Kingdom.
All mutual fund investing involves risk, including possible loss of principal. Investing in foreign securities entails special risks, such as fluctuations in currency exchange rates and possible lax regulation of securities markets and accounting practices.
4
WHV INTERNATIONAL EQUITY FUND
Fund Expense Disclosure
October 31, 2015
(Unaudited)
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments, if any, and redemption fees; and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, if any, and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
These examples are based on an investment of $1,000 invested at the beginning of the six-month period from May 1, 2015 through October 31, 2015 for the Fund, and held for the entire period.
Actual Expenses
The first line of each accompanying table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Examples for Comparison Purposes
The second line of each accompanying table provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare these 5% hypothetical examples with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that the expenses shown in the accompanying tables are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), if any, or redemption fees. Therefore, the second line of each accompanying table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
5
WHV INTERNATIONAL EQUITY FUND
Fund Expense Disclosure (Concluded)
October 31, 2015
(Unaudited)
WHV International Equity Fund | |||||||||||||||
Beginning Account Value May 1, 2015 | Ending Account Value October 31, 2015 | Expenses Paid During Period* | |||||||||||||
Class A Shares | |||||||||||||||
Actual | $ | 1,000.00 | $ | 837.00 | $ | 6.70 | |||||||||
Hypothetical (5% return before expenses) | 1,000.00 | 1,017.85 | 7.35 | ||||||||||||
Class C Shares | |||||||||||||||
Actual | $ | 1,000.00 | $ | 833.40 | $ | 10.14 | |||||||||
Hypothetical (5% return before expenses) | 1,000.00 | 1,014.08 | 11.14 | ||||||||||||
Class I Shares | |||||||||||||||
Actual | $ | 1,000.00 | $ | 837.70 | $ | 5.54 | |||||||||
Hypothetical (5% return before expenses) | 1,000.00 | 1,019.10 | 6.09 |
*Expenses are equal to an annualized expense ratio for the six-month period ended October 31, 2015 of 1.45%, 2.20% and 1.20% for Class A, Class C and Class I Shares, respectively, for the Fund, multiplied by the average account value over the period, multiplied by the number of days in the most recent period (184), then divided by 366 to reflect the period. The Fund’s ending account values on the first line in the table are based on the actual six-month total returns for the Fund of (16.30%), (16.66%) and (16.23%) for Class A, Class C and Class I Shares, respectively.
6
WHV INTERNATIONAL EQUITY FUND
Portfolio Holdings Summary Table
October 31, 2015
(Unaudited)
The following table presents a summary by sector of the portfolio holdings of the Fund:
% of Net Assets | Value | |||||||
COMMON STOCKS: | ||||||||
Energy Equipment & Services | 23.6% | $ | 54,553,253 | |||||
Metals & Mining | 10.5 | 24,198,784 | ||||||
Road & Rail | 9.5 | 21,918,263 | ||||||
Food Products | 4.9 | 11,273,774 | ||||||
Personal Products | 3.7 | 8,664,272 | ||||||
Oil, Gas & Consumable Fuels | 8.5 | 19,585,147 | ||||||
Chemicals | 8.4 | 19,546,815 | ||||||
Pharmaceuticals | 4.3 | 9,888,973 | ||||||
Tobacco | 3.9 | 8,941,351 | ||||||
Machinery | 3.7 | 8,607,811 | ||||||
Electrical Equipment | 3.1 | 7,207,135 | ||||||
Beverages | 2.5 | 5,854,695 | ||||||
Insurance | 1.9 | 4,429,308 | ||||||
Real Estate Management & Development | 1.7 | 3,971,788 | ||||||
Building Products | 1.3 | 2,899,088 | ||||||
Capital Markets | 0.7 | 1,686,226 | ||||||
Trading Companies & Distributors | 0.1 | 266,633 | ||||||
Other Assets in Excess of Liabilities | 7.7 | 17,776,897 | ||||||
|
|
|
| |||||
NET ASSETS | 100.0% | $ | 231,270,213 | |||||
|
|
|
|
Portfolio holdings are subject to change at any time.
The accompanying notes are an integral part of the financial statements.
7
WHV INTERNATIONAL EQUITY FUND
Portfolio of Investments
October 31, 2015
(Unaudited)
Number of Shares | Value | |||||||
COMMON STOCKS — 92.3% |
| |||||||
Australia — 4.2% | ||||||||
BHP Billiton, Ltd., SP ADR | 278,205 | $ | 9,150,163 | |||||
South32 Ltd., ADR* | 114,052 | 586,227 | ||||||
|
| |||||||
9,736,390 | ||||||||
|
| |||||||
Bermuda — 5.8% | ||||||||
Bunge, Ltd. | 14,590 | 1,064,486 | ||||||
Nabors Industries Ltd. | 925,132 | 9,288,325 | ||||||
PartnerRe Ltd. | 21,455 | 2,982,245 | ||||||
|
| |||||||
13,335,056 | ||||||||
|
| |||||||
Brazil — 1.2% | ||||||||
Vale SA, SP ADR | 655,995 | 2,860,138 | ||||||
|
| |||||||
Canada — 25.3% | ||||||||
Agrium, Inc. | 74,390 | 6,923,477 | ||||||
Brookfield Asset Management, Inc., Class A | 113,577 | 3,971,788 | ||||||
Canadian National Railway Co. | 186,640 | 11,401,838 | ||||||
Canadian Natural Resources, Ltd. | 331,450 | 7,696,269 | ||||||
Canadian Pacific Railway, Ltd. | 74,850 | 10,516,425 | ||||||
Ensign Energy Services, Inc. | 14,585 | 91,830 | ||||||
Finning International, Inc. | 16,675 | 266,633 | ||||||
Manulife Financial Corp. | 34,855 | 578,245 | ||||||
Potash Corp. of Saskatchewan, Inc. | 218,330 | 4,416,816 | ||||||
Suncor Energy, Inc. | 399,895 | 11,888,878 | ||||||
Teck Resources, Ltd., Class B | 115,675 | 679,012 | ||||||
|
| |||||||
58,431,211 | ||||||||
|
| |||||||
Curacao — 4.8% | ||||||||
Schlumberger, Ltd. | 141,145 | 11,031,893 |
Number of Shares | Value | |||||||
COMMON STOCKS — (Continued) |
| |||||||
France — 0.4% | ||||||||
AXA SA, SP ADR | 32,540 | $ | 868,818 | |||||
|
| |||||||
Germany — 2.8% | ||||||||
BASF SE, SP ADR | 78,855 | 6,455,859 | ||||||
|
| |||||||
Ireland — 12.9% | ||||||||
Allegion PLC | 44,485 | 2,899,088 | ||||||
Eaton Corp. PLC | 128,906 | 7,207,135 | ||||||
Ingersoll-Rand PLC | 145,255 | 8,607,811 | ||||||
Weatherford International PLC* | 1,082,510 | 11,084,902 | ||||||
|
| |||||||
29,798,936 | ||||||||
|
| |||||||
Luxembourg — 4.0% | ||||||||
Tenaris SA, ADR | 367,645 | 9,290,389 | ||||||
|
| |||||||
Netherlands — 6.4% | ||||||||
Core Laboratories NV | 52,400 | 6,095,692 | ||||||
Unilever NV, New York Registry Shares | 192,625 | 8,664,272 | ||||||
|
| |||||||
14,759,964 | ||||||||
|
| |||||||
Norway — 0.2% | ||||||||
Yara International ASA, ADR | 12,285 | 556,265 | ||||||
|
| |||||||
Switzerland — 9.9% | ||||||||
Nestle SA, SP ADR | 133,945 | 10,209,288 | ||||||
Novartis AG, ADR | 109,355 | 9,888,973 | ||||||
Syngenta AG, ADR | 17,750 | 1,194,398 | ||||||
UBS Group AG | 84,185 | 1,686,226 | ||||||
|
| |||||||
22,978,885 | ||||||||
|
| |||||||
United Kingdom — 14.4% | ||||||||
British American Tobacco PLC, SP ADR | 75,710 | 8,941,351 | ||||||
Diageo PLC, SP ADR | 50,875 | 5,854,695 | ||||||
Ensco PLC, Class A | 67,350 | 1,120,030 | ||||||
Noble Corp. PLC | 486,280 | 6,550,192 |
The accompanying notes are an integral part of the financial statements.
8
WHV INTERNATIONAL EQUITY FUND
Portfolio of Investments (Concluded)
October 31, 2015
(Unaudited)
Number of Shares | Value | |||||||
COMMON STOCKS — (Continued) |
| |||||||
United Kingdom — (Continued) |
| |||||||
Rio Tinto PLC, SP ADR | 299,185 | $ | 10,923,244 | |||||
|
| |||||||
33,389,512 | ||||||||
|
| |||||||
TOTAL COMMON STOCKS (Cost $212,860,448) |
| 213,493,316 | ||||||
|
| |||||||
TOTAL INVESTMENTS - 92.3% |
| 213,493,316 | ||||||
OTHER ASSETS IN EXCESS OF LIABILITIES - 7.7% | 17,776,897 | |||||||
|
| |||||||
NET ASSETS - 100.0% | $ | 231,270,213 | ||||||
|
|
* | Non-income producing. |
ADR | American Depositary Receipt | |
SP ADR | Sponsored American Depositary Receipt | |
PLC | Public Limited Company |
The accompanying notes are an integral part of the financial statements.
9
WHV INTERNATIONAL EQUITY FUND
Statement of Assets and Liabilities
October 31, 2015
(Unaudited)
Assets | ||||
Investments, at value (Cost $212,860,448) | $ | 213,493,316 | ||
Cash | 13,979,162 | |||
Receivable for investments sold | 3,299,318 | |||
Receivable for capital shares sold | 1,516,841 | |||
Dividends and interest receivable | 505,817 | |||
Prepaid expenses and other assets | 106,976 | |||
|
| |||
Total assets | 232,901,430 | |||
|
| |||
Liabilities | ||||
Payable for capital shares redeemed | 1,353,629 | |||
Payable to Investment Adviser | 190,744 | |||
Payable for administration and accounting fees | 26,612 | |||
Payable for custodian fees | 14,142 | |||
Payable for transfer agent fees | 6,744 | |||
Accrued expenses | 39,346 | |||
|
| |||
Total liabilities | 1,631,217 | |||
|
| |||
Net Assets | $ | 231,270,213 | ||
|
| |||
Net Assets Consist of: | ||||
Capital stock, $0.01 par value | $ | 130,247 | ||
Paid-in capital | 256,860,289 | |||
Accumulated net investment income | 5,888,232 | |||
Accumulated net realized loss from investments | (32,241,423 | ) | ||
Net unrealized appreciation on investments | 632,868 | |||
|
| |||
Net Assets | $ | 231,270,213 | ||
|
| |||
Class A Shares: | ||||
Net asset value and redemption price per share ($19,736,575 / 1,114,573 shares) | $17.71 | |||
Maximum offering price per share (100/94.25 of $17.71) | $18.79 | |||
Class C Shares: | ||||
Net asset value, offering and redemption price per share ($142,492 / 8,090 shares) | $17.61 | |||
Class I Shares: | ||||
Net asset value, offering and redemption price per share ($211,391,146 / 11,902,019 shares) | $17.76 |
The accompanying notes are an integral part of the financial statements.
10
WHV INTERNATIONAL EQUITY FUND
Statement of Operations
For the Six Months Ended October 31, 2015
(Unaudited)
Investment Income | ||||
Dividends | $ | 4,873,040 | ||
Less: foreign taxes withheld | (217,235 | ) | ||
Interest | 914 | |||
|
| |||
Total investment income | 4,656,719 | |||
|
| |||
Expenses | ||||
Advisory fees (Note 2) | 1,549,363 | |||
Administration and accounting fees (Note 2) | 110,844 | |||
Transfer agent fees (Note 2) | 60,382 | |||
Distribution fees (Class A) (Note 2) | 33,200 | |||
Trustees’ and officers’ fees (Note 2) | 21,441 | |||
Printing and shareholder reporting fees | 17,271 | |||
Custodian fees (Note 2) | 12,788 | |||
Registration and filing fees | 9,994 | |||
Distribution fees (Class C) (Note 2) | 570 | |||
Shareholder servicing fees (Class C) (Note 2) | 190 | |||
Other expenses | 83,931 | |||
|
| |||
Total expenses | 1,899,974 | |||
|
| |||
Net investment income | 2,756,745 | |||
|
| |||
Net realized and unrealized gain/(loss) from investments: | ||||
Net realized loss from investments | (21,736,085 | ) | ||
Net change in unrealized appreciation/(depreciation) on investments | (43,886,753 | ) | ||
|
| |||
Net realized and unrealized loss on investments | (65,622,838 | ) | ||
|
| |||
Net decrease in net assets resulting from operations | $ | (62,866,093 | ) | |
|
|
The accompanying notes are an integral part of the financial statements.
11
WHV INTERNATIONAL EQUITY FUND
Statements of Changes in Net Assets
For the Six Months Ended October 31, 2015 (Unaudited) | For the Year Ended April 30, 2015 | |||||||||
Increase/(Decrease) in net assets from operations: | ||||||||||
Net investment income | $ | 2,756,745 | $ | 4,321,011 | ||||||
Net realized loss from investments | (21,736,085 | ) | (2,479,564 | ) | ||||||
Net change in unrealized appreciation/(depreciation) on investments | (43,886,753 | ) | (40,989,374 | ) | ||||||
|
|
|
| |||||||
Net decrease in net assets resulting from operations | (62,866,093 | ) | (39,147,927 | ) | ||||||
|
|
|
| |||||||
Less Dividends and Distributions to Shareholders from: | ||||||||||
Net investment income: | ||||||||||
Class A Shares | — | (293,529 | ) | |||||||
Class C Shares | — | (473 | ) | |||||||
Class I Shares | — | (3,574,349 | ) | |||||||
|
|
|
| |||||||
Total net investment income | — | (3,868,351 | ) | |||||||
|
|
|
| |||||||
Net decrease in net assets from dividends and distributions to shareholders | — | (3,868,351 | ) | |||||||
|
|
|
| |||||||
Increase/(Decrease) in Net Assets Derived from Capital Share Transactions (Note 4) | (107,228,208 | ) | 50,154,797 | |||||||
|
|
|
| |||||||
Total increase/(decrease) in net assets | (170,094,301 | ) | 7,138,519 | |||||||
|
|
|
| |||||||
Net assets | ||||||||||
Beginning of period | 401,364,514 | 394,225,995 | ||||||||
|
|
|
| |||||||
End of period | $ | 231,270,213 | $ | 401,364,514 | ||||||
|
|
|
| |||||||
Accumulated net investment income, end of period | $ | 5,888,232 | $ | 3,131,487 | ||||||
|
|
|
|
The accompanying notes are an integral part of the financial statements.
12
WHV INTERNATIONAL EQUITY FUND
Financial Highlights
Contained below is per share operating performance data for Class A Shares outstanding, total investment return, ratios to average net assets and other supplemental data for the respective periods. 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). This information has been derived from information provided in the financial statements and should be read in conjunction with the financial statements and the notes thereto.
Class A Shares | ||||||||||||||||||||||||||||||
For the Six Months Ended October 31, 2015 (Unaudited) | For the Year Ended April 30, 2015 | For the Year Ended April 30, 2014 | For the Year Ended April 30, 2013 | For the Year Ended April 30, 2012 | For the Year Ended April 30, 2011 | |||||||||||||||||||||||||
Per Share Operating Performance | ||||||||||||||||||||||||||||||
Net asset value, beginning of period | $ | 21.16 | $ | 23.48 | $ | 20.54 | $ | 19.30 | $ | 22.42 | $ | 17.97 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Net investment income(1) | 0.15 | 0.17 | 0.14 | 0.05 | 0.10 | 0.01 | ||||||||||||||||||||||||
Net realized and unrealized gain/(loss) on investments | (3.60 | ) | (2.34 | ) | 2.92 | 1.22 | (3.20 | ) | 4.44 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Net increase/(decrease) in net assets resulting from operations | (3.45 | ) | (2.17 | ) | 3.06 | 1.27 | (3.10 | ) | 4.45 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Dividends and distributions to shareholders from: | ||||||||||||||||||||||||||||||
Net investment income | — | (0.15 | ) | (0.09 | ) | (0.03 | ) | (0.03 | ) | — | ||||||||||||||||||||
Net realized gains | — | — | (0.03 | ) | — | — | (0.01 | ) | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Total dividends and distributions to shareholders | — | (0.15 | ) | (0.12 | ) | (0.03 | ) | (0.03 | ) | (0.01 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Redemption fees | — | — | (2) | — | (2) | — | (2) | 0.01 | 0.01 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Net asset value, end of period | $ | 17.71 | $ | 21.16 | $ | 23.48 | $ | 20.54 | $ | 19.30 | $ | 22.42 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Total investment return(3) | (16.30 | )% | (9.18 | )% | 14.90 | % | 6.61 | % | (13.75 | )% | 24.83 | % | ||||||||||||||||||
Ratio/Supplemental Data | ||||||||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $ | 19,737 | $ | 31,583 | $ | 46,435 | $ | 53,447 | $ | 58,360 | $ | 56,113 | ||||||||||||||||||
Ratio of expenses to average net assets | 1.45 | %(4) | 1.45 | % | 1.49 | % | 1.50 | % | 1.50 | % | 1.50 | % | ||||||||||||||||||
Ratio of expenses to average net assets without waivers, expense reimbursements and/or recoupment, if any(5) | 1.45 | %(4) | 1.45 | % | 1.45 | % | 1.46 | % | 1.51 | % | 1.57 | % | ||||||||||||||||||
Ratio of net investment income to average net assets | 1.55 | %(4) | 0.75 | % | 0.67 | % | 0.27 | % | 0.51 | % | 0.05 | % | ||||||||||||||||||
Portfolio turnover rate | 3.37 | %(6) | 7.76 | % | 5.65 | % | 5.21 | % | 7.48 | % | 2.20 | % |
(1) | The selected per share data was calculated using the average shares outstanding method for the period. |
(2) | Amount is less than $0.005 per share. |
(3) | Total investment return is calculated assuming a purchase of shares on the first day and a sale of shares on the last day of each period reported and includes reinvestments of dividends and distributions, if any. Total returns for periods less than one year are not annualized. Total investment return does not reflect the impact of the maximum front-end sales load of 5.75%. If reflected, the return would be lower. |
(4) | Annualized. |
(5) | During the period, certain fees were reduced or expenses were recouped. If such fee reductions or recoupments had not occurred, the ratios would have been as indicated (See Note 2). |
(6) | Not annualized. |
The accompanying notes are an integral part of the financial statements.
13
WHV INTERNATIONAL EQUITY FUND
Financial Highlights (Continued)
Contained below is per share operating performance data for Class C Shares outstanding, total investment return, ratios to average net assets and other supplemental data for the respective periods. 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). This information has been derived from information provided in the financial statements and should be read in conjunction with the financial statements and the notes thereto.
Class C Shares | ||||||||||
For the Six Months Ended October 31, 2015 (Unaudited) | For the Period November 13, 2014* to April 30, 2015 | |||||||||
Per Share Operating Performance | ||||||||||
Net asset value, beginning of period | $ | 21.13 | $ | 21.89 | ||||||
|
|
|
| |||||||
Net investment income(1) | 0.07 | 0.07 | ||||||||
Net realized and unrealized loss on investments | (3.59 | ) | (0.64 | ) | ||||||
|
|
|
| |||||||
Net decrease in net assets resulting from operations | (3.52 | ) | (0.57 | ) | ||||||
|
|
|
| |||||||
Dividends and distributions to shareholders from: | ||||||||||
Net investment income | — | (0.19 | ) | |||||||
Net realized gains | — | — | ||||||||
|
|
|
| |||||||
Total dividends and distributions to shareholders | — | (0.19 | ) | |||||||
|
|
|
| |||||||
Redemption Fees | — | — | (2) | |||||||
|
|
|
| |||||||
Net asset value, end of period | $ | 17.61 | $ | 21.13 | ||||||
|
|
|
| |||||||
Total investment return(3) | (16.66 | )% | (2.54 | )% | ||||||
Ratio/Supplemental Data | ||||||||||
Net assets, end of period (000’s omitted) | $ | 142 | $ | 171 | ||||||
Ratio of expenses to average net assets | 2.20 | %(4) | 2.20 | %(4) | ||||||
Ratio of expenses to average net assets without waivers and expense reimbursements(5) | 2.20 | %(4) | 2.20 | %(4) | ||||||
Ratio of net investment income to average net assets | 0.80 | %(4) | 0.74 | %(4) | ||||||
Portfolio turnover rate | 3.37 | %(6) | 7.76 | %(6) |
* | Commencement of operations. |
(1) | The selected per share data was calculated using the average shares outstanding method for the period. |
(2) | Amount is less than $0.05 per share. |
(3) | Total investment return is calculated assuming a purchase of shares on the first day and a sale of shares on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total returns for periods less than one year are not annualized. |
(4) | Annualized. |
(5) | During the period, certain fees were waived. If such fee waivers had not occurred, the ratios would have been as indicated (See Note 2). |
(6) | Notannualized. |
The accompanying notes are an integral part of the financial statements.
14
WHV INTERNATIONAL EQUITY FUND
Financial Highlights (Continued)
Contained below is per share operating performance data for Class I Shares outstanding, total investment return, ratios to average net assets and other supplemental data for the respective periods. 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). This information has been derived from information provided in the financial statements and should be read in conjunction with the financial statements and the notes thereto.
Class I Shares | ||||||||||||||||||||||||||||||
For the Six Months Ended October 31, 2015 (Unaudited) | For the Year Ended April 30, 2015 | For the Year Ended April 30, 2014 | For the Year Ended April 30, 2013 | For the Year Ended April 30, 2012 | For the Year Ended April 30, 2011 | |||||||||||||||||||||||||
Per Share Operating Performance | ||||||||||||||||||||||||||||||
Net asset value, beginning of period | $ | 21.20 | $ | 23.53 | $ | 20.59 | $ | 19.35 | $ | 22.47 | $ | 17.99 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Net investment income(1) | 0.17 | 0.24 | 0.20 | 0.11 | 0.15 | 0.05 | ||||||||||||||||||||||||
Net realized and unrealized gain/(loss) on investments | (3.61 | ) | (2.36 | ) | 2.92 | 1.22 | (3.21 | ) | 4.45 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Net increase/(decrease) in net assets resulting from operations | (3.44 | ) | (2.12 | ) | 3.12 | 1.33 | (3.06 | ) | 4.50 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Dividends and distributions to shareholders from: | ||||||||||||||||||||||||||||||
Net investment income | — | (0.21 | ) | (0.15 | ) | (0.09 | ) | (0.07 | ) | (0.02 | ) | |||||||||||||||||||
Net realized gains | — | — | (0.03 | ) | — | — | (0.01 | ) | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Total dividends and distributions to shareholders | — | (0.21 | ) | (0.18 | ) | (0.09 | ) | (0.07 | ) | (0.03 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Redemption fees | — | — | (2) | — | (2) | — | (2) | 0.01 | 0.01 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Net asset value, end of period | $ | 17.76 | $ | 21.20 | $ | 23.53 | $ | 20.59 | $ | 19.35 | $ | 22.47 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Total investment return(3) | (16.23 | )% | (8.94 | )% | 15.18 | % | 6.88 | % | (13.51 | )% | 25.12 | % | ||||||||||||||||||
Ratio/Supplemental Data | ||||||||||||||||||||||||||||||
Net assets, end of period (000’s omitted) | $ | 211,391 | $ | 369,610 | $ | 347,791 | $ | 320,190 | $ | 256,268 | $ | 193,361 | ||||||||||||||||||
Ratio of expenses to average net assets | 1.20 | %(4) | 1.20 | % | 1.24 | % | 1.25 | % | 1.25 | % | 1.25 | % | ||||||||||||||||||
Ratio of expenses to average net assets without waivers, expense reimbursements and/or recoupment, if any(5) | 1.20 | %(4) | 1.20 | % | 1.20 | % | 1.21 | % | 1.27 | % | 1.32 | % | ||||||||||||||||||
Ratio of net investment income to average net assets | 1.80 | %(4) | 1.11 | % | 0.92 | % | 0.58 | % | 0.77 | % | 0.24 | % | ||||||||||||||||||
Portfolio turnover rate | 3.37 | %(6) | 7.76 | % | 5.65 | % | 5.21 | % | 7.48 | % | 2.20 | % |
(1) | The selected per share data was calculated using the average shares outstanding method for the period. |
(2) | Amount is less than $0.005 per share. |
(3) | Total investment return is calculated assuming a purchase of shares on the first day and a sale of shares on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total returns for periods less than one year are not annualized. |
(4) | Annualized. |
(5) | During the period, certain fees were reduced or expenses were recouped. If such fee reductions or recoupments had not occurred, the ratios would have been as indicated (See Note 2). |
(6) | Not annualized. |
The accompanying notes are an integral part of the financial statements.
15
WHV INTERNATIONAL EQUITY FUND
Notes to Financial Statements
October 31, 2015
(Unaudited)
1. Organization and Significant Accounting Policies
The WHV International Equity Fund ( The “Fund” ) is a diversified, open-end management investment companies registered under the Investment Company Act of 1940, as amended, (the “1940 Act”), and commenced investment operations on December 19, 2008. The Fund is a separate series of FundVantage Trust (the “Trust”) which was organized as a Delaware statutory trust on August 28, 2006. The Trust is a “series trust” authorized to issue an unlimited number of separate series or classes of shares of beneficial interest. Each series is treated as a separate entity for certain matters under the 1940 Act, and for other purposes, and a shareholder of one series is not deemed to be a shareholder of any other series. The Fund offers separate classes of shares: Class A, Class C and Class I Shares. Class A Shares are sold subject to a front-end sales charge. Front-end sales charges may be reduced or waived under certain circumstances. A contingent deferred sales charge (“CDSC”) of up to 1.00% may apply for investments of $1 million or more of Class A Shares of each Fund (and therefore no initial sales charge was paid) and shares are redeemed within 18 months after initial purchase. The CDSC shall not apply to those purchases of Class A Shares of $1 million or more where the selling broker-dealer did not receive a commission. A CDSC of up to 1.00% will be assessed when Class C Shares are redeemed within 12 months after initial purchase. The CDSC shall not apply to those purchases of Class C Shares where the selling broker-dealer did not receive a commission.
The Fund is an investment company and follows accounting and reporting guidance in the Financial Accounting Standards Board Accounting Standards Codification Topic 946.
Portfolio Valuation — The Fund’s net asset value (“NAV”) is calculated once daily at the close of regular trading hours on the New York Stock Exchange (“NYSE”) (typically 4:00 p.m. Eastern time) on each day the NYSE is open. Securities held by the Fund are valued using the closing price or the last sale price on national securities exchange or the National Association of Securities Dealers Automatic Quotation System (“NASDAQ”) market system where they are primarily traded. The Fund’s equity securities listed on any national or foreign exchange market system will be valued at the last sale price. Equity securities traded in the over-the-counter market are valued at their closing sale or official closing price. If there were no transactions on that day, securities traded principally on an exchange will be valued at the mean of the last bid and ask prices prior to the market close. Prices for equity securities normally are supplied by an independent pricing service approved by the Trust’s Board of Trustees. Fixed income securities are valued based on market quotations, which are furnished by an independent pricing service. Fixed income securities having remaining maturities of 60 days or less are generally valued at amortized cost, provided such amount approximates fair value. Any assets held by the Fund that are denominated in foreign currencies are valued daily in U.S. dollars at the foreign currency exchange rates that are prevailing at the time that the Fund determines the daily NAV per share. Foreign securities may trade on weekends or other days when the Fund does not calculate NAV. As a result, the market value of these investments may change on days when you cannot buy or sell shares of the Fund. Investments in other open-end investment companies are valued based on the NAV of such investment companies (which may use fair
16
WHV INTERNATIONAL EQUITY FUND
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
value pricing as disclosed in their prospectuses). Securities that do not have a readily available current market value are valued in accordance with procedures adopted by the Trust’s Board of Trustees. The Board of Trustees has adopted methods for valuing securities and other assets in circumstances where market quotes are not readily available and has delegated to WHV Investments, Inc. (“WHV” or the “Adviser”) the responsibility for applying the valuation methods. Relying on prices supplied by pricing services or dealers or using fair valuation may result in values that are higher or lower than the values used by other investment companies and investors to price the same investments.
Fair Value Measurements — The inputs and valuation techniques used to measure fair value of the Fund’s investments are summarized into three levels as described in the hierarchy below:
● | Level 1 | — | quoted prices in active markets for identical securities; | |||
● | Level 2 | — | other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.); and | |||
● | Level 3 | — | significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments). |
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
The following is a summary of the inputs used, as of October 31, 2015, in valuing the Fund’s investments carried at fair value:
Total Value at 10/31/15 | Level 1 Quoted Price | Level 2 Other Significant Observable Inputs | Level 3 | |||||
Investments in Securities* |
$213,493,316 |
$213,493,316 |
$ — |
$ — |
* Please refer to Portfolio of Investments for details on portfolio holdings. |
At the end of each quarter, management evaluates the classification of Levels 1, 2 and 3 assets and liabilities. Various factors are considered such as changes in liquidity from the prior reporting period; whether or not a broker is willing to execute at the quoted price; the depth and consistency of prices from third party pricing services; and the existence of contemporaneous, observable trades in the market. Additionally, management evaluates the classification of Level 1 and Level 2 assets and liabilities on a quarterly basis for changes in listings or delistings on national exchanges.
17
WHV INTERNATIONAL EQUITY FUND
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of the Fund’s investments may fluctuate from period to period. Additionally, the fair value of investments may differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially from the values the Fund may ultimately realize. Further, such investments may be subject to legal and other restrictions on resale or otherwise less liquid than publicly traded securities.
For fair valuations using significant unobservable inputs, accounting principles generally accepted in the United States of America (“U.S. GAAP”) require the Fund to present a reconciliation of the beginning to ending balances for reported market values that presents changes attributable to total realized and unrealized gains or losses, purchase and sales, and transfers in and out of Level 3 during the period. Transfers in and out between Levels are based on values at the end of the period. U.S. GAAP also requires the Fund to disclose amounts and reasons for all transfers in and out of Level 1 and Level 2 fair value measurements. A reconciliation of Level 3 investments is presented only when the Fund had an amount of Level 3 investments at the end of the reporting period that was meaningful in relation to its net assets. The amounts and reasons for all transfers in and out of each Level within the three-tier hierarchy are disclosed when the Fund had an amount of total transfers during the reporting period that was meaningful in relation to its net assets as of the end of the reporting period.
For the six months ended October 31, 2015, there were no transfers between Levels 1, 2 and 3 for the Fund.
Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes at the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates and those differences could be material.
Investment Transactions, Investment Income and Expenses — Investment transactions are recorded on trade date for financial statement preparation purposes. Realized gains and losses on investments sold are recorded on the identified cost basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date. Distribution (12b-1) fees and shareholder services fees relating to a specific class are charged directly to that class. Fund level expenses common to all classes, investment income and realized and unrealized gains and losses on investments are allocated to each class based upon the relative daily net assets of each class. General expenses of the Trust are generally allocated to each fund in proportion to its relative daily net assets. Expenses directly attributable to a particular fund in the Trust are charged directly to that fund. The Fund’s investment income, expenses (other than class specific) and unrealized and realized gains and losses are allocated daily to each class of shares based upon the relative proportion of net assets of each class at the beginning of the day.
18
WHV INTERNATIONAL EQUITY FUND
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
Foreign Currency Translation — Assets and liabilities initially expressed in non-U.S. currencies are translated into U.S. dollars based on the applicable exchange rates at the date of the last business day of the financial statement period. Purchases and sales of securities, interest income, dividends, variation margin received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rates in effect on the transaction date.
The Fund does not separately report the effect of changes in foreign exchange rates from changes in market prices of securities held. Such changes are included with the net realized gain or loss and change in unrealized appreciation or depreciation on investment securities in the Statement of Operations. Other foreign currency transactions resulting in realized and unrealized gain or loss are reported separately as net realized gain or loss and change in unrealized appreciation or depreciation on foreign currencies in the Statement of Operations.
Dividends and Distributions to Shareholders — Dividends from net investment income and distributions from net realized capital gains, if any, are declared and paid at least annually to shareholders and are recorded on ex-date. Income dividends and capital gain distributions are determined in accordance with U.S. federal income tax regulations, which may differ from U.S. GAAP. These differences include the treatment of non-taxable dividends, expiring capital loss carryforwards and losses deferred due to wash sales and excise tax regulations. Permanent book and tax basis differences relating to shareholder distributions will result in reclassifications within the components of net assets.
U.S. Tax Status — No provision is made for U.S. income taxes as it is the Fund’s intention to continue to qualify for and elect the tax treatment applicable to regulated investment companies under Subchapter M of the Internal Revenue Code of 1986, as amended, and make the requisite distributions to its shareholders which will be sufficient to relieve it from U.S. income and excise taxes.
Other — In the normal course of business, the Fund may enter into contracts that provide general indemnifications. The Fund’s maximum exposure under these arrangements is dependent on claims that may be made against the Fund in the future, and, therefore, cannot be estimated; however, based on experience, the risk of material loss for such claims is considered remote.
Currency Risk — The Fund invests in securities of foreign issuers, including American Depositary Receipts. These markets are subject to special risks associated with foreign investments not typically associated with investing in U.S. markets. Because the foreign securities in which the Fund may invest generally trade in currencies other than the U.S. dollar, changes in currency exchange rates will affect the Fund’s NAV, the value of dividends and interest earned and gains and losses realized on the sale of securities. Because the NAV for the Fund is determined on the basis of U.S. dollars, the Fund may lose money by investing in a foreign security if the local currency of a foreign market depreciates against
19
WHV INTERNATIONAL EQUITY FUND
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
the U.S. dollar, even if the local currency value of the Fund’s holdings goes up. Generally, a strong U.S. dollar relative to these other currencies will adversely affect the value of the Fund’s holdings in foreign securities.
Foreign Securities Market Risk — Securities of many non-U.S. companies may be less liquid and their prices more volatile than securities of comparable U.S. companies. Securities of companies traded in many countries outside the U.S., particularly emerging markets countries, may be subject to further risks due to the inexperience of local investment professionals and financial institutions, the possibility of permanent or temporary termination of trading and greater spreads between bid and asked prices of securities. In addition, non-U.S. stock exchanges and investment professionals are subject to less governmental regulation, and commissions may be higher than in the United States. Also, there may be delays in the settlement of non-U.S. stock exchange transactions.
2. Transactions with Affiliates and Related Parties
WHV serves as investment adviser to the Fund pursuant to an investment advisory agreement with the Trust. For its services, the Adviser is paid a monthly fee at the annual rate of 1.00% of the Fund’s average daily net assets. The Adviser has contractually agreed to reduce its investment advisory fee and/or reimburse certain expenses of the Fund to the extent necessary to ensure that the Fund’s total operating expenses (excluding taxes, any class-specific fees and expenses, interest, extraordinary items, “Acquired Fund” fees and expenses and brokerage commissions) do not exceed 1.25% (on an annual basis) of the Fund’s average daily net assets. The Expense Limitation will remain in place until August 31, 2016 for the Fund, unless the Board of Trustees approves its earlier termination. The Adviser is entitled to recover, subject to approval by the Board of Trustees, such amounts reduced or reimbursed for a period of up to three (3) years from the year in which the Adviser reduced its compensation and/or assumed expenses for the Fund. No recoupment will occur unless the Fund’s expenses are below the Expense Limitation. For the period ended October 31, 2015, the Adviser did not waive or reimburse any fees.
Hirayama Investments, LLC (“Hirayama” or the “Sub-Adviser”) serves as the sub-adviser to the Fund. The Sub-Adviser provides certain services pursuant to a sub-advisory agreement among WHV, the Sub-Adviser and the Trust, on behalf of the Fund. Sub-Advisory fees are paid by WHV, not the Fund.
BNY Mellon Investment Servicing (US) Inc. (“BNY Mellon”) serves as administrator and transfer agent for the Fund. For providing administrative and accounting services, BNY Mellon is entitled to receive a monthly fee equal to an annual percentage rate of the Fund’s average daily net assets and is subject to certain minimum monthly fees. For providing transfer agency services, BNY Mellon is entitled to receive a monthly fee, subject to certain minimum, and out of pocket expenses.
20
WHV INTERNATIONAL EQUITY FUND
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
The Bank of New York Mellon (the “Custodian”) provides certain custodial services to the Fund. The Custodian is entitled to receive a monthly fee, subject to certain minimum, and out of pocket expenses.
Foreside Funds Distributors LLC (“the Underwriter”) provides principal underwriting services to the Fund.
The Trust and the Underwriter are parties to an underwriting agreement. The Trust has adopted a distribution plan for Class A and Class C Shares in accordance with Rule 12b-1 under the 1940 Act. Pursuant to the Class A and Class C Shares plan, the Fund compensates the Underwriter for direct and indirect costs and expenses incurred in connection with advertising, marketing and other distribution services in an amount not to exceed 0.25% and 1.00% (0.75% Rule 12b-1 distribution fee and 0.25% shareholder service fee) on an annualized basis of the average daily net assets of the Fund’s Class A and Class C Shares, respectively.
The Trustees of the Trust who are not officers or employees of an investment adviser, sub-adviser or other service provider to the Trust receive compensation in the form of an annual retainer and per meeting fees for their services as a Trustee. The remuneration paid to the Trustees by the Fund during the six months ended October 31, 2015, was $16,440. Certain employees of BNY Mellon serve as Officers of the Trust. They are not compensated by the Fund or the Trust.
3. Investment in Securities
For the six months ended October 31, 2015, aggregate purchases and sales of investment securities (excluding U.S. Government and agency short-term investments and other short-term investments) of the Fund were as follows:
Purchases | Sales | |||||||
Investment Securities | $ | 9,709,057 | $ | 104,242,921 |
4. Capital Share Transactions
For the six months ended October 31, 2015 and the period ended April 30, 2015, transactions in capital shares (authorized shares unlimited) were as follows:
For the Six Months Ended October 31, 2015 (Unaudited) | For the Period Ended April 30, 2015* | |||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||
Class A Shares | ||||||||||||||||||||||
Sales | 153,373 | $ | 3,054,517 | 703,258 | $ | 14,776,254 | ||||||||||||||||
Reinvestments | — | — | 9,795 | 194,717 | ||||||||||||||||||
Redemption Fees** | — | — | — | 319 |
21
WHV INTERNATIONAL EQUITY FUND
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
For the Six Months Ended October 31, 2015 (Unaudited) | For the Period Ended April 30, 2015* | |||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||
Redemptions | (531,432 | ) | (9,719,748 | ) | (1,198,191 | ) | (25,802,579 | ) | ||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Net decrease | (378,059 | ) | $ | (6,665,231 | ) | (485,138 | ) | $ | (10,831,289 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Class C Shares | ||||||||||||||||||||
Sales. | — | $ | — | 10,431 | $ | 215,594 | ||||||||||||||
Reinvestments | — | — | 24 | 473 | ||||||||||||||||
Redemptions | — | — | (2,365 | ) | (49,005 | ) | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Net increase | — | $ | — | 8,090 | $ | 167,062 | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Class I Shares | ||||||||||||||||||||
Sales. | 3,663,858 | $ | 66,175,102 | 9,471,602 | $ | 204,602,356 | ||||||||||||||
Reinvestments | — | — | 123,257 | 2,452,823 | ||||||||||||||||
Redemption Fees** | — | — | — | 2,734 | ||||||||||||||||
Redemptions | (9,199,323 | ) | (166,738,079 | ) | (6,939,607 | ) | (146,238,889 | ) | ||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Net increase/(decrease) | (5,535,465 | ) | $ | (100,562,977 | ) | 2,655,252 | $ | 60,819,024 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Total net increase/(decrease) | (5,913,524 | ) | $ | (107,228,208 | ) | 2,178,204 | $ | 50,154,797 | ||||||||||||
|
|
|
|
|
|
|
|
*Class C Shares commenced operations on November 13, 2014.
**Prior to September 1, 2014, there was a 2.00% redemption fee that may have been charged on shares redeemed which had been held for 60 days or less. The redemption fee was retained by the Funds for the benefit of the remaining shareholders and recorded as paid-in-capital. Effective September 1, 2014, this redemption fee was discontinued and is no longer charged.
5. Federal Tax Information
The Fund has followed the authoritative guidance on accounting for and disclosure of uncertainty in tax positions, which requires the Fund to determine whether a tax position is more likely than not to be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The Fund has determined that there was no effect on the financial statements from following this authoritative guidance. In the normal course of business, the Fund is subject to examination by federal, state and local jurisdictions, where applicable, for tax years for which applicable statutes of limitations have not expired.
22
WHV INTERNATIONAL EQUITY FUND
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
For the year ended April 30, 2015, the tax characters of distributions paid by the Fund was $3,868,351 of ordinary income dividends. For the year ended April 30, 2014, the tax characters of distributions paid by the Fund was $2,344,381 of ordinary income dividends and $450,271, of long-term capital gains dividends. Distributions from net investment income and short-term capital gains are treated as ordinary income for federal income tax purposes.
As of April 30, 2015, the components of distributable earnings on a tax basis were as follows:
Capital Loss | Undistributed Ordinary Income | Undistributed Long-Term Gain | Unrealized Appreciation/ (Depreciation) | Qualified Late-Year Losses | ||||
$(4,134,604) | $3,131,487 | $— | $40,641,485 | $(2,492,598) |
The differences between the book and tax basis components of distributable earnings relate primarily to the timing and recognition of income and gains for federal income tax purposes. Short-term capital gains are reported as ordinary income for federal income tax purposes.
As of October 31, 2015, the federal tax cost, aggregate gross unrealized appreciation and depreciation of securities held by the Fund were as follows:
Federal tax cost | $ | 212,860,448 | ||||
|
| |||||
Gross unrealized appreciation | $ | 46,371,700 | ||||
Gross unrealized depreciation | (45,738,832 | ) | ||||
|
| |||||
Net unrealized appreciation | $ | 632,868 | ||||
|
|
Accumulated capital losses represent net capital loss carryovers as of April 30, 2015 that may be available to offset future realized capital gains and thereby reduce future capital gains distributions. Under the Regulated Investment Company Modernization Act of 2010, the Fund is permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period. Additionally, capital losses that are carried forward will retain their character as either short-term or long-term capital losses rather than being considered all short-term as under the previous law.
As of April 30, 2015, the Fund had capital loss carryforwards of $4,134,604, of which $53,307 were short-term losses, $4,081,297 are long-term losses, and all have an unlimited period of capital loss carryforward.
23
WHV INTERNATIONAL EQUITY FUND
Notes to Financial Statements (Concluded)
October 31, 2015
(Unaudited)
6. Subsequent Event
Management has evaluated the impact of all subsequent events on the Fund through the date the financial statements were issued and has determined that there were no subsequent events requiring recognition or disclosure in the financial statements.
24
WHV INTERNATIONAL EQUITY FUND
Other Information
(Unaudited)
Proxy Voting
Policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities as well as information regarding how the Fund voted proxies relating to portfolio securities for the most recent 12-month period ended June 30 are available without charge, upon request, by calling (888) 948-4685 and on the Securities and Exchange Commission’s (“SEC”) website at http:// www.sec.gov.
Quarterly Portfolio Schedules
The Trust files its complete schedule of portfolio holdings with the SEC for the first and third fiscal quarters of each fiscal year (quarters ended July 31 and January 31) on Form N-Q. The Trust’s Forms N-Q are available on the SEC’s website at http://www.sec.gov and may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. Information on the operation of the SEC’s Public Reference Room may be obtained by calling 1-800-SEC-0330.
