Filed with the Securities and Exchange Commission on February 21, 2018
1933 Act Registration File No. 033-20827
1940 Act File No. 811- 05518
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 | [ | X | ] | ||
Pre-Effective Amendment No. | [ | ] | |||
Post-Effective Amendment No. | 238 | [ | X | ] |
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 | [ | X | ] | ||
Amendment No. | 240 | [ | X | ] |
(Check Appropriate Box or Boxes)
THE RBB FUND, INC.
(Exact Name of Registrant as Specified in Charter)
615 East Michigan Street,
Milwaukee, Wisconsin 53202
(Address of Principal Executive Offices, including Zip Code)
Registrant’s Telephone Number, including Area Code: (302) 791-1851
Copies to:
SALVATORE FAIA | MICHAEL P. MALLOY, ESQUIRE |
The RBB Fund, Inc. | Drinker Biddle & Reath LLP |
615 East Michigan Street, | One Logan Square, Suite 2000 |
Milwaukee, Wisconsin 53202 | Philadelphia, Pennsylvania 19103-6996 |
Approximate Date of Proposed Public Offering: As soon as practicable after the Registration Statement becomes effective.
[ | X | ] | immediately upon filing pursuant to paragraph (b) |
[ | ] | on (date) pursuant to paragraph (b) | |
[ | ] | 60 days after filing pursuant to paragraph (a)(1) | |
[ | ] | on (date) pursuant to paragraph (a)(1) | |
[ | ] | 75 days after filing pursuant to paragraph (a)(2) | |
[ | ] | on (date) pursuant to paragraph (a)(2) of Rule 485. |
If appropriate, check the following box:
[ | ] | This post-effective amendment designates a new effective date for a previously filed post-effective amendment. |
AQUARIUS INTERNATIONAL FUND
of The RBB Fund, Inc.
Prospectus
February 21, 2018
Investment Adviser:
Altair Advisers LLC
THE SECURITIES DESCRIBED IN THIS PROSPECTUS HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION (THE “SEC”). THE SEC, HOWEVER, HAS NOT JUDGED THESE SECURITIES FOR THEIR INVESTMENT MERIT AND HAS NOT DETERMINED THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANYONE WHO TELLS YOU OTHERWISE IS COMMITTING A CRIMINAL OFFENSE.
Table of Contents
SUMMARY SECTION | 1 |
ADDITIONAL INFORMATION ABOUT THE FUND’S INVESTMENTS AND RISKS | 8 |
Disclosure of Portfolio Holdings | 10 |
MANAGEMENT OF THE FUND | 10 |
Investment Adviser | 10 |
Sub-Advisers | 11 |
SHAREHOLDER INFORMATION | 13 |
Pricing of Fund Shares | 13 |
Market Timing | 14 |
Purchase of Fund Shares | 15 |
Redemption of Fund Shares | 18 |
Dividends and Distributions | 20 |
More Information About Taxes | 20 |
Additional Information | 22 |
FINANCIAL HIGHLIGHTS | 23 |
For More Information | Back Cover |
i
SUMMARY SECTION
Investment Objective
The Aquarius International Fund (the “Fund”) seeks capital appreciation.
Expenses and Fees
This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund (the “Shares”).
Shareholder Fees (fees paid directly from your investment)
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) | None |
Maximum Deferred Sales Charge (Load) | None |
Maximum Sales Charge (Load) Imposed on Reinvested Dividends | None |
Redemption Fee (as a percentage of amount redeemed, if applicable) | None |
Exchange Fee | None |
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)
Management Fees(1) | 0.49% |
Distribution and/or Service (12b-1) Fees | None |
Other Expenses(2) | 0.24% |
Total Annual Fund Operating Expenses | 0.73% |
(1) | The Fund is currently only available to clients of the Fund's investment adviser, Altair Advisers LLC (the “Adviser”) and to other investors at the Fund's discretion. Investors in the Fund who are also clients of the Adviser will incur additional fees based on the total assets of the client under management with the Adviser. The Adviser does not receive a separate management fee from the Fund, although the Adviser is reimbursed for compliance expenses in connection with managing the Fund, up to 0.03% of the Fund's average daily net assets. The management fee shown above reflects the estimated aggregate fees to be paid by the Fund to the Sub-Advisers for the current fiscal year, plus anticipated reimbursements to the Adviser for out-of-pocket expenses. Investors in the Fund who are also clients of the Adviser should review the information provided separately by the Adviser for a discussion of fees and expenses charged by the Adviser. |
(2) | “Other Expenses” are estimated for the current fiscal year. |
Example
This Example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The Example assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your Shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and that the Fund's operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs of investing $10,000 in the Fund would be:
1 Year | 3 Years | ||
$75 | $233 |
Portfolio Turnover
The Fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in Total Annual Fund Operating Expenses or in the Example, affect the Fund’s performance. Portfolio turnover may vary from year to year, as well as within a year. No portfolio turnover rate is provided for the Fund because the Fund had not commenced operations prior to the date of this Prospectus.
1
Summary of Principal Investment Strategies
The Fund seeks to achieve its investment objective by investing, under normal circumstances, primarily in securities of companies located outside the United States, including emerging market countries. The Fund determines where a company is located, and thus, whether a company is considered to be located outside the United States by considering whether: (i) it is organized under the laws of or maintains its principal office in a country located outside the United States; (ii) its securities are principally traded on trading markets in countries located outside the United States; (iii) it derives at least 50% of its total revenue or profits from either goods produced or services performed or sales made in countries located outside the United States; or (iv) it has at least 50% of its assets in countries located outside the United States. The Fund may invest in companies of any size capitalization.
The Fund utilizes a “multi-manager” approach whereby the Fund’s assets are allocated to one or more sub-advisers (“Sub-Advisers”) in percentages determined at the discretion of the Fund’s investment adviser, Altair Advisers LLC (the “Adviser”). The Adviser also monitors Sub-Adviser trading with the dual objectives of maximizing each Sub-Adviser’s investment flexibility and assuring that the Fund as a whole complies with its investment restrictions. Otherwise, each Sub-Adviser acts independently from the others and utilizes its own distinct investment style in selecting securities. However, each Sub-Adviser must operate within the constraints of the Fund’s investment objective and strategies and the particular investment restrictions applicable to that Sub-Adviser.
The Sub-Advisers will implement a number of different investment strategies and styles within the international universe. The Sub-Advisers will implement one or more of the following investment strategies summarized below:
● Developed Market — A Sub-Adviser following the developed market style is expected to invest primarily in companies located in those countries included in the MSCI EAFE Index. As of October 31, 2017, the following countries were included in the MSCI EAFE Index: Australia, Austria, Belgium, Denmark, Finland, France, Germany, Hong Kong, Ireland, Israel, Italy, Japan, the Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland and the UK. When investing in developed international markets, a Sub-Adviser may follow either a growth or a value investment style. A Sub-Adviser following a growth investment style would invest primarily in companies with consistent or accelerating growth in earnings, revenues, cash flow, and/or other financial metrics. A Sub-Adviser following a value investment style would invest primarily in companies that are out of favor and/or undervalued in comparison to their peers or their growth prospects.
● Emerging Market — A Sub-Adviser following the emerging market style is expected to invest primarily in companies located in those countries included in the MSCI Emerging Markets Index. As of October 31, 2017, the following countries were included in the MSCI Emerging Markets Index: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Pakistan, Peru, Philippines, Poland, Russia, Qatar, South Africa, Taiwan, Thailand, Turkey and United Arab Emirates.
● Tax Loss Harvesting — A Sub-Adviser following a tax loss harvesting style is expected to hold a portfolio of securities that will have a pre-tax return similar to the performance of the MSCI EAFE Index. The Sub-Adviser will seek to generate strong-after tax returns by timing trades to avoid realizing capital gains and to harvest losses when possible. The Fund may use losses generated from the tax loss harvesting Sub-Adviser to offset gains from other Sub-Advisers.
The Fund’s Sub-Advisers will invest primarily in equity securities, including common stocks, preferred stocks, convertible securities, sponsored and unsponsored depositary receipts, warrants and rights. In addition to purchasing equity securities on exchanges where the companies are located, the Fund may purchase equity securities on exchanges other than where their companies are domiciled (often traded as dual listed securities) or in the form of Depositary Receipts, which include American Depositary Receipts (“ADRs”), Global Depositary Receipts (“GDRs”) or similar securities. The Fund may also invest in other investment companies, including exchange-traded funds (“ETFs”). Investments in ETFs based on foreign market indices are considered investments outside the U.S. The Fund may enter into currency contracts (such as spot, forward and futures) to hedge foreign currency exposure.
The Fund may invest a portion of its assets in fixed income securities, including securities issued by corporate and governmental issuers. The principal debt investments of the Fund will be fixed and floating rate securities with no reset terms.
The Fund may also invest in companies that may experience unusual and possibly unique developments, or “special situations”, which may create a special opportunity for significant returns. Special situations include: significant technological improvements or important discoveries; reorganizations, recapitalizations or mergers; favorable resolutions of litigation; new management or material changes in company policies; and actual or potential changes in control of a company.
2
Summary of Principal Risks
As with all mutual funds, a shareholder is subject to the risk that his or her investment could lose money. The principal risk factors affecting shareholders’ investments in the Fund are set forth below.
● Management Risk. The Fund is subject to the risk of poor stock selection. In other words, the individual stocks in the Fund may not perform as well as expected, and/or the Fund's portfolio management practices do not work to achieve their desired result.
● Market Risk. The net asset value (“NAV”) of the Fund will change with changes in the market value of its portfolio positions. Investors may lose money.
● Equity Securities Risk. The Fund is designed for investors who can accept the risks of investing in a portfolio with significant holdings of equity securities. Equity securities tend to be more volatile than other investment choices, such as debt and money market instruments. The value of your investment may decrease in response to overall stock market movements or the value of individual securities held by the Fund.
● Large Capitalization Risk. Securities of companies with certain market capitalizations may perform differently from the equities markets generally. At times, large-cap companies may underperform as compared to small- or mid-capitalization companies, and vice versa. Larger, more established companies may be unable to respond to new competitive challenges such as changes in consumer tastes or innovative smaller competitors.
● Mid-Capitalization Risk. Securities of mid-capitalization companies are often more volatile and less liquid than investments in larger companies. The frequency and volume of trading in securities of mid-capitalization companies may be substantially less than is typical of larger companies. As a result, the securities of mid-capitalization companies may be subject to greater and more abrupt price fluctuations. In addition, mid-capitalization companies may lack the management experience, financial resources and product diversification of larger companies, making them more susceptible to market pressures and business failure.
● Small and Micro-Capitalization Risk. The securities of small and micro-cap companies may be more volatile in price, have wider spreads between their bid and ask prices, and have significantly lower trading volumes than the securities of larger capitalization companies. As a result, the purchase or sale of more than a limited number of shares of the securities of a smaller company may affect its market price. The Fund may need a considerable amount of time to purchase or sell its positions in these securities. Some small and micro-cap companies are followed by few, if any, securities analysts, and there tends to be less publicly available information about such companies. The small and micro-cap securities in which the Fund invests may be traded only in the over-the-counter market or on a regional securities exchange, may be listed only in the quotation service commonly known as the "pink sheets," and may not be traded every day or in the volume typical of trading on a national securities exchange. They generally have even more limited trading volumes and are subject to even more abrupt or erratic market price movements than are mid and large cap securities, and the Fund may be able to deal with only a few market-makers when purchasing and selling securities. Small and micro-cap companies also may have limited markets, financial resources or product lines, may lack management depth, and may be more vulnerable to adverse business or market developments. Smaller company stocks may fall out of favor relative to mid or large cap stocks, which may cause the Fund to underperform other equity funds that focus on mid or large cap stocks. Moreover, the lack of an efficient market for the securities may make them difficult to value.
● Growth Stock Risk. Growth stocks are typically priced higher than other stocks, in relation to earnings and other measures, because investors believe they have more growth potential. This potential may or may not be realized and, if it is not realized, may result in a loss to the Fund. Growth stock prices also tend to be more volatile than the overall market. Because different types of stocks go out of favor with investors depending on market and economic conditions, the Fund's return may be adversely affected during a market downturn and when growth stocks are out of favor.
● Value Stock Risk. Value investing involves buying stocks that are out of favor and/or undervalued in comparison to their peers or their prospects for growth. Typically, their valuation levels are less than those of growth stocks. Because different types of stocks go out of favor with investors depending on market and economic conditions, the Fund’s return may be adversely affected during a market downturn and when value stocks are out of favor.
3
● Special Situations Risk. The Fund will seek to benefit from “special situations,” such as mergers, reorganizations, or other unusual events expected to affect a particular issuer. There is a risk that the “special situation” might not occur or involve longer time frames than originally expected, which could have a negative impact on the price of the issuer's securities and fail to produce gains or produce a loss for the Fund.
● Allocation Risk. The Fund's overall risk level will depend on the market sectors in which the Sub-Advisers are invested. Although the Fund will not concentrate in any industry, because the Fund may have significant weightings in a particular company, industry or market sector, the value of Shares may be affected by events that adversely affect that company, industry or market sector and may fluctuate more than that of a less focused fund.
● Multi-Manager Dependence Risk. The success of the Fund's investment strategy depends both on the Adviser's ability to select Sub-Advisers and to allocate assets to those Sub-Advisers and on each Sub-Adviser's ability to execute the relevant strategy and select investments for the Fund. The Sub-Advisers' investment styles may not always be complementary, which could affect the performance of the Fund and lead to higher transaction expenses as compared to a fund using a single investment management style.
● Sub-Adviser and Strategy Concentration Risk. Because the Adviser will not be subject to fixed limitations upon the amount of Fund assets that may be invested with a single Sub-Adviser or in a single investment strategy, the Fund may be more heavily exposed to the investment judgments of one or more Sub-Advisers or the possible increased risk of investing in a limited number of investment strategies.
● Illiquid Securities Risk. Investing in illiquid securities is subject to certain risks, such as limitations on resale and uncertainty in determining valuation. Limitations on resale may adversely affect the marketability of portfolio securities and the Fund might be unable to dispose of restricted or other illiquid securities promptly or at reasonable prices and might thereby experience difficulty satisfying redemptions within seven days. The Fund might, in order to dispose of restricted securities, have to register securities resulting in additional expense and delay. Adverse market conditions could impede such a public offering of such securities.
● American Depositary Receipts (“ADRs”) and Global Depository Receipts (“GDRs”) Risk. ADRs and GDRs may be subject to some of the same risks as direct investment in foreign companies, which includes international trade, currency, political, regulatory and diplomatic risks. In a sponsored ADR arrangement, the foreign issuer assumes the obligation to pay some or all of the depositary’s transaction fees. Under an unsponsored ADR arrangement, the foreign issuer assumes no obligations and the depositary’s transaction fees are paid directly by the ADR holders. Because unsponsored ADR arrangements are organized independently and without the cooperation of the issuer of the underlying securities, available information concerning the foreign issuer may not be as current as for sponsored ADRs and voting rights with respect to the deposited securities are not passed through. GDRs can involve currency risk since, unlike ADRs, they may not be U.S. dollar-denominated.
● Unseasoned Issuers Risk. Unseasoned issuers may not have an established financial history and may have limited product lines, markets or financial resources. Unseasoned issuers may depend on a few key personnel for management and may be susceptible to losses and risks of bankruptcy. As a result, such securities may be more volatile and difficult to sell.
● Convertible Securities Risk. Securities that can be converted into common stock, such as certain securities and preferred stock, are subject to the usual risks associated with fixed income investments, such as interest rate risk and credit risk. In addition, because they react to changes in the value of the equity securities into which they will convert, convertible securities are also subject to the risks associated with equity securities.
● Currency and Exchange Risk. Investments in currencies, currency futures contracts, forward currency exchange contracts or similar instruments, as well as securities that are denominated in foreign currency, are subject to the risk that the value of a particular currency will change in relation to one or more other currencies. In addition, the Fund may engage in currency hedging transactions. Currency hedging transactions are subject to the risk that a result opposite expectations occurs (an expected decline turns into a rise and conversely) resulting in a loss to the Fund.
● Emerging Markets Risk. The Fund will invest in emerging markets, which may carry more risk than investing in developed foreign markets. Risks associated with investing in emerging markets include limited information about companies in these countries, greater political and economic uncertainties compared to developed foreign markets, underdeveloped securities markets and legal systems, potentially high inflation rates, and the influence of foreign governments over the private sector.
4
● Foreign Securities Risk. The Fund will invest in foreign securities and is subject to risks associated with foreign markets, such as adverse political, social and economic developments, accounting standards or governmental supervision that is not consistent with that to which U.S. companies are subject, limited information about foreign companies, less liquidity in foreign markets and less protection to the shareholders in foreign markets.
● Portfolio Turnover Risk. The Adviser and Sub-Advisers will not consider portfolio turnover rate a limiting factor in making investment decisions consistent with the Fund's investment objective and policies. Therefore, it is possible that the Fund may experience high rates of portfolio turnover. High portfolio turnover will cause the Fund to incur higher brokerage commissions and transaction costs, which could lower the Fund's performance. In addition to lower performance, high portfolio turnover could result in taxable capital gains. A portfolio turnover rate of 100% is considered to be high.
● Fixed Income Securities Risk. The Fund may invest in fixed income securities and is therefore subject to the risk that the prices of, and the income generated by, fixed income securities held by the Fund may decline significantly and/or rapidly in response to adverse issuer, geopolitical, regulatory, general economic and market conditions, or other developments, such as regional or global economic instability (including terrorism and related geopolitical risks), interest rate fluctuations, and those events directly involving the issuers that may cause broad changes in market value, public perceptions concerning these developments, and adverse investor sentiment.
● Interest Rate Risk. An increase in interest rates typically causes a fall in the value of the fixed income securities in which the Fund may invest. Interest rates currently are at, or near, historic lows, and may increase, with potentially sudden and unpredictable effects on the markets and the Fund’s investments.
● Credit Risk. The value of your investment in the Fund may change in response to changes in the credit ratings of the Fund’s portfolio securities. Generally, investment risk and price volatility increase as a security’s credit rating declines. The financial condition of an issuer of a fixed income security held by the Fund may cause it to default or become unable to pay interest or principal due on the security.
● Prepayment Risk. Issuers may experience an acceleration in prepayments of mortgage loans or other receivables backing the issuers’ fixed income securities when interest rates decline, which can shorten the maturity of the security, force the Fund to invest in securities with lower interest rates, and reduce the Fund’s return. Issuers may decrease prepayments of principal when interest rates increase, extending the maturity of a fixed income security and causing the value of the security to decline.
● Investments in Other Investment Companies Risk. Shareholders of the Fund will indirectly be subject to the fees and expenses of the other investment companies in which the Fund invests and these fees and expenses are in addition to the fees and expenses that Fund shareholders directly bear in connection with the Fund’s own operations. In addition, shareholders will be exposed to the investment risks associated with investments in the other investment companies.
● New Fund Risk. The Fund is new with no operating history and there can be no assurance that the Fund will grow to or maintain an economically viable size, in which case the Board may determine to liquidate the Fund.
● ETF Risk. ETFs may trade at a discount to the aggregate value of the underlying securities and frequent trading of ETFs by the Fund can generate brokerage expenses. Shareholders of the Fund will indirectly be subject to the fees and expenses of the individual ETFs in which the Fund invests and these fees and expenses are in addition to the fees and expenses that Fund shareholders directly bear in connection with the Fund’s own operations.
Fund Performance
Performance information for the Fund is not included because the Fund had not commenced operations prior to the date of this Prospectus. Performance information will be available in the Prospectus once the Fund has at least one calendar year of performance. Updated performance information will be available by calling 1-844-261-6482 (toll free).
5
Management of the Fund
Investment Adviser and Sub-Advisers
Altair Advisers LLC, 303 West Madison, Suite 600, Chicago, Illinois 60606, serves as the investment adviser to the Fund. Aperio Group, LLC, Driehaus Capital Management LLC, Mawer Investment Management Ltd., and Setanta Asset Management Limited each serve as a Sub-Adviser to the Fund.
Portfolio Managers
Title | Portfolio Manager of Fund since: |
|
Altair Advisers LLC | ||
Steven B. Weinstein | Chairman | Inception in 2018 |
Jason M. Laurie | Chief Investment Officer | Inception in 2018 |
Bryan R. Malis | Managing Director | Inception in 2018 |
Donald J. Sorota | Managing Director | Inception in 2018 |
David J. Lin | Director of Research | Inception in 2018 |
Aperio Group, LLC | ||
Ran Leshem | Portfolio Manager | Inception in 2018 |
Robert Tymoczko | Portfolio Manager | Inception in 2018 |
Jonathan Liu, CFA | Associate Portfolio Manager | Inception in 2018 |
Driehaus Capital Management LLC | ||
Howard Schwab | Lead Portfolio Manager | Inception in 2018 |
Chad Cleaver | Portfolio Manager | Inception in 2018 |
Richard Thies | Portfolio Manager | Inception in 2018 |
Mawer Investment Management Ltd. |
||
Travis Goldfeldt | Lead Portfolio Manager | Inception in 2018 |
Peter Lampert | Portfolio Manager | Inception in 2018 |
David Ragan | Portfolio Manager | Inception in 2018 |
Setanta Asset Management Limited | ||
Rowan Smith | Portfolio Manager | Inception in 2018 |
Fergal Sarsfield | Portfolio Manager | Inception in 2018 |
Conor Walshe | Portfolio Manager | Inception in 2018 |
Purchase and Sale of Fund Shares
There is no minimum investment amount for initial or subsequent investments. You can only purchase and redeem Shares of the Fund on days the New York Stock Exchange is open. Shares of the Fund are currently only available to new and existing clients of the Adviser and to other investors at the Fund's discretion. Shares may be purchased through certain brokerage firms, financial institutions and other industry professionals (collectively, “Service Organizations”). Shares of the Fund may also be purchased and redeemed directly through The RBB Fund, Inc. by the means described below.
6
Purchase and Redemption By Mail:
Regular Mail: | Overnight Delivery: |
Aquarius International
Fund c/o U.S. Bancorp Fund Services, LLC P.O. Box 701 Milwaukee, WI 53201-0701 |
Aquarius International
Fund c/o U.S. Bancorp Fund Services, LLC 615 East Michigan Street Milwaukee, WI 53202-5207 |
Purchase By Wire:
Before sending any wire, call U.S. Bancorp Fund Services, LLC (the “Transfer Agent”) at 1-844-261-6482 to confirm the current wire instructions for the Fund.
Redemption By Telephone:
Call the Transfer Agent at 1-844-261-6482.
Taxes
The Fund intends to make distributions that generally may be taxed at ordinary income or capital gains rates.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund or the Adviser may pay the intermediary for the sale of Shares and other related services. Ask your broker-dealer or visit your financial intermediary's website for more information.
7
ADDITIONAL INFORMATION ABOUT THE FUND'S INVESTMENTS AND RISKS
This section provides some additional information about the Fund's investments and certain portfolio management techniques that the Fund may use. More information about the Fund's investments and portfolio management techniques, and related risks, is included in the Statement of Additional Information (“SAI”).
The Fund’s investment objective is non-fundamental and may be changed by the Board of Directors (the “Board”) of The RBB Fund, Inc. (the “Company”) without the approval of the Fund's shareholders. However, as a matter of policy, the Fund would not materially change its investment objective without informing shareholders at least 60 days in advance of any such change.
Equity Securities. The Fund invests in all types of equity securities. Equity securities include exchange-traded and over-the-counter common and preferred stocks, warrants, rights, convertible securities, depositary receipts and shares, trust certificates, limited partnership interests, shares of other investment companies, and equity participations. Investments in equity securities in general are subject to market risks that may cause their prices to fluctuate over time. The value of a convertible security may not increase or decrease as rapidly as the underlying common stock. Common stocks may decline over short or even extended periods of time. The purchase of rights or warrants involves the risk that the Fund could lose the purchase value of a right or warrant if the right to subscribe to additional shares is not executed prior to the right's or warrant's expiration. The value of such securities convertible into equity securities, such as warrants or convertible debt, is also affected by prevailing interest rates, the credit quality of the issuer and any call provision. State law governing partnerships is often less restrictive than state law governing corporations. Accordingly, there may be fewer protections afforded to investors in a limited partnership than investors in a corporation. Fluctuations in the value of equity securities in which a mutual fund invests will cause the Fund’s net asset value to fluctuate. The number of issuers in the Fund's portfolio will vary over time.
Fixed Income Investments. The Fund may invest a portion of its assets in fixed income securities. Fixed income investments include bonds, notes (including structured notes), mortgage-backed securities, asset-backed securities, convertible securities, Eurodollar and Yankee dollar instruments, preferred stocks and money market instruments. Fixed income securities may be issued by corporate and governmental issuers and may have all types of interest rate payment and reset terms, including (without limitation) fixed rate, adjustable rate, zero coupon, contingent, deferred, payment-in-kind and auction rate features. The principal debt investments of the Fund will be fixed and floating rate securities with no reset terms.
The credit quality of securities held in the Fund's portfolio is determined at the time of investment. If a security is rated differently by multiple ratings organizations, the Fund treats the security as being rated in the higher rating category. The Fund may invest in fixed income securities that are not investment grade but are rated as low as B by Moody’s Investors Service or by S&P Global Ratings (or their equivalents, or, if unrated, determined by the Adviser or applicable Sub-Adviser to be of comparable credit quality). The Fund may choose not to sell securities that are downgraded below the Fund’s minimum accepted credit rating after their purchase. Periods of rising interest rates may result in decreased liquidity and increased volatility in the fixed income markets.
Foreign Securities. The Fund may invest in securities of foreign issuers that are traded or denominated in U.S. dollars (including equity securities of foreign issuers trading in U.S. markets) through American Depositary Receipts (“ADRs”), Global Depositary Receipts (“GDRs”), European Depositary Receipts (“EDRs”) or International Depositary Receipts (“IDRs”). Depositary receipts may be available through “sponsored” or “unsponsored” facilities. A sponsored facility is established jointly by the issuer of the security underlying the receipt and the depository, whereas an unsponsored facility is established by the depository without participation by the issuer of the underlying security. Holders of unsponsored depositary receipts generally bear all of the costs of the unsponsored facility. The depository of an unsponsored facility is frequently under no obligation to distribute shareholder communications received from the issuer of the deposited security or to pass through, to the holders of the receipts, voting rights with respect to the deposited securities. The depository of unsponsored depositary receipts may provide less information to receipt holders.
In addition, the Fund may invest in securities traded or denominated in foreign currencies and in multinational currencies such as the Euro. The Fund will value its securities and other assets in U.S. dollars. Investments in securities of foreign entities and securities denominated or traded in foreign currencies involve special risks. These include possible political and economic instability and the possible imposition of exchange controls or other restrictions on investments. Changes in foreign currency rates relative to the U.S. dollar will affect the U.S. dollar value of the Fund's assets denominated or quoted in currencies other than the U.S. dollar. Emerging market investments offer the potential for significant gains but also involve greater risks than investing in more developed countries. Political or economic instability, lack of market liquidity and government actions such as currency controls or seizure of private business or property may be more likely in emerging markets.
8
Exchange-Traded Funds (“ETFs”) Risk. The Fund may invest in ETFs to the extent permitted by the 1940 Act and applicable SEC orders. ETFs are registered investment companies whose shares are listed and traded on U.S. stock exchanges or otherwise traded in the over-the-counter market. In general, ETFs seek to track a specified securities index or a basket of securities that an "index provider," such as Standard & Poor's, selects as representative of a market, market segment or industry sector. An ETF portfolio generally holds the same stocks or bonds as the index it tracks or it may hold a representative sample of such securities. Thus, an ETF typically is designed so that its performance will correspond closely with that of the index it tracks. In some cases, an ETF may be actively-managed by an investment adviser and/or sub-advisers. Actively-managed ETFs are subject to the risk of poor investment selection, and the individual investments in an actively-managed ETF may not perform as well as its investment adviser and/or sub-advisers expected, and/or the actively-managed ETF's portfolio management practices do not work to achieve their desired result. As a shareholder in an ETF, the Fund will bear its pro rata portion of an ETF’s expenses, including advisory fees, in addition to its own expenses.
The market for an ETF’s shares may become less liquid in response to deteriorating liquidity in the markets for the ETF’s underlying portfolio holdings, which could lead to differences between the market price of the ETF’s shares and the underlying value of those shares. An ETF’s market price may deviate from the value of the ETF’s underlying portfolio holdings, particularly in times of market stress, with the result that investors may pay significantly more or receive significantly less than the underlying value of the ETF shares bought or sold. An active trading market for shares of the ETF may not develop or be maintained. In times of market stress, market makers or authorized participants may step away from their respective roles in making a market in shares of the ETF and in executing purchase or redemption orders, which could also lead to variances between the market price of the ETF’s shares and the underlying value of those shares.
Interest Rate Risk. During periods of rising interest rates, the market value of the Fund’s fixed-income securities will tend to be lower than prevailing market interest rates. In periods of falling interest rates, the market value of the Fund’s fixed-income securities generally will tend to be higher than prevailing market interest rates. Prices of longer-term fixed income securities are typically more sensitive to changes in interest rates than prices of shorter-term fixed-income securities.
Credit/Default Risk. The credit rating of an issuer or guarantor of a security in which the Fund invests may be lowered or an issuer or guarantor of a security or the counterparty to a derivatives contract or a repurchase agreement may default on its payment obligations.
Prepayment/Extension Risk. In connection with the Fund’s investments in fixed income securities, the Fund may be forced to invest in securities with lower yields and thus reducing its income if issuers prepay certain fixed income securities. Issuers may decrease prepayments of principal when interest rates increase, extending the average life and duration of a fixed income security and causing the value of the security to decline.
New Fund Risk. There can be no assurance that a newly organized Fund will grow to or maintain an economically viable size, in which case the Board may determine to liquidate the Fund. Liquidation can be initiated without shareholder approval by the Board if it determines it is in the best interest of shareholders. As a result, the timing of any liquidation may not be favorable to certain individual shareholders.
Liquidity Risk. Liquidity risk exists when particular investments are difficult to purchase or sell. The Fund's investments in illiquid securities may reduce the returns of the Fund because it may be unable to sell the illiquid securities at an advantageous time or price. Illiquidity can be caused by a drop in overall market trading volume, an inability to find a ready buyer, or legal restrictions on the securities’ resale. Certain securities that were liquid when purchased may later become illiquid, particularly in times of overall economic distress.
Convertible Securities Risk. Convertible securities have characteristics of both equity and fixed income securities. The value of a convertible security tends to move with the market value of the underlying stock, but may also be affected by interest rates, the credit quality of the issuer and any call provisions. In particular, when interest rates rise, fixed income securities will decline in value. Convertible securities frequently have speculative characteristics and may be acquired without regard to minimum quality ratings. Lower quality convertible securities, also known as “junk bonds,” involve greater risk of default or price changes due to the issuer's creditworthiness. The market prices of these securities may fluctuate more than those of higher quality securities and may decline significantly in periods of general economic difficulty, which may follow periods of rising interest rates. Securities in the lowest quality category may present the risk of default, or may be in default.
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Portfolio Turnover. The Fund may engage in active and frequent trading, resulting in high portfolio turnover. This may lead to the realization and distribution to shareholders of higher capital gains, increasing their tax liability. A portfolio turnover rate of 100% is considered to be high. Frequent trading may also increase transaction costs, which could detract from the Fund's performance.
Temporary Investments. The Fund may depart from its principal investment strategy in response to adverse market, economic, political or other conditions by taking temporary defensive positions (up to 100% of its assets) in all types of money market and short-term debt securities. In response to such conditions, the Fund may also utilize derivatives, including purchasing put options. A put option gives the purchaser of the option, upon payment of a premium, the right to sell, and the seller the obligation to buy, the underlying security, index, currency or other instrument at the exercise price. If the Fund were to take a temporary defensive position, it may be unable for a time to achieve its investment objective.
Disclosure of Portfolio Holdings
A description of the Company's policies and procedures with respect to the disclosure of the Fund's portfolio securities is available in the SAI. The SAI is incorporated herein.
MANAGEMENT OF THE FUND
Investment Adviser
Altair Advisers LLC, a registered investment adviser located at 303 W. Madison, Suite 600, Chicago, Illinois 60606, provides investment advisory services to the Fund subject to the general supervision of the Company's Board. The Adviser was founded in June 2002. As of September 30, 2017, the Adviser had over $4.4 billion in assets under management.
The Fund is currently only available to clients of the Adviser and to other investors at the Fund's discretion. The Adviser does not receive a separate management fee from the Fund. However, pursuant to the Fund's investment advisory agreement with the Adviser, the Adviser is entitled to receive reimbursement for compliance expenses in connection with managing the Fund, up to 0.03% of the Fund's average daily net assets. These costs include, but are not limited to, direct salary and bonus for personnel who provide services to the Fund, and payments in connection with compliance monitoring of Fund trading.
The Fund is managed by the Adviser and one or more Sub-Advisers unaffiliated with the Adviser. The Adviser also has the ultimate responsibility to oversee the Sub-Advisers, and to recommend their hiring, termination, and replacement, subject to approval by the Board. The Adviser has an investment team that is jointly responsible for the day-to-day management of the Fund. The investment team consists of Steven B. Weinstein, Jason M. Laurie, Bryan R. Malis, Donald J. Sorota, and David J. Lin.
Steven B. Weinstein, Chairman. Mr. Weinstein founded the Adviser in June of 2002. He has been counseling wealthy families, business owners, and senior executives on their investment, tax, retirement and estate planning matters for over 36 years. He is a member of the Adviser's Board of Managers as well as the Adviser’s Investment Committee. Mr. Weinstein is a CFA® charterholder and a Certified Financial PlannerTM certificant. He is a member of the Illinois and California bar. Mr. Weinstein graduated with Distinction in Political Science and Communication from Stanford University in 1974, and earned both his MBA and JD degrees, with Distinction, from Northwestern University in 1978.
Jason M. Laurie, Chief Investment Officer. Mr. Laurie is a founding partner of the Adviser. His role includes client service, business development, and he is the Chairman of the Adviser's Investment Committee. Mr. Laurie is a CFA® charterholder and a Certified Financial PlannerTM certificant. Mr. Laurie earned his B.B.A. in Finance and Computer Applications from the University of Notre Dame (cum laude).
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Bryan R. Malis, Managing Director. Mr. Malis is a founding partner of the Adviser. His role includes serving as a lead adviser to a variety of clients, developing new business, and participating in firm management. He is a member of the Adviser’s Board of Managers as well as the Adviser’s Investment Committee. Mr. Malis is a CFA® charterholder and a Certified Financial PlannerTM certificant. Mr. Malis earned his B.A. in Accounting and Finance from the University of Illinois at Urbana-Champaign.
Donald J. Sorota, Managing Director. Mr. Sorota is a founding partner of the Adviser. His role includes client services business development. He served as the Adviser’s Finance Director for the Adviser’s first three years due to his tax expertise as a CPA. He is also a member of the Adviser’s Investment Committee. Mr. Sorota is a Certified Financial PlannerTM and a Certified Public Accountant. Mr. Sorota holds a B.S. in accounting from DePaul University.
David J. Lin, Director of Research. Mr. Lin is the Director of Research of the Adviser. He is responsible for leading the research team’s ongoing due diligence efforts, which include identifying, evaluating, selecting, and monitoring investment managers across various asset classes and vehicle structures. Mr. Lin also serves on the Adviser’s Investment Committee. Mr. Lin is a CFA® charterholder and earned his B.S. in Finance from the University of Illinois Urbana-Champaign.
Sub-Advisers
The Company and the Adviser have received an exemptive order from the SEC with respect to the Fund that permits the Adviser to engage or terminate a Sub-Adviser, and to enter into and materially amend an existing sub-advisory agreement, upon the approval of the Board, without obtaining shareholder approval. This arrangement has been approved by the Board and the Fund's initial shareholder. Consequently, under the exemptive order, the Adviser has the right to hire, terminate and replace Sub-Advisers when the Board and the Adviser feel that a change would benefit the Fund. The exemptive order enables the Fund to operate with greater efficiency and without incurring the expense and delays associated with obtaining shareholder approval of sub-advisory agreements.
The Sub-Advisers provide investment advisory services to the portion of the Fund's portfolio allocated to them by the Adviser. The Adviser and the Fund have entered into sub-advisory agreements with the following Sub-Advisers to manage the Fund, subject to supervision of the Adviser and the Board, and in accordance with the investment goal and restrictions of the Fund. For their services, each Sub-Adviser is entitled to receive a fee based upon a percentage of the Fund's average daily net assets, which will be paid by the Fund and not by the Adviser. The Adviser selects Sub-Advisers based upon the Sub-Adviser's skills in managing assets pursuant to particular investment styles and strategies. The Adviser monitors existing Sub-Advisers based on their investment styles, strategies, and results in managing assets for specific asset classes. Each Sub-Adviser will have discretion to select portfolio securities for its portion of the Fund, but must select those securities according to the Fund's investment objectives and restrictions. The Fund is not required to invest with any minimum number of Sub-Advisers, and does not have minimum or maximum limitations with respect to allocations of assets to any Sub-Adviser. The Adviser may change the allocation of the Fund's assets among the available Sub-Advisers, and may add or remove Sub-Advisers, at any time, which may change the sub-advisory fees payable by the Fund. However, in no event will the total sub-advisory fees exceed the annual rate of 0.90% of the Fund’s average daily net assets.
Aperio Group, LLC ("Aperio"), a registered investment adviser located at Three Harbor Drive, Suite 315, Sausalito, California 94965, has served as a Sub-Adviser to the Fund since its inception. Ran Leshem, Robert Tymoczko and Jonathan Liu, CFA, each serve as portfolio managers primarily responsible for the day-to-day management of the portion of the Fund sub-advised by Aperio. Mr. Leshem oversees the portfolio management and operations of Aperio's US, Foreign, and Global products. Mr. Leshem has extensive expertise in applying quantitative techniques and information technology to complex operational problems. Prior to joining Aperio in 2006, Mr. Leshem was a Manager, Operating Strategy at the GAP, Inc. At the GAP, Mr. Leshem managed the development of a store level forecasting system utilizing clustering and data mining algorithms to predict sales based on historical data. Mr. Leshem received a Bachelor's degree in Mathematics from the University of Waterloo, Canada, where he received the Hewlett Packard Award for academic excellence, and his MBA from the University of California at Berkeley. Mr. Tymoczko is Aperio’s Director of Portfolio Management. Mr. Tymoczko joined Aperio in 2012 and he is responsible for overseeing the day-to-day portfolio management and strategy implementation of all investment products. Prior to joining Aperio, Mr. Tymoczko was a Managing Partner at AlphaStream Capital Management, LLC from 2002 to 2011, where he was responsible for quantitative research and portfolio management. From 1997 to 2002, Mr. Tymoczko was Lead Portfolio Manager and Co-head of U.S. Quantitative Equity Products at Zurich Scudder Investments. Mr. Tymoczko received a BA in Quantitative Economics from Stanford University and his MBA with concentrations in Finance and Econometrics from the University of Chicago. Mr. Liu has been a portfolio manager at Aperio since 2014 and provides analytical support in the research, portfolio management, and trading of client portfolios. Mr. Liu joined Aperio in 2007 as a portfolio accountant. He graduated from San Francisco State University, with a BS in corporate finance and financial services. He holds the Chartered Financial Analyst designation and is a member of the CFA Society of San Francisco.
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Driehaus Capital Management LLC (“Driehaus”), a registered investment adviser located at 25 East Erie Street, Chicago, Illinois 60611, has served as a Sub-Adviser to the Fund since its inception. Howie Schwab serves as the lead portfolio manager responsible for making investment decisions of the portion of the Fund sub-advised by Driehaus. Mr. Schwab joined Driehaus in 2001 upon completion of his B.A. degree in Economics from Denison University. Mr. Schwab has been a portfolio manager of the Driehaus emerging markets growth strategy since August 2007 and became the lead portfolio manager on May 1, 2012. Mr. Schwab is also a portfolio manager for the Driehaus emerging markets small cap growth and Driehaus multi-asset growth economies strategies. Prior to assuming portfolio manager responsibilities for certain of Driehaus’ international strategies, Mr. Schwab was an international equity analyst for Driehaus. Chad Cleaver serves as portfolio manager responsible for making investment decisions of the portion of the Fund sub-advised by Driehaus. Mr. Cleaver has been a portfolio manager of the Driehaus emerging markets growth strategy since May 1, 2012. Mr. Cleaver served as the assistant portfolio manager of the strategy from May 1, 2008 to May 1, 2012. Mr. Cleaver is also a portfolio manager for the Driehaus emerging markets small cap growth, Driehaus frontier emerging markets and Driehaus multi-asset growth economies strategies. Mr. Cleaver received his A.B. in Economics in 2000 from Wabash College. He earned his M.B.A. degree in 2004 from the Kenan-Flagler Business School at the University of North Carolina at Chapel Hill. Mr. Cleaver is a CFA® charterholder. He began his career with the Board of Governors of the Federal Reserve System. He joined Driehaus in 2004 as an investment analyst prior to assuming assistant portfolio management responsibilities on May 1, 2008. Richard Thies serves as portfolio manager responsible for making investment decisions of the portion of the Fund sub-advised by Driehaus. Mr. Thies has been a portfolio manager of the Driehaus emerging markets growth strategy since May 1, 2016. Mr. Thies served as an assistant portfolio manager of the strategy from May 1, 2014 to April 30, 2016. Mr. Thies is also a portfolio manager of Driehaus emerging markets small cap growth, Driehaus frontier emerging markets and Driehaus multi-asset growth economies strategies. Mr. Thies received his B.A. in international studies from Emory University and his M.A. focused in international political economy from the University of Chicago Booth School of Business. Mr. Thies began his career at the International Finance Corporation of the World Bank Group in 2005. In 2008, Mr. Thies worked for Opportunity International as a proposal writer. He then worked as an associate international economist for The Northern Trust in 2009. Mr. Thies joined Driehaus as a macro analyst in 2011. He was also an assistant portfolio manager of the Driehaus Frontier Emerging Markets Fund from May 4, 2015 to April 30, 2016.
Mawer Investment Management Ltd. (“Mawer”), a registered investment adviser located at 517 10th Avenue SW, Suite 600, Calgary, Alberta, Canada T2R OA8, has served as a Sub-Adviser to the Fund since its inception. Travis Goldfeldt serves as the portfolio manager primarily responsible for the day-to-day management of the portion of the Fund sub-advised by Mawer. Travis Goldfeldt has worked at Mawer since 2007. He is responsible for the management and servicing of institutional clients and separately managed accounts programs offered through Mawer’s institutional alliances. Mr. Goldfeldt graduated with a Bachelor of Mathematics from the University of Waterloo and a Bachelor of Business Administration from Wilfrid Laurier University. Mr. Goldfeldt is also a Chartered Financial Analyst charterholder. David Ragan serves as a co-manager for the International Equity strategy at Mawer. He is responsible for investment research, security selection, and portfolio construction for the strategy and several institutional accounts. David Ragan has worked at Mawer since 2004 and been a member of the board of directors since 2007. Mr. Ragan earned a Bachelor of Commerce from the University of Calgary and is a Chartered Financial Analyst charterholder. Peter Lampert serves as the manager of the Emerging Market strategy and co-manager for the International Equity strategy at Mawer. He is responsible for investment research, security selection, and portfolio construction for both strategies and several institutional accounts. Peter Lampert has worked at Mawer since 2008. Mr. Lampert graduated with a Bachelor of Mathematics from the University of Waterloo and a Bachelor of Business Administration from Wilfrid Laurier University. Mr. Lampert is also a Chartered Financial Analyst charterholder.
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Setanta Asset Management Limited (“Setanta”), a registered investment adviser located at Beresford Court, Beresford Place, Dublin 1, Ireland, has served as a Sub-Adviser to the Fund since its inception. Rowan Smith, Fergal Sarsfield and Conor Walshe serve as the portfolio managers primarily responsible for the day-to-day management of the portion of the Fund sub-advised by Setanta, with trading decisions requiring unanimous agreement. Rowan Smith joined Setanta in 1998 and has 19 years of experience in the asset management industry. Mr. Smith is responsible for the Global Healthcare sector and has managed other global sector portfolios in the past. Mr. Smith co-manages Setanta’s Global Focus strategy and its EAFE strategy. He gained his BA in Accounting from the National College of Ireland in 1998 and became an Associate of the Society of Investment Analysts in Ireland in 2001, having completed the organization’s professional exams that year. Fergal Sarsfield, CFA, joined Setanta in 2007 and has 18 years of experience in the asset management industry. Mr. Sarsfield is responsible for the Global Technology sector and in addition to co-managing Setanta’s European Equity strategy he also co-manages its EAFE Equity strategy. He spent 5 years working in KBC Asset Management mainly as an Asian Equity analyst before joining Setanta in 2007. He has a BBS and is a CFA Charterholder. Conor Walshe joined Setanta in 2014 and has 21 years of experience in the asset management industry. In addition to responsibility for developing its Asian Equity strategy, Mr. Walshe also co-manages its EAFE Equity strategy. He started his career as an equity analyst at Goodbody Stockbrokers before moving to Pioneer Investments to analyze and manage European Utilities. Prior to joining Setanta, he spent 7 years in Irish Life Investment Managers managing a number of global sector portfolios. Mr. Walshe has a B. Comm and MBS in Finance from University College Dublin.
The SAI provides additional information about the portfolio managers’ compensation, other accounts managed by the portfolio managers and the portfolio managers’ ownership of shares of the Fund.
A discussion regarding the basis for the Board’s approval of the Fund’s investment advisory agreement with the Adviser and sub-advisory agreements with the Sub-Advisers will be available in the Fund’s first annual or semi-annual report to shareholders.
SHAREHOLDER INFORMATION
Pricing of Fund Shares
The Shares are priced at their net asset value (“NAV”). The NAV per Share of the Fund is calculated as follows:
Value of Assets Attributable to the Shares | |||
NAV = | − | Value of Liabilities Attributable to the Shares | |
Number of Outstanding Shares of the Shares |
The Fund's NAV is calculated once daily at the close of regular trading hours on the New York Stock Exchange (“NYSE”) (generally 4:00 p.m. Eastern time) on each day the NYSE is open. The NYSE is generally open Monday through Friday, except national holidays. The NYSE also may be closed on national days of mourning or due to natural disaster or other extraordinary events or emergency. The Fund will effect purchases of Shares at the NAV next determined after receipt by the Transfer Agent of your purchase order in good order. The Fund will effect redemptions of Shares at the NAV next calculated after receipt by the Fund’s Transfer Agent of your redemption request in good order as described below.
The Fund's equity securities listed on any national or foreign exchange market system will be valued at the last sale price, except for the National Association of Securities Dealers Automatic Quotation System (“NASDAQ”). Equity securities listed on the NASDAQ will be valued at the official closing price. Equity securities traded in the over-the-counter market are valued at their closing prices. If there were no transactions on that day, equity securities will be valued at the mean of the last bid and ask prices prior to the market close. Fixed income securities are valued using an independent pricing service, which considers such factors as security prices, yields, maturities and ratings, and are deemed representative of market value at the close of the market. Foreign securities, currencies and other securities denominated in foreign currencies are translated into U.S. dollars at the exchange rate of such currencies against the U.S. dollar provided by a pricing service. All assets denominated in foreign currencies will be converted into U.S. dollars at the exchange rates in effect at the time of valuation. If the Fund holds foreign equity securities, the calculation of the Fund's NAV will not occur at the same time as the determination of the value of the foreign equities securities in the Fund's portfolio, since these securities are traded on foreign exchanges.
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Investments in other open-end investment companies are valued based on the NAV of those investment companies (which may use fair value pricing as discussed in their prospectuses). Investments in exchange-traded funds, REITs and closed-end funds will be valued at their market price.
If market quotations are unavailable or deemed unreliable by the Fund's administrator, in consultation with the Adviser and Sub-Advisers, securities will be valued by the Adviser and Sub-Advisers in accordance with procedures adopted by the Company’s Board and under the Board’s ultimate supervision. In addition, the prices of foreign securities may be affected by events that occur after the close of a foreign market but before the Fund prices its Shares. In such instances, a foreign security may be fair valued in accordance with procedures adopted by the Company's Board. Relying on prices supplied by pricing services or dealers or using fair valuation involves the risk that the values used by the Fund to price its investments may be higher or lower than the values used by other investment companies and investors to price the same investments.
Market Timing
In accordance with the policy adopted by its Board, the Company discourages and does not accommodate market timing and other excessive trading practices. Purchases should be made with a view to longer-term investment only. Excessive short-term (market timing) trading practices may disrupt portfolio management strategies, increase brokerage and administrative costs, harm Fund performance and result in dilution in the value of Shares held by long-term shareholders. The Company and the Adviser reserve the right to (i) reject a purchase or exchange order, (ii) delay payment of immediate cash redemption proceeds for up to seven calendar days, (iii) revoke a shareholder's privilege to purchase Shares (including exchanges), or (iv) limit the amount of any exchange involving the purchase of Shares. An investor may receive notice that their purchase order or exchange has been rejected after the day the order is placed or after acceptance by a financial intermediary. It is currently expected that a shareholder would receive notice that its purchase order or exchange has been rejected within 48 hours after such purchase order or exchange has been received by the Company in good order. The Company and the Adviser will not be liable for any loss resulting from rejected purchase orders. To minimize harm to the Company and its shareholders (or the Adviser), the Company (or the Adviser) will exercise its right if, in the Company's (or the Adviser's) judgment, an investor has a history of excessive trading or if an investor's trading, in the judgment of the Company (or the Adviser), has been or may be disruptive to the Fund. No waivers of the provisions of the policy established to detect and deter market timing and other excessive trading activity are permitted that would harm the Fund and its shareholders or would subordinate the interests of the Fund and its shareholders to those of the Adviser or any affiliated person or associated person of the Adviser.
Pursuant to the policy adopted by the Board, the Adviser has developed criteria that it uses to identify trading activity that may be excessive. The Adviser reviews on a regular, periodic basis available information related to the trading activity in the Fund in order to assess the likelihood that the Fund may be the target of excessive trading. As part of its excessive trading surveillance process, the Adviser, on a periodic basis, examines transactions that exceed certain monetary thresholds or numerical limits within a period of time. If, in its judgment, the Adviser detects excessive, short-term trading, it may reject or restrict a purchase request and may further seek to close an investor’s account with the Fund. The Adviser may modify its surveillance procedures and criteria from time to time without prior notice regarding the detection of excessive trading or to address specific circumstances. The Adviser will apply the criteria in a manner that, in its judgment, will be uniform.
If necessary, the Company may prohibit additional purchases of Shares by a financial intermediary or by certain customers of the financial intermediary. Financial intermediaries may also monitor their customers' trading activities in the Fund. The criteria used by intermediaries to monitor for excessive trading may differ from the criteria used by the Company. If a financial intermediary fails to enforce the Company's excessive trading policies, the Company may take certain actions, including terminating the relationship.
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There is no assurance that the Fund will be able to identify market timers, particularly if they are investing through intermediaries.
Purchase of Fund Shares
Shares of the Fund are currently only available to new and existing clients of the Adviser and to other investors at the Fund's discretion. Shares representing interests in the Fund are offered continuously for sale by Quasar Distributors, LLC (the “Distributor”).
General. You may purchase Shares of the Fund at the NAV per Share next calculated after your order is received by the Transfer Agent in good order as described below. The Fund's NAV is calculated once daily at the close of regular trading hours on the NYSE (generally 4:00 p.m. Eastern time) on each day the NYSE is open. After an initial purchase is made, the Transfer Agent will set up an account for you on the Company records. There is no minimum investment amount for initial or subsequent investments. You can only purchase Shares of the Fund on days the NYSE is open and through the means described below.
Purchases Through Intermediaries. Shares of the Fund may also be available through certain brokerage firms, financial institutions and other industry professionals (collectively, “Service Organizations”). Certain features of the Shares, such as the initial and subsequent investment minimums and certain trading restrictions, may be modified or waived by Service Organizations. Service Organizations may impose minimum investment requirements. Service Organizations may also impose transaction or administrative charges or other direct fees, which charges and fees would not be imposed if Shares are purchased directly from the Company. Therefore, you should contact the Service Organization acting on your behalf concerning the fees (if any) charged in connection with a purchase or redemption of Shares and should read this Prospectus in light of the terms governing your accounts with the Service Organization. Service Organizations will be responsible for promptly transmitting client or customer purchase and redemption orders to the Company in accordance with their agreements with the Company or its agent and with clients or customers. Service Organizations or, if applicable, their designees that have entered into agreements with the Company or its agent may enter confirmed purchase orders on behalf of clients and customers, with payment to follow no later than the Company's pricing on the following business day. If payment is not received by such time, the Service Organization could be held liable for resulting fees or losses. The Company will be deemed to have received a purchase or redemption order when a Service Organization, or, if applicable, its authorized designee, accepts a purchase or redemption order in good order if the order is actually received by the Company in good order not later than the next business morning. If a purchase order is not received by the Fund in good order, the Transfer Agent will contact the financial intermediary to determine the status of the purchase order. Orders received by the Company in good order will be priced at the Fund's NAV next computed after such orders are deemed to have been received by the Service Organization or its authorized designee.
For administration, subaccounting, transfer agency and/or other services, the Fund or the Adviser may pay Service Organizations and certain recordkeeping organizations a fee (the “Service Fee”). The Service Fee payable to any one Service Organization is determined based upon a number of factors, including the nature and quality of services provided, the operations processing requirements of the relationship and the standardized fee schedule of the Service Organization or recordkeeper.
Initial Investment By Mail. An account may be opened by completing and signing an account application and mailing it to the Transfer Agent at the address noted below, together with a check payable to the Aquarius International Fund.
Regular Mail: | Overnight Mail: |
Aquarius
International Fund c/o U.S. Bancorp Fund Services, LLC P.O. Box 701 Milwaukee, WI 53201-0701 |
Aquarius
International Fund c/o U.S. Bancorp Fund Services, LLC 615 East Michigan Street Milwaukee, WI 53202-5207 |
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The Fund does not consider the U.S. Postal Service or other independent delivery services to be its agents. Therefore, deposit in the mail or with such services, or receipt at U.S. Bancorp Fund Services, LLC’s post office box, of purchase orders or redemption requests does not constitute receipt by the transfer agent of the Fund. Receipt of purchase orders or redemption requests is based on when the order is received at the Transfer Agent’s offices.
All checks must be in U.S. Dollars drawn on a domestic bank. The Fund will not accept payment in cash or money orders. The Fund does not accept post-dated checks or any conditional order or payment. To prevent check fraud, the Fund will not accept third party checks, Treasury checks, credit card checks, traveler’s checks or starter checks for the purchase of shares.
Shares will be purchased at the NAV next computed after the time the application and funds are received in proper order and accepted by the Fund. The Transfer Agent will charge a $25 fee against a shareholder’s account, in addition to any loss sustained by the Fund, for any payment that is returned. It is the policy of the Fund not to accept applications under certain circumstances or in amounts considered disadvantageous to shareholders. The Fund reserves the right to reject any application.
Initial Investment By Wire. If you are making your first investment in the Fund, before you wire funds, the Transfer Agent must have a completed account application. You may mail or overnight deliver your account application to the Transfer Agent. Upon receipt of your completed account application, the Transfer Agent will establish an account for you. The account number assigned will be required as part of the instruction that should be provided to your bank to send the wire. Your bank must include the name of the Fund, the account number, and your name so that monies can be correctly applied. Your bank should transmit funds by wire to:
U.S. Bank, N.A.
777 East Wisconsin Avenue
Milwaukee, WI 53202
ABA #075000022
Credit:
U.S. Bancorp Fund Services, LLC
Account #112-952-137
Further Credit:
Aquarius International Fund
(shareholder registration)
(shareholder account number)
Wired funds must be received prior to 4:00 p.m. Eastern time to be eligible for same day pricing. The Fund and U.S. Bank, N.A. are not responsible for the consequences of delays resulting from the banking or Federal Reserve wire system, or from incomplete wiring instructions.
Subsequent Investments By Wire. Before sending your wire, please contact the Transfer Agent to advise them of your intent to wire funds. This will ensure prompt and accurate credit upon receipt of your wire.
Additional Investments. Additional investments may be made at any time by purchasing Shares of the Fund at the NAV per Share of the Fund by mailing a check to the Transfer Agent at the address noted under “Initial Investment by Mail” (payable to Aquarius International Fund) or by wiring monies to U.S. Bank, N.A., as outlined under “Initial Investment by Wire.” Notification must be given to the Transfer Agent at 1-844-261-6482 prior to 4:00 p.m., Eastern time, on the wire date. Initial and additional purchases made by check or electronic funds transfer through the ACH network cannot be redeemed until payment of the purchase has been collected. This may take up to 15 calendar days from the purchase date.
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Automatic Investment Plan. Once your account has been opened with the initial minimum investment, you may make additional purchases at regular intervals through an automatic investment plan (the “Automatic Investment Plan”). The Automatic Investment Plan provides a convenient method to have monies deducted from your bank account, for investment into the Fund, on a monthly or quarterly basis. In order to participate in the Automatic Investment Plan, each purchase must be in the amount of $250 or more, and your financial institution must be a member of the Automated Clearing House (ACH) network. If your bank rejects your payment, the Fund’s transfer agent will charge a $25 fee to your account. To begin participating in the Automatic Investment Plan, please complete the Automatic Investment Plan section on the account application or call the Fund’s transfer agent at 1-844-261-6482 for instructions. Any request to change or terminate your Automatic Investment Plan should be submitted to the Transfer Agent five (5) days prior to effective date.
Retirement Plans/IRA Accounts. The Fund offers prototype documents for a variety of retirement accounts for individuals and small businesses. Please call 1-844-261-6482 for information on:
● | Individual Retirement Plan, including Traditional IRAs and Roth IRAs |
● | Small Business Retirement Plans, including Simple IRAs and SEP IRAs |
● | Coverdell Education Savings Accounts |
There may be special distribution requirements for a retirement account, such as required distributions or mandatory Federal income tax withholding. For more information, call the number listed above. You may be charged a $15 annual account maintenance fee for each retirement account up to a maximum of $30 annually and a $25 fee for transferring assets to another custodian or for closing a retirement account.
Purchases in Kind. In certain circumstances, Shares of the Fund may be purchased “in kind” (i.e. in exchange for securities, rather than cash). The securities rendered in connection with an in-kind purchase must be liquid securities that are not restricted as to transfer and have a value that is readily ascertainable in accordance with the Company’s valuation procedures. Securities accepted by the Fund will be valued, as set forth in this Prospectus, as of the time of the next determination of net asset value after such acceptance. The Shares of the Fund that are issued to the investor in exchange for the securities will be determined as of the same time. All dividend, subscription, or other rights that are reflected in the market price of accepted securities at the time of valuation become the property of the Fund and must be delivered to the Fund by the investor upon receipt from the issuer. The Fund will not accept securities in exchange for its Shares unless such securities are, at the time of the exchange, eligible to be held by the Fund and satisfy such other conditions as may be imposed by the Adviser or the Company. Purchases in-kind may result in the recognition of gain or loss for federal income tax purposes on the securities transferred to the Fund.
Other Purchase Information. The Company reserves the right, in its sole discretion, to suspend the offering of Shares or to reject purchase orders when, in the judgment of management, such suspension or rejection is in the best interest of the Fund. The Adviser will monitor the Fund's total assets and may, subject to Board approval, decide to close the Fund at any time to new investments or to new accounts due to concerns that a significant increase in the size of the Fund may adversely affect the implementation of the Fund’s strategy. The Adviser, subject to Board approval, may also choose to reopen the Fund to new investments at any time, and may subsequently close the Fund again should concerns regarding the Fund’s size recur. If the Fund closes to new investments, the Fund may be offered only to certain existing shareholders of the Fund and certain other persons who may be subject to cumulative, maximum purchase amounts, as follows:
a. Persons who already hold Shares of the closed Fund directly or through accounts maintained by brokers by arrangement with the Adviser;
b. Existing and future clients of financial advisers and planners whose clients already hold Shares of the closed Fund;
c. Employees of the Adviser and their spouses, parents and children; and
d. Directors of the Company.
Distributions to all shareholders of the closed Fund will continue to be reinvested unless a shareholder elects otherwise. The Adviser, subject to the Board’s discretion, reserves the right to implement other purchase limitations at the time of closing, including limitations on current shareholders.
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Purchases of the Shares will be made in full and fractional Shares of the Fund calculated to three decimal places.
Certificates for Shares will not be issued.
Good Order. A purchase request is considered to be in good order when the purchase request includes the name of the Fund, the dollar amount of shares to be purchased, your account application or investment stub, and a check payable to the Fund. Purchase requests not in good order may be rejected.
Customer Identification Program. Federal law requires the Company to obtain, verify and record identifying information, which may include the name, residential or business street address, date of birth (for an individual), social security or taxpayer identification number or other identifying information for each investor who opens or reopens an account with the Company. Applications without the required information, or without any indication that a social security or taxpayer identification number has been applied for, may not be accepted. After acceptance, to the extent permitted by applicable law or its customer identification program, the Company reserves the right (a) to place limits on transactions in any account until the identity of the investor is verified; or (b) to refuse an investment in a Company portfolio or to involuntarily redeem an investor’s Shares and close an account in the event that an investor’s identity is not verified. The Company and its agents will not be responsible for any loss in an investor’s account resulting from the investor’s delay in providing all required identifying information or from closing an account and redeeming an investor’s Shares when an investor’s identity cannot be verified.
Redemption of Fund Shares
You may redeem Shares at the next NAV calculated after a redemption request is received by the Transfer Agent in good order. The Fund’s NAV is calculated once daily at the close of regular trading hours on the NYSE (generally 4:00 p.m. Eastern time) on each day the NYSE is open. You can only redeem Shares of the Fund on days the NYSE is open and through the means described below. You may redeem Fund Shares by mail, or, if you are authorized, by telephone. The value of Shares redeemed may be more or less than the purchase price, depending on the market value of the investment securities held by the Fund.
Redemption By Mail. Your redemption request should be addressed to Aquarius International Fund, c/o U.S. Bancorp Fund Services, LLC, P.O. Box 701, Milwaukee, WI 53201-0701, or for overnight delivery to Aquarius International Fund, c/o U.S. Bancorp Fund Services, LLC, 615 East Michigan Street, Milwaukee, WI 53202.
The Fund does not consider the U.S. Postal Service or other independent delivery services to be its agents. Therefore, deposit in the mail or with such services, or receipt at U.S. Bancorp Fund Services, LLC’s post office box, of purchase orders or redemption requests does not constitute receipt by the Transfer Agent of the Fund. Receipt of purchase orders or redemption requests is based on when the order is received at the Transfer Agent’s offices.
Signature guarantees will generally be accepted from domestic banks, brokers, dealers, credit unions, national securities exchanges, registered securities associations, clearing agencies and savings associations, as well as from participants in the New York Stock Exchange Medallion Signature Program and the Securities Transfer Agents Medallion Program (“STAMP”). A notary public is not an acceptable signature guarantor.
A signature guarantee, from either a Medallion program member or a non-Medallion program member, is required in the following situations:
● | If ownership is being changed on your account; |
● | When redemption proceeds are payable or sent to any person, address or bank account not on record; and |
● | For all redemptions in excess of $50,000 from any shareholder account. |
The Fund may waive any of the above requirements in certain instances. In addition to the situations described above, the Fund and/or the Transfer Agent reserve the right to require a signature guarantee in other instances based on the circumstances relative to the particular situation.
Nonfinancial transactions, including establishing or modifying certain services on an account, may require a signature guarantee, signature verification from a Signature Validation Program member, or other acceptable form of authentication from a financial institution source.
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Redemption By Telephone. In order to utilize the telephone redemption option, you must indicate that option on your Account Application. You may then initiate a redemption of Shares in the amount of up to $50,000 by calling the Transfer Agent at 1-844-261-6482.
Investors may have a check sent to the address of record, proceeds may be wired to a shareholder’s bank account of record, or funds may be sent via electronic funds transfer through the Automated Clearing House (ACH) network, also to the bank account of record. Wires are subject to a $15 fee paid by the investor, but the investor does not incur any charge when proceeds are sent via the ACH system.
Once a telephone transaction has been placed, it cannot be canceled or modified after the close of regular trading on the NYSE (generally, 4:00 p.m., Eastern time).
Telephone trades must be received by or prior to market close. During periods of high market activity, shareholders may encounter higher than usual call waits. Please allow sufficient time to place your telephone transaction.
Before executing an instruction received by telephone, the Transfer Agent will use reasonable procedures to confirm that the telephone instructions are genuine. The telephone call may be recorded and the caller may be asked to verify certain personal identification information. If the Fund or its agents follow these procedures, they cannot be held liable for any loss, expense or cost arising out of any telephone redemption request that is reasonably believed to be genuine. This includes fraudulent or unauthorized requests. If an account has more than one owner or authorized person, the Fund will accept telephone instructions from any one owner or authorized person.
IRA and Other Retirement Plan Redemptions. If you have an IRA, you must indicate on your written redemption request whether or not to withhold federal income tax. Redemption requests failing to indicate an election to have tax withheld will be subject to 10% withholding.
Shares held in IRA accounts may be redeemed by telephone at 1-844-261-6484. Investors will be asked whether or not to withhold taxes from any distribution.
Involuntary Redemption. The Fund reserves the right to redeem a shareholder's account in the Fund at any time the value of the account falls below $5,000 as the result of a redemption or an exchange request. Shareholders will be notified in writing that the value of their account in the Fund is less than $5,000 and will be allowed 30 days to make additional investments before the redemption is processed. The transaction fee applicable to the Fund will not be charged when Shares are involuntarily redeemed.
The Fund may assert the right to redeem your Shares at current NAV at any time and without prior notice if, and to the extent that, such redemption is necessary to reimburse the Fund for any loss sustained by reason of your failure to make full payment for Shares of the Fund you previously purchased or subscribed for.
Other Redemption Information. Redemption proceeds for Shares of the Fund recently purchased by check or electronic funds transfer through the ACH network may not be distributed until payment for the purchase has been collected, which may take up to fifteen calendar days from the purchase date. Shareholders can avoid this delay by utilizing the wire purchase option.
Other than as described above, payment of the redemption proceeds will be made within seven days after receipt of an order for a redemption. The Company may suspend the right of redemption or postpone the date at times when the NYSE is closed or under any emergency circumstances as determined by the SEC. The Fund typically expects to meet redemption requests by paying out proceeds from cash or cash equivalent portfolio holdings, or by selling portfolio securities. In stressed market conditions, redemption methods may include redeeming in kind.
If the Board of Directors determines that it would be detrimental to the best interests of the remaining shareholders of the Fund to make payment wholly or partly in cash, redemption proceeds may be paid in whole or in part by an in-kind distribution of readily marketable securities held by the Fund instead of cash in conformity with applicable rules of the SEC. If a shareholder receives redemption proceeds in-kind, the shareholder will bear the market risk of the securities received in the redemption until their disposition and should expect to incur transaction costs upon the disposition of the securities. The Company has elected, however, to be governed by Rule 18f-1 under the 1940 Act, so that the Fund is obligated to redeem its Shares solely in cash up to the lesser of $250,000 or 1% of its NAV during any 90-day period for any one shareholder of the Fund.
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Good Order. A redemption request is considered to be in good order the redemption request includes the name of the Fund, the number of shares or dollar amount to be redeemed, the account number, and signatures by all of the shareholders whose names appear on the account registration with a signature guarantee, if applicable. Redemption requests not in good order may be delayed.
Dividends and Distributions
The Fund will distribute substantially all of its net investment income and net realized capital gains, if any, to its shareholders. All distributions are reinvested in the form of additional full and fractional Shares of the Fund unless a shareholder elects otherwise.
The Fund will declare and pay dividends from net investment income annually. Net realized capital gains (including net short-term capital gains), if any, will be distributed by the Fund at least annually.
The Fund may pay additional distributions and dividends at other times if necessary for the Fund to avoid U.S. federal tax. The Fund's distributions and dividends, whether received in cash or reinvested in additional Shares, are subject to U.S. federal income tax.
All distributions will be reinvested in Fund shares unless you elect to receive cash. If you elect to receive distributions and/or capital gains paid in cash, and the U.S. Postal Service cannot deliver the check, or if a check remains outstanding for six months, the Fund reserves the right to reinvest the distribution check in your account, at the Fund's current net asset value, and to reinvest all subsequent distributions. You may change the distribution option on your account at any time by telephone or in writing. You should notify the Transfer Agent in writing or by telephone at least five (5) days prior to the next distribution.
More Information About Taxes
The following is a summary of certain United States tax considerations relevant under current law, which may be subject to change in the future. Except where otherwise indicated, the discussion relates to investors who are individual United States citizens or residents. You should consult your tax adviser for further information regarding federal, state, local and/or foreign tax consequences relevant to your specific situation.
Distributions. The Fund contemplates distributing as dividends each year all or substantially all of its taxable income, including its net capital gain (the excess of net long-term capital gain over net short-term capital loss). Except as otherwise discussed below, you will be subject to federal income tax on Fund distributions regardless of whether they are paid in cash or reinvested in additional Shares. Fund distributions attributable to short-term capital gains and net investment income will generally be taxable to you as ordinary income, except as discussed below.
Distributions attributable to the net capital gain of the Fund will be taxable to you as long-term capital gain, no matter how long you have owned your Shares. The maximum long-term capital gain rate applicable to individuals, estates, and trusts is currently 23.8% (which includes a 3.8% Medicare tax). You will be notified annually of the tax status of distributions to you.
Distributions of “qualifying dividends” will also generally be taxable to you at long-term capital gain rates, as long as certain requirements are met. In general, if 95% or more of the gross income of the Fund (other than net capital gain) consists of dividends received from domestic corporations or ‘qualified” foreign corporations (“qualifying dividends”), then all distributions paid by the Fund to individual shareholders will be taxed at long-term capital gains rates. But if less than 95% of the gross income of the Fund (other than net capital gain) consists of qualifying dividends, then distributions paid by the Fund to individual shareholders will be qualifying dividends only to the extent they are derived from qualifying dividends earned by the Fund. For the lower rates to apply, you must have owned your Fund shares for at least 61 days during the 121-day period beginning on the date that is 60 days before the Fund's ex-dividend date (and the Fund will need to have met a similar holding period requirement with respect to the shares of the corporation paying the qualifying dividend). The amount of the Fund’s distributions that qualify for this favorable treatment may be reduced as a result of the Fund's securities lending activities (if any), a high portfolio turnover rate or investments in debt securities or non-qualified foreign corporations.
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Distributions from the Fund will generally be taxable to you in the taxable year in which they are paid, with one exception. Distributions declared by the Fund in October, November or December and paid in January of the following year are taxed as though they were paid on December 31.
A portion of distributions paid by the Fund to shareholders that are corporations may also qualify for the dividends-received deduction for corporations, subject to certain holding period requirements and debt financing limitations. The amount of the dividends qualifying for this deduction may, however, be reduced as a result of the Fund’s securities lending activities (if any), by a high portfolio turnover rate or by investments in debt securities or foreign corporations.
If you purchase Shares just before a distribution, the purchase price will reflect the amount of the upcoming distribution, but you will be taxed on the entire amount of the distribution received, even though, as an economic matter, the distribution simply constitutes a return of capital. This is known as “buying into a dividend.”
Sales of Shares. You will generally recognize taxable gain or loss for federal income tax purposes on a sale or redemption of your Shares based on the difference between your tax basis in the Shares and the amount you receive for them. Generally, you will recognize long-term capital gain or loss if you have held your Shares for over twelve months at the time you dispose of them.
Any loss realized on Shares held for six months or less will be treated as a long-term capital loss to the extent of any capital gain dividends that were received on the Shares. Additionally, any loss realized on a disposition of Shares of the Fund may be disallowed under “wash sale” rules to the extent the Shares disposed of are replaced with other Shares of the Fund within a period of 61 days beginning 30 days before and ending 30 days after the Shares are disposed of, such as pursuant to a dividend reinvestment in Shares of the Fund. If disallowed, the loss will be reflected in an upward adjustment to the basis of the Shares acquired.
The Fund (or relevant broker or financial adviser) is required to compute and report to the Internal Revenue Service (“IRS”) and furnish to Fund shareholders cost basis information when Shares are sold. The Fund has elected to use the average cost method, unless you instruct the Fund to use a different IRS-accepted cost basis method, or choose to specifically identify your Shares at the time of each sale. If your account is held by your broker or other financial adviser, they may select a different cost basis method. In these cases, please contact your broker or other financial adviser to obtain information with respect to the available methods and elections for your account. You should carefully review the cost basis information provided by the Fund and make any additional basis, holding period or other adjustments that are required when reporting these amounts on your federal and state income tax returns. Fund shareholders should consult with their tax advisers to determine the best IRS-accepted cost basis method for their tax situation and to obtain more information about how the cost basis reporting requirements apply to them.
IRAs and Other Tax-Qualified Plans. The one major exception to the preceding tax principles is that distributions on, and sales and redemptions of, Shares held in an IRA (or other tax-qualified plan) will not be currently taxable unless such Shares were acquired with borrowed funds.
Backup Withholding. The Fund may be required in certain cases to withhold and remit to the IRS a percentage of taxable dividends or gross proceeds realized upon sale payable to shareholders who have failed to provide a correct tax identification number in the manner required, or who are subject to withholding by the IRS for failure to properly include on their return payments of taxable interest or dividends, or who have failed to certify to the Fund that they are not subject to backup withholding when required to do so or that they are “exempt recipients.” The current backup withholding rate is currently 28%.
U.S. Tax Treatment of Foreign Shareholders. Generally, nonresident aliens, foreign corporations and other foreign investors are subject to a 30% withholding tax on dividends paid by a U.S. corporation, although the rate may be reduced for an investor that is a qualified resident of a foreign country with an applicable tax treaty with the United States. In the case of a regulated investment company such as the Fund, however, certain categories of dividends are exempt from the 30% withholding tax. These generally include dividends attributable to the Fund's net capital gains (the excess of net long-term capital gains over net short-term capital loss) and dividends attributable to the Fund’s interest income from U.S. obligors and dividends attributable to net short-term capital gains of the Fund.
21
Foreign shareholders will generally not be subject to U.S. tax on gains realized on the sale or redemption of shares in the Fund, except that a nonresident alien individual who is present in the United States for 183 days or more in a calendar year will be taxable on such gains and on capital gain dividends from the Fund.
In contrast, if a foreign investor conducts a trade or business in the United States and the investment in the Fund is effectively connected with that trade or business, then the foreign investor's income from the Fund will generally be subject to U.S. federal income tax at graduated rates in a manner similar to the income of a U.S. citizen or resident.
The Fund will also generally be required to withhold 30% tax on certain payments to foreign entities that do not provide a Form W-8BEN-E that evidences their compliance with, or exemption from, specified information reporting requirements under the Foreign Account Tax Compliance Act.
All foreign investors should consult their own tax advisers regarding the tax consequences in their country of residence of an investment in the Fund.
Shares of the Fund have not been registered for sale outside of the United States.
State and Local Taxes. You may also be subject to state and local taxes on income and gain from Fund shares. State income taxes may not apply, however, to the portions of the Fund's distributions, if any, that are attributable to interest on U.S. government securities. You should consult your tax adviser regarding the tax status of distributions in your state and locality.
More information about taxes is contained in the SAI.
Additional Information
Lost Shareholders, Inactive Accounts and Unclaimed Property. It is important that the Fund maintains a correct address for each shareholder. An incorrect address may cause a shareholder’s account statements and other mailings to be returned to the Fund. Based upon statutory requirements for returned mail, the Fund will attempt to locate the shareholder or rightful owner of the account. If the Fund is unable to locate the shareholder, then it will determine whether the shareholder’s account can legally be considered abandoned. Your mutual fund account may be transferred to the state government of your state of residence if no activity occurs within your account during the “inactivity period” specified in your state’s abandoned property laws. The Fund is legally obligated to escheat (or transfer) abandoned property to the appropriate state’s unclaimed property administrator in accordance with statutory requirements. The shareholder’s last known address of record determines which state has jurisdiction. Please proactively contact the Transfer Agent at 1-844-261-6482 (toll free) at least annually to ensure your account remains in active status.
If you are a resident of the state of Texas, you may designate a representative to receive notifications that, due to inactivity, your mutual fund account assets may be delivered to the Texas Comptroller. Please contact the Transfer Agent if you wish to complete a Texas Designation of Representative form.
NO
PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS OR IN THE FUND’S
SAI INCORPORATED HEREIN BY REFERENCE, IN CONNECTION WITH THE OFFERING MADE BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ITS DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING
BY THE COMPANY OR BY THE DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE.
