N-CSRS 1 pf-ncsrs.htm PZENA FUNDS SEMIANNUAL REPORT 8-31-18
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES




Investment Company Act file number 811-07959



Advisors Series Trust
(Exact name of registrant as specified in charter)



615 East Michigan Street
Milwaukee, WI 53202
(Address of principal executive offices) (Zip code)


Emily R. Enslow, Vice President/Secretary
Advisors Series Trust
c/o U.S. Bancorp Fund Services, LLC
777 East Wisconsin Avenue, 10th Floor
Milwaukee, WI 53202
(Name and address of agent for service)



(414) 765-6872
Registrant's telephone number, including area code



Date of fiscal year end: February 28, 2019



Date of reporting period:  August 31, 2018



Item 1. Reports to Stockholders.


 
 
 









PZENA MID CAP VALUE FUND
Investor Class PZVMX
Institutional Class PZIMX

PZENA EMERGING MARKETS VALUE FUND
Investor Class PZVEX
Institutional Class PZIEX

PZENA LONG/SHORT VALUE FUND
Investor Class PZVLX
Institutional Class PZILX

PZENA SMALL CAP VALUE FUND
Investor Class PZVSX
Institutional Class PZISX

PZENA INTERNATIONAL SMALL CAP VALUE FUND
Investor Class PZVIX
Institutional Class PZIIX



1-844-PZN-1996 (1-844-796-1996) • www.pzenafunds.com



Table of Contents


Letter to Shareholders
1
   
Pzena Funds Commentary
 
Pzena Mid Cap Value Fund
2
Pzena Emerging Markets Value Fund
4
Pzena Long/Short Value Fund
6
Pzena Small Cap Value Fund
8
Pzena International Small Cap Value Fund
10
   
Pzena Mid Cap Value Fund
 
Portfolio Allocation
12
Schedule of Investments
13
   
Pzena Emerging Markets Value Fund
 
Portfolio Allocation
14
Schedule of Investments
15
Portfolio Diversification
17
   
Pzena Long/Short Value Fund
 
Portfolio Allocation
18
Schedule of Investments
19
Schedule of Securities Sold Short
21
   
Pzena Small Cap Value Fund
 
Portfolio Allocation
23
Schedule of Investments
24
   
Pzena International Small Cap Value Fund
 
Portfolio Allocation
26
Schedule of Investments
27
Portfolio Diversification
29
   
Statements of Assets and Liabilities
30
   
Statements of Operations
32
   
Statements of Changes in Net Assets
 
Pzena Mid Cap Value Fund
34
Pzena Emerging Markets Value Fund
35
Pzena Long/Short Value Fund
36
Pzena Small Cap Value Fund
37
Pzena International Small Cap Value Fund
38
   
Statement of Cash Flows – Pzena Long/Short Value Fund
39
   
Financial Highlights
 
Pzena Mid Cap Value Fund
40
Pzena Emerging Markets Value Fund
42
Pzena Long/Short Value Fund
44
Pzena Small Cap Value Fund
46
Pzena International Small Cap Value Fund
48
   
Notes to Financial Statements
50
   
Expense Example
62
   
Notice to Shareholders
64
   
Privacy Notice
65



Dear Shareholder:
 
The global bull market in equities that began in March 2009 continued apace. Yet recently, strength in the U.S. market is overshadowing shorter-term forces affecting markets outside the U.S. The emerging markets have pulled back significantly since their high in January as investors worry about trade wars, U.S. interest rates and a strong dollar. Strength in the dollar has reduced the U.S. investor’s returns from overseas investments. And while economic progress roars ahead in the U.S., economic news from Europe is not as strong, as Brexit, tariff concerns, financial problems in Italy, and other events have led to a tapering off of business activity.
 
This period has also been remarkable for the severe headwinds value stocks have faced. Investors still maintain a preference for what has recently been working for them, namely high growth technology names and stable earners, both of which investors perceive to be immune to the normal economic forces. By way of example, over the past six months, just three names – accounting for 9.1% of the Russell 1000 Index – delivered 29% of the index’s return. Each is a technology company: Apple Inc., Amazon.com, Inc., and Microsoft Corporation.
 
Some of this strong performance is the result of a premium often bestowed on disruptors. Controversy swirls around disruptors and everything in their path. Retailers the world over, for example, have been faced with the challenge of e-commerce for well over a decade, and a long shadow now looms over every distributor and middle-man. The mere mention of Amazon’s interest in an industry sends investors scurrying for the exits. As the valuations of affected companies sag, our research kicks into high gear, aimed at identifying businesses with defensible franchises that present the opportunity for outsized gains.  We rely on this research to differentiate between the potential winners and those destined to a bleak future.  Interestingly, and often overlooked, many businesses assumed to be on the wrong side of technology are absorbing technology to make their already good franchises even better. Banks, autos, and industrial distribution provide the backdrop to illustrate how innovative technologies enhance their value proposition and how scale, service, and proximity provide competitive advantages that are hard for the disruptors to duplicate. There are many such examples in our Funds today.
 
Disruption, however, is not the only driver creating investment opportunities. Historically, over-reaction to earnings disappointments, restructuring situations, and other company-specific challenges, as well as macro events such as tariffs, have enabled us to build portfolios of stocks with, what we believe, have multiple pathways to their full earnings potential. Many of our holdings fall into this more-traditional bucket of value opportunities, and we are finding them in a wide variety of industries.
 
We continue to wait patiently for value to be realized in our holdings. The climate does, however, continue to present new opportunities as fear drives responses to near-term disappointment or stress. We remain excited by the scope and scale of the opportunity in value today which spans a range of companies and are optimistic that these values will ultimately be unlocked.
 
We thank you for your investment and commitment to Pzena Investment Management. As always, we welcome your comments and feedback.
 
Best regards,
 
Pzena Investment Management, LLC
 

 

 

 

 
Past performance does not guarantee future results.
 
Growth stocks typically are more volatile than value stocks; however, value stocks generally have a lower expected growth rate in earnings and sales.
 
The Russell 1000® Index is an unmanaged index and is a subset of the Russell 3000® Index; it measures the performance of approximately 1000 of the largest securities based on a combination of their market cap and current index membership. The index cannot be invested in directly.
 
1


 
Pzena Mid Cap Value Fund
Commentary
August 2018

Average Annual Total Returns for the semi-annual fiscal period ended August 31, 2018.
 
 
Three
Six
One
Since Inception
 
Months(1)
Months(1)
Year
(3/31/2014)
Pzena Mid Cap Value Fund – Investor Class (PZVMX)
3.57%
1.08%
12.19%
8.53%
Pzena Mid Cap Value Fund – Institutional Class (PZIMX)
3.64%
1.31%
12.54%
8.85%
Russell Midcap® Value Index
4.96%
6.89%
12.67%
9.08%
 
(1)
Not annualized.
 
Performance data quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance of the Fund may be lower or higher than the performance quoted. Performance data current to the most recent month-end may be obtained by calling 844.PZN.1996 (844.796.1996). Performance data shown does not reflect the 1.00% redemption fee imposed on shares held 30 days or less. If it did, total returns would be reduced.
 
PZVMX Expense Ratio – Gross: 3.71%
PZVMX Expense Ratio – Net: 1.26%*
 
PZIMX Expense Ratio – Gross: 2.84%
PZIMX Expense Ratio – Net: 0.91%*
 
Expense ratios shown are as of the Fund’s registration statement dated June 28, 2018.
 
*
 Pzena Investment Management, LLC, the Fund’s investment adviser, has contractually agreed to waive a portion or all of its management fees and pay Fund expenses through at least June 27, 2019.
 
Burgeoning trade wars, European political fear, and rising interest rates all conspired to make markets volatile over the past six months, and drove investors towards companies viewed as delivering reliable growth, with little concern for their valuations.  Growth stocks outpaced value by a wide margin across the market cap spectrum. The Russell 1000 Value Index and Russell Midcap Value Index advanced 4.86% and 6.89%, respectively, compared to the Russell 1000 Growth Index’s return of 11.66% and Russell Midcap Growth Index’s return of 11.26%.  In the Russell Midcap Value Index, financial services, energy, and utilities drove returns, while materials & processing and consumer discretionary were the only sectors in the red.
 
The continued focus in the market on growth and certainty weighed on Fund performance over the period.  Pharmaceutical distributor, Cardinal Health, Inc. (“Cardinal”), declined 23.29%, as the company reported operating and integration issues in its medical segment relating to the Cordis acquisition. The company’s pricing guidance for the pharmaceutical segment was also weaker than expectations. We remain constructive on Cardinal, however, and fellow Fund holding McKesson Corp. The pharmaceutical distributors operate in a highly regulated and evolved industry with efficient operations that operate at low margins, which we believe create significant barriers to entry for a new player. In consumer discretionary, car rental company Avis Budget Group, Inc., traded down 31.14% on continued concerns around used vehicle values and industry pricing, though operating results for the start of the year showed encouraging trends. Also weak was door and window manufacturer, JELD-WEN Holding, Inc. (“JELD-WEN”), as shares declined 21.95%, reflecting concerns about rising costs, recent weakness in organic growth, and an adverse legal decision in an action brought by a customer. JELD-WEN also replaced its CEO over disappointing earnings in recent quarters. Our investment case continues to be based on an attractive duopoly market structure and the company’s ability to generate high returns on capital over the long-term.
 
Positions in producer durables were the main contributors in the Fund, led by KBR, Inc. (“KBR”) and Carlisle Companies Incorporated (“Carlisle”). KBR, the global engineering and construction firm with a focus on LNG and Government Services, gained 39.85% during the period. For the company’s most recent quarter, KBR reported 11% organic growth in Government Services on higher defense spending. Management raised 2018 guidance, and provided bullish 2019 commentary, on expectations KBR should begin to benefit from LNG and other hydrocarbon recovery. Similarly, Carlisle recently reported strong quarterly results, as earnings beat consensus on higher revenue growth, better margins, and a lower tax rate.
 
During the period, we initiated several new positions in the Fund, most notably Anixter International Inc. (“Anixter”), Fifth Third Bancorp, and Newell Brands Inc.  Anixter is a distributor of enterprise cabling and security products, electrical wiring and cable products. Stock performance has been weak as the Network & Security Solutions division posted negative organic growth and margin pressure due to lower vendor rebates and higher transportation costs. We believe the lull in growth is temporary and that the company
 
2


 
Pzena Mid Cap Value Fund
Commentary (Continued)
August 2018

ultimately should be able to recover margin due to its strong competitive positioning and value proposition. Fifth Third Bancorp, a regional bank, has been executing on several strategic initiatives, and has been improving balance sheet mix, product offerings, and customer experience. Capital levels remain elevated, and we believe there is a significant opportunity for capital return in excess of earnings. Newell Brands Inc. is a consumer products company that recently merged with Jarden and now owns a collection of well-known brands including Graco, Coleman, Rubbermaid, and Calphalon. Integration issues, the sudden bankruptcy of Toys-R-Us, and inventory tightening by office superstores pressured sales and margins. The long-term profit history of the brands bolsters our belief in the durability of the franchise, and management has a credible plan to sell the non-core brands to reduce leverage, which enabled us to purchase this diverse set of brands at what we believe to be an attractive valuation. Other new positions in the Fund included McKesson Corporation, AXA Equitable Holdings, Inc., National Oilwell Varco, Inc., Snap-on Incorporated, Realogy Holdings Corp, and Foot Locker Inc.
 
To help fund our purchases, there were several sells during the period. We exited XL Group Ltd. as it rallied on news that it was being acquired by AXA S.A., and did the same with Validus Holdings, Ltd. as American International Group Inc. is in the process of acquiring the insurer. We eliminated our position in Micro Focus International plc, which spun out of Hewlett Packard Enterprise Co. a year ago, as we were concerned about the deterioration in its operations. We sold Superior Energy Services, Inc. and used the proceeds to build our position in National Oilwell Varco, Inc. We also exited Lamar Advertising Company, Comerica Incorporated, HP Inc., Flex Ltd., Webster Financial Corporation, Hilton Worldwide Holdings Inc, and Torchmark Corporation, all on valuation.
 
