OMB APPROVAL |
OMB Number: 3235-0570
Expires: August 31, 2020
Estimated average burden hours per response: 20.6 |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANY
Investment Company Act file number | 811-22680 |
Ultimus Managers Trust |
(Exact name of registrant as specified in charter) |
225 Pictoria Drive, Suite 450 Cincinnati, Ohio | 45246 |
(Address of principal executive offices) | (Zip code) |
Matthew J. Beck, Esq.
Ultimus Fund Solutions, LLC 225 Pictoria Drive, Suite 450 Cincinnati, Ohio 45246 |
(Name and address of agent for service) |
Registrant's telephone number, including area code: | (513) 587-3400 |
Date of fiscal year end: | August 31 | |
Date of reporting period: | August 31, 2019 |
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, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.
Item 1. | Reports to Stockholders. |
Alambic Small Cap Plus Fund (ALGSX)
Alambic Mid Cap Plus Fund (ALMGX)
Annual Report
August 31, 2019
Beginning on January 1, 2021, as permitted by regulations adopted by the U.S. Securities and Exchange Commission, paper copies of the Funds’ shareholder reports like this one will no longer be sent by mail, unless you specifically request paper copies of the reports from the Funds or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you have already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Funds electronically by contacting the Funds at 1-888-890-8988 or, if you own these shares through a financial intermediary, by contacting your financial intermediary.
You may elect to receive all future reports in paper free of charge. You can inform the Funds that you wish to continue receiving paper copies of your shareholder reports by contacting the Funds at 1-888-890-8988. If you own shares through a financial intermediary, you may contact your financial intermediary or follow instructions included with this document to elect to continue to receive paper copies of your shareholder reports. Your election to receive reports in paper will apply to all Funds held with the Fund complex or at your financial intermediary.
ALAMBIC FUNDS | October 2019 |
Dear Alambic Funds Shareholder:
We are once again pleased to present you with the Alambic Funds’ Annual Report for our fiscal year ended August 31, 2019. It was another interesting year for the U.S. equity markets, as the final four months of 2018 saw a meaningful market pullback – one that ended on December 24th, 2018 – whereupon the market rallied strongly into the new year. Over the entire period, small-caps significantly underperformed, and growth continued to beat value, particularly in the larger cap ranges.
We continue to believe U.S. equities remain broadly overvalued, particularly when it comes to the highest growth, often tech-oriented companies. While there are, no doubt, some fantastic companies in this mix, we believe the expectations embedded in many share prices currently exceed any rational projections of future performance. As a result, while the companies themselves may perform well, we believe share price performance could well be challenged over the medium term.
Adding to this “tricky situation” is the mixed economic backdrop. A significant portion of global manufacturing Purchasing Managers Indices (PMI’s) are now in contraction territory, with the U.S. recently joining this club. Services, in contrast, are still showing strength, although there does seem to be some slippage from the particularly robust business conditions of several months ago. Whether global manufacturing weakness continues to infect the U.S. economy remains to be seen, but we would venture the answer is “yes.” More difficult is the question of whether manufacturing weakness will bleed in to the service economy – and it is services that dominate GDP (manufacturing, for example, is only around 12.5% of U.S. GDP). We are probably more pessimistic than most on this front, but we still think there is only slightly greater than a 50% chance of a recession over the next 12-18 months – not high enough to panic, but still enough to cause concern.
Performance Review
Alambic Small Cap Plus Fund (“ALGSX”)
For the fiscal year ended August 31, 2019, ALGSX delivered a total return of -19.85%, compared to -12.89% for its benchmark, the Russell 2000® Index. The Fund’s portfolio has been managed with a focus on smaller market cap equities that are “cheap” relative to their industry peers on metrics such as price-to-book and cash flow yield. This has given the portfolio a distinct value bias, which clearly has not been the appropriate positioning given the market’s ongoing infatuation with the highest growth companies, regardless of their price. As an investment strategy, fundamental valuation swings in and out of style – although historically it has been in favor much more often than out-of-favor. Unfortunately, the past few years have been one of those times (just like the run-up to the Tech Bubble) when fundamental valuation hasn’t worked well. This has resulted in a prolonged period of underperformance for the Fund relative to its benchmark. While we believe that value will come back into favor, the timing is uncertain and, as a result, a decision has been made to close the Fund.
1
Alambic Mid Cap Plus Fund (“ALMGX”)
For the fiscal year ended August 31, 2019, ALMGX delivered a total return of -7.54%, compared to the +0.54% return for its benchmark, the Russell Midcap® Index. This Fund’s portfolio consists of a range of mid-cap equities. While these positions span the entire spectrum from growth to value, our investment methodology favors shares that are “cheap” relative to their industry peers on metrics such as price-to-book and cash flow yield (this being consistent with the approach in our Small Cap Plus Fund). Once again, this gives the portfolio a distinct value bias, and this was the main cause of the past year’s underperformance. While we remain confident that fundamental valuation will again turn to be the best investment approach over the longer term, we do not have enough visibility on when markets will turn away from their recent “growth at any price” approach and, hence, a decision has been made to close the Fund.
One of the greatest investors of all time, Julian Robertson, famously closed his firm – Tiger Management – in March of 2000, right at the peak of the Tech Bubble. In his final letter to shareholders, Mr. Robertson wrote: “As you have heard me say on many occasions, the key to Tiger’s success over the years has been a steady commitment to buying the best stocks and shorting the worst. In a rational environment, this strategy functions well. But in an irrational market, where earnings and price considerations take a back seat to mouse clicks and momentum, such logic, as we have learned, does not count for much.” Well aware of this story, we stuck to our knitting as long as we could, but we ultimately reached the same fate. Just as markets turned back then, we firmly believe they will turn again, and our greatest disappointment is that the Funds won’t be around to reap the rewards.
To paraphrase Hill Street Blues, “be careful out there.”
Sincerely
Albert Richards | Brian Thompson | Rob Slaymaker |
CEO | CRO | Partner |
Past performance is not predictive of future performance. Investment results and principal value will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Current performance may be higher or lower than the performance data quoted. Performance data current to the most recent month end are available by calling 1-888-890-8988.
An investor should consider the investment objectives, risks, charges and expenses of the Funds carefully before investing. The Funds’ prospectus contains this and other important information. To obtain a copy of the Funds’ prospectus, please visit our website at http://alambicfunds.com or call 1-888-890-8988 and a copy will be sent to you free of charge. Please read the prospectus carefully before you invest. The Alambic Funds are distributed by Ultimus Fund Distributors, LLC.
The Letter to Shareholders seeks to describe some of the Adviser’s current opinions and views of the financial markets. Although the Adviser believes it has a reasonable basis for any opinions or views expressed, actual results may differ, sometimes significantly so, from those expected or expressed. The securities held by the Funds that are discussed in the Letter to Shareholders were held during the period covered by this Report. They do not comprise the entire investment portfolio of the Funds, may be sold at any time and may no longer be held
2
by the Funds. For a complete list of securities held by the Funds as of August 31, 2019, please see the Schedule of Investments sections of the Annual Report. The opinions of the Funds’ Adviser with respect to those securities may change at any time.
Statements in the Letter to Shareholders that reflect projections or expectations for future financial or economic performance of the Funds and the market in general and statements of the Funds’ plans and objectives for future operations are forward-looking statements. No assurance can be given that actual results or events will not differ materially from those projected, estimated, assumed, or anticipated in any such forward-looking statements. Important factors that could result in such differences, in addition to factors noted with such forward-looking statements include, without limitation, general economic conditions, such as inflation, recession, and interest rates. Past performance is not a guarantee of future results.
3
ALAMBIC SMALL CAP PLUS FUND
PERFORMANCE INFORMATION
August 31, 2019 (Unaudited)
Comparison of the Change in Value of a $10,000 Investment
in Alambic Small Cap Plus Fund versus the Russell 2000® Total Return Index* and the Russell 2000® Growth Index.
Average Annual Total Returns | ||||
1 Year | 3 Years | Since | ||
Alambic Small Cap Plus Fund (a) | (19.85%) | 4.11% | 6.43% | |
Russell 2000® Total Return Index | (12.89%) | 7.89% | 8.62% | |
Russell 2000® Growth Index | (11.02%) | 10.62% | 9.68% |
(a) | The total returns shown do not reflect the deduction of taxes a shareholder would pay on Fund distributions, if any, or the redemption of Fund shares. |
(b) | Commencement of operations for Alambic Small Cap Plus Fund was December 29, 2015. |
* | Effective April 9, 2019, the Russell 2000® Total Return Index is the Fund’s primary benchmark. The investment advisor to the Fund believes the Russell 2000® Total Return Index is a more appropriate and accurate index against which to compare the Fund’s investment strategies than the Russell 2000® Growth Index. |
4
ALAMBIC MID CAP PLUS FUND
PERFORMANCE INFORMATION
August 31, 2019 (Unaudited)
Comparison of the Change in Value of a $10,000 Investment
in Alambic Mid Cap Plus Fund versus the Russell Midcap Total Return Index* and the Russell Midcap Growth Total Return Index.
Average Annual Total Returns | |||
1 Year | Since | ||
Alambic Mid Cap Plus Fund (a) | (7.54%) | 6.23% | |
Russell Midcap Total Return Index | 0.54% | 9.81% | |
Russell Midcap Growth Total Return Index | 5.96% | 16.48% |
(a) | The total returns shown do not reflect the deduction of taxes a shareholder would pay on Fund distributions, if any, or the redemption of Fund shares. |
(b) | Commencement of operations for Alambic Mid Cap Plus Fund was December 29, 2016. |
* | Effective April 9, 2019, the Russell Midcap Total Return Index is the Fund’s primary benchmark. The investment advisor to the Fund believes the Russell Midcap Total Return Index is a more appropriate and accurate index against which to compare the Fund’s investment strategies than the Russell Midcap Growth Total Return Index. |
5
ALAMBIC SMALL CAP PLUS FUND
PORTFOLIO INFORMATION
August 31, 2019 (Unaudited)
Sector Diversification (% of Net Assets)
Top 10 Equity Holdings
Security Description | % of Net Assets |
Simply Good Foods Company (The) | 1.9% |
Willis Lease Finance Corporation | 1.9% |
AngioDynamics, Inc. | 1.9% |
Great Lakes Dredge & Dock Corporation | 1.6% |
Sinclair Broadcast Group, Inc. - Class A | 1.5% |
Kimball International, Inc. - Class B | 1.5% |
Herman Miller, Inc. | 1.5% |
Luna Innovations, Inc. | 1.3% |
A10 Networks, Inc. | 1.3% |
Matson, Inc. | 1.2% |
6
ALAMBIC MID CAP PLUS FUND
PORTFOLIO INFORMATION
August 31, 2019 (Unaudited)
Sector Diversification (% of Net Assets)
Top 10 Equity Holdings
Security Description | % of Net Assets |
Reliance Steel & Aluminum Company | 2.9% |
Gentex Corporation | 2.7% |
Cummins, Inc. | 2.7% |
Bio-Rad Laboratories, Inc. - Class A | 2.7% |
Cadence Design Systems, Inc. | 2.3% |
Sinclair Broadcast Group, Inc. - Class A | 2.1% |
Hologic, Inc. | 2.0% |
Mylan N.V. | 2.0% |
Oshkosh Corporation | 2.0% |
Seaboard Corporation | 2.0% |
7
ALAMBIC SMALL CAP PLUS FUND | ||||||||
COMMON STOCKS — 95.8% | Shares | Value | ||||||
Communication Services — 3.5% | ||||||||
Entertainment — 0.8% | ||||||||
Lions Gate Entertainment Corporation - Class A | 2,100 | $ | 18,963 | |||||
Interactive Media & Services — 0.1% | ||||||||
Liberty TripAdvisor Holdings, Inc. - Series A (a) | 400 | 3,496 | ||||||
Media — 2.3% | ||||||||
Marchex, Inc. - Class B (a) | 1,118 | 3,801 | ||||||
MSG Networks, Inc. - Class A (a) | 200 | 3,280 | ||||||
Sinclair Broadcast Group, Inc. - Class A | 850 | 37,885 | ||||||
Tribune Publishing Company | 1,422 | 10,878 | ||||||
55,844 | ||||||||
Wireless Telecommunication Services — 0.3% | ||||||||
Telephone & Data Systems, Inc. | 300 | 7,560 | ||||||
Consumer Discretionary — 12.6% | ||||||||
Auto Components — 1.8% | ||||||||
Gentex Corporation | 800 | 21,280 | ||||||
Goodyear Tire & Rubber Company (The) | 1,700 | 19,499 | ||||||
Stoneridge, Inc. (a) | 114 | 3,501 | ||||||
44,280 | ||||||||
Automobiles — 0.1% | ||||||||
Ford Motor Company | 100 | 917 | ||||||
Distributors — 0.1% | ||||||||
LKQ Corporation (a) | 100 | 2,627 | ||||||
Diversified Consumer Services — 2.4% | ||||||||
American Public Education, Inc. (a) | 700 | 16,961 | ||||||
Career Education Corporation (a) | 300 | 6,153 | ||||||
Collectors Universe, Inc. | 353 | 9,150 | ||||||
Laureate Education, Inc. - Class A (a) | 800 | 14,640 | ||||||
Select Interior Concepts, Inc. - Class A (a) | 992 | 12,311 | ||||||
59,215 | ||||||||
Hotels, Restaurants & Leisure — 3.6% | ||||||||
Boyd Gaming Corporation | 500 | 12,020 | ||||||
Brinker International, Inc. | 50 | 1,900 | ||||||
Caesars Entertainment Corporation (a) | 500 | 5,755 | ||||||
Century Casinos, Inc. (a) | 1,800 | 13,824 | ||||||
Churchill Downs, Inc. | 220 | 27,117 | ||||||
Habit Restaurants, Inc. (The) - Class A (a) | 400 | 3,504 |
8
See accompanying notes to financial statements.
ALAMBIC SMALL CAP PLUS FUND | ||||||||
COMMON STOCKS — 95.8% (Continued) | Shares | Value | ||||||
Consumer Discretionary — 12.6% (Continued) | ||||||||
Hotels, Restaurants & Leisure — 3.6% (Continued) | ||||||||
MGM Resorts International | 100 | $ | 2,806 | |||||
Norwegian Cruise Line Holdings Ltd. (a) | 300 | 15,225 | ||||||
Planet Fitness, Inc. - Class A (a) | 20 | 1,412 | ||||||
Starbucks Corporation | 60 | 5,794 | ||||||
89,357 | ||||||||
Household Durables — 3.0% | ||||||||
Cavco Industries, Inc. (a) | 10 | 1,835 | ||||||
Green Brick Partners, Inc. (a) | 374 | 3,437 | ||||||
Installed Building Products, Inc. (a) | 150 | 8,536 | ||||||
M/I Homes, Inc. (a) | 200 | 7,228 | ||||||
PulteGroup, Inc. | 100 | 3,380 | ||||||
Skyline Champion Corporation (a) | 300 | 8,400 | ||||||
Sonos, Inc. (a) | 1,701 | 24,699 | ||||||
TopBuild Corporation (a) | 140 | 12,967 | ||||||
Universal Electronics, Inc. (a) | 50 | 2,257 | ||||||
72,739 | ||||||||
Internet & Direct Marketing Retail — 0.0% (b) | ||||||||
Lands’ End, Inc. (a) | 100 | 775 | ||||||
Leisure Products — 0.4% | ||||||||
American Outdoor Brands Corporation (a) | 1,000 | 6,010 | ||||||
Johnson Outdoors, Inc. - Class A | 50 | 2,800 | ||||||
Polaris, Inc. | 20 | 1,640 | ||||||
10,450 | ||||||||
Specialty Retail — 0.2% | ||||||||
Aaron’s, Inc. | 50 | 3,206 | ||||||
Rent-A-Center, Inc. (a) | 100 | 2,553 | ||||||
5,759 | ||||||||
Textiles, Apparel & Luxury Goods — 1.0% | ||||||||
Levi Strauss & Company - Class A (a) | 100 | 1,690 | ||||||
Steven Madden Ltd. | 400 | 13,288 | ||||||
Vera Bradley, Inc. (a) | 900 | 9,531 | ||||||
24,509 | ||||||||
Consumer Staples — 2.8% | ||||||||
Beverages — 0.5% | ||||||||
Coca-Cola Consolidated, Inc. | 15 | 5,049 | ||||||
Monster Beverage Corporation (a) | 100 | 5,867 | ||||||
10,916 | ||||||||
Food Products — 1.9% | ||||||||
Simply Good Foods Company (The) (a) | 1,600 | 47,408 |
9
See accompanying notes to financial statements.
ALAMBIC SMALL CAP PLUS FUND | ||||||||
COMMON STOCKS — 95.8% (Continued) | Shares | Value | ||||||
Consumer Staples — 2.8% (Continued) | ||||||||
Tobacco — 0.4% | ||||||||
Vector Group Ltd. | 900 | $ | 10,512 | |||||
Energy — 4.2% | ||||||||
Energy Equipment & Services — 1.6% | ||||||||
DMC Global, Inc. | 150 | 6,514 | ||||||
Era Group, Inc. (a) | 1,200 | 11,376 | ||||||
Forum Energy Technologies, Inc. (a) | 1,500 | 2,115 | ||||||
Geospace Technologies Corporation (a) | 191 | 2,338 | ||||||
Matrix Service Company (a) | 900 | 17,883 | ||||||
40,226 | ||||||||
Oil, Gas & Consumable Fuels — 2.6% | ||||||||
Clean Energy Fuels Corporation (a) | 800 | 1,592 | ||||||
Gulfport Energy Corporation (a) | 1,300 | 3,120 | ||||||
International Seaways, Inc. (a) | 500 | 8,610 | ||||||
Kosmos Energy Ltd. | 2,900 | 18,328 | ||||||
NACCO Industries, Inc. - Class A | 191 | 9,508 | ||||||
SandRidge Energy, Inc. (a) | 600 | 2,808 | ||||||
Talos Energy, Inc. (a) | 421 | 8,016 | ||||||
World Fuel Services Corporation | 300 | 11,520 | ||||||
63,502 | ||||||||
Financials — 1.7% | ||||||||
Banks — 1.2% | ||||||||
CIT Group, Inc. | 100 | 4,259 | ||||||
Smartsheet, Inc. - Class A (a) | 500 | 24,300 | ||||||
TCF Financial Corporation | 50 | 1,928 | ||||||
30,487 | ||||||||
Capital Markets — 0.2% | ||||||||
Stifel Financial Corporation | 100 | 5,342 | ||||||
Thrifts & Mortgage Finance — 0.3% | ||||||||
Axos Financial, Inc. (a) | 100 | 2,591 | ||||||
Mr. Cooper Group, Inc. (a) | 200 | 1,762 | ||||||
NMI Holdings, Inc. - Class A (a) | 100 | 2,834 | ||||||
7,187 | ||||||||
Health Care — 26.0% | ||||||||
Biotechnology — 8.2% | ||||||||
ACADIA Pharmaceuticals, Inc. (a) | 500 | 13,830 | ||||||
Agenus, Inc. (a) | 800 | 2,304 | ||||||
Agios Pharmaceuticals, Inc. (a) | 50 | 1,897 | ||||||
Alector, Inc. (a) | 100 | 1,646 | ||||||
Alexion Pharmaceuticals, Inc. (a) | 20 | 2,015 |
10
See accompanying notes to financial statements.
ALAMBIC SMALL CAP PLUS FUND | ||||||||
COMMON STOCKS — 95.8% (Continued) | Shares | Value | ||||||
Health Care — 26.0% (Continued) | ||||||||
Biotechnology — 8.2% (Continued) | ||||||||
AMAG Pharmaceuticals, Inc. (a) | 300 | $ | 3,276 | |||||
Arrowhead Pharmaceuticals, Inc. (a) | 200 | 6,834 | ||||||
Blueprint Medicines Corporation (a) | 20 | 1,533 | ||||||
Clovis Oncology, Inc. (a) | 500 | 2,805 | ||||||
Cyclerion Therapeutics, Inc. (a) | 400 | 3,804 | ||||||
Denali Therapeutics, Inc. (a) | 100 | 1,800 | ||||||
Editas Medicine, Inc. (a) | 100 | 2,483 | ||||||
Emergent BioSolutions, Inc. (a) | 100 | 4,380 | ||||||
Epizyme, Inc. (a) | 100 | 1,297 | ||||||
Fate Therapeutics, Inc. (a) | 300 | 4,896 | ||||||
FibroGen, Inc. (a) | 100 | 4,466 | ||||||
Genomic Health, Inc. (a) | 110 | 8,433 | ||||||
Gritstone Oncology, Inc. (a) | 200 | 2,024 | ||||||
Halozyme Therapeutics, Inc. (a) | 700 | 11,564 | ||||||
Intellia Therapeutics, Inc. (a) | 400 | 5,676 | ||||||
Invitae Corporation (a) | 300 | 7,278 | ||||||
Ironwood Pharmaceuticals, Inc. (a) | 1,000 | 9,310 | ||||||
Jounce Therapeutics, Inc. (a) | 500 | 1,885 | ||||||
Momenta Pharmaceuticals, Inc. (a) | 100 | 1,263 | ||||||
OPKO Health, Inc. (a) | 2,900 | 5,336 | ||||||
Pfenex, Inc. (a) | 200 | 1,470 | ||||||
Portola Pharmaceuticals, Inc. (a) | 300 | 8,718 | ||||||
Precision BioSciences, Inc. (a) | 400 | 3,408 | ||||||
Principia Biopharma, Inc. (a) | 150 | 5,955 | ||||||
Progenics Pharmaceuticals, Inc. (a) | 4,000 | 17,600 | ||||||
Seattle Genetics, Inc. (a) | 200 | 14,528 | ||||||
Spectrum Pharmaceuticals, Inc. (a) | 400 | 2,936 | ||||||
Stemline Therapeutics, Inc. (a) | 200 | 2,382 | ||||||
Sutro Biopharma, Inc. (a) | 100 | 807 | ||||||
Ultragenyx Pharmaceutical, Inc. (a) | 200 | 10,894 | ||||||
United Therapeutics Corporation (a) | 60 | 4,954 | ||||||
Vanda Pharmaceuticals, Inc. (a) | 300 | 4,227 | ||||||
Veracyte, Inc. (a) | 100 | 2,650 | ||||||
Voyager Therapeutics, Inc. (a) | 200 | 3,574 | ||||||
Xencor, Inc. (a) | 150 | 5,592 | ||||||
201,730 | ||||||||
Health Care Equipment & Supplies — 7.3% | ||||||||
Alphatec Holdings, Inc. (a) | 800 | 4,184 | ||||||
AngioDynamics, Inc. (a) | 2,500 | 45,925 | ||||||
AtriCure, Inc. (a) | 300 | 8,217 | ||||||
Avanos Medical, Inc. (a) | 150 | 4,977 |
11
See accompanying notes to financial statements.
ALAMBIC SMALL CAP PLUS FUND | ||||||||
COMMON STOCKS — 95.8% (Continued) | Shares | Value | ||||||
Health Care — 26.0% (Continued) | ||||||||
Health Care Equipment & Supplies — 7.3% (Continued) | ||||||||
Cardiovascular Systems, Inc. (a) | 600 | $ | 29,058 | |||||
CryoLife, Inc. (a) | 200 | 5,360 | ||||||
Cutera, Inc. (a) | 100 | 2,887 | ||||||
FONAR Corporation (a) | 800 | 19,280 | ||||||
Hologic, Inc. (a) | 250 | 12,342 | ||||||
Integer Holdings Corporation (a) | 200 | 14,480 | ||||||
Lantheus Holdings, Inc. (a) | 200 | 4,352 | ||||||
Natus Medical, Inc. (a) | 100 | 2,768 | ||||||
OraSure Technologies, Inc. (a) | 300 | 1,980 | ||||||
SeaSpine Holdings Corporation (a) | 101 | 1,110 | ||||||
Tandem Diabetes Care, Inc. (a) | 70 | 5,070 | ||||||
Vapotherm, Inc. (a) | 100 | 1,160 | ||||||
Varex Imaging Corporation (a) | 200 | 5,270 | ||||||
Zimmer Biomet Holdings, Inc. | 20 | 2,784 | ||||||
Zynex, Inc. | 1,057 | 9,450 | ||||||
180,654 | ||||||||
Health Care Providers & Services — 4.7% | ||||||||
Amedisys, Inc. (a) | 180 | 23,168 | ||||||
AmerisourceBergen Corporation | 260 | 21,390 | ||||||
Cardinal Health, Inc. | 500 | 21,565 | ||||||
Cross Country Healthcare, Inc. (a) | 700 | 7,175 | ||||||
DaVita, Inc. (a) | 100 | 5,637 | ||||||
Humana, Inc. | 10 | 2,832 | ||||||
Joint Corporation (The) (a) | 759 | 12,736 | ||||||
McKesson Corporation | 80 | 11,062 | ||||||
Owens & Minor, Inc. | 600 | 3,048 | ||||||
Triple-S Management Corporation - Class B (a) | 296 | 6,074 | ||||||
114,687 | ||||||||
Health Care Technology — 0.9% | ||||||||
Change Healthcare, Inc. (a) | 216 | 3,030 | ||||||
NextGen Healthcare, Inc. (a) | 1,400 | 19,894 | ||||||
22,924 | ||||||||
Life Sciences Tools & Services — 1.0% | ||||||||
Bio-Rad Laboratories, Inc. - Class A (a) | 50 | 16,886 | ||||||
Medpace Holdings, Inc. (a) | 50 | 4,045 | ||||||
NanoString Technologies, Inc. (a) | 100 | 2,548 | ||||||
23,479 |
12
See accompanying notes to financial statements.
