0001193125-14-263120.txt : 20140708 0001193125-14-263120.hdr.sgml : 20140708 20140708161625 ACCESSION NUMBER: 0001193125-14-263120 CONFORMED SUBMISSION TYPE: N-CSRS PUBLIC DOCUMENT COUNT: 21 CONFORMED PERIOD OF REPORT: 20140430 FILED AS OF DATE: 20140708 DATE AS OF CHANGE: 20140708 EFFECTIVENESS DATE: 20140708 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VALUED ADVISERS TRUST CENTRAL INDEX KEY: 0001437249 IRS NUMBER: 262762915 FILING VALUES: FORM TYPE: N-CSRS SEC ACT: 1940 Act SEC FILE NUMBER: 811-22208 FILM NUMBER: 14965617 BUSINESS ADDRESS: STREET 1: 2960 N MERIDIAN STREET STE 300 CITY: INDIANAPOLIS STATE: IN ZIP: 46208 BUSINESS PHONE: 317-917-7000 MAIL ADDRESS: STREET 1: 2960 N MERIDIAN STREET STE 300 CITY: INDIANAPOLIS STATE: IN ZIP: 46208 0001437249 S000034367 Green Owl Intrinsic Value Fund C000105788 Green Owl Intrinsic Value Fund GOWLX 0001437249 S000035229 Granite Value Fund C000108372 Granite Value Fund GVFIX 0001437249 S000039469 BRC Large Cap Focus Equity Fund C000121675 Institutional Class Shares BRCIX C000121676 Advisor Class Shares BRCFX 0001437249 S000039824 Dreman Contrarian Small Cap Value Fund C000123465 Institutional Class DRISX C000123466 Retail Class DRSVX C000123467 Class A Shares DRSAX 0001437249 S000039946 Sound Mind Investing Fund C000123868 Sound Mind Investing Fund SMIFX 0001437249 S000039947 Sound Mind Investing Balanced Fund C000123869 Sound Mind Investing Balanced Fund SMILX 0001437249 S000039948 SMI Dynamic Allocation Fund C000123870 SMI Dynamic Allocation Fund SMIDX 0001437249 S000042642 Dana Large Cap Equity Fund C000131828 Class A Shares DLCAX C000131829 Class N Shares DLCEX C000131830 Institutional Class Shares DLCIX N-CSRS 1 d728003dncsrs.htm VALUED ADVISERS TRUST Valued Advisers Trust

 

 

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 811-22208

 

 

Valued Advisers Trust

(Exact name of registrant as specified in charter)

 

 

 

Huntington Asset Services, Inc.

2960 N. Meridian Street, Suite 300

  Indianapolis, IN 46208
(Address of principal executive offices)   (Zip code)

 

 

Capitol Services, Inc.

615 S. Dupont Hwy.

Dover, DE 19901

(Name and address of agent for service)

 

 

With a copy to:

John H. Lively, Esq.

The Law Offices of John H. Lively & Associates, Inc.

A member firm of The 1940 Act Law GroupTM

11300 Tomahawk Creek Parkway,

Suite 310

Leawood, KS 66221

 

 

Registrant’s telephone number, including area code: 317-917-7000

Date of fiscal year end: 10/31

Date of reporting period: 04/30/14

 

 

 


Item 1. Reports to Stockholders.

 

-2-


 

BRC

Large Cap

Focus Equity Fund

Semi-Annual Report

April 30, 2014

Fund Adviser:

BRC Investment Management LLC

8400 East Prentice Avenue, Suite 1401

Greenwood Village, Colorado 80111

Toll Free (877) 272-1214


LETTER FROM CHIEF INVESTMENT OFFICER – (Unaudited)

The investment strategy of the BRC Large Cap Focus Equity Fund (the “Fund”) is based on our belief that future investor expectations are strongly influenced by the opinions, forecasts and announcements of perceived market experts, including Wall Street analysts and company management. By incorporating a combination of proprietary behavioral valuation techniques, we seek to invest in companies that are likely to be the beneficiaries of future favorable earnings announcements and upward earnings estimate revisions. Regardless of market conditions, so long as the predictive abilities of the quantitative models remain strong and investors continue to react to industry experts, the management team expects this investment strategy to provide above average returns over a typical 3-5 year investment cycle.

For this reporting period, the management team was satisfied with the predictive abilities of the quantitative model and the implementation of the investment process. The Fund held equity positions representing those securities that were highly ranked by our quantitative models and were evaluated and approved by our fundamental analysts.

 

 

Holdings in the Fund’s portfolio received significantly more upward analyst revisions compared to a hypothetical portfolio of stocks randomly selected from the large-cap universe would have been expected to receive.

 

 

On the earnings-surprise front, a significant number of portfolio companies announced earnings that were materially higher than analyst expectations, with only a few companies reporting materially negative earnings surprises.

As a result of our ability to select and manage the securities in the portfolio, the performance results exceeded the benchmark for the reporting period. The behavior we seek to identify and monetize was evident and achieved the intended results.

The Adviser has proprietary tools for tacking and monitoring risk factors. Some of the factors we focus on include; value factors (P/B, P/E, P/S, P/CF etc.); medium-term and short-term momentum; market capitalization; beta; and volatility, among others. Using analytical tools that are distinct from those of portfolio management, the risk management process assesses the risks embedded in the strategy.

We monitor the levels and trends of fundamental factor exposures, economic sector exposures, and the composition and magnitude of residual risk versus various benchmarks and indices. For the reporting period, this risk management process resulted in even sector and style exposures and a realized beta significantly lower than the market.

On behalf of the management team, I would like to thank you for your continued support. You have our commitment to the consistent application of our investment process and to a proprietary research agenda that will drive our ongoing effort to add value for our clients.

John R. Riddle, CFA

Managing Principal and Chief Investment Officer

 

1


INVESTMENT RESULTS – (Unaudited)

 

       Total Returns*
(for the periods ended April 30, 2014)
 
       Six Months     One Year     Since Inception
(December 21, 2012)
 

BRC Large Cap Focus Equity Fund - Institutional Class

       10.07     22.76     25.57

S&P 500 Index®**

       8.36     20.44     24.17

 

Total annual operating expenses, as disclosed in the Fund’s prospectus dated February 28, 2014, were 6.44% of net assets for the Institutional Class (0.55% after fee waivers/expense reimbursements by the Adviser). The Adviser has contractually agreed to waive or limit its fees and to assume other expenses of the Fund until February 29, 2016, so that the Total Annual Fund Operating Expenses does not exceed 0.55%. This operating expense limitation does not apply to interest, taxes, brokerage commissions, other expenditures which are capitalized in accordance with generally accepted accounting principles, other extraordinary expenses not incurred in the ordinary course of the Fund’s business, dividend expense on short sales, expenses incurred under a Rule 12b-1 plan of distribution, “acquired fund fees and expenses,” and expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement.

The performance quoted represents past performance, which does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. The returns shown do not reflect deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Current performance of the Fund may be lower or higher than the performance quoted. The Fund’s investment objectives, risks, charges and expenses must be considered carefully before investing. Performance data current to the most recent month end may be obtained by calling (877) 272-1214.

 

* Return figures reflect any change in price per share and assume the reinvestment of all distributions.

 

**

The S&P 500® Index is a widely recognized unmanaged index of equity securities and are representative of a broader domestic equity market and range of securities than is found in the Fund’s portfolio. Individuals cannot invest directly in an Index; however, an individual can invest in exchange traded funds or other investment vehicles that attempt to track the performance of a benchmark index.

The Fund’s investment objectives, strategies, risks, charges and expenses must be considered carefully before investing. The prospectus contains this and other important information about the Fund and may be obtained by calling the same number as above. Please read it carefully before investing.

The Fund is distributed by Unified Financial Securities, Inc., member FINRA.

 

2


INVESTMENT RESULTS – (Unaudited)

Comparison of the Growth of a $10,000 Investment in the BRC Large Cap Focus Equity Fund - Institutional Class and the S&P 500® Index (Unaudited)

 

LOGO

The chart above assumes an initial investment of $10,000 made on December 21, 2012 (commencement of Institutional Class operations) and held through April 30, 2014. The S&P 500® Index is a widely recognized unmanaged index of equity securities and is representative of a broader domestic equity market and range of securities than is found in the Fund’s portfolio. Individuals cannot invest directly in an Index; however, an individual can invest in exchange traded funds or other investment vehicles that attempt to track the performance of a benchmark index. THE FUND’S RETURN REPRESENTS PAST PERFORMANCE AND DOES NOT GUARANTEE FUTURE RESULTS. The returns shown do not reflect deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Investment returns and principal values will fluctuate so that your shares, when redeemed, may be worth more or less than their original purchase price.

Current performance may be lower or higher than the performance data quoted. For more information on the Fund, and to obtain performance data current to the most recent month end or to request a prospectus, please call (877) 272-1214. You should carefully consider the investment objectives, potential risks, management fees, and charges and expenses of the Fund before investing. The Fund’s prospectus contains this and other information about the Fund, and should be read carefully before investing.

The Fund is distributed by Unified Financial Securities, Inc., member FINRA.

 

3


FUND HOLDINGS – (Unaudited)

LOGO

1 

As a percentage of net assets.

The investment objective of the BRC Large Cap Focus Equity Fund is to seek long-term capital appreciation that will exceed the S&P 500 Index over a three-to-five year time horizon.

Availability of Portfolio Schedule – (Unaudited)

The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (“SEC”) for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms N-Q are available at the SEC’s website at www.sec.gov. The Fund’s Forms N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330.

Summary of Fund’s Expenses – (Unaudited)

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, such as short-term redemption fees; and (2) ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning and held for the entire period from November 1, 2013 to April 30, 2014.

 

4


Actual Expenses

The first line of 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 = $8.60), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During the Period” to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The second line of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare 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 costs only. Therefore, the second line of the table below is useful in comparing ongoing costs only and will not help you determine the relative costs of owning different funds.

 

BRC Large Cap Focus

Equity Fund – Institutional
Class

  

Beginning
Account Value

November 1, 2013

    

Ending

Account Value

April 30, 2014

    

Expenses Paid
During Period
November 1, 2013 –

April 30, 2014

 

Actual*

   $     1,000.00       $     1,100.70       $     2.86   

Hypothetical**

   $ 1,000.00       $ 1,022.07       $ 2.76   

 

* Expenses are equal to the Fund’s annualized expense ratio of 0.55%, multiplied by the average account value over the period, multiplied by 181/365.

 

** Assumes a 5% return before expenses.

 

5


BRC LARGE CAP FOCUS EQUITY FUND

SCHEDULE OF INVESTMENTS

April 30, 2014 (Unaudited)

 

COMMON STOCKS – 98.27%    Shares      Fair Value  
     

Consumer Discretionary – 17.51%

  

BorgWarner, Inc.

     6,826       $ 424,168   

Foot Locker, Inc.

     9,139         425,238   

Home Depot, Inc./The

     4,358         346,505   

Michael Kors Holdings Ltd. *

     3,946         359,875   

Viacom, Inc. – Class B

     4,403         374,167   

Wyndham Worldwide Corp.

     5,165         368,471   
     

 

 

 
        2,298,424   
     

 

 

 

Consumer Staples – 5.82%

  

Constellation Brands, Inc. – Class A *

     4,738         378,282   

CVS Caremark Corp.

     5,302         385,561   
     

 

 

 
        763,843   
     

 

 

 

Energy – 9.15%

  

EOG Resources, Inc.

     4,083         400,134   

Helmerich & Payne, Inc.

     3,640         395,486   

Valero Energy Corp.

     7,100         405,907   
     

 

 

 
        1,201,527   
     

 

 

 

Financials – 16.84%

  

Discover Financial Services

     6,658         372,182   

Lincoln National Corp.

     7,649         371,053   

Prudential Financial, Inc.

     4,220         340,470   

T. Rowe Price Group, Inc.

     4,692         385,354   

Travelers Cos., Inc./The

     3,885         351,903   

Wells Fargo & Co.

     7,862         390,270   
     

 

 

 
        2,211,232   
     

 

 

 

Health Care – 8.56%

  

Aetna, Inc.

     5,333         381,043   

Biogen Idec, Inc. *

     1,295         371,820   

Cardinal Health, Inc.

     5,333         370,697   
     

 

 

 
        1,123,560   
     

 

 

 

Industrials – 12.83%

  

ManpowerGroup

     4,754         386,690   

Northrop Grumman Corp.

     3,794         461,009   

Raytheon Co.

     4,266         407,318   

Snap-on, Inc.

     3,702         429,432   
     

 

 

 
        1,684,449   
     

 

 

 

 

See accompanying notes which are an integral part of these financial statements.

 

6


BRC LARGE CAP FOCUS EQUITY FUND

SCHEDULE OF INVESTMENTS – (continued)

April 30, 2014 (Unaudited)

 

COMMON STOCKS – 98.27%– continued    Shares      Fair Value  
     
     

Information Technology – 14.60%

  

Accenture PLC – Class A

     4,403       $ 353,209   

Amdocs Ltd.

     8,453         393,318   

Intuit, Inc.

     4,890         370,417   

Microchip Technology, Inc.

     9,110         433,089   

TE Connectivity Ltd.

     6,216         366,620   
     

 

 

 
        1,916,653   
     

 

 

 

Materials – 6.83%

  

Lyondellbasell Industries NV – Class A

     4,693         434,102   

Westlake Chemical Corp.

     6,490         462,088   
     

 

 

 
        896,190   
     

 

 

 

Telecommunication Services – 3.32%

  

Level 3 Communications, Inc. *

     10,120         435,464   
     

 

 

 

Utilities – 2.81%

  

Public Service Enterprise Group, Inc.

     9,019         369,508   
     

 

 

 

TOTAL COMMON STOCKS (Cost $11,752,859)

  

     12,900,850   
     

 

 

 

MONEY MARKET SECURITIES – 2.34%

  

Fidelity Institutional Money Market Portfolio – Institutional Class, 0.06% (a)

     307,697         307,697   
     

 

 

 

TOTAL MONEY MARKET SECURITIES (Cost $307,697)

        307,697   
     

 

 

 

TOTAL INVESTMENTS – 100.61% (Cost $12,060,556)

        13,208,547   
     

 

 

 
Liabilities in Excess of Other Assets – (0.61)%         (80,704)   
     

 

 

 
TOTAL NET ASSETS – 100.00%       $ 13,127,843   
     

 

 

 

 

  (a) Rate disclosed is the seven day yield as of April 30, 2014.

 

  * Non-income producing security.

 

See accompanying notes which are an integral part of these financial statements.

 

7


BRC LARGE CAP FOCUS EQUITY FUND

STATEMENT OF ASSETS AND LIABILITIES

April 30, 2014 (Unaudited)

 

Assets

  

Investments in securities at fair value (cost $12,060,556)

   $ 13,208,547   

Receivable for investments sold

     814,325   

Dividends receivable

     16,410   

Interest receivable

     18   

Receivable from Adviser

     9,409   

Prepaid expenses

     17,027   
  

 

 

 

Total Assets

     14,065,736   
  

 

 

 

Liabilities

  

Payable for investments purchased

     919,893   

Payable to administrator, fund accountant, and transfer agent

     7,383   

Payable to custodian

     2,223   

Payable to trustees

     927   

Other accrued expenses

     7,467   
  

 

 

 

Total Liabilities

     937,893   
  

 

 

 

Net Assets

   $ 13,127,843   
  

 

 

 

Net Assets consist of:

  

Paid-in capital

   $ 11,486,063   

Accumulated undistributed net investment income

     35,811   

Accumulated undistributed net realized gain from investments

     457,978   

Net unrealized appreciation on investments

     1,147,991   
  

 

 

 

Net Assets

   $ 13,127,843   
  

 

 

 

Institutional Class:

  

Shares outstanding (unlimited number of shares authorized, no par value)

     969,704   
  

 

 

 

Net asset value, offering and redemption price per share

   $ 13.54   
  

 

 

 

 

See accompanying notes which are an integral part of these financial statements.

 

8


BRC LARGE CAP FOCUS EQUITY FUND

STATEMENT OF OPERATIONS

For the six months ended April 30, 2014 (Unaudited)

 

Investment Income

  

Dividend income (net of foreign taxes withheld of $486)

   $ 85,639   

Interest income

     116   
  

 

 

 

Total investment income

     85,755   
  

 

 

 

Expenses

  

Investment Adviser

     23,316   

Administration

     20,102   

Fund accounting

     12,408   

Transfer agent

     18,825   

Legal

     8,590   

Registration

     8,401   

Custodian

     3,583   

Audit

     7,363   

Trustee

     4,067   

Pricing

     1,117   

Offering costs

     6,169   

Miscellaneous

     2,790   
  

 

 

 

Total expenses

     116,731   
  

 

 

 

Fees waived and reimbursed by Adviser

     (89,435
  

 

 

 

Net operating expenses

     27,296   
  

 

 

 

Net investment income

     58,459   
  

 

 

 

Net Realized and Unrealized Gains on Investments

  

Net realized gains on investment securities transactions

     457,978   

Net change in unrealized appreciation of investment securities

     373,337   
  

 

 

 

Net realized and unrealized gains on investments

     831,315   
  

 

 

 

Net increase in net assets resulting from operations

   $ 889,774   
  

 

 

 

 

See accompanying notes which are an integral part of these financial statements.

 

9


BRC LARGE CAP FOCUS EQUITY FUND

STATEMENTS OF CHANGES IN NET ASSETS

 

     For the
Six Months Ended
April 30, 2014
(Unaudited)
    For the
Period Ended
October 31, 2013 (a)
 

Increase in Net Assets due to:

    

Operations

    

Net investment income

   $ 58,459      $ 32,747   

Net realized gains on investment transactions

     457,978        242   

Net change in unrealized appreciation of investments

     373,337        774,654   
  

 

 

   

 

 

 

Net increase in net assets resulting from operations

     889,774        807,643   
  

 

 

   

 

 

 

Distributions from:

    

Net investment income – Institutional Class

     (55,395       

Net realized gains – Institutional Class

     (242       
  

 

 

   

 

 

 

Total distributions

     (55,637       
  

 

 

   

 

 

 

Capital Transactions – Institutional Class

    

Proceeds from shares sold

     4,374,598        7,316,024   

Reinvestment of distributions

     54,011          

Amount paid for shares redeemed

     (246,570     (12,000
  

 

 

   

 

 

 

Net increase in net assets resulting from capital transactions

     4,182,039        7,304,024   
  

 

 

   

 

 

 

Total Increase in Net Assets

     5,016,176        8,111,667   
  

 

 

   

 

 

 

Net Assets

    

Beginning of period

     8,111,667          
  

 

 

   

 

 

 

End of period

   $ 13,127,843      $ 8,111,667   
  

 

 

   

 

 

 

Accumulated undistributed net investment income

   $ 35,811      $ 32,747   
  

 

 

   

 

 

 

Share Transactions – Institutional Class

    

Shares sold

     329,720        656,072   

Shares issued in reinvestment of distributions

     4,152          

Shares redeemed

     (19,250     (990
  

 

 

   

 

 

 

Net increase in shares

     314,622        655,082   
  

 

 

   

 

 

 

 

(a) For the period December 21, 2012 (commencement of operations) to October 31, 2013.

 

See accompanying notes which are an integral part of these financial statements.

 

10


BRC LARGE CAP FOCUS EQUITY FUND

FINANCIAL HIGHLIGHTS – INSTITUTIONAL CLASS

(For a share outstanding during the period)

 

     For the
Six Months Ended
April 30, 2014
(Unaudited)
    For the
Period Ended
October 31, 2013 
(a)
 

Selected Per Share Data:

    

Net asset value, beginning of period

   $ 12.38      $ 10.00   
  

 

 

   

 

 

 

Investment Operations:

    

Net investment income

     0.07        0.05   

Net realized and unrealized gain on investments

     1.17        2.33   
  

 

 

   

 

 

 

Total from investment operations

     1.24        2.38   
  

 

 

   

 

 

 

Less distributions to shareholders from:

    

Net investment income

     (0.08       

Net realized gains

     (b)        
  

 

 

   

 

 

 

Total distributions

     (0.08       
  

 

 

   

 

 

 

Net asset value, end of period

   $ 13.54      $ 12.38   
  

 

 

   

 

 

 

Total Return (c)

     10.07 %(d)      23.80 %(d) 

Ratios and Supplemental Data:

    

Net assets, end of period (000)

   $ 13,128      $ 8,112   

Ratio of net expenses to average net assets

     0.55 %(e)      0.56 %(e) 

Ratio of expenses to average net assets before waiver and reimbursement

     2.35 %(e)      6.49 %(e) 

Ratio of net investment income to average net assets

     1.18 %(e)      0.98 %(e) 

Portfolio turnover rate

     71 %(d)      154 %(d) 

 

(a) For the period December 21, 2012 (commencement of operations) to October 31, 2013.
(b) Amount is less than $0.005.
(c) Total return in the above table represents the rate that the investor would have earned or lost on an investment in the Fund, assuming reinvestment of distributions.
(d) Not annualized.
(e) Annualized.

 

See accompanying notes which are an integral part of these financial statements.

 

11


BRC LARGE CAP FOCUS EQUITY FUND

NOTES TO THE FINANCIAL STATEMENTS

April 30, 2014 (Unaudited)

 

NOTE 1. ORGANIZATION

 

The BRC Large Cap Focus Equity Fund (the “Fund”) is an open-end non-diversified series of the Valued Advisers Trust (the “Trust”). The Trust is a management investment company established under the laws of Delaware by an Agreement and Declaration of Trust dated June 13, 2008 (the “Trust Agreement”). The Trust Agreement permits the Trustees to issue an unlimited number of shares of beneficial interest of separate series without par value. The Fund is one of a series of funds authorized by the Board of Trustees (the “Board”). The Fund commenced operations December 21, 2012. The Fund’s investment adviser is BRC Investment Management LLC. (the “Adviser”). The investment objective of the Fund is to seek long-term capital appreciation that will exceed the S&P 500 Index over a three-to five-year time horizon.

The Fund is authorized to offer two classes of shares: Institutional Class and Advisor Class. Each share represents an equal proportionate interest in the assets and liabilities belonging to the Fund and is entitled to such dividends and distributions out of income belonging to the applicable class as are declared by the Trustees. Expenses attributable to any class are borne by that class. Income, expenses, and realized and unrealized gains/losses are allocated to the respective classes on the basis of relative daily net assets. On matters that affect the Fund as a whole, each class has the same voting and other rights and preferences as any other class. On matters that affect only one class, only shareholders of that class may vote. Each class votes separately on matters affecting only that class, or on matters expressly required to be voted on separately by state or federal law. Shares of each class of a series have the same voting and other rights and preferences as the other classes and series of the Trust for matters that affect the Trust as a whole. As of April 30, 2014, only Institutional Class shares are available for purchase. The Fund may offer additional classes of shares in the future.

NOTE 2. SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. These policies are in conformity with generally accepted accounting principles in the United States of America (“GAAP”).

Securities Valuation – All investments in securities are recorded at their estimated fair value as described in Note 3.

Federal Income Taxes – The Fund makes no provision for federal income or excise tax. The Fund intends to qualify each year as a regulated investment company (“RIC”) under subchapter M of the Internal Revenue Code of 1986, as amended, by complying with the requirements applicable to RICs and by distributing substantially all of its taxable income. The Fund also intends to distribute sufficient net investment income and net capital gains, if any, so that it will not be subject to excise tax on undistributed income and gains. If the required amount of net investment income or gains is not distributed, the Fund could incur a tax expense.

As of and during the period ended April 30, 2014, the Fund did not have a liability for any unrecognized tax benefits. The Fund recognizes interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the Statement of Operations. During the year, the Fund did not incur any interest or penalties. The Fund is subject to examination by U.S. federal tax authorities for all tax years since inception.

Expenses – Expenses incurred by the Trust that do not relate to a specific fund of the Trust are allocated to the individual funds based on each fund’s relative net assets or other appropriate basis (as determined by the Board of Trustees).

 

12


BRC LARGE CAP FOCUS EQUITY FUND

NOTES TO THE FINANCIAL STATEMENTS – (continued)

April 30, 2014 (Unaudited)

 

NOTE 2. SIGNIFICANT ACCOUNTING POLICIES – continued

 

Security Transactions and Related Income – The Fund follows industry practice and records security transactions on the trade date for financial reporting purposes. The average cost method is used for determining gains or losses for financial statements and income tax purposes. Dividend income is recorded on the ex-dividend date and interest income is recorded on an accrual basis. Discounts and premiums on securities purchased are amortized or accreted using the effective interest method. Withholding taxes on foreign dividends, if any, have been provided for in accordance with the Fund’s understanding of the applicable country’s tax rules and rates. The ability of issuers of debt securities held by the Fund to meet their obligations may be affected by economic and political developments in a specific country or region.

Dividends and Distributions – The Fund intends to distribute substantially all of its net investment income, net realized long-term capital gains and its net realized short-term capital gains, if any, to its shareholders on at least an annual basis. Dividends to shareholders, which are determined in accordance with income tax regulations, are recorded on the ex-dividend date. The treatment for financial reporting purposes of distributions made to shareholders during the year from net investment income or net realized capital gains may differ from their ultimate treatment for federal income tax purposes. These differences are caused primarily by differences in the timing of the recognition of certain components of income, expense or realized capital gain for federal income tax purposes. Where such differences are permanent in nature, they are reclassified in the components of net assets based on their ultimate characterization for federal income tax purposes. Any such reclassifications will have no effect on net assets, results of operations or net asset values per share of the Fund. There were no such material reclassifications made as of April 30, 2014.

NOTE 3. SECURITIES VALUATION AND FAIR VALUE MEASUREMENTS

Fair value is defined as the price that a Fund would receive upon selling an investment in a orderly transaction to an independent buyer in the principal or most advantageous market of the investment. GAAP established a three-tier hierarchy to maximize the use of observable market data and minimize the use of unobservable inputs and to establish classification of fair value measurements for disclosure purposes.

Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk, (ex., the risk inherent in a particular valuation technique used to measure fair value including items such as a pricing model and/or the risk inherent in the inputs to the valuation technique). Inputs may be observable or unobservable. Observable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs are inputs that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.

Various inputs are used in determining the value of the Fund’s investments. These inputs are summarized in the three broad levels listed below.

 

   

Level 1 – quoted prices in active markets for identical securities

 

   

Level 2 – other significant observable inputs (including, but not limited to, quoted prices for an identical security in an inactive market, quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)

 

13


BRC LARGE CAP FOCUS EQUITY FUND

NOTES TO THE FINANCIAL STATEMENTS – (continued)

April 30, 2014 (Unaudited)

 

NOTE 3. SECURITIES VALUATION AND FAIR VALUE MEASUREMENTS – continued

 

 

   

Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining fair value of investments based on the best information available)

The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety, is determined based on the lowest level input that is significant to the fair value measurement in its entirety.

Equity securities, including common stocks, are generally valued by using market quotations, furnished by a pricing service. Securities that are traded on any stock exchange are generally valued at the last quoted sale price. Lacking a last sale price, an exchange traded security is generally valued at its last bid price. Securities traded in the NASDAQ over-the-counter market are generally valued at the NASDAQ Official Closing Price. When using the market quotations or close prices provided by the pricing service and when the market is considered active, the security is classified as a Level 1 security. Sometimes, an equity security owned by the Fund will be valued by the pricing service with factors other than market quotations or when the market is considered inactive. When this happens, the security is classified as a Level 2 security. When market quotations are not readily available, when the Fund determines that the market quotation or the price provided by the pricing service does not accurately reflect the current fair value, or when restricted or illiquid securities are being valued, such securities are valued as determined in good faith by the Fund, in conformity with guidelines adopted by and subject to review by the Board. These securities may be categorized as Level 3 securities.

Investments in open-end mutual funds, including money market mutual funds, are generally priced at the ending net asset value (NAV) provided by the service agent of the funds. These securities will be categorized as Level 1 securities.

Fixed income securities when valued using market quotations in an active market, will be categorized as Level 1 securities. However, they may be valued on the basis of prices furnished by a pricing service when the Fund believes such prices more accurately reflect the fair value of such securities. A pricing service uses various inputs and techniques, which include broker-dealer quotations, live trading levels, recently executed transactions in securities of the issuer or comparable issuers, and option adjusted spread models that include base curve and spread curve inputs. Adjustments to individual bonds can be applied to recognize trading differences compared to other bonds issued by the same issuer. The broker-dealer quotations received are supported by credit analysis of the issuer that takes into consideration credit quality assessments, daily trading activity, and the activity of the underlying equities, listed bonds and sector-specific trends. To the extent that these inputs are observable, the values of fixed income securities are categorized as Level 2 securities. If the Fund decides that a price provided by the pricing service does not accurately reflect the fair value of the securities, when prices are not readily available from a pricing service, or when restricted or illiquid securities are being valued, securities are valued at fair value as determined in good faith by the Fund, in conformity with guidelines adopted by and subject to review of the Board. These securities may be categorized as Level 3 securities.

Short-term investments in fixed income securities (those with maturities of less than 60 days when acquired, or which subsequently are within 60 days of maturity), including certificates of deposit and U.S. government securities, are valued by using the amortized cost method of valuation, which the Board has determined represents fair value. These securities will be classified as Level 2 securities.

 

14


BRC LARGE CAP FOCUS EQUITY FUND

NOTES TO THE FINANCIAL STATEMENTS – (continued)

April 30, 2014 (Unaudited)

 

NOTE 3. SECURITIES VALUATION AND FAIR VALUE INSTRUMENTS – continued

 

In accordance with the Trust’s good faith pricing guidelines, the Fund is required to consider all appropriate factors relevant to the value of securities for which it has determined other pricing sources are not available or reliable as described above. No single standard exists for determining fair value, because fair value depends upon the circumstances of each individual case. As a general principle, the current fair value of an issue of securities being valued by the Fund would appear to be the amount which the owner might reasonably expect to receive for them upon their current sale. Methods which are in accordance with this principle may, for example, be based on (i) a multiple of earnings; (ii) a discount from market of a similar freely traded security (including a derivative security or a basket of securities traded on other markets, exchanges or among dealers); or (iii) yield to maturity with respect to debt issues, or a combination of these and other methods. Good faith pricing is permitted if, in the Fund’s opinion, the validity of market quotations appears to be questionable based on factors such as evidence of a thin market in the security based on a small number of quotations, a significant event occurs after the close of a market but before a Fund’s NAV calculation that may affect a security’s value, or the Fund is aware of any other data that calls into question the reliability of market quotations. Good faith pricing may also be used in instances when the bonds the Fund invests in may default or otherwise cease to have market quotations readily available. Any fair value pricing done outside the Fund’s approved pricing methods must be approved by the Pricing Committee of the Board.

The following is a summary of the inputs used to value the Fund’s investments as of April 30, 2014:

 

      Valuation Inputs  
Assets    Level 1 – 
Quoted Prices in
Active Markets
     Level 2 – 
Other
Significant
Observable
Inputs
    

Level 3 – 

Significant
Unobservable
Inputs

     Total  

Common Stocks*

   $   12,900,850       $   –       $   –       $   12,900,850   

Money Market Securities

     307,697                         307,697   

Total

   $ 13,208,547       $       $       $ 13,208,547   

 

* Refer to the Schedule of Investments for industry classifications.

The Fund did not hold any investments at any time during the reporting period in which significant unobservable inputs were used in determining fair value; therefore, no reconciliation of Level 3 securities is included for this reporting period. The Trust recognizes transfers between fair value hierarchy levels at the reporting period end. There were no transfers between any Levels for the period ended April 30, 2014 and the previous measurement period.

NOTE 4. ADVISER FEES AND OTHER TRANSACTIONS

Under the terms of the management agreement, on behalf of the Fund (the “Agreement”), the Adviser manages the Fund’s investments subject to approval of the Trustees. As compensation for its management services, the Fund is obligated to pay the Adviser a fee computed and accrued daily and paid monthly at an annual rate of 0.47% of the average daily net assets of the Fund. For the period ended April 30, 2014, the Adviser earned a fee of $23,316 from the Fund before the reimbursement described below.

 

15


BRC LARGE CAP FOCUS EQUITY FUND

NOTES TO THE FINANCIAL STATEMENTS – (continued)

April 30, 2014 (Unaudited)

 

NOTE 4. ADVISER FEES AND OTHER TRANSACTIONS – continued

 

The Adviser has contractually agreed to waive its management fee and/or reimburse expenses through February 29, 2016, so that total annual fund operating expenses, excluding interest, taxes, brokerage commissions, other expenditures which are capitalized in accordance with GAAP, other extraordinary expenses not incurred in the ordinary course of the Fund’s business, dividend expense on short sales, 12b-1 expenses, and expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement, if applicable, incurred by the Fund in any fiscal year, do not exceed 0.55% of the Fund’s average daily net assets. The operating expense limitation also excludes any fees and expenses of acquired funds. For the period ended April 30, 2014, expenses totaling $89,435 were waived or reimbursed by the Adviser and may be subject to potential recoupment by the Adviser until October 31, 2017. At April 30, 2014, the Adviser owed the Fund $9,409.

The amount subject to repayment by the Fund pursuant to the aforementioned conditions are as follows:

 

Amount

  Recoverable through
October 31,

$ 198,220

  2016

     89,435

  2017

The Trust retains Huntington Asset Services, Inc. (“HASI”) to manage the Fund’s business affairs and provide the Fund with administrative services, including all regulatory reporting and necessary office equipment and personnel. For the period ended April 30, 2014, HASI earned fees of $18,613 for administrative services provided to the Fund. At April 30, 2014, HASI was owed $2,988 from the Fund for administrative services. Certain officers and trustees of the Trust are members of management and/or employees of HASI. HASI is a wholly-owned subsidiary of Huntington Bancshares, Inc., the parent company of Unified Financial Securities, Inc. (the “Distributor”) and Huntington National Bank, the custodian of the Fund’s investments (the “Custodian”). For the period ended April 30, 2014, the Custodian earned fees of $3,583 for custody services provided to the Fund. At April 30, 2014, the Custodian was owed $2,223 from the Fund for custody services.

The Trust also retains HASI to act as the Fund’s transfer agent and to provide fund accounting services. For the period ended April 30, 2014, HASI earned fees of $18,825 for transfer agent services to the Fund. At April 30, 2014, the Fund owed HASI $2,403 for transfer agent services. For the period ended April 30, 2014, HASI earned fees of $12,408 from the Fund for fund accounting services. At April 30, 2014, HASI was owed $1,992 from the Fund for fund accounting services.

Unified Financial Securities, Inc. acts as the principal underwriter of the Fund’s shares. There were no payments made by the Fund to the Distributor during period ended April 30, 2014. An officer of the Trust is also an officer of the Distributor.

 

16


BRC LARGE CAP FOCUS EQUITY FUND

NOTES TO THE FINANCIAL STATEMENTS – (continued)

April 30, 2014 (Unaudited)

 

NOTE 5. PURCHASES AND SALES

 

For the period ended April 30, 2014, purchases and sales of investment securities, other than short-term investments and short-term U.S. government obligations, were as follows:

 

Purchases

 

U.S. Government Obligations

  $   

Other

    11,123,490   

Sales

 

U.S. Government Obligations

  $   

Other

      7,072,220   

NOTE 6. ESTIMATES

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.

NOTE 7. BENEFICIAL OWNERSHIP

The beneficial ownership, either directly or indirectly, of 25% or more of the voting securities of a fund creates a presumption of control of a fund, under Section 2(a) (9) of the Investment Company Act of 1940. At April 30, 2014, Charles Schwab & Co., Inc. for the benefit of its customers, owned 54.17%. It is not known whether Charles Schwab & Co. or any of the underlying beneficial owners controlled 25% or more of the voting securities of the Fund.

NOTE 8. FEDERAL TAX INFORMATION

At April 30, 2014, the net unrealized appreciation (depreciation) of investments for tax purposes was as follows:

 

Gross Appreciation

  $ 1,186,695   

Gross (Depreciation)

    (38,704
 

 

 

 

Net Appreciation (Depreciation) on Investments

  $   1,147,991   
 

 

 

 

At April 30, 2014, the aggregate cost of securities for federal income tax purposes was $12,060,556 for the Fund.

At October 31, 2013, the components of distributable earnings (accumulated losses) on a tax basis were as follows:

 

Undistributed ordinary income

  $ 32,989   

Net unrealized appreciation (depreciation)

    774,654   
 

 

 

 
  $   807,643   
 

 

 

 

 

17


BRC LARGE CAP FOCUS EQUITY FUND

NOTES TO THE FINANCIAL STATEMENTS – (continued)

April 30, 2014 (Unaudited)

 

NOTE 9. COMMITMENTS AND CONTINGENCIES

 

The Fund indemnifies its officers and trustees for certain liabilities that may arise from the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts that contain a variety of representations and warranties which provide general indemnifications. The Fund’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Fund that have not yet occurred.

NOTE 10. SUBSEQUENT EVENTS

Management of the Fund has evaluated the need for disclosures and/or adjustments resulting from subsequent events through the date these financial statements were issued. There were no items requiring adjustment of the financial statements or additional disclosure.

 

18


VALUED ADVISERS TRUST

PRIVACY POLICY

The following is a description of the policies of the Valued Advisers Trust (the “Trust”) regarding disclosure of nonpublic personal information that shareholders provide to a series of the Trust (each, a “Fund”) or that the Fund collects from other sources. In the event that a shareholder holds shares of a Fund through a broker-dealer or other financial intermediary, the privacy policy of the financial intermediary would govern how shareholder nonpublic personal information would be shared with nonaffiliated third parties.

Categories of Information A Fund May Collect. A Fund may collect the following nonpublic personal information about its shareholders:

 

   

Information the Fund receives from a shareholder on applications or other forms, correspondence, or conversations (such as the shareholder’s name, address, phone number, social security number, and date of birth); and

 

   

Information about the shareholder’s transactions with the Fund, its affiliates, or others (such as the shareholder’s account number and balance, payment history, cost basis information, and other financial information).

Categories of Information A Fund May Disclose. A Fund may not disclose any nonpublic personal information about its current or former shareholders to unaffiliated third parties, except as required or permitted by law. A Fund is permitted by law to disclose all of the information it collects, as described above, to its service providers (such as the Fund’s custodian, administrator, transfer agent, accountant and legal counsel) to process shareholder transactions and otherwise provide services to the shareholder.

Confidentiality and Security. Each Fund shall restrict access to shareholder nonpublic personal information to those persons who require such information to provide products or services to the shareholder. Each Fund shall maintain physical, electronic, and procedural safeguards that comply with federal standards to guard shareholder nonpublic personal information.

Disposal of Information. The Funds, through their transfer agent, have taken steps to reasonably ensure that the privacy of a shareholder’s nonpublic personal information is maintained at all times, including in connection with the disposal of information that is no longer required to be maintained by the Funds. Such steps shall include, whenever possible, shredding paper documents and records prior to disposal, requiring off-site storage vendors to shred documents maintained in such locations prior to disposal, and erasing and/or obliterating any data contained on electronic media in such a manner that the information can no longer be read or reconstructed.

 

19


OTHER INFORMATION

The Fund’s Statement of Additional Information (“SAI”) includes additional information about the trustees and is available without charge, upon request. You may call toll-free at (877) 272-1214 to request a copy of the SAI or to make shareholder inquiries.

PROXY VOTING

A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and information regarding how the Fund voted those proxies is available without charge upon request by (1) calling the Fund at (877) 272-1214 and (2) from Fund documents filed with the Securities and Exchange Commission (“SEC”) on the SEC’s website at www.sec.gov.

 

TRUSTEES

R. Jeffrey Young, Chairman

Ira Cohen

Andrea N. Mullins

OFFICERS

R. Jeffrey Young, Principal Executive Officer and President

John C. Swhear, Chief Compliance Officer, AML Officer and Vice President

Carol J. Highsmith, Vice President and Secretary

Matthew J. Miller, Vice President

Bryan W. Ashmus, Principal Financial Officer and Treasurer

INVESTMENT ADVISER

BRC Investment Management LLC

8400 East Prentice Avenue, Suite 1401

Greenwood Village, Colorado 80111

DISTRIBUTOR

Unified Financial Securities, Inc.

2960 North Meridian Street, Suite 300

Indianapolis, IN 46208

INDEPENDENT REGISTERED

PUBLIC ACCOUNTING FIRM

Cohen Fund Audit Services Ltd.

1350 Euclid Avenue, Suite 800

Cleveland, OH 44115

LEGAL COUNSEL

The Law Offices of John H. Lively & Associates, Inc.

A member firm of The 1940 Act Law GroupTM

11300 Tomahawk Creek Parkway, Ste. 310

Leawood, KS 66211

CUSTODIAN

Huntington National Bank

41 South High Street

Columbus, OH 43215

ADMINISTRATOR, TRANSFER AGENT AND FUND ACCOUNTANT

Huntington Asset Services, Inc.

2960 North Meridian Street, Suite 300

Indianapolis, IN 46208

 

 

This report is intended only for the information of shareholders or those who have received the Fund’s prospectus which contains information about the Fund’s management fee and expenses. Please read the prospectus carefully before investing.

Distributed by Unified Financial Securities, Inc.

Member FINRA/SIPC

 

20


 

LOGO

Semi-Annual Report

April 30, 2014

Fund Adviser:

Granite Investment Advisors, Inc.