22
FINANCIAL HIGHLIGHTS
No financial highlights are presented because the Fund had not commenced investment operations prior to the date of this Prospectus.
23
FACTS | WHAT DOES THE AQUARIUS INTERNATIONAL FUND DO WITH YOUR PERSONAL INFORMATION? |
Why? | Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do. |
What? | The types of personal information we collect and share depend on the product or service you have with us. This information can include:
● Social Security number ● account balances ● account transactions ● transaction history ● wire transfer instructions ● checking account information
When you are no longer our customer, we continue to share your information as described in this notice. |
How? | All financial companies need to share customers’ personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers’ personal information; the reasons the Aquarius International Fund chooses to share; and whether you can limit this sharing. |
Reasons we can share your information |
Does the Aquarius International Fund share? |
Can you limit this sharing? |
For our everyday business purpose — such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus |
Yes | No |
For our marketing purposes — to offer our products and services to you |
Yes | No |
For joint marketing with other financial companies | Yes | No |
For
affiliates’ everyday business purposes — information about your transactions and experiences |
Yes | No |
For
affiliates’ everyday business purposes — information about your creditworthiness |
No | We don’t share |
For our affiliates to market to you | No | We don’t share |
For nonaffiliates to market to you | No | We don’t share |
Questions? | Call 1-844-261-6482 |
What we do | ||
How does the Aquarius International Fund protect my personal information? | To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include computer safeguards and secured files and buildings. | |
How does the Aquarius International Fund collect my personal information? | We collect your personal information, for example, when you
● open an account ● provide account information ● give us your contact information ● make a wire transfer ● tell us where to send the money
We also collect your information from others, such as credit bureaus, affiliates, or other companies. |
|
Why can’t I limit all sharing? | Federal law gives you the right to limit only
● sharing for affiliates’ everyday business purposes — information about your creditworthiness ● affiliates from using your information to market to you ● sharing for nonaffiliates to market to you
State laws and individual companies may give you additional rights to limit sharing. |
|
Definitions | ||
Affiliates | Companies related by common ownership or control. They can be financial and nonfinancial companies.
● Our affiliates include Altair Advisers, LLC, the investment adviser to the Aquarius International Fund. |
|
Nonaffiliates | Companies not related by common ownership or control. They can be financial and nonfinancial companies.
● Aquarius International Fund doesn’t share with nonaffiliates so they can market to you. |
|
Joint marketing | A formal agreement between nonaffiliated financial companies that together market financial products or services to you.
● Aquarius International Fund may share your information with other financial institutions with whom they have joint marketing arrangements who may suggest additional fund services or other investments products which may be of interest to you. We do not currently have any joint marketing arrangements with other financial institutions. |
Aquarius
International Fund
of
The RBB Fund, Inc.
(1-844-261-6482)
For More Information
This Prospectus contains important information you should know before you invest. Read it carefully and keep it for future reference. More information about the Aquarius International Fund is available free of charge, upon request, including:
Annual/Semi-Annual Reports
As of the date of this Prospectus, annual and semi-annual reports for the Fund are not yet available as this Fund had not commenced operations. The annual and semi-annual reports will contain additional information about the Fund's investments, describe the Fund's performance, list portfolio holdings, and discuss recent market conditions and economic trends. The annual report will include fund strategies that significantly affected the Fund's performance during its last fiscal year.
Once available, the Fund's annual and semi-annual reports to shareholders may be obtained by calling 1-844-261-6482.
Statement of Additional Information
The Fund’s SAI (“SAI”), dated February 21, 2018, has been filed with the SEC. The SAI, which includes additional information about the Fund, may be obtained free of charge, along with the annual and semi-annual reports, by calling 1-844-261-6482. The SAI, as supplemented from time to time, is incorporated by reference into this Prospectus (and is legally part of this Prospectus). The SAI is not available on the Adviser’s website, but a copy may be obtained by calling 1-844-261-6482.
Shareholder Inquiries
Representatives are available to discuss account balance information, mutual fund prospectuses, literature, programs and services available. Hours: 9 a.m. to 8 p.m. (Eastern time) Monday-Friday. Call: 1-844-261-6482.
Purchases
and Redemptions
Call 1-844-261-6482.
Written
Correspondence
Street Address:
Aquarius
International Fund
c/o U.S. Bancorp Fund Services, LLC
615 East Michigan Street
Milwaukee, WI 53202-5207
P.O. Box Address:
Aquarius
International Fund
c/o U.S. Bancorp Fund Services, LLC
P.O. Box 701
Milwaukee, WI 53201-0701
Securities and Exchange Commission
You may view and copy information about the Company and the Fund, including the SAI, by visiting the SEC's Public Reference Room in Washington, D.C. or the EDGAR Database on the SEC's Internet site at www.sec.gov. You may also obtain copies of Fund documents by paying a duplicating fee and sending an electronic request to the following e-mail address: publicinfo@sec.gov, or by sending your written request and a duplicating fee to the SEC's Public Reference Section, Washington, D.C. 20549-1520. You may obtain information on the operation of the public reference room by calling the SEC at (202) 551-8090.
Investment Company Act File No. 811-05518
STATEMENT OF ADDITIONAL INFORMATION
AQUARIUS INTERNATIONAL FUND
a series of THE RBB FUND, INC.
February 21, 2018
Investment Adviser:
Altair Advisers LLC
This Statement of Additional Information (“SAI”) provides supplementary information pertaining to shares of the Aquarius International Fund (the “Fund”) of The RBB Fund, Inc. (the “Company”). This SAI is not a prospectus and should be read only in conjunction with the Fund’s Prospectus dated February 21, 2018 (the “Prospectus”). Copies of the Prospectus and Annual and Semi-Annual Reports, when issued, may be obtained free of charge by calling toll-free 1-844-261-6482.
TABLE OF CONTENTS
GENERAL INFORMATION | 1 |
INVESTMENT OBJECTIVE AND POLICIES | 1 |
INVESTMENT LIMITATIONS | 29 |
DISCLOSURE OF PORTFOLIO HOLDINGS | 31 |
PORTFOLIO TURNOVER | 32 |
MANAGEMENT OF THE COMPANY | 32 |
CODE OF ETHICS | 40 |
PROXY VOTING | 40 |
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES | 41 |
INVESTMENT ADVISORY AND OTHER SERVICES | 41 |
INVESTMENT ADVISER | 41 |
INVESTMENT SUB-ADVISERS | 42 |
THE PORTFOLIO MANAGERS | 43 |
ADMINISTRATION AND ACCOUNTING AGREEMENT | 48 |
CUSTODIAN AGREEMENT | 48 |
TRANSFER AGENCY AGREEMENT | 49 |
DISTRIBUTION AGREEMENT | 49 |
FUND TRANSACTIONS | 50 |
PURCHASE AND REDEMPTION INFORMATION | 51 |
TELEPHONE TRANSACTION PROCEDURES | 52 |
VALUATION OF SHARES | 52 |
TAXES | 53 |
ADDITIONAL INFORMATION CONCERNING COMPANY SHARES | 54 |
MISCELLANEOUS | 56 |
APPENDIX A | A-1 |
APPENDIX B | B-1 |
APPENDIX C | C-1 |
APPENDIX D | D-1 |
APPENDIX E | E-1 |
i
GENERAL INFORMATION
The Company is an open-end management investment company consisting of 31 separate portfolios. The Company is registered under the Investment Company Act of 1940, as amended, (the “1940 Act”) and was organized as a Maryland corporation on February 29, 1988. This SAI pertains to shares of the Aquarius International Fund (the “Fund”), a diversified portfolio. Altair Advisers LLC (“Altair” or the “Adviser”), serves as the investment adviser to the Fund.
INVESTMENT OBJECTIVE AND POLICIES
The following supplements the information contained in the Prospectus concerning the investment objective and policies of the Fund.
The Fund seeks capital appreciation. The Fund may not necessarily invest in all of the instruments or use all of the investment techniques permitted by the Fund’s Prospectus and this SAI, or invest in such instruments or engage in such techniques to the full extent permitted by the Fund’s investment policies and limitations.
Principal Investment Policies and Risks.
Multi-Manager Structure. The Fund is managed by the Adviser and one or more asset managers who are unaffiliated with the Adviser (each a “Sub-Adviser” and together, the “Sub-Advisers”). Subject to review by the Fund’s Board of Directors (the “Board”), the Adviser is responsible for selecting the Fund’s investment strategies and for allocating and reallocating assets among the Sub-Advisers consistent with the Fund’s investment objective and strategies. The Adviser is also responsible for recommending to the Board whether an agreement with a Sub-Adviser should be approved, renewed, modified or terminated and for monitoring and evaluating the Sub-Advisers. The Adviser is also responsible for implementing procedures to ensure that each Sub-Adviser complies with the Fund’s investment objective, strategies and restrictions.
Portfolio Turnover Rate. Portfolio turnover rate is defined under U.S. Securities and Exchange Commission (the “SEC”) rules as the greater of the value of the securities purchased or securities sold, excluding all securities whose maturities at the time of acquisition were one-year or less, divided by the average monthly value of such securities owned during the year. Based on this definition, instruments with remaining maturities of less than one-year are excluded from the calculation of the portfolio turnover rate. Instruments excluded from the calculation of portfolio turnover generally would include the futures contracts in which the Fund may invest since such contracts generally have remaining maturities of less than one-year. The Fund may at times hold investments in other short-term instruments, such as repurchase agreements, which are excluded for purposes of computing portfolio turnover.
Corporate Obligations. The Fund may invest in debt obligations, such as bonds and debentures, issued by corporations and other business organizations without limit on credit quality or maturity of debt securities. See Appendix “A” to this SAI for a description of corporate debt ratings. An issuer of debt obligations may default on its obligation to pay interest and repay principal. Also, changes in the financial strength of an issuer or changes in the credit rating of a security may affect its value.
Equity Markets. The Fund invests primarily in equity markets at all times. Equity markets can be highly volatile, so that investing in the Fund involves substantial risk. As a result, investing in the Fund involves the risk of loss of capital.
Equity Securities. Equity securities represent ownership interests in a company and consist of common stocks, preferred stocks, warrants to acquire common stock, and securities convertible into common stock. Investments in equity securities in general are subject to market risks that may cause their prices to fluctuate over time. Fluctuations in the value of equity securities in which the Fund invests will cause the net asset value of the Fund to fluctuate. The Fund purchases equity securities traded in the U.S. on registered exchanges or the over-the-counter market, and on domestic exchanges. Equity securities are described in more detail below:
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● | Common Stock. Common stock represents an equity or ownership interest in an issuer. In the event an issuer is liquidated or declares bankruptcy, the claims of owners of bonds and preferred stock take precedence over the claims of those who own common stock. |
● | Preferred Stock. Preferred stock represents an equity or ownership interest in an issuer that pays dividends at a specified rate and that has precedence over common stock in the payment of dividends. In the event an issuer is liquidated or declares bankruptcy, the claims of owners of bonds take precedence over the claims of those who own preferred and common stock. |
● | Warrants. Warrants are instruments that entitle the holder to buy an equity security at a specific price for a specific period of time. Changes in the value of a warrant do not necessarily correspond to changes in the value of its underlying security. The price of a warrant may be more volatile than the price of its underlying security, and a warrant may offer greater potential for capital appreciation as well as capital loss. Warrants do not entitle a holder to dividends or voting rights with respect to the underlying security and do not represent any rights in the assets of the issuing company. A warrant ceases to have value if it is not exercised prior to its expiration date. These factors can make warrants more speculative than other types of investments. |
● | Convertible Securities. Convertible securities are bonds, debentures, notes, preferred stocks or other securities that may be converted or exchanged (by the holder or by the issuer) into shares of the underlying common stock (or cash or securities of equivalent value) at a stated exchange ratio. A convertible security may also be called for redemption or conversion by the issuer after a particular date and under certain circumstances (including a specified price) established upon issue. If a convertible security held by the Fund is called for redemption or conversion, the Fund could be required to tender it for redemption, convert it into the underlying common stock, or sell it to a third party. |
Convertible securities generally have less potential for gain or loss than common stocks. Convertible securities generally provide yields higher than the underlying common stocks, but generally lower than comparable non-convertible securities. Because of this higher yield, convertible securities generally sell at a price above their “conversion value,” which is the current market value of the stock to be received upon conversion. The difference between this conversion value and the price of convertible securities will vary over time depending on changes in the value of the underlying common stocks and interest rates. When the underlying common stocks decline in value, convertible securities will tend not to decline to the same extent because of the interest or dividend payments and the repayment of principal at maturity for certain types of convertible securities. However, securities that are convertible other than at the option of the holder generally do not limit the potential for loss to the same extent as securities convertible at the option of the holder. When the underlying common stocks rise in value, the value of convertible securities may also be expected to increase. At the same time, however, the difference between the market value of convertible securities and their conversion value will narrow, which means that the value of convertible securities will generally not increase to the same extent as the value of the underlying common stocks. Because convertible securities may also be interest-rate sensitive, their value may increase as interest rates fall and decrease as interest rates rise. Convertible securities are also subject to credit risk, and are often lower-quality securities. |
● | Micro, Small and Medium Capitalization Issuers. Investing in equity securities of micro, small and medium capitalization companies often involves greater risk than is customarily associated with investments in larger capitalization companies. This increased risk may be due to the greater business risks of smaller size, limited markets and financial resources, narrow product lines and frequent lack of depth of management. The securities of smaller companies are often traded in the over-the-counter market and even if listed on a national securities exchange may not be traded in volumes typical for that exchange. Consequently, the securities of smaller companies are less likely to be liquid, may have limited market stability, and may be subject to more abrupt or erratic market movements than securities of larger, more established growth companies or the market averages in general. |
● | Large Capitalization Issuers. Securities of companies with certain market capitalizations may perform differently from the equities markets generally. At times, large-cap companies may underperform as compared to small- or mid-capitalization companies, and vice versa. Larger, more established companies may be unable to respond to new competitive challenges such as changes in consumer tastes or innovative smaller competitors. |
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Foreign Securities. The Fund may invest in securities of foreign issuers that are denominated or traded in foreign currencies. The Fund may also invest in securities of foreign issuers that are traded or denominated in U.S. dollars (including equity securities of foreign issuers trading in U.S. markets) through American Depositary Receipts (“ADRs”), Global Depositary Receipts (“GDRs”), European Depositary Receipts (“EDRs”) or International Depositary Receipts (“IDRs”). ADRs are securities, typically issued by a U.S. financial institution (a “depository”), that evidence ownership interests in a security or pool of securities issued by a foreign issuer and deposited with the depository. ADRs may be listed on a national securities exchange or may trade in the over-the-counter market. ADR prices are denominated in U.S. dollars; the underlying security may be denominated in a foreign currency. GDRs, EDRs and IDRs are securities that represent ownership interests in a security or pool of securities issued by a non-U.S. or U.S. corporation. Depositary receipts may be available through “sponsored” or “unsponsored” facilities. A sponsored facility is established jointly by the issuer of the security underlying the receipt and the depository, whereas an unsponsored facility is established by the depository without participation by the issuer of the underlying security. Holders of unsponsored depositary receipts generally bear all of the costs of the unsponsored facility. The depository of an unsponsored facility is frequently under no obligation to distribute shareholder communications received from the issuer of the deposited security or to pass through, to the holders of the receipts, voting rights with respect to the deposited securities. The depository of unsponsored depositary receipts may provide less information to receipt holders. Investments in depositary receipts do not eliminate the risks in investing in foreign issuers. The underlying security may be subject to foreign government taxes, which would reduce the yield on such securities.
Investments in foreign securities involve higher costs than investments in U.S. securities, including higher transaction costs as well as the imposition of additional taxes by foreign governments. In addition, foreign investments may include additional risks associated with currency exchange rates, less complete financial information about the issuers, less market liquidity and political stability. Volume and liquidity in most foreign bond markets are less than in the United States and, at times, volatility or price can be greater than in the United States. Future political and economic information, the possible imposition of withholding taxes on interest income, the possible seizure or nationalization of foreign holdings, the possible establishment of exchange controls, or the adoption of other governmental restrictions, might adversely affect the payment of principal and interest on foreign obligations. Inability to dispose of Fund securities due to settlement problems could result either in losses to the Fund due to subsequent declines in value of the securities, or, if the Fund has entered into a contract to sell the securities, could result in possible liability to the purchaser. Individual foreign economies may differ favorably or unfavorably from the U.S. economy in such respects as growth or gross national product, rate of inflation, capital reinvestment, resource self-sufficiency and balance of payments position.
Fixed commissions on foreign securities exchanges are generally higher than negotiated commissions on U.S. exchanges, although the Fund endeavors to achieve the most favorable net results on their portfolio transactions. There is generally less government supervision and regulation of securities exchanges, brokers, dealers and listed companies than in the United States.
Settlement mechanics (e.g., mail service between the United States and foreign countries) may be slower or less reliable than within the United States, thus increasing the risk of delayed settlements of portfolio transactions or loss of certificates for portfolio securities. Foreign markets also have different clearance and settlement procedures, and in certain markets there have been times when settlements have been unable to keep pace with the volume of securities transactions, making it difficult to conduct such transactions. Such delays in settlement could result in temporary periods when a portion of the assets of the Fund is uninvested and no return is earned thereon. The inability of the Fund to make intended security purchases due to settlement problems could cause the Fund to miss attractive investment opportunities.
Although the Fund may invest in securities denominated in foreign currencies, the Fund values its securities and other assets in U.S. dollars. As a result, the net asset value (“NAV”) of the Fund’s shares may fluctuate with U.S. dollar exchange rates as well as the price changes of the Fund’s securities in the various local markets and currencies. Thus, an increase in the value of the U.S. dollar compared to the currencies in which the Fund makes its investments could reduce the effect of increases and magnify the effect of decreases in the price of the Fund’s securities in their local markets. Conversely, a decrease in the value of the U.S. dollar may have the opposite effect of magnifying the effect of increases and reducing the effect of decreases in the prices of the Fund’s securities in its foreign markets. In addition to favorable and unfavorable currency exchange rate developments, the Fund is subject to the possible imposition of exchange control regulations or freezes on convertibility of currency. The Fund may invest in obligations of foreign branches of U.S. banks (Eurodollars) and U.S. branches of foreign banks (Yankee dollars) as well as foreign branches of foreign banks. These investments involve risks that are different from investments in securities of U.S. banks, including potential unfavorable political and economic developments, different tax provisions, seizure of foreign deposits, currency controls, interest limitations or other governmental restrictions which might affect payment of principal or interest. The Fund may also invest in Yankee bonds, which are issued by foreign governments and their agencies and foreign corporations but pay interest in U.S. dollars and are typically issued in the United States.
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Illiquid Securities. Illiquid securities are securities that cannot be sold or disposed of in the ordinary course of business (within seven days) at approximately the prices at which they are valued. Because of their illiquid nature, illiquid securities must be priced at fair value as determined in good faith pursuant to procedures approved by the Board. Despite such good faith efforts to determine fair value prices, the Fund’s illiquid securities are subject to the risk that the security’s fair value price may differ from the actual price which the Fund may ultimately realize upon its sale or disposition. Difficulty in selling illiquid securities may result in a loss or may be costly to the Fund. Under the supervision of the Board, the Adviser and the Sub-Advisers determine the liquidity of the Fund’s investments. In determining the liquidity of the Fund’s investments, the Adviser and Sub-Advisers may consider various factors, including: (1) the frequency and volume of trades and quotations; (2) the number of dealers and prospective purchasers in the marketplace; (3) dealer undertakings to make a market; and (4) the nature of the security and the market in which it trades (including any demand, put or tender features, the mechanics and other requirements for transfer, any letters of credit or other credit enhancement features, any ratings, the number of holders, the method of soliciting offers, the time required to dispose of the security, and the ability to assign or offset the rights and obligations of the security). The Fund will not hold more than 15% of its net assets in illiquid securities.
Initial Public Offerings. To the extent consistent with its investment policies and limitations, the Fund may purchase stock in an initial public offering (“IPO”). An IPO is a company’s first offering of stock to the public. Risks associated with IPOs may include considerable fluctuation in the market value of IPO shares due to certain factors, such as the absence of a prior public market, unseasoned trading, a limited number of shares available for trading, lack of information about the issuer and limited operating history. The purchase of IPO shares may involve high transaction costs. When the Fund’s asset base is small, a significant portion of the Fund’s performance could be attributable to investments in IPOs, because such investments would have a magnified impact on the Fund. As the Fund’s assets grow, the effect of the Fund’s investments in IPOs on the Fund’s performance probably will decline, which could reduce the Fund’s performance. Because of the price volatility of IPO shares, the Fund may choose to hold IPO shares for a very short period of time. This may increase the turnover of the Fund’s portfolio and may lead to increased expenses to the Fund, such as commissions and transaction costs. In addition, the Fund cannot guarantee continued access to IPOs.
Investing in Emerging Countries, including Asia and Eastern Europe. The Fund may invest in securities of issuers located in emerging countries. The securities markets of emerging countries are less liquid and subject to greater price volatility, and have a smaller market capitalization, than the U.S. securities markets. In certain countries, there may be fewer publicly traded securities and the market may be dominated by a few issues or sectors. Issuers and securities markets in such countries are not subject to as extensive and frequent accounting, financial and other reporting requirements or as comprehensive government regulations as are issuers and securities markets in the U.S. In particular, the assets and profits appearing on the financial statements of emerging country issuers may not reflect their financial position or results of operations in the same manner as financial statements for U.S. issuers. Substantially less information may be publicly available about emerging country issuers than is available about issuers in the United States.
Emerging country securities markets are typically marked by a high concentration of market capitalization and trading volume in a small number of issuers representing a limited number of industries, as well as a high concentration of ownership of such securities by a limited number of investors. The markets for securities in certain emerging countries are in the earliest stages of their development. Even the markets for relatively widely traded securities in emerging countries may not be able to absorb, without price disruptions, a significant increase in trading volume or trades of a size customarily undertaken by institutional investors in the securities markets of developed countries. The limited size of many of these securities markets can cause prices to be erratic for reasons apart from factors that affect the soundness and competitiveness of the securities issuers. For example, prices may be unduly influenced by traders who control large positions in these markets. Additionally, market making and arbitrage activities are generally less extensive in such markets, which may contribute to increased volatility and reduced liquidity of such markets. The limited liquidity of emerging country securities may also affect the Fund’s ability to accurately value its portfolio securities or to acquire or dispose of securities at the price and time it wishes to do so or in order to meet redemption requests.
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With respect to investments in certain emerging market countries, antiquated legal systems may have an adverse impact on the Fund. For example, while the potential liability of a shareholder in a U.S. corporation with respect to acts of the corporation is generally limited to the amount of the shareholder’s investment, the notion of limited liability is less clear in certain emerging market countries. Similarly, the rights of investors in emerging market companies may be more limited than those of shareholders in U.S. corporations.
Transaction costs, including brokerage commissions or dealer mark-ups, in emerging countries may be higher than in the United States and other developed securities markets. In addition, existing laws and regulations are often inconsistently applied. As legal systems in emerging countries develop, foreign investors may be adversely affected by new or amended laws and regulations. In circumstances where adequate laws exist, it may not be possible to obtain swift and equitable enforcement of the law.
Foreign investment in the securities markets of certain emerging countries is restricted or controlled to varying degrees. These restrictions may limit the Fund’s investment in certain emerging countries and may increase the expenses of the Fund. Certain emerging countries require governmental approval prior to investments by foreign persons or limit investment by foreign persons to only a specified percentage of an issuer’s outstanding securities or a specific class of securities which may have less advantageous terms (including price) than securities of the company available for purchase by nationals. In addition, the repatriation of both investment income and capital from emerging countries may be subject to restrictions which require governmental consents or prohibit repatriation entirely for a period of time. Even where there is no outright restriction on repatriation of capital, the mechanics of repatriation may affect certain aspects of the operation of the Fund. The Fund may be required to establish special custodial or other arrangements before investing in certain emerging countries.
Emerging countries may be subject to a substantially greater degree of economic, political and social instability and disruption than is the case in the United States, Japan and most Western European countries. This instability may result from, among other things, the following: (i) authoritarian governments or military involvement in political and economic decision making, including changes or attempted changes in governments through extra-constitutional means; (ii) popular unrest associated with demands for improved political, economic or social conditions; (iii) internal insurgencies; (iv) hostile relations with neighboring countries; (v) ethnic, religious and racial disaffection or conflict; and (vi) the absence of developed legal structures governing foreign private investments and private property. Such economic, political and social instability could disrupt the principal financial markets in which the Fund may invest and adversely affect the value of the Fund’s assets. The Fund’s investments can also be adversely affected by any increase in taxes or by political, economic or diplomatic developments.
The Fund may seek investment opportunities within former “east bloc” countries in Eastern Europe. Most Eastern European countries had a centrally planned, socialist economy for a substantial period of time. The governments of many Eastern European countries have more recently been implementing reforms directed at political and economic liberalization, including efforts to decentralize the economic decision-making process and move towards a market economy. However, business entities in many Eastern European countries do not have an extended history of operating in a market-oriented economy, and the ultimate impact of Eastern European countries’ attempts to move toward more market-oriented economies is currently unclear. In addition, any change in the leadership or policies of Eastern European countries may halt the expansion of or reverse the liberalization of foreign investment policies now occurring and adversely affect existing investment opportunities. As a result of recent events involving Ukraine and the Russian Federation, the United States and the European Union have imposed sanctions on certain Russian individuals and Russian corporations. Additional broader sanctions may be imposed in the future. These sanctions, or even the threat of further sanctions, may result in the decline of the value and liquidity of Russian securities, a weakening of the ruble or other adverse consequences to the Russian economy. These sanctions could also result in the immediate freeze of Russian securities, impairing the ability of a Fund to buy, sell, receive or deliver those securities. Sanctions could also result in Russia taking counter measures or retaliatory actions which may further impair the value and liquidity of Russian and/or Ukrainian securities.
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The economies of emerging countries may differ unfavorably from the U.S. economy in such respects as growth of gross domestic product, rate of inflation, capital reinvestment, resources, self-sufficiency and balance of payments. Many emerging countries have experienced in the past, and continue to experience, high rates of inflation. In certain countries inflation has at times accelerated rapidly to hyperinflationary levels, creating a negative interest rate environment and sharply eroding the value of outstanding financial assets in those countries. Other emerging countries, on the other hand, have recently experienced deflationary pressures and are in economic recessions. The economies of many emerging countries are heavily dependent upon international trade and are accordingly affected by protective trade barriers and the economic conditions of their trading partners. In addition, the economies of some emerging countries are vulnerable to weakness in world prices for their commodity exports. The Fund’s income and, in some cases, capital gains from foreign stocks and securities will be subject to applicable taxation in certain of the countries in which it invests, and treaties between the U.S. and such countries may not be available in some cases to reduce the otherwise applicable tax rates.
Foreign markets also have different clearance and settlement procedures, and in certain markets there have been times when settlements have been unable to keep pace with the volume of securities transactions, making it difficult to conduct such transactions. Such delays in settlement could result in temporary periods when a portion of the assets of the Fund remain uninvested and no return is earned on such assets. The inability of the Fund to make intended security purchases or sales due to settlement problems could result either in losses to the Fund due to subsequent declines in value of the portfolio securities or, if the Fund has entered into a contract to sell the securities, could result in possible liability to the purchaser.
Market Fluctuation. The market value of the Fund’s investments, and thus the Fund’s NAV, will change in response to market conditions affecting the value of its portfolio securities. When interest rates decline, the value of fixed rate obligations can be expected to rise. Conversely, when interest rates rise, the value of fixed rate obligations can be expected to decline. In contrast, as interest rates on adjustable rate loans are reset periodically, yields on investments in such loans will gradually align themselves to reflect changes in market interest rates, causing the value of such investments to fluctuate less dramatically in response to interest rate fluctuations than would investments in fixed rate obligations. Because the investment alternatives available to the Fund may be limited by the specific objective of the Fund, investors should be aware that an investment in the Fund may be subject to greater market fluctuation than an investment in a portfolio of securities representing a broader range of investment alternatives. In view of the specialized nature of the investment activities of the Fund, an investment in the Fund should not be considered a complete investment program.
Micro-Cap and Small-Cap Stocks. The Fund may invest in securities of companies with micro-and small-size capitalizations that tend to be riskier than securities of companies with large capitalizations. This is because micro- and small-cap companies typically have smaller product lines and less access to liquidity than large cap companies, and are therefore more sensitive to economic downturns. In addition, growth prospects of micro- and small-cap companies tend to be less certain than large cap companies, and the dividends paid on micro- and small-cap stocks are frequently negligible. Moreover, micro- and small-cap stocks have, on occasion, fluctuated in the opposite direction of large cap stocks or the general stock market. Consequently, securities of micro- and small-cap companies tend to be more volatile than those of large-cap companies. The market for micro- and small-cap securities may be thinly traded and as a result, greater fluctuations in the price of micro- and small-cap securities may occur.
Restricted and Illiquid Securities. The Fund may not invest more than 15% of its net assets in illiquid securities, including securities that are illiquid by virtue of the absence of a readily available market or legal or contractual restrictions on resale. Illiquid securities include: repurchase agreements and time deposits with a notice or demand period of more than seven days; interest rate; currency and mortgage swaps; interest rate caps; floors and collars; municipal leases; certain restricted securities, such as those purchased in a private placement of securities, unless it is determined, based upon a review of the trading markets for a specific restricted security, that such restricted security is liquid; and certain over-the-counter options. Securities that have legal or contractual restrictions on resale but have a readily available market are not considered illiquid for purposes of this limitation.
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Mutual funds do not typically hold a significant amount of restricted or other illiquid securities because of the potential for delays on resale and uncertainty in valuation. Limitations on resale may have an adverse effect on the marketability of portfolio securities and a mutual fund might be unable to dispose of restricted or other illiquid securities promptly or at reasonable prices and might thereby experience difficulty in satisfying redemptions within seven days. A mutual fund might also have to register such restricted securities in order to dispose of them resulting in additional expense and delay. Adverse market conditions could impede such a public offering of securities.
The Fund may purchase securities which are not registered under the Securities Act of 1933, as amended (the “1933 Act”) but which may be sold to “qualified institutional buyers” in accordance with Rule 144A under the 1933 Act (“Restricted Securities”). These securities will not be considered illiquid so long as it is determined by the Adviser or applicable Sub-Adviser that an adequate trading market exists for the securities. This investment practice could have the effect of increasing the level of illiquidity in the Fund during any period that qualified institutional buyers become uninterested in purchasing restricted securities.
The Adviser or applicable Sub-Adviser will monitor the liquidity of Restricted Securities held by the portion of the assets of the Fund it manages. In reaching liquidity decisions, the Adviser or Sub-Adviser may consider, among others, the following factors: (1) the unregistered nature of the security; (2) the frequency of trades and quotes for the security; (3) the number of dealers wishing to purchase or sell the security and the number of other potential purchasers; (4) dealer undertakings to make a market in the security; and (5) the nature of the security and the nature of the marketplace trades (e.g., the time needed to dispose of the security, the method of soliciting offers and the mechanics of the transfer).
The purchase price and subsequent valuation of Restricted Securities normally reflect a discount from the price at which such securities trade when they are not restricted, since the restriction makes them less liquid. The amount of the discount from the prevailing market price is expected to vary depending upon the type of security, the character of the issuer, the party who will bear the expenses of registering the Restricted Securities and prevailing supply and demand conditions.
As consistent with the Fund’s investment objective, the Fund may also invest in Section 4(2) commercial paper. Section 4(2) commercial paper is issued in reliance on an exemption from registration under Section 4(2) of the 1933 Act and is generally sold to institutional investors who purchase for investment. Any resale of such commercial paper must be in an exempt transaction, usually to an institutional investor through the issuer or investment dealers who make a market in such commercial paper. The Company believes that Section 4(2) commercial paper is liquid to the extent it meets the criteria established by the Board. The Company intends to treat such commercial paper as liquid and not subject to the investment limitations applicable to illiquid securities or restricted securities.
Rights Offerings and Purchase Warrants. Rights offerings and purchase warrants are privileges issued by a corporation which enable the owner to subscribe to and purchase a specified number of shares of the corporation at a specified price during a specified period of time. Subscription rights normally have a short lifespan to expiration. The purchase of rights or warrants involves the risk that the Fund could lose the purchase value of a right or warrant if the right to subscribe to additional shares is not executed prior to the right’s or warrant’s expiration. Also, the purchase of rights and/or warrants involves the risk that the effective price paid for the right and/or warrant added to the subscription price of the related security may exceed the value of the subscribed security’s market price such as when there is no movement in the level of the underlying security.
Securities of Unseasoned Issuers. The Fund may invest in securities of unseasoned issuers, including equity securities of unseasoned issuers which are not readily marketable. The term “unseasoned” refers to issuers which, together with their predecessors, have been in operation for less than three years.
Special Situation Companies. The Fund may invest in “Special Situations.” The term “Special Situation” shall be deemed to refer to a security of a company in which an unusual and possibly non-repetitive development is taking place which, in the opinion of the Adviser or Sub-Adviser, may cause the security to attain a higher market value independently, to a degree, of the trend in the securities market in general. The particular development (actual or prospective), which may qualify a security as a Special Situation, may be one of many different types.
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Such developments may include, among others, a technological improvement or important discovery or acquisition which, if the expectation for it materialized, would effect a substantial change in the company’s business; a reorganization; a recapitalization or other development involving a security exchange or conversion; a merger, liquidation or distribution of cash, securities or other assets; a breakup or workout of a holding company; litigation which, if resolved favorably, would improve the value of the company’s stock; a new or changed management; or material changes in management policies. A Special Situation may often involve a comparatively small company, which is not well known, and which has not been closely watched by investors generally, but it may also involve a large company. The fact, if it exists, that an increase in the company’s earnings, dividends or business is expected, or that a given security is considered to be undervalued, would not in itself be sufficient to qualify as a Special Situation. The Fund may invest in securities (even if not Special Situations) which, in the opinion of the Adviser, are appropriate investments for the Fund, including securities which the Adviser or Sub-Adviser believes are undervalued by the market. The Fund is not required to invest any minimum percentage of its aggregate portfolio in “Special Situations,” nor is it required to invest any minimum percentage of its aggregate portfolio in securities other than “Special Situations.”
Special Note Regarding Market Events. Events in the financial sector over the past several years have resulted in reduced liquidity in credit and fixed income markets and in an unusually high degree of volatility in the financial markets, both domestically and internationally. While entire markets have been impacted, issuers that have exposure to the real estate, mortgage and credit markets have been particularly affected. These events and the potential for continuing market turbulence may have an adverse effect on the Fund’s investments. It is uncertain how long these conditions will continue.
The instability in the financial markets has led the U.S. government to take a number of unprecedented actions designed to support certain financial institutions and certain segments of the financial markets. Federal, state and foreign governments, regulatory agencies, and self-regulatory organizations may take actions that affect the regulation of the instruments in which the Fund invests, or the issuers of such instruments, in ways that are unforeseeable. Such legislation or regulation could limit or preclude the Fund’s ability to achieve its investment objective.
Governments or their agencies may also acquire distressed assets from financial institutions and acquire ownership interests in those institutions. The implications of government ownership and disposition of these assets are unclear, and such ownership or disposition may have positive or negative effects on the liquidity, valuation and performance of the Fund’s holdings.
Temporary Defensive Positions. In anticipation of or in response to adverse market, economic, political or other conditions, the Fund may take temporary defensive positions (up to 100% of its assets) in cash, cash equivalents and short-term U.S. government securities. If the Fund were to take a temporary defensive position, it may be unable for a time to achieve its investment objective.
Non-Principal Investment Policies and Risks.
Asset-Backed Securities. The Fund may invest in asset-backed securities, which represent participations in, or are secured by and payable from, pools of assets such as motor vehicle installment sale contracts, installment loan contracts, leases of various types of real and personal property, receivables from revolving credit (credit card) agreements and other categories of receivables. Asset-backed securities may also be collateralized by a portfolio of U.S. government securities but are not direct obligations of the U.S. government, its agencies or instrumentalities. Such asset pools are securitized through the use of privately-formed trusts or special purpose corporations. Payments or distributions of principal and interest on asset-backed securities may be guaranteed up to certain amounts and for a certain time period by a letter of credit or a pool insurance policy issued by a financial institution unaffiliated with the trust or corporation, or other credit enhancements may be present, although privately issued obligations collateralized by a portfolio of privately issued asset-backed securities do not involve any government-related guarantee or insurance. In addition to the risks that are presented by mortgage-backed securities, asset-backed securities generally do not have the benefit of a security interest in collateral that is comparable to mortgage assets. See “Mortgage-Backed Securities” below for additional information.
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Asset-backed securities acquired by the Fund may also include collateralized debt obligations (“CDOs”). CDOs include collateralized bond obligations (“CBOs”) and collateralized loan obligations (“CLOs”) and other similarly structured securities.
A CBO is a trust or other special purpose entity (“SPE”) that is typically backed by a diversified pool of fixed-income securities (which may include high risk, below investment grade securities). A CLO is a trust or other SPE that is typically collateralized by a pool of loans, which may include, among others, domestic and non-U.S. senior secured loans, senior unsecured loans, and subordinate corporate loans, including loans that may be rated below investment grade or equivalent unrated loans. Although certain CDOs may receive credit enhancement in the form of a senior-subordinate structure, over-collateralization or bond insurance, such enhancement may not always be present and may fail to protect the Fund against the risk of loss on default of the collateral. Certain CDOs may use derivatives contracts to create “synthetic” exposure to assets rather than holding such assets directly, which entails the risks of derivative instruments described elsewhere in this SAI. CDOs may charge management fees and administrative expenses, which are in addition to those of the Fund.
For both CBOs and CLOs, the cashflows from the SPE are split into two or more portions, called tranches, varying in risk and yield. The riskiest portion is the “equity” tranche, which bears the first loss from defaults from the bonds or loans in the SPE and serves to protect the other, more senior tranches from default (though such protection is not complete). Since it is partially protected from defaults, a senior tranche from a CBO or CLO typically has higher ratings and lower yields than its underlying securities, and may be rated investment grade. Despite the protection from the equity tranche, CBO or CLO tranches can experience substantial losses due to actual defaults, increased sensitivity to defaults due to collateral default and disappearance of protecting tranches, market anticipation of defaults, as well as investor aversion to CBO or CLO securities as a class. Interest on certain tranches of a CDO may be paid in kind (paid in the form of obligations of the same type rather than cash), which involves continued exposure to default risk with respect to such payments.
The risks of an investment in a CDO depend largely on the type of the collateral securities and the class of the CDO in which the Fund invests. Normally, CBOs, CLOs and other CDOs are privately offered and sold, and thus are not registered under the securities laws. As a result, investments in CDOs may be characterized by the Fund as illiquid securities. However, an active dealer market may exist for CDOs, allowing a CDO to qualify for Rule 144A transactions. In addition to the normal risks associated with fixed-income securities and asset-backed securities generally discussed elsewhere in this SAI, CDOs carry additional risks including, but not limited to: (i) the possibility that distributions from collateral securities will not be adequate to make interest or other payments; (ii) the quality of the collateral may decline in value or default; (iii) the Fund may invest in tranches of CDOs that are subordinate to other tranches; (iv) the complex structure of the security may not be fully understood at the time of investment and may produce disputes with the issuer or unexpected investment results; and (v) the CDO’s manager may perform poorly or default.
Commercial Paper. Commercial paper is the term used to designate unsecured short-term promissory notes issued by corporations and other entities. Maturities on these issues vary from a few to 270 days.
Commodity-Linked Derivatives. The Fund may attempt to provide exposure to the returns of real assets that trade in the commodity markets without direct investment in physical commodities. Real assets include oil, gas, industrial and precious metals, livestock, and agricultural or meat products, or other items that have tangible properties. Commodity-linked derivative instruments include commodity index-linked securities and other derivative instruments that provide exposure to the investment returns of the commodities markets. Commodity-linked investments may be more volatile and less liquid than the underlying instruments and their value may be affected by the performance of commodities as well as weather, tax, and other regulatory or political developments, overall market movements and other factors affecting the value of particular industries or commodities, such as disease, embargoes, acts of war or terrorism.
The Fund may invest in commodity-linked derivative instruments such as commodity-linked structured notes. The Fund may invest in commodity-linked notes that pay a return linked to the performance of a commodities index or basket of futures contracts with respect to all of the commodities in an index. In some cases, the return will be based on some multiple of the performance of the index, and this embedded leverage will magnify the positive and negative return the Fund earns from these notes as compared to the index. The principal and/or interest payments of commodity-linked derivatives are tied to the value of a real asset or commodity index. Structured notes may be structured by the issuer and the purchaser of the note. The notes are derivative debt instruments with principal payments generally linked to the value of commodities, commodity futures contracts or the performance of commodity indices and interest and coupon payments pegged to a market-based interest rate, such as LIBOR or a bank’s prime rate. The value of these notes will rise or fall in response to changes in the underlying commodity or related index or investment. These notes expose the Fund economically to movements in commodity prices.
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Cyber Security Risk. The Fund and its service providers may be prone to operational and information security risks resulting from breaches in cyber security. A breach in cyber security refers to both intentional and unintentional events that may cause the Fund to lose proprietary information, suffer data corruption, or lose operational capacity. Breaches in cyber security include, among other behaviors, stealing or corrupting data maintained online or digitally, denial of service attacks on websites, the unauthorized release of confidential information or various other forms of cyber-attacks. Cyber security breaches affecting the Fund or its Adviser, custodian, transfer agent, intermediaries and other third-party service providers may adversely impact the Fund. For instance, cyber security breaches may interfere with the processing of shareholder transactions, impact the Fund’s ability to calculate its NAVs, cause the release of private shareholder information or confidential business information, impede trading, subject the Fund to regulatory fines or financial losses and/or cause reputational damage. The Fund may also incur additional costs for cyber security risk management purposes. Similar types of cyber security risks are also present for issuers of securities in which the Fund may invest, which could result in material adverse consequences for such issuers and may cause the Fund’s investment in such companies to lose value.
Dollar Rolls. The Fund may enter into dollar rolls in which the Fund sells fixed income securities for delivery in the current month and simultaneously contracts to repurchase substantially similar (same type, coupon and maturity) securities on a specified future date. During the roll period, the Fund would forgo principal and interest paid on such securities. However, the Fund would be compensated by the difference between the current sales price and the forward price for the future purchase, as well as by the interest earned on the cash proceeds of the initial sale. The return on dollar rolls may be negatively impacted by fluctuations in interest rates. The Fund does not presently intend to engage in dollar roll transactions involving more than 5% of its net assets. For additional information on dollar roll transactions, see the section entitled “Mortgage Dollar Roll Transactions” in this SAI.
Forward Foreign Currency Transactions. The Fund may, to the extent that it invests in foreign securities, enter into forward foreign currency exchange contracts in order to protect against uncertainty in the level of future foreign currency exchange rates. The Fund will conduct its foreign currency exchange transactions either on a spot (i.e., cash) basis at the spot rate prevailing in the foreign currency exchange market, or through entering into forward contracts to purchase or sell foreign currencies. A forward foreign currency exchange contract involves an obligation to purchase or sell a specific currency at a future date, which may be any fixed number of days (usually less than one year) from the date of the contract agreed upon by the parties, at a price set at the time of the contract. These contracts are traded in the interbank market conducted directly between traders (usually large commercial banks) and their customers. A forward contract generally has no deposit requirement, and no commissions are charged at any stage for trades. Although foreign exchange dealers do not charge a fee for conversion, they do realize a profit based on the difference (the spread) between the price at which they are buying and selling various currencies.
The Fund is permitted to enter into forward contracts under two circumstances. First, when the Fund enters into a contract for the purchase or sale of a security quoted or denominated in a foreign currency, it may desire to “lock in” the U.S. dollar price of the security. By entering into a forward contract for the purchase or sale, for a fixed number of U.S. dollars, of the amount of foreign currency involved in the underlying security transactions, the Fund will be able to insulate itself from a possible loss resulting from a change in the relationship between the U.S. dollar and the subject foreign currency during the period between the date on which the security is purchased or sold and the date on which payment is made or received.
Second, when the Adviser or Sub-Adviser, as applicable, believes that the currency of a particular foreign country may suffer a substantial decline against the U.S. dollar, it may cause the Fund to enter a forward contract to sell, for a fixed U.S. dollar amount, the amount of foreign currency approximating the value of some or all of the Fund’s portfolio securities quoted or denominated in such foreign currency. The precise matching of the forward contract amounts and the value of the securities involved will not generally be possible since the future value of such securities in foreign currencies will change as a consequence of market movements in the value of those securities between the date the forward contract is entered into and the date it matures.
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Although the Fund has no current intention to do so, it may engage in cross-hedging by using forward contracts in one currency to hedge against fluctuations in the value in securities denominated or quoted in a different currency if the Adviser or Sub-Adviser, as applicable, determines that there is a pattern of correlation between the two currencies. Cross-hedging may also include entering into a forward transaction involving two foreign currencies, using one foreign currency as a proxy for the U.S. dollar to hedge against variations in the other U.S. foreign currency, if the Adviser or Sub-Adviser, as applicable, determines that there is a pattern of correlation between the proxy currency and the U.S. dollar.
The Fund will not enter into forward contracts to sell currency or maintain a net exposure to such contracts if the consummation of such contracts would obligate the Fund to deliver an amount of foreign currency in excess of the value of the Fund’s respective portfolio securities or other assets quoted or denominated in that currency. At the consummation of the forward contract, the Fund may either make delivery of the foreign currency or terminate its contractual obligation by purchasing an offsetting contract obligating it to purchase at the same maturity date, the same amount of such foreign currency. If the Fund chooses to make delivery of foreign currency, it may be required to obtain such delivery through the sale of portfolio securities quoted or denominated in such currency or through conversion of other assets of the Fund into such currency. If the Fund engages in an offsetting transaction, the Fund will realize a gain or a loss to the extent that there has been a change in forward contract prices. Closing purchase transactions with respect to forward contracts are usually effected with the currency trader who is a party to the original forward contract.
The Fund’s transactions in forward contracts will be limited to those described above. Of course, the Fund is not required to enter into such transactions with regard to its foreign currency quoted or denominated securities, and the Fund will not do so unless deemed appropriate by the Adviser or Sub-Adviser, as applicable.
When entering into a forward contract, the Fund will segregate either cash or liquid securities quoted or denominated in any currency in an amount equal to the value of the Fund’s total assets committed to the consummation of forward currency exchange contracts which require the Fund to purchase a foreign currency. If the value of the segregated securities declines, additional cash or securities will be segregated by the Fund on a daily basis so that the value of the segregated securities will equal the amount of the Fund’s commitments with respect to such contracts.
If the Fund uses forward contracts as a method of protecting the value of the Fund’s portfolio securities against a decline in the value of a currency, this does not eliminate fluctuations in the underlying prices of the securities. It simply establishes a rate of exchange which can be achieved at some future point in time. The precise projection of short-term currency market movements is not possible, and short-term hedging provides a means of fixing the U.S. dollar value of only a portion of the Fund’s foreign assets. It also reduces any potential gain which may have otherwise occurred had the currency value increased above the settlement price of the contract.
While the Fund may enter into forward contracts to seek to reduce currency exchange rate risks, transactions in such contracts involve certain other risks. Thus, while the Fund may benefit from such transactions, unanticipated changes in currency prices may result in a poorer overall performance for the Fund than if it had not engaged in any such transactions. Moreover, there may be imperfect correlation between the Fund’s portfolio holdings or securities quoted or denominated in a particular currency and forward contracts entered into by the Fund. Such imperfect correlation may cause the Fund to sustain losses, which will prevent the Fund from achieving a complete hedge, or expose the Fund to the risk of foreign exchange loss.
Forward contracts are subject to the risks that the counterparty to such contract will default on its obligations. Since a forward foreign currency exchange contract is not guaranteed by an exchange or clearing house, a default on the contract would deprive the Fund of unrealized profits, transaction costs or the benefits of a currency hedge or force the Fund to cover its purchase or sale commitments, if any, at the current market price.
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The Fund’s foreign currency transactions (including related options, futures and forward contracts) may be limited by the requirements of Subchapter M of the Code for qualification as a regulated investment company.
Futures And Options On Futures. Futures contracts provide for the future sale by one party and purchase by another party of a specified amount of a specific security at a specified future time and at a specified price. An option on a futures contract gives the purchaser the right, in exchange for a premium, to assume a position in a futures contract at a specified exercise price during the term of the option. The Fund will reduce the risk that it will be unable to close out a futures contract by only entering into futures contracts that are traded on a national futures exchange regulated by the Commodities Futures Trading Commission (“CFTC”). The Fund may use futures contracts and related options for: bona fide hedging; attempting to offset changes in the value of securities held or expected to be acquired or be disposed of; attempting to minimize fluctuations in foreign currencies; attempting to gain exposure to a particular market, index or instrument; or other risk management purposes. To the extent futures and/or options on futures are employed by the Fund, the Fund will limit such investments in commodity futures, commodity options contracts and swaps to below the de minimis thresholds adopted by the CFTC in its recent amendments to Rule 4.5 (see below for a description of these thresholds). For this reason, the Adviser is not required to register as a “commodity pool operator” (“CPO”) under the Commodity Exchange Act at this time.
With respect to investments in swap transactions, commodity futures, commodity options or certain other derivatives used for purposes other than bona fide hedging purposes, an investment company must meet one of the following tests under the amended regulations in order to claim an exemption from being considered a “commodity pool” or a CPO. First, the aggregate initial margin and premiums required to establish an investment company’s positions in such investments may not exceed five percent (5%) of the liquidation value of the investment company’s portfolio (after accounting for unrealized profits and unrealized losses on any such investments). Alternatively, the aggregate net notional value of such instruments, determined at the time of the most recent position established, may not exceed one hundred percent (100%) of the liquidation value of the investment company’s portfolio (after accounting for unrealized profits and unrealized losses on any such positions). In addition to meeting one of the foregoing trading limitations, the investment company may not market itself as a commodity pool or otherwise as a vehicle for trading in the commodity futures, commodity options or swaps and derivatives markets. In the event that the Adviser was required to register as a CPO, the disclosure and operations of the Funds would need to comply with all applicable CFTC regulations.
An index futures contract is a bilateral agreement pursuant to which two parties agree to take or make delivery of an amount of cash equal to a specified dollar amount times the difference between the index value at the close of trading of the contract and the price at which the futures contract is originally struck. No physical delivery of the securities comprising the index is made; generally contracts are closed out prior to the expiration date of the contract.
When the Fund purchases or sells a futures contract, or sells an option thereon, the Fund is required to “cover” its position in order to limit leveraging and related risks. To cover its position, the Fund may segregate (and mark-to-market on a daily basis) cash or liquid securities that, when added to any amounts deposited with a futures commission merchant as margin, are equal to the market value of the futures contract or otherwise “cover” its position in a manner consistent with the 1940 Act or the rules and SEC interpretations thereunder. The segregated account functions as a practical limit on the amount of leverage which the Fund may undertake and on the potential increase in the speculative character of the Fund’s outstanding portfolio securities. Additionally, such segregated accounts will generally assure the availability of adequate funds to meet the obligations of the Fund arising from such investment activities.
The Fund may also cover its long position in a futures contract by purchasing a put option on the same futures contract with a strike price (i.e., an exercise price) as high or higher than the price of the futures contract. In the alternative, if the strike price of the put is less than the price of the futures contract, the Fund will segregate cash or liquid securities equal in value to the difference between the strike price of the put and the price of the futures contract. The Fund may also cover its long position in a futures contract by taking a short position in the instruments underlying the futures contract, or by taking positions in instruments with prices which are expected to move relatively consistently with the futures contract. The Fund may cover its short position in a futures contract by taking a long position in the instruments underlying the futures contracts, or by taking positions in instruments with prices which are expected to move relatively consistently with the futures contract.
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The Fund may cover its sale of a call option on a futures contract by taking a long position in the underlying futures contract at a price less than or equal to the strike price of the call option. In the alternative, if the long position in the underlying futures contract is established at a price greater than the strike price of the written (sold) call, the Fund will maintain in a segregated account cash or liquid securities equal in value to the difference between the strike price of the call and the price of the futures contract. The Fund may also cover its sale of a call option by taking positions in instruments with prices which are expected to move relatively consistently with the call option. The Fund may cover its sale of a put option on a futures contract by taking a short position in the underlying futures contract at a price greater than or equal to the strike price of the put option, or, if the short position in the underlying futures contract is established at a price less than the strike price of the written put, the Fund will maintain in a segregated account cash or liquid securities equal in value to the difference between the strike price of the put and the price of the futures contract. The Fund may also cover its sale of a put option by taking positions in instruments with prices which are expected to move relatively consistently with the put option.
There are significant risks associated with the Fund’s use of futures contracts and related options, including the following: (1) the success of a hedging strategy may depend on the Adviser’s or Sub-Adviser’s ability to predict movements in the prices of individual securities, fluctuations in markets and movements in interest rates; (2) there may be an imperfect or no correlation between the changes in market value of the securities held by the Fund and the prices of futures and options on futures; (3) there may not be a liquid secondary market for a futures contract or option; (4) trading restrictions or limitations may be imposed by an exchange; and (5) government regulations may restrict trading in futures contracts and options on futures. In addition, some strategies reduce the Fund’s exposure to price fluctuations, while others tend to increase its market exposure.
Large Shareholder Purchase and Redemption Risk: The Fund may experience adverse effects when certain large shareholders purchase or redeem large amounts of shares of the Fund. Such large shareholder redemptions may cause the Fund to sell its securities at times when it would not otherwise do so, which may negatively impact the Fund’s NAV and liquidity. Similarly, large share purchases may adversely affect the Fund’s performance to the extent that the Fund is delayed in investing new cash and is required to maintain a larger cash position than it ordinarily would. In addition, a large redemption could result in the Fund’s current expenses being allocated over a smaller asset base, leading to an increase in the Fund’s expense ratio. However, this risk may be limited to the extent that the Adviser and the Fund have entered into a fee waiver and/or expense reimbursement arrangement.
Real Estate Investment Trust Securities. The Fund may invest in real estate investment trusts (“REITs”). REITs generally invest directly in real estate, in mortgages or in some combination of the two. Individual REITs may own a limited number of properties and may concentrate in a particular region or property type. A REIT is a corporation, or a business trust that would otherwise be taxed as a corporation, which meets the definitional requirements of the Code. The Code permits a qualifying REIT to deduct dividends paid, thereby effectively eliminating corporate level federal income tax and making the REIT a pass-through vehicle for federal income tax purposes. To meet the definitional requirements of the Code, a REIT must, among other things, invest substantially all of its assets in interests in real estate (including mortgages and other REITs) or cash and government securities, derive most of its income from rents from real property or interest on loans secured by mortgages on real property and distribute to shareholders annually a substantial portion of its otherwise taxable income.
Generally, REITs can be classified as equity REITs, mortgage REITs and hybrid REITs. Equity REITs invest the majority of their assets directly in real property and derive their income primarily from rents and capital gains from appreciation realized through property sales. Mortgage REITs invest the majority of their assets in real estate mortgages and derive their income primarily from interest payments. Hybrid REITs combine the characteristics of both equity and mortgage REITs. The values of securities issued by REITs are affected by tax and regulatory requirements and by perceptions of management skill. They also are subject to heavy cash flow dependency, defaults by borrowers or tenants, self-liquidation and the possibility of failing to qualify for tax-free status under the Code or to maintain exemption from the 1940 Act. Unexpected high rates of default on the mortgages held by a mortgage pool may adversely affect the value of a mortgage-backed security and could result in losses to a mortgage REIT. The risk of such defaults is generally higher in the case of mortgage pools that include subprime mortgages. To the extent that a mortgage REIT’s portfolio is exposed to lower-rated, unsecured or subordinated instruments, the risk of loss may increase, which may have a negative impact on the Fund.
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REITs may be affected by economic forces and other factors related to the real estate industry. REITs are sensitive to factors such as changes in real estate values, property taxes, interest rates, cash flow of underlying real estate assets, occupancy rates, government regulations affecting zoning, land use and rents, and management skill and creditworthiness of the issuer. Companies in the real estate industry may also be subject to liabilities under environmental and hazardous waste laws. REITS whose underlying assets include long-term health care properties, such as nursing, retirement and assisted living homes, may be affected by federal regulations concerning the health care industry. The Fund will indirectly bear its proportionate share of expenses, including management fees, paid by each REIT in which it invests in addition to the expenses of the Fund. The Fund is also subject to the risk that the REITs in which it invests will fail to qualify for tax-free pass-through of income under the Code and/or fail to qualify for an exemption from registration as an investment company under the 1940 Act. Mortgage REITs may be affected by the quality of the credit extended. A REIT’s return may be adversely affected when interest rates are high or rising.
Investing in REITs may involve risks similar to those associated with investing in small capitalization companies. REITs may have limited financial resources, may trade less frequently and in a limited volume and may be subject to more abrupt or erratic price movements than larger company securities. Historically, small capitalization stocks, such as REITs, have been more volatile in price than the larger capitalization stocks included in the S&P 500®.
Swap Agreements. The Fund may enter into equity index or interest rate swap agreements for purposes of attempting to gain exposure to the stocks making up an index of securities in a market without actually purchasing those stocks, or to hedge a position. Swap agreements are two-party contracts entered into primarily by institutional investors for periods ranging from a day to more than one-year. In a standard “swap” transaction, two parties agree to exchange the returns (or differentials in rates of return) earned or realized on particular predetermined investments or instruments. The gross returns to be exchanged or “swapped” between the parties are calculated with respect to a “notional amount,” i.e., the return on or increase in value of a particular dollar amount invested in a “basket” of securities representing a particular index. Forms of swap agreements include interest rate caps, under which, in return for a premium, one party agrees to make payments to the other to the extent that interest rates exceed a specified rate, or “cap,” interest rate floors, under which, in return for a premium, one party agrees to make payments to the other to the extent that interest rates fall below a specified level, or “floor,” and interest rate dollars, under which a party sells a cap and purchases a floor or vice versa in an attempt to protect itself against interest rate movements exceeding given minimum or maximum levels.
Most swap agreements entered into by the Fund calculate the obligations of the parties to the agreement on a “net basis.” Consequently, the Fund’s current obligations (or rights) under a swap agreement will generally be equal only to the net amount to be paid or received under the agreement based on the relative values of the positions held by each party to the agreement (the “net amount”). The Fund’s current obligations under a swap agreement will be accrued daily (offset against any amounts owing to the Fund) and any accrued but unpaid net amounts owed to a swap counterparty will be covered by segregating assets determined to be liquid. Obligations under swap agreements so covered will not be construed to be “senior securities” for purposes of the Fund’s investment restriction concerning senior securities. Because they are two party contracts and because they may have terms of greater than seven days, swap agreements may be considered to be illiquid for the Fund’s illiquid investment limitation. The Fund will not enter into any swap agreement unless the Adviser or applicable Sub-Adviser believes that the other party to the transaction is creditworthy. The Fund bears the risk of loss of the amount expected to be received under a swap agreement in the event of the default or bankruptcy of a swap agreement counterparty.
The Fund may enter into swap agreements to invest in a market without owning or taking physical custody of securities in circumstances in which direct investment is restricted for legal reasons or is otherwise impracticable. The counterparty to any swap agreement will typically be a bank, investment banking firm or broker/dealer. The counter-party will generally agree to pay the Fund the amount, if any, by which the notional amount of the swap agreement would have increased in value had it been invested in the particular stocks, plus the dividends that would have been received on those stocks. The Fund will agree to pay to the counter-party a floating rate of interest on the notional amount of the swap agreement plus the amount, if any, by which the notional amount would have decreased in value had it been invested in such stocks. Therefore, the return to the Fund on any swap agreement should be the gain or loss on the notional amount plus dividends on the stocks less the interest paid by the Fund on the notional amount.
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Swap agreements typically are settled on a net basis, which means that the two payment streams are netted out, with the Fund receiving or paying, as the case may be, only the net amount of the two payments. Payments may be made at the conclusion of a swap agreement or periodically during its term. Swap agreements do not involve the delivery of securities or other underlying assets. Accordingly, the risk of loss with respect to swap agreements is limited to the net amount of payments that the Fund is contractually obligated to make. If the other party to a swap agreement defaults, the Fund’s risk of loss consists of the net amount of payments that the Fund is contractually entitled to receive, if any. The net amount of the excess, if any, of the Fund’s obligations over its entitlements with respect to each equity swap will be accrued on a daily basis and an amount of cash or liquid assets, having an aggregate net asset value at least equal to such accrued excess will be maintained in a segregated account by the Fund’s custodian. Inasmuch as these transactions are entered into for hedging purposes or are offset by segregated cash of liquid assets, as permitted by applicable law, the Fund and the Adviser believe that these transactions do not constitute senior securities under the 1940 Act and, accordingly, will not treat them as being subject to the Fund’s borrowing restrictions.
The Adviser and Sub-Advisers, under the supervision of the Board, are responsible for determining and monitoring the liquidity of Fund transactions in swap agreements. The use of equity swaps is a highly specialized activity, which involves investment techniques and risks different from those associated with ordinary portfolio securities transactions.
Credit Default Swaps, Interest Rate Swaps, Mortgage Swaps, Currency Swaps, Total Return Swaps, Options on Swaps and Interest Rate Caps, Floors and Collars. The Fund may enter into credit default, interest rate and total return swaps. The Fund may also enter into interest rate caps, floors and collars. In addition, the Fund may enter into mortgage swaps and currency swaps.
The Fund may enter into swap transactions for hedging purposes or to seek to increase total return. As examples, the Fund may enter into swap transactions for the purpose of attempting to obtain or preserve a particular return or spread at a lower cost than obtaining a return or spread through purchases and/or sales of instruments in other markets, to protect against currency fluctuations, as a duration management technique, to protect against any increase in the price of securities the Fund anticipates purchasing at a later date, or to gain exposure to certain markets in an economical way.
Swap agreements are two party contracts entered into primarily by institutional investors. In a standard “swap” transaction, two parties agree to exchange the returns (or differentials in rates of return) earned or realized on particular predetermined investments or instruments, which may be adjusted for an interest factor. The gross returns to be exchanged or “swapped” between the parties are generally calculated with respect to a “notional amount,” i.e., the return on or increase in value of a particular dollar amount invested at a particular interest rate, in a particular foreign currency or security, or in a “basket” of securities representing a particular index. As examples, credit default swaps involve the receipt of floating or fixed rate payments in exchange for assuming potential credit losses of an underlying security. Credit default swaps give one party to a transaction the right to dispose of or acquire an asset (or group of assets), or the right to receive from or make a payment to the other party, upon the occurrence of specified credit events. Interest rate swaps involve the exchange by the Fund with another party of their respective commitments to pay or receive interest, such as an exchange of fixed-rate payments for floating rate payments. Mortgage swaps are similar to interest rate swaps in that they represent commitments to pay and receive interest. The notional principal amount, however, is tied to a reference pool or pools of mortgages. Currency swaps involve the exchange of the parties’ respective rights to make or receive payments in specified currencies. Total return swaps are contracts that obligate a party to pay or receive interest in exchange for payment by the other party of the total return generated by a security, a basket of securities, an index, or an index component.
The purchase of an interest rate cap entitles the purchaser, to the extent that a specified index exceeds a predetermined interest rate, to receive payment of interest on a notional principal amount from the party selling such interest rate cap. The purchase of an interest rate floor entitles the purchaser, to the extent that a specified index falls below a predetermined interest rate, to receive payments of interest on a notional principal amount from the party selling the interest rate floor. An interest rate collar is the combination of a cap and a floor that preserves a certain return within a predetermined range of interest rates.
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A great deal of flexibility is possible in the way swap transactions are structured. However, generally the Fund will enter into credit default, interest rate, total return and mortgage swaps on a net basis, which means that the two payment streams are netted out, with the Fund receiving or paying, as the case may be, only the net amount of the two payments. Credit default, interest rate, total return and mortgage swaps do not normally involve the delivery of securities, other underlying assets or principal. Accordingly, the risk of loss with respect to credit default, interest rate, total return and mortgage swaps is normally limited to the net amount of payments that the Fund is contractually obligated to make. If the other party to a credit default, interest rate, total return or mortgage swap defaults, the Fund’s risk of loss consists of the net amount of payments that the Fund is contractually entitled to receive, if any. In contrast, currency swaps may involve the delivery of the entire principal amount of one designated currency in exchange for the other designated currency. Therefore, the entire principal value of a currency swap is subject to the risk that the other party to the swap will default on its contractual delivery obligations.
A credit default swap may have as reference obligations one or more securities that may, or may not, be currently held by the Fund. The protection “buyer” in a credit default swap is generally obligated to pay the protection “seller” an upfront or a periodic stream of payments over the term of the swap provided that no credit event, such as a default, on a reference obligation has occurred. If a credit event occurs, the seller generally must pay the buyer the “par value” (full notional value) of the swap in exchange for an equal face amount of deliverable obligations of the reference entity described in the swap, or the seller may be required to deliver the related net cash amount, if the swap is cash settled. The Fund may be either the buyer or seller in the transaction. If the Fund is a buyer and no credit event occurs, the Fund may recover nothing if the swap is held through its termination date. However, if a credit event occurs, the buyer generally may elect to receive the full notional value of the swap in exchange for an equal face amount of deliverable obligations of the reference entity whose value may have significantly decreased. As a seller, the Fund generally receives an upfront payment or a rate of income throughout the term of the swap provided that there is no credit event. As the seller, the Fund would effectively add leverage to its portfolio because, in addition to its total net assets, the Fund would be subject to investment exposure on the notional amount of the swap. If a credit event occurs, the value of any deliverable obligation received by the Fund as seller, coupled with the upfront or periodic payments previously received, may be less than the full notional value it pays to the buyer, resulting in a loss of value to the Fund.
To the extent that the Fund’s exposure in a transaction involving a swap or an interest rate floor, cap or collar is covered by the segregation of cash or liquid assets, or is covered by other means in accordance with SEC guidance, the Fund and the Adviser believe that the transactions do not constitute senior securities under the Act and, accordingly, will not treat them as being subject to the Fund’s borrowing restrictions. The SEC has recently issued the concept release “Use of Derivatives by Investment Companies under the Investment Company Act of 1940,” which discusses, among other matters, whether current market practices involving derivatives are consistent with the leverage provisions of the Act. Accordingly, investors should be aware that the SEC may offer additional guidance in the future that may impact the manner in which the Fund operates.
The Fund will not enter into any credit default, interest rate, total return or mortgage swap transactions unless the unsecured commercial paper, senior debt or claims-paying ability of the other party thereto is rated investment grade by S&P Global Ratings (“S&P”) or Moody’s Investors Service (“Moody’s”), or, if unrated by such rating organization, determined to be of comparable quality by the Adviser or applicable Sub-Adviser. If there is a default by the other party to such a transaction, the Fund will have contractual remedies pursuant to the agreements related to the transaction.
The use of credit default, interest rate, mortgage, total return and currency swaps, as well as interest rate caps, floors and collars, is a highly specialized activity which involves investment techniques and risks different from those associated with ordinary portfolio securities transactions. The use of a swap requires an understanding not only of the referenced asset, reference rate, or index but also of the swap itself, without the benefit of observing the performance of the swap under all possible market conditions. If the Adviser or applicable Sub-Adviser is incorrect in its forecasts of market values, credit quality, interest rates and currency exchange rates, the investment performance of the Fund would be less favorable than it would have been if these investment instruments were not used.
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Forward Commitment and When-Issued Transactions. The Fund may purchase or sell securities on a when-issued or forward commitment basis (subject to its investment policies and restrictions). These transactions involve a commitment by a fund to purchase or sell securities at a future date (ordinarily one or two months later). The price of the underlying securities (usually expressed in terms of yield) and the date when the securities will be delivered and paid for (the settlement date) are fixed at the time the transaction is negotiated. When-issued purchases and forward commitments are negotiated directly with the other party, and such commitments are not traded on exchanges. The Fund will not enter into such transactions for the purpose of leverage.
When-issued purchases and forward commitments enable the Fund to lock in what is believed by the Adviser or Sub-Adviser, as applicable, to be an attractive price or yield on a particular security for a period of time, regardless of future changes in interest rates. For instance, in periods of rising interest rates and falling prices, the Fund might sell securities it owns on a forward commitment basis to limit its exposure to falling prices. In periods of falling interest rates and rising prices, the Fund might sell securities it owns and purchase the same or a similar security on a when-issued or forward commitment basis, thereby obtaining the benefit of currently higher yields. When-issued securities or forward commitments involve a risk of loss if the value of the security to be purchased declines prior to the settlement date.
The value of securities purchased on a when-issued or forward commitment basis and any subsequent fluctuations in their value are reflected in the computation of the Fund’s NAV starting on the date of the agreement to purchase the securities, and the Fund is subject to the rights and risks of ownership of the securities on that date. The Fund does not earn interest on the securities it has committed to purchase until they are paid for and delivered on the settlement date. When the Fund makes a forward commitment to sell securities it owns, the proceeds to be received upon settlement are included in the Fund’s assets. Fluctuations in the market value of the underlying securities are not reflected in the Fund’s NAV as long as the commitment to sell remains in effect. Settlement of when-issued purchases and forward commitment transactions generally takes place within two months after the date of the transaction, but the Fund may agree to a longer settlement period.
The Fund will make commitments to purchase securities on a when-issued basis or to purchase or sell securities on a forward commitment basis only with the intention of completing the transaction and actually purchasing or selling the securities. If deemed advisable as a matter of investment strategy, however, the Fund may dispose of or renegotiate a commitment after it is entered into. The Fund also may sell securities it has committed to purchase before those securities are delivered to the Fund on the settlement date. The Fund may realize a capital gain or loss in connection with these transactions, and its distributions from any net realized capital gains will be taxable to shareholders. When the Fund purchases securities on a when-issued or forward commitment basis, the Fund or the Custodian will maintain in a segregated account cash or liquid securities having a value (determined daily) at least equal to the amount of the Fund’s purchase commitments. These procedures are designed to ensure that the Fund will maintain sufficient assets at all times to cover its obligations under when-issued purchases and forward commitments.
Investment Company Shares. The Fund may invest in shares of other investment companies to the extent permitted by applicable law and subject to certain restrictions. These investment companies typically incur fees that are separate from those fees incurred directly by the Fund. The Fund’s purchase of such investment company securities results in the layering of expenses, such that shareholders would indirectly bear a proportionate share of the operating expenses of such investment companies, including advisory fees, in addition to paying the Fund’s expenses. Unless an exception is available, Section 12(d)(1)(A) of the 1940 Act prohibits a fund from (i) acquiring more than 3% of the voting shares of any one investment company, (ii) investing more than 5% of its total assets in any one investment company, and (iii) investing more than 10% of its total assets in all investment companies combined, including its ETF investments.
For hedging or other purposes, the Fund may invest in investment companies that seek to track the composition and/or performance of specific indexes or portions of specific indexes. Certain of these investment companies, known as exchange-traded funds, are traded on a securities exchange. The market prices of index-based investments will fluctuate in accordance with changes in the underlying portfolio securities of the investment company and also due to supply and demand of the investment company’s shares on the exchange upon which the shares are traded. Index-based investments may not replicate or otherwise match the composition or performance of their specified index due to transaction costs, among other things.
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Pursuant to orders issued by the SEC to each of certain exchange-traded funds (collectively, the “ETFs”) and procedures approved by the Board, the Fund may invest in the ETFs in excess of the limits described above, provided that the Fund has described the ETF investments in its prospectus and otherwise complies with the conditions of the SEC, as it may be amended, and any other applicable investment limitations. Neither the ETFs nor their investment advisers make any representations regarding the advisability of investing in the ETFs.
Inflation-Protected Securities. The Fund may invest in inflation-protected securities issued by the U.S. Treasury, known as “TIPs” or “Treasury Inflation-Protected Securities,” which are debt securities whose principal and interest payments are adjusted for inflation and interest is paid on the adjusted amount. The inflation adjustment, which is typically applied monthly to the principal of the bond, follows a designated inflation index, such as the consumer price index (“CPI”). A fixed coupon rate is applied to the inflation-adjusted principal so that as inflation rises, both the principal value and the interest payments increase. This can provide investors with a hedge against inflation, as it helps preserve the purchasing power of your investment. Inflation-protected securities normally will decline in price when real interest rates rise. (A real interest rate is calculated by subtracting the inflation rate from a nominal interest rate. For example, if a 10-year Treasury note is yielding 5% and inflation is 2%, the real interest rate is 3%.) If inflation is negative, the principal and income of an inflation-protected security will decline and could result in losses for the Fund.
Any increase in principal for an inflation-protected security resulting from inflation adjustments is considered by IRS regulations to be taxable income in the year it occurs. For direct holders of an inflation-protected security, this means that taxes must be paid on principal adjustments even though these amounts are not received until the bond matures. By contrast, the Fund holding these securities distributes both interest income and the income attributable to principal adjustments in the form of cash or reinvested shares, which are taxable to shareholders.
Mortgage-Backed Securities. The Fund may invest in mortgage pass-through certificates and multiple-class pass-through securities, such as real estate mortgage investment conduits (“REMIC”), pass-through certificates and collateralized mortgage obligations (“CMOs”).
Guaranteed mortgage pass-through securities represent participation interests in pools of residential mortgage loans and are issued by U.S. governmental or private lenders and guaranteed by the U.S. government or one of its agencies or instrumentalities, including but not limited to the Government National Mortgage Association (“Ginnie Mae”), the Federal National Mortgage Association (“Fannie Mae”), and the Federal Home Loan Mortgage Corporation (“Freddie Mac”). Ginnie Mae certificates are guaranteed by the full faith and credit of the U.S. government for timely payment of principal and interest on the certificates. Fannie Mae and Freddie Mac certificates are not backed by the full faith and credit of the U.S. government. Fannie Mae certificates are guaranteed by Fannie Mae, a federally chartered and privately owned corporation, for full and timely payment of principal and interest on the certificates. Fannie Mae is authorized to borrow from the U.S. Treasury to meet its obligations. Freddie Mac certificates are guaranteed by Freddie Mac, a corporate instrumentality of the U.S. government, for timely payment of interest and the ultimate collection of all principal of the related mortgage loans.
In September 2008, the U.S. Treasury Department and the Federal Housing Finance Agency (“FHFA”) announced that Fannie Mae and Freddie Mac would be placed in conservatorship under the FHFA. On June 16, 2010, FHFA ordered Fannie Mae’s and Freddie Mac’s stock de-listed from the New York Stock Exchange after the price of common stock in Fannie Mae fell below the New York Stock Exchange’s minimum average closing price of $1 for more than 30 days. The effect that this conservatorship will have on Fannie Mae and Freddie Mac’s debt and equity and on securities guaranteed by Fannie Mae and Freddie Mac is unclear.
There is risk that the U.S. Government will not provide financial support to its agencies, authorities, instrumentalities or sponsored enterprises. The Fund may purchase U.S. Government securities that are not backed by the full faith and credit of the United States, such as those issued by Fannie Mae and Freddie Mac. The maximum potential liability of the issuers of some U.S. Government securities held by the Fund may greatly exceed their current resources, including their legal right to support from the U.S. Treasury. It is possible that these issuers will not have the funds to meet their payment obligations in the future.
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CMOs and REMIC pass-through or participation certificates may be issued by, among others, U.S. government agencies and instrumentalities as well as private lenders. CMOs and REMIC certificates are issued in multiple classes and the principal of and interest on the mortgage assets may be allocated among the several classes of CMOs or REMIC certificates in various ways. Each class of CMOs or REMIC certificates, often referred to as a “tranche,” is issued at a specific adjustable or fixed interest rate and must be fully retired no later than its final distribution date. Generally, interest is paid or accrues on all classes of CMOs or REMIC certificates on a monthly basis.
Typically, CMOs are collateralized by Ginnie Mae, Fannie Mae or Freddie Mac certificates but also may be collateralized by other mortgage assets such as whole loans or private mortgage pass-through securities. Debt service on CMOs is provided from payments of principal and interest on collateral of mortgaged assets and any reinvestment income thereon. Unexpected high rates of default on the mortgages held by a mortgage pool may adversely affect the value of a mortgage-backed security and could result in losses to a mortgage REIT. The risk of such defaults is generally higher in the case of mortgage pools that include subprime mortgages. To the extent that a mortgage REIT’s portfolio is exposed to lower-rated, unsecured or subordinated instruments, the risk of loss may increase, which may have a negative impact on the Fund.
A REMIC is a CMO that qualifies for special tax treatment under the Code and invests in certain mortgages primarily secured by interests in real property and other permitted investments. Investors may purchase “regular” and “residual” interest shares of beneficial interest in REMIC trusts, although the Fund does not intend to invest in residual interests.
