As filed with the Securities and Exchange Commission on October 17, 2014
Securities Act File No. 33-20827
Investment Company Act File No. 811-5518
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |
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Pre-Effective Amendment No. |
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Post-Effective Amendment No. 172 |
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REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |
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Amendment No. 174 |
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THE RBB FUND, INC.
(Exact Name of Registrant as Specified in Charter)
Bellevue Park Corporate Center
103 Bellevue Parkway
Wilmington, DE 19809
(Address of Principal Executive Offices)
Registrants Telephone Number: (302) 791-1851
Copies to:
SALVATORE FAIA BNY Mellon Investment Servicing (US) Inc. 103 Bellevue Parkway Wilmington, DE 19809 (Name and Address of Agent for Service) |
MICHAEL P. MALLOY, ESQUIRE Drinker Biddle & Reath LLP One Logan Square, Ste. 2000 Philadelphia, PA 19103-6996 |
It is proposed that this filing will become effective (check appropriate box)
o immediately upon filing pursuant to paragraph (b)
x on October 20, 2014 pursuant to paragraph (b)
o 60 days after filing pursuant to paragraph (a)(1)
o on [date] pursuant to paragraph (a)(1)
o 75 days after filing pursuant to paragraph (a)(2)
o on [date] pursuant to paragraph (a)(2) of Rule 485
If appropriate, check the following box:
o This post-effective amendment designates a new effective date for a previously filed post-effective amendment.
Title of Securities Being Registered Shares of Common Stock
ALTAIR SMALLER
COMPANIES FUND
of The RBB Fund, Inc.
Prospectus
October 20, 2014
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 |
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Altair Smaller Companies Fund |
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ADDITIONAL INFORMATION ABOUT THE FUND'S INVESTMENTS AND RISKS |
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MANAGEMENT OF THE FUNDS |
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Investment Adviser |
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Sub-Advisers |
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SHAREHOLDER INFORMATION |
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Pricing of Fund Shares |
15 |
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Market Timing |
15 |
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Purchase of Fund Shares |
16 |
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Redemption of Fund Shares |
19 |
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Dividends and Distributions |
20 |
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More Information About Taxes |
20 |
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Appendix A Prior Performance of Similarly Advised Accounts |
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FOR MORE INFORMATION |
Back Cover |
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SUMMARY SECTION |
Investment Objective
The Altair Smaller Companies 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 ("Shares").
Shareholder Fees (fees paid directly from your investment)
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) |
None |
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Maximum Deferred Sales Charge (Load) |
None |
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Maximum Sales Charge (Load) Imposed on Reinvested Dividends |
None |
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Redemption Fee (as a percentage of amount redeemed, if applicable) |
None |
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Exchange Fee |
None |
Annual Fund Operating Expenses
(expenses that that you pay each year as a percentage
of the value of your investment)
Management (1) |
0.91 |
% |
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Distribution (12b-1) Fees |
None |
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Total Other Expenses (2) |
0.29 |
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Total Annual Fund Operating Expenses |
1.20 |
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(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 out-of-pocket expenses in connection with its compliance monitoring of Fund trading, up to 0.01% of the Fund's average daily net assets. The management fee shown above reflects the maximum aggregate fees to be paid by the Fund to the Sub-Advisers for the first 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) Total other expenses are based on estimated amounts for the first fiscal year. Other expenses include audit, administration, custody, legal, registration, transfer agency, and miscellaneous other charges.
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 $10,000 in the Fund for the time periods indicated and then redeem all of your shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and that the Fund's operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
1 Year |
3 Years |
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$ |
122 |
$ |
381 |
1
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.
Summary of Principal Investment Strategies
The Fund seeks to achieve its investment objective by investing, under normal circumstances, at least 80% of its net assets (including borrowing for investment purposes) in equity securities of small or micro-cap companies. Small or micro-cap companies are generally considered to be those whose market capitalization are, at the time the Fund makes an investment, within the range of the market capitalization of companies in the Russell Microcap Index ($30 million to $884 million as of September 30, 2014), the Russell 2000 Index ($169 million to $4.05 billion as of May 31, 2014), or the S&P SmallCap 600 Index ($100 million to $3.78 billion as of May 31, 2014). Securities of companies whose market capitalization no longer meet this definition after purchase may continue to be held by the Fund.
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 small and micro-cap universe. The Sub-Advisers will implement one or more of the following investment strategies summarized below:
• Small or Micro-Cap Growth A Sub-Adviser following a growth investment style is expected to invest primarily in small or micro-cap companies with consistent or accelerating growth in earnings, revenues, cash flow, and/or other financial metrics.
• Small or Micro-Cap Value A Sub-Adviser following a value investment style is expected to invest primarily in small or micro-cap companies that are out of favor and/or undervalued in comparison to their peers or their growth prospects.
• Small or Micro-Cap Core A Sub-Adviser following a core investment style is expected to invest in small or micro-cap companies that have both value characteristics and growth characteristics.
• 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 S&P SmallCap 600 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 equities and equity-related instruments of small and micro-cap companies. Equities and equity-related instruments include common stocks, preferred stocks, convertible securities, sponsored and unsponsored depositary receipts, warrants and rights. The Fund may participate as a purchaser in initial public offerings of securities ("IPO"). An IPO is a company's first offering of stock to the public. 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
2
resolutions of litigation; new management or material changes in company policies; and actual or potential changes in control of a company. The Sub-Advisers may also invest in real estate investment trusts ("REITs"), debt securities, and foreign securities (directly and through depository receipts).
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. 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.
• Small and Micro-Cap 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. Their securities 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. Such 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.
• 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.
• REIT Risk. REITs may be affected by economic forces and other factors related to the real estate industry. 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
3
stocks included in the S&P 500 ® Index. The Fund will indirectly bear its proportionate share of any expenses, including management fees, paid by an externally managed REIT in which it invests.
• 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.
• Non-Diversification Risk. The Fund is non-diversified, which means that it may invest a high percentage of its assets in a limited number of securities. Since the Fund is non-diversified, its NAV and total returns may fluctuate or fall more than a diversified mutual 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 Fund 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. 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. Certain securities, assets or markets can become illiquid at times and negatively impact the price of securities if the Fund were to sell during times of illiquidity.
• IPO Risk. IPO risk is the risk that the market value of IPO shares will fluctuate considerably due to certain factors, such as the absence of a prior public market, unseasoned trading, the small number of shares available for trading and limited information about the issuer. The purchase of IPO shares may involve high transaction costs. IPO shares are subject to market risk and liquidity risk. 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 Adviser cannot guarantee continued access to IPOs.
• 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. 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.
4
• Portfolio Turnover. 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.
• New Adviser Risk. The Fund's Sub-Advisers may be newly-formed, newly registered with the SEC and/or have not previously managed a mutual fund. Accordingly, investors in the Fund bear the risk that a Sub-Adviser's inexperience may limit its effectiveness.
• New Fund Risk. As a new Fund, there can be no assurance that the Fund will grow to or maintain an economically viable size.
Fund Performance
No performance information is available for the Fund because it had not commenced operations as of the date of this Prospectus. The Fund intends to evaluate its performance as compared to that of the Russell 2000 ® Index.
Management of the Fund
Investment Advisers and Sub-Advisers
Altair Advisers LLC, 303 W. Madison, Suite 600, Chicago, Illinois 60606, serves as investment adviser to the Fund. Aperio Group, Driehaus Capital Management LLC, Granite Investment Partners, LLC, Pacific Ridge Capital Partners, LLC, Pier Capital LLC, and River Road Asset Management, LLC each serves as a Sub-Adviser to the Fund.
Portfolio Managers
Title |
Portfolio Manager
of Fund since: |
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Altair Advisers LLC |
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Steven B. Weinstein |
President, Chief Investment Officer |
October 20, 2014 |
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Jason M. Laurie |
Managing Director |
October 20, 2014 |
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Bryan R. Malis |
Managing Director |
October 20, 2014 |
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Michael J. Murray |
Managing Director |
October 20, 2014 |
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Daniel L. Tzonev |
Senior Consultant |
October 20, 2014 |
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Aaron D. Dirlam |
Director of Research |
October 20, 2014 |
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Aperio Group |
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Patrick Geddes |
Partner, Chief Investment Officer |
October 20, 2014 |
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Ran Lesham |
Head of Portfolio Manaement and Operations |
October 20, 2014 |
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Driehaus Capital
Management LLC |
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Jeffrey James |
Portfolio Manager |
October 20, 2014 |
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Michael Buck |
Assistant Portfolio Manager |
October 20, 2014 |
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Granite Investment
Partners, LLC |
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Jeffrey J. Hoo, CFA |
Lead Portfolio Manager |
October 20, 2014 |
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Peter O. Lopez |
Co-Portfolio Manager |
October 20, 2014 |
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Joshua D. Shaskan, CFA |
Co-Portfolio Manager |
October 20, 2014 |
5
Title |
Portfolio Manager
of Fund since: |
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Pacific Ridge Capital
Partners, LLC |
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Mark D. Cooper, CFA |
President, Senior Portfolio Manager |
October 20, 2014 |
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Dominic R. Marshall, CFA |
Senior Portfolio Manager |
October 20, 2014 |
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Pier Capital LLC |
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Jan Parsons |
Managing Director, Chief Investment Officer |
October 20, 2014 |
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Alexander Yakirevich |
Portfolio Manager |
October 20, 2014 |
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River Road Asset
Management, LLC |
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R. Andrew Beck |
President, Chief Executive Officer, Senior Portfolio Manager |
October 20, 2014 |
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James Shircliff |
Co-Chief Investment Officer |
October 20, 2014 |
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J. Justin Akin |
Portfolio Manager |
October 20, 2014 |
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.
Purchase and Redemption By Mail:
Altair Smaller Companies Fund
c/o BNY Mellon Investment Servicing (US) Inc.
P.O. Box 9841
Providence, RI 02940-8042
Purchase By Wire:
Before sending any wire, call BNY Mellon Investment Servicing (US) Inc. (the "Transfer Agent") at 1-844-261-6482 to confirm the current wire instructions for the Altair Smaller Companies Fund.
Redemption By Telephone:
Call the Transfer Agent at 1-844-261-6482.
Taxes
The Fund intends to make distributions that may be taxed as ordinary income or capital gains.
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 Fund shares and other related services. Ask your broker-dealer or visit your financial intermediary's website for more information.
6
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 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.
Additional Information About the Fund's Principal Investments and Risks
Equity and Equity-Related 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 real estate investment trusts ("REITs"), 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. 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. 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.
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
7
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.
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.
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.
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. 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.
8
Broad-Based Securities Market Index.
The Russell 2000 ® Index is an unmanaged index that is comprised of the 2,000 smallest of the 3,000 largest U.S. domiciled corporations, ranked by market capitalizations. As of May 31, 2014, the minimum market capitalization of the Russell 2000 ® Index was $169 million and the largest stock was $4.05 billion. Please note that this information is as of a particular point in time and is subject to change.
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.
9
MANAGEMENT OF THE FUNDS
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 of Directors. The Adviser was founded in June 2002.
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 out-of-pocket expenses it incurs in connection with its compliance monitoring of Fund trading, up to 0.01% of the Fund's average daily net assets.
The Adviser has contractually agreed to reimburse expenses in an aggregate amount equal to the amount by which the Total Annual Fund Operating Expenses (other than acquired fund fees and expenses, short sale dividend expenses, brokerage commissions, litigation, extraordinary items, interest or taxes) exceeds 1.35% of the average daily net assets of the Fund. This contractual limitation is in effect until at least October 20, 2015 and may not be terminated without Board approval. If at any time during the first three years the investment advisory agreement is in effect, the Fund's Total Annual Fund Operating Expenses for that year are less than 1.35%, the Adviser may recoup any waived or reimbursed amounts from the Fund if such reimbursement does not cause the Fund to exceed expense limitations that were in effect at the time of the waiver or reimbursement.
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 of Directors. 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, Michael J. Murray, Daniel L. Tzonev and Aaron D. Dirlam.
Steven B. Weinstein, President and Chief Investment Officer. 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 35 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 Planner TM 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, Managing Director. 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 Planner TM certificant. Mr. Laurie earned his B.B.A. in Finance and Computer Applications from the University of Notre Dame (cum laude).
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 Planner TM certificant. Mr. Malis earned his B.A. in Accounting and Finance from the University of Illinois at Urbana-Champaign.
Michael J. Murray, Managing Director. Mr. Murray 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. Murray is a CFA ® charterholder, a Certified Financial Planner TM certificant and has earned the Chartered Alternative Investment Analyst designation. Mr. Murray holds a B.B.A. in accounting and finance from the University of Wisconsin.
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Daniel L. Tzonev, Senior Consultant. Mr. Tzonev joined the Adviser in 2007 and is a Senior Consultant. His role includes working with the Managing Directors to provide investment advice to wealthy individuals, families and foundations. He is also a member of the Adviser's Investment Committee. Mr. Tzonev is a CFA ® charterholder. Mr. Tzonev earned his B.A. in Business Economics and Mathematics from the College of Wooster (magna cum laude).
Aaron D. Dirlam, Director of Research. Mr. Dirlam joined the Adviser in 2005 and is the Director of Research. His role includes monitoring the investment managers currently working with clients as well as conducting research to identify and select new investment managers. As part of his research, Mr. Dirlam also identifies trends and activities in the markets that may impact clients' portfolios. He is a member of the Adviser's Investment Committee. Mr. Dirlam is a CFA ® charterholder and has earned the Chartered Alternative Investment Analyst designation. Mr. Dirlam graduated from Lake Forest College with degrees in Business and Psychology.
Sub-Advisers
The Fund and the Adviser have submitted an application with the SEC for an exemptive order with respect to the Fund that would permit 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 of Directors, without obtaining shareholder approval. This arrangement has been approved by the Board of Directors and the Fund's initial shareholder. Consequently, if approved by the SEC, under the exemptive order, the Adviser would have the right to hire, terminate and replace Sub-Advisers when the Board of Directors 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 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 1.00% of the Fund's average daily net assets.
Aperio Group ("Aperio") , a registered investment adviser located at Three Harbor Drive, Suite 315, Sausalito, CA 94965, has served as a Sub-Adviser to the Fund since its inception. Patrick Geddes and Ran Leshem each serve portfolio managers primarily responsible for the day-to-day management of the portion of the Fund sub-advised by Aperio. Mr. Geddes serves as Aperio's Chief Investment Officer and a Partner. Prior to joining Aperio, Mr. Geddes was the Chief Financial Officer of Morningstar, Inc. Mr. Geddes also served on the company's executive committee, overseeing all strategic, policy, and internal investment decisions. Before Morningstar, he spent five years with Amoco, now part of BP, in the U.S. and Europe providing quantitative analysis, currency hedging and corporate tax optimization. He has taught numerous courses in graduate-level finance at the University of California Berkeley Extension. Mr. Geddes received his MBA, with Honors, from the University of Chicago. Mr. Leshem is Head of Portfolio Management and Operations at Aperio. He 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. Lesham managed the development of a store level
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forecasting system utilizing clustering and data mining algorithms to predict sales based on historical data. Mr. Lesham 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.
Driehaus Capital Management LLC ("Driehaus"), a registered investment adviser located at 25 E Erie St, Chicago, IL 60611, has served as a Sub-Adviser to the Fund since its inception. Jeffrey James serves as the portfolio manager primarily responsible for the day-to-day management of the portion of the Fund sub-advised by Driehaus. Mr. James joined Driehaus in 1997 as a sector analyst covering the information technology and energy sectors. In 1998, he assumed portfolio management duties for the Driehaus Micro Cap Growth Strategy and in 2006 for the Driehaus Small Cap Growth Strategy. He began his career with Lehman Brothers in 1990. From 1991 through 1997, Mr. James worked at the Federal Reserve Bank of Chicago as an analyst. Mr. James received his B.S. in Finance from Indiana University in 1990 and an M.B.A. from DePaul University in 1995. Michael Buck supports Mr. James with investment research, security selection and portfolio construction. Mr. Buck has investment decision-making responsibilities subject to Mr. James' approval. Mr. Buck began his career in 2001 with Deloitte Consulting. In 2002, he joined Driehaus, where he also serves as a senior research analyst focusing on U.S. micro-cap and small-cap stocks within the consumer discretionary, consumer staples and financials sectors. Mr. Buck is also the assistant portfolio manager for the Driehaus Small Cap Growth Strategy. Mr. Buck received a B.A. in Economics and Cello Performance from Northwestern University in 2000.
Granite Investment Partners, LLC ("Granite"), a registered investment adviser located at The Plaza at Continental Park, 2121 Rosecrans Ave, Suite 2360, El Segundo, California 90245, has served as Sub-Adviser to the Fund since its inception. Jeffrey J. Hoo, CFA is the portfolio manager primarily responsible for the day-to-day management of the portion of the Fund sub-advised by Granite. Mr. Hoo joined Granite in 2011. Mr. Hoo is a Principal and Portfolio Manager and manages portfolios in the small cap, small/mid cap and micro-cap equity asset classes. Mr. Hoo has been the Lead Portfolio Manager of the Micro Cap Equity product since inception. He is also the lead portfolio manager for the firm's small/mid cap portfolio and Small Core portfolio. Prior to joining Granite, Mr. Hoo was a Principal and Portfolio Manager at Transamerica Investment Management, LLC (TIM) where he managed mutual funds and institutional accounts. He joined TIM in 2005 when the firm acquired Westcap Investors, LLC where he was a Principal, Portfolio Manager and Equity Analyst specializing in Healthcare and Technology from 1997 through 2005. Prior to Westcap, Mr. Hoo worked at Sony Pictures Entertainment and KPMG. Mr. Hoo has 16 years of investment industry experience. Joshua D. Shaskan, CFA serves as a co-portfolio manager and joined Granite in 2011. Mr Shaskan is a Principal and Portfolio Manager. Mr. Shaskan manages portfolios in the small cap, small/mid cap and all cap equity asset classes. He is the lead portfolio manager for the firm's Small Cap Growth portfolio. Prior to Granite, Mr. Shaskan was a Principal and Portfolio Manager for TIM. He joined TIM in 2005 when the firm acquired Westcap Investors LLC. Prior to Westcap, Mr. Shaskan served as an investment specialist for three years at Wells Fargo Securities and was also previously a financial advisor at Prudential Securities. Mr. Shaskan has 19 years of investment industry experience. Peter O. Lopez serves as a co-portfolio manager and joined Granite in 2011. Mr. Lopez is a Principal and Portfolio Manager. Mr. Lopez manages portfolios in the small cap and all cap equity asset classes. He is the lead portfolio manager for the firm's All Cap portfolio. Prior to joining Granite, Mr. Lopez was CEO and Director of Research for TIM. Prior to joining TIM in 2003, Mr. Lopez was managing director at Centre Pacific, LLC. He previously served as senior fixed income analyst for Transamerica Investment Services, Inc. from 1997 to2000. Mr. Lopez also served as an assistant vice president at Alliance Capital and an associate at TIAA-CREF. Mr. Lopez has 20 years of investment industry experience.
Pacific Ridge Capital Partners, LLC ("Pacific Ridge"), a registered investment adviser located at 4900 Meadows Rd, Suite 320, Lake Oswego, OR 97035, has served as a Sub-Adviser to the Fund since its inception. Mark D. Cooper, CFA and Dominic R. Marshall, CFA are the portfolio managers primarily responsible for the day-to-day management of the portion of the Fund sub-advised by Pacific Ridge. Mr. Cooper has been with Pacific Ridge since 2010 and brings more than 23 years of investment industry experience to the presidency of Pacific Ridge. Previously, Mr. Cooper was a senior portfolio manager at Wells Capital Management from 2003 to 2010 and co-founder and president of Benson Associates from 1997 to 2003. Prior to that, he was employed by Qualivest
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Capital Management (a subsidiary of U.S. Bancorp) as a portfolio manager of the Qualivest Small Companies Value strategy from 1996 to 1997, where he co-managed all of the small cap portfolios. He also served as an associate at Bankers Trust Company in New York and Los Angeles. Mr. Cooper earned a bachelor's degree in economics and political science from the University of California at Los Angeles in 1990 and a master's degree from the Wharton School of Business at the University of Pennsylvania in 1996. Mr. Marshall has been with Pacific Ridge since 2010 and brings 20 years of investment experience to Pacific Ridge. Prior to Pacific Ridge, Mr. Marshall was president and senior portfolio manager at Scott Creek Capital Management from 2006 to 2009. Prior to that, he served as a portfolio manager for the Benson Value Team at Wells Capital Management from 2003 to 2006 and a portfolio manager at Benson Associates from 1998 to 2003. He was also an equity analyst at The Red Chip Review and research associate at CTC Consulting. Mr. Marshall earned a bachelor's degree in Business Administration from the University of Washington in 1993 and a master's degree in Finance from the Mendoza College of Business at the University of Notre Dame in 1998.
Pier Capital LLC ("Pier Capital"), a registered investment adviser located at 600 Summer Street, Suite 203, Stamford, CT 06901, has served as a Sub-Adviser to the Fund since its inception. Jan Parsons and Alexander Yakirevich are the portfolio managers primarily responsible for the day-to-day management of the portion of the Fund sub-advised by Pier Capital. Mr. Parsons has been the President and Chief Investment Officer of Pier Capital since 2004. Mr. Parsons graduated from the University of Stockholm in 1983 with a Civilekonom degree (MBA equivalent), majoring in Business Administration and Economics. Prior to founding Pier Capital, Mr. Parsons was at Enskilda Securities from 1985 to 1987 and Sirius Insurance Company from 1983 to 1985. Mr. Parsons has over 30 years of investment industry experience. Mr. Yakirevich has been the Portfolio Manager of the Small-Cap Growth Strategy at Pier Capital since 2008. He joined Pier Capital in 2004 as a Research Analyst. Mr. Yakirevich earned his Bachelors of Science degree in 1993 and his MBA in 2003 both from New York University. Prior to joining Pier Capital, Mr. Yakirevich was at Richmond Consulting & Research from 2002 to 2004, Individual Investors Group from 1997 to 2001, and Value Line from 1995 to 1997. Mr. Yakirevich has over 19 years of investment industry experience.
River Road Asset Management, LLC ("River Road"), a registered investment adviser located at 462 S 4th St #1600, Louisville, KY 40202, has served as a Sub-Adviser to the Fund since its inception. James C. Shircliff is the portfolio manager primarily responsible for the day-to-day management of the portion of the Fund sub-advised by River Road. Mr. Shircliff serves in the role of Chief Investment Officer at River Road. Additionally, Mr. Shircliff serves as Lead Portfolio Manager for River Road's Small Cap Value and Small-Mid Cap Value Portfolios and as Co-Portfolio Manager for River Road's Dividend All-Cap Value Portfolios. Prior to cofounding River Road, Mr. Shircliff served as EVP, Portfolio Manager and Director of Research for SMC Capital, Inc., a registered investment advisor and affiliate of Commonwealth Trust Company (Commonwealth SMC). Mr. Shircliff began his career in 1973 as Research Analyst for First Kentucky Trust, where he later served as Director of Research. In 1983, he joined Oppenheimer Management Company as Special Situations Analyst and, later, Oppenheimer's Target Fund as Portfolio Manager. In 1986, he joined Southeastern Asset Management (Longleaf Funds) as Partner, Portfolio Manager and Director of Research. In 1997, Mr. Shircliff joined SMC Capital, Inc., where he launched River Road's Small Cap Value Portfolio. Mr. Shircliff graduated from the University of Louisville with a B.S. in Finance. Andrew Beck and J. Justin Akin each serve as portfolio managers, assisting Mr. Shircliff in the day-to-day management of the portion of the Fund sub-advised by River Road. Mr. Beck serves as President and Chief Executive Officer at River Road. Additionally, Mr. Beck serves as Co-Portfolio Manager for River Road's Small Cap Value and Small-Mid Cap Value Portfolios. Prior to cofounding River Road, Mr. Beck served as Senior Research Analyst and, later, Senior Vice President and Portfolio Manager for Commonwealth SMC. Mr. Beck earned a B.S. in Finance from the University of Louisville and an M.B.A. from the F.W. Olin School of Business at Babson College. Mr. Akin serves as Portfolio Manager for River Road's Small Cap Value and Small-Mid Cap Value Portfolios. Prior to joining River Road, Mr. Akin worked with the firm's founders at Commonwealth SMC as Equity Research Analyst for the Small Cap Value and Dividend All-Cap Value Portfolios. Mr. Akin earned a B.S. in Economics from Centre College. Mr. Akin is a member of the CFA Institute and the CFA Society of Louisville.
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The SAI provides additional information about the portfolio managers' compensation, other accounts managed by the portfolio managers and the portfolio managers' ownership of securities in the Fund.
A discussion regarding the basis for the Company's Board of Directors 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.
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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:
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 Fund will effect purchases of Fund shares at the NAV next determined after receipt by the Fund's Transfer Agent of your purchase order in good order. The Fund will effect redemptions of Fund shares at the NAV next calculated after receipt by the Fund's Transfer Agent of your redemption request in good order.
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 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, securities traded principally on an exchange or on NASDAQ will be valued at the mean of the last bid and ask prices prior to the market close. Fixed income securities having a remaining maturity of 60 days or less are valued at amortized cost, which approximates market value. Fixed income securities having a remaining maturity of greater than 60 days are valued using an independent pricing service. When prices are not available from such services or are deemed to be unreliable, securities may be valued by dealers who make markets in such securities. 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.
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 of Directors and under the Board of Directors' 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 of Directors. 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.
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.
Market Timing
In accordance with the policy adopted by the Company's Board of Directors, 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 Fund 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
15
calendar days, (iii) revoke a shareholder's privilege to purchase Fund Shares (including exchanges), or (iv) limit the amount of any exchange involving the purchase of Fund 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 of Directors, 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 Fund 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.
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 Foreside Funds 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
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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 they 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 the application included with this Prospectus and mailing it to the Transfer Agent at the address noted below, together with a check payable to the Fund. Third party checks will not be accepted.
Regular Mail:
Altair Smaller Companies Fund
c/o BNY Mellon Investment Servicing (US) Inc.
P.O. Box 9841
Providence, RI 02940
Overnight Mail:
Altair Smaller Companies Fund
c/o BNY Mellon Investment Servicing (US) Inc.
4400 Computer Drive
Westborough, MA 01581
The name of the Fund should be designated on the application and should appear on the check. Payment for the purchase of Shares received by mail will be credited to a shareholder's account at the NAV per share of the Fund next determined after receipt of payment in good order.
Initial Investment By Wire. Shares of the Fund may be purchased by wiring federal funds to The Bank of New York Mellon. A completed application must be forwarded to the Transfer Agent at the address noted above under "Initial Investment by Mail" in advance of the wire. For the Fund, 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. (Prior notification must also be received from investors with existing accounts.) Request account information and routing instructions by calling the Transfer Agent at 1-844-261-6482.
Federal funds wire purchases will be accepted only on days when the NYSE and The Bank of New York Mellon are open for business.
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 Altair Smaller Companies Fund) or by wiring monies to The Bank of New York Mellon 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 cannot be redeemed until payment of the purchase has been collected. This may take up to 15 calendar days from the date of purchase.
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Automatic Investment Plan. Additional investments in Shares of the Fund may be made automatically by authorizing the Transfer Agent to withdraw funds from your bank account through an Automatic Investment Plan ($250 minimum). Investors desiring to participate in an Automatic Investment Plan should call the Transfer Agent at 1-844-261-6482.
Retirement Plans/IRA Accounts. Shares may be purchased in conjunction with individual retirement accounts ("IRAs") and rollover IRAs. A $15.00 custodial maintenance fee is charged per IRA account per year. For further information as to applications and annual fees, contact the Transfer Agent at 1-844-261-6482. To determine whether the benefits of an IRA are available and/or appropriate, you should consult with a tax adviser.
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 Company,
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 of Directors' discretion, reserves the right to implement other purchase limitations at the time of closing, including limitations on current shareholders.
Purchases of the Fund's Shares will be made in full and fractional shares of the Fund calculated to three decimal places.
Good Order. A purchase request is considered to be in good order when all necessary information is provided and all required documents are properly completed, signed and delivered. 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),
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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 Fund 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 requests should be addressed to Altair Smaller Companies Fund, c/o BNY Mellon Investment Servicing (US) Inc., P.O. Box 9841, Providence, RI 02940; for overnight delivery, requests should be addressed to Altair Smaller Companies Fund, c/o BNY Mellon Investment Servicing (US) Inc., 4400 Computer Drive, Westborough, MA 01581 and must include:
a. Name of the Fund;
b. Account number;
c. Your Share certificates, if any, properly endorsed or with proper powers of attorney;
d. A letter of instruction specifying the number of Shares or dollar amount to be redeemed, signed by all registered owners of the Shares in the exact names in which they are registered;
e. Medallion signature guarantees are required when (i) the redemption proceeds are to be sent to someone other than the registered shareholder(s) or (ii) the redemption request is for $50,000 or more. A signature guarantee may be obtained from a domestic bank or trust company, broker, dealer, clearing agency or savings association who are participants in a Medallion Program recognized by the Securities Transfer Association. The three recognized Medallion Programs are Securities Transfer Agent Medallion Program (STAMP), Stock Exchanges Medallion Program (SEMP) and New York Stock Exchange, Inc. Medallion Program (MSP). Signature guarantees which are not a part of these programs will not be accepted. Please note that a notary public stamp or seal is not acceptable; and
f. Other supporting legal documents, if required, in the case of estates, trusts, guardianships, custodianships, corporations, pension and profit sharing plans and other organizations.
Redemption By Telephone. In order to utilize the telephone redemption option, you must indicate that option on your Account Application. Please note that the telephone redemption option is not available for retirement accounts. You may then initiate a redemption of Shares by calling the Transfer Agent at 1-844-261-6482 and requesting that the redemption proceeds be mailed to the primary registration address or wired per the authorized instructions. A wire charge of $7.50 is assessed and charged to the shareholder. If the telephone redemption option is authorized, the Transfer Agent may act on telephone instructions from any person representing himself or herself to be a shareholder and believed by the Transfer Agent to be genuine. The Transfer Agent's records of such instructions are binding and shareholders, not the Fund or its Transfer Agent, bear the risk of loss in the event of unauthorized instructions reasonably believed by the Fund or its Transfer Agent to be genuine. The Fund and the Transfer Agent will employ reasonable procedures to confirm that instructions communicated are genuine and, if it
19
does not, it may be liable for any losses due to unauthorized or fraudulent instructions. The procedures employed by the Fund and the Transfer Agent in connection with transactions initiated by telephone include tape recording of telephone instructions and requiring some form of personal identification prior to acting upon instructions received by telephone.
Involuntary Redemption. The Fund reserves the right to redeem a shareholder's account in the Fund at any time the value of the account in the Fund 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 may not be distributed until payment for the purchase has been collected, which may take up to fifteen 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.
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.
Good Order. A redemption request is considered to be in good order when all necessary information is provided and all required documents are properly completed, signed and delivered. 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 Fund Shares, are subject to U.S. federal income tax.
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
20
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 Fund shares. The maximum long-term capital gain rate applicable to individuals, estates, and trusts is 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. The high anticipated portfolio turnover rate of the Fund makes it likely that a significant portion of its distributions will not qualify for this favorable treatment.
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.
The Fund may be subject to foreign withholding or other foreign taxes on income or gain from certain foreign securities. If more than 50% of the value of the total assets of the Fund consists of stocks and securities (including debt securities) of foreign corporations at the close of a taxable year, the Fund may elect, for federal income tax purposes, to treat certain foreign taxes paid by it, including generally any withholding and other foreign income taxes, as paid by its shareholders. If the Fund makes this election, the amount of those foreign taxes paid by the Fund will be included in its shareholders' income pro rata (in addition to taxable distributions actually received by them), and each such shareholder will be entitled either (1) to credit that proportionate amount of taxes against U.S. federal income tax liability as a foreign tax credit or (2) to take that amount as an itemized deduction. If the Fund is not eligible or chooses not to make this election the Fund will be entitled to deduct any such foreign taxes in computing the amounts it is required to distribute.
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."
21
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 Fund 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.
For shares acquired on or after January 1, 2012, 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 such shares are sold or exchanged. 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 or exchange. 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 withholding rate is 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, for taxable years of the Fund beginning before January 1, 2014, dividends attributable to the Fund's interest income from U.S. obligors and dividends attributable to net short-term capital gains of the Fund.
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.
22
Beginning July 1, 2014, the Fund will generally be required to withhold 30% tax on certain payments to foreign entities that do not meet 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.
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.
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.
23
APPENDIX A
Prior Performance of Similarly Advised Accounts
The Sub-Advisers have experience in managing other accounts with substantially similar investment objectives, policies and strategies as the portion of the Fund's portfolio allocated to them by the Adviser. The tables below are provided to illustrate the past performance of each Sub-Adviser in managing all of its other similarly advised accounts and does not represent the performance of the Fund. Investors should not consider this performance information as a substitute for the performance of the Fund, nor should investors consider this information as an indication of the future performance of the Fund or of the Sub-Advisers. This performance history is net of all fees (including any applicable sales loads) charged to investors in the other accounts. The composite includes other accounts that pay lower expenses than those paid by shareholders of the Fund. Higher expenses reduce returns to investors. The use of the Fund's expense structure would have lowered the performance results. The Fund's results in the future also may be different because the other accounts are not subject to certain investment limitations, diversification requirements and other restrictions imposed on mutual funds under applicable U.S. securities and tax laws that, if applicable, could have adversely affected the performance of the other accounts. In addition, the securities held by the Fund will not be identical to the securities held by the other accounts.
The performance of the other accounts is also compared to the performance of an appropriate broad-based securities benchmark index. These indexes are unmanaged and are not subject to fees and expenses typically associated with managed funds, including the Fund. Investors cannot invest directly in any broad-based securities index.
SUMMARY STATISTICS (periods ended December 31, 2013)
RETURN
1 Year |
3 Year |
5 Year |
10 Year |
Inception
(Jan 1996) |
|||||||||||||||||||
Driehaus |
63.05 |
% |
16.83 |
% |
24.24 |
% |
13.18 |
% |
22.85 |
% |
|||||||||||||
Russell Micro Cap Growth TR |
52.84 |
% |
17.25 |
% |
23.78 |
% |
6.74 |
% |
n/a |
||||||||||||||
Russell 2000 TR |
38.82 |
% |
15.67 |
% |
20.08 |
% |
9.07 |
% |
8.94 |
% |
SUMMARY STATISTICS (periods ended December 31, 2013)
RETURN
1 Year |
3 Year |
5 Year |
10 Year |
Inception
(Jan 2004) |
|||||||||||||||||||
Granite |
55.23 |
% |
21.72 |
% |
34.07 |
% |
15.02 |
% |
15.02 |
% |
|||||||||||||
Russell Micro Cap TR |
45.62 |
% |
16.52 |
% |
21.05 |
% |
6.99 |
% |
6.99 |
% |
|||||||||||||
Russell 2000 TR |
38.82 |
% |
15.67 |
% |
20.08 |
% |
9.07 |
% |
9.07 |
% |
SUMMARY STATISTICS (periods ended December 31, 2013)
RETURN
1 Year |
3 Year |
5 Year |
Inception
(Apr 2007) |
||||||||||||||||
Pacific Ridge |
45.31 |
% |
18.95 |
% |
27.73 |
% |
8.44 |
% |
|||||||||||
Russell Micro Cap Value TR |
41.17 |
% |
15.84 |
% |
18.58 |
% |
4.08 |
% |
|||||||||||
Russell 2000 TR |
38.82 |
% |
15.67 |
% |
20.08 |
% |
7.17 |
% |
24
SUMMARY STATISTICS (periods ended December 31, 2013)
RETURN
1 Year |
3 Year |
5 Year |
10 Year |
Inception
(Jan 1992) |
|||||||||||||||||||
Pier Capital |
51.30 |
% |
15.65 |
% |
22.87 |
% |
11.59 |
% |
12.96 |
% |
|||||||||||||
Russell 2000 Growth TR |
43.30 |
% |
16.82 |
% |
22.58 |
% |
9.41 |
% |
7.36 |
% |
|||||||||||||
Russell 2000 TR |
38.82 |
% |
15.67 |
% |
20.08 |
% |
9.07 |
% |
9.27 |
% |
SUMMARY STATISTICS (periods ended December 31, 2013)
RETURN
1 Year |
3 Year |
5 Year |
10 Year |
Inception
(Jan 1998) |
|||||||||||||||||||
River Road |
31.31 |
% |
13.72 |
% |
16.41 |
% |
11.00 |
% |
11.15 |
% |
|||||||||||||
Russell 2000 Value TR |
34.52 |
% |
14.49 |
% |
17.64 |
% |
8.61 |
% |
8.72 |
% |
|||||||||||||
Russell 2000 TR |
38.82 |
% |
15.67 |
% |
20.08 |
% |
9.07 |
% |
7.70 |
% |
25
Altair Smaller Companies 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 Altair Smaller Companies Fund is available free of charge, upon request, including:
Annual/Semi-Annual Reports
These reports 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 includes fund strategies that significantly affected the Fund's performance during its last fiscal year.
When available, the annual and semi-annual reports to shareholders may be obtained by calling 1-844-261-6482.
Statement of Additional Information
An SAI, dated October 20, 2014, as supplemented, 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 the 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: 8 a.m. to 6 p.m. (Eastern time) Monday-Friday. Call: 1-844-261-6482.
Purchases and Redemptions
Call 1-844-261-6482.
Written Correspondence
Street Address:
Altair Smaller Companies Fund
c/o BNY Mellon Investment Servicing (US) Inc.
4400 Computer Drive
Westborough, MA 01581
P.O. Box Address:
Altair Smaller Companies Fund
c/o BNY Mellon Investment Servicing (US) Inc.
P.O. Box 9841
Providence, RI 02940
Securities and Exchange Commission
You may also view and copy information about the Company and the Fund, including the SAI, by visiting the SEC's Public Reference Room in Washington, DC 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, DC 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
ALTAIR SMALLER COMPANIES FUND
a series of THE RBB FUND, INC.
October 20, 2014
Investment Adviser:
Altair Advisers LLC
This Statement of Additional Information (SAI) provides supplementary information pertaining to Altair Smaller Companies 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 Funds Prospectus dated October 20, 2014 (the Prospectus). Copies of the Prospectus may be obtained free of charge by calling toll-free 1-844-261-6482.
TABLE OF CONTENTS
|
Page |
|
|
GENERAL INFORMATION |
S-1 |
INVESTMENT OBJECTIVE AND POLICIES |
S-1 |
INVESTMENT LIMITATIONS |
S-39 |
DISCLOSURE OF PORTFOLIO HOLDINGS |
S-42 |
MANAGEMENT OF THE COMPANY |
S-43 |
CODE OF ETHICS |
S-52 |
PROXY VOTING |
S-52 |
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES |
S-52 |
INVESTMENT ADVISORY AND OTHER SERVICES |
S-53 |
INVESTMENT ADVISER |
S-53 |
INVESTMENT SUB-ADVISERS |
S-54 |
THE PORTFOLIO MANAGERS |
S-56 |
ADMINISTRATION AND ACCOUNTING AGREEMENT |
S-64 |
CUSTODIAN AGREEMENT |
S-65 |
TRANSFER AGENCY AGREEMENT |
S-65 |
DISTRIBUTION AGREEMENT |
S-66 |
FUND TRANSACTIONS |
S-66 |
PURCHASE AND REDEMPTION INFORMATION |
S-69 |
TELEPHONE TRANSACTION PROCEDURES |
S-70 |
VALUATION OF SHARES |
S-70 |
TAXES |
S-70 |
ADDITIONAL INFORMATION CONCERNING COMPANY SHARES |
S-72 |
MISCELLANEOUS |
S-73 |
APPENDIX A DESCRIPTION OF SECURITIES RATINGS |
A-1 |
APPENDIX B SUMMARY OF PROXY VOTING POLICY OF APERIO GROUP, LLC |
B-1 |
APPENDIX C SUMMARY OF PROXY VOTING POLICY OF DRIEHAUS CAPITAL MANAGEMENT, LLC |
C-1 |
APPENDIX D SUMMARY OF VOTING POLICY OF GRANITE INVESTMENT PARTNERS, LLC |
D-1 |
APPENDIX E PROXY VOTING POLICY OF PACIFIC RIDGE CAPITAL PARTNERS, LLC |
E-1 |
TABLE OF CONTENTS
(continued)
|
Page |
|
|
APPENDIX F PROXY VOTING POLICY OF PIER CAPITAL, LLC |
F-1 |
APPENDIX G PROXY VOTING POLICY OF RIVER ROAD ASSET MANAGEMENT LLC |
G-1 |
GENERAL INFORMATION
The Company is an open-end management investment company currently operating 24 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 Altair Smaller Companies Fund. 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 Funds Prospectus and this SAI, or invest in such instruments or engage in such techniques to the full extent permitted by the Funds 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 Funds Board of Directors, the Adviser is responsible for selecting the Funds investment strategies and for allocating and reallocating assets among the Sub-Advisers consistent with the Funds 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 Funds 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. Equity securities are described in more detail below:
· 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.
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 NAV of the Funds shares may fluctuate with U.S. dollar exchange rates as well as the price changes of the Funds 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 Funds 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 Funds 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.
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 Companys Board of Directors. Despite such good faith efforts to determine fair value prices, the Funds illiquid securities are subject to the risk that the securitys 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 Companys Board of Directors, the Adviser and the Sub-Advisers determine the liquidity of the Funds investments. In determining the liquidity of the Funds 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 companys 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 Funds asset base is small, a significant portion of the Funds performance could be attributable to investments in IPOs, because such investments would have a magnified impact on the Fund. As the Funds assets grow, the effect of the Funds investments in IPOs on the Funds performance probably will decline, which could reduce the Funds 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 Funds 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.
Market Fluctuation. The market value of the Funds investments, and thus the Funds 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.
Non-Diversification. Non-diversification risk is the risk that the Fund may be more susceptible to adverse financial, economic or other developments affecting any single issuer, and more susceptible to greater losses because of these developments. A non-diversified classification means that the Fund is not limited by the 1940 Act with regard to the percentage of its assets that may be invested in the securities of a single issuer. The securities of a particular issuer may dominate the Underlying Index of such a Fund and, consequently, the Funds investment portfolio.
The Fund intends to maintain the required level of diversification and otherwise conduct its operations so as to qualify as a regulated investment company for purposes of the Internal Revenue Code of 1986, as amended (the Code), and to relieve the Fund of any liability for federal income tax to the extent that its earnings are distributed to shareholders. Compliance with the diversification requirements of the Code may limit the investment flexibility of the Fund and may make it less likely that the Fund will meet its investment objectives.
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 REITs 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.
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 REITs 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®.
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.
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 Funds 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 Companys Board of Directors. 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 rights or warrants 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 securitys market price such as when there is no movement in the level of the underlying security.
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 Moodys Investors Service (Moodys) or B by Standard and Poors® (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 Funds 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 Funds 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 securitys value will decrease in a rising interest rate market, as will the value of the Funds 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 Advisers and Sub-Advisers ability to accurately value such securities and the Funds assets and on the Funds 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.
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 securitys liquidity so the Fund can meet redemption requests.
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.
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 companys 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 companys 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 companys 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.
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 Funds 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 Funds 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 Funds holdings.
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.
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 a 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 CDOs 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 banks 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.
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 Funds 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.
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 Funds 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 Funds 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 Funds 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 Funds commitments with respect to such contracts.
This method of protecting the value of the Funds portfolio securities against a decline in the value of a currency 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 Funds 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 Funds 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.
The Funds 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 companys positions in such investments may not exceed five percent (5%) of the liquidation value of the investment companys 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 companys 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 Funds 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.
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 Funds use of futures contracts and related options, including the following: (1) the success of a hedging strategy may depend on the Advisers or Sub-Advisers 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 Funds exposure to price fluctuations, while others tend to increase its market exposure.
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 Funds 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 Funds 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 Funds 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 Funds 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.
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 Funds 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 Funds 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 Funds 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 a Funds 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.
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 Funds 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, a 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 Funds 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 Funds 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&Ps or Moodys, 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.
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 Funds 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 Funds assets. Fluctuations in the market value of the underlying securities are not reflected in the Funds 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 Funds 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.
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 Funds 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.
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 shareholders 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 Funds 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 issuers 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 Funds assets. The Funds 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.
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 Funds 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. See Taxes.
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.
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 Funds 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 Funds 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 companys 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.
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 Maes and Freddie Macs stock de-listed from the New York Stock Exchange after the price of common stock in Fannie Mae fell below the New York Stock Exchanges minimum average closing price of $1 for more than 30 days. The effect that this conservatorship will have on Fannie Mae and Freddie Macs 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. A 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 a 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.
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 REITs 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&Ps or Moodys), 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.
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.
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 issuers 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 issuers 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 states 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 authoritys obligations.
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 Funds 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 banks 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 securitys 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 Funds 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.
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.
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 Funds investment objective, and except as restricted by the Funds 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 Funds 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 SECs 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.
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 bankers 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 Funds 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 Funds 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.
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 Funds 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 Funds 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 Funds 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.
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 Companys Board of Directors. 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 Funds 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 Funds 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 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 Funds short position.
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.
· 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 Funds 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 Funds 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 Funds investment goals and strategies described in the Prospectus may be changed by the Companys Board of Directors without the approval of the Funds 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 331/2% 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;
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. Purchase the securities of any one issuer, other than securities issued or guaranteed by the U.S. government or its agencies or instrumentalities, if immediately after and as a result of such purchase, more than 5% of the value of the Funds total assets would be invested in the securities of such issuer, or more than 10% of the outstanding voting securities of such issuer would be owned by the Fund, except that up to 25% of the value of the Funds total assets may be invested without regard to such limitations.
In addition to the fundamental investment limitations specified above, the Fund is subject to the following non-fundamental limitations. These non-fundamental restrictions 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 companys 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.
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).
The 1940 Act does not directly restrict an investment companys 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 Funds 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 Funds 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 disclosure of the Funds portfolio holdings to ensure that disclosure of information about portfolio holdings is in the best interests of Fund shareholders. The policies relating to the disclosure of the Funds portfolio holdings are designed to allow disclosure of portfolio holdings information where necessary to the Funds operation without compromising the integrity or performance of the Fund. It is the policy of the Company that disclosure of the Funds 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 Funds 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 Funds portfolio holdings that is not publicly available to its third-party service providers, which include The Bank of New York Mellon, the custodian; BNY Mellon Investment Servicing (US) Inc., the administrator, accounting agent and transfer agent; PricewaterhouseCoopers, LLP, the Funds independent registered public accounting firm; Drinker Biddle & Reath LLP, legal counsel; and Merrill Corporation, 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 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 Companys policy on selective disclosure of portfolio holdings. The Board of Directors of the Company 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 Funds portfolio.
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.
Any violations of the policy set forth above as well as any corrective action undertaken to address such violations must be reported by the Adviser, director, officer or third party service provider to the Companys Chief Compliance Officer, who will determine whether the violation should be reported immediately to the Board of Directors of the Company or at its next quarterly Board meeting.
MANAGEMENT OF THE COMPANY
The Companys Leadership Structure
The business and affairs of the Company are managed under the oversight of the Companys Board of Directors (the Board), subject to the laws of the State of Maryland and the Companys Charter. The Directors are responsible for deciding matters of overall policy and overseeing the actions of the Companys service providers. The officers of the Company conduct and supervise the Companys 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 six Independent Directors and two Interested Directors. The Board has selected Arnold M. Reichman, an Independent Director, to act as Chairman. Mr. Reichmans 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 Companys 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 Companys
independent registered public accounting firms and legal counsel, to assist the Directors in performing their oversight responsibilities.
The Board has established seven standing committees Audit, Contract, Product Development, Executive, Nominating and Governance, Valuation and Regulatory Oversight Committees. The Board may establish other committees, or nominate one or more Directors to examine particular issues related to the Boards 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.
The Board has determined that the Companys 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
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Position(s)
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Term of
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Principal Occupation(s)
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Number of
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Other
|
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|
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|
|
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Gregory P. Chandler
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Director |
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2012 to present |
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Since May 2009, Chief Financial Officer, Emtec, Inc. (information technology consulting/services); from February 2003-April 2009, Managing Director, head of Business Services and IT Services Practice, Janney Montgomery Scott LLC (investment banking/brokerage). |
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24 |
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Emtec, Inc.; FS Investment Corporation (business development company); FS Energy and Power Fund (business development company) |
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|
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Nicholas A. Giordano
|
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Director |
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2006 to present |
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Consultant, financial services organizations from 1997 to present. |
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24 |
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Kalmar Pooled Investment Trust; (registered investment company); Wilmington Funds (registered investment company); WT Mutual Fund (registered investment company) (until March 2012); Independence Blue Cross; Intricon Corp. (producer of medical devices) |
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Arnold M. Reichman
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Chairman Director |
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2005 to present 1991 to present |
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Co-Founder and Chief Executive Officer, Lifebooker, LLC, from 2006 to present. |
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24 |
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None |
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Robert A. Straniere
|
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Director |
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2006 to present |
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Since 2009, Administrative Law Judge, New York City; from 1980 to present, Founding Partner, Straniere Law Group; from 2006 to 2008, President, The New York City Hot Dog Company. |
|
24 |
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Reich and Tang Group (asset management); The SPARX Asia Funds Group (registered investment company) (until 2009) |
Name, Address, and
|
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Position(s)
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Term of
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Principal Occupation(s)
|
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Number of
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Other
|
|
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|
|
|
|
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|
|
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James G. Shaw
|
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Assistant Treasurer |
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2005 to present |
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Since 1995, Vice President of BNY Mellon Investment Servicing (US) Inc. (financial services company). |
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N/A |
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N/A |
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|
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Michael P. Malloy
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Assistant Secretary |
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1999 to present |
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Since 1993, Partner, Drinker Biddle & Reath LLP (law firm). |
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N/A |
|
N/A |
* Each Director oversees twenty four portfolios of the Company that are currently offered for sale.
(1) Subject to the Companys 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 and Sablowsky. Each officer holds office at the pleasure of the Board of Directors 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) Messrs. Sablowsky and Nusblatt are considered interested persons of the Company as that term is defined in the 1940 Act and are referred to as Interested Directors. Mr. Sablowsky is considered an Interested Director of the Company by virtue of his position as a senior officer of Oppenheimer & Co., Inc., a registered broker-dealer. Mr. Nusblatt is considered an Interested Director of the Company by virtue of his position as the Head of U.S. Fund Accounting and Administration at BNY Mellon Asset Servicing, administrator and accounting agent and transfer agent to the Company.
Director Experience, Qualifications, Attributes and/or Skills
The information above includes each Directors 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 also serves 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. Nusblatt 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.
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, Giordano and Chandler. 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 six times during the fiscal year ended August 31, 2014.
Contract Committee. The Board has a Contract Committee comprised of one Interested Director and two Independent Directors. The current members of the Contract Committee are Messrs. Chandler, Sablowsky, and Brodsky. 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 two times during the fiscal year ended August 31, 2014.
Executive Committee. The Board has an Executive Committee comprised of one 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 of Directors is not in session. The Executive Committee did not meet during the fiscal year ended August 31, 2014.
Nominating and Governance Committee. The Board has a Nominating and Governance Committee comprised only of 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 of Directors 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 Companys Secretary. The Nominating and Governance Committee met one time during the fiscal year ended August 31, 2014.
Valuation Committee. Effective January 1, 2014, the Board has a Valuation Committee comprised of one Interested Director and three officers of the Company. Prior to January 1, 2014, the Companys Valuation Committee was comprised only of officers of the Company.
The members of the Valuation Committee are Messrs. Faia, Sablowsky, Shaw and Weiss. The Valuation Committee is responsible for reviewing fair value determinations. The Valuation Committee of the Board convened four times during the fiscal year ended August 31, 2014.
Regulatory Oversight Committee. The Board has a Regulatory Oversight Committee comprised of two Interested Directors and three Independent Directors. The current members of the Regulatory Oversight Committee are Messrs. Carnall, Nusblatt, 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, 2014.
Product Development Committee. The Board has a Product Development Committee comprised of two Interested Directors and one Independent Director. The current members of the Product Development Committee are Messrs. Reichman, Sablowsky and Nusblatt. The Product Development Committee oversees the process regarding the addition of new investment advisers and investment products to the Company and evaluates the Companys current investment advisers and investment products. The Product Development Committee convened two times during the fiscal year ended August 31, 2014.
Risk Oversight
The Board of Directors 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 Companys investment advisers and other service providers, Company officers and the Companys 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 Companys investment advisers or other service providers (depending on the nature of the risk) that carry out the Companys 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 Companys and each others 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 Companys investment advisers or other service providers, receiving and approving compliance policies and procedures, periodic meetings with the Companys portfolio managers to review investment policies, strategies and risks, and meeting regularly with the Companys Chief Compliance Officer to discuss compliance reports, findings and issues. The Board also relies on the Companys 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 Companys business and reputation.
Board oversight of risk management is also provided by various Board Committees. For example, the Audit Committee meets with the Companys independent registered public
accounting firms to ensure that the Companys respective audit scopes include risk-based considerations as to the Companys financial position and operations.
The Board may, at any time and in its discretion, change the manner in which it conducts risk oversight. The Boards oversight role does not make the Board a guarantor of the Companys 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 in the Company (which for each Director comprise all registered investment companies within the Companys family of investment companies overseen by him), as of December 31, 2013:
Name of Director |
|
Dollar Range of
|
|
Aggregate Dollar Range of
|
|
INDEPENDENT DIRECTORS |
|
||||
Julian A. Brodsky |
|
None |
|
Over $100,000 |
|
J. Richard Carnall |
|
None |
|
$10,001-$50,000 |
|
Gregory P. Chandler |
|
None |
|
None |
|
Nicholas A. Giordano |
|
None |
|
$10,001-$50,000 |
|
Arnold M. Reichman |
|
None |
|
Over $100,000 |
|
Robert A. Straniere |
|
None |
|
$1-$10,000 |
|
INTERESTED DIRECTORS |
|
||||
Jay F. Nusblatt |
|
None |
|
None |
|
Robert Sablowsky |
|
None |
|
Over $100,000 |
|
* The Fund has not commenced operations as of the date of this SAI.
Directors and Officers Compensation
Effective January 1, 2014, the Company pays each Director, except Jay Nusblatt (who is not compensated by the Company for his service on the Board), a retainer at the rate of $35,000 annually, $3,500 for each regular meeting of the Board of Directors, $2,000 for each committee meeting or special meeting of the Board of Directors attended in-person and $1,000 for each committee meeting or special meeting of the Board of Directors and Committee meeting attended telephonically. From January 1, 2012 to December 31, 2013, the Company paid each Director (except Mr. Nusblatt) a retainer at the rate of $27,500 annually, $3,500 for each regular meeting of the Board of Directors, $2,000 for each committee meeting or special meeting of the Board of Directors attended in-person and $1,000 for each committee meeting or special meeting of the Board of Directors and Committee meeting attended telephonically. From February 1, 2010 to December 31, 2011, the Company paid each Director a retainer of at the rate of $17,500 annually, $3,500 for each regular meeting of the Board of Directors, $1,500 for each special
meeting of the Board of Directors and Committee meeting attended in person and $1,000 for each special meeting of the Board of Directors and Committee meeting attended telephonically. The Chairman of the Board receives an additional fee of $17,500 per year for his services in this capacity, and each Chairman of the Audit Committee, Nominating and Governance Committee and Regulatory Oversight Committee receives an additional fee of $4,000 per year for his services. From February 2, 2010 to December 31, 2011, the Chairman of the Board received an additional fee of $12,000 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 of Directors or any committee thereof. The Company also compensates its President and Chief Compliance Officer for his services to the Company. For the fiscal year ended August 31, 2014, each of the following members of the Board of Directors and the President, Treasurer and Chief Compliance Officer received compensation from the Company in the following amounts:
Name of Director/Officer |
|
Aggregate
|
|
Pension or
|
|
Estimated
|
|
Total
|
|
|
FISCAL YEAR ENDED AUGUST 31, 2014 |
|
|
|
|
|
|
|
|
|
|
Independent Directors: |
|
|
|
|
|
|
|
|
|
|
Julian A. Brodsky, Director |
|
N/A |
|
N/A |
|
N/A |
|
$ |
61,775.00 |
|
J. Richard Carnall, Director |
|
N/A |
|
N/A |
|
N/A |
|
$ |
64,625.00 |
|
Gregory P. Chandler, Director |
|
N/A |
|
N/A |
|
N/A |
|
$ |
71,625.00 |
|
Nicholas A. Giordano, Director |
|
N/A |
|
N/A |
|
N/A |
|
$ |
70,625.00 |
|
Arnold M. Reichman, Director and Chairman |
|
N/A |
|
N/A |
|
N/A |
|
$ |
82,125.00 |
|
Robert A. Straniere, Director |
|
N/A |
|
N/A |
|
N/A |
|
$ |
60,625.00 |
|
Interested Directors: |
|
|
|
|
|
|
|
|
|
|
Jay F. Nusblatt, Director |
|
N/A |
|
N/A |
|
N/A |
|
None |
|
|
Robert Sablowsky, Director |
|
N/A |
|
N/A |
|
N/A |
|
$ |
67,525.00 |
|
Officers: |
|
|
|
|
|
|
|
|
|
|
Salvatore Faia, Esquire, CPA Chief Compliance Officer and President |
|
N/A |
|
N/A |
|
N/A |
|
$ |
339,996.00 |
|
* The Fund had not commenced operations as of the date of this SAI. Under current compensation arrangements, it is estimated that the Directors will receive the following compensation from the Fund for the fiscal period October 20, 2014 through August 31, 2015: Mr. Brodsky, $837; Mr. Carnall, $875; Mr. Chandler, $970; Mr. Giordano, $956; Mr. Reichman, $1,112; Mr. Straniere, $821; Mr. Nusblatt, $0; and Mr. Sablowsky, $914.