Valuation dispersion in the market remains wide, and while in aggregate the market appears overvalued, we continue to see opportunities in a broad range of industries. The Fund remains invested in attractively valued, economically sensitive sectors including financials and producer durables, with limited exposure to consumer staples, utilities, and materials as valuations in these sectors are less attractive.
 
Past performance does not guarantee future results. Investment performance reflects fee waivers in effect. In the absence of such waivers, total return would be reduced.
 
Mutual fund investing involves risk. Principal loss is possible. Investments in mid-cap companies involve additional risks such as limited liquidity and greater volatility than larger companies. Investments in foreign securities involve political, economic and currency risks, greater volatility and differences in accounting methods. These risks are greater for investments in emerging markets. The Fund may have emphasis on a specific sector which could adversely affect a fund to a greater extent than if its emphasis was less. The Fund may invest in securities which are less liquid and more difficult to sell than more liquid securities. The value investing style may over time go in and out of favor. At times when the value investing style is out of favor, the Mid Cap Fund may underperform other funds that use different investing styles. Investments in real estate investment trusts are subject to the risks associated with the direct ownership of real estate.
 
Fund holdings, exposures and characteristics are as of the date shown and are subject to change at any time. Please refer to the Schedule of Investments for more information.
 
The opinions expressed in this letter are those of the Fund manager, are subject to change, are not guaranteed, and should not be considered recommendations to buy or sell any security.
 
The Russell Midcap® Value Index is an unmanaged index that measures the performance of those Russell Mid Cap® companies with lower price-to-book ratios and lower forecasted growth rates. The Russell Midcap® Growth Index is an unmanaged index that measures the performance of those Russell Mid Cap® companies with higher price-to-book ratios and higher forecasted growth rates. The Russell 1000® Value Index is an unmanaged index that measures the performance of those Russell 1000® companies with lower price-to-book ratios and lower forecasted growth rates. Russell 1000® Growth Index is an unmanaged index that measures the performance of those Russell 1000 companies with higher price-to-book ratios, higher predicted and historical growth rates. An index cannot be invested in directly.
 

3



Pzena Emerging Markets Value Fund
Commentary
August 2018

Average Annual Total Returns for the semi-annual fiscal period ended August 31, 2018.
 
 
Three
Six
One
Since Inception
 
Months(1)
Months(1)
Year
(3/31/2014)
Pzena Emerging Markets Value Fund – Investor Class (PZVEX)
-2.88%
  -8.81%
-2.90%
1.97%
Pzena Emerging Markets Value Fund – Institutional Class (PZIEX)
-2.88%
  -8.64%
-2.65%
2.24%
MSCI Emerging Markets Index
-4.70%
-10.18%
-0.68%
3.90%
 
(1)
Not annualized.
 
Performance data quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance of the Fund may be lower or higher than the performance quoted. Performance data current to the most recent month-end may be obtained by calling 844.PZN.1996 (844.796.1996). Performance data shown does not reflect the 1.00% redemption fee imposed on shares held 60 days or less. If it did, total returns would be reduced.
 
PZVEX Expense Ratio – Gross: 2.07%
PZVEX Expense Ratio – Net: 1.61%*
 
PZIEX Expense Ratio – Gross: 1.76%
PZIEX Expense Ratio – Net: 1.26%*
 
Expense ratios shown are as of the Fund’s registration statement dated June 28, 2018.
 
Pzena Investment Management, LLC, the Fund’s investment adviser, has contractually agreed to waive a portion or all of its management fees and pay Fund expenses through at least June 27, 2019.
 
Emerging market equities saw outflows during the past six months, as fears over growing protectionist policies, rising geopolitical tensions, and tighter Federal Reserve monetary policy took hold. The MSCI Emerging Markets Index declined by 10.18%. Political uncertainty in Brazil (-28.37%) and the heightened financial crisis in Turkey (-54.86%) caused investors to flee those countries at the greatest pace, while Qatar was up significantly (+21.83%), followed by modest gains in India and Egypt. All sectors declined; energy was the most resilient, down only 0.99%, as crude oil prices strengthened during the period. The Fund was down but outperformed its benchmark driven by stock selection in information technology and positions in China.
 
On an individual basis, leading detractors were Turkish bank Akbank TAS (“Akbank”), Brazilian water and sewage utility company, Companhia de Saneamento Basico do Estado de Sao Paulo SABESP (“SABESP”), and Standard Chartered PLC (“Standard Chartered”), a London-headquartered bank with approximately 90% of its revenues from Asia, Africa and the Middle East. Akbank declined 67.72%, as Turkey’s already fragile financial health worsened during recent months and the value of the lira continues to decline. Despite announcing good numbers during the latest quarter, that showed earnings per share beating consensus driven by better revenue and lower bad debt provisions, Akbank is highly sensitive to the macro economy and its impact on the credit cycle. SABESP was down 47.63%, reporting an earnings miss that followed on the heels of a sudden CEO replacement and a disappointing tariff decision by the regulator. EBITDA missed consensus (by ~3%) due to weaker than expected water sales volumes and higher costs across the board. Standard Chartered reported a couple of disappointing quarters with lower-than-expected revenue growth and higher-than-expected costs, although a positive was capital ratios showed improvement. We maintain our positions in Akbank, SABESP, and Standard Chartered.
 
Leading contributors were the Chinese PC, smartphone, and data center equipment manufacturer Lenovo Group (“Lenovo”) and Russian energy names Rosneft Oil Co. (“Rosneft”) and Lukoil PJSC (“Lukoil”). Lenovo, up 31.22%, recently reported better-than-expected and encouraging 1QFY19 results, characterized by healthy topline growth and an improvement in operating income and margins. By segment, PC sales were strong; Mobile and Data Center continued to lose money, but the level of losses appears to be declining with both segments, showing signs that management’s turnaround efforts appear to be progressing. Russian oil majors, Rosneft (+11.76%) and Lukoil (+6.68%), both benefitted from rising crude oil prices during the period. Rosneft announced changes to the strategic outlook, focusing on capital discipline and capital return, looking for a 50% payout ratio and a $2 billion buyback, via lower capex, the sale of non-core assets, and some borrowing. Similar to Rosneft, Lukoil strengthened as it announced a share buyback program and improved their capital return policy to shareholders.
 
The largest additions to the Fund the past six months were Asian companies ICICI Bank Limited (“ICICI Bank”), Huadian Power International Corp. Ltd. (“Huadian Power”) and Realtek Semiconductor Corp. (“Realtek”). At around 11x our estimate of normalized earnings, private sector bank ICICI is more richly valued than our existing holdings in Indian public-sector banks, but its higher
 
4

Pzena Emerging Markets Value Fund
Commentary (Continued)
August 2018

quality (both credit and deposit franchise) makes it a good candidate to increase our exposure to the unwinding of the Indian infrastructure boom. Huadian Power is one of the largest coal utilities in China. While Huadian Power’s profitability has been hurt by rising coal prices, we believe it should improve through a combination of regulatory price increases and coal price normalization. Realtek is a Taiwan-based fabless semiconductor company with approximately $1.4bn in sales, serving end markets like communications, PC peripheral and media. The company has followed a strategy of becoming a market leader by focusing on mature tech categories by focusing on being the cost leader in each market. The company has continued to gain share and recent weakness in its gross margins led to the underperformance of the stock and have created an attractive opportunity. We believe these issues are temporary and should be resolved, as the company executes on launching higher performance WiFi chips and gains share in the auto ethernet business. We exited our position in Russian energy major, PJSC Gazprom, due to its questionable capital discipline.
 
The opportunity set in emerging markets continues to be highly idiosyncratic based on company-specific opportunities. The Fund’s largest weightings are to the financial and information technology sectors, though we remain below the index weight in both. We do not own any real estate stocks and have a small exposure to health care and consumer staples. Regionally, Asia is our largest area of focus, represented by large weightings to China and Korea; Latin America remains underrepresented.
 
Past performance does not guarantee future results. Investment performance reflects fee waivers in effect. In the absence of such waivers, total return would be reduced.
 
Mutual fund investing involves risk. Principal loss is possible. Investments in foreign securities involve political, economic and currency risks, greater volatility and differences in accounting methods. These risks are greater for investments in emerging markets. The Fund may have emphasis on a specific sector which could adversely affect a fund to a greater extent than if its emphasis was less. The Fund may invest in securities which are less liquid and more difficult to sell than more liquid securities. The Fund may invest in participation notes which are a type of equity linked derivative and involve counterparty risk and risk that the performance of the security may not exactly match the performance of the issuer. Investments in real estate investment trusts are subject to the risks associated with the direct ownership of real estate.
 
Fund holdings, exposures and characteristics are as of the date shown and are subject to change at any time. Please refer to the Schedule of Investments for more information. The opinions expressed in this letter are those of the Fund manager, are subject to change, are not guaranteed, and should not be considered recommendations to buy or sell any security.
 
EBITDA: Earnings before interest, taxes, depreciation and amortization (EBITDA) refers to a company’s earnings with interest, taxes, depreciation and amortization expenses added back to it.
 
The MSCI Emerging Markets Index is a free float-adjusted market capitalization index that is designed to measure equity market performance of emerging markets, and provides equity returns including dividends net of withholding tax rates as calculated by MSCI. The index cannot be invested in directly.
 
5


 
Pzena Long/Short Value Fund
Commentary
August 2018

Average Annual Total Returns for the semi-annual fiscal period ended August 31, 2018.
 
 
Three
Six
One
Since Inception
 
Months(1)
Months(1)
Year
(3/31/2014)
Pzena Long/Short Value Fund – Investor Class (PZVLX)
0.10%
-3.32%
  3.25%
  2.52%
Pzena  Long/Short Value Fund – Institutional Class (PZILX)
0.19%
-3.10%
  3.61%
  2.82%
Russell 1000® Index
7.71%
 8.32%
19.82%
12.47%
ICE BofAML 0-3 Month U.S. Treasury Bill Index
0.49%
 0.91%
  1.47%
  0.50%
50% Russell 1000® Index/50% ICE BofAML
       
  0-3 Month U.S. Treasury Bill Index
4.07%
 4.59%
10.39%
  6.45%
 
(1)
Not annualized.
 
Performance data quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance of the Fund may be lower or higher than the performance quoted. Performance data current to the most recent month-end may be obtained by calling 844.PZN.1996 (844.796.1996). Performance data shown does not reflect the 1.00% redemption fee imposed on shares held 60 days or less. If it did, total returns would be reduced.
 
PZVLX Expense Ratio – Gross: 7.49%
PZVLX Expense Ratio – Net: 2.85%*
 
PZILX Expense Ratio – Gross: 6.73%
PZILX Expense Ratio – Net: 2.50%*
 
Expense ratios shown are as of the Fund’s registration statement dated June 28, 2018.
 
Pzena Investment Management, LLC, the Fund’s investment adviser, has contractually agreed to waive a portion or all of its management fees and pay Fund expenses through at least June 27, 2019.
 
Burgeoning trade wars, European political fear, and rising interest rates all conspired to make markets volatile over the past six months.  Growth stocks outpaced value by a wide margin, with the Russell 1000 Value Index advancing 4.86% for the six months through August 31st, compared to the Growth Index that returned 11.66%, resulting in a 8.32% return for the style neutral Russell 1000 Index. Growth’s outperformance was led by a narrow group of stocks (Amazon.com, Inc., Apple Inc., Microsoft Corporation, Alphabet Inc., Netflix, Inc.), as investors stayed away from stability and yield in favor of companies viewed as delivering reliable growth, with little concern for their valuations.  On the other hand, companies that disappointed in delivering growth were severely punished. The Russell 1000 Index was driven by, not surprisingly, technology, followed by health care and consumer discretionary. No sector delivered negative returns; materials & processing and consumer staples lagged most.
 
