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ALPS Series Trust

Filed: 6 Dec 19, 1:26pm

UNITED STATES 

SECURITIES AND EXCHANGE COMMISSION 

Washington, D.C. 20549

 

FORM N-CSR

 

CERTIFIED SHAREHOLDER REPORT OF REGISTERED 

MANAGEMENT INVESTMENT COMPANIES

 

Investment Company Act file number: 811-22747

 

ALPS SERIES TRUST 

(Exact name of registrant as specified in charter)

 

1290 Broadway, Suite 1000, Denver, Colorado 80203 

(Address of principal executive offices) (Zip code)

 

(303) 623-2577 

(Registrant’s telephone number, including area code)

 

Christopher A. Moore, Esq., Secretary 

ALPS Series Trust 

1290 Broadway, Suite 1000 

Denver, CO 80203 

(Name and address of agent for service)

 

Date of fiscal year end:September 30

 

Date of reporting period:October 1, 2018 – September 30, 2019

 

 

 

Item 1.Reports to Stockholders.

 

 

 

Table of Contents

 

 

Shareholder Letter1
Portfolio Update3
Disclosure of Fund Expenses5
Portfolio of Investments6
Statement of Assets and Liabilities12
Statement of Operations13
Statements of Changes in Net Assets14
Financial Highlights15
Notes to Financial Statements17
Report of Independent Registered Public Accounting Firm24
Disclosure Regarding Renewal and Approval of Fund Advisory Agreement25
Additional Information27
Privacy Policy28
Trustees & Officers30

 

Beginning on January 1, 2021, as permitted by regulations adopted by the U.S. Securities and Exchange Commission, paper copies of the Fund’s annual and semi-annual shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports. Instead, the reports will be made available on the Fund’s website at www.carret.com, and you will be notified by mail each time a report is posted and provided with a website link to access the report.

 

You may, notwithstanding the availability of shareholder reports online, elect to receive all future shareholder reports in paper free of charge. If you invest through a financial intermediary, you can contact your financial intermediary to request that you continue to receive paper copies of your shareholder reports. If you invest directly with a Fund, you can call 1-833-287-7933 to let the Fund know you wish to continue receiving paper copies of your shareholder reports.

 

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 a Fund electronically anytime by contacting your financial intermediary (such as a broker-dealer or bank).

 

 

 

American Independence Kansas
Tax-Exempt Bond Fund
Shareholder Letter
 

September 30, 2019 (Unaudited)

 

Throughout 2019, interest rates have fallen and global economic growth has slowed, a result of weakening conditions in Europe and Asia, on-going trade and Brexit negotiations, and added trade tariffs. Given the fragile state of global economies, the Federal Reserve (“FED”) has been forced to implement a handful of interest rate cuts. It’s been our view that the FED’s goal has been to revert to a more neutral stance (inflation sub-2%) by lowering the Fed Funds rate. While we see no recession on the horizon, we remain acutely aware of the fact that with $16T+ of global yields trading at negative interest rates, the demand for higher-yielding U.S. debt should remain robust.

 

Bond investors have had a good year as interest rates have continued to decline, and most sectors of the bond market have experienced tightening credit spreads. While the good times continue to roll, we remain aware that the risk/reward metrics do not necessarily favor risk-taking. Global yields are low, spreads are tight, and inflation – while frustratingly low - can emerge unexpectedly. Additionally, with the 2020 elections getting closer, this will likely bring increased market volatility. We believe that with yields at low levels and the curve essentially flat, investors should focus on quality and controlling risk.

 

Municipal bond investors continued to benefit from favorable market conditions. The positive return metrics and market fundamentals have been driven primarily by hefty demand and sound credit conditions. Through the first nine months of the year, new issue supply averaged $25B+ per month which was just below the pace of calendar year 2018. Demand, as mentioned above, continued to be quite strong. During the first half of the year, $50B+ flowed into municipal bond mutual funds and exchange traded funds (“ETFs”).

 

The demand story goes far beyond the impact of high state-and-local-tax states (SALT states). We believe municipal investors across the country continue to find good value in the perceived safety of municipal securities, combined with attractive relative yields and cash flows. For many investors, the tax reform act of 2017 did not dramatically reduce marginal tax rates. Instead, the new tax rates, along with compelling relative yields, reignited the attractiveness of municipal bonds.

 

From a credit perspective, conditions generally improved in 2019, with upgrades exceeding downgrades. Further, Moody’s issued a report in May stating that all but two states (IL and NJ) are prepared to weather a moderate recession without significantly affecting their credit quality. This is due largely to healthy reserves and strong financial flexibility. Moody’s also noted that the states with the highest revenue volatility have appropriately stockpiled reserves.

 

Municipal bond yields remain relatively attractive within our preferred segment of the yield curve. We continue to see forward-looking value for tax free investors, especially those in mid-to-high tier tax brackets. During Fiscal Year 2019, 7-year AAA rated municipal bonds ranged from a high of 2.56% (11/6/18) to a low of 1.06% (8/15/19). The 7-year AAA Rated base municipal bond closed the year at a 1.32%. Crossover buyers continue to realize attractive Taxable Equivalent Yields (TEYs) on a relative basis, compared with U.S. Treasury Bonds and Investment Grade Corporate Bonds.

 

2019 was a very positive year for Kansas, as the state bounced back from a budget deficit to a budget surplus, mostly due to reversing tax cuts implemented by the previous Governor. Tax revenue jumped dramatically, as did personal income. The state’s tax collections exceeded expectations in 23 of the 24 months once the tax cuts were reversed. In fact, tax collections were $150M+ ahead of expectations through 2Q19. Cash reserves approached $1B through that period as well. In mid-July, CNBC called Kansas the “comeback state” in its “America’s Top States for Business” rankings*.

 

Manufacturing has seen steady growth this year, with the aerospace and aviation industries leading the way. That has led to many new ancillary businesses coming to the state. However, one stat to keep an eye on going forward is the disparity in economic and population growth at the county level: the state continues to see the top ten largest counties show the most positive overall gains in 2019.

 

Kansas municipal bonds remain a solid value in the overall municipal marketplace, as the rating agencies (S&P and Moody’s) both rate the state and many of its local issuers at a high level. With overall unemployment at 3.2% at the state level, we believe Kansas municipal bonds will continue to be in demand.

 

The Kansas Tax Exempt Bond Fund focuses on preservation of capital while producing cash flows that are fully exempt from federal taxes and Kansas state tax. The Fund continues to seek premium coupon general obligation (GO) and essential service revenue bonds in the investment grade category. Representative bond issues in the Fund include Kansas Department of Transportation Revenue, City of Wichita GO, Topeka Utility Revenue, Kansas Department of Finance Authority Revenue, and Wichita Water & Sewer Revenue. The Fund’s largest sector allocations are to School Districts (33%), General Obligations (14%), General Revenue (11%), Transportation (10%), and Utilities (10%).

 

The Fund’s modified duration is 4.41 years, which is in-line with last year’s duration of 4.35 years. We may look to alter the Fund’s duration over the next several quarters should value-added opportunities arise. The Fund holds 190 different bond issues, and over 65% of those are rated AA or better. The Institutional Share Class (I shares) returned +6.77% over the 12-month period ending September 30, 2019. Over this same time period, the Barclays 7 Year US Municipal Bond Index returned +7.85%. The Fund is Kansas-specific in nature while the Index is non-state specific (general Market). Given several factors, including the flatness of the yield curve, the Fund is presently taking on a lesser degree of interest rate risk as measured by duration. Over a 3-year time horizon, the I shares returned an average of +2.38% (annualized), compared to the Barclays Index at 2.66% (annualized).

 

 
Annual Report | September 30, 20191

 

 

 

American Independence Kansas
Tax-Exempt Bond Fund
Shareholder Letter
 

September 30, 2019 (Unaudited)

 

The Fund did not employ any derivative investments during the fiscal year ending September 30, 2019.

 

Carret Asset Management, LLC

 

*CNBC.com staff. (2019, July 10). America’s Top States for Business in 2019. CNBC.com. Retrieved from https://www.cnbc.com/2019/07/09/top-states-for-business-kansas.html

 

 

2

 

 

 

American Independence Kansas
Tax-Exempt Bond Fund
Portfolio Update
 

September 30, 2019 (Unaudited)

 

Average Annual Total Returns(as of September 30, 2019)

 

 1 Year5 Year10 YearSince Inception*
American Independence Kansas Tax-Exempt Bond Fund - Institutional Class6.77%2.75%3.29%4.58%
American Independence Kansas Tax-Exempt Bond Fund – Class A (NAV)6.50%2.39%2.92%4.24%
American Independence Kansas Tax-Exempt Bond Fund – Class A (MOP)1.98%1.51%2.47%4.09%
Bloomberg Barclays US Municipal Bond: 7 Year (6-8) Index(a)7.85%3.08%3.76%2.62%

 

The performance data quoted above represents past performance. Past performance is not a guarantee of future results. Investment return and value of the Fund shares will fluctuate so that an investor’s shares, when sold or redeemed, may be worth more or less than their original cost. Performance may be lower or higher than performance data quoted. Fund performance current to the most recent month-end is available by calling (833) 287-7933.

 

*The Fund commenced operations on May 22, 2007. The Predecessor Fund, American Independence Kansas Tax-Exempt Bond Fund, managed by Manifold Fund Advisors, LLC, was reorganized into the American Independence Kansas Tax-Exempt Bond Fund on September 24, 2018. Manifold Partners, LLC had been the Fund’s investment adviser from September 24, 2018, through September 13, 2019, with Carret Asset Management, LLC serving as sub-adviser. Effective September 13, 2019, Manifold Partners, LLC ceased providing investment advisory services to the Fund and Carret Asset Management, LLC, became the Fund's investment adviser. Fund performance prior to September 24, 2018, is reflective of the past performance of the Predecessor Fund. The Institutional Class of the Predecessor Fund commenced operations on December 10, 1990. Class A of the Predecessor Fund commenced operations on August 6, 2002.
(a)The Bloomberg Barclays 7-Year Municipal Bond Index is a total return performance benchmark for the investment-grade, geographically unrestricted 7-year tax-exempt bond market, consisting of municipal bonds with maturities of 6 to 8 years.

 

Indices are not actively managed and do not reflect deduction for fees, expenses or taxes. An investor cannot invest directly in an index.

 

The returns shown above do not reflect the deduction of taxes a shareholder would pay on Fund distributions or redemption of Fund shares.

 

Maximum Offering Price (MOP) for Class A shares includes the Fund’s maximum sales charge of 4.25%. Performance shown at NAV does not include these sales charges and would have been lower had it been taken into account.

 

The total annual operating expenses and total annual operating expenses after fee waivers and/or reimbursement you may pay as an investor in the Fund’s Institutional Class and Class A shares (as reported in the January 28, 2019 Prospectus) are 0.57% and 0.48% and 0.82% and 0.73%, respectively. The Fund’s investment adviser has contractually agreed to limit expenses through January 31, 2021.

 

 
Annual Report | September 30, 20193

 

 

 

American Independence Kansas
Tax-Exempt Bond Fund
Portfolio Update
 

September 30, 2019 (Unaudited)

 

Performance of $3,000,000 Initial Investment(as of September 30, 2019)

 

 

The graph shown above represents historical performance of a hypothetical investment of $3,000,000 in the Institutional Class. Due to differing expenses, performance of Class A will vary. Past performance does not guarantee future results. Returns do not reflect the deduction of fees, sales charges, or taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

 

Portfolio Diversification(% of Net Assets as of September 30, 2019)

 

 

 

4

 

 

 

American Independence Kansas
Tax-Exempt Bond Fund
Disclosure of Fund Expenses
 

September 30, 2019 (Unaudited)

 

Examples.As a shareholder of the American Independence Kansas Tax-Exempt Bond Fund, you incur two types of costs: (1) transaction costs, including applicable redemption fees; and (2) ongoing costs, including management fees, distribution and service (12b-1) fees and other Fund 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. The examples are based on an investment of $1,000 invested on April 1, 2019 and held through September 30, 2019.

 

Actual Expenses.The first line under each class in the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading “Expenses Paid During Period April 1, 2019 – September 30, 2019” to estimate the expenses you paid on your account during this period.

 

Hypothetical Example for Comparison Purposes.The second line under each class in the table below provides information about hypothetical account values and hypothetical expenses based on each Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not each Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in each Fund and other mutual funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

 

Please note that the expenses shown in the table are meant to highlight your ongoing Fund costs only and do not reflect any transactional costs, such as redemption fees. Therefore, the second line under each class in the table below is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

 

 Beginning Account Value April 1, 2019Ending Account Value September 30, 2019

Expense

Ratio(a)

Expenses Paid During Period April 1, 2019 -September 30, 2019(b)
American Independence Kansas Tax-Exempt Bond Fund    
Institutional Class    
Actual$1,000.00$1,031.200.48%$2.44
Hypothetical (5% return before expenses)$1,000.00$1,022.660.48%$2.43
Class A    
Actual$1,000.00$1,029.000.73%$3.71
Hypothetical (5% return before expenses)$1,000.00$1,021.410.73%$3.70

 

(a)Each Fund's expense ratios have been annualized based on the Fund's actual expenses for the 6 month period ending September 30, 2019.
(b)Expenses are equal to the annualized expense ratio shown above for the applicable class, multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half year (183), divided by 365.

 

 
Annual Report | September 30, 20195

 

 

 

American Independence Kansas Tax-Exempt Bond FundPortfolio of Investments
 

September 30, 2019

 

  Principal Amount  Value
(Note 2)
 
MUNICIPAL BONDS (97.65%)        
Education (37.08%)(a)        
Barton Community College, Certificate Participation Bonds        
4.000%, 12/01/2032 $555,000  $621,983 
4.000%, 12/01/2034  250,000   277,065 
Bourbon County Unified School District No. 234-Fort Scott, General Obligation Unlimited Bonds        
5.000%, 09/01/2025  355,000   410,841 
Butler County Unified School District No. 206 Remington, General Obligation Unlimited Bonds        
3.000%, 09/01/2034  1,000,000   1,033,050 
3.000%, 09/01/2035  510,000   525,483 
Butler County Unified School District No. 385 Andover, General Obligation Unlimited Bonds        
4.000%, 09/01/2030  690,000   799,151 
4.000%, 09/01/2031  500,000   575,985 
5.000%, 09/01/2032  2,750,000   3,390,392 
5.000%, 09/01/2034  2,000,000   2,454,020 
Butler County Unified School District No. 490 El Dorado, General Obligation Unlimited Bonds        
4.000%, 09/01/2034  1,000,000   1,122,550 
4.000%, 09/01/2036  500,000   557,415 
Dodge City Community College, Revenue Bonds        
5.125%, 04/01/2030  250,000   254,700 
Douglas County Unified School District No. 497 Lawrence, General Obligation Unlimited Bonds        
4.000%, 09/01/2031  1,500,000   1,738,695 
4.000%, 09/01/2033  500,000   548,645 
Finney County Unified School District No. 457 Garden City, General Obligation Unlimited Bonds        
4.000%, 09/01/2031  1,500,000   1,685,165 
5.000%, 09/01/2027  800,000   970,424 
Ford County Unified School District No. 443 Dodge City, General Obligation Unlimited Bonds        
4.000%, 03/01/2034  1,000,000   1,126,450 
Franklin County Unified School District No. 290 Ottawa, General Obligation Unlimited Bonds        
4.000%, 09/01/2040  250,000   271,135 
5.000%, 09/01/2031  1,715,000   2,023,580 
5.000%, 09/01/2032  150,000   176,847 
5.000%, 09/01/2033  1,000,000   1,179,010 
Geary County Unified School District No. 475, General Obligation Unlimited Bonds        
4.000%, 09/01/2038  2,000,000   2,199,260 
4.000%, 09/01/2043  1,000,000   1,091,690 
Hutchinson Community College & Area Vocational School, Certificate Participation Bonds        
4.000%, 10/01/2037  1,700,000   1,757,256 
Johnson & Miami Counties Unified School District No. 230 Spring Hills, General Obligation Unlimited Bonds        
4.000%, 09/01/2031  400,000   462,696 
4.000%, 09/01/2033  1,000,000   1,121,960 
4.000%, 09/01/2035  1,000,000   1,116,530 
5.000%, 09/01/2030  1,970,000   2,393,432 
5.250%, 09/01/2029  1,500,000   1,611,630 
Johnson County Unified School District No. 232 De Soto, General Obligation Unlimited Bonds        
4.000%, 09/01/2031  1,165,000   1,368,828 
4.000%, 09/01/2032  1,745,000   2,041,650 
Johnson County Unified School District No. 233 Olathe, General Obligation Unlimited Bonds        
4.000%, 09/01/2031  1,000,000   1,136,780 
4.000%, 09/01/2033  905,000   1,004,548 
4.000%, 09/01/2035  790,000   874,198 
4.000%, 09/01/2036  480,000   530,175 
Johnson County Unified School District No. 512 Shawnee Mission, General Obligation Unlimited Bonds        
5.000%, 10/01/2032  1,000,000   1,203,220 
Kansas Development Finance Authority, Revenue Bonds        
3.000%, 05/01/2030  450,000   469,773 
4.000%, 05/01/2034  1,000,000   1,055,920 

 

See Notes to Financial Statements.

 

6

 

 

 

American Independence Kansas Tax-Exempt Bond FundPortfolio of Investments
 

September 30, 2019

 

  Principal Amount  Value
(Note 2)
 
Education (continued)        
Leavenworth County Unified School District No. 453, General Obligation Unlimited Bonds        
4.000%, 09/01/2036 $1,000,000  $1,116,870 
Leavenworth County Unified School District No. 458, General Obligation Unlimited Bonds        
5.000%, 09/01/2038  1,000,000   1,210,890 
Leavenworth County Unified School District No. 464, General Obligation Unlimited Bonds        
4.000%, 09/01/2034  675,000   750,310 
Leavenworth County Unified School District No. 469, General Obligation Unlimited Bonds        
4.000%, 09/01/2026  750,000   862,920 
4.000%, 09/01/2030  900,000   965,511 
Montgomery County Unified School District No. 446 Independence, General Obligation Unlimited Bonds        
5.000%, 09/01/2030  1,715,000   2,088,613 
Riley County Unified School District No. 383 Manhattan-Ogden, General Obligation Unlimited Bonds        
5.000%, 09/01/2028  1,220,000   1,494,927 
Saline County Unified School District No. 305 Salina, General Obligation Unlimited Bonds        
4.000%, 09/01/2034  440,000   506,994 
Scott County Unified School District No. 466 Scott City, General Obligation Unlimited Bonds        
4.000%, 09/01/2037  1,000,000   1,089,940 
Sedgwick County Unified School District No. 259 Wichita, General Obligation Unlimited Bonds        
3.000%, 10/01/2021  500,000   517,105 
Sedgwick County Unified School District No. 260 Derby, General Obligation Unlimited Bonds        
3.500%, 10/01/2036  845,000   912,279 
5.000%, 10/01/2029  340,000   377,604 
Sedgwick County Unified School District No. 261 Haysville, General Obligation Unlimited Bonds        
2.500%, 11/01/2030  500,000   501,790 
5.000%, 11/01/2019  20,000   20,066 
5.000%, 11/01/2023  5,000   5,015 
Sedgwick County Unified School District No. 262 Valley Center, General Obligation Unlimited Bonds        
4.000%, 09/01/2030  500,000   547,740 
5.000%, 09/01/2033  750,000   866,737 
Sedgwick County Unified School District No. 264 Clearwater, General Obligation Unlimited Bonds        
4.000%, 09/01/2029  530,000   600,320 
Sedgwick County Unified School District No. 265 Goddard, General Obligation Unlimited Bonds        
5.000%, 10/01/2024  370,000   434,014 
Sedgwick County Unified School District No. 266 Maize, General Obligation Unlimited Bonds        
5.000%, 09/01/2021  500,000   535,245 
Sedgwick County Unified School District No. 267 Renwick, General Obligation Unlimited Bonds        
4.000%, 11/01/2033  350,000   400,257 
4.000%, 11/01/2034  425,000   484,258 
4.000%, 11/01/2035  635,000   721,131 
Sedgwick County Unified School District No. 268 Cheney, General Obligation Unlimited Bonds        
3.000%, 09/01/2029  615,000   643,714 
Seward County Unified School District No. 480 Liberal, General Obligation Unlimited Bonds        
4.000%, 09/01/2028  1,000,000   1,161,590 
4.000%, 09/01/2032  500,000   570,645 
5.000%, 09/01/2029  2,390,000   2,840,826 
Shawne County Unified School District No. 437 Auburn - Washburn, General Obligation Unlimited Bonds        
3.950%, 09/01/2028  825,000   845,023 
Sumner County Unified School District No. 353 Wellington, General Obligation Unlimited Bonds        
5.000%, 09/01/2026  230,000   259,330 
Washburn University/Topeka, Revenue Bonds        
4.000%, 07/01/2041  330,000   355,770 
5.000%, 07/01/2035  500,000   583,730 
Wyandotte County Unified School District No. 500 Kansas City, General Obligation Unlimited Bonds        
5.000%, 09/01/2030  500,000   610,755 
Total Education      68,064,051 

 

See Notes to Financial Statements.

 
Annual Report | September 30, 20197

 

 

 

American Independence Kansas Tax-Exempt Bond FundPortfolio of Investments
 

September 30, 2019

 

  Principal Amount  Value
(Note 2)
 
General Obligation (26.58%)(a)        
Ashland Public Building Commission, Revenue Bonds        
4.000%, 09/01/2020 $110,000  $111,740 
5.000%, 09/01/2035  720,000   779,004 
City of Abilene, General Obligation Unlimited Bonds        
4.300%, 09/01/2027  150,000   154,045 
4.600%, 09/01/2030  500,000   514,845 
City of Abilene, Revenue Bonds        
4.000%, 12/01/2029  325,000   372,807 
4.000%, 12/01/2031  445,000   506,228 
City of Dodge City, Revenue Bonds        
4.000%, 06/01/2024  230,000   254,932 
City of Haysville, Certificate Participation Bonds        
4.125%, 11/01/2032  460,000   479,969 
City of Junction City, General Obligation Unlimited Bonds        
4.500%, 09/01/2031  1,000,000   1,026,190 
City of Lawrence, General Obligation Unlimited Bonds        
4.000%, 09/01/2030  470,000   542,798 
4.000%, 09/01/2031  445,000   509,908 
City of Manhattan, General Obligation Unlimited Bonds        
4.000%, 11/01/2031  400,000   477,164 
5.000%, 11/01/2025  570,000   688,600 
5.000%, 11/01/2029  800,000   1,047,104 
City of Merriam, General Obligation Unlimited Bonds        
5.000%, 10/01/2027  1,670,000   2,130,252 
City of Newton, General Obligation Unlimited Bonds        
4.000%, 09/01/2023  250,000   273,450 
City of Olathe, General Obligation Unlimited Bonds        
4.000%, 10/01/2028  1,315,000   1,531,409 
5.000%, 10/01/2024  535,000   611,794 
City of Park City, General Obligation Unlimited Bonds        
5.375%, 12/01/2025  5,000   5,020 
City of Phillipsburg, Revenue Bonds        
4.500%, 10/01/2028  545,000   558,712 
City of Salina, General Obligation Unlimited Bonds        
3.000%, 10/01/2033  620,000   649,208 
3.000%, 10/01/2036  680,000   704,664 
City of Shawnee, General Obligation Unlimited Bonds        
4.000%, 12/01/2027  425,000   478,333 
City of Spring Hill, General Obligation Unlimited Bonds        
4.000%, 09/01/2029  810,000   939,592 
City of Topeka, General Obligation Unlimited Bonds        
2.000%, 08/15/2026  1,000,000   1,005,620 
City of Wichita, General Obligation Unlimited Bonds        
3.000%, 10/01/2030  720,000   781,416 
4.000%, 06/01/2026  475,000   488,314 
4.000%, 06/01/2027  780,000   801,754 
4.000%, 12/01/2029  250,000   260,963 
4.000%, 06/01/2030  820,000   958,400 
5.000%, 12/01/2025  500,000   609,630 
County of Clay, General Obligation Unlimited Bonds        
4.000%, 10/01/2036  750,000   816,405 
County of Geary, General Obligation Unlimited Bonds        
4.000%, 09/01/2030  415,000   467,128 
County of Johnson, General Obligation Unlimited Bonds        
3.000%, 09/01/2030  400,000   411,464 
4.000%, 09/01/2028  1,125,000   1,282,905 

 

See Notes to Financial Statements.

 

8

 

 

 

American Independence Kansas Tax-Exempt Bond FundPortfolio of Investments
 

September 30, 2019

 

  Principal Amount  Value
(Note 2)
 
General Obligation (continued)        
County of Linn, General Obligation Unlimited Bonds        
4.000%, 07/01/2032 $505,000  $589,709 
County of Scott, General Obligation Unlimited Bonds        
5.000%, 04/01/2028  500,000   509,215 
Johnson County Public Building Commission, Revenue Bonds        
4.000%, 09/01/2029  650,000   750,334 
4.000%, 09/01/2030  500,000   574,270 
4.000%, 09/01/2031  1,500,000   1,711,440 
4.500%, 09/01/2027  955,000   1,012,969 
Kansas Development Finance Authority, Revenue Bonds        
4.000%, 10/01/2020  250,000   256,440 
4.000%, 11/01/2031  1,100,000   1,275,021 
5.000%, 04/01/2025  800,000   894,856 
5.000%, 04/01/2026  1,485,000   1,657,839 
5.000%, 11/01/2029  2,060,000   2,066,139 
5.000%, 04/01/2031  1,000,000   1,114,590 
5.000%, 04/01/2034  2,000,000   2,221,060 
5.250%, 11/15/2021  1,300,000   1,306,130 
5.500%, 11/15/2022  1,000,000   1,005,005 
Overland Park Transportation Development District, Revenue Bonds        
5.900%, 04/01/2032  900,000   913,554 
Unified Government of Greeley County, General Obligation Unlimited Bonds        
4.000%, 12/01/2029  250,000   280,167 
4.000%, 12/01/2032  100,000   111,085 
Wyandotte County-Kansas City Unified Government, General Obligation Unlimited Bonds        
3.000%, 03/01/2020  720,000   724,881 
4.000%, 08/01/2029  685,000   800,279 
4.000%, 08/01/2030  1,560,000   1,740,231 
4.000%, 08/01/2031  930,000   992,952 
5.000%, 08/01/2025  815,000   975,547 
5.000%, 08/01/2029  1,000,000   1,030,960 
Wyandotte County-Kansas City Unified Government, Revenue Bonds        
4.875%, 10/01/2028  380,000   380,080 
5.000%, 12/01/2023  570,000   648,631 
Total General Obligation      48,775,151 
         
Health Care (7.25%)        
City of Manhattan, Revenue Bonds        
5.000%, 11/15/2029  680,000   741,982 
City of Olathe, Revenue Bonds        
4.000%, 09/01/2030  450,000   470,378 
City of Wichita, Revenue Bonds        
4.750%, 11/15/2024  810,000   813,289 
5.000%, 11/15/2029  1,570,000   1,688,629 
County of Franklin, Certificate Participation Bonds        
4.750%, 09/01/2021  405,000   405,632 
Kansas Development Finance Authority, Revenue Bonds        
4.000%, 04/01/2024  230,000   233,059 
4.500%, 04/01/2022  225,000   228,445 
5.000%, 02/01/2022  555,000   561,499 
5.000%, 11/15/2027  1,000,000   1,004,420 
5.000%, 04/01/2029  650,000   661,654 
5.000%, 11/15/2032  1,500,000   1,622,265 
5.000%, 11/15/2034  350,000   378,063 
5.250%, 01/01/2025  200,000   201,954 
5.250%, 11/15/2030  250,000   251,180 
5.375%, 03/01/2030  1,000,000   1,015,160 

 

See Notes to Financial Statements.

 
Annual Report | September 30, 20199

 

 

 

American Independence Kansas Tax-Exempt Bond FundPortfolio of Investments
 

September 30, 2019

 

  Principal Amount  Value
(Note 2)
 
Health Care (continued)        
Lyon County Public Building Commission, Revenue Bonds        
5.000%, 12/01/2035 $1,335,000  $1,578,144 
Pawnee County Public Building Commission, Revenue Bonds        
4.000%, 02/15/2031  145,000   150,481 
University of Kansas Hospital Authority, Revenue Bonds        
5.000%, 09/01/2028  250,000   297,313 
5.000%, 09/01/2030  350,000   413,367 
5.000%, 09/01/2031  500,000   588,735 
Total Health Care      13,305,649 
         
Housing (1.86%)        
La Cygne Public Building Commission, Revenue Bonds        
5.000%, 11/01/2029  375,000   375,994 
Pratt County Public Building Commission, Revenue Bonds        
3.250%, 12/01/2032  655,000   655,557 
Topeka Public Building Commission, Revenue Bonds        
5.000%, 06/01/2027  2,355,000   2,385,473 
Total Housing      3,417,024 
         
Public Services (0.99%)        
Johnson County Park & Recreation District, Certificate Participation Bonds        
3.000%, 09/01/2028  1,165,000   1,255,183 
3.000%, 09/01/2029  535,000   571,144 
Total Public Services      1,826,327 
         
Transportation (9.31%)        
Kansas Turnpike Authority, Revenue Bonds        
4.000%, 09/01/2026  1,000,000   1,023,300 
5.000%, 09/01/2031  630,000   826,264 
5.000%, 09/01/2032  500,000   652,805 
5.000%, 09/01/2038  900,000   1,151,559 
State of Kansas Department of Transportation, Revenue Bonds        
5.000%, 09/01/2023  200,000   228,460 
5.000%, 09/01/2028  1,500,000   1,896,765 
5.000%, 09/01/2029  1,000,000   1,199,230 
5.000%, 09/01/2031  3,020,000   3,782,731 
5.000%, 09/01/2032  500,000   623,945 
5.000%, 09/01/2033  1,445,000   1,724,246 
5.000%, 09/01/2034  3,260,000   3,981,598 
Total Transportation      17,090,903 
         
Utilities (14.58%)        
City of Lawrence Water & Sewage System, Revenue Bonds        
4.000%, 11/01/2038  1,000,000   1,101,950 
City of Olathe Water & Sewer System, Revenue Bonds        
3.000%, 07/01/2030  675,000   729,668 
3.000%, 07/01/2031  555,000   594,594 
3.000%, 07/01/2032  745,000   792,762 
3.000%, 07/01/2033  755,000   796,631 
4.000%, 07/01/2024  250,000   277,795 
City of Topeka Combined Utility, Revenue Bonds        
3.375%, 08/01/2032  1,335,000   1,347,122 
3.500%, 08/01/2033  2,285,000   2,306,365 
4.000%, 08/01/2026  2,600,000   2,731,768 
City of Wichita Water & Sewer Utility, Revenue Bonds        
3.000%, 10/01/2029  1,180,000   1,269,940 

 

See Notes to Financial Statements.

 

10

 

 

 

American Independence Kansas Tax-Exempt Bond FundPortfolio of Investments
 

September 30, 2019

 

  Principal Amount  

Value

(Note 2)

 
Utilities (continued)        
3.250%, 10/01/2031 $1,070,000  $1,082,027 
3.375%, 10/01/2039  1,000,000   1,050,670 
4.000%, 10/01/2029  1,000,000   1,026,970 
4.000%, 10/01/2030  1,000,000   1,026,970 
5.000%, 10/01/2025  1,000,000   1,070,090 
5.000%, 10/01/2028  2,650,000   2,832,505 
Kansas Power Pool, Revenue Bonds        
5.000%, 12/01/2019  600,000   603,420 
5.000%, 12/01/2023  200,000   219,110 
5.000%, 12/01/2028  700,000   829,164 
Kansas Rural Water Finance Authority, Revenue Bonds        
4.100%, 09/01/2034  270,000   275,516 
Wyandotte County-Kansas City Unified Government Utility System, Revenue Bonds        
4.250%, 09/01/2023  500,000   505,640 
5.000%, 09/01/2027  1,300,000   1,384,513 
5.000%, 09/01/2031  1,350,000   1,598,515 
5.000%, 09/01/2032  1,090,000   1,193,572 
5.000%, 09/01/2033  100,000   116,983 
Total Utilities      26,764,260 
         
TOTAL MUNICIPAL BONDS         
(Cost $172,874,724)      179,243,365 

 

  7-Day Yield  Shares  Value (Note 2) 
SHORT TERM INVESTMENTS (1.99%)            
Money Market Fund            
Federated Treasury Obligations Fund, Institutional Shares  1.824%  3,653,903  $3,653,903 
             
TOTAL SHORT TERM INVESTMENTS            
(Cost $3,653,903)          3,653,903 
             
TOTAL INVESTMENTS (99.64%)            
(Cost $176,528,627)         $182,897,268 
             
OTHER ASSETS IN EXCESS OF LIABILITIES (0.36%)          656,870 
             
NET ASSETS (100.00%)         $183,554,138 

 

(a)To the extent the Fund invests more heavily in particular sectors of the economy, its performance will be especially sensitive to developments that significantly affect those sectors. When sector categorization is broken down by industry, no industry exceeds the 25% maximum specified in the Statement of Additional Information.

 

See Notes to Financial Statements.

 
Annual Report | September 30, 201911

 

 

 

American Independence Kansas
Tax-Exempt Bond Fund
Statement of Assets and Liabilities
 

September 30, 2019

 

ASSETS:   
Investments, at value (Cost $176,528,627) $182,897,268 
Receivable for shares sold  159,652 
Dividends and interest receivable  1,684,582 
Other assets  24,010 
Total Assets  184,765,512 
     
LIABILITIES:    
Distributions payable  355,168 
Payable for administration and transfer agency fees  39,053 
Payable for investments purchased  749,648 
Payable for shares redeemed  1,465 
Payable to adviser  29,431 
Payable for distribution and service fees  852 
Payable for printing  3,678 
Payable for professional fees  18,680 
Payable for trustees' fees and expenses  667 
Payable to Chief Compliance Officer fees  4,596 
Accrued expenses and other liabilities  8,136 
Total Liabilities  1,211,374 
NET ASSETS $183,554,138 
     
NET ASSETS CONSIST OF:    
Paid-in capital (Note 5) $176,733,284 
Total distributable earnings  6,820,854 
NET ASSETS $183,554,138 
     
PRICING OF SHARES    
Institutional Class:    
Net Asset Value, offering and redemption price per share $10.97 
Net Assets $179,408,836 
Shares of beneficial interest outstanding  16,359,096 
Class A :    
Net Asset Value, offering and redemption price per share $10.97 
Net Assets $4,145,302 
Shares of beneficial interest outstanding  377,932 
Maximum offering price per share(a) $11.46 

 

(a)Net Asset Value/100% minus maximum sales charge of net asset value, 4.25% for the Fund, adjusted to the nearest cent.

 

See Notes to Financial Statements.