As of December 31, 2013, the Independent Directors and their respective immediate family members (spouse or dependent children) did not own beneficially or of record any securities of the Companys investment advisers or distributor, or of any person directly or indirectly controlling, controlled by, or under common control with the investment advisers or distributor.
Effective with the calendar year ending December 31, 2014, each compensated Director is entitled to participate in the Companys 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.
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.
PROXY VOTING
The Board of Directors has delegated the responsibility of voting proxies with respect to the portfolio securities purchased and/or held by the Fund to the Funds Sub-Advisers, subject to the Boards 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 Funds 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 Funds 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.
The Company is required to disclose annually the Funds complete proxy voting record on Form N-PX. The Funds 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: Altair Smaller Companies Fund, c/o BNY Mellon Investment Servicing (US) Inc., PO Box 9841, Providence, Rhode Island 02940. The Funds Form N-PX is also available on the SECs website at www.sec.gov.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
The Fund was not previously in operation and consequently, there are no shareholders as of the date of this SAI. As of October 9, 2014, Directors and officers as a group owned less than 1% of the outstanding shares of each fund of the Company.
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) dated as of October 17, 2014.
Subject to the supervision of the Companys Board of Directors, 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 Funds 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 Funds 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 out-of-pocket expenses it incurs in connection with its compliance monitoring of Fund trading, up to 0.01% of the Funds average daily net assets.
The Adviser has contractually agreed to reimburse expenses in an aggregate amount equal to the amount by which the Total Annual Fund Operating Expenses (other than acquired fund fees and expenses, short sale dividend expenses, brokerage commissions, litigation, extraordinary items, interest or taxes) exceeds 1.35% of the average daily net assets of the Fund. This contractual limitation is in effect until at least October 20, 2015 and may not be terminated without Board approval. If at any time during the first three years the investment advisory agreement is in effect, the Funds Total Annual Fund Operating Expenses for that year are less than 1.35%, the Adviser may recoup any waived or reimbursed amounts from the Fund if such reimbursement does not cause the Fund to exceed expense limitations that were in effect at the time of the waiver or reimbursement.
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 Companys Board of Directors 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 Funds 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 Funds shares under federal and/or state securities laws and maintaining such registrations and qualifications; (d) fees and salaries payable to the Companys 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 material 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 portfolios 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.
Disclosure relating to the material factors and the conclusions with respect to those factors that formed the basis for the Board of Directors approval of the Funds investment advisory agreement will be available in the Funds first annual or semi-annual report to shareholders and may be obtained by calling 1-844-261-6482 or visiting the SECs website at www.sec.gov.
The Advisory Agreement provides that the Adviser shall at all times have all rights in and to the Funds name and all investment models used by or on behalf of the Fund. The Adviser may use the Funds 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 Funds average daily net assets, which will be paid by the Fund and not by the Adviser.
The Fund and the Adviser have submitted an application with the SEC for an exemptive order 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 of Directors and the Funds initial shareholder. Consequently, if approved by the SEC, under the exemptive order, the Adviser would have the right to hire, terminate and replace Sub-Advisers when the Board of Directors 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)
Sausalito, CA 94965 |
|
Paul Solli, Patrick Geddes, Robert Newman, and Guy Arthur Lampard are managing members of Aperio. |
|
|
|
Driehaus Capital Management LLC (Driehaus)
Chicago, IL 60611 |
|
Driehaus is majority-owned by Driehaus Capital Holdings LLC (DCH), an affiliated company. DCH is owned by entities related to Driehaus founder, Richard Driehaus, and certain key employees. |
|
|
|
Granite Investment Partners, LLC (Granite)
2121 Rosecrans Ave, Suite 2360 El Segundo, California 90245 |
|
Granite has no individuals or entities that are 25% or greater owners. |
|
|
|
Pacific Ridge Capital Partners, LLC (Pacific Ridge)
Lake Oswego, OR 97035 |
|
Pacific Ridge Holdings, LLC, a Nevada limited liability company, controls 25% or more of the voting interest in Pacific Ridge. |
|
|
|
Pier Capital LLC (Pier Capital)
Stamford, CT 06901 |
|
Pier Capital is controlled by its founder, Jan Eric Parsons. |
|
|
|
River Road Asset Management, LLC (River Road)
Louisville, KY 40202 |
|
Affiliated Managers Group, Inc., through its wholly-owned subsidiary, RRAM Acquisition, LLC, holds 25% or more of the voting interest in River Road. Additionally, collectively certain employees of River Road hold 25% or more of the voting interest in River Road, but no one employee holds 25% or more of the voting interest individually. |
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 Funds 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 Companys Board of Directors 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 Funds 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 October 14, 2014.
Name of Portfolio
|
|
Type of Accounts |
|
Total
|
|
Total
|
|
# of
|
|
Total Assets
|
|
||
1. Steven B. Weinstein |
|
Other Registered Investment Companies: |
|
0 |
|
$ |
0 |
|
0 |
|
$ |
0 |
|
|
|
Other Pooled Investment Vehicles: |
|
0 |
|
$ |
0 |
|
0 |
|
$ |
0 |
|
|
|
Other Accounts: |
|
258 |
|
$ |
4,052,999,995 |
|
0 |
|
$ |
0 |
|
2. Jason M. Laurie |
|
Other Registered Investment Companies: |
|
0 |
|
$ |
0 |
|
0 |
|
$ |
0 |
|
|
|
Other Pooled Investment Vehicles: |
|
0 |
|
$ |
0 |
|
0 |
|
$ |
0 |
|
|
|
Other Accounts: |
|
258 |
|
$ |
4,052,999,995 |
|
0 |
|
$ |
0 |
|
3. Bryan R. Malis |
|
Other Registered Investment Companies: |
|
0 |
|
$ |
0 |
|
0 |
|
$ |
0 |
|
|
|
Other Pooled Investment Vehicles: |
|
0 |
|
$ |
0 |
|
0 |
|
$ |
0 |
|
|
|
Other Accounts: |
|
258 |
|
$ |
4,052,999,995 |
|
0 |
|
$ |
0 |
|
4. Michael J. Murray |
|
Other Registered Investment Companies: |
|
0 |
|
$ |
0 |
|
0 |
|
$ |
0 |
|
|
|
Other Pooled Investment Vehicles: |
|
0 |
|
$ |
0 |
|
0 |
|
$ |
0 |
|
|
|
Other Accounts: |
|
258 |
|
$ |
4,052,999,995 |
|
0 |
|
$ |
0 |
|
5. Daniel L. Tzonev |
|
Other Registered Investment Companies: |
|
0 |
|
$ |
0 |
|
0 |
|
$ |
0 |
|
|
|
Other Pooled Investment Vehicles: |
|
0 |
|
$ |
0 |
|
0 |
|
$ |
0 |
|
|
|
Other Accounts: |
|
258 |
|
$ |
4,052,999,995 |
|
0 |
|
$ |
0 |
|
6. Aaron D. Dirlam |
|
Other Registered Investment Companies: |
|
0 |
|
$ |
0 |
|
0 |
|
$ |
0 |
|
|
|
Other Pooled Investment Vehicles: |
|
0 |
|
$ |
0 |
|
0 |
|
$ |
0 |
|
|
|
Other Accounts: |
|
258 |
|
$ |
4,052,999,995 |
|
0 |
|
$ |
0 |
|
Compensation. The Adviser compensates the Funds portfolio managers for their management of the Fund. Each of the portfolio managers 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 Funds net assets and other client accounts they are managing.
Conflicts of Interests. The Adviser provides investment management services to multiple clients with investment objectives and strategies that are similar as well as different than those of the Fund. The Advisers management of other accounts may give rise to potential conflicts of interest in connection with its management of the Funds investments, on the one hand, and the investments of the other accounts, on the other. The portfolio managers management of the Fund and other accounts may result in a portfolio manager devoting a disproportionate amount of time and attention to the management of the Fund or another account. Generally, the Adviser seeks to manage such competing interests for the time and attention of the portfolio managers. Although the Adviser does not track the time a portfolio manager spends on the Fund or other accounts, the Adviser does periodically assess whether a portfolio manager has adequate time and resources to effectively manage all of such portfolio managers accounts.
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, 2014.
Name of Portfolio
|
|
Type of Accounts |
|
Total
|
|
Total
|
|
# of
|
|
Total Assets
|
|
||
1. Patrick Geddes |
|
Other Registered Investment Companies: |
|
0 |
|
$ |
0 |
|
0 |
|
$ |
0 |
|
|
|
Other Pooled Investment Vehicles: |
|
0 |
|
$ |
0 |
|
0 |
|
$ |
0 |
|
|
|
Other Accounts: |
|
1705 |
|
$ |
8,986M |
|
0 |
|
$ |
0 |
|
2. Ran Leshem |
|
Other Registered Investment Companies: |
|
0 |
|
$ |
0 |
|
0 |
|
$ |
0 |
|
|
|
Other Pooled Investment Vehicles: |
|
0 |
|
$ |
0 |
|
0 |
|
$ |
0 |
|
|
|
Other Accounts: |
|
1705 |
|
$ |
8,986M |
|
0 |
|
$ |
0 |
|
* Total assets under management for Aperio were approximately $8,986 million as of August 31, 2014.
Compensation . Aperio compensates the Funds 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 shop, Aperio does not link compensation to portfolio performance.
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 Aperios 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, 2014.
Name of Portfolio
|
|
Type of Accounts |
|
Total
|
|
Total
|
|
# of
|
|
Total Assets
|
|
||
1. Jeffrey James |
|
Other Registered Investment Companies: |
|
1 |
|
$ |
105.8 |
|
0 |
|
$ |
0 |
|
|
|
Other Pooled Investment Vehicles: |
|
4 |
|
$ |
49.3 |
|
0 |
|
$ |
0 |
|
|
|
Other Accounts: |
|
39 |
|
$ |
676.5 |
|
2 |
|
$ |
126.1 |
|
2. Michael Buck |
|
Other Registered Investment Companies: |
|
1 |
|
$ |
104.0 |
|
0 |
|
$ |
0 |
|
|
|
Other Pooled Investment Vehicles: |
|
4 |
|
$ |
49.3 |
|
0 |
|
$ |
0 |
|
|
|
Other Accounts: |
|
39 |
|
$ |
676.5 |
|
2 |
|
$ |
126.1 |
|
* Total assets under management for Driehaus were approximately $11,833 million as of August 31, 2014.
**Total assets under management numbers are estimated and unreconciled.
Compensation . Driehaus compensates the Funds 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. The assistant portfolio manager also receives a bonus based on a percentage of his salary, which has both subjective and objective components.
If Driehaus declares a profit sharing plan contribution, the portfolio managers also would receive such contribution. The portfolio managers are eligible to participate in an equity purchase plan available to certain key employees of Driehaus. The portfolio manager is 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.
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, Driehauss affiliates, including the Funds portfolio managers, may personally own interests in the Accounts or have other financial incentives (including that a portfolio managers 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 Driehauss policies and procedures.
Granite
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, 2014.
Name of Portfolio
|
|
Type of Accounts |
|
Total
|
|
Total
|
|
# of
|
|
Total Assets
|
|
||
1. Jeffrey J. Hoo |
|
Other Registered Investment Companies: |
|
1 |
|
$ |
44.2M |
|
0 |
|
$ |
0 |
|
|
|
Other Pooled Investment Vehicles: |
|
0 |
|
$ |
0 |
|
0 |
|
$ |
0 |
|
|
|
Other Accounts: |
|
242 |
|
$ |
136.5M |
|
0 |
|
$ |
0 |
|
2. Joshua D. Shaskan |
|
Other Registered Investment Companies: |
|
0 |
|
$ |
0 |
|
0 |
|
$ |
0 |
|
|
|
Other Pooled Investment Vehicles: |
|
1 |
|
$ |
35.4M |
|
0 |
|
$ |
0 |
|
|
|
Other Accounts: |
|
21 |
|
$ |
41.1M |
|
0 |
|
$ |
0 |
|
3. Peter O. Lopez |
|
Other Registered Investment Companies: |
|
0 |
|
$ |
0 |
|
0 |
|
$ |
0 |
|
|
|
Other Pooled Investment Vehicles: |
|
0 |
|
$ |
0 |
|
0 |
|
$ |
0 |
|
|
|
Other Accounts: |
|
6 |
|
$ |
1.0M |
|
0 |
|
$ |
0 |
|
* Total assets under management for Granite were approximately $893 million as of August 31, 2014.
Compensation. Granite compensates the Funds portfolio managers for their management of the Fund. The portfolio managers compensation includes base compensation, revenue-based and performance-based compensation for each team (Small Cap and Large Cap) and, if principals, a profits interest in Granite. The overall compensation structure is reviewed annually. Portfolio managers, and other key investment personnel, have membership interests in Granite and are evaluated on an annual basis to determine additional allocations of membership interest. Such interests entitle the members to distribution of profits as well as certain liquidity features. The interests effectively vest over a determined time period so as to provide a retention incentive.
This ownership feature is intended to create both stability and an entrepreneurial atmosphere at Granite.
Conflicts of Interests. The portfolio managers management of other accounts may give rise to potential conflicts of interest in connection with their management of the Funds investments, on the one hand, and the investments of the other accounts, on the other. The other accounts may have the same investment objective as the Fund. Therefore, a potential conflict of interest may arise as a result of the identical investment objectives, whereby a portfolio manager could favor one account over another. Another potential conflict could include the portfolio managers knowledge about the size, timing and possible market impact of Fund trades, whereby a portfolio manager could use this information to the advantage of other accounts and to the disadvantage of the Fund. However, the Adviser has established policies and procedures to ensure that the purchase and sale of securities among all accounts it manages are fairly and equitably allocated, and they will generally be allocated pro rata in proportion to the size of the orders or redemptions placed.
Pacific Ridge
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, 2014.
Name of Portfolio
|
|
Type of Accounts |
|
Total
|
|
Total
|
|
# of
|
|
Total Assets
|
|
||
1. Mark D. Cooper |
|
Other Registered Investment Companies: |
|
0 |
|
$ |
0 |
|
0 |
|
$ |
0 |
|
|
|
Other Pooled Investment Vehicles: |
|
11 |
|
$ |
142 |
|
0 |
|
$ |
0 |
|
|
|
Other Accounts: |
|
6 |
|
$ |
65 |
|
0 |
|
$ |
0 |
|
2. Dominic R. Marshall |
|
Other Registered Investment Companies: |
|
0 |
|
$ |
0 |
|
0 |
|
$ |
0 |
|
|
|
Other Pooled Investment Vehicles: |
|
11 |
|
$ |
142 |
|
0 |
|
$ |
0 |
|
|
|
Other Accounts: |
|
6 |
|
$ |
65 |
|
0 |
|
$ |
0 |
|
* Total assets under management for Pacific Ridge were approximately $207 million as of August 31, 2014.
Compensation . Pacific Ridge compensates the Funds portfolio managers for their management of the Fund. Each of the portfolio managers compensation consists of a cash base salary and a discretionary performance bonus paid in cash that is based on overall profitability of the Adviser
and performance of the Fund, and therefore in part based on the value of the Funds net assets and other client accounts they are managing.
Conflicts of Interests. The portfolio managers management of other accounts may give rise to potential conflicts of interest in connection with their management of the Funds investments, on the one hand, and the investments of the other accounts, on the other. The other accounts may have the same investment objective as the Fund. Therefore, a potential conflict of interest may arise as a result of the identical investment objectives, whereby a portfolio manager could favor one account over another. Another potential conflict could include the portfolio managers knowledge about the size, timing and possible market impact of Fund trades, whereby a portfolio manager could use this information to the advantage of other accounts and to the disadvantage of the Fund. However, the Adviser has established policies and procedures to ensure that the purchase and sale of securities among all accounts it manages are fairly and equitably allocated, and they will generally be allocated pro rata in proportion to the size of the orders or redemptions placed.
Pier Capital
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, 2014.
Name of Portfolio
|
|
Type of Accounts |
|
Total
|
|
Total
|
|
# of
|
|
Total Assets
|
|
||
1. Jan Parsons |
|
Other Registered Investment Companies: |
|
***2 |
|
$ |
***239,622,610.53 |
|
1 |
|
$ |
23,374,968.48 |
|
|
|
Other Pooled Investment Vehicles: |
|
1 |
|
$ |
61,183,161.26 |
|
0 |
|
$ |
0 |
|
|
|
Other Accounts: |
|
31 |
|
$ |
370,316,283.81 |
|
**11 |
|
$ |
**96,467,431.80 |
|
2. Alexander Yakirevich |
|
Other Registered Investment Companies: |
|
***2 |
|
$ |
***239,622,610.53 |
|
1 |
|
$ |
23,374,968.48 |
|
|
|
Other Pooled Investment Vehicles: |
|
1 |
|
$ |
61,183,161.26 |
|
0 |
|
$ |
0 |
|
|
|
Other Accounts: |
|
27 |
|
$ |
367,776,181.67 |
|
**11 |
|
$ |
**96,467,431.80 |
|
* Total assets under management for Pier Capital were approximately $671.12 million as of August 31, 2014.
**Other accounts for performance fee calculations include individual participants in Piers Small Cap Growth Commingled fund offering.
***Includes a non-US Registered Investment Company
Compensation. Pier Capital compensates the Funds portfolio managers for their management of the Fund. Jan Parsons and Alexander Yakirevich receive a fixed salary based on tenure and experience from Pier Capital. In addition, as partners, both Mr. Parsons and Mr. Yakirevich receive a contracted percentage of equity distribution from Pier Capital.
Conflicts of Interests. Jan Parsons and Alexander Yakirevich must adhere to policies and procedures adopted by Pier Capital designed to address any potential material conflicts of interest. For instance, all portfolio managers are responsible for all accounts within a certain investment discipline, and do not, absent special circumstances, differentiate from such investment discipline when allocating resources. Additionally, the Sub-Adviser and its advisory affiliates utilize a system for allocating investment opportunities among portfolio that is designed to provide a fair and equitable allocation. Equity Trader trades all accounts through a block trade and the average share price is prorated across all accounts.
River Road
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, 2014.
Name of Portfolio
|
|
Type of Accounts |
|
Total
|
|
Total
|
|
# of
|
|
Total Assets
|
|
||
1. James C. Shircliff |
|
Other Registered Investment Companies: |
|
6 |
|
$ |
1,993 |
|
0 |
|
$ |
0 |
|
|
|
Other Pooled Investment Vehicles: |
|
25 |
|
$ |
2,434 |
|
0 |
|
$ |
0 |
|
|
|
Other Accounts: |
|
144 |
|
$ |
2,961 |
|
2 |
|
$ |
469 |
|
2. Andrew Beck |
|
Other Registered Investment Companies: |
|
3 |
|
$ |
602 |
|
0 |
|
$ |
0 |
|
|
|
Other Pooled Investment Vehicles: |
|
3 |
|
$ |
345 |
|
0 |
|
$ |
0 |
|
|
|
Other Accounts: |
|
43 |
|
$ |
951 |
|
1 |
|
$ |
62 |
|
3. J. Justin Akin |
|
Other Registered Investment Companies: |
|
3 |
|
$ |
602 |
|
0 |
|
$ |
0 |
|
|
|
Other Pooled Investment Vehicles: |
|
3 |
|
$ |
345 |
|
0 |
|
$ |
0 |
|
|
|
Other Accounts: |
|
39 |
|
$ |
945 |
|
1 |
|
$ |
62 |
|
* Total assets under management for River Road were approximately $8,472 million as of August 31, 2014.
Compensation. River Road compensates the Funds portfolio managers for their management of the Fund. Compensation for portfolio managers includes an annual fixed base salary and a potential performance-based bonus. In addition, all portfolio managers are shareholders in the firm and have signed long-term employment agreements.
Conflicts of Interests. Portfolio managers at River Road may manage one or more mutual funds as well as other types of accounts, including separate accounts for institutions and individuals, and other pooled investment vehicles. Portfolio managers make investment decisions for an account or portfolio based on its investment objectives and policies, and other relevant investment considerations. A portfolio manager may manage a separate account or other pooled investment vehicle whose fees may be materially greater than the management fees paid by the fund and may include a performance-based fee. Management of multiple funds and accounts may create potential conflicts of interest relating to the allocation of investment opportunities, and the aggregation and allocation of trades. In addition, River Road monitors a variety of areas (e.g., allocation of investment opportunities) and compliance with the firms Code of Ethics. River Road has a fiduciary responsibility to all of the clients for which it manages accounts. River Road seeks to provide best execution of all securities transactions and to aggregate securities transactions and then allocate securities to client accounts in a fair and timely manner. River Road has developed policies and procedures, including brokerage and trade allocation policies and procedures, designed to mitigate and manage the potential conflicts of interest that may arise from the management of multiple types of accounts for multiple clients.
Fund Shares Owned by Portfolio Managers .
As of the date of this SAI, no shares of the Fund were outstanding and the Funds portfolio managers did not own any shares of the Fund.
ADMINISTRATION AND ACCOUNTING AGREEMENT
BNY Mellon Investment Servicing (U.S.) Inc. (BNY Mellon), 301 Bellevue Parkway, Wilmington, Delaware 1980, serves as administrator to the Fund pursuant to administration and accounting services agreements with respect to the Fund (the Administration Agreements). BNY Mellon has agreed to furnish to the Fund statistical and research data, clerical, accounting and bookkeeping services, and certain other services required by the Fund. In addition, BNY Mellon 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 Agreement provides that BNY Mellon shall be obligated to exercise care and diligence in the performance of its duties, to act in good faith and to use its best efforts, within reasonable limits, in performing services thereunder. BNY Mellon shall be responsible for failure to perform its duties under the Administration Agreement arising out of its willful misfeasance, bad faith, gross negligence or reckless disregard. For its services to the Fund, BNY Mellon is entitled to receive a fee calculated at an annual rate of :
· .060% of the Funds first $250 million of average daily net assets;
· .050% of the Funds next $250 million of average daily net assets;
· .040% of the Funds next $250 million of average daily net assets; and
· .030% of the Funds average daily net assets in excess of $750 million.
The minimum monthly fee is $5,833 per month, exclusive of Rule 38a-1 base compliance support services fees, costs of obtaining independent security market quotes, data repository and analytics suite access fees and out-of-pocket expenses.
The Administration Agreement provides that BNY Mellon shall not be liable for any error of judgment or mistake of law or any loss suffered by the Company or the Fund in connection with the performance of the agreement, except a loss resulting from willful misfeasance, gross negligence or reckless disregard by it of its duties and obligations thereunder.
On June 1, 2003, the Company entered into a regulatory administration services agreement with BNY Mellon. Under this agreement, BNY Mellon has agreed to provide regulatory administration services to the Company. These services include the preparation and coordination of the Companys annual post-effective amendment filing and supplements to the Funds registration statement, the preparation and assembly of board meeting materials, and certain other services necessary to the Companys regulatory administration. BNY Mellon receives an annual fee based on the average daily net assets of the portfolios of the Company.
CUSTODIAN AGREEMENT
The Bank of New York (the Custodian), One Wall Street, New York, New York 10286, is custodian of the Funds assets pursuant to a custodian agreement dated July 19, 2011. 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 Funds portfolio investments; and (e) makes periodic reports to the Companys Board of Directors concerning the Funds 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. The Fund has made arrangements with BNY Mellon Investment Servicing Trust Company to serve as custodian for Individual Retirement Accounts (IRAs). For its services to the Fund under the Custodian Agreement, the Custodian receives a fee, calculated daily and payable monthly, based on the Funds average gross assets calculated daily and payable monthly, exclusive of transaction charges and out-of-pocket expenses, which are also charged to the Fund.
TRANSFER AGENCY AGREEMENT
BNY Mellon also serves as the transfer and dividend disbursing agent for the Fund pursuant to a transfer agency agreement dated November 5, 1991, as supplemented (the Transfer Agency Agreement), under which BNY Mellon: (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 Companys Board of Directors concerning the operations of the Fund. BNY Mellon may, on 30 days notice to the Company, assign its duties as transfer and dividend disbursing agent to any affiliate . For its services to the Fund under the Transfer Agency Agreement, BNY Mellon receives an annual fee based on the number of accounts in the Fund, subject to a minimum monthly fee payable monthly on a pro rata basis, and also receives reimbursement of its out-of-pocket expenses.
BNY Mellon also provides services relating to the implementation of the Companys Anti-Money Laundering Program. The Company pays an annual fee based on the number of open accounts in each portfolio of the Company. In addition, BNY Mellon provides services relating to the implementation of the Funds Customer Identification Program, including verification of required customer information and the maintenance of records with respect to such verification.
The Fund will pay BNY a fee for each customer verification and a monthly fee for each record result maintained.
DISTRIBUTION AGREEMENT
Foreside Funds Distributors LLC (Foreside Distributors or the Distributor), whose principal business address is 400 Berwyn Park, 899 Cassatt Road, Berwyn, PA 19312, serves as the underwriter to the Fund pursuant to the terms of a distribution agreement, effective as of April 1, 2012, as supplemented (the Distribution Agreement). Foreside Distributors is a registered broker-dealer and is a member of the Financial Industry Regulatory Authority (FINRA). Foreside Distributors is not affiliated with the Company, the Adviser, or any other service provider for the Fund.
Foreside Distributors 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 Foreside Distributors, 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 Foreside Distributors. 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 intermediarys 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. Foreside Distributors does not receive compensation from the Fund for its distribution services. However, the Adviser pays Foreside Distributors a fee for certain distribution-related services.
FUND TRANSACTIONS
Subject to policies established by the Board of Directors 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 dealers mark-up or reflect a dealers 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 dealers mark up or reflect a dealers 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 Companys Board of Directors 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 Companys 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. There were no securities held by the Fund of its regular broker-dealers as of the end of the most recent fiscal year as the Fund had not commenced operations.
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 Funds 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.
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 a Funds 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 Funds 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).
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 a 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 Companys Board of Directors, desirable in order to prevent the Company or any 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 Companys 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 owners 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 owners 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 Companys 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 Companys records; (3) requiring the Companys 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 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 callers authority is required. Finally, for telephone transactions in accounts held jointly, additional information regarding other account holders is required. Telephone transactions will not be permitted in connection with IRA or other retirement plan accounts or by an attorney-in-fact under a power of attorney.
VALUATION OF SHARES
Subject to approval by the Companys Board of Directors, 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 Funds books at their face value. Other assets, if any, are valued at fair value as determined in good faith by the Funds Valuation Committee under the direction of the Companys Board of Directors.
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 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 qualified during its last taxable year and intends to continue 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 Funds 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 Funds taxable year, at least 50% of the value of the Funds 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 Funds 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.
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) 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 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 Funds current and accumulated earnings and profits, and corporate shareholders could be eligible for the dividends-received deduction.
The Fund may invest in commodity-linked derivative instruments, such as commodity-linked structured notes, commodity-linked securities and other derivative instruments that provide exposure to commodity markets. The Fund has not obtained a ruling from the IRS that these investments will be treated as securities for purposes of the income and diversification tests described above. The Fund intends to limit its investment in these instruments so that they give rise to less than 10% of its income each year and comprise less than 50% of its assets at the close of each quarter of its taxable year. If the Fund were to fail to limit these investments, and if the
investments were determined not to be securities for purposes of the income and diversification tests, the Fund could fail to qualify as a regulated investment company.
The Code imposes a nondeductible 4% excise tax on regulated investment companies that fail to distribute each calendar 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, 81.973 billion shares have been classified into 153 classes, however, the Company only has 26 active share classes that have begun investment operations. Under the Companys charter, the Board of Directors 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 Companys 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.
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 of Directors 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 Companys 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 Companys 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).
MISCELLANEOUS
Counsel
The law firm of Drinker Biddle & Reath LLP, One Logan Square, Ste. 2000, Philadelphia, Pennsylvania 19103-6996, serves as independent counsel to the Company and the Independent Directors.
APPENDIX A
DESCRIPTION OF SECURITIES RATINGS
Short-Term Credit Ratings
A Standard & Poors short-term issue credit rating is a forward-looking opinion about the creditworthiness of an obligor with respect to a specific financial obligation having an original maturity of no more than 365 days. The following summarizes the rating categories used by Standard & Poors for short-term issues:
A-1 A short-term obligation rated A-1 is rated in the highest category and indicates that the obligors capacity to meet its financial commitment on the obligation is strong. Within this category, certain obligations are designated with a plus sign (+). This indicates that the obligors capacity to meet its financial commitment on these obligations is extremely strong.
A-2 A short-term obligation rated A-2 is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligations in higher rating categories. However, the obligors capacity to meet its financial commitment on the obligation is satisfactory.
A-3 A short-term obligation rated A-3 exhibits adequate protection parameters. However, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitment on the obligation.
B A short-term obligation rated B is regarded as vulnerable and has significant speculative characteristics. The obligor currently has the capacity to meet its financial commitments; however, it faces major ongoing uncertainties which could lead to the obligors inadequate capacity to meet its financial commitments.
C A short-term obligation rated C is currently vulnerable to nonpayment and is dependent upon favorable business, financial, and economic conditions for the obligor to meet its financial commitment on the obligation.
D A short-term obligation rated D is in default or in breach of an imputed promise. For non-hybrid capital instruments, the D rating category is used when payments on an obligation are not made on the date due, unless Standard & Poors believes that such payments will be made within any stated grace period. However, any stated grace period longer than five business days will be treated as five business days. The D rating also will be used upon the filing of a bankruptcy petition or the taking of a similar action and where default on an obligation is a virtual certainty, for example due to automatic stay provisions. An obligations rating is lowered to D if it is subject to a distressed exchange offer.
Local Currency and Foreign Currency Risks Standard & Poors issuer credit ratings make a distinction between foreign currency ratings and local currency ratings. An issuers foreign currency rating will differ from its local currency rating when the obligor has a different
capacity to meet its obligations denominated in its local currency, vs. obligations denominated in a foreign currency.
Moodys Investors Service (Moodys) short-term ratings are forward-looking opinions of the relative credit risks of financial obligations with an original maturity of thirteen months or less and reflect the likelihood of a default on contractually promised payments. Ratings may be assigned to issuers, short-term programs or to individual short-term debt instruments.
Moodys employs the following designations to indicate the relative repayment ability of rated issuers:
P-1 Issuers (or supporting institutions) rated Prime-1 have a superior ability to repay short-term debt obligations.
P-2 Issuers (or supporting institutions) rated Prime-2 have a strong ability to repay short-term debt obligations.
P-3 Issuers (or supporting institutions) rated Prime-3 have an acceptable ability to repay short-term obligations.
NP Issuers (or supporting institutions) rated Not Prime do not fall within any of the Prime rating categories.
Fitch, Inc. / Fitch Ratings Ltd. (Fitch) short-term issuer or obligation rating is based in all cases on the short-term vulnerability to default of the rated entity or security stream and relates to the capacity to meet financial obligations in accordance with the documentation governing the relevant obligation. Short-term ratings are assigned to obligations whose initial maturity is viewed as short-term based on market convention. Typically, this means up to 13 months for corporate, sovereign and structured obligations, and up to 36 months for obligations in U.S. public finance markets. The following summarizes the rating categories used by Fitch for short-term obligations:
F1 Securities possess the highest short-term credit quality. This designation indicates the strongest intrinsic capacity for timely payment of financial commitments; may have an added + to denote any exceptionally strong credit feature.
F2 Securities possess good short-term credit quality. This designation indicates good intrinsic capacity for timely payment of financial commitments.
F3 Securities possess fair short-term credit quality. This designation indicates that the intrinsic capacity for timely payment of financial commitments is adequate.
B Securities possess speculative short-term credit quality. This designation indicates minimal capacity for timely payment of financial commitments, plus heightened vulnerability to near term adverse changes in financial and economic conditions.
C Securities possess high short-term default risk. Default is a real possibility.
RD Restricted default. Indicates an entity that has defaulted on one or more of its financial commitments, although it continues to meet other financial obligations. Typically applicable to entity ratings only.
D Default. Indicates a broad-based default event for an entity, or the default of a short-term obligation.
The DBRS® Ratings Limited (DBRS) short-term debt rating scale provides an opinion on the risk that an issuer will not meet its short-term financial obligations in a timely manner. Ratings are based on quantitative and qualitative considerations relevant to the issuer and the relative ranking of claims. The R-1 and R-2 rating categories are further denoted by the sub-categories (high), (middle), and (low).
The following summarizes the ratings used by DBRS for commercial paper and short-term debt:
R-1 (high) - Short-term debt rated R-1 (high) is of the highest credit quality. The capacity for the payment of short-term financial obligations as they fall due is exceptionally high. Unlikely to be adversely affected by future events.
R-1 (middle) Short-term debt rated R-1 (middle) is of superior credit quality. The capacity for the payment of short-term financial obligations as they fall due is very high. Differs from R-1 (high) by a relatively modest degree. Unlikely to be significantly vulnerable to future events.
R-1 (low) Short-term debt rated R-1 (low) is of good credit quality. The capacity for the payment of short-term financial obligations as they fall due is substantial. Overall strength is not as favorable as higher rating categories. May be vulnerable to future events, but qualifying negative factors are considered manageable.
R-2 (high) Short-term debt rated R-2 (high) is considered to be at the upper end of adequate credit quality. The capacity for the payment of short-term financial obligations as they fall due is acceptable. May be vulnerable to future events.
R-2 (middle) Short-term debt rated R-2 (middle) is considered to be of adequate credit quality. The capacity for the payment of short-term financial obligations as they fall due is acceptable. May be vulnerable to future events or may be exposed to other factors that could reduce credit quality.
R-2 (low) Short-term debt rated R-2 (low) is considered to be at the lower end of adequate credit quality. The capacity for the payment of short-term financial obligations as they fall due is acceptable. May be vulnerable to future events. A number of challenges are present that could affect the issuers ability to meet such obligations.
R-3 Short-term debt rated R-3 is considered to be at the lowest end of adequate credit quality. There is a capacity for the payment of short-term financial obligations as they fall due. May be vulnerable to future events and the certainty of meeting such obligations could be impacted by a variety of developments.
R-4 Short-term debt rated R-4 is considered to be of speculative credit quality. The capacity for the payment of short-term financial obligations as they fall due is uncertain.
R-5 Short-term debt rated R-5 is considered to be of highly speculative credit quality. There is a high level of uncertainty as to the capacity to meet short-term financial obligations as they fall due.
D Short-term debt rated D is assigned when the issuer has filed under any applicable bankruptcy, insolvency or winding up statute or there is a failure to satisfy an obligation after the exhaustion of grace periods, a downgrade to D may occur. DBRS may also use SD (Selective Default) in cases where only some securities are impacted, such as the case of a distressed exchange.
Long-Term Credit Ratings
The following summarizes the ratings used by Standard & Poors for long-term issues:
AAA An obligation rated AAA has the highest rating assigned by Standard & Poors. The obligors capacity to meet its financial commitment on the obligation is extremely strong.
AA An obligation rated AA differs from the highest-rated obligations only to a small degree. The obligors capacity to meet its financial commitment on the obligation is very strong.
A An obligation rated A is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligations in higher-rated categories. However, the obligors capacity to meet its financial commitment on the obligation is still strong.
BBB An obligation rated BBB exhibits adequate protection parameters. However, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitment on the obligation.
BB, B, CCC, CC and C Obligations rated BB, B, CCC, CC and C are regarded as having significant speculative characteristics. BB indicates the least degree of speculation and C the highest. While such obligations will likely have some quality and protective characteristics, these may be outweighed by large uncertainties or major exposures to adverse conditions.
BB An obligation rated BB is less vulnerable to nonpayment than other speculative issues. However, it faces major ongoing uncertainties or exposure to adverse business, financial,
or economic conditions which could lead to the obligors inadequate capacity to meet its financial commitment on the obligation.
B An obligation rated B is more vulnerable to nonpayment than obligations rated BB, but the obligor currently has the capacity to meet its financial commitment on the obligation. Adverse business, financial, or economic conditions will likely impair the obligors capacity or willingness to meet its financial commitment on the obligation.
CCC An obligation rated CCC is currently vulnerable to nonpayment, and is dependent upon favorable business, financial and economic conditions for the obligor to meet its financial commitment on the obligation. In the event of adverse business, financial, or economic conditions, the obligor is not likely to have the capacity to meet its financial commitment on the obligation.
CC An obligation rated CC is currently highly vulnerable to nonpayment. The CC rating is used when a default has not yet occurred, but Standard & Poors expects default to be a virtual certainty, regardless of the anticipated time to default.
C An obligation rated C is currently highly vulnerable to nonpayment, and the obligation is expected to have lower relative seniority or lower ultimate recovery compared to obligations that are rated higher.
D An obligation rated D is in default or in breach of an imputed promise. For non-hybrid capital instruments, the D rating category is used when payments on an obligation are not made on the date due, unless Standard & Poors believes that such payments will be made within five business days in the absence of a stated grace period or within the earlier of the stated grace period or 30 calendar days. The D rating also will be used upon the filing of a bankruptcy petition or the taking of similar action and where default on an obligation is a virtual certainty, for example due to automatic stay provisions. An obligations rating is lowered to D if it is subject to a distressed exchange offer.
Plus (+) or minus (-) The ratings from AA to CCC may be modified by the addition of a plus (+) or minus (-) sign to show relative standing within the major rating categories.
NR This indicates that no rating has been requested, or that there is insufficient information on which to base a rating, or that Standard & Poors does not rate a particular obligation as a matter of policy.
Local Currency and Foreign Currency Risks - Standard & Poors issuer credit ratings make a distinction between foreign currency ratings and local currency ratings. An issuers foreign currency rating will differ from its local currency rating when the obligor has a different capacity to meet its obligations denominated in its local currency, vs. obligations denominated in a foreign currency.
Moodys long-term ratings are forward-looking opinions of the relative credit risks of financial obligations with an original maturity of one year or more. Such ratings reflect both the
likelihood of default on contractually promised payments and the expected financial loss suffered in the event of default. The following summarizes the ratings used by Moodys for long-term debt:
Aaa Obligations rated Aaa are judged to be of the highest quality, subject to the lowest level of credit risk.
Aa Obligations rated Aa are judged to be of high quality and are subject to very low credit risk.
A Obligations rated A are judged to be upper-medium grade and are subject to low credit risk.
Baa Obligations rated Baa are judged to be medium-grade and subject to moderate credit risk and as such may possess certain speculative characteristics.
Ba Obligations rated Ba are judged to be speculative and are subject to substantial credit risk.
B Obligations rated B are considered speculative and are subject to high credit risk.
Caa Obligations rated Caa are judged to be speculative of poor standing and are subject to very high credit risk.
Ca Obligations rated Ca are highly speculative and are likely in, or very near, default, with some prospect of recovery of principal and interest.
C Obligations rated C are the lowest rated and are typically in default, with little prospect for recovery of principal or interest.
Note: Moodys appends numerical modifiers 1, 2, and 3 to each generic rating classification from Aa through Caa. The modifier 1 indicates that the obligation ranks in the higher end of its generic rating category; the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates a ranking in the lower end of that generic rating category.
The following summarizes long-term ratings used by Fitch :
AAA Securities considered to be of the highest credit quality. AAA ratings denote the lowest expectation of credit risk. They are assigned only in cases of exceptionally strong capacity for payment of financial commitments. This capacity is highly unlikely to be adversely affected by foreseeable events.
AA Securities considered to be of very high credit quality. AA ratings denote expectations of very low credit risk. They indicate very strong capacity for payment of financial commitments. This capacity is not significantly vulnerable to foreseeable events.
A Securities considered to be of high credit quality. A ratings denote expectations of low credit risk. The capacity for payment of financial commitments is considered strong. This capacity may, nevertheless, be more vulnerable to adverse business or economic conditions than is the case for higher ratings.
BBB Securities considered to be of good credit quality. BBB ratings indicate that expectations of credit risk are currently low. The capacity for payment of financial commitments is considered adequate but adverse business or economic conditions are more likely to impair this capacity.
BB Securities considered to be speculative. BB ratings indicate that there is an elevated vulnerability to credit risk, particularly in the event of adverse changes in business or economic conditions over time; however, business or financial alternatives may be available to allow financial commitments to be met.
B Securities considered to be highly speculative. B ratings indicate that material credit risk is present.
CCC A CCC rating indicates that substantial credit risk is present.
CC A CC rating indicates very high levels of credit risk.
C A C rating indicates exceptionally high levels of credit risk.
Defaulted obligations typically are not assigned RD or D ratings, but are instead rated in the B to C rating categories, depending upon their recovery prospects and other relevant characteristics. Fitch believes that this approach better aligns obligations that have comparable overall expected loss but varying vulnerability to default and loss.
Plus (+) or minus (-) may be appended to a rating to denote relative status within major rating categories. Such suffixes are not added to the AAA obligation rating category, or to corporate finance obligation ratings in the categories below CCC.
The DBRS long-term rating scale provides an opinion on the risk of default. That is, the risk that an issuer will fail to satisfy its financial obligations in accordance with the terms under which an obligation has been issued. Ratings are based on quantitative and qualitative considerations relevant to the issuer, and the relative ranking of claims. All rating categories other than AAA and D also contain subcategories (high) and (low). The absence of either a (high) or (low) designation indicates the rating is in the middle of the category. The following summarizes the ratings used by DBRS for long-term debt:
AAA - Long-term debt rated AAA is of the highest credit quality. The capacity for the payment of financial obligations is exceptionally high and unlikely to be adversely affected by future events.
AA Long-term debt rated AA is of superior credit quality. The capacity for the payment of financial obligations is considered high. Credit quality differs from AAA only to a small degree. Unlikely to be significantly vulnerable to future events.
A Long-term debt rated A is of good credit quality. The capacity for the payment of financial obligations is substantial, but of lesser credit quality than AA. May be vulnerable to future events, but qualifying negative factors are considered manageable.
BBB Long-term debt rated BBB is of adequate credit quality. The capacity for the payment of financial obligations is considered acceptable. May be vulnerable to future events.
BB Long-term debt rated BB is of speculative, non-investment grade credit quality. The capacity for the payment of financial obligations is uncertain. Vulnerable to future events.
B Long-term debt rated B is of highly speculative credit quality. There is a high level of uncertainty as to the capacity to meet financial obligations.
CCC, CC and C Long-term debt rated in any of these categories is of very highly speculative credit quality. In danger of defaulting on financial obligations. There is little difference between these three categories, although CC and C ratings are normally applied to obligations that are seen as highly likely to default, or subordinated to obligations rated in the CCC to B range. Obligations in respect of which default has not technically taken place but is considered inevitable may be rated in the C category.
D A security rated D is assigned when the issuer has filed under any applicable bankruptcy, insolvency or winding up statute or there is a failure to satisfy an obligation after the exhaustion of grace periods, a downgrade to D may occur. DBRS may also use SD (Selective Default) in cases where only some securities are impacted, such as the case of a distressed exchange.
Municipal Note Ratings
A Standard & Poors U.S. municipal note rating reflects Standard & Poors opinion about the liquidity factors and market access risks unique to the notes. Notes due in three years or less will likely receive a note rating. Notes with an original maturity of more than three years will most likely receive a long-term debt rating. In determining which type of rating, if any, to assign, Standard & Poors analysis will review the following considerations:
· Amortization schedule - the larger the final maturity relative to other maturities, the more likely it will be treated as a note; and
· Source of payment - the more dependent the issue is on the market for its refinancing, the more likely it will be treated as a note.
Municipal Short-Term Note rating symbols are as follows:
SP-1 A municipal note rated SP-1 exhibits a strong capacity to pay principal and interest. An issue determined to possess a very strong capacity to pay debt service is given a plus (+) designation.
SP-2 A municipal note rated SP-2 exhibits a satisfactory capacity to pay principal and interest, with some vulnerability to adverse financial and economic changes over the term of the notes.
SP-3 A municipal note rated SP-3 exhibits a speculative capacity to pay principal and interest.
Moodys uses the Municipal Investment Grade (MIG) scale to rate U.S. municipal bond anticipation notes of up to three years maturity. Municipal notes rated on the MIG scale may be secured by either pledged revenues or proceeds of a take-out financing received prior to note maturity. MIG ratings expire at the maturity of the obligation, and the issuers long-term rating is only one consideration in assigning the MIG rating. MIG ratings are divided into three levels MIG-1 through MIG-3 while speculative grade short-term obligations are designated SG. The following summarizes the ratings used by Moodys for short-term municipal obligations:
MIG-1 This designation denotes superior credit quality. Excellent protection is afforded by established cash flows, highly reliable liquidity support, or demonstrated broad-based access to the market for refinancing.
MIG-2 This designation denotes strong credit quality. Margins of protection are ample, although not as large as in the preceding group.
MIG-3 This designation denotes acceptable credit quality. Liquidity and cash-flow protection may be narrow, and market access for refinancing is likely to be less well-established.
SG This designation denotes speculative-grade credit quality. Debt instruments in this category may lack sufficient margins of protection.
NR Is assigned to an unrated obligation.
In the case of variable rate demand obligations (VRDOs), a two-component rating is assigned: a long or short-term debt rating and a demand obligation rating. The first element represents Moodys evaluation of risk associated with scheduled principal and interest payments. The second element represents Moodys evaluation of risk associated with the ability to receive purchase price upon demand (demand feature). The second element uses a rating from a variation of the MIG rating scale called the Variable Municipal Investment Grade or VMIG scale. The rating transitions on the VMIG scale differ from those on the Prime scale to reflect the risk that external liquidity support generally will terminate if the issuers long-term rating drops below investment grade.
VMIG rating expirations are a function of each issues specific structural or credit features.
VMIG-1 This designation denotes superior credit quality. Excellent protection is afforded by the superior short-term credit strength of the liquidity provider and structural and legal protections that ensure the timely payment of purchase price upon demand.
VMIG-2 This designation denotes strong credit quality. Good protection is afforded by the strong short-term credit strength of the liquidity provider and structural and legal protections that ensure the timely payment of purchase price upon demand.
VMIG-3 This designation denotes acceptable credit quality. Adequate protection is afforded by the satisfactory short-term credit strength of the liquidity provider and structural and legal protections that ensure the timely payment of purchase price upon demand.
SG This designation denotes speculative-grade credit quality. Demand features rated in this category may be supported by a liquidity provider that does not have an investment grade short-term rating or may lack the structural and/or legal protections necessary to ensure the timely payment of purchase price upon demand.
NR Is assigned to an unrated obligation.
About Credit Ratings
A Standard & Poors issue credit rating is a forward-looking opinion about the creditworthiness of an obligor with respect to a specific financial obligation, a specific class of financial obligations, or a specific financial program (including ratings on medium-term note programs and commercial paper programs). It takes into consideration the creditworthiness of guarantors, insurers, or other forms of credit enhancement on the obligation and takes into account the currency in which the obligation is denominated. The opinion reflects Standard & Poors view of the obligors capacity and willingness to meet its financial commitments as they come due, and may assess terms, such as collateral security and subordination, which could affect ultimate payment in the event of default.
Moodys credit ratings must be construed solely as statements of opinion and not statements of fact or recommendations to purchase, sell or hold any securities.
Fitchs credit ratings provide an opinion on the relative ability of an entity to meet financial commitments, such as interest, preferred dividends, repayment of principal, insurance claims or counterparty obligations. Fitch credit ratings are used by investors as indications of the likelihood of receiving the money owed to them in accordance with the terms on which they invested. Fitchs credit ratings cover the global spectrum of corporate, sovereign (including supranational and sub-national), financial, bank, insurance, municipal and other public finance entities and the securities or other obligations they issue, as well as structured finance securities backed by receivables or other financial assets.
DBRS credit ratings are opinions based on the quantitative and qualitative analysis of information sourced and received by DBRS, which information is not audited or verified by DBRS. Ratings are not buy, hold or sell recommendations and they do not address the market price of a security. Ratings may be upgraded, downgraded, placed under review, confirmed and discontinued.
APPENDIX B
SUMMARY OF PROXY VOTING POLICY OF APERIO GROUP, LLC
Aperio Groups 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 Groups 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 clients 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.
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 ISS Governance Services, a direct wholly-owned subsidiary of MSCI 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 DCMs 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 DCMs clients, enabling the clients to monitor voting activities performed by DCM.
DCMs 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 ISSs 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 ISSs 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 DCMs complete proxy voting policy.
APPENDIX D
SUMMARY OF PROXY VOTING POLICY OF
GRANITE INVESTMENT PARTNERS, LLC
Granite votes proxies on behalf of its Clients when authorized to do so. In general, Clients delegate the responsibility of voting proxies to Granite. However, a Client may reserve the authority to vote proxies for itself. When granted proxy voting authority, Granite will vote such securities for the exclusive benefit and in the best economic interest of those Clients and their beneficiaries as determined by Granite in good faith, subject to any restrictions or directions from a Client. Such voting responsibilities are exercised in accordance with the applicable provisions of the Investment Advisers Act of 1940, as amended, as well as with Granites fiduciary duties under applicable law to act in the best interests of its Clients.
Granite has contracted with Broadridge Financial Solutions and utilizes their Proxy Edge® platform (ProxyEdge). ProxyEdge will provide proxy voting support with regard to casting votes and keeping voting records. ProxyEdge will vote proxies it receives from the Custodian(s) on behalf of Granite. However, proxies not received in a timely manner may not be voted. Under the terms of its arrangement with ProxyEdge, Granite will generally follow the Glass Lewis recommendations. However, certain clients may use the socially responsible guidelines which may cause those clients to vote differently than other clients.
Granite can instruct ProxyEdge to vote either for or against a particular type of proposal or Granite can instruct ProxyEdge to seek instruction with respect to that particular type of proposal from Granite on a case-by-case basis. ProxyEdge receives proxy statements where Granite is authorized to vote and sorts the proposals according to Granites voting instructions. Proposals for which a voting decision has been pre-determined are automatically voted by ProxyEdge pursuant to voting instructions. Case-by-case decisions are generally made by the PMs. All voting records where Granite retains proxy voting authority are maintained by ProxyEdge, except that Granite will maintain copies of any document created by Granite that was material in making a determination of how to vote a case-by-case proxy or that memorializes the basis for that decision.
While how best to vote a proxy to maximize shareholder value may not be clear or be able to be decided with certainty, the policies are intended to provide guidance so that it acts in a manner it deems to be prudent and diligent and which is intended to enhance the economic value of the Clients assets. A copy of Granites proxy voting guidelines is available upon request.
APPENDIX E
PROXY VOTING POLICY OF
PACIFIC RIDGE CAPITAL PARTNERS, LLC
Pacific Ridge Capital Partners, LLC, as a matter of policy and as a fiduciary to our clients, has responsibility for voting proxies for portfolio securities consistent with the best economic interests of the clients. Our firm maintains written policies and procedures as to the handling, research, voting and reporting of proxy voting and makes appropriate disclosures about our firms proxy policies and practices. Our policy and practice includes the responsibility to monitor corporate actions, receive and vote client proxies and disclose any potential conflicts of interest as well as making information available to clients about the voting of proxies for their portfolio securities and maintaining relevant and required records.
Background
Proxy voting is an important right of shareholders and reasonable care and diligence must be undertaken to ensure that such rights are properly and timely exercised.
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 advisers interests and those of its clients; (b) disclose to clients how they may obtain information from the adviser with respect to the voting of proxies for their securities; (c) 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 advisers proxy voting activities when the adviser has proxy voting authority.
Responsibility
The Chief Compliance Officer has the responsibility for the implementation and monitoring of our proxy voting policy, practices, disclosures and record keeping, including outlining our voting guidelines in our procedures.
Procedure
Pacific Ridge Capital Partners, LLC has adopted procedures to implement the firms policy and reviews to monitor and ensure the firms policy is observed, implemented properly and amended or updated, as appropriate, which include the following:
Voting Procedures
· All employees will forward any proxy materials received on behalf of clients to the proxy voting department;
· Absent material conflicts, the Portfolio Manager in charge of the stock will vote the proxy with applicable voting guidelines, sign and return the in a timely and appropriate manner to the proxy voting team who will then place the votes via electronic means.
Disclosure
Pacific Ridge Capital Partners, LLC will provide conspicuously displayed information in its Disclosure Document summarizing this proxy voting policy and procedures, including a statement that clients may request information regarding how Pacific Ridge Capital Partners, LLC voted a clients proxies, and that clients may request a copy of the firms proxy policies and procedures.
The Chief Compliance Officer will also send a copy of this summary to all existing clients who have previously received Pacific Ridge Capital Partners, LLCs Disclosure Document; or the Chief Compliance Officer may send each client the amended Disclosure Document.
Client Requests for Information
· All client requests for information regarding proxy votes, or policies and procedures, received by any employee should be forwarded to the Chief Compliance Officer.
· In response to any request, the Chief Compliance Officer will prepare a written response to the client with the information requested, and as applicable will include the name of the issuer, the proposal voted upon, and how Pacific Ridge Capital Partners, LLC voted the clients proxy with respect to each proposal about which client inquired.
Voting Guidelines
· In the absence of specific voting guidelines from the client, Pacific Ridge Capital Partners, LLC will vote proxies in the best interests of shareholders. Pacific Ridge Capital Partners, LLCs policy is to vote all proxies from a specific issuer the same way for each client absent qualifying restrictions from a client. Clients are permitted to place reasonable restrictions on Pacific Ridge Capital Partners, LLCs voting authority in the same manner that they may place such restrictions on the actual selection of account securities.
· Pacific Ridge Capital Partners, LLC will generally vote in favor of routine corporate housekeeping proposals such as the election of directors and selection of auditors absent conflicts of interest raised by an auditors non-audit services.
· Generally vote against proposals that cause board members to become entrenched or cause unequal voting rights.
· In reviewing proposals, Pacific Ridge Capital Partners, LLC will further consider the opinion of management and the effect on management, and the effect on shareholder value and the issuers business practices.
· Pacific Ridge Capital Partners, LLC will abstain from any advisory proxy items regarding executive compensation or the frequency of the vote on executive compensation.
· Pacific Ridge Capital Partners, LLC does not vote proxies relating to any cash vehicles (i.e. Sweep funds, cash accounts and daily cash mutual funds) held by and chosen by clients.
· Pacific Ridge Capital Partners, LLC will vote against any proxy items allowing board members to vote in their discretion on unspecified business that may properly come before the shareholders meeting.
Conflicts of Interest
· Pacific Ridge Capital Partners, LLC will identify any conflicts that exist between the interests of the adviser and the client by reviewing the relationship of Pacific Ridge Capital Partners, LLC with the issuer of each security to determine if Pacific Ridge Capital Partners, LLC or any of its employees has any financial, business or personal relationship with the issuer.
· If a material conflict of interest exists, the Chief Compliance Officer will determine whether it is appropriate to disclose the conflict to the affected clients, to give the clients an opportunity to vote the proxies themselves, or to address the voting issue through other objective means such as voting in a manner consistent with a predetermined voting policy or receiving an independent third party voting recommendation.
· Pacific Ridge Capital Partners, LLC will maintain a record of the voting resolution of any conflict of interest.
Recordkeeping
The Chief Compliance Officer shall retain the following proxy records in accordance with the SECs five-year retention requirement.