The Fund underperformed the Russell 1000 Index and our custom benchmark. The underperformance was primarily driven by our long book which lagged the performance of both the Russell 1000 Index and Russell 1000 Value Index for the period. The short book contributed modestly in the period as the short book’s performance lagged that of the Russell 1000 Index. Long and short positioning in financial services and healthcare, and long positioning in consumer discretionary and technology had the largest impact on performance. Our three largest individual detractors were long positions in Ingredion Inc. (“Ingredion”), down 21.85%, JELD-WEN Holding, Inc. (“JEL-WEN”), down 21.95%, and Morgan Stanley, down 11.90%. Ingredion (starches and sweeteners producer) declined on weaker-than-expected second quarter earnings per share due to lower-than-expected North America performance. JELD-WEN (door and window manufacturer) was weak, reflecting concerns about rising costs, recent weakness in organic growth, and an adverse legal decision in an action brought by a customer. JELD-WEN also replaced its CEO over disappointing earnings. Our investment case continues to be based on an attractive duopoly market structure and the company’s ability to generate high returns on capital over the long-term. Morgan Stanley (universal bank) has reported strong quarterly results and raised guidance, but macro concerns around yield curve inversion, trade wars, and European political uncertainty drove the sector lower. In the short book, health care and financial services positions were the top detractors. Biotech names, for example, such as FibroGen, Inc. and Seattle Genetics, Inc. continued to move against the Fund, as did real estate investment trusts (“REITS”), CyrusOne Inc., and Sun Communities, Inc.
 
Market leadership by growth stocks has contributed to a widening of valuation spreads to one of the widest points in the past 50+ years. Although the broad market appears fully valued, we believe wide spreads continue to offer a good environment for value investing and we see an assortment of attractive value investments and a broadening opportunity set. Overall, our long book is exposed
 
6

 
Pzena Long/Short Value Fund
Commentary (Continued)
August 2018

to sectors whose earnings are depressed and expectations are low: principally financials, as we continue to see strong earnings growth from large expense reductions and share buybacks, health care, technology, and consumer discretionary names. Our short book is exposed to stocks with rich valuations across sectors like the biotech stocks in health care; some of the new technology stocks in IT; and REITS within financial services. Financials is still our largest net exposure, followed by the health care and consumer discretionary sectors, and we are net short the materials & processing and consumer staples sectors.  We remain encouraged by the breadth and depth of opportunities today and are optimistic that these values will ultimately be unlocked.
 
Past performance does not guarantee future results. Investment performance reflects fee waivers in effect. In the absence of such waivers, total return would be reduced.
 
Mutual fund investing involves risk. Principal loss is possible. Investments in foreign securities involve political, economic and currency risks, greater volatility and differences in accounting methods. The Fund may make short sales of securities, which involves the risk that losses may exceed the original amount invested in these securities. The Fund may have emphasis on a specific sector which could adversely affect a fund to a greater extent than if its emphasis was less. The Fund may invest in securities which are less liquid and more difficult to sell than more liquid securities. The value investing style may over time go in and out of favor. At times when the value investing style is out of favor, the Long/Short Fund may underperform other funds that use different investing styles. Investments in real estate investment trusts are subject to the risks associated with the direct ownership of real estate.
 
Fund holdings, exposures and characteristics are as of the date shown and are subject to change at any time. Please refer to the Schedule of Investments for more information.
 
The opinions expressed in this letter are those of the Fund manager, are subject to change, are not guaranteed, and should not be considered recommendations to buy or sell any security.
 
The Russell 1000® Index is an unmanaged index and is a subset of the Russell 3000® Index; it measures the performance of approximately 1000 of the largest securities based on a combination of their market cap and current index membership. The Russell 1000® Value Index is an unmanaged index that measures the performance of those Russell 1000® companies with lower price-to-book ratios and lower forecasted growth rates. An index cannot be invested in directly. The Bank of America Merrill Lynch 0-3 month U.S. Treasury Bill Index measures the performance of short-term U.S. Government securities with a remaining term to final maturity of less than three months. The index cannot be invested in directly. The blended index represents a 50% weighting of the Russell 1000® Index, and a 50% weighting of the Bank of America Merrill Lynch 0-3 month U.S. Treasury Bill Index, both described above.
 

7


 
Pzena Small Cap Value Fund
Commentary
August 2018

Average Annual Total Returns for the semi-annual fiscal period ended August 31, 2018.
 
 
Three
Six
One
Since Inception
 
Months(1)
Months(1)
Year
(4/27/2016)
Pzena Small Cap Value Fund – Investor Class (PZVSX)
-0.16%
11.35%
17.82%
12.99%
Pzena Small Cap Value Fund – Institutional Class (PZISX)
-0.08%
11.55%
18.20%
13.36%
Russell 2000® Value Index
 4.82%
14.24%
20.05%
18.21%
 
(1)
Not annualized.
 
Performance data quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance of the Fund may be lower or higher than the performance quoted. Performance data current to the most recent month-end may be obtained by calling 844.PZN.1996 (844.796.1996). Performance data shown does not reflect the 1.00% redemption fee imposed on shares held 30 days or less. If it did, total returns would be reduced.
 
PZVSX Expense Ratio – Gross: 2.95%
PZVSX Expense Ratio – Net: 1.56%*
 
PZISX Expense Ratio – Gross: 2.57%
PZISX Expense Ratio – Net: 1.21%*
 
Expense ratios shown are as of the Fund’s registration statement dated June 28, 2018.
 
*
 Pzena Investment Management, LLC, the Fund’s investment adviser, has contractually agreed to waive a portion or all of its management fees and pay Fund expenses through at least June 27, 2019.
 
Small cap stocks delivered very strong returns, performing significantly better than their large cap peers (which also rose), as the threat of foreign tariffs and the benefits of domestic tax cuts drove investors toward smaller companies that tend to be more domestically focused. Small cap value stocks trailed their growth peers, though the gap was less significant than it was in the large cap space. Additionally, M&A activities continued to heat up, with many of the Fund’s positions benefiting from acquisitions or takeover speculation. The strongest returns in the Russell 2000 Value Index came from energy, health care, and utilities stocks.
 
The Fund’s return trailed the Russell 2000 Value Index as holdings in technology (the ATM manufacturer Diebold Nixdorf, Incorporated (“Diebold”) was the Fund’s largest detractor), consumer discretionary (Avis Budget Group, Inc., was the second-largest detractor) and health care sectors lagged. Diebold traded down as weak results and the new CEO’s expensive restructuring plans have caused free cash flow to turn negative, increasing the company’s leverage. The weakening of the balance sheet put the company at risk of tripping covenants and having to raise new capital, increasing the range of outcomes for the stock and leading to us exiting the position. Avis Budget Group, Inc., was down on continued concerns around used vehicle values and industry pricing, though operating results for the start of the year showed encouraging trends. The third-largest detractor was door and window manufacturer, JELD-WEN Holding, Inc. (“JELD-WEN”), which was down on concerns about rising costs, recent weakness in organic growth, and an adverse legal decision in an action brought by a customer. JELD-WEN also replaced its CEO over disappointing earnings. Our investment case continues to be based on an attractive duopoly market structure and the company’s ability to generate high returns on capital over the long-term.
 
Conversely, strong performance was delivered by producer durables holdings, led by Essendant, Inc. (“Essendant”), up 86.92% during the period. Essendant (wholesaler of office essentials) was strong after announcing a transaction to combine with competitor S.P. Richards, which should drive substantial synergies, as well as on news that Staples tried to acquire the company. Insight Enterprises (tech. value-added reseller) was another strong performer, up 57.86%; the company reported very strong results in May and raised its 2018 guidance. Earnings per share was well ahead of consensus driven by solid sales on a continued strong device refresh cycle (mostly PCs but also servers) as well as growth in its services business. The company has also demonstrated strong SG&A (selling, general & administrative expense) management, which together with the sales growth has led to better-than-expected operating margins.
 
During the period we initiated a position in Celestica Inc., an electronic manufacturing services (EMS) company with a global footprint, in Navigant, a professional services company that has a strong consulting franchise and is building a revenue cycle management outsourcing business for hospital groups, and in Ryder Systems, Inc., a leading provider of commercial fleet management and supply chain solutions. And we added the leading provider of neonatal physician services, MEDNAX, Inc., which, despite a long
 
8

 
Pzena Small Cap Value Fund
Commentary (Continued)
August 2018

history of stable margins, has seen earnings suffer recently from weak birth volumes, adverse payer mix, and cyclical wage inflation, which we expect to be offset by management actions and normalization in births. In addition to Diebold, we sold Validus Holdings, Ltd. as AIG (American International Group, Inc.) is in the process of acquiring the insurer, Ply Gem Holdings, Inc. (window and siding manufacturer), which is being acquired by private equity, and Verifone Systems, Inc. (payment terminals), which was acquired by private equity at a substantial premium. We sold our remaining position in Owens & Minor Inc. (health care distributor) as challenging business trends and an expensive acquisition led to lower normalized earnings power and General Cable Corp. (leading wire and cable manufacturer) which was acquired by Italian competitor, Prysmian Group, at a large premium. We trimmed Cubic Corporation (leading developer of mass transit fair collection systems), Chart Industries, Inc. (maker of liquefied gas solutions) and Evertec Inc. (Puerto Rico based data processor), all on valuation.
 
We continue to see opportunities in a broader number of industries due to market moves in recent months but the Fund remains heavily invested in attractively valued, economically sensitive sectors including financials and producer durables, as well as certain areas of technology, such as specialty technology hardware companies in consolidated markets. We still aren’t finding opportunities in perceived ‘safe’ sectors including REITs and utilities.
 
Past performance does not guarantee future results. Investment performance reflects fee waivers in effect. In the absence of such waivers, total return would be reduced.
 
Mutual fund investing involves risk. Principal loss is possible. Investments in small-cap companies involve additional risks such as limited liquidity and greater volatility than larger companies. Investments in foreign securities involve political, economic and currency risks, greater volatility and differences in accounting methods. These risks are greater for investments in emerging markets. The Fund may have emphasis on a specific sector which could adversely affect a fund to a greater extent than if its emphasis was less. The Fund may invest in securities which are less liquid and more difficult to sell than more liquid securities. The value investing style may over time go in and out of favor. At times when the value investing style is out of favor, the Small Cap Value Fund may underperform other funds that use different investing styles. Investments in real estate investment trusts are subject to the risks associated with the direct ownership of real estate.
 
Fund holdings, exposures and characteristics are as of the date shown and are subject to change at any time. Please refer to the Schedule of Investments for more information. The opinions expressed in this letter are those of the Fund manager, are subject to change, are not guaranteed, and should not be considered recommendations to buy or sell any security.
 
Free cash flow is calculated as operating cash flow minus capital expenditures.
 
The Russell 2000® Value Index measures the performance of those Russell 2000® companies with lower price-to-book ratios and lower forecasted growth values.  The index cannot be invested in directly.
 


9


Pzena International Small Cap Value Fund
Commentary
August 2018

Average Annual Total Returns for the semi-annual period ended August 31, 2018.
 
 
Since Inception(1)
 
(7/2/2018)
Pzena International Small Cap Value Fund – Investor Class (PZVIX)
1.00%
Pzena International Small Cap Value Fund – Institutional Class (PZIIX)
1.10%
MSCI World ex-USA Small Cap Index
1.44%
 
(1)
Not annualized.
 
Performance data quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance of the Fund may be lower or higher than the performance quoted. Performance data current to the most recent month-end may be obtained by calling 844.PZN.1996 (844.796.1996). Performance data shown does not reflect the 1.00% redemption fee imposed on shares held 60 days or less. If it did, total returns would be reduced.
 
PZVIX Expense Ratio – Gross: 5.69%
PZVIX Expense Ratio – Net: 1.52%*
 
PZIIX Expense Ratio – Gross: 5.34%
PZIIX Expense Ratio – Net: 1.17%*
 
Expense ratios shown are as of the Fund’s registration statement dated June 28, 2018.
 