The Fund may invest in mortgage-backed securities issued by trusts or other entities formed or sponsored by private originators of and institutional investors in mortgage loans and other non-governmental entities (or representing custodial arrangements administered by such institutions). These private originators and institutions include savings and loan associations, mortgage bankers, commercial banks, insurance companies, investment banks and special purpose subsidiaries of the foregoing.
Privately issued mortgage-backed securities are generally backed by pools of conventional (i.e., non-government guaranteed or insured) mortgage loans. Since such mortgage-backed securities normally are not guaranteed by an entity having the credit standing of Ginnie Mae, Fannie Mae or Freddie Mac, in order to receive a high quality rating from the rating organizations (e.g., S&P’s or Moody’s), they often are structured with one or more types of “credit enhancement.” Such credit enhancement falls into two categories: (1) liquidity protection and (2) protection against losses resulting after default by a borrower and liquidation of the collateral (e.g., sale of a house after foreclosure). Liquidity protection refers to the payment of cash advances to holders of mortgage-backed securities when a borrower on an underlying mortgage fails to make its monthly payment on time. Protection against losses resulting after default and liquidation is designed to cover losses resulting when, for example, the proceeds of a foreclosure sale are insufficient to cover the outstanding amount on the mortgage. Such protection may be provided through guarantees, insurance policies or letters of credit, through various means of structuring the securities or through a combination of such approaches.
Examples of credit enhancement arising out of the structure of the transaction include “senior-subordinated securities” (multiple class securities with one or more classes entitled to receive payment before other classes, with the result that defaults on the underlying mortgages are borne first by the holders of the subordinated class), creation of “spread accounts” or “reserve funds” (where cash or investments are held in reserve against future losses) and “over-collateralization” (where the scheduled payments on the underlying mortgages in a pool exceed the amount required to be paid on the mortgage-backed securities). The degree of credit enhancement for a particular issue of mortgage-backed securities is based on the level of credit risk associated with the particular mortgages in the related pool. Losses on a pool in excess of anticipated levels could nevertheless result in losses to security holders since credit enhancement rarely covers every dollar owed on a pool.
Investing in mortgage-backed securities (such as those described above) involves certain risks, including the failure of a counter-party to meet its commitments, adverse interest rate changes and the effects of prepayments on mortgage cash flows. Further, the yield characteristics of mortgage-backed securities differ from those of traditional fixed income securities. The major differences typically include more frequent interest and principal payments (usually monthly), the adjustability of interest rates, and the possibility that prepayments of principal may be made substantially earlier than their final distribution dates.
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Prepayment rates are influenced by changes in current interest rates and a variety of economic, geographic, social and other factors and cannot be predicted with certainty. Both adjustable rate mortgage loans and fixed rate mortgage loans may be subject to a greater rate of principal prepayments in a declining interest rate environment and to a lesser rate of principal prepayments in an increasing interest rate environment. Under certain interest rate and prepayment rate scenarios, the Fund may fail to recoup fully its investment in mortgage-backed securities notwithstanding any direct or indirect governmental or agency guarantee. When the Fund reinvests amounts representing payments and unscheduled prepayments of principal, it may receive a rate of interest that is lower than the rate on existing adjustable rate mortgage pass-through securities. Thus, mortgage-backed securities, and adjustable rate mortgage pass-through securities in particular, may be less effective than other types of U.S. government securities as a means of “locking in” interest rates.
Conversely, in a rising interest rate environment, a declining prepayment rate will extend the average life of many mortgage-backed securities. This possibility is often referred to as extension risk. Extending the average life of a mortgage-backed security increases the risk of depreciation due to future increases in market interest rates. The market for certain types of mortgage-backed securities (i.e., certain CMOs) may not be liquid under all interest rate scenarios, which may prevent the Fund from selling such securities held in its portfolio at times or prices that it desires.
Different types of derivative debt securities are subject to different combinations of prepayment, extension and/or interest rate risk. Conventional mortgage pass-through securities and sequential pay CMOs are subject to all of these risks, but are typically not leveraged. Thus, the magnitude of exposure may be less than for more leveraged mortgage-backed securities.
Planned amortization class (“PAC”) and target amortization class (“TAC”) CMO bonds involve less exposure to prepayment, extension and interest rate risk than other mortgage-backed securities, provided that prepayment rates remain within expected prepayment ranges or “collars.” To the extent that prepayment rates remain within these prepayment ranges, the residual or support tranches of PAC and TAC CMOs assume the extra prepayment extension and interest rate risk associated with the underlying mortgage assets.
The Fund may invest in floating rate securities based on the Cost of Funds Index (“COFI floaters”), other “lagging rate” floating rate securities, floating rate securities that are subject to a maximum interest rate (“capped floaters”), and mortgage-backed securities purchased at a discount. The primary risks associated with these derivative debt securities are the potential extension of average life and/or depreciation due to rising interest rates.
Recently, rating agencies have placed on credit watch or downgraded the ratings previously assigned to a large number of mortgage-related securities (which may include certain of the mortgage-related securities in which the Fund may have invested or may in the future be invested), and may continue to do so in the future. In the event that any mortgage-related security held by the Fund is placed on credit watch or downgraded, the value of such mortgage-related security may decline and the Fund may consequently experience losses in respect of such mortgage-related security.
Mortgage Dollar Roll Transactions. The Fund may enter into mortgage dollar roll transactions in which the Fund sells securities for delivery in the current month and simultaneously contracts with the same counterparty to repurchase similar (same type, coupon and maturity), but not identical securities, on a specified future date. For financial reporting and tax purposes, the Fund treats mortgage dollar rolls as two separate transactions; one involving the purchase of a security and a separate transaction involving a sale. The Fund does not currently intend to enter into mortgage dollar rolls for financing and does not treat them as borrowings.
During the roll period, the Fund would forgo principal and interest paid on such securities. The Fund would benefit to the extent of any difference between the price received for the securities sold and the lower forward price for the future purchase (often referred to as the “drop”) or fee income plus the interest on the cash proceeds of the securities sold until the settlement date of the forward purchase. Unless such benefits exceed the income, capital appreciation and gain or loss due to mortgage prepayments that would have been realized on the securities sold as part of the mortgage dollar roll, the use of this technique will diminish the investment performance of the Fund compared with what such performance would have been without the use of mortgage dollar rolls. The Fund will hold and maintain in a segregated account until the settlement date cash or liquid, high-grade debt securities in an amount equal to the forward purchase price. Any benefits derived from the use of mortgage dollar rolls may depend upon mortgage prepayment assumptions, which will be affected by changes in interest rates. There is no assurance that mortgage dollar rolls can be successfully employed. For additional information on dollar rolls, please refer to the section entitled “Dollar Rolls” in this SAI.
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Municipal Obligations. The Fund may invest in municipal obligations. Municipal obligations are issued by or on behalf of states, territories and possessions of the United States and their political subdivisions, agencies and instrumentalities to obtain funds for various public purposes. The interest on most of these obligations is generally exempt from regular federal income tax in the hands of most individual investors, although it may be subject to the individual and corporate alternative minimum tax. The two principal classifications of municipal obligations are “notes” and “bonds.”
Municipal notes are generally used to provide for short-term capital needs and generally have maturities of one year or less. Municipal notes include tax anticipation notes, revenue anticipation notes, bond anticipation notes, and construction loan notes. Tax anticipation notes are sold to finance working capital needs of municipalities. They are generally payable from specific tax revenues expected to be received at a future date. Revenue anticipation notes are issued in expectation of receipt of other types of revenue such as federal revenues available under the Federal Revenue Sharing Program. Tax anticipation notes and revenue anticipation notes are generally issued in anticipation of various seasonal revenues such as income, sales, use, and business taxes. Bond anticipation notes are sold to provide interim financing.
These notes are generally issued in anticipation of long-term financing in the market. In most cases, these monies provide for the repayment of the notes. Construction loan notes are sold to provide construction financing. After the projects are successfully completed and accepted, many projects receive permanent financing through the Federal Housing Administration under Fannie Mae or Ginnie Mae. There are, of course, a number of other types of notes issued for different purposes and secured differently from those described above.
Municipal bonds, which meet longer term capital needs and generally have maturities of more than one year when issued, have two principal classifications, “general obligation” bonds and “revenue” bonds. Issuers of general obligation bonds include states, counties, cities, towns and regional districts. The proceeds of these obligations are used to fund a wide range of public projects including the construction or improvement of schools, highways and roads, water and sewer systems and a variety of other public purposes. The basic security of general obligation bonds is the issuer’s pledge of its faith, credit, and taxing power for the payment of principal and interest. The taxes that can be levied for the payment of debt service may be limited or unlimited as to rate or amount or special assessments.
The principal security for a revenue bond is generally the net revenues derived from a particular facility or group of facilities or, in some cases, from the proceeds of a special excise or other specific revenue source. Revenue bonds have been issued to fund a wide variety of capital projects including: electric, gas, water and sewer systems; highways, bridges and tunnels; port and airport facilities; colleges and universities; and hospitals. Revenue obligations are not backed by the credit and taxing authority of the issuer but are payable solely from the revenues derived from a particular facility or class of facilities or, in some cases, from the proceeds of a special excise tax or other specific revenue source. In addition, revenue obligations may be backed by a letter of credit, guarantee or insurance. Revenue obligations include private activity bonds, resource recovery bonds, certificates of participation and certain municipal notes. Although the principal security behind these bonds varies widely, many provide additional security in the form of a debt service reserve fund whose monies may also be used to make principal and interest payments on the issuer’s obligations. Housing finance authorities have a wide range of security including partially or fully insured, rent subsidized and/or collateralized mortgages, and/or the net revenues from housing or other public projects. In addition to a debt service reserve fund, some authorities provide further security in the form of a state’s ability (without obligation) to make up deficiencies in the debt service reserve fund. Lease rental revenue bonds issued by a state or local authority for capital projects are secured by annual lease rental payments from the state or locality to the authority sufficient to cover debt service on the authority’s obligations.
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Industrial development bonds (now a subset of a class of bonds known as “private activity bonds”), although nominally issued by municipal authorities, are generally not secured by the taxing power of the municipality but are secured by the revenues of the authority derived from payments by the industrial user.
There is, in addition, a variety of hybrid and special types of municipal obligations as well as numerous differences in the security of municipal obligations both within and between the two principal classifications above. An entire issue of municipal obligations may be purchased by one or a small number of institutional investors such as the Fund. Thus, the issue may not be said to be publicly offered. Unlike securities which must be registered under the 1933 Act, prior to offer and sale unless an exemption from such registration is available, municipal obligations which are not publicly offered may nevertheless be readily marketable. A secondary market exists for municipal obligations that were not publicly offered initially.
The Adviser or Sub-Adviser, as applicable, determines whether a municipal obligation is readily marketable based on whether it may be sold in a reasonable time consistent with the customs of the municipal markets (usually seven days) at a price (or interest rate), which accurately reflects its value. In addition, stand-by commitments and demand obligations also enhance marketability.
For the purpose of the Fund’s investment restrictions, the identification of the “issuer” of municipal obligations that are not general obligation bonds is made by the Adviser or Sub-Adviser, as applicable, on the basis of the characteristics of the obligation as described above, the most significant of which is the source of funds for the payment of principal of and interest on such obligations.
Yields on municipal obligations depend on a variety of factors, including money market conditions, municipal bond market conditions, the size of a particular offering, the maturity of the obligation and the quality of the issue. High grade municipal obligations tend to have a lower yield than lower rated obligations. Municipal obligations are subject to the provisions of bankruptcy, insolvency and other laws affecting the rights and remedies of creditors, such as the Federal Bankruptcy Code and laws, if any, that may be enacted by Congress or state legislatures extending the time for payment of principal or interest, or both, or imposing other constraints upon enforcement of such obligations or municipalities to levy taxes. There is also the possibility that as a result of litigation or other conditions the power or ability of any one or more issuers to pay when due principal of and interest on its or their municipal obligations may be materially affected.
Economic, business or political developments might affect all municipal obligations of a similar type. The Fund believes that the most important consideration affecting risk is the quality of particular issues of municipal obligations rather than factors affecting all, or broad classes of, municipal obligations.
The Fund may invest in variable, floating rate and other municipal securities on which the interest may fluctuate based on changes in market rates. The interest rates payable on variable rate securities are adjusted at designated intervals (e.g., daily, monthly, semi-annually), and the interest rates payable on, floating rate securities are adjusted whenever there is a change in the market rate of interest on which the interest payable is based. The interest rate on variable and floating rate securities is ordinarily determined by reference to or is a percentage of a bank’s prime rate, the 90-day U.S. Treasury bill rate, the rate of return on commercial paper or bank certificates of deposit, an index of short-term interest rates, or some other objective measure. The value of floating and variable rate securities generally is more stable than that of fixed rate securities in response to changes in interest rate levels. The Fund may consider the maturity of a variable or floating rate municipal security to be shorter than its ultimate maturity if the Fund has the right to demand prepayment of its principal at specified intervals prior to the security’s ultimate maturity.
The Fund may invest in municipal leases and certificates of participation in municipal leases. A municipal lease is an obligation in the form of a lease or installment purchase which is issued by a state or local government to acquire equipment and facilities. Certificates of participation represent undivided interests in municipal leases, installment purchase agreements or other instruments. The certificates are typically issued by a trust or other entity, which has received an assignment of the payments to be made by the state or political subdivision under such leases or installment purchase agreements. The primary risk associated with municipal lease obligations and certificates of participation is that the governmental lessee will fail to appropriate funds to enable it to meet its payment obligations under the lease. Although the obligations may be secured by the leased equipment or facilities, the disposition of the property in the event of non-appropriation or foreclosure might prove difficult, time consuming and costly and may result in a delay in recovering, or the failure to fully recover, the Fund’s original investment. To the extent that the Fund invests in unrated municipal leases or participates in such leases, the Adviser or applicable Sub-Adviser will monitor on an ongoing basis the credit quality rating and risk of cancellation of such unrated leases. Certain municipal lease obligations and certificates of participation may be deemed illiquid for the purposes of the limitation on investments in illiquid securities.
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The Fund may invest in pre-refunded municipal securities. The principal of and interest on pre-refunded municipal securities are no longer paid from the original revenue source for the securities. Instead, the source of such payments is typically an escrow fund consisting of U.S. government securities. The assets in the escrow fund are derived from the proceeds of refunding bonds issued by the same issuer as the pre-refunded municipal securities. Issuers of municipal securities use this advance refunding technique to obtain more favorable terms with respect to securities that are not yet subject to call or redemption by the issuer. For example, advance refunding enables an issuer to refinance debt at lower market interest rates, restructure debt to improve cash flow or eliminate restrictive covenants in the indenture or other governing instrument for the pre-refunded municipal securities. Except for a change in the revenue source from which principal and interest payments are made, the pre-refunded municipal securities remain outstanding on their original terms until they mature or are redeemed by the issuer. Pre-refunded municipal securities are usually purchased at a price, which represents a premium over their face value.
Obligations of Domestic Banks, Foreign Banks and Foreign Branches of U.S. Banks. The Fund may invest in obligations issued by banks and other savings institutions. Investments in bank obligations include obligations of domestic branches of foreign banks and foreign branches of domestic banks. Such investments in domestic branches of foreign banks and foreign branches of domestic banks may involve risks that are different from investments in securities of domestic branches of U.S. banks. These risks may include future unfavorable political and economic developments, possible withholding taxes on interest income, seizure or nationalization of foreign deposits, currency controls, interest limitations, or other governmental restrictions which might affect the payment of principal or interest on the securities held by the Fund. Additionally, these institutions may be subject to less stringent reserve requirements and to different accounting, auditing, reporting and recordkeeping requirements than those applicable to domestic branches of U.S. banks. Bank obligations include the following:
● | Bankers’ Acceptances. Bankers’ acceptances are bills of exchange or time drafts drawn on and accepted by a commercial bank. Corporations use bankers’ acceptances to finance the shipment and storage of goods and to furnish dollar exchange. Maturities are generally six months or less. |
● | Certificates of Deposit. Certificates of deposit are interest-bearing instruments with a specific maturity. They are issued by banks and savings and loan institutions in exchange for the deposit of funds and normally can be traded in the secondary market prior to maturity. Certificates of deposit with penalties for early withdrawal will be considered illiquid. |
● | Time Deposits. Time deposits are non-negotiable receipts issued by a bank in exchange for the deposit of funds. Like a certificate of deposit, it earns a specified rate of interest over a definite period of time; however, it cannot be traded in the secondary market. Time deposits with a withdrawal penalty or that mature in more than seven days are considered to be illiquid securities. |
Options. The Fund may purchase and write put and call options on indices and enter into related closing transactions. A put option on a security gives the purchaser of the option the right to sell, and the writer of the option the obligation to buy, the underlying security at any time during the option period. A call option on a security gives the purchaser of the option the right to buy, and the writer of the option the obligation to sell, the underlying security at any time during the option period. The premium paid to the writer is the consideration for undertaking the obligations under the option contract.
The Fund may purchase and write put and call options on foreign currencies (traded on U.S. and foreign exchanges or over-the-counter markets) to manage its exposure to exchange rates. Call options on foreign currency written by the Fund will be “covered,” which means that the Fund will own an equal amount of the underlying foreign currency.
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Put and call options on indices are similar to options on securities except that options on an index give the holder the right to receive, upon exercise of the option, an amount of cash if the closing level of the underlying index is greater than (or less than, in the case of puts) the exercise price of the option. This amount of cash is equal to the difference between the closing price of the index and the exercise price of the option, expressed in dollars multiplied by a specified number. Thus, unlike options on individual securities, all settlements are in cash, and gain or loss depends on price movements in the particular market represented by the index generally, rather than the price movements in individual securities.
All options written on indices or securities must be covered. When the Fund writes an option on a security, an index or a foreign currency, it will establish a segregated account containing cash or liquid securities in an amount at least equal to the market value of the option and will maintain the account while the option is open or will otherwise cover the transaction.
The Fund may trade put and call options on securities, securities indices and currencies, as the Adviser or applicable Sub-Adviser determines is appropriate in seeking the Fund’s investment objective, and except as restricted by the Fund’s investment limitations. See “Investment Limitations.”
The initial purchase (sale) of an option contract is an “opening transaction.” In order to close out an option position, the Fund may enter into a “closing transaction,” which is simply the sale (purchase) of an option contract on the same security with the same exercise price and expiration date as the option contract originally opened. If the Fund is unable to effect a closing purchase transaction with respect to an option it has written, it will not be able to sell the underlying security until the option expires or the Fund delivers the security upon exercise.
The Fund may purchase put and call options on securities to protect against a decline in the market value of the securities in its portfolio or to anticipate an increase in the market value of securities that the Fund may seek to purchase in the future. The Fund purchasing put and call options pays a premium therefor. If price movements in the underlying securities are such that exercise of the options would not be profitable for the Fund, loss of the premium paid may be offset by an increase in the value of the Fund’s securities or by a decrease in the cost of acquisition of securities by the Fund.
The Fund may write covered call options on securities as a means of increasing the yield on its assets and as a means of providing limited protection against decreases in its market value. When the Fund writes an option, if the underlying securities do not increase or decrease to a price level that would make the exercise of the option profitable to the holder thereof, the option generally will expire without being exercised and the Fund will realize as profit the premium received for such option. When a call option of which the Fund is the writer is exercised, the Fund will be required to sell the underlying securities to the option holder at the strike price, and will not participate in any increase in the price of such securities above the strike price. When a put option of which the Fund is the writer is exercised, the Fund will be required to purchase the underlying securities at a price in excess of the market value of such securities.
The Fund may purchase and write options on an exchange or over-the-counter. Over-the-counter options (“OTC options”) differ from exchange-traded options in several respects. They are transacted directly with dealers and not with a clearing corporation, and therefore entail the risk of non-performance by the dealer. OTC options are available for a greater variety of securities and for a wider range of expiration dates and exercise prices than are available for exchange-traded options. Because OTC options are not traded on an exchange, pricing is done normally by reference to information from a market maker. It is the SEC’s position that OTC options are generally illiquid.
The market value of an option generally reflects the market price of an underlying security. Other principal factors affecting market value include supply and demand, interest rates, the pricing volatility of the underlying security and the time remaining until the expiration date.
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Risks associated with options transactions include: (1) the success of a hedging strategy may depend on an ability to predict movements in the prices of individual securities, fluctuations in markets and movements in interest rates; (2) there may be an imperfect correlation between the movement in prices of options and the securities underlying them; (3) there may not be a liquid secondary market for options; and (4) while the Fund will receive a premium when it writes covered call options, it may not participate fully in a rise in the market value of the underlying security.
Pay-in-Kind Securities, Zero Coupon and Capital Appreciation Bonds. To the extent consistent with its investment objective, the Fund may invest in pay-in-kind (“PIK”) securities. PIK securities may be debt obligations or preferred shares that provide the issuer with the option of paying interest or dividends on such obligations in cash or in the form of additional securities rather than cash. Similarly, zero coupon and capital appreciation bonds are debt securities issued or sold at a discount from their face value and do not entitle the holder to any periodic payment of interest prior to maturity or a specified date. The amount of the discount varies depending on the time remaining until maturity or cash payment date, prevailing interest rates, the liquidity of the security and the perceived credit quality of the issuer. These securities also may take the form of debt securities that have been stripped of their unmatured interest coupons, the coupons themselves or receipts or certificates representing interests in such stripped debt obligations or coupons. A portion of the discount with respect to stripped tax-exempt securities or their coupons may be taxable. Such securities are designed to give an issuer flexibility in managing cash flow. PIK securities that are debt securities can either be senior or subordinated debt and generally trade flat (i.e., without accrued interest). The trading price of PIK debt securities generally reflects the market value of the underlying debt plus an amount representing accrued interest since the last interest payment.
PIK securities, zero coupon bonds and capital appreciation bonds do not pay interest periodically to maturity, and, therefore, they involve the additional risk that the Fund will not realize any cash until a specified future payment date unless a portion of such securities is sold, and, if the issuer of such securities defaults, the Fund may not obtain any return at all on its investment. In addition, even though such securities may not provide for the payment of current interest in cash, the Fund is nonetheless required to accrue income on such investments for each taxable year and generally is required to distribute such accrued amounts (net of deductible expenses, if any) to avoid being subject to tax. Because cash generally is not received at the time of the accrual, the Fund may be required to liquidate other portfolio securities to obtain sufficient cash to satisfy federal tax distribution requirements applicable to the Fund. Additionally, the market prices of PIK securities, zero coupon bonds and capital appreciation bonds generally are more volatile than the market prices of interest bearing securities and are likely to respond to a greater degree to changes in interest rates than interest bearing securities having similar maturities and credit quality.
Repurchase Agreements. The Fund may enter into repurchase agreements with financial institutions. A repurchase agreement is an agreement under which the Fund acquires a fixed income security (generally a security issued by the U.S. government or an agency thereof, a banker’s acceptance, or a certificate of deposit) from a commercial bank, broker, or dealer, and simultaneously agrees to resell such security to the seller at an agreed upon price and date (normally, the next business day). Because the security purchased constitutes collateral for the repurchase obligation, a repurchase agreement may be considered a loan that is collateralized by the security purchased. The acquisition of a repurchase agreement may be deemed to be an acquisition of the underlying securities as long as the obligation of the seller to repurchase the securities is collateralized fully. The Fund follows certain procedures designed to minimize the risks inherent in such agreements. These procedures include effecting repurchase transactions only with creditworthy financial institutions whose condition will be continually monitored by the Adviser or applicable Sub-Adviser. The repurchase agreements entered into by the Fund will provide that the underlying collateral at all times shall have a value at least equal to 102% of the resale price stated in the agreement and consist only of securities permissible under Section 101(47)(A)(i) of the Bankruptcy Code (the Adviser or Sub-Adviser, as applicable, monitors compliance with this requirement). Under all repurchase agreements entered into by the Fund, the custodian or its agent must take possession of the underlying collateral. In the event of a default or bankruptcy by a selling financial institution, the Fund will seek to liquidate such collateral. However, the exercising of the Fund’s right to liquidate such collateral could involve certain costs or delays and, to the extent that proceeds from any sale upon a default of the obligation to repurchase were less than the repurchase price, the Fund could suffer a loss. It is the current policy of the Fund, not to invest in repurchase agreements that do not mature within seven days if any such investment, together with any other illiquid assets held by that Fund, amounts to more than 15% of the Fund’s total assets. The investments of the Fund in repurchase agreements, at times, may be substantial when, in the view of the Adviser or applicable Sub-Advisers, liquidity or other considerations so warrant.
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Reverse Repurchase Agreements. The Fund may enter into reverse repurchase agreements with respect to portfolio securities for temporary purposes (such as to obtain cash to meet redemption requests) when the liquidation of portfolio securities is deemed disadvantageous or inconvenient by the Adviser or applicable Sub-Adviser. Reverse repurchase agreements involve the sale of securities held by the Fund subject to the Fund’s agreement to repurchase the securities at an agreed-upon price, date and rate of interest. Such agreements are considered to be borrowings under the 1940 Act and will be limited, together with other borrowings, to 33 1/3% of the Fund’s total assets (including the amount borrowed) less all liabilities other than borrowings. While reverse repurchase transactions are outstanding, the Fund will maintain in a segregated account with the Fund’s custodian or a qualified sub-custodian, cash or liquid securities of an amount at least equal to the market value of the securities, plus accrued interest, subject to the agreement and will monitor the account to ensure that such value is maintained. Reverse repurchase agreements involve the risk that the market value of the securities sold by the Fund may decline below the price of the securities the Fund is obligated to repurchase and the interest received on the cash exchanged for the securities.
Risk Considerations of Medium Grade Securities. Obligations in the lowest investment grade (i.e., BBB or Baa), referred to as “medium grade” obligations, have speculative characteristics, and changes in economic conditions and other factors are more likely to lead to weakened capacity to make interest payments and repay principal on these obligations than is the case for higher rated securities. In the event that a security purchased by the Fund is subsequently downgraded below investment grade, the Adviser and Sub-Advisers will consider such event in its determination of whether the Fund should continue to hold the security.
Risk Considerations of Lower Rated Securities. The Fund may invest in fixed income securities that are not investment grade but are rated as low as B by Moody’s or B by S&P (or their equivalents or, if unrated, determined by the Adviser or applicable Sub-Adviser to be of comparable credit quality). In the case of a security that is rated differently by two or more rating services, the higher rating is used in connection with the foregoing limitation. In the event that the rating on a security held in the Fund’s portfolio is downgraded by a rating service, such action will be considered by the Adviser or applicable Sub-Adviser in its evaluation of the overall investment merits of that security, but will not necessarily result in the sale of the security. The widespread expansion of government, consumer and corporate debt within the U.S. economy has made the corporate sector, especially cyclically sensitive industries, more vulnerable to economic downturns or increased interest rates. An economic downturn could severely disrupt the market for high yield fixed income securities and adversely affect the value of outstanding fixed income securities and the ability of the issuers to repay principal and interest.
The Fund may invest in high yield debt obligations, such as bonds and debentures, issued by corporations and other business organizations. The Fund will invest in high yield debt instruments when the Fund believes that such instruments offer a better risk/reward profile than comparable equity opportunities. High yield fixed income securities (commonly known as “junk bonds”) are considered speculative investments while generally providing greater income than investments in higher rated securities, involve greater risk of loss of principal and income (including the possibility of default or bankruptcy of the issuers of such securities) and may involve greater volatility of price (especially during periods of economic uncertainty or change) than securities in the higher rating categories. Since yields vary over time, no specific level of income can ever be assured.
The prices of high yield fixed income securities have been found to be less sensitive to interest rate changes than higher-rated investments but more sensitive to adverse economic changes or individual corporate developments. Also, during an economic downturn or substantial period of rising interest rates, highly leveraged issuers may experience financial stress, which would adversely affect their ability to service their principal and interest payment obligations, to meet projected business goals and to obtain additional financing. If the issuer of a fixed income security owned by the Fund defaulted, the Fund could incur additional expenses in attempting to obtain a recovery. In addition, periods of economic uncertainty and changes can be expected to result in increased volatility of market prices of high yield fixed income securities and the Fund’s NAV to the extent it holds such securities.
High yield fixed income securities also present risks based on payment expectations. For example, high yield fixed income securities may contain redemption or call provisions. If an issuer exercises these provisions in a declining interest rate market, the Fund may, to the extent it holds such fixed income securities, have to replace the securities with a lower yielding security, which may result in a decreased return for investors. Conversely, a high yield fixed income security’s value will decrease in a rising interest rate market, as will the value of the Fund’s assets, to the extent it holds such fixed income securities. In addition, to the extent that there is no established retail secondary market, there may be thin trading of high yield fixed income securities, and this may have an impact on the Adviser’s and Sub-Advisers’ ability to accurately value such securities and the Fund’s assets and on the Fund’s ability to dispose of such securities. Adverse publicity and investor perceptions, whether or not based on fundamental analysis, may decrease the values and liquidity of high yield fixed income securities, especially in a thinly traded market.
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New laws proposed or adopted from time to time may have an impact on the market for high yield securities.
Finally, there are risks involved in applying credit or dividend ratings as a method for evaluating high yield securities. For example, ratings evaluate the safety of principal and interest or dividend payments, not market value risk of high yield securities. Also, since rating agencies may fail to timely change the credit ratings to reflect subsequent events, the Fund will continuously monitor the issuers of high yield securities in its portfolio, if any, to determine if the issuers will have sufficient cash flow and profits to meet required principal and interest payments, and to assure the security’s liquidity so the Fund can meet redemption requests.
Securities Lending. The Fund may lend portfolio securities to brokers, dealers and other financial organizations that meet capital and other credit requirements or other criteria established by the Board. These loans, if and when made, may not exceed 33 1/3% of the total asset value of the Fund (including the loan collateral). The Fund will not lend portfolio securities to the Adviser, any Sub-Adviser or their affiliates unless permissible under the 1940 Act and the rules and promulgations thereunder. Loans of portfolio securities will be fully collateralized by cash, letters of credit or U.S. government securities, and the collateral will be maintained in an amount equal to at least 102% of the current market value of the loaned domestic securities (105% of loaned foreign securities) by marking to market daily. Any gain or loss in the market price of the securities loaned that might occur during the term of the loan would be for the account of the Fund.
The Fund may pay a part of the interest earned from the investment of collateral, or other fee, to an unaffiliated or, to the extent consistent with the 1940 Act or the rules and SEC interpretations thereunder, affiliated third party for acting as the Fund’s securities lending agent.
By lending its securities, the Fund may increase its income by receiving payments from the borrower that reflect the amount of any interest or any dividends payable on the loaned securities as well as by either investing cash collateral received from the borrower in short-term instruments or obtaining a fee from the borrower when U.S. government securities or letters of credit are used as collateral. The Fund does not have the right to vote loaned securities. The Fund will attempt to call all loaned securities back to permit the exercise of voting rights on material matters, if time and jurisdictional restrictions permit. There is no guarantee that all loans can be recalled.
Short Sales. As consistent with the Fund’s investment objectives, the Fund may engage in short sales that are either “uncovered” or “against the box.” A short sale is “against the box” if at all times during which the short position is open, the Fund owns at least an equal amount of the securities or securities convertible into, or exchangeable without further consideration for, securities of the same issue as the securities that are sold short. A short sale against the box is generally a taxable transaction to the Fund with respect to the securities that are sold short.
Uncovered short sales are transactions under which the Fund sells a security it does not own. To complete such a transaction, the Fund must borrow the security to make delivery to the buyer. The Fund then is obligated to replace the security borrowed by purchasing the security at the market price at the time of the replacement. The price at such time may be more or less than the price at which the security was sold by the Fund. Until the security is replaced, the Fund is required to pay the lender amounts equal to any dividends or interest that accrue during the period of the loan. To borrow the security, the Fund also may be required to pay a premium, which would increase the cost of the security sold. The proceeds of the short sale will be retained by the broker, to the extent necessary to meet margin requirements, until the short position is closed out.
Until the Fund closes its short position or replaces the borrowed security, the Fund will: (a) maintain a segregated account containing cash or liquid securities at such a level that (i) the amount deposited in the account plus the amount deposited with the broker as collateral will equal the current value of the security sold short; and (ii) the amount deposited in the segregated account plus the amount deposited with the broker as collateral will not be less than the market value of the security at the time the security was sold short; or (b) otherwise cover the Fund’s short position.
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Structured Securities. The Fund may invest in structured securities to the extent consistent with its investment objective. The value of the principal of and/or interest on structured securities is determined by reference to changes in the value of specific currencies, commodities, securities, indices or other financial indicators (the “Reference”) or the relative change in two or more References. The interest rate or the principal amount payable upon maturity or redemption may be increased or decreased depending upon changes in the applicable Reference. Examples of structured securities include, but are not limited to, notes where the principal repayment at maturity is determined by the value of the relative change in two or more specified securities or securities indices.
The terms of some structured securities may provide that in certain circumstances no principal is due at maturity and, therefore, the Fund could suffer a total loss of its investment. Structured securities may be positively or negatively indexed, so that appreciation of the Reference may produce an increase or decrease in the interest rate or value of the security at maturity. In addition, changes in the interest rate or the value of the security at maturity may be a multiple of the changes in the value of the Reference. Consequently, structured securities may entail a greater degree of market risk than other types of securities. Structured securities may also be more volatile, less liquid and more difficult to accurately price than less complex securities due to their derivative nature.
U.S. Government Securities. The Fund may invest in U.S. government securities. Securities issued or guaranteed by the U.S. government or its agencies or instrumentalities include U.S. Treasury securities, which are backed by the full faith and credit of the U.S. Treasury and which differ only in their interest rates, maturities, and times of issuance. U.S. Treasury bills have initial maturities of one-year or less; U.S. Treasury notes have initial maturities of one to ten years; and U.S. Treasury bonds generally have initial maturities of greater than ten years. Certain U.S. government securities are issued or guaranteed by agencies or instrumentalities of the U.S. government including, but not limited to, obligations of U.S. government agencies or instrumentalities such as Fannie Mae, Freddie Mac, Ginnie Mae, the Small Business Administration, the Federal Farm Credit Administration, the Federal Home Loan Banks, Banks for Cooperatives (including the Central Bank for Cooperatives), the Federal Land Banks, the Federal Intermediate Credit Banks, the Tennessee Valley Authority, the Export-Import Bank of the United States, the Commodity Credit Corporation, the Federal Financing Bank, the Student Loan Marketing Association, the National Credit Union Administration and the Federal Agricultural Mortgage Corporation (“Farmer Mac”).
Some obligations issued or guaranteed by U.S. government agencies and instrumentalities, including, for example, Ginnie Mae pass-through certificates, are supported by the full faith and credit of the U.S. Treasury. Other obligations issued by or guaranteed by federal agencies, such as those securities issued by Fannie Mae, are supported by the discretionary authority of the U.S. government to purchase certain obligations of the federal agency, while other obligations issued by or guaranteed by federal agencies, such as those of the Federal Home Loan Banks, are supported by the right of the issuer to borrow from the U.S. Treasury, while the U.S. government provides financial support to such U.S. government-sponsored federal agencies, no assurance can be given that the U.S. government will always do so, since the U.S. government is not so obligated by law. U.S. Treasury notes and bonds typically pay coupon interest semi-annually and repay the principal at maturity.
See “Mortgage-Backed Securities” above for additional information about the September 7, 2008 federal takeover of Fannie Mae and Freddie Mac.
● | U.S. Treasury Obligations. U.S. Treasury obligations consist of bills, notes and bonds issued by the U.S. Treasury and separately traded interest and principal component parts of such obligations that are transferable through the federal book-entry system known as Separately Traded Registered Interest and Principal Securities (“STRIPS”) and Treasury Receipts (“TRs”). |
● | Receipts. Interests in separately traded interest and principal component parts of U.S. government obligations that are issued by banks or brokerage firms and are created by depositing U.S. government obligations into a special account at a custodian bank. The custodian holds the interest and principal payments for the benefit of the registered owners of the certificates or receipts. The custodian arranges for the issuance of the certificates or receipts evidencing ownership and maintains the register. TRs and STRIPS are interests in accounts sponsored by the U.S. Treasury. Receipts are sold as zero coupon securities. |
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● | U.S. Government Zero Coupon Securities. STRIPS and receipts are sold as zero coupon securities, that is, fixed income securities that have been stripped of their unmatured interest coupons. Zero coupon securities are sold at a (usually substantial) discount and redeemed at face value at their maturity date without interim cash payments of interest or principal. The amount of this discount is accreted over the life of the security, and the accretion constitutes the income earned on the security for both accounting and tax purposes. Because of these features, the market prices of zero coupon securities are generally more volatile than the market prices of securities that have similar maturity but that pay interest periodically. Zero coupon securities are likely to respond to a greater degree to interest rate changes than are non-zero coupon securities with similar maturity and credit qualities. |
● | U.S. Government Agencies. Some obligations issued or guaranteed by agencies of the U.S. government are supported by the full faith and credit of the U.S. Treasury, others are supported by the right of the issuer to borrow from the Treasury, while still others are supported only by the credit of the instrumentality. Guarantees of principal by agencies or instrumentalities of the U.S. government may be a guarantee of payment at the maturity of the obligation so that in the event of a default prior to maturity there might not be a market and thus no means of realizing on the obligation prior to maturity. Guarantees as to the timely payment of principal and interest do not extend to the value or yield of these securities nor to the value of the Fund’s shares. |
INVESTMENT LIMITATIONS
The Fund has adopted the following fundamental investment limitations which may not be changed with respect to the Fund without the affirmative vote of the holders of a majority of the Fund’s outstanding shares (as defined in Section 2(a) (42) of the 1940 Act). As used in this SAI and in the Prospectus, “shareholder approval” and a “majority of the outstanding shares” of the Fund means, with respect to the approval of an investment advisory agreement, a distribution plan or a change in a fundamental investment limitation, the lesser of (1) 67% of the shares of the Fund represented at a meeting at which the holders of more than 50% of the outstanding shares of the Fund are present in person or by proxy, or (2) more than 50% of the outstanding shares of the Fund. Unless otherwise noted, the Fund’s investment goals and strategies described in the Prospectus may be changed by the Board without the approval of the Fund’s shareholders.
The Fund may not:
1. | Borrow money except that (a) the Fund may borrow from banks or through reverse repurchase agreements in amounts up to 33 1/2% of the value of its total assets (including the amount borrowed); and (b) the Fund may engage in transactions in mortgage dollar rolls which are accounted for as financings. For purposes of this limitation, investment strategies which either obligate the Fund to purchase securities or require the Fund to segregate assets are not considered to be borrowings. Asset coverage of at least 300% is required for all borrowings, except where the Fund has borrowed money for temporary purposes in amounts not exceeding 5% of its total assets; |
2. | Issue senior securities as defined in the 1940 Act, except as permitted by rule, regulation or order of the SEC; |
3. | Act as an underwriter of securities within the meaning of the 1933 Act, except insofar as it might be deemed to be an underwriter upon disposition of certain portfolio securities acquired within the limitation on purchases of restricted securities; |
4. | Purchase or sell real estate (including real estate limited partnership interests), provided that the Fund may invest: (a) in securities secured by real estate or interests therein or issued by companies that invest in real estate or interests therein; or (b) in real estate investment trusts; |
5. | Purchase or sell commodities, except as permitted by the 1940 Act, as amended, and as interpreted or modified by the regulatory authority having jurisdiction from time to time; |
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6. | Make loans, except through loans of portfolio securities and repurchase agreements, provided that for purposes of this restriction the acquisition of bonds, debentures or other debt instruments or interests therein and investment in government obligations, loan participations and assignments, short-term commercial paper, certificates of deposit and bankers’ acceptances shall not be deemed to be the making of a loan; |
7. | Invest 25% or more of its total assets, taken at market value at the time of each investment, in the securities of one or more issuers conducting their principal business activities in the same industry, provided that (a) there is no limitation with respect to (i) instruments issued or guaranteed by the United States, any state, territory or possession of the United States, the District of Columbia or any of their authorities, agencies, instrumentalities or political subdivisions, and (ii) repurchase agreements secured by the instruments described in clause (i); (b) wholly-owned finance companies will be considered to be in the industries of their parents if their activities are primarily related to financing the activities of the parents; and (c) utilities will be divided according to their services, for example, gas, gas transmission, electric and gas, electric and telephone will each be considered a separate industry; or |
8. | With respect to 75% of the Fund’s total assets, the Fund may not purchase the securities of any issuer (other than securities issued or guaranteed by the U.S. government or any of its agencies or instrumentalities, or, to the extent permitted by the 1940 Act, the rules and regulations thereunder and any applicable exemptive relief, securities of other investment companies) if, as a result, (1) more than 5% of the Fund’s total assets would be invested in the securities of that issuer; or (2) the Fund would hold more than 10% of the outstanding voting securities of that issuer. |
In addition to the fundamental investment limitations specified above, the Fund is subject to the following non-fundamental limitations, which may be changed without shareholder approval, in compliance with applicable law and regulatory policy. The Fund may not:
1. | Make investments for the purpose of exercising control or management, but investments by the Fund in wholly-owned investment entities created under the laws of certain countries will not be deemed the making of investments for the purpose of exercising control or management; or |
2. | Purchase securities on margin, except that the Fund may use margin to the extent necessary to engage in short sales and may obtain such short-term credits as are necessary for the clearance of portfolio transactions; and provided that margin deposits in connection with options, futures contracts, options on futures contracts or other derivative instruments, including foreign exchange forward contracts, shall not constitute purchasing securities on margin; or |
3. | Pledge, mortgage or hypothecate assets, except as permitted by the 1940 Act. |
The Fund may invest in securities issued by other investment companies within the limits prescribed by the 1940 Act. Pursuant to orders issued by the SEC to ETFs and procedures approved by the Board, the Fund may invest in ETFs in excess of the limits of the 1940 Act. As a shareholder of another investment company, the Fund would bear, along with other shareholders, its pro rata portion of the other investment company’s expenses, including advisory fees. These expenses would be in addition to the advisory and other expenses that the Fund bears directly in connection with its own operations.
Securities held by the Fund generally may not be purchased from, sold or loaned to the Adviser, any Sub-Adviser or their affiliates or any of their directors, officers or employees, acting as principal, unless pursuant to a rule or exemptive order under the 1940 Act. None of the Fund, the Adviser, or any Sub-Adviser has obtained such an exemptive order as of the date of this SAI.
Under the 1940 Act, the Fund will be required to maintain asset coverage of at least 300% for borrowings from a bank. In the event that such asset coverage is below 300%, the Fund will be required to reduce the amount of its borrowings to obtain 300% asset coverage within three business days (not including Sundays and holidays).
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The 1940 Act does not directly restrict an investment company’s ability to invest in commodities, but does require that every investment company have a fundamental investment policy governing such investments. The Fund has adopted fundamental policies that would permit direct investment in commodities.
Any collateral arrangements with respect to, if applicable, the writing of options and futures contracts, options on futures contracts, short sales and other similar instruments, and collateral arrangements with respect to initial and variation margin are not deemed to be a pledge of assets. The Fund may pledge, mortgage or hypothecate assets to secure borrowings permitted by the Fund’s fundamental limitation on borrowing.
Senior securities may include any obligation or instrument issued by a fund evidencing indebtedness. The 1940 Act generally prohibits funds from issuing senior securities, although it does not treat certain transactions as senior securities, such as certain borrowings, short sales, reverse repurchase agreements, firm commitment agreements and standby commitments, with appropriate earmarking or segregation of assets to cover such obligation.
If a percentage restriction under one of the Fund’s investment policies or limitations or the use of assets is adhered to at the time a transaction is effected, later changes in percentages resulting from changing values will not be considered a violation (except with respect to any restrictions that may apply to borrowings or senior securities issued by the Fund).
DISCLOSURE OF PORTFOLIO HOLDINGS
The Company has adopted, on behalf of the Fund, a policy relating to the selective disclosure of the Fund’s portfolio holdings by the Adviser, director, officer or third party service provider, in accordance with regulations that seek to ensure that disclosure of information about portfolio holdings is in the best interest of Fund shareholders and to address the conflicts of interests of the Fund shareholders and its service providers. The policies relating to the disclosure of the Fund’s portfolio holdings are designed to allow disclosure of portfolio holdings information where necessary to the Fund’s operation without compromising the integrity or performance of the Fund. It is the policy of the Company that disclosure of the Fund’s portfolio holdings to a select person or persons prior to the release of such holdings to the public (“selective disclosure”) is prohibited, unless there are legitimate business purposes for selective disclosure.
The Company discloses portfolio holdings information as required in regulatory filings and shareholder reports, discloses portfolio holdings information as required by federal and state securities laws and may disclose portfolio holdings information in response to requests by governmental authorities. As required by the federal securities laws, including the 1940 Act, the Company will disclose the Fund’s portfolio holdings in applicable regulatory filings, including shareholder reports, reports on Form N-CSR and Form N-Q or such other filings, reports or disclosure documents as the applicable regulatory authorities may require.
The Company may distribute or authorize the distribution of information about the Fund’s portfolio holdings that is not publicly available to its third-party service providers of the Company, which include U.S. Bank, N.A., the custodian; U.S. Bancorp Fund Services, LLC., the administrator, accounting agent and transfer agent; PricewaterhouseCooopers LLP, the Fund’s independent registered public accounting firm; Drinker Biddle & Reath LLP, legal counsel; and Filepoint, the financial printer. These service providers are required to keep such information confidential, and are prohibited from trading based on the information or otherwise using the information except as necessary in providing services to the Fund. Such holdings are released on conditions of confidentiality, which include appropriate trading prohibitions. “Conditions of confidentiality” include confidentiality terms included in written agreements, implied by the nature of the relationship (e.g. attorney-client relationship), or required by fiduciary or regulatory principles (e.g., custody services provided by financial institutions). Portfolio holdings may also be provided earlier to shareholders and their agents who receive redemptions in kind that reflect a pro rata allocation of all securities held in the Fund’s portfolio.
Portfolio holdings may also be disclosed, upon authorization by a designated officer of the Adviser, to certain independent reporting agencies recognized by the SEC as acceptable agencies for the reporting of industry statistical information. Disclosures to financial consultants are also subject to a confidentiality agreement and/or trading restrictions as well as a 15-day time lag. The foregoing disclosures are made pursuant to the Company’s policy on selective disclosure of portfolio holdings. The Board or a committee thereof may, in limited circumstances, permit other selective disclosure of portfolio holdings subject to a confidentiality agreement and/or trading restrictions. Portfolio holdings may also be provided earlier to shareholders and their agents who receive redemptions in kind that reflect a pro rata allocation of all securities held in the Fund’s portfolio.
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The Adviser reserves the right to refuse to fulfill any request for portfolio holdings information from a shareholder or non-shareholder if it believes that providing such information will be contrary to the best interests of the Fund.
The Board provides ongoing oversight of the Company’s policies and procedures and compliance with such policies and procedures. As part of this oversight function, the Board receives from the Trust’s Chief Compliance Officer (“CCO”) as necessary, reports on compliance with these policies and procedures. In addition, the Board receives an annual assessment of the adequacy and effectiveness of the policies and procedures with respect to the Fund, and any changes thereto, and an annual review of the operation of the policies and procedures. Any violation of the policy set forth above as well as any corrective action undertaken to address such violation must be reported by the Adviser, director, officer or third party service provider to the Company’s CCO, who will determine whether the violation should be reported immediately to the Board or at its next quarterly Board meeting.
PORTFOLIO TURNOVER
Portfolio turnover measures the percentage of the Fund’s total portfolio market value that was purchased or sold during the period. The Fund’s turnover rate provides an indication of how transaction costs (which are not included in the Fund’s expenses) may affect the Fund’s performance. Also, funds with a high turnover may be more likely to distribute capital gains that may be taxable to shareholders.
No portfolio turnover information is provided for the Fund because the Fund had not commenced operations prior to the date of this SAI.
MANAGEMENT OF THE COMPANY
The business and affairs of the Company are managed under the oversight of the Board, subject to the laws of the State of Maryland and the Company’s Charter. The Directors are responsible for deciding matters of overall policy and overseeing the actions of the Company’s service providers. The officers of the Company conduct and supervise the Company’s daily business operations.
Directors who are not deemed to be “interested persons” of the Company (as defined in the 1940 Act) are referred to as “Independent Directors.” Directors who are deemed to be “interested persons” of the Company are referred to as “Interested Directors.” The Board is currently composed of seven Independent Directors and one Interested Director. The Board has selected Arnold M. Reichman, an Independent Director, to act as Chairman. Mr. Reichman’s duties include presiding at meetings of the Board and interfacing with management to address significant issues that may arise between regularly scheduled Board and Committee meetings. In the performance of his duties, Mr. Reichman will consult with the other Independent Directors and the Company’s officers and legal counsel, as appropriate. The Chairman may perform other functions as requested by the Board from time to time.
The Board meets as often as necessary to discharge its responsibilities. Currently, the Board conducts regular, in-person meetings at least four times a year, and holds special in-person or telephonic meetings as necessary to address specific issues that require attention prior to the next regularly scheduled meeting. The Board also relies on professionals, such as the Company’s independent registered public accounting firms and legal counsel, to assist the Directors in performing their oversight responsibilities.
The Board has established nine standing committees — Audit, Contract, Executive, Investment Risk, Nominating and Governance, Product Development, Regulatory Oversight, Strategic Oversight, and Valuation Committees. The Board may establish other committees, or nominate one or more Directors to examine particular issues related to the Board’s oversight responsibilities, from time to time. Each Committee meets periodically to perform its delegated oversight functions and reports its findings and recommendations to the Board. For more information on the Committees, see the section “Standing Board Committees,” below.
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The Board has determined that the Company’s leadership structure is appropriate because it allows the Board to effectively perform its oversight responsibilities.
Directors and Executive Officers
The Directors and executive officers of the Company, their ages, business addresses and principal occupations during the past five years are set forth below.
Name, Address, and Age | Position(s) Held with Company | Term of Office and Length of Time Served1 | Principal Occupation(s) During Past 5 Years | Number of Portfolios in Fund Complex Overseen by Director* | Other Directorships Held by Director in the Past 5 Years |
INDEPENDENT DIRECTORS | |||||
Julian A. Brodsky 615 East Michigan Street Milwaukee, WI 53202 Age: 84 |
Director | 1988 to present | From 1969 to 2011, Director and Vice Chairman, Comcast Corporation (cable television and communications). | 31 | AMDOCS Limited (service provider to telecommunications companies). |
J. Richard Carnall 615 East Michigan Street Milwaukee, WI 53202 Age: 79 |
Director | 2002 to present | Since 1984, Director of Haydon Bolts, Inc. (bolt manufacturer) and Parkway Real Estate Company (subsidiary of Haydon Bolts, Inc.); since 2004, Director of Cornerstone Bank. | 31 | None |
Gregory P. Chandler 615 East Michigan Street Milwaukee, WI 53202 Age: 50 |
Director | 2012 to present | Since 2009, Chief Financial Officer, Emtec, Inc. (information technology consulting/services); from 2003 to 2009, Managing Director, head of Business Services and IT Services Practice, Janney Montgomery Scott LLC (investment banking/brokerage). | 31 | Emtec, Inc.; FS Investment Corporation (business development company); FS Energy and Power Fund (business development company). |
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Name, Address, and Age | Position(s) Held with Company | Term of Office and Length of Time Served1 | Principal Occupation(s) During Past 5 Years | Number of Portfolios in Fund Complex Overseen by Director* | Other Directorships Held by Director in the Past 5 Years |
Nicholas A. Giordano 615 East Michigan Street Milwaukee, WI 53202 Age: 74 |
Director | 2006 to present | Since 1997, Consultant, financial services organizations. | 31 | Kalmar Pooled Investment Trust (registered investment company)(until September 2017); Wilmington Funds (12 portfolios)(registered investment company); Independence Blue Cross (healthcare insurance). |
Arnold M. Reichman 615 East Michigan Street Milwaukee, WI 53202 Age: 69 |
Chairman Director | 2005 to present 1991 to present | Since 2006, Co-Founder and Chief Executive Officer, Lifebooker, LLC (online beauty and health appointment booking service). | 31 | Independent Trustee of EIP Investment Trust (registered investment company). |
Robert A. Straniere 615 East Michigan Street Milwaukee, WI 53202 Age: 76 |
Director | 2006 to present | Since 2009, Administrative Law Judge, New York City; since 1980, Founding Partner, Straniere Law Group (law firm). | 31 | Reich and Tang Group (asset management). |
INTERESTED DIRECTOR2 | |||||
Robert Sablowsky 615 East Michigan Street Milwaukee, WI 53202 Age: 79 |
Vice Chairman Director | 2016 to present 1991 to present | Since 2002, Senior Director — Investments and prior thereto Executive Vice President, of Oppenheimer & Co., Inc. (a registered broker-dealer). | 31 | None |
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Name, Address, and Age | Position(s) Held with Company | Term of Office and Length of Time Served1 | Principal Occupation(s) During Past 5 Years | Number of Portfolios in Fund Complex Overseen by Director* | Other Directorships Held by Director in the Past 5 Years |
OFFICERS | |||||
Salvatore Faia, JD, CPA, CFE Vigilant Compliance, LLC Gateway Corporate Center Suite 216 223 Wilmington West Chester Pike Chadds Ford, PA 19317 Age: 55 |
President Chief Compliance Officer | 2009 to present 2004 to present | Since 2004, President, Vigilant Compliance, LLC (investment management services company); since 2005, Independent Trustee of EIP Investment Trust (registered investment company). | N/A | N/A |
James G. Shaw 615 East Michigan Street Milwaukee, WI 53202 Age: 57 |
Treasurer and Secretary | 2016 to present | Since 2016, Treasurer and Secretary of The RBB Fund, Inc.; from 2005 to 2016, Assistant Treasurer of The RBB Fund, Inc.; from 1995 to 2016, Senior Director and Vice President of BNY Mellon Investment Servicing (US) Inc. (financial services company). | N/A | N/A |
Robert Amweg Vigilant Compliance, LLC Gateway Corporate Center Suite 216 223 Wilmington West Chester Pike Chadds Ford, PA 19317 Age: 63 |
Assistant Treasurer | 2016 to present | Since 2013, Compliance Director, Vigilant Compliance, LLC (investment management services company); since 2012, Consultant to the financial services industry; from 2007 to 2012, Chief Financial Officer and Chief Accounting Officer, Turner Investments, LP (registered investment company). | N/A | N/A |
Jesse Schmitting 615 East Michigan Street Milwaukee, WI 53202 Age: 35 |
Assistant Treasurer | 2016 to present | Since 2008, Assistant Vice President, U.S. Bancorp Fund Services, LLC (fund administrative services firm). | N/A | N/A |
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Name, Address, and Age | Position(s) Held with Company | Term of Office and Length of Time Served1 | Principal Occupation(s) During Past 5 Years | Number of Portfolios in Fund Complex Overseen by Director* | Other Directorships Held by Director in the Past 5 Years |
Edward Paz 615 East Michigan Street Milwaukee, WI 53202 Age: 46 |
Assistant Secretary | 2016 to present | Since 2007, Vice President and Counsel, U.S. Bancorp Fund Services, LLC (fund administrative services firm). | N/A | N/A |
Michael P. Malloy One Logan Square Ste. 2000 Philadelphia, PA 19103 Age: 58 |
Assistant Secretary | 1999 to present | Since 1993, Partner, Drinker Biddle & Reath LLP (law firm). | N/A | N/A |
Jillian L. Bosmann One Logan Square Ste. 2000 Philadelphia, PA 19103 Age: 39 |
Assistant Secretary | 2017 to present | Since 2017, Partner, Drinker Biddle & Reath LLP (law firm); Drinker Biddle & Reath LLP (2006-Present). | N/A | N/A |
* | Each Director oversees 31 portfolios of the Company. |
1. | Subject to the Company’s Retirement Policy, each Director may continue to serve as a Director until the last day of the calendar year in which the applicable Director attains age 75 or until his successor is elected and qualified or his death, resignation or removal. The Board reserves the right to waive the requirements of the Policy with respect to an individual Director. The Board has approved waivers of the policy with respect to Messrs. Brodsky, Carnall, Sablowsky and Straniere. Each officer holds office at the pleasure of the Board until the next special meeting of the Company or until his or her successor is duly elected and qualified, or until he or she dies, resigns or is removed. |
2. | Mr. Sablowsky is considered an “interested person” of the Company as that term is defined in the 1940 Act and is referred to as an “Interested Director.” Mr. Sablowsky is considered an “Interested Director” of the Company by virtue of his position as an employee of Oppenheimer & Co., Inc., a registered broker-dealer. |
Director Experience, Qualifications, Attributes and/or Skills
The information above includes each Director’s principal occupations during the last five years. Each Director possesses extensive additional experience, skills and attributes relevant to his qualifications to serve as a Director. The cumulative background of each Director led to the conclusion that each Director should serve as a Director of the Company. Mr. Giordano has years of experience as a consultant to financial services organizations and also serves on the boards of other registered investment companies. Mr. Reichman brings decades of investment management experience to the Board, in addition to senior executive-level management experience. Mr. Straniere has been a practicing attorney for over 30 years and has served on the boards of an asset management company and another registered investment company. Mr. Brodsky has over 40 years of senior executive-level management experience in the cable television and communications industry. Mr. Sablowsky has demonstrated leadership and management abilities as evidenced by his senior executive-level positions in the financial services industry. Mr. Carnall has decades of senior executive-level management experience in the banking and financial services industry and also serves on the boards of various corporations and a bank. Mr. Chandler has demonstrated leadership and management abilities as evidenced by his senior executive-level positions in the investment technology consulting/services and investment banking/brokerage industries, and also serves on various boards.
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Standing Committees
The responsibilities of each Committee of the Board and its members are described below.
Audit Committee. The Board has an Audit Committee comprised of three Independent Directors. The current members of the Audit Committee are Messrs. Brodsky, Chandler and Giordano. The Audit Committee, among other things, reviews results of the annual audit and approves the firm(s) to serve as independent auditors. The Audit Committee convened two times during the fiscal year ended August 31, 2017.
Contract Committee. The Board has a Contract Committee comprised of the Interested Director and three Independent Directors. The current members of the Contract Committee are Messrs. Brodsky, Chandler, Sablowsky and Straniere. The Contract Committee reviews and makes recommendations to the Board regarding the approval and continuation of agreements and plans of the Company. The Contract Committee convened four times during the fiscal year ended August 31, 2017.
Executive Committee. The Board has an Executive Committee comprised of the Interested Director and three Independent Directors. The current members of the Executive Committee are Messrs. Chandler, Giordano, Reichman and Sablowsky. The Executive Committee may generally carry on and manage the business of the Company when the Board is not in session. The Executive Committee did not meet during the fiscal year ended August 31, 2017.
Investment Risk Committee. The Board has an Investment Risk Committee comprised of the Interested Director and one Independent Director. The current members of the Investment Risk Committee are Messrs. Reichman and Sablowsky. The Investment Risk Committee ensures that the Company’s investment advisers have adopted investment risk management policies and procedures. The Investment Risk Committee convened two times during the fiscal year ended August 31, 2017.
Nominating and Governance Committee. The Board has a Nominating and Governance Committee comprised of three Independent Directors. The current members of the Nominating and Governance Committee are Messrs. Carnall, Giordano and Reichman. The Nominating and Governance Committee recommends to the Board all persons to be nominated as Directors of the Company. The Nominating and Governance Committee will consider nominees recommended by shareholders. Recommendations should be submitted to the Committee care of the Company’s Secretary. The Nominating and Governance Committee convened two times during the fiscal year ended August 31, 2017.
Product Development Committee. The Board has a Product Development Committee comprised of the Interested Director and one Independent Director. The current members of the Product Development Committee are Messrs. Reichman and Sablowsky. The Product Development Committee oversees the process regarding the addition of new investment advisers and investment products to the Company. The Product Development Committee convened six times during the fiscal year ended August 31, 2017.
Regulatory Oversight Committee. The Board has a Regulatory Oversight Committee comprised of the Interested Director and three Independent Directors. The current members of the Regulatory Oversight Committee are Messrs. Carnall, Reichman, Sablowsky and Straniere. The Regulatory Oversight Committee monitors regulatory developments in the mutual fund industry and focuses on various regulatory aspects of the operation of the Company. The Regulatory Oversight Committee convened four times during the fiscal year ended August 31, 2017.
Strategic Oversight Committee. The Board has a Strategic Oversight Committee comprised of the Interested Director and three Independent Directors. The current members of the Strategic Oversight Committee are Messrs. Carnall, Chandler, Reichman and Sablowsky. The Strategic Oversight Committee assists the Board in its oversight and review of the Company’s strategic plan and operations. The Strategic Oversight Committee convened one time during the fiscal year ended August 31, 2017.
Valuation Committee. The Board has a Valuation Committee comprised of the Interested Director and three officers of the Company. The members of the Valuation Committee are Messrs. Amweg, Faia, Sablowsky and Shaw. The Valuation Committee is responsible for reviewing fair value determinations. The Valuation Committee convened four times during the fiscal year ended August 31, 2017.
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Risk Oversight
The Board performs its risk oversight function for the Company through a combination of (1) direct oversight by the Board as a whole and Board committees and (2) indirect oversight through the Company’s investment advisers and other service providers, Company officers and the Company’s Chief Compliance Officer. The Company is subject to a number of risks, including but not limited to investment risk, compliance risk, operational risk, reputational risk, credit risk and counterparty risk. Day-to-day risk management with respect to the Company is the responsibility of the Company’s investment advisers or other service providers (depending on the nature of the risk) that carry out the Company’s investment management and business affairs. Each of the investment advisers and the other service providers have their own independent interest in risk management and their policies and methods of risk management will depend on their functions and business models and may differ from the Company’s and each other’s in the setting of priorities, the resources available or the effectiveness of relevant controls.
The Board provides risk oversight by receiving and reviewing on a regular basis reports from the Company’s investment advisers or other service providers, receiving and approving compliance policies and procedures, periodic meetings with the Company’s portfolio managers to review investment policies, strategies and risks, and meeting regularly with the Company’s Chief Compliance Officer to discuss compliance reports, findings and issues. The Board also relies on the Company’s investment advisers and other service providers, with respect to the day-to-day activities of the Company, to create and maintain procedures and controls to minimize risk and the likelihood of adverse effects on the Company’s business and reputation.
Board oversight of risk management is also provided by various Board Committees. For example, the Audit Committee meets with the Company’s independent registered public accounting firms to ensure that the Company’s respective audit scopes include risk-based considerations as to the Company’s financial position and operations.
The Board may, at any time and in its discretion, change the manner in which it conducts risk oversight. The Board’s oversight role does not make the Board a guarantor of the Company’s investments or activities.
Director Ownership of Shares of the Company
The following table sets forth the dollar range of equity securities beneficially owned by each Director in the Fund and in all of the portfolios of the Company (which for each Director comprise all registered investment companies within the Company’s family of investment companies overseen by him), as of December 31, 2017:
Name of Director | Dollar Range of Equity Securities in the Fund* |
Aggregate Dollar Range of Equity Securities in All Registered Investment Companies Overseen by Director within the Family of Investment Companies |
INDEPENDENT DIRECTORS | ||
Julian A. Brodsky | None | Over $100,000 |
J. Richard Carnall | None | $10,001-$50,000 |
Gregory P. Chandler | None | $1-$10,000 |
Nicholas A. Giordano | None | $10,001-$50,000 |
Sam Lambroza** | None | Over $100,000 |
Arnold M. Reichman | None | Over $100,000 |
Robert A. Straniere | None | $1-$10,000 |
INTERESTED DIRECTOR | ||
Robert Sablowsky | None | Over $100,000 |
* | The Fund had not commenced operations prior to the date of this SAI. |
** | Mr. Lambroza resigned from the Board effective January 26, 2018. |
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As of December 31, 2017, the Independent Directors and their respective immediate family members (spouse or dependent children) did not own beneficially or of record any securities of the Company’s investment advisers or distributor, or of any person directly or indirectly controlling, controlled by, or under common control with the investment advisers or distributor.
Directors’ and Officers’ Compensation
Effective January 1, 2018, the Company pays each Director a retainer at the rate of $100,000 annually, $10,000 for each regular meeting of the Board, $3,500 for each committee meeting attended in-person, and $2,000 for each committee meeting attended telephonically or special meeting of the Board attended in-person or telephonically. The Chairman of the Audit Committee and Chairman of the Regulatory Oversight Committee each receive an additional fee of $15,000 for his services. The Chairman of the Contract Committee receives an additional fee of $10,000 per year for his services, and the Chairman of the Nominating and Governance Committee and Chairman of the Investment Risk Committee each receive an additional fee of $7,500 per year for his services. The Vice Chairman of the Board receives an additional fee of $25,000 per year for his services in this capacity and the Chairman of the Board receives an additional fee of $50,000 per year for his services in this capacity.
From January 1, 2017, to December 31, 2017, the Company paid each Director a retainer at the rate of $100,000 annually, $5,000 for each regular meeting of the Board, $2,500 for each committee meeting attended in-person, and $2,000 for each committee meeting attended telephonically or special meeting of the Board attended in-person or telephonically. The Chairman of the Audit Committee and Chairman of the Regulatory Oversight Committee each received an additional fee of $15,000 for his services. The Chairman of the Contract Committee received an additional fee of $10,000 for his services and the Chairman of the Nominating and Governance Committee received an additional fee of $7,500 for his services. Effective June 1, 2017, the Chairman of the Investment Risk Committee received an additional fee of $7,500 for his services. The Vice Chairman of the Board received an additional fee of $25,000 for his services in this capacity and the Chairman of the Board received an additional fee of $50,000 for his services in this capacity.
From January 1, 2016, to December 31, 2016, the Company paid each Director a retainer at the rate of $85,000 annually, $3,500 for each regular meeting of the Board, and $2,000 for each committee meeting or special meeting of the Board attended in-person or telephonically. The Chairman of the Audit Committee and Chairman of the Regulatory Oversight Committee each received an additional fee of $10,000 for his services. The Chairman of the Nominating and Governance Committee and the Chairman of the Contract Committee each received an additional fee of $6,000 per year for his services. The Chairman of the Board received an additional fee of $25,000 per year for his services in this capacity.
Directors are reimbursed for any reasonable out-of-pocket expenses incurred in attending meetings of the Board or any committee thereof. Employees of Vigilant Compliance, LLC serve as President, Chief Compliance Officer, and Assistant Treasurer of the Company. Vigilant Compliance, LLC is compensated for the services provided to the Company, and such compensation is determined by the Board. For the fiscal year ended August 31, 2017, Vigilant Compliance LLC received $600,000 in aggregate from all series of the Company for services provided. An employee of the Company serves as Treasurer and Secretary and is compensated for services provided. For the fiscal year ended August 31, 2017, each of the following members of the Board and the Treasurer and Secretary received compensation from the Company in the following amounts:
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Name of Director/Officer | Aggregate Compensation from the Fund* | Pension or Retirement Benefits Accrued | Estimated Annual Benefits Upon Retirement |
Total Compensation From Fund Complex Paid to Directors or Officer |
Independent Directors: | ||||
Julian A. Brodsky, Director | None | N/A | N/A | $130,250 |
J. Richard Carnall, Director | None | N/A | N/A | $128,250 |
Gregory P. Chandler, Director | None | N/A | N/A | $151,000 |
Nicholas A. Giordano, Director | None | N/A | N/A | $132,875 |
Sam Lambroza, Director** | None | N/A | N/A | $133,375 |
Arnold M. Reichman, Director and Chairman | None | N/A | N/A | $175,500 |
Robert A. Straniere, Director | None | N/A | N/A | $130,750 |
Interested Director: | ||||
Robert Sablowsky, Director | None | N/A | N/A | $173,750 |
Officer: | ||||
James G. Shaw, Treasurer and Secretary | None | N/A | N/A | $240,000 |
* | The Fund had not commenced operations prior to the date of this SAI. |
** | Mr. Lambroza resigned from the Board effective January 26, 2018. |
Each compensated Director is entitled to participate in the Company’s deferred compensation plan (the “DC Plan”). Under the DC Plan, a compensated Director may elect to defer all or a portion of his compensation and have the deferred compensation treated as if it had been invested by the Company in shares of one or more of the portfolios of the Company. The amount paid to the Directors under the DC Plan will be determined based upon the performance of such investments.
As of December 31, 2017, the Independent Directors and their respective immediate family members (spouse or dependent children) did not own beneficially or of record any securities of the Company’s investment advisers or distributor, or of any person directly or indirectly controlling, controlled by, or under common control with the investment advisers or distributor.
CODE OF ETHICS
The Company, the Adviser and the Sub-Advisers have each adopted a code of ethics under Rule 17j-1 of the 1940 Act that permits personnel subject to the codes to invest in securities, including securities that may be purchased or held by the Company, subject to certain restrictions.
PROXY VOTING
The Board has delegated the responsibility of voting proxies with respect to the portfolio securities purchased and/or held by the Fund to the Fund’s Sub-Advisers, subject to the Board’s continuing oversight. In exercising its voting obligations, each Sub-Adviser is guided by its general fiduciary duty to act prudently and in the interest of the Fund. Each Sub-Adviser will consider factors affecting the value of the Fund’s investments and the rights of shareholders in its determination on voting portfolio securities.
Each Sub-Adviser will vote proxies in connection with securities in which the portion of the Fund’s assets allocated to the Sub-Adviser are invested, respectively, in accordance with its proxy policies and procedures, which policies and procedures or a summary thereof are included in Appendix B-G to this SAI. The proxy policies of each Sub-Adviser differ. If one or more Sub-Advisers each has responsibility for voting a particular proxy, it is possible that the Sub-Advisers will disagree on how to vote the proxy.
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The Company is required to disclose annually the Fund’s complete proxy voting record on Form N-PX. The Fund’s proxy voting record for the most recent 12 month period ended June 30th is available upon request by calling 1-844-261-6482 or by writing to the Fund at: Aquarius International Fund, c/o U.S. Bancorp Fund Services, LLC, P.O. Box 701, Milwaukee, Wisconsin 53201-0701. The Fund’s Form N-PX is also available on the SEC’s website at www.sec.gov.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
No ownership information is provided as the Fund had not commenced operations prior to the date of this SAI.
INVESTMENT ADVISORY AND OTHER SERVICES
INVESTMENT ADVISER
Altair Advisers LLC (“Altair” or the “Adviser”) is a professional investment management firm registered with the SEC under the Investment Advisers Act of 1940. The Adviser was established in June 2002. PHRM Investments LLC holds a controlling interest in the Adviser.
Advisory Agreement with the Company. The Adviser renders advisory services to the Fund pursuant to an Investment Advisory Agreement (“Advisory Agreement”).
Subject to the supervision of the Board, the Adviser will provide for the overall management of the Fund including (i) the provision of a continuous investment program for the Fund, including investment research and management with respect to all securities, investments, cash and cash equivalents, (ii) the determination from time to time of what securities and other investments will be purchased, retained, or sold by the Fund, and (iii) the placement from time to time of orders for all purchases and sales made for the Fund. The Adviser will provide the services rendered by it in accordance with the Fund’s investment objective, restrictions and policies as stated in the Prospectus and in this SAI. The Adviser will not be liable for any error of judgment, mistake of law, or for any loss suffered by the Fund in connection with the performance of the Advisory Agreement, except a loss resulting from a breach of fiduciary duty with respect to the receipt of compensation for services or a loss resulting from willful misfeasance, bad faith or gross negligence on the part of the Adviser in the performance of its duties, or from reckless disregard of its obligations and duties under the Advisory Agreement. As discussed further below, the Adviser has delegated responsibility for the investment of the assets of the Fund to Sub-Advisers.
The Fund is currently only available to clients of the Adviser and to other investors at the Fund’s discretion. The Adviser does not receive a separate management fee from the Fund. However, pursuant to the Advisory Agreement, the Adviser is entitled to receive reimbursement for compliance expenses in connection with managing the Fund, up to 0.03% of the Fund's average daily net assets. The Fund’s management fee of 0.49% reflects the estimated aggregate fees to be paid by the Fund to the Sub-Advisers for the current fiscal year, plus anticipated reimbursements to the Adviser for out-of-pocket expenses.
Except as otherwise noted in the Advisory Agreement, the Adviser will pay all expenses incurred by it in connection with its activities under the Advisory Agreement. The Fund bears all of its own expenses not specifically assumed by the Adviser. General expenses of the Company not readily identifiable as belonging to a portfolio of the Company are allocated among all investment portfolios by or under the direction of the Board in such manner as it deems to be fair and equitable. Expenses borne by the Fund include, but are not limited to the following (or the Fund’s share of the following): (a) the cost (including brokerage commissions) of securities purchased or sold by the Fund and any losses incurred in connection therewith; (b) fees payable to and expenses incurred on behalf of the Fund by the Adviser; (c) filing fees and expenses relating to the registration and qualification of the Company and the Fund’s shares under federal and/or state securities laws and maintaining such registrations and qualifications; (d) fees and salaries payable to the Company’s Directors and officers; (e) taxes (including any income or franchise taxes) and governmental fees; (f) costs of any liability and other insurance or fidelity bonds; (g) any costs, expenses or losses arising out of a liability of or claim for damages or other relief asserted against the Company or the Fund for violation of any law; (h) legal, accounting and auditing expenses, including legal fees of special counsel for the independent Directors; (i) charges of custodians and other agents; (j) expenses of setting in type and printing prospectuses, statements of additional information and supplements thereto for existing shareholders, reports, statements, and confirmations to shareholders and proxy materials that are not attributable to a class; (k) costs of mailing prospectuses, statements of additional information and supplements thereto to existing shareholders, as well as reports to shareholders and proxy materials that are not attributable to a class; (1) any extraordinary expenses; (m) fees, voluntary assessments and other expenses incurred in connection with membership in investment company organizations; (n) costs of mailing and tabulating proxies and costs of shareholders’ and Directors’ meetings; (o) costs of independent pricing services to value a portfolio’s securities; and (p) the costs of investment company literature and other publications provided by the Company to its Directors and officers. Distribution expenses, transfer agency expenses, expenses of preparation, printing and mailing prospectuses, statements of additional information, proxy statements and reports to shareholders, and organizational expenses and registration fees, identified as belonging to a particular class of the Company, are allocated to such class.
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The Advisory Agreement provides that the Adviser shall at all times have all rights in and to the Fund’s name and all investment models used by or on behalf of the Fund. The Adviser may use the Fund’s name or any portion thereof in connection with any other mutual fund or business activity without the consent of any shareholder, and the Company has agreed to execute and deliver any and all documents required to indicate its consent to such use.
INVESTMENT SUB-ADVISERS
Each Sub-Adviser shall, subject to the supervision and oversight of the Adviser, manage the investment and reinvestment of such portion of the assets of the Fund, as the Adviser may from time to time allocate to such Sub-Adviser for management. For their services, each Sub-Adviser is entitled to receive a fee based upon a percentage of the Fund’s average daily net assets, which will be paid by the Fund and not by the Adviser.
The Company and the Adviser have received an exemptive order from the SEC with respect to the Fund that would permit the Adviser, without shareholder approval and subject to certain conditions, to terminate existing Sub-Advisers or hire new Sub-Advisers for the Fund, to materially amend the terms of particular agreements with Sub-Advisers or to continue the employment of existing Sub-Advisers after events that would otherwise cause an automatic termination of a sub-advisory agreement. This arrangement has been approved by the Board and the Fund’s initial shareholder. Consequently, under the exemptive order, the Adviser would have the right to hire, terminate and replace Sub-Advisers when the Board and the Adviser feel that a change would benefit the Fund. The exemptive order will enable the Fund to operate with greater efficiency and without incurring the expense and delays associated with obtaining shareholder approval of sub-advisory agreements.
The Adviser does not determine what investments will be purchased or sold for the Fund with respect to the portions of the Fund managed by the Sub-Advisers. Because each Sub-Adviser manages its portion of the Fund independently from the others, the same security may be held in two or more different portions of the Fund or may be acquired for one portion at a time when a Sub-Adviser of another portion deems it appropriate to dispose of the security from that other portion. Similarly, under some market conditions, one or more of the Sub-Advisers may believe that temporary, defensive investments in short-term instruments or cash are appropriate when another Sub-Adviser or Sub-Advisers believe continued exposure to the broader securities market is appropriate. Because each Sub-Adviser directs the trading for its portion of the Fund and does not aggregate its transactions with those of the other Sub-Advisers, the Fund may incur higher brokerage costs than would be the case if a single adviser or Sub-Adviser were managing the Fund.
The current Sub-Advisers to the Fund are set forth below.
