Filed
with the Securities and Exchange Commission on August 28, 2009
1933 Act
Registration File No. 333-17391
1940 Act
File No. 811-07959
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 20549
FORM
N-1A
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REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933
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Pre-Effective
Amendment No. ___
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Post-Effective
Amendment No. 290
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and
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REGISTRATION
STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
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Amendment
No. 292
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(Check
appropriate box or boxes.)
ADVISORS SERIES
TRUST
(Exact
Name of Registrant as Specified in Charter)
615 East
Michigan Street
Milwaukee,
Wisconsin 53202
(Address
of Principal Executive Offices) (Zip Code)
(Registrant’s
Telephone Numbers, Including Area Code) (414) 765-6609
Douglas
G. Hess
Advisors
Series Trust
615 East
Michigan Street
Milwaukee,
Wisconsin 53202
(Name and
Address of Agent for Service)
Copies
to:
Domenick
Pugliese, Esq.
Paul,
Hastings, Janofsky & Walker LLP
75 East
55th
Street
New York,
New York 10022
As soon as practical after
the effective date of this Registration Statement
Approximate
Date of Proposed Public Offering
It is
proposed that this filing will become effective
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immediately
upon filing pursuant to paragraph (b)
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on
____________ pursuant to
paragraph (b)
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60
days after filing pursuant to paragraph (a)(1)
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on
____________ pursuant to
paragraph (a)(1)
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75
days after filing pursuant to paragraph (a)(2)
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on
____________ pursuant to
paragraph (a)(2) of Rule
485.
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If
appropriate, check the following box
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[ ]
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this
post-effective amendment designates a new effective date for a previously
filed post-effective amendment.
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Explanatory Note: This
Post-Effective Amendment No. 290 to the Registration Statement of Advisors
Series Trust (the “Trust”) is being filed for the purpose of conforming the
Davidson Multi-Cap Core Fund’s Prospectus to the Summary Prospectus Rule as set
forth in 17 CFR Parts 230, 232, 239, and 274.
DAVIDSON
MULTI-CAP CORE FUND
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Ticker Symbol:
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Advisor
Class A
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DFMAX
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Advisor
Class C
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DFMCX
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www.davidsonmutualfunds.com
PROSPECTUS
The
Fund is a series of Advisors Series Trust (the “Trust”).
October
28, 2009
The
U.S. Securities and Exchange Commission (“SEC”) has not approved or disapproved
these securities or determined if this Prospectus is truthful or
complete. Any representation to the contrary is a criminal
offense.
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P-1
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Investment
Objective
The
investment objective of the Fund is to seek long-term capital
appreciation.
Fees
and Expenses
This
table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund. You may qualify for sales charge discounts if you and your
family invest, or agree to invest in the future, at least $25,000 in the
Fund. More information about these and other discounts is available
from your financial professional and in the “Advisor Class A Shares” section on
page __ of the Fund’s statutory Prospectus and the “Breakpoints/Volume Discounts
and Sales Charge Waivers” section on page __ of the Fund’s Statement of
Additional Information (“SAI”).
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Shareholder
Fees
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Advisor
Class
A
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Advisor
Class
C
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(fees
paid directly from your investment)
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Maximum
Sales Charge (Load) Imposed on Purchases
(as
a percentage of offering price)
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5.00%
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None
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Maximum
Deferred Sales Charge (Load) (as a percentage of original
purchase price or redemption price, whichever is
less)
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None(1)
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1.00%
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Maximum
Sales Charge (Load) Imposed on Reinvested Dividends
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None
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None
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Redemption
Fee (as a percentage of
amount redeemed)(2)
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1.00%
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1.00%
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Annual
Fund Operating Expenses
(expenses
that you pay each year as a percentage of the value of your
investment)
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Management
Fees
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0.65%
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0.65%
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Distribution
and Service (Rule 12b-1) Fees
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0.25%
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1.00%
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Other
Expenses
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2.62%
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2.62%
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Total
Annual Fund Operating Expenses
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3.52%
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4.27%
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Less: Fee Waiver and Expense
Payment(3)
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-2.37%
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-2.37%
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Net
Annual Fund Operating Expenses
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1.15%
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1.90%
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(1)
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Advisor
Class A shares that are purchased at net asset value in amounts of
$1,000,000 or more may be assessed a 1.00% contingent deferred sales
charge (“CDSC”) if they are redeemed within one year from the date of
purchase. The CDSC is waived in certain circumstances as
described in “Waiving Your
CDSC.”
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(2)
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The
redemption fee applies only to those shares that have been held seven
calendar days or less.
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(3)
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The
Advisor has contractually agreed to waive all or a portion of its
management fees and/or pay expenses of the Fund to ensure that Net Annual
Fund Operating Expenses (excluding acquired fund fees and expenses
(“AFFE”), interest, taxes and extraordinary expenses) do not exceed 1.15%
of average daily net assets of the Fund’s Advisor Class A shares and 1.90%
of average daily net assets of the Fund’s Advisor Class C shares
(together, the “Expense Caps”). The Expense Caps will remain in
effect indefinitely and may be terminated only by the Trust’s Board of
Trustees (the “Board”). The Advisor is permitted to seek
recoupment from the Fund, subject to limitations, for fees it waived and
Fund expenses it paid for three years from the date fees were waived or
expenses were paid provided that any such recoupment during any fiscal
year will not cause the Fund’s net annual fund operating expenses to
exceed the Expense Caps.
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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 either redeem or do not redeem
all of your shares at the end of those periods. The example also
assumes that you pay the sales charges that apply to that class, your investment
has a 5% return each year, dividends and distributions are reinvested, and the
Fund’s operating expenses remain the same (taking into account the Expense
Caps). Although your actual costs may be higher or lower, based on
these assumptions your costs would be:
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Advisor Class A shares
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1 Year
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3 Years
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5 Years
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10 Years
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If
you redeem your shares at the end of the period:
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$611
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$847
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$1,101
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$1,828
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If
you do not redeem
your shares at the end of the period:
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$611
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$847
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$1,101
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$1,828
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Advisor Class C shares
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1 Year
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3 Years
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5 Years
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10 Years
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If
you redeem your shares at the end of the period:
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$293
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$597
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$1,026
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$2,222
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If
you do not redeem
your shares at the end of the period:
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$193
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$597
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$1,026
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$2,222
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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 the Annual Fund Operating Expenses or in the example, affect the
Fund’s performance. During the most recent fiscal year, the Fund’s
portfolio turnover rate was 22.58% of the average value of its
portfolio.
Principal
Investment Strategies of the Fund
The Fund
normally invests at least 80% of its net assets in common stocks of companies
across a wide range of market capitalizations and investment styles with
attractive fundamental characteristics. Consistent with the Fund’s
“core” strategy, it will invest its assets in both value and growth stocks, as
well as dividend-paying and non-dividend-paying stocks. The Fund will
seek to achieve its investment objective primarily through stock selection, with
less emphasis on sector weightings. As a result, the Fund expects to
only occasionally make modest sector changes, preferring to differentiate
performance by relative movement in individual stocks than in sectors or
industries.
The
Fund may seek to enhance returns through the use of other investment strategies
such as options (for hedging purposes), foreign securities (which may include
American Depositary Receipts (“ADRs”), dollar-denominated foreign securities, or
direct investment in foreign securities), and other investment companies
(including exchange-traded funds (“ETFs”). The Fund may invest up to
20% of its total net assets in options. The Fund may invest up to 20%
of its net assets in foreign securities.
The
Advisor sells a position if the fundamentals have deteriorated, catalysts fail
to develop, or a stock exceeds fair valuation. The Fund may also
eliminate a position if a better alternative becomes available.
At the
discretion of the Advisor, the Fund may invest its assets in cash, cash
equivalents, and high-quality, short-term debt securities and money market
instruments for temporary defensive purposes in response to adverse market,
economic or political conditions.
Principal
Risks of Investing in the Fund
Losing
all or a portion of your investment is a risk of investing in the
Fund. The following principal risks could affect the value of your
investment:
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Equity
Risk. The risks that could affect the value of the
Fund’s shares and the total return on your investment include the
possibility that the equity securities held by the Fund will experience
sudden, unpredictable drops in value or long periods of decline in
value.
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·
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ETF
Risk. ETFs are typically open-end investment companies
that are bought and sold on a national securities
exchange. Like other investment companies, ETFs have management
fees that are part of their costs, and the Fund will indirectly bear its
proportionate share of these
costs.
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·
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Foreign Securities
Risk. The Fund may invest in foreign securities which
are subject to special risks. Foreign securities can be more
volatile than domestic (U.S.) securities. Securities markets of
other countries are generally smaller than U.S. securities
markets. Many foreign securities may be less liquid and more
volatile than U.S. securities, which could affect the Fund’s
investments.
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Issuer
Risk. The value of a security may decline for a number
of reasons, which directly relate to the issuer, such as management
performance, financial leverage, and reduced demand for the issuer’s goods
and services.
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·
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Management
Risk. Management risk means that your investment in the
Fund varies with the success and failure of the Advisor’s investment
strategies and the Advisor’s research, analysis and determination of
portfolio securities. The Fund’s Advisor has not previously
managed a mutual fund.
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Market
Risk. The value of the Fund’s shares will fluctuate as a
result of the movement of the overall stock market or of the value of the
individual securities held by the Fund, and you could lose
money.
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Newer Fund
Risk. The Fund is newer with limited operating history
and there can be no assurance that the Fund will grow to or maintain an
economically viable size, in which case the Board may determine to
liquidate the Fund.
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Options
Risk. Options on securities may be subject to greater
fluctuations in value than an investment in the underlying
securities. Purchasing and writing put and call options are
highly specialized activities and entail greater than ordinary investment
risks.
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Small and Medium Companies
Risk. Investing in securities of small and medium
capitalization companies may involve greater volatility than investing in
larger and more established companies because small and medium
capitalization companies can be subject to more abrupt or erratic share
price changes than larger, more established
companies.
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This Fund
may be appropriate for investors who:
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Have
a long-term investment horizon;
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Want
to add an investment with potential for capital appreciation to diversify
their investment portfolio;
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Can
accept the greater risks of investing in a portfolio with common stock
holdings; and
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Are
not primarily concerned with seeking regular
income.
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Performance
When
the Fund has been in operation for a full calendar year, performance information
will be shown here. Updated performance information is available on
the Fund’s website at www.davidsonmutualfunds.com
or by calling the Fund toll-free at 1-877-332-0529.
The
Fund’s year-to-date return as of September 30, 2009, was
[____]%.
Management
Investment Advisor. Davidson
Investment Advisors, Inc. is the Fund’s investment advisor.
Portfolio Managers. The
Advisor uses a team approach for portfolio management. Of the eight
investment team members, William B. Whitlow, Jr., CFA and Brian P. Clancy,
CFA are principally responsible for the management of the Fund’s portfolio
and serve as co-portfolio managers of the Fund. They have been
responsible for the Fund’s portfolio management since its inception in August
2008.
Purchase
and Sale of Fund Shares
You
may purchase or redeem Fund shares on any business day by written request via
mail (Davidson Multi-Cap Core Fund, c/o U.S. Bancorp Fund Services, LLC, P.O.
Box 701, Milwaukee, WI 53201-0701), by wire transfer, by telephone at
1-877-332-0529, or through a financial intermediary. Purchases and
redemptions by telephone are only permitted if you previously established these
options on your account. The minimum initial and subsequent
investment amounts are shown below, although the Fund may reduce or waive them
in some cases.
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Minimum Investments
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To
Open
Your Account
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To
Add to
Your Account
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Regular
Accounts
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$2,500
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Any
amount
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Individual
Retirement Accounts (“IRAs”) (Traditional, Roth, SEP, and SIMPLE
IRAs)
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$2,500
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Any
amount
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401(k),
Pension or Other Types of ERISA Accounts
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Any
amount
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Any
amount
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Automatic
Investment Plan Accounts
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$2,500
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$100
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Tax
Information
The
Fund’s distributions are taxable, and, unless you are investing through a
tax-deferred vehicle, distributions will be taxed as ordinary income or capital
gains. Distributions on investments made through tax-deferred
vehicles such as 401(k) plans or IRAs may be taxed upon withdrawal of assets
from those accounts.
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 or financial advisor), the Fund and/or its Advisor or its affiliates
may pay the intermediary for the sale of Fund shares and related
services. These payments may create a conflict of interest by
influencing the broker-dealer or other intermediary and your salesperson to
recommend the Fund over another investment. Ask your salesperson or
visit your financial intermediary’s website for more
information.
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INVESTMENT
OBJECTIVE, PRINCIPAL INVESTMENT STRATEGIES, RELATED RISKS
AND DISCLOSURE OF PORTFOLIO
HOLDINGS
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Investment
Objective
The
investment objective of the Fund is long-term capital
appreciation. The Fund’s investment objective is
fundamental. There is no assurance that the Fund will achieve its
investment objective.
Principal
Investment Strategies
The
Fund normally invests at least 80% of its net assets in common stocks of
companies across a wide range of market capitalizations and investment styles
with attractive fundamental characteristics. Consistent with the
Fund’s “core” strategy, it will invest its assets in both value and growth
stocks, as well as dividend-paying and non-dividend-paying
stocks. The Fund will seek to achieve its investment objective
primarily through stock selection, with less emphasis on sector
weightings. As a result, the Fund expects to only occasionally make
modest sector changes, preferring to differentiate performance by relative
movement in individual stocks than in sectors or industries.
The
Advisor initially conducts a quantitative screen to identify potential
investment candidates. Then a more in-depth qualitative and
fundamental analysis is performed to identify the best candidates for
investment. A top-down approach is used secondarily to help determine
the portfolio’s investment across economic sectors, market capitalization and
investment styles.
The
Advisor starts with a universe of over 3,000 companies and conducts an initial
screen based on liquidity to reduce the universe to a smaller, more manageable
one that consists of approximately 1,200 companies. Further screening
is performed as part of the Advisor’s quantitative analysis to identify
companies meeting its fundamental criteria. A few examples of
characteristics for which the Advisor screens include: reasonable
valuations, prudent debt levels, cash flow generation, attractive growth
characteristics and solid balance sheets.
The next
step of the process is qualitative, whereby the style manager evaluates relative
attractiveness of an industry and a company’s competitive strengths and
weaknesses. The management team is also assessed based on a
consistent track record of meeting and/or exceeding articulated goals and
targets. The Advisor’s fundamental analysis focuses on the financials
of a company. Data is initially compared with its historical trends
as well as those of competitors. Cash flow, earnings, profitability,
and the balance sheet are all evaluated to determine the financial strength of a
company. In most cases, a detailed model is developed to forecast a
future income and cash flow statement along with a balance sheet.
Factors
considered in the buy decision include: price relative to fair value; its
attractiveness on a risk versus reward basis; and its fit within the
portfolio. Fair value determination is based on generated forecasts,
as well as analysis of a company’s historical valuation ratios (such as
price-to-earnings, price-to-book, and enterprise value-to-earnings before
interest, taxes, depreciation and amortization (also known as EBITDA)) and those
of competitors. An investment’s position size is commensurate with
risk. Additional risk management procedures consist of broad
diversification among holdings; modest sector bets; owning quality companies;
and limiting exposure to any one company or sector.
The
Advisor sells a position if the fundamentals have deteriorated, catalysts fail
to develop, or a stock exceeds fair valuation. The Fund may also
eliminate a position if a better alternative becomes available. The
Advisor does not base sell decisions solely on price activity and will trim
positions if either the individual position or the sector has grown to be too
large a percentage of the portfolio.
The Fund
reserves the right to invest up to 20% of its net assets in the writing and
selling of put and call options on securities in which it invests to seek
enhanced returns and for hedging purposes.
The Fund
will invest primarily in domestic U.S. securities but reserves the right to
invest up to 20% of its net assets in American Depositary Receipts (“ADRs”),
dollar-denominated foreign securities, or directly in foreign
securities.
Because
the Fund may invest in one or more underlying investment companies (i.e., mutual funds and ETFs),
investors will indirectly bear a proportionate share of any fees and expenses
charged by the underlying investment companies in which the Fund invests in
addition to the expenses of the Fund. Actual underlying fund expenses
are expected to vary with changes in the allocation of the Fund’s assets among
various underlying investment companies.
Temporary or Cash
Investments. Under normal market conditions, the Fund will
stay fully invested according to its principal investment strategies as noted
above. The Fund, however, may temporarily depart from its principal
investment strategies by making short-term investments in cash, cash
equivalents, and high-quality, short-term debt securities and money market
instruments for temporary defensive purposes in response to adverse market,
economic or political conditions. This may result in the Fund not
achieving its investment objective during that period.
For
longer periods of time, the Fund may hold a substantial cash
position. If the market advances during periods when the Fund is
holding a large cash position, the Fund may not participate to the extent it
would have if the Fund had been more fully invested. To the extent
that the Fund uses a money market fund for its cash position, there will be some
duplication of expenses because the Fund would bear its pro rata portion of such
money market fund’s management fees and operational expenses.
The
risk exists that you could lose money on your investment in the
Fund. The principal risks of investing in the Fund that may adversely
affect the Fund’s net asset value (“NAV”) or total return are discussed
below.
By
itself, the Fund is not a complete, balanced investment plan and the success of
the Fund cannot be predicted.
Conflicts of Interest
Risk. The Advisor may advise other clients with investment
objectives similar to those of the Fund. There may be instances in
which the Fund would not be able to invest in certain limited investment
opportunities due to the investment by other clients advised by the
Advisor. All trades will be allocated fairly across all appropriate
accounts, including the Fund. The Advisor has a written policy to
monitor all trading activity to address any conflicts that may
occur.
Equity Risk. The
risks that could affect the value of the Fund’s shares and the total return on
your investment include the possibility that the equity securities held by the
Fund will experience sudden, unpredictable drops in value or long periods of
decline in value. This may occur because of factors that affect the
securities market generally, such as adverse changes in: economic conditions,
the general outlook for corporate earnings, interest rates, or investor
sentiment. Equity securities may also lose value because of factors
affecting an entire industry or sector, such as increases in production costs,
or factors directly related to a specific company, such as decisions made by its
management.
ETF Risk. ETFs are
typically open-end investment companies that are bought and sold on a national
securities exchange. When the Fund invests in an ETF, it will bear additional
expenses based on its pro rata share of the ETF’s operating expenses, including
the potential duplication of management fees. The risk of owning an ETF
generally reflects the risks of owning the underlying securities it
holds. Many ETFs seek to replicate a specific benchmark
index. However, an ETF may not fully replicate the performance of its
benchmark index for many reasons, including because of the temporary
unavailability of certain index securities in the secondary market or
discrepancies between the ETF and the index with respect to the weighting of
securities or the number of stocks held. Lack of liquidity in an ETF
could result in an ETF being more volatile than the underlying portfolio of
securities it holds. In addition, because of ETF expenses, compared to owning
the underlying securities directly, it may be more costly to own an
ETF.
Issuer Risk. The
value of a security may decline for a number of reasons, which directly relate
to the issuer, such as management performance, financial leverage, and reduced
demand for the issuer’s goods and services.
Management
Risk. The skill of the Advisor will play a significant role in
the Fund’s ability to achieve its investment objective. The Fund’s
ability to achieve its investment objective depends on the ability of the
Advisor to correctly identify economic trends, especially with regard to
accurately forecasting inflationary and deflationary periods. In
addition, the Fund’s ability to achieve its investment objective depends on the
Advisor’s ability to select stocks, particularly in volatile stock
markets. The Advisor could be incorrect in its analysis of
industries, companies and the relative attractiveness of growth and value stocks
and other matters. The Fund’s Advisor has not previously managed a
mutual fund. Neither the Trust nor the Advisor can guarantee that the
Fund will achieve its investment objective.
Market Risk. The
Fund is designed for long-term investors who can accept the risks of investing
in a portfolio with significant common stock holdings. Common stocks tend to be
more volatile than other investment choices such as bonds and money market
instruments. The value of the Fund’s shares will fluctuate as a
result of the movement of the overall stock market or of the value of the
individual securities held by the Fund, and you could lose money.
Newer Fund Risk. There
can be no assurance that the Fund will grow to or maintain an economically
viable size, in which case the Board may determine to liquidate the
Fund. The Board can liquidate the Fund without shareholder vote and,
while shareholder interests will be the paramount consideration, the timing of
any liquidation may not be favorable to certain individual
shareholders.
Foreign Securities
Risk. The Fund may invest in foreign securities, which may be
subject to special risks. The Fund’s returns and NAV may be affected by several
factors, including those described below.
Foreign
securities are also subject to higher political, social and economic
risks. These risks include, but are not limited to, a downturn in the
country’s economy, excessive taxation, political instability, and expropriation
of assets by foreign governments. Compared to the U.S., foreign
governments and markets often have less stringent accounting, disclosure, and
financial reporting requirements.
Foreign
securities can be more volatile than domestic (U.S.)
securities. Securities markets of other countries are generally
smaller than U.S. securities markets. Many foreign securities may be
less liquid and more volatile than U.S. securities, which could affect the
Fund’s investments. The exchange rates between the U.S. dollar and
foreign currencies might fluctuate, which could negatively affect the value of
the Fund’s investments.
Options
Risk. Options on securities may be subject to greater
fluctuations in value than an investment in the underlying
securities. Purchasing and writing put and call options are highly
specialized activities and entail greater than ordinary investment
risks. The successful use of options depends in part on the ability
of the Advisor to manage future price fluctuations and the degree of correlation
between the options and securities (or currency) markets. By writing
put options on equity securities, the Fund gives up the opportunity to benefit
from potential increases in the value of the common stocks above the strike
prices of the written put options, but continues to bear the risk of declines in
the value of its common stock portfolio. The Fund will receive a
premium from writing a covered call option that it retains whether or not the
option is exercised. The premium received from the written options
may not be sufficient to offset any losses sustained from the volatility of the
underlying equity securities over time.
Small and Medium Companies
Risk. Investing in securities of small and medium
capitalization companies may involve greater volatility than investing in larger
and more established companies because small and medium capitalization companies
can be subject to more abrupt or erratic share price changes than larger, more
established companies. Small and medium capitalization companies may
have limited product lines, markets or financial resources and their management
may be dependent on a limited number of key individuals. Securities
of those companies may have limited market liquidity and their prices may be
more volatile.
Disclosure of Portfolio
Holdings. A description of the Fund’s policies and procedures
with respect to the disclosure of the Fund’s portfolio securities is available
in the Fund’s SAI. Currently, disclosure of the Fund’s holdings is
required to be made quarterly within 60 days of the end of each fiscal quarter
in the Fund’s Annual Report and Semi-Annual Report to Fund shareholders and in
the quarterly holdings report on Form N-Q. From time to time, the
Advisor may select certain portfolio characteristics for distribution to the
public on the Fund’s website with such frequencies and lag times as the Advisor
determines to be in the best interests of shareholders.
Investment
Advisor
Davidson
Investment Advisors, Inc. is the Fund’s investment adviser and provides
discretionary investment advisory services to the Fund pursuant to an investment
advisory agreement between the Advisor and the Trust (the “Advisory
Agreement”). The Advisor’s corporate headquarters’ address is
Davidson Building, 8 Third Street North, Great Falls, Montana
59401-3155. The Advisor has provided investment advisory services to
individuals, banks, pension and profit sharing plans, trusts, estates,
foundations and corporations since 1975. The Advisor has provided
investment advisory services to the Fund since its inception. The
Advisor is a wholly-owned subsidiary of Davidson Companies, a financial services
holding company.
The
Advisor provides the Fund with advice on buying and selling
securities. The Advisor also furnishes the Fund with office space and
certain administrative services and provides most of the personnel needed by the
Fund. For its services, the Advisor is entitled to receive an annual
management fee, calculated daily and payable monthly, equal to 0.65% of the
Fund’s average daily net assets.
A
discussion regarding the basis for the Board’s approval of the Advisory
Agreement is available in the Fund’s semi-annual report for the period ended
December 31, 2008.
Portfolio
Managers
The
Advisor’s firm uses a team approach for portfolio management. Of the
eight investment team members, William B. Whitlow, Jr. and Brian P. Clancy are
principally responsible for the management of the Fund’s portfolio and serve as
co-portfolio managers of the Fund.
William B. Whitlow, Jr. CFA is
a Senior Vice President, senior portfolio manager and research analyst of the
Advisor. Mr. Whitlow joined the Advisor in October
2004. He currently is the lead manager of the Advisor’s multi-cap
core strategy. Prior to his affiliation with the Advisor, Mr. Whitlow
was employed at SAFECO Asset Management since 1997, where he was co-manager of
the Multi-Cap Core and Growth Opportunities Funds. He earned an MBA
in Finance from the University of California - Berkeley and is a graduate of the
University of Colorado, where he
received a B.A. in Chemistry. Mr. Whitlow is a CFA charterholder and
is a member of the CFA Society of Seattle.
Brian P. Clancy, CFA is a Vice
President, portfolio manager and research analyst of the Advisor. Mr.
Clancy joined the Advisor in October 2004. Prior to his affiliation
with the Advisor, Mr. Clancy worked at SAFECO Asset Management since
1996. During that time Mr. Clancy worked with Mr. Whitlow as
co-manager of the Multi-Cap Core Fund, as well as serving as a portfolio manager
for the SAFECO Trust Co. He earned an MBA from the University of
Washington and is a graduate of the United States Naval Academy, where he
received a B.S. in Mathematics. Mr. Clancy is a CFA charterholder and
a member of the CFA Society of Seattle.
The SAI
provides additional information about the portfolio managers for the Fund,
including information about the portfolio managers’ compensation, other accounts
managed by the portfolio managers, and their ownership of securities in the Fund
and any conflicts of interest.
Prior
Performance
The
Advisor currently maintains data related to two multi-cap core strategy
composites which are managed identically. The data provided below is
for the wrap composite and it is being used instead of the data for the
traditional account composite because it reflects inclusion of a larger number
of accounts and a longer performance record. Accounts in the wrap
composite are subject to one, flat quarterly or annual fee that covers all
administrative, commission, and management expenses.