Approval of Advisory and Sub-Advisory Agreements
At an in-person meeting held on September 21-22, 2015 (the “Meeting”), the Board of Trustees (“Board” or “Trustees”) of FundVantage Trust (“Trust”), including a majority of the Trustees who are not “interested persons” as defined in the Investment Company Act of 1940, as amended (“1940 Act”) (the “Independent Trustees”),unanimously approved (a) the continuation of the advisory agreement (the “Agreement”) between the Trust, on behalf of the WHV International Equity Fund (the “Fund”), and WHV Investments, Inc. (“WHV” or the “Adviser”); and (b) the continuation of the sub-advisory agreement (the “Sub-advisory Agreement” and together with the Agreement, the “Agreements”) among WHV, Hirayama Investments, LLC (“Hirayama” or “Sub-Adviser”) and the Trust, on behalf of the Fund. In determining whether to approve the Agreements, the Trustees considered information provided by WHV and Hirayama in accordance with Section 15(c) of the 1940 Act. The Trustees considered information that WHV and Hirayama each provided regarding (i) the services performed for the Fund, (ii) the size and qualifications of their portfolio management staff, (iii) any potential or actual material conflicts of interest which may arise in connection with a portfolio manager’s management of the Fund, (iv) investment performance, (v) the capitalization and financial condition of the Adviser and Sub-Adviser, (vi) brokerage selection procedures (including soft dollar arrangements), (vii) the procedures for allocating investment opportunities between the Fund and other clients (viii) results of any regulatory examination, including any recommendations or deficiencies noted, (ix) any litigation, investigation or administrative proceeding which may have a material impact on WHV’s or Hirayama’s ability to service the Fund, and (x) compliance with investment objectives, policies and practices (including codes of ethics), federal securities laws and other regulatory requirements. The Trustees noted the reports provided at Board meetings throughout the year covering matters including: the relative performance of the Fund; compliance with the investment objectives, policies, strategies and
25
WHV INTERNATIONAL EQUITY FUND
Other Information (Continued)
(Unaudited)
limitations for the Fund; the compliance of management personnel with the applicable code of ethics; and the adherence to fair value pricing procedures as established by the Board. The Trustees also received and reviewed a memorandum from legal counsel regarding the legal standard applicable to their review of the Agreements.
Representatives from WHV and Hirayama attended the Meeting both in person and via teleconference and discussed the firms’ histories, performance and investment strategies in connection with the proposed continuation of the Agreements and answered questions from the Board.
The Trustees considered the investment performance for the Fund, the Adviser and Sub-Adviser. The Trustees reviewed relevant peer comparative rankings and historical performance charts which showed the performance for the Fund’s Class A and Class I shares for the year to date, one year, two year, three year, five year and since inception periods ended June 30, 2015 as compared to (i) the Lipper International Large-Cap Growth Fund category, the Fund’s applicable Lipper peer group, and (ii) the MSCI EAFE Index (Net Dividends). The Trustees noted that the Class A and Class I shares of the Fund underperformed each of the MSCI EAFE Index (Net Dividends) and the median of the Lipper International Large-Cap Growth Fund category for the year to date, one year, two year, three year, five year and since inception periods ended June 30, 2015. The Fund’s Class C shares, which commenced operations in November 2014, underperformed the Index and median of the Lipper category for the since inception period ended June 30, 2015. The Trustees also received performance information for the Fund’s Class I shares for the one year, three year, five year and since inception periods ended June 30, 2015 as compared to the comparable separate account composite and the MSCI EAFE Index (Gross). The Trustees noted that the Fund’s Class I shares underperformed the comparable separate account composite and MSCI EAFE Index (Gross) for the one year, three year, five year and since inception periods ended June 30, 2015. The Trustees also reviewed WHV’s and Hirayama’s commentary regarding the performance data and the various factors contributing to the Fund’s short- and long-term performance, as applicable. The Trustees took note of the various periods where the Fund underperformed its Lipper peer group and MSCI EAFE Index, both gross and net. The Trustees noted that while absolute performance was positive for certain periods ended June 30, 2015, the Fund’s relative performance lagged the median of its Lipper peer group. The Trustees considered explanations provided by WHV and Hirayama regarding the various factors contributing to the relative underperformance of the Fund, including, among other things, differences in the Fund’s investment strategies and portfolio construction in comparison to the peer funds included in the Lipper peer group. The Board discussed with WHV and Hirayama the reasons behind such results for the Fund, including the steps being undertaken by WHV and Hirayama to seek to improve such performance. The Trustees considered other factors that supported the continuation of the Agreements, including that the Sub-Adviser’s investment decisions, such as security selection and sector allocation, contributing to such underperformance were consistent with the Fund’s investment objective and policies. Taking note of the WHV’s and Hirayama’s discussion of (i) the various factors contributing to the Fund’s performance and (ii) their continuing commitment to the Fund’s current investment strategy, the Independent Trustees concluded that the investment performance of the Fund was within an acceptable range of performance relative to other mutual funds with similar investment objectives, strategies and policies based on the information provided at the Meeting.
26
WHV INTERNATIONAL EQUITY FUND
Other Information (Continued)
(Unaudited)
WHV and Hirayama provided information regarding the advisory fees and an analysis of these fees in relation to the services provided to the Fund and any other ancillary benefit resulting from the Adviser’s and Sub-Adviser’s relationship with the Fund. The Trustees also reviewed information regarding the fees the Adviser and Sub-Adviser charge to other clients and evaluated explanations provided by the Adviser and Sub-Adviser as to differences in fees charged to the Fund and other similarly managed accounts. The Trustees also reviewed a peer comparison of advisory fees and total expenses for the Fund versus other similarly managed funds. With respect to advisory fees and expenses, the Trustees noted that the net total expense ratio of the Fund’s Class A shares was lower than, and the gross advisory fee of the Fund’s Class A shares was higher than, the median of the net total expense ratios and gross advisory fees of funds with a similar share class in the Lipper International Large-Cap Growth Fund category with $500 million or less in assets. The Trustees noted that due to the limited operating history of the Fund’s Class C shares, the net total expense ratio presented for such Class was based on the estimates reflected in the most recent prospectus for the Fund’s Class C shares. The Trustees further noted that the net total expense ratio and the gross advisory fee of the Fund’s Class C shares and Class I shares were higher than the median of the net total expense ratios and the gross advisory fees of funds with similar share classes in the Lipper International Large-Cap Growth Fund category with $500 million or less in assets. The Trustees concluded that the advisory and sub-advisory fees and services provided by WHV and Hirayama, respectively, are consistent with those of other advisers or sub-advisers which manage mutual funds with investment objectives, strategies and policies similar to those of the Fund based on the information provided at the Meeting.
The Board considered the level and depth of knowledge of WHV and Hirayama, including the professional experience and qualifications of senior personnel. In evaluating the quality of services provided by WHV and Hirayama, the Board took into account its familiarity with WHV and Hirayama’s senior management through Board meetings, discussions and reports during the preceding year. The Board also took into account WHV’s and Hirayama’s compliance policies and procedures and reports regarding WHV’s and Hirayama’s compliance operations from the Trust’s Chief Compliance Officer. The Board also considered any potential conflicts of interest that may arise in a portfolio manager’s management of the Fund’s investments on the one hand, and the investments of other accounts, on the other. The Trustees reviewed the services provided to the Fund by WHV and Hirayama and concluded that the nature, extent and quality of the services provided by WHV and Hirayama were appropriate and consistent with the terms of the Agreements, that the quality of the services appeared to be consistent with industry norms and that the Fund is likely to benefit from the retention of those services. They also concluded that WHV and Hirayama have sufficient personnel, with the appropriate education and experience, to serve the Fund effectively and had demonstrated their ability to attract and retain qualified personnel.
27
WHV INTERNATIONAL EQUITY FUND
Other Information (Concluded)
(Unaudited)
The Trustees considered the costs of the services provided by WHV and Hirayama, the compensation and benefits received by WHV and Hirayama in providing services to the Fund and WHV’s and Hirayama’s profitability. The Trustees were provided with WHV’s most recent audited financial statements and Hirayama’s balance sheet. The Trustees noted that WHV’s and Hirayama’s levels of profitability are appropriate factors to consider, and the Trustees should be satisfied that WHV’s and Hirayama’s profits are sufficient to continue as a healthy concern generally and as investment advisers of the Fund specifically. The Trustees noted that the sub-advisory fees under the Sub-advisory Agreement with respect to the Fund were paid by the Adviser out of the advisory fees it receives from the Fund and considered the impact of such sub-advisory fees on the profitability of the Adviser. The Trustees concluded that WHV’s and Hirayama’s fees derived from their relationship with the Trust, in light of the Fund’s expenses, were reasonable in relation to the nature and quality of the services provided, taking into account the current size and projected growth of the Fund.
The Trustees considered the extent to which economies of scale would be realized relative to fee levels as the Fund grows and whether the advisory fee levels reflect these economies of scale for the benefit of shareholders. The Board noted that economies of scale may be achieved at higher asset levels for the Fund for the benefit of fund shareholders, but that because such economies of scale did not yet exist and were not likely to exist in the near term, it was not appropriate to incorporate a mechanism for sharing the benefit of such economies with Fund shareholders in the advisory fee structure at this time.
In voting to approve the continuation of the Agreement between the Trust and WHV and the Sub-advisory Agreement between WHV and Hirayama, the Board considered all factors it deemed relevant and the information presented to the Board by WHV and Hirayama. In arriving at its decision, the Trustees did not identify any single factor as being of paramount importance and each member of the Board gave varying weights to each factor according to his or her own judgment. The Board determined that the continuation of the Agreements would be in the best interest of the Fund and its shareholders. As a result, the Board, including a majority of the Independent Trustees, unanimously approved the continuation of each Agreement for an additional one year period.
28
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Investment Adviser
WHV Investments, Inc.
301 Battery Street
Suite 400
San Francisco, CA 94111-3203
Sub-Adviser
Hirayama Investments, LLC
301 Battery Street
Suite 400
San Francisco, CA 94111-3203
Administrator
BNY Mellon Investment Servicing (US) Inc.
301 Bellevue Parkway
Wilmington, DE 19809
Transfer Agent
BNY Mellon Investment Servicing (US) Inc.
4400 Computer Drive
Westborough, MA 01581
Principal Underwriter
Foreside Funds Distributors LLC
400 Berwyn Park
899 Cassatt Road
Berwyn, PA 19312
Custodian
The Bank of New York Mellon
225 Liberty Street
New York, NY 10286
Independent Registered Public Accounting Firm
PricewaterhouseCoopers LLP
Two Commerce Square, Suite 1700
2001 Market Street
Philadelphia, PA 19103-7042
Legal Counsel
Pepper Hamilton LLP
3000 Two Logan Square
18th and Arch Streets
Philadelphia, PA 19103
WHV-1015
WHV INTERNATIONAL
EQUITY FUND
of
FundVantage Trust
Class A Shares
Class C Shares
Class I Shares
SEMI-ANNUAL
REPORT
October 31, 2015
(Unaudited)
This report is submitted for the general information of the shareholders of the WHV International Equity Fund. It is not authorized for distribution unless preceded or accompanied by a current prospectus for the WHV International Equity Fund.
WHV/ACUITY TACTICAL CREDIT LONG/SHORT FUND
Semi-Annual Report
Performance Data
October 31, 2015
(Unaudited)
Total Returns for the Periods Ended October 31, 2015† | ||||||||
Six Months | Since Inception | |||||||
Class A Shares (with sales charge)* | -2.85% | 1.57% | ||||||
Class A Shares (without sales charge)* | 3.05% | 7.76% | ||||||
Class I Shares* | 3.16% | 7.90% | ||||||
Barclays Capital U.S. Aggregate Bond Index | -0.10% | 1.09%*** | ||||||
Class C Shares** | 2.67% | |||||||
Barclays Capital U.S. Aggregate Bond Index | 0.23%*** |
† | Not Annualized. |
* | Class A and I Shares of the Fund commenced operations on December 16, 2014. |
** | Class C Shares of the Fund commenced operations on May 1, 2015. |
*** | Benchmark performance is from inception date of Class only and is not the inception date of the benchmark itself. |
The performance data quoted represents past performance and does not guarantee future results. Current performance may be lower or higher. Performance data current to the most recent month-end may be obtained by calling (888) 948-4685. The investment return and principal value of an investment will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. The table does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
The returns shown for Class A Shares reflect a deduction for the maximum front-end sales charge of 5.75%. The returns shown for Class C reflect a 1.00% contingent deferred sales charge (“CDSC”).
The Fund’s total annual gross and net operating expense ratios, as stated in the current prospectus dated September 1, 2015, are 2.89% and 1.67% for Class A Shares, 3.64% and 2.42% for Class C Shares and 2.64% and 1.42% for Class I Shares, respectively, of the Fund’s average daily net assets. These ratios may differ from the actual expenses incurred by the Fund for the period covered by this report. WHV Investments, Inc. (the “Adviser”) has contractually agreed to reduce its investment advisory fee and/or reimburse certain expenses of the Fund to the extent necessary to ensure that the Fund’s total operating expenses excluding taxes, any class-specific expenses (such as Rule 12b-1 distribution fees, shareholder service fees, or transfer agency fees), “Acquired Fund” fees and expenses, dividend and interest expense on securities sold short, interest, extraordinary items, and brokerage commissions, do not exceed 1.42% (on an annual basis) of average daily net assets of the Fund (the “Expense Limitation”). The Expense Limitation will remain in place until August 31, 2018 unless the Board of Trustees of FundVantage Trust (the “Trust”) approves its earlier termination. Total returns would be lower had such fees and expenses not been waived and/or reimbursed. The net ratios shown do not include acquired fund fees and expenses estimated to be 0.02% annually.
Under a separate contractual agreement, the Adviser has contractually agreed to reduce its investment advisory fee and/or reimburse certain expenses of the Fund in an amount equal to the Fund’s dividend and interest expense on securities sold short through August 31, 2016. The Adviser is entitled to recover, subject to approval by the Board of Trustees, such amounts reduced or reimbursed for a period of up to three (3) years from the year in which the Adviser reduced its compensation and/or assumed expenses for the Fund. No recoupment will occur unless the Fund’s expenses are below the Expense Limitation.
The Fund evaluates its performance as compared to that of the Barclays Capital U.S. Aggregate Bond Index. Barclays Capital U.S. Aggregate Bond Index is an intermediate term, broad-based index comprised of most U.S. traded investment grade bonds. It is impossible to invest directly in an index.
All mutual fund investing involves risk, including possible loss of principal. The Fund seeks current income and capital appreciation by investing primarily in corporate fixed income and/or equity securities, without restriction as to issuer capitalization, country, credit quality and bond maturity. It takes long positions in securities believed to be undervalued and short positions in securities believed to be overvalued. The potential loss on a short sale theoretically is unlimited because the price of the borrowed security may rise without limit. A rise in interest rates typically causes a decline in the value of fixed income securities. The Fund may invest in non-investment grade fixed income securities, sometimes known as “high-yield bonds” or “junk bonds,” which may subject the Fund to greater credit risk, price volatility and risk of loss than investment grade securities.
1
WHV/ACUITY TACTICAL CREDIT LONG/SHORT FUND
Fund Expense Disclosure
October 31, 2015
(Unaudited)
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments, if any, and redemption fees; and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, if any, and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
These examples are based on an investment of $1,000 invested at the beginning of the six-month period from May 1, 2015 through October 31, 2015, and held for the entire period.
Actual Expenses
The first line of the accompanying table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Examples for Comparison Purposes
The second line of the accompanying table provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare these 5% hypothetical examples with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that the expenses shown in the accompanying table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), if any, or redemption fees. Therefore, the second line of the accompanying table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
2
WHV/ACUITY TACTICAL CREDIT LONG/SHORT FUND
Fund Expense Disclosure (Concluded)
October 31, 2015
(Unaudited)
WHV/Acuity Tactical Credit Long/Short Fund | ||||||||||
Beginning Account Value May 1, 2015 | Ending Account Value October 31, 2015 | Expenses Paid During Period | ||||||||
Class A Shares | ||||||||||
Actual | $1,000.00 | $1,030.50 | $ 9.44* | |||||||
Hypothetical (5% return before expenses) | 1,000.00 | 1,015.84 | 9.37* | |||||||
Class C Shares † | ||||||||||
Actual | $1,000.00 | $1,026.70 | $13.25** | |||||||
Hypothetical (5% return before expenses) | 1,000.00 | 1,012.07 | 13.15** | |||||||
Class I Shares | ||||||||||
Actual | $1,000.00 | $1,031.60 | $ 8.17* | |||||||
Hypothetical (5% return before expenses) | 1,000.00 | 1,017.09 | 8.11* |
† | Class C Shares commenced operations on May 1, 2015. |
* | Expenses are equal to an annualized expense ratio for the six-month period ended October 31, 2015 of 1.85% and 1.60% for Class A and Class I Shares, respectively, of the Fund, multiplied by the average account value over the period, multiplied by the number of days in the most recent period (184), then divided by 366 to reflect the period. The Fund’s ending account values on the first line in the table are based on the actual six month total returns for the Fund of 3.05% and 3.16% for Class A and Class I Shares, respectively. These amounts include dividends paid on securities which the Fund has sold short (“short-sale dividends”) and related interest expense. The annualized amount of short-sale dividends and related interest expense were 0.16% and 0.18% for Class A and Class I Shares, respectively, of the Fund’s average net assets. |
** | Actual Expenses are equal to an annualized expense ratio for the period beginning May 1, 2015, commencement of operations to October 31, 2015 of 2.60% for Class C Shares, of the Fund, multiplied by the average account value over the period, multiplied by the number of days in the most recent period (183), then divided by 366 to reflect the period. The Fund’s ending account values on the first line in the table are based on the actual total returns for the Class since commencement of operations of 2.67% for Class C Shares. Hypothetical expenses are as if the Class had been in existence from May 1, 2015, and are equal to its annualized expense ratios, multiplied by the average account value over the period, multiplied by the number of days in the most recent six-month period (184), then divided by 366 to reflect the period. These amounts include dividends paid on securities which the Fund has sold short (“short-sale dividends”) and related interest expense. The annualized amount of short-sale dividends and related interest expense was 0.19% of average net assets for the period from May 1, 2015 to October 31, 2015. |
3
WHV/ACUITY TACTICAL CREDIT LONG/SHORT FUND
Portfolio Holdings Summary Table
October 31, 2015
(Unaudited)
The following table presents a summary by industry group of the portfolio holdings of the Fund:
% of Net Assets | Value | |||||||
Corporate Bonds and Notes | ||||||||
Retail | 13.1 | % | $ 6,047,012 | |||||
Media | 11.5 | 5,319,531 | ||||||
Software | 11.0 | 5,068,750 | ||||||
Telecommunications | 10.1 | 4,659,542 | ||||||
Food | 10.0 | 4,635,470 | ||||||
Distribution/Wholesale | 9.8 | 4,525,000 | ||||||
Commercial Services | 5.4 | 2,482,063 | ||||||
Holding Companies-Diversified | 4.6 | 2,141,838 | ||||||
Machinery-Construction & Mining | 4.4 | 2,017,500 | ||||||
Environmental Control | 4.2 | 1,958,875 | ||||||
Healthcare-Products | 3.8 | 1,751,062 | ||||||
Oil & Gas Services | 2.8 | 1,290,000 | ||||||
Healthcare-Services | 2.2 | 992,500 | ||||||
Biotechnology | 2.1 | 980,000 | ||||||
Aerospace & Defense | 1.9 | 896,750 | ||||||
Auto Manufacturers | 1.7 | 802,500 | ||||||
Computers | 1.4 | 642,672 | ||||||
Lodging | 1.3 | 583,000 | ||||||
Diversified Financial Services | 0.9 | 392,000 | ||||||
Liabilities in Excess of Other Assets | (2.2 | ) | (997,117 | ) | ||||
NET ASSETS | 100.0 | % | $46,188,948 |
Portfolio holdings are subject to change at any time.
The accompanying notes are an integral part of the financial statements.
4
WHV/ACUITY TACTICAL CREDIT LONG/SHORT FUND
Portfolio of Investments
October 31, 2015
(Unaudited)
Par Value | Value | |||||||
CORPORATE BONDS AND NOTES — 102.2% |
| |||||||
Aerospace & Defense — 1.9% |
| |||||||
TransDigm, Inc. 7.50%, 07/15/2021 | $ | 850,000 | $ | 896,750 | ||||
|
| |||||||
Auto Manufacturers — 1.7% |
| |||||||
FCA US LLC/CG Co-Issuer, Inc. | 750,000 | 802,500 | ||||||
|
| |||||||
Biotechnology — 2.1% | ||||||||
Concordia Healthcare Corp. (Canada) 9.50%, 10/21/2022 (a) | 1,000,000 | 980,000 | ||||||
|
| |||||||
Commercial Services — 5.4% | ||||||||
Hertz Corp. (The) 7.50%, | 500,000 | 511,250 | ||||||
Safway Group Holding, LLC / Safway Finance Corp. 7.00%, 05/15/2018 (a) | 1,350,000 | 1,387,125 | ||||||
United Rentals North America, Inc. 7.38%, 05/15/2020 | 550,000 | 583,688 | ||||||
|
| |||||||
2,482,063 | ||||||||
|
| |||||||
Computers — 1.4% | ||||||||
SunGard Data Systems, Inc. 7.38%, 11/15/2018 | 475,000 | 486,282 | ||||||
SunGard Data Systems, Inc. 7.63%, 11/15/2020 | 150,000 | 156,390 | ||||||
|
| |||||||
642,672 | ||||||||
|
| |||||||
Distribution/Wholesale — 9.8% | ||||||||
HD Supply, Inc. 11.50%, 07/15/2020 | 4,000,000 | 4,525,000 | ||||||
|
| |||||||
Diversified Financial Services — 0.9% |
| |||||||
Jefferies Finance, LLC 7.38%, 04/01/2020 (a) | 400,000 | 392,000 | ||||||
|
| |||||||
Environmental Control — 4.2% | ||||||||
ADS Waste Holdings, Inc. 8.25%, 10/01/2020 | 900,000 | 943,875 | ||||||
Casella Waste Systems, Inc. 7.75%, 02/15/2019 | 1,000,000 | 1,015,000 | ||||||
|
| |||||||
1,958,875 | ||||||||
|
| |||||||
Food — 10.0% | ||||||||
Albertsons Holdings, LLC/Saturn Acquisition Merger Sub, Inc. 7.75%, 10/15/2022 (a) | 2,000,000 | 2,155,000 | ||||||
Post Holdings, Inc. 8.00%, 07/15/2025 (a) | 750,000 | 813,750 | ||||||
Post Holdings, Inc. 7.38%, 02/15/2022 | 200,000 | 210,720 | ||||||
US Foods, Inc. 8.50%, 06/30/2019 | 1,400,000 | 1,456,000 | ||||||
|
| |||||||
4,635,470 | ||||||||
|
|
Par Value | Value | |||||||
CORPORATE BONDS AND NOTES — (Continued) |
| |||||||
Healthcare-Products — 3.8% |
| |||||||
Kinetic Concepts, Inc. / KCI USA, Inc. 12.50%, 11/01/2019 | $ | 1,650,000 | $ | 1,751,062 | ||||
|
| |||||||
Healthcare-Services — 2.2% |
| |||||||
Tenet Healthcare Corp. 6.75%, 06/15/2023 | 1,000,000 | 992,500 | ||||||
|
| |||||||
Holding Companies-Diversified — 4.6% |
| |||||||
Argos Merger Sub, Inc. 7.13%, 03/15/2023 (a) | 2,035,000 | 2,141,838 | ||||||
|
| |||||||
Lodging — 1.3% | ||||||||
Boyd Gaming Corp. 6.88%, 05/15/2023 | 550,000 | 583,000 | ||||||
|
| |||||||
Machinery-Construction & Mining — 4.4% |
| |||||||
Blueline Rental Finance Corp. 7.00%, 02/01/2019 (a) | 2,000,000 | 2,017,500 | ||||||
|
| |||||||
Media — 11.5% | ||||||||
Cablevision Systems Corp. 7.75%, 04/15/2018 | 2,000,000 | 2,100,000 | ||||||
Neptune Finco Corp. 10.88%, 10/15/2025 (a) | 2,000,000 | 2,135,000 | ||||||
Univision Communications, Inc. 8.50%, 05/15/2021 (a) | 775,000 | 809,875 | ||||||
WideOpenwest Finance, LLC / WideOpenwest Capital Corp. 10.25%, 07/15/2019 | 275,000 | 274,656 | ||||||
|
| |||||||
5,319,531 | ||||||||
|
| |||||||
Oil & Gas Services — 2.8% |
| |||||||
McDermott International, Inc. (Panama) 8.00%, 05/01/2021 (a) | 1,500,000 | 1,290,000 | ||||||
|
| |||||||
Retail — 13.1% |
| |||||||
Neiman Marcus Group Ltd., LLC 8.00%, 10/15/2021 (a) | 220,000 | 228,525 | ||||||
Neiman Marcus Group Ltd., LLC 8.75% Cash or 9.50% PIK interest, 10/15/2021 , (a) | 1,415,000 | 1,469,760 | ||||||
Petco Holdings, Inc. 8.50% Cash or 9.25% PIK interest, 10/15/2017 , (a) | 1,750,000 | 1,780,625 | ||||||
Rite Aid Corp. 6.13%, 04/01/2023 (a) | 1,260,000 | 1,357,650 | ||||||
Yum! Brands, Inc. 5.35%, 11/01/2043 | 1,500,000 | 1,210,452 | ||||||
|
| |||||||
6,047,012 | ||||||||
|
| |||||||
Software — 11.0% | ||||||||
First Data Corp. 11.75%, 08/15/2021 | $ | 4,000,000 | 4,560,000 |
The accompanying notes are an integral part of the financial statements.
5
WHV/ACUITY TACTICAL CREDIT LONG/SHORT FUND
Portfolio of Investments (Concluded)
October 31, 2015
(Unaudited)
Par Value | Value | |||||||
CORPORATE BONDS AND NOTES — (Continued) |
| |||||||
Software — (Continued) | ||||||||
First Data Corp. 7.00%, 12/01/2023 (a) | $ | 500,000 | $ | 508,750 | ||||
|
| |||||||
5,068,750 | ||||||||
|
| |||||||
Telecommunications — 10.1% |
| |||||||
Intelsat Luxembourg SA 7.75%, 06/01/2021 | 1,600,000 | 944,000 | ||||||
Level 3 Financing, Inc. 8.63%, 07/15/2020 | 250,000 | 264,062 | ||||||
Sprint Corp. 7.63%, 02/15/2025 | 2,000,000 | 1,775,000 | ||||||
Wind Acquisition Finance SA (Luxembourg) 7.38%, 04/23/2021 (a) | 1,664,000 | 1,676,480 | ||||||
|
| |||||||
4,659,542 | ||||||||
|
| |||||||
TOTAL CORPORATE BONDS AND NOTES | 47,186,065 | |||||||
|
| |||||||
TOTAL INVESTMENTS - 102.2% (Cost $46,982,300) | 47,186,065 | |||||||
LIABILITIES IN EXCESS OF OTHER ASSETS - (2.2)% | (997,117 | ) | ||||||
|
| |||||||
NET ASSETS - 100.0% | $ | 46,188,948 | ||||||
|
|
(a) | Securities exempt from registration under Rule 144A of the Securities Act of 1933, as amended. These securities were purchased in accordance with the guidelines approved by the Fund’s Board of Trustees and may be resold, in transactions exempt from registration, to qualified institutional buyers. At October 31, 2015, these securities amounted to $21,143,878 or 45.8% of net assets. These securities have been determined by the Adviser to be liquid securities. |
Legend:
PIK | Payment-In-Kind. A security which may pay interest in additional par value and/or in cash. Rates shown are the current rate and possible payment rates. |
The accompanying notes are an integral part of the financial statements.
6
WHV/ACUITY TACTICAL CREDIT LONG/SHORT FUND
Statement of Assets and Liabilities
October 31, 2015
(Unaudited)
Assets | ||||
Investments, at value (Cost $46,982,300) | $ | 47,186,065 | ||
Receivable for investments sold | 2,412,422 | |||
Receivable for capital shares sold | 685,460 | |||
Dividends receivable | 850,535 | |||
Prepaid expenses and other assets | 90,029 | |||
|
| |||
Total assets | 51,224,511 | |||
|
| |||
Liabilities | ||||
Payable for investments purchased | 2,231,598 | |||
Payable for capital shares redeemed | 15,951 | |||
Due to Custodian | 219,680 | |||
Due to Broker | 2,489,139 | |||
Payable to Investment Adviser | 18,128 | |||
Payable for administration and accounting fees | 13,776 | |||
Payable for Trustees and Officers | 12,020 | |||
Payable for transfer agent fees | 11,205 | |||
Payable for custodian fees | 3,554 | |||
Accrued expenses | 20,512 | |||
|
| |||
Total liabilities | 5,035,563 | |||
|
| |||
Net Assets | $ | 46,188,948 | ||
|
| |||
Net Assets Consist of: | ||||
Capital stock, $0.01 par value | $ | 43,557 | ||
Paid-in capital | 45,670,841 | |||
Accumulated net investment income | 181,452 | |||
Accumulated net realized gain from investments and securities sold short | 89,333 | |||
Net unrealized appreciation on investments and securities sold short | 203,765 | |||
|
| |||
Net Assets | $ | 46,188,948 | ||
|
|
Class A Shares: | ||||
Net asset value and redemption price per share ($4,228,108 / 398,911 shares) | $ | 10.60 | ||
|
| |||
Maximum offering price per share (100/94.25 of $10.60) | $ | 11.25 | ||
|
| |||
Class C Shares: | ||||
Net asset value, offering and redemption price per share ($1,572,770 / 148,866 shares) | $ | 10.57 | ||
|
| |||
Class I Shares: | ||||
Net asset value, offering and redemption price per share ($40,388,070 / 3,807,940 shares) | $ | 10.61 | ||
|
|
The accompanying notes are an integral part of the financial statements.
7
WHV/ACUITY TACTICAL CREDIT LONG/SHORT FUND
Statement of Operations
For the Six Months Ended October 31, 2015
(Unaudited)
Investment Income | ||||
Dividends | $ | 4,980 | ||
Interest | 519,923 | |||
|
| |||
Total investment income | 524,903 | |||
|
| |||
Expenses | ||||
Advisory fees (Note 2) | 114,011 | |||
Administration and accounting fees (Note 2) | 35,837 | |||
Transfer agent fees (Note 2) | 24,963 | |||
Audit fees | 22,941 | |||
Dividends and fees on securities sold short | 17,543 | |||
Trustees’ and officers’ fees (Note 2) | 10,701 | |||
Custodian fees (Note 2) | 6,815 | |||
Registration and filing fees | 3,057 | |||
Distribution fees (Class A) (Note 2) | 2,952 | |||
Distribution fees (Class C) (Note 2) | 1,662 | |||
Shareholder services fees | 554 | |||
Other expenses | 26,390 | |||
|
| |||
Total expenses before waivers and reimbursements | 267,426 | |||
|
| |||
Less: waivers and reimbursements (Note 2) | (106,147 | ) | ||
|
| |||
Net expenses after waivers and reimbursements | 161,279 | |||
|
| |||
Net investment income | 363,624 | |||
|
| |||
Net realized and unrealized gain/(loss) from investments: | ||||
Net realized loss from investments | (64,841 | ) | ||
Net realized gain from securities sold short | 36,255 | |||
Net change in unrealized appreciation/(depreciation) on investments | 181,183 | |||
Net change in unrealized appreciation/(depreciation) on securities sold short | 378 | |||
|
| |||
Net realized and unrealized gain on investments | 152,975 | |||
|
| |||
Net increase in net assets resulting from operations | $ | 516,599 | ||
|
|
The accompanying notes are an integral part of the financial statements.
8
WHV/ACUITY TACTICAL CREDIT LONG/SHORT FUND
Statements of Changes in Net Assets
For the Six Months Ended October 31, 2015 (Unaudited) | For the Period Ended April 30, 2015* | |||||||||
Increase in net assets from operations: | ||||||||||
Net investment income | $ | 363,624 | $ | 49,051 | ||||||
Net realized gain/(loss) from investments and securities sold short | (28,586 | ) | 117,919 | |||||||
Net change in unrealized appreciation/(depreciation) on investments and securities sold short | 181,561 | 22,204 | ||||||||
|
|
|
| |||||||
Net increase in net assets resulting from operations | 516,599 | 189,174 | ||||||||
|
|
|
| |||||||
Less Dividends and Distributions to Shareholders: | ||||||||||
Net investment income: | ||||||||||
Class A Shares | (15,568 | ) | (380 | ) | ||||||
Class C Shares | (4,410 | ) | — | |||||||
Class I Shares | (179,814 | ) | (32,191 | ) | ||||||
|
|
|
| |||||||
Total net investment income | (199,792 | ) | (32,571 | ) | ||||||
|
|
|
| |||||||
Increase in Net Assets Derived from Capital Share Transactions (Note 4) | 41,298,163 | 4,417,375 | ||||||||
|
|
|
| |||||||
Total increase in net assets | 41,614,970 | 4,573,978 | ||||||||
|
|
|
| |||||||
Net assets | ||||||||||
Beginning of period | 4,573,978 | — | ||||||||
|
|
|
| |||||||
End of period | $ | 46,188,948 | $ | 4,573,978 | ||||||
|
|
|
| |||||||
Accumulated net investment income, end of period | $ | 181,452 | $ | 17,620 | ||||||
|
|
|
|
* | The Fund commenced operations on December 16, 2014. |
The accompanying notes are an integral part of the financial statements.
9
WHV/ACUITY TACTICAL CREDIT LONG/SHORT FUND
Financial Highlights
Contained below is per share operating performance data for Class A Shares outstanding, total investment return, ratios to average net assets and other supplemental data for the respective periods. 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). This information has been derived from information provided in the financial statements and should be read in conjunction with the financial statements and the notes thereto.
Class A Shares | ||||||
For the Six Months Ended October 31, 2015 (Unaudited) | For the Period | |||||
Per Share Operating Performance | ||||||
Net asset value, beginning of period | $ 10.38 | $ 10.00 | ||||
Net investment income(1) | 0.18 | 0.11 | ||||
Net realized and unrealized gain on investments | 0.13 | 0.35 | ||||
Net increase in net assets resulting from operations | 0.31 | 0.46 | ||||
Dividends and distributions to shareholders from: | ||||||
Net investment income | (0.09) | (0.08) | ||||
Total distributions | (0.09) | (0.08) | ||||
Net asset value, end of period | $ 10.60 | $ 10.38 | ||||
Total investment return(2) | 3.05%(3) | 4.57%(3) | ||||
Ratio/Supplemental Data | ||||||
Net assets, end of period (000’s omitted) | $ 4,228 | $ 126 | ||||
Ratio of expenses to average net assets with waivers and expense reimbursements(4) | 1.85%(5) | 1.68%(5) | ||||
Ratio of expenses to average net assets without waivers and expense reimbursements(6)(7) | 2.94%(5) | 6.60%(5) | ||||
Ratio of net investment income to average net assets | 3.46%(5) | 2.97%(5) | ||||
Portfolio turnover rate | 262.69%(3) | 532.05%(3) |
* | Commencement of operations. |
(1) | The selected per share data was calculated using the average shares outstanding method for the period. |
(2) | Total investment return is calculated assuming a purchase of shares on the first day and a sale of shares on the last day of each period reported and includes reinvestments of dividends and distributions, if any. Total returns for periods less than one year are not annualized. Total investment return does not reflect the impact of the maximum front-end sales load of 5.75%. If reflected, the return would be lower. |
(3) | Not annualized. |
(4) | Expense ratio includes dividend and interest expense related to securities sold short. Excluding such dividend and interest expense, the ratio of expenses to average net assets would be 1.67% for both the six months ended October 31, 2015 and for the period ended April 30, 2015. |
(5) | Annualized. |
(6) | Expense ratio includes dividend and interest expense related to securities sold short. Excluding such dividend and interest expense, the ratio of expenses to average net assets would be 2.76% and 6.60% for the six months ended October 31, 2015 and for the period ended April 30, 2015, respectively. |
(7) | During the period, certain fees were waived and/or reimbursed. If such fee waivers and/or reimbursements had not occurred, the ratios would have been as indicated (See Note 2). |
The accompanying notes are an integral part of the financial statements.
10
WHV/ACUITY TACTICAL CREDIT LONG/SHORT FUND
Financial Highlights (Continued)
Contained below is per share operating performance data for Class C Shares outstanding, total investment return, ratios to average net assets and other supplemental data for the respective periods. 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). This information has been derived from information provided in the financial statements and should be read in conjunction with the financial statements and the notes thereto.
| ||
Class C Shares | ||
For the Period | ||
Per Share Operating Performance | �� | |
Net asset value, beginning of period | $ 10.38 | |
Net investment income(1) | 0.16 | |
Net realized and unrealized gain on investments | 0.12 | |
Net increase in net assets resulting from operations | 0.28 | |
Dividends and distributions to shareholders from: | ||
Net investment income | (0.09) | |
Total distributions | (0.09) | |
Net asset value, end of period | $ 10.57 | |
Total investment return(2) | 2.67%(3) | |
Ratio/Supplemental Data | ||
Net assets, end of period (000’s omitted) | $ 1,573 | |
Ratio of expenses to average net assets with waivers and expense reimbursements(4) | 2.60%(5) | |
Ratio of expenses to average net assets without waivers and expense reimbursements(6)(7) | 3.69%(5) | |
Ratio of net investment income to average net assets | 3.08%(5) | |
Portfolio turnover rate | 262.69%(3) |
* | Commencement of operations. |
(1) | The selected per share data was calculated using the average shares outstanding method for the period. |
(2) | Total investment return is calculated assuming a purchase of shares on the first day and a sale of shares on the last day of each period reported and includes reinvestments of dividends and distributions, if any. Total returns for periods less than one year are not annualized. Total investment return does not reflect any applicable sales charge. |
(3) | Not annualized. |
(4) | Expense ratio includes dividend and interest expense related to securities sold short. Excluding such dividend and interest expense, the ratio of expenses to average net assets would be 2.42% for the period ended October 31, 2015. |
(5) | Annualized. |
(6) | Expense ratio includes dividend and interest expense related to securities sold short. Excluding such dividend and interest expense, the ratio of expenses to average net assets would be 3.51% for the period ended October 31, 2015. |
(7) | During the period, certain fees were waived and/or reimbursed. If such fee waivers and/or reimbursements had not occurred, the ratios would have been as indicated (See Note 2). |
The accompanying notes are an integral part of the financial statements.
11
WHV/ACUITY TACTICAL CREDIT LONG/SHORT FUND
Financial Highlights (Continued)
Contained below is per share operating performance data for Class I Shares outstanding, total investment return, ratios to average net assets and other supplemental data for the respective periods. 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). This information has been derived from information provided in the financial statements and should be read in conjunction with the financial statements and the notes thereto.
Class I Shares | ||||||||
For the Six Months Ended October 31, 2015 (Unaudited) | For the Period to April 30, 2015 | |||||||
Per Share Operating Performance | ||||||||
Net asset value, beginning of period | $ 10.38 | $ 10.00 | ||||||
Net investment income(1) | 0.20 | 0.12 | ||||||
Net realized and unrealized gain on investments | 0.14 | 0.34 | ||||||
Net increase in net assets resulting from operations | 0.34 | 0.46 | ||||||
Dividends and distributions to shareholders from: | ||||||||
Net investment income | (0.11) | (0.08) | ||||||
Total distributions | (0.11) | (0.08) | ||||||
Net asset value, end of period | $ 10.61 | $ 10.38 | ||||||
Total investment return(2) | 3.16%(3) | 4.60%(3) | ||||||
Ratio/Supplemental Data | ||||||||
Net assets, end of period (000’s omitted) | $40,388 | $ 4,448 | ||||||
Ratio of expenses to average net assets with waivers and expense reimbursement(4) | 1.60%(5) | 1.42%(5) | ||||||
Ratio of expenses to average net assets without waivers and expense reimbursement(6)(7) | 2.69%(5) | 6.35%(5) | ||||||
Ratio of net investment income to average net assets | 3.79%(5) | 3.22%(5) | ||||||
Portfolio turnover rate | 262.69%(3) | 532.05%(3) |
* | Commencement of operations. |
(1) | The selected per share data was calculated using the average shares outstanding method for the period. |
(2) | Total investment return is calculated assuming a purchase of shares on the first day and a sale of shares on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total returns for periods less than one year are not annualized. |
(3) | Not annualized. |
(4) | Expense ratio includes dividend and interest expense related to securities sold short. Excluding such dividend and interest expense, the ratio of expenses to average net assets would be 1.42% for both the six months ended October 31, 2015 and for the period ended April 30, 2015. |
(5) | Annualized. |
(6) | Expense ratio includes dividend and interest expense related to securities sold short. Excluding such dividend and interest expense, the ratio of expenses to average net assets would be 2.51% and 6.35% for the six months ended October 31, 2015 and for the period ended April 30, 2015, respectively. |
(7) | During the period, certain fees were waived and/or reimbursed. If such fee waivers and/or reimbursements had not occurred, the ratios would have been as indicated (See Note 2). |
The accompanying notes are an integral part of the financial statements.
12
WHV/ACUITY TACTICAL CREDIT LONG/SHORT FUND
Notes to Financial Statements
October 31, 2015
(Unaudited)
1. Organization and Significant Accounting Policies
The WHV/Acuity Tactical Credit Long/Short Fund (the “Fund”) is a diversified, open-end management investment company registered under the Investment Company Act of 1940, as amended, (the “1940 Act”), which commenced investment operations on December 16, 2014. The Fund is a separate series of FundVantage Trust (the “Trust”) which was organized as a Delaware statutory trust on August 28, 2006. The Trust is a “series trust” authorized to issue an unlimited number of separate series or classes of shares of beneficial interest. Each series is treated as a separate entity for certain matters under the 1940 Act, and for other purposes, and a shareholder of one series is not deemed to be a shareholder of any other series. The Fund offers separate classes of shares: Class A, Class C and Class I Shares. Class A Shares are sold subject to a front-end sales charge. Front-end sales charges may be reduced or waived under certain circumstances. A contingent deferred sales charge (“CDSC”) of up to 1.00% may apply for investments of $1 million or more of Class A Shares of the Fund (and therefore no initial sales charge was paid) and shares are redeemed within 18 months after initial purchase. The CDSC shall not apply to those purchases of Class A Shares of $1 million or more where Foreside Funds Distributors LLC (the “Underwriter”) did not pay a commission to the selling broker-dealer. A CDSC of up to 1.00% will be assessed when Class C Shares are redeemed within 12 months after initial purchase. The CDSC shall not apply to those purchases of Class C Shares where the selling broker-dealer did not receive a commission.
The Fund is an investment company and follows accounting and reporting guidance in the Financial Accounting Standards Board Accounting Standards Codification Topic 946.