Sub-Advisers
Aperio Group, LLC (“Aperio”) Three Harbor Drive, Suite 315 Sausalito, CA 94965 |
Paul Solli, Patrick Geddes, Robert Newman, and Guy Arthur Lampard are managing members of Aperio. |
Driehaus Capital Management LLC (“Driehaus”) 25 E Erie Street Chicago, IL 60611 |
Driehaus is majority-owned by Driehaus Capital Holdings LLLP (“DCH”), an affiliated company. DCH is owned by entities related to Driehaus’ founder, Richard Driehaus. |
Mawer Investment Management Ltd. (“Mawer”) 517 10th Avenue SW, Suite 600 Calgary, Alberta T2R OA8, Canada |
Mawer is owned by entities related to certain key employees. |
Setanta
Asset Management Limited (“Setanta”) Dublin 1, Ireland |
Setanta is a wholly owned subsidiary of The Canada Life Group (U.K.) Limited, which is in turn owned by Great–West Lifeco Inc. |
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Sub-Advisory Agreements with the Adviser. Each of the Sub-Advisory Agreements provides that the Sub-Adviser will manage the investment and reinvestment of such portion of the assets of the Fund as the Adviser may from time to time allocate to the Sub-Adviser in accordance with the Fund’s objective, policies and restrictions and any investment guidelines established by the Adviser. Each Sub-Adviser will, subject to the supervision and control of the Adviser, determine in its discretion which issuers and securities will be purchased, held, sold or exchanged by the Fund, and will place orders with and give instruction to brokers and dealers to cause the execution of such transactions. The Sub-Advisers are required to furnish at their own expense all investment facilities necessary to perform its obligations under the Sub-Advisory Agreements.
Generally, each Sub-Advisory Agreement may be terminated without penalty by vote of the Board or by vote of a majority of the outstanding voting securities of the Fund, upon 60 days’ written notice, or by the Adviser immediately upon notice to the Sub-Adviser, and each such agreement terminates automatically in the event of an assignment (as defined in the 1940 Act). Each Sub-Advisory Agreement also may be terminated by a Sub-Adviser upon 30 days’ written notice and automatically terminates upon termination of the Advisory Agreement.
THE PORTFOLIO MANAGERS
This section includes information about the Fund’s portfolio managers, including information about other accounts they manage, the dollar range of Fund shares they own and how they are compensated.
Altair
Other Accounts. In addition to the Fund, the portfolio managers are responsible for the day-to-day management of certain other accounts, as listed below. The information below is provided as of December 31, 2017.
Name of Portfolio Manager or Team Member | Type of Accounts | Total # of Accounts Managed | Total Assets | # of Accounts Managed that Advisory Fee is Based on Performance | Total Assets that Advisory Fee is Based on Performance |
1. Steven B. Weinstein | Other Registered Investment Companies: | 1 | $262 million | 0 | $0 |
Other Pooled Investment Vehicles: | 0 | $0 | 0 | $0 | |
Other Accounts: | 315 | $4.5 billion | 0 | $0 | |
2. Jason M. Laurie | Other Registered Investment Companies: | 1 | $262 million | 0 | $0 |
Other Pooled Investment Vehicles: | 0 | $0 | 0 | $0 | |
Other Accounts: | 315 | $4.5 billion | 0 | $0 | |
3. Bryan R. Malis | Other Registered Investment Companies: | 1 | $262 million | 0 | $0 |
Other Pooled Investment Vehicles: | 0 | $0 | 0 | $0 | |
Other Accounts: | 315 | $4.5 billion | 0 | $0 | |
4. Donald J. Sorota | Other Registered Investment Companies: | 1 | $262 million | 0 | $0 |
Other Pooled Investment Vehicles: | 0 | $0 | 0 | $0 | |
Other Accounts: | 315 | $4.5 billion | 0 | $0 | |
5. David J. Lin | Other Registered Investment Companies: | 1 | $262 million | 0 | $0 |
Other Pooled Investment Vehicles: | 0 | $0 | 0 | $0 | |
Other Accounts: | 315 | $4.5 billion | 0 | $0 |
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Compensation. As of the date of this SAI, the Adviser compensates the Fund’s portfolio managers for their management of the Fund. Each of the portfolio manager’s compensation consists of a cash base salary and a bonus paid in cash that is based on overall profitability of the Adviser, and therefore in part based on the value of the Fund’s net assets and other client accounts they are managing.
Conflicts of Interests. The portfolio managers are responsible for managing other accounts. The side-by-side management of both the Fund and other accounts may raise potential conflicts of interest due to certain trading practices used by Mawer (for example, allocation of aggregated trades among the Fund and other accounts). Mawer has no accounts with performance based management fees. Mawer has developed policies and procedures reasonably designed to mitigate these conflicts.
Aperio
Other Accounts. In addition to the Fund, the portfolio managers are responsible for the day-to-day management of certain other accounts, as listed below. The information below is provided as of August 31, 2017.
Name of Portfolio Manager or Team Member | Type of Accounts | Total # of Accounts Managed | Total Assets | # of Accounts Managed that Advisory Fee is Based on Performance | Total Assets that Advisory Fee is Based on Performance |
1. Ran Leshem | Other Registered Investment Companies: | 5 | $964 million | 0 | $0 |
Other Pooled Investment Vehicles: | 1 | $140 million | 0 | $0 | |
Other Accounts: | 4,039 | $20.3 billion | 0 | $0 | |
2. Robert Tymoczko | Other Registered Investment Companies: | 5 | $964 million | 0 | $0 |
Other Pooled Investment Vehicles: | 1 | $140 million | 0 | $0 | |
Other Accounts: | 4,039 | $20.3 billion | 0 | $0 | |
3. Jonathan Liu | Other Registered Investment Companies: | 5 | $964 million | 0 | $0 |
Other Pooled Investment Vehicles: | 1 | $140 million | 0 | $0 | |
Other Accounts: | 4,039 | $20.3 billion | 0 | $0 |
Compensation. Aperio compensates the Fund’s portfolio managers for their management of the Fund. Aperio provides a competitive salary plus bonus system of compensation for all employees. Bonus awards are highly dependent on firm profitability and individual contribution. In addition, Aperio provides additional long term compensation for key staff members. As an index investment manager, Aperio does not link compensation to portfolio performance.
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Conflicts of Interests. Aperio recognizes that conflicts of interest are an inherent part of the investment advisory business and has implemented policies and procedures in order to manage such conflicts and ensure that all clients of the firm are treated in a fair and equitable fashion. Among other things, Aperio has adopted a Code of Ethics which governs employees’ personal investing activity and is designed to help employees comply with legal restrictions on personal investments while honoring their duties to Aperio’s clients.
Driehaus
Other Accounts. In addition to the Fund, the portfolio managers are responsible for the day-to-day management of certain other accounts, as listed below. The information below is provided as of August 31, 2017.
Name of Portfolio Manager or Team Member | Type of Accounts | Total # of Accounts Managed | Total Assets | # of Accounts Managed that Advisory Fee is Based on Performance | Total Assets that Advisory Fee is Based on Performance |
1. Howard Schwab | Other Registered Investment Companies: | 4 | $2.0 billion | 0 | $0 |
Other Pooled Investment Vehicles: | 5 | $511 million | 1 | $27 million | |
Other Accounts: | 3 | $1.0 billion | 0 | $0 | |
2. Chad Cleaver | Other Registered Investment Companies: | 5 | $2.0 billion | 0 | $0 |
Other Pooled Investment Vehicles: | 6 | $523 million | 2 | $39 million | |
Other Accounts: | 3 | $1.0 billion | 0 | $0 | |
3. Richard Theis | Other Registered Investment Companies: | 5 | $2.0 billion | 0 | $0 |
Other Pooled Investment Vehicles: | 6 | $523 million | 2 | $39 million | |
Other Accounts: | 3 | $1.0 billion | 0 | $0 |
Compensation. Driehaus compensates the Fund’s portfolio managers for their management of the Fund. The portfolio managers are paid a fixed salary plus a bonus. They each receive bonuses which are based on a percentage of management fees paid by the registered investment companies and other accounts managed, as applicable. In addition, if performance exceeds certain percentile benchmarks when compared to its peer group (using Lipper rankings) and/or certain risk adjusted return formulas, they each earn a specified additional percentage of the management fees paid by the registered investment companies and other accounts managed. They also each receive a bonus based on a percentage of any performance-based fees paid by the registered investment companies and other accounts managed, if applicable.
If Driehaus declares a profit sharing plan contribution, the portfolio managers also would receive such contribution. The portfolio managers are also eligible to participate in a deferred compensation plan.
Conflicts of Interests. The portfolio managers may manage the assets of more than one registered investment company (for this section only, each a “Fund”), other pooled investment vehicles and/or other accounts (collectively, the “Accounts”) for Driehaus. Both clients and affiliated persons of Driehaus, including the portfolio managers, may own interests in these Accounts. The same or related securities may be appropriate and desirable investments for both a Fund and the Accounts (including another fund) and they may compete in the marketplace for the same investment opportunities, which may be limited. In addition, transactions by the Accounts in securities held by a Fund or that a Fund is seeking to buy or sell (or transactions in related securities) may have an adverse impact on the prices that a Fund pays for those securities or can realize upon sale, or on the ability of Driehaus to buy or sell the desired amount of such securities for a Fund at favorable prices. This is particularly true when the Accounts’ transactions occur at a point in time close to when trades in the same or related securities are effected for a Fund. This presents a conflict between the interests of the Fund and the interests of the Accounts as well as the affiliates of Driehaus who invest in the Accounts.
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Conflicts also may arise between the interests of a Fund and the interests of Driehaus and its affiliates, including the portfolio managers. These conflicts can occur as one or more of the Accounts pay advisory fees to Driehaus, including performance-based compensation, at a higher rate than the rate of fees paid by the Fund. In addition, Driehaus’ affiliates, including the Fund’s portfolio managers, may personally own interests in the Accounts or have other financial incentives (including that a portfolio manager’s compensation is based, in part, on assets under management). For example, portfolio managers could favor an Account over a Fund when dividing their time and attention between them or when presented with limited investment opportunities that would be desirable and suitable for both a Fund and the Accounts or when making trading decisions.
Driehaus, through trade allocation and other policies and procedures, seeks to manage these conflicts of interest to reduce any adverse effects on either a Fund or the Accounts. These policies and procedures include requirements that transactions by a Fund and the Accounts in the same securities that occur on the same day are average priced when feasible and allocated on a fair and equitable basis. In addition, Driehaus conducts periodic reviews of transactions in and holdings of the same or related securities by a Fund and the Accounts for compliance with the Driehaus’ policies and procedures.
Mawer
Other Accounts. In addition to the Fund, the portfolio managers are responsible for the day-to-day management of certain other accounts, as listed below. The information below is provided as of August 31, 2017.
Name of Portfolio Manager or Team Member | Type of Accounts | Total # of Accounts Managed | Total Assets | # of Accounts
Managed that Advisory Fee is Based on Performance |
Total Assets that Advisory Fee is Based on Performance |
1. David Ragan | Other Registered Investment Companies: | 0 | $0 | 0 | $0 |
Other Pooled Investment Vehicles: | 1 | $528 million | 0 | $0 | |
Other Accounts: | 7 | $8.5 billion | 0 | $0 | |
2. Peter Lampert | Other Registered Investment Companies: | 0 | $0 | 0 | $0 |
Other Pooled Investment Vehicles: | 0 | $0 | 0 | $0 | |
Other Accounts: | 1 | $32 million | 0 | $0 | |
3. Travis Goldfeldt | Other Registered Investment Companies: | 0 | $0 | 0 | $0 |
Other Pooled Investment Vehicles: | 0 | $0 | 0 | $0 | |
Other Accounts: | 194 | $2.4 billion | 0 | $0 |
Compensation. Mawer compensates the Fund’s portfolio managers for their management of the Fund. Mawer provides a competitive salary with a profit-sharing bonus for all employees. Bonuses are assessed annually based on individual performance and contribution to the strategy and success of the overall firm. Portfolio managers may also be granted the opportunity to purchase an equity interest in Mawer.
Conflicts of Interests. The portfolio managers are responsible for managing other accounts. The side-by-side management of both the Fund and other accounts may raise potential conflicts of interest due to certain trading practices used by Mawer (for example, allocation of aggregated trades among the Fund and other accounts). Mawer has no accounts with performance based management fees. Mawer has developed policies and procedures reasonably designed to mitigate these conflicts.
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Setanta
Other Accounts. In addition to the Fund, the portfolio managers are responsible for the day-to-day management of certain other accounts, as listed below. The information below is provided as of August 31, 2017.
Name of Portfolio Manager or Team Member | Type of Accounts | Total # of Accounts Managed | Total Assets | # of Accounts Managed that Advisory Fee is Based on Performance | Total Assets that Advisory Fee is Based on Performance |
1. Rowan Smith | Other Registered Investment Companies: | 0 | $0 | 0 | $0 |
Other Pooled Investment Vehicles: | 40 | $1.1 billion | 0 | $0 | |
Other Accounts: | 0 | $0 | 0 | $0 | |
2. Fergal Sarsfield | Other Registered Investment Companies: | 0 | $0 | 0 | $0 |
Other Pooled Investment Vehicles: | 43 | $1.6 billion | 0 | $0 | |
Other Accounts: | 0 | $0 | 0 | $0 | |
3. Conor Walshe | Other Registered Investment Companies: | 0 | $0 | 0 | $0 |
Other Pooled Investment Vehicles: | 8 | $601 million | 0 | $0 | |
Other Accounts: | 0 | $0 | 0 | $0 |
Compensation. Setanta are keen to retain top investment talent. Setanta are also keen to align the investment team's remuneration with that of its clients. We seek to focus the remuneration on the investment performance of the client's assets, to build in long term rewards to match long term performance objectives and thinking, and it has put in place a long term incentive plan to encourage skilled investment staff to stay. The team approach at Setanta reduces the risk of loss of knowledge and skill when a Portfolio Manager leaves the firm.
The firm’s compensation structure aligns the team to work together to find the best ideas for all strategies so that the clients benefit from a collective research approach. The compensation structure is as follows:
● | Portfolio Managers are paid a competitive base salary and are incentivized by a bonus, dependent on the performance of: |
1. | their sector vs. the MSCI sector benchmark, |
2. | their specific mandate strategy vs. index, and |
3. | overall global equity strategy vs. the MSCI World index. |
● | Incentivized on a 1 year, 3 year and 5 year rolling basis, weighted 20% / 40% / 40%, respectively. |
● | A Long Term Incentive Plan (LTIP) was put in place in 2008 to enhance retention and ensure market competitiveness: |
1. | linked to performance and business growth objectives, |
2. | 3 year scheme, awards made annually and payable in 3 years, and |
3. | subject to scheme conditions and bonus pool available. |
● | Remuneration policy and rates are reviewed frequently with external consultants. |
● | Clients get a team incentivized to generate strong long-term performance. |
Conflicts of Interests. Setanta typically assigns different client accounts within similar investment strategies to the Portfolio Managers to mitigate the potentially conflicting strategies of accounts. However, Portfolio Managers may have responsibility for more than one investment strategy, which may experience potential conflicts. The services of Setanta are not exclusive and may provide similar services to other investment funds and other clients. These agreements do not impose any specific obligations or requirements concerning the allocation of time by Setanta to the Fund. The Portfolio Managers will devote such time to the affairs of the Fund as they, in their respective discretion, determine to be necessary for the conduct of the business of the Fund.
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In addition, Setanta, its stockholders, officers, directors, affiliates and employees, and other clients of Setanta, may have, acquire, increase, decrease or dispose of positions in securities at or about the same time that Setanta is purchasing or selling securities for the Fund, which actions for the Fund are or may be deemed to be inconsistent with the action by such persons. Setanta will not, however, favor any other client over the Fund or the Fund over any client in implementing objectives or in effecting particular transactions. Setanta has developed policies and procedures reasonably designed to mitigate conflicts of interests.
Fund Shares Owned by Portfolio Managers.
As of the date of this SAI, no shares of the Fund were outstanding.
ADMINISTRATION AND ACCOUNTING AGREEMENT
U.S. Bancorp Fund Services, LLC (“USBFS”), located at 615 East Michigan Street, Milwaukee, Wisconsin, 53202, serves as fund administrator to the Fund pursuant to a fund administration servicing agreement and serves as fund accountant pursuant to a fund accounting servicing agreement (the “Administration Agreements”). Under the fund accounting servicing agreement, USBFS has agreed to furnish to the Fund statistical and research data, clerical, accounting and bookkeeping services, and certain other services required by the Fund. Under the fund administration servicing agreement, USBFS has agreed to provide fund administration services to the Company. These services include the preparation and coordination of the Company’s annual post-effective amendment filing and supplements to the Fund’s registration statement, the preparation and assembly of board meeting materials, and certain other services necessary to the Company’s fund administration. In addition, USBFS has agreed to prepare and file various reports with the appropriate regulatory agencies and prepare materials required by the SEC or any state securities commission having jurisdiction over the Fund.
The Administration Agreements provide that USBFS shall be obligated to exercise reasonable care in the performance of its duties and that USFBS shall not be liable for any error of judgment or mistake of law or any loss suffered by the Company in connection with its duties under the Administration Agreements, except a loss resulting from USBSF’s refusal or failure to comply with the terms of the applicable Administration Agreement or from its bad faith, negligence or willful misconduct in the performance of its duties thereunder.
USBFS receives a fee under the Administration Agreements based on the average daily net assets of the Company.
No administration fee information is provided for the Fund because the Fund had not commenced operations prior to the date of this SAI.
CUSTODIAN AGREEMENT
U.S. Bank, N.A., (the “Custodian”), 1555 North Rivercenter Drive, Suite 302, Milwaukee, Wisconsin 53212, is custodian of the Fund’s assets pursuant to a custodian agreement (the “Custodian Agreement”). Under the Custodian Agreement, the Custodian: (a) maintains a separate account or accounts in the name of the Fund; (b) holds and transfers portfolio investments on account of the Fund; (c) accepts receipts and makes disbursements of money on behalf of the Fund; (d) collects and receives all income and other payments and distributions on account of the Fund’s portfolio investments; and (e) makes periodic reports to the Board concerning the Fund’s operations. The Custodian is authorized to select one or more banks or trust companies to serve as sub-custodian on behalf of the Fund, provided that the Custodian remains responsible for the performance of all of its duties under the Custodian Agreement and holds the Fund harmless from the acts and omissions of any affiliate, sub-custodian or domestic sub-custodian. For its services to the Fund under the Custodian Agreement, the Custodian receives a fee based on the Fund’s average gross assets calculated daily and payable monthly. Transaction charges and out-of-pocket expenses are also charged to the Fund.
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TRANSFER AGENCY AGREEMENT
USBFS also serves as the transfer and dividend disbursing agent for the Fund pursuant to a transfer agency and servicing agreement (the “Transfer Agency Agreement”), under which USBFS: (a) issues and redeems shares of the Fund; (b) addresses and mails all communications by the Fund to record owners of the shares, including reports to shareholders, dividend and distribution notices and proxy materials for its meetings of shareholders; (c) maintains shareholder accounts and, if requested, sub-accounts; and (d) makes periodic reports to the Board concerning the operations of the Fund. USBFS may, subject to the Board’s approval, assign its duties as transfer and dividend disbursing agent to any affiliate. For its services to the Fund under the Transfer Agency Agreement, USBFS receives an annual fee based on the number of accounts in the Fund and the Fund’s average gross assets calculated daily and payable monthly. Transaction charges and out-of-pocket expenses are also charged to the Fund.
USBFS also provides services relating to the implementation of the Company’s Anti-Money Laundering Program. In addition, USBFS provides services relating to the implementation of the Fund’s Customer Identification Program, including verification of required customer information and the maintenance of records with respect to such verification.
DISTRIBUTION AGREEMENT
Quasar Distributors, LLC (the “Distributor”), whose principal business address is 777 East Wisconsin Avenue, 6th Floor, Milwaukee, Wisconsin 53202, serves as the underwriter to the Fund pursuant to the terms of a distribution agreement (the “Distribution Agreement”). The Distributor is a registered broker-dealer and is a member of the Financial Industry Regulatory Authority (“FINRA”). The Distributor is not affiliated with the Company, the Adviser or the Sub Advisers. The Distributor, U.S. Bank, N.A. and USBFS are affiliates.
Under the Distribution Agreement with the Fund, the Distributor acts as the agent of the Company in connection with the continuous offering of shares of the Fund. The Distributor continually distributes shares of the Fund on a best efforts basis. The Distributor has no obligation to sell any specific quantity of Fund shares. The Distributor and its officers have no role in determining the investment policies or which securities are to be purchased or sold by the Company.
The Distributor may enter into agreements with selected broker-dealers, banks or other financial intermediaries for distribution of shares of the Fund. With respect to certain financial intermediaries and related fund “supermarket” platform arrangements, the Fund and/or the Adviser, rather than the Distributor, typically enter into such agreements. These financial intermediaries may charge a fee for their services and may receive shareholder service or other fees from parties other than the Distributor. These financial intermediaries may otherwise act as processing agents and are responsible for promptly transmitting purchase, redemption and other requests to the Fund.
Investors who purchase shares through financial intermediaries will be subject to the procedures of those intermediaries through which they purchase shares, which may include charges, investment minimums, cutoff times and other restrictions in addition to, or different from, those listed herein. Information concerning any charges or services will be provided to customers by the financial intermediary through which they purchase shares. Investors purchasing shares of the Fund through financial intermediaries should acquaint themselves with their financial intermediary’s procedures and should read the Prospectus in conjunction with any materials and information provided by their financial intermediary. The financial intermediary, and not its customers, will be the shareholder of record, although customers may have the right to vote shares depending upon their arrangement with the financial intermediary. The Distributor does not receive compensation from the Fund for its distribution services except the distribution/service fees with respect to the shares of those classes for which a Rule 12b-1 distribution plan is effective. The Adviser pays the Distributor a fee for certain distribution-related services.
The Distribution Agreement has an initial term of up to two years and will continue in effect only if such continuance is specifically approved at least annually by the Board or by vote of a majority of the Fund’s outstanding voting securities in accordance with the 1940 Act. The Distribution Agreement is terminable without penalty by the Company on behalf of the Fund on no less than 60 days’ written notice when authorized either by a vote of a majority of the outstanding voting securities of the Fund or by vote of a majority of the members of the Board who are not “interested persons” (as defined in the 1940 Act) of the Company and have no direct or indirect financial interest in the operation of the Distribution Agreement, or by the Distributor, and will automatically terminate in the event of its “assignment” (as defined in the 1940 Act). The Distribution Agreement provides that the Distributor shall not be liable for any loss suffered by the Company in connection with the performance of the Distributor’s obligations and duties under the Distribution Agreement, except a loss resulting from the Distributor’s willful misfeasance, bad faith or negligence in the performance of such duties and obligations, or by reason of its reckless disregard thereof.
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FUND TRANSACTIONS
Subject to policies established by the Board and applicable rules, the Adviser and Sub-Advisers are responsible for the execution of portfolio transactions and the allocation of brokerage transactions for the Fund. In executing portfolio transactions, the Adviser and Sub-Advisers seek to obtain the best price and most favorable execution for the Fund, taking into account such factors as the price (including the applicable brokerage commission or dealer spread), size of the order, difficulty of execution and operational facilities of the firm involved. While the Adviser and Sub-Advisers generally seek reasonably competitive commission rates, payment of the lowest commission or spread is not necessarily consistent with obtaining the best price and execution in particular transactions.
Brokerage Transactions
Generally, equity securities, both listed and over-the-counter, are bought and sold through brokerage transactions for which commissions are payable. Purchases from underwriters will include the underwriting commission or concession, and purchases from dealers serving as market makers will include a dealer’s mark-up or reflect a dealer’s mark-down. Money market securities and other debt securities are usually bought and sold directly from the issuer or an underwriter or market maker for the securities. Generally, the Fund will not pay brokerage commissions for such purchases. When a debt security is bought from an underwriter, the purchase price will usually include an underwriting commission or concession. The purchase price for securities bought from dealers serving as market makers will similarly include the dealer’s mark up or reflect a dealer’s mark down. When the Fund executes transactions in the over-the-counter market, it will generally deal with primary market makers unless prices that are more favorable are otherwise obtainable.
In addition, the Adviser and Sub-Advisers may place a combined order for two or more accounts they manage, including the Fund, engaged in the purchase or sale of the same security if, in its judgment, joint execution is in the best interest of each participant and will result in best price and execution. Transactions involving commingled orders are allocated in a manner deemed equitable to each account or fund. Although it is recognized that, in some cases, the joint execution of orders could adversely affect the price or volume of the security that a particular account or the Fund may obtain, it is the opinion of the Adviser, the Sub-Advisers and the Board that the advantages of combined orders outweigh the possible disadvantages of separate transactions. Nonetheless, the Adviser and Sub-Advisers believe that the ability of the Fund to participate in higher volume transactions will generally be beneficial to the Fund.
The Fund is required to identify any securities of the Company’s regular broker-dealers (as defined in Rule 10b-1 under the 1940 Act) or their parents held by the Fund as of the end of the most recent fiscal year. No ownership information is provided since the Fund had not commenced operations prior to the date of this SAI.
Brokerage Selection
The Company does not expect to use one particular broker or dealer, and when one or more brokers is believed capable of providing the best combination of price and execution, the Fund’s Adviser and Sub-Advisers may select a broker based upon brokerage or research services provided to the Adviser or applicable Sub-Adviser. The Adviser and Sub-Advisers may pay a higher commission than otherwise obtainable from other brokers in return for such services only if a good faith determination is made that the commission is reasonable in relation to the services provided.
Section 28(e) of the 1934 Act permits an investment adviser or sub-adviser, under certain circumstances, to cause a fund to pay a broker or dealer a commission for effecting a transaction in excess of the amount of commission another broker or dealer would have charged for effecting the transaction in recognition of the value of brokerage and research services provided by the broker or dealer. In addition to agency transactions, certain Sub-Advisers may receive brokerage and research services in connection with certain riskless principal transactions, in accordance with applicable SEC guidance. Brokerage and research services include: (1) furnishing advice as to the value of securities, the advisability of investing in, purchasing or selling securities, and the availability of securities or purchasers or sellers of securities; (2) furnishing analyses and reports concerning issuers, industries, securities, economic factors and trends, portfolio strategy, and the performance of accounts; and (3) effecting securities transactions and performing functions incidental thereto (such as clearance, settlement, and custody). In the case of research services, the applicable Sub-Advisers believe that access to independent investment research is beneficial to their investment decision-making processes and, therefore, to the Fund.
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To the extent research services may be a factor in selecting brokers, such services may be in written form or through direct contact with individuals and may include information as to particular companies and securities as well as market, economic, or institutional areas and information which assists in the valuation and pricing of investments. Examples of research-oriented services for which the applicable Sub-Advisers might utilize Fund commissions include research reports and other information on the economy, industries, sectors, groups of securities, individual companies, statistical information, political developments, technical market action, pricing and appraisal services, credit analysis, risk measurement analysis, performance and other analysis. The Sub-Advisers may use research services furnished by brokers in servicing all client accounts and not all services may necessarily be used in connection with the account that paid commissions to the broker providing such services. Information so received by the Sub-Advisers will be in addition to and not in lieu of the services required to be performed by the Sub-Adviser under its Sub-Advisory Agreement. Any advisory or other fees paid to the Sub-Advisers are not reduced as a result of the receipt of research services.
In some cases a Sub-Adviser may receive a service from a broker that has both a “research” and a “non-research” use. When this occurs, the applicable Sub-Adviser makes a good faith allocation, under all the circumstances, between the research and non-research uses of the service. The percentage of the service that is used for research purposes may be paid for with client commissions, while the applicable Sub-Adviser will use its own funds to pay for the percentage of the service that is used for non-research purposes. In making this good faith allocation, the Sub-Adviser faces a potential conflict of interest, but each applicable Sub-Adviser believes that its allocation procedures are reasonably designed to ensure that it appropriately allocates the anticipated use of such services to their research and non-research uses.
From time to time, the Fund may purchase new issues of securities for clients in a fixed price offering. In these situations, the seller may be a member of the selling group that will, in addition to selling securities, provide the Adviser and Sub-Advisers with research services. FINRA has adopted rules expressly permitting these types of arrangements under certain circumstances. Generally, the seller will provide research “credits” in these situations at a rate that is higher than that which is available for typical secondary market transactions. These arrangements may not fall within the safe harbor of Section 28(e).
PURCHASE AND REDEMPTION INFORMATION
You may purchase shares through an account maintained by your brokerage firm and you may also purchase shares directly by mail or wire. The Company reserves the right, if conditions exist which make cash payments undesirable, to honor any request for redemption or repurchase of the Fund’s shares by making payment in whole or in part in securities chosen by the Company and valued in the same way as they would be valued for purposes of computing the Fund’s NAV. If payment is made in securities, a shareholder may incur transaction costs in converting these securities into cash. A shareholder will also bear any market risk or tax consequences as a result of a payment in securities. The Company has elected, however, to be governed by Rule 18f-1 under the 1940 Act so that the Fund is obligated to redeem its shares solely in cash up to the lesser of $250,000 or 1% of its NAV during any 90-day period for any one shareholder of the Fund. A shareholder will bear the risk of a decline in market value and any tax consequences associated with a redemption in securities.
Under the 1940 Act, the Company may suspend the right to redemption or postpone the date of payment upon redemption for any period during which the New York Stock Exchange, Inc. (the “NYSE”) is closed (other than customary weekend and holiday closings), or during which the SEC restricts trading on the NYSE or determines an emergency exists as a result of which disposal or valuation of portfolio securities is not reasonably practicable, or for such other periods as the SEC may permit. (The Company may also suspend or postpone the recordation of the transfer of its shares upon the occurrence of any of the foregoing conditions).
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Shares of the Company are subject to redemption by the Company, at the redemption price of such shares as in effect from time to time, including, without limitation: (1) to reimburse the Fund for any loss sustained by reason of the failure of a shareholder to make full payment for shares purchased by the shareholder or to collect any charge relating to a transaction effected for the benefit of a shareholder as provided in the Prospectus from time to time; (2) if such redemption is, in the opinion of the Board, desirable in order to prevent the Company or the Fund from being deemed a “personal holding company” within the meaning of the Code; (3) or if the net income with respect to any particular class of common stock should be negative or it should otherwise be appropriate to carry out the Company’s responsibilities under the 1940 Act.
The Fund has the right to redeem your shares at current NAV at any time and without prior notice if, and to the extent that, such redemption is necessary to reimburse the Fund for any loss sustained by reason of your failure to make full payment for shares of the Fund you previously purchased or subscribed for.
Other Purchase Information
If shares of the Fund are held in a “street name” account with an authorized dealer, all recordkeeping, transaction processing and payments of distributions relating to the beneficial owner’s account will be performed by the authorized dealer, and not by the Fund and its Transfer Agent. Since the Fund will have no record of the beneficial owner’s transactions, a beneficial owner should contact the authorized dealer to purchase, redeem or exchange shares, to make changes in or give instructions concerning the account or to obtain information about the account. The transfer of shares in a “street name” account to an account with another dealer or to an account directly with the Fund involves special procedures and will require the beneficial owner to obtain historical purchase information about the shares in the account from the authorized dealer.
TELEPHONE TRANSACTION PROCEDURES
The Company’s telephone transaction procedures include the following measures: (1) requiring the appropriate telephone transaction privilege forms; (2) requiring the caller to provide the names of the account owners, the account social security number and name of the Fund, all of which must match the Company’s records; (3) requiring the Company’s service representative to complete a telephone transaction form, listing all of the above caller identification information; (4) permitting exchanges (if applicable) only if the two account registrations are identical; (5) requiring that redemption proceeds be sent only by check to the account owners of record at the address of record, or by electronic funds transfer through the ACH network or wire only to the owners of record at the bank account of record; (6) sending a written confirmation for each telephone transaction to the owners of record at the address of record within five (5) business days of the call; and (7) maintaining tapes of telephone transactions for six months, if the Company elects to record shareholder telephone transactions. For accounts held of record by broker-dealers, financial institutions, securities dealers, financial planners and other industry professionals, additional documentation or information regarding the scope of a caller’s authority is required. Finally, for telephone transactions in accounts held jointly, additional information regarding other account holders is required.
VALUATION OF SHARES
In accordance with procedures adopted by the Board, the NAV per share of the Fund is calculated by determining the value of the net assets attributed to the Fund and dividing by the number of outstanding shares of the Fund. All securities are valued on each Business Day as of the close of regular trading on the NYSE (normally, but not always, 4:00 p.m. Eastern Time) or such other time as the New York Stock Exchange or National Association of Securities Dealers Automated Quotations System (“NASDAQ”) market may officially close. The term “Business Day” means any day the New York Stock Exchange is open for trading, which is Monday through Friday except for holidays. The New York Stock Exchange is generally closed on the following holidays: New Year’s Day (observed), Martin Luther King, Jr. Day, Washington’s Birthday (observed), Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
The time at which transactions and shares are priced and the time by which orders must be received may be changed in case of an emergency or if regular trading on the NYSE is stopped at a time other than 4:00 p.m. Eastern Time. The Company reserves the right to reprocess purchase, redemption and exchange transactions that were initially processed at a NAV other than the Fund’s official closing NAV (as the same may be subsequently adjusted), and to recover amounts from (or distribute amounts to) shareholders based on the official closing NAV. The Company reserves the right to advance the time by which purchase and redemption orders must be received for same business day credit as otherwise permitted by the SEC. In addition, the Fund may compute its NAV as of any time permitted pursuant to any exemption, order or statement of the SEC or its staff.
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The securities of the Fund are valued under the direction of the Fund’s administrator and under the general supervision of the Board. Prices are generally determined using readily available market prices. Subject to the approval of the Board, the Fund may employ outside organizations, which may use a matrix or formula method that takes into consideration market indices, matrices, yield curves and other specific adjustments in determining the approximate market value of portfolio investments. This may result in the investments being valued at a price that differs from the price that would have been determined had the matrix or formula method not been used. All cash, receivables, and current payables are carried on the Fund’s books at their face value. Other assets, if any, are valued at fair value as determined in good faith by the Fund’s Valuation Committee under the direction of the Board.
The procedures used by any pricing service and its valuation results are reviewed by the officers of the Company under the general supervision of the Board.
The Fund may hold portfolio securities that are listed on foreign exchanges. These securities may trade on weekends or other days when the Fund does not calculate NAV. As a result, the value of these investments may change on days when you cannot purchase or sell Fund shares.
TAXES
General
The following summarizes certain additional tax considerations generally affecting the Fund and its shareholders that are not described in the Prospectus. No attempt is made to present a detailed explanation of the tax treatment of the Fund or its shareholders, and the discussions here and in the Prospectus are not intended as a substitute for careful tax planning. Potential investors should consult their tax advisers with specific reference to their own tax situations.
The discussions of the federal tax consequences in the Prospectus and this SAI are based on the Internal Revenue Code (the “Code”) and the regulations issued under it, and court decisions and administrative interpretations, as in effect on the date of this SAI. Future legislative or administrative changes or court decisions may significantly alter the statements included herein, and such changes or decisions may be retroactive.
The Fund intends to qualify as a regulated investment company under Subchapter M of Subtitle A, Chapter 1, of the Code. As such, the Fund generally will be exempt from federal income tax on its net investment income and realized capital gains that it distributes to shareholders. To qualify for treatment as a regulated investment company, it must meet three important tests each year.
First, the Fund must derive with respect to each taxable year at least 90% of its gross income from dividends, interest, certain payments with respect to securities loans, gains from the sale or other disposition of stock or securities or foreign currencies, other income derived with respect to the Fund’s business of investing in stock, securities or currencies, or net income derived from interests in qualified publicly traded partnerships.
Second, generally, at the close of each quarter of the Fund’s taxable year, at least 50% of the value of the Fund’s assets must consist of cash and cash items, U.S. government securities, securities of other regulated investment companies, and securities of other issuers as to which the Fund has not invested more than 5% of the value of its total assets in securities of the issuer and as to which the Fund does not hold more than 10% of the outstanding voting securities of the issuer, and no more than 25% of the value of the Fund’s total assets may be invested in the securities of (1) any one issuer (other than U.S. government securities and securities of other regulated investment companies), (2) two or more issuers that the Fund controls and which are engaged in the same or similar trades or businesses or (3) one or more qualified publicly traded partnerships.
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Third, the Fund must distribute an amount equal to at least the sum of 90% of its investment company taxable income (net investment income and the excess of net short-term capital gain over net long-term capital loss) before taking into account any deduction for dividends paid, and 90% of its tax-exempt income, if any, for the year.
The Fund intends to comply with these requirements. If the Fund were to fail to make sufficient distributions, it could be liable for corporate income tax and for excise tax in respect of the shortfall or, if the shortfall is large enough, the Fund could be disqualified as a regulated investment company. If for any taxable year the Fund were not to qualify as a regulated investment company, all its taxable income would be subject to tax at regular corporate rates without any deduction for distributions to shareholders. In that event, shareholders would recognize dividend income on distributions to the extent of the Fund’s current and accumulated earnings and profits, and corporate shareholders could be eligible for the dividends-received deduction.
The Code imposes a nondeductible 4% excise tax on regulated investment companies that fail to distribute each year an amount equal to specified percentages of their ordinary taxable income and capital gain net income (excess of capital gains over capital losses). The Fund intends to make sufficient distributions or deemed distributions each year to avoid liability for this excise tax.
State and Local Taxes
Although the Fund expects to qualify as a “regulated investment company” and to be relieved of all or substantially all federal income taxes, depending upon the extent of its activities in states and localities in which its offices are maintained, in which its agents or independent contractors are located or in which it is otherwise deemed to be conducting business, the Fund may be subject to the tax laws of such states or localities.
Taxation of Certain Investments
The tax principles applicable to transactions in financial instruments, such as futures contracts and options, that may be engaged in by the Fund, and investments in passive foreign investment companies (“PFICs”), are complex and, in some cases, uncertain. Such transactions and investments may cause the Fund to recognize taxable income prior to the receipt of cash, thereby requiring the Fund to liquidate other positions, or to borrow money, so as to make sufficient distributions to shareholders to avoid corporate-level tax. Moreover, some or all of the taxable income recognized may be ordinary income or short-term capital gain, so that the distributions may be taxable to shareholders as ordinary income.
In addition, in the case of any shares of a PFIC in which the Fund invests, the Fund may be liable for corporate-level tax on any ultimate gain or distributions on the shares if the Fund fails to make an election to recognize income annually during the period of its ownership of the shares.
ADDITIONAL INFORMATION CONCERNING COMPANY SHARES
The Company has authorized capital of 100 billion shares of common stock at a par value of $0.001 per share. Currently, 87.023 billion shares have been classified into 179 classes, however, the Company only has 44 active share classes that have begun investment operations. Under the Company’s charter, the Board has the power to classify and reclassify any unissued shares of common stock from time to time.
Each share that represents an interest in the Fund has an equal proportionate interest in the assets belonging to such Fund with each other share that represents an interest in such Fund, even where a share has a different class designation than another share representing an interest in that Fund. Shares of the Company do not have preemptive or conversion rights. When issued for payment as described in the Prospectus, shares of the Company will be fully paid and non-assessable.
The Company does not currently intend to hold annual meetings of shareholders except as required by the 1940 Act or other applicable law. The Company’s amended By-Laws provide that shareholders owning at least ten percent of the outstanding shares of all classes of common stock of the Company have the right to call for a meeting of shareholders to consider the removal of one or more directors. To the extent required by law, the Company will assist in shareholder communication in such matters.
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Holders of shares of each class of the Company will vote in the aggregate and not by class on all matters, except where otherwise required by law. Further, shareholders of the Company will vote in the aggregate and not by portfolio except as otherwise required by law or when the Board determines that the matter to be voted upon affects only the interests of the shareholders of a particular portfolio or class of shares. Rule 18f-2 under the 1940 Act provides that any matter required to be submitted by the provisions of such Act or applicable state law, or otherwise, to the holders of the outstanding voting securities of an investment company such as the Company shall not be deemed to have been effectively acted upon unless approved by the holders of a majority of the outstanding voting securities of each portfolio affected by the matter. Rule 18f-2 further provides that a portfolio shall be deemed to be affected by a matter unless it is clear that the interests of each portfolio in the matter are identical or that the matter does not affect any interest of the portfolio. Under Rule 18f-2 the approval of an investment advisory agreement or distribution agreement or any change in a fundamental investment objective or fundamental investment policy would be effectively acted upon with respect to a portfolio only if approved by the holders of a majority of the outstanding voting securities of such portfolio. However, the Rule also provides that the ratification of the selection of independent public accountants and the election of directors are not subject to the separate voting requirements and may be effectively acted upon by shareholders of an investment company voting without regard to a portfolio. Shareholders of the Company are entitled to one vote for each full share held (irrespective of class or portfolio) and fractional votes for fractional shares held. Voting rights are not cumulative and, accordingly, the holders of more than 50% of the aggregate shares of common stock of the Company may elect all of the Directors.
Notwithstanding any provision of Maryland law requiring a greater vote of shares of the Company’s common stock (or of any class voting as a class) in connection with any corporate action, unless otherwise provided by law (for example by Rule 18f-2 discussed above), or by the Company’s Articles of Incorporation and By-Laws, the Company may take or authorize such action upon the favorable vote of the holders of more than 50% of all of the outstanding shares of Common Stock voting without regard to class (or portfolio).
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MISCELLANEOUS
Counsel
The law firm of Drinker Biddle & Reath LLP, One Logan Square, Suite 2000, Philadelphia, Pennsylvania 19103-6996, serves as independent counsel to the Company and the Independent Directors.
Independent Registered Public Accounting Firm
PricewaterhouseCoopers LLP, Two Commerce Square, Suite 1800, 2001 Market Street, Philadelphia, Pennsylvania 19103, serves as the Fund’s independent registered public accounting firm, and in that capacity audits the Fund’s financial statements.
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APPENDIX B
SUMMARY OF PROXY VOTING POLICY OF APERIO GROUP, LLC
Aperio Group’s policy is to vote proxies for clients, unless directed otherwise by the client in writing. Aperio Group votes proxies consistent with what the Firm determines is in best interest of Aperio Group’s clients. Aperio Group will generally cast proxy votes in favor of proposals that increase shareholder value and will generally be cast against proposals having the opposite effect.
In cases where a client requests us to vote in a specific way on a particular company issue, Aperio Group will vote that client’s proxies in accordance with their specific instructions.
Aperio Group offers specific strategies related to Socially Responsive Investing (SRI). Proxies for those clients are voted using specific SRI proxy voting criteria provided by a third party service provider and may differ from votes cast for other clients’ portfolios managed by Aperio.
Aperio Group may choose not to vote proxies in certain situations or for certain accounts, such as: 1) where a client has informed Aperio Group that it wishes to retain the right to vote the proxy, Aperio Group will instruct the custodian to send the proxy material directly to the client, 2) where Aperio Group deems the cost of voting would exceed any anticipated benefit to the client, 3) where a proxy is received for a client account that has been terminated with Aperio Group, or 4) where a proxy is received for a security Aperio Group no longer manages (i.e. the Adviser had previously sold the entire position).
A client may request a complete copy of our current Proxy Voting Policies and Procedures and voting guidelines and/or information on how we have voted proxies for their account(s) by contacting Aperio Group by phone at 415-339-4300 or e-mail at operations@aperiogroup.com.
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APPENDIX C
SUMMARY OF PROXY VOTING POLICY OF DRIEHAUS CAPITAL MANAGEMENT, LLC
For those clients for whom Driehaus Capital Management LLC (“DCM”) has undertaken to vote proxies, DCM retains the final authority and responsibility for such voting. On behalf of our valued clients, DCM (i) provides the client with this written summary of its proxy voting policy and the complete proxy voting policy upon request; (ii) discloses to the client how to obtain voting information; (iii) applies the proxy voting policy consistently; (iv) documents the reasons for voting; (v) maintains records of voting activities for clients and regulating authorities; and (vi) votes securities based on a pre-determined voting policy, based on the recommendations of an independent third-party to avoid conflicts of interest with DCM.
In order to facilitate this proxy voting process, DCM has retained Institutional Shareholder Services Inc. (“ISS”) to provide in-depth proxy research, vote recommendations and execution, and the record keeping necessary for the appropriate management of a client account. ISS is an investment adviser that specializes in providing a variety of fiduciary-level services related to proxy voting. DCM has ascertained that ISS has the capacity and competency to analyze proxy issues, make vote recommendations in an impartial manner and in the best interests of DCM’s clients. The default choice used by DCM for ISS recommendations is the ISS U.S. Policy for its domestic client accounts and the applicable international policy for its international client accounts. Clients may choose another policy, such as the ISS Socially Responsible Investment (SRI) Policy, as appropriate. In addition to analyses, ISS delivers to DCM voting reports that reflect voting activities for DCM’s clients, enabling the clients to monitor voting activities performed by DCM.
DCM’s proxy voting policy sets forth the general voting guidelines that ISS follows on various types of issues when there are no company-specific reasons for voting to the contrary. In making the proxy voting decision, there are two overriding considerations: first, the economic impact of the proposal; and second, the best interest impact of a proposal if it were to pass or not pass, as the case may be. ISS performs company-by-company analysis, which means that all votes are reviewed on a case-by-case basis and no issues are considered routine. Each issue is considered in the context of the company under review. DCM generally follows ISS’s recommendations and does not use its discretion in the proxy voting decision. For this reason, client proxies are voted in the clients’ best interests, in accordance with a predetermined policy based upon recommendations of an independent third party, and are not affected by any potential or actual conflict of interest of DCM. In addition, DCM annually, and more frequently if necessary, reviews ISS’s policies and procedures regarding any potential conflicts of interest when making vote recommendations to determine if ISS is acting impartially.
Clients who are interested in obtaining information from DCM on how their securities were voted may contact the Relationship Management Department at 1-800-688-8819. In addition, the Relationship Management Department mails to each client an annual record of all proxies voted on behalf of that client. Clients may also contact the Relationship Management Department if they wish to receive a copy of DCM’s complete proxy voting policy.
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APPENDIX D
PROXY VOTING POLICY OF MAWER INVESTMENT MANAGEMENT LTD.
Introduction
The primary objective of Mawer, as an investment manager is to maximize the investment return on assets under management, subject to an acceptable level of risk. Corporate governance is widely recognized by regulators, advisors, investors and academics as a crucial element of long-term company performance. Mawer shares this view and feels that the voting rights which accrue to shareholders are an important factor in the governance process. Voting rights need to be managed in order to maximize their potential. Casting votes in a manner that is consistent with the long-term interests of a company's shareholders is one of Mawer's most important responsibilities. Proxy voting is considered to be one of the most effective methods for ensuring good corporate governance. Therefore, this policy has been created to achieve these ends and to comply with Part 10 of NI 81-106 Investment Fund Continuous Disclosure.
Proxies are generally used to exercise the right to vote. Mawer's objective is to vote every share of every company owned at every shareholder meeting. It is the policy of Mawer to vote proxies in a prudent and diligent manner after careful review of each company's proxy statement. Proxy voting decisions and documentation of the rationale is the responsibility of the relevant Asset Class Manager for all names in model portfolios. Proxy voting for non-model holdings is the responsibility of the relevant client Portfolio Manager/Investment Counselor.
The voting decision is made internally and is based on Mawer's Statement of Guidelines and Procedures on Proxy Voting ("Guidelines") and/or a reasonable judgment of what will serve the best interests of the shareholders. Voting decisions that do not follow the Guidelines are documented by the Asset Class Managers and reported periodically to the Director of Research to help ensure the Guidelines continue to be appropriate and highlight any potential conflicts of interest. If there is a client directive for voting, this should be resolved between the client Portfolio Manager and the Asset Class Manager. Copies of the proxy forms and our voting recommendations are retained by Investment Operations. Historical proxy voting records can be obtained by requesting them from Investment Operations.
Statement of Guidelines and Procedures on Proxy Voting
This statement of guidelines and procedures on proxy voting is based on today's standards. Mawer has adopted proxy voting guidelines with respect to recurring issues. As proxy voting is dynamic, this document does not cover all potential issues. Nevertheless, all proxies containing "non-routine" issues are reviewed as well. The Director of Research will update this statement on a periodic basis.
Mawer's current guidelines are divided into a number of sections. The first four (Boards of Directors, Executive Compensation, Takeover Protection, and Shareholders' Rights) are the sections set out by the Pension Investment Association of Canada in its publication entitled "Corporate Governance Standards".
Boards of Directors
a. Independence of Board of Directors
It is Mawer's opinion that a board of directors should have a majority of unrelated directors. Independence is best maintained if the majority of the board members have no direct material relationship with the company other than board membership. An unrelated director is a director who is independent of management and is free from any interest or business relationship that could materially interfere with the director's ability to act in the best interests of the Corporation.
A related director would include retired executives of the company, relatives of management and directors receiving consulting fees from the company such as legal counsel and investment bankers. Those companies that have interlocking directorships, whereby chief executive officers sit on each other's boards, would also be deemed to employ related directors.
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In addition, Mawer feels that a board of directors should include a number of committees that should be staffed, at a minimum, with a majority of unrelated directors. These should include a nominating committee, an audit committee, and a compensation committee.
Voting Guideline:
Mawer prefers that a board of directors have a majority of unrelated directors. However, it is felt that the overall skill and experience contained within a slate of directors is of greater importance than simple independence. As a result, Mawer will not withhold votes or vote against a slate of directors simply because it fails to meet the independence standard unless corporate performance, over a reasonable period of time, is unsatisfactory.
b. Nominating committee
The nominating committee sets the policy for selecting qualified candidates, proposes new nominees to a board and assesses directors on an ongoing basis.
Each board should have an independent nominating committee to ensure the quality of nominees for directorships. An independent nominating committee tends to ensure that a board is effective.
The nominating committee must be comprised of outside directors, the majority of whom are unrelated directors.
Voting Guideline:
Mawer prefers the existence of an independent nominating committee. However, it is felt that the quality of nominees for directorships is of greater importance than nominating committee independence. As a result, Mawer will not withhold votes or vote against a slate of directors simply because the board lacks a properly constituted nominating committee unless corporate performance, over a reasonable period of time, is unsatisfactory.
c. Appointment of Auditors
Each board should have an independent audit committee composed of outside directors, the majority of whom are unrelated directors.
Mawer's preference is that the audit committee retains the services of a well-known and reputable accounting firm. It is preferred that all, or a significant majority of the revenues generated by the accounting firm through its relationship with the company come from the audit function. A concern arises where the same firm and, in particular the same partner of any firm, has audited a company for excessively long periods.
Voting Guideline:
Mawer generally supports the choice of auditors recommended by the corporation's directors, specifically by the audit committee of these directors. Any sudden and unanticipated changes in auditors are reviewed on a case-by-case basis.
d. Compensation Committee
The compensation committee should evaluate whether the compensation package is properly structured to enhance shareholder value.
Boards should have a compensation committee composed of outside directors, the majority of whom are unrelated directors. This committee should not be nominated or selected by the CEO.
Voting Guideline:
Mawer prefers the existence of an independent compensation committee. However, it is felt that the quality of nominees for directorships is of greater importance than compensation committee independence. As a result, Mawer will not withhold votes or vote against a slate of directors simply because the board lacks a properly constituted compensation committee unless corporate performance, over a reasonable period of time, is unsatisfactory.
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e. Size of Boards of Directors
Adding board members has a tendency to dilute the voting power of individual members and may reduce the effectiveness of a board. On the other hand, a board that is too small may also not be able to adequately discharge its responsibilities and will affect overall corporate performance.
There must be a sufficient number of board participants to enable the board to function efficiently and effectively. Key areas that must be examined in conjunction with the size of a board in order to ensure board effectiveness include sufficient composition to ensure that management will not exert undue influence, and diversity in experience, education, attitudes and background.
Mawer prefers a board of no more than 12 to 16 members depending on the type of corporation. However, the highest priority should be to ensure that the board has a sufficient number of competent and independent members. Should the size of a board be changed, the reason needs to be examined and justified. The size of a board should be changed only in the interest of benefiting shareholders.
Voting Guideline:
Mawer prefers a board of no more than 12 to 16 members. However, it is felt that the overall skill and experience contained within a slate of directors is of greater importance than simple board size. As a result, Mawer will not withhold votes or vote against a slate of directors simply because the size of the board is outside the guideline unless corporate performance, over a reasonable period of time, is unsatisfactory.
f. Cumulative Voting for Directors
Cumulative voting allows shareholders to cast all their votes for a single candidate or any two or more candidates. The result is that a minority block of shares can be represented on a board ensuring an independent voice with a potentially positive impact, but also allows for the possibility that a minority of shareholders could unduly influence the company.
Opponents to cumulative voting are concerned that directors who gain office as a result of cumulative voting might be preoccupied with their own agenda or the agenda of special interest groups rather than the welfare of all shareholders. Proponents of cumulative voting see it as an effective method of gaining minority representation on the board and of ensuring that the board is somewhat independent of management.
Voting Guideline:
Mawer will review cumulative voting proposals on a case-by-case basis, voting for such proposals when they ensure an independent voice on an otherwise unresponsive board of directors.
g. Classified or Staggered Boards
In a classified or staggered board, directors are typically elected in two or more classes, serving terms greater than one year. Proponents of classified boards argue that by staggering the election of directors, a certain level of continuity and skill is maintained.
There are many disadvantages with a classified system. Staggered terms for board members make it more difficult for shareholders to make fundamental changes to the composition and behaviour of boards, by making it extremely difficult for any challenge to, or change in, board control. In circumstances of deteriorating corporate performance, this difficulty could result in a permanent impairment of long term shareholder value.
Voting Guideline:
Mawer prefers proposals that provide for the annual elections of directors as opposed to staggered terms or "classified boards". Classified boards may be supported if the terms do not exceed three years and the proxy allows a separate vote for each director.
h. Director Liability & Indemnification
Many individuals may be reluctant to serve as corporate directors if they were held personally liable for all lawsuits and legal costs. Limitations on directors' liability can benefit the corporation and its shareholders by facilitating the attraction and retention of qualified directors and officers while affording recourse to shareholders on areas of misconduct by directors.
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In order to encourage the nomination of able directors, Mawer believes that an appropriate indemnification policy is warranted. However, these policies should be generally limited to the director acting honestly and in good faith with a view to the best interests of the corporation and, in criminal matters, limited to the director having reasonable grounds for believing the conduct was lawful.
Voting Guideline:
Mawer generally supports proposals that limit directors' liability and provide indemnification.
i. Separation of Board and Management Roles
Mawer believes that a combined Chair/CEO is put in the very difficult position of coordinating the body (the board) that is responsible for evaluating his or her own performance. In order to avoid having too much power or control residing in one individual, it is advantageous to the corporation, the CEO and the directors to have a separate Chair. The Chair may more clearly deal with matters from the board's perspective and can provide a greater measure of independence to the board's oversight role.
Executive Compensation
a. Stock Option Plans
Mawer believes in compensation and option packages that induce management and board members to own sufficient stock to ensure that managers' and directors' interests are closely aligned with those of the shareholders. Generally speaking we do not support stock option plans, preferring instead direct share ownership. We feel the later promotes better alignment (both upside and downside) between management and board members and shareholders.
To determine whether a stock option plan is in the best interests of the shareholders requires a careful review of the plan's details. Proposals are reviewed on a case-by-case basis. The features of the plan are reviewed together with other aspects of total compensation. After considering each of the issues, a determination is made as to whether the plan as a whole is reasonable.
Voting Guideline:
The following are specific guidelines dealing with the more common features of stock option plans:
PRICE: Stock options should be issued at no less than 100% of the current fair market value.
TERM: Stock options should expire within five years.
PERFORMANCE METRICS: Stock option exercisability should be tied to important business fundamentals like Return on Equity (ROE), Return on Capital (ROIC) and EPS growth rather than simple stock price changes.
DILUTION: Mawer generally does not support stock option plan amendments if the total dilution exceeds 10% of the outstanding common shares. Exceptions will be analyzed based on the size of the company, industry, competitiveness of labour markets, a below average level of total compensation including benefits, and other relevant factors as are appropriate.
REPRICING: Mawer does not support stock option plans that allow the board of directors to lower the purchase price of options already granted.
CHANGE IN CONTROL: Mawer does not support stock option plans with change in control provisions if such provisions allow option holders to receive more for their options than shareholders would receive for their shares. Changes in control arrangements developed in the midst of a takeover fight that specifically entrench management are also not supported. Granting of options or bonuses to outside directors in the event of a change of control is not supported as the independence of outside directors may be compromised if they are eligible for additional severance benefits in the event of a change of control.
METHOD OF PAYMENT: Mawer does not generally support the corporation making loans to employees to pay for stock or stock options. Loans engender risk to the company as a result of uncollectible debt and may inhibit the termination of employees who are in debt to the company. Employees, including executives, seeking to buy stock or options should be encouraged to obtain credit from conventional, market-rate sources such as banks.
b. Share Unit Plans
Mawer recognizes that it is good practice for variable executive compensation to be linked to long-term shareholder returns in order to align executives with shareholders, and that there has been a movement towards unit compensation plans. However, Mawer is cautious toward these types of compensation plans given some inherent flaws of these plans or inherent flaws in the usage of them. For example, many unit plans are settled with cash, which end shareholder alignment when units are settled, or with treasury shares, which creates dilution; some plans include a measurement of total shareholder return over a period of time, a variable external to the control of management; and many plans are excessively used as they are replacements for or extensions of a stock option plan and continue to use the 10% threshold of shares outstanding as a maximum benchmark, while not recognizing that unit plans are inherently more expensive for shareholders because of the lack of an exercise price.
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c. Director Compensation and Share Ownership
Mawer encourages director share ownership requirements due to the importance of aligning the board's activities with shareholders' interests. Individual directors should be appropriately compensated and should be motivated to act in the best interests of shareholders. It is felt that meaningful share ownership by directors is in the best interest of the company.
The degree of ownership should be determined by the circumstances of that individual director's financial position and the financial commitment should be material to that director.
Mawer also encourages boards to adopt a policy of paying a percentage of directors’ compensation in the form of common stock, which the directors undertake to hold so long as they remain directors of the company.
Voting Guideline:
Proposals that call for a certain percentage of a director's compensation to be in the form of common stock are supported. Mawer will not withhold votes or vote against a slate of directors where there does not exist a practice of paying some percentage of director compensation in common stock unless corporate performance, over a reasonable period of time, is unsatisfactory.
d. "Golden Parachutes"
"Golden parachutes" are severance payments to top executives who are terminated or demoted after a takeover.
Mawer recognizes the need for competitive severance arrangements, particularly to enable management to continue making decisions in the best interest of a company and its shareholders regardless of their own welfare in the event of a successful takeover. Excessive compensation ("golden parachutes") to be paid to any director, officer or employee which is contingent upon a merger or acquisition of the corporation with a resulting change in control is not supported.
Voting Guideline:
Mawer will review severance compensation arrangements on a case-by-case basis and vote against "golden parachutes" that are felt to be excessive.
e. Dividend Policy and Share Buybacks
Common share buybacks can often enhance long-term shareholder value relative to making acquisitions. Share buybacks can be beneficial to shareholders. During periods of general market exuberance, however, they are of less long-term merit and can inflate option-driven compensation materially. The use of surplus cash to make large share buybacks can also add to share price volatility. Unlike regular dividend increases, share buybacks do not provide enduring cash flow increases to shareholders and can destabilize pension fund reserves.
Voting Guideline:
Mawer will review share buybacks on a case by case basis and may be opposed.
f. Executive Compensation Plans - "Say on Pay"
Mawer believes in compensation packages that are competitive enough to attract talent, promote alignment with shareholders, and are tied to performance metrics like Return on Capital (ROC), Return on Equity (ROE) and EPS growth that create wealth for shareholders over the long term. We are not in support of most current compensation proposals because they do not exhibit these characteristics, appear too high for the value that is created for shareholders by any single individual, and are based on what we believe to be a flawed model of comparing compensation to others in similar roles. We believe that this last point has only produced a ratchet effect upward over time as it appears to have no downside in practice. We are unmoved by the argument that these are the rates necessary to attract and motivate management talent and we are unconvinced that senior executive compensation yet bears meaningful relationship to the capital risk assumed by shareholders.
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To determine whether a plan is in the best interests of the shareholders requires a careful review of the plan's details. Proposals are reviewed on a case-by-case basis. The features of the plan are reviewed together with other aspects of total compensation. After considering each of the issues, a determination is made as to whether the plan as a whole is reasonable.
Voting Guideline:
Mawer will review executive compensation on a case by case basis and may be opposed.
Takeover Protection
a. Shareholder Rights Plans
Shareholder rights plans (also referred to as "poison pills") provide the shareholders of the target company with rights to purchase additional shares or to sell shares at very attractive prices when triggered by an event such as a hostile tender offer or the accumulation of a specified percentage of shares by the acquirer. Shareholder rights plans should be designed with the benefits of assurance of a reasonable period to review such bids. The plans should allow for other competing bids and give equal treatment in the context of control transactions. These rights, when triggered, impose significant economic penalties on a hostile acquirer. Shareholder rights plans are considered among the most potent anti-takeover measures a company can adopt.
There are two legitimate purposes of a shareholder rights plan: 1) ensuring that all shareholders are treated equally in connection with a change of control of the company; and 2) allowing the board of the target company sufficient time to determine whether there is a course of action that will provide shareholders with a better alternative to the offer.
Opponents of shareholder rights plans point to studies which indicate that shareholder rights plans have an adverse impact on share prices because the plans make companies more insulated from take-overs and put too much power in the hands of the board in determining what is a desirable takeover offer.
Voting Guideline:
Shareholder rights plans will be reviewed on a case by case basis and will only be approved if they genuinely protect shareholders' rights without disempowering the shareholders.
b. "Crown Jewel" Defenses
"Crown jewel" defenses involve selling attractive assets to a friendly third party to frustrate a takeover. Such actions may undermine shareholders' rights to determine the company’s future course and may devalue the shares.
In Canada, such transactions usually require the approval of a majority of the minority shareholders. In addition, if a crown jewel transaction includes "substantially all the assets of a corporation" or if the transaction "would change the essential nature of a corporation's business", dissenting shareholders may seek the fair value of their shares from the acquirer. This appraisal remedy has been invoked on occasion.
Voting Guideline:
Mawer reviews "crown jewel" transactions on a case-by-case basis. Generally, "crown jewel" defenses are voted against unless they are clearly in the interests of all shareholders.
c. Going Private Transactions and Leveraged Buyouts
Going private transactions involve minority shareholders selling their equity interest in the corporation at a price offered by the controlling shareholder who will assume control.
A leveraged buyout is most often a proposal to buy a company by a group of financial buyers that includes and is supported by the management of the company.
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These transactions are complicated by the fact that the offering party is usually an insider, either the controlling shareholder or the management of the company. Both of these parties may have an informational advantage over minority shareholders. Opposition to going private transactions focuses on the fairness of the consideration offered for the shares rather than the principle. Where the price is considered to be inadequate, minority shareholders tend to oppose a going private transaction.
Voting Guideline:
Mawer will carefully evaluate going private transactions and leveraged buyouts on a case-by-case basis to determine whether the transaction is in the long-term best economic interests of shareholders or whether it is designed mainly to further the interests of one group of stakeholders at the expense of other shareholders. Attention will be paid to the process by which the proposal was received including whether other potential bidders have had an opportunity to investigate the company and make competing bids. Mawer will vote against transactions that do not adequately compensate minority shareholders.
d. Lock-Up Agreements
Lock-up agreements are entered into between certain shareholders to sell their shares to a target company or to a third party. The sale generally takes place by private, mutual agreement. No vote by shareholders is required and there is no recourse to determine the fair value of the shares.
Potential acquirers seek lock-up arrangements because these arrangements ensure that a minimum number of shares will be acquired under an offer and they often serve to discourage other potential bidders. The process also allows a potential acquirer to negotiate a price with a small group of shareholders, which would then presumably establish an offer price for all other shares.
Voting Guideline:
Mawer will review lock-up agreements on a case-by-case basis. This review will focus on whether the agreement permits the shareholder-party the opportunity to entertain another takeover bid and whether the agreement is structured to be too easily terminated and therefore prevent the takeover bid the shareholder-party might otherwise support. Lastly, a "Lock-Up" agreement should not trigger a rights plan.
e. Re-incorporation
Re-incorporation involves a proposal to re-establish the company in a different legal jurisdiction. There are a number of legitimate reasons why a company may want to re-incorporate, but it is often a tactic by management to frustrate a potential takeover or to limit director liability.
Voting Guideline:
Mawer will vote in favour of re-incorporation proposals provided management can demonstrate sound financial or business reasons for the move. However, proposals based on an anti-takeover defense or solely to limit directors' liability will be voted against.
f. Payment of "Greenmail"
"Greenmail" is the payment from corporate funds of a premium price to selected shareholders (i.e. an unwanted purchaser of the company) without the opportunity for all shareholders to participate in such a purchase program.
The "greenmail" payment is usually a premium above the market price of the shares so that it discriminates against the other stockholders.
Anti-greenmail resolutions generally require shareholder approval of a major share repurchase at prices that exceed the market, unless the same purchase price is offered to all of the corporation’s owners.
Voting Guideline:
Mawer will vote against proposals that support the payment of "greenmail" because they prevent potentially beneficial takeover bids and do not treat shareholders equally.
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g. Linked Proposals
Linked proposals are proposals that link two elements of an issue together into one. This linkage tends to create confusion amongst shareholders. Examples include a fair price amendment linked to a supermajority amendment or the linking of corporate governance issues with the payment of a dividend.
Although linked proposals may occasionally provide for the combination of logically interrelated issues, they are more often used as a smoke-screen or as a form of coercion. Mawer feels that this type of resolution should generally be discouraged, particularly when one of the linked proposals will have a negative impact on the shareholders.
Voting Guideline:
Mawer will vote against linked proposals (unless the two issues being linked are both beneficial to shareholders).
h. Fair Price Amendments
Fair price provisions were designed to help guard against two-tiered tender offers, in which a raider offers a substantially higher cash bid for an initial position and often controlling stake in a company and then offers a lower price for the remaining shares.
In Canada, two-tiered tender offers are effectively prohibited, making fair price provisions unnecessary, but the same protections do not exist in some other jurisdictions.
Voting Guideline:
Mawer will vote against proposals where a bidder for a corporation does not pay every shareholder a fair price where a "fair" price is defined as the highest price paid to any shareholder under the offer.
Shareholders’ Rights
a. Confidential Voting by Shareholders
Mawer believes that voting at annual, general and special meetings should be subject to the same safeguards as voting in any other election. Confidential voting procedures ensure this freedom and have not been particularly expensive or difficult to implement where companies have adopted them. Open balloting, on the other hand, creates the opportunity for coercion or re-solicitation.
Voting Guideline:
Mawer will vote for resolutions to introduce confidential voting by shareholders on the basis that proxy voting should be subject to the same safeguards as voting in any other election and be free of any potential for coercion.
b. Unequal or Subordinate Voting Shares
Unequal or subordinate voting shares involve the creation of a second class of common stock with either superior or inferior voting rights to those of the existing class of stock. The shares that have inferior voting rights usually pay a greater dividend and can be transferred more readily than the shares that have superior voting rights. To the extent that shareholders opt for the higher paying, but lower voting shares, management maintains effective control of the corporation by keeping for itself the shares that have superior voting rights. Dual classifications with unequal rights violate the principle of "one share, one vote."
The concern with unequal or subordinate voting shares are that such proposals 1) can create a second class of common shares with superior voting rights to those of the existing class of shares, 2) could dilute the power of the initial shares issued, thus depriving shareholders of certain rights and control, and 3) are basically a defensive tactic to retain control of the corporation by a selected few investors.
Voting Guideline:
Mawer will vote against the creation or extension of unequal or subordinate voting shares and will support motions to eliminate them.
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c. Supermajority Approval of Business Transactions
Supermajority amendments are generally designed to deter hostile takeovers by imposing voting barriers. They typically require the approval of 75-95% of shareholders to approve a particular transaction. Mawer feels that a two-thirds (66.7%) approval level is sufficient in those instances where a supermajority approval is appropriate. A two-thirds requirement is reasonable and provides sufficient protection against unwarranted invasions on the corporation.
Voting Guideline:
Mawer will vote against proposals in which management seeks to increase the number of votes required on an issue above two-thirds (66.7%) of the outstanding shares.
d. Increase in Authorized Shares
An increase in the number of shares of authorized but unissued stock provides a company's board of directors with flexibility to meet changing financial conditions. It is felt that control should be exercised over authorized shares and the issuance thereof to allow shareholders to have input on major decisions that affect the company.
Voting Guideline:
Mawer will vote for proposals for the authorization of additional common shares provided management can demonstrate sound financial or business reasons for the move.
e. "Blank Cheque" Preferred Shares
"Blank cheque" preferred shares usually carry a preference as to dividends, rank ahead of common shares upon liquidation, and give a board broad discretion (a "blank cheque") to establish voting, dividend, conversion and other rights in respect of these shares.
Blank cheque preferred shares may provide corporations with the flexibility needed to meet changing financial conditions. They may also be used as a vehicle for a defence against hostile suitors, or may be placed in friendly hands to help block a potential takeover bid. A concern for many shareholders is that once these shares have been authorized, shareholders have no further power to determine how or when the shares will be allocated.
Voting Guideline:
Mawer will vote against the authorization of or an increase in blank-cheque preferred shares.
f. Shareholder Proposals
Shareholder proposals may take a number of forms but many are designed to somehow diminish the power of the board of directors or management by placing specific additional constraints on behaviour of the board, the management, or the company.
Many of these proposals serve to introduce artificial or arbitrary constraints upon a company. Mawer believes that the board and the company must maintain sufficient flexibility to organize itself in a fashion that is most appropriate for that company at that time and that the company should be free to compete in its marketplace. Introducing artificial or arbitrary constraints will not assist and may often hinder the company's ability to create economic wealth for its shareholders.
Voting Guideline:
Mawer will evaluate shareholder proposals on a case-by-case basis. Generally, proposals that place arbitrary or artificial constraints on the company, its board, or management will be voted against.
g. Stakeholder Proposals
To effectively manage a corporation, directors and management must consider not only the interests of shareholders, but also the interests of the stakeholders (i.e. employees, customers, suppliers, creditors, and the community). However, corporate officers and directors must fulfill their fiduciary duty and recognize their first priority is to the owners of their corporation, its shareholders.
Stakeholder proposals demanding that directors consider the effects of their decisions on numerous other corporate constituencies at the expense of the company's shareholders are inconsistent with the directors' primary fiduciary duty and may serve to undermine the long-term value of the company.
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Voting Guideline:
Mawer will review stakeholder proposals on a case-by-case basis. Generally, proposals that seek to alter the responsibility of the directors by putting them in the position of having to give equal or more consideration to the interests of stakeholders in relation to the long-term interests of shareholders will be voted against.
Conflicts of Interest
A conflict of interest may arise when Mawer votes a proxy solicited by an issuer with whom Mawer has a material business or personal relationship that may affect the vote. In particular, a conflict of interest is a situation where a reasonable person would consider Mawer, or an entity related to Mawer, to have an interest that may conflict with its ability to act in good faith and in the best interests of the investment fund.
Anyone who becomes aware of a potential conflict must notify Compliance. To avoid conflicts of interest Mawer adheres to the following procedures:
● Adherence to Stated Proxy Voting Guidelines
○ All votes will be cast according to this written policy in the best interests of the Funds and clients. If votes are cast otherwise, they will be documented and explained.
● Disclosure of Conflicts
○ Anyone involved in the process for deciding how a proxy should be voted must disclose any potential conflict that they are aware of. Vote recommendations must be made solely on merits and in accordance with any standing instructions from Mawer's Independent Review Committee.
● Potential Conflicts
○ Mawer has established procedures to identify material relationships that could result in potential conflicts.
● Review of Proposed Trades
○ When a possible conflict of interest is encountered it will be reviewed using the following process:
● Mawer will determine whether a conflict of interest does in fact exist.
● Where Mawer has identified a conflict of interest relevant to an 81-107 Fund, the IRC will be notified forthwith in the event IRC standing instructions are not applicable and therefore may not be followed.
Proxy Voting Procedure and Disclosures
The Manager of Investment Operations maintains detailed and up-to-date proxy voting procedures to comply with all relevant regulations and industry standards. Investment Operations is also responsible for making the following disclosures:
● Description of Proxy Voting Policies and Procedures in Registration Statements: All annual information forms, and amendments to annual information forms, filed on or after July 1, 2005, include a copy of, or a description of Mawer's Proxy Voting policy.
● Availability of Description of Policies and Procedures: All investors in the Funds may obtain a copy of a description of the Mawer's proxy voting policies and procedures in the annual information form by the following methods:
○ Upon request and without charge, by calling a specified toll free (or collect) telephone number; or
○ On Mawer's website at www.mawer.com
● Availability of Fund's Proxy Voting Record: All annual information forms, and amendments to annual information forms, filed on or after August 31, 2005, will disclose that an investor may obtain a copy of any Fund's actual proxy voting record by the following methods:
○ Upon request and without charge, by calling a specified toll free (or collect) telephone number; or
○On Mawer's website at www.mawer.com
● Client adhoc or contractual ongoing requests for proxy voting records of how Mawer Portfolio Manager / Investment Counsellor voted the securities in their account are also prepared on a timely basis and provided by Investment Operations to the respective Portfolio Manager / Investment Counsellor who is responsible to send the requested report to the client within three business days of receipt of the request, by first class mail or other means designed to ensure equally prompt delivery. Only those voting records relating to Executive Compensation or Takeover Protection will be included in the report.
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APPENDIX E
SUMMARY OF PROXY VOTING POLICY OF SETANTA ASSET MANAGEMENT LIMITED
Background
Investment advisers registered with the SEC, and which exercise voting authority with respect to client securities, are required by Rule 206(4)-6 of the Advisers Act to:
(a) adopt and implement written policies and procedures that are reasonably designed to ensure that client securities are voted in the best interests of clients, which must include how an adviser addresses material conflicts that may arise between an adviser's interests and those of its clients;
(b) to disclose to clients how they may obtain information from the adviser with respect to the voting of proxies for their securities;
(c) to describe to clients a summary of its proxy voting policies and procedures and, upon request, furnish a copy to its clients; and
(d) maintain certain records relating to the adviser's proxy voting activities when the adviser does have proxy voting authority.
Setanta Policy
Setanta's discretion to vote on behalf of clients portfolios is set out in the Investment Advisory Agreement. Where such discretion has been granted to Setanta, we will adopt our standard voting policy. Clients may request a bespoke voting policy to be applied and this will be considered by Setanta on a case by case basis. Below is a statement of principles that generally describe how Setanta may vote on some commonly raised issues. Setanta may elect to vote contrary to these guidelines provided the vote is in the best economic interest of the clients/funds managed:
(a) Setanta generally votes in favour of: proposals that support a majority of Board members being independent of management; the appointment of outside directors to an issuer Board or Audit Committee; as well as requirements that the Chair of the Board be separate from the office of the Chief Executive Officer.
(b) Proxies related to executive compensation are voted on a case-by-case basis. Generally, Setanta will vote in favour of stock options and other forms of compensation that: do not result in a potential dilution of more than 10% of the issued and outstanding shares; are granted under clearly defined and reasonable terms; are commensurate with the duties of plan participants; and are tied to the achievement of corporate objectives.
(c) Setanta will generally not support: the repricing of options; plans that give the Board broad discretion in setting the terms of the grant of options; or plans that authorize allocation of 20% or more of the available options to any individual in any single year.
(d) Setanta will generally vote in favour of shareholder rights plans designed to provide sufficient time to undertake a fair and complete shareholder value maximization process and that do not merely seek to entrench management or deter a public bidding process. In addition, Setanta will generally support plans that promote the interests and equal treatment of all shareholders, and that allow for periodic shareholder ratification.
(e) Setanta will evaluate and vote on shareholder proposals on a case-by-case basis. All proposals on financial matters will be given consideration. Generally, proposals that place arbitrary or artificial constraints on the company will not be supported.
If a client chooses not to delegate proxy voting authority to Setanta, the right to vote securities is retained by the client or other designated person. In such situations, the client will generally receive proxies or other solicitations directly from the custodian or transfer agent.
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Setanta Procedure
Setanta exercises voting rights on behalf of its Clients and has adequate and effective strategies for determining when and how voting rights attached to instruments held in Clients’ funds/portfolios are to be exercised.
Voting rights are typically exercised following the receipt of proxy forms and the strategy for determining when and how voting rights attached to instruments held in the Clients’ funds/portfolios are to be exercised determines measures and procedures for:
● monitoring relevant corporate events;
● ensuring that the exercise of voting rights is in accordance with the investment objectives and policy of the sub-funds; and
● preventing or managing any conflicts of interest arising from the exercise of voting rights.