ALAMBIC SMALL CAP PLUS FUND | ||||||||
COMMON STOCKS — 95.8% (Continued) | Shares | Value | ||||||
Health Care — 26.0% (Continued) | ||||||||
Pharmaceuticals — 3.9% | ||||||||
Amphastar Pharmaceuticals, Inc. (a) | 1,000 | $ | 22,460 | |||||
Corcept Therapeutics, Inc. (a) | 700 | 8,827 | ||||||
Innoviva, Inc. (a) | 200 | 2,318 | ||||||
Lannett Company, Inc. (a) | 1,700 | 17,510 | ||||||
Merck & Company, Inc. | 30 | 2,594 | ||||||
Mylan N.V. (a) | 1,200 | 23,364 | ||||||
Osmotica Pharmaceuticals plc (a) | 1,334 | 4,082 | ||||||
Prestige Consumer Healthcare, Inc. (a) | 400 | 12,752 | ||||||
Supernus Pharmaceuticals, Inc. (a) | 100 | 2,703 | ||||||
96,610 | ||||||||
Industrials — 22.3% | ||||||||
Aerospace & Defense — 2.2% | ||||||||
Axon Enterprise, Inc. (a) | 100 | 5,997 | ||||||
Mercury Systems, Inc. (a) | 250 | 21,408 | ||||||
Wesco Aircraft Holdings, Inc. (a) | 2,500 | 27,500 | ||||||
54,905 | ||||||||
Building Products — 2.4% | ||||||||
Armstrong Flooring, Inc. (a) | 200 | 1,354 | ||||||
Builders FirstSource, Inc. (a) | 1,367 | 26,588 | ||||||
CSW Industrials, Inc. | 342 | 23,328 | ||||||
JELD-WEN Holding, Inc. (a) | 400 | 6,904 | ||||||
Patrick Industries, Inc. (a) | 50 | 1,807 | ||||||
59,981 | ||||||||
Commercial Services & Supplies — 4.0% | ||||||||
Brady Corporation - Class A | 50 | 2,360 | ||||||
Herman Miller, Inc. | 850 | 35,938 | ||||||
Kimball International, Inc. - Class B | 2,076 | 36,434 | ||||||
Pitney Bowes, Inc. | 6,400 | 22,784 | ||||||
97,516 | ||||||||
Construction & Engineering — 3.0% | ||||||||
Construction Partners, Inc. - Class A (a) | 500 | 8,245 | ||||||
Great Lakes Dredge & Dock Corporation (a) | 3,751 | 40,661 | ||||||
IES Holdings, Inc. (a) | 917 | 17,304 | ||||||
MYR Group, Inc. (a) | 100 | 2,867 | ||||||
Northwest Pipe Company (a) | 150 | 3,450 | ||||||
72,527 | ||||||||
Electrical Equipment — 1.6% | ||||||||
Powell Industries, Inc. | 616 | 22,373 | ||||||
Preformed Line Products Company | 324 | 16,605 | ||||||
38,978 |
13
See accompanying notes to financial statements.
ALAMBIC SMALL CAP PLUS FUND | ||||||||
COMMON STOCKS — 95.8% (Continued) | Shares | Value | ||||||
Industrials — 22.3% (Continued) | ||||||||
Industrial Conglomerates — 0.1% | ||||||||
General Electric Company | 200 | $ | 1,650 | |||||
Machinery — 3.9% | ||||||||
AGCO Corporation | 129 | 8,917 | ||||||
Commercial Vehicle Group, Inc. (a) | 2,304 | 14,630 | ||||||
Federal Signal Corporation | 200 | 5,942 | ||||||
Hurco Companies, Inc. | 234 | 7,467 | ||||||
L.B. Foster Company - Class A (a) | 200 | 3,982 | ||||||
Lydall, Inc. (a) | 200 | 4,022 | ||||||
Meritor, Inc. (a) | 1,000 | 16,820 | ||||||
Miller Industries, Inc. | 100 | 3,129 | ||||||
Oshkosh Corporation | 272 | 19,113 | ||||||
Terex Corporation | 500 | 12,415 | ||||||
96,437 | ||||||||
Marine — 1.2% | ||||||||
Matson, Inc. | 850 | 30,201 | ||||||
Professional Services — 0.7% | ||||||||
Kforce, Inc. | 250 | 8,135 | ||||||
Korn Ferry | 100 | 3,908 | ||||||
Resources Connection, Inc. | 100 | 1,655 | ||||||
TriNet Group, Inc. (a) | 50 | 3,356 | ||||||
17,054 | ||||||||
Road & Rail — 0.5% | ||||||||
Universal Logistics Holdings, Inc. | 591 | 12,381 | ||||||
Trading Companies & Distributors — 2.7% | ||||||||
BMC Stock Holdings, Inc. (a) | 612 | 15,563 | ||||||
Veritiv Corporation (a) | 300 | 4,968 | ||||||
Willis Lease Finance Corporation (a) | 761 | 47,007 | ||||||
67,538 | ||||||||
Information Technology — 18.0% | ||||||||
Communications Equipment — 2.0% | ||||||||
Acacia Communications, Inc. (a) | 100 | 6,305 | ||||||
ADTRAN, Inc. | 548 | 5,628 | ||||||
Cambium Networks Corporation (a) | 500 | 4,495 | ||||||
Comtech Telecommunications Corporation | 100 | 2,675 | ||||||
DASAN Zhone Solutions, Inc. (a) | 258 | 2,753 | ||||||
Digi International, Inc. (a) | 458 | 5,853 | ||||||
Extreme Networks, Inc. (a) | 3,100 | 20,708 | ||||||
48,417 |
14
See accompanying notes to financial statements.
ALAMBIC SMALL CAP PLUS FUND | ||||||||
COMMON STOCKS — 95.8% (Continued) | Shares | Value | ||||||
Information Technology — 18.0% (Continued) | ||||||||
Electronic Equipment, Instruments & Components — 4.1% | ||||||||
Avnet, Inc. | 250 | $ | 10,473 | |||||
Iteris, Inc. (a) | 1,300 | 7,072 | ||||||
Kimball Electronics, Inc. (a) | 300 | 3,963 | ||||||
Luna Innovations, Inc. (a) | 5,076 | 32,334 | ||||||
PCM, Inc. (a) | 100 | 3,500 | ||||||
Sanmina Corporation (a) | 100 | 2,890 | ||||||
Tech Data Corporation (a) | 284 | 26,335 | ||||||
Vishay Precision Group, Inc. (a) | 350 | 10,937 | ||||||
Zebra Technologies Corporation - Class A (a) | 20 | 4,101 | ||||||
101,605 | ||||||||
IT Services — 2.6% | ||||||||
Brightcove, Inc. (a) | 1,100 | 13,563 | ||||||
EPAM Systems, Inc. (a) | 40 | 7,653 | ||||||
KBR, Inc. | 300 | 7,656 | ||||||
Paysign, Inc. (a) | 526 | 6,991 | ||||||
Perspecta, Inc. | 300 | 7,785 | ||||||
Presidio, Inc. | 743 | 11,903 | ||||||
TTEC Holdings, Inc. | 150 | 7,036 | ||||||
62,587 | ||||||||
Semiconductors & Semiconductor Equipment — 4.3% | ||||||||
ACM Research, Inc. - Class A (a) | 600 | 8,580 | ||||||
Amkor Technology, Inc. (a) | 1,142 | 9,993 | ||||||
Cirrus Logic, Inc. (a) | 307 | 16,467 | ||||||
FormFactor, Inc. (a) | 700 | 11,963 | ||||||
Inphi Corporation (a) | 100 | 6,119 | ||||||
Micron Technology, Inc. (a) | 200 | 9,054 | ||||||
NeoPhotonics Corporation (a) | 2,800 | 17,528 | ||||||
Rambus, Inc. (a) | 1,400 | 17,556 | ||||||
Xperi Corporation | 500 | 9,160 | ||||||
106,420 | ||||||||
Software — 5.0% | ||||||||
A10 Networks, Inc. (a) | 4,615 | 32,028 | ||||||
Alteryx, Inc. - Class A (a) | 80 | 11,396 | ||||||
Cadence Design Systems, Inc. (a) | 300 | 20,544 | ||||||
ChannelAdvisor Corporation (a) | 600 | 5,160 | ||||||
eGain Corporation (a) | 600 | 4,308 | ||||||
GlobalSCAPE, Inc. | 600 | 7,206 | ||||||
HubSpot, Inc. (a) | 10 | 1,997 | ||||||
MobileIron, Inc. (a) | 800 | 5,520 | ||||||
Oracle Corporation | 50 | 2,603 | ||||||
Pivotal Software, Inc. - Class A (a) | 100 | 1,491 |
15
See accompanying notes to financial statements.
ALAMBIC SMALL CAP PLUS FUND | ||||||||
COMMON STOCKS — 95.8% (Continued) | Shares | Value | ||||||
Information Technology — 18.0% (Continued) | ||||||||
Software — 5.0% (Continued) | ||||||||
Telaria, Inc. (a) | 1,800 | $ | 17,964 | |||||
Telenav, Inc. (a) | 700 | 7,924 | ||||||
Tenable Holdings, Inc. (a) | 100 | 2,280 | ||||||
Workiva, Inc. (a) | 50 | 2,406 | ||||||
122,827 | ||||||||
Technology Hardware, Storage & Peripherals — 0.0% (b) | ||||||||
Sonim Technologies, Inc. (a) | 100 | 726 | ||||||
Materials — 4.7% | ||||||||
Chemicals — 1.9% | ||||||||
Cabot Corporation | 250 | 10,000 | ||||||
CF Industries Holdings, Inc. | 50 | 2,410 | ||||||
Hawkins, Inc. | 100 | 4,435 | ||||||
Huntsman Corporation | 300 | 5,976 | ||||||
Innospec, Inc. | 260 | 21,627 | ||||||
Valhi, Inc. | 900 | 1,755 | ||||||
46,203 | ||||||||
Metals & Mining — 1.8% | ||||||||
Commercial Metals Company | 200 | 3,134 | ||||||
Reliance Steel & Aluminum Company | 280 | 27,224 | ||||||
Ryerson Holding Corporation (a) | 1,750 | 12,023 | ||||||
Worthington Industries, Inc. | 100 | 3,470 | ||||||
45,851 | ||||||||
Paper & Forest Products — 1.0% | ||||||||
Schweitzer-Mauduit International, Inc. | 719 | 24,115 | ||||||
Total Investments at Value — 95.8% (Cost $2,170,527) | $ | 2,360,074 | ||||||
Other Assets in Excess of Liabilities — 4.2% | 104,702 | |||||||
Net Assets — 100.0% | $ | 2,464,776 |
(a) | Non-income producing security. |
(b) | Percentage rounds to less than 0.1%. |
16
See accompanying notes to financial statements.
ALAMBIC MID CAP PLUS FUND | ||||||||
COMMON STOCKS — 93.3% | Shares | Value | ||||||
Communication Services — 6.0% | ||||||||
Diversified Telecommunication Services — 0.2% | ||||||||
CenturyLink, Inc. | 200 | $ | 2,276 | |||||
Entertainment — 1.4% | ||||||||
Electronic Arts, Inc. (a) | 20 | 1,874 | ||||||
Live Nation Entertainment, Inc. (a) | 20 | 1,390 | ||||||
Viacom, Inc. - Class B | 300 | 7,494 | ||||||
Zynga, Inc. - Class A (a) | 1,200 | 6,852 | ||||||
17,610 | ||||||||
Media — 3.2% | ||||||||
Discovery, Inc. - Series A (a) | 500 | 13,800 | ||||||
Sinclair Broadcast Group, Inc. - Class A | 600 | 26,742 | ||||||
40,542 | ||||||||
Wireless Telecommunication Services — 1.2% | ||||||||
Sprint Corporation (a) | 2,200 | 14,938 | ||||||
Consumer Discretionary — 14.7% | ||||||||
Auto Components — 3.9% | ||||||||
BorgWarner, Inc. | 460 | 15,010 | ||||||
Gentex Corporation | 1,300 | 34,580 | ||||||
49,590 | ||||||||
Distributors — 1.6% | ||||||||
LKQ Corporation (a) | 750 | 19,703 | ||||||
Diversified Consumer Services — 0.9% | ||||||||
Laureate Education, Inc. - Class A (a) | 600 | 10,980 | ||||||
Hotels, Restaurants & Leisure — 3.7% | ||||||||
Caesars Entertainment Corporation (a) | 100 | 1,151 | ||||||
Chipotle Mexican Grill, Inc. (a) | 4 | 3,354 | ||||||
Churchill Downs, Inc. | 160 | 19,721 | ||||||
Hilton Worldwide Holdings, Inc. | 140 | 12,932 | ||||||
MGM Resorts International | 250 | 7,015 | ||||||
Norwegian Cruise Line Holdings Ltd. (a) | 40 | 2,030 | ||||||
46,203 | ||||||||
Household Durables — 2.7% | ||||||||
NVR, Inc. (a) | 3 | 10,797 | ||||||
PulteGroup, Inc. | 700 | 23,660 | ||||||
34,457 |
17
See accompanying notes to financial statements.
ALAMBIC MID CAP PLUS FUND | ||||||||
COMMON STOCKS — 93.3% (Continued) | Shares | Value | ||||||
Consumer Discretionary — 14.7% (Continued) | ||||||||
Internet & Direct Marketing Retail — 0.5% | ||||||||
Etsy, Inc. (a) | 80 | $ | 4,223 | |||||
Expedia Group, Inc. | 20 | 2,602 | ||||||
6,825 | ||||||||
Leisure Products — 0.4% | ||||||||
Polaris, Inc. | 60 | 4,921 | ||||||
Multi-Line Retail — 0.7% | ||||||||
Dollar General Corporation | 50 | 7,804 | ||||||
Macy’s, Inc. | 100 | 1,476 | ||||||
9,280 | ||||||||
Textiles, Apparel & Luxury Goods — 0.3% | ||||||||
Levi Strauss & Company - Class A (a) | 200 | 3,380 | ||||||
Consumer Staples — 5.8% | ||||||||
Beverages — 1.0% | ||||||||
Monster Beverage Corporation (a) | 220 | 12,908 | ||||||
Food & Staples Retailing — 0.9% | ||||||||
Performance Food Group Company (a) | 80 | 3,743 | ||||||
US Foods Holding Corporation (a) | 200 | 8,090 | ||||||
11,833 | ||||||||
Food Products — 3.9% | ||||||||
Archer-Daniels-Midland Company | 190 | 7,229 | ||||||
Campbell Soup Company | 120 | 5,400 | ||||||
General Mills, Inc. | 120 | 6,456 | ||||||
Ingredion, Inc. | 40 | 3,091 | ||||||
Pilgrim’s Pride Corporation (a) | 50 | 1,558 | ||||||
Seaboard Corporation | 6 | 24,781 | ||||||
48,515 | ||||||||
Energy — 3.4% | ||||||||
Oil, Gas & Consumable Fuels — 3.4% | ||||||||
CVR Energy, Inc. | 80 | 3,182 | ||||||
Devon Energy Corporation | 900 | 19,791 | ||||||
EQT Corporation | 1,000 | 10,170 | ||||||
HollyFrontier Corporation | 180 | 7,985 | ||||||
Marathon Oil Corporation | 100 | 1,184 | ||||||
42,312 | ||||||||
Financials — 6.2% | ||||||||
Banks — 2.6% | ||||||||
Fifth Third Bancorp | 350 | 9,257 | ||||||
First Citizens BancShares, Inc. - Class A | 10 | 4,446 |
18
See accompanying notes to financial statements.
ALAMBIC MID CAP PLUS FUND | ||||||||
COMMON STOCKS — 93.3% (Continued) | Shares | Value | ||||||
Financials — 6.2% (Continued) | ||||||||
Banks — 2.6% (Continued) | ||||||||
Huntington Bancshares, Inc. | 400 | $ | 5,300 | |||||
KeyCorp | 400 | 6,640 | ||||||
Prosperity Bancshares, Inc. | 40 | 2,597 | ||||||
Regions Financial Corporation | 200 | 2,924 | ||||||
SunTrust Banks, Inc. | 20 | 1,230 | ||||||
32,394 | ||||||||
Capital Markets — 1.5% | ||||||||
Franklin Resources, Inc. | 150 | 3,942 | ||||||
KKR & Company, Inc. - Class A | 300 | 7,752 | ||||||
MarketAxess Holdings, Inc. | 5 | 1,988 | ||||||
Raymond James Financial, Inc. | 40 | 3,140 | ||||||
T. Rowe Price Group, Inc. | 20 | 2,213 | ||||||
19,035 | ||||||||
Consumer Finance — 0.1% | ||||||||
Synchrony Financial | 50 | 1,603 | ||||||
Insurance — 2.0% | ||||||||
Assurant, Inc. | 80 | 9,840 | ||||||
Erie Indemnity Company - Class A | 25 | 5,482 | ||||||
First American Financial Corporation | 40 | 2,338 | ||||||
Hartford Financial Services Group, Inc. (The) | 60 | 3,497 | ||||||
Principal Financial Group, Inc. | 40 | 2,129 | ||||||
Prudential Financial, Inc. | 20 | 1,602 | ||||||
24,888 | ||||||||
Health Care — 15.2% | ||||||||
Biotechnology — 0.7% | ||||||||
Alexion Pharmaceuticals, Inc. (a) | 50 | 5,038 | ||||||
Seattle Genetics, Inc. (a) | 60 | 4,359 | ||||||
9,397 | ||||||||
Health Care Equipment & Supplies — 4.6% | ||||||||
Edwards Lifesciences Corporation (a) | 10 | 2,219 | ||||||
Hill-Rom Holdings, Inc. | 100 | 10,768 | ||||||
Hologic, Inc. (a) | 520 | 25,672 | ||||||
Masimo Corporation (a) | 40 | 6,130 | ||||||
Zimmer Biomet Holdings, Inc. | 90 | 12,528 | ||||||
57,317 | ||||||||
Health Care Providers & Services — 4.9% | ||||||||
AmerisourceBergen Corporation | 280 | 23,036 | ||||||
Cardinal Health, Inc. | 240 | 10,351 | ||||||
DaVita, Inc. (a) | 80 | 4,509 |
19
See accompanying notes to financial statements.
ALAMBIC MID CAP PLUS FUND | ||||||||
COMMON STOCKS — 93.3% (Continued) | Shares | Value | ||||||
Health Care — 15.2% (Continued) | ||||||||
Health Care Providers & Services — 4.9% (Continued) | ||||||||
McKesson Corporation | 170 | $ | 23,506 | |||||
61,402 | ||||||||
Life Sciences Tools & Services — 3.0% | ||||||||
Bio-Rad Laboratories, Inc. - Class A (a) | 100 | 33,771 | ||||||
Charles River Laboratories International, Inc. (a) | 35 | 4,592 | ||||||
38,363 | ||||||||
Pharmaceuticals — 2.0% | ||||||||
Mylan N.V. (a) | 1,300 | 25,311 | ||||||
Industrials — 14.5% | ||||||||
Aerospace & Defense — 1.4% | ||||||||
Mercury Systems, Inc. (a) | 200 | 17,126 | ||||||
Airlines — 1.2% | ||||||||
JetBlue Airways Corporation (a) | 400 | 6,928 | ||||||
Southwest Airlines Company | 160 | 8,371 | ||||||
15,299 | ||||||||
Construction & Engineering — 1.3% | ||||||||
EMCOR Group, Inc. | 60 | 5,246 | ||||||
MasTec, Inc. (a) | 180 | 11,317 | ||||||
16,563 | ||||||||
Electrical Equipment — 1.0% | ||||||||
Acuity Brands, Inc. | 90 | 11,287 | ||||||
Rockwell Automation, Inc. | 10 | 1,528 | ||||||
12,815 | ||||||||
Industrial Conglomerates — 0.7% | ||||||||
Carlisle Companies, Inc. | 50 | 7,248 | ||||||
General Electric Company | 200 | 1,650 | ||||||
8,898 | ||||||||
Machinery — 6.7% | ||||||||
AGCO Corporation | 150 | 10,368 | ||||||
Allison Transmission Holdings, Inc. | 200 | 8,886 | ||||||
Cummins, Inc. | 230 | 34,332 | ||||||
Oshkosh Corporation | 360 | 25,297 | ||||||
Woodward, Inc. | 50 | 5,393 | ||||||
84,276 | ||||||||
Professional Services — 1.7% | ||||||||
CoStar Group, Inc. (a) | 4 | 2,459 | ||||||
ManpowerGroup, Inc. | 220 | 17,983 | ||||||
20,442 |
20
See accompanying notes to financial statements.
ALAMBIC MID CAP PLUS FUND | ||||||||
COMMON STOCKS — 93.3% (Continued) | Shares | Value | ||||||
Industrials — 14.5% (Continued) | ||||||||
Road & Rail — 0.5% | ||||||||
Old Dominion Freight Line, Inc. | 40 | $ | 6,550 | |||||
Information Technology — 19.3% | ||||||||
Communications Equipment — 0.1% | ||||||||
EchoStar Corporation - Class A (a) | 30 | 1,267 | ||||||
Electronic Equipment, Instruments & Components — 2.5% | ||||||||
Avnet, Inc. | 339 | 14,201 | ||||||
Jabil, Inc. | 250 | 7,202 | ||||||
Keysight Technologies, Inc. (a) | 100 | 9,686 | ||||||
31,089 | ||||||||
IT Services — 6.6% | ||||||||
Booz Allen Hamilton Holding Corporation | 200 | 15,102 | ||||||
EPAM Systems, Inc. (a) | 80 | 15,306 | ||||||
Euronet Worldwide, Inc. (a) | 90 | 13,783 | ||||||
Perspecta, Inc. | 700 | 18,165 | ||||||
Sabre Corporation | 400 | 9,456 | ||||||
Western Union Company (The) | 500 | 11,060 | ||||||
82,872 | ||||||||
Semiconductors & Semiconductor Equipment — 3.2% | ||||||||
Lam Research Corporation | 40 | 8,420 | ||||||
Mellanox Technologies Ltd. (a) | 10 | 1,071 | ||||||
Micron Technology, Inc. (a) | 171 | 7,741 | ||||||
ON Semiconductor Corporation (a) | 300 | 5,340 | ||||||
Qorvo, Inc. (a) | 60 | 4,286 | ||||||
Teradyne, Inc. | 100 | 5,297 | ||||||
Xilinx, Inc. | 80 | 8,325 | ||||||
40,480 | ||||||||
Software — 4.6% | ||||||||
Autodesk, Inc. (a) | 10 | 1,428 | ||||||
Cadence Design Systems, Inc. (a) | 420 | 28,762 | ||||||
Fortinet, Inc. (a) | 60 | 4,751 | ||||||
Nuance Communications, Inc. (a) | 700 | 11,767 | ||||||
salesforce.com, Inc. (a) | 44 | 6,867 | ||||||
Symantec Corporation | 200 | 4,650 | ||||||
58,225 | ||||||||
Technology Hardware, Storage & Peripherals — 2.3% | ||||||||
Dell Technologies, Inc. - Class C (a) | 20 | 1,031 | ||||||
HP, Inc. | 800 | 14,632 | ||||||
Western Digital Corporation | 200 | 11,454 |
21
See accompanying notes to financial statements.
ALAMBIC MID CAP PLUS FUND | ||||||||
COMMON STOCKS — 93.3% (Continued) | Shares | Value | ||||||
Information Technology — 19.3% (Continued) | ||||||||
Technology Hardware, Storage & Peripherals — 2.3% (Continued) | ||||||||
Xerox Holdings Corporation (a) | 50 | $ | 1,449 | |||||
28,566 | ||||||||
Materials — 5.6% | ||||||||
Chemicals — 1.8% | ||||||||
CF Industries Holdings, Inc. | 180 | 8,674 | ||||||
Corteva, Inc. | 250 | 7,330 | ||||||
Dow, Inc. | 60 | 2,558 | ||||||
Huntsman Corporation | 240 | 4,781 | ||||||
23,343 | ||||||||
Containers & Packaging — 0.4% | ||||||||
Packaging Corporation of America | 50 | 5,029 | ||||||
Metals & Mining — 3.4% | ||||||||
Nucor Corporation | 60 | 2,939 | ||||||
Reliance Steel & Aluminum Company | 380 | 36,947 | ||||||
Steel Dynamics, Inc. | 100 | 2,700 | ||||||
42,586 | ||||||||
Real Estate — 2.6% | ||||||||
Equity Real Estate Investment Trusts (REITs) — 2.6% | ||||||||
Digital Realty Trust, Inc. | 30 | 3,709 | ||||||
Kimco Realty Corporation | 100 | 1,838 | ||||||
Lamar Advertising Company - Class A | 40 | 3,066 | ||||||
SBA Communications Corporation | 30 | 7,873 | ||||||
SL Green Realty Corporation | 20 | 1,604 | ||||||
Ventas, Inc. | 100 | 7,339 | ||||||
Weyerhaeuser Company | 250 | 6,578 | ||||||
32,007 | ||||||||
Total Investments at Value — 93.3% (Cost $1,061,417) | $ | 1,173,416 | ||||||
Other Assets in Excess of Liabilities — 6.7% | 84,930 | |||||||
Net Assets — 100.0% | $ | 1,258,346 |
(a) | Non-income producing security. |
22
See accompanying notes to financial statements.