· These policies and procedures and any amendments;
· Each proxy statement that Pacific Ridge Capital Partners, LLC receives;
· A record of each vote that Pacific Ridge Capital Partners, LLC casts;
· Any document Pacific Ridge Capital Partners, LLC created that was material to making a decision how to vote proxies, or that memorializes that decision including periodic reports to the Chief Compliance Officer or proxy committee, if applicable.
· A copy of each written request from a client for information on how Pacific Ridge Capital Partners, LLC voted such clients proxies, and a copy of any written response.
In the event PRCP retains the research, voting and/or recordkeeping services of an outside proxy firm, PRCP will tailor its proxy policy and procedures to be consistent with the services received and the firms actual proxy handling and voting processes.
APPENDIX F
PROXY VOTING POLICY OF
PIER CAPITAL, LLC
This statement sets forth the Firms policy with respect to the exercise of voting authority in connection with proxy proposals, amendments, consents, corporate actions, class action participation (Proxy Discretion) with respect to securities held by the Firms Clients.
The Advisers Act requires the Firm to, at all times, act in the best financial interest of the Clients. To this end, the Firm has adopted and implemented these Proxy Policies and Procedures which are designed to result in voting proxies for the benefit of Clients in order to enhance the value of the securities in Client portfolios. The financial interest of the Clients is the primary consideration when exercising Proxy Discretion taking into account the surrounding facts and circumstances as more fully set forth herein.
Proxy voting is an important right of shareholders and reasonable care and diligence must be undertaken to ensure that such rights are properly and timely exercised. The Firm considers it to be our fiduciary duty to preserve and protect the assets of the Clients, including exercising Proxy Discretion, for their benefit. Accordingly, it is Firm policy to exercise Proxy Discretion in a prudent and diligent manner and to base decisions on our reasonable judgment of what will serve the best financial interest of the Clients, after taking into account relevant factors, including, among others,:
· Impact on the value of the securities
· Anticipated costs and benefits associated with the proposal
· Effect on liquidity
· Customary industry and business practices
In those cases where a Client is deemed to be plan assets, the beneficial owners of the security are deemed to be the participants in the employee benefit plans for which we act as investment manager. In those cases where securities are on loan, the Firm as the lender cannot and does not exercise Proxy Discretion for such securities.
There is no per se rule regarding what is a correct decision when exercising Proxy Discretion. Accordingly, as in other areas relating to prudent investing, our decision is based on our good faith analysis and judgment in the context of the surrounding facts and circumstances in question. In determining our vote, however, we will not and do not subordinate the financial interests of our Clients to any other entity or interested party.
At times, conflicts may arise between the interest of the Clients on the one hand, and the interests of the Firm on the other hand. Examples of conflicts of interest include:
· The Firm manages a pension plan or assets for a company that is also soliciting proxies.
· The Firm has a material business relationship with a proponent of a proxy proposal.
· The Firm or any of its principals or employees have a personal relationship with participants in a proxy contest.
If the Firm has determined that it has or may be perceived to have a conflict of interest when voting a proxy, the Firm will address matters involving such a conflict of interest as follows:
1. If the proposal is addressed by the specific policies herein, the Firm will vote in accordance with such policies.
2. If the Firm believes it is in the best economic interests of the Clients to depart from such policies, the Firm may depart from such policies, provided that, (a) it has documented its rationalization for such vote, and (b) consulting with the Compliance Officer who will advise as to a reasonable resolution of the conflict.
We will use commercially reasonable efforts to determine whether a potential conflict exists based on current known facts and circumstances. Any consideration received in connection with the exercise of Proxy Discretion belongs to the relevant Client and will not be retained by Firm, its employees, or affiliates.
The Compliance Officer/Chief Compliance Officer is responsible for the administration of Proxy Discretion and the actual voting of the proxies in an accurate and timely manner. The PM or his designee is responsible for making all proxy voting decisions in accordance with these policies and procedures. In this capacity, the Compliance Officer/Chief Compliance Officer is responsible for and performs the following functions:
· Receive proxy materials or notices from prime brokers
· Determine the number of shares held by Clients as of the record date
· Exercise Proxy Discretion consistent with this policy on routine matters or consult with the PM or his designee for decision on non-routine matters
· Record the Proxy Discretion decision
· When relevant, record the rationale provided by the PM or his designee and
· When requested, provide Clients with a report of Proxy Discretion exercised with respect to their positions
In order to facilitate the proxy voting process, Pier has engaged ADP, an independent proxy voting service (the Proxy Service) to vote proxies for the Funds on Piers behalf. The Proxy Service allows Pier to vote according to our guidelines as set forth and review reports indicating how individual votes have been cast. The Proxy Service does not automatically cast votes for Pier. Pier must enter its vote into the Proxy Service system. The Proxy Service then casts the vote on Piers behalf.
To facilitate the timely and complete administration of proxies, the Firm has developed the following standing instructions for the exercise of Proxy Discretion which it believes is in the best economic interest of the Clients.
Unless otherwise advised by the portfolio manager, all proxies will be voted in accordance with the recommendations of management unless in the portfolio managers opinion such recommendation is not in the best financial interest of the Clients. This standing instruction is consistent with Firms investment process which generally evaluates the quality and commitment of management.
We may abstain from voting if we conclude that the effect on a Clients economic interests or the value of the portfolio holding is insignificant or indeterminable. In making such a decision, the Firm may consider various factors including, (i) costs associated with exercising Proxy Discretion (e.g., translation or travel expenses) and (ii) potential legal restrictions on trading resulting from the exercise of Proxy Discretion. The firm will not abstain or decide not to vote a proxy if the Client constitutes a Plan.
In the case of social or political responsibility, we believe social and political issues do not enhance shareholder value and generally abstain or vote against such proposals.
The Firm will disclose in Part II of its Form ADV that a copy of this proxy policy is available and will provide details and contact information in order to direct such requests to the appropriate source. Further, the ADV disclosure will also contain a summary of these policies and procedures and will be updated as necessary to reflect changes.
We maintain the records required to be maintained by the Firm with respect to proxies in accordance with the Advisers Act, generally for a period of five years in an easily accessible place, the first two years in a Firm office. For proxies, we will maintain or have available to us,
· Written or electronic copies of each proxy statement,
· Record of each proxy voting decision,
· Documents, if any, regarding decisions that were material in making the voting decision, and
· A copy of each written request from a Client or investor/limited partner for proxy voting information and our written response.
We may but need not retain proxy statements that we received regarding Client securities to the extent that such proxies are available on the SECs EDGAR system. We may also rely upon a third party to maintain certain records required to be maintained by the Advisers Act.
We shall from time to time review these policies and procedures and may adopt changes based upon our experience, evolving industry practice and developments in applicable laws and regulations. Unless otherwise agreed to with a Client, we may change these proxy voting policies and procedures from time to time without notice to or approval by any Client.
Clients may request a current version of our proxy policies and procedures as well as information as to how the Firm voted proxies or corporate actions for their respective portfolios by contacting Piers Compliance Officer at 203-425-1442. Such copies are provided at no charge and may be delivered electronically in the discretion of the Firm.
APPENDIX G
PROXY VOTING POLICY OF
RIVER ROAD ASSET MANAGEMENT LLC
PROXY VOTING
Policy
River Road exercises discretionary voting authority over proxies issued on securities held in client accounts unless the client has explicitly reserved voting authority. Our policy and practice includes the responsibility to receive and vote client proxies, mitigate any potential conflicts of interest, make information available to clients about the voting of proxies for their portfolio securities, and maintain required records. River Road, as a matter of policy and as a fiduciary to our clients, votes proxies for client securities consistent with the best economic interests of the clients. River Road engages a third-party voting agent, Glass Lewis & Co. (Glass Lewis), to help discharge its duties.
Background
Registered investment advisers that exercise voting authority with respect to client securities are required by Rule 206(4)-6 of the Advisers Act to do the following:
· 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 advisers interests and those of its clients;
· Disclose to clients how they may obtain information from the adviser with respect to the voting of proxies for their securities; and
· Describe to clients a summary of its proxy voting policies and procedures and, upon request, furnish a copy to its clients.
Advisers also must maintain certain records relating to proxy voting activities. See Books and Records.
Responsibility
The Proxy Voting Policy Committee, the Proxy Voting Procedure Committee, and the Compliance Department are responsible for implementing and monitoring this policy.
Procedure
River Road has adopted the following procedures to implement and monitor the firms policy:
Proxy Committees :
River Road established two proxy committees to oversee proxy voting activities.
The Proxy Voting Policy Committee is responsible for establishing voting guidelines and reviewing special issues. The Committee consists at a minimum of the Chief Investment Officer, the Director of Research, the Chief Compliance Officer, and a Compliance Department proxy designee (Proxy Designee). The Committee meets annually to review Glass Lewis proxy voting guidelines. The Committee must determine and document where River Road disagrees with the agents guidelines, if at all, and determine necessary action, if any. The Committee is responsible for adopting the final voting
guidelines. The minutes from the meeting will be distributed to the investment team (as necessary) for their reference as they make voting decisions throughout the year. Meetings may be called by any Committee member throughout the year, based on issues that arise.
The Proxy Voting Procedure Committee is responsible for operational and procedural aspects of the proxy voting process. The Committee consists at a minimum of the Chief Compliance Officer and the Proxy Designee. The Committee meets annually to review operational or procedural issues related to the proxy process. Meetings may be called by any Committee member throughout the year, based on issues that arise.
Voting Agent : Glass Lewis performs the following services:
· provides analysis of proxy proposals,
· tracks and receives proxies for which River Road clients are entitled to vote,
· votes the proxies as directed by River Road, and
· compiles and provides client voting records.
Voting Process :
The Proxy Designee coordinates the proxy voting process. The steps for reviewing and submitting votes are as follows:
· The Proxy Designee reviews the Glass Lewis web-based system on at least a weekly basis for upcoming meetings.
· The Proxy Designee reconciles the number of ballots reflected by Glass Lewis to River Roads records and reports any discrepancies to Glass Lewis for follow up. River Road makes its best efforts to ensure that all shares are voted. However, issues with receiving ballots from client custodians may prevent voting for a particular account. River Road continues to follow up with Glass Lewis and the custodian where necessary until issues are resolved.
· If the policy recommendation and the management recommendation for all votes on a ballot are the same, the Proxy Designee will vote accordingly.
· If the policy recommendation and management recommendation are different for a particular vote, the Proxy Designee distributes Glass Lewis proxy paper for the upcoming meeting to the appropriate member of the investment team. The investment team member (in consultation with the portfolio manager) is responsible for reviewing the proxy paper and making the appropriate vote decision based on this policy and the Proxy Voting Policy meeting minutes. Where the investment team member decides to vote differently from the policy recommendation, they must document the investment rationale. The Proxy Designee then obtains prior approval from the Chief Compliance Officer, the Compliance Manager, or their designee before submitting the vote decision.
Client Direction : River Roads policy is to vote all proxies the same way for each client. Clients are permitted to place reasonable restrictions on River Roads voting authority by providing their own voting guidelines. If clients provide River Road with their voting guidelines and River Road accepts them, River Road will instruct the voting agent to vote proxies pursuant to the client guidelines.
Conflicts of Interest : River Road has eliminated most conflicts of interest by using an independent third party (Glass Lewis) that votes pursuant to the guidelines adopted by the Proxy Voting Policy Committee or in accordance with River Roads direction after following this process. In cases where River Road
believes there may be an actual or perceived conflict of interest, River Road requires additional steps that may include the following:
· documenting the potential conflict of interest,
· obtaining the prior approval of the Chief Investment Officer and CCO,
· obtaining Committee review or approval,
· deferring to the voting recommendation of a third party,
· voting pursuant to client direction (following disclosure of the conflict),
· abstaining from voting,
· voting reflectively (in the same proportion and manner as other shareholders), or
· taking such other action as necessary to protect the interests of clients.
River Road will maintain a record of the voting resolution of any conflict of interest.
Securities Lending : Where clients have implemented securities lending programs, River Road will be unable to vote proxies for securities on loan unless it issues instructions to the client custodian to callback the securities prior to record date. River Road typically does not instruct custodians to callback securities.
Disclosure and Client Requests for Information : River Road discloses a summary of this policy and information on how clients may obtain a copy of this policy and records of how River Road voted securities for their accounts in Form ADV Part 2A. Employees that receive a client request for information regarding proxy votes or policies and procedures must forward such request to the Compliance Department where necessary. The Compliance Department is responsible for gathering the relevant information.
Testing : The Compliance Department typically performs a monthly review of reconciliations and proxy voting records to ensure the process is being followed.
Version Reference
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THE RBB FUND, INC.
PEA 172
PART C: OTHER INFORMATION
Item 28 . EXHIBITS
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Articles of Incorporation. |
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Articles of Incorporation of Registrant are incorporated herein by reference to Registrants Registration Statement (No. 33-20827) filed on March 24, 1988, and refiled electronically with Post-Effective Amendment No. 61 to Registrants Registration Statement filed on October 30, 1998. |
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Articles Supplementary of Registrant are incorporated herein by reference to Registrants Registration Statement (No. 33-20827) filed on March 24, 1988, and refiled electronically with Post-Effective Amendment No. 61 to Registrants Registration Statement filed on October 30, 1998. |
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Articles of Amendment to Articles of Incorporation of Registrant are incorporated herein by reference to Pre-Effective Amendment No. 2 to Registrants Registration Statement (No. 33-20827) filed on July 12, 1988, and refiled electronically with Post-Effective Amendment No. 61 to Registrants Registration Statement filed on October 30, 1998. |
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Articles Supplementary of Registrant are incorporated herein by reference to Pre-Effective Amendment No. 2 to Registrants Registration Statement (No. 33-20827) filed on July 12, 1988, and refiled electronically with Post-Effective Amendment No. 61 to Registrants Registration Statement filed on October 30, 1998. |
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Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 3 to the Registrants Registration Statement (No. 33-20827) filed on April 27, 1990, and refiled electronically with Post-Effective Amendment No. 61 to Registrants Registration Statement filed on October 30, 1998. |
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Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 4 to the Registrants Registration Statement (No. 33-20827) filed on May 1, 1990, and refiled electronically with Post-Effective Amendment No. 61 to Registrants Registration Statement filed on October 30, 1998. |
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Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 7 to the Registrants Registration Statement (No. 33-20827) filed on July 15, 1992, and refiled electronically with Post-Effective Amendment No. 61 to Registrants Registration Statement filed on October 30, 1998. |
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(8) |
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Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 8 to the Registrants Registration Statement (No. 33-20827) filed on October 22, 1992, and refiled electronically with Post-Effective Amendment No. 61 to Registrants Registration Statement filed on October 30, 1998. |
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(9) |
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Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 13 to the Registrants Registration Statement (No. 33-20827) filed on October 29, 1993, and refiled electronically with Post-Effective Amendment No. 61 to Registrants Registration Statement filed on October 30, 1998. |
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(10) |
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Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 13 to the Registrants Registration Statement (No. 33-20827) filed on October 29, 1993, and refiled electronically with Post-Effective Amendment No. 61 to Registrants Registration Statement filed on October 30, 1998. |
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(11) |
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Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 22 to the Registrants Registration Statement (No. 33-20827) filed on December 19, 1994, and refiled electronically with Post-Effective Amendment No. 61 to Registrants Registration Statement filed on October 30, 1998. |
(12) |
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Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 22 to the Registrants Registration Statement (No. 33-20827) filed on December 19, 1994, and refiled electronically with Post-Effective Amendment No. 61 to Registrants Registration Statement filed on October 30, 1998. |
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(13) |
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Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 22 to the Registrants Registration Statement (No. 33-20827) filed on December 19, 1994, and refiled electronically with Post-Effective Amendment No. 61 to Registrants Registration Statement filed on October 30, 1998. |
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(14) |
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Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 22 to the Registrants Registration Statement (No. 33-20827) filed on December 19, 1994, and refiled electronically with Post-Effective Amendment No. 61 to Registrants Registration Statement filed on October 30, 1998. |
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(15) |
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Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 27 to the Registrants Registration Statement (No. 33-20827) filed on March 31, 1995. |
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(16) |
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Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 34 to the Registrants Registration Statement (No. 33-20827) filed on May 16, 1996. |
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(17) |
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Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 39 to the Registrants Registration Statement (No. 33-20827) filed on October 11, 1996. |
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(18) |
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Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 45 to the Registrants Registration Statement (No. 33-20827) filed on May 9, 1997. |
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(19) |
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Articles of Amendment to Charter of the Registrant are incorporated herein by reference to Post-Effective Amendment No. 46 to the Registrants Registration Statement (No. 33-20827) filed on September 25, 1997. |
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(20) |
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Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 46 to the Registrants Registration Statement (No. 33-20827) filed on September 25, 1997. |
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(21) |
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Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 60 to the Registrants Registration Statement (No. 33-20827) filed on October 29, 1998. |
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(22) |
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Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 60 to the Registrants Registration Statement (No. 33-20827) filed on October 29, 1998. |
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(23) |
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Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 63 to the Registrants Registration Statement (No. 33-20827) filed on December 14, 1998. |
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(24) |
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Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 63 to the Registrants Registration Statement (No. 33-20827) filed on December 14, 1998. |
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(25) |
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Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 67 to the Registrants Registration Statement (No. 33-20827) filed on September 30, 1999. |
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(26) |
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Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 69 to the Registrants Registration Statement (No. 33-20827) filed on November 29, 1999. |
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(27) |
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Articles of Amendment to Charter of the Registrant are incorporated herein by reference to Post-Effective Amendment No. 71 to the Registrants Registration Statement (No. 33-20827) filed on December 29, 2000. |
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(28) |
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Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 71 to the Registrants Registration Statement (No. 33-20827) filed on December 29, 2000. |
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(29) |
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Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 71 to the Registrants Registration Statement (No. 33-20827) filed on December 29, 2000. |
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(30) |
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Articles of Amendment to Charter of the Registrant are incorporated herein by reference to Post-Effective Amendment No. 71 to the Registrants Registration Statement (No. 33-20827) filed on December 29, 2000. |
(31) |
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Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 73 to the Registrants Registration Statement (No. 33-20827) filed on March 15, 2001. |
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(32) |
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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 Registrants Registration Statement (No. 33-20827) filed on May 15, 2002. |
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(33) |
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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 Registrants Registration Statement (No. 33-20827) filed on May 15, 2002. |
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(34) |
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Articles Supplementary of Registrant ( Schneider Value Fund ) are incorporated herein by reference to Post-Effective Amendment No. 78 to the Registrants Registration Statement (No. 33-20827) filed on May 16, 2002. |
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(35) |
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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 Registrants Registration Statement (No. 33-20827) filed on December 29, 2003. |
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(36) |
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Articles of Amendment to Charter of the Registrant are incorporated herein by reference to Post-Effective Amendment No. 89 to the Registrants Registration Statement (No. 33-20827) filed on December 30, 2004. |
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(37) |
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Articles Supplementary of Registrant ( RobecoWPG Core Bond Fund Investor Class, RobecoWPG Core Bond Fund Institutional Class, RobecoWPG Tudor Fund Institutional Class, RobecoWPG Large Cap Growth Fund Institutional Class ) are incorporated herein by reference to Post-Effective Amendment No. 93 to the Registrants Registration Statement (No. 33-20827) filed on March 4, 2005. |
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(38) |
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Certificate of Correction of Registrant is incorporated herein by reference to Post-Effective Amendment No. 95 to the Registrants Registration Statement (No. 33-20827) filed on March 23, 2005. |
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(39) |
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Articles Supplementary of Registrant ( RobecoWPG Core Bond Fund Investor Class, RobecoWPG Core Bond Fund Institutional Class, RobecoWPG Tudor Fund Institutional Class, RobecoWPG 130/30 Large Cap Core Fund f/k/a RobecoWPG Large Cap Growth Fund Institutional Class ) are incorporated herein by reference to Post-Effective Amendment No. 95 to the Registrants Registration Statement (No. 33-20827) filed on March 23, 2005. |
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(40) |
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Articles Supplementary of Registrant ( Senbanc Fund) are incorporated herein by reference to Post-Effective Amendment No. 96 to the Registrants Registration Statement (No. 33-20827) filed on June 6, 2005. |
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(41) |
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Articles of Amendment of Registrant ( RobecoWPG Core Bond Fund Retirement Class) are incorporated herein by reference to Post-Effective Amendment No. 97 to the Registrants Registration Statement (No. 33-20827) filed on August 19, 2005. |
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(42) |
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Articles Supplementary of Registrant ( RobecoWPG Core Bond Fund Investor Class) are incorporated herein by reference to Post-Effective Amendment No. 99 to the Registrants Registration Statement (No. 33-20827) filed on September 27, 2005. |
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(43) |
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Articles Supplementary of Registrant (Bear Stearns CUFSMLP Mortgage Portfolio) are incorporated herein by reference to Post-Effective Amendment No. 104 to the Registrants Registration Statement (No. 33-20827) filed on July 18, 2006. |
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(44) |
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Articles of Amendment to Charter of the Registrant (Bear Stearns CUFSMLP Mortgage Portfolio) are incorporated herein by reference to Post-Effective Amendment No. 108 to the Registrants Registration Statement (No. 33-20827) filed on December 14, 2006. |
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(45) |
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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 Registrants Registration Statement (No. 33-20827) filed on December 15, 2006. |
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(46) |
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Articles Supplementary of Registrant (Marvin & Palmer Large Cap Growth Fund) are incorporated herein by reference to Post-Effective Amendment No. 109 to Registrants Registration Statement (No. 33-20827) filed on December 15, 2006. |
(47) |
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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 Registrants Registration Statement (No. 33-20827) filed on February 28, 2007. |
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(48) |
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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 Registrants Registration Statement (No. 33-20827) filed on February 28, 2007. |
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(49) |
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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 Registrants Registration Statement (No. 33-20827) filed on June 1, 2007. |
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(50) |
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Articles Supplementary of Registrant (RobecoWPG 130/30 Large Cap Core Fund Investor Class) are incorporated herein by reference to Post-Effective Amendment No.113 to the Registrants Registration Statement (No. 33-20827) filed on July 13, 2007. |
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(51) |
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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 Registrants Registration Statement (No. 33-20827) filed on July 17, 2007. |
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(52) |
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Articles of Amendment of Registrant (RobecoWPG 130/30 Large Cap Core Fund Institutional Class) are incorporated herein by reference to Post-Effective Amendment No.116 to the Registrants Registration Statement (No. 33-20827) filed on September 4, 2007. |
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(53) |
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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 Registrants Registration Statement (No. 33-20827) filed on December 17, 2007. |
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(54) |
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Articles of Amendment to Charter of the Registrant (Bear Stearns Ultra Short Income Fund f/k/a Bear Stearns Enhanced Income Fund areincorporated herein by reference to Post-Effective Amendment No. 124 to the Registrants Registration Statement (No. 33-20827) filed on December 28, 2007. |
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(55) |
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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 Registrants Registration Statement (No. 33-20827) filed on April 23, 2009. |
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(56) |
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Articles Supplementary of Registrant ( Perimeter Small Cap Growth Fund) are incorporated herein by reference to Post-Effective Amendment No. 129 to the Registrants Registration Statement (No. 33-20827) filed on July 2, 2009. |
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(57) |
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Articles Supplementary of Registrant ( S1 Fund) are incorporated herein by reference to Post-Effective Amendment No. 135 to Registrants Registration Statement (No. 33-20827) filed on July 19, 2010. |
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(58) |
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Articles Supplementary of Registrant ( Robeco Boston Partners Long/Short Research Fund ) are incorporated herein by reference to Post-Effective Amendment No. 136 to the Registrants Registration Statement (No. 33-20827) filed on August 4, 2010. |
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(59) |
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Articles of Amendment of Registrant (RobecoWPG Small/Micro Cap Value Fund f/k/a RobecoWPG Small Cap Value Fund) are incorporated herein by reference to Post-Effective Amendment No. 141 to the Registrants Registration Statement (No. 33-20827) filed on December 28, 2010. |
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(60) |
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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 Registrants Registration Statement (No. 33-20827) filed on October 14, 2011. |
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(61) |
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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 Registrants Registration Statement (No. 33-20827) filed on December 15, 2011. |
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(62) |
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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 Registrants Registration Statement (No. 33-20827) filed on October 29, 2012. |
(63) |
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Articles Supplementary of Registrant (Robeco Boston Partners Global Long/Short Fund) are incorporated herein by reference to Post-Effective Amendment No. 152 to the Registrants Registration Statement (No. 33-20827) filed on March 29, 2013. |
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(64) |
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Articles Supplementary of Registrant (Robeco Boston Partners Long/Short Research Fund Institutional Class) areincorporated herein by reference to Post-Effective Amendment No. 157 to the Registrants Registration Statement (No. 33-20827) filed on October 29, 2013. |
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(65) |
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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 Registrants Registration Statement (No. 33-20827) filed on December 20, 2013. |
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(66) |
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Articles Supplementary of Registrant( ScotiaDynamic U.S. Growth Fund )are incorporated herein by reference to Post-Effective Amendment No. 161 to the Registrants Registration Statement (No. 33-20827) filed on December 27, 2013. |
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(67) |
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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 Registrants Registration Statement (No. 33-20827) filed on June 30, 2014. |
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(68) |
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Articles Supplementary of Registrant ( Abbey Capital Futures Strategy Fund and Altair Smaller Companies Fund ) are incorporated herein by reference to Post-Effective Amendment No. 168 to the Registrants Registration Statement (No. 33-20827) filed on June 30, 2014. |
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(69) |
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Articles Supplementary of Registrant ( Campbell Core Trend Fund ) are incorporated herein by reference to Post-Effective Amendment No. 171 to the Registrants Registration Statement (No. 33-20827) filed on October 16, 2014. |
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(b) |
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By-Laws. |
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(1) |
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By-Laws, as amended, are incorporated herein by reference to Post-Effective Amendment No. 143 to the Registrants Registration Statement (No. 33-20827) filed on October 28, 2011. |
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(c) |
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Instruments Defining Rights of Security Holders. |
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(1) |
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See Articles VI, VII, VIII, IX and XI of Registrants Articles of 1 Incorporation dated February 17, 1988 which are incorporated herein by reference to Registrants Registration Statement (No. 33-20827) filed on March 24, 1988, and refiled electronically with Post-Effective Amendment No. 61 to Registrants Registration Statement filed on October 30, 1998. |
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(2) |
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See Articles II, III, VI, XIII, and XIV of Registrants By-Laws as amended through August 25, 2004, which are incorporated herein by reference to Post-Effective Amendment No. 89 to the Registrants Registration Statement (No. 33-20827) filed on December 30, 2004. |
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(d) |
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Investment Advisory Contracts. |
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(1) |
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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 Registrants Registration Statement (No. 33-20827) filed on October 29, 1998. |
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(2) |
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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 Registrants Registration Statement (No. 33-20827) filed on September 30, 1999. |
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(3) |
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Investment Advisory Agreement (Schneider Value Fund) between Registrant and Schneider Capital Management Company is incorporated herein by reference to Post-Effective Amendment No. 80 to the Registrants Registration Statement (No. 33-20827) filed on November 1, 2002. |
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(4) |
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Investment Advisory and Administration Agreement (Money Market Portfolio ) between Registrant and BlackRock Advisors, LLC is incorporated herein by reference to Post-Effective Amendment No. 143 to the Registrants Registration Statement (No. 33-20827) filed on October 28, 2011. |
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(5) |
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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 Registrants Registration Statement (No. 33-20827) filed on February 27, 2008. |
(6) |
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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 Registrants Registration Statement (No. 33-20827) filed on October 29, 2013. |
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(7) |
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Form of Contractual Fee Waiver Agreement (Schneider Small Cap Value Fund) is incorporated herein by reference to Post-Effective Amendment No. 160 to the Registrants Registration Statement (No. 33-20827) filed on December 23, 2013. |
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(8) |
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Form of Contractual Fee Waiver Agreement (Schneider Value Fund) is incorporated herein by reference to Post-Effective Amendment No. 160 to the Registrants Registration Statement (No. 33-20827) filed on December 23, 2013. |
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(9) |
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Form of Contractual Fee Waiver Agreement (Bogle Investment Management Small Cap Growth Fund) is incorporated herein by reference to Post-Effective Amendment No. 160 to the Registrants Registration Statement (No. 33-20827) filed on December 23, 2013. |
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(10) |
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Form of Contractual Fee Waiver Agreement (Robeco Boston Partners Small Cap Value Fund II, Robeco Boston Partners All Cap Value Fund, Robeco Boston Partners Long/Short Equity Fund, Robeco Boston Partners Long/Short Research Fund, WPG Small/Micro Cap Value Fund, Robeco Boston Partners Global Equity Fund,Robeco Boston Partners International Equity Fund, and Robeco Boston Partners Global Long/Short Fund) is incorporated herein by reference to Post-Effective Amendment No. 160 to the Registrants Registration Statement (No. 33-20827) filed on December 23, 2013. |
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(11) |
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Investment Advisory Agreement (Perimeter Small Cap Growth Fund) between Registrant and Perimeter Capital Management is incorporated herein by reference to Post-Effective Amendment No. 143 to the Registrants Registration Statement (No. 33-20827) filed on October 28, 2011. |
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(12) |
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Form of Contractual Fee Waiver Agreement (Perimeter Small Cap Growth Fund) between Registrant and Perimeter Capital Management is incorporated herein by reference to Post-Effective Amendment No. 160 to the Registrants Registration Statement (No. 33-20827) filed on December 23, 2013. |
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(13) |
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Investment Advisory 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. |
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(14) |
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Contractual Fee Waiver Agreement (S1 Fund) between Registrant and Simple Alternatives, LLC is incorporated herein by reference to Post-Effective Amendment No. 150 to the Registrants Registration Statement (No. 33-20827) filed on December 28, 2012. |
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(15) |
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Investment Sub-Advisory Agreement (S1 Fund) between Simple Alternatives, LLC and Roaring Blue Lion Capital Management, LLC is incorporated herein by reference to Post-Effective Amendment No. 143 to the Registrants Registration Statement (No. 33-20827) filed on October 28, 2011. |
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(16) |
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Investment Sub-Advisory Agreement (S1 Fund) between Simple Alternatives, LLC and Courage Capital Management, LLC is incorporated herein by reference to Post-Effective Amendment No. 143 to the Registrants Registration Statement (No. 33-20827) filed on October 28, 2011. |
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(17) |
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Investment Sub-Advisory Agreement (S1 Fund) between Simple Alternatives, LLC and Starwood Real Estate Securities, LLC is incorporated herein by reference to Post-Effective Amendment No. 143 to the Registrants Registration Statement (No. 33-20827) filed on October 28, 2011. |
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(18) |
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Investment Sub-Advisory Agreement (S1 Fund) between Simple Alternatives, LLC and Maerisland Capital, LLC is incorporated herein by reference to Post-Effective Amendment No. 149 to the Registrants Registration Statement (No. 33-20827) filed on October 29, 2012. |
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(19) |
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Investment Sub-Advisory Agreement ( S1 Fund) between Simple Alternatives, LLC and Garelick Capital Partners, L.P. is incorporated herein by reference to Post-Effective Amendment No. 157 to the Registrants Registration Statement (No. 33-20827) filed on October 29, 2013. |
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(20) |
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Investment Sub-Advisory Agreement ( S1 Fund) between Simple Alternatives, LLC andSonica Capital, LLC is incorporated herein by reference to Post-Effective Amendment No. 157 to the Registrants Registration Statement (No. 33-20827) filed on October 29, 2013. |
(21) |
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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 Registrants Registration Statement (No. 33-20827) filed on December 23, 2013. |
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(22) |
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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. 160 to the Registrants Registration Statement (No. 33-20827) filed on December 23, 2013. |
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(23) |
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Contractual Fee Waiver Agreement between Registrant and BlackRock Advisors, LLC ( Money Market Portfolio ) is incorporated herein by reference to Post-Effective Amendment No. 145 to the Registrants Registration Statement (No. 33-20827) filed on December 30, 2011. |
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(24) |
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Investment Advisory Agreement (RobecoInvestment Funds) between Registrant and Robeco Investment Management, Inc. is incorporated herein by reference to Post-Effective Amendment No. 157 to the Registrants Registration Statement (No. 33-20827) filed on October 29, 2013. |
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(25) |
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Addendum No. 1 to Investment Advisory Agreement ( Robeco Boston Partners Global Long/Short Fund) between Registrant and Robeco Investment Management Inc. is incorporated herein by reference to Post-Effective Amendment No. 160 to the Registrants Registration Statement (No. 33-20827) filed on December 23, 2013. |
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(26) |
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Form of Investment Advisory Agreement ( ScotiaDynamic U.S. Growth Fund ) between Registrant and Scotia Institutional Asset Management US, LTD. is incorporated herein by reference to Post-Effective Amendment No. 161 to the Registrants Registration Statement (No. 33-20827) filed on December 27, 2013. |
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(27) |
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Form of Contractual Fee Waiver Agreement( ScotiaDynamic U.S. Growth Fund ) between Registrant and Scotia Institutional Asset Management US, Ltd.is incorporated herein by reference to Pre-Effective Amendment No. 2 to the Registrants Registration Statement (No. 333-193147) filed on January 31, 2014. |
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(28) |
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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 Registrants Registration Statement (No. 33-20827) filed on June 30, 2014. |
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(29) |
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Form of Contractual Fee Waiver 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 Registrants Registration Statement (No. 33-20827) filed on June 30, 2014. |
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(30) |
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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 Registrants Registration Statement (No. 33-20827) filed on June 30, 2014. |
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(31) |
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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 Registrants Registration Statement (No. 33-20827) filed on June 30, 2014. |
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(32) |
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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 Registrants Registration Statement (No. 33-20827) filed on June 30, 2014. |
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(33) |
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Form of Trading Advisory Agreement (Abbey Capital Futures Strategy Fund) among Abbey Capital Offshore Fund Limited, Abbey Capital Limited andEclipse Capital Management, Inc. is incorporated herein by reference to Post-Effective Amendment No. 168 to the Registrants Registration Statement (No. 33-20827) filed on June 30, 2014. |
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(34) |
|
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 Registrants Registration Statement (No. 33-20827) filed on June 30, 2014. |
(35) |
|
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 Registrants Registration Statement (No. 33-20827) filed on June 30, 2014. |
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(36) |
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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 Registrants Registration Statement (No. 33-20827) filed on June 30, 2014. |
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(37) |
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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 Registrants Registration Statement (No. 33-20827) filed on June 30, 2014. |
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(38) |
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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 Registrants Registration Statement (No. 33-20827) filed on June 30, 2014. |
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(39) |
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Addendum No. 2 to Investment Advisory Agreement ( RobecoWPG Small/Micro Cap Fund) between Registrant and Robeco Investment Management Inc. is incorporated herein by reference to Post-Effective Amendment No. 168 to the Registrants Registration Statement (No. 33-20827) filed on June 30, 2014. |
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(40) |
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Contractual Fee Waiver Agreement (Robeco Boston Partners Small Cap Value Fund II and RobecoWPG Small/Micro Cap Value Fund) is incorporated herein by reference to Post-Effective Amendment No. 168 to the Registrants Registration Statement (No. 33-20827) filed on June 30, 2014. |
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(41) |
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Form of Investment Advisory Agreement ( Altair Smaller Companies Fund ) between Registrant and Altair Advisers LLC is filed herewith. |
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(42) |
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Form of Contractual Fee Waiver Agreement ( Altair Smaller Companies Fund ) between Registrant and Altair Advisers LLC is filed herewith. |
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(43) |
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Form of Investment Advisory Agreement ( Campbell Core Trend Fund ) between Registrant and Campbell & Company Investment Adviser LLC is incorporated herein by reference to Post-Effective Amendment No. 171 to the Registrants Registration Statement (No. 33-20827) filed on October 16, 2014. |
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(44) |
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Contractual Fee Waiver Agreement ( Campbell Core Trend Fund ) between Registrant and Campbell & Company Investment Adviser LLC to be filed by amendment. |
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(45) |
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Form of Investment Sub-Advisory Agreement (Altair Smaller Companies Fund) among Registrant, Altair Advisers LLC and Aperio Group, LLC is filed herewith. |
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(46) |
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Form of Investment Sub-Advisory Agreement (Altair Smaller Companies Fund) among Registrant, Altair Advisers LLC and Driehaus Capital Management LLC is filed herewith. |
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(47) |
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Form of Investment Sub-Advisory Agreement (Altair Smaller Companies Fund) among Registrant, Altair Advisers LLC and Granite Investment Partners, LLC is filed herewith. |
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(48) |
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Form of Investment Sub-Advisory Agreement (Altair Smaller Companies Fund) among Registrant, Altair Advisers LLC and Pacific Ridge Capital Partners, LLC is filed herewith. |
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(49) |
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Form of Investment Sub-Advisory Agreement (Altair Smaller Companies Fund) among Registrant, Altair Advisers LLC and Pier Capital, LLC is filed herewith. |
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(50) |
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Form of Investment Sub-Advisory Agreement (Altair Smaller Companies Fund) among Registrant, Altair Advisers LLC and River Road Asset Management, LLC is filed herewith. |
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(e) |
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Underwriting Contracts. |
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(1) |
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Distribution Agreement between Registrant and Foreside Funds Distributors LLC ( f/k/aPFPC Distributors, Inc.) dated as of January 2, 2001 is incorporated herein by reference to Post-Effective Amendment No. 73 to the Registrants Registration Statement (No. 33-20827) filed on March 15, 2001. |
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(2) |
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Distribution Agreement Supplement (Boston Partners All-Cap Value Fund - Investor Class) between Registrant and Foreside Funds Distributors LLC ( f/k/aPFPC Distributors, Inc.) is incorporated herein by reference to Post-Effective Amendment No. 80 to the Registrants Registration Statement (No. 33-20827) filed on November 1, 2002. |
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(3) |
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Distribution Agreement Supplement (Boston Partners All-Cap Value Fund - Institutional Class ) between Registrant and Foreside Funds Distributors LLC ( f/k/aPFPC Distributors, Inc.) is incorporated herein by reference to Post-Effective Amendment No. 80 to the Registrants Registration Statement (No. 33-20827) filed on November 1, 2002. |
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(4) |
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Distribution Agreement Supplement (Schneider Value Fund) between Registrant and Foreside Funds Distributors LLC ( f/k/aPFPC Distributors, Inc.) is incorporated herein by reference to Post-Effective Amendment No. 80 to the Registrants Registration Statement (No. 33-20827) filed on November 1, 2002. |
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(5) |
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Distribution Agreement Supplement (RobecoWPG Small/Micro Cap Value Fund f/k/a RobecoWPG Small Cap Value Fund - Institutional Class) between Registrant and Foreside Funds Distributors LLC ( f/k/aPFPC Distributors, Inc.) is incorporated herein by reference to Post-Effective Amendment No. 101 to the Registrants Registration Statement (No. 33-20827) filed on December 29, 2005. |
(6) |
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Distribution Agreement Supplement (Free Market U.S. Equity Fund) between Registrant and Foreside Funds Distributors LLC ( f/k/aPFPC Distributors, Inc.) is incorporated herein by reference to Post-Effective Amendment No. 126 to the Registrants Registration Statement (No. 33-20827) filed on October 24, 2008. |
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(7) |
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Distribution Agreement Supplement ( Free Market International Equity Fund ) between Registrant and Foreside Funds Distributors LLC ( f/k/aPFPC Distributors, Inc.) is incorporated herein by reference to Post-Effective Amendment No. 126 to the Registrants Registration Statement (No. 33-20827) filed on October 24, 2008. |
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(8) |
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Distribution Agreement Supplement ( Free Market Fixed Income Fund ) between Registrant and Foreside Funds Distributors LLC ( f/k/aPFPC Distributors, Inc.) is incorporated herein by reference to Post-Effective Amendment No. 126 to the Registrants Registration Statement (No. 33-20827) filed on October 24, 2008. |
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(9) |
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Distribution Agreement Supplement (Perimeter Small Cap Growth Fund) between Registrant and Foreside Funds Distributors LLC ( f/k/aPFPC Distributors, Inc.) is incorporated herein by reference to Post-Effective Amendment No. 157 to the Registrants Registration Statement (No. 33-20827) filed on October 29, 2013. |
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(10) |
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Distribution Agreement between Registrant and Foreside Funds Distributors LLC ( f/k/aBNY Mellon Distributors, Inc.) is incorporated herein by reference to Post-Effective Amendment No. 136 to the Registrants Registration Statement (No. 33-20827) filed on August 4, 2010. |
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(11) |
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Distribution Agreement Supplement (S1 Fund and Robeco Boston Partners Long/Short Research Fund) between Registrant and Foreside Funds Distributors LLC ( f/k/aBNY Mellon Distributors, Inc.) is incorporated herein by reference to Post-Effective Amendment No. 141 to the Registrants Registration Statement (No. 33-20827) filed on December 28, 2010. |
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(12) |
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Distribution Agreement Supplement (Robeco Boston Partners Global Equity Fund and Robeco Boston Partners International Equity Fund) between Registrant and Foreside Funds Distributors LLC ( f/k/aBNY Mellon Distributors, Inc.) is incorporated herein by reference to Post-Effective Amendment No. 157 to the Registrants Registration Statement (No. 33-20827) filed on October 29, 2013. |
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(13) |
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Distribution Agreement Supplement (Summit Global Investments U.S. Low Volatility Equity Fund) between Registrant and Foreside Funds Distributors LLC ( f/k/aBNY Mellon Distributors, Inc.) is incorporated herein by reference to Post-Effective Amendment No. 157 to the Registrants Registration Statement (No. 33-20827) filed on October 29, 2013. |
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(14) |
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Distribution Agreement between Registrant and Foreside Funds Distributors LLC dated March 31, 2012 is incorporated herein by reference to Post-Effective Amendment No. 149 to the Registrants Registration Statement (No. 33-20827) filed on October 29, 2012. |
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(15) |
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Form of Distribution Agreement Supplement ( Robeco Boston Partners Global Long/Short Fund , Matson Money U.S. Equity VI Portfolio, Matson Money International VI Equity Portfolio, Matson Money Fixed Income VI Portfolio ) between Registrant and Foreside Funds Distributors LLC is incorporated herein by reference to Post-Effective Amendment No. 160 to the Registrants Registration Statement (No. 33-20827) filed on December 23, 2013. |
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(16) |
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Form of Distribution Agreement Supplement ( ScotiaDynamic U.S. Growth Fund ) between Registrant and Foreside Funds Distributors LLC is incorporated herein by reference to Post-Effective Amendment No. 161 to the Registrants Registration Statement (No. 33-20827) filed on December 27, 2013. |
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(17) |
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Form of Distribution Agreement Supplement ( Abbey Capital Futures Strategy Fund ) between Registrant and Foreside Funds Distributors LLCis incorporated herein by reference to Post-Effective Amendment No. 167 to the Registrants Registration Statement (No. 33-20827) filed on April 16, 2014. |
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(18) |
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Distribution Agreement Supplement ( Altair Smaller Companies Fund ) between Registrant and Foreside Funds Distributors LLC is filed herewith. |
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(19) |
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Form of Distribution Agreement Supplement ( Campbell Core Trend Fund ) between Registrant and Foreside Funds Distributors LLC is incorporated herein by reference to Post-Effective Amendment No. 171 to the Registrants Registration Statement (No. 33-20827) filed on October 16, 2014. |
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(f) |
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Bonus or Profit Sharing Contracts. |
(1) |
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Form of Deferred Compensation Plan is incorporated herein by reference to Post-Effective Amendment No. 160 to the Registrants Registration Statement (No. 33-20827) filed on December 23, 2013. |
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(2) |
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Form of Deferred Compensation Agreement is incorporated herein by reference to Post-Effective Amendment No. 160 to the Registrants Registration Statement (No. 33-20827) filed on December 23, 2013. |
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(g) |
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Custodian Agreements. |
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(1) |
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Custody Agreement dated July 18, 2011 between Registrant and The Bank of New York Mellon is incorporated herein by reference to Post-Effective Amendment No. 143 to the Registrants Registration Statement (No. 33-20827) filed on October 28, 2011. |
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(2) |
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Foreign Custody Manager Agreement dated July 18, 2011 between Registrant and The Bank of New York Mellon is incorporated herein by reference to Post-Effective Amendment No. 143 to the Registrants Registration Statement (No. 33-20827) filed on October 28, 2011. |
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(3) |
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Form of Amended and Restated Schedule II to the Custody Agreement ( Robeco Boston Partners Global Equity Fund and Robeco Boston Partners International Equity Fund ) is incorporated herein by reference to Post-Effective Amendment No. 143 to the Registrants Registration Statement (No. 33-20827) filed on October 28, 2011. |
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(4) |
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Form of Amended and Restated Schedule II to the Custody Agreement ( Summit Global Investments U.S. Low Volatility Equity Fund ) is incorporated herein by reference to Post-Effective Amendment No. 145 to the Registrants Registration Statement (No. 33-20827) filed on December 30, 2011. |
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(5) |
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Form of Amended and Restated Schedule II to the Custody Agreement ( Robeco Boston Partners Global Long/Short Fund ) are incorporated herein by reference to Post-Effective Amendment No. 160 to the Registrants Registration Statement (No. 33-20827) filed on December 23, 2013. |
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(6) |
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Form of Amended and Restated Schedule II to the Custody Agreement ( Matson Money U.S. Equity Portfolio, Matson Money International Equity Portfolio, Matson Money Fixed Income Portfolio ) is incorporated herein by reference to Post-Effective Amendment No. 160 to the Registrants Registration Statement (No. 33-20827) filed on December 23, 2013. |
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(7) |
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Form of Amended and Restated Schedule II to the Custody Agreement ( ScotiaDynamic U.S. Growth Fund ) is incorporated herein by reference to Pre-Effective Amendment No. 2 to the Registrants Registration Statement (No. 333-193147) filed on January 31, 2014. |
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(h) |
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Other Material Contracts. |
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(1) |
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Transfer Agency Agreement (Sansom Street) between Registrant and Provident Financial Processing Corporation, dated as of August 16, 1988 is incorporated herein by reference to Post-Effective Amendment No. 1 to Registrants Registration Statement (No. 33-20827) filed on March 23, 1989, and refiled electronically with Post-Effective Amendment No. 61 to Registrants Registration Statement filed on October 30, 1998. |
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(2) |
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Shareholder Servicing Agreement (Sansom Street Money Market) is incorporated herein by reference to Post-Effective Amendment No. 1 to Registrants Registration Statement (No. 33-20827) filed on March 23, 1989, and refiled electronically with Post-Effective Amendment No. 61 to Registrants Registration Statement filed on October 30, 1998. |
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(3) |
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Shareholder Servicing Agreement (Sansom Street Government Obligations Money Market) is incorporated herein by reference to Post-Effective Amendment No. 1 to Registrants Registration Statement (No. 33-20827) filed on March 23, 1989, and refiled electronically with Post-Effective Amendment No. 61 to Registrants Registration Statement filed on October 30, 1998. |
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(4) |
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Shareholder Services Plan (Sansom Street Money Market) is incorporated herein by reference to Post-Effective Amendment No. 1 to Registrants Registration Statement (No. 33-20827) filed on March 23, 1989, and refiled electronically with Post-Effective Amendment No. 61 to Registrants Registration Statement filed on October 30, 1998. |
(5) |
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Transfer Agency Agreement (Bedford Money Market) between Registrant and Provident Financial Processing Corporation, dated as of August 16, 1988 is incorporated herein by reference to Post-Effective Amendment No. 1 to Registrants Registration Statement (No. 33-20827) filed on March 23, 1989, and refiled electronically with Post-Effective Amendment No. 61 to Registrants Registration Statement filed on October 30, 1998. |
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(6) |
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Transfer Agency Agreement and Supplements (Bradford, Beta, Gamma, Delta, Epsilon, Zeta, Eta and Theta) between Registrant and Provident Financial Processing Corporation dated as of November 5, 1991 is incorporated herein by reference to Post-Effective Amendment No. 7 to the Registrants Registration Statement (No. 33-20827) filed on July 15, 1992, and refiled electronically with Post-Effective Amendment No. 61 to Registrants Registration Statement filed on October 30, 1998. |
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(7) |
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Transfer Agency and Service Agreement between Registrant and State Street Bank and Trust Company and PNC Global Investment Servicing (U.S.) Inc. (f/k/a PFPC Inc.) dated February 1, 1995 is incorporated herein by reference to Post-Effective Amendment No. 28 to the Registrants Registration Statement (No. 33-20827) filed on October 6, 1995. |
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(8) |
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Supplement to Transfer Agency and Service Agreement between Registrant, State Street Bank and Trust Company, Inc. and PNC Global Investment Servicing (U.S.) Inc. (f/k/a PFPC Inc.) dated April 10, 1995 is incorporated herein by reference to Post-Effective Amendment No. 28 to the Registrants Registration Statement (No. 33-20827) filed on October 6, 1995. |
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(9) |
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Amended and Restated Credit Agreement dated December 15, 1994 is incorporated herein by reference to Post-Effective Amendment No. 29 to the Registrants Registration Statement (No. 33-20827) filed on October 25, 1995. |
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(10) |
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Transfer Agreement and Service Agreement between Registrant and State Street Bank and Trust Company is incorporated herein by reference to Post-Effective Amendment No. 37 to the Registrants Registration Statement (No. 33-20827) filed on July 30, 1996. |
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(11) |
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Transfer Agency Agreement Supplement (Boston Partners Mid Cap Value Fund - Institutional Class) between Registrant and BNY Mellon Asset Servicing (US) Inc. (f/k/a PFPC Inc.) is incorporated herein by reference to Post-Effective Amendment No. 46 to the Registrants Registration Statement (No. 33-20827) filed on September 25, 1997. |
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(12) |
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Transfer Agency Agreement Supplement (Boston Partners Mid Cap Value Fund - Investor Class) between Registrant and BNY Mellon Asset Servicing (US) Inc. (f/k/a PFPC Inc.) is incorporated herein by reference to Post-Effective Amendment No. 46 to the Registrants Registration Statement (No. 33-20827) filed on September 25, 1997. |
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(13) |
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Administration and Accounting Services Agreement (Boston Partners Mid Cap Value Fund) between Registrant and BNY Mellon Asset Servicing (US) Inc. (f/k/a PFPC Inc.) dated, May 30, 1997 is incorporated herein by reference to Post-Effective Amendment No. 46 to the Registrants Registration Statement (No. 33-20827) filed on September 25, 1997. |
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(14) |
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Administration and Accounting Services Agreement (Schneider Small Cap Value Fund) between Registrant and BNY Mellon Asset Servicing (US) Inc. (f/k/a PFPC Inc.) is incorporated herein by reference to Post-Effective Amendment No. 60 to the Registrants Registration Statement (No. 33-20827) filed on October 29, 1998. |
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(15) |
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Transfer Agency Agreement Supplement (Schneider Small Cap Value Fund) between Registrant and BNY Mellon Asset Servicing (US) Inc. (f/k/a PFPC Inc.) is incorporated herein by reference to Post-Effective Amendment No. 60 to the Registrants Registration Statement (No. 33-20827) filed on October 29, 1998. |
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(16) |
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Transfer Agency Agreement Supplement (Boston Partners Small Cap Value Fund II (formerly Micro Cap Value) - Institutional Class) between Registrant and BNY Mellon Asset Servicing (US) Inc. (f/k/a PFPC Inc.) is incorporated herein by reference to Post-Effective Amendment No. 60 to the Registrants Registration Statement (No. 33-20827) filed on October 29, 1998. |
(17) |
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Transfer Agency Agreement Supplement (Boston Partners Small Cap Value Fund II (formerly Micro Cap Value) - Investor Class) between Registrant and BNY Mellon Asset Servicing (US) Inc. (f/k/a PFPC Inc.) is incorporated herein by reference to Post-Effective Amendment No. 60 to the Registrants Registration Statement (No. 33-20827) filed on October 29, 1998. |
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(18) |
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Administration and Accounting Services Agreement (Boston Partners Small Cap Value Fund II (formerly Boston Partners Micro Cap Value Fund)) between Registrant and BNY Mellon Asset Servicing (US) Inc. (f/k/a PFPC Inc.) is incorporated herein by reference to Post-Effective Amendment No. 60 to the Registrants Registration Statement (No. 33-20827) filed on October 29, 1998. |
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(19) |
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Administrative and Accounting Services Agreement (Boston Partners Long/Short Equity Fund (formerly Market Neutral) - Institutional and Investor Classes) between Registrant and BNY Mellon Asset Servicing (US) Inc. (f/k/a PFPC Inc.) is incorporated herein by reference to Post-Effective Amendment No. 63 to the Registrants Registration Statement (No. 33-20827) filed on December 14, 1998. |
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(20) |
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Transfer Agency Agreement Supplement (Boston Partners Long/Short Equity Fund (formerly Market Neutral) - Institutional and Investor Classes) between Registrant and BNY Mellon Asset Servicing (US) Inc. (f/k/a PFPC Inc.) is incorporated herein by reference to Post-Effective Amendment No. 63 to the Registrants Registration Statement (No. 33-20827) filed on December 14, 1998. |
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(21) |
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Form of Transfer Agency Agreement Supplement (Boston Partners Fund (formerly Long-Short Equity)) between Registrant and BNY Mellon Asset Servicing (US) Inc. (f/k/a PFPC Inc.) is incorporated herein by reference to Post-Effective Amendment No. 65 to the Registrants Registration Statement (No. 33-20827) filed on May 19, 1999. |
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(22) |
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Form of Administration and Accounting Services Agreement (Boston Partners Fund (formerly Long-Short Equity)) between Registrant and BNY Mellon Asset Servicing (US) Inc. (f/k/a PFPC Inc.) is incorporated herein by reference to Post-Effective Amendment No. 65 to the Registrants Registration Statement (No. 33-20827) filed on May 19, 1999. |
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(23) |