The procedure is reviewed periodically and is available to shareholders free of charge upon request.
Monitoring Corporate Events
All relevant corporate events are monitored via Broadridge’s ProxyEdge online application. ProxyEdge provides proxy information through an automated electronic interface based on share positions provided directly to Broadridge by our clients’ custodians.
It is the policy of the Investment Manager that:
● to conduct its investment management operations with respect to publicly traded equity securities independently of its affiliated companies that it maintains and exercises exclusive discretion to acquire, dispose of and vote on publicly traded equity securities held or controlled by it on behalf of shareholders.
● it does not become involved with, or attempt to influence, publicly traded equity security investment or voting decisions made by any of its affiliated companies.
● it does not share information with or consult with any of its affiliate companies regarding the acquisition, disposition, or voting of publicly traded equity securities (except where sub- advisory/discretionary investment management agreements exist with affiliated companies or where required to do so for legal/compliance purposes)
The objective of the proxy voting procedure is to vote for the securities of companies for which we have proxy-voting authority in a manner most consistent with the long-term economic interest of the clients/funds managed.
Setanta (and the Equity Fund Managers who physically exercise the vote) take reasonable steps to vote in all proxies received. However, Setanta may refrain from voting where administrative or other procedures result in the costs of voting outweighing the benefits. Setanta may also refrain from voting if its opinion abstaining or otherwise withholding its vote is in the best interests of the clients/funds managed. The Equity Fund Manager makes the voting decision (electronically or via hard copy) and issues his/her direction to the relevant Proxy Administrator (“The Administrator”), if any. The Administrator completes and submits the proxy voting ballot and files all related documentation.
Conflicts of interest
Circumstances may occur where a fund has a potential conflict of interest relative to its proxy voting activities. Where Setanta (or the Equity Fund Manager) has a conflict or potential conflict, a notification about the conflict must be made to Compliance Manager and the Chief Investment Officer (“CIO”). Should the CIO and the Compliance Manager conclude that a conflict exists, the Compliance Manager will document the conflict and inform the relevant Administrator. The CIO and the Compliance Manager will discuss the voting matter(s) with the Equity Fund Manager and ensure that the proxy voting decision is based on Setanta’s proxy voting policies and is in the best interests of the fund.
Responsibility
Setanta Senior Management Team.
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THE RBB FUND, INC.
PEA 238
PART C: OTHER INFORMATION
Item 28. | EXHIBITS |
(a) | Articles of Incorporation.
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(1) | Articles of Incorporation of Registrant are incorporated herein by reference to Registrant’s Registration Statement (No. 33-20827) filed on March 24, 1988, and refiled electronically with Post-Effective Amendment No. 61 to Registrant’s Registration Statement filed on October 30, 1998.
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(2) | Articles Supplementary of Registrant are incorporated herein by reference to Registrant’s Registration Statement (No. 33-20827) filed on March 24, 1988, and refiled electronically with Post-Effective Amendment No. 61 to Registrant’s Registration Statement filed on October 30, 1998.
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(3) | Articles of Amendment to Articles of Incorporation of Registrant are incorporated herein by reference to Pre-Effective Amendment No. 2 to Registrant’s Registration Statement (No. 33-20827) filed on July 12, 1988, and refiled electronically with Post-Effective Amendment No. 61 to Registrant’s Registration Statement filed on October 30, 1998.
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(4) | Articles Supplementary of Registrant are incorporated herein by reference to Pre-Effective Amendment No. 2 to Registrant’s Registration Statement (No. 33-20827) filed on July 12, 1988, and refiled electronically with Post-Effective Amendment No. 61 to Registrant’s Registration Statement filed on October 30, 1998.
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(5) | Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 3 to the Registrant’s Registration Statement (No. 33-20827) filed on April 27, 1990, and refiled electronically with Post-Effective Amendment No. 61 to Registrant’s Registration Statement filed on October 30, 1998.
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(6) | Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 4 to the Registrant’s Registration Statement (No. 33-20827) filed on May 1, 1990, and refiled electronically with Post-Effective Amendment No. 61 to Registrant’s Registration Statement filed on October 30, 1998.
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(7) | Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 7 to the Registrant’s Registration Statement (No. 33-20827) filed on July 15, 1992, and refiled electronically with Post-Effective Amendment No. 61 to Registrant’s Registration Statement filed on October 30, 1998.
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(8) | Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 8 to the Registrant’s Registration Statement (No. 33-20827) filed on October 22, 1992, and refiled electronically with Post-Effective Amendment No. 61 to Registrant’s Registration Statement filed on October 30, 1998. |
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(9) | Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 13 to the Registrant’s Registration Statement (No. 33-20827) filed on October 29, 1993, and refiled electronically with Post-Effective Amendment No. 61 to Registrant’s Registration Statement filed on October 30, 1998.
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(10) | Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 13 to the Registrant’s Registration Statement (No. 33-20827) filed on October 29, 1993, and refiled electronically with Post-Effective Amendment No. 61 to Registrant’s Registration Statement filed on October 30, 1998.
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(11) | Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 22 to the Registrant’s Registration Statement (No. 33-20827) filed on December 19, 1994, and refiled electronically with Post-Effective Amendment No. 61 to Registrant’s Registration Statement filed on October 30, 1998.
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(12) | Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 22 to the Registrant’s Registration Statement (No. 33-20827) filed on December 19, 1994, and refiled electronically with Post-Effective Amendment No. 61 to Registrant’s Registration Statement filed on October 30, 1998.
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(13) | Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 22 to the Registrant’s Registration Statement (No. 33-20827) filed on December 19, 1994, and refiled electronically with Post-Effective Amendment No. 61 to Registrant’s Registration Statement filed on October 30, 1998.
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(14) | Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 22 to the Registrant’s Registration Statement (No. 33-20827) filed on December 19, 1994, and refiled electronically with Post-Effective Amendment No. 61 to Registrant’s Registration Statement filed on October 30, 1998.
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(15) | Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 27 to the Registrant’s Registration Statement (No. 33-20827) filed on March 31, 1995.
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(16) | Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 34 to the Registrant’s Registration Statement (No. 33-20827) filed on May 16, 1996.
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(17) | Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 39 to the Registrant’s Registration Statement (No. 33-20827) filed on October 11, 1996.
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(18) | Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 45 to the Registrant’s Registration Statement (No. 33-20827) filed on May 9, 1997.
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(19) | Articles of Amendment to Charter of the Registrant are incorporated herein by reference to Post-Effective Amendment No. 46 to the Registrant’s Registration Statement (No. 33-20827) filed on September 25, 1997.
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(20) | Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 46 to the Registrant’s Registration Statement (No. 33-20827) filed on September 25, 1997. |
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(21) | Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 60 to the Registrant’s Registration Statement (No. 33-20827) filed on October 29, 1998.
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(22) | Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 60 to the Registrant’s Registration Statement (No. 33-20827) filed on October 29, 1998.
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(23) | Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 63 to the Registrant’s Registration Statement (No. 33-20827) filed on December 14, 1998.
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(24) | Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 63 to the Registrant’s Registration Statement (No. 33-20827) filed on December 14, 1998.
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(25) | Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 67 to the Registrant’s Registration Statement (No. 33-20827) filed on September 30, 1999.
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(26) | Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 69 to the Registrant’s Registration Statement (No. 33-20827) filed on November 29, 1999.
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(27) | Articles of Amendment to Charter of the Registrant are incorporated herein by reference to Post-Effective Amendment No. 71 to the Registrant’s Registration Statement (No. 33-20827) filed on December 29, 2000.
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(28) | Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 71 to the Registrant’s Registration Statement (No. 33-20827) filed on December 29, 2000.
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(29) | Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 71 to the Registrant’s Registration Statement (No. 33-20827) filed on December 29, 2000.
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(30) | Articles of Amendment to Charter of the Registrant are incorporated herein by reference to Post-Effective Amendment No. 71 to the Registrant’s Registration Statement (No. 33-20827) filed on December 29, 2000.
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(31) | Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 73 to the Registrant’s Registration Statement (No. 33-20827) filed on March 15, 2001.
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(32) | Articles of Amendment to Charter of the Registrant (Boston Partners Bond Fund – Institutional Class and Boston Partners Bond Fund – Investor Class) are incorporated herein by reference to Post-Effective Amendment No. 77 to the Registrant’s Registration Statement (No. 33-20827) filed on May 15, 2002.
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(33) | Articles Supplementary of Registrant (Boston Partners All-Cap Value Fund – Institutional Class and Boston Partners Bond Fund – Institutional Class) are incorporated herein by reference to Post-Effective Amendment No. 77 to the Registrant’s Registration Statement (No. 33-20827) filed on May 15, 2002. |
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(34) | Articles Supplementary of Registrant (Schneider Value Fund) are incorporated herein by reference to Post-Effective Amendment No. 78 to the Registrant’s Registration Statement (No. 33-20827) filed on May 16, 2002.
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(35) | Articles Supplementary of Registrant (Institutional Liquidity Fund for Credit Unions and Liquidity Fund for Credit Union Members) are incorporated herein by reference to Post-Effective Amendment No. 84 to the Registrant’s Registration Statement (No. 33-20827) filed on December 29, 2003.
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(36) | Articles of Amendment to Charter of the Registrant are incorporated herein by reference to Post-Effective Amendment No. 89 to the Registrant’s Registration Statement (No. 33-20827) filed on December 30, 2004.
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(37) | Articles Supplementary of Registrant (Robeco WPG Core Bond Fund – Investor Class, Robeco WPG Core Bond Fund – Institutional Class, Robeco WPG Tudor Fund – Institutional Class, Robeco WPG Large Cap Growth Fund – Institutional Class) are incorporated herein by reference to Post-Effective Amendment No. 93 to the Registrant’s Registration Statement (No. 33-20827) filed on March 4, 2005.
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(38) | Certificate of Correction of Registrant is incorporated herein by reference to Post-Effective Amendment No. 95 to the Registrant’s Registration Statement (No. 33-20827) filed on March 23, 2005.
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(39) | Articles Supplementary of Registrant (Robeco WPG Core Bond Fund – Investor Class, Robeco WPG Core Bond Fund – Institutional Class, Robeco WPG Tudor Fund – Institutional Class, Robeco WPG 130/30 Large Cap Core Fund f/k/a Robeco WPG Large Cap Growth Fund – Institutional Class) are incorporated herein by reference to Post-Effective Amendment No. 95 to the Registrant’s Registration Statement (No. 33-20827) filed on March 23, 2005.
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(40) | Articles Supplementary of Registrant (Senbanc Fund) are incorporated herein by reference to Post-Effective Amendment No. 96 to the Registrant’s Registration Statement (No. 33-20827) filed on June 6, 2005.
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(41) | Articles of Amendment of Registrant (Robeco WPG Core Bond Fund – Retirement Class) are incorporated herein by reference to Post-Effective Amendment No. 97 to the Registrant’s Registration Statement (No. 33-20827) filed on August 19, 2005.
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(42) | Articles Supplementary of Registrant (Robeco WPG Core Bond Fund – Investor Class) are incorporated herein by reference to Post-Effective Amendment No. 99 to the Registrant’s Registration Statement (No. 33-20827) filed on September 27, 2005.
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(43) | Articles Supplementary of Registrant (Bear Stearns CUFS MLP Mortgage Portfolio) are incorporated herein by reference to Post-Effective Amendment No. 104 to the Registrant’s Registration Statement (No. 33-20827) filed on July 18, 2006.
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(44) | Articles of Amendment to Charter of the Registrant (Bear Stearns CUFS MLP Mortgage Portfolio) are incorporated herein by reference to Post-Effective Amendment No. 108 to the Registrant’s Registration Statement (No. 33-20827) filed on December 14, 2006.
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(45) | Articles Supplementary of Registrant (Bear Stearns Ultra Short Income Fund f/k/a Bear Stearns Enhanced Income Fund) are incorporated herein by reference to Post-Effective Amendment No. 109 to Registrant’s Registration Statement (No. 33-20827) filed on December 15, 2006. |
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(46) | Articles Supplementary of Registrant (Marvin & Palmer Large Cap Growth Fund) are incorporated herein by reference to Post-Effective Amendment No. 109 to Registrant’s Registration Statement (No. 33-20827) filed on December 15, 2006.
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(47) | Articles of Amendment to Charter of the Registrant (Bear Stearns Ultra Short Income Fund f/k/a Bear Stearns Enhanced Income Fund) are incorporated herein by reference to Post-Effective Amendment No. 111 to the Registrant’s Registration Statement (No. 33-20827) filed on February 28, 2007.
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(48) | Articles Supplementary of Registrant (Bear Stearns Ultra Short Income Fund f/k/a Bear Stearns Enhanced Income Fund) are incorporated herein by reference to Post-Effective Amendment No. 111 to the Registrant’s Registration Statement (No. 33-20827) filed on February 28, 2007.
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(49) | Articles Supplementary of Registrant (Free Market U.S. Equity Fund, Free Market International Equity Fund, Free Market Fixed Income Fund) incorporated herein by reference to Post-Effective Amendment No. 112 to the Registrant’s Registration Statement (No. 33-20827) filed on June 1, 2007.
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(50) | Articles Supplementary of Registrant (Robeco WPG 130/30 Large Cap Core Fund – Investor Class) are incorporated herein by reference to Post-Effective Amendment No. 113 to the Registrant’s Registration Statement (No. 33-20827) filed on July 13, 2007.
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(51) | Articles Supplementary of Registrant (SAM Sustainable Water Fund, SAM Sustainable Climate Fund) are incorporated herein by reference to Post-Effective Amendment No. 114 to the Registrant’s Registration Statement (No. 33-20827) filed on July 17, 2007.
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(52) | Articles of Amendment of Registrant (Robeco WPG 130/30 Large Cap Core Fund – Institutional Class) are incorporated herein by reference to Post-Effective Amendment No. 116 to the Registrant’s Registration Statement (No. 33-20827) filed on September 4, 2007.
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(53) | Articles Supplementary of Registrant (Bear Stearns Multifactor 130/30 US Core Equity Fund) are incorporated herein by reference to Post-Effective Amendment No. 123 to the Registrant’s Registration Statement (No. 33-20827) filed on December 17, 2007.
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(54) | Articles of Amendment to Charter of the Registrant (Bear Stearns Ultra Short Income Fund f/k/a Bear Stearns Enhanced Income Fund) are incorporated herein by reference to Post-Effective Amendment No. 124 to the Registrant’s Registration Statement (No. 33-20827) filed on December 28, 2007.
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(55) | Articles Supplementary of Registrant (SAM Sustainable Global Active Fund, SAM Sustainable Themes Fund) are incorporated herein by reference to Post-Effective Amendment No. 128 to the Registrant’s Registration Statement (No. 33-20827) filed on April 23, 2009.
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(56) | Articles Supplementary of Registrant (Perimeter Small Cap Growth Fund) are incorporated herein by reference to Post-Effective Amendment No. 129 to the Registrant’s Registration Statement (No. 33-20827) filed on July 2, 2009.
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(57) | Articles Supplementary of Registrant (S1 Fund) are incorporated herein by reference to Post-Effective Amendment No. 135 to Registrant’s Registration Statement (No. 33-20827) filed on July 19, 2010. |
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(58) | Articles Supplementary of Registrant (Robeco Boston Partners Long/Short Research Fund) are incorporated herein by reference to Post-Effective Amendment No. 136 to the Registrant’s Registration Statement (No. 33-20827) filed on August 4, 2010.
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(59) | Articles of Amendment of Registrant (Robeco WPG Small/Micro Cap Value Fund f/k/a Robeco WPG Small Cap Value Fund) are incorporated herein by reference to Post-Effective Amendment No. 141 to the Registrant’s Registration Statement (No. 33-20827) filed on December 28, 2010.
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(60) | Articles Supplementary of Registrant (Robeco Boston Partners Global Equity Fund and Robeco Boston Partners International Equity Fund) are incorporated herein by reference to Post-Effective Amendment No. 142 to the Registrant’s Registration Statement (No. 33-20827) filed on October 14, 2011.
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(61) | Articles Supplementary of Registrant (Summit Global Investments U.S. Low Volatility Equity Fund) are incorporated herein by reference to Post-Effective Amendment No. 144 to the Registrant’s Registration Statement (No. 33-20827) filed on December 15, 2011.
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(62) | Articles Supplementary of Registrant (Free Market U.S. Equity Fund, Free Market International Equity Fund, Free Market Fixed Income Fund) are incorporated herein by reference to Post-Effective Amendment No. 149 to the Registrant’s Registration Statement (No. 33-20827) filed on October 29, 2012.
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(63) | Articles Supplementary of Registrant (Robeco Boston Partners Global Long/Short Fund) are incorporated herein by reference to Post-Effective Amendment No. 152 to the Registrant’s Registration Statement (No. 33-20827) filed on March 29, 2013.
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(64) | Articles Supplementary of Registrant (Robeco Boston Partners Long/Short Research Fund – Institutional Class) are incorporated herein by reference to Post-Effective Amendment No. 157 to the Registrant’s Registration Statement (No. 33-20827) filed on October 29, 2013.
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(65) | Articles Supplementary of Registrant (Matson Money U.S. Equity VI Portfolio, Matson Money International VI Equity Portfolio, Matson Money Fixed Income VI Portfolio) are incorporated herein by reference to Post-Effective Amendment No. 159 to the Registrant’s Registration Statement (No. 33-20827) filed on December 20, 2013.
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(66) | Articles Supplementary of Registrant (Scotia Dynamic U.S. Growth Fund) are incorporated herein by reference to Post-Effective Amendment No. 161 to the Registrant’s Registration Statement (No. 33-20827) filed on December 27, 2013.
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(67) | Articles Supplementary of Registrant (Robeco Boston Partners Long/Short Research Fund – Institutional Class) are incorporated herein by reference to Post-Effective Amendment No. 168 to the Registrant’s Registration Statement (No. 33-20827) filed on June 30, 2014.
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(68) | Articles Supplementary of Registrant (Abbey Capital Futures Strategy Fund and Adara Smaller Companies Fund (f/k/a Altair Smaller Companies Fund)) are incorporated herein by reference to Post-Effective Amendment No. 168 to the Registrant’s Registration Statement (No. 33-20827) filed on June 30, 2014.
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(69) | Articles Supplementary of Registrant (Campbell Core Trend Fund) are incorporated herein by reference to Post-Effective Amendment No. 171 to the Registrant’s Registration Statement (No. 33-20827) filed on October 16, 2014. |
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(70) | Articles Supplementary of Registrant (Free Market U.S. Equity Fund, Free Market International Equity Fund, Free Market Fixed Income Fund) are incorporated herein by reference to Post-Effective Amendment No. 174 to the Registrant’s Registration Statement (No. 33-20827) filed on December 23. 2014.
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(71) | Articles Supplementary of Registrant (Boston Partners Investment Funds) are incorporated herein by reference to Post-Effective Amendment No. 174 to the Registrant’s Registration Statement (No. 33-20827) filed on December 23. 2014.
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(72) | Articles Supplementary of Registrant (Boston Partners Emerging Markets Long/Short Fund) are incorporated herein by reference to Post-Effective Amendment No. 182 to the Registrant’s Registration Statement (No. 33-20827) filed on October 16, 2015
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(73) | Articles Supplementary of Registrant (Campbell Core Carry Fund) are incorporated herein by reference to Post-Effective Amendment No. 182 to the Registrant’s Registration Statement (No. 33-20827) filed on October 16, 2015.
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(74) | Articles Supplementary of Registrant (Boston Partners Alpha Blue Dynamic Equity Fund) are incorporated herein by reference to Post-Effective Amendment No. 182 to the Registrant’s Registration Statement (No. 33-20827) filed on October 16, 2015.
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(75) | Articles Supplementary of Registrant (Summit Global Investments U.S. Low Volatility Equity Fund – Class C) are incorporated herein by reference to Post-Effective Amendment No. 184 to the Registrant’s Registration Statement (No. 33-20827) filed on October 30, 2015.
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(76) | Articles Supplementary of Registrant (Boston Partners Long/Short Research Fund – Institutional Class) are incorporated herein by reference to Post-Effective Amendment No. 187 to the Registrant’s Registration Statement (No. 33-20827) filed on December 29, 2015.
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(77) | Articles Supplementary of Registrant (Summit Global Investments Small Cap Low Volatility Fund) are incorporated herein by reference to Post-Effective Amendment No. 195 to the Registrant’s Registration Statement (No. 33-20827) filed on March 30, 2016.
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(78) | Articles Supplementary of Registrant (Fasanara Capital Absolute Return Multi-Asset Fund) are incorporated herein by reference to Post-Effective Amendment No. 198 to the Registrant’s Registration Statement (No. 33-20827) filed on April 29, 2016.
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(79) | Articles of Amendment of Registrant (Campbell Dynamic Trend Fund f/k/a Campbell Core Trend Fund and Campbell Multi-Asset Carry Fund f/k/a Campbell Core Carry Fund) are incorporated herein by reference to Post-Effective Amendment No. 207 to the Registrant’s Registration Statement (No. 33-20827) filed on December 28, 2016.
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(80) | Articles Supplementary of Registrant (Motley Fool Global Opportunities Fund (f/k/a Motley Fool Independence Fund), Motley Fool Small-Mid Cap Growth Fund (f/k/a Motley Fool Great America Fund), and Motley Fool Emerging Markets Fund (f/k/a Motley Fool Epic Voyage Fund)) are incorporated herein by reference to Post-Effective Amendment No. 206 to the Registrant’s Registration Statement (No. 33-20827) filed on December 21, 2016.
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(81) | Articles of Amendment of Registrant (Motley Fool Emerging Markets Fund (f/k/a Motley Fool Epic Voyage Fund) are incorporated herein by reference to Post-Effective Amendment No. 212 to the Registrant’s Registration Statement (No. 33-20827) filed on February 28, 2017. |
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(82) | Articles Supplementary of Registrant (Orinda Income Opportunities Fund) are incorporated herein by reference to Post-Effective Amendment No. 216 to the Registrant’s Registration Statement (No. 33-20827) filed on April 10, 2017.
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(83) | Articles Supplementary of Registrant (Abbey Capital Futures Strategy Fund — Class T) are incorporated herein by reference to Post-Effective Amendment No. 216 to the Registrant’s Registration Statement (No. 33-20827) filed on April 10, 2017.
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(84) | Articles Supplementary of Registrant (Campbell Managed Futures 10V Fund) are incorporated herein by reference to Post-Effective Amendment No. 224 to the Registrant’s Registration Statement (No. 33-20827) filed on July 28, 2017.
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(85) | Articles Supplementary of Registrant (Boston Partners Emerging Markets Fund) are incorporated herein by reference to Post-Effective Amendment No. 226 to the Registrant’s Registration Statement (No. 33-20827) filed on August 23, 2017.
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(86) | Articles Supplementary of Registrant (Motley Fool 100 Index ETF) is incorporated herein by reference to Post-Effective Amendment No. 235 to the Registrant’s Registration Statement (No. 33-20827) filed on January 19, 2018.
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(87) | Articles Supplementary of Registrant (Abbey Capital Futures Strategy Fund – Class I) are filed herewith.
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(88) | Articles Supplementary of Registrant (Boston Partners Global Long/Short Fund – Institutional Class) are filed herewith.
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(89) | Articles Supplementary of Registrant (Free Market U.S. Equity Fund, Free Market International Equity Fund, Free Market Fixed Income Fund) are filed herewith.
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(90) | Articles Supplementary of Registrant (Aquarius International Fund) are filed herewith.
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(91) | Articles Supplementary of Registrant (Abbey Capital Multi Asset Fund) are filed herewith.
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(92) | Articles of Amendment of Registrant (Dynamic U.S. Growth Fund) are filed herewith.
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(93) | Articles of Amendment of Registrant (Summit Global Investments Global Low Volatility Fund) will be filed by amendment.
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(94) | Articles of Amendment of Registrant (Summit Global Investments Small Cap Low Volatility Fund) will be filed by amendment.
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(95) | Articles of Amendment of Registrant (Adara Smaller Companies Fund (f/k/a Altair Smaller Companies Fund)) will be filed by amendment.
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(96) | Articles of Amendment of Registrant (Motley Fool Global Opportunities Fund (f/k/a Motley Fool Independence Fund), Motley Fool Small-Mid Cap Growth Fund (f/k/a Motley Fool Great America Fund), and Motley Fool Emerging Markets Fund (f/k/a Motley Fool Epic Voyage Fund)) will be filed by amendment. | |
(b) | By-Laws.
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(1) | By-Laws, as amended, are incorporated herein by reference to Post-Effective Amendment No. 143 to the Registrant’s Registration Statement (No. 33-20827) filed on October 28, 2011.
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(c) | Instruments Defining Rights of Security Holders.
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(1) | See Articles VI, VII, VIII, IX and XI of Registrant’s Articles of Incorporation dated February 17, 1988 which are incorporated herein by reference to Registrant’s Registration Statement (No. 33-20827) filed on March 24, 1988, and refiled electronically with Post-Effective Amendment No. 61 to Registrant’s Registration Statement filed on October 30, 1998. |
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(2) | See Articles II, III, VI, XIII, and XIV of Registrant’s By-Laws as amended through August 25, 2004, which are incorporated herein by reference to Post-Effective Amendment No. 89 to the Registrant’s Registration Statement (No. 33-20827) filed on December 30, 2004.
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(d) | Investment Advisory Contracts.
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(1) | Investment Advisory Agreement (Schneider Small Cap Value Fund) between Registrant and Schneider Capital Management Company is incorporated herein by reference to Post-Effective Amendment No. 60 to the Registrant’s Registration Statement (No. 33-20827) filed on October 29, 1998.
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(2) | Investment Advisory Agreement (Bogle Investment Management Small Cap Growth Fund) between Registrant and Bogle Investment Management, L.P. is incorporated herein by reference to Post-Effective Amendment No. 67 to the Registrant’s Registration Statement (No. 33-20827) filed on September 30, 1999.
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(3) | Investment Advisory Agreement (Free Market U.S. Equity Fund, Free Market International Equity Fund, Free Market Fixed Income Fund) between Registrant and Matson Money, Inc. (f/k/a Abundance Technologies, Inc.) is incorporated herein by reference to Post-Effective Amendment No. 125 to the Registrant’s Registration Statement (No. 33-20827) filed on February 27, 2008.
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(4) | Amendment No. 1 to the Investment Advisory Agreement (Free Market U.S. Equity Fund, Free Market International Equity Fund and Free Market Fixed Income Fund) between Registrant and Matson Money, Inc. (f/k/a Abundance Technologies, Inc.) is incorporated herein by reference to Post-Effective Amendment No. 157 to the Registrant’s Registration Statement (No. 33-20827) filed on October 29, 2013.
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(5) | Form of Contractual Fee Waiver Agreement (Schneider Small Cap Value Fund) between Registrant and Schneider Capital Management Company is incorporated herein by reference to Post-Effective Amendment No. 232 to the Registrant’s Registration Statement (No. 33-20827) filed on December 28, 2017.
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(6) | Form of Contractual Fee Waiver Agreement (Boston Partners Investment Funds) between Registrant and Boston Partners Global Investors, Inc. is incorporated herein by reference to Post-Effective Amendment No. 232 to the Registrant’s Registration Statement (No. 33-20827) filed on December 28, 2017.
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(7) | Investment Advisory Agreement (Summit Global Investments U.S. Low Volatility Equity Fund) between Registrant and Summit Global Investments, LLC is incorporated herein by reference to Post-Effective Amendment No. 160 to the Registrant’s Registration Statement (No. 33-20827) filed on December 23, 2013.
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(8) | Form of Contractual Fee Waiver Agreement (Summit Global Investments U.S. Low Volatility Equity Fund) between Registrant and Summit Global Investments, LLC is incorporated herein by reference to Post-Effective Amendment No. 232 to the Registrant’s Registration Statement (No. 33-20827) filed on December 28, 2017.
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(9) | Investment Advisory Agreement (Boston Partners Investment Funds) between Registrant and Boston Partners Global Investors, Inc. (f/k/a Robeco Investment Management, Inc.) is incorporated herein by reference to Post-Effective Amendment No. 157 to the Registrant’s Registration Statement (No. 33-20827) filed on October 29, 2013. |
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(10) | Addendum No. 1 to Investment Advisory Agreement (Robeco Boston Partners Global Long/Short Fund) between Registrant and Boston Partners Global Investors, Inc. (f/k/a Robeco Investment Management, Inc.) is incorporated herein by reference to Post-Effective Amendment No. 160 to the Registrant’s Registration Statement (No. 33-20827) filed on December 23, 2013.
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(11) | Form of Investment Advisory Agreement (Summit Global Investments Global Low Volatility Fund (f/k/a Scotia Dynamic U.S. Growth Fund)) between Registrant and Summit Global Investments, LLC is incorporated herein by reference to Post-Effective Amendment No. 232 to the Registrant’s Registration Statement (No. 33-20827) filed on December 28, 2017.
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(12) | Form of Contractual Fee Waiver Agreement (Summit Global Investments Global Low Volatility Fund) between Registrant and Summit Global Investments, LLC is incorporated herein by reference to Post-Effective Amendment No. 232 to the Registrant’s Registration Statement (No. 33-20827) filed on December 28, 2017.
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(13) | Investment Advisory Agreement (Abbey Capital Futures Strategy Fund) between Registrant and Abbey Capital Limited is incorporated herein by reference to Post-Effective Amendment No. 168 to the Registrant’s Registration Statement (No. 33-20827) filed on June 30, 2014.
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(14) | Investment Advisory Agreement (Abbey Capital Futures Strategy Fund) between Abbey Capital Offshore Fund Limited and Abbey Capital Limited is incorporated herein by reference to Post-Effective Amendment No. 168 to the Registrant’s Registration Statement (No. 33-20827) filed on June 30, 2014.
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(15) | Form of Trading Advisory Agreement (Abbey Capital Futures Strategy Fund) among Abbey Capital Offshore Fund Limited, Abbey Capital Limited and Altis Partners (Jersey) Limited is incorporated herein by reference to Post-Effective Amendment No. 168 to the Registrant’s Registration Statement (No. 33-20827) filed on June 30, 2014.
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(16) | Form of Trading Advisory Agreement (Abbey Capital Futures Strategy Fund) among Abbey Capital Offshore Fund Limited, Abbey Capital Limited and Cantab Capital Partners, LLP is incorporated herein by reference to Post-Effective Amendment No. 168 to the Registrant’s Registration Statement (No. 33-20827) filed on June 30, 2014.
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(17) | Form of Trading Advisory Agreement (Abbey Capital Futures Strategy Fund) among Abbey Capital Offshore Fund Limited, Abbey Capital Limited and Eclipse Capital Management, Inc. is incorporated herein by reference to Post-Effective Amendment No. 168 to the Registrant’s Registration Statement (No. 33-20827) filed on June 30, 2014.
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(18) | Form of Trading Advisory Agreement (Abbey Capital Futures Strategy Fund) among Abbey Capital Offshore Fund Limited, Abbey Capital Limited and Graham Capital Management, LP is incorporated herein by reference to Post-Effective Amendment No. 168 to the Registrant’s Registration Statement (No. 33-20827) filed on June 30, 2014.
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(19) | Form of Trading Advisory Agreement (Abbey Capital Futures Strategy Fund) among Abbey Capital Offshore Fund Limited, Abbey Capital Limited and P/E Investments, LLC is incorporated herein by reference to Post-Effective Amendment No. 168 to the Registrant’s Registration Statement (No. 33-20827) filed on June 30, 2014. |
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(20) | Form of Trading Advisory Agreement (Abbey Capital Futures Strategy Fund) among Abbey Capital Offshore Fund Limited, Abbey Capital Limited and Revolution Capital Management, LLC is incorporated herein by reference to Post-Effective Amendment No. 168 to the Registrant’s Registration Statement (No. 33-20827) filed on June 30, 2014.
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(21) | Form of Trading Advisory Agreement (Abbey Capital Futures Strategy Fund) among Abbey Capital Offshore Fund Limited, Abbey Capital Limited and Trigon Investment Advisors, LLC is incorporated herein by reference to Post-Effective Amendment No. 168 to the Registrant’s Registration Statement (No. 33-20827) filed on June 30, 2014.
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(22) | Form of Trading Advisory Agreement (Abbey Capital Futures Strategy Fund) among Abbey Capital Offshore Fund Limited, Abbey Capital Limited and Harmonic Capital Partners LLP is incorporated herein by reference to Post-Effective Amendment No. 168 to the Registrant’s Registration Statement (No. 33-20827) filed on June 30, 2014.
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(23) | Addendum No. 2 to Investment Advisory Agreement (Robeco WPG Small/Micro Cap Fund) between Registrant and Boston Partners Global Investors, Inc. (f/k/a Robeco Investment Management, Inc.) is incorporated herein by reference to Post-Effective Amendment No. 168 to the Registrant’s Registration Statement (No. 33-20827) filed on June 30, 2014.
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(24) | Form of Investment Advisory Agreement (Adara Smaller Companies Fund (f/k/a Altair Smaller Companies Fund)) between Registrant and Altair Advisers LLC is incorporated herein by reference to Post-Effective Amendment No. 172 to the Registrant’s Registration Statement (No. 33-20827) filed on October 17, 2014.
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(25) | Form of Investment Advisory Agreement dated December 29, 2014 (Campbell Core Trend Fund) between Registrant and Campbell & Company Investment Adviser LLC is incorporated herein by reference to Post-Effective Amendment No. 175 to the Registrant’s Registration Statement (No. 33-20827) filed on December 23, 2014.
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(26) | Form of Investment Advisory Agreement dated January 2, 2015 (Campbell Core Trend Fund) between Registrant and Campbell & Company Investment Adviser LLC is incorporated herein by reference to Post-Effective Amendment No. 175 to the Registrant’s Registration Statement (No. 33-20827) filed on December 23, 2014.
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(27) | Form of Investment Advisory Agreement (Campbell Core Trend Fund) between Campbell Core Offshore Limited and Campbell & Company Investment Adviser LLC is incorporated herein by reference to Post-Effective Amendment No. 175 to the Registrant’s Registration Statement (No. 33-20827) filed on December 23, 2014.
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(28) | Form of Investment Sub-Advisory Agreement (Adara Smaller Companies Fund (f/k/a Altair Smaller Companies Fund)) among Registrant, Altair Advisers LLC and Aperio Group, LLC is incorporated herein by reference to Post-Effective Amendment No. 172 to the Registrant’s Registration Statement (No. 33-20827) filed on October 17, 2014.
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(29) | Form of Investment Sub-Advisory Agreement (Adara Smaller Companies Fund (f/k/a Altair Smaller Companies Fund)) among Registrant, Altair Advisers LLC and Driehaus Capital Management LLC is incorporated herein by reference to Post-Effective Amendment No. 172 to the Registrant’s Registration Statement (No. 33-20827) filed on October 17, 2014. |
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(30) | Form of Investment Sub-Advisory Agreement (Adara Smaller Companies Fund (f/k/a Altair Smaller Companies Fund)) among Registrant, Altair Advisers LLC and Granite Investment Partners, LLC is incorporated herein by reference to Post-Effective Amendment No. 172 to the Registrant’s Registration Statement (No. 33-20827) filed on October 17, 2014.
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(31) | Form of Investment Sub-Advisory Agreement (Adara Smaller Companies Fund (f/k/a Altair Smaller Companies Fund)) among Registrant, Altair Advisers LLC and Pacific Ridge Capital Partners, LLC is incorporated herein by reference to Post-Effective Amendment No. 172 to the Registrant’s Registration Statement (No. 33-20827) filed on October 17, 2014.
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(32) | Form of Investment Sub-Advisory Agreement (Adara Smaller Companies Fund (f/k/a Altair Smaller Companies Fund)) among Registrant, Altair Advisers LLC and Pier Capital, LLC is incorporated herein by reference to Post-Effective Amendment No. 172 to the Registrant’s Registration Statement (No. 33-20827) filed on October 17, 2014.
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(33) | Form of Investment Sub-Advisory Agreement (Adara Smaller Companies Fund (f/k/a Altair Smaller Companies Fund)) among Registrant, Altair Advisers LLC and River Road Asset Management, LLC is incorporated herein by reference to Post-Effective Amendment No. 172 to the Registrant’s Registration Statement (No. 33-20827) filed on October 17, 2014.
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(34) | Form of Addendum No. 3 to Investment Advisory Agreement (Boston Partners Emerging Markets Long/Short Fund) between Registrant and Boston Partners Global Investors, Inc. (f/k/a Robeco Investment Management, Inc.) is incorporated herein by reference to Post-Effective Amendment No. 180 to the Registrant’s Registration Statement (No. 33-20827) filed on August 14, 2015.
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(35) | Form of Investment Advisory Agreement (Campbell Multi-Asset Carry Fund, f/k/a Campbell Core Carry Fund) between Registrant and Campbell & Company Investment Adviser LLC is incorporated herein by reference to Post-Effective Amendment No. 181 to the Registrant’s Registration Statement (No. 33-20827) filed on October 2, 2015.
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(36) | Form of Investment Advisory Agreement (Campbell Multi-Asset Carry Fund, f/k/a Campbell Core Carry Fund) between Campbell Core Carry Offshore Limited and Campbell & Company Investment Adviser LLC is incorporated herein by reference to Post-Effective Amendment No. 181 to the Registrant’s Registration Statement (No. 33-20827) filed on October 2, 2015.
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(37) | Form of Investment Advisory Agreement (Summit Global Investments Small Cap Low Volatility Fund) between Registrant and Summit Global Investments, LLC is incorporated herein by reference to Post-Effective Amendment No. 195 to the Registrant’s Registration Statement (No. 33-20827) filed on March 30, 2016.
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(38) | Form of Contractual Fee Waiver (Summit Global Investments Small Cap Low Volatility Fund) between Registrant and Summit Global Investments, LLC is incorporated herein by reference to Post-Effective Amendment No. 232 to the Registrant’s Registration Statement (No. 33-20827) filed on December 28, 2017.
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(39) | Form of Contractual Fee Waiver (Bogle Investment Management Small Cap Growth Fund) between Registrant and Bogle Investment Management is incorporated herein by reference to Post-Effective Amendment No. 232 to the Registrant’s Registration Statement (No. 33-20827) filed on December 28, 2017. |
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(40) | Form of Contractual Fee Waiver (Campbell Dynamic Trend Fund and Campbell Multi-Asset Carry Fund) between Registrant and Campbell & Company Investment Adviser LLC is incorporated herein by reference to Post-Effective Amendment No. 232 to the Registrant’s Registration Statement (No. 33-20827) filed on December 28, 2017.
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(41) | Form of Contractual Fee Waiver (Abbey Capital Futures Strategy Fund) from April 10, 2017 through April 30, 2018 between Registrant and Abbey Capital Limited is incorporated herein by reference to Post-Effective Amendment No. 216 to the Registrant’s Registration Statement (No. 33-20827) filed on April 10, 2017.
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(42) | Form of Investment Advisory Agreement (Matson Money U.S. Equity VI Portfolio, Matson Money International Equity VI Portfolio, and Matson Money Fixed Income VI Portfolio) between Registrant and Matson Money, Inc. is incorporated herein by reference to Post-Effective Amendment No. 159 to the Registrant’s Registration Statement (No. 33-20827) filed on December 20, 2013.
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(43) | Form of Contractual Fee Waiver (Matson Money U.S. Equity VI Portfolio, Matson Money International Equity VI Portfolio, and Matson Money Fixed Income VI Portfolio) between Registrant and Matson Money Inc. is incorporated herein by reference to Post-Effective Amendment No. 232 to the Registrant’s Registration Statement (No. 33-20827) filed on December 28, 2017.
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(44) | Form of Addendum No. 4 to Investment Advisory Agreement (Boston Partners All-Cap Value Fund) between Registrant and Boston Partners Global Investors, Inc. (f/k/a Robeco Investment Management, Inc.) is incorporated herein by reference to Post-Effective Amendment No. 213 to the Registrant’s Registration Statement (No. 33-20827) filed on February 28, 2017.
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(45) | First Amendment to Investment Advisory Agreement (Abbey Capital Futures Strategy Fund) between Registrant and Abbey Capital Limited is incorporated herein by reference to Post-Effective Amendment No. 216 to the Registrant’s Registration Statement (No. 33-20827) filed on April 10, 2017.
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(46) | Form of Trading Advisory Agreement (Abbey Capital Futures Strategy Fund) among Abbey Capital Offshore Fund Limited, Abbey Capital Limited and Aspect Capital Limited is incorporated herein by reference to Post-Effective Amendment No. 216 to the Registrant’s Registration Statement (No. 33-20827) filed on April 10, 2017.
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(47) | Form of Investment Advisory Agreement (Orinda Income Opportunities Fund) between Registrant and Orinda Asset Management LLC is incorporated herein by reference to Post-Effective Amendment No. 219 to the Registrant’s Registration Statement (No. 33-20827) filed on May 1, 2017.
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(48) | Form of Expense Limitation and Reimbursement Agreement (Orinda Income Opportunities Fund) between Registrant and Orinda Asset Management LLC is incorporated herein by reference to Post-Effective Amendment No. 219 to the Registrant’s Registration Statement (No. 33-20827) filed on May 1, 2017.
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(49) | Form of Investment Advisory Agreement (Campbell Managed Futures 10V Fund) between Registrant and Campbell & Company Investment Adviser LLC is incorporated herein by reference to Post-Effective Amendment No. 220 to the Registrant’s Registration Statement (No. 33-20827) filed on May 9, 2017. |
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(50) | Form of Investment Advisory Agreement (Campbell Managed Futures 10V Fund) between Campbell Managed Futures LV Offshore Limited and Campbell & Company Investment Adviser LLC is incorporated herein by reference to Post-Effective Amendment No. 220 to the Registrant’s Registration Statement (No. 33-20827) filed on May 9, 2017.
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(51) | Form of Expense Limitation and Reimbursement Agreement (Campbell Managed Futures 10V Fund) between Registrant and Campbell & Company Investment Adviser LLC is incorporated herein by reference to Post-Effective Amendment No. 220 to the Registrant’s Registration Statement (No. 33-20827) filed on May 9, 2017.
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(52) | Form of Addendum No. 5 to Investment Advisory Agreement (Boston Partners Emerging Markets Fund) between Registrant and Boston Partners Global Investors, Inc. is incorporated herein by reference to Post-Effective Amendment No. 226 to the Registrant’s Registration Statement (No. 33-20827) filed on August 23, 2017.
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(53) | Form of Contractual Fee Waiver (Boston Partners Emerging Markets Fund) between Registrant and Boston Partners Global Investors, Inc. is incorporated herein by reference to Post-Effective Amendment No. 226 to the Registrant’s Registration Statement (No. 33-20827) filed on August 23, 2017.
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(54) | Form of Investment Advisory Agreement (Motley Fool Global Opportunities Fund (f/k/a Motley Fool Independence Fund), Motley Fool Small-Mid Cap Growth Fund (f/k/a Motley Fool Great America Fund), and Motley Fool Emerging Markets Fund (f/k/a Motley Fool Epic Voyage Fund))between Registrant and Motley Fool Asset Management, LLC is incorporated herein by reference to Post-Effective Amendment No. 206 to the Registrant’s Registration Statement (No. 33-20827) filed on December 21, 2016.
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(55) | Form of Expense Limitation and Reimbursement Agreement (Motley Fool Global Opportunities Fund (f/k/a Motley Fool Independence Fund), Motley Fool Small-Mid Cap Growth Fund (f/k/a Motley Fool Great America Fund), and Motley Fool Emerging Markets Fund (f/k/a Motley Fool Epic Voyage Fund))between Registrant and Motley Fool Asset Management, LLC is incorporated herein by reference to Post-Effective Amendment No. 232 to the Registrant’s Registration Statement (No. 33-20827) filed on December 28, 2017.
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(56) | Amendment to Investment Sub-Advisory Agreement (Adara Smaller Companies Fund (f/k/a Altair Smaller Companies Fund)) among Registrant, Altair Advisers LLC and Aperio Group, LLC will be filed by amendment.
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(57) | Form of Amendment to Trading Advisory Agreement (Abbey Capital Futures Strategy Fund) among Abbey Capital Offshore Fund Limited, Abbey Capital Limited and Aspect Capital Limited is incorporated herein by reference to Post-Effective Amendment No. 232 to the Registrant’s Registration Statement (No. 33-20827) filed on December 28, 2017.
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(58) | Form of Contractual Fee Waiver (Abbey Capital Futures Strategy Fund) from May 1, 2018 through December 31, 2018 between Registrant and Abbey Capital Limited is incorporated herein by reference to Post-Effective Amendment No. 232 to the Registrant’s Registration Statement (No. 33-20827) filed on December 28, 2017. |
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(59) | Form of Investment Advisory Agreement (Motley Fool 100 Index ETF) between Registrant and Motley Fool Asset Management, LLC is incorporated herein by reference to Post-Effective Amendment No. 235 to the Registrant’s Registration Statement (No. 33-20827) filed on January 19, 2018.
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(60) | Form of Investment Advisory Agreement (Aquarius International Fund) between Registrant and Altair Advisers LLC is filed herewith.
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(61) | Form of Investment Sub-Advisory Agreement (Aquarius International Fund Fund) among Registrant, Altair Advisers LLC and Aperio Group, LLC is filed herewith.
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(62) | Form of Investment Sub-Advisory Agreement (Aquarius International Fund Fund) among Registrant, Altair Advisers LLC and Driehaus Capital Management LLC is filed herewith.
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(63) | Form of Investment Sub-Advisory Agreement (Aquarius International Fund Fund) among Registrant, Altair Advisers LLC and Mawer Investment Management Ltd. is filed herewith.
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(64) | Form of Investment Sub-Advisory Agreement (Aquarius International Fund Fund) among Registrant, Altair Advisers LLC and Setanta Asset Management Limited is filed herewith.
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(65) | Form of Investment Advisory Agreement (Abbey Capital Multi Asset Fund) between Registrant and Abbey Capital Limited is incorporated herein by reference to Post-Effective Amendment No. 233 to the Registrant’s Registration Statement (No. 33-20827) filed on January 10, 2018.
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(66) | Form of Investment Advisory Agreement (Abbey Capital Multi Asset Fund) between ACMAF Offshore Fund Limited and Abbey Capital Limited is incorporated herein by reference to Post-Effective Amendment No. 233 to the Registrant’s Registration Statement (No. 33-20827) filed on January 10, 2018.
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(67) | Form of Trading Advisory Agreement (Abbey Capital Multi Asset Fund) among Registrant, Abbey Capital Limited, ACMAF Offshore Fund Limited and Aspect Capital Limited is incorporated herein by reference to Post-Effective Amendment No. 233 to the Registrant’s Registration Statement (No. 33-20827) filed on January 10, 2018.
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(68) | Form of Trading Advisory Agreement (Abbey Capital Multi Asset Fund) among Registrant, Abbey Capital Limited, ACMAF Offshore Fund Limited and Eclipse Capital Management, Inc. is incorporated herein by reference to Post-Effective Amendment No. 233 to the Registrant’s Registration Statement (No. 33-20827) filed on January 10, 2018.
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(69) | Form of Trading Advisory Agreement (Abbey Capital Multi Asset Fund) among Registrant, Abbey Capital Limited, ACMAF Offshore Fund Limited and Revolution Capital Management, LLC is incorporated herein by reference to Post-Effective Amendment No. 233 to the Registrant’s Registration Statement (No. 33-20827) filed on January 10, 2018.
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(70) | Form of Trading Advisory Agreement (Abbey Capital Multi Asset Fund) among Registrant, Abbey Capital Limited, ACMAF Offshore Fund Limited and Welton Investment Partners LLC is incorporated herein by reference to Post-Effective Amendment No. 233 to the Registrant’s Registration Statement (No. 33-20827) filed on January 10, 2018.
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(71) | Form of Contractual Fee Waiver (Abbey Capital Multi Asset Fund) between Registrant and Abbey Capital Limited is incorporated herein by reference to Post-Effective Amendment No. 233 to the Registrant’s Registration Statement (No. 33-20827) filed on January 10, 2018. |
15
(72) | Form of Trading Advisory Agreement (Abbey Capital Futures Strategy Fund) among Abbey Capital Offshore Fund Limited, Abbey Capital Limited, Welton Investment Partners LLC is incorporated herein by reference to Post-Effective Amendment No. 235 to the Registrant’s Registration Statement (No. 33-20827) filed on January 19, 2018.
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(e) | Underwriting Contracts.
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(1) | Distribution Agreement between Registrant, Quasar Distributors, LLC, and Abbey Capital Limited dated June 30, 2016 is incorporated herein by reference to Post-Effective Amendment No. 207 to the Registrant’s Registration Statement (No. 33-20827) filed on December 28, 2016.
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(2) | Distribution Agreement between Registrant, Quasar Distributors, LLC, and Altair Advisers LLC dated June 30, 2016 is incorporated herein by reference to Post-Effective Amendment No. 207 to the Registrant’s Registration Statement (No. 33-20827) filed on December 28, 2016.
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(3) | Distribution Agreement between Registrant, Quasar Distributors, LLC, and Bogle Investment Management, L.P. dated June 30, 2016 is incorporated herein by reference to Post-Effective Amendment No. 207 to the Registrant’s Registration Statement (No. 33-20827) filed on December 28, 2016.
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(4) | Distribution Agreement between Registrant, Quasar Distributors, LLC, and Boston Partners Global Investors, Inc. dated June 30, 2016 is incorporated herein by reference to Post-Effective Amendment No. 207 to the Registrant’s Registration Statement (No. 33-20827) filed on December 28, 2016.
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(5) | Distribution Agreement between Registrant, Quasar Distributors, LLC, and Campbell & Company Investment Adviser LLC dated June 30, 2016 is incorporated herein by reference to Post-Effective Amendment No. 207 to the Registrant’s Registration Statement (No. 33-20827) filed on December 28, 2016.
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(6) | Distribution Agreement between Registrant, Quasar Distributors, LLC, and Matson Money, Inc. dated June 30, 2016 is incorporated herein by reference to Post-Effective Amendment No. 207 to the Registrant’s Registration Statement (No. 33-20827) filed on December 28, 2016.
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(7) | Distribution Agreement between Registrant, Quasar Distributors, LLC, and Schneider Capital Management Company dated June 30, 2016 is incorporated herein by reference to Post-Effective Amendment No. 207 to the Registrant’s Registration Statement (No. 33-20827) filed on December 28, 2016.
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(8) | Distribution Agreement between Registrant, Quasar Distributors, LLC, and Summit Global Investments, LLC dated June 30, 2016 is incorporated herein by reference to Post-Effective Amendment No. 207 to the Registrant’s Registration Statement (No. 33-20827) filed on December 28, 2016.
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(9) | Form of Distribution Agreement (Motley Fool Global Opportunities Fund (f/k/a Motley Fool Independence Fund), Motley Fool Small-Mid Cap Growth Fund (f/k/a Motley Fool Great America Fund), and Motley Fool Emerging Markets Fund (f/k/a Motley Fool Epic Voyage Fund)) between Registrant and Foreside Funds Distributors LLC is incorporated herein by reference to Post-Effective Amendment No. 212 to the Registrant’s Registration Statement (No. 33-20827) filed on February 28, 2017. |
16
(10) | Form of Distribution Agreement (Orinda Income Opportunities Fund) between Registrant, Quasar Distributors, LLC, and Orinda Asset Management LLC is incorporated herein by reference to Post-Effective Amendment No. 219 to the Registrant’s Registration Statement (No. 33-20827) filed on May 1, 2017.
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(11) | Amendment to the Distribution Agreement (Campbell Managed Futures 10V Fund) between Registrant, Quasar Distributors, LLC, and Campbell & Company Investment Adviser LLC is incorporated herein by reference to Post-Effective Amendment No. 224 to the Registrant’s Registration Statement (No. 33-20827) filed on July 28, 2017.
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(12) | Form of Amendment to the Distribution Agreement between Registrant, Quasar Distributors, LLC, and Boston Partners Global Investors, Inc. dated June 30, 2016 is incorporated herein by reference to Post-Effective Amendment No. 226 to the Registrant’s Registration Statement (No. 33-20827) filed on August 23, 2017.
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(13) | Amendment to Distribution Agreement between Registrant, Quasar Distributors, LLC, and Abbey Capital Limited dated July 11, 2017 is incorporated herein by reference to Post-Effective Amendment No. 232 to the Registrant’s Registration Statement (No. 33-20827) filed on December 28, 2017.
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(14) | Form of Distribution Agreement (Motley Fool 100 Index ETF) between Registrant, Quasar Distributors, LLC, and Motley Fool Asset Management, LLC is incorporated herein by reference to Post-Effective Amendment No. 235 to the Registrant’s Registration Statement (No. 33-20827) filed on January 19, 2018.
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(15) | Form of Amendment to the Distribution Agreement (Aquarius International Fund) between Registrant, Quasar Distributors, LLC, and Altair Advisers LLC is filed herewith.
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(16) | Amendment to Distribution Agreement (Abbey Capital Multi-Asset Fund) between Registrant, Quasar Distributors, LLC and Abbey Capital Limited will be filed by amendment.
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(f) | Bonus or Profit Sharing Contracts.
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(1) | Form of Deferred Compensation Plan is incorporated herein by reference to Post-Effective Amendment No. 160 to the Registrant’s Registration Statement (No. 33-20827) filed on December 23, 2013.
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(2) | Form of Deferred Compensation Agreement is incorporated herein by reference to Post-Effective Amendment No. 160 to the Registrant’s Registration Statement (No. 33-20827) filed on December 23, 2013.
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(g) | Custodian Agreements.
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(1) | Custody Agreement between Registrant and U.S. Bank National Association dated June 30, 2016 is incorporated herein by reference to Post-Effective Amendment No. 207 to the Registrant’s Registration Statement (No. 33-20827) filed on December 28, 2016.
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(2) | First Amendment dated June 30, 2016 to the Custody Agreement between Registrant and U.S. Bank National Association is incorporated herein by reference to Post-Effective Amendment No. 207 to the Registrant’s Registration Statement (No. 33-20827) filed on December 28, 2016. |
17
(3) | Addendum to Custody Agreement dated January 5, 2017 is incorporated herein by reference to Post-Effective Amendment No. 216 to the Registrant’s Registration Statement (No. 33-20827) filed on April 10, 2017.
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(4) | Form of Second Amendment dated May 1, 2017 to the Custody Agreement between Registrant and U.S. Bank National Association is incorporated herein by reference to Post-Effective Amendment No. 219 to the Registrant’s Registration Statement (No. 33-20827) filed on May 1, 2017.
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(5) | Form of Third Amendment to the Custody Agreement between Registrant and U.S. Bank National Association is incorporated herein by reference to Post-Effective Amendment No. 224 to the Registrant’s Registration Statement (No. 33-20827) filed on July 28, 2017.
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(6) | Form of Fourth Amendment to the Custody Agreement between Registrant and U.S. Bank National Association is incorporated herein by reference to Post-Effective Amendment No. 226 to the Registrant’s Registration Statement (No. 33-20827) filed on August 23, 2017.
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(7) | Form of Fifth Amendment to the Custody Agreement between Registrant and U.S. Bank National Association dated December 1, 2017 is incorporated herein by reference to Post-Effective Amendment No. 232 to the Registrant’s Registration Statement (No. 33-20827) filed on December 28, 2017.
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(8) | Form of Custody Agreement (Motley Fool 100 Index ETF) between Registrant and U.S. Bank National Association is incorporated herein by reference to Post-Effective Amendment No. 235 to the Registrant’s Registration Statement (No. 33-20827) filed on January 19, 2018.
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(9) | Form of Amendment to the Custody Agreement (Aquarius International Fund) between Registrant and U.S. Bank National Association is filed herewith.
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(10) |
Form of Amendment to the Custody Agreement (Abbey Capital Multi Asset Fund) between Registrant and U.S. Bank National Association will be filed by amendment.
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(h) | Other Material Contracts.
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(1) | Non 12b-1 Shareholder Services Plan and Agreement (Bogle Investment Management Small Cap Growth - Investor Shares) is incorporated herein by reference to Post-Effective Amendment No. 67 to the Registrant’s Registration Statement (No. 33-20827) filed on September 30, 1999.
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(2) | Non-12b-1 Shareholder Services Plan and Related Form of Shareholder Servicing Agreement (Robeco WPG Small/Micro Cap Value Fund f/k/a Robeco WPG Tudor Fund – Institutional Class) is incorporated herein by reference to Post-Effective Amendment No. 100 to the Registrant’s Registration Statement (No. 33-20827) filed on November 25, 2005.
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(3) | Services Plan for Class I Shares and Form of Servicing Agreement (Summit Global Investments Global Low Volatility Fund, formerly known as Scotia Dynamic U.S. Growth Fund) are incorporated herein by reference to Post-Effective Amendment No. 161 to the Registrant’s Registration Statement (No. 33-20827) filed on December 27, 2013. |
18
(4) | Services Plan for Class II Shares and Form of Servicing Agreement (Summit Global Investments Global Low Volatility Fund, formerly known as Scotia Dynamic U.S. Growth Fund) are incorporated herein by reference to Post-Effective Amendment No. 161 to the Registrant’s Registration Statement (No. 33-20827) filed on December 27, 2013.
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(5) | Fund Accounting Servicing Agreement between Registrant and U.S. Bancorp Fund Services, LLC dated June 30, 2016 is incorporated herein by reference to Post-Effective Amendment No. 207 to the Registrant’s Registration Statement (No. 33-20827) filed on December 28, 2016.
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(6) | First Amendment to the Fund Accounting Servicing Agreement between Registrant and U.S. Bancorp Fund Services, LLC is incorporated herein by reference to Post-Effective Amendment No. 207 to the Registrant’s Registration Statement (No. 33-20827) filed on December 28, 2016.
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(7) | Form of Second Amendment to the Fund Accounting Servicing Agreement between Registrant and U.S. Bancorp Fund Services, LLC is incorporated herein by reference to Post-Effective Amendment No. 219 to the Registrant’s Registration Statement (No. 33-20827) filed on May 1, 2017.
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(8) | Form of Third Amendment to the Fund Accounting Servicing Agreement between Registrant and U.S. Bancorp Fund Services, LLC is incorporated herein by reference to Post-Effective Amendment No. 224 to the Registrant’s Registration Statement (No. 33-20827) filed on July 28, 2017.
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(9) | Form of Fourth Amendment to the Fund Accounting Servicing Agreement between Registrant and U.S. Bancorp Fund Services, LLC is incorporated herein by reference to Post-Effective Amendment No. 226 to the Registrant’s Registration Statement (No. 33-20827) filed on August 23, 2017.
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(10) | Form of Fifth Amendment to the Fund Accounting Servicing Agreement between Registrant and U.S. Bancorp Fund Services, LLC dated December 1, 2017 is incorporated herein by reference to Post-Effective Amendment No. 232 to the Registrant’s Registration Statement (No. 33-20827) filed on December 28, 2017.
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(11) | Form of Fund Accounting Servicing Agreement (Motley Fool 100 Index ETF) between Registrant and U.S. Bancorp Fund Services, LLC is incorporated herein by reference to Post-Effective Amendment No. 235 to the Registrant’s Registration Statement (No. 33-20827) filed on January 19, 2018.
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(12) | Form of Amendment to the Fund Accounting Servicing Agreement (Aquarius International Fund) between Registrant and U.S. Bancorp Fund Services, LLC is filed herewith.
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(13) | Form of Amendment to the Fund Accounting Servicing Agreement (Abbey Capital Multi Asset Fund) between Registrant and U.S. Bancorp Fund Services, LLC will be filed by amendment.
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(14) | Fund Administration Servicing Agreement between Registrant and U.S. Bancorp Fund Services, LLC dated June 30, 2016 is incorporated herein by reference to Post-Effective Amendment No. 207 to the Registrant’s Registration Statement (No. 33-20827) filed on December 28, 2016.
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(15) | First Amendment to the Fund Administration Servicing Agreement between Registrant and U.S. Bancorp Fund Services, LLC is incorporated herein by reference to Post-Effective Amendment No. 207 to the Registrant’s Registration Statement (No. 33-20827) filed on December 28, 2016. |
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(16) | Form of Second Amendment to the Fund Administration Servicing Agreement between Registrant and U.S. Bancorp Fund Services, LLC is incorporated herein by reference to Post-Effective Amendment No. 219 to the Registrant’s Registration Statement (No. 33-20827) filed on May 1, 2017.
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(17) | Form of Third Amendment to the Fund Administration Servicing Agreement between Registrant and U.S. Bancorp Fund Services, LLC is incorporated herein by reference to Post-Effective Amendment No. 224 to the Registrant’s Registration Statement (No. 33-20827) filed on July 28, 2017.
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(18) | Form of Fourth Amendment to the Fund Administration Servicing Agreement between Registrant and U.S. Bancorp Fund Services, LLC is incorporated herein by reference to Post-Effective Amendment No. 226 to the Registrant’s Registration Statement (No. 33-20827) filed on August 23, 2017.
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(19) | Form of Fifth Amendment to the Fund Administration Servicing Agreement between Registrant and U.S. Bancorp Fund Services, LLC dated December 1, 2017 is incorporated herein by reference to Post-Effective Amendment No. 232 to the Registrant’s Registration Statement (No. 33-20827) filed on December 28, 2017.
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(20) | Form of Fund Administration Servicing Agreement (Motley Fool 100 Index ETF) between Registrant and U.S. Bancorp Fund Services, LLC is incorporated herein by reference to Post-Effective Amendment No. 235 to the Registrant’s Registration Statement (No. 33-20827) filed on January 19, 2018.
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(21) | Form of Amendment to the Fund Administration Servicing Agreement (Aquarius International Fund) between Registrant and U.S. Bancorp Fund Services, LLC is filed herewith.
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(22) | Form of Amendment to the Fund Administration Servicing Agreement (Abbey Capital Multi Asset Fund) between Registrant and U.S. Bancorp Fund Services, LLC will be filed by amendment.
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(23) | Transfer Agent Servicing Agreement between Registrant and U.S. Bancorp Fund Services, LLC dated June 30, 2016 is incorporated herein by reference to Post-Effective Amendment No. 207 to the Registrant’s Registration Statement (No. 33-20827) filed on December 28, 2016.
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(24) | First Amendment to the Transfer Agent Servicing Agreement between Registrant and U.S. Bancorp Fund Services, LLC is incorporated herein by reference to Post-Effective Amendment No. 207 to the Registrant’s Registration Statement (No. 33-20827) filed on December 28, 2016.
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(25) | Form of Second Amendment to the Transfer Agent Servicing Agreement between Registrant and U.S. Bancorp Fund Services, LLC is incorporated herein by reference to Post-Effective Amendment No. 219 to the Registrant’s Registration Statement (No. 33-20827) filed on May 1, 2017.
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(26) | Form of Third Amendment to the Transfer Agent Servicing Agreement between Registrant and U.S. Bancorp Fund Services, LLC is incorporated herein by reference to Post-Effective Amendment No. 224 to the Registrant’s Registration Statement (No. 33-20827) filed on July 28, 2017. |
20
(27) | Form of Fourth Amendment to the Transfer Agent Servicing Agreement between Registrant and U.S. Bancorp Fund Services, LLC is incorporated herein by reference to Post-Effective Amendment No. 226 to the Registrant’s Registration Statement (No. 33-20827) filed on August 23, 2017.
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(28) | Form of Fifth Amendment to the Transfer Agent Servicing Agreement between Registrant and U.S. Bancorp Fund Services, LLC dated December 1, 2017 is incorporated herein by reference to Post-Effective Amendment No. 232 to the Registrant’s Registration Statement (No. 33-20827) filed on December 28, 2017.
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(29) | Form of Transfer Agent Servicing Agreement (Motley Fool 100 Index ETF) between Registrant and U.S. Bancorp Fund Services, LLC is incorporated herein by reference to Post-Effective Amendment No. 235 to the Registrant’s Registration Statement (No. 33-20827) filed on January 19, 2018.
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(30) | Form of Amendment to the Transfer Agent Servicing Agreement (Aquarius International Fund) between Registrant and U.S. Bancorp Fund Services, LLC is filed herewith.
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(31) | Form of Amendment to the Transfer Agent Servicing Agreement (Abbey Capital Multi Asset Fund) between Registrant and U.S. Bancorp Fund Services, LLC will be filed by amendment.
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(i) | (1) | Opinion of Counsel is filed herewith.
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(2) | Consent of Counsel is filed herewith.
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(j) | None.
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(k) | None.
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(l) | Initial Capital Agreements.
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(1) | Subscription Agreement, relating to Classes A through N, is incorporated herein by reference to Pre-Effective Amendment No. 2 to Registrant’s Registration Statement (No. 33-20827) filed on July 12, 1988, and refiled electronically with Post-Effective Amendment No. 61 to Registrant’s Registration Statement filed on October 30, 1998.
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(2) | Subscription Agreement between Registrant and Planco Financial Services, Inc., relating to Classes O and P is incorporated herein by reference to Post-Effective Amendment No. 5 to the Registrant’s Registration Statement (No. 33-20827) filed on December 14, 1990.
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(3) | Subscription Agreement between Registrant and Planco Financial Services, Inc., relating to Class Q is incorporated herein by reference to Post-Effective Amendment No. 5 to the Registrant’s Registration Statement (No. 33-20827) filed on December 14, 1990.
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(4) | Subscription Agreement between Registrant and Counselors Securities Inc. relating to Classes R, S, and Alpha 1 through Theta 4 is incorporated herein by reference to Post-Effective Amendment No. 7 to the Registrant’s Registration Statement (No. 33-20827) filed on July 15, 1992, and refiled electronically with Post-Effective Amendment No. 61 to Registrant’s Registration Statement filed on October 30, 1998.
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(5) | Purchase Agreement between Registrant and Boston Partners Asset Management, L.P. relating to Classes TT and UU (Boston Partners Mid Cap Value Fund) is incorporated herein by reference to Post-Effective Amendment No. 46 to the Registrant’s Registration Statement (No. 33-20827) filed on September 25, 1997.
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(6) | Purchase Agreement between Registrant and Schneider Capital Management Company relating to Class YY (Schneider Small Cap Value Fund) is incorporated herein by reference to Post-Effective Amendment No. 60 to the Registrant’s Registration Statement (No. 33-20827) filed on October 29, 1998.
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(7) | Purchase Agreement between Registrant and Boston Partners Asset Management, L.P. relating to Classes DDD and EEE (Boston Partners Small Cap Value Fund II (formerly Micro Cap Value)) is incorporated herein by reference to Post-Effective Amendment No. 60 to the Registrant’s Registration Statement (No. 33-20827) filed on October 29, 1998. |
23
(8) | Purchase Agreement between Registrant and Boston Partners Asset Management relating to Classes III and JJJ (Boston Partners Long/Short Equity Fund (formerly Market Neutral)) is incorporated herein by reference to Post-Effective Amendment No. 63 to the Registrant’s Registration Statement (No. 33-20827) filed on December 14, 1998.
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(9) | Form of Purchase Agreement between Registrant and Boston Partners Asset Management, L. P. relating to Classes KKK and LLL (Boston Partners Fund (formerly Long-Short Equity)) is incorporated herein by reference to Post-Effective Amendment No. 65 to the Registrant’s Registration Statement (No. 33-20827) filed on May 19, 1999.
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(10) | Purchase Agreement (Bogle Investment Management Small Cap Growth Fund) between Registrant and Bogle Investment Management, L.P. is incorporated herein by reference to Post-Effective Amendment No. 67 to the Registrant’s Registration Statement (No. 33-20827) filed on September 30, 1999.
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(11) | Purchase Agreement (Boston Partners All-Cap Value Fund) between Registrant and Boston Partners Asset Management, L.P. is incorporated herein by reference to Post-Effective Amendment No. 80 to the Registrant’s Registration Statement (No. 33-20827) filed on November 1, 2002.
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(12) | Purchase Agreement (Schneider Value Fund) between Registrant and Schneider Capital Management Company is incorporated herein by reference to Post-Effective Amendment No. 80 to the Registrant’s Registration Statement (No. 33-20827) filed on November 1, 2002.
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(13) | Purchase Agreement (Robeco WPG Small/Micro Cap Value Fund f/k/a Robeco WPG Tudor Fund) between Registrant and Weiss, Peck & Greer Investments is incorporated herein by reference to Post-Effective Amendment No. 96 to the Registrant’s Registration Statement (No. 33-20827) filed on June 6, 2005.
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(14) | Form of Purchase Agreement (Free Market U.S. Equity Fund) between Registrant and Matson Money, Inc. (f/k/a Abundance Technologies, Inc.), is incorporated herein by reference to Post-Effective Amendment No. 112 to the Registrant’s Registration Statement (No. 33-20827) filed on June 1, 2007.
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(15) | Form of Purchase Agreement (Free Market International Equity Fund) between Registrant and Matson Money, Inc. (f/k/a Abundance Technologies, Inc.), is incorporated herein by reference to Post-Effective Amendment No. 112 to the Registrant’s Registration Statement (No. 33-20827) filed on June 1, 2007.
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(16) | Form of Purchase Agreement (Free Market Fixed Income Fund) between Registrant and Matson Money, Inc. (f/k/a Abundance Technologies, Inc.), is incorporated herein by reference to Post-Effective Amendment No. 112 to the Registrant’s Registration Statement (No. 33-20827) filed on June 1, 2007.
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(17) | Form of Purchase Agreement (Perimeter Small Cap Growth Fund) between Registrant and Perimeter Capital Management is incorporated herein by reference to Post-Effective Amendment No. 134 to the Registrant’s Registration Statement (No. 33-20827) filed on December 30, 2009.
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(18) | Purchase Agreement (S1 Fund) between Registrant and Simple Alternatives, LLC is incorporated herein by reference to Post-Effective Amendment No. 138 to the Registration Statement (No. 33-20827) filed on October 29, 2010. |
24
(19) | Purchase Agreement (Robeco Boston Partners Long/Short Research Fund) between Registrant and Robeco Investment Management Inc. is incorporated herein by reference to Post-Effective Amendment No. 136 to the Registrant’s Registration Statement (No. 33-20827) filed on August 4, 2010.
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(20) | Form of Purchase Agreement (Robeco Boston Partners Global Equity Fund) between Registrant and Robeco Investment Management Inc. is incorporated herein by reference to Post-Effective Amendment No. 142 to the Registrant’s Registration Statement (No. 33-20827) filed on October 14, 2011.
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(21) | Form of Purchase Agreement (Robeco Boston Partners International Equity Fund) between Registrant and Robeco Investment Management Inc. is incorporated herein by reference to Post-Effective Amendment No. 142 to the Registrant’s Registration Statement (No. 33-20827) filed on October 14, 2011.
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(22) | Purchase Agreement (Summit Global Investments U.S. Low Volatility Equity Fund) between Registrant and Summit Global Investments, LLC is incorporated herein by reference to Post-Effective Amendment No. 157 to the Registrant’s Registration Statement (No. 33-20827) filed on October 29, 2013.
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(23) | Form of Purchase Agreement (Robeco Boston Partners Global Long/Short Fund-Investor Class) between Registrant and Robeco Investment Management Inc. is incorporated hereby by reference to Post-Effective Amendment No. 160 to the Registrant’s Registration Statement (No. 33-20827) filed on December 23, 2013.
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(24) | Form of Purchase Agreement (Robeco Boston Partners Global Long/Short Fund-Institutional Class) between Registrant and Robeco Investment Management Inc. is incorporated hereby by reference to Post-Effective Amendment No. 160 to the Registrant’s Registration Statement (No. 33-20827) filed on December 23, 2013.
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(25)
|
Form of Purchase Agreement (Robeco Boston Partners Global Long/Short Fund-Investor Class) between Registrant and Robeco Investment Management Inc. is incorporated hereby by reference to Post-Effective Amendment No. 160 to the Registrant’s Registration Statement (No. 33-20827) filed on December 23, 2013.
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(26) | Form of Purchase Agreement (Summit Global Investments Global Low Volatility Fund, formerly known as Scotia Dynamic U.S. Growth Fund) between Registrant and Scotia Institutional Asset Management US, Ltd. is incorporated herein by reference to Post-Effective Amendment No. 168 to the Registrant’s Registration Statement (No. 33-20827) filed on June 30, 2014.
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(27) | Form of Purchase Agreement (Abbey Capital Futures Strategy Fund) between Registrant and Abbey Capital Limited is incorporated herein by reference to Post-Effective Amendment No. 168 to the Registrant’s Registration Statement (No. 33-20827) filed on June 30, 2014.
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(28) | Form of Purchase Agreement (Adara Smaller Companies Fund (f/k/a Altair Smaller Companies Fund)) between Registrant and Altair Advisers LLC is incorporated herein by reference to Post-Effective Amendment No. 172 to the Registrant’s Registration Statement (No. 33-20827) filed on October 17, 2014. |
25
(29) | Form of Purchase Agreement (Campbell Core Trend Fund) between Registrant and Campbell & Company, Inc. is incorporated herein by reference to Post-Effective Amendment No. 175 to the Registrant’s Registration Statement (No. 33-20827) filed on December 23, 2014.
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(30) | Purchase Agreement (Boston Partners Emerging Markets Long/Short Fund) between Registrant and Robeco Investment Management, Inc. is incorporated herein by reference to Post-Effective Amendment No. 187 to the Registrant’s Registration Statement (No. 33-20827) filed on December 29, 2015.
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(31) | Purchase Agreement (Campbell Core Carry Fund) between Registrant and Campbell & Company, Inc. is incorporated herein by reference to Post-Effective Amendment No. 187 to the Registrant’s Registration Statement (No. 33-20827) filed on December 29, 2015.
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(32) | Form of Purchase Agreement (Boston Partners Alpha Blue Dynamic Equity Fund) between Registrant and Robeco Investment Management, Inc. is incorporated herein by reference to Post-Effective Amendment No. 182 to the Registration Statement (No. 33-20827) filed on October 16, 2015.
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(33) | Form of Purchase Agreement (Summit Global Investments Small Cap Low Volatility Fund) between Registrant and Summit Global Investments, LLC is incorporated herein by reference to Post-Effective Amendment No. 195 to the Registrant’s Registration Statement (No. 33-20827) filed on March 30, 2016.
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(34) | Form of Purchase Agreement Form of Purchase Agreement (Motley Fool Global Opportunities Fund (f/k/a Motley Fool Independence Fund), Motley Fool Small-Mid Cap Growth Fund (f/k/a Motley Fool Great America Fund), and Motley Fool Emerging Markets Fund (f/k/a Motley Fool Epic Voyage Fund))between Registrant and Motley Fool Asset Management, LLC is incorporated herein by reference to Post-Effective Amendment No. 206 to the Registrant’s Registration Statement (No. 33-20827) filed on December 21, 2016.
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(35) | Form of Purchase Agreement (Orinda Income Opportunities Fund) between Registrant and Orinda Asset Management LLC is incorporated herein by reference to Post-Effective Amendment No. 219 to the Registrant’s Registration Statement (No. 33-20827) filed on May 1, 2017.
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(36) | Form of Purchase Agreement (Campbell Managed Futures 10V Fund) between Registrant and Campbell & Company Investment Adviser LLC is incorporated herein by reference to Post-Effective Amendment No. 220 to the Registrant’s Registration Statement (No. 33-20827) filed on May 9, 2017.
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(37) | Form of Purchase Agreement (Boston Partners Emerging Markets Fund) between Registrant and Boston Partners Global Investors, Inc. is incorporated herein by reference to Post-Effective Amendment No. 226 to the Registrant’s Registration Statement (No. 33-20827) filed on August 23, 2017.
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(38) | Purchase Agreement (Motley Fool 100 Index Fund) between Registrant and Motley Fool Asset Management, LLC is incorporated herein by reference to Post-Effective Amendment No. 235 to the Registrant’s Registration Statement (No. 33-20827) filed on January 19, 2018.
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(39) | Form of Purchase Agreement (Aquarius International Fund) between Registrant and Altair Advisers LLC is filed herewith.
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(40) | Purchase Agreement (Abbey Capital Multi Asset Fund) between Registrant and Abbey Capital Limited will be filed by Amendment.
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(m) | Rule 12b-1 Plan.
|
26
(1) | Plan of Distribution (Boston Partners Mid Cap Value Fund - Investor Class) is incorporated herein by reference to Post-Effective Amendment No. 45 to the Registrant’s Registration Statement (No. 33-20827) filed on May 9, 1997.