11 South Main Street, Suite 501

Concord, New Hampshire 03301

Toll Free (888) 442-9893


INVESTMENT RESULTS – (Unaudited)

 

       Average Annual Total  Returns*
(for the periods ended April 30, 2014)
 
       Six Month     One Year     Since Inception
(December 22, 2011)
 

Granite Value Fund

       5.43     17.20     17.80

S&P 500® Index**

       8.36     20.44     21.84

Russell 1000® Value Index**

       9.61     20.90     23.35

 

Total annual operating expenses, as disclosed in the Fund’s prospectus dated February 28, 2014, were 3.32% of average daily net assets (1.35% after fee waivers/expense reimbursements by the adviser). The adviser has contractually agreed to waive or limit its fees and to assume other expenses of the Fund until February 28, 2015, so that the Total Annual Fund Operating Expenses does not exceed 1.35%. This operating expense limitation does not apply to interest, taxes, brokerage commissions, other expenditures which are capitalized in accordance with generally accepted accounting principles, other extraordinary expenses not incurred in the ordinary course of the Fund’s business, dividend expense on short sales, expenses incurred under a Rule 12b-1 plan of distribution, “acquired fund fees and expenses,” and expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement.

The performance quoted represents past performance, which does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. The returns shown do not reflect deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Current performance of the Fund may be lower or higher than the performance quoted. The Fund’s investment objectives, risks, charges and expenses must be considered carefully before investing. Performance data current to the most recent month end may be obtained by calling 1-888-442-9893.

 

  * Return figures reflect any change in price per share and assume the reinvestment of all distributions.

 

**

The S&P 500® Index and the Russell 1000® Value Index are widely recognized unmanaged indices of equity securities and are representative of a broader domestic equity market and range of securities than is found in the Fund’s portfolio. Individuals cannot invest directly in an Index; however, an individual can invest in exchange traded funds or other investment vehicles that attempt to track the performance of a benchmark index.

The Fund’s investment objectives, strategies, risks, charges and expenses must be considered carefully before investing. The prospectus contains this and other important information about the Fund and may be obtained by calling the same number as above. Please read it carefully before investing.

The Fund is distributed by Unified Financial Securities, Inc., member FINRA.

 

1


Comparison of the Growth of a $10,000 Investment in the Granite Value Fund,

the Russell 1000® Value Index, and the S&P 500® Index (Unaudited)

 

LOGO

The chart above assumes an initial investment of $10,000 made on December 22, 2011 (commencement of Fund operations) and held through April 30, 2014. The S&P 500® Index and Russell 1000® Value Index are widely recognized unmanaged indices of equity securities and are representative of a broader domestic equity market and range of securities than is found in the Fund’s portfolio. Individuals cannot invest directly in an Index; however, an individual can invest in exchange traded funds or other investment vehicles that attempt to track the performance of a benchmark index. THE FUND’S RETURN REPRESENTS PAST PERFORMANCE AND DOES NOT GUARANTEE FUTURE RESULTS. The returns shown do not reflect deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Investment returns and principal values will fluctuate so that your shares, when redeemed, may be worth more or less than their original purchase price.

Current performance may be lower or higher than the performance data quoted. For more information on the Fund, and to obtain performance data current to the most recent month end or to request a prospectus, please call 1-888-442-9893. You should carefully consider the investment objectives, potential risks, management fees, and charges and expenses of the Fund before investing. The Fund’s prospectus contains this and other information about the Fund, and should be read carefully before investing.

The Fund is distributed by Unified Financial Securities, Inc., member FINRA.

 

2


FUND HOLDINGS – (Unaudited)

 

LOGO

 

1 

As a percentage of net assets.

The investment objective of the Granite Value Fund is to seek long-term capital appreciation.

Availability of Portfolio Schedule – (Unaudited)

The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (“SEC”) for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms N-Q are available at the SEC’s website at www.sec.gov. The Fund’s Forms N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330.

Summary of Fund’s Expenses – (Unaudited)

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, such as short-term redemption fees; and (2) ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning and held for the six month period, November 1, 2013 to April 30, 2014.

 

3


Actual Expenses

The first line of 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 = $8.60), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During the Period” to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The second line of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare 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 costs only. Therefore, the second line of the table below is useful in comparing ongoing costs only and will not help you determine the relative costs of owning different funds.

 

Granite Value Fund   

Beginning
Account Value

November 1, 2013

    

Ending

Account Value

April 30, 2014

    

Expenses Paid
During Period*

November 1, 2013 –
April 30, 2014

 

Actual*

   $     1,000.00       $     1,054.30       $     6.88   

Hypothetical**

   $     1,000.00       $     1,018.10       $     6.75   

 

* Expenses are equal to the Fund’s annualized expense ratio of 1.35%, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).

 

** Assumes a 5% return before expenses.

 

4


GRANITE VALUE FUND

SCHEDULE OF INVESTMENTS

April 30, 2014 (Unaudited)

 

COMMON STOCKS – 98.12%    Shares      Fair Value  
     

Consumer Discretionary – 19.42%

     

Bed Bath & Beyond, Inc. *

     5,550       $ 344,822   

Coach, Inc.

     7,010         312,997   

Comcast Corp. – Class A

     6,300         326,088   

Foot Locker, Inc.

     8,700         404,811   

General Motors Co.

     12,390         427,207   

News Corp. – Class A *

     20,830         354,527   

TRW Automotive Holdings Corp. *

     3,500         281,225   
     

 

 

 
        2,451,677   
     

 

 

 

Consumer Staples – 11.15%

  

Coca-Cola Co. / The

     9,150         373,229   

Tesco PLC ADR

     20,870         308,876   

Unilever PLC ADR

     8,720         390,133   

Wal-Mart Stores, Inc.

     4,210         335,579   
     

 

 

 
        1,407,817   
     

 

 

 

Energy – 15.91%

  

Apache Corp.

     4,065         352,842   

Exxon Mobil Corp.

     4,640         475,182   

Southwestern Energy Co. *

     7,840         375,379   

Ultra Petroleum Corp. *

     15,555         463,539   

Unit Corp. *

     5,175         341,291   
     

 

 

 
        2,008,233   
     

 

 

 

Financials – 18.56%

  

Alleghany Corp. *

     925         377,381   

American Express Co.

     2,765         241,744   

American International Group, Inc.

     9,730         516,955   

Berkshire Hathaway, Inc. – Class B *

     3,855         496,717   

Citigroup, Inc.

     7,640         366,032   

Franklin Resources, Inc.

     6,575         344,201   
     

 

 

 
        2,343,030   
     

 

 

 

Health Care – 10.52%

  

Baxter International, Inc.

     5,450         396,705   

Johnson & Johnson

     2,590         262,341   

Sanofi ADR

     6,595         354,811   

UnitedHealth Group, Inc.

     4,185         314,042   
     

 

 

 
        1,327,899   
     

 

 

 

 

See accompanying notes which are an integral part of these financial statements.

 

5


GRANITE VALUE FUND

SCHEDULE OF INVESTMENTS – (continued)

April 30, 2014 (Unaudited)

 

COMMON STOCKS – 98.12% – continued    Shares      Fair Value  
     

Industrials – 7.98%

  

Boeing Co. / The

     2,530       $ 326,421   

FedEx Corp.

     2,550         347,438   

Kennametal, Inc.

     7,140         333,652   
     

 

 

 
        1,007,511   
     

 

 

 

Information Technology – 11.52%

  

Apple, Inc.

     680         401,261   

Cisco Systems, Inc.

     16,385         378,657   

Microsoft Corp.

     8,395         339,158   

Western Union Co. / The

     21,170         335,968   
     

 

 

 
        1,455,044   
     

 

 

 

Utilities – 3.06%

  

Calpine Corp. *

     16,875         386,944   
     

 

 

 

TOTAL COMMON STOCKS (Cost $10,210,958)

        12,388,155   
     

 

 

 

MONEY MARKET SECURITIES – 1.83%

     

Fidelity Institutional Money Market Funds – Prime Money Market Portfolio – Institutional Class, 0.06% (a)

     230,616         230,616   
     

 

 

 

TOTAL MONEY MARKET SECURITIES (Cost $230,616)

        230,616   
     

 

 

 

TOTAL INVESTMENTS – 99.95% (Cost $10,441,574)

      $ 12,618,771   
     

 

 

 
Other Assets in Excess of Liabilities – 0.05%         6,011   
     

 

 

 
TOTAL NET ASSETS – 100.00%       $ 12,624,782   
     

 

 

 

 

  (a) Rate disclosed is the seven day yield as of April 30, 2014.

 

  * Non-income producing security.

ADR – American Depositary Receipt

 

See accompanying notes which are an integral part of these financial statements.

 

6


GRANITE VALUE FUND

STATEMENT OF ASSETS AND LIABILITIES

April 30, 2014 (Unaudited)

 

Assets

  

Investments in securities at fair value (cost $10,441,574)

   $ 12,618,771   

Dividends receivable

     13,803   

Interest receivable

     15   

Receivable from Adviser

     106   

Prepaid expenses

     8,303   
  

 

 

 

Total Assets

     12,640,998   
  

 

 

 

Liabilities

  

Payable to administrator, fund accountant, and transfer agent

     6,629   

Payable to custodian

     1,954   

Payable to trustees

     548   

Other accrued expenses

     7,085   
  

 

 

 

Total Liabilities

     16,216   
  

 

 

 

Net Assets

   $ 12,624,782   
  

 

 

 

Net Assets consist of:

  

Paid-in capital

   $ 10,339,143   

Accumulated undistributed net investment income

     3,707   

Accumulated undistributed net realized gains from investments

     104,735   

Net unrealized appreciation on investments

     2,177,197   
  

 

 

 

Net Assets

   $ 12,624,782   
  

 

 

 

Shares outstanding
(unlimited number of shares authorized, no par value)

     889,421   
  

 

 

 

Net asset value (“NAV”) and offering price per share

   $ 14.19   
  

 

 

 

Redemption price per share (NAV * 98%) (a)

   $ 13.91   
  

 

 

 
(a) The Fund charges a 2.00% redemption fee on shares redeemed in 60 days or less of purchase. Share are redeemed at the NAV if held longer than 60 calendar days.

 

See accompanying notes which are an integral part of these financial statements.

 

7


GRANITE VALUE FUND

STATEMENT OF OPERATIONS

For the six months ended April 30, 2014 (Unaudited)

 

Investment Income

  

Dividend income

   $ 89,451   

Interest income

     71   
  

 

 

 

Total investment income

     89,522   
  

 

 

 

Expenses

  

Investment Adviser

     57,672   

Administration

     18,596   

Fund accounting

     12,397   

Transfer agent

     18,396   

Legal

     6,444   

Registration

     7,929   

Custodian

     2,628   

Audit

     7,438   

Trustee

     3,874   

Pricing

     1,047   

Miscellaneous

     4,639   
  

 

 

 

Total expenses

     141,060   
  

 

 

 

Fees waived and reimbursed by Adviser

     (63,194
  

 

 

 

Net operating expenses

     77,866   
  

 

 

 

Net investment income

     11,656   
  

 

 

 

Net Realized and Unrealized Gains on Investments

  

Net realized gains on investment securities transactions

     116,479   

Net change in unrealized appreciation of investment securities

     521,515   
  

 

 

 

Net realized and unrealized gains on investments

     637,994   
  

 

 

 

Net increase in net assets resulting from operations

   $ 649,650   
  

 

 

 

 

See accompanying notes which are an integral part of these financial statements.

 

8


GRANITE VALUE FUND

STATEMENTS OF CHANGES IN NET ASSETS

 

     For the
Six Months Ended
April 30, 2014
(Unaudited)
    For the
Year Ended
October 31, 2013
 

Increase in Net Assets due to:

    

Operations

    

Net investment income

   $ 11,656      $ 20,979   

Net realized gain on investment transactions

     116,479        307,429   

Net change in unrealized appreciation of investments

     521,515        1,365,378   
  

 

 

   

 

 

 

Net increase in net assets resulting from operations

     649,650        1,693,786   
  

 

 

   

 

 

 

Distributions

    

From net investment income

     (17,291     (48,544

From net realized gains

     (287,895       
  

 

 

   

 

 

 

Total distributions

     (305,186     (48,544
  

 

 

   

 

 

 

Capital Transactions

    

Proceeds from shares sold

     1,639,277        5,330,630   

Reinvestment of distributions

     261,021        46,272   

Amount paid for shares redeemed

     (197,075     (1,194,939
  

 

 

   

 

 

 

Net increase in net assets resulting from capital transactions

     1,703,223        4,181,963   
  

 

 

   

 

 

 

Total Increase in Net Assets

     2,047,687        5,827,205   
  

 

 

   

 

 

 

Net Assets

    

Beginning of period

     10,577,095        4,749,890   
  

 

 

   

 

 

 

End of period

   $ 12,624,782      $ 10,577,095   
  

 

 

   

 

 

 

Accumulated undistributed net investment income

   $ 3,707      $ 9,342   
  

 

 

   

 

 

 

Share Transactions

    

Shares sold

     120,411        435,459   

Shares issued in reinvestment of distributions

     19,067        4,120   

Shares redeemed

     (14,233     (97,956
  

 

 

   

 

 

 

Net increase in shares

     125,245        341,623   
  

 

 

   

 

 

 

 

See accompanying notes which are an integral part of these financial statements.

 

9


GRANITE VALUE FUND

FINANCIAL HIGHLIGHTS

For a share outstanding during each period

 

     For the
Six Months Ended
April 30, 2014
(Unaudited)
    For the
Year Ended
October 31,

2013
    For the
Period Ended
October 31,

2012 (a)
 

Selected Per Share Data:

      

Net asset value, beginning of period

   $ 13.84      $ 11.24      $ 10.00   
  

 

 

   

 

 

   

 

 

 

Income from investment operations:

      

Net investment income

     0.01        0.02        0.05 (b) 

Net realized and unrealized gains on investments

     0.72        2.68        1.19   
  

 

 

   

 

 

   

 

 

 

Total Income from investment operations

     0.73        2.70        1.24   
  

 

 

   

 

 

   

 

 

 

Less Distributions to shareholders from:

      

Net investment income

     (0.02     (0.10       

Net realized gains

     (0.36              
  

 

 

   

 

 

   

 

 

 

Total distributions

     (0.38     (0.10       
  

 

 

   

 

 

   

 

 

 

Paid in capital from redemption fees

                   (c) 
  

 

 

   

 

 

   

 

 

 

Net asset value, end of period

   $ 14.19      $ 13.84      $ 11.24   
  

 

 

   

 

 

   

 

 

 

Total Return (d)

     5.43 %(e)      24.21     12.40 %(e) 

Ratios and Supplemental Data:

      

Net assets, end of period (000)

   $ 12,625      $ 10,577      $ 4,750   

Ratio of net expenses to average net assets

     1.35 %(f)      1.35     1.35 %(f) 

Ratio of expenses to average net assets before waiver and reimbursement

     2.45 %(f)      3.32     8.11 %(f) 

Ratio of net investment income to average net assets

     0.20 %(f)      0.27     0.55 %(f) 

Portfolio turnover rate

     9 %(e)      33     20 %(e) 

 

(a) For the period December 22, 2011 (commencement of operations) to October 31, 2012.
(b) Calculated using the average shares method.
(c) Resulted in less than $0.005 per share.
(d) Total return in the above table represents the rate that the investor would have earned or lost on an investment in the Fund, assuming reinvestment of distributions.
(e) Not annualized.
(f) Annualized.

 

See accompanying notes which are an integral part of these financial statements.

 

10


GRANITE VALUE FUND

NOTES TO THE FINANCIAL STATEMENTS

April 30, 2014 (Unaudited)

 

NOTE 1. ORGANIZATION

 

The Granite Value Fund (the “Fund”) is an open-end diversified series of the Valued Advisers Trust (the “Trust”). The Trust is a management investment company established under the laws of Delaware by an Agreement and Declaration of Trust dated June 13, 2008 (the “Trust Agreement”). The Trust Agreement permits the Trustees to issue an unlimited number of shares of beneficial interest of separate series without par value. The Fund is one of a series of funds authorized by the Board of Trustees (the “Board”). The Fund commenced operations December 22, 2011. The Fund’s investment adviser is Granite Investment Advisors, Inc. (the “Adviser”). The investment objective of the Fund is to provide long-term capital appreciation.

NOTE 2. SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. These policies are in conformity with generally accepted accounting principles in the United States of America (“GAAP”).

Securities Valuation – All investments in securities are recorded at their estimated fair value as described in Note 3.

Federal Income Taxes – The Fund makes no provision for federal income or excise tax. The Fund intends to qualify each year as a regulated investment company (“RIC”) under subchapter M of the Internal Revenue Code of 1986, as amended, by complying with the requirements applicable to RICs and by distributing substantially all of its taxable income. The Fund also intends to distribute sufficient net investment income and net capital gains, if any, so that it will not be subject to excise tax on undistributed income and gains. If the required amount of net investment income or gains is not distributed, the Fund could incur a tax expense.

As of and during the period ended April 30, 2014, the Fund did not have a liability for any unrecognized tax benefits. The Fund recognizes interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the Statement of Operations. During the period, the Fund did not incur any interest or penalties. The Fund is subject to examination by U.S. federal tax authorities for all tax years since inception.

Expenses – Expenses incurred by the Trust that do not relate to a specific fund of the Trust are allocated to the individual funds based on each fund’s relative net assets or other appropriate basis.

Security Transactions and Related Income – The Fund follows industry practice and records security transactions on the trade date for financial reporting purposes. The First In, First Out method is used for determining gains or losses for financial statements and income tax purposes. Dividend income is recorded on the ex-dividend date and interest income is recorded on an accrual basis. Discounts and premiums on securities purchased are amortized or accreted using the effective interest method. Withholding taxes on foreign dividends have been provided for in accordance with the Fund’s understanding of the applicable country’s tax rules and rates. The ability of issuers of debt securities held by the Fund to meet their obligations may be affected by economic and political developments in a specific country or region.

Redemption Fees – The Fund charges a 2.00% redemption fee for shares redeemed within 60 days. These fees are deducted from the redemption proceeds otherwise payable to the shareholder. The Fund will retain the fee charged as an increase in paid-in capital and such fees become part of the Fund’s daily NAV calculation.

 

11


GRANITE VALUE FUND

NOTES TO THE FINANCIAL STATEMENTS – (continued)

April 30, 2014 (Unaudited)

 

NOTE 2. SIGNIFICANT ACCOUNTING POLICIES – continued

 

Dividends and Distributions – The Fund intends to distribute substantially all of its net investment income, net realized long-term capital gains and its net realized short-term capital gains, if any, to its shareholders on at least an annual basis. Dividends to shareholders, which are determined in accordance with income tax regulations, are recorded on the ex-dividend date. The treatment for financial reporting purposes of distributions made to shareholders during the year from net investment income or net realized capital gains may differ from their ultimate treatment for federal income tax purposes. These differences are caused primarily by differences in the timing of the recognition of certain components of income, expense or realized capital gain for federal income tax purposes. Where such differences are permanent in nature, they are reclassified in the components of net assets based on their ultimate characterization for federal income tax purposes. Any such reclassifications will have no effect on net assets, results of operations or net asset values per share of the Fund. There were no such material reclassifications made as of April 30, 2014.

NOTE 3. SECURITIES VALUATION AND FAIR VALUE MEASUREMENTS

Fair value is defined as the price that a Fund would receive upon selling an investment in a orderly transaction to an independent buyer in the principal or most advantageous market of the investment. GAAP established a three-tier hierarchy to maximize the use of observable market data and minimize the use of unobservable inputs and to establish classification of fair value measurements for disclosure purposes.

Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk, (ex., the risk inherent in a particular valuation technique used to measure fair value including items such as a pricing model and/or the risk inherent in the inputs to the valuation technique). Inputs may be observable or unobservable. Observable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs are inputs that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.

Various inputs are used in determining the value of the Fund’s investments. These inputs are summarized in the three broad levels listed below.

 

   

Level 1 – quoted prices in active markets for identical securities

 

   

Level 2 – other significant observable inputs (including, but not limited to, quoted prices for an identical security in an inactive market, quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)

 

   

Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining fair value of investments based on the best information available)

The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety, is determined based on the lowest level input that is significant to the fair value measurement in its entirety.

Equity securities, including common stocks, are generally valued by using market quotations, furnished by a pricing service. Securities that are traded on any stock exchange are generally valued at the last quoted sale price.

 

12


GRANITE VALUE FUND

NOTES TO THE FINANCIAL STATEMENTS – (continued)

April 30, 2014 (Unaudited)

 

NOTE 3. SECURITIES VALUATION AND FAIR VALUE MEASUREMENTS – continued

 

Lacking a last sale price, an exchange traded security is generally valued at its last bid price. Securities traded in the NASDAQ over-the-counter market are generally valued at the NASDAQ Official Closing Price. When using the market quotations or close prices provided by the pricing service and when the market is considered active, the security is classified as a Level 1 security. Sometimes, an equity security owned by the Fund will be valued by the pricing service with factors other than market quotations or when the market is considered inactive. When this happens, the security is classified as a Level 2 security. When market quotations are not readily available, when the Fund determines that the market quotation or the price provided by the pricing service does not accurately reflect the current fair value, or when restricted or illiquid securities are being valued, such securities are valued as determined in good faith by the Fund, in conformity with guidelines adopted by and subject to review by the Board. These securities may be categorized as Level 3 securities.

Investments in open-end mutual funds, including money market mutual funds, are generally priced at the ending net asset value (NAV) provided by the service agent of the funds. These securities will be categorized as Level 1 securities.

Fixed income securities when valued using market quotations in an active market, will be categorized as Level 1 securities. However, they may be valued on the basis of prices furnished by a pricing service when the Fund believes such prices more accurately reflect the fair value of such securities. A pricing service uses various inputs and techniques, which include broker-dealer quotations, live trading levels, recently executed transactions in securities of the issuer or comparable issuers, and option adjusted spread models that include base curve and spread curve inputs. Adjustments to individual bonds can be applied to recognize trading differences compared to other bonds issued by the same issuer. The broker-dealer quotations received are supported by credit analysis of the issuer that takes into consideration credit quality assessments, daily trading activity, and the activity of the underlying equities, listed bonds and sector-specific trends. To the extent that these inputs are observable, the values of fixed income securities are categorized as Level 2 securities. If the Fund decides that a price provided by the pricing service does not accurately reflect the fair value of the securities, when prices are not readily available from a pricing service, or when restricted or illiquid securities are being valued, securities are valued at fair value as determined in good faith by the Fund, in conformity with guidelines adopted by and subject to review of the Board. These securities may be categorized as Level 3 securities.

Short-term investments in fixed income securities (those with maturities of less than 60 days when acquired, or which subsequently are within 60 days of maturity), including certificates of deposit and U.S. government securities, are valued by using the amortized cost method of valuation, which the Board has determined represents fair value. These securities will be classified as Level 2 securities.

In accordance with the Trust’s good faith pricing guidelines, the Fund is required to consider all appropriate factors relevant to the value of securities for which it has determined other pricing sources are not available or reliable as described above. No single standard exists for determining fair value, because fair value depends upon the circumstances of each individual case. As a general principle, the current fair value of an issue of securities being valued by the Fund would appear to be the amount which the owner might reasonably expect to receive for them upon their current sale. Methods which are in accordance with this principle may, for example, be based on (i) a multiple of earnings; (ii) a discount from market of a similar freely traded security (including a derivative security or a basket of securities traded on other markets, exchanges or among dealers); or (iii) yield to maturity with respect to debt issues, or a combination of these and other methods. Good faith pricing is permitted if, in the Fund’s opinion, the validity of market quotations appears to be questionable based on factors such as evidence of

 

13


GRANITE VALUE FUND

NOTES TO THE FINANCIAL STATEMENTS – (continued)

April 30, 2014 (Unaudited)

 

NOTE 3. SECURITIES VALUATION AND FAIR VALUE MEASUREMENTS – continued

 

a thin market in the security based on a small number of quotations, a significant event occurs after the close of a market but before a Fund’s NAV calculation that may affect a security’s value, or the Fund is aware of any other data that calls into question the reliability of market quotations. Good faith pricing may also be used in instances when the bonds the Fund invests in may default or otherwise cease to have market quotations readily available. Any fair value pricing done outside the Fund’s approved pricing methods must be approved by the Pricing Committee of the Board.

The following is a summary of the inputs used to value the Fund’s investments as of April 30, 2014:

 

      Valuation Inputs  
Assets   

Level 1 – 

Quoted Prices in
Active Markets

    

Level 2 – 

Other

Significant

Observable

Inputs

     Level 3 –
Significant
Unobservable
Inputs
     Total  

Common Stocks*

   $   12,388,155       $   –       $   –       $   12,388,155   

Money Market Securities

     230,616           –           –         230,616   

Total

   $ 12,618,771       $   –       $   –       $ 12,618,771   

* Refer to the Schedule of Investments for industry classifications.

The Fund did not hold any investments at any time during the reporting period in which significant unobservable inputs were used in determining fair value; therefore, no reconciliation of Level 3 securities is included for this reporting period. The Trust recognizes transfers between fair value hierarchy levels at the reporting period end. There were no transfers between any Levels for the period ended April 30, 2014 compared to the previous measurement period.

NOTE 4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES

Under the terms of the management agreement, on behalf of the Fund (the “Agreement”), the Adviser manages the Fund’s investments subject to approval of the Trustees. As compensation for its management services, the Granite Value Fund is obligated to pay the Adviser a fee computed and accrued daily and paid monthly at an annual rate of 1.00% of the average daily net assets of the Fund. For the period ended April 30, 2014, the Adviser earned a fee of $57,672 from the Fund before the reimbursement described below.

The Adviser has contractually agreed to waive its management fee and/or reimburse expenses through February 28, 2015, so that total annual fund operating expenses, excluding interest, taxes, brokerage commissions, other expenditures which are capitalized in accordance with GAAP, other extraordinary expenses not incurred in the ordinary course of the Fund’s business, dividend expense on short sales, and expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement, if applicable, incurred by the Fund in any fiscal year, do not exceed 1.35% of the Fund’s average daily net assets. The operating expense limitation also excludes any fees and expenses of acquired funds. For the period ended April 30, 2014, expenses totaling $63,194 were waived or reimbursed by the Adviser and are subject to potential recoupment by the Adviser until October 31, 2017. At April 30, 2014, the Adviser owed the Fund $106.

 

14


GRANITE VALUE FUND

NOTES TO THE FINANCIAL STATEMENTS – (continued)

April 30, 2014 (Unaudited)

 

NOTE 4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES – continued

 

The amount subject to repayment by the Fund pursuant to the aforementioned conditions are as follows:

 

Amount

  Recoverable through
October 31,

$171,698

  2015

  150,231

  2016

    63,194

  2017

The Trust retains Huntington Asset Services, Inc. (“HASI”) to manage the Fund’s business affairs and provide the Fund with administrative services, including all regulatory reporting and necessary office equipment and personnel. For the period ended April 30, 2014, HASI earned fees of $18,596 for administrative services provided to the Fund. At April 30, 2014, HASI was owed $2,971 from the Fund for administrative services. Certain officers and one Trustee of the Trust are members of management and/or employees of HASI. HASI is a wholly-owned subsidiary of Huntington Bancshares, Inc., the parent company of Unified Financial Securities, Inc. (the “Distributor”) and Huntington National Bank, the custodian of the Fund’s investments (the “Custodian”). For the period ended April 30, 2014, the Custodian earned fees of $2,628 for custody services provided to the Fund. At April 30, 2014, the Custodian was owed $1,954 from the Fund for custody services.

The Trust also retains HASI to act as the Fund’s transfer agent and to provide fund accounting services. For the period ended April 30, 2014, HASI earned fees of $18,396 for transfer agent services to the Fund. At April 30, 2014, the Fund owed HASI $1,678 for transfer agent services. For the period ended April 30, 2014, HASI earned fees of $12,397 from the Fund for fund accounting services. At April 30, 2014, HASI was owed $1,980 from the Fund for fund accounting services.

Unified Financial Securities, Inc. acts as the principal underwriter of the Fund’s shares. There were no payments made by the Fund to the Distributor during the period ended April 30, 2014. An officer of the Trust is an officer of the Distributor and such person may be deemed to be an affiliate of the Distributor.

The Fund has adopted a 12b-1 Plan that permits the Fund to pay 0.25% of its average daily net assets to financial institutions that provide distribution and/or shareholder servicing. The Plan has not been activated as of April 30, 2014.

 

15


GRANITE VALUE FUND

NOTES TO THE FINANCIAL STATEMENTS – (continued)

April 30, 2014 (Unaudited)

 

NOTE 5. INVESTMENTS

 

For the period ended April 30, 2014, purchases and sales of investment securities, other than short-term investments and short-term U.S. government obligations, were as follows:

 

Purchases

 

U.S. Government Obligations

  $   

Other

    2,364,096   

Sales

 

U.S. Government Obligations

  $   

Other

      1,031,824   

NOTE 6. ESTIMATES

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.

NOTE 7. BENEFICIAL OWNERSHIP

The beneficial ownership, either directly or indirectly, of 25% or more of the voting securities of a fund creates a presumption of control of a fund, under Section 2(a) (9) of the Investment Company Act of 1940. At April 30, 2014, Charles Schwab & Co., Inc. for the benefit of its customers, owned 60.23%. It is not known whether Charles Schwab & Co. or any of the underlying beneficial owners controlled 25% or more of the voting securities of the Fund.

NOTE 8. FEDERAL TAX INFORMATION

At April 30, 2014, the net unrealized appreciation (depreciation) of investments for tax purposes was as follows:

 

Gross Appreciation

  $ 2,245,827   

Gross (Depreciation)

    (80,374
 

 

 

 

Net Appreciation (Depreciation) on Investments

  $   2,165,453   
 

 

 

 

At April 30, 2014, the aggregate cost of securities, excluding U.S. government obligations, for federal income tax purposes was $10,453,318 for the Fund.

The tax characterization of distributions for the fiscal years ended October 31, 2013 was as follows:

 

Distributions paid from:   2013  

Ordinary Income*

  $ 48,544   
 

 

 

 

Total Distributions

  $   48,544   
 

 

 

 

 

* Short term capital gain distributions are treated as ordinary income for tax purposes.

 

16


GRANITE VALUE FUND

NOTES TO THE FINANCIAL STATEMENTS – (continued)

April 30, 2014 (Unaudited)

 

NOTE 8. FEDERAL TAX INFORMATION – continued

 

At October 31, 2013, the components of distributable earnings (accumulated losses) on a tax basis were as follows:

 

Undistributed ordinary income

  $ 159,471   

Undistributed long-term capital gain (loss)

    141,051   

Accumulated capital and other losses

    (3,285

Net Unrealized appreciation (depreciation)

    1,643,938   
 

 

 

 
  $   1,941,175   
 

 

 

 

At October 31, 2013, the difference between book basis and tax basis unrealized appreciation (depreciation) is primarily attributable to the tax deferral of losses on wash sales in the amount of $11,744.

At October 31, 2013, for federal income tax purposes, the Fund has no capital loss carryforwards.

NOTE 9. COMMITMENTS AND CONTINGENCIES

The Fund indemnifies its officers and trustees for certain liabilities that may arise from their performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts that contain a variety of representations and warranties which provide general indemnifications. The Fund’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Fund that have not yet occurred.

NOTE 10. SUBSEQUENT EVENTS

Management of the Fund has evaluated the need for disclosures and/or adjustments resulting from subsequent events through the date these financial statements were issued. There were no items requiring adjustment of the financial statements or additional disclosure.

 

17


VALUED ADVISERS TRUST

PRIVACY POLICY

The following is a description of the policies of the Valued Advisers Trust (the “Trust”) regarding disclosure of nonpublic personal information that shareholders provide to a series of the Trust (each, a “Fund”) or that the Fund collects from other sources. In the event that a shareholder holds shares of a Fund through a broker-dealer or other financial intermediary, the privacy policy of the financial intermediary would govern how shareholder nonpublic personal information would be shared with nonaffiliated third parties.

Categories of Information A Fund May Collect. A Fund may collect the following nonpublic personal information about its shareholders:

 

   

Information the Fund receives from a shareholder on applications or other forms, correspondence, or conversations (such as the shareholder’s name, address, phone number, social security number, and date of birth); and

 

   

Information about the shareholder’s transactions with the Fund, its affiliates, or others (such as the shareholder’s account number and balance, payment history, cost basis information, and other financial information).

Categories of Information A Fund May Disclose. A Fund may not disclose any nonpublic personal information about its current or former shareholders to unaffiliated third parties, except as required or permitted by law. A Fund is permitted by law to disclose all of the information it collects, as described above, to its service providers (such as the Fund’s custodian, administrator, transfer agent, accountant and legal counsel) to process shareholder transactions and otherwise provide services to the shareholder.

Confidentiality and Security. Each Fund shall restrict access to shareholder nonpublic personal information to those persons who require such information to provide products or services to the shareholder. Each Fund shall maintain physical, electronic, and procedural safeguards that comply with federal standards to guard shareholder nonpublic personal information.

Disposal of Information. The Funds, through their transfer agent, have taken steps to reasonably ensure that the privacy of a shareholder’s nonpublic personal information is maintained at all times, including in connection with the disposal of information that is no longer required to be maintained by the Funds. Such steps shall include, whenever possible, shredding paper documents and records prior to disposal, requiring off-site storage vendors to shred documents maintained in such locations prior to disposal, and erasing and/or obliterating any data contained on electronic media in such a manner that the information can no longer be read or reconstructed.

 

18


OTHER INFORMATION

The Fund’s Statement of Additional Information (“SAI”) includes additional information about the trustees and is available without charge, upon request. You may call toll-free at (888) 442-9893 to request a copy of the SAI or to make shareholder inquiries.

PROXY VOTING

A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and information regarding how the Fund voted those proxies is available without charge upon request by (1) calling the Fund at (888) 442-9893 and (2) from Fund documents filed with the Securities and Exchange Commission (“SEC”) on the SEC’s website at www.sec.gov.

 

TRUSTEES

R. Jeffrey Young, Chairman

Ira Cohen

Andrea N. Mullins

OFFICERS

R. Jeffrey Young, Principal Executive Officer and President

John C. Swhear, Chief Compliance Officer, AML Officer and Vice President

Carol J. Highsmith, Vice President and Secretary

Matthew J. Miller, Vice President

Bryan W. Ashmus, Principal Financial Officer and Treasurer

INVESTMENT ADVISER

Granite Investment Advisors

11 South Main Street, Suite 501

Concord, NH 03301

DISTRIBUTOR

Unified Financial Securities, Inc.

2960 North Meridian Street, Suite 300

Indianapolis, IN 46208

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Cohen Fund Audit Services Ltd.

1350 Euclid Avenue, Suite 800

Cleveland, OH 44115

LEGAL COUNSEL

The Law Offices of John H. Lively & Associates, Inc.

A member firm of The 1940 Act Law GroupTM

11300 Tomahawk Creek Parkway, Ste. 310

Leawood, KS 66211

CUSTODIAN

Huntington National Bank

41 South High Street

Columbus, OH 43215

ADMINISTRATOR, TRANSFER AGENT AND FUND ACCOUNTANT

Huntington Asset Services, Inc.

2960 North Meridian Street, Suite 300

Indianapolis, IN 46208

 

 

This report is intended only for the information of shareholders or those who have received the Fund’s prospectus which contains information about the Fund’s management fee and expenses. Please read the prospectus carefully before investing.

Distributed by Unified Financial Securities, Inc.

Member FINRA/SIPC

 

19


 

LOGO

Semi-Annual Report

April 30, 2014

Fund Adviser:

Kovitz Investment Group, LLC

115 South LaSalle Street, 27th Floor

Chicago, IL 60603

Toll Free (888) 695-3729


MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE – (Unaudited)

Kovitz Investment Group launched the Green Owl Intrinsic Value Fund (the Fund) with the goal of seeking long-term capital appreciation through high risk-adjusted returns. Relying on a fundamental, research-driven process, the Fund strives to build a diversified portfolio of equity investments through the purchase of competitively advantaged and financially strong companies at prices substantially less than our estimate of their intrinsic values.

MARKET AND PERFORMANCE SUMMARY

The Fund increased in value by 5.82% during the first half of the fiscal year (November 1, 2013 through April 30, 2014), while our primary benchmark, the S&P 500, increased 8.36% over the same period. Admittedly, a poor showing on a relative basis. Fortunately, long-term outperformance is not predicated on outperforming the benchmark over every short-term interval along the way. Six months is simply not a meaningful period in this regard. Given that our investment orientation is more long-term in nature, this result is unsurprising and, frankly, not a cause for concern.

As a matter of fact, we would go so far as to argue that an acceptance of underperformance over very short periods is what allows for consistent outperformance over more meaningful periods. This may seem counterintuitive, but attempting to outperform over short time periods means you are almost certainly basing your investment decisions on expectations of near-term stock price movements, which are largely unpredictable, rather than making decisions based on the ultimate value of the businesses underlying those stock prices.

For a concrete example of how we think about the trade-off between short-term and long-term performance, consider the activity surrounding our position in Hertz that took place towards the end of 2013. As part of the company’s third quarter earnings release, management lowered its earnings guidance for the full fiscal year by roughly 5% due to an expectation of weaker volumes in its U.S. airport segment, and the need to reduce excess capacity of its rental fleet. The excess capacity issues were widely known, and it did not surprise us that travel would be slightly impaired given the soft economy at the time. Our analysis indicated that these were short-term issues unlikely to impair longer-term earnings power. This meant our investment thesis was still intact: that Hertz Global Holdings (HTZ) should benefit from a more rational pricing environment, given industry consolidation. From our standpoint, the next quarter was irrelevant as we felt the positive structural changes occurring in the rental car industry were likely to play out over the next several years, and the valuation of Hertz did not reflect the earnings power these changes would produce. Other market participants thought otherwise, sending the shares down 15% in a single day.

With the discount to our estimate of Hertz’s intrinsic value now wider, our inclination was to buy more, which we did, making Hertz one of our ten largest positions. We weren’t under any delusions that increasing our stake in a company that just disappointed Wall Street would have any beneficial impact on our performance over the next few months. We did believe, however, that the company’s fundamentals would improve over the next two to three years, and our overall performance during this time period would be better off having a bigger stake in Hertz. By being more patient as to the ultimate outcome we accepted the trade-off between short and long-term performance.

As indicated, there is nothing magical – or even informative – in looking at performance over a six-month period. Randomness alone can produce just about any outcome in the short run. For a broader perspective, the Fund has produced an annualized return of 22.23% since inception (December, 22, 2011), whereas the S&P 500 has returned 21.10% over the same period.

COMPANY UPDATES

Almost all of the quarter’s underperformance was due to a handful of stocks, which is not atypical. Except for times where correlation of investment returns among various stocks is extremely high (as it has been the past few years), a small group of stocks generally drives underperformance, as well as outperformance, over both short

 

1


and long time periods. As correlations continue to normalize lower (as they have in the past few months), the spread between our best performers and worst performers widens.

Detracting from performance, Bed Bath & Beyond (BBBY) (“Bed Bath”) and Coach (COH) both sold off on earnings-related fears, while General Motors (GM) declined primarily due to the announcement that it was recalling 1.6 million older model cars due to faulty ignition switches. As investors, our primary job is to match valuation with expectations, meaning we are trying to determine what expectations for earnings growth are priced into the current valuation. Secondarily, we need to determine whether recent negative news signifies a busted investment thesis, or whether it falls in the normal range of “things happen.”

Bed Bath has had the realm of the home goods space largely to itself since the bankruptcy and liquidation of its primary competitor, Linens ‘n Things, in late 2008. Recently, fears of online competition have focused investors on the possibility that Bed Bath is the next brick and mortar retailer to get “Amazon’d.” While we believe that Bed Bath’s management is among the best of the traditional merchants, it has taken longer than expected to build a significant online presence. Given the cash generative nature of Bed Bath’s operation, it has the ability to keep investing in this area. Regardless, at its current valuation of 11x earnings (excluding cash), we believe the risk of any major incursion by Amazon on Bed Bath’s market share is already reflected in the price.

Coach is also being assailed, not by online competition, but by a couple of fashion forward rivals, namely Michael Kors and Kate Spade. We don’t doubt the significance of the increased competition, but we believe Coach’s current valuation more than discounts these fears. We think Coach’s brand is much like the fabled tortoise, except Coach doesn’t necessarily have to win the race – it just needs to finish higher than where the current odds place it.

Regarding GM, we do not want to minimize the significance of the recall (especially in terms of human lives lost), but, purely from an investment standpoint, we believe we’ve seen this type of headline risk play out many times before. Whether it was Johnson & Johnson (JNJ) and the Tylenol poisonings in 1982 or the Coca-Cola (KO) recall in Belgium in 1999, scary headlines have a way of receding with the passage of time. If the brand is solid and the company handles the tragedy well, typically there is no long-term impact to sales and profits. GM has work to do to reclaim customer trust, but its new CEO, Mary Barra, seems up to the task.

In each of these cases, we believe our investment theses are intact and that the expectations priced in at current levels are far below what will likely happen over the next few years.

Top contributors to performance over the period were Berkshire Hathaway (BRK.B), DirecTV (DTV), Apple (AAPL), CVS Caremark (CVS), and Wells Fargo (WFC). While happy with the performance of these companies, it’s important to not get complacent. Just as we determine what expectations are priced into a stock price that has recently fallen, we apply the same thought process to companies experiencing positive expectation revisions. While the recent increase in prices has taken these companies closer to our intrinsic value estimates, we do not believe their valuations incorporate excessive growth expectations, and are content to continue to be holders.

PORTFOLIO ACTIVITY

Over the period, we initiated three new positions, added to six current positions, trimmed exposure to four, and sold out of three completely. Two of the three newly purchased securities are energy-related companies. Generally, we have had little exposure to this sector as many of its constituents’ fortunes are inextricably tied to the whims of the oil and natural gas markets. Since we have no expertise in determining intrinsic values of non-income producing assets, such as commodities, we have found it tough to have any degree of conviction when analyzing a specific company. While not immune to the vagaries of the oil market, we believe we have found two candidates that have many other characteristics that make them attractive investments.