ALAMBIC FUNDS | ||||||||
| Alambic | Alambic | ||||||
ASSETS | ||||||||
Investments in securities: | ||||||||
At cost | $ | 2,170,527 | $ | 1,061,417 | ||||
At value (Note 2) | $ | 2,360,074 | $ | 1,173,416 | ||||
Cash (Note 2) | 111,064 | 64,723 | ||||||
Receivable for investment securities sold | 79,361 | 22,765 | ||||||
Dividends receivable | 1,568 | 1,860 | ||||||
Receivable from Adviser (Note 4) | 28,733 | 30,343 | ||||||
Other assets | 146 | 144 | ||||||
Total assets | 2,580,946 | 1,293,251 | ||||||
LIABILITIES | ||||||||
Payable for investment securities purchased | 103,677 | 22,572 | ||||||
Payable to administrator (Note 4) | 7,021 | 7,011 | ||||||
Other accrued expenses | 5,472 | 5,322 | ||||||
Total liabilities | 116,170 | 34,905 | ||||||
NET ASSETS | $ | 2,464,776 | $ | 1,258,346 | ||||
NET ASSETS CONSIST OF: | ||||||||
Paid-in capital | $ | 2,640,394 | $ | 1,212,874 | ||||
Accumulated earnings (deficit) | (175,618 | ) | 45,472 | |||||
NET ASSETS | $ | 2,464,776 | $ | 1,258,346 | ||||
Shares of beneficial interest outstanding (unlimited number of shares authorized, no par value) | 265,917 | 118,021 | ||||||
Net asset value, offering price and redemption price (Note 2) | $ | 9.27 | $ | 10.66 |
See accompanying notes to financial statements. |
23
ALAMBIC FUNDS | ||||||||
| Alambic | Alambic | ||||||
INVESTMENT INCOME | ||||||||
Dividend income | $ | 28,686 | $ | 13,803 | ||||
Interest | 281 | 192 | ||||||
Total investment income | 28,967 | 13,995 | ||||||
EXPENSES | ||||||||
Fund accounting fees (Note 4) | 30,270 | 29,114 | ||||||
Administration fees (Note 4) | 30,000 | 29,000 | ||||||
Legal fees | 21,209 | 21,209 | ||||||
Audit and tax services fees | 17,000 | 17,000 | ||||||
Investment advisory fees (Note 4) | 25,686 | 7,977 | ||||||
Trustees’ fees and expenses (Note 4) | 14,262 | 14,262 | ||||||
Compliance service fees (Note 4) | 12,000 | 12,000 | ||||||
Transfer agent fees (Note 4) | 12,000 | 12,000 | ||||||
Custody and bank service fees | 5,739 | 5,739 | ||||||
Registration and filing fees | 4,238 | 4,199 | ||||||
Pricing costs | 3,821 | 2,257 | ||||||
Insurance expense | 2,682 | 2,666 | ||||||
Postage and supplies | 2,078 | 1,943 | ||||||
Printing of shareholder reports | 1,953 | 1,893 | ||||||
Other expenses | 11,324 | 11,208 | ||||||
Total expenses | 194,262 | 172,467 | ||||||
Less fee reductions and expense reimbursements by Adviser (Note 4) | (168,576 | ) | (162,780 | ) | ||||
Net expenses | 25,686 | 9,687 | ||||||
NET INVESTMENT INCOME | 3,281 | 4,308 | ||||||
REALIZED AND UNREALIZED LOSSES ON INVESTMENTS | ||||||||
Net realized losses from investment transactions | (341,761 | ) | (70,799 | ) | ||||
Net change in unrealized appreciation (depreciation) on investments | (279,695 | ) | (27,359 | ) | ||||
NET REALIZED AND UNREALIZED LOSSES ON INVESTMENTS | (621,456 | ) | (98,158 | ) | ||||
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS | $ | (618,175 | ) | $ | (93,850 | ) |
See accompanying notes to financial statements. |
24
ALAMBIC SMALL CAP PLUS FUND | ||||||||
| Year | Year | ||||||
FROM OPERATIONS | ||||||||
Net investment income (loss) | $ | 3,281 | $ | (6,682 | ) | |||
Net realized gains (losses) from investment transactions | (341,761 | ) | 479,597 | |||||
Net change in unrealized appreciation (depreciation) on investments | (279,695 | ) | 81,190 | |||||
Net increase (decrease) in net assets resulting from operations | (618,175 | ) | 554,105 | |||||
DISTRIBUTIONS TO SHAREHOLDERS (Note 2) | (387,087 | ) | (358,457 | ) | ||||
CAPITAL SHARE TRANSACTIONS | ||||||||
Net asset value of shares issued in reinvestment of distributions to shareholders | 387,087 | 358,457 | ||||||
Payments for shares redeemed | (54,472 | ) | (35,512 | ) | ||||
Net increase from capital share transactions | 332,615 | 322,945 | ||||||
TOTAL INCREASE (DECREASE) IN NET ASSETS | (672,647 | ) | 518,593 | |||||
NET ASSETS | ||||||||
Beginning of year | 3,137,423 | 2,618,830 | ||||||
End of year | $ | 2,464,776 | $ | 3,137,423 | ||||
CAPITAL SHARES ACTIVITY | ||||||||
Shares issued in reinvestment of distributions to shareholders | 42,351 | 28,954 | ||||||
Shares redeemed | (5,283 | ) | (2,675 | ) | ||||
Net increase in shares outstanding | 37,068 | 26,279 | ||||||
Shares outstanding at beginning of year | 228,849 | 202,570 | ||||||
Shares outstanding at end of year | 265,917 | 228,849 |
(a) | The presentation of Distributions to Shareholders has been updated to reflect the changes prescribed in amendments to Regulations S-X, effective November 5, 2018 (Note 2). For the year ended August 31, 2018, distributions to shareholders consisted of $358,457 from net realized gains. As of August 31, 2018, accumulated net investment loss was ($6,623). |
See accompanying notes to financial statements. |
25
ALAMBIC MID CAP PLUS FUND | ||||||||
| Year | Year | ||||||
FROM OPERATIONS | ||||||||
Net investment income | $ | 4,308 | $ | 3,922 | ||||
Net realized gains (losses) from investment transactions | (70,799 | ) | 85,972 | |||||
Net change in unrealized appreciation (depreciation) on investments | (27,359 | ) | 70,519 | |||||
Net increase (decrease) in net assets resulting from operations | (93,850 | ) | 160,413 | |||||
DISTRIBUTIONS TO SHAREHOLDERS (Note 2) | (88,810 | ) | (2,819 | ) | ||||
CAPITAL SHARE TRANSACTIONS | ||||||||
Proceeds from shares sold | 161,610 | — | ||||||
Net asset value of shares issued in reinvestment of distributions to shareholders | 88,810 | 2,819 | ||||||
Net increase from capital share transactions | 250,420 | 2,819 | ||||||
TOTAL INCREASE IN NET ASSETS | 67,760 | 160,413 | ||||||
NET ASSETS | ||||||||
Beginning of year | 1,190,586 | 1,030,173 | ||||||
End of year | $ | 1,258,346 | $ | 1,190,586 | ||||
CAPITAL SHARES ACTIVITY | ||||||||
Shares sold | 14,773 | — | ||||||
Shares issued in reinvestment of distributions to shareholders | 9,368 | 234 | ||||||
Net increase in shares outstanding | 24,141 | 234 | ||||||
Shares outstanding at beginning of year | 93,880 | 93,646 | ||||||
Shares outstanding at end of year | 118,021 | 93,880 |
(a) | The presentation of Distributions to Shareholders has been updated to reflect the changes prescribed in amendments to Regulations S-X, effective November 5, 2018 (Note 2). For the year ended August 31, 2018, distributions to shareholders consisted of $2,519 and $300 from net investment income and from net realized gains, respectively. As of August 31, 2018, accumulated net investment income was $3,057. |
See accompanying notes to financial statements. |
26
ALAMBIC SMALL CAP PLUS FUND | ||||||||||||||||
Per Share Data for a Share Outstanding Throughout Each Period: | ||||||||||||||||
| Year | Year | Year | Period | ||||||||||||
Net asset value at beginning of period | $ | 13.71 | $ | 12.93 | $ | 11.14 | $ | 10.00 | ||||||||
Income (loss) from investment operations: | ||||||||||||||||
Net investment income (loss) | 0.02 | (0.02 | ) | (0.06 | ) | (0.01 | ) | |||||||||
Net realized and unrealized gains (losses) on investments | (2.77 | ) | 2.58 | 1.85 | 1.15 | |||||||||||
Total from investment operations | (2.75 | ) | 2.56 | 1.79 | 1.14 | |||||||||||
Less distributions: | ||||||||||||||||
From net realized gains | (1.69 | ) | (1.78 | ) | — | — | ||||||||||
Net asset value at end of period | $ | 9.27 | $ | 13.71 | $ | 12.93 | $ | 11.14 | ||||||||
Total return (b) | (19.85 | %) | 21.31 | % | 16.07 | % | 11.40 | %(c) | ||||||||
Net assets at end of period (000’s) | $ | 2,465 | $ | 3,137 | $ | 2,619 | $ | 2,246 | ||||||||
Ratios/supplemental data: | ||||||||||||||||
Ratio of total expenses to average net assets | 7.19 | % | 6.09 | % | 7.22 | % | 8.89 | %(d) | ||||||||
Ratio of net expenses to average net assets (e) | 0.95 | % | 0.95 | % | 1.18 | % | 1.20 | %(d) | ||||||||
Ratio of net investment income (loss) to average net assets (e) | 0.12 | % | (0.23 | %) | (0.50 | %) | (0.16 | %)(d) | ||||||||
Portfolio turnover rate | 428 | % | 220 | % | 199 | % | 309 | %(c) |
(a) | Represents the period from the commencement of operations (December 29, 2015) through August 31, 2016. |
(b) | Total return is a measure of the change in value of an investment in the Fund over the periods covered. The returns shown do not reflect the deduction of taxes a shareholder would pay on Fund distributions, if any, or the redemption of Fund shares. The total returns would be lower if the Adviser had not reduced advisory fees and reimbursed expenses (Note 4). |
(c) | Not annualized. |
(d) | Annualized. |
(e) | Ratio was determined after advisory fees reductions and expense reimbursements (Note 4). |
See accompanying notes to financial statements. |
27
ALAMBIC MID CAP PLUS FUND | ||||||||||||
Per Share Data for a Share Outstanding Throughout Each Period: | ||||||||||||
| Year | Year | Period | |||||||||
Net asset value at beginning of period | $ | 12.68 | $ | 11.00 | $ | 10.00 | ||||||
Income (loss) from investment operations: | ||||||||||||
Net investment income | 0.04 | 0.04 | 0.02 | |||||||||
Net realized and unrealized gains (losses) on investments | (1.12 | ) | 1.67 | 0.98 | ||||||||
Total from investment operations | (1.08 | ) | 1.71 | 1.00 | ||||||||
Less distributions: | ||||||||||||
From net investment income | (0.03 | ) | (0.03 | ) | — | |||||||
From net realized gains | (0.91 | ) | (0.00 | )(b) | — | |||||||
Total distributions | (0.94 | ) | (0.03 | ) | — | |||||||
Net asset value at end of period | $ | 10.66 | $ | 12.68 | $ | 11.00 | ||||||
Total return (c) | (7.54 | %) | 15.56 | % | 10.00 | %(d) | ||||||
Net assets at end of period (000’s) | $ | 1,258 | $ | 1,191 | $ | 1,030 | ||||||
Ratios/supplemental data: | ||||||||||||
Ratio of total expenses to average net assets | 15.13 | % | 13.60 | % | 16.22 | %(e) | ||||||
Ratio of net expenses to average net assets (f) | 0.85 | % | 0.85 | % | 0.85 | %(e) | ||||||
Ratio of net investment income to average net assets (f) | 0.38 | % | 0.35 | % | 0.30 | %(e) | ||||||
Portfolio turnover rate | 299 | % | 183 | % | 217 | %(d) |
(a) | Represents the period from the commencement of operations (December 29, 2016) through August 31, 2017. |
(b) | Amount rounds to less than $0.01 per share. |
(c) | Total return is a measure of the change in value of an investment in the Fund over the periods covered. The returns shown do not reflect the deduction of taxes a shareholder would pay on Fund distributions, if any, or the redemption of Fund shares. The total returns would be lower if the Adviser had not reduced advisory fees and reimbursed expenses (Note 4). |
(d) | Not annualized. |
(e) | Annualized. |
(f) | Ratio was determined after advisory fees reductions and expense reimbursements (Note 4). |
See accompanying notes to financial statements. |
28
ALAMBIC FUNDS
NOTES TO FINANCIAL STATEMENTS
August 31, 2019
1. Organization
Alambic Small Cap Plus Fund (formerly Alambic Small Cap Growth Plus Fund) and Alambic Mid Cap Plus Fund (formerly Alambic Mid Cap Growth Plus Fund) (individually, a “Fund” and collectively, the “Funds”) are each a diversified series of Ultimus Managers Trust (the “Trust”), an open-end investment company established as an Ohio business trust under a Declaration of Trust dated February 28, 2012. Other series of the Trust are not incorporated in this report.
The investment objective of each Fund is to seek long-term capital appreciation.
2. Significant Accounting Policies
In August 2018, the U.S. Securities and Exchange Commission (the “SEC”) adopted regulations that eliminated or amended disclosure requirements that were redundant or outdated in light of changes in SEC requirements, accounting principles generally accepted in the United States of America (“GAAP”), International Financial Reporting Standards or changes in technology or the business environment. These regulations were effective November 5, 2018, and the Funds are complying with them effective with these financial statements.
The Funds follow accounting and reporting guidance under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 946, “Financial Services – Investment Companies.” The following is a summary of significant accounting policies followed by the Funds. These policies are in conformity with GAAP.
New accounting pronouncement – In August 2018, FASB issued Accounting Standards Update No. 2018-13 (“ASU 2018-13”), “Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement,” which amends the fair value measurement disclosure requirements of ASC Topic 820 (“ASC 820”), “Fair Value Measurement.” ASU 2018-13 includes new, eliminated, and modified disclosure requirements for ASC 820. In addition, ASU 2018-13 clarifies that materiality is an appropriate consideration when evaluating disclosure requirements. ASU 2018-13 is effective for fiscal years beginning after December 15, 2019, including interim periods therein. Early adoption is permitted and the Funds have adopted ASU 2018-13 with these financial statements.
Securities valuation – Each Fund values its portfolio securities at market value as of the close of regular trading on the New York Stock Exchange (the “NYSE”) (normally 4:00 p.m. Eastern time) on each business day the NYSE is open for business. The Funds value their listed securities, including common stocks, on the basis of the security’s last sale price on the security’s primary exchange, if available, otherwise at the exchange’s most recently quoted mean price. NASDAQ-listed securities are valued at the NASDAQ Official Closing Price. The Funds value securities traded in the over-the-counter market at the last sale price, if available, otherwise at the most recently quoted mean price. When using a quoted price and when the market for the security is considered active, the security will be classified as Level 1 within the fair value hierarchy (see below). In the event that market quotations are not readily available or are considered unreliable due to market or other events, the Funds value their securities and other assets at fair value pursuant to procedures established by and under the direction
29
ALAMBIC FUNDS |
of the Board of Trustees (the “Board”) of the Trust. Under these procedures, the securities will be classified as Level 2 or 3 within the fair value hierarchy, depending on the inputs used. Unavailable or unreliable market quotes may be due to the following factors: a substantial bid-ask spread; infrequent sales resulting in stale prices; insufficient trading volume; small trade sizes; a temporary lapse in any reliable pricing source; and actions of the securities or futures markets, such as the suspension or limitation of trading. As a result, the prices of securities used to calculate each Fund’s net asset value (“NAV”) may differ from quoted or published prices for the same securities.
GAAP establishes a single authoritative definition of fair value, sets out a framework for measuring fair value, and requires additional disclosures about fair value measurements.
Various inputs are used in determining the value of each Fund’s investments. These inputs are summarized in the three broad levels listed below:
● | Level 1 – quoted prices in active markets for identical securities |
● | Level 2 – other significant observable inputs |
● | Level 3 – significant unobservable inputs |
The inputs or methods used for valuing securities are not necessarily an indication of the risks associated with investing in those securities. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety is determined based on the lowest level input that is significant to the fair value measurement.
The following is a summary of the inputs used to value the Funds’ investments as of August 31, 2019:
Alambic Small Cap Plus Fund | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Common Stocks | $ | 2,360,074 | $ | — | $ | — | $ | 2,360,074 |
Alambic Mid Cap Plus Fund | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Common Stocks | $ | 1,173,416 | $ | — | $ | — | $ | 1,173,416 |
Refer to the Funds’ Schedules of Investments for a listing of the common stocks by industry type. There were no Level 3 securities held by the Funds as of or during the year ended August 31, 2019.
Cash account – Each Fund’s cash is held in a bank account with balances which may exceed the amount covered by federal deposit insurance. As of August 31, 2019, the cash balances reflected on the Statements of Assets and Liabilities for each Fund represent the amount held in a deposit sweep account.
30
ALAMBIC FUNDS |
Share valuation – The NAV per share of each Fund is calculated daily by dividing the total value of its assets, less liabilities, by the number of shares outstanding. The offering price and redemption price per share of each Fund is equal to the NAV per share.
Investment income – Dividend income is recorded on the ex-dividend date. Interest income, if any, is accrued as earned. Withholding taxes on foreign dividends have been recorded for in accordance with the Funds’ understanding of the applicable country’s tax rules and rates.
Investments in REITs – With respect to each Fund, dividend income is recorded based on the income included in distributions received from its REIT investments using published REIT reclassifications. The actual amounts of income, return of capital, and capital gains are only determined by each REIT after its fiscal year end.
Investment transactions – Investment transactions are accounted for on the trade date. Realized gains and losses on investments sold are determined on a specific identification basis.
Common expenses – Common expenses of the Trust are allocated among the Funds and the other series of the Trust based on the relative net assets of each series, the number of series in the Trust, or the nature of the services performed and the relative applicability to each series.
Distributions to shareholders – The Funds distribute to shareholders any net investment income dividends and net realized capital gains distributions at least once each year. The amount of such dividends and distributions are determined in accordance with federal income tax regulations, which may differ from GAAP. Dividends and distributions to shareholders are recorded on the ex-dividend date. The tax character of distributions paid by each Fund to shareholders during the years ended August 31, 2019 and 2018 was as follows:
| Year | Ordinary | Long-Term | Total | |||||||||
Alambic Small Cap Plus Fund | 8/31/2019 | $ | — | $ | 387,087 | $ | 387,087 | ||||||
8/31/2018 | $ | — | $ | 358,457 | $ | 358,457 | |||||||
Alambic Mid Cap Plus Fund | 8/31/2019 | $ | 3,068 | $ | 85,742 | $ | 88,810 | ||||||
8/31/2018 | $ | 2,819 | $ | — | $ | 2,819 |
Estimates – The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions which affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates.
31
ALAMBIC FUNDS |
Federal income tax – Each Fund has qualified and intends to continue to qualify as a regulated investment company under the Internal Revenue Code of 1986, as amended (the “Code”). Qualification generally will relieve each Fund of liability for federal income taxes to the extent 100% of its net investment income and net realized capital gains are distributed in accordance with the Code.
In order to avoid imposition of the excise tax applicable to regulated investment companies, it is also each Fund’s intention to declare as dividends in each calendar year at least 98% of its net investment income (earned during the calendar year) and 98.2% of its net realized capital gains (earned during the 12 months ended October 31) plus undistributed amounts from prior years.
The following information is computed on a tax basis for each item as of August 31, 2019:
| Alambic | Alambic | ||||||
Tax cost of portfolio investments | $ | 2,171,236 | $ | 1,063,010 | ||||
Gross unrealized appreciation | $ | 256,806 | $ | 130,492 | ||||
Gross unrealized depreciation | (67,968 | ) | (20,086 | ) | ||||
Net unrealized appreciation | 188,838 | 110,406 | ||||||
Undistributed ordinary income | — | 4,297 | ||||||
Accumulated capital and other losses | (364,456 | ) | (69,231 | ) | ||||
Accumulated earnings (deficit) | $ | (175,618 | ) | $ | 45,472 |
The difference between the federal income tax cost of portfolio investments and the financial statement cost of portfolio investments for the Funds is due to certain timing differences in the recognition of capital gains or losses under income tax regulations and GAAP. These “book/tax” differences are temporary in nature and are due primarily to the tax deferral of losses on wash sales.
As of August 31, 2019, Alambic Mid Cap Plus Fund had a short-term capital loss carryforward of $69,231 for federal income tax purposes, which may be carried forward indefinitely. This capital loss carryforward is available to offset net realized capital gains in future years, thereby reducing future taxable gains distributions.
Specified capital losses incurred after October 31, 2018 and net qualified late-year ordinary losses incurred after December 31, 2018 are deemed to arise on the first day of a Fund’s next taxable year. For the year ended August 31, 2019, Alambic Small Cap Plus Fund deferred $363,428 and $1,028 of late-year capital losses and ordinary losses, respectively, to September 1, 2019 for income tax purposes.
32
ALAMBIC FUNDS |
For the year ended August 31, 2019, the following reclassifications were made on the Statements of Assets and Liabilities as a result of permanent differences in the recognition of capital gains or losses under income tax regulations and GAAP:
| Paid-in | Accumulated | ||||||
Alambic Small Cap Plus Fund | $ | (2,317 | ) | $ | 2,317 | |||
Alambic Mid Cap Plus Fund | $ | — | $ | — |
Such reclassifications, the result of permanent differences between financial statement and income tax reporting requirements, had no effect on each of the Fund’s net assets or NAV per share.
The Funds recognize the tax benefits or expenses of uncertain tax positions only when the position is “more likely than not” of being sustained assuming examination by tax authorities. Management has reviewed each Fund’s tax positions for all open tax years (generally, three years) and has concluded that no provision for unrecognized tax benefits or expenses is required in these financial statements. The Funds identify their major tax jurisdiction as U.S. Federal.
3. Investment Transactions
During the year ended August 31, 2019, costs of purchases and proceeds from sales of investment securities, other than short-term investments, were as follows:
| Alambic | Alambic | ||||||
Purchases of investment securities | $ | 11,266,168 | $ | 3,363,067 | ||||
Proceeds from sales of investment securities | $ | 11,313,517 | $ | 3,214,632 |
4. Transactions with Related Parties
INVESTMENT ADVISORY AGREEMENT
Each Fund’s investments are managed by Alambic Investment Management, L.P. (the “Adviser”) pursuant to the terms of an Investment Advisory Agreement. Under the Investment Advisory Agreement, each Fund pays the Adviser an investment advisory fee, computed and accrued daily and paid monthly, at the annual rate of 0.95% of average daily net assets with respect to Alambic Small Cap Plus Fund and at the annual rate of 0.70% of average daily net assets with respect to Alambic Mid Cap Plus Fund.
33
ALAMBIC FUNDS |
Pursuant to an Expense Limitation Agreement (the “ELA”) between each Fund and the Adviser, the Adviser has contractually agreed, until December 31, 2020, to reduce investment advisory fees and reimburse other expenses to the extent necessary to limit total annual operating expenses (exclusive of portfolio transaction and other investment-related costs (including brokerage costs); taxes; interest; borrowing costs such as interest and dividend expenses on securities sold short; costs to organize the Fund; Acquired Fund fees and expenses; extraordinary expenses such as litigation and merger or reorganization costs and other expenses not incurred in the ordinary course of the Fund’s business) to 0.95% of average daily net assets with respect to Alambic Small Cap Plus Fund and to 0.85% of average daily net assets with respect to Alambic Mid Cap Plus Fund.
Accordingly, during the year ended August 31, 2019, the Adviser did not collect any of its investment advisory fees and reimbursed other operating expenses totaling $142,890 and $154,803 with respect to Alambic Small Cap Plus Fund and Alambic Mid Cap Plus Fund, respectively.
Under the terms of the ELA, investment advisory fee reductions and expense reimbursements by the Adviser are subject to repayment by each Fund for a period of three years after such fees and expenses were incurred, provided the repayments do not cause total annual operating expenses to exceed the lesser of (i) the expense limitation then in effect, if any, and (ii) the expense limitations in effect at the time the expenses to be repaid were incurred. As of August 31, 2019, the Adviser may seek repayment of investment advisory fee reductions and expense reimbursements totaling $469,204 and $392,270 with respect to Alambic Small Cap Plus Fund and Alambic Mid Cap Plus Fund, respectively, no later than the dates as stated below:
| Alambic | Alambic | ||||||
August 31, 2020 | $ | 150,695 | $ | 86,151 | ||||
August 31, 2021 | 149,933 | 143,339 | ||||||
August 31, 2022 | 168,576 | 162,780 | ||||||
$ | 469,204 | $ | 392,270 |
OTHER SERVICE PROVIDERS
Ultimus Fund Solutions, LLC (“Ultimus”) provides administration, fund accounting, compliance and transfer agency services to the Funds. Each Fund pays Ultimus fees in accordance with the agreements for such services. In addition, each Fund pays out-of-pocket expenses including, but not limited to, postage, supplies and costs of pricing its portfolio securities.
Under the terms of a Distribution Agreement with the Trust, Ultimus Fund Distributors, LLC (the “Distributor”) serves as the principal underwriter to each Fund. The Distributor is a wholly-owned subsidiary of Ultimus. The Distributor is compensated by the Adviser (not the Funds) for acting as principal underwriter.
34
ALAMBIC FUNDS |
Certain officers and a Trustee of the Trust are also officers of Ultimus and the Distributor and are not paid by the Funds for serving in such capacities.
TRUSTEE COMPENSATION
Each Trustee who is not an “interested person” of the Trust (“Independent Trustee”) receives a $1,300 annual retainer from each Fund, paid quarterly, except for the Board Chairperson who receives a $1,500 annual retainer from each Fund, paid quarterly. Each Independent Trustee also receives from each Fund a fee of $500 for each Board meeting attended plus reimbursement for travel and other meeting-related expenses.