Portfolio Valuation — The Fund’s net asset value (“NAV”) is calculated once daily at the close of regular trading hours on the New York Stock Exchange (“NYSE”) (typically 4:00 p.m. Eastern time) on each business day the NYSE is open. Securities held by the Fund are valued at their last sale price on the NYSE on the day the security is valued. Lacking any sales on such day, the security will be valued at the mean between the last asked price and the last bid price prior to the market close. Securities listed on other exchanges (and not subject to restriction against sale by the Fund on such exchanges) will be similarly valued, using quotations on the exchange on which the security is traded most extensively. Unlisted securities that are quoted on the National Association of Securities Dealers National Market System, for which there have been sales of such securities on such day, shall be valued at the official closing price on such system on the day the security is valued. If there are no such sales on such day, the value shall be the mean between the last asked price and the last bid price prior to market close. The value of such securities quoted on the National Association of Securities Dealers Automatic Quotation System (“NASDAQ”) market system, but not listed on the National Market System, shall be valued at the mean between closing asked price and the closing bid price. Unlisted securities that are not quoted on NASDAQ and for which over-the-counter market quotations are readily available will be valued at the mean between the current bid and asked prices for such security in the over-the-counter market. Fixed income securities are valued based on market quotations, which are furnished by an independent pricing service. Fixed income securities having a remaining maturity of 60 days or less are generally valued at amortized cost, provided such amount approximates market value. Debt securities are valued on the basis of broker quotations or valuations provided by a pricing service, which utilizes information with respect to recent sales, market transactions in comparable securities, quotations from dealers, and various relationships between securities in determining value. Valuations developed through pricing techniques may materially vary from the actual amounts realized upon sale of the securities. Investments in other open-end investment companies are valued based on the NAV of the investment companies (which may use fair value pricing as discussed in their prospectuses). If market quotations are unavailable or deemed unreliable, securities will be valued in accordance with procedures adopted by the Trust’s Board of Trustees. Relying on prices supplied by pricing services or dealers or using fair valuation may result in values that are higher or lower than the values used by other investment companies and investors to price the same investments.
13
WHV/ACUITY TACTICAL CREDIT LONG/SHORT FUND
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
Fair Value Measurements — The inputs and valuation techniques used to measure fair value of a Fund’s investments are summarized into three levels as described in the hierarchy below:
● | Level 1 — | quoted prices in active markets for identical securities; | ||
● | Level 2 — | other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.); and | ||
● | Level 3 — | significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments). |
The fair value of the Fund’s bonds are generally based on quotes received from brokers of independent pricing services. Bonds with quotes that are based on actual trades with a sufficient level of activity on or near the measurement date are classified as Level 2 assets.
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
The following is a summary of the inputs used, as of October 31, 2015, in valuing the Fund’s investments carried at fair value:
Total Value at 10/31/15 | Level 1 Quoted Price | Level 2 Other Significant Observable Inputs | Level 3 Significant Unobservable Inputs | |||||||||||||
Corporate Bonds and Notes* | $ | 47,186,065 | $ | — | $ | 47,186,065 | $ | — | ||||||||
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* Please refer to Portfolio of Investments for further details on portfolio holdings.
At the end of each quarter, management evaluates the classification of Levels 1, 2 and 3 assets and liabilities. Various factors are considered, such as changes in liquidity from the prior reporting period; whether or not a broker is willing to execute at the quoted price; the depth and consistency of prices from third party pricing services; and the existence of contemporaneous, observable trades in the market. Additionally, management evaluates the classification of Level 1 and Level 2 assets and liabilities on a quarterly basis for changes in listings or delistings on national exchanges.
Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of the Fund’s investments may fluctuate from period to period. Additionally, the fair value of investments may differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially from the values the Fund may ultimately realize. Further, such investments may be subject to legal and other restrictions on resale or are otherwise less liquid than publicly traded securities.
For fair valuations using significant unobservable inputs, U.S. generally accepted accounting principles (“U.S. GAAP”) require the Fund to present a reconciliation of the beginning to ending balances for reported market values that presents changes attributable to total realized and unrealized gains or losses, purchase and sales, and transfers in and out of Level 3 during the period. Transfers in and out between Levels are based on values at the end of the period. U.S. GAAP also requires the Fund to disclose amounts and reasons for all transfers in and out of Level 1 and Level 2 fair value measurements. A reconciliation of Level 3 investments is presented only when the Fund had an amount of Level 3 investments at the end of the reporting period that was meaningful in relation to its net assets. The amounts and reasons for all transfers in and out of each Level within the three-tier hierarchy are disclosed when the Fund had an amount of total transfers during the reporting period that was meaningful in relation to its net assets as of the end of the reporting period.
For the six months ended October 31, 2015, there were no transfers between Levels 1, 2 and 3 for the Fund.
14
WHV/ACUITY TACTICAL CREDIT LONG/SHORT FUND
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes at the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates and those differences could be material.
Investment Transactions, Investment Income and Expenses — Investment transactions are recorded on trade date for financial statement preparation purposes. Realized gains and losses on investments sold are recorded on the identified cost basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date. Estimated components of distributions received from real estate investment trusts may be considered income, return of capital distributions or capital gain distributions. Return of capital distributions are recorded as a reduction of cost of the related investments. Distribution (12b-1) fees and shareholder services fees relating to a specific class are charged directly to that class. General expenses of the Trust are generally allocated to each fund in proportion to its relative daily net assets. Expenses directly attributable to a particular fund in the Trust are charged directly to that fund. The Fund’s investment income, expenses (other than class specific expenses) and unrealized and realized gains and losses are allocated daily to each class of shares based upon the relative proportion of net assets of each class at the beginning of the day.
Dividends and Distributions to Shareholders — Dividends from net investment income and distributions from net realized capital gains, if any, are declared, recorded on ex-date and paid at least annually to shareholders. Income dividends and capital gain distributions are determined in accordance with U.S. federal income tax regulations, which may differ from U.S. GAAP. These differences include the treatment of non-taxable dividends, expiring capital loss carryforwards and losses deferred due to wash sales and excise tax regulations. Permanent book and tax basis differences relating to shareholder distributions will result in reclassifications within the components of net assets.
U.S. Tax Status — No provision is made for U.S. income taxes as it is the Fund’s intention to qualify for and elect the tax treatment applicable to regulated investment companies under Subchapter M of the Internal Revenue Code of 1986, as amended, and make the requisite distributions to its shareholders which will be sufficient to relieve it from U.S. income and excise taxes.
Other — In the normal course of business, the Fund may enter into contracts that provide general indemnifications. The Fund’s maximum exposure under these arrangements is dependent on claims that may be made against the Fund in the future, and, therefore, cannot be estimated; however, based on experience, the risk of material loss for such claims is considered remote.
Short Sales — A Fund’s short sales are subject to special risks. A short sale involves the sale by the Fund of a security that it does not own with the hope of purchasing the same security at a later date at a lower price. If the price of the security has increased during this time, then the Fund will incur a loss equal to the increase in price from the time that the short sale was entered into plus any premiums and interest paid to the third party. Therefore, short sales involve the risk that losses may be exaggerated, potentially losing more money than the actual cost of the investment. Also, there is the risk that the third party to the short sale may fail to honor its contract terms, causing a loss to the Fund. There can be no assurance that the Fund will be able to close out a short position at any particular time or at an acceptable price. Although a Fund’s gain is limited to the amount at which it sold a security short, its potential loss is unlimited. The Fund will comply with guidelines established by the Security and Exchange Commission and other applicable regulatory bodies with respect to coverage of short sales.
In accordance with the terms of its prime brokerage agreements, the Fund may receive rebate income or be charged fees on securities sold short. Such income or fee is calculated on a daily basis based upon the market value of securities sold short and a variable rate that is dependent upon the availability of such security. For the six months ended October 31, 2015, the Fund had net rebate charges of $4,162 on securities sold short. This amount is included in dividends and fees on securities sold short on the Statement of Operations.
15
WHV/ACUITY TACTICAL CREDIT LONG/SHORT FUND
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
For the six months ended October 31, 2015, the Fund incurred financing charges of $240 to finance purchases of long securities. A financing fee is charged to the Fund based on the Federal Funds rate plus an agreed upon spread. These fees are included in dividends and fees on securities sold short.
Payment-In-Kind Securities — The Fund may invest in payment-in-kind securities (“PIK”). PIKs give the issuer the option at each interest payment date of making interest payments in either cash or additional debt securities. Those additional debt securities usually have the same terms, including maturity dates, interest rates, and associated risks as the original bonds. For the six months ended October 31, 2015, there were no in-kind payments received by the Fund with respect to PIK securities.
2. Transactions with Affiliates and Related Parties
WHV serves as investment adviser to the Fund pursuant to an investment advisory agreement with the Trust (the “Advisory Agreement”). For its services, the Adviser is paid a monthly fee at the annual rate of 1.17% of the Fund’s average daily net assets. The Adviser has contractually agreed to reduce its investment advisory fee and/or reimburse certain expenses of the Fund to the extent necessary to ensure that the Fund’s total operating expenses, excluding taxes, any class-specific expenses (such as Rule 12b-1 distribution fees, shareholder service fees, or transfer agency fees), “Acquired Fund” fees and expenses, dividend and interest expense on securities sold short, interest, extraordinary items, and brokerage commissions, do not exceed 1.42% (on an annual basis) of average daily net assets of the Fund (the “Expense Limitation”). The Expense Limitation will remain in place until August 31, 2018, unless the Board of Trustees approves its earlier termination. Under a separate contractual agreement, the Adviser has contractually agreed to reduce its investment advisory fee and/or reimburse certain expenses of the Fund in an amount equal to the Fund’s dividend and interest expense on securities sold short through August 31, 2016. The Adviser is entitled to recover, subject to approval by the Board of Trustees, such amounts reduced or reimbursed for a period of up to three (3) years from the year in which the Adviser reduced its compensation and/or assumed expenses for the Fund. No recoupment will occur unless the Fund’s expenses are below the Expense Limitation.
For the six months ended October 31, 2015, the amount of potential recovery was as follows:
Expiration | ||||
April 30, 2018 | April 30, 2019 | |||
$45,147 | $106,147 |
For the six months ended October 31, 2015, the Adviser earned investment advisory fees of $114,011 and waived fees of $106,147.
Acuity Capital Management, LLC (“Acuity” or the “Sub-Adviser”) serves as the sub-adviser to the Fund. The Sub-Adviser provides certain services pursuant to a sub-advisory agreement among WHV, the Sub-Adviser and the Trust, on behalf of the Fund. Sub-Advisory fees are paid by WHV, not the Fund.
BNY Mellon Investment Servicing (US) Inc. (“BNY Mellon”) serves as administrator and transfer agent for the Fund. For providing administrative and accounting services, BNY Mellon is entitled to receive a monthly fee equal to an annual percentage rate of the Fund’s average daily net assets and is subject to certain minimum monthly fees. For providing transfer agent services, BNY Mellon is entitled to receive a monthly fee, subject to certain minimum, and out of pocket expenses.
The Bank of New York Mellon (the “Custodian”) provides certain custodial services to the Fund. The Custodian is entitled to receive a monthly fee, subject to certain minimum, and out of pocket expenses.
16
WHV/ACUITY TACTICAL CREDIT LONG/SHORT FUND
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
BNY Mellon and the Custodian have the ability to recover such amounts previously waived if each Fund terminates its agreements with BNY Mellon or the Custodian within three years of signing the agreements.
Foreside Funds Distributors LLC (the “Underwriter”) provides principal underwriting services to the Fund.
The Trust and the Underwriter are parties to an underwriting agreement. The Trust has adopted a distribution plan for Class A and Class C Shares in accordance with Rule 12b-1 under the 1940 Act. Pursuant to the Class A and Class C Shares plan, the Fund compensates the Underwriter for direct and indirect costs and expenses incurred in connection with advertising, marketing and other distribution services in an amount not to exceed 0.25% and 1.00% (0.75% Rule 12b-1 distribution fee and 0.25% shareholder service fee), respectively, on an annualized basis of the average daily net assets of the Fund’s Class A and Class C Shares.
The Trustees of the Trust who are not officers or employees of an investment adviser, sub-adviser or other service provider to the Trust receive compensation in the form of an annual retainer and per meeting fees, for their services as a Trustee. The remuneration paid to the Trustees by the Fund during the six months ended October 31, 2015 was $1,437. Certain employees of BNY Mellon serve as Officers of the Trust. They are not compensated by the Fund or the Trust.
3. Investment in Securities
For the six months ended October 31, 2015, aggregate purchases and sales of investment securities (excluding other short-term investments) of the Fund were as follows:
Purchases | Sales | |||||||
Investment Securities | $ | 94,163,779 | $ | 51,367,238 |
4. Capital Share Transactions
For the six months/period ended October 31, 2015 and the period from December 16, 2014, commencement of operations, to April 30, 2015, transactions in capital shares of the Fund (authorized shares unlimited) were as follows:
For the Six Months/Period Ended October 31, 2015 (Unaudited) | For the Period Ended | |||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||
Class A Shares* | ||||||||||||||||||||
Sales | 619,357 | $ | 6,491,270 | 12,074 | $ | 123,572 | ||||||||||||||
Reinvestments | 1,471 | 15,189 | 38 | 380 | ||||||||||||||||
Redemptions | (234,029 | ) | (2,450,982 | ) | — | — | ||||||||||||||
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Net increase | 386,799 | $ | 4,055,477 | 12,112 | $ | 123,952 | ||||||||||||||
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Class C Shares** | ||||||||||||||||||||
Sales | 148,448 | $ | 1,549,345 | — | $ | — | ||||||||||||||
Reinvestments | 428 | 4,410 | — | — | ||||||||||||||||
Redemptions | (10 | ) | (97 | ) | — | — | ||||||||||||||
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Net increase | 148,866 | $ | 1,553,658 | — | $ | — | ||||||||||||||
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17
WHV/ACUITY TACTICAL CREDIT LONG/SHORT FUND
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
For the Six Months/Period Ended October 31, 2015 (Unaudited) | For the Period Ended April 30, 2015 | |||||||||||
Shares | Amount | Shares | Amount | |||||||||
Class I Shares* | ||||||||||||
Sales | 3,466,498 | $36,607,756 | 425,402 | $4,261,489 | ||||||||
Reinvestments | 13,395 | 138,394 | 3,153 | 32,191 | ||||||||
Redemptions | (100,483) | (1,057,122) | (25) | (257) | ||||||||
Net increase | 3,379,410 | $35,689,028 | 428,530 | $4,293,423 | ||||||||
Total net increase | 3,915,075 | $41,298,163 | 440,642 | $4,417,375 |
* | Class A and Class I Shares commenced operations on December 16, 2014. |
** | Class C Shares commenced operations on May 1, 2015. |
5. Federal Tax Information
The Fund has followed the authoritative guidance on accounting for and disclosure of uncertainty in tax positions, which requires the Fund to determine whether a tax position is more likely than not to be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The Fund has determined that there was no effect on the financial statements from following this authoritative guidance. In the normal course of business, the Fund is subject to examination by federal, state and local jurisdictions, where applicable, for tax years for which applicable statutes of limitations have not expired.
For the period ended April 30, 2015, the tax character of distributions paid by the Fund was $32,571 of ordinary income dividends. Distributions from short-term capital gains are treated as ordinary income for federal income tax purposes.
As of April 30, 2015 the components of distributable earnings on a tax basis were as follows:
Qualified | ||||||||||
Capital Loss | Undistributed | Undistributed | Unrealized | Late-Year | Other Temporary | |||||
Carryforward | Ordinary Income | Long-Term Gain | Appreciation | Losses | Differences | |||||
$— | $135,539 | $— | $22,204 | $— | $— |
The differences between the book and tax basis components of distributable earnings relate primarily to the timing and recognition of income and gains for federal income tax purposes. Short-term capital gains are reported as ordinary income for federal income tax purposes.
18
WHV/ACUITY TACTICAL CREDIT LONG/SHORT FUND
Notes to Financial Statements (Concluded)
October 31, 2015
(Unaudited)
As of October 31, 2015, the federal tax cost, aggregate gross unrealized appreciation and depreciation of securities held by the Fund were as follows: |
Federal tax cost | $ | 46,982,300 | ||||
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Gross unrealized appreciation | $ | 703,588 | ||||
Gross unrealized depreciation | (499,823 | ) | ||||
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Net unrealized appreciation | $ | 203,765 | ||||
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Pursuant to federal income tax rules applicable to regulated investment companies, the Fund may elect to treat certain capital losses between November 1 and April 30 and late year ordinary losses ((i) ordinary losses between January 1 and April 30, and (ii) specified ordinary and currency losses between November 1 and April 30) as occurring on the first day of the following tax year. For the period ended April 30, 2015, any amount of losses elected within the tax return will not be recognized for federal income tax purposes until May 1, 2015. For the period ended April 30, 2015, the Fund had no loss deferrals.
Accumulated capital losses represent net capital loss carryovers as of April 30, 2015 that may be available to offset future realized capital gains and thereby reduce future capital gains distributions. As of April 30, 2015, the fund did not have any capital loss carryforwards.
6. Subsequent Events
Management has evaluated the impact of all subsequent events on the Fund through the date the financial statements were issued and has determined that there were no subsequent events requiring recognition or disclosure in the financial statements.
19
WHV/ACUITY TACTICAL CREDIT LONG/SHORT FUND
Other Information
(Unaudited)
Proxy Voting
Policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities as well as information regarding how the Fund voted proxies relating to portfolio securities for the most recent 12-month period ended June 30 are available without charge, upon request, by calling (888) 948-4685 and on the Securities and Exchange Commission’s (“SEC”) website at http://www.sec.gov.
Quarterly Portfolio Schedules
The Trust files its complete schedule of portfolio holdings with the SEC for the first and third fiscal quarters of each fiscal year (quarters ended July 31 and January 31) on Form N-Q. The Trust’s Forms N-Q are available on the SEC’s website at http://www.sec.gov and may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. Information on the operation of the SEC’s Public Reference Room may be obtained by calling 1-800-SEC-0330.
20
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Investment Adviser
WHV Investments, Inc.
301 Battery Street
Suite 400
San Francisco, CA 94111-3203
Sub-Adviser
Acuity Capital Management, LLC
60 Arch Street
2nd Floor
Greenwich, CT 06830
Administrator
BNY Mellon Investment Servicing (US) Inc.
301 Bellevue Parkway
Wilmington, DE 19809
Transfer Agent
BNY Mellon Investment Servicing (US) Inc.
4400 Computer Drive
Westborough, MA 01581
Principal Underwriter
Foreside Funds Distributors LLC
400 Berwyn Park
899 Cassatt Road
Berwyn, PA 19312
Custodian
The Bank of New York Mellon
225 Liberty Street
New York, NY 10286
Independent Registered Public Accounting Firm
PricewaterhouseCoopers LLP
Two Commerce Square, Suite 1700
2001 Market Street
Philadelphia, PA 19103-7042
Legal Counsel
Pepper Hamilton LLP
3000 Two Logan Square
18th and Arch Streets
Philadelphia, PA 19103
ACU-1015
As Sub-Advised by
WHV/ACUITY
TACTICAL CREDIT
LONG/SHORT FUND
of
FundVantage Trust
Class A Shares
Class C Shares
Class I Shares
SEMI-ANNUAL
REPORT
October 31, 2015
(Unaudited)
This report is submitted for the general information of the shareholders of the WHV/Acuity Tactical Credit Long/Short Fund. It is not authorized for distribution unless preceded or accompanied by a current prospectus for the WHV/Acuity Tactical Credit Long/Short Fund.
WHV/EAM International Small Cap Equity Fund
Semi-Annual Report
Performance Data
October 31, 2015
(Unaudited)
Average Annual Total Returns for the Periods Ended October 31, 2015 | ||||||||||||
Six Months† | 1 Year | Since | ||||||||||
Class A Shares (with sales charge)(a) | -8.05% | -2.02 | % | -2.92% | ||||||||
Class A Shares (without sales charge)(a) | -2.40% | 3.99 | % | 1.19% | ||||||||
Class I Shares(a) | -2.30% | 4.19 | % | 1.39% | ||||||||
MSCI ACWI ex USA Small Cap Index(b) | -6.27% | 1.53 | % | -3.56% | ||||||||
Russell Global ex-U.S. Small Cap Growth Index(b) | -7.14% | 0.75 | % | -3.63% | ||||||||
Total Return for the Period Ended October 31, 2015 | ||||||||||||
Since | ||||||||||||
Class C Shares(c) | -6.01% | |||||||||||
MSCI ACWI ex USA Small Cap Index(d) | -3.25% | |||||||||||
Russell Global ex-U.S. Small Cap Growth Index(d) | -4.50% |
† Not Annualized.
(a) | Class A and I Shares of the WHV/EAM International Small Cap Equity Fund (the “Fund”) commenced operations on May 27, 2014. |
(b) | Benchmark performance is from the inception date of Class A and I Shares of the Fund (May 27, 2014) only and is not the inception date of the benchmark itself. |
(c) | Class C Shares of the Fund commenced operations on July 13, 2015. |
(d) | Benchmark performance is from the inception date of Class C Shares of the Fund (July 13, 2015) only and is not the inception date of the benchmark itself. |
The performance data quoted represents past performance and does not guarantee future results. Current performance may be lower or higher. Performance data current to the most recent month-end may be obtained by calling (888) 948-4685. The investment return and principal value of an investment will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. The table does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
The Fund’s total annual Fund gross and net operating expense ratios are 42.57% and 1.65%, respectively, for Class A Shares, 43.32% and 2.40%, respectively, for Class C Shares and 42.32% and 1.40%, respectively, for Class I Shares of the Fund’s average daily net assets. These ratios are stated in the current prospectus dated September 1, 2015, and may differ from the actual expenses incurred by the Fund for the period covered by this report. WHV Investments, Inc. (the “Adviser”), has contractually agreed to reduce its investment advisory fee and/or reimburse certain expenses of the Fund to the extent necessary to ensure that the Fund’s total operating expenses excluding taxes, “Acquired Fund” fees and expenses, dividend and interest expense on short sales of securities, interest, extraordinary items and brokerage commissions do not exceed 1.65% with respect to Class A Shares, 2.40% with respect to Class C Shares and 1.40% with respect to Class I Shares (on an annual basis) of average daily net assets of the Fund (the “Expense Limitation”). The Expense Limitation will remain in place until August 31, 2018 unless the Board of Trustees of FundVantage Trust ( the “Trust”) approves its earlier termination. The Advisor is entitled to recover, subject to approval by the Board of Trustees, such amounts reduced or reimbursed for a period up to three years from the year in which the Advisor reduced its compensation and/or assumed expenses for the Fund.
1
WHV/EAM International Small Cap Equity Fund
Semi-Annual Report
Performance Data (Concluded)
October 31, 2015
(Unaudited)
No recoupment by the Adviser will occur unless the Fund’s expenses are below the Expense Limitation. Total returns would be lower had such fees and expenses not been waived and/or reimbursed, or been higher had such fees and expenses not been recouped. The net ratios shown do not include “Acquired Fund” fees and expenses estimated to be 0.02% annually.
The Fund’s benchmark changed from the Russell Global ex-U.S. Small Cap Growth Index to the MSCI ACWI ex USA Small Cap Index due to the Russell Index no longer being supported past June 30, 2016. The MSCI ACWI ex USA Small Cap Index captures small cap representation across 22 of 23 Developed Markets countries (excluding the US) and 23 Emerging Market countries. The MSCI ACWI ex USA Small Cap Index covers approximately 14% of the global equity opportunity set outside the US. The Fund’s former benchmark, the Russell Global ex-U.S. Small Cap Growth Index measures the growth segment for the smallest securities in the global equity universe, excluding companies assigned to the U.S. The Russell Global ex-U.S. Small Cap Growth Index includes smaller companies outside the U.S. that have higher growth earning potential as defined by Russell’s leading style methodology. The Russell Global ex-U.S. Small Cap Growth Index is constructed to provide a comprehensive and unbiased barometer of the global growth market, excluding the U.S. It is impossible to invest directly in an index.
All mutual fund investing involves risk, including possible loss of principal. Investing in foreign securities entails special risks, such as fluctuations in currency exchange rates and possible lax regulation of securities markets and accounting practices.
2
WHV/EAM Emerging Markets Small Cap Equity Fund
Semi-Annual Report
Performance Data
October 31, 2015
(Unaudited)
Average Annual Total Returns for the Periods Ended October 31, 2015 | ||||||||||||
Six Months† | 1 Year | Since | ||||||||||
Class A Shares (with sales charge)(a) | -19.64% | -16.51 | % | -12.26% | ||||||||
Class A Shares (without sales charge)(a) | -14.73% | -11.38 | % | -8.55% | ||||||||
Class I Shares(a) | -14.59% | -11.07 | % | -8.26% | ||||||||
MSCI Emerging Markets Small Cap Index(b) | -15.44% | -8.61 | % | -6.78% | ||||||||
Russell Emerging Markets Small Cap Growth Index(b) | -13.63% | -8.40 | % | -5.85% | ||||||||
Total Return for the Period Ended October 31, 2015 | ||||||||||||
Since | ||||||||||||
Class C Shares(c) | -13.29% | |||||||||||
MSCI Emerging Markets Small Cap Index(d) | -8.92% | |||||||||||
Russell Emerging Markets Small Cap Growth Index(d) | -8.89% |
† Not Annualized.
(a) | Class A and I Shares of the WHV/EAM Emerging Markets Small Cap Equity Fund (the “Fund”) commenced operations on May 27, 2014. |
(b) | Benchmark performance is from the inception date of Class A and I Shares of the Fund (May 27, 2014) only and is not the inception date of the benchmark itself. |
(c) | Class C Shares of the Fund commenced operations on July 13, 2015. |
(d) | Benchmark performance is from the inception date of Class C Shares of the Fund (July 13, 2015) only and is not the inception date of the benchmark itself. |
The performance data quoted represents past performance and does not guarantee future results. Current performance may be lower or higher. Performance data current to the most recent month-end may be obtained by calling (888) 948-4685. The investment return and principal value of an investment will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. The table does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
The Fund’s total annual Fund gross and net operating expense ratios are 50.28% and 1.80%, respectively, for Class A Shares, 51.03% and 2.55%, respectively, for Class C Shares and 50.03% and 1.55%, respectively, for Class I Shares of the Fund’s average daily net assets. These ratios are stated in the current prospectus dated September 1, 2015, and may differ from the actual expenses incurred by the Fund for the period covered by this report. WHV Investments, Inc. (the “Adviser”), has contractually agreed to reduce its investment advisory fee and/or reimburse certain expenses of the Fund to the extent necessary to ensure that the Fund’s total operating expenses excluding taxes, “Acquired Fund” fees and expenses, dividend and interest expense on short sales of securities, interest, extraordinary items and brokerage commissions do not exceed 1.80% with respect to Class A shares, 2.55% with respect to Class C shares and 1.55% with respect to Class I shares (on an annual basis) of the Fund’s average daily net assets (the “Expense Limitation”). The Expense Limitation will remain in place until August 31, 2018 unless the Board of Trustees of FundVantage Trust (the “Trust”) approves its earlier termination. Prior to July 10, 2015, the Management Fee was 1.50% and Expense Limitation was 1.75% (on an annual basis) with respect to Class I shares and 2.00% (on an annual basis) with respect to Class A shares. Class C shares were not offered prior to July 10,
3
WHV/EAM Emerging Markets Small Cap Equity Fund
Semi-Annual Report
Performance Data (Concluded)
October 31, 2015
(Unaudited)
2015. The Adviser is entitled to recover, subject to approval by the Board of Trustees, such amounts reduced or reimbursed for a period of up to three years from the year in which the Adviser reduced its compensation and/or assumed expenses for the Fund. No recoupment by the Adviser will occur unless the Fund’s expenses are below the Expense Limitation. Total returns would be lower had such fees and expenses not been waived and/or reimbursed. The net ratios shown do not include “Acquired Fund” fees and expenses estimated to be 0.02% annually.
The Fund’s benchmark changed from the Russell Emerging Markets Small Cap Growth Index to the MSCI Emerging Markets Small Cap Index due to the Russell Index no longer being supported past June 30,2016. The MSCI Emerging Markets Small Cap Index captures small cap representation across 23 Emerging Markets countries. The MSCI Emerging Markets Small Cap Index covers approximately 14% of the free float-adjusted market capitalization in each country. The small cap segment tends to capture more local economic and sector characteristics relative to larger Emerging Markets capitalization segments. The Fund’s former benchmark, the Russell Emerging Markets Small Cap Growth Index measures the growth segment of the smallest securities located in the global emerging market. The Russell Emerging Markets Small Cap Growth Index includes smaller companies with higher growth earning potential as defined by Russell’s leading style methodology. The Russell Emerging Markets Small Cap Growth Index is constructed to provide a comprehensive and unbiased barometer of the global emerging markets growth market. It is impossible to invest directly in an index.
All mutual fund investing involves risk, including possible loss of principal. Investing in foreign securities entails special risks, such as fluctuations in currency exchange rates and possible lax regulation of securities markets and accounting practices. Emerging markets involve additional risks, including lack of market liquidity, currency devaluation, hyperinflation, political or social instability, and other factors.
4
WHV/EAM FUNDS
Fund Expense Disclosure
October 31, 2015
(Unaudited)
As a shareholder of the Fund(s), you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments, if any, and redemption fees; and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, if any, and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund(s) and to compare these costs with the ongoing costs of investing in other mutual funds.
These examples are based on an investment of $1,000 invested at the beginning of the six-month period from May 1, 2015 through October 31, 2015 for the Funds, and held for the entire period.
Actual Expenses
The first line of each accompanying table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Examples for Comparison Purposes
The second line of each accompanying table provides information about hypothetical account values and hypothetical expenses based on the Funds’ actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Funds’ actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Funds and other funds. To do so, compare these 5% hypothetical examples with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that the expenses shown in the accompanying tables are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), if any, or redemption fees. Therefore, the second line of each accompanying table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
5
WHV/EAM FUNDS
Fund Expense Disclosure (Continued)
October 31, 2015
(Unaudited)
WHV/EAM International Small Cap Equity Fund | |||||||||||||||
Beginning Account Value |
Ending Account Value |
Expenses Paid | |||||||||||||
Class A Shares* | |||||||||||||||
Actual | $1,000.00 | $ 976.00 | $ 8.20 | ||||||||||||
Hypothetical (5% return before expenses) | 1,000.00 | 1,016.84 | 8.36 | ||||||||||||
Class C Shares** | |||||||||||||||
Actual | $1,000.00 | $ 939.90 | $ 6.93 | ||||||||||||
Hypothetical (5% return before expenses) | 1,000.00 | 1,013.07 | 12.14 | ||||||||||||
Class I Shares* | |||||||||||||||
Actual | $1,000.00 | $ 977.00 | $ 6.96 | ||||||||||||
Hypothetical (5% return before expenses) | 1,000.00 | 1,018.10 | 7.10 | ||||||||||||
WHV/EAM Emerging Markets Small Cap Equity Fund | |||||||||||||||
Beginning Account Value |
Ending Account Value |
Expenses Paid | |||||||||||||
Class A Shares* | |||||||||||||||
Actual | $1,000.00 | $ 852.70 | $ 8.52 | ||||||||||||
Hypothetical (5% return before expenses) | 1,000.00 | 1,015.94 | 9.27 | ||||||||||||
Class C Shares** | |||||||||||||||
Actual | $1,000.00 | $ 867.10 | $ 7.35 | ||||||||||||
Hypothetical (5% return before expenses) | 1,000.00 | 1,011.97 | 13.25 | ||||||||||||
Class I Shares* | |||||||||||||||
Actual | $1,000.00 | $ 854.10 | $ 7.60 | ||||||||||||
Hypothetical (5% return before expenses) | 1,000.00 | 1,016.94 | 8.26 |
*Expenses are equal to an annualized expense ratio for the six-month period ended October 31, 2015 of 1.65% and 1.40% for Class A and Class I Shares, respectively, of the WHV/EAM International Small Cap Equity Fund; and 1.83% and 1.63% for Class A and Class I Shares, respectively, of the WHV/EAM Emerging Markets Small Cap Equity Fund; multiplied by the average account value over the period, multiplied by the number of days in the most recent period (184 days), then divided by 366 to reflect the period. Each Fund’s ending account values on the first line in the table are based on the actual six month total returns of (2.40)% and (2.30)% for both Class A and Class I Shares, respectively, of the WHV/EAM International Small Cap Equity Fund; and (14.73)% and (14.59)% for Class A and Class I Shares, respectively, of the WHV/EAM Emerging Markets Small Cap Equity Fund.
**Expenses are equal to an annualized expense ratio for the period from July 13, 2015 (commencement of operations of Class C Shares) through October 31, 2015 of 2.40% for Class C Shares for the WHV/EAM International Small Cap Equity Fund and 2.62% for Class C Shares for the WHV/EAM Emerging Markets Small Cap Equity Fund, multiplied by the average account value over the period, multiplied by the number of days in the most recent period (110), then divided by 366 to reflect the period. The Fund’s ending account values on the first line in the table are based
6
WHV/EAM FUNDS
Fund Expense Disclosure (Concluded)
October 31, 2015
(Unaudited)
on the actual total return for the Fund since commencement of operations of (6.01)% for Class C Shares for the WHV/EAM International Small Cap Equity Fund and (13.29)% for Class C Shares for the WHV/EAM Emerging Markets Small Cap Equity Fund. Hypothetical expenses are as if the Class C Shares had been in existence from May 1, 2015, and are equal to the annualized expense ratio, multiplied by the average account value over the period, multiplied by the number of days in the most recent six-month period (184), then divided by 366 to reflect the period.
7
WHV/EAM INTERNATIONAL SMALL CAP EQUITY FUND
Portfolio Holdings Summary Table
October 31, 2015
(Unaudited)
The following table presents a summary by sector of the portfolio holdings of the Fund:
% of Net Assets | Value | |||||||
COMMON STOCKS: | ||||||||
Textiles, Apparel & Luxury Goods | 6.3% | $457,330 | ||||||
Auto Components | 5.8 | 424,494 | ||||||
Hotels, Restaurants & Leisure | 5.2 | 377,967 | ||||||
Food Products | 4.6 | 335,704 | ||||||
Electronic Equipment, Instruments & Components | 4.6 | 333,977 | ||||||
Food & Staples Retailing | 4.4 | 317,458 | ||||||
Semiconductors & Semiconductor Equipment | 4.0 | 290,982 | ||||||
IT Services | 3.4 | 248,560 | ||||||
Specialty Retail | 3.3 | 243,048 | ||||||
Health Care Equipment & Supplies | 3.1 | 230,275 | ||||||
Construction & Engineering | 3.1 | 222,488 | ||||||
Pharmaceuticals | 2.9 | 208,511 | ||||||
Software | 2.8 | 204,951 | ||||||
Building Products | 2.8 | 201,612 | ||||||
Machinery | 2.7 | 197,518 | ||||||
Biotechnology | 2.7 | 193,380 | ||||||
Personal Products | 2.6 | 192,246 | ||||||
Media | 2.6 | 189,184 | ||||||
Internet Software & Services | 2.5 | 183,627 | ||||||
Chemicals | 2.4 | 177,547 | ||||||
Airlines | 2.3 | 164,702 | ||||||
Health Care Providers & Services | 2.2 | 159,031 | ||||||
Household Durables | 1.5 | 111,070 |
% of Net Assets | Value | |||||||
Life Sciences Tools & Services | 1.5% | $ 107,689 | ||||||
Internet & Catalog Retail | 1.4 | 102,560 | ||||||
Real Estate Management & Development | 1.4 | 100,787 | ||||||
Communications Equipment | 1.3 | 99,833 | ||||||
Multiline Retail | 1.3 | 98,335 | ||||||
Commercial Services & Supplies | 0.8 | 59,889 | ||||||
Electrical Equipment | 0.8 | 59,481 | ||||||
Beverages | 0.8 | 59,004 | ||||||
Gas Utilities | 0.8 | 58,509 | ||||||
Professional Services | 0.8 | 58,366 | ||||||
Distributors | 0.8 | 57,039 | ||||||
Road & Rail | 0.7 | 53,487 | ||||||
Multi-Utilities | 0.7 | 53,474 | ||||||
Diversified Financial Services | 0.7 | 52,569 | ||||||
Metals & Mining | 0.7 | 50,330 | ||||||
Containers & Packaging | 0.7 | 48,717 | ||||||
Aerospace & Defense | 0.7 | 48,580 | ||||||
Banks | 0.7 | 47,797 | ||||||
Registered Investment Company | 4.0 | 294,956 | ||||||
Other Assets in Excess of Liabilities | 1.6 | 113,288 | ||||||
NET ASSETS | 100.0% | $7,290,352 |
Portfolio holdings are subject to change at any time.
The accompanying notes are an integral part of the financial statements.
8
WHV/EAM FUNDS
WHV/EAM International Small Cap Equity Fund
Portfolio of Investments
October 31, 2015
(Unaudited)
Number of Shares | Value | |||||||
COMMON STOCKS — 94.4% | ||||||||
Australia — 4.2% | ||||||||
Domino’s Pizza Enterprises, Ltd. | 1,582 | $ | 52,319 | |||||
Echo Entertainment Group, Ltd. | 12,592 | 45,510 | ||||||
Estia Health, Ltd. | 9,605 | 50,761 | ||||||
Japara Healthcare, Ltd. | 23,750 | 52,216 | ||||||
Orora, Ltd. | 29,464 | 48,717 | ||||||
Treasury Wine Estates, Ltd. | 11,789 | 59,004 | ||||||
|
| |||||||
308,527 | ||||||||
|
| |||||||
Belgium — 0.6% | ||||||||
Ablynx NV* | 3,366 | 44,374 | ||||||
|
| |||||||
Brazil — 1.3% | ||||||||
Iochpe Maxion SA | 10,579 | 43,890 | ||||||
Raia Drogasil SA | 4,621 | 47,917 | ||||||
|
| |||||||
91,807 | ||||||||
|
| |||||||
Canada — 3.6% | ||||||||
Canam Group, Inc. | 4,344 | 50,330 | ||||||
Colliers International Group, Inc. | 1,037 | 51,404 | ||||||
Descartes Systems Group, Inc. (The)* | 2,674 | 46,789 | ||||||
Just Energy Group, Inc. | 7,276 | 53,474 | ||||||
Uni-Select, Inc. | 1,151 | 57,039 | ||||||
|
| |||||||
259,036 | ||||||||
|
| |||||||
China — 2.0% | ||||||||
China Lesso Group Holdings, Ltd. | 56,574 | 45,741 | ||||||
Cosmo Lady China Holdings Co., Ltd.(a) | 49,469 | 49,210 | ||||||
Tongda Group Holdings, Ltd. | 242,732 | 49,435 | ||||||
|
| |||||||
144,386 | ||||||||
|
|
Number of Shares | Value | |||||||
COMMON STOCKS — (Continued) |
| |||||||
Denmark — 0.7% | ||||||||
Genmab A/S* | 528 | $ | 52,103 | |||||
|
| |||||||
France — 5.0% | ||||||||
DBV Technologies SA, SP ADR* | 1,420 | 49,231 | ||||||
Nexity SA | 1,116 | 49,383 | ||||||
Parrot SA* | 1,169 | 52,878 | ||||||
Rubis SCA | 730 | 58,509 | ||||||
Sopra Steria Group | 479 | 54,488 | ||||||
Technicolor SA | 6,426 | 43,458 | ||||||
UBISOFT Entertainment* | 1,933 | 57,915 | ||||||
|
| |||||||
365,862 | ||||||||
|
| |||||||
Germany — 4.7% | ||||||||
Gerresheimer AG | 712 | 55,518 | ||||||
Jenoptik AG | 3,046 | 49,254 | ||||||
Nordex SE* | 1,821 | 59,481 | ||||||
Sixt SE | 959 | 53,487 | ||||||
SMA Solar Technology AG* | 1,448 | 69,804 | ||||||
Stroeer Media SE | 877 | 55,335 | ||||||
|
| |||||||
342,879 | ||||||||
|
| |||||||
India — 6.4% | ||||||||
Emami, Ltd. | 2,534 | 41,417 | ||||||
Escorts, Ltd. | 20,916 | 56,143 | ||||||
Force Motors, Ltd. | 1,013 | 51,843 | ||||||
Granules India, Ltd. | 22,732 | 51,253 | ||||||
KEC International, Ltd. | 21,829 | 44,557 | ||||||
Natco Pharma, Ltd. | 1,422 | 55,700 | ||||||
SpiceJet, Ltd.* | 79,399 | 56,791 | ||||||
Strides Arcolab, Ltd. | 2,396 | 47,299 | ||||||
WNS Holdings, Ltd., ADR* | 1,730 | 58,941 | ||||||
|
| |||||||
463,944 | ||||||||
|
|
The accompanying notes are an integral part of the financial statements.
9
WHV/EAM FUNDS
WHV/EAM International Small Cap Equity Fund
Portfolio of Investments (Continued)
October 31, 2015
(Unaudited)
Number of Shares | Value | |||||||
COMMON STOCKS — (Continued) |
| |||||||
Ireland — 0.7% | ||||||||
Kingspan Group PLC | 2,154 | $ | 52,103 | |||||
|
| |||||||
Israel — 0.7% | ||||||||
Frutarom Industries, Ltd. | 1,242 | 53,633 | ||||||
|
| |||||||
Italy — 4.2% | ||||||||
Astaldi SpA | 4,781 | 38,512 | ||||||
Brembo SpA | 1,233 | 54,346 | ||||||
Geox SpA* | 10,592 | 49,384 | ||||||
OVS SpA(a)* | 8,758 | 60,235 | ||||||
Recordati SpA | 2,183 | 54,259 | ||||||
Yoox Net-A-Porter Group SpA* | 1,493 | 50,621 | ||||||
|
| |||||||
307,357 | ||||||||
|
| |||||||
Japan — 17.5% | ||||||||
Adastria Co., Ltd. | 865 | 48,695 | ||||||
Ain Holdings, Inc. | 1,178 | 55,765 | ||||||
Ariake Japan Co., Ltd. | 1,443 | 65,452 | ||||||
ASKUL Corp. | 1,415 | 51,939 | ||||||
Autobacs Seven Co., Ltd. | 2,763 | 48,451 | ||||||
COOKPAD, Inc. | 2,372 | 45,136 | ||||||
Daikyonishikawa Corp. | 995 | 52,637 | ||||||
Ferrotec Corp. | 5,565 | 54,241 | ||||||
Goldwin, Inc. | 966 | 55,150 | ||||||
Kinden Corp. | 3,554 | 46,175 | ||||||
Kose Corp. | 565 | 55,178 | ||||||
Kusuri No Aoki Co., Ltd. | 1,170 | 55,725 | ||||||
Morinaga & Co., Ltd. | 11,241 | 57,243 | ||||||
Nihon M&A Center, Inc. | 1,415 | 58,366 | ||||||
Nissan Chemical Industries, Ltd. | 2,299 | 57,099 | ||||||
Ryohin Keikaku Co., Ltd. | 250 | 50,199 | ||||||
Saizeriya Co., Ltd. | 2,078 | 47,101 | ||||||
Seria Co., Ltd. | 1,132 | 48,136 | ||||||
Skylark Co., Ltd. | 3,554 | 46,227 |
Number of Shares | Value | |||||||
COMMON STOCKS — (Continued) |
| |||||||
Japan — (Continued) | ||||||||
Sundrug Co., Ltd. | 895 | $ | 47,148 | |||||
Takeuchi Manufacturing Co., Ltd. | 2,423 | 45,642 | ||||||
Toda Corp. | 8,555 | 46,537 | ||||||
Toyota Boshoku Corp. | 2,365 | 50,533 | ||||||
United Arrows, Ltd. | 1,234 | 53,162 | ||||||
V-Cube, Inc.* | 2,024 | 36,646 | ||||||
|
| |||||||
1,278,583 | ||||||||
|
| |||||||
Luxembourg — 0.8% | ||||||||
Regus PLC | 11,631 | 59,889 | ||||||
|
| |||||||
Malaysia — 0.9% | ||||||||
Top Glove Corp. Bhd | 27,884 | 61,588 | ||||||
|
| |||||||
Mexico — 3.0% | ||||||||
Controladora Vuela Cia de Aviacion SAB de CV, ADR* | 3,409 | 57,919 | ||||||
Gruma SAB de CV, Class B | 3,348 | 51,382 | ||||||
Grupo Lala SAB de CV | 21,425 | 54,724 | ||||||
Nemak SAB de CV(a)* | 36,772 | 53,206 | ||||||
|
| |||||||
217,231 | ||||||||
|
| |||||||
Netherlands — 1.4% | ||||||||
Euronext NV(a) | 1,197 | 52,569 | ||||||
TomTom NV* | 4,512 | 48,930 | ||||||
|
| |||||||
101,499 | ||||||||
|
| |||||||
Norway — 0.6% | ||||||||
XXL ASA(a) | 4,362 | 46,660 | ||||||
|
| |||||||
South Africa — 0.6% | ||||||||
Net 1 UEPS Technologies, Inc.* | 2,487 | 42,354 | ||||||
|
| |||||||
South Korea — 8.4% | ||||||||
CJ CGV Co., Ltd. | 452 | 41,064 |
The accompanying notes are an integral part of the financial statements.