Pzena Investment Management, LLC, the Fund’s investment adviser, has contractually agreed to waive a portion or all of its management fees and pay Fund expenses through at least June 27, 2019.
 
International small cap equity performance was mixed in the two-month period since Fund inception (July 2, 2018 to August 31, 2018). The Fund slightly underperformed the broad MSCI World ex-USA Small Cap Index in a market environment that favored growth over value. Sector performance was mixed, with the energy and materials sectors contributing positively, offsetting weakness in consumer staples.
 
Individually, the top contributors were Japanese chemical company, DIC Corporation (“DIC”) and French electrical distributor, Rexel SA (“Rexel”), both up 14%. DIC reported solid quarterly results in the period and maintained full-year guidance despite higher raw material input prices due to the strong performance of Packaging Inks and Fine Chemicals. Investments DIC has made to leverage its technological capabilities in color pigments and resins are paying off, and, while the company remains the largest publishing ink manufacturer, that business now accounts for less than one third of profits. We continue to expect both earnings improvement and market appreciation from this transformation. Rexel also reported strong quarterly earnings during the period with strength in the USA. The U.S. division saw expanded margins and faster organic growth, both positive data points for the self-help initiatives undertaken by the new management team.
 
The largest individual detractor from performance came from exchange-traded fund liquidity provider, Flow Traders NV, which fell by 20% after second-quarter earnings reported net-trading income declines with sequentially lower trading volume and volatility after a record first quarter. We believe the company’s fundamental earnings drivers remain misunderstood, and we continue to hold the position. Aryzta AG (“Aryzta”), the global provider of Swiss-based baker and servicer of bread and pastry products, also detracted from returns. We bought a small initial position in the company due to its high financial leverage. Meanwhile, management’s announcement of its intent to raise additional capital through a rights issue sent shares plunging (-39%). The increased equity is ultimately positive for Aryzta’s investment case. This positive step buys time and financial flexibility for the new management team to streamline its portfolio and execute on the significant self-help opportunities available in both its U.S. and European markets. The reduced share price during the quarter, provided us with an opportunity to add to our position.
 
Our Fund remains skewed toward cyclically depressed exposures in financials and industrials, focused on companies with substantial self-help opportunities where market concerns over earnings uncertainty and volatility have created what we believe are attractive valuations.
 
Past performance does not guarantee future results. Investment performance reflects fee waivers in effect. In the absence of such waivers, total return would be reduced.
 
Mutual fund investing involves risk. Principal loss is possible. Investments in small- and mid-cap companies involve additional risks such as limited liquidity and greater volatility than larger companies. Investments in foreign securities involve political, economic and currency risks, greater volatility and differences
 

 
10

 
Pzena International Small Cap Value Fund
Commentary (Continued)
August 2018

in accounting methods. These risks are greater for investments in Emerging Markets. The fund may have emphasis on a specific sector which could adversely affect a fund to a greater extent than if its emphasis was less. The fund may invest in securities which are less liquid and more difficult to sell than more liquid securities. The fund may invest in p-notes which are a type of equity linked derivative and involve counterparty risk and risk that the performance of the security may not exactly match the performance of the issuer. Investments in REITs are subject to the risks associated with the direct ownership of real estate.
 
Fund holdings, exposures and characteristics are as of the date shown and are subject to change at any time. Please refer to the Schedule of Investments for more information.
 
The opinions expressed in this letter are those of the Fund manager, are subject to change, are not guaranteed, and should not be considered recommendations to buy or sell any security.
 
The MSCI World ex USA Small Cap Index captures small cap representation across 22 of 23 Developed Markets (DM) countries* (excluding the United States). With 2,580 constituents, the index covers approximately 14% of the free float-adjusted market capitalization in each country. *DM countries in this index include: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Hong Kong, Ireland, Israel, Italy, Japan, Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland and the UK.
 
 
 
11


 
Pzena Mid Cap Value Fund
Portfolio Allocation
August 31, 2018 (Unaudited)

 
 
 
 
The portfolio’s holdings and allocations are subject to change. The percentages are of total investments as of August 31, 2018.
 
Note: For presentation purposes, the Fund has grouped some of the industry categories. For purposes of categorizing securities for compliance with Section 8(b)(1) of the Investment Company Act of 1940, as amended, the Fund uses more specific industry classifications.
 
 
 
12

 
Pzena Mid Cap Value Fund
Schedule of Investments
August 31, 2018 (Unaudited)

 
             
% of
 
 
 
Shares
   
Fair Value
   
Net Assets
 
COMMON STOCKS – 97.52%
                 
Consumer Discretionary – 11.42%
                 
Avis Budget Group, Inc. (a)
   
28,600
   
$
889,746
     
1.91
%
Foot Locker, Inc.
   
8,073
     
397,999
     
0.85
%
Interpublic Group of Cos., Inc.
   
48,160
     
1,124,536
     
2.41
%
Newell Brands, Inc.
   
41,323
     
897,535
     
1.92
%
News Corp.
   
55,242
     
722,013
     
1.55
%
Omnicom Group, Inc.
   
18,671
     
1,294,274
     
2.78
%
 
           
5,326,103
     
11.42
%
                         
Energy – 7.99%
                       
Cenovus Energy, Inc. (b)
   
81,507
     
758,830
     
1.63
%
Murphy Oil Corp.
   
27,235
     
839,655
     
1.80
%
National Oilwell Varco, Inc.
   
20,586
     
968,983
     
2.08
%
TechnipFMC PLC (b)
   
37,890
     
1,160,571
     
2.48
%
 
           
3,728,039
     
7.99
%
                         
Financial Services – 32.83%
                       
Allstate Corp.
   
4,675
     
470,165
     
1.01
%
Apollo Global
                       
  Management LLC – Class A
   
28,658
     
989,561
     
2.12
%
AXA Equitable Holdings, Inc.
   
43,801
     
1,005,233
     
2.15
%
Axis Capital Holdings, Ltd. (b)
   
29,006
     
1,668,425
     
3.58
%
Fifth Third Bancorp
   
36,056
     
1,061,128
     
2.27
%
Franklin Resources, Inc.
   
28,693
     
910,716
     
1.95
%
Hanover Insurance Group, Inc.
   
9,699
     
1,188,031
     
2.55
%
Invesco, Ltd. (b)
   
34,314
     
826,967
     
1.77
%
KeyCorp
   
63,302
     
1,333,773
     
2.86
%
KKR & Co, Inc. – Class A
   
63,481
     
1,655,585
     
3.55
%
Realogy Holdings Corp.
   
31,653
     
677,058
     
1.45
%
Regions Financial Corp.
   
60,616
     
1,179,587
     
2.53
%
Voya Financial, Inc.
   
26,188
     
1,311,233
     
2.81
%
Willis Towers Watson PLC (b)
   
7,068
     
1,040,904
     
2.23
%
 
           
15,318,366
     
32.83
%
                         
Health Care – 9.78%
                       
Cardinal Health, Inc.
   
18,508
     
965,933
     
2.07
%
McKesson Corp.
   
7,467
     
961,376
     
2.06
%
MEDNAX, Inc. (a)
   
19,522
     
924,367
     
1.98
%
Mylan N.V. (a)(b)
   
43,711
     
1,710,411
     
3.67
%
 
           
4,562,087
     
9.78
%
                         
Materials & Processing – 2.95%
                       
JELD-WEN Holding, Inc. (a)
   
56,550
     
1,375,296
     
2.95
%
                         
Producer Durables – 18.52%
                       
AECOM Technology Corp. (a)
   
25,131
     
845,407
     
1.81
%
Carlisle Cos., Inc.
   
12,087
     
1,532,752
     
3.29
%
Dover Corp.
   
10,868
     
933,235
     
2.00
%
Genpact, Ltd. (b)
   
27,146
   
 
831,753
     
1.78
%
KBR, Inc.
   
54,203
     
1,137,179
     
2.44
%
Ryder System, Inc.
   
18,276
     
1,404,328
     
3.01
%
Snap-on, Inc.
   
5,919
     
1,046,361
     
2.24
%
Terex Corp.
   
23,418
     
907,448
     
1.95
%
 
           
8,638,463
     
18.52
%
                         
Technology – 10.95%
                       
Anixter International, Inc. (a)
   
21,660
     
1,561,686
     
3.35
%
Avnet, Inc.
   
49,934
     
2,416,805
     
5.18
%
Hewlett Packard Enterprise Co.
   
68,275
     
1,128,586
     
2.42
%
 
           
5,107,077
     
10.95
%
                         
Utilities – 3.08%
                       
Edison International
   
21,827
     
1,434,689
     
3.08
%
Total Common Stocks
                       
  (Cost $45,735,563)
           
45,490,120
     
97.52
%
 
                       
SHORT-TERM INVESTMENTS – 2.88%
                       
Money Market Fund – 2.88%
                       
Fidelity Government Portfolio –
                       
  Class I, 1.82% (c)
   
1,342,508
     
1,342,508
     
2.88
%
Total Short-Term Investments
                       
  (Cost $1,342,508)
           
1,342,508
     
2.88
%
Total Investments
                       
 (Cost $47,078,071) – 100.40%
           
46,832,628
     
100.40
%
Liabilities in Excess
                       
  of Other Assets – (0.40)%
           
(187,195
)
   
(0.40
)%
TOTAL NET ASSETS – 100.00%
         
$
46,645,433
     
100.00
%
 
                       
Percentages are stated as a percent of net assets.
 
PLC  Public Limited Company
(a)
Non-income producing security.
(b)
Foreign issued security.
(c)
The rate listed is the Fund’s 7-day yield as of August 31, 2018.

Note: For presentation purposes, the Fund has grouped some of the industry categories. For purposes of categorizing securities for compliance with Section 8(b)(1) of the Investment Company Act of 1940, as amended, the Fund uses more specific industry classifications.


The accompanying notes are an integral part of these financial statements.

13


Pzena Emerging Markets Value Fund
Portfolio Allocation
August 31, 2018 (Unaudited)
 
 
 

 
The portfolio’s holdings and allocations are subject to change. The percentages are of total investments as of August 31, 2018.
 
14


Pzena Emerging Markets Value Fund
Schedule of Investments
August 31, 2018 (Unaudited)

 
             
% of
 
 
 
Shares
   
Fair Value
   
Net Assets
 
COMMON STOCKS – 89.51%
                 
Brazil – 1.94%
                 
Cia de Saneamento Basico
                 
  do Estrado de San Paulo
   
671,970
   
$
3,999,055
     
1.94
%
 
                       
China – 22.00%
                       
Baidu, Inc. – ADR (a)
   
18,265
     
4,136,657
     
2.00
%
China Agri-Industries
                       
  Holdings, Ltd.
   
10,448,000
     
4,153,242
     
2.01
%
China Construction
                       
  Bank Corp.
   
2,286,000
     
2,024,233
     
0.98
%
China Dongxiang Group Co.
   
6,522,000
     
1,080,248
     
0.52
%
China Mobile, Ltd.
   
851,500
     
8,006,460
     
3.88
%
China Resources Power
                       
  Holdings Co., Ltd.
   
2,794,000
     
5,033,561
     
2.44
%
China Shenhua Energy
                       
  Co., Ltd.
   
879,000
     
1,959,866
     
0.95
%
China Shineway
                       
  Pharmaceutical Group, Ltd.
   
233,000
     
328,924
     
0.16
%
Dah Chong Hong
                       
  Holdings, Ltd.
   
2,241,879
     
974,016
     
0.47
%
Dongfeng Motor
                       
  Group Co., Ltd.
   
4,144,000
     
4,630,404
     
2.24
%
Grand Baoxin Auto
                       
  Group, Ltd.
   
10,501,500
     
2,876,665
     
1.39
%
Huadian Power
                       
  International Corp Ltd.
   
8,074,000
     
3,003,801
     
1.46
%
Lenovo Group, Ltd.
   