The
following table sets forth performance data relating to the historical
performance of private accounts managed by the Advisor for the periods indicated
that have investment objectives, policies, strategies and risks substantially
similar to those of the Fund. The data is provided to illustrate the past
performance of the Advisor in managing substantially similar accounts as
measured against the Russell 3000® Index
and does not represent the performance of the Fund. The private accounts that
are included in the Advisor’s composite are not subject to the same types of
expenses to which the Fund is subject nor to the diversification requirements,
specific tax restrictions and investment limitations imposed on the Fund by the
Investment Company Act of 1940, as amended, or Subchapter M of the Internal
Revenue Code. Consequently, the performance results for the Advisor’s
composite could have been adversely affected if the private accounts included in
the composite had been regulated as investment companies under the federal
securities laws. You should not consider this performance data as an
indication of future performance of the Fund.
Davidson
Investment Advisors, Inc.
Multi-Cap
Core Wrap Composite – June 30, 2009 Returns
|
Performance
Results June 30, 2009
|
Annualized
|
|||
|
1st
Qtr 2009
|
1
Year
|
3
Years
|
Since
Inception
(2)
|
|
|
Multi-Cap
Core Wrap (Pure Gross-of-Fees) (1)
|
17.0%
|
-23.2%
|
-6.6%
|
-0.2%
|
|
Multi-Cap
Core Wrap (Net-of-Fees)
|
16.7%
|
-24.3%
|
-7.9%
|
-1.4%
|
|
Russell
3000®
Index(3)
|
16.8%
|
-26.6%
|
-8.4%
|
-3.7%
|
|
(1)
|
Supplemental
Information
|
|
(2)
|
Inception
of the Multi-Cap Core Wrap Composite is December 31,
2004
|
|
(3)
|
The
Russell 3000®
Index measures the performance of the largest 3,000 U.S. companies
representing approximately 98% of the investable U.S. equity
market. You cannot invest directly in an
index.
|
Multi-Cap
Core Wrap Composite Annual Disclosure Presentation
January
1, 2005 to December 31, 2008
|
Year
End
|
Total
Firm Assets (millions)
|
Composite
Assets
|
Annual
Performance Results
|
||||
|
U.S.
Dollars (millions)
|
Number
of Accounts
|
Composite
|
Russell
3000®
Index(2)
|
Composite
Dispersion(3)
|
|||
|
Pure
Gross-of -Fees
(1)
|
Net
of Fees
|
||||||
|
2008
|
$766
|
$39
|
117
|
-35.84%
|
-36.74%
|
-37.31%
|
0.3%
|
|
2007
|
$1,010
|
$56
|
147
|
11.53%
|
10.01%
|
5.14%
|
0.2%
|
|
2006
|
$930
|
$47
|
114
|
12.17%
|
10.78%
|
15.72%
|
0.3%
|
|
2005
|
$977
|
$7
|
17
|
13.97%
|
12.97%
|
6.12%
|
N/A
|
N/A –
Information is not statistically meaningful due to an insufficient number of
portfolios in the composite for the entire calendar year.
|
(1)
|
Supplemental
Information
|
|
(2)
|
The
Russell 3000®
Index measures the performance of the largest 3,000 U.S. companies
representing approximately 98% of the investable U.S. equity
market. You cannot invest directly in an
index.
|
|
(3)
|
Composite
dispersion measures the consistency of a firm’s composite performance with
respect to the individual account returns within a
composite. The dispersion is measured by the standard deviation
of asset-weighted account returns for the full
year.
|
The
Advisor has prepared and presented this report in compliance with the Global
Investment Performance Standards (GIPS®).
The
Davidson Multi-Cap Core Wrap Composite consists of all fully discretionary
equity multi-cap core wrap accounts with the objective to provide diversified
investment coverage across a wide range of market capitalizations and investment
styles with attractive fundamental characteristics, including those accounts no
longer with the firm. The portfolio style and market capitalization
weightings are adjusted over time based on relative value opportunities
available in the marketplace.
The
Davidson Multi-Cap Core Wrap Composite was created on December 31,
2004. The minimum asset level for an account to be included in the
Davidson Multi-Cap Core Wrap Composite is $150,000. Composite policy
requires the temporary removal of any portfolio incurring a client initiated
significant cash inflow or outflow of at least 20% of Composite assets. The
temporary removal of such an account occurs at the beginning of the month in
which the significant cash flow occurs and the account re-enters the Composite
the second full month after the cash flow.
Compliance
with GIPS has been verified firm-wide by Ashland Partners & Company LLP
(independent third-party provider for GIPS verification) from January 1, 1992
through December 31, 2008. A
performance examination was conducted on the Davidson Multi-Cap Core Wrap
Composite beginning January 1, 2005. The performance results for the
Davidson Multi-Cap Core Wrap Composite have been verified for the period January
1, 2005, to December 31, 2008, by Ashland Partners & Company
LLP. A copy of the verification report is available upon request. The
primary benchmark is the Russell 3000® Index.
(The Index does not include transaction costs, management fees or other
costs.) Returns are presented gross and net of fees and include the
reinvestment of all income. In addition to a management fee, accounts
pay an all-inclusive fee based on a percentage of assets under
management. Other than brokerage commission, this fee includes
portfolio monitoring, consulting services, and in some cases, custodial
services. Wrap fee accounts make up 100% of the composite for all
periods shown. “Pure” gross results are shown for supplemental
information only as they are stated gross of all fees and have not been reduced
by transaction costs. Net results have been reduced by all actual
fees and transaction costs incurred. Wrap fee schedules are provided
by independent wrap sponsors and are available upon request from the respective
wrap sponsor. Actual investment advisory fees incurred by clients may
vary. The annual composite dispersion presented is an asset-weighted
standard deviation calculated for the accounts in the composite the entire
year. The fee schedule for the Davidson Multi-Cap Core Wrap Composite
is: 1.00% on first $5 million, 0.875% on next $5 million and 0.75% over $10
million. Investment performance returns and market values are
calculated in U.S. dollars. The fees and expenses associated with an investment
in the composite have, at times, been both higher and lower than the fees and
expenses associated with an investment in the Fund. As of December
31, 2007, the fees and expenses associated with an investment in the composite
were higher than the fees and expenses associated with an investment in the
Advisor Class A shares of the Fund but lower than the fees and expenses
associated with an investment in Advisor Class C shares of the Fund, so that if
the composite’s expenses in 2007 were adjusted for these expenses, its 2007
performance would have been higher (if adjusted for Advisor Class A expenses) or
lower (if adjusted for Advisor Class C expenses) than shown.
The data
shown represents past performance and offers no guarantee or representation of
future results.
To obtain
a complete list and description of the Advisor’s composites or additional
information regarding policies or calculating and reporting returns, please
contact Davidson Investment Advisors, Inc. at 1-800-332-0529.
Fund
Expenses
The
Fund is responsible for its own operating expenses. The Advisor has
contractually agreed, however, to waive its fees and/or pay expenses of the Fund
to ensure that the net annual fund operating expenses (excluding AFFE, interest,
taxes and extraordinary expenses) for the Advisor Class A shares do not exceed
1.15% of the Advisor Class A shares’ average daily net assets for the Fund’s
Advisor Class A shares and 1.90% of the Advisor Class C shares’ average daily
net assets for the Advisor Class C shares. The term of the Fund’s
operating expenses limitation agreement is indefinite and it can only be
terminated upon a vote of the Board. Any waiver in management fees or
payment of expenses made by the Advisor may be recouped by the Advisor in
subsequent fiscal years if the Advisor so requests. This recoupment
may be requested if the aggregate amount actually paid by the Fund toward
operating expenses for such fiscal year (taking into account the recoupment)
does not exceed the applicable limitation on the Fund’s expenses. The
Advisor is permitted to recoup fee waivers and/or expense payments made in the
prior three fiscal years from the date the fees were waived and/or Fund expenses
were paid. Any such recoupment is contingent upon the subsequent
review and ratification of the recouped amounts by the Board’s independent
trustees who oversee the Fund. The Fund must pay current ordinary
operating expenses before the Advisor is entitled to any recoupment of fees
and/or expenses.
Description
of Classes
The
Trust has adopted a multiple class plan that allows the Fund to offer one or
more classes of shares. The Fund has registered two classes of shares
– Advisor Class A shares and Advisor Class C shares. The
different classes of shares represent investments in the same portfolio of
securities, but the classes are subject to different expenses and may have
different share prices as outlined below:
|
·
|
Advisor
Class A shares are charged a front-end sales load. The
Advisor Class A shares are also charged a 0.25% Rule 12b-1 distribution
and service fee. Advisor Class A shares do not have a
contingent deferred sales charge (“CDSC”) except that a charge of 1%
applies to certain redemptions made within twelve months, following
purchases of $1 million or more without an initial sales
charge.
|
|
·
|
Advisor
Class C shares are charged a CDSC of 1.00%. The Advisor
Class C shares are also charged a 1.00% Rule 12b-1 distribution and
service fee.
|
Advisor
Class A Shares
Advisor
Class A shares of the Fund are retail shares that require that you pay a
front-end sales charge when you invest in the Fund unless you qualify for a
reduction or waiver of the sales charge. Advisor Class A shares are
also subject to Rule 12b-1 fees (or distribution and service fees)
described earlier of 0.25% of average daily net assets which are assessed
against the shares of the Fund.
If you
purchase Advisor Class A shares of the Fund you will pay the public offering
price (“POP”) which is the NAV per share next determined after your order is
received plus a sales charge (shown in percentages below) depending on the
amount of your investment. Since sales charges are reduced for
Advisor Class A share purchases above certain dollar amounts, known as
“breakpoint levels,” the POP is lower for these purchases. The dollar
amount of the sales charge is the difference between the POP of the shares
purchased (based on the applicable sales charge in the table below) and the NAV
of those shares. Because of rounding in the calculation of the POP,
the actual sales charge you pay may be more or less than that calculated using
the percentages shown below. The sales charge does not apply to
shares purchased with reinvested dividends. The sales charge is
calculated as follows:
|
Amount
of Transaction
|
Sales
Charge as % of
Public
Offering Price(1)
|
Sales
Charge as % of
Net
Amount Invested
|
Dealer
Reallowance as a Percentage of Public Offering Price
|
|
Less
than $25,000
|
5.00%
|
5.26%
|
5.00%
|
|
$25,000
but less than $50,000
|
4.50%
|
4.71%
|
4.50%
|
|
$50,000
but less than $100,000
|
4.00%
|
4.17%
|
4.00%
|
|
$100,000
but less than $250,000
|
3.50%
|
3.63%
|
3.50%
|
|
$250,000
but less than $500,000
|
2.50%
|
2.56%
|
2.50%
|
|
$500,000
but less than $1,000,000
|
2.00%
|
2.04%
|
2.00%
|
|
$1,000,000
or more(2)
|
0.00%
|
0.00%
|
1.00%
|
|
(1)
|
Offering
price includes the front-end sales load. The sales charge you
pay may differ slightly from the amount set forth above because of
rounding that occurs in the calculation used to determine your sales
charge.
|
|
(2)
|
The
Transfer Agent will assess Advisor Class A purchases of $1,000,000 or more
a 1.00% CDSC if they are redeemed within twelve months from the date of
purchase, unless the dealer of record waived its
commission. The 1.00% is applied to the NAV of the shares on
the date of original purchase or on the date of redemption, whichever is
less.
|
The
Advisor’s affiliated broker-dealer, D.A. Davidson & Co. (“DAD”), will
receive all of the initial sales charge for purchases of Advisor Class A shares
of the Fund without a dealer of record.
A
redemption fee of 1.00%, based on the redeemed share’s market value, will be
imposed on redemptions of Advisor Class A shares of the Fund held for seven
calendar days or less after purchase, using the “first in, first out” (“FIFO”)
method.
Reducing
Your Sales Charge
You may
be able to reduce the sales charge on Advisor Class A shares of the Fund
based on the combined market value of your accounts. If you believe
you are eligible for any of the following reductions or waivers, it is up to you
to ask the selling agent or shareholder servicing agent for the reduction and to
provide appropriate proof of eligibility.
|
·
|
You
pay no sales charges on Fund shares you buy with reinvested
distributions.
|
|
·
|
You
pay a lower sales charge if you are investing an amount over a specific
breakpoint level as indicated by the above
table.
|
|
·
|
You
pay no sales charges on Fund shares you purchase with the proceeds of a
redemption of Advisor Class A shares of the Fund within 120 days of the
date of the redemption.
|
|
·
|
By
signing a Letter of
Intent (“LOI”) prior to purchase, you pay a lower sales charge now
in exchange for promising to invest an amount over a specified breakpoint
within the next 13 months. Reinvested dividends and capital
gains do not count as purchases made during this period. We
will hold in escrow shares equal to approximately 5% of the amount you say
you intend to buy. If you do not invest the amount specified in
the LOI before the expiration date, we will redeem enough escrowed shares
to pay the difference between the reduced sales load you paid and the
sales load you would have paid based on the total amount actually invested
in Advisor Class A shares on the expiration date. Otherwise, we
will release the escrowed shares when you have invested the agreed
amount.
|
|
·
|
Rights of Accumulation
(“ROA”) allow you to combine Advisor Class A shares of the
Fund you already own in order to reach breakpoint levels and to qualify
for sales load discounts on subsequent purchases of Advisor Class A
shares. The purchase amount used in determining the sales
charge on your purchase will be calculated by multiplying the maximum
public offering price by the number of Advisor Class A shares of the
Fund already owned and adding the dollar amount of your current
purchase.
|
Eligible
Accounts
Certain
accounts may be aggregated for ROA eligibility, including your current
investment in the Fund, and previous investments you and members of your primary
household group have made in the Fund, provided your investment was subject to a
sales charge. (Your primary household group consists of you, your
spouse and children under age 21 living at home.) Specifically, the
following accounts are eligible to be included in determining the sales charge
on your purchase, if a sales charge has been paid on those
purchases:
|
·
|
Individual
or joint accounts held in your
name;
|
|
·
|
Coverdell
Savings Accounts and UGMA/UTMA accounts for which you or your spouse is
parent or guardian of the minor
child;
|
|
·
|
Trust
accounts for which you or a member of your primary household group,
individually, is the beneficiary;
|
|
·
|
Accounts
held in the name of you or your spouse’s sole proprietorship or single
owner limited liability company or S corporation;
and
|
|
·
|
Investors
who purchase shares that are to be included in certain retirement,
benefit, pension, trust or investment “wrap accounts” or through an
omnibus account maintained with the Fund by a
broker-dealer.
|
Waiving
Your Sales Charge
We
reserve the right to waive the sales charges for certain groups or classes of
shareholders. If you fall into any of the following categories, you
can buy Advisor Class A shares at NAV without a sales charge:
|
·
|
Current
and retired employees, directors/trustees and officers
of:
|
|
o
|
Advisors
Series Trust;
|
|
o
|
Davidson
Investment Advisors, Inc. and its affiliates;
and
|
|
o
|
Family
members (spouse, domestic partner, parents, grandparents, children,
grandchildren and siblings (including step and in-law)) of any of the
above.
|
|
·
|
Current
employees of:
|
|
o
|
the
Fund’s Transfer Agent;
|
|
o
|
broker-dealers
who act as selling agents; and
|
|
o
|
family
members (spouse, domestic partner, parents, grandparents, children,
grandchildren and siblings (including step and in-law)) of any of the
above.
|
|
·
|
Qualified
registered investment advisors who buy through a broker-dealer or service
agent who has entered into an agreement with the Fund’s distributor that
allows for load-waived Advisor Class A
purchases.
|
|
·
|
Qualified
broker-dealers, including the Advisor’s affiliated broker-dealer, DAD, who
have entered into an agreement with the Fund’s distributor that allows for
load-waived Advisor Class A
purchases.
|
We also
reserve the right to enter into agreements that reduce or eliminate sales
charges for groups or classes of shareholders, or for Fund shares included in
other investment plans such as “wrap accounts.” If you own Fund
shares as part of another account or package, such as an IRA or a sweep account,
you should read the terms and conditions that apply for that
account. Those terms and conditions may supersede the terms and
conditions discussed here. Contact your selling agent for further
information.
More
information regarding the Fund’s sales charges, breakpoints and waivers is
available free of charge on the Fund’s website: www.davidsonmutualfunds.com. Click
on “Breakpoints and Sales Loads.”
Advisor
Class C Shares
You
can buy Advisor Class C shares at the offering price, which is the NAV without
an up-front sales charge. Advisor Class C shares are subject to
annual Rule 12b-1 distribution and service fees of 1.00%. Of the
1.00% fee, an annual 0.75% distribution fee compensates your financial
intermediary for providing distribution services and an annual 0.25% service fee
compensates your financial intermediary for providing ongoing service to
you. The Distributor pays your financial intermediary a 1.00%
up-front sales commission, which includes an advance of the first year’s
distribution and service fees. The Distributor retains the
distribution and service fees in the first year to reimburse itself for paying
your financial intermediary a 1.00% up-front sales commission and retains the
distribution and service fees on accounts with no authorized dealer of
record.
If you
sell (redeem) your Advisor Class C shares within 1 year of purchase, you will
have to pay a CDSC of 1.00% which is applied to the NAV of the shares on the
date of original purchase or on the date of redemption, whichever is
less. For example, if you purchased $10,000 worth of shares, which
due to market fluctuation has appreciated to $15,000, the CDSC will be assessed
on your $10,000 purchase. If that same $10,000 purchase has
depreciated to $5,000, the CDSC will be assessed on $5,000 value. For
purposes of calculating the CDSC, the start of the 1-year holding period is the
first day of the month in which the purchase was made. The Fund will
use the FIFO method when taking the CDSC.
A
redemption fee of 1.00%, based on the redeemed share’s market value, will be
imposed on redemptions of Advisor Class C shares of the Fund held for seven
calendar days or less after purchase, using the FIFO method.
Investments
of $1 million or more for purchase into Advisor Class C will be
rejected. Your financial intermediary is responsible for placing
individual investments of $1 million or more into Advisor Class A
shares.
Waiving
Your CDSC
We
reserve the right to waive the CDSC for certain groups or classes of
shareholders. If you fall into any of the following categories, you
can redeem Advisor Class C shares without a CDSC:
|
·
|
You
will not be assessed a CDSC on Fund shares you redeem that were purchased
with reinvested distributions.
|
|
·
|
You
will not be assessed a CDSC on Fund shares redeemed for account and
transaction fees (e.g., returned
investment fee) and redemptions through a systematic withdrawal
plan.
|
|
·
|
We
waive the CDSC for all redemptions made because of scheduled (Internal
Revenue Code Section 72(t)(2) withdrawal schedule) or mandatory
(withdrawals generally made after age 70½ according to Internal Revenue
Service (IRS) guidelines) distributions from traditional IRAs and certain
other retirement plans. (See your retirement plan information for
details.)
|
|
·
|
We
waive the CDSC for redemptions made in the event of the last surviving
shareholder’s death or for a disability suffered after purchasing shares.
(“Disabled” is defined in Internal Revenue Code Section
72(m)(7).)
|
|
·
|
We
waive the CDSC for redemptions made at the direction of the Trust in order
to, for example, complete a merger or effect a Fund
liquidation.
|
|
·
|
We
waive the Advisor Class C shares CDSC if the dealer of record waived its
commission with the Fund’s or Advisor’s
approval.
|
We also
reserve the right to enter into agreements that reduce or eliminate the CDSC for
groups or classes of shareholders, or for Fund shares included in other
investment plans such as “wrap accounts.” If you own Fund shares as
part of another account or package, such as an IRA or a sweep account, you
should read the terms and conditions that apply for that
account. Those terms and conditions may supersede the terms and
conditions discussed here. Contact your selling agent for further
information.
More
information regarding the Fund’s sales charges and waivers is available free of
charge on the Fund’s website: www.davidsonmutualfunds.com. Click
on “Breakpoints and Sales Loads.”
Share
Price
Shares
of the Fund are sold at NAV per share, which is calculated as of the close of
regular trading (generally, 4:00 p.m. Eastern time) on each day that the New
York Stock Exchange (“NYSE”) is open for unrestricted
business. However, the Fund’s NAV may be calculated earlier if
trading on the NYSE is restricted or as permitted by the SEC. The
NYSE is closed on weekends and most national holidays. The NAV will
not be calculated on days when the NYSE is closed for trading.
Purchase
and redemption requests are priced at the next NAV per share calculated after
receipt of such requests. The NAV is the value of the Fund’s
securities, cash and other assets, minus all expenses and
liabilities. NAV per share is determined by dividing NAV by the
number of shares outstanding. The NAV takes into account the expenses
and fees of the Fund, including management, shareholder servicing and
administration fees, which are accrued daily.
In
calculating the NAV, portfolio securities are valued using current market values
or official closing prices, if available. Each security owned by the
Fund that is listed on a securities exchange is valued at its last sale price on
that exchange on the date as of which assets are valued. Where the
security is listed on more than one exchange, the Fund will use the price of the
exchange that the Fund generally considers to be the principal exchange on which
the security is traded. When market quotations are not readily
available, a security or other asset is valued at its fair value as determined
under procedures approved by the Board. These fair value procedures
will also be used to price a security when corporate events, events in the
securities market and/or world events cause the Advisor to believe that a
security’s last sale price may not reflect its actual market
value. The intended effect of using fair value pricing procedures is
to ensure that the Fund is accurately priced. The Board will
regularly evaluate whether the Fund’s fair valuation pricing procedures continue
to be appropriate in light of the specific circumstances of the Fund and the
quality of prices obtained through their application by the Trust’s valuation
committee.
When fair
value pricing is employed, the prices of securities used to calculate the Fund’s
NAV may differ from quoted or published prices for the same
securities. Due to the subjective and variable nature of fair value
pricing, it is possible that the fair value determined for a particular security
may be materially different from the price of the security quoted or published
by others or the value when trading resumes or realized upon its
sale. Therefore, if a shareholder purchases or redeems shares in the
Fund when it holds securities priced at a fair value, this may have the
unintended effect of increasing or decreasing the number of shares received in a
purchase or the value of the proceeds received upon a redemption.
In the
case of foreign securities, the occurrence of certain events after the close of
foreign markets, but prior to the time the Fund’s NAV is calculated (such as a
significant surge or decline in the U.S. or other markets) often will result in
an adjustment to the trading prices of foreign securities when foreign markets
open on the following business day. If such events occur, the Fund
will value foreign securities at fair value, taking into account such events, in
calculating the NAV. In such cases, use of fair valuation can reduce
an investor’s ability to seek to profit by estimating the Fund’s NAV in advance
of the time the NAV is calculated. The Advisor anticipates that the
Fund’s portfolio holdings will be fair valued only if market quotations for
those holdings are considered unreliable.
There are
several ways to purchase shares of the Fund. An account application is used if
you send money directly to the Fund by mail or wire. Payment should
be made by check in U.S. dollars and drawn on a U.S. bank, savings and loan, or
credit union, or sent by wire transfer. Checks should be made payable
to “Davidson Multi-Cap Core Fund.”
The Fund
will not accept payment in cash or money orders. The Fund also does
not accept cashier’s checks in amounts less than $10,000. Also, to
prevent check fraud, the Fund will not accept third party checks, U.S. Treasury
checks, credit card checks, traveler’s checks or starter checks for the purchase
of shares. We are unable to accept post-dated checks, post-dated
on-line bill pay checks, or any conditional order or payment.
If your
check is returned for any reason, a $25 fee will be assessed against your
account. You will also be responsible for any losses suffered by the
Fund as a result.
The Fund
does not issue share certificates and its shares are not registered for sale
outside of the United States. The Fund reserves the right to reject
any purchase in whole or in part. If you have questions about how to
invest, or about how to complete the account application, please call an account
representative at 1-877-332-0529.
In
compliance with the USA PATRIOT Act of 2001, please note that the Transfer Agent
will verify certain information on your account application as part of the
Fund’s Anti-Money Laundering Program. As requested on the
application, you should supply your full name, date of birth, social security
number and permanent street address. Mailing addresses containing
only a P.O. Box will not be accepted. Please contact the Transfer
Agent at 1-877-332-0529 if you need assistance when completing your account
application.
If the
Transfer Agent does not have a reasonable belief of the identity of an investor,
the account will be rejected or you will not be allowed to perform a transaction
on the account until such information is received. The Fund may also
reserve the right to close the account within five business days if clarifying
information/documentation is not received.
Shares of
the Fund have not been registered for sale outside of the United
States. The Fund generally does not sell shares to investors residing
outside of the United States, even if they are United States citizens or lawful
permanent residents, except to investors with United States military APO or FPO
addresses.
You
may Purchase Shares through an Investment Broker
You may
buy and sell shares of the Fund through certain brokers (and their agents,
together “brokers”) that have made arrangements with the Fund. An
order placed with such a broker is treated as if it was placed directly with the
Fund, and will be executed at the next share price calculated by the
Fund. Your shares will be held in the broker’s name, and the broker
will maintain your individual ownership information. The Fund or
Advisor may pay the broker for maintaining these records as well as providing
other shareholder services. In addition, the broker may charge you a
fee for handling your order. The broker is responsible for processing
your order correctly and promptly, keeping you advised of the status of your
individual account, confirming your transactions and ensuring that you receive
copies of the Fund’s Prospectus.
You
may Send Money to the Fund by Mail
If you
wish to invest by mail, simply complete the account application and mail it with
a check (made payable to “Davidson Multi-Cap Core Fund”) to:
|
Regular Mail
|
Overnight Delivery
|
|
Davidson
Multi-Cap Core Fund
|
Davidson
Multi-Cap Core Fund
|
|
c/o
U.S. Bancorp Fund Services, LLC
|
c/o
U.S. Bancorp Fund Services, LLC
|
|
P.O.
Box 701
|
615
East Michigan Street, Third Floor
|
|
Milwaukee,
Wisconsin 53201-0701
|
Milwaukee,
Wisconsin 53202
|
|
Note:
|
The
Fund does not consider the U.S. Postal Service or other independent
delivery services to be its agents.
|
You
may Wire Money to the Fund
If you
are making your first investment in the Fund, before you wire funds, please
contact the Fund by phone to make arrangements with a telephone service
representative to submit your completed account application via mail, overnight
delivery or facsimile. Upon receipt of your completed account
application, your account will be established and a service representative will
contact you within 24 hours to provide you with an account number and wiring
instructions.
You
may then instruct your bank to initiate the wire. Prior to sending
the wire, please call the Fund at 1-877-332-0629 to advise them of the wire and
to ensure proper credit upon receipt. You bank must include the
Fund’s name, your name and account number so that your wire can be correctly
applied. Your bank should transmit immediately available funds by
wire to:
U.S. Bank
National Association
777 East
Wisconsin Avenue
Milwaukee,
Wisconsin 53202
ABA #:
075000022
Credit: U.S.