 

12

 

 

 

American Independence Kansas
Tax-Exempt Bond Fund
Statement of Operations
 

For the Year Ended September 30, 2019

 

INVESTMENT INCOME:   
Dividends $92,754 
Interest  4,714,042 
Total Investment Income  4,806,796 
EXPENSES:    
Investment advisory fees (Note 6)  464,762 
Administration fees  219,221 
Distribution fees    
Class A  10,375 
Custody fees  7,900 
Legal fees  5,978 
Audit and tax fees  12,384 
Transfer agent fees  37,462 
Trustees fees and expenses  14,746 
Registration and filing fees  36,102 
Printing fees  3,165 
Chief Compliance Officer fees  45,999 
Insurance fees  4,364 
Other expenses  6,814 
Total Expenses  869,272 
Less fees waived/reimbursed by investment adviser (Note 6)    
Institutional Class  (108,274)
Class A  (6,089)
Total fees waived/reimbursed by investment adviser  (114,363)
Net Expenses  754,909 
NET INVESTMENT INCOME  4,051,887 
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS:    
Net realized gain/(loss) on:    
Investments  509,100 
Net realized gain  509,100 
Change in unrealized appreciation/(depreciation) on:    
Investments  5,558,630 
Net change  5,558,630 
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS  6,067,730 
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $10,119,617 

 

See Notes to Financial Statements.

 
Annual Report | September 30, 201913

 

 

 

American Independence Kansas
Tax-Exempt Bond Fund
Statements of Changes in Net Assets
 

 

  For the Year Ended September 30, 2019  For the Period Ended September 30, 2018(a)  For the Year Ended October 31, 2017 
OPERATIONS:         
Net investment income $4,051,887  $3,968,031  $5,370,631 
Net realized gain/(loss) on investments  509,100   1,077,483   (244,507)
Net change in unrealized appreciation/(depreciation) on investments  5,558,630   (5,413,242)  (3,649,118)
Net increase/(decrease) in net assets resulting from operations  10,119,617   (367,728)  1,477,006 
DISTRIBUTIONS TO SHAREHOLDERS(b)            
Institutional Class  (4,455,855)  (3,771,175)  (5,057,517)
Class A(c)  (115,546)  (180,929)  (294,193)
Class C(c)     (8,545)  (18,921)
Total distributions  (4,571,401)  (3,960,649)  (5,370,631)
             
BENEFICIAL SHARE TRANSACTIONS (Note 5):            
Institutional Class            
Shares sold  61,548,180   28,106,930   28,351,865 
Dividends reinvested  556,903   384,039   453,721 
Shares redeemed  (21,338,286)  (58,543,555)  (48,557,589)
Net increase/(decrease) from beneficial share transactions  40,766,797   (30,052,586)  (19,752,003)
Class A(c)            
Shares sold  19,887   651,534   381,419 
Dividends reinvested  90,632   113,411   164,729 
Shares redeemed  (854,924)  (7,251,264)  (374,573)
Net increase/(decrease) from beneficial share transactions  (744,405)  (6,486,319)  171,575 
Class C(c)            
Shares sold     27,246   1,536 
Dividends reinvested     4,246   8,118 
Shares redeemed     (710,429)  (459,797)
Net decrease from beneficial share transactions     (678,937)  (450,143)
Net increase/(decrease) in net assets  45,570,608   (41,546,219)  (23,924,196)
             
NET ASSETS:            
Beginning of year  137,983,530   179,529,749   203,453,945 
End of year $183,554,138  $137,983,530  $179,529,749 

 

(a)Effective September 24, 2018, the American Independence Kansas Tax-Exempt Bond Fund merged with and into a clone series of ALPS Series Trust. In connection with the merger, the fiscal year-end changed from October 31 to September 30.
(b)For the prior year ended October 31, 2017, American Independence Kansas Tax-Exempt Bond Fund had Total Distributions consisting of Net Investment Income of $5,370,631, and Net Realized Gains of $0 and Net Assets included accumulated net investment income of $72,211.
(c)Class C shares were merged into Class A on September 24, 2018. The amounts presented represent the results of the Class A shares for the periods prior to the merger and the results of the combined share class for the period subsequent the merger. As a result of the merger, Shareholder equity in Class A increased by $342,954 and 32,402 shares.

 

See Notes to Financial Statements.

 

14

 

 

 

American Independence Kansas Tax-Exempt Bond FundFinancial Highlights
 
Institutional ClassFor a Share Outstanding Throughout the Periods Presented

 

  For the Year Ended September 30, 2019  For the Period Ended September 30, 2018(a)  For the Year Ended October 31, 2017  For the Year Ended October 31, 2016  For the Year Ended October 31, 2015  For the Year Ended October 31, 2014 
NET ASSET VALUE, BEGINNING OF PERIOD $10.59  $10.88  $11.09  $11.11  $11.16  $10.80 
                         
INCOME/(LOSS) FROM OPERATIONS:                        
Net investment income(b)  0.28   0.27   0.32   0.33   0.35   0.37(c)
Net realized and unrealized gain/(loss) on investments  0.42   (0.29)  (0.21)  (0.02)  (0.05)  0.36 
Total from investment operations  0.70   (0.02)  0.11   0.31   0.30   0.73 
                         
LESS DISTRIBUTIONS:                        
From net investment income  (0.28)  (0.27)  (0.32)  (0.33)  (0.35)  (0.37)
From net realized gains on investments  (0.04)               
Total Distributions  (0.32)  (0.27)  (0.32)  (0.33)  (0.35)  (0.37)
NET INCREASE/(DECREASE) IN NET ASSET VALUE  0.38   (0.29)  (0.21)  (0.02)  (0.05)  0.36 
NET ASSET VALUE, END OF PERIOD $10.97  $10.59  $10.88  $11.09  $11.11  $11.16 
                         
TOTAL RETURN(d)  6.77%  (0.15%)  1.04%  2.80%  2.70%  6.89%
                         
SUPPLEMENTAL DATA:                        
Net assets, end of period (in 000s) $179,409  $133,235  $167,374  $190,780  $181,983  $183,423 
                         
RATIOS TO AVERAGE NET ASSETS                        
Operating expenses excluding reimbursement/waiver  0.55%  0.75%(e)  0.61%  0.60%  0.60%  0.58%
Operating expenses including reimbursement/waiver  0.48%  0.56%(e)  0.48%  0.48%  0.48%  0.48%
Net investment income including reimbursement/waiver  2.62%  2.80%(e)  2.95%  2.94%  3.12%  3.39%
                         
PORTFOLIO TURNOVER RATE(f)  12%  14%  9%  10%  13%  1%

 

(a)Effective September 24, 2018, the American Independence Kansas Tax-Exempt Bond Fund merged with and into a clone series of ALPS Series Trust. In connection with the merger, the fiscal year-end changed from October 31 to September 30.
(b)Per share amounts are based upon average shares outstanding, unless otherwise noted.
(c)Calculated based on ending shares outstanding during the period.
(d)Assumes an initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are for the period indicated and have not been annualized. Total returns would have been lower had certain expenses not been waived during the period. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
(e)Annualized.
(f)Portfolio turnover rate for periods less than one full year have not been annualized.

 

See Notes to Financial Statements.

 
Annual Report | September 30, 201915

 

 

 

American Independence Kansas Tax-Exempt Bond FundFinancial Highlights
 
Class AFor a Share Outstanding Throughout the Periods Presented

 

  For the Year Ended September 30, 2019  For the Period Ended September 30, 2018(a)(b)  For the Year Ended October 31, 2017  For the Year Ended October 31, 2016  For the Year Ended October 31, 2015  For the Year Ended October 31, 2014 
NET ASSET VALUE, BEGINNING OF PERIOD $10.59  $10.88  $11.09  $11.11  $11.16  $10.80 
                         
INCOME/(LOSS) FROM OPERATIONS:                        
Net investment income(c)  0.26   0.24   0.28   0.29   0.31   0.33(d)
Net realized and unrealized gain/(loss) on investments  0.42   (0.29)  (0.21)  (0.02)  (0.05)  0.36 
Total from investment operations  0.68   (0.05)  0.07   0.27   0.26   0.69 
                         
LESS DISTRIBUTIONS:                        
From net investment income  (0.26)  (0.24)  (0.28)  (0.29)  (0.31)  (0.33)
From net realized gains on investments  (0.04)               
Total Distributions  (0.30)  (0.24)  (0.28)  (0.29)  (0.31)  (0.33)
NET INCREASE/(DECREASE) IN NET ASSET VALUE  0.38   (0.29)  (0.21)  (0.02)  (0.05)  0.36 
NET ASSET VALUE, END OF PERIOD $10.97  $10.59  $10.88  $11.09  $11.11  $11.16 
                         
TOTAL RETURN(e)  6.50%  (0.51%)  0.65%  2.41%  2.34%  6.47%
                         
SUPPLEMENTAL DATA:                        
Net assets, end of period (in 000s) $4,145  $4,748  $11,462  $11,509  $10,620  $10,186 
                         
RATIOS TO AVERAGE NET ASSETS                        
Operating expenses excluding reimbursement/waiver  0.88%  1.25%(f)  1.11%  1.10%  1.03%  1.08%
Operating expenses including reimbursement/waiver  0.73%  0.94%(f)  0.87%  0.87%  0.83%  0.87%
Net investment income including reimbursement/waiver  2.40%  2.43%(f)  2.56%  2.55%  2.76%  3.00%
                         
PORTFOLIO TURNOVER RATE(g)  12%  14%  9%  10%  13%  1%

 

(a)Effective September 24, 2018, the American Independence Kansas Tax-Exempt Bond Fund merged with and into a clone series of ALPS Series Trust. In connection with the merger, the fiscal year-end changed from October 31 to September 30.
(b)Class C shares were merged into Class A on September 24, 2018. The amounts presented represent the results of the Class A shares for the periods prior to the merger and the results of the combined share class for the period subsequent to the merger.
(c)Per share amounts are based upon average shares outstanding, unless otherwise noted.
(d)Calculated based on ending shares outstanding during the period.
(e)Assumes an initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are for the period indicated and have not been annualized. Total returns would have been lower had certain expenses not been waived during the period. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
(f)Annualized.
(g)Portfolio turnover rate for periods less than one full year have not been annualized.

 

See Notes to Financial Statements.

 

16

 

 

 

American Independence Kansas 
Tax-Exempt Bond FundNotes to Financial Statements
 

September 30, 2019

 

1. ORGANIZATION

 

 

ALPS Series Trust (the “Trust”), a Delaware statutory trust, is an open-end management investment company registered under the Investment Company Act of 1940, as amended (“1940 Act”). The Trust consists of multiple separate portfolios or series. This annual report describes the American Independence Kansas Tax-Exempt Bond Fund (the “Fund” or “Kansas Tax-Exempt Bond Fund”). The Fund’s primary investment objective is to preserve capital while producing current income for the investor that is exempt from both federal and Kansas state income taxes. The Fund is considered non-diversified and may invest a greater portion of assets in securities of individual issuers than a diversified fund. As a result, changes in the market value of a single investment could cause greater fluctuations in share price than would occur in a diversified fund. The Fund currently offers Institutional Class Shares and Class A Shares. Each share class has identical rights to earnings, assets and voting privileges, except for class specific expenses and exclusive rights to vote on matters affecting only individual classes. The Board of Trustees (the “Board”) may establish additional funds and classes of shares at any time in the future without shareholder approval.

 

The Kansas Tax-Exempt Bond Fund is the successor in interest to the American Independence Kansas Tax-Exempt Bond Fund (“Predecessor Kansas Fund”), and was a series of another investment company, American Independence Funds Trust (“Predecessor Trust”), which was advised by Manifold Fund Advisors, LLC (“MFA”). On September 18, 2018, the shareholders of the Predecessor Kansas Fund approved the reorganization of the Institutional Class Shares, Class A Shares and Class C Shares of the Predecessor Fund with and into the Institutional Class Shares and Class A Shares of the Kansas Tax Exempt Bond Fund and Class C Shares exchanged for load-waived Class A Shares in the Kansas Tax Exempt Bond Fund, and effective as of the close of business on September 21, 2018, the assets and liabilities of the Predecessor Kansas Fund were transferred to the Trust in exchange for shares of the Kansas Tax-Exempt Bond Fund. Costs incurred by the Kansas Tax-Exempt Bond Fund in connection with the reorganization were paid by Manifold Partners, LLC (“Manifold”), the advisor following the reorganization. The prior fiscal year end of the Predecessor Kansas Fund was October 31, 2017. The reporting period for the Kansas Tax-Exempt Bond Fund was an 11 month period from November 1, 2017 through September 30, 2018. Operations prior to September 24, 2018 were for the Predecessor Kansas Fund. The reorganization was accomplished by a tax-free exchange of 13,125,721 shares of the Predecessor Tax-Exempt Bond Fund’s shares, valued at $138,912,350 for the exact same shares (except for of Class C shares that were exchanged for load waived Class A shares) and value of the Kansas Tax-Exempt Bond Fund’s shares. For financial reporting purposes, assets received and shares issued by the Kansas Tax-Exempt Bond Fund were recorded at fair value; however, the cost basis of the investments received from the Predecessor Kansas Fund was carried forward to align ongoing reporting of the Kansas Tax-Exempt Bond Fund’s realized and unrealized gains and losses with amounts distributable to shareholders for tax purposes. Immediately prior to the reorganization, the net assets of the Predecessor Kansas Fund were $138,912,350, including $757,310 of net unrealized appreciation, $72,211 of undistributed (accumulated) net investment income, and $383,483 of undistributed (accumulated) net realized gain.

 

The reorganization did not result in any material change to the Fund’s investment objectives or principal investment strategies or fundamental investment restrictions. However, upon completion of the reorganization, Manifold, an affiliate of the previous adviser, became the new investment adviser, through September 13, 2019. Carret Asset Management, LLC continued to be the sub-adviser to the Kansas Tax-Exempt Bond Fund through September 13, 2019, at which point, Carret Asset Management, LLC became the adviser.

 

2. SIGNIFICANT ACCOUNTING POLICIES

 

 

The accompanying financial statements were prepared in accordance with accounting principles generally accepted in the United States of America for investment companies (“U.S. GAAP”). The Fund is considered an investment company under U.S. GAAP and follows the accounting and reporting guidance applicable to investment companies in the Financial Accounting Standards Board (“FASB”)Accounting Standards CodificationTopic 946. The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the period. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Fund in preparation of its financial statements.

 

Investment Valuation:The Fund generally values its securities based on market prices determined at the close of regular trading on the New York Stock Exchange (“NYSE”), normally 4:00 p.m. Eastern Time, on each day the NYSE is open for trading.

 

For equity securities and shares of registered investment companies that are traded on an exchange, the market price is usually the closing sale or official closing price on that exchange. In the case of equity securities not traded on an exchange, or if such closing prices are not otherwise available, the securities are valued at the mean of the most recent bid and ask prices on such day.

 

The market price for debt obligations is generally the price supplied by an independent third-party pricing service approved by the Board, which may use a matrix, formula or other objective method that takes into consideration quotations from dealers, market transactions in comparable investments, market indices and yield curves. If vendors are unable to supply a price, or if the price supplied is deemed to be unreliable, the market price may be determined using quotations received from one or more broker-dealers that make a market in the security.

 

 
Annual Report | September 30, 201917

 

 

 

American Independence Kansas 
Tax-Exempt Bond FundNotes to Financial Statements
 

September 30, 2019

 

Redeemable securities issued by open-end registered investment companies are valued at the investment company’s applicable net asset value (“NAV”). Money market funds, representing short-term investments, are valued at their NAV.

 

When such prices or quotations are not available, or when the Fair Value Committee appointed by the Board believes that they are unreliable, securities may be priced using fair value procedures approved by the Board.

 

Fair Value Measurements:The Fund discloses the classification of its fair value measurements following a three-tier hierarchy based on the inputs used to measure fair value. Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk. Inputs may be observable or unobservable. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability that are developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability that are developed based on the best information available.

 

Various inputs are used in determining the value of the Fund’s investments as of the end of the reporting period. When inputs used fall into different levels of the fair value hierarchy, the level in the hierarchy within which the fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The designated input levels are not necessarily an indication of the risk or liquidity associated with these investments. These inputs are categorized in the following hierarchy under applicable financial accounting standards:

 

Level 1 – Unadjusted quoted prices in active markets for identical investments, unrestricted assets or liabilities that the Fund has the ability to access at the measurement date;

 

Level 2 – Quoted prices which are not active, quoted prices for similar assets or liabilities in active markets or inputs other than quoted prices that are observable (either directly or indirectly); and

 

Level 3 – Significant unobservable prices or inputs (including the Fund’s own assumptions in determining the fair value of investments) where there is little or no market activity for the asset or liability at the measurement date.

 

The following is a summary of the inputs used to value the Fund’s investments as of September 30, 2019:

 

Investments in Securities at Value* 

Level 1 - Quoted and Unadjusted Prices

  

Level 2 - Other Significant Observable Inputs

  

Level 3 - Significant Unobservable Inputs

  Total 
Municipal Bonds $  $179,243,365  $  $179,243,365 
Short Term Investments  3,653,903         3,653,903 
Total $3,653,903  $179,243,365  $  $182,897,268 

 

*For a detailed Sector breakdown, see the accompanying Portfolio of Investments.

 

There were no Level 3 securities held in the Fund at September 30, 2019.

 

Securities Purchased on a When-Issued Basis:The Fund may purchase securities on a “when-issued” basis. When-issued securities are securities purchased for delivery beyond the normal settlement date at a stated price and/or yield, thereby involving the risk that the price and/or yield obtained may be more or less than those available in the market when delivery takes place. At the time a Fund makes the commitment to purchase a security on a when-issued basis, the Fund records the transaction and reflects the value of the security in determining net asset value. Normally, the settlement date occurs within one month of the purchase. No payment is made by the Fund and no interest accrues to the Fund during the period between purchase and settlement.

 

 

18

 

 

 

American Independence Kansas 
Tax-Exempt Bond FundNotes to Financial Statements
 

September 30, 2019

 

Cash & Cash Equivalents:The Fund considers its investment in a Federal Deposit Insurance Corporation (“FDIC”) insured interest bearing account to be cash and cash equivalents. Cash and cash equivalents are valued at cost plus any accrued interest. The Fund maintains cash balances, which, at times may exceed federally insured limits. The Fund maintains these balances with a high-quality financial institution.

 

Concentration of Credit Risk:The Fund places its cash with a banking institution, which is insured by FDIC. The FDIC limit is $250,000. At various times throughout the year, the amount on deposit may exceed the FDIC limit and subject the Fund to a credit risk. The Fund does not believe that such deposits are subject to any unusual risk associated with investment activities.

 

The Fund invests primarily in debt obligations issued by the State of Kansas and its respective political subdivisions, agencies and public authorities. The Fund is more susceptible to economic and political factors adversely affecting issuers of Kansas specific municipal securities than are municipal bond funds that are not concentrated in these issuers to the same extent.

 

Trust Expenses:Some expenses of the Trust can be directly attributed to a Fund. Expenses that cannot be directly attributed to a Fund are apportioned among all funds in the Trust based on average net assets of each fund, including Trustees’ fees and expenses.

 

Fund Expenses:Some expenses can be directly attributed to a Fund and are apportioned among the classes based on average net assets of each class.

 

Class Expenses:Expenses that are specific to a class of shares are charged directly to that share class. Fees provided under the distribution (Rule 12b-1) and/or shareholder service plans for a particular class of each Fund are charged to the operations of such class.

 

Federal Income Taxes:The Fund complies with the requirements under Subchapter M of the Internal Revenue Code of 1986, as amended, applicable to regulated investment companies and intends to distribute substantially all of its net taxable income and net capital gains, if any, each year so that it will not be subject to excise tax on undistributed income and gains. The Fund is not subject to income taxes to the extent such distributions are made.

 

As of and during the fiscal year ended September 30, 2019, the Fund did not have a liability for any unrecognized tax benefits in the accompanying financial statements. The Fund recognizes interest and penalties, if any, related to tax liabilities as income tax expense in the Statement of Operations. The Fund files U.S. federal, state and local income tax returns as required. The Fund’s tax returns are subject to examination by the relevant tax authorities until expiration of the applicable statute of limitations, which is generally three years after the filing of the tax return for federal purposes and four years for most state returns. The Fund’s administrator has analyzed the Fund’s tax positions taken on federal and state income tax returns for all open tax years and has concluded that as of September 30, 2019, no provision for income tax is required in the Fund’s financial statements related to these tax positions.

 

Investment Transactions and Investment Income:Investment transactions are accounted for on the date the investments are purchased or sold (trade date basis for financial reporting purposes). Realized gains and losses from investment transactions are reported on an identified cost basis. Interest income, which includes accretion of discounts and amortization of premiums, is accrued and recorded as earned based on the effective yield method. Dividend income is recognized on the ex-dividend date. All of the realized and unrealized gains and losses and net investment income are allocated daily to each class in proportion to its average daily net assets.

 

Distributions to Shareholders:Distributions from net investment income for the Fund are declared daily and paid monthly. Distributions from net realized capital gains, if any, are distributed at least annually. Income dividend distributions are derived from interest and other income the Fund receives from its investments, including short-term capital gains. Long term capital gain distributions are derived from gains realized when the Fund sells a security it has owned for more than one year. A Fund may make additional distributions and dividends at other times if its investment adviser has determined that so may be necessary for the Fund to avoid or reduce taxes. Net investment income/(loss) and net realized gain/(loss) may differ for financial statement and tax purposes.

 

3. TAX BASIS INFORMATION

 

 

Tax Basis of Distributions to Shareholders:The character of distributions made during the period from net investment income or net realized gains may differ from its ultimate characterization for federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the fiscal year in which the income or realized gain were recorded by the Fund. The amounts and characteristics of tax basis distributions are estimated at the time of distribution and composition of distributable earnings/(accumulated losses) are finalized at fiscal year-end.

 

 
Annual Report | September 30, 201919

 

 

 

American Independence Kansas 
Tax-Exempt Bond FundNotes to Financial Statements
 

September 30, 2019

 

The tax character of distributions paid by the Fund for the fiscal years or periods ended September 30, 2019, September 30, 2018 and October 31, 2017 respectively, were as follows:

 

  Ordinary Income  Tax-Exempt Income  Long-Term Capital Gains 
Kansas Tax-Exempt Bond Fund $137,415  $3,914,477  $519,509 

 

  Ordinary Income  Tax-Exempt Income  Long-Term Capital Gains 
Kansas Tax-Exempt Bond Fund $49,064  $3,911,585  $ 

 

  Ordinary Income  Tax-Exempt Income  Long-Term Capital Gains 
Kansas Tax-Exempt Bond Fund $  $5,370,631  $ 

 

Unrealized Appreciation and Depreciation on Investments:As of September 30, 2019, the aggregate cost of investments, gross unrealized appreciation/(depreciation) and net unrealized appreciation for Federal tax purposes were as follows:

 

  Kansas Tax-Exempt Bond Fund 
Gross unrealized appreciation (excess of value over tax cost) $6,393,484 
Gross unrealized depreciation (excess of tax cost over value)  (24,843)
Net unrealized appreciation $6,368,641 
Cost of investments for income tax purposes $176,528,627 

 

Components of Distributable Earnings:At September 30, 2019, components of distributable earnings were as follows:

 

  Kansas Tax-Exempt Bond Fund 
Undistributed ordinary income $434,899 
Accumulated capital gains  372,482 
Net unrealized appreciation  6,368,641 
Other cumulative effect of timing differences(a)  (355,168)
Total $6,820,854 

 

(a)Related to distributions payable at year end.

 

4. SECURITIES TRANSACTIONS

 

 

Purchases and sales of securities, excluding short-term securities, during the fiscal year ended September 30, 2019 were as follows:

 

  Purchases of Securities  

Proceeds from Sales of Securities

 
Kansas Tax-Exempt Bond Fund $55,901,844  $17,582,020 

 

5. BENEFICIAL SHARE TRANSACTIONS

 

 

The capitalization of the Trust consists of an unlimited number of shares of beneficial interest with no par value per share. Holders of the shares of the Fund have one vote for each share held and a proportionate fraction of a vote for each fractional share. All shares issued and outstanding are fully paid and are transferable and redeemable at the option of the shareholder. Shares have no pre-emptive rights. Neither the Fund nor any of their creditors have the right to require shareholders to pay any additional amounts solely because the shareholder owns the shares.

 

 

20

 

 

 

American Independence Kansas 
Tax-Exempt Bond FundNotes to Financial Statements
 

September 30, 2019

 

Transactions in common shares were as follows:

 

  For the Year Ended
September 30,
2019
  

For the Period Ended

September 30,

2018(a)

  For the Year Ended
October 31,
2017
 
Kansas Tax-Exempt Bond Fund            
Institutional Class            
Shares sold  5,710,019   2,618,566   2,598,718 
Shares issued in reinvestment of distributions to shareholders  52,366   35,603   41,610 
Shares redeemed  (1,988,206)  (5,458,564)  (4,458,454)
Net increase/(decrease) in shares outstanding  3,774,179   (2,804,395)  (1,818,126)
Class A            
Shares sold  1,842   61,220   34,999 
Shares issued in reinvestment of distributions to shareholders  8,441   10,574   15,117 
Shares redeemed ��(80,824)  (677,021)  (34,278)
Net increase/(decrease) in shares outstanding  (70,541)  (605,227)  15,838 
Class C            
Shares sold     2,509   142 
Shares issued in reinvestment of distributions to shareholders     396   745 
Shares redeemed     (66,742)  (42,133)
Net decrease in shares outstanding     (63,837)  (41,246)

 

(a)Effective September 24, 2018, the Predecessor Kansas Fund merged with and into clone series of ALPS Series Trust. In connection with the merger, the fiscal year-end changed from October 31 to September 30.

 

Control is defined by the 1940 Act as the beneficial ownership, either directly or through one or more controlled companies, of more than 25% of the voting securities of a company. Approximately 96% of the shares outstanding of the Fund are owned by one omnibus account.

 

6. MANAGEMENT AND RELATED PARTY TRANSACTIONS

 

 

Investment Advisory:Effective September 13, 2019, Carret Asset Management, LLC (the “Adviser” or “Carret”), serves as the investment adviser to the Fund. The Adviser, subject to the authority of the Board, is responsible for the overall management and administration of the Fund’s business affairs. The Adviser manages the investments of the Fund in accordance with the Fund’s investment objective, policies and limitations, and investment guidelines established jointly by the Adviser and the Board.

 

Prior to the reorganization, the adviser to the Predecessor Fund was MFA and the sub-adviser to the Predecessor Fund was Carret. Upon completion of the Reorganization, Manifold became the Fund's investment adviser, and Carret continued to serve as the Fund's investment sub-adviser. On September 13, 2019, Manifold ceased to serve as the Fund's investment adviser, and Carret became the investment adviser on that date.

 

Pursuant to the Investment Advisory Agreement (“Advisory Agreement”) with the Adviser, the Fund pays the Adviser an annual management fee of 0.30% based on the Fund’s average daily net assets. The management fee is paid on a monthly basis. The initial term of the Advisory Agreement is two years and the Board may extend the Advisory Agreement for additional one-year terms by approval at an in-person meeting called for the purpose of considering such matters. The Board and shareholders of the Fund may terminate the Advisory Agreement upon 60 days’ prior written notice. The Adviser may terminate the Advisory Agreement upon 120 days’ prior written notice. Pursuant to an investment advisory agreement between the Fund and Manifold, Manifold was entitled to receive an annual fee of 0.30%, computed daily and paid monthly. Of the $464,762 in investment advisory fees disclosed on the Statement of Operations, $442,185 is attributable to Manifold, and $22,577 is attributable to Carret.

 

Effective September 13, 2019, pursuant to a fee waiver letter agreement (“Fee Waiver Agreement”), the Adviser has contractually agreed to limit the amount of the Total Annual Fund Operating Expenses, exclusive of interest, dividend expense on short sales/interest expense, taxes, brokerage commissions, other investment related costs, acquired fund fees and expenses, distribution service fees (i.e., Rule 12b-1 fees), shareholder service fee, and extraordinary expenses, such as litigation and other expenses not incurred in the ordinary course of business to 0.48% of the Fund’s average daily net assets for Institutional Class shares and Class A shares. The Fee Waiver Agreement is in effect through January 31, 2021. The Adviser will be permitted to recover, on a class-by-class basis, expenses it has borne through the Fee Waiver Agreement only to the extent that the Fund's expenses in later periods do not exceed the lesser of: (1) the contractual expense limit in effect at the time the Adviser waives or limits the expenses; or (2) the contractual expense limit in effect at the time the Adviser seeks to recover the expenses; provided, however, that the Fund will not be obligated to reimburse any such expenses borne by the Adviser more than three years after the date on which the fee or expense was waived or limited or assumed and paid by the Adviser, as calculated on a monthly basis. The Adviser may not discontinue this waiver without the approval by the Trust's Board. Of the $114,363 in fees waived disclosed on the Statement of Operations, $105,073 is attributable to Manifold, and $9,290 is attributable to Carret.

 

 
Annual Report | September 30, 201921

 

 

 

American Independence Kansas 
Tax-Exempt Bond FundNotes to Financial Statements
 

September 30, 2019

 

As of September 30, 2019, the balances of recoupable expenses for the Fund were as follows:

 

Kansas Tax-Exempt Bond Fund Expiring in 2022 
Class A $440 
Institutional Class  8,850 

 

Previously waived fees by Manifold amounting to $105,073 are not subject to recoupment by Carret.

 

Administrator:ALPS Fund Services, Inc. (“ALPS”) (an affiliate of ALPS Distributors, Inc.) serves as administrator to the Fund. The Fund has agreed to pay expenses incurred in connection with its administrative activities. Pursuant to the Administration, Bookkeeping and Pricing Services Agreement with the Trust, ALPS will provide operational services to the Fund including, but not limited to, fund accounting and fund administration, and will generally assist in the Fund’s operations. The Fund’s administration fee is accrued on a daily basis and paid monthly. The officers of the Trust are employees of ALPS. Administration fees paid by the Fund for the fiscal year ended September 30, 2019, are disclosed in the Statement of Operations. ALPS is reimbursed by the Fund for certain out of pocket expenses.

 

Transfer Agent:ALPS serves as transfer agent for the Fund under a Transfer Agency and Services Agreement with the Trust. Under this agreement, ALPS is paid an annual fee for services performed on behalf of the Fund plus fees for open accounts and is reimbursed for certain out-of-pocket expenses.

 

Compliance Services:ALPS provides services as the Fund’s Chief Compliance Officer to monitor and test the policies and procedures of the Fund in conjunction with requirements under Rule 38a-1 of the 1940 Act pursuant to a Chief Compliance Officer Services Agreement with the Trust. Under this agreement, ALPS is paid an annual fee for services performed on behalf of the Fund and is reimbursed for certain out-of-pocket expenses.

 

Distribution:ALPS Distributors, Inc. (the “Distributor”) (an affiliate of ALPS) acts as the principal underwriter of the Fund’s shares pursuant to a Distribution Agreement with the Trust. Shares of the Fund are offered on a continuous basis through the Distributor, as agent of the Fund. The Distributor is not obligated to sell any particular amount of shares of the Fund and is not entitled to any compensation for its services as the Fund’s principal underwriter pursuant to the Distribution Agreement.

 

The Fund has adopted a shareholder services plan (“Shareholder Services Plan”) for its Class A Shares. Under the Shareholder Services Plan the Fund is authorized to pay banks and their affiliates and other institutions, including broker-dealers and Fund affiliates (“Participating Organizations”), an aggregate fee in an amount not to exceed on an annual basis 0.25% of the average daily net assets of the Fund’s Class A Shares to Participating Organizations as compensation for providing shareholder service activities, which do not include distribution services, pursuant to an agreement with a Participating Organization. Starting as of September 24, 2018, the Board authorized 0.00% to be paid on shareholder servicing fees.

 

The Fund has adopted a plan pursuant to Rule 12b-1 under the 1940 Act (the “Plan”) that allows its Class A shares to pay a distribution and service fee, as defined by the Financial Industry Regulatory Authority (“FINRA”), from its assets for selling and distributing its shares. The Fund was permitted to pay distribution and service fees at an annual rate of up to 0.50% of its Class A share assets. This fees consisted of up to 0.25% for shareholder services of the Class A share assets (which is currently not being charged) and up to 0.25% for distribution expenses, as defined by FINRA, of Class A share assets. Effective September 24, 2018, the Funds adopted a plan pursuant to Rule 12b-1 under the 1940 Act (“Plan”) that allows its Class A shares to pay a distribution and service fee, as defined by the FINRA from its assets for selling and distributing its shares.

 

 

22

 

 

 

American Independence Kansas 
Tax-Exempt Bond FundNotes to Financial Statements
 

September 30, 2019

 

7. TRUSTEES

 

 

As of September 30, 2019, there were four Trustees, three of whom are not “interested persons” (as defined in the 1940 Act) of the Trust (the “Independent Trustees”). The Independent Trustees of the Trust receive a quarterly retainer of $8,000, plus $4,000 for each regular Board or Committee meeting attended and $2,000 for each special telephonic or in-person Board or Committee meeting attended. Additionally, the Audit Committee Chair receives a quarterly retainer of $1,250 and the Independent Chair receives a quarterly retainer of $2,500. The Independent Trustees are also reimbursed for all reasonable out-of-pocket expenses relating to attendance at meetings and for meeting-related expenses. Officers of the Trust and Trustees who are interested persons of the Trust receive no salary or fees from the Trust. As discussed in Note 6, the Fund pays ALPS an annual fee for compliance services.

 

8. INDEMNIFICATIONS

 

 

Under the Trust’s organizational documents, its officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust. Additionally, in the normal course of business, the Trust enters into contracts with service providers that may contain general indemnification clauses which may permit indemnification to the extent permissible under applicable law. The Trust’s maximum exposure under these arrangements is unknown, as such exposure would involve future claims that may be made against the Trust that have not yet occurred.

 

9. RECENT ACCOUNTING PRONOUNCEMENTS

 

 

In March 2017, the FASB issued Accounting Standards Update (“ASU”) No. 2017-08, “Receivables-Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities.” ASU 2017-08 changed the amortization period for certain callable debt securities held at a premium. Specifically, it required the premium to be amortized to the earliest call date. The Fund had already been amortizing certain callable debt securities held at a premium to the earliest call date; therefore, the Fund did not adopt this ASU.

 

In August 2018, the FASB issued ASU 2018-13, which changes the fair value measurement disclosure requirements of FASB ASC Topic 820, Fair Value Measurement. The update to Topic 820 includes new, eliminated, and modified disclosure requirements. ASU 2018-13 is effective for fiscal years beginning after December 15, 2019, including interim periods. Early adoption is permitted for any eliminated or modified disclosures. The Fund has elected to early adopt the eliminated and modified disclosures effective with the financial statements prepared as of September 30, 2019.

 

10. SUBSEQUENT EVENTS

 

 

Subsequent events after the date of the Statement of Assets and Liabilities have been evaluated through the date the financial statements were issued. Management has determined that there were no subsequent events to report through the issuance of these financial statements.

 

 
Annual Report | September 30, 201923

 

 

 

American Independence KansasReport of Independent Registered
Tax-Exempt Bond FundPublic Accounting Firm
 

 

To the Shareholders of American Independence Kansas Tax-Exempt Bond Fund and

Board of Trustees of ALPS Series Trust

 

Opinion on the Financial Statements

 

We have audited the accompanying statement of assets and liabilities, including the portfolio of investments, of American Independence Kansas Tax-Exempt Bond Fund (the “Fund”), a series of ALPS Series Trust, as of September 30, 2019, and the related statement of operations for the year then ended, and the statements of changes in net assets, including the related notes, and the financial highlights for each of the two 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 September 30, 2019, the results of its operations for the year then ended, and the changes in its net assets and the financial highlights for each of the two periods in the period then ended, in conformity with accounting principles generally accepted in the United States of America.