11,056,000
     
7,212,195
     
3.50
%
 
           
45,420,272
     
22.00
%
 
                       
Czech Republic – 2.01%
                       
CEZ
   
164,198
     
4,161,805
     
2.01
%
 
                       
Greece – 0.15%
                       
Alpha Bank AE (a)
   
82,998
     
152,410
     
0.08
%
National Bank of
                       
  Greece S.A. (a)
   
53,031
     
150,688
     
0.07
%
 
           
303,098
     
0.15
%
 
                       
Hong Kong – 2.64%
                       
Pacific Basin
                       
  Shipping, Ltd.
   
21,022,000
     
5,035,370
     
2.44
%
Stella International
                       
  Holdings, Ltd.
   
157,000
     
157,825
     
0.08
%
Texwinca Holdings, Ltd.
   
542,000
     
250,672
     
0.12
%
 
           
5,443,867
     
2.64
%
 
                       
Hungary – 1.10%
                       
Magyar Telekom
                       
  Telecommunications PLC
   
202,472
     
296,787
     
0.15
%
OTP Bank PLC
   
53,449
     
1,967,684
     
0.95
%
 
           
2,264,471
     
1.10
%
 
                       
India – 4.49%
                       
ICICI Bank, Ltd. – ADR
   
405,106
     
3,901,171
     
1.89
%
Reliance Industries,
                       
  Ltd. – GDR
   
45,334
     
1,568,556
     
0.76
%
State Bank of India – GDR (a)
   
87,549
     
3,804,004
     
1.84
%
 
           
9,273,731
     
4.49
%
 
                       
Indonesia – 0.66%
                       
Bank Danamon
                       
  Indonesia Tbk PT
   
2,957,100
     
1,365,124
     
0.66
%
 
                       
Malaysia – 1.98%
                       
Genting Malaysia Berhad
   
3,217,800
     
4,087,338
     
1.98
%
 
                       
Poland – 1.24%
                       
Cyfrowy Polsat S.A. (a)
   
420,819
     
2,552,138
     
1.24
%
 
                       
Republic of Korea – 17.53%
                       
Dongbu Insurance Co., Ltd.
   
72,620
     
4,175,250
     
2.02
%
Hana Financial Group, Inc.
   
79,067
     
3,032,979
     
1.47
%
Hyundai Heavy
                       
  Industries Co., Inc. (a)
   
55,030
     
5,833,482
     
2.82
%
Hyundai Motor Co.
   
10,047
     
1,128,217
     
0.55
%
KB Financial Group, Inc.
   
65,610
     
3,047,242
     
1.48
%
LG Electronics, Inc.
   
12,808
     
883,667
     
0.43
%
POSCO
   
24,925
     
7,310,796
     
3.54
%
Samsung Electronics Co., Ltd.
   
147,652
     
6,426,573
     
3.11
%
Samsung Electronics
                       
  Co., Ltd. – GDR
   
83
     
88,644
     
0.04
%
Shinhan Financial
                       
  Group Co., Ltd.
   
108,930
     
4,266,584
     
2.06
%
Shinhan Financial
                       
  Group Co., Ltd. – ADR (a)
   
450
     
17,739
     
0.01
%
 
           
36,211,173
     
17.53
%
 
                       
Romania – 0.64%
                       
Banca Transilvania S.A.
   
2,252,204
     
1,324,147
     
0.64
%
 
                       
Russian Federation – 7.59%
                       
LUKOIL PJSC – ADR
   
77,216
     
5,327,904
     
2.58
%
MMC Norilsk Nickel
                       
  PJSC – ADR
   
315,111
     
5,218,238
     
2.53
%
 
                       

The accompanying notes are an integral part of these financial statements.

15

Pzena Emerging Markets Value Fund
Schedule of Investments (Continued)
August 31, 2018 (Unaudited)

 
             
% of
 
 
 
Shares
   
Fair Value
   
Net Assets
 
COMMON STOCKS – 89.51% (Continued)
                 
Russian Federation – 7.59% (Continued)
                 
Rosneft Oil Co. – GDR
   
803,934
   
$
5,122,668
     
2.48
%
 
           
15,668,810
     
7.59
%
 
                       
Singapore – 2.39%
                       
Wilmar International, Ltd.
   
2,117,300
   
$
4,936,330
     
2.39
%
                         
South Africa – 3.52%
                       
Reunert, Ltd.
   
565,785
     
2,927,683
     
1.42
%
Sasol
   
110,449
     
4,329,270
     
2.10
%
 
           
7,256,953
     
3.52
%
 
                       
Taiwan – 8.56%
                       
Compal Electronics, Inc.
   
8,059,000
     
5,050,814
     
2.45
%
Hon Hai Precision
                       
  Industry Co., Ltd.
   
2,245,165
     
5,884,284
     
2.85
%
Realtek
                       
  Semiconductor Corp.
   
486,000
     
2,357,610
     
1.14
%
Taiwan Semiconductor
                       
  Manufacturing Co., Ltd.
   
520,000
     
4,334,039
     
2.10
%
Taiwan Semiconductor
                       
  Manufacturing Co., Ltd. – ADR
   
1,125
     
49,050
     
0.02
%
 
           
17,675,797
     
8.56
%
 
                       
Thailand – 2.41%
                       
Bangkok Bank Public
                       
  Co., Ltd. – NVDR
   
530,400
     
3,322,090
     
1.61
%
Siam Commercial
                       
  Bank PLC – NVDR
   
363,700
     
1,644,595
     
0.80
%
 
           
4,966,685
     
2.41
%
 
                       
Turkey – 0.97%
                       
Akbank T.A.S.
   
2,288,470
     
2,007,491
     
0.97
%
 
                       
United Arab Emirates – 0.43%
                       
Union National Bank PJSC
   
896,526
     
893,317
     
0.43
%
 
                       
United Kingdom – 2.76%
                       
Antofagasta PLC
   
62,550
     
653,282
     
0.32
%
Standard Chartered PLC
   
619,648
     
5,037,743
     
2.44
%
 
           
5,691,025
     
2.76
%
 
                       
United States – 4.50%
                       
Cognizant Technology
                       
  Solutions Corp. – Class A
   
67,002
     
5,254,967
     
2.55
%
Flextronics
                       
  International, Ltd. (a)
   
148,290
     
2,044,919
     
0.99
%
Genpact, Ltd.
   
64,824
     
1,986,207
     
0.96
%
 
           
9,286,093
     
4.50
%
Total Common Stocks
                       
  (Cost $185,731,701)
           
184,788,720
     
89.51
%
 
                       
PREFERRED STOCKS – 4.69%
                       
Brazil – 2.26%
                       
Petroleo Brasileiro S.A., 0.53%
   
195,600
   
 
929,714
     
0.45
%
Randon SA Implementos e
                       
  Participacoes, 1.57%
   
201,716
     
329,829
     
0.16
%
Telefonica Brasil S.A. –
                       
  ADR, 7.65%
   
316,812
     
3,133,271
     
1.52
%
Usinas Siderurgicas de
                       
  Minas Gerais S.A., 0.59%
   
137,700
     
274,176
     
0.13
%
 
           
4,666,990
     
2.26
%
 
                       
Republic of Korea – 2.43%
                       
Hyundai Motor Co., 5.17%
   
71,208
     
5,008,837
     
2.43
%
Total Preferred Stocks 
                       
  (Cost $10,678,192)
           
9,675,827
     
4.69
%
 
                       
SHORT-TERM INVESTMENTS – 5.54%
                       
Money Market Fund – 5.54%
                       
Fidelity Institutional
                       
  Government Portfolio –
                       
  Class I, 1.82%
   
11,447,396
     
11,447,396
     
5.54
%
Total Short-Term Investments
                       
  (Cost $11,447,396)
           
11,447,396
     
5.54
%
Total Investments
                       
  (Cost $207,857,289) – 99.74%
           
205,911,943
     
99.74
%
Other Assets in Excess
                       
  of Liabilities – 0.26%
           
529,866
     
0.26
%
TOTAL NET ASSETS – 100.00%
         
$
206,441,809
     
100.00
%

Percentages are stated as a percent of net assets.

ADR
 
American Depository Receipt
GDR
 
Global Depository Receipt
NVDR
 
Non-voting Depository Receipt
PJSC
 
Private Joint Stock Company
PLC
 
Public Limited Company
(a)
 
Non-income producing security.
(b)
 
The rate listed is the Fund’s 7-day yield as of August 31, 2018.



The accompanying notes are an integral part of these financial statements.

16

Pzena Emerging Markets Value Fund
Portfolio Diversification
August 31, 2018 (Unaudited)

   
Fair
   
% of
 
   
Value
   
Net Assets
 
COMMON STOCKS
           
Consumer Discretionary
 
$
18,621,191
     
9.02
%
Consumer Staples
   
9,089,572
     
4.40
%
Energy
   
13,978,994
     
6.77
%
Financials
   
42,134,490
     
20.41
%
Health Care
   
328,924
     
0.16
%
Industrials
   
13,796,534
     
6.68
%
Information Technology
   
44,825,960
     
21.72
%
Materials
   
17,511,586
     
8.48
%
Telecommunication Services
   
8,303,247
     
4.02
%
Utilities
   
16,198,222
     
7.85
%
Total Common Stocks
   
184,788,720
     
89.51
%
                 
PREFERRED STOCKS
               
Consumer Discretionary
   
5,008,837
     
2.43
%
Energy
   
929,714
     
0.45
%
Industrials
   
329,829
     
0.16
%
Materials
   
274,176
     
0.13
%
Telecommunication Services
   
3,133,271
     
1.52
%
Total Preferred Stocks
   
9,675,827
     
4.69
%
Short-Term Investments
   
11,447,396
     
5.54
%
Total Investments
   
205,911,943
     
99.74
%
Other Assets in Excess
               
  of Liabilities
   
529,866
     
0.26
%
Total Net Assets
 
$
206,441,809
     
100.00
%

The Global Industry Classification Standard (GICS®) was developed by and/or is the exclusive property of MSCI, Inc. and Standard & Poor Financial Services LLC (“S&P”). GICS is a service mark of MSCI and S&P and has been licensed for use by Pzena Investment Management, LLC.


The accompanying notes are an integral part of these financial statements.

17

Pzena Long/Short Value Fund
Portfolio Allocation
August 31, 2018 (Unaudited)


 

 
The portfolio’s holdings and allocations are subject to change. The percentages are of total investments on long securities as of August 31, 2018.
 
Note: For presentation purposes, the Fund has grouped some of the industry categories. For purposes of categorizing securities for compliance with Section 8(b)(1) of the Investment Company Act of 1940, as amended, the Fund uses more specific industry classifications.
 
 

 
 
The portfolio’s holdings and allocations are subject to change. The percentages are of total investments on short securities as of August 31, 2018.
 
18



Pzena Long/Short Value Fund
Schedule of Investments
August 31, 2018 (Unaudited)

 
             
% of
 
 
 
Shares
   
Fair Value
   
Net Assets
 
COMMON STOCKS – 105.81%
                 
Consumer Discretionary – 12.94%
                 
AutoZone, Inc. (a)(d)
   
325
   
$
249,236
     
1.01
%
Booking Holdings, Inc. (a)(d)
   
221
     
431,293
     
1.75
%
Carter’s, Inc. (d)
   
3,083
     
326,582
     
1.32
%
Foot Locker, Inc.
   
2,306
     
113,686
     
0.46
%
Ford Motor Co. (d)
   
62,334
     
590,926
     
2.40
%
H&R Block, Inc. (d)
   
4,786
     
129,509
     
0.53
%
Interpublic Group
                       
  of Cos., Inc. (d)
   
3,503
     
81,795
     
0.33
%
Newell Brands, Inc.
   