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(2) | Plan of Distribution (Boston Partners Small Cap Value Fund II (formerly Micro Cap Value) - Investor Class) is incorporated herein by reference to Post-Effective Amendment No. 53 to the Registrant’s Registration Statement (No. 33-20827) filed on April 10, 1998.
| |
(3) | Amendment to Plans of Distribution pursuant to Rule 12b-1 is incorporated herein by reference to Post-Effective Amendment No. 63 to the Registrant’s Registration Statement (No. 33-20827) filed on December 14, 1998.
| |
(4) | Plan of Distribution (Boston Partners Long/Short Equity Fund (formerly Market Neutral) - Investor Class) is incorporated herein by reference to Post-Effective Amendment No. 62 to the Registrant’s Registration Statement (No. 33-20827) filed on November 12, 1998.
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(5) | Plan of Distribution (Boston Partners Fund (formerly Long Short Equity) - Investor Class) is incorporated herein by reference to Post-Effective Amendment No. 65 to the Registrant’s Registration Statement (No. 33-20827) filed on May 19, 1999.
| |
(6) | Plan of Distribution pursuant to Rule 12b-1 (Boston Partners All-Cap Value Fund) is incorporated herein by reference to Post-Effective Amendment No. 80 to the Registrant’s Registration Statement (No. 33-20827) filed on November 1, 2002.
| |
(7) | Plan of Distribution pursuant to Rule 12b-1(Robeco Boston Partners Long/Short Research Fund — Investor Class) is incorporated herein by reference to Post-Effective Amendment No. 141 to the Registrant’s Registration Statement (No. 33-20827) filed on December 28, 2010.
| |
(8) | Plan of Distribution pursuant to Rule 12b-1(Robeco Boston Partners Global Equity Fund — Investor Class) is incorporated herein by reference to Post-Effective Amendment No. 142 to the Registrant’s Registration Statement (No. 33-20827) filed on October 14, 2011.
| |
(9) | Plan of Distribution pursuant to Rule 12b-1 (Robeco Boston Partners International Equity Fund — Investor Class) is incorporated herein by reference to Post-Effective Amendment No. 142 to the Registrant’s Registration Statement (No. 33-20827) filed on October 14, 2011.
| |
(10) | Plan of Distribution pursuant to Rule 12b-1 (Summit Global Investments U.S. Low Volatility Equity Fund — Retail Class) is incorporated by reference to Post-Effective Amendment No. 144 to Registrant’s Registration Statement (No. 33-20827) filed on December 15, 2011.
| |
(11) | Plan of Distribution pursuant to Rule 12b-1 (Summit Global Investments U.S. Low Volatility Equity Fund – Class A) is incorporated by reference to Post-Effective Amendment No. 144 to Registrant’s Registration Statement (No. 33-20827) filed on December 15, 2011.
| |
(12) | Plan of Distribution pursuant to Rule 12b-1 (Robeco Boston Partners Global Long/Short Fund — Investor Class) is incorporated herein by reference to Post-Effective Amendment No. 154 to the Registrant’s Registration Statement (No. 33-20827) filed on July 11, 2013. |
(13) | Plan of Distribution pursuant to Rule 12b-1 (Abbey Capital Futures Strategy Fund — Class A) is incorporated herein by reference to Post-Effective Amendment No. 168 to the Registrant’s Registration Statement (No. 33-20827) filed on June 30, 2014.
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(14) | Plan of Distribution pursuant to Rule 12b-1 (Abbey Capital Futures Strategy Fund — Class C) is incorporated herein by reference to Post-Effective Amendment No. 168 to the Registrant’s Registration Statement (No. 33-20827) filed on June 30, 2014.
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(15) | Plan of Distribution pursuant to Rule 12b-1 (Summit Global Investments U.S. Low Volatility Equity Fund —Class C) is incorporated herein by reference to Post-Effective Amendment No. 184 to the Registrant’s Registration Statement (No. 33-20827) filed on October 30, 2015.
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(16) | Plan of Distribution pursuant to Rule 12b-1 (Summit Global Investments Small Cap Low Volatility Fund – Retail Class) is incorporated herein by reference to Post-Effective Amendment No. 195 to the Registrant’s Registration Statement (No. 33-20827) filed on March 30, 2016.
| |
(17) | Plan of Distribution pursuant to Rule 12b-1 (Summit Global Investments Small Cap Low Volatility Fund – Class C) is incorporated herein by reference to Post-Effective Amendment No. 195 to the Registrant’s Registration Statement (No. 33-20827) filed on March 30, 2016.
| |
(18) | Plan of Distribution pursuant to Rule 12b-1 (Abbey Capital Futures Strategy Fund — Class T) is incorporated herein by reference to Post-Effective Amendment No. 216 to the Registrant’s Registration Statement (No. 33-20827) filed on April 10, 2017.
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(19) | Plan of Distribution pursuant to Rule 12b-1 (Orinda Income Opportunities Fund — Class A) is incorporated herein by reference to Post-Effective Amendment No. 219 to the Registrant’s Registration Statement (No. 33-20827) filed on May 1, 2017.
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(20) | Plan of Distribution pursuant to Rule 12b-1 (Orinda Income Opportunities Fund — Class D) is incorporated herein by reference to Post-Effective Amendment No. 219 to the Registrant’s Registration Statement (No. 33-20827) filed on May 1, 2017.
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(21) | Plan of Distribution pursuant to Rule 12b-1 (Campbell Managed Futures 10V Fund — Class N) is incorporated herein by reference to Post-Effective Amendment No. 224 to the Registrant’s Registration Statement (No. 33-20827) filed on July 28, 2017.
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(22) | Plan of Distribution pursuant to Rule 12b-1 (Campbell Managed Futures 10V Fund — Class T) is incorporated herein by reference to Post-Effective Amendment No. 224 to the Registrant’s Registration Statement (No. 33-20827) filed on July 28, 2017.
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(23) | Form of Plan of Distribution pursuant to Rule 12b-1 (Summit Global Investments Global Low Volatility Fund – Class A Shares (formerly Class II Shares)) is incorporated herein by reference to Post-Effective Amendment No. 232 to the Registrant’s Registration Statement (No. 33-20827) filed on December 28, 2017.
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(24) | Form of Plan of Distribution pursuant to Rule 12b-1 (Summit Global Investments Global Low Volatility Fund – Class C Shares (formerly Institutional Shares)) is incorporated herein by reference to Post-Effective Amendment No. 232 to the Registrant’s Registration Statement (No. 33-20827) filed on December 28, 2017.
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(25) | Plan of Distribution pursuant to Rule 12b-1 (Abbey Capital Multi Asset Fund – Class A Shares) will be filed by amendment. |
(26) | Plan of Distribution pursuant to Rule 12b-1 (Abbey Capital Multi Asset Fund – Class C Shares) will be filed by amendment.
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(n) | Rule 18f-3 Plan.
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(1) | Amended Rule 18f-3 Plan will be filed by amendment.
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(p) | Code of Ethics. | |
(1) | Code of Ethics of the Registrant is incorporated herein by reference to Post-Effective Amendment No. 232 to the Registrant’s Registration Statement (No. 33-20827) filed on December 28, 2017.
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(2) | Code of Ethics of Robeco Investment Management is incorporated herein by reference to Post-Effective Amendment No. 145 to the Registrant’s Registration Statement (No. 33-20827) filed on December 30, 2011.
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(3) | Code of Ethics of Schneider Capital Management Company is incorporated herein by reference to Post-Effective Amendment No. 129 to the Registrant’s Registration Statement (No. 33-20827) filed on July 2, 2009.
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(4) | Code of Ethics of Bogle Investment Management, L.P. is incorporated herein by reference to Post-Effective Amendment No. 129 to the Registrant’s Registration Statement (No. 33-20827) filed on July 2, 2009.
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(5) | Code of Ethics of Matson Money, Inc. is incorporated herein by reference to Post-Effective Amendment No. 145 to the Registrant’s Registration Statement (No. 33-20827) filed on December 30, 2011.
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(6) | Code of Ethics of Foreside Funds Distributors LLC is incorporated herein by reference to Post-Effective Amendment No. 182 to the Registrant’s Registration Statement (No. 33-20827) filed on October 16, 2015.
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(7) | Code of Ethics of Summit Global Investments, LLC is incorporated herein by reference to Post-Effective Amendment No. 145 to the Registrant’s Registration Statement (No. 33-20827) filed on December 30, 2011.
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(8) | Code of Ethics of Abbey Capital Limited is incorporated herein by reference to Post-Effective Amendment No. 168 to the Registrant’s Registration Statement (No. 33-20827) filed on June 30, 2014.
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(9) | Code of Ethics of Altair Advisers LLC is incorporated herein by reference to Post-Effective Amendment No. 172 to the Registrant’s Registration Statement (No. 33-20827) filed on October 17, 2014.
| |
(10) | Code of Ethics of Aperio Group is incorporated herein by reference to Post-Effective Amendment No. 172 to the Registrant’s Registration Statement (No. 33-20827) filed on October 17, 2014.
| |
(11) | Code of Ethics of Driehaus Capital Management LLC is incorporated herein by reference to Post-Effective Amendment No. 172 to the Registrant’s Registration Statement (No. 33-20827) filed on October 17, 2014. |
(12) | Code of Ethics of Granite Investment Partners, LLC is incorporated herein by reference to Post-Effective Amendment No. 172 to the Registrant’s Registration Statement (No. 33-20827) filed on October 17, 2014.
|
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(13) | Code of Ethics of Pacific Ridge Capital Partners, LLC is incorporated herein by reference to Post-Effective Amendment No. 172 to the Registrant’s Registration Statement (No. 33-20827) filed on October 17, 2014.
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(14) | Code of Ethics of Pier Capital LLC is incorporated herein by reference to Post-Effective Amendment No. 172 to the Registrant’s Registration Statement (No. 33-20827) filed on October 17, 2014.
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(15) | Code of Ethics of River Road Asset Management, LLC is incorporated herein by reference to Post-Effective Amendment No. 172 to the Registrant’s Registration Statement (No. 33-20827) filed on October 17, 2014.
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(16) | Code of Ethics of Campbell & Company Investment Adviser LLC is incorporated herein by reference to Post-Effective Amendment No. 175 to the Registrant’s Registration Statement (No. 33-20827) filed on December 23, 2014.
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(17) | Code of Ethics of Motley Fool Asset Management, LLC is incorporated herein by reference to Post-Effective Amendment No. 206 to the Registrant’s Registration Statement (No. 33-20827) filed on December 21, 2016.
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(18) | Code of Ethics of Quasar Distributors, LLC is incorporated herein by reference to Post-Effective Amendment No. 210 to the Registrant’s Registration Statement (No. 33-20827) filed on January 31, 2017.
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(19) | Code of Ethics of Orinda Asset Management LLC is incorporated herein by reference to Post-Effective Amendment No. 232 to the Registrant’s Registration Statement (No. 33-20827) filed on December 28, 2017.
| |
(20) | Code of Ethics of Mawer Investment Management Ltd. will be filed by amendment.
| |
(21) | Code of Ethics of Setanta Asset Management Limited is filed herewith. |
Item 29. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
None.
Item 30. INDEMNIFICATION
Sections 1, 2, 3 and 4 of Article VIII of Registrant’s Articles of Incorporation, as amended, incorporated herein by reference as Exhibits (a)(1) and (a)(3), provide as follows:
Section 1. To the fullest extent that limitations on the liability of directors and officers are permitted by the Maryland General Corporation Law, no director or officer of the Corporation shall have any liability to the Corporation or its shareholders for damages. This limitation on liability applies to events occurring at the time a person serves as a director or officer of the Corporation whether or not such person is a director or officer at the time of any proceeding in which liability is asserted.
Section 2. The Corporation shall indemnify and advance expenses to its currently acting and its former directors to the fullest extent that indemnification of directors is permitted by the Maryland General Corporation Law. The Corporation shall indemnify and advance expenses to its officers to the same extent as its directors and to such further extent as is consistent with law. The Board of Directors may by law, resolution or agreement make further provision for indemnification of directors, officers, employees and agents to the fullest extent permitted by the Maryland General Corporation law.
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Section 3. No provision of this Article shall be effective to protect or purport to protect any director or officer of the Corporation against any liability to the Corporation or its security holders to which he would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his office.
Section 4. References to the Maryland General Corporation Law in this Article are to the law as from time to time amended. No further amendment to the Articles of Incorporation of the Corporation shall decrease, but may expand, any right of any person under this Article based on any event, omission or proceeding prior to such amendment. Insofar as indemnification for liability arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of Registrant pursuant to the foregoing provisions, or otherwise, Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by Registrant of expenses incurred or paid by a director, officer or controlling person of Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
Section 12 of the Investment Advisory Agreement between Registrant and Boston Partners Global Investors, Inc. (“Boston Partners”) (f/k/a Robeco Investment Management, Inc.), incorporated herein by reference to exhibit (d)(9), provides for the indemnification of Boston Partners against certain losses.
Section 12 of the Investment Advisory Agreement between Registrant and Bogle Investment Management, L.P. (“Bogle”), dated September 15, 1999 and incorporated herein by reference to exhibit (d)(2) provides for the indemnification of Bogle against certain losses.
Section 12 of the Investment Advisory Agreement between the Registrant and Schneider Capital Management (“Schneider”) incorporated herein by reference as exhibit (d)(1) provides for the indemnification of Schneider against certain losses.
Section 12 of each of the Investment Advisory Agreements between the Registrant and Matson Money, Inc. (f/k/a Abundance Technologies, Inc.), (“Matson Money”) incorporated herein by reference as exhibits (d)(3) and (d)(42) provides for the indemnification of Matson Money against certain losses.
Section 12 of each of the Investment Advisory Agreements between the Registrant and Summit Global Investments, LLC (“SGI”) incorporated herein by reference as exhibits (d)(7), (d)(11) and (d)(37) provides for the indemnification of SGI against certain losses.
Section 12 of each of the Investment Advisory Agreements with Abbey Capital Limited (“Abbey Capital”) incorporated herein by reference as exhibits (d)(13), (d)(14), (d)(65) and (d)(66) provides for the indemnification of Abbey Capital against certain losses.
Section 12 of each of the Investment Advisory Agreements between the Registrant and Altair Advisers LLC (“Altair”) incorporated herein by reference as exhibits (d)(24) and (d)(60) provide for indemnification of Altair against certain losses.
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Section 12 of each of the Investment Advisory Agreements between the Registrant and Campbell & Company Investment Adviser LLC (“CCIA”) incorporated herein by reference as exhibits (d)(25), (d)(26), (d)(35), (d)(36), (d)(49) and (d)(50) provide for indemnification of CCIA against certain losses.
Section 12 of each of the Investment Advisory Agreements between the Registrant and Motley Fool Asset Management, LLC (“Motley Fool”) incorporated herein by reference to exhibits (d)(54) and (d)(59) provides for indemnification of Motley Fool against certain losses.
Section 12 of the Investment Advisory Agreement between the Registrant and Orinda Asset Management LLC (“Orinda”) incorporated herein by reference to exhibit (d)(47) provides for indemnification of Orinda against certain losses.
Section 8 of each of the Distribution Agreements between Registrant and Quasar Distributors, LLC incorporated herein by reference to exhibits (e)(1) – (e)(10) and (e)(14) provide for the indemnification of Quasar Distributors, LLC against certain losses.
Item 31. | BUSINESS AND OTHER CONNECTIONS OF THE INVESTMENT ADVISERS. |
1. | Bogle Investment Management, LP:
| |
The sole business activity of Bogle Investment Management, LP (“Bogle”), 2310 Washington Street, Suite 310, Newton Lower Falls, MA 02462, is to serve as an investment adviser. Bogle is registered under the Investment Advisers Act of 1940. | ||
The directors and officers have not held any positions with other companies during the last two fiscal years.
| ||
2. | Schneider Capital Management Company:
| |
The sole business activity of Schneider Capital Management Company (“Schneider”), 460 E. Swedesford Road, Suite 2000, Wayne, PA 19087, is to serve as an investment adviser. Schneider is registered under the Investment Advisers Act of 1940. | ||
Information as to the directors and officers of Schneider is as follows: |
Name and Position with Schneider | Other Company | Position With Other Company | |
Arnold C. Schneider, III President and Chief Investment Officer |
Turnbridge Management Partners Corp. | President | |
Steven J. Fellin Sr. Vice President, Chief Operating & Financial Officer Chief Compliance Officer |
Turnbridge Management Partners Corp. | Vice President |
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3. | Boston Partners Global Investors, Inc.
The sole business activity of Boston Partners Global Investors, Inc. (“Boston Partners”), 909 Third Avenue, New York 10022, is to serve as an investment adviser. Boston Partners provides investment advisory services to the Boston Partners Funds and the WPG Partners Funds.
Boston Partners is registered under the Investment Advisers Act of 1940 and serves as an investment adviser to domestic and foreign institutional investors, investment companies, commingled trust funds, private investment partnerships and collective investment vehicles. Information as to the directors and officers of Boston Partners is as follows:
|
Name and Position with Boston Partners | Other Company | Position With Other Company | |
Mark E. Donovan Co-Chief Executive Officer |
Robeco Institutional Asset Management US Inc.
|
Director | |
Joseph F. Feeney, Jr. Co-Chief Executive Officer |
Robeco US Holding, Inc. | Director | |
William George Butterly, III General Counsel, Chief Compliance Officer & Secretary |
Robeco Institutional Asset Management US Inc.
|
Chief Legal Officer, Chief Compliance Officer & Secretary
| |
Boston Partners Securities LLC | Chief Legal Officer | ||
Robeco Trust Company | Chief Operating Officer, Secretary & Director | ||
RobecoSAM USA, Inc. | Chief Legal Officer, Chief Compliance Officer & Secretary | ||
Robeco Boston Partners (UK) Limited | Director, Chief Operating Officer & Secretary |
33
Matthew J. Davis Treasurer & Chief Financial Officer |
Robeco Institutional Asset Management US Inc. |
President, Treasurer & Director | |
Boston Partners Securities LLC | Chief Financial Officer | ||
Robeco Trust Company | Director, President, Chief Financial Officer, Treasurer & Director | ||
Robeco Boston Partners (UK) Limited | Chief Financial Officer |
David Steyn Director |
Orix Corporation Europe N.V. | Chief Executive Officer | |
Leni M. Boeren Director |
Orix Corporation Europe N.V. | Chief Operating Officer | |
Robeco Institutional Asset Management B.V. | Director | ||
RobecoSAM AG | Director | ||
RobecoSAM USA, Inc. | Director | ||
Martin Mlynár Director |
Corestone Investment Managers AG | Chief Executive Officer | |
Source Capital AG | Board Member | ||
|
Source Capital Holding AG | Board Member |
34
4. | Matson Money, Inc.:
The sole business activity of Matson Money, Inc. (“Matson Money”), 5955 Deerfield Blvd., Mason, Ohio 45040, is to serve as an investment adviser. Matson Money is registered under the Investment Advisers Act of 1940.
Below is a list of each executive officer and director of Matson Money indicating each business, profession, vocation or employment of a substantial nature in which each such person has been engaged within the last two years, for his or her own account or in the capacity of director, officer, partner or trustee.
|
Name and Position with Matson Money, Inc. |
Name of Other Company | Position With Other Company | |
Mark E. Matson CEO |
Keep It Tight Fitness, LLC | 50% owner
| |
Mark E. Matson CEO |
The Matson Family Foundation | 100% owner
| |
Michelle Matson Vice President/ Secretary |
None | None | |
Daniel J. List Chief Compliance Officer |
None | None | |
Steven B. Miller President |
None | None | |
35
5. | Summit Global Investments, LLC: | |
The sole business activity of Summit Global Investments, LLC (“SGI”), 620 South Main Street, Bountiful, Utah 84010, is to serve as an investment adviser. SGI is registered under the Investment Advisers Act of 1940. | ||
The only employment of a substantial nature of each of SGI’s directors and officers is with SGI. | ||
6. | Abbey Capital Limited: | |
The only employment of a substantial nature of each of Abbey Capital Limited directors and officers is with Abbey Capital Limited. | ||
7. | Altair Advisers LLC: | |
The only employment of a substantial nature of each of Altair Advisers LLC directors and officers is with Altair Advisers LLC. | ||
36
8. | Campbell & Company Investment Adviser LLC: | |
The principal business activity of Campbell & Company Investment Adviser LLC (“CCIA”), 2850 Quarry Lake Drive, Baltimore, Maryland 21209, is to serve as an investment adviser. CCIA is registered under the Investment Advisers Act of 1940. | ||
Below is a list of each executive officer and director of CCIA indicating each business, profession, vocation or employment of a substantial nature in which each such person has been engaged within the last two years, for his or her own account or in the capacity of director, officer, partner or trustee. |
Name and Position with CCIA | Name of Other Company | Position With Other Company | |
G. Williams
Andrews Chief Executive Officer |
Campbell & Company, LP | Chief Executive Officer | |
Campbell & Company, LLC | Director & Chief Executive Officer | ||
EC LLC | Managing Member | ||
The Campbell Multi-Strategy Trust | Trustee & Chief Executive Officer | ||
Campbell Financial Services, LLC | Director | ||
Campbell & Company International Bahamas Limited | Director & President | ||
Campbell Core Offshore Limited | Director | ||
Campbell Core Carry Offshore Limited | Director |
Gregory T. Donovan Chief Financial Officer, Treasurer & Assistant Secretary |
Campbell & Company, LP | Chief Financial Officer, Treasurer & Assistant Secretary | |
Campbell & Company, LLC | Chief Financial Officer | ||
The Campbell Multi-Strategy Trust | Chief Financial Officer, Treasurer & Assistant Secretary | ||
Campbell Financial Services, LLC | Vice President, Chief Financial Officer and Treasurer | ||
Campbell & Company International Bahamas Limited | Director & Treasurer |
37
Michael S. Harris President | Campbell & Company, LLC | President | |
Campbell & Company, LLC | Director & President | ||
EC LLC | Managing Member | ||
The Campbell Multi-Strategy Trust | President | ||
Campbell Financial Services, LLC | Director | ||
Managed Futures Association | Director & Vice-Chairman | ||
Campbell & Company International Bahamas Limited | Director | ||
Campbell Core Offshore Limited | Director | ||
Campbell Core Carry Offshore Limited | Director | ||
Dr. Kevin Cole Director of Research |
Campbell & Company, LP | Director of Research |
Heidi L. Kaiser Deputy General Counsel & Chief Compliance Officer, Anti-Money Laundering Officer |
The Campbell Multi-Strategy Trust | Deputy General Counsel and Chief Compliance Officer | |
Campbell Financial Services, LLC | Deputy General Counsel and Chief Compliance Officer | ||
Campbell & Company, LP | Deputy General Counsel & Director of Compliance, Anti-Money Laundering Officer |
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Thomas P. Lloyd General Counsel, & Secretary |
Campbell & Company, LP | General Counsel & Secretary | |
Campbell & Company, LLC | Secretary | ||
EC LLC | Managing Member | ||
The Campbell Multi-Strategy Trust | General Counsel, Secretary & Assistant Treasurer | ||
Campbell & Company International Bahamas Limited | Secretary | ||
Campbell Core Offshore Limited | Director | ||
Campbell Core Carry Offshore Limited | Director | ||
Campbell Financial Services, LLC | General Counsel & Director; previously, Chief Compliance Officer & Secretary until September 2014 | ||
Robert W. McBride Chief Technology Officer |
Campbell & Company, LLC | Chief Technology Officer |
John
R. Radle Global Head of Trading |
Campbell & Company, LP | Global Head of Trading | |
Richard
Johnson Managing Director |
Campbell & Company, LP | Managing Director, Global Head of Client Solutions Group of Campbell & Company | |
Darvin
N. Sterner Director of Private Wealth Distribution |
Campbell & Company, LP | Director of Private Wealth Distribution | |
Campbell Financial Services, LLC | Vice President |
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9. | Motley Fool Asset Management, LLC: | |
A description of any other business, profession, vocation, or employment of a substantial nature in which Motley Fool Asset Management, LLC and each director, officer, or partner of Motley Fool Asset Management, LLC is or has been engaged within the last two fiscal years for his or her own account or in the capacity of director, employee, partner or trustee, is set forth in the Form ADV of Motley Fool Asset Management, LLC, as filed with the SEC on January 26, 2018, and is incorporated herein by this reference. | ||
10. | Orinda Asset Management, LLC: | |
A description of any other business, profession, vocation, or employment of a substantial nature in which Orinda Asset Management, LLC and each director, officer, or partner of Orinda Asset Management, LLC is or has been engaged within the last two fiscal years for his or her own account or in the capacity of director, employee, partner or trustee, is set forth in the Form ADV of Orinda Asset Management LLC, as filed with the SEC on March 27, 2017, and is incorporated herein by this reference. |
Item 32. Principal Underwriter
(a) | Quasar Distributors, LLC, the Registrant’s principal underwriter, acts as principal underwriter for the following investment companies registered under the Investment Company Act of 1940, as amended: |
Advisors Series Trust | LKCM Funds | |
Aegis Funds | LoCorr Investment Trust | |
Allied Asset Advisors Funds | Lord Asset Management Trust |
Alpha Architect ETF Trust | MainGate Trust | |
Alpine Equity Trust | Managed Portfolio Series | |
Alpine Income Trust | Manager Directed Portfolios | |
Alpine Series Trust | Matrix Advisors Fund Trust | |
Amplify ETF Trust | Matrix Advisors Value Fund, Inc. | |
Angel Oak Funds Trust | Merger Fund | |
Barrett Opportunity Fund, Inc. | Monetta Trust | |
Bridge Builder Trust | Nicholas Equity Income Fund, Inc. | |
Bridges Investment Fund, Inc. | Nicholas Family of Funds, Inc. | |
Brookfield Investment Funds | Oaktree Funds | |
Brown Advisory Funds | Permanent Portfolio Family of Funds | |
Buffalo Funds | Perritt Funds, Inc. | |
CG Funds Trust | PRIMECAP Odyssey Funds | |
DoubleLine Funds Trust | Professionally Managed Portfolios | |
ETF Series Solutions | Prospector Funds, Inc. |
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Evermore Funds Trust | Provident Mutual Funds, Inc. | |
First American Funds, Inc. | Rainier Investment Management Mutual Funds | |
FundX Investment Trust | RBB Fund, Inc. | |
Glenmede Fund, Inc. | RBC Funds Trust | |
Glenmede Portfolios | Series Portfolio Trust | |
GoodHaven Funds Trust | Sims Total Return Fund, Inc. | |
Greenspring Fund, Inc. | Stone Ridge Trust | |
Harding Loevner Funds, Inc. | Thompson IM Funds, Inc. | |
Hennessy Funds Trust | TrimTabs ETF Trust | |
Horizon Funds | Trust for Professional Managers | |
Hotchkis & Wiley Funds | Trust for Advised Portfolios | |
Intrepid Capital Management Funds Trust | USA Mutuals | |
IronBridge Funds, Inc. | Wall Street EWM Funds Trust | |
Jacob Funds, Inc. | Westchester Capital Funds | |
Jensen Portfolio, Inc. | Wisconsin Capital Funds, Inc. | |
Kirr Marbach Partners Funds, Inc. | YCG Funds |
(b) | To the best of Registrant’s knowledge, the directors and executive officers of Quasar Distributors, LLC are as follows: |
Name and Principal Business Address | Position and Offices with Quasar Distributors, LLC | Positions and Offices with Registrant | |
James R. Schoenike(1) | President, Board Member | None | |
Andrew M. Strnad(2) | Vice President, Secretary | None | |
Joe Neuberger(1) | Board Member | None | |
Michael Peck(1) | Board Member | None | |
Susan LaFond(1) | Vice President, Treasurer | None | |
Peter A. Hovel(1) | Chief Financial Officer | None | |
Teresa Cowan(1) | Senior Vice President, Assistant Secretary | None | |
Brett Scribner(3) | Assistant Treasurer | None | |
Thomas A. Wolden(3) | Assistant Treasurer | None |
(1) | This individual is located at 777 East Wisconsin Avenue, Milwaukee, Wisconsin 53202. |
(2) | This individual is located at 10 West Market Street, Suite 1150, Indianapolis, Indiana 46204. |
(3) | This individual is located at 800 Nicollet Mall, Minneapolis, Minnesota 55402. |
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(c) | Not Applicable |
Item 33. LOCATION OF ACCOUNTS AND RECORDS
(1) | Boston Partners Global Investors, Inc., 909 Third Avenue, 32nd floor, New York, New York 10022 (records relating to its function as investment adviser). |
(2) | Schneider Capital Management Co., 460 East Swedesford Road, Suite 1080, Wayne, Pennsylvania 19087 (records relating to its function as investment adviser). |
(3) | Bogle Investment Management, L.P., 2310 Washington Street, Suite 310, Newton Lower Falls, Massachusetts 02462 (records relating to its function as investment adviser). |
(4) | Matson Money, Inc. (formerly Abundance Technologies, Inc.), 5955 Deerfield Blvd., Mason, OH 45040 (records relating to its function as investment adviser). |
(5) | Summit Global Investments, LLC, 620 South Main Street, Bountiful, Utah 84010 (records relating to its function as investment adviser). |
(6) | Abbey Capital Limited, 1-2 Cavendish Row, Dublin 1, Ireland (records relating to its function as investment adviser). |
(7) | Altair Advisers LLC, 303 West Madison, Suite 600, Chicago, Illinois 60606 (records relating to its function as investment adviser). |
(8) | Campbell & Company Investment Adviser LLC, 2850 Quarry Lake Drive, Baltimore, Maryland 21209 (records relating to its function as investment adviser). |
(9) | Motley Fool Asset Management, LLC, 2000 Duke Street, Suite 275, Alexandria, Virginia 22314 (records relating to its function as investment adviser). |
(10) | Orinda Asset Management, LLC, 4 Orinda Way, Suite 150A, Orinda, California 94563 (records relating to its function as investment adviser). |
(11) | U.S. Bancorp Fund Services, LLC, 615 East Michigan Street, Milwaukee, Wisconsin 53202 (records relating to its function as administrator, transfer agent and dividend disbursing agent). |
(12) | U.S. Bank, N.A., 1555 North RiverCenter Drive, Suite 302, Milwaukee, Wisconsin, 53212 (records relating to its function as custodian). |
(13) | Quasar Distributors, LLC, 777 East Wisconsin Avenue, Floor, 6, Milwaukee, Wisconsin 53202 (records relating to its function as underwriter). |
Item 34. MANAGEMENT SERVICES
None.
Item 35. UNDERTAKINGS
(a) | Registrant hereby undertakes to hold a meeting of shareholders for the purpose of considering the removal of directors in the event the requisite number of shareholders so request. |
(b) | Registrant hereby undertakes to furnish each person to whom a prospectus is delivered a copy of Registrant’s latest annual report to shareholders upon request and without charge. |
42
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended (the “1933 Act”), and the Investment Company Act of 1940, as amended, the Registrant certifies that it meets all of the requirements for effectiveness of this Post-Effective Amendment to its Registration Statement under Rule 485(b) under the 1933 Act and has duly caused this Post-Effective Amendment to its Registration Statement to be signed on its behalf by the undersigned, thereto duly authorized, in the City of Chadds Ford, and Commonwealth of Pennsylvania on February 21, 2018.
THE RBB FUND, INC. | |||
By: | /s/ Salvatore Faia | ||
Salvatore Faia | |||
President |
Pursuant to the requirements of the 1933 Act, this Amendment to Registrant’s Registration Statement has been signed below by the following persons in the capacities and on the date indicated.
SIGNATURE | TITLE | DATE | ||
/s/ Salvatore Faia | President (Principal Executive Officer) and Chief Compliance Officer | February 21, 2018 | ||
Salvatore Faia | ||||
/s/ James G. Shaw | Treasurer (Chief Financial Officer) and Secretary | February 21, 2018 | ||
James G. Shaw | ||||
*J. Richard Carnall | Director | February 21, 2018 | ||
J. Richard Carnall | ||||
*Julian A. Brodsky | Director | February 21, 2018 | ||
Julian A. Brodsky | ||||
*Arnold M. Reichman | Director | February 21, 2018 | ||
Arnold M. Reichman | ||||
*Robert Sablowsky | Director | February 21, 2018 | ||
Robert Sablowsky | ||||
*Robert Straniere | Director | February 21, 2018 | ||
Robert Straniere | ||||
*Nicholas A. Giordano | Director | February 21, 2018 | ||
Nicholas A. Giordano | ||||
*Gregory P. Chandler | Director | February 21, 2018 | ||
Gregory P. Chandler | ||||
*By: /s/ Salvatore Faia | February 21, 2018 | |||
Salvatore Faia | ||||
Attorney-in-Fact |
43
THE RBB FUND, INC.
(the “Company”)
POWER OF ATTORNEY
Know All Men by These Presents, that the undersigned, Julian A. Brodsky, hereby constitutes and appoints Salvatore Faia, Michael P. Malloy, James G. Shaw, Edward Paz, and Robert Amweg, his true and lawful attorneys, to execute in his name, place, and stead, in his capacity as Director or officer, or both, of the Company, the Registration Statement and any amendments thereto and all instruments necessary or incidental in connection therewith, and to file the same with the Securities and Exchange Commission; and said attorneys shall have full power and authority to do and perform in his name and on his behalf, in any and all capacities, every act whatsoever requisite or necessary to be done in the premises, as fully and to all intents and purposes as he might or could do in person, said acts of said attorneys being hereby ratified and approved.
DATED: | February 16, 2017 | |
/s/ Julian A. Brodsky | ||
Julian A. Brodsky |
44
THE RBB FUND, INC.
(the “Company”)
POWER OF ATTORNEY
Know All Men by These Presents, that the undersigned, J. Richard Carnall, hereby constitutes and appoints Salvatore Faia, Michael P. Malloy, James G. Shaw, Edward Paz, and Robert Amweg, his true and lawful attorneys, to execute in his name, place, and stead, in his capacity as Director or officer, or both, of the Company, the Registration Statement and any amendments thereto and all instruments necessary or incidental in connection therewith, and to file the same with the Securities and Exchange Commission; and said attorneys shall have full power and authority to do and perform in his name and on his behalf, in any and all capacities, every act whatsoever requisite or necessary to be done in the premises, as fully and to all intents and purposes as he might or could do in person, said acts of said attorneys being hereby ratified and approved.
DATED: | February 16, 2017 | |
/s/ J. Richard Carnall | ||
J. Richard Carnall |
45
THE RBB FUND, INC.
(the “Company”)
POWER OF ATTORNEY
Know All Men by These Presents, that the undersigned, Nicholas A. Giordano, hereby constitutes and appoints Salvatore Faia, Michael P. Malloy, James G. Shaw, Edward Paz, and Robert Amweg, his true and lawful attorneys, to execute in his name, place, and stead, in his capacity as Director or officer, or both, of the Company, the Registration Statement and any amendments thereto and all instruments necessary or incidental in connection therewith, and to file the same with the Securities and Exchange Commission; and said attorneys shall have full power and authority to do and perform in his name and on his behalf, in any and all capacities, every act whatsoever requisite or necessary to be done in the premises, as fully and to all intents and purposes as he might or could do in person, said acts of said attorneys being hereby ratified and approved.
DATED: | February 16, 2017 | |
/s/ Nicholas A. Giordano | ||
Nicholas A. Giordano |
46
THE RBB FUND, INC.
(the “Company”)
POWER OF ATTORNEY
Know All Men by These Presents, that the undersigned, Arnold M. Reichman, hereby constitutes and appoints Salvatore Faia, Michael P. Malloy, James G. Shaw, Edward Paz, and Robert Amweg, his true and lawful attorneys, to execute in his name, place, and stead, in his capacity as Director or officer, or both, of the Company, the Registration Statement and any amendments thereto and all instruments necessary or incidental in connection therewith, and to file the same with the Securities and Exchange Commission; and said attorneys shall have full power and authority to do and perform in his name and on his behalf, in any and all capacities, every act whatsoever requisite or necessary to be done in the premises, as fully and to all intents and purposes as he might or could do in person, said acts of said attorneys being hereby ratified and approved.
DATED: | February 16, 2017 | |
/s/ Arnold M. Reichman | ||
Arnold M. Reichman |
47
THE RBB FUND, INC.
(the “Company”)
POWER OF ATTORNEY
Know All Men by These Presents, that the undersigned, Robert Sablowsky, hereby constitutes and appoints Salvatore Faia, Michael P. Malloy, James G. Shaw, Edward Paz, and Robert Amweg, his true and lawful attorneys, to execute in his name, place, and stead, in his capacity as Director or officer, or both, of the Company, the Registration Statement and any amendments thereto and all instruments necessary or incidental in connection therewith, and to file the same with the Securities and Exchange Commission; and said attorneys shall have full power and authority to do and perform in his name and on his behalf, in any and all capacities, every act whatsoever requisite or necessary to be done in the premises, as fully and to all intents and purposes as he might or could do in person, said acts of said attorneys being hereby ratified and approved.
DATED: | February 16, 2017 | |
/s/ Robert Sablowsky | ||
Robert Sablowsky |
48
THE RBB FUND, INC.
(the “Company”)
POWER OF ATTORNEY
Know All Men by These Presents, that the undersigned, Robert A. Straniere, hereby constitutes and appoints Salvatore Faia, Michael P. Malloy, James G. Shaw, Edward Paz, and Robert Amweg, his true and lawful attorneys, to execute in his name, place, and stead, in his capacity as Director or officer, or both, of the Company, the Registration Statement and any amendments thereto and all instruments necessary or incidental in connection therewith, and to file the same with the Securities and Exchange Commission; and said attorneys shall have full power and authority to do and perform in his name and on his behalf, in any and all capacities, every act whatsoever requisite or necessary to be done in the premises, as fully and to all intents and purposes as he might or could do in person, said acts of said attorneys being hereby ratified and approved.
DATED: | February 16, 2017 | |
/s/ Robert Straniere | ||
Robert Straniere |
49
THE RBB FUND, INC.
(the “Company”)
POWER OF ATTORNEY
Know All Men by These Presents, that the undersigned, Gregory P. Chandler, hereby constitutes and appoints Salvatore Faia, Michael P. Malloy, James G. Shaw, Edward Paz, and Robert Amweg, his true and lawful attorneys, to execute in his name, place, and stead, in his capacity as Director or officer, or both, of the Company, the Registration Statement and any amendments thereto and all instruments necessary or incidental in connection therewith, and to file the same with the Securities and Exchange Commission; and said attorneys shall have full power and authority to do and perform in his name and on his behalf, in any and all capacities, every act whatsoever requisite or necessary to be done in the premises, as fully and to all intents and purposes as he might or could do in person, said acts of said attorneys being hereby ratified and approved.
DATED: | February 17, 2017 | |
/s/ Gregory P. Chandler | ||
Gregory P. Chandler |
50
PEA 238
EXHIBIT |
DESCRIPTION |
(a)(87) | Articles Supplementary of Registrant (Abbey Capital Futures Strategy Fund – Class I) |
(a)(88) | Articles Supplementary of Registrant (Boston Partners Global Long/Short Fund – Institutional Class) |
(a)(89) | Articles Supplementary of Registrant (Free Market U.S. Equity Fund, Free Market International Equity Fund, Free Market Fixed Income Fund) |
(a)(90) | Articles Supplementary of Registrant (Aquarius International Fund) |
(a)(91) | Articles Supplementary of Registrant (Abbey Capital Multi Asset Fund) |
(a)(92) | Articles of Amendment of Registrant (Dynamic U.S. Growth Fund) |
(d)(60) | Form of Investment Advisory Agreement (Aquarius International Fund) between Registrant and Altair Advisers LLC |
(d)(61) | Form of Investment Sub-Advisory Agreement (Aquarius International Fund Fund) among Registrant, Altair Advisers LLC and Aperio Group, LLC |
(d)(62) | Form of Investment Sub-Advisory Agreement (Aquarius International Fund Fund) among Registrant, Altair Advisers LLC and Driehaus Capital Management LLC |
(d)(63) | Form of Investment Sub-Advisory Agreement (Aquarius International Fund Fund) among Registrant, Altair Advisers LLC and Mawer Investment Management Ltd. |
(d)(64) | Form of Investment Sub-Advisory Agreement (Aquarius International Fund Fund) among Registrant, Altair Advisers LLC and Setanta Asset Management Limited |
(e)(15) | Form of Amendment to the Distribution Agreement (Aquarius International Fund) between Registrant, Quasar Distributors, LLC, and Altair Advisers LLC |
(g)(9) | Form of Amendment to the Custody Agreement (Aquarius International Fund) between Registrant and U.S. Bank National Association |
(h)(12) | Form of Amendment to the Fund Accounting Servicing Agreement (Aquarius International Fund) between Registrant and U.S. Bancorp Fund Services, LLC |
(h)(21) | Form of Amendment to the Fund Administration Servicing Agreement (Aquarius International Fund) between Registrant and U.S. Bancorp Fund Services, LLC |
(h)(30) | Form of Amendment to the Transfer Agent Servicing Agreement (Aquarius International Fund) between Registrant and U.S. Bancorp Fund Services, LLC |
(i)(1) | Opinion of Counsel |
(i)(2) | Consent of Counsel |
(l)(39) | Form of Purchase Agreement (Aquarius International Fund) between Registrant and Altair Advisers LLC |
(p)(21) | Code of Ethics of Setanta Asset Management Limited |
49
THE RBB FUND, INC.
ARTICLES SUPPLEMENTARY
THE RBB FUND, INC., a Maryland corporation (the “Corporation”), hereby certifies to the State Department of Assessments and Taxation of Maryland that:
FIRST: In accordance with the requirements of Section 2-208 of the Maryland General Corporation Law, the Board of Directors of the Corporation has adopted a resolution classifying an additional 200,000,000 authorized but unclassified and unissued shares of common stock, par value $.001 per share (the “Common Stock”), of the Corporation as Class TTTTT shares of Common Stock representing interests in the Abbey Capital Futures Strategy Fund – Class I shares.
SECOND: Each TTTTT share of Common Stock of the Corporation classified herein has the preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications and terms and conditions of redemption as previously set forth in the charter of the Corporation with respect to Class TTTTT shares of Common Stock of the Corporation.
THIRD: The shares aforesaid have been duly classified by the Board of Directors of the Corporation pursuant to authority and power contained in the charter of the Corporation. The aggregate number of authorized shares of stock of the Corporation is not changed by these Articles Supplementary.
FOURTH: Immediately after the classification of additional authorized, unissued and unclassified shares of Common Stock as Class TTTTT Common Stock:
(a) the Corporation has the authority to issue 100,000,000,000 shares of its Common Stock, par value $.001 per share, and the aggregate par value of all the shares of all classes is $100,000,000; and
(b) the number of authorized shares of each class of Common Stock is as follows, and the Corporation hereby confirms the classification and designation of the shares in the following classes and numbers:
Class A | - | 100,000,000 |
Class B | - | 100,000,000 |
Class C | - | 100,000,000 |
Class D | - | 100,000,000 |
Class E | - | 500,000,000 |
Class F | - | 500,000,000 |
Class G | - | 500,000,000 |
Class H | - | 500,000,000 |
Class I | - | 1,500,000,000 |
Class J | - | 500,000,000 |
Class K | - | 500,000,000 |
Class L | - | 1,500,000,000 |
Class M | - | 500,000,000 |
Class N | - | 500,000,000 |
Class O | - | 500,000,000 |
Class P | - | 100,000,000 |
Class Q | - | 100,000,000 |
Class R | - | 500,000,000 |
Class S | - | 500,000,000 |
Class T | - | 500,000,000 |
Class U | - | 500,000,000 |
Class V | - | 500,000,000 |
Class W | - | 100,000,000 |
Class X | - | 50,000,000 |
Class Y | - | 50,000,000 |
Class Z | - | 50,000,000 |
Class AA | - | 50,000,000 |
Class BB | - | 50,000,000 |
Class CC | - | 50,000,000 |
Class DD | - | 100,000,000 |
Class EE | - | 100,000,000 |
Class FF | - | 50,000,000 |
Class GG | - | 50,000,000 |
Class HH | - | 50,000,000 |
Class II | - | 100,000,000 |
Class JJ | - | 100,000,000 |
Class KK | - | 100,000,000 |
Class LL | - | 100,000,000 |
Class MM | - | 100,000,000 |
Class NN | - | 100,000,000 |
Class OO | - | 100,000,000 |
Class PP | - | 100,000,000 |
Class QQ | - | 100,000,000 |
Class RR | - | 100,000,000 |
Class SS | - | 100,000,000 |
Class TT | - | 100,000,000 |
Class UU | - | 100,000,000 |
Class VV | - | 100,000,000 |
Class WW | - | 100,000,000 |
Class YY | - | 100,000,000 |
Class ZZ | - | 100,000,000 |
Class AAA | - | 100,000,000 |
Class BBB | - | 100,000,000 |
Class CCC | - | 100,000,000 |
Class DDD | - | 100,000,000 |
Class EEE | - | 100,000,000 |
Class FFF | - | 100,000,000 |
Class GGG | - | 100,000,000 |
-2-
Class HHH | - | 100,000,000 |
Class III | - | 100,000,000 |
Class JJJ | - | 100,000,000 |
Class KKK | - | 100,000,000 |
Class LLL | - | 100,000,000 |
Class MMM | - | 100,000,000 |
Class NNN | - | 100,000,000 |
Class OOO | - | 100,000,000 |
Class PPP | - | 100,000,000 |
Class QQQ | - | 2,500,000,000 |
Class RRR | - | 2,500,000,000 |
Class SSS | - | 100,000,000 |
Class TTT | - | 50,000,000 |
Class UUU | - | 50,000,000 |
Class VVV | - | 50,000,000 |
Class WWW | - | 50,000,000 |
Class XXX | - | 100,000,000 |
Class YYY | - | 100,000,000 |
Class ZZZ | - | 100,000,000 |
Class AAAA | - | 50,000,000,000 |
Class BBBB | - | 300,000,000 |
Class CCCC | - | 300,000,000 |
Class DDDD | - | 300,000,000 |
Class EEEE | - | 100,000,000 |
Class FFFF | - | 100,000,000 |
Class GGGG | - | 100,000,000 |
Class HHHH | - | 100,000,000 |
Class IIII | - | 100,000,000 |
Class JJJJ | - | 100,000,000 |
Class KKKK | - | 100,000,000 |
Class LLLL | - | 100,000,000 |
Class MMMM | - | 100,000,000 |
Class NNNN | - | 100,000,000 |
Class OOOO | - | 100,000,000 |
Class PPPP | - | 100,000,000 |
Class QQQQ | - | 100,000,000 |
Class RRRR | - | 100,000,000 |
Class SSSS | - | 100,000,000 |
Class TTTT | - | 100,000,000 |
Class UUUU | - | 100,000,000 |
Class VVVV | - | 100,000,000 |
Class WWWW | - | 100,000,000 |
Class XXXX | - | 100,000,000 |
Class YYYY | - | 100,000,000 |
Class ZZZZ | - | 100,000,000 |
Class AAAAA | - | 100,000,000 |
-3-
Class BBBBB | - | 750,000,000 |
Class CCCCC | - | 100,000,000 |
Class DDDDD | - | 100,000,000 |
Class EEEEE | - | 100,000,000 |
Class FFFFF | - | 100,000,000 |
Class GGGGG | - | 100,000,000 |
Class HHHHH | - | 100,000,000 |
Class IIIII | - | 100,000,000 |
Class JJJJJ | - | 100,000,000 |
Class KKKKK | - | 100,000,000 |
Class LLLLL | - | 100,000,000 |
Class MMMMM | - | 100,000,000 |
Class NNNNN | - | 100,000,000 |
Class OOOOO | - | 100,000,000 |
Class PPPPP | - | 100,000,000 |
Class QQQQQ | - | 100,000,000 |
Class RRRRR | - | 100,000,000 |
Class SSSSS | - | 100,000,000 |
Class TTTTT | - | 300,000,000 |
Class UUUUU | - | 100,000,000 |
Class VVVVV | - | 100,000,000 |
Class WWWWW | - | 100,000,000 |
Class XXXXX | - | 100,000,000 |
Class YYYYY | - | 100,000,000 |
Class ZZZZZ | - | 100,000,000 |
Class AAAAAA | - | 100,000,000 |
Class BBBBBB | - | 100,000,000 |
Class CCCCCC | - | 100,000,000 |
Class DDDDDD | - | 100,000,000 |
Class EEEEEE | - | 100,000,000 |
Class FFFFFF | - | 100,000,000 |
Class GGGGGG | - | 100,000,000 |
Class HHHHHH | - | 100,000,000 |
Class IIIIII | - | 100,000,000 |
Class JJJJJJ | - | 100,000,000 |
Class KKKKKK | - | 100,000,000 |
Class LLLLLL | - | 100,000,000 |
Class MMMMMM | - | 100,000,000 |
Class NNNNNN | - | 100,000,000 |
Class OOOOOO | - | 100,000,000 |
Class PPPPPP | - | 100,000,000 |
Class QQQQQQ | - | 100,000,000 |
Class RRRRRR | - | 100,000,000 |
Class SSSSSS | - | 100,000,000 |
Class TTTTTT | - | 100,000,000 |
Class Select | - | 700,000,000 |
-4-
Class Beta 2 | - | 1,000,000 |
Class Beta 3 | - | 1,000,000 |
Class Beta 4 | - | 1,000,000 |
Class Principal Money | - | 700,000,000 |
Class Gamma 2 | - | 1,000,000 |
Class Gamma 3 | - | 1,000,000 |
Class Gamma 4 | - | 1,000,000 |
Class Bear Stearns | ||
Money | - | 2,500,000,000 |
Class Bear Stearns | ||
Municipal Money | - | 1,500,000,000 |
Class Bear Stearns | ||
Government Money | - | 1,000,000,000 |
Class Delta 4 | - | 1,000,000 |
Class Epsilon 1 | - | 1,000,000 |
Class Epsilon 2 | - | 1,000,000 |
Class Epsilon 3 | - | 1,000,000 |
Class Epsilon 4 | - | 1,000,000 |
Class Zeta 1 | - | 1,000,000 |
Class Zeta 2 | - | 1,000,000 |
Class Zeta 3 | - | 1,000,000 |
Class Zeta 4 | - | 1,000,000 |
Class Eta 1 | - | 1,000,000 |
Class Eta 2 | - | 1,000,000 |
Class Eta 3 | - | 1,000,000 |
Class Eta 4 | - | 1,000,000 |
Class Theta 1 | - | 1,000,000 |
Class Theta 2 | - | 1,000,000 |
Class Theta 3 | - | 1,000,000 |
Class Theta 4 | - | 1,000,000 |
for a total of 85,223,000,000 shares classified into separate classes of Common Stock.
FIFTH: The undersigned President of the Corporation acknowledges these Articles Supplementary to be the corporate act of the Corporation and, as to all matters or facts required to be verified under oath, the undersigned President acknowledges that, to the best of his knowledge, information and belief, these matters and facts are true in all material respects and that this statement is made under the penalties for perjury.
[SIGNATURE PAGE FOLLOWS]
-5-
IN WITNESS WHEREOF, The RBB Fund, Inc. has caused these presents to be signed in its name and on its behalf by its President and attested by its Secretary on the 2nd day of February, 2018.
ATTEST: | THE RBB FUND, INC. | ||||
By: | /s/ James G. Shaw | By: | /s/ Salvatore Faia . | ||
James G. Shaw | Salvatore Faia | ||||
Secretary | President |
-6-
THE RBB FUND, INC.
ARTICLES SUPPLEMENTARY
THE RBB FUND, INC., a Maryland corporation (the “Corporation”), hereby certifies to the State Department of Assessments and Taxation of Maryland that:
FIRST: In accordance with the requirements of Section 2-208 of the Maryland General Corporation Law, the Board of Directors of the Corporation has adopted a resolution classifying an additional 200,000,000 authorized but unclassified and unissued shares of common stock, par value $.001 per share (the “Common Stock”), of the Corporation as Class KKKKK shares of Common Stock representing interests in the Boston Partners Global Long/Short Fund – Institutional Class shares.
SECOND: Each KKKKK share of Common Stock of the Corporation classified herein has the preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications and terms and conditions of redemption as previously set forth in the charter of the Corporation with respect to Class KKKKK shares of Common Stock of the Corporation.
THIRD: The shares aforesaid have been duly classified by the Board of Directors of the Corporation pursuant to authority and power contained in the charter of the Corporation. The aggregate number of authorized shares of stock of the Corporation is not changed by these Articles Supplementary.
FOURTH: Immediately after the classification of additional authorized, unissued and unclassified shares of Common Stock as Class KKKKK Common Stock:
(a) the Corporation has the authority to issue 100,000,000,000 shares of its Common Stock, par value $.001 per share, and the aggregate par value of all the shares of all classes is $100,000,000; and
(b) the number of authorized shares of each class of Common Stock is as follows, and the Corporation hereby confirms the classification and designation of the shares in the following classes and numbers:
Class A | - | 100,000,000 |
Class B | - | 100,000,000 |
Class C | - | 100,000,000 |
Class D | - | 100,000,000 |
Class E | - | 500,000,000 |
Class F | - | 500,000,000 |
Class G | - | 500,000,000 |
Class H | - | 500,000,000 |
Class I | - | 1,500,000,000 |
Class J | - | 500,000,000 |
Class K | - | 500,000,000 |
Class L | - | 1,500,000,000 |
Class M | - | 500,000,000 |
Class N | - | 500,000,000 |
Class O | - | 500,000,000 |
Class P | - | 100,000,000 |
Class Q | - | 100,000,000 |
Class R | - | 500,000,000 |
Class S | - | 500,000,000 |
Class T | - | 500,000,000 |
Class U | - | 500,000,000 |
Class V | - | 500,000,000 |
Class W | - | 100,000,000 |
Class X | - | 50,000,000 |
Class Y | - | 50,000,000 |
Class Z | - | 50,000,000 |
Class AA | - | 50,000,000 |
Class BB | - | 50,000,000 |
Class CC | - | 50,000,000 |
Class DD | - | 100,000,000 |
Class EE | - | 100,000,000 |
Class FF | - | 50,000,000 |
Class GG | - | 50,000,000 |
Class HH | - | 50,000,000 |
Class II | - | 100,000,000 |
Class JJ | - | 100,000,000 |
Class KK | - | 100,000,000 |
Class LL | - | 100,000,000 |
Class MM | - | 100,000,000 |
Class NN | - | 100,000,000 |
Class OO | - | 100,000,000 |
Class PP | - | 100,000,000 |
Class QQ | - | 100,000,000 |
Class RR | - | 100,000,000 |
Class SS | - | 100,000,000 |
Class TT | - | 100,000,000 |
Class UU | - | 100,000,000 |
Class VV | - | 100,000,000 |
Class WW | - | 100,000,000 |
Class YY | - | 100,000,000 |
Class ZZ | - | 100,000,000 |
Class AAA | - | 100,000,000 |
Class BBB | - | 100,000,000 |
Class CCC | - | 100,000,000 |
Class DDD | - | 100,000,000 |
Class EEE | - | 100,000,000 |
Class FFF | - | 100,000,000 |
Class GGG | - | 100,000,000 |
-2-
Class HHH | - | 100,000,000 |
Class III | - | 100,000,000 |
Class JJJ | - | 100,000,000 |
Class KKK | - | 100,000,000 |
Class LLL | - | 100,000,000 |
Class MMM | - | 100,000,000 |
Class NNN | - | 100,000,000 |
Class OOO | - | 100,000,000 |
Class PPP | - | 100,000,000 |
Class QQQ | - | 2,500,000,000 |
Class RRR | - | 2,500,000,000 |
Class SSS | - | 100,000,000 |
Class TTT | - | 50,000,000 |
Class UUU | - | 50,000,000 |
Class VVV | - | 50,000,000 |
Class WWW | - | 50,000,000 |
Class XXX | - | 100,000,000 |
Class YYY | - | 100,000,000 |
Class ZZZ | - | 100,000,000 |
Class AAAA | - | 50,000,000,000 |
Class BBBB | - | 300,000,000 |
Class CCCC | - | 300,000,000 |
Class DDDD | - | 300,000,000 |
Class EEEE | - | 100,000,000 |
Class FFFF | - | 100,000,000 |
Class GGGG | - | 100,000,000 |
Class HHHH | - | 100,000,000 |
Class IIII | - | 100,000,000 |
Class JJJJ | - | 100,000,000 |
Class KKKK | - | 100,000,000 |
Class LLLL | - | 100,000,000 |
Class MMMM | - | 100,000,000 |
Class NNNN | - | 100,000,000 |
Class OOOO | - | 100,000,000 |
Class PPPP | - | 100,000,000 |
Class QQQQ | - | 100,000,000 |
Class RRRR | - | 100,000,000 |
Class SSSS | - | 100,000,000 |
Class TTTT | - | 100,000,000 |
Class UUUU | - | 100,000,000 |
Class VVVV | - | 100,000,000 |
Class WWWW | - | 100,000,000 |
Class XXXX | - | 100,000,000 |
Class YYYY | - | 100,000,000 |
Class ZZZZ | - | 100,000,000 |
Class AAAAA | - | 100,000,000 |
-3-
Class BBBBB | - | 750,000,000 |
Class CCCCC | - | 100,000,000 |
Class DDDDD | - | 100,000,000 |
Class EEEEE | - | 100,000,000 |
Class FFFFF | - | 100,000,000 |
Class GGGGG | - | 100,000,000 |
Class HHHHH | - | 100,000,000 |
Class IIIII | - | 100,000,000 |
Class JJJJJ | - | 100,000,000 |
Class KKKKK | - | 300,000,000 |
Class LLLLL | - | 100,000,000 |
Class MMMMM | - | 100,000,000 |
Class NNNNN | - | 100,000,000 |
Class OOOOO | - | 100,000,000 |
Class PPPPP | - | 100,000,000 |
Class QQQQQ | - | 100,000,000 |
Class RRRRR | - | 100,000,000 |
Class SSSSS | - | 100,000,000 |
Class TTTTT | - | 300,000,000 |
Class UUUUU | - | 100,000,000 |
Class VVVVV | - | 100,000,000 |
Class WWWWW | - | 100,000,000 |
Class XXXXX | - | 100,000,000 |
Class YYYYY | - | 100,000,000 |
Class ZZZZZ | - | 100,000,000 |
Class AAAAAA | - | 100,000,000 |
Class BBBBBB | - | 100,000,000 |
Class CCCCCC | - | 100,000,000 |
Class DDDDDD | - | 100,000,000 |
Class EEEEEE | - | 100,000,000 |
Class FFFFFF | - | 100,000,000 |
Class GGGGGG | - | 100,000,000 |
Class HHHHHH | - | 100,000,000 |
Class IIIIII | - | 100,000,000 |
Class JJJJJJ | - | 100,000,000 |
Class KKKKKK | - | 100,000,000 |
Class LLLLLL | - | 100,000,000 |
Class MMMMMM | - | 100,000,000 |
Class NNNNNN | - | 100,000,000 |
Class OOOOOO | - | 100,000,000 |
Class PPPPPP | - | 100,000,000 |
Class QQQQQQ | - | 100,000,000 |
Class RRRRRR | - | 100,000,000 |
Class SSSSSS | - | 100,000,000 |
Class TTTTTT | - | 100,000,000 |
Class Select | - | 700,000,000 |
-4-
Class Beta 2 | - | 1,000,000 |
Class Beta 3 | - | 1,000,000 |
Class Beta 4 | - | 1,000,000 |
Class Principal Money | - | 700,000,000 |
Class Gamma 2 | - | 1,000,000 |
Class Gamma 3 | - | 1,000,000 |
Class Gamma 4 | - | 1,000,000 |
Class Bear Stearns | ||
Money | - | 2,500,000,000 |
Class Bear Stearns | ||
Municipal Money | - | 1,500,000,000 |
Class Bear Stearns | ||
Government Money | - | 1,000,000,000 |
Class Delta 4 | - | 1,000,000 |
Class Epsilon 1 | - | 1,000,000 |
Class Epsilon 2 | - | 1,000,000 |
Class Epsilon 3 | - | 1,000,000 |
Class Epsilon 4 | - | 1,000,000 |
Class Zeta 1 | - | 1,000,000 |
Class Zeta 2 | - | 1,000,000 |
Class Zeta 3 | - | 1,000,000 |
Class Zeta 4 | - | 1,000,000 |
Class Eta 1 | - | 1,000,000 |
Class Eta 2 | - | 1,000,000 |
Class Eta 3 | - | 1,000,000 |
Class Eta 4 | - | 1,000,000 |
Class Theta 1 | - | 1,000,000 |
Class Theta 2 | - | 1,000,000 |
Class Theta 3 | - | 1,000,000 |
Class Theta 4 | - | 1,000,000 |
for a total of 85,423,000,000 shares classified into separate classes of Common Stock.
FIFTH: The undersigned President of the Corporation acknowledges these Articles Supplementary to be the corporate act of the Corporation and, as to all matters or facts required to be verified under oath, the undersigned President acknowledges that, to the best of his knowledge, information and belief, these matters and facts are true in all material respects and that this statement is made under the penalties for perjury.
[SIGNATURE PAGE FOLLOWS]
-5-
IN WITNESS WHEREOF, The RBB Fund, Inc. has caused these presents to be signed in its name and on its behalf by its President and attested by its Secretary on the 2nd day of February, 2018.
ATTEST: | THE RBB FUND, INC. | ||||
By: | /s/ James G. Shaw | By: | /s/ Salvatore Faia . | ||
James G. Shaw | Salvatore Faia | ||||
Secretary | President |
-6-
THE RBB FUND, INC.
ARTICLES SUPPLEMENTARY
THE RBB FUND, INC., a Maryland corporation (the “Corporation”), hereby certifies to the State Department of Assessments and Taxation of Maryland that:
FIRST: In accordance with the requirements of Section 2-208 of the Maryland General Corporation Law, the Board of Directors of the Corporation has adopted resolutions classifying an aggregate additional 1,200,000,000 authorized but unclassified and unissued shares of common stock, par value $.001 per share (the “Common Stock”), of the Corporation as follows:
1. Class BBBB. An additional 400,000,000 of the authorized, unissued and unclassified shares Common Stock of the Corporation are hereby classified as Class BBBB shares of Common Stock representing interests in the Free Market U.S. Equity Fund.
2. Class CCCC. An additional 400,000,000 of the authorized, unissued and unclassified shares of Common Stock of the Corporation are hereby classified as Class CCCC shares of Common Stock representing interests in the Free Market International Equity Fund.
3. Class DDDD. An additional 400,000,000 of the authorized, unissued and unclassified shares of Common Stock of the Company are hereby classified as Class DDDD shares of Common Stock representing interests in the Free Market Fixed Income Fund.
SECOND: Each Class BBBB, Class CCCC, and Class DDDD share of Common Stock of the Corporation classified herein has the preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications and terms and conditions of redemption as previously set forth in the charter of the Corporation with respect to Class BBBB, Class CCCC, and Class DDDD shares of Common Stock of the Corporation.
THIRD: The shares aforesaid have been duly classified by the Board of Directors of the Corporation pursuant to authority and power contained in the charter of the Corporation. The aggregate number of authorized shares of stock of the Corporation is not changed by these Articles Supplementary.
FOURTH: Immediately after the classification of additional authorized, unissued and unclassified shares of Common Stock as Class BBBB, Class CCCC, and Class DDDD Common Stock:
(a) the Corporation has the authority to issue 100,000,000,000 shares of its Common Stock, par value $.001 per share, and the aggregate par value of all the shares of all classes is $100,000,000; and
(b) the number of authorized shares of each class of Common Stock is as follows, and the Corporation hereby confirms the classification and designation of the shares in the following classes and numbers:
Class A | - | 100,000,000 |
Class B | - | 100,000,000 |
Class C | - | 100,000,000 |
Class D | - | 100,000,000 |
Class E | - | 500,000,000 |
Class F | - | 500,000,000 |
Class G | - | 500,000,000 |
Class H | - | 500,000,000 |
Class I | - | 1,500,000,000 |
Class J | - | 500,000,000 |
Class K | - | 500,000,000 |
Class L | - | 1,500,000,000 |
Class M | - | 500,000,000 |
Class N | - | 500,000,000 |
Class O | - | 500,000,000 |
Class P | - | 100,000,000 |
Class Q | - | 100,000,000 |
Class R | - | 500,000,000 |
Class S | - | 500,000,000 |
Class T | - | 500,000,000 |
Class U | - | 500,000,000 |
Class V | - | 500,000,000 |
Class W | - | 100,000,000 |
Class X | - | 50,000,000 |
Class Y | - | 50,000,000 |
Class Z | - | 50,000,000 |
Class AA | - | 50,000,000 |
Class BB | - | 50,000,000 |
Class CC | - | 50,000,000 |
Class DD | - | 100,000,000 |
Class EE | - | 100,000,000 |
Class FF | - | 50,000,000 |
Class GG | - | 50,000,000 |
Class HH | - | 50,000,000 |
Class II | - | 100,000,000 |
Class JJ | - | 100,000,000 |
Class KK | - | 100,000,000 |
Class LL | - | 100,000,000 |
Class MM | - | 100,000,000 |
Class NN | - | 100,000,000 |
Class OO | - | 100,000,000 |
Class PP | - | 100,000,000 |
Class QQ | - | 100,000,000 |
-2-
Class RR | - | 100,000,000 |
Class SS | - | 100,000,000 |
Class TT | - | 100,000,000 |
Class UU | - | 100,000,000 |
Class VV | - | 100,000,000 |
Class WW | - | 100,000,000 |
Class YY | - | 100,000,000 |
Class ZZ | - | 100,000,000 |
Class AAA | - | 100,000,000 |
Class BBB | - | 100,000,000 |
Class CCC | - | 100,000,000 |
Class DDD | - | 100,000,000 |
Class EEE | - | 100,000,000 |
Class FFF | - | 100,000,000 |
Class GGG | - | 100,000,000 |
Class HHH | - | 100,000,000 |
Class III | - | 100,000,000 |
Class JJJ | - | 100,000,000 |
Class KKK | - | 100,000,000 |
Class LLL | - | 100,000,000 |
Class MMM | - | 100,000,000 |
Class NNN | - | 100,000,000 |
Class OOO | - | 100,000,000 |
Class PPP | - | 100,000,000 |
Class QQQ | - | 2,500,000,000 |
Class RRR | - | 2,500,000,000 |
Class SSS | - | 100,000,000 |
Class TTT | - | 50,000,000 |
Class UUU | - | 50,000,000 |
Class VVV | - | 50,000,000 |
Class WWW | - | 50,000,000 |
Class XXX | - | 100,000,000 |
Class YYY | - | 100,000,000 |
Class ZZZ | - | 100,000,000 |
Class AAAA | - | 50,000,000,000 |
Class BBBB | - | 700,000,000 |
Class CCCC | - | 700,000,000 |
Class DDDD | - | 700,000,000 |
Class EEEE | - | 100,000,000 |
Class FFFF | - | 100,000,000 |
Class GGGG | - | 100,000,000 |
Class HHHH | - | 100,000,000 |
Class IIII | - | 100,000,000 |
Class JJJJ | - | 100,000,000 |
Class KKKK | - | 100,000,000 |
Class LLLL | - | 100,000,000 |
-3-
Class MMMM | - | 100,000,000 |
Class NNNN | - | 100,000,000 |
Class OOOO | - | 100,000,000 |
Class PPPP | - | 100,000,000 |
Class QQQQ | - | 100,000,000 |
Class RRRR | - | 100,000,000 |
Class SSSS | - | 100,000,000 |
Class TTTT | - | 100,000,000 |
Class UUUU | - | 100,000,000 |
Class VVVV | - | 100,000,000 |
Class WWWW | - | 100,000,000 |
Class XXXX | - | 100,000,000 |
Class YYYY | - | 100,000,000 |
Class ZZZZ | - | 100,000,000 |
Class AAAAA | - | 100,000,000 |
Class BBBBB | - | 750,000,000 |
Class CCCCC | - | 100,000,000 |
Class DDDDD | - | 100,000,000 |
Class EEEEE | - | 100,000,000 |
Class FFFFF | - | 100,000,000 |
Class GGGGG | - | 100,000,000 |
Class HHHHH | - | 100,000,000 |
Class IIIII | - | 100,000,000 |
Class JJJJJ | - | 100,000,000 |
Class KKKKK | - | 300,000,000 |
Class LLLLL | - | 100,000,000 |
Class MMMMM | - | 100,000,000 |
Class NNNNN | - | 100,000,000 |
Class OOOOO | - | 100,000,000 |
Class PPPPP | - | 100,000,000 |
Class QQQQQ | - | 100,000,000 |
Class RRRRR | - | 100,000,000 |
Class SSSSS | - | 100,000,000 |
Class TTTTT | - | 300,000,000 |
Class UUUUU | - | 100,000,000 |
Class VVVVV | - | 100,000,000 |
Class WWWWW | - | 100,000,000 |
Class XXXXX | - | 100,000,000 |
Class YYYYY | - | 100,000,000 |
Class ZZZZZ | - | 100,000,000 |
Class AAAAAA | - | 100,000,000 |
Class BBBBBB | - | 100,000,000 |
Class CCCCCC | - | 100,000,000 |
Class DDDDDD | - | 100,000,000 |
Class EEEEEE | - | 100,000,000 |
Class FFFFFF | - | 100,000,000 |
-4-
Class GGGGGG | - | 100,000,000 |
Class HHHHHH | - | 100,000,000 |
Class IIIIII | - | 100,000,000 |
Class JJJJJJ | - | 100,000,000 |
Class KKKKKK | - | 100,000,000 |
Class LLLLLL | - | 100,000,000 |
Class MMMMMM | - | 100,000,000 |
Class NNNNNN | - | 100,000,000 |
Class OOOOOO | - | 100,000,000 |
Class PPPPPP | - | 100,000,000 |
Class QQQQQQ | - | 100,000,000 |
Class RRRRRR | - | 100,000,000 |
Class SSSSSS | - | 100,000,000 |
Class TTTTTT | - | 100,000,000 |
Class Select | - | 700,000,000 |
Class Beta 2 | - | 1,000,000 |
Class Beta 3 | - | 1,000,000 |
Class Beta 4 | - | 1,000,000 |
Class Principal Money | - | 700,000,000 |
Class Gamma 2 | - | 1,000,000 |
Class Gamma 3 | - | 1,000,000 |
Class Gamma 4 | - | 1,000,000 |
Class Bear Stearns | ||
Money | - | 2,500,000,000 |
Class Bear Stearns | ||
Municipal Money | - | 1,500,000,000 |
Class Bear Stearns | ||
Government Money | - | 1,000,000,000 |
Class Delta 4 | - | 1,000,000 |
Class Epsilon 1 | - | 1,000,000 |
Class Epsilon 2 | - | 1,000,000 |
Class Epsilon 3 | - | 1,000,000 |
Class Epsilon 4 | - | 1,000,000 |
Class Zeta 1 | - | 1,000,000 |
Class Zeta 2 | - | 1,000,000 |
Class Zeta 3 | - | 1,000,000 |
Class Zeta 4 | - | 1,000,000 |
Class Eta 1 | - | 1,000,000 |
Class Eta 2 | - | 1,000,000 |
Class Eta 3 | - | 1,000,000 |
Class Eta 4 | - | 1,000,000 |
Class Theta 1 | - | 1,000,000 |
Class Theta 2 | - | 1,000,000 |
Class Theta 3 | - | 1,000,000 |
Class Theta 4 | - | 1,000,000 |
-5-
for a total of 86,623,000,000 shares classified into separate classes of Common Stock.
FIFTH: The undersigned President of the Corporation acknowledges these Articles Supplementary to be the corporate act of the Corporation and, as to all matters or facts required to be verified under oath, the undersigned President acknowledges that, to the best of his knowledge, information and belief, these matters and facts are true in all material respects and that this statement is made under the penalties for perjury.
[SIGNATURE PAGE FOLLOWS]
-6-
IN WITNESS WHEREOF, The RBB Fund, Inc. has caused these presents to be signed in its name and on its behalf by its President and attested by its Secretary on the 2nd day of February, 2018.
ATTEST: | THE RBB FUND, INC. | ||||
By: | /s/ James G. Shaw | By: | /s/ Salvatore Faia . | ||
James G. Shaw | Salvatore Faia | ||||
Secretary | President |
-7-
THE RBB FUND, INC.
ARTICLES SUPPLEMENTARY
THE RBB FUND, INC., a Maryland corporation (the "Corporation"), hereby certifies to the State Department of Assessments and Taxation of Maryland that:
FIRST: In accordance with the requirements of Section 2-208 of the Maryland General Corporation Law, and under a power contained in the charter of the Corporation (the “Charter”), the Board of Directors of the Corporation (the “Board of Directors”) adopted resolutions classifying an aggregate of 100,000,000 authorized but unclassified and unissued shares of common stock, par value $.001 per share (the “Common Stock”), of the Corporation as follows:
1. | Class UUUUUU. 100,000,000 shares of authorized but unclassified and unissued shares of Common Stock are hereby classified and designated as Class UUUUUU shares of Common Stock representing interests in the Aquarius International Fund. |
SECOND: A description of the shares so classified with the preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications and terms and conditions of redemption as set or changed by the Board of Directors is as set forth in Article VI, Section (6) of the Corporation’s Articles of Incorporation and as set forth elsewhere in the Charter with respect to stock of the Corporation generally, and as follows:
1. To the full extent permitted by applicable law, the Corporation may, without the vote of the shares of any class of capital stock of the Corporation then outstanding and if so determined by the Board of Directors:
(A)(1) sell and convey the assets belonging to Class UUUUUU (the “Class”) to another trust or corporation that is a management investment company (as defined in the Investment Company Act of 1940, as amended) and is organized under the laws of any state of the United States for consideration, which may include the assumption of all outstanding obligations, taxes and other liabilities, accrued or contingent, belonging to such Class and which may include securities issued by such trust or corporation. Following such sale and conveyance, and after making provision for the payment of any liabilities belonging to such Class that are not assumed by the purchaser of the assets belonging to such Class, the Corporation may, at its option, redeem all outstanding shares of such Class at the net asset value thereof as determined by the Board of Directors in accordance with the provisions of applicable law, less such redemption fee or other charge, if any, as may be fixed by resolution of the Board of Directors. Notwithstanding any other provision of the Charter to the contrary, the redemption price may be paid in any combination of cash or other assets belonging to such Class, including but not limited to the distribution of the securities or other consideration received by the Corporation for the assets belonging to such Class upon such conditions as the Board of Directors deems, in its sole discretion, to be appropriate and consistent with applicable law and the Charter;
(2) sell and convert the assets belonging to the Class into money and, after making provision for the payment of all obligations, taxes and other liabilities, accrued or contingent, belonging to such Class, the Corporation may, at its option, redeem all outstanding shares of such Class at the net asset value thereof as determined by the Board of Directors in accordance with the provisions of applicable law, less such redemption fee or other charge, if any, as may be fixed by resolution of the Board of Directors upon such conditions as the Board of Directors deems, in its sole discretion, to be appropriate and consistent with applicable law and the Charter; or
(3) combine the assets belonging to a Class with the assets belonging to any one or more other classes of capital stock of the Corporation if the Board of Directors reasonably determines that such combination will not have a material adverse effect on the stockholders of any class of capital stock of the Corporation participating in such combination. In connection with any such combination of assets, the shares of the Class then outstanding may, if so determined by the Board of Directors, be converted into shares of any other class or classes of capital stock of the Corporation with respect to which conversion is permitted by applicable law, or may be redeemed, at the option of the Corporation, at the net asset value thereof as determined by the Board of Directors in accordance with the provisions of applicable law, less such redemption fee or other charge, or conversion cost, if any, as may be fixed by resolution of the Board of Directors upon such conditions as the Board of Directors deems, in its sole discretion, to be appropriate and consistent with applicable law and the Charter. Notwithstanding any other provision of these Articles Supplementary or the Charter to the contrary, any redemption price, or part thereof, paid pursuant to this section may be paid in shares of any other existing or future class or classes of capital stock of the Corporation; and
(B) without limiting the foregoing, at its option, redeem shares of the Class for any other reason if the Board of Directors has determined that it is in the best interest of the Corporation to do so. Any such redemption shall be at the net asset value of such shares of such Class being redeemed less such redemption fee or other charge, if any, as may be fixed by resolution of the Board of Directors and shall be made and effective upon such terms and in accordance with procedures approved by the Board of Directors at such time.
2. The shares of Class UUUUUU Common Stock will be issued without stock certificates.
-2-
THIRD: The shares aforesaid have been duly classified by the Board of Directors under the authority contained in the Charter. The aggregate number of authorized shares of stock of the Corporation is not changed by these Articles Supplementary.