 

The Fund’s financial statements and financial highlights for the years ended October 31, 2017, and prior, were audited by other auditors whose report dated December 28, 2017, expressed an unqualified opinion on those financial statements and financial highlights.

 

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 September 30, 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 Fund’s auditor since 2018.

 

 

COHEN & COMPANY, LTD.
Cleveland, Ohio
November 25, 2019

 

 

24

 

 

 

American Independence KansasDisclosure Regarding Renewal and
Tax-Exempt Bond FundApproval of Fund Advisory Agreement
 

September 30, 2019

 

The Board of Trustees met in person on August 22, 2019 to evaluate, among other things, the proposed new investment advisory agreement and interim advisory agreement (the “New Carret Agreements”) between the Trust (on behalf of the Fund) and Carret Asset Management, LLC (“Adviser” or “Carret”) was in the best interests of the Fund’s shareholders. At this Board meeting and throughout the consideration process, the Board, including a majority of the Independent Trustees, was advised by independent legal counsel.

 

In voting to approve the New Carret Agreements, the Board did not identify any single factor as all-important or controlling. The following summary does not identify all the matters considered by the Board but provides a summary of the principal matters the Board considered.

 

Fees and Expenses:The Trustees reviewed and considered the proposed contractual annual advisory fee to be paid by the Fund equal to 0.30% of the Fund’s average daily net assets. The Trustees considered the information they received comparing the Fund’s contractual annual advisory fee and overall expenses with those of funds in a peer group and universe of funds provided by FUSE, an independent provider of investment company data. They noted that the peer group for the Fund consisted of single-state municipal bond funds identified by the FUSE.

 

The Trustees noted that the Fund’s contractual advisory fee of 0.30% was below the peer group median and fell in the lowest decile of the comparable universe of funds. They considered the fee currently paid to Carret as sub-adviser (0.15%, less 50% of any adviser fee waivers) and whether the increased fee was reasonable in light of the additional services, obligations and risks assumed by Carret as the adviser. They discussed the range of fees charged by Carret for managing other accounts, and reasons for the variations described by Carret.

 

Nature, Extent and Quality of Services:The Trustees received and considered information regarding the nature, extent and quality of services to be provided to the Fund under the Carret Advisory Agreement. The Trustees reviewed certain background materials supplied by Carret, including Carret’s Form ADV.

 

The Trustees reviewed and considered Carret’s history as an asset manager and the quality of services provided to the Fund as the current sub-adviser. The Trustees discussed the research and decision-making processes utilized by Carret, including the methods adopted to seek to achieve compliance with the investment objective, policies and restrictions of the Fund. The Trustees considered the background and experience of Carret’s management team, including the qualifications, background and responsibilities of the portfolio managers primarily responsible for the day-to-day portfolio management of the Fund. The Trustees also considered the reputation of Carret, its key personnel and its ability to deliver all services required of an adviser.

 

Performance:The Trustees noted that the Fund, currently sub-advised by Carret, achieved positive returns in each of the periods presented with returns similar to that of the peer funds. They discussed that the Fund trailed the benchmark index over each period, but acknowledged Carret’s dedication to providing a portfolio limited primarily to Kansas municipal bonds. They discussed the performance of the Fund since Carret became the sub-adviser.

 

Profitability:The Trustees received and considered information related to Carret’s historical profitability as the Fund’s sub-adviser, as well as an estimated profitability analysis prepared by Carret based on the estimated fees to be paid under the Carret Advisory Agreement. The Trustees considered the impact of the expense limitation agreement on anticipated profits. The Trustees then reviewed and discussed Carret’s financial statements to analyze Carret’s financial condition and stability.

 

Economies of Scale:The Trustees considered whether economies of scale in the provision of services to the Fund would be passed along to the shareholders under the Carret Advisory Agreement. They recognized the benefits received by shareholders from the expense limitation agreement, which reduced shareholder expenses at lower asset levels. They also considered that Fund shareholders benefit from the current scale of Carret’s advisory business, which affords opportunities in terms of execution, access to markets, and similar benefits of institutional investing, but that the Fund’s assets under management would likely not result in material additional economies of scale for Carret.

 

Other Benefits to the Adviser:The Trustees reviewed and considered any other incidental benefits derived or to be derived by Carret from its relationship with the Fund, including research and other support services.

 

The Trustees, including all the Independent Trustees, concluded that:

 

the proposed annual advisory fee for the Fund was not unreasonable;

 

the terms of the fee waiver/expense reimbursement letter agreement between the Trust (on behalf of the Fund) and Carret were reasonable;

 

the nature, extent and quality of services to be rendered by Carret under the New Advisory Agreement were adequate and the shareholders of the Fund would benefit by retaining an experienced adviser that had provided quality service to the Fund;

 

 
Annual Report | September 30, 201925

 

 

 

American Independence KansasDisclosure Regarding Renewal and
Tax-Exempt Bond FundApproval of Fund Advisory Agreement
 

September 30, 2019

 

the performance of the Fund was acceptable and consistent with the Fund’s investment mandate;

 

bearing in mind the limitations of comparing different types of accounts and the different levels of service typically associated with such accounts, the fee structures applicable to Carret’s other clients employing comparable strategies to the Fund was not indicative of any unreasonableness with respect to the advisory fee payable by the Fund;

 

the estimated profitability of Carret relating to the management of the Fund was not unreasonable; and

 

there were no material economies of scale or other material incidental benefits expected to accrue to Carret because of its relationship with the Fund during the initial term of the New Advisory Agreement.

 

Based on the Trustees’ deliberations and their evaluation of the information described above, the Trustees, including a majority of the Independent Trustees, concluded each approval of the New Carret Agreements with Carret was consistent with the best interests of the Fund and its shareholders. Based on its evaluation of the considerations, the Board unanimously voted to approve the New Carret Agreements, and to recommend to the shareholders of the Fund that they approve the New Carret Agreement.

 

 

26

 

 

 

American Independence Kansas 
Tax-Exempt Bond FundAdditional Information
 

September 30, 2019 (Unaudited)

 

1. PROXY VOTING POLICIES AND VOTING RECORD

 

 

A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, (i) by calling the Fund (toll-free) at 1-800-444-7388 or (ii) on the website of the Securities and Exchange Commission (“SEC”) at http://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 (i) without charge, upon request, by calling the Fund (toll-free) at 1-800-444-7388 or (ii) on the SEC’s website at http://www.sec.gov.

 

2. PORTFOLIO HOLDINGS

 

 

The Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Form N-Q is available on the SEC website at http://www.sec.gov.

 

3. TAX DESIGNATIONS

 

 

Pursuant to Section 852(b)(3) of the Internal Revenue Code, American Independence Kansas Tax Exempt Bond Fund designated $519,509 as long-term capital gain dividends.

 

For the year ended September 30, 2019, 96.61% of the distributions from net investment income for American Independence Kansas Tax Exempt Bond Fund are exempt from federal income tax.

 

 
Annual Report | September 30, 201927

 

 

 

American Independence Kansas 
Tax-Exempt Bond FundPrivacy Policy
 

September 30, 2019 (Unaudited)

 

FACTSWHAT DO THE FUNDS DO WITH YOUR PERSONAL INFORMATION?
WHY?Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share and protect your personal information. Please read this notice carefully to understand what we do.
WHAT?

The types of personal information we collect and share depend on the product or service you have with us. This information can include:

 

    Social Security number and account transactions

    Account balances and transaction history

    Wire transfer instructions

HOW?All financial companies need to share customers’ personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers’ personal information, the reasons a Fund chooses to share, and whether you can limit this sharing.

REASONS WE CAN SHARE YOUR

PERSONAL INFORMATION

DO THE

FUNDS SHARE?

CAN YOU LIMIT

THIS SHARING?

For our everyday business purposes
such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus
YesNo
For our marketing purposes –
to offer our products and services to you
NoWe do not share.
For joint marketing with other financial companiesNoWe do not share.
For our affiliates’ everyday business purposes –
information about your transactions and experiences
YesNo
For our affiliates’ everyday business purposes –
information about your creditworthiness
NoWe do not share.
For non-affiliates to market to youNoWe do not share.
QUESTIONS?Call 1-833-287-7933.

 

 

28

 

 

 

American Independence Kansas 
Tax-Exempt Bond FundPrivacy Policy
 

September 30, 2019 (Unaudited)

 

WHO WE ARE
Who is providing this notice?American Independence Global Tactical Allocation Fund and American Independence Kansas Tax-Exempt Bond Fund (the “Funds”)
WHAT WE DO
How do the Funds protect my personal information?To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include computer safeguards and secured files and buildings.

How do the Funds collect my 

personal information?

 

We collect your personal information, for example, when you

 

    open an account

    provide account information or give us your contact information

    make a wire transfer or deposit money

Why can’t I limit all sharing?

Federal law gives you the right to limit only

 

●    sharing for affiliates’ everyday business purposes-information about your creditworthiness

●    affiliates from using your information to market to you

●    sharing for non-affiliates to market to you

 

State laws and individual companies may give you additional rights to limit sharing.

DEFINITIONS 
AffiliatesCompanies related by common ownership or control. They can be financial and nonfinancial companies.
Non-affiliates

Companies not related by common ownership or control. They can be financial and nonfinancial companies.

 

    The Funds do not share with non-affiliates so they can market to you.

Joint marketing

A formal agreement between non-affiliated financial companies that together market financial products or services to you.

 

    The Funds do not jointly market.

OTHER IMPORTANT INFORMATION
California ResidentsIf your account has a California home address, your personal information will not be disclosed to nonaffiliated third parties except as permitted by applicable California law, and we will limit sharing such personal information with our affiliates to comply with California privacy laws that apply to us.

 

 
Annual Report | September 30, 201929

 

 

 

American Independence Kansas 
Tax-Exempt Bond FundTrustees & Officers
 

September 30, 2019 (Unaudited)

 

INDEPENDENT TRUSTEES

 

Name, Birth Year

& Address*

Position(s) Held

with Fund

Term of Office

and Length of

Time Served**

Principal Occupation(s)

During Past 5 Years***

Number of Funds in Fund

Complex

Overseen by

Trustee****

Other Directorships

Held by Trustee

During Past

5 Years***

Ward D. Armstrong,
Birth year: 1954
Trustee and ChairmanMr. Armstrong was appointed to the Board on May 27, 2016. Mr. Armstrong was appointed Chairman of the Board at the August 24, 2017 meeting of the Board of Trustees.Retired; Managing Partner, NorthRock Partners, LLC (October 2013 to July 2015); Managing Director, NorthRock Partners, a Private Wealth Advisory Practice of Ameriprise Financial (February 2010 to October 2013); Senior Vice President, Ameriprise Financial, Inc. (November 1984 to May 2007); President, American Express Asset Management (2002 to 2004); and Chairman, Ameriprise Trust Company (November 1996 to May 2007).9Mr. Armstrong is a Director of the Heartland Group, Inc. (4 funds).

J. Wayne Hutchens,

Birth year: 1944

TrusteeMr. Hutchens was elected to the Board on October 30, 2012.Mr. Hutchens is currently retired. From April 2006 to December 2012, he served as President and CEO of the University of Colorado (CU) Foundation and from April 2009 to December 2012, he was Executive Director of the CU Real Estate Foundation. Mr. Hutchens is also Trustee of the Denver Museum of Nature and Science (2000 to present), Director of AMG National Trust Bank (June 2012 to present) and Trustee of Children’s Hospital Colorado (May 2012 to present). Prior to these positions, Mr. Hutchens spent 29 years in the banking industry, retiring as Chairman of Chase Bank Colorado.9Mr. Hutchens is a Director of RiverNorth Opportunity Fund (2013 to present), RiverNorth Opportunistic Municipal Income Fund (2018 to present), RiverNorth Doubleline Strategic Opportunity Fund (2018 to present), RiverNorth Marketplace Lending Corp. (2018 to present) and RiverNorth Managed Duration Municipal Income Fund (2019 to present).
Patrick Seese,
Birth year: 1971
TrusteeMr. Seese was elected to the Board on October 30, 2012.Mr. Seese is an owner and a Managing Director of Integris Partners, a middle-market investment banking firm serving closely-held companies, financial sponsors and public companies (February 2008 to present). Prior to this, Mr. Seese was a Managing Director of Headwaters MB, a middle-market investing banking firm (December 2003 to February 2008). Prior to that, Mr. Seese worked in Credit Suisse First Boston’s Mergers and Acquisitions Group and served as Head of Corporation Development, Katy Industries, a publicly traded industrial and consumer products company and at Deloitte & Touche LLP, where he began his career in 1994.9Mr. Seese is a Director of The Mile High Five Foundation (2013 to present) and SJ Panthers Foundation (2016 to present).

 

 

30

 

 

 

American Independence Kansas 
Tax-Exempt Bond FundTrustees & Officers
 

September 30, 2019 (Unaudited)

 

INTERESTED TRUSTEE

 

Name, Birth Year

& Address*

Position(s) Held

with Fund

Term of Office

and Length of

Time Served**

Principal Occupation(s)

During Past 5 Years***

Number of

Funds in Fund

Complex

Overseen by

Trustee****

Other Directorships

Held by Trustee

During Past

5 Years***

Jeremy O. May,

Birth year: 1970

 

TrusteeMr. May was elected Trustee on October 30, 2012. Mr. May was President from October 30, 2012 to May 23, 2019. Mr. May was Chairman from October 30, 2012 to August 24, 2017.Mr. May previously served as President and Director of ALPS Fund Services, Inc., ALPS Distributors, Inc., and ALPS Portfolio Solutions Distributor, Inc., Executive Vice President and Director of ALPS Holdings, Inc. and ALPS Advisors, Inc., working at ALPS from June 1995 until June 2019. Because of his positions with these entities, Mr. May is deemed an affiliate of the Trust as defined under the 1940 Act. Mr. May is also on the Board of Directors of the University of Colorado Foundation and the AV Hunter Trust.9Mr. May is Trustee of the Reaves Utility Income Fund (1 fund).

 

 
Annual Report | September 30, 201931

 

 

 

American Independence Kansas 
Tax-Exempt Bond FundTrustees & Officers
 

September 30, 2019 (Unaudited)

 

OFFICERS

 

Name, Birth

Year & Address*

Position(s) Held

with Fund

Term of Office and

Length of Time Served**

Principal Occupation(s) During Past 5 Years***
Bradley Swenson,
Birth year: 1972
PresidentSince May 2019Mr. Swenson joined ALPS Fund Services, Inc. (“ALPS”) in 2004 and has served as its President since June 2019. In this role, he serves as an officer to certain other closed-end and open-end investment companies. He previously served as the Chief Operating Officer of ALPS (2015-2019). Mr. Swenson also previously served as Chief Compliance Officer to ALPS, its affiliated entities, and to certain ETF, closed-end and open-end investment companies (2004-2015).
Kimberly Storms,
Birth year: 1972
TreasurerSince October 2012Ms. Storms is Senior Vice President and Director of Fund Administration of ALPS. Ms. Storms is also Treasurer of Financial Investors Trust, Liberty All-Star Equity Fund and Liberty All-Star Growth Fund, Inc.
Christopher Moore,
Birth year: 1984
SecretarySince May 2019Mr. Moore has been Vice President and Senior Counsel of ALPS since 2016. Mr. Moore served as an associate at Thompson Hine LLP (2013-2016) and as Corporate Counsel at DSW, Inc. (2012-2013). He also served as a certified public accountant for Ernst & Young (2007-2009) and as an internal auditor for JSJ Inc. in 2007. Mr. Moore serves also as Vice President & Secretary of the Boulder Growth & Income Fund, Secretary of the RiverNorth Opportunities Fund, Inc., and Assistant Secretary of the RiverNorth Funds, Griffin Institutional Access Credit Fund, Griffin Institutional Access Real Estate Fund, RiverNorth Managed Duration Municipal Income Fund, Inc., and RiverNorth Opportunistic Municipal Income Fund, Inc.
Erich Rettinger,
Birth year: 1985
Assistant TreasurerSince May 2019Mr. Rettinger joined ALPS in 2007 and is currently Vice President and Fund Controller of ALPS. He has served as Fund Controller, ALPS Fund Services, Inc. (since 2013) and Fund Accounting, ALPS Fund Services, Inc. (2013-2017). Mr. Rettinger is also Assistant Treasurer of the Stone Harbor Investment Funds.
Anne Berg,
Birth year: 1973
Assistant SecretarySince August 2018Ms. Berg joined ALPS as Senior Investment Company Act Paralegal in February 2017. Prior to joining ALPS, Anne was a Senior Legal Manager at Janus Capital Management LLC (2000-2017).
Lucas Foss,
Birth Year: 1977
Chief Compliance OfficerSince January 2018Mr. Foss rejoined ALPS in November 2017 as Vice President and Deputy Chief Compliance Officer. Prior to his current role, Mr. Foss served as the Director of Compliance at Transamerica Asset Management (2015–2017) and Deputy Chief Compliance Officer at ALPS (2012-2015). Mr. Foss is also CCO of Harvest Volatility Edge Trust, Goehring & Rozencwajg Investment Funds, Broadstone Real Estate Access Fund, Inc., Clough Global Funds; Clough Funds Trust; and 1WS Credit Income Fund.

 

*All communications to Trustees and Officers may be directed to ALPS Series Trust c/o 1290 Broadway, Suite 1000, Denver, CO 80203.
**This is the period for which the Trustee or Officer began serving the Trust. Each Trustee serves an indefinite term, until such Trustee’s successor is elected and appointed, or such Trustee resigns or is deceased. Officers are elected on an annual basis.
***Except as otherwise indicated, each individual has held the office shown or other offices in the same company for the last five years.
****The Fund Complex currently consists of 9 series of the Trust; Carret Asset Management, LLC does not provide investment advisory services for any of these series other than the Fund, and any other investment companies for which Carret Asset Management, LLC provides investment advisory services, currently none.

 

Additional information about members of the Board of Trustees and officers of the Trust is available in the Statement of Additional Information and is available, without charge, upon request, by calling the Fund (toll-free) at 1-833-287-7933.

 

 

32

 

 

 

This material must be preceded or accompanied by a prospectus.

 

The American Independence Funds are distributed by ALPS Distributors, Inc

 

 

 

 

 

 

Table of Contents

 

 

Shareholder Letter2
Portfolio Update 
Beacon Accelerated Return Strategy Fund4
Beacon Planned Return Strategy Fund6
Disclosure of Fund Expenses8
Portfolios of Investments 
Beacon Accelerated Return Strategy Fund10
Beacon Planned Return Strategy Fund13
Statements of Assets and Liabilities16
Statements of Operations17
Statements of Changes in Net Assets 
Beacon Accelerated Return Strategy Fund18
Beacon Planned Return Strategy Fund19
Financial Highlights20
Notes to Financial Statements22
Report of Independent Registered Public Accounting Firm36
Disclosure Regarding Renewal and Approval of Fund Advisory Agreement37
Additional Information39
Privacy Policy40
Trustees and Officers43

 

Beginning on January 1, 2021, as permitted by regulations adopted by the U.S. Securities and Exchange Commission, paper copies of the Funds’ annual and semi-annual shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports. Instead, the reports will be made available on the Funds’ website at www.beacontrust.com and you will be notified by mail each time a report is posted and provided with a website link to access the report.

 

You may, notwithstanding the availability of shareholder reports online, elect to receive all future shareholder reports in paper free of charge. If you invest through a financial intermediary, you can contact your financial intermediary to request that you continue to receive paper copies of your shareholder reports. If you invest directly with a Fund, you can call 1-844-894-9222 to let the Fund know you wish to continue receiving paper copies of your shareholder reports.

 

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 a Fund electronically anytime by contacting your financial intermediary (such as a broker-dealer or bank) or, if you are a direct investor, by enrolling at www.beacontrust.com.

 

 

 

Beacon Funds TrustShareholder Letter

 

September 30, 2019 (Unaudited)

 

Now that we reached the end of 2019 fiscal year, we would like to provide an update on the Beacon Accelerated Return Strategy Fund (BARLX) and the Beacon Planned Return Strategy Fund (BPRLX).

 

Beacon investment strategies are disciplined, rules-based equity strategies for investors who are looking for a supplement or an alternative to traditional stock-picking strategies which can be negatively impacted by investment styles or market sectors falling in and out of favor, as well as behavioral biases embedded in stock picking strategies.

 

Beacon’s rules-based strategies, on the other hand, attempt to add value through intelligent portfolio design and implementation, not through individual security or sector selection. They seek to offer a diversified portfolio of domestic equity exposure with contractually defined outcomes and stable returns, taking the emotion out of investing.

 

Both portfolios consist of approximately 12 unique monthly investments, each one seeking to offer exposure to the S&P 500 price index over a 12 month period, enhanced upside participation and potential alpha (outperformance), as well as a potential monthly income stream from option premiums. Each monthly BPRLX investment also seeks to mitigate risk by providing 10% downside protection against losses in the S&P 500 price index over a 12 month period. The portfolios are systematically re-balanced each month to minimize portfolio risk.

 

The current environment of late-cycle economic uncertainty, rising geopolitical risks, heightened market volatility and range-bound returns could bode well for Accelerated Return Strategy and Planned Return Strategy. The strategies not only seek to provide a cushion against losses in the equity markets (in the case of BPRLX) and high equity participation, but they can also provide potential upside enhancement on positive results.

 

During the fourth quarter of 2018, when S&P 500 lost 14% of its value, Planned Return Strategy protected against approximately half of the index losses, providing strong portfolio insurance while preserving a decent upside capture during the eventual recovery.

 

The past 12 months provide a good example of what’s likely to be ahead of us; a sharp selloff at the end of 2018, followed by a strong market recovery in the first quarter of 2019, and a sideways market in the second and third quarters of 2019; showing all three possible market cycles during the same 12 month term.

 

During this period, the S&P 500 index was up 4.25%, while the Funds primary benchmark, S&P 500 BuyWrite index, was down -1.11%, and the Funds secondary benchmark, HFRX Global Hedge Fund Index, was up 0.01%.

 

We are happy to report that both Accelerated Return Strategy and Planned Return Strategy outperformed all three indices during the past 12 months. BARLX was up 5.09%, while BPRLX was up 5.77% with half of the volatility of the broad equity indices during the same time period. Moreover, Beacon Funds continued to have stellar peer group results, with BARLX ranking in the top 13% of its Morningstar peer group universe and BPRLX ranking in the top 11% of the same peer group universe during the 2019 fiscal year1.

 

 

2www.beacontrust.com

 

 

 

Beacon Funds TrustShareholder Letter

 

September 30, 2019 (Unaudited)

 

Income component of returns generated from short options helped results, while the directional component of returns generated from long options detracted from performance. Portfolio hedging helped maintain a low volatility profile for BPRLX during the 2019 fiscal year.

 

The rules-based, systematic equity strategy that Accelerated Return Strategy and Planned Return Strategy employ, with downside protection in the case of BPRLX, has been gaining good traction with individual and institutional investors over the past two years, as evidenced by the popularity and robust asset gathering of the defined outcome strategies offered by various fund sponsors and ETF providers.

 

Beacon’s Accelerated Return Strategy and Planned Return Strategy are early adopters in the defined outcome strategy space, managed by an experienced team. They are much easier to understand alternatives to expensive hedge fund strategies, unproven absolute return products, and hard to understand black swan strategies that investors have used in the past to manage equity risk.

 

We believe Beacon's systematic equity strategies may also offer a good solution to the dilemma bond investors face today in this ultra-low yield environment when fixed income securities do not offer sufficient yields to meet most investors’ return objectives.

 

10-year Treasury bonds yield 1.8% as of the time of this writing, which is the most investors can earn over the next 10 years unless yields are suppressed even lower: an unlikely event. If bond yields move up 1% however, investors can lose approximately 8% of the value of their Treasury bonds as bond yields and prices move in opposite directions.

 

Beacon funds seek to have similar portfolio diversification benefits and the low risk-profile of bonds, however, they also pursue better total return outcomes than bonds without any sensitivity to interest rates. As a result, we believe Beacon's rules-based strategies not only pair up well with traditional equities, but are also good supplements to traditional bond strategies.

 

Beacon Funds Portfolio Management Team

 

1Rankings are based on Morningstar’s options based investment category over the 9/30/18 – 9/30/19 period. BPRLX was the 19th best fund out of 170 funds, and BARLX was the 22nd best fund out of 170 funds in the category based on investment performance.

 

Alpha is a measure of performance. It is the excess return of an investment relative to the return of a benchmark index.

 

Beta is a measure of volatility. It measures the systematic risk of a portfolio in comparison the market as a whole.

 

HFRX Global Hedge Fund index is an index that is designed to be representative of the overall composition of the hedge fund universe.

 

S&P 500 is an American stock market index based on the market capitalizations of 500 large companies having common stock listed on the NYSE or NASDAQ.

 

 

Annual Report | September 30, 20193

 

 

 

Beacon Accelerated Return Strategy FundPortfolio Update

 

September 30, 2019 (Unaudited)

 

Performance of a Hypothetical $1,000,000 Initial Investment
(at Inception* through September 30, 2019)

 

 

 

The graph shown above represents historical performance of a hypothetical investment of $1,000,000 in the Institutional Class. Past performance does not guarantee future results. All returns reflect reinvested dividends, but do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

 

Performance(as of September 30, 2019)

 

 1 Month3 Month6 MonthYTD1 YearSince
Inception*
Beacon Accelerated Return Strategy Fund – Institutional Class2.22%1.91%6.17%22.00%5.09%9.34%
CBOE S&P 500 BuyWrite Index0.65%0.56%3.85%10.88%-1.11%4.15%

 

The performance data quoted above represents past performance. Past performance is not a guarantee of future results. Investment return and value of the Fund shares will fluctuate so that an investor’s shares, when sold or redeemed, may be worth more or less than their original cost. Performance may be lower or higher than performance data quoted. Fund performance current to the most recent month end is available by calling (844) 814-9222 or by visiting www.beacontrust.com.

 

*Inception date of October 2, 2017 for Institutional Class.

 

The Cboe S&P 500 BuyWrite Index (BXM) is a benchmark index designed to track the performance of a hypothetical buy-write strategy on the S&P 500 Index. The BXM is a passive total return index based on (1) buying an S&P 500 stock index portfolio, and (2) “writing” (or selling) the near-term S&P 500 Index (SPXSM) “covered” call option, generally on the third Friday of each month. The SPX call written will have about one month remaining to expiration, with an exercise price just above the prevailing index level (i.e., slightly out of the money). The SPX call is held until expiration and cash settled, at which time a new one-month, near-the-money call is written.

 

Returns of less than 1 year are cumulative.

 

 

4www.beacontrust.com

 

 

 

Beacon Accelerated Return Strategy FundPortfolio Update

 

September 30, 2019 (Unaudited)

 

Indices are not actively managed and do not reflect a deduction for fees, expenses or taxes. An investor cannot invest directly in an index.

 

The returns shown above do not reflect the deduction of taxes a shareholder would pay on Fund distributions or redemption of Fund shares.

 

The total annual operating expenses and total annual operating expenses after fee waivers and/or reimbursement you may pay as an investor in the Fund’s Institutional Class shares (as reported in the January 28, 2019 Prospectus), are 1.35 % and 1.35%, respectively. The Fund’s investment adviser has contractually agreed to limit expenses through January 31, 2020.

 

Top Ten Holdings(as a % of Net Assets)*

 

Option ContractExpiration DateStrike Price 
S&P 500® Mini Index10/14/20190.0110.63%
S&P 500® Mini Index3/13/20200.019.94%
S&P 500® Mini Index11/14/20190.018.99%
S&P 500® Mini Index12/13/20190.018.72%
S&P 500® Mini Index1/14/20200.018.72%
S&P 500® Mini Index4/14/20200.018.69%
S&P 500® Mini Index5/14/20200.018.43%
S&P 500® Mini Index6/12/20200.018.17%
S&P 500® Mini Index7/14/20200.018.16%
S&P 500® Mini Index8/14/20200.018.02%
Top Ten Holdings 88.47%

 

Asset Allocation(as a % of Net Assets)*

 

Purchased Option Contracts103.30%
Written Option Contracts(5.34)%
Cash, Money Market Funds, & Other Assetsin Excess of Liabilities2.04%
Total100.00%

 

*Holdings are subject to change, and may not reflect the current or future position of the portfolio.

 

 

Annual Report | September 30, 20195

 

 

 

Beacon Planned Return Strategy FundPortfolio Update

 

September 30, 2019 (Unaudited)

 

Performance of a Hypothetical $1,000,000 Initial Investment
(at Inception* through September 30, 2019)

 

 

 

The graph shown above represents historical performance of a hypothetical investment of $1,000,000 in the Institutional Class. Past performance does not guarantee future results. All returns reflect reinvested dividends, but do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

 

Performance(as of September 30, 2019)

 

 1 Month3 Month6 MonthYTD1 YearSince
Inception*
Beacon Planned Return Strategy Fund – Institutional Class1.56%1.26%4.30%14.10%5.77%6.72%
CBOE S&P 500 BuyWrite Index0.65%0.56%3.85%10.88%-1.11%4.15%

 

The performance data quoted above represents past performance. Past performance is not a guarantee of future results. Investment return and value of the Fund shares will fluctuate so that an investor’s shares, when sold or redeemed, may be worth more or less than their original cost. Performance may be lower or higher than performance data quoted. Fund performance current to the most recent month end is available by calling (844) 894-9222 or by visiting www.beacontrust.com.

 

*Inception date of October 2, 2017 for Institutional Class.

 

The Cboe S&P 500 BuyWrite Index (BXM) is a benchmark index designed to track the performance of a hypothetical buy-write strategy on the S&P 500 Index. The BXM is a passive total return index based on (1) buying an S&P 500 stock index portfolio, and (2) “writing” (or selling) the near-term S&P 500 Index (SPXSM) “covered” call option, generally on the third Friday of each month. The SPX call written will have about one month remaining to expiration, with an exercise price just above the prevailing index level (i.e., slightly out of the money). The SPX call is held until expiration and cash settled, at which time a new one-month, near-the-money call is written.

 

Returns of less than 1 year are cumulative.

 

Indices are not actively managed and do not reflect a deduction for fees, expenses or taxes. An investor cannot invest directly in an index.

 

 

6www.beacontrust.com

 

 

 

Beacon Planned Return Strategy FundPortfolio Update

 

September 30, 2019 (Unaudited)

 

The returns shown above do not reflect the deduction of taxes a shareholder would pay on Fund distributions or redemption of Fund shares.

 

The total annual operating expenses and total annual operating expenses after fee waivers and/or reimbursement you may pay as an investor in the Fund’s Institutional Class shares (as reported in the January 28, 2019 Prospectus), 1.31% and 1.31%, respectively. The Fund’s investment adviser has contractually agreed to limit expenses through January 31, 2020.

 

Top Ten Holdings(as a % of Net Assets)*

 

Option ContractExpiration DateStrike Price 
S&P 500® Mini Index10/14/201935.9610.25%
S&P 500® Mini Index1/14/202036.1210.21%
S&P 500® Mini Index12/13/201933.9010.04%
S&P 500® Mini Index6/12/202039.309.18%
S&P 500® Mini Index7/14/202037.088.41%
S&P 500® Mini Index8/14/202039.108.12%
S&P 500® Mini Index5/14/202037.757.99%
S&P 500® Mini Index4/14/202036.787.60%
S&P 500® Mini Index2/14/202036.705.76%
S&P 500® Mini Index3/13/202037.885.73%
Top Ten Holdings 83.29%

 

Asset Allocation(as a % of Net Assets)*

 

Purchased Option Contracts111.69%
Written Option Contracts(13.05)%
Cash, Money Market Funds, & Other Assets in Excess of Liabilities1.36%
Total100.00%

 

*Holdings are subject to change, and may not reflect the current or future position of the portfolio.

 

 

Annual Report | September 30, 20197

 

 

 

Beacon Funds TrustDisclosure of Fund Expenses

 

September 30, 2019 (Unaudited)

 

Example.As a shareholder of the Beacon Accelerated Return Strategy Fund or Beacon Planned Return Strategy Fund (the “Funds”), you incur two types of costs: (1) transaction costs; and (2) ongoing costs, including management fees and other Fund expenses. The following examples are intended to help you understand your ongoing costs (in dollars) of investing in a Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The examples are based on an investment of $1,000 invested on April 1, 2019 and held through September 30, 2019.

 

Actual Expenses.The first line under each class in the following table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading “Expenses Paid During Period April 1, 2019 – September 30, 2019” to estimate the expenses you paid on your account during this period.

 

Hypothetical Example for Comparison Purposes.The second line under each class in the following table provides information about hypothetical account values and hypothetical expenses based on a Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in a Fund and other mutual funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

 

Please note that the expenses shown in the table are meant to highlight your ongoing Fund costs only and do not reflect any transactional costs. Therefore, the second line under each class in the table below is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

 

 

8www.beacontrust.com

 

 

 

Beacon Funds TrustDisclosure of Fund Expenses

 

September 30, 2019 (Unaudited)

 

 Beginning
Account Value
April 1, 2019
Ending
Account Value
September 30, 2019
Expense
Ratio(a)
Expenses Paid
During Period
April 1, 2019 -
September 30, 2019(b)
Beacon Accelerated Return    
Strategy Fund    
Institutional Class    
Actual$1,000.00$1,061.701.21%$6.25
Hypothetical (5% return before expenses)$1,000.00$1,019.001.21%$6.12
     
Beacon Planned Return    
Strategy Fund    
Institutional Class    
Actual$1,000.00$1,043.001.17%$5.99
Hypothetical (5% return before expenses)$1,000.00$1,019.201.17%$5.92

 

(a)Each Fund's expense ratios have been annualized based on the Fund's most recent fiscal half-year expenses after any applicable waivers and reimbursements.
(b)Expenses are equal to the annualized expense ratio shown above for the applicable class, multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half year (183), divided by 365.

 

 

Annual Report | September 30, 20199

 

 

 

Beacon Accelerated Return Strategy FundPortfolio of Investments

 

September 30, 2019

 

Counterparty Expiration Date Strike Price Contracts Notional Value Value
(Note 2)
PURCHASED OPTION CONTRACTS - (103.30%)         
Call Option Contracts (103.30%)         
S&P 500® Mini Index:                 
Jefferies 10/14/2019 $0.01  425  $12,650,975  $12,650,938 
Jefferies 10/14/2019  276.20  425   12,650,975   932,877 
Jefferies 11/14/2019  261.10  360   10,716,120   1,346,810 
Jefferies 11/14/2019  0.01  360   10,716,120   10,697,279 
Jefferies 12/13/2019  0.01  350   10,418,450   10,385,348 
Jefferies 12/13/2019  260.97  150   4,465,050   575,307 
Jefferies 12/13/2019  277.00  200   5,953,400   479,450 
Jefferies 01/14/2020  0.01  350   10,418,450   10,381,066 
Jefferies 01/14/2020  277.00  120   3,572,040   307,728 
Jefferies 01/14/2020  282.00  230   6,846,410   496,211 
Jefferies 02/14/2020  0.01  300   8,930,100   8,884,271 
Jefferies 02/14/2020  282.00  160   4,762,720   368,243 
Jefferies 02/14/2020  289.92  140   4,167,380   239,246 
Jefferies 03/13/2020  285.40  400   11,906,800   859,917 
Jefferies 03/13/2020  0.01  400   11,906,800   11,828,848 
Jefferies 04/14/2020  0.01  350   10,418,450   10,338,907 
Jefferies 04/14/2020  289.19  350   10,418,450   701,442 
Jefferies 05/14/2020  0.01  340   10,120,780   10,030,457 
Jefferies 05/14/2020  289.19  90   2,679,030   190,722 
Jefferies 05/14/2020  301.17  250   7,441,750   336,035 
Jefferies 06/12/2020  0.01  330   9,823,110   9,720,570 
Jefferies 06/12/2020  284.80  180   5,358,060   454,713 
Jefferies 06/12/2020  301.17  150   4,465,050   216,520 
Jefferies 07/14/2020  284.80  180   5,358,060   472,705 
Jefferies 07/14/2020  299.47  150   4,465,050   248,200 
Jefferies 07/14/2020  0.01  330   9,823,110   9,713,559 
Jefferies 08/14/2020  299.47  325   9,674,275   569,684 
Jefferies 08/14/2020  0.01  325   9,674,275   9,552,234 
            229,801,240   122,979,287 
TOTAL PURCHASED OPTION CONTRACTS         
(Cost $114,221,359)          $229,801,240  $122,979,287 

 

See Notes to Financial Statements. 