Bancorp Fund Services, LLC
A/C
#112-952-137
|
|
FFC:
|
Davidson Multi-Cap Core
Fund
|
Shareholder
Registration
Shareholder
Account Number
Wired
funds must be received prior to 4:00 p.m. Eastern time to be eligible for same
day pricing. Neither the Fund nor U.S. Bank N.A. is responsible for
the consequences of delays resulting from the banking or Federal Reserve wire
system, or from incomplete wiring instructions.
Please
contact the Transfer Agent prior to sending a wire in order to ensure proper
credit. If you are making a subsequent purchase, your bank should
wire funds as indicated above. It is essential that your bank include
complete information about your account in all wire instructions. If
you have questions about how to invest by wire, you may call the Transfer Agent
at 1-877-332-0529. Your bank may charge you a fee for sending a wire
payment to the Fund.
When
is Money Invested in the Fund?
Your
share price will be the next NAV per share calculated after the Transfer Agent
or your broker receives your request in good order. “Good order”
means that your purchase request includes: (1) the name of the Fund, (2) the
dollar amount of shares to be purchased, (3) your purchase application or
investment stub, and (4) a check payable to the “Davidson Multi-Cap Core
Fund.” All requests received in good order before 4:00 p.m. (Eastern
time) will be processed on that same day. Requests received after
4:00 p.m. (Eastern time) will receive the next business day’s NAV per
share.
What
is the Price of the Fund?
Advisor
Class A shares of the Fund are sold at NAV per share plus any applicable sales
charge; Advisor Class C shares of the Fund are sold at NAV per
share. The Fund’s NAV per share, or price per share, is calculated by
dividing the value of the Fund’s total assets, less its liabilities, by the
number of its shares outstanding. The Fund’s assets are the market value of
securities held in its portfolio, plus any cash and other assets. The
Fund’s liabilities are fees and expenses it owes. The number of Fund
shares outstanding is the amount of shares which have been issued to
shareholders. The price you will pay to buy Fund shares or the amount
you will receive when you sell your Fund shares is based on the NAV per share
next calculated after your order is received and accepted.
The
minimum initial investment in the Fund is $2,500 for regular accounts and
Individual Retirement Accounts (“IRAs”). There is no minimum initial
investment for 401(k), pension or other types of ERISA accounts. Once
your account is established, subsequent investments may be in any
amount. If you are starting an Automatic Investment Plan (see below),
however, the minimum initial and subsequent investments are $2,500 and $100,
respectively, for regular accounts and IRAs.
Subsequent
Investments
You may
purchase additional shares of the Fund by sending a check, with the stub from an
account statement, to the Fund at the address above. Please also
write your account number on the check. If you do not have a stub
from an account statement, you can write your name, address and account number
on a separate piece of paper and enclose it with your check. If you
want to invest additional money by wire, it is important for you to first call
the Fund at 1-877-332-0529.
Automatic
Investment Plan (“AIP”)
You
may make regular monthly investments in the Fund using the AIP. In order to
participate in the AIP, your financial institution must be an Automated Clearing
House (“ACH”) member. An ACH debit is drawn electronically against
your account at a financial institution of your choice. Upon receipt
of the withdrawn funds, the Fund automatically invests the money in additional
shares of the Fund at the next calculated NAV per share. There is no charge
by the Fund for this service. The Fund may terminate or modify this
privilege at any time. You may terminate or modify your participation
by notifying the Transfer Agent at least five days prior to the effective
date. Once the initial minimum investment of $2,500 for regular
accounts and IRAs is made, the subsequent minimum monthly investment amount is
$100. A request to change bank information will require a signature
guarantee. Additionally, the Transfer Agent will charge a $25 fee for
any payment returned as unpaid. You will also be responsible for any
losses suffered by the Fund as a result. To establish the AIP, an
investor must complete the appropriate section of the account
application. For additional information on the AIP, please call the
Transfer Agent at 1-877-332-0529.
You
have the right to redeem all or any portion of your shares of the Fund at their
next calculated NAV per share on each day the NYSE is open for
trading. A redemption may result in recognition of a gain or loss for
federal income tax purposes.
Shareholders
who have an IRA or other retirement plan must indicate on their redemption
request whether or not to withhold federal income tax. Redemption
requests failing to indicate an election not to have tax withheld will be
subject to withholding. IRA redemption requests must be made in
writing.
Redemptions
in Writing
You
may redeem up to $100,000 of your shares by simply sending a written request to
the Fund. Please provide the Fund’s name, your name, account number
and state the number of shares or dollar amount you would like
redeemed. The letter should be signed by all of the shareholders
whose names appear in the account registration. Please have the
signatures guaranteed, if applicable. You should send your redemption
request to:
|
Regular Mail
|
Overnight Delivery
|
|
Davidson
Multi-Cap Core Fund
|
Davidson
Multi-Cap Core Fund
|
|
c/o
U.S. Bancorp Fund Services, LLC
|
c/o
U.S. Bancorp Fund Services, LLC
|
|
P.O.
Box 701
|
615
East Michigan Street, Third Floor
|
|
Milwaukee,
Wisconsin 53201-0701
|
Milwaukee,
Wisconsin 53202
|
Redemptions
by Telephone
If you
complete the Telephone Options portion of the Fund’s account application, you
may redeem shares on any business day the NYSE is open by calling the Transfer
Agent at 1-877-332-0529 before the close of trading on the
NYSE. Redemption proceeds will be sent on the next business day to
the address that appears on the Transfer Agent’s records. If you
request, redemption proceeds will be wired on the next business day to your
designated bank account, or via electronic funds transfer through the ACH
network to your predetermined bank account. The minimum amount that
may be wired is $1,000. Wire charges, currently $15, will be deducted
from your account balance on dollar specific trades. If you are
redeeming your entire account or are requesting a redemption for a specific
share amount, the wire charge will be deducted from the redemption
proceeds. In the case of a partial redemption or a certain dollar
redemption, the fee will be deducted above and beyond the requested redemption
amount. There is no charge to have proceeds sent by electronic funds
transfer and credit is typically available in two to three business
days. Telephone redemptions cannot be made if you notify the Transfer
Agent of a change of address within 15 days before the redemption
request. Telephone redemptions cannot be made for retirement plan
accounts. Once a telephone transaction has been placed, it cannot be
canceled or modified.
By
establishing telephone redemption privileges, you authorize the Fund and its
Transfer Agent to act upon the instruction of any person who makes the telephone
call to redeem shares from your account and transfer the proceeds to the
financial institution account designated on the account
application. The Fund and the Transfer Agent will use procedures to
confirm that redemption instructions received by telephone are genuine,
including recording of telephone instructions and requiring a form of personal
identification before acting on these instructions. If these normal
identification procedures are followed, neither the Fund nor the Transfer Agent
will be liable for any loss, liability, or cost that results from acting upon
instructions of a person believed to be a shareholder with respect to the
telephone redemption privilege. The Fund may change, modify, or
terminate these privileges at any time upon at least 60 days’ notice to
shareholders.
You
may request telephone redemption privileges after your account is opened;
however, the authorization form may require a separate signature
guarantee. Shareholders may experience delays in exercising telephone
redemption privileges during periods of abnormal market activity. If
this occurs, you may make your redemption request in writing.
Signature
Guarantees
A
signature guarantee of each account owner is required to redeem shares in the
following situations:
|
—
|
If
ownership is changed on your
account;
|
|
—
|
When
redemption proceeds are payable to or sent to any person, address or bank
account not on record;
|
|
—
|
Written
requests to wire redemption proceeds (if not previously authorized on the
account);
|
|
—
|
If
a change of address request has been received by the Transfer Agent within
the last 15 calendar days;
|
|
—
|
For
all redemptions in excess of $100,000 from any shareholder account;
or
|
|
—
|
When
establishing or modifying certain services on an
account.
|
In
addition to the situations described above, the Fund and/or the Transfer Agent
reserve the right to require a signature guarantee in other instances based on
the circumstances relative to the particular situation.
Signature
guarantees will generally be accepted from domestic banks, brokers, dealers,
credit unions, national securities exchanges, registered securities
associations, clearing agencies and savings associations, as well as from
participants in the New York Stock Exchange Medallion Signature Program and the
Securities Transfer Agents Medallion Program. A notary public is not
a signature guarantor.
When
are Redemption Payments Made?
No
redemption request will become effective until the Transfer Agent has received
all documents in good order. Shareholders should contact the Transfer
Agent at 1-877-332-0529 for further information concerning documentation
required for redemption of Fund shares.
Redemption
payments for telephone redemptions are sent on the next business day after the
telephone call is received. Payments for redemptions requested in writing are
normally made promptly, but no later than seven days after the receipt of a
valid request. However, the Fund may suspend the right of redemption
under certain extraordinary circumstances in accordance with rules of the
SEC.
If
shares were purchased by check and then redeemed shortly after the check is
received, the Fund may delay sending the redemption proceeds until it has been
notified that the check used to purchase the shares has been collected, a
process that may take up to 15 calendar days. This delay can be
avoided by investing by wire to make your purchase.
Systematic
Withdrawal Plan (“SWP”)
The
Fund offers a SWP whereby you may request that a check drawn in a predetermined
amount be sent to you monthly, quarterly or annually. To start the
SWP, your account must have Fund shares with a value of at least $5,000, and the
minimum amount that may be withdrawn each month or quarter is
$100. The SWP may be terminated or modified by you or the Fund at any
time without charge or penalty. Termination and modification of your
SWP should be provided to the Transfer Agent five business days prior to the
next withdrawal. A withdrawal under the SWP involves a redemption of
shares of the Fund, and may result in a gain or loss for federal income tax
purposes. In addition, if the amount withdrawn exceeds the dividends
credited to your account, the account ultimately may be depleted. The
redemption fee will be waived on sales of Fund shares due to participation in
the SWP.
Payment
of Redemption Proceeds
You may
redeem the Fund’s shares at a price equal to the NAV per share next determined
after the Transfer Agent receives your redemption request in good
order. Your redemption request cannot be processed on days the NYSE
is closed. All requests received in good order by the Fund before the
close of the regular trading session of the NYSE (generally, 4:00 p.m.
Eastern time) will usually be sent to the bank you indicate or mailed on the
following day to the address of record. Payment for shares redeemed
will be sent to you typically within one to two business days, but no later than
the seventh calendar day after receipt of the redemption request by the Transfer
Agent.
If you
purchase shares using a check and soon after request a redemption, the Fund will
honor the redemption request, but will not mail the proceeds until your purchase
check has cleared (usually within 12 calendar
days). Furthermore, there are certain times when you may be unable to
sell the Fund shares or receive proceeds.
Specifically,
the Fund may suspend the right to redeem shares or postpone the date of payment
upon redemption for more than three business days (1) for any period during
which the NYSE is closed (other than customary weekend or holiday closings) or
trading on the NYSE is restricted; (2) for any period during which an
emergency exists as a result of which disposal by a Fund of securities owned by
it is not reasonably practicable or it is not reasonably practicable for the
Fund fairly to determine the value of its net assets; or (3) for such other
periods as the SEC may permit for the protection of a Fund’s
shareholders.
Other
Redemption Information
Your
redemption proceeds are net of any CDSC fees and/or redemption
fees.
Shareholders
who have an IRA or other retirement plan must indicate on their redemption
request whether or not to withhold federal income tax. Redemption
requests failing to indicate an election not to have tax withheld will generally
be subject to 10% withholding.
The
Trust has elected to be governed by Rule 18f-1 under the Investment Company Act
of 1940, as amended (“the 1940 Act”). Specifically, if the amount you
are redeeming is in excess of the lesser of $250,000 or 1% of the Fund’s net
assets, the Fund has the right to redeem your shares by giving you the amount
that exceeds $250,000 or 1% of the Fund’s net assets in securities instead of
cash. If the Fund pays your redemption proceeds by a distribution of
securities, you could incur brokerage or other charges in converting the
securities to cash, and will bear any market risks associated with such
securities until they are converted into cash.
The Fund
has the right to pay redemption proceeds to you in whole or in part by a
distribution of securities from the Fund’s portfolio
(redemption-in-kind). It is not expected that the Fund would do so
except in unusual circumstances. If the Fund pays your redemption
proceeds by a distribution of securities, you could incur brokerage or other
charges in converting the securities to cash.
Due to
the relatively high cost of maintaining smaller accounts, the shares in your
account (unless it is a retirement plan or Uniform Gifts or Transfers to Minors
Act account) may be redeemed by the Fund if, due to redemptions you have made,
the total value of your account falls below the minimum initial
investment. If the Fund determines to make such an involuntary
redemption, you will first be notified that the value of your account is less
than the minimum initial investment, and you will be allowed 30 days to make an
additional investment to bring the value of your account to at least the minimum
initial investment before the Fund takes any action.
Tools
to Combat Frequent Transactions
The Board
has adopted policies and procedures with respect to frequent purchases and
redemptions of Fund shares by Fund shareholders. The Fund discourages
excessive, short-term trading and other abusive trading practices that may
disrupt portfolio management strategies and harm the Fund’s performance. The
Fund takes steps to reduce the frequency and effect of these activities in the
Fund. These steps include monitoring trading activity, imposing
redemption fees and using fair value pricing. Although these efforts
(which are described in more detail below) are designed to discourage abusive
trading practices, these tools cannot eliminate the possibility that such
activity may occur. Further, while the Fund makes efforts to identify
and restrict frequent trading, the Fund receives purchase and sale orders
through financial intermediaries and cannot always know or detect frequent
trading that may be facilitated by the use of intermediaries or the use of group
or omnibus accounts by those intermediaries. The Fund seeks to
exercise its judgment in implementing these tools to the best of its abilities
in a manner that the Fund believes is consistent with shareholder
interests.
Monitoring
Trading Practices
The Fund
monitors selected trades in an effort to detect excessive short-term trading
activities. If, as a result of this monitoring, the Fund believes
that a shareholder has engaged in excessive short-term trading, it may, in its
discretion, ask the shareholder to stop such activities or refuse to process
purchases in the shareholder’s accounts. In making such judgments,
the Fund seeks to act in a manner that it believes is consistent with the best
interests of shareholders. Due to the complexity and subjectivity
involved in identifying abusive trading activity and the volume of shareholder
transactions the Fund handles, there can be no assurance that the Fund’s efforts
will identify all trades or trading practices that may be considered
abusive. In addition, the Fund’s ability to monitor trades that are
placed by individual shareholders within group or omnibus accounts maintained by
financial intermediaries is limited because the Fund does not have simultaneous
access to the underlying shareholder account information.
In
compliance with Rule 22c-2 of the 1940 Act, the Fund’s Distributor, on behalf of
the Fund, has entered into written agreements with each of the Fund’s financial
intermediaries, under which the intermediary must, upon request, provide the
Fund with certain shareholder and identity trading information so that the Fund
can enforce its market timing policies.
Redemption
Fee
The
Fund charges a 1% redemption fee on the redemption of Fund shares held for 7
days or less. This fee is imposed in order to help offset the
transaction costs and administrative expenses associated with the activities of
short-term “market timers” that engage in the frequent purchase and sale of Fund
shares. The FIFO method is used to determine the holding period; this
means that if you bought shares on different days, the shares purchased first
will be redeemed first for the purpose of determining whether the redemption fee
applies. The redemption fee is deducted from your proceeds and is
retained by the Fund for the benefit of its long-term
shareholders. Redemption fees will not apply to shares acquired
through the reinvestment of dividends or on sales of Fund shares due to
participation in the Systematic Withdrawal Plan. Although the Fund
has the goal of applying this redemption fee to most such redemptions, the
redemption fee may not apply in certain circumstances where it is not currently
practicable for the Fund to impose the fee, such as redemptions of shares held
in certain omnibus accounts or retirement plans.
Fair
Value Pricing
The Fund
employs fair value pricing selectively to ensure greater accuracy in its daily
NAV and to prevent dilution by frequent traders or market timers who seek to
take advantage of temporary market anomalies. The Board has developed
procedures which utilize fair value pricing when reliable market quotations are
not readily available or the Fund’s pricing service does not provide a valuation
(or provides a valuation that in the judgment of the Advisor to the Fund does
not represent the security’s fair value), or when, in the judgment of the
Advisor, events have rendered the market value unreliable. Valuing
securities at fair value involves reliance on judgment. Fair value
determinations are made in good faith in accordance with procedures adopted by
the Board and are reviewed by the Board. There can be no assurance
that the Fund will obtain the fair value assigned to a security if it were to
sell the security at approximately the time at which the Fund determines its NAV
per share.
More
detailed information regarding fair value pricing can be found under the heading
titled, “YOUR ACCOUNT WITH THE FUND – Share Price.”
Distributor
Quasar
Distributors, LLC, an affiliate of the Transfer Agent, 615 East Michigan Street,
4th floor, Milwaukee, Wisconsin 53202, is the distributor for the shares of the
Fund (“Distributor”). Quasar Distributors, LLC is a registered
broker-dealer and a member of the Financial Industry Regulatory Authority
(“FINRA”). Shares of the Fund are offered on a continuous
basis.
Distribution
and Service (Rule 12b-1) Plan
The
Trust has adopted a plan pursuant to Rule 12b-1 that allows the Fund’s Advisor
Class A shares and Advisor Class C shares to pay distribution and service fees
for the sale, distribution and servicing of its shares. The plan
provides for the payment of a distribution and service fee at the annual rate of
0.25% and 1.00% of average daily net assets of the Fund’s Advisor Class A shares
and Advisor Class C shares, respectively. Because these fees are paid
out of the Fund’s assets, over time these fees will increase the cost of your
investment and may cost you more than paying other types of sales
charges.
Distribution
and Service Fees – Other Payments to Third Parties
The Fund
may pay service fees to intermediaries such as banks, broker-dealers, financial
advisors or other financial institutions, for sub-administration, sub-transfer
agency and other shareholder services associated with shareholders whose shares
are held of record in omnibus, other group accounts or accounts traded through
registered securities clearing agents.
The
Advisor, out of its own resources, and without additional cost to the Fund or
its shareholders, may provide additional cash payments or non-cash compensation
to intermediaries who sell shares of the Fund. Such payments and
compensation are in addition to service fees paid by the Fund. These
additional cash payments are generally made to intermediaries that provide
shareholder servicing, marketing support and/or access to sales meetings, sales
representatives and management representatives of the
intermediary. Cash compensation may also be paid to intermediaries
for inclusion of the Fund on its sales list, including a preferred or select
sales list, in other sales programs or as an expense reimbursement in cases
where the intermediary provides shareholder services to the Fund’s
shareholders. The Advisor may also pay cash compensation in the form
of finder’s fees that vary depending on the Fund and the dollar amount of the
shares sold.
Some of
the following policies are mentioned above. In general, the Fund
reserves the right to:
|
—
|
Vary
or waive any minimum investment
requirement;
|
|
—
|
Refuse,
change, discontinue, or temporarily suspend account services, including
purchase, or telephone redemption privileges, for any
reason;
|
|
—
|
Reject
any purchase request for any reason. Generally, the Fund does
this if the purchase is disruptive to the efficient management of the Fund
(due to the timing of the investment or an investor’s history of excessive
trading);
|
|
—
|
Redeem
all shares in your account if your balance falls below the Fund’s minimum
initial investment requirement due to redemption activity. If,
within 30 days of the Fund’s written request, you have not increased your
account balance, you may be required to redeem your shares. The
Fund will not require you to redeem shares if the value of your account
drops below the investment minimum due to fluctuations of
NAV;
|
|
—
|
Delay
paying redemption proceeds for up to seven calendar days after receiving a
request, if an earlier payment could adversely affect the Fund;
and
|
|
—
|
Reject
any purchase or redemption request that does not contain all required
documentation.
|
If you
elect telephone privileges on the account application or in a letter to the
Fund, you may be responsible for any fraudulent telephone orders as long as the
Fund has taken reasonable precautions to verify your identity. In
addition, once you place a telephone transaction request, it cannot be canceled
or modified.
Telephone
trades must be received by or prior to market close. During periods
of high market activity, shareholders may encounter higher than usual call wait
times. Please allow sufficient time to ensure that you will be able
to complete your telephone transaction prior to market close. If you
are unable to contact the Fund by telephone, you may also mail your request to
the Fund at the address listed under “How to Purchase Shares of the
Fund.”
Your
financial intermediary may establish policies that differ from those of the
Fund. For example, the organization may charge transaction fees, set
higher minimum investments, or impose certain limitations on buying or selling
shares in addition to those identified in this Prospectus. Contact
your financial intermediary for details.
Advisor
Class A shares of the Fund may not be exchanged for Advisor Class C shares of
the Fund and vice versa.
Householding
In an
effort to decrease costs, the Fund intends to reduce the number of duplicate
prospectuses, Annual and Semi-Annual Reports, proxy statements and other similar
documents you receive by sending only one copy of each to those addresses shared
by two or more accounts and to shareholders we reasonably believe are from the
same family or household. Once implemented, if you would like to
discontinue householding for your accounts, please call toll-free at
1-877-332-0529 to request individual copies of these documents. Once
the Fund receives notice to stop householding, we will begin sending individual
copies thirty days after receiving your request. This policy does not
apply to account statements.
Dividends
from net investment income, if any, are normally declared and paid by the Fund
typically in December. Capital gain distributions, if any, are also normally
made in December, but the Fund may make an additional payment of dividends or
capital gain distributions if it deems it desirable at another time during any
year.
All
distributions will be reinvested in Fund shares unless you choose one of the
following options: (1) receive dividends in cash while reinvesting capital
gain distributions in additional Fund shares; (2) receive capital gain
distributions in cash while reinvesting dividends in additional Fund shares; or
(3) receive all distributions in cash.
If you
elect to receive any distributions paid in cash, and the U.S. Postal Service
cannot deliver the check, or if a check remains outstanding for six months, the
Fund reserves the right to reinvest the distribution check in your account, at
the Fund’s current NAV per share, and to reinvest all subsequent
distributions. If you wish to change your distribution option, notify
the Transfer Agent in advance of the payment date for the
distribution.
Any
dividend or capital gain distribution paid by the Fund has the effect of
reducing the NAV per share on the ex-dividend date by the amount of the dividend
or capital gain distribution. You should note that a dividend or
capital gain distribution paid on shares purchased shortly before that dividend
or capital gain distribution was declared will be subject to income taxes even
though the dividend or capital gain distribution represents, in substance, a
partial return of capital to you.
Distributions
made by the Fund will be taxable to shareholders whether received in shares
(through reinvestment) or in cash. Distributions derived from net
investment income, including net short-term capital gains, are taxable to
shareholders as ordinary income or, under current law, as qualified dividend
income. Distributions designated as capital gain dividends are
taxable as long-term capital gains regardless of the length of time shares of
the Fund have been held. There is no requirement that the Fund take
into consideration any tax implication when implementing its investment
strategy. Shareholders should note that the Fund may make taxable
distributions of income and capital gains even when share values have
declined. You should consult your own advisor concerning federal,
state and local taxation of distributions from the Fund.
By law,
the Fund must withhold a percentage of your taxable distributions and redemption
proceeds if you do not provide your correct social security or taxpayer
identification number and certify that you are not subject to backup
withholding, or if the Internal Revenue Service instructs the Fund to do
so.
|
FINANCIAL
HIGHLIGHTS
|
The
financial highlights table is intended to help you understand the Fund’s
financial performance for the period of the Fund’s
operations. Certain information reflects financial results for a
single Fund share. The total returns in the table represent the rate
that an investor would have earned (or lost) on an investment in the Fund,
assuming reinvestment of all dividends and distributions. This
information has been audited by Tait, Weller & Baker LLP, an independent
registered public accounting firm, whose report, along with the Fund’s financial
statements, are included in the Annual Report, which is available upon
request.
For
a share outstanding throughout the period
|
August
11, 2008*
|
||||
|
through
|
||||
|
June
30, 2009
|
||||
|
Net
asset value, beginning of period
|
$ | 15.00 | ||
|
Income
from investment operations:
|
||||
|
Net
investment income
|
0.10
|
^ | ||
|
Net
realized and unrealized loss on investments
|
(3.96 | ) | ||
|
Total
from investment operations
|
(3.86 | ) | ||
|
Less
distributions:
|
||||
|
From
net investment income
|
(0.05 | ) | ||
|
Total
distributions
|
(0.05 | ) | ||
|
Redemption
fees retained
|
0.00
|
^# | ||
|
Net
asset value, end of period
|
$ | 11.09 | ||
|
Total
return
|
-25.72 | %‡ | ||
|
Ratios/supplemental
data:
|
||||
|
Net
assets, end of period (thousands)
|
$ | 9,466 | ||
|
Ratio
of expenses to average net assets:
|
||||
|
Before
expense reimbursement
|
3.51 | %† | ||
|
After
expense reimbursement
|
1.15 | %† | ||
|
Ratio
of net investment income/(loss) to average net assets:
|
||||
|
Before
expense reimbursement
|
-1.33 | %† | ||
|
After
expense reimbursement
|
1.03 | %† | ||
|
Portfolio
turnover rate
|
22.58 | %‡ | ||
|
*
Commencement of operations
|
||||
|
^
Per share numbers have been calculated using the average shares
method.
|
||||
|
#
Amount is less than $0.01.
|
||||
|
‡
Not annualized.
|
||||
|
†
Annualized.
|
||||
Investment
Advisor
Davidson
Investment Advisors, Inc.
Davidson
Building
8 Third
Street North
Great
Falls, Montana 59401-3155
Independent
Registered Public Accounting Firm
Tait,
Weller & Baker LLP
1818
Market Street, Suite 2400
Philadelphia,
Pennsylvania 19103
Legal
Counsel
Paul,
Hastings, Janofsky & Walker LLP
75 East
55th
Street
New York,
New York 10022-3205
Custodian
U.S. Bank
National Association
Custody
Operations
1555
North River Center Drive, Suite 302
Milwaukee,
Wisconsin 53212
Transfer
Agent, Fund Accountant and Fund Administrator
U.S.