PRINCIPAL HOLDERS OF FUND SHARES
As of August 31, 2019, the following shareholders owned of record 25% or more of the outstanding shares of each Fund:
Name of Record Owner | % Ownership |
Alambic Small Cap Plus Fund | |
Charles Schwab & Co. (for the benefit of its customers) | 44% |
Kawishiwi Partners Trust | 31% |
Alambic Mid Cap Plus Fund | |
Charles Schwab & Co. (for the benefit of its customers) | 47% |
Kawishiwi Partners Trust | 27% |
A beneficial owner of 25% or more of a Fund’s outstanding shares may be considered a controlling person. That shareholder’s vote could have a more significant effect on matters presented at a shareholders’ meeting.
5. Sector Risk
If a Fund has significant investments in the securities of issuers within a particular sector, any development affecting that sector will have a greater impact on the value of the net assets of the Fund than would be the case if the Fund did not have significant investments in that sector. In addition, this may increase the risk of loss in the Fund and increase the volatility of the Fund’s NAV per share. For instance, economic or market factors, regulatory changes or other developments may negatively impact all companies in a particular sector, and therefore the value of the Fund’s portfolio will be adversely affected. As of August 31, 2019, Alambic Small Cap Plus Fund had 26.0% of the value of its net assets invested in stocks within the Health Care sector.
35
ALAMBIC FUNDS |
6. Contingencies and Commitments
The Funds indemnify the Trust’s officers and Trustees for certain liabilities that might arise from their performance of their duties to the Funds. Additionally, in the normal course of business the Funds enter into contracts that contain a variety of representations and warranties and which provide general indemnifications. The Funds’ maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Funds that have not yet occurred. However, based on experience, the Funds expect the risk of loss to be remote.
7. Subsequent Events
The Funds are required to recognize in the financial statements the effects of all subsequent events that provide additional evidence about conditions that existed as of the date of the Statements of Assets and Liabilities. For non-recognized subsequent events that must be disclosed to keep the financial statements from being misleading, the Funds are required to disclose the nature of the event as well as an estimate of its financial effect, or a statement that such an estimate cannot be made. Management has evaluated subsequent events through the issuance of these financial statements and has noted no such events except those listed below:
At a meeting of the Trustees held on September 16, 2019, the Trustees, in consultation with the Funds’ investment adviser, determined that it was in the best interest of the Funds and their shareholders to discontinue the Funds’ operations and to liquidate and close the Funds. Shares of the Funds are no longer available for purchase. All outstanding shares of the Funds were redeemed on or before October 28, 2019.
36
ALAMBIC FUNDS |
To the Shareholders of Alambic Small Cap Plus Fund and Alambic Mid Cap Plus Fund and Board of Trustees of Ultimus Managers Trust
Opinion on the Financial Statements
We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of Alambic Small Cap Plus Fund and Alambic Mid Cap Plus Fund (the “Funds”), each a series of Ultimus Managers Trust, as of August 31, 2019, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, including the related notes, and the financial highlights for each of the periods indicated in the period then ended (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of each of the Funds as of August 31, 2019, the results of their operations for the year then ended, the changes in their net assets, and the financial highlights for each of the periods indicated in the period then ended, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Funds’ management. Our responsibility is to express an opinion on the Funds’ financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Funds in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and confirmation of securities owned as of August 31, 2019, by correspondence with the custodian and brokers. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
We have served as the Funds’ auditor since 2016.
COHEN & COMPANY, LTD.
Cleveland, Ohio
October 30, 2019
37
ALAMBIC FUNDS |
We believe it is important for you to understand the impact of costs on your investment. As a shareholder of the Funds, you incur ongoing costs, including management fees and other operating expenses. The following examples are intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds.
A mutual fund’s ongoing costs are expressed as a percentage of its average net assets. This figure is known as the expense ratio. The expenses in the table below are based on an investment of $1,000 made at the beginning of the most recent period (March 1, 2019) and held until the end of the period (August 31, 2019).
The table below illustrates each Fund’s ongoing costs in two ways:
Actual fund return – This section helps you to estimate the actual expenses that you paid over the period. The “Ending Account Value” shown is derived from each Fund’s actual return, and the fourth column shows the dollar amount of operating expenses that would have been paid by an investor who started with $1,000 in the Funds. You may use the information here, together with the amount you invested, to estimate the expenses that you paid over the period.
To do so, 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 given for the applicable Fund under the heading “Expenses Paid During Period.”
Hypothetical 5% return – This section is intended to help you compare each Fund’s ongoing costs with those of other mutual funds. It assumes that each Fund had an annual return of 5% before expenses during the period shown, but that the expense ratio is unchanged. In this case, because the return used is not the Funds’ actual return, the results do not apply to your investment. The example is useful in making comparisons because the SEC requires all mutual funds to calculate expenses based on a 5% return. You can assess each Fund’s ongoing costs by comparing this hypothetical example with the hypothetical examples that appear in shareholder reports of other funds. The hypothetical returns example does not reflect actual trading in any Fund, but is used for illustrative purposes only.
Note that expenses shown in the table are meant to highlight and help you compare ongoing costs only. The Funds do not charge transaction fees, such as purchase or redemption fees, nor do they carry a “sales load.”
The calculations assume no shares were bought or sold during the period. Your actual costs may have been higher or lower, depending on the amount of your investment and the timing of any purchases or redemptions.
More information about the Funds’ expenses can be found in this report. For additional information on operating expenses and other shareholder costs, please refer to each Fund’s prospectus.
38
ALAMBIC FUNDS |
| Beginning | Ending | Net | Expenses |
Alambic Small Cap Plus Fund | ||||
Actual Fund Return | $1,000.00 | $ 872.10 | 0.95% | $4.48 |
Hypothetical 5% Return (before expenses) | $1,000.00 | $ 1,020.42 | 0.95% | $4.84 |
Alambic Mid Cap Plus Fund | ||||
Actual Fund Return | $1,000.00 | $ 973.50 | 0.85% | $4.23 |
Hypothetical 5% Return (before expenses) | $1,000.00 | $ 1,020.92 | 0.85% | $4.33 |
(a) | Annualized, based on each Fund’s expenses for the previous six month period. |
(b) | Expenses are equal to each Fund’s annualized net expense ratio multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). |
39
ALAMBIC FUNDS |
A description of the policies and procedures that the Funds use to vote proxies relating to portfolio securities is available without charge upon request by calling toll-free 1-888-890-8988, or on the SEC website at www.sec.gov. Information regarding how the Funds voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available without charge upon request by calling toll-free 1-888-890-8988, or on the SEC’s website at www.sec.gov.
The Trust files a complete listing of portfolio holdings for the Funds with the SEC as of the end of the first and third quarters of each fiscal year on Form N-Q. These filings are available upon request by calling 1-888-890-8988. Furthermore, you may obtain a copy of the filings on the SEC’s website at www.sec.gov.
OTHER FEDERAL TAX INFORMATION (Unaudited)
For the fiscal year ended August 31, 2019, Alambic Small Cap Plus Fund and Alambic Mid Cap Plus Fund designated $387,087 and $85,742, respectively, as long-term capital gain distributions.
Qualified Dividend Income – Alambic Mid Cap Plus Fund designates 100% of its ordinary income dividends, or up to the maximum amount of such dividends allowable pursuant to the Internal Revenue Code, as qualified dividend income eligible for the reduced tax rate of 15%.
Dividends Received Deduction – Corporate shareholders are generally entitled to take the dividends received deduction on the portion of the Fund’s dividend distributions that qualifies under tax law. For the fiscal year ended August 31, 2019, 100% of ordinary income dividends paid by Alambic Mid Cap Plus Fund qualified for the corporate dividends received deduction.
40
ALAMBIC FUNDS |
The Board has overall responsibility for management of the Trust’s affairs. The Trustees serve during the lifetime of the Trust and until its termination, or until death, resignation, retirement, or removal. The Trustees, in turn, elect the officers of the Fund to actively supervise its day-to-day operations. The officers have been elected for an annual term. Each Trustee’s and officer’s address is 225 Pictoria Drive, Suite 450, Cincinnati, Ohio 45246. The following are the Trustees and executive officers of the Fund:
Name and | Length | Position(s) Held | Principal Occupation(s) | Number | Directorships |
Interested Trustees: | |||||
Robert G. Dorsey* Year of Birth: 1957 | Since February 2012 | Trustee (February 2012 to present)
President (June 2012 to October 2013) | Vice Chairman (February 2019 to present), Managing Director (1999 to January 2019), Co-CEO (April 2018 to January 2019), and President (1999 to April 2018) of Ultimus Fund Solutions, LLC and its subsidiaries (except as otherwise noted for FINRA-regulated broker dealer entities) | 14 | Interested Trustee of Capitol Series Trust (10 Funds) |
Independent Trustees: | |||||
Janine L. Cohen Year of Birth: 1952 | Since January 2016 | Chairperson (October 2019 to present)
Trustee (January 2016 to present) | Retired (2013) financial services executive | 14 | None |
David M. Deptula Year of Birth: 1958 | Since June 2012 | Trustee | Vice President of Legal and Special Projects at Dayton Freight Lines, Inc. since 2016; Vice President of Tax Treasury at The Standard Register Inc. (formerly The Standard Register Company) from 2011 to 2016 | 14 | None |
* | Mr. Dorsey is considered an “interested person” of the Trust within the meaning of Section 2(a)(19) of the Investment Act of 1940, as amended, because of his relationship with the Trust’s administrator, transfer agent and distributor. |
41
ALAMBIC FUNDS |
Name and | Length | Position(s) Held | Principal Occupation(s) | Number | Directorships |
Robert E. Morrison Year of Birth: 1957 | Since June 2019 | Trustee | Senior Vice President and National Practice Lead for Investment, Huntington National Bank/Huntington Private Bank (2014 to present); CEO, CIO, President of 5 Star Investment Management Company (2006 to 2014) | 14 | Independent Trustee and Chairman of the Ultimus Managers Trust (2012 to 2014) |
Clifford N. Schireson Year of Birth: 1953 | Since June 2019 | Trustee | Founder of Schireson Consulting, LLC (2017 to present); Director of Institutional Services for Brandes Investment Partners, LP (2004-2017). | 14 | None |
Jacqueline A. Williams Year of Birth: 1954 | Since June 2019 | Trustee | Managing Member of Custom Strategy Consulting, LLC (2017 to present); Managing Director of Global Investment Research (2005 to 2017),Cambridge Associates, LLC | 14 | None |
42
ALAMBIC FUNDS |
Name and | Length | Position(s) | Principal Occupation(s) During Past 5 Years |
Executive Officers: | |||
David R. Carson Year of Birth: 1958 | Since 2013 | Principal
President (October 2013 to present)
Vice President (April 2013 to October 2013) | Vice President and Director of Client Strategies of Ultimus Fund Solutions, LLC (2013 to present); President, Unified Series Trust (2016 to present); Chief Compliance Officer, FSI Low Beta Absolute Return Fund (2013 to 2016) |
Todd E. Heim Year of Birth: 1967 | Since 2014 | Vice President (2014 to present) | Relationship Management Director and Vice President (2018 to present) and Client Implementation Manager and Assistant Vice President (2014 to 2018) of Ultimus Fund Solutions, LLC; Naval Flight Officer of United States Navy (1989 to 2017) |
Jennifer L. Leamer Year of Birth: 1976 | Since 2014 | Treasurer (October 2014 to present)
Assistant Treasurer (April 2014 to October 2014) | Vice President, Mutual Fund Controller of Ultimus Fund Solutions, LLC (2014 to present) |
Daniel D. Bauer Year of Birth: 1977 | Since 2016 | Assistant Treasurer (April 2016 to present) | Assistant Mutual Fund Controller (September 2015 to present) and Fund Accounting Manager (March 2012 to August 2015) of Ultimus Fund Solutions, LLC |
Matthew J. Beck Year of Birth: 1988 | Since 2018 | Secretary | Senior Attorney of Ultimus Fund Solutions, LLC (2018 to present); General Counsel of The Nottingham Company (2014 to 2018) |
Natalie S. Anderson Year of Birth: 1975 | Since 2016 | Assistant Secretary (April 2016 to present) | Legal Administration Manager (July 2016 to present) and Paralegal (January 2015 to June 2016) of Ultimus Fund Solutions, LLC; Senior Paralegal of Unirush, LLC (October 2011 to January 2015) |
43
ALAMBIC FUNDS |
Name and | Length | Position(s) | Principal Occupation(s) During Past 5 Years |
Charles C. Black Year of Birth: 1979 | Since 2015 | Chief Compliance Officer
Assistant Chief Compliance Officer (April 2015 to January 2016) | Senior Compliance Officer of Ultimus Fund Solutions, LLC (2015 to present); Chief Compliance Officer of The Caldwell & Orkin Funds, Inc. (2016 to present); Senior Compliance Manager for Touchstone Mutual Funds (2013 to 2015) |
Additional information about members of the Board and executive officers is available in the Funds’ Statement of Additional Information (“SAI”). To obtain a free copy of the SAI, please call 1-888-890-8988.
44
ALAMBIC FUNDS |
The Board of Trustees (the “Board”), including the Independent Trustees voting separately, has reviewed and approved the Fund’s Investment Agreement with Alambic Investment Management, L.P. (the “Adviser”) for an additional one-year term (the “Agreement”) for the Alambic Small Cap Plus Fund and the Alambic Mid Cap Plus Fund (the “Remaining Funds” or, in the context of this section alone, the “Funds”). The Board approved the Agreement at an in-person meeting held on July 22-23, 2019, at which all of the Trustees were present.
Legal counsel advised the Board during its deliberations. Additionally, the Board received and reviewed a substantial amount of information provided by the Adviser in response to requests of the Board and counsel. In considering whether to approve the Agreement and in reaching its conclusions with respect thereto, the Board reviewed and analyzed various factors that it determined were relevant to the Agreement, including the following factors.
The nature, extent, and quality of the services to be provided by the Adviser. In this regard, the Board reviewed the services being provided by the Adviser to each Fund including, without limitation, its investment advisory services since each Fund’s inception; its compliance procedures and practices; its efforts to promote the Funds and assist in their distribution; and its compliance program. After reviewing the foregoing information and further information in the Adviser Memorandum (e.g., description of its business and Form ADV), the Board concluded that the quality, extent, and nature of the services provided by the Adviser to each Fund were satisfactory and adequate.
The investment performance of the Funds. In this regard, the Board compared the performance of each Fund with the performance of its benchmark index, custom peer group, and Morningstar categories. The Board also considered the consistency of the Adviser’s management with each Fund’s investment objective and policies. The Board noted that:
● | the Alambic Small Cap Plus Fund underperformed the average and matched the median of its custom peer group and underperformed the average and median of its Morningstar category (Small Cap Value Category Under $50 Million, True No-Load), for a one-year period, but outperformed the average and median of its custom peer group and Morningstar category for the three-year period and since inception. |
● | the Alambic Mid Cap Plus Fund underperformed the average and median of its custom peer group, over the one-year period, outperformed the average and median of its custom peer group since inceptions, and underperformed its Morningstar category’s (Mid Cap Value Category Under $50 Million, True No-Load) average and median for a one-year period, but outperformed its Morningstar category’s average and median since inception; and |
The Board indicated that the Adviser had satisfactorily explained its performance results for the Funds. Following additional discussion of the investment performance of each Fund, as compared to its benchmark, custom peer group, and Morningstar category and other factors, the Board concluded that the investment performance of each Fund has been satisfactory.
The costs of the services provided and profits to be realized by the Adviser and its affiliates from the relationship with the Funds. In this regard, the Board considered the Adviser’s staffing; personnel, methods of operations; the education and experience of its personnel; its
45
ALAMBIC FUNDS |
compliance program, policies and procedures; the Adviser’s advisory business generally; its financial condition and the level of commitment to the Funds; the asset level of each Fund; the overall expenses of each Fund, including the advisory fee; and the differences in fees and services to the Adviser’s other similar clients. The Board considered its discussion with the Adviser regarding the Funds’ expense limitation agreement and considered the Adviser’s current and past fee reductions and expense reimbursements for the Funds. The Board further took into account the Adviser’s willingness to continue the Funds’ expense limitation agreement for the Funds until at least December 31, 2020.
The Board also considered potential benefits for the Adviser in managing the Funds, including promotion of the Adviser’s name and the potential for it to receive research, statistical, or other services from the Funds’ trades. The Board compared each Fund’s advisory fee and overall expense ratio to the average and median advisory fees and expense ratios for its custom peer group and Morningstar categories and fees charged to the Adviser’s other client accounts. In considering the comparison in fees and expense ratios between each of the Funds and its respective comparable funds, the Board looked at the differences in types of funds being compared, the style of investment management, the size of each Fund, and the nature of the investment strategies. The Board noted that:
● | the Alambic Small Cap Plus Fund’s advisory fee was higher than the average and median advisory fee for the Alambic Small Cap Value Fund’s custom peer group and higher than the average and median for the Alambic Small Cap Value Fund’s Morningstar category (Small Cap Value Category Under $50 Million, True No-Load), but less than the highest advisory fee in its Morningstar category; |
● | the Alambic Mid Cap Plus Fund’s advisory fee was higher than the average and median advisory fee for the Alambic Mid Cap Value Fund’s custom peer group and lower than the average and median advisory fee for the Alambic Mid Cap Value Fund’s Morningstar category (Mid Cap Value Category Under $50 Million, True No-Load); and |
The Board also considered the Adviser’s commitment to limit each Fund’s expenses under the Funds’ expense limitation agreement. The Board further noted that for the overall expense ratio:
● | the Alambic Small Cap Plus Fund’s overall expense ratio was equal to the average and to the median expense ratio for the Alambic Small Cap Value Fund’s custom peer group, and lower than the average and median of the Alambic Small Cap Value Fund’s Morningstar category; |
● | the Alambic Mid Cap Plus Fund’s overall expense ratio was lower than the average and median expense ratio for the Alambic Mid Cap Value Fund’s custom peer group and lower than the average and median expense ratio for the Alambic Mid Cap Value Fund’s Morningstar category; and |
The Board also compared the fees paid by each Fund to the fees paid by other clients of the Adviser and considered the similarities and differences of services received by such other clients as compared to the services received by the Funds. The Board noted that the fee structures applicable to the Adviser’s other clients were not indicative of any unreasonableness with respect to the advisory fees proposed to be payable by each of the Funds. The Board further considered the investment strategy and style used by the Adviser in managing the
46
ALAMBIC FUNDS |
portfolio of each Fund and the Adviser’s commitment to limit the expenses of each Fund under the Funds’ expense limitation agreement. Following these comparisons and considerations and upon further consideration and discussion of the foregoing, the Board concluded that for each Fund, the advisory fees paid to the Adviser by the fund are fair and reasonable.
The extent to which economies of scale would be realized as the Funds grow and whether advisory fee levels reflect these economies of scale for the benefit of the Funds’ investors. In this regard, the Board considered that for each Fund, the fee arrangement with the Adviser involves both the advisory fee and the Funds’ expense limitation agreement. The Board determined that while the advisory fee remained the same as asset levels increased, the shareholders of the Funds will continue to experience benefits from the Funds’ expense limitation agreement until each fund’s assets grow to a level where its expenses otherwise fall below the expense limit. Following further discussion of the asset levels for each Fund, expectations for asset growth, and level of fees, the Board determined that the fee arrangements with the Adviser will continue to provide benefits and that each Fund’s arrangements were fair and reasonable in relation to the nature and quality of services being provided by the Adviser and given each Fund’s projected asset levels for the next year.
Brokerage and portfolio transactions. In this regard, the Board considered the Adviser’s policies, procedures and performance in seeking best execution for its clients, including the Funds. The Board also considered the historical portfolio turnover rate for each Fund; the process by which the Adviser evaluates the overall reasonableness of commissions paid; the process by which the Adviser evaluates best execution; the method and basis for selecting and evaluating broker-dealers; and any anticipated allocation of portfolio business to persons affiliated with the Adviser. After further review and discussion, the Board determined that the Adviser’s practices regarding brokerage and portfolio transactions are satisfactory.
Possible conflicts of interest. In evaluating the possibility for conflicts of interest, the Board considered such matters as the experience and abilities of the advisory personnel assigned to the Funds, the Adviser’s process for allocating trades among its different clients, including the Adviser’s private fund and the Funds. The Board also considered the substance and administration of the Adviser’s Code of Ethics. Following further consideration and discussion, the Board determined for each Fund that the Adviser’s standards and practices relating to the identification and mitigation of potential conflicts of interests were satisfactory.
After further discussion of the factors noted above, as well as other factors, and in reliance on the information provided by the Adviser and Trust Management, and taking into account the totality of all the factors discussed and information presented at this meeting and previous meetings, the Board indicated its agreement to approve the Agreement. It was noted that in the Trustees’ deliberations regarding the approval of the Agreement, the Trustees did not identify any particular information or factor that was all-important or controlling, and that each individual Trustee may have attributed different weights to the various factors listed above. After full consideration of the above factors as well as other factors, the Board unanimously concluded that approval of the Agreement was in the best interests of the Fund and its shareholders.
47
ALAMBIC FUNDS |
On June 18, 2019, a Special Meeting of Shareholders of the Trust was held for the purpose of considering the election of seven trustees for the Trust. The number of shares of the Trust present and voting at the Special Meeting represented 68.40% of the total shares entitled to vote at the meeting. Each of the seven nominees was elected by the shareholders of the Trust.
The results of the voting with respect to the election of the seven Trustees were as follows:
Number of Shares | ||
Nominee/Trustee | Affirmative | Withhold |
Robert G. Dorsey | 79,822,871 | 11,178 |
John J. Discepoli | 79,499,054 | 334,995 |
David M. Deptula | 79,499,054 | 334,995 |
Janine L. Cohen | 79,485,191 | 348,858 |
Jacqueline A. Williams | 79,757,455 | 76,594 |
Clifford N. Schireson | 79,771,318 | 62,731 |
Robert E. Morrison, Jr. | 79,771,349 | 62,700 |
48
This page intentionally left blank.
BLUE CURRENT GLOBAL DIVIDEND FUND
INSTITUTIONAL CLASS (BCGDX)
Annual Report
August 31, 2019
Beginning on January 1, 2021, as permitted by regulations adopted by the U.S. Securities and Exchange Commission, paper copies of the Fund’s shareholder reports like this one will no longer be sent by mail, unless you specifically request paper copies of the reports from the Fund or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you have already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Fund electronically by contacting the Fund at 1-800-514-3583 or, if you own these shares through a financial intermediary, by contacting your financial intermediary.
You may elect to receive all future reports in paper free of charge. You can inform the Fund that you wish to continue receiving paper copies of your shareholder reports by contacting the Fund at 1-800-514-3583. If you own shares through a financial intermediary, you may contact your financial intermediary or follow instructions included with this document to elect to continue to receive paper copies of your shareholder reports. Your election to receive reports in paper will apply to all Funds held with the Fund complex or at your financial intermediary.
BLUE CURRENT GLOBAL DIVIDEND FUND | August 31, 2019 |
Dear Shareholders.
PERFORMANCE SUMMARY
The Blue Current Global Dividend Fund (the “Fund”) returned 2.91% over the last twelve months ended August 31, 2019. The Fund’s benchmark, the MSCI World High Dividend Yield Index, returned 2.52% over the same period. The MSCI World High Dividend Yield Index most accurately reflects the Fund’s investment objective to invest in high-quality, dividend paying stocks globally. Since inception, the Fund has returned 28.15%, which compares to a 22.99% return for the MSCI World High Dividend Yield Index. It is important to remind our investors that we are not managing the Fund to track or beat an index. We do not select securities to align with an index, or the underlying sector and country holdings, but rather we aim to construct a portfolio of high quality companies that are committed to dividend growth and offer an attractive yield.
Total Returns for period ended August 31, 2019 | |||||
Fund Name | QTD (since | TYD (since | Trailing 1 | Trailing 3 | Since |
Blue Current Global Dividend | 4.42% | 16.81% | 2.91% | 23.39% | 28.15% |
MSCI World High Div Yield Index | 4.02% | 11.20% | 2.52% | 21.92% | 22.99% |
Source: Bloomberg
Past performance is not predictive of future performance. Investment results and principal value will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Current performance may be higher or lower than the performance data quoted. Performance data current to the most recent month end are available by calling 1-800-514-3583.
After a challenging 2018, we are pleased with the performance of the strategy for the quarter and annual period. Much of the recent performance can be attributed to decisions that were made one year ago, but we acknowledge that recent investor prefererences for dividend growth and stable cash flow have been a tailwind for the strategy, especially in the 2019 calendar year.This is a trend that we welcome and believe has further room to run.
Since the global economy exited the financial crisis and central banks embarked on a long monetary experiment in pushing borrowing rates to close to zero (negative in many regions), investors have flocked to equities and especially growth equities. When long-dated cash flows are discounted at an almost zero percentage cost of capital, the value of that asset skyrockets which is what has happened for nearly a decade. All equities have benefitted from the math, but growth companies that need access to cheap capital and don’t pay dividends have reaped the reward through this cycle with the rest of the market trying to keep up. We would place dividend equities (those yielding above the broad market) in the camp of trying to keep up with their speedy peers over the trailing ten year period.
1
Following a decade of strong performance, we believe investor preference for long-dated cash flows may be waning, opting for the higher certainty of business models with quicker paybacks and more stringent capital discipline. Unexpectantly, this transition has not occurred from a normalization of interest rate policy, as many would have predicted, but rather a sharp rise in political and economic uncertainty, two factors that are increasingly connected. This uncertainty stems from recognition that central banks are now wavering in their commitment and ability to improve growth through monetary policy and that future growth may be more dependent on fiscal measures. Unfortunately, in today’s world characterized by rising income inequality, a shift towards populism and protectionism, and growing political factions, fiscal policy may not be achievable on a large enough scale to extend the business cycle forward.