 

2


BUYS

National Oilwell Varco (NOV)

Headquartered in Houston, Texas, National Oilwell Varco is a global manufacturer of diversified drilling and production equipment and provider of support services for the upstream oil and gas industry. In plain English, NOV provides equipment and services for oil and gas drillers. Rig technology, NOV’s largest segment at about 50% of revenues, manufactures, sells, and services complete systems used throughout the life of oil and gas wells, both onshore and offshore. Drilling rigs are often the most technically sophisticated and expensive investments of a drilling operation. NOV has built a reputation as the world’s leading rig manufacturer and is the market share leader in many categories.

The demand for NOV’s capital equipment is dependent on the capital expenditures of oil drillers and rig operators, as well as the aftermarket environment for replacement parts, spare parts, or service requests. As oil and gas discoveries have moved farther offshore, recovering these resources has become a more complex undertaking, which we believe will benefit a technology leader such as NOV. Furthermore, the company’s substantial geographic diversification will alleviate the inevitable lumpiness in regional demand. Trading at roughly 12x current year earnings, we believe downside is limited while the potential for upside is significant.

Ensco (ESV)

Ensco is a leading contractor of offshore drilling services to the global oil and gas industry. While NOV makes the rigs, Ensco purchases them and contracts with exploration companies to utilize them. The company owns and operates a fleet of 75 offshore drilling rigs (including eight under construction) with about half dedicated to deep water drilling and half that operate in shallow water. While we just stated above that we have no ability to predict future oil prices, we believe this stock, which is currently trading at only 8x current year earnings, will prove to be incredibly cheap as long as oil prices can stay above $80 per barrel (currently near $100). From a portfolio (hedge) standpoint, we take additional comfort from the fact that many of our other holdings (i.e. consumer-related) should reap substantial benefits if oil does break below $80 for an extended period of time. Ensco is also coming close to the end of a hefty investment cycle, which should increase free cash flow in coming years.

Ocwen Financial (OCN)

Ocwen is the leading servicer of subprime and Alt-A mortgages originated prior to the financial crisis and the 4th largest servicer of mortgage loans overall. Mortgage servicing consists of collecting payments from borrowers, transmitting those payments to note holders, and servicing delinquent loans by pursuing either a loan modification or foreclosure. The company has significantly expanded its portfolio of mortgage servicing rights over the last couple years in primarily two ways: through acquisitions of mortgage servicing rights from large financial institutions that are looking to scale back, or completely exit the business due to increased regulatory scrutiny and higher capital requirements; and a recent venture of its own into originating and servicing prime loans.

Ocwen is not exposed to the credit risk of the loans it services except that a delinquent loan is no longer paying the servicing fee (which is built into the mortgage rate). However, the company has established a strong track record of modifying delinquent loans with a lower rate of re-default than the rest of the industry. This, along with its onshore/offshore labor model, has provided it with a cost advantage over its competitors.

The acquisition of servicing rights by Ocwen and other non-bank servicers has drawn scrutiny from regulators who are concerned about the firms’ ability to handle the increased volume. In February, the New York Superintendent of Financial Services halted a deal in which Wells Fargo & Co. agreed to sell to Ocwen the rights to service $39 billion of loans. Our belief is that as regulators gain comfort that Ocwen’s focused service model is likely to produce better overall outcomes for delinquent borrowers, Ocwen will ultimately be allowed to continue growing its servicing portfolio. In the meantime, further growth from originations and reductions in delinquent loans in its existing servicing portfolio holds the potential for substantial upside from the current price with limited downside (if you find the company name a little odd, try reading it backwards).

 

3


ADDITIONS

We used the price volatility during the quarter to add to the following positions: Bed, Bath & Beyond (BBBY), Boeing (BA), Carmax (KMX), General Motors (GM), JP Morgan (JPM) and Target (TGT).

SALES

In the category of busted investment theses, we sold our entire position of International Business Machines (IBM). Our belief had been that revenue growth had only temporarily stalled and that management’s continued return of capital in the form of buybacks would see it through this tough period. We’re not sure why we were so sanguine on the return of top line growth. It now seems painfully obvious that IBM faces too many headwinds which are longer-term in nature. Principally, the company seems to have missed its opportunity to be a leader in cloud hosting and storage, having ceded the advantage to Amazon and Google. The shift to the cloud not only hurts IBM’s hardware sales but negatively affects its software and services revenues. Even a large investment by IBM at this point would be fruitless as Amazon and Google are content to work on very low margins, thus making an adequate return on investment a dubious prospect. Fortunately, the price at which we bought shares for our clients created such a substantial margin of safety that even though our investment thesis failed, we did not substantially impair invested capital.

We also exited Johnson & Johnson and Trinity Industries (TRN) for good reasons in that they reached our fair value estimates.

TRIMS

In order to fund the purchase of Ocwen shares without increasing our overall exposure to the finance sector, we trimmed back two other financial services holdings, Franklin Resources (BEN) and Goldman Sachs (GS). In our opinion, though not overvalued, both of these longer-term holdings have less potential upside than Ocwen. We also trimmed our exposure slightly to United Parcel Service (UPS) and Walgreen (WAG) as strong price performance took each closer to our targets.

Our current portfolio contains proven franchises and industry leaders managed by capable operators and capital allocators. While the strong performance of the market in recent years has made it difficult to find new purchases that meet our requisite discount for purchase, we have approximately 5% in available cash to deploy as opportunities emerge either via market dislocations or company-specific disappointments. Our own capital is invested alongside yours and we believe we have a strong process in place to deliver strong long-term relative returns.

 

4


INVESTMENT RESULTS – (Unaudited)

 

Total Returns*

(For the periods ended April 30, 2014)

 

                   Average Annual
Returns
 
       Six Months     One Year     Since Inception
(December 22, 2011) (a)
 

Green Owl Intrinsic Value Fund

       5.82     16.63     22.23

S&P 500® Index**

       8.36     20.44     21.10

 

Total annual operating expenses, as disclosed in the Fund’s prospectus dated February 28, 2014, were 1.54% of average daily net assets (1.12% after fee waivers/expense reimbursements by the adviser). Effective November 1, 2013, the adviser contractually agreed to waive or limit its fees and to assume other expenses of the Fund until February 28, 2015, so that the Total Annual Operating Expenses do not exceed 1.10%. This operating expense limitation does not apply to interest, taxes, brokerage commissions, other expenditures which are capitalized in accordance with generally accepted accounting principles, other extraordinary expenses not incurred in the ordinary course of the Fund’s business, dividend expense on short sales, expenses incurred under a Rule 12b-1 plan of distribution, “acquired fund fees and expenses,” and expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Prior to November 1, 2013, the expense cap was 1.40%.

The performance quoted represents past performance, which does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. The returns shown do not reflect deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Current performance of the Fund may be lower or higher than the performance quoted. The Fund’s investment objectives, risks, charges and expenses must be considered carefully before investing. Performance data current to the most recent month end may be obtained by calling 1-888-695-3729.

 

(a) 

The Fund commenced operations on December 22, 2011. However, the Fund did not invest in long-term securities towards the investment objective until December 28, 2011. December 28, 2011 is the performance calculation inception date.

 

  * Return figures reflect any change in price per share and assume the reinvestment of all distributions.

 

**

The S&P 500® Index is a widely recognized unmanaged index of equity securities and is representative of a broader domestic equity market and range of securities than is found in the Fund’s portfolio. Individuals cannot invest directly in the Index; however, an individual can invest in exchange traded funds or other investment vehicles that attempt to track the performance of a benchmark index.

The Fund’s investment objectives, strategies, risks, charges and expenses must be considered carefully before investing. The prospectus contains this and other important information about the Fund and may be obtained by calling the same number as above. Please read it carefully before investing.

The Fund is distributed by Unified Financial Securities, Inc., member FINRA.

 

5


Comparison of the Growth of a $10,000 Investment in the Green Owl Intrinsic Value

Fund and the S&P 500® Index (Unaudited)

 

LOGO

The Fund commenced operations on December 22, 2011. However, the Fund did not invest in long-term securities towards the investment objective until December 28, 2011. December 28, 2011 is the performance calculation inception date. The chart above assumes an initial investment of $10,000 made on December 28, 2011 and held through April 30, 2014. The S&P 500® Index is a widely recognized unmanaged index of equity securities and is representative of a broader domestic equity market and range of securities than is found in the Fund’s portfolio. Individuals cannot invest directly in the Index; however, an individual can invest in exchange traded funds or other investment vehicles that attempt to track the performance of a benchmark index. THE FUND’S RETURN REPRESENTS PAST PERFORMANCE AND DOES NOT GUARANTEE FUTURE RESULTS. The returns shown do not reflect deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Investment returns and principal values will fluctuate so that your shares, when redeemed, may be worth more or less than their original purchase price.

Current performance may be lower or higher than the performance data quoted. For more information on the Fund, and to obtain performance data current to the most recent month end or to request a prospectus, please call 1-888-695-3729. You should carefully consider the investment objectives, potential risks, management fees, and charges and expenses of the Fund before investing. The Fund’s prospectus contains this and other information about the Fund, and should be read carefully before investing.

The Fund is distributed by Unified Financial Securities, Inc., member FINRA.

 

6


FUND HOLDINGS – (Unaudited)

 

LOGO

 

1As

a percentage of net assets.

The investment objective of the Green Owl Intrinsic Value Fund is long-term capital appreciation.

Availability of Portfolio Schedule – (Unaudited)

The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (“SEC”) for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms N-Q are available at the SEC’s website at www.sec.gov. The Fund’s Forms N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330.

Summary of Fund’s Expenses – (Unaudited)

As a shareholder of the Fund, you incur ongoing costs, including management fees and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

The example is based on an investment of $1,000 invested at the beginning and held for the entire period from November 1, 2013 to April 30, 2014.

 

7


Actual Expenses

The first line of 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 = $8.60), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During the Period” to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The second line of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare 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 costs only. Therefore, the second line of the table below is useful in comparing ongoing costs only and will not help you determine the relative costs of owning different funds.

 

Green Owl Intrinsic Value
Fund
  

Beginning
Account Value

November 1, 2013

    

Ending

Account Value

April 30, 2014

    

Expenses Paid
During Period*

November 1, 2013 –
April 30, 2014

 

Actual

   $ 1,000.00       $ 1,058.20       $ 5.66   

Hypothetical**

   $ 1,000.00       $ 1,019.29       $ 5.56   

 

* Expenses are equal to the Fund’s annualized expense ratio of 1.11%, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).

 

** Assumes a 5% return before expenses.

 

8


GREEN OWL INTRINSIC VALUE FUND

SCHEDULE OF INVESTMENTS

April 30, 2014 (Unaudited)

 

Common Stocks – 94.66%    Shares      Fair Value  
     

Consumer Discretionary – 23.78%

     

Bed Bath & Beyond, Inc. *

     26,265       $ 1,631,844   

CarMax, Inc. *

     30,240         1,323,907   

Coach, Inc.

     24,920         1,112,678   

DIRECTV – Class A *

     19,650         1,524,840   

General Motors Co.

     48,950         1,687,796   

Kohl’s Corp.

     37,500         2,054,625   

Nordstrom, Inc.

     3,600         220,608   

Target Corp.

     34,465         2,128,214   

Walt Disney Co. / The

     17,505         1,388,847   

Weight Watchers International, Inc.

     6,045         119,691   
     

 

 

 
        13,193,050   
     

 

 

 

Consumer Staples – 12.26%

  

Coca-Cola Co./The

     28,170         1,149,054   

CVS Caremark Corp.

     25,890         1,882,721   

Walgreen Co.

     27,815         1,888,639   

Wal-Mart Stores, Inc.

     23,565         1,878,366   
     

 

 

 
        6,798,780   
     

 

 

 

Energy – 4.58%

  

Ensco PLC – Class A

     26,500         1,336,925   

National Oilwell Varco, Inc.

     15,350         1,205,436   
     

 

 

 
        2,542,361   
     

 

 

 

Financials – 29.02%

  

American Express Co.

     10,815         945,555   

American International Group, Inc.

     32,250         1,713,443   

Bank of America Corp.

     96,600         1,462,524   

Bank of New York Mellon Corp. / The

     52,360         1,773,433   

Berkshire Hathaway, Inc. – Class B *

     28,815         3,712,813   

Franklin Resources, Inc.

     10,210         534,494   

Goldman Sachs Group, Inc./The

     600         95,892   

JPMorgan Chase & Co.

     34,000         1,903,320   

Leucadia National Corp.

     44,735         1,141,637   

Ocwen Financial Corp. *

     26,560         1,006,624   

Wells Fargo & Co.

     36,350         1,804,414   
     

 

 

 
        16,094,149   
     

 

 

 

Health Care – 0.94%

  

Abbott Laboratories

     13,430         520,278   
     

 

 

 

Industrials – 10.76%

  

Boeing Co./The

     12,690         1,637,264   

Expeditors International of Washington, Inc.

     25,605         1,055,950   

 

See accompanying notes which are an integral part of these financial statements.

 

9


GREEN OWL INTRINSIC VALUE FUND

SCHEDULE OF INVESTMENTS – (continued)

April 30, 2014 (Unaudited)

 

Common Stocks – 94.66% – continued    Shares      Fair Value  
     

Hertz Global Holdings, Inc. *

     71,929       $ 2,047,819   

Robert Half International, Inc.

     13,500         604,800   

United Parcel Service, Inc. (UPS) – Class B

     6,320         622,520   
     

 

 

 
        5,968,353   
     

 

 

 

Information Technology – 11.91%

  

Accenture PLC – Class A

     18,315         1,469,229   

Apple, Inc.

     4,360         2,572,792   

Corning, Inc.

     59,340         1,240,799   

Google, Inc. – Class A *

     1,073         573,926   

Google, Inc. *

     1,423         749,437   
     

 

 

 
        6,606,183   
     

 

 

 

Telecommunication Services – 1.41%

  

Verizon Communications, Inc.

     6,233         291,268   

Vodafone Group PLC ADR

     12,927         490,709   
     

 

 

 
        781,977   
     

 

 

 

TOTAL COMMON STOCKS (Cost $42,029,990)

        52,505,131   
     

 

 

 

MONEY MARKET SECURITIES – 4.61%

     

Federated Treasury Obligations Fund – Service Shares, 0.01% (a)

     2,555,230         2,555,230   
     

 

 

 

TOTAL MONEY MARKET SECURITIES (Cost $2,555,230)

        2,555,230   
     

 

 

 

TOTAL INVESTMENTS – 99.27% (Cost $44,585,220)

      $ 55,060,361   
     

 

 

 
Other Assets in Excess of Liabilities – 0.73%         404,405   
     

 

 

 
TOTAL NET ASSETS – 100.00%       $ 55,464,766   
     

 

 

 

 

  (a) Rate disclosed is the seven day yield as of April 30, 2014.
  * Non-income producing security.

ADR – American Depositary Receipt

 

See accompanying notes which are an integral part of these financial statements.

 

10


GREEN OWL INTRINSIC VALUE FUND

STATEMENT OF ASSETS AND LIABILITIES

April 30, 2014 (Unaudited)

 

Assets

  

Investments in securities at fair value (cost $44,585,220)

   $ 55,060,361   

Receivable for fund shares sold

     20,557   

Receivable for investments sold

     622,082   

Dividends receivable

     41,799   

Interest receivable

     17   

Prepaid expenses

     19,703   
  

 

 

 

Total Assets

     55,764,519   
  

 

 

 

Liabilities

  

Payable for fund shares redeemed

     3,056   

Payable for investments purchased

     240,174   

Payable to Adviser

     32,141   

Payable to administrator, fund accountant, and transfer agent

     7,034   

Payable to custodian

     3,181   

Payable to trustees

     642   

Other accrued expenses

     13,525   
  

 

 

 

Total Liabilities

     299,753   
  

 

 

 

Net Assets

   $ 55,464,766   
  

 

 

 

Net Assets consist of:

  

Paid-in capital

   $ 43,208,875   

Accumulated undistributed net investment income

     471,749   

Accumulated undistributed net realized gains from investments

     1,309,001   

Net unrealized appreciation on investments

     10,475,141   
  

 

 

 

Net Assets

   $ 55,464,766   
  

 

 

 

Shares outstanding
(unlimited number of shares authorized, no par value)

     3,630,651   
  

 

 

 

Net asset value, offering and redemption price per share

   $ 15.28   
  

 

 

 

 

See accompanying notes which are an integral part of these financial statements.

 

11


GREEN OWL INTRINSIC VALUE FUND

STATEMENT OF OPERATIONS

For the six months ended April 30, 2014 (Unaudited)

 

Investment Income

  

Dividend income

   $ 831,898   

Interest income

     51   
  

 

 

 

Total investment income

     831,949   
  

 

 

 

Expenses

  

Investment Adviser

     255,195   

Administration

     20,488   

Fund accounting

     12,397   

Transfer agent

     19,119   

Legal

     7,969   

Custodian

     5,780   

Audit

     7,439   

Trustee

     4,045   

Miscellaneous

     18,266   
  

 

 

 

Total expenses

     350,698   
  

 

 

 

Fees waived and reimbursed by Adviser

     (68,143
  

 

 

 

Net operating expenses

     282,555   
  

 

 

 

Net investment income

     549,394   
  

 

 

 

Net Realized and Unrealized Gain on Investments

  

Net realized gains on investment securities transactions

     1,266,687   

Net realized gains on option transactions

     42,321   

Net change in unrealized appreciation on investment securities

     959,948   

Net change in unrealized depreciation on option contracts

     (28,291
  

 

 

 

Net realized and unrealized gain on investments

     2,240,665   
  

 

 

 

Net increase in net assets resulting from operations

   $ 2,790,059   
  

 

 

 

 

See accompanying notes which are an integral part of these financial statements.

 

12


GREEN OWL INTRINSIC VALUE FUND

STATEMENTS OF CHANGES IN NET ASSETS

 

     For the
Six Months Ended
April 30, 2014
(Unaudited)
    For the
Year Ended
October 31, 2013
 

Increase in Net Assets due to:

    

Operations

    

Net investment income

   $ 549,394      $ 48,093   

Net realized gain on investment transactions and option transactions

     1,309,008        1,708,484   

Net change in unrealized appreciation of investment securities and option transactions

     931,657        7,163,572   
  

 

 

   

 

 

 

Net increase in net assets resulting from operations

     2,790,059        8,920,149   
  

 

 

   

 

 

 

Distributions

    

From net investment income

     (84,105     (104,736

From net realized gains

     (1,708,485     (132,334
  

 

 

   

 

 

 

Total distributions

     (1,792,590     (237,070
  

 

 

   

 

 

 

Capital Transactions

    

Proceeds from shares sold

     9,277,860        18,027,338   

Reinvestment of distributions

     1,696,716        233,845   

Amount paid for shares redeemed

     (3,635,820     (4,571,936
  

 

 

   

 

 

 

Net increase in net assets resulting from capital transactions

     7,338,756        13,689,247   
  

 

 

   

 

 

 

Total Increase in Net Assets

     8,336,225        22,372,326   
  

 

 

   

 

 

 

Net Assets

    

Beginning of period

     47,128,541        24,756,215   
  

 

 

   

 

 

 

End of period

   $ 55,464,766      $ 47,128,541   
  

 

 

   

 

 

 

Accumulated undistributed net investment income included in net assets at end of period

   $ 471,749      $ 6,460   
  

 

 

   

 

 

 

Share Transactions

    

Shares sold

     611,842        1,334,642   

Shares issued in reinvestment of distributions

     114,953        19,868   

Shares redeemed

     (239,336     (333,405
  

 

 

   

 

 

 

Net increase in shares

     487,459        1,021,105   
  

 

 

   

 

 

 

 

See accompanying notes which are an integral part of these financial statements.

 

13


GREEN OWL INTRINSIC VALUE FUND

FINANCIAL HIGHLIGHTS

(For a share outstanding during each period)

 

     For the
Six Months  Ended
April 30, 2014
(Unaudited)
    For the
Year Ended
October 31,
2013
    For the
Period Ended
October 31,
2012(a)
 

Selected Per Share Data:

      

Net asset value, beginning of period

   $ 14.99      $ 11.67      $ 10.00   
  

 

 

   

 

 

   

 

 

 

Income from investment operations:

      

Net investment income

     0.15        0.02        0.02   

Net realized and unrealized gain on investments

     0.71        3.41        1.65   
  

 

 

   

 

 

   

 

 

 

Total from investment operations

     0.86        3.43        1.67   
  

 

 

   

 

 

   

 

 

 

Less distributions to shareholders from:

      

Net investment income

     (0.03     (0.05       

Net realized gains

     (0.54     (0.06       
  

 

 

   

 

 

   

 

 

 

Total distributions

     (0.57     (0.11       
  

 

 

   

 

 

   

 

 

 

Net asset value, end of period

   $ 15.28      $ 14.99      $ 11.67   
  

 

 

   

 

 

   

 

 

 

Total Return (b)

     5.82 %(c)      29.59     16.70 %(c) 

Ratios and Supplemental Data:

      

Net assets, end of period (000)

   $ 55,465      $ 47,129      $ 24,756   

Ratio of net expenses to average net assets

     1.11 %(d)(e)      1.40 %(e)      1.41 %(d)(e) 

Ratio of expenses to average net assets before waiver and reimbursement

     1.37 %(d)(e)      1.52 %(e)      2.11 %(d)(e) 

Ratio of net investment income to average net assets

     2.15 %(d)      0.14     0.26 %(d) 

Portfolio turnover rate

     16 %(c)      20     11 %(c) 

 

(a) For the period December 22, 2011 (commencement of operations) to October 31, 2012.
(b) Total return in the above table represents the rate that the investor would have earned or lost on an investment in the Fund, assuming reinvestment of distributions.
(c) Not annualized.
(d) Annualized
(e) Includes 0.01%, less than 0.005% and 0.01% for line of credit fees for 2012, 2013 and 2014, respectively.

 

See accompanying notes which are an integral part of these financial statements.

 

14


GREEN OWL INTRINSIC VALUE FUND

NOTES TO THE FINANCIAL STATEMENTS

April 30, 2014 (Unaudited)

 

NOTE 1. ORGANIZATION

 

The Green Owl Intrinsic Value Fund (the “Fund”) is an open-end diversified series of the Valued Advisers Trust (the “Trust”). The Trust is a management investment company established under the laws of Delaware by an Agreement and Declaration of Trust dated June 13, 2008 (the “Trust Agreement”). The Trust Agreement permits the Trustees to issue an unlimited number of shares of beneficial interest of separate series without par value. The Fund is one of a series of funds authorized by the Trustees. The Fund’s investment adviser is Kovitz Investment Group, LLC (the “Adviser”). The investment objective of the Fund is to provide long-term capital appreciation.

NOTE 2. SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. These polices are in conformity with generally accepted accounting principles in the United States of America (“GAAP”).

Securities Valuation – All investments in securities are recorded at their estimated fair value as described in Note 3.

Federal Income Taxes – The Fund makes no provision for federal income or excise tax. The Fund intends to qualify each year as a regulated investment company (“RIC”) under subchapter M of the Internal Revenue Code of 1986, as amended, by complying with the requirements applicable to RICs and by distributing substantially all of its taxable income. The Fund also intends to distribute sufficient net investment income and net capital gains, if any, so that it will not be subject to excise tax on undistributed income and gains. If the required amount of net investment income or gains is not distributed, the Fund could incur a tax expense.

As of and during the six months ended April 30, 2014, the Fund did not have a liability for any unrecognized tax benefits. The Fund recognizes interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the Statement of Operations. During the year, the Fund did not incur any interest or penalties. The Fund is subject to examination by U.S. federal tax authorities for all tax years since inception.

Expenses – Expenses incurred by the Trust that do not relate to a specific fund of the Trust are allocated to the individual funds based on each fund’s relative net assets or other appropriate basis (as determined by the Board of Trustees).

Security Transactions and Related Income – The Fund follows industry practice and records security transactions on the trade date for financial reporting purposes. The First In, First Out method is used for determining gains or losses for financial statements and income tax purposes. Dividend income is recorded on the ex-dividend date and interest income is recorded on an accrual basis. Discounts and premiums on securities purchased are amortized or accreted using the effective interest method. Withholding taxes on foreign dividends have been provided for in accordance with the Fund’s understanding of the applicable country’s tax rules and rates. The ability of issuers of debt securities held by the Fund to meet their obligations may be affected by economic and political developments in a specific country or region.

Dividends and Distributions – The Fund intends to distribute substantially all of its net investment income, net realized long-term capital gains and its net realized short-term capital gains, if any, to its shareholders on at least an annual basis. Dividends to shareholders, which are determined in accordance with income tax regulations, are recorded on the ex-dividend date. The treatment for financial reporting purposes of distributions made to shareholders during the year from net investment income or net realized capital gains may differ from their

 

15


GREEN OWL INTRINSIC VALUE FUND

NOTES TO THE FINANCIAL STATEMENTS – (continued)

April 30, 2014 (Unaudited)

 

NOTE 2. SIGNIFICANT ACCOUNTING POLICIES – continued

 

ultimate treatment for federal income tax purposes. These differences are caused primarily by differences in the timing of the recognition of certain components of income, expense or realized capital gain for federal income tax purposes. Where such differences are permanent in nature, they are reclassified in the components of net assets based on their ultimate characterization for federal income tax purposes. Any such reclassifications will have no effect on net assets, results of operations or net asset values per share of the Fund. There were no such material reclassifications made as of April 30, 2014.

Writing Options – The Fund may write covered call options on equity securities or futures contracts that the Fund is eligible to purchase to extend a holding period to obtain long-term capital gain treatment, to earn premium income, to assure a definite price for a security it has considered selling, or to close out options previously purchased. The Fund may write covered call options if, immediately thereafter, not more than 30% of its net assets would be committed to such transactions. A call option gives the holder (buyer) the right to purchase a security or futures contract at a specified price (the exercise price) at any time until a certain date (the expiration date). A call option is “covered” if the Fund owns the underlying security subject to the call option at all times during the option period, or to the extent that some or all of the risk of the option has been offset by another option. When the Fund writes a covered call option, it maintains a segregated position within its account with the Custodian or as otherwise required by the rules of the exchange of the underlying security, cash or liquid portfolio securities in an amount not less than the exercise price at all times while the option is outstanding. See Note 4 for additional disclosures.

The Fund will receive a premium from writing a call option, which increases the Fund’s return in the event the option expires unexercised or is closed out at a profit. The amount of the premium will reflect, among other things, the relationship of the market price of the underlying security to the exercise price of the option and the remaining term of the option. However, there is no assurance that a closing transaction can be affected at a favorable price. During the option period, the covered call writer has, in return for the premium received, given up the opportunity for capital appreciation above the exercise price should the market price of the underlying security increase, but has retained the risk of loss should the price of the underlying security decline.

The Fund may write put options on equity securities and futures contracts that the Fund is eligible to purchase to earn premium income or to assure a definite price for a security if it is considering acquiring the security at a lower price than the current market price or to close out options previously purchased. The Fund may not write a put option if, immediately thereafter, more than 25% of its net assets would be committed to such transactions. A put option gives the holder of the option the right to sell, and the writer has the obligation to buy, the underlying security at the exercise price at any time during the option period. The operation of put options in other respects is substantially identical to that of call options. When the Fund writes a put option, it maintains a segregated position within its account with the Custodian, cash or liquid portfolio securities in an amount not less than the exercise price at all times while the put option is outstanding.

The Fund will receive a premium from writing a put option, which increases the Fund’s return in the event the option expires unexercised or is closed out at a profit. The amount of the premium will reflect, among other things, the relationship of the market price of the underlying security to the exercise price of the option and the remaining term of the option. The risks involved in writing put options include the risk that a closing transaction cannot be effected at a favorable price and the possibility that the price of the underlying security may fall below the exercise price, in which case the Fund may be required to purchase the underlying security at a higher price than the market price of the security at the time the option is exercised, resulting in a potential capital loss unless the security subsequently appreciates in value. During the six months ended April 30, 2014, the Fund utilized

 

16


GREEN OWL INTRINSIC VALUE FUND

NOTES TO THE FINANCIAL STATEMENTS – (continued)

April 30, 2014 (Unaudited)

 

NOTE 2. SIGNIFICANT ACCOUNTING POLICIES – continued

 

covered call options to extend the holding period to obtain long-term capital gain treatment and to take advantage of the option premium to garner a higher exit price than would have been available by immediately selling the stock.

NOTE 3. SECURITIES VALUATION AND FAIR VALUE MEASUREMENTS

Fair value is defined as the price that a Fund would receive upon selling an investment in an orderly transaction to an independent buyer in the principal or most advantageous market of the investment. GAAP established a three-tier hierarchy to maximize the use of observable market data and minimize the use of unobservable inputs and to establish classification of fair value measurements for disclosure purposes.

Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk; for example, the risk inherent in a particular valuation technique used to measure fair value including items such as a pricing model and/or the risk inherent in the inputs to the valuation technique. Inputs may be observable or unobservable. Observable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs are inputs that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.

Various inputs are used in determining the value of the Fund’s investments. These inputs are summarized in the three broad levels listed below.

 

   

Level 1 – quoted prices in active markets for identical securities

 

   

Level 2 – other significant observable inputs (including, but not limited to, quoted prices for an identical security in an inactive market, quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)

 

   

Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining fair value of investments based on the best information available)

The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety, is determined based on the lowest level input that is significant to the fair value measurement in its entirety.

Equity securities, including common stocks, are generally valued by using market quotations, but may be valued on the basis of prices furnished by a pricing service when the Fund believes such prices more accurately reflect the fair value of such securities. Securities that are traded on any stock exchange are generally valued by the pricing service at the last quoted sale price. Lacking a last sale price, an exchange traded security is generally valued by the pricing service at its last bid price. Securities traded in the NASDAQ over-the-counter market are generally valued by the pricing service at the NASDAQ Official Closing Price. When using the market quotations or close prices provided by the pricing service and when the market is considered active, the security will be classified as a Level 1 security. Sometimes, an equity security owned by the Fund will be valued by the pricing service with factors other than market quotations or when the market is considered inactive. When this happens, the security will be classified as a Level 2 security. When market quotations are not readily available,

 

17


GREEN OWL INTRINSIC VALUE FUND

NOTES TO THE FINANCIAL STATEMENTS – (continued)

April 30, 2014 (Unaudited)

 

NOTE 3. SECURITIES VALUATION AND FAIR VALUE MEASUREMENTS – continued

 

when the Fund determines that the market quotation or the price provided by the pricing service does not accurately reflect the current fair value, or when restricted or illiquid securities are being valued, such securities are valued as determined in good faith by the Fund, in conformity with guidelines adopted by and subject to review by the Board. These securities may be categorized as Level 3 securities.

Investments in open-end mutual funds, including money market mutual funds, are generally priced at the ending net asset value (NAV) provided by the service agent of the funds. These securities are categorized as Level 1 securities.

Written option contracts that the Fund invests in are generally traded on an exchange. The options in which the Fund invests are generally valued at the last trade price as provided by a pricing service. If the last sale price is not available, the options will be valued at the mean of the last bid and ask prices. The options will generally be categorized as Level 1 securities. If the Fund decides that a price provided by the pricing service does not accurately reflect the fair value of the securities, when prices are not readily available from a pricing service, or when restricted or illiquid securities are being valued, securities are valued at fair value as determined in good faith by the Fund, in conformity with guidelines adopted by and subject to review of the Board. These securities may be categorized as Level 3 securities.

Fixed income securities, when valued using market quotations in an active market, will be categorized as Level 1 securities. However, they may be valued on the basis of prices furnished by a pricing service when the Fund believes such prices more accurately reflect the fair value of such securities. A pricing service uses various inputs and techniques, which include broker-dealer quotations, like trading levels, recently executed transactions in securities of the issuer or comparable issuers, and option adjusted spread models that include base curve and spread curve inputs. Adjustments to individual bonds can be applied to recognize trading differences compared to other bonds issued by the same issuer. The broker-dealer quotations received are supported by credit analysis of the issuer that takes into consideration credit quality assessments, daily trading activity, and the activity of the underlying equities, listed bonds and sector-specific trends. To the extent that these inputs are observable, the fixed income securities are categorized as Level 2 securities. If the Fund decides that a price provided by the pricing service does not accurately reflect the fair value of the securities, when prices are not readily available from a pricing service, or when restricted or illiquid securities are being valued, securities are valued at fair value as determined in good faith by the Fund, in conformity with guidelines adopted by and subject to review of the Board. These securities will be categorized as Level 3 securities.

Short-term investments in fixed income securities, (those with maturities of less than 60 days when acquired, or which subsequently are within 60 days of maturity), are valued by using the amortized cost method of valuation, which the Board has determined represents fair value. These securities will be classified as Level 2 securities.

In accordance with the Trust’s good faith pricing guidelines, the Fund is required to consider all appropriate factors relevant to the value of securities for which it has determined other pricing sources are not available or reliable as described above. No single standard exists for determining fair value, because fair value depends upon the circumstances of each individual case. As a general principle, the current fair value of an issue of securities being valued by the Fund would appear to be the amount which the owner might reasonably expect to receive for them upon their current sale. Methods which are in accordance with this principle may, for example, be based on (i) a multiple of earnings; (ii) a discount from market of a similar freely traded security (including a derivative security or a basket of securities traded on other markets, exchanges or among dealers); or (iii) yield to maturity with respect to debt issues, or a combination of these and other methods. Good faith pricing is permitted if, in the

 

18


GREEN OWL INTRINSIC VALUE FUND

NOTES TO THE FINANCIAL STATEMENTS – (continued)

April 30, 2014 (Unaudited)

 

NOTE 3. SECURITIES VALUATION AND FAIR VALUE MEASUREMENTS – continued

 

Fund’s opinion, the validity of market quotations appears to be questionable based on factors such as evidence of a thin market in the security based on a small number of quotations, a significant event occurs after the close of a market but before a Fund’s NAV calculation that may affect a security’s value, or the Fund is aware of any other data that calls into question the reliability of market quotations. Good faith pricing may also be used in instances when the bonds the Fund invests in may default or otherwise cease to have market quotations readily available. Any fair value pricing done outside the Fund’s approved pricing methods must be approved by the Pricing Committee of the Board.

The following is a summary of the inputs used to value the Fund’s investments as of April 30, 2014:

 

      Valuation Inputs  
Assets   

Level 1 – 

Quoted Prices in
Active Markets

    

Level 2 – 

Other

Significant

Observable

Inputs

     Level 3 – 
Significant
Unobservable
Inputs
     Total  

Common Stocks*

   $   52,505,131       $   –       $   –       $   52,505,131   

Money Market Securities

     2,555,230           –           –         2,555,230   

Total

   $ 55,060,361       $   –       $   –       $ 55,060,361   

* Refer to the Schedule of Investments for industry classifications.

The Fund did not hold any investments at any time during the reporting period in which significant unobservable inputs were used in determining fair value; therefore, no reconciliation of Level 3 securities is included for this reporting period. The Trust recognizes transfers between fair value hierarchy levels at the reporting period end. There were no transfers between any Levels for the six months ended April 30, 2014.

NOTE 4. DERIVATIVE TRANSACTIONS

Call options written are presented separately on the Statement of Assets and Liabilities as a liability at fair value and on the Statement of Operations under net realized gain on option transactions and change in unrealized appreciation on option contracts, respectively. As of April 30, 2014, there were no open written call options outstanding.

For the six months ended April 30, 2014:

 

Derivatives    Location of Gain (Loss)  on
Derivatives on Statement of Operations
   Realized Gain
(Loss) on
Derivatives
     Change in
Unrealized
Appreciation
(Depreciation)
on Derivatives
 

Equity Risk:

              

Written Call Options

   Net realized and unrealized gain on option contracts    $   42,321       $    (28,291) 

 

19


GREEN OWL INTRINSIC VALUE FUND

NOTES TO THE FINANCIAL STATEMENTS – (continued)

April 30, 2014 (Unaudited)

 

NOTE 4. DERIVATIVE TRANSACTIONS – continued

 

Transactions in written options by the Fund during the six months ended April 30, 2014, were as follows:

 

    Number of
Contracts
    Premiums
Received
 

Options outstanding at October 31, 2013

    122      $   42,321   

Options expired

    (122     (42,321

Options outstanding at April 30, 2014

      –      $   –   

NOTE 5. ADVISER FEES AND OTHER TRANSACTIONS

Under the terms of the management agreement, on behalf of the Fund (the “Agreement”), the Adviser manages the Fund’s investments subject to approval by the Trustees. As compensation for its management services, the Fund is obligated to pay the Adviser a fee computed and accrued daily and paid monthly at an annual rate of 1.00% of the average daily net assets of the Fund. For the six months ended April 30, 2014, the Adviser earned a fee of $255,195 from the Fund before the reimbursement described below. At April 30, 2014, the Fund owed the Adviser $32,141.

Effective November 1, 2013, the Adviser has contractually agreed to waive its management fee and/or reimburse expenses so that total annual fund operating expenses, excluding interest, taxes, brokerage commissions, other expenditures which are capitalized in accordance with GAAP, other extraordinary expenses not incurred in the ordinary course of the Fund’s business, dividend expense on short sales, and expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement, if applicable, incurred by the Fund in any fiscal year, do not exceed 1.10% of the Fund’s average daily net assets through February 28, 2015. The operating expense limitation also excludes any fees and expenses of acquired funds. Prior to November 1, 2013, the expense cap was 1.40%

For the six months ended April 30, 2014, expenses totaling $68,143 were waived or reimbursed by the Adviser. Each waiver or reimbursement by the Adviser with respect to the Fund is subject to repayment by the Fund within the three fiscal years following the fiscal year in which that particular waiver or reimbursement occurred, provided that the Fund is able to make the repayment without exceeding the expense limitation in effect at the time of the waiver and any expense limitation in place at the time of repayment.

The amount subject to repayment by the Fund pursuant to the aforementioned conditions are as follows:

 

Amount

  Recoverable through
October 31,
 

$  115,029

    2015   

    40,437

    2016   

    68,143

    2017   

The Trust retains Huntington Asset Services, Inc. (“HASI”) to manage the Fund’s business affairs and provide the Fund with administrative services, including all regulatory reporting and necessary office equipment and personnel. For the six months ended April 30, 2014, HASI earned fees of $19,002 for administrative services provided to the Fund. At April 30, 2014, HASI was owed $2,204 from the Fund for administrative services. Certain officers and one Trustee of the Trust are members of management and/or employees of HASI. HASI is a wholly-owned subsidiary of Huntington Bancshares, Inc., the parent company of Unified Financial Securities, Inc. (the “Distributor”) and Huntington National Bank, the custodian of the Fund’s investments (the “Custodian”). For the six months ended April 30, 2014, the Custodian earned fees of $5,780 for custody services provided to the Fund. At April 30, 2014, the Custodian was owed $3,181 from the Fund for custody services.

 

20


GREEN OWL INTRINSIC VALUE FUND

NOTES TO THE FINANCIAL STATEMENTS – (continued)

April 30, 2014 (Unaudited)

 

NOTE 5. ADVISER FEES AND OTHER TRANSACTIONS – continued

 

The Trust also retains HASI to act as the Fund’s transfer agent and to provide fund accounting services. For the six months ended April 30, 2014, HASI earned fees of $19,119 for transfer agent services to the Fund. At April 30, 2014, the Fund owed HASI $2,850 for transfer agent services. For the six months ended April 30, 2014, HASI earned fees of $12,397 from the Fund for fund accounting services. At April 30, 2014, HASI was owed $1,980 from the Fund for fund accounting services.

During the six months ended April 30, 2014, the Fund paid $3,581 to Kovitz Securities, LLC, an affiliate of the Adviser, on the execution of purchases and sales of the Fund’s portfolio investments.

Unified Financial Securities, Inc. (the “Distributor”) acts as the principal underwriter of the Fund’s shares. There were no payments made by the Fund to the Distributor during the six months ended April 30, 2014. An officer of the Trust is an officer of the Distributor and such person may be deemed to be an affiliate of the Distributor.

NOTE 6. LINE OF CREDIT

The Fund participates in a short-term credit agreement (“Line of Credit”) with Huntington National Bank (“Huntington”). Under the terms of the agreement, the Fund may borrow the lesser of $1,000,000 or 5% of the Fund’s daily market value at an interest rate of LIBOR plus 150 basis points. The purpose of the agreement is to meet temporary or emergency cash needs, including redemption requests that might otherwise require the untimely disposition of securities. As of April 30, 2014, the Fund had no outstanding borrowings under this Line of Credit.

 

Average
Daily
Loan
Balance
   Weighted
Average
Interest
Rate
    Number of
Days
Outstanding*
     Interest
Expense
Incurred
     Maximum
Loan
Outstanding
 

$  370,674

     1.67     5       $   69       $   370,674   

 

* Number of Days Outstanding represents the total days during the six months ended April 30, 2014 that the Fund utilized the Line of Credit.

NOTE 7. INVESTMENTS

For the six months ended April 30, 2014, purchases and sales of investment securities, other than short-term investments and short-term U.S. government obligations, were as follows:

 

Purchases

 

U.S. Government Obligations

  $   

Other

      11,663,280   

Sales

 

U.S. Government Obligations

  $   

Other

    7,845,367   

 

21


GREEN OWL INTRINSIC VALUE FUND

NOTES TO THE FINANCIAL STATEMENTS – (continued)

April 30, 2014 (Unaudited)

 

NOTE 8. ESTIMATES

 

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.

NOTE 9. BENEFICIAL OWNERSHIP

The beneficial ownership, either directly or indirectly, of 25% or more of the voting securities of a fund creates a presumption of control of a fund, under Section 2(a) (9) of the Investment Company Act of 1940. At April 30, 2014, Charles Schwab & Co., Inc., for the benefit of its customers, owned 39.94% of the Fund. It is not known whether Charles Schwab or any of the underlying beneficial owners owned or controlled 25% or more of the voting securities of the Fund.