12,038
     
261,465
     
1.06
%
News Corp. – Class A (d)
   
13,578
     
177,464
     
0.72
%
Omnicom Group, Inc. (d)
   
11,946
     
828,097
     
3.36
%
 
           
3,190,053
     
12.94
%
 
                       
Consumer Staples – 2.07%
                       
CVS Health Corp. (d)
   
1,938
     
145,815
     
0.59
%
Ingredion, Inc. (d)
   
3,599
     
363,751
     
1.48
%
 
           
509,566
     
2.07
%
 
                       
Energy – 12.27%
                       
Cenovus Energy, Inc. (b)(d)
   
14,298
     
133,114
     
0.54
%
ConocoPhillips (d)
   
6,886
     
505,639
     
2.05
%
ExxonMobil Corp. (d)
   
10,868
     
871,288
     
3.53
%
Halliburton Co. (d)
   
6,615
     
263,872
     
1.07
%
HollyFrontier Corp.
   
3,495
     
260,448
     
1.06
%
Murphy Oil Corp. (d)
   
9,493
     
292,669
     
1.19
%
National Oilwell Varco, Inc.
   
7,326
     
344,835
     
1.40
%
Royal Dutch
                       
  Shell PLC – ADR (b)(d)
   
5,393
     
351,785
     
1.43
%
 
           
3,023,650
     
12.27
%
 
                       
Financial Services – 30.67%
                       
American International
                       
  Group, Inc. (d)
   
9,063
     
481,880
     
1.95
%
AXA Equitable Holdings, Inc.
   
12,856
     
295,045
     
1.20
%
Axis Capital
                       
  Holdings, Ltd. (b)(d)
   
4,917
     
282,826
     
1.15
%
Bank of America Corp. (d)
   
16,890
     
522,408
     
2.12
%
Capital One Financial
                       
  Corp. (d)
   
5,240
     
519,232
     
2.11
%
CBRE Group, Inc. –
                       
  Class A (a)
   
3,991
     
194,801
     
0.79
%
Chubb, Ltd. (b)(d)
   
1,003
     
135,646
     
0.55
%
Citigroup, Inc. (d)
   
8,218
     
585,450
     
2.38
%
Franklin Resources, Inc. (d)
   
10,187
     
323,335
     
1.31
%
Goldman Sachs Group, Inc. (d)
   
1,440
     
342,446
     
1.39
%
Jones Lang LaSalle, Inc. (d)
   
1,823
     
278,044
     
1.13
%
JPMorgan Chase & Co. (d)
   
3,676
     
421,196
     
1.71
%
KKR & Co, Inc. – Class A
   
7,031
     
183,368
     
0.74
%
Metlife, Inc. (d)
   
10,457
     
479,872
     
1.95
%
Morgan Stanley (d)
   
9,051
     
441,960
     
1.79
%
Regions Financial Corp. (d)
   
5,791
     
112,693
     
0.46
%
State Street Corp. (d)
   
3,404
     
295,842
     
1.20
%
UBS Group AG (b)(d)
   
8,061
     
126,235
     
0.51
%
Voya Financial, Inc. (d)
   
10,025
     
501,952
     
2.04
%
W.R. Berkley Corp. (d)
   
6,156
     
481,768
     
1.95
%
Wells Fargo & Co. (d)
   
8,029
     
469,536
     
1.90
%
Willis Towers Watson PLC (b)(d)
   
573
     
84,386
     
0.34
%
 
           
7,559,921
     
30.67
%
 
                       
Health Care – 15.18%
                       
AmerisourceBergen Corp. (d)
   
1,521
     
136,844
     
0.56
%
Amgen, Inc. (d)
   
2,269
     
453,369
     
1.84
%
Biogen, Inc. (a)(d)
   
1,381
     
488,170
     
1.97
%
Celgene Corp. (a)(d)
   
3,674
     
347,009
     
1.41
%
Charles River Laboratories
                       
  International, Inc. (a)(d)
   
3,791
     
468,226
     
1.90
%
Express Scripts
                       
  Holding Co. (a)(d)
   
3,632
     
319,689
     
1.30
%
McKesson Corp. (d)
   
2,889
     
371,959
     
1.51
%
MEDNAX, Inc. (a)(d)
   
6,367
     
301,477
     
1.22
%
Mylan N.V. (a)(b)(d)
   
10,830
     
423,778
     
1.72
%
Zimmer Biomet
                       
  Holdings, Inc. (d)
   
3,490
     
431,469
     
1.75
%
 
           
3,741,990
     
15.18
%
 
                       
Materials & Processing – 2.73%
                       
Alcoa Corp. (a)
   
2,633
     
117,616
     
0.48
%
JELD-WEN
                       
  Holding, Inc. (a)(d)
   
13,358
     
324,867
     
1.31
%
NewMarket Corp. (d)
   
576
     
230,999
     
0.94
%
 
           
673,482
     
2.73
%
 
                       
Producer Durables – 8.72%
                       
AECOM Technology
                       
  Corp. (a)(d)
   
5,967
     
200,730
     
0.81
%
Carlisle Cos., Inc. (d)
   
1,024
     
129,853
     
0.53
%
Dover Corp. (d)
   
4,769
     
409,514
     
1.66
%
General Electric Co.
   
21,588
     
279,349
     
1.13
%
Genpact, Ltd. (b)(d)
   
12,393
     
379,722
     
1.54
%
Ryder System, Inc. (d)
   
5,712
     
438,910
     
1.79
%
Terex Corp. (d)
   
8,019
     
310,736
     
1.26
%
 
           
2,148,814
     
8.72
%

The accompanying notes are an integral part of these financial statements.

19

Pzena Long/Short Value Fund
Schedule of Investments (Continued)
August 31, 2018 (Unaudited)

 
             
% of
 
 
 
Shares
   
Fair Value
   
Net Assets
 
COMMON STOCKS – 105.81% (Continued)
                 
Technology – 15.26%
                 
Amdocs, Ltd.  (b)(d)
   
5,370
   
$
350,554
     
1.42
%
Avnet, Inc. (d)
   
14,993
     
725,661
     
2.95
%
Broadcom, Inc.
   
613
     
134,265
     
0.54
%
Cognizant Technology
                       
  Solutions Corp. – Class A (d)
   
8,304
     
651,283
     
2.64
%
Hewlett Packard
                       
  Enterprise Co. (d)
   
23,283
     
384,868
     
1.56
%
Oracle Corp. (d)
   
15,373
     
746,820
     
3.04
%
Qorvo, Inc. (a)(d)
   
3,076
     
246,357
     
1.00
%
SS&C Technologies
                       
  Holdings, Inc.
   
8,781
     
521,065
     
2.11
%
 
           
3,760,873
     
15.26
%
 
                       
Utilities – 5.97%
                       
Edison International (d)
   
12,466
     
819,390
     
3.32
%
PG&E Corp. (d)
   
7,986
     
368,794
     
1.50
%
Southern Co. (d)
   
6,498
     
284,482
     
1.15
%
 
           
1,472,666
     
5.97
%
Total Common Stocks
                       
  (Cost $26,098,578)
           
26,081,015
     
105.81
%
 
                       
REITs – 6.50%
                       
Financial Services – 6.50%
                       
HCP, Inc.
   
17,258
     
466,484
     
1.89
%
Hospitality Properties Trust (d)
   
5,362
     
155,444
     
0.63
%
Lamar Advertising Co. –
                       
  Class A (d)
   
6,820
     
525,481
     
2.13
%
Omega Healthcare
                       
  Investors, Inc. (d)
   
10,272
     
339,490
     
1.38
%
Park Hotels & Resorts, Inc. (d)
   
3,463
     
115,837
     
0.47
%
Total REITs
                       
  (Cost $1,396,956)
           
1,602,736
     
6.50
%
 
                       
SHORT-TERM INVESTMENTS – 0.57%
                       
Money Market Fund – 0.57%
                       
Fidelity Institutional
                       
  Government Portfolio –
                       
  Class I, 1.82% (c)
   
139,589
   
 
139,589
     
0.57
%
Total Short-Term Investments
                       
  (Cost $139,589)
           
139,589
     
0.57
%
Total Investments
                       
  (Cost $27,635,123) – 112.88%
           
27,823,340
     
112.88
%
Liabilities in Excess
                       
  of Other Assets – (12.88)%
           
(3,174,201
)
   
(12.88
)%
TOTAL NET ASSETS – 100.00%
         
$
24,649,139
     
100.00
%

Percentages are stated as a percent of net assets.

ADR
 
American Depository Receipt
PLC
 
Public Limited Company
REIT
 
Real Estate Investment Trust
(a)
 
Non-income producing security.
(b)
 
Foreign issued security.
(c)
 
The rate listed is the Fund’s 7-day yield as of August 31, 2018.
(d)
 
All or a portion of the security has been pledged in connection with open short securities.

Note: For presentation purposes, the Fund has grouped some of the industry categories. For purposes of categorizing securities for compliance with Section 8(b)(1) of the Investment Company Act of 1940, as amended, the Fund uses more specific industry classifications.

 
The accompanying notes are an integral part of these financial statements.

20

Pzena Long/Short Value Fund
Schedule of Securities Sold Short
August 31, 2018 (Unaudited)

 
             
% of
 
 
 
Shares
   
Fair Value
   
Net Assets
 
COMMON STOCKS – 50.84%
                 
Consumer Discretionary – 6.83%
                 
Cable One, Inc.
   
243
   
$
203,571
     
0.83
%
Caesars Entertainment Corp. (a)
   
17,993
     
183,528
     
0.75
%
Charter Communications,
                       
  Inc. – Class A (a)
   
622
     
193,069
     
0.78
%
Home Depot, Inc.
   
1,117
     
224,260
     
0.91
%
Liberty Global PLC –
                       
   Class A (a)(b)
   
6,910
     
185,257
     
0.75
%
Lions Gate Entertainment
                       
  Corp. – Class A (b)
   
7,700
     
181,104
     
0.74
%
Tesla Inc. (a)
   
571
     
172,248
     
0.70
%
Wynn Resorts Ltd.
   
854
     
126,682
     
0.51
%
Yum! Brands, Inc.
   
2,449
     
212,794
     
0.86
%
 
           
1,682,513
     
6.83
%
 
                       
Consumer Staples – 5.57%
                       
Casey’s General Stores, Inc.
   
1,665
     
190,093
     
0.77
%
Conagra Brands, Inc.
   
5,323
     
195,620
     
0.80
%
Constellation Brands, Inc.
   
901
     
187,588
     
0.76
%
Lancaster Colony Corp.
   
1,297
     
202,682
     
0.82
%
McCormick & Co., Inc.
   
1,565
     
195,437
     
0.79
%
Pinnacle Foods, Inc.
   
3,123
     
207,430
     
0.84
%
Sysco Corp.
   
2,604
     
194,832
     
0.79
%
 
           
1,373,682
     
5.57
%
 
                       
Energy – 3.89%
                       
Cabot Oil & Gas Corp.
   
7,963
     
189,758
     
0.77
%
Core Laboratories N.V. (b)
   
1,664
     
190,611
     
0.77
%
EOG Resources, Inc.
   
1,653
     
195,434
     
0.79
%
EQT Corp.
   
3,890
     
198,468
     
0.81
%
Pioneer Natural Resources Co.
   
1,062
     
185,532
     
0.75
%
 
           
959,803
     
3.89
%
 
                       
Financial Services – 5.47%
                       
Cboe Global Markets, Inc.
   
1,879
     
189,403
     
0.77
%
Erie Indemnity Co. – Class A
   
1,725
     
213,089
     
0.87
%
Global Payments, Inc.
   
1,408
     
175,409
     
0.71
%
Jefferies Financial Group, Inc.
   
8,790
     
204,104
     
0.83
%
Markel Corp. (a)
   
176
     
212,749
     
0.86
%
MarketAxess Holdings, Inc.
   
933
     
177,102
     
0.72
%
S&P Global, Inc.
   
849
     
175,785
     
0.71
%
 
           
1,347,641
     
5.47
%
 
                       
Health Care – 3.28%
                       
Cantel Medical Corp.
   