Bancorp Fund Services, LLC
615 East
Michigan Street
Milwaukee,
Wisconsin 53202
Distributor
Quasar
Distributors, LLC
615 East
Michigan Street
Milwaukee,
Wisconsin 53202
The Fund
collects non-public information about you from the following
sources:
|
·
|
Information
we receive about you on applications or other
forms;
|
|
·
|
Information
you give us orally; and/or
|
|
·
|
Information
about your transactions with us or
others.
|
We
do not disclose any non-public personal information about our customers or
former customers without the customer’s authorization, except as permitted by
law or in response to inquiries from governmental authorities. We may
share information with affiliated and unaffiliated third parties with whom we
have contracts for servicing the Fund. We will provide unaffiliated
third parties with only the information necessary to carry out their assigned
responsibilities. We maintain physical, electronic and procedural
safeguards to guard your non-public personal information and require third
parties to treat your personal information with the same high degree of
confidentiality.
In
the event that you hold shares of the Fund through a financial intermediary,
including, but not limited to, a broker-dealer, bank, or trust company, the
privacy policy of your financial intermediary would govern how your non-public
personal information would be shared by those entities with unaffiliated third
parties.
THIS
PAGE IS NOT A PART OF THE PROSPECTUS
DAVIDSON
MULTI-CAP CORE FUND
A
series of Advisors Series Trust
www.davidsonmutualfunds.com
|
FOR
MORE INFORMATION
|
You can
find more information about the Fund in the following documents:
Statement
of Additional Information
The SAI
provides additional details about the investments and techniques of the Fund and
certain other additional information. A current SAI is on file with
the SEC and is incorporated into this Prospectus by reference. This
means that the SAI is legally considered a part of this Prospectus even though
it is not physically within this Prospectus.
Annual
and Semi-Annual Reports
The
Fund’s Annual and Semi-Annual Reports (collectively, the “Shareholder Reports”)
provide the most recent financial statements and portfolio listings. The Annual
Report contains a discussion of the market conditions and investment strategies
that affected the Fund’s performance during the Fund’s last fiscal
year.
The SAI
and the Shareholder Reports are available free of charge on the Fund’s website
at www.davidsonmutualfunds.com. You
can obtain a free copy of the SAI and Shareholder Reports, request other
information, or make general inquires about the Fund by calling the Fund
(toll-free) at 1-877-332-0529 or by writing to:
DAVIDSON
MULTI-CAP CORE FUND
c/o U.S.
Bancorp Fund Services, LLC
P.O. Box
701
Milwaukee,
Wisconsin 53201-0701
www.davidsonmutualfunds.com
You may
review and copy information including the Shareholder Reports and SAI at the
Public Reference Room of the Securities and Exchange Commission in Washington,
D.C. You can obtain information on the operation of the Public
Reference Room by calling (202) 551-8090. Reports and other
information about the Fund are also available:
|
·
|
Free
of charge from the Commission’s EDGAR database on the Commission’s
Internet website at
http://www.sec.gov;
|
|
·
|
For
a fee, by writing to the Public Reference Section of the Commission,
Washington, D.C. 20549-1520; or
|
|
·
|
For
a fee, by electronic request at the following e-mail address:
publicinfo@sec.gov.
|
(The
Trust’s SEC Investment Company Act file number is 811-07959.)
STATEMENT
OF ADDITIONAL INFORMATION
October
28, 2009
DAVIDSON
MULTI-CAP CORE FUND
A
Series of Advisors Series Trust
|
Ticker Symbol
|
|
|
Advisor
Class A
|
DFMAX
|
|
Advisor
Class C
|
DFMCX
|
c/o
U.S. Bancorp Fund Services, LLC
P.O.
Box 701
Milwaukee,
Wisconsin 53201-0701
1-877-332-0529
This
Statement of Additional Information (“SAI”) is not a prospectus and should be
read in conjunction with the Prospectus for Advisor Class A and Advisor Class C
shares dated October 28, 2009, as may be revised, of the Davidson Multi-Cap Core
Fund (the “Fund”), a series of Advisors Series Trust (the
“Trust”). Davidson Investment Advisors, Inc. (the “Advisor”) is the
investment advisor to the Fund. A copy of the Prospectus may be
obtained by contacting the Fund at the address or telephone number above or by
visiting the Fund’s website at www.davidsonmutualfunds.com.
The
Fund’s audited financial statements and notes thereto for the fiscal period
ended June 30, 2009, are included in the Fund’s Annual Report to Shareholders
for the fiscal period ended June 30, 2009 (the “Annual Report”), and are
incorporated by reference into this SAI. A copy of the Annual Report
may be obtained without charge by calling or writing the Fund as shown above or
by visiting the Fund’s website at www.davidsonmutualfunds.com.
|
The
Trust
|
3
|
|
Investment
Policies And Risks
|
3
|
|
Portfolio
Turnover
|
16
|
|
Management
|
16
|
|
The
Fund’s Investment Advisor
|
21
|
|
Portfolio
Managers
|
23
|
|
Service
Providers
|
24
|
|
Execution
of Portfolio Transactions
|
25
|
|
Distribution
Agreement
|
27
|
|
Rule
12b-1 Distribution And Service Plan
|
28
|
|
Codes
of Ethics
|
29
|
|
Proxy
Voting Policies And Procedures
|
29
|
|
Portfolio
Holdings Information
|
30
|
|
Determination
Of Share Price
|
32
|
|
Additional
Purchase And Redemption Information
|
33
|
|
Distributions
And Tax Information
|
38
|
|
Marketing
And Support Payments
|
40
|
|
General
Information
|
41
|
|
Financial
Statements
|
42
|
|
Appendix
|
43
|
2
The
Trust is a Delaware statutory trust organized under the laws of the State
of Delaware on October 3, 1996, and is registered with the Securities and
Exchange Commission (the “SEC”) as an open-end management investment
company. The Trust’s Agreement and Declaration of Trust (the
“Declaration of Trust”) permits the Trust’s Board of Trustees (the “Board” or
the “Trustees”) to issue an unlimited number of full and fractional shares of
beneficial interest, par value $0.01 per share, which may be issued in any
number of series. The Trust consists of various series that represent
separate investment portfolios. The Board may from time to time issue
other series, the assets and liabilities of which will be separate and distinct
from any other series. This SAI relates only to the Fund, which is a series of
the Trust.
Registration
with the SEC does not involve supervision of the management or policies of the
Fund. The Fund’s Prospectus and this SAI omit certain of the
information contained in the Registration Statement filed with the
SEC. Copies of such information may be obtained from the SEC upon
payment of the prescribed fee or may be accessed free of charge at the SEC’s
website at www.sec.gov.
The
Fund’s registration with the SEC was declared effective on July 3, 2008 and the
Fund’s inception date was August 11, 2008.
The
following discussion supplements the discussion of the Fund’s investment
policies as set forth in the Prospectus.
Diversification
The
Fund is diversified. This means, among other things, that as to 75%
of a Fund’s total assets (1) no more than 5% may be in the securities of a
single issuer, and (2) it may not hold more than 10% of the outstanding voting
securities of a single issuer.
Under
applicable federal securities laws, the diversification of a mutual fund’s
holdings is measured at the time the fund purchases a
security. However, if the Fund purchases a security and holds it for
a period of time, the security may become a larger percentage of the Fund’s
total assets due to movements in the financial markets. If the market
affects several securities held by the Fund, the Fund may have a greater
percentage of its assets invested in securities of fewer
issuers. Accordingly, the Fund is subject to the risk that its
performance may be hurt disproportionately by the poor performance of relatively
few securities despite the Fund’s qualifying as a diversified mutual fund under
applicable federal securities laws.
Percentage
Limitations
Whenever
an investment policy or limitation states a maximum percentage of the Fund’s
assets that may be invested in any security or other asset, or sets forth a
policy regarding quality standards, such standards or percentage limitation will
be determined immediately after and as a result of the Fund’s acquisition or
sale of such security or other asset. Accordingly, except with
respect to borrowing, any subsequent change in values, net assets or other
circumstances will not be considered in determining whether an investment
complies with the Fund’s investment policies and limitations. In
addition, if a bankruptcy or other extraordinary event occurs concerning a
particular investment by the Fund, the Fund may receive stock, real estate or
other investments that the Fund would not, or could not buy. If this
happens, the Fund would sell such investments as soon as practicable while
trying to maximize the return to its shareholders.
Equity
Securities
The
Fund may invest in common stocks, preferred stocks, convertible securities,
warrants and foreign securities, including American Depositary Receipts
(“ADRs”), each of which is subject to certain risks, as discussed
below.
All
investments in equity securities are subject to market risks that may cause
their prices to fluctuate over time. Historically, the equity markets
have moved in cycles and the value of the securities in the Fund’s portfolio may
fluctuate substantially from day to day. Owning an equity security
can also subject the Fund to the risk that the issuer may discontinue paying
dividends.
The
economic crisis that began to unfold in 2007 continues to manifest itself in
nearly all areas of the U.S. economy and has caused dramatic volatility in the
financial markets, as well as a significant decrease in the value of many
financial institutions, including, in general, a decrease in the value of stocks
and bonds. The U.S. Government has taken a number of measures to
attempt to restore stability to the financial markets and to promote economic
recovery. The measures have included various programs to stimulate
economic activity, to reform regulatory oversight, to advance various social
goals and to provide relief to businesses and individuals suffering from the
effects of the economic crisis. There is no guarantee that any of
these programs or other efforts will be successful and therefore there is no
guarantee that the financial markets or stock and bond values will stabilize in
the near future.
Common
Stock. A common stock represents a proportionate share of the
ownership of a company and its value is based on the success of the company’s
business, any income paid to stockholders, the value of its assets, and general
market conditions. In addition to the general risks set forth above,
investments in common stocks are subject to the risk that in the event a company
in which the Fund invests is liquidated, the holders of preferred stock and
creditors of that company will be paid in full before any payments are made to
the Fund as a holder of common stock. It is possible that all assets
of that company will be exhausted before any payments are made to the
Fund.
Preferred
Stock. Preferred stocks are equity securities that often pay
dividends at a specific rate and have a preference over common stocks in
dividend payments and liquidation of assets. A preferred stock has a
blend of the characteristics of a bond and common stock. It can offer
the higher yield of a bond and has priority over common stock in equity
ownership, but does not have the seniority of a bond and, unlike common stock,
its participation in the issuer’s growth may be limited. Although the
dividend is set at a fixed annual rate, in some circumstances it can be changed
or omitted by the issuer.
Convertible
Securities. The Fund may invest in convertible
securities. Convertible securities (such as debt securities or
preferred stock) may be converted into or exchanged for a prescribed amount of
common stock of the same or different issuer within a particular period of time
at a specified price or formula. A convertible security entitles the
holder to receive interest paid or accrued on debt or dividends paid on
preferred stock until the convertible stock matures or is redeemed, converted or
exchanged. While no securities investment is without some risk,
investments in convertible securities generally entail less risk than the
issuer’s common stock. However, the extent to which such risk
is reduced depends in large measure upon the degree to which the convertible
security sells above its value as a fixed income security. In
addition to the general risk associated with equity securities discussed above,
the market value of convertible securities is also affected by prevailing
interest rates, the credit quality of the issuer and any call
provisions. While convertible securities generally offer lower
interest or dividend yields than nonconvertible debt securities of similar
quality, they do enable the investor to benefit from increases in the market
price of the underlying common stock.
Warrants. A
warrant gives the holder a right to purchase at any time during a specified
period a predetermined number of shares of common stock at a fixed
price. Unlike convertible debt securities or preferred stock,
warrants do not pay a fixed dividend. In addition to the general
risks associated with equity securities discussed above, investments in warrants
involve certain risks, including the possible lack of a liquid market for resale
of the warrants, potential price fluctuations as a result of speculation or
other factors, and failure of the price of the underlying security to reach or
have reasonable prospects of reaching a level at which the warrant can be
prudently exercised (in which event the warrant may expire without being
exercised, resulting in a loss of the Fund’s entire investment
therein).
Foreign
Securities
The Fund
may invest up to 20% of its net assets in foreign securities, including emerging
markets.
American Depositary Receipts,
European Depositary Receipts and Global Depositary
Receipts. The Fund may invest in securities of foreign issuers
in the form of ADRs, European Depositary Receipts (“EDRs”) and Global Depositary
Receipts (“GDRs”). These securities may not necessarily be
denominated in the same currency as the securities for which they may be
exchanged. These are certificates evidencing ownership of shares of a
foreign-based issuer held in trust by a bank or similar financial
institution. Designed for use in U.S. securities markets, ADRs are
alternatives to the purchase of the underlying securities in their national
market and currencies, while EDRs and GDRs are European and Global receipts
evidencing a similar arrangement. ADRs, EDRs and GDRs may be
purchased through “sponsored” or “unsponsored” facilities. A
sponsored facility is established jointly by the issuer of the underlying
security and a depositary, whereas a depositary may establish an unsponsored
facility without participation by the issuer of the depositary
security. Holders of unsponsored depositary receipts generally bear
all the costs of such facilities and the depositary of an unsponsored facility
frequently is under no obligation to distribute shareholder communications
received from the issuer of the deposited security or to pass through voting
rights to the holders of such receipts of the deposited securities.
Investing
in foreign securities involves certain risks not ordinarily associated with
investments in securities of domestic issuers. Foreign securities
markets have, for the most part, substantially less volume than the U.S. markets
and securities of many foreign companies are generally less liquid and their
prices more volatile than securities of U.S. companies. There is
generally less government supervision and regulation of foreign exchanges,
brokers and issuers than in the U.S. The rights of investors in
certain foreign countries may be more limited than those of shareholders of U.S.
issuers and the Fund may have greater difficulty taking appropriate legal action
to enforce its rights in a foreign court than in a U.S.
court. Investing in foreign securities also involves risks associated
with government, economic, monetary, and fiscal policies (such as the adoption
of protectionist trade measures), possible foreign withholding taxes on
dividends and interest payable to the Fund, possible taxes on trading profits,
inflation, and interest rates, economic expansion or contraction, and global or
regional political, economic or banking crises. Furthermore, there is the risk
of possible seizure, nationalization or expropriation of the foreign issuer or
foreign deposits and the possible adoption of foreign government restrictions
such as exchange controls. Also, foreign issuers are not necessarily
subject to uniform accounting, auditing and financial reporting standards,
practices and requirements comparable to those applicable to domestic issuers
and as a result, there may be less publicly available information on such
foreign issuers than is available from a domestic issuer.
In
addition, the Fund may invest in foreign securities of companies that are
located in developing or emerging markets. Investing in securities of
issuers located in these markets may pose greater risks not typically associated
with investing in more established markets such as increased risk of social,
political and economic instability. Emerging market countries
typically have smaller securities markets than developed countries and therefore
less liquidity and greater price volatility than more developed
markets. Securities traded in emerging markets may also be subject to
risks associated with the lack of modern technology, poor infrastructures, the
lack of capital base to expand business operations and the inexperience of
financial intermediaries, custodians and transfer agents. Emerging
market countries are also more likely to impose restrictions on the repatriation
of an investor’s assets and even where there is no outright restriction on
repatriation, the mechanics of repatriations may delay or impede the Fund’s
ability to obtain possession of its assets. As a result, there may be
an increased risk or price volatility associated with the Fund’s investments in
emerging market countries, which may be magnified by currency
fluctuations.
Dividends
and interest payable on the Fund’s foreign securities may be subject to foreign
withholding tax. The Fund may also be subject to foreign taxes on its
trading profits. Some countries may also impose a transfer or stamp
duty on certain securities transactions. The imposition of these
taxes will increase the cost to the Fund of investing in those countries that
impose these taxes. To the extent such taxes are not offset by
credits or deductions available to shareholders in the Fund under U.S. tax law,
they will reduce the net return to the Fund’s shareholders. Based on the
principal investment strategies of the Fund, it is not expected that the Fund
will be eligible to pass through to its shareholders any credits or deductions
against their U.S. federal income tax with respect to any foreign withholding
taxes paid by the Fund.
To the
extent the Fund invests in securities denominated in foreign currencies, the
Fund will be subject to the risk that a change in the value of any such currency
against the U.S. dollar will result in a corresponding change in the U.S. dollar
value of the Fund’s assets denominated in that currency. Investing in
foreign denominated securities may also result in transaction costs incurred in
connection with conversions between various currencies. In addition,
only a limited market currently exists for hedging transactions relating to
currencies in certain emerging markets and securities transactions undertaken in
foreign markets may not be settled promptly, subjecting the Fund to the risk of
fluctuating currency exchange rates pending settlement.
Small
and Medium Sized Companies
Many of
the companies in which the Fund may invest will include those that have limited
product lines, services, markets, or financial resources, or that are dependent
on a small management group. In addition, because these stocks may
not be well-known to the investing public, do not have significant institutional
ownership and are followed by relatively few security analysts, there will
normally be less publicly available information concerning these securities
compared to what is available for the securities of larger companies or
companies with larger capitalizations (“large-sized
companies”). Adverse publicity and investor perceptions, whether or
not based on fundamental analysis, can decrease the value and liquidity of
securities held by a Fund.
Historically,
smaller companies and the stocks of companies with smaller or mid-sized
companies (“small-sized companies”) have been more volatile in price than
large-sized companies. Among the reasons for the greater price
volatility of these small-sized company stocks are the less certain growth
prospects of small-sized companies, the lower degree of liquidity in the markets
for such stocks, the greater sensitivity of small-sized companies to changing
economic conditions and the fewer market makers and wider spreads between quoted
bid and asked prices which exist in the over-the-counter market for such
stocks. Besides exhibiting greater volatility, small-sized company
stocks may, to a degree, fluctuate independently of large-sized company
stocks. Small-sized company stocks may decline in price as
large-sized company stocks rise, or rise in price as large-sized company stocks
decline. Investors should therefore expect that a Fund that invests
primarily in small-sized companies will be more volatile than, and may fluctuate
independently of, broad stock market indices such as the S&P 500®
Index.
Other
Investment Companies
The
Fund may invest in shares of other registered investment companies, including
exchange-traded funds (“ETFs”), money market mutual funds and other mutual funds
in pursuit of its investment objective, in accordance with the limitations
established under the Investment Company Act of 1940, as amended (the “1940
Act”). This may include investments in money market mutual funds in connection
with the Fund’s management of daily cash positions. Investments in the
securities of other investment companies may involve duplication of advisory
fees and certain other expenses. By investing in another investment
company, the Fund becomes a shareholder of that investment
company. As a result, Fund shareholders indirectly will bear the
Fund’s proportionate share of the fees and expenses paid by shareholders of the
other investment company, in addition to the fees and expenses Fund shareholders
directly bear in connection with the Fund’s own operations.
Section
12(d)(1)(A) of the 1940 Act generally prohibits a fund from purchasing (1) more
than 3% of the total outstanding voting stock of another fund; (2) securities of
another fund having an aggregate value in excess of 5% of the value of the
acquiring fund; and (3) securities of the other fund and all other funds having
an aggregate value in excess of 10% of the value of the total assets of the
acquiring fund. There are some exceptions, however, to these
limitations pursuant to various rules promulgated by the SEC.
Exchange-Traded
Funds. ETFs are open-end investment companies whose shares are
listed on a national securities exchange. An ETF is similar to a
traditional mutual fund, but trades at different prices during the day on a
security exchange like a stock. Similar to investments in other
investment companies discussed above, the Fund’s investments in ETFs will
involve duplication of advisory fees and other expenses since the Fund will be
investing in another investment company. In addition, the Fund’s
investment in ETFs is also subject to its limitations on investments in
investment companies discussed above. To the extent the Fund invests
in ETFs which focus on a particular market segment or industry, the Fund will
also be subject to the risks associated with investing in those sectors or
industries. The shares of the ETFs in which the Fund will invest will
be listed on a national securities exchange and the Fund will purchase or sell
these shares on the secondary market at its current market price, which may be
more or less than its net asset value (“NAV”) per share.
As a
purchaser of ETF shares on the secondary market, the Fund will be subject to the
market risk associated with owning any security whose value is based on market
price. ETF shares historically have tended to trade at or near their
NAV, but there is no guarantee that they will continue to do
so. Unlike traditional mutual funds, shares of an ETF may be
purchased and redeemed directly from the ETFs only in large blocks (typically
50,000 shares or more) and only through participating organizations that have
entered into contractual agreements with the ETF. The Fund does not
expect to enter into such agreements and therefore will not be able to purchase
and redeem its ETF shares directly from the ETF.
Short-Term,
Temporary, and Cash Investments
When the
Advisor believes market, economic or political conditions are unfavorable for
investors, the Advisor may invest up to 100% of the Fund’s net assets in a
temporary defensive manner or hold a substantial portion of its net assets in
cash, cash equivalents or other short-term investments. Unfavorable
market or economic conditions may include excessive volatility or a prolonged
general decline in the securities markets, or the U.S.
economy. Temporary defensive investments generally may include U.S.
Government securities, certificates of deposit, high-grade commercial paper,
repurchase agreements, money market mutual funds shares and other money market
equivalents. The Advisor also may invest in these types of securities
or hold cash while looking for suitable investment opportunities or to maintain
liquidity. The Fund may invest in any of the following securities and
instruments:
Money Market Mutual
Funds. The Fund may invest in money market mutual funds in
connection with its management of daily cash positions or as a temporary
defensive measure. Generally, money market mutual funds seek to earn
income consistent with the preservation of capital and maintenance of
liquidity. It primarily invests in high quality money market
obligations, including securities issued or guaranteed by the U.S. Government or
its agencies and instrumentalities, bank obligations and high-grade corporate
instruments. These investments generally mature within 397 days from
the date of purchase. An investment in a money market mutual fund is
not a bank deposit and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any government agency. The Fund’s
investments in money market mutual funds may be used for cash management
purposes and to maintain liquidity in order to satisfy redemption requests or
pay unanticipated expenses.
Your cost
of investing in the Fund will generally be higher than the cost of investing
directly in the underlying money market mutual fund shares. You will
indirectly bear fees and expenses charged by the underlying money market mutual
funds in addition to the Fund’s direct fees and
expenses. Furthermore, the use of this strategy could affect the
timing, amount and character of distributions to you and therefore may increase
the amount of taxes payable by you.
Bank Certificates of Deposit,
Bankers’ Acceptances and Time Deposits. The Fund may acquire
bank certificates of deposit, bankers’ acceptances and time
deposits. Certificates of deposit are negotiable certificates issued
against monies deposited in a commercial bank for a definite period of time and
earning a specified return. Bankers’ acceptances are negotiable
drafts or bills of exchange, normally drawn by an importer or exporter to pay
for specific merchandise, which are “accepted” by a bank, meaning in effect that
the bank unconditionally agrees to pay the face value of the instrument on
maturity. Certificates of deposit and bankers’ acceptances acquired
by the Fund will be dollar-denominated obligations of domestic or foreign banks
or financial institutions which at the time of purchase have capital, surplus
and undivided profits in excess of $100 million (including assets of both
domestic and foreign branches), based on latest published reports, or less than
$100 million if the principal amount of such bank obligations are fully insured
by the U.S. Government. If the Fund holds instruments of foreign
banks or financial institutions, they may be subject to additional investment
risks that are different in some respects from those incurred by a fund that
invests only in debt obligations of U.S. domestic issuers. Such risks
include future political and economic developments, the possible imposition of
withholding taxes by the particular country in which the issuer is located on
interest income payable on the securities, the possible seizure or
nationalization of foreign deposits, the possible establishment of exchange
controls, or the adoption of other foreign governmental restrictions which might
adversely affect the payment of principal and interest on these
securities.
Domestic
banks and foreign banks are subject to different governmental regulations with
respect to the amount and types of loans that may be made and interest rates
that may be charged. In addition, the profitability of the banking industry
depends largely upon the availability and cost of funds for the purpose of
financing lending operations under prevailing money market conditions. General
economic conditions as well as exposure to credit losses arising from possible
financial difficulties of borrowers play an important part in the operations of
the banking industry.
As a
result of federal and state laws and regulations, domestic banks are, among
other things, required to maintain specified levels of reserves, limited in the
amount which they can loan to a single borrower, and subject to other
regulations designed to promote financial soundness. However, such
laws and regulations do not necessarily apply to foreign bank obligations that
the Fund may acquire.
In
addition to purchasing certificates of deposit and bankers’ acceptances, to the
extent permitted under its investment objectives and policies stated above and
in the Prospectus, the Fund may make interest-bearing time or other
interest-bearing deposits in commercial or savings banks. Time
deposits are non-negotiable deposits maintained at a banking institution for a
specified period of time at a specified interest rate.
Savings Association
Obligations. The Fund may invest in certificates of deposit
(interest-bearing time deposits) issued by savings banks or savings and loan
associations that have capital, surplus and undivided profits in excess of $100
million, based on latest published reports, or less than $100 million if the
principal amount of such obligations is fully insured by the U.S.
Government.
Commercial Paper, Short-Term Notes
and Other Corporate Obligations. The Fund may invest a portion
of its assets in commercial paper and short-term notes. Commercial
paper consists of unsecured promissory notes issued by
corporations. Issues of commercial paper and short-term notes will
normally have maturities of less than nine months and fixed rates of return,
although such instruments may have maturities of up to one year.
Commercial
paper and short-term notes will consist of issues rated at the time of purchase
“A-2” or higher by Standard & Poor’s Ratings Group (“S&P”), “Prime-1” or
“Prime-2” by Moody’s Investors Service, Inc. (“Moody’s”), or similarly rated by
another nationally recognized statistical rating organization or, if unrated,
will be determined by the Advisor to be of comparable quality. These
rating symbols are described in the Appendix.
Corporate
obligations include bonds and notes issued by corporations to finance
longer-term credit needs than supported by commercial paper. While
such obligations generally have maturities of ten years or more, the Fund may
purchase corporate obligations which have remaining maturities of one year or
less from the date of purchase and which are rated “AA” or higher by S&P or
“Aa” or higher by Moody’s.
Illiquid
Securities
The
Fund may not invest more than 15% of the value of its net assets in securities
that are illiquid. The Advisor will monitor the amount of illiquid
securities in the Fund’s portfolio, under the supervision of the Board, to
ensure compliance with this investment restriction.
Historically,
illiquid securities have included securities subject to contractual or legal
restrictions on resale because they have not been registered under the
Securities Act of 1933, as amended (the “Securities Act”), securities which are
otherwise not readily marketable and repurchase agreements having a maturity of
longer than seven days. Mutual funds do not typically hold a
significant amount of these 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 the Fund might be unable to sell
illiquid securities promptly or at reasonable prices and might thereby
experience difficulty satisfying redemption requests within seven
days.