NOTE 10. FEDERAL TAX INFORMATION

At April 30, 2014, the net unrealized appreciation (depreciation) of investments, including written options, for tax purposes was as follows:

 

Gross Appreciation

  $   10,776,279   

Gross (Depreciation)

    (301,138
 

 

 

 

Net Appreciation (Depreciation) on Investments

  $ 10,475,141   
 

 

 

 

At April 30, 2014, the aggregate cost of securities, excluding U.S. government obligations, for federal income tax purposes was $44,585,220 for the Fund.

The tax characterization of distributions for the fiscal year ended October 31, 2013 was as follows:

 

Distributions paid from:   2013  

Ordinary Income*

  $ 237,070   
 

 

 

 

Total Distributions

  $   237,070   
 

 

 

 

 

* Short term capital gain distributions are treated as ordinary income for tax purposes.

At October 31, 2013, the components of distributable earnings on a tax basis were as follows:

 

Undistributed ordinary income

  $ 76,019   

Undistributed long term capital gains

    1,642,180   

Net unrealized appreciation (depreciation)

    9,543,484   

Accumulated capital and other losses

    (3,261
 

 

 

 
  $   11,258,422   
 

 

 

 

 

22


GREEN OWL INTRINSIC VALUE FUND

NOTES TO THE FINANCIAL STATEMENTS – (continued)

April 30, 2014 (Unaudited)

 

NOTE 11. COMMITMENTS AND CONTINGENCIES

 

The Fund indemnifies its officers and trustees for certain liabilities that may arise from their performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts that contain a variety of representations and warranties which provide general indemnifications. The Fund’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Fund that have not yet occurred.

NOTE 12. SUBSEQUENT EVENTS

Management of the Fund has evaluated the need for disclosures and/or adjustments resulting from subsequent events through the date these financial statements were issued. There were no items requiring adjustment of the financial statements or additional disclosure.

 

23


VALUED ADVISERS TRUST

PRIVACY POLICY

The following is a description of the policies of the Valued Advisers Trust (the “Trust”) regarding disclosure of nonpublic personal information that shareholders provide to a series of the Trust (each, a “Fund”) or that the Fund collects from other sources. In the event that a shareholder holds shares of a Fund through a broker-dealer or other financial intermediary, the privacy policy of the financial intermediary would govern how shareholder nonpublic personal information would be shared with nonaffiliated third parties.

Categories of Information A Fund May Collect. A Fund may collect the following nonpublic personal information about its shareholders:

 

   

Information the Fund receives from a shareholder on applications or other forms, correspondence, or conversations (such as the shareholder’s name, address, phone number, social security number, and date of birth); and

 

   

Information about the shareholder’s transactions with the Fund, its affiliates, or others (such as the shareholder’s account number and balance, payment history, cost basis information, and other financial information).

Categories of Information A Fund May Disclose. A Fund may not disclose any nonpublic personal information about its current or former shareholders to unaffiliated third parties, except as required or permitted by law. A Fund is permitted by law to disclose all of the information it collects, as described above, to its service providers (such as the Fund’s custodian, administrator, transfer agent, accountant and legal counsel) to process shareholder transactions and otherwise provide services to the shareholder.

Confidentiality and Security. Each Fund shall restrict access to shareholder nonpublic personal information to those persons who require such information to provide products or services to the shareholder. Each Fund shall maintain physical, electronic, and procedural safeguards that comply with federal standards to guard shareholder nonpublic personal information.

Disposal of Information. The Funds, through their transfer agent, have taken steps to reasonably ensure that the privacy of a shareholder’s nonpublic personal information is maintained at all times, including in connection with the disposal of information that is no longer required to be maintained by the Funds. Such steps shall include, whenever possible, shredding paper documents and records prior to disposal, requiring off-site storage vendors to shred documents maintained in such locations prior to disposal, and erasing and/or obliterating any data contained on electronic media in such a manner that the information can no longer be read or reconstructed.

 

24


OTHER INFORMATION

The Fund’s Statement of Additional Information (“SAI”) includes additional information about the trustees and is available without charge, upon request. You may call toll-free at (888) 695-3729 to request a copy of the SAI or to make shareholder inquiries.

PROXY VOTING

A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and information regarding how the Fund voted those proxies is available without charge upon request by (1) calling the Fund at (888) 695-3729 and (2) from Fund documents filed with the Securities and Exchange Commission (“SEC”) on the SEC’s website at www.sec.gov.

 

TRUSTEES

R. Jeffrey Young, Chairman

Ira Cohen

Andrea N. Mullins

OFFICERS

R. Jeffrey Young, Principal Executive Officer and President

John C. Swhear, Chief Compliance Officer, AML Officer and Vice President

Carol J. Highsmith, Vice President and Secretary

Matthew J. Miller, Vice President

Bryan W. Ashmus, Principal Financial Officer and Treasurer

INVESTMENT ADVISER

Kovitz Investment Group, LLC

115 South LaSalle Street, 27th Floor

Chicago, IL 60603

DISTRIBUTOR

Unified Financial Securities, Inc.

2960 North Meridian Street, Suite 300

Indianapolis, IN 46208

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Cohen Fund Audit Services Ltd.

1350 Euclid Avenue, Suite 800

Cleveland, OH 44115

LEGAL COUNSEL

The Law Offices of John H. Lively & Associates, Inc.

A member firm of The 1940 Act Law GroupTM

11300 Tomahawk Creek Parkway, Ste. 310

Leawood, KS 66211

CUSTODIAN

Huntington National Bank

41 South High Street

Columbus, OH 43215

ADMINISTRATOR, TRANSFER AGENT AND FUND ACCOUNTANT

Huntington Asset Services, Inc.

2960 North Meridian Street, Suite 300

Indianapolis, IN 46208

 

 

 

This report is intended only for the information of shareholders or those who have received the Fund’s prospectus which contains information about the Fund’s management fee and expenses. Please read the prospectus carefully before investing.

Distributed by Unified Financial Securities, Inc.

Member FINRA/SIPC

 

25


 

Semi-Annual Report

April 30, 2014

 

 

Dreman Contrarian Small Cap Value Fund

Fund Adviser:

Dreman Value Management, LLC

Harborside Financial Center, Plaza 10

Suite 800 Jersey City, NJ 07311

Toll Free: (800) 247-1014

 

LOGO


Investment Results (Unaudited)

  

 

Average Annual Total Returns* (unaudited)
As of April 30, 2014
 
   

  

   Class A with
Load
     Class A without
Load
     Retail
Class
     Institutional
Class
     Russell 2000®
Value Index1
 

Six Months

     1.56      7.74      7.75      7.85      4.97

One Year

     18.60      25.81      25.71      25.91      19.61

Three Year

     8.16      10.32      10.27      10.48      11.16

Five Year

     N/A         N/A         18.34      18.68      19.13

Ten Year

     N/A         N/A         11.53      N/A         8.37

Since Inception (11/20/09)

     13.12      14.64      N/A         N/A         16.60

Since Inception (8/22/07)

     N/A         N/A         N/A         7.75      6.05

Since Inception (12/31/03)

     N/A         N/A         11.41      N/A         8.06
   

  

          Expense Ratios2         

Gross

        1.57      1.57      1.32     

With Applicable Waivers

              1.29      1.29      1.04         

The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. The returns shown do not reflect deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. THE FUND’S RETURNS REPRESENT PAST PERFORMANCE AND DO NOT PREDICT FUTURE RESULTS. The returns shown are net of all recurring expenses. Current performance of the Fund may be lower or higher than the performance quoted. For more information on the Fund, and to obtain performance data current to the most recent month end, or to request a prospectus or summary prospectus, please call 1-800-247-1014.

You should carefully consider the investment objectives, potential risk, management fees, and charges and expenses of the Fund before investing. The Fund’s prospectus and summary prospectus contains this and other information about the Fund, and should be read carefully before investing.

 

* The total return figures set forth above include all waivers of fees for various periods since inception. Without such fee waivers, the total returns would have been lower. Total return figures reflect any change in price per share and assume reinvestment of all distributions. Total returns for periods less than 1 year are not annualized.

 

1 

The Russell 2000® Value Index is an unmanaged benchmark that assumes reinvestment of all distributions and excludes the effect of taxes and fees. The Index is a widely recognized unmanaged index of equity prices and is representative of a broader market and range of securities than are found in the Fund’s portfolio. Individuals cannot invest directly in the Index; however, an individual can invest in ETFs or other investment vehicles that attempt to track the performance of a benchmark index.

 

2 

The expense ratios are from the Fund’s prospectus dated February 28, 2014. The Adviser has contractually agreed to waive its management fee and/or reimburse certain operating expenses through February 28, 2015, but only to the extent necessary so that the Fund’s net expenses, excluding brokerage fees and commissions, borrowing costs (such as (a) interest expense and (b) dividends on securities sold short), taxes, extraordinary expenses, 12b-1 fees (Class A and Retail Class), and any indirect expenses (such as fees and expenses of acquired funds), do not exceed 1.00%. Information pertaining to the Fund’s expense ratios as of April 30, 2014 can be found on the financial highlights.

The Fund is distributed by Unified Financial Securities, Inc., member FINRA.

 

Semi-Annual Report

 

1


Fund Holdings (Unaudited)

 

LOGO

 

1 As a percent of net assets.

Availability of Portfolio Schedule – (Unaudited)

The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (“SEC”) for the first and third quarters of each fiscal year on Form N-Q, which is available on the SEC’s web site at www.sec.gov. The Fund’s Form N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330.

Summary of Fund’s Expenses – (Unaudited)

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs (such as short-term redemption fees) and (2) ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

The Fund’s Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period November 1, 2013 to April 30, 2014.

Actual Expenses

The first line of the table provide information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.60), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The second line of the table provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratios 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 balances or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

 

Semi-Annual Report

 

2


Expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as the fee imposed on short-term redemptions. Therefore, the second line of the table are useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. If incurred, the short-term redemption fee imposed by the Fund would increase your expenses.

 

          Beginning
Account
Value,
November 1, 2013
     Ending
Account Value,
April 30, 2014
     Expenses
Paid
During
Period(1)
     Annualized
Expense
Ratio
 

Dreman Contrarian Small Cap Value Fund

  

                          

Class A Shares

  Actual   $ 1,000.00       $ 1,077.40       $ 6.44         1.25
    Hypothetical (2)   $ 1,000.00       $ 1,018.60       $ 6.26         1.25

Retail Shares

  Actual   $ 1,000.00       $ 1,077.50       $ 6.44         1.25
    Hypothetical (2)   $ 1,000.00       $ 1,018.60       $ 6.26         1.25

Institutional Shares

  Actual   $ 1,000.00       $ 1,078.50       $ 5.15         1.00
    Hypothetical (2)   $ 1,000.00       $ 1,019.84       $ 5.01         1.00

 

(1) Expenses are equal to the Fund’s annualized expense ratios, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). The annualized expense ratios reflect reimbursement of expenses by the Fund’s Adviser for the period beginning November 1, 2013 through April 30, 2014. The “Financial Highlights” tables in the Fund’s financial statements, included in the report, also show the gross expense ratios, without such reimbursements.
(2) Hypothetical assumes 5% annual return before expenses.

 

Semi-Annual Report

 

3


 
Dreman  Contrarian Small Cap Value Fund   April  30, 2014

 

Schedule of Investments (Unaudited)  

 

Shares          Value       

 

Common Stocks — 96.4%

         

 

Consumer Discretionary — 10.0%

   
  35,225     

Aaron’s, Inc.

  $ 1,038,081     
  97,375     

American Axle & Manufacturing Holdings, Inc. *

    1,718,669     
  20,685     

Big Lots, Inc. *

    817,057     
  35,595     

Brinker International, Inc.

    1,749,138     
  28,940     

Cooper Tire & Rubber Co.

    727,841     
  44,540     

CST Brands, Inc.

    1,453,340     
  73,430     

CTC Media, Inc.

    636,638     
  20,913     

Helen of Troy Ltd. *

    1,311,245     
  21,227     

Hillenbrand, Inc.

    645,301     
  14,549     

John Wiley & Sons, Inc., Class A

    835,986     
  21,780     

Life Time Fitness, Inc. *

    1,045,440     
  10,415     

Matthews International Corp., Class A

    420,245     
  28,774     

Meredith Corp.

    1,268,070     
              13,667,051     

 

Energy — 7.1%

   
  32,070     

Atwood Oceanics, Inc. *

    1,589,389     
  133,540     

Bellatrix Exploration Ltd. *

    1,298,009     
  46,420     

Energy XXI Bermuda Ltd.

    1,110,831     
  94,840     

Gran Tierra Energy, Inc. *

    678,106     
  47,670     

Superior Energy Services, Inc.

    1,569,296     
  60,060     

Ultra Petroleum Corp. *

    1,789,788     
  26,865     

Unit Corp. *

    1,771,747     
              9,807,166     

 

Financials — 24.7%

   
  14,276     

Allied World Assurance Co. Holdings AG

    1,537,382     
  31,675     

Aspen Insurance Holdings Ltd.

    1,450,081     
  99,570     

Associated Banc-Corp.

    1,747,453     
  55,405     

BancorpSouth, Inc.

    1,294,261     
  9,259     

Chemical Financial Corp.

    259,900     
  9,855     

City National Corp.

    715,177     
  59,040     

Clifton Bancorp, Inc.

    684,274     
  23,955     

Endurance Specialty Holdings Ltd.

    1,217,393     
  21,053     

Federated Investors, Inc., Class B

    600,853     
  119,760     

First Horizon National Corp.

    1,376,042     
  33,550     

First Midwest Bancorp, Inc.

    549,213     
  147,049     

First Niagara Financial Group, Inc.

    1,311,677     
  60,944     

FirstMerit Corp.

    1,181,704     
  108,140     

Fulton Financial Corp.

    1,318,227     
  44,935     

Hancock Holding Co.

    1,515,658     
  32,330     

Hanover Insurance Group, Inc.

    1,889,688     
  60,990     

Home Loan Servicing Solutions Ltd.

    1,350,928     
  8,595     

Independent Bank Corp.

    319,046     
  16,269     

International Bancshares Corp.

    373,536     
  105,685     

Janus Capital Group, Inc.

    1,281,959     
  9,355     

Lakeland Financial Corp.

    342,393     
  23,520     

Montpelier Re Holdings Ltd.

    719,242     
  14,290     

NBT Bancorp, Inc.

    323,669     
  10,862     

Nelnet, Inc., Class A

    459,028     
  14,297     

Platinum Underwriters Holdings Ltd.

    896,565     
  44,875     

Prospect Capital Corp.

    485,099     
  19,248     

Prosperity Bancshares, Inc.

    1,135,632     
  33,838     

Protective Life Corp.

    1,730,814     
  40,165     

Symetra Financial Corp.

    829,809     
  42,827     

TCF Financial Corp.

    672,384     
Shares          Value       

 

Common Stocks — (Continued)

         

 

Financials — (Continued)

   
  33,730     

Umpqua Holdings Corp.

  $ 560,930     
  61,340     

Washington Federal, Inc.

    1,323,717     
  28,890     

Webster Financial Corp.

    870,745     
  8,300     

WesBanco, Inc.

    250,992     
  30,186     

Wintrust Financial Corp.

    1,352,937     
              33,928,408     

 

Health Care — 6.2%

   
  17,212     

Charles River Laboratories International, Inc. *

    924,629     
  51,830     

Gentiva Health Services, Inc. *

    390,280     
  35,750     

Hill-Rom Holdings, Inc.

    1,335,620     
  18,565     

Integra LifeSciences Holdings Corp. *

    846,193     
  26,660     

Kindred Healthcare, Inc.

    669,166     
  26,165     

LifePoint Hospitals, Inc. *

    1,463,147     
  37,787     

Owens & Minor, Inc.

    1,267,376     
  94,400     

Select Medical Holdings Corp.

    1,317,824     
  20,403     

Triple-S Management Corp, Class B *

    305,637     
              8,519,872     

 

Industrials — 14.7%

   
  25,601     

AAR Corp.

    663,066     
  32,285     

ABM Industries, Inc.

    874,601     
  28,302     

Aegion Corp. *

    721,418     
  93,964     

Aircastle Ltd.

    1,650,947     
  12,505     

Alliant Techsystems, Inc.

    1,803,471     
  22,177     

Barnes Group, Inc.

    854,258     
  20,939     

Brady Corp., Class A

    540,017     
  47,295     

Brink’s Co./The

    1,203,185     
  21,252     

Crane Co.

    1,545,658     
  17,770     

EMCOR Group, Inc.

    817,242     
  14,755     

EnerSys

    997,143     
  9,432     

Esterline Technologies Corp. *

    1,028,277     
  31,000     

Global Brass & Copper Holdings, Inc.

    491,660     
  5,143     

Hyster-Yale Materials Handling, Inc., Class A

    495,734     
  31,150     

ITT Corp.

    1,343,811     
  5,490     

LB Foster Co., Class A

    259,952     
  25,550     

Ryder System, Inc.

    2,099,699     
  52,705     

Tutor Perini Corp. *

    1,560,068     
  25,340     

URS Corp.

    1,194,021     
              20,144,228     

 

Information Technology — 14.4%

   
  34,763     

ARRIS Group, Inc. *

    906,967     
  146,569     

Brocade Communications Systems, Inc. *

    1,364,557     
  49,770     

Celestica, Inc. *

    552,447     
  20,850     

CSG Systems International, Inc.

    549,606     
  14,890     

DST Systems, Inc.

    1,372,709     
  18,974     

EPIQ Systems, Inc.

    242,677     
  54,390     

Ingram Micro, Inc., Class A *

    1,466,354     
  19,872     

Itron, Inc. *

    755,136     
  112,119     

Kulicke & Soffa Industries, Inc. *

    1,649,270     
  67,060     

Mentor Graphics Corp.

    1,388,142     
  71,145     

Microsemi Corp. *

    1,673,330     
  32,990     

Plantronics, Inc.

    1,437,374     
  121,555     

QLogic Corp. *

    1,407,607     
 

 

See accompanying notes which are an integral part of these portfolios of investments.

Semi-Annual Report

 

4


 
 

 

Dreman Contrarian Small Cap Value Fund   (Continued)

 

Shares          Value       

 

Common Stocks — (Continued)

         

 

Information Technology — (Continued)

   
  40,132     

Sanmina Corp. *

  $ 812,673     
  18,770     

Science Applications International Corp.

    732,030     
  18,893     

Sykes Enterprises, Inc. *

    373,892     
  12,987     

Tech Data Corp. *

    811,558     
  27,876     

TTM Technologies, Inc. *

    219,942     
  20,060     

Unisys Corp. *

    488,862     
  109,155     

Vishay Intertechnology, Inc.

    1,552,184     
              19,757,317     

 

Materials — 6.5%

   
  13,465     

A. Schulman, Inc.

    483,663     
  31,934     

Cabot Corp.

    1,845,785     
  91,186     

Coeur Mining, Inc. *

    789,671     
  17,347     

Koppers Holdings, Inc.

    740,717     
  56,460     

Olin Corp.

    1,586,526     
  77,802     

Pan American Silver Corp.

    1,008,314     
  77,784     

Steel Dynamics, Inc.

    1,421,114     
  29,106     

Worthington Industries, Inc.

    1,071,101     
              8,946,891     

 

Real Estate Investment Trusts — 8.8%

   
  22,752     

Ashford Hospitality Prime, Inc.

    349,016     
  81,000     

Ashford Hospitality Trust, Inc.

    831,060     
  38,959     

Associated Estates Realty Corp.

    653,732     
  113,520     

Brandywine Realty Trust

    1,651,716     
  59,075     

CBL & Associates Properties, Inc.

    1,073,393     
  49,974     

Hospitality Properties Trust

    1,501,719     
  50,730     

Mack-Cali Realty Corp.

    1,033,370     
  200,685     

New Residential Investment Corp.

    1,224,178     
  45,150     

Omega Healthcare Investors, Inc.

    1,570,317     
  55,035     

Pennsylvania Real Estate Investment Trust

    910,829     
  151,776     

RAIT Financial Trust

    1,241,528     
              12,040,858     

 

Utilities — 4.0%

   
  53,120     

Hawaiian Electric Industries, Inc.

    1,274,349     
  28,950     

IDACORP, Inc.

    1,625,253     
  47,001     

Portland General Electric Co.

    1,573,123     
  60,290     

TECO Energy, Inc.

    1,082,808     
              5,555,533     

 

Total Common Stocks (Cost $111,011,425)

    132,367,324     

 

Money Market Securities — 3.7%

         
  5,132,048     

Huntington Money Market Fund, Institutional Shares, 0.010% (a) (b)

    5,132,048     

 

Total Money Market Securities (Cost $5,132,048)

    5,132,048     

 
 

Total Investments
(Cost $116,143,473) — 100.1%

    137,499,372     

 

Liabilities in Excess of Other Assets — (0.1)%

    (103,919)     

 

Net Assets — 100.0%

  $ 137,395,453     

 

(a) Rate disclosed is the seven day yield as of April 30, 2014.
(b) Affiliated fund.
* Non-income producing security.
 

 

See accompanying notes which are an integral part of these portfolios of investments.

Semi-Annual Report

 

5


Statement of Assets and Liabilities

 

April 30, 2014 (Unaudited)

 

      Dreman
Contrarian
Small Cap
Value Fund
 
Assets:   

Investments in securities, at cost

   $ 111,011,425   

Investments in affiliated securities, at cost

     5,132,048   
          

Investments in securities, at fair value

     132,367,324   

Investments in affiliated securities, at fair value

     5,132,048   

Dividends receivable

     87,469   

Receivable for fund shares sold

     82,955   

Prepaid expenses

     47,229   

Total assets

     137,717,025   
Liabilities:   

Payable for shares redeemed

     190,790   

Payable to Adviser

     80,356   

Payable to administrator

     15,985   

Accrued Distribution/12b-1

     13,333   

Payable to trustees

     1,128   

Other accrued expenses

     19,980   

Total Liabilities

     321,572   

Net Assets

   $ 137,395,453   
          
Net Assets consist of:   

Paid in capital

   $ 107,309,805   

Accumulated undistributed net investment income

     107,013   

Accumulated undistributed net realized gain on investments

     8,622,736   

Net unrealized appreciation

     21,355,899   

Net Assets

   $ 137,395,453   
          
Net Assets (unlimited number of shares authorized)   
Class A:   

Net Assets

   $ 4,541,816   

Shares outstanding

     196,494   

Net asset value and redemption price per share

   $ 23.11   
          

Offering price per share (NAV/0.9425) (a)

   $ 24.52   
          
Retail Class:   

Net Assets

   $ 59,494,720   

Shares outstanding

     2,567,710   

Net asset value and offering price per share

   $ 23.17   
          

Redemption price per share (NAV * 0.99) (b)

   $ 22.94   
          
Institutional Class:   

Net Assets

   $ 73,358,917   

Shares outstanding

     3,154,630   

Net asset value, offering and redemption price per share

   $ 23.25   
          
(a) Class A shares impose a maximum 5.75% sales charge on purchases.

 

(b) A redemption fee of 1.00% is charged on shares held less than 60 days.

 

See accompanying notes which are an integral part of these financial statements.

Semi-Annual Report

 

6


Statement of Operations

 

For the Six Months Ended April 30, 2014 (Unaudited)

 

      Dreman
Contrarian
Small Cap
Value Fund
 
Investment Income:   

Dividend income

   $ 1,196,307   

Dividend income from affiliated securities

     161   

Foreign dividend taxes withheld

     (2,151

Total investment income

     1,194,317   
Expenses:   

Investment Adviser

     516,973   

Distribution/12b-1:

  

Class A

     6,020   

Retail Class

     76,966   

Administration

     72,185   

Legal

     6,929   

Registration

     30,395   

Printing

     11,999   

Auditing

     7,935   

Custodian

     12,951   

Trustee

     3,164   

Miscellaneous

     8,205   

Total expenses

     753,722   

Fees waived by Adviser

     (61,078

Net operating expenses

     692,644   

Net investment income

     501,673   
Realized & Unrealized Gains (Loss) on Investments   

Net realized gains on investment transactions

     9,244,006   

Change in unrealized depreciation on investment securities

     (1,230,804

Net realized and unrealized gains on investment securities

     8,013,202   

Net increase in net assets resulting from operations

   $ 8,514,875   
          

 

See accompanying notes which are an integral part of these financial statements.

Semi-Annual Report

 

7


Statements of Changes in Net Assets

 

 

     Dreman Contrarian
Small Cap Value Fund
 
      Six Months Ended
April 30, 2014
     Year Ended
October 31, 2013
 
     (Unaudited)         
Increase (Decrease) in Net Assets due to:      
Operations:      

Net investment income

   $ 501,673       $ 607,096   

Net realized gains on investment transactions

     9,244,006         12,164,654   

Change in unrealized appreciation (depreciation) on investment securities

     (1,230,804      11,804,804   

Net increase in net assets resulting from operations

     8,514,875         24,576,554   
Distributions from:      

Net investment income, Class A

     (33,863      (16,349

Net investment income, Retail Class

     (418,477      (292,834

Net investment income, Institutional Class

     (468,029      (55,644

Realized gains, Class A

     (490,209      (33,363

Realized gains, Retail Class

     (6,225,188      (597,247

Realized gains, Institutional Class

     (5,063,473      (113,488

Total distributions

     (12,699,239      (1,108,925
Capital Transactions—Class A:      

Proceeds from shares sold

     239,733         1,779,662   

Reinvestment of distributions

     487,467         48,434   

Amount paid for shares redeemed

     (1,129,827      (1,184,391

Total Class A

     (402,627      643,705   
Capital Transactions—Retail Class:      

Proceeds from shares sold

     3,343,953         9,514,704   

Reinvestment of distributions

     6,532,454         871,077   

Amount paid for shares redeemed

     (12,463,927      (34,677,105

Proceeds from redemption fees (a)

     588         616   

Total Retail Class

     (2,586,720      (24,290,708
Capital Transactions—Institutional Class:      

Proceeds from shares sold

     61,116,992         6,044,510   

Reinvestment of distributions

     4,944,506         111,665   

Amount paid for shares redeemed

     (5,263,459      (8,563,303

Total Institutional Class

     60,798,039         (2,407,128

Net change resulting from capital transactions

     57,808,692         (26,054,131

Total Increase (Decrease) in Net Assets

     53,624,328         (2,586,502

Net Assets:

     

Beginning of period

     83,771,125         86,357,627   

End of period

   $ 137,395,453       $ 83,771,125   
                   

Accumulated undistributed net investment income

   $ 107,013       $ 525,709   
Share Transactions—Class A:      

Shares sold

     10,340         92,723   

Shares issued in reinvestment of distributions

     21,371         2,644   

Shares redeemed

     (49,620      (59,581

Total Class A

     (17,909      35,786   
Share Transactions—Retail Class:      

Shares sold

     144,634         476,871   

Shares issued in reinvestment of distributions

     285,759         47,419   

Shares redeemed

     (543,124      (1,763,072

Total Retail Class

     (112,731      (1,238,782
Share Transactions—Institutional Class:      

Shares sold

     2,557,306         280,658   

Shares issued in reinvestment of distributions

     215,619         6,056   

Shares redeemed

     (230,785      (409,909

Total Institutional Class

     2,542,140         (123,195
(a) A redemption fee of 1.00% is charged on shares held less than 60 days.

 

See accompanying notes which are an integral part of these financial statements.

Semi-Annual Report

 

8


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Financial Highlights

 

(For a share outstanding throughout each period)

 

     Net Asset
Value,
beginning
of period
    Net
investment
income (loss)
    Net realized
and unrealized
gain (loss)  on
investments
    Total from
investment
operations
    Distributions
from net
investment
income
        
    
Distributions
from  net
realized gain
on investment
transactions
    Total
distributions
 
DREMAN CONTRARIAN SMALL CAP VALUE FUND           
Class A              
2010(b)   $ 16.04        0.10 (c)      2.30        2.40        (0.14            (0.14
2011   $ 18.30        0.10        (0.22     (0.12     (0.13            (0.13
2012   $ 18.07        0.11        1.47        1.58        (0.19     (1.66     (1.85
2013   $ 17.80        0.12        6.14        6.26        (0.08     (0.16     (0.24
2014(g)   $ 23.82        0.09        1.72        1.81        (0.16     (2.36     (2.52
Retail Class              
2009   $ 13.51        0.07        2.12        2.19        (0.06     (0.06     (0.12
2010   $ 15.59        0.09        2.80        2.89        (0.13            (0.13
2011   $ 18.35        0.11        (0.22     (0.11     (0.13            (0.13
2012   $ 18.11        0.11        1.47        1.58        (0.17     (1.66     (1.83
2013   $ 17.86        0.17        6.08        6.25        (0.08     (0.16     (0.24
2014(g)   $ 23.87        0.09        1.73        1.82        (0.16     (2.36     (2.52
Institutional Class              
2009   $ 13.55        0.10 (c)      1.94        2.04        (0.06     (0.06     (0.12
2010   $ 15.47        0.14        2.93        3.07        (0.14            (0.14
2011   $ 18.40        0.31        (0.38     (0.07     (0.14            (0.14
2012   $ 18.19        0.14        1.48        1.62        (0.23     (1.66     (1.89
2013   $ 17.92        0.20        6.10        6.30        (0.08     (0.16     (0.24
2014(g)   $ 23.98        0.11 (c)      1.74        1.85        (0.22     (2.36     (2.58
(a) Total return represents the rate the investor would have earned or lost on an investment in the Fund, assuming reinvestment of dividends, and excludes any sales charges and redemption fees.
(b) For the period November 20, 2009 (commencement of operations) to October 31, 2010.
(c) Per share amount has been calculated using the average shares method.
(d) Not Annualized.
(e) Annualized.
(f) The expense ratios shown include overdraft fees charged to the Fund. Without these overdraft fees, the expense ratios would be 1.25% for Class A and Retail Class and 1.00% for Institutional Class.
(g) Six months ended April 30, 2014 (Unaudited).
(h) Effective June 1, 2009, the Adviser discontinued the voluntary waiver of 12b-1 fees. Accordingly, if the Adviser had not voluntarily reimbursed the Fund for these expenses, each expense ratio would have been 0.12% higher and each net investment income ratio would have been 0.12% lower.
(i) Amount is less than $0.005.
(j) Effective June 1, 2009, the Adviser agreed to waive fees to maintain Fund expenses at 1.00%. Prior to that date, the expense cap was 1.25%.

 

See accompanying notes which are an integral part of these financial statements.

Semi-Annual Report

 

10


 

Paid in
capital from
redemption
fees
    Net Asset
Value, end
of period
    Total
return(a)
    Net Assets,
end of
period
(000 omitted)
    Ratio of net
expenses to
average net
assets
    Ratio of expenses
(prior to
reimbursements)
to average
net  assets
    Ratio of net
investment
income (loss)
to average
net  assets
    Ratio of net
investment income
(loss) to average
net  assets before
waiver &
reimbursement by
advisor
    Portfolio
turnover
rate
 
               
               
       $ 18.30        15.00 %(d)    $ 275        1.25 %(e)      1.59 %(e)      0.62 %(e)      0.28 %(e)      35.75
  0.02      $ 18.07        (0.60 )%    $ 1,935        1.25     1.49     0.46     0.22     44.08
       $ 17.80        9.92   $ 3,180        1.25     1.75     0.55     0.05     30.19
       $ 23.82        35.56   $ 5,106        1.26 %(f)      1.51     0.65     0.40     28.28
       $ 23.11        7.74 %(d)    $ 4,542        1.25 %(e)      1.36 %(e)      0.74 %(e)      0.63 %(e)      24.57
               
  0.01      $ 15.59        16.51   $ 72,442        1.38 %(h)      2.18     0.54 %(h)      (0.26 )%      80.75
  (i)    $ 18.35        18.61   $ 105,796        1.25     1.58     0.53     0.20     35.75
  (i)    $ 18.11        (0.66 )%    $ 82,840        1.25     1.51     0.57     0.32     44.08
  (i)    $ 17.86        9.93   $ 69,992        1.25     1.74     0.56     0.06     30.19
  (i)    $ 23.87        35.38   $ 63,976        1.26 %(f)      1.53     0.72     0.45     28.28
  (i)    $ 23.17        7.75 %(d)    $ 59,495        1.25 %(e)      1.36 %(e)      0.74 %(e)      0.63 %(e)      24.57
               
       $ 15.47        15.27   $ 15,309        1.09 %(j)      2.06     0.74     (0.23 )%      80.75
       $ 18.40        19.90   $ 19,300        1.00     1.34     0.79     0.45     35.75
       $ 18.19        (0.44 )%    $ 11,472        1.00     1.26     0.85     0.59     44.08
       $ 17.92        10.14   $ 13,185        1.00     1.49     0.80     0.30     30.19
       $ 23.98        35.55   $ 14,689        1.01 %(f)      1.27     0.95     0.68     28.28
       $ 23.25        7.85 %(d)    $ 73,359        1.00 %(e)      1.09 %(e)      0.92 %(e)      0.83 %(e)      24.57

 

Semi-Annual Report

 

11


Notes to the Financial Statements

 

April 30, 2014 (Unaudited)

 

Note 1. Organization

The Dreman Contrarian Small Cap Value Fund (the “Fund”) is an open-end diversified series of the Valued Advisers Trust (the “Trust”). The Trust is a management investment company established under the laws of Delaware by an Agreement and Declaration of Trust dated June 13, 2008 (the “Trust Agreement”). The Trust Agreement permits the Trustees to issue an unlimited number of shares of beneficial interest of separate series without par value. The Fund is one of a series of funds authorized by the Board of Trustees (the “Board”). The Fund’s investment adviser is Dreman Value Management, LLC (the “Adviser”). The investment objective of the Fund is long-term capital appreciation.

The Fund currently offers Class A shares, Retail Class shares, and Institutional Class shares. Class A shares are offered with a front-end sales charge. The Retail Class shares impose a 1% redemption fee on all shares redeemed within 60 days of purchase. Institutional Class shares do not have sales charges on original purchases.

Note 2. Significant Accounting Policies

The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. These policies are in conformity with the generally accepted accounting principles in the United States of America (“GAAP”).

Estimates—The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.

Securities Valuation—All investments in securities are recorded at their estimated fair value as described in Note 3.

Federal Income Taxes—The Fund makes no provision for federal income or excise tax. The Fund intends to qualify each year as a regulated investment company (“RIC”) under subchapter M of the Internal Revenue Code of 1986, as amended, by complying with the requirements applicable to RICs and by distributing substantially all of its taxable income. The Fund also intends to distribute sufficient net investment income and net capital gains, if any, so that it will not be subject to excise tax on undistributed income and gains. If the required amount of net investment income or gains is not distributed, the Fund could incur a tax expense.

During the six months ended April 30, 2014, the Fund did not have a liability for any unrecognized tax benefits. The Fund recognizes interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the statement of operations. The Fund is subject to examination by U.S. federal tax authorities for the last four tax year ends and the interim tax period since then.

Expenses—Expenses incurred by the Trust that do not relate to a specific fund of the Trust are allocated to the individual funds based on each fund’s relative net assets or other appropriate basis as (determined by the Board). Expenses attributable to any class are borne by that class. Income, realized gains and losses, unrealized appreciation and depreciation, and expenses are allocated to each class based on the net assets in relation to the relative net assets of the Fund.

Security Transactions and Related Income—The Fund follows industry practice and records security transactions on the trade date, for financial purposes. The specific identification method is used for determining gains or losses for financial statement and income tax purposes. Dividend income is recorded on the ex-dividend date and interest income is recorded on an accrual basis. Discounts and premiums on securities purchased are accreted or amortized using the effective interest method. Withholding taxes on foreign dividends have been provided for in accordance with the Fund’s understanding of the applicable country’s tax rules and rates.

Dividends and Distributions—Distributions to shareholders, which are determined in accordance with income tax regulations, are recorded on the ex-dividend date. The Fund intends to distribute substantially all of its net investment income on, at least, an annual basis. The Fund intends to distribute its net realized long-term and short-term capital gains, if any, at least once a year. The treatment for financial reporting purposes of distributions made to shareholders during the year from net investment income or net realized capital gains may differ from their ultimate treatment for federal income tax purposes. These differences are caused primarily by differences in the timing of the recognition of certain components of income, expense or realized capital gain for federal income tax purposes. Where such differences are permanent in nature, they are reclassified in the components of the net assets based on their ultimate characterization for federal income tax purposes. Any such reclassifications will have no effect on net assets, results of operations or net asset values per share of the Fund.

Note 3. Securities Valuation and Fair Value Measurements

Fair value is defined as the price that a Fund would receive upon selling an investment in a timely transaction to an independent buyer in the principal or most advantageous market of the investment. GAAP establishes a three-tier hierarchy to maximize the use of observable market data and minimize the use of unobservable inputs and to establish classification of fair value measurements for disclosure purposes.

Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk (the risk inherent in a particular valuation technique used to measure fair value including such a pricing model and/or the risk inherent in the

 

 

Semi-Annual Report

 

12


inputs to the valuation technique). Inputs may be observable or unobservable. Observable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs are inputs that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.

Various inputs are used in determining the value of the Fund’s investments. These inputs are summarized in the three broad levels listed below.

 

 

Level 1—quoted prices in active markets for identical securities

 

Level 2—other significant observable inputs (including, but not limited to, quoted prices for an identical security in an inactive market, quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)

 

Level 3—significant unobservable inputs (including the Fund’s own assumptions in determining fair value of investments based on the best information available)

The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety, is determined based, on the lowest level input that is significant to the fair value measurement in its entirety.

Equity securities, including common stocks, exchanged-traded funds and real estate investment trusts, are generally valued by using market quotations, but may be valued on the basis of prices furnished by a pricing service when the Adviser believes such prices more accurately reflect the fair value of such securities. Securities traded in the NASDAQ over-the-counter market are generally valued by the pricing service at the NASDAQ Official Closing Price.

When using the market quotations or close prices provided by the pricing service and when the market is considered active, the security is classified as a Level 1 security. Sometimes, an equity security owned by the Fund will be valued by the pricing service with factors other than market quotations or when the market is considered inactive. When this happens, the security is classified as a Level 2 security. When market quotations are not readily available, when the Adviser

determines that the market quotation or the price provided by the pricing service does not accurately reflect the current fair value, or when restricted or illiquid securities are being valued, such securities are valued as determined in good faith by the Adviser, in conformity with guidelines adopted by and subject to review by the Board. These securities are categorized as Level 3 securities.

Investments in mutual funds, including money market mutual funds, are generally priced at the ending NAV provided by the service agent of the funds. These securities are categorized as Level 1 securities.

Short-term investments in fixed income securities, (those with maturities of less than 60 days when acquired, or which subsequently are within 60 days of maturity), are valued by using the amortized cost method of valuation, which the Board has determined represents fair value. These securities are classified as Level 2 securities.

In accordance with the Trust’s good faith pricing guidelines, the Adviser is required to consider all appropriate factors relevant to the value of securities for which it has determined other pricing sources are not available or reliable as described above. No single standard exists for determining fair value, because fair value depends upon the circumstances of each individual case. As a general principle, the current fair value of an issue of securities being valued by the Adviser would appear to be the amount which the owner might reasonably expect to receive for them upon their current sale. Methods which are in accordance with this principle may, for example, be based on (i) a multiple of earnings; (ii) a discount from market of a similar freely traded security (including a derivative security or a basket of securities traded on other markets, exchanges or among dealers); or (iii) yield to maturity with respect to debt issues, or a combination of these and other methods. Good faith pricing is permitted if, in the Adviser’s opinion, the validity of market quotations appears to be questionable based on factors such as evidence of a thin market in the security based on a small number of quotations, a significant event occurs after the close of a market but before a Fund’s NAV calculation that may affect a security’s value, or the Adviser is aware of any other data that calls into question the reliability of market quotations. Good faith pricing may also be used in instances when the securities the Fund invests in may default or otherwise cease to have market quotations readily available.

 

 

The following is a summary of the inputs used to value the Fund’s investments as of April 30, 2014:

 

        Valuation Inputs            
Assets      Level 1—Quoted Prices
in Active Markets
       Level 2—Other Significant
Observable Inputs
       Level 3—Significant
Unobservable Inputs
       Total  

Common Stocks*

     $ 132,367,324         $             —         $             —         $ 132,367,324   

Money Market Securities

       5,132,048                               5,132,048   
    

 

 

      

 

 

      

 

 

      

 

 

 

Total

     $ 137,499,372         $         $         $ 137,499,372   

 

* Refer to Schedule of Investments for industry classifications.

 

Semi-Annual Report

 

13


Notes to the Financial Statements (Continued)

 

 

The Fund did not hold any investments at any time during the reporting period in which other significant observable inputs (Level 2) were used in determining fair value. The Fund also did not hold any investments at any time during the reporting period in which significant unobservable inputs were used in determining fair value; therefore, no reconciliation of Level 3 securities is included for this reporting period.

The Trust recognizes transfers between fair value hierarchy levels at the reporting period end. There were no transfers between any levels as of April 30, 2014 and the previous measurement period.

Note 4. Adviser Fees and Other Transactions

Under the terms of the management agreement between the Trust and the Adviser (the “Agreement”) for the Fund, the Adviser manages the Fund’s investments subject to oversight of the Board. As compensation for its management services, the Fund is obligated to pay the Adviser a fee computed and accrued daily and paid monthly at an annual rate of 0.85% of the average daily net assets of the Fund. For the six months ended April 30, 2014, the Adviser earned fees of $516,973 from the Fund before the waivers described below. At April 30, 2014, the Fund owed $80,356 to the Adviser.