1,830
     
177,510
     
0.72
%
IQVIA Holdings, Inc. (a)
   
1,283
     
163,056
     
0.66
%
Medidata Solutions, Inc. (a)
   
2,512
     
213,470
     
0.87
%
West Pharmaceutical
                       
  Services, Inc.
   
1,097
     
128,404
     
0.52
%
Zoetis, Inc.
   
1,384
     
125,390
     
0.51
%
 
           
807,830
     
3.28
%
 
                       
Materials & Processing – 6.68%
                       
AptarGroup, Inc.
   
2,089
     
218,739
     
0.89
%
Lennox International, Inc.
   
964
     
214,789
     
0.87
%
Louisiana-Pacific Corp.
   
6,770
     
197,413
     
0.80
%
Newmont Mining Corp.
   
5,060
     
157,012
     
0.64
%
Royal Gold, Inc.
   
1,539
     
117,364
     
0.47
%
Steel Dynamics, Inc.
   
4,147
     
189,642
     
0.77
%
United States Steel Corp.
   
6,208
     
184,253
     
0.75
%
Vulcan Materials Co.
   
1,667
     
184,704
     
0.75
%
Watsco, Inc.
   
1,044
     
182,690
     
0.74
%
 
           
1,646,606
     
6.68
%
 
                       
Producer Durables – 9.54%
                       
3M Co.
   
894
     
188,562
     
0.77
%
A.O. Smith Corp.
   
3,079
     
178,828
     
0.73
%
Arconic, Inc.
   
8,643
     
193,430
     
0.78
%
Boeing Co.
   
550
     
188,535
     
0.76
%
Brink’s Co.
   
2,639
     
198,189
     
0.80
%
Huntington Ingalls
                       
  Industries, Inc.
   
766
     
187,264
     
0.76
%
Knight-Swift Transportation
                       
  Holdings, Inc.
   
6,039
     
206,111
     
0.84
%
Mettler-Toledo
                       
  International, Inc. (a)
   
336
     
196,379
     
0.80
%
Old Dominion Freight Line, Inc.
   
1,313
     
200,101
     
0.81
%
Pentair PLC (b)
   
4,391
     
190,921
     
0.77
%
Roper Technologies, Inc.
   
708
     
211,246
     
0.86
%
Waste Management, Inc.
   
2,331
     
211,888
     
0.86
%
 
           
2,351,454
     
9.54
%
 
                       
Technology – 8.03%
                       
Autodesk, Inc. (a)
   
1,344
     
207,446
     
0.84
%
Cognex Corp.
   
4,109
     
221,064
     
0.90
%
Cypress Semiconductor Corp.
   
11,251
     
193,630
     
0.78
%
EchoStar Corp. – Class A (a)
   
4,319
     
207,312
     
0.84
%
Lumentum Holdings, Inc. (a)
   
2,099
     
142,522
     
0.58
%
Monolithic Power Systems, Inc.
   
1,365
     
204,573
     
0.83
%
Pegasystems, Inc.
   
2,343
     
149,249
     
0.60
%
Take-Two Interactive
                       
  Software, Inc. (a)
   
1,434
     
191,525
     
0.78
%
Texas Instruments, Inc.
   
1,221
     
137,240
     
0.56
%

The accompanying notes are an integral part of these financial statements.

21

Pzena Long/Short Value Fund
Schedule of Securities Sold Short (Continued)
August 31, 2018 (Unaudited)

 
             
% of
 
 
 
Shares
   
Fair Value
   
Net Assets
 
COMMON STOCKS – 50.84% (Continued)
                 
Technology – 8.03% (Continued)
                 
Universal Display Corp.
   
1,572
   
$
192,413
     
0.78
%
ViaSat, Inc. (a)
   
2,112
     
132,676
     
0.54
%
 
         
1,979,650
 
   
8.03
%
 
                       
Utilities – 1.55%
                       
American Water Works Co., Inc.
   
2,221
     
194,404
     
0.79
%
U.S. Cellular Corp. (a)
   
4,386
     
187,546
     
0.76
%
 
           
381,950
     
1.55
%
Total Common Stocks
                       
  (Proceeds $12,191,037)
           
12,531,129
     
50.84
%
 
                       
REITs – 8.76%
                       
Financial Services – 8.76%
                       
CoreSite Realty Corp.
   
1,147
   
 
133,591
     
0.54
%
Crown Castle International Corp.
   
1,930
     
220,078
     
0.89
%
CyrusOne, Inc.
   
2,534
     
169,677
     
0.69
%
Duke Realty Corp.
   
7,116
     
202,735
     
0.82
%
Essex Property Trust, Inc.
   
844
     
207,860
     
0.84
%
Invitation Homes, Inc.
   
9,013
     
210,634
     
0.86
%
JBG SMITH Properties
   
5,358
     
200,711
     
0.81
%
Liberty Property Trust
   
4,631
     
202,606
     
0.82
%
Macerich Co.
   
3,379
     
198,482
     
0.81
%
Prologis, Inc.
   
3,077
     
206,713
     
0.84
%
Sun Communities, Inc.
   
1,998
     
206,154
     
0.84
%
Total REITs
                       
  (Proceeds $2,032,160)
           
2,159,241
     
8.76
%
 
                       
TOTAL SECURITIES
                       
  SOLD SHORT
                       
  (Proceeds $14,223,197) – 59.60%
         
$
14,690,370
     
59.60
%

Percentages are stated as a percent of net assets.

As of August 31, 2018 securities and cash collateral of $23,371,062 has been pledged in connection with open short securities.

REIT
 
Real Estate Investment Trust
PLC
 
Public Limited Company
(a)
 
Non-income producing security.
(b)
 
Foreign issued security.

The accompanying notes are an integral part of these financial statements.

22

Pzena Small Cap Value Fund
Portfolio Allocation
August 31, 2018 (Unaudited)


 
 

 
The portfolio’s holdings and allocations are subject to change. The percentages are of total investments as of August 31, 2018.
 
Note: For presentation purposes, the Fund has grouped some of the industry categories. For purposes of categorizing securities for compliance with Section 8(b)(1) of the Investment Company Act of 1940, as amended, the Fund uses more specific industry classifications.
 
 
23



Pzena Small Cap Value Fund
Schedule of Investments
August 31, 2018 (Unaudited)

 
             
% of
 
 
 
Shares
   
Fair Value
   
Net Assets
 
COMMON STOCKS – 97.04%
                 
Consumer Discretionary – 2.30%
                 
Avis Budget Group, Inc. (a)
   
16,536
   
$
514,435
     
2.30
%
                         
Consumer Staples – 3.77%
                       
Universal Corp.
   
14,110
     
843,778
     
3.77
%
                         
Energy – 4.70%
                       
Murphy Oil Corp.
   
26,681
     
822,575
     
3.67
%
Superior Energy Services, Inc. (a)
   
25,619
     
230,571
     
1.03
%
 
           
1,053,146
     
4.70
%
                         
Financial Services – 32.65%
                       
American Equity Investment
                       
  Life Holding Co.
   
15,676
     
581,423
     
2.59
%
Argo Group International
                       
  Holdings, Ltd. (b)
   
7,404
     
471,635
     
2.10
%
Aspen Insurance
                       
  Holdings, Ltd. (b)
   
18,437
     
758,682
     
3.39
%
Associated Banc-Corp
   
29,479
     
803,303
     
3.59
%
Axis Capital Holdings, Ltd. (b)
   
14,607
     
840,195
     
3.75
%
EVERTEC, Inc. (b)
   
14,017
     
337,109
     
1.50
%
First Midwest Bancorp, Inc.
   
16,707
     
454,096
     
2.03
%
Hanover Insurance Group, Inc.
   
3,610
     
442,189
     
1.97
%
Hope Bancorp, Inc.
   
39,890
     
698,474
     
3.12
%
Realogy Holdings Corp.
   
21,702
     
464,206
     
2.07
%
Synovus Financial Corp.
   
6,859
     
343,360
     
1.53
%
TCF Financial Corp.
   
17,826
     
451,889
     
2.02
%
Webster Financial Corp.
   
8,552
     
559,130
     
2.50
%
WSFS Financial Corp.
   
2,272
     
110,874
     
0.49
%
 
           
7,316,565
     
32.65
%
                         
Health Care – 3.94%
                       
MEDNAX, Inc. (a)
   
9,684
     
458,538
     
2.04
%
Triple-S Management Corp. –
                       
  Class B (a)(b)
   
19,517
     
424,885
     
1.90
%
 
           
883,423
     
3.94
%
                         
Materials & Processing – 10.38%
                       
Gibraltar Industries, Inc. (a)
   
18,566
     
842,896
     
3.76
%
JELD-WEN Holding, Inc. (a)
   
28,814
     
700,757
     
3.13
%
Masonite International
                       
  Corp. (a)(b)
   
11,675
     
781,641
     
3.49
%
 
           
2,325,294
     
10.38
%
                         
Producer Durables – 26.00%
                       
Actuant Corp. – Class A
   
31,690
     
933,271
     
4.17
%
Chart Industries, Inc. (a)
   
1,424
     
107,583
     
0.48
%
Cubic Corp.
   
3,033
     
229,598
     
1.02
%
Essendant, Inc.
   
45,332
     
654,141
     
2.92
%
KBR, Inc.
   
17,026
     
357,205
     
1.59
%
Navigant Consulting, Inc. (a)
   
24,215
     
578,496
     
2.58
%
Ryder System, Inc.
   
7,346
     
564,467
     
2.52
%
Steelcase, Inc.
   
50,108
     
731,577
     
3.27
%
Terex Corp.
   
12,273
     
475,579
     
2.12
%
TriMas Corp. (a)
   
30,482
     
935,797
     
4.18
%
Wesco Aircraft
                       
  Holdings, Inc. (a)
   
21,272
     
258,455
     
1.15
%
 
           
5,826,169
     
26.00
%
                         
Technology – 13.30%
                       
Anixter International, Inc. (a)
   
12,445
     
897,285
     
4.00
%
ARC Document
                       
  Solutions, Inc. (a)
   
26,114
     
84,087
     
0.38
%
Celestica, Inc. (a)(b)
   
57,053
     
701,752
     
3.13
%
Insight Enterprises, Inc. (a)
   
11,365
     
626,666
     
2.80
%
ScanSource, Inc. (a)
   
16,497
     
670,603
     
2.99
%
 
           
2,980,393
     
13.30
%
Total Common Stocks
                       
  (Cost $20,153,991)
           
21,743,203
     
97.04
%
 
                       
REITs – 1.03%
                       
Financial Services – 1.03%
                       
DiamondRock Hospitality Co.
   
19,240
     
230,110
     
1.03
%
Total REITs
                       
  (Cost $215,472)
           
230,110
     
1.03
%

The accompanying notes are an integral part of these financial statements.

24

Pzena Small Cap Value Fund
Schedule of Investments (Continued)
August 31, 2018 (Unaudited)

 
             
% of
 
 
 
Shares
   
Fair Value
   
Net Assets
 
SHORT-TERM INVESTMENTS – 1.95%
                 
Money Market Fund – 1.95%
                 
Fidelity Government
                 
  Portfolio – Class I, 1.82% (c)
   
437,949
   
$
437,949
     
1.95
%
Total Short-Term Investments
                       
  (Cost $437,949)
           
437,949
     
1.95
%
Total Investments
                       
  (Cost $20,807,412) – 100.02%
           
22,411,262
     
100.02
%
Liabilities in Excess
                       
  of Other Assets – (0.02)%
           
(4,929
)
   
(0.02
)%
TOTAL NET ASSETS – 100.00%
         
$
22,406,333
     
100.00
%

Percentages are stated as a percent of net assets.

REIT
 
Real Estate Investment Trust
(a)
 
Non-income producing security.
(b)
 
Foreign issued security.
(c)
 
The rate listed is the Fund’s 7-day yield as of August 31, 2018.

Note: For presentation purposes, the Fund has grouped some of the industry categories. For purposes of categorizing securities for compliance with Section 8(b)(1) of the Investment Company Act of 1940, as amended, the Fund uses more specific industry classifications.