10
WHV/EAM FUNDS
WHV/EAM International Small Cap Equity Fund
Portfolio of Investments (Continued)
October 31, 2015
(Unaudited)
Number of Shares | Value | |||||||
COMMON STOCKS — (Continued) |
| |||||||
South Korea — (Continued) |
| |||||||
CJ Freshway Corp. | 725 | $ | 46,779 | |||||
Cosmax, Inc. | 294 | 49,374 | ||||||
DIO Corp.* | 2,084 | 51,749 | ||||||
DuzonBizon Co., Ltd. | 2,750 | 51,711 | ||||||
Hansol Technics Co., Ltd.* | 2,096 | 45,978 | ||||||
HS R&A Co., Ltd. | 1,206 | 43,300 | ||||||
Kyung Dong Navien Co., Ltd. | 1,441 | 47,694 | ||||||
NongShim Co., Ltd. | 185 | 59,786 | ||||||
Toptec Co., Ltd. | 2,402 | 70,542 | ||||||
Value Added Technologies Co., Ltd. | 1,689 | 57,491 | ||||||
WiSoL Co., Ltd. | 3,481 | 49,250 | ||||||
|
| |||||||
614,718 | ||||||||
|
| |||||||
Spain — 1.4% | ||||||||
Melia Hotels International SA | 3,852 | 55,623 | ||||||
Zeltia SA* | 10,745 | 47,672 | ||||||
|
| |||||||
103,295 | ||||||||
|
| |||||||
Sweden — 2.2% | ||||||||
NetEnt AB | 876 | 49,761 | ||||||
Saab AB, Class B | 1,725 | 48,580 | ||||||
Unibet Group PLC, SDR | 728 | 64,116 | ||||||
|
| |||||||
162,457 | ||||||||
|
| |||||||
Switzerland — 4.2% | ||||||||
Tecan Group AG | 383 | 52,171 | ||||||
Temenos Group AG | 1,039 | 48,536 | ||||||
U-Blox AG | 261 | 50,417 | ||||||
Valiant Holding AG | 414 | 47,797 | ||||||
Wizz Air Holdings PLC(a)* | 1,711 | 49,992 | ||||||
Ypsomed Holding AG | 452 | 59,447 | ||||||
|
| |||||||
308,360 | ||||||||
|
|
Number of Shares | Value | |||||||
COMMON STOCKS — (Continued) |
| |||||||
Taiwan — 8.9% | ||||||||
Compeq Manufacturing Co., Ltd. | 67,834 | $ | 44,460 | |||||
De Licacy Industrial Co., Ltd. | 59,225 | 60,227 | ||||||
Elite Material Co., Ltd. | 23,901 | 48,834 | ||||||
Feng TAY Enterprise Co., Ltd. | 7,360 | 42,174 | ||||||
Hota Industrial Manufacturing Co., Ltd. | 18,147 | 60,162 | ||||||
Iron Force Industrial Co., Ltd. | 9,231 | 51,093 | ||||||
Li Cheng Enterprise Co., Ltd. | 8,791 | 54,219 | ||||||
Macauto Industrial Co., Ltd. | 10,765 | 59,217 | ||||||
Makalot Industrial Co., Ltd. | 5,802 | 44,174 | ||||||
Namchow Chemical Industrial Co., Ltd. | 21,735 | 47,117 | ||||||
Pou Chen Corp. | 30,173 | 42,557 | ||||||
Sercomm Corp. | 20,232 | 46,955 | ||||||
TCI Co., Ltd. | 15,239 | 46,277 | ||||||
|
| |||||||
647,466 | ||||||||
|
| |||||||
Thailand — 3.5% | ||||||||
Bumrungrad Hospital PCL | 9,242 | 56,054 | ||||||
Forth Corp. PCL | 179,326 | 44,728 | ||||||
KCE Electronics PCL | 27,656 | 48,016 | ||||||
Unique Engineering & Construction PCL | 77,392 | 46,707 | ||||||
Vanachai Group PCL | 123,390 | 56,074 | ||||||
|
| |||||||
251,579 | ||||||||
|
| |||||||
United Kingdom — 5.3% | ||||||||
Card Factory PLC | 8,287 | 46,080 | ||||||
Cineworld Group PLC | 5,806 | 49,327 |
The accompanying notes are an integral part of the financial statements.
11
WHV/EAM FUNDS
WHV/EAM International Small Cap Equity Fund
Portfolio of Investments (Concluded)
October 31, 2015
(Unaudited)
Number of Shares | Value | |||||||
COMMON STOCKS — (Continued) |
| |||||||
United Kingdom — (Continued) |
| |||||||
Domino’s Pizza Group PLC | 3,991 | $ | 67,071 | |||||
Greggs PLC | 3,504 | 64,124 | ||||||
Just Eat PLC* | 7,942 | 52,084 | ||||||
Paysafe Group PLC* | 9,603 | 44,863 | ||||||
Redrow PLC | 8,707 | 62,140 | ||||||
|
| |||||||
385,689 | ||||||||
|
| |||||||
United States — 1.6% | ||||||||
Luxoft Holding, Inc.* | 719 | 47,914 | ||||||
Trinseo SA* | 2,059 | 66,815 | ||||||
|
| |||||||
114,729 | ||||||||
|
| |||||||
TOTAL COMMON STOCKS (Cost $6,382,808) |
| 6,882,108 | ||||||
|
| |||||||
REGISTERED INVESTMENT COMPANY — 4.0% |
| |||||||
BlackRock Liquidity Funds TempCash Portfolio, Institutional Shares | 294,956 | 294,956 | ||||||
|
| |||||||
TOTAL REGISTERED INVESTMENT COMPANY |
| 294,956 | ||||||
|
|
Value | ||||
TOTAL INVESTMENTS - 98.4% | $ | 7,177,064 | ||
OTHER ASSETS IN EXCESS OF LIABILITIES - 1.6% | 113,288 | |||
|
| |||
NET ASSETS - 100.0% | $ | 7,290,352 | ||
|
|
(a) | Securities exempt from registration under Rule 144A of the Securities Act of 1933, as amended. These securities were purchased in accordance with the guidelines approved by the Fund’s Board of Trustees and may be resold, in transactions exempt from registration, to qualified institutional buyers. At October 31, 2015, these securities amounted to $311,872 or 4.3% of net assets. These securities have been determined by the Adviser to be liquid securities. |
* | Non-income producing. |
Legend: | ||
ADR | American Depository Receipt | |
PCL | Public Company Limited | |
PLC | Public Limited Company | |
SDR | Swedish Depository Receipt | |
SP ADR | Sponsored American Depository Receipt |
The accompanying notes are an integral part of the financial statements.
12
WHV/EAM Emerging Markets Small Cap Equity Fund
Portfolio Holdings Summary Table
October 31, 2015
(Unaudited)
The following table presents a summary by sector of the portfolio holdings of the Fund:
% of Net Assets | Value | |||||||
COMMON STOCKS: | ||||||||
Textiles, Apparel & Luxury Goods | 7.9% | $303,507 | ||||||
Food Products | 7.6 | 290,481 | ||||||
Pharmaceuticals | 7.2 | 276,706 | ||||||
Electronic Equipment, Instruments & Components | 6.8 | 259,807 | ||||||
Auto Components | 6.4 | 245,356 | ||||||
Semiconductors & Semiconductor Equipment | 4.9 | 189,246 | ||||||
Machinery | 4.6 | 176,163 | ||||||
Health Care Equipment & Supplies | 4.3 | 163,199 | ||||||
Software | 3.2 | 121,606 | ||||||
Electrical Equipment | 3.1 | 120,530 | ||||||
Building Products | 3.1 | 119,767 | ||||||
Food & Staples Retailing | 3.1 | 117,089 | ||||||
Personal Products | 3.0 | 116,362 | ||||||
IT Services | 2.8 | 109,267 | ||||||
Health Care Providers & Services | 2.3 | 88,437 | ||||||
Airlines | 1.9 | 70,954 | ||||||
Media | 1.6 | 61,445 | ||||||
Construction & Engineering | 1.6 | 60,650 | ||||||
Transportation Infrastructure | 1.6 | 59,905 | ||||||
Aerospace & Defense | 1.5 | 58,377 | ||||||
Chemicals | 1.5 | 57,773 |
% of Net Assets | Value | |||||||||||
Household Durables | 1.5% | $ | 56,193 | |||||||||
Internet Software & Services | 1.4 | 52,560 | ||||||||||
Life Sciences Tools & Services | 0.9 | 32,849 | ||||||||||
Banks | 0.8 | 32,485 | ||||||||||
Paper & Forest Products | 0.8 | 31,577 | ||||||||||
Hotels, Restaurants & Leisure | 0.8 | 31,247 | ||||||||||
Industrial Conglomerates | 0.8 | 30,926 | ||||||||||
Trading Companies & Distributors | 0.8 | 28,849 | ||||||||||
Capital Markets | 0.7 | 28,732 | ||||||||||
Professional Services | 0.7 | 28,279 | ||||||||||
Insurance | 0.7 | 28,268 | ||||||||||
Wireless Telecommunication Services | 0.7 | 26,285 | ||||||||||
Technology Hardware Storage & Peripherals | 0.7 | 26,244 | ||||||||||
Communications Equipment | 0.7 | 26,063 | ||||||||||
Internet & Catalog Retail | 0.6 | 23,045 | ||||||||||
Registered Investment Company | 6.2 | 237,803 | ||||||||||
Other Assets in Excess of Liabilities | 1.2 | 47,612 | ||||||||||
|
|
|
| |||||||||
NET ASSETS | 100.0% | $ | 3,835,644 | |||||||||
|
|
|
|
Portfolio holdings are subject to change at any time.
The accompanying notes are an integral part of the financial statements.
13
WHV/EAM FUNDS
WHV/EAM Emerging Markets Small Cap Equity Fund
Portfolio of Investments
October 31, 2015
(Unaudited)
Number of Shares | Value | |||||||
COMMON STOCKS — 92.6% | ||||||||
Brazil — 2.2% | ||||||||
Iochpe Maxion SA | 5,650 | $ | 23,441 | |||||
Raia Drogasil SA | 3,092 | 32,062 | ||||||
Sul America SA | 5,759 | 28,268 | ||||||
|
| |||||||
83,771 | ||||||||
|
| |||||||
China — 8.2% | ||||||||
China Dongxiang Group Co., Ltd. | 129,038 | 32,654 | ||||||
China Lesso Group Holdings, Ltd. | 31,431 | 25,412 | ||||||
China NT Pharma Group Co., Ltd.* | 118,700 | 29,183 | ||||||
Chinasoft International, Ltd.* | 62,371 | 27,034 | ||||||
Cogobuy Group(a)* | 23,609 | 23,045 | ||||||
Cosmo Lady China Holdings Co., Ltd.(a) | 29,429 | 29,275 | ||||||
Hiroca Holdings, Ltd. | 6,815 | 26,688 | ||||||
NetDragon Websoft, Inc. | 10,206 | 28,162 | ||||||
Sinosoft Technology Group, Ltd. | 50,695 | 28,741 | ||||||
Tongda Group Holdings, Ltd. | 139,160 | 28,342 | ||||||
Xinyi Solar Holdings, Ltd. | 89,645 | 35,637 | ||||||
|
| |||||||
314,173 | ||||||||
|
| |||||||
Hong Kong — 1.4% | ||||||||
China Traditional Chinese Medicine Co., Ltd.* | 38,132 | 28,839 | ||||||
SmarTone Telecommunications Holdings, Ltd. | 14,848 | 26,285 | ||||||
|
| |||||||
55,124 | ||||||||
|
| |||||||
India — 17.1% | ||||||||
Aditya Birla Nuvo, Ltd. | 982 | 30,926 | ||||||
Amara Raja Batteries, Ltd. | 2,098 | 28,943 |
Number of Shares | Value | |||||||
COMMON STOCKS — (Continued) |
| |||||||
India — (Continued) | ||||||||
Ashok Leyland, Ltd. | 24,369 | $ | 34,796 | |||||
Bharat Electronics, Ltd. | 1,555 | 29,538 | ||||||
Cummins India, Ltd. | 2,042 | 33,558 | ||||||
Dishman Pharmaceuticals & Chemicals, Ltd. | 5,923 | 32,849 | ||||||
Emami, Ltd. | 1,543 | 25,219 | ||||||
Escorts, Ltd. | 10,481 | 28,133 | ||||||
Force Motors, Ltd. | 691 | 35,364 | ||||||
Glenmark Pharmaceuticals, Ltd. | 1,847 | 27,949 | ||||||
Granules India, Ltd. | 15,607 | 35,188 | ||||||
Jubilant Life Sciences, Ltd. | 5,614 | 35,034 | ||||||
KEC International, Ltd. | 13,868 | 28,307 | ||||||
LA Opala RG, Ltd. | 3,552 | 29,483 | ||||||
MRF, Ltd. | 42 | 25,554 | ||||||
Natco Pharma, Ltd. | 833 | 32,629 | ||||||
SpiceJet, Ltd.* | 55,369 | 39,603 | ||||||
Sterlite Technologies, Ltd. | 19,405 | 27,720 | ||||||
Strides Arcolab, Ltd. | 1,425 | 28,131 | ||||||
Tata Elxsi, Ltd. | 1,197 | 33,300 | ||||||
WNS Holdings, Ltd., ADR* | 945 | 32,196 | ||||||
|
| |||||||
654,420 | ||||||||
|
| |||||||
Indonesia — 1.4% | ||||||||
AKR Corporindo Tbk PT | 67,166 | 28,849 | ||||||
Sawit Sumbermas Sarana Tbk PT | 191,122 | 26,502 | ||||||
|
| |||||||
55,351 | ||||||||
|
| |||||||
Malaysia — 2.4% | ||||||||
Berjaya Auto Bhd | 1 | — | ||||||
SKP Resources Bhd | 63,629 | 20,871 | ||||||
Top Glove Corp. Bhd | 16,605 | 36,676 |
The accompanying notes are an integral part of the financial statements.
14
WHV/EAM FUNDS
WHV/EAM Emerging Markets Small Cap Equity Fund
Portfolio of Investments (Continued)
October 31, 2015
(Unaudited)
Number of Shares | Value | |||||||
COMMON STOCKS — (Continued) |
| |||||||
Malaysia — (Continued) |
| |||||||
VS Industry Bhd | 96,646 | $ | 34,876 | |||||
|
| |||||||
92,423 | ||||||||
|
| |||||||
Mexico — 6.3% | ||||||||
Alsea SAB de CV | 9,535 | 31,247 | ||||||
Controladora Vuela Cia de Aviacion SAB de CV, Class A* | 18,422 | 31,351 | ||||||
Gruma SAB de CV, Class B | 2,342 | 35,943 | ||||||
Grupo Aeroportuario del Pacifico SAB de CV, Class B | 3,379 | 30,476 | ||||||
Grupo Aeroportuario Del Sureste SAB de CV, Class B | 1,899 | 29,429 | ||||||
Grupo Lala SAB de CV | 11,597 | 29,621 | ||||||
Industrias Bachoco SAB de CV, Class B | 5,306 | 24,150 | ||||||
Nemak SAB de CV(a)* | 20,331 | 29,417 | ||||||
|
| |||||||
241,634 | ||||||||
|
| |||||||
South Africa — 5.2% | ||||||||
Capitec Bank Holdings, Ltd. | 752 | 32,485 | ||||||
Clicks Group, Ltd. | 3,643 | 26,572 | ||||||
EOH Holdings, Ltd. | 2,255 | 24,901 | ||||||
Investec, Ltd. | 3,473 | 28,732 | ||||||
Mondi, Ltd. | 1,359 | 31,577 | ||||||
Net 1 UEPS Technologies, Inc.* | 1,476 | 25,136 | ||||||
Pioneer Foods Group, Ltd. | 1,966 | 28,166 | ||||||
|
| |||||||
197,569 | ||||||||
|
|
Number of Shares | Value | |||||||
COMMON STOCKS — (Continued) |
| |||||||
South Korea — 19.8% |
| |||||||
Boryung Pharmaceutical Co., Ltd. | 519 | $ | 25,244 | |||||
CJ CGV Co., Ltd. | 324 | 29,435 | ||||||
CJ E&M Corp.* | 438 | 32,010 | ||||||
CJ Freshway Corp. | 445 | 28,713 | ||||||
Cosmax, Inc. | 173 | 29,054 | ||||||
Daou Technology, Inc. | 1,210 | 26,223 | ||||||
DIO Corp.* | 1,180 | 29,301 | ||||||
DuzonBizon Co., Ltd. | 1,670 | 31,403 | ||||||
Firstec Co., Ltd. | 5,627 | 28,839 | ||||||
Hansae Co., Ltd. | 653 | 32,088 | ||||||
Hansol Technics Co., Ltd.* | 1,162 | 25,490 | ||||||
HS R&A Co., Ltd. | 686 | 24,630 | ||||||
Hyundai Greenfood Co., Ltd. | 1,423 | 29,742 | ||||||
InBody Co., Ltd. | 645 | 27,779 | ||||||
INITECH Co., Ltd.* | 3,254 | 26,337 | ||||||
KONA I Co., Ltd. | 821 | 26,243 | ||||||
Kyung Dong Navien Co., Ltd. | 825 | 27,306 | ||||||
NongShim Co., Ltd. | 102 | 32,963 | ||||||
Ottogi Corp. | 34 | 31,232 | ||||||
PNE Solution Co., Ltd.* | 4,192 | 28,114 | ||||||
Samlip General Foods Co., Ltd. | 100 | 24,652 | ||||||
Sang-A Frontec Co., Ltd. | 2,848 | 24,021 | ||||||
Toptec Co., Ltd. | 1,237 | 36,328 | ||||||
Value Added Technologies Co., Ltd. | 1,013 | 34,481 | ||||||
WiSoL Co., Ltd. | 2,248 | 31,805 | ||||||
Yuhan Corp. | 148 | 36,656 | ||||||
|
| |||||||
760,089 | ||||||||
|
|
The accompanying notes are an integral part of the financial statements.
15
WHV/EAM FUNDS
WHV/EAM Emerging Markets Small Cap Equity Fund
Portfolio of Investments (Continued)
October 31, 2015
(Unaudited)
Number of Shares | Value | |||||||
COMMON STOCKS — (Continued) |
| |||||||
Taiwan — 22.4% | ||||||||
Adlink Technology, Inc. | — | $ | 1 | |||||
Basso Industry Corp. | 13,408 | 26,710 | ||||||
Bioteque Corp. | 1 | 2 | ||||||
Bon Fame Co., Ltd. | 8,100 | 29,495 | ||||||
Chlitina Holding, Ltd. | 4,328 | 35,278 | ||||||
Compeq Manufacturing Co., Ltd. | 41,197 | 27,002 | ||||||
De Licacy Industrial Co., Ltd. | 31,745 | 32,282 | ||||||
Elite Advanced Laser Corp. | 6,835 | 28,826 | ||||||
Elite Material Co., Ltd. | 12,782 | 26,116 | ||||||
Feng TAY Enterprise Co., Ltd. | 4,341 | 24,875 | ||||||
Global Lighting Technologies, Inc. | 16,784 | 33,771 | ||||||
Iron Force Industrial Co., Ltd. | 5,229 | 28,942 | ||||||
LCY Chemical Corp.* | 35,286 | 31,317 | ||||||
Li Cheng Enterprise Co., Ltd. | 5,775 | 35,617 | ||||||
LuxNet Corp. | 12,134 | 33,971 | ||||||
Macauto Industrial Co., Ltd. | 6,776 | 37,274 | ||||||
Makalot Industrial Co., Ltd. | 3,960 | 30,152 | ||||||
Namchow Chemical Industrial Co., Ltd. | 13,180 | 28,571 | ||||||
Nantex Industry Co., Ltd. | 31,385 | 26,456 | ||||||
Pou Chen Corp. | 19,339 | 27,276 | ||||||
Sercomm Corp. | 11,230 | 26,063 | ||||||
Sporton International, Inc. | 4,672 | 28,279 | ||||||
Standard Foods Corp. | 11,891 | 28,681 | ||||||
Taiwan FU Hsing Industrial Co., Ltd. | 20,989 | 34,825 |
Number of Shares | Value | |||||||
COMMON STOCKS — (Continued) |
| |||||||
Taiwan — (Continued) | ||||||||
TCI Co., Ltd. | 8,829 | $ | 26,811 | |||||
TTY Biopharm Co., Ltd. | 9,543 | 27,036 | ||||||
Tung Thih Electronic Co., Ltd. | 5,109 | 41,989 | ||||||
United Orthopedic Corp. | 13,782 | 34,960 | ||||||
Voltronic Power Technology Corp. | 2,804 | 35,753 | ||||||
Yi Jinn Industrial Co., Ltd. | 70,807 | 29,793 | ||||||
|
| |||||||
858,124 | ||||||||
|
| |||||||
Thailand — 4.6% | ||||||||
Bumrungrad Hospital PCL | 5,160 | 31,296 | ||||||
Chularat Hospital PCL | 417,944 | 27,958 | ||||||
Forth Corp. PCL | 107,245 | 26,749 | ||||||
KCE Electronics PCL | 15,508 | 26,925 | ||||||
Unique Engineering & Construction PCL | 53,590 | 32,343 | ||||||
Vanachai Group PCL | 70,908 | 32,224 | ||||||
|
| |||||||
177,495 | ||||||||
|
| |||||||
United States — 1.6% | ||||||||
IntelliEPI, Inc. | 8,289 | 29,194 | ||||||
Nexteer Automotive Group, Ltd. | 29,067 | 30,862 | ||||||
|
| |||||||
60,056 | ||||||||
|
| |||||||
TOTAL COMMON STOCKS (Cost $3,406,543) | 3,550,229 | |||||||
|
| |||||||
REGISTERED INVESTMENT COMPANY — 6.2% |
| |||||||
BlackRock Liquidity Funds TempCash Portfolio, Institutional Shares | 237,803 | 237,803 | ||||||
|
| |||||||
TOTAL REGISTERED INVESTMENT COMPANY(Cost $237,803) | 237,803 | |||||||
|
|
The accompanying notes are an integral part of the financial statements.
16
WHV/EAM FUNDS
WHV/EAM Emerging Markets Small Cap Equity Fund
Portfolio of Investments (Concluded)
October 31, 2015
(Unaudited)
Value | ||||
TOTAL INVESTMENTS - 98.8% | $ | 3,788,032 | ||
OTHER ASSETS IN EXCESS OF LIABILITIES - 1.2% | 47,612 | |||
|
| |||
NET ASSETS - 100.0% | $ | 3,835,644 | ||
|
|
(a) | Securities exempt from registration under Rule 144A of the Securities Act of 1933, as amended. These securities were purchased in accordance with the guidelines approved by the Fund’s Board of Trustees and may be resold, in transactions exempt from registration, to qualified institutional buyers. At October 31, 2015, these securities amounted to $81,737 or 2.1% of net assets. These securities have been determined by the Adviser to be liquid securities. |
* | Non-income producing. |
Legend: | ||
ADR | American Depository Receipt | |
PCL | Public Company Limited |
The accompanying notes are an integral part of the financial statements.
17
WHV/EAM FUNDS
Statements of Assets and Liabilities
October 31, 2015
(Unaudited)
WHV/EAM | WHV/EAM | |||||||||
International | Emerging Markets | |||||||||
Small Cap | Small Cap | |||||||||
Equity Fund | Equity Fund | |||||||||
Assets | ||||||||||
Investments, at value (Cost $6,677,764 and $3,644,346, respectively) | $7,177,064 | $3,788,032 | ||||||||
Foreign currency (Cost $0 and $87,282, respectively) | — | 87,284 | ||||||||
Receivable for investments sold | 274,890 | 133,476 | ||||||||
Dividends and interest receivable | 5,998 | 1,511 | ||||||||
Receivable from Investment Adviser | 42,157 | 41,637 | ||||||||
Prepaid expenses and other assets | 35,094 | 33,813 | ||||||||
Total assets | 7,535,203 | 4,085,753 | ||||||||
Liabilities | ||||||||||
Payable for investments purchased | 102,443 | 171,543 | ||||||||
Foreign currency overdraft (Cost $85,809 and $0, respectively) | 85,728 | — | ||||||||
Payable for transfer agent fees | 18,703 | 26,834 | ||||||||
Payable for administration and accounting fees | 12,804 | 15,195 | ||||||||
Payable for Trustees and Officers | 12,485 | 12,485 | ||||||||
Payable for legal fees | 5,569 | 8,191 | ||||||||
Payable for printing fees | 3,749 | 4,701 | ||||||||
Payable for distribution fees | 375 | 266 | ||||||||
Accrued expenses | 2,995 | 10,894 | ||||||||
Total liabilities | 244,851 | 250,109 | ||||||||
Net Assets | $7,290,352 | $3,835,644 | ||||||||
Net Assets Consist of: | ||||||||||
Capital stock, $0.01 par value | $ 7,151 | $ 4,346 | ||||||||
Paid-in capital | 7,413,538 | 4,203,002 | ||||||||
Accumulated net investment loss | (11,229 | ) | (2,649 | ) | ||||||
Accumulated net realized loss from investments | (617,799 | ) | (514,815 | ) | ||||||
Net unrealized appreciation on investments and foreign currency transactions | 498,691 | 145,760 | ||||||||
Net Assets | $7,290,352 | $3,835,644 |
The accompanying notes are an integral part of the financial statements.
18
WHV/EAM FUNDS
Statements of Assets and Liabilities (Concluded)
October 31, 2015
(Unaudited)
WHV/EAM | WHV/EAM | |||||||||
International | Emerging Markets | |||||||||
Small Cap | Small Cap | |||||||||
Equity Fund | Equity Fund | |||||||||
Class A Shares: | ||||||||||
Net asset value and redemption price per share ($1,407,761 / 138,434 shares) and ($1,210,139 / 137,507 shares), respectively | $10.17 | $8.80 | ||||||||
Maximum offering price per share (100/94.25 of $10.17 and 100/94.25 of $8.80), respectively | $10.79 | $9.34 | ||||||||
Class C Shares: | ||||||||||
Net asset value, offering and redemption price per share ($150,025 / 14,762 shares) and ($4,336 / 492 shares), respectively | $10.16 | $8.81 | ||||||||
Class I Shares: | ||||||||||
Net asset value, offering and redemption price per share ($5,732,566 / 561,949 shares) and ($2,621,169 / 296,604 shares), respectively | $10.20 | $8.84 |
The accompanying notes are an integral part of the financial statements.
19
WHV/EAM FUNDS
Statements of Operations
For the Six Months Ended October 31, 2015
(Unaudited)
WHV/EAM | WHV/EAM | |||||||||
International | Emerging Markets | |||||||||
Small Cap | Small Cap | |||||||||
Equity Fund | Equity Fund | |||||||||
Investment Income | ||||||||||
Dividends | $ 34,935 | $ 28,550 | ||||||||
Less: foreign taxes withheld | (3,169 | ) | (3,593 | ) | ||||||
Total investment income | 31,766 | 24,957 | ||||||||
Expenses | ||||||||||
Advisory fees (Note 2) | 31,770 | 18,383 | ||||||||
Custodian fees (Note 2) | 100,516 | 91,874 | ||||||||
Administration and accounting fees (Note 2) | 45,575 | 45,575 | ||||||||
Transfer agent fees (Note 2) | 37,854 | 37,854 | ||||||||
Audit fees | 19,776 | 19,776 | ||||||||
Legal fees | 7,831 | 7,827 | ||||||||
Trustees’ and officers’ fees (Note 2) | 6,385 | 6,388 | ||||||||
Registration and filing fees | 5,863 | 5,856 | ||||||||
Printing and shareholder reporting fees | 5,270 | 8,006 | ||||||||
Distribution fees (Class A) (Note 2) | 1,272 | 771 | ||||||||
Distribution fees (Class C) (Note 2) | 222 | 10 | ||||||||
Shareholder service fees | 74 | 3 | ||||||||
Other expenses | 5,161 | 5,162 | ||||||||
Total expenses before waivers and reimbursements | 267,569 | 247,485 | ||||||||
Less: waivers and reimbursements (Note 2) | (227,295 | ) | (224,961 | ) | ||||||
Net expenses after waivers and reimbursements | 40,274 | 22,524 | ||||||||
Net investment income/(loss) | (8,508 | ) | 2,433 | |||||||
Net realized and unrealized gain/(loss) from investments: | ||||||||||
Net realized loss from investments | (484,372 | ) | (392,866 | ) | ||||||
Net realized loss from foreign currency transactions | (8,380 | ) | (9,729 | ) | ||||||
Net change in unrealized appreciation/(depreciation) on investments | 243,501 | (30,640 | ) | |||||||
Net change in unrealized appreciation/(depreciation) on foreign currency transactions | (752 | ) | 2,078 | |||||||
Net realized and unrealized loss on investments | (250,003 | ) | (431,157 | ) | ||||||
Net decrease in net assets resulting from operations | $(258,511 | ) | $(428,724 | ) |
The accompanying notes are an integral part of the financial statements.
20
WHV/EAM FUNDS
WHV/EAM International Small Cap Equity Fund
Statements of Changes in Net Assets
For the | ||||||||||
Six Months Ended | For the | |||||||||
October 31, 2015 | Period Ended | |||||||||
(Unaudited) | April 30, 2015* | |||||||||
Increase/(decrease) in net assets from operations: | ||||||||||
Net investment loss | $ (8,508 | ) | $ (1,290 | ) | ||||||
Net realized loss from investments and foreign currency transactions | (492,752 | ) | (126,631 | ) | ||||||
Net change in unrealized appreciation/(depreciation) on investments and foreign currency transactions | 242,749 | 255,942 | ||||||||
Net increase/(decrease) in net assets resulting from operations | (258,511 | ) | 128,021 | |||||||
Increase in Net Assets Derived from Capital Share Transactions (Note 4) | 4,994,118 | 2,426,724 | ||||||||
Total increase in net assets | 4,735,607 | 2,554,745 | ||||||||
Net assets | ||||||||||
Beginning of period | 2,554,745 | — | ||||||||
End of period | $7,290,352 | $2,554,745 | ||||||||
Accumulated net investment loss, end of period | $ (11,229 | ) | $ (2,721 | ) |
* | The Fund commenced operations on May 27, 2014. |
The accompanying notes are an integral part of the financial statements.
21
WHV/EAM FUNDS
WHV/EAM Emerging Markets Small Cap Equity Fund
Statements of Changes in Net Assets
For the | ||||||||||
Six Months Ended | For the | |||||||||
October 31, 2015 | Period Ended | |||||||||
(Unaudited) | April 30, 2015* | |||||||||
Increase/(decrease) in net assets from operations: | ||||||||||
Net investment income/(loss) | $ 2,433 | $ (3,645 | ) | |||||||
Net realized loss from investments and foreign currency transactions | (402,595 | ) | (113,880 | ) | ||||||
Net change in unrealized appreciation/(depreciation) on investments and foreign currency transactions | (28,562 | ) | 174,322 | |||||||
Net increase/(decrease) in net assets resulting from operations | (428,724 | ) | 56,797 | |||||||
Increase in Net Assets Derived from Capital Share Transactions (Note 4) | 2,896,266 | 1,311,305 | ||||||||
Total increase in net assets | 2,467,542 | 1,368,102 | ||||||||
Net assets | ||||||||||
Beginning of period | 1,368,102 | — | ||||||||
End of period | $3,835,644 | $1,368,102 | ||||||||
Accumulated net investment loss, end of period | $ (2,649 | ) | $ (5,082 | ) |
* | The Fund commenced operations on May 27, 2014. |
The accompanying notes are an integral part of the financial statements.
22
WHV/EAM INTERNATIONAL SMALL CAP EQUITY FUND
Financial Highlights
Contained below is per share operating performance data for Class A Shares outstanding, total investment return, ratios to average net assets and other supplemental data for the respective periods. 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). This information has been derived from information provided in the financial statements and should be read in conjunction with the financial statements and the notes thereto.
Class A Shares | ||||||||||
For the Six Months Ended October 31,2015 (Unaudited) | For the Period May 27, 2014* to April 30, 2015 | |||||||||
Per Share Operating Performance | ||||||||||
Net asset value, beginning of period | $ | 10.42 | $ | 10.00 | ||||||
|
|
|
| |||||||
Net investment loss(1) | (0.03 | ) | (0.03 | ) | ||||||
Net realized and unrealized gain/(loss) on investments | (0.22 | ) | 0.45 | |||||||
|
|
|
| |||||||
Net increase/(decrease) in net assets resulting from operations | (0.25 | ) | 0.42 | |||||||
|
|
|
| |||||||
Redemption fees | — | — | (2) | |||||||
|
|
|
| |||||||
Net asset value, end of period | $ | 10.17 | $ | 10.42 | ||||||
|
|
|
| |||||||
Total investment return(3) | (2.40 | )% | 4.20 | % | ||||||
Ratio/Supplemental Data | ||||||||||
Net assets, end of period (000’s omitted) | $ | 1,408 | $ | 460 | ||||||
Ratio of expenses to average net assets | 1.65 | %(4) | 1.65 | %(4) | ||||||
Ratio of expenses to average net assets without waivers, expense reimbursements(5) | 9.91 | %(4) | 42.98 | %(4) | ||||||
Ratio of net investment loss to average net assets | (0.51 | )%(4) | (0.36 | )%(4) | ||||||
Portfolio turnover rate | 98.77 | %(6) | 173.00 | %(6) |
* | Commencement of operations. |
(1) | The selected per share data was calculated using the average shares outstanding method for the period. |
(2) | Amount is less than $0.005 per share. |
(3) | Total investment return is calculated assuming a purchase of shares on the first day and a sale of shares on the last day of each period reported and includes reinvestments of dividends and distributions, if any. Total returns for periods less than one year are not annualized. Total investment return does not reflect the impact of the maximum front-end sales load of 5.75%. If reflected, the return would be lower. |
(4) | Annualized. |
(5) | During the period, certain fees were reduced. If such fee reductions had not occurred, the ratios would have been as indicated (See Note 2). |
(6) | Not annualized. |
The accompanying notes are an integral part of the financial statements.
23
WHV/EAM INTERNATIONAL SMALL CAP EQUITY FUND
Financial Highlights
Contained below is per share operating performance data for Class C Shares outstanding, total investment return, ratios to average net assets and other supplemental data for the respective periods. 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). This information has been derived from information provided in the financial statements and should be read in conjunction with the financial statements and the notes thereto.
Class C Shares | |||||
For the Period July 13, 2015* to October 31, 2015 (Unaudited) | |||||
Per Share Operating Performance | |||||
Net asset value, beginning of period | $ | 10.81 | |||
Net investment loss | (0.03 | ) | |||
Net realized and unrealized loss on investments | (0.62 | ) | |||
|
| ||||
Net decrease in net assets resulting from operations | (0.65 | ) | |||
|
| ||||
Net asset value, end of period | $ | 10.16 | |||
|
| ||||
Total investment return(1) | (6.01 | )% | |||
Ratio/Supplemental Data | |||||
Net assets, end of period (000’s omitted) | $ | 150 | |||
Ratio of expenses to average net assets | 2.40 | %(2) | |||
Ratio of expenses to average net assets without waivers and expense reimbursements(3) | 10.75 | %(2) | |||
Ratio of net investment loss to average net assets | (1.37 | )%(2) | |||
Portfolio turnover rate | 98.77 | %(4) |
* | Commencement of operations. |
(1) | Total investment return is calculated assuming a purchase of shares on the first day and a sale of shares on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total returns for periods less than one year are not annualized. |
(2) | Annualized. |
(3) | During the period, certain fees were waived. If such fee waivers had not occurred, the ratios would have been as indicated (See Note 2). |
(4) | Not annualized. |
The accompanying notes are an integral part of the financial statements.
24
WHV/EAM INTERNATIONAL SMALL CAP EQUITY FUND
Financial Highlights
Contained below is per share operating performance data for Class I Shares outstanding, total investment return, ratios to average net assets and other supplemental data for the respective periods. 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). This information has been derived from information provided in the financial statements and should be read in conjunction with the financial statements and the notes thereto.
Class I Shares | ||||||||||
For the | For the Period May 27, 2014* to April 30, 2015 | |||||||||
Per Share Operating Performance | ||||||||||
Net asset value, beginning of period | $ | 10.44 | $ | 10.00 | ||||||
|
|
|
| |||||||
Net investment loss(1) | (0.01 | ) | (0.01 | ) | ||||||
Net realized and unrealized gain/(loss) on investments | (0.23 | ) | 0.45 | |||||||
|
|
|
| |||||||
Net increase/(decrease) in net assets resulting from operations | (0.24 | ) | 0.44 | |||||||
|
|
|
| |||||||
Redemption fees | — | — | (2) | |||||||
|
|
|
| |||||||
Net asset value, end of period | $ | 10.20 | $ | 10.44 | ||||||
|
|
|
| |||||||
Total investment return(3) | (2.30 | )% | 4.40 | % | ||||||
Ratio/Supplemental Data | ||||||||||
Net assets, end of period (000’s omitted) | $ | 5,733 | $ | 2,095 | ||||||
Ratio of expenses to average net assets | 1.40 | %(4) | 1.40 | %(4) | ||||||
Ratio of expenses to average net assets without waivers, expense reimbursements(5) | 9.62 | %(4) | 42.30 | %(4) | ||||||
Ratio of net investment loss to average net assets | (0.25 | )%(4) | (0.11 | )%(4) | ||||||
Portfolio turnover rate | 98.77 | %(6) | 173.00 | %(6) |
* | Commencement of operations. |
(1) | The selected per share data was calculated using the average shares outstanding method for the period. |
(2) | Amount is less than $0.005 per share. |
(3) | Total investment return is calculated assuming a purchase of shares on the first day and a sale of shares on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total returns for periods less than one year are not annualized. |
(4) | Annualized. |
(5) | During the period, certain fees were reduced. If such fee reductions had not occurred, the ratios would have been as indicated (See Note 2). |
(6) | Not annualized. |
The accompanying notes are an integral part of the financial statements.
25
WHV/EAM EMERGING MARKETS SMALL CAP EQUITY FUND
Financial Highlights
Contained below is per share operating performance data for Class A Shares outstanding, total investment return, ratios to average net assets and other supplemental data for the respective period. 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). This information has been derived from information provided in the financial statements and should be read in conjunction with the financial statements and the notes thereto.
Class A Shares | ||||||||||
For the | For the Period May 27, 2014* to April 30, 2015 | |||||||||
Per Share Operating Performance | ||||||||||
Net asset value, beginning of period | $ | 10.32 | $ | 10.00 | ||||||
|
|
|
| |||||||
Net investment loss(1) | (0.01 | ) | (0.07 | ) | ||||||
Net realized and unrealized gain/(loss) on investments | (1.51 | ) | 0.39 | |||||||
|
|
|
| |||||||
Net increase/(decrease) in net assets resulting from operations | (1.52 | ) | 0.32 | |||||||
|
|
|
| |||||||
Net asset value, end of period | $ | 8.80 | $ | 10.32 | ||||||
|
|
|
| |||||||
Total investment return(2) | (14.73 | )% | 3.20 | % | ||||||
Ratio/Supplemental Data | ||||||||||
Net assets, end of period (000’s omitted) | $ | 1,210 | $ | 142 | ||||||
Ratio of expenses to average net assets | 1.83 | %(3) | 2.00 | %(3) | ||||||
Ratio of expenses to average net assets without waivers and expense reimbursements(4) | 17.62 | %(3) | 56.87 | %(3) | ||||||
Ratio of net investment loss to average net assets | (0.32 | )%(3) | (0.73 | )%(3) | ||||||
Portfolio turnover rate | 146.42 | %(5) | 214.00 | %(5) |
* | Commencement of operations. |
(1) | The selected per share data was calculated using the average shares outstanding method for the period. |
(2) | Total investment return is calculated assuming a purchase of shares on the first day and a sale of shares on the last day of each period reported and includes reinvestments of dividends and distributions, if any. Total returns for periods less than one year are not annualized. Total investment return does not reflect the impact of the maximum front-end sales load of 5.75%. If reflected, the return would be lower. |
(3) | Annualized. |
(4) | During the period, certain fees were reduced. If such fee reductions had not occurred, the ratios would have been as indicated (See Note 2). |
(5) | Not annualized. |
The accompanying notes are an integral part of the financial statements.
26
WHV/EAM EMERGING MARKETS SMALL CAP EQUITY FUND
Financial Highlights
Contained below is per share operating performance data for Class C Shares outstanding, total investment return, ratios to average net assets and other supplemental data for the respective period. 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). This information has been derived from information provided in the financial statements and should be read in conjunction with the financial statements and the notes thereto.
Class C Shares | |||||
For the Period | |||||
Per Share Operating Performance | |||||
Net asset value, beginning of period | $ | 10.16 | |||
|
| ||||
Net investment loss | (0.02 | ) | |||
Net realized and unrealized loss on investments | (1.33 | ) | |||
|
| ||||
Net decrease in net assets resulting from operations | (1.35 | ) | |||
|
| ||||
Net asset value, end of period | $ | 8.81 | |||
|
| ||||
Total investment return(1) | (13.29 | )% | |||
Ratio/Supplemental Data | |||||
Net assets, end of period (000’s omitted) | $ | 4 | |||
Ratio of expenses to average net assets | 2.62 | %(2) | |||
Ratio of expenses to average net assets without waivers and expense reimbursements(3) | 19.85 | %(2) | |||
Ratio of net investment loss to average net assets | (0.59 | )%(2) | |||
Portfolio turnover rate | 146.42 | %(4) |
* | Commencement of operations. |
(1) | Total investment return is calculated assuming a purchase of shares on the first day and a sale of shares on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total returns for periods less than one year are not annualized. |
(2) | Annualized. |
(3) | During the period, certain fees were waived. If such fee waivers had not occurred, the ratios would have been as indicated (See Note 2). |
(4) | Not annualized. |
The accompanying notes are an integral part of the financial statements.
27
WHV/EAM EMERGING MARKETS SMALL CAP EQUITY FUND
Financial Highlights
Contained below is per share operating performance data for Class I Shares outstanding, total investment return, ratios to average net assets and other supplemental data for the respective period. 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). This information has been derived from information provided in the financial statements and should be read in conjunction with the financial statements and the notes thereto.