All of this leads us back to investors preferring durable cash flows and dividends playing a larger role in portfolios. We have been through these cycles in the past. Throughout the 1960s and 1970s, periods of time where economic and policy uncertainty were high, dividends represented approximately 45% and 75% of an investor’s total annualized return. Unlike those periods, however, fixed income today doesn’t provide any yield which we believe is another catalyst for dividends to play a meaningful role in portfolios. We believe these risk factors will elevate the importance of dividend growth investing in the decade to come.
When we examine the contributor’s to the Fund’s return over the last twelve months, investor preference for cash flow stability and defensive businesses are apparent. The three strongest sector contributors over the period are consumer staples, healthcare, and real estate. These three sectors represented 44% of the portfolio at period end. Sectors that detracted include materials, energy, and financials. These three sectors represented 21% of the portfolio. Technology was also a strong sector performer for the strategy but still lagged yield-friendly safe havens.
Looking below the sector level, the top three contributors to the Fund’s performance over the prior year include Procter & Gamble, Crown Castle, and Microsoft, while the top three detractors include Bayer, British American Tobacco, and DowDupont. We highlight that both Bayer and British American Tobacco were sold prior to the new calendar year as we believe recent legal and regulatory risks pose a threat to future dividend growth.
Since one year ago, the portfolio’s international allocation has increased from 44% to 49% as of the end of the fiscal year. The increase partially stems from our team finding more unique valuation opportunities outside of the US.
BLUE CURRENT PHILOSOPHY & OBJECTIVES
It is important to remind the Fund’s shareholders of our philosophy and objectives. In the current environment, investors need to make every penny work for them. With yield in short supply and safe income streams providing little return, quality companies with growing and sustainable cash flow from across the globe might be less risky than you think – and more fruitful. Over the long run, dividends matter, and dividend growth investors have outperformed.
2
The Fund utilizes its investment expertise in growing cash flow through what we believe is a niche universe of high quality, dividend-paying companies with sustainable business models and dividend policies. The primary objectives are to pay a stable and increasing dividend each quarter and deliver attractive long term capital appreciation to investors.
The Blue Current investment team concentrates on a select portfolio of 25-50 companies across developed markets that meet our stringent qualities. We focus on companies that we believe have a strong history of rewarding shareholders and have the financial ability to continue to increase the dividend over time. We also focus on the future earnings potential of each company and strive to purchase those businesses when they are trading at a discount to their true value.
OUTLOOK SUMMARY
Since our last update, we have witnessed little progress on trade relations between the US and China, a concerning stalemate that has now spilled over to affect many pockets of the global economy including industrial manufacturing and executive confidence. The result has been a downward revision to US and global growth, as well as, earnings expectations for the year. The market has been amazingly resilient and less volatile than we would have imagined, believing that underneath the rhetoric there is a sound US economy with decision makers that simply want to know the new rules before resuming investment. Regardless of whether a “skinny deal” or an all-encompassing trade treaty is announced, we do not believe that executive confidence and earnings growth will rebound quickly in 2020. Instead, we think economic conditions will continue to be tough and that trade will be increasingly leveraged as a negotiating tactic between political leaders with corporations caught in the middle. We are witnessing this play out through trade tariffs and economic sanctions in an attempt to rebalance financial relationships and force geopolitical compliance. We believe this behavior is in its early years and will continue to escalate corporate and earnings uncertainty.
In this environment we believe investors will again focus on quality and that dividends, similar to prior periods, will represent a meaningful portion of an investor’s annualized return.
Sincerely,
Henry “Harry” M. T. Jones | Dennis Sabo, CFA |
3
Disclosure and Risk Summary
The Letter to Shareholders seeks to describe some of the current opinions and views of the financial markets of Edge Capital Group, LLC (the “Adviser”). Although the Adviser believes it has a reasonable basis for any opinions or views expressed, actual results may differ, sometimes significantly so, from those expected or expressed. The securities held by the Fund that are discussed in the Letter to Shareholders were held during the period covered by this Report. They do not comprise the entire investment portfolio of the Fund, may be sold at any time and may no longer be held by the Fund. For a complete list of securities held in the Fund as of August 31, 2018, please see the Schedule of Investments section of the annual report. The opinions of the Adviser with respect to those securities may change at any time.
The opinions expressed herein are those of the Adviser, and the report is not meant as legal, tax, or financial advice. You should consult your own professional advisors as to the legal, tax, financial, or other matters relevant to the suitability of investing. The external data presented in this report have been obtained from independent sources (as noted) and are believed to be accurate, but no independent verification has been made and accuracy is not guaranteed. The information contained in this report is not intended to address the needs of any particular investor.
The information contained in this document does not constitute an offer to sell any securities nor a solicitation to purchase any securities. Index returns reflect the reinvestment of dividends. An investor should consider the investment objectives, risks, charges and expenses of the Fund carefully before investing. The Fund’s prospectus contains this and other important information. To obtain a copy of the Fund’s prospectus please visit our website at www.bluecurrentfunds.com or call 1-800-514-3583 and a copy will be sent to you free of charge. Please read the prospectus carefully before you invest. The Blue Current Global Dividend Fund is distributed by Ultimus Fund Distributors, LLC.
PAST PERFORMANCE CANNOT BE CONSTRUED AS AN INDICATOR OF FUTURE RESULTS BECAUSE OF, AMONG OTHER THINGS, POSSIBLE DIFFERENCES IN MARKET CONDITIONS, INVESTMENT STRATEGY, AND REGULATORY CLIMATE. THERE IS NO ASSURANCE THAT THE FUND WILL ACHIEVE ITS INVESTMENT OBJECTIVE. INVESTMENT RESULTS AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT PERFORMANCE MAY BE HIGHER OR LOWER THAN THE PERFORMANCE DATA QUOTED. PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH END IS AVAILABLE BY CALLING 1-800-514-3583. THE FUND INVESTS PRIMARILY IN DIVIDEND PAYING COMPANIES AND IT IS POSSIBLE THESE COMPANIES MAY ELIMINATE OR REDUCE THEIR DIVIDEND PAYMENTS. INDEX INFORMATION (I) IS INCLUDED MERELY TO SHOW THE GENERAL TREND IN THE EQUITY MARKETS FOR THE PERIOD INDICATED AND IS NOT INTENDED TO IMPLY THAT THE FUND’S PORTFOLIO WILL BE SIMILAR TO THE INDICES EITHER IN COMPOSITION OR RISK AND (II) HAS BEEN OBTAINED FROM SOURCES BELIEVED TO BE ACCURATE.
4
BLUE CURRENT GLOBAL DIVIDEND FUND
PERFORMANCE INFORMATION
August 31, 2019 (Unaudited)
Comparison of the Change in Value of a $100,000 Investment in
Blue Current Global Dividend Fund -
Institutional Class vs. the MSCI World Index
and the MSCI World High Dividend Yield Index
Average Annual Total Returns (for the periods ended August 31, 2019) | ||||
1 Year | 3 Years | Since | ||
Blue Current Global Dividend Fund - Institutional Class(a) | 2.91% | 7.26% | 5.14% | |
MSCI World Index | 0.26% | 9.63% | 6.27% | |
MSCI World High Dividend Yield Index | 2.52% | 6.83% | 4.27% |
(a) | The Fund’s total returns do not reflect the deduction of taxes a shareholder would pay on Fund distributions or the redemption of Fund shares. |
(b) | The Fund commenced operations on September 18, 2014. |
5
BLUE CURRENT GLOBAL DIVIDEND FUND
PORTFOLIO INFORMATION
August 31, 2019 (Unaudited)
Sector Diversification
(% of Net Assets)
Top Ten Equity Holdings
Security Description | % of Net Assets | |
Sanofi - ADR | 3.5% | |
Anheuser-Busch InBev S.A./N.V. - ADR | 3.5% | |
Novartis AG - ADR | 3.2% | |
Unilever plc - ADR | 3.1% | |
Microsoft Corporation | 3.1% | |
Verizon Communications, Inc. | 3.1% | |
SunTrust Banks, Inc. | 3.0% | |
Crown Castle International Corporation | 3.0% | |
Diageo plc - ADR | 3.0% | |
Danone S.A. | 3.0% |
6
BLUE CURRENT GLOBAL DIVIDEND FUND | ||||||||
COMMON STOCKS — 95.2% | Shares | Value | ||||||
Communication Services — 3.1% | ||||||||
Diversified Telecommunication Services — 3.1% | ||||||||
Verizon Communications, Inc. | 33,000 | $ | 1,919,280 | |||||
Consumer Discretionary — 5.0% | ||||||||
Multi-Line Retail — 1.5% | ||||||||
Kohl’s Corporation | 19,250 | 909,755 | ||||||
Textiles, Apparel & Luxury Goods — 3.5% | ||||||||
Compagnie Financiere Richemont S.A. (a) | 15,800 | 1,227,822 | ||||||
LVMH Moet Hennessy Louis Vuitton SE (a) | 2,480 | 989,182 | ||||||
2,217,004 | ||||||||
Consumer Staples — 23.8% | ||||||||
Beverages — 9.3% | ||||||||
Anheuser-Busch InBev S.A./N.V. - ADR | 22,750 | 2,149,875 | ||||||
Diageo plc - ADR | 10,897 | 1,866,438 | ||||||
PepsiCo, Inc. | 13,100 | 1,791,163 | ||||||
5,807,476 | ||||||||
Food Products — 7.1% | ||||||||
Danone S.A. (a) | 20,580 | 1,844,107 | ||||||
J.M. Smucker Company (The) | 10,800 | 1,135,728 | ||||||
Nestlé S.A. - ADR | 12,615 | 1,417,800 | ||||||
4,397,635 | ||||||||
Household Products — 4.3% | ||||||||
Procter & Gamble Company (The) | 14,250 | 1,713,278 | ||||||
Reckitt Benckiser Group plc (a) | 12,150 | 949,474 | ||||||
2,662,752 | ||||||||
Personal Products — 3.1% | ||||||||
Unilever plc - ADR | 30,600 | 1,933,308 | ||||||
Energy — 7.9% | ||||||||
Oil, Gas & Consumable Fuels — 7.9% | ||||||||
BP plc - ADR | 29,800 | 1,101,110 | ||||||
ConocoPhillips | 26,700 | 1,393,206 | ||||||
ONEOK, Inc. | 18,460 | 1,315,829 | ||||||
Royal Dutch Shell plc - Class B - ADR | 19,440 | 1,083,974 | ||||||
4,894,119 |
See accompanying notes to financial statements. |
7
BLUE CURRENT GLOBAL DIVIDEND FUND | ||||||||
COMMON STOCKS — 95.2% (Continued) | Shares | Value | ||||||
Financials — 10.6% | ||||||||
Banks — 6.2% | ||||||||
Citigroup, Inc. | 14,150 | $ | 910,553 | |||||
ING Groep N.V. - ADR | 113,000 | 1,079,150 | ||||||
SunTrust Banks, Inc. | 30,600 | 1,882,206 | ||||||
3,871,909 | ||||||||
Insurance — 4.4% | ||||||||
Allianz SE (a) | 7,240 | 1,598,207 | ||||||
Prudential plc - ADR | 33,000 | 1,101,870 | ||||||
2,700,077 | ||||||||
Health Care — 14.4% | ||||||||
Biotechnology — 1.0% | ||||||||
Amgen, Inc. | 3,000 | 625,860 | ||||||
Health Care Equipment & Supplies — 4.6% | ||||||||
Abbott Laboratories | 12,300 | 1,049,436 | ||||||
Koninklijke Philips N.V. | 38,600 | 1,817,288 | ||||||
2,866,724 | ||||||||
Pharmaceuticals — 8.8% | ||||||||
Johnson & Johnson | 9,925 | 1,273,973 | ||||||
Novartis AG - ADR | 22,350 | 2,013,958 | ||||||
Sanofi - ADR | 51,365 | 2,206,127 | ||||||
5,494,058 | ||||||||
Industrials — 6.3% | ||||||||
Aerospace & Defense — 2.8% | ||||||||
United Technologies Corporation | 13,450 | 1,751,728 | ||||||
Electrical Equipment — 2.1% | ||||||||
Eaton Corporation plc | 16,139 | 1,302,740 | ||||||
Machinery — 1.4% | ||||||||
Cummins, Inc. | 5,930 | 885,171 | ||||||
Information Technology — 13.1% | ||||||||
Communications Equipment — 2.9% | ||||||||
Cisco Systems, Inc. | 38,900 | 1,820,909 | ||||||
Electronic Equipment, Instruments & Components — 2.1% | ||||||||
Corning, Inc. | 46,500 | 1,295,025 |
See accompanying notes to financial statements. |
8
BLUE CURRENT GLOBAL DIVIDEND FUND | ||||||||
COMMON STOCKS — 95.2% (Continued) | Shares | Value | ||||||
Information Technology — 13.1% (Continued) | ||||||||
Semiconductors & Semiconductor Equipment — 5.0% | ||||||||
Broadcom, Inc. | 5,575 | $ | 1,575,718 | |||||
Taiwan Semiconductor Manufacturing Company Ltd. - ADR | 36,650 | 1,562,390 | ||||||
3,138,108 | ||||||||
Software — 3.1% | ||||||||
Microsoft Corporation | 13,950 | 1,923,147 | ||||||
Materials — 2.7% | ||||||||
Chemicals — 2.7% | ||||||||
Air Liquide S.A. (a) | 12,050 | 1,679,259 | ||||||
Real Estate — 5.8% | ||||||||
Equity Real Estate Investment Trusts (REITs) — 5.8% | ||||||||
CoreSite Realty Corporation | 15,200 | 1,765,936 | ||||||
Crown Castle International Corporation | 12,865 | 1,867,612 | ||||||
3,633,548 | ||||||||
Utilities — 2.5% | ||||||||
Multi-Utilities — 2.5% | ||||||||
Dominion Energy, Inc. | 20,000 | 1,552,600 | ||||||
Total Common Stocks (Cost $50,653,380) | $ | 59,282,192 |
| ||||||||
MONEY MARKET FUNDS — 4.7% | Shares | Value | ||||||
First American Government Obligations Fund - Class Z, 1.99% (b) (Cost $2,939,006) | 2,939,006 | $ | 2,939,006 | |||||
Investments at Value — 99.9% (Cost $53,592,386) | $ | 62,221,198 | ||||||
Other Assets in Excess of Liabilities — 0.1% | 80,874 | |||||||
Net Assets — 100.0% | $ | 62,302,072 |
ADR – American Depositary Receipt. | |
(a) | Level 2 security (Note 2). |
(b) | The rate shown is the 7-day effective yield as of August 31, 2019. |
See accompanying notes to financial statements. |
9
BLUE CURRENT GLOBAL DIVIDEND FUND | ||||||||
Country | Value | % of Net | ||||||
United States | $ | 32,175,401 | 51.6 | % | ||||
United Kingdom | 8,036,174 | 12.9 | % | |||||
France | 6,718,675 | 10.8 | % | |||||
Switzerland | 4,659,580 | 7.5 | % | |||||
Belgium | 2,149,875 | 3.5 | % | |||||
Germany | 1,598,207 | 2.6 | % | |||||
Taiwan Province of China | 1,562,390 | 2.5 | % | |||||
Ireland | 1,302,740 | 2.1 | % | |||||
Netherlands | 1,079,150 | 1.7 | % | |||||
$ | 59,282,192 | 95.2 | % |
See accompanying notes to financial statements. |
10
BLUE CURRENT GLOBAL DIVIDEND FUND | ||||
ASSETS |
| |||
Investments in securities: | ||||
At cost | $ | 53,592,386 | ||
At value (Note 2) | $ | 62,221,198 | ||
Dividends receivable | 172,156 | |||
Other assets | 4,973 | |||
Total assets | 62,398,327 | |||
LIABILITIES | ||||
Payable for capital shares redeemed | 51,748 | |||
Payable to Adviser (Note 4) | 24,567 | |||
Payable to administrator (Note 4) | 11,240 | |||
Other accrued expenses | 8,700 | |||
Total liabilities | 96,255 | |||
NET ASSETS | $ | 62,302,072 | ||
| ||||
NET ASSETS CONSIST OF: | ||||
Paid-in capital | $ | 53,544,270 | ||
Accumulated earnings | 8,757,802 | |||
NET ASSETS | $ | 62,302,072 | ||
PRICING OF INSTITUTIONAL SHARES (Note 1) | ||||
Net assets applicable to Institutional Shares | $ | 62,302,072 | ||
Shares of Institutional Shares outstanding (no par value, unlimited number of shares outstanding) | 5,360,226 | |||
Net asset value, offering and redemption price per share (a) (Note 2) | $ | 11.62 |
(a) | Redemption fee of 2.00% may apply to redemptions of shares held for 7 days or less. |
See accompanying notes to financial statements. |
11
BLUE CURRENT GLOBAL DIVIDEND FUND | ||||
INVESTMENT INCOME | ||||
Dividends | $ | 1,877,236 | ||
Foreign withholding taxes on dividends | (110,119 | ) | ||
Total investment income | 1,767,117 | |||
EXPENSES | ||||
Investment advisory fees (Note 4) | 611,677 | |||
Administration fees (Note 4) | 61,780 | |||
Fund accounting fees (Note 4) | 42,106 | |||
Legal fees | 28,733 | |||
Audit and tax services fees | 18,500 | |||
Transfer agent fees (Note 4) | 18,000 | |||
Custodian and bank service fees | 17,727 | |||
Registration and filing fees | 17,285 | |||
Trustees’ fees and expenses (Note 4) | 14,262 | |||
Compliance fees and expenses (Note 4) | 12,602 | |||
Printing of shareholder reports | 8,347 | |||
Postage and supplies | 6,049 | |||
Pricing fees | 4,549 | |||
Insurance expense | 3,240 | |||
Other expenses | 16,667 | |||
Total expenses | 881,524 | |||
Fee reductions by the Adviser (Note 4) | (269,847 | ) | ||
Net expenses | 611,677 | |||
NET INVESTMENT INCOME | 1,155,440 | |||
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS, DERIVATIVES AND FOREIGN CURRENCY TRANSLATION | ||||
Net realized gains (losses) from: | ||||
Investments | (23,987 | ) | ||
Forward foreign currency contracts (Notes 2 and 5) | 160,657 | |||
Foreign currency transactions (Note 2) | (36,039 | ) | ||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments | 294,125 | |||
Forward foreign currency contracts (Notes 2 and 5) | (39,148 | ) | ||
Foreign currency translation (Note 2) | (62 | ) | ||
NET REALIZED AND UNREALIZED GAINS ON INVESTMENTS, DERIVATIVES AND FOREIGN CURRENCY TRANSLATION | 355,546 | |||
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS | $ | 1,510,986 |
See accompanying notes to financial statements. |
12
BLUE CURRENT GLOBAL DIVIDEND FUND | ||||||||
| Year | Year | ||||||
FROM OPERATIONS | ||||||||
Net investment income | $ | 1,155,440 | $ | 1,316,452 | ||||
Net realized gains (losses) from: | ||||||||
Investments | (23,987 | ) | 329,634 | |||||
Forward foreign currency contracts | 160,657 | (472,454 | ) | |||||
Foreign currency transactions | (36,039 | ) | (13,660 | ) | ||||
Net change in unrealized appreciation (depreciation) on: | ||||||||
Investments | 294,125 | 2,001,653 | ||||||
Forward foreign currency contracts | (39,148 | ) | 138,199 | |||||
Foreign currency translation | (62 | ) | (195 | ) | ||||
Net increase in net assets from operations | 1,510,986 | 3,299,629 | ||||||
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2) | ||||||||
Institutional Shares | (964,319 | ) | (1,941,711 | ) | ||||
FROM CAPITAL SHARE TRANSACTIONS | ||||||||
Institutional Shares | ||||||||
Proceeds from shares sold | 7,470,319 | 8,580,932 | ||||||
Net asset value of shares issued in reinvestment of distributions | 732,226 | 1,454,021 | ||||||
Proceeds from redemption fees collected (Note 2) | 2,135 | 764 | ||||||
Payments for shares redeemed | (11,992,437 | ) | (5,698,681 | ) | ||||
Net increase (decrease) in Institutional Shares net assets from capital share transactions | (3,787,757 | ) | 4,337,036 | |||||
TOTAL INCREASE (DECREASE) IN NET ASSETS | (3,241,090 | ) | 5,694,954 | |||||
NET ASSETS | ||||||||
Beginning of year | 65,543,162 | 59,848,208 | ||||||
End of year | $ | 62,302,072 | $ | 65,543,162 | ||||
CAPITAL SHARE ACTIVITY | ||||||||
Institutional Shares | ||||||||
Shares sold | 671,265 | 742,293 | ||||||
Shares reinvested | 65,072 | 127,013 | ||||||
Shares redeemed | (1,092,626 | ) | (495,023 | ) | ||||
Net increase (decrease) in shares outstanding | (356,289 | ) | 374,283 | |||||
Shares outstanding, beginning of year | 5,716,515 | 5,342,232 | ||||||
Shares outstanding, end of year | 5,360,226 | 5,716,515 |
(a) | The presentation of Distributions to Shareholders has been updated to reflect the changes prescribed in amendments to Regulation S-X, effective November 5, 2018 (Note 2). For the year ended August 31, 2018, distributions to shareholders consisted of $778,879 and $1,162,832 of net investment income and realized capital gains, respectively, to Institutional Shares. Undistributed net investment income as of August 31, 2018 was $350,742. |
See accompanying notes to financial statements. |
13
BLUE CURRENT GLOBAL DIVIDEND FUND | ||||||||||||||||||||
Per Share Data for a Share Outstanding Throughout Each Period | ||||||||||||||||||||
| Year | Year | Year | Year | Period | |||||||||||||||
Net asset value at beginning of period | $ | 11.47 | $ | 11.20 | $ | 10.06 | $ | 9.42 | $ | 10.00 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income | 0.22 | 0.23 | 0.24 | 0.22 | 0.16 | |||||||||||||||
Net realized and unrealized gains (losses) on investments and foreign currencies | 0.11 | 0.39 | 1.11 | 0.61 | (0.62 | ) | ||||||||||||||
Total from investment operations | 0.33 | 0.62 | 1.35 | 0.83 | (0.46 | ) | ||||||||||||||
Less distributions: | ||||||||||||||||||||
From net investment income | (0.18 | ) | (0.14 | ) | (0.21 | ) | (0.19 | ) | (0.12 | ) | ||||||||||
From net realized gains | — | (0.21 | ) | — | — | — | ||||||||||||||
Total distributions | (0.18 | ) | (0.35 | ) | (0.21 | ) | (0.19 | ) | (0.12 | ) | ||||||||||
Proceeds from redemption fees collected (Note 2) | 0.00 | (b) | 0.00 | (b) | — | — | — | |||||||||||||
Net asset value at end of period | $ | 11.62 | $ | 11.47 | $ | 11.20 | $ | 10.06 | $ | 9.42 | ||||||||||
Total return (c) | 2.91 | % | 5.58 | % | 13.57 | % | 8.92 | % | (4.65 | %)(d) | ||||||||||
Net assets at end of period (000’s) | $ | 62,302 | $ | 65,543 | $ | 59,848 | $ | 39,632 | $ | 30,098 | ||||||||||
Ratios/supplementary data: | ||||||||||||||||||||
Ratio of total expenses to average net assets | 1.43 | % | 1.39 | % | 1.45 | % | 1.55 | % | 1.68 | %(e) | ||||||||||
Ratio of net expenses to average net assets (f) | 0.99 | % | 0.99 | % | 0.99 | % | 0.99 | % | 0.99 | %(e) | ||||||||||
Ratio of net investment income to average net assets (f) | 1.87 | % | 2.06 | % | 2.47 | % | 2.37 | % | 2.04 | %(e) | ||||||||||
Portfolio turnover rate | 46 | % | 50 | % | 61 | % | 58 | % | 72 | %(d) |
(a) | Represents the period from the commencement of operations (September 18, 2014) through August 31, 2015. |
(b) | Amount rounds to less than $0.01 per share. |
(c) | Total return is a measure of the change in value of an investment in the Fund over the periods covered, which assumes any dividends and capital gain distributions are reinvested in shares of the Fund. The returns shown do not reflect the deduction of taxes a shareholder would pay on Fund distributions or the redemption of Fund shares. The total returns would be lower if the Adviser had not reduced advisory fees (Note 4). |
(d) | Not annualized. |
(e) | Annualized. |
(f) | Ratio was determined after advisory fee reductions by the Adviser (Note 4). |
See accompanying notes to financial statements. |
14
BLUE CURRENT GLOBAL DIVIDEND FUND
NOTES TO FINANCIAL STATEMENTS
August 31, 2019
1. Organization
Blue Current Global Dividend Fund (the “Fund”) is a diversified series of Ultimus Managers Trust (the “Trust”), an open-end investment company established as an Ohio business trust under a Declaration of Trust dated February 28, 2012. Other series of the Trust are not incorporated in this report.
The investment objective of the Fund is to seek current income and capital appreciation.
The Fund currently offers one class of shares: Institutional Class shares (sold without any sales loads or distribution fees and subject to a $100,000 initial investment requirement). As of August 31, 2019, the Investor Class shares (to be sold without any sales loads, but subject to a distribution fee of up to 0.25% of Investor Class’ average daily net assets and subject to a $2,500 initial investment requirement) are not currently offered. When both classes are offered, each share class will represent an ownership interest in the same investment portfolio.
2. Significant Accounting Policies
In August 2018, the U.S. Securities and Exchange Commission (the “SEC”) adopted regulations that eliminated or amended disclosure requirements that were redundant or outdated in light of changes in SEC requirements, accounting principles generally accepted in the United States of America (“GAAP”), International Financial Reporting Standards or changes in technology or the business environment. These regulations were effective November 5, 2018, and the Fund is complying with them.