 

10www.beacontrust.com

 

 

 

Beacon Accelerated Return Strategy FundPortfolio of Investments

 

September 30, 2019

 

  7 Day Yield Shares Value
(Note 2)
SHORT TERM INVESTMENTS (0.90%)            
Money Market Funds            
BlackRock Liquidity Funds, T-Fund Portfolio - Institutional Class(a)  1.336%  180,290   180,290 
Invesco Short-Term Investments Trust Government & Agency Portfolio -Institutional Class  1.816%  885,416   885,416 
           1,065,706 
TOTAL SHORT TERM INVESTMENTS            
(Cost $1,065,706)          1,065,706 
             
TOTAL INVESTMENTS (104.20%)            
(Cost $115,287,065)         $124,044,993 
             
LIABILITIES IN EXCESS OF OTHER ASSETS (-4.20%)          (5,003,089)
             
NET ASSETS (100.00%)         $119,041,904 

 

(a)All or a portion is held as collateral at broker for written options.

 

See Notes to Financial Statements.

 

Annual Report | September 30, 201911

 

 

 

Beacon Accelerated Return Strategy FundPortfolio of Investments

 

September 30, 2019

 

WRITTEN OPTION CONTRACTS (5.34%) 

 

Counterparty 

Expiration

Date

 

Strike

Price

  Contracts  

Premiums

Received

  

Notional

Value

  

Value

(Note 2)

 
Call Option Contracts - (5.34%)
S&P 500® Mini Index
Jefferies 10/14/19 $300.16   (850)  $597,298  $(25,301,950) $(151,597)
Jefferies 11/14/19  283.53   (720)   424,585   (21,432,240)  (1,217,408)
Jefferies 12/13/19  284.12   (300)   186,805   (8,930,100)  (541,367)
Jefferies 12/13/19  297.78   (400)   219,075   (11,906,800)  (326,941)
Jefferies 01/14/20  299.16   (240)   137,681   (7,144,080)  (224,853)
Jefferies 01/14/20  301.54   (460)   241,357   (13,692,820)  (366,613)
Jefferies 02/14/20  303.15   (320)   175,898   (9,525,440)  (275,122)
Jefferies 02/14/20  309.55   (280)   142,149   (8,334,760)  (149,828)
Jefferies 03/13/20  305.18   (800)   438,959   (23,813,600)  (696,111)
Jefferies 04/14/20  309.72   (700)   392,488   (20,836,900)  (536,445)
Jefferies 05/14/20  311.46   (180)   103,978   (5,358,060)  (142,144)
Jefferies 05/14/20  320.69   (500)   265,846   (14,883,500)  (201,468)
Jefferies 06/12/20  306.73   (360)   229,926   (10,716,120)  (405,410)
Jefferies 06/12/20  322.28   (300)   165,503   (8,930,100)  (125,546)
Jefferies 07/14/20  308.18   (360)   234,966   (10,716,120)  (417,849)
Jefferies 07/14/20  320.61   (300)   192,804   (8,930,100)  (178,303)
Jefferies 08/14/20  322.32   (650)   432,703   (19,348,550)  (394,811)
TOTAL WRITTEN OPTION CONTRACTS  $4,582,021  $(229,801,240) $(6,351,816)

 

See Notes to Financial Statements.

 

12www.beacontrust.com

 

 

 

Beacon Planned Return Strategy FundPortfolio of Investments

 

September 30, 2019

 

Counterparty 

Expiration

Date

 

Strike

Price

  Contracts  

Notional

Value

  

Value

(Note 2)

 
PURCHASED OPTION CONTRACTS - (111.69%) 
Call Option Contracts (108.39%)
S&P 500® Mini Index:                 
Jefferies 10/14/2019 $35.96  1,200  $35,720,400  $31,409,450 
Jefferies 10/14/2019  276.95  1,200   35,720,400   2,546,696 
Jefferies 11/14/2019  35.03  550   16,371,850   14,421,373 
Jefferies 11/14/2019  270.50  550   16,371,850   1,571,100 
Jefferies 11/14/2019  260.69  610   18,157,870   2,305,993 
Jefferies 11/14/2019  33.90  610   18,157,870   16,063,386 
Jefferies 12/13/2019  260.69  1,170   34,827,390   4,517,740 
Jefferies 12/13/2019  33.90  1,170   34,827,390   30,766,140 
Jefferies 01/14/2020  276.70  1,200   35,720,400   3,107,250 
Jefferies 01/14/2020  36.12  1,200   35,720,400   31,281,153 
Jefferies 02/14/2020  36.70  680   20,241,560   17,658,833 
Jefferies 02/14/2020  37.88  310   9,227,770   8,014,006 
Jefferies 02/14/2020  290.40  310   9,227,770   519,149 
Jefferies 02/14/2020  282.75  680   20,241,560   1,525,420 
Jefferies 03/13/2020  285.15  200   5,953,400   433,646 
Jefferies 03/13/2020  37.88  680   20,241,560   17,553,440 
Jefferies 03/13/2020  36.78  200   5,953,400   5,184,609 
Jefferies 03/13/2020  290.40  680   20,241,560   1,217,269 
Jefferies 04/14/2020  285.15  900   26,790,300   2,064,061 
Jefferies 04/14/2020  36.78  900   26,790,300   23,305,872 
Jefferies 05/14/2020  289.23  950   28,278,650   2,010,541 
Jefferies 05/14/2020  37.75  950   28,278,650   24,477,071 
Jefferies 06/12/2020  301.03  1,100   32,743,700   1,597,104 
Jefferies 06/12/2020  39.30  1,100   32,743,700   28,128,253 
Jefferies 07/14/2020  37.08  1,000   29,767,000   25,773,803 
Jefferies 07/14/2020  283.60  1,000   29,767,000   2,711,845 
Jefferies 08/14/2020  39.10  975   29,022,825   24,896,828 
Jefferies 08/14/2020  299.75  975   29,022,825   1,692,604 
Jefferies 09/14/2020  299.75  200   5,953,400   365,844 
Jefferies 09/14/2020  39.10  200   5,953,400   5,099,785 
            698,036,150   332,220,264 

 

See Notes to Financial Statements.

 
Annual Report | September 30, 201913

 

 

 

Beacon Planned Return Strategy FundPortfolio of Investments

 

September 30, 2019

 

Counterparty 

Expiration

Date

 

Strike

Price

  Contracts  

Notional

Value

  

Value

(Note 2)

 
PURCHASED OPTION CONTRACTS - (111.69%) (continued)
Put Option Contracts (3.30%)
S&P 500®Mini Index:                 
Jefferies 10/14/2019 $276.95  1,200  $35,720,400  $34,873 
Jefferies 11/14/2019  270.50  550   16,371,850   70,939 
Jefferies 11/14/2019  260.69  610   18,157,870   45,137 
Jefferies 12/13/2019  260.69  1,170   34,827,390   188,759 
Jefferies 01/14/2020  276.70  1,200   35,720,400   548,266 
Jefferies 02/14/2020  282.75  680   20,241,560   490,214 
Jefferies 02/14/2020  290.40  310   9,227,770   282,839 
Jefferies 03/13/2020  285.15  200   5,953,400   178,711 
Jefferies 03/13/2020  290.40  680   20,241,560   704,779 
Jefferies 04/14/2020  285.15  900   26,790,300   912,831 
Jefferies 05/14/2020  289.23  950   28,278,650   1,183,561 
Jefferies 06/12/2020  301.03  1,100   32,743,700   1,937,705 
Jefferies 07/14/2020  283.60  1,000   29,767,000   1,285,634 
Jefferies 08/14/2020  299.75  975   29,022,825   1,866,421 
Jefferies 09/14/2020  299.75  200   5,953,400   403,011 
           349,018,075   10,133,680 
TOTAL PURCHASED OPTION CONTRACTS          
(Cost $322,460,139)  $1,047,054,225  $342,353,944 

 

  7 Day Yield  Shares  

Value

(Note 2)

 
SHORT TERM INVESTMENTS(1.47%)            
Money Market Funds            
BlackRock Liquidity Funds, T-Fund Portfolio - Institutional Class(a)  1.336%  354,067   354,067 
Invesco Short-Term Investments Trust Government & Agency Portfolio - Institutional Class  1.816%  4,156,207   4,156,207 
           4,510,274 
TOTAL SHORT TERM INVESTMENTS            
(Cost $4,510,274)          4,510,274 
             
TOTAL INVESTMENTS (113.16%)            
(Cost $326,970,413)         $346,864,218 
             
LIABILITIES IN EXCESS OF OTHER ASSETS (-13.16%)          (40,340,240)
             
NET ASSETS (100.00%)         $306,523,978 

 

(a)All or a portion is held as collateral at broker for written options.

 

See Notes to Financial Statements.

 

14www.beacontrust.com

 

 

 

Beacon Planned Return Strategy FundPortfolio of Investments

 

September 30, 2019

 

WRITTEN OPTION CONTRACTS (13.05%)

 

Counterparty 

Expiration

Date

 

Strike

Price

  Contracts  

Premiums

Received

  

Notional

Value

  

Value

(Note 2)

 
Put Option Contracts - (1.66%)
S&P 500® Mini Index
Jefferies 10/14/19 $249.26   (1,200)  $1,085,649  $(35,720,400) $(3,153)
Jefferies 11/14/19  243.45   (550)   530,584   (16,371,850)  (15,502)
Jefferies 11/14/19  234.62   (610)   470,737   (18,157,870)  (10,472)
Jefferies 12/13/19  234.62   (1,170)   967,247   (34,827,390)  (61,288)
Jefferies 01/14/20  249.03   (1,200)   905,644   (35,720,400)  (207,580)
Jefferies 02/14/20  254.48   (680)   477,834   (20,241,560)  (210,027)
Jefferies 02/14/20  261.36   (310)   201,090   (9,227,770)  (118,774)
Jefferies 03/13/20  256.64   (200)   147,332   (5,953,400)  (82,217)
Jefferies 03/13/20  261.36   (680)   480,554   (20,241,560)  (317,435)
Jefferies 04/14/20  256.64   (900)   726,930   (26,790,300)  (446,861)
Jefferies 05/14/20  260.31   (950)   754,016   (28,278,650)  (603,414)
Jefferies 06/12/20  270.93   (1,100)   878,572   (32,743,700)  (1,002,272)
Jefferies 07/14/20  255.24   (1,000)   993,702   (29,767,000)  (709,263)
Jefferies 08/14/20  269.78   (975)   937,659   (29,022,825)  (1,032,119)
Jefferies 09/14/20  269.78   (200)   207,132   (5,953,400)  (229,757)
             9,764,682   (349,018,075)  (5,050,134)
                       
Call Option Contracts - (11.39%)
S&P 500® Mini Index
Jefferies 10/14/19  291.07   (2,400)   2,711,309   (71,440,800)  (1,961,794)
Jefferies 11/14/19  285.49   (1,100)   1,321,877   (32,743,700)  (1,678,581)
Jefferies 11/14/19  272.55   (1,220)   1,252,583   (36,315,740)  (3,254,573)
Jefferies 12/13/19  273.33   (2,340)   2,475,045   (69,654,780)  (6,356,448)
Jefferies 01/14/20  288.81   (2,400)   2,432,898   (71,440,800)  (3,923,459)
Jefferies 02/14/20  294.12   (1,360)   1,309,277   (40,483,120)  (1,928,134)
Jefferies 02/14/20  300.74   (620)   578,271   (18,455,540)  (619,053)
Jefferies 03/13/20  295.90   (400)   398,674   (11,906,800)  (568,073)
Jefferies 03/13/20  301.78   (1,360)   1,303,837   (40,483,120)  (1,440,833)
Jefferies 04/14/20  296.90   (1,800)   1,858,870   (53,580,600)  (2,680,170)
Jefferies 05/14/20  300.83   (1,900)   1,935,541   (56,557,300)  (2,592,612)
Jefferies 06/12/20  312.70   (2,200)   2,032,155   (65,487,400)  (1,807,381)
Jefferies 07/14/20  296.62   (2,000)   2,295,414   (59,534,000)  (3,662,052)
Jefferies 08/14/20  312.25   (1,950)   2,191,228   (58,045,650)  (2,043,024)
Jefferies 09/14/20  313.39   (400)   463,075   (11,906,800)  (431,231)
             24,560,054   (698,036,150)  (34,947,418)
                       
TOTAL WRITTEN OPTION CONTRACTS  $34,324,736  $(1,047,054,225) $(39,997,552)

 

See Notes to Financial Statements.

 
Annual Report | September 30, 201915

 

 

 

Beacon Funds TrustStatements of Assets and Liabilities
 

September 30, 2019

 

  

BEACON

ACCELERATED

RETURN

STRATEGY

FUND

  

BEACON

PLANNED

RETURN

STRATEGY

FUND

 
ASSETS:      
Investments, at value (Cost $115,287,065 and $326,970,413) $124,044,993  $346,864,218 
Cash and cash equivalents  1,500,000    
Dividends and interest receivable  3,846   8,522 
Other assets  20,969   21,518 
Total Assets  125,569,808   346,894,258 
         
LIABILITIES:        
Written options, at value (premiums received $4,582,021 and $34,324,736)  6,351,816   39,997,552 
Payable for administration and transfer agency fees  24,343   58,749 
Payable for shares redeemed  10,971   10,816 
Payable to adviser  97,784   251,421 
Payable for distribution and service fees  11,804   7,180 
Payable for printing  411   930 
Payable for professional fees  23,255   29,988 
Payable for trustees' fees and expenses  54   139 
Payable to Chief Compliance Officer fees  722   1,865 
Accrued expenses and other liabilities  6,744   11,640 
Total Liabilities  6,527,904   40,370,280 
NET ASSETS $119,041,904  $306,523,978 
         
NET ASSETS CONSIST OF:        
Paid-in capital (Note 6) $116,366,641  $291,328,204 
Total distributable earnings  2,675,263   15,195,774 
NET ASSETS $119,041,904  $306,523,978 
         
PRICING OF SHARES        
Institutional Class :        
Net Asset Value, offering and redemption price per share $10.15  $10.44 
Net Assets $119,041,904  $306,523,978 
Shares of beneficial interest outstanding  11,724,796   29,368,996 

 

See Notes to Financial Statements.

 
16www.beacontrust.com

 

 

 

Beacon Funds TrustStatements of Operations

 

For the Year Ended September 30, 2019

 

  

BEACON

ACCELERATED

RETURN

STRATEGY

FUND

  

BEACON

PLANNED

RETURN

STRATEGY

FUND

 
INVESTMENT INCOME:      
Dividends $55,438  $121,706 
Total Investment Income  55,438   121,706 
         
EXPENSES:        
Investment advisory fees (Note 7)  1,227,896   3,094,171 
Administration fees  104,368   260,634 
Shareholder service fees        
Institutional Class  4,359   25,638 
Class A  3   3 
Distribution fees        
Class A  26   25 
Custody fees  5,777   5,794 
Legal fees  9,258   24,004 
Audit and tax fees  19,195   19,477 
Transfer agent fees  27,539   59,415 
Trustees fees and expenses  11,721   29,592 
Registration and filing fees  38,009   57,332 
Printing fees  3,628   8,893 
Chief Compliance Officer fees  8,657   21,868 
Insurance fees  5,045   14,021 
Offering costs  233   230 
Other expenses  6,059   9,308 
Total Expenses  1,471,773   3,630,405 
NET INVESTMENT LOSS  (1,416,335)  (3,508,699)
         
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS AND WRITTEN OPTIONS:        
Net realized gain/(loss) on:    
Investments  2,629,789   (2,313,998)
Written options  5,952,817   26,658,081 
Net realized gain  8,582,606   24,344,083 
Change in unrealized appreciation/(depreciation) on:    
Investments  (8,006,478)  (23,681,795)
Written options  3,515,271   18,042,144 
Net change  (4,491,207)  (5,639,651)
         
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS AND WRITTEN OPTIONS  4,091,399   18,704,432 
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $2,675,064  $15,195,733 

 

See Notes to Financial Statements.

 
Annual Report | September 30, 201917

 

 

 

Beacon Accelerated

Return Strategy Fund

Statements of Changes in Net Assets
 

 

  

For the

Year Ended

September 30,

2019

  

For the

Period Ended

September 30,

2018(a)

 
OPERATIONS:      
Net investment loss $(1,416,335) $(1,773,483)
Net realized gain on investments and written options  8,582,606   9,097,658 
Net change in unrealized appreciation/(depreciation) on investments and written options  (4,491,207)  11,479,340 
Net increase in net assets resulting from operations  2,675,064   18,803,515 
         
DISTRIBUTIONS TO SHAREHOLDERS        
Class A(b)(c)  (1,311)   
Institutional Class  (17,982,239)  (870,244)
Total distributions  (17,983,550)  (870,244)
         
BENEFICIAL SHARE TRANSACTIONS (Note 6):        
Class A(b)(c)        
Shares sold     10,000 
Dividends reinvested  1,311    
Shares redeemed  (10,971)   
Net increase/(decrease) from beneficial share transactions  (9,660)  10,000 
Institutional Class        
Shares sold  20,818,136   151,518,922 
Dividends reinvested  17,459,214   153,524 
Shares redeemed  (58,445,591)  (15,087,426)
Net increase/(decrease) from beneficial share transactions  (20,168,241)  136,585,020 
Net increase/(decrease) in net assets  (35,486,387)  154,528,291 
         
NET ASSETS:        
Beginning of period  154,528,291    
End of period $119,041,904  $154,528,291 

 

(a)Commenced operations on October 2, 2017.
(b)Commenced operations on June 11, 2018.
(c)Effective as of September 30, 2019, the Fund has suspended the offering of its Class A shares.

 

See Notes to Financial Statements.

 
18www.beacontrust.com

 

 

 

Beacon Planned
Return Strategy Fund
Statements of Changes in Net Assets
 

 

  

For the

Year Ended

September 30,

2019

  

For the

Period Ended

September 30,

2018(a)

 
OPERATIONS:      
Net investment loss $(3,508,699) $(4,140,058)
Net realized gain on investments and written options  24,344,083   9,765,102 
Net change in unrealized appreciation/(depreciation) on investments and written options  (5,639,651)  19,860,640 
Net increase in net assets resulting from operations  15,195,733   25,485,684 
         
DISTRIBUTIONS TO SHAREHOLDERS        
Class A(b)(c)  (762)   
Institutional Class  (24,405,566)  (1,129,696)
Total distributions  (24,406,328)  (1,129,696)
         
BENEFICIAL SHARE TRANSACTIONS (Note 6):        
Class A(b)(c)        
Shares sold     10,000 
Dividends reinvested  762    
Shares redeemed  (10,816)   
Net increase/(decrease) from beneficial share transactions  (10,054)  10,000 
Institutional Class        
Shares sold  23,162,773   370,673,094 
Dividends reinvested  21,646,863   293,880 
Shares redeemed  (80,670,196)  (43,727,775)
Net increase/(decrease) from beneficial share transactions  (35,860,560)  327,239,199 
Net increase/(decrease) in net assets  (45,081,209)  351,605,187 
         
NET ASSETS:        
Beginning of period  351,605,187    
End of period $306,523,978  $351,605,187 

 

(a)Commenced operations on October 2, 2017.
(b)Commenced operations on June 11, 2018.
(c)Effective as of September 30, 2019, the Fund has suspended the offering of its Class A shares.

 

See Notes to Financial Statements.

 
Annual Report | September 30, 201919

 

 

 

Beacon Accelerated
Return Strategy Fund – Institutional Class
Financial Highlights

 

For a Share Outstanding Throughout the Period Presented

 

  

For the

Year Ended

September 30,

2019

  

For the

Period Ended

September 30,

2018(a)

 
NET ASSET VALUE, BEGINNING OF PERIOD $11.30  $10.00 
         
INCOME/(LOSS) FROM OPERATIONS:        
Net investment loss(b)  (0.11)  (0.13)
Net realized and unrealized gain on investments  0.37   1.49 
Total from investment operations  0.26   1.36 
         
LESS DISTRIBUTIONS:        
From net realized gains on investments  (1.41)  (0.06)
Total Distributions  (1.41)  (0.06)
NET INCREASE/(DECREASE) IN NET ASSET VALUE  (1.15)  1.30 
NET ASSET VALUE, END OF PERIOD $10.15  $11.30 
         
TOTAL RETURN(c)  5.09%  13.70%
         
SUPPLEMENTAL DATA:        
Net assets, end of period (in 000s) $119,042  $154,518 
         
RATIOS TO AVERAGE NET ASSETS        
Operating expenses(d)  1.20%  1.29%(e)
Net investment loss  (1.16%)  (1.25%)(e)
         
PORTFOLIO TURNOVER RATE(f)(g)  0%  0%

 

(a)Commenced operations on October 2, 2017.
(b)Calculated using the average shares method.
(c)Assumes an initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are for the period indicated and have not been annualized. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
(d)According to the Fund's shareholder services plan with respect to the Fund's Institutional Class shares, any amount of fees accrued according to the plan but not paid during the Fund's fiscal year for such service activities shall be reimbursed to the Fund as soon as practical. Fees were reimbursed to the Fund during the period ended September 30, 2019 and period ended September 30, 2018, respectively, in the amount of 0.14% (annualized) and 0.06% (annualized) of average net assets of Institutional Class shares.
(e)Annualized.
(f)Portfolio turnover rate for periods less than one full year have not been annualized.
(g)All securities whose maturity or expiration date at time of acquisition were one year or less are excluded from the portfolio turnover calculation.

 

See Notes to Financial Statements.

 
20www.beacontrust.com

 

 

 

Beacon Planned
Return Strategy Fund – Institutional Class
Financial Highlights
 

For a Share Outstanding Throughout the Period Presented

 

  

For the

Year Ended

September 30,

2019

  

For the

Period Ended

September 30,

2018(a)

 
NET ASSET VALUE, BEGINNING OF PERIOD $10.73  $10.00 
         
INCOME/(LOSS) FROM OPERATIONS:        
Net investment loss(b)  (0.11)  (0.13)
Net realized and unrealized gain on investments  0.62   0.89 
Total from investment operations  0.51   0.76 
         
LESS DISTRIBUTIONS:        
From net realized gains on investments  (0.80)  (0.03)
Total Distributions  (0.80)  (0.03)
NET INCREASE/(DECREASE) IN NET ASSET VALUE  (0.29)  0.73 
NET ASSET VALUE, END OF PERIOD $10.44  $10.73 
         
TOTAL RETURN(c)  5.77%  7.64%
         
SUPPLEMENTAL DATA:        
Net assets, end of period (in 000s) $306,524  $351,595 
         
RATIOS TO AVERAGE NET ASSETS        
Operating expenses(d)  1.17%  1.25%(e)
Net investment loss  (1.13%)  (1.23%)(e)
         
PORTFOLIO TURNOVER RATE(f)(g)  0%  0%

 

(a)Commenced operations on October 2, 2017.
(b)Calculated using the average shares method.
(c)Assumes an initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are for the period indicated and have not been annualized. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
(d)According to the Fund's shareholder services plan with respect to the Fund's Institutional Class shares, any amount of fees accrued according to the plan but not paid during the Fund's fiscal year for such service activities shall be reimbursed to the Fund as soon as practical. Fees were reimbursed to the Fund during the period ended September 30, 2019 and period ended September 30, 2018, respectively, in the amount of 0.14% (annualized) and 0.06% (annualized) of average net assets of Institutional Class shares.
(e)Annualized.
(f)Portfolio turnover rate for periods less than one full year have not been annualized.
(g)All securities whose maturity or expiration date at time of acquisition were one year or less are excluded from the portfolio turnover calculation.

 

See Notes to Financial Statements.

 
Annual Report | September 30, 201921

 

 

 

Beacon Funds TrustNotes to Financial Statements
 

September 30, 2019

 

1. ORGANIZATION

 

 

ALPS Series Trust (the "Trust"), a Delaware statutory trust, is an open-end management investment company registered under the Investment Company Act of 1940, as amended (the "1940 Act"). The Trust consists of multiple separate portfolios or series. This annual report describes the Beacon Accelerated Return Strategy Fund and the Beacon Planned Return Strategy Fund (each, a "Fund" and collectively, the "Funds" or "Beacon Funds Trust"). The Funds are non-diversified and the primary investment objectives are to deliver capital appreciation and generate positive alpha for the Beacon Accelerated Return Strategy Fund, and capital preservation and capital appreciation for the Beacon Planned Return Strategy Fund. The Funds currently offer Institutional Class shares. Effective as of September 30, 2019, the Funds have suspended the offering of its Class A shares. Each share class of the Funds has identical rights to earnings, assets and voting privileges, except for class-specific expenses and exclusive rights to vote on matters affecting only individual classes. The Board of Trustees (the "Board") may establish additional funds and classes of shares at any time in the future without shareholder approval.

 

2. SIGNIFICANT ACCOUNTING POLICIES

 

 

The accompanying financial statements were prepared in accordance with accounting principles generally accepted in the United States of America for investment companies ("U.S. GAAP"). The Funds are considered investment companies under U.S. GAAP and follow the accounting and reporting guidance applicable to investment companies in the Financial Accounting Standards Board ("FASB")Accounting Standards CodificationTopic 946. The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the period. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Funds in preparation of their financial statements.

 

Investment Valuation:The Funds generally value their securities based on market prices determined at the close of regular trading on the New York Stock Exchange ("NYSE"), normally 4:00 p.m. Eastern Time, on each day the NYSE is open for trading.

 

FLEX Options are customized option contracts available through the Chicago Board Options Exchange ("CBOE"). Flexible Exchange Options are valued based on prices supplied by an independent third-party pricing service, which utilizes pricing models that incorporate various inputs such as interest rates, credit spreads, currency exchange rates and volatility measurements for in-the-money, at-the-money, and out-of-money contracts on a given strike price.

 

Redeemable securities issued by open-end registered investment companies are valued at the investment company's applicable net asset value ("NAV"). Money market funds, representing short-term investments, are valued at their NAV.

 

When such prices or quotations are not available, or when the Fair Value Committee appointed by the Board believes that they are unreliable, securities may be priced using fair value procedures approved by the Board.

 

 

22www.beacontrust.com

 

 

 

Beacon Funds TrustNotes to Financial Statements
 

September 30, 2019

 

Fair Value Measurements:The Funds disclose the classification of their fair value measurements following a three-tier hierarchy based on the inputs used to measure fair value. Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk. Inputs may be observable or unobservable. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability that are developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the reporting entity's own assumptions about the assumptions market participants would use in pricing the asset or liability that are developed based on the best information available.

 

Various inputs are used in determining the value of the Funds' investments as of the end of the reporting period. When inputs used fall into different levels of the fair value hierarchy, the level in the hierarchy within which the fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The designated input levels are not necessarily an indication of the risk or liquidity associated with these investments. These inputs are categorized in the following hierarchy under applicable financial accounting standards:

 

Level 1 – Unadjusted quoted prices in active markets for identical investments, unrestricted assets or liabilities that the Fund has the ability to access at the measurement date;

 

Level 2 – 

Quoted prices which are not active, quoted prices for similar assets or liabilities in activemarkets or inputs other than quoted prices that are observable (either directly or indirectly); and

 

Level 3 – Significant unobservable prices or inputs (including the Fund's own assumptions in determining the fair value of investments) where there is little or no market activity for the asset or liability at the measurement date.

 

 

Annual Report | September 30, 201923

 

 

 

Beacon Funds TrustNotes to Financial Statements
 

September 30, 2019

 

The following is a summary of the inputs used to value the Funds' investments as of September 30, 2019:

 

BEACON ACCELERATED RETURN STRATEGY FUND

 

         
Investments in Securities at Value Level 1 -
Unadjusted
Quoted Prices
 Level 2 - Other Significant Observable Inputs Level 3 -
Significant
Unobservable
Inputs
 Total
Purchased Option Contracts $  $122,979,287  $  $122,979,287 
Short Term Investments  1,065,706         1,065,706 
Total $1,065,706  $122,979,287  $  $124,044,993 

 

  Valuation Inputs     
Other Financial Instruments  Level 1   Level 2   Level 3   Total 
Liabilities                
Written Option Contracts $  $(6,351,816) $  $(6,351,816)
TOTAL $  $(6,351,816) $  $(6,351,816)

 

BEACON PLANNED RETURN STRATEGY FUND

 

Investments in Securities at Value Level 1 -
Unadjusted
Quoted Prices
 Level 2 - Other Significant Observable Inputs Level 3 -
Significant
Unobservable
Inputs
 Total
Purchased Option Contracts $  $342,353,944  $  $342,353,944 
Short Term Investments  4,510,274         4,510,274 
Total $4,510,274  $342,353,944  $  $346,864,218 

 

   Valuation Inputs     
Other Financial Instruments  Level 1   Level 2   Level 3   Total 
Liabilities                
Written Option Contracts $  $(39,997,552) $  $(39,997,552)
TOTAL $  $(39,997,552) $  $(39,997,552)

 

There were no Level 3 securities held during the year.

 

Cash & Cash Equivalents:The Funds consider their investment in a Federal Deposit Insurance Corporation ("FDIC") insured interest bearing account to be cash and cash equivalents. Cash and cash equivalents are valued at cost plus any accrued interest. The Funds maintain cash balances, which, at times may exceed federally insured limits. The Funds maintain these balances with a high quality financial institution.

 

Concentration of Credit Risk:The Funds place their cash with a banking institution, which is insured by FDIC. The FDIC limit is $250,000. At various times throughout the year, the amount on deposit may exceed the FDIC limit and subject the Funds to a credit risk. The Funds do not believe that such deposits are subject to any unusual risk associated with investment activities.

 

Offering Costs:The Funds incurred offering costs during the fiscal year ended September 30, 2019. These offering costs, including fees for printing initial prospectuses, legal and registration fees, are being amortized over the first twelve months from the inception date of the Funds. Amounts amortized through September 30, 2019, are expensed in the Funds' Statements of Operations.

 

 
24www.beacontrust.com

 

 

 

Beacon Funds TrustNotes to Financial Statements
 

September 30, 2019

 

Trust Expenses:Some expenses of the Trust can be directly attributed to a Fund. Expenses that cannot be directly attributed to a Fund are apportioned among all funds in the Trust based on average net assets of each fund.

 

Fund Expenses:Some expenses can be directly attributed to a Fund and are apportioned among the classes based on average net assets of each class.

 

Class Expenses:Expenses that are specific to a class of shares are charged directly to that share class. Fees provided under the distribution and services plan for a particular class of a Fund are charged to the operations of such class.

 

Federal Income Taxes:The Funds comply with the requirements under Subchapter M of the Internal Revenue Code of 1986, as amended, applicable to regulated investment companies and intend to distribute substantially all of their net taxable income and net capital gains, if any, each year so that they will not be subject to excise tax on undistributed income and gains. The Funds are not subject to income taxes to the extent such distributions are made.

 

As of and during the fiscal year ended September 30, 2019, the Funds did not have a liability for any unrecognized tax benefits in the accompanying financial statements. The Funds recognize interest and penalties, if any, related to tax liabilities as income tax expense in the Statements of Operations. The Funds file U.S. federal, state and local income tax returns as required. The Funds' tax returns are subject to examination by the relevant tax authorities until expiration of the applicable statute of limitations, which is generally three years after the filing of the tax return for federal purposes and four years for most state returns. The Funds' administrator has analyzed the Funds' tax positions and has concluded that as of September 30, 2019, no provision for income tax is required in the Funds' financial statements related to these tax positions.

 

Investment Transactions and Investment Income:Investment transactions are accounted for on the date the investments are purchased or sold (trade date basis for financial reporting purposes). Realized gains and losses from investment transactions are reported on an identified cost basis. Interest income, which includes accretion of discounts and amortization of premiums, is accrued and recorded as earned. Dividend income is recognized on the ex-dividend date, or for certain foreign securities, as soon as information is available to a Fund. Withholding taxes on foreign dividends are paid (a portion of which may be reclaimable) or provided for in accordance with the applicable country's tax rules and rates and are disclosed in the Statements of Operations. All of the realized and unrealized gains and losses and net investment income are allocated daily to each class in proportion to its average daily net assets.

 

Distributions to Shareholders:The Funds normally pay dividends, if any, and distribute capital gains, if any, on an annual basis. Income dividend distributions are derived from interest, dividends and other income the Funds receive from their investments, including short-term capital gains. Long-term capital gain distributions are derived from gains realized when a Fund sells a security it has owned for more than one year. A Fund may make additional distributions and dividends at other times if its portfolio manager or managers believe doing so may be necessary for the Fund to avoid or reduce taxes. Net investment income/(loss) and net realized gain/(loss) may differ for financial statement and tax purposes.

 

 

Annual Report | September 30, 201925

 

 

 

Beacon Funds TrustNotes to Financial Statements
 

September 30, 2019

 

3. DERIVATIVE INSTRUMENTS

 

 

The Funds' investment objectives permit the Funds to enter into various types of derivatives contracts, including, but not limited to, futures contracts, forward foreign currency contracts, currency swaps and purchased and written options. In doing so, the Funds may employ strategies in differing combinations to permit it to increase, decrease, or change the level or types of exposure to market factors. Central to those strategies are features inherent in derivatives that make them more attractive for this purpose than equity or debt securities; they require little or no initial cash investment, they can focus exposure on only certain selected risk factors, and they may not require the ultimate receipt or delivery of the underlying security (or securities) to the contract. This may allow the Funds to pursue their objectives more quickly and efficiently than if they were to make direct purchases or sales of securities capable of affecting a similar response to market factors.

 

Risk of Investing in Derivatives:The Funds' use of derivatives can result in losses due to unanticipated changes in the market risk factors and the overall market. In instances where the Funds are using derivatives to decrease, or hedge, exposures to market risk factors for securities held by the Funds, there are also risks that those derivatives may not perform as expected resulting in losses for the combined or hedged positions.

 

Derivatives may have little or no initial cash investment relative to their market value exposure and therefore can produce significant gains or losses in excess of their cost. This use of embedded leverage allows the Funds to increase their market value exposure relative to their net assets and can substantially increase the volatility of the Funds' performance.

 

Additional associated risks from investing in derivatives also exist and potentially could have significant effects on the valuation of the derivative and the Funds. Typically, the associated risks are not the risks that the Funds are attempting to increase or decrease exposure to, per their investment objectives, but are the additional risks from investing in derivatives.

 

Examples of these associated risks are liquidity risk, which is the risk that the Funds will not be able to sell or close out the derivative in a timely manner, and counterparty credit risk, which is the risk that the counterparty will not fulfill its obligation to the Funds. In addition, use of derivatives may increase or decrease exposure to the following risk factors:

 

Equity Risk:Equity risk relates to the change in value of equity securities as they relate to increases or decreases in the general market. Associated risks can be different for each type of derivative.