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Transfer Agency Agreement Supplement (Bogle Investment Management Small Cap Growth Fund) between Registrant and BNY Mellon Asset Servicing (US) Inc. (f/k/a PFPC Inc.) is incorporated herein by reference to Post-Effective Amendment No. 67 to the Registrants Registration Statement (No. 33-20827) filed on September 30, 1999. |
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(24) |
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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 Registrants Registration Statement (No. 33-20827) filed on September 30, 1999. |
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(25) |
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Agreement between E*TRADE Group, Inc., Registrant and Registrants principal underwriter is incorporated herein by reference to Post-Effective Amendment No. 69 to the Registrants Registration Statement (No. 33-20827) filed on December 1, 1999. |
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(26) |
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Administration and Accounting Services Agreement (Bogle Investment Management Small Cap Growth Fund) between Registrant and BNY Mellon Asset Servicing (US) Inc. (f/k/a PFPC Inc.) is incorporated herein by reference to Post-Effective Amendment No. 69 to the Registrants Registration Statement (No. 33-20827) filed on December 1, 1999. |
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(27) |
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Form of Transfer Agency Supplement (Boston Partners All-Cap Value Fund) between Registrant and BNY Mellon Asset Servicing (US) Inc. (f/k/a PFPC Inc.) is incorporated herein by reference to Post-Effective Amendment No. 80 to the Registrants Registration Statement (No. 33-20827) filed on November 1, 2002. |
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(28) |
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Form of Administration and Accounting Services Agreement (Boston Partners All-Cap Value Fund) between Registrant and BNY Mellon Asset Servicing (US) Inc. (f/k/a PFPC Inc.) is incorporated herein by reference to Post-Effective Amendment No. 77 to the Registrants Registration Statement (No. 33-20827) filed on May 15, 2002. |
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(29) |
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Transfer Agency Supplement (Schneider Value Fund) between Registrant and BNY Mellon Asset Servicing (US) Inc. (f/k/a PFPC Inc.) is incorporated herein by reference to Post-Effective Amendment No. 80 to the Registrants Registration Statement (No. 33-20827) filed on November 1, 2002. |
(30) |
|
Form of Administration and Accounting Services Agreement (Schneider Value Fund) between Registrant and BNY Mellon Asset Servicing (US) Inc. (f/k/a PFPC Inc.) is incorporated herein by reference to Post-Effective Amendment No. 78 to the Registrants Registration Statement (No. 33-20827) filed on May 16, 2002. |
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(31) |
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Shareholder Servicing Agreement (Bogle Investment Management Small Cap Growth Fund) is incorporated herein by reference to Post-Effective Amendment No. 80 to the Registrants Registration Statement (No. 33-20827) filed on November 1, 2002. |
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(32) |
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Form of Transfer Agency Agreement Supplement (Customer Identification Program) between Registrant and BNY Mellon Asset Servicing (US) Inc. (f/k/a PFPC Inc.) is incorporated herein by reference to Post-Effective Amendment No. 84 to the Registrants Registration Statement (No. 33-20827) filed on December 29, 2003. |
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(33) |
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Regulatory Administration Services Agreement between Registrant and BNY Mellon Asset Servicing (US) Inc. (f/k/a PFPC Inc.) is incorporated herein by reference to Post-Effective Amendment No. 84 to the Registrants Registration Statement (No. 33-20827) filed on December 29, 2003. |
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(34) |
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Administration and Accounting Services Agreement (RobecoWPG Core Bond Fund, RobecoWPG Large Cap Growth Fund, and RobecoWPG Tudor Fund) between Registrant and BNY Mellon Asset Servicing (US) Inc. (f/k/a PFPC Inc.) is incorporated herein by reference to Post-Effective Amendment No. 100 to the Registrants Registration Statement (No. 33-20827) filed on November 25, 2005. |
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(35) |
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Transfer Agency Agreement Supplement (RobecoWPG Small/Micro Cap Value Fund f/k/a RobecoWPG Tudor Fund) between Registrant and BNY Mellon Asset Servicing (US) Inc. (f/k/a PFPC Inc.) is incorporated herein by reference to Post-Effective Amendment No. 100 to the Registrants Registration Statement (No. 33-20827) filed on November 25, 2005. |
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(36) |
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Non-12b-1 Shareholder Services Plan and Related Form of Shareholder Servicing Agreement (RobecoWPG Small/Micro Cap Value Fund f/k/a RobecoWPG Tudor Fund Institutional Class) is incorporated herein by reference to Post-Effective Amendment No. 100 to the Registrants Registration Statement (No. 33-20827) filed on November 25, 2005. |
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(37) |
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Delegation Agreement (Money Market Portfolio) among Registrant, BNY Mellon Investment Servicing (US) Inc. (f/k/a PFPC Inc.) , BlackRock Institutional Management Corp. is incorporated herein by reference to Post-Effective Amendment No. 149 to the Registrants Registration Statement (No. 33-20827) filed on October 29, 2012. |
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(38) |
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Transfer Agency Agreement Supplement (Free Market U.S. Equity Fund ) is incorporated herein by reference to Post-Effective Amendment No. 126 to the Registrants Registration Statement (No. 33-20827) filed on October 24, 2008. |
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(39) |
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Transfer Agency Agreement Supplement (Free Market International Equity Fund ) is incorporated herein by reference to Post-Effective Amendment No. 126 to the Registrants Registration Statement (No. 33-20827) filed on October 24, 2008. |
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(40) |
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Transfer Agency Agreement Supplement (Free Market Fixed Income Fund ) is incorporated herein by reference to Post-Effective Amendment No. 126 to the Registrants Registration Statement (No. 33-20827) filed on October 24, 2008. |
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(41) |
|
Amended Schedule A to Regulatory Administration Services Agreement (Free Market U.S. Equity Fund, Free Market International Equity Fund, Free Market Fixed-Income Fund ) between Registrant and BNY Mellon Asset Servicing (US) Inc. (f/k/a PFPC Inc.) is incorporated herein by reference to Post-Effective Amendment No. 126 to the Registrants Registration Statement (No. 33-20827) filed on October 24, 2008. |
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(42) |
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Form of Transfer Agency Agreement Supplement (Red Flags Amendment) between Registrant and BNY Mellon Asset Servicing (US) Inc. (f/k/a PNC Global Investment Servicing (U.S.) Inc . ) is incorporated herein by reference to Post-Effective Amendment No. 127 to the Registrants Registration Statement (No. 33-20827) filed on December 29, 2008. |
(43) |
|
Transfer Agency Agreement Supplement (Perimeter Small Cap Growth Fund) between Registrant and BNY Mellon Asset Servicing (US) Inc. (f/k/aPNC Global Investment Servicing (U.S.) Inc.) is incorporated herein by reference to Post-Effective Amendment No. 145 to the Registrants Registration Statement (No. 33-20827) filed on December 30, 2011. |
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(44) |
|
Administration and Accounting Services Agreement (Perimeter Small Cap Growth Fund) is incorporated herein by reference to Post-Effective Amendment No. 141 to the Registrants Registration Statement (No. 33-20827) filed on December 28, 2010. |
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(45) |
|
Amended Schedule A to the Regulatory Administration Services Agreement ( Perimeter Small Cap Growth Fund ) between Registrant and BNY Mellon Asset Servicing (US) Inc. (f/k/aPNC Global Investment Servicing (U.S.) Inc.) is incorporated herein by reference to Post-Effective Amendment No. 141 to the Registrants Registration Statement (No. 33-20827) filed on December 28, 2010. |
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(46) |
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Administrative and Accounting Services Agreement (S1 Fund) between Registrant and BNY Mellon Investment Servicing (U.S.) Inc. (f/k/aPNC Global Investment Servicing (U.S.) Inc.) is incorporated herein by reference to Post-Effective Amendment No. 145 to the Registrants Registration Statement (No. 33-20827) filed on December 30, 2011. |
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(47) |
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Transfer Agency Agreement Supplement (S1 Fund) between Registrant and BNY Mellon Investment Servicing (U.S.) Inc . (f/k/a PNC Global Investment Servicing (U.S.) Inc.) is incorporated herein by reference to Post-Effective Amendment No. 145 to the Registrants Registration Statement (No. 33-20827) filed on December 30, 2011. |
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(48) |
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Amended Schedule A to Regulatory Administration Services Agreement (S1 Fund) between Registrant and BNY Mellon Investment Servicing (U.S.) Inc. ( f/k/a PNC Global Investment Servicing (U.S.) Inc.) is incorporated herein by reference to Post-Effective Amendment No. 145 to the Registrants Registration Statement (No. 33-20827) filed on December 30, 2011. |
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(49) |
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Administration and Accounting Services Agreement (Robeco Boston Partners Long/Short Research Fund) between Registrant and BNY Mellon Investment Servicing (U.S.) Inc. is incorporated herein by reference to Post-Effective Amendment No. 145 to the Registrants Registration Statement (No. 33-20827) filed on December 30, 2011. |
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(50) |
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Transfer Agency Agreement Supplement (Robeco Boston Partners Long/Short Research Fund) between Registrant and BNY Mellon Investment Servicing (U.S.) Inc. is incorporated herein by reference to Post-Effective Amendment No. 145 to the Registrants Registration Statement (No. 33-20827) filed on December 30, 2011. |
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(51) |
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Amended Schedule A to Regulatory Administration Services Agreement (Robeco Boston Partners Long/Short Research Fund) between Registrant and BNY Mellon Investment Servicing (U.S.) Inc. is incorporated herein by reference to Post-Effective Amendment No. 145 to the Registrants Registration Statement (No. 33-20827) filed on December 30, 2011. |
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(52) |
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Form of Money Market Fund Services Amendment to Delegation Agreement (Money Market Portfolio) between Registrant, BNY Mellon Investment Servicing (US) Inc., and BlackRock Advisors, LLC (f/k/a BlackRock Institutional Management Corp.) is incorporated herein by reference to Post-Effective Amendment No. 149 to the Registrants Registration Statement (No.33-20827 ) filed on October 29, 2012. |
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(53) |
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Transfer Agency Agreement Supplement (Robeco Boston Global Equity Fund and Robeco Boston Partners International Equity Fund) between Registrant and BNY Mellon Investment Servicing (U.S.) Inc. is incorporated herein by reference to Post-Effective Amendment No. 149 to the Registrants Registration Statement (No. 33-20827) filed on October 29, 2012. |
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(54) |
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Amended Schedule A to Regulatory Administration Services Agreement (Robeco Boston Global Equity Fund and Robeco Boston Partners International Equity Fund) between Registrant and BNY Mellon Investment Servicing (U.S.) Inc. is incorporated herein by reference to Post-Effective Amendment No. 149 to the Registrants Registration Statement (No. 33-20827) filed on October 29, 2012. |
(55) |
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Administration and Accounting Services Agreement (Robeco Boston Global Equity Fund and Robeco Boston Partners International Equity Fund) between Registrant and BNY Mellon Investment Servicing (U.S.) Inc. is incorporated herein by reference to Post-Effective Amendment No. 149 to the Registrants Registration Statement (No. 33-20827) filed on October 29, 2012. |
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(56) |
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Administration and Accounting Services Agreement (Robeco Boston Partners International Equity Fund) between Registrant and BNY Mellon Investment Servicing (U.S.) Inc. is incorporated herein by reference to Post-Effective Amendment No. 149 to the Registrants Registration Statement (No. 33-20827) filed on October 29, 2012. |
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(57) |
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Transfer Agency Agreement Supplement (Summit Global Investments U.S. Low Volatility Equity Fund) between Registrant and BNY Mellon Investment Servicing (U.S.) Inc. is incorporated herein by reference to Post-Effective Amendment No. 149 to the Registrants Registration Statement (No. 33-20827) filed on October 29, 2012. |
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(58) |
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Amended Schedule A to Regulatory Administration Services Agreement (Summit Global Investments U.S. Low Volatility Equity Fund) between Registrant and BNY Mellon Investment Servicing (U.S.) Inc. is incorporated herein by reference to Post-Effective Amendment No. 149 to the Registrants Registration Statement (No. 33-20827) filed on October 29, 2012. |
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(59) |
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Administration and Accounting Services Agreement (Summit Global Investments U.S. Low Volatility Equity Fund) between Registrant and BNY Mellon Investment Servicing (U.S.) Inc. is incorporated herein by reference to Post-Effective Amendment No. 149 to the Registrants Registration Statement (No. 33-20827) filed on October 29, 2012. |
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(60) |
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Form of Amendment No. 5 to Transfer Agency Agreement ( Robeco Boston Partners Global Equity Fund, Robeco Boston Partners International Equity Fund, RobecoWPG Small/Micro Cap Value Fund, Robeco Boston Partners Long/Short Research Fund, Robeco Boston Partners Long/Short Equity Fund, Robeco Boston Partners All-Cap Value Fund and Robeco Boston Partners Small Cap Value Fund II) between Registrant and BNY Mellon Investment Servicing (US) Inc. is incorporated herein by reference to Post-Effective Amendment No. 149 to the Registrants Registration Statement (No. 33-20827) filed on October 29, 2012. |
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(61) |
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Form of Money Market Fund Services Amendment to Delegation Agreement (Money Market Portfolio) between Registrant, BNY Mellon Investment Servicing (US) Inc., and BlackRock Advisors, LLC (f/k/a BlackRock Institutional Management Corp.) is incorporated herein by reference to Post-Effective Amendment No. 141 to the Registrants Registration Statement (No. 33-20827) filed on December 28, 2010. |
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(62) |
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Form of Transfer Agency Agreement Supplement (Robeco Boston Partners Global Long/Short Fund) between Registrant and BNY Mellon Investment Servicing (U.S.) Inc. is incorporated hereby by reference to Post-Effective Amendment No. 160 to the Registrants Registration Statement (No. 33-20827) filed on December 23, 2013. |
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(63) |
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Form of Amended Schedule A to Regulatory Administration Services Agreement (Robeco Boston Global Long/Short Fund) between Registrant and BNY Mellon Investment Servicing (U.S.) Inc. is incorporated hereby by reference to Post-Effective Amendment No. 160 to the Registrants Registration Statement (No. 33-20827) filed on December 23, 2013. |
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(64) |
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Form of Administration and Accounting Services Agreement (Robeco Boston Global Long/Short Fund) between Registrant and BNY Mellon Investment Servicing (U.S.) Inc. is incorporated hereby by reference to Post-Effective Amendment No. 160 to the Registrants Registration Statement (No. 33-20827) filed on December 23, 2013. |
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(65) |
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Form of Transfer Agency Agreement Supplement (Matson Money U.S. Equity Portfolio, Matson Money International Equity Portfolio, Matson Money Fixed Income Portfolio) between Registrant and BNY Mellon Investment Servicing (U.S.) Inc. is incorporated hereby by reference to Post-Effective Amendment No. 160 to the Registrants Registration Statement (No. 33-20827) filed on December 23, 2013. |
(66) |
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Form of Amended Schedule A to Regulatory Administration Services Agreement (Matson Money U.S. Equity Portfolio, Matson Money International Equity Portfolio, Matson Money Fixed Income Portfolio) between Registrant and BNY Mellon Investment Servicing (U.S.) Inc. is incorporated hereby by reference to Post-Effective Amendment No. 160 to the Registrants Registration Statement (No. 33-20827) filed on December 23, 2013. |
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(67) |
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Form of Administration and Accounting Services Agreement (Matson Money U.S. Equity Portfolio, Matson Money International Equity Portfolio, Matson Money Fixed Income Portfolio) between Registrant and BNY Mellon Investment Servicing (U.S.) Inc. is incorporated hereby by reference to Post-Effective Amendment No. 160 to the Registrants Registration Statement (No. 33-20827) filed on December 23, 2013. |
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(68) |
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Form of Administration and Accounting Services Agreement (ScotiaDynamic U.S. Growth Fund) is incorporated herein by reference to Pre-Effective Amendment No. 2 to the Registrants Registration Statement (No. 333-193147) filed on January 31, 2014. |
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(69) |
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Form of Transfer Agency Agreement Supplement ( ScotiaDynamic U.S. Growth Fund ) between Registrant and BNY Mellon Investment Servicing (U.S.) Inc. is incorporated herein by reference to Post-Effective Amendment No. 161 to the Registrants Registration Statement (No. 33-20827) filed on December 27, 2013. |
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(70) |
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Form of Amended Schedule A to Regulatory Administration Services Agreement ( ScotiaDynamic U.S. GrowthFund ) between Registrant and BNY Mellon Investment Servicing (U.S.) Inc. is incorporated herein by reference to Post-Effective Amendment No. 161 to the Registrants Registration Statement (No. 33-20827) filed on December 27, 2013. |
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(71) |
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Services Plan for Class I Shares and Form of Servicing Agreement ( ScotiaDynamic U.S. Growth Fund ) are incorporated herein by reference to Post-Effective Amendment No. 161 to the Registrants Registration Statement (No. 33-20827) filed on December 27, 2013. |
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(72) |
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Services Plan for Class II Shares and Form of Servicing Agreement ( ScotiaDynamic U.S. Growth Fund ) are incorporated herein by reference to Post-Effective Amendment No. 161 to the Registrants Registration Statement (No. 33-20827) filed on December 27, 2013. |
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(73) |
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Agreement and Plan of Reorganization dated as of March 14, 2014 ( ScotiaDynamic U.S. Growth Fund )is incorporated herein by reference to Post-Effective Amendment No. 165 to the Registrants Registration Statement (No. 33-20827) filed on March 21, 2014. |
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(74) |
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Form of Transfer Agency Agreement Supplement ( Abbey Capital Futures Strategy Fund ) between Registrant and BNY Mellon Investment Servicing (U.S.) Inc. is incorporated herein by reference to Post-Effective Amendment No. 167 to the Registrants Registration Statement (No. 33-20827) filed on April 16, 2014. |
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(75) |
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Form of Amended Schedule A to Regulatory Administration Services Agreement ( Abbey Capital Futures Strategy Fund) between Registrant and BNY Mellon Investment Servicing (U.S.) Inc. is incorporated herein by reference to Post-Effective Amendment No. 167 to the Registrants Registration Statement (No. 33-20827) filed on April 16, 2014. |
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(76) |
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Form of Transfer Agency Agreement Supplement ( Altair Smaller Companies Fund ) between Registrant and BNY Mellon Investment Servicing (U.S.) Inc. is filed herewith. |
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(77) |
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Form of Transfer Agency Agreement Supplement ( Campbell Core Trend Fund ) between Registrant and BNY Mellon Investment Servicing (U.S.) Inc. is incorporated herein by reference to Post-Effective Amendment No. 171 to the Registrants Registration Statement (No. 33-20827) filed on October 16, 2014. |
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(78) |
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Form of Amended Schedule A to Regulatory Administration Services Agreement ( Altair Smaller Companies Fund and Campbell Core Trend Fund ) between Registrant and BNY Mellon Investment Servicing (U.S.) Inc. is incorporated herein by reference to Post-Effective Amendment No. 171 to the Registrants Registration Statement (No. 33-20827) filed on October 16, 2014. |
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(i) |
(1) |
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Opinion and Consent of Counsel is incorporated herein by reference to Post-Effective Amendment No. 170 to the Registrants Registration Statement (No. 33-20827) filed on August 6, 2014. |
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(2) |
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Consent of Counsel is filed herewith. |
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(j) |
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None. |
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(k) |
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None. |
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(l) |
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Initial Capital Agreements. |
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(1) |
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Subscription Agreement, relating to Classes A through N, is incorporated herein by reference to Pre-Effective Amendment No. 2 to Registrants Registration Statement (No. 33-20827) filed on July 12, 1988, and refiled electronically with Post-Effective Amendment No. 61 to Registrants Registration Statement filed on October 30, 1998. |
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(2) |
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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 Registrants Registration Statement (No. 33-20827) filed on December 14, 1990. |
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(3) |
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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 Registrants Registration Statement (No. 33-20827) filed on December 14, 1990. |
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(4) |
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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 Registrants Registration Statement (No. 33-20827) filed on July 15, 1992, and refiled electronically with Post-Effective Amendment No. 61 to Registrants Registration Statement filed on October 30, 1998. |
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(5) |
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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 Registrants Registration Statement (No. 33-20827) filed on September 25, 1997. |
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(6) |
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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 Registrants Registration Statement (No. 33-20827) filed on October 29, 1998. |
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(7) |
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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 Registrants Registration Statement (No. 33-20827) filed on October 29, 1998. |
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(8) |
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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 Registrants Registration Statement (No. 33-20827) filed on December 14, 1998. |
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(9) |
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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 Registrants Registration Statement (No. 33-20827) filed on May 19, 1999. |
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(10) |
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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 Registrants Registration Statement (No. 33-20827) filed on September 30, 1999. |
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(11) |
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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 Registrants Registration Statement (No. 33-20827) filed on November 1, 2002. |
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(12) |
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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 Registrants Registration Statement (No. 33-20827) filed on November 1, 2002. |
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(13) |
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Purchase Agreement (RobecoWPG Small/Micro Cap Value Fund f/k/a RobecoWPG Tudor Fund) between Registrant and Weiss, Peck & Greer Investments is incorporated herein by reference to Post-Effective Amendment No. 96 to the Registrants Registration Statement (No. 33-20827) filed on June 6, 2005. |
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(14) |
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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 Registrants Registration Statement (No. 33-20827) filed on June 1, 2007. |
(15) |
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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 Registrants Registration Statement (No. 33-20827) filed on June 1, 2007. |
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(16) |
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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 Registrants Registration Statement (No. 33-20827) filed on June 1, 2007. |
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(17) |
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Form of Purchase Agreement ( Perimeter Small Cap Growth Fund ) between Registrant and Perimeter Capital Managementis incorporated herein by reference to Post-Effective Amendment No. 134 to the Registrants Registration Statement (No. 33-20827) filed on December 30, 2009. |
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(18) |
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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. |
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(19) |
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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 Registrants Registration Statement (No. 33-20827) filed on August 4, 2010. |
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(20) |
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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 t the Registrants Registration Statement (No. 33-20827) filed on October 14, 2011. |
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(21) |
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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 t the Registrants Registration Statement (No. 33-20827) filed on October 14, 2011. |
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(22) |
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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 Registrants Registration Statement (No. 33-20827) filed on October 29, 2013. |
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(23) |
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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 Registrants Registration Statement (No. 33-20827) filed on December 23, 2013. |
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(24) |
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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 Registrants Registration Statement (No. 33-20827) filed on December 23, 2013. |
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(25) |
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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 Registrants Registration Statement (No. 33-20827) filed on December 23, 2013. |
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(26) |
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Form of Purchase Agreement ( 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 Registrants Registration Statement (No. 33-20827) filed on June 30, 2014. |
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(27) |
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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 Registrants Registration Statement (No. 33-20827) filed on June 30, 2014. |
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(28) |
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Form of Purchase Agreement (Altair Smaller Companies Fund) between Registrant and Altair Advisers LLC is filed herewith. |
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(29) |
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Purchase Agreement ( Campbell Core Trend Fund ) between Registrant and Campbell & Company, Inc. to be filed by amendment. |
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(m) |
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Rule 12b-1 Plan. |
(1) |
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Plan of Distribution (Bedford Money Market) is incorporated herein by reference to Post-Effective Amendment No. 1 to Registrants Registration Statement (No. 33-20827) filed on March 23, 1989, and refiled electronically with Post-Effective Amendment No. 61 to Registrants Registration Statement filed on October 30, 1998. |
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(2) |
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Plan of Distribution (Boston Partners Mid Cap Value Fund - Investor Class) is incorporated herein by reference to Post-Effective Amendment No. 45 to the Registrants Registration Statement (No. 33-20827) filed on May 9, 1997. |
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(3) |
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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 Registrants Registration Statement (No. 33-20827) filed on April 10, 1998. |
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(4) |
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Amendment to Plans of Distribution pursuant to Rule 12b-1 is incorporated herein by reference to Post-Effective Amendment No. 63 to the Registrants Registration Statement (No. 33-20827) filed on December 14, 1998. |
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(5) |
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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 Registrants Registration Statement (No. 33-20827) filed on November 12, 1998. |
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(6) |
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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 Registrants Registration Statement (No. 33-20827) filed on May 19, 1999. |
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(7) |
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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 Registrants Registration Statement (No. 33-20827) filed on November 1, 2002. |
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(8) |
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Agreement between Registrant, Bear Stearns Securities Corp. and Foreside Funds Distributors LLC (f/k/a PFPC Distributors, Inc.) dated as of November 17, 2005 is incorporated herein by reference to Post-Effective Amendment No. 101 to the Registrants Registration Statement filed on December 29, 2005. |
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(9) |
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Plan of Distribution pursuant to Rule 12b-1 (Perimeter Small Cap Growth Fund Investor Class) is incorporated herein by reference to Post-Effective Amendment No. 132 to the Registration Statement (No. 33-20827) filed on October 22, 2009. |
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(10) |
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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 Registrants Registration Statement (No. 33-20827) filed on December 28, 2010. |
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(11) |
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Plan of Distribution pursuant to Rule 12b-1 (S1 Fund R Shares) is incorporated herein by reference to Post-Effective Amendment No. 137 to the Registrants Registration Statement (No. 33-20827) filed on October 1, 2010. |
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(12) |
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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 Registrants Registration Statement (No. 33-20827) filed on October 14, 2011. |
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(13) |
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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 Registrants Registration Statement (No. 33-20827) filed on October 14, 2011. |
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(14) |
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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 Registrants Registration Statement (No. 33-20827) filed on December 15, 2011. |
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(15) |
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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 Registrants Registration Statement (No. 33-20827) filed on December 15, 2011. |
(16) |
|
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 Registrants Registration Statement (No. 33-20827) filed on July 11, 2013. |
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(17) |
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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 Registrants Registration Statement (No. 33-20827) filed on June 30, 2014. |
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(18) |
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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 Registrants Registration Statement (No. 33-20827) filed on June 30, 2014. |
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(n) |
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Rule 18f-3 Plan. |
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(1) |
|
Amended Rule 18f-3 Plan is incorporated herein by reference to Post-Effective Amendment No. 168 to the Registrants Registration Statement (No. 33-20827) filed on June 30, 2014. |
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(p) |
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Code of Ethics. |
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(1) |
|
Code of Ethics of the Registrant is incorporated herein by reference to Post-Effective Amendment No. 110 to Registrants Registration Statement (No. 33-20827) filed on December 29, 2006. |
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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 Registrants Registration Statement (No. 33-20827) filed on December 30, 2011. |
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(3) |
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Code of Ethics of Schneider Capital Management Company is incorporated herein by reference to Post-Effective Amendment No. 129 to the Registrants Registration Statement (No. 33-20827) filed on July 2, 2009. |
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(4) |
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Code of Ethics of Bogle Investment Management, L.P. is incorporated herein by reference to Post-Effective Amendment No. 129 to the Registrants Registration Statement (No. 33-20827) filed on July 2, 2009. |
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(5) |
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Code of Ethics of Matson Money, Inc. is incorporated herein by reference to Post-Effective Amendment No. 145 to the Registrants Registration Statement (No. 33-20827) filed on December 30, 2011. |
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(6) |
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Code of Ethics of Perimeter Capital Management is incorporated herein by reference to Post-Effective Amendment No. 149 to the Registrants Registration Statement (No. 33-20827) filed on October 29, 2012. |
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(7) |
|
Code of Ethics of Simple Alternatives, LLC is incorporated herein by reference to Post-Effective Amendment No. 149 to the Registrants Registration Statement (No. 33-20827) filed on October 29, 2012. |
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(8) |
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Code of Ethics of Blue Lion Capital Management, LLC is incorporated herein by reference to Post-Effective Amendment No. 145 to the Registrants Registration Statement (No. 33-20827) filed on December 30, 2011. |
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(9) |
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Code of Ethics of Courage Capital Management, LLC is incorporated herein by reference to Post-Effective Amendment No. 145 to the Registrants Registration Statement (No. 33-20827) filed on December 30, 2011. |
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(10) |
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Code of Ethics of Starwood Real Estate Securities, LLC is incorporated herein by reference to Post-Effective Amendment No. 137 to the Registrants Registration Statement (No. 33-20827) filed on October 1, 2010. |
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(11) |
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Code of Ethics of Foreside Funds Distributors LLC ( f/k/aBNY Mellon Distributors, Inc.) is incorporated herein by reference to Post-Effective Amendment No. 143 to the Registrants Registration Statement (No. 33-20827) filed on October 28, 2011. |
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(12) |
|
Code of Ethics of Summit Global Investments, LLC is incorporated herein by reference to Post-Effective Amendment No. 145 to the Registrants Registration Statement (No. 33-20827) filed on December 30, 2011. |
(13) |
|
Code of Ethics of Maerisland Capital, LLC is incorporated herein by reference to Post-Effective Amendment No. 149 to the Registrants Registration Statement (No. 33-20827) filed on October 29, 2012. |
|
|
|
(14) |
|
Code of Ethics of Sonica Capital, LLC is incorporated herein by reference to Post-Effective Amendment No. 157 to the Registrants Registration Statement (No. 33-20827) filed on October 29, 2013. |
|
|
|
(15) |
|
Code of Ethics of Garelick Capital Partners, L.P. is incorporated herein by reference to Post-Effective Amendment No. 157 to the Registrants Registration Statement (No. 33-20827) filed on October 29, 2013. |
|
|
|
(16) |
|
Code of Ethics of Scotia Institutional Asset Management US, Ltd.is incorporated herein by reference to Post-Effective Amendment No. 167 to the Registrants Registration Statement (No. 33-20827) filed on April 16, 2014. |
|
|
|
(17) |
|
Code of Ethics of Abbey Capital Limited is incorporated herein by reference to Post-Effective Amendment No. 168 to the Registrants Registration Statement (No. 33-20827) filed on June 30, 2014. |
|
|
|
(18) |
|
Code of Ethics of Altair Advisers LLC is filed herewith. |
|
|
|
(19) |
|
Code of Ethics of Aperio Group is filed herewith. |
|
|
|
(20) |
|
Code of Ethics of Driehaus Capital Management LLC is filed herewith. |
|
|
|
(21) |
|
Code of Ethics of Granite Investment Partners, LLC is filed herewith. |
|
|
|
(22) |
|
Code of Ethics of Pacific Ridge Capital Partners, LLC is filed herewith. |
|
|
|
(23) |
|
Code of Ethics of Pier Capital LLC is filed herewith. |
|
|
|
(24) |
|
Code of Ethics of River Road Asset Management, LLC is filed herewith. |
|
|
|
(25) |
|
Code of Ethics of Campbell & Company Investment Adviser LLC to be filed by amendment. |
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 Registrants 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.
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 and Administration Agreement Registrant and BlackRock Advisors, LLC (BALLC), dated June 30, 2011 and incorporated herein by reference to exhibit (d)(4), provides for the indemnification of BALLC against certain losses.
Section 12 of the Investment Advisory Agreement between Registrant and Robeco Investment Management, Inc. (Robeco), incorporated herein by reference to exhibit (d)(24), provides for the indemnification of Robeco 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 9 of the Distribution Agreement between Registrant and BNY Mellon Distributors Inc. (f/k/a PFPC Distributors, Inc. ), dated January 2, 2001 and incorporated herein by reference to exhibit (e)(1) provides for the indemnification of BNY Mellon Distributors Inc. against certain losses.
Section 12 of each of the Investment Advisory Agreements between the Registrant and Schneider Capital Management (Schneider) incorporated herein by reference as exhibits (d)(1) and (d)(3) provides for the indemnification of Schneider against certain losses.
Section 12 of the Investment Advisory Agreement between the Registrant and Matson Money, Inc. ( f/k/a Abundance Technologies, Inc.) , (Matson Money) dated December 31, 2007 and incorporated herein by reference as exhibit (d)(5) provides for the indemnification of Matson Money against certain losses.
Section 12 of the Investment Advisory Agreement between the Registrant and Perimeter Capital Management (Perimeter) incorporated herein by reference as exhibit (d)(11) provides for the indemnification of Perimeter against certain losses.
Section 12 of the Investment Advisory Agreement between the Registrant and Simple Alternatives, LLC (SA) dated September 30, 2010 and incorporated herein by reference as exhibit (d)(13) provides for the indemnification of SA against certain losses.
Section 12 of the Investment Advisory Agreement between the Registrant and Summit Global Investments, LLC (SGI) incorporated herein by reference as exhibit (d)(21) provides for the indemnification of SGI against certain losses.
Section 12 of the form of Investment Advisory Agreement between the Registrant and Scotia Institutional Asset Management US, Ltd. (SIAM) filed herein as exhibit (d)(26) provides for the indemnification of SIAM against certain losses.
Section 12 of the form of Investment Advisory Agreement between the Registrant and Abbey Capital Limited (Abbey Capital) filed herein as exhibit (d)(28) provides for the indemnification of Abbey Capital against certain losses.
Section 12 of the form of Investment Advisory Agreement between the Registrant and Altair Advisers LLC (Altair) filed herein as exhibit (d)(41) provides for indemnification of Altair against certain losses.
Section 12 of the form of Investment Advisory Agreement between the Registrant and Campbell & Company Investment Adviser LLC (CCIA) filed herein as exhibit (d)(43) provides for indemnification of CCIA against certain losses.
Item 31. BUSINESS AND OTHER CONNECTIONS OF THE INVESTMENT ADVISERS.
1. BlackRock Advisors, LLC:
BlackRock Advisors, LLC (previously defined as the BALLC or the Adviser) principal business address is 100 Bellevue Parkway, Wilmington, Delaware 19809. BALLC is registered under the Investment Advisers Act of 1940, as amended, and serves as an investment adviser for registered investment companies. BALLC is an indirect wholly-owned subsidiary of BlackRock, Inc. BALLC was organized in 1994 for the purpose of providing advisory services to investment companies. The information required by this Item 31 about officers and directors of BALLC, together with information as to any other business, profession, vocation or employment of a substantial nature engaged in by such officers and directors during the past two years, is incorporated by reference to Schedules A and D of Form ADV, filed by BALLC pursuant to the Investment Advisers Act of 1940 (SEC File No. 801-47710).
2. 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.
3. 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
|
|
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 |
4. Robeco Investment Management , Inc.
The sole business activity of Robeco Investment Management, Inc. (RIM),909 Third Avenue, New York10022, is to serve as an investment adviser. RIM provides investment advisory services to the Robeco Boston Partners Funds and the Robeco Weiss, Peck, & Greer Funds.
RIM 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 Robeco Investment Management, Inc. is as follows:
Name and Position with
|
|
Other Company |
|
Position With Other Company |
|
|
|
|
|
Mark E. Donovan Senior Managing Director, Co-Chief Executive Officer |
|
Robeco Institutional Asset Management US Inc. |
|
Director |
|
|
Robeco Trust Company |
|
Co-CEO, Director & Chairman of the Board |
Joseph F. Feeney, Jr. Senior Managing Director, Co-Chief Executive Officer |
|
Robeco US Holding, Inc. |
|
Director |
|
|
|
|
|
William George Butterly, III Senior Managing Director, Chief Operating Officer, General Counsel, Chief Compliance Officer & Secretary |
|
Robeco Institutional Asset Management US Inc. |
|
Chief Legal Officer, Chief Compliance Officer & Secretary |
|
|
Robeco Securities, L.L.C. |
|
Chief Legal Officer |
|
|
Robeco Trust Company |
|
Chief Operating Officer, Secretary & Director |
|
|
RobecoSAM USA, Inc. |
|
Chief Legal Officer, Chief Compliance Officer & Secretary |
|
|
|
|
|
Matthew J. Davis Senior Managing Director, Treasurer & Chief Financial Officer |
|
Robeco Institutional Asset Management US Inc. |
|
President, Treasurer & Director |
|
|
Robeco Securities, L.L.C. |
|
Chief Financial Officer |
|
|
Robeco Trust Company |
|
Chief Financial Officer, Treasurer & Director |
|
|
|
|
|
Roderick Munsters Director |
|
RobecoGroepN.V. |
|
Chief Executive Officer |
|
|
|
|
|
Leni M. Boeren Director |
|
RobecoGroepN.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 |
|
|
|
|
|
MichielPrinsze Director |
|
RobecoGroepN.V. |
|
General Counsel |
5. Matson Money, Inc.:
The sole business activity of Matson Money, Inc. (Matson Money), 5955 Deerfield Blvd., Mason, OH 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
|
|
Name of Other Company |
|
Position With Other Company |
|
|
|
|
|
Mark E. Matson President/CEO |
|
Keep It Tight Fitness, LLC |
|
50% owner |
|
|
|
|
|
Mark E. Matson President/CEO |
|
The Wolfpack Foundation |
|
100% owner |
|
|
|
|
|
Michelle Matson Vice President/ Secretary |
|
None |
|
None |
|
|
|
|
|
Dan List Chief Compliance Officer |
|
None |
|
None |
6. Perimeter Capital Management(Perimeter)
The principal business address of Perimeter is Six Concourse Parkway, Suite 3300, Atlanta, Georgia 30328.
Perimeter serves as the investment adviser for the Perimeter Small Cap Growth Fund. Perimeter is an investment adviser registered under the Investment Advisers Act of 1940. The information as to the directors and officers of Perimeter is as follows:
Name and Position with
|
|
Name of Other Company |
|
Position With Other Company |
|
|
|
|
|
G. Bradley Ball Managing Partner and CEO Perimeter Capital Management
|
|
Perimeter Concourse Capital LLC |
|
Member, Board of Directors |
|
|
|
|
|
Mark D. Garfinkel, CFA Managing Partner and CIO Perimeter Capital Management
|
|
Perimeter Concourse Capital LLC |
|
Member, Board of Directors |
|
|
|
|
|
Christopher J. Paolella Managing Partner, Director of Marketing & Consultant Relations Perimeter Capital Management
|
|
Perimeter Concourse Capital LLC |
|
Director of Marketing & Consultant Relations |
|
|
|
|
|
Adam C. Stewart, CFA Partner, Director of Trading Perimeter Capital Management
|
|
Perimeter Concourse Capital LLC |
|
Director of Trading |
Theresa N. Benson Partner, Director of Third-Party Distribution & Consultant Relations Perimeter Capital Management
|
|
Perimeter Concourse Capital LLC |
|
Director of Third-Party Distribution & Client Relations |
|
|
|
|
|
Laura B. Newberg Chief Compliance Officer |
|
Perimeter Concourse Capital LLC &Perimeter Capital Management LLC |
|
Chief Compliance Officer |
7. Simple Alternatives, LLC (SA)
The principal business address of SA is 90 Grove Street, Suite 205, Ridgefield, CT 06877.
SA serves as the investment adviser for the S1 Fund. SA is an investment adviser registered under the Investment Advisers Act of 1940. The information as to the directors and officers of SA is as follows:
Name and Position with
|
|
Name of Other Company |
|
Position With Other Company |
|
|
|
|
|
James K. Dilworth Partner, Chief Executive Officer
|
|
Dilworth Capital Management, LLC
Dilworth Securities, Inc. |
|
President, Chief Compliance Officer |
|
|
|
|
|
Josh Kernan Partner, Chief Marketing Officer
|
|
Charles Schwab & Co., Inc. |
|
Director of Alternative Investments & Managed Accounts |
|
|
|
|
|
PJ Rossi Chief Operating Officer & CFO |
|
TH Lee Putnum Ventures, LP |
|
Director of Finance & Business Operations |
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|
|
|
|
|
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|
|
|
|
|
|
|
|
Lelia Long Chief Compliance Officer |
|
Pemberwick Investment Advisors, LLC |
|
Chief Compliance Officer |
|
|
|
|
|
|
|
Vigilant Compliance Services |
|
Director |
|
|
|
|
|
|
|
The New Ireland Fund, Inc. |
|
Treasurer |
8. 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.
Below is a list of each executive officer and director of SGI 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
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|
Name of Other Company |
|
Position With Other
|
|
|
|
|
|
David Harden President, Chief Investment Officer |
|
Ensign Peak Advisors, Inc. |
|
Vice President |
|
|
|
|
|
Mark Kenison Chief Operating Officer, Chief Compliance Officer |
|
Turning Point Financial, Inc. Turning Point Benefits Group |
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President, Chief Compliance Officer
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|
|
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|
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Bryce Sutton Partner, Managing Director |
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LC Advisors Kotak Mahindra, Inc. |
|
Vice President Vice President, Institutional Sales & Marketing |
9. Scotia Institutional Asset Management US, Ltd .
The only employment of a substantial nature of each of Scotia Institutional Asset Management US, Ltd. directors and officers is with Scotia Institutional Asset Management US, Ltd.
10. Abbey Capital Limited
The only employment of a substantial nature of each of Abbey Capital Limited directors and officers is with Abbey Capital Limited.
11. Altair Advisers LLC
The only employment of a substantial nature of each of Altair Advisers LLCdirectors and officers is with Altair Advisers LLC.
12. Campbell & Company Investment Adviser LLC
The principal business activity of Campbell & Company Investment Adviser LLC (CCIA), 2850 Quarry Lake Drive, Baltimore, MD 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
|
|
Name of Other Company |
|
Position With Other Company |
G. Williams Andrews Chief Executive Officer |
|
Campbell & Company, Inc. |
|
Director & Chief Executive Officer |
|
|
The Campbell Multi-Strategy Trust |
|
Chief Executive Officer |
|
|
Campbell Financial Services, Inc. |
|
Director |
|
|
Campbell & Company International Bahamas Limited |
|
Director and President |
|
|
|
|
|
Gregory T. Donovan Chief Financial Officer, Treasurer & Assistant Secretary |
|
Campbell & Company, Inc. |
|
Chief Financial Officer, Treasurer & Assistant Secretary |
|
|
The Campbell Multi-Strategy Trust |
|
Chief Financial Officer, Treasurer & Assistant Secretary |
|
|
Campbell Financial Services, Inc. |
|
Vice President, Chief Financial Officer and Treasurer |
|
|
Campbell & Company International Bahamas Limited |
|
Treasurer |
|
|
|
|
|
Michael S. Harris President |
|
Campbell & Company, Inc. |
|
Director & President |
|
|
The Campbell Multi-Strategy Trust |
|
President |
|
|
Campbell Financial Services, Inc. |
|
Director |
|
|
Merged Funds Association |
|
Director |
|
|
Campbell & Company International Bahamas Limited |
|
Director |
|
|
|
|
|
Dr. Xiaohua Hu Director of Research |
|
Campbell & Company, Inc. |
|
Director of Research |
Heidi L. Kaiser Deputy General Counsel & Chief Compliance Officer, Anti-Money Laundering Officer until August 2013 |
|
The Campbell Multi-Strategy Trust |
|
Deputy General Counsel and Chief Compliance Officer |
|
|
Campbell Financial Services, Inc. |
|
Deputy General Counsel and Chief Compliance Officer |
|
|
Campbell & Company, Inc. |
|
Deputy General Counsel & Director of Compliance, Anti-Money Laundering Officer until August 2013 |
|
|
|
|
|
Thomas P. Lloyd General Counsel, Secretary, & Assistant Treasurer |
|
Campbell & Company, Inc. |
|
General Counsel, Executive Vice-President - Legal and Compliance, Secretary & Board Member |
|
|
The Campbell Multi-Strategy Trust |
|
General Counsel, Secretary & Assistant Treasurer |
|
|
Campbell & Company International Bahamas Limited |
|
Secretary |
|
|
Campbell Financial Services, Inc. |
|
General Counsel & Director; previously, Chief Compliance Officer & Secretary until September 2014 |
|
|
|
|
|
Robert W. McBride Chief Technology Officer |
|
Campbell & Company, Inc. |
|
Chief Technology Officer |
|
|
|
|
|
John R. Radle Global Head of Trading |
|
Campbell & Company, Inc. |
|
Global Head of Trading |
|
|
|
|
|
Darvin N. Sterner Director of Private Wealth Distribution |
|
Campbell & Company, Inc. |
|
Director of Private Wealth Distribution & Vice-President - National Sales Manager until May 2013 |
|
|
Campbell Financial Services, Inc. |
|
Vice President |
|
|
|
|
|
Tracy Wills-Zapata Vice President |
|
Campbell & Company, Inc. |
|
Managing Director - Institutional Business Development |
|
|
The Campbell Multi-Strategy Trust |
|
Vice President until September 2014 |
|
|
Campbell Financial Services, Inc. |
|
Vice President |
Item 32 . Principal Underwriter
(a) Foreside Funds Distributors LLC (f/k/a BNY Mellon Distributors LLC) (the Distributor) serves as principal underwriter for the following investment companies registered under the Investment Company Act of 1940, as amended:
1. Aston Funds
2. E.I.I. Realty Securities Trust
3. FundVantage Trust
4. GuideStone Funds
5. Highland Funds I (f/k/a Pyxis Funds I)
6. Highland Funds II (f/k/a Pyxis Funds II)
7. Kalmar Pooled Investment Trust
8. Matthews International Funds (d/b/a Matthews Asia Funds)
9. Metropolitan West Funds
10. The Motley Fool Funds Trust
11. New Alternatives Fund, Inc.
12. Old Westbury Funds, Inc.
13. The RBB Fund, Inc.
14. Stratton Mid Cap Fund, Inc. (f/k/a Stratton Multi-Cap Fund, Inc.)
15. Stratton Real Estate Fund, Inc.
16. The Stratton Funds, Inc.
17. The Torray Fund
18. Versus Capital Multi-Manager Real Estate Income Fund LLC (f/k/a Versus Global Multi-Manager Real Estate Income Fund LLC)
(b) The following are the Officers and Managers of the Distributor. The Distributors main business address is 400 Berwyn Park, Suite 110, 899 Cassatt Road, Berwyn, PA 19312.
Name |
|
Address |
|
Position with
|
|
Position with
|
Mark A. Fairbanks |
|
Three Canal Plaza, Suite 100, Portland, ME 04101 |
|
President and Manager |
|
None |
Richard J. Berthy |
|
Three Canal Plaza, Suite 100, Portland, ME 04101 |
|
Vice President, Treasurer and Manager |
|
None |
Bruno S. DiStefano |
|
899 Cassatt Road, 400 Berwyn Park, Suite 110, Berwyn, PA 19312 |
|
Vice President |
|
None |
Ronald C. Berge |
|
899 Cassatt Road, 400 Berwyn Park, Suite 110, Berwyn, PA 19312 |
|
Vice President |
|
None |
Susan K. Moscaritolo |
|
899 Cassatt Road, 400 Berwyn Park, Suite 110, Berwyn, PA 19312 |
|
Vice President and Chief Compliance Officer |
|
None |
Lisa S. Clifford |
|
Three Canal Plaza, Suite 100, Portland, ME 04101 |
|
Vice President, Managing Director of Compliance |
|
None |
Jennifer E. Hoopes |
|
Three Canal Plaza, Suite 100, Portland, ME 04101 |
|
Secretary |
|
None |
Nishant Bhatnagar |
|
Three Canal Plaza, Suite 100, Portland, ME 04101 |
|
Assistant Secretary |
|
None |
(c) Not Applicable
Item 33. LOCATION OF ACCOUNTS AND RECORDS
(1) The Bank of New York Mellon, One Wall Street, New York, New York 10286 (records relating to its functions as sub-adviser and custodian).
(2) Foreside Funds Distributors, 400 Berwyn Park, 899 Cassatt Road, Berwyn, Pennsylvania 19312. (records relating to its functions as principal underwriter).
(3) BlackRock Advisors, LLC, Bellevue Corporate Center, 100 Bellevue Parkway, Wilmington, Delaware 19809 (records relating to its functions as investment adviser, sub-adviser and administrator).
(4) BNY Mellon Investment Servicing (US) Inc., Bellevue Corporate Center, 103 Bellevue Parkway, Wilmington, Delaware 19809 (records relating to its functions as transfer agent and dividend disbursing agent).
(5) BNY Mellon Investment Servicing (US) Inc., 301 Bellevue Parkway, Wilmington, Delaware 19809 (records relating to its function as administrator and accounting agent and Registrants Articles of Incorporation, By-Laws and Minute books).
(6) Robeco Investment Management, Inc., 909 Third Avenue, 32 nd floor, New York, New York 10022 (records relating to its function as investment adviser).
(7) Schneider Capital Management Co., 460 East Swedesford Road, Suite 1080, Wayne, Pennsylvania 19087 (records relating to its function as investment adviser).
(8) Bogle Investment Management, L.P., 2310 Washington Street, Suite 310, Newton Lower Falls, Massachusetts 02462 (records relating to its function as investment adviser).
(9) Matson Money, Inc. (formerly Abundance Technologies, Inc.),5955 Deerfield Blvd., Mason, OH 45040 (records relating to its function as investment adviser).
(10) Perimeter Capital Management, Six Concourse Parkway, Suite 3300, Atlanta, Georgia 30328(records relating to its function as investment adviser).
(11) Simple Alternatives, LLC, 90 Grove Street, Suite 205, Ridgefield, CT 06877(records relating to its function as investment adviser).
(12) Summit Global Investments, LLC, 620 South Main Street, Bountiful, Utah 84010 (records relating to its function as investment adviser).
(13) Scotia Institutional Asset Management US, Ltd., Dundee Place, 1 Adelaide St. E., Ste. 2900, Toronto, ON M5C2V9 (records relating to its function as investment adviser).
(14) Abbey Capital Limited, 1-2 Cavendish Row, Dublin 1, Ireland (records relating to its function as investment adviser).
(15) Altair Advisers LLC, 303 W. Madison, Suite 600, Chicago, Illinois 60606(records relating to its function as investment adviser).
(16) Campbell & Company Investment Adviser LLC, 2850 Quarry Lake Drive, Baltimore, Maryland 21209 (records relating to its function as investment adviser).
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 Registrants latest annual report to shareholders upon request and without charge.
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 Registration Statement under Rule 485(b) and has duly caused this Post-Effective Amendment No.172 to its Registration Statement to be signed on its behalf by the undersigned, thereto duly authorized, in the City of Wilmington, and State of Delaware on the 17 th day of October, 2014.
|
THE RBB FUND, INC. |
|
|
|
|
|
By: |
/s/ Salvatore Faia |
|
Salvatore Faia |
|
|
President |
Pursuant to the requirements of the 1933 Act, this Post-Effective Amendment to Registrants 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 |
|
October 17, 2014 |
Salvatore Faia |
|
Compliance Officer |
|
|
|
|
|
|
|
/s/Joel L. Weiss |
|
Treasurer (Chief Financial Officer) |
|
October 17, 2014 |
Joel L. Weiss |
|
|
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*J. Richard Carnall |
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Director |
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October 17, 2014 |
J. Richard Carnall |
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*Julian A. Brodsky |
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Director |
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October 17, 2014 |
Julian A. Brodsky |
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*Arnold M. Reichman |
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Director |
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October 17, 2014 |
Arnold M. Reichman |
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*Robert Sablowsky |
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Director |
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October 17, 2014 |
Robert Sablowsky |
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*Robert Straniere |
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Director |
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October 17, 2014 |
Robert Straniere |
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*Nicholas A. Giordano |
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Director |
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October 17, 2014 |
Nicholas A. Giordano |
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*Gregory P. Chandler |
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Director |
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October 17, 2014 |
Gregory P. Chandler |
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*Jay F. Nusblatt |
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Director |
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October 17, 2014 |
Jay F. Nusblatt |
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*By: /s/Salvatore Faia |
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October 17, 2014 |
Salvatore Faia Attorney-in-Fact |
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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 and Joel L. Weiss, 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: |
May 7, 2009 |
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/s/ Julian A. Brodsky |
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Julian A. Brodsky |
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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 and Joel L. Weiss, 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: |
May 7, 2009 |
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/s/ J. Richard Carnall |
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J. Richard Carnall |
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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 and Joel L. Weiss, 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: |
May 7, 2009 |
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/s/ Nicholas A. Giordano |
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Nicholas A. Giordano |
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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 and Joel L. Weiss, 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: |
May 7, 2009 |
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/s/ Arnold M. Reichman |
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Arnold M. Reichman |
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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 and Joel L. Weiss, 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: |
May 7, 2009 |
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/s/ Robert Sablowsky |
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Robert Sablowsky |
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THE RBB FUND, INC.
(the Company)
POWER OF ATTORNEY
Know All Men by These Presents, that the undersigned, Robert Straniere, hereby constitutes and appoints Salvatore Faia, Michael P. Malloy, James G. Shaw and Joel L. Weiss, 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: |
May 7, 2009 |
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/s/ Robert Straniere |
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Robert Straniere |
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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 and Joel L. Weiss, 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: |
October 15, 2012 |
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/s/ Gregory P. Chandler |
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Gregory P. Chandler |
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THE RBB FUND, INC.
(the Company)
POWER OF ATTORNEY
Know All Men by These Presents, that the undersigned, Jay F. Nusblatt, hereby constitutes and appoints Salvatore Faia, Michael P. Malloy, James G. Shaw and Joel L. Weiss, 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: |
October 16, 2012 |
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/s/ Jay F. Nusblatt |
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Jay F. Nusblatt |
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PEA 172
EXHIBIT INDEX
EXHIBIT |
|
DESCRIPTION |
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|
(d)(41) |
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Form of Investment Advisory Agreement (Altair Smaller Companies Fund) between Registrant and Altair Advisers LLC |
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|
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(d)(42) |
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Form of Contractual Fee Waiver Agreement (Altair Smaller Companies Fund) between Registrant and Altair Advisers LLC |
|
|
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(d)(45) |
|
Form of Investment Sub-Advisory Agreement (Altair Smaller Companies Fund) among Registrant, Altair Advisers LLC and Aperio Group, LLC |
|
|
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(d)(46) |
|
Form of Investment Sub-Advisory Agreement (Altair Smaller Companies Fund) among Registrant, Altair Advisers LLC and Driehaus Capital Management LLC |
|
|
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(d)(47) |
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Form of Investment Sub-Advisory Agreement (Altair Smaller Companies Fund) among Registrant, Altair Advisers LLC and Granite Investment Partners, LLC |
|
|
|
(d)(48) |
|
Form of Investment Sub-Advisory Agreement (Altair Smaller Companies Fund) among Registrant, Altair Advisers LLC and Pacific Ridge Capital Partners, LLC |
|
|
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(d)(49) |
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Form of Investment Sub-Advisory Agreement (Altair Smaller Companies Fund) among Registrant, Altair Advisers LLC and Pier Capital, LLC |
|
|
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(d)(50) |
|
Form of Investment Sub-Advisory Agreement (Altair Smaller Companies Fund) among Registrant, Altair Advisers LLC and River Road Asset Management, LLC |
|
|
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(e)(18) |
|
Distribution Agreement Supplement ( Altair Smaller Companies Fund ) between Registrant and Foreside Funds Distributors LLC |
|
|
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(h)(76) |
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Form of Transfer Agency Agreement Supplement ( Altair Smaller Companies Fund ) between Registrant and BNY Mellon Investment Servicing (U.S.) Inc. |
|
|
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(i)(2) |
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Consent of Counsel |
|
|
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(n)(28) |
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Form of Purchase Agreement (Altair Smaller Companies Fund) between Registrant and Altair Advisers LLC |
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|
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(p)(18) |
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Code of Ethics of Altair Advisers LLC |
|
|
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(p)(19) |
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Code of Ethics of Aperio Group |
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|
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(p)(20) |
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Code of Ethics of Driehaus Capital Management LLC |
|
|
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(p)(21) |
|
Code of Ethics of Granite Investment Partners, LLC |
|
|
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(p)(22) |
|
Code of Ethics of Pacific Ridge Capital Partners, LLC |
|
|
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(p)(23) |
|
Code of Ethics of Pier Capital LLC |
|
|
|
(p)(24) |
|
Code of Ethics of River Road Asset Management, LLC |
Exhibit (d)(41)
INVESTMENT ADVISORY AGREEMENT
Altair Smaller Companies Fund
AGREEMENT made as of October 17, 2014 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 Funds Altair Smaller Companies 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 Funds 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 Portfolios 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 Advisers ability to effectively provide an investment program for the Portfolio. The Investment Adviser further agrees that it will provide to the Funds 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 Portfolios 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 Funds or the Portfolios service providers directly to both the Investment Adviser and any Sub-Adviser.
SECTION 4. BROKERAGE. Subject to the Investment Advisers 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 Advisers 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 Portfolios securities be purchased from or sold to the Funds 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 Advisers 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 Funds 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 Advisers 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 Funds 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 Funds 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 Portfolios 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 Portfolios shares under federal and/or state securities laws and maintaining such registrations and qualifications; (d) fees and salaries payable to the Funds 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 Portfolios 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 Portfolios 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 Portfolios name and all investment models used by or on behalf of or developed for the Portfolio. The Investment Adviser may use the Portfolios 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 out-of-pocket expenses in connection with its compliance monitoring of Portfolio trading, up to 0.01% of the Portfolios 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 Advisers rights to the Portfolios 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, 2016. 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.
Bellevue Corporate Center
301 Bellevue Parkway
Wilmington, DE 19809
Attention: Salvatore Faia
Fax: 302-791-4830
If to the Investment Adviser:
Altair Advisers LLC
303 W. Madison Street, Suite 600
Chicago, IL 60606
Attention: Rebecca Kohmescher
Fax: 312-577-0461
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 (5 th ) 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.
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Exhibit (d)(42)
[Altair Letterhead]
October 20, 2014
Salvatore Faia
President
The RBB Fund, Inc.
103 Bellevue Parkway
Wilmington, DE 19809
Re: The RBB Fund, Inc. Altair Smaller Companies Fund (the Fund)
Dear Mr. Faia:
By our execution of this letter agreement (this Agreement), Altair Advisers LLC (the Adviser) agrees that in order to improve the performance of the Fund, the Adviser shall, from October 20, 2014 through October 20, 2015, waive all or a portion of its investment advisory fees and/or reimburse expenses (other than acquired fund fees and expenses, brokerage commissions, extraordinary items, interest and taxes) in an aggregate amount equal to the amount by which the Funds total operating expenses (other than acquired fund fees and expenses, brokerage commissions, extraordinary items, interest and taxes) exceed a total operating expense ratio (other than brokerage commissions, extraordinary items, interest and taxes) of 1.35% of the Funds average daily net assets.
If at any time during the first three years in which the Advisory Agreement is still in effect, the total annual fund operating expenses of the Fund for that year are less than 1.35% of the Funds average daily net assets, the Adviser shall be entitled to reimbursement by the Fund, in whole or in part as provided below, of the investment advisory fees waived or reduced and other payments remitted by the Adviser to the Fund pursuant to this Agreement. The total amount of reimbursement to which the Adviser may be entitled (the Reimbursement Amount) shall equal, at any time, the sum of all investment advisory fees previously waived or reduced by the Adviser and all other payments remitted by the Adviser to the Fund, pursuant to this Agreement, less any reimbursement previously paid by the Fund to the Adviser, with respect to such waivers, reductions, and payments. The Reimbursement Amount shall not include any additional charges or fees whatsoever, including, e.g., interest accruable on the Reimbursement Amount.
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Your signature below acknowledges acceptance of this Agreement: |
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Exhibit (d)(45)
SUB-ADVISORY AGREEMENT
This Agreement is dated as of the day of October, 2014, 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 Altair Smaller Companies 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 Clients investment objectives, policies and restrictions set forth in the Clients 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 Companys Chief Compliance Officer or the Companys 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-Advisers 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-Advisers 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 Clients 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 Clients 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 Clients 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 Clients information that may be relevant to Sub-Advisers 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-Advisers normal business hours at the Advisers 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-Advisers 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-Advisers 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-Advisers then current Brochure, and shall provide a copy of Sub-Advisers 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 Advisers clients.