Restricted
Securities
The
Fund may invest in securities that are subject to restrictions on resale because
they have not been registered under the Securities Act. These
securities are sometimes referred to as private placements. Although
securities which may be resold only to “qualified institutional buyers” in
accordance with the provisions of Rule 144A under the Securities Act are
technically considered “restricted securities,” the Fund may purchase Rule 144A
securities without regard to the limitation on investments in illiquid
securities described above in the “Illiquid Securities” section, provided that a
determination is made that such securities have a readily available trading
market. The Fund may also purchase certain commercial paper issued in
reliance on the exemption from regulations in Section 4(2) of the Securities Act
(“4(2) Paper”). The Advisor will determine the liquidity of Rule 144A
securities and 4(2) Paper under the supervision of the Board.
Limitations
on the resale of restricted securities may have an adverse effect on the
marketability of portfolio securities and the Fund might be unable to dispose of
restricted securities promptly or at reasonable prices and might thereby
experience difficulty satisfying redemption requirements. The 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.
Options
The Fund
may write call options on stocks and stock indices if the calls are “covered”
throughout the life of the option. A call is “covered” if the Fund
owns the optioned securities. When the Fund writes a call, they
receive a premium and give the purchaser the right to buy the underlying
security at any time during the call period at a fixed exercise price regardless
of market price changes during the call period. If the call is
exercised, the Fund will forgo any gain from an increase in the market price of
the underlying security over the exercise price.
The Fund
may purchase a call on securities to effect a “closing purchase transaction,”
which is the purchase of a call covering the same underlying security and having
the same exercise price and expiration date as a call previously written by the
Fund on which it wishes to terminate its obligation. If the Fund is
unable to effect a closing purchase transaction, it will not be able to sell the
underlying security until the call previously written by the Fund expires (or
until the call is exercised and the Fund delivers the underlying
security).
The Fund
also may write and purchase put options (“puts”). When the Fund
writes a put, it receives a premium and gives the purchaser of the put the right
to sell the underlying security to the Fund at the exercise price at any time
during the option period. When the Fund purchases a put, it pays a
premium in return for the right to sell the underlying security at the exercise
price at any time during the option period. If any put is not
exercised or sold, it will become worthless on its expiration date.
The
Fund’s option positions may be closed out only on an exchange which provides a
secondary market for options of the same series, but there can be no assurance
that a liquid secondary market will exist at a given time for any particular
option.
In the
event of a shortage of the underlying securities deliverable on exercise of an
option, the Options Clearing Corporation (“OCC”) has the authority to permit
other, generally comparable securities to be delivered in fulfillment of option
exercise obligations. If the OCC exercises its discretionary
authority to allow such other securities to be delivered, it may also adjust the
exercise prices of the affected options by setting different prices at which
otherwise ineligible securities may be delivered. As an alternative
to permitting such substitute deliveries, the OCC may impose special exercise
settlement procedures.
Purchasing Put and Call
Options - When the Fund purchases a put option, it buys the right to sell
the instrument underlying the option at a fixed strike price. In
return for this right, the Fund pays the current market price for the option
(known as the “option premium”). The Fund may purchase put options to
offset or hedge against a decline in the market value of its securities
(“protective puts”) or to benefit from a decline in the price of securities that
it does not own. The Fund would ordinarily realize a gain if, during
the option period, the value of the underlying securities decreased below the
exercise price sufficiently to cover the premium and transaction
costs. However, if the price of the underlying instrument does not
fall enough to offset the cost of purchasing the option, a put buyer would lose
the premium and related transaction costs.
Call
options are similar to put options, except that the Fund obtains the right to
purchase, rather than sell, the underlying instrument at the option’s strike
price. The Fund would normally purchase call options in anticipation
of an increase in the market value of securities it owns or wants to
buy. The Fund would ordinarily realize a gain if, during the option
period, the value of the underlying instrument exceeded the exercise price plus
the premium paid and related transaction costs. Otherwise, the Fund
would realize either no gain or a loss on the purchase of the call
option.
The
purchaser of an option may terminate its position by:
|
·
|
Allowing
it to expire and losing its entire
premium;
|
|
·
|
Exercising
the option and either selling (in the case of a put option) or buying (in
the case of a call option) the underlying instrument at the strike price;
or
|
|
·
|
Closing
it out in the secondary market at its current
price.
|
Selling (Writing) Put and Call
Options - When the Fund writes a call option it assumes an obligation to
sell specified securities to the holder of the option at a specified price if
the option is exercised at any time before the expiration
date. Similarly, when the Fund writes a put option it assumes an
obligation to purchase specified securities from the option holder at a
specified price if the option is exercised at any time before the expiration
date. The Fund may terminate its position in an exchange-traded put
option before exercise by buying an option identical to the one it has
written. Similarly, it may cancel an over-the-counter option by
entering into an offsetting transaction with the counter-party to the
option.
The Fund
may try to hedge against an increase in the value of securities it would like to
acquire by writing a put option on those securities. If security
prices rise, the Fund would expect the put option to expire and the premium
it received to offset the increase in the security’s value. If
security prices remain the same over time, the Fund would hope to profit by
closing out the put option at a lower price. If security prices fall,
the Fund may lose an amount of money equal to the difference between the value
of the security and the premium it received. Writing covered put
options may deprive the Fund of the opportunity to profit from a decrease in the
market price of the securities it would like to acquire.
The
characteristics of writing call options are similar to those of writing put
options, except that call writers expect to profit if prices remain the same or
fall. The Fund could try to hedge against a decline in the value of
securities it already owns by writing a call option. If the price of
that security falls as expected, the Fund would expect the option to expire and
the premium it received to offset the decline of the security’s
value. However, the Fund must be prepared to deliver the underlying
instrument in return for the strike price, which may deprive it of the
opportunity to profit from an increase in the market price of the securities it
holds.
The Fund
is permitted only to write covered options. The Fund can cover a call
option by owning:
|
·
|
The
underlying security (or securities convertible into the underlying
security without additional consideration), index, interest rate, foreign
currency or futures contract;
|
|
·
|
A
call option on the same security or index with the same or lesser exercise
price;
|
|
·
|
A
call option on the same security or index with a greater exercise price
and segregating cash or liquid securities in an amount equal to the
difference between the exercise
prices;
|
|
·
|
Cash
or liquid securities equal to at least the market value of the optioned
securities, interest rate, foreign currency or futures contract;
or
|
|
·
|
In
the case of an index, the fund of securities that corresponds to the
index.
|
The Fund
can cover a put option by:
|
·
|
Entering
into a short position in the underlying
security;
|
|
·
|
Purchasing
a put option on the same security, index, interest rate, foreign currency
or futures contract with the same or greater exercise
price;
|
|
·
|
Purchasing
a put option on the same security, index, interest rate, foreign currency
or futures contract with a lesser exercise price and segregating cash or
liquid securities in an amount equal to the difference between the
exercise prices; or
|
|
·
|
Maintaining
the entire exercise price in liquid
securities.
|
Options on Securities Indices
- Options on securities indices are similar to options on securities, except
that the exercise of securities index options requires cash settlement payments
and does not involve the actual purchase or sale of securities. In
addition, securities index options are designed to reflect price fluctuations in
a group of securities or segment of the securities market, rather than price
fluctuations in a single security.
Options on Futures - An
option on a futures contract provides the holder with the right to buy a futures
contract (in the case of a call option) or sell a futures contract (in the case
of a put option) at a fixed time and price. Upon exercise of the
option by the holder, the contract market clearing house establishes a
corresponding short position for the writer of the option (in the case of a call
option) or a corresponding long position (in the case of a put
option). If the option is exercised, the parties will be subject to
the futures contracts. In addition, the writer of an option on a
futures contract is subject to initial and variation margin requirements on the
option position. Options on futures contracts are traded on the same
contract market as the underlying futures contract.
The buyer
or seller of an option on a futures contract may terminate the option early by
purchasing or selling an option of the same series (i.e., the same exercise price
and expiration date) as the option previously purchased or sold. The
difference between the premiums paid and received represents the trader's profit
or loss on the transaction.
The Fund
may purchase put and call options on futures contracts instead of selling or
buying futures contracts. The Fund may buy a put option on a futures
contract for the same reason it would sell a futures contract. It
also may purchase such put options in order to hedge a long position in the
underlying futures contract. The Fund may buy call options on futures
contracts for the same purpose as the actual purchase of the futures contracts,
such as in anticipation of favorable market conditions.
The Fund
may write a call option on a futures contract to hedge against a decline in the
prices of the instrument underlying the futures contracts. If the
price of the futures contract at expiration were below the exercise price, the
Fund would retain the option premium, which would offset, in part, any decline
in the value of its assets.
The
writing of a put option on a futures contract is similar to the purchase of the
futures contracts, except that, if the market price declines, the Fund would pay
more than the market price for the underlying instrument. The premium
received on the sale of the put option, less any transaction costs, would reduce
the net cost to the Fund.
Combined Positions - The Fund
may purchase and write options in combination with each other, or in combination
with futures or forward contracts, to adjust the risk and return characteristics
of the overall position. For example, the Fund could construct a combined
position whose risk and return characteristics are similar to selling a futures
contract by purchasing a put option and writing a call option on the same
underlying instrument. Alternatively, the Fund could write a call
option at one strike price and buy a call option at a lower price to reduce the
risk of the written call option in the event of a substantial price
increase. Because combined options positions involve multiple trades,
they result in higher transaction costs and may be more difficult to open and
close out.
Caps and Floors - The Fund
may enter cap and floor agreements. Caps and floors have an effect similar to
buying or writing options. In a typical cap or floor agreement, one
party agrees to make payments only under specified circumstances, usually in
return for payment of a fee by the other party. For example, the
buyer of an interest rate cap obtains the right to receive payments to the
extent that a specified interest rate exceeds an agreed-upon level. The seller
of an interest rate floor is obligated to make payments to the extent that a
specified interest rate falls below an agreed-upon level. An interest
rate collar combines elements of buying a cap and selling a floor.
Risks of Derivatives - While
transactions in derivatives may reduce certain risks, these transactions
themselves entail certain other risks. For example, unanticipated
changes in interest rates, securities prices or currency exchange rates may
result in a poorer overall performance of the Fund than if it had not entered
into any derivatives transactions. Derivatives may magnify the Fund’s
gains or losses, causing it to make or lose substantially more than it
invested.
When used
for hedging purposes, increases in the value of the securities the Fund holds or
intends to acquire should offset any losses incurred with a
derivative. Purchasing derivatives for purposes other than hedging
could expose the Fund to greater risks.
Derivative Management Risk -
If the Advisor incorrectly predicts stock market and interest rate trends, the
Fund may lose money by investing in derivatives. For example, if the
Fund were to write a call option based on its Advisor’s expectation that the
price of the underlying security would fall, but the price were to rise instead,
the Fund could be required to sell the security upon exercise at a price below
the current market price. Similarly, if the Fund were to write a put
option based on the Advisor’s expectation that the price of the underlying
security would rise, but the price were to fall instead, the Fund could be
required to purchase the security upon exercise at a price higher than the
current market price.
Borrowing
The Fund
is authorized to borrow money from time to time for temporary, extraordinary or
emergency purposes or for clearance of transactions in amounts not to exceed at
any time 33 1/3% of the value of its total assets at the time of such
borrowings. The use of borrowing by the Fund involves special risk
considerations that may not be associated with other funds having similar
objectives and policies. Since substantially all of the Fund’s assets
fluctuate in value, while the interest obligation resulting from a borrowing
will be fixed by the terms of the Fund’s agreement with its lender, the net
asset value per share of the Fund will tend to increase more when its portfolio
securities increase in value and to decrease more when its portfolio assets
decrease in value than would otherwise be the case if the Fund did not
borrow. In addition, interest costs on borrowings may fluctuate with
changing market rates of interest and may partially offset or exceed the return
earned on borrowed funds. Under adverse market conditions, the Fund
might have to sell portfolio securities to meet interest or principal payments
at a time when fundamental investment considerations would not favor such
sales.
INVESTMENT
RESTRICTIONS
The Trust
(on behalf of the Fund) has adopted the following restrictions as fundamental
policies, which may not be changed without the affirmative vote of the holders
of a “majority of the Fund’s outstanding voting securities” as defined in the
1940 Act. Under the 1940 Act, the “vote of the holders of a majority
of the outstanding voting securities” means the vote of the holders of the
lesser of (i) 67% of the shares of the Fund represented at a meeting at
which the holders of more than 50% of its outstanding shares are represented or
(ii) more than 50% of the outstanding shares of the Fund.
As a
matter of fundamental policy, the Fund is diversified (see page
3). The Fund’s investment objective is also
fundamental.
In
addition, the Fund may not:
|
1.
|
Issue
senior securities, borrow money or pledge its assets, except through
reverse repurchase agreements or as permitted under the 1940 Act and the
rules and regulations promulgated
thereunder;
|
|
2.
|
Act
as underwriter (except to the extent the Fund may be deemed to be an
underwriter in connection with the sale of securities in its investment
portfolio);
|
|
3.
|
Purchase
or sell real estate unless acquired as a result of ownership of securities
or other instruments (although the Fund may purchase and sell securities
which are backed by real estate and securities of companies which invest
or deal in real estate);
|
|
4.
|
Purchase
or sell physical commodities, unless acquired as a result of ownership of
securities or other instruments and provided that this restriction does
not prevent the Fund from engaging in transactions involving currencies
and futures contracts and options thereon or investing in securities or
other instruments that are backed by physical
commodities;
|
|
5.
|
Make
loans (except as permitted by the 1940 Act and the rules and regulations
promulgated thereunder); or
|
|
6.
|
Purchase
the securities of issuers conducting their principal business activity in
the same industry if, immediately after the purchase and as a result
thereof, the value of the Fund’s investments in that industry would equal
or exceed 25% of the current value of the Fund’s total assets, provided
that this restriction does not limit the Fund’s investments in
(i) securities issued or guaranteed by the U.S. Government, its
agencies or instrumentalities, (ii) securities of other investment
companies, or (iii) repurchase agreements, subject to the limitations
of the 1940 Act.
|
|
7.
|
Pledge,
hypothecate, mortgage or otherwise encumber its assets, except to secure
permitted borrowings. Initial and variation margin for futures
and options contracts will not be deemed to be a pledge of the Fund’s
assets.
|
The Fund
observes the following restrictions as a matter of operating but not fundamental
policy. Except as noted below, the Fund may:
|
1.
|
Not
make investments for the purpose of exercising control or management;
or
|
|
2.
|
Not
invest more than 15% of the Fund’s net assets in illiquid
securities.
|
If a
percentage or rating restriction on investment or use of assets set forth herein
or in the Prospectus is adhered to at the time a transaction is effected, later
changes in percentage resulting from any cause other than actions by the Fund
will not be considered a violation, except that there is an ongoing asset
coverage requirement in the case of borrowings. If the value of the
Fund’s holdings of illiquid securities at any time exceeds the percentage
limitation applicable at the time of acquisition due to subsequent fluctuations
in value or other reasons, the Trust’s Board will consider what actions, if any,
are appropriate to maintain adequate liquidity.
Although
the Fund generally will not invest for short-term trading purposes, portfolio
securities may be sold without regard to the length of time they have been held
when, in the opinion of the Advisor, investment considerations warrant such
action. Portfolio turnover rate is calculated by dividing
(1) the lesser of purchases or sales of portfolio securities for the fiscal
year by (2) the monthly average of the value of portfolio securities owned
during the fiscal year. A 100% turnover rate would occur if all the
securities in the Fund’s portfolio, with the exception of securities whose
maturities at the time of acquisition were one year or less, were sold and
either repurchased or replaced within one year. A high rate of
portfolio turnover (100% or more) generally leads to higher transaction costs
and may result in a greater number of taxable transactions at higher ordinary
income tax rates.
For the
fiscal period indicated below, the Fund’s portfolio turnover rate was as
follows:
|
For
Fiscal Period Ended
June
30, 2009*
|
|
|
Davidson
Multi-Cap Core Fund
|
22.58%
|
* From
August 11, 2008 – June 30, 2009
The
overall management of the business and affairs of the Trust is vested with its
Board, all of whom are independent of the Adviser. The Board approves
all significant agreements between the Trust and persons or companies furnishing
services to it, including the agreements with the Adviser, Administrator,
Custodian and Transfer Agent, each as defined below. The day-to-day
operations of the Trust are delegated to its officers, subject to the Fund’s
investment objective, strategies, and policies and to general supervision by the
Board.
The
Trustees and officers of the Trust, their ages, birth dates, positions with the
Trust, term of office with the Trust and length of time served, business
addresses, principal occupations during the past five years and other
directorships held are set forth in the table below. Unless noted
otherwise, each person has held the position listed for a minimum of five
years.
Independent Trustees(1)
|
Name,
Address
and
Age
|
Position
Held
with
the Trust
|
Term
of Office and
Length
of Time Served
|
Principal
Occupation
During
Past Five Years
|
Number
of Portfolios
in
Fund Complex
Overseen by Trustee(2)
|
Other
Directorships
Held
|
|
Michael
D. LeRoy
(age
62, dob 8/14/1947)
615
E. Michigan Street
Milwaukee,
WI 53202
|
Trustee
|
Indefinite
term since
December
2008.
|
President,
Crown Capital Advisors, LLC (financial consulting firm) (2000 to
present).
|
1
|
Director,
Wedbush Bank.
|
|
Name,
Address
and
Age
|
Position
Held
with
the Trust
|
Term
of Office and
Length
of Time Served
|
Principal
Occupation
During
Past Five Years
|
Number
of Portfolios
in
Fund Complex
Overseen by Trustee(2)
|
Other
Directorships
Held
|
|
Donald
E. O’Connor
(age
73, dob 6/18/1936)
615
E. Michigan Street
Milwaukee,
WI 53202
|
Trustee
|
Indefinite
term since
February
1997.
|
Retired;
former Financial Consultant and former Executive Vice President and Chief
Operating Officer of ICI Mutual Insurance Company (until January
1997).
|
1
|
Trustee,
The Forward Funds (35 portfolios).
|
|
George
J. Rebhan
(age
75, dob 7/10/1934)
615
E. Michigan Street
Milwaukee,
WI 53202
|
Trustee
|
Indefinite
term since
May
2002.
|
Retired;
formerly President, Hotchkis and Wiley Funds (mutual funds) (1985 to
1993).
|
1
|
None.
|
|
George
T. Wofford
(age
70, dob 10/8/1939)
615
E. Michigan Street
Milwaukee,
WI 53202
|
Trustee
|
Indefinite
term since
February
1997.
|
Retired;
formerly Senior Vice President, Federal Home Loan Bank of San
Francisco.
|
1
|
None.
|
Interested
Trustee
|
Name,
Address
and
Age
|
Position
Held
with
the Trust
|
Term
of Office and
Length
of Time Served
|
Principal
Occupation
During
Past Five Years
|
Number
of Portfolios
in
Fund Complex
Overseen by Trustee(2)
|
Other
Directorships
Held
|
|
Joe
D. Redwine(3)
(age
62, dob 7/9/1947)
615
E. Michigan Street
Milwaukee,
WI 53202
|
Interested
Trustee
|
Indefinite
term since September 2008.
|
President,
CEO, U.S. Bancorp Fund Services, LLC (May 1991 to
present).
|
1
|
None.
|
Officers
|
Name,
Address
and
Age
|
Position
Held
with
the Trust
|
Term
of Office and
Length
of Time Served
|
Principal
Occupation
During
Past Five Years
|
|
Joe
D. Redwine
(age
62, dob 7/9/1947)
615
E. Michigan Street
Milwaukee,
WI 53202
|
Chairman
and Chief Executive Officer
|
Indefinite
term since September 2007.
|
President,
CEO, U.S. Bancorp Fund Services, LLC (May 1991 to
present).
|
|
Douglas
G. Hess
(age
42, dob 7/19/1967)
615
E. Michigan Street
Milwaukee,
WI 53202
|
President
and Principal Executive Officer
|
Indefinite
term since June 2003.
|
Vice
President, Compliance and Administration, U.S. Bancorp Fund Services, LLC
(March 1997 to present).
|
|
Cheryl
L. King
(age
48, dob 8/27/1961)
615
E. Michigan Street
Milwaukee,
WI 53202
|
Treasurer
and Principal Financial Officer
|
Indefinite
term since December 2007.
|
Assistant
Vice President, Compliance and Administration, U.S. Bancorp Fund Services,
LLC (October 1998 to present).
|
|
Michael
L. Ceccato
(age
52, dob 9/11/1957)
615
E. Michigan Street
Milwaukee,
WI 53202
|
Vice
President, Chief Compliance Officer and AML Officer
|
Indefinite
term since September 2009.
|
Vice
President, U.S. Bancorp Fund Services, LLC (February 2008 to present);
General Counsel/Controller, Steinhafels, Inc. (September 1995 to February
2008)
|
|
Jeanine
M. Bajczyk, Esq.
(age
44, dob 4/16/1965)
615
E. Michigan Street
Milwaukee,
WI 53202
|
Secretary
|
Indefinite
term since June 2007.
|
Vice
President and Counsel, U.S. Bancorp Fund Services, LLC (May 2006 to
present); Senior Counsel, Wells Fargo Funds Management, LLC (May 2005 to
May 2006); Senior Counsel, Strong Financial Corporation (January 2002 to
April
2005).
|
|
(1)
|
The
Trustees of the Trust who are not “interested persons” of the Trust as
defined under the 1940 Act (“Independent
Trustees”).
|
|
(2)
|
The
Trust is comprised of numerous portfolios managed by unaffiliated
investment advisors. The term “Fund Complex” applies only to
the Fund. The Fund does not hold itself out as related to any
other series within the Trust for investment purposes, nor does it share
the same investment adviser with any other
series.
|
|
(3)
|
Mr.
Redwine is an “interested person” of the Trust as defined by the 1940
Act. Mr. Redwine is an interested Trustee of the Trust by
virtue of the fact that he is an interested person of Quasar Distributors,
LLC who acts as principal underwriter to the series of the
Trust.
|
Compensation
The
Independent Trustees receive an annual trustee fee of $44,000 per year with no
additional fee for special meetings. The Trustees also receive
reimbursement from the Trust for expenses incurred in connection with attendance
at regular meetings. This amount is allocated among each of the
current series of the Trust. The Trust has no pension or retirement
plan. No other entity affiliated with the Trust pays any compensation
to the Trustees.
|
Aggregate
Compensation
from the Fund(1)
|
Pension
or Retirement Benefits Accrued as Part of Fund
Expenses
|
Estimated
Annual Benefits Upon Retirement
|
Total Compensation from Fund
Complex Paid to Trustees(2)
|
|
|
Name
of Independent Trustee
|
||||
|
Walter
E. Auch(3)
|
$635
|
None
|
None
|
$635
|
|
James
Clayburn LaForce(3)
|
$635
|
None
|
None
|
$635
|
|
Michael
D. LeRoy(4)
|
$993
|
None
|
None
|
$993
|
|
Donald
E. O’Connor
|
$1,306
|
None
|
None
|
$1,306
|
|
George
J. Rebhan
|
$1,306
|
None
|
None
|
$1,306
|
|
George
T. Wofford
|
$1,306
|
None
|
None
|
$1,306
|
|
Name
of Interested Trustee
|
||||
|
Joe
D. Redwine(5)
|
None
|
None
|
None
|
None
|
|
(1)
|
For
the Fund’s fiscal period ended June 30,
2009.
|
|
(2)
|
There
are currently numerous series comprising the Trust. The term
“Fund Complex” refers only to the Fund and not to any other series of the
Trust. For the Fund’s fiscal period ended June 30, 2009,
aggregate Independent Trustees’ fees and expenses for the Trust were
$209,000.
|
|
(3)
|
Messrs.
Auch and LaForce retired from the Trust effective December 31,
2008.
|
|
(4)
|
Effective
December 1, 2008, Michael D. LeRoy was elected by a vote of shareholders
of the Trust to the position of Independent
Trustee.
|
|
(5)
|
Effective
September 1, 2008, Joe D. Redwine was elected by a vote of shareholders of
the Trust to the position of Interested
Trustee.
|
Board
Committees
The
Trust has four standing committees: the Audit Committee, the Qualified Legal
Compliance Committee (“QLCC”), the Nominating Committee, and the Valuation
Committee.
The
Audit Committee is comprised of all of the Independent Trustees. It
does not include any interested Trustees. The Audit Committee
typically meets once per year with respect to the various series of the
Trust. The function of the Audit Committee, with respect to each
series of the Trust, is to review the scope and results of the audit and any
matters bearing on the audit or a Fund’s financial statements and to ensure the
integrity of the Fund’s pricing and financial reporting. During the
Fund’s fiscal period ended June 30, 2009, the Audit Committee did not meet with
respect to the Fund.
The
Audit Committee also serves as the QLCC for the Trust for the purpose of
compliance with Rules 205.2(k) and 205.3(c) of the Code of Federal Regulations,
regarding alternative reporting procedures for attorneys retained or employed by
an issuer who appear and practice before the Securities and Exchange Commission
on behalf of the issuer (the “issuer attorneys”). An issuer attorney
who becomes aware of evidence of a material violation by the Trust, or by any
officer, director, employee, or agent of the Trust, may report evidence of such
material violation to the QLCC as an alternative to the reporting requirements
of Rule 205.3(b) (which requires reporting to the chief legal officer and
potentially “up the ladder” to other entities). The QLCC meets as
needed. During the Fund’s fiscal period ended June 30, 2009, the QLCC
did not meet with respect to the Fund.
The
Nominating Committee is responsible for seeking and reviewing candidates for
consideration as nominees for Trustees as is considered necessary from time to
time and meets only as necessary. During the Fund’s fiscal period
ended June 30, 2009, the Nominating Committee did not meet with respect to the
Fund. The Nominating Committee is currently comprised of Messrs.
LeRoy, O’Connor, Rebhan and Wofford.
The
Nominating Committee will consider nominees recommended by shareholders for
vacancies on the Board. Recommendations for consideration by the
Nominating Committee should be sent to the President of the Trust in writing
together with the appropriate biographical information concerning each such
proposed Nominee, and such recommendation must comply with the notice provisions
set forth in the Trust’s Amended and Restated By-Laws. In general, to
comply with such procedures, such nominations, together with all required
biographical information, must be delivered to and received by the President of
the Trust at the principal executive office of the Trust not later than 60 days
prior to the shareholder meeting at which any such nominee would be voted
on.