The Adviser has contractually agreed to waive its management fee and/or reimburse certain operating expenses, but only to the extent necessary so that the Fund’s net expenses, excluding brokerage fees and commissions, borrowing costs (such as (a) interest expense and (b) dividends on securities sold short), taxes, extraordinary expenses, 12b-1 fees (if applicable), and any indirect expenses (such as fees and expenses of acquired funds), do not exceed 1.00%. Each waiver or reimbursement of an expense by the Adviser is subject to repayment by the Fund within the three fiscal years following the fiscal year in which the expense was incurred, provided that the Fund is able to make the repayment without exceeding the expense limitation. The contractual agreement is in effect through February 28, 2015. The expense cap may not be terminated prior to this date except by the Board. For the six months ended April 30, 2014, the Adviser waived fees of $61,078 from the Fund. This amount is subject to potential recoupment by the Adviser through October 31, 2017.

The amounts subject to repayment by the Fund, pursuant to the aforementioned conditions are as follows:

 

Amount           Recoverable
through
October 31,
 
$ 307,826           2014   
  459,430           2015   
  215,534           2016   
  61,078             2017   

The Trust retains Huntington Asset Services, Inc. (“HASI”) to manage the Fund’s business affairs and to provide the Fund with administrative services, including all regulatory, reporting and necessary office equipment and personnel. The Trust also retains HASI to act as the Fund’s transfer agent and to provide the Fund with fund accounting services. For the six months ended April 30, 2014, HASI earned fees of $72,185 for administrative services. At April 30, 2014, HASI was owed $15,985 for administrative services.

Certain officers and one Trustee of the Trust are members of management and/or employees of HASI. HASI operates as a wholly-owned subsidiary of Huntington Bancshares, Inc., the parent company of the Unified Financial Securities, Inc. (the “Distributor”) and Huntington National Bank, the custodian of the Fund’s investments (the “Custodian”). For the six months ended April 30, 2014, the Custodian earned fees $12,951 for custody services.

The Distributor acts as the principal distributor of the Fund’s shares. During the six months ended April 30, 2014, there were no commissions earned on sales of Class A Shares. The Distributor, HASI and the Custodian are controlled by Huntington Bancshares, Inc.

The Fund has adopted a Distribution Plan (the “Plan”) pursuant to Rule 12b-1 under the 1940 Act. The Plan provides that the Fund will pay the Adviser and/or any registered securities dealer, financial institution or any other person (a “Recipient”) a shareholder servicing fee aggregating up to: 0.25% of the average daily net assets of the Class A shares and 0.25% of the average daily net assets of the Retail Class shares in connection with the promotion and distribution of the Fund’s shares or the provision of personal services to shareholders, including, but not necessarily limited to, advertising, compensation to underwriters, dealers and selling personnel, the printing and mailing of prospectuses to other than current Fund shareholders, the printing and mailing of sales literature and servicing shareholder accounts. The Fund or the Adviser may pay all or a portion of these fees to any Recipient who renders assistance in distributing or promoting the sale of shares, or who provides certain shareholder services, pursuant to a written agreement. The Plan is a compensation plan, which means compensation is paid regardless of 12b-1 expense actually incurred. It is anticipated that the Plan will benefit shareholders because an effective sales program typically is necessary in order for the Fund to reach and maintain a sufficient size to achieve efficiently its investment objectives and to realize economies of scale. For the six months ended April 30, 2014, Class A shares 12b-1 expense incurred by the Fund was $6,020 and Retail Class shares 12b-1 expense incurred by the Fund was $76,966. The Fund owed $956 for Class A shares and $12,377 for Retail Class shares 12b-1 fees as of April 30, 2014.

 

 

Semi-Annual Report

 

14


The Fund may invest in certain affiliated money market funds which are managed by an affiliated party of the Distributor. Income distributions earned from investments in this Fund are recorded as dividend income from affiliates in the accompanying financial statements. A summary of the Fund’s investment in such affiliated money market funds is presented in the table below:

 

Affiliated Fund    10/31/13
Fair Value
     Purchases      Sales     4/30/14
Fair Value
     Income  

Huntington Money Market Fund

   $ 778,785       $ 29,343,677       $ (24,990,414   $ 5,132,048       $ 161   

 

Note 5. Purchases and Sales of Securities

For the six months ended April 30, 2014, purchases and sales of investment securities, other than short-term investments and short-term U.S. government obligations were as follows:

 

Purchases    Sales  

$70,574,336

   $ 28,924,556   

Note 6. Beneficial Ownership

The beneficial ownership, either directly or indirectly, of more than 25% of the voting securities of a fund creates a presumption of control of the fund, under Section 2(a)(9) of the Investment Company Act of 1940. At April 30, 2014, there were no shareholders owning more than 25% of the voting shares of the Fund.

Note 7. Federal Income Taxes

At April 30, 2014, the net unrealized appreciation (depreciation) of investments for tax purposes was as follows:

 

Gross Unrealized Appreciation

   $ 22,701,461   

Gross Unrealized (Depreciation)

     (2,174,321

Net Unrealized Appreciation on Investments

   $ 20,527,140   

At April 30, 2014, the difference between book basis and tax basis unrealized appreciation (depreciation) is attributable to the tax deferral of losses on wash sales, mark-to-market adjustments on passive foreign investment companies, return of capital from real estate investment trusts and income from certain investments.

At April 30, 2014, the aggregate cost of securities for federal income tax purposes was $116,972,232 for the Fund.

At October 31, 2013, the Fund’s most recent fiscal year end, the components of distributable earnings (accumulated losses) on a tax basis were as follows:

Undistributed ordinary income

   $ 1,442,915   

Undistributed long-term capital gains

     11,069,153   

Unrealized appreciation

     21,757,944   
     $ 34,270,012   

 

* The difference between book basis and tax basis unrealized appreciation (depreciation) is attributable to the tax deferral of losses on wash sales, mark-to-market adjustments on passive foreign investment companies, return of capital from real estate investment trusts and income from certain investments.

The tax character of distributions paid for the fiscal year ended October 31, 2013 was as follows:

 

      2013  

Distributions paid from*:

  

Ordinary Income

   $ 652,447   

Net Long-Term Capital Gain

     456,478   
     $ 1,108,925   

 

* The tax character of distributions paid may differ from the character of distributions shown on the statements of changes in net assets due to short-term capital gains being treated as ordinary income for tax purposes.

Note 8. Commitments and Contingencies

The Fund indemnities its officers and trustees for certain liabilities that may arise from performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts that contain a variety of representations and warranties which provide general indemnifications. The Fund’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Fund that have not yet occurred.

Note 9. Subsequent Events

Management of the Fund has evaluated the need for disclosure and/or adjustments resulting from subsequent events through the date these financials were issued. Based upon this evaluation, there are no subsequent events to report.

 

 

Semi-Annual Report

 

15


Valued Advisers Trust

 

PRIVACY POLICY

The following is a description of the policies of the Valued Advisers Trust (the “Trust”) regarding disclosure of nonpublic personal information that shareholders provide to a series of the Trust (each, a “Fund”) or that the Fund collects from other sources. In the event that a shareholder holds shares of a Fund through a broker-dealer or other financial intermediary, the privacy policy of the financial intermediary would govern how shareholder nonpublic personal information would be shared with nonaffiliated third parties.

Categories of Information A Fund May Collect.

A Fund may collect the following nonpublic personal information about its shareholders:

 

 

Information the Fund receives from a shareholder on applications or other forms, correspondence, or conversations (such as the shareholder’s name, address, phone number, social security number, and date of birth); and

 

 

Information about the shareholder’s transactions with the Fund, its affiliates, or others (such as the shareholder’s account number and balance, payment history, cost basis information, and other financial information).

Categories of Information A Fund May Disclose.

A Fund may not disclose any nonpublic personal information about its current or former shareholders to unaffiliated third parties, except as required or permitted by law. A Fund is permitted by law to disclose all of the information it collects, as described above, to its service providers (such as the Fund’s custodian, administrator, transfer agent, accountant and legal counsel) to process shareholder transactions and otherwise provide services to the shareholder.

Confidentiality and Security.

Each Fund shall restrict access to shareholder nonpublic personal information to those persons who require such information to provide products or services to the shareholder. Each Fund shall maintain physical, electronic, and procedural safeguards that comply with federal standards to guard shareholder nonpublic personal information.

Disposal of Information.

The Funds, through their transfer agent, have taken steps to reasonably ensure that the privacy of a shareholder’s nonpublic personal information is maintained at all times, including in connection with the disposal of information that is no longer required to be maintained by the Funds. Such steps shall include, whenever possible, shredding paper documents and records prior to disposal, requiring off-site storage vendors to shred documents maintained in such locations prior to disposal, and erasing and/or obliterating any data contained on electronic media in such a manner that the information can no longer be read or reconstructed.

 

Semi-Annual Report

 

16


OTHER INFORMATION

The Fund’s Statement of Additional Information (“SAI”) includes additional information about the Trustees and is available without charge, upon request. You may call toll-free at (800) 247-1014 to request a copy of the SAI or to make shareholder inquiries.

PROXY VOTING

A description of the policies and procedures that each Fund uses to determine how to vote proxies relating to portfolio securities and information regarding how the Funds voted those proxies during the recent twelve month period ended June 30 are available without charge upon request by (1) calling the Funds at (800) 247-1014 or (2) from Fund documents filed with the Commission on the Commission’s website at www.sec.gov.

TRUSTEES

R. Jeffrey Young, Chairman

Ira Cohen

Andrea Mullins

OFFICERS

R. Jeffrey Young, Principal Executive Officer and President

John C. Swhear, Chief Compliance Officer, AML Officer and Vice-President

Carol J. Highsmith, Vice President and Secretary

Matthew J. Miller, Vice President

Bryan W. Ashmus, Principal Financial Officer and Treasurer

INVESTMENT ADVISER

Dreman Value Management, LLC

Harborside Financial Center

Plaza 10, Suite 800

Jersey City, NJ 07311

DISTRIBUTOR

Unified Financial Securities, Inc.

2960 North Meridian Street, Suite 300

Indianapolis, IN 46208

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Cohen Fund Audit Services, Ltd.

1350 Euclid Avenue, Suite 800

Cleveland, OH 44115

LEGAL COUNSEL

The Law Offices of John H. Lively & Associates, Inc.

A member firm of The 1940 Act Law Group TM

11300 Tomahawk Creek Parkway, Suite 310

Leawood, KS 66211

CUSTODIAN

Huntington National Bank

41 S. High St.

Columbus, OH 43215

ADMINISTRATOR, TRANSFER AGENT

AND FUND ACCOUNTANT

Huntington Asset Services, Inc.

2960 North Meridian Street, Suite 300

Indianapolis, IN 46208

This report is intended only for the information of shareholders or those who have received the Fund’s prospectus which contains information about the Fund’s management fee and expenses. Please read the prospectus carefully before investing.

Distributed by Unified Financial Securities, Inc.

Member FINRA/SIPC


LOGO

 

 

THE SOUND MIND INVESTING FUND

 

 

 

THE SOUND MIND INVESTING

BALANCED FUND

 

 

 

THE SMI DYNAMIC ALLOCATION FUND

 

 

 
SEMI-ANNUAL REPORT
 
APRIL 30, 2014

Fund Adviser:

SMI Advisory Services, LLC

11135 Baker Hollow Road

Columbus, IN 47201

Toll Free (877) SMI-FUND

www.smifund.com


 

LOGO

Dear Fellow Shareholder,

To the casual stock market observer, the early months of 2014 may have seemed dull. The largest, most recognizable stock indexes – like the S&P 500 – made small advances and ended April sitting close to their all-time highs. Following 2013’s abnormally large gains, it would be easy to chalk up this year’s performance to-date as merely a pause for investors to digest some of those big gains.

The reality is more complicated than that. Beneath the calm exterior of the broad market indexes, a fairly pronounced shift has occurred. The stocks that led the market during 2013’s strong run have largely given way to those that lagged. Specifically, this means that riskier funds from the smaller-company and growth-oriented categories have fallen out of favor, while more conservative funds from the larger-company and value-oriented categories have taken the lead.

Consider the following table, which illustrates the degree of the market’s leadership change from last year to this year. Performance shown for each of SMI’s five stock risk categories is taken from the corresponding iShares exchange-traded fund that tracks it.

 

Category (ETF)    2013    2014 YTD thru April 30
Foreign (EFA)    21.39%    1.83%
Small Growth (IWO)    43.33%    (4.58)%
Small Value (IWN)    34.34%    (0.86)%
Large Growth (IWF)    33.14%    1.09%
Large Value (IWD)    32.09%    3.92%

Ignoring the foreign category for a moment, the most striking feature of this table is the way the four domestic risk categories perfectly inverted their performance from 2013 to early 2014. In 2013, small-growth stocks were clearly the best performers, with performance dropping along with risk exposure as we move through the bottom of the table. In 2014, it has been exactly the opposite: the best performance has been at the bottom rung of the risk ladder in large-value, with performance dropping – and actually turning negative – as we move into the higher risk categories.

The reason this transition has gone undetected by many is that the most popular stock market indexes are “capitalization weighted,” which means the largest stocks dominate their movement. The fact that small-company stocks have struggled so far in 2014 doesn’t factor much, if at all, into the pricing of the most recognizable indexes like the S&P 500.

For investors utilizing Upgrading through either the Sound Mind Investing Fund (SMIFX) or the SMI Balanced Fund (SMILX), this market leadership reversal has had a significant impact. First, the good news: our Upgrading strategy has been allocated well for 2014, with significantly larger allocations to the large-company risk categories than the small. In fact, our U.S. stock allocations for 2014 have closely matched the “bottom-up” performance of the market, with our largest allocation to large-value, followed by slightly less to large-growth, and so forth. Unfortunately, that allocation advantage has only offset a small part of the performance lag Upgrading has suffered as a result of this leadership change.

 

1


When Upgrading lags the market by a significant margin, it usually reflects a substantial change to the market’s primary trend. As a trend-following system, Upgrading takes time to adjust to significant trend changes. We don’t want our Upgrading formula to be so sensitive that it responds to every wiggle in market direction. But the cost of building a degree of patience into the system is that we occasionally lag for a short time while Upgrading plays catch-up to the new market trends.

As new market trends are revealed, Upgrading steers us to funds that are taking advantage of those trends. That’s what has been happening throughout 2014: the old former leaders have been gradually replaced with new funds that are better positioned to take advantage of the new market leadership trends.

Specifically, Upgrading’s mix of funds shifted throughout 2013 to take maximum advantage of the higher-risk, growth and small-company orientation that was leading the market. This orientation helped Upgrading and SMIFX outperform the market in 2013. As the market trends began to change, however, those funds began to lag rather than lead, and Upgrading began replacing them with funds better suited to the new market emphasis on safety. But during this transition period, which encompassed most of the six months being discussed in this letter, Upgrading’s performance lagged the market overall.

The Sound Mind Investing Fund (SMIFX)

Upgrading’s significant allocations to small-company funds, which have lagged significantly in 2014, pulled the performance of SMIFX down. Foreign stocks, which lagged badly in 2013, have performed better this year, though still not quite as well as the U.S. stock market. During the six months ended April 30, 2014, SMIFX gained 4.23%. That’s not a bad absolute result for a six-month period, but it did lag the 8.36% gain of the S&P 500, as well as the 7.89% gain of the Wilshire 5000.

The SMI Balanced Fund (SMILX)

The same factors that impacted SMIFX’s performance (discussed above) weighed down the stock portion of the SMI Balanced Fund. The bond portion of the portfolio lagged the Barclays U.S. Aggregate Bond Index slightly (1.36% vs. 1.74%). That isn’t surprising, given that our bond subadvisor attempts to opportunistically take advantage of volatility in the bond market when it occurs, and there hasn’t been much volatility to be taken advantage of in recent months. We can live with this type of short-term “patient lagging” knowing that opportunities will inevitably present themselves, and when they do our bond managers have a strong track record of taking full advantage of those opportunities.

Overall, during the six months ended April 30, 2014, SMILX gained 3.10%. That lagged the performance of a “blended benchmark” portfolio made up of 60% Wilshire 5000 and 40% Barclays U.S. Aggregate Bond Index, which would have gained 5.46%. (The Wilshire 5000 stock index gained 7.89%, while Barclays U.S. Aggregate Bond Index gained 1.74%.)

The SMI Dynamic Allocation Fund (SMIDX)

As was the case throughout 2013, SMIDX maintained a constant allocation to U.S. Stocks and Foreign Stocks. Our U.S. Stock allocation did well, with primary holding SPY gaining 8.18% over the six month period. Foreign stocks didn’t perform as well as the U.S. stock market indexes, with primary holding EFA gaining 4.59%. SMIDX’s performance was further held back by its third allocation, which shifted between real estate, bonds, and cash during the period.

 

2


Overall, SMIDX gained 3.98% during the six months ended April 30, 2014. That lagged the performance of a “blended benchmark” portfolio made up of 60% Wilshire 5000 stock index and 40% Barclays U.S. Aggregate Bond Index, which would have gained 5.46%. (The Wilshire 5000 gained 7.89%, while Barclays U.S. Aggregate Bond Index gained 1.74%.)

It’s worth remembering that SMIDX is designed to “win by not losing.” So while we’d love to have market-beating gains when stocks are advancing, we don’t really expect to. As long as the fund is making steady progress during those periods, we’re generally satisfied. We expect SMIDX to really add value when stocks stop advancing and start declining. Avoiding the worst of those bear market losses is what we expect will make SMIDX a valuable long-term addition to most investor portfolios.

Conclusion

We don’t ever like trailing our benchmarks. But realistically, we know those periods will occur occasionally with Upgrading, as they do with all trend-following systems. Within the two Upgrading-based portfolios (SMIFX and SMILX), each fund’s significant allocation to foreign securities (roughly 20% of the stock portfolio) as well as small-company stocks (roughly 34% of the stock portfolio) meant that more than half of our stock money was invested in risk categories that lagged the large-company dominated market indexes during the past six months. These allocations, along with the internal rotation each risk category experienced as the transition from more-risky to less-risky holdings took place, were the specific factors that hurt the performance of our Upgrading-based funds relative to the market indexes. But we have confidence that our Upgrading strategy will have us positioned correctly more often than not, so we’re willing to endure brief transition periods as part of the process.

We appreciate the confidence you have placed in us to be a faithful steward of your assets, even as you strive to be a faithful steward of His assets.

Sincerely,

 

LOGO

Mark Biller

Senior Portfolio Manager

The Sound Mind Investing Funds

 

3


 

PERFORMANCE RESULTS – (Unaudited)

 

 

 

Total Return*

(For the periods ended April 30, 2014)

 
                           Average Annual  
      Three Months      Six Months      One Year      Five Year      Since Inception
(December 2, 2005)
 

The Sound Mind Investing Fund

     0.59%         4.23%         19.79%         16.39%         6.88%   

S&P 500® Index**

     6.23%         8.36%         20.44%         19.14%         7.10%   

Wilshire 5000 Index**

     5.54%         7.89%         20.52%         19.37%         7.36%   

 

Gross Expenses 2.18% (as stated in the most recent prospectus dated February 28, 2014). Net Expenses 2.18% (as stated in the most recent prospectus dated February 28, 2014), which excludes acquired fund fees and expenses and reflects the fee waiver/expense reimbursement discussed. All expenses are reflected in performance results. The Fund’s advisor contractually has agreed to waive its fee and/or reimburse expenses to the extent necessary to maintain Total Annual Fund Operating Expenses (excluding brokerage fees and commissions; borrowing costs; any 12b-1 fees; taxes; indirect expenses, such as acquired fund fees and expenses; and extraordinary litigation expenses) at 1.50% of the Fund’s average daily net assets through February 28, 2015. This expense cap may not be terminated prior to this date except by the Board of Trustees.

 

Total Return*

(For the periods ended April 30, 2014)

 
                           Average Annual  
      Three Months      Six Months      One Year      Since Inception
(December 30, 2010)
 

The Sound Mind Investing Balanced Fund

     0.62%         3.10%         12.50%         7.90%   

S&P 500® Index**

     6.23%         8.36%         20.44%         15.26%   

Wilshire 5000 Index**

     5.54%         7.89%         20.52%         14.93%   

Barclays Capital U.S. Aggregate Bond Index**

     1.21%         1.74%         -0.26%         3.84%   

Custom Benchmark***

     3.80%         5.46%         11.90%         10.59%   

 

Gross Expenses 2.20% (as stated in the most recent prospectus dated February 28, 2014). Net Expenses 1.15% (as stated in the most recent prospectus dated February 28, 2014), which excludes acquired fund fees and expenses and reflects the fee waiver/expense reimbursement discussed below. All expenses are reflected in performance results. The Fund’s advisor contractually has agreed to waive its fee and/or reimburse expenses to the extent necessary to maintain Total Annual Fund Operating Expenses (excluding brokerage fees and commissions; borrowing costs; any 12b-1 fees; taxes; indirect expenses, such as acquired fund fees and expenses; and extraordinary litigation expenses) at 1.15% of the Fund’s average daily net assets through February 28, 2015. This expense cap may not be terminated prior to this date except by the Board of Trustees.

 

4


 

PERFORMANCE RESULTS – (Unaudited), (Continued)

 

 

 

 

Total Return*

(For the periods ended April 30, 2014)

 
                       Average Annual  
     Three Months     Six Months     One Year     Since Inception
(February 28, 2013)
 

The SMI Dynamic Allocation Fund

    5.46%        3.98%        5.33%        11.76%   

Wilshire 5000 Index**

    5.54%        7.89%        20.52%        23.03%   

Barclays Capital U.S. Aggregate Bond Index**

    1.21%        1.74%        -0.26%        0.71%   

Custom Benchmark***

    3.80%        5.46%        11.90%        13.73%   

 

Gross Expenses 1.66% (as stated in the most recent prospectus dated February 28, 2014). Net Expenses 1.66% (as stated in the most recent prospectus dated February 28, 2014), which excludes acquired fund fees and expenses and reflects the fee waiver/expense reimbursement discussed below. All expenses are reflected in performance results. The Fund’s advisor contractually has agreed to waive its fee and/or reimburse expenses to the extent necessary to maintain Total Annual Fund Operating Expenses (excluding brokerage fees and commissions; borrowing costs; any 12b-1 fees; taxes; indirect expenses, such as acquired fund fees and expenses; and extraordinary litigation expenses) at 1.45% of the Fund’s average daily net assets through February 28, 2015. This expense cap may not be terminated prior to this date except by the Board of Trustees.

The performance quoted represents past performance, which does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. The returns shown do not reflect deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Current performance of the Fund may be lower or higher than the performance quoted. Performance data current to the most recent month end may be obtained by calling 1-877-764-3863.

 

    * Return figures reflect any change in price per share and assume the reinvestment of all distributions.
  **

The Standard & Poor’s 500® Index, Wilshire 5000 Index and Barclays Capital U.S. Aggregate Bond Index are unmanaged indices that assume reinvestment of all distributions and exclude the effect of taxes and fees. The Standard & Poor’s 500® Index, Wilshire 5000 Index and Barclays Capital U.S. Aggregate Bond Index are widely recognized unmanaged indices and are representative of a broader market and range of securities than is found in each Fund’s portfolio. The returns of the indices are not reduced by any fees or operating expenses. Individuals cannot invest directly in the Indices; however, an individual can invest in exchange traded funds or other investment vehicles that attempt to track the performance of a benchmark index.

*** The Custom Benchmark for the Sound Mind Investing Balanced Fund and SMI Dynamic Allocation Fund is comprised of 60% Wilshire 5000 Index and 40% Barclays Capital U.S. Aggregate Bond Index.

The Funds’ investment objectives, risks, charges and expenses must be considered carefully before investing. The prospectus contains this and other important information about the Funds and may be obtained by calling the same number as above. Please read it carefully before investing.

 

5


 

FUND HOLDINGS – (Unaudited)

 

 

 

LOGO

  1 As a percentage of net assets.

The Sound Mind Investing Fund seeks long term capital appreciation. The Fund seeks to achieve its objective by investing in a diversified portfolio of other investment companies using a “fund upgrading” strategy. The fund upgrading investment strategy is a systematic investment approach that is based on the belief of the Fund’s adviser, SMI Advisory Services, LLC, that superior returns can be obtained by constantly monitoring the performance of a wide universe of other investment companies, and standing ready to move assets into the funds deemed by the adviser to be most attractive at the time of analysis.

 

6


 

FUND HOLDINGS – (Unaudited), (Continued)

 

 

 

 

LOGO

  1 As a percentage of net assets.

The Sound Mind Investing Balanced Fund seeks total return. Total return is composed of both income and capital appreciation. The Fund seeks to achieve its objective by investing in a diversified portfolio of equities and fixed income securities. The Fund’s adviser determines how the Fund’s assets will be allocated between equity and fixed income securities. Under normal circumstances the Fund will target an approximate mix of 60% equity securities and 40% fixed income securities. The adviser periodically rebalances the Fund’s asset allocation in response to market conditions and to ensure an appropriate mix of elements in the Fund.

 

7


 

FUND HOLDINGS – (Unaudited), (Continued)

 

 

 

 

LOGO

  1 As a percentage of net assets.

The SMI Dynamic Allocation Fund seeks total return. Total return is composed of both income and capital appreciation. The Fund uses a dynamic asset allocation investment strategy to achieve its investment objective. This is done by investing in securities from the following six asset classes – U.S. Equities, International Equities, Fixed Income Securities, Real Estate, Precious Metals, and Cash.

Availability of Portfolio Schedule – (Unaudited)

Each Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (“SEC”) for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Forms N-Q are available at the SEC’s website at www.sec.gov. The Funds’ Forms N-Q may be reviewed and copied at the Public Reference Room in Washington DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330.

Summary of Fund’s Expenses – (Unaudited)

As a shareholder of one of the Funds, you incur two types of costs: (1) transaction costs (such as short-term redemption fees); and (2) ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds.

Each Fund’s example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (November 1, 2013 through April 30, 2014).

 

8


 

FUND HOLDINGS – (Unaudited), (Continued)

 

 

 

Actual Expenses

The first line of 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 = 8.60), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

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

Expenses shown are meant to highlight your ongoing costs only and do not reflect any transactional costs such as the fee imposed on short-term redemptions. Therefore, the second line of the table below is useful in comparing ongoing costs only and will not help you determine the relative costs of owning different funds. If incurred, the short-term redemption fee imposed by the Fund would increase your expenses.

 

The Sound Mind
Investing Fund

  Beginning
Account Value
November 1, 2013
    Ending
Account Value
April 30, 2014
    Expenses Paid
During Period
November 1, 2013  –
April 30, 2014*
 
Actual   $ 1,000.00      $ 1,042.30      $ 5.57   
Hypothetical **   $ 1,000.00      $ 1,019.34      $ 5.51   

 

  * Expenses are equal to the Fund’s annualized expense ratio of 1.10%, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the partial year period).
** Assumes a 5% return before expenses.

 

The Sound Mind
Investing
Balanced Fund

  Beginning
Account Value
November 1, 2013
    Ending
Account Value
April 30, 2014
    Expenses Paid
During Period
November 1, 2013  –
April 30, 2014*
 
Actual   $ 1,000.00      $ 1,031.00      $ 5.71   
Hypothetical **   $ 1,000.00      $ 1,019.17      $ 5.68   

 

  * Expenses are equal to the Fund’s annualized expense ratio of 1.13%, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the partial year period).
** Assumes a 5% return before expenses.

 

9


 

FUND HOLDINGS – (Unaudited), (Continued)

 

 

 

 

The SMI
Dynamic Allocation
Fund

  Beginning
Account Value
November 1, 2013
    Ending
Account Value
April 30, 2014
    Expenses Paid
During Period
November 1, 2013  –
April 30, 2014*
 
Actual   $ 1,000.00      $ 1,039.80      $ 6.04   
Hypothetical **   $ 1,000.00      $ 1,018.87      $ 5.98   

 

  * Expenses are equal to the Fund’s annualized expense ratio of 1.19%, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the partial year period).
** Assumes a 5% return before expenses.

 

10


 

THE SOUND MIND INVESTING FUND

SCHEDULE OF INVESTMENTS

April 30, 2014 – (Unaudited)

 

 

 

Mutual Funds 100.25%   Shares        Fair Value  

Mutual Funds Greater Than 1% of The Sound
Mind Investing Fund’s Net Assets – 96.42%

      

American Century International Discovery Fund – Institutional Class (a)

    1,205,182         $ 15,908,405   

AMG Managers Skyline Special Equities Fund (a)

    355,926           13,777,889   

Aston/Fairpointe Mid Cap Fund – Class I

    222,573           10,349,634   

Baron Partners Fund – Institutional Class *

    260,828           9,157,683   

Bogle Investment Management Small Cap Growth Fund (a)

    197,797           6,905,106   

Cambiar Aggressive Value Fund – Investor Class (a) *

    314,272           5,594,034   

ClearBridge Aggressive Growth Fund – Institutional Class

    56,937           11,600,310   

Davis Opportunity Fund (a)

    311,230           10,980,183   

DFA International Small Cap Value Portfolio – Institutional Class

    617,545           13,277,212   

Dreyfus Opportunistic Midcap Value Fund – Institutional Class

    321,243           13,119,580   

Federated MDT Stock Trust – Institutional Class (a)

    238,471           6,796,413   

Fidelity Mid Cap Value Fund

    426,280           9,753,289   

Fidelity OTC Portfolio

    152,485           11,594,990   

Hotchkis and Wiley Mid-Cap Value Fund – Institutional Class

    372,913           15,852,531   

Janus Contrarian Fund – Class T

    615,150           13,318,003   

Legg Mason Opportunity Trust – Institutional Class (a)

    1,194,544           22,122,950   

Longleaf Partners International Fund

    374,333           6,928,906   

Lord Abbett Developing Growth Fund – Institutional Class

    519,413           14,050,120   

Morgan Stanley Institutional Fund, Inc. – Growth Portfolio – Institutional Class

    399,750           14,538,903   

Oakmark Select Fund – Institutional Class

    164,768           6,892,243   

Oppenheimer International Small Co. Fund – Class Y

    501,816           16,454,537   

PRIMECAP Odyssey Aggressive Growth Fund

    507,659           14,981,026   

Touchstone Sands Capital Select Growth Fund – Class Y

    691,283           11,717,243   

Vanguard International Explorer Fund

    224,513           4,290,437   

Wasatch Small Cap Value Fund (a) *

    505,919           2,934,333   
      

 

 

 

TOTAL MUTUAL FUNDS GREATER THAN 1% OF THE SOUND
MIND INVESTING FUND’S NET ASSETS (Cost $255,336,196)

   

       282,895,960   
      

 

 

 

Mutual Funds Less Than 1% of The Sound
Mind Investing Fund’s Net Assets – 3.83% (b)

      

AllianzGI NFJ Dividend Value Fund – Institutional Class

    200           3,314   

AllianzGI NFJ Small-Cap Value Fund – Institutional Class

    162           5,774   

Artisan International Small Cap Fund – Investor Class

    150           4,076   

Artisan International Value Fund – Investor Class

    150           5,572   

Artisan Mid Cap Value Fund – Investor Class

    200           5,416   

 

See accompanying notes which are an integral part of these financial statements.

 

11


 

THE SOUND MIND INVESTING FUND

SCHEDULE OF INVESTMENTS

April 30, 2014 – (Unaudited), (Continued)

 

 

 

Mutual Funds 100.25% – continued   Shares        Fair Value  

Mutual Funds Less Than 1% of The Sound
Mind Investing Fund’s Net Assets – 3.83% (b) – continued

      

Artisan Small Cap Fund – Investor Class *

    250         $ 6,510   

Artisan Small Cap Value Fund – Investor Class

    150           2,783   

Aston TAMRO Small Cap Fund – Institutional Class

    100           2,157   

BBH Core Select Fund – Class N

    100           2,193   

Berwyn Fund

    100           3,877   

BlackRock International Opportunities Portfolio – Institutional Class

    100           4,059   

Bridgeway Small Cap Growth Fund – Class N

    205           3,575   

Bridgeway Small Cap Value Fund – Class N

    179           3,978   

Buffalo Small Cap Fund

    150           5,053   

Columbia Acorn International – Class Z

    100           4,714   

Columbia Acorn Select – Class Z

    150           3,965   

Columbia Small Cap Growth I Fund – Class Z

    100           2,946   

Columbia Value and Restructuring Fund – Class Z

    50           2,475   

Delaware Select Growth Fund – Institutional Class

    100           5,087   

Delaware Small Cap Value Fund – Institutional Class

    100           5,556   

Delaware SMID Cap Growth Fund – Institutional Class

    100           3,302   

Delaware Value Fund – Institutional Class

    144           2,419   

DFA International Small Company Portfolio – Institutional Class

    100           2,003   

DFA U.S. Small Cap Value Portfolio

    100           3,515   

Dodge & Cox International Stock Fund

    54,200           2,426,521   

Dodge & Cox Stock Fund

    11,026           1,884,604   

Dreyfus Opportunistic Small Cap Fund

    100           3,498   

DWS Dreman Small Cap Value Fund – Institutional Class

    85           2,347   

Fairholme Fund

    100           4,090   

FBR Focus Fund – Investor Class *

    100           6,390   

Fidelity International Small Cap Fund

    53,331           1,424,481   

Fidelity Mid-Cap Stock Fund

    150           6,039   

Fidelity Small Cap Discovery Fund

    100           3,077   

Fidelity Small Cap Stock Fund

    150           3,125   

Fidelity Small Cap Value Fund – Institutional Class

    150           2,961   

Franklin Small Cap Value Fund – Advisor Class

    100           6,105   

Hartford International Opportunities Fund/The – Class Y

    248           4,463   

Heartland Value Fund

    100           4,972   

Invesco American Value R5 Fund

    100           4,028   

Janus Overseas Fund – Class T

    100           3,551   

Janus Venture Fund – Class T

    100           6,174   

 

See accompanying notes which are an integral part of these financial statements.

 

12


 

THE SOUND MIND INVESTING FUND

SCHEDULE OF INVESTMENTS

April 30, 2014 – (Unaudited), (Continued)

 

 

 

Mutual Funds 100.25% – continued   Shares        Fair Value  

Mutual Funds Less Than 1% of The Sound
Mind Investing Fund’s Net Assets – 3.83% (b) – continued

      

JPMorgan Mid Cap Value Fund – Institutional Class

    100         $ 3,618   

JPMorgan Small Cap Equity Fund – Class S

    226           11,149   

Kinetics Small Cap Opportunities Fund – Institutional Class *

    70,036           2,801,445   

Longleaf Partners Fund

    150           5,202   

Longleaf Partners Small-Cap Fund

    100           3,411   

Morgan Stanley Institutional Fund, Inc. – International Small Cap Portfolio – Institutional Class

    36           538   

Neuberger Berman Genesis Fund – Institutional Class

    100           5,939   

Oakmark International Fund – Institutional Class

    150           4,017   

Oakmark International Small Cap Fund – Institutional Class

    150           2,691   

Oppenheimer Small and Mid Cap Value Fund – Class Y

    100           4,631   

Perkins Mid Cap Value Fund – Class T

    200           4,754   

Principal SmallCap Growth Fund I – Institutional Class

    200           2,668   

Royce Low-Priced Stock Fund – Investment Class

    150           2,113   

Royce Opportunity Fund – Investor Class

    151           2,353   

Royce Premier Fund – Investor Class

    300           6,777   

Royce Special Equity Fund – Investor Class

    100           2,401   

Royce Special Equity Fund – Institutional Class

    150           3,582   

Royce Value Fund – Institutional Class

    100           1,349   

Sterling Capital Special Opportunities Fund

    108,803           2,452,412   

T. Rowe Price International Discovery Fund

    150           8,553   

T. Rowe Price New Horizons Fund

    100           4,417   

T. Rowe Price Small-Cap Value Fund

    100           4,963   

TIAA-CREF International Equity Fund – Institutional Class

    100           1,185   

Tweedy Browne Global Value Fund

    150           4,112   

Vanguard Strategic Equity Fund – Investor Class

    100           3,110   

Wasatch Emerging Markets Small Cap Fund

    1,000           2,610   

Wasatch International Growth Fund

    150           4,212   
      

 

 

 

TOTAL MUTUAL FUNDS LESS THAN 1% OF THE SOUND
MIND INVESTING FUND’S NET ASSETS (Cost $10,519,148)

   

       11,244,957   
      

 

 

 

TOTAL MUTUAL FUNDS (Cost $265,855,344)

         294,140,917   
      

 

 

 

 

See accompanying notes which are an integral part of these financial statements.

 

13


 

THE SOUND MIND INVESTING FUND

SCHEDULE OF INVESTMENTS

April 30, 2014 – (Unaudited), (Continued)

 

 

 

Money Market Securities – 0.02%   Shares        Fair Value  

Fidelity Institutional Money Market Portfolio – Institutional Class, 0.090% (c)

    66,584         $ 66,584   
      

 

 

 

TOTAL MONEY MARKET SECURITIES (Cost $66,584)

         66,584   
      

 

 

 

TOTAL INVESTMENTS – 100.27% (Cost $265,921,928)

       $ 294,207,501   
      

 

 

 

Liabilities in excess of other assets – (0.27)%

         (793,868
      

 

 

 

TOTAL NET ASSETS – 100.00%

       $ 293,413,633   
      

 

 

 

 

(a) A portion of this security may be deemed illiquid due to the Investment Company Act of 1940 provision stating that no issuer of any investment company security purchased or acquired by a registered investment company shall be obligated to redeem such security in an amount exceeding 1 per centum of such issuer’s total outstanding shares during any period of less than thirty days.
(b) Small investments are occasionally retained in mutual funds that are closed to new investment, or in the manager’s opinion are at risk to close, so as to allow the Fund the flexibility to reinvest in these funds in the future.
(c) Rate disclosed is the seven day yield as of April 30, 2014.
* Non-income producing security.

 

See accompanying notes which are an integral part of these financial statements.

 

14


 

THE SOUND MIND INVESTING BALANCED FUND

SCHEDULE OF INVESTMENTS

April 30, 2014 – (Unaudited)

 

 

 

Corporate Bonds – 6.86%   Principal
Amount
       Fair Value  

Ally Financial, Inc., 3.125%, 1/15/2016

  $ 25,000         $ 25,687   

Ally Financial, Inc., 5.500%, 2/15/2017

    55,000           59,916   

American Honda Finance Corp., 1.125%, 10/7/2016

    80,000           80,674   

American International Group, Inc., 5.050%, 10/1/2015

    70,000           74,248   

American International Group, Inc., 4.875%, 9/15/2016

    65,000           70,761   

American International Group, Inc., 3.800%, 3/22/2017

    70,000           74,934   

American International Group, Inc., 6.400%, 12/15/2020

    50,000           60,438   

Bank of America Corp., 4.500%, 4/1/2015

    200,000           207,045   

Bank of America Corp., 1.500%, 10/9/2015

    160,000           161,579   

Citigroup, Inc., 1.350%, 3/10/2017

    55,000           54,849   

Daimler Finance North America LLC, 1.250%, 1/11/2016 (a)

    90,000           90,761   

Entergy Texas, Inc., 3.600%, 6/1/2015

    55,000           56,651   

Ford Motor Credit Co. LLC, 3.875%, 1/15/2015

    100,000           102,323   

Ford Motor Credit Co. LLC, 3.984%, 6/15/2016 (a)

    65,000           68,033   

Ford Motor Credit Co. LLC, 4.250%, 2/3/2017

    90,000           96,884   

Ford Motor Credit Co. LLC, 5.000%, 5/15/2018

    140,000           155,569   

Ford Motor Credit Co. LLC, 4.375%, 8/6/2023

    55,000           57,740   

General Electric Capital Corp., 1.000%, 12/11/2015

    90,000           90,711   

General Electric Capital Corp., 1.000%, 1/8/2016

    90,000           90,639   

Goldman Sachs Group, Inc./The, 3.700%, 8/1/2015

    45,000           46,632   

Goldman Sachs Group, Inc./The, 1.600%, 11/23/2015

    85,000           85,923   

Goldman Sachs Group, Inc./The, 1.425%, 4/30/2018 (b)

    85,000           86,286   

Hartford Financial Services Group, Inc., 5.500%, 10/15/2016

    60,000           66,283   

Hartford Financial Services Group, Inc., 5.375%, 3/15/2017

    65,000           71,933   

JPMorgan Chase & Co., 0.854%, 2/26/2016 (b)

    75,000           75,428   

JPMorgan Chase & Co., 3.250%, 9/23/2022

    55,000           54,443   

Liberty Mutual Group, Inc., 6.700%, 8/15/2016 (a)

    25,000           28,036   

Morgan Stanley, 1.485%, 2/25/2016 (b)

    40,000           40,593   
      

 

 

 

TOTAL CORPORATE BONDS (Cost $2,161,260)

         2,234,999   
      

 

 

 

Foreign Bonds Denominated in U.S. Dollars – 0.73%

      

ING Bank NV, 3.750%, 3/7/2017 (a)

    165,000           175,665   

Petrobras Global Finance BV, 2.366%, 1/15/2019 (b)

    35,000           34,860   

Petroleos Mexicanos, 3.500%, 7/18/2018

    25,000           25,969   
      

 

 

 

TOTAL FOREIGN BONDS DENOMINATED
IN U.S. DOLLARS (Cost $224,512)

         236,494   
      

 

 

 

 

See accompanying notes which are an integral part of these financial statements.