The accompanying notes are an integral part of these financial statements.

25

Pzena International Small Cap Value Fund
Portfolio Allocation
August 31, 2018 (Unaudited)


 
 

 
The portfolio’s holdings and allocations are subject to change. The percentages are of total investments as of August 31, 2018.
 
Note: For presentation purposes, the Fund has grouped some of the industry categories. For purposes of categorizing securities for compliance with Section 8(b)(1) of the Investment Company Act of 1940, as amended, the Fund uses more specific industry classifications.
 
 

26


Pzena International Small Cap Value Fund
Schedule of Investments
August 31, 2018 (Unaudited)

 
             
% of
 
 
 
Shares
   
Fair Value
   
Net Assets
 
COMMON STOCKS – 97.69%
                 
Australia – 1.64%
                 
OFX Group, Ltd.
   
23,268
   
$
33,120
     
1.64
%
                         
Austria – 2.00%
                       
Vienna Insurance Group AG
                       
  Wiener Versicherung Gruppe
   
1,487
     
40,528
     
2.00
%
                         
Belgium – 1.77%
                       
Orange Belgium
   
2,363
     
35,712
     
1.77
%
                         
Bermuda – 2.63%
                       
Pacific Basin Shipping, Ltd.
   
222,000
     
53,175
     
2.63
%
                         
Canada – 8.67%
                       
Celestica, Inc. (a)
   
3,399
     
41,804
     
2.07
%
Dorel Industries, Inc. –
                       
  Class B
   
1,212
     
23,515
     
1.16
%
Genworth MI Canada, Inc.
   
1,721
     
57,894
     
2.86
%
Linamar Corp.
   
1,184
     
52,060
     
2.58
%
 
           
175,273
     
8.67
%
                         
Cayman Islands – 2.39%
                       
Ju Teng International
                       
  Holdings, Ltd.
   
256,000
     
48,273
     
2.39
%
                         
France – 11.16%
                       
Coface S.A.
   
4,499
     
42,143
     
2.08
%
Europcar Mobility Group
   
3,871
     
37,182
     
1.84
%
Ipsos
   
1,177
     
37,298
     
1.85
%
Rexel S.A.
   
4,217
     
66,326
     
3.28
%
Technicolor S.A. (a)
   
31,070
     
42,592
     
2.11
%
 
         
225,541
 
   
11.16
%
                         
Germany – 7.30%
                       
Bertrandt AG
   
431
     
41,348
     
2.05
%
Deutsche Pfandbriefbank AG
   
2,938
     
42,970
     
2.13
%
Salzgitter AG
   
1,394
     
63,154
     
3.12
%
 
           
147,472
     
7.30
%
                         
Ireland – 3.73%
                       
Grafton Group PLC – UTS
   
1,926
     
19,176
     
0.95
%
Greencore Group PLC
   
24,892
     
56,152
     
2.78
%
 
           
75,328
     
3.73
%
                         
Italy – 6.82%
                       
BPER Banca S.p.A.
   
3,686
     
16,254
     
0.80
%
Danieli & C Officine
                       
  Meccaniche S.p.A.
   
3,473
     
61,598
     
3.05
%
Saipem S.p.A. (a)
   
7,493
     
40,035
     
1.98
%
UBI Banca – Unione di
                       
  Banche Italiane S.p.A.
   
5,422
     
19,970
     
0.99
%
 
           
137,857
     
6.82
%
                         
Japan – 17.77%
                       
DIC Corp.
   
1,900
     
67,460
     
3.34
%
Foster Electric Co., Ltd.
   
3,600
     
50,480
     
2.50
%
Fukuoka Financial Group, Inc.
   
4,000
     
22,428
     
1.11
%
Hitachi Metals, Ltd.
   
5,300
     
61,247
     
3.03
%
Nishi-Nippon Financial
                       
  Holdings, Inc.
   
1,700
     
19,753
     
0.98
%
Taiheiyo Cement Corp.
   
700
     
21,168
     
1.05
%
Transcosmos, Inc.
   
1,700
     
41,081
     
2.03
%
Tsubakimoto Chain Co.
   
4,000
     
35,784
     
1.77
%
Zeon Corp.
   
3,700
     
39,661
     
1.96
%
 
           
359,062
     
17.77
%
                         
Netherlands – 6.91%
                       
Flow Traders
   
1,564
     
45,676
     
2.26
%
Koninklijke BAM Groep N.V.
   
9,729
     
39,808
     
1.97
%
PostNL N.V.
   
16,189
     
54,269
     
2.68
%
 
           
139,753
     
6.91
%
                         
Spain – 3.94%
                       
Tecnicas Reunidas S.A.
   
1,257
     
42,532
     
2.11
%
Unicaja Banco S.A.
   
23,647
     
37,055
     
1.83
%
 
           
79,587
     
3.94
%
                         
Switzerland – 1.41%
                       
Aryzta AG (a)
   
3,032
     
28,417
     
1.41
%
                         
United Kingdom – 19.55%
                       
Balfour Beatty PLC
   
10,934
     
41,066
     
2.03
%
Capita PLC
   
19,559
     
37,655
     
1.86
%
Drax Group PLC
   
9,371
     
46,433
     
2.30
%
Go-Ahead Group PLC
   
2,397
     
52,176
     
2.58
%
Jardine Lloyd Thompson
                       
  Group PLC
   
2,306
     
43,170
     
2.14
%
John Wood Group PLC
   
4,735
     
44,113
     
2.18
%
Northgate PLC
   
9,561
     
50,746
     
2.51
%
Petrofac Ltd.
   
2,704
     
22,997
     
1.14
%
SIG PLC
   
10,982
     
18,509
     
0.92
%
SThree PLC
   
8,370
     
38,251
     
1.89
%
 
           
395,116
     
19.55
%
Total Common Stocks
                       
  (Cost $1,967,633)
           
1,974,214
     
97.69
%

The accompanying notes are an integral part of these financial statements.


27

Pzena International Small Cap Value Fund
Schedule of Investments (Continued)
August 31, 2018 (Unaudited)

 
             
% of
 
 
 
Shares
   
Fair Value
   
Net Assets
 
PREFERRED STOCKS – 1.68%
                 
Germany – 1.68%
                 
Draegerwerk AG &
                 
  Co. KGaA, 0.66%
   
420
   
$
33,882
     
1.68
%
Total Preferred Stocks
                       
  (Cost $30,121)
           
33,882
     
1.68
%
 
                       
SHORT-TERM INVESTMENTS – 0.66%
                       
Money Market Fund – 0.66%
                       
Fidelity Institutional 
                       
  Government Portfolio –
                       
  Class I, 1.82% (b)
   
13,368
     
13,368
     
0.66
%
Total Short-Term Investments
                       
  (Cost $13,368)
           
13,368
     
0.66
%
Total Investments
                       
  (Cost $2,011,122) – 100.03%
           
2,021,464
     
100.03
%
Liabilities in Excess
                       
  of Other Assets – (0.03)%
           
(701
)
   
(0.03
)%
TOTAL NET ASSETS – 100.00%
         
$
2,020,763
     
100.00
%

Percentages are stated as a percent of net assets.

PLC
 
Public Limited Company
(a)
 
Non-income producing security.
(b)
 
The rate listed is the Fund’s 7-day yield as of August 31, 2018.

The accompanying notes are an integral part of these financial statements.

28

Pzena International Small Cap Value Fund
Portfolio Diversification
August 31, 2018 (Unaudited)

   
Fair
   
% of
 
   
Value
   
Net Assets
 
COMMON STOCKS
           
Consumer Discretionary
 
$
130,369
     
6.45
%
Consumer Staples
   
84,568
     
4.18
%
Energy
   
149,676
     
7.41
%
Financials
   
420,961
     
20.83
%
Industrials
   
764,451
     
37.83
%
Information Technology
   
89,354
     
4.42
%
Materials
   
252,690
     
12.51
%
Telecommunication Services
   
35,712
     
1.76
%
Utilities
   
46,433
     
2.30
%
Total Common Stocks
   
1,974,214
     
97.69
%
                 
PREFERRED STOCKS
               
Healthcare
   
33,882
     
1.68
%
Total Preferred Stocks
   
33,882
     
1.68
%
Short-Term Investments
   
13,368
     
0.66
%
Total Investments
   
2,021,464
     
100.03
%
Liabilities in Excess
               
  of Other Assets
   
(701
)
   
(0.03
)%
Total Net Assets
 
$
2,020,763
     
100.00
%

The Global Industry Classification Standard (GICS®) was developed by and/or is the exclusive property of MSCI, Inc. and Standard & Poor Financial Services LLC (“S&P”). GICS is a service mark of MSCI and S&P and has been licensed for use by Pzena Investment Management, LLC.


The accompanying notes are an integral part of these financial statements.

29

Pzena Funds
Statements of Assets and Liabilities
August 31, 2018 (Unaudited)

         
PZENA
       
   
PZENA
   
EMERGING
   
PZENA
 
   
MID CAP
   
MARKETS
   
LONG/SHORT
 
   
VALUE FUND
   
VALUE FUND
   
VALUE FUND
 
ASSETS:
                 
Investments in securities, at value (cost $47,078,071, $207,857,289 and
                 
  $27,635,123, respectively)
 
$
46,832,628
   
$
205,911,943
   
$
27,823,340
 
Foreign currency, at value (cost $0, $507,958 and $0, respectively)
   
     
506,472
     
 
Deposits for short sales
   
     
     
14,673,941
 
Receivables
                       
Fund shares sold
   
747
     
528,304
     
499
 
Securities sold
   
     
404,019
     
 
Dividends and interest
   
87,002
     
366,477
     
59,576
 
Dividend tax reclaim
   
     
18,346
     
 
Due from advisor (Note 4)
   
     
     
 
Prepaid expenses
   
17,492
     
16,994
     
15,369
 
Total assets
   
46,937,869
     
207,752,555
     
42,572,725
 
LIABILITIES:
                       
Short securities, at value (proceeds received $0, $0 and $14,223,197, respectively)
   
     
     
14,690,370
 
Payables
                       
  Margin
   
     
     
3,122,615
 
  Securities purchased
   
234,297
     
1,080,247
     
 
  Due to advisor (Note 4)
   
15,630
     
180,640
     
15,997
 
  Administration and fund accounting fees
   
14,368
     
15,416
     
15,495
 
  Audit fees
   
10,853
     
10,853
     
10,853
 
  Transfer agent fees and expenses
   
5,654
     
6,770
     
5,705
 
  12b-1 fees
   
3,892
     
4,409
     
986
 
  Miscellaneous
   
3,650
     
449
     
4,347
 
  Chief Compliance Officer fee
   
1,537
     
1,537
     
1,537
 
  Legal fees
   
954
     
954
     
954
 
  Custody fees
   
807
     
     
39,684
 
  Shareholder servicing fees
   
794
     
816
     
135
 
  Shareholder reporting
   
     
4,090
     
596
 
  Fund shares redeemed
   
     
3,476
     
 
  Currency
   
     
1,089
     
 
  Dividends payable
   
     
     
10,736
 
  Broker interest and fees payable
   
     
     
3,576
 
  Trustee fees
   
     
     
 
Total liabilities
   
292,436
     
1,310,746
     
17,923,586
 
NET ASSETS
 
$
46,645,433
   
$
206,441,809
   
$
24,649,139
 
NET ASSETS CONSIST OF:
                       
Capital stock
 
$
45,756,814
   
$
207,213,252
   
$
24,732,552
 
Accumulated net investment income
   
315,516
     
1,823,382
     
69,560
 
Accumulated net realized gain/(loss) from investments and foreign currency
   
818,546
     
(647,615
)
   
125,983
 
Unrealized net appreciation/(depreciation) on:
                       
  Investments
   
(245,443
)
   
(1,947,210
)
   
188,217
 
  Securities sold short
   
     
     
(467,173
)
Total net assets
 