The
Board has delegated day-to-day valuation issues to a Valuation Committee that is
comprised of one or more Trustees and representatives from the Administrator’s
staff. The function of the Valuation Committee is to value securities
held by any series of the Trust for which current and reliable market quotations
are not readily available. Such securities are valued at their
respective fair values as determined in good faith by the Valuation Committee
and the actions of the Valuation Committee are subsequently reviewed and
ratified by the Board of Trustees. The Valuation Committee meets as
needed. During the Fund’s fiscal period ended June 30, 2009, the
Valuation Committee did not meet with respect to the Fund.
Trustee
Ownership of Fund Shares and Other Interests
As of
December 31, 2008, neither the Independent Trustees nor members of their
immediate family, own securities beneficially or of record in the Adviser, the
Distributor, as defined below, or any affiliate of the Adviser or
Distributor. Accordingly, during the two most recently completed
calendar years, neither the Independent Trustees nor members of their immediate
family, have direct or indirect interest, the value of which exceeds $120,000,
in the Adviser, the Distributor or any of their affiliates. In
addition, during the two most recently completed calendar years, neither the
Independent Trustees nor members of their immediate families have conducted any
transactions (or series of transactions) in which the amount involved exceeds
$120,000 and to which the Adviser, the Distributor or any affiliate thereof was
a party.
The
following table states the dollar range of equity securities of the Fund
beneficially owned by the Trustees as of December 31, 2008:
|
Name
of Trustee
|
Dollar
Range of Equity Securities in the Fund (None, $1-$10,000, $10,001-$50,000,
$50,001-$100,000, Over $100,000)
|
Aggregate
Dollar Range of Equity Securities in all Registered Investment Companies
Overseen by Trustee in Family of Investment
Companies
|
|
Walter
E. Auch, Independent Trustee(1)
|
None
|
None
|
|
James
Clayburn LaForce, Independent Trustee(1)
|
None
|
None
|
|
Michael
D. LeRoy, Independent Trustee(2)
|
None
|
None
|
|
Donald
E. O’Connor, Independent Trustee
|
None
|
None
|
|
George
J. Rebhan, Independent Trustee
|
None
|
None
|
|
George
T. Wofford III, Independent Trustee
|
None
|
None
|
|
Joe
D. Redwine, Interested Trustee(3)
|
None
|
None
|
|
(1)
|
Messrs.
Auch and La Force retired from the Trust effective December 31,
2008.
|
|
(2)
|
Effective
December 1, 2008, Michael D. LeRoy was elected by a vote of shareholders
of the Trust to the position of Independent
Trustee.
|
|
(3)
|
Effective
September 1, 2008, Joe D. Redwine was elected by a vote of shareholders of
the Trust to the position of Interested
Trustee.
|
Control
Persons, Principal Shareholders, and Management Ownership
A
principal shareholder is any person who owns of record or beneficially 5% or
more of the outstanding shares of the Fund. A control person is one
who owns beneficially or through controlled companies more than 25% of the
voting securities of a company or acknowledges the existence of
control. Shareholders with a controlling interest could affect the
outcome of voting or the direction of management of the Fund. As of
September 30, 2009, the following shareholders were considered to be either a
control person or principal shareholder of the Fund:
|
Name
and Address
|
Parent
Company
|
Jurisdiction
|
%
Ownership
|
Type
of Ownership
|
|
[___]
|
[___]
|
[___]%
|
[___]
|
|
|
[___]
|
[___]
|
[___]%
|
[___]
|
|
Management Ownership
Information. As of September 30, 2009, the Trustees and
officers of the Trust, as a group, beneficially owned less than 1% of the
outstanding shares of the Fund.
Davidson
Investment Advisors, Inc. acts as investment advisor to the Fund pursuant to an
investment advisory agreement (the “Advisory Agreement”) with the
Trust. The Advisor is 100% owned and controlled by its parent holding
company, Davidson Companies. Davidson Companies is thus a control
person of the Advisor.
In
consideration of the services to be provided by the Advisor pursuant to the
Advisory Agreement, the Advisor is entitled to receive from the Fund an
investment advisory fee computed daily and payable monthly, based on a rate
equal to 0.65% of the Fund’s average daily net assets for each of the
Advisor Class A and Advisor Class C, respectively. For the fiscal period
indicated below, the Fund paid the following management fees to the
Advisor:
|
June
30,
|
Management
Fees
Accrued
|
Management
Fees Waived
|
Management
Fees Recouped
|
Net
Management Fee Paid to Advisor
|
|
2009
|
$32,500
|
$32,500
|
$0
|
$0
|
After its
initial two year term, the Advisory Agreement continues in effect for successive
annual periods so long as such continuation is specifically approved at least
annually by the vote of (1) the Board (or a majority of the outstanding
shares of the Fund), and (2) a majority of the Trustees who are not
interested persons of any party to the Advisory Agreement, in each case, cast in
person at a meeting called for the purpose of voting on such
approval. The Advisory Agreement may be terminated at any time,
without penalty, by either party to the Advisory Agreement upon a 60-day written
notice and is automatically terminated in the event of its “assignment,” as
defined in the 1940 Act.
In
addition to the management fees payable to the Advisor, the Fund is responsible
for its own operating expenses, including: fees and expenses incurred in
connection with the issuance, registration and transfer of its shares; brokerage
and commission expenses; all expenses of transfer, receipt, safekeeping,
servicing and accounting for the cash, securities and other property of the
Trust for the benefit of the Fund including all fees and expenses of its
custodian and accounting services agent; interest charges on any borrowings;
costs and expenses of pricing and calculating its daily NAV per share and of
maintaining its books of account required under the 1940 Act; taxes, if any; a
pro rata portion of expenditures in connection with meetings of the Fund’s
shareholders and the Trust’s Board that are properly payable by the Fund;
salaries and expenses of officers and fees and expenses of members of the Board
or members of any advisory board or committee who are not members of, affiliated
with or interested persons of the Advisor or Administrator; insurance premiums
on property or personnel of the Fund which inure to their benefit, including
liability and fidelity bond insurance; the cost of preparing and printing
reports, proxy statements, prospectuses and the statement of additional
information of the Fund or other communications for distribution to existing
shareholders; legal counsel, auditing and accounting fees; trade association
membership dues (including membership dues in the Investment Company Institute
allocable to the Fund); fees and expenses (including legal fees) of registering
and maintaining registration of its shares for sale under federal and applicable
state and foreign securities laws; all expenses of maintaining shareholder
accounts, including all charges for transfer, shareholder recordkeeping,
dividend disbursing, redemption, and other agents for the benefit of the Fund,
if any; and all other charges and costs of its operation plus any extraordinary
and non-recurring expenses, except as otherwise prescribed in the Advisory
Agreement.
Though
the Fund is responsible for its own operating expenses, the Advisor has
contractually agreed to waive a portion or all of its management fees and/or to
pay Fund operating expenses to the extent necessary to limit the Fund’s
aggregate annual operating expenses (excluding acquired fund fees and expenses,
interest, taxes and extraordinary expenses) to the limit set forth in the
Expense Table of the Prospectus (the “Expense Cap”). Any such waivers
made by the Advisor in its management fees or payment of expenses which are the
Fund’s obligation are subject to recoupment by the Advisor from the Fund, if so
requested by the Advisor, in subsequent fiscal years if the aggregate amount
actually paid by the Fund toward the operating expenses for such fiscal year
(taking into account the recoupment) does not exceed the applicable limitation
on Fund expenses. The Advisor is permitted to recoup only for
management fee reductions and expense payments made in the previous three fiscal
years. Any such recoupment is also contingent upon the Board’s
subsequent review and ratification of the recouped amounts. Such
recoupment may not be paid prior to the Fund’s payment of current ordinary
operating expenses.
The Fund
is managed by Messrs. William B. Whitlow, Jr., CFA and Brian P. Clancy, CFA who
serve as co-portfolio managers of the Fund.
The following provides information
regarding other accounts managed by Mr. Whitlow as of June 30,
2009:
|
Category
of Account
|
Total
Number of Accounts Managed
|
Total
Assets in Accounts Managed
(in
millions)
|
Number
of Accounts for which Advisory Fee is Based on Performance
|
Assets
in Accounts for which Advisory Fee is Based on
Performance
|
|
Other
Registered Investment Companies
|
0
|
$0
|
0
|
$0
|
|
Other
Pooled Investment Vehicles
|
0
|
$0
|
0
|
$0
|
|
Other
Accounts
|
427
|
$161
|
0
|
$0
|
The
following provides information regarding other accounts managed by Mr. Clancy as
of June 30, 2009:
|
Category
of Account
|
Total
Number of Accounts Managed
|
Total
Assets in Accounts Managed
(in
millions)
|
Number
of Accounts for which Advisory Fee is Based on Performance
|
Assets
in Accounts for which Advisory Fee is Based on
Performance
|
|
Other
Registered Investment Companies
|
0
|
$0
|
0
|
$0
|
|
Other
Pooled Investment Vehicles
|
0
|
$0
|
0
|
$0
|
|
Other
Accounts
|
427
|
$161
|
0
|
$0
|
Compensation. The
portfolio managers’ compensation consists of a fixed salary, which is not based
on Fund performance. However, they do receive a bonus based
on the advisory firm’s pre-tax performance – 60% of the portfolio
managers’ yearly eligible bonus is based on the performance of the Advisor’s
investment strategies, of which, 75% is derived from the multi-cap core
investment strategy managed against the Russell 3000®
Index with performance results measured relative to the Lipper Multi-Cap Core
peer group; 40% of the portfolio managers’ yearly eligible bonus is based on the
Advisor’s total overall business results for its full fiscal year. Additionally,
the senior portfolio manager participates in a long-term bonus
plan. This bonus is paid out every three years and is based entirely
on the three-year trailing performance of the Advisor’s multi-cap core
investment strategy compared to the Lipper Multi-Cap Core peer
group. The portfolio managers do not receive deferred
compensation. The Advisor’s parent company may make a profit sharing
contribution to the portfolio managers’ 401(k) plans. That
contribution is based on the profit performance of the parent company as a whole
of which the Advisor is a part. In addition, the portfolio managers
may receive incentive stock options and a profit sharing contribution to the
parent company’s Employee Stock Ownership Program.
Material Conflicts of
Interest. Because the Advisor performs investment management
services for various clients, certain conflicts of interest could
arise. The Advisor’s policy prohibits any allocation of trades in a
manner that the Advisor’s proprietary accounts, affiliated account, or any
particular client(s) or group of clients receive more favorable treatment than
other client accounts, including the Fund. The Advisor employs the
block allocation function of the MOXY portfolio software, and shares are
distributed in a random manner.
As of
June 30, 2009, the portfolio managers owned the following securities in the
Fund:
|
Name
of Portfolio Manager
|
Dollar
Range of Securities in the Fund
(None,
$1-$10,000, $10,001-$50,000, $50,001-$100,000, $100,001 - $500,000,
$500,001 - $1,000,000, Over $1,000,000)
|
|
William
B. Whitlow, Jr., CFA
|
None
|
|
Brian
P. Clancy, CFA
|
None
|
Fund
Administrator, Transfer Agent and Fund Accountant
Pursuant
to an administration agreement (the “Administration Agreement”), U.S. Bancorp
Fund Services, LLC, (“USBFS”) 615 East Michigan Street, Milwaukee, Wisconsin
53202, acts as the Administrator to the Fund. USBFS provides certain
services to the Fund including, among other responsibilities, coordinating the
negotiation of contracts and fees with, and the monitoring of performance and
billing of, the Fund’s independent contractors and agents; preparation for
signature by an officer of the Trust of all documents required to be filed for
compliance by the Trust and the Fund with applicable laws and regulations,
excluding those of the securities laws of various states; arranging for the
computation of performance data, including NAV and yield; responding to
shareholder inquiries; and arranging for the maintenance of books and records of
the Fund, and providing, at its own expense, office facilities, equipment and
personnel necessary to carry out its duties. In this capacity, USBFS
does not have any responsibility or authority for the management of the Fund,
the determination of investment policy, or for any matter pertaining to the
distribution of Fund shares. USBFS also acts as fund
accountant, transfer agent and dividend disbursing agent (the “Transfer Agent”)
under separate agreements. Additionally, the
Administrator provides Chief Compliance Officer services to the Trust under a
separate agreement. The cost for the Chief Compliance Officer
services is allocated to the Fund by the Board.
For
the fiscal period indicated below, the Fund paid the following fees to its
Administrator:
|
Administrator
Fees
Paid
During Fiscal Period Ended June 30,
|
|
|
2009
|
|
|
U.S.
Bancorp Fund Services, LLC
|
$26,547
|
Custodian
Pursuant
to a Custody Agreement between the Trust and U.S. Bank National Association,
located at 1555 North River Center Drive, Suite 302, Milwaukee, Wisconsin 53212
(the “Custodian”), the Custodian serves as the custodian of the Fund’s assets,
holds the Fund’s portfolio securities in safekeeping, and keeps all necessary
records and documents relating to its duties. The Custodian is
compensated with an asset-based fee plus transaction fees and is reimbursed for
out-of-pocket expenses.
The
Custodian and Administrator do not participate in decisions relating to the
purchase and sale of securities by the Fund. The Administrator,
Transfer Agent, Custodian and the Fund’s Distributor (as defined below) are
affiliated entities under the common control of U.S.
Bancorp. The Custodian and its affiliates may participate in
revenue sharing arrangements with the service providers of mutual funds in which
the Fund may invest.
Independent
Registered Pubic Accounting Firm and Legal Counsel
Tait,
Weller & Baker LLP (“Tait”), 1818 Market Street, Suite 2400, Philadelphia,
Pennsylvania 19103, is the independent registered public accounting firm
for the Fund whose services include auditing the Fund’s financial statements and
the performance of related tax services.
Paul,
Hastings, Janofsky & Walker LLP (“Paul Hastings”), 75 East 55th Street, New
York, New York 10022, serves as counsel to the Trust and provides counsel
on legal matters relating to the Fund. Paul Hastings also serves as
independent legal counsel to the Board of Trustees.
Pursuant
to the Advisory Agreement, the Advisor determines which securities are to be
purchased and sold by the Fund and which broker-dealers are eligible to execute
the Fund’s portfolio transactions. Purchases and sales of securities
in the over-the-counter market will generally be executed directly with a
“market-maker” unless, in the opinion of the Advisor, a better price and
execution can otherwise be obtained by using a broker for the
transaction.
Purchases
of portfolio securities for the Fund also may be made directly from issuers or
from underwriters. Where possible, purchase and sale transactions
will be effected through dealers (including banks) which specialize in the types
of securities which the Fund will be holding, unless better executions are
available elsewhere. Dealers and underwriters usually act as
principal for their own accounts. Purchases from underwriters will
include a concession paid by the issuer to the underwriter and purchases from
dealers will include the spread between the bid and the asked
price. If the execution and price offered by more than one dealer or
underwriter are comparable, the order may be allocated to a dealer or
underwriter that has provided research or other services as discussed
below.
In
placing portfolio transactions, the Advisor will seek best
execution. The full range and quality of services available will be
considered in making these determinations, such as the size of the order, the
difficulty of execution, the operational facilities of the firm involved, the
firm’s risk in positioning a block of securities and other
factors. In those instances where it is reasonably determined that
more than one broker-dealer can offer the services needed to obtain the most
favorable price and execution available, consideration may be given to those
broker-dealers which furnish or supply research and statistical information to
the Advisor that it may lawfully and appropriately use in its investment
advisory capacities, as well as provide other services in addition to execution
services. The Advisor considers such information, which is in
addition to and not in lieu of the services required to be performed by it under
its Agreement with the Fund, to be useful in varying degrees, but of
indeterminable value. Portfolio transactions may be placed with
broker-dealers who sell shares of the Fund subject to rules adopted by the
Financial Industry Regulatory Authority, Inc. (“FINRA”) and the
SEC.
While it
is the Fund’s general policy to first seek to obtain the most favorable price
and execution available in selecting a broker-dealer to execute portfolio
transactions for the Fund, in accordance with Section 28(e) under the Securities
and Exchange Act of 1934, when it is determined that more than one broker can
deliver best execution, weight is also given to the ability of a broker-dealer
to furnish brokerage and research services to the Fund or to the Advisor, even
if the specific services are not directly useful to the Fund and may be useful
to the Advisor in advising other clients. In negotiating commissions
with a broker or evaluating the spread to be paid to a dealer, the Fund may
therefore pay a higher commission or spread than would be the case if no weight
were given to the furnishing of these supplemental services, provided that the
amount of such commission or spread has been determined in good faith by the
Advisor to be reasonable in relation to the value of the brokerage and/or
research services provided by such broker-dealer.
Investment
decisions for the Fund are made independently from those of other client
accounts or mutual funds managed or advised by the
Advisor. Nevertheless, it is possible that at times identical
securities will be acceptable for both the Fund and one or more of such client
accounts or mutual funds. In such event, the position of the Fund and
such client account(s) or mutual funds in the same issuer may vary and the
length of time that each may choose to hold its investment in the same issuer
may likewise vary. However, to the extent any of these client
accounts or mutual funds seek to acquire the same security as the Fund at the
same time, the Fund may not be able to acquire as large a portion of such
security as it desires, or it may have to pay a higher price or obtain a lower
yield for such security. Similarly, the Fund may not be able to
obtain as high a price for, or as large an execution of, an order to sell any
particular security at the same time. If one or more of such client
accounts or mutual funds simultaneously purchases or sells the same security
that the Fund is purchasing or selling, each day’s transactions in such security
will be allocated between the Fund and all such client accounts or mutual funds
in a manner deemed equitable by the Advisor, taking into account the respective
sizes of the accounts and the amount of cash available for investment, the
investment objective of the account, and the ease with which a clients
appropriate amount can be bought, as well as the liquidity and volatility of the
account and the urgency involved in making an investment decision for the
client. It is recognized that in some cases this system could have a
detrimental effect on the price or value of the security insofar as the Fund is
concerned. In other cases, however, it is believed that the ability
of the Fund to participate in volume transactions may produce better executions
for the Fund.
The
Advisor utilizes a three tier rating system for the purposes of allocating the
Fund’s annual research commission budget. Ratings are based on the
investment team’s evaluation of value-added research, access to analysts, access
to company management, and access to investment conferences. The
Advisor will make every effort to ensure tier I brokers garner a larger portion
of the annual research budget, followed by tier II brokers, with the remainder
going to tier III brokers. The Advisor’s investment team will
re-evaluate the status of brokers within the ranking system on at least a
semi-annual basis. In addition, the Advisor may use its affiliated
broker-dealer, D.A. Davidson & Co. (“DAD”) to execute a portion of the
Fund’s portfolio securities transactions. All such transactions are
subject to the requirement that the Advisor seek to obtain best execution for
all portfolio transactions. The Advisor has represented to the Fund
that it will not execute portfolio transactions through DAD unless the use of
DAD satisfies the Advisor’s duty of best execution and was in the best interest
of the Fund. The Board continually reviews the Advisor’s use of
DAD.
During
the fiscal period indicated below, the Fund paid the following amount in
brokerage commissions:
|
Aggregate
Brokerage Commissions
Paid
During Fiscal Period Ended June 30,
|
|
|
2009
|
$0
|
The Trust
has entered into a Distribution Agreement (the “Distribution Agreement”) with
Quasar Distributors, LLC, 615 East Michigan Street, Milwaukee, Wisconsin 53202
(the “Distributor”), pursuant to which the Distributor acts as the Fund’s
distributor, provides certain administration services and promotes and arranges
for the sale of Fund shares. The offering of the Fund’s shares is
continuous. The Distributor, USBFS, and Custodian are all affiliated
companies. The Distributor is a registered broker-dealer and member
of FINRA.
The
Distribution Agreement has an initial term of up to two years and will continue
in effect only if such continuance is specifically approved at least annually by
the Board or by vote of a majority of the Fund’s outstanding voting securities
and, in either case, by a majority of the Trustees who are not parties to the
Distribution Agreement or “interested persons” (as defined in the 1940 Act) of
any such party. The Distribution Agreement is terminable without
penalty by the Trust on behalf of the Fund on 60 days’ written notice when
authorized either by a majority vote of the Fund’s shareholders or by vote of a
majority of the Board, including a majority of the Trustees who are not
“interested persons” (as defined in the 1940 Act) of the Trust, or by the
Distributor on 60 days’ written notice, and will automatically terminate in the
event of its “assignment” (as defined in the 1940 Act).
The
following table reflects the underwriting commissions associated with the sale
of Advisor Class A shares of the Fund during the fiscal period indicated, none
of which were retained by the Distributor.
|
Aggregate
Underwriting Commissions
Paid
During Fiscal Period Ended June 30,
|
|
|
2009
|
$262,453
|
The Fund
has adopted on behalf of the Fund’s Advisor Class A and Advisor Class C shares a
Distribution and Service Plan (the “Plan”) pursuant to Rule 12b-1 under the 1940
Act under which the Advisor Class A shares of the Fund pay the Distributor an
amount which is accrued daily and paid quarterly, at an annual rate of up to
0.25% of the average daily net assets of the Fund’s Advisor Class A shares and
the Advisor Class C shares of the Fund pay the Distributor an amount which is
accrued daily and paid quarterly, at an annual rate of up to 1.00% of the
average daily net assets of the Fund’s Advisor Class C shares. The
Plan provides that the Distributor may use all or any portion of such fee to
finance any activity that is principally intended to result in the sale of Fund
shares, subject to the terms of the Plan, or to provide certain shareholder
services. Amounts paid under the Plan, by the Fund, are paid to the
Distributor to reimburse it for costs of the services it provides and the
expenses it bears in the distribution of the Fund’s Advisor Class A and Advisor
Class C shares, including overhead and telephone expenses; printing and
distribution of prospectuses and reports used in connection with the offering of
the Fund’s shares to prospective investors; and preparation, printing and
distribution of sales literature and advertising materials. In
addition, payments to the Distributor under the Plan reimburse the Distributor
for payments it makes to selected dealers and administrators which have entered
into Service Agreements with the Distributor of periodic fees for services
provided to shareholders of the Fund. The services provided by
selected dealers pursuant to the Plan are primarily designed to promote the sale
of shares of the Fund and include the furnishing of office space and equipment,
telephone facilities, personnel and assistance to the Fund in servicing such
shareholders. The services provided by the administrators pursuant to
the Plan are designed to provide support services to the Fund and include
establishing and maintaining shareholders’ accounts and records, processing
purchase and redemption transactions, answering routine client inquiries
regarding the Fund and providing other services to the Fund as may be
required.
Under
the Plan, the Trustees are furnished quarterly with information detailing the
amount of expenses paid under the Plan and the purposes for which payments were
made. The Plan may be terminated at any time by vote of a majority of
the Trustees of the Trust who are not interested
persons. Continuation of the Plan is considered by such Trustees no
less frequently than annually. With the exception of the Distributor
in its capacity as the Fund’s principal underwriter, no interested person has or
had a direct or indirect financial interest in the Plan or any related
agreement.
While
there is no assurance that the expenditures of Fund assets to finance
distribution of shares will have the anticipated results, the Board believes
there is a reasonable likelihood that one or more of such benefits will result,
and because the Board is in a position to monitor the distribution expenses, it
is able to determine the benefit of such expenditures in deciding whether to
continue the Plan.
For
the fiscal period ended June 30, 2009, distribution and service related
expenditures under the Plan primarily intended to result in the sales of the
Fund’s Advisor Class A shares that were made by the Fund totaled
$12,500. The following table shows the dollar amounts by category
allocated to the Fund for distribution and service related
expenses:
|
Actual
12b-1 Expenditures Paid by the Fund
During
the Fiscal Period Ended June 30, 2009
|
||||
|
Total
Dollars Allocated
|
||||
|
Advertising/Marketing
|
$ | 4,544 | ||
|
Printing/Postage
|
$ | 168 | ||
|
Payment
to distributor
|
$ | 3,307 | ||
|
Payment
to dealers
|
$ | 4,481 | ||
|
Compensation
to sales personnel
|
$ | 0 | ||
|
Interest,
carrying, or other financing charges
|
$ | 0 | ||
|
Other
|
$ | 0 | ||
|
Total
|
$ | 12,500 | ||
The
Trust, the Advisor and the Distributor, as defined below, have each adopted
separate Codes of Ethics under Rule 17j-1 of the 1940 Act. These
Codes permit, subject to certain conditions, access persons of the Advisor and
Distributor to invest in securities that may be purchased or held by the
Fund.
The Board
has adopted Proxy Voting Policies and Procedures (the “Proxy Policies”) on
behalf of the Trust which delegate the responsibility for voting proxies to the
Advisor, subject to the Board’s continuing oversight. The Proxy
Policies require that the Advisor vote proxies received in a manner consistent
with the best interests of the Fund and its shareholders. The Proxy
Policies also require the Advisor to present to the Board, at least annually,
the Advisor’s Proxy Policies and a record of each proxy voted by the Advisor on
behalf of the Fund, including a report on the resolution of all proxies
identified by the Advisor as involving a conflict of interest.
The
Advisor has adopted Proxy Policies that underscore the Advisor’s concern to act
solely in the best interest of the Fund and its shareholders. The
Advisor has delegated its administrative duties with respect to voting proxies
to a proxy voting committee (the “Committee”). Members of the
Committee are appointed by the Advisor’s President and include senior investment
personnel from the Advisor and its affiliates. On a regular
basis, the Committee will also invite personnel from the Legal and Compliance
Departments of its affiliates to participate in Committee
meetings. The Committee is responsible for voting proxies on behalf
of the Advisor via a Voting Administrator.
The
Advisor has engaged Institutional Shareholder Services (“ISS”), an unbiased
third party proxy voting service, to make proxy voting recommendations to the
Committee and Voting Administrator. The Voting Administrator will
generally vote proxies in accordance with these recommendations, but reserves
the right to exercise its own judgment on a case-by-case basis, in the event,
for example, that the ISS recommendation conflicts with the proxy voting
decision of the issuer’s management.
The
Advisor considers an issuer’s management team to be an important factor when
deciding to invest in a particular company. As a result, the Committee will
analyze any proxy vote in which the decision of management conflicts with the
ISS recommendation and will vote the proxy in the best interests of the
Advisor’s clients. In such an event, the Committee will determine, prior to
voting, whether any of the members of the Committee have a material personal or
business conflict in which case the committee member will not be permitted to
vote. The Committee may also seek the advice of outside counsel when making a
final determination regarding a potential conflict and/or the vote of the
Committee. Any final determination regarding a particular proxy vote
and the analysis undertaken by the Committee shall be documented and
retained.