 

Option Contracts:Each Fund may enter into options transactions for hedging purposes and for nonhedging purposes such as seeking to enhance return. Each Fund may write covered put and call options on any stocks or stock indices, currencies traded on domestic and foreign securities exchanges, or futures contracts on stock indices, interest rates and currencies traded on domestic and, to the extent permitted by the U.S. Commodity Futures Trading Commission, foreign exchanges. A call option on an asset written by a Fund obligates the Fund to sell the specified asset to the holder (purchaser) at a stated price (the exercise price) if the option is exercised before a specified date (the expiration date). A put option on an asset written by a Fund obligates the Fund to buy the specified asset from the purchaser at the exercise price if the option is exercised before the expiration date. Premiums received when writing options are recorded as liabilities and are subsequently adjusted to the current value of the options written. Premiums received from writing options that expire are treated as realized gains. Premiums received from writing options, which are either exercised or closed, are offset against the proceeds received or amount paid on the transaction to determine realized gains or losses.

 

 

26www.beacontrust.com

 

 

 

Beacon Funds TrustNotes to Financial Statements
 

September 30, 2019

 

The Funds use FLEX Options, which are customized equity or index option contracts that trade on an exchange, but that provide investors with the ability to customize key contract terms like exercise prices, styles and expiration dates. Like standardized exchange-traded options, FLEX Options are guaranteed for settlement by The Options Clearing Corporation ("OCC"), a market clearinghouse. The OCC guarantees performance by each of the counterparties to the FLEX Options, becoming the "buyer for every seller and the seller for every buyer," protecting clearing members and options traders from counterparty risk. FLEX Options provide investors with the ability to customize key terms, while achieving price discovery in competitive, transparent auctions markets and avoiding the counterparty exposure of Over-the-Counter ("OTC") options positions. The Funds bear the risk that the OCC will be unable or unwilling to perform its obligations under the FLEX Options contracts. Additionally, FLEX Options may be less liquid than certain other securities such as standardized options. In a less liquid market for the FLEX Options, the Funds may have difficulty closing out certain FLEX Options positions at desired times and prices.

 

Purchased Options:When the Funds purchase an option, an amount equal to the premium paid by the Funds are recorded as an investment and is subsequently adjusted to the current value of the option purchased. If an option expires on the stipulated expiration date or if the Funds enter into a closing sale transaction, a gain or loss is realized. If a call option is exercised, the cost of the security acquired is increased by the premium paid for the call. If a put option is exercised, a gain or loss is realized from the sale of the underlying security, and the proceeds from such sale are decreased by the premium originally paid. Purchased options are non-income producing securities.

 

Written Options:When the Funds write an option, an amount equal to the premium received by the Funds are recorded as a liability and is subsequently adjusted to the current value of the option written. Premiums received from writing options that expire unexercised are treated by the Funds on the expiration date as realized gain from written options. The difference between the premium and the amount paid on effecting a closing purchase transaction, including brokerage commissions, is also treated as a realized gain, or if the premium is less than the amount paid for the closing purchase transaction, as a realized loss. If a call option is exercised, the premium is added to the proceeds from the sale of the underlying security in determining whether the Funds have realized a gain or loss. If a put option is exercised, the premium reduces the cost basis of the securities purchased by the Funds. The Funds, as writers of an option, bear the market risk of an unfavorable change in the price of the security underlying the written option.

 

 

Annual Report | September 30, 201927

 

 

 

Beacon Funds TrustNotes to Financial Statements
 

September 30, 2019

 

The average option contract notional amount during the fiscal year ended September 30, 2019, is noted below for each of the Funds.

 

Derivative Type Unit of Measurement Monthly Average
Beacon Accelerated Return Strategy Fund      
Purchased Option Contracts Notional value of contracts outstanding $234,750,185 
Written Option Contracts Notional value of contracts outstanding $234,750,185 

 

Derivative Type Unit of Measurement Monthly Average
Beacon Planned Return Strategy Fund      
Purchased Option Contracts Notional value of contracts outstanding $1,029,947,747 
Written Option Contracts Notional value of contracts outstanding $1,029,947,747 

 

Derivative Instruments:The following tables disclose the amounts related to the Funds' use of Derivative instruments.

 

The effect of derivative instruments on the Statements of Assets and Liabilities as of September 30, 2019:

 

Risk Exposure Statements of Assets
and Liabilities Location
 Fair Value of
Asset
Derivatives
 Statements of
Assets
and Liabilities
Location
 Fair Value of
Liability
Derivatives
Beacon Accelerated Return Strategy Fund            
Equity Contracts (Purchased Options/ Written Options) Investments, at value $122,979,287  Written Options, at value $6,351,816 
    $122,979,287    $6,351,816 

 

Beacon Planned Return Strategy Fund            
Equity Contracts (Purchased Options/ Written Options) Investments, at value $342,353,944  Written Options, at value $39,997,552 
    $342,353,944    $39,997,552 

 

 

28www.beacontrust.com

 

 

 

Beacon Funds TrustNotes to Financial Statements
 

September 30, 2019

 

The effect of derivative instruments on the Statements of Operations for the fiscal year ended September 30, 2019:

 

Risk Exposure Statements of Operations Location  Realized Gain (Loss)
on

Derivatives
Recognized
in Income
   Change in Unrealized
Gain (Loss) on

Derivatives
Recognized in
Income
 
Beacon Accelerated Return Strategy Fund          
Equity Contracts (Purchased Options) Net realized gain/(loss) on investments/Net change in unrealized appreciation/ (depreciation) on investments $2,629,789  $(8,006,478)
Equity Contracts (Written Options) Net realized gain/(loss) on written option contracts/Net change in unrealized appreciation/ (depreciation) on written option contracts  5,952,817   3,515,271 
Total   $8,582,606  $(4,491,207)
Beacon Planned Return Strategy Fund          
Equity Contracts (Purchased Options) Net realized gain/(loss) on investments/Net change in unrealized appreciation/ (depreciation) on investments $(2,313,998) $(23,681,795)
Equity Contracts (Written Options) Net realized gain/(loss) on written option contracts/Net change in unrealized appreciation/ (depreciation) on written option contracts  26,658,081   18,042,144 
Total   $24,344,083  $(5,639,651)

 

4. TAX BASIS INFORMATION

 

 

Tax Basis of Distributions to Shareholders:The character of distributions made during the period from net investment income or net realized gains may differ from its ultimate characterization for Federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the fiscal year in which the income or realized gain were recorded by the Funds. The amounts and characteristics of tax basis distributions and composition of distributable earnings/(accumulated losses) are finalized at fiscal year-end.

 

 
Annual Report | September 30, 201929

 

 

 

Beacon Funds TrustNotes to Financial Statements
 

September 30, 2019

 

The tax character of distributions paid during the fiscal year ended September 30, 2019, were as follows:

 

  Ordinary Income Long-Term Capital Gains
Beacon Accelerated Return Strategy Fund $6,405,718  $11,577,832 
Beacon Planned Return Strategy Fund  7,760,438   16,645,890 

 

The tax character of distributions paid during the fiscal period ended September 30, 2018, were as follows:

 

  Ordinary Income Long-Term Capital Gains
Beacon Accelerated Return Strategy Fund $101,843  $768,401 
Beacon Planned Return Strategy Fund     1,129,696 

 

Reclassifications:As of September 30, 2019, permanent differences in book and tax accounting were reclassified. The following reclassifications have been made on the Statements of Assets and Liabilities and have no impact on the net asset value of the Funds:

 

  Paid-in Capital Distributable Earnings
Beacon Accelerated Return Strategy Fund $(233) $233 
Beacon Planned Return Strategy Fund  (231)  231 

 

These reclassifications were primarily attributable to offering expenses that are non-deductible for tax.

 

Unrealized Appreciation and Depreciation on Investments and Derivative Instruments:As ofSeptember 30, 2019, the aggregate costs of investments, gross unrealized appreciation/ (depreciation) and net unrealized appreciation of instruments and derivative instruments for Federal tax purposes were as follows:

 

  Beacon Accelerated Return Strategy Fund  Beacon Planned Return Strategy Fund 
Gross unrealized appreciation (excess of value over tax cost)(a) $  $ 
Gross unrealized depreciation (excess of tax cost over value)(a)     
Net unrealized appreciation $  $ 
Cost of investments for income tax purposes $124,044,993  $346,864,218 

 

(a)Includes appreciation/(depreciation) on written options.

 

 

30www.beacontrust.com

 

 

 

Beacon Funds TrustNotes to Financial Statements
 

September 30, 2019

 

Components of Distributable Earnings:At September 30, 2019, components of distributable earnings were as follows:

 

  Beacon Accelerated Return Strategy Fund Beacon Planned Return Strategy Fund
Undistributed ordinary income $217,892  $3,966,726 
Accumulated capital gains  2,457,371   11,229,048 
Total $2,675,263  $15,195,774 

 

5. SECURITIES TRANSACTIONS

 

 

Purchases and sales of securities, excluding short-term securities, during the fiscal year ended September 30, 2019 were as follows:

 

   Purchases of Securities   Proceeds from Sales of Securities 
Beacon Accelerated Return Strategy Fund $  $ 
Beacon Planned Return Strategy Fund      

 

6. BENEFICIAL SHARE TRANSACTIONS

 

 

The capitalization of the Trust consists of an unlimited number of shares of beneficial interest with no par value per share. Holders of the shares of the Funds have one vote for each share held and a proportionate fraction of a vote for each fractional share. All shares issued and outstanding are fully paid and are transferable and redeemable at the option of the shareholder. Shares have no pre-emptive rights. Neither the Funds nor any of their creditors have the right to require shareholders to pay any additional amounts solely because the shareholder owns the shares.

 

Shares redeemed within 60 days of purchase may incur a 2.00% short-term redemption fee deducted from the redemption amount. For the fiscal year ended September 30, 2019, the redemption fees charged by the Funds, if any, are presented in the Statements of Changes in Net Assets.

 

 

Annual Report | September 30, 201931

 

 

 

Beacon Funds TrustNotes to Financial Statements
 

September 30, 2019

 

Transactions in common shares were as follows:

 

  For the Year Ended
September 30, 2019
 For the Period
Ended September 30, 2018
Beacon Accelerated Return Strategy Fund        
Class A(a)(b)        
Shares sold     927 
Shares issued in reinvestment of distributions to shareholders  158    
Shares redeemed  (1,085)   
Net increase/(decrease) in shares outstanding  (927)  927 
Institutional Class(c)        
Shares sold  2,080,398   15,086,370 
Shares issued in reinvestment of distributions to shareholders  2,098,463   14,805 
Shares redeemed  (6,123,424)  (1,431,816)
Net increase/(decrease) in shares outstanding  (1,944,563)  13,669,359 
         
Beacon Planned Return Strategy Fund        
Class A(a)(b)        
Shares sold     957 
Shares issued in reinvestment of distributions to shareholders  83    
Shares redeemed  (1,040)   
Net increase/(decrease) in shares outstanding  (957)  957 
Institutional Class(c)        
Shares sold  2,426,904   37,004,843 
Shares issued in reinvestment of distributions to shareholders  2,368,365   28,840 
Shares redeemed  (8,191,159)  (4,268,797)
Net increase/(decrease) in shares outstanding  (3,395,890)  32,764,886 

 

(a)Commenced operations June 11, 2018.

(b)Effective as of September 30, 2019, the Fund has suspended the offering of its Class A shares.

(c)Commenced operations October 2, 2017.

 

Control is defined by the 1940 Act as the beneficial ownership, either directly or through one or more controlled companies, of more than 25% of the voting securities of a company. Approximately 97% of the outstanding shares of the Beacon Accelerated Return Strategy Fund are held by one omnibus account. Approximately 85% of the outstanding shares of the Beacon Planned Return Strategy Fund are owned by one omnibus account. Share transaction activities of these shareholders could have a material impact on the Funds.

 

 

32www.beacontrust.com

 

 

 

Beacon Funds TrustNotes to Financial Statements
 

September 30, 2019

 

7. MANAGEMENT AND RELATED PARTY TRANSACTIONS

 

 

Investment Advisory:Beacon Investment Advisory Services, Inc. (the "Adviser"), subject to the authority of the Board, is responsible for the management of the Funds' portfolios. The Adviser manages the investments of the Funds in accordance with the Funds' investment objectives, policies and limitations and investment guidelines established jointly by the Adviser and the Board.

 

Pursuant to the Investment Advisory Agreement (the "Advisory Agreement") with the Adviser, each Fund pays the Adviser an annual management fee that is based on the Fund's average daily net assets. The management fee is paid on a monthly basis. The contractual management fee rate is 1.00% based on average daily net assets for the Beacon Accelerated Return Strategy Fund and Beacon Planned Return Strategy Fund. The initial term of the Advisory Agreement is two years. The Board may extend the Advisory Agreement for additional one-year terms. The Board and shareholders of a Fund may terminate the Advisory Agreement upon 30 days' written notice. The Adviser may terminate the Advisory Agreement upon 60 days' notice.

 

Pursuant to a fee waiver letter agreement (the "Fee Waiver Agreement"), the Adviser has contractually agreed to limit the amount of each Fund's Total Annual Fund Operating Expenses, exclusive of 12b-1 fees, shareholder servicing fees, Acquired Fund Fees and Expenses, brokerage expenses, interest expenses, taxes and extraordinary expenses to an annual rate of 1.40% of the Beacon Accelerated Return Strategy Fund's average daily net assets for each of the Class A shares and the Institutional Class shares and 1.40% of the Beacon Planned Return Strategy Fund's average daily net assets for the Class A shares and the Institutional Class shares. The Fee Waiver Agreement is in effect through January 31, 2020. The Adviser may not terminate the Fee Waiver Agreement without the approval of the Trust's Board. The Adviser will be permitted to recover, on a class-by-class basis, expenses it has borne through the Fee Waiver Agreement only to the extent that the Fund's expenses in later periods do not exceed the lesser of: (1) the contractual expense limit in effect at the time the Adviser waives or limits the expenses; or (2) the contractual expense limit in effect at the time the Adviser seeks to recover the expenses; provided, however, that the Funds will not be obligated to reimburse any such expenses borne by the Adviser more than three years after the date on which the fee or expense was waived or limited or assumed and paid by the Adviser, as calculated on a monthly basis. There were no fees waived or reimbursed for the fiscal year ended September 30, 2019.

 

Administrator:ALPS Fund Services, Inc. ("ALPS") (an affiliate of ALPS Distributors, Inc.) serves as administrator to each Fund. The Funds have agreed to pay expenses incurred in connection with its administrative activities. Pursuant to the Administration, Bookkeeping and Pricing Services Agreement with the Trust, ALPS will provide operational services to the Funds including, but not limited to, fund accounting and fund administration and generally assist in each Fund's operations. Each Fund's administration fee is accrued on a daily basis and paid monthly. The officers of the Trust are employees of ALPS. Administration fees paid by the Funds for the fiscal year ended September 30, 2019 are disclosed in the Statements of Operations. ALPS is reimbursed by the Funds for certain out-of-pocket expenses.

 

Transfer Agent:ALPS serves as transfer agent for each Fund under a Transfer Agency and Services Agreement with the Trust. Under this agreement, ALPS is paid an annual fee for services performed on behalf of the Funds plus fees for open accounts and is reimbursed for certain out-of-pocket expenses.

 

 
Annual Report | September 30, 201933

 

 

 

Beacon Funds TrustNotes to Financial Statements
 

September 30, 2019

 

Compliance Services:ALPS provides services as each Fund's Chief Compliance Officer to monitor and test the policies and procedures of each Fund in conjunction with requirements under Rule 38a-1 of the 1940 Act pursuant to a Chief Compliance Officer Services Agreement with the Trust. Under this agreement, ALPS is paid an annual fee for services performed on behalf of the Funds and is reimbursed for certain out-of-pocket expenses.

 

Distribution:ALPS Distributors, Inc. (the "Distributor") (an affiliate of ALPS) acts as the principal underwriter of each Fund's shares pursuant to a Distribution Agreement with the Trust. Shares of each Fund are offered on a continuous basis through the Distributor, as agent of the Funds. The Distributor is not obligated to sell any particular amount of shares and is not entitled to any compensation for its services as the Funds' principal underwriter pursuant to the Distribution Agreement.

 

Each Fund has adopted a Distribution and Services Plan (the "Plan") pursuant to Rule 12b-1 of the 1940 Act for their Class A shares. The Plan allows the Funds to use Class A assets to pay fees in connection with the distribution and marketing of Class A shares and/or the provision of shareholder services to Class A shareholders. The Plan permits payment for services in connection with the administration of plans or programs that use Class A shares of the Funds, if any, as their funding medium and for related expenses. The Plan permits the Funds to make total payments at an annual rate of up to 0.25% of the Fund's average daily net assets attributable to its Class A shares. Because these fees are paid out of the Fund's Class A assets, if any, on an ongoing basis, over time they will increase the cost of an investment in the Class A shares, if any, and Class A Plan fees may cost an investor more than other types of sales charges. Plan fees are shown as distribution fees on the Statements of Operations.

 

Each Fund has adopted a shareholder services plan ("Shareholder Services Plan") for its Class A shares and Institutional Class. Under the Shareholder Services Plan each Fund is authorized to pay banks and their affiliates and other institutions, including broker-dealers and Fund affiliates ("Participating Organizations"), an aggregate fee in an amount not to exceed on an annual basis 0.15% of the average daily net assets of each Fund's Class A shares and Institutional Class shares, respectively, to Participating Organizations as compensation for providing shareholder service activities, which do not include distribution services, pursuant to an agreement with a Participating Organization. Shareholder Services Plan fees paid by the Funds are disclosed in the Statements of Operations.

 

8. TRUSTEES

 

 

As of September 30, 2019, there were four Trustees, three of whom are not "interested persons" (as defined in the 1940 Act) of the Trust (the "Independent Trustees"). The Independent Trustees of the Trust receive a quarterly retainer of $8,000, plus $4,000 for each regular Board or Committee meeting attended and $2,000 for each special telephonic or in-person Board or Committee meeting attended. Additionally, the Audit Committee Chair receives a quarterly retainer of $1,250 and the Independent Chair receives a quarterly retainer of $2,500. The Independent Trustees are also reimbursed for all reasonable out-of-pocket expenses relating to attendance at meetings. Officers of the Trust and Trustees who are interested persons of the Trust receive no salary or fees from the Trust. As discussed in Note 7, the Funds pay ALPS an annual fee for compliance services.

 

 

34www.beacontrust.com

 

 

 

Beacon Funds TrustNotes to Financial Statements
 

September 30, 2019

 

9. INDEMNIFICATIONS

 

 

Under the Trust's organizational documents, its officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust. Additionally, in the normal course of business, the Trust enters into contracts with service providers that may contain general indemnification clauses which may permit indemnification to the extent permissible under applicable law. The Trust's maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Trust that have not yet occurred.

 

10. RECENT ACCOUNTING PRONOUNCEMENTS

 

 

In August 2018, the FASB issued ASU 2018-13, which changes the fair value measurement disclosure requirements of FASB ASC Topic 820, Fair Value Measurement. The update to Topic 820 includes new, eliminated, and modified disclosure requirements. ASU 2018-13 is effective for fiscal years beginning after December 15, 2019, including interim periods. Early adoption is permitted for any eliminated or modified disclosures. The Funds have elected to early adopt the eliminated and modified disclosures effective with the financial statements prepared as of September 30, 2019.

 

11. SUBSEQUENT EVENTS

 

 

Subsequent events after the date of the Statements of Assets and Liabilities have been evaluated through the date the financial statements were issued. Management has determined that there were no subsequent events to report through the issuance of these financial statements.

 

 

Annual Report | September 30, 201935

 

 

 

Beacon Funds TrustReport of Independent Registered
Public Accounting Firm
 

 

To the Shareholders of Beacon Accelerated Return Strategy Fund and Beacon Planned Return Strategy Fund and Board of Trustees of ALPS Series Trust

 

Opinion on the Financial Statements

 

We have audited the accompanying statements of assets and liabilities, including the portfolios of investments, of Beacon Accelerated Return Strategy Fund and Beacon Planned Return Strategy Fund (the "Funds"), each a series of ALPS Series Trust, as of September 30, 2019, and the related statements of operations for the year then ended, and the statements of changes in net assets, including the related notes, and the financial highlights for each of the two 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 each of the Funds as of September 30, 2019, the results of their operations for the year then ended, and the changes in their net assets and the financial highlights for each of the two 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 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. Our procedures included confirmation of securities owned as of September 30, 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 2018.

 

 

 

COHEN & COMPANY, LTD.
Cleveland, Ohio
November 25, 2019

 

 
36www.beacontrust.com

 

 

 

Beacon Funds TrustDisclosure Regarding Renewal and
Approval of Fund Advisory Agreement

 

 

On August 22, 2019, the Board of Trustees (the "Board") of ALPS Series Trust (the "Trust") met in person to discuss, among other things, the renewal and approval of the Investment Advisory Agreement between the Trust and Beacon Investment Advisory Services, Inc. ("Beacon" or the "Adviser") in accordance with Section 15(c) of the 1940 Act. The Independent Trustees met with independent legal counsel during executive session and discussed the Investment Advisory Agreement and other related materials.

 

In approving the renewal of the Investment Advisory Agreement with Beacon, the Trustees, including all the Independent Trustees, considered the following factors with respect to the Beacon Accelerated Return Strategy Fund ("BARS Fund") and the Beacon Planned Return Strategy Fund ("BPRS Fund" and together with the BARS Fund, the "Beacon Funds"):

 

Nature Extent and Quality of the Services:The Trustees received and considered information regarding the nature, extent and quality of services provided to the Beacon Funds under the Beacon Agreement. The Trustees reviewed certain background materials supplied by Beacon in its presentation, including its Form ADV and ownership structure as a subsidiary of a larger organization.

 

The Trustees reviewed and considered Beacon's investment advisory personnel, its history as an asset manager and its performance. The Trustees also reviewed the research and decision-making processes utilized by the Beacon, including the methods adopted to seek to achieve compliance with the investment objectives, policies and restrictions of the Beacon Funds. The Trustees discussed the strong compliance culture of the firm, noting the results of the recent examination of it by the SEC. They considered the Trust's experience with Beacon in the period since the initial approval, including the firm's strong responsiveness to the officers of the Trust and excellent compliance record.

 

The Trustees considered the background and experience of Beacon's team, including reviewing the qualifications, background and responsibilities of the portfolio manager primarily responsible for the day-to-day portfolio management of the Beacon Funds and the extent of the resources devoted to research and analysis of actual and potential investments. The Trustees also reviewed, among other things, Beacon Advisory's Code of Ethics. The Trustees also considered Beacon Advisory's reputation generally and its risk management controls and decision-making processes. The Board agreed that the nature, extent and quality of services rendered by Beacon under the Beacon Agreement were satisfactory.

 

Investment Advisory Fee Rate:The Trustees reviewed and considered the contractual annual advisory fee paid by the Beacon Funds to Beacon of 1.00% of the Fund's daily average net assets, considering the nature, extent and quality of the advisory services provided by Beacon Advisory to the Beacon Funds. The Board considered the information they received comparing each Beacon Fund's contractual annual advisory fees and overall expenses with those of funds in the expense group and universe of funds provided by FUSE, an independent provider of investment company data.

 

The Trustees noted that the BARS Fund's contractual advisory fee of 1.00% was slightly above the peer group median, but within the range of the peer group. The Board also noted that the BARS Fund's net expense ratio was also above the peer group median, but within the range of the peer group. With respect to the BPRS Fund, its contractual advisory fee of 1.00% was slightly above the peer group median, but within the range of the peer group. The Board also noted that the BPRS Fund's net expense ratio was also above the peer group median, but within the range of the peer group. The Board acknowledged Beacon's representation regarding the differences in strategies of the peer funds compared to the Beacon Funds, noting that the Funds' strategy may be more work-intensive than of certain peer funds. The Trustees also noted Beacon's representation that it did not offer the same strategy to other clients, but did offer similar strategies for a fee that was greater than both Funds' management fee. After further consideration, the Trustees determined that the contractual annual advisory fees, taking into consideration the total net expenses for each Fund were not unreasonable for the quality of services provided.

 

 

Annual Report | September 30, 201937

 

 

 

Beacon Funds TrustDisclosure Regarding Renewal and
Approval of Fund Advisory Agreement

 

 

Performance:The Board reviewed performance information provided for the Funds for the one year period ended July 30, 2019 compared to each Fund's benchmark index, and for the 3-month, one-year and since inception periods ended June 30, 2019 against a peer group selected by FUSE. The Trustees observed that the returns for each Fund's one year ended July 30, 2019 outperformed the benchmark index. In addition, for each of the 3-month, one year and since inception periods ended June 30, 2019, the Funds each significantly outperformed their respective peer group median performance, ranking among the top funds within the peer group. The Board noted their satisfaction with each Beacon Fund's performance, giving credit to Beacon's disciplined execution of its strategy.

 

Profitability:The Trustees received and considered a profitability analysis prepared by Beacon based on the fees paid under the Beacon Agreement. The Trustees noted that Beacon's work with the Funds was profitable, but that the amount of profit was not unreasonable in absolute terms or as a percentage of income. They considered the benefit to Beacon of the soft dollar arrangements and reviewed and discussed the financial statements of Beacon's parent company, recognizing that Beacon's parent was well capitalized. Further, in consideration of the fact that Beacon's work with the Funds was profitable, the Board did not have concerns regarding the firm's continued viability.

 

Economies of Scale:The Trustees considered whether Beacon was benefiting from economies of scale in the provision of services to each Beacon Fund and whether such economies should be shared with the Funds' shareholders under the Beacon Agreement. The Board noted Beacon's belief that, because the firm was part of a large organization, it was able achieve certain internal economies through resource sharing with its parent company and thus was able to charge the Funds a lower advisory fee than it otherwise would be able to if it were a smaller organization. The Board reviewed the size of Beacon Funds and their prospects for growth, and agreed that neither had not yet achieved meaningful economies that would necessitate the establishment of breakpoints, but agreed to continue to monitor and revisit the issue at the appropriate time.

 

Other Benefits to the Adviser:The Trustees reviewed and considered any other incidental benefits derived or to be derived by Beacon from its relationship with each Beacon Fund, including research and other support services, noting nothing of concern.

 

Having requested and reviewed such information from Beacon as the Board believed to be reasonably necessary to evaluate the terms of the Beacon Agreement, the Trustees, including all the Independent Trustees, concluded that the compensation of Beacon was appropriate under the Beacon Agreement and the renewal of the Beacon Agreement was in the best interests of each Beacon Fund and its respective shareholders.

 

 

38www.beacontrust.com

 

 

 

Beacon Funds TrustAdditional Information
 

September 30, 2019 (Unaudited)

 

1. PROXY VOTING POLICIES AND VOTING RECORD

 

 

A description of the policies and procedures that the Funds use to determine how to vote proxies relating to portfolio securities is available without charge, upon request, (i) by calling the Funds (toll-free) at 1-844-894-9222 or (ii) on the website of the Securities and Exchange Commission (the "SEC") at http://www.sec.gov.

 

Information regarding how each Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available (i) without charge, upon request, by calling the Funds (toll-free) at 1-844-894-9222 or (ii) on the SEC's website at http://www.sec.gov.

 

2. PORTFOLIO HOLDINGS

 

 

The Funds file their complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Funds' Forms N-Q are available on the SEC website at http://www.sec.gov.

 

3. TAX DESIGNATIONS

 

 

Pursuant to Section 852(b)(3) of the Internal Revenue Code the following Funds designate the amounts listed below as long-term capital gain dividends:

 

Beacon Accelerated Return Strategy Fund: $11,577,832

Beacon Planned Return Strategy Fund: $16,645,890

 

The following Funds designate the percentages listed below of the income dividends distributed in 2018 as qualified dividend income (QDI) as defined in Section 1(h)(11) of the Internal Revenue Code:

 

Beacon Accelerated Return Strategy Fund: 0.00%

Beacon Planned Return Strategy Fund: 0.00%

 

The following Funds designate the percentages listed below of the income dividends distributed in 2018 as qualifying for the corporate dividends received deduction (DRD) as defined in Section 854(b)(2) of the Internal Revenue Code:

 

Beacon Accelerated Return Strategy Fund: 0.00%

Beacon Planned Return Strategy Fund: 0.00%

 

 

Annual Report | September 30, 201939

 

 

 

Beacon Funds TrustPrivacy Policy
 

September 30, 2019 (Unaudited)

 

FACTSWHAT DOES THE FUND DO WITH YOUR PERSONAL INFORMATION?
WHY?Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do.
WHAT?

The types of personal information we collect and share depend on the product or service you have with us. This information can include:

 

•      Social Security number and account transactions

•      Account balances and transaction history

•      Wire transfer instructions

HOW?All financial companies need to share customers' personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers' personal information, the reasons a Fund chooses to share, and whether you can limit this sharing.
REASONS WE CAN SHARE YOUR PERSONAL INFORMATIONDOES THE FUND SHARE:CAN YOU LIMIT THIS SHARING?
For our everyday business purposes
such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus
YesNo
For our marketing purposes
to offer our products and services to you
NoWe do not share.
For joint marketing with other financial companiesNoWe do not share.
For our affiliates' everyday business purposes –
information about your transactions and experiences
YesNo
For our affiliates' everyday business purposes
information about your creditworthiness
NoWe do not share.
For non-affiliates to market to youNoWe do not share.
QUESTIONS?Call 1-844-894-9222 or go to www.beacontrust.com.

 

 
40www.beacontrust.com

 

 

 

Beacon Funds TrustPrivacy Policy
 

September 30, 2019 (Unaudited)

 

WHO WE ARE 
Who is providing this notice?Beacon Accelerated Return Strategy fund and Beacon Planned Return Strategy fund (each, a “Fund”)
WHAT WE DO 
How does the Fund protect my personal information?To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include computer safeguards and secured files and buildings.
How does the Fund collect my personal information?

We collect your personal information, for example, when you

 

•     open an account

•     provide account information or give us your contact information

•     make a wire transfer or deposit money

Why can't I limit all sharing?

Federal law gives you the right to limit only

 

•     sharing for affiliates' everyday business purposes-information about your creditworthiness

•     affiliates from using your information to market to you

•     sharing for non-affiliates to market to you

•     State laws and individual companies may give you additional rights to limit sharing

DEFINITIONS 
AffiliatesCompanies related by common ownership or control. They can be financial and nonfinancial companies.
Non-affiliates

Companies not related by common ownership or control. They can be financial and nonfinancial companies.

 

•     The Fund does not share with non-affiliates so they can market to you.

Joint marketing

A formal agreement between non-affiliated financial companies that together market financial products or services to you.

 

•     The Fund does not jointly market.

 

 
Annual Report | September 30, 201941

 

 

 

Beacon Funds TrustPrivacy Policy
 

September 30, 2019 (Unaudited)

 

OTHER IMPORTANT INFORMATION
California ResidentsIf your account has a California home address, your personal information will not be disclosed to nonaffiliated third parties except as permitted by applicable California law, and we will limit sharing such personal information with our affiliates to comply with California privacy laws that apply to us.
Vermont ResidentsThe State of Vermont requires financial institutions to obtain your consent prior to sharing personal information that they collect about you with affiliated companies and nonaffiliated third parties other than in certain limited circumstances. Except as permitted by law, we will not share personal information we collect about you with nonaffiliated third parties or other affiliated companies unless you provide us with your written consent to share such information.

 

 
42www.beacontrust.com

 

 

 

Beacon Funds TrustTrustees and Officers
 

September 30, 2019 (Unaudited)

 

INDEPENDENT TRUSTEES

 
Name, Birth Year & Address*Position(s) Held with FundTerm of Office and Length of Time Served**Principal Occupation(s)
During Past 5 Years***
Number of Funds in Fund Complex Overseen by Trustee****Other Directorships Held by Trustee During Past 5 Years***

Ward D. Armstrong,

Birth year: 1954

 

Trustee and ChairmanMr. Armstrong was appointed to the Board on May 27, 2016. Mr. Armstrong was appointed Chairman of the Board at the August 24, 2017 meeting of the Board of Trustees.Retired; Managing Partner, NorthRock Partners, LLC (October 2013 to July 2015); Managing Director, NorthRock Partners, a Private Wealth Advisory Practice of Ameriprise Financial (February 2010 to October 2013); Senior Vice President, Ameriprise Financial, Inc. (November 1984 to May 2007); President, American Express Asset Management (2002 to 2004); and Chairman, Ameriprise Trust Company (November 1996 to May 2007).9Mr. Armstrong is a Director of the Heartland Group, Inc. (4 funds).

 

*All communications to Trustees and Officers may be directed to ALPS Series Trust c/o 1290 Broadway, Suite 1000, Denver, CO 80203.
**This is the period for which the Trustee or Officer began serving the Trust. Each Trustee serves an indefinite term, until such Trustee's successor is elected and appointed, or such Trustee resigns or is deceased. Officers are elected on an annual basis.
***Except as otherwise indicated, each individual has held the office shown or other offices in the same company for the last five years.
****The Fund Complex currently consists of 9 series of the Trust; Beacon Investment Advisory Services, Inc. does not provide investment advisory services for any of these series other than the Funds, and any other investment companies for which Beacon Investment Advisory Services, Inc. provides investment advisory services, currently none.

 

 
Annual Report | September 30, 201943

 

 

 

Beacon Funds TrustTrustees and Officers
 

September 30, 2019 (Unaudited)

 

Name, Birth Year & Address*Position(s) Held with FundTerm of Office and Length of Time Served**Principal Occupation(s)
During Past 5 Years***
Number of Funds in Fund Complex Overseen by Trustee****Other Directorships Held by Trustee During Past 5 Years***

J. Wayne Hutchens,

Birth year: 1944

 

TrusteeMr. Hutchens was elected to the Board on October 30, 2012.Mr. Hutchens is currently retired. From April 2006 to December 2012, he served as President and CEO of the University of Colorado (CU) Foundation and from April 2009 to December 2012, he was Executive Director of the CU Real Estate Foundation. Mr. Hutchens is also Trustee of the Denver Museum of Nature and Science (2000 to present), Director of AMG National Trust Bank (June 2012 to present) and Trustee of Children's Hospital Colorado (May 2012 to present). Prior to these positions, Mr. Hutchens spent 29 years in the banking industry, retiring as Chairman of Chase Bank Colorado.9Mr. Hutchens is a Director of RiverNorth Opportunity Fund (2013 to present), RiverNorth Opportunistic Municipal Income Fund (2018 to present), RiverNorth Doubleline Strategic Opportunity Fund (2018 to present), RiverNorth Marketplace Lending Corp. (2018 to present) and RiverNorth Managed Duration Municipal Income Fund (2019 to present).

 

*All communications to Trustees and Officers may be directed to ALPS Series Trust c/o 1290 Broadway, Suite 1000, Denver, CO 80203.
**This is the period for which the Trustee or Officer began serving the Trust. Each Trustee serves an indefinite term, until such Trustee's successor is elected and appointed, or such Trustee resigns or is deceased. Officers are elected on an annual basis.
***Except as otherwise indicated, each individual has held the office shown or other offices in the same company for the last five years.
****The Fund Complex currently consists of 9 series of the Trust; Beacon Investment Advisory Services, Inc. does not provide investment advisory services for any of these series other than the Funds, and any other investment companies for which Beacon Investment Advisory Services, Inc. provides investment advisory services, currently none.