11. Investment Management Fee .
In consideration of Sub-Advisers 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 states 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-Advisers 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 Advisers ability to carry out its duties under this Agreement.
(e) The Adviser has reviewed the Clients 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-Advisers services are suitable for Client. The Adviser will notify the Sub-Adviser promptly of any changes in a Clients 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-Advisers 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 Advisers 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 Clients 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, 2016, 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 Advisers 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 Clients 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-Advisers adherence to Clients 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 Clients total assets, Sub-Adviser shall not be responsible for any of Clients assets not designated to Sub-Adviser for management under this Agreement or the diversification of all of Clients 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 partys 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 : |
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The RBB Fund, Inc. |
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Bellevue Park Corporate Center, 103 Bellevue Parkway |
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Wilmington, DE 19809 |
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Attention |
Salvatore Faia, President |
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If to the Adviser : |
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Name |
Altair Advisers LLC |
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Address |
303 W. Madison Street, Suite 600 |
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City, State, Zip |
Chicago, IL 60606 |
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Fax |
312-577-0461 |
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Attention |
Rebecca Kohmescher |
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If to the Sub-Adviser : |
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Name |
Aperio Group, LLC |
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Address |
Three Harbor Drive, Suite 315 |
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City, State, Zip |
Sausalito, CA 94965 |
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Fax |
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Attention |
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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.
Exhibit (d)(46)
SUB-ADVISORY AGREEMENT
This Agreement is dated as of the day of October, 2014, 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 Capital 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 Altair Smaller Companies 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 Clients investment objectives, policies and restrictions set forth in the Clients 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 Companys Chief Compliance Officer or the Companys 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-Advisers 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-Advisers 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 requests, but does not obligate, Sub-Adviser to 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. Upon the reasonable request of Client or Adviser, Sub-Adviser shall produce to Client or the Adviser records and information related to 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 Clients 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 Clients 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 Clients 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 Clients information that may be relevant to Sub-Advisers 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-Advisers normal business hours at the Advisers 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-Advisers 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-Advisers 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-Advisers then current Brochure, and shall provide a copy of Sub-Advisers 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 Advisers clients.
11. Investment Management Fee .
In consideration of Sub-Advisers 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 states 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-Advisers 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 Advisers ability to carry out its duties under this Agreement.
(e) The Adviser has reviewed the Clients 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-Advisers services are suitable for Client. The Adviser will notify the Sub-Adviser promptly of any changes in a Clients 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-Advisers 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 Advisers 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 Clients 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, 2016, 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 Advisers 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 Clients shareholders as may be required by applicable law.
22. Liability .
The Sub-Adviser shall not be liable to the Adviser for the acts or omissions of any other fiduciary or other person acting on behalf of the Client, or for anything done or omitted to be done by the Sub-Adviser under the terms of this Agreement if the Sub-Adviser shall have acted in good faith and exercised reasonable care. Nothing in this Agreement shall in any way constitute a waiver or limitation of any rights which may not be so limited or waived in accordance with applicable law. The Sub-Adviser shall not be deemed to have breached this Agreement in connection with fluctuations arising from market movements and other events outside the control of the Sub-Adviser.
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 partys 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 : |
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Name |
The RBB Fund, Inc. |
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Address |
Bellevue Park Corporate Center, 103 Bellevue Parkway |
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City, State, Zip |
Wilmington, DE 19809 |
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Fax |
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Attention |
Salvatore Faia, President |
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If to the Adviser : |
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Name |
Altair Advisers LLC |
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Address |
303 W. Madison Street, Suite 600 |
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City, State, Zip |
Chicago, IL 60606 |
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Fax |
312-577-0461 |
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Attention |
Rebecca Kohmescher |
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If to the Sub-Adviser : |
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Name |
Driehaus Capital Management LLC |
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Address |
25 East Erie Street |
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City, State, Zip |
Chicago, IL 60611 |
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Fax |
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Attention |
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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.
Exhibit (d)(47)
SUB-ADVISORY AGREEMENT
This Agreement is dated as of the day of October, 2014, 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 Granite Investment Partners, 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 Altair Smaller Companies 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 Clients investment objectives, policies and restrictions set forth in the Clients 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 Companys Chief Compliance Officer or the Companys 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-Advisers 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-Advisers 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 requests, but does not obligate, Sub-Adviser to 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. Upon the reasonable request of Client or Adviser, Sub-Adviser shall produce to Client or the Adviser records and information related to 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 Clients 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 Clients 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 Clients 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 Clients information that may be relevant to Sub-Advisers 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-Advisers normal business hours at the Advisers 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-Advisers 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-Advisers 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-Advisers then current Brochure, and shall provide a copy of Sub-Advisers 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 Advisers clients.
11. Investment Management Fee .
In consideration of Sub-Advisers 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 states 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-Advisers 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 Advisers ability to carry out its duties under this Agreement.
(e) The Adviser has reviewed the Clients 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-Advisers services are suitable for Client. The Adviser will notify the Sub-Adviser promptly of any changes in a Clients 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-Advisers 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 Advisers 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 Clients 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, 2016, 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 Advisers 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 Clients shareholders as may be required by applicable law.
22. Liability .
The Sub-Adviser shall not be liable to the Adviser for the acts or omissions of any other fiduciary or other person acting on behalf of the Client, or for anything done or omitted to be done by the Sub-Adviser under the terms of this Agreement if the Sub-Adviser shall have acted in good faith and exercised reasonable care. Nothing in this Agreement shall in any way constitute a waiver or limitation of any rights which may not be so limited or waived in accordance with applicable law. The Sub-Adviser shall not be deemed to have breached this Agreement in connection with fluctuations arising from market movements and other events outside the control of the Sub-Adviser.
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 partys 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 : |
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Name |
The RBB Fund, Inc. |
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Address |
Bellevue Park Corporate Center, 103 Bellevue Parkway |
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City, State, Zip |
Wilmington, DE 19809 |
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Fax |
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Attention |
Salvatore Faia, President |
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If to the Adviser : |
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Name |
Altair Advisers LLC |
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Address |
303 W. Madison Street, Suite 600 |
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City, State, Zip |
Chicago, IL 60606 |
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Fax |
312-577-0461 |
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Attention |
Rebecca Kohmescher |
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If to the Sub-Adviser : |
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Name |
Granite Investment Partners, LLC |
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Address |
2121 Rosecrans Avenue, Suite 2360 |
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City, State, Zip |
El Segundo, CA 90245 |
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Fax |
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Attention |
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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.
Exhibit (d)(48)
SUB-ADVISORY AGREEMENT
This Agreement is dated as of the day of October, 2014, 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 Pacific Ridge Capital Partners, LLC, a Nevada 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 Altair Smaller Companies 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 Clients investment objectives, policies and restrictions set forth in the Clients 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 Companys Chief Compliance Officer or the Companys 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-Advisers 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-Advisers 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 requests, but does not obligate, Sub-Adviser to 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. Upon the reasonable request of Client or Adviser, Sub-Adviser shall produce to Client or the Adviser records and information related to 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 Clients 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 Clients 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 Clients 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 Clients information that may be relevant to Sub-Advisers 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-Advisers normal business hours at the Advisers 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-Advisers 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-Advisers 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-Advisers then current Brochure, and shall provide a copy of Sub-Advisers 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 Advisers clients.
11. Investment Management Fee .
In consideration of Sub-Advisers 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 states 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-Advisers 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 Advisers ability to carry out its duties under this Agreement.
(e) The Adviser has reviewed the Clients 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-Advisers services are suitable for Client. The Adviser will notify the Sub-Adviser promptly of any changes in a Clients 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-Advisers 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 Advisers 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 Clients 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, 2016, 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 Advisers 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 Clients shareholders as may be required by applicable law.
22. Liability .
The Sub-Adviser shall not be liable to the Adviser for the acts or omissions of any other fiduciary or other person acting on behalf of the Client, or for anything done or omitted to be done by the Sub-Adviser under the terms of this Agreement if the Sub-Adviser shall have acted in good faith and exercised reasonable care. Nothing in this Agreement shall in any way constitute a waiver or limitation of any rights which may not be so limited or waived in accordance with applicable law. The Sub-Adviser shall not be deemed to have breached this Agreement in connection with fluctuations arising from market movements and other events outside the control of the Sub-Adviser.
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 partys 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 : |
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Name |
The RBB Fund, Inc. |
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Address |
Bellevue Park Corporate Center, 103 Bellevue Parkway |
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City, State, Zip |
Wilmington, DE 19809 |
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Fax |
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Attention |
Salvatore Faia, President |
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If to the Adviser : |
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Name |
Altair Advisers LLC |
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Address |
303 W. Madison Street, Suite 600 |
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City, State, Zip |
Chicago, IL 60606 |
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Fax |
312-577-0461 |
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Attention |
Rebecca Kohmescher |
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If to the Sub-Adviser : |
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Name |
Pacific Ridge Capital Partners, LLC |
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Address |
4900 Meadows Road, Suite 320 |
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City, State, Zip |
Lake Oswego, OR 97035 |
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Fax |
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Attention |
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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.
Exhibit (d)(49)
SUB-ADVISORY AGREEMENT
This Agreement is dated as of the day of October, 2014, 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 Pier Capital, 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 Altair Smaller Companies 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 Clients investment objectives, policies and restrictions set forth in the Clients 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 Companys Chief Compliance Officer or the Companys 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-Advisers 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-Advisers 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 requests, but does not obligate, Sub-Adviser to 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. Upon the reasonable request of Client or Adviser, Sub-Adviser shall produce to Client or the Adviser records and information related to 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 Clients 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 Clients 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 Clients 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 Clients information that may be relevant to Sub-Advisers 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-Advisers normal business hours at the Advisers 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-Advisers 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-Advisers 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-Advisers then current Brochure, and shall provide a copy of Sub-Advisers 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 Advisers clients.
11. Investment Management Fee .
In consideration of Sub-Advisers 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 states 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-Advisers 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 Advisers ability to carry out its duties under this Agreement.
(e) The Adviser has reviewed the Clients 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-Advisers services are suitable for Client. The Adviser will notify the Sub-Adviser promptly of any changes in a Clients 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-Advisers 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 Advisers 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 Clients 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, 2016, 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 Advisers 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 Clients shareholders as may be required by applicable law.
22. Liability .
The Sub-Adviser shall not be liable to the Adviser for the acts or omissions of any other fiduciary or other person acting on behalf of the Client, or for anything done or omitted to be done by the Sub-Adviser under the terms of this Agreement if the Sub-Adviser shall have acted in good faith and exercised reasonable care. Nothing in this Agreement shall in any way constitute a waiver or limitation of any rights which may not be so limited or waived in accordance with applicable law. The Sub-Adviser shall not be deemed to have breached this Agreement in connection with fluctuations arising from market movements and other events outside the control of the Sub-Adviser.
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 partys 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 : |
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Name |
The RBB Fund, Inc. |
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Address |
Bellevue Park Corporate Center, 103 Bellevue Parkway |
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City, State, Zip |
Wilmington, DE 19809 |
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Fax |
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Attention |
Salvatore Faia, President |
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If to the Adviser : |
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Name |
Altair Advisers LLC |
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Address |
303 W. Madison Street, Suite 600 |
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City, State, Zip |
Chicago, IL 60606 |
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Fax |
312-577-0461 |
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Attention |
Rebecca Kohmescher |
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If to the Sub-Adviser : |
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Name |
Pier Capital, LLC |
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Address |
600 Summer Street, Suite 203 |
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City, State, Zip |
Stamford, CT 06901 |
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Fax |
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Attention |
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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.
Exhibit (d)(50)
SUB-ADVISORY AGREEMENT
This Agreement is dated as of the day of October, 2014, 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 River Road Asset 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 Altair Smaller Companies 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 Clients investment objectives, policies and restrictions set forth in the Clients 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 Companys Chief Compliance Officer or the Companys 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 applicable 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-Advisers 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) Upon the Sub-Advisers confirmed receipt, which shall not be unreasonably delayed, 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) Upon actual receipt of the written notice from the Adviser, 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 and upon actual receipt of the written notice from the Adviser, 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.
(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-Advisers 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 requests, but does not obligate, Sub-Adviser to 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. Upon the reasonable request of Client or Adviser, Sub-Adviser shall produce to Client or the Adviser records and information related to 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 Clients 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 Clients 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 Clients 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 Clients information that may be relevant to Sub-Advisers 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-Advisers normal business hours at the Advisers 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-Advisers 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-Advisers 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-Advisers then current Brochure, and shall provide a copy of Sub-Advisers 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. 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 Advisers clients.
10. Investment Management Fee .
In consideration of Sub-Advisers 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.
11. 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 states 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-Advisers ability to carry out its duties under this Agreement.
12. 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 Advisers ability to carry out its duties under this Agreement.
(e) The Adviser has reviewed the Clients 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-Advisers services are suitable for Client. The Adviser will notify the Sub-Adviser promptly of any changes in a Clients 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.
13. 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-Advisers 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.
14. 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 Advisers 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.
15. 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 Clients 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.
For the avoidance of doubt, any party may disclose information to affiliates, the custodian delegates, agents, advisers, brokers and counterparties as may be reasonably required in order to perform its obligations and duties under this Agreement.
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.
16. 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.
17. 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.
18. 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.
19. 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.
20. 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, 2016, 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 Advisers 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 Clients shareholders as may be required by applicable law.
21. Liability .
The Sub-Adviser shall not be liable to the Adviser for the acts or omissions of any other fiduciary or other person acting on behalf of the Client, or for anything done or omitted to be done by the Sub-Adviser under the terms of this Agreement if the Sub-Adviser shall have acted in good faith and exercised reasonable care. Nothing in this Agreement shall in any way constitute a waiver or limitation of any rights which may not be so limited or waived in accordance with applicable law. The Sub-Adviser shall not be deemed to have breached this Agreement in connection with fluctuations arising from market movements and other events outside the control of the Sub-Adviser.
22. Governing Law .
This Agreement shall be governed by and construed under and in accordance with the laws of the State of Delaware.
23. 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 partys 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.
24. 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:
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The RBB Fund, Inc. |
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Bellevue Park Corporate Center, 103 Bellevue Parkway |
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Wilmington, DE 19809 |
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Salvatore Faia, President |
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Altair Advisers LLC |
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303 W. Madison Street, Suite 600 |
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Chicago, IL 60606 |
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312-577-0461 |
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Attention |
Rebecca Kohmescher |
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River Road Asset Management, LLC |
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462 South Fourth Street, Suite 1600 |
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Louisville, KY 40202-3467 |
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25. 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.
26. Survival .
The provisions of Sections 13, 14, 15, 21 and 23 contained herein shall survive the termination of this Agreement.
Altair Advisers LLC |
River Road Asset Management, LLC |
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The RBB Fund, Inc., on behalf of its |
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Altair Smaller Companies Fund |
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Exhibit (e)(18)
DISTRIBUTION AGREEMENT SUPPLEMENT
The RBB Fund, Inc.
Altair Smaller Companies Fund
This supplemental agreement is entered into this 20th day of October, 2014 by and between THE RBB FUND, INC. (the Company) and FORESIDE FUNDS DISTRIBUTORS LLC (the Distributor).
The Company is a corporation organized under the laws of the State of Maryland and is an open-end management investment company. The Company and the Distributor have entered into a Distribution Agreement, dated as of July 1, 2010 (as from time to time amended and supplemented, the Distribution Agreement), pursuant to which the Distributor has undertaken to act as distributor for the Company, as more fully set forth therein. Certain capitalized terms used without definition in this supplemental agreement have the meaning specified in the Distribution Agreement.
The Company agrees with the Distributor as follows:
1. Adoption of Distribution Agreement . The Distribution Agreement is hereby adopted for Altair Smaller Companies Fund Shares of Common Stock of the Company (the Class).
2. Payment of Fees . For all services to be rendered, facilities furnished and expenses paid or assumed by the Distributor on behalf of the Fund as provided in the Distribution Agreement and herein, the Company shall pay the Distributor no compensation.
3. Counterparts . This supplemental 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.
[Signature page follows.]
IN WITNESS WHEREOF, the undersigned have entered into this supplemental agreement with an effective date as of the date and year first above written.
THE RBB FUND, INC. |
FORESIDE FUNDS DISTRIBUTORS LLC |
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/s/ Salvatore Faia |
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/s/ Mark Fairbanks |
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Salvatore Faia, JD, CPA, CFE |
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Mark Fairbanks |
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President, The RBB Fund, Inc. |
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President |
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10/6/2014 |
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October 3, 2014 |
Exhibit (h)(76)
FORM OF TRANSFER AGENCY AGREEMENT SUPPLEMENT
(Altair Smaller Companies Fund)
This supplemental agreement, dated October 20, 2014 by and between THE RBB FUND, INC. (the Fund) and BNY MELLON INVESTMENT SERVICING (U.S.) INC., a Massachusetts corporation (Transfer Agent).
The Fund is a corporation organized under the laws of the State of Maryland and is an open-end management investment company. The Fund and the Transfer Agent have entered into a Transfer Agency Agreement, dated as of November 5, 1991 (as from time to time amended and supplemented, the Transfer Agency Agreement), pursuant to which the Transfer Agent has undertaken to act as transfer agent, registrar and dividend disbursing agent for the Fund with respect to the portfolios of the Fund, as more fully set forth therein. Certain capitalized terms used without definition in this supplemental agreement have the meaning specified in the Transfer Agency Agreement.
The Fund agrees with the Transfer Agent as follows:
1. Adoption of Transfer Agency Agreement . The Transfer Agency Agreement is hereby adopted for Altair Smaller Companies Fund (the Portfolio).
2. Compensation . As compensation for the services rendered by the Transfer Agent during the term of the Transfer Agency Agreement, the Fund will pay to the Transfer Agent, with respect to the Portfolio, such fees and expenses as shall be agreed to from time to time by the Fund and the Transfer Agent.
3. Counterparts . This supplemental 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.
[Signature page follows.]
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. 172 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.
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/s/ Drinker Biddle & Reath LLP |
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DRINKER BIDDLE & REATH LLP |
Philadelphia, Pennsylvania
October 17, 2014
Exhibit (n)(28)
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 Altair Smaller Companies Fund (the Fund) (Class UUUUU, par value $.001 per share) at price per Share equivalent to the net asset value per share of the Fund as determined on October 20, 2014.
2. The Company hereby acknowledges receipt from Altair of funds in the amount of $10.00 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 20 th day of October, 2014.
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THE RBB FUND, INC. |
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Salvatore Faia |
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President |
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ALTAIR ADVISERS LLC |
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Exhibit (p)(18)
Altair Advisers LLC
Code of Ethics
Revised December 1, 2013
As an investment adviser, Altair Advisers, LLC (the Firm) owes its clients the highest duty of diligence and loyalty. Accordingly, one of the fundamental policies of the Firm is to avoid any conflict of interest. In furtherance of this fundamental policy, the Firm has adopted the CFA Institute Code of Ethics and Standards of Professional Conduct (the Code). This is included as Appendix A. The Firm has further developed Policies and Procedures to Prevent the Misuse of Inside Information (Appendix B) and Policies and Procedures on Personal Trading (Appendix C), which are also part of the Code. In addition, as part of this Code, all employees, members and officers must comply with all applicable federal securities laws (i.e., the Securities Act of 1933, the Sarbanes-Oxley Act of 2002, the Investment Company Act of 1940, the Investment Advisers Act of 1940, Title V of the Gramm-Leach-Bliley Act, any rules adopted by the SEC under any of these statutes, the Bank Secrecy Act as it applies to investment advisers and any rules adopted thereunder by the SEC or the Department of the Treasury).
The Code applies to each employee of the Firm. Employees include all employees of Altair Advisers and RIA Management Inc, including all interns (whether paid or unpaid) and full- and part-time employees. Each Employee should consult with the Chief Compliance Officer regarding any question about the Code or other issues relating to the Firms fiduciary obligations to its clients before taking any action. The Firm requires its employees to report any violations of the code promptly to the Chief Compliance Officer (CCO) Altair encourages such reporting and will take steps to prevent any unwarranted actions or retaliation against reporting employees. Please refer to the Altairs Employee Handbook manual for additional information about our Whistleblower Policy and the requirements of the law.
Appendix A
CFA Institute
CODE OF ETHICS
AND STANDARDS OF
PROFESSIONAL CONDUCT
PREAMBLE
The CFA Institute Code of Ethics and Standards of Professional Conduct are fundamental to the values of CFA Institute and essential to achieving its mission to lead the investment profession globally by setting high standards of education, integrity, and professional excellence. High ethical standards are critical to maintaining the publics trust in financial markets and in the investment profession. Since their creation in the 1960s, the Code and Standards have promoted the integrity of CFA Institute members and served as a model for measuring the ethics of investment professionals globally, regardless of job function, cultural differences, or local laws and regulations. All CFA Institute members (including holders of the Chartered Financial Analyst ® [CFA ® ] designation) and CFA candidates must abide by the Code and Standards and are encouraged to notify their employer of this responsibility. Violations may result in disciplinary sanctions by CFA Institute. Sanctions can include revocation of membership, revocation of candidacy in the CFA Program, and revocation of the right to use the CFA designation.
THE CODE OF ETHICS
Members of CFA Institute (including CFA charterholders) and candidates for the CFA designation (Members and Candidates) must:
· Act with integrity, competence, diligence, respect, and in an ethical manner with the public, clients, prospective clients, employers, employees, colleagues in the investment profession, and other participants in the global capital markets.
· Place the integrity of the investment profession and the interests of clients above their own personal interests.
· Use reasonable care and exercise independent professional judgment when conducting investment analysis, making investment recommendations, taking investment actions, and engaging in other professional activities.
· Practice and encourage others to practice in a professional and ethical manner that will reflect credit on themselves and the profession.
· Promote the integrity of and uphold the rules governing capital markets.
· Maintain and improve their professional competence and strive to maintain and improve the competence of other investment professionals.
STANDARDS OF PROFESSIONAL CONDUCT
I. PROFESSIONALISM
A. Knowledge of the Law. Members and Candidates must understand and comply with all applicable laws, rules, and regulations (including the CFA Institute Code of Ethics and Standards of Professional Conduct) of any government, regulatory organization, licensing agency, or professional association governing their professional activities. In the event of conflict, Members and Candidates must comply with the more strict law, rule, or regulation. Members and Candidates must not knowingly participate or assist in and must dissociate from any violation of such laws, rules, or regulations.
B. Independence and Objectivity. Members and Candidates must use reasonable care and judgment to achieve and maintain independence and objectivity in their professional activities. Members and Candidates must not offer, solicit, or accept any gift, benefit, compensation, or consideration that reasonably could be expected to compromise their own or anothers independence and objectivity.
C. Misrepresentation. Members and Candidates must not knowingly make any misrepresentations relating to investment analysis, recommendations, actions, or other professional activities.
O. Misconduct. Members and Candidates must not engage in any professional conduct involving dishonesty, fraud, or deceit or commit any act that reflects adversely on their professional reputation, integrity, or competence.
II. INTEGRITY OF CAPITAL MARKETS
A. Material Nonpublic Information. Members and Candidates who possess material nonpublic information that could affect the value of an investment must not act or cause others to act on the information.
B. Market Manipulation. Members and Candidates must not engage in practices that distort prices or artificially inflate trading volume with the intent to mislead market participants.
III. DUTIES TO CLIENTS
A. Loyalty, Prudence, and Care. Members and Candidates have a duty of loyalty to their clients and must act with reasonable care and exercise prudent judgment. Members and Candidates must act for the benefit of their clients and place their clients interests before their employers or their own interests.
B. Fair Dealing. Members and Candidates must deal fairly and objectively with all clients when providing investment analysis, making investment recommendations, taking investment action, or engaging in other professional activities.
C. Suitability.
1. When Members and Candidates are in an advisory relationship with a client, they must:
a. Make a reasonable inquiry into a clients or prospective clients investment experience, risk and return objectives, and financial constraints prior to making any investment recommendation or taking investment action and must reassess and update this information regularly.
b. Determine that an investment is suitable to the clients financial situation and consistent with the clients written objectives, mandates, and constraints before making an investment recommendation or taking investment action.
c. Judge the suitability of investments in the context of the clients total portfolio.
2. When Members and Candidates are responsible for managing a portfolio to a specific mandate, strategy, or style, they must make only investment recommendations or take only investment actions that are consistent with the stated objectives and constraints of the portfolio.
D. Performance Presentation. When communicating investment performance information, Members and Candidates must make reasonable efforts to ensure that it is fair, accurate, and complete.
E. Preservation of Confidentiality. Members and Candidates must keep information about current, former, and prospective clients confidential unless:
1. The information concerns illegal activities on the part of the client or prospective client,
2. Disclosure is required by law, or
3. The client or prospective client permits disclosure of the information.
IV. DUTIES TO EMPLOYERS
A. Loyalty. In matters related to their employment, Members and Candidates must act for the benefit of their employer and not deprive their employer of the advantage of their skills and abilities, divulge confidential information, or otherwise cause harm to their employer.
B. Additional Compensation Arrangements. Members and Candidates must not accept gifts, benefits, compensation, or consideration that competes with or might reasonably be expected to create a conflict of interest with their employers interest unless they obtain written consent from all parties involved.
C. Responsibilities of Supervisors. Members and Candidates must make reasonable efforts to detect and prevent violations of applicable laws, rules, regulations, and the Code and Standards by anyone subject to their supervision or authority.
V. INVESTMENT ANALYSIS, RECOMMENDATIONS, AND ACTIONS
A. Diligence and Reasonable Basis. Members and Candidates must:
1. Exercise diligence, independence, and thoroughness in analyzing investments, making investment recommendations, and taking investment actions.
2. Have a reasonable and adequate basis, supported by appropriate research and investigation, for any investment analysis, recommendation, or action.
B. Communication with Clients and Prospective Clients. Members and Candidates must:
1. Disclose to clients and prospective clients the basic format and general principles of the investment processes they use to analyze investments, select securities, and construct portfolios and must promptly disclose any changes that might materially affect those processes.
2. Use reasonable judgment in identifying which factors are important to their investment analyses, recommendations, or actions and include those factors in communications with clients and prospective clients.
3. Distinguish between fact and opinion in the presentation of investment analysis and recommendations.
C. Record Retention. Members and Candidates must develop and maintain appropriate records to support their investment analyses, recommendations, actions, and other investment-related communications with clients and prospective clients.
VI. CONFLICTS OF INTEREST
A. Disclosure of Conflicts. Members and Candidates must make full and fair disclosure of all matters that could reasonably be expected to impair their independence and objectivity or interfere with respective duties to their clients, prospective clients, and employer. Members and Candidates must ensure that such disclosures are prominent, are delivered in plain language, and communicate the relevant information effectively.
B. Priority of Transactions. Investment transactions for clients and employers must have priority over investment transactions in which a Member or Candidate is the beneficial owner.
C. Referral Fees. Members and Candidates must disclose to their employer, clients, and prospective clients, as appropriate, any compensation, consideration, or benefit received from or paid to others for the recommendation of products or services.
VII. RESPONSIBILITIES AS A CFA INSTITUTE MEMBER OR CFA CANDIDATE
A. Conduct as Members and Candidates in the CFA Program. Members and Candidates must not engage in any conduct that compromises the reputation or integrity of CFA Institute or the CFA designation or the integrity, validity, or security of the CFA examinations.
B. Reference to CFA Institute, the CFA Designation, and the CFA Program. When referring to CFA Institute, CFA Institute membership, the CFA designation, or candidacy in the CFA Program, Members and Candidates must not misrepresent or exaggerate the meaning or implications of membership in CFA Institute, holding the CFA designation, or candidacy in the CFA program.
CFA Institute |
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APPENDIX B: Policy & Procedures To Prevent The Misuse of Inside Information
1. Policy: Altair Advisers, LLC (the Firm) has adopted this policy and the procedures that follow to prevent the misuse of material, non-public information in securities transactions.
Violations of this Code may also violate the federal securities laws. Sanctions for violations of the federal securities laws, particularly violations of the antifraud provisions, include fines, money damages, injunctions, imprisonment, and bars from certain types of employment in the securities business.
The Firm may also impose sanctions on the Employee, including unwinding a transaction, forfeiture of any profit from a transaction, reduction in salary, censure, suspension or termination of employment. Finally, you may be sued by investors seeking to recover damages for insider trading violations.
2. Scope of the Policy: This policy is drafted broadly; it will be applied and interpreted in a similar manner. The policy applies to securities trading and information handling by members, officers and employees of the Firm (including spouses, minor children and adult members of their households).
The law of insider trading is unsettled; an individual legitimately may be uncertain about the application of the policy in a particular circumstance. Often, a single question can forestall disciplinary action or complex legal problems. You should direct any questions relating to this policy to the Firms Chief Compliance Officer or his delegate. You also must notify the Firms Chief Compliance Officer or his delegate immediately if you have any reason to believe that a violation of the policy has occurred or is about to occur.
3. Policy on Insider Trading: No person to whom this policy applies may trade, either personally or on behalf of others, on the basis of (e.g., while aware) inside information; nor may such Firm personnel communicate material, non-public information to others in violation of the law.
(a) Definition of Material Information. Information is material when there is a substantial likelihood that a reasonable investor would consider it important in making his or her investment decisions. Generally, this is information whose disclosure will have a substantial effect on the price of a companys securities. No simple bright line test exists to determine when information is material; assessments of materiality involve a highly fact-specific inquiry. For this reason, you should direct questions about whether information is material to the Firms Chief Compliance Officer or his delegate.
Material information often relates to a companys results and operations including, for example, dividend changes, earnings results, changes in
previously released earnings estimates, significant merger or acquisition proposals or agreements, major litigation problems, and extraordinary management developments.
Material information also may relate to the market for a companys securities. Information about a significant order to purchase or sell securities may, in some contexts, be deemed material. Similarly, prepublication information regarding reports in the financial press also may be deemed material. For example, the Supreme Court upheld the criminal convictions of insider trading defendants who capitalized on prepublication information about The Wall Street Journals heard on the Street column.
(b) Definition of non-public: Information is public when it has been disseminated broadly to investors in the marketplace. Tangible evidence of such dissemination is the best indication that the information is public. For example, information is public after it has become available to the general public through a public filing with the SEC or some other governmental agency, the Dow Jones tape or The Wall Street Journal or some other publication of general circulation, and after sufficient time has passed so that the information has been disseminated widely.
(c) Identifying, (inside information): In order to be inside information, information must not only be material and non-public, it must be information about a security or issuer that was (i) acquired in violation of a duty to keep the information confidential, or (ii) misappropriated. For example, if an officer of an issuer breaches his duty to the issuer and conveys information that should have been kept confidential, that information is inside information, even if you learn it third- or fourth hand. In contrast, a conclusion drawn by a securities analyst from publicly-available information is not inside information, even if the analysts conclusion is both material and non-public.
Deciding whether information that is material and non-public is inside information is often difficult. For that reason, the Firms policies are triggered once you become aware of material, non-public information, whether or not the information is inside information that will result in trading restriction.
(d) Trading restrictions: Before executing any trade for yourself or others, if you think you are aware of material, non-public information, you should take the following steps:
(i) Report the information and proposed trade immediately to the Chief Compliance Officer or his delegate.
(ii) Do not purchase or sell the securities on behalf of yourself or others, until the Firm has made a determination as to the need for trading restrictions.
(iii) Do not communicate the information inside or outside the Firm (other than to the Chief Compliance Officer or his delegate).
(iv) After the Chief Compliance Officer or his delegate has reviewed the issue, the Firm will determine whether the information is material and nonpublic and, if so, whether any trading restrictions apply and what action, if any, the Firm should take.
You should consult with the Chief Compliance Officer or his delegate before taking any action. This degree of caution will protect you, our clients and the Firm.
(e) Contacts with public companies: For the Firm, contacts with executives at public companies represent opportunities where confidential information may be obtained. Difficult legal issues arise, however, when, in the course of these contacts, an employee or other person subject to this policy becomes aware of material, non-public information. This could happen, for example, if a companys chief financial officer prematurely discloses quarterly results or an investor relations representative makes a selective disclosure of adverse news to a handful of investors. In such situations, the Firm must make a judgment as to its further conduct. To protect yourself, your clients and the Firm, you should contact the Chief Compliance Officer or his delegate immediately if you believe that you are aware of material, non-public information.
(f) Tender offers: Tender offers represent a particular concern in the law of insider trading for two reasons. First, tender offer activity often produces extraordinary gyrations in the price of the target companys securities. Trading during this time period is more likely to attract regulatory attention (and produces a disproportionate percentage of insider trading cases). Second, the SEC has adopted a rule which expressly forbids trading and tipping on the basis of material, non-public information regarding a tender offer received from the tender offeror, the target company or anyone acting on behalf of either. The Firm employees and others subject to this policy should exercise particular caution any time they become aware of non-public information relating to a tender offer.
4. Procedures: The following procedures have been established to aid the members, officers and employees of the Firm in avoiding insider trading and to aid the Firm in preventing, detecting and imposing sanctions against insider trading. Every member, officer and employee of the Firm must follow these procedures or risk serious sanctions, including dismissal, substantial personal liability and criminal penalties. If you have any questions about these procedures, you should consult the Chief Compliance Officer or his delegate.
(a) Personal Securities Transactions: All personal securities transactions are subject to the Firms Code of Ethics.
(b) High-Risk Trading Activities: Certain high-risk trading activities, if used in the management of a member, officer or employees personal trading portfolio, are risky not only because of the nature of the securities transactions themselves, but also because of the potential that action necessary to close out the transactions may become prohibited during the duration of the transaction. Examples of such activities include short sales of common stock and trading in derivative instruments such as option contracts to purchase (call) or sell (put) securities at certain predetermined prices. Members, officers and employees should understand that short sales and trading in derivative instruments involve special risks - derivative instruments, for example, ordinarily have greater price volatility than the underlying security. The fulfillment of the obligations owed by each member, officer and employee to the Firm may heighten those risks. For example, if the Firm becomes aware of material, non-public information about the issuer of the underlying securities, the Firm personnel may find themselves frozen in a position in a derivative security. The Firm will not bear any losses resulting in personal accounts through the implementation of this policy.
(c) Restrictions on disclosures (Chinese Walls): Members, officers and employees shall not disclose any non-public information (whether or not it is material) relating to the Firm or its securities transactions to any person outside the Firm (unless such disclosure has been authorized).
(i) Do not communicate: Material, non-public information may not be communicated to anyone, including persons within the Firm, except as provided in Section 3 above. Conversations containing such information, if appropriate at all, should be conducted in private (for example, not by cellular telephone, to avoid potential interception).
(ii) Security: Material, non-public information must be secured. For example, access to files containing material, non-public information and computer files containing such information should be restricted, including by maintenance of such materials in locked cabinets, or through the use of passwords or other security devices for electronic data.
APPENDIX C: Personal Trading Rules and Procedures
I. GENERAL STANDARDS
A. Fair Dealing. Each Employee shall act in a manner consistent with the obligation of the Firm and each person covered by the Code to deal fairly with all clients when taking investment action. Any investment ideas obtained by any Employee in the course of such Employees work for the Firm shall be made available for use by the Firms clients prior to any personal trading or investment by any Employee based on such ideas, including trading or investment by an Employee directly or indirectly.
B. Personal Securities Transactions. No Employee may purchase or sell any security (as defined below) in which the Employee has a beneficial interest except in accordance with this Code. See Schedule A for examples of situations in which a person covered by the Code will be deemed to have a beneficial interest in a security for purposes of the Code.
C. Gifts, Favors, and, Gratuities. An Employee may not accept any gift, favor, gratuity or invitation offered by any broker, client, approved company (i.e., a company whose securities are held by a Firm client), supplier, or other person or organization with whom the Firm has a business relationship that creates a conflict between the Employees personal financial interest and the interests of the Firms clients. Specifically, an Employee may not accept any such gift, favor, gratuity or invitation except those extended as a customary courtesy of business life. The value of any gift, favor, gratuity or invitation is not to exceed $250. Prohibited gifts or gratuities include the receipt of any credit facility, personal investment opportunities or other special treatment from any broker or dealer that is not available from that broker or dealer to similarly situated customers of the Firm.
No Employee should offer any gift, favor, gratuity, or invitation that influences decision-making or otherwise creates a conflict of interest on the part of the intended recipient.
D. Confidentiality. Information relating to any clients portfolio or activities is strictly confidential and shall not be disclosed, orally or in writing, to anyone outside the Firm, unless that Employee has been specifically authorized to release that information.
E. Service as a Director. No Employee shall serve on the board of directors (or equivalent) of any company with a class of publicly-held securities, unless such service has been authorized by the Chief Compliance Officer. Board service increases the likelihood of becoming aware of material, non-public information.
Please refer to the Firms Policy and Procedures to Prevent the Misuse of Inside Information (Appendix B).
F. Exemptions from the Codes Provisions. The purpose of the Code is to prevent the damage that might result from a conflict between the interests of an Employee and the Firms clients. For that reason, the Chief Compliance Officer has the authority to grant an exemption, in advance of any proposed transaction, from any provision of this Code (except the provisions requiring reporting of personal securities transactions) if, in the judgment of the Chief Compliance Officer, the proposed conduct would involve negligible opportunity for abuse.
II. TRANSACTIONS COVERED BY THE CODE AND EXEMPT TRANSACTIONS
The Code regulates personal securities transactions as a part of the effort by the Firm to detect and prevent conduct that might create actual or potential conflicts of interest with a client. The Code prohibits certain transactions (as listed in Section II.B) and establishes reporting requirements for all non-prohibited transactions except those listed as exempt in Section II.C.
A. Transactions Covered by the Code. Every transaction in a security by or for the benefit of an Employee is subject to the Code.
The term Security is defined very broadly for purposes of the Code and includes all stock, debt obligations and other instruments. Transactions involving options, warrants, and futures contracts are subject to the same restrictions and procedures as those set forth in this Code with respect to the underlying securities. The term security does not include (i) a direct obligation of the Government of the United States; (ii) a bankers acceptance, bank certificate of deposit, commercial paper or high quality short-term debt instrument, including a repurchase agreement; (iii) shares issued by a money market fund; (iv) shares issued by an open-end registered investment company, except those investment companies that are exchange-traded or advised or sub-advised by the Firm or any of its affiliates (a reportable fund); or (v) shares issued by unit investment trusts that are invested exclusively in one or more open-end funds, none of which are reportable funds. An open-end mutual fund offers redeemable securities whereas an ETF (exchange traded fund) is traded on an exchange, and therefore, is considered to be a reportable fund.
The Code covers transactions in the personal account of an Employee, the account of any member of the Employees immediate family (including spouse, minor children or any relative living in the Employees home), any other account in which the Employees has a direct or indirect financial or beneficial ownership interest (Covered Accounts). As required by the Securities and Exchange Commission, beneficial interest is defined broadly; see Schedule A to the Code for examples of ownership arrangements covered
Having a beneficial interest in a security for purposes of the Code is not necessarily the same thing as ownership for other purposes (including, for example, tax purposes).
If you have any questions about whether a transaction is covered by the Code, or whether you have a beneficial ownership in any security, contact the Chief Compliance Officer before taking any action.
B. Prohibited Transactions
1. Fraudulent Practices. No Employee shall employ any device, scheme or artifice to defraud any client or prospective client, or engage in fraudulent, deceptive or manipulative practices.
2. Front-Running. No Employee shall engage in front-running an order or recommendation made by any third-party investment manager hired by any client of the Firm, even if the recommendation is for someone other than a client of the Firm. Front-running consists of executing a transaction in the same or underlying securities, options, rights, warrants, convertible securities, or other related securities, in advance of block or large transactions of a similar nature likely to affect the value of the securities, based on the knowledge of the forthcoming transaction or recommendation.
3. Inside Information. No Employee may purchase or sell any security prohibited by the Policy on Insider Trading.
4. Initial Public Offerings. No Employee may purchase any equity security or any security convertible into an equity security in an initial public offering of that security, except with the prior approval of the Chief Compliance Officer.
5. Private Placements. No Employee may purchase any security in a private placement (i.e., an offering that is exempt from registration pursuant to either Section 4(2) or 4(6) of the Securities Act of 1933) without the prior approval of the Chief Compliance Officer.
See Policy & Procedures To Prevent The Misuse of Inside Information (Appendix B) for more information and definitions.
C. Exempt Transactions. The following transactions are exempt from the reporting provisions of this Code:
1. purchases or sales effected in any account over which an Employee has no or indirect influence or control or in any account of the Employee which is managed on a discretionary basis by a person other than the Employee and with respect to which the Employee does not, in fact, influence or control purchase or sale transactions; and
2. transactions effected pursuant to an Automatic Investment Plan (i.e., a program in which the regular periodic purchases (or withdrawals) are made automatically in (or from) an investment account(s) in accordance with a predetermined schedule and allocation, including a dividend reinvestment plan.
III. Reports of Personal Investments and Transactions.
A. Initial Compliance Certification
Every Employee shall, no later than ten (10) business days after the person begins employment, certify that he or she has read and understands the Code (including all appendices and schedules) and is in compliance with the Code as of the date of hire. The Employee must sign the Initial Compliance Certification (attached as Exhibit A) and return the executed copy to the Chief Compliance Officer or his designee. Each Employee is required to identify in the Initial Compliance Certification each brokerage or other account in which covered and non-covered securities may be held, in which the Employee has a beneficial interest, that the Employee controls or in which the Employee shares profits. In addition to identification of accounts, each Employee must also submit a holdings schedule, dated no more than 45 days before the initial date of employment, of covered securities held in the accounts which are listed in the Initial Compliance Certification.
Holdings schedules must include:
· Name of Security
· Ticker symbol or CUSIP number
· Type of security
· Number of shares
· Principal amount
· Name of the broker or custodian in which securities are held for the Employees direct or indirect benefit
· Date of the report.
B. Annual Compliance Certification
Every Employee shall, no later than July 31 each year, file an Annual Compliance Certification for the year ending the preceding June 30 (attached as Exhibit B) containing the same information required in the Initial Compliance Certification as described above.
C. Quarterly Reporting of Personal Securities Transactions
In addition to the above Initial and Annual Compliance Certifcate requirements, every Employee shall also report to the Chief Compliance Officer, on a quarterly basis, all transactions in any security in which such person has, or by reason of such transaction acquires, any direct or indirect beneficial interest in the security. Reports required to be made under this paragraph shall be made on a Quarterly Transactions Report (form attached as Exhibit C) not later than 30 days after the end of the calendar quarter in which the transaction was effected. A report shall be made in a format that contains the following information:
· the date of the transaction;
· the title and the number of shares, bonds, units, or other relevant quantity (as the case may be) of each security involved;
· the nature of the transaction (i.e., purchase, sale or any other type of acquisition or disposition);
· the price at which the transaction was effected; and
· the name of the broker, dealer, bank or other financial institution with or through whom the transaction was effected.
D. Exempt Transactions
An Employee need not submit a report with respect to:
a) Transactions effected for, securities held in, any account over which the person has no direct or indirect influence or control;
b) Transactions effected for non-reportable securities
c) Transactions effected pursuant to an automatic investment plan, e.g. a dividend reinvestment plan;
d) A quarterly transaction report if the report would duplicate information contained in securities transaction confirmations or
brokerage account statements that Altair holds in its records so long as the firm receives the confirmations or statements no later than 30 days after the end of the applicable calendar quarter;
e) Any transaction or holding report if Altair has only one Employee, so long as the firm maintains records of the information otherwise required to be reported.
IV. ADMINISTRATION OF THE CODE
A. Annual Certification
a. Each year the Firm will recirculate the Code (or any amendments) to its Employees. At that time each Employee is required to sign the Annual Compliance Certification referred to above and return the executed copy to the Chief Compliance Officer acknowledging receipt of the Code.
Information reported under the Code will be maintained in confidence, except to the extent necessary to implement and enforce the provisions of the Code or to comply with requests for information from regulatory agencies.
B. Review of Personal Securities Transactions.
a. The Chief Compliance Officer or someone under his or her supervision shall review all personal securities transaction and holdings reports. The Chief Compliance Officer shall also maintain a watch list of securities with respect to which an Employee of the Firm has become aware of material, non-public information. As part of the Chief Compliance Officers review of personal trading, the Chief Compliance Officer will investigate any personal trading by an Employee in a security on the watch list to his/her reasonable satisfaction.
b. See Procedure for Employee Initial, Annual and Quarterly Compliance Reporting and Administration for more detailed information (Attached as Exhibit D)
V. VIOLATIONS OF THE CODE
If the Chief Compliance Officer determines that an Employee has violated, or the Chief Compliance Officer has a reasonable basis to believe that an Employee has violated, any of the provisions of this Code, the Firm may impose sanctions on the Employee, including unwinding a transaction, forfeiture of any profit from a transaction, reduction in salary, censure, suspension or termination of employment.
Violations of this Code may also violate the federal securities laws. Sanctions for violations of the federal securities laws, particularly violations of the antifraud
provisions, include fines, money damages, injunctions, imprisonment, and bars from certain types of employment in the securities business.
SCHEDULE A
EXAMPLES OF BENEFICIAL OWNERSHIP
You will be deemed to have a beneficial interest in a security for purposes of the Code in the circumstances listed below.
1. Securities held by you for your own benefit, whether such securities are in bearer form, registered in your own name, or otherwise;
2. Securities held by others for your benefit (regardless of whether or how such securities are registered), such as, for example, securities held for you by custodians, brokers, relatives, executors, or administrators;
3. Securities held by a pledgee for your account;
4. Securities held by a trust in which you have an interest. A remainder interest will confer beneficial ownership only if you have power to exercise or share investment control over the trust.
5. Securities held by you as trustee or co-trustee, where either you or any member of your immediate family (i.e., spouse, children or descendants, stepchildren, parents and their ancestors, and stepparents, in each case treating a legal adoption as blood relationship) has an interest in the trust.
6. Securities held by a trust of which you are the settlor, if you have the power to revoke the trust without obtaining the consent of all the beneficiaries and have or share investment control;
7. Securities held by any non-public partnership in which you are a partner to the extent of your interest in partnership capital or profits;
8. Securities held by a personal holding company controlled by you alone or jointly with others;
9. Securities held in the name of your spouse unless legally separated, or in the name of you and your spouse jointly;
10. Securities held in the name of your minor children or in the name of any immediate family member of you or your spouse (including an adult child) who is presently sharing your home. This applies even if the securities were not received from you and the income from the securities is not actually used for the maintenance of your household;
11. Securities held in the name of any person other than you and those listed in paragraphs (9) and (10), above, if by reason of any contract, understanding,
relationship, agreement, or other arrangement you obtain benefits substantially equivalent to those of ownership;
12. Securities held in the name of any person other than you, even though you do not obtain benefits substantially equivalent to those of ownership (as described in (11), above), if you can vest or revest title in yourself.
EXHIBIT A
ALTAIR ADVISERS LLC
CODE OF ETHICS
INITIAL COMPLIANCE CERTIFICATION
1. I certify that:
a. I have read and understand the Altair Advisers LLC Code of Ethics
b. And as of the date of hire listed below, I am in compliance with the Code.
2. Below is listed each brokerage or other account which may hold reportable or nonreportable securities in which I have a beneficial interest, control or share the profits (Covered Accounts).
3. Select one of the following:
I have attached a holdings report for each account listed above, dated no more than 45 days before the date of hire listed below, which details the reportable securities in which I have a beneficial interest as defined in the Code or
There are no reportable securities held in the Covered Accounts listed above.
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The undersigned, in my capacity as the Chief Compliance Officer, hereby certifies receipt of this Initial Compliance Certification on the day of , 20 .
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Chief Compliance Officer |
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EXHIBIT B
ALTAIR ADVISERS LLC
Code of Ethics
ANNUAL COMPLIANCE CERTIFICATION
1. I certify that:
a. I have re-read and understand the Altair Advisers LLC Code of Ethics and Compliance Policy (the Code),
b. During the past year I have complied with the requirements of the Code, and
c. I have reported all securities transactions required to be reported under the Code.
Below is listed each brokerage or other account which may hold reportable or nonreportable securities in which I have a beneficial interest, control or share the profits (Covered Account).
Select one of the following:
I have attached a holdings report for each account listed above, dated no later than June 30 th of each year, which details the reportable securities in which I have a beneficial interest as defined in the Code or
There are no reportable securities held in the Covered Accounts listed above.
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The undersigned, , inmy capacity as the Chief Compliance Officer, hereby certifies receipt of this Annual Compliance Certification on the day of , 20 .
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Exhibit C
ALTAIR ADVISERS LLC
Code of Ethics
Quarterly Compliance Report
For the Quarter Ended
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This Quarterly Compliance Report must be filed within 30 days after the end of each calendar quarter by all Employees of the Firm. This report should list all accounts opened by the Employee, those where reportable or non-reportable securities may be held for the direct or indirect benefit of the Employee (Covered Accounts), during the report period.
If you are an Employee, you must file this report whether or not you held or opened any Covered Accounts which may hold reportable or non-reportable during the period. Each report must cover all accounts in which you have a direct or indirect beneficial ownership interest (unless you have no influence or control over such accounts) and all non-client accounts that you manage or with respect to which you give investment or voting advice.
Did you open any accounts in which Securities are held for your direct or indirect benefit during the above quarter?
Yes o No o
Did you have any reportable transactions in Covered Accounts during the above quarter?
Yes o No o
If you answered Yes to either question above, please complete the information on the next page. Copies of brokerage statements may be attached to a signed report in lieu of setting forth the information otherwise required. Use additional copies of this form if necessary. To the best of my knowledge and belief, the answers set out in this Report are true and correct.
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The undersigned, , in my capacity as the Chief Compliance Officer, hereby certifies receipt of this Quarterly Compliance Report on the day of , 20 .
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Part I
Below is listed each brokerage or other account opened during the quarter, in which I have a beneficial interest, control or share the profits:
Part II
Below is the detail of transactions in covered securities in which I have a direct or beneficial interest:
a) Date of
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c) Ticker
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d) Number
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e) Principal
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f)Nature of
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g) Price at
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h) Name of
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Employee Name: |
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Exhibit D
Altair Advisers LLC
Procedure for Employee Initial, Annual and
Quarterly Compliance Reporting and Administration
Under the Altair Advisers LLC Code of Ethics
I. General Overview
A. The Altair Advisers Code of Ethics requires that all employees (full time and part time):
1. Complete an Initial Compliance Certification within 45 days of hire date which lists all brokerage accounts which the employee owns or in which the employee holds a beneficial interest together with a detailed listing of reportable securities held in those accounts
2. Complete an Annual Compliance Certification by June 30 th of each year which certifies that the employee has read and is in compliance with the Code of Ethics and also lists all brokerage accounts which the employee owns or in which the employee holds a beneficial interest together with a detailed listing of covered securities held in those accounts
3. Complete a Quarterly Compliance Report by the last day of the month end following the quarter end. This report includes an Employees agreement that they are following the Code and also includes a report of all reportable transactions in Covered Accounts.
B. Responsibility for Review
1. The Director of Administration/Controller is responsible for the collection of this information from employees and maintains the records for the Company. The following of a summary of the procedures used to affect this process.
2. The Chief Compliance Officer is presented with all collected certifications / reports for review and sign off. (Note: The Managing Director of Investment Operations is to review all certifications and reports of the Chief Compliance Officer.)
II. Initial Compliance Certifications
A. All new employees are provided with a copy of the Code of Ethics during the new employee orientation conducted by the Director of Administration on their first day of employment. The employee is required to complete the certification process summarized above and described in more detail in the Altair Advisers Code of Ethics within 10 business days of the start date and the information presented must be current (within 45 days of hire date for any statements).
B. The Initial Compliance Certification received from the new employee(s) is/are included with the Quarterly Compliance Reports in presentation to the Chief Compliance Office by the Director of Administration in the next quarterly reporting period.
III. Annual Compliance Certifications
A. Upon completion of the quarter ended June 30, in conjunction with the quarterly process described below, the Director of Administration announces the deadline for delivery of
a. An Annual Compliance Certification from each employee stating that each employee has re-read and understands the Code of Ethics
b. A list of all Covered Accounts, those owned by the employee or in which the employee has a beneficial interest
c. A list of reportable securities held in the Covered Accounts
B. Receipt of these documents is noted on the Compliance Reporting Control Report and held in the pending file until all employee responses have been received
C. When all employees have delivered their certifications, the certifications together with the Compliance Reporting Control Report, are delivered to the CCO for his review. (Note - the report provided by the Chief Compliance Officer (CCO) is reviewed by the Managing Director in charge of Investment Operations.)
IV. Quarterly Compliance Reports
A. The Director of Administration maintains a master list of that is updated each quarter to reflect the employees who are required to complete a Quarterly Compliance Report. (Compliance Reporting Control Report attached).
B. Subsequent to the end of each quarter, the Director of Administration announces to all employees via Altair Advisers intranet the deadline for delivery of the Quarterly Compliance Report. Employees are required to deliver their report no later than the last business day of the month following the end of each calendar quarter
C. As employees deliver their Quarterly Compliance Reports, the Director indicates that the report has been received and retains the report in a pending file. The file is held until all employees have responded
D. When all employees have delivered their reports, the reports together with the Compliance Reporting Control Report are delivered to the Chief Compliance Officer for his review. (Note - the report provided by the Chief Compliance Officer (CCO) is reviewed by the Managing Director in charge of Investment Operations.)
V. Post-Review
A. Upon completion of review by the CCO, all certifications and reports are returned to the Director of Administration. The certifications and reports are then filed in an employee file and the Compliance Reporting Control Report is filed reports by date. A master file of reports received from employees is also maintained.
VI. Record Keeping Requirements
A. The Chief Compliance Officer or his designees as detailed below shall be responsible for maintaining the following records for at least five years after the date of the decision/document pertaining to this Code:
B. A copy of the Firms Code of Ethics as adopted and implemented will be maintained by the CCO or Managing Director of Investment Operations.
C. Violations and Resolutions: A record of any violation of the Code, and of any action taken as a result of the violation will be kept by the CCO or Director of Administration
D. Acknowledgements and Certifications: A record of all written acknowledgments as required by Rule 204A-1(a)(5) for each Employee will be kept by the CCO or Director of Administration
E. Holding and Transaction Reporting: A record of each holding and transaction report made by an access person as required by Rule 204A-1(b), including any information provided under paragraph (b)(3)(iii) of that section in lieu of such reports will be kept by the CCO or Director of Administration
Exhibit (p)(19)
Code of Ethics
In accordance with Rule 204A-1 of the Investment Advisers Act of 1940 (the Advisers Act) and Rule 17j-1 of the Investment Company Act of 1940 (the IC Act), all Partners and supervised employees of Aperio Group, LLC (Aperio) are required to comply with the following Code of Ethics (Code). Under this rule, all Partners and employees of Aperio are considered to be Supervised Persons. Those Supervised Persons, and any Aperio agent, representative or independent consultant that have access to non- public information regarding clients purchases or sales, are directly involved in making portfolio management decisions and/or are trading in clients accounts based on those decisions are considered Access Persons. All Supervised Persons and Access Persons must be provided with a current copy of the Aperio Code of Ethics and any amendments.
This policy is intended to promote honest and ethical conduct of employees and others who act for and on behalf of Aperio Group, LLC. While this policy may not cover every issue that may arise, it sets out the basic principles to guide the firms Supervised Persons and Access Persons. All such persons must conduct themselves accordingly, and seek to avoid even the appearance of improper behavior. If a law conflicts with a policy in this Code, you must comply with the law. If you have any questions about these conflicts, you should ask your supervisor or Aperios Chief Compliance Officer (CCO).
A copy of the Code and any subsequent amendment to the Code will be provided to all Supervised Persons and Access Persons. Aperios CCO or a designee will maintain and enforce this Code. Evidence of receipt of this Code by all Supervised Persons, and Access Persons will be maintained by the CCO.
Those who violate the standards in this Code will be subject to disciplinary action, including possible termination of employment. The CCO is charged with keeping all required records pertaining to this Code, which are outlined in the Advisers Act and the IC Act and include, but are not limited to copies of the Code, a list of all Access Persons, copies of all reporting by all Access Persons required by the Code, records of violations of the Code, and actions taken as a result of any violation of the Code. All required records pertaining to this Code will be maintained in accordance with the books and records rules under the Advisers Act and the IC Act.
Supervised Persons and Access Persons must be aware that the issues discussed below can arise both as the result of such persons direct activity, and indirectly, through third persons related to or affiliated with a Supervised Person or Access Person. Supervised Persons and Access Persons must not deal with or use these third persons on their behalf to take any action that is prohibited to the Supervised Person or Access Person as indicated hereunder.