FOURTH: Immediately after the classification of shares of Undesignated Common Stock as shares of Class UUUUUU Common Stock:
(a) the Corporation has the authority to issue 100,000,000,000 shares of its Common Stock, par value $.001 per share, and the aggregate par value of all the shares of all classes is $100,000,000; and
(b) the number of authorized shares of each class of Common Stock is as follows:
Class A | - | 100,000,000 |
Class B | - | 100,000,000 |
Class C | - | 100,000,000 |
Class D | - | 100,000,000 |
Class E | - | 500,000,000 |
Class F | - | 500,000,000 |
Class G | - | 500,000,000 |
Class H | - | 500,000,000 |
Class I | - | 1,500,000,000 |
Class J | - | 500,000,000 |
Class K | - | 500,000,000 |
Class L | - | 1,500,000,000 |
Class M | - | 500,000,000 |
Class N | - | 500,000,000 |
Class O | - | 500,000,000 |
Class P | - | 100,000,000 |
Class Q | - | 100,000,000 |
Class R | - | 500,000,000 |
Class S | - | 500,000,000 |
Class T | - | 500,000,000 |
Class U | - | 500,000,000 |
Class V | - | 500,000,000 |
Class W | - | 100,000,000 |
Class X | - | 50,000,000 |
Class Y | - | 50,000,000 |
Class Z | - | 50,000,000 |
Class AA | - | 50,000,000 |
Class BB | - | 50,000,000 |
Class CC | - | 50,000,000 |
Class DD | - | 100,000,000 |
Class EE | - | 100,000,000 |
Class FF | - | 50,000,000 |
Class GG | - | 50,000,000 |
-3-
Class HH | - | 50,000,000 |
Class II | - | 100,000,000 |
Class JJ | - | 100,000,000 |
Class KK | - | 100,000,000 |
Class LL | - | 100,000,000 |
Class MM | - | 100,000,000 |
Class NN | - | 100,000,000 |
Class OO | - | 100,000,000 |
Class PP | - | 100,000,000 |
Class QQ | - | 100,000,000 |
Class RR | - | 100,000,000 |
Class SS | - | 100,000,000 |
Class TT | - | 100,000,000 |
Class UU | - | 100,000,000 |
Class VV | - | 100,000,000 |
Class WW | - | 100,000,000 |
Class YY | - | 100,000,000 |
Class ZZ | - | 100,000,000 |
Class AAA | - | 100,000,000 |
Class BBB | - | 100,000,000 |
Class CCC | - | 100,000,000 |
Class DDD | - | 100,000,000 |
Class EEE | - | 100,000,000 |
Class FFF | - | 100,000,000 |
Class GGG | - | 100,000,000 |
Class HHH | - | 100,000,000 |
Class III | - | 100,000,000 |
Class JJJ | - | 100,000,000 |
Class KKK | - | 100,000,000 |
Class LLL | - | 100,000,000 |
Class MMM | - | 100,000,000 |
Class NNN | - | 100,000,000 |
Class OOO | - | 100,000,000 |
Class PPP | - | 100,000,000 |
Class QQQ | - | 2,500,000,000 |
Class RRR | - | 2,500,000,000 |
Class SSS | - | 100,000,000 |
Class TTT | - | 50,000,000 |
Class UUU | - | 50,000,000 |
Class VVV | - | 50,000,000 |
Class WWW | - | 50,000,000 |
Class XXX | - | 100,000,000 |
Class YYY | - | 100,000,000 |
Class ZZZ | - | 100,000,000 |
Class AAAA | - | 50,000,000,000 |
Class BBBB | - | 700,000,000 |
-4-
Class CCCC | - | 700,000,000 |
Class DDDD | - | 700,000,000 |
Class EEEE | - | 100,000,000 |
Class FFFF | - | 100,000,000 |
Class GGGG | - | 100,000,000 |
Class HHHH | - | 100,000,000 |
Class IIII | - | 100,000,000 |
Class JJJJ | - | 100,000,000 |
Class KKKK | - | 100,000,000 |
Class LLLL | - | 100,000,000 |
Class MMMM | - | 100,000,000 |
Class NNNN | - | 100,000,000 |
Class OOOO | - | 100,000,000 |
Class PPPP | - | 100,000,000 |
Class QQQQ | - | 100,000,000 |
Class RRRR | - | 100,000,000 |
Class SSSS | - | 100,000,000 |
Class TTTT | - | 100,000,000 |
Class UUUU | - | 100,000,000 |
Class VVVV | - | 100,000,000 |
Class WWWW | - | 100,000,000 |
Class XXXX | - | 100,000,000 |
Class YYYY | - | 100,000,000 |
Class ZZZZ | - | 100,000,000 |
Class AAAAA | - | 100,000,000 |
Class BBBBB | - | 750,000,000 |
Class CCCCC | - | 100,000,000 |
Class DDDDD | - | 100,000,000 |
Class EEEEE | - | 100,000,000 |
Class FFFFF | - | 100,000,000 |
Class GGGGG | - | 100,000,000 |
Class HHHHH | - | 100,000,000 |
Class IIIII | - | 100,000,000 |
Class JJJJJ | - | 100,000,000 |
Class KKKKK | - | 300,000,000 |
Class LLLLL | - | 100,000,000 |
Class MMMMM | - | 100,000,000 |
Class NNNNN | - | 100,000,000 |
Class OOOOO | - | 100,000,000 |
Class PPPPP | - | 100,000,000 |
Class QQQQQ | - | 100,000,000 |
Class RRRRR | - | 100,000,000 |
Class SSSSS | - | 100,000,000 |
Class TTTTT | - | 300,000,000 |
Class UUUUU | - | 100,000,000 |
Class VVVVV | - | 100,000,000 |
Class WWWWW | - | 100,000,000 |
-5-
Class XXXXX | - | 100,000,000 |
Class YYYYY | - | 100,000,000 |
Class ZZZZZ | - | 100,000,000 |
Class AAAAAA | - | 100,000,000 |
Class BBBBBB | - | 100,000,000 |
Class CCCCCC | - | 100,000,000 |
Class DDDDDD | - | 100,000,000 |
Class EEEEEE | - | 100,000,000 |
Class FFFFFF | - | 100,000,000 |
Class GGGGGG | - | 100,000,000 |
Class HHHHHH | - | 100,000,000 |
Class IIIIII | - | 100,000,000 |
Class JJJJJJ | - | 100,000,000 |
Class KKKKKK | - | 100,000,000 |
Class LLLLLL | - | 100,000,000 |
Class MMMMMM | - | 100,000,000 |
Class NNNNNN | - | 100,000,000 |
Class OOOOOO | - | 100,000,000 |
Class PPPPPP | - | 100,000,000 |
Class QQQQQQ | - | 100,000,000 |
Class RRRRRR | - | 100,000,000 |
Class SSSSSS | - | 100,000,000 |
Class TTTTTT | - | 100,000,000 |
Class UUUUUU | - | 100,000,000 |
Class Select | - | 700,000,000 |
Class Beta 2 | - | 1,000,000 |
Class Beta 3 | - | 1,000,000 |
Class Beta 4 | - | 1,000,000 |
Class Principal Money | - | 700,000,000 |
Class Gamma 2 | - | 1,000,000 |
Class Gamma 3 | - | 1,000,000 |
Class Gamma 4 | - | 1,000,000 |
Class Bear Stearns | ||
Money | - | 2,500,000,000 |
Class Bear Stearns | ||
Municipal Money | - | 1,500,000,000 |
Class Bear Stearns | ||
Government Money | - | 1,000,000,000 |
Class Delta 4 | - | 1,000,000 |
Class Epsilon 1 | - | 1,000,000 |
Class Epsilon 2 | - | 1,000,000 |
Class Epsilon 3 | - | 1,000,000 |
Class Epsilon 4 | - | 1,000,000 |
Class Zeta 1 | - | 1,000,000 |
-6-
Class Zeta 2 | - | 1,000,000 |
Class Zeta 3 | - | 1,000,000 |
Class Zeta 4 | - | 1,000,000 |
Class Eta 1 | - | 1,000,000 |
Class Eta 2 | - | 1,000,000 |
Class Eta 3 | - | 1,000,000 |
Class Eta 4 | - | 1,000,000 |
Class Theta 1 | - | 1,000,000 |
Class Theta 2 | - | 1,000,000 |
Class Theta 3 | - | 1,000,000 |
Class Theta 4 | - | 1,000,000 |
for a total of 86,723,000,000 shares classified into separate classes of Common Stock.
FIFTH: The undersigned President of the Corporation acknowledges these Articles Supplementary to be the corporate act of the Corporation and, as to all matters or facts required to be verified under oath, the undersigned President acknowledges that, to the best of his knowledge, information and belief, these matters and facts are true in all material respects and that this statement is made under the penalties for perjury.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, The RBB Fund, Inc. has caused these presents to be signed in its name and on its behalf by its President and attested by its Secretary on the 2nd day of February, 2018.
ATTEST: | THE RBB FUND, INC. | ||||
By: | /s/ James G. Shaw | By: | /s/ Salvatore Faia . | ||
James G. Shaw | Salvatore Faia | ||||
Secretary | President |
-8-
THE RBB FUND, INC.
ARTICLES SUPPLEMENTARY
THE RBB FUND, INC., a Maryland corporation (the "Corporation"), hereby certifies to the State Department of Assessments and Taxation of Maryland that:
FIRST: In accordance with the requirements of Section 2-208 of the Maryland General Corporation Law, and under a power contained in the charter of the Corporation (the “Charter”), the Board of Directors of the Corporation (the “Board of Directors”) adopted resolutions classifying an aggregate of 300,000,000 authorized but unclassified and unissued shares of common stock, par value $.001 per share (the “Common Stock”), of the Corporation as follows:
1. | Class VVVVVV. 100,000,000 shares of authorized but unclassified and unissued shares of Common Stock (the “Undesignated Common Stock”) are hereby classified and designated as Class VVVVVV shares of Common Stock representing interests in the Abbey Capital Multi Asset Fund – Class I Shares. |
2. | Class WWWWWW. 100,000,000 shares of Undesignated Common Stock are hereby classified and designated as Class WWWWWW shares of Common Stock representing interests in the Abbey Capital Multi Asset Fund – Class A Shares. |
3. | Class XXXXXX. 100,000,000 shares of Undesignated Common Stock are hereby classified and designated as Class XXXXXX shares of Common Stock representing interests in the Abbey Capital Multi Asset Fund – Class C Shares. |
SECOND: A description of the shares so classified with the preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications and terms and conditions of redemption as set or changed by the Board of Directors is as set forth in Article VI, Section (6) of the Corporation’s Articles of Incorporation and as set forth elsewhere in the Charter with respect to stock of the Corporation generally, and as follows:
1. To the full extent permitted by applicable law, the Corporation may, without the vote of the shares of any class of capital stock of the Corporation then outstanding and if so determined by the Board of Directors:
(A)(1) sell and convey the assets belonging to Class VVVVVV, Class WWWWWW, and Class XXXXXX (each a “Class”) to another trust or corporation that is a management investment company (as defined in the Investment Company Act of 1940, as amended) and is organized under the laws of any state of the United States for consideration, which may include the assumption of all outstanding obligations, taxes and other liabilities, accrued or contingent, belonging to such Class and which may include securities issued by such trust or corporation. Following such sale and conveyance, and after making provision for the payment of any liabilities belonging to such Class that are not assumed by the purchaser of the assets belonging to such Class, the Corporation may, at its option, redeem all outstanding shares of such Class at the net asset value thereof as determined by the Board of Directors in accordance with the provisions of applicable law, less such redemption fee or other charge, if any, as may be fixed by resolution of the Board of Directors. Notwithstanding any other provision of the Charter to the contrary, the redemption price may be paid in any combination of cash or other assets belonging to such Class, including but not limited to the distribution of the securities or other consideration received by the Corporation for the assets belonging to such Class upon such conditions as the Board of Directors deems, in its sole discretion, to be appropriate and consistent with applicable law and the Charter;
(2) sell and convert the assets belonging to a Class into money and, after making provision for the payment of all obligations, taxes and other liabilities, accrued or contingent, belonging to such Class, the Corporation may, at its option, redeem all outstanding shares of such Class at the net asset value thereof as determined by the Board of Directors in accordance with the provisions of applicable law, less such redemption fee or other charge, if any, as may be fixed by resolution of the Board of Directors upon such conditions as the Board of Directors deems, in its sole discretion, to be appropriate and consistent with applicable law and the Charter; or
(3) combine the assets belonging to a Class with the assets belonging to any one or more other classes of capital stock of the Corporation if the Board of Directors reasonably determines that such combination will not have a material adverse effect on the stockholders of any class of capital stock of the Corporation participating in such combination. In connection with any such combination of assets, the shares of the Class then outstanding may, if so determined by the Board of Directors, be converted into shares of any other class or classes of capital stock of the Corporation with respect to which conversion is permitted by applicable law, or may be redeemed, at the option of the Corporation, at the net asset value thereof as determined by the Board of Directors in accordance with the provisions of applicable law, less such redemption fee or other charge, or conversion cost, if any, as may be fixed by resolution of the Board of Directors upon such conditions as the Board of Directors deems, in its sole discretion, to be appropriate and consistent with applicable law and the Charter. Notwithstanding any other provision of these Articles Supplementary or the Charter to the contrary, any redemption price, or part thereof, paid pursuant to this section may be paid in shares of any other existing or future class or classes of capital stock of the Corporation; and
(B) without limiting the foregoing, at its option, redeem shares of a Class for any other reason if the Board of Directors has determined that it is in the best interest of the Corporation to do so. Any such redemption shall be at the net asset value of such shares of such Class being redeemed less such redemption fee or other charge, if any, as may be fixed by resolution of the Board of Directors and shall be made and effective upon such terms and in accordance with procedures approved by the Board of Directors at such time.
-2-
2. The shares of Class VVVVVV, Class WWWWWW, and Class XXXXXX Common Stock will be issued without stock certificates.
THIRD: The shares aforesaid have been duly classified by the Board of Directors under the authority contained in the Charter. The aggregate number of authorized shares of stock of the Corporation is not changed by these Articles Supplementary.
FOURTH: Immediately after the classification of the shares of Undesignated Common Stock as shares of Class VVVVVV, Class WWWWWW, and Class XXXXXX Common Stock:
(a) the Corporation has the authority to issue 100,000,000,000 shares of its Common Stock, par value $.001 per share, and the aggregate par value of all the shares of all classes is $100,000,000; and
(b) the number of authorized shares of each class of Common Stock is as follows:
Class A | - | 100,000,000 |
Class B | - | 100,000,000 |
Class C | - | 100,000,000 |
Class D | - | 100,000,000 |
Class E | - | 500,000,000 |
Class F | - | 500,000,000 |
Class G | - | 500,000,000 |
Class H | - | 500,000,000 |
Class I | - | 1,500,000,000 |
Class J | - | 500,000,000 |
Class K | - | 500,000,000 |
Class L | - | 1,500,000,000 |
Class M | - | 500,000,000 |
Class N | - | 500,000,000 |
Class O | - | 500,000,000 |
Class P | - | 100,000,000 |
Class Q | - | 100,000,000 |
Class R | - | 500,000,000 |
Class S | - | 500,000,000 |
Class T | - | 500,000,000 |
Class U | - | 500,000,000 |
Class V | - | 500,000,000 |
Class W | - | 100,000,000 |
Class X | - | 50,000,000 |
Class Y | - | 50,000,000 |
Class Z | - | 50,000,000 |
-3-
Class AA | - | 50,000,000 |
Class BB | - | 50,000,000 |
Class CC | - | 50,000,000 |
Class DD | - | 100,000,000 |
Class EE | - | 100,000,000 |
Class FF | - | 50,000,000 |
Class GG | - | 50,000,000 |
Class HH | - | 50,000,000 |
Class II | - | 100,000,000 |
Class JJ | - | 100,000,000 |
Class KK | - | 100,000,000 |
Class LL | - | 100,000,000 |
Class MM | - | 100,000,000 |
Class NN | - | 100,000,000 |
Class OO | - | 100,000,000 |
Class PP | - | 100,000,000 |
Class QQ | - | 100,000,000 |
Class RR | - | 100,000,000 |
Class SS | - | 100,000,000 |
Class TT | - | 100,000,000 |
Class UU | - | 100,000,000 |
Class VV | - | 100,000,000 |
Class WW | - | 100,000,000 |
Class YY | - | 100,000,000 |
Class ZZ | - | 100,000,000 |
Class AAA | - | 100,000,000 |
Class BBB | - | 100,000,000 |
Class CCC | - | 100,000,000 |
Class DDD | - | 100,000,000 |
Class EEE | - | 100,000,000 |
Class FFF | - | 100,000,000 |
Class GGG | - | 100,000,000 |
Class HHH | - | 100,000,000 |
Class III | - | 100,000,000 |
Class JJJ | - | 100,000,000 |
Class KKK | - | 100,000,000 |
Class LLL | - | 100,000,000 |
Class MMM | - | 100,000,000 |
Class NNN | - | 100,000,000 |
Class OOO | - | 100,000,000 |
Class PPP | - | 100,000,000 |
Class QQQ | - | 2,500,000,000 |
Class RRR | - | 2,500,000,000 |
Class SSS | - | 100,000,000 |
Class TTT | - | 50,000,000 |
Class UUU | - | 50,000,000 |
-4-
Class VVV | - | 50,000,000 |
Class WWW | - | 50,000,000 |
Class XXX | - | 100,000,000 |
Class YYY | - | 100,000,000 |
Class ZZZ | - | 100,000,000 |
Class AAAA | - | 50,000,000,000 |
Class BBBB | - | 700,000,000 |
Class CCCC | - | 700,000,000 |
Class DDDD | - | 700,000,000 |
Class EEEE | - | 100,000,000 |
Class FFFF | - | 100,000,000 |
Class GGGG | - | 100,000,000 |
Class HHHH | - | 100,000,000 |
Class IIII | - | 100,000,000 |
Class JJJJ | - | 100,000,000 |
Class KKKK | - | 100,000,000 |
Class LLLL | - | 100,000,000 |
Class MMMM | - | 100,000,000 |
Class NNNN | - | 100,000,000 |
Class OOOO | - | 100,000,000 |
Class PPPP | - | 100,000,000 |
Class QQQQ | - | 100,000,000 |
Class RRRR | - | 100,000,000 |
Class SSSS | - | 100,000,000 |
Class TTTT | - | 100,000,000 |
Class UUUU | - | 100,000,000 |
Class VVVV | - | 100,000,000 |
Class WWWW | - | 100,000,000 |
Class XXXX | - | 100,000,000 |
Class YYYY | - | 100,000,000 |
Class ZZZZ | - | 100,000,000 |
Class AAAAA | - | 100,000,000 |
Class BBBBB | - | 750,000,000 |
Class CCCCC | - | 100,000,000 |
Class DDDDD | - | 100,000,000 |
Class EEEEE | - | 100,000,000 |
Class FFFFF | - | 100,000,000 |
Class GGGGG | - | 100,000,000 |
Class HHHHH | - | 100,000,000 |
Class IIIII | - | 100,000,000 |
Class JJJJJ | - | 100,000,000 |
Class KKKKK | - | 300,000,000 |
Class LLLLL | - | 100,000,000 |
Class MMMMM | - | 100,000,000 |
Class NNNNN | - | 100,000,000 |
Class OOOOO | - | 100,000,000 |
-5-
Class PPPPP | - | 100,000,000 |
Class QQQQQ | - | 100,000,000 |
Class RRRRR | - | 100,000,000 |
Class SSSSS | - | 100,000,000 |
Class TTTTT | - | 300,000,000 |
Class UUUUU | - | 100,000,000 |
Class VVVVV | - | 100,000,000 |
Class WWWWW | - | 100,000,000 |
Class XXXXX | - | 100,000,000 |
Class YYYYY | - | 100,000,000 |
Class ZZZZZ | - | 100,000,000 |
Class AAAAAA | - | 100,000,000 |
Class BBBBBB | - | 100,000,000 |
Class CCCCCC | - | 100,000,000 |
Class DDDDDD | - | 100,000,000 |
Class EEEEEE | - | 100,000,000 |
Class FFFFFF | - | 100,000,000 |
Class GGGGGG | - | 100,000,000 |
Class HHHHHH | - | 100,000,000 |
Class IIIIII | - | 100,000,000 |
Class JJJJJJ | - | 100,000,000 |
Class KKKKKK | - | 100,000,000 |
Class LLLLLL | - | 100,000,000 |
Class MMMMMM | - | 100,000,000 |
Class NNNNNN | - | 100,000,000 |
Class OOOOOO | - | 100,000,000 |
Class PPPPPP | - | 100,000,000 |
Class QQQQQQ | - | 100,000,000 |
Class RRRRRR | - | 100,000,000 |
Class SSSSSS | - | 100,000,000 |
Class TTTTTT | - | 100,000,000 |
Class UUUUUU | - | 100,000,000 |
Class VVVVVV | - | 100,000,000 |
Class WWWWWW | - | 100,000,000 |
Class XXXXXX | - | 100,000,000 |
Class Select | - | 700,000,000 |
Class Beta 2 | - | 1,000,000 |
Class Beta 3 | - | 1,000,000 |
Class Beta 4 | - | 1,000,000 |
Class Principal Money | - | 700,000,000 |
Class Gamma 2 | - | 1,000,000 |
Class Gamma 3 | - | 1,000,000 |
Class Gamma 4 | - | 1,000,000 |
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Class Bear Stearns | ||
Money | - | 2,500,000,000 |
Class Bear Stearns | ||
Municipal Money | - | 1,500,000,000 |
Class Bear Stearns | ||
Government Money | - | 1,000,000,000 |
Class Delta 4 | - | 1,000,000 |
Class Epsilon 1 | - | 1,000,000 |
Class Epsilon 2 | - | 1,000,000 |
Class Epsilon 3 | - | 1,000,000 |
Class Epsilon 4 | - | 1,000,000 |
Class Zeta 1 | - | 1,000,000 |
Class Zeta 2 | - | 1,000,000 |
Class Zeta 3 | - | 1,000,000 |
Class Zeta 4 | - | 1,000,000 |
Class Eta 1 | - | 1,000,000 |
Class Eta 2 | - | 1,000,000 |
Class Eta 3 | - | 1,000,000 |
Class Eta 4 | - | 1,000,000 |
Class Theta 1 | - | 1,000,000 |
Class Theta 2 | - | 1,000,000 |
Class Theta 3 | - | 1,000,000 |
Class Theta 4 | - | 1,000,000 |
for a total of 87,023,000,000 shares classified into separate classes of Common Stock.
FIFTH: The undersigned President of the Corporation acknowledges these Articles Supplementary to be the corporate act of the Corporation and, as to all matters or facts required to be verified under oath, the undersigned President acknowledges that, to the best of his knowledge, information and belief, these matters and facts are true in all material respects and that this statement is made under the penalties for perjury.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, The RBB Fund, Inc. has caused these presents to be signed in its name and on its behalf by its President and attested by its Secretary on the 2nd day of February, 2018.
ATTEST: | THE RBB FUND, INC. | ||||
By: | /s/ James G. Shaw | By: | /s/ Salvatore Faia . | ||
James G. Shaw | Salvatore Faia | ||||
Secretary | President |
-8-
THE RBB FUND, INC.
ARTICLES OF AMENDMENT
THE RBB FUND, INC., a Maryland corporation (hereinafter called the “Corporation”), hereby certifies to the State Department of Assessments and Taxation of Maryland that:
FIRST: The charter of the Corporation is hereby amended by changing the name of the Class OOOOO (Dynamic U.S. Growth Fund – Class I), Class PPPPP (Dynamic U.S. Growth Fund – Class II), and Class QQQQQ (Dynamic U.S. Growth Fund – Institutional Class) shares as follows:
Old Designation | New Designation |
Class OOOOO Dynamic U.S. Growth Fund – Class I | Class OOOOO Summit Global Investments Global Low Volatility Fund – Class I |
Class PPPPP Dynamic U.S. Growth Fund – Class II Class QQQQQ Dynamic U.S. Growth Fund – Institutional Class |
Class PPPPP Summit Global Investments Global Low Volatility Fund – Class II Class QQQQQ Summit Global Investments Global Low Volatility Fund – Institutional Class |
SECOND: The foregoing amendment to the charter of the Corporation was approved by the vote of a majority of the Board of Directors. The foregoing amendment is limited to a change expressly permitted by Section 2-605 of the Maryland General Corporation Law to be made without action by the stockholders of the Corporation.
IN WITNESS WHEREOF, the Corporation has caused these presents to be signed in its name and on behalf by its duly authorized President who acknowledges that these Articles of Amendment are the act of the Corporation, that to the best of his knowledge, information and belief, all matters and facts set forth herein relating to the authorization and approval of these Articles are true in all material respects, and that this statement is made under the penalties for perjury.
THE RBB FUND, INC. | |||
By: | /s/ Salvatore Faia . | ||
Salvatore Faia | |||
President |
ATTEST: | |
/s/ James G. Shaw | |
James G. Shaw | |
Secretary |
INVESTMENT ADVISORY AGREEMENT
Aquarius International Fund
AGREEMENT made as of [ ], 2018 between THE RBB FUND, INC., a Maryland corporation (herein called the “Fund”), and ALTAIR ADVISERS LLC, a Delaware limited liability company (herein called the “Investment Adviser”).
WHEREAS, the Fund is registered as an open-end management investment company under the Investment Company Act of 1940 (the “1940 Act”), and currently offers or proposes to offer shares representing interests in separate investment portfolios; and
WHEREAS, the Fund desires to retain the Investment Adviser to render certain investment advisory services to the Fund with respect to the Fund’s Aquarius International Fund (the “Portfolio”), and the Investment Adviser is willing to so render such services; and
WHEREAS, the Board of Directors of the Fund and the sole shareholder of the Portfolio have approved this Agreement, and the Investment Adviser is willing to furnish such services upon the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, and intending to be legally bound hereby, it is agreed between the parties hereto as follows:
SECTION 1. APPOINTMENT. The Fund hereby appoints the Investment Adviser to act as investment adviser for the Portfolio for the period and on the terms set forth in this Agreement. The Investment Adviser accepts such appointment and agrees to render the services herein set forth for the compensation herein provided.
SECTION 2. DELIVERY OF DOCUMENTS. The Fund has furnished the Investment Adviser with copies properly certified or authenticated of each of the following:
(a) Resolutions of the Board of Directors of the Fund authorizing the appointment of the Investment Adviser and the execution and delivery of this Agreement; and
(b) A prospectus, statement of additional information and summary prospectus, if applicable, relating to each class of shares representing interests in the Portfolio of the Fund in effect under the Securities Act of 1933 (such prospectus, statement of additional information and summary prospectus, as presently in effect and as they shall from time to time be amended and supplemented, are herein collectively called the “Prospectus,” “Statement of Additional Information” and “Summary Prospectus,” respectively).
The Fund will promptly provide the Investment Adviser with notice in writing, of any intention to amend or supplement the foregoing, as applicable, and will provide the Investment Adviser with ample time to review and comment upon any such amendment or supplement to the foregoing. The Fund will promptly furnish the Investment Adviser with copies, properly certified or authenticated, of all amendments of or supplements to the foregoing, if any, as filed with the Securities and Exchange Commission.
In addition to the foregoing, the Fund will also provide the Investment Adviser with copies of the Fund’s Charter and By-laws, and any registration statement or service contracts related to the Portfolio, will promptly provide the Investment Adviser with notice in writing, of any intention to amend or supplement the foregoing, as applicable and to the extent such amendment or supplement relates to the Portfolio, and will provide the Investment Adviser with ample time to review and comment upon any such amendment or supplement to the foregoing. The Fund will promptly furnish the Investment Adviser with any final amendments of or supplements to such documents.
SECTION 3. MANAGEMENT.
(a) Subject to the supervision of the Board of Directors of the Fund and subject to Section 3 (b) below, the Investment Adviser will provide for the overall management of the Portfolio. including (i) providing a continuous investment program for the Portfolio, including investment research and continuous management with respect to all securities, investments, cash and cash equivalents in the Portfolio, (ii) determining, in its sole discretion, which securities and other investments will be purchased, retained, or sold by the Portfolio, and (iii) placing, in its sole discretion, orders for all purchases and sales made for the Portfolio. The Investment Adviser will provide the services rendered by it hereunder in accordance with the Portfolio’s investment objective, restrictions and policies as stated in the then currently effective Prospectus and Statement of Additional Information, provided that the Investment Adviser has received prompt notice, in writing, of any changes by the Board of Directors to such investment objectives, restrictions or policies or any other policies or procedures that may impact the Investment Adviser’s ability to effectively provide an investment program for the Portfolio. The Investment Adviser further agrees that it will provide to the Fund’s Board of Directors such periodic and special reports regarding the performance of its duties under this Agreement as the Board of Directors may reasonably request. The Investment Adviser agrees to provide to the Fund (or its agents and service providers) prompt and accurate data with respect to the Portfolio’s transactions and, where not otherwise available, the daily valuation of securities in the Portfolio.
(b) Sub-Advisers. The Investment Adviser may delegate any or all of its responsibilities hereunder with respect to provision of the investment advisory services set forth in Section 3(a) to one or more other parties (each such party, a “Sub-Adviser”), pursuant in each case to a written agreement with such Sub-Adviser that meets the requirements of Section 15 of the 1940 Act and rules thereunder applicable to contracts for service as investment adviser of a registered investment company (including without limitation the requirements for approval by the Board of Directors of the Fund and the shareholders of the Portfolio), subject, however, to such exemptions as may be granted by the U.S. Securities and Exchange Commission upon application or by rule. Such Sub-Adviser may (but need not) be affiliated with the Investment Adviser.
Any delegation of services pursuant to this Section 3(b) shall be subject to the following conditions:
1. Any fees or compensation payable to any Sub-Adviser shall be paid directly to a Sub-Adviser by the Portfolio pursuant to the terms of a Sub-Advisory Agreement with such Sub-Adviser.
2. The Investment Adviser shall be responsible for overseeing the performance of any Sub-Adviser and recommending changes of a Sub-Adviser, if appropriate.
3. If the Investment Adviser delegates its responsibilities to more than one Sub-Adviser, the Investment Adviser shall be responsible for assigning to each Sub-Adviser that portion of the assets of the Portfolio for which the Sub-Adviser is to act as Sub-Adviser.
4. To the extent that any obligations of the Investment Adviser or any Sub-Adviser require any service provider of the Fund or Portfolio to furnish information or services, the Fund or Portfolio shall cause such information or services to be promptly furnished by the Fund’s or the Portfolio’s service providers directly to both the Investment Adviser and any Sub-Adviser.
SECTION 4. BROKERAGE. Subject to the Investment Adviser’s obligation to obtain best price and execution, the Investment Adviser shall have full discretion to select brokers or dealers to effect the purchase and sale of securities. When the Investment Adviser places orders for the purchase or sale of securities for the Portfolio, in selecting brokers or dealers to execute such orders, the Investment Adviser is expressly authorized to consider the fact that a broker or dealer has furnished statistical, research or other information or services for the benefit of the Portfolio directly or indirectly. Without limiting the generality of the foregoing, the Investment Adviser is authorized to cause the Portfolio to pay brokerage commissions which may be in excess of the lowest rates available to brokers who execute transactions for the Portfolio or who otherwise provide brokerage and research services utilized by the Investment Adviser, provided that the Investment Adviser determines in good faith that the amount of each such commission paid to a broker is reasonable in relation to the value of the brokerage and research services provided by such broker viewed in terms of either the particular transaction to which the commission relates or the Investment Adviser’s overall responsibilities with respect to accounts as to which the Investment Adviser exercises investment discretion. The Investment Adviser may aggregate securities orders so long as the Investment Adviser adheres to a policy of allocating investment opportunities to the Portfolio over a period of time on a fair and equitable basis relative to other clients. In no instance will the Portfolio’s securities be purchased from or sold to the Fund’s principal underwriter, the Investment Adviser, or any affiliated person thereof, except to the extent permitted by SEC exemptive order or by applicable law.
The Investment Adviser shall provide a written report to the Board of Directors of the Fund at least quarterly with respect to brokerage transactions that were entered into by the Investment Adviser pursuant to the foregoing paragraph, and shall certify to the Board a certification to the Board that the commissions paid were determined, in good faith, by the Investment Adviser to be reasonable in terms either of that transaction or the overall responsibilities of the Investment Adviser to the Fund and the Investment Adviser’s other clients, that the total commissions paid by the Fund were reasonable in relation to the benefits to the Fund over the long term, and that such commissions were paid in compliance with Section 28(e) of the Securities Exchange Act of 1934, as amended.
The Investment Adviser may delegate the selection of brokers or dealers to effect the purchase and sale of securities for the Portfolio and any and all responsibilities pursuant to this Section 4 to one or more Sub-Advisers subject to the terms of a Sub-Advisory Agreement with such Sub-Adviser.
SECTION 5. CONFORMITY WITH LAW; CONFIDENTIALITY. The Investment Adviser further agrees that it will comply in all material respects with all applicable rules and regulations of all federal regulatory agencies having jurisdiction over the Investment Adviser in the performance of its duties hereunder. The Investment Adviser will treat confidentially and as proprietary information of the Fund all records and other information relating to the Fund and prior, present, or potential shareholders (except with respect to clients or potential clients of the Investment Adviser or information that is developed by the Investment Adviser) and will not use or disclose such records and information for any purpose other than performance of its responsibilities and duties hereunder, except after prior notification to and approval in writing by the Fund, which approval shall not be unreasonably withheld and may not be withheld where the Investment Adviser may be required by law to disclose such information or exposed to civil or criminal contempt proceedings for failure to comply, when requested to divulge such information by duly constituted authorities, or when so requested by the Fund. Where the Investment Adviser may be required by law to disclose such information or exposed to civil or criminal contempt proceedings for failure to comply with a request for records or other information relating to the Fund, the Investment Adviser may disclose such information prior to obtaining the Fund’s written approval, provided that the Investment Adviser has taken reasonable steps to promptly notify the Fund, in writing, upon receipt of the request. The Fund shall treat any and all information and advice furnished by the Investment Adviser as confidential and proprietary and shall not disclose such information or advice, except as may be required by law.
SECTION 6. SERVICES NOT EXCLUSIVE. The Investment Adviser and its officers and employees may act and continue to act as investment managers for others, and nothing in this Agreement shall in any way be deemed to restrict the right of the Investment Adviser to perform investment management or other services for any other person or entity, and the performance of such services for others shall not be deemed to violate or give rise to any duty or obligation to the Portfolio or the Fund.
Nothing in this Agreement shall limit or restrict the Investment Adviser or any of its directors, officers, affiliates or employees from buying, selling or trading in any securities for its or their own account. The Fund acknowledges that the Investment Adviser and its directors, officers, affiliates, employees and other clients may, and nothing in this Agreement shall prohibit the Investment Adviser’s ability to, at any time, have, hold, acquire, increase, decrease, or dispose of positions in investments prior to, simultaneously with, or subsequent to, those investments being acquired or disposed of for the Portfolio. The Investment Adviser shall have no obligation to acquire, or dispose of, for the Portfolio a position in any investment which the Investment Adviser, its directors, officers, affiliates or employees may acquire, or dispose of, for its or their own accounts or for the account of another client, so long as it continues to be the policy and practice of the Investment Adviser not to favor or disfavor consistently or consciously any client or class of clients in the allocation of investment opportunities so that, to the extent practical, such opportunities will be allocated among clients over a period of time on a fair and equitable basis.
The Investment Adviser agrees that this Section 6 does not constitute a waiver by the Fund of the obligations imposed upon the Investment Adviser with respect to Sections 17(d) and 17(j) of the 1940 Act, and the rules thereunder, nor constitute a waiver by the Fund of the obligations imposed upon the Investment Adviser under Section 206 of the Investment Advisers Act of 1940 and the rules thereunder. Further, the Investment Adviser agrees that this Section 6 does not constitute a waiver by the Fund of the fiduciary obligation of the Investment Adviser arising under federal or state law, including Section 36 of the 1940 Act. The Investment Adviser agrees that this Section 6 shall be interpreted consistent with the provisions of Section 17(i) of the 1940 Act.
SECTION 7. BOOKS AND RECORDS. In compliance with the requirements of Rule 3la-3 under the 1940 Act, the Investment Adviser hereby agrees that all records which it maintains for the Portfolio are the property of the Fund and further agrees to surrender promptly to the Fund any of such records upon the Fund’s request; provided however, that the Investment Adviser may maintain and possess copies of all such records to satisfy its record-keeping requirements under the Investment Advisers Act of 1940, as amended, or other federal or state laws. The Investment Adviser further agrees to preserve for the periods prescribed by Rule 3la-2 under the 1940 Act the records required to be maintained by Rule 3la-1 under the 1940 Act.
SECTION 8. EXPENSES. During the term of this Agreement, the Investment Adviser will pay all expenses incurred by it in connection with its activities under this Agreement. The Portfolio shall bear all of its own expenses not specifically assumed by the Investment Adviser. General expenses of the Fund not readily identifiable as belonging to an investment portfolio of the Fund shall be allocated among all investment portfolios of the Fund by or under the direction of the Fund’s Board of Directors in such manner as the Board determines to be fair and equitable. Expenses borne by the Portfolio shall include, but are not limited to, the following (or the Portfolio’s share of the following): (a) the cost (including brokerage commissions) of securities purchased or sold by the Portfolio and any losses incurred in connection therewith; (b) fees payable to and expenses incurred on behalf of the Portfolio by the Investment Adviser or any Sub-Adviser; (c) filing fees and expenses relating to the registration and qualification of the Fund and the Portfolio’s shares under federal and/or state securities laws and maintaining such registrations and qualifications; (d) fees and salaries payable to the Fund’s directors and officers; (e) taxes (including any income or franchise taxes) and governmental fees; (f) costs of any liability and other insurance or fidelity bonds; (g) any costs, expenses or losses arising out of a liability of or claim for damages or other relief asserted against the Fund or the Portfolio for violation of any law; (h) legal, accounting and auditing expenses, including legal fees of special counsel for the independent directors; (i) charges of custodians, transfer agents, accounting agents and registrars, dividend disbursing and redemption agents and any other agents; (j) expenses of setting in type and printing prospectuses, statements of additional information and supplements thereto for existing shareholders, reports, statements, and confirmations to shareholders and proxy materials that are not attributable to a class; (k) costs of mailing prospectuses, statements of additional information and supplements thereto to existing shareholders, as well as reports to shareholders and proxy materials that are not attributable to a class; (1) any extraordinary expenses; (m) fees, voluntary assessments and other expenses incurred in connection with membership in investment company organizations; (n) costs of mailing and tabulating proxies and costs of shareholders’ and directors’ meetings; (o) costs of independent pricing services to value the Portfolio’s securities; (p) all costs of borrowing money; and (q) the costs of investment company literature and other publications provided by the Fund to its directors and officers. Distribution expenses, transfer agency expenses, expenses of preparing, printing and mailing prospectuses, statements of additional information, proxy statements and reports to shareholders, and organizational expenses and registration fees, identified as belonging to a particular class of the Portfolio are allocated to such class.
SECTION 9. VOTING. The Investment Adviser shall have the authority as agent for the Portfolio to vote, either in person or by proxy, tender and take all actions incident to the ownership of all securities in which the Portfolio’s assets may be invested from time to time, subject to such policies and procedures as the Board of Directors of the Fund may adopt from time to time; provided the Investment Adviser has received prompt notice, in writing of any changes to such policies and procedures.
The Investment Adviser may delegate any and all voting powers pursuant to this Agreement to one or more Sub-Advisers subject to the terms of a Sub-Advisory Agreement with such Sub-Adviser.
SECTION 10. RESERVATION OF NAME. The Investment Adviser shall at all times have all rights in and to the Portfolio’s name and all investment models used by or on behalf of or developed for the Portfolio. The Investment Adviser may use the Portfolio’s name or any portion thereof in connection with any other mutual fund or business activity without the consent of any shareholder and the Fund shall execute and deliver any and all documents required to indicate the consent of the Fund to such use. The Fund hereby agrees that in the event that neither the Investment Adviser nor any of its affiliates acts as investment adviser to the Portfolio, the name of the Portfolio will be changed to one that does not suggest an affiliation with the Investment Adviser.
SECTION 11. COMPENSATION.
(a) The Portfolio will pay no investment advisory fees to the Investment Adviser for the services rendered by the Investment Adviser under this Agreement, except that the Investment Adviser is entitled to reimbursement from the Portfolio for compliance expenses in connection with its managing the Portfolio, up to 0.03% of the Portfolio’s average daily net assets. The Fund will reimburse the Investment Adviser from the assets of the Portfolio for any expenses of the Portfolio assumed by the Investment Adviser pursuant to this Agreement. For any period less than a full month during which this Agreement is in effect, the expenses shall be prorated according to the proportion which such period bears to a full month.
(b) The expenses attributable to the Portfolio shall be satisfied only against the assets of the Portfolio and not against the assets of any other investment portfolio of the Fund. The Investment Adviser may from time to time agree to pay or reimburse the Portfolio for all or a portion of its expenses not otherwise required to be borne or reimbursed by the Investment Adviser.
SECTION 12. LIMITATION OF LIABILITY. The Investment Adviser shall not be liable for any error of judgment or mistake of law or for any loss suffered by the Portfolio in connection with the matters to which this Agreement relates, except a loss resulting from a breach of fiduciary duty with respect to the receipt of compensation for services or a loss resulting from willful misfeasance, bad faith or gross negligence on the part of the Investment Adviser in the performance of its duties or from reckless disregard by it of its obligations and duties under this Agreement (“disabling conduct”). The Portfolio will indemnify the Investment Adviser against and hold it harmless from any and all losses, claims, damages, liabilities or expenses (including reasonable counsel fees and expenses) resulting from any claim, demand, action or suit not resulting from disabling conduct by the Investment Adviser . Indemnification shall be made only following: (i) a final decision on the merits by a court or other body before whom the proceeding was brought that the Investment Adviser was not liable by reason of disabling conduct or (ii) in the absence of such a decision, a settlement by the Investment Adviser, in which the Investment Adviser admits no wrong-doing and the Investment Adviser and the Fund or Portfolio are released from any and all liability or a reasonable determination, based upon a review of the facts, that the Investment Adviser was not liable by reason of disabling conduct by (a) the vote of a majority of a quorum of directors of the Portfolio who are neither “interested persons” of the Fund nor parties to the proceeding (“disinterested non-party directors”) or (b) an independent legal counsel, as agreed to by the Fund and Investment Adviser, in a written opinion. The Investment Adviser shall be entitled to advances from the Portfolio for payment of the reasonable expenses incurred by it in connection with the matter as to which it is seeking indemnification in the manner and to the fullest extent permissible under the Maryland General Corporation Law. The Investment Adviser shall provide to the Portfolio a written affirmation of its good faith belief that the standard of conduct necessary for indemnification by the Portfolio has been met and a written undertaking to repay any such advance if it should ultimately be determined by a court or other governmental body that the standard of conduct has not been met. In addition, at least one of the following additional conditions shall be met: (a) the Investment Adviser shall provide a security in form and amount acceptable to the Portfolio for its undertaking; (b) the Portfolio is insured against losses arising by reason of the advance; or (c) a majority of a quorum of disinterested non-party directors, or independent legal counsel, as agreed to by the Fund and Investment Adviser, in a written opinion, shall have determined, based upon a review of facts readily available to the Portfolio at the time the advance is proposed to be made, that there is reason to believe that the Investment Adviser will ultimately be found to be entitled to indemnification. Any amounts payable by the Portfolio under this Section shall be satisfied only against the assets of the Portfolio and not against the assets of any other investment portfolio of the Fund.
The limitations on liability and indemnification provisions of this Section 12 shall not be applicable to any losses, claims, damages, liabilities or expenses arising from the Investment Adviser’s rights to the Portfolio’s name. The Investment Adviser shall indemnify and hold harmless the Fund and the Portfolio for any claims arising from the use of the term “Altair” in the name of the Portfolio.
SECTION 13. DURATION AND TERMINATION. This Agreement shall become effective with respect to the Portfolio as of the date first above written and, unless sooner terminated as provided herein, shall continue with respect to the Portfolio until August 16, 2019. Thereafter, if not terminated, this Agreement shall continue with respect to the Portfolio for successive annual periods ending on August 16, provided such continuance is specifically approved at least annually (a) by the vote of a majority of those members of the Board of Directors of the Fund who are not parties to this Agreement or interested persons of any such party, cast in person at a meeting called for the purpose of voting on such approval, and (b) by the Board of Directors of the Fund or by vote of a majority of the outstanding voting securities of the Portfolio; provided, however, that this Agreement may be terminated with respect to the Portfolio by the Fund at any time, without the payment of any penalty, by a vote of the majority of the Board of Directors of the Fund or by vote of a majority of the outstanding voting securities of the Portfolio, on 60 days’ prior written notice to the Investment Adviser, or by the Investment Adviser at any time, without payment of any penalty, on 60 days’ prior written notice to the Fund. This Agreement will immediately terminate in the event of its assignment. (As used in this Agreement, the terms “majority of the outstanding voting securities,” “interested person” and “assignment” shall have the same meaning as such terms have in the 1940 Act). Termination of this Agreement will not affect the validity of any action previously taken by the Investment Adviser under this Agreement prior to termination or the liabilities or obligations of the parties from transactions initiated before termination of this Agreement. Upon termination of this Agreement, the Investment Adviser will have no obligation to recommend or take any action with regard to securities, cash or other investments held by the Portfolio.
SECTION 14. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement may be changed, discharged or terminated, except by an instrument in writing signed by both parties and, unless otherwise permitted by the 1940 Act, no amendment of this Agreement affecting the Portfolio shall be effective until approved by vote of a majority of the Board of Directors and by the holders of a majority of the outstanding voting securities of the Portfolio.
SECTION 15. MISCELLANEOUS. The captions in this Agreement are included for convenience of reference only and in no way define or delimit any of the provisions hereof or otherwise affect their construction or effect. If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected thereby. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors.
SECTION 16. NOTICE. All notices hereunder shall be given in writing and delivered by hand, national overnight courier, facsimile or electronic mail (provided written confirmation of receipt is obtained and said notice is sent via first class mail on the next business day) or mailed by certified mail, return receipt requested, as follows:
If to the Fund:
The RBB Fund, Inc.
615 East Michigan Street,
Milwaukee, WI 53202
Attention: Salvatore Faia
If to the Investment Adviser:
Altair Advisers LLC
303 W. Madison Street, Suite 600
Chicago, IL 60606
Attention: Rebecca Kohmescher
Or such other addresses as may be provided by either party, in writing, from time to time.
The effective date of any notice shall be (i) the date such notice is sent if such delivery is effected by hand or facsimile or electronic mail, (ii) one business day after the date such notice is sent if such delivery is effected by national overnight courier; or (iii) the fifth (5th) Business Day after the date of mailing thereof.
SECTION 17. GOVERNING LAW. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Delaware without giving effect to the conflicts of laws principles thereof.
SECTION 18. COUNTERPARTS. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed by their officers designated below as of the day and year first above written.
THE RBB FUND, INC. | |||
By: | |||
Name: | Salvatore Faia | ||
Title: | President | ||
ALTAIR ADVISERS, LLC | |||
By: | |||
Name: | |||
Title: |
SUB-ADVISORY AGREEMENT
This Agreement is dated as of the [ ] day of [ ], 2018, and is entered into by and among The RBB Fund, Inc., a Maryland corporation, (the “Company”), Altair Advisers LLC, an Illinois limited liability company (the “Adviser”), and Aperio Group, LLC, a California limited liability company (the “Sub-Adviser”). This Agreement governs the relationship among the Company, the Adviser and the Sub-Adviser with respect to the Sub-Adviser providing investment management services to a portion of the assets (the “Assets”) of the Aquarius International Fund, a series of the Company (the “Client”).
1. | Appointment and the Management of Assets. |
The Adviser, on behalf of the Client, hereby appoints the Sub-Adviser to manage the Assets, and the Sub-Adviser hereby agrees to serve as Sub-Adviser with respect to the Assets, on the terms and conditions set forth herein.
(a) The Sub-Adviser shall have full power and authority to supervise and direct the investment of the Assets on a discretionary basis in accordance with (i) the Client’s investment objectives, policies and restrictions set forth in the Client’s prospectus and statement of additional information, as they may be amended from time to time, any additional policies or guidelines, including without limitation compliance policies and procedures established by the Adviser, the Company’s Chief Compliance Officer or the Company’s Board of Directors that has been furnished in writing by the Adviser to the Sub-Adviser, (ii) the written instructions and directions received from the Adviser or the Client; and (iii) the requirements of the Investment Company Act of 1940 (the “1940 Act”), the Investment Advisers Act of 1940 (the “Advisers Act”), the Internal Revenue Code of 1986 and all other applicable federal and state laws governing the performance of the Sub-Adviser’s duties under this Agreement, all as may be in effect from time to time (collectively, the “Policies”). The Sub-Adviser may purchase, sell and otherwise deal with the Assets (including exercising all voting rights, granting or withholding consent or taking other actions with respect to the Assets), in the name and on behalf of the Client in a manner consistent with the provisions of this Agreement. Sub-Adviser understands that Adviser has advised the Client that Sub-Adviser will, at no time, take custody of the Assets.
(b) The Sub-Adviser shall promptly implement any change with respect to its management of the Assets as a result of any modification of the Policies relayed to Sub-Adviser by the Adviser.
2. | Additions to, and Withdrawal of, Assets Under Management. |
(a) The Adviser may add to or withdraw Assets from the Sub-Adviser on written notice (including via e-mail) to the Sub-Adviser. Any such notice shall set forth the amount of the increase or withdrawal, or identify the specific Assets to be added or withdrawn, the date on which such increase or withdrawal shall be effective, whether a withdrawal shall be in the form of cash, and such other information deemed necessary or appropriate by the Adviser. Sub-Adviser shall confirm receipt of that notice via phone or e-mail to Adviser.
(b) Sub-Adviser shall invest any additional Assets as soon as practicable consistent with the applicable investment objectives and restrictions, the prevailing market conditions, and its investment philosophy and processes.
(c) Withdrawals in the form of non-cash Assets shall be effective immediately upon written notice to the Sub-Adviser, subject to confirmation of position availability by the Sub-Adviser.
(d) In the case of cash withdrawals, the Sub-Adviser shall liquidate the necessary Assets as soon as practicable.
3. | Brokerage. |
(a) The Sub-Adviser is authorized to place orders for the execution of securities transactions on behalf of the Client with or through such broker-dealers as it may reasonably select, subject to its duty to obtain “the combination of best net price and execution” under the circumstances. In selecting brokers or dealers to execute transactions on behalf of the Client, the Sub-Adviser will make its selection based on its expectation of the most advantageous combination of execution, service and price under the circumstances, taking into consideration all relevant factors, including but not limited to price, execution capabilities, reputation, infrastructure, reliability, financial resources, quality of research products or services, and other value-added services. The Sub-Adviser may pay a broker or dealer a commission in excess of the commission another broker or dealer may have charged, provided the Sub-Adviser has determined in good faith that such commission is reasonable in relation to the value of the brokerage and research services (within the meaning of Section 28(e) of the Securities Exchange Act of 1934, as amended) provided to the Client and other accounts over which the Sub-Adviser exercises investment discretion.
(b) The Sub-Adviser may utilize a broker or dealer that is an affiliate of the Sub-Adviser to the extent permitted by the 1940 Act. If the Client or the Assets are a “plan” or an “employee benefit plan” under the Employee Retirement Income Security Act of 1974 (“ERISA”), Sub-Adviser shall comply in all material respects with the requirements of PTE 86-128.
(c) Nothing in this Agreement shall preclude the Sub-Adviser from combining orders for the sale or purchase of securities for the Client with orders for other accounts managed by the Sub-Adviser, provided that such action is consistent with the Sub-Adviser’s fiduciary obligations to the Client.
4. | Proxies; Class Actions. |
The Sub-Adviser shall be solely responsible to vote all proxies received with respect to the Assets, and shall take all necessary and reasonable steps with respect to corporate actions related to securities held or previously held as part of the Assets. The Sub-Adviser shall not incur any liability to Client for failing to vote any proxies, or to take an action with respect to a corporate action, if it had not received such proxies or related communication on a timely basis.
Adviser acknowledges that Sub-Adviser does not advise or act for Client in any legal proceedings, including bankruptcies or class actions, involving securities held or previously held as part of the Assets.
5. | Duties. |
(a) The Sub-Adviser shall discharge its duties and exercise its powers in a manner consistent with its stated investment policy and philosophy and its fiduciary obligations, and in accordance with the Policies.
(b) Consistent with its fiduciary duties, nothing in this Agreement shall limit the Sub-Adviser or any of its affiliates, officers, directors or employees from engaging in securities transactions that are different from those in which it might transact on behalf of Client or that involve the same securities purchased or sold for the Client for its or their own accounts, or for the accounts of other clients. The Sub-Adviser will allocate investment opportunities among the Client’s account and other accounts in a manner that it reasonably and in good faith believes to be equitable. The Sub-Adviser may give advice and take action (including the allocation of investment opportunities among accounts) in the performance of its duties with respect to any of its other clients that may differ from advice given to or action taken with respect to the Client.
6. | Recordkeeping. |
The Sub-Adviser shall maintain such records relating to Client’s account and the Assets as are required under applicable law or regulation, including without limitation the 1940 Act.
7. | Communication and Reporting. |
(a) The Adviser shall have the sole responsibility for maintaining regular and periodic oral and written communication with the Client with respect to any and all matters relating to the Client’s account and its Assets, including obtaining updated information with respect to the Client. The Adviser shall promptly notify the Sub-Adviser of any changes to the Client’s information that may be relevant to Sub-Adviser’s obligations under this Agreement or its fiduciary duties. The Adviser shall be solely responsible for all reporting to the Client. The Sub-Adviser agrees to make such personnel who are knowledgeable about the Assets reasonably available during the Sub-Adviser’s normal business hours at the Adviser’s reasonable request for consultation with respect to the Assets.
(b) As soon as practicable after the end of each calendar quarter, the Sub-Adviser shall provide the Adviser with the standard reports provided by the Sub-Adviser to other clients who receive service similar to the Client, the contents of which previously have been agreed to by the Adviser.
8. | Information. |
(a) The Adviser shall provide to the Client a copy of the Sub-Adviser’s then-current Form ADV, Part 2A, or a separate disclosure statement meeting the requirements of Rule 204-3(a) under the Advisers Act, and all amendments and supplements thereto (the “Brochure”), and a copy of Sub-Adviser’s Privacy Notice, prior to the commencement of Sub-Adviser managing the Assets. At least annually, so long as this Agreement is effective, the Adviser shall make a written offer to the Client to provide a copy of the Sub-Adviser’s then current Brochure, and shall provide a copy of Sub-Adviser’s Privacy Notice. The Adviser shall maintain records reflecting (i) each date on which the Client is offered a Brochure and (ii) each date on which the Client is sent a Brochure and shall provide the Sub-Adviser with written confirmation thereof. Adviser agrees to make such records available to the Sub-Adviser upon request.
(b) The Sub-Adviser will provide copies of the Brochures and Privacy Notices to the Adviser promptly after execution of this Agreement, annually thereafter or at such times as requested by Adviser.
9. | ERISA Accounts. |
If Client or the Assets are considered a “plan” or an “employee benefit plan” as such terms as defined in ERISA, Sub-Adviser acknowledges that, in acting as discretionary sub-adviser to the Assets, it is a fiduciary (as defined in Section 3938 of ERISA) with respect to the Assets.
10. | Non-Exclusivity. |
Sub-Adviser, its officers, employees and agents may have or take the same or similar positions in specific investments for their own accounts or for the accounts of other clients as the Sub-Adviser does for the Assets. The Adviser acknowledges and understands that the Sub-Adviser shall be free to render investment advice to others and that the Sub-Adviser does not make its investment management services available exclusively to the Adviser or the Adviser’s clients.
11. | Investment Management Fee. |
In consideration of Sub-Adviser’s services, Sub-Adviser shall receive a monthly fee in accordance with Appendix A of this Agreement. The Client will pay the Sub-Adviser from the assets of the Client. For any period less than a full month during which this Agreement is in effect, the fee shall be prorated according to the proportion which such period bears to a full month. The fee attributable to the Client shall be satisfied only against the assets of the Client and not against the assets of any other investment portfolio of the Company.
12. | Representations and Warranties of Sub-Adviser. |
The Sub-Adviser hereby makes the following representations and warranties to the Adviser, which representations and warranties shall continue for so long as this Agreement remains in effect, and if at any time any event occurs that would make any of the representations or warranties not true, the party making such representation or warranty shall promptly notify the other party in writing (including via e-mail) within ten (10) days of such event.
(a) The Sub-Adviser is duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is organized and has full power and authority to execute and perform this Agreement. The Sub-Adviser conducts its business in compliance in all material respects with the requirements of all applicable laws and regulations.
(b) The Sub-Adviser has delivered to Adviser a copy of its current Form ADV and Privacy Notice. As of the date hereof, all amendments to Form ADV, which are required by the Advisers Act have been made and filed with the Securities and Exchange Commission and each applicable state’s securities law administrator. The Sub-Adviser represents that its Form ADV is, to its knowledge, true, accurate and not misleading.
(c) The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby will not violate any agreement to which the Sub-Adviser is a party or by which it is bound, or violate any law, regulation or order applicable to the Sub-Adviser.
(d) The Sub-Adviser will comply in all material respects with the requirements of the Advisers Act and any other applicable law or regulation with respect to the Client and the subject matter of, or transactions completed by, this Agreement.
(e) There is no litigation or regulatory proceeding pending or, to the knowledge of the Sub-Adviser, threatened against the Sub-Adviser that could materially affect the Sub-Adviser’s ability to carry out its duties under this Agreement.
(f) To the extent applicable to this Agreement, the Sub-Adviser (i) meets the bonding requirements of Section 412 of the Employee Retirement Income Security Act of 1974, as amended, or (ii) is exempt from those requirements and has provided an explanation of its exemption to the Adviser.
13. | Representations and Warranties of the Adviser. |
The Adviser hereby makes the following representations and warranties to the Sub-Adviser, which representations and warranties shall continue for so long as this Agreement remains in effect, and if at any time any event occurs that would make any of the representations or warranties not true, the party making such representation or warranty shall promptly notify the other party in writing (including via e-mail) within ten (10) days of such event.
(a) The Adviser is duly organized, validly existing and in good standing under the laws of the jurisdiction in which it was incorporated or otherwise organized and has full power and authority to execute and perform this Agreement. The Adviser conducts its business in compliance in all material respects with the requirements of all applicable laws and regulations.
(b) The execution and delivery of this Agreement and the consummation of the transactions provided herein will not violate any agreement to which the Adviser is a party or by which it is bound, or violate any law, regulation or order applicable to the Adviser.
(c) The Adviser will comply in all material respects with the requirements of the Advisers Act and any other applicable law or regulation with respect to the Client and the subject matter of, or transactions contemplated by, this Agreement.
(d) There is no litigation or regulatory proceeding pending or, to the knowledge of the Adviser, threatened against the Adviser that could materially affect the Adviser’s ability to carry out its duties under this Agreement.
(e) The Adviser has reviewed the Client’s investment goals, objectives, limitations and restrictions with the Client in accordance with its standard procedures for evaluating the suitability of investment products and has deemed, in its judgment, that Sub-Adviser’s services are suitable for Client. The Adviser will notify the Sub-Adviser promptly of any changes in a Client’s investment objectives or restrictions.
(f) The Adviser has reviewed all authorizing documentation from the Client and is satisfied that such documentation authorizes the Client to hire an investment manager.
14. | Indemnity from Sub-Adviser. |
The Sub-Adviser agrees to reimburse, indemnify and hold harmless the Adviser and its officers, directors, employees and agents for any and all expenses (including, without limitation, reasonable legal fees), losses, damages, liabilities, judgments, demands, charges and claims of every kind or nature whatsoever (one or more hereinafter referred to as “Damages”) caused by or arising, directly or indirectly, out of (i) the gross negligence or willful misconduct of the Sub-Adviser, or the Sub-Adviser’s material breach of fiduciary duty to the Client, in the performance of its duties hereunder, or (ii) the material breach of this Agreement by the Sub-Adviser.
15. | Indemnity from Adviser. |
The Adviser agrees to reimburse, indemnify and hold harmless the Sub-Adviser and its respective affiliates, officers, directors, employees, and agents for any and all Damages caused by or arising, directly or indirectly out of (i) the gross negligence or willful misconduct of the Adviser, or the Adviser’s material breach of fiduciary duty to the Client, in the performance of its duties hereunder; (ii) the material breach of this Agreement by the Adviser; or (iii) actions of Sub-Adviser authorized by the direction of the Adviser.
16. | Confidentiality. |
(a) The Adviser and Sub-Adviser shall safeguard as strictly confidential, and shall not use for any purpose other than fulfilling their duties under this Agreement, all information about any Client and each Client’s Assets, except (i) as required in the performance or enforcement of this Agreement; or (ii) in order to comply with applicable laws and regulations or regulatory requests or a subpoena, court order or similar compulsory legal process, provided that disclosure shall not be broader than required by the applicable process or law.
(b) Each party agrees that with respect to any confidential information or documents, which are furnished by any other party hereto, such information shall be kept in strict confidence and shall not be used directly or indirectly for any purpose other than that for which it was furnished, except (i) as required in connection with the performance or enforcement of this Agreement; or (ii) in order to comply with applicable laws and regulations or regulatory requests or a subpoena, court order or similar compulsory legal process, provided that disclosure shall not be broader than required by the applicable process or law.
Each party agrees that no advertising or marketing information, which contains the name, or any reference to any other party may be distributed without the prior written consent of the other party.
17. | Headings. |
The headings in this Agreement have been inserted for convenience of reference only and shall in no way restrict or otherwise modify any of the terms or provisions hereof.
18. | Further Acts and Assurances. |
In addition to the acts and deeds recited herein and contemplated to be performed, executed and delivered by or on behalf of the parties hereto, the parties hereby agree to perform, execute and deliver or cause to be performed, executed and delivered any and all such further acts, deeds and assurances as the other party may reasonably require to consummate the transactions contemplated hereby.
19. | Counterparts. |
This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which counterparts shall together constitute but one and the same instrument.
20. | Entire Agreement; Amendment and Waiver. |
This Agreement (together with any Appendix hereto) constitutes the entire agreement of the parties with respect to the subject matter hereof. No amendment or modification of this Agreement or any provision hereof, or waiver of any right or remedy herein provided, shall be effective for any purpose unless specifically set forth in writing and signed by the party or parties to be bound thereby. The waiver of any right or remedy in respect to any occurrence or event on one occasion shall not be deemed a waiver of such right or remedy in respect to such occurrence or event on any other occasion.
21. | Term; Assignment. |
This Agreement shall become effective as of the date of its execution, and:
(a) unless otherwise terminated, this Agreement shall continue in effect until August 16, 2019, and from year to year thereafter so long as such continuance is specifically approved at least annually (i) by the Board of Directors of the Company or by vote of a majority of the outstanding voting securities of the Client, and (ii) by vote of a majority of the Directors of the Company who are not interested persons of the Company, the Adviser or the Sub-Adviser, cast in person at a meeting called for the purpose of voting on such approval;
(b) this Agreement may at any time be terminated on 60 days’ written notice to the Sub-Adviser either by vote of the Board of Directors of the Company or by vote of a majority of the outstanding voting securities of the Client;
(c) this Agreement shall automatically terminate in the event of its assignment or upon the termination of the Adviser’s Investment Advisory Agreement with the Company, on behalf of the Client; and
(d) this Agreement may be terminated by the Sub-Adviser on 60 days’ written notice to the Adviser and the Company, or by the Adviser immediately upon notice to the Sub-Adviser.
Termination of this Agreement pursuant to this Section 20 shall be without the payment of any penalty.
The Sub-Adviser may not assign this Agreement and this Agreement shall automatically terminate in the event of an “assignment,” as such term is defined in Section 2(a)(4) of the 1940 Act. The Sub-Adviser shall notify the Adviser in writing sufficiently in advance of any proposed change of “control,” as defined in Section 2(a)(9) of the 1940 Act, so as to enable the Company and/or the Adviser to: (a) consider whether an assignment will occur, (b) consider whether to enter into a new Sub-Advisory Agreement with the Sub-Adviser, and (c) prepare, file, and deliver any disclosure document to the Client’s shareholders as may be required by applicable law.
22. | Liability. |
Except as otherwise provided by law, neither Sub-Adviser nor any of its employees, affiliates, representatives or agents (“Affiliated Persons”) shall be liable for: (a) any loss that Client may suffer by reason of any investment decision made or other action taken or omitted in good faith by Sub-Adviser with that degree of care, skill, prudence, and diligence under the circumstances that a person acting in a fiduciary capacity would use; (b) any loss arising from Sub-Adviser’s adherence to Client’s written or oral instructions as delivered to Sub-Adviser by Adviser; (c) any act or failure to act by the custodian, any broker or dealer to which Sub-Adviser directs transactions for the Assets or by any other third party.
The federal and state securities laws impose liabilities under certain circumstances on persons who act in good faith, and therefore nothing in this Agreement shall in any way constitute a waiver or limitation of any rights that Client may have under federal or state laws.
If the Assets constitute only a portion of Client’s total assets, Sub-Adviser shall not be responsible for any of Client’s assets not designated to Sub-Adviser for management under this Agreement or the diversification of all of Client’s assets.
23. | Governing Law. |
This Agreement shall be governed by and construed under and in accordance with the laws of the State of Delaware.
24. | Arbitration. |
The parties waive their right to seek remedies in court, including any right to a jury trial. The parties agree that in the event of any dispute between the parties arising out of, relating to or in connection with this Agreement, such dispute shall be resolved exclusively by arbitration to be conducted only in the country and state of the principal office of Adviser at the time of such dispute in accordance with the rules of JAMS/Endispute. Disputes shall not be resolved in any other forum or venue. The parties agree that such arbitration shall be conducted by a retired judge who is experienced in dispute resolution regarding the securities business, that discovery shall not be permitted except as required by the rules of JAMS/Endispute, that the arbitration award shall not include factual findings or conclusions of law, and that no punitive damages shall be awarded. The parties understand that any party’s right to appeal or to seek modification of any ruling or award of the arbitrator is severely limited. Any award rendered by the arbitrator shall be final and binding, and judgment may be entered on it in any court of competent jurisdiction in the county and state of the principal office of Adviser at the time such award is rendered or as otherwise provided by law.
25. | Notices. |
All notices, reports, and other communications required hereunder shall be in writing and (i) shall be effective upon delivery, and (ii) shall be deemed properly delivered if delivered by hand, faxed, e-mailed, or mailed, postage prepaid, addressed as set forth below or to such other address as the addressed party shall have designated in writing to the other party:
If to the Company:
The RBB Fund, Inc.
615 East Michigan Street,
Milwaukee, WI 53202
Attention: Salvatore Faia
If to the Investment Adviser:
Altair Advisers LLC
303 W. Madison Street, Suite 600
Chicago, IL 60606
Attention: Rebecca Kohmescher
If to the Sub-Adviser:
Aperio Group, LLC
Three Harbor Drive, Suite 315
Sausalito, CA 94965-2843
Attention: Rick Moreno
26. | Severability. |
Any provision of this Agreement, which may be determined by competent authority to be prohibited or unenforceable in any jurisdiction, shall be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof.
27. | Survival. |
The provisions of Sections 14, 15, 16, 22 and 24 contained herein shall survive the termination of this Agreement.
Altair Advisers LLC | Aperio Group, LLC | ||||
By: | By: | ||||
Printed Name | Printed Name | ||||
Signature | Signature | ||||
Title: | Title: | ||||
The RBB Fund, Inc., on behalf of its | |||||
Aquarius International Fund | |||||
By: | |||||
Printed Name | |||||
Signature | |||||
Title: |
Appendix A
[ ]
SUB-ADVISORY AGREEMENT
This Agreement is dated as of the [ ] day of [ ], 2018, and is entered into by and among The RBB Fund, Inc., a Maryland corporation, (the “Company”), Altair Advisers LLC, an Illinois limited liability company (the “Adviser”), and Driehaus Capial Management LLC, a Delaware limited liability company (the “Sub-Adviser”). This Agreement governs the relationship among the Company, the Adviser and the Sub-Adviser with respect to the Sub-Adviser providing investment management services to a portion of the assets (the “Assets”) of the Aquarius International Fund, a series of the Company (the “Client”).
1. | Appointment and the Management of Assets. |
The Adviser, on behalf of the Client, hereby appoints the Sub-Adviser to manage the Assets, and the Sub-Adviser hereby agrees to serve as Sub-Adviser with respect to the Assets, on the terms and conditions set forth herein.
(a) The Sub-Adviser shall have full power and authority to supervise and direct the investment of the Assets on a discretionary basis in accordance with (i) the Client’s investment objectives, policies and restrictions set forth in the Client’s prospectus and statement of additional information, as they may be amended from time to time, any additional policies or guidelines, including without limitation compliance policies and procedures established by the Adviser, the Company’s Chief Compliance Officer or the Company’s Board of Directors that has been furnished in writing by the Adviser to the Sub-Adviser, (ii) the written instructions and directions received from the Adviser or the Client; and (iii) the requirements of the Investment Company Act of 1940 (the “1940 Act”), the Investment Advisers Act of 1940 (the “Advisers Act”), the Internal Revenue Code of 1986 and all other applicable federal and state laws governing the performance of the Sub-Adviser’s duties under this Agreement, all as may be in effect from time to time (collectively, the “Policies”). The Sub-Adviser may purchase, sell and otherwise deal with the Assets (including exercising all voting rights, granting or withholding consent or taking other actions with respect to the Assets), in the name and on behalf of the Client in a manner consistent with the provisions of this Agreement. Sub-Adviser understands that Adviser has advised the Client that Sub-Adviser will, at no time, take custody of the Assets.
(b) The Sub-Adviser shall promptly implement any change with respect to its management of the Assets as a result of any modification of the Policies relayed to Sub-Adviser by the Adviser.
2. | Additions to, and Withdrawal of, Assets Under Management. |
(a) The Adviser may add to or withdraw Assets from the Sub-Adviser on written notice (including via e-mail) to the Sub-Adviser. Any such notice shall set forth the amount of the increase or withdrawal, or identify the specific Assets to be added or withdrawn, the date on which such increase or withdrawal shall be effective, whether a withdrawal shall be in the form of cash, and such other information deemed necessary or appropriate by the Adviser. Sub-Adviser shall confirm receipt of that notice via phone or e-mail to Adviser.
(b) Sub-Adviser shall invest any additional Assets as soon as practicable consistent with the applicable investment objectives and restrictions, the prevailing market conditions, and its investment philosophy and processes.
(c) Withdrawals in the form of non-cash Assets shall be effective immediately upon written notice to the Sub-Adviser, subject to confirmation of position availability by the Sub-Adviser.
(d) In the case of cash withdrawals, the Sub-Adviser shall liquidate the necessary Assets as soon as practicable.
3. | Brokerage. |
(a) The Sub-Adviser is authorized to place orders for the execution of securities transactions on behalf of the Client with or through such broker-dealers as it may reasonably select, subject to its duty to obtain “the combination of best net price and execution” under the circumstances. In selecting brokers or dealers to execute transactions on behalf of the Client, the Sub-Adviser will make its selection based on its expectation of the most advantageous combination of execution, service and price under the circumstances, taking into consideration all relevant factors, including but not limited to price, execution capabilities, reputation, infrastructure, reliability, financial resources, quality of research products or services, and other value-added services. The Sub-Adviser may pay a broker or dealer a commission in excess of the commission another broker or dealer may have charged, provided the Sub-Adviser has determined in good faith that such commission is reasonable in relation to the value of the brokerage and research services (within the meaning of Section 28(e) of the Securities Exchange Act of 1934, as amended) provided to the Client and other accounts over which the Sub-Adviser exercises investment discretion.
(b) The Sub-Adviser may utilize a broker or dealer that is an affiliate of the Sub-Adviser to the extent permitted by the 1940 Act. If the Client or the Assets are a “plan” or an “employee benefit plan” under the Employee Retirement Income Security Act of 1974 (“ERISA”), Sub-Adviser shall comply in all material respects with the requirements of PTE 86-128.
(c) Nothing in this Agreement shall preclude the Sub-Adviser from combining orders for the sale or purchase of securities for the Client with orders for other accounts managed by the Sub-Adviser, provided that such action is consistent with the Sub-Adviser’s fiduciary obligations to the Client.
4. | Proxies; Class Actions. |
The Sub-Adviser shall be solely responsible to vote all proxies received with respect to the Assets, and shall take all necessary and reasonable steps with respect to corporate actions related to securities held or previously held as part of the Assets. The Sub-Adviser shall not incur any liability to Client for failing to vote any proxies, or to take an action with respect to a corporate action, if it had not received such proxies or related communication on a timely basis.
Adviser acknowledges that Sub-Adviser does not advise or act for Client in any legal proceedings, including bankruptcies or class actions, involving securities held or previously held as part of the Assets.
5. | Duties. |
(a) The Sub-Adviser shall discharge its duties and exercise its powers in a manner consistent with its stated investment policy and philosophy and its fiduciary obligations, and in accordance with the Policies.
(b) Consistent with its fiduciary duties, nothing in this Agreement shall limit the Sub-Adviser or any of its affiliates, officers, directors or employees from engaging in securities transactions that are different from those in which it might transact on behalf of Client or that involve the same securities purchased or sold for the Client for its or their own accounts, or for the accounts of other clients. The Sub-Adviser will allocate investment opportunities among the Client’s account and other accounts in a manner that it reasonably and in good faith believes to be equitable. The Sub-Adviser may give advice and take action (including the allocation of investment opportunities among accounts) in the performance of its duties with respect to any of its other clients that may differ from advice given to or action taken with respect to the Client.
6. | Recordkeeping. |
The Sub-Adviser shall maintain such records relating to Client’s account and the Assets as are required under applicable law or regulation, including without limitation the 1940 Act.
7. | Communication and Reporting. |
(a) The Adviser shall have the sole responsibility for maintaining regular and periodic oral and written communication with the Client with respect to any and all matters relating to the Client’s account and its Assets, including obtaining updated information with respect to the Client. The Adviser shall promptly notify the Sub-Adviser of any changes to the Client’s information that may be relevant to Sub-Adviser’s obligations under this Agreement or its fiduciary duties. The Adviser shall be solely responsible for all reporting to the Client. The Sub-Adviser agrees to make such personnel who are knowledgeable about the Assets reasonably available during the Sub-Adviser’s normal business hours at the Adviser’s reasonable request for consultation with respect to the Assets.
(b) As soon as practicable after the end of each calendar quarter, the Sub-Adviser shall provide the Adviser with the standard reports provided by the Sub-Adviser to other clients who receive service similar to the Client, the contents of which previously have been agreed to by the Adviser.
8. | Information. |
(a) The Adviser shall provide to the Client a copy of the Sub-Adviser’s then-current Form ADV, Part 2A, or a separate disclosure statement meeting the requirements of Rule 204-3(a) under the Advisers Act, and all amendments and supplements thereto (the “Brochure”), and a copy of Sub-Adviser’s Privacy Notice, prior to the commencement of Sub-Adviser managing the Assets. At least annually, so long as this Agreement is effective, the Adviser shall make a written offer to the Client to provide a copy of the Sub-Adviser’s then current Brochure, and shall provide a copy of Sub-Adviser’s Privacy Notice. The Adviser shall maintain records reflecting (i) each date on which the Client is offered a Brochure and (ii) each date on which the Client is sent a Brochure and shall provide the Sub-Adviser with written confirmation thereof. Adviser agrees to make such records available to the Sub-Adviser upon request.
(b) The Sub-Adviser will provide copies of the Brochures and Privacy Notices to the Adviser promptly after execution of this Agreement, annually thereafter or at such times as requested by Adviser.
9. | ERISA Accounts. |
If Client or the Assets are considered a “plan” or an “employee benefit plan” as such terms as defined in ERISA, Sub-Adviser acknowledges that, in acting as discretionary sub-adviser to the Assets, it is a fiduciary (as defined in Section 3938 of ERISA) with respect to the Assets.
10. | Non-Exclusivity. |
Sub-Adviser, its officers, employees and agents may have or take the same or similar positions in specific investments for their own accounts or for the accounts of other clients as the Sub-Adviser does for the Assets. The Adviser acknowledges and understands that the Sub-Adviser shall be free to render investment advice to others and that the Sub-Adviser does not make its investment management services available exclusively to the Adviser or the Adviser’s clients.