 

 
44www.beacontrust.com

 

 

 

Beacon Funds TrustTrustees and Officers
 

September 30, 2019 (Unaudited)

 

Name, Birth Year & Address*Position(s) Held with FundTerm of Office and Length of Time Served**Principal Occupation(s)
During Past 5 Years***
Number of Funds in Fund Complex Overseen by Trustee****Other Directorships Held by Trustee During Past 5 Years***

Patrick Seese, 

Birth year: 1971

 

TrusteeMr. Seese was elected to the Board on October 30, 2012.Mr. Seese is an owner and a Managing Director of Integris Partners, a middle-market investment banking firm serving closely-held companies, financial sponsors and public companies (February 2008 to present). Prior to this, Mr. Seese was a Managing Director of Headwaters MB, a middle-market investing banking firm (December 2003 to February 2008). Prior to that, Mr. Seese worked in Credit Suisse First Boston's Mergers and Acquisitions Group and served as Head of Corporation Development, Katy Industries, a publicly traded industrial and consumer products company and at Deloitte & Touche LLP, where he began his career in 1994.9Mr. Seese is a Director of The Mile High Five Foundation (2013 to present) and SJ Panthers Foundation (2016 to present)

 

*All communications to Trustees and Officers may be directed to ALPS Series Trust c/o 1290 Broadway, Suite 1000, Denver, CO 80203.
**This is the period for which the Trustee or Officer began serving the Trust. Each Trustee serves an indefinite term, until such Trustee's successor is elected and appointed, or such Trustee resigns or is deceased. Officers are elected on an annual basis.

***Except as otherwise indicated, each individual has held the office shown or other offices in the same company for the last five years.
****The Fund Complex currently consists of 9 series of the Trust; Beacon Investment Advisory Services, Inc. does not provide investment advisory services for any of these series other than the Funds, and any other investment companies for which Beacon Investment Advisory Services, Inc. provides investment advisory services, currently none.

 

 
Annual Report | September 30, 201945

 

 

 

Beacon Funds TrustTrustees and Officers
 

September 30, 2019 (Unaudited)

 

INTERESTED TRUSTEE

 
Name, Birth Year & Address*Position(s)Held with FundTerm of Office and Length of Time Served**Principal Occupation(s)
During Past 5 Years***
Number of Funds in Fund Complex Overseen by Trustee****Other Directorships Held by Trustee During Past 5 Years***

Jeremy O. May,

Birth year: 1970

 

TrusteeMr. May was elected Trustee on October 30, 2012. Mr. May was President from October 30, 2012 to May 23, 2019. Mr. May was Chairman from October 30, 2012 to August 24, 2017.Mr. May previously served as President and Director of ALPS Fund Services, Inc., ALPS Distributors, Inc., and ALPS Portfolio Solutions Distributor, Inc., Executive Vice President and Director of ALPS Holdings, Inc. and ALPS Advisors, Inc., working at ALPS from June 1995 until June 2019. Because of his positions with these entities, Mr. May is deemed an affiliate of the Trust as defined under the 1940 Act. Mr. May is also on the Board of Directors of the University of Colorado Foundation and the AV Hunter Trust.9Mr. May is Trustee of the Reaves Utility Income Fund (1 fund).

 

*All communications to Trustees and Officers may be directed to ALPS Series Trust c/o 1290 Broadway, Suite 1000, Denver, CO 80203.
**This is the period for which the Trustee or Officer began serving the Trust. Each Trustee serves an indefinite term, until such Trustee's successor is elected and appointed, or such Trustee resigns or is deceased. Officers are elected on an annual basis.
***Except as otherwise indicated, each individual has held the office shown or other offices in the same company for the last five years.
****The Fund Complex currently consists of 9 series of the Trust; Beacon Investment Advisory Services, Inc. does not provide investment advisory services for any of these series other than the Funds, and any other investment companies for which Beacon Investment Advisory Services, Inc. provides investment advisory services, currently none.

 

 
46www.beacontrust.com

 

 

 

Beacon Funds TrustTrustees and Officers
 

September 30, 2019 (Unaudited)

 

OFFICERS

 

 

Name, Birth Year & Address*Position(s) Held with FundTerm of Office and Length of Time Served**Principal Occupation(s) During Past 5 Years***

Bradley Swenson

Birth year: 1972

 

PresidentSince May 2019Mr. Swenson joined ALPS Fund Services, Inc. (“ALPS”) in 2004 and has served as its President since June 2019. In this role, he serves as an officer to certain other closed-end and open-end investment companies. He previously served as the Chief Operating Officer of ALPS (2015-2019). Mr. Swenson also previously served as Chief Compliance Officer to ALPS, its affiliated entities, and to certain ETF, closed-end and open-end investment companies (2004-2015).

Kimberly Storms 

Birth year: 1972

 

TreasurerSince October 2012Ms. Storms is Senior Vice President and Director of Fund Administration of ALPS. Ms. Storms is also Treasurer of Financial Investors Trust, Liberty All-Star Equity Fund and Liberty All-Star Growth Fund, Inc.

Christopher Moore

Birth year: 1984

 

SecretarySince May 2019Mr. Moore has been Vice President and Senior Counsel of ALPS since 2016. Mr. Moore served as an associate at Thompson Hine LLP (2013-2016) and as Corporate Counsel at DSW, Inc. (2012-2013). He also served as a certified public accountant for Ernst & Young (2007-2009) and as an internal auditor for JSJ Inc. in 2007. Mr. Moore serves also as Vice President & Secretary of the Boulder Growth & Income Fund, Secretary of the RiverNorth Opportunities Fund, Inc., and Assistant Secretary of the RiverNorth Funds, Griffin Institutional Access Credit Fund, Griffin Institutional Access Real Estate Fund, RiverNorth Managed Duration Municipal Income Fund, Inc., and RiverNorth Opportunistic Municipal Income Fund, Inc.

Erich Rettinger

Birth year: 1985

 

Assistant TreasurerSince May 2019Mr. Rettinger joined ALPS in 2007 and is currently Vice President and Fund Controller of ALPS. He has served as Fund Controller, ALPS Fund Services, Inc. (since 2013) and Fund Accounting, ALPS Fund Services, Inc. (2013-2017). Mr. Rettinger is also Assistant Treasurer of the Stone Harbor Investment Funds.

 

*All communications to Trustees and Officers may be directed to ALPS Series Trust c/o 1290 Broadway, Suite 1000, Denver, CO 80203.
**This is the period for which the Trustee or Officer began serving the Trust. Each Trustee serves an indefinite term, until such Trustee's successor is elected and appointed, or such Trustee resigns or is deceased. Officers are elected on an annual basis.
***Except as otherwise indicated, each individual has held the office shown or other offices in the same company for the last five years.

 

 
Annual Report | September 30, 201947

 

 

 

Beacon Funds TrustTrustees and Officers
 

September 30, 2019 (Unaudited)

 

Name, Birth Year & Address*Position(s) Held with FundTerm of Office and Length of Time Served**Principal Occupation(s) During Past 5 Years***

Anne Berg

Birth year: 1973

 

Assistant SecretarySince August 2018Ms. Berg joined ALPS as Senior Investment Company Act Paralegal in February 2017. Prior to joining ALPS, Anne was a Senior Legal Manager at Janus Capital Management LLC (2000-2017).

Lucas Foss

Birth year: 1977

 

Chief Compliance OfficerSince January 2018Mr. Foss rejoined ALPS in November 2017 as Vice President and Deputy Chief Compliance Officer. Prior to his current role, Mr. Foss served as the Director of Compliance at Transamerica Asset Management (2015–2017) and Deputy Chief Compliance Officer at ALPS (2012-2015). Mr. Foss is also CCO of Harvest Volatility Edge Trust, Goehring & Rozencwajg Investment Funds, Broadstone Real Estate Access Fund, Inc., Clough Global Funds; Clough Funds Trust; and 1WS Credit Income Fund.

 

*All communications to Trustees and Officers may be directed to ALPS Series Trust c/o 1290 Broadway, Suite 1000, Denver, CO 80203.
**This is the period for which the Trustee or Officer began serving the Trust. Each Trustee serves an indefinite term, until such Trustee's successor is elected and appointed, or such Trustee resigns or is deceased. Officers are elected on an annual basis.
***Except as otherwise indicated, each individual has held the office shown or other offices in the same company for the last five years.

 

Additional information about members of the Board of Trustees and officers of the Trust is available in the Statement of Additional Information and is available, without charge, upon request, by calling the Fund (toll-free) at 1-844-894-9222.

 

 
48www.beacontrust.com

 

 

 

 

This material must be preceded by a prospectus.

The Beacon Funds are distributed by ALPS Distributors, Inc.

 

 

 

 

 

 

 

Table of Contents

 

 

 

Shareholder Letter2
Portfolio Update 
Clarkston Partners Fund 5
Clarkston Fund 10
Clarkston Founders Fund15
Disclosure of Fund Expenses 20
Portfolios of Investments 
Clarkston Partners Fund 22
Clarkston Fund 24
Clarkston Founders Fund 26
Statements of Assets and Liabilities 28
Statements of Operations 29
Statements of Changes in Net Assets 
Clarkston Partners Fund 30
Clarkston Fund 31
Clarkston Founders Fund 32
Financial Highlights 34
Notes to Financial Statements 47
Report of Independent Registered Public Accounting Firm58
Additional Information59
Privacy Policy 61
Trustees and Officers 64

 

Beginning on January 1, 2021, as permitted by regulations adopted by the U.S. Securities and Exchange Commission, paper copies of the Funds’ annual and semi-annual shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports. Instead, the reports will be made available on the Funds’ website at www.clarkstonfunds.com and you will be notified by mail each time a report is posted and provided with a website link to access the report.

 

You may, notwithstanding the availability of shareholder reports online, elect to receive all future shareholder reports in paper free of charge. If you invest through a financial intermediary, you can contact your financial intermediary to request that you continue to receive paper copies of your shareholder reports. If you invest directly with a Fund, you can call 1-844-680-6562 to let the Fund know you wish to continue receiving paper copies of your shareholder reports.

 

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 a Fund electronically anytime by contacting your financial intermediary (such as a broker-dealer or bank) or, if you are a direct investor, by enrolling at www.clarkstonfunds.com.

 

 

 

Clarkston FundsShareholder Letter

 

September 30, 2019 (Unaudited)

Dear Shareholder:

 

Introduction

Information is integral to Clarkston Capital’s research process. Combined with the appropriate behavior and a long-term mindset, it also forms part of our investment philosophy. Clarkston Capital’s investment philosophy comprises three mutually supporting sources:

 

1.Information – Being a more knowledgeable shareholder facilitates the confidence to act appropriately.

2.Time Horizon – A long-term mindset can be a valuable breeding ground for thinking differently.

3.Temperament – The determination to exercise patience, act with courage, and maintain discipline even when no one agrees with you.

 

The time horizon and temperament aspects of Clarkston Capital’s investment philosophy help to distinguish us from other investors who do not act patiently and courageously with an eye to the long term. These two aspects are less defensible, however, without relevant, accurate, and digestible data, along with the proper process and experience to interpret said data. Thus, this discussion will focus on gathering and interpreting data, while future commentaries will focus on how our temperament and time horizon allow us to use this data to our advantage.

 

Clarkston Capital’s Information Gathering and Interpretation

We are voracious consumers of information. We wake up every morning, drive to work, pour a cup of coffee, and learn about businesses all day long. If we aren’t sitting in front of a computer digging through financial statements, conference calls, or industry publications, we’re gathering information via conversations internally, with management teams, or industry experts.

 

Daily, we search for, gather, filter, process, and act upon information. Information is at the heart of what we do and provides the foundation for our investment philosophy. While informational advantages have historically been easier to achieve, the advent of the internet and the affordability of hardware and software has leveled the informational playing field for investors. Even amateur investors can gain access to the same data, screens, and algorithms that professionals use. Therefore, today it is more difficult, though still possible, to gain an informational advantage.

 

Remember, information is the foundation that enables us to maintain a long-term focus and exercise patience and courage when others choose not to. When we are buying shares of a business whose share price has fallen considerably, there is an intelligent investor on the other side who 1) has owned the shares for longer, and 2) is selling them to us. We must be confident in the information upon which we are acting.

 

Our goal at Clarkston Capital is to be the most knowledgeable shareholder in every company we invest in. The keys to gaining a possible informational edge are inefficiencies that exist in the investment industry and the barriers involved in accessing information.

 

Investment Industry Inefficiencies

We believe that underfollowed asset classes and underappreciated micro-niche industries offer informationally inefficient investment opportunities.

 

 

2www.clarkstonfunds.com

 

 

 

Clarkston FundsShareholder Letter

 

September 30, 2019 (Unaudited)

 

Why would underfollowed asset classes exist in an era of increasingly powerful informational tools? The investment industry is increasingly dominated by fewer large firms that manage large pools of capital and are limited to searching for investments in asset classes that offer larger addressable investment opportunities. The sell-side analyst community has directed its efforts to larger and more popular asset classes and investments. This has resulted in informational inefficiencies, including in smaller asset classes and investments, such as U.S. small-cap or emerging markets.

 

Less popular asset classes and investment opportunities are also underfollowed because humans are attracted to “shiny new toys”. It is only natural that investors gravitate towards newer and more popular investments, like Netflix, Inc. (NFLX) or Beyond Meat, Inc. (BYND). Fortunately for Clarkston Capital, underappreciated industries inhabited by “boring” micro-niche businesses like CDK Global, Inc. (CDK), a leading technology provider to automotive dealers, are often ignored by the broader investment community. An additional reason why investment opportunities may remain underfollowed in micro-niche industries is that these businesses can be eclectic. Sell-side analysts may avoid these companies because they are not directly comparable to the rest of their coverage universe and the research involved is time consuming. Currently, forty sell-side analysts follow Netflix, while only five follow CDK.

 

We understand, on the surface, why micro-niche businesses may appear unattractive. They are mature companies that operate in small addressable markets with limited growth opportunities. While these businesses might not grow their top line as rapidly as other companies, micro-niche businesses, if run effectively, can be successful businesses, and anything but boring. They can be highly profitable and generate lots of free cash flow, which can be used to reward shareholders via targeted acquisition growth, dividends, or share repurchases. We gravitate toward these businesses, and are glad they are ignored, because we enjoy spending the time gathering the necessary information to become their most knowledgeable shareholder.

 

Barriers to Accessing Information 

Although it has become easier to gain access to information that is published by analysts, researching underfollowed industries and businesses can be challenging due to the scarcity of information that is made available in these areas. Quantitative data is critical to understanding a business and is the starting point of our research. Our team spends thousands of hours per year building financial models, performing industry research, reading, furthering our education through accounting courses, etc. All this leg work prepares us to incorporate qualitative information into our research process. Perhaps the best way to gather qualitative information about a business is to go on-site and meet with the management team.

 

On-site visits allow us to:

 

1)Conduct in-person meetings with executive and non-executive team members,

2)Evaluate the character of the teams leading the business,

3)Understand management’s capital allocation framework,

4)Witness firsthand the culture of the organization, and

5)Assess the state of the operations of the business.

 

Our willingness to travel and meet with management teams in their own backyards has proven to be invaluable in our research efforts. During the last twelve months, Clarkston Capital’s investment team researched more than 30 businesses and performed more than 20 on-site visits.

 

 

Annual Report | September 30, 20193

 

 

 

Clarkston FundsShareholder Letter

 

September 30, 2019 (Unaudited)

 

We build long-term relationships with management teams through diligent preparation and in-depth discussions centered around capital allocation and durability of the businesses’ competitive advantages. Our long-term mindset and thoughtful analysis have helped us build a reputation as a patient investor.

 

Conclusion 

We spend a considerable amount of time, energy, and resources gathering and processing information about a business in an effort to become the most knowledgeable shareholder. We believe we can gain informational advantages due to inefficiencies that exist in the investment industry and because of barriers present in accessing quantitative and qualitative data on underfollowed businesses. This information, when paired with the proper temperament and investment time horizon, serves as an important source of our investment philosophy.

 

Sincerely,

 

Jeffrey A. Hakala, CFA, CPAJerry W. Hakala, CFA
  

 

Past performance does not guarantee future results.The views and information discussed in this letter are as of the date of publication, are subject to change, and may not reflect the writer’s current views. The views expressed are those of Clarkston Capital Partners, LLC, the investment adviser to the Clarkston Funds, and represent an assessment of market conditions at a specific point in time, are opinions only and should not be relied upon as investment advice regarding a particular investment or markets in general. The information provided does not constitute a recommendation to buy or sell specific securities or investment vehicles. It should not be assumed that any investment will be profitable or will equal the performance of any securities or any sectors mentioned in this letter. The subject matter contained in this letter has been derived from several sources believed to be reliable and accurate at the time of compilation. Neither the Clarkston Funds nor Clarkston Capital Partners, LLC accepts any liability for losses, either direct or consequential, caused by the use of this information.

 

 

4www.clarkstonfunds.com

 

 

 

Clarkston Partners FundPortfolio Update

 

September 30, 2019 (Unaudited)

 

Partners Fund Commentary

 

For the twelve months ended September 30, 2019, the Clarkston Partners Fund – Institutional Class (the “Fund”) gained 3.45%. The Russell 2500™ Index lost -4.04% during the same period.

 

This past year, investors continued to favor the highest of high-quality businesses with recurring revenue streams, above-average growth characteristics, and enviable margins; in many cases, this has resulted in share price appreciation beyond growth in underlying intrinsic value, the estimated value of a company and its cash flows. Although we would love for the Fund to hold these quality businesses, we believe no business is worth an infinite amount and are disciplined in our valuation approach. Instead, we have found great value in an eclectic group of businesses facing short-term headwinds that others in the investment community are uninterested in owning. Many of these businesses have a core business that supports the entire value of the enterprise, but have gone on sale due to challenges in other areas of the business. We believe our ability to see past these short-term challenges is a byproduct of our long-term mindset and a distinguishing factor of our investment philosophy.

 

The largest contributors to Fund performance over the past twelve months were Willis Towers Watson PLC (WLTW) and The Western Union Co. (WU). Conversely, two of the largest individual detractors from the Fund’s performance over the past twelve months were Hillenbrand, Inc. (HI) and John Wiley & Sons, Inc. Class A (JW.A).

 

Willis Towers Watson is a leading global advisory, broking and solutions company with a rich heritage dating back to 1828. Willis Towers Watson has built strong client relationships, many of which span decades, with clients who represent approximately 86% of the Fortune Global 500 companies. Leveraging these relationships and breadth of expertise, Willis Towers Watson has been able to successfully cross sell its services and attract new clients resulting in strong organic revenue growth and margin expansion.

 

Western Union is the global leader in sending remittances cross-border and cross-currency. The company enjoys strong competitive advantages related to its economies of scale, compliance capabilities, and agent network. Over the past several years, Western Union has been subjected to operational challenges and regulatory pressures, which have resulted in significant investments to strengthen its compliance capabilities. These investments have enabled Western Union to highlight its competitive advantages both through operational performance and plans to leverage its cross-border capabilities outside of its own network. Management has maintained their disciplined approach to capital allocation with a strong emphasis on returning capital to shareholders both through dividends and share repurchases and have communicated plans to continue to do so. We remain optimistic about Western Union’s future.

 

Hillenbrand, Inc. (HI) is a global diversified industrial company that produces burial caskets and highly engineered process equipment. Hillenbrand’s transformational story began in 2008 when it was spun-off from Hill-Rom as Batesville Casket. Since then, Hillenbrand has redeployed the strong cash flow from Batesville to make acquisitions in order to build out the Process Equipment Group, which comprises most of Hillenbrand’s revenues today.

 

What originally attracted us to Hillenbrand was Batesville’s leading position in the micro-niche casket industry, its high and consistent return on capital, and strong cash generation. And, while Batesville is a smaller piece of the business today, we believe its value supports nearly half of Hillenbrand’s value.

 

 

Annual Report | September 30, 20195

 

 

 

Clarkston Partners FundPortfolio Update

 

September 30, 2019 (Unaudited)

 

Hillenbrand's Process Equipment Group is a portfolio of niche industrial businesses that design and manufacture highly engineered process equipment used in a variety of applications and end markets. These businesses operate in more cyclical end markets than Batesville, but their financial profile is bolstered by the profitable aftermarket parts and service business. We are pleased with management’s execution and believe the organic growth and margin expansion highlight their ability to effectively deploy capital and deliver shareholder value.

 

Since May 2018, Hillenbrand’s share price has declined over 40% due to margin compression related to business mix, input cost inflation, and skepticism toward the announced acquisition of Milacron Holdings Corp. (MCRN). We believe the selloff is unwarranted as nothing fundamental has changed with Hillenbrand to impair its quality. The underlying value of Hillenbrand prior to the Milacron acquisition exceeds what the market is appraising it for; factor in Milacron, and the valuation becomes even more compelling.

 

John Wiley & Sons, Inc. Class A (JW.A), another significant detractor from the Fund’s performance, is a leading publisher and distributor of academic journals and research. In addition, Wiley publishes textbooks and delivers digital solutions to college classrooms while also developing and delivering online graduate and undergraduate degree programs for university partners. These businesses enjoy attractive cash flow characteristics and possess strong competitive advantages, including:

 

1.Customer Captivity: Universities and authors need methods to peer review, publish, and read their research. Universities also need tools to offer online courses.

2.Recurring Revenue: Recurring revenue that is over 50%.

3.Economies of Scale: As a top 3 academic journal publisher with a global reach, Wiley enjoys strong economics and returns on capital.

4.Brand Recognition: Wiley has been in existence for over 200 years and is a trusted and respected provider to universities and adjacent markets.

 

Wiley has taken its strong businesses and employed a very disciplined capital allocation philosophy that balances capital returns with strategic mergers and acquisitions ("M&A"), all while maintaining an under-levered balance sheet.

 

As Wiley has deployed capital towards adjacent market acquisitions, it has also invested in streamlining its operations and cost structure and laid out an achievable 3-year plan. These different operational and M&A investments have created some noise around the short-term financial performance. Therefore, we believe the shares are trading at a very attractive discount to intrinsic value for a group of quality businesses. On a sum-of-the-parts valuation, we believe the value of the Research business supports the entire market value today, meaning investors are essentially owning the other Wiley businesses for free.

 

During the twelve months ended September 30, 2019, we added five new holdings to the Fund: Affiliated Managers Group, Inc. (AMG), Molson Coors Brewing Company Class B (TAP), Sabre Corp. (SABR), Change Healthcare, Inc. (CHNG), and KAR Auction Services, Inc. (KAR). We also added capital to several existing holdings. We eliminated IHS Markit Ltd. (INFO), Fastenal Company (FAST), McCormick & Company, Incorporated (MKC), and KAR due to what we considered to be excessive valuations. We trimmed several existing holdings during this period as well.

 

 

 

6www.clarkstonfunds.com

 

 

 

Clarkston Partners FundPortfolio Update

 

September 30, 2019 (Unaudited)

 

Top Ten Holdings(as a % of Net Assets)* 
  
Stericycle, Inc.7.84%
The Western Union Co.7.20%
Willis Towers Watson PLC6.20%
Legg Mason, Inc.5.87%
Brown & Brown, Inc.5.02%
Nielsen Holdings PLC5.00%
LPL Financial Holdings, Inc.4.39%
CDK Global, Inc.4.27%
Molson Coors Brewing Co.3.39%
Affiliated Managers Group,Inc.3.17%
Top Ten Holdings52.35%

 

Sector Allocation(as a % of Net Assets)* 
  
Financial Services38.25%
Producer Durables20.74%
Consumer Discretionary10.72%
Consumer Staples5.54%
Technology4.36%
Health Care2.01%
Cash, Cash Equivalents, & Other Net Assets18.38%
Total100.00%

 

*Holdings are subject to change, and may not reflect the current or future position of the portfolio.

 

 

Annual Report | September 30, 20197

 

 

 

Clarkston Partners FundPortfolio Update

 

September 30, 2019 (Unaudited)

 

Performance of a Hypothetical $25,000 Initial Investment(at Inception* through September 30, 2019)

 

 

 

The graph shown above represents historical performance of a hypothetical investment of $25,000 in the Institutional Class. Due to differing expenses, performance of the Founders Class will vary. Past performance does not guarantee future results. All returns reflect reinvested dividends, but do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

 

Average Annual Total Returns(as of September 30, 2019)

 

 3 Month6 Month1 Year3 YearSince Inception*
Clarkston Partners Fund – Founders Class1.51%4.74%3.49%8.28%8.93%
Clarkston Partners Fund – Institutional Class1.51%4.68%3.45%8.17%8.78%
Russell 2500TM Index TR-1.28%1.64%-4.04%9.51%9.21%

 

The performance data quoted above represents past performance. Past performance is not a guarantee of future results. Investment return and value of the Fund shares will fluctuate so that an investor’s shares, when sold or redeemed, may be worth more or less than their original cost. Performance may be lower or higher than performance data quoted. Fund performance current to the most recent month end is available by calling (844) 680-6562 or by visiting www.clarkstonfunds.com.

 

*Fund’s inception date is September 15, 2015.

 

The Russell 2500TM Index TR measures the performance of the small- to mid-cap segment of the U.S. equity universe, commonly referred to as “smid” cap. The Russell 2500TM Index TR is a subset of the Russell 3000® Index. It includes approximately 2,500 of the smallest securities based on a combination of their market cap and current index membership. The Russell 2500TM Index TR is constructed to provide a comprehensive and unbiased barometer for the small- to mid-cap segment. The Russell 3000® Index measures the performance of the largest 3,000 U.S. companies representing approximately 98% of the investable U.S. equity market.

 

 

8www.clarkstonfunds.com

 

 

 

Clarkston Partners FundPortfolio Update

 

September 30, 2019 (Unaudited)

 

Frank Russell Company (“Russell”) is the source and owner of the trademarks, service marks and copyrights related to the Russell Indexes. Russell® is a trademark of Frank Russell Company. Neither Russell nor its licensors accept any liability for any errors or omissions in the Russell Indexes or underlying data and no party may rely on any Russell Indexes and/or underlying data contained in this communication. No further distribution of Russell Data is permitted without Russell’s express written consent. Russell does not promote, sponsor or endorse the content of this communication.

 

Returns of less than 1 year are cumulative.

 

Indices are not actively managed and do not reflect a deduction for fees, expenses or taxes. An investor cannot invest directly in an index.

 

The returns shown above do not reflect the deduction of taxes a shareholder would pay on Fund distributions or redemption of Fund shares.

 

The total annual operating expenses and total annual operating expenses after fee waivers and/or reimbursement you may pay as an investor in the Fund’s Founders Class and Institutional Class shares (as reported in the January 28, 2019 Prospectus), are 0.94% and 0.85% and 1.10% and 1.00%, respectively. The Fund’s investment adviser has contractually agreed to limit expenses through January 31, 2020.

 

 

Annual Report | September 30, 20199

 

 

 

Clarkston FundPortfolio Update

 

September 30, 2019 (Unaudited)

 

Clarkston Fund Commentary

 

For the twelve months ended September 30, 2019, the Clarkston Fund – Institutional Class (the “Fund”) gained 10.92%. The Russell 1000® Index gained 3.87% during the same period.

 

This past year, investors favored large, fast-growing technology businesses with stellar economics, as well as established consumer staple businesses that have demonstrated an ability to grow, albeit at a much more modest pace than the former. We believe these opposing behaviors reflect investors’ enthusiasm for growth, as well as an acknowledgment that we are more than a decade into the current economic cycle. We have been able to resist the temptation to pay up for such businesses and have instead found a group of eclectic businesses that we feel comfortable holding in the Fund over a full market cycle. Many of these businesses have a core business that supports the entire value of the enterprise, but has gone on sale due to challenges in other areas of the business. We believe our ability to see past these short-term challenges is a byproduct of our long-term mindset and a distinguishing factor of our investment philosophy.

 

The largest contributors to Fund performance over the past twelve months were The Procter & Gamble Co. (PG) and Willis Towers Watson PLC (WLTW). Conversely, the two largest individual detractors from the Fund’s performance over the past twelve months were Affiliated Managers Group, Inc. (AMG) and Nielsen Holdings PLC (NLSN).

 

P&G’s revenue growth continued to accelerate, providing further evidence that the company is now nimbler and more focused following a series of portfolio rationalization moves. Additionally, P&G surpassed the halfway point of its second $10 billion productivity plan. Further acceleration of revenue growth coupled with cost savings initiatives should lead to meaningful margin expansion and growth in free cash flow.

 

Willis Towers Watson is a leading global advisory, broking and solutions company with a rich heritage dating back to 1828. Willis Towers Watson has built strong client relationships, many of which span decades, with clients who represent approximately 86% of the Fortune Global 500 companies. Leveraging these relationships and breadth of expertise, Willis Towers Watson has been able to successfully cross sell its services and attract new clients resulting in strong organic revenue growth and margin expansion.

 

AMG is the permanent partner of choice for boutique asset managers seeking a succession solution. In exchange for a share of the asset management firms’ revenues, AMG takes minority and majority stakes in the managers. This business model possesses four important structural advantages:

 

1.It allows the managers to retain independence.

2.It keeps a significant portion of economic ownership with the people running the firm.

3.It enables the transfer of equity from the founding partners to the next generation of partners.

4.It creates a positive selection bias; founders that value independence and firm continuity throughout generations are more likely to be successful.

 

AMG pioneered this model and has been employing it for more than 25 years. Over that time, the Company has invested in more than 50 managers: notably, Tweedy, Browne Company LLC, ValueAct Capital, and AQR Capital Management.

 

 

10www.clarkstonfunds.com

 

 

 

Clarkston FundPortfolio Update

 

September 30, 2019 (Unaudited)

 

Since January 2018, AMG’s share price has fallen more than 60%, primarily due to fee compression, active management outflows, and challenged performance of a few large affiliates. We believe the sell-off is largely overblown. AMG has invested more in its affiliates than reflected in its current enterprise value, a measure of a company’s total value, and most of those affiliates have experienced meaningful growth in assets under management since AMG’s investment.

 

Nielsen Holdings PLC (NLSN) is a global media and retail measurement business. The company possesses many attractive attributes, such as recurring revenue streams, pricing power, high returns on capital, and durable competitive moats. Nielsen comprises two businesses: Global Media and Global Connect.

 

The Global Media business measures what media is consumed and, more importantly, who is consuming it – both in the U.S. and internationally. This measurement data is used by advertisers and media publishers to buy and sell advertising space. Nielsen has been the standard in radio measurement since the 1940s, television measurement since the 1950s, and digital measurement since the late 2000s. We believe this business supports the entire market value of Nielsen today. Nielsen’s Global Connect business, on the other hand, measures the market shares of fast-moving consumer goods in over 100 countries, requiring immense scale and a robust network of retail relationships. In contrast with Global Media, this business has struggled due to a challenged end market coupled with years of product underinvestment.

 

Nielsen is more than 12 months into a strategic review of the company that will result in one of three outcomes: (1) retain and improve both Media and Connect businesses, (2) sell the Global Connect business, or (3) sell the entire business. Although we have no insight into which outcome will manifest, we have confidence that the value of the underlying business – whether in whole or pieces – is worth significantly more than what the market is appraising it for today.

 

During the twelve months ended September 30, 2019, we added four new holdings to the Fund: Nielsen Holdings PLC (NLSN), Affiliated Managers Group, Inc. (AMG), Molson Coors Brewing Co., Class B (TAP), and FedEx Corp. (FDX). We also added capital to several existing holdings. We eliminated Walmart, Inc. (WMT), Markel Corp. (MKL), Mondelez International, Inc. Class A (MDLZ), and Medtronic PLC (MDT) due to what we considered to be excessive valuations. We trimmed several existing holdings during this period as well.

 

 

Annual Report | September 30, 201911

 

 

 

Clarkston FundPortfolio Update

 

September 30, 2019 (Unaudited)

 

Top Ten Holdings(as a % of Net Assets)* 
  
The Procter & Gamble Co.6.83%
General Electric Co.6.51%
The Western Union Co.5.62%
Anheuser-Busch InBev SA/NV5.40%
Nielsen Holdings PLC5.25%
PepsiCo, Inc.4.52%
Sysco Corp.3.78%
Willis Towers Watson PLC3.71%
American Express Co.3.68%
Affiliated Managers Group, Inc.3.66%
Top Ten Holdings48.96%

 

Sector Allocation(as a % of Net Assets)* 
  
Consumer Staples30.65%
Financial Services24.52%
Producer Durables13.92%
Technology8.10%
Consumer Discretionary6.08%
Health Care5.61%
Cash, Cash Equivalents, & Other Net Assets11.12%
Total100.00%

 

*Holdings are subject to change, and may not reflect the current or future position of the portfolio.

 

 

12www.clarkstonfunds.com

 

 

 

Clarkston FundPortfolio Update

 

September 30, 2019 (Unaudited)

Performance of a Hypothetical $10,000 Initial Investment(at Inception* through September 30, 2019)

 

 

 

The graph shown above represents historical performance of a hypothetical investment of $10,000 in the Institutional Class. Past performance does not guarantee future results. All returns reflect reinvested dividends, but do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

 

Average Annual Total Returns(as of September 30, 2019)

 

 3 Month6 Month1 Year3 YearSince Inception*
Clarkston Fund – Institutional Class2.54%7.57%10.92%8.99%9.23%
Russell 1000® Index TR1.42%5.73%3.87%13.19%13.08%

 

The performance data quoted above represents past performance. Past performance is not a guarantee of future results. Investment return and value of the Fund shares will fluctuate so that an investor’s shares, when sold or redeemed, may be worth more or less than their original cost. Performance may be lower or higher than performance data quoted. Fund performance current to the most recent month-end is available by calling (844) 680-6562 or by visiting www.clarkstonfunds.com.

 

*Fund’s inception date is April 1, 2016.

 

The Russell 1000® Index TR measures the performance of the large-cap segment of the U.S. equity universe. It is a subset of the Russell 3000® Index and includes approximately 1,000 of the largest securities based on a combination of their market cap and current index membership. The Russell 1000® Index TR represents approximately 92% of the U.S. market. The Russell 1000® Index TR is constructed to provide a comprehensive and unbiased barometer for the large-cap segment and is completely reconstituted annually to ensure new and growing equities are reflected.

 

Frank Russell Company (“Russell”) is the source and owner of the trademarks, service marks and copyrights related to the Russell Indexes. Russell® is a trademark of Frank Russell Company. Neither Russell nor its licensors accept any liability for any errors or omissions in the Russell Indexes or underlying data and no party may rely on any Russell Indexes and/or underlying data contained in this communication. No further distribution of Russell Data is permitted without Russell’s express written consent. Russell does not promote, sponsor or endorse the content of this communication.

 

 

Annual Report | September 30, 201913

 

 

 

Clarkston FundPortfolio Update

 

September 30, 2019 (Unaudited)

 

Returns of less than 1 year are cumulative.

 

Indices are not actively managed and do not reflect a deduction for fees, expenses or taxes. An investor cannot invest directly in an index.

 

The returns shown above do not reflect the deduction of taxes a shareholder would pay on Fund distributions or redemption of Fund shares.

 

The total annual operating expenses and total annual operating expenses after fee waivers and/or reimbursement you may pay as an investor in the Fund’s Institutional Class shares (as reported in the January 28, 2019 Prospectus), are 0.98% and 0.70%, respectively. The Fund’s investment adviser has contractually agreed to limit expenses through January 31, 2020.