1. Compliance with Laws, Rules and Regulations
It is the policy of Aperio that Supervised Persons and Access Persons shall act in accordance with the Laws, Rules and Regulations of the Governmental jurisdictions within which the firm operates and is regulated. These include the Advisers Act, the IC Act, the Securities Act of 1933, the Securities Exchange Act of 1934, the Bank Secrecy Act of 1970, as it applies to fund and investment advisers, Title V of the Gramm-Leach- Bliley Act of 1999, the Sarbanes-Oxley Act of 2002, any rules adopted by the SEC under any of these statutes and any rules adopted there under by the SEC, Department of Labor or the Department of Treasury.
Obeying the law, both in letter and in spirit is the foundation upon which Aperios ethical standards are built. All Supervised Persons and Access Persons must respect and obey all laws in any jurisdiction in which the firm operates. If there is a question of law in the course of doing business it is important to seek advice from the appropriate Aperio official or the CCO.
2. Conflicts of Interest
It is the policy of Aperio that Supervised Persons and Access Persons shall avoid conflicts of interest and place client interests before their own. As fiduciaries, the firm, its Supervised Persons and Access Persons must at all times deal with clients in an honest and ethical manner.
A conflict of interest exists when a persons personal interest interferes in any way with the interests of Aperio and by extension an Aperio client. A conflict situation can arise when an Supervised Person or Access Person takes actions or has interests that may make, or appear to make, it difficult to perform his or her Aperio work objectively and effectively. Conflicts may also occur when an Aperio Supervised Person or Access Person receives improper personal benefits as a result of his or her position and duties at Aperio.
Supervised Persons and Access Persons shall at all times ensure that client interests supersede their individual interests and Aperio interests in the client relationship including (but not limited to) investment selection, transactions, monitoring, and custody.
Any Supervised Person or Access Person who becomes aware of a conflict of interest should consult with the CCO or other Partner of Aperio and consult the procedures described in section 9 of this Code.
3. Unlawful Actions
It is unlawful for any Supervised Person or Access Person:
(a) To employ any device, scheme or artifice to defraud a client;
(b) To make any untrue statement of a material fact to any of the firms clients or omit to state a material fact necessary in order to make the statements made to a client, in light of the circumstances under which they are made, not misleading;
(c) To engage in any act, practice or course of business that operates or would operate as a fraud or deceit on a client; or
(d) To engage in any manipulative practice with respect to a client.
This Code does not attempt to identify all possible conflicts of interest, and literal compliance with each of its specific provisions will not shield Supervised Persons from liability for personal trading or other conduct that violates a fiduciary duty to firm clients.
4. Marketing Timing
No Supervised Person or Access Person shall engage in aggressive trading or market timing activities. For the purposes of the Code, market timing shall be defined as a purchase and redemption, regardless of size, of the same Firm managed mutual fund within a 30 day period, unless doing so would result in a substantial loss. Under this circumstance, the Supervised Person or Access Person must obtain approval from the CCO (or other Partner in the case of the CCO) in advance of the sale of the Firm managed mutual fund and provide a written detailed explanation of the hardship.
5. Insider Trading Policy
It is the policy of Aperio that Supervised Persons and Access Persons who have access to confidential information are not permitted to act or use, or cause others to act or use, share or disseminate material nonpublic information. Use of non-public information for personal financial benefit or through dissemination to benefit others who would use such information to make an investment decision is unethical and illegal.
Pending trades, fund holdings, client holdings, and client diversification plans may be considered material non-public information that a reasonable investor would view as altering the total mix of information available to the public. In addition, material non- public information also may include information about corporate events that have not yet been made public. For example, the officers of a firm know in advance if the company is about to be acquired or if the latest earning report is going to differ significantly from information previously released. If information reasonably influences the purchase, sale or market value of a companys securities and such information has not yet been publicized in a widely used medium, then it is considered insider information
Aperio maintains a list of securities, and Firm managed mutual funds which are restricted from trading by Access Persons (Restricted Securities List). It is the responsibility of each Access Person to consult the Restricted Securities List or the CCO before transacting to ensure compliance with this policy. Each Access Person
Must review the firms most recently updated Restricted Securities List and report to the CCO any recommended additions or deletions to that list.
To prevent and detect insider trading and purchases of restricted securities, 1) quarterly trading reports will be reviewed for all Supervised Persons and 2) quarterly brokerage statements and annual holdings will be reviewed for all Access Persons.
6. Honesty and Fair Dealing
It is the policy of Aperio that each Supervised Person and Access Person should endeavor to respect the rights of and deal fairly and objectively with Aperios clients, suppliers, competitors and employees. No Supervised Person or Access Person should take unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of material facts, or any other intentional unfair-dealing practice.
In order to maintain the trust that clients place in Aperio, Supervised Persons and Access Persons should deal with all clients equitably and not give preferential treatment to favored clients to the detriment of other clients. Supervised Persons and Access Persons will use reasonable care and prudent judgment when managing client assets and meeting their obligations to clients.
Business entertainment and gifts in a commercial setting is for the purpose of creating good will and sound working relationships and not to gain unfair advantage with clients. No gift or entertainment should ever be offered, given, provided or accepted by any Aperio Supervised Person, Access Person or family member of such persons unless it: 1) is not a cash gift (excepting minimal speaking gratuities or similar payments), 2) is consistent with customary business practices, 3) is not excessive in value (maximum of $200.00 a year), 4) cannot be construed as a bribe or payoff and 5) does not violate any laws or regulations.
No Supervised Person or Access Person shall serve on the board of directors of a company, institution, endowment, charity, or any other organization without prior written authorization by the CCO or designee (or other Partner in the case of the CCO). If board service is authorized, such Supervised Person or Access Person shall at all times ensure that they have no role in making any type of investment decisions with respect to the company, unless otherwise approved by the CCO or designee (or other Partner in the case of the CCO).
While associated with Aperio, no Supervised Person or Access Person will accept outside employment or receive outside compensation without obtaining written pre- approval by the CCO or designee (or other Partner in the case of the CCO). (Please note: This procedure must be followed even if the outside activity is performed without receiving compensation.
7. Record-Keeping and Reporting
Aperio requires honest and accurate recording and reporting of information in order to make responsible business decisions. This applies to Aperio reporting and to information and reports provided to clients.
All reports and communication internal to Aperio and external to its clients and others must be accurate and complete. Performance reports must present information that is fair, accurate, relevant, timely and complete.
The CCO or designee, will be responsible for maintaining the following records pertaining to the Code for a minimum of five years from the end of the fiscal year in which the report was obtained and/or in effect, the first two years on-site in an accessible place, with the exception of (c) below, which will be kept for five years after the individual ceases to be deemed an Access Person.
(a) A list of all of the Firms Access Persons, which will include every person who was deemed an Access Person at any time within the past five years, even if they are no longer deemed as such.
(b) Copies of the Code and all amendments thereto.
(c) Copies of the written acknowledgments of the Code and each amendment submitted by each Access Person.
(d) A record of any violation of the Code and any action taken as a result of the violation.
(e) Copies of each holding and transaction report submitted by an Supervised Person and Access Person, as applicable.
(f) Copies of all brokerage statements submitted by each Access Person.
(g) All pre-clearance decisions and the reasons supporting the decision.
8. Confidentiality
It is the policy of Aperio that all Supervised Persons and Access Persons must hold information communicated to them by clients or other sources within the context of the manager-client relationship and proprietary information relating to Aperio, strictly confidential, and they must take all reasonable measures to preserve this confidentiality.
Aperio receives handles and stores considerable quantities of confidential information from our clients and potential clients concerning those clients or third parties with whom
our clients deal and about Aperio. Confidential information includes all non-public information that might be of use to competitors, or harmful to the firm or its clients, if disclosed. It also includes information that suppliers and customers have entrusted to us. Supervised Persons and Access Persons must maintain the confidentiality of the information entrusted to them by the firm or its clients, as required by applicable law and any contractual arrangements by which Aperio is bound, except when disclosure is authorized by the firm or required by law. The obligation to preserve confidential information continues even after employment ends.
9. Protection and Proper Use of Assets
Supervised Persons and Access Persons should always endeavor to protect the firms assets and ensure their efficient use. Theft, carelessness, and waste will not be tolerated. Any suspected incident of fraud or theft should be immediately reported for investigation.
The obligation to protect firm assets includes its proprietary information. Proprietary information includes intellectual property as well as business, marketing and service plans, ideas, databases, records and salary information. Unauthorized use or distribution of this information is a violation of firm policy.
10. Reporting any Illegal or Unethical Behavior
Supervised Persons and Access Persons must speak promptly with a firm Partner or with the CCO about observed potential or actual illegal or unethical behavior or other violation of this Code. Reports of misconduct by others, made in good faith by Supervised Persons or Access Persons will not be met with retaliation against the reporting person.
11. Compliance Procedures
Initially/
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CCO shall conduct an annual review of all compliance procedures and controls including as part of the process meeting with Supervised Persons and Access Persons to insure knowledge and compliance with policies and procedures. |
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Each Access Person shall provide to the CCO for review, initially within 10 days of hire and annually, a complete list of holdings or brokerage statements (including privately placed securities) for any account they have control over or an interest in (control accounts). The report must include the following information, which must be as of a date no more than 45 days prior to the date the report was submitted: |
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i. The title and type of security, and as applicable the exchange ticker symbol or CUSIP number, number of shares, and principal amount of |
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each reportable security in which the Access Person has any direct or indirect beneficial ownership; |
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ii. The name of the broker, dealer or bank with which the Access Person maintains an account in which the securities are held; and |
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iii. The date the Access Person submits the report. |
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Another Partner of Aperio will review the CCOs holdings. Documentation of review will be maintained. |
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Quarterly: |
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Within 30 days of quarter-end each Supervised Person shall submit to the CCO a report listing all transactions that took place during the quarter in their personal control accounts. All Access Persons will submit copies of brokerage statements that include all transactions in accounts under their control for the prior quarter and if applicable, a listing of any privately traded securities transactions. The report and brokerage statements must contain the following information: |
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i. The date of the transaction (either trade date or settlement date), the name of the security, the symbol, the number of shares, the maturity date and/or the interest rate, if applicable, and the principal amount of each Security involved; |
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ii. The nature of the transaction (i.e., purchase, sale, or any other type of acquisition or disposition); |
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iii. The price of the security at which the transaction was effected; |
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iv. The name and account number of the personal account. |
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Another Partner will review CCOs brokerage statements and reports. All statements and reports will be reviewed for compliance with the Aperio Code of Ethics compliance procedures and applicable federal securities laws. |
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CCO will circulate the firms Restricted Securities List to all Supervised Persons and Access Persons along with a request for additions or deletions from the list. |
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All Access Persons must seek pre-clearance of all trades in IPOs and Private Placements from the CCO through email or written communication with documentation initialed by the CCO. The CCO will seek pre- clearance from another Partner. Documentation should include all relevant |
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information and will also be documented in the quarterly brokerage statements. |
12. Administration of the Code
(a) The CCO or designee (or other Partner in the case of the CCO) will review all reports and other information submitted under this Code. This review will include, but not be limited to: 1) an assessment of whether Supervised persons an Access Persons followed the required procedures, 2) an assessment of whether Supervised Persons and Access Persons have traded in the same securities as the firms clients and if so, determining whether the client terms for the transactions were more favorable, 3) an assessment of any trading patterns that may indicate abuse, including market timing, and 4) performing any other assessment that may be necessary to determine whether there have been any violations of the Code.
(b) Each Supervised Person and Access Person shall receive a copy of the Code initially upon becoming a Supervised Person or Access Person, annually and anytime the Code is amended. Upon receipt, each Supervised Person and Access Person is required to read and understand the requirements of the Code and then submit to the CCO or designee, the Code of Ethics Acknowledgment Form (Appendix A).. The Acknowledgment Form must be submitted no later than 30 days from the date of receipt of the Code.
(c) This Code does not amend or supersede any other Code(s) of Ethics that may affect the duties and obligations of any person affected hereby.
(d) No less frequently than annually, the CCO or designee will furnish to the board of directors of the firms managed mutual fund a written report that:
i. Describes any issues arising under the Code during the reporting period, including, but not limited to, information about material violations of the Code and sanctions imposed in response to the material violations; and
ii. Certifies that the firm has adopted procedures reasonably necessary to prevent Supervised Persons and Access Persons from violating the code.
While rare, sometimes it is difficult to know right from wrong. Below are some suggestions for how to handle situations that may not be clear.
Check list to assure prompt and consistent action against violations of the Code:
Make sure you have all the facts. In order to reach the right solution, be as fully informed as possible.
Does what you are being asked to do seem unethical or improper? Focus on the specifics. Use your judgment and common sense; if something seems unethical or improper, it probably is.
Clarify your responsibility and role. In most situations, there is shared responsibility. Are your colleagues informed? Get others involved and discuss the problem.
Discuss the problem with a Partner or the CCO.
You should report ethical violations in confidence and without fear of retaliation. When in doubt, always ask first and act later.
Aperio Group, LLC places great importance on the firms Code of Ethics and will maintain and enforce the code at all times. The CCO is charged with the implementation of this Code and the establishment of procedures designed to assure adherence to this Code.
Any violation of this policy, even if it is corrected immediately, shall be reported to the CCO.
Dated: January 27, 2011
APPENDIX A
RECEIPT AND ACKNOWLEDGMENT
OF
APERIO GROUP, LLC CODE OF ETHICS
This is to acknowledge that I have received a copy of the Aperio Group, LLC Code of Ethics Policy. I further acknowledge that it is my responsibility to read this information, to ask questions of the Chief Compliance Officer if I do not understand any of the information, and I also certify to abide by and observe all of the and rules, policies, and procedures explained therein, including future changes or additions to this policy.
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Exhibit (p)(20)
Driehaus Capital Management LLC
Driehaus Securities LLC
Driehaus Mutual Funds
Driehaus Capital Management (USVI) LLC
CODE OF ETHICS AND BUSINESS CONDUCT
Statement of General Policy and Business Principles
This Code of Ethics and Business Conduct (Code) has been adopted under Rule 17j-1 of the Investment Company Act of 1940 (Rule 17j-1) and Rule 204A-1 of the Investment Advisers Act of 1940 (Rule 204A-1). Rule 17j-1 is applicable because Driehaus Capital Management LLC (the Adviser) is the investment adviser to Driehaus Mutual Funds (the Fund), a registered investment company, and Driehaus Securities LLC (DS LLC) is the Funds principal underwriter. The Code also applies to any registered investment company that the Adviser may serve as an investment adviser or sub-adviser. The Code covers all Employees of the Adviser, DS LLC and Driehaus Capital Management (USVI) LLC (collectively the Firm, we or us); the Funds Disinterested Trustees and Advisory Board Members; and others as may be designated from time to time by the Firm (Access Persons).(1) Our Employees are also subject to the Firms policies and procedures, including the compliance manuals and employee handbooks that are readily accessible on our Firms intranet, which may impose additional restrictions on their conduct, including personal securities transactions.
The Code is specifically and reasonably designed for how we conduct our activities and addresses the particular conflicts of interest that we may encounter. A long-standing core business principle of our Firm is our commitment to maintaining the highest legal and ethical standards in the conduct of our business. We have built our reputation for excellence on Client trust and confidence in our professional abilities and integrity. The Code seeks to prevent Employee misuse of material non-public information regarding current and prospective investments we make for our Clients, investment research we perform for our Clients and actual and proposed trading on behalf of our Clients. Together with this Code, we have adopted and implemented various internal policies and procedures to detect and prevent the misuse of material non-public information. Compliance with this Code as well as additional policies and procedures is monitored and enforced by our legal and compliance professionals, who are supported by our strong culture of compliance.
Integral to our investment management process is real time internal sharing of information by the Advisers Portfolio Managers and research analysts within the equity and credit strategies. The investment personnel for the equity strategies are required to systematically enter research information about the securities held by or under consideration for purchase or sale for a Client, Restricted Strategy or Restricted Account in our Global Research Database (GRD) before placing any orders in our Order Management System (OMS) for execution. The data in the
(1) Capitalized terms used in the Code are defined when first used or in Section 1 of the Code.
GRD is accessible to, among others, Employees, including the Credit Strategies investment personnel, responsible for the Firms investment and trading activities on behalf of our Clients. However, the investment personnel for the Credit Strategies are not required to use the GRD, except for long-only equity securities, because the instruments researched and traded by them, e.g. bonds, options and swaps, cannot be entered into this system. Rather, information sharing occurs on a regular and continuous basis among the portfolio management team of the Credit Strategies. The Adviser believes that even though Credit Strategies research (other than for long-only equity securities) is not entered into the GRD, the equity strategies are not disadvantaged because of the marked differences between the strategies and their portfolio holdings. The transactions of the Credit Strategies are monitored by the Compliance Department for potential conflicts of interest with Clients and the results of such monitoring are reported to the Ethics Committee.
We believe that these information sharing and trading procedures, along with the comprehensive Employee education and training, personal securities transaction reporting, compliance monitoring and the imposition of sanctions, where appropriate, work collectively to ensure that as fiduciaries we and all Access Persons do not place our interests above our Clients interests and comply with the applicable Federal securities laws, rules and regulations.
Any questions regarding the Codes operation should be directed to the Firms Chief Compliance Officer (CCO). Throughout the Code, there are also specific references to the assistance that the CCO can provide to Access Persons. The CCO shall act in accordance with the Firms policies and procedures, the Code, guidance from the Ethics Committee and in consultation with counsel.
1. DEFINITIONS OF TERMS USED
(a) Access Person means (i) any Fund Trustee, Fund officer, Advisory Board Member or Employee of the Fund or the Firm; and (ii) any natural person who is employed by an entity which controls, is controlled by or is under common control with the Fund or the Firm who obtains or has access to information concerning the purchase or sale of Covered Securities or those under consideration for purchase or sale or current holdings of the Fund or a Client.
(b) Acknowledgment means the initial and annual written certification by each Access Person of receipt and compliance with the Code.
(c) Adviser means Driehaus Capital Management LLC.
(d) Advisory Board Member means any individual serving as a member of an Advisory Board appointed by the Board of Trustees of the Fund.
(e) Automatic Investment Plan means a program in which regular periodic purchases (or withdrawals) are made automatically in (or from) investment accounts in accordance with a predetermined schedule and allocation. An Automatic Investment Plan includes a dividend reinvestment plan.
(f) Beneficial Interest shall be interpreted in the same manner as it would be in determining whether a person is subject to the provisions of Section 16 of the Securities Exchange Act of 1934 (the Exchange Act) and rules thereunder, which includes any interest in which a person, directly or indirectly, has or shares a direct or indirect pecuniary interest. A pecuniary interest is the opportunity, directly or indirectly, to profit or share in any profit derived from any transaction. Each Access Person will be assumed to have a pecuniary interest, and therefore, beneficial interest or ownership, in all securities held by the Access Person, the Access Persons spouse or domestic partner, all minor children, all dependent adult children and adults sharing the same household with the Access Person (other than mere roommates) and in all accounts subject to their direct or indirect influence or control and/or through which they obtain the substantial equivalent of ownership, such as trusts in which they are a trustee or beneficiary, partnerships in which they are the general partner, except where the amount invested by the general partner is limited to an amount reasonably necessary in order to maintain the status as a general partner, corporations in which they are a controlling shareholder, except any investment company, mutual fund trust or similar entity registered under applicable U.S. or foreign law, or any other similar arrangement. Any questions an Access Person may have about whether an interest in a security or an account constitutes beneficial interest or ownership should be directed to the Firms CCO.
(g) Client means an advisory client of the Adviser. Client shall not include an Employee or Restricted Account.
(h) Compliance11 is the Firms vended web-based compliance and personal trading system, which is primarily used for tracking Employees holdings, securities transactions, gifts and political contributions.
(i) Covered Security shall have the meaning set forth in Section 2(a)(36) of the Investment Company Act of 1940 (the Company Act) and Section 202(a)(18) of the Investment Advisers Act of 1940 (the Advisers Act), including any right to acquire such security, such as puts, calls, other options or rights in such securities, and securities-based futures contracts, except that it shall not include securities which are direct obligations of the Government of the United States, shares issued by registered open-end investment companies other than those for which the Adviser serves as the investment adviser or sub-adviser or DS LLC serves as principal underwriter, bankers acceptances, bank certificates of deposit or commercial paper and high quality short-term debt instruments, including repurchase agreements.
(j) Credit Strategies are the investment strategies of the Adviser that invest primarily in fixed income and floating rate securities, of both investment and non-investment grade credit quality, and engage in a variety of short-term trading strategies involving both fixed income and equity securities.
(k) Disinterested Trustee means any trustee of a Fund who is not an interested person of the Firm, is not an officer of the Fund and is not otherwise an interested person of the Fund as defined in the Company Act.
(l) DS LLC means Driehaus Securities LLC.
(m) Employee means any person employed by the Firm, whether on a full or parttime basis, all officers, shareholders and directors of the Firm and any natural person who is employed by an entity which controls, is controlled by or is under common control with the Fund or the Firm who obtains or has access to information concerning the purchase or sale of Covered Securities or those under consideration for purchase or sale or current holdings of the Fund or a Client.
(n) The Ethics Committee shall consist of at least three but no more than five members who shall be Employees. One of the members shall be the Firms General Counsel. The Ethics Committee shall be comprised of Employees with sufficient experience and knowledge of the legal obligations and regulatory responsibilities of the Fund and the Firm. The Ethics Committee shall promptly advise the Funds Board of Trustees of any appointment or resignation by a member of the Ethics Committee. The Ethics Committee as a whole and each member shall act in accordance with Section 11 below.
(o) Federal Securities Laws has the same meaning as that term is defined in Rule 204A-1(e)(4) under the Advisers Act, and includes the Securities Act of 1933 (Securities Act), the Exchange Act, the Company Act, the Advisers Act, Title V of the Gramm-Leach-Bliley Act, any rules adopted by the U.S. Securities and Exchange Commission (the SEC) under any of these statutes, the Bank Secrecy Act as it applies to funds and investment advisers, and any rules adopted thereunder by the SEC or the U.S. Department of the Treasury.
(p) Fund means Driehaus Mutual Funds.
(q) GRD is the Advisers Global Research Database, a proprietary software application that Employees of the Advisers Investment Management and Research Department are required to use to enter, update, make available and maintain research information about securities held by or under consideration for purchase or sale for a Client, Restricted Strategy or Restricted Account. The GRD data is available to Employees, including those with responsibility for investment management and research, trading, and legal and regulatory compliance.
(r) Limited Offering includes private placements and means an offering that is exempt from registration under Section 4(2) or Section 4(6) under the Securities Act or pursuant to Rule 504, Rule 505, or Rule 506 under the Securities Act.
(s) New Issue means an offering of securities registered under the Securities Act, the issuer of which, immediately before the registration, was not required to file reports under Sections 13 or 15(d) of the Exchange Act.
(t) Personal Benefit includes any intended benefit for oneself or any other individual, company, group or organization of any kind whatsoever except a benefit for a Client or any entity that adopts this Code.
(u) Restricted Account means an account of the Adviser in which Employees own a Beneficial Interest of 25% or more.
(v) Restricted Strategy means an investment strategy of the Adviser in which Employees own a Beneficial Interest of 25% or more.
(w) Segregated Account means a Restricted Account which is subject to information barriers from internally-generated stock-specific research information, order and execution information and current holdings information regarding Covered Securities held by or under consideration for purchase or sale for a non-Segregated account or strategy of the Adviser.
(x) Segregated Strategy means a Restricted Strategy which is subject to information barriers from internally-generated stock-specific research information, order and execution information and current holdings information regarding Covered Securities held by or under consideration for purchase or sale for a non-Segregated account or strategy of the Adviser.
2. STANDARDS OF BUSINESS CONDUCT AND COMPLIANCE WITH LAWS
Access Persons are required at all times to comply with the Federal Securities Laws as applicable in conducting the business of the Firm or the Fund. Accordingly, a violation of the Federal Securities Laws will be a violation of this Code and may subject an Access Person to sanctions or other appropriate remedial action under the Code.
In addition, as a SEC registered investment adviser subject to the Advisers Act, the Adviser has fiduciary obligations to its Clients. Further, the Code requires that the conduct of Access Persons comply with the fundamental principles of integrity, honesty and trust.
The Code is designed to ensure that Access Persons understand and comply with their fiduciary obligations and to protect Clients by deterring misconduct. The Code also educates Access Persons about the expectations of the Firm and the Fund regarding their behavior and the Federal Securities Laws that govern their conduct, as applicable.
The Code and related policies and procedures contain provisions reasonably necessary to prevent Access Persons from engaging in acts in violation of the Code. Access Persons are required to report any violations of the Code to the CCO. The CCO is primarily
responsible for monitoring compliance with the Code and reporting material violations of the Code to the Ethics Committee to ensure the Codes enforcement.
3. TRANSACTIONS WITH A FUND
No Access Person shall sell to, or purchase from, a Fund any security or other property (except merchandise in the ordinary course of business), in which such Access Person has or would acquire a Beneficial Interest, unless such purchase or sale involves shares of that Fund.
4. DISCLOSURE OF INFORMATION
No Access Person shall discuss with or otherwise inform others of any security held or to be acquired by a Client except in the performance of employment duties or in an official capacity and then only for the benefit of the Client, and in no event for Personal Benefit or for the benefit of others.
No Access Person shall release information to dealers or brokers or others (except to those concerned with the execution and settlement of a transaction) as to any changes in a Clients investments, proposed or in process, except (i) upon the completion of such changes, or (ii) when the disclosure results from the publication of a prospectus, or (iii) in conjunction with a regular report to shareholders or to any governmental authority resulting in such information becoming public knowledge, or (iv) in connection with any report to which shareholders are entitled by reason of provisions of the declaration of trust, by-laws, rules and regulations, contracts or similar documents governing the operations of the Client.
5. PREFERENTIAL TREATMENT, GIFTS AND BUSINESS ENTERTAINMENT
No Employee shall seek or accept favors, preferential treatment, or any other Personal Benefit because of his or her association with a Client, except those usual and normal benefits directly provided by the Client.
No Employee shall seek or accept any gift or other Personal Benefit of more than de minimis value, i.e. $100 per person per year, from any person or entity that does business with the Firm or Fund or is seeking to do business with the Firm or Fund. Employees are required to promptly report the receipt of any gift or other Personal Benefit to the CCO no later than thirty days after the calendar quarter during which the gift or Personal Benefit was received. Such reporting should be made through Compliance11. The CCO shall arrange to donate all gifts of more than de minimis value to charity.
Likewise, no Employee shall seek or accept any business entertainment from any person or entity that does business with the Firm or Fund or is seeking to do business with the Firm or Fund other than usual and customary business entertainment. Usual and customary business entertainment includes an occasional dinner, a ticket to a sporting event, or comparable entertainment, as long as the donor and recipient are both present at the event and the entertainment or event is not so frequent or lavish as to raise any question of propriety. Employees are required to promptly report business entertainment
to the CCO no later than thirty days after the calendar quarter during which the business entertainment took place. Such reporting should be made through Compliance11.
Any questions regarding the receipt of any gift, entertainment or other Personal Benefit should be directed to the CCO of the Firm. The CCO shall report any exceptions to the gifts and business entertainment policy to the Ethics Committee for appropriate action consistent with enforcement of the Code.
6. CONFLICTS OF INTEREST
If any Access Person is aware of a personal interest that is, or might be, in conflict with the interest of a Client, that Access Person should disclose the situation or transaction and the nature of the conflict to the CCO for appropriate consideration. The CCO may consult with the Ethics Committee or counsel with respect to any appropriate action that should be taken.
7. SERVICE AS A DIRECTOR
Employees are prohibited from serving on the boards of directors of unaffiliated for-profit or not-for-profit corporations, business trusts or similar business entities, whether or not their securities are publicly traded, absent prior written approval by the Ethics Committee, based upon a determination that the board service would not be inconsistent with the interests of the Firm and the Fund. Copies of all written approvals obtained under this paragraph must be provided to and maintained by the CCO.
8. MATERIAL NON-PUBLIC INFORMATION
Securities laws and regulations prohibit the misuse of material non-public information when trading or recommending securities.
Material non-public information obtained by any Access Person from any source must be kept strictly confidential. All material non-public information should be kept secure, and access to files and computer files containing such information should be restricted. Access Persons shall not act upon or disclose material non-public information except as may be necessary for legitimate business purposes on behalf of a Client or the Firm as appropriate. Questions and requests for assistance regarding material non-public information should be promptly directed to the CCO of the Firm.
Material non-public information may include, but is not limited to, knowledge of pending orders or research recommendations, corporate finance activity, mergers or acquisitions, and other material non-public information that could reasonably be expected to affect the price of a security.
Client account information and Fund shareholder account information are also confidential and must not be discussed with any individual whose responsibilities do not require knowledge of such information.
9. RESTRICTIONS ON PERSONAL SECURITY TRANSACTIONS
No Access Person shall knowingly take unlawful advantage of his or her position with the Firm or with the Fund for Personal Benefit, or take action inconsistent with such Access Persons obligations to the Firm, or any Client. All personal securities transactions must be consistent with this Code and must be conducted in a manner designed to avoid any actual or potential conflict of interest or any abuse of any Access Persons position of trust and responsibility. Any transaction effected with the purpose of profiting as a result of one or more transactions effected or anticipated for a Client (scalping or frontrunning) is prohibited.
(a) All Employees:
No Employee shall purchase or sell a Covered Security within four calendar days of a Client trade in that Covered Security. This four day blackout restriction shall not apply to the following exceptions, unless the Ethics Committee determines that the conduct is inconsistent with the Code or the Federal Securities Laws.
1. GRD Entries An Employee may buy or sell a Covered Security for a Restricted Strategy or Restricted Account after the security name and research information about the security has been entered into the GRD.
2. ERISA Account Transactions Trades may be effected for an account of a qualified employee benefit plan subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended, including an account maintained for the benefit of Employees.
3. Excepted Securities Transactions may be effected in U.S. Government securities, bankers acceptances, bank certificates of deposit, commercial paper, high quality short-term debt instruments including repurchase agreements and shares of U.S. registered open-end investment companies, non-volitional purchases and sales, such as dividend reinvestment programs or calls or redemptions of securities.
4. Credit Strategies Transactions may be effected for the Advisers Credit Strategies, except for long-only equity transactions, which must be entered into the GRD.
5. Short Sales Short sale transactions may be effected and buys to cover short sale transactions may be effected.
6. Investment Companies Transactions may be effected in U.S. registered closed-end investment companies and foreign registered open-end and closed-end investment companies.
7. Segregated Accounts and Segregated Strategies Transactions may be effected for the Advisers Segregated Accounts and Segregated Strategies.
(b) Limited Offerings and New Issues: No Employee shall directly or indirectly acquire a Beneficial Interest in Limited Offering securities or securities in a New Issue without the prior consent of the Ethics Committee. Consideration will be given to whether the opportunity should be reserved for a Client. The Ethics Committee will review these proposed investments on a case-by-case basis except for those circumstances in which advance general approval may be appropriate because it is clear that conflicts are very unlikely to arise due to the nature of the opportunity for investing in the New Issue or Limited Offering. Additionally, Limited Offering securities and New Issue securities may not be purchased for Firm employee profit sharing plans and other Firm employee savings or benefits plans without the prior consent of the Ethics Committee.
(c) Related Instruments: When anything in this section 9 prohibits the purchase or sale of a security, it also prohibits the purchase or sale of any related securities, such as puts, calls, other options or rights in such securities and securities-based futures contracts and any securities convertible into or exchangeable for such security.
(d) Disinterested Trustees and Advisory Board Members: No Disinterested Trustee or Advisory Board Member of a Fund shall purchase or sell, directly or indirectly, any Covered Security in which he or she has, or by reason of such transaction acquires, any direct or indirect beneficial ownership or interest when the Disinterested Trustee or Advisory Board Member knows that securities of the same class are being purchased or sold or are being considered for purchase or sale by the Fund, until such time as the Funds transactions have been completed or consideration of such transaction is abandoned.
(e) Sanction Guidelines: Unless an exception exists, if a Restricted Account or Restricted Strategy trades in violation of this section 9, the Ethics Committee will determine the appropriate sanction consistent with the Sanction Guidelines of the Code, which may include disgorgement of profits to a charity selected by the Ethics Committee. A copy of the Sanction Guidelines will be provided to the Funds Board of Trustees annually.
10. REPORTING PROCEDURES
Unless a noted exception is applicable, each Access Person must follow these procedures for all securities or accounts in which he or she has a Beneficial Interest:
(a) Reports - All Access Persons:
(1) Brokerage confirmations and statements: Each Access Person must provide to the Firms CCO identifying information for all securities or
commodities brokerage accounts in which that Access Person has a Beneficial Interest in Covered Securities. Before opening any brokerage account, each Access Person shall submit a completed Securities and Commodities Brokerage Account Report or otherwise provide the information required on such report to the CCO of the Firm. The CCO will arrange to receive trade confirmations and monthly/quarterly account statements from the Access Persons broker-dealer, bank and/or financial institution either directly in hard copy or electronically through Compliance11.
To the extent that a security transaction in which an Access Person has any Beneficial Interest or ownership is not reported on brokerage confirmations and statements either in hard copy or through Compliance11, such transaction must be reported to the Firms CCO as part of the quarterly transactions report set forth in section 10(a)(2).
(2) Initial and Annual Holdings Reports and Quarterly Transactions Reports: Each Access Person must provide a holdings report within 10 days after becoming an Access Person (an Initial Holdings Report) and annually thereafter (an Annual Holdings Report). The Annual Holdings Report must be current within 45 days of the date of the report, and should be made through Compliance11. Any supplemental supporting documentation should be submitted to the CCO in hard copy, if necessary.
Each Access Person must also provide a quarterly transactions report within 30 days after the close of a quarter for each transaction during the quarter in a Covered Security in which the Access Person had any Beneficial Interest and provide information for any account established by the Access Person during the quarter. The quarterly transaction reports should be made through Compliance11. Any supplemental supporting documentation should be submitted to the CCO in hard copy, if necessary.
Each report must state the title, number of shares and principal amount of each Covered Security in which the Access Person had any Beneficial Interest, the broker/dealer, bank and/or financial institution maintaining the account for the Access Person in which any securities were held for the benefit of the Access Person, and the date that the report is submitted by the Access Person. In addition, the quarterly transaction report must state the date of the transaction, the interest rate and maturity date of the Covered Security (if applicable), the nature of the transaction (i.e., purchase, sale or other), the purchase or sale price, and the date the account was established if established in the current reporting quarter.
(b) Exceptions to Reporting:
(1) Access Persons need not file a quarterly transaction report if the information would duplicate information that the CCO received in a brokers confirmation or account statement or that is contained in the records of the Firm, including within Compliance11.
(2) An Access Person need not make a quarterly transaction report hereunder with respect to transactions effected pursuant to an Automatic Investment Plan.
(3) A Disinterested Trustee or Advisory Board Member who would be required to make a report referenced in Section 10(a) solely by virtue of being a Trustee or Advisory Board Member is not required to make a report unless Section 10(c)(1) applies.
(4) An Access Person who is not an Employee of the Firm may provide required reports to the CCO in hard copy in lieu of using Compliance11.
(c) Reports - Disinterested Trustees and Advisory Board Members:
(1) A Disinterested Trustee or Advisory Board Member must provide a quarterly report to the Ethics Committee of any purchase or sale of any Covered Security in which such person has, or by virtue of such transaction acquires, any Beneficial Interest if at the time of the transaction the Disinterested Trustee or Advisory Board Member knew, or in the ordinary course of fulfilling his or her official duties as a Trustee or Advisory Board Member of a Fund should have known that, on the date of the transaction or within 15 days before or after the transaction, purchase or sale of that class of security was made or considered for the Fund. The form of the report must conform to the provisions of subsection (a)(2) above.
(2) This subsection (c) shall not apply to non-volitional purchases and sales, such as dividend reinvestment programs or calls or redemptions.
(d) Review of Reports:
The CCO of the Firm or a designee of the CCO will review reports submitted by Access Persons, except no person shall be permitted to review his or her own reports. Any report required to be filed shall not be construed as an admission by the person making such report that he/she has any direct or indirect Beneficial Interest in the security to which the report relates.
11. ETHICS COMMITTEE
The Ethics Committee will take whatever action it deems necessary and appropriate, consistent with its Sanction Guidelines, with respect to any Access Person of the Firm or
the Fund other than as noted below who violates any provision of this Code, and will inform the Funds Board of Trustees as to the nature of such violation and the action taken by the Committee. However, any information received by the Ethics Committee relating to questionable practices or transactions by a Disinterested Trustee or an Advisory Board Member of a Fund shall immediately be forwarded to the Audit Committee of the Fund for that committees consideration and such action as it, in its sole judgment, shall deem warranted. At least once a year, each Fund, the Adviser and DS LLC must provide a written report prepared by the Ethics Committee to the Funds Board of Trustees that describes any issues arising under the Code or procedures since the last report to the Board of Trustees, including, but not limited to, information about material violations of the Code or procedures and sanctions imposed in response to the material violations. The report will also certify to the Board of Trustees that each Fund and the Firm each have adopted procedures reasonably necessary to prevent Access Persons from violating the Code. The Report should also address any significant conflicts of interest that arose involving the Fund and Firms personal investment policies, even if the conflicts have not resulted in a violation of the Code.
12. WAIVERS
The Ethics Committee may, in its discretion, waive compliance with any provision of the Code after considering whether the waiver (i) is necessary or appropriate to alleviate undue hardship, or in view of unforeseen circumstances, (ii) will not be inconsistent with the purposes and policies of the Code; (iii) will not adversely affect the interests of any Client or the interests of the Firm and/or (iv) will not result in a transaction or conduct that would violate provisions of applicable laws or rules. Normally, all waiver applications must be made in advance and in writing. A written record shall be kept of all waivers granted by the Ethics Committee, including a brief summary of the reasons for the waiver.
13. CODE REVISIONS
Any material changes to this Code will be approved by the Funds Board of Trustees prior to the effective date of such changes.
14. RECORD KEEPING REQUIREMENTS
The Firm shall maintain records, at its principal place of business, of the following: a copy of each Code in effect during the past five years; a record of any violation of the Code and any action taken as a result of the violation for at least five years after the end of the fiscal year in which the violation occurs; a copy of each report made by Access Persons as required in this Code, including any information provided in place of the reports during the past five years after the end of the fiscal year in which the report is made or the information is provided; a copy of each Fund trustee report made during the past five years; a copy of each Acknowledgment of the Code made by Access Persons during the past five years; a record of all Access Persons required to make reports currently and during the past five years; a record of all who are or were responsible for
reviewing these reports during the past five years; and, for at least five years after approval, a record of any decision and the reasons supporting that decision, to approve an Access Persons purchase of a New Issue or a Limited Offering.
15. CONDITION OF EMPLOYMENT OR SERVICE
All Access Persons shall conduct themselves at all times in the best interests of Clients. Compliance with the Code is a condition of employment or continued affiliation with a Fund or the Firm. Conduct not in accordance with the Code is grounds for sanctions which may include, but are not limited to, a reprimand, a restriction on activities, disgorgement, termination of employment or removal from office. All Access Persons shall certify annually to the Ethics Committee that they have read and agree to comply in all respects with this Code and that they have disclosed or reported all personal securities transactions, holdings and accounts required to be disclosed or reported by this Code.
Effective: February 25, 2013
Background
Investment advisers are fiduciaries that owe their undivided loyalty to their clients. Investment advisers are trusted to represent clients interests in many matters, and advisers must hold themselves to the highest standard of fairness in all such matters.
Rule 204A-1 under the Advisers Act requires each registered investment adviser to adopt and implement a written code of ethics that contains provisions regarding:
· The advisers fiduciary duty to its clients;
· Compliance with all applicable Federal Securities Laws;
· Reporting and review of personal securities transactions and holdings;
· Reporting of violations of the code; and
· The provision of the code to all supervised persons.
Similarly, each registered investment company and its adviser and principal underwriter must adopt a code of ethics pursuant to Rule 17j-1 under the Investment Company Act of 1940, as amended (Company Act). As an adviser to a mutual fund, Granite has incorporated certain items and definitions to ensure compliance under Rule 17j-1. This Code of Ethics applies to all Employees of Granite.
Risks
In developing these policies and procedures, Granite considered the material risks associated with administering the Code of Ethics. This analysis includes risks such as:
· Employees do not understand the fiduciary duty that they, and Granite, owe to Clients;
· Employees and/or Granite fail to identify and comply with all applicable Federal Securities Laws;
· Employees do not report personal securities transactions;
· Employees trade personal accounts ahead of Client accounts;
· Employees allocate profitable trades to personal accounts or unprofitable trades to Client accounts;
· Violations of the Federal Securities Laws, the Code of Ethics, or the policies and procedures set forth in this Manual, are not reported to the CCO and/or appropriate supervisory personnel;
· Granite does not provide its code of ethics and any amendments to all Employees; and
· Granite does not retain Employees written acknowledgements that they received the code and any amendments.
Granite has established the following guidelines to mitigate these risks.
Policies and Procedures
Fiduciary Standards and Compliance with the Federal Securities Laws
At all times, Granite and its Employees(1) must comply with the spirit and the letter of the Federal Securities Laws and the rules governing the capital markets. The CCO administers the Code of Ethics. All questions regarding the Code should be directed to the CCO. You must cooperate to the fullest extent reasonably requested by the CCO to enable (i) Granite to comply with all applicable Federal Securities Laws and (ii) the CCO to discharge his duties under the Manual.
All Employees will act with competence, dignity, integrity, and in an ethical manner, when dealing with Clients, the public, prospects, third-party service providers and fellow Employees. You must use reasonable care and exercise independent professional judgment when conducting investment analysis, making investment recommendations, trading, promoting Granites services, and engaging in other professional activities.
We expect all Employees to adhere to the highest standards with respect to any potential conflicts of interest with Clients. As a fiduciary, Granite must act in its Clients best interests. Neither Granite, nor any Employee should ever benefit at the expense of any Client. Notify the CCO promptly if you become aware of any practice that creates, or gives the appearance of, a material conflict of interest.
Employees are generally expected to discuss any perceived risks, or concerns about Granites business practices, with their direct supervisor. However, if an Employee is uncomfortable discussing an issue with their supervisor, or if they believe that an issue has not been appropriately addressed, they should bring the matter to the CCOs attention.
Reporting Violations of the Code
Employees must promptly report any suspected violations of the Code of Ethics to the CCO. To the extent practicable, Granite will protect the identity of an Employee who reports a suspected violation. However, the Company remains responsible for satisfying the regulatory reporting, investigative and other obligations that may follow the reporting of a potential violation.
Retaliation against any Employee who reports a violation of the Code of Ethics is strictly prohibited and will be cause for corrective action, up to and including dismissal.
Violations of this Code of Ethics, or the other policies and procedures set forth in the Manual, may warrant sanctions including, without limitation, requiring that personal trades be reversed, requiring the disgorgement of profits or gifts, issuing a letter of caution or warning, suspending personal trading rights, imposing a fine, suspending employment (with or without compensation), making a civil referral to the SEC, making a criminal referral, terminating employment for cause, and/or a combination of the foregoing. Violations may also subject an Employee to civil, regulatory or criminal sanctions. No Employee will determine whether he or she committed a violation of the Code of Ethics, or impose any sanction against himself or herself. All sanctions and other actions taken will be in accordance with applicable employment laws and regulations.
(1) Employees are defined as Granites officers, directors, principals, and employees.
Distribution of the Code and Acknowledgement of Receipt
Granite will make this Manual available to Employees. Each Employee upon the commencement of employment, annually, and upon any change to the Code of Ethics or any material change to another portion of the Manual must acknowledge that they have received, read, understood, and agree to comply with Granites policies and procedures described in this Manual. Employees will complete a certification to acknowledge their reading and understanding of Granites Code of Ethics and Manual at least annually following the end of the calendar year.
Conflicts of Interest
Conflicts of interest may exist between various individuals and entities, including Granite, Employees, and current or prospective Clients. Any failure to identify or properly address a conflict can have severe negative repercussions for Granite, its Employees, and/or Clients. In some cases the improper handling of a conflict could result in litigation and/or disciplinary action.
Granites policies and procedures have been designed to identify and properly disclose, mitigate, and/or eliminate applicable conflicts of interest. However, written policies and procedures cannot address every potential conflict, so Employees must use good judgment in identifying and responding appropriately to actual or apparent conflicts. Conflicts of interest that involve Granite and/or its Employees on one hand, and Clients on the other hand, will generally be fully disclosed and/or resolved in a way that favors the interests of Clients over the interests of Granite and its Employees. If an Employee believes that a conflict of interest has not been identified or appropriately addressed, that Employee should promptly bring the issue to the CCOs attention.
In some instances conflicts of interest may arise between Clients. Responding appropriately to these types of conflicts can be challenging, and may require robust disclosures if there is any appearance that one or more Clients have been unfairly disadvantaged. Employees should notify the CCO promptly if it appears that any actual or apparent conflict of interest between Clients has not been appropriately addressed.
Personal Securities Transactions
All Employees shall be considered Access Persons for purposes of personal securities transactions reporting. An Access Person is an Employee who has access to non-public information regarding any clients trading or any Reportable Funds holdings, who is involved in making securities recommendations to Clients, or who has access to non-public securities recommendations. All of Granites principals, directors, officers, and partners are presumed to be Access Persons. Employee trades should be executed in a manner consistent with our fiduciary obligations to our Clients: trades should avoid actual improprieties, as well as the appearance of impropriety. Employee trades must not be timed to precede orders placed for any Client, nor should trading activity be so excessive as to conflict with the Employees ability to fulfill daily job responsibilities.
Accounts Covered by the Policy and Procedures
Granites Personal Securities Transactions policy and procedures apply to all accounts holding any Securities over which Employees have any beneficial ownership interest, which typically includes accounts held by immediate family members sharing the same household. Immediate family members include children, step-children, grandchildren, parents, step-parents, grandparents, spouses, domestic
partners, siblings, parents-in-law, and children-in-law, as well as adoptive relationships that meet the above criteria.
It may be possible for Employees to exclude accounts held personally or by immediate family members sharing the same household if the Employee does not have any direct or indirect influence or control over the accounts. Employees should consult with the CCO before excluding any accounts held by immediate family members sharing the same household.
Reportable Securities
Granite requires Employees to provide periodic reports regarding transactions and holdings in all Reportable Securities, which include any Security(2), except :
· Direct obligations of the Government of the United States;
· Bankers acceptances, bank certificates of deposit, commercial paper and high-quality short-term debt instruments, including repurchase agreements;
· Shares issued by money market funds;
· Shares issued by open-end registered investment companies, other than funds advised or underwritten by Granite or an affiliate; and
Exchange-traded funds, or ETFs, are somewhat similar to open-end registered investment companies. However, ETFs are Reportable Securities and are subject to the reporting requirements contained in Granites Personal Securities Transactions policy.
Pre-clearance Procedures
Employees must request pre-clearance from the CCO for all transactions involving the following:
· IPOs (initial public offerings)
· Private Placements(3)
· Any equity security of any market capitalization (other than ETFs)
· Any fixed income security that has a face value of more than $250,000
Pre-clearance must be received before completing the transactions. Granite may disapprove any proposed transaction, particularly if the transaction appears to pose a conflict of interest or otherwise appears improper. With the exception of IPOs and private placements, no pre-clearance is required for
(2) Granite utilizes the SEC definition of Security which broadly includes stocks, bonds, certificates of deposit, shares issued by unit investment trusts, options, interests in Private Placements, futures contracts on other Securities, participations in profit-sharing agreements, and interests in oil, gas, or other mineral royalties or leases, among other things. Security is also defined to include any instrument commonly known as a Security. Any questions about whether an instrument is a Security for purposes of the Federal Securities Laws should be directed to the CCO
(3) A private placement of securities is an offering of securities that is not a public offering. A private placement is an offering that is exempt from the securities registration requirements such as a hedge fund or other private fund.
transactions in employee accounts that are considered clients of Granite (Proprietary Accounts). Trades for Proprietary Accounts must be traded in accordance with the Trading Policy set forth in this Manual.
Any pre-cleared trade must be made within twenty-four (24) hours of such approval.
30 Day Holding Period
With the exception of ETFs, no Employee shall sell any security within 30-days of being purchased, i.e. short-term trade. However, the CCO may approve a request by an Employee to sell a security inside of 30 days in his sole discretion. The 30 day holding period does not apply to proprietary accounts managed by Granite and whose trades go through with other client accounts on the same day.
Restricted List
The Restricted List contains securities about which the CCO believes Granite might have received Material Non-Public Information. Securities will be removed from the Restricted List at such time when information is no longer material or when the CCO has deemed it appropriate to remove.
Blackout Period
No Employee shall buy or sell a Reportable Security on the same day as any trades in the security are made for Client accounts. The price paid or received by a Client account for any security should not be affected by a buying or selling interest on the part of an Employee, or otherwise result in an inappropriate advantage to the Employee. The blackout period does not apply to proprietary accounts managed by Granite and whose trades go through with other client accounts on the same day.
Reporting
Granite must collect information regarding the personal trading activities and holdings of all Employees. Employees must report Securities transactions and newly opened accounts, as well as annual reports regarding holdings and existing accounts.
Quarterly Transaction Reports
Each quarter, Employees must report, using a form similar to Attachment A to this section, all Reportable Securities transactions in accounts in which they have a direct or indirect beneficial interest. Employees must also report any accounts opened in which they have a direct or indirect beneficial ownership during the quarter that hold any Securities (including Securities excluded from the definition of a Reportable Security). Reports regarding Securities transactions and newly opened accounts must be submitted within 30 days of the end of each calendar quarter. Brokerage account statements or trade confirmations containing all required information may be substituted for the attached form if submitted timely. To the extent that a brokerage statement or confirmation lacks some of the information otherwise required to be reported, you may submit a transactions report containing the missing information as a supplement to the statement or confirmation.
Initial and Annual Holdings Reports
Employees must periodically report the existence of any account in which they have a direct or indirect beneficial ownership that holds any Securities (including Securities excluded from the definition of a Reportable Security), as well as all Reportable Securities holdings. Reports (please see Attachment B) regarding accounts and holdings must be submitted to the CCO on or before February 14 th of each year,
and within 10 days of an individual first becoming an Employee. Annual reports must be current as of December 31 st ; initial reports must be current as of a date no more than 45 days prior to the date that the person became an Employee.
Recordkeeping
Granite will maintain the following records under this Code of Ethics:
A copy of the advisers code of ethics currently in effect, or that was in effect at any time within the past six years.
A record of any violation of the advisers code of ethics, and any action taken as a result of the violation.
A record of all written acknowledgements of receipt of the code of ethics for each person who is, or within the past six years was, a Supervised Person of the adviser.
A record of each report made by an access person regarding personal securities transactions and holdings, as well as copies of any associated account statements and trade confirmations provided by broker-dealers and custodians.
A record of the names of people who are, or within the past six years were, access persons of the investment adviser.
A record of any decision, and the reasons supporting the decision, to approve an access persons investment in an IPO or Private Placement.
Exceptions from Reporting Requirements
There are limited exceptions from certain reporting requirements. Specifically, an Employee is not required to submit:
· Quarterly reports for any transactions effected pursuant to an Automatic Investment Plan; or
· Any reports with respect to Securities held in accounts over which the Employee had no direct or indirect influence or control, such as an account managed by an investment adviser on a discretionary basis.
Any investment plans or accounts that may be eligible for either of these exceptions should be brought to the attention of the CCO who will, on a case-by-case basis, determine whether the plan or account qualifies for an exception. In making this determination, the CCO may ask for supporting documentation, such as a copy of the Automatic Investment Plan, a copy of the discretionary account management agreement, and/or a written certification from an unaffiliated investment adviser.
Personal Trading and Holdings Reviews
Granites Personal Securities Transactions policies and procedures are designed to mitigate any potential material conflicts of interest associated with Employees personal trading activities. Accordingly, the CCO will closely monitor Employees investment patterns to detect the following potentially abusive behavior:
· Frequent and/or short-term trades in any Security (i.e., trading within 30 days after being purchased), with particular attention paid to potential market-timing of mutual funds;
· Trading opposite of Client trades;
· Trading ahead of Clients; and
· Trading that appears to be based on Material Non-Public Information.
The CCO or a designee will review reports submitted pursuant to the Personal Securities Transactions policies and procedures for potentially abusive behavior, and will compare Employee trading with Client and Fund trading and positions, and Restricted Lists, as necessary. Upon review, the CCO or a designee will evidence the review and document any issues noted. Any personal trading that appears abusive may result in further inquiry by the CCO and/or sanctions, up to and including dismissal.
Mr. Robert Foran, Principal, or his designee, will monitor the CCOs personal securities transactions for compliance with the Personal Securities Transactions policies and procedures.
Disclosure of the Code of Ethics
Granite will describe its Code of Ethics in Part 2A of Form ADV and, upon request, furnish Clients with a copy of the Code of Ethics. All Client requests for Granites Code of Ethics should be directed to the CCO.
DEFINITIONS
The following defined terms are used throughout Granites Code of Ethics and its Regulatory Compliance Manual. Other capitalized terms are defined within specific sections of the Code and Manual.
· Access Person An Access Person is an Employee who has access to non-public information regarding any clients trading or any Reportable Funds holdings, who is involved in making securities recommendations to Clients, or who has access to non-public securities recommendations. All of Granites principals, directors, officers, and partners are presumed to be Access Persons.
· Advisers Act The Investment Advisers Act of 1940, as amended.
· Automatic Investment Plan A program in which regular trades are made automatically in accordance with a predetermined schedule and allocation. An Automatic Investment Plan includes a dividend reinvestment plan.
· Beneficial Interest An individual has a Beneficial Interest in a Security if he or she can directly or indirectly profit from the Security. An individual generally has a Beneficial Interest in all Securities held directly or indirectly, as well as those owned directly or indirectly by family members sharing the same household.
· CCO Mr. Geoffrey Edelstein, Granites Chief Compliance Officer.
· CFTC The Commodity Futures Trading Commission.
· Clients Individuals and entities for which Granite provides investment advisory services.
· Consumer Report Generally, any communication by a consumer reporting agency bearing on a consumers credit worthiness, character, personal characteristics, or mode of living which is used or expected to be used or collected for the purpose of establishing the consumers eligibility for (A) credit or insurance; (B) employment; or (C) any other purpose authorized under Section 604 of Fair Credit Reporting Act. Please see Section 603(d) of the Fair Credit Reporting Act for a complete definition.
· Employees Granites officers, directors, principals, and employees.
· ERISA The Employee Retirement Income and Savings Act of 1974.
· Exchange Act The Securities Exchange Act of 1934.
· Federal Securities Laws The Federal Securities Laws include the Securities Act, the Exchange Act, the Sarbanes-Oxley Act of 2002, the IC Act, the Advisers Act, Title V of the Gramm-Leach- Bliley Act, any rules adopted by the SEC under any of these statutes, the Bank Secrecy Act as it applies to investment companies and investment advisers, and any rules adopted thereunder by the SEC or the Department of the Treasury.
· FINRA The Financial Industry Regulatory Authority, a self-regulatory organization. FINRA was formed in 2007 through the consolidation of NASD and certain functions of the New York Stock Exchange.
· Front-Running Trading a favored account ahead of other accounts.
· FTC The Federal Trade Commission.
· GIPS® The CFA Institutes Global Investment Performance Standards. Formerly known as the Association for Investment Management and Researchs Performance Presentation Standards, or AIMR-PPS.
· IAR Investment advisory representative. The formal definition of an IAR, and any licensure or registration requirements varies by state. Any Employee who manages Client accounts, makes investment recommendations, and/or solicits Clients should discuss applicable state-specific requirements with the CCO.
· Investor A limited partner or shareholder in a pooled investment vehicle.
· IC Act The Investment Company Act of 1940.
· Insider Trading Trading personally or on behalf of others on the basis of Material Non-Public Information, or improperly communicating Material Non-Public Information to others.
· IPO An initial public offering. An IPO is an offering of Securities registered under the Securities Act where the issuer, immediately before the registration, was not subject to the reporting requirements of sections 13 or 15(d) of the Exchange Act.
· Material Non-Public Information Information that (i) has not been made generally available to the public, and that (ii) a reasonable investor would likely consider important in making an investment decision. Consult Granites CCO if you are unsure whether information constitutes Material Non-Public Information.