11. | Investment Management Fee. |
In consideration of Sub-Adviser’s services, Sub-Adviser shall receive a monthly fee in accordance with Appendix A of this Agreement. The Client will pay the Sub-Adviser from the assets of the Client. For any period less than a full month during which this Agreement is in effect, the fee shall be prorated according to the proportion which such period bears to a full month. The fee attributable to the Client shall be satisfied only against the assets of the Client and not against the assets of any other investment portfolio of the Company.
12. | Representations and Warranties of Sub-Adviser. |
The Sub-Adviser hereby makes the following representations and warranties to the Adviser, which representations and warranties shall continue for so long as this Agreement remains in effect, and if at any time any event occurs that would make any of the representations or warranties not true, the party making such representation or warranty shall promptly notify the other party in writing (including via e-mail) within ten (10) days of such event.
(a) The Sub-Adviser is duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is organized and has full power and authority to execute and perform this Agreement. The Sub-Adviser conducts its business in compliance in all material respects with the requirements of all applicable laws and regulations.
(b) The Sub-Adviser has delivered to Adviser a copy of its current Form ADV and Privacy Notice. As of the date hereof, all amendments to Form ADV, which are required by the Advisers Act have been made and filed with the Securities and Exchange Commission and each applicable state’s securities law administrator. The Sub-Adviser represents that its Form ADV is, to its knowledge, true, accurate and not misleading.
(c) The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby will not violate any agreement to which the Sub-Adviser is a party or by which it is bound, or violate any law, regulation or order applicable to the Sub-Adviser.
(d) The Sub-Adviser will comply in all material respects with the requirements of the Advisers Act and any other applicable law or regulation with respect to the Client and the subject matter of, or transactions completed by, this Agreement.
(e) There is no litigation or regulatory proceeding pending or, to the knowledge of the Sub-Adviser, threatened against the Sub-Adviser that could materially affect the Sub-Adviser’s ability to carry out its duties under this Agreement.
(f) To the extent applicable to this Agreement, the Sub-Adviser (i) meets the bonding requirements of Section 412 of the Employee Retirement Income Security Act of 1974, as amended, or (ii) is exempt from those requirements and has provided an explanation of its exemption to the Adviser.
13. | Representations and Warranties of the Adviser. |
The Adviser hereby makes the following representations and warranties to the Sub-Adviser, which representations and warranties shall continue for so long as this Agreement remains in effect, and if at any time any event occurs that would make any of the representations or warranties not true, the party making such representation or warranty shall promptly notify the other party in writing (including via e-mail) within ten (10) days of such event.
(a) The Adviser is duly organized, validly existing and in good standing under the laws of the jurisdiction in which it was incorporated or otherwise organized and has full power and authority to execute and perform this Agreement. The Adviser conducts its business in compliance in all material respects with the requirements of all applicable laws and regulations.
(b) The execution and delivery of this Agreement and the consummation of the transactions provided herein will not violate any agreement to which the Adviser is a party or by which it is bound, or violate any law, regulation or order applicable to the Adviser.
(c) The Adviser will comply in all material respects with the requirements of the Advisers Act and any other applicable law or regulation with respect to the Client and the subject matter of, or transactions contemplated by, this Agreement.
(d) There is no litigation or regulatory proceeding pending or, to the knowledge of the Adviser, threatened against the Adviser that could materially affect the Adviser’s ability to carry out its duties under this Agreement.
(e) The Adviser has reviewed the Client’s investment goals, objectives, limitations and restrictions with the Client in accordance with its standard procedures for evaluating the suitability of investment products and has deemed, in its judgment, that Sub-Adviser’s services are suitable for Client. The Adviser will notify the Sub-Adviser promptly of any changes in a Client’s investment objectives or restrictions.
(f) The Adviser has reviewed all authorizing documentation from the Client and is satisfied that such documentation authorizes the Client to hire an investment manager.
14. | Indemnity from Sub-Adviser. |
The Sub-Adviser agrees to reimburse, indemnify and hold harmless the Adviser and its officers, directors, employees and agents for any and all expenses (including, without limitation, reasonable legal fees), losses, damages, liabilities, judgments, demands, charges and claims of every kind or nature whatsoever (one or more hereinafter referred to as “Damages”) caused by or arising, directly or indirectly, out of (i) the gross negligence or willful misconduct of the Sub-Adviser, or the Sub-Adviser’s material breach of fiduciary duty to the Client, in the performance of its duties hereunder, or (ii) the material breach of this Agreement by the Sub-Adviser.
15. | Indemnity from Adviser. |
The Adviser agrees to reimburse, indemnify and hold harmless the Sub-Adviser and its respective affiliates, officers, directors, employees, and agents for any and all Damages caused by or arising, directly or indirectly out of (i) the gross negligence or willful misconduct of the Adviser, or the Adviser’s material breach of fiduciary duty to the Client, in the performance of its duties hereunder; (ii) the material breach of this Agreement by the Adviser; or (iii) actions of Sub-Adviser authorized by the direction of the Adviser.
16. | Confidentiality. |
(a) The Adviser and Sub-Adviser shall safeguard as strictly confidential, and shall not use for any purpose other than fulfilling their duties under this Agreement, all information about any Client and each Client’s Assets, except (i) as required in the performance or enforcement of this Agreement; or (ii) in order to comply with applicable laws and regulations or regulatory requests or a subpoena, court order or similar compulsory legal process, provided that disclosure shall not be broader than required by the applicable process or law.
(b) Each party agrees that with respect to any confidential information or documents, which are furnished by any other party hereto, such information shall be kept in strict confidence and shall not be used directly or indirectly for any purpose other than that for which it was furnished, except (i) as required in connection with the performance or enforcement of this Agreement; or (ii) in order to comply with applicable laws and regulations or regulatory requests or a subpoena, court order or similar compulsory legal process, provided that disclosure shall not be broader than required by the applicable process or law.
Each party agrees that no advertising or marketing information, which contains the name, or any reference to any other party may be distributed without the prior written consent of the other party.
17. | Headings. |
The headings in this Agreement have been inserted for convenience of reference only and shall in no way restrict or otherwise modify any of the terms or provisions hereof.
18. | Further Acts and Assurances. |
In addition to the acts and deeds recited herein and contemplated to be performed, executed and delivered by or on behalf of the parties hereto, the parties hereby agree to perform, execute and deliver or cause to be performed, executed and delivered any and all such further acts, deeds and assurances as the other party may reasonably require to consummate the transactions contemplated hereby.
19. | Counterparts. |
This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which counterparts shall together constitute but one and the same instrument.
20. | Entire Agreement; Amendment and Waiver. |
This Agreement (together with any Appendix hereto) constitutes the entire agreement of the parties with respect to the subject matter hereof. No amendment or modification of this Agreement or any provision hereof, or waiver of any right or remedy herein provided, shall be effective for any purpose unless specifically set forth in writing and signed by the party or parties to be bound thereby. The waiver of any right or remedy in respect to any occurrence or event on one occasion shall not be deemed a waiver of such right or remedy in respect to such occurrence or event on any other occasion.
21. | Term; Assignment. |
This Agreement shall become effective as of the date of its execution, and:
(a) unless otherwise terminated, this Agreement shall continue in effect until August 16, 2019, and from year to year thereafter so long as such continuance is specifically approved at least annually (i) by the Board of Directors of the Company or by vote of a majority of the outstanding voting securities of the Client, and (ii) by vote of a majority of the Directors of the Company who are not interested persons of the Company, the Adviser or the Sub-Adviser, cast in person at a meeting called for the purpose of voting on such approval;
(b) this Agreement may at any time be terminated on 60 days’ written notice to the Sub-Adviser either by vote of the Board of Directors of the Company or by vote of a majority of the outstanding voting securities of the Client;
(c) this Agreement shall automatically terminate in the event of its assignment or upon the termination of the Adviser’s Investment Advisory Agreement with the Company, on behalf of the Client; and
(d) this Agreement may be terminated by the Sub-Adviser on 60 days’ written notice to the Adviser and the Company, or by the Adviser immediately upon notice to the Sub-Adviser.
Termination of this Agreement pursuant to this Section 20 shall be without the payment of any penalty.
The Sub-Adviser may not assign this Agreement and this Agreement shall automatically terminate in the event of an “assignment,” as such term is defined in Section 2(a)(4) of the 1940 Act. The Sub-Adviser shall notify the Adviser in writing sufficiently in advance of any proposed change of “control,” as defined in Section 2(a)(9) of the 1940 Act, so as to enable the Company and/or the Adviser to: (a) consider whether an assignment will occur, (b) consider whether to enter into a new Sub-Advisory Agreement with the Sub-Adviser, and (c) prepare, file, and deliver any disclosure document to the Client’s shareholders as may be required by applicable law.
22. | Liability. |
Except as otherwise provided by law, neither Sub-Adviser nor any of its employees, affiliates, representatives or agents (“Affiliated Persons”) shall be liable for: (a) any loss that Client may suffer by reason of any investment decision made or other action taken or omitted in good faith by Sub-Adviser with that degree of care, skill, prudence, and diligence under the circumstances that a person acting in a fiduciary capacity would use; (b) any loss arising from Sub-Adviser’s adherence to Client’s written or oral instructions as delivered to Sub-Adviser by Adviser; (c) any act or failure to act by the custodian, any broker or dealer to which Sub-Adviser directs transactions for the Assets or by any other third party.
The federal and state securities laws impose liabilities under certain circumstances on persons who act in good faith, and therefore nothing in this Agreement shall in any way constitute a waiver or limitation of any rights that Client may have under federal or state laws.
If the Assets constitute only a portion of Client’s total assets, Sub-Adviser shall not be responsible for any of Client’s assets not designated to Sub-Adviser for management under this Agreement or the diversification of all of Client’s assets.
23. | Governing Law. |
This Agreement shall be governed by and construed under and in accordance with the laws of the State of Delaware.
24. | Arbitration. |
The parties waive their right to seek remedies in court, including any right to a jury trial. The parties agree that in the event of any dispute between the parties arising out of, relating to or in connection with this Agreement, such dispute shall be resolved exclusively by arbitration to be conducted only in the country and state of the principal office of Adviser at the time of such dispute in accordance with the rules of JAMS/Endispute. Disputes shall not be resolved in any other forum or venue. The parties agree that such arbitration shall be conducted by a retired judge who is experienced in dispute resolution regarding the securities business, that discovery shall not be permitted except as required by the rules of JAMS/Endispute, that the arbitration award shall not include factual findings or conclusions of law, and that no punitive damages shall be awarded. The parties understand that any party’s right to appeal or to seek modification of any ruling or award of the arbitrator is severely limited. Any award rendered by the arbitrator shall be final and binding, and judgment may be entered on it in any court of competent jurisdiction in the county and state of the principal office of Adviser at the time such award is rendered or as otherwise provided by law.
25. | Notices. |
All notices, reports, and other communications required hereunder shall be in writing and (i) shall be effective upon delivery, and (ii) shall be deemed properly delivered if delivered by hand, faxed, e-mailed, or mailed, postage prepaid, addressed as set forth below or to such other address as the addressed party shall have designated in writing to the other party:
If to the Company:
The RBB Fund, Inc.
615 East Michigan Street,
Milwaukee, WI 53202
Attention: Salvatore Faia
If to the Investment Adviser:
Altair Advisers LLC
303 W. Madison Street, Suite 600
Chicago, IL 60606
Attention: Rebecca Kohmescher
If to the Sub-Adviser:
Driehaus Capital Management LLC
25 East Erie Street
Chicago, IL 60611
Attention: Jason Pomatto
26. | Severability. |
Any provision of this Agreement, which may be determined by competent authority to be prohibited or unenforceable in any jurisdiction, shall be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof.
27. | Survival. |
The provisions of Sections 14, 15, 16, 22 and 24 contained herein shall survive the termination of this Agreement.
Altair Advisers LLC | Driehaus Capital Management LLC | ||||
By: | By: | ||||
Printed Name | Printed Name | ||||
Signature | Signature | ||||
Title: | Title: | ||||
The RBB Fund, Inc., on behalf of its Aquarius International Fund | |||||
By: | |||||
Printed Name | |||||
Signature | |||||
Title: |
Appendix A
[ ]
SUB-ADVISORY AGREEMENT
This Agreement is dated as of the [ ] day of [ ], 2018, and is entered into by and among The RBB Fund, Inc., a Maryland corporation, (the “Company”), Altair Advisers LLC, an Illinois limited liability company (the “Adviser”), and Mawer Investment Management Ltd., a Canadian limited liability company (the “Sub-Adviser”). This Agreement governs the relationship among the Company, the Adviser and the Sub-Adviser with respect to the Sub-Adviser providing investment management services to a portion of the assets (the “Assets”) of the Aquarius International Fund, a series of the Company (the “Client”).
1. | Appointment and the Management of Assets. |
The Adviser, on behalf of the Client, hereby appoints the Sub-Adviser to manage the Assets, and the Sub-Adviser hereby agrees to serve as Sub-Adviser with respect to the Assets, on the terms and conditions set forth herein.
(a) The Sub-Adviser shall have full power and authority to supervise and direct the investment of the Assets on a discretionary basis in accordance with (i) the Client’s investment objectives, policies and restrictions set forth in the Client’s prospectus and statement of additional information, as they may be amended from time to time, any additional policies or guidelines, including without limitation compliance policies and procedures established by the Adviser, the Company’s Chief Compliance Officer or the Company’s Board of Directors that has been furnished in writing by the Adviser to the Sub-Adviser, (ii) the written instructions and directions received from the Adviser or the Client; and (iii) the requirements of the Investment Company Act of 1940 (the “1940 Act”), the Investment Advisers Act of 1940 (the “Advisers Act”), the Internal Revenue Code of 1986 and all other applicable federal and state laws governing the performance of the Sub-Adviser’s duties under this Agreement, all as may be in effect from time to time (collectively, the “Policies”). The Sub-Adviser may purchase, sell and otherwise deal with the Assets (including exercising all voting rights, granting or withholding consent or taking other actions with respect to the Assets), in the name and on behalf of the Client in a manner consistent with the provisions of this Agreement. Sub-Adviser understands that Adviser has advised the Client that Sub-Adviser will, at no time, take custody of the Assets.
(b) The Sub-Adviser shall promptly implement any change with respect to its management of the Assets as a result of any modification of the Policies relayed to Sub-Adviser by the Adviser.
2. | Additions to, and Withdrawal of, Assets Under Management. |
(a) The Adviser may add to or withdraw Assets from the Sub-Adviser on written notice (including via e-mail) to the Sub-Adviser. Any such notice shall set forth the amount of the increase or withdrawal, or identify the specific Assets to be added or withdrawn, the date on which such increase or withdrawal shall be effective, whether a withdrawal shall be in the form of cash, and such other information deemed necessary or appropriate by the Adviser. Sub-Adviser shall confirm receipt of that notice via phone or e-mail to Adviser.
(b) Sub-Adviser shall invest any additional Assets as soon as practicable consistent with the applicable investment objectives and restrictions, the prevailing market conditions, and its investment philosophy and processes.
(c) Withdrawals in the form of non-cash Assets shall be effective immediately upon written notice to the Sub-Adviser, subject to confirmation of position availability by the Sub-Adviser.
(d) In the case of cash withdrawals, the Sub-Adviser shall liquidate the necessary Assets as soon as practicable.
3. | Brokerage. |
(a) The Sub-Adviser is authorized to place orders for the execution of securities transactions on behalf of the Client with or through such broker-dealers as it may reasonably select, subject to its duty to obtain “the combination of best net price and execution” under the circumstances. In selecting brokers or dealers to execute transactions on behalf of the Client, the Sub-Adviser will make its selection based on its expectation of the most advantageous combination of execution, service and price under the circumstances, taking into consideration all relevant factors, including but not limited to price, execution capabilities, reputation, infrastructure, reliability, financial resources, quality of research products or services, and other value-added services. The Sub-Adviser may pay a broker or dealer a commission in excess of the commission another broker or dealer may have charged, provided the Sub-Adviser has determined in good faith that such commission is reasonable in relation to the value of the brokerage and research services (within the meaning of Section 28(e) of the Securities Exchange Act of 1934, as amended) provided to the Client and other accounts over which the Sub-Adviser exercises investment discretion.
(b) The Sub-Adviser may utilize a broker or dealer that is an affiliate of the Sub-Adviser to the extent permitted by the 1940 Act. If the Client or the Assets are a “plan” or an “employee benefit plan” under the Employee Retirement Income Security Act of 1974 (“ERISA”), Sub-Adviser shall comply in all material respects with the requirements of PTE 86-128.
(c) Nothing in this Agreement shall preclude the Sub-Adviser from combining orders for the sale or purchase of securities for the Client with orders for other accounts managed by the Sub-Adviser, provided that such action is consistent with the Sub-Adviser’s fiduciary obligations to the Client.
4. | Proxies; Class Actions. |
The Sub-Adviser shall be solely responsible to vote all proxies received with respect to the Assets, and shall take all necessary and reasonable steps with respect to corporate actions related to securities held or previously held as part of the Assets. The Sub-Adviser shall not incur any liability to Client for failing to vote any proxies, or to take an action with respect to a corporate action, if it had not received such proxies or related communication on a timely basis.
Adviser acknowledges that Sub-Adviser does not advise or act for Client in any legal proceedings, including bankruptcies or class actions, involving securities held or previously held as part of the Assets.
5. | Duties. |
(a) The Sub-Adviser shall discharge its duties and exercise its powers in a manner consistent with its stated investment policy and philosophy and its fiduciary obligations, and in accordance with the Policies.
(b) Consistent with its fiduciary duties, nothing in this Agreement shall limit the Sub-Adviser or any of its affiliates, officers, directors or employees from engaging in securities transactions that are different from those in which it might transact on behalf of Client or that involve the same securities purchased or sold for the Client for its or their own accounts, or for the accounts of other clients. The Sub-Adviser will allocate investment opportunities among the Client’s account and other accounts in a manner that it reasonably and in good faith believes to be equitable. The Sub-Adviser may give advice and take action (including the allocation of investment opportunities among accounts) in the performance of its duties with respect to any of its other clients that may differ from advice given to or action taken with respect to the Client.
6. | Recordkeeping. |
The Sub-Adviser shall maintain such records relating to Client’s account and the Assets as are required under applicable law or regulation, including without limitation the 1940 Act.
7. | Communication and Reporting. |
(a) The Adviser shall have the sole responsibility for maintaining regular and periodic oral and written communication with the Client with respect to any and all matters relating to the Client’s account and its Assets, including obtaining updated information with respect to the Client. The Adviser shall promptly notify the Sub-Adviser of any changes to the Client’s information that may be relevant to Sub-Adviser’s obligations under this Agreement or its fiduciary duties. The Adviser shall be solely responsible for all reporting to the Client. The Sub-Adviser agrees to make such personnel who are knowledgeable about the Assets reasonably available during the Sub-Adviser’s normal business hours at the Adviser’s reasonable request for consultation with respect to the Assets.
(b) As soon as practicable after the end of each calendar quarter, the Sub-Adviser shall provide the Adviser with the standard reports provided by the Sub-Adviser to other clients who receive service similar to the Client, the contents of which previously have been agreed to by the Adviser.
8. | Information. |
(a) The Adviser shall provide to the Client a copy of the Sub-Adviser’s then-current Form ADV, Part 2A, or a separate disclosure statement meeting the requirements of Rule 204-3(a) under the Advisers Act, and all amendments and supplements thereto (the “Brochure”), and a copy of Sub-Adviser’s Privacy Notice, prior to the commencement of Sub-Adviser managing the Assets. At least annually, so long as this Agreement is effective, the Adviser shall make a written offer to the Client to provide a copy of the Sub-Adviser’s then current Brochure, and shall provide a copy of Sub-Adviser’s Privacy Notice. The Adviser shall maintain records reflecting (i) each date on which the Client is offered a Brochure and (ii) each date on which the Client is sent a Brochure and shall provide the Sub-Adviser with written confirmation thereof. Adviser agrees to make such records available to the Sub-Adviser upon request.
(b) The Sub-Adviser will provide copies of the Brochures and Privacy Notices to the Adviser promptly after execution of this Agreement, annually thereafter or at such times as requested by Adviser.
9. | ERISA Accounts. |
If Client or the Assets are considered a “plan” or an “employee benefit plan” as such terms as defined in ERISA, Sub-Adviser acknowledges that, in acting as discretionary sub-adviser to the Assets, it is a fiduciary (as defined in Section 3938 of ERISA) with respect to the Assets.
10. | Non-Exclusivity. |
Sub-Adviser, its officers, employees and agents may have or take the same or similar positions in specific investments for their own accounts or for the accounts of other clients as the Sub-Adviser does for the Assets. The Adviser acknowledges and understands that the Sub-Adviser shall be free to render investment advice to others and that the Sub-Adviser does not make its investment management services available exclusively to the Adviser or the Adviser’s clients.
11. | Investment Management Fee. |
In consideration of Sub-Adviser’s services, Sub-Adviser shall receive a monthly fee in accordance with Appendix A of this Agreement. The Client will pay the Sub-Adviser from the assets of the Client. For any period less than a full month during which this Agreement is in effect, the fee shall be prorated according to the proportion which such period bears to a full month. The fee attributable to the Client shall be satisfied only against the assets of the Client and not against the assets of any other investment portfolio of the Company.
12. | Representations and Warranties of Sub-Adviser. |
The Sub-Adviser hereby makes the following representations and warranties to the Adviser, which representations and warranties shall continue for so long as this Agreement remains in effect, and if at any time any event occurs that would make any of the representations or warranties not true, the party making such representation or warranty shall promptly notify the other party in writing (including via e-mail) within ten (10) days of such event.
(a) The Sub-Adviser is duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is organized and has full power and authority to execute and perform this Agreement. The Sub-Adviser conducts its business in compliance in all material respects with the requirements of all applicable laws and regulations.
(b) The Sub-Adviser has delivered to Adviser a copy of its current Form ADV and Privacy Notice. As of the date hereof, all amendments to Form ADV, which are required by the Advisers Act have been made and filed with the Securities and Exchange Commission and each applicable state’s securities law administrator. The Sub-Adviser represents that its Form ADV is, to its knowledge, true, accurate and not misleading.
(c) The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby will not violate any agreement to which the Sub-Adviser is a party or by which it is bound, or violate any law, regulation or order applicable to the Sub-Adviser.
(d) The Sub-Adviser will comply in all material respects with the requirements of the Advisers Act and any other applicable law or regulation with respect to the Client and the subject matter of, or transactions completed by, this Agreement.
(e) There is no litigation or regulatory proceeding pending or, to the knowledge of the Sub-Adviser, threatened against the Sub-Adviser that could materially affect the Sub-Adviser’s ability to carry out its duties under this Agreement.
(f) To the extent applicable to this Agreement, the Sub-Adviser (i) meets the bonding requirements of Section 412 of the Employee Retirement Income Security Act of 1974, as amended, or (ii) is exempt from those requirements and has provided an explanation of its exemption to the Adviser.
13. | Representations and Warranties of the Adviser. |
The Adviser hereby makes the following representations and warranties to the Sub-Adviser, which representations and warranties shall continue for so long as this Agreement remains in effect, and if at any time any event occurs that would make any of the representations or warranties not true, the party making such representation or warranty shall promptly notify the other party in writing (including via e-mail) within ten (10) days of such event.
(a) The Adviser is duly organized, validly existing and in good standing under the laws of the jurisdiction in which it was incorporated or otherwise organized and has full power and authority to execute and perform this Agreement. The Adviser conducts its business in compliance in all material respects with the requirements of all applicable laws and regulations.
(b) The execution and delivery of this Agreement and the consummation of the transactions provided herein will not violate any agreement to which the Adviser is a party or by which it is bound, or violate any law, regulation or order applicable to the Adviser.
(c) The Adviser will comply in all material respects with the requirements of the Advisers Act and any other applicable law or regulation with respect to the Client and the subject matter of, or transactions contemplated by, this Agreement.
(d) There is no litigation or regulatory proceeding pending or, to the knowledge of the Adviser, threatened against the Adviser that could materially affect the Adviser’s ability to carry out its duties under this Agreement.
(e) The Adviser has reviewed the Client’s investment goals, objectives, limitations and restrictions with the Client in accordance with its standard procedures for evaluating the suitability of investment products and has deemed, in its judgment, that Sub-Adviser’s services are suitable for Client. The Adviser will notify the Sub-Adviser promptly of any changes in a Client’s investment objectives or restrictions.
(f) The Adviser has reviewed all authorizing documentation from the Client and is satisfied that such documentation authorizes the Client to hire an investment manager.
14. | Indemnity from Sub-Adviser. |
The Sub-Adviser agrees to reimburse, indemnify and hold harmless the Adviser and its officers, directors, employees and agents for any and all expenses (including, without limitation, reasonable legal fees), losses, damages, liabilities, judgments, demands, charges and claims of every kind or nature whatsoever (one or more hereinafter referred to as “Damages”) caused by or arising, directly or indirectly, out of (i) the gross negligence or willful misconduct of the Sub-Adviser, or the Sub-Adviser’s material breach of fiduciary duty to the Client, in the performance of its duties hereunder, or (ii) the material breach of this Agreement by the Sub-Adviser.
15. | Indemnity from Adviser. |
The Adviser agrees to reimburse, indemnify and hold harmless the Sub-Adviser and its respective affiliates, officers, directors, employees, and agents for any and all Damages caused by or arising, directly or indirectly out of (i) the gross negligence or willful misconduct of the Adviser, or the Adviser’s material breach of fiduciary duty to the Client, in the performance of its duties hereunder; (ii) the material breach of this Agreement by the Adviser; or (iii) actions of Sub-Adviser authorized by the direction of the Adviser.
16. | Confidentiality. |
(a) The Adviser and Sub-Adviser shall safeguard as strictly confidential, and shall not use for any purpose other than fulfilling their duties under this Agreement, all information about any Client and each Client’s Assets, except (i) as required in the performance or enforcement of this Agreement; or (ii) in order to comply with applicable laws and regulations or regulatory requests or a subpoena, court order or similar compulsory legal process, provided that disclosure shall not be broader than required by the applicable process or law.
(b) Each party agrees that with respect to any confidential information or documents, which are furnished by any other party hereto, such information shall be kept in strict confidence and shall not be used directly or indirectly for any purpose other than that for which it was furnished, except (i) as required in connection with the performance or enforcement of this Agreement; or (ii) in order to comply with applicable laws and regulations or regulatory requests or a subpoena, court order or similar compulsory legal process, provided that disclosure shall not be broader than required by the applicable process or law.
Each party agrees that no advertising or marketing information, which contains the name, or any reference to any other party may be distributed without the prior written consent of the other party.
17. | Headings. |
The headings in this Agreement have been inserted for convenience of reference only and shall in no way restrict or otherwise modify any of the terms or provisions hereof.
18. | Further Acts and Assurances. |
In addition to the acts and deeds recited herein and contemplated to be performed, executed and delivered by or on behalf of the parties hereto, the parties hereby agree to perform, execute and deliver or cause to be performed, executed and delivered any and all such further acts, deeds and assurances as the other party may reasonably require to consummate the transactions contemplated hereby.
19. | Counterparts. |
This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which counterparts shall together constitute but one and the same instrument.
20. | Entire Agreement; Amendment and Waiver. |
This Agreement (together with any Appendix hereto) constitutes the entire agreement of the parties with respect to the subject matter hereof. No amendment or modification of this Agreement or any provision hereof, or waiver of any right or remedy herein provided, shall be effective for any purpose unless specifically set forth in writing and signed by the party or parties to be bound thereby. The waiver of any right or remedy in respect to any occurrence or event on one occasion shall not be deemed a waiver of such right or remedy in respect to such occurrence or event on any other occasion.
21. | Term; Assignment. |
This Agreement shall become effective as of the date of its execution, and:
(a) unless otherwise terminated, this Agreement shall continue in effect until August 16, 2019, and from year to year thereafter so long as such continuance is specifically approved at least annually (i) by the Board of Directors of the Company or by vote of a majority of the outstanding voting securities of the Client, and (ii) by vote of a majority of the Directors of the Company who are not interested persons of the Company, the Adviser or the Sub-Adviser, cast in person at a meeting called for the purpose of voting on such approval;
(b) this Agreement may at any time be terminated on 60 days’ written notice to the Sub-Adviser either by vote of the Board of Directors of the Company or by vote of a majority of the outstanding voting securities of the Client;
(c) this Agreement shall automatically terminate in the event of its assignment or upon the termination of the Adviser’s Investment Advisory Agreement with the Company, on behalf of the Client; and
(d) this Agreement may be terminated by the Sub-Adviser on 60 days’ written notice to the Adviser and the Company, or by the Adviser immediately upon notice to the Sub-Adviser.
Termination of this Agreement pursuant to this Section 20 shall be without the payment of any penalty.
The Sub-Adviser may not assign this Agreement and this Agreement shall automatically terminate in the event of an “assignment,” as such term is defined in Section 2(a)(4) of the 1940 Act. The Sub-Adviser shall notify the Adviser in writing sufficiently in advance of any proposed change of “control,” as defined in Section 2(a)(9) of the 1940 Act, so as to enable the Company and/or the Adviser to: (a) consider whether an assignment will occur, (b) consider whether to enter into a new Sub-Advisory Agreement with the Sub-Adviser, and (c) prepare, file, and deliver any disclosure document to the Client’s shareholders as may be required by applicable law.
22. | Liability. |
Except as otherwise provided by law, neither Sub-Adviser nor any of its employees, affiliates, representatives or agents (“Affiliated Persons”) shall be liable for: (a) any loss that Client may suffer by reason of any investment decision made or other action taken or omitted in good faith by Sub-Adviser with that degree of care, skill, prudence, and diligence under the circumstances that a person acting in a fiduciary capacity would use; (b) any loss arising from Sub-Adviser’s adherence to Client’s written or oral instructions as delivered to Sub-Adviser by Adviser; (c) any act or failure to act by the custodian, any broker or dealer to which Sub-Adviser directs transactions for the Assets or by any other third party.
The federal and state securities laws impose liabilities under certain circumstances on persons who act in good faith, and therefore nothing in this Agreement shall in any way constitute a waiver or limitation of any rights that Client may have under federal or state laws.
If the Assets constitute only a portion of Client’s total assets, Sub-Adviser shall not be responsible for any of Client’s assets not designated to Sub-Adviser for management under this Agreement or the diversification of all of Client’s assets.
23. | Governing Law. |
This Agreement shall be governed by and construed under and in accordance with the laws of the State of Delaware.
24. | Arbitration. |
The parties waive their right to seek remedies in court, including any right to a jury trial. The parties agree that in the event of any dispute between the parties arising out of, relating to or in connection with this Agreement, such dispute shall be resolved exclusively by arbitration to be conducted only in the country and state of the principal office of Adviser at the time of such dispute in accordance with the rules of JAMS/Endispute. Disputes shall not be resolved in any other forum or venue. The parties agree that such arbitration shall be conducted by a retired judge who is experienced in dispute resolution regarding the securities business, that discovery shall not be permitted except as required by the rules of JAMS/Endispute, that the arbitration award shall not include factual findings or conclusions of law, and that no punitive damages shall be awarded. The parties understand that any party’s right to appeal or to seek modification of any ruling or award of the arbitrator is severely limited. Any award rendered by the arbitrator shall be final and binding, and judgment may be entered on it in any court of competent jurisdiction in the county and state of the principal office of Adviser at the time such award is rendered or as otherwise provided by law.
25. | Notices. |
All notices, reports, and other communications required hereunder shall be in writing and (i) shall be effective upon delivery, and (ii) shall be deemed properly delivered if delivered by hand, faxed, e-mailed, or mailed, postage prepaid, addressed as set forth below or to such other address as the addressed party shall have designated in writing to the other party:
If to the Company:
The RBB Fund, Inc.
615 East Michigan Street,
Milwaukee, WI 53202
Attention: Salvatore Faia
If to the Investment Adviser:
Altair Advisers LLC
303 W. Madison Street, Suite 600
Chicago, IL 60606
Attention: Rebecca Kohmescher
If to the Sub-Adviser:
Mawer Investment Management Ltd.
Suite 600,517 – 10th Avenue S.W.
Calgary, Alberta, T2R 0A8
Attention: Travis Goldfeldt
26. | Severability. |
Any provision of this Agreement, which may be determined by competent authority to be prohibited or unenforceable in any jurisdiction, shall be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof.
27. | Survival. |
The provisions of Sections 14, 15, 16, 22 and 24 contained herein shall survive the termination of this Agreement.
Altair Advisers LLC | Mawer Investment Management Ltd. | ||||
By: | By: | ||||
Printed Name | Printed Name | ||||
Signature | Signature | ||||
Title: | Title: | ||||
The RBB Fund, Inc., on behalf of its Aquarius International Fund | |||||
By: | |||||
Printed Name | |||||
Signature | |||||
Title: |
Appendix A:
[ ]
SUB-ADVISORY AGREEMENT
This Agreement is dated as of the [ ] day of [ ], 2018, and is entered into by and among The RBB Fund, Inc., a Maryland corporation, (the “Company”), Altair Advisers LLC, an Illinois limited liability company (the “Adviser”), and Setanta Asset Management Limited, an Irish limited liability company (the “Sub-Adviser”). This Agreement governs the relationship among the Company, the Adviser and the Sub-Adviser with respect to the Sub-Adviser providing investment management services to a portion of the assets (the “Assets”) of the Aquarius International Fund, a series of the Company (the “Client”).
1. | Appointment and the Management of Assets. |
The Adviser, on behalf of the Client, hereby appoints the Sub-Adviser to manage the Assets, and the Sub-Adviser hereby agrees to serve as Sub-Adviser with respect to the Assets, on the terms and conditions set forth herein.
(a) The Sub-Adviser shall have full power and authority to supervise and direct the investment of the Assets on a discretionary basis in accordance with (i) the Client’s investment objectives, policies and restrictions set forth in the Client’s prospectus and statement of additional information, as they may be amended from time to time, any additional policies or guidelines, including without limitation compliance policies and procedures established by the Adviser, the Company’s Chief Compliance Officer or the Company’s Board of Directors that has been furnished in writing by the Adviser to the Sub-Adviser, (ii) the written instructions and directions received from the Adviser or the Client; and (iii) the requirements of the Investment Company Act of 1940 (the “1940 Act”), the Investment Advisers Act of 1940 (the “Advisers Act”), the Internal Revenue Code of 1986 and all other applicable federal and state laws governing the performance of the Sub-Adviser’s duties under this Agreement, all as may be in effect from time to time (collectively, the “Policies”). The Sub-Adviser may purchase, sell and otherwise deal with the Assets (including exercising all voting rights, granting or withholding consent or taking other actions with respect to the Assets), in the name and on behalf of the Client in a manner consistent with the provisions of this Agreement. Sub-Adviser understands that Adviser has advised the Client that Sub-Adviser will, at no time, take custody of the Assets.
(b) The Sub-Adviser shall promptly implement any change with respect to its management of the Assets as a result of any modification of the Policies relayed to Sub-Adviser by the Adviser.
2. | Additions to, and Withdrawal of, Assets Under Management. |
(a) The Adviser may add to or withdraw Assets from the Sub-Adviser on written notice (including via e-mail) to the Sub-Adviser. Any such notice shall set forth the amount of the increase or withdrawal, or identify the specific Assets to be added or withdrawn, the date on which such increase or withdrawal shall be effective, whether a withdrawal shall be in the form of cash, and such other information deemed necessary or appropriate by the Adviser. Sub-Adviser shall confirm receipt of that notice via phone or e-mail to Adviser.
(b) Sub-Adviser shall invest any additional Assets as soon as practicable consistent with the applicable investment objectives and restrictions, the prevailing market conditions, and its investment philosophy and processes.
(c) Withdrawals in the form of non-cash Assets shall be effective immediately upon written notice to the Sub-Adviser, subject to confirmation of position availability by the Sub-Adviser.
(d) In the case of cash withdrawals, the Sub-Adviser shall liquidate the necessary Assets as soon as practicable.
3. | Brokerage. |
(a) The Sub-Adviser is authorized to place orders for the execution of securities transactions on behalf of the Client with or through such broker-dealers as it may reasonably select, subject to its duty to obtain “the combination of best net price and execution” under the circumstances. In selecting brokers or dealers to execute transactions on behalf of the Client, the Sub-Adviser will make its selection based on its expectation of the most advantageous combination of execution, service and price under the circumstances, taking into consideration all relevant factors, including but not limited to price, execution capabilities, reputation, infrastructure, reliability, financial resources, quality of research products or services, and other value-added services. The Sub-Adviser may pay a broker or dealer a commission in excess of the commission another broker or dealer may have charged, provided the Sub-Adviser has determined in good faith that such commission is reasonable in relation to the value of the brokerage and research services (within the meaning of Section 28(e) of the Securities Exchange Act of 1934, as amended) provided to the Client and other accounts over which the Sub-Adviser exercises investment discretion.
(b) The Sub-Adviser may utilize a broker or dealer that is an affiliate of the Sub-Adviser to the extent permitted by the 1940 Act. If the Client or the Assets are a “plan” or an “employee benefit plan” under the Employee Retirement Income Security Act of 1974 (“ERISA”), Sub-Adviser shall comply in all material respects with the requirements of PTE 86-128.
(c) Nothing in this Agreement shall preclude the Sub-Adviser from combining orders for the sale or purchase of securities for the Client with orders for other accounts managed by the Sub-Adviser, provided that such action is consistent with the Sub-Adviser’s fiduciary obligations to the Client.
4. | Proxies; Class Actions. |
The Sub-Adviser shall be solely responsible to vote all proxies received with respect to the Assets, and shall take all necessary and reasonable steps with respect to corporate actions related to securities held or previously held as part of the Assets. The Sub-Adviser shall not incur any liability to Client for failing to vote any proxies, or to take an action with respect to a corporate action, if it had not received such proxies or related communication on a timely basis.
Adviser acknowledges that Sub-Adviser does not advise or act for Client in any legal proceedings, including bankruptcies or class actions, involving securities held or previously held as part of the Assets.
5. | Duties. |
(a) The Sub-Adviser shall discharge its duties and exercise its powers in a manner consistent with its stated investment policy and philosophy and its fiduciary obligations, and in accordance with the Policies.
(b) Consistent with its fiduciary duties, nothing in this Agreement shall limit the Sub-Adviser or any of its affiliates, officers, directors or employees from engaging in securities transactions that are different from those in which it might transact on behalf of Client or that involve the same securities purchased or sold for the Client for its or their own accounts, or for the accounts of other clients. The Sub-Adviser will allocate investment opportunities among the Client’s account and other accounts in a manner that it reasonably and in good faith believes to be equitable. The Sub-Adviser may give advice and take action (including the allocation of investment opportunities among accounts) in the performance of its duties with respect to any of its other clients that may differ from advice given to or action taken with respect to the Client.
6. | Recordkeeping. |
The Sub-Adviser shall maintain such records relating to Client’s account and the Assets as are required under applicable law or regulation, including without limitation the 1940 Act.
7. | Communication and Reporting. |
(a) The Adviser shall have the sole responsibility for maintaining regular and periodic oral and written communication with the Client with respect to any and all matters relating to the Client’s account and its Assets, including obtaining updated information with respect to the Client. The Adviser shall promptly notify the Sub-Adviser of any changes to the Client’s information that may be relevant to Sub-Adviser’s obligations under this Agreement or its fiduciary duties. The Adviser shall be solely responsible for all reporting to the Client. The Sub-Adviser agrees to make such personnel who are knowledgeable about the Assets reasonably available during the Sub-Adviser’s normal business hours at the Adviser’s reasonable request for consultation with respect to the Assets.
(b) As soon as practicable after the end of each calendar quarter, the Sub-Adviser shall provide the Adviser with the standard reports provided by the Sub-Adviser to other clients who receive service similar to the Client, the contents of which previously have been agreed to by the Adviser.
8. | Information. |
(a) The Adviser shall provide to the Client a copy of the Sub-Adviser’s then-current Form ADV, Part 2A, or a separate disclosure statement meeting the requirements of Rule 204-3(a) under the Advisers Act, and all amendments and supplements thereto (the “Brochure”), and a copy of Sub-Adviser’s Privacy Notice, prior to the commencement of Sub-Adviser managing the Assets. At least annually, so long as this Agreement is effective, the Adviser shall make a written offer to the Client to provide a copy of the Sub-Adviser’s then current Brochure, and shall provide a copy of Sub-Adviser’s Privacy Notice. The Adviser shall maintain records reflecting (i) each date on which the Client is offered a Brochure and (ii) each date on which the Client is sent a Brochure and shall provide the Sub-Adviser with written confirmation thereof. Adviser agrees to make such records available to the Sub-Adviser upon request.
(b) The Sub-Adviser will provide copies of the Brochures and Privacy Notices to the Adviser promptly after execution of this Agreement, annually thereafter or at such times as requested by Adviser.
9. | ERISA Accounts. |
If Client or the Assets are considered a “plan” or an “employee benefit plan” as such terms as defined in ERISA, Sub-Adviser acknowledges that, in acting as discretionary sub-adviser to the Assets, it is a fiduciary (as defined in Section 3938 of ERISA) with respect to the Assets.
10. | Non-Exclusivity. |
Sub-Adviser, its officers, employees and agents may have or take the same or similar positions in specific investments for their own accounts or for the accounts of other clients as the Sub-Adviser does for the Assets. The Adviser acknowledges and understands that the Sub-Adviser shall be free to render investment advice to others and that the Sub-Adviser does not make its investment management services available exclusively to the Adviser or the Adviser’s clients.
11. | Investment Management Fee. |
In consideration of Sub-Adviser’s services, Sub-Adviser shall receive a monthly fee in accordance with Appendix A of this Agreement. The Client will pay the Sub-Adviser from the assets of the Client. For any period less than a full month during which this Agreement is in effect, the fee shall be prorated according to the proportion which such period bears to a full month. The fee attributable to the Client shall be satisfied only against the assets of the Client and not against the assets of any other investment portfolio of the Company.
12. | Representations and Warranties of Sub-Adviser. |
The Sub-Adviser hereby makes the following representations and warranties to the Adviser, which representations and warranties shall continue for so long as this Agreement remains in effect, and if at any time any event occurs that would make any of the representations or warranties not true, the party making such representation or warranty shall promptly notify the other party in writing (including via e-mail) within ten (10) days of such event.
(a) The Sub-Adviser is duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is organized and has full power and authority to execute and perform this Agreement. The Sub-Adviser conducts its business in compliance in all material respects with the requirements of all applicable laws and regulations.
(b) The Sub-Adviser has delivered to Adviser a copy of its current Form ADV and Privacy Notice. As of the date hereof, all amendments to Form ADV, which are required by the Advisers Act have been made and filed with the Securities and Exchange Commission and each applicable state’s securities law administrator. The Sub-Adviser represents that its Form ADV is, to its knowledge, true, accurate and not misleading.
(c) The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby will not violate any agreement to which the Sub-Adviser is a party or by which it is bound, or violate any law, regulation or order applicable to the Sub-Adviser.
(d) The Sub-Adviser will comply in all material respects with the requirements of the Advisers Act and any other applicable law or regulation with respect to the Client and the subject matter of, or transactions completed by, this Agreement.
(e) There is no litigation or regulatory proceeding pending or, to the knowledge of the Sub-Adviser, threatened against the Sub-Adviser that could materially affect the Sub-Adviser’s ability to carry out its duties under this Agreement.
(f) To the extent applicable to this Agreement, the Sub-Adviser (i) meets the bonding requirements of Section 412 of the Employee Retirement Income Security Act of 1974, as amended, or (ii) is exempt from those requirements and has provided an explanation of its exemption to the Adviser.
13. | Representations and Warranties of the Adviser. |
The Adviser hereby makes the following representations and warranties to the Sub-Adviser, which representations and warranties shall continue for so long as this Agreement remains in effect, and if at any time any event occurs that would make any of the representations or warranties not true, the party making such representation or warranty shall promptly notify the other party in writing (including via e-mail) within ten (10) days of such event.
(a) The Adviser is duly organized, validly existing and in good standing under the laws of the jurisdiction in which it was incorporated or otherwise organized and has full power and authority to execute and perform this Agreement. The Adviser conducts its business in compliance in all material respects with the requirements of all applicable laws and regulations.
(b) The execution and delivery of this Agreement and the consummation of the transactions provided herein will not violate any agreement to which the Adviser is a party or by which it is bound, or violate any law, regulation or order applicable to the Adviser.
(c) The Adviser will comply in all material respects with the requirements of the Advisers Act and any other applicable law or regulation with respect to the Client and the subject matter of, or transactions contemplated by, this Agreement.
(d) There is no litigation or regulatory proceeding pending or, to the knowledge of the Adviser, threatened against the Adviser that could materially affect the Adviser’s ability to carry out its duties under this Agreement.
(e) The Adviser has reviewed the Client’s investment goals, objectives, limitations and restrictions with the Client in accordance with its standard procedures for evaluating the suitability of investment products and has deemed, in its judgment, that Sub-Adviser’s services are suitable for Client. The Adviser will notify the Sub-Adviser promptly of any changes in a Client’s investment objectives or restrictions.
(f) The Adviser has reviewed all authorizing documentation from the Client and is satisfied that such documentation authorizes the Client to hire an investment manager.
14. | Indemnity from Sub-Adviser. |
The Sub-Adviser agrees to reimburse, indemnify and hold harmless the Adviser and its officers, directors, employees and agents for any and all expenses (including, without limitation, reasonable legal fees), losses, damages, liabilities, judgments, demands, charges and claims of every kind or nature whatsoever (one or more hereinafter referred to as “Damages”) caused by or arising, directly or indirectly, out of (i) the gross negligence or willful misconduct of the Sub-Adviser, or the Sub-Adviser’s material breach of fiduciary duty to the Client, in the performance of its duties hereunder, or (ii) the material breach of this Agreement by the Sub-Adviser.
15. | Indemnity from Adviser. |
The Adviser agrees to reimburse, indemnify and hold harmless the Sub-Adviser and its respective affiliates, officers, directors, employees, and agents for any and all Damages caused by or arising, directly or indirectly out of (i) the gross negligence or willful misconduct of the Adviser, or the Adviser’s material breach of fiduciary duty to the Client, in the performance of its duties hereunder; (ii) the material breach of this Agreement by the Adviser; or (iii) actions of Sub-Adviser authorized by the direction of the Adviser.
16. | Confidentiality. |
(a) The Adviser and Sub-Adviser shall safeguard as strictly confidential, and shall not use for any purpose other than fulfilling their duties under this Agreement, all information about any Client and each Client’s Assets, except (i) as required in the performance or enforcement of this Agreement; or (ii) in order to comply with applicable laws and regulations or regulatory requests or a subpoena, court order or similar compulsory legal process, provided that disclosure shall not be broader than required by the applicable process or law.
(b) Each party agrees that with respect to any confidential information or documents, which are furnished by any other party hereto, such information shall be kept in strict confidence and shall not be used directly or indirectly for any purpose other than that for which it was furnished, except (i) as required in connection with the performance or enforcement of this Agreement; or (ii) in order to comply with applicable laws and regulations or regulatory requests or a subpoena, court order or similar compulsory legal process, provided that disclosure shall not be broader than required by the applicable process or law.
Each party agrees that no advertising or marketing information, which contains the name, or any reference to any other party may be distributed without the prior written consent of the other party.
17. | Headings. |
The headings in this Agreement have been inserted for convenience of reference only and shall in no way restrict or otherwise modify any of the terms or provisions hereof.
18. | Further Acts and Assurances. |
In addition to the acts and deeds recited herein and contemplated to be performed, executed and delivered by or on behalf of the parties hereto, the parties hereby agree to perform, execute and deliver or cause to be performed, executed and delivered any and all such further acts, deeds and assurances as the other party may reasonably require to consummate the transactions contemplated hereby.
19. | Counterparts. |
This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which counterparts shall together constitute but one and the same instrument.
20. | Entire Agreement; Amendment and Waiver. |
This Agreement (together with any Appendix hereto) constitutes the entire agreement of the parties with respect to the subject matter hereof. No amendment or modification of this Agreement or any provision hereof, or waiver of any right or remedy herein provided, shall be effective for any purpose unless specifically set forth in writing and signed by the party or parties to be bound thereby. The waiver of any right or remedy in respect to any occurrence or event on one occasion shall not be deemed a waiver of such right or remedy in respect to such occurrence or event on any other occasion.
21. | Term; Assignment. |
This Agreement shall become effective as of the date of its execution, and:
(a) unless otherwise terminated, this Agreement shall continue in effect until August 16, 2019, and from year to year thereafter so long as such continuance is specifically approved at least annually (i) by the Board of Directors of the Company or by vote of a majority of the outstanding voting securities of the Client, and (ii) by vote of a majority of the Directors of the Company who are not interested persons of the Company, the Adviser or the Sub-Adviser, cast in person at a meeting called for the purpose of voting on such approval;
(b) this Agreement may at any time be terminated on 60 days’ written notice to the Sub-Adviser either by vote of the Board of Directors of the Company or by vote of a majority of the outstanding voting securities of the Client;
(c) this Agreement shall automatically terminate in the event of its assignment or upon the termination of the Adviser’s Investment Advisory Agreement with the Company, on behalf of the Client; and
(d) this Agreement may be terminated by the Sub-Adviser on 60 days’ written notice to the Adviser and the Company, or by the Adviser immediately upon notice to the Sub-Adviser.
Termination of this Agreement pursuant to this Section 20 shall be without the payment of any penalty.
The Sub-Adviser may not assign this Agreement and this Agreement shall automatically terminate in the event of an “assignment,” as such term is defined in Section 2(a)(4) of the 1940 Act. The Sub-Adviser shall notify the Adviser in writing sufficiently in advance of any proposed change of “control,” as defined in Section 2(a)(9) of the 1940 Act, so as to enable the Company and/or the Adviser to: (a) consider whether an assignment will occur, (b) consider whether to enter into a new Sub-Advisory Agreement with the Sub-Adviser, and (c) prepare, file, and deliver any disclosure document to the Client’s shareholders as may be required by applicable law.
22. | Liability. |
Except as otherwise provided by law, neither Sub-Adviser nor any of its employees, affiliates, representatives or agents (“Affiliated Persons”) shall be liable for: (a) any loss that Client may suffer by reason of any investment decision made or other action taken or omitted in good faith by Sub-Adviser with that degree of care, skill, prudence, and diligence under the circumstances that a person acting in a fiduciary capacity would use; (b) any loss arising from Sub-Adviser’s adherence to Client’s written or oral instructions as delivered to Sub-Adviser by Adviser; (c) any act or failure to act by the custodian, any broker or dealer to which Sub-Adviser directs transactions for the Assets or by any other third party.
The federal and state securities laws impose liabilities under certain circumstances on persons who act in good faith, and therefore nothing in this Agreement shall in any way constitute a waiver or limitation of any rights that Client may have under federal or state laws.
If the Assets constitute only a portion of Client’s total assets, Sub-Adviser shall not be responsible for any of Client’s assets not designated to Sub-Adviser for management under this Agreement or the diversification of all of Client’s assets.
23. | Governing Law. |
This Agreement shall be governed by and construed under and in accordance with the laws of the State of Delaware.
24. | Arbitration. |
The parties waive their right to seek remedies in court, including any right to a jury trial. The parties agree that in the event of any dispute between the parties arising out of, relating to or in connection with this Agreement, such dispute shall be resolved exclusively by arbitration to be conducted only in the country and state of the principal office of Adviser at the time of such dispute in accordance with the rules of JAMS/Endispute. Disputes shall not be resolved in any other forum or venue. The parties agree that such arbitration shall be conducted by a retired judge who is experienced in dispute resolution regarding the securities business, that discovery shall not be permitted except as required by the rules of JAMS/Endispute, that the arbitration award shall not include factual findings or conclusions of law, and that no punitive damages shall be awarded. The parties understand that any party’s right to appeal or to seek modification of any ruling or award of the arbitrator is severely limited. Any award rendered by the arbitrator shall be final and binding, and judgment may be entered on it in any court of competent jurisdiction in the county and state of the principal office of Adviser at the time such award is rendered or as otherwise provided by law.
25. | Notices. |
All notices, reports, and other communications required hereunder shall be in writing and (i) shall be effective upon delivery, and (ii) shall be deemed properly delivered if delivered by hand, faxed, e-mailed, or mailed, postage prepaid, addressed as set forth below or to such other address as the addressed party shall have designated in writing to the other party:
If to the Company:
The RBB Fund, Inc.
615 East Michigan Street,
Milwaukee, WI 53202
Attention: Salvatore Faia
If to the Investment Adviser:
Altair Advisers LLC
303 W. Madison Street, Suite 600
Chicago, IL 60606
Attention: Rebecca Kohmescher
If to the Sub-Adviser:
Setanta Asset Management Limited
Beresford Court, Beresford Place,
Dublin 1, Ireland
Attention: Alan Hickey
26. | Severability. |
Any provision of this Agreement, which may be determined by competent authority to be prohibited or unenforceable in any jurisdiction, shall be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof.
27. | Survival. |
The provisions of Sections 14, 15, 16, 22 and 24 contained herein shall survive the termination of this Agreement.
Altair Advisers LLC | Setanta Asset Management Limited |
||||
By: | By: | ||||
Printed Name | Printed Name | ||||
Signature | Signature | ||||
Title: | Title: | ||||
The RBB Fund, Inc., on behalf of its Aquarius International Fund | |||||
By: | |||||
Printed Name | |||||
Signature | |||||
Title: |
Appendix A:
[ ]
AMENDMENT TO THE
DISTRIBUTION AGREEMENT
THIS AMENDMENT to the Distribution Agreement, dated as of June 30, 2016 (the “Agreement”), is entered into by and among THE RBB FUND, INC., a Maryland corporation, (the “Company”), Quasar Distributors, LLC, a Delaware limited liability company (the “Distributor”), and Altair Advisers LLC, a Delaware corporation and an investment adviser to the Company (the “Adviser”).
RECITALS
WHEREAS, the parties have entered into the Agreement; and
WHEREAS, the Company, the Distributor and Adviser desire to amend the series of the Company to add a new Fund; and
WHEREAS, Section 11 of the Agreement provides that the Agreement may be amended by written agreement executed by the parties.
NOW, THEREFORE, the parties agree to amend and restate Exhibit A of the Agreement for the purposes of adding the Aquarius International Fund to the Agreement. Exhibit A of the Agreement is hereby replaced with the Exhibit A attached hereto.
Except to the extent amended hereby, the Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to be executed by a duly authorized officer on one or more counterparts as of the date and year last written below.
THE RBB FUND, INC. | QUASAR DISTRIBUTORS, LLC | ||||
By: | By: | ||||
Printed Name: | Salvatore Faia | Printed Name: | James R. Schoenike | ||
Title: | President | Title: | President | ||
Date: | Date: |
ALTAIR ADVISERS LLC | ||
By: | ||
Printed Name: | ||
Title: | ||
Date |
1
Exhibit A to the Distribution Agreement – The RBB Fund, Inc.
Fund Names
Adara Smaller Companies Fund
Aquarius International Fund
2
AMENDMENT TO THE
CUSTODY AGREEMENT
THIS AMENDMENT to the Custody Agreement dated as of June 30, 2016, as amended (the “Agreement”), is entered into by and between THE RBB FUND, INC., a Maryland corporation, (the “Company”) and U.S. BANK NATIONAL ASSOCIATION, a national banking association organized and existing under the laws of the United States of America (the “Custodian”).
RECITALS
WHEREAS, the parties have entered into the Agreement; and
WHEREAS, the Company and the Custodian desire to amend the series of the Company to add a new Fund; and
WHEREAS, Article XV, Section 15.02 of the Agreement provides that the Agreement may be amended by written agreement executed by both parties, and authorized or approved by the Board of Directors of the Company.
NOW, THEREFORE, the parties agree to amend and restate Exhibit E of the Agreement for the purposes of adding the Aquarius International Fund to the Agreement. Exhibit E of the Agreement is hereby replaced with the Exhibit E attached hereto.
Except to the extent amended hereby, the Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Fifth Amendment to be executed by a duly authorized officer on one or more counterparts as of the date and year last written below.
THE RBB Fund, Inc. | U.S. BANK NATIONAL ASSOCIATION | ||||
By: |
By: |
||||
Printed Name: | Salvatore Faia | Printed Name: | Anita Zagrodnik | ||
Title: | President | Title: | Senior Vice President | ||
Date: | Date: |
Exhibit E to the Custody Agreement – The RBB Fund, Inc.
Fund Name
Adara Smaller Companies Fund
Aquarius International Fund
AMENDMENT TO THE
FUND ACCOUNTING SERVICING AGREEMENT
THIS AMENDMENT to the Fund Accounting Servicing Agreement, dated as of June 30, 2016, as amended (the “Agreement”), is entered into by and between THE RBB FUND, INC., a Maryland corporation, (the “Company”) and U.S. BANCORP FUND SERVICES, LLC, a Wisconsin limited liability company (“USBFS”).
RECITALS
WHEREAS, the parties have entered into the Agreement; and
WHEREAS, the Company and USBFS desire to amend the series of the Company to add a new Fund; and
WHEREAS, Section 13 of the Agreement provides that the Agreement may be amended by written agreement executed by both parties, and authorized or approved by the Board of Directors of the Company.
NOW, THEREFORE, the parties agree to amend and restate Exhibit B of the Agreement for the purposes of adding the Aquarius International Fund to the Agreement. Exhibit B of the Agreement is hereby replaced with Exhibit B attached hereto.
Except to the extent amended hereby, the Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Fifth Amendment to be executed by a duly authorized officer on one or more counterparts as of the date and year last written below.
THE RBB FUND, INC. | U.S. BANCORP FUND SERVICES, LLC | ||||
By: | By: | ||||
Printed Name: | Salvatore Faia | Printed Name: | Anita Zagrodnik | ||
Title: | President | Title: | Senior Vice President | ||
Date: | Date: |
Exhibit B to the Fund Accounting Servicing Agreement – The RBB Fund, Inc.
Fund Names
Funds with Fee Schedule Exhibit I:
Adara Smaller Companies Fund
Aquarius International Fund
AMENDMENT TO THE
FUND ADMINISTRATION SERVICING AGREEMENT
THIS AMENDMENT to the Fund Administration Servicing Agreement, dated as of June 30, 2016, as amended (the “Agreement”), is entered into by and between THE RBB FUND, INC., a Maryland corporation, (the “Company”) and U.S. BANCORP FUND SERVICES, LLC, a Wisconsin limited liability company (“USBFS”).
RECITALS
WHEREAS, the parties have entered into the Agreement; and
WHEREAS, the Company and USBFS desire to amend the series of the Company to add a new Fund; and
WHEREAS, Section 11 of the Agreement provides that the Agreement may be amended by written agreement executed by both parties, and authorized or approved by the Board of Directors of the Company.
NOW, THEREFORE, the parties agree to amend and restate Exhibit C of the Agreement for the purposes of adding the Aquarius International Fund to the Agreement. Exhibit C of the Agreement is hereby replaced with Exhibit C attached hereto.
Except to the extent amended hereby, the Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Fifth Amendment to be executed by a duly authorized officer on one or more counterparts as of the date and year last written below.
THE RBB Fund, Inc. | U.S. BANCORP FUND SERVICES, LLC | ||||
By: | By: | ||||
Printed Name: | Salvatore Faia | Printed Name: | Anita Zagrodnik | ||
Title: | President | Title: | Senior Vice President | ||
Date: | Date: |
Exhibit C to the Fund Administration Servicing Agreement – The RBB Fund, Inc.
Fund Name
Funds with Fee Schedule Exhibit J:
Adara Smaller Companies Fund
Aquarius International Fund
AMENDMENT TO THE
TRANSFER AGENT SERVICING AGREEMENT
THIS AMENDMENT to the Transfer Agent Servicing Agreement, dated as of June 30, 2016, as amended (the “Agreement”), is entered into by and between THE RBB FUND, INC., a Maryland corporation, (the “Company”) and U.S. BANCORP FUND SERVICES, LLC, a Wisconsin limited liability company (“USBFS”).
RECITALS
WHEREAS, the parties have entered into the Agreement; and
WHEREAS, the Company and USBFS desire to amend the series of the Company to add a new Fund; and
WHEREAS, Section 13 of the Agreement provides that the Agreement may be amended by written agreement executed by both parties, and authorized or approved by the Board of Directors of the Company.
NOW, THEREFORE, the parties agree to amend and restate Exhibit D of the Agreement for the purposes of adding the Aquarius International Fund to the Agreement. Exhibit D of the Agreement is hereby replaced with the Exhibit D attached hereto.
Except to the extent amended hereby, the Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Fifth Amendment to be executed by a duly authorized officer on one or more counterparts as of the date and year last written below.
THE RBB FUND, INC. | U.S. BANCORP FUND SERVICES, LLC | ||||
By: | By: | ||||
Printed Name: | Salvatore Faia | Printed Name: | Anita Zagrodnik | ||
Title: | President | Title: | Senior Vice President | ||
Date: | Date: |
1
Exhibit D to the Transfer Agent Servicing Agreement – The RBB Fund, Inc.
Fund Name
Adara Smaller Companies Fund
Aquarius International Fund
2
Drinker Biddle & Reath LLP
One Logan Square
Suite 2000
Philadelphia, PA 19103-6996
(215) 988-2700 (Phone)
(215) 988-2757 (Facsimile)
www.drinkerbiddle.com
February 21, 2018
The RBB Fund, Inc.
615 East Michigan Street
Milwaukee, WI 53202
Re: | Shares Registered by Post-Effective Amendment No. 237 to Registration Statement on Form N-1A (File No. 33-20827) |
Ladies and Gentlemen:
We have acted as counsel to The RBB Fund, Inc. (the “Company”) in connection with the preparation and filing with the Securities and Exchange Commission of Post-Effective Amendment No. 238 (the “Amendment”) to the Company’s Registration Statement on Form N-1A under the Securities Act of 1933, as amended. The Board of Directors of the Company has authorized the issuance and sale by the Company of the following classes and numbers of shares of common stock, $0.001 par value per share (collectively, the “Shares”), with respect to the Company’s Aquarius International Fund:
PORTFOLIO |
CLASS |
AUTHORIZED SHARES |
Aquarius International Fund | UUUUUU |
100 million |
The Amendment seeks to register an indefinite number of the Shares.
We have reviewed the Company’s Articles of Incorporation, ByLaws, resolutions of its Board of Directors, and such other legal and factual matters as we have deemed appropriate. This opinion is based exclusively on the Maryland General Corporation Law and the federal law of the United States of America.
Based upon and subject to the foregoing, it is our opinion that the Shares, when issued for payment as described in the Company’s Prospectuses offering the Shares and in accordance with the Company’s Articles of Incorporation for not less than $0.001 per share, will be legally issued, fully paid and non-assessable by the Company.
February 21, 2018
Page 2
We consent to the filing of this opinion as an exhibit to the Amendment to the Company’s Registration Statement.
Very truly yours, | ||
/s/ Drinker Biddle & Reath LLP | ||
Drinker Biddle & Reath LLP |
Exhibit (i)(2)
CONSENT OF COUNSEL
We hereby consent to the use of our name and to the reference to our Firm under the caption “Counsel” in the Statement of Additional Information that is included in Post-Effective Amendment No. 238 to the Registration Statement (No. 33-20827; 811-5518) on Form N-1A of The RBB Fund, Inc., under the Securities Act of 1933 and the Investment Company Act of 1940, respectively. This consent does not constitute a consent under section 7 of the Securities Act of 1933, and in consenting to the use of our name and the references to our Firm under such caption we have not certified any part of the Registration Statement and do not otherwise come within the categories of persons whose consent is required under said section 7 or the rules and regulations of the Securities and Exchange Commission thereunder.
/s/ Drinker Biddle & Reath LLP | ||
DRINKER BIDDLE & REATH LLP | ||
Philadelphia, Pennsylvania | ||
February 21, 2018 |
Exhibit (l)(38)
FORM OF PURCHASE AGREEMENT
The RBB Fund, Inc. (the “Company”), a Maryland corporation, and Altair Advisers LLC (“Altair”), intending to be legally bound, hereby agree with each other as follows:
1. The Company hereby offers Altair and Altair hereby purchases one (1) share of the Aquarius International Fund (the “Fund”) (Class [ ], par value $.001 per share) at price per Share equivalent to the net asset value per share of the Fund as determined on [ ], 2018.
2. The Company hereby acknowledges receipt from Altair of funds in the amount of $[ ] in full payment for the Share.
3. Altair represents and warrants to the Company that the Share is being acquired for investment purposes and not with a view to the distribution thereof.
4. This Agreement may be executed in counterparts, and all such counterparts taken together shall be deemed to constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the [ ] day of [ ], 2018.
THE RBB FUND, INC. | |||
By: | |||
Name: | Salvatore Faia | ||
Title | President | ||
ALTAIR ADVISERS LLC | |||
By: | |||
Name: | |||
Title: |
5. | Personal Share/Account Dealing Policy and Procedure |
Introduction
Every employee of Setanta Asset Managers is obliged to comply with the conditions of the Personal Transaction / Personal Account Dealing Policy and Procedure as outlined below, which covers all personal trades. The procedures cover personal transaction dealings by staff in financial instruments, transaction dealings in financial instruments by related parties, and any trading activity in which a staff member has a beneficial interest.
US Securities Exchange Commission (SEC) Access Person rules apply to employees of a registered investment adviser who have access to prescribed non-public information. Given the nature of Setanta’s business it is Setanta’s policy to apply the Access Person rules to all staff of the firm.
A Personal Account (PA) transaction:
● | Is a trade in a financial instrument i.e. transferable securities such as equity and debt securities and ETFs, as well as derivative securities, private investment funds, shares of investment companies and collective investment schemes, and investments in unit investment trusts; |
● | Refers to trades by; |
- | An employee of Setanta; |
- | A related party of an employee , i.e. a spouse/partner, or any other person whose business, private or familial relationship with you as an employee of Setanta might reasonably be expected to give rise to a conflict of interest in dealings for clients of Setanta; |
- | Other parties in circumstances where an employee has a material interest in the outcome or where the employee believes it may be a relevant transaction to report, e.g. where the employee may obtain benefits substantially equivalent to ownership by reason of any relationship/arrangement; |
Insider Dealing
No employee may deal, or otherwise advise anyone else to deal, in the stock or shares of a company while in the possession of price sensitive information. The legal requirements in relation to insider dealing are laid out in the Investment Funds, Companies and Miscellaneous Provisions Act 2005.
Speculative Dealings
Dealings in margined transactions (including futures, CFDs and financial spread betting) are prohibited. Dealings in traded options are permitted only when they involve the purchase of call or put options, and are subject to PA Dealing Approval. Dealing in futures linked to a market index are permitted and are subject to PA Dealing Approval.
Setanta Trading / Holdings
Employees may not deal in any share when a fund managed by Setanta is building a position or disposing of a position in that share. Staff must not enter into a personal transaction which involves the misuse of confidential client information.
If Setanta is building a position and has traded the stock in the last seven days or if the security is on the trade blotter, approval shall not be granted except in very exceptional cases noted in the approval.
1
PERSONAL ACCOUNT DEALING PROCEDURES
PA Dealing Approval and Trading Process
● | Prior approval must be obtained for all relevant transaction dealings by staff, by their related parties, or in any trades in which staff have a material or beneficial interest. |
● | Sign-off by Compliance is required. |
● | The PA Dealing Approval Form can be found on Setanta’s Intranet and is available to all staff. |
Trades which require prior written approval include:
● | voluntary transactions1 initiated on the instructions of the relevant person (or related party) and where the timing is under discretion of the relevant person |
● | in any financial instrument, including shares and fixed interest securities (quoted or unquoted), and in initial public offerings and limited offerings. |
Trades which do not need to be pre-approved, but must be reported afterwards:
● | Involuntary transactions, i.e. a transaction where the timing occurs outside of the control of employee e.g. annual Employee Bonus Share Scheme, a compulsory corporate action (deemed to include IPO’s, bonus issues, rights issues). Staff should confirm with the Compliance Department if in doubt. |
Unit-linked funds managed by Setanta
Transactions in unit-linked funds including pension policies do not require prior approval.
In general, staff holdings in unit linked policies align personal interest with policyholders rather than conflicting interest. The rules for unit transactions and timing are no different for employees. Individual unit holder transactions are also immaterial in relation to the size of the fund.
Staff should be mindful of any conflicts of interest they may have in relation to dealings in unit- linked funds, this would include knowledge of pricing basis changes etc. Any questions on conflicts of interest should be cleared with the compliance department.
Excessive activity by staff in unit-linked funds is considered to be a conflict of interest.
Employee Declaration
Each employee must sign a declaration confirming that they have carefully considered whether any information they have in respect of any shares or instruments they are seeking approval to transact in might be considered price sensitive information, and therefore would breach any of the provisions of the insider dealing laws in Ireland, the US or any other country. Each employee must also declare that they have no conflict of interest to declare regarding the proposed transaction(s), and must confirm that the transaction proposed does not involve the misuse of confidential client information. This declaration is included in the PA Dealing Approval Form.
1 | A voluntary transaction is one which is initiated on the instructions of the relevant person and the timing is under discretion of the relevant person |
2
Process for requesting written approval
Dealing Process
● | Staff members must complete the Personal Account Transaction Form. |
● | All steps in the approval process must be obtained prior to all share / security dealings and dealings by related parties. |
Step one
Approval must be obtained from one of the following members of senior management:
● | The Managing Director; |
● | Marketing Director; |
● | Business Development Manager. |
● | PA dealings by the Marketing Director and the Business Development Manager must be approved by the Managing Director. |
● | PA transactions by the Managing Director must be approved by a non-executive director of the Setanta Board. |
● | The time and date of the approval is required to be evidenced on the PA Account Transaction Form. |
● | Note as detailed above, if Setanta has traded the stock in the last seven days or if the security is on the trade blotter, approval shall not be granted. |
● | Portfolio Managers and the Managing Director must also confirm on their PA Transaction Forms that they are not planning to trade the stock on behalf of Setanta. |
● | If prior written approval cannot be granted, staff are prohibited from executing PA transactions. |
● | The approver should only grant approval on the basis that the transaction is permitted by Regulation, is not contrary to the Firm’s conflict of interest policy and /or this Code of Conduct. |
Step two
● | Once approval has been granted by senior management (or a non-executive director), sign- off must be obtained from a member of the compliance team before trading. |
● | Compliance will require confirmation that Setanta has not traded in the stock in last seven days where Setanta are building or disposing of a position in that share. Compliance will also review the transaction for any other potential conflicts of interest. The Approval of the transaction and the compliance sign-off should only be granted on the basis that the transaction is permitted by Regulation, is not contrary to Setanta’s Conflict of Interest Policy and /or Code of Conduct. |
● | In the case of Irish Equities, Compliance will check to see if Setanta are currently in the process of a material transition of Irish Equity portfolios e.g. as a result of an individual client mandate request or fund rebalancing. If such a situation arises then permission will not be granted for any trades in relatively illiquid Irish securities. |
● | The approval is valid for 24 hours from the time of sign-off from compliance unless specific approval to extend the 24 hour timeframe is granted by approvers in step one and noted on the PA Transaction Form |
● | Employees must hold the stock for a minimum period of 30 calendar days from the date of settlement, unless specific approval to dispose of the stock earlier is obtained. The approval should note the reason for early disposal. |
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Counterparty/ Broker in respect of PA Deals
In the case of personal account trading with a broker on the Setanta Authorised Stockbroker Panel, the trade must be carried out through the private client department /arm of the stockbroker firm.
Records of transactions
The PA Dealing Approval Form must be retained in Compliance. A copy of the contract note must be forwarded to the Compliance Department within 8 working days of the trade being placed.
The completed forms are held in a locked cabinet within the Compliance Unit. All the private and sensitive information contained in the application forms are held by Setanta in accordance with the Data Protection Code.
Additional Restrictions for Directors of Setanta
There are additional restrictions in relation to entering into PA deals in respect of the purchase or sale of Canada Life / GWL Group company shares by Directors/Insiders – please refer to GWL Code of Conduct.
Discretionary Managed Portfolios
For employees and related parties of employees who have discretionary managed portfolios, a letter must be sent to the relevant Discretionary Manager/Broker advising them of your employment with Setanta. A copy of this letter must be given to the Compliance Unit. This letter must request that the Discretionary Manager/Broker forward a copy of all contract notes to the Compliance Unit in Setanta. Discretionary Managers/Brokers may then trade in line with their respective in-house policy. However, if the Discretionary Manager/Broker discloses a potential trade to the employee of Setanta then that trade becomes subject to the Setanta Personal Share/Account Dealing policy and must be approved in line with the above conditions.
Employee Bonus Share Scheme: Great-West Lifeco Inc. Shares
Advance approval is required for any disposal of Great-West Lifeco shares acquired by the Employee via the Employee Share Ownership Scheme, or otherwise. This is in accordance with normal PA Transaction Procedures.
Any acquisition of shares by an employee in Great-West Lifeco Inc, other than by an Employee Share Ownership Scheme, requires the prior written approval and the completion of the PA Dealing Approval Form in respect of the trade(s) (as per any normal PA Transaction in accordance with the normal PA Dealing Procedures).
PA Dealing Reporting
All Setanta staff are designated as ‘Access Persons’ in accordance with SEC Rules. This means that all Setanta staff (irrespective of the frequency and volume of personal transaction activities) are subject to the SEC transaction reporting requirements.
The on-going reporting process is facilitated and managed by Compliance.
Holding Report
All staff must submit Annual Holding Reports disclosing all reportable securities holdings (i.e. holdings in all financial instruments, with certain limited exceptions) in which they have any direct or indirect beneficial ownership or investment control.
This information must be reported using the Annual Holding Report Form. The form is located in the Setanta Internet. The Annual Holding Report must be submitted to the compliance department by the 28th February each year. The information provided must be current as of a date no more than 45 days prior to the report submission date.
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Staff must report all Reportable Securities holdings (i.e. all holdings in financial instruments) in this form and the identity of all investment accounts, identifying:
● | the title and type of security, exchange ticker symbol or CUSIP number, number of shares and principal amount of each Reportable Security in which staff have any direct or indirect Beneficial Ownership or Investment Control; and |
● | the name of any broker, dealer or bank with whom an account is maintained in which any Reportable Securities are held for the direct or indirect benefit of staff (including accounts held by any member of their immediate family). |
Staff with no information to disclose are required to submit a ‘nil report’ and employee declaration certifying that the staff member has no other information to report.
For new staff, the Setanta Policy is for the first Holding Report to be submitted by the employee to the Compliance department within 10 working days of joining, as part of the induction process.
Line managers must ensure that new staff receive a copy of the Holding Report Form and a copy of the Setanta Code of Business Conduct and Ethics on commencement with the firm.
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Quarterly Transaction Report
SEC Rules require that staff return a detailed Quarterly Transaction Report. This report must be submitted no later than thirty (30) calendar days after the end of a calendar quarter.
To facilitate the quarterly reporting process, the compliance department will provide a template quarterly transaction report reflecting reported trades recorded for the staff member. It remains the responsibility of staff to ensure that a complete and accurate transaction report is returned.
All PA Dealing documentation and reports submitted to the Compliance Department are treated as confidential, are held securely and are subject to restricted access.
Setanta PA Dealing Review
Holding reports and transaction reports are reviewed and monitored by Compliance department staff whose holdings do not present any conflict of interest. The purpose of the review is to assess reported transactions in terms of compliance with US SEC and European MiFID requirements.
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Drinker Biddle & Reath LLP
One Logan Square, Ste. 2000
Philadelphia, PA 19103-6996
(215) 988-2700 (Phone)
(215) 988-2757 (Facsimile)
www.drinkerbiddle.com
February 21, 2018
VIA EDGAR TRANSMISSION
Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549
Re: | The RBB Fund, Inc. |
Post-Effective Amendment No. 238
Registration Nos. 33-20827/811-05518
Ladies and Gentlemen:
On behalf of The RBB Fund, Inc. (the “Company”), I have transmitted herewith for filing Post-Effective Amendment No. 238 (the “Amendment”) to the Company’s Registration Statement on Form N-1A under the Securities Act of 1933, as amended (the “1933 Act”), and the Investment Company Act of 1940, as amended.
Pursuant to Rule 485(b) under the 1933 Act, it is proposed that the Amendment become effective immediately. The purpose of the Amendment is to (i) respond to the staff’s comments on Post-Effective Amendment No. 231 and (ii) make other non-material changes to finalize and complete the disclosure to the prospectus and statement of additional information for the Company’s Aquarius International Fund.
The Amendment does not contain disclosures that would render it ineligible to become effective pursuant to Rule 485(b) under the 1933 Act.
Questions and comments concerning this filing may be directed to the undersigned at 215-988-2497.
Very truly yours, | ||
/s/ Catherine A. DiValentino | ||
Catherine A. DiValentino |