The following is a summary of the Fund’s significant accounting policies. The policies are in conformity with GAAP. The Fund follows accounting and reporting guidance under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 946, “Financial Services – Investment Companies.”
New accounting pronouncement – In August 2018, FASB issued Accounting Standards Update No. 2018-13 (“ASU 2018-13”), “Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement,” which amends the fair value measurement disclosure requirements of ASC Topic 820 (“ASC 820”), “Fair Value Measurement.” ASU 2018-13 includes new, eliminated, and modified disclosure requirements for ASC 820. In addition, ASU 2018-13 clarifies that materiality is an appropriate consideration when evaluating disclosure requirements. ASU 2018-13 is effective for fiscal years beginning after December 15, 2019, including interim periods therein. Early adoption is permitted and the Fund has adopted ASU 2018-13 with these financial statements.
Securities valuation – The Fund values its portfolio securities at market value as of the close of regular trading on the New York Stock Exchange (the “NYSE”) (normally 4:00 p.m. Eastern Time) on each day the NYSE is open for business. The Fund generally values its listed securities on the basis of the security’s last sale price on the security’s primary
15
BLUE CURRENT GLOBAL DIVIDEND FUND
NOTES TO FINANCIAL STATEMENTS (Continued)
exchange, if available, otherwise at the exchange’s most recently quoted mean price. NASDAQ-listed securities are valued at the NASDAQ Official Closing Price. When using a quoted price and when the market is considered active, the security will be classified as Level 1 within the fair value hierarchy (see below). In the event that market quotations are not readily available or are considered unreliable due to market or other events, the Fund values its securities and other assets at fair value in accordance with procedures established by and under the general supervision of the Board of Trustees (the “Board”) of the Trust. Under these procedures, the securities will be classified as Level 2 or 3 within the fair value hierarchy, depending on the inputs used. Unavailable or unreliable market quotes may be due to the following factors: a substantial bid-ask spread; infrequent sales resulting in stale prices; insufficient trading volume; small trade sizes; a temporary lapse in any reliable pricing source; and actions of the securities or futures markets, such as the suspension or limitation of trading. As a result, the prices of securities used to calculate the Fund’s net asset value (“NAV”) may differ from quoted or published prices for the same securities. Securities traded on foreign exchanges are typically fair valued by an independent pricing service and translated from the local currency into U.S. dollars using currency exchange rates supplied by an independent pricing service.
GAAP establishes a single authoritative definition of fair value, sets out a framework for measuring fair value, and requires additional disclosures about fair value measurements.
Various inputs are used in determining the value of the Fund’s investments. These inputs are summarized in the three broad levels listed below:
● | Level 1 – quoted prices in active markets for identical securities |
● | Level 2 – other significant observable inputs |
● | Level 3 – significant unobservable inputs |
The inputs or methods used for valuing securities are not necessarily an indication of the risks associated with investing in those securities. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety is determined based on the lowest level input that is significant to the fair value measurement.
The Fund’s foreign equity securities actively traded in foreign markets may be classified as Level 2 despite the availability of closing prices because such securities are typically fair valued by an independent pricing service. The Board has authorized the Fund to retain an independent pricing service to determine the fair value of its foreign securities because the value of such securities may be materially affected by events occurring before the Fund’s pricing time but after the close of the primary markets or exchanges on which such foreign securities are traded. These intervening events might be country-specific (e.g., natural disaster, economic or political developments, interest rate change); issuer specific (e.g., earnings report or merger announcement); or U.S. market-specific (such
16
BLUE CURRENT GLOBAL DIVIDEND FUND
NOTES TO FINANCIAL STATEMENTS (Continued)
as a significant movement in the U.S. market that is deemed to affect the value of foreign securities). The pricing service uses an automated system that incorporates a model based on multiple parameters, including a security’s local closing price, relevant general and sector indices, currency fluctuations, trading in depositary receipts and futures, if applicable, and/or research valuations by its staff, in determining what it believes is the fair value of the securities.
The following is a summary of the inputs used to value the Fund’s investments as of August 31, 2019:
Investments in Securities | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Common Stocks | $ | 50,994,141 | $ | 8,288,051 | $ | — | $ | 59,282,192 | ||||||||
Money Market Funds | 2,939,006 | — | — | 2,939,006 | ||||||||||||
Total | $ | 53,933,147 | $ | 8,288,051 | $ | — | $ | 62,221,198 |
Refer to the Fund’s Schedule of Investments for a listing of the common stocks by industry type. The Fund did not have any assets or liabilities that were measured at fair value on a recurring basis using significant unobservable inputs (Level 3) as of or during the year ended August 31, 2019.
Foreign currency translation – Securities and other assets and liabilities denominated in or expected to settle in foreign currencies are translated into U.S. dollars based on exchange rates on the following basis:
A. | The fair values of investment securities and other assets and liabilities are translated as of the close of the NYSE each day. |
B. | Purchases and sales of investment securities and income and expenses are translated at the rate of exchange prevailing as of 4:00 p.m. Eastern Time on the respective date of such transactions. |
C. | The Fund does not isolate that portion of the results of operations caused by changes in foreign exchange rates on investments from those caused by changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gains or losses on investments. |
Reported net realized foreign exchange gains or losses arise from 1) purchases and sales of foreign currencies, 2) currency gains or losses realized between the trade and settlement dates on securities transactions and 3) the difference between the amounts of dividends and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Reported net unrealized foreign exchange gains and losses arise from changes in the value of assets and liabilities that result from changes in exchange rates.
17
BLUE CURRENT GLOBAL DIVIDEND FUND
NOTES TO FINANCIAL STATEMENTS (Continued)
Forward foreign currency contracts – The Fund, at times, uses forward foreign currency contracts to offset the exposure to foreign currency. All foreign currency contracts are “marked-to-market” daily at the applicable translation rates, resulting in unrealized gains or losses. Realized and unrealized gains or losses from transactions in foreign currency contracts will be included on the Fund’s Statement of Operations. Risks associated with these contracts include the potential inability of counterparties to meet the terms of their contracts and unanticipated movements in the value of a foreign currency relative to the U.S. dollar. See Note 5 for additional disclosures.
Share valuation – The NAV per share of each class of the Fund is calculated daily by dividing the total value of the assets attributable to that class, less liabilities attributable to that class, by the number of shares outstanding of that class. The offering price and redemption price per share of each class of the Fund is equal to the NAV per share of such class, except that shareholders of the Fund are subject to a redemption fee equal to 2.00% of the value of Fund shares redeemed within 7 days of purchase, excluding involuntary redemptions of accounts that fall below the minimum investment amount or the redemption of Fund shares representing reinvested dividends, capital gain distributions, or capital appreciation. During the years ended August 31, 2019 and 2018, proceeds from redemption fees, recorded in capital, totaled $2,135 and $764, respectively.
Investment income – Dividend income is recorded on the ex-dividend date. Interest income is accrued as earned. The Fund may invest in real estate investment trusts (“REITs”) that pay distributions to their shareholders based on available funds from operations. It is common for these distributions to exceed the REIT’s taxable earnings and profits resulting in the excess portion of such distribution to be designated as return of capital. Distributions received from REITs are generally recorded as dividend income and, if necessary, are reclassified annually in accordance with tax information provided by the underlying REITs. The Fund may also invest in master limited partnerships (“MLPs”) whose distributions generally are comprised of ordinary income, capital gains and return of capital from the MLP. For financial statement purposes, the Fund records all income received as ordinary income. This amount may be subsequently revised based on information received from the MLPs after their tax reporting periods are concluded, as the actual character of these distributions is not known until after the fiscal year end of the Fund. Withholding taxes on foreign dividends have been recorded for in accordance with the Fund’s understanding of the applicable country’s tax rules and rates.
Investment transactions – Investment transactions are accounted for on the trade date. Realized gains and losses on investments sold are determined on a specific identification basis.
Common expenses – Common expenses of the Trust are allocated among the Fund and the other series of the Trust based on the relative net assets of each series, the number of series in the Trust, or the nature of the services performed and the relative applicability to each series.
18
BLUE CURRENT GLOBAL DIVIDEND FUND
NOTES TO FINANCIAL STATEMENTS (Continued)
Distributions to shareholders – Distributions to shareholders arising from net investment income are declared and paid quarterly to shareholders. Net realized capital gains, if any, are distributed at least annually. The amount of distributions from net investment income and net realized capital gains are determined in accordance with federal income tax regulations, which may differ from GAAP. Dividends and distributions to shareholders are recorded on the ex-dividend date. The tax character of distributions paid during the years ended August 31, 2019 and 2018 was as follows:
Years Ended | Ordinary | Long-Term | Total | |||||||||
08/31/19 | $ | 964,319 | $ | — | $ | 964,319 | ||||||
08/31/18 | $ | 952,107 | $ | 989,604 | $ | 1,941,711 |
On September 30, 2019, the Fund paid an ordinary income dividend of $0.0284 per share to shareholders of record on September 27, 2019.
Estimates – The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities, each as of the date of the financial statements, and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates.
Federal income tax – The Fund has qualified and intends to continue to qualify as a regulated investment company under the Internal Revenue Code of 1986, as amended (the “Code”). Qualification generally will relieve the Fund of liability for federal income taxes to the extent 100% of its net investment income and net realized capital gains are distributed in accordance with the Code.
In order to avoid imposition of the excise tax applicable to regulated investment companies, it is also the Fund’s intention to declare as dividends in each calendar year at least 98% of its net investment income (earned during the calendar year) and 98.2% of its net realized capital gains (earned during the 12 months ended October 31) plus undistributed amounts from prior years.
The following information is computed on a tax basis for each item as of August 31, 2019:
Tax cost of portfolio investments | $ | 53,572,115 | ||
Gross unrealized appreciation | $ | 10,124,367 | ||
Gross unrealized depreciation | (1,475,284 | ) | ||
Net unrealized appreciation on investments | 8,649,083 | |||
Net unrealized depreciation on foreign currency translation | (62 | ) | ||
Undistributed ordinary income | 55,868 | |||
Undistributed long-term gains | 52,913 | |||
Accumulated earnings | $ | 8,757,802 |
19
BLUE CURRENT GLOBAL DIVIDEND FUND
NOTES TO FINANCIAL STATEMENTS (Continued)
The difference between the federal income tax cost of portfolio investments and the financial statement cost is due to certain timing differences in the recognition of capital gains or losses under income tax regulations and GAAP. These “book/tax” differences are temporary in nature and are primarily due to the tax deferral of losses on wash sales and the tax treatment of the cost of securities received as in-kind subscriptions at the inception of the Fund.
For the year ended August 31, 2019, the following reclassifications were made on the Statement of Assets and Liabilities as a result of permanent difference in the recognition of capital gains or losses under income tax regulations and GAAP:
Paid-in capital | $ | 27,476 | ||
Accumulated earnings | $ | (27,476 | ) |
These differences are primarily due to the tax treatment of net realized losses from forward foreign currency contracts and foreign currency transactions and publicly traded partnerships. Such reclassifications, the result of permanent differences between financial statement and income tax reporting requirements, had no effect on the Fund’s net assets or NAV per share.
The Fund recognizes the tax benefits or expenses of uncertain tax positions only when the position is “more likely than not” to be sustained assuming examination by tax authorities. Management has reviewed the Fund’s tax positions for all open tax years (generally, three years) and has concluded that no provision for unrecognized tax benefits or expenses is required in these financial statements. The Fund identifies its major tax jurisdiction as U.S. federal.
3. Investment Transactions
During the year ended August 31, 2019, cost of purchases and proceeds from sales of investment securities, other than short-term investments, were $27,493,491 and $31,724,340, respectively.
4. Transactions with Related Parties
INVESTMENT ADVISORY AGREEMENT
The Fund’s investments are managed by Edge Capital Group, LLC (the “Adviser”) pursuant to the terms of an Investment Advisory Agreement. Under the Investment Advisory Agreement, the Fund pays the Adviser an investment advisory fee, computed and accrued daily and paid monthly, at the annual rate of 0.99% of its average daily net assets.
Pursuant to an Expense Limitation Agreement between the Fund and the Adviser (the “ELA”), the Adviser had agreed, until January 1, 2020, to reduce its investment advisory fees and reimburse other expenses to limit total annual operating expenses (exclusive of
20
BLUE CURRENT GLOBAL DIVIDEND FUND
NOTES TO FINANCIAL STATEMENTS (Continued)
brokerage costs; taxes; interest; borrowing costs such as interest and dividends expenses on securities sold short; costs to organize the Fund; acquired fund fees and expenses; and extraordinary expenses such as litigation and merger or reorganization costs and other expenses not incurred in the ordinary course of the Fund’s business) to an amount not exceeding 1.24% of the average daily net assets of the Investor Class shares and 0.99% of the average daily net assets of the Institutional Class shares. Accordingly, under the ELA, the Adviser reduced its investment advisory fees in the amount of $269,847 during the year ended August 31, 2019.
Under the terms of the ELA, investment advisory fee reductions and expense reimbursements by the Adviser are subject to repayment by the Fund for a period of three years after such fees and expenses were incurred, provided that the repayments do not cause the Fund’s total annual operating expenses to exceed the lesser of (i) the expense limitation then in effect, if any, and (ii) the expense limitation in effect at the time the expenses to be repaid were incurred. As of August 31, 2019, the Adviser may seek recoupment of investment advisory fee reductions in the amount of $752,405 no later than the dates stated below:
August 31, 2020 | $ | 225,554 | ||
August 31, 2021 | 257,004 | |||
August 31, 2022 | 269,847 | |||
Total | $ | 752,405 |
OTHER SERVICE PROVIDERS
Ultimus Fund Solutions, LLC (“Ultimus”) provides administration, fund accounting, compliance and transfer agency services to the Fund. The Fund pays Ultimus fees in accordance with the agreements for such services. In addition, the Fund pays out-of-pocket expenses including, but not limited to, postage, supplies, and costs of pricing the Fund’s portfolio securities.
Under the terms of a Distribution Agreement with the Trust, Ultimus Fund Distributors, LLC (the “Distributor”) serves as principal underwriter to the Fund. The Distributor is a wholly-owned subsidiary of Ultimus. The Distributor is compensated by the Adviser (not the Fund) for acting as principal underwriter.
Certain officers and a Trustee of the Trust are also officers of Ultimus and the Distributor and are not paid by the Fund for serving in such capacities.
TRUSTEE COMPENSATION
Each Trustee who is not an “interested person” of the Trust (“Independent Trustee”) receives a $1,300 annual retainer from the Fund, paid quarterly, except for the Board Chairperson who receives a $1,500 annual retainer from the Fund, paid quarterly. Each Independent Trustee also receives from the Fund a fee of $500 for each Board meeting attended plus reimbursement for travel and other meeting-related expenses.
21
BLUE CURRENT GLOBAL DIVIDEND FUND
NOTES TO FINANCIAL STATEMENTS (Continued)
PRINCIPAL HOLDER OF FUND SHARES
As of August 31, 2019, the following shareholder owned of record 25% or more of the outstanding shares of the Fund:
Name of Record Owner | % Ownership |
Pershing, LLC (for the benefit of multiple shareholders) | 76% |
A beneficial owner of 25% or more of the Fund’s outstanding shares may be considered a controlling person. That shareholder’s vote could have a more significant effect on matters presented at a shareholders’ meeting.
5. Derivative Transactions
There were no outstanding derivative positions held by the Fund as of August 31, 2019.
During the year ended August 31, 2019, the effect of derivative contracts on the Fund’s Statement of Operations was as follows:
Risk | Derivative Type | Net Realized | Net Change | ||||||
Currency | Forward foreign currency contracts | $ | 160,657 | $ | (39,148 | ) |
In the ordinary course of business, the Fund may enter into transactions subject to enforceable netting agreements or other similar arrangements (“netting agreements”). Generally, the right to offset in netting agreements allows the Fund to offset the exposure it has on any transactions with a specific counterparty with any collateral it has received or delivered in connection with other transactions with that counterparty. Generally, the Fund manages its cash collateral and securities collateral, if any, on a counterparty basis.
The average net monthly notional value of forward foreign currency exchange contracts during the year ended August 31, 2019 is $1,451,936.
6. Foreign Investment Risk
Compared with investing in the U.S., investing in foreign markets involves a greater degree and variety of risk. Investors in foreign markets may face delayed settlements, currency controls, and adverse economic developments as well as higher overall transaction costs. In addition, fluctuations in the U.S. dollar’s value versus other currencies may erode or reverse gains or increase losses from investments denominated in foreign currencies. Foreign governments may expropriate assets, impose capital or currency controls, impose punitive taxes, impose limits on ownership or nationalize a company or industry. Any of these actions could have a severe effect on security prices and impair an investor’s
22
BLUE CURRENT GLOBAL DIVIDEND FUND
NOTES TO FINANCIAL STATEMENTS (Continued)
ability to bring its capital or income back to the U.S. The value of foreign securities may be affected by incomplete, less frequent, or inaccurate financial information about their issuers, social upheavals, or political actions ranging from tax code changes to government collapse. Foreign companies may also receive less coverage by market analysts than U.S. companies and may be subject to different reporting standards or regulatory requirements than those applicable to U.S. companies.
7. Contingencies and Commitments
The Fund indemnifies the Trust’s officers and Trustees for certain liabilities that might arise from their performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts that contain a variety of representations, warranties, and general indemnifications. The Fund’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Fund that have not yet occurred. However, based on experience, the Fund expects the risk of loss to be remote.
8. Subsequent Events
The Fund is required to recognize in the financial statements the effects of all subsequent events that provide additional evidence about conditions that existed as of the date of the Statement of Assets and Liabilities. For non-recognized subsequent events that must be disclosed to keep the financial statements from being misleading, the Fund is required to disclose the nature of the event as well as an estimate of its financial effect, or a statement that such an estimate cannot be made. Management has evaluated subsequent events through the issuance of these financial statements and has noted no such events other than the ordinary income dividend paid on September 30, 2019, as discussed in Note 2.
23
BLUE CURRENT GLOBAL DIVIDEND FUND
REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
To the Shareholders of Blue Current Global Dividend Fund and
Board of Trustees of Ultimus Managers Trust
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Blue Current Global Dividend Fund (the “Fund”), a series of Ultimus Managers Trust, as of August 31, 2019, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, including the related notes, and the financial highlights for each of the five periods in the period then ended (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of August 31, 2019, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five periods in the period then ended, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and confirmation of securities owned as of August 31, 2019, by correspondence with the custodian. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
We have served as the Fund’s auditor since 2014.
COHEN & COMPANY, LTD.
Cleveland, Ohio
October 30, 2019
24
BLUE CURRENT GLOBAL DIVIDEND FUND
ABOUT YOUR FUND’S EXPENSES (Unaudited)
We believe it is important for you to understand the impact of costs on your investment. As a shareholder of the Fund, you incur ongoing costs, including management fees and other operating expenses. The following 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.
A mutual fund’s ongoing costs are expressed as a percentage of its average net assets. This figure is known as the expense ratio. The expenses in the table below are based on an investment of $1,000 made at the beginning of the most recent period (March 1, 2019) and held until the end of the period (August 31, 2019).
The table below illustrates the Fund’s ongoing costs in two ways:
Actual fund return – This section helps you to estimate the actual expenses that you paid over the period. The “Ending Account Value” shown is derived from the Fund’s actual return, and the fourth column shows the dollar amount of operating expenses that would have been paid by an investor who started with $1,000 in the Fund. You may use the information here, together with the amount you invested, to estimate the expenses that you paid over the period.
To do so, 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 given for the Fund under the heading “Expenses Paid During Period.”
Hypothetical 5% return – This section is intended to help you compare the Fund’s ongoing costs with those of other mutual funds. It assumes that the Fund had an annual return of 5% before expenses during the period shown, but that the expense ratio is unchanged. In this case, because the return used is not the Fund’s actual return, the results do not apply to your investment. The example is useful in making comparisons because the SEC requires all mutual funds to calculate expenses based on a 5% return. You can assess the Fund’s ongoing costs by comparing this hypothetical example with the hypothetical examples that appear in shareholder reports of other funds.
Note that expenses shown in the table are meant to highlight and help you compare ongoing costs only. The Fund does not charge sales loads. However, a redemption fee of 2% is applied on the sale of shares held for less than 7 days.
The calculations assume no shares were bought or sold during the period. Your actual costs may have been higher or lower, depending on the amount of your investment and the timing of any purchases or redemptions.
More information about the Fund’s expenses can be found in this report. For additional information on operating expenses and other shareholder costs, please refer to the Fund’s prospectus.
25
BLUE CURRENT GLOBAL DIVIDEND FUND
ABOUT YOUR FUND’S EXPENSES (Unaudited) (Continued)
Institutional Class | Beginning | Ending | Net Expense | Expenses |
Based on Actual Fund Return | $ 1,000.00 | $ 1,050.90 | 0.99% | $5.12 |
Based on Hypothetical 5% Return (before expenses) | $ 1,000.00 | $ 1,020.21 | 0.99% | $5.04 |
(a) | Annualized, based on the Fund’s most recent one-half year expenses. |
(b) | Expenses are equal to the Fund’s annualized net expense ratio multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). |
Results of Special Meeting of Shareholders
(Unaudited)
On June 18, 2019, a Special Meeting of Shareholders of the Trust was held for the purpose of considering the election of seven trustees for the Trust. The number of shares of the Trust present and voting at the Special Meeting represented 68.40% of the total shares entitled to vote at the meeting. Each of the seven nominees was elected by the shareholders of the Trust.
The results of the voting with respect to the election of the seven Trustees were as follows:
Number of Shares | ||
Nominee/Trustee | Affirmative | Withhold |
Robert G. Dorsey | 79,822,871 | 11,178 |
John J. Discepoli | 79,499,054 | 334,995 |
David M. Deptula | 79,499,054 | 334,995 |
Janine L. Cohen | 79,485,191 | 348,858 |
Jacqueline A. Williams | 79,757,455 | 76,594 |
Clifford N. Schireson | 79,771,318 | 62,731 |
Robert E. Morrison, Jr. | 79,771,349 | 62,700 |
26
BLUE CURRENT GLOBAL DIVIDEND FUND
OTHER INFORMATION (Unaudited)
A description of the policies and procedures that the Fund uses to vote proxies relating to portfolio securities is available without charge upon request by calling 1-800-514-3583, or on the SEC’s website at www.sec.gov. Information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is also available without charge upon request by calling 1-800-514-3583, or on the SEC’s website at www.sec.gov.
The Trust files a complete listing of portfolio holdings for the Fund with the SEC as of the end of the first and third quarters of each fiscal year on Form N-Q. These filings are available upon request by calling 1-800-514-3583. Furthermore, you may obtain a copy of the filings on the SEC’s website at www.sec.gov.
OTHER FEDERAL TAX INFORMATION (Unaudited)
Qualified Dividend Income – The Fund designates 100% of its ordinary income dividends, or up to the maximum amount of such dividends allowable pursuant to the Internal Revenue Code, as qualified dividend income eligible for the reduced tax rate of 15%.
Dividends Received Deduction – Corporate shareholders are generally entitled to take the dividends received deduction on the portion of the Fund’s dividend distributions that qualifies under tax law. For the fiscal year ended August 31, 2019, 74.73% of ordinary income dividends qualified for the corporate dividends received deduction.