Class I Shares | ||||||||||
For the | For the Period May 27, 2014* to April 30, 2015 | |||||||||
Per Share Operating Performance | ||||||||||
Net asset value, beginning of period | $ | 10.35 | $ | 10.00 | ||||||
|
|
|
| |||||||
Net investment income/(loss)(1) | 0.02 | (0.04 | ) | |||||||
Net realized and unrealized gain/(loss) on investments | (1.53 | ) | 0.39 | |||||||
|
|
|
| |||||||
Net increase/(decrease) in net assets resulting from operations | (1.51 | ) | 0.35 | |||||||
|
|
|
| |||||||
Net asset value, end of period | $ | 8.84 | $ | 10.35 | ||||||
|
|
|
| |||||||
Total investment return(2) | (14.59 | )% | 3.50 | % | ||||||
Ratio/Supplemental Data | ||||||||||
Net assets, end of period (000’s omitted) | $ | 2,620 | $ | 1,226 | ||||||
Ratio of expenses to average net assets | 1.63 | %(3) | 1.75 | %(3) | ||||||
Ratio of expenses to average net assets without waivers and expense reimbursements(4) | 18.70 | %(3) | 50.21 | %(3) | ||||||
Ratio of net investment income/(loss) to average net assets | 0.33 | %(3) | (0.48 | )%(3) | ||||||
Portfolio turnover rate | 146.42 | %(5) | 214.00 | %(5) |
* | Commencement of operations. |
(1) | The selected per share data was calculated using the average shares outstanding method for the period. |
(2) | Total investment return is calculated assuming a purchase of shares on the first day and a sale of shares on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total returns for periods less than one year are not annualized. |
(3) | Annualized. |
(4) | During the period, certain fees were waived. If such fee waivers had not occurred, the ratios would have been as indicated (See Note 2). |
(5) | Not annualized. |
The accompanying notes are an integral part of the financial statements.
28
WHV/EAM FUNDS
Notes to Financial Statements
October 31, 2015
(Unaudited)
1. Organization and Significant Accounting Policies
The WHV/EAM International Small Cap Equity Fund and WHV/EAM Emerging Markets Small Cap Equity Fund (each a “Fund” and together the “Funds”) are diversified, open-end management investment companies registered under the Investment Company Act of 1940, as amended, (the “1940 Act”), and commenced investment operations on May 27, 2014. The Funds are each a separate series of FundVantage Trust (the “Trust”) which was organized as a Delaware statutory trust on August 28, 2006. The Trust is a “series trust” authorized to issue an unlimited number of separate series or classes of shares of beneficial interest. Each series is treated as a separate entity for certain matters under the 1940 Act, and for other purposes, and a shareholder of one series is not deemed to be a shareholder of any other series. The Funds offer separate classes of shares, Class A, Class C and Class I Shares. Class A Shares are sold subject to a front-end sales charge. Front-end sales charges may be reduced or waived under certain circumstances. A contingent deferred sales charge (“CDSC”) of up to 1.00% may apply for investments of $1 million or more of Class A Shares of each Fund (and therefore no initial sales charge was paid) and shares are redeemed within 18 months after initial purchase. The CDSC shall not apply to those purchases of Class A Shares of $1 million or more where the selling broker-dealer was not paid a commission. A CDSC of up to 1.00% will be assessed when Class C Shares are redeemed within 12 months after initial purchase. The CDSC shall not apply to those purchases of Class C Shares where the selling broker-dealer did not receive a commission.
The Funds are investment companies and follow accounting and reporting guidance in the Financial Accounting Standards Board Accounting Standards Codification Topic 946.
Portfolio Valuation — Each Fund’s net asset value (“NAV”) is calculated once daily at the close of regular trading hours on the New York Stock Exchange (“NYSE”) (typically 4:00 p.m. Eastern time) on each day the NYSE is open. Securities held by each Fund are valued using the closing price or the last sale price on a national securities exchange or the National Association of Securities Dealers Automatic Quotation System (“NASDAQ”) market system where they are primarily traded. The Funds’ equity securities listed on any national or foreign exchange market system will be valued at the last sale price. Equity securities traded in the over-the-counter market are valued at their closing sale or official closing price. If there were no transactions on that day, securities traded principally on an exchange will be valued at the mean of the last bid and ask prices prior to the market close. Prices for equity securities normally are supplied by an independent pricing service approved by the Trust’s Board of Trustees (“Board of Trustees”). Fixed income securities are valued based on market quotations, which are furnished by an independent pricing service. Fixed income securities having remaining maturities of 60 days or less are generally valued at amortized cost, provided such amount approximates fair value. Any assets held by the Funds that are denominated in foreign currencies are valued daily in U.S. dollars at the foreign currency exchange rates that are prevailing at the time that the Funds determine the daily NAV per share. Foreign securities may trade on weekends or other days when the Funds do not calculate NAV. As a result, the market value of these investments may change on days when you cannot buy or sell shares of the Funds.
29
WHV/EAM FUNDS
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
Investments in other open-end investment companies are valued based on the NAV of such investment companies (which may use fair value pricing as disclosed in their prospectuses). Securities that do not have a readily available current market value are valued in accordance with procedures adopted by the Board of Trustees. The Board of Trustees has adopted methods for valuing securities and other assets in circumstances where market quotes are not readily available and has delegated to WHV Investment Management, Inc. (“WHV” or the “Adviser”) the responsibility for applying the valuation methods. Relying on prices supplied by pricing services or dealers or using fair valuation may result in values that are higher or lower than the values used by other investment companies and investors to price the same investments.
Fair Value Measurements — The inputs and valuation techniques used to measure fair value of each Fund’s investments are summarized into three levels as described in the hierarchy below:
● Level 1 | — | quoted prices in active markets for identical securities; | ||
● Level 2 | — | other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.); and | ||
● Level 3 | — | significant unobservable inputs (including each Fund’s own assumptions in determining the fair value of investments). |
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
Significant events (such as movement in the U.S. securities market, or other regional and local developments) may occur between the time that foreign markets close (where the security is principally traded) and the time that each Fund calculates its NAV (generally, the close of the NYSE) that may impact the value of securities traded in these foreign markets. As a result, each Fund fair values foreign securities using an independent pricing service which considers the correlation of the trading patterns of the foreign security to the intraday trading in the U.S. markets for investments such as American Depositary Receipts, financial futures, exchange traded funds and certain indexes as well as prices for similar securities. Such fair valuations are categorized as Level 2 in the hierarchy.
30
WHV/EAM FUNDS
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
The following is a summary of the inputs used, as of October 31, 2015, in valuing each Fund’s investments carried at fair value:
WHV/EAM International Small Cap Equity Fund | Total Value at 10/31/15 | Level 1 Quoted Price | Level 2 Other Significant Observable Inputs | Level 3 Significant Unobservable Inputs | ||||||||||||
Common Stocks: | ||||||||||||||||
Australia | $ | 308,527 | $ | — | $ | 308,527 | $ | — | ||||||||
Belgium | 44,374 | — | 44,374 | — | ||||||||||||
Brazil | 91,807 | 91,807 | — | — | ||||||||||||
Canada | 259,036 | 259,036 | — | — | ||||||||||||
China | 144,386 | 49,210 | 95,176 | — | ||||||||||||
Denmark | 52,103 | — | 52,103 | — | ||||||||||||
France | 365,862 | 49,231 | 316,631 | — | ||||||||||||
Germany | 342,879 | — | 342,879 | — | ||||||||||||
India | 463,944 | 58,941 | 405,003 | — | ||||||||||||
Ireland | 52,103 | — | 52,103 | — | ||||||||||||
Israel | 53,633 | — | 53,633 | — | ||||||||||||
Italy | 307,357 | — | 307,357 | — | ||||||||||||
Japan | 1,278,583 | — | 1,278,583 | — | ||||||||||||
Luxembourg | 59,889 | — | 59,889 | — | ||||||||||||
Malaysia | 61,588 | — | 61,588 | — | ||||||||||||
Mexico | 217,231 | 217,231 | — | — | ||||||||||||
Netherlands | 101,499 | — | 101,499 | — | ||||||||||||
Norway | 46,660 | — | 46,660 | — | ||||||||||||
South Africa | 42,354 | 42,354 | — | — | ||||||||||||
South Korea | 614,718 | — | 614,718 | — | ||||||||||||
Spain | 103,295 | — | 103,295 | — | ||||||||||||
Sweden | 162,457 | — | 162,457 | — | ||||||||||||
Switzerland | 308,360 | 59,447 | 248,913 | — | ||||||||||||
Taiwan | 647,466 | — | 647,466 | — | ||||||||||||
Thailand | 251,579 | — | 251,579 | — | ||||||||||||
United Kingdom | 385,689 | 46,080 | 339,609 | — | ||||||||||||
United States | 114,729 | 114,729 | — | — | ||||||||||||
Registered Investment Company | 294,956 | 294,956 | — | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total Investments in Securities | $ | 7,177,064 | $ | 1,283,022 | $ | 5,894,042 | $ | — | ||||||||
|
|
|
|
|
|
|
|
31
WHV/EAM FUNDS
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
WHV/EAM Emerging Markets Small Cap Equity Fund | Total Value at 10/31/15 | Level 1 Quoted Price | Level 2 Other Significant Observable Inputs | Level 3 Significant Unobservable Inputs | ||||||||||||
Common Stocks: | ||||||||||||||||
Brazil | $ | 83,771 | $ | 83,771 | $ | — | $ | — | ||||||||
China | 314,173 | 29,275 | 284,898 | — | ||||||||||||
Hong Kong | 55,124 | — | 55,124 | — | ||||||||||||
India | 654,420 | 32,196 | 622,224 | — | ||||||||||||
Indonesia | 55,351 | — | 55,351 | — | ||||||||||||
Malaysia | 92,423 | — | 92,423 | — | ||||||||||||
Mexico | 241,634 | 241,634 | — | — | ||||||||||||
South Africa | 197,569 | 25,136 | 172,433 | — | ||||||||||||
South Korea | 760,089 | — | 760,089 | — | ||||||||||||
Taiwan | 858,124 | — | 858,124 | — | ||||||||||||
Thailand | 177,495 | — | 177,495 | — | ||||||||||||
United States | 60,056 | — | 60,056 | — | ||||||||||||
Registered Investment Company | 237,803 | 237,803 | — | — | ||||||||||||
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|
|
|
|
| |||||||||
Total Investments in Securities | $ | 3,788,032 | $ | 649,815 | $ | 3,138,217 | $ | — | ||||||||
|
|
|
|
|
|
|
|
At the end of each quarter, management evaluates the classification of Levels 1, 2 and 3 assets and liabilities. Various factors are considered such as changes in liquidity from the prior reporting period; whether or not a broker is willing to execute at the quoted price; the depth and consistency of prices from third party pricing services; and the existence of contemporaneous, observable trades in the market. Additionally, management evaluates the classification of Level 1 and Level 2 assets and liabilities on a quarterly basis for changes in listings or delistings on national exchanges.
Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of each Fund’s investments may fluctuate from period to period. Additionally, the fair value of investments may differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially from the values the Fund may ultimately realize. Further, such investments may be subject to legal and other restrictions on resale or otherwise less liquid than publicly traded securities.
For fair valuations using significant unobservable inputs, accounting principles generally accepted in the United States of America (“U.S. GAAP”) require each Fund to present a reconciliation of the beginning to ending balances for reported market values that presents changes attributable to total realized and unrealized gains or losses, purchase and sales, and transfers in and out of Level 3 during the period.
32
WHV/EAM FUNDS
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
Transfers in and out between Levels are based on values at the end of the period. U.S. GAAP also requires each Fund to disclose amounts and reasons for all transfers in and out of Level 1 and Level 2 fair value measurements. A reconciliation of Level 3 investments is presented only when each Fund had an amount of Level 3 investments at the end of the reporting period that was meaningful in relation to its net assets. The amounts and reasons for all transfers in and out of each Level within the three-tier hierarchy are disclosed when each Fund had an amount of total transfers during the reporting period that was meaningful in relation to its net assets as of the end of the reporting period.
For the six months ended October 31, 2015, there were transfers from level 1 to 2 of $186,811 due to fair value adjustments in the WHV/EAM International Small Cap Equity Fund. The WHV/EAM Emerging Markets Small Cap Equity Fund had no transfers between Levels 1, 2 and 3.
Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes at the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates and those differences could be material.
Investment Transactions, Investment Income and Expenses — Investment transactions are recorded on trade date for financial statement preparation purposes. Realized gains and losses on investments sold are recorded on the identified cost basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date. Estimated components of distributions received from real estate investment trusts may be considered income, return of capital distributions or capital gain distributions. Return of capital distributions are recorded as a reduction of cost of the related investments. Distribution (12b-1) fees and shareholder services fees relating to a specific class are charged directly to that class. Fund level expenses common to all classes, investment income and realized and unrealized gains and losses on investments are allocated to each class based upon the relative daily net assets of each class. General expenses of the Trust are generally allocated to each fund in proportion to its relative daily net assets. Expenses directly attributable to a particular fund in the Trust are charged directly to that fund. The Funds’ investment income, expenses (other than class specific expenses) and unrealized and realized gains and losses are allocated daily to each class of shares based upon the relative proportion of net assets of each class at the beginning of the day.
Foreign Currency Translation — Assets and liabilities initially expressed in non-U.S. currencies are translated into U.S. dollars based on the applicable exchange rates at the date of the last business day of the financial statement period. Purchases and sales of securities, interest income, dividends, variation margin received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rates in effect on the transaction date.
33
WHV/EAM FUNDS
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
The Funds do not separately report the effect of changes in foreign exchange rates from changes in market prices of securities held. Such changes are included with the net realized gain or loss and change in unrealized appreciation or depreciation on investment securities in the Statement of Operations. Other foreign currency transactions resulting in realized and unrealized gain or loss are reported separately as net realized gain or loss and change in unrealized appreciation or depreciation on foreign currencies in the Statement of Operations.
Dividends and Distributions to Shareholders — Dividends from net investment income and distributions from net realized capital gains, if any, are declared, recorded on ex-date and paid at least annually to shareholders. Income dividends and capital gain distributions are determined in accordance with U.S. federal income tax regulations, which may differ from U.S. GAAP. These differences include the treatment of non-taxable dividends, expiring capital loss carryforwards and losses deferred due to wash sales and excise tax regulations. Permanent book and tax basis differences relating to shareholder distributions will result in reclassifications within the components of net assets.
U.S. Tax Status — No provision is made for U.S. income taxes as it is each Fund’s intention to qualify for and elect the tax treatment applicable to regulated investment companies under Subchapter M of the Internal Revenue Code of 1986, as amended, and make the requisite distributions to its shareholders which will be sufficient to relieve it from U.S. income and excise taxes.
Other — In the normal course of business, each Fund may enter into contracts that provide general indemnifications. The Fund’s maximum exposure under these arrangements is dependent on claims that may be made against the Fund in the future, and, therefore, cannot be estimated; however, based on experience, the risk of material loss for such claims is considered remote.
Currency Risk — Each Fund invests in securities of foreign issuers, including American Depositary Receipts. These markets are subject to special risks associated with foreign investments not typically associated with investing in U.S. markets. Because the foreign securities in which each Fund may invest generally trade in currencies other than the U.S. dollar, changes in currency exchange rates will affect the Fund’s NAV, the value of dividends and interest earned and gains and losses realized on the sale of securities. Because the NAV for each Fund is determined on the basis of U.S. dollars, each Fund may lose money by investing in a foreign security if the local currency of a foreign market depreciates against the U.S. dollar, even if the local currency value of a Fund’s holdings goes up. Generally, a strong U.S. dollar relative to these other currencies will adversely affect the value of the Fund’s holdings in foreign securities.
Foreign Securities Market Risk — Securities of many non-U.S. companies may be less liquid and their prices more volatile than securities of comparable U.S. companies. Securities of companies traded in many countries outside the U.S., particularly emerging markets countries, may be subject to further risks due to the inexperience of local investment professionals and financial institutions, the possibility
34
WHV/EAM FUNDS
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
of permanent or temporary termination of trading and greater spreads between bid and asked prices of securities. In addition, non-U.S. stock exchanges and investment professionals are subject to less governmental regulation, and commissions may be higher than in the United States. Also, there may be delays in the settlement of non-U.S. stock exchange transactions.
Emerging Markets Risk — Each Fund invests in emerging market instruments which are subject to certain credit and market risks. The securities and currency markets of emerging market countries are generally smaller, less developed, less liquid and more volatile than the securities and currency markets of the United States and other developed markets. Disclosure and regulatory standards in many respects are less stringent than in other developed markets. There also may be a lower level of monitoring and regulation of securities markets in emerging market countries and the activities of investors in such markets and enforcement of existing regulations may be extremely limited. Political and economic structures in many of these countries may be in their infancy and developing rapidly, and such countries may lack the social, political and economic stability characteristics of more developed countries.
2. Transactions with Affiliates and Related Parties
WHV serves as investment adviser to the Funds pursuant to an investment advisory agreement with the Trust. For its services, the Adviser is paid a monthly fee at the annual rate of 1.15% and 1.30% for the WHV/EAM International Small Cap Equity Fund and WHV/EAM Emerging Markets Small Cap Equity Fund, respectively, of each Fund’s average daily net assets. The Adviser has contractually agreed to reduce its investment advisory fee and/or reimburse certain expenses of the WHV/EAM International Small Cap Equity Fund and the WHV/EAM Emerging Markets Small Cap Equity Fund to the extent necessary to ensure that the Fund’s total operating expenses excluding taxes, “Acquired Fund” fees and expenses, dividend and interest expense on short sales of securities, interest, extraordinary items and brokerage commissions do not exceed 1.65% with respect to Class A Shares, 2.40% with respect to Class C Shares and 1.40% with respect to Class I Shares (on an annual basis) of the WHV/EAM International Small Cap Equity Fund’s average daily net assets and 1.80% with respect to Class A Shares, 2.55% with respect to Class C Shares and 1.55% with respect to Class I Shares (on an annual basis) of the WHV/EAM Emerging Markets Small Cap Equity Fund’s average daily net assets (the “Expense Limitation”). The Expense Limitation will remain in place with respect to each Fund until August 31, 2018 unless the Board of Trustees of FundVantage Trust (the “Trust”) approves its earlier termination. Prior to July 10, 2015, the Management Fee for WHV/EAM Emerging Markets Small Cap Equity Fund was 1.50% and Expense Limitation was 1.75% (on an annual basis) with respect to Class I shares and 2.00% (on an annual basis) with respect to Class A shares. Class C shares were not offered for WHV/EAM Emerging Markets Small Cap Equity Fund prior to July 10, 2015. The Adviser is entitled to recover, subject to approval by the Board of Trustees, such amounts reduced or reimbursed for a period of up to three (3) years from the year in which the Adviser reduced its compensation and/or assumed expenses for a Fund. No recoupment by the Adviser will occur unless a Fund’s expenses are below the respective Expense Limitation.
35
WHV/EAM FUNDS
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
For the six months ended October 31, 2015, investment advisory fees accrued were $31,770 and $18,383 for the WHV/EAM International Small Cap Equity Fund and WHV/EAM Emerging Markets Small Cap Equity Fund, respectively. For the six months ended October 31, 2015, the Adviser waived investment advisory fees of $31,770 and $18,383 and reimbursed fees of $195,525 and $206,578 for the WHV/EAM International Small Cap Equity Fund and WHV/EAM Emerging Markets Small Cap Equity Fund, respectively.
As of October 31, 2015, the amounts of potential recoupment by the Adviser for each Fund was as follows:
Expiration | ||||||||||
Expiration | Expiration April 30, 2019 | |||||||||
WHV/EAM International Small Cap Equity Fund | $ | 338,196 | $ | 227,295 | ||||||
WHV/EAM Emerging Markets Small Cap Equity Fund | 318,170 | 224,961 |
EAM Global Investors, LLC (“EAM Global” or “Sub-Adviser”) serves as the sub-adviser to the Funds. The Sub-Adviser provides certain services pursuant to a sub-advisory agreement among WHV, the Sub-Advisor and the Trust, on behalf of the Funds. Sub-Advisory fees are paid by WHV, not the Funds.
BNY Mellon Investment Servicing (US) Inc. (“BNY Mellon”) serves as administrator and transfer agent for the Funds. For providing administrative and accounting services, BNY Mellon is entitled to receive a monthly fee equal to an annual percentage rate of each Fund’s average daily net assets and is subject to certain minimum monthly fees. For providing transfer agent services, BNY Mellon is entitled to receive a monthly fee, subject to certain minimum, and out of pocket expenses.
The Bank of New York Mellon (the “Custodian”) provides certain custodial services to the Funds. The Custodian is entitled to receive a monthly fee, subject to certain minimum, and out of pocket expenses.
BNY Mellon and the Custodian have the ability to recover amounts previously waived in prior years if each Fund terminates its agreements with BNY Mellon or the Custodian within three years of signing the agreements.
Foreside Funds Distributors LLC (“the Underwriter”) provides principal underwriting services to the Funds.
The Trust and the Underwriter are parties to an underwriting agreement. The Trust has adopted a distribution plan for Class A Shares in accordance with Rule 12b-1 under the 1940 Act. Pursuant to the Class A Shares plan, each Fund compensates the Underwriter for direct and indirect costs and expenses incurred in connection with advertising, marketing and other distribution services in an amount not to exceed 0.25% on an annualized basis of the average daily net assets of the Fund’s Class A Shares.
36
WHV/EAM FUNDS
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
The Trustees of the Trust who are not officers or employees of an investment adviser, sub-adviser or other service provider to the Trust receive compensation in the form of an annual retainer and per meeting fees for their services as a Trustee. The remuneration paid to the Trustees by the Funds during the six months ended October 31, 2015, was $319 and $170 for WHV/EAM International Small Cap Equity Fund and Emerging Markets Small Cap Equity Fund, respectively. Certain employees of BNY Mellon serve as Officers of the Trust. They are not compensated by the Funds or the Trust.
3. Investment in Securities
For the six months ended October 31, 2015, aggregate purchases and sales of investment securities (excluding U.S. Government and agency short-term investments and other short-term investments) of the Funds were as follows:
Purchases | Sales | |||||||
WHV/EAM International Small Cap Equity Fund | $ | 9,833,961 | $ | 5,068,503 | ||||
WHV/EAM Emerging Markets Small Cap Equity Fund | 6,226,522 | 3,543,620 |
4. Capital Share Transactions
For the six months ended October 31, 2015 and for the period from May 27, 2014 (commencement of operations) through April 30, 2015, transactions in capital shares (authorized shares unlimited) were as follows:
WHV/EAM International | ||||||||||||||||||
Small Cap Equity Fund | ||||||||||||||||||
For the | ||||||||||||||||||
Six Months Ended | For the | |||||||||||||||||
October 31, 2015 | Period Ended | |||||||||||||||||
(Unaudited) | April 30, 2015 | |||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||
Class A Shares | ||||||||||||||||||
Sales | 107,566 | $ | 1,125,404 | 44,115 | $ | 446,555 | ||||||||||||
Redemptions | (13,247 | ) | (134,604 | ) | — | — | ||||||||||||
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| |||||||||||
Net increase | 94,319 | $ | 990,800 | 44,115 | $ | 446,555 | ||||||||||||
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|
37
WHV/EAM FUNDS
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
WHV/EAM International | ||||||||||||||||
Small Cap Equity Fund | ||||||||||||||||
For the | ||||||||||||||||
Six Months Ended | For the | |||||||||||||||
October 31, 2015 | Period Ended | |||||||||||||||
(Unaudited) | April 30, 2015 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Class C Shares* | ||||||||||||||||
Sales | 14,762 | $ | 155,000 | — | $ | — | ||||||||||
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| |||||||||
Net increase | 14,762 | $ | 155,000 | — | $ | — | ||||||||||
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| |||||||||
Class I Shares | ||||||||||||||||
Sales | 371,408 | $ | 3,953,216 | 203,816 | $ | 2,010,916 | ||||||||||
Redemptions | (10,067 | ) | (104,898 | ) | (3,208 | ) | (30,747 | ) | ||||||||
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|
|
|
|
|
|
| |||||||||
Net increase | 361,341 | $ | 3,848,318 | 200,608 | $ | 1,980,169 | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Total net increase | 470,422 | $ | 4,994,118 | 244,723 | $ | 2,426,724 | ||||||||||
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WHV/EAM Emerging Markets | ||||||||||||||||
Small Cap Equity Fund | ||||||||||||||||
For the | ||||||||||||||||
Six Months Ended | For the | |||||||||||||||
October 31, 2015 | Period Ended | |||||||||||||||
(Unaudited) | April 30, 2015 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Class A Shares | ||||||||||||||||
Sales | 136,138 | $ | 1,280,221 | 15,229 | $ | 156,915 | ||||||||||
Redemptions | (12,418 | ) | (108,901 | ) | (1,442 | ) | (13,255 | ) | ||||||||
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|
|
|
|
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| |||||||||
Net increase | 123,720 | $ | 1,171,320 | 13,787 | $ | 143,660 | ||||||||||
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| |||||||||
Class C Shares* | ||||||||||||||||
Sales | 492 | $ | 5,000 | — | $ | — | ||||||||||
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Net increase | 492 | $ | 5,000 | — | $ | — | ||||||||||
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Class I Shares | ||||||||||||||||
Sales | 183,424 | $ | 1,770,867 | 122,756 | $ | 1,207,997 | ||||||||||
Redemptions | (5,301 | ) | (50,921 | ) | (4,275 | ) | (40,352 | ) | ||||||||
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|
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| |||||||||
Net increase | 178,123 | $ | 1,719,946 | 118,481 | $ | 1,167,645 | ||||||||||
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38
WHV/EAM FUNDS
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
WHV/EAM Emerging Markets | ||||||||||||||||
Small Cap Equity Fund | ||||||||||||||||
For the | ||||||||||||||||
Six Months Ended | For the | |||||||||||||||
October 31, 2015 | Period Ended | |||||||||||||||
(Unaudited) | April 30, 2015 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Total net increase | 302,335 | $ | 2,896,266 | 132,268 | $ | 1,311,305 | ||||||||||
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* Class C Shares of the Fund commenced operations on July 13, 2015.
As of April 30, 2015, the following Funds had shareholders that held 10% or more of the outstanding shares of the Funds:
WHV/EAM International Small Cap Equity Fund | ||||||
(Affiliated Shareholder) | 74 | % | ||||
WHV/EAM Emerging Markets Small Cap Equity Fund | ||||||
(Affiliated Shareholder) | 87 | % |
5. Federal Tax Information
The Funds have followed the authoritative guidance on accounting for and disclosure of uncertainty in tax positions, which requires the Funds to determine whether a tax position is more likely than not to be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. Each Fund has determined that there was no effect on the financial statements from following this authoritative guidance. In the normal course of business, the Funds are subject to examination by federal, state and local jurisdictions, where applicable, for tax years for which applicable statutes of limitations have not expired.
As of April 30, 2015 the components of distributable earnings on a tax basis were as follows:
Qualified | |||||||||||||||||||||||||
Capital Loss | Undistributed | Undistributed | Unrealized | Late-Year | |||||||||||||||||||||
Carryforward | Ordinary Income | Long-Term Gain | Appreciation | Losses | |||||||||||||||||||||
WHV/EAM International Small Cap Equity Fund | $ | (39,550 | ) | $ | 1,440 | $ | — | $ | 252,804 | $ | (86,520 | ) | |||||||||||||
WHV/EAM Emerging Markets Small Cap Equity Fund | $ | (40,087 | ) | $ | — | $ | — | $ | 173,292 | $ | (76,180 | ) |
39
WHV/EAM FUNDS
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
The differences between the book and tax basis components of distributable earnings relate primarily to the timing and recognition of income and gains for federal income tax purposes. Foreign currency and short-term capital gains are reported as ordinary income for federal income tax purposes.
As of October 31, 2015, the federal tax cost, aggregate gross unrealized appreciation and depreciation of securities held by each Fund were as follows:
Federal Tax Cost | Unrealized Appreciation | Unrealized Depreciation | Net Unrealized Appreciation | |||||||||
WHV/EAM International Small Cap Equity Fund | $ | 6,677,764 | $659,377 | $(160,077) | $499,300 | |||||||
WHV/EAM Emerging Markets Small Cap Equity Fund | 3,644,346 | 268,695 | (125,009) | 143,686 |
Pursuant to federal income tax rules applicable to regulated investment companies, the Funds may elect to treat certain capital losses between November 1 and April 30 and late year ordinary losses ((i) ordinary losses between January 1 and April 30, and (ii) specified ordinary and currency losses between November 1 and April 30) as occurring on the first day of the following tax year. For the period ended April 30, 2015, any amount of losses elected within the tax return will not be recognized for federal income tax purposes until May 1, 2015. For the period ended April 30, 2015, the Funds deferred to May 1, 2015 the following losses:
Late-Year Ordinary | Short-Term Capital | |||||||||||
Losses Deferral | Loss Deferral | |||||||||||
WHV/EAM International Small Cap Equity Fund | $ | 1,282 | $ | 85,238 | ||||||||
WHV/EAM Emerging Markets Small Cap Equity Fund | 4,398 | 71,782 |
Accumulated capital losses represent net capital loss carryforwards as of April 30, 2015 that may be available to offset future realized capital gains and thereby reduce future capital gains distributions. Under the Regulated Investment Company Modernization Act of 2010, the Funds are permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period. Additionally, capital losses that are carried forward will retain their character as either short-term or long-term capital losses rather than being considered all short-term as under the previous law. As of April 30, 2015, the WHV/EAM International Small Cap Equity Fund and WHV/EAM Emerging Markets Small Cap Equity Fund had short-term capital losses of $39,550 and $40,087, respectively.
40
WHV/EAM FUNDS
Notes to Financial Statements (Concluded)
October 31, 2015
(Unaudited)
6. Subsequent Event
Management has evaluated the impact of all subsequent events on the Funds through the date the financial statements were issued and has determined that there were no subsequent events requiring recognition or disclosure in the financial statements.
41
WHV/EAM FUNDS
Other Information
(Unaudited)
Proxy Voting
Policies and procedures that the Funds use to determine how to vote proxies relating to portfolio securities as well as information regarding how the Funds voted proxies relating to portfolio securities for the most recent 12-month period ended June 30 are available without charge, upon request, by calling (888) 948-4685 and on the Securities and Exchange Commission’s (“SEC”) website at http:// www.sec.gov.
Quarterly Portfolio Schedules
The Trust files its complete schedule of portfolio holdings with the SEC for the first and third fiscal quarters of each fiscal year (quarters ended July 31 and January 31) on Form N-Q. The Trust’s Forms N-Q are available on the SEC’s website at http://www.sec.gov and may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. Information on the operation of the SEC’s Public Reference Room may be obtained by calling 1-800-SEC-0330.
Approval of Advisory Agreement
At an in-person meeting held on September 21-22, 2015 (the “Meeting”), the Board of Trustees (“Board” or “Trustees”) of FundVantage Trust (“Trust”), including a majority of the Trustees who are not “interested persons” as defined in the Investment Company Act of 1940, as amended (“1940 Act”) (the “Independent Trustees”), unanimously approved the continuation of the advisory agreement (the “Agreement”) between the Trust, on behalf of the WHV/EAM Emerging Markets Small Cap Equity Fund and WHV/EAM International Small Cap Equity Fund (each a “Fund” and collectively, the “Funds”), and WHV Investments, Inc. (“WHV” or the “Adviser”) for an additional one year period.
In determining whether to approve the Agreement, the Trustees considered information provided by the Adviser in accordance with Section 15(c) of the 1940 Act. The Trustees considered information that the Adviser provided regarding (i) services performed for the Funds, (ii) the size and qualifications of the Adviser’s staff, (iii) any potential or actual material conflicts of interest in relation to the Adviser’s management of the Funds and other clients and oversight of the Funds’ sub-adviser in this regard, (iv) investment performance, (v) the capitalization and financial condition of the Adviser, (vi) brokerage selection procedures (including soft dollar arrangements, if any), (vii) the procedures for allocating investment opportunities between the Funds and other clients, (viii) results of any regulatory examination, including any recommendations or deficiencies noted, (ix) any litigation, investigation or administrative proceeding which may have a material impact on the Adviser’s ability to service the Funds, (x) compliance with the Funds’ investment objective, policies and practices (including codes of ethics and proxy voting policies), and (xi) compliance with federal securities laws and other regulatory requirements. The Trustees noted the reports and discussions with the Adviser and the Funds’ sub-adviser at Board meetings throughout the year covering matters including:
42
WHV/EAM FUNDS
Other Information (Continued)
(Unaudited)
the relative performance of the Funds; compliance with the investment objectives, policies, strategies and limitations for the Funds; the compliance of management personnel with the applicable code of ethics; and the adherence to fair value pricing procedures as established by the Board. At the Meeting, the Trustees also received and reviewed a memorandum from legal counsel regarding the legal standard applicable to their review of the Agreement.
Representatives from WHV attended the Meeting both in person and via teleconference. The representatives from WHV discussed the firm’s history, track record and investment services in connection with the proposed approval of the Agreement and answered questions from the Board.
The Trustees considered the investment performance information for the Funds. The Trustees reviewed performance information for the Funds Class A and Class I shares as compared to their respective Lipper categories for the year to date, one year and since inception periods ended June 30, 2015. The Trustees also received performance information for the Funds’ Class I shares as compared to their respective benchmark indices as well as the similarly managed account or comparable separate account composite (of the Funds’ sub-adviser) for the one year and since inception periods ended June 30, 2015. The Trustees also reviewed commentary provided by the Adviser and the Funds’ sub-adviser regarding the performance data and the various factors contributing to the Funds’ performance. They concluded that the investment performance of the Funds was within an acceptable range of performance relative to other mutual funds with similar investment objectives, strategies and policies based on the information provided at the Meeting.
The Adviser provided information regarding its advisory fees and an analysis of these fees in relation to the delivery of services to the Funds and any other ancillary benefits resulting from the Adviser’s relationship with the Funds. The Trustees considered the fees that the Funds’ sub-adviser charges to its separately managed accounts, and evaluated the explanations provided as to the differences in the aggregate fees charged to the Fund and such separately managed accounts. The Trustees concluded that the advisory fee and services to be provided by the Adviser are consistent with those of other advisers which manage mutual funds with investment objectives, strategies and policies similar to those of the Funds as measured by the information provided at the Meeting.
With respect to comparative performance information and advisory fees and expenses, the Board considered, among other data, the specific factors set forth below with respect to the Funds:
WHV/EAM International Fund. With respect to advisory fees and expenses, the Trustees noted that the net total expense ratio and the gross advisory fee of the WHV/EAM International Fund’s Class A shares and Class I shares were higher than the net total expense ratio and the gross advisory fee of the median of funds with a similar share class in the Lipper International Small/Mid Growth category, with $250 million or less in assets. The Trustees noted that due to the limited operating history of the Fund, the net total expense ratio presented was based on the estimates reflected in the Fund’s most
43
WHV/EAM FUNDS
Other Information (Continued)
(Unaudited)
recent prospectus. With respect to performance, the Trustees noted that the Class A shares and Class I shares of the WHV/EAM International Fund outperformed the Lipper International Small/Mid Growth category, the Fund’s applicable Lipper peer group, for the year to date, one year and since inception periods ended June 30, 2015.
WHV/EAM Emerging Markets Fund. With respect to advisory fees and expenses, the Trustees noted that the net total expense ratio and the gross advisory fee of the WHV/EAM Emerging Markets Fund’s Class A shares and Class I shares were higher than the net total expense ratio and the gross advisory fee of the median of funds with a similar share class in the Lipper Emerging Market Fund category, with $250 million or less in assets. The Trustees noted that due to the limited operating history of the Fund, the net total expense ratio presented was based on the estimates reflected in the Fund’s most recent prospectus. With respect to performance, the Trustees noted that the Class A shares and Class I shares of the WHV/EAM Emerging Markets Fund outperformed the Lipper Emerging Market Fund category, the Fund’s applicable Lipper peer group, for the year to date, one year and since inception periods ended June 30, 2015.
The Board considered the level and depth of knowledge of the Adviser, including the professional experience and qualifications of senior personnel. In evaluating the quality of services provided by the Adviser, the Board took into account its familiarity with the Adviser’s senior management through Board meetings, discussions and reports during the preceding year. The Trustees also took into account the compliance policies and procedures of WHV, and reports regarding WHV’s compliance operations from the Trust’s Chief Compliance Officer. The Board also considered any potential conflicts of interest that may arise in a portfolio manager’s management of the Fund’s investments on the one hand, and the investments of other accounts, on the other. The Trustees reviewed the services provided to the Funds by the Adviser and concluded that the nature, extent and quality of the services to be provided were appropriate and consistent with the terms of the Agreement. They also concluded that the Adviser has sufficient personnel, with the appropriate education and experience, to serve the Funds effectively and had demonstrated its ability to attract and retain qualified personnel.
The Trustees considered the costs of the services provided by the Adviser, the compensation and benefits received by the Adviser in providing services to the Funds as well as the Adviser’s profitability. It was noted that the Adviser’s level of profitability is an appropriate factor to consider, and the Trustees should be satisfied that the Adviser’s profits are sufficient to continue as a healthy concern generally and as investment adviser of the Funds specifically. The Trustees concluded that the Adviser’s advisory fee level was reasonable in relation to the nature and quality of the services provided, taking into account the fees charged by other advisers for managing comparable mutual funds with similar strategies. The Trustees also concluded that the overall expense ratio of the Funds were reasonable, taking into account the growth and size of the Funds and the quality of services provided by the Adviser and the expense limitations agreed to by the Adviser.
44
WHV/EAM FUNDS
Other Information (Continued)
(Unaudited)
The Trustees considered the extent to which economies of scale would be realized relative to fee levels as the Funds grow and whether the advisory fee levels reflect these economies of scale for the benefit of shareholders. The Board noted that economies of scale may be achieved at higher asset levels for the Funds for the benefit of fund shareholders, but that because such economies of scale did not yet exist and were not likely to exist in the near term, the Adviser did not believe it was appropriate to incorporate a mechanism for sharing the benefit of such economies with Fund shareholders in the advisory fee structure at this time.
In voting to approve the continuation of the Agreement with respect to each Fund, the Board considered all factors it deemed relevant and the information presented to the Board by the Adviser. In arriving at its decision, the Board did not identify any single factor as being of paramount importance and each member of the Board gave varying weights to each factor according to his or her own judgment. The Board determined that the approval of the Agreement would be in the best interest of each Fund and its shareholders. As a result, the Board, including a majority of the Independent Trustees, unanimously approved the continuation of the Agreement with respect to each Fund for an additional one year period.
45
[THIS PAGE INTENTIONALLY LEFT BLANK.]
[THIS PAGE INTENTIONALLY LEFT BLANK.]
Investment Adviser
WHV Investments, Inc.
301 Battery Street
Suite 400
San Francisco, CA 94111-3203
Sub-Adviser
EAM Global Investors, LLC
2533 South Coast Highway 101
Suite 240
Cardiff-by-the-Sea, CA 92007
Administrator
BNY Mellon Investment Servicing (US) Inc.
301 Bellevue Parkway
Wilmington, DE 19809
Transfer Agent
BNY Mellon Investment Servicing (US) Inc.
4400 Computer Drive
Westborough, MA 01581
Principal Underwriter
Foreside Funds Distributors LLC
400 Berwyn Park
899 Cassatt Road
Berwyn, PA 19312
Custodian
The Bank of New York Mellon
225 Liberty Street
New York, NY 10286
Independent Registered Public Accounting Firm
PricewaterhouseCoopers LLP
Two Commerce Square, Suite 1700
2001 Market Street
Philadelphia, PA 19103-7042
Legal Counsel
Pepper Hamilton LLP
3000 Two Logan Square
18th and Arch Streets
Philadelphia, PA 19103
EAM-1015
As Sub-Advised by
WHV/EAM INTERNATIONAL SMALL CAP EQUITY FUND
WHV/EAM EMERGING
MARKETS SMALL CAP
EQUITY FUND
of
FundVantage Trust
Class A Shares
Class C Shares
Class I Shares
SEMI-ANNUAL REPORT
October 31, 2015
(Unaudited)
This report is submitted for the general information of the shareholders of the WHV/EAM International Small Cap Equity Fund and WHV/EAM Emerging Markets Small Cap Equity Fund. It is not authorized for distribution unless preceded or accompanied by a current prospectus for the WHV/EAM International Small Cap Equity Fund and WHV/EAM Emerging Markets Small Cap Equity Fund.
Rivington Diversified International Equity Fund by WHV
Semi-Annual Report
Performance Data
October 31, 2015
(Unaudited)
Total Returns for the Period Ended October 31, 2015*
| ||||||
| Since Inception** | | ||||
Class A Shares (with sales charge) | -14.80% | |||||
Class A Shares (without sales charge) | -9.60% | |||||
Class I Shares | -9.50% | |||||
MSCI ACWI ex USA Index | -8.71%** | * |
* | Not Annualized. |
** | The Rivington Diversified International Equity Fund by WHV (the “Fund”) commenced operations on June 24, 2015. |
*** | Benchmark performance is from inception date of the Fund (June 24, 2015) only and is not the inception date of the benchmark itself. |
The performance data quoted represents past performance and does not guarantee future results. Current performance may be lower or higher. Performance data current to the most recent month-end may be obtained by calling (888) 948-4685. The investment return and principal value of an investment will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. The table does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
The returns shown for Class A Shares reflect a deduction for the maximum front-end sales charge of 5.75%.
The Fund’s total annual Fund gross and net operating expense ratios are 2.09% and 1.24%, respectively, for Class A Shares and 1.84% and 0.99%, respectively, for Class I Shares of the Fund’s average daily net assets. These ratios are stated in the current prospectus dated June 30, 2015, and may differ from the actual expenses incurred by the Fund for the period covered by this report. WHV Investments, Inc. (the “Adviser”), has contractually agreed to reduce its investment advisory fee and/or reimburse certain expenses of the Fund to the extent necessary to ensure that the Fund’s total operating expenses, excluding taxes, any class-specific expenses (such as distribution fees, shareholder service fees, or transfer agency fees), “Acquired Fund” fees and expenses, interest, extraordinary items, and brokerage commissions, do not exceed 0.99% (on an annual basis) of average daily net assets of the Fund (the “Expense Limitation”). The Expense Limitation will remain in place until August 31, 2018 unless the Board of Trustees of FundVantage Trust ( the “Trust”) approves its earlier termination. The Advisor is entitled to recover, subject to approval by the Board of Trustees, such amounts reduced or reimbursed for a period up to three years from the year in which the Advisor reduced its compensation and/or assumed expenses for the Fund. No recoupment by the Adviser will occur unless the Fund’s expenses are below the Expense Limitation. Total returns would be lower had such fees and expenses not been waived and/or reimbursed, or been higher had such fees and expenses not been recouped.
The Fund evaluates its performance as compared to that of the MSCI ACWI ex USA Index, which captures large and mid-cap representation across 22 of 23 Developed Markets countries (excluding the US) and 23 Emerging Markets countries. With 1,839 constituents, the index covers approximately 85% of the global equity opportunity set outside the U.S. It is impossible to invest directly in an index.
1
Rivington Diversified International Equity Fund by WHV
Semi-Annual Report
Performance Data (Concluded)
October 31, 2015
(Unaudited)
All mutual fund investing involves risk, including possible loss of principal. Investing in foreign securities entails special risks, such as fluctuations in currency exchange rates and possible lax regulation of securities markets and accounting practices.
2
Rivington Diversified Global Equity Fund by WHV
Semi-Annual Report
Performance Data
October 31, 2015
(Unaudited)
Total Returns for the Period Ended October 31, 2015*
| ||||||
| Since Inception** | | ||||
Class A Shares (with sales charge) | -11.97% | |||||
Class A Shares (without sales charge) | -6.60% | |||||
Class I Shares | -6.50% | |||||
MSCI ACWI Index | -4.96%* | ** |
* | Not Annualized. |
** | The Rivington Diversified Global Equity Fund by WHV (the “Fund”) commenced operations on June 24, 2015. |
*** | Benchmark performance is from inception date of the Fund (June 24, 2015) only and is not the inception date of the benchmark itself. |
The performance data quoted represents past performance and does not guarantee future results. Current performance may be lower or higher. Performance data current to the most recent month-end may be obtained by calling (888) 948-4685. The investment return and principal value of an investment will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. The table does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
The returns shown for Class A Shares reflect a deduction for the maximum front-end sales charge of 5.75%.