The
Trust is required to file a Form N-PX, with the Fund’s complete proxy voting
record for the 12 months ended June 30, no later than August 31 of each
year. Form N-PX for the Fund is available without charge, upon
request, by calling toll-free 1-877-332-0529 and on the SEC’s website at
www.sec.gov.
The
Advisor and the Fund maintain portfolio holdings disclosure policies (the
“Disclosure Policies”) that govern the timing and circumstances of disclosure to
shareholders and third parties of information regarding the portfolio
investments held by the Fund. These Disclosure Policies have been approved by
the Board. Disclosure of the Fund’s complete holdings is required to be made
quarterly within 60 days of the end of each fiscal quarter in the Annual Report
and Semi-Annual Report to Fund shareholders and in the quarterly holdings report
on Form N-Q. These reports are available, free of charge, on the
EDGAR database on the SEC’s website at www.sec.gov.
From
time to time, the Advisor may select certain portfolio characteristics for
distribution to the public with such frequencies and lag times as the Advisor
determines to be in the best interests of shareholders.
Pursuant
to the Disclosure Policies, information about the Fund’s portfolio holdings is
not distributed to any person unless:
|
·
|
The
disclosure is required pursuant to a regulatory request, court order or is
legally required in the context of other legal
proceedings;
|
|
·
|
The
disclosure is made to a mutual fund rating and/or ranking organization, or
person performing similar functions, who is subject to a duty of
confidentiality, including a duty not to trade on any non-public
information;
|
|
·
|
The
disclosure is made to internal parties involved in the investment process,
administration, operation or custody of the Fund, including, but not
limited to USBFS and the Board, attorneys, auditors or
accountants;
|
|
·
|
The
disclosure is made: (a) in connection with a quarterly, semi-annual or
annual report that is available to the public; or (b) relates to
information that is otherwise available to the
public;
|
|
·
|
The
disclosure is made with the approval of either the Trust’s Chief
Compliance Officer (“CCO”) or his or her designee;
or
|
|
·
|
The
disclosure is made pursuant to a confidentiality
agreement.
|
Certain
of the persons listed above receive information about the Fund’s portfolio
holdings on an ongoing basis. The Fund believes that these third
parties have legitimate objectives in requesting such portfolio holdings
information and operate in the best interest of the Fund’s shareholders. These
persons are:
|
·
|
A
mutual fund rating and/or ranking organization, or person performing
similar functions, who is subject to a duty of confidentiality, including
a duty not to trade on any non-public
information;
|
|
·
|
Rating
and/or ranking organizations, specifically: Lipper; Morningstar; S&P;
Bloomberg; Vickers-Stock Research Corporation; Thomson Financial; and
Capital-Bridge, all of which may receive such information between the
seventh and tenth business day of the month following the end of a
calendar quarter; and
|
|
·
|
Internal
parties involved in the investment process, administration, operation or
custody of the Fund, specifically: USBFS; the Board; and the Trust’s
attorneys and accountants (currently, Paul Hastings and Tait,
respectively), all of which typically receive such information after it is
generated.
|
Any
disclosures to additional parties not described above are made with the prior
written approval of either the Trust’s CCO or his or her designee, pursuant to
the Disclosure Policies.
The Board
exercises continuing oversight of the disclosure of the Fund’s portfolio
holdings by (1) overseeing the implementation and enforcement of the Disclosure
Policies, Codes of Ethics and other relevant policies of the Fund and its
service providers by the Trust’s CCO, (2) by considering reports and
recommendations by the Trust’s CCO concerning any material compliance matters
(as defined in Rule 38a-1 under the 1940 Act), and (3) by considering to approve
any amendment to these Disclosure Policies. The Board reserves the
right to amend the Disclosure Policies at any time without prior notice in their
sole discretion.
Neither
the Advisor nor the Fund may receive compensation in connection with the
disclosure of information about the Fund’s portfolio securities. In
the event of a conflict between the interests of the Fund and the interests of
the Advisor or an affiliated person of the Advisor, the Advisor’s CCO, in
consultation with the Trust’s CCO, shall make a determination in the best
interest of the Fund, and shall report such determination to the Advisor’s Board
of Directors and to the Fund’s Board at the end of the quarter in which such
determination was made. Any employee of the Advisor who suspects a
breach of this obligation must report the matter immediately to the Advisor’s
CCO or to his or her supervisor.
In
addition, material non-public holdings information may be provided without lag
as part of the normal investment activities of the Fund to each of the following
entities which, by explicit agreement by virtue of their respective duties to
the Fund, are required to maintain the confidentiality of the information
disclosed: Fund Administrator, Fund Accountant, Custodian, Transfer
Agent, auditors, counsel to the Fund or the Trustees, broker-dealers (in
connection with the purchase or sale of securities or requests for price
quotations or bids on one or more securities), and regulatory
authorities. Portfolio holdings information not publicly available
with the SEC or through the Fund’s website may only be provided to additional
third parties, in accordance with the Disclosure Policies, when the Fund has a
legitimate business purpose and the third party recipient is subject to a
confidentiality agreement.
In no
event shall the Advisor, its affiliates or employees, or the Fund receive any
direct or indirect compensation in connection with the disclosure of information
about the Fund’s portfolio holdings.
There can
be no assurance that the Disclosure Policies and these procedures will protect
the Fund from potential misuse of that information by individuals or entities to
which it is disclosed.
The NAV
per share of the Fund is determined as of the close of regular trading on the
New York Stock Exchange (the “NYSE”) (generally 4:00 p.m., Eastern time), each
day the NYSE is open for trading. The NYSE annually announces the
days on which it will not be open for trading. It is expected that
the NYSE will not be open for trading on the following holidays: New
Year’s Day, Martin Luther King, Jr. Day, Washington’s Birthday/Presidents’ Day,
Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day.
Generally,
the Fund’s investments are valued at market value or, in the absence of a market
value, at fair value as determined in good faith by the Trust’s Valuation
Committee pursuant to procedures approved by or under the direction of the
Board. Pursuant to those procedures, the Valuation Committee
considers, among other things: (1) the last sales price on the
securities exchange, if any, on which a security is primarily traded; (2) the
mean between the bid and asked prices; (3) price quotations from an approved
pricing service; and (4) other factors as necessary to determine a fair value
under certain circumstances.
Securities
primarily traded in the NASDAQ Global Market® for
which market quotations are readily available shall be valued using the
NASDAQ® Official
Closing Price (“NOCP”). If the NOCP is not available, such securities
shall be valued at the last sale price on the day of valuation, or if there has
been no sale on such day, at the mean between the bid and asked
prices. OTC securities which are not traded in the NASDAQ Global
Market® shall be
valued at the most recent trade price. Securities and assets for
which market quotations are not readily available (including restricted
securities which are subject to limitations as to their sale) are valued at fair
value as determined in good faith under procedures approved by or under the
direction of the Board.
Short-term
debt obligations with remaining maturities in excess of 60 days are valued at
current market prices, as discussed above. In order to reflect their
fair value, short-term securities with 60 days or less remaining to maturity
are, unless conditions indicate otherwise, amortized to maturity based on their
cost to a Fund if acquired within 60 days of maturity or, if already held by the
Fund on the 60th day, based on the value determined on the 61st
day.
The
securities in the Fund’s portfolio, including ADRs, EDRs and GDRs, which are
traded on securities exchanges are valued at the last sale price on the exchange
on which such securities are traded, as of the close of business on the day the
securities are being valued or, lacking any reported sales, at the mean between
the last available bid and asked price. Securities that are traded on
more than one exchange are valued on the exchange determined by the Advisor to
be the primary market.
All other
assets of the Fund are valued in such manner as the Board in good faith deems
appropriate to reflect their fair value.
The
information provided below supplements the information contained in the
Prospectus regarding the purchase and redemption of Fund
shares.
How
to Buy Shares
You may
purchase shares of the Fund from securities brokers, dealers or financial
intermediaries (collectively, “Financial Intermediaries”). Investors should
contact their Financial Intermediary directly for appropriate instructions, as
well as information pertaining to accounts and any service or transaction fees
that may be charged. The Fund may enter into arrangements with
certain Financial Intermediaries whereby such Financial Intermediaries are
authorized to accept your order on behalf of the Fund. If you
transmit your order to these Financial Intermediaries before the close of
regular trading (generally 4:00 p.m., Eastern time) on a day that the NYSE is
open for business, your order will be priced at the Fund’s NAV next computed
after it is received by the Financial Intermediary. Investors should
check with their Financial Intermediary to determine if it participates in these
arrangements.
The
public offering price of Fund Advisor Class A shares is the NAV per share plus
the sales load and for Fund Advisor Class C shares is the NAV per
share. Shares are purchased at the public offering price next
determined after USBFS receives your order in proper form, as discussed in the
Fund’s Prospectus. In order to receive that day’s public offering
price, USBFS must receive your order in proper form before the close of regular
trading on the NYSE, generally 4:00 p.m., Eastern time.
The Trust
reserves the right in its sole discretion (i) to suspend the continued
offering of the Fund’s shares, (ii) to reject purchase orders in whole or
in part when in the judgment of the Advisor or the distributor such rejection is
in the best interest of the Fund, and (iii) to reduce or waive the minimum
for initial and subsequent investments for certain fiduciary accounts or under
circumstances where certain economies can be achieved in sales of the Fund’s
shares.
In
addition to cash purchases, Fund shares may be purchased by tendering payment
in-kind in the form of shares of stock, bonds or other
securities. Any securities used to buy Fund shares must be readily
marketable, their acquisition consistent with the Fund’s objective and otherwise
acceptable to the Advisor and the Board.
Automatic
Investment Plan
As
discussed in the Prospectus, the Fund provides an Automatic Investment Plan
(“AIP”) for the convenience of investors who wish to purchase shares of the Fund
on a regular basis. All record keeping and custodial costs of the AIP
are paid by the Fund. The market value of the Fund’s shares is
subject to fluctuation. Prior to participating in the AIP the
investor should keep in mind that this plan does not assure a profit nor protect
against depreciation in declining markets.
How to Sell Shares and Delivery of
Redemption Proceeds
You
can sell your Fund shares any day the NYSE is open for regular trading, either
directly to the Fund or through your Financial Intermediary. Shares
held less than seven calendar days are subject to a redemption fee as explained
in the Prospectus.
Payments
to shareholders for shares of the Fund redeemed directly from the Fund will be
made as promptly as possible, but no later than seven days after receipt by the
Fund’s transfer agent of the written request in proper form, with the
appropriate documentation as stated in the Prospectus, except that the Fund may
suspend the right of redemption or postpone the date of payment during any
period when (a) trading on the NYSE is restricted as determined by the SEC
or the NYSE is closed for other than weekends and holidays; (b) an
emergency exists as determined by the SEC making disposal of portfolio
securities or valuation of net assets of the Fund not reasonably practicable; or
(c) for such other period as the SEC may permit for the protection of the
Fund’s shareholders. Under unusual
circumstances, the Fund may suspend redemptions, or postpone payment for more
than seven days, but only as authorized by SEC rules.
The value
of shares on redemption or repurchase may be more or less than the investor’s
cost, depending upon the market value of the Fund’s portfolio securities at the
time of redemption or repurchase.
Telephone
Redemptions
Shareholders
with telephone transaction privileges established on their account may redeem
Fund shares by telephone. Upon receipt of any instructions or
inquiries by telephone from the shareholder the Fund or its authorized agents
may carry out the instructions and/or to respond to the inquiry consistent with
the shareholder’s previously established account service options. For
joint accounts, instructions or inquiries from either party will be carried out
without prior notice to the other account owners. In acting upon
telephone instructions, the Fund and its agents use procedures that are
reasonably designed to ensure that such instructions are
genuine. These include recording all telephone calls, requiring
pertinent information about the account and sending written confirmation of each
transaction to the registered owner.
USBFS
will employ reasonable procedures to confirm that instructions communicated by
telephone are genuine. If USBFS fails to employ reasonable
procedures, the Fund and USBFS may be liable for any losses due to unauthorized
or fraudulent instructions. If these procedures are followed,
however, that to the extent permitted by applicable law, neither the Fund nor
its agents will be liable for any loss, liability, cost or expense arising out
of any redemption request, including any fraudulent or unauthorized
request. For additional information, contact USBFS.
Redemptions
In-Kind
The
Trust has filed an election under Rule 18f-1 committing to pay in cash all
redemptions by a shareholder of record up to amounts specified by the rule (in
excess of the lesser of (i) $250,000 or (ii) 1% of the Fund’s
assets). The Fund has reserved the right to pay the redemption price
of its shares in excess of the amounts specified by the rule, either totally or
partially, by a distribution in-kind of portfolio securities (instead of
cash). The securities so distributed would be valued at the same
amount as that assigned to them in calculating the NAV for the shares being
sold. If a shareholder receives a distribution in-kind, the
shareholder could incur brokerage or other charges in converting the securities
to cash.
The Fund
does not intend to hold any significant percentage of its portfolio in illiquid
securities, although the Fund, like virtually all mutual funds, may from time to
time hold a small percentage of securities that are illiquid. In the
unlikely event the Fund were to elect to make an in-kind redemption, the Fund
expects that it would follow the normal protocol of making such distribution by
way of a pro rata distribution based on its entire portfolio. If the Fund held
illiquid securities, such distribution may contain a pro rata portion of such
illiquid securities or the Fund may determine, based on a materiality
assessment, not to include illiquid securities in the in-kind redemption. The
Fund does not anticipate that it would ever selectively distribute a greater
than pro rata portion of any illiquid securities to satisfy a redemption
request. If such securities are included in the distribution, shareholders may
not be able to liquidate such securities and may be required to hold such
securities indefinitely. Shareholders’ ability to liquidate such securities
distributed in-kind may be restricted by resale limitations or substantial
restrictions on transfer imposed by the issuers of the securities or by law.
Shareholders may only be able to liquidate such securities distributed in-kind
at a substantial discount from their value, and there may be higher brokerage
costs associated with any subsequent disposition of these securities by the
recipient.
Sales
Charges and Dealer Reallowance
Advisor
Class A shares of the Fund are retail shares that require that you pay a sales
charge when you invest unless you qualify for a reduction or waiver of the sales
charge. Advisor Class A shares are also subject to Rule 12b-1
fees (or distribution and service fees) of up to 0.25% of average daily net
assets that are assessed against the shares of the Fund.
If you
purchase Advisor Class A shares of the Fund you will pay the NAV next determined
after your order is received plus a sales charge (shown in percentages below)
depending on the amount of your investment. The sales charge does not
apply to shares purchased with reinvested dividends. The sales charge
is calculated as follows and the dealer reallowance is as shown in the far right
column:
|
Amount
of Transaction
|
Sales
Charge as %
of
Public Offering Price(1)
|
Sales
Charge as % of
Net
Amount Invested
|
Dealer
Reallowance as a Percentage
of
Public Offering Price
|
|
Less
than $25,000
|
5.00%
|
5.26%
|
5.00%
|
|
$25,000
but less than $50,000
|
4.50%
|
4.71%
|
4.50%
|
|
$50,000
but less than $100,000
|
4.00%
|
4.17%
|
4.00%
|
|
$100,000
but less than $250,000
|
3.50%
|
3.63%
|
3.50%
|
|
$250,000
but less than $500,000
|
2.50%
|
2.56%
|
2.50%
|
|
$500,000
but less than $1,000,000
|
2.00%
|
2.04%
|
2.00%
|
|
$1,000,000
or more(2)
|
0.00%
|
0.00%
|
1.00%
|
|
(1)
|
Offering
price includes the front-end sales load. The sales charge you
pay may differ slightly from the amount set forth above because of
rounding that occurs in the calculation used to determine your sales
charge.
|
|
(2)
|
The
Transfer Agent will assess Advisor Class A purchases of $1,000,000 or more
a 1.00% CDSC if they are redeemed within twelve months from the date of
purchase, unless the dealer of record waived its
commission. The 1.00% is applied to the NAV of the shares on
the date of original purchase or on the date of redemption, whichever is
less.
|
The
Advisor’s affiliated broker-dealer, D.A. Davidson & Co. (“DAD”), will
receive all of the initial sales charge for purchases of Advisor Class A shares
of the Fund without a dealer of record.
Breakpoints/Volume
Discounts and Sales Charge Waivers
Reducing Your Sales
Charge. You may be able to reduce the sales charge on Advisor
Class A shares of the Fund based on the combined market value of your
accounts. If you believe you are eligible for any of the following
reductions or waivers, it is up to you to ask the selling agent or shareholder
servicing agent for the reduction and to provide appropriate proof of
eligibility.
|
·
|
You
pay no sales charges on Fund shares you buy with reinvested
distributions.
|
|
·
|
You
pay a lower sales charge if you are investing an amount over a specific
breakpoint level as indicated by the above
table.
|
|
·
|
You
pay no sales charges on Fund shares you purchase with the proceeds of a
redemption of Advisor Class A shares within 120 days of the date of the
redemption.
|
|
·
|
By
signing a Letter of
Intent (LOI) prior to purchase, you pay a lower sales charge now in
exchange for promising to invest an amount over a specified breakpoint
within the next 13 months. Reinvested dividends and capital
gains do not count as purchases made during this period. The
Fund’s transfer agent will hold in escrow shares equal to approximately 5%
of the amount you say you intend to buy. If you do not invest
the amount specified in the LOI before the expiration date, the transfer
agent will redeem enough escrowed shares to pay the difference between the
reduced sales load you paid and the sales load you should have
paid. Otherwise, the transfer agent will release the escrowed
shares when you have invested the agreed amount. For example, an
investor has $2,500 to invest in the Fund, but intends to invest an
additional $2,500 per month for the next 13 months for a total of
$35,000. Based on the above breakpoint schedule, by signing the
LOI, the investor pays a front-end load of 4.50% rather than
5.00%. If the investor fails to meet the intended LOI amount in
the 13-month period, however, the mutual fund company will charge the
higher sales load
retroactively.
|
|
·
|
Rights of Accumulation
(“ROA”) allow you to combine Advisor Class A shares you already own
in order to reach breakpoint levels and to qualify for sales load
discounts on subsequent purchases of Advisor Class A
shares. The purchase amount used in determining the sales
charge on your purchase will be calculated by multiplying the maximum
public offering price by the number of Advisor Class A shares of the Fund
already owned and adding the dollar amount of your current
purchase. For
example, an individual has a $35,000 investment in the Fund, which
was sold with a 4.50% front-end load. The investor intends to
open a second account and purchase $25,000 of the Fund. Using
ROA, the new $25,000 investment is combined with the existing $35,000
investment to reach the $50,000 breakpoint, and the sales charge on the
new investment is 4.00% (rather than the 4.50% for a single transaction
amount).
|
Eligible
Accounts. Certain accounts may be aggregated for ROA
eligibility, including your current investment in the Fund, and previous
investments you and members of your primary household group have made in the
Fund, provided your investment was subject to a sales charge. (Your
primary household group consists of you, your spouse and children under age 21
living at home.) Specifically, the following accounts are eligible to
be included in determining the sales charge on your purchase, if a sales charge
has been paid on those purchases:
|
·
|
Individual
or joint accounts held in your
name;
|
|
·
|
Coverdell
Education Savings Accounts and UGMA/UTMA accounts for which you or your
spouse is parent or guardian of the minor
child;
|
|
·
|
Trust
accounts for which you or a member of your primary household group,
individually, is the
beneficiary;
|
|
·
|
Accounts
held in the name of you or your spouse’s sole proprietorship or single
owner limited liability company or S corporation;
and
|
The
following accounts are not eligible to be included in determining ROA
eligibility;
|
·
|
Investments
in Advisor Class A shares where the sales charge was
waived.
|
Waiving Your Sales Charge.
The Fund’s Advisor reserves the right to waive the sales charges for
certain groups or classes of shareholders. If you fall into any of
the following categories, you can buy Advisor Class A shares at NAV per share
without a sales charge:
|
·
|
Current
and retired employees, directors/trustees and officers
of:
|
|
o
|
Advisors
Series Trust;
|
|
o
|
Davidson
Investment Advisors, Inc. and its affiliates;
and
|
|
o
|
Family
members (spouse, domestic partner, parents, grandparents, children,
grandchildren and siblings (including step and in-law)) of any of the
above.
|
|
·
|
Current
employees of:
|
|
o
|
the
Fund’s Transfer Agent;
|
|
o
|
broker-dealers
who act as selling agents; and
|
|
o
|
family
members (spouse, domestic partner, parents, grandparents, children,
grandchildren and siblings (including step and in-law)) of any of the
above.
|
|
·
|
Qualified
registered investment advisors who buy through a broker-dealer or service
agent who has entered into an agreement with the Fund’s distributor that
allows for load-waived Advisor Class A
purchases.
|
|
·
|
Qualified
broker-dealers, including the Advisor’s affiliated broker-dealer, DAD, who
have entered into an agreement with the Fund’s distributor that allows for
load-waived Advisor Class A
purchases.
|
The
Advisor also reserves the right to enter into agreements that reduce or
eliminate sales charges for groups or classes of shareholders, or for Fund
shares included in other investment plans such as “wrap accounts.” If
you own Fund shares as part of another account or package, such as an IRA or a
sweep account, you should read the terms and conditions that apply for that
account. Those terms and conditions may supersede the terms and
conditions discussed here. Contact your selling agent for further
information.
Advisor Class C
Shares. You can buy Advisor Class C shares at the offering
price, which is the NAV without an up-front sales charge. If you sell
(redeem) your Advisor Class C shares within 1 year of purchase, you will have to
pay a CDSC of 1.00% which is applied to the NAV of the shares on the date of
original purchase or on the date of redemption, whichever is
less. For example, if you purchased $10,000 worth of shares, which
due to market fluctuation have appreciated to $15,000, the CDSC will be assessed
on your $10,000 purchase. If that same $10,000 purchase has
depreciated to $5,000, the CDSC will be assessed on the $5,000
value. For purposes of calculating the CDSC, the start of the
1-year holding period is the first day of the month in which the purchase was
made. The Fund will use the first-in, first-out (“FIFO”) method when
taking the CDSC.
A
redemption fee of 1.00%, based on the redeemed share’s market value, will be
imposed on redemptions of Advisor Class C shares of the Fund held for seven
calendar days or less after purchase, using the FIFO method.
Investments
of $1 million or more for purchase into Advisor Class C will be
rejected. Your financial intermediary is responsible for placing
individual investments of $1 million or more into Advisor Class A, which is
offered by a different prospectus.
Waiving Your
CDSC. The Fund reserves the right to waive the CDSC for
certain groups or classes of shareholders. If you fall into any of
the following categories, you can redeem Advisor Class C shares without a
CDSC:
|
·
|
You
will not be assessed a CDSC on Fund shares you redeem that were purchased
with reinvested distributions.
|
|
·
|
You
will not be assessed a CDSC on Fund shares redeemed for account and
transaction fees (e.g., returned
investment fee) and redemptions through a systematic withdrawal
plan.
|
|
·
|
The
Fund waives the CDSC for all redemptions made because of scheduled
(Internal Revenue Code Section 72(t)(2) withdrawal schedule) or mandatory
(withdrawals generally made after age 70½ according to Internal Revenue
Service (IRS) guidelines) distributions from traditional IRAs and certain
other retirement plans. (See your retirement plan information for
details.)
|
|
·
|
The
Fund waives the CDSC for redemptions made in the event of the last
surviving shareholder’s death or for a disability suffered after
purchasing shares. (“Disabled” is defined in Internal Revenue Code Section
72(m)(7).)
|
|
·
|
The
Fund waives the CDSC for redemptions made at the direction of the Trust in
order to, for example, complete a merger or effect a Fund’s
liquidation.
|
|
·
|
The
Fund waives the Advisor Class C shares CDSC if the dealer of record waived
its commission with the Fund’s or Advisor’s
approval.
|
Distributions
Dividends
from net investment income and distributions from net profits from the sale of
securities are generally made annually. Also, the Fund typically
distributes any undistributed net investment income on or about December 31 of
each year. Any net capital gains realized through the period ended
October 31 of each year will also be distributed by December 31 of each
year.
Each
distribution by the Fund is accompanied by a brief explanation of the form and
character of the distribution. In January of each year, the Fund will
issue to each shareholder a statement of the federal income tax status of all
distributions.
Tax
Information
Each
series of the Trust is treated as a separate entity for federal income tax
purposes. The Fund, as a series of the Trust, has elected to qualify
and intends to continue to qualify to be treated as a regulated investment
company under Subchapter M of the Internal Revenue Code of 1986, as amended (the
“Code”), provided it complies with all applicable requirements regarding the
source of its income, diversification of its assets and timing and amount of
distributions. The Fund’s policy is to distribute to its shareholders
all of its investment company taxable income and any net realized long term
capital gains for each fiscal year in a manner that complies with the
distribution requirements of the Code, so that the Fund will not be subject to
any federal income or excise taxes. However, the Fund can give no
assurances that distributions will be sufficient to eliminate all
taxes. To avoid the excise tax, the Fund must also distribute (or be
deemed to have distributed) by December 31 of each calendar year (i) at least
98% of its ordinary income for such year, (ii) at least 98% of the excess of its
realized capital gains over its realized capital losses for the 12 month period
ending on October 31 during such year, and (iii) any amounts from the prior
calendar year that were not distributed and on which no federal income tax was
paid by the Fund or shareholders.
Net
investment income generally consists of interest and dividend income, less
expenses. Net realized capital gains for a fiscal period are computed
by taking into account any capital loss carryforward of the Fund.
Distributions
of net investment income and net short term capital gains are taxable to
shareholders as ordinary income. For individual shareholders, a
portion of the distributions paid by the Fund may be qualified dividend income
currently eligible for taxation at long-term capital gain rates to the extent
the Fund designates the amount distributed as a qualifying dividend and certain
holding period requirements are met. In the case of corporate
shareholders, a portion of the distributions may qualify for the intercorporate
dividends-received deduction to the extent the Fund designates the amount
distributed as a qualifying dividend. The aggregate amount so
designated to either individual or corporate shareholders cannot, however,
exceed the aggregate amount of qualifying dividends received by the Fund for its
taxable year. In view of the Fund’s investment policies, it is
expected that dividends from domestic corporations will be part of the Fund’s
gross income and that, accordingly, part of the distributions by the Fund may be
eligible for qualified dividend income treatment for individual shareholders, or
for the dividends-received deduction for corporate
shareholders. However, the portion of the Fund’s gross income
attributable to qualifying dividends is largely dependent on the Fund’s
investment activities for a particular year and therefore cannot be predicted
with any certainty. Further, the dividends-received deduction may be
reduced or eliminated if Fund shares held by a corporate investor are treated as
debt financed or are held for less than 46 days.