· Natural Person A human being, as opposed to a legal entity.
· Nonpublic Personal Information Regulation S-P defines Nonpublic Personal Information to include personally identifiable financial information that is not publicly available, as well as any list, description, or other grouping of consumers derived from nonpublic personally identifiable financial information.
· Outside Counsel Spolin, Silverman and Cohen
· Portfolio Managers Those Employees with portfolio management responsibility.
· Portfolio System Fiserv/APL portfolio accounting and trading system provided by SEI or any Wrap Program Sponsor
· QIB A qualified institutional buyer. Pursuant to Rule 144A under the Securities Act, a QIB is an entity, acting for its own account or the accounts of other QIBs, which in aggregate owns and invests on a discretionary basis at least $100 million in Securities of issuers that are not affiliated with the QIB.
· Qualified Custodian Please see Rule 206(4)-2 under the Advisers Act for a complete definition. Generally, a Qualified Custodian is defined to include:
· A bank or savings association with deposits insured by the FDIC holding assets in accounts in the name of the Client;
· A registered broker-dealer holding assets in the name of the Client;
· A registered futures commission merchant holding Client funds or Security futures in customer accounts; and
· A foreign financial institution that customarily holds financial assets for customers.
· Reportable Fund Any RIC advised or underwritten by Granite.
· RIC An investment company registered under the IC Act, often referred to as a mutual fund.
· Security The SEC defines the term Security broadly to include stocks, bonds, certificates of deposit, options, interests in Private Placements, futures contracts on other Securities, participations in profit-sharing agreements, and interests in oil, gas, or other mineral royalties or leases, among other things. Security is also defined to include any instrument commonly known as a Security. Any questions about whether an instrument is a Security for purposes of the Federal Securities Laws should be directed to the CCO.
· SEC The Securities and Exchange Commission.
· SEI Granites back and middles office service provider.
· Securities Act The Securities Act of 1933.
· SRO A self-regulatory organization, such as FINRA.
· Traders Employees whose primary responsibility is to trade securities on behalf of Clients.
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Annual Compliance Questionnaire Supplement
Please answer the following questions accurately. If you mark any shaded boxes, explain your response in the space following the table.
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1. Are you or any members of your immediate family employed by a financial services company or a company that provides products or services to Granite? |
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2. Do you or any member of your immediate family serve as a general partner or managing member for an investment-related pooled investment vehicle? |
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3. Do you or any members of your immediate family have some other business or personal relationship with, or substantive investment in, a financial services company or a company that provides products or services to Granite? |
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4. Do you or any members of your immediate family have any other business or personal relationship with any Client? |
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5. Are you or any members of your immediate family employed by any government? |
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6. Do you or any members of your immediate family serve as officers or directors of any organizations (including private companies, public companies, and not- for-profit organizations)? |
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7. Are you aware of any conflicts of interest that have not already been disclosed to the CCO involving Granite, you or your immediate family members and any Client? |
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8. Have you complied with Granites requirements regarding the disclosure and approval of outside business activities? |
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9. In the past ten years, have you or any advisory affiliate been convicted of or plead guilty or no contest in a domestic, foreign, or military court to any:
o Felony o Misdemeanor involving investments or an investment-related business, or any fraud, false statements, or omissions, wrongful taking of property, bribery, perjury, forgery, counterfeiting, extortion, or a conspiracy to commit any of these offenses? |
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10. Are any felony or misdemeanor charges, as described above, currently pending? |
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11. In the past ten years, has the SEC or the CFTC found you or any advisory affiliate:
o To have made a false statement or omission? o To have been involved in a violation of SEC or CFTC regulations or |
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o To have been a cause of an investment related business having its authorization to do business denied, suspended, revoked, or restricted? |
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12. In the past ten years, has the SEC or the CFTC:
o Entered an order against you or any advisory affiliate in connection with investment-related activity? o Imposed a civil money penalty on you or any advisory affiliate, or ordered you or any advisory affiliate to cease and desist from any activity? |
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13. In the past ten years, has any other federal regulatory agency, any state regulatory agency, or any foreign financial regulatory authority found you or an advisory affiliate to have:
o Made a false statement or omission, or been dishonest, unfair, or unethical? o Been involved in a violation of investment-related regulations or statutes? o Been a cause of an investment related business having its authorization to do business denied, suspended, revoked, or restricted? |
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14. In the past ten years, has any other federal regulatory agency, any state regulatory agency, or any foreign financial regulatory authority:
o Entered an order against you or any advisory affiliate in connection with an investment-related activity? o Denied, suspended, or revoked your or any advisory affiliates registration or license, or otherwise prevented you or any advisory affiliate, by order, from associating with an investment-related business or restricted your or any advisory affiliates activity? |
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15. In the past ten years, has any self-regulatory organization or commodities exchange found you or an advisory affiliate to have:
o Made a false statement or omission? o Been involved in a violation of its rules (other than a violation designated as a minor rule violation under a plan approved by the SEC)? o Been the cause of an investment related business having its authorization to do business denied, suspended, revoked, or restricted? |
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16. In the past ten years, has any self-regulatory organization or commodities exchange disciplined you or any advisory affiliate by expelling or suspending you or the advisory affiliate from membership, barring or suspending you or the advisor affiliate from association with other members, or otherwise restricting your or the advisory affiliates activities? |
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17. Has an authorization to act as an attorney, accountant, or federal contractor |
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granted to you or any advisory affiliate ever been revoked or suspended? |
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18. In the past ten years, has any domestic or foreign court:
o Enjoined you or any advisory affiliate in connection with any investment- related activity? o Found that you or any advisory affiliate was involved in a violation of investment-related statutes or regulations? o Dismissed, pursuant to a settlement agreement, an investment related civil action brought against you or any advisory affiliate by a state or foreign financial regulatory authority? |
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19. Are you or any advisory affiliate now the subject of any proceeding that could result in a yes answer to any of the preceding questions? |
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New Employees should skip the remaining questions. Any marks in a shaded box should be explained at the end of this questionnaire. |
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20. During the past 12 months, have you reported all personal securities transactions in accordance with Granites reporting policies? |
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21. During the past 12 months, have you reported gifts and entertainment in accordance with Granites reporting policies? |
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22. During the past 12 months, have you traded on or improperly transmitted any Material Non-Public Information? |
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23. During the past 12 months, have you become aware of any violation of Granites Code of Ethics that you did not disclose to the CCO? |
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24. During the past 12 months, have you complied with the Companys written policies and procedures regarding:
o Insider trading; o Outside business activities; o Political contributions; o Identification, reporting, and resolution of complaints; o Portfolio management; o Proxy voting; o Trading; o Identification, reporting, and resolution of trade errors; o Soft dollars; o Security valuation; o Account opening and closing; o Side pockets; o Anti-money laundering; |
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o Protection of Clients privacy; o Custody and safeguarding of assets; o Fee billing; o The maintenance and dissemination of disclosure documents; o The use of electronic communications; o Advertising and marketing; o Solicitation arrangements; o Media communications o Contingency and disaster recovery planning; and o The maintenance of books and records. |
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Please use the space below to explain any marks in shaded boxes. For each explanation, indicate the relevant question number. Use additional pages as necessary.
By signing below, I certify that I responded to the Annual Compliance Questionnaire Supplement completely and accurately.
Print Name:
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Attachment A
Quarterly Code of Ethics Report: For Quarter Ending
This form must be completed by each Access Person within 30 days following the end of each calendar quarter. This report is due by .
Name:
Brokerage account statements or trade confirmations containing all required information may be used to comply with the firms requirements for personal securities reporting if submitted timely. To the extent that a brokerage statement or confirmation lacks some of the information otherwise required to be reported, a transactions report containing the missing information as a supplement to the statement or confirmation may be submitted.
The following are the accounts you have reported to us. If there are any other reportable transactions in accounts not on the list below for the reporting period, please attach them to this form. By signing this form you are certifying that you have arranged to have account statements sent to us or are providing documentation of your quarterly transactions.
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This report (1) excludes personal securities transactions with respect to which I had no direct or indirect influence or control, (2) exclude personal securities transactions in securities which are not Reportable Securities.
Did you open or close any accounts during the quarter ending ?
o Yes o No If yes, please list below.
Other Information:
Recently Opened or Closed
Accounts:
Political Contributions:
Below are political contributions we have on file for you for the quarter ending . If there are any other political contributions not on this list below or if any information is incorrect, please correct below.
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Attachment B
Initial/Annual Holdings Reporting Form: Reportable Securities
Initial/Annual Holdings Report
As of the below date, I held the following positions in these securities in which I may be deemed to have a direct or indirect Beneficial Ownership, which are required to be reported pursuant to the Code of Ethics.
You may attach a copy of your most recent account statement(s), in lieu of listing each security.
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This report (1) excludes holdings with respect to which I had no direct or indirect influence or control, (2) excludes personal securities holdings of securities which are not Reportable Securities, and (3) is not an admission that I have or had any direct or indirect beneficial ownership in the Reportable Securities listed above.
I have an account or accounts, over which I have direct or indirect influence or control, in which securities (including securities which are not considered Reportable Securities (i.e., mutual fund-only accounts, non- discretionary accounts) which are not listed above are held for my direct or indirect benefit as of the date below with the following brokers, dealers or banks:
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I certify that this form fully discloses all Reportable Security holdings in which I have a beneficial interest. I understand that I am presumed to have a beneficial interest in Securities holdings of immediate family members living in the same household.
Deliver to the CCO within 10 days of becoming associated with Granite Investment Partners, LLC, and by February 14 th of each year. Use additional sheets if necessary.
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Exhibit (p)(22)
Pacific Ridge Capital Partners, LLC
Code of Ethics
April 29, 2014
Pacific Ridge Capital Partners, LLC
Code of Ethics
4/29/2014 to Current
Table of Contents
1- Statement of General Policy
This Code of Ethics (Code) has been adopted by Pacific Ridge Capital Partners, LLC and is designed to comply with Rule 204A-1 under the Investment Advisers Act of 1940 (Advisers Act).
This Code establishes rules of conduct for all employees of Pacific Ridge Capital Partners, LLC and is designed to, among other things, govern personal securities trading activities in the accounts of employees, immediate family/household accounts and accounts in which an employee has a beneficial interest. The Code is based upon the principle that Pacific Ridge Capital Partners, LLC and its employees owe a fiduciary duty to Pacific Ridge Capital Partners, LLCs clients to conduct their affairs, including their personal securities transactions, in such a manner as to avoid (i) serving their own personal interests ahead of clients, (ii) taking inappropriate advantage of their position with the firm and (iii) any actual or potential conflicts of interest or any abuse of their position of trust and responsibility.
The Code is designed to ensure that the high ethical standards long maintained by Pacific Ridge Capital Partners, LLC continue to be applied. The purpose of the Code is to preclude activities which may lead to or give the appearance of conflicts of interest, insider trading and other forms of prohibited or unethical business conduct. The excellent name and reputation of our firm continues to be a direct reflection of the conduct of each employee.
Pursuant to Section 206 of the Advisers Act, both Pacific Ridge Capital Partners, LLC and its employees are prohibited from engaging in fraudulent, deceptive or manipulative conduct. Compliance with this section involves more than acting with honesty and good faith alone. It means that the Pacific Ridge Capital Partners, LLC has an affirmative duty of utmost good faith to act solely in the best interest of its clients.
Pacific Ridge Capital Partners, LLC and its employees are subject to the following specific fiduciary obligations when dealing with clients:
· The duty to have a reasonable, independent basis for the investment advice provided;
· The duty to obtain best execution for a clients transactions where the Firm is in a position to direct brokerage transactions for the client;
· The duty to ensure that investment advice is suitable to meeting the clients individual objectives, needs and circumstances; and
· A duty to be loyal to clients.
In meeting its fiduciary responsibilities to its clients, Pacific Ridge Capital Partners, LLC expects every employee to demonstrate the highest standards of ethical conduct for continued employment with Pacific Ridge Capital Partners, LLC. Strict compliance with the provisions of the Code shall be considered a basic condition of employment with Pacific Ridge Capital Partners, LLC. Pacific Ridge Capital Partners, LLCs reputation for fair and honest dealing with its clients has taken considerable time to build. This standing could be seriously damaged as the result of even a single securities transaction being considered questionable in light of the fiduciary duty owed to our clients. Employees are urged to seek the advice of the Chief Compliance Officer, for any questions about the Code or the application of the
Code to their individual circumstances. Employees should also understand that a material breach of the provisions of the Code may constitute grounds for disciplinary action, including termination of employment with Pacific Ridge Capital Partners, LLC.
The provisions of the Code are not all-inclusive. Rather, they are intended as a guide for employees of Pacific Ridge Capital Partners, LLC in their conduct. In those situations where an employee may be uncertain as to the intent or purpose of the Code, he/she is advised to consult with the Chief Compliance Officer. The Chief Compliance Officer may grant exceptions to certain provisions contained in the Code only in those situations when it is clear beyond dispute that the interests of our clients will not be adversely affected or compromised. All questions arising in connection with personal securities trading should be resolved in favor of the client even at the expense of the interests of employees.
The Chief Compliance Officer will periodically report to senior management/board of directors of Pacific Ridge Capital Partners, LLC to document compliance with this Code.
2 - Definitions
For the purposes of this Code, the following definitions shall apply:
· Access person means any supervised person who: has access to nonpublic information regarding any clients purchase or sale of securities, or nonpublic information regarding the portfolio holdings of any Reportable fund our firm or its control affiliates manage or has access to such recommendations; or is involved in making securities recommendations to clients that are nonpublic.
· Account means accounts of any employee and includes accounts of the employees immediate family members (any relative by blood or marriage living in the employees household), and any account in which he or she has a direct or indirect beneficial interest, such as trusts and custodial accounts or other accounts in which the employee has a beneficial interest, controls or exercises investment discretion.
· Beneficial ownership shall be interpreted in the same manner as it would be under Rule 16a-1(a)(2) under the Securities Exchange Act of 1934 in determining whether a person is the beneficial owner of a security for purposes of Section 16 of such Act and the rules and regulations thereunder.
· Fund means an investment company registered under the Investment Company Act.
· Reportable fund means any registered investment company, i.e., mutual fund, for which our Firm, or a control affiliate, acts as investment adviser, as defined in section 2(a) (20) of the Investment Company Act, or principal underwriter.
· Reportable security means any security as defined in Section 202(a)(18) of the Advisers Act, except that it does not include: (i) Transactions and holdings in direct obligations of the Government of the United States; (ii) Bankers acceptances, bank certificates of deposit, commercial paper and other high quality short-term debt instruments, including repurchase agreements; (iii) Shares issued by money market funds; (iv) Transactions and holdings in shares of other types of open-end registered mutual funds, unless Pacific Ridge Capital Partners, LLC or a control affiliate acts as the investment adviser or principal underwriter for the fund; and (v) Transactions in units of a unit investment trust if the unit investment trust is invested exclusively in mutual funds, unless Pacific Ridge Capital Partners, LLC or a control affiliate acts as the investment adviser or principal underwriter for the fund.
· Supervised person means directors, officers and partners of Pacific Ridge Capital Partners, LLC (or other persons occupying a similar status or performing similar functions); employees of Pacific Ridge Capital Partners, LLC; and any other person who provides advice on behalf of Pacific Ridge Capital Partners, LLC and is subject to Pacific Ridge Capital Partners, LLCs supervision and control.
3 - Standards of Business Conduct
Pacific Ridge Capital Partners, LLC places the highest priority on maintaining its reputation for integrity and professionalism. That reputation is a vital business asset. The confidence and trust placed in our firm and its employees by our clients is something we value and endeavor to protect. The following Standards of Business Conduct set forth policies and procedures to achieve these goals. This Code is intended to comply with the various provisions of the Advisers Act and also requires that all supervised persons comply with the various applicable provisions of the Investment Company Act of 1940, as amended, the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, and applicable rules and regulations adopted by the Securities and Exchange Commission (SEC).
Section 204A of the Advisers Act requires the establishment and enforcement of policies and procedures reasonably designed to prevent the misuse of material, nonpublic information by investment advisers. Such policies and procedures are contained in this Code. The Code also contains policies and procedures with respect to personal securities transactions of all Pacific Ridge Capital Partners, LLCs supervised persons as defined herein. These procedures cover transactions in a reportable security in which a supervised person has a beneficial interest in or accounts over which the supervised person exercises control as well as transactions by members of the supervised persons immediate family.
Section 206 of the Advisers Act makes it unlawful for Pacific Ridge Capital Partners, LLC or its agents or employees to employ any device, scheme or artifice to defraud any client or prospective client, or to engage in fraudulent, deceptive or manipulative practices. This Code contains provisions that prohibit these and other enumerated activities and that are reasonably designed to detect and prevent violations of the Code, the Advisers Act and rules thereunder.
4 - Prohibition Against Insider Trading
Introduction
Trading securities while in possession of material, nonpublic information, or improperly communicating that information to others may expose supervised persons and Pacific Ridge Capital Partners, LLC to stringent penalties. Criminal sanctions may include a fine of up to $1,000,000 and/or ten years imprisonment. The SEC can recover the profits gained or losses avoided through the illegal trading, impose a penalty of up to three times the illicit windfall, and/or issue an order permanently barring you from the securities industry. Finally, supervised persons and Pacific Ridge Capital Partners, LLC may be sued by investors seeking to recover damages for insider trading violations.
The rules contained in this Code apply to securities trading and information handling by supervised persons of Pacific Ridge Capital Partners, LLC and their immediate family members.
The law of insider trading is unsettled and continuously developing. An individual legitimately may be uncertain about the application of the rules contained in this Code in a particular circumstance. Often, a single question can avoid disciplinary action or complex legal problems. You must notify the Chief Compliance Officer immediately if you have any reason to believe that a violation of this Code has occurred or is about to occur.
General Policy
No supervised person may trade, either personally or on behalf of others (such as investment funds and private accounts managed by Pacific Ridge Capital Partners, LLC), while in the possession of material, nonpublic information, nor may any personnel of Pacific Ridge Capital Partners, LLC communicate material, nonpublic information to others in violation of the law.
1. What is Material Information?
Information is material where there is a substantial likelihood that a reasonable investor would consider it important in making his or her investment decisions. Generally, this includes any information the disclosure of which will have a substantial effect on the price of a companys securities. No simple test exists to determine when information is material; assessments of materiality involve a highly fact-specific inquiry. For this reason, you should direct any questions about whether information is material to the Chief Compliance Officer.
Material information often relates to a companys results and operations, including, for example, dividend changes, earnings results, changes in previously released earnings estimates, significant merger or acquisition proposals or agreements, major litigation, liquidation problems, and extraordinary management developments.
Material information also may relate to the market for a companys securities. Information about a significant order to purchase or sell securities may, in some contexts, be material. Prepublication information regarding reports in the financial press also may be material. For
example, the United States Supreme Court upheld the criminal convictions of insider trading defendants who capitalized on prepublication information about The Wall Street Journals Heard on the Street column.
You should also be aware of the SECs position that the term material nonpublic information relates not only to issuers but also to Pacific Ridge Capital Partners, LLCs securities recommendations and client securities holdings and transactions.
2. What is Nonpublic Information?
Information is public when it has been disseminated broadly to investors in the marketplace. For example, information is public after it has become available to the general public through the Internet, a public filing with the SEC or some other government agency, the Dow Jones tape or The Wall Street Journal or some other publication of general circulation, and after sufficient time has passed so that the information has been disseminated widely.
3. Identifying Inside Information
Before executing any trade for yourself or others, including investment funds or private accounts managed by Pacific Ridge Capital Partners, LLC (Client Accounts), you must determine whether you have access to material, nonpublic information. If you think that you might have access to material, nonpublic information, you should take the following steps:
· Report the information and proposed trade immediately to the Chief Compliance Officer.
· Do not purchase or sell the securities on behalf of yourself or others, including investment funds or private accounts managed by the firm.
· Do not communicate the information inside or outside the firm, other than to the Chief Compliance Officer.
· After the Chief Compliance Officer has reviewed the issue, the firm will determine whether the information is material and nonpublic and, if so, what action the firm will take.
You should consult with the Chief Compliance Officer before taking any action. This high degree of caution will protect you, our clients, and the firm.
4. Contacts with Public Companies
Contacts with public companies may represent an important part of our research efforts. The firm may make investment decisions on the basis of conclusions formed through such contacts and analysis of publicly available information. Difficult legal issues arise, however, when, in the course of these contacts, a supervised person of Pacific Ridge Capital Partners, LLC or other person subject to this Code becomes aware of material, nonpublic information. This could happen, for example, if a companys Chief Financial Officer prematurely discloses quarterly results to an analyst, or an investor relations representative makes selective disclosure of
adverse news to a handful of investors. In such situations, Pacific Ridge Capital Partners, LLC must make a judgment as to its further conduct. To protect yourself, your clients and the firm, you should contact the Chief Compliance Officer immediately if you believe that you may have received material, nonpublic information.
5. Tender Offers
Tender offers represent a particular concern in the law of insider trading for two reasons: First, tender offer activity often produces extraordinary gyrations in the price of the target companys securities. Trading during this time period is more likely to attract regulatory attention (and produces a disproportionate percentage of insider trading cases). Second, the SEC has adopted a rule which expressly forbids trading and tipping while in the possession of material, nonpublic information regarding a tender offer received from the tender offeror, the target company or anyone acting on behalf of either. Supervised persons of Pacific Ridge Capital Partners, LLC and others subject to this Code should exercise extreme caution any time they become aware of nonpublic information relating to a tender offer.
6. Restricted/Watch Lists
Although Pacific Ridge Capital Partners, LLC does not typically receive confidential information from portfolio companies, it may, if it receives such information take appropriate procedures to establish restricted or watch lists in certain securities.
The Chief Compliance Officer may place certain securities on a restricted list. Supervised persons are prohibited from personally, or on behalf of an advisory account, purchasing or selling securities during any period they are listed. Securities issued by companies about which a number of supervised persons are expected to regularly have material, nonpublic information should generally be placed on the restricted list. The Chief Compliance Officer shall take steps to immediately inform all supervised persons of the securities listed on the restricted list.
The Chief Compliance Officer may place certain securities on a watch list. Securities issued by companies about which a limited number of supervised persons possess material, nonpublic information should generally be placed on the watch list. The list will be disclosed only to the Chief Compliance Officer and a limited number of other persons who are deemed necessary recipients of the list because of their roles in compliance.
5 - Personal Securities Transactions
General Policy
Pacific Ridge Capital Partners, LLC has adopted the following principles governing personal investment activities by Pacific Ridge Capital Partners, LLCs supervised persons:
· The interests of client accounts will at all times be placed first;
· All personal securities transactions will be conducted in such manner as to avoid any actual or potential conflict of interest or any abuse of an individuals position of trust and responsibility; and
· Supervised persons must not take inappropriate advantage of their positions.
Pre-Clearance Required for Participation in IPOs
No supervised person shall acquire any beneficial ownership in any securities in an Initial Public Offering for his or her account, as defined herein without the prior written approval of the Chief Compliance Officer who has been provided with full details of the proposed transaction (including written certification that the investment opportunity did not arise by virtue of the supervised persons activities on behalf of a client) and, if approved, will be subject to continuous monitoring for possible future conflicts.
Private or Limited Offerings in Publicly Traded Companies
No supervised person shall acquire beneficial ownership of any securities in a limited offering or private placement that invests in publicly traded companies, or placements in companies that will invest in publicly traded companies, unless full discretion is given to the manager of such Private or Limited Offering. Supervised person(s) also represent that the investment opportunity did not arise by virtue of the supervised persons activities on behalf of a client.
Pre-Clearance Required for Trading in Securities owned in a Pacific Ridge Capital Partners, LLC client account
No supervised person shall purchase or sell, directly or indirectly for their own account, any security which is also held in a Pacific Ridge Capital Partners, LLC client account without the prior written approval of the Chief Compliance Officer or the President who has been provided with full details of the proposed transaction (including written certification that the investment opportunity did not arise by virtue of the supervised persons activities on behalf of a client) and, if approved, will be subject to continuous monitoring for possible future conflicts.
Pre-Clearance Required for Trading in US Exchanged Traded Securities with a Market Capitalization between $25 million and $2 billion
No supervised person shall purchase or sell, directly or indirectly, any security traded on a US Exchange with a market capitalization between $25 million and $2 billion without the prior written approval of the
Chief Compliance Officer who has been provided with full details of the proposed transaction (including written certification that the investment opportunity did not arise by virtue of the supervised persons activities on behalf of a client) and, if approved, will be subject to continuous monitoring for possible future conflicts.
Blackout Periods
No supervised person shall purchase or sell, directly or indirectly, any security in which he or she has, or by reason of such transaction acquires, any direct or indirect beneficial interest within seven (7) calendar days after any client trades in that security unless all of the transactions contemplated by the client in that security have been completed prior to such transaction. If a securities transaction is executed by a client within seven (7) calendar days after an access person executed a transaction in the same security, the Chief Compliance Officer will review the supervised persons and the clients transactions to determine whether the supervised person did not meet his or her fiduciary duties to the client in violation of this Code.
6 - Social Media
General Policy
It is Pacific Ridge Capital Partners policy to monitor employee use of social media, networking and similar communications. There should be no expectation of privacy in the use of the Firms Internet, emails, any use of blogs, instant messages, company- owned cellular phones and text messages on company-owned equipment under this policy. Every message leaves an electronic trail thats both traceable to a specific individual and accessible by Pacific Ridge Capital Partners even if it is deleted. Blogging or other forms of social media or technology include but are not limited to: video or wiki postings, sites such as LinkedIn, Facebook and Twitter, chat rooms, pod casts, virtual worlds, personal blogs, microblogs or other similar forms of online journals, diaries or personal newsletters.
General Provisions
Unless specific to job scope requirements, employees are not authorized to and therefore may not speak on behalf of Pacific Ridge Capital Partners through social media or otherwise. Employees may not publicly discuss clients, investment strategies or recommendations, investment performance, other products or services offered by our Firm , employees or any work-related matters, whether confidential or not, outside company-authorized communications. Employees are required to protect the privacy of Pacific Ridge Capital Partners, its clients and employees, and are prohibited from disclosing personal employee and non-employee information and any other proprietary and nonpublic information to which employees have access. Such information includes but is not limited to customer information, trade secrets, financial information and strategic business plans.
Personal Blogs and Social Networking Sites . Bloggers and commenters are personally responsible for their commentary on blogs and social media sites. Bloggers and commenters can be held personally liable for commentary that is considered defamatory, obscene, proprietary or libelous by any offended party, not just Pacific Ridge Capital Partners.
It is Pacific Ridge Capital Partners policy that no employee may use employer-owned equipment, including computers, company-licensed software or other electronic equipment, nor facilities or company time, to conduct unauthorized personal blogging or social networking activities. Employees cannot use blogs or social media sites to harass, threaten, discriminate or disparage against employees or anyone associated with or doing business with Pacific Ridge Capital Partners.
Employees cannot post on personal blogs or other sites the name, trademark or logo of Pacific Ridge Capital Partners or any business with a connection to Pacific Ridge Capital Partners. Employees cannot post company-privileged information, including copyrighted or trademarked information or company-issued documents.
Text Messaging Policy . Text messaging is enabled on company-issued smartphones or similar devices for your traveling and/or communications convenience. However, as Pacific Ridge Capital Partners is unable to capture such communications, no Pacific Ridge Capital Partners business may be conducted via text messaging.
Internet Monitoring . Employees are cautioned that they should have no expectation of privacy while using company equipment or facilities for any purpose, including authorized blogging. Employees are cautioned that they should have no expectation of privacy while using the Internet. Your postings can be reviewed by anyone, including Pacific Ridge Capital Partners. Pacific Ridge Capital Partners reserves the right to monitor comments or discussions about the company, its employees, clients and the industry, including products and competitors, posted on the Internet by anyone, including employees and non-employees. Pacific Ridge Capital Partners may use blog- search tools and software, and/or may engage outside service providers to periodically monitor forums such as blogs and other types of personal journals, diaries, personal and business discussion forums, and social networking sites.
Pacific Ridge Capital Partners Social Media policy, however, will not be construed or applied to limit employees rights under the under the National Labor Relations Act (NLRA) or applicable law.
Background
Social media and/or methods of publishing opinions or commentary electronically is a fast growing phenomenon which takes many forms, including internet forums, blogs and microblogs, online profiles, wikis, podcasts, picture and video posts, virtual worlds, email, instant messaging, text messaging, music and other file-sharing, to name just a few. Examples of social media applications include, among others, LinkedIn, Facebook, MySpace, YouTube, Twitter, Yelp, Flickr, Second Life, Yahoo groups, Wordpress, and ZoomInfo. The proliferation of such electronic communications presents new and ever changing regulatory risks for our firm.
As a registered investment adviser, use of social media by our Firm and/or related persons of the Firm must comply with applicable provisions of the federal securities laws, including, but not limited to the following laws and regulations under the Advisers Act, as well as additional rules and regulations identified below:
Anti-Fraud Provisions: Sections 206(1), 206(2), and 206(4), and Rule 206(4)-1 thereunder;
Advertising: Rule 206(4)-1
Compliance/Supervision: Rule 206(4)-7
Privacy: Regulation S-P
Recordkeeping: Rule 204(2)
For example, business or client related comments or posts made through social media may breach applicable privacy laws or be considered Advertising under applicable regulations triggering content restrictions and special disclosure and recordkeeping requirements. Employees should be aware that the use of social media for personal purposes may also have implications for our Firm, particularly where the employee is identified as an officer, employee or representative of the firm. Accordingly, Pacific Ridge Capital Partners seeks to adopt reasonable policies and procedures to safeguard the Firm and our clients.
Responsibility
The Chief Compliance Officer has the responsibility for the implementation and monitoring of our firms Social Media policy, practices, and recordkeeping.
Procedure
Pacific Ridge Capital Partners has adopted procedures to implement Pacific Ridge Capital Partners policy, and conducts internal reviews to monitor and ensure that the policy is observed, implemented properly, and amended or updated, as appropriate. These include the following:
1. Pacific Ridge Capital Partners email policy has been communicated to all persons within the Firm and any changes in our policy will be promptly communicated.
2. All employees are required to sign a written acknowledgement of our Social Media policy.
3. All employees will be required to provide annual certification that they understand and are complying with our Social Media policy.
4. Emails and any other electronic communications relating to Pacific Ridge Capital Partners advisory services and client relationships will be maintained on an on-going basis.
5. Electronic communications records will be maintained and arranged for easy access and retrieval so as to provide true and complete copies with appropriate backup and separate storage for the required periods.
6. The Chief Compliance Officer will periodically monitor a random sampling of employee electronic communications and maintain documentary evidence of such surveillance in an applicable location.
7. Pacific Ridge Capital Partners reserves the right to use content management tools to monitor, review or block content on company blogs that violate company blogging rules and guidelines.
8. Pacific Ridge Capital Partners requires employees to report any violation, or possible or perceived violation, to the Chief Compliance Officer. Violations include discussions of Pacific Ridge Capital Partners, its clients and/or employees, any discussion of proprietary information (including trade secrets, or copyrighted or trademarked material) and any unlawful activity related to blogging or social networking.
9. Pacific Ridge Capital Partners investigates and responds to all reports of violations of the social media policy and other related policies. Violation of the companys social media policy will result in disciplinary action up to and including immediate termination. Any disciplinary action or termination will be determined based on the nature and factors of any blog or social networking post, or any unauthorized communication. Pacific Ridge Capital Partners reserves the right to take legal action where necessary against employees who engage in prohibited or unlawful conduct. If you have any questions about this policy or a specific posting on the web, please contact the Chief Compliance Officer.
7 - Gifts and Entertainment
Giving, receiving or soliciting gifts in a business setting may create an appearance of impropriety or may raise a potential conflict of interest. Pacific Ridge Capital Partners, LLC has adopted the policies set forth below to guide supervised persons in this area.
General Policy
Pacific Ridge Capital Partners, LLCs policy with respect to gifts and entertainment is as follows:
· Giving, receiving or soliciting gifts in a business may give rise to an appearance of impropriety or may raise a potential conflict of interest;
· Supervised persons should not accept or provide any gifts or favors that might influence the decisions you or the recipient must make in business transactions involving Pacific Ridge Capital Partners, LLC, or that others might reasonably believe would influence those decisions;
· Modest gifts and favors, which would not be regarded by others as improper, may be accepted or given on an occasional basis. Entertainment that satisfies these requirements and conforms to generally accepted business practices also is permissible;
· Where there is a law or rule that applies to the conduct of a particular business or the acceptance of gifts of even nominal value, the law or rule must be followed.
Reporting Requirements
· Any supervised person who accepts, directly or indirectly, anything of value from any person or entity that does business with or on behalf of Pacific Ridge Capital Partners, LLC, including gifts and gratuities with value in excess of $300 per year (Note: Dual registrants sometimes use a $100 gift threshold for all employees based on NASD rule), must obtain consent from the Chief Compliance Officer before accepting such gift.
· This reporting requirement does not apply to bona fide dining or bona fide entertainment if, during such dining or entertainment, you are accompanied by the person or representative of the entity that does business with Pacific Ridge Capital Partners, LLC.
· This gift reporting requirement is for the purpose of helping Pacific Ridge Capital Partners, LLC monitor the activities of its employees. However, the reporting of a gift does not relieve any supervised person from the obligations and policies set forth in this Section or anywhere else in this Code. If you have any questions or concerns about the appropriateness of any gift, please consult the Chief Compliance Officer.
8 - Political Contributions
Policy
It is Pacific Ridge Capital Partners policy to permit the firm, and its covered associates, to make political contributions to elected officials, candidates and others, consistent with this policy and regulatory requirements.
Pacific Ridge Capital Partners recognizes that it is never appropriate to make or solicit political contributions, or provide gifts or entertainment for the purpose of improperly influencing the actions of public officials. Accordingly, our firms policy is to restrict certain political contributions made to government officials and candidates of state and state political subdivisions who can influence or have the authority for hiring an investment adviser.
Pacific Ridge Capital Partners practice is to restrict contributions made by covered associates so lees than or equal to the de minimis amounts ($350, if an election that the person can vote in, or $150, if an election the person cannot vote in). The firm also maintains appropriate records for all political contributions made by the firm and/or its covered associates. Our firms Code of Ethics also provides employees with a summary of Pacific Ridge Capital Partners Pay-to-Play practices.
Background
On June 22, 2011, the SEC adopted amendments to rule 206(4)-5, adding provisions extended the scope of the rule, making it applicable to (i) exempt reporting advisers, defined as an investment adviser that is exempt from registration because it is an adviser solely to one or more venture capital funds, or because it is an adviser solely to private funds and has assets under management in the United States of less than $150 million; and foreign private advisers, as defined under rule 202(a)(30)-1.
The amendments also permit an adviser to pay a registered municipal advisor to act as a placement agent to solicit government entities on its behalf provided that the municipal advisor is subject to a pay-to-play rule adopted by the Municipal Securities Rulemaking Board (MSRB) that is at least as stringent as the investment adviser pay-to-play rule.
In addition, the SEC extended the compliance date applicable to third-party solicitor provisions from September 13, 2011 to June 13, 2012 to provide time for the MSRB and FINRA to adopt pay-to-play rules if they choose to do so. The extension will also give third-party solicitors additional time to come into compliance with the applicable rules.
In July 2010, the SEC adopted Pay-to-Play rules; including the new anti-fraud Political Contributions by Certain Investment Advisers Rule (Rule 206(4)-5) under the Advisers Act (SEC Release No. IA-3043). The SEC had previously proposed a similar pay-to-play rule in 1999 which was not adopted. The political contribution rule was re-proposed in 2009 and adopted 7/1/2010.
The Political Contributions rule addresses certain pay-to-play practices such as making or soliciting campaign contributions or payments to certain government officials to influence the awarding of investment contracts for managing public pension plan assets and other state governmental investments.
The new rule applies to SEC registered advisers as well as advisers exempt from registration with the SEC pursuant to reliance on the private adviser exemption as provided in Section 203(b)(3) of the Advisers Act (hereafter, the adviser), which manage or seek to manage private investment funds in which government and governmental plans invest.
The Political Contribution Rule and amendments to Rule 204-2 are effective 9/13/2010, and the compliance date is 3/14/2011; although the Rule provides an extended date for compliance with certain of its provisions as detailed below.
By March 14, 2011, Advisers with clients who are government entities must comply with the amendments to Rule 204-2, including:
· maintaining required records of all individuals who are Covered Associates under the Rule;
· maintaining required records of political contributions made by the firm or its Covered Associates on and after that date; and
· maintaining required records identifying all government entities to which the Adviser provides advisory services on and after that date
Notes: The Rules prohibition on providing advisory services for compensation to a government entity within two years of a contribution will not apply to, and the Rules prohibition on soliciting or coordinating contributions will not be triggered by contributions made before March 13, 2011 (i.e., six months after the effective date of the Rule).
Additionally, Advisers that pay regulated persons to solicit government entities for advisory services on their behalf must maintain a list of those persons. As noted above, this compliance date has been extended by the SEC to June 13, 2012.
Likewise, Advisers to registered investment companies that are covered investment pools must comply with the Rule requirements pertaining to such covered pools within one year after the effective date. During that interim time, contributions made by the Adviser or its Covered
Associates to government entity clients that have selected the Advisers registered investment company as an option of the plan or program will not trigger the prohibitions of the Rule.
Responsibility
The Chief Compliance Officer has the responsibility for the implementation and monitoring of our firms political contribution policy, practices, disclosures and recordkeeping.
Procedure
Pacific Ridge Capital Partners has adopted various procedures to implement the firms policy, conducts reviews to monitor and ensure the firms policy is observed, implemented properly and amended or updated, as appropriate, which include the following:
· The Chief Compliance Officer, or other designated officer, determines who is deemed to be a Covered Associate of the firm and promptly advises those individuals of their status as such; maintains records including the names, titles, and business and residence addresses of all covered associates;
· The Chief Compliance Officer, or other designated officer, obtains appropriate information from new employees (or employees promoted or otherwise transferred into positions) deemed to be covered associates, regarding any political contributions made within the preceding two years (from the date s/he becomes a covered associate) if such person will be soliciting municipal business;
· Political contributions made by covered associates must not exceed the rules de minimis amount ($350, if an election that the person can vote in, or $150, if an election the person cannot vote in);
· Prior to accepting a new advisory client that is a government entity, the Chief Compliance Officer, or other designated officer will conduct a review of political contributions made by covered associates to ensure that any such contribution(s) did not exceed the rules permissible de minimis amount;
· The Chief Compliance Officer, or other designated officer, monitors and maintains records identifying all government entities to which Pacific Ridge Capital Partners provides advisory services, if any;
· The Chief Compliance Officer, or other designated officer, monitors and maintains records detailing political contributions made by the firm and/or its covered associates;
· Such records will be maintained in chronological order and will detail:
i. the name and title of the contributor;
ii. the name and title (including any city/county/state or other political subdivision) of each recipient of a contribution or payment;
iii. the amount and date of each contribution or payment; and
iv. whether any such contribution was the subject of the exception for certain returned contributions.
· The Chief Compliance Officer, or other designated officer, will maintain appropriate records following the departure of a covered associate who made a political contribution triggering the two-year time out period;
· The Chief Compliance Officer, or other designated officer, maintains records reflecting approval of political contributions made by the firm and/or its covered associates;
· Prior to engaging a third party solicitor to solicit advisory business from a government entity, the Chief Compliance Officer, or other designated officer, will determine that such solicitor is (1) a regulated person as defined under this Rule and (2) determined that such individual has not made certain political contributions or otherwise engaged in conduct that would disqualify the solicitor from meeting the definition of regulated person;
· On at least an annual basis, the Chief Compliance Officer, or other designated officer, will require covered associates and any third party solicitors to confirm that such person(s) have reported any and all political contributions, and continue to meet the definition of regulated person;
· The Chief Compliance Officer, or other designated officer, maintains records of each regulated person to whom the firm provides or agrees to provide (either directly or indirectly) payment to solicit a government entity for advisory services on its behalf.
· The Chief Compliance Officer, or other designated officer, will monitor states registration and/or reporting requirements pursuant to the firms use of any placement agents (including employees of the firm and/or its affiliates) for the solicitation of or arrangements for providing advisory services to any government entity or public pension plan.
9 - Protecting the Confidentiality of Client Information
Confidential Client Information
In the course of investment advisory activities of Pacific Ridge Capital Partners, LLC, the firm gains access to non-public information about its clients. Such information may include a persons status as a client, personal financial and account information, the allocation of assets in a client portfolio, the composition of investments in any client portfolio, information relating to services performed for or transactions entered into on behalf of clients, advice provided by Pacific Ridge Capital Partners, LLC to clients, and data or analyses derived from such non-public personal information (collectively referred to as Confidential Client Information). All Confidential Client Information, whether relating to Pacific Ridge Capital Partners, LLCs current or former clients, is subject to the Codes policies and procedures. Any doubts about the confidentiality of information must be resolved in favor of confidentiality.
Non-Disclosure of Confidential Client Information
All information regarding Pacific Ridge Capital Partners, LLCs clients is confidential. Information may only be disclosed when the disclosure is consistent with the firms policy and the clients direction. Pacific Ridge Capital Partners, LLC does not share Confidential Client Information with any third parties, except in the following circumstances:
· As necessary to provide service that the client requested or authorized, or to maintain and service the clients account. Pacific Ridge Capital Partners, LLC will require that any financial intermediary, agent or other service provider utilized by Pacific Ridge Capital Partners, LLC (such as broker-dealers or sub-advisers) comply with substantially similar standards for non-disclosure and protection of Confidential Client Information and use the information provided by Pacific Ridge Capital Partners, LLC only for the performance of the specific service requested by Pacific Ridge Capital Partners, LLC;
· As required by regulatory authorities or law enforcement officials who have jurisdiction over Pacific Ridge Capital Partners, LLC, or as otherwise required by any applicable law. In the event Pacific Ridge Capital Partners, LLC is compelled to disclose Confidential Client Information, the firm shall provide prompt notice to the clients affected, so that the clients may seek a protective order or other appropriate remedy. If no protective order or other appropriate remedy is obtained, Pacific Ridge Capital Partners, LLC shall disclose only such information, and only in such detail, as is legally required;
· To the extent reasonably necessary to prevent fraud, unauthorized transactions or liability.
Employee Responsibilities
All supervised persons are prohibited, either during or after the termination of their employment with Pacific Ridge Capital Partners, LLC, from disclosing Confidential Client Information to any person or entity outside the firm, including family members, except under the circumstances described above. A supervised person is permitted to disclose Confidential Client Information only to such other supervised
persons who need to have access to such information to deliver the Pacific Ridge Capital Partners, LLCs services to the client.
Supervised persons are also prohibited from making unauthorized copies of any documents or files containing Confidential Client Information and, upon termination of their employment with Pacific Ridge Capital Partners, LLC, must return all such documents to Pacific Ridge Capital Partners, LLC.
Any supervised person who violates the non-disclosure policy described above will be subject to disciplinary action, including possible termination, whether or not he or she benefited from the disclosed information.
Security of Confidential Personal Information
Pacific Ridge Capital Partners, LLC enforces the following policies and procedures to protect the security of Confidential Client Information:
· The Firm restricts access to Confidential Client Information to those supervised persons who need to know such information to provide Pacific Ridge Capital Partners, LLCs services to clients;
· Any supervised person who is authorized to have access to Confidential Client Information in connection with the performance of such persons duties and responsibilities is required to keep such information in a secure compartment, file or receptacle on a daily basis as of the close of each business day;
· All electronic or computer files containing any Confidential Client Information shall be password secured and firewall protected from access by unauthorized persons;
· Any conversations involving Confidential Client Information, if appropriate at all, must be conducted by supervised persons in private, and care must be taken to avoid any unauthorized persons overhearing or intercepting such conversations.
Privacy Policy
As a registered investment adviser, Pacific Ridge Capital Partners, LLC and all supervised persons, must comply with SEC Regulation S-P, which requires investment advisers to adopt policies and procedures to protect the nonpublic personal information of natural person clients. Nonpublic information, under Regulation S-P, includes personally identifiable financial information and any list, description, or grouping that is derived from personally identifiable financial information. Personally identifiable financial information is defined to include information supplied by individual clients, information resulting from transactions, any information obtained in providing products or services. Pursuant to Regulation S-P Pacific Ridge Capital Partners, LLC has adopted policies and procedures to safeguard the information of natural person clients.
Enforcement and Review of Confidentiality and Privacy Policies
The Chief Compliance Officer is responsible for reviewing, maintaining and enforcing Pacific Ridge Capital Partners, LLCs confidentiality and privacy policies and is also responsible for conducting
appropriate employee training to ensure adherence to these policies. Any exceptions to this policy requires the written approval of the Chief Compliance Officer.
10 - Service as an Officer or Director
No supervised person shall serve as an officer or on the board of directors of any publicly or privately traded company without prior authorization by the Chief Compliance Officer or a designated supervisory person based upon a determination that any such board service or officer position would be consistent with the interest of Pacific Ridge Capital Partners, LLCs clients. Where board service or an officer position is approved, Pacific Ridge Capital Partners, LLC shall implement a Chinese Wall or other appropriate procedure, to isolate such person from making decisions relating to the companys securities.
11 - Compliance Procedures
Pre-clearance
A supervised person may, directly or indirectly, acquire or dispose of beneficial ownership of a reportable security only if: (i) such purchase or sale has been approved by a supervisory person designated by Pacific Ridge Capital Partners, LLC firm; (ii) the approved transaction is completed by the close of business on the second trading day after approval is received; and (iii) the designated supervisory person has not rescinded such approval prior to execution of the transaction. Post-approval is not permitted.
Clearance must be obtained by completing and signing the Pre-clearance Form provided for that purpose by the Chief Compliance Officer. The Chief Compliance Officer monitors all transactions by all access persons in order to ascertain any pattern of conduct which may evidence conflicts or potential conflicts with the principles and objectives of this Code, including a pattern of front running.
Advance trade clearance in no way waives or absolves any supervised person of the obligation to abide by the provisions, principles and objectives of this Code.
Reporting Requirements
Every supervised person shall provide initial and annual holdings reports and quarterly transaction reports to the Chief Compliance Officer which must contain the information described below. It is the policy of Pacific Ridge Capital Partners, LLC that each supervised person must arrange for their brokerage firm(s) to send automatic duplicate brokerage account statements to the Chief Compliance Officer.
1. Initial Holdings Report
Every supervised person shall, no later than ten (10) days after the person becomes a supervised person, file an initial holdings report containing the following information:
· The title and exchange ticker symbol or CUSIP number, type of security, number of shares and principal amount (if applicable) of each reportable security in which the supervised person had any direct or indirect beneficial interest ownership when the person becomes a supervised person;
· The name of any broker, dealer or bank, account name, number and location with whom the supervised person maintained an account in which any securities were held for the direct or indirect benefit of the supervised person; and
· The date that the report is submitted by the supervised person.
The information submitted must be current as of a date no more than forty-five (45) days before the person became a supervised person.
2. Annual Holdings Report
Every supervised person shall, no later than January 31 each year, file an annual holdings report containing the same information required in the initial holdings report as described above. The information submitted must be current as of a date no more than forty-five (45) days before the annual report is submitted.
3. Quarterly Transaction Reports
Every supervised person must, no later than thirty (30) days after the end of each calendar quarter, file a quarterly transaction report containing the following information:
With respect to any transaction during the quarter in a reportable security in which the supervised persons had any direct or indirect beneficial ownership:
· The date of the transaction, the title and exchange ticker symbol or CUSIP number, the interest rate and maturity date (if applicable), the number of shares and the principal amount (if applicable) of each covered security;
· The nature of the transaction (i.e., purchase, sale or any other type of acquisition or disposition);
· The price of the reportable security at which the transaction was effected;
· The name of the broker, dealer or bank with or through whom the transaction was effected; and
· The date the report is submitted by the supervised person.
4. Exempt Transactions
A supervised person need not submit a report with respect to:
· Transactions effected for, securities held in, any account over which the person has no direct or indirect influence or control;
· Transactions effected pursuant to an automatic investment plan, e.g. a dividend retirement plan;
· A quarterly transaction report if the report would duplicate information contained in securities transaction confirmations or brokerage account statements that Pacific Ridge Capital Partners, LLC holds in its records so long as the firm receives the confirmations or statements no later than 30 days after the end of the applicable calendar quarter;
· Any transaction or holding report if Pacific Ridge Capital Partners, LLC has only one supervised person, so long as the firm maintains records of the information otherwise required to be reported.
5. Monitoring and Review of Personal Securities Transactions
The Chief Compliance Officer, or a designee, will monitor and review all reports required under the Code for compliance with Pacific Ridge Capital Partners, LLCs policies regarding personal securities transactions and applicable SEC rules and regulations. The Chief Compliance Officer may also initiate inquiries of supervised persons regarding personal securities trading. Supervised persons are required to
cooperate with such inquiries and any monitoring or review procedures employed Pacific Ridge Capital Partners, LLC. Any transactions for any accounts of the Chief Compliance Officer will be reviewed and approved by the President, or other designated supervisory person. The Chief Compliance Officer shall at least annually identify all supervised persons who are required to file reports pursuant to the Code and will inform such supervised persons of their reporting obligations.
12 - Certification
Initial Certification
All supervised persons will be provided with a copy of the Code and must initially certify in writing to the Chief Compliance Officer that they have: (i) received a copy of the Code; (ii) read and understand all provisions of the Code; (iii) agreed to abide by the Code; and (iv) reported all account holdings as required by the Code.
Acknowledgement of Amendments
All supervised persons shall receive any amendments to the Code and must certify to the Chief Compliance Officer in writing that they have: (i) received a copy of the amendment; (ii) read and understood the amendment; (iii) and agreed to abide by the Code as amended.
Annual Certification
All supervised persons must annually certify in writing to the Chief Compliance Officer that they have: (i) read and understood all provisions of the Code; (ii) complied with all requirements of the Code; and (iii) submitted all holdings and transaction reports as required by the Code.
Further Information
Supervised persons should contact the Chief Compliance Officer regarding any inquiries pertaining to the Code or the policies established herein.
13 - Records
The Chief Compliance Officer shall maintain and cause to be maintained in a readily accessible place the following records:
· A copy of any Code of Ethics adopted by the Firm pursuant to Advisers Act Rule 204A-1 which is or has been in effect during the past five years;
· A record of any violation of Pacific Ridge Capital Partners, LLCs Code and any action that was taken as a result of such violation for a period of five years from the end of the fiscal year in which the violation occurred;
· A record of all written acknowledgements of receipt of the Code and amendments thereto for each person who is currently, or within the past five years was, a supervised person which shall be retained for five years after the individual ceases to be a supervised person of Pacific Ridge Capital Partners, LLC;
· A copy of each report made pursuant to Advisers Act Rule 204A-1, including any brokerage confirmations and account statements made in lieu of these reports;
· A list of all persons who are, or within the preceding five years have been, access persons;
· A record of any decision and reasons supporting such decision to approve a supervised persons acquisition of securities in IPOs and limited offerings within the past five years after the end of the fiscal year in which such approval is granted.
14 - Reporting Violations and Sanctions
All supervised persons shall promptly report to the Chief Compliance Officer or an alternate designee all apparent violations of the Code. Any retaliation for the reporting of a violation under this Code will constitute a violation of the Code.
The Chief Compliance Officer shall promptly report to senior management all apparent material violations of the Code. When the Chief Compliance Officer finds that a violation otherwise reportable to senior management could not be reasonably found to have resulted in a fraud, deceit, or a manipulative practice in violation of Section 206 of the Advisers Act, he or she may, in his or her discretion, submit a written memorandum of such finding and the reasons therefore to a reporting file created for this purpose in lieu of reporting the matter to senior management.
Senior management shall consider reports made to it hereunder and shall determine whether or not the Code has been violated and what sanctions, if any, should be imposed. Possible sanctions may include reprimands, monetary fine or assessment, or suspension or termination of the employees employment with the firm.
Exhibit (p)(23)
Code of Ethics
Code of Ethics Index:
1. Standards of Conduct and Compliance with the Laws
2. Protection of Material Non-public Information
· Prohibiting Against Trading On or Tipping Inside Information
· Confidentiality
3. Personal Trading Policy
· About the Policy
· General Pre-Clearance, Reporting & Approval Rules
· IPO and Private Placements Policy
· Rules for Personal Trading in Equity Options
· Rules for Shorting in Personal Trading
· Rules for Personal Trading in Equities
· Approval Rules
· Restricted Period Rule
· Special Requirement for the Analysts and Portfolio Managers
· Approval Process
· Violations to Personal Trading Policy
· Rules for Personal Trading in Fixed Income
· Approval Rules
· Approval Process
· Violations to Personal Trading Policy
· Reviewing Personal Trading
4. Conflicts of Interests
· Outside Activities and Investments
· Finders Fees and Financial Relationships
· Gifts, Gratuities and Entertainment
· Authority to Act on Behalf of Hillswick Asset Management, LLC
· Political Contributions and Activities
· Regulatory Matters
· Books and Records
· Foreign Corrupt Practices Act
5. Reporting Violations
9/15/2009
Standards of Conduct and Compliance with Laws
Pier Capital, LLC places the utmost importance on ethical conduct and challenges all of its partners, officers, and employees to live up not only to the letter of the law, but also to the ideas of the organization.
Pier Capital, LLC has a specific Code of Ethics, which applies to all of its employees, officers and partners. For the purpose of this document, employees, officers and partners will be referred to as supervised persons. The Code of Ethics summarizes the companys philosophy on standard of business conduct and the companys fiduciary obligations to its clients. Specifically:
1. As an investment adviser, Pier Capital, LLC has an obligation to act in the best interest of its clients. Therefore, the company requires that all supervised persons exercise fiduciary duty to Piers clients at all times.
It is important, that everyone at Pier understands the meaning of a fiduciary duty. A fiduciary duty is the highest standard of care imposed at either equity or law. A fiduciary is expected to be extremely loyal to the person to whom they owe the duty (the principal): they must not put their personal interests before the duty, and must not profit from their position as a fiduciary, unless the principal consents. A person acting in a fiduciary capacity is required to make truthful and complete disclosures to those placing trust in him, and he is forbidden to obtain an unreasonable advantage at the latters expense.
As an investment adviser, Pier Capital, LLCs fiduciary duty encompasses more than just being honest and avoiding negligence. Advisers owe an affirmative duty of loyalty, which means that an adviser must always put the clients interest first. Some of the basic fiduciary duties of and investment adviser are:
· Duty to provide only disinterested advice.
· Duty to give thorough written disclosures of potential or actual conflicts of interests through the Form ADV and advisory agreement.
· Duty to maintain strict confidentially.
· Duty to refrain from fraud and misconduct.
In simple terms, as fiduciaries, advisers owe a higher duty to their clients. A breach of the fiduciary duty is the most serious transgression an adviser can commit. Even an inadvertent breach of the fiduciary duty can trigger legal, financial, and regularity actions
2. All supervised persons are required to comply with applicable federals securities laws.
As part of this requirement, all supervised persons at Pier may not , directly or indirectly, in connection with the purchase or sale of a security held or to be acquired by a client:
· Defraud such client in any manner;
· Mislead such client, including by making a statement that omits material fact;
· Engage in any act, practice or course of such conduct which operates or would operate as a fraud or deceit upon such client;
· Engage in any manipulative practice with respect to such client; or
· Engage in any manipulative practice with respect to securities, including price manipulation
Furthermore, all supervised persons must make themselves familiar with the companys policy regarding client privacy, confidentially and anti-money laundering; all related to federal securities laws. The Privacy and Anti-Money Laundering policies can be found in the companys Policies & Procedures manual.
3. All supervised persons shall conduct themselves in such a manner that transactions for the companys clients have priority over transactions in securities of which they are a beneficial owner, and so that transactions in securities in which supervised persons have such beneficial ownership do not operate adversely to clients interests.
No supervised person shall seek to utilize his/her position with the company to influence the price of securities purchased or sold for his/her personal account.
Prior to purchasing or selling for their own accounts or for the accounts of family members all supervised persons shall obtain an advance confirmation from the companys Chief Investment Officer (or another designated person) that the company is not in the process of buying or selling such securities for its clients portfolios. Companys Personal Trading policy lists in detail the required procedures necessary for pre-clearance and reporting of personal transactions. All supervised persons at Pier Capital, LLC are required to conform to its requirements.