 

15


 

THE SOUND MIND INVESTING BALANCED FUND

SCHEDULE OF INVESTMENTS

April 30, 2014 – (Unaudited), (Continued)

 

 

 

U.S. Treasury Obligations – 17.59%   Principal
Amount
       Fair Value  

U.S. Treasury Note, 0.250%, 3/31/2015

  $ 2,330,000         $ 2,333,504   

U.S. Treasury Note, 0.250%, 5/31/2015

    2,680,000           2,683,926   

U.S. Treasury Note, 1.500%, 1/31/2019

    715,000           711,202   
      

 

 

 

TOTAL U.S. TREASURY OBLIGATIONS (Cost $5,726,373)

         5,728,632   
      

 

 

 

Asset-Backed Securities – 9.37%

      

American Airlines Pass Through Trust,
Series 2011-1, Class A, 5.250%, 1/31/2021

    24,364           26,313   

Banc of America Merrill Lynch Commercial Mortgage, Inc., Series 2006-3, 5.889%, 7/10/2044 (b)

    63,883           69,299   

Burlington Northern and Santa Fe Railway Co. Pass Through Trust, Series 2004-1, 4.575%, 1/15/2021

    57,101           61,614   

Burlington Northern and Santa Fe Railway Co. Pass Through Trust, Series 2001-2, 6.462%, 1/15/2021

    22,452           25,505   

Burlington Northern and Santa Fe Railway Co. Pass Through Trust, Series 2005-4, 4.967%, 4/1/2023

    16,918           18,411   

Citigroup Commercial Mortgage Trust,
Series 2012-GC8, Class A1, 0.685%, 9/10/2045

    35,890           35,801   

Commercial Mortgage Pass Through Certificates, 0.666%, 10/15/2045

    25,731           25,632   

Commercial Mortgage Trust,
Series 2007-GC9, Class A7, 5.444%, 3/10/2039

    30,000           32,859   

Conseco Financial Corp., 7.600%, 4/15/2026 (b)

    36,801           32,012   

Countrywide Asset-Backed Certificates, 0.372%, 10/25/2036 (b)

    16,292           15,849   

Credit Suisse First Boston Mortgage Securities Corp.,
Series 2005-10, Class 7A1, 5.000%, 9/25/2015

    704           707   

Credit Suisse Mortgage Capital Certificates,
Series 2009-12R, Class 41A1, 5.250%, 3/27/2037 (a) (b)

    13,979           14,655   

DBRR Trust, Series 2012-EZ1, Class A, 0.946%, 9/25/2045 (a)

    49,558           49,562   

Delta Air Lines Pass Through Trust,
Series 2007-1, Class A, 6.821%, 8/10/2022

    29,277           34,474   

Fannie Mae, Pool # 465468, 3.330%, 7/1/2020

    74,321           79,420   

Fannie Mae, Pool # 466284, 3.330%, 10/1/2020

    89,942           94,500   

Fannie Mae, Pool # 466890, 3.230%, 11/1/2020

    89,533           93,623   

Fannie Mae, Pool # AM2182, 2.160%, 1/1/2023

    151,242           144,020   

Fannie Mae, Pool # AA4328, 4.000%, 4/1/2024

    37,929           40,357   

Fannie Mae, Pool # AB2822, 2.500%, 3/1/2026

    29,547           29,814   

Fannie Mae, Pool # AM1671, 2.100%, 12/1/2027

    55,840           53,092   

Fannie Mae, Pool # MA1604, 2.000%, 7/1/2028

    52,205           50,834   

 

See accompanying notes which are an integral part of these financial statements.

 

16


 

THE SOUND MIND INVESTING BALANCED FUND

SCHEDULE OF INVESTMENTS

April 30, 2014 – (Unaudited), (Continued)

 

 

 

Asset-Backed Securities – 9.37% – continued   Principal
Amount
       Fair Value  

Fannie Mae, Pool # 464398, 5.970%, 1/1/2040

  $ 19,083         $ 21,521   

Fannie Mae, Pool # 464400, 5.970%, 1/1/2040

    14,312           16,140   

Fannie Mae, Pool # 466890, 5.100%, 12/1/2040

    23,978           25,874   

Fannie Mae REMICS, Series 2004-67, Class VC, 4.500%, 2/25/2025

    14,936           15,061   

Fannie Mae REMICS, 4.000%, 2/25/2033

    94,446           94,223   

Fannie Mae-Aces, Series 2013-M5, Class ASQ2, 0.595%, 8/25/2015

    111,952           112,214   

Fannie Mae-Aces, 0.478%, 9/25/2015 (b)

    130,000           130,102   

Fannie Mae-Aces, 2.325%, 7/25/2023 (b)

    78,371           78,940   

Freddie Mac REMICS, Series 3609, Class LA, 4.000%, 12/15/2024

    54,210           57,126   

Freddie Mac REMICS, Series 3873, Class DG, 3.000%, 7/15/2027

    13,288           13,658   

GE Capital Commercial Mortgage Corp.,
Series 2004-C3, Class A4, 5.189%, 7/10/2039 (b)

    1,552           1,553   

Ginnie Mae, Pool # AB2583, 2.140%, 8/15/2023

    87,678           86,833   

Ginnie Mae, Pool # AD0091, 2.730%, 6/15/2032

    226,500           220,160   

GS Mortgage Securities Corp. II,
Series 2012-GCJ9, Class A1, 0.662%, 11/10/2045

    40,118           39,988   

GS Mortgage Securities Trust,
Series 2007-GG10, Class A4, 5.997%, 8/10/2045 (b)

    91,095           101,277   

Hertz Vehicle Financing LLC,
Series 2011-1A, Class A1, 2.200%, 3/25/2016 (a)

    110,000           111,164   

Hertz Vehicle Financing LLC,
Series 2013-1A, Class A1, 1.120%, 8/25/2017 (a)

    90,000           90,132   

Home Equity Loan Trust,
Series 2003-HS3, Class A2A, 0.432%, 8/25/2033 (b)

    9,865           9,173   

Home Equity Mortgage Trust,
Series 2006-1, Class A2, 5.800%, 5/25/2036

    28,690           24,581   

JPMBB Commercial Mortgage Securities Trust,
Series 2013-C14, Class A1, 1.260%, 8/15/2046

    120,105           120,689   

JPMorgan Chase Commercial Mortgage Securities Trust, Series 2012-C8, Class A1, 0.705%, 10/15/2045

    32,290           32,307   

Mid-State Trust, Series 11, Class A1, 4.864%, 7/15/2038

    16,009           17,206   

Morgan Stanley Bank of America Merrill Lynch Trust,
Series 2012-C6, Class A1, 0.664%, 11/15/2045

    32,724           32,626   

MSCC Heloc Trust, Series 2007-1, Class A, 0.252%, 12/25/2031 (b)

    70,556           65,993   

Northwest Airlines Pass Through Trust,
Series 2007-1, Class A, 7.027%, 11/1/2019

    42,350           48,279   

Structured Asset Securities Corp. Mortgage Loan Trust,
Series 2005-S6, Class A2, 0.732%, 11/25/2035 (b)

    528           528   

 

See accompanying notes which are an integral part of these financial statements.

 

17


 

THE SOUND MIND INVESTING BALANCED FUND

SCHEDULE OF INVESTMENTS

April 30, 2014 – (Unaudited), (Continued)

 

 

 

Asset-Backed Securities – 9.37% – continued   Principal
Amount or
Shares
       Fair Value  

Structured Asset Securities Corp. Mortgage Loan Trust,
Series 2005-S7, Class A2, 0.452%, 12/25/2035 (a) (b)

  $ 18,003         $ 17,467   

Structured Asset Securities Corp. Mortgage Loan Trust,
Series 2006-S2, Class A2, 5.500%, 6/25/2036

    59,940           40,022   

UBS-Barclays Commercial Mortgage Trust, 0.726%, 8/10/2049

    49,725           49,403   

Union Pacific Railroad Co. 2003 Pass Through Trust,
Series 03-1, 4.698%, 1/2/2024

    9,631           10,328   

Union Pacific Railroad Co. 2004 Pass Through Trust,
Series 04-1, 5.404%, 7/2/2025

    61,683           66,917   

Union Pacific Railroad Co. 2005 Pass Through Trust,
Series 05-1, 5.082%, 1/2/2029

    44,936           49,547   

Union Pacific Railroad Co. 2006 Pass Through Trust,
Series 06-1, 5.866%, 7/2/2030

    27,346           31,569   

US Airways Pass 2011-1 Through Trust, Series A, 7.125%, 10/22/2023

    25,393           29,456   

US Airways Pass 2012-1 Through Trust, Series A, 5.900%, 10/1/2024

    46,355           51,802   

Wells Fargo Commercial Mortgage Trust,
Series 2012-LC5, Class A1, 0.687%, 10/15/2045

    65,133           65,016   

WF-RBS Commercial Mortgage Trust,
Series 2012-C10, Class A1, 0.734%, 12/15/2045

    44,644           44,572   
      

 

 

 

TOTAL ASSET-BACKED SECURITIES (Cost $2,979,464)

         3,051,800   
      

 

 

 

Mutual Funds – 62.29%

      

American Century International Discovery Fund

    68,925           909,808   

AMG Managers Skyline Special Equities Fund

    20,351           787,786   

Bogle Investment Management Small Cap Growth Fund

    27,219           950,204   

Cambiar Aggressive Value Fund *

    71,408           1,271,065   

Davis Opportunity Fund

    6,896           243,299   

DFA International Small Cap Value Portfolio

    52,444           1,127,538   

Dreyfus Opportunistic Midcap Value Fund – Institutional Class

    19,887           812,176   

Federated MDT Stock Trust

    40,279           1,147,944   

Fidelity International Small Cap Fund

    100           2,671   

Fidelity OTC Portfolio

    14,098           1,072,008   

Hotchkis and Wiley Mid-Cap Value Fund – Institutional Class

    19,210           816,637   

Janus Contrarian Fund – Class T

    45,304           980,829   

Kinetics Small Cap Opportunities Fund – Institutional Class *

    34,621           1,384,839   

Legg Mason Opportunity Trust – Institutional Class

    97,679           1,809,022   

Longleaf Partners Small-Cap Fund

    89           3,019   

 

See accompanying notes which are an integral part of these financial statements.

 

18


 

THE SOUND MIND INVESTING BALANCED FUND

SCHEDULE OF INVESTMENTS

April 30, 2014 – (Unaudited), (Continued)

 

 

 

Mutual Funds – 62.29% – continued   Shares        Fair Value  

Lord Abbett Developing Growth Fund – Institutional Class

    28,033         $ 758,294   

Morgan Stanley Institutional Fund, Inc. – Growth Portfolio

    29,571           1,075,489   

Oakmark International Fund – Institutional Class

    100           2,678   

Oberweis Micro-Cap Fund (c) *

    46,686           893,095   

Oppenheimer International Small Co. Fund – Class Y

    33,227           1,089,512   

PRIMECAP Odyssey Aggressive Growth Fund

    33,558           990,286   

Scout Unconstrained Bond Fund – Institutional Class

    29,586           347,337   

Sterling Capital Special Opportunities Fund – Institutional Class

    7,381           166,369   

Touchstone Sands Capital Select Growth Fund – Class Y

    31,667           536,759   

Vanguard International Explorer Fund

    57,742           1,103,445   

Wasatch Emerging Markets Small Cap Fund

    700           1,827   
      

 

 

 

TOTAL MUTUAL FUNDS (Cost $18,594,669)

         20,283,936   
      

 

 

 

Money Market Securities – 2.73%

      

Fidelity Institutional Money Market Portfolio – Institutional Class, 0.09% (d)

    888,025           888,025   
      

 

 

 

TOTAL MONEY MARKET SECURITIES (Cost $888,025)

         888,025   
      

 

 

 

TOTAL INVESTMENTS – 99.57% (Cost $30,574,303)

       $ 32,423,886   
      

 

 

 

Other assets in excess of liabilities – 0.43%

         140,476   
      

 

 

 

TOTAL NET ASSETS – 100.00%

       $ 32,564,362   
      

 

 

 

 

(a) Security exempt from registration under Rule 144A or Section 4(2) of the Securities Act of 1933. The security may be resold in transactions exempt from registration, normally to qualified institutional buyers.
(b) Variable or Floating Rate Security. Rate disclosed is as of April 30, 2014.
(c) A portion of this security may be deemed illiquid due to the Investment Company Act of 1940 provision stating that no issuer of any investment company security purchased or acquired by a registered investment company shall be obligated to redeem such security in an amount exceeding 1 per centum of such issuer’s total outstanding shares during any period of less than thirty days.
(d) Rate disclosed is the seven day yield as of April 30, 2014.
* Non-income producing security.

 

Centrally Cleared Credit
Default Swaps – Buy
Protection (e)

  Name   Acquisition
Date
  Maturity
Date
  Implied
Credit
Spread at
April 30,
2014 (f)
    Notional
Amount (g)
    Appreciation/
(Depreciation)
 

CDX North America Investment Grade Credit Default Swap Index

  Markit CDX.
NA. IG. 22
  4/15/2014   6/20/2019     0.64   $      610,000      $              1,243   
         

 

 

   

 

 

 

(Markit CDX. NA. IG. 22) contract to pay a premium equal to 1% of the notional amount.

           

 

See accompanying notes which are an integral part of these financial statements.

 

19


 

THE SOUND MIND INVESTING BALANCED FUND

SCHEDULE OF INVESTMENTS

April 30, 2014 – (Unaudited), (Continued)

 

 

 

 

(e) When a credit event occurs as defined under the terms of the swap contract, the Fund as a buyer of credit protection will either (i) receive a net amount equal to the par value of the defaulted reference entity and deliver the reference entity or (ii) receive a net amount equal to the par value of the defaulted reference entity less its recovery value.
(f) Implied credit spread, represented in absolute terms, utilized in determining the market value of the credit default swap contracts as of period will serve as an indicator of the payment/performance risk and represent the likelihood of risk of default for the credit derivative. The implied credit spread of a referenced entity reflects the cost of buying/selling protection and may include upfront payments required to be made to enter into the contract. Generally, wider credit spreads represent a perceived deterioration of the referenced entity’s credit soundness and a greater likelihood or risk of default or other credit event occurring as defined under the terms of the swap contract.
(g) The notional amount represents the maximum potential the Fund may receive as a buyer of credit protection if a credit event occurs, as defined under the terms of the swap contract, for each security included in the CDX North America Investment Grade Index.

 

See accompanying notes which are an integral part of these financial statements.

 

20


 

THE SMI DYNAMIC ALLOCATION FUND

SCHEDULE OF INVESTMENTS

April 30, 2014 – (Unaudited)

 

 

 

Exchange-Traded Funds – 95.67%   Shares        Fair Value  

Health Care Select Sector SPDR Fund

    37,930         $ 2,204,492   

iShares MSCI EAFE ETF (b)

    428,380           29,266,922   

iShares MSCI France ETF

    39,260           1,179,371   

iShares MSCI Germany Fund

    35,840           1,135,411   

iShares MSCI Italy Capped ETF

    70,190           1,266,228   

iShares MSCI Netherlands ETF

    43,870           1,127,898   

iShares MSCI Spain Capped ETF

    28,390           1,191,528   

iShares MSCI Switzerland Capped ETF

    33,680           1,179,810   

iShares U.S. Technology ETF

    21,620           1,964,826   

SPDR S&P 500 ETF Trust (b)

    145,605           27,436,350   

Vanguard REIT ETF (b)

    495,370           36,132,288   
      

 

 

 

TOTAL EXCHANGE-TRADED FUNDS (Cost $96,978,903)

         104,085,124   
      

 

 

 

Mutual Funds – 3.15%

      

Fidelity Select Electronics Portfolio

    49,217           3,425,030   
      

 

 

 

TOTAL MUTUAL FUNDS (Cost $3,515,000)

         3,425,030   
      

 

 

 

Money Market Securities – 2.07%

      

Fidelity Institutional Money Market Portfolio – Institutional Class, 0.09% (a)

    2,250,479           2,250,479   
      

 

 

 

TOTAL MONEY MARKET SECURITIES (Cost $2,250,479)

         2,250,479   
      

 

 

 

TOTAL INVESTMENTS – 100.89% (Cost $102,744,382)

       $ 109,760,633   
      

 

 

 

Liabilities in excess of other assets – (0.89)%

         (963,905
      

 

 

 

TOTAL NET ASSETS – 100.00%

       $ 108,796,728   
      

 

 

 

 

(a) Rate disclosed is the seven day yield as of April 30, 2014.
(b) For a schedule of each Fund’s holdings please refer to each Fund’s most recent semi annual or annual report filed at www.sec.gov.
ETF – Exchange-Traded Fund

 

See accompanying notes which are an integral part of these financial statements.

 

21


 

THE SOUND MIND INVESTING FUNDS

STATEMENTS OF ASSETS AND LIABILITIES

April 30, 2014 – (Unaudited)

 

 

 

    The Sound Mind
Investing Fund
    The Sound Mind
Investing
Balanced Fund
    The SMI
Dynamic
Allocation Fund
 

Assets

     

Investment in securities:

     

At cost

  $ 265,921,928      $ 30,574,303      $ 102,744,382   
 

 

 

   

 

 

   

 

 

 

At fair value

  $ 294,207,501      $ 32,423,886      $ 109,760,633   

Receivable for investments sold

    1,504,165        239,097          

Receivable for fund shares sold

    261,289        113,523        1,308,763   

Dividend and interest receivable

    25        33,466        109   

Receivable for variation margin on swap contracts

           408          

Segregated cash collateral for outstanding swap contracts

           10,251          

Prepaid expenses

    15,274        12,233        42,418   
 

 

 

   

 

 

   

 

 

 

Total assets

    295,988,254        32,832,864        111,111,923   
 

 

 

   

 

 

   

 

 

 

Liabilities

     

Cash overdraft

           119,633          

Payable for investments purchased

    750,000               2,201,695   

Payable for fund shares redeemed

    1,505,848        91,624        9,405   

Payable to Adviser

    242,942        22,073        82,903   

Payable to administrator, fund accountant, and transfer agent

    35,657        11,693        7,248   

Payable to custodian

    8,385        3,908        3,497   

Payable to trustees

    479        900        596   

Other accrued expenses

    31,310        18,671        9,851   
 

 

 

   

 

 

   

 

 

 

Total liabilities

    2,574,621        268,502        2,315,195   
 

 

 

   

 

 

   

 

 

 

Net Assets

  $ 293,413,633      $ 32,564,362      $ 108,796,728   
 

 

 

   

 

 

   

 

 

 

Net Assets consist of:

     

Paid-in capital

  $ 230,546,307      $ 28,187,114      $ 102,985,187   

Accumulated undistributed net investment (loss)

    (2,016,775     (177,476     (345,530

Accumulated undistributed net realized gain (loss) from investment transactions

    36,598,528        2,703,898        (859,180

Net unrealized appreciation on:

     

Investments

    28,285,573        1,849,583        7,016,251   

Swap contracts

           1,243          
 

 

 

   

 

 

   

 

 

 

Net Assets

  $ 293,413,633      $ 32,564,362      $ 108,796,728   
 

 

 

   

 

 

   

 

 

 

Shares outstanding (unlimited number of shares authorized, no par value)

    21,693,009        2,864,252        9,714,261   
 

 

 

   

 

 

   

 

 

 

Net Asset Value (“NAV”) and offering price per share

  $ 13.53      $ 11.37      $ 11.20   
 

 

 

   

 

 

   

 

 

 

Redemption price per share (NAV * 98%) (a)

  $ 13.26      $ 11.14      $ 10.98   
 

 

 

   

 

 

   

 

 

 

 

(a) The Funds charge a 2% redemption fee on shares redeemed within 60 days of purchase. Shares are redeemed at the NAV if held longer than 60 days.

 

See accompanying notes which are an integral part of these financial statements.

 

22


 

THE SOUND MIND INVESTING FUNDS

STATEMENTS OF OPERATIONS

For the six months ended April 30, 2014 – (Unaudited)

 

 

 

     The Sound Mind
Investing Fund
    The Sound Mind
Investing
Balanced Fund
    The SMI
Dynamic
Allocation Fund
 

Investment Income

      

Dividend income

   $ 1,716,735      $ 72,004      $ 1,139,457   

Interest income

            116,379          
  

 

 

   

 

 

   

 

 

 

Total Investment Income

     1,716,735        188,383        1,139,457   
  

 

 

   

 

 

   

 

 

 

Expenses

      

Investment Adviser

     1,477,099        141,711        426,525   

Administration

     55,645        5,032        14,096   

Fund accounting

     29,613        1,661        6,937   

Transfer agent

     35,437        9,179        13,983   

Legal

     8,097        8,632        8,790   

Registration

     16,111        11,908        11,107   

Custodian

     11,759        4,856        4,502   

Audit

     7,052        8,926        9,686   

Trustee

     3,285        3,285        2,490   

CCO

     1,844        1,844        1,124   

Miscellaneous

     37,038        14,723        11,664   
  

 

 

   

 

 

   

 

 

 

Total Expenses

     1,682,980        211,757        510,904   

Fees waived by Adviser

            (30,559       

Other expense reductions (a)

     (28,486     (2,455       
  

 

 

   

 

 

   

 

 

 

Net Operating Expenses

     1,654,494        178,743        510,904   
  

 

 

   

 

 

   

 

 

 

Net Investment Income

     62,241        9,640        628,553   
  

 

 

   

 

 

   

 

 

 

Net Realized and Unrealized Gain (Loss) on Investments and Swap Contracts

      

Long term capital gain dividends from investment companies

   $ 6,981,522      $ 475,604      $ 338,947   

Net realized gain on investment transactions

     30,566,747        2,228,979        517,878   

Net change in unrealized appreciation (depreciation) on investments

     (25,407,876     (1,838,595     2,351,190   

Net change in unrealized appreciation on swap contracts

            1,243          
  

 

 

   

 

 

   

 

 

 

Net realized and unrealized gain on investments and swap contracts

     12,140,393        867,231        3,208,015   
  

 

 

   

 

 

   

 

 

 

Net increase in net assets resulting from operations

   $ 12,202,634      $ 876,871      $ 3,836,568   
  

 

 

   

 

 

   

 

 

 

 

(a) Certain funds in which the Fund invests refund a portion of the distribution fee charged.

 

See accompanying notes which are an integral part of these financial statements.

 

23


 

THE SOUND MIND INVESTING FUND

STATEMENTS OF CHANGES IN NET ASSETS

 

 

 

     For the
six months ended
April 30, 2014
(Unaudited)
    Year ended
October 31, 2013
 

Increase in Net Assets due to:

    

Operations

    

Net investment income (loss)

   $ 62,241      $ (1,093,921

Long term capital gain dividends from investment companies

     6,981,522        2,086,102   

Net realized gain on investment transactions

     30,566,747        29,446,203   

Net change in unrealized appreciation (depreciation) on investments

     (25,407,876     46,265,588   
  

 

 

   

 

 

 

Net increase in net assets resulting from operations

     12,202,634        76,703,972   
  

 

 

   

 

 

 

Distributions

    

From net investment income

     (985,095     (8,906

From net realized gains

     (30,426,944     (11,101,278
  

 

 

   

 

 

 

Total distributions

     (31,412,039     (11,110,184
  

 

 

   

 

 

 

Capital Transactions

    

Proceeds from shares sold

     21,696,113        28,410,260   

Proceeds from redemption fees (a)

     5,632        3,705   

Reinvestment of distributions

     30,865,319        10,902,326   

Amount paid for shares redeemed

     (32,979,360     (83,966,360
  

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from capital transactions

     19,587,704        (44,650,069
  

 

 

   

 

 

 

Total Increase in Net Assets

     378,299        20,943,719   
  

 

 

   

 

 

 

Net Assets

    

Beginning of period

     293,035,334        272,091,615   
  

 

 

   

 

 

 

End of period

   $ 293,413,633      $ 293,035,334   
  

 

 

   

 

 

 

Accumulated net investment loss

   $ (2,016,775   $ (1,093,921
  

 

 

   

 

 

 

Share Transactions

    

Shares sold

     1,548,561        2,233,548   

Shares issued in reinvestment of distributions

     2,266,176        968,235   

Shares redeemed

     (2,373,628     (6,893,624
  

 

 

   

 

 

 

Net increase (decrease) in share transactions

     1,441,109        (3,691,841
  

 

 

   

 

 

 

 

(a) The Fund charges a 2% redemption fee on shares redeemed within 60 days of purchase. Shares are redeemed at the NAV if held longer than 60 days.

 

See accompanying notes which are an integral part of these financial statements.

 

24


 

THE SOUND MIND INVESTING BALANCED FUND

STATEMENTS OF CHANGES IN NET ASSETS

 

 

 

     For the
six months ended
April 30, 2014
(Unaudited)
    Year ended
October 31, 2013
 

Increase (decrease) in Net Assets due to:

    

Operations

    

Net investment income (loss)

   $ 9,640      $ (18,965

Long term capital gain dividends from investment companies

     475,604        136,250   

Net realized gain on investment transactions and swap contracts

     2,228,979        2,823,594   

Net change in unrealized appreciation (depreciation) on investments and swap contracts

     (1,837,352     2,910,633   
  

 

 

   

 

 

 

Net increase in net assets resulting from operations

     876,871        5,851,512   
  

 

 

   

 

 

 

Distributions

    

From net investment income

     (139,586     (87,797

From net realized gains

     (2,841,565     (576,661
  

 

 

   

 

 

 

Total distributions

     (2,981,151     (664,458
  

 

 

   

 

 

 

Capital Transactions

    

Proceeds from shares sold

     5,469,543        8,796,270   

Proceeds from redemption fees (a)

     759        5,091   

Reinvestment of distributions

     2,960,793        660,917   

Amount paid for shares redeemed

     (3,588,355     (22,081,663
  

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from capital transactions

     4,842,740        (12,619,385
  

 

 

   

 

 

 

Total Increase (Decrease) in Net Assets

     2,738,460        (7,432,331
  

 

 

   

 

 

 

Net Assets

    

Beginning of period

     29,825,902        37,258,233   
  

 

 

   

 

 

 

End of period

   $ 32,564,362      $ 29,825,902   
  

 

 

   

 

 

 

Accumulated net investment loss

   $ (177,476   $ (47,530
  

 

 

   

 

 

 

Share Transactions

    

Shares sold

     470,052        800,432   

Shares issued in reinvestment of distributions

     260,404        63,919   

Shares redeemed

     (310,455     (2,034,213
  

 

 

   

 

 

 

Net increase (decrease) in share transactions

     420,001        (1,169,862
  

 

 

   

 

 

 

 

(a) The Fund charges a 2% redemption fee on shares redeemed within 60 days of purchase. Shares are redeemed at the NAV if held longer than 60 days.

 

See accompanying notes which are an integral part of these financial statements.

 

25


 

THE SMI DYNAMIC ALLOCATION FUND

STATEMENTS OF CHANGES IN NET ASSETS

 

 

 

     For the
six months ended
April 30, 2014
(Unaudited)
    Period ended
October 31, 2013 (a)
 

Increase in Net Assets due to:

    

Operations

    

Net investment income

   $ 628,553      $ 311,274   

Long term capital gain dividends from investment companies

     338,947          

Net realized gain (loss) on investment transactions

     517,878        (1,716,005

Net change in unrealized appreciation on investments

     2,351,190        4,665,061   
  

 

 

   

 

 

 

Net increase in net assets resulting from operations

     3,836,568        3,260,330   
  

 

 

   

 

 

 

Distributions

    

From net investment income

     (1,285,357       
  

 

 

   

 

 

 

Total distributions

     (1,285,357       
  

 

 

   

 

 

 

Capital Transactions

    

Proceeds from shares sold

     42,208,437        72,307,252   

Proceeds from redemption fees (b)

     275        985   

Reinvestment of distributions

     1,264,696          

Amount paid for shares redeemed

     (5,517,548     (7,278,910
  

 

 

   

 

 

 

Net increase in net assets resulting from capital transactions

     37,955,860        65,029,327   
  

 

 

   

 

 

 

Total Increase in Net Assets

     40,507,071        68,289,657   
  

 

 

   

 

 

 

Net Assets

    

Beginning of period

     68,289,657          
  

 

 

   

 

 

 

End of period

   $ 108,796,728      $ 68,289,657   
  

 

 

   

 

 

 

Accumulated net investment income (loss)

   $ (345,530   $ 311,274   
  

 

 

   

 

 

 

Share Transactions

    

Shares sold

     3,869,251        6,916,492   

Shares issued in reinvestment of distributions

     116,347          

Shares redeemed

     (505,478     (682,351
  

 

 

   

 

 

 

Net increase in share transactions

     3,480,120        6,234,141   
  

 

 

   

 

 

 

 

(a) For the period February 28, 2013 (commencement of operations) through October 31, 2013.
(b) The Fund charges a 2% redemption fee on shares redeemed within 60 days of purchase. Shares are redeemed at the NAV if held longer than 60 days.

 

See accompanying notes which are an integral part of these financial statements.

 

26


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27


 

THE SOUND MIND INVESTING FUND

FINANCIAL HIGHLIGHTS

(For a share outstanding during each period)

 

 

 

     Six months ended
April 30, 2014
(Unaudited)
 

Selected Per Share Data:

  

Net asset value, beginning of period

   $ 14.47   
  

 

 

 

Income from investment operations:

  

Net investment income (loss)(a)

     0.01   

Net realized and unrealized gain (loss)

     0.61   
  

 

 

 

Total from investment operations

     0.62   
  

 

 

 

Less Distributions to Shareholders:

  

From net investment income

     (0.05

From net realized gain

     (1.51

From return of capital

       
  

 

 

 

Total distributions

     (1.56
  

 

 

 

Paid in capital from redemption fees(c)

       
  

 

 

 

Net asset value, end of period

   $ 13.53   
  

 

 

 

Total Return(d)

     4.23 %(e) 

Ratios and Supplemental Data:

  

Net assets, end of period (000)

   $ 293,414   

Ratio of expenses to average net assets(f)(g)

     1.12 %(j) 

Ratio of net investment income (loss) to average net assets(a)(h)

     0.04 %(j) 

Portfolio turnover rate

     49.02 %(e) 

 

(a) Recognition of the net investment income by the Fund is affected by the timing of the declaration of dividends by the underlying investment companies in which the Fund invests.
(b) Resulted in less than $0.005 per share.
(c) Redemption fee resulted in less than $0.005 per share.
(d) Total return in the above table represents the rate that the investor would have earned or lost on an investment in the Fund, assuming reinvestment of dividends.
(e) Not annualized.
(f) These ratios exclude the impact of expenses of the underlying funds in which the Fund invests as represented in the Schedule of Investments.
(g) This ratio does not include the effects of other expenses refunded by the underlying funds in which the Fund invests. If these refunds had been included, the ratio of expenses to average net assets would have been 1.10%, 1.17%, 1.15%, 1.14%, 1.21%, and 1.26% for the periods ended April 30, 2014, October 31, 2013, October 31, 2012, October 31, 2011, October 31, 2010 and October 31, 2009, respectively.
(h) This ratio is presented net of the other expenses refunded by the underlying funds in which the Fund invests.
(i) Portfolio turnover rate excludes $21,405,392 of purchases, which is the book value of securities acquired at the time of merger with SMI Managed Volatility Fund.
(j) Annualized.

 

See accompanying notes which are an integral part of these financial statements.

 

28


 

THE SOUND MIND INVESTING FUND

FINANCIAL HIGHLIGHTS

(For a share outstanding during each period) – (Continued)

 

 

 

Year ended
October 31,
2013

    Year ended
October 31,
2012
    Year ended
October 31,
2011
    Year ended
October 31,
2010
    Year ended
October 31,
2009
 
$ 11.36      $ 10.74      $ 10.71      $ 8.84      $ 7.63   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  (0.05            0.02        (0.04     (0.02
  3.66        0.62        0.04        1.91        1.27   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  3.61        0.62        0.06        1.87        1.25   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  (b)             (0.03              
  (0.50                            
                              (0.04

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  (0.50            (0.03            (0.04

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
                                

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
$ 14.47      $ 11.36      $ 10.74      $ 10.71      $ 8.84   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  33.01     5.77     0.50     21.15     16.57
$ 293,035      $ 272,092      $ 288,727      $ 283,892      $ 244,379   
  1.17     1.15     1.15     1.22     1.28
  (0.41 )%      0.00     0.13     (0.41 )%      (0.26 )% 
  93.59     187.39     165.12 %(i)      95.29     124.85

 

See accompanying notes which are an integral part of these financial statements.

 

29


 

THE SOUND MIND INVESTING BALANCED FUND

FINANCIAL HIGHLIGHTS

(For a share outstanding during each period)

 

 

 

     Six months ended
April 30, 2014
(Unaudited)
 

Selected Per Share Data:

  

Net asset value, beginning of period

   $ 12.20   
  

 

 

 

Income from investment operations:

  

Net investment income (loss)(b)

     0.01   

Net realized and unrealized gain (loss)

     0.37   
  

 

 

 

Total from investment operations

     0.38   
  

 

 

 

Less Distributions to Shareholders:

  

From net investment income

     (0.06

From net realized gain

     (1.15
  

 

 

 

Total distributions

     (1.21
  

 

 

 

Paid in capital from redemption fees

     (c) 
  

 

 

 

Net asset value, end of period

   $ 11.37   
  

 

 

 

Total Return(d)

     3.10 %(e) 

Ratios and Supplemental Data:

  

Net assets, end of period (000)

   $ 32,564   

Ratio of expenses to average net assets(f)(g)

     1.15 %(h) 

Ratio of expenses to average net assets before waiver and reimbursement(f)

     1.34 %(h) 

Ratio of net investment income (loss) to average net assets(b)(f)(i)

     0.06 %(h) 

Portfolio turnover rate

     148.03 %(e) 

 

(a) For the period December 30, 2010 (the date the Fund commenced operations) through October 31, 2011.
(b) Recognition of net investment income by the Fund is affected by the timing of the declaration of dividends by the underlying investment companies in which the Fund invests.
(c) Redemption fees resulted in less than $0.005 per share.
(d) Total return in the above table represents the rate that the investor would have earned on an investment in the Fund, assuming reinvestment of dividends.
(e) Not annualized.
(f) These ratios exclude the impact of expenses of the underlying funds in which the Fund may invest, as represented in the Schedule of Investments.
(g) This ratio does not include the effects of other expenses refunded by the underlying funds in which the Fund invests. If these refunds had been included, the ratio of expenses to average net assets would have been 1.13%, 1.14% and 1.14% for the periods ended April 30, 2014, October 31, 2012 and October 31, 2011, respectively.
(h) Annualized.
(i) This ratio is presented net of the other expenses refunded by the underlying funds in which the Fund invests.

 

See accompanying notes which are an integral part of these financial statements.

 

30


 

THE SOUND MIND INVESTING BALANCED FUND

FINANCIAL HIGHLIGHTS

(For a share outstanding during each period) – (Continued)

 

 

 

    
Year ended
October 31, 2013

    Year ended
October 31, 2012
    Period Ended
October 31, 2011(a)
 
$ 10.31      $ 9.70      $ 10.00   

 

 

   

 

 

   

 

 

 
  (0.02     0.03        (0.01
  2.11        0.63        (0.30

 

 

   

 

 

   

 

 

 
  2.09        0.66        (0.31

 

 

   

 

 

   

 

 

 
  (0.03     (0.05       
  (0.17              

 

 

   

 

 

   

 

 

 
  (0.20     (0.05       

 

 

   

 

 

   

 

 

 
  (c)      (c)      0.01   

 

 

   

 

 

   

 

 

 
$ 12.20      $ 10.31      $ 9.70   

 

 

   

 

 

   

 

 

 
  20.56     6.89     -3.00 %(e) 
$ 29,826      $ 37,258      $ 34,830   
  1.15     1.15     1.15 %(h) 
  1.52     1.49     1.80 %(h) 
  (0.06 )%      0.29     (0.17 )%(h) 
  270.30     349.33     276.04

 

See accompanying notes which are an integral part of these financial statements.

 

31


 

THE SMI DYNAMIC ALLOCATION FUND

FINANCIAL HIGHLIGHTS

(For a share outstanding during each period)

 

 

 

     Six months ended
April 30, 2014
(Unaudited)
    Period Ended
October 31, 2013(a)
 

Selected Per Share Data:

    

Net asset value, beginning of period

   $ 10.95      $ 10.00   
  

 

 

   

 

 

 

Income from investment operations:

    

Net investment income (loss)(b)

     0.09        0.05   

Net realized and unrealized gain (loss)

     0.34        0.90   
  

 

 

   

 

 

 

Total from investment operations

     0.43        0.95   
  

 

 

   

 

 

 

Less Distributions to Shareholders:

    

From net investment income

     (0.18       
  

 

 

   

 

 

 

Total distributions

     (0.18       
  

 

 

   

 

 

 

Paid in capital from redemption fees(c)

              
  

 

 

   

 

 

 

Net asset value, end of period

   $ 11.20      $ 10.95   
  

 

 

   

 

 

 

Total Return(d)

     3.98 %(e)      9.50 %(e) 

Ratios and Supplemental Data:

    

Net assets, end of period (000)

   $ 108,797      $ 68,290   

Ratio of expenses to average net assets(f)

     1.19 %(g)      1.30 %(g) 

Ratio of net investment income (loss) to
average net assets
(b)(f)

     1.47 %(g)      0.94 %(g) 

Portfolio turnover rate

     92.25 %(e)      68.64 %(e) 

 

(a) For the period February 28, 2013 (the date the Fund commenced operations) through October 31, 2013.
(b) Recognition of net investment income by the Fund is affected by the timing of the declaration of dividends by the underlying investment companies in which the Fund invests.
(c) Redemption fees resulted in less than $0.005 per share.
(d) Total return in the above table represents the rate that the investor would have earned on an investment in the Fund, assuming reinvestment of dividends.
(e) Not annualized.
(f) These ratios exclude the impact of expenses of the underlying funds in which the Fund may invest, as represented in the Schedule of Investments.
(g) Annualized.

 

See accompanying notes which are an integral part of these financial statements.

 

32


 

THE SOUND MIND INVESTING FUNDS

NOTES TO THE FINANCIAL STATEMENTS

April 30, 2014 – (Unaudited)

 

 

 

NOTE 1. ORGANIZATION

The Sound Mind Investing Fund (“SMI Fund”), Sound Mind Investing Balanced Fund (“SMI Balanced Fund”), and SMI Dynamic Allocation Fund (each a “Fund” and collectively, the “Funds”) are each a diversified series of The Valued Advisers Trust (the “Trust”). Pursuant to a reorganization that took place on February 28, 2013, the SMI Fund and SMI Balanced Fund are the successors to the series of the Unified Series Trust (the “Predecessor Funds”) with the same names. The Predecessor Funds had the same investment objectives and strategies and substantially the same investment policies as the Funds. The SMI Fund was organized on August 29, 2005 and commenced operations on December 2, 2005. The SMI Balanced Fund was organized on November 13, 2010 and commenced operations on December 30, 2010. The SMI Dynamic Allocation Fund was organized on December 11, 2012 and commenced operations on February 28, 2013. The Trust is a management investment company established under the laws of Delaware by an Agreement and Declaration of Trust dated June 13, 2008 (the “Trust Agreement”). The Trust Agreement permits the Trustees to issue an unlimited number of shares of beneficial interest of separate series without par value. Each Fund is one of a series of funds currently authorized by the Trustees. The investment adviser to the Funds is SMI Advisory Services, LLC (the “Adviser”). Scout Investments, Inc., (the “Subadviser”) through its REAMS Asset Management division, is the subadviser for the fixed income portion of the SMI Balanced Fund and subadviser for the fixed income investments (other than ETFs and other investment companies that invest primarily in fixed income securities) and cash investments for the SMI Dynamic Allocation Fund. The SMI Fund seeks to provide long-term capital appreciation. The SMI Balanced Fund seeks total return. The SMI Dynamic Allocation Fund seeks total return.

NOTE 2. SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant accounting policies followed by the Funds in the preparation of their financial statements. These policies are in conformity with generally accepted accounting principles in the United States of America (“GAAP”).

Securities Valuations – All investments in securities are recorded at their estimated fair value as described in Note 3.

Federal Income Taxes – The Funds make no provision for federal income or excise tax. The Funds intend to qualify each year as regulated investment companies (“RICs”) under subchapter M of the Internal Revenue Code of 1986, as amended, by complying with the requirements applicable to RICs and by distributing substantially all of their taxable income. The Funds also intend to distribute sufficient net investment income and net capital gains, if any, so that they will not be subject to excise tax on undistributed income and gains. If the required amount of net investment income or gains is not distributed, the Funds could incur a tax expense.

 

33


 

THE SOUND MIND INVESTING FUNDS

NOTES TO THE FINANCIAL STATEMENTS

April 30, 2014 – (Unaudited), (Continued)

 

 

 

NOTE 2. SIGNIFICANT ACCOUNTING POLICIES – (Continued)

As of and during the six months ended April 30, 2014, the Funds did not have a liability for any unrecognized tax benefits. The Funds recognize interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the statements of operations. During the period, the Funds did not incur any interest or penalties. Management of the Funds has reviewed tax positions taken in tax years that remain subject to examination by all major tax jurisdictions, including federal (i.e., the last four tax year ends and the interim tax period since then, as applicable). Management believes that there is no tax liability resulting from unrecognized tax benefits related to uncertain tax positions taken.

Expenses – Expenses incurred by the Trust that do not relate to a specific fund of the Trust are allocated to the individual funds based on each fund’s relative net assets or other appropriate basis (as determined by the Board).

Security Transactions and Related Income – The Funds follow industry practice and record security transactions on the trade date for financial reporting purposes. For financial statement and income tax purposes, the specific identification method is used for determining gains or losses on mutual funds and exchange-traded funds while the first in, first out method is used for determining gains or losses on all other security types. Dividend income is recorded on the ex-dividend date and interest income is recorded on an accrual basis. Short-term capital gain distributions from underlying funds are classified as dividend income for financial reporting purposes. Long-term capital gain distributions are broken out as such. Discounts and premiums on securities purchased are amortized or accreted using the effective interest method. The ability of issuers of debt securities held by the Funds to meet their obligations may be affected by economic and political developments in a specific country or region.