Any
long-term capital gain distributions are taxable to shareholders as long-term
capital gains regardless of the length of time shares have been
held. Capital gains distributions are not eligible for qualified
dividend income treatment or the dividends received deduction referred to in the
previous paragraph. Distributions of any net investment income and
net realized capital gains will be taxable as described above, whether received
in shares or in cash. Shareholders who choose to receive
distributions in the form of additional shares will have a cost basis for
federal income tax purposes in each share so received equal to the net asset
value of a share on the reinvestment date. Distributions are
generally taxable when received or deemed to be received. However,
distributions declared in October, November or December to shareholders of
record on a date in such a month and paid the following January are taxable as
if received on December 31. Distributions are includable in
alternative minimum taxable income in computing a shareholder’s liability for
the alternative minimum tax.
The Fund
may be subject to foreign withholding taxes on dividends and interest earned
with respect to securities of foreign corporations.
Redemption
of Fund shares may result in recognition of a taxable gain or
loss. Any loss realized upon redemption of shares within six months
from the date of their purchase will be treated as a long term capital loss to
the extent of any amounts treated as distributions of long term capital gains
during such six month period. Any loss realized upon a redemption may
be disallowed under certain wash sale rules to the extent shares of the Fund are
purchased (through reinvestment of distributions or otherwise) within 30 days
before or after the redemption.
Under the
Code, the Fund will be required to report to the Internal Revenue Service all
distributions of taxable income and capital gains as well as gross proceeds from
the redemption of Fund shares, except in the case of exempt shareholders, which
includes most corporations. Pursuant to the backup withholding
provisions of the Code, distributions of any taxable income and capital gains
and proceeds from the redemption of Fund shares may be subject to withholding of
federal income tax in the case of non-exempt shareholders who fail to furnish
the Fund with their taxpayer identification numbers and with required
certifications regarding their status under the federal income tax
law. If the withholding provisions are applicable, any such
distributions and proceeds, whether taken in cash or reinvested in additional
shares, will be reduced by the amounts required to be
withheld. Corporate and other exempt shareholders should provide the
Fund with their taxpayer identification numbers or certify their exempt status
in order to avoid possible erroneous application of backup
withholding. The Fund reserves the right to refuse to open an account
for any person failing to provide a certified taxpayer identification
number.
The
foregoing discussion of U.S. federal income tax law relates solely to the
application of that law to U.S. citizens or residents and U.S. domestic
corporations, partnerships, trusts and estates. Each shareholder who
is not a U.S. person should consider the U.S. and foreign tax consequences of
ownership of shares of the Fund, including the possibility that such a
shareholder may be subject to a U.S. withholding tax at a rate of 30 percent (or
at a lower rate under an applicable income tax treaty) on amounts constituting
ordinary income.
This
discussion and the related discussion in the Prospectus have been prepared by
Fund management. The information above is only a summary of some of
the tax considerations generally affecting the Fund and its
shareholders. No attempt has been made to discuss individual tax
consequences and this discussion should not be construed as applicable to all
shareholders’ tax situations. Investors should consult their own tax
advisors to determine the suitability of the Fund and the applicability of any
state, local or foreign taxation. Paul Hastings has expressed no
opinion in respect thereof.
The
Advisor, out of its own resources and without additional cost to the Fund or its
shareholders, may provide additional cash payments or other compensation to
certain financial intermediaries who sell shares of the Fund. Such payments may
be divided into categories as follows:
Support Payments. Payments may be made by
the Advisor to certain financial intermediaries in connection with the
eligibility of the Fund to be offered in certain programs and/or in connection
with meetings between the Fund’s representatives and financial intermediaries
and its sales representatives. Such meetings may be held for various purposes,
including providing education and training about the Fund and other general
financial topics to assist financial intermediaries’ sales representatives in
making informed recommendations to, and decisions on behalf of, their
clients.
Entertainment, Conferences and
Events. The Advisor also
may pay cash or non-cash compensation to sales representatives of financial
intermediaries in the form of (i) occasional gifts; (ii) occasional meals,
tickets or other entertainments; and/or (iii) sponsorship support for the
financial intermediary’s client seminars and cooperative
advertising. In addition, the Advisor pays for exhibit space or
sponsorships at regional or national events of financial
intermediaries.
The
prospect of receiving, or the receipt of additional payments or other
compensation as described above by financial intermediaries may provide such
intermediaries and/or their salespersons with an incentive to favor sales of
shares of the Fund, and other mutual funds whose affiliates make similar
compensation available, over sale of shares of mutual funds (or non-mutual fund
investments) not making such payments. You may wish to take such payment
arrangements into account when considering and evaluating any recommendations
relating to the Fund shares.
The
Trust’s Declaration of Trust permits the Trustees to issue an unlimited number
of full and fractional shares of beneficial interest and to divide or combine
the shares into a greater or lesser number of shares without thereby changing
the proportionate beneficial interest in the Fund. Each share
represents an interest in a Fund proportionately equal to the interest of each
other share. Upon a Fund’s liquidation, all shareholders would share
pro rata in the net assets of the Fund available for distribution to
shareholders.
With
respect to the Fund, the Trust may offer more than one class of
shares. The Trust has adopted a Multiple Class Plan pursuant to Rule
18f-3 under the 1940 Act, detailing the attributes of each class of the Fund,
and has reserved the right to create and issue additional series or
classes. Each share of a series or class represents an equal
proportionate interest in that series or class with each other share of that
series or class. Currently, the Fund has two classes of shares –
Advisor Class A and Advisor Class C.
The
shares of each series or class participate equally in the earnings, dividends
and assets of the particular series or class. Expenses of the Trust
which are not attributable to a specific series or class are allocated among all
the series in a manner believed by management of the Trust to be fair and
equitable. Shares have no pre-emptive or conversion
rights. Shares, when issued, are fully paid and non-assessable,
except as set forth below. Shareholders are entitled to one vote for
each share held. Shares of each series or class generally vote together, except
when required under federal securities laws to vote separately on matters that
only affect a particular class, such as the approval of distribution plans for a
particular class.
The Trust
is not required to hold annual meetings of shareholders but will hold special
meetings of shareholders of a series or class when, in the judgment of the
Trustees, it is necessary or desirable to submit matters for a shareholder
vote. Shareholders have, under certain circumstances, the right to
communicate with other shareholders in connection with requesting a meeting of
shareholders for the purpose of removing one or more
Trustees. Shareholders also have, in certain circumstances, the right
to remove one or more Trustees without a meeting. No material
amendment may be made to the Declaration of Trust without the affirmative vote
of the holders of a majority of the outstanding shares of each portfolio
affected by the amendment. The Declaration of Trust provides that, at
any meeting of shareholders of the Trust or of any series or class, a
Shareholder Servicing Agent may vote any shares as to which such Shareholder
Servicing Agent is the agent of record and which are not represented in person
or by proxy at the meeting, proportionately in accordance with the votes cast by
holders of all shares of that portfolio otherwise represented at the meeting in
person or by proxy as to which such Shareholder Servicing Agent is the agent of
record. Any shares so voted by a Shareholder Servicing Agent will be deemed
represented at the meeting for purposes of quorum
requirements. Shares have no preemptive or conversion
rights. Shares, when issued, are fully paid and non assessable,
except as set forth below. Any series or class may be terminated (i)
upon the merger or consolidation with, or the sale or disposition of all or
substantially all of its assets to, another entity, if approved by the vote of
the holders of two thirds of its outstanding shares, except that if the Board
recommends such merger, consolidation or sale or disposition of assets, the
approval by vote of the holders of a majority of the series’ or class’
outstanding shares will be sufficient, or (ii) by the vote of the holders of a
majority of its outstanding shares, or (iii) by the Board by written notice to
the series’ or class’ shareholders. Unless each series and class is
so terminated, the Trust will continue indefinitely.
The
Declaration of Trust also provides that the Trust shall maintain appropriate
insurance (for example, fidelity bonding and errors and omissions insurance) for
the protection of the Trust, its shareholders, Trustees, officers, employees and
agents covering possible tort and other liabilities. Thus, the risk of a
shareholder incurring financial loss on account of shareholder liability is
limited to circumstances in which both inadequate insurance existed and the
Trust itself was unable to meet its obligations.
The
Declaration of Trust does not require the issuance of stock
certificates. If stock certificates are issued, they must be returned
by the registered owners prior to the transfer or redemption of shares
represented by such certificates.
Rule
18f-2 under the 1940 Act provides that as to any investment company which has
two or more series outstanding and as to any matter required to be submitted to
shareholder vote, such matter is not deemed to have been effectively acted upon
unless approved by the holders of a “majority” (as defined in the Rule) of the
voting securities of each series affected by the matter. Such
separate voting requirements do not apply to the election of Trustees or the
ratification of the selection of accountants. The Rule contains
special provisions for cases in which an advisory contract is approved by one or
more, but not all, series. A change in investment policy may go into
effect as to one or more series whose holders so approve the change even though
the required vote is not obtained as to the holders of other affected
series.
The
Annual Report for the Fund for the fiscal period ended June 30, 2009, is a
separate document supplied with this SAI and the financial statements,
accompanying notes and report of independent registered public accounting firm
appearing therein are incorporated by reference in this SAI.
CORPORATE
BOND RATINGS*
Moody’s
Investors Service, Inc.
Aaa:
Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
“gilt edge.” Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective
elements are likely to change, such changes as can be visualized are most
unlikely to impair the fundamentally strong position of such
issues.
Aa: Bonds
which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are
generally known as high grade bonds. They are rated lower than the
best bonds because margins of protection may not be as large as in Aaa
securities or fluctuations or protective elements may be of greater amplitude or
there may be other elements present which make long-term risks appear somewhat
larger than in Aaa securities.
A: Bonds
which are rated A possess many favorable investment attributes and are to be
considered as upper medium grade obligations. Factors giving security
to principal and interest are considered adequate but elements may be present
which suggest a susceptibility to impairment sometime in the
future.
Baa:
Bonds which are rated Baa are considered as medium grade obligations, i.e., they
are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as
well.
Standard
& Poor’s Ratings Group
AAA:
Bonds rated AAA are highest grade debt obligations. This rating
indicates an extremely strong capacity to pay principal and
interest.
AA: Bonds
rated AA also qualify as high-quality debt obligations. Capacity to
pay principal and interest is very strong, and in the majority of instances they
differ from AAA issues only in small degree.
A: Bonds
rated A have a strong capacity to pay principal and interest, although they are
more susceptible to the adverse effects of changes in circumstances and economic
conditions.
BBB:
Bonds rated BBB are regarded as having an adequate capacity to pay principal and
interest. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay principal and interest for bonds in
this category than for bonds in the A category.
*Ratings
are generally given to securities at the time of issuance. While the
rating agencies may from time to time revise such ratings, they undertake no
obligation to do so.
COMMERCIAL
PAPER RATINGS
Moody’s
Investors Service, Inc.
Prime-1--Issuers
(or related supporting institutions) rated “Prime-1” have a superior ability for
repayment of senior short-term debt obligations. “Prime-1” repayment
ability will often be evidenced by many of the following characteristics:
leading market positions in well-established industries, high rates of return on
funds employed, conservative capitalization structures with moderate reliance on
debt and ample asset protection, broad margins in earnings coverage of fixed
financial charges and high internal cash generation, and well-established access
to a range of financial markets and assured sources of alternate
liquidity.
Prime-2--Issuers
(or related supporting institutions) rated “Prime-2” have a strong ability for
repayment of senior short-term debt obligations. This will normally
be evidenced by many of the characteristics cited above but to a lesser
degree. Earnings trends and coverage ratios, while sound, will be
more subject to variation. Capitalization characteristics, while
still appropriate, may be more affected by external conditions. Ample
alternative liquidity is maintained.
Standard
& Poor’s Ratings Group
A-1--This
highest category indicates that the degree of safety regarding timely payment is
strong. Those issues determined to possess extremely strong safety
characteristics are denoted with a plus (+) sign designation.
A-2--Capacity
for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high
as for issues designated “A-1”.
PART
C
(Davidson
Multi-Cap Core Fund)
OTHER
INFORMATION
Item
28. Exhibits.
|
(a)
|
Agreement and Declaration of
Trust dated October 3, 1996, was previously filed with
the Trust’s Registration Statement on Form N-1A on
December 6, 1996, and is incorporated herein by
reference.
|
|
(b)
|
Amended and Restated
By-Laws dated June 27, 2002, were previously filed with
Post-Effective Amendment No. 113 to the Trust’s Registration Statement on
Form N-1A on January 28, 2003, and are incorporated herein
by reference.
|
|
(c)
|
Instruments Defining Rights of
Security Holders are incorporated by reference into the Trust’s
Agreement and Declaration of Trust and Amended and Restated
By-Laws.
|
|
(d)
|
Investment Advisory
Agreement was previously filed with Post-Effective Amendment No.
271 to the Registration Statement on Form N-1A on July 3, 2008, and is
incorporated herein by reference.
|
|
(e)
|
Distribution Agreement
was previously filed with Post-Effective Amendment No. 271 to the
Registration Statement on Form N-1A on July 3, 2008, and is incorporated
herein by reference.
|
|
(f)
|
Bonus or Profit Sharing
Contracts – not applicable.
|
|
(g)
|
Custody Agreement was
previously filed with Post-Effective Amendment No. 222 to the Trust’s
Registration Statement on Form N-1A on June 28, 2006, and is incorporated
herein by reference.
|
|
(i)
|
Amendment
to the Custody Agreement was previously filed with Post-Effective
Amendment No. 271 to the Registration Statement on Form N-1A on July 3,
2008, and is incorporated herein by
reference.
|
|
(h)
|
Other
Material Contracts.
|
|
(i)
|
Fund Administration Servicing
Agreement was previously filed with Post-Effective Amendment No.
222 to the Trust’s Registration Statement on Form N-1A on June 28,
2006, and is incorporated herein by
reference.
|
|
(1)
|
Amendment
to the Fund Administration Servicing Agreement was previously filed with
Post-Effective Amendment No. 271 to the Registration Statement on Form
N-1A on July 3, 2008, and is incorporated herein by
reference.
|
|
(2)
|
Amendment
to the Fund Administration Servicing Agreement – filed
herewith.
|
|
(ii)
|
Transfer Agent Servicing
Agreement was previously filed with Post-Effective Amendment No.
222 to the Trust’s Registration Statement on Form N-1A on June 28,
2006, and is incorporated herein by
reference.
|
|
(1)
|
Amendment
to the Transfer Agent Servicing Agreement was previously filed with
Post-Effective Amendment No. 271 to the Registration Statement on Form
N-1A on July 3, 2008, and is incorporated herein by
reference.
|
|
(2)
|
Addendum
dated March 26, 2009, to the Transfer Agent Servicing Agreement was
previously filed with Post-Effective Amendment No. 282 to the Trust’s
Registration Statement on Form N-1A on April 21, 2009, and is incorporated
herein by reference.
|
C-1
|
(3)
|
Amendment
to the Transfer Agent Servicing Agreement – filed
herewith.
|
|
(iii)
|
Fund Accounting Servicing
Agreement was previously filed with Post-Effective Amendment No.
222 to the Trust’s Registration Statement on Form N-1A on June 28,
2006, and is incorporated herein by
reference.
|
|
(1)
|
Amendment
to the Fund Accounting Servicing Agreement was previously filed with
Post-Effective Amendment No. 271 to the Registration Statement on Form
N-1A on July 3, 2008, and is incorporated herein by
reference.
|
|
(2)
|
Amendment
to the Fund Accounting Servicing Agreement – filed
herewith.
|
|
(iv)
|
Operating Expenses Limitation
Agreement was previously filed with Post-Effective Amendment No.
271 to the Registration Statement on Form N-1A on July 3, 2008, and is
incorporated herein by reference.
|
|
(v)
|
Power of Attorney was
previously filed with Post-Effective Amendment No. 275 to the Trust’s
Registration Statement on Form N-1A on January 23, 2009, and is
incorporated herein by reference.
|
|
(i)
|
Legal Opinion was
previously filed with Post-Effective Amendment No. 271 to the Registration
Statement on Form N-1A on July 3, 2008, and is incorporated herein by
reference.
|
|
(j)
|
Consent of Independent
Registered Public Accounting Firm – to be filed by
amendment.
|
|
(k)
|
Omitted Financial
Statements – not applicable.
|
|
(l)
|
Initial Capital Agreements.
Subscription Agreements were previously filed with Pre-Effective
Amendment No. 2 to the Trust’s Registration Statement on Form N-1A on
February 28, 1997, and are incorporated herein by
reference.
|
|
(m)
|
Distribution (Rule 12b-1) Plan was
previously filed with Post-Effective Amendment No. 271 to the Registration
Statement on Form N-1A on July 3, 2008, and is incorporated herein by
reference.
|
|
(n)
|
Multiple Class (Rule 18f-3) Plan was
previously filed with Post-Effective Amendment No. 271 to the Registration
Statement on Form N-1A on July 3, 2008, and is incorporated herein by
reference.
|
|
(o)
|
Reserved.
|
|
(p)
|
Codes
of Ethics.
|
|
(i)
|
Code
of Ethics for Registrant was previously filed with Post-Effective
Amendment No. 257 to the Trust’s Registration Statement on
Form N-1A on January 28, 2008, and is incorporated herein by
reference.
|
|
(ii)
|
Code
of Ethics for Advisor – filed
herewith.
|
|
(iii)
|
Code
of Ethics for Access Persons of Quasar Distributors, LLC was previously
filed with Registrant’s Post-Effective Amendment No. 257 to the Trust’s
Registration Statement on Form N-1A on January 28, 2008, and is
incorporated herein by reference.
|
C-2
Item
29. Persons Controlled by or Under Common Control with
Registrant.
No person
is directly or indirectly controlled by or under common control with the
Registrant.
Item
30. Indemnification.
Reference
is made to Article VII of the Registrant’s Agreement and Declaration of Trust,
Article VI of the Registrant’s Amended and Restated By-Laws.
Pursuant
to Rule 484 under the Securities Act of 1933, as amended, the Registrant
furnishes the following undertaking: “Insofar as indemnification for
liability arising under the Securities Act of 1933 (the “Act”) may be permitted
to trustees, officers and controlling persons of the Registrant pursuant to the
foregoing provisions, or otherwise, the Registrant has been advised that, in the
opinion of the Securities and Exchange Commission (“SEC”) 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 the Registrant of expenses incurred
or paid by a trustee, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
trustee, officer or controlling person in connection with the securities being
registered, the 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.”
Item
31. Business and Other Connections of the Investment
Advisor.
With
respect to the Advisor, the response to this Item will be incorporated by
reference to the Advisor’s Uniform Application for Investment Adviser
Registration (Form ADV) on file with the SEC (File No. 801-10883), dated
December 15, 2008. The Advisor’s Form ADV may be obtained, free of
charge, at the SEC’s website at www.adviserinfo.sec.gov.
Item
32. Principal Underwriter.
|
(a)
|
Quasar
Distributors, LLC, the Registrant’s principal underwriter, acts as
principal underwriter for the following investment
companies:
|
|
Academy
Funds Trust
|
Jacob
Internet Fund, Inc.
|
|
Advisors
Series Trust
|
Jensen
Portfolio, Inc.
|
|
AIP
Alternative Strategies Funds
|
Keystone
Mutual Funds
|
|
Allied
Asset Advisors Funds
|
Kiewit
Investment Fund, LLLP
|
|
Alpine
Equity Trust
|
Kirr
Marbach Partners Funds, Inc.
|
|
Alpine
Income Trust
|
LKCM
Funds
|
|
Alpine
Series Trust
|
Masters'
Select Funds Trust
|
|
Artio
Global Equity Fund, Inc.
|
Matrix
Advisors Value Fund, Inc.
|
|
Artio
Global Investment Funds
|
Monetta
Fund, Inc.
|
|
Brandes
Investment Trust
|
Monetta
Trust
|
|
Brandywine
Blue Fund, Inc.
|
MP63
Fund, Inc.
|
|
Brazos
Mutual Funds
|
Nicholas
Family of Funds, Inc.
|
|
Bridges
Investment Fund, Inc.
|
Permanent
Portfolio Family of Funds, Inc.
|
|
Buffalo
Funds
|
Perritt
Funds, Inc.
|
|
Country
Mutual Funds Trust
|
Perritt
Microcap Opportunities Fund, Inc.
|
|
Empiric
Funds, Inc.
|
Primecap
Odyssey Funds
|
|
First
American Funds, Inc.
|
Professionally
Managed Portfolios
|
|
First
American Investment Funds, Inc.
|
Prospector
Funds, Inc.
|
|
First
American Strategy Funds, Inc.
|
Purisima
Funds
|
|
Fort
Pitt Capital Funds
|
Quaker
Investment Trust
|
|
Glenmede
Fund, Inc.
|
Rainier
Investment Management Mutual Funds
|
|
Glenmede
Portfolios
|
Rockland
Funds Trust
|
C-3
|
Greenspring
Fund, Inc.
|
Thompson
Plumb Funds, Inc.
|
|
Guinness
Atkinson Funds
|
TIFF
Investment Program, Inc.
|
|
Harding
Loevner Funds, Inc.
|
Trust
for Professional Managers
|
|
Hennessy
Funds Trust
|
Underlying
Funds Trust
|
|
Hennessy
Funds, Inc.
|
USA
Mutuals Funds
|
|
Hennessy
Mutual Funds, Inc.
|
Wexford
Trust
|
|
Hotchkis
& Wiley Funds
|
Wisconsin
Capital Funds, Inc.
|
|
Intrepid
Capital Management Funds Trust
|
WY
Funds
|
|
(b)
|
To
the best of Registrant’s knowledge, the directors and executive officers
of Quasar Distributors, LLC are as
follows:
|
|
Name
and Principal
Business
Address
|
Position
and Offices with Quasar
Distributors,
LLC
|
Positions
and Offices
with
Registrant
|
|
James
R. Schoenike(1)
|
President,
Board Member
|
None
|
|
Andrew
M. Strnad(2)
|
Secretary
|
None
|
|
Joe
D. Redwine(1)
|
Board
Member
|
None
|
|
Robert
Kern(1)
|
Board
Member
|
None
|
|
Eric
W. Falkeis(1)
|
Board
Member
|
None
|
|
Susan
LaFond(1)
|
Treasurer
|
None
|
|
Teresa
Cowan(1)
|
Assistant
Secretary
|
None
|
|
(1) This
individual is located at 615 East Michigan Street, Milwaukee, Wisconsin
53202.
(2) This
individual is located at 6602 East 75th Street, Indianapolis, Indiana
46250.
|
||
(c) Not
applicable.
Item
33. Location of Accounts and Records.
The books
and records required to be maintained by Section 31(a) of the Investment Company
Act of 1940 are maintained at the following locations:
|
Records
Relating to:
|
Are
located at:
|
|
Registrant’s
Fund Administrator, Fund Accountant and Transfer Agent
|
U.S.
Bancorp Fund Services, LLC
615
East Michigan Street, 3rd Floor
Milwaukee,
Wisconsin 53202
|
|
Registrant’s
Custodian
|
U.S.
Bank National Association
1555
North River Center Drive, Suite 302
Milwaukee,
Wisconsin 53212
|
|
Investment
Advisor
|
Davidson
Investment Advisors, Inc.
8
Third Street North
Great
Falls, Montana 59401
|
|
Registrant’s
Distributor
|
Quasar
Distributors, LLC
615
East Michigan Street, 4th
Floor
Milwaukee,
Wisconsin
53202
|
C-4
Item
34. Management Services Not Discussed in Parts A and B.
Not
Applicable.
Item
35. Undertakings.
Not
Applicable.
C-5
SIGNATURES
Pursuant to the requirements of the
Securities Act of 1933, as amended, and the Investment Company Act of 1940, as
amended, the Registrant has duly caused this Post-Effective Amendment
No. 290 to its Registration Statement on Form N-1A to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of
Milwaukee and State of Wisconsin, on the 28th day of August, 2009.
Advisors
Series Trust
By:/s/ Douglas G.
Hess
Douglas
G. Hess
President
Pursuant to the requirements of the
Securities Act of 1933, as amended, this Post-Effective Amendment No. 290 to its
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
|
Signature
|
Title
|
Date
|
|
|
Michael D. LeRoy*
|
Trustee
|
August
28, 2009
|
|
|
Michael
D. LeRoy
|
|||
|
Donald E. O’Connor*
|
Trustee
|
August
28, 2009
|
|
|
Donald
E. O’Connor
|
|||
|
George J. Rebhan*
|
Trustee
|
August
28, 2009
|
|
|
George
J. Rebhan
|
|||
|
George T. Wofford*
|
Trustee
|
August
28, 2009
|
|
|
George
T. Wofford
|
|||
|
Joe D. Redwine*
|
Trustee,
Chairman and
|
August
28, 2009
|
|
|
Joe
D. Redwine
|
Chief
Executive Officer
|
||
|
/s/ Cheryl L. King
|
Treasurer
and Principal
|
August
28, 2009
|
|
|
Cheryl
L. King
|
Financial
Officer
|
||
|
/s/ Douglas G. Hess
|
President
and Principal
|
August
28, 2009
|
|
|
Douglas
G. Hess
|
Executive
Officer
|
||
|
*By:/s/ Douglas G. Hess
|
August
28, 2009
|
||
|
Douglas
G. Hess
Attorney-In
Fact pursuant to
Power
of Attorney
|
C-6
EXHIBIT
LIST
|
Exhibit
|
Exhibit No.
|
|
Amendment
to the Fund Administration Servicing Agreement
|
EX-99.h.i.2
|
|
Amendment
to the Transfer Agent Servicing Agreement
|
EX-99.h.ii.3
|
|
Amendment
to the Fund Accounting Servicing Agreement
|
EX-99.h.iii.2
|
|
Code
of Ethics (Advisor)
|
EX-99.p.ii
|
C-7