The Fund’s total annual Fund gross and net operating expense ratios are 2.08% and 1.24%, respectively, for Class A Shares and 1.83% and 0.99%, respectively, for Class I Shares of the Fund’s average daily net assets. These ratios are stated in the current prospectus dated June 30, 2015, and may differ from the actual expenses incurred by the Fund for the period covered by this report. WHV Investments, Inc. (the “Adviser”), has contractually agreed to reduce its investment advisory fee and/or reimburse certain expenses of the Fund to the extent necessary to ensure that the Fund’s total operating expenses, excluding taxes, any class-specific expenses (such as distribution fees, shareholder service fees, or transfer agency fees), “Acquired Fund” fees and expenses, interest, extraordinary items, and brokerage commissions, do not exceed 0.99% (on an annual basis) of average daily net assets of the Fund (the “Expense Limitation”). The Expense Limitation will remain in place until August 31, 2018 unless the Board of Trustees of FundVantage Trust ( the “Trust”) approves its earlier termination. The Advisor is entitled to recover, subject to approval by the Board of Trustees, such amounts reduced or reimbursed for a period up to three years from the year in which the Advisor reduced its compensation and/or assumed expenses for the Fund. No recoupment by the Adviser will occur unless the Fund’s expenses are below the Expense Limitation. Total returns would be lower had such fees and expenses not been waived and/or reimbursed, or been higher had such fees and expenses not been recouped.
The Fund evaluates its performance as compared to that of the MSCI ACWI Index, which captures large and mid-cap representation across 23 Developed Markets and 23 Emerging Markets countries. With 2,476 constituents, the index covers approximately 85% of the global equity opportunity set outside the U.S. It is impossible to invest directly in an index.
All mutual fund investing involves risk, including possible loss of principal. Investing in foreign securities entails special risks, such as fluctuations in currency exchange rates and possible lax regulation of securities markets and accounting practices.
3
Rivington Funds by WHV
Fund Expense Disclosure
October 31, 2015
(Unaudited)
As a shareholder of the Fund(s), you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments, if any, and redemption fees; and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, if any, and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund(s) and to compare these costs with the ongoing costs of investing in other mutual funds.
These examples are based on an investment of $1,000 invested at the beginning of the period from June 24, 2015 (commencement of operations) through October 31, 2015 for the Funds, and held for the entire period.
Actual Expenses
The first line of each accompanying table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Examples for Comparison Purposes
The second line of each accompanying table provides information about hypothetical account values and hypothetical expenses based on the Funds’ actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Funds’ actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Funds and other funds. To do so, compare these 5% hypothetical examples with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that the expenses shown in the accompanying tables are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), if any, or redemption fees. Therefore, the second line of each accompanying table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
4
Rivington Funds by WHV
Fund Expense Disclosure (Concluded)
October 31, 2015
(Unaudited)
Rivington Diversified International Equity Fund by WHV | |||||||||||||||
Beginning Account Value |
Ending Account Value |
Expenses Paid | |||||||||||||
June 24, 2015 | October 31, 2015 | During Period* | |||||||||||||
Class A Shares | |||||||||||||||
Actual | $1,000.00 | $ 904.00 | $4.16 | ||||||||||||
Hypothetical (5% return before expenses) | 1,000.00 | 1,018.90 | 6.29 | ||||||||||||
Class I Shares | |||||||||||||||
Actual | $1,000.00 | $ 905.00 | $3.32 | ||||||||||||
Hypothetical (5% return before expenses) | 1,000.00 | 1,020.16 | 5.03 | ||||||||||||
Rivington Diversified Global Equity Fund by WHV | |||||||||||||||
Beginning Account Value |
Ending Account Value |
Expenses Paid | |||||||||||||
June 24, 2015 | October 31, 2015 | During Period* | |||||||||||||
Class A Shares | |||||||||||||||
Actual | $1,000.00 | $ 934.00 | $4.23 | ||||||||||||
Hypothetical (5% return before expenses) | 1,000.00 | 1,018.90 | 6.29 | ||||||||||||
Class I Shares | |||||||||||||||
Actual | $1,000.00 | $ 935.00 | $3.38 | ||||||||||||
Hypothetical (5% return before expenses) | 1,000.00 | 1,020.16 | 5.03 |
* | Expenses are equal to an annualized expense ratio for the period June 24, 2015 (commencement of operations) to October 31, 2015 of 1.24% and 0.99% for Class A and Class I Shares, respectively, of the Rivington Diversified International Equity Fund by WHV; and 1.24% and 0.99% for Class A and Class I Shares, respectively, of the Rivington Diversified Global Equity Fund by WHV; multiplied by the average account value over the period, multiplied by the number of days in the most recent period (129 days), then divided by 366 to reflect the period. Each Fund’s ending account values on the first line in the table are based on the actual total returns since commencement of operations on June 24, 2015 of (9.60%) and (9.50%) for both Class A and Class I Shares, respectively of the Rivington Diversified International Equity Fund by WHV; and (6.60%) and (6.50%) for Class A and Class I Shares, respectively of the Rivington Diversified Global Equity Fund by WHV. Hypothetical expenses are as if the Fund had been in existence from May 1, 2014, and are equal to its annualized expense ratios, multiplied by the average account value over the period, multiplied by the number of days in the most recent six-month period (184), then divided by 366 to reflect the period. |
5
Rivington Diversified International Equity Fund by WHV
Portfolio Holdings Summary Table
October 31, 2015
(Unaudited)
The following table presents a summary by sector of the portfolio holdings of the Fund:
% of Net | ||||||||||
Assets | Value | |||||||||
COMMON STOCKS: | ||||||||||
Banks | 16.1 | % | $ | 160,083 | ||||||
Insurance | 14.6 | 145,099 | ||||||||
Diversified Financial Services | 6.6 | 64,929 | ||||||||
Oil Gas & Consumable Fuels | 5.8 | 57,440 | ||||||||
Auto Components | 4.8 | 47,871 | ||||||||
Media | 4.3 | 42,203 | ||||||||
Pharmaceuticals | 4.0 | 39,846 | ||||||||
Food & Staples Retailing | 3.9 | 38,771 | ||||||||
Electrical Equipment | 3.6 | 35,613 | ||||||||
Food Products | 3.1 | 30,244 | ||||||||
Trading Companies & Distributors | 2.9 | 29,125 | ||||||||
Multiline Retail | 2.8 | 28,041 | ||||||||
Automobiles | 2.7 | 26,718 | ||||||||
Capital Markets | 2.7 | 26,324 | ||||||||
Biotechnology | 2.2 | 21,518 | ||||||||
Technology Hardware Storage & Peripherals | 2.1 | 20,911 | ||||||||
Internet Software & Services | 2.0 | 20,090 | ||||||||
Semiconductors & Semiconductor Equipment | 2.0 | 19,618 | ||||||||
Chemicals | 1.9 | 18,954 | ||||||||
Internet & Catalog Retail | 1.7 | 16,742 | ||||||||
Machinery | 1.7 | 16,718 | ||||||||
Electronic Equipment Instruments & Components | 1.4 | 14,235 | ||||||||
Personal Products | 1.4 | 14,198 | ||||||||
Household Durables | 1.4 | 13,933 | ||||||||
Diversified Telecommunication Services | 1.4 | 13,531 | ||||||||
Metals & Mining | 1.2 | 12,367 | ||||||||
Road & Rail | 0.9 | 9,353 | ||||||||
Distributors | 0.9 | 8,956 | ||||||||
Wireless Telecommunication Services | 0.9 | 8,763 | ||||||||
Professional Services | 0.8 | 7,964 | ||||||||
Aerospace & Defense | 0.7 | 6,795 | ||||||||
Pharmaceuticals & Biotechnology | 0.5 | 5,090 | ||||||||
Liabilities in Excess of Other Assets | (3.0 | ) | (29,576 | ) | ||||||
|
|
|
| |||||||
NET ASSETS | 100.0 | % | $ | 992,467 | ||||||
|
|
|
|
Portfolio holdings are subject to change at any time.
The accompanying notes are an integral part of the financial statements.
6
Rivington Diversified International Equity Fund by WHV
Portfolio of Investments
October 31, 2015
(Unaudited)
Number | Value | |||||
COMMON STOCKS — 103.0% | ||||||
Australia — 3.2% | ||||||
Australia & New Zealand Banking Group Ltd. | 1,000 | $ | 19,340 | |||
BHP Billiton, Ltd., SP ADR | 376 | 12,367 | ||||
|
| |||||
31,707 | ||||||
|
| |||||
Belgium — 1.6% | ||||||
KBC Groep NV | 258 | 15,687 | ||||
|
| |||||
Brazil — 0.5% | ||||||
Banco Bradesco SA, ADR | 843 | 4,586 | ||||
|
| |||||
Canada — 7.7% | ||||||
Alimentation Couche-Tard, Inc., Class B | 293 | 12,604 | ||||
Bank of Montreal | 90 | 5,228 | ||||
Bank Of Nova Scotia (The) | 500 | 23,513 | ||||
Dollarama, Inc. | 251 | 16,955 | ||||
Linamar Corp. | 218 | 12,669 | ||||
Magna International, Inc. | 96 | 5,062 | ||||
|
| |||||
76,031 | ||||||
|
| |||||
China — 5.2% | ||||||
China Communications Services Corp. Ltd., Class H | 14,600 | 5,857 | ||||
China Construction Bank Corp., Class H | 13,000 | 9,422 | ||||
China Life Insurance Co. Ltd., ADR | 271 | 4,894 | ||||
CNOOC Ltd. | 10,000 | 11,295 | ||||
NetEase, Inc., ADR | 139 | 20,090 | ||||
|
| |||||
51,558 | ||||||
|
| |||||
Denmark — 4.9% | ||||||
Danske Bank AS | 351 | 9,657 | ||||
Novo Nordisk AS, Class B | 381 | 20,232 |
Number | Value | |||||
COMMON STOCKS — (Continued) | ||||||
Denmark — (Continued) | ||||||
Vestas Wind Systems AS | 325 | $ | 18,949 | |||
|
| |||||
48,838 | ||||||
|
| |||||
Finland — 3.1% | ||||||
Sampo Oyj, Class A | 631 | 30,842 | ||||
|
| |||||
France — 7.0% | ||||||
AXA SA | 910 | 24,286 | ||||
Casino Guichard Perrachon SA | 118 | 6,780 | ||||
Thales SA | 94 | 6,795 | ||||
TOTAL SA | 506 | 24,470 | ||||
Valeo SA | 48 | 7,412 | ||||
|
| |||||
69,743 | ||||||
|
| |||||
Germany — 6.4% | ||||||
Allianz SE, Registered Shares | 70 | 12,255 | ||||
Continental AG | 31 | 7,444 | ||||
CTS Eventim AG & Co KGaA | 269 | 10,529 | ||||
Hannover Rueck SE | 146 | 16,879 | ||||
Krones AG | 139 | 16,718 | ||||
|
| |||||
63,825 | ||||||
|
| |||||
Hong Kong — 3.5% | ||||||
AIA Group Ltd. | 5,000 | 29,317 | ||||
Noble Group Ltd. | 14,900 | 5,350 | ||||
|
| |||||
34,667 | ||||||
|
| |||||
India — 0.8% | ||||||
Tata Motors, Ltd., SP ADR* | 282 | 8,339 | ||||
|
| |||||
Indonesia — 0.8% | ||||||
Telekomunikasi Indonesia Tbk PT, SP ADR | 193 | 7,674 | ||||
|
|
The accompanying notes are an integral part of the financial statements.
7
Rivington Diversified International Equity Fund by WHV
Portfolio of Investments (Continued)
October 31, 2015
(Unaudited)
Number | Value | |||||
COMMON STOCKS — (Continued) | ||||||
Japan — 17.2% | ||||||
Century Tokyo Leasing Corp. | 500 | $ | 16,961 | |||
CyberAgent, Inc. | 500 | 20,536 | ||||
ITOCHU Corp. | 1,900 | 23,775 | ||||
Mitsubishi Electric Corp. | 1,600 | 16,664 | ||||
Murata Manufacturing Co., Ltd. | 100 | 14,235 | ||||
NHK Spring Co., Ltd. | 600 | 6,107 | ||||
ORIX Corp. | 900 | 13,143 | ||||
Start Today Co., Ltd. | 500 | 16,742 | ||||
Sumitomo Mitsui Financial Group, Inc. | 600 | 23,936 | ||||
Toyota Motor Corp. | 300 | 18,379 | ||||
|
| |||||
170,478 | ||||||
|
| |||||
Mexico — 0.9% | ||||||
America Movil SAB de CV, SP ADR, Class L | 492 | 8,763 | ||||
|
| |||||
Netherlands — 5.0% | ||||||
ING Groep NV, CVA | 910 | 13,244 | ||||
Koninklijke Ahold NV | 953 | 19,387 | ||||
Royal Dutch Shell PLC, Class A | 639 | 16,739 | ||||
|
| |||||
49,370 | ||||||
|
| |||||
Singapore — 1.7% | ||||||
DBS Group Holdings Ltd. | 1,400 | 17,213 | ||||
|
| |||||
South Africa — 0.9% | ||||||
Imperial Holdings Ltd. | 688 | 8,956 | ||||
|
| |||||
South Korea — 2.1% | ||||||
Samsung Electronics Co. Ltd., GDR | 35 | 20,911 | ||||
|
| |||||
Sweden — 4.8% | ||||||
Investor AB, Class B | 941 | 34,825 |
Number | Value | |||||
COMMON STOCKS — (Continued) | ||||||
Sweden — (Continued) | ||||||
Skandinaviska Enskilda Banken AB, Class A | 1,236 | $ | 12,979 | |||
|
| |||||
47,804 | ||||||
|
| |||||
Switzerland — 6.8% | ||||||
BB Biotech AG, Registered Shares | 18 | 5,090 | ||||
Nestle SA, Registered Shares | 396 | 30,244 | ||||
Swiss Re AG | 58 | 5,384 | ||||
UBS Group AG, Registered Shares | 1,318 | 26,324 | ||||
|
| |||||
67,042 | ||||||
|
| |||||
Taiwan — 1.2% | ||||||
Taiwan Semiconductor Manufacturing Co., Ltd., SP ADR | 548 | 12,034 | ||||
|
| |||||
Thailand — 1.0% | ||||||
Krung Thai Bank PCL, NVDR | 11,000 | 5,278 | ||||
PTT Exploration & Production PCL, NVDR | 2,400 | 4,936 | ||||
|
| |||||
10,214 | ||||||
|
| |||||
United Kingdom — 12.6% | ||||||
Berkeley Group Holdings PLC | 273 | 13,933 | ||||
Capita PLC | 406 | 7,964 | ||||
Dialog Semiconductor PLC* | 205 | 7,584 | ||||
GKN PLC | 2,077 | 9,177 | ||||
Legal & General Group PLC | 5,275 | 21,242 | ||||
Marks & Spencer Group PLC | 1,404 | 11,086 |
The accompanying notes are an integral part of the financial statements.
8
Rivington Diversified International Equity Fund by WHV
Portfolio of Investments (Concluded)
October 31, 2015
(Unaudited)
Number | Value | |||||
COMMON STOCKS — (Continued) | ||||||
United Kingdom — (Continued) | ||||||
Shire PLC | 259 | $ | 19,614 | |||
Sky PLC | 660 | 11,138 | ||||
Stagecoach Group PLC | 1,754 | 9,353 | ||||
Unilever NV, CVA | 314 | 14,198 | ||||
|
| |||||
125,289 | ||||||
|
| |||||
United States — 4.1% | ||||||
Gilead Sciences, Inc. | 199 | 21,518 | ||||
LyondellBasell Industries NV, Class A | 204 | 18,954 | ||||
|
| |||||
40,472 | ||||||
|
| |||||
TOTAL COMMON STOCKS (Cost $1,089,952) | 1,022,043 | |||||
|
| |||||
TOTAL INVESTMENTS - 103.0% (Cost $1,089,952) | 1,022,043 | |||||
LIABILITIES IN EXCESS OF OTHER ASSETS - (3.0)% | (29,576 | ) | ||||
|
| |||||
NET ASSETS - 100.0% | $ | 992,467 | ||||
|
|
* | Non-income producing. |
Legend:
| ||
ADR | American Depository Receipt | |
GDR | Global Depository Receipt | |
NVDR | Non-Voting Depository Receipt | |
PCL | Public Company Limited | |
PLC | Public Limited Company | |
SP ADR | Sponsored American Depository Receipt |
The accompanying notes are an integral part of the financial statements.
9
Rivington Diversified Global Equity Fund by WHV
Portfolio Holdings Summary Table
October 31, 2015
(Unaudited)
The following table presents a summary by sector of the portfolio holdings of the Fund:
% of Net Assets | Value | |||||||
COMMON STOCKS: | ||||||||
Banks | 9.5 | % | $ 96,986 | |||||
Insurance | 8.8 | 90,481 | ||||||
Oil Gas & Consumable Fuels | 8.7 | 88,962 | ||||||
Health Care Providers & Services | 6.6 | 67,894 | ||||||
Diversified Financial Services | 6.6 | 67,781 | ||||||
Specialty Retail | 6.1 | 62,235 | ||||||
Food & Staples Retailing | 5.6 | 57,453 | ||||||
Internet Software & Services | 4.0 | 40,625 | ||||||
Media | 3.9 | 40,007 | ||||||
Technology Hardware Storage & Peripherals | 3.8 | 38,837 | ||||||
IT Services | 3.7 | 37,675 | ||||||
Auto Components | 3.7 | 37,425 | ||||||
Textiles Apparel & Luxury Goods | 2.5 | 25,729 | ||||||
Pharmaceuticals | 2.5 | 25,713 | ||||||
Trading Companies & Distributors | 2.5 | 25,299 | ||||||
Electrical Equipment | 2.2 | 22,108 | ||||||
Semiconductors & Semiconductor Equipment | 2.0 | 20,687 | ||||||
Capital Markets | 2.0 | 20,172 | ||||||
Chemicals | 1.8 | 18,582 | ||||||
Aerospace & Defense | 1.8 | 18,140 | ||||||
Software | 1.5 | 15,792 | ||||||
Biotechnology | 1.5 | 15,787 | ||||||
Metals & Mining | 1.3 | 13,406 | ||||||
Multiline Retail | 1.0 | 10,335 | ||||||
Internet & Catalog Retail | 1.0 | 10,045 | ||||||
Diversified Consumer Services | 1.0 | 9,987 | ||||||
Food Products | 0.9 | 9,516 | ||||||
Household Durables | 0.9 | 9,187 | ||||||
Machinery | 0.9 | 9,021 | ||||||
Automobiles | 0.9 | 8,871 | ||||||
Communications Equipment | 0.7 | 7,201 | ||||||
Road & Rail | 0.6 | 6,367 | ||||||
Wireless Telecommunication Services | 0.6 | 6,340 | ||||||
Hotels Restaurants & Leisure | 0.6 | 5,882 | ||||||
Diversified Telecommunication Services | 0.5 | 5,248 | ||||||
Commercial Services & Supplies | 0.4 | 4,466 | ||||||
Liabilities in Excess of Other Assets | (2.6 | ) | (27,050 | ) | ||||
NET ASSETS | 100.0 | % | $1,023,192 |
Portfolio holdings are subject to change at any time.
The accompanying notes are an integral part of the financial statements.
10
Rivington Diversified Global Equity Fund by WHV
Portfolio of Investments
October 31, 2015
(Unaudited)
Number | Value | |||||
COMMON STOCKS — 102.6% |
| |||||
Australia — 1.3% |
| |||||
BHP Billiton, Ltd. | 673 | $ | 11,038 | |||
BHP Billiton, Ltd., SP ADR | 72 | 2,368 | ||||
|
| |||||
13,406 | ||||||
|
| |||||
Belgium — 0.7% | ||||||
KBC Groep NV | 110 | 6,688 | ||||
|
| |||||
Brazil — 0.6% | ||||||
Banco Bradesco SA, ADR | 1,052 | 5,723 | ||||
|
| |||||
Canada — 4.5% | ||||||
Alimentation Couche-Tard, Inc., Class B | 350 | 15,056 | ||||
Bank of Montreal | 183 | 10,631 | ||||
Dollarama, Inc. | 153 | 10,335 | ||||
Linamar Corp. | 178 | 10,344 | ||||
|
| |||||
46,366 | ||||||
|
| |||||
China — 2.1% | ||||||
CNOOC Ltd. | 7,000 | 7,907 | ||||
CNOOC, Ltd., SP ADR | 24 | 2,728 | ||||
NetEase, Inc., ADR | 77 | 11,129 | ||||
|
| |||||
21,764 | ||||||
|
| |||||
Denmark — 3.4% | ||||||
Novo Nordisk AS, Class B | 353 | 18,746 | ||||
Vestas Wind Systems AS | 272 | 15,859 | ||||
|
| |||||
34,605 | ||||||
|
| |||||
Finland — 1.9% | ||||||
Sampo Oyj, Class A | 400 | 19,551 | ||||
|
| |||||
France — 4.5% | ||||||
AXA SA | 700 | 18,682 | ||||
Casino Guichard Perrachon SA | 92 | 5,286 | ||||
Thales SA | 105 | 7,591 | ||||
TOTAL SA | 155 | 7,496 |
Number | Value | |||||
COMMON STOCKS — (Continued) |
| |||||
France — (Continued) |
| |||||
Valeo SA | 48 | $ | 7,412 | |||
|
| |||||
46,467 | ||||||
|
| |||||
Germany — 3.0% | ||||||
Continental AG | 32 | 7,684 | ||||
CTS Eventim AG & Co KGaA | 141 | 5,519 | ||||
Hannover Rueck SE | 76 | 8,786 | ||||
Krones AG | 75 | 9,021 | ||||
|
| |||||
31,010 | ||||||
|
| |||||
Hong Kong — 2.6% | ||||||
AIA Group Ltd. | 3,600 | 21,108 | ||||
Noble Group Ltd. | 14,700 | 5,278 | ||||
|
| |||||
26,386 | ||||||
|
| |||||
India — 0.9% | ||||||
Tata Motors, Ltd., SP ADR* | 300 | 8,871 | ||||
|
| |||||
Indonesia — 0.5% | ||||||
Telekomunikasi Indonesia Tbk PT, SP ADR | 132 | 5,248 | ||||
|
| |||||
Japan — 7.9% | ||||||
Century Tokyo Leasing Corp. | 300 | 10,176 | ||||
CyberAgent, Inc. | 200 | 8,214 | ||||
ITOCHU Corp. | 1,600 | 20,021 | ||||
Mitsubishi Electric Corp. | 600 | 6,249 | ||||
NHK Spring Co., Ltd. | 400 | 4,071 | ||||
ORIX Corp. | 700 | 10,223 | ||||
Start Today Co., Ltd. | 300 | 10,045 | ||||
Sumitomo Mitsui Financial Group, Inc. | 300 | 11,968 | ||||
|
| |||||
80,967 | ||||||
|
|
The accompanying notes are an integral part of the financial statements.
11
Rivington Diversified Global Equity Fund by WHV
Portfolio of Investments (Continued)
October 31, 2015
(Unaudited)
Number | Value | |||||
COMMON STOCKS — (Continued) |
| |||||
Mexico — 0.6% |
| |||||
America Movil SAB de CV, SP ADR, Class L | 356 | $ | 6,340 | |||
|
| |||||
Netherlands — 1.7% | ||||||
ING Groep NV, CVA | 300 | 4,366 | ||||
Royal Dutch Shell PLC, Class A | 479 | 12,548 | ||||
|
| |||||
16,914 | ||||||
|
| |||||
Singapore — 0.7% | ||||||
DBS Group Holdings Ltd. | 600 | 7,377 | ||||
|
| |||||
South Korea — 0.6% | ||||||
Samsung Electronics Co. Ltd., GDR | 10 | 5,975 | ||||
|
| |||||
Sweden — 3.3% | ||||||
Investor AB, Class B | 729 | 26,979 | ||||
Skandinaviska Enskilda Banken AB, Class A | 622 | 6,532 | ||||
|
| |||||
33,511 | ||||||
|
| |||||
Switzerland — 2.7% | ||||||
Swiss Re AG | 80 | 7,426 | ||||
UBS Group AG, Registered Shares | 1,010 | 20,172 | ||||
|
| |||||
27,598 | ||||||
|
| |||||
Taiwan — 0.3% | ||||||
Taiwan Semiconductor Manufacturing Co., Ltd., SP ADR | 125 | 2,745 | ||||
|
| |||||
Thailand — 0.8% | ||||||
Krung Thai Bank PCL, NVDR | 17,300 | 8,301 | ||||
|
| |||||
United Kingdom — 4.7% |
| |||||
Berkeley Group Holdings PLC | 180 | 9,187 |
Number | Value | |||||
COMMON STOCKS — (Continued) |
| |||||
United Kingdom — (Continued) |
| |||||
Dialog Semiconductor PLC* | 224 | $ | 8,287 | |||
GKN PLC | 1,791 | 7,914 | ||||
Legal & General Group PLC | 2,456 | 9,890 | ||||
Shire PLC | 92 | 6,967 | ||||
Stagecoach Group PLC | 1,194 | 6,367 | ||||
|
| |||||
48,612 | ||||||
|
| |||||
United States — 53.3% |
| |||||
Aetna, Inc. | 73 | 8,379 | ||||
Alphabet, Inc., Class A* | 40 | 29,496 | ||||
Apple, Inc. | 275 | 32,862 | ||||
AutoZone, Inc.* | 25 | 19,610 | ||||
Berkshire Hathaway Inc., Class B* | 150 | 20,403 | ||||
Bright Horizons Family Solutions, Inc.* | 156 | 9,987 | ||||
Cal-Maine Foods, Inc. | 178 | 9,516 | ||||
Carter’s, Inc. | 100 | 9,088 | ||||
Casey’s General Stores, Inc. | 138 | 14,658 | ||||
Centene Corp.* | 169 | 10,052 | ||||
Chevron Corp. | 223 | 20,266 | ||||
Costco Wholesale Corp. | 142 | 22,453 | ||||
Deluxe Corp. | 75 | 4,466 | ||||
Exxon Mobil Corp. | 332 | 27,470 | ||||
Fifth Third Bancorp | 1,000 | 19,050 | ||||
General Dynamics Corp. | 71 | 10,549 | ||||
Gilead Sciences, Inc. | 146 | 15,787 | ||||
Global Payments, Inc. | 76 | 10,367 | ||||
Harris Corp. | 91 | 7,201 | ||||
Health Net, Inc.* | 182 | 11,695 | ||||
Home Depot, Inc. (The) | 125 | 15,455 |
The accompanying notes are an integral part of the financial statements.
12
Rivington Diversified Global Equity Fund by WHV
Portfolio of Investments (Concluded)
October 31, 2015
(Unaudited)
Number | Value | |||||
COMMON STOCKS — (Continued) |
| |||||
United States — (Continued) |
| |||||
LyondellBasell Industries NV, Class A | 200 | $ | 18,582 | |||
McKesson Corp. | 55 | 9,834 | ||||
MetLife, Inc. | 100 | 5,038 | ||||
Microsoft Corp. | 300 | 15,792 | ||||
Molina Healthcare, Inc.* | 139 | 8,618 | ||||
NIKE, Inc., Class B | 127 | 16,641 | ||||
Skyworks Solutions, Inc. | 125 | 9,655 | ||||
Starbucks Corp. | 94 | 5,882 | ||||
TJX Cos, Inc. (The) | 250 | 18,298 | ||||
Ulta Salon Cosmetics & Fragrance, Inc.* | 51 | 8,872 | ||||
UnitedHealth Group, Inc. | 164 | 19,316 | ||||
Valero Energy Corp. | 160 | 10,547 | ||||
Visa, Inc., Class A | 352 | 27,308 | ||||
Walt Disney Co. (The) | 231 | 26,274 | ||||
Wells Fargo & Co. | 302 | 16,350 | ||||
|
| |||||
545,817 | ||||||
|
| |||||
TOTAL COMMON STOCKS (Cost $1,078,957) | 1,050,242 | |||||
|
| |||||
TOTAL INVESTMENTS - 102.6% | 1,050,242 | |||||
LIABILITIES IN EXCESS OF OTHER ASSETS - (2.6)% | (27,050 | ) | ||||
|
| |||||
NET ASSETS - 100.0% | $ | 1,023,192 | ||||
|
|
Legend: | ||
ADR | American Depository Receipt | |
GDR | Global Depository Receipt | |
NVDR | Non-Voting Depository Receipt | |
PCL | Public Company Limited | |
PLC | Public Limited Company | |
SP ADR | Sponsored American Depository Receipt |
* | Non-income producing. |
The accompanying notes are an integral part of the financial statements.
13
Rivington Funds by WHV
Statements of Assets and Liabilities
October 31, 2015
(Unaudited)
Rivington Diversified International Equity Fund by WHV | Rivington Diversified Global Equity Fund by WHV | |||||||||
Assets | ||||||||||
Investments, at value (Cost $1,089,952 and $1,078,957, respectively) | $ | 1,022,043 | $ | 1,050,242 | ||||||
Cash | 13,417 | 31,564 | ||||||||
Foreign currency (Cost $14 and $7, respectively) | 14 | 7 | ||||||||
Receivable for investments sold | 30,838 | 12,576 | ||||||||
Dividends and interest receivable | 2,123 | 1,284 | ||||||||
Receivable from Investment Adviser | 19,359 | 14,310 | ||||||||
Prepaid expenses and other assets | 91 | 94 | ||||||||
|
|
|
| |||||||
Total assets | 1,087,885 | 1,110,077 | ||||||||
|
|
|
| |||||||
Liabilities | ||||||||||
Payable for investments purchased | 9,193 | 5,698 | ||||||||
Payable for transfer agent fees | 19,179 | 18,019 | ||||||||
Payable for administration and accounting fees | 18,224 | 14,840 | ||||||||
Payable for legal fees | 8,247 | 8,243 | ||||||||
Payable for custodian fees | 8,073 | 7,590 | ||||||||
Payable for audit fees | 7,432 | 7,432 | ||||||||
Payable for printing fees | 7,013 | 7,013 | ||||||||
Payable for Trustees and Officers | 4,209 | 4,209 | ||||||||
Accrued expenses | 13,848 | 13,841 | ||||||||
|
|
|
| |||||||
Total liabilities | 95,418 | 86,885 | ||||||||
|
|
|
| |||||||
Net Assets | $ | 992,467 | $ | 1,023,192 | ||||||
|
|
|
| |||||||
Net Assets Consist of: | ||||||||||
Capital stock, $0.01 par value | $ | 1,097 | $ | 1,094 | ||||||
Paid-in capital | 1,089,468 | 1,089,338 | ||||||||
Accumulated net investment income | 3,617 | 2,082 | ||||||||
Accumulated net realized loss from investments | (33,822 | ) | (40,606 | ) | ||||||
Net unrealized depreciation on investments and foreign currency transactions | (67,893 | ) | (28,716 | ) | ||||||
|
|
|
| |||||||
Net Assets | $ | 992,467 | $ | 1,023,192 | ||||||
|
|
|
|
The accompanying notes are an integral part of the financial statements.
14
Rivington Funds by WHV
Statements of Assets and Liabilities (Concluded)
October 31, 2015
(Unaudited)
Rivington Diversified International Equity Fund by WHV | Rivington Diversified Global Equity Fund by WHV | |||||||||
Class A Shares: | ||||||||||
Net asset value and redemption price per share ($4,521 / 500 shares) and ($4,671 / 500 shares), respectively | $ | 9.04 | $ | 9.34 | ||||||
|
|
|
| |||||||
Maximum offering price per share (100/94.25 of $9.04 and 100/94.25 of $9.34), respectively | $ | 9.59 | $ | 9.91 | ||||||
|
|
|
| |||||||
Class I Shares: | ||||||||||
Net asset value, offering and redemption price per share ($987,946 / 109,164 shares) and ($1,018,521 / 108,909 shares), respectively | $ | 9.05 | $ | 9.35 | ||||||
|
|
|
|
The accompanying notes are an integral part of the financial statements.
15
Rivington Funds by WHV
Statements of Operations
For the Period Ended October 31, 2015*
(Unaudited)
Rivington Diversified International Equity Fund by WHV | Rivington Diversified Global Equity Fund by WHV | |||||||||
Investment Income | ||||||||||
Dividends | $ | 7,599 | $ | 5,795 | ||||||
Less: foreign taxes withheld | (644 | ) | (281 | ) | ||||||
|
|
|
| |||||||
Total investment income | 6,955 | 5,514 | ||||||||
|
|
|
| |||||||
Expenses | ||||||||||
Advisory fees (Note 2) | 2,492 | 2,562 | ||||||||
Administration and accounting fees (Note 2) | 28,513 | 28,513 | ||||||||
Transfer agent fees (Note 2) | 20,339 | 20,339 | ||||||||
Registration and filing fees | 16,436 | 16,436 | ||||||||
Custodian fees (Note 2) | 8,556 | 8,556 | ||||||||
Legal fees | 8,416 | 8,416 | ||||||||
Audit fees | 7,431 | 7,432 | ||||||||
Printing and shareholder reporting fees | 7,013 | 7,013 | ||||||||
Trustees’ and officers’ fees (Note 2) | 4,209 | 4,209 | ||||||||
Distribution fees (Class A) (Note 2) | 4 | 4 | ||||||||
Other expenses | 3,431 | 3,431 | ||||||||
|
|
|
| |||||||
Total expenses before waivers and reimbursements | 106,840 | 106,911 | ||||||||
|
|
|
| |||||||
Less: waivers and reimbursements (Note 2) | (103,502 | ) | (103,479 | ) | ||||||
|
|
|
| |||||||
Net expenses after waivers and reimbursements | 3,338 | 3,432 | ||||||||
|
|
|
| |||||||
Net investment income | 3,617 | 2,082 | ||||||||
|
|
|
| |||||||
Net realized and unrealized gain/(loss) from investments: | ||||||||||
Net realized loss from investments | (32,519 | ) | (39,749 | ) | ||||||
Net realized loss from foreign currency transactions | (1,303 | ) | (857 | ) | ||||||
Net change in unrealized appreciation/(depreciation) on investments | (67,909 | ) | (28,715 | ) | ||||||
Net change in unrealized appreciation/(depreciation) on foreign currency transactions | 16 | (1 | ) | |||||||
|
|
|
| |||||||
Net realized and unrealized loss on investments | (101,715 | ) | (69,322 | ) | ||||||
|
|
|
| |||||||
Net decrease in net assets resulting from operations | $ | (98,098 | ) | $ | (67,240 | ) | ||||
|
|
|
|
* | The Funds commenced operations on June 24, 2015. |
The accompanying notes are an integral part of the financial statements.
16
Rivington Diversified International Equity Fund by WHV
Statement of Changes in Net Assets
For the Period Ended October 31, 2015 (Unaudited)* | |||||
Increase/(decrease) in net assets from operations: | |||||
Net investment income | $ | 3,617 | |||
Net realized loss from investments and foreign currency transactions | (33,822 | ) | |||
Net change in unrealized appreciation/(depreciation) on investments and foreign currency transactions | (67,893 | ) | |||
|
| ||||
Net decrease in net assets resulting from operations | (98,098 | ) | |||
|
| ||||
Increase in Net Assets Derived from Capital Share Transactions (Note 4) | 1,090,565 | ||||
|
| ||||
Total increase in net assets | 992,467 | ||||
|
| ||||
Net assets | |||||
Beginning of period | — | ||||
|
| ||||
End of period | $ | 992,467 | |||
|
| ||||
Accumulated net investment income, end of period | $ | 3,617 | |||
|
|
* | The Fund commenced operations on June 24, 2015. |
The accompanying notes are an integral part of the financial statements.
17
Rivington Diversified Global Equity Fund by WHV
Statement of Changes in Net Assets
For the Period Ended October 31, 2015 (Unaudited)* | |||||
Increase/(decrease) in net assets from operations: | |||||
Net investment income | $ | 2,082 | |||
Net realized loss from investments and foreign currency transactions | (40,606 | ) | |||
Net change in unrealized appreciation/(depreciation) on investments and foreign currency transactions | (28,716 | ) | |||
|
| ||||
Net decrease in net assets resulting from operations | (67,240 | ) | |||
|
| ||||
Increase in Net Assets Derived from Capital Share Transactions (Note 4) | 1,090,432 | ||||
|
| ||||
Total increase in net assets | 1,023,192 | ||||
|
| ||||
Net assets | |||||
Beginning of period | — | ||||
|
| ||||
End of period | $ | 1,023,192 | |||
|
| ||||
Accumulated net investment income, end of period | $ | 2,082 | |||
|
|
* | The Fund commenced operations on June 24, 2015. |
The accompanying notes are an integral part of the financial statements.
18
Rivington Diversified International Equity Fund by WHV
Financial Highlights
Contained below is per share operating performance data for Class A Shares outstanding, total investment return, ratios to average net assets and other supplemental data for the respective periods. 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). This information has been derived from information provided in the financial statements and should be read in conjunction with the financial statements and the notes thereto.
Class A Shares | |||||
For the Period June 24, 2015* to October 31, 2015 (Unaudited) | |||||
Per Share Operating Performance | |||||
Net asset value, beginning of period | $ | 10.00 | |||
|
| ||||
Net investment income(1) | 0.03 | ||||
Net realized and unrealized loss on investments | (0.99 | ) | |||
|
| ||||
Net decrease in net assets resulting from operations | (0.96 | ) | |||
|
| ||||
Net asset value, end of period | $ | 9.04 | |||
|
| ||||
Total investment return(2) | (9.60 | )% | |||
Ratio/Supplemental Data | |||||
Net assets, end of period (000’s omitted) | $ | 5 | |||
Ratio of expenses to average net assets | 1.24 | %(3) | |||
Ratio of expenses to average net assets without waivers, expense reimbursements and/or recoupment(4) | 31.99 | %(3) | |||
Ratio of net investment income to average net assets | 0.83 | %(3) | |||
Portfolio turnover rate | 27.80 | %(5) |
* | Commencement of operations. |
(1) | The selected per share data was calculated using the average shares outstanding method for the period. |
(2) | Total investment return is calculated assuming a purchase of shares on the first day and a sale of shares on the last day of each period reported and includes reinvestments of dividends and distributions, if any. Total returns for periods less than one year are not annualized. Total investment return does not reflect the impact of the maximum front-end sales load of 5.75%. If reflected, the return would be lower. |
(3) | Annualized. |
(4) | During the period, certain fees were reduced or expenses were recouped. If such fee reductions or recoupments had not occurred, the ratios would have been as indicated (See Note 2). |
(5) | Not annualized. |
The accompanying notes are an integral part of the financial statements.
19
Rivington Diversified International Equity Fund by WHV
Financial Highlights
Contained below is per share operating performance data for Class I Shares outstanding, total investment return, ratios to average net assets and other supplemental data for the respective periods. 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). This information has been derived from information provided in the financial statements and should be read in conjunction with the financial statements and the notes thereto.
Class I Shares | |||||
For the Period June 24, 2015* to October 31, 2015 (Unaudited) | |||||
Per Share Operating Performance | |||||
Net asset value, beginning of period | $ | 10.00 | |||
|
| ||||
Net investment income(1) | 0.03 | ||||
Net realized and unrealized loss on investments | (0.98 | ) | |||
|
| ||||
Net decrease in net assets resulting from operations | (0.95 | ) | |||
|
| ||||
Net asset value, end of period | $ | 9.05 | |||
|
| ||||
Total investment return(2) | (9.50 | )% | |||
Ratio/Supplemental Data | |||||
Net assets, end of period (000’s omitted) | $ | 988 | |||
Ratio of expenses to average net assets | 0.99 | %(3) | |||
Ratio of expenses to average net assets without waivers, expense reimbursements and/or recoupment(4) | 31.74 | %(3) | |||
Ratio of net investment income to average net assets | 1.08 | %(3) | |||
Portfolio turnover rate | 27.80 | %(5) |
* | Commencement of operations. |
(1) | The selected per share data was calculated using the average shares outstanding method for the period. |
(2) | Total investment return is calculated assuming a purchase of shares on the first day and a sale of shares on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total returns for periods less than one year are not annualized. |
(3) | Annualized. |
(4) | During the period, certain fees were reduced or expenses were recouped. If such fee reductions or recoupments had not occurred, the ratios would have been as indicated (See Note 2). |
(5) | Not annualized. |
The accompanying notes are an integral part of the financial statements.
20
Rivington Diversified Global Equity Fund by WHV
Financial Highlights
Contained below is per share operating performance data for Class A Shares outstanding, total investment return, ratios to average net assets and other supplemental data for the respective period. 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). This information has been derived from information provided in the financial statements and should be read in conjunction with the financial statements and the notes thereto.
Class A Shares | |||||
For the Period June 24, 2015* to October 31, 2015 (Unaudited) | |||||
Per Share Operating Performance | |||||
Net asset value, beginning of period | $ | 10.00 | |||
|
| ||||
Net investment income(1) | 0.01 | ||||
Net realized and unrealized loss on investments | (0.67 | ) | |||
|
| ||||
Net decrease in net assets resulting from operations | (0.66 | ) | |||
|
| ||||
Net asset value, end of period | $ | 9.34 | |||
|
| ||||
Total investment return(2) | (6.60 | )% | |||
Ratio/Supplemental Data | |||||
Net assets, end of period (000’s omitted) | $ | 5 | |||
Ratio of expenses to average net assets | 1.24 | %(3) | |||
Ratio of expenses to average net assets without waivers, expense reimbursements and/or recoupment(4) | 31.14 | %(3) | |||
Ratio of net investment income to average net assets | 0.35 | %(3) | |||
Portfolio turnover rate | 30.16 | %(5) |
* | Commencement of operations. |
(1) | The selected per share data was calculated using the average shares outstanding method for the period. |
(2) | Total investment return is calculated assuming a purchase of shares on the first day and a sale of shares on the last day of each period reported and includes reinvestments of dividends and distributions, if any. Total returns for periods less than one year are not annualized. Total investment return does not reflect the impact of the maximum front-end sales load of 5.75%. If reflected, the return would be lower. |
(3) | Annualized. |
(4) | During the period, certain fees were reduced or expenses were recouped. If such fee reductions or recoupments had not occurred, the ratios would have been as indicated (See Note 2). |
(5) | Not annualized. |
The accompanying notes are an integral part of the financial statements.
21
Rivington Diversified Global Equity Fund by WHV
Financial Highlights
Contained below is per share operating performance data for Class I Shares outstanding, total investment return, ratios to average net assets and other supplemental data for the respective period. 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). This information has been derived from information provided in the financial statements and should be read in conjunction with the financial statements and the notes thereto.