Dividends and Distributions – The Funds typically distribute substantially all of their net investment income in the form of dividends and taxable capital gains to their shareholders at least annually. These distributions, which are recorded on the ex-dividend date, are automatically reinvested in each Fund unless shareholders request cash distributions on their application or through a written request. The treatment for financial reporting purposes of distributions made to shareholders during the year from net investment income or net realized capital gains may differ from their ultimate treatment for federal income tax purposes. These differences are caused primarily by differences in the timing of the recognition of certain components of income, expense or realized capital gain for federal income tax purposes. Where such differences are permanent in nature, they are reclassified in the components of net assets based on their ultimate characterization for federal income tax purposes. Any such reclassifications will have no effect on net assets, results of operations, or net asset values per share of the Funds.

 

34


 

THE SOUND MIND INVESTING FUNDS

NOTES TO THE FINANCIAL STATEMENTS

April 30, 2014 – (Unaudited), (Continued)

 

 

 

NOTE 2. SIGNIFICANT ACCOUNTING POLICIES – (Continued)

Swap Contracts – The SMI Balanced Fund may enter into credit default swap contracts. A credit default swap involves a protection buyer and a protection seller. The Fund may be either a protection buyer or seller. The protection buyer makes periodic premium payments to the protection seller during the swap term in exchange for the protection seller agreeing to make certain defined payments to the protection buyer in the event that certain defined credit events occur with respect to a particular security, issuer, or basket of securities. The “notional amount” of the swap agreement is the agreed upon amount or value of the underlying asset used for calculating the obligations that the parties to a swap agreement have agreed to exchange. The Fund’s obligation under a swap agreement will be accrued daily (offset against amounts owed to the Fund) and any accrued but unpaid net amounts owed to a swap counterparty may be collateralized by designating liquid assets on the Fund’s books and records. The credit default swaps are marked to market daily based upon quotes received from a pricing service and any change in value is recorded in unrealized appreciation/depreciation. Periodic payments paid or received are recorded as realized gains/losses. Any premium paid or received by the Fund upon entering into a credit default swap contract is recorded as an asset or liability and amortized daily as a component of realized gain (loss) on the Statement of Operations. Payments made or received as a result of a credit event or termination of the contract are recognized, net of a proportional amount of the upfront payment, as realized gains/losses. In addition to bearing the risk that the credit event will occur as a protection seller, the Fund could be exposed to market risk due to unfavorable changes in interest rates or in the price of the underlying security or index, the possibility that the Fund may be unable to close out its position at the same time or at the same price as if it had purchased comparable publicly traded securities, or that the counterparty may default on its obligation to perform. Please see Note 4 for information on swap agreement activity during the fiscal period ended April 30, 2014.

NOTE 3. SECURITIES VALUATION AND FAIR VALUE MEASUREMENTS

Fair value is defined as the price that a Fund would receive upon selling an investment in a orderly transaction to an independent buyer in the principal or most advantageous market of the investment. GAAP establishes a three-tier hierarchy to maximize the use of observable market data and minimize the use of unobservable inputs and to establish classification of fair value measurements for disclosure purposes.

Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk, for example, the risk inherent in a particular valuation technique used to measure fair value including such a pricing model and/or the risk inherent in the inputs to the valuation technique. Inputs may be observable or unobservable. Observable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs are inputs that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.

 

35


 

THE SOUND MIND INVESTING FUNDS

NOTES TO THE FINANCIAL STATEMENTS

April 30, 2014 – (Unaudited), (Continued)

 

 

 

NOTE 3. SECURITIES VALUATION AND FAIR VALUE MEASUREMENTS – (Continued)

Various inputs are used in determining the value of the Funds’ investments. These inputs are summarized in the three broad levels listed below.

 

   

Level 1 – quoted prices in active markets for identical securities

 

   

Level 2 – other significant observable inputs (including, but not limited to, quoted prices for an identical security in an inactive market, quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)

 

   

Level 3 – significant unobservable inputs (including each Fund’s own assumptions in determining fair value of investments based on the best information available)

The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety, is determined based on the lowest level input that is significant to the fair value measurement in its entirety.

Equity securities, including exchange-traded funds, are generally valued by using market quotations, but may be valued on the basis of prices furnished by a pricing service when the Adviser believes such prices more accurately reflect the fair value of such securities. Securities that are traded on any stock exchange are generally valued by the pricing service at the last quoted sale price. Lacking a last sale price, an exchange traded security is generally valued by the pricing service at its last bid price. Securities traded in the NASDAQ over-the-counter market are generally valued by the pricing service at the NASDAQ Official Closing Price.

When using the market quotations or close prices provided by the pricing service and when the market is considered active, the security will be classified as a Level 1 security. Sometimes, an equity security owned by the Funds will be valued by the pricing service with factors other than market quotations or when the market is considered inactive. When this happens, the security will be classified as a Level 2 security. When market quotations are not readily available, when the Adviser determines that the market quotation or the price provided by the pricing service does not accurately reflect the current fair value, or when restricted or illiquid securities are being valued, such securities are valued as determined in good faith by the Adviser, in conformity with guidelines adopted by and subject to review by the Board. These securities will be categorized as Level 3 securities.

Investments in mutual funds, including money market mutual funds, are generally priced at the ending net asset value (“NAV”) provided by the service agent of the funds. These securities will be categorized as Level 1 securities.

 

36


 

THE SOUND MIND INVESTING FUNDS

NOTES TO THE FINANCIAL STATEMENTS

April 30, 2014 – (Unaudited), (Continued)

 

 

 

NOTE 3. SECURITIES VALUATION AND FAIR VALUE MEASUREMENTS – (Continued)

Derivative instruments that a Fund invests in, such as swap agreements, are generally traded over-the-counter. The credit default swaps the SMI Balanced Fund invests in will generally be valued at the mean of bid and ask prices provided by a major credit default swap pricing provider and will generally be classified as Level 2 securities.

Fixed income securities, including corporate bonds, foreign bonds denominated in U.S. dollars, U.S. treasury obligations and asset-backed securities, when valued using market quotations in an active market, will be categorized as Level 1 securities. However, they may be valued on the basis of prices furnished by a pricing service when the Adviser believes such prices more accurately reflect the fair value of such securities. A pricing service uses various inputs and techniques, which include broker-dealer quotations, live trading levels, recently executed transactions in securities of the issuer or comparable issuers, and option adjusted spread models that include base curve and spread curve inputs. Adjustments to individual bonds can be applied to recognize trading differences compared to other bonds issued by the same issuer. The broker-dealer quotations received are supported by credit analysis of the issuer that takes into consideration credit quality assessments, daily trading activity, and the activity of the underlying equities, listed bonds and sector-specific trends. Data used to establish quotes for asset-backed securities includes analysis of cash flows, pre-payment speeds, default rates, delinquency assumptions, and assumptions regarding collateral and loss. To the extent that these inputs are observable, the fixed income securities are categorized as Level 2 securities. If the Adviser decides that a price provided by the pricing service does not accurately reflect the fair value of the securities, when prices are not readily available from a pricing service, or when illiquid securities are being valued, securities are valued at fair value as determined in good faith by the Adviser, in conformity with guidelines adopted by and subject to review of the Board. These securities may be categorized as Level 3 securities.

Short-term investments in fixed income securities, (those with maturities of less than 60 days when acquired, or which subsequently are within 60 days of maturity), are valued by using the amortized cost method of valuation, which the Board has determined will represent fair value. These securities will be classified as Level 2 securities.

 

37


 

THE SOUND MIND INVESTING FUNDS

NOTES TO THE FINANCIAL STATEMENTS

April 30, 2014 – (Unaudited), (Continued)

 

 

 

NOTE 3. SECURITIES VALUATION AND FAIR VALUE MEASUREMENTS – (Continued)

In accordance with the Trust’s good faith pricing guidelines, the Adviser is required to consider all appropriate factors relevant to the value of securities for which it has determined other pricing sources are not available or reliable as described above. No single standard exists for determining fair value, because fair value depends upon the circumstances of each individual case. As a general principle, the current fair value of an issue of securities being valued by the Adviser would appear to be the amount which the owner might reasonably expect to receive for them upon their current sale. Methods which are in accordance with this principle may, for example, be based on (i) a multiple of earnings; (ii) a discount from market of a similar freely traded security (including a derivative security or a basket of securities traded on other markets, exchanges or among dealers); or (iii) yield to maturity with respect to debt issues, or a combination of these and other methods. Good faith pricing is permitted if, in the Adviser’s opinion, the validity of market quotations appears to be questionable based on factors such as evidence of a thin market in the security based on a small number of quotations, a significant event occurs after the close of a market but before a Fund’s NAV calculation that may affect a security’s value, or the Adviser is aware of any other data that calls into question the reliability of market quotations. Good faith pricing may also be used in instances when the bonds the Funds’ invest in may default or otherwise cease to have market quotations readily available.

The following is a summary of the inputs used to value the Funds’ investments as of April 30, 2014:

 

     Valuation Inputs  
SMI Fund   Level 1 – Quoted
Prices in Active
Markets
    Level 2 – Other
Significant
Observable
Inputs
    Level 3 –
Significant
Unobservable
Inputs
    Total  
Mutual Funds – greater than 1% of net assets   $ 282,895,960      $           —      $           —      $ 282,895,960   
Mutual Funds – less than 1% of net assets     11,244,957                      11,244,957   
Money Market Securities     66,584                      66,584   
Total   $     294,207,501      $      $      $     294,207,501   

 

38


 

THE SOUND MIND INVESTING FUNDS

NOTES TO THE FINANCIAL STATEMENTS

April 30, 2014 – (Unaudited), (Continued)

 

 

 

NOTE 3. SECURITIES VALUATION AND FAIR VALUE MEASUREMENTS – (Continued)

 

     Valuation Inputs  
SMI Balanced Fund   Level 1 – Quoted
Prices in Active
Markets
    Level 2 – Other
Significant
Observable
Inputs
    Level 3 –
Significant
Unobservable
Inputs
    Total  
Corporate Bonds   $      $ 2,234,999      $           —      $ 2,234,999   
Foreign Bonds Denominated in U.S. Dollars            236,494               236,494   
U.S. Treasury Obligations            5,728,632               5,728,632   
Asset-Backed Securities            3,051,800               3,051,800   
Mutual Funds     20,283,936                      20,283,936   
Money Market Securities     888,025                      888,025   
Total   $     21,171,961      $     11,251,925      $      $       32,423,886   

 

     Valuation Inputs  
Assets   Level 1 – Quoted
Prices in Active
Markets
    Level 2 – Other
Significant
Observable
Inputs
    Level 3 –
Significant
Unobservable
Inputs
    Total  
Other Financial Instruments*   $                    —      $ 1,243      $           —      $ 1,243   
Total   $      $              1,243      $      $                1,243   

* Credit Default Swaps (reflects net appreciation as of April 30, 2014)—See Note 4 for additional information related to these instruments.

 

39


 

THE SOUND MIND INVESTING FUNDS

NOTES TO THE FINANCIAL STATEMENTS

April 30, 2014 – (Unaudited), (Continued)

 

 

 

NOTE 3. SECURITIES VALUATION AND FAIR VALUE MEASUREMENTS – (Continued)

 

     Valuation Inputs  
SMI Dynamic
Allocation Fund
  Level 1 – Quoted
Prices in Active
Markets
    Level 2 – Other
Significant
Observable
Inputs
    Level 3 –
Significant
Unobservable
Inputs
    Total  
Exchange-Traded Funds   $     104,085,124      $           —      $           —      $ 104,085,124   
Mutual Funds     3,425,030                      3,425,030   
Money Market Securities     2,250,479                      2,250,479   
Total   $ 109,760,633      $      $      $     109,760,633   

The Funds did not hold any investments at any time during the reporting period in which significant unobservable inputs were used in determining fair value; therefore, no reconciliation of Level 3 securities is included for this reporting period. During the six months ended April 30, 2014, there were no transfers between levels. The Trust recognizes transfers between fair value hierarchy levels at the end of the reporting period.

NOTE 4. DERIVATIVE TRANSACTIONS

The SMI Balanced Fund may obtain exposure to the fixed income market by investing in credit default swap (“CDX”) contracts. The Fund used CDX contracts as an additional avenue in which to bring value to the Fund. The Fund may use CDX contracts as an alternative to buying, selling, or holding certain securities in the fixed income market. The use of CDX contracts may provide a less expensive, more expedient, or more specifically focused way to invest than traditional fixed income securities would. The Fund may enter into single name CDX agreements to gain exposure to a particular company when it is more economically attractive to do so rather than purchasing traditional bonds. The Fund may also invest in CDX index products and options thereon that allow the Fund to gain broad market exposure but with less company-specific risk than single name CDX agreements.

The SMI Balanced Fund enters into CDX contracts to gain exposure or to mitigate specific forms of credit risk. Swaps expose the Fund to counterparty risk (described below). The Fund could also suffer losses with respect to a swap agreement if the Fund is unable to terminate the agreement or reduce its exposure through offsetting transactions.

 

40


 

THE SOUND MIND INVESTING FUNDS

NOTES TO THE FINANCIAL STATEMENTS

April 30, 2014 – (Unaudited), (Continued)

 

 

 

NOTE 4. DERIVATIVE TRANSACTIONS – (Continued)

Many of the markets in which the SMI Balanced Fund participates in credit default transactions are “over the counter” or “interdealer” markets. The participants in these markets are typically not subject to credit evaluation and regulatory oversight as are members of “exchange based markets”. When the Fund invests in CDX contracts, it is assuming a credit risk with regard to parties with whom it trades and also bears the risk of settlement default. These risks may differ materially from those associated with transactions effected on an exchange, which generally are backed by clearing organization guarantees, daily marking-to-market and settlement, and segregation and minimum capital requirements applicable to intermediaries. Transactions entered into directly between two counterparties generally do not benefit from such protections. This exposes the Fund to the risk that the counterparty will not settle a transaction in accordance with its terms and conditions because of a dispute over the terms of the contract (whether or not bona fide) or because of a credit or liquidity problem, thus causing the Fund to suffer a loss. To mitigate counterparty risk, the Fund will sometimes require the counterparty to post collateral to the Fund’s custodian to cover the exposure.

The SMI Balanced Fund may also invest in credit default swap index products and in options on credit default swap index products. These instruments are designed to track segments of the credit default swap market and provide investors with exposure to specific “baskets” of issuers of bonds or loans. In general, the value of the credit default swap market provides investors with exposure to specific “baskets” of issuers of bonds or loans. In general, the value of the credit default swap index product will go up or down in response to changes in the perceived credit risk and default experience of the basket of issuers, instead of the exchange of the stream of payments for the payment of the notional amount (if a credit event occurs) that is the substance of a single name credit default swap. Such investments are subject to liquidity risks as well as counterparty and other risks associated with investments in credit default swaps discussed above.

In accordance with GAAP, the fair value of any credit default swaps can be found on the Statements of Operations under net realized gain on swap contracts.

At April 30, 2014:

 

Derivatives – Credit Risk   Location of Derivatives on
Statements of Assets  & Liabilities
      
Credit Default Swap Agreements   Receivable for variation margin on swap contracts   $     408   

 

41


 

THE SOUND MIND INVESTING FUNDS

NOTES TO THE FINANCIAL STATEMENTS

April 30, 2014 – (Unaudited), (Continued)

 

 

 

NOTE 4. DERIVATIVE TRANSACTIONS – (Continued)

For the six months ended April 30, 2014:

 

Derivatives   Location of Gain
(Loss) on
Derivatives on
Statements of
Operations
  Contracts
Opened
    Contracts
Closed
    Realized Gain
(Loss) on
Derivatives
    Change in
Unrealized
Appreciation
(Depreciation)
on  Derivatives
 

Credit Risk:

Credit Default Swap Agreements

  Net unrealized gain on swap contracts     1             $           —      $     1,243   

The Fund purchased a total notional value of swap agreements of $610,000 during the six months ended April 30, 2014. The Fund utilized credit derivative instruments in conjunction with investment securities in an effort to achieve its investment objective for the six months ended April 30, 2014.

As of April 30, 2014, the Fund segregated cash collateral for outstanding swap contracts in the amount of $10,251.

Balance Sheet Offsetting Information

The following table provides a summary of offsetting financial liabilities and derivatives and the effect of derivative instruments on the Statements of Assets and Liabilities as of April 30, 2014.

 

                        Gross Amounts Not Offset in
Statements of Assets and Liabilities
        
     Gross
Amounts of
Recognized
Assets
  Gross
Amounts
Offset in
Statements
of Assets
and
Liabilities
    Net
Amounts of
Assets
Presented in
Statements
of Assets
and
Liabilities
    Financial
Instruments
    Cash
Collateral
Pledged
    Net
Amount
(not less
than 0)
 
Credit Default Swap Agreements   $    408   $           —      $     408      $           —      $     (10,251   $           —   

 

42


 

THE SOUND MIND INVESTING FUNDS

NOTES TO THE FINANCIAL STATEMENTS

April 30, 2014 – (Unaudited), (Continued)

 

 

 

NOTE 5. FEES AND OTHER TRANSACTIONS WITH AFFILIATES

The Adviser, under the terms of the management agreement with respect to each Fund (each an “Agreement”), manages the Funds’ investments. As compensation for its management services, each Fund is obligated to pay the Adviser a fee based on the Fund’s average daily net assets as follows:

 

Fund Assets

  

SMI Fund
Management Fee

 

SMI Balanced Fund
Management Fee

 

SMI Dynamic Allocation
Fund Management Fee

$1 – $100 million    1.00%   0.90%   1.00%
$100,000,001 – $250 million    1.00%   0.80%   1.00%
$250,000,001 to $500 million    0.90%   0.70%   0.90%
Over $500 million    0.80%   0.60%   0.80%
Management fees earned    $    1,477,099   $    141,711   $    426,525
Fees waived and expenses reimbursed    $                —   $      (30,559)   $              —

The Adviser contractually has agreed to waive its management fee and/or reimburse certain operating expenses, but only to the extent necessary so that each Fund’s total annual operating expenses (excluding interest, taxes, brokerage commissions, other expenses which are capitalized in accordance with generally accepted accounting principles, extraordinary expenses, dividend expense on short sales, 12b-1 fees, and acquired fund fees and expenses) do not exceed 1.50% of the Fund’s average daily net assets with respect to the SMI Fund, 1.15% with respect to the SMI Balanced Fund, and 1.45% with respect to the SMI Dynamic Allocation Fund. The contractual arrangement for each Fund is in place through February 28, 2015. Each waiver or reimbursement by the Adviser is subject to repayment by the applicable Fund within the three fiscal years following the fiscal year in which the particular expense or reimbursement was incurred; provided that such Fund is able to make the repayment without exceeding the applicable expense limitation.

The amount subject to repayment by the SMI Balanced Fund, pursuant to the aforementioned conditions, at April 30, 2014 is as follows:

 

Amount    

Recoverable through
October 31,

 
$     126,597        2014   
  131,773        2015   
  116,168        2016   
  30,559        2017   

 

43


 

THE SOUND MIND INVESTING FUNDS

NOTES TO THE FINANCIAL STATEMENTS

April 30, 2014 – (Unaudited), (Continued)

 

 

 

NOTE 5. FEES AND OTHER TRANSACTIONS WITH AFFILIATES – (Continued)

The Trust retains Huntington Asset Services, Inc. (“HASI”) to manage the Funds’ business affairs and to provide the Funds with administrative services, including all regulatory reporting and necessary office equipment and personnel. The Trust also retains HASI to act as each Fund’s transfer agent and to provide fund accounting services. Expenses incurred by the Funds for these expenses are allocated to the individual Funds based on each Fund’s relative net assets. Certain officers of the Trust are members of management and/or employees of HASI. HASI operates as a wholly-owned subsidiary of Huntington Bancshares, Inc., the parent company of the principal distributor of the Funds and Huntington National Bank, the custodian of the Funds’ investments (the “Custodian”). A Trustee of the Trust is a member of management of the Custodian. For the six months ended April 30, 2014, fees for administrative, transfer agent, and fund accounting services, reimbursement of out-of-pocket expenses, and Custodian expenses and the amounts due to HASI and the Custodian at April 30, 2014 were as follows:

 

    

SMI Fund

    

SMI
Balanced Fund

    

SMI Dynamic
Allocation Fund

 
Administration expenses    $     55,645       $     5,032       $     14,096   
Transfer agent expenses      35,437         9,179         13,983   
Fund accounting expenses      29,613         1,661         6,937   
Custodian expenses      11,759         4,856         4,502   
Payable to HASI      35,657         11,693         7,248   
Payable to Custodian      8,385         3,908         3,497   

Unified Financial Securities, Inc. (the “Distributor”) acts as the principal distributor of the Funds. There were no payments made to the Distributor by the SMI Fund, the SMI Balanced Fund, or the SMI Dynamic Allocation Fund for six months ended April 30, 2014. The Distributor, HASI, and the Custodian are controlled by Huntington Bancshares, Inc. A Trustee of the Trust is a member of management of Huntington National Bank, a subsidiary of Huntington Bancshares, Inc. (the parent of the Distributor), and certain officers of the Trust are officers of the Distributor and such persons may be deemed to be affiliates of the Distributor.

 

44


 

THE SOUND MIND INVESTING FUNDS

NOTES TO THE FINANCIAL STATEMENTS

April 30, 2014 – (Unaudited), (Continued)

 

 

 

NOTE 6. INVESTMENTS

For the six months ended April 30, 2014, purchases and sales of investment securities, other than short-term investments and short-term U.S. government obligations were as follows:

 

    SMI Fund      SMI
Balanced Fund
     SMI Dynamic
Allocation Fund
 

Purchases

       

U.S. Government Obligations

  $       $     36,065,235       $   

Other

    147,956,000         11,987,684             108,970,736   

Sales

       

U.S. Government Obligations

  $       $ 33,535,347       $   

Other

        148,188,525         11,870,238         72,008,403   

NOTE 7. RESTRICTED SECURITIES

Restricted securities are securities that may only be resold upon registration under federal securities laws or in transactions exempt from such registration. In some cases, the issuer of restricted securities has agreed to register such securities for resale, at the issuer’s expense, either upon demand by the Funds or in connection with another registered offering of the securities. Many restricted securities may be resold in the secondary market in transactions exempt from registration. Such restricted securities may be determined to be liquid. The Board of Trustees and management of the SMI Balanced Fund consider the restricted securities shown below to be liquid. The Fund will not incur any registration costs upon such resale. The Fund’s restricted securities are valued at the price provided by dealers in the secondary market or, if no market prices are available, at the fair value as determined by the Trust’s Pricing Committee. At April 30, 2014, the SMI Balanced Fund held restricted securities representing 1.98% of net assets, as listed below:

 

45


 

THE SOUND MIND INVESTING FUNDS

NOTES TO THE FINANCIAL STATEMENTS

April 30, 2014 – (Unaudited), (Continued)

 

 

 

NOTE 7. RESTRICTED SECURITIES – (Continued)

 

Issuer Description   Acquisition
Date
    Principal
Amount
    Amortized
Cost
    Fair Value  
Credit Suisse Mortgage Capital Certificates, Series 2009-12R, Class 41A1, 5.250%, 3/27/2037     6/13/2011      $ 13,979      $ 13,983      $ 14,655   
Daimler Finance North America LLC, 1.250%, 1/11/2016     1/9/2013        90,000        89,937        90,761   
DBRR Trust, Series 2012-EZ1, Class A, 0.946%, 9/25/2045     (a     49,558        49,595        49,562   
Ford Motor Credit Co. LLC,
3.984%, 6/15/2016
    (b     65,000        65,042        68,033   
Hertz Vehicle Financing LLC,
Series 2011-1A, Class A1, 2.200%, 3/25/2016
    (c     110,000        110,352        111,164   
Hertz Vehicle Financing LLC,
Series 2013-1A, Class A1, 1.200%, 8/25/2017
    1/18/2013        90,000        89,995        90,132   
ING Bank NV, 3.750%, 3/7/2017     (d         165,000            164,610        175,665   
Liberty Mutual Group, Inc., 6.700%, 8/15/2016     1/19/2012        25,000        26,235        28,036   
Structured Asset Securities Corp. Mortgage Loan Trust, 2005-S7, Class A2, 0.452%, 12/25/2035     (e     18,003        12,941        17,467   
                            $     645,475   

 

(a) Purchased on various dates beginning 9/21/2012.
(b) Purchased on various dates beginning 6/17/2011.
(c) Purchased on various dates beginning 6/13/2011.
(d) Purchased on various dates beginning 3/1/2012.
(e) Purchased on various dates beginning 6/22/2011.

NOTE 8. ESTIMATES

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.

 

46


 

THE SOUND MIND INVESTING FUNDS

NOTES TO THE FINANCIAL STATEMENTS

April 30, 2014 – (Unaudited), (Continued)

 

 

 

NOTE 9. BENEFICIAL OWNERSHIP

The beneficial ownership, either directly or indirectly, of more than 25% of the voting securities of a fund creates a presumption of control of the fund, under Section 2(a)(9) of the Investment Company Act of 1940. At April 30, 2014, National Financial Services Corporation (“NFS”), for the benefit of others, held 25.59%, 34.33% and 28.77% of the SMI Fund, SMI Balanced Fund and the SMI Dynamic Allocation Fund, respectively. It is not known whether NFS, or any of the underlying beneficial owners, owned or controlled 25% or more of the voting securities of the Funds. As a result, NFS may be deemed to control the SMI Fund, SMI Balanced Fund and the SMI Dynamic Allocation Fund.

NOTE 10. FEDERAL TAX INFORMATION

At April 30, 2014, the net unrealized appreciation (depreciation) of investments for tax purposes, was as follows:

 

     SMI Fund     SMI
Balanced Fund
    SMI Dynamic
Allocation Fund
 

Gross Appreciation

   $ 30,951,896      $ 2,100,322      $ 7,117,541   

Gross (Depreciation)

     (2,667,851     (251,660     (103,221
  

 

 

   

 

 

   

 

 

 

Net Appreciation (Depreciaton) on Investments

   $     28,284,045      $     1,848,662      $     7,014,320   
  

 

 

   

 

 

   

 

 

 

At April 30, 2014, the aggregate cost of securities for federal income tax purposes was $265,923,456, $30,575,224 and $102,746,313 for the SMI Fund, SMI Balanced Fund and SMI Dynamic Allocation Fund respectively.

SMI Fund: On December 27, 2013, SMI Fund paid an income distribution of $0.0490 per share, a short-term capital gain distribution of $0.8291, and a long-term capital gain distribution of $0.6838 per share to shareholders of record on December 26, 2013.

The tax characterization of distributions for the fiscal year ended October 31, 2013 was as follows:

 

     2013  

Distributions paid from:

  

Ordinary Income

   $ 8,906   

Long-term Capital Gain

     11,101,278   
  

 

 

 
   $     11,110,184   
  

 

 

 

 

47


 

THE SOUND MIND INVESTING FUNDS

NOTES TO THE FINANCIAL STATEMENTS

April 30, 2014 – (Unaudited), (Continued)

 

 

 

NOTE 10. FEDERAL TAX INFORMATION – Continued

SMI Balanced Fund: On December 27, 2013, SMI Balanced Fund paid an income distribution of $0.0565 per share, a short-term capital gain distribution of $0.6931 per share, and a long-term capital gain distribution of $0.4579 per share to shareholders of record on December 26, 2013.

The tax characterization of distributions for the fiscal year ended October 31, 2013 was as follows:

 

     2013  

Distributions paid from:

  

Ordinary Income

   $ 322,336   

Long-term Capital Gain

     342,122   
  

 

 

 
   $     664,458   
  

 

 

 

SMI Dynamic Allocation Fund: On December 27, 2013, SMI Dynamic Allocation Fund paid an income distribution of $0.1805 per share to shareholders of record on December 26, 2013.

At October 31, 2013, the components of distributable earnings (accumulated losses) on a tax basis were as follows:

 

    

SMI Fund

   

SMI
Balanced Fund

   

SMI Dynamic
Allocation Fund

 

Accumulated undistributed ordinary income

   $     16,674,842      $     1,711,136      $ 311,274   

Accumulated undistributed long-term capital gains

     13,751,346        1,130,543          

Accumulated capital and other losses

     (2,041,378     (47,408         (1,714,074

Unrealized appreciation (depreciation)

     53,691,921        3,687,257        4,663,130   
  

 

 

   

 

 

   

 

 

 
   $ 82,076,731      $ 6,481,528      $ 3,260,330   
  

 

 

   

 

 

   

 

 

 

At October 31, 2013, the difference between book basis and tax basis unrealized appreciation is attributable to the tax deferral of losses on wash sales in the amount of $1,528, $921, and $1,931 for the SMI Fund, SMI Balanced Fund, and SMI Dynamic Allocation Fund, respectively.

As of October 31, 2013, accumulated capital and other losses consist of:

 

    

Qualified
Late Year Ordinary
Losses

    

Capital Loss
Carryforwards

 

SMI Fund

   $     1,093,920       $ 947,458   

SMI Balanced Fund

     47,408           

SMI Dynamic Allocation Fund

                 1,714,074   

 

48


 

THE SOUND MIND INVESTING FUNDS

NOTES TO THE FINANCIAL STATEMENTS

April 30, 2014 – (Unaudited), (Continued)

 

 

 

NOTE 10. FEDERAL TAX INFORMATION – Continued

At October 31, 2013, for federal income tax purposes, the Funds had capital loss carryforwards, in the following amounts:

 

     No Expiration –
Short Term
     Expiring
October 31, 2016
 

SMI Fund

   $       $     947,458   

SMI Dynamic Allocation Fund

         1,714,074           

NOTE 11. COMMITMENTS AND CONTIGENCIES

The Funds indemnify its officers and trustees for certain liabilities that may arise from performance of their duties to the Funds. Additionally, in the normal course of business, the Funds enter into contracts that contain a variety of representations and warranties which provide general indemnifications. The Funds’ maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Funds that have not yet occurred.

NOTE 12. SUBSEQUENT EVENT

Management of the Funds has evaluated the need for disclosures and/or adjustments resulting from subsequent events through the date these financial statements were issued. There were no items requiring adjustment of financial statements or additional disclosure.

 

49


 

OTHER INFORMATION

 

 

 

The Funds’ Statement of Additional Information (“SAI”) includes additional information about the trustees and is available without charge, upon request. You may call toll-free at (877) 764-3863 to request a copy of the SAI or to make shareholder inquiries.

 

 

PROXY VOTING

 

 

A description of the policies and procedures that the Funds use to determine how to vote proxies relating to portfolio securities and information regarding how the Funds voted those proxies during the most recent twelve month period ended June 30 is available without charge upon request by (1) calling the Funds at (877) 764-3863 and (2) from Fund documents filed with the Securities and Exchange Commission (“SEC”) on the SEC’s website at www.sec.gov.

 

TRUSTEES

R. Jeffrey Young, Chairman

Ira Cohen

Andrea N. Mullins

OFFICERS

R. Jeffrey Young, Principal Executive Officer

and President

Bryan W. Ashmus, Principal Financial Officer

and Treasurer

John C. Swhear, Chief Compliance Officer,

AML Officer and Vice President

Carol J. Highsmith, Vice President and Secretary

Matthew J. Miller, Vice President

INVESTMENT ADVISOR

SMI Advisory Services, LLC

11135 Baker Hollow Road

Columbus, IN 47201

DISTRIBUTOR

Unified Financial Securities, Inc.

2960 North Meridian Street, Suite 300

Indianapolis, IN 46208

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Cohen Fund Audit Services Ltd.

1350 Euclid Avenue, Suite 800

Cleveland, OH 44115

LEGAL COUNSEL

The Law Offices of John H. Lively &

Associates, Inc.,

A member firm of The 1940 Act Law GroupTM

11300 Tomahawk Creek Pkwy, Suite 310

Leawood, KS 66211

CUSTODIAN

Huntington National Bank

41 South High Street

Columbus, OH 43125

ADMINISTRATOR, TRANSFER AGENT AND FUND ACCOUNTANT

Huntington Asset Services, Inc.

2960 North Meridian Street, Suite 300

Indianapolis, IN 46208

 

 

This report is intended only for the information of shareholders or those who have received the Funds prospectus which contains information about the Funds management fee and expenses. Please read the prospectus carefully before investing.

Distributed by Unified Financial Securities, Inc.

Member FINRA/SIPC

 

50


 

VALUED ADVISERS TRUST

PRIVACY POLICY

 

 

 

The following is a description of the policies of the Valued Advisers Trust (the “Trust”) regarding disclosure of nonpublic personal information that shareholders provide to a series of the Trust (each, a “Fund”) or that the Fund collects from other sources. In the event that a shareholder holds shares of a Fund through a broker-dealer or other financial intermediary, the privacy policy of the financial intermediary would govern how shareholder nonpublic personal information would be shared with nonaffiliated third parties.

Categories of Information A Fund May Collect. A Fund may collect the following nonpublic personal information about its shareholders:

 

   

Information the Fund receives from a shareholder on applications or other forms, correspondence, or conversations (such as the shareholder’s name, address, phone number, social security number, and date of birth); and

 

   

Information about the shareholder’s transactions with the Fund, its affiliates, or others (such as the shareholder’s account number and balance, payment history, cost basis information, and other financial information).

Categories of Information A Fund May Disclose. A Fund may not disclose any nonpublic personal information about its current or former shareholders to unaffiliated third parties, except as required or permitted by law. A Fund is permitted by law to disclose all of the information it collects, as described above, to its service providers (such as the Fund’s custodian, administrator, transfer agent, accountant and legal counsel) to process shareholder transactions and otherwise provide services to the shareholder.

Confidentiality and Security. Each Fund shall restrict access to shareholder nonpublic personal information to those persons who require such information to provide products or services to the shareholder. Each Fund shall maintain physical, electronic, and procedural safeguards that comply with federal standards to guard shareholder nonpublic personal information.

Disposal of Information. The Funds, through their transfer agent, have taken steps to reasonably ensure that the privacy of a shareholder’s nonpublic personal information is maintained at all times, including in connection with the disposal of information that is no longer required to be maintained by the Funds. Such steps shall include, whenever possible, shredding paper documents and records prior to disposal, requiring off-site storage vendors to shred documents maintained in such locations prior to disposal, and erasing and/or obliterating any data contained on electronic media in such a manner that the information can no longer be read or reconstructed.

 

51


 

LOGO

 

 

THE SOUND MIND
INVESTING FUND

 

 

 

SOUND MIND INVESTING
BALANCED FUND

 

 

 

THE SMI DYNAMIC ALLOCATION FUND

 

 

 
SEMI-ANNUAL
 
April 30, 2014

Fund Adviser:

SMI Advisory Services, LLC

11135 Baker Hollow Road

Columbus, IN 47201

Toll Free (877) SMI-Fund

www.smifund.com

 


LOGO

DANA LARGE CAP EQUITY FUND

Semi-Annual Report

April 30, 2014

Dana Investment Advisors, Inc.

15800 Bluemound Rd., Suite 250

Brookfield, WI 53005

(855) 280-9648

www.danafunds.com


 

  

 

 

Investment Results (Unaudited)

Total Returns* as of April 30, 2014

   

Six

Months

    

One

Year

    

Three

Year

    

Since

Inception

(3/1/10)

    

Since

Inception

(7/28/10)

    

Since

Inception

(10/29/13)

 

Dana Large Cap Equity Fund

  

              

Class A with Load

    3.72%         14.69%         10.06%         N/A         15.18%         N/A   

Class A without Load

    9.15%         20.74%         11.95%         N/A         16.77%         N/A   

Class N

    9.21%         21.08%         12.18%         17.78%         N/A         N/A   

Institutional Class

    9.36%         N/A         N/A         N/A         N/A         9.68%   

S&P 500 Index1

    8.36%         20.44%         13.83%         16.09%         17.49%         16.58%   
           Expense Ratios2                
           Class A      Class N      Institutional
Class
               

Gross

             2.19%         2.19%         1.94%                     

With Applicable Waivers

             0.98%         0.98%         0.73%                     

 

The performance quoted represents past performance, which does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. The returns shown do not reflect deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Current performance of the Fund may be lower or higher than the performance quoted. The Fund's investment objectives, risks, charges and expenses must be considered carefully before investing. Performance data current to the most recent month end may be obtained by calling 1-855-280-9648.

* Return figures reflect any change in price per share and assume the reinvestment of all distributions. Returns for periods less than 1 year are not annualized.

1 The S&P 500® Index ("Index") is widely recognized unmanaged index of equity securities and is representative of a broader domestic equity market and range of securities than is found in the Fund's portfolio. Individuals cannot invest directly in the Index; however, an individual can invest in exchange traded funds or other investment vehicles that attempt to track the performance of a benchmark index.

2 The expense ratios are from the Fund's prospectus dated February 28, 2014. The Adviser has contractually agreed to waive its management fee and/or reimburse certain operating expenses through February 28, 2017, but only to the extent necessary so that the Fund's net expenses, excluding brokerage fees and commissions, borrowing costs (such as (a) interest expense and (b) dividends on securities sold short), taxes, extraordinary expenses, 12b-1 fees (if applicable), and any indirect expenses (such as fees and expenses of acquired funds), do not exceed 0.73%. Information pertaining to the Fund's expense ratios as of April 30, 2014 can be found on the financial highlights.

 

The Fund's investment objectives, strategies, risks, charges and expenses must be considered carefully before investing. The prospectus contains this and other important information about the Fund and may be obtained by calling the same number as above. Please read it carefully before investing.

The Fund is distributed by Unified Financial Securities, Inc., member FINRA.

 

1


 

  

 

 

Portfolio Illustration (Unaudited)

April 30, 2014

The following chart gives a visual breakdown of the Fund by the industry sectors the underlying securities represent as a percentage of the portfolio of investments.

 

 

LOGO

Availability of Portfolio Schedule

The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (“SEC”) for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms N-Q are available at the SEC’s website at www.sec.gov. The Fund’s Forms N-Q may be reviewed and copied at the Public Reference Room in Washington DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330.

 

2


 

  

 

 

Summary of Fund’s Expenses (Unaudited)

As a shareholder of the Fund, you may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchases and short-term redemption fees and (2) ongoing costs, including management fees, distribution and service (12b-1) fees, and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

Each Fund’s example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (November 1, 2013 through April 30, 2014).

Actual Expenses

The first line of 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 = 8.60), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

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

Expenses shown are meant to highlight your ongoing costs only and do not reflect any transactional costs such as the fee imposed on sales charges and short-term redemptions. Therefore, the second line of the table below is useful in comparing ongoing costs only and will not help you determine the relative costs of owning different funds. If incurred, the short-term redemption fee imposed by the Fund would increase your expenses.

 

3


 

  

 

 

Summary of Fund’s Expenses (Unaudited) (continued)

 

        Beginning
Account
Value,
November 1, 2013
    Ending
Account
Value,
April 30, 2014
    Expenses
Paid
During
Period1
    Annualized
Expense
Ratio
 

Dana Large Cap Equity Fund

       

Class A

  Actual   $ 1,000.00      $ 1,091.50      $ 5.08        0.98
  Hypothetical2   $ 1,000.00      $ 1,019.93      $ 4.91        0.98

Class N

  Actual   $ 1,000.00      $ 1,092.10      $ 5.08        0.98
  Hypothetical2   $ 1,000.00      $ 1,019.93      $ 4.91        0.98

Institutional Class

  Actual   $ 1,000.00      $ 1,093.60      $ 3.79        0.73
  Hypothetical2   $ 1,000.00      $ 1,021.17      $ 3.66        0.73

 

1   

Expenses are equal to the Fund’s annualized expense ratios, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). The annualized expense ratios reflect reimbursement of expenses by the Fund’s Adviser for the period beginning November 1, 2013 to April 30, 2014. The “Financial Highlights” tables in the Fund’s financial statements, included in the report, also show the gross expense ratios, without such reimbursements.

2   

Hypothetical assumes 5% annual return before expenses.

 

4


Schedule of Investments (Unaudited)

April 30, 2014

 

Shares            Fair Value  
  COMMON STOCKS – 98.58%   
   Consumer Discretionary 11.60%   
  7,800      

Comcast Corp. – Class A

   $ 403,728   
  5,500      

Hanesbrands, Inc.

     451,495   
  4,200      

Magna International, Inc.

     411,558   
  7,800      

Royal Caribbean Cruises Ltd.

     414,414   
  5,000      

Viacom, Inc. – Class B

     424,900   
  2,900      

Whirlpool Corp.

     444,802   
  5,100      

Wyndham Worldwide Corp.

     363,834   
     

 

 

 
        2,914,731   
     

 

 

 
   Consumer Staples 9.90%   
  10,700      

Coca-Cola Enterprises, Inc.

     486,208   
  6,500      

CVS Caremark Corp.

     472,680   
  9,000      

General Mills, Inc.

     477,180   
  4,600      

Kimberly-Clark Corp.

     516,350   
  9,000      

Lorillard, Inc.

     534,780   
     

 

 

 
        2,487,198   
     

 

 

 
   Energy 10.33%   
  3,000      

Chevron Corp.

     376,560   
  5,600      

ConocoPhillips

     416,136   
  4,200      

Exxon Mobil Corp.

     430,122   
  4,800      

Helmerich & Payne, Inc.

     521,520   
  4,100      

Schlumberger Ltd.

     416,355   
  7,600      

Valero Energy Corp.

     434,492   
     

 

 

 
        2,595,185   
     

 

 

 
   Financials 16.08%   
  8,000      

Allstate Corp./The

     455,600   
  4,500      

Ameriprise Financial, Inc.

     502,335   
  8,000      

Discover Financial Services

     447,200   
  21,000      

Fifth Third Bancorp.

     432,810   
  7,700      

JPMorgan Chase & Co.

     431,046   
  9,500      

Lincoln National Corp.

     460,845   
  8,400      

MetLife, Inc.

     439,740   
  4,800      

PNC Financial Services Group, Inc.

     403,392   
  9,400      

Wells Fargo & Co.