 

 

14www.clarkstonfunds.com

 

 

 

Clarkston Founders FundPortfolio Update

 

September 30, 2019 (Unaudited)

 

Founders Fund Commentary

 

For the twelve months ended September 30, 2019, the Clarkston Founders Fund – Institutional Class (the “Fund”) gained 5.31%. The Russell Midcap® Index gained 3.19% during the same period.

 

This past year, investors continued to favor the highest of high-quality businesses with recurring revenue streams, above-average growth characteristics, and enviable margins; in many cases, this has resulted in share price appreciation beyond growth in underlying intrinsic value, the estimated value of a company and its cash flows. Although we would love for the Fund to hold these quality businesses, we believe no business is worth an infinite amount and are disciplined in our valuation approach. Instead, we have found great value in an eclectic group of businesses facing short-term headwinds that others in the investment community are uninterested in owning. Many of these businesses have a core business that supports the entire value of the enterprise, but have gone on sale due to challenges in other areas of the business. We believe our ability to see past these short-term challenges is a byproduct of our long-term mindset and a distinguishing factor of our investment philosophy.

 

The largest contributors to Fund performance over the past twelve months were Willis Towers Watson PLC (WLTW) and The Western Union Co. (WU). Conversely, the two largest individual detractors from the Fund’s performance over the past twelve months were Affiliated Managers Group, Inc. (AMG) and Nielsen Holdings PLC (NLSN).

 

Willis Towers Watson is a leading global advisory, broking and solutions company with a rich heritage dating back to 1828. Willis Towers Watson has built strong client relationships, many of which span decades, with clients who represent approximately 86% of the Fortune Global 500 companies. Leveraging these relationships and breadth of expertise, Willis Towers Watson has been able to successfully cross sell its services and attract new clients resulting in strong organic revenue growth and margin expansion.

 

Western Union is the global leader in sending remittances cross-border and cross-currency. The company enjoys strong competitive advantages related to its economies of scale, compliance capabilities, and agent network. Over the past several years, Western Union has been subjected to operational challenges and regulatory pressures, which have resulted in significant investments to strengthen its compliance capabilities. These investments have enabled Western Union to highlight its competitive advantages both through operational performance and plans to leverage its cross-border capabilities outside of its own network. Management has maintained their disciplined approach to capital allocation with a strong emphasis on returning capital to shareholders both through dividends and share repurchases and have communicated plans to continue to do so. We remain optimistic about Western Union’s future.

 

AMG is the permanent partner of choice for boutique asset managers seeking a succession solution. In exchange for a share of the asset management firms’ revenues, AMG takes minority and majority stakes in the managers. This business model possesses four important structural advantages:

 

1.It allows the managers to retain independence.

2.It keeps a significant portion of economic ownership with the people running the firm.

3.It enables the transfer of equity from the founding partners to the next generation of partners.

 

 

Annual Report | September 30, 201915

 

 

 

Clarkston Founders FundPortfolio Update

 

September 30, 2019 (Unaudited)

 

4.It creates a positive selection bias; founders that value independence and firm continuity throughout generations are more likely to be successful.

 

AMG pioneered this model and has been employing it for more than 25 years. Over that time, the Company has invested in more than 50 managers: notably, Tweedy, Browne Company LLC, ValueAct Capital, and AQR Capital Management.

 

Since January 2018, AMG’s share price has fallen more than 60%, primarily due to fee compression, active management outflows, and challenged performance of a few large affiliates. We believe the sell-off is largely overblown. AMG has invested more in its affiliates than reflected in its current Enterprise Value, and most of those affiliates have experienced meaningful growth in assets under management since AMG’s investment.

 

Nielsen Holdings PLC (NLSN) is a global media and retail measurement business. The company possesses many attractive attributes, such as recurring revenue streams, pricing power, high returns on capital, and durable competitive moats. Nielsen comprises two businesses: Global Media and Global Connect.

 

The Global Media business measures what media is consumed and, more importantly, who is consuming it – both in the U.S. and internationally. This measurement data is used by advertisers and media publishers to buy and sell advertising space. Nielsen has been the standard in radio measurement since the 1940s, television measurement since the 1950s, and digital measurement since the late 2000s. We believe this business supports the entire market value of Nielsen today. Nielsen’s Global Connect business, on the other hand, measures the market shares of fast-moving consumer goods in over 100 countries, requiring immense scale and a robust network of retail relationships. Contrary to Global Media, this business has struggled due to a challenged end market coupled with years of product underinvestment.

 

Nielsen is more than 12 months into a strategic review of the company that will result in one of three outcomes: (1) retain and improve both Media and Connect businesses, (2) sell the Global Connect business, or (3) sell the entire business. Although we have no special insight into which outcome will manifest, we have confidence that the value of the underlying business – whether in whole or pieces – is worth significantly more than what the market is appraising it for today.

 

During the twelve months ended September 30, 2019, we added five new holdings to the Fund: Affiliated Managers Group, Inc. (AMG), Molson Coors Brewing Co., Class B (TAP), Sabre Corp. (SABR), Post Holdings, Inc. (POST), and Change Healthcare, Inc. (CHNG). We also added capital to several existing holdings. We eliminated DENTSPLY SIRONA, Inc. (XRAY), Fastenal Co. (FAST), Cintas Corp. (CTAS), IHS Markit Ltd. (INFO), Roper Technologies, Inc. (ROP), and McCormick & Co., Inc. (MKC) due to what we considered to be excessive valuations. We trimmed several existing holdings during this period as well.

 

 

16www.clarkstonfunds.com

 

 

 

Clarkston Founders FundPortfolio Update

 

September 30, 2019 (Unaudited)

 

Top Ten Holdings(as a % of Net Assets)* 
  
Stericycle, Inc.7.91%
The Western Union Co.6.78%
Nielsen Holdings PLC5.26%
Willis Towers Watson PLC5.21%
Brown & Brown, Inc.4.87%
Affiliated Managers Group, Inc.4.60%
Legg Mason, Inc.4.34%
CDK Global, Inc.4.33%
Molson Coors Brewing Co.4.25%
Sysco Corp.3.40%
Top Ten Holdings50.95%

 

Sector Allocation(as a % of Net Assets)* 
  
Financial Services32.17%
Producer Durables13.95%
Consumer Staples9.72%
Consumer Discretionary6.75%
Health Care5.89%
Technology4.41%
Cash, Cash Equivalents, & Other Net Assets27.11%
Total100.00%

 

*Holdings are subject to change, and may not reflect the current or future position of the portfolio.

 

 

Annual Report | September 30, 201917

 

 

 

Clarkston Founders FundPortfolio Update

 

September 30, 2019 (Unaudited)

 

Performance of a Hypothetical $10,000 Initial Investment(at Inception* through September 30, 2019)

 

 

 

The graph shown above represents historical performance of a hypothetical investment of $10,000 in the Institutional Class. Past performance does not guarantee future results. All returns reflect reinvested dividends, but do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

 

Average Annual Total Returns(as of September 30, 2019)

 

 3 Month6 Month1 YearSince Inception*
Clarkston Founders Fund – Institutional Class2.73%5.52%5.31%7.06%
Russell Midcap® Index TR0.48%4.63%3.19%9.82%

 

The performance data quoted above represents past performance. Past performance is not a guarantee of future results. Investment return and value of the Fund shares will fluctuate so that an investor’s shares, when sold or redeemed, may be worth more or less than their original cost. Performance may be lower or higher than performance data quoted. Fund performance current to the most recent month end is available by calling (844) 680-6562 or by visiting www.clarkstonfunds.com.

 

*Fund’s inception date is January 31, 2017.

 

The Russell Midcap® Index is a market capitalization weighted index that measures the performance of the mid-capitalization sector of the U.S. equity market and includes approximately 800 of the smallest issuers in the Russell 1000® Index. The Russell 1000® Index includes the 1,000 largest stocks in the Russell 3000® Index, which consists of the 3,000 largest U.S. public companies.

 

Frank Russell Company (“Russell”) is the source and owner of the trademarks, service marks and copyrights related to the Russell Indexes. Russell® is a trademark of Frank Russell Company. Neither Russell nor its licensors accept any liability for any errors or omissions in the Russell Indexes or underlying data and no party may rely on any Russell Indexes and/or underlying data contained in this communication. No further distribution of Russell Data is permitted without Russell’s express written consent. Russell does not promote, sponsor or endorse the content of this communication.

 

 

18www.clarkstonfunds.com

 

 

 

Clarkston Founders FundPortfolio Update

 

September 30, 2019 (Unaudited)

 

Returns of less than 1 year are cumulative.

 

Indices are not actively managed and do not reflect a deduction for fees, expenses or taxes. An investor cannot invest directly in an index.

 

The returns shown above do not reflect the deduction of taxes a shareholder would pay on Fund distributions or redemption of Fund shares.

 

The total annual operating expenses and total annual operating expenses after fee waivers and/or reimbursement you may pay as an investor in the Fund’s Institutional Class shares (as reported in the January 28, 2019 Prospectus), are 1.26% and 0.95%, respectively. The Fund’s investment adviser has contractually agreed to limit expenses through January 31, 2020.

 

 

Annual Report | September 30, 201919

 

 

 

Clarkston FundsDisclosure of Fund Expenses

 

September 30, 2019 (Unaudited)

 

Example.As a shareholder of the Clarkston Partners Fund, Clarkston Fund, or Clarkston Founders Fund (the “Funds”), you incur one type of cost, ongoing costs, including management fees and other Fund expenses. The following examples are intended to help you understand your ongoing costs (in dollars) of investing in a Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The examples are based on an investment of $1,000 invested on April 1, 2019 and held through September 30, 2019.

 

Actual Expenses.The first line under each class in the following table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading “Expenses Paid During Period April 1, 2019 – September 30, 2019” to estimate the expenses you paid on your account during this period.

 

Hypothetical Example for Comparison Purposes.The second line under each class in the following table provides information about hypothetical account values and hypothetical expenses based on a Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in a Fund and other mutual funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

 

Please note that the expenses shown in the table are meant to highlight your ongoing Fund costs only and do not reflect any transactional costs. Therefore, the second line under each class in the table below is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

 

 

20www.clarkstonfunds.com

 

 

 

Clarkston FundsDisclosure of Fund Expenses

 

September 30, 2019 (Unaudited)

 

 Beginning
Account Value
April 1, 2019

Ending
Account Value
September 30,

2019

Expense

Ratio(a)

Expenses Paid
During Period
April 1, 2019 -
September 30,

2019(b)

Clarkston Partners Fund    
Founders Class    
Actual$1,000.00$1,047.400.85%$4.36
Hypothetical (5% return before expenses)$1,000.00$1,020.810.85%$4.31
Institutional Class    
Actual$1,000.00$1,046.800.95%$4.87
Hypothetical (5% return before expenses)$1,000.00$1,020.310.95%$4.81
Clarkston Fund    
Institutional Class    
Actual$1,000.00$1,075.700.67%$3.49
Hypothetical (5% return before expenses)$1,000.00$1,021.710.67%$3.40
Clarkston Founders Fund    
Institutional Class    
Actual$1,000.00$1,055.200.91%$4.69
Hypothetical (5% return before expenses)$1,000.00$1,020.510.91%$4.61

 

(a)Each Fund's expense ratios have been annualized based on the Fund's most recent fiscal half-year expenses after any applicable waivers and reimbursements.

(b)Expenses are equal to the annualized expense ratio shown above for the applicable class, multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half year (183), divided by 365.

 

 

Annual Report | September 30, 201921

 

 

 

Clarkston Partners FundPortfolio of Investments

 

September 30, 2019

 

  Shares  Value
(Note 2)
 
COMMON STOCK (81.62%)        
Consumer Discretionary (10.72%)        
IAA, Inc.(a)  180,000  $7,511,400 
John Wiley & Sons, Inc., Class A  594,000   26,100,360 
Matthews International Corp., Class A  560,000   19,818,400 
Nielsen Holdings PLC  2,195,000   46,643,750 
Total Consumer Discretionary      100,073,910 
         
Consumer Staples (5.54%)        
Molson Coors Brewing Co., Class B  550,000   31,625,000 
Post Holdings, Inc.(a)  190,000   20,109,600 
Total Consumer Staples      51,734,600 
         
Financial Services (38.25%)(b)        
Affiliated Managers Group, Inc.  355,000   29,589,250 
Artisan Partners Asset Management, Inc., REIT, Class A  725,000   20,474,000 
Broadridge Financial Solutions, Inc.  200,000   24,886,000 
Brown & Brown, Inc.  1,300,000   46,878,000 
Legg Mason, Inc.  1,435,000   54,802,650 
LPL Financial Holdings, Inc.  500,000   40,950,000 
Markel Corp.(a)  12,000   14,182,800 
The Western Union Co.  2,900,000   67,193,000 
Willis Towers Watson PLC  300,000   57,891,000 
Total Financial Services      356,846,700 
         
Health Care (2.01%)        
Change Healthcare, Inc.(a)  1,550,000   18,724,000 
         
Producer Durables (20.74%)        
Actuant Corp., Class A  1,090,000   23,914,600 
CH Robinson Worldwide, Inc.  270,000   22,890,600 
Graco, Inc.  165,000   7,596,600 
Hillenbrand, Inc.  832,451   25,706,087 
Landstar System, Inc.  205,000   23,078,900 
Stericycle, Inc.(a)  1,436,000   73,135,480 
Waters Corp.(a)  77,000   17,188,710 
Total Producer Durables      193,510,977 
         
Technology (4.36%)        
CDK Global, Inc.  829,000   39,866,610 

 

See Notes to Financial Statements.

 

22www.clarkstonfunds.com

 

 

 

Clarkston Partners FundPortfolio of Investments

 

September 30, 2019

 

  Shares  Value
(Note 2)
 
Technology (continued)        
Sabre Corp.  35,084  $785,706 
Total Technology      40,652,316 
         
TOTAL COMMON STOCK        
(Cost $645,159,169)      761,542,503 
         
TOTAL INVESTMENTS (81.62%)        
(Cost $645,159,169)     $761,542,503 
         
OTHER ASSETS IN EXCESS OF LIABILITIES (18.38%)      171,460,591 
         
NET ASSETS (100.00%)     $933,003,094 

 

(a)Non-income producing security.

(b)To the extent the Fund invests more heavily in particular sectors of the economy, its performance will be especially sensitive to developments that significantly affect those sectors. When sector categorization is broken down by industry, no industry exceeds the 25% maximum specified in the Statement of Additional Information.

 

For Fund compliance purposes, the Fund’s industry classifications refer to any one or more of the industry sub-classifications used by one or more widely recognized market indices or ratings group indices and/or as defined by Fund management. This definition may not apply for purposes of this report, which may use a different classification system or may combine industry sub-classifications for reporting ease. Industries are shown as a percent of the Fund's net assets. (Unaudited)

 

See Notes to Financial Statements.

 

Annual Report | September 30, 201923

 

 

 

Clarkston FundPortfolio of Investments

 

September 30, 2019

 

  Shares  Value
(Note 2)
 
COMMON STOCK (88.88%)        
Consumer Discretionary (6.08%)        
Nielsen Holdings PLC  135,000  $2,868,750 
The Walt Disney Co.  3,500   456,120 
Total Consumer Discretionary      3,324,870 
         
Consumer Staples (30.65%)(a)        
Anheuser-Busch InBev SA/NV, Sponsored ADR  31,000   2,949,650 
Diageo PLC, Sponsored ADR  11,700   1,913,184 
Molson Coors Brewing Co., Class B  30,000   1,725,000 
Nestle SA, Sponsored, ADR  17,500   1,897,000 
PepsiCo, Inc.  18,000   2,467,800 
Sysco Corp.  26,000   2,064,400 
The Procter & Gamble Co.  30,000   3,731,400 
Total Consumer Staples      16,748,434 
         
Financial Services (24.52%)        
Affiliated Managers Group, Inc.  24,000   2,000,400 
American Express Co.  17,000   2,010,760 
Capital One Financial Corp.  12,800   1,164,544 
Mastercard, Inc., Class A  3,500   950,495 
The Charles Schwab Corp.  27,500   1,150,325 
The Western Union Co.  132,500   3,070,025 
US Bancorp  18,500   1,023,790 
Willis Towers Watson PLC  10,500   2,026,185 
Total Financial Services      13,396,524 
         
Health Care (5.61%)        
AmerisourceBergen Corp.  7,550   621,591 
Johnson & Johnson  13,500   1,746,630 
McKesson Corp.  5,100   696,966 
Total Health Care      3,065,187 
         
Producer Durables (13.92%)        
3M Co.  500   82,200 
CH Robinson Worldwide, Inc.  9,500   805,410 
FedEx Corp.  7,000   1,018,990 
General Electric Co.  398,000   3,558,120 
Paychex, Inc.  8,500   703,545 
United Parcel Service, Inc., Class B  12,000   1,437,840 
Total Producer Durables      7,606,105 
         
Technology (8.10%)        
Cisco Systems, Inc.  18,500   914,085 

 

See Notes to Financial Statements.

 

24www.clarkstonfunds.com

 

 

 

Clarkston FundPortfolio of Investments

 

September 30, 2019

 

  Shares  Value
(Note 2)
 
Technology (continued)        
International Business Machines Corp.  13,500  $1,963,170 
Microsoft Corp.  11,150   1,550,185 
Total Technology      4,427,440 
         
TOTAL COMMON STOCK        
(Cost $42,762,871)      48,568,560 
         
TOTAL INVESTMENTS (88.88%)        
(Cost $42,762,871)     $48,568,560 
         
OTHER ASSETS IN EXCESS OF LIABILITIES (11.12%)      6,075,685 
         
NET ASSETS (100.00%)     $54,644,245 

 

(a)To the extent the Fund invests more heavily in particular sectors of the economy, its performance will be especially sensitive to developments that significantly affect those sectors. When sector categorization is broken down by industry, no industry exceeds the 25% maximum specified in the Statement of Additional Information.

 

For Fund compliance purposes, the Fund’s industry classifications refer to any one or more of the industry sub-classifications used by one or more widely recognized market indices or ratings group indices and/or as defined by Fund management. This definition may not apply for purposes of this report, which may use a different classification system or may combine industry sub-classifications for reporting ease. Industries are shown as a percent of the Fund's net assets. (Unaudited)

 

See Notes to Financial Statements.

 

Annual Report | September 30, 201925

 

 

 

Clarkston Founders FundPortfolio of Investments

 

September 30, 2019

 

  Shares  Value
(Note 2)
 
COMMON STOCK (72.89%)        
Consumer Discretionary (6.75%)        
LKQ Corp.(a)  21,000  $660,450 
Nielsen Holdings PLC  110,000   2,337,500 
Total Consumer Discretionary      2,997,950 
         
Consumer Staples (9.72%)        
Molson Coors Brewing Co., Class B  32,800   1,886,000 
Post Holdings, Inc.(a)  8,700   920,808 
Sysco Corp.  19,000   1,508,600 
Total Consumer Staples      4,315,408 
         
Financial Services (32.17%)(b)        
Affiliated Managers Group, Inc.  24,500   2,042,075 
Broadridge Financial Solutions, Inc.  7,800   970,554 
Brown & Brown, Inc.  60,000   2,163,600 
FactSet Research Systems, Inc.  1,500   364,455 
Legg Mason, Inc.  50,500   1,928,595 
Markel Corp.(a)  500   590,950 
The Charles Schwab Corp.  21,500   899,345 
The Western Union Co.  130,000   3,012,100 
Willis Towers Watson PLC  12,000   2,315,640 
Total Financial Services      14,287,314 
         
Health Care (5.89%)        
AmerisourceBergen Corp.  5,000   411,650 
Change Healthcare, Inc.(a)  75,000   906,000 
McKesson Corp.  9,500   1,298,270 
Total Health Care      2,615,920 
         
Producer Durables (13.95%)        
CH Robinson Worldwide, Inc.  13,000   1,102,140 
Paychex, Inc.  11,000   910,470 
Stericycle, Inc.(a)  69,000   3,514,170 
Waters Corp.(a)  3,000   669,690 
Total Producer Durables      6,196,470 
         
Technology (4.41%)        
CDK Global, Inc.  40,000   1,923,600 

 

See Notes to Financial Statements.

 

26www.clarkstonfunds.com

 

 

 

Clarkston Founders FundPortfolio of Investments

 

September 30, 2019

 

  Shares  Value
(Note 2)
 
Technology (continued)        
Sabre Corp.  1,581  $35,407 
Total Technology      1,959,007 
         
TOTAL COMMON STOCK        
(Cost $29,444,289)      32,372,069 
         
TOTAL INVESTMENTS (72.89%)        
(Cost $29,444,289)     $32,372,069 
         
OTHER ASSETS IN EXCESS OF LIABILITIES (27.11%)      12,038,485 
         
NET ASSETS (100.00%)     $44,410,554 

 

(a)Non-income producing security.

(b)To the extent the Fund invests more heavily in particular sectors of the economy, its performance will be especially sensitive to developments that significantly affect those sectors. When sector categorization is broken down by industry, no industry exceeds the 25% maximum specified in the Statement of Additional Information.

 

For Fund compliance purposes, the Fund’s industry classifications refer to any one or more of the industry sub-classifications used by one or more widely recognized market indices or ratings group indices and/or as defined by Fund management. This definition may not apply for purposes of this report, which may use a different classification system or may combine industry sub-classifications for reporting ease. Industries are shown as a percent of the Fund's net assets. (Unaudited)

 

 

See Notes to Financial Statements.

 

Annual Report | September 30, 201927

 

 

 

Clarkston FundsStatements of Assets and Liabilities

 

September 30, 2019

 

  Clarkston Partners Fund  Clarkston Fund  Clarkston Founders Fund 
ASSETS:         
Investments, at value (Cost $645,159,169, $42,762,871 and $29,444,289) $761,542,503  $48,568,560  $32,372,069 
Cash and Cash Equivalents  171,431,324   7,061,681   12,526,142 
Receivable for shares sold  984,838   50,132   25,086 
Dividends and interest receivable  559,749   52,797   30,784 
Other assets  35,130   5,975   3,786 
Total Assets  934,553,544   55,739,145   44,957,867 
             
LIABILITIES:            
Payable for administration and transfer agency fees  57,730   5,978   5,334 
Payable for shares redeemed  750,286   1,038,012   494,016 
Payable to adviser  560,140   6,137   19,020 
Payable for distribution and service fees  105,681   20,136   8,863 
Payable for printing  7,236   419   280 
Payable for professional fees  45,588   20,304   16,449 
Payable for trustees' fees and expenses  411   24   20 
Payable to Chief Compliance Officer fees  3,245   178   146 
Accrued expenses and other liabilities  20,133   3,712   3,185 
Total Liabilities  1,550,450   1,094,900   547,313 
NET ASSETS $933,003,094  $54,644,245  $44,410,554 
             
NET ASSETS CONSIST OF:            
Paid-in capital (Note 5) $781,845,025  $46,496,581  $39,935,681 
Total distributable earnings  151,158,069   8,147,664   4,474,873 
NET ASSETS $933,003,094  $54,644,245  $44,410,554 
             
PRICING OF SHARES            
Founders Class:            
Net Asset Value, offering and redemption price per share $12.81   N/A   N/A 
Net Assets $451,293,719   N/A   N/A 
Shares of beneficial interest outstanding  35,221,415   N/A   N/A 
Institutional Class:            
Net Asset Value, offering and redemption price per share $12.76  $12.50  $11.67 
Net Assets $481,709,375  $54,644,245  $44,410,554 
Shares of beneficial interest outstanding  37,748,751   4,372,485   3,805,414 

 

See Notes to Financial Statements.

 
28www.clarkstonfunds.com

 

 

 

Clarkston FundsStatements of Operations

 

For the Year Ended September 30, 2019

 

  Clarkston Partners Fund  Clarkston Fund  

Clarkston Founders Fund

 
INVESTMENT INCOME:            
Dividends $17,374,691  $1,000,331  $733,903 
Non cash income     101,198*   
Foreign taxes withheld     (36,490)   
Total Investment Income  17,374,691   1,065,039   733,903 
             
EXPENSES:            
Investment advisory fees (Note 6)  6,920,219   210,151   279,061 
Administration fees  523,715   26,440   23,801 
Shareholder service fees Institutional Class  494,962   50,944   39,520 
Custody fees  79,190   7,062   5,217 
Legal fees  62,816   2,864   2,766 
Audit and tax fees  16,066   11,753   15,040 
Transfer agent fees  102,613   27,038   26,752 
Trustees fees and expenses  79,260   3,817   3,377 
Registration and filing fees  57,113   37,768   22,985 
Printing fees  39,414   3,277   1,459 
Chief Compliance Officer fees  42,677   1,978   1,812 
Insurance fees  30,550   1,520   1,301 
Other expenses  16,705   6,110   5,136 
Total Expenses  8,465,300   390,722   428,227 
Less fees waived by investment adviser (Note 6)            
Founders Class  (303,538)  N/A   N/A 
Institutional Class  (312,594)  (108,159)  (90,772)
Total fees waived by investment adviser (Note 6)  (616,132)  (108,159)  (90,772)
Net Expenses  7,849,168   282,563   337,455 
NET INVESTMENT INCOME  9,525,523   782,476   396,448 
             
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS:            
Net realized gain/(loss) on:            
Investments  29,592,638   2,146,659   1,249,683 
Net realized gain  29,592,638   2,146,659   1,249,683 
Change in unrealized appreciation/(depreciation) on:            
Investments  (11,852,769)  1,833,211   471,650 
Net change  (11,852,769)  1,833,211   471,650 
             
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS  17,739,869   3,979,870   1,721,333 
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $27,265,392  $4,762,346  $2,117,781 

 

*Represents non-cash distributions in connection with capital changes for certain investments held by the Fund recorded on ex-date and based on fair value.

 

See Notes to Financial Statements.

 
Annual Report | September 30, 201929

 

 

 

Clarkston Partners FundStatements of Changes in Net Assets
 

 

  For the Year Ended September 30, 2019  For the Year Ended September 30, 2018 
OPERATIONS:        
Net investment income $9,525,523  $4,408,691 
Net realized gain on investments  29,592,638   45,315,879 
Net change in unrealized appreciation/(depreciation) on investments  (11,852,769)  12,796,620 
Net increase in net assets resulting from operations  27,265,392   62,521,190 
         
DISTRIBUTIONS TO SHAREHOLDERS        
Founders Class  (26,457,456)  (5,470,612)
Institutional Class  (24,254,843)  (4,232,656)
Total distributions  (50,712,299)  (9,703,268)
         
BENEFICIAL SHARE TRANSACTIONS (Note 5):        
Founders Class        
Shares sold  50,669,709   45,054,690 
Dividends reinvested  831,516   187,284 
Shares redeemed  (31,213,365)  (26,289,800)
Net increase from beneficial share transactions  20,287,860   18,952,174 
Institutional Class        
Shares sold  143,599,610   168,049,486 
Dividends reinvested  23,711,613   3,956,110 
Shares redeemed  (106,287,492)  (133,503,789)
Net increase from beneficial share transactions  61,023,731   38,501,807 
Net increase in net assets  57,864,684   110,271,903 
         
NET ASSETS:        
Beginning of year  875,138,410   764,886,507 
End of year $933,003,094  $875,138,410 

 

See Notes to Financial Statements.

 
30www.clarkstonfunds.com

 

 

 

Clarkston FundStatements of Changes in Net Assets
 

 

  For the Year Ended September 30, 2019  For the Year Ended September 30, 2018 
OPERATIONS:        
Net investment income $782,476  $488,069 
Net realized gain on investments  2,146,659   818,342 
Net change in unrealized appreciation on investments  1,833,211   542,726 
Net increase in net assets resulting from operations  4,762,346   1,849,137 
         
DISTRIBUTIONS TO SHAREHOLDERS        
Institutional Class  (1,800,994)  (400,570)
Total distributions  (1,800,994)  (400,570)
         
BENEFICIAL SHARE TRANSACTIONS (Note 5):        
Institutional Class        
Shares sold  12,188,610   8,817,309 
Dividends reinvested  1,794,252   398,503 
Shares redeemed  (7,770,785)  (8,398,319)
Acquisition (Note 9)  13,797,848    
Net increase from beneficial share transactions  20,009,925   817,493 
Net increase in net assets  22,971,277   2,266,060 
         
NET ASSETS:        
Beginning of year  31,672,968   29,406,908 
End of year $54,644,245  $31,672,968 

 

See Notes to Financial Statements.

 
Annual Report | September 30, 201931

 

 

 

Clarkston Founders FundStatements of Changes in Net Assets
 

 

  For the Year Ended September 30, 2019  For the Year Ended September 30, 2018 
OPERATIONS:        
Net investment income $396,448  $179,693 
Net realized gain on investments  1,249,683   477,317 
Net change in unrealized appreciation on investments  471,650   1,228,620 
Net increase in net assets resulting from operations  2,117,781   1,885,630 
         
DISTRIBUTIONS TO SHAREHOLDERS        
Institutional Class  (685,991)  (111,451)
Total distributions  (685,991)  (111,451)
         
BENEFICIAL SHARE TRANSACTIONS (Note 5):        
Institutional Class        
Shares sold  12,105,072   11,412,364 
Dividends reinvested  685,991   111,451 
Shares redeemed  (4,012,879)  (3,244,063)
Net increase from beneficial share transactions  8,778,184   8,279,752 
Net increase in net assets  10,209,974   10,053,931 
         
NET ASSETS:        
Beginning of year  34,200,580   24,146,649 
End of year $44,410,554  $34,200,580 

 

See Notes to Financial Statements.

 
32www.clarkstonfunds.com

 

 

 

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Clarkston Partners Fund – Founders ClassFinancial Highlights
 

For a Share Outstanding Throughout the Periods Presented

    
NET ASSET VALUE, BEGINNING OF PERIOD    
     
INCOME/(LOSS) FROM OPERATIONS:    
Net investment income(b)    
Net realized and unrealized gain/(loss) on investments    
Total from investment operations    
     
LESS DISTRIBUTIONS:    
From net investment income    
From net realized gains on investments    
Total Distributions    
     
NET INCREASE/(DECREASE) IN NET ASSET VALUE    
     
NET ASSET VALUE, END OF PERIOD    
     
TOTAL RETURN(d)    
     
SUPPLEMENTAL DATA:    
Net assets, end of period (in 000s)    
     
RATIOS TO AVERAGE NET ASSETS    
Operating expenses excluding reimbursement/waiver    
Operating expenses including reimbursement/waiver    
Net investment income including reimbursement/waiver    
     
PORTFOLIO TURNOVER RATE(g)    

 

See Notes to Financial Statements.

 
34www.clarkstonfunds.com

 

 

 

Clarkston Partners Fund – Founders ClassFinancial Highlights
 

For a Share Outstanding Throughout the Periods Presented

 

For the Year Ended September 30, 2019  For the Year Ended September 30, 2018  For the Year Ended September 30, 2017  For the Year Ended September 30, 2016  For the Period Ended September 30, 2015(a) 
$13.29  $12.39  $11.11  $9.70  $10.00 
                   
 0.14   0.08   0.05   0.06   0.00(c)
 0.17   0.99   1.37   1.37   (0.30)
 0.31   1.07   1.42   1.43   (0.30)
                   
 (0.09)  (0.04)  (0.06)  (0.02)   
 (0.70)  (0.13)  (0.08)      
 (0.79)  (0.17)  (0.14)  (0.02)   
 (0.48)  0.90   1.28   1.41   (0.30)
$12.81  $13.29  $12.39  $11.11  $9.70 
                   
 3.49%  8.70%  12.86%  14.73%(e)  (3.00%)
                   
$451,294  $445,516  $397,474  $308,607  $126,281 
                   
 0.92%  0.94%  0.96%  1.02%  1.81%(f)
 0.85%  0.85%  0.85%  0.85%  0.85%(f)
 1.16%  0.60%  0.40%  0.62%  0.05%(f)
                   
 10%  23%  13%  16%  0%

 

(a)Commenced operations on September 16, 2015.
(b)Calculated using the average shares method.
(c)Less than $0.005 per share.
(d)Assumes an initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are for the period indicated and have not been annualized. Total returns would have been lower had certain expenses not been waived during the period. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
(e)In 2016, the Fund's total return consists of a voluntary/unvoluntary reimbursement by the adviser for a realized investment loss. Excluding this item, total return would not change as the impact is less than 0.005%.
(f)Annualized.
(g)Portfolio turnover rate for periods less than one full year have not been annualized.

 

See Notes to Financial Statements.

 
Annual Report | September 30, 201935

 

 

 

Clarkston Partners Fund – Institutional ClassFinancial Highlights
 

For a Share Outstanding Throughout the Periods Presented

    
NET ASSET VALUE, BEGINNING OF PERIOD    
     
INCOME/(LOSS) FROM OPERATIONS:    
Net investment income/(loss)(b)    
Net realized and unrealized gain/(loss) on investments    
Total from investment operations    
     
LESS DISTRIBUTIONS:    
From net investment income    
From net realized gains on investments    
Total Distributions    
     
NET INCREASE/(DECREASE) IN NET ASSET VALUE    
     
NET ASSET VALUE, END OF PERIOD    
     
TOTAL RETURN(d)    
     
SUPPLEMENTAL DATA:    
Net assets, end of period (in 000s)    
     
RATIOS TO AVERAGE NET ASSETS    
Operating expenses excluding reimbursement/waiver    
Operating expenses including reimbursement/waiver    
Net investment income/(loss) including reimbursement/waiver    
     
PORTFOLIO TURNOVER RATE(h)    

 

See Notes to Financial Statements.

 
36www.clarkstonfunds.com

 

 

 

Clarkston Partners Fund – Institutional ClassFinancial Highlights
 

For a Share Outstanding Throughout the Periods Presented

 

For the Year Ended September 30, 2019  For the Year Ended September 30, 2018  For the Year Ended September 30, 2017  For the Year Ended September 30, 2016  For the Period Ended September 30, 2015(a) 
$13.24  $12.36  $11.09  $9.70  $10.00 
                   
 0.13   0.06   0.03   0.05   (0.00)(c)
 0.18   0.99   1.37   1.35   (0.30)
 0.31   1.05   1.40   1.40   (0.30)
                   
 (0.09)  (0.04)  (0.05)  (0.01)   
 (0.70)  (0.13)  (0.08)      
 (0.79)  (0.17)  (0.13)  (0.01)   
 (0.48)  0.88   1.27   1.39   (0.30)
$12.76  $13.24  $12.36  $11.09  $9.70 
                   
 3.45%  8.52%  12.75%  14.47%(e)  (3.00%)
                   
$481,709  $429,622  $367,393  $242,295  $24 
                   
 1.03%  1.08%  1.09%  1.16%  1.96%(f)
 0.96%(g)  0.98%(g)  0.98%(g)  1.00%  1.00%(f)
 1.04%  0.47%  0.27%  0.46%  (0.10%)(f)
                   
 10%  23%  13%  16%  0%

 

(a)Commenced operations on September 16, 2015.
(b)Calculated using the average shares method.
(c)Less than $0.005 per share.
(d)Assumes an initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are for the period indicated and have not been annualized. Total returns would have been lower had certain expenses not been waived during the period. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
(e)In 2016, the Fund's total return consists of a voluntary/unvoluntary reimbursement by the adviser for a realized investment loss. Excluding this item, total return would not change as the impact is less than 0.005%.
(f)Annualized.

 

See Notes to Financial Statements.