27
BLUE CURRENT GLOBAL DIVIDEND FUND
BOARD OF TRUSTEES AND EXECUTIVE OFFICERS
(Unaudited)
The Board has overall responsibility for management of the Trust’s affairs. The Trustees serve during the lifetime of the Trust and until its termination, or until death, resignation, retirement, or removal. The Trustees, in turn, elect the officers of the Fund to actively supervise its day-to-day operations. The officers have been elected for an annual term. Each Trustee’s and officer’s address is 225 Pictoria Drive, Suite 450, Cincinnati, Ohio 45246. The following are the Trustees and executive officers of the Fund:
Name and | Length | Position(s) Held | Principal Occupation(s) | Number | Directorships |
Interested Trustees: | |||||
Robert G. Dorsey* Year of Birth: 1957 | Since | Trustee (February 2012 to present)
President (June 2012 to October 2013) | Vice Chairman (February 2019 to present), Managing Director (1999 to January 2019), Co-CEO (April 2018 to January 2019), and President (1999 to April 2018) of Ultimus Fund Solutions, LLC and its subsidiaries (except as otherwise noted for FINRA-regulated broker dealer entities) | 14 | Interested Trustee of Capitol Series Trust (10 Funds) |
Independent Trustees: | |||||
Janine L. Cohen Year of Birth: 1952 | Since | Chairperson (October 2019 to present)
Trustee (January 2016 to present) | Retired (2013) financial services executive | 14 | None |
David M. Deptula Year of Birth: 1958 | Since | Trustee | Vice President of Legal and Special Projects at Dayton Freight Lines, Inc. since 2016; Vice President of Tax Treasury at The Standard Register Inc. (formerly The Standard Register Company) from 2011 to 2016 | 14 | None |
28
BLUE CURRENT GLOBAL DIVIDEND FUND
BOARD OF TRUSTEES AND EXECUTIVE OFFICERS
(Unaudited) (Continued)
Name and | Length | Position(s) Held | Principal Occupation(s) | Number | Directorships |
Independent Trustees (Continued): | |||||
Robert E. Morrison Year of Birth: 1957 | Since | Trustee | Senior Vice President and National Practice Lead for Investment, Huntington National Bank/Huntington Private Bank (2014 to present); CEO, CIO, President of 5 Star Investment Management Company (2006 to 2014) | 14 | Independent Trustee and Chairman of the Ultimus Managers Trust (2012 to 2014) |
Clifford N. Schireson Year of Birth: 1953 | Since | Trustee | Founder of Schireson Consulting, LLC (2017 to present); Director of Institutional Services for Brandes Investment Partners, LP (2004 to 2017). | 14 | None |
Jacqueline A. Williams Year of Birth: 1954 | Since | Trustee | Managing Member of Custom Strategy Consulting, LLC (2017 to present); Managing Director of Global Investment Research (2005 to 2017),Cambridge Associates, LLC | 14 | None |
* | Mr. Dorsey is considered an “interested person” of the Trust within the meaning of Section 2(a)(19) of the Investment Act of 1940, as amended, because of his relationship with the Trust’s administrator, transfer agent and distributor. |
29
BLUE CURRENT GLOBAL DIVIDEND FUND
BOARD OF TRUSTEES AND EXECUTIVE OFFICERS
(Unaudited) (Continued)
Name and | Length | Position(s) | Principal Occupation(s) During Past 5 Years |
Executive Officers: | |||
David R. Carson Year of Birth: 1958 | Since | Principal Executive Officer (April 2017 to present)
President (October 2013 to present)
Vice President (April 2013 to October 2013) | Vice President and Director of Client Strategies of Ultimus Fund Solutions, LLC (2013 to present); President, Unified Series Trust (2016 to present); Chief Compliance Officer, FSI Low Beta Absolute Return Fund (2013 to 2016) |
Todd E. Heim Year of Birth: 1967 | Since 2014 | Vice President (2014 to present) | Relationship Management Director and Vice President of Ultimus Fund Solutions, LLC (2018 to present); Client Implementation Manager and SVP of Ultimus Fund Solutions, LLC (2014 to 2018); Naval Flight Officer of United States Navy (1989 to 2017) |
Jennifer L. Leamer Year of Birth: 1976 | Since | Treasurer (October 2014 to present)
Assistant Treasurer (April 2014 to October 2014) | Vice President, Mutual Fund Controller of Ultimus Fund Solutions, LLC (2014 to present) |
Daniel D. Bauer Year of Birth: 1977 | Since | Assistant Treasurer (April 2016 to present) | Assistant Mutual Fund Controller (September 2015 to present) and Fund Accounting Manager (March 2012 to August 2015) of Ultimus Fund Solutions, LLC |
Matthew J. Beck Year of Birth: 1988 | Since | Secretary | Senior Attorney of Ultimus Fund Solutions, LLC (2018 to present); General Counsel of The Nottingham Company (2014 to 2018) |
Natalie S. Anderson Year of Birth: 1975 | Since | Assistant Secretary (April 2016 to present) | Legal Administration Manager (July 2016 to present) and Paralegal (January 2015 to June 2016) of Ultimus Fund Solutions LLC; Senior Paralegal of Unirush, LLC (October 2011 to January 2015) |
30
BLUE CURRENT GLOBAL DIVIDEND FUND
BOARD OF TRUSTEES AND EXECUTIVE OFFICERS
(Unaudited) (Continued)
Name and | Length | Position(s) | Principal Occupation(s) During Past 5 Years |
Executive Officers (Continued): | |||
Charles C. Black Year of Birth: 1979 | Since | Chief Compliance Officer
Assistant Chief Compliance Officer (April 2015 to January 2016) | Senior Compliance Officer of Ultimus Fund Solutions, LLC (2015 to present); Chief Compliance Officer of The Caldwell & Orkin Funds, Inc. (2016 to present); Senior Compliance Manager for Touchstone Mutual Funds (2013 to 2015) |
Additional information about members of the Board and executive officers is available in the Fund’s Statement of Additional Information (“SAI”). To obtain a free copy of the SAI, please call 1-800-514-3583.
31
This page intentionally left blank.
This page intentionally left blank.
Annual Report
August 31, 2019
Beginning on January 1, 2021, as permitted by regulations adopted by the U.S. Securities and Exchange Commission, paper copies of the Fund’s shareholder reports like this one will no longer be sent by mail, unless you specifically request paper copies of the reports from the Fund or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Fund electronically by contacting the Fund at 1-855-691-5288 or, if you own these shares through a financial intermediary, by contacting your financial intermediary.
You may elect to receive all future reports in paper free of charge. You can inform the Fund that you wish to continue receiving paper copies of your shareholder reports by contacting the Fund at 1-855-691-5288. If you own shares through a financial intermediary, you may contact your financial intermediary or follow instructions included with this document to elect to continue to receive paper copies of your shareholder reports. Your election to receive reports in paper will apply to all Funds held with the Fund complex or at your financial intermediary.
MARSHFIELD CONCENTRATED OPPORTUNITY FUND | |
LETTER TO SHAREHOLDERS | September 2019 |
During the fiscal year ending August 31, 2019, the Marshfield Concentrated Opportunity Fund returned 17.12%, compared to the 2.92% return for the S&P 500 Index.
Since the Fund’s inception in late 2015, we have used these letters to reiterate our agnosticism about the macroeconomic and political environment. We refrain from predicting economic events and trends, but we do pay attention to current domestic and global developments because that allows us to understand something about how our companies perform in different environments, both in terms of their operating results and in terms of management’s approach to changes in such things as end market demand. In the absence of good, actionable information about significant trends in parts of the economy and in specific industries, we always believe it is in the interest of the Fund and its shareholders to make our decisions on a bottom-up basis. Irrespective of the external climate, we ask ourselves if a stock is cheap enough to buy, if the stock has a sufficient moat around its business which cannot be exploited by competitors, and if the company’s corporate culture is appropriate to its business. As managers, we feel comfortable making a judgment about those aspects of a business, making sure our investments can withstand shocks and not only survive, but thrive in any type of external environment. We do expect, as a matter of course, that there will be shocks, a few possibly foreseeable, but most of which will be surprising to us as well as to all (or almost all) other investors.
The US economy in the year ending August 31, 2019 was initially characterized by a moderate strengthening, but signs of weakness emerged toward the end of this time period. Improvements in the economy, such as they have been, took place despite the near-constant noise produced by the US political environment, which we do our best to tune out when making decisions about securities.
Unlike last year, the Fund’s performance, for the most part, was driven by companies relatively less exposed to the economic cycle and was held back by our more cyclical names. The fact that we had significant investments in such less exposed companies was not driven by any newly-found ability on our part to predict the future, but rather on our constant willingness to prune positions that we believe to be over-appreciated by other investors and thus over-valued, and to invest the proceeds in out-of-favor companies, often with a significant time lag between the sale and the buy. In other words, during 2016 to 2018, when the economy appeared to be relatively strong, we were able to sell some of our more cyclical companies and purchase some neglected or actively disliked companies in stable businesses.
Last year, we did have one cyclical company that materially added to performance (Moody’s, the bond rating agency), as capital markets remained relatively robust. However, our other two big “producers” (i.e., large positions that also did well in the market) were Arch Capital, an insurance and reinsurance company that has its own cycle that tends to differ from the economic cycle, and Chipotle, which is relatively acyclical. On the other hand, the three of our holdings that produced the most negative effect on the Fund’s returns included two industrial companies,
1
Deere (which manufactures farm and construction equipment) and Cummins (which manufactures diesel engines), as well as Expeditors International (a non-asset-based transportation company). It probably won’t have escaped your notice that the latter three companies have also been negatively affected by the new tariffs and overall trade situation.
Our historical track record is one of limited turnover, and that was true again this year. For the year ending August 31, 2019 it was 13.60%. We sold one position in its entirety while trimming the sizes of three other positions. We sold our remaining position in Yum! Brands due in part to price appreciation. Other factors which influenced our Yum! Brands sale were the increased leverage the company has taken on in the last few years and the retirement of a CEO whom we liked and his replacement by someone we just don’t know as well, and whom we want to see “in action” before we place our (and your) trust in him. The companies we reduced our investment in solely due to significant price appreciation were Chipotle (the fast food company), Strategic Education (the for-profit education company, aka Strayer) and Waters (which manufactures mass spectrometry and liquid chromatography instruments).
We did not add any new names during the fiscal year, nor did we add at all to existing positions. Our decision not to buy anything is not due to any opinion about what the market or economy might do, but solely to our inability to find stocks in companies we like trading at what we consider to be reasonable prices.
If you have been with us for a while, you know that our approach in any environment is to stick to our discipline. That means: 1) understanding what’s real and what’s fantasy; 2) acting with equanimity to exploit the misjudgments of the crowd; and 3) being patient and not pulling the trigger before our buy or sell price has been reached. These things won’t change. Process and discipline are why we believe investors choose to invest in the Fund, and we take our mandate to preserve capital and generate risk-adjusted returns very seriously.
We thank you for the opportunity to invest your money and for your confidence in our process and discipline.
Sincerely,
Elise J. Hoffmann | Christopher M. Niemczewski |
Past performance is not predictive of future performance. Investment results and principal value will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Current performance may be higher or lower than the performance data quoted. Performance data current to the most recent month-end are available by calling 1-855-691-5288.
An investor should consider the investment objectives, risks, charges and expenses of the Fund carefully before investing. The Fund’s prospectus contains this and other important information. To obtain a copy of the Fund’s prospectus please visit our website at www.MarshfieldFunds.com or call 1-855-691-5288 and a copy will be sent to you free of charge. Please read the prospectus carefully before you invest. The Fund is distributed by Ultimus Fund Distributors, LLC.
2
The Letter to Shareholders seeks to describe some of the Adviser’s current opinions and views of the financial markets. Although the Adviser believes it has a reasonable basis for any opinions or views expressed, actual results may differ, sometimes significantly so, from those expected or expressed. The securities held by the Fund that are discussed in the Letter to Shareholders were held during the period covered by this Report. They do not comprise the entire investment portfolio of the Fund, may be sold at any time, and may no longer be held by the Fund. For a complete list of securities held by the Fund as of August 31, 2019, please see the Schedule of Investments section of the annual report. The opinions of the Fund’s adviser with respect to those securities may change at any time.
Statements in the Letter to Shareholders that reflect projections or expectations for future financial or economic performance of the Fund and the market in general and statements of the Fund’s plans and objectives for future operations are forward-looking statements. No assurance can be given that actual results or events will not differ materially from those projected, estimated, assumed, or anticipated in any such forward-looking statements. Important factors that could result in such differences, in addition to factors noted with such forward-looking statements, include, without limitation, general economic conditions, such as inflation, recession, and interest rates. Past performance is not a guarantee of future results.
3
MARSHFIELD CONCENTRATED OPPORTUNITY FUND
PERFORMANCE INFORMATION (Unaudited)
Comparison of the Change in Value of a $10,000 Investment in
Marshfield Concentrated Opportunity Fund versus
the S&P 500® Index
Average Annual Total Returns (for the periods ended August 31, 2019) | ||||
1 Year | 3 Years | Since | ||
Marshfield Concentrated Opportunity Fund(a) | 17.12% | 20.32% | 18.20% | |
S&P 500® Index | 2.92% | 12.70% | 12.03% |
(a) | The total returns shown do not reflect the deduction of taxes a shareholder would pay on Fund distributions, if any, or the redemption of Fund shares. |
(b) | The Fund commenced operations on December 29, 2015. |
4
MARSHFIELD CONCENTRATED OPPORTUNITY FUND
PORTFOLIO INFORMATION
August 31, 2019 (Unaudited)
Portfolio Allocation (% of Net Assets)
Top 10 Equity Holdings
Security Description | % of Net Assets |
Moody’s Corporation | 10.9% |
Arch Capital Group Ltd. | 8.7% |
AutoZone, Inc. | 6.4% |
Mastercard, Inc. - Class A | 5.6% |
Visa, Inc. - Class A | 4.9% |
Deere & Company | 4.8% |
O’Reilly Automotive, Inc. | 4.2% |
Fastenal Company | 4.1% |
Goldman Sachs Group, Inc. (The) | 4.0% |
Cummins, Inc. | 3.7% |
5
MARSHFIELD CONCENTRATED OPPORTUNITY FUND | ||||||||
COMMON STOCKS — 75.8% | Shares | Value | ||||||
Consumer Discretionary — 22.4% | ||||||||
Diversified Consumer Services — 2.4% | ||||||||
Strategic Education, Inc. | 12,937 | $ | 2,189,328 | |||||
Hotels, Restaurants & Leisure — 3.5% | ||||||||
Chipotle Mexican Grill, Inc. (a) | 3,672 | 3,078,678 | ||||||
Household Durables — 2.4% | ||||||||
NVR, Inc. (a) | 586 | 2,109,014 | ||||||
Specialty Retail — 14.1% | ||||||||
AutoZone, Inc. (a) | 5,174 | 5,700,144 | ||||||
O’Reilly Automotive, Inc. (a) | 9,660 | 3,707,122 | ||||||
Ross Stores, Inc. | 29,208 | 3,096,340 | ||||||
12,503,606 | ||||||||
Financials — 23.6% | ||||||||
Capital Markets — 14.9% | ||||||||
Goldman Sachs Group, Inc. (The) | 17,306 | 3,528,866 | ||||||
Moody’s Corporation | 44,882 | 9,675,662 | ||||||
13,204,528 | ||||||||
Insurance — 8.7% | ||||||||
Arch Capital Group Ltd. (a) | 195,694 | 7,729,913 | ||||||
Health Care — 0.6% | ||||||||
Life Sciences Tools & Services — 0.6% | ||||||||
Waters Corporation (a) | 2,676 | 567,018 | ||||||
Industrials — 18.7% | ||||||||
Air Freight & Logistics — 3.7% | ||||||||
Expeditors International of Washington, Inc. | 45,752 | 3,252,967 | ||||||
Machinery — 8.5% | ||||||||
Cummins, Inc. | 21,799 | 3,253,937 | ||||||
Deere & Company | 27,793 | 4,305,413 | ||||||
7,559,350 | ||||||||
Road & Rail — 2.4% | ||||||||
Union Pacific Corporation | 13,084 | 2,119,085 | ||||||
Trading Companies & Distributors — 4.1% | ||||||||
Fastenal Company | 117,248 | 3,590,134 |
6
MARSHFIELD CONCENTRATED OPPORTUNITY FUND | ||||||||
COMMON STOCKS — 75.8% (Continued) | Shares | Value | ||||||
Information Technology — 10.5% | ||||||||
IT Services — 10.5% | ||||||||
Mastercard, Inc. - Class A | 17,631 | $ | 4,960,834 | |||||
Visa, Inc. - Class A | 23,879 | 4,317,801 | ||||||
9,278,635 | ||||||||
Total Common Stocks (Cost $56,174,783) | $ | 67,182,256 |
| ||||||||
MONEY MARKET FUNDS — 24.7% | Shares | Value | ||||||
Goldman Sachs Financial Square Funds - Treasury Instruments Fund - Institutional Shares, 1.86% (b) | 11,556,563 | $ | 11,556,563 | |||||
Vanguard Treasury Money Market Fund, 2.02% (b) | 10,276,329 | 10,276,329 | ||||||
Total Money Market Funds (Cost $21,832,892) | $ | 21,832,892 | ||||||
Investments at Value — 100.5% (Cost $78,007,675) | $ | 89,015,148 | ||||||
Liabilities in Excess of Other Assets — (0.5%) | (425,915 | ) | ||||||
Net Assets — 100.0% | $ | 88,589,233 |
(a) | Non-income producing security. |
(b) | The rate shown is the 7-day effective yield as of August 31, 2019. |
See accompanying notes to financial statements. |
7
MARSHFIELD CONCENTRATED OPPORTUNITY FUND | ||||
ASSETS | ||||
Investments in securities: | ||||
At cost | $ | 78,007,675 | ||
At value (Note 2) | $ | 89,015,148 | ||
Receivable for capital shares sold | 96,875 | |||
Dividends receivable | 133,712 | |||
Other assets | 18,462 | |||
Total assets | 89,264,197 | |||
LIABILITIES | ||||
Payable for capital shares redeemed | 1 | |||
Payable for investment securities purchased | 595,842 | |||
Payable to Adviser (Note 4) | 52,657 | |||
Payabel to administrator (Note 4) | 12,965 | |||
Other accrued expenses | 13,499 | |||
Total liabilities | 674,964 | |||
NET ASSETS | $ | 88,589,233 | ||
NET ASSETS CONSIST OF: | ||||
Paid-in capital | $ | 75,779,691 | ||
Accumulated earnings | 12,809,542 | |||
NET ASSETS | $ | 88,589,233 | ||
Shares of beneficial interest outstanding (unlimited number of shares authorized, no par value) | 5,020,572 | |||
Net asset value, offering price and redemption price per share (Note 2) | $ | 17.65 |
See accompanying notes to financial statements. |
8
MARSHFIELD CONCENTRATED OPPORTUNITY FUND | ||||
INVESTMENT INCOME | ||||
Dividend income | $ | 598,539 | ||
EXPENSES | ||||
Investment advisory fees (Note 4) | 429,250 | |||
Administration fees (Note 4) | 47,171 | |||
Fund accounting fees (Note 4) | 34,534 | |||
Registration and filing fees | 31,454 | |||
Legal fees | 23,415 | |||
Transfer agent fees (Note 4) | 18,000 | |||
Audit and tax services fees | 17,000 | |||
Trustees’ fees and expenses (Note 4) | 14,262 | |||
Compliance fees and expenses (Note 4) | 12,461 | |||
Custody and bank service fees | 11,412 | |||
Printing of shareholder reports | 10,580 | |||
Postage and supplies | 5,613 | |||
Insurance expense | 2,901 | |||
Pricing fees | 646 | |||
Other expenses | 14,559 | |||
Total expenses | 673,258 | |||
Less fee reductions by the Adviser (Note 4) | (176,244 | ) | ||
Net expenses | 497,014 | |||
NET INVESTMENT INCOME | 101,525 | |||
REALIZED AND UNREALIZED GAINS ON INVESTMENTS | ||||
Net realized gains from investment transactions | 1,853,312 | |||
Net change in unrealized appreciation (depreciation) on investments | 6,023,110 | |||
NET REALIZED AND UNREALIZED GAINS ON INVESTMENTS | 7,876,422 | |||
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS | $ | 7,977,947 |
See accompanying notes to financial statements. |
9
MARSHFIELD CONCENTRATED OPPORTUNITY FUND | ||||||||
| Year | Year | ||||||
FROM OPERATIONS | ||||||||
Net investment income (loss) | $ | 101,525 | $ | (975 | ) | |||
Net realized gains from investment transactions | 1,853,312 | 505,753 | ||||||
Net change in unrealized appreciation (depreciation) on investments | 6,023,110 | 3,106,123 | ||||||
Net increase in net assets resulting from operations | 7,977,947 | 3,610,901 | ||||||
DISTRIBUTIONS TO SHAREHOLDERS (Note 2) | (475,838 | ) | (312,300 | ) | ||||
CAPITAL SHARE TRANSACTIONS | ||||||||
Proceeds from shares sold | 61,969,831 | 7,384,990 | ||||||
Net asset value of shares issued in reinvestment of distributions to shareholders | 457,005 | 301,657 | ||||||
Proceeds from redemption fees collected (Note 2) | 10,979 | 690 | ||||||
Payments for shares redeemed | (4,248,932 | ) | (921,553 | ) | ||||
Net increase in net assets from capital share transactions | 58,188,883 | 6,765,784 | ||||||
TOTAL INCREASE IN NET ASSETS | 65,690,992 | 10,064,385 | ||||||
NET ASSETS | ||||||||
Beginning of year | 22,898,241 | 12,833,856 | ||||||
End of year | $ | 88,589,233 | $ | 22,898,241 | ||||
CAPITAL SHARES ACTIVITY | ||||||||
Shares sold | 3,760,098 | 513,412 | ||||||
Shares reinvested | 33,852 | 21,796 | ||||||
Shares redeemed | (263,211 | ) | (65,298 | ) | ||||
Net increase in shares outstanding | 3,530,739 | 469,910 | ||||||
Shares outstanding at beginning of year | 1,489,833 | 1,019,923 | ||||||
Shares outstanding at end of year | 5,020,572 | 1,489,833 |
(a) | The presentation of Distributions to Shareholders has been updated to reflect the changes prescribed in amendments to Regulation S-X, effective November 5, 2018 (Note 2). For the year ended August 31, 2018, distributions to shareholders consisted of $8,517 from net investment income and $303,783 from net realized gains. As of August 31, 2018, undistributed net investment income was $0. |
See accompanying notes to financial statements. |
10
MARSHFIELD CONCENTRATED OPPORTUNITY FUND | ||||||||||||||||
Per Share Data for a Share Outstanding Throughout Each Period | ||||||||||||||||
| Year | Year | Year | Period | ||||||||||||
Net asset value at beginning of period | $ | 15.37 | $ | 12.58 | $ | 10.61 | $ | 10.00 | ||||||||
Income (loss) from investment operations: | ||||||||||||||||
Net investment income (loss) | 0.02 | (0.00 | )(b) | 0.00 | (b) | 0.02 | ||||||||||
Net realized and unrealized gains on investments | 2.53 | 3.08 | 2.04 | 0.59 | ||||||||||||
Total from investment operations | 2.55 | 3.08 | 2.04 | 0.61 | ||||||||||||
Less distributions: | ||||||||||||||||
From net investment income | (0.00 | )(b) | (0.01 | ) | (0.02 | ) | — | |||||||||
From net realized gains | (0.27 | ) | (0.28 | ) | (0.05 | ) | — | |||||||||
Total distributions | (0.27 | ) | (0.29 | ) | (0.07 | ) | — | |||||||||
Proceeds from redemption fees collected (Note 2) | 0.00 | (b) | 0.00 | (b) | — | — | ||||||||||
Net asset value at end of period | $ | 17.65 | $ | 15.37 | $ | 12.58 | $ | 10.61 | ||||||||
Total return (c) | 17.12 | % | 24.70 | % | 19.27 | % | 6.10 | %(d) | ||||||||
Net assets at end of period (000’s) | $ | 88,589 | $ | 22,898 | $ | 12,834 | $ | 5,891 | ||||||||
Ratios/supplementary data: | ||||||||||||||||
Ratio of total expenses to average net assets | 1.48 | % | 2.09 | % | 2.87 | % | 3.80 | %(e) | ||||||||
Ratio of net expenses to average net assets (f) | 1.10 | % | 1.10 | % | 1.10 | % | 1.22 | %(e) | ||||||||
Ratio of net investment income (loss) to average net assets (f) | 0.22 | % | (0.01 | %) | 0.08 | % | 0.42 | %(e) | ||||||||
Portfolio turnover rate | 14 | % | 10 | % | 11 | % | 18 | %(d) |
(a) | Represents the period from the commencement of operations (December 29, 2015) through August 31, 2017. |
(b) | Amount rounds to less than $0.01 per share. |
(c) | Total return is a measure of the change in value of an investment in the Fund over the periods covered. The returns shown do not reflect the deduction of taxes a shareholders would pay on Fund distributions, if any, or the redemption of Fund shares. The total returns would be lower if the Adviser had not reduced advisory fees and reimbursed expenses (Note 4). |
(d) | Not annualized. |
(e) | Annualized. |
(f) | Ratio was determined after advisory fee reductions and expense reimbursements (Note 4). |
See accompanying notes to financial statements. |
11
MARSHFIELD CONCENTRATED OPPORTUNITY FUND
NOTES TO FINANCIAL STATEMENTS
August 31, 2019
1. Organization
Marshfield Concentrated Opportunity Fund (the “Fund”) is a non-diversified series of Ultimus Managers Trust (the “Trust”), an open-end investment company established as an Ohio business trust under a Declaration of Trust dated February 28, 2012. Other series of the Trust are not incorporated in this report.
The investment objective of the Fund is to seek the dual goals of capital preservation and the long-term growth of principal, while targeting a pattern of performance at variance with that of the market.
2. Significant Accounting Policies
In August 2018, the U.S. Securities and Exchange Commission (the “SEC”) adopted regulations that eliminated or amended disclosure requirements that were redundant or outdated in light of changes in SEC requirements, accounting principles generally accepted in the United States of America (“GAAP”), International Financial Reporting Standards or changes in technology or the business environment. These regulations were effective November 5, 2018, and the Fund is complying with them effective with these financial statements.
The Fund follows accounting and reporting guidance under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 946, “Financial Services – Investment Companies.” The following is a summary of the Fund’s significant accounting policies used in the preparation of its financial statements. These policies are in conformity with GAAP.
New accounting pronouncement – In August 2018, FASB issued Accounting Standards Update No. 2018-13 (“ASU 2018-13”), “Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement,” which amends the fair value measurement disclosure requirements of ASC Topic 820 (“ASC 820”), “Fair Value Measurement.” ASU 2018-13 includes new, eliminated, and modified disclosure requirements for ASC 820. In addition, ASU 2018-13 clarifies that materiality is an appropriate consideration when evaluating disclosure requirements. ASU 2018-13 is effective for fiscal years beginning after December 15, 2019, including interim periods therein. Early adoption is permitted and the Fund has adopted ASU 2018-13 with these financial statements.
Securities valuation – The Fund values its portfolio securities at market value as of the close of regular trading on the New York Stock Exchange (the “NYSE”) (normally 4:00 p.m. Eastern time) on each business day the NYSE is open for business. The Fund values its listed securities on the basis of the security’s last sale price on the security’s primary exchange, if available, otherwise at the exchange’s most recently quoted mean price. NASDAQ-listed securities are valued at the NASDAQ Official Closing Price. Investments representing shares of other open-end investment companies, including money market funds, are valued at their net asset value
12
MARSHFIELD CONCENTRATED OPPORTUNITY FUND |
(“NAV”) as reported by such companies. When using a quoted price and when the market is considered active, the security will be classified as Level 1 within the fair value hierarchy (see below). Fixed income securities, if any, are generally valued using prices provided by an independent pricing service approved by the Board of Trustees of the Trust (the “Board”). The independent pricing service uses information with respect to transactions in bonds, quotations from bond dealers, market transactions in comparable securities, and various relationships between securities in determining these prices. In the event that market quotations are not readily available or are considered unreliable due to market or other events, the Fund values its securities and other assets at fair value in accordance with procedures established by and under the general supervision of the Board. Under these procedures, the securities will be classified as Level 2 or 3 within the fair value hierarchy, depending on the inputs used. Unavailable or unreliable market quotes may be due to the following factors: a substantial bid-ask spread; infrequent sales resulting in stale prices; insufficient trading volume; small trade sizes; a temporary lapse in any reliable pricing source; and actions of the securities or futures markets, such as the suspension or limitation of trading. As a result, the prices of securities used to calculate the Fund’s NAV may differ from quoted or published prices for the same securities.