     466,616   
     

 

 

 
        4,039,584   
     

 

 

 
   Health Care 13.03%   
  8,400      

AbbVie, Inc.

     437,472   
  6,700      

Aetna, Inc.

     478,715   
  4,200      

Amgen, Inc.

     469,350   
  6,400      

Covidien PLC

     456,000   
  4,600      

Johnson & Johnson

     465,934   
  2,700      

McKesson Corp.

     456,813   
  10,000      

Mylan, Inc. *

     507,800   
     

 

 

 
        3,272,084   
     

 

 

 

 

The accompanying notes are an integral part of these financial statements.

 

5


Schedule of Investments (Unaudited) (continued)

April 30, 2014

 

Shares            Fair Value  
  COMMON STOCKS – (continued)   
   Industrials 10.82%   
  1,800      

Alaska Air Group, Inc.

   $ 169,344   
  3,200      

Boeing Co./The

     412,864   
  13,000      

Delta Air Lines, Inc.

     478,790   
  4,600      

Dover Corp.

     397,440   
  4,200      

Raytheon Co.

     401,016   
  2,400      

Union Pacific Corp.

     457,032   
  3,400      

United Technologies Corp.

     402,322   
     

 

 

 
        2,718,808   
     

 

 

 
   Information Technology 17.94%   
  1,577      

Alliance Data Systems Corp. *

     381,476   
  9,800      

Amdocs Ltd.

     455,994   
  850      

Apple, Inc.

     501,576   
  9,000      

Avnet, Inc.

     388,170   
  11,000      

CA, Inc.

     331,540   
  2,370      

International Business Machines Corp.

     465,634   
  4,400      

KLA-Tencor Corp.

     281,556   
  10,400      

Oracle Corp.

     425,152   
  5,700      

QUALCOMM, Inc.

     448,647   
  6,267      

Seagate Technology PLC

     329,519   
  12,100      

Skyworks Solutions, Inc. *

     496,705   
     

 

 

 
        4,505,969   
     

 

 

 
   Materials 3.40%   
  4,700      

Lyondellbasell Industries N.V. – Class A

     434,750   
  6,300      

Packaging Corp. of America

     419,769   
     

 

 

 
        854,519   
     

 

 

 
   Telecommunication Services 2.46%   
  7,900      

AT&T, Inc.

     282,030   
  7,200      

Verizon Communications, Inc.

     336,456   
     

 

 

 
        618,486   
     

 

 

 
   Utilities 3.02%   
  13,000      

CMS Energy Corp.

     394,030   
  11,400      

Xcel Energy, Inc.

     363,318   
     

 

 

 
        757,348   
     

 

 

 
  

Total Common Stocks (Cost $19,958,383)

     24,763,912   
     

 

 

 

 

The accompanying notes are an integral part of these financial statements.

 

6


Schedule of Investments (Unaudited) (continued)

April 30, 2014

 

Shares            Fair Value  
  SHORT-TERM INVESTMENTS – 2.38%   
  598,875      

Fidelity Institutional Money Market Portfolio – Institutional Class, 0.090%(a)

   $ 598,875   
     

 

 

 
  

Total Short-Term Investments (Cost $598,875)

     598,875   
     

 

 

 
  

Total Investments (Cost $20,557,257) 100.96%

     25,362,787   
     

 

 

 
  

Liabilities in Excess of Other Assets (0.96)%

     (241,640
     

 

 

 
  

TOTAL NET ASSETS 100.00%

   $ 25,121,147   
     

 

 

 

 

(a)   Rate disclosed is the seven day yield as of April 30, 2014.
*   Non-income producing security.

 

The accompanying notes are an integral part of these financial statements.

 

7


Statement of Assets and Liabilities (Unaudited)

April 30, 2014

 

Assets

  

Investments in securities at fair value (Cost $20,557,257)

   $ 25,362,787   

Receivable for fund shares sold

     20,399   

Dividends receivable

     28,034   

Receivable from Adviser

     7,111   

Prepaid expenses

     25,291   

Total Assets

     25,443,622   

Liabilities

  

Payable for investments purchased

     288,514   

Payable for Distribution Fees

     4,631   

Payable to administrator, fund accountant, and transfer agent

     10,584   

Payable to custodian

     2,286   

Payable to trustees and officers

     2,622   

Other accrued expenses

     13,838   

Total Liabilities

     322,475   

Net Assets

   $ 25,121,147   

Net Assets Consist of:

  

Paid-in capital

   $ 19,228,470   

Accumulated undistributed net investment income

     14,710   

Accumulated undistributed net realized gain from investments

     1,072,437   

Net unrealized appreciation on investments

     4,805,530   

Net Assets

   $ 25,121,147   

Class N:

  

Net Assets

   $ 22,314,250   

Shares outstanding

     1,274,304   

Net asset value (“NAV”) and offering price per share

   $ 17.51   

Redemption price per share (NAV*98%) (a)

   $ 17.16   

Class A:

  

Net Assets

   $ 995,280   

Shares outstanding

     56,955   

Net asset value (“NAV”) per share

   $ 17.47   

Offering price per share (NAV/0.95) (b)

   $ 18.39   

Redemption price per share (NAV*98%) (a)

   $ 17.12   

Institutional Class:

  

Net Assets

   $ 1,811,617   

Shares outstanding (unlimited number of shares authorized, no par value)

     103,625   

Net asset value (“NAV”) and offering price per share

   $ 17.48   

Redemption price per share (NAV*98%) (a)

   $ 17.13   

 

(a)   

The Fund charges a 2.00% redemption fee on shares redeemed within 60 days of purchase.

(b)   

Class A shares impose a maximum 5.00% sales charge on purchases.

 

8

The accompanying notes are an integral part of these financial statements.


Statement of Operations (Unaudited)

For the six months ended April 30, 2014

 

Investment Income

  

Dividend income (Net of foreign taxes withheld of $460)

   $ 220,295   

Total investment income

     220,295   

Expenses

  

Adviser fees

     73,622   

Distribution (12b-1) fees:

  

Class N

     24,626   

Class A

     1,134   

Administration fees

     21,167   

Fund accounting fees

     17,610   

Transfer agent fees

     24,246   

Legal fees

     7,926   

Registration fees

     21,652   

Custodian fees

     2,816   

Audit fees

     9,480   

Trustee fees

     3,413   

Printing fees

     9,021   

Miscellaneous fees

     9,000   

Total expenses

     225,713   

Fees contractually waived by Adviser

     (123,019

Net operating expenses

     102,694   

Net investment income

     117,601   

Realized & Unrealized Gain on Investments

  

Net realized gain on investment securities

     1,074,355   

Change in unrealized appreciation of investment securities

     694,411   

Net realized and unrealized gain on investment securities

     1,768,766   

Net increase in net assets resulting from operations

   $ 1,886,367   

 

9

The accompanying notes are an integral part of these financial statements.


Statements of Changes in Net Assets

 

 

     For the Six Months Ended
April 30, 2014
(Unaudited)
    For the Year Ended
October 31, 2013
 

Increase in Net Assets due to:

Operations:

    

Net investment income

   $ 117,601      $ 208,819   

Net realized gain on investment securities

     1,074,355        1,297,323   

Change in unrealized appreciation of investments securities

     694,411        2,231,812   

Net increase in net assets resulting from operations

     1,886,367        3,737,954   

Distributions:

    

From net investment income, Class N

     (95,476     (213,577

From net investment income, Class A

     (4,775     (3,890

From net investment income, Class C

            (139 )(a) 

From net investment income, Institutional Class

     (2,640       

From realized gain, Class N

     (1,221,280     (74,911

From realized gain, Class A

     (55,136     (1,602

From realized gain, Class C

            (304 )(a) 

From realized gain, Institutional Class

     (17,697       

Total distributions

     (1,397,004     (294,423

Capital Transactions – Class N:

    

Proceeds from shares sold

     4,129,207        3,559,617   

Reinvestment of distributions

     1,232,480        276,526   

Amount paid for shares redeemed

     (1,778,790     (1,715,924

Proceeds from redemption fees (b)

     208          

Total Class N

     3,583,105        2,120,219   

Capital Transactions – Class A:

    

Proceeds from shares sold

     124,623        533,513   

Proceeds from shares converted from Class C

            62,900   

Reinvestment of distributions

     59,910        5,492   

Amount paid for shares redeemed

     (8,001     (540,288

Total Class A

     176,532        61,617   

Capital Transactions – Class C (a):

    

Proceeds from shares sold

            33,000   

Reinvestment of distributions

            443   

Amount paid for shares redeemed

            (52,323

Amount converted to Class A

            (62,900

Total Class C

            (81,780

Capital Transactions – Institutional Class:

  

Proceeds from shares sold

     1,474,622        271,870 (c) 

Reinvestment of distributions

     19,894          

Total Institutional Class

     1,494,516        271,870 (c) 

Net increase in net assets resulting from capital transactions

     5,254,153        2,371,926   

Total Increase in Net Assets

     5,743,516        5,815,457   

 

10

The accompanying notes are an integral part of these financial statements.


Statements of Changes in Net Assets (continued)

 

 

     For the Six Months Ended
April 30, 2014
(Unaudited)
    For the Year Ended
October 31, 2013
 

Net Assets:

    

Beginning of period

   $ 19,377,631      $ 13,562,174   

End of period

   $ 25,121,147      $ 19,377,631   

Accumulated net investment income included in net assets at end of period

   $ 14,710      $   

Share Transactions – Class N:

    

Shares sold

     238,722        230,138   

Shares issued in reinvestment of distributions

     74,007        18,834   

Shares redeemed

     (103,356     (107,298

Total Class N

     209,373        141,674   

Share Transactions – Class A:

    

Shares sold

     7,268        31,099   

Shares converted from Class C

            3,876   

Shares issued in reinvestment of distributions

     3,604        387   

Shares redeemed

     (475     (37,550

Total Class A

     10,397        (2,188

Share Transactions – Class C (a):

    

Shares sold

            2,126   

Shares issued in reinvestment of distributions

            32   

Shares redeemed

            (2,973

Shares converted to Class A

            (3,876

Total Class C

            (4,691

Share Transactions – Institutional Class:

    

Shares sold

     86,567        15,862 (c) 

Shares issued in reinvestment of distributions

     1,196          

Total Institutional Class

     87,763        15,862 (c) 

 

(a)   

For the period November 1, 2012 to August 19, 2013 (effective date of Class C shares conversion to Class A shares).

(b)   

The Fund charges a 2.00% redemption fee on shares redeemed within 60 days of purchase.

(c)   

For the period October 29, 2013 (Institutional Class shares commenced operations) to October 31, 2013.

 

11

The accompanying notes are an integral part of these financial statements.


 

 

Dana Large Cap Equity Fund – Class N

Financial Highlights

Selected data for a share outstanding throughout each period.

 

 

 

     Six Months
Ended
April 30,
2014
(Unaudited)
    Years Ended October 31,     Period
Ended
October 31,
2010(a)
 
       2013     2012     2011    

Net asset value, at
beginning of period

    $17.19        $13.88        $12.50        $11.83        $10.00   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income from investment operations:

         

Net investment income (loss)

    0.09        0.21     0.14     0.09     0.06

Net realized and unrealized gain (loss) on investments

    1.43        3.40        1.51        0.67        1.81   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total from investment operations

    1.52        3.61        1.65        0.76        1.87   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Distributions from:

         

Net investment income

    (0.08     (0.22     (0.14     (0.09     (0.04

Net realized gain

    (1.12     (0.08     (0.13              
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total from distributions

    (1.20     (0.30     (0.27     (0.09     (0.04
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Redemption fees***

                                  

Net asset value, at
end of period

    $17.51        $17.19        $13.88        $12.50        $11.83   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Return**

    9.21 %(b)      26.35     13.44     6.40     18.76 %(b) 
         

Ratios/Supplemental Data:

         

Net assets at end of period (thousands)

    $22,314        $18,306        $12,819        $8,961        $3,524   

Before waiver

         

Ratio of expenses to average net assets

    2.15 %(c)      1.99     2.30     3.50     9.63 %(c) 

Ratio of net investment income (loss) to average net assets

    (0.05 )%(c)      0.32     0.24     (1.28 )%      (7.32 )%(c) 

After waiver

         

Ratio of expenses to average net assets

    0.98 %(c)      0.98     1.50     1.50     1.50 %(c) 

Ratio of net investment income (loss) to average net assets

    1.12 %(c)      1.33     1.04     0.72     0.82 %(c) 

Portfolio turnover

    30 %(b)      70     54     53     32 %(b) 

 

 

(a)   

The Dana Large Cap Equity Fund Class N commenced operations on March 1, 2010.

(b)   

Not annualized

(c)   

Annualized

*   Per share net investment income has been determined on the basis of average shares outstanding during the period.
**   Total return in the above table represents the rate that the investor would have earned or lost on an investment in the Fund assuming reinvestment of dividends, and is not annualized for periods of less than one year.
***   The amount is less than $0.005 per share.

 

12

The accompanying notes are an integral part of these financial statements.


 

 

Dana Large Cap Equity Fund – Class A

Financial Highlights

Selected data for a share outstanding throughout each period.

 

 

 

     Six Months
Ended
April 30,
2014
(Unaudited)
    Years ended October 31,     Period
Ended
October 31,
2010(a)
 
       2013     2012     2011    

Net asset value, at
beginning of period

    $17.17        $13.92        $12.52        $11.84        $10.95   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income from investment operations:

         

Net investment income (loss)

    0.10        0.13     0.14     0.08     *,*** 

Net realized and unrealized gain (loss) on investments

    1.41        3.39        1.52        0.67        0.89   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total from investment operations

    1.51        3.52        1.66        0.75        0.89   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Distributions from:

         

Net investment income

    (0.09     (0.19     (0.13     (0.07       

Net realized gain

    (1.12     (0.08     (0.13              
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total from distributions

    (1.21     (0.27     (0.26     (0.07       
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Redemption fees ***

                                  

Net asset value, at
end of period

    $17.47        $17.17        $13.92        $12.52        $11.84   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Return **

    9.15 %(b)      25.67     13.54     6.36     8.13 %(b) 
         

Ratios/Supplemental Data:

  

     

Net assets at end of period (thousands)

    $995        $799        $678        $301        $3   

Before waiver:

         

Ratio of expenses to average net assets

    2.15 %(c)      1.98     2.27     3.11     4.75 %(c) 

Ratio of net investment income (loss) to average net assets

    (0.06 )%(c)      0.35     0.22     (0.95 )%      (2.94 )%(c) 

After waiver:

         

Ratio of expenses to average net assets

    0.98 %(c)      1.49     1.50     1.50     1.50 %(c) 

Ratio of net investment income (loss) to average net assets

    1.11 %(c)      0.84     1.00     0.66     0.31 %(c) 

Portfolio turnover

    30 %(b)      70     54     53     32 %(b) 

 

 

(a)   

The Dana Large Cap Equity Fund Class A commenced operations on July 28, 2010.

(b)   

Not annualized

(c)   

Annualized

*   Per share net investment income has been determined on the basis of average shares outstanding during the period.
**   Total return in the above table represents the rate that the investor would have earned or lost on an investment in the Fund assuming reinvestment of dividends, excluding maximum sales charge, and is not annualized for periods of less than one year.
***   The amount is less than $0.005 per share.

 

13

The accompanying notes are an integral part of these financial statements.


 

 

Dana Large Cap Equity Fund – Institutional Class

Financial Highlights

Selected data for a share outstanding throughout each period.

 

 

 

     Six Months
Ended
April 30, 2014
(Unaudited)
    Period
Ended
October  31,
2013(a)
 

Net asset value, at beginning of period

    $17.19        $17.14   
 

 

 

   

 

 

 

Income from investment operations:

   

Net investment income (loss)

    0.13       

Net realized and unrealized gain (loss) on investments

    1.41        0.05   
 

 

 

   

 

 

 

Total from investment operations

    1.54        0.05   
 

 

 

   

 

 

 

Distributions from:

   

Net investment income

    (0.13       

Net realized gain

    (1.12       
 

 

 

   

 

 

 

Total from distributions

    (1.25       
 

 

 

   

 

 

 

Net asset value, at end of period

    $17.48        $17.19   
 

 

 

   

 

 

 

Total Return **

    9.36 %(b)      0.29 %(b) 
   

Ratios/Supplemental Data:

   

Net assets at end of period (thousands)

    $1,812        $273   

Before waiver:

   

Ratio of expenses to average net assets

    1.86 %(c)      1.53 %(c) 

Ratio of net investment income (loss) to average net assets

    (0.12 )%(c)      (0.31 )%(c) 

After waiver:

   

Ratio of expenses to average net assets

    0.73 %(c)      0.73 %(c) 

Ratio of net investment income (loss) to average net assets

    1.01 %(c)      0.49 %(c) 

Portfolio turnover

    30 %(b)      70 %(b) 

 

 

(a)   

The Dana Large Cap Equity Fund Institutional Class commenced operations on October 29, 2013.

(b)   

Not annualized

(c)   

Annualized

*   Per share net investment income has been determined on the basis of average shares outstanding during the period. The amount is less than $0.005 per share.
**   Total return in the above table represents the rate that the investor would have earned or lost on an investment in the Fund assuming reinvestment of dividends, and is not annualized for periods of less than one year.

 

14

The accompanying notes are an integral part of these financial statements.


Notes to the Financial Statements (Unaudited)

April 30, 2014

 

NOTE 1. ORGANIZATION

The Dana Large Cap Equity Fund (the “Fund”) is an open-end diversified series of the Valued Advisers Trust (the “Trust”). The Trust is a management investment company established under the laws of Delaware by an Agreement and Declaration of Trust dated June 13, 2008 (the “Trust Agreement”). The Trust Agreement permits the Board of Trustees (“Board”) to issue an unlimited number of shares of beneficial interest of separate series without par value. The Fund is one of a series of funds currently authorized by the Board. The Fund’s investment adviser is Dana Investment Advisors, Inc. (the “Adviser”). The Fund seeks long-term growth of capital.

The Fund currently offers Class N shares, Class A shares, and Institutional Class shares. Each share represents an equal proportionate interest in the assets and liabilities belonging to the Fund and is entitled to such dividends and distributions out of income belonging to the Fund as declared by the Board. Class A currently has a maximum sales charge on purchases of 5.00% as a percentage of the original purchase price. All three share classes impose a 2.00% redemption fee on shares redeemed within 60 days of purchase.

The Fund was previously a series of the Epiphany Funds, an unaffiliated registered investment company and was named Dana Large Cap Core Fund. On October 22, 2013, shareholders of the Fund voted to reorganize the Fund into the Trust effective October 28, 2013.

NOTE 2. SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. These policies are in conformity with the generally accepted accounting principles in the United States of America (“GAAP”).

Estimates – The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.

Securities Valuation – All investments in securities are recorded at their estimated fair value as described in Note 3.

Federal Income Taxes – The Fund makes no provision for federal income or excise tax. The Fund intends to qualify each year as a regulated investment company (“RIC”) under subchapter M of the Internal Revenue Code of 1986, as amended, by complying with the requirements applicable to RICs and by distributing substantially all of its taxable income. The Fund also intends to distribute sufficient net investment income and net capital gains, if any, so that it will not be subject to excise tax on undistributed income and gains. If the required amount of net investment income or gains is not distributed, the Fund could incur a tax expense.

For the six months ended April 30, 2014, the Fund did not have a liability for any unrecognized tax benefits. The Fund recognizes interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the statement of operations. The Fund is subject to examination by U.S. federal tax authorities for the last four tax year ends and the interim tax period since then.

 

15


Notes to the Financial Statements (Unaudited) (continued)

April 30, 2014

 

Expenses – Expenses incurred by the Trust that do not relate to a specific fund of the Trust are allocated to the individual funds based on each fund’s relative net assets or other appropriate basis (as determined by the Board). Expenses attributable to any class are borne by that class. Income, realized gains and losses, unrealized appreciation and depreciation, and expenses are allocated to each class based on the net assets in relation to the relative net assets of the Fund.

Security Transactions and Related Income – The Fund follows industry practice and records security transactions on the trade date for financial reporting purposes. The specific identification method is used for determining gains or losses for financial statement and income tax purposes. Dividend income is recorded on the ex-dividend date and interest income is recorded on an accrual basis. Discounts and premiums on securities purchased are accreted or amortized using the effective interest method. Withholding taxes on foreign dividends have been provided for in accordance with the Fund’s understanding of the applicable country’s tax rules and rates.

Dividends and Distributions – Distributions to shareholders, which are determined in accordance with income tax regulations, are recorded on the ex-dividend date. The Fund intends to distribute substantially all of its net investment income on a quarterly basis. The Fund intends to distribute its net realized long-term and short-term capital gains, if any, on an annual basis. The treatment for financial reporting purposes of distributions made to shareholders during the year from net investment income or net realized capital gains may differ from their ultimate treatment for federal income tax purposes. These differences are caused primarily by differences in the timing of the recognition of certain components of income, expense or realized capital gain for federal income tax purposes. Where such differences are permanent in nature, they are reclassified in the components of the net assets based on their ultimate characterization for federal income tax purposes. Any such reclassifications will have no effect on net assets, results of operations or net asset values per share of the Fund.

NOTE 3. SECURITIES VALUATION AND FAIR VALUE MEASUREMENTS

Fair value is defined as the price that a Fund would receive upon selling an investment in a timely transaction to an independent buyer in the principal or most advantageous market of the investment. GAAP establishes a three-tier hierarchy to maximize the use of observable market data and minimize the use of unobservable inputs and to establish classification of fair value measurements for disclosure purposes.

Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk (the risk inherent in a particular valuation technique used to measure fair value including such a pricing model and/or the risk inherent in the inputs to the valuation technique). Inputs may be observable or unobservable. Observable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs are inputs that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.

 

16


Notes to the Financial Statements (Unaudited) (continued)

April 30, 2014

 

Various inputs are used in determining the value of the Fund’s investments. These inputs are summarized in the three broad levels listed below.

 

   

Level 1 – quoted prices in active markets for identical securities

   

Level 2 – other significant observable inputs (including, but not limited to, quoted prices for an identical security in an inactive market, quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)

   

Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining fair value of investments based on the best information available)

The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety, is determined based, on the lowest level input that is significant to the fair value measurement in its entirety.

Equity securities, including common stocks, exchanged-traded funds and real estate investment trusts, are generally valued by using market quotations, but may be valued on the basis of prices furnished by a pricing service when the Adviser believes such prices more accurately reflect the fair value of such securities. Securities traded in the NASDAQ over-the-counter market are generally valued by a pricing service at the NASDAQ official closing price. Lacking a last sale price, an exchange security is generally valued by the pricing service at its last bid price.

When using the market quotations or close prices provided by a pricing service and when the market is considered active, the security is classified as a Level 1 security. Sometimes, an equity security owned by the Fund will be valued by the pricing service with factors other than market quotations or when the market is considered inactive. When this happens, the security is classified as a Level 2 security. When market quotations are not readily available, when the Adviser determines that the market quotation or the price provided by the pricing service does not accurately reflect the current fair value, or when restricted or illiquid securities are being valued, such securities are valued as determined in good faith by the Adviser, in conformity with guidelines adopted by and subject to review by the Board. These securities are categorized as Level 3 securities.

Investments in mutual funds, including money market mutual funds, are generally priced at the ending NAV provided by the service agent of the funds. These securities are categorized as Level 1 securities.

Short-term investments in fixed income securities, (those with maturities of less than 60 days when acquired, or which subsequently are within 60 days of maturity), are valued by using the amortized cost method of valuation, which the Board has determined represents fair value. These securities are classified as Level 2 securities.

In accordance with the Trust’s good faith pricing guidelines, the Adviser is required to consider all appropriate factors relevant to the value of securities for which it has determined other pricing sources are not available or reliable as described above. No single standard exists for determining fair value, because fair value depends upon the circumstances of each individual case. As a general principle, the current fair value of an issue of securities being valued by the Adviser would appear to be the amount which the owner might reasonably expect to receive for them upon their current

 

17


Notes to the Financial Statements (Unaudited) (continued)

April 30, 2014

 

sale. Methods which are in accordance with this principle may, for example, be based on (i) a multiple of earnings; (ii) a discount from market of a similar freely traded security (including a derivative security or a basket of securities traded on other markets, exchanges or among dealers); or (iii) yield to maturity with respect to debt issues, or a combination of these and other methods. Good faith pricing is permitted if, in the Adviser’s opinion, the validity of market quotations appears to be questionable based on factors such as evidence of a thin market in the security based on a small number of quotations, a significant event occurs after the close of a market but before a Fund’s NAV calculation that may affect a security’s value, or the Adviser is aware of any other data that calls into question the reliability of market quotations. Good faith pricing may also be used in instances when the bonds the Fund invests in may default or otherwise cease to have market quotations readily available.

The following is a summary of the inputs used to value the Fund’s investments as of April 30, 2014:

 

     Valuation Inputs         
Assets    Level 1
Quoted Prices in
Active Markets
    

Level 2

Other Significant
Observable Inputs

    

Level 3

Significant
Unobservable Inputs

     Total  

Common Stocks*

   $ 24,763,912       $         –       $         –       $ 24,763,912   

Short-Term Investments

     598,875                         598,875   

Total

   $ 25,362,787       $       $       $ 25,362,787   

 

*   Refer to Schedule of Investments for industry classifications.

The Fund did not hold any investments at any time during the reporting period in which other significant observable inputs (Level 2) were used in determining fair value. The Fund did not hold any investments at any time during the reporting period in which significant unobservable inputs were used in determining fair value; therefore, no reconciliation of Level 3 securities is included for this reporting period.

The Trust recognizes transfers between fair value hierarchy levels at the reporting period end. There were no transfers between any levels as of April 30, 2014 and the previous reporting period end.

NOTE 4. ADVISER FEES AND OTHER TRANSACTIONS

Under the terms of the management agreement between the Trust and the Adviser (the “Agreement”) for the Fund, the Adviser manages the Fund’s investments subject to oversight of the Board. As compensation for its management services, the Fund is obligated to pay the Adviser a fee computed and accrued daily and paid monthly at an annual rate of 0.70% of the average daily net assets of the Fund. For the six months ended April 30, 2014, the Adviser earned fees of $73,622 from the Fund before the waivers described below. At April 30, 2014, the Adviser owed $7,111 to the Fund including fee waivers and expense reimbursements.

Beginning October 28, 2013, the Adviser contractually agreed to waive its management fee and/or reimburse certain operating expenses through February 28, 2017, but only to the extent necessary so that the Fund’s net expenses, excluding brokerage fees and commissions, borrowing costs (such as interest and dividend expenses on securities sold short), taxes, extraordinary expenses, fees and expenses paid under a distribution plan adopted pursuant to Rule 12b-1, fees and expenses paid

 

18


Notes to the Financial Statements (Unaudited) (continued)

April 30, 2014

 

under a shareholder services plan, and indirect expenses (such as “acquired funds fees and expenses”) do not exceed 0.73% for Class N, Class A and Institutional shares.

Each waiver or reimbursement of an expense by the Adviser is subject to repayment by the Fund within the three fiscal years following the fiscal year in which the expense was incurred, provided that the Fund is able to make the repayment without exceeding the expense limitation. The contractual agreement is in effect through February 28, 2017. The expense cap may not be terminated prior to this date except by the Board. For the six months ended April 30, 2014, the Adviser waived fees or reimbursed expenses of $123,019 from the Fund.

The amounts subject to repayment by the Fund, pursuant to the aforementioned conditions are as follows:

 

Amount   Recoverable through
October 31,
 
$    2,189     2016   
  123,019     2017   

The Trust retains Huntington Asset Services, Inc. (“HASI”) to manage the Fund’s business affairs and to provide the Fund with administrative services, including all regulatory, reporting and necessary office equipment and personnel. For the six months ended April 30, 2014, HASI earned fees of $21,167 from the Fund for administrative services. At April 30, 2014 HASI was owed $3,762 from the Fund for administrative services. The Trust also retains HASI to act as the Fund’s transfer agent and to provide the Fund with fund accounting services. For the six months ended April 30, 2014, the HASI earned fees of $24,246 for transfer agent services and reimbursement for out-of-pocket expenses incurred in providing transfer agent services to the Fund. At April 30, 2014, HASI was owed $3,795 for transfer agent services and out-of-pocket expenses.

For the six months ended April 30, 2014, the HASI earned fees of $17,610 from the Fund for fund accounting services. At April 30, 2014, HASI was owed $3,026 from the Fund for fund accounting services.

Certain officers and one Trustee of the Trust are members of management and/or employees of HASI. HASI operates as a wholly-owned subsidiary of Huntington Bancshares, Inc., the parent company of Unified Financial Securities, Inc. (the “Distributor” or “Unified”) and Huntington National Bank, the custodian of the Fund’s investments (the “Custodian”). For the six months ended April 30, 2014, the Custodian earned fees $2,816 for custody services. At April 30, 2014, the Custodian was owed $2,286 for custody services.

The Fund has adopted a Distribution Plan (the “Plan”) pursuant to Rule 12b-1 under the 1940 Act. The Plan provides that the Fund will pay the Distributor and/or any registered securities dealer, financial institution or any other person (a “Recipient”) a shareholder servicing fee aggregating up to 0.25% of the average daily net assets of the Class N and Class A shares in connection with the promotion and distribution of the Fund’s shares or the provision of personal services to shareholders, including, but not necessarily limited to, advertising, compensation to underwriters, dealers and selling personnel, the printing and mailing of prospectuses to other than current Fund shareholders, the printing and mailing of sales literature and servicing shareholder accounts. The Fund or the Adviser may pay all or a portion of these fees to any Recipient who renders assistance

 

19


Notes to the Financial Statements (Unaudited) (continued)

April 30, 2014

 

in distributing or promoting the sale of shares, or who provides certain shareholder services, pursuant to a written agreement. The Plan is a compensation plan, which means that compensation is paid regardless of 12b-1 expenses actually incurred. It is anticipated that the Plan will benefit shareholders because an effective sales program typically is necessary in order for the Fund to reach and maintain a sufficient size to achieve efficiently its investment objectives and to realize economies of scale. For the six months ended April 30, 2014, Class N shares 12b-1 expense incurred by the Fund was $24,626 and Class A shares 12b-1 expense incurred by the Fund was $1,134. The Fund owed $4,429 for Class N shares and $202 for Class A shares 12b-1 fees as of April 30, 2014.

Unified acts as the principal distributor of the Fund’s shares. During the six months ended April 30, 2014, the Distributor received $7,388 from commissions earned on sales of Class A shares. An officer of the Trust is an officer of the Distributor and such person may be deemed to be an affiliate of the Distributor.

NOTE 5. PURCHASES AND SALES OF SECURITIES

For the six months ended April 30, 2014, purchases and sales of investment securities, other than short-term investments and short-term U.S. government obligations, were as follows:

 

      Amount  

Purchases

  

U.S. Government Obligations

   $   

Other

     10,253,742   

Sales

  

U.S. Government Obligations

   $   

Other

     6,278,867   

NOTE 6. BENEFICIAL OWNERSHIP

The beneficial ownership, either directly or indirectly, of more than 25% of the voting securities of a fund creates a presumption of control of the fund, under Section 2(a)(9) of the Investment Company Act of 1940. At April 30, 2014, Charles Schwab & Co. (“Schwab”) owned, as record shareholders, 35% of the Fund. The Trust does not know whether Schwab, or any of the underlying beneficial owners, owned or controlled 25% or more of the voting securities of the Fund. As a result, Schwab may be deemed to control the Fund.

NOTE 7. FEDERAL TAX INFORMATION

At April 30, 2014, the net unrealized appreciation (depreciation) of investments for tax purposes was as follows:

 

Gross Unrealized Appreciation

   $ 4,858,260   

Gross Unrealized Depreciation

     (52,730

Net Unrealized Appreciation

   $ 4,805,530   

 

20


Notes to the Financial Statements (Unaudited) (continued)

April 30, 2014

 

At April 30, 2014, the aggregate cost of securities for federal income tax purposes was $20,557,257 for the Fund.

At October 31, 2013, the Fund’s most recent fiscal year end, the components of distributable earnings (accumulated losses) on a tax basis was as follows:

 

Undistributed Ordinary Income

   $ 206,368   

Undistributed Long-Term Capital Gains

     1,085,827   

Unrealized Appreciation (Depreciation)

     4,111,119   

Total Accumulated Earnings (Deficit)

   $ 5,403,314   

The tax character of distributions paid for the fiscal year ended October 31, 2013 was as follows:

 

      2013  

Distributions paid from:

  

Ordinary Income

   $ 217,606   

Net Long-Term Capital Gains

     76,816   
     $ 294,422   

NOTE 8. COMMITMENTS AND CONTINGENCIES

The Fund indemnifies its officers and trustees for certain liabilities that may arise from performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts that contain a variety of representations and warranties which provide general indemnifications. The Fund’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Fund that have not yet occurred.

NOTE 9. SUBSEQUENT EVENTS

Management of the Fund has evaluated the need for disclosures and/or adjustments resulting from subsequent events through the date these financial statements were issued. There were no items requiring adjustment of financial statements or additional disclosure.

 

21


Other Information

The Fund’s Statement of Additional Information (“SAI”) includes additional information about the trustees and is available without charge, upon request. You may call toll-free at (855) 280-9648 to request a copy of the SAI or to make shareholder inquiries.

 

22


VALUED ADVISERS TRUST

PRIVACY POLICY

The following is a description of the policies of the Valued Advisers Trust (the “Trust”) regarding disclosure of nonpublic personal information that shareholders provide to a series of the Trust (each, a “Fund”) or that the Fund collects from other sources. In the event that a shareholder hold shares of a Fund through a broker-dealer or other financial intermediary, the privacy policy of the financial intermediary would govern how shareholder nonpublic personal information would be shared with nonaffiliated third parties.

Categories of Information A Fund May Collect.  A Fund may collect the following nonpublic personal information about its shareholders:

 

   

Information the Fund receives from a shareholder on applications or other forms, correspondence, or conversations (such as the shareholder’s name, address, phone number, social security number, and date of birth); and

 

   

Information about the shareholder’s transactions with the Fund, its affiliates, or others (such as the shareholder’s account number and balance, payment history, cost basis information, and other financial information).

Categories of Information A Fund May Disclose.  A Fund may not disclose any nonpublic personal information about its current or former shareholders to unaffiliated third parties, except as required or permitted by law. A Fund is permitted by law to disclose all of the information it collects, as described above, to its service providers (such as the Fund’s custodian, administrator, transfer agent, accountant and legal counsel) to process shareholder transactions and otherwise provide services to the shareholder.

Confidentiality and Security.  Each Fund shall restrict access to shareholder nonpublic personal information to those persons who require such information to provide products or services to the shareholder. Each Fund shall maintain physical, electronic, and procedural safeguards that comply with federal standards to guard shareholder nonpublic personal information.

Disposal of Information.  The Funds, through their transfer agent, have taken steps to reasonably ensure that the privacy of a shareholder’s nonpublic personal information is maintained at all times, including in connection with the disposal of information that is no longer required to be maintained by the Funds. Such steps shall include, whenever possible, shredding paper documents and records prior to disposal, requiring off-site storage vendors to shred documents maintained in such locations prior to disposal, and erasing and/or obliterating any data contained on electronic media in such a manner that the information can no longer be read or reconstructed.

 

23


PROXY VOTING

A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and information regarding how the Fund voted those proxies is available without charge upon request by (1) calling the Fund at (855) 280-9648 and (2) from Fund documents filed with the Securities and Exchange Commission (“SEC”) on the SEC’s website at www.sec.gov.

TRUSTEES

R. Jeffrey Young, Chairman

Ira Cohen

Andrea N. Mullins

OFFICERS

R. Jeffrey Young, Principal Executive Officer and President

John C. Swhear, Chief Compliance Officer, AML Officer and Vice-President

Bryan W. Ashmus, Principal Financial Officer and Treasurer

Carol J. Highsmith, Vice President and Secretary

Matthew J. Miller, Vice President

INVESTMENT ADVISER

Dana Investment Advisors, Inc.

15800 Bluemound Rd., Suite 250

Brookfield, WI 53005

DISTRIBUTOR

Unified Financial Securities, Inc.

2960 North Meridian Street, Suite 300

Indianapolis, IN 46208

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Cohen Fund Audit Services, Ltd.

1350 Euclid Avenue, Suite 800

Cleveland, OH 44115

LEGAL COUNSEL

The Law Offices of John H. Lively & Associates, Inc.,

A member firm of The 1940 Act Law GroupTM

11300 Tomahawk Creek Parkway, Suite 310

Leawood, KS 66211

CUSTODIAN

Huntington National Bank

41 S. High St.

Columbus, OH 43215

ADMINISTRATOR, TRANSFER AGENT AND FUND ACCOUNTANT

Huntington Asset Services, Inc.

2960 North Meridian Street, Suite 300

Indianapolis, IN 46208

This report is intended only for the information of shareholders or those who have received the Fund’s prospectus which contains information about the Fund’s management fee and expenses. Please read the prospectus carefully before investing.

Distributed by Unified Financial Securities, Inc.

Member FINRA/SIPC


Item 2. Code of Ethics. NOT APPLICABLE – disclosed with annual report

 

Item 3. Audit Committee Financial Expert. NOT APPLICABLE – disclosed with annual report

 

Item 4. Principal Accountant Fees and Services. NOT APPLICABLE – disclosed with annual report

 

Item 5. Audit Committee of Listed Companies. NOT APPLICABLE – applies to listed companies only

 

Item 6. Schedule of Investments. Schedules filed with Item 1.

 

Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. NOT APPLICABLE – applies to closed-end funds only

 

Item 8. Portfolio Managers of Closed-End Investment Companies. NOT APPLICABLE – applies to closed-end funds only

 

Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers. NOT APPLICABLE – applies to closed-end funds only

 

Item 10. Submission of Matters to a Vote of Security Holders.

The guidelines applicable to shareholders desiring to submit recommendations for nominees to the Registrant’s board of trustees are contained in the statement of additional information of the Trust with respect to the Fund(s) for which this Form N-CSR is being filed.

 

Item 11. Controls and Procedures.

(a) Based on their evaluation of the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the “Act”)) as of a date within 90 days of the filing date of this report, the registrant’s principal executive officer and principal financial officer have concluded that such disclosure controls and procedures are reasonably designed and are operating effectively to ensure that material information relating to the registrant is made known to them by others within those entities, particularly during the period in which this report is being prepared, and that the information required in filings on Form N-CSR is recorded, processed, summarized, and reported on a timely basis.

(b) There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) that occurred during the second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.

 

Item 12. Exhibits.

(a)    (1)    Not Applicable – filed with annual report

 

  (2) Certifications by the registrant’s principal executive officer and principal financial officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and required by Rule 30a-2 under the Investment Company Act of 1940 are filed herewith.

 

  (3) Not Applicable

(b)             Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 is

                  filed herewith.

 

-3-


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

(Registrant) Valued Advisers Trust
By *   /s/ R. Jeffrey Young
  R. Jeffrey Young, President and Principal Executive Officer
Date   June 27, 2014

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

By *   /s/ R. Jeffrey Young
  R. Jeffrey Young, President and Principal Executive Officer
Date       June 27, 2014

 

By *   /s/ Bryan W. Ashmus
  Bryan W. Ashmus, Treasurer and Principal Financial Officer
Date       June 27, 2014

 

-4-

EX-99.CERT 2 d728003dex99cert.htm CERTIFICATIONS PURUSANT TO SECTION 302 Certifications Purusant to Section 302

Exhibit 99.CERT

SECTION 302 CERTIFICATIONS

CERTIFICATION OF PRESIDENT

CERTIFICATIONS

I, R. Jeffrey Young, certify that:

 

1. I have reviewed this report on Form N-CSR of Valued Advisers Trust;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:

 

  a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

  b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

  c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and

 

  d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer(s) and I have disclosed to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

  a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

 

  b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: June 27, 2014     /s/ R. Jeffrey Young
    R. Jeffrey Young
    President and Principal Executive Officer


SECTION 302 CERTIFICATIONS

CERTIFICATION OF CHIEF FINANCIAL OFFICER

CERTIFICATIONS

I, Bryan W. Ashmus, certify that:

 

1. I have reviewed this report on Form N-CSR of Valued Advisers Trust;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:

 

  a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

  b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

  c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and

 

  d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer(s) and I have disclosed to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

  a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

 

  b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date June 27, 2014     /s/ Bryan W. Ashmus
    Bryan W. Ashmus
    Treasurer and Principal Financial Officer
EX-99.906 CERT 3 d728003dex99906cert.htm CERTIFICATIONS PURSUANT TO SECTION 906 Certifications Pursuant to Section 906

EX-99.906CERT

CERTIFICATION OF PRESIDENT AND TREASURER PURSUANT TO 18 U.S.C. SECTION

1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES OXLEY ACT OF 2002

R. Jeffrey Young, President, and Bryan W. Ashmus, Treasurer of Valued Advisers Trust (the “Registrant”), each certify to the best of his or her knowledge that:

 

1. The Registrant’s periodic report on Form N-CSR for the period ended April 30, 2014 (the “Form N-CSR”) fully complies with the requirements of Sections 15(d) of the Securities Exchange Act of 1934, as amended; and

 

2. The information contained in the Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

 

President and Principal Executive Officer

Valued Advisers Trust

   

Treasurer and Principal Financial Officer

Valued Advisers Trust

  /s/ R. Jeffrey Young     /s/ Bryan W. Ashmus
  R. Jeffrey Young     Bryan W. Ashmus
Date: June 27, 2014     Date: June 27, 2014

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to Valued Advisers Trust and will be retained by Valued Advisers Trust and furnished to the Securities and Exchange Commission (the “Commission”) or its staff upon request.

This certification is being furnished to the Commission solely pursuant to 18 U.S.C. § 1350 and is not being filed as part of the Form N-CSR filed with the Commission.

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