4. The following procedure is hereby established for the enforcement of the foregoing Code of Ethics:
A copy of this Code of Ethics shall be delivered annually to each supervised person within thirty days after January 1 st . All supervised persons are required to certify in writing to the Compliance Officer (example document below):
· Whether or not he /she is in compliance with the requirements of this Code of Ethics; and
· Whether or not there is any interest, affiliation or activity, of any sort, on the part of such partner, officer or other employee, which conflicts or which such person believes is likely to conflict with his or her official duties, and
· Require all companys personnel to provide a complete list of personal brokerage accounts.
Employees Broker Account List
&
Code of Ethics Acknowledgement
I hereby confirm that the following list of accounts is a complete list of all security accounts my immediate family members and I use, or can use, for investment purposes
Financial Institution: |
Account Number: |
* Please add omitted applicable account(s) and/or cross out account(s) that have been closed indicating the date of closure.
I have read and understood the companys Code of Ethics. I am in compliance with the requirements of the Code of Ethics and I have no interest, affiliation or activity, of any sort, that conflicts with Firms Code of Ethics.
Employee/Partner Name: |
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Employee/Partner Signature: |
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This document is distributed annually to all supervised persons to acknowledge the Companys Code of Ethics and to
verify that Compliance is receiving duplicate monthly statements.
Protection of Material Non-Public Information
In 1988, Congress enacted legislation expanding liability for insider trading and tipping inside information. This is an extremely important matter and the company urges you to read the following with care.
No supervised person of the company may use any material inside information concerning the company or concerning any other corporation or business about which material inside information has been obtained in purchasing or selling any securities.
The federal securities laws generally prohibit the use of material inside information by any person in purchasing or selling securities, as well as the communication of such information to any other person for such use. Material information is any information that a reasonable investor would consider important in determining whether to buy, sell or hold securities. Inside information is information that has not been effectively disseminated to the investing public. The Securities & Exchange Commission views the term material non-public information as related not only to issuers but also to the advisers securities recommendations and client securities holdings and transactions.
It is the policy of the company that material inside information concerning the company, as well as any other corporation or business about which personnel of the company obtain material inside information, may not, directly or indirectly, be used by any company personnel in purchasing or selling any securities. It is also the policy of the company that all inside information concerning the company or, for that matter, any other corporation or business which is obtained by company personnel in the course of their employment may not be communicated to any other person (including relatives, friends or business associates and regardless of the purpose for which such communication may be made), except to the extent necessary to perform work for the company.
A determination as to whether information is material or whether it is inside information depends on all of the related facts and circumstances. Information that you should consider material includes, but is not limited to, dividend changes, earnings estimates, changes in previously related earnings estimates, significant merger, acquisition or divestiture proposals or agreements, major litigation, significant product news and extraordinary management developments. In addition, it should be emphasized that material information does not have to relate to a companys business; information about the contents of a forthcoming publication in the financial press that is expected to affect the market price of a security could well be material.
No supervised person of the company shall, without proper authority, give or release to anyone not employed by the company, or to another employee who has no need for the information, data or information of a confidential nature concerning the company without proper authorization to do so.
All internal information concerning the company and any other corporation or business about which company personnel may obtain information in the course of their employment must be kept strictly confidential and should not be discussed with any person inside or outside of the company except to the extent necessary to perform work for the company, nor should such information be discussed with any person within the company under circumstances where it could be overheard. Written information should be appropriately safeguarded and should not be left where it may be seen by persons not entitled to the information. The unauthorized disclosure of such information could result in serious consequences to the company, whether or not such disclosure is made for the purpose of facilitating improper trading.
In addition to other circumstances in which it may be applicable, this confidentiality policy must be strictly adhered to in responding to inquiries about the company that may be made by the press, financial analysts or other members of the financial community. It is important that responses to any such inquiries be made on behalf of the company by a duly designated officer. Accordingly, company personnel should not respond to such inquiries unless expressly authorized to do so.
Furthermore, all supervised persons must be familiar with Piers Privacy Policy. This document can be found in Piers Policies and Procedures manual as well as on our website.
We expect all supervised persons to abide by the foregoing policies and procedures. Again, it should be emphasized that any violation may result in serious legal difficulties and may also constitute grounds for disciplinary action, including termination of employment. Any questions concerning the policies and procedures set forth in this memorandum, as well as any inquiries that may be made about the company by persons outside of the company, should be directed to Jan Parsons. You should not try to resolve any uncertainties on your own.
Personal Trading Policy
This policy applies to personal trades made by supervised persons at Pier Capital, LLC. The companys intention is to ensure that employees will not benefit from knowledge of the companys trading on behalf of its clients (by trading ahead of clients), or in any way profit from situations where our clients should have benefited. Nor should any supervised person provide anyone with such knowledge
Since Pier Capital, LLC and Hillswick Asset Management, LLC (successors to SEB Asset Management America, Inc) have an agreement to share administrative services and office space, it is necessary to consider both Piers and Hillswicks investment portfolios as they relate to any employee trading. Thus, all supervised persons at Pier must receive approval for trading not just in reportable equities but also in reportable fixed income instruments. As such, approval for trading equities or equity derivatives shall be directed to Pier and approval for fixed income or fixed income derivatives shall be directed to an authorized person at Hillswick Asset Management, LLC.
Supervised persons are required to have duplicates of monthly account statements forwarded directly from their brokers to the Compliance Officer at Pier. Statements are required for all immediate family members (wife/husband, any under-age children and/or any living with the employee).
· Generally, all personal trades in individual securities (or derivatives of such securities) require prior approval (pre-clearance) from the person(s) designated in this policy.
· Specifically, transactions in the following types of securities/investments must receive pre-clearance and must be reported:
· Individually traded securities
· Derivatives of individually traded securities
· Private placements
· Limited offerings
· IPOs
· Hedge funds
· Limited partnership
· Investment clubs
· Closed-ended Mutual Funds
· Foreign Mutual Funds
· Pier Capital Commingled Small Cap Growth Fund
· Hillswick Macro Strategy Fund
· Dunham Small Cap Growth Funds
· ETFs based on an industry sub-sector (* see an example below)
(*) An example of an ETF based on an industry sub-sector would be Pharmaceutical HOLDRs (symbol PPH) because it focuses only on pharmaceutical companies within the broad Health Care sector.
· Transactions in the following types of securities/investments must be reported but do not need pre-clearance:
· Indices
· Currency
· Commodities
· ETFs based on commodities or currency
· ETFs based on a broad index or broad sector (* see the explanation below)
· Derivatives of the above
(*) In order to qualify for the pre-clearance exemption in ETFs, the ETF must be based on broad-based securities index or on a broad based industry sector and be open-ended; all other forms of ETFs must receive pre-clearance.
Broad based index ETFs have as their underlying tracking instrument an index or other financial product made up of a well diversified number of stocks among various industries.
Broad based sector ETFs have as their underlying tracking instrument an index or other financial product based on a genera l industry sector, such as, but not limited to: Technology, Financials, Energy, Health Care, Consumer Staples, Industrials, Consumer Discretionary, Materials, Utilities, Telecommunications, Corporate Bonds, Mortgage Backed Securities, Municipalities, Agencies, Treasuries, and Sovereign, Supranational, and Foreign Bonds.
· Transactions in the following types of securities do not need to be pre-cleared or reported :
· Open-ended Mutual Funds
· Direct obligations of the US government
· Money Market funds and instruments
· Unit Investment Trusts
Personal trading in a security on the same day as Hillswick/Pier is executing trades in the security for clients portfolio is not allowed.
The exceptions to the same-day rule may be:
· if Piers/Hillswicks rules require supervised person sell such security
· if Pier/Hillswick is executing a program trade in client portfolio(s) as a result of clients contribution/withdrawal after an approval was granted
· securities which do not require pre-clearance are exempt from the same day rule
· supervised persons investment/redemption in Piers/Hillswicks commingled fund(s)
· other exceptions may be granted by the Chief Compliance Officer but must be the result of unexpected circumstance and must be clearly documented
All employees and partners must receive pre-clearance for investments in IPOs and Private Placements.
Generally, participation in IPOs (initial public offerings prior to listing) is not allowed; however, upon management approval, exceptions can be made in cases of family at the issuing company.
All Options related pre-clearance requests must clearly state that the transaction is an option, name the option type, and identify the underlying security symbol.
Buying an option : needs an approval just like regular trading AND needs another approval when exercising:
· buying calls = approval like for buying shares
· buying puts = approval like selling shares
Selling options you own: (selling is not the same as writing)
· selling calls = approval like for selling shares
· selling puts = approval like buying shares
Writing options:
· not allowed inside Piers investment universe
Exercising options:
· requires pre-clearance
Piers Shorting Rule:
Analysts and Portfolio Managers are NOT allowed to short stocks owned the Fund. Trader may approve shorting stocks the Fund does not own; otherwise shorting requests must be approved by either JP/AY. Buying back shares that have been shorted requires the same approval process as regular buying.
Hillswicks Shorting Rule:
Generally, the Analysts and Portfolio Managers are NOT allowed to short securities owned in the clients portfolios. However, this rule does not apply to securities that are exempt from the pre- clearance requirement (as listed under the General Pre-Clearance, Reporting & Approval Rules section above).
Approval Rules for Personal Trading in Equities:
If Piers Client Owns the Security:
If Pier is not currently considering trading the stock, approval will be given.
If Piers Client Does Not Own the Security:
Sells will be approved.
Purchases will be approved, if Pier is not currently considering purchasing the stock.
Restricted Period Rules (for personal Sell transactions only):
Restricted period applies only to securities, which are not held by Piers client(s) at the time of employee/partner personal purchase. For the purpose of this rule, there is no difference whether Pier is purchasing a completely new name or if Pier is investing in a security which was owned by Piers client(s) in the past.
If Pier does not own a security but decides to purchase it within 90 days following the supervised persons purchase, then the supervised person will be required to postpone his/her sell of this security until (whichever comes first):
A) 90 days passes since Piers purchase, or
B) Pier has sold all of its shares
Note Exception : If the above situation occurs and time allows, a supervised person who is aware of this transaction is allowed to sell his/her personal holdings in such security on the same day but prior to Piers entering into an order. If this occurs, the individual must include this explanation in his/her pre-clearance request.
In order to facilitate compliance with the Restricted Period rule, each supervised person is required to follow the below procedure when attempting a sale transaction for his/her personal account:
1. Send an e-mail to the trader asking for permission to sell.
· If Pier does not own the stock, an approval will be granted
· If Pier owns the stock, the trader will request an employee to refer to Restricted Period worksheet.
2. If the employee/partner believes he/she is in compliance with the Blackout Period rule after referring to the Restricted Period List worksheet, then he/she must reply to the trader with this information, which can be either:
· Restricted period has expired (provide the date it expired), or
· Security was purchased by the supervised person more than 90 days prior Piers purchase (provide the date it was purchased).
OR
· Employee/Partner can send an e-mail to the trader with the date he/she purchased the stock and ask the trader to look it up in the Restricted Period List.
Special Requirement for the Analysts & Portfolio Mangers:
If an employee directly involved in the research process (Analysts and PMs) asks for an approval to purchase a stock, an explanation must be given as to why Pier should not be investing in that stock. The person approving the trade (Alex/Jan) should give an approval on the basis that Pier is not actively considering investing in the stock, and that we are not currently interested in doing so.
If an employee not directly involved in the research process (all not listed above, including the trader) asks for an approval to purchase a stock, no explanation is needed. Furthermore, the person approving the trade need only to give approval based on the knowledge that we are not currently considering/researching said stock.
Approval Process for Personal Trading in Equities:
Personal equity trades shall be approved by the Trader (currently NW) and if necessary also by either Alex Yakirevich (AY) or Jan Parsons (JP), and are valid only on the day they are given. The process will be as follows:
1. The employee/partner asks NW for trading approval by sending an email containing such a request. Every effort shall be made by to grant or deny request within 15 minutes.
2. NW may grant approval without asking AY or JP in the following cases: securities Pier would not trade anyway, including stocks where the market cap is too small or too large (currently below $100m or above market cap limits where Pier is not allowed purchase), closed-end mutual funds, ETFs, or similar such securities, as well as sales of securities Pier does not currently own. All approvals given directly by NW must include an explanation of why AY/JP involvement was not needed. For approval in all other cases, NW shall forward the original email request for clearance to AY or JP, who will in turn forward same email to the employee/partner granting or denying approval.
3. AY/JP/NW will immediately reply to the email sent by the employee confirming the approval (however, if communicated verbally, an email reply must occur within 48 hours).
4. The employee will then forward this email to mytrade@piercap.com with the actions he took and the date of such action. Such e-mail must include a complete trade history (request for approval, approval of trade, and action taken), and should be completed within one day of the trade, and if later than this, an explanation for the delay must be given.
All emails to mytrade@piercap.com are automatically copied to NW, JP, and Kathy Mienko for compliance purposes.
Personal trades by NW need approval from either AY or JP.
Violations to Personal Trading Policy:
If there is any question as to whether an executed personal trade might be in violation of these rules, we would expect that individual to reverse his/her trade before Pier trades (even if that trade occurs on the same day Pier trades). Pier reserves the right to ask the employee to reverse any transaction it deems inappropriate, and expects the employee to follow such instructions, and accept any losses that might be incurred.
If a person is deemed to have traded inappropriately, any profits (including losses avoided) from such a trade, will be donated to charity. After a second offence/warning within 6 months, that person will be prohibited from personal trading for 3 months. A third offence/warning will be grounds for dismissal.
Approval Rules for Personal Trading in Fixed Income:
To prevent a possibility of front-running, personal trading in a security on the same day as Hillswick or Pier is executing trades in the security for clients portfolio is not allowed.
If there is any question as to whether an executed personal trade might be in violation of these rules, we would expect that individual to reverse his/her trade before Hillswick or Pier trades . Hillswick reserves the right to ask any supervised person to reverse any transaction it deems inappropriate, and expects the individual to follow such instructions, and accept any losses that might be incurred.
Approval Process for Personal Trading in Fixed Income:
Personal fixed income trades shall be approved by Anders Ekernas (AE) or his substitute (Mark McDonnell or Radha Lai) and are valid only on the day they are given. Below is a three-step process required for each personal transaction:
1. The supervised person asks AE or his substitute for trading approval electronically (by e- mail). In cases when an approval was received verbally, it must be followed by an electronic message, which can be sent by someone other the person executing the trade, as long as an explanation is provided as to why the approval was given verbally and/or why the message is sent by someone else.
2. AE will reply to the individuals e-mail (at their Hillswick email address) that he/she may or may not place the personal trade.
3. The individual will forward the entire e-mail (the e-mail must include steps 1 -2) to mytrade@hillswickasset.com as soon as possible after the trade has been executed, confirming if it was a buy or a sell and the security information.
The e-mails sent to mytrade@hillswickasset.com are automatically forwarded to the Chief Compliance Officer and to the Compliance Officer for review and record-keeping.
Violations to Personal Trading Policy:
If a person has traded inappropriately, any profits (including avoided losses) from such a trade will be donated to charity. After a second offence/warning within 6 months, that person will be prohibited from personal trading for 3 months. A third offence/warning will be grounds for dismissal.
The Securities and Exchange Commission requires that all investment advisors carefully review employees personal trading. Therefore, all supervised persons are required to provide a copy of all their monthly statements, which must include holdings and transactions (not trade confirmations) directly to our offices to the attention of the Compliance Department (see sample letter below).
All supervised persons personal statements must include holdings and transactions and will be kept confidential. If monthly statements are not available, all affected individuals must submit at least quarterly statements no later than 30 days after the end of each calendar quarter.
The Compliance Officer is required conduct a monthly review all supervised persons personal trading activities. During this process, personal trading activity is cross-referenced with transactions in the companys portfolio management system and with the established pre- clearance procedures. The Compliance Officer maintains two worksheets: one to ensure that all personal statements are received and another to log employee personal transactions and to test their compliance with the established procedures. A quarterly e-mail is sent out to all employees by the Compliance Officer detailing findings or commenting on their personal trading activity during the period. All statements are kept under the lock and key and the worksheet are stored on the Compliance Officers private network drive.
Attn: Compliance Department
Date XXXX
To Whom It May Concern:
Please send duplicate copies of my monthly statements (including those of my immediate family members) to my employer at the below address. Please do not send my employer individual trade confirmations.
Pier Capital, LLC
Attn: Compliance Department
600 Summer Street
Suite 600
Stamford, CT 06901
My account(s) information is:
Name:
Address:
Acct. No.:
If you have any questions, please call me at .
Thank you.
XXXXXXX
Conflict of Interests
To maintain our clients confidence in our integrity, it is important that all supervised persons avoid activities, interests or relations that might interfere, or even appear to interfere, with our ability to act in the best interests of the firm and its clients. Investment advisers are required to, not just avoid conflicts of interests, but also to avoid situations that might be perceived as creating a conflict of interest, even if none exists.
In any area where there may be a conflict between the interests of the firm and those of a client, the clients interests must always come first. Because it is impossible to describe every potential conflict, Pier Capital, LLC relies upon the commitment of its supervised persons to exercise sound judgment, to seek advice when appropriate, and to adhere to the highest ethical standards in the conduct of our relationships with each other, the firm, its clients, and the public.
Any time a supervised person performs duties or invests away from Pier Capital, LLC there is a potential risk to the firm and its clients. Some activities or investments may conflict, or appear to conflict, with Piers interests, while others may carry the risk of confusing the public or our clients that Pier Capital, LLC is somehow involved in such an activity. Moreover, various regulatory agencies/institutions require that employees of securities firms obtain prior permission from their employers for many outside activities and investments.
Therefore, as a rule, you may not engage in any outside business activity or investments without prior written consent from the Compliance Department, unless such activities are stated to be exempt from reporting in our Code of Ethics policy.
This means that no supervised person shall receive, without a prior approval, in addition to his/her regular salary, fees or other compensation as fixed by the partners, any money or thing of value, directly or indirectly, or through any substantial interest in any non-affiliated corporation or business of any sort, or through any personal relationship, for negotiating, procuring, recommending, or aiding in any purchase, sale or rental of property or to any loan made by or to the company or for endeavoring so to do. Nor shall any supervised person have any pecuniary or other personal interest, directly or indirectly, or through any other non-affiliated corporation or business or through any personal relationship, in or with respect to any such purchase, sale, rental or loan.
Definition of Outside Activities and Investments
Outside activities and investments include:
· Engaging in any business activities other then those on behalf of Pier Capital, LLC.
· Being employed or compensated by any entity or person other than Pier Capital, LLC.
· Serving as an officer, director, employee, or consultant for a business or organization or other entity, other than Pier Capital, LLC.
· Investing in financial products, businesses, partnerships, or investment clubs, (other than securities described as exempted in our Personal Trading policy), or soliciting others to invest to in such securities.
Prohibited Outside Activities
No supervised person of the company shall knowingly compete, or aid or advise any person, firm or corporation in competing, with the Company in any way, or engage in any activity in which his/her personal interests in any manner conflict, or might conflict, with those of the company.
Kindred Business:
As a supervised person of Pier Capital, LLC you are prohibited from becoming associated (whether compensated or otherwise) with any venture that is or plans to operate as kindred business, such as investment advisor, investment company, hedge fund, broker-dealer, venture capital business, financial consulting business or any other business in any way involving securities or other financial products. Such an association would create a conflict of interest and confusion for clients that no amount of disclosure, integrity, or honorable practice could relieve.
Selling Away:
As a supervised person of Pier Capital, LLC you are prohibited from soliciting anyone to purchase or participate in investments away from the firm, whether you are compensated for this activity or not. These prohibited activities include the solicitation of clients, potential clients, Piers employees or the public to invest in non-Pier-sponsored financial products and/or services.
No supervised person of the company shall accept or request, directly or indirectly, any favor or thing of value from any person, firm, or non-affiliated corporation negotiating, contracting or in any way dealing with the company or likely to negotiate, contract or deal with the Company, if such favor or thing of value is such as might influence him or her in negotiating, contracting, dealing with such person, firm or corporation; and any partner, officer or other employee who is offered any such favor or thing of value, directly or indirectly by any such person, firm or corporation shall immediately report such offer to the Chief Compliance Officer.
Rebates, Referral Fees and Finders Fees
No supervised person may, directly or indirectly, pay or receive any rebate, referral fee, finders fee or any other sort of fee or compensation other than as permitted by Piers normal compensation structure. Notwithstanding this, there are a few narrow exceptions which require the prior written approval from the Chief Compliance Officer.
Financial Relationships with Clients
Entering into financial relationship with a client creates a direct conflict of interest between the interests of the client and those of the supervised person, thus it is generally prohibited. Any exceptions must be approved in writing in advance by one of the executive officers at Pier Capital, LLC. Prohibited relationships may include, but are not limited to:
· Extending credit or loans to clients.
· Endorsing or guaranteeing loans to clients.
· Acting as agent for a client in arranging a bank loan or for any other purpose.
· Receiving loans or credit from clients, except in the ordinary course of the clients business.
· Sharing, or agreeing to share, in the profits or losses of any clients account or any transaction effected therein.
· Guaranteeing, or in any way representing that you or the firm will guarantee, a client against loss in any account or on any transaction.
· Pooling funds with the client for investment purposes.
No supervised person of the company shall, directly or indirectly, give any favor or thing of value to or engage in the entertainment of any person, firm or non-affiliated corporation, negotiating, contracting, or in any way dealing with the Company, except as may be consistent with generally acceptable ethical standards and accepted business practices and not in violation of any applicable law.
To prevent the appearance of impropriety, conflict of interest or a quid pro quo arrangement, no supervised persons at Pier Capital, LLC may give or accept (directly or indirectly) gifts or gratuities to or from persons or entities outside of the firm, except in accordance with the firms guidelines.
The gift reporting requirement is for the purpose of helping Pier Capital, LLC monitor the activities of its supervised persons. However, the reporting of a gift does not relieve any supervised persons from the obligations and policies set forth in this Section or anywhere else in this Code or Compliance Manual. If you have any questions or concerns about the appropriateness of any gift, please consult the Compliance Department.
Giving Gifts or Gratuities
A supervised person may not give a gift or gratuity (including Piers promotional merchandise) exceeding an aggregate of $250 (or foreign currency equivalent) per person, per year, directly or indirectly to any:
· Client or individual associated with the client
· Securities or financial institution
· News or financial information media
· Party where the payment or gratuity is related to the business of the recipient or his or her employer
Any gift in excess of the $250 threshold must be reported to and approved by the Compliance Department.
Accepting Gifts or Gratuities
A supervised person may not solicit or encourage another to give him/her gifts or gratuities that are related, in any way, to his/her business activities on behalf of the company Supervised persons may not represent or suggest that any service or business will be given in exchange for a gift or gratuity.
Supervised persons generally may not accept gifts or gratuities reasonably valued at $250 (or foreign currency equivalent) or more (including vendor promotional merchandise), aggregated annually from any other person or entity that:
· Does or seeks to do business with Pier Capital, LLC.
· Gives the gift or gratuity because of employees position with Pier Capital, LLC.
Any gift or gratuity under either of the above circumstances valued at $250 (or foreign currency equivalent) or more, either alone or aggregated annually, must be reported to and pre-approved by the Compliance Department.
Entertainment
Any service, meal, beverage or paid admission to an event given to a supervised person at Pier Capital, LLC from an outside entity, where at least one individual from the outside entity is present is considered Entertainment and is not considered a gift for the purpose of the Gift and Gratuities policy within the Code of Ethics. If the event is attended without the presence of the outside entity, it will be considered a gift and will fall under the Gift and Gratuity policy described above.
Supervised persons may provide to, and accept from, persons outside of the firm customary and reasonable business meals and entertainment as long as both you and the other person(s) are present; these will not be included in the $250 (or foreign currency equivalent) per person, per year gift and gratuity limitations. These events do not have to be reported or approved by the Compliance Department, as long they are not extravagant or excessive in value . An extravagant or excessive form of entertainment may be that which exceeds a value of $150 per person per occurrence. While there is no limit to the dollar amount a supervised person of Pier Capital, LLC can spend and/or receive within the limits of customary and reasonable business activities, an employee must be aware that excessive entertainment can be perceived as a conflict of interest. Supervised persons should not accept inappropriate favors, entertainment or special accommodations that could influence their decision-making or make them feel beholden to a person or firm. Similarly, supervised persons should not offer inappropriate favors, entertainment or special accommodations that could be viewed as overly generous or aimed at influencing decision-making or making a client feel beholden to the firm or the supervised person.
Supervised persons are expected to adhere to their fiduciary duty to clients and abstain from business meals and entertainment actives, which are or may be viewed as extravagant or excessive.
If you have any questions or concerns about the appropriateness of any entertainment, please consult the Compliance Department.
Department of Labor Gift Reporting & Government Officials
Department of Labor Gift Reporting: The Department of Labor released guidance in July 2005 for investment advisers, broker-dealers, other financial institutions and employers, which have specified financial dealings with union-affiliated pension plans, typically, Taft Hartley plans. The guidance clarifies requirements that any employer e.g., adviser that makes a gift of money, client dinners, tickets, or loans, etc., or entertains a person associated with a union must report the gift or entertainment on Form LM-10 to the Department of Labors Office of Labor Management standards. The reporting threshold is now $250 in value. Any form LM-10 filings are to be made within 90 days of the filers fiscal year end. Penalties for failing to report are severe. (For further information, see http://www.dol.gov/esa/regs/compliance/olms/LM10_FAQ.htm).
Government Officials: Firms that engage in certain types of business, such as managing state or municipal pension funds may be subject to certain laws or rules in various jurisdictions that may prohibit or limit gifts or entertainment extended to public officials.
Pier Capital, LLC requires that all supervised persons report and receive prior approval before engaging in any event related to gift and/or entertainment with any union-affiliated individuals or government official.
No supervised person shall participate on behalf of the company in any negotiations or dealing of any sort with any person, firm or non-affiliated corporation in which he/she has an interest, whether through a personal relationship which is more that mere acquaintance, or through stockholding or otherwise, except an ordinary investment not sufficient to in any way affect his/her judgement, conduct, or attitude in the matter, or give him/her a personal interest therein.
As a supervised person of Pier Capital, LLC, you are prohibited from speaking for, representing, or obligating Pier Capital, LLC, contractually or otherwise, unless you are authorized to do so. If you are acting in your personal capacity and there could be any doubt on the part of others about the capacity in which you are acting, you must make clear that you are not acting in a professional capacity or on behalf of Pier Capital, LLC.
Political contributions and activities by Pier Capital, LLC and its supervised persons are strictly regulated. These policies and procedures are designed to avoid any conflicts of interests, assure full compliance with all applicable law and regulations and avoid the imposition of restrictions on the firms business.
Political Contributions and Solicitation
These policies apply to all employees who wish to make or solicit political contributions:
· Neither Pier Capital, LLCs name, facilities, equipment nor other resources (including computers, letterhead and employee services) may be used in connection with any political contribution or campaign activity without the prior written approval from the Compliance Department.
· No political contribution may be made for the purpose of obtaining or retaining business, or unlawfully influencing an official decision.
· Supervised persons may not bundle political contributions by (1) collecting and forwarding contributions to campaigns or (2) providing stamped and addressed envelopes in which to send contributions. Political contributions must be sent directly to the indented recipient and not through Piers supervised persons.
· Pier Capital, LLC may not reimburse or compensate its supervised persons in any way, and no supervised person may seek reimbursement or compensation from any other source, for individual political contributions.
· Soliciting Piers supervised persons for political contributions requires prior written approval from the Compliance Department.
Contributions and Solicitations by Pier Capital, LLC
Corporate contributions to candidates for federal, state or local offices are prohibited. Under certain limited circumstances, the Firm may contribute to political parties and ballot measures where no money is used in connection with any election. Any such contributions require the prior written approval of the Chief Compliance Officer. To request such approval, please submit a request for approval for Pier Capital, LLC contribution at least ten days prior to the proposed contribution.
All political activity of Piers supervised persons must receive prior approval from the Compliance Department.
Regulatory and Legal Proceedings Involving Supervised Persons
Pier Capital, LLC is required to notify regulatory organizations and/or take other action when certain events occur regarding its supervised persons. Accordingly, all supervised persons must notify the Compliance Department if they are:
· The subject of an investigation (foreign or domestic) by any governmental agency, self-regulatory organization or financial, business or professional organization;
· The defendant or respondent in any private, governmental or self-regulatory litigation or proceeding (foreign or domestic) related to securities industry activities or alleging violations of any securities rules or regulations, or of any agreement, rule or standard of conduct of any governmental agency, self-regulatory organization or financial, business or professional organization (collectively, Securities Laws or Regulations);
· Named in any written or verbal customer complaint alleging violation(s) of the Securities Laws or Regulations;
· Denied registration, membership or continued membership in, or expelled, enjoined, directed to cease and desist, suspended or otherwise disciplined by, any (foreign or domestic) financial industry regulator or self-regulatory organization;
· Associated in any business capacity with any person or entity that has been barred, suspended, expelled, or disqualified from the financial industry, had its registration denied or revoked, or was convicted of, or pleaded no contest to, any felony or misdemeanour;
· Denied a bond, had a bond revoked by a bonding company, or had a claim paid out on a bond covering him/her;
· Charged or arrested, arraigned, indicted, convicted of, plead guilty or no contest to, any criminal offence (other than minor traffic violations); or
· Petitioning for bankruptcy protection, declared bankrupt, or the owner of 10% or more of a corporation that petitioned for bankruptcy or was declared bankrupt, or have unsatisfied judgments or liens against you.
Oral and Written Complaints
Any verbal or written statement that directly or indirectly alleges the mishandling of an account or transaction or improper conduct on the part of a Piers supervised persons must be immediately reported to the Compliance Department. Any settlement must be pursued through the Firms dispute resolution channels. Under no circumstances may a supervised person attempt to settle complaints or disputes on his or her own.
Contact with Industry Regulators
Supervised persons must immediately notify the Compliance Department in the event of an inquiry from a financial industry regulator whether via telephone, correspondence or personal visit.
Receipt of Legal Documents
On occasion, supervised persons may be served with legal documents, such as subpoenas and regulatory requests, relating to securities or other industry-related activities. Should a supervised person receive any such document, he/she must notify the Compliance Department immediately and forward the document(s) to the Compliance Department without any delay.
Retention of Outside Counsel
Supervised persons may neither retain outside counsel on behalf of the Firm nor obligate the Firm to pay for the services of outside counsel that employee may retain or cause to be retained unless he/she have received prior approval from the Compliance Department.
Accurate and complete books and records are critical to the integrity and operation of our business and an important legal and regulatory obligation. All supervised persons must help to assure that the books and records of the Firm accurately and fairly reflect the activities of the Firm and that all transactions and dispositions of assets are recorded in reasonable detail. No undisclosed or unrecorded fund or asset may be established or maintained for any purpose. Employees are prohibited from making false or misleading entries in the Firms books and records and from assisting others, including clients and counterparties, in creating false or misleading books or entries.
Federal securities regulations and other applicable rules and regulations specify minimum retention requirements relating to certain business records of financial institutions. Supervised persons should be familiar with the document retention requirements relating to their business activities.
No document that is subject to subpoena or other legal request for information may be altered or destroyed.
Any questions regarding documents retention requirements should be referred to the Compliance Department.
Signing On Behalf Of Another
In connection with employment with Pier Capital, LLC, all supervised persons are prohibited from signing or initialling any document on behalf of a client, potential client or anyone else with whom Pier does or may do business, regardless of the employees intention, even when authorized by the other party or done for the other partys convenience.
Tax and/or Legal Advice
While supervised persons may be sensitive to tax considerations in the course of doing business, they are prohibited from offering or providing tax or legal advice to clients (other than that which the Firm explicitly provides), even if the supervised person is an accountant or an attorney. Clients must be instructed to seek the assistance of an attorney, tax professional or accountant of their own choosing.
The Foreign Corrupt Practices Act FCPA makes it a federal offence for any US person or entity, directly, or indirectly, to pay any foreign government official to obtain or retain business. The Firm requires its supervised persons to comply with the FCPA, as well as applicable local laws, to avoid the appearance of impropriety or conflict of interest and to maintain the highest ethical standards of business conduct.
Any business activity with foreign government official(s) must receive prior approval from the Compliance Department ahead.
Reporting Violations
Under rule 204A-1, any violations to the Code of Ethics require prompt reporting to the Chief Compliance Officer. As such all supervised persons are required to report any observed activity that violates, or is suspect to violate, the companys Code of Ethics.
Any violations to the companys Code of Ethics and any actions taken to correct it will be recorded; however are not required to include records provided by the informing person if he/she so requests.
No supervised person will be reprimanded in any way for reporting such violations. Retaliation against a supervised person who reports a violation will not be allowed.
Exhibit (p)(24)
CODE OF ETHICS
January 2014
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River Road Asset Management, LLC (River Road)
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Contents
Background |
3 |
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Standards of Conduct |
3 |
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Policy |
3 |
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Procedure |
4 |
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Personal Securities Transactions |
8 |
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Background |
8 |
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Definitions |
8 |
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Policy |
8 |
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Procedures |
10 |
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Insider Trading |
14 |
BACKGROUND
Rule 204A-1 of the Investment Advisers Act of 1940 (Advisers Act) requires investment advisers to establish, maintain, and enforce a written code of ethics that applies to all supervised persons.(1) An adviser to registered investment companies is also required to adopt a Code of Ethics regarding personal investment activities under the Investment Company Act of 1940, Rule 17j-1. An investment advisers Code of Ethics represents an internal control and supervisory review to detect and prevent possible insider trading, conflicts of interests, and regulatory violations.
Each employee, temp-to-hire employee, or intern of River Road Asset Management, LLC (River Road) is considered a supervised person (Employee). Upon hire and on an annual basis thereafter, each Employee must certify in writing or through an online application that they have received and read, understand, and agree to comply with River Roads Standards of Conduct, Personal Securities Transactions and Insider Trading Policies and Procedures (known in the aggregate as the Code of Ethics). Employees will receive and shall be required to make a similar certification following any amendment to the Code of Ethics.
STANDARDS OF CONDUCT
Policy
Employees must exercise good faith in their dealings with both River Road and its clients, consistent with the high degree of trust and confidence that is placed in each Employee by River Road.
The need for the stringent application of this principle is heightened by the necessity that River Road, in turn, exercises the highest degree of ethical conduct in its dealings with its clients. This can be accomplished only through each Employees individual commitment to River Roads values: Loyalty, Integrity, Accountability, and Teamwork.
If an Employee discovers that he or she will derive personal gain or benefit from any transaction between River Road and any individual or firm, the Employee must immediately refer the matter and disclose all pertinent facts to River Roads Chief Compliance Officer (CCO) or a manager/supervisor.
River Roads standards of conduct are necessarily strict because they are intended for the benefit and protection of River Road and its Employees. No attempt to delineate guidelines for proper conduct can hope to cover every potential situation that may arise during an Employees service with River Road. Whenever there is any doubt about the propriety of any action, Employees must discuss the matter with River Roads Chief Compliance Officer or a manager/supervisor. Violations of the Standards of Conduct Policy are grounds for disciplinary action, including dismissal. The standards of conduct set forth herein must be applied fully and fairly without reliance upon technical distinctions to justify questionable conduct.
(1) Supervised Person is defined as any partner, officer, director (or other person occupying a similar status or performing similar functions), or employee of an investment adviser, or other person who provides investment advice on behalf of the investment adviser and is subject to the supervision and control of the investment adviser.
Procedure
Conflicts of Interest: Employees may not engage in personal activities that conflict with the best interests of River Road. In addition, Employees may not engage in personal activities that are in conflict with the interests of River Roads clients. Upon initial hire and annually thereafter, every Employee is required to complete a conflicts of interest questionnaire designed to identify any actual or potential conflicts of interests that the Employee may have. If there is any doubt on how to answer the questionnaire, the Employee shall discuss such matters with the CCO or their designee.
Disclosure or Use of Confidential Information: In the normal course of business, Employees may be given or may acquire information about the business of River Road, its clients, or its affiliates which is not available to the general public. This information is confidential and may include financial data, business plans and strategies, examiners ratings, and information concerning specific trading decisions. All Employees are responsible for respecting and maintaining the confidential nature of such information, including taking reasonable care in how and where they discuss, document, store, and dispose of confidential information. Confidential information may only be disclosed within River Road to those who need to know the information to perform their job functions.
Material, Non-public Information: Some confidential information is also material, non-public information and subject to the restrictions of federal and state banking and securities laws and regulations as to its communication and use. Material information should be treated as non-public until it is clear the information can be deemed public or ceases to be material, which should be determined in accordance with River Roads Insider Trading Policies and Procedures.
Outside Activities: If you are a full-time employee, you may not accept outside employment or accept payment for services rendered to others without the prior consent of the CCO or their designee. If warranted, the CCO may defer to the CEO. This includes engagements for teaching, speaking, and the writing of books and articles. If there are any situations apart from your duties as an Employee of River Road where you may or will be required to provide investment advice, guidance or discretion, you must received pre-approval from the CCO or their designee (for example, acting as an executor or trustee for a family or non-family member or providing investment advice as a member of a non-profit organizations finance committee).
You are allowed to participate in appropriate professional groups and responsible civic organizations if such participation does not interfere with your duties at River Road, and it is not prohibited or limited because of statutory or administrative requirements regarding conflicts of interest. If there is any possibility that participation in any such organizations would interfere with your duties, you must obtain pre-approval from the CCO or CEO.
Political Activity: In order to comply with the provisions of Rule 206(4)-5 of the Adviser Act, all Employees must comply with the following policies and procedures:
Prohibited Activity :
River Road Employees are prohibited from making political contributions (defined below) to an incumbent, candidate, or successful candidate for elective office (Official) of any state or local
governments, their agencies and instrumentalities, and all public pension plans and other collective government funds (Government Entity).
· A contribution includes a gift, subscription, loan, advance, deposit of money, or anything of value made for the purpose of influencing an election. It also includes transition or inaugural expenses incurred by a successful candidate for state or local office.
· A contribution does not include a donation of time by an Employee, so long as River Road has not solicited the Employees efforts and River Roads resources are not used, i.e. office space, telephones, etc. An Employees donation of his or her time generally would not be viewed as a contribution if such volunteering were to occur during non-work hours or vacation time.
· A political contribution to a federal government official or candidate for federal office is not prohibited unless the federal candidate is a state or local government official at the time of running for federal office. However, River Roads Executive Committee reserves the right to prohibit any federal contributions if the Executive Committee finds that it conflicts with the best interests of River Road.
Employees are also prohibited from hosting fundraising meetings for an Official of a Government Entity or allowing the use of Employees name on any fundraising literature, including being listed on an invitation or other marketing and collateral pieces.
Employees are prohibited from doing any of the above prohibited activity directly or indirectly. For example, an Employee cannot channel political contributions through family, friends, an attorney, or a political action committee.
Household Members :
Household members of an Employee are not prohibited from making political contributions, but the Employee must provide notice to the CCO or their designee in writing, including via email, before any such contributions are made by a household member.
Borrowing from Clients: You may not borrow money from a client of River Road unless such borrowing is from a bank or other financial institution made in the ordinary course of business on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with members of the general public.
Business Transactions for River Road: You may not represent or exercise authority on behalf of River Road in any transaction with any person, firm, company, or organization with which you have any material connection (including, but not limited to, a directorship, officership, family relationship or significant borrowing relationship) or in which you have a material financial interest. You must report any existing or proposed business relationships with any such person, firm, company, or organization to River Roads CCO or their designee, who will determine with the appropriate levels of management whether such business relationship is material for purposes of this prohibition.
Business Transactions with River Road: If you are authorized by an outside organization to transact business with River Road on the outside organizations behalf, you must report such authorization to River Roads CCO or their designee.
Gifts and Entertainment: Employees cannot receive any gift that is more than $25 annually (calendar year basis) per giver (either person or entity) if:
· the giver is paid with client commissions or soft dollars (Client Assets) or
· the giver is a party dealing with one of River Roads ERISA client plans in connection with a transaction involving that plans assets.
Where a gift is shared among a group, the estimated amount of the gift can be pro-rated among the recipients.
Additionally, no Employee shall, directly or indirectly, give (or permit anyone else to give) anything of service or value, including gratuities, in excess of $100 annually (calendar year basis) to:
· any person who is licensed with FINRA, or
· a plan fiduciary of one of River Roads ERISA clients where the gift relates to the business of recipients employer.
An example of a gift includes but is not limited to the following: gift certificates, event tickets, gift baskets, golf shirts, sleeves of golf balls, etc. This policy is not meant to prohibit personal gifts.
If an Employee attends an event or dinner with any person or entity, this is not considered a gift but is considered entertainment. Employees are not allowed to be entertained by:
· any person or entity that is paid with Client Assets, or
· any person or entity that is a party dealing with one of River Roads ERISA client plans in connection with a transaction involving the plans assets.
Employees can attend the event or dinner at River Roads or the Employees expense. This provision does not apply if it is logistically unreasonable for the Employee or River Road to pay for the Employee at such event or dinner. For example, if an Employee attends a conference and is incidentally entertained in the normal course of the conference at the expense of a person or entity that is paid for with Client Assets, this provision does not apply.
Employees are also prohibited from receiving gifts and/or entertainment from companies that River Road invests in or may invest in on behalf of its clients (excluding de minimis gifts or entertainment, such as a reasonable onsite lunch or snack during an onsite visit).
Employees are required to report all gifts given or received covered by this policy so they can be tracked by the compliance department to ensure compliance with this policy. If there is any question about Gifts and Entertainment, the Employee shall discuss such matters with the CCO or their designee.
Improper Payments (Bribes or Kickbacks): Employees have an obligation not to take any action that might result in a violation by River Road of the laws of the United States, the Commonwealth of Kentucky, or any other jurisdiction in which River Road does business. The Foreign Corrupt Practices Act (FCPA) provides that in no event may payment of anything of value be offered, promised or made to any government, government entity, government official, candidate for political office, political party or official of a political party (including any possible intermediary for any of
the above), foreign or domestic, which is, or could be construed as being, for the purposes of receiving favorable treatment or influencing any act or decision by any such person, organization or government for the benefit of River Road or any other person.
Economic Sanctions: Under the International Emergency Economics Powers Act (IEEPA), the President of the United States may impose sanctions such as trade embargoes, freezing of assets and import surcharges. The Office of Foreign Assets Control (OFAC) of the U.S. Department of the Treasury promulgates regulations dealing with economic sanctions. Therefore, no Employee on behalf of River Road may intentionally transact business with those countries or specially designated nationals against which economic sanctions have been imposed unless the appropriate license has been obtained from the OFAC allowing such transaction.
Prohibition on the Use of Information from Your Previous Employer: Employees are prohibited from bringing any documents, software or other items to River Road that may contain the Employees previous employers confidential, trade secret, or proprietary information. This would include such things as computer files, client lists, financial reports, or other materials that belong to your previous employer. If an Employee has any such materials in his or her possession, they should be returned to the former employer immediately unless the Employee has received permission from the previous employer to use such materials, and the Employee has discussed the issue with River Roads CCO.
Your Duty to Report Abuses of the Code of Ethics and Standards of Conduct Policy or Other Illegal or Unethical Conduct: Employees have a special obligation to advise the organization of any suspected abuses of River Road policy, suspected criminal or unethical conduct, or any violation of securities law, anti-trust, health and safety, environmental, government contract compliance, any other laws, or River Road policies. Employees are required to report any of the preceding promptly to the CCO or the Chief Executive Officer. If reported to the Chief Executive Officer, the CCO will also receive notice of such report. The Employee will not be subjected to any form of retaliation for reporting legitimate suspected abuses.
Investigations of Reported or Suspected Misconduct: As a financial organization, we have a special duty to safeguard River Roads proprietary and confidential information of our clients and the organization. In the event of an investigation regarding possible wrongdoing, Employees must cooperate fully.
Information relating to any investigation, including information provided by the Employee or the fact of the Employees participation in any investigation, is considered confidential and will only be revealed to individuals not associated with the investigation on a need to know basis.
Any request for information or subpoenas involving River Road must be in writing and directed to the CCO who will coordinate with legal counsel.
Federal Securities Laws: Employees must comply with applicable Federal Securities Laws.
PERSONAL SECURITIES TRANSACTIONS
Background
Rule 204A-1 of the Advisers Act requires the reporting of personal securities transactions and holdings periodically as provided below and the maintenance of records of personal securities transactions for those supervised persons who are considered access persons.
Definitions
Access Persons: River Road considers the following persons to be Access Persons:
· All officers and employees of River Road, and
· All interns and temp-to-hire employees with access to non-public information regarding any clients purchase or sale of securities, or nonpublic information regarding the portfolio holdings of any Affiliated Fund (defined below).
Covered Securities: Covered Securities includes everything not defined below, including all common stocks and corporate bonds.
Open Securities: The following are Open Securities:
1) direct obligations of the Government of the United States,
2) bankers acceptances, bank certificates of deposit, commercial paper and high quality short-term debt instruments, including repurchase agreements,
3) shares issued by money market funds,
4) shares issued by non-affiliated, open-end funds,
5) shares issued by unit investment trusts that are invested exclusively in one or more non- affiliated, open-end funds, and
6) municipal bonds
Preclearance Securities: Preclearance Securities are Affiliated Funds, exchange traded funds, and closed-end funds.
Affiliated Fund: An Affiliated Fund is any mutual fund for which River Road serves as an investment adviser or sub-adviser or any mutual fund whose investment adviser or principal underwriter controls River Road, is controlled by River Road, or is under common control with River Road.
Policy
River Roads policy allows Access Persons to maintain personal securities accounts provided any personal investing by an Access Person in any accounts in which the Access Person has any direct or indirect beneficial ownership is consistent with River Roads fiduciary duties to its clients and consistent with regulatory requirements. An Access Person is presumed to have a beneficial ownership in any personal securities accounts that are held by household members including, but not limited to, the Access Persons spouse and/or children. However, the CCO has discretion to exempt an Employee from reporting certain household members accounts if such exemption is consistent with the Advisers Act.
Access Persons and their minor childrens (17 years old and under) personal securities transactions are subject to the following rules:
(1) Covered Securities :
a. Access Persons may not purchase, short, or execute any derivative transactions on any Covered Securities.
b. Sell transactions (or its equivalent) are allowed on Covered Securities that were owned prior to employment with preclearance of such transactions from the CCO or their designee.
c. Sell transactions of fractional shares due to stock splits or similar corporate actions do not require preclearance.
d. Donation of Covered Securities by an Access Person is allowed with preclearance of such donation from the CCO or their designee.
(2) Preclearance Securities :
a. Access Persons may purchase, sell, short, cover, or execute derivative transactions on Preclearance Securities with preclearance of such transactions from the CCO or their designee.
b. Access Persons that participate in defined contribution or automatic investment plans must obtain preclearance for their asset allocations in Preclearance Securities and also for any changes made thereafter from the CCO or their designee.
c. Donation of Preclearance Securities by an Access Person is allowed with preclearance of such donation from the CCO or their designee.
(3) Open Securities : Access Persons may purchase, sell, short, cover, donate or execute derivative transactions on Open Securities without preclearance.
Access Persons may apply for an exception from a trading restriction from the CCO, which application may be granted or denied based on the surrounding facts and circumstances.
The Chief Compliance Officer must obtain preapproval from the Chief Risk Officer or their designee when effecting a transaction that requires preclearance.
Household members personal securities transactions are subject to the following rules:
(1) Covered Securities :
a. Household members must receive preclearance for the right to transact in Covered Securities from the CCO or their designee.
b. After household members have been approved for the right to transact in Covered Securities, household members may purchase, sell, short, cover, or execute derivative transactions on Covered Securities with preclearance of such transactions from the CCO or their designee.
c. Donation of Covered Securities by a household member is allowed with preclearance of such donation from the CCO or their designee.
(2) Preclearance Securities :
a. Household members may purchase, sell, short, cover, or perform derivative transactions on Preclearance Securities with preclearance of such transactions from the CCO or their designee.
a. Household members that participate in defined contribution or automatic investment plans that offer Preclearance Securities for investment must obtain preclearance of their asset allocations for Preclearance Securities and any changes made to the allocations thereafter from the CCO or their designee.
b. Donation of Preclearance Securities by a household member is allowed with preclearance of such donation from the CCO or their designee.
(3) Open Securities : Household members may purchase, sell, short, cover, donate or perform derivative transactions on Open Securities without any preclearance.
Miscellaneous: If an Access Persons comes across a situation that is not specifically addressed by this policy, the Access Person must bring the situation to the CCO or their designee for review. The Executive Committee has the right to limit an Access Persons personal trading if the Executive Committee deems it to be excessive in volume or complexity as to require a level of personal time and attention that interferes with the performance of employment duties. This will be determined by the Executive Committee based upon surrounding facts and circumstances.
Portfolio Managers Investment: Following a reasonable period of employment, all portfolio managers are required to have a minimum of 30% of their personal investable assets invested in Affiliated Funds or River Road strategies. A reasonable period of employment will be established by the CCO and, if necessary, the CEO. Any exceptions to the above must be approved by written consent of the CCO.
Procedures
River Road has adopted the following procedures to implement and monitor the firms policy:
Holdings Report
Requirements : In accordance with Rule 204A-1 under the Investment Advisers Act of 1940, Access Persons shall identify on a form provided by the CCO or their designee (which may be through an online application) all Covered Securities, Preclearance Securities, and municipal bonds in which the Access Person has any direct or indirect beneficial ownership, including any of the preceding held in certificate form (excludes securities held in accounts over which the Access Person has no direct or indirect influence or control). Each Holdings Report must contain the following information:
(1) The title and type of security
(2) The exchange ticker symbol or CUSIP number (as applicable)
(3) The number of shares
(4) The principal amount of each security
(5) The name of any broker, dealer or bank with which the Access Person maintains an account in which securities are held
(6) The date the Access Person submits the report
An Access Person can satisfy the initial or annual holdings report requirement by timely filing and dating a copy of each investment account statement that lists all of the Access Persons Covered Securities, Preclearance Securities, and municipal bonds but only if the statement provides all information required in (1) through (6) above. If an Access Person has previously provided statements with all of the required information and the CCO or their designee has maintained a copy of the statements, the Access Person can satisfy the initial or annual holdings report requirement by timely confirming the accuracy of the statements (in writing or through an online application). If the statements do not contain all of the required information or if the securities are not held in an account, the Access Person must list out the required information for those securities on the Holdings Report.
Timing : Each Access Person must submit a Holdings Report to the CCO or their designee within 10 days of becoming an Access Person and annually thereafter. The CCO or their designee is responsible for contacting new Access Persons and sending out initial and annual Holdings Report forms to all Access Persons. The information on the Holdings Report or its equivalent must be current as of a date:
· Not more than 45 days prior to the date the person became an Access Person, in the case of an initial Holdings Report, or
· Not more than 45 days prior to the date the report was submitted, in the case of an annual Holdings Report.
Investment Account List
Requirements : Each Access Person shall identify on a form provided by the CCO or their designee (which may be through an online application) a list of all investment accounts over which the Access Person has direct or indirect beneficial ownership, except that the Access Person is not required to list any of the following:
· Accounts where Covered Securities, Preclearance Securities, and municipal bonds are not available for purchase or sell.
· Accounts where Access Person has no direct or indirect influence or control.
Timing : Each Access Person must submit an Account List to the CCO or their designee within 10 days of becoming an Access Person and annually thereafter. Additionally, after becoming an Access Person, each Access Person must disclose to the CCO or their designee any new investment accounts required to be reported pursuant to this Code of Ethics.
Brokerage: No Access Person shall open or maintain personal accounts with the institutional broker representatives through which River Road executes non-directed transactions on behalf of advisory clients.
Quarterly Investment Account Statements: It is the responsibility of the Access Person to direct their broker to send copies of their investment account statements and transaction confirmations directly to River Road or to where the Compliance Department designates. At the start of an Access Persons employment, River Road will accept copies of account statements and confirms from the Access Person in order to give the Access Person time to set up delivery of account statements and confirms either to River Road or where the Compliance Department designates. Copies will also be accepted for any period of time where the broker failed to send or River Road did not receive a statement. For short-term interns or temporary employees that are Access Persons, copies will be acceptable during the internship or temporary employment. The Compliance Department maintains a standard instruction letter that the Access Person may provide to their broker.
The investment account statements and confirms shall contain all transactions of Access Person, including transactions in Covered Securities and Preclearance Securities. As necessary, investment account statements and confirms shall be received no later than 30 days after the end of the applicable calendar quarter. Confirms do not need to be received for transactions that are effected pursuant to an automatic investment plan.
Preclearance of Personal Securities Transactions
Requirements : All Access Persons must obtain approval for their transactions or for their household members transactions in a Preclearance or Covered Security from the CCO or their designee by filling out a preclearance transaction form (which may be through an online application).
Timing : Preclearance of a trade shall be valid and in effect only until the end of the next business day following the day preclearance is given. The trade must take place by the end of the day following the date of the preclearance, and if a trade is not made, then a new preclearance must be obtained. A preclearance also expires if and when the person becomes, or should have become, aware of facts or circumstances that would prevent a proposed trade from being precleared.
Transaction Reports
Requirements : Each person shall identify on a form provided by the CCO or their designee (which may be through an online application) a quarterly securities transaction report that lists all transactions in Covered Securities, Preclearance Securities, and municipal bonds. Each Transaction Report must contain the following information:
(1) The date of the transaction
(2) The title of the security
(3) The exchange ticker symbol or CUSIP number (as applicable)
(4) The interest rate and maturity date (as applicable)
(5) The number of shares
(6) The principal amount of each security involved
(7) The nature of the transactions (i.e. purchase, sale or any other type of acquisition or disposition)
(8) The price of the security at which the transaction was effected
(9) The name of the broker, dealer or bank with or through which the transaction was effected
(10) The date the Access Person submits the report
Timing : Each Access Person must submit the Transaction Report no later than 30 days after the end of each calendar quarter. The report must cover all transactions during the quarter.
Excluded from Preclearance Rules and Transaction Reports are the following:
· Purchases or sales effected in any account over which the Access Person has no direct influence or control, including non-volitional investment programs or rights;
· Purchases effected by reinvesting cash dividends pursuant to an automatic dividend reimbursement program (DRIP). This exemption does not apply, however, to optional cash purchase pursuant to a DRIP;
· Purchases of rights issued by an issuer pro rata to all holders of a class of its securities ( if such rights were acquired from such issuer) and the exercise of such rights; and,
· Transactions involving the exercise of employee stock options.
Minimum Holding Period For Affiliated Funds: Access Persons may not purchase and sell or sell and purchase the same Affiliated Fund within 30 calendar days.
Personal Investments: You must exercise sound judgment in making personal investments in order to avoid situations contrary to the best interests of River Road. You must also avoid imprudent and questionable activity.
Prohibited Dealings: Trading based upon or communicating inside information is prohibited under any and all circumstances. It is prohibited to use the facilities of River Road to secure new issues for any non-clients, directly or indirectly. Access Persons are not permitted to, directly or indirectly, purchase securities from or sell securities to client accounts.
Initial Public Offerings and Limited Offerings: Access Persons may not directly or indirectly acquire beneficial ownership in any security in an initial public offering. Access Persons may not directly or indirectly acquire an interest in a limited offering without approval from the CCO. The approval is based, in part, on whether the investment opportunity should be reserved for clients.
Initial public offering means an offering of securities registered under the Securities Act of 1933 (15 U.S.C. 77a), the issuer of which, immediately before the registration, was not subject to the reporting requirements of sections 13 or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)).
Limited offering means an offering that is exempt from registration under the Securities Act of 1933 pursuant to section 4(2) or section 4(6) (15 U.S.C. 77d(2) or 77d(6)) or pursuant to §§ 230.504, 230.505, or 230.506 of this chapter.
Investment Person Disclosure: Access Persons who have been authorized to acquire securities in a private placement or who have beneficial interests prior to employment with River Road are required to disclose the investment when they play a part in any subsequent consideration of client investments in the issuer. In such circumstances, River Roads decision to purchase securities is subject to an independent review by investment personnel with no personal interest in the issuer. Investment Persons, when recommending any security, shall disclose any direct, indirect, or potential conflict of interest related to the issuer of the security being recommended.
Adviser Review: The Compliance Department will review all Access Persons transactions and reporting outlined in this document for compliance with the firms policies, including the Insider Trading Policy, regulatory requirements, and the firms fiduciary duties to its clients, among other things. The CCO tracks any apparent violations or requested exemptions and reports such activity to the Executive Committee at least quarterly. The Executive Committee will determine any corrective action and/or sanctions that should be imposed.
Records: The Company shall maintain records in accordance with the Books and Records Policies and Procedures found in River Roads Policies and Procedures Manual.