GAAP establishes a single authoritative definition of fair value, sets out a framework for measuring fair value, and requires additional disclosures about fair value measurements.
Various inputs are used in determining the value of the Fund’s investments. These inputs are summarized in the three broad levels listed below:
● | Level 1 – quoted prices in active markets for identical securities |
● | Level 2 – other significant observable inputs |
● | Level 3 – significant unobservable inputs |
The inputs or methods used for valuing securities are not necessarily an indication of the risks associated with investing in those securities. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety is determined based on the lowest level input that is significant to the fair value measurement.
The following is a summary of the inputs used to value the Fund’s investments as of August 31, 2019:
| Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Common Stocks | $ | 67,182,256 | $ | — | $ | — | $ | 67,182,256 | ||||||||
Money Market Funds | 21,832,892 | — | — | 21,832,892 | ||||||||||||
Total | $ | 89,015,148 | $ | — | $ | — | $ | 89,015,148 |
13
MARSHFIELD CONCENTRATED OPPORTUNITY FUND |
Refer to the Fund’s Schedule of Investments for a listing of the common stocks by industry type. The Fund did not hold derivative instruments or any assets or liabilities that were measured at fair value on a recurring basis using significant unobservable inputs (Level 3) as of or during the year ended August 31, 2019.
Share valuation – The NAV per share of the Fund is calculated daily by dividing the total value of the Fund’s assets, less liabilities, by the number of shares outstanding. The offering price and redemption price per share of the Fund is equal to the NAV, except that shares of the Fund are subject to a redemption fee of 2% if redeemed within 90 days of the date of purchase. During the years ended August 31, 2019 and 2018, proceeds from the redemption fees, recorded in capital, totaled $10,979 and $690, respectively.
Investment income – Dividend income is recorded on the ex-dividend date. Interest income is accrued as earned.
Investment transactions – Investment transactions are accounted for on the trade date. Realized gains and losses on investments sold are determined on a specific identification basis.
Common expenses – Common expenses of the Trust are allocated among the Fund and the other series of the Trust based on the relative net assets of each series, the number of series in the Trust, or the nature of the services performed and the relative applicability to each series.
Distributions to shareholders – The Fund will distribute to shareholders any net investment income dividends and net realized capital gains distributions at least once each year. The amount of such dividends and distributions are determined in accordance with federal income tax regulations, which may differ from GAAP. Dividends and distributions are recorded on the ex-dividend date. The tax character of the Fund’s distributions paid to shareholders during the years ended August 31, 2019 and 2018 was as follows:
Year | Ordinary | Long-Term | Total | |||||||||
8/31/2019 | $ | 24,384 | $ | 451,454 | $ | 475,838 | ||||||
8/31/2018 | $ | 9,718 | $ | 302,582 | $ | 312,300 |
Estimates – The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates.
14
MARSHFIELD CONCENTRATED OPPORTUNITY FUND |
Federal income tax – The Fund has qualified and intends to continue to qualify as a regulated investment company under the Internal Revenue Code of 1986, as amended (the “Code”). Qualification generally will relieve the Fund of liability for federal income taxes to the extent 100% of its net investment income and net realized capital gains are distributed in accordance with the Code.
In order to avoid imposition of the excise tax applicable to regulated investment companies, it is also the Fund’s intention to declare as dividends in each calendar year at least 98% of its net investment income (earned during the calendar year) and 98.2% of its net realized capital gains (earned during the 12 months ended October 31) plus undistributed amounts from prior years.
The following information is computed on a tax basis for each item as of August 31, 2019:
Tax cost of portfolio investments | $ | 78,010,297 | ||
Gross unrealized appreciation | $ | 11,812,412 | ||
Gross unrealized depreciation | (807,561 | ) | ||
Net unrealized appreciation | 11,004,851 | |||
Undistributed ordinary income | 281,224 | |||
Undistributed long-term capital gains | 1,523,467 | |||
Accumulated earnings | $ | 12,809,542 |
The values of the federal income tax cost of portfolio investments and the financial statement cost of portfolio investments may be temporarily different (“book/tax differences”). These book/tax differences are due to the timing of the recognition of capital gains or losses under income tax regulations and GAAP, primarily due to the tax deferral of losses on wash sales.
The Fund recognizes the tax benefits or expenses of uncertain tax positions only when the position is “more likely than not” to be sustained assuming examination by tax authorities. Management has reviewed the Fund’s tax positions for all open tax years (generally, three years) and has concluded that no provision for unrecognized tax benefits or expenses is required in these financial statements. The Fund identifies its major tax jurisdiction as U.S. Federal.
3. Investment Transactions
During the year ended August 31, 2019, cost of purchases and proceeds from sales of investment securities, other than short-term investments, were $44,827,653 and $5,009,060, respectively.
15
MARSHFIELD CONCENTRATED OPPORTUNITY FUND |
4. Transactions with Related Parties
INVESTMENT ADVISORY AGREEMENT
The Fund’s investments are managed by Marshfield Associates, Inc. (the “Adviser”) pursuant to the terms of an Investment Advisory Agreement. Under the Investment Advisory Agreement, the Fund pays the Adviser an advisory fee, computed and accrued daily and paid monthly, at the annual rate of 0.95% of its average daily net assets.
Pursuant to an Expense Limitation Agreement (“ELA”) between the Fund and the Adviser, the Adviser has contractually agreed, until January 1, 2020, to reduce its investment advisory fees and reimburse other expenses to limit total annual operating expenses (exclusive of brokerage costs; taxes; interest; borrowing costs such as interest and dividend expenses on securities sold short; costs to organize the Fund; acquired fund fees and expenses; extraordinary expenses such as litigation and merger or reorganization costs and other expenses not incurred in the ordinary course of the Fund’s business), to an amount not exceeding 1.10% of the Fund’s average daily net assets. Accordingly, during the year ended August 31, 2019, the Adviser reduced its investment advisory fees by $176,244.
Under the terms of the ELA, investment advisory fee reductions and expense reimbursements by the Adviser are subject to repayment by the Fund for a period of three years after such fees and expenses were incurred, provided the repayments do not cause total annual operating expenses to exceed the lesser of: (i) the expense limitation then in effect, if any, and (ii) the expense limitation in effect at the time the expenses to be repaid were incurred. As of August 31, 2019, the Adviser may seek repayment of investment advisory fee reductions and expense reimbursements in the amount of $489,528 no later than the dates as stated below:
August 31, 2020 | $ | 149,506 | ||
August 31, 2021 | 163,778 | |||
August 31, 2022 | 176,244 | |||
Total | $ | 489,528 |
OTHER SERVICE PROVIDERS
Ultimus Fund Solutions, LLC (“Ultimus”) provides administration, fund accounting, compliance and transfer agency services to the Fund. The Fund pays Ultimus fees in accordance with the agreements for such services. In addition, the Fund pays out-of-pocket expenses including, but not limited to, postage, supplies, and costs of pricing the Fund’s portfolio securities.
Under the terms of a Distribution Agreement with the Trust, Ultimus Fund Distributors, LLC (the “Distributor”) serves as principal underwriter to the Fund. The Distributor is a wholly-owned subsidiary of Ultimus. The Distributor is compensated by the Adviser (not the Fund) for acting as principal underwriter.
16
MARSHFIELD CONCENTRATED OPPORTUNITY FUND |
Certain officers and a Trustee of the Trust are also officers of Ultimus and the Distributor.
TRUSTEE COMPENSATION
Each Trustee who is not an “interested person” of the Trust (“Independent Trustee”) receives a $1,300 annual retainer from the Fund, paid quarterly, except for the Board Chairperson who receives a $1,500 annual retainer from the Fund, paid quarterly. Each Independent Trustee also receives from the Fund a fee of $500 for each Board meeting attended plus reimbursement for travel and other meeting-related expenses.
PRINCIPAL HOLDER OF FUND SHARES
As of August 31, 2019, the following shareholder owned of record 25% or more of the outstanding shares of the Fund:
Name of Record Owner | % Ownership |
RBC Capital Markets, LLC (for the benefit of its customers) | 43% |
A beneficial owner of 25% or more of the Fund’s outstanding shares may be considered a controlling person. That shareholder’s vote could have a more significant effect on matters presented at a shareholders’ meeting.
5. Contingencies and Commitments
The Fund indemnifies the Trust’s officers and Trustees for certain liabilities that might arise from their performance of their duties to the Fund. Additionally, in the normal course of business the Fund enters into contracts that contain a variety of representations and warranties and which provide general indemnifications. The Fund’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Fund that have not yet occurred. However, based on experience, the Fund expects the risk of loss to be remote.
6. Subsequent Events
The Fund is required to recognize in the financial statements the effects of all subsequent events that provide additional evidence about conditions that existed as of the date of the Statement of Assets and Liabilities. For non-recognized subsequent events that must be disclosed to keep the financial statements from being misleading, the Fund is required to disclose the nature of the event as well as an estimate of its financial effect, or a statement that such an estimate cannot be made. Management has evaluated subsequent events through the issuance of these financial statements and has noted no such events.
17
MARSHFIELD CONCENTRATED OPPORTUNITY FUND |
To the Shareholders of Marshfield Concentrated Opportunity Fund and
Board of Trustees of Ultimus Managers Trust
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Marshfield Concentrated Opportunity Fund (the “Fund”), a series of Ultimus Managers Trust, as of August 31, 2019, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, including the related notes, and the financial highlights for each of the four periods in the period then ended (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of August 31, 2019, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the four periods in the period then ended, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of August 31, 2019, by correspondence with the custodian and broker. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
We have served as the Fund’s auditor since 2016.
COHEN & COMPANY, LTD.
Cleveland, Ohio
October 30, 2019
18
MARSHFIELD CONCENTRATED OPPORTUNITY FUND |
We believe it is important for you to understand the impact of costs on your investment. As a shareholder of the Fund, you incur two types of cost: (1) transaction costs, including redemption fees; and (2) ongoing costs, including management fees and other operating expenses. The following 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.
A mutual fund’s ongoing costs are expressed as a percentage of its average net assets. This figure is known as the expense ratio. The expenses in the table below are based on an investment of $1,000 made at the beginning of the most recent period (March 1, 2019) and held until the end of the period (August 31, 2019).
The table below illustrates the Fund’s ongoing costs in two ways:
Actual fund return – This section helps you to estimate the actual expenses that you paid over the period. The “Ending Account Value” shown is derived from the Fund’s actual return, and the fourth column shows the dollar amount of operating expenses that would have been paid by an investor who started with $1,000 in the Fund. You may use the information here, together with the amount you invested, to estimate the expenses that you paid over the period.
To do so, 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 given for the Fund under the heading “Expenses Paid During Period.”
Hypothetical 5% return – This section is intended to help you compare the Fund’s ongoing costs with those of other mutual funds. It assumes that the Fund had an annual return of 5% before expenses during the period shown, but that the expense ratio is unchanged. In this case, because the return used is not the Fund’s actual return, the results do not apply to your investment. The example is useful in making comparisons because the SEC requires all mutual funds to calculate expenses based on a 5% return. You can assess the Fund’s ongoing costs by comparing this hypothetical example with the hypothetical examples that appear in shareholder reports of other funds.
Note that expenses shown in the table are meant to highlight and help you compare ongoing costs only. The Fund does not charge sales loads. However, a redemption fee of 2% is applied on the sale of shares held for less than 90 days.
The calculations assume no shares were bought or sold during the period. Your actual costs may have been higher or lower, depending on the amount of your investment and the timing of any purchases or redemptions.
More information about the Fund’s expenses can be found in this report. For additional information on operating expenses and other shareholder costs, please refer to the Fund’s prospectus.
19
MARSHFIELD CONCENTRATED OPPORTUNITY FUND |
| Beginning | Ending | Net | Expenses |
Based on Actual Fund Return | $1,000.00 | $1,112.90 | 1.10% | $5.86 |
Based on Hypothetical 5% Return (before expenses) | $1,000.00 | $1,019.66 | 1.10% | $5.60 |
(a) | Annualized, based on the Fund’s most recent one-half year expenses. |
(b) | Expenses are equal to the Fund’s annualized net expense ratio multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). |
OTHER INFORMATION (Unaudited)
A description of the policies and procedures that the Fund uses to vote proxies relating to portfolio securities is available without charge upon request by calling toll-free 1-855-691-5288, or on the SEC’s website at www.sec.gov. Information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available without charge upon request by calling toll-free 1-855-691-5288, or on the SEC’s website at www.sec.gov.
The Trust files a complete listing of portfolio holdings for the Fund with the SEC as of the end of the first and third quarters of each fiscal year on Form N-Q. These filings are available upon request by calling 1-855-691-5288. Furthermore, you may obtain a copy of the filings on the SEC’s website at www.sec.gov.
20
MARSHFIELD CONCENTRATED OPPORTUNITY FUND |
On June 18, 2019, a Special Meeting of Shareholders of the Trust was held for the purpose of considering the election of seven trustees for the Trust. The number of shares of the Trust present and voting at the Special Meeting represented 68.40% of the total shares entitled to vote at the meeting. Each of the seven nominees was elected by the shareholders of the Trust.
The results of the voting with respect to the election of the seven Trustees were as follows:
Number of Shares | ||
Nominee/Trustee | Affirmative | Withhold |
Robert G. Dorsey | 79,822,871 | 11,178 |
John J. Discepoli | 79,499,054 | 334,995 |
David M. Deptula | 79,499,054 | 334,995 |
Janine L. Cohen | 79,485,191 | 348,858 |
Jacqueline A. Williams | 79,757,455 | 76,594 |
Clifford N. Schireson | 79,771,318 | 62,731 |
Robert E. Morrison, Jr. | 79,771,349 | 62,700 |
FEDERAL TAX INFORMATION (Unaudited)
For the fiscal year ended August 31, 2019, the Fund designated $451,454 as long-term capital gain distributions.
Qualified Dividend Income – The Fund designates 100% of its ordinary income dividends, or up to the maximum amount of such dividends allowable pursuant to the Internal Revenue Code, as qualified dividend income eligible for the reduced tax rate of 15%.
Dividends Received Deduction – Corporate shareholders are generally entitled to take the dividends received deduction on the portion of a Fund’s dividend distribution that qualifies under tax law. For the Fund’s fiscal year ended August 31, 2019, 100% of ordinary income dividends qualifies for the corporate dividends received deduction.
21
MARSHFIELD CONCENTRATED OPPORTUNITY FUND |
The Board has overall responsibility for management of the Trust’s affairs. The Trustees serve during the lifetime of the Trust and until its termination, or until death, resignation, retirement, or removal. The Trustees, in turn, elect the officers of the Fund to actively supervise its day-to-day operations. The officers have been elected for an annual term. Each Trustee’s and officer’s address is 225 Pictoria Drive, Suite 450, Cincinnati, Ohio 45246. The following are the Trustees and executive officers of the Funds:
Name and | Length | Position(s) | Principal Occupation(s) | Number | Directorships |
Interested Trustees: | |||||
Robert G. Dorsey* Year of Birth: 1957 | Since February 2012 | Trustee (February 2012 to present)
President (June 2012 to October 2013) | Vice Chairman (February 2019 to present), Managing Director (1999 to January 2019), Co-CEO (April 2018 to January 2019), and President (1999 to April 2018) of Ultimus Fund Solutions, LLC and its subsidiaries (except as otherwise noted for FINRA-regulated broker dealer entities) | 14 | Interested Trustee of Capitol Series Trust (10 Funds) |
Independent Trustees: | |||||
Janine L. Cohen Year of Birth: 1952 | Since January 2016 | Chairperson (October 2019 to present)
Trustee (January 2016 to present) | Retired (2013) financial services executive | 14 | None |
22
MARSHFIELD CONCENTRATED OPPORTUNITY FUND |
Name and | Length | Position(s) | Principal Occupation(s) | Number | Directorships |
Independent Trustees (Continued): | |||||
David M. Deptula Year of Birth: 1958 | Since June 2012 | Trustee | Vice President of Legal and Special Projects at Dayton Freight Lines, Inc. since 2016; Vice President of Tax Treasury at The Standard Register Inc. (formerly The Standard Register Company) from 2011 to 2016 | 14 | None |
Robert E. Morrison Year of Birth: 1957 | Since June 2019 | Trustee | Senior Vice President and National Practice Lead for Investment, Huntington National Bank/Huntington Private Bank (2014 to present); CEO, CIO, President of 5 Star Investment Management Company (2006 to 2014). | 14 | Independent Trustee and Chairman of the Ultimus Managers Trust (2012 to 2014). |
Clifford N. Schireson Year of Birth: 1953 | Since June 2019 | Trustee | Founder of Schireson Consulting, LLC (2017 to present); Director of Institutional Services for Brandes Investment Partners, LP (2004-2017). | 14 | n/a |
Jacqueline A. Williams Year of Birth: 1954 | Since June 2019 | Trustee | Managing Member of Custom Strategy Consulting, LLC (2017 to present); Managing Director of Global Investment Research (2005 to 2017), Cambridge Associates, LLC. | 14 | n/a |
* | Mr. Dorsey is considered an “interested person” of the Trust within the meaning of Section 2(a)(19) of the Investment Company Act of 1940, as amended, because of his relationship with the Trust’s administrator, transfer agent and distributor. |
23
MARSHFIELD CONCENTRATED OPPORTUNITY FUND |
Name and | Length | Position(s) | Principal Occupation(s) During Past 5 Years |
Executive Officers: | |||
David R. Carson Year of Birth: 1958 | Since 2013 | Principal Executive Officer (April 2017 to present)
President (October 2013 to present)
Vice President (April 2013 to October 2013) | Vice President and Director of Client Strategies of Ultimus Fund Solutions, LLC (2013 to present); President, Unified Series Trust (2016 to present); President, Centaur Mutual Funds Trust (2018 to present); Chief Compliance Officer, FSI Low Beta Absolute Return Fund (2013 to 2016) |
Todd E. Heim Year of Birth: 1967 | Since 2014 | Vice President (2014 to present) | Relationship Management Director and Vice President of Ultimus Fund Solutions, LLC (2018 to present); Client Implementation Manager and AVP of Ultimus Fund Solutions, LLC (2014 to 2018); Naval Flight Officer in the United States Navy (May 1989 to June 2017) |
Jennifer L. Leamer Year of Birth: 1976 | Since | Treasurer
Assistant Treasurer (April 2014 to October 2014) | Vice President, Mutual Fund Controller of Ultimus Fund Solutions, LLC (2014 to present) |
Daniel D. Bauer Year of Birth: 1977 | Since 2016 | Assistant Treasurer (April 2016 to present) | Assistant Mutual Fund Controller (September 2015 to present) and Fund Accounting Manager (March 2012 to August 2015) of Ultimus Fund Solutions, LLC |
Matthew J. Beck Year of Birth: 1988 | Since 2018 | Secretary (July 2018 to present) | Senior Attorney of Ultimus Fund Solutions, LLC (2018 to present); Chief Compliance Officer of OBP Capital, LLC (2015 to 2018); Vice President and General Counsel of The Nottingham Company (2014 to 2018) |
24
MARSHFIELD CONCENTRATED OPPORTUNITY FUND |
Name and | Length | Position(s) | Principal Occupation(s) During Past 5 Years |
Executive Officers (Continued): | |||
Natalie S. Anderson Year of Birth: 1975 | Since 2016 | Assistant Secretary (April 2016 to present) | Legal Administration Manager (July 2016 to present) and Paralegal (January 2015 to June 2016) of Ultimus Fund Solutions, LLC; Senior Paralegal of Unirush, LLC (October 2011 to January 2015) |
Charles C. Black Year of Birth: 1979 | Since 2015 | Chief Compliance Officer (January 2016 to present)
Assistant Chief Compliance Officer (April 2015 to January 2016) | Senior Compliance Officer of Ultimus Fund Solutions, LLC (2015 to present); Chief Compliance Officer of The Caldwell & Orkin Funds, Inc. (2016 to present); Senior Compliance Manager for Touchstone Mutual Funds (2013 to 2015) |
Additional information about members of the Board and executive officers is available in the Fund’s Statement of Additional Information (“SAI”). To obtain a free copy of the SAI, please call 1-855-691-5288.
25
Item 2. | Code of Ethics. |
As of the end of the period covered by this report, the registrant has adopted a code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party. Pursuant to Item 12(a)(1), a copy of registrant’s code of ethics is filed as an exhibit to this Form N-CSR. During the period covered by this report, the code of ethics has not been amended, and the registrant has not granted any waivers, including implicit waivers, from the provisions of the code of ethics.
Item 3. | Audit Committee Financial Expert. |
The registrant’s board of trustees has determined that the registrant has at least one audit committee financial expert serving on its audit committee. The name of the audit committee financial expert is Janine L. Cohen. Ms. Cohen is “independent” for purposes of this Item.
Item 4. | Principal Accountant Fees and Services. |
(a) | Audit Fees. The aggregate fees billed for professional services rendered by the principal accountant for the audit of the registrant’s annual financial statements or for services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements were $52,500 and $91,500 with respect to the registrant’s fiscal years ended August 31, 2019 and August 31, 2018, respectively. |
(b) | Audit-Related Fees. No fees were billed in the first fiscal period for assurance and related services by the principal accountant that are reasonably related to the performance of the audit of the registrant’s financial statements and are not reported under paragraph (a) of this Item. |
(c) | Tax Fees. The aggregate fees billed for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning were $13,000 and $22,000 with respect to the registrant’s fiscal years ended August 31, 2019, and August 31, 2018, respectively. The services comprising these fees are the preparation of the registrant’s federal income and excise tax returns. |
(d) | All Other Fees. No fees were billed in the first fiscal period for products and services provided by the principal accountant, other than the services reported in paragraphs (a) through (c) of this Item. |
(e)(1) | The audit committee has not adopted pre-approval policies and procedures described in paragraph (c)(7) of Rule 2-01 of Regulation S-X. |
(e)(2) | None of the services described in paragraph (b) through (d) of this Item were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X. |
(f) | Less than 50% of hours expended on the principal accountant’s engagement to audit the registrant’s financial statements for the most recent fiscal year were attributed to work performed by persons other than the principal accountant’s full-time, permanent employees. |
(g) | During the fiscal years ended August 31, 2019 and August 31, 2018, aggregate non-audit fees of $13,000 and $22,000, respectively, were billed by the registrant’s accountant for services rendered to the registrant. No non-audit fees were billed in the last fiscal year by the registrant’s accountant for services rendered to the registrant’s investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant. |
(h) | The principal accountant has not provided any non-audit services to the registrant’s investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant. |
Item 5. | Audit Committee of Listed Registrants. |
Not applicable
Item 6. | Schedule of Investments. |
(a) | Not applicable [schedule filed with Item 1] |
(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. |
The registrant’s Committee of Independent Trustees shall review shareholder recommendations to fill vacancies on the registrant’s board of trustees if such recommendations are submitted in writing, addressed to the Committee at the registrant’s offices and meet any minimum qualifications adopted by the Committee. The Committee may adopt, by resolution, a policy regarding its procedures for considering candidates for the board of trustees, including any recommended by shareholders.
Item 11. | Controls and Procedures. |
(a) Based on their evaluation of the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) as of a date within 90 days of the filing date of this report, the registrant’s principal executive officer and principal financial officer have concluded that such disclosure controls and procedures are reasonably designed and are operating effectively to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to them by others within those entities, particularly during the period in which this report is being prepared, and that the information required in filings on Form N-CSR is recorded, processed, summarized, and reported on a timely basis.
(b) There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) that occurred during the second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.
Item 12. | Disclosure of Securities Lending Activities for Closed-End Management Investment Companies. |
Not applicable.
Item 13. | Exhibits. |
File the exhibits listed below as part of this Form. Letter or number the exhibits in the sequence indicated.
(a)(1) Any code of ethics, or amendment thereto, that is the subject of the disclosure required by Item 2, to the extent that the registrant intends to satisfy the Item 2 requirements through filing of an exhibit: Attached hereto
(a)(2) A separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the Act (17 CFR 270.30a-2(a)): Attached hereto
(a)(3) Any written solicitation to purchase securities under Rule 23c-1 under the Act (17 CFR 270.23c-1) sent or given during the period covered by the report by or on behalf of the registrant to 10 or more persons: Not applicable
(a)(4) Change in the registrant’s independent public accountants: Not applicable.
(b) Certifications required by Rule 30a-2(b) under the Act (17 CFR 270.30a-2(b)): Attached hereto
Exhibit 99.CODE ETH | Code of Ethics |
Exhibit 99.CERT | Certifications required by Rule 30a-2(a) under the Act |
Exhibit 99.906CERT | Certifications required by Rule 30a-2(b) under the Act |
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) | Ultimus Managers Trust | ||
By (Signature and Title)* | /s/ Matthew J. Beck | ||
Matthew J. Beck, Secretary | |||
Date | November 6, 2019 |
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/ David R. Carson | ||
David R. Carson, Principal Executive Officer | |||
Date | November 6, 2019 | ||
By (Signature and Title)* | /s/ Jennifer L. Leamer | ||
Jennifer L. Leamer, Treasurer and Principal Financial Officer | |||
Date | November 6, 2019 |
* | Print the name and title of each signing officer under his or her signature. |