 
Annual Report | September 30, 201937

 

 

 

Clarkston Partners Fund – Institutional ClassFinancial Highlights
 

For a Share Outstanding Throughout the Periods Presented

 

(g)According to the Fund's shareholder services plan with respect to the Fund's Institutional shares, any amount of fees accrued according to the plan but not paid during the Fund's fiscal year for such service activities shall be reimbursed to the Fund as soon as practical. Fees were reimbursed to the Fund for the years ended September 30, 2019, September 30, 2018, and September 30, 2017, respectively, in the amount of 0.04%, 0.02% and 0.02% of average net assets of Institutional shares.
(h)Portfolio turnover rate for periods less than one full year have not been annualized.

 

See Notes to Financial Statements.

 
38www.clarkstonfunds.com

 

 

 

Page Intentionally Left Blank

 

 

 

Clarkston Fund – Institutional Class

Financial Highlights
 

For a Share Outstanding Throughout the Periods Presented

     
NET ASSET VALUE, BEGINNING OF PERIOD    
INCOME/(LOSS) FROM OPERATIONS:    
Net investment income(b)    
Net realized and unrealized gain on investments    
Total from investment operations    
     
LESS DISTRIBUTIONS:    
From net investment income    
From net realized gains on investments    
Total Distributions    
     
NET INCREASE IN NET ASSET VALUE    
     
NET ASSET VALUE, END OF PERIOD    
     
TOTAL RETURN(d)    
     
SUPPLEMENTAL DATA:    
Net assets, end of period (in 000s)    
     
RATIOS TO AVERAGE NET ASSETS    
Operating expenses excluding reimbursement/waiver    
Operating expenses including reimbursement/waiver    
Net investment income including reimbursement/waiver    
     
PORTFOLIO TURNOVER RATE(g)    

 

See Notes to Financial Statements.

 
40www.clarkstonfunds.com

 

 

 

Clarkston Fund – Institutional ClassFinancial Highlights
 

For a Share Outstanding Throughout the Periods Presented

 

For the Year Ended

September 30, 2019

  

For the Year Ended

September 30, 2018

  

For the Year Ended

September 30, 2017

  

For the Period Ended

September 30,  2016(a)

 
$11.99  $11.46  $10.52  $10.00 
               
 0.22   0.19   0.16   0.08 
 0.94   0.49   0.90   0.44 
 1.16   0.68   1.06   0.52 
               
 (0.26)  (0.15)  (0.10)   
 (0.39)  (0.00)(c)  (0.02)   
 (0.65)  (0.15)  (0.12)   
 0.51   0.53   0.94   0.52 
$12.50  $11.99  $11.46  $10.52 
               
 10.92%  5.99%  10.13%  5.20%
               
$54,644  $31,673  $29,407  $20,173 
 0.93%  0.93%  1.04%  1.48%(e)
 0.67%(f)  0.65%(f)  0.65%(f)  0.70%(e)
 1.86%  1.60%  1.41%  1.36%(e)
               
 17%  11%  5%  0%

 

(a)Commenced operations on April 4, 2016.
(b)Calculated using the average shares method.
(c)Less than $0.005 per share.
(d)Assumes an initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are for the period indicated and have not been annualized. Total returns would have been lower had certain expenses not been waived during the period. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
(e)Annualized.

 

See Notes to Financial Statements.

 
Annual Report | September 30, 201941

 

 

 

Clarkston Fund – Institutional ClassFinancial Highlights
 

For a Share Outstanding Throughout the Periods Presented

 

(f)According to the Fund's shareholder services plan with respect to the Fund's Institutional shares, any amount of fees accrued according to the plan but not paid during the Fund's fiscal year for such service activities shall be reimbursed to the Fund as soon as practical. Fees were reimbursed to the Fund for the years ended September 30, 2019, September 30, 2018, and September 30, 2017, respectively, in the amount of 0.03%, 0.05% and 0.05% of average net assets of Institutional shares.
(g)Portfolio turnover rate for periods less than one full year have not been annualized.

 

See Notes to Financial Statements.

 
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Page Intentionally Left Blank

 

 

 

Clarkston Founders Fund – Institutional ClassFinancial Highlights
 

For a Share Outstanding Throughout the Periods Presented

 

NET ASSET VALUE, BEGINNING OF PERIOD
 
INCOME/(LOSS) FROM OPERATIONS:
Net investment income(b)
Net realized and unrealized gain on investments
Total from investment operations
 
LESS DISTRIBUTIONS:
From net investment income
From net realized gains on investments
Total Distributions
NET INCREASE IN NET ASSET VALUE
NET ASSET VALUE, END OF PERIOD
 
TOTAL RETURN(c)
 
SUPPLEMENTAL DATA:
Net assets, end of period (in 000s)
 
RATIOS TO AVERAGE NET ASSETS
Operating expenses excluding reimbursement/waiver
Operating expenses including reimbursement/waiver
Net investment income including reimbursement/waiver
 
PORTFOLIO TURNOVER RATE(f)

 

See Notes to Financial Statements.

 
44www.clarkstonfunds.com

 

 

 

Clarkston Founders Fund – Institutional ClassFinancial Highlights
 

For a Share Outstanding Throughout the Periods Presented

 

For the Year

Ended

September 30, 2019

  

For the Year

Ended

September 30, 2018

  

For the Period

Ended September 30, 2017(a)

 
$11.34  $10.64  $10.00 
           
 0.12   0.07   0.02 
 0.44   0.67   0.62 
 0.56   0.74   0.64 
           
 (0.08)  (0.04)   
 (0.15)      
 (0.23)  (0.04)   
 0.33   0.70   0.64 
$11.67  $11.34  $10.64 
           
 5.31%  7.01%  6.40%
           
$44,411  $34,201  $24,147 
           
 1.15%  1.22%  1.46%(d)
 0.91%(e)  0.91%(e)  0.92%(d)(e)
 1.06%  0.59%  0.29%(d)
           
 15%  9%  4%

 

(a)Commenced operations on February 1, 2017.

(b)Calculated using the average shares method.

(c)Assumes an initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are for the period indicated and have not been annualized. Total returns would have been lower had certain expenses not been waived during the period. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

(d)Annualized.

 

See Notes to Financial Statements.

 
Annual Report | September 30, 201945

 

 

 

Clarkston Founders Fund – Institutional ClassFinancial Highlights
 

For a Share Outstanding Throughout the Periods Presented

 

(e)According to the Fund's shareholder services plan with respect to the Fund's Institutional shares, any amount of fees accrued according to the plan but not paid during the Fund's fiscal year for such service activities shall be reimbursed to the Fund as soon as practical. Fees were reimbursed to the Fund for the years ended September 30, 2019, September 30, 2018, and September 30, 2017, respectively, in the amount of 0.04%, 0.04% and 0.03% of average net assets of Institutional shares.

(f)Portfolio turnover rate for periods less than one full year have not been annualized.

 

See Notes to Financial Statements.

 
46www.clarkstonfunds.com

 

 

 

Clarkston FundsNotes to Financial Statements
 

September 30, 2019

 

1. ORGANIZATION

 

 

ALPS Series Trust (the “Trust”), a Delaware statutory trust, is an open-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”). The Trust consists of multiple separate portfolios or series. This annual report describes the Clarkston Partners Fund, the Clarkston Fund and the Clarkston Founders Fund (each, a “Fund” and collectively, the “Funds”). The Funds are non-diversified and the primary investment objectives are to achieve long-term capital appreciation. The Clarkston Partners Fund currently offers Founders Class shares and Institutional Class shares, and the Clarkston Fund and the Clarkston Founders Fund currently offer Institutional Class shares. Each share class of the Clarkston Partners Fund has identical rights to earnings, assets and voting privileges, except for class-specific expenses and exclusive rights to vote on matters affecting only individual classes. The Board of Trustees (the “Board”) may establish additional funds and classes of shares at any time in the future without shareholder approval.

 

2. SIGNIFICANT ACCOUNTING POLICIES

 

 

The accompanying financial statements were prepared in accordance with accounting principles generally accepted in the United States of America for investment companies (“U.S. GAAP”). The Funds are considered investment companies under U.S. GAAP and follow the accounting and reporting guidance applicable to investment companies in the Financial Accounting Standards Board (“FASB”)Accounting Standards CodificationTopic 946. The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the period. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Funds in preparation of their financial statements.

 

Investment Valuation:The Funds generally value their securities based on market prices determined at the close of regular trading on the New York Stock Exchange (“NYSE”), normally 4:00 p.m. Eastern Time, on each day the NYSE is open for trading.

 

Securities traded on a registered U.S. securities exchange (including exchange-traded derivatives other than futures and futures options) are valued based on the last sale price of the security reported on the principal exchange on which it is traded, prior to the time when the Funds’ assets are valued. In the case of equity securities not traded on an exchange, or if such closing prices are not otherwise available, the securities are valued at the mean of the most recent bid and ask prices on such day.

 

Redeemable securities issued by open-end registered investment companies are valued at the investment company’s applicable net asset value (“NAV”), with the exception of exchange-traded open-end investment companies, which are priced as equity securities. Money market funds, representing short-term investments, are valued at their NAV.

 

When such prices or quotations are not available, or when the Fair Value Committee appointed by the Board believes that they are unreliable, securities may be priced using fair value procedures approved by the Board.

 

 
Annual Report | September 30, 201947

 

 

 

Clarkston FundsNotes to Financial Statements
 

September 30, 2019

 

Fair Value Measurements:The Funds disclose the classification of their fair value measurements following a three-tier hierarchy based on the inputs used to measure fair value. Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk. Inputs may be observable or unobservable. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability that are developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability that are developed based on the best information available.

 

Various inputs are used in determining the value of the Funds’ investments as of the end of the reporting period. When inputs used fall into different levels of the fair value hierarchy, the level in the hierarchy within which the fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The designated input levels are not necessarily an indication of the risk or liquidity associated with these investments. These inputs are categorized in the following hierarchy under applicable financial accounting standards:

 

Level 1 – Unadjusted quoted prices in active markets for identical investments, unrestricted assets or liabilities that the Fund has the ability to access at the measurement date;

 

Level 2 – Quoted prices which are not active, quoted prices for similar assets or liabilities in active markets or inputs other than quoted prices that are observable (either directly or indirectly); and

 

Level 3 – Significant unobservable prices or inputs (including the Fund’s own assumptions in determining the fair value of investments) where there is little or no market activity for the asset or liability at the measurement date.

 

The following is a summary of the inputs used to value the Funds’ investments as of September 30, 2019:

 

Clarkston Partners Fund

 

Investments in Securities at Value 

Level 1 -

Unadjusted

Quoted Prices

  

Level 2 -

Other

Significant

Observable

Inputs

  

Level 3 -

Significant

Unobservable

Inputs

  Total 
Common Stocks                
Consumer Discretionary $100,073,910  $  $  $100,073,910 
Consumer Staples  51,734,600         51,734,600 
Financial Services  356,846,700         356,846,700 
Health Care  18,724,000         18,724,000 
Producer Durables  193,510,977         193,510,977 
Technology  40,652,316         40,652,316 
Total $761,542,503  $  $  $761,542,503 

 

 
48www.clarkstonfunds.com

 

 

 

Clarkston FundsNotes to Financial Statements
 

September 30, 2019

 

Clarkston Fund

 

Investments in Securities at Value 

Level 1 -

Unadjusted

Quoted Prices

  

Level 2 -

Other

Significant

Observable

Inputs

  

Level 3 -

Significant

Unobservable

Inputs

  Total 
Common Stocks                
Consumer Discretionary $3,324,870  $  $  $3,324,870 
Consumer Staples  16,748,434         16,748,434 
Financial Services  13,396,524         13,396,524 
Health Care  3,065,187         3,065,187 
Producer Durables  7,606,105         7,606,105 
Technology  4,427,440         4,427,440 
Total $48,568,560  $  $  $48,568,560 

 

Clarkston Founders Fund

 

Investments in Securities at Value 

Level 1 -

Unadjusted

Quoted Prices

  

Level 2 -

Other

Significant

Observable

Inputs

  

Level 3 - 

Significant

Unobservable

Inputs

  Total 
Common Stocks                
Consumer Discretionary $2,997,950  $  $  $2,997,950 
Consumer Staples  4,315,408         4,315,408 
Financial Services  14,287,314         14,287,314 
Health Care  2,615,920         2,615,920 
Producer Durables  6,196,470         6,196,470 
Technology  1,959,007         1,959,007 
Total $32,372,069  $  $  $32,372,069 

 

There were no Level 3 securities held during the year.

 

Cash & Cash Equivalents:The Funds consider their investment in a Federal Deposit Insurance Corporation (“FDIC”) insured interest bearing account to be cash and cash equivalents. Cash and cash equivalents are valued at cost plus any accrued interest. The Funds maintain cash balances, which, at times may exceed federally insured limits. The Funds maintain these balances with a high quality financial institution.

 

Concentration of Credit Risk: Each Fund places its cash with a banking institution, which is insured by FDIC. The FDIC limit is $250,000. At various times throughout the period, the amount on deposit may exceed the FDIC limit and subject the Funds to a credit risk. The Funds do not believe that such deposits are subject to any unusual risk associated with investment activities.

 

 
Annual Report | September 30, 201949

 

 

 

Clarkston FundsNotes to Financial Statements
 

September 30, 2019

 

Trust Expenses:Some expenses of the Trust can be directly attributed to a Fund. Expenses that cannot be directly attributed to a Fund are apportioned among all funds in the Trust based on average net assets of each fund.

 

Fund Expenses:Some expenses can be directly attributed to a Fund and are apportioned among the classes based on average net assets of each class.

 

Class Expenses:Expenses that are specific to a class of shares are charged directly to that share class. Fees provided under the shareholder service plan for a particular class of a Fund are charged to the operations of such class.

 

Federal Income Taxes:The Funds comply with the requirements under Subchapter M of the Internal Revenue Code of 1986, as amended, applicable to regulated investment companies and intend to distribute substantially all of their net taxable income and net capital gains, if any, each year so that they will not be subject to federal income or excise tax on undistributed income and gains. The Funds are not subject to income taxes to the extent such distributions are made.

 

As of and during the fiscal year ended September 30, 2019, the Funds did not have a liability for any unrecognized tax benefits in the accompanying financial statements. The Funds recognize interest and penalties, if any, related to tax liabilities as income tax expense in the Statements of Operations. The Funds file U.S. federal, state and local income tax returns as required. The Funds’ tax returns are subject to examination by the relevant tax authorities until expiration of the applicable statute of limitations, which is generally three years after the filing of the tax return for federal purposes and four years for most state returns. The Funds’ administrator has analyzed the Funds’ tax positions taken on federal and state income tax returns for all open tax years and has concluded that as of September 30, 2019, no provision for income tax is required in the Funds’ financial statements related to these tax positions.

 

Investment Transactions and Investment Income:Investment transactions are accounted for on the date the investments are purchased or sold (trade date basis for financial reporting purposes). Realized gains and losses from investment transactions are reported on an identified cost basis. Interest income, which includes accretion of discounts and amortization of premiums, is accrued and recorded as earned using the effective yield method. Dividend income is recognized on the ex-dividend date, or for certain foreign securities, as soon as information is available to a Fund. Withholding taxes on foreign dividends are paid (a portion of which may be reclaimable) or provided for in accordance with the applicable country’s tax rules and rates and are disclosed in the Statements of Operations. All of the realized and unrealized gains and losses of a Fund and net investment income of a Fund are allocated daily to each class of the Fund in proportion to its average daily net assets.

 

Distributions to Shareholders:The Funds normally pay dividends, if any, and distribute capital gains, if any, on an annual basis. Income dividend distributions are derived from interest, dividends and other income the Funds receive from their investments, including short-term capital gains. Long-term capital gain distributions are derived from gains realized when a Fund sells a security it has owned for more than one year. A Fund may make additional distributions and dividends at other times if its portfolio manager or managers believe doing so may be necessary for the Fund to avoid or reduce taxes. Net investment income/(loss) and net realized gain/(loss) may differ for financial statement and tax purposes.

 

 
50www.clarkstonfunds.com

 

 

 

Clarkston FundsNotes to Financial Statements
 

September 30, 2019

 

3. TAX BASIS INFORMATION

 

 

Tax Basis of Distributions to Shareholders:The character of distributions made during the period from net investment income or net realized gains may differ from its ultimate characterization for Federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the fiscal year in which the income or realized gain were recorded by the Funds. The amounts and characteristics of tax basis distributions and composition of distributable earnings/(accumulated losses) are finalized at fiscal year-end.

 

The tax character of distributions paid during the fiscal year ended September 30, 2019, were as follows:

 

  Ordinary Income  

Long-Term Capital

Gains

 
Clarkston Partners Fund $5,951,971  $44,760,328 
Clarkston Fund  762,288   1,038,706 
Clarkston Founders Fund  247,661   438,330 

 

The tax character of distributions paid during the fiscal year ended September 30, 2018 were as follows:

 

  Ordinary Income  

Long-Term Capital

Gains

 
Clarkston Partners Fund $2,206,133  $7,497,135 
Clarkston Fund  400,570    
Clarkston Founders Fund  111,451    

 

Reclassifications:As of September 30, 2019, permanent differences in book and tax accounting were reclassified. The following reclassifications, which had no impact on results of operations or net assets, were recorded to reflect tax character:

 

  Paid-in Capital  Total Distributable
Earnings
 
Clarkston Partners Fund $1,520,276  $(1,520,276)

 

These differences are primarily attributable to equalization utilized.

 

 
Annual Report | September 30, 201951

 

 

 

Clarkston FundsNotes to Financial Statements
 

September 30, 2019

 

Unrealized Appreciation and Depreciation on Investments:As of September 30, 2019, the aggregate costs of investments, gross unrealized appreciation/(depreciation) and net unrealized appreciation for Federal tax purposes were as follows:

 

  

Clarkston Partners

Fund

  

Clarkston

Fund

  

Clarkston Founders

Fund

 
Gross unrealized appreciation (excess of value over tax cost) $163,237,901  $9,952,310  $4,749,373 
Gross unrealized depreciation (excess of tax cost over value)  (47,100,895)  (4,146,621)  (1,821,593)
Net unrealized appreciation $116,137,006  $5,805,689  $2,927,780 
Cost of investments for income tax purposes $645,405,497  $42,762,871  $29,444,289 

 

These differences are primarily attributed to wash sales.

 

Components of Distributable Earnings:As of September 30, 2019, components of distributable earnings were as follows:

 

  

Clarkston Partners

Fund

  Clarkston Fund  

Clarkston

Founders Fund

 
Undistributed ordinary income $8,312,861  $453,683  $297,410 
Accumulated capital gains  26,708,202   1,888,292   1,249,683 
Net unrealized appreciation  116,137,006   5,805,689   2,927,780 
Total $151,158,069  $8,147,664  $4,474,873 

 

4. SECURITIES TRANSACTIONS

 

 

Purchases and sales of securities, excluding short-term securities, during the fiscal year ended September 30, 2019 were as follows:

 

  Purchases of Securities  

Proceeds from Sales of Securities

 
Clarkston Partners Fund $207,159,865  $69,165,962 
Clarkston Fund  21,884,949   6,425,790 
Clarkston Founders Fund  11,519,695   4,027,071 

 

5. BENEFICIAL SHARE TRANSACTIONS

 

 

The capitalization of the Trust consists of an unlimited number of shares of beneficial interest with no par value per share. Holders of the shares of the Funds have one vote for each share held and a proportionate fraction of a vote for each fractional share. All shares issued and outstanding are fully paid and are transferable and redeemable at the option of the shareholder. Shares have no pre-emptive rights. Neither the Funds nor any of their creditors have the right to require shareholders to pay any additional amounts solely because the shareholder owns the shares.

 

 
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Clarkston FundsNotes to Financial Statements
 

September 30, 2019

 

Transactions in common shares were as follows:

 

  

For the Year

Ended

September 30,

2019

  

For the Year

Ended

September 30,

2018

 
Clarkston Partners Fund        
Founders Class        
Shares sold  4,157,522   3,460,916 
Shares issued in reinvestment of distributions to shareholders  77,350   14,712 
Shares redeemed  (2,546,307)  (2,019,083)
Net increase in shares outstanding  1,688,565   1,456,545 
Institutional Class        
Shares sold  11,873,807   13,016,378 
Shares issued in reinvestment of distributions to shareholders  2,211,904   311,259 
Shares redeemed  (8,775,921)  (10,603,468)
Net increase in shares outstanding  5,309,790   2,724,169 
         
Clarkston Fund        
Institutional Class        
Shares sold  1,027,807   754,271 
Shares issued in reinvestment of distributions to shareholders  171,825   33,601 
Shares redeemed  (658,401)  (712,502)
Acquisition (Note 9)  1,189,405    
Net increase in shares outstanding  1,730,636   75,370 
         
Clarkston Founders Fund        
Institutional Class        
Shares sold  1,087,117   1,025,855 
Shares issued in reinvestment of distributions to shareholders  70,430   10,050 
Shares redeemed  (368,631)  (288,005)
Net increase in shares outstanding  788,916   747,900 

 

Control is defined by the 1940 Act as the beneficial ownership, either directly or through one or more controlled companies, of more than 25% of the voting securities of a company. Approximately 47% of the outstanding shares of the Clarkston Partners Fund are held by one record shareholder that owns shares on behalf of its underlying beneficial owners. Approximately 79% of the outstanding shares of the Clarkston Fund are owned by one omnibus account. Approximately 97% of the outstanding shares of the Clarkston Founders Fund are owned by two omnibus accounts. Share transaction activities of these shareholders could have a material impact on the Funds.

 

 
Annual Report | September 30, 201953

 

 

 

Clarkston FundsNotes to Financial Statements
 

September 30, 2019

 

6. MANAGEMENT AND RELATED PARTY TRANSACTIONS

 

 

Investment Advisory:Clarkston Capital Partners, LLC (“Clarkston” or the “Adviser”), subject to the authority of the Board, is responsible for the management of the Funds’ portfolios. The Adviser manages the investments of the Funds in accordance with the Funds’ investment objectives, policies and limitations and investment guidelines established jointly by the Adviser and the Board.

 

Pursuant to the Investment Advisory Agreement (the “Advisory Agreement”) with the Adviser, each Fund pays the Adviser an annual management fee that is based on each Fund’s average daily net assets. The management fee is paid on a monthly basis. The contractual management fee rates are 0.80%, 0.50% and 0.75% for the Clarkston Partners Fund, the Clarkston Fund and the Clarkston Founders Fund, respectively. The Board may extend the Advisory Agreement for additional one-year terms. The Board and shareholders of a Fund may terminate the Advisory Agreement upon 30 days’ written notice. The Adviser may terminate the Advisory Agreement upon 60 days’ notice.

 

Pursuant to a fee waiver letter agreement (the “Fee Waiver Agreement”), the Adviser has contractually agreed to limit the amount of each Fund’s Total Annual Fund Operating Expenses, exclusive of shareholder servicing fees, brokerage expenses, interest expenses, acquired fund fees and expenses and extraordinary expenses to an annual rate of 0.85% of the Clarkston Partners Fund’s average daily net assets for each of the Founders Class shares and the Institutional Class shares, 0.55% of the Clarkston Fund’s average daily net assets for the Institutional Class shares and 0.80% of the Clarkston Founders Fund’s average daily net assets for the Institutional Class shares. The Fee Waiver Agreement is in effect through January 31, 2020. The Adviser may not terminate the Fee Waiver Agreement without the approval of the Trust’s Board. The Adviser will be permitted to recover, on a class-by-class basis, expenses it has borne through the Fee Waiver Agreement only to the extent that the Fund’s expenses in later periods do not exceed the lesser of: (1) the contractual expense limit in effect at the time the Adviser waives or limits the expenses; or (2) the contractual expense limit in effect at the time the Adviser seeks to recover the expenses; provided, however, that the Funds will not be obligated to reimburse any such expenses borne by the Adviser more than three years after the date on which the fee or expense was waived or limited or assumed and paid by the Adviser, as calculated on a monthly basis.

 

For the fiscal year ended September 30, 2019, the fee waivers and/or reimbursements were $303,538, $312,594, $108,159, and $90,772 for the Clarkston Partners Fund Founders Class, Clarkston Partners Fund Institutional Class, Clarkston Fund Institutional Class, and Clarkston Founders Fund Institutional Class, respectively.

 

As of September 30, 2019, the balances of recoupable expenses for each Fund were as follows:

 

  Expiring in 2020  Expiring in 2021  Expiring in 2022 
Clarkston Partners Fund            
Founders $389,579  $399,992  $303,538 
Institutional  349,038   361,957   312,594 
Clarkston Fund            
Institutional  101,949   84,677   108,159 
Clarkston Founders Fund            
Institutional  73,077   95,166   90,772 

 

 
54www.clarkstonfunds.com

 

 

 

Clarkston FundsNotes to Financial Statements
 

September 30, 2019

 

Administrator:ALPS Fund Services, Inc. (“ALPS”) (an affiliate of ALPS Distributors, Inc.) serves as administrator to each Fund. The Funds have agreed to pay expenses incurred in connection with their administrative activities. Pursuant to the Administration, Bookkeeping and Pricing Services Agreement with the Trust, ALPS provides operational services to the Funds including, but not limited to, fund accounting and fund administration and generally assists in each Fund’s operations. Each Fund’s administration fee is accrued on a daily basis and paid monthly. The officers of the Trust are employees of ALPS. Administration fees paid by the Funds for the fiscal year ended September 30, 2019 are disclosed in the Statements of Operations. ALPS is reimbursed by the Funds for certain out-of-pocket expenses.

 

Transfer Agent:ALPS serves as transfer agent for each Fund under a Transfer Agency and Services Agreement with the Trust. Under this agreement, ALPS is paid an annual fee for services performed on behalf of the Funds plus fees for open accounts and is reimbursed for certain out-of-pocket expenses.

 

Compliance Services:ALPS provides services as each Fund’s Chief Compliance Officer to monitor and test the policies and procedures of each Fund in conjunction with requirements under Rule 38a-1 of the 1940 Act pursuant to a Chief Compliance Officer Services Agreement with the Trust. Under this agreement, ALPS is paid an annual fee for services performed on behalf of the Funds and is reimbursed for certain out-of-pocket expenses.

 

Distribution:ALPS Distributors, Inc. (the “Distributor”) (an affiliate of ALPS) acts as the principal underwriter of each Fund’s shares pursuant to a Distribution Agreement with the Trust. Shares of each Fund are offered on a continuous basis through the Distributor, as agent of the Funds. The Distributor is not obligated to sell any particular amount of shares and is not entitled to any compensation for its services as the Funds’ principal underwriter pursuant to the Distribution Agreement.

 

Each Fund has adopted a shareholder services plan (“Shareholder Services Plan”) for its Institutional Class. Under the Shareholder Services Plan each Fund is authorized to pay banks and their affiliates and other institutions, including broker-dealers and Fund affiliates (“Participating Organizations”), an aggregate fee in an amount not to exceed on an annual basis 0.15% of the average daily net asset value of each Fund’s Institutional Class shares to Participating Organizations as compensation for providing shareholder service activities, which do not include distribution services, pursuant to an agreement with a Participating Organization.

 

7. TRUSTEES

 

 

As of September 30, 2019, there were four Trustees, three of whom are not “interested persons” (as defined in the 1940 Act) of the Trust (the “Independent Trustees”). The Independent Trustees of the Trust receive a quarterly retainer of $8,000, plus $4,000 for each regular Board or Committee meeting attended and $2,000 for each special telephonic or in-person Board or Committee meeting attended. Additionally, the Audit Committee Chair receives a quarterly retainer of $1,250 and the Independent Chair receives a quarterly retainer of $2,500. The Independent Trustees are also reimbursed for all reasonable out-of-pocket expenses relating to attendance at meetings and for meeting-related expenses. Officers of the Trust and Trustees who are interested persons of the Trust receive no salary or fees from the Trust. As discussed in Note 6, the Funds pay ALPS an annual fee for compliance services.

 

 
Annual Report | September 30, 201955

 

 

 

Clarkston FundsNotes to Financial Statements

 

September 30, 2019

 

8. INDEMNIFICATIONS

 

 

Under the Trust’s organizational documents, its officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust. Additionally, in the normal course of business, the Trust enters into contracts with service providers that may contain general indemnification clauses which may permit indemnification to the extent permissible under applicable law. The Trust’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Trust that have not yet occurred.

 

9. FUND REORGANIZATION

 

 

At a special meeting of shareholders held on March 13, 2019, the shareholders of Clarkston Select Fund (the “Acquired Fund”), a former series of the Trust, approved the reorganization, pursuant to an Agreement and Plan of Reorganization (the “Plan”), of the Acquired Fund into the Clarkston Fund (“Acquiring Fund”). For accounting and financial reporting purposes, the Acquiring Fund is the accounting survivor and as a result, the financial statements and financial highlights do not reflect the operations of the Acquired Fund. The Board of Trustees of the Trust had previously approved the Plan providing for the reorganization.

 

The purpose of the Reorganization was to combine two funds with substantially identical investment objectives and similar principal investment strategies and policies.

 

Following the completion of the reorganization at the close of business on March 15, 2019, and pursuant to the terms of the Plan, Institutional Class shareholders of the Clarkston Select Fund became shareholders of the Clarkston Fund and received Institutional Class shares, respectively, of the Clarkston Fund. The reorganization qualified as a tax-free “reorganization” under the Internal Revenue Code of 1986, as amended (the “Code”) for U.S. federal income tax purposes. The Acquired Fund's securities were recorded at fair value, however, the cost basis of the investments received from the Clarkston Select Fund were carried forward to align ongoing reporting of the Clarkston Fund’s realized and unrealized gains and losses with amounts distributable for tax purposes.

 

As of the close of business on March 15, 2019, assets of the Acquired Fund were acquired by the Acquiring Fund in exchange for shares of the Acquiring Fund and the assumption by the Acquiring Fund of the liabilities of the Acquired Fund. On the Reorganization date, the Acquiring Fund and the Acquired Fund reported the following financial information:

 

Acquiring Fund 

Shares

Outstanding of

Acquiring

Fund

  

Net Assets

of Acquiring

Fund

 

Acquired

Fund

  Acquired Fund Shares Exchanged  

Net Assets

of Acquired

Fund

Exchanged

 
Clarkston Fund  2,899,370   33,634,424 Clarkston Select Fund   1,301,165   13,797,848 

 

 
56www.clarkstonfunds.com

 

 

 

Clarkston FundsNotes to Financial Statements
 

September 30, 2019

 

The investment portfolio value and unrealized appreciation/(depreciation) as of the Reorganization Date of the Acquired Fund was as follows:

 

Acquired Fund 

Portfolio

Value

  

Unrealized

Appreciation of

Acquired Fund

 
Clarkston Select Fund $12,640,986  $621,303 

 

Immediately following the Reorganization the net assets of the combined Acquiring Fund were $47,432,272.

 

As a result of the Reorganization, 1,189,405 Shares were issued in the Acquiring Fund.

 

Assuming the Reorganization had been completed on October 1, 2018, the beginning of the annual reporting period of the Acquiring Fund, the Acquiring Fund’s pro forma results of operations for the year ended September 30, 2019, are as follows:

 

Pro Forma (unaudited)   
Net Investment Income $969,370 
Net Realized and Unrealized Gain on Investments  4,185,040 
Net Increase in Net Assets Resulting from Operations $5,154,410 

 

Because the combined investment portfolios have been managed as a single integrated portfolio since the reorganization was completed, it is not practicable to separate the amounts of revenue and earnings of the Clarkston Select Fund that have been included in the Clarkston Fund's Statement of Operations since March 15, 2019. The Clarkston Select Fund had no capital loss carryforward.

 

10. RECENT ACCOUNTING PRONOUNCEMENTS

 

 

In August 2018, the FASB issued ASU 2018-13, which changes the fair value measurement disclosure requirements of FASB ASC Topic 820, Fair Value Measurement. The update to Topic 820 includes new, eliminated, and modified disclosure requirements. ASU 2018-13 is effective for fiscal years beginning after December 15, 2019, including interim periods. Early adoption is permitted for any eliminated or modified disclosures. The Funds have elected to early adopt the eliminated and modified disclosures effective with the financial statements prepared as of September 30, 2019.

 

11. SUBSEQUENT EVENTS

 

 

Subsequent events after the date of the Statements of Assets and Liabilities have been evaluated through the date the financial statements were issued. Management has determined that there were no subsequent events to report through the issuance of these financial statements.

 

 
Annual Report | September 30, 201957

 

 

 

Clarkston FundsReport of Independent Registered Public Accounting Firm
 

 

To the Shareholders of Clarkston Partners Fund, Clarkston Fund and Clarkston Founders Fund and Board of Trustees of ALPS Series Trust

 

Opinion on the Financial Statements

 

We have audited the accompanying statements of assets and liabilities, including the portfolios of investments, of Clarkston Partners Fund, Clarkston Fund, and Clarkston Founders Fund (the “Funds”), each a series of ALPS Series Trust, as of September 30, 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 three 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 each of the Funds as of September 30, 2019, the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended, and the financial highlights for each of the three periods in the period then ended, in conformity with accounting principles generally accepted in the United States of America.

 

The Funds’ financial highlights for the years or periods ended September 30, 2016, and prior, were audited by other auditors whose report dated December 2, 2016, expressed an unqualified opinion on those financial highlights.

 

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. Our procedures included confirmation of securities owned as of September 30, 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 Funds’ auditor since 2017.

 

 

COHEN & COMPANY, LTD.
Cleveland, Ohio
November 25, 2019

 

 
58www.clarkstonfunds.com

 

 

 

Clarkston FundsAdditional Information
 

September 30, 2019 (Unaudited)

 

1. PROXY VOTING POLICIES AND VOTING RECORD

 

 

A description of the policies and procedures that the Funds use to determine how to vote proxies relating to portfolio securities is available without charge, upon request, (i) by calling the Funds (toll-free) at 1-844-680-6562 or (ii) on the website of the Securities and Exchange Commission (the “SEC”) at http://www.sec.gov.

 

Information regarding how each Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available (i) without charge, upon request, by calling the Funds (toll-free) at 1-844-680-6562 or (ii) on the SEC’s website at http://www.sec.gov.

 

2. PORTFOLIO HOLDINGS

 

 

The Funds file their complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Forms N-Q are available on the SEC website at http://www.sec.gov.

 

3. SHAREHOLDER PROXY RESULTS

 

 

At a Special Meeting of Shareholders of the Funds on February 13, 2019, shareholders of record as of the close of business on December 3, 2018 voted to approve the following proposals:

 

Proposal 1: To approve a new Investment Advisory Agreement among the Trust, on behalf of the Funds, and Clarkston Capital Partners, LLC.

 

 Share Voted in Favor

Shares Voted Against

or Abstentions

Clarkston Founders Fund2,848,7340
Clarkston Fund2,470,1010
Clarkston Partners Fund52,307,66948,674

 

4. TAX DESIGNATIONS

 

 

Qualified Dividend Income

The percentage of ordinary income dividends distributed during the calendar year ended December 31, 2018 are designated as qualified dividend income (QDI) as defined in Section 1(h)(11) of the Internal Revenue Code in the following percentages:

 

 Amount
Clarkston Partners Fund100.00%
Clarkston Fund100.00%
Clarkston Founders Fund100.00%

 

 
Annual Report | September 30, 201959

 

 

 

Clarkston FundsAdditional Information
 

September 30, 2019 (Unaudited)

 

Dividends Received Deduc