Class I Shares | |||||
For the Period June 24, 2015* to October 31, 2015 (Unaudited) | |||||
Per Share Operating Performance | |||||
Net asset value, beginning of period | $ | 10.00 | |||
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Net investment income(1) | 0.02 | ||||
Net realized and unrealized loss on investments | (0.67 | ) | |||
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Net decrease in net assets resulting from operations | (0.65 | ) | |||
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Net asset value, end of period | $ | 9.35 | |||
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Total investment return(2) | (6.50 | )% | |||
Ratio/Supplemental Data | |||||
Net assets, end of period (000’s omitted) | $ | 1,019 | |||
Ratio of expenses to average net assets | 0.99 | %(3) | |||
Ratio of expenses to average net assets without waivers, expense reimbursements and/or recoupment(4) | 30.89 | %(3) | |||
Ratio of net investment income to average net assets | 0.60 | %(3) | |||
Portfolio turnover rate | 30.16 | %(5) |
* | Commencement of operations. |
(1) | The selected per share data was calculated using the average shares outstanding method for the period. |
(2) | Total investment return is calculated assuming a purchase of shares on the first day and a sale of shares on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total returns for periods less than one year are not annualized. |
(3) | Annualized. |
(4) | During the period, certain fees were reduced or expenses were recouped. If such fee reductions or recoupments had not occurred, the ratios would have been as indicated (See Note 2). |
(5) | Not annualized. |
The accompanying notes are an integral part of the financial statements.
22
Rivington Funds by WHV
Notes to Financial Statements
October 31, 2015
(Unaudited)
1. Organization and Significant Accounting Policies
The Rivington Diversified International Equity Fund by WHV and Rivington Diversified Global Equity Fund by WHV (each a “Fund” and together the “Funds”) are diversified, open-end management investment companies registered under the Investment Company Act of 1940, as amended, (the “1940 Act”), and commenced investment operations on June 24, 2015. The Funds are each a separate series of FundVantage Trust (the “Trust”) which was organized as a Delaware statutory trust on August 28, 2006. The Trust is a “series trust” authorized to issue an unlimited number of separate series or classes of shares of beneficial interest. Each series is treated as a separate entity for certain matters under the 1940 Act, and for other purposes, and a shareholder of one series is not deemed to be a shareholder of any other series. The Funds offer separate classes of shares, Class A and Class I Shares. Class A Shares are sold subject to a front-end sales charge. Front-end sales charges may be reduced or waived under certain circumstances. A contingent deferred sales charge (“CDSC”) of up to 1.00% may apply for investments of $1 million or more of Class A Shares of each Fund (and therefore no initial sales charge was paid) and shares are redeemed within 18 months after initial purchase. The CDSC shall not apply to those purchases of Class A Shares of $1 million or more where Foreside Funds Distributors LLC (the “Underwriter”) did not pay a commission to the selling broker-dealer.
The Funds are investment companies and follow accounting and reporting guidance in the Financial Accounting Standards Board Accounting Standards Codification Topic 946.
Portfolio Valuation — Each Fund’s net asset value (“NAV”) is calculated once daily at the close of regular trading hours on the New York Stock Exchange (“NYSE”) (typically 4:00 p.m. Eastern time) on each day the NYSE is open. Securities held by each Fund are valued using the closing price or the last sale price on a national securities exchange or the National Association of Securities Dealers Automatic Quotation System (“NASDAQ”) market system where they are primarily traded. The Funds’ equity securities listed on any national or foreign exchange market system will be valued at the last sale price. Equity securities traded in the over-the-counter market are valued at their closing sale or official closing price. If there were no transactions on that day, securities traded principally on an exchange will be valued at the mean of the last bid and ask prices prior to the market close. Prices for equity securities normally are supplied by an independent pricing service approved by the Trust’s Board of Trustees (“Board of Trustees”). Fixed income securities are valued based on market quotations, which are furnished by an independent pricing service. Fixed income securities having remaining maturities of 60 days or less are generally valued at amortized cost, provided such amount approximates fair value. Any assets held by the Funds that are denominated in foreign currencies are valued daily in U.S. dollars at the foreign currency exchange rates that are prevailing at the time that the Funds determine the daily NAV per share. Foreign securities may trade on weekends or other days when the Funds do not calculate NAV. As a result, the market value of these investments may change on days when you cannot buy or sell shares of the Funds. Investments in other open-end investment companies are valued based on the NAV of such investment companies (which may use fair value pricing as disclosed in their prospectuses). Securities that do not
23
Rivington Funds by WHV
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
have a readily available current market value are valued in accordance with procedures adopted by the Board of Trustees. The Board of Trustees has adopted methods for valuing securities and other assets in circumstances where market quotes are not readily available and has delegated to WHV Investment Management, Inc. (“WHV” or the “Adviser”) the responsibility for applying the valuation methods. Relying on prices supplied by pricing services or dealers or using fair valuation may result in values that are higher or lower than the values used by other investment companies and investors to price the same investments.
Fair Value Measurements — The inputs and valuation techniques used to measure fair value of each Fund’s investments are summarized into three levels as described in the hierarchy below:
● | Level 1 — | quoted prices in active markets for identical securities; | ||
● | Level 2 — | other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.); and | ||
● | Level 3 — | significant unobservable inputs (including each Fund’s own assumptions in determining the fair value of investments). |
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
Significant events (such as movement in the U.S. securities market, or other regional and local developments) may occur between the time that foreign markets close (where the security is principally traded) and the time that each Fund calculates its NAV (generally, the close of the NYSE) that may impact the value of securities traded in these foreign markets. As a result, each Fund fair values foreign securities using an independent pricing service which considers the correlation of the trading patterns of the foreign security to the intraday trading in the U.S. markets for investments such as American Depositary Receipts, financial futures, exchange traded funds and certain indexes as well as prices for similar securities. Such fair valuations are categorized as Level 2 in the hierarchy.
24
Rivington Funds by WHV
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
The following is a summary of the inputs used, as of October 31, 2015, in valuing each Fund’s investments carried at fair value:
Rivington Diversified International Equity Fund by WHV | Total Value at 10/31/15 | Level 1 Quoted Price | Level 2 Other Significant Observable Inputs | Level 3 Significant Unobservable Inputs | ||||||||||||
Common Stocks: | ||||||||||||||||
Australia | $ | 31,707 | $ | 12,367 | $ | 19,340 | $ | — | ||||||||
Belgium | 15,687 | — | 15,687 | — | ||||||||||||
Brazil | 4,586 | 4,586 | — | — | ||||||||||||
Canada | 76,031 | 76,031 | — | — | ||||||||||||
China | 51,558 | 24,984 | 26,574 | — | ||||||||||||
Denmark | 48,838 | — | 48,838 | — | ||||||||||||
Finland | 30,842 | — | 30,842 | — | ||||||||||||
France | 69,743 | — | 69,743 | — | ||||||||||||
Germany | 63,825 | — | 63,825 | — | ||||||||||||
Hong Kong | 34,667 | — | 34,667 | — | ||||||||||||
India | 8,339 | 8,339 | — | — | ||||||||||||
Indonesia | 7,674 | 7,674 | — | — | ||||||||||||
Ireland | 19,614 | — | 19,614 | — | ||||||||||||
Japan | 170,478 | — | 170,478 | — | ||||||||||||
Mexico | 8,763 | 8,763 | — | — | ||||||||||||
Netherlands | 49,370 | 13,244 | 36,126 | — | ||||||||||||
Singapore | 17,213 | — | 17,213 | — | ||||||||||||
South Africa | 8,956 | — | 8,956 | — | ||||||||||||
South Korea | 20,911 | — | 20,911 | — | ||||||||||||
Sweden | 47,804 | — | 47,804 | — | ||||||||||||
Switzerland | 67,042 | — | 67,042 | — | ||||||||||||
Taiwan | 12,034 | 12,034 | — | — | ||||||||||||
Thailand | 10,214 | — | 10,214 | — | ||||||||||||
United Kingdom | 105,675 | 14,198 | 91,477 | — | ||||||||||||
United States | 40,472 | 40,472 | — | — | ||||||||||||
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Total Investments in Securities | $ | 1,022,043 | $ | 222,692 | $ | 799,351 | $ | — | ||||||||
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25
Rivington Funds by WHV
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
Rivington Diversified Global Equity Fund by WHV | Total Value at 10/31/15 | Level 1 Quoted Price | Level 2 Other Significant Observable Inputs | Level 3 Significant Unobservable Inputs | ||||||||||||
Common Stocks: | ||||||||||||||||
Australia | $ | 13,406 | $ | 2,368 | $ | 11,038 | $ | — | ||||||||
Belgium | 6,688 | — | 6,688 | — | ||||||||||||
Brazil | 5,723 | 5,723 | — | — | ||||||||||||
Canada | 46,366 | 46,366 | — | — | ||||||||||||
China | 21,764 | 13,857 | 7,907 | — | ||||||||||||
Denmark | 34,605 | — | 34,605 | — | ||||||||||||
Finland | 19,551 | — | 19,551 | — | ||||||||||||
France | 46,467 | — | 46,467 | — | ||||||||||||
Germany | 31,010 | — | 31,010 | — | ||||||||||||
Hong Kong | 26,386 | — | 26,386 | — | ||||||||||||
India | 8,871 | 8,871 | — | — | ||||||||||||
Indonesia | 5,248 | 5,248 | — | — | ||||||||||||
Ireland | 6,967 | — | 6,967 | — | ||||||||||||
Japan | 80,967 | — | 80,967 | — | ||||||||||||
Mexico | 6,340 | 6,340 | — | — | ||||||||||||
Netherlands | 16,914 | 4,366 | 12,548 | — | ||||||||||||
Singapore | 7,377 | — | 7,377 | — | ||||||||||||
South Korea | 5,975 | — | 5,975 | — | ||||||||||||
Sweden | 33,511 | — | 33,511 | — | ||||||||||||
Switzerland | 27,598 | — | 27,598 | — | ||||||||||||
Taiwan | 2,745 | 2,745 | — | — | ||||||||||||
Thailand | 8,301 | — | 8,301 | — | ||||||||||||
United Kingdom | 41,645 | — | 41,645 | — | ||||||||||||
United States | 545,817 | 545,817 | — | — | ||||||||||||
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Total Investments in Securities | $ | 1,050,242 | $ | 641,701 | $ | 408,541 | $ | — | ||||||||
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At the end of each quarter, management evaluates the classification of Levels 1, 2 and 3 assets and liabilities. Various factors are considered such as changes in liquidity from the prior reporting period; whether or not a broker is willing to execute at the quoted price; the depth and consistency of prices from third party pricing services; and the existence of contemporaneous, observable trades in the market. Additionally, management evaluates the classification of Level 1 and Level 2 assets and liabilities on a quarterly basis for changes in listings or delistings on national exchanges.
26
Rivington Funds by WHV
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of each Fund’s investments may fluctuate from period to period. Additionally, the fair value of investments may differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially from the values the Fund may ultimately realize. Further, such investments may be subject to legal and other restrictions on resale or otherwise less liquid than publicly traded securities.
For fair valuations using significant unobservable inputs, accounting principles generally accepted in the United States of America (“U.S. GAAP”) require each Fund to present a reconciliation of the beginning to ending balances for reported market values that presents changes attributable to total realized and unrealized gains or losses, purchase and sales, and transfers in and out of Level 3 during the period. Transfers in and out between Levels are based on values at the end of the period. U.S. GAAP also requires each Fund to disclose amounts and reasons for all transfers in and out of Level 1 and Level 2 fair value measurements. A reconciliation of Level 3 investments is presented only when each Fund had an amount of Level 3 investments at the end of the reporting period that was meaningful in relation to its net assets. The amounts and reasons for all transfers in and out of each Level within the three-tier hierarchy are disclosed when each Fund had an amount of total transfers during the reporting period that was meaningful in relation to its net assets as of the end of the reporting period.
For the period ended October 31, 2015, there were no transfers between Levels 1, 2 and 3 for the Funds.
Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes at the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates and those differences could be material.
Investment Transactions, Investment Income and Expenses — Investment transactions are recorded on trade date for financial statement preparation purposes. Realized gains and losses on investments sold are recorded on the identified cost basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date. Estimated components of distributions received from real estate investment trusts may be considered income, return of capital distributions or capital gain distributions. Return of capital distributions are recorded as a reduction of cost of the related investments. Distribution (12b-1) fees and shareholder services fees relating to a specific class are charged directly to that class. Fund level expenses common to all classes, investment income and realized and unrealized gains and losses on investments are allocated to each class based upon the relative daily net assets of each class. General expenses of the Trust are generally allocated to each fund in proportion to its relative daily net assets. Expenses directly attributable to a particular fund in the Trust are charged directly to that fund. The Funds’ investment income, expenses (other than class specific expenses) and unrealized and realized gains and losses are allocated daily to each class of shares based upon the relative proportion of net assets of each class at the beginning of the day.
27
Rivington Funds by WHV
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
Foreign Currency Translation — Assets and liabilities initially expressed in non-U.S. currencies are translated into U.S. dollars based on the applicable exchange rates at the date of the last business day of the financial statement period. Purchases and sales of securities, interest income, dividends, variation margin received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rates in effect on the transaction date.
The Funds do not separately report the effect of changes in foreign exchange rates from changes in market prices of securities held. Such changes are included with the net realized gain or loss and change in unrealized appreciation or depreciation on investment securities in the Statement of Operations. Other foreign currency transactions resulting in realized and unrealized gain or loss are reported separately as net realized gain or loss and change in unrealized appreciation or depreciation on foreign currencies in the Statement of Operations.
Dividends and Distributions to Shareholders — Dividends from net investment income and distributions from net realized capital gains, if any, are declared, recorded on ex-date and paid at least annually to shareholders. Income dividends and capital gain distributions are determined in accordance with U.S. federal income tax regulations, which may differ from U.S. GAAP. These differences include the treatment of non-taxable dividends, expiring capital loss carryforwards and losses deferred due to wash sales and excise tax regulations. Permanent book and tax basis differences relating to shareholder distributions will result in reclassifications within the components of net assets.
U.S. Tax Status — No provision is made for U.S. income taxes as it is each Fund’s intention to qualify for and elect the tax treatment applicable to regulated investment companies under Subchapter M of the Internal Revenue Code of 1986, as amended, and make the requisite distributions to its shareholders which will be sufficient to relieve it from U.S. income and excise taxes.
Other — In the normal course of business, each Fund may enter into contracts that provide general indemnifications. The Fund’s maximum exposure under these arrangements is dependent on claims that may be made against the Fund in the future, and, therefore, cannot be estimated; however, based on experience, the risk of material loss for such claims is considered remote.
Currency Risk — Each Fund invests in securities of foreign issuers, including American Depositary Receipts. These markets are subject to special risks associated with foreign investments not typically associated with investing in U.S. markets. Because the foreign securities in which each Fund may invest generally trade in currencies other than the U.S. dollar, changes in currency exchange rates will affect the Fund’s NAV, the value of dividends and interest earned and gains and losses realized on the sale of securities. Because the NAV for each Fund is determined on the basis of U.S. dollars, each Fund
28
Rivington Funds by WHV
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
may lose money by investing in a foreign security if the local currency of a foreign market depreciates against the U.S. dollar, even if the local currency value of a Fund’s holdings goes up. Generally, a strong U.S. dollar relative to these other currencies will adversely affect the value of the Fund’s holdings in foreign securities.
Foreign Securities Market Risk — Securities of many non-U.S. companies may be less liquid and their prices more volatile than securities of comparable U.S. companies. Securities of companies traded in many countries outside the U.S., particularly emerging markets countries, may be subject to further risks due to the inexperience of local investment professionals and financial institutions, the possibility of permanent or temporary termination of trading and greater spreads between bid and asked prices of securities. In addition, non-U.S. stock exchanges and investment professionals are subject to less governmental regulation, and commissions may be higher than in the United States. Also, there may be delays in the settlement of non-U.S. stock exchange transactions.
Emerging Markets Risk — Each Fund invests in emerging market instruments which are subject to certain credit and market risks. The securities and currency markets of emerging market countries are generally smaller, less developed, less liquid and more volatile than the securities and currency markets of the United States and other developed markets. Disclosure and regulatory standards in many respects are less stringent than in other developed markets. There also may be a lower level of monitoring and regulation of securities markets in emerging market countries and the activities of investors in such markets and enforcement of existing regulations may be extremely limited. Political and economic structures in many of these countries may be in their infancy and developing rapidly, and such countries may lack the social, political and economic stability characteristics of more developed countries.
2. Transactions with Affiliates and Related Parties
WHV serves as investment adviser to the Funds pursuant to an investment advisory agreement with the Trust (the “Advisory Agreement”). For its services, the Adviser is paid a monthly fee at the annual rate of 0.74% and 0.74% for the Rivington Diversified International Equity Fund by WHV and Rivington Diversified Global Equity Fund by WHV, respectively, of each Fund’s average daily net assets. The Adviser has contractually agreed to reduce its investment advisory fee and/or reimburse certain expenses of the Rivington Diversified International Equity Fund by WHV and the Rivington Diversified Global Equity Fund by WHV to the extent necessary to ensure that the Fund’s total operating expenses, excluding taxes, any class-specific expenses (such as distribution fees, shareholder service fees, or transfer agency fees), “Acquired Fund” fees and expenses, interest, extraordinary items, and brokerage commissions, do not exceed 0.99% (on an annual basis) of the Diversified International Equity Fund by WHV’s average daily net assets and 0.99% (on an annual basis) of the Diversified Global Equity Fund by WHV’s average daily net assets (the “Expense Limitation”). The Expense Limitation will remain in place with respect to each Fund until August 31, 2018 unless the Board of Trustees of FundVantage Trust (the “Trust”) approves
29
Rivington Funds by WHV
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
its earlier termination. The Adviser is entitled to recover, subject to approval by the Board of Trustees, such amounts reduced or reimbursed for a period of up to three (3) years from the year in which the Adviser reduced its compensation and/or assumed expenses for a Fund. No recoupment by the Adviser will occur unless a Fund’s expenses are below the respective Expense Limitation.
For the period ended October 31, 2015, investment advisory fees accrued were $2,492 and $2,562 for the Rivington Diversified International Equity Fund by WHV and Rivington Diversified Global Equity Fund by WHV, respectively. For the period ended October 31, 2015, the Adviser waived investment advisory fees of $2,492 and $2,562 and reimbursed fees of $95,984 and $95,891 for the Rivington Diversified International Equity Fund by WHV and Rivington Diversified Global Equity Fund by WHV, respectively.
As of October 31, 2015, the amount of potential recoupment by the Adviser for each Fund was as follows:
Expiration | |||||
April 30, 2019 | |||||
Rivington Diversified International Equity Fund by WHV | $98,476 | ||||
Rivington Diversified Global Equity Fund by WHV | 98,453 |
BNY Mellon Investment Servicing (US) Inc. (“BNY Mellon”) serves as administrator and transfer agent for the Funds. For providing administrative and accounting services, BNY Mellon is entitled to receive a monthly fee equal to an annual percentage rate of each Fund’s average daily net assets and is subject to certain minimum monthly fees. For the period ended October 31, 2015, BNY Mellon accrued administration and accounting fees totaling $28,513 and $28,513 and waived fees totaling $3,383 and $3,383 for the Rivington Diversified International Equity Fund by WHV and Rivington Diversified Global Equity Fund by WHV, respectively. For providing transfer agent services, BNY Mellon is entitled to receive a monthly fee, subject to certain minimum, and out of pocket expenses. For the period ended October 31, 2015, BNY Mellon accrued transfer agent fees totaling $20,339 and $20,339 and waived fees totaling $1,160 and $1,160 for the Rivington Diversified International Equity Fund by WHV and Rivington Diversified Global Equity Fund by WHV, respectively.
The Bank of New York Mellon (the “Custodian”) provides certain custodial services to the Funds. The Custodian is entitled to receive a monthly fee, subject to certain minimum, and out of pocket expenses. For the period ended October 31, 2015, the Custodian accrued custodian fees totaling $8,556 and $8,556 and waived fees totaling $483 and $483 for the Rivington Diversified International Equity Fund by WHV and Rivington Diversified Global Equity Fund by WHV, respectively.
BNY Mellon and the Custodian have the ability to recover such amounts previously waived if each Fund terminates its agreements with BNY Mellon or the Custodian within three years of signing the agreements.
30
Rivington Funds by WHV
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
Foreside Funds Distributors LLC (“the Underwriter”) provides principal underwriting services to the Funds.
The Trust and the Underwriter are parties to an underwriting agreement. The Trust has adopted a distribution plan for Class A Shares in accordance with Rule 12b-1 under the 1940 Act. Pursuant to the Class A Shares plan, each Fund compensates the Underwriter for direct and indirect costs and expenses incurred in connection with advertising, marketing and other distribution services in an amount not to exceed 0.25% on an annualized basis of the average daily net assets of the Fund’s Class A Shares.
The Trustees of the Trust who are not officers or employees of an investment adviser, sub-adviser or other service provider to the Trust receive compensation in the form of an annual retainer and per meeting fees for their services as a Trustee. The remuneration paid to the Trustees by the Funds during the period ended October 31, 2015, was $38 and $39 for Rivington Diversified International Equity Fund by WHV and Rivington Diversified Global Equity Fund by WHV, respectively. Certain employees of BNY Mellon serve as Officers of the Trust. They are not compensated by the Funds or the Trust.
3. Investment in Securities
For the period from June 24, 2015 (commencement of operations) through October 31, 2015, aggregate purchases and sales of investment securities (excluding U.S. Government and agency short-term investments and other short-term investments) of the Funds were as follows:
Purchases | Sales | |||||||
Rivington Diversified International Equity Fund by WHV | $ | 1,344,414 | $ | 221,943 | ||||
Rivington Diversified Global Equity Fund by WHV | 1,414,932 | 296,226 |
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Rivington Funds by WHV
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
4. Capital Share Transactions
For the period from June 24, 2015 (commencement of operations) through October 31, 2015, transactions in capital shares (authorized shares unlimited) were as follows:
Rivington Diversified | ||||||||||
International Equity Fund | ||||||||||
by WHV | ||||||||||
For the Period Ended | ||||||||||
October 31, 2015 | ||||||||||
(Unaudited) | ||||||||||
Shares |
Amount | |||||||||
Class A Shares | ||||||||||
Sales | 500 | $ | 5,000 | |||||||
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Net increase | 500 | $ | 5,000 | |||||||
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Class I Shares | ||||||||||
Sales | 109,282 | $ | 1,086,577 | |||||||
Redemptions | (118 | ) | (1,012 | ) | ||||||
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Net increase | 109,164 | $ | 1,085,565 | |||||||
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Total net increase | 109,664 | $ | 1,090,565 | |||||||
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Rivington Diversified | ||||||||||
Global Equity Fund | ||||||||||
by WHV | ||||||||||
For the Period Ended | ||||||||||
October 31, 2015 | ||||||||||
(Unaudited) | ||||||||||
Shares |
Amount | |||||||||
Class A Shares | ||||||||||
Sales | 500 | $ | 5,000 | |||||||
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Net increase | 500 | $ | 5,000 | |||||||
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Class I Shares | ||||||||||
Sales | 108,912 | $ | 1,085,459 | |||||||
Redemptions | (3 | ) | (27 | ) | ||||||
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Net increase | 108,909 | $ | 1,085,432 | |||||||
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Total net increase | 109,409 | $ | 1,090,432 | |||||||
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32
Rivington Funds by WHV
Notes to Financial Statements (Concluded)
October 31, 2015
(Unaudited)
5. Federal Tax Information
The Funds have followed the authoritative guidance on accounting for and disclosure of uncertainty in tax positions, which requires the Funds to determine whether a tax position is more likely than not to be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. Each Fund has determined that there was no effect on the financial statements from following this authoritative guidance. In the normal course of business, the Funds are subject to examination by federal, state and local jurisdictions, where applicable, for tax years for which applicable statutes of limitations have not expired.
As of October 31, 2015, the federal tax cost, aggregate gross unrealized appreciation and depreciation of securities held by each Fund were as follows:
Federal Tax | Unrealized | Unrealized | Net Unrealized | |||||||||||||||||
Cost | Appreciation | Depreciation | Depreciation | |||||||||||||||||
Rivington Diversified International Equity Fund by WHV | $1,089,952 | $14,358 | $(82,267) | $(67,909) | ||||||||||||||||
Rivington Diversified Global Equity Fund by WHV | 1,078,957 | 30,624 | (59,339) | (28,715) |
6. Subsequent Event
Management has evaluated the impact of all subsequent events on the Funds through the date the financial statements were issued and has determined that there were no subsequent events requiring recognition or disclosure in the financial statements.
33
Rivington Funds by WHV
Other Information
(Unaudited)
Proxy Voting
Policies and procedures that the Funds use to determine how to vote proxies relating to portfolio securities as well as information regarding how the Fund voted proxies relating to portfolio securities for the most recent 12-month period ended June 30 are available without charge, upon request, by calling (888) 948-4685 and on the Securities and Exchange Commission’s (“SEC”) website at http://www.sec.gov.
Quarterly Portfolio Schedules
The Trust files its complete schedule of portfolio holdings with the SEC for the first and third fiscal quarters of each fiscal year (quarters ended July 31 and January 31) on Form N-Q. The Trust’s Forms N-Q are available on the SEC’s website at http://www.sec.gov and may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. Information on the operation of the SEC’s Public Reference Room may be obtained by calling 1-800-SEC-0330.
Approval of Advisory Agreement
At an in-person meeting held on June 23-24, 2015 (the “Meeting”), the Board of Trustees (the “Board” or “Trustees”) of FundVantage Trust (the “Trust”), including a majority of the Trustees who are not “interested persons” as defined in the Investment Company Act of 1940, as amended (“1940 Act”) (the “Independent Trustees”), unanimously approved an advisory agreement (the “Agreement”) between WHV Investments, Inc. (“WHV” or the “Adviser”) and the Trust, on behalf of each of the Rivington Diversified International Equity Fund by WHV (the “International Fund”) and the Rivington Diversified Global Equity Fund by WHV (the “Global Fund”) (each, a “Fund” and collectively, the “Funds”) for an initial two year period. In determining whether to approve the Agreement, the Trustees considered information provided by the Adviser in accordance with Section 15(c) of the 1940 Act. The Trustees considered information that the Adviser provided regarding (i) services to be performed for the Funds, (ii) the size and qualifications of the Adviser’s portfolio management staff, (iii) any potential or actual material conflicts of interest which may arise in connection with a portfolio manager’s management of the Funds, (iv) investment performance of similarly managed accounts, (v) the capitalization and financial condition of the Adviser, (vi) brokerage selection procedures (including soft dollar arrangements, if any), (vii) the procedures for allocating investment opportunities between the Funds and other clients, (viii) results of any regulatory examination, including any recommendations or deficiencies noted, (ix) any litigation, investigation or administrative proceeding which may have a material impact on the Adviser’s ability to service the Funds, and (x) compliance with federal securities laws and other regulatory requirements. The Trustees noted that they had previously received and reviewed a memorandum from legal counsel regarding the legal standard applicable to their review of the Agreement.
34
Rivington Funds by WHV
Other Information (Continued)
(Unaudited)
Representatives from WHV attended the Meeting both in person and telephonically and discussed the firm’s history, performance and investment strategy in connection with the proposed approval of the Agreement and answered questions from the Board.
The Trustees reviewed performance information for a comparable fund and for a separate account managed by the International Fund’s portfolio manager in a substantially similar manner as the International Fund (and chronologically-linked performance of such investment vehicles), including a comparison to the MSCI ACWI Ex USA Index. The Trustees also reviewed performance for a comparable fund and for a separate account managed by the Global Fund’s portfolio manager in a substantially similar manner as the Global Fund (and chronologically-linked performance of such investment vehicles), including a comparison to the MSCI ACWI Index.
WHV provided information regarding its proposed advisory fees and an analysis of these fees in relation to the delivery of services to be provided to the Funds and any other ancillary benefit resulting from the Adviser’s relationship with the Funds. The Trustees also reviewed information regarding the fees the Adviser charges to other clients and evaluated explanations provided by the Adviser as to differences in the fees proposed to be charged to the Funds and other similarly managed accounts. The Trustees reviewed fees charged by other advisers that manage comparable mutual funds with similar strategies. The Trustees concluded that the proposed advisory fees and services to be provided by WHV are sufficiently consistent with those of other advisers which manage mutual funds with investment objectives, strategies and policies similar to those of the Funds as measured by the information provided at the Meeting.
The Board considered the level and depth of knowledge of WHV, including the professional experience and qualifications of its senior personnel. In evaluating the quality of services to be provided by the Adviser, the Board took into account its familiarity with the Adviser’s senior management through Board meetings, discussions and reports during the preceding year. The Board also took into account WHV’s compliance policies and procedures and reports regarding WHV’s compliance operations from the Trust’s Chief Compliance Officer. The Board also considered any potential conflicts of interest that may arise in a portfolio manager’s management of the Funds’ investments on the one hand, and the investments of other accounts, on the other. The Trustees reviewed the services to be provided to the Funds by the Adviser and concluded that the nature, extent and quality of the services to be provided were appropriate and consistent with the terms of the Agreement, that the quality of the proposed services appeared to be consistent with industry norms and that the Funds are likely to benefit from the provision of those services. They also concluded that the Adviser has sufficient personnel, with the appropriate education and experience, to serve the Funds effectively.
The Trustees considered the anticipated costs of the services to be provided by the Adviser, the proposed compensation and expected benefits to be received by the Adviser in providing services to the Funds, as well as the Adviser’s anticipated profitability. The Trustees noted that the Adviser’s level of profitability is an appropriate factor to consider, and the Trustees should be satisfied that the Adviser’s
35
Rivington Funds by WHV
Other Information (Concluded)
(Unaudited)
profits are sufficient to continue as a healthy concern generally and as investment adviser of the Funds specifically. The Trustees concluded that WHV’s contractual advisory fee level was reasonable in relation to the nature and quality of the services to be provided, taking into account the projected growth and size of the Funds, and the expense limitations agreed to by the Adviser.
The Trustees considered the extent to which economies of scale would be realized relative to fee levels as the Funds grow, and whether the advisory fee levels reflect these economies of scale for the benefit of shareholders. The Trustees noted that economies of scale may be achieved at higher asset levels for the Funds for the benefit of fund shareholders, but that because such economies of scale did not yet exist and were not likely to exist in the near term, it was not appropriate to incorporate a mechanism for sharing the benefit of such economies with Fund shareholders in the advisory fee structure at this time.
In voting to approve the Agreement, the Board considered all factors it deemed relevant and the information presented to the Board by the Adviser. In arriving at its decision, the Board did not identify any single factor as being of paramount importance and each member of the Board gave varying weights to each factor according to his or her own judgment. The Board determined that the approval of the Agreement would be in the best interests of the Funds and their shareholders. As a result, the Board, including a majority of the Independent Trustees, unanimously approved the Agreement with respect to each Fund for an initial two-year period.
36
Rivington Funds by WHV
Privacy Notice
(Unaudited)
The privacy of your personal financial information is extremely important to us. When you open an account with us, we collect a significant amount of information from you in order to properly invest and administer your account. We take very seriously the obligation to keep that information private and confidential, and we want you to know how we protect that important information.
We collect nonpublic personal information about you from applications or other forms you complete and from your transactions with us or our affiliates. We do not disclose information about you, or our former clients, to our affiliates or to service providers or other third parties, except as permitted by law. We share only the information required to properly administer your accounts, which enables us to send transaction confirmations, monthly or quarterly statements, financials and tax forms. Even within FundVantage Trust and its affiliated entities, a limited number of people who actually service accounts will have access to your personal financial information. Further, we do not share information about our current or former clients with any outside marketing groups or sales entities.
To ensure the highest degree of security and confidentiality, FundVantage Trust and its affiliates maintain various physical, electronic and procedural safeguards to protect your personal information. We also apply special measures for authentication of information you request or submit to us on our web site.
If you have questions or comments about our privacy practices, please call us at (888) 948-4685.
37
[THIS PAGE INTENTIONALLY LEFT BLANK.]
[THIS PAGE INTENTIONALLY LEFT BLANK.]
Investment Adviser
WHV Investments, Inc.
301 Battery Street
Suite 400
San Francisco, CA 94111-3203
Administrator
BNY Mellon Investment Servicing (US) Inc.
301 Bellevue Parkway
Wilmington, DE 19809
Transfer Agent
BNY Mellon Investment Servicing (US) Inc.
4400 Computer Drive
Westborough, MA 01581
Principal Underwriter
Foreside Funds Distributors LLC
400 Berwyn Park
899 Cassatt Road
Berwyn, PA 19312
Custodian
The Bank of New York Mellon
225 Liberty Street
New York, NY 10286
Independent Registered Public Accounting Firm
PricewaterhouseCoopers LLP
Two Commerce Square, Suite 1700
2001 Market Street
Philadelphia, PA 19103-7042
Legal Counsel
Pepper Hamilton LLP
3000 Two Logan Square
18th and Arch Streets
Philadelphia, PA 19103
Rivington Diversified
International Equity Fund
by WHV
Rivington Diversified
Global Equity Fund
by WHV
of
FundVantage Trust
Class A Shares
Class I Shares
SEMI-ANNUAL REPORT
October 31, 2015
(Unaudited)
This report is submitted for the general information of the shareholders of the Rivington Diversified International Equity Fund by WHV and Rivington Diversified Global Equity Fund by WHV. It is not authorized for distribution unless preceded or accompanied by a current prospectus for the Rivington Diversified International Equity Fund by WHV and Rivington Diversified Global Equity Fund by WHV.
RIV-1015
WHV/SEIZERT SMALL CAP VALUE EQUITY FUND
Semi-Annual Report
Performance Data
October 31, 2015
(Unaudited)
Average Annual Total Returns for the Periods Ended October 31, 2015* | ||||||||||||||
Six Months† | 1 Year | Since Inception | ||||||||||||
Class A Shares (with sales charge) | -12.69% | -10.51 | % | -2.40% | ||||||||||
Class A Shares (without sales charge) | -7.37% | -5.03 | % | 0.41% | ||||||||||
Class I Shares | -7.26% | -4.70 | % | 0.67% | ||||||||||
Russell 2000 Value Index | -4.83% | -2.88 | % | 3.85%* | * |
† | Not Annualized. |
* | The WHV/Seizert Small Cap Equity Fund (“The Fund”) commenced operations on September 30, 2013. |
** | Benchmark performance is from inception date of the Fund (September 30, 2013) only and is not the inception date of the benchmark itself. |
Class A Shares of the Fund have a 5.75% maximum sales charge.
The performance data quoted represents past performance and does not guarantee future results. Current performance may be lower or higher. Performance data current to the most recent month-end may be obtained by calling (888) 948-4685. The investment return and principal value of an investment will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. The table does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
The Fund’s total annual Fund gross and net operating expense ratios are 3.27% and 1.50%, respectively, for Class A Shares and 3.02% and 1.25%, respectively, for Class I Shares of the Fund’s average daily net assets. These ratios are stated in the current prospectus dated September 1, 2015, and may differ from the actual expenses incurred by the Fund for the period covered by this report. WHV Investments, Inc. (the “Adviser”) has contractually agreed to reduce its investment advisory fee and/or reimburse certain expenses of the Fund to the extent necessary to ensure that the Fund’s total operating expenses (excluding taxes, any class-specific fees and expenses (such as Rule 12b-1 distribution fees, shareholder service fees or transfer agency fees), “Acquired Fund” fees and expenses, interest, extraordinary items, and brokerage commissions) do not exceed 1.25% (on an annual basis) of the Fund’s average daily net assets (the “Expense Limitation”). The Expense Limitation will remain in place until September 30, 2016 unless the Board of Trustees approves its earlier termination. Total returns would be lower had such fees and expenses not been waived and/or reimbursed. The Adviser is entitled to recover, subject to approval by the Board of Trustees, such amounts reduced or reimbursed for a period of up to three (3) years from the year in which the Adviser reduced its compensation and/or assumed expenses for the Fund. No recoupment will occur unless the Fund’s expenses are below the Expense Limitation. The net ratios shown do not include acquired fund fees and expenses estimated to be 0.02% annually.
The Fund evaluates its performance as compared to that of the Russell 2000 Value Index, which measures the performance of the small-cap value segment of the U.S. equity universe. Please note an investor cannot invest directly in an index.
All mutual fund investing involves risk, including possible loss of principal. Investments in small capitalization companies present a greater risk of loss than investments in large companies due to greater volatility and less liquidity.
1
WHV/SEIZERT SMALL CAP VALUE EQUITY FUND
Fund Expense Disclosure
October 31, 2015
(Unaudited)
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments, if any, and redemption fees; and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, if any, and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
These examples are based on an investment of $1,000 invested at the beginning of the six-month period from May 1, 2015 through October 31, 2015, and held for the entire period.
Actual Expenses
The first line of the accompanying table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Examples for Comparison Purposes
The second line of each accompanying table provides information about hypothetical account values and hypothetical expenses based on each Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not either Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare these 5% hypothetical examples with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that the expenses shown in the accompanying tables are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), if any, or redemption fees. Therefore, the second line of each accompanying table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
2
WHV/SEIZERT SMALL CAP VALUE EQUITY FUND
Fund Expense Disclosure (Concluded)
October 31, 2015
(Unaudited)
WHV/Seizert Small Cap Value Equity Fund | |||||||||||||||
Beginning Account Value |
Ending Account Value |
Expenses Paid | |||||||||||||
Class A Shares | |||||||||||||||
Actual | $ | 1,000.00 | $ | 926.30 | $ | 7.26 | |||||||||
Hypothetical (5% return before expenses) | 1,000.00 | 1,017.60 | 7.61 | ||||||||||||
Class I Shares | |||||||||||||||
Actual | $ | 1,000.00 | $ | 927.40 | $ | 6.06 | |||||||||
Hypothetical (5% return before expenses) | 1,000.00 | 1,018.85 | 6.34 |
*Expenses are equal to an annualized expense ratio for the six-month period ended October 31, 2015 of 1.50% and 1.25% for Class A and Class I Shares, respectively, for the Fund, multiplied by the average account value over the period, multiplied by the number of days in the most recent period (184), then divided by 366 to reflect the period. The Fund’s ending account values on the first line in the table are based on the actual six-month total returns for the Fund of (7.37%) and (7.26%) for Class A and Class I Shares, respectively.
3
WHV/SEIZERT SMALL CAP VALUE EQUITY FUND
Portfolio Holdings Summary Table
October 31, 2015
(Unaudited)
The following table presents a summary by sector of the portfolio holdings of the Fund:
% of Net Assets | Value | |||||||
COMMON STOCKS: | ||||||||
Thrifts & Mortgage Finance | 16.1% | $ 2,025,642 | ||||||
Commercial Banks | 14.7 | 1,849,659 | ||||||
Semiconductors & Semiconductor Equipment | 9.3 | 1,175,455 | ||||||
Specialty Retail | 5.1 | 643,547 | ||||||
Biotechnology | 5.0 | 632,818 | ||||||
Electronic Equipment, Instruments & Components | 4.2 | 529,490 | ||||||
Insurance | 4.1 | 523,730 | ||||||
Software | 3.6 | 457,748 | ||||||
Auto Components | 3.2 | 400,682 | ||||||
Metals & Mining | 3.1 | 396,561 | ||||||
Aerospace & Defense | 2.6 | 327,546 | ||||||
Technology Hardware, Storage & Peripherals | 2.6 | 327,248 | ||||||
Health Care Providers & Services | 2.5 | 316,715 | ||||||
Construction & Engineering | 2.4 | 297,585 | ||||||
Real Estate Investment Trusts | 2.2 | 275,229 | ||||||
Internet Software & Services | 2.0 | 254,364 | ||||||
Professional Services | 2.0 | 253,073 | ||||||
IT Services | 1.7 | 208,887 | ||||||
Health Care Technology | 1.6 | 207,083 | ||||||
Hotels, Restaurants & Leisure | 1.6 | 199,748 | ||||||
Media | 1.5 | 190,263 | ||||||
Oil, Gas & Consumable Fuels | 1.5 | 187,595 | ||||||
Real Estate Management & Development | 1.5 | 183,379 | ||||||
Machinery | 1.4 | 179,928 | ||||||
Commercial Services & Supplies | 1.3 | 169,932 | ||||||
Energy Equipment & Services | 0.8 | 100,873 | ||||||
Other Assets in Excess of Liabilities | 2.4 | 298,573 | ||||||
NET ASSETS | 100.0% | $12,613,353 |
Portfolio holdings are subject to change at any time.
The accompanying notes are an integral part of the financial statements.
4
WHV/SEIZERT SMALL CAP VALUE EQUITY FUND
Portfolio of Investments
October 31, 2015
(Unaudited)
Number of Shares | Value | |||||||
COMMON STOCKS — 97.6% |
| |||||||
Aerospace & Defense — 2.6% |
| |||||||
KLX, Inc.* | 8,375 | $ | 327,546 | |||||
|
| |||||||
Auto Components — 3.2% |
| |||||||
China Automotive Systems, Inc.* | 27,686 | 166,116 | ||||||
Superior Industries International, Inc. | 11,919 | 234,566 | ||||||
|
| |||||||
400,682 | ||||||||
|
| |||||||
Biotechnology — 5.0% |
| |||||||
Emergent Biosolutions, Inc.* | 8,614 | 276,940 | ||||||
Enanta Pharmaceuticals, Inc.* | 6,212 | 174,495 | ||||||
Myriad Genetics, Inc.* | 4,493 | 181,383 | ||||||
|
| |||||||
632,818 | ||||||||
|
| |||||||
Commercial Banks — 14.7% |
| |||||||
Blue Hills Bancorp, Inc. | 22,001 | 312,194 | ||||||
Centerstate Banks, Inc. | 15,433 | 225,013 | ||||||
HomeTrust Bancshares, Inc.* | 10,537 | 199,571 | ||||||
International Bancshares Corp. | 9,153 | 246,673 | ||||||
National Bank Holdings Corp., Class A | 13,539 | 298,670 | ||||||
Popular, Inc. | 9,230 | 272,931 | ||||||
Republic Bancorp, Inc., Class A | 11,585 | 294,607 | ||||||
|
| |||||||
1,849,659 | ||||||||
|
| |||||||
Commercial Services & Supplies — 1.3% |
| |||||||
Quad/Graphics, Inc. | 13,173 | 169,932 | ||||||
|
| |||||||
Construction & Engineering — 2.4% |
| |||||||
KBR, Inc. | 16,138 | 297,585 | ||||||
|
|
Number of Shares | Value | |||||||
COMMON STOCKS — (Continued) |
| |||||||
Electronic Equipment, Instruments & Components — 4.2% |
| |||||||
Celestica, Inc., ADR (Canada)* | 9,696 | $ | 108,789 | |||||
Multi-Fineline Electronix, Inc.* | 14,060 | 261,235 | ||||||
Vishay Intertechnology, Inc. | 15,044 | 159,466 | ||||||
|
| |||||||
529,490 | ||||||||
|
| |||||||
Energy Equipment & Services — 0.8% |
| |||||||
Helix Energy Solutions Group, Inc.* | 17,452 | 100,873 | ||||||
|
| |||||||
Health Care Providers & Services — 2.5% |
| |||||||
Magellan Health Services, Inc.* | 5,931 | 316,715 | ||||||
|
| |||||||
Health Care Technology — 1.6% |
| |||||||
Quality Systems, Inc. | 14,739 | 207,083 | ||||||
|
| |||||||
Hotels, Restaurants & Leisure — 1.6% |
| |||||||
Biglari Holdings, Inc.* | 520 | 199,748 | ||||||
|
| |||||||
Insurance — 4.1% |
| |||||||
FBL Financial Group, Inc., Class A | 3,541 | 222,729 | ||||||
Maiden Holdings Ltd., ADR (Bermuda) | 19,357 | 301,001 | ||||||
|
| |||||||
523,730 | ||||||||
|
| |||||||
Internet Software & Services — 2.0% |
| |||||||
j2 Global, Inc. | 3,280 | 254,364 | ||||||
|
| |||||||
IT Services — 1.7% |
| |||||||
Sykes Enterprises, Inc.* | 7,203 | 208,887 | ||||||
|
| |||||||
Machinery — 1.4% |
| |||||||
FreightCar America, Inc. | 9,897 | 179,928 | ||||||
|
| |||||||
Media — 1.5% |
| |||||||
Tribune Publishing Co. | 20,155 | 190,263 | ||||||
|
|
The accompanying notes are an integral part of the financial statements.
5
WHV/SEIZERT SMALL CAP VALUE EQUITY FUND
Portfolio of Investments (Concluded)
October 31, 2015
(Unaudited)
Number of Shares | Value | |||||||
COMMON STOCKS — (Continued) |
| |||||||
Metals & Mining — 3.1% |
| |||||||
Nevsun Resources Ltd., ADR (Canada) | 132,187 | $ | 396,561 | |||||
|
| |||||||
Oil, Gas & Consumable Fuels — 1.5% |
| |||||||
Denbury Resources, Inc. | 52,993 | 187,595 | ||||||
|
| |||||||
Professional Services — 2.0% |
| |||||||
RPX Corp.* | 17,772 | 253,073 | ||||||
|
| |||||||
Real Estate Investment Trusts — 2.2% |
| |||||||
Anworth Mortgage Asset Corp. | 24,962 | 119,069 | ||||||
Redwood Trust, Inc. | 11,759 | 156,160 | ||||||
|
| |||||||
275,229 | ||||||||
|
| |||||||
Real Estate Management & Development — 1.5% |
| |||||||
Nam Tai Property, Inc. | 31,134 | 183,379 | ||||||
|
| |||||||
Semiconductors & Semiconductor Equipment — 9.3% |
| |||||||
ChipMOS Technologies Bermuda Ltd., ADR (Bermuda) | 17,737 | 314,477 | ||||||
Kulicke & Soffa Industries, Inc.* | 30,749 | 325,939 | ||||||
Nova Measuring Instruments Ltd., ADR (Israel)* | 24,484 | 251,940 | ||||||
OmniVision Technologies, Inc.* | 9,806 | 283,099 | ||||||
|
| |||||||
1,175,455 | ||||||||
|
| |||||||
Software — 3.6% |
| |||||||
AVG Technologies NV ADR, (Netherlands)* | 11,029 | 261,387 | ||||||
EnerNOC, Inc.* | 25,046 | 196,361 | ||||||
|
| |||||||
457,748 | ||||||||
|
|
Number | Value | |||||
COMMON STOCKS — (Continued) |
| |||||
Specialty Retail — 5.1% |
| |||||
Francesca’s Holdings Corp.* | 14,555 | $ | 206,827 | |||
Outerwall, Inc. | 4,506 | 270,360 | ||||
Systemax, Inc.* | 17,946 | 166,360 | ||||
|
| |||||
643,547 | ||||||
|
| |||||
Technology Hardware, Storage & Peripherals — 2.6% |
| |||||
QLogic Corp.* | 26,391 | 327,248 | ||||
|
| |||||
Thrifts & Mortgage Finance — 16.1% |
| |||||
Astoria Financial Corp. | 12,843 | 204,974 | ||||
Beneficial Bancorp, Inc.* | 23,798 | 330,078 | ||||
Charter Financial Corp. | 25,054 | 328,207 | ||||
Clifton Bancorp, Inc. | 21,072 | 307,230 | ||||
Kearny Financial Corp. | 25,988 | 310,557 | ||||
Northfield Bancorp, Inc. | 18,039 | 276,358 | ||||
Waterstone Financial, Inc. | 20,138 | 268,238 | ||||
|
| |||||
2,025,642 | ||||||
|
| |||||
TOTAL COMMON STOCKS | 12,314,780 | |||||
|
| |||||
TOTAL INVESTMENTS - 97.6% | 12,314,780 | |||||
OTHER ASSETS IN EXCESS OF LIABILITIES - 2.4% | 298,573 | |||||
|
| |||||
NET ASSETS - 100.0% | $ | 12,613,353 | ||||
|
|
* | Non-income producing. |
ADR | American Depositary Receipt |
The accompanying notes are an integral part of the financial statements.
6
WHV/SEIZERT SMALL CAP VALUE EQUITY FUND
Statement of Assets and Liabilities
October 31, 2015
(Unaudited)
Assets | |||||
Investments, at value (Cost $12,199,647) | $12,314,780 | ||||
Cash | 372,573 | ||||
Receivable for investments sold | 14,133 | ||||
Receivable for capital shares sold | 4,349 | ||||
Dividends and interest receivable | 1,069 | ||||
Receivable from Investment Adviser | 14,844 | ||||
Prepaid expenses and other assets | 43,904 | ||||
Total assets | 12,765,652 | ||||
Liabilities | |||||
Payable for investments purchased | 10,065 | ||||
Payable for capital shares redeemed | 101,433 | ||||
Payable for administration and accounting fees | 11,637 | ||||
Payable for audit fees | 9,385 | ||||
Payable for custodian fees | 8,593 | ||||
Payable for transfer agent fees | 2,340 | ||||
Accrued expenses | 8,846 | ||||
Total liabilities | 152,299 | ||||
Net Assets | $12,613,353 | ||||
Net Assets Consist of: | |||||
Capital stock, $0.01 par value | $ 12,503 | ||||
Paid-in capital | 13,486,959 | ||||
Accumulated net investment income | 75,397 | ||||
Accumulated net realized loss from investments | (1,076,639 | ) | |||
Net unrealized appreciation on investments | 115,133 | ||||
Net Assets | $12,613,353 | ||||
Class A Shares: | |||||
Net asset value, redemption price per share ($2,875,331 / 285,988 shares) | $10.05 | ||||
Maximum offering price per share (100/94.25 of $10.05) | $10.66 | ||||
Class I Shares: | |||||
Net asset value, offering and redemption price per share ($9,738,022 / 964,300 shares) | $10.10 |
The accompanying notes are an integral part of the financial statements.
7
WHV/SEIZERT SMALL CAP VALUE EQUITY FUND
Statement of Operations
For the Six Months Ended October 31, 2015
(Unaudited)
Investment Income | |||||
Dividends | $ | 112,713 | |||
Less: foreign taxes withheld | (1,311 | ) | |||
Interest | 12 | ||||
|
| ||||
Total investment income | 111,414 | ||||
|
| ||||
Expenses | |||||
Advisory fees (Note 2) | 60,795 | ||||
Administration and accounting fees (Note 2) | 35,147 | ||||
Transfer agent fees (Note 2) | 33,613 | ||||
Custodian fees (Note 2) | 20,940 | ||||
Audit fees | 10,744 | ||||
Registration and filing fees | 10,012 | ||||
Distribution fees (Class A) (Note 2) | 3,548 | ||||
Printing and shareholder reporting fees | 3,000 | ||||
Trustees’ and officers’ fees (Note 2) | 1,593 | ||||
Legal fees | 1,418 | ||||
Other expenses | 8,173 | ||||
|
| ||||
Total expenses before waivers and reimbursements | 188,983 | ||||
|
| ||||
Less: waivers and reimbursements (Note 2) | (109,442 | ) | |||
|
| ||||
Net expenses after waivers and reimbursements | 79,541 | ||||
|
| ||||
Net investment income | 31,873 | ||||
|
| ||||
Net realized and unrealized gain/(loss) from investments: | |||||
Net realized loss from investments | (488,404 | ) | |||
Net change in unrealized appreciation/(depreciation) on investments | (385,645 | ) | |||
|
| ||||
Net realized and unrealized loss on investments | (874,049 | ) | |||
|
| ||||
Net decrease in net assets resulting from operations | $ | (842,176 | ) | ||
|
|
The accompanying notes are an integral part of the financial statements.
8
WHV/SEIZERT SMALL CAP VALUE EQUITY FUND
Statements of Changes in Net Assets
For the Six Months Ended October 31, 2015 (Unaudited) | For the Year Ended April 30, 2015 | |||||||||
Increase/(Decrease) in net assets from operations: | ||||||||||
Net investment income | $ | 31,873 | $ | 44,107 | ||||||
Net realized loss from investments | (488,404 | ) | (579,395 | ) | ||||||
Net change in unrealized appreciation/(depreciation) on investments | (385,645 | ) | 371,844 | |||||||
|
|
|
| |||||||
Net decrease in net assets resulting from operations | (842,176 | ) | (163,444 | ) | ||||||
|
|
|
| |||||||
Less Dividends and Distributions to Shareholders from: | ||||||||||
Net investment income: | ||||||||||
Class A Shares | — | — | ||||||||
Class I Shares | — | (4,672 | ) | |||||||
|
|
|
| |||||||
Total net investment income | — | (4,672 | ) | |||||||
|
|
|
| |||||||
Net realized capital gains: | ||||||||||
Class A Shares | — | (9,050 | ) | |||||||
Class I Shares | — | (38,787 | ) | |||||||
|
|
|
| |||||||
Total net realized capital gains | — | (47,837 | ) | |||||||
|
|
|
| |||||||
Net decrease in net assets from dividends and distributions to shareholders | — | (52,509 | ) | |||||||
|
|
|
| |||||||
Increase in Net Assets Derived from Capital Share Transactions (Note 4) | 1,491,550 | 6,994,763 | ||||||||
|
|
|
| |||||||
Total increase in net assets | 649,374 | 6,778,810 | ||||||||
|
|
|
| |||||||
Net assets | ||||||||||
Beginning of period | 11,963,979 | 5,185,169 | ||||||||
|
|
|
| |||||||
End of period | $ | 12,613,353 | $ | 11,963,979 | ||||||
|
|
|
| |||||||
Accumulated net investment income, end of period | $ | 75,397 | $ | 43,524 | ||||||
|
|
|
|
The accompanying notes are an integral part of the financial statements.
9
WHV/SEIZERT SMALL CAP VALUE EQUITY FUND
Financial Highlights
Contained below is per share operating performance data for Class A Shares outstanding, total investment return, ratios to average net assets and other supplemental data for the respective periods. 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). This information has been derived from information provided in the financial statements and should be read in conjunction with the financial statements and the notes thereto.
Class A Shares | |||||||||||||||
For the Six Months Ended October 31, 2015 (Unaudited) | For the Year Ended April 30, 2015 | For the Period September 30, 2013* to April 30, 2014 | |||||||||||||
Per Share Operating Performance | |||||||||||||||
Net asset value, beginning of period | $ | 10.85 | $ | 11.22 | $ | 10.00 | |||||||||
|
|
|
|
|
| ||||||||||
Net investment income(1) | 0.02 | 0.02 | — | (2) | |||||||||||
Net realized and unrealized gain/(loss) on investments | (0.82 | ) | (0.35 | ) | 1.22 | ||||||||||
|
|
|
|
|
| ||||||||||
Net increase/(decrease) in net assets resulting from operations | (0.80 | ) | (0.33 | ) | 1.22 | ||||||||||
|
|
|
|
|
| ||||||||||
Dividends and distributions to shareholders from: | |||||||||||||||
Net realized gains | — | (0.04 | ) | — | |||||||||||
|
|
|
|
|
| ||||||||||
Total dividends and distributions to shareholders | — | (0.04 | ) | — | |||||||||||
|
|
|
|
|
| ||||||||||
Net asset value, end of period | $ | 10.05 | $ | 10.85 | $ | 11.22 | |||||||||
|
|
|
|
|
| ||||||||||
Total investment return(3) | (7.37 | %) | (2.95 | %) | 12.10 | % | |||||||||
Ratio/Supplemental Data | |||||||||||||||
Net assets, end of period (000’s omitted) | $ | 2,875 | $ | 2,727 | $ | 1,649 | |||||||||
Ratio of expenses to average net assets | 1.50 | %(4) | 1.50 | % | 1.50 | %(4) | |||||||||
Ratio of expenses to average net assets without waivers and expense reimbursements(5) | 3.30 | %(4) | 3.44 | % | 16.06 | %(4) | |||||||||
Ratio of net investment income to average net assets | 0.33 | %(4) | 0.20 | % | 0.04 | %(4) | |||||||||
Portfolio turnover rate | 29.50 | %(6) | 101.90 | % | 36.00 | %(6) |
* | Commencement of operations. |
(1) | The selected per share data was calculated using the average shares outstanding method for the period. |
(2) | Amount is less than $0.005 per share. |
(3) | Total investment return is calculated assuming a purchase of shares on the first day and a sale of shares on the last day of each period reported and includes reinvestments of dividends and distributions, if any. Total returns for periods less than one year are not annualized. Total investment return does not reflect the impact of the maximum front-end sales load of 5.75%. If reflected, the return would be lower. |
(4) | Annualized. |
(5) | During the period, certain fees were waived and/or reimbursed. If such fee waivers and/or reimbursements had not occurred, the ratios would have been as indicated (See Note 2). |
(6) | Not annualized. |
The accompanying notes are an integral part of the financial statements.
10
WHV/SEIZERT SMALL CAP VALUE EQUITY FUND
Financial Highlights (Continued)
Contained below is per share operating performance data for Class I Shares outstanding, total investment return, ratios to average net assets and other supplemental data for the respective periods. 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). This information has been derived from information provided in the financial statements and should be read in conjunction with the financial statements and the notes thereto.
Class I Shares | |||||||||||||||
For the Six Months Ended October 31, 2015 (Unaudited) | For the Year Ended April 30, 2015 | For the Period September 30, 2013* to April 30, 2014 | |||||||||||||
Per Share Operating Performance | |||||||||||||||
Net asset value, beginning of period | $ | 10.89 | $ | 11.23 | $ | 10.00 | |||||||||
|
|
|
|
|
| ||||||||||
Net investment income(1) | 0.03 | 0.05 | 0.02 | ||||||||||||
Net realized and unrealized gain/(loss) on investments | (0.82 | ) | (0.35 | ) | 1.21 | ||||||||||
|
|
|
|
|
| ||||||||||
Net increase/(decrease) in net assets resulting from operations | (0.79 | ) | (0.30 | ) | 1.23 | ||||||||||
|
|
|
|
|
| ||||||||||
Dividends and distributions to shareholders from: | |||||||||||||||
Net investment income | — | — | (2) | — | |||||||||||
Net realized gains | — | (0.04 | ) | — | |||||||||||
|
|
|
|
|
| ||||||||||
Total dividends and distributions to shareholders | — | (0.04 | ) | — | |||||||||||
|
|
|
|
|
| ||||||||||
Net asset value, end of period | $ | 10.10 | $ | 10.89 | $ | 11.23 | |||||||||
|
|
|
|
|
| ||||||||||
Total investment return(3) | (7.26 | %) | (2.64 | %) | 12.30 | % | |||||||||
Ratio/Supplemental Data | |||||||||||||||
Net assets, end of period (000’s omitted) | $ | 9,738 | $ | 9,237 | $ | 3,537 | |||||||||
Ratio of expenses to average net assets | 1.25 | %(4) | 1.25 | % | 1.25 | %(4) | |||||||||
Ratio of expenses to average net assets without waivers and expense reimbursements(5) | 3.05 | %(4) | 3.00 | % | 17.69 | %(4) | |||||||||
Ratio of net investment income to average net assets | 0.58 | %(4) | 0.45 | % | 0.30 | %(4) | |||||||||
Portfolio turnover rate | 29.50 | %(6) | 101.90 | % | 36.00 | %(6) |
* | Commencement of operations. |
(1) | The selected per share data was calculated using the average shares outstanding method for the period. |
(2) | Amount is less than $0.005 per share. |
(3) | Total investment return is calculated assuming a purchase of shares on the first day and a sale of shares on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total returns for periods less than one year are not annualized. |
(4) | Annualized. |
(5) | During the period, certain fees were waived and/or reimbursed. If such fee waivers and/or reimbursements had not occurred, the ratios would have been as indicated (See Note 2). |
(6) | Not annualized. |
The accompanying notes are an integral part of the financial statements.
11
WHV/SEIZERT SMALL CAP VALUE EQUITY FUND
Notes to Financial Statements
October��31, 2015
(Unaudited)
1. Organization and Significant Accounting Policies
The WHV/Seizert Small Cap Value Equity Fund (the “Fund”) is a diversified, open-end management investment company registered under the Investment Company Act of 1940, as amended, (the “1940 Act”), which commenced investment operations on September 30, 2013. The Fund is a separate series of FundVantage Trust (the “Trust”) which was organized as a Delaware statutory trust on August 28, 2006. The Trust is a “series trust” authorized to issue an unlimited number of separate series or classes of shares of beneficial interest. Each series is treated as a separate entity for certain matters under the 1940 Act, and for other purposes, and a shareholder of one series is not deemed to be a shareholder of any other series. The Fund offers separate classes of shares: Class A, Class C and Class I Shares. Class A Shares are sold subject to a front-end sales charge. Front-end sales charges may be reduced or waived under certain circumstances. A contingent deferred sales charge (“CDSC”) of up to 1.00% may apply for investments of $1 million or more of Class A Shares of the Fund (and therefore no initial sales charge was paid) and shares are redeemed within 18 months after initial purchase. The CDSC shall not apply to those purchases of Class A Shares of $1 million or more where Foreside Funds Distributors LLC (the “Underwriter”) did not pay a commission to the selling broker-dealer. As of October 31, 2015, Class C shares had not been issued.
The Fund is an investment company and follows accounting and reporting guidance in the Financial Accounting Standards Board Accounting Standards Codification Topic 946.
Portfolio Valuation — The Fund’s net asset value (“NAV”) is calculated once daily at the close of regular trading hours on the New York Stock Exchange (“NYSE”) (typically 4:00 p.m. Eastern time) on each day the NYSE is open. Securities held by the Fund are valued using the closing price or the last sale price on a national securities exchange or the National Association of Securities Dealers Automatic Quotation System (“NASDAQ”) market system where they are primarily traded. Equity securities traded in the over-the-counter market are valued at their closing prices. If there were no transactions on that day, securities traded principally on an exchange or on NASDAQ will be valued at the mean of the last bid and ask prices prior to the market close. Fixed income securities having a remaining maturity of greater than 60 days are valued using an independent pricing service. Fixed income securities having a remaining maturity of 60 days or less are generally valued at amortized cost, provided such amount approximates fair value. Foreign securities are valued based on prices from the primary market in which they are traded and are translated from the local currency into U.S. dollars using current exchange rates. Investments in other open-end investment companies are valued based on the NAV of the investment companies (which may use fair value pricing as discussed in their prospectuses). If market quotations are unavailable or deemed unreliable, securities will be valued in accordance with procedures adopted by the Trust’s Board of Trustees. Relying on prices supplied by pricing services or dealers or using fair valuation may result in values that are higher or lower than the values used by other investment companies and investors to price the same investments.
12
WHV/SEIZERT SMALL CAP VALUE EQUITY FUND
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
Fair Value Measurements — The inputs and valuation techniques used to measure fair value of the Fund’s investments are summarized into three levels as described in the hierarchy below:
● | Level 1 | — | quoted prices in active markets for identical securities; | |||
● | Level 2 | — | other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.); and | |||
● | Level 3 | — | significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments). |
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
The following is a summary of the inputs used, as of October 31, 2015, in valuing the Fund’s investments carried at fair value:
Total Value at 10/31/15 | Level 1 Quoted Price | Level 2 Other Significant Observable Inputs | Level 3 | ||||||||||||||
Investments in Securities* |
$ |
12,314,780 |
|
$ |
12,314,780 |
|
$ |
— |
|
$ — | |||||||
|
|
|
|
|
|
|
* Please refer to Portfolio of Investments for details on portfolio holdings.
At the end of each quarter, management evaluates the classification of Levels 1, 2 and 3 assets and liabilities. Various factors are considered such as changes in liquidity from the prior reporting period; whether or not a broker is willing to execute at the quoted price; the depth and consistency of prices from third party pricing services; and the existence of contemporaneous, observable trades in the market. Additionally, management evaluates the classification of Level 1 and Level 2 assets and liabilities on a quarterly basis for changes in listings or delistings on national exchanges.
Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of the Fund’s investments may fluctuate from period to period. Additionally, the fair value of investments may differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially from the values the Fund may ultimately realize. Further, such investments may be subject to legal and other restrictions on resale or otherwise less liquid than publicly traded securities.
For fair valuations using significant unobservable inputs, accounting principles generally accepted in the United States of America (“U.S. GAAP”) require the Fund to present a reconciliation of the beginning
13
WHV/SEIZERT SMALL CAP VALUE EQUITY FUND
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
to ending balances for reported market values that presents changes attributable to total realized and unrealized gains or losses, purchase and sales, and transfers in and out of Level 3 during the period. Transfers in and out between Levels are based on values at the end of the period. U.S. GAAP also requires the Fund to disclose amounts and reasons for all transfers in and out of Level 1 and Level 2 fair value measurements. A reconciliation of Level 3 investments is presented only when the Fund had an amount of Level 3 investments at the end of the reporting period that was meaningful in relation to its net assets. The amounts and reasons for all transfers in and out of each Level within the three-tier hierarchy are disclosed when the Fund had an amount of total transfers during the reporting period that was meaningful in relation to its net assets as of the end of the reporting period.
For the six months ended October 31, 2015, there were no transfers between Levels 1, 2 and 3 for the Fund.
Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes at the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates and those differences could be material.
Investment Transactions, Investment Income and Expenses — Investment transactions are recorded on trade date for financial statement preparation purposes. Realized gains and losses on investments sold are recorded on the identified cost basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date. Estimated components of distributions received from real estate investment trusts may be considered income, return of capital distributions or capital gain distributions. Return of capital distributions are recorded as a reduction of cost of the related investments. Distribution (12b-1) fees and shareholder services fees relating to a specific class are charged directly to that class. Fund level expenses common to all classes, investment income and realized and unrealized gains and losses on investments are allocated to each class based upon the relative daily net assets of each class. General expenses of the Trust are generally allocated to each fund in proportion to its relative daily net assets. Expenses directly attributable to a particular fund in the Trust are charged directly to that fund. The Funds’ investment income, expenses (other than class specific expenses) and unrealized and realized gains and losses are allocated daily to each class of shares based upon the relative proportion of net assets of each class at the beginning of the day.
Dividends and Distributions to Shareholders — Dividends from net investment income and distributions from net realized capital gains, if any, are declared, recorded on ex-date and paid at least annually to shareholders. Income dividends and capital gain distributions are determined in accordance with U.S. federal income tax regulations, which may differ from U.S. GAAP. These differences include the treatment of non-taxable dividends, expiring capital loss carryforwards and losses deferred due to wash sales and excise tax regulations. Permanent book and tax basis differences relating to shareholder distributions will result in reclassifications within the components of net assets.
14
WHV/SEIZERT SMALL CAP VALUE EQUITY FUND
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
U.S. Tax Status — No provision is made for U.S. income taxes as it is the Fund’s intention to continue to qualify for and elect the tax treatment applicable to regulated investment companies under Subchapter M of the Internal Revenue Code of 1986, as amended, and make the requisite distributions to its shareholders which will be sufficient to relieve it from U.S. income and excise taxes.
Other — In the normal course of business, the Fund may enter into contracts that provide general indemnifications. The Fund’s maximum exposure under these arrangements is dependent on claims that may be made against the Fund in the future, and, therefore, cannot be estimated; however, based on experience, the risk of material loss for such claims is considered remote.
2. Transactions with Affiliates and Related Parties
WHV serves as investment adviser to the Fund pursuant to an investment advisory agreement with the Trust. For its services, the Adviser is paid a monthly fee at the annual rate of 1.00% of the Fund’s average daily net assets. The Adviser has contractually agreed to reduce its investment advisory fee and/or reimburse certain expenses of the Fund to the extent necessary to ensure that the Fund’s total operating expenses (excluding taxes, any class-specific fees and expenses (such as Rule 12b-1 distribution fees, shareholder service fees or transfer agency fees), “Acquired Fund” fees and expenses, interest, extraordinary items, and brokerage commissions) do not exceed 1.25% (on an annual basis) of the Fund’s average daily net assets (the “Expense Limitation”). The Expense Limitation will remain in place until September 30, 2016, unless the Board of Trustees approves its earlier termination. The Adviser is entitled to recover, subject to approval by the Board of Trustees, such amounts reduced or reimbursed for a period of up to three (3) years from the year in which the Adviser reduced its compensation and/or assumed expenses for the Fund. No recoupment will occur unless the Fund’s expenses are below the Expense Limitation.
As of October 31, 2015, the amount of potential recovery was as follows:
Expiration
| ||||
April 30, 2017 | April 30, 2018 | April 30, 2019 | ||
$119,158 | $199,526 | $109,442 |
For the six months ended October 31, 2015, the investment adviser earned and waived fees of $60,795 and reimbursed other fees of $48,647.
15
WHV/SEIZERT SMALL CAP VALUE EQUITY FUND
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
Seizert Capital Partners, LLC (“Seizert” or the “Sub-Adviser”) serves as the sub-adviser to the Fund. The Sub-Adviser provides certain services pursuant to a sub-advisory agreement among WHV, the Sub-Adviser and the Trust, on behalf of the Fund. Sub-Advisory fees are paid by WHV, not the Fund.
BNY Mellon Investment Servicing (US) Inc. (“BNY Mellon”) serves as administrator and transfer agent for the Fund. For providing administrative and accounting services, BNY Mellon is entitled to receive a monthly fee equal to an annual percentage rate of each Fund’s average daily net assets and is subject to certain minimum monthly fees. For providing transfer agency services, BNY Mellon is entitled to receive a monthly fee, subject to certain minimum, and out of pocket expenses.
The Bank of New York Mellon (the “Custodian”) provides certain custodial services to the Fund. The Custodian is entitled to receive a monthly fee, subject to certain minimum, and out of pocket expenses.
BNY Mellon and the Custodian have the ability to recover amounts previously waived, if the Fund terminates its agreements with BNY Mellon or the Custodian within three years of signing the agreements.
Foreside Funds Distributors LLC (the “Underwriter”), provides principal underwriting services to the Fund.
The Trust and the Underwriter are parties to an underwriting agreement. The Trust has adopted a distribution plan for Class A Shares in accordance with Rule 12b-1 under the 1940 Act. Pursuant to the Class A Shares plan, the Fund compensates the Underwriter for direct and indirect costs and expenses incurred in connection with advertising, marketing and other distribution services in an amount not to exceed 0.25% on an annualized basis of the average daily net assets of the Fund’s Class A Shares.
The Trustees of the Trust who are not officers or employees of an investment adviser, sub-adviser or other service provider to the Trust receive compensation in the form of an annual retainer and per meeting fees for their services as a Trustee. The remuneration paid to the Trustees by the Fund during the six months ended October 31, 2015 was $703. Certain employees of BNY Mellon serve as Officers of the Trust. They are not compensated by the Fund or the Trust.
3. Investment in Securities
For the six months ended October 31, 2015, aggregate purchases and sales of investment securities (excluding U.S. Government and agency short-term investments and other short-term investments) of the Fund were as follows:
Purchases | Sales | |||||||
Investment Securities | $4,873,562 | $3,489,155 |
16
WHV/SEIZERT SMALL CAP VALUE EQUITY FUND
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
4. Capital Share Transactions
For the six months ended October 31, 2015 and the year ended April 30, 2015, transactions in capital shares (authorized shares unlimited) were as follows:
For the | ||||||||||||||||
Six Months Ended | For the | |||||||||||||||
October 31, 2015 | Year Ended | |||||||||||||||
(Unaudited) | April 30, 2015 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Class A Shares | ||||||||||||||||
Sales | 52,037 | $ | 534,189 | 132,731 | $ | 1,430,087 | ||||||||||
Reinvestments | — | — | 784 | 8,234 | ||||||||||||
Redemptions* | (17,310 | ) | (173,544 | ) | (29,232 | ) | (313,822 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Net increase | 34,727 | $ | 360,645 | 104,283 | $ | 1,124,499 | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Class I Shares | ||||||||||||||||
Sales | 129,533 | $ | 1,270,653 | 935,288 | $ | 10,255,190 | ||||||||||
Reinvestments | — | — | 4,127 | 43,459 | ||||||||||||
Redemptions* | (13,707 | ) | (139,748 | ) | (405,982 | ) | (4,428,385 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Net increase | 115,826 | $ | 1,130,905 | 533,433 | $ | 5,870,264 | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Total net increase | 150,553 | $ | 1,491,550 | 637,716 | $ | 6,994,763 | ||||||||||
|
|
|
|
|
|
|
|
* | Prior to September 1, 2014, there was a 2.00% redemption fee that may have been charged on shares redeemed which had been held for 30 days or less. The redemption fee was retained by the Funds for the benefit of the remaining shareholders and recorded as paid-in-capital. Effective September 1, 2014, this redemption fee was discontinued and is no longer charged. For the six months period ending October 31, 2015, there were no redemption fees charged. |
5. Federal Tax Information
The Fund has followed the authoritative guidance on accounting for and disclosure of uncertainty in tax positions, which requires the Fund to determine whether a tax position is more likely than not to be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The Fund has determined that there was no effect on the financial statements from following this authoritative guidance. In the normal course of business, the Fund is subject to examination by federal, state and local jurisdictions, where applicable, for tax years for which applicable statutes of limitations have not expired.
17
WHV/SEIZERT SMALL CAP VALUE EQUITY FUND
Notes to Financial Statements (Continued)
October 31, 2015
(Unaudited)
The tax character of distributions paid by the Fund during the year ended April 30, 2015 was as follows:
Ordinary Income Dividend | Long-Term Capital Gain Dividend | |||||
$52,491 | $18 |
For the year ended April 30, 2014, the Fund had no distributions paid. Distributions from net investment income and short-term gains are treated as ordinary income for federal income tax purposes.
As of April 30, 2015, the components of distributable earnings on a tax basis were as follows:
Capital Loss Carryforward | Undistributed Ordinary Income | Undistributed Long-Term Gain | Unrealized Appreciation/ (Depreciation) | Qualified Late-Year Losses | Other Temporary Differences | |||||
$(94,824) | $44,939 | $— | $229,810 | $(222,445) | $(1,413) |
The differences between the book and tax basis components of distributable earnings relate primarily to the timing and recognition of income and gains for federal income tax purposes.
As of October 31, 2015, the federal tax cost, aggregate gross unrealized appreciation and depreciation of securities held by the Fund were as follows:
Federal tax cost | $ | 12,199,647 | ||||
|
| |||||
Gross unrealized appreciation | $ | 1,133,791 | ||||
Gross unrealized depreciation | (1,018,658 | ) | ||||
|
| |||||
Net unrealized appreciation | $ | 115,133 | ||||
|
|
Pursuant to federal income tax rules applicable to regulated investment companies, the Fund may elect to treat certain capital losses between November 1 and April 30 and late year ordinary losses ((i) ordinary losses between January 1 and April 30, and (ii) specified ordinary and currency losses between November 1 and April 30) as occurring on the first day of the following tax year. For the year ended April 30, 2015, any amount of losses elected within the tax return will not be recognized for federal income tax purposes until May 1, 2015. For the year ended April 30, 2015, the Fund deferred to May 1, 2015 the following losses:
Late-Year Ordinary | Short-Term Capital Loss Deferral | Long-Term Capital Loss Deferral | ||
$— | $187,720 | $34,725 |
Accumulated capital losses represent net capital loss carryforwards as of April 30, 2015 that may be available to offset future realized capital gains and thereby reduce future capital gains distributions.
18
WHV/SEIZERT SMALL CAP VALUE EQUITY FUND
Notes to Financial Statements (Concluded)
October 31, 2015
(Unaudited)
As of April 30, 2015, the Fund had capital loss carryforward of $94,824, of which $94,301 were short-term losses and $523 were long-term losses.
6. Subsequent Event
Management has evaluated the impact of all subsequent events on the Fund through the date the financial statements were issued and has determined that there were no subsequent events requiring recognition or disclosure in the financial statements.
19
WHV/SEIZERT SMALL CAP VALUE EQUITY FUND
Other Information
(Unaudited)
Proxy Voting
Policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities as well as information regarding how the Fund voted proxies relating to portfolio securities for the most recent 12-month period ended June 30 are available without charge, upon request, by calling (888) 948-4685 and on the Securities and Exchange Commission’s (“SEC”) website at http://www.sec.gov.
Quarterly Portfolio Schedules
The Trust files its complete schedule of portfolio holdings with the SEC for the first and third fiscal quarters of each fiscal year (quarters ended July 31 and January 31) on Form N-Q. The Trust’s Forms N-Q are available on the SEC’s website at http://www.sec.gov and may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. Information on the operation of the SEC’s Public Reference Room may be obtained by calling 1-800-SEC-0330.
Approval of Advisory Agreement
At an in-person meeting held on September 21-22, 2015 (the “Meeting”), the Board of Trustees (“Board” or “Trustees”) of FundVantage Trust (“Trust”), including a majority of the Trustees who are not “interested persons” as defined in the Investment Company Act of 1940, as amended (“1940 Act”) (the “Independent Trustees”), unanimously approved the continuation of the advisory agreement (the “Agreement”) between the Trust, on behalf of the WHV/Seizert Small Cap Value Equity Fund (the “Fund”), and WHV Investments, Inc. (“WHV” or the “Adviser”) for an additional one year period.
In determining whether to approve the Agreement, the Trustees considered information provided by the Adviser in accordance with Section 15(c) of the 1940 Act. The Trustees considered information provided by the Adviser regarding (i) services performed for the Fund, (ii) the size and qualifications of the Adviser’s staff, (iii) any potential or actual material conflicts of interest in relation to the Adviser’s management of the Fund and other clients and oversight of the Fund’s sub-adviser in this regard, (iv) investment performance, (v) the capitalization and financial condition of the Adviser, (vi) brokerage selection procedures (including soft dollar arrangements, if any), (vii) the procedures for allocating investment opportunities between the Fund and other clients, (viii) results of any regulatory examination, including any recommendations or deficiencies noted, (ix) any litigation, investigation or administrative proceeding which may have a material impact on the Adviser’s ability to service the Fund, and (x) compliance with the Fund’s investment objective, policies and practices (including codes of ethics and proxy voting policies), and (xi) compliance with federal securities laws and other regulatory requirements. The Trustees noted the reports and discussions with the Adviser and the Fund’s sub-adviser at Board meetings throughout the year covering matters including: the relative performance of the Fund; compliance with the investment objectives, policies, strategies and
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WHV/SEIZERT SMALL CAP VALUE EQUITY FUND
Other Information (Continued)
(Unaudited)
limitations for the Fund; the compliance of management personnel with the applicable code of ethics; and the adherence to fair value pricing procedures as established by the Board. At the Meeting, the Trustees also received and reviewed a memorandum from legal counsel regarding the legal standard applicable to their review of the Agreement.
Representatives from WHV attended the Meeting both in person and via teleconference. The representatives from WHV discussed the firm’s history, track record and investment services in connection with the proposed approval of the Agreement and answered questions from the Board.
The Trustees considered the investment performance information for the Fund. The Trustees reviewed performance information for the Fund as compared to its respective Lipper category for the year to date, one year and since inception periods ended June 30, 2015. The Trustees also received performance information for the Fund’s Class I shares as compared to its respective benchmark index as well as the similarly managed account or comparable separate account composite (of the Fund’s sub-adviser) for the one year and since inception periods ended June 30, 2015. The Trustees also reviewed commentary provided by the Adviser and the Fund’ sub-adviser regarding the performance data and the various factors contributing to the Fund’s performance. The Trustees noted that while absolute performance was positive for certain periods ended June 30, 2015, the Fund’s relative performance lagged the median of its respective Lipper peer groups. The Trustees noted that the Class A shares and Class I shares of the Fund underperformed each of the Russell 2000 Value Total Return Index and the median of the Lipper 2000 Value category, the Fund’s applicable Lipper peer group, for the year to date, one year and since inception periods ended June 30, 2015. The Trustees considered explanations provided by the Adviser regarding the various factors contributing to the relative underperformance of the Fund, including, among other things, differences in the Fund’s investment strategy and portfolio construction in comparison to the peer funds included in its Lipper peer group. The Board discussed with the Adviser the reasons behind such results for the Fund, including the steps being undertaken by the Adviser to seek to improve such performance. The Trustees considered other factors that supported the continuation of the Advisory Agreement, including the following: (i) that the sub-adviser’s investment decisions, such as security selection and sector allocation, contributing to such underperformance were consistent with the Fund’s investment objective and policies. Taking note of the Adviser’s discussion of (i) the various factors contributing to the Fund’s performance and (ii) its continuing commitment to the Fund’s current investment strategy, the Independent Trustees concluded that the investment performance of the Fund was within an acceptable range of performance relative to other mutual funds with similar investment objectives, strategies and policies based on the information provided at the Meeting.
The Adviser provided information regarding its advisory fees and an analysis of these fees in relation to the delivery of services to the Fund and any other ancillary benefit resulting from the Adviser’s relationship with the Fund. The Trustees considered the fees that the Fund’s sub-adviser charges to its separately managed accounts, and evaluated the explanations provided by the Adviser as to the differences in the aggregate fees charged to the Fund and such separately managed accounts. The Trustees reviewed
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WHV/SEIZERT SMALL CAP VALUE EQUITY FUND
Other Information (Continued)
(Unaudited)
fees charged by other advisers that manage comparable mutual funds with similar strategies to those of the Fund. The Trustees noted that the net total expense ratio and the gross advisory fee of the Fund’s Class A shares and Class I shares were higher than the median net total expense ratio and gross advisory fee of funds with a similar share class in the Lipper 2000 Value Total Return category with $250 million or less in assets. The Trustees concluded that the advisory fee and services to be provided by the Adviser are consistent with those of other advisers which manage mutual funds with investment objectives, strategies and policies similar to those of the Fund as measured by the information provided at the Meeting.
The Board considered the level and depth of knowledge of the Adviser, including the professional experience and qualifications of senior personnel. In evaluating the quality of services provided by the Adviser, the Board took into account its familiarity with the Adviser’s senior management through Board meetings, discussions and reports during the preceding year. The Trustees also took into account the compliance policies and procedures of WHV, and reports regarding WHV’s compliance operations from the Trust’s Chief Compliance Officer. The Board also considered any potential conflicts of interest that may arise in a portfolio manager’s management of the Fund’s investments on the one hand, and the investments of other accounts, on the other. The Trustees reviewed the services provided to the Fund by the Adviser and concluded that the nature, extent and quality of the services to be provided were appropriate and consistent with the terms of the Agreement. They also concluded that the Adviser has sufficient personnel, with the appropriate education and experience, to serve the Fund effectively and had demonstrated its ability to attract and retain qualified personnel.
The Trustees considered the costs of the services provided by the Adviser, the compensation and benefits received by the Adviser in providing services to the Fund as well as the Adviser’s profitability. It was noted that the Adviser’s level of profitability is an appropriate factor to consider, and the Trustees should be satisfied that the Adviser’s profits are sufficient to continue as a healthy concern generally and as investment adviser of the Fund specifically. The Trustees concluded that the Adviser’s advisory fee level was reasonable in relation to the nature and quality of the services provided, taking into account the fees charged by other advisers for managing comparable mutual funds with similar strategies. The Trustees also concluded that the overall expense ratio of the Fund was reasonable, taking into account the growth and size of the Fund and the quality of services provided by the Adviser and the expense limitations agreed to by the Adviser.
The Trustees considered the extent to which economies of scale would be realized relative to fee levels as the Fund grows and whether the advisory fee levels reflect these economies of scale for the benefit of shareholders. The Board noted that economies of scale may be achieved at higher asset levels for the Fund for the benefit of fund shareholders, but that because such economies of scale did not yet exist and were not likely to exist in the near term, the Adviser did not believe it was appropriate to incorporate a mechanism for sharing the benefit of such economies with Fund shareholders in the advisory fee structure at this time.
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WHV/SEIZERT SMALL CAP VALUE EQUITY FUND
Other Information (Concluded)
(Unaudited)
In voting to approve the continuation of the Agreement with respect to the Fund, the Board considered all factors it deemed relevant and the information presented to the Board by the Adviser. In arriving at its decision, the Board did not identify any single factor as being of paramount importance and each member of the Board gave varying weights to each factor according to his or her own judgment. The Board determined that the approval of the Agreement would be in the best interests of the Fund and its shareholders. As a result, the Board, including a majority of the Independent Trustees, unanimously approved the continuation of the Agreement with respect to the Fund for an additional one year period.
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Investment Adviser
WHV Investments, Inc.
301 Battery Street
Suite 400
San Francisco, CA 94111-3203
Sub-Adviser
Seizert Capital Partners, LLC
185 Oakland Avenue
Suite 100
Birmingham, MI 48009-3433
Administrator
BNY Mellon Investment Servicing (US) Inc.
301 Bellevue Parkway
Wilmington, DE 19809
Transfer Agent
BNY Mellon Investment Servicing (US) Inc.
4400 Computer Drive
Westborough, MA 01581
Principal Underwriter
Foreside Funds Distributors LLC
400 Berwyn Park
899 Cassatt Road
Berwyn, PA 19312
Custodian
The Bank of New York Mellon
225 Liberty Street
New York, NY 10286
Independent Registered Public Accounting Firm
PricewaterhouseCoopers LLP
Two Commerce Square, Suite 1700
2001 Market Street
Philadelphia, PA 19103-7042
Legal Counsel
Pepper Hamilton LLP
3000 Two Logan Square
18th and Arch Streets
Philadelphia, PA 19103
SEI-1015
As Sub-Advised by
WHV/SEIZERT
SMALL CAP VALUE
EQUITY FUND
of
FundVantage Trust
Class A Shares
Class I Shares
SEMI-ANNUAL REPORT
October 31, 2015 (Unaudited)
This report is submitted for the general information of the shareholders of the WHV/Seizert Small Cap Value Equity Fund. It is not authorized for distribution unless preceded or accompanied by a current prospectus for the WHV/Seizert Small Cap Value Equity Fund.
Item 2. Code of Ethics.
Not applicable.
Item 3. Audit Committee Financial Expert.
Not applicable.
Item 4. Principal Accountant Fees and Services.
Not applicable.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. Investments.
(a) | Schedule of Investments in securities of unaffiliated issuers as of the close of the reporting period is included as part of the report to shareholders filed under Item 1 of this form. |
(b) | Not applicable. |
Item 7. | Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. |
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9. | Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers. |
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
There have been no material changes to the procedures by which the shareholders may recommend nominees to the registrant’s board of trustees, where those changes were implemented after the registrant last provided disclosure in response to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR 229.407) (as required by Item 22(b)(15) of Schedule 14A (17 CFR 240.14a-101)), or this Item.
Item 11. Controls and Procedures.
(a) | The registrant’s principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”) (17 CFR 270.30a-3(c))) are effective, as of a date within 90 days of the filing date of the report that includes the disclosure required by this paragraph, based on their evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or 240.15d-15(b)). |
(b) | There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR 270.30a-3(d)) that occurred during the registrant’s second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting. |
Item 12. Exhibits.
(a)(1) | Not applicable. | |
(a)(2) | Certifications pursuant to Rule 30a-2(a) under the 1940 Act and Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto. | |
(a)(3) | Not applicable. | |
(b) | Certifications pursuant to Rule 30a-2(b) under the 1940 Act and Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) | FundVantage Trust |
By (Signature and Title)* | /s/ Joel L. Weiss | |||
Joel L. Weiss, President and | ||||
Chief Executive Officer | ||||
(principal executive officer) |
Date | 12/31/2015 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By (Signature and Title)* | /s/ Joel L. Weiss | |||
Joel L. Weiss, President and | ||||
Chief Executive Officer | ||||
(principal executive officer) |
Date | 12/31/2015 |
By (Signature and Title)* | /s/ James G. Shaw | |||
James G. Shaw, Treasurer and | ||||
Chief Financial Officer | ||||
(principal financial officer) |
Date | 12/31/2015 |
* Print the name and title of each signing officer under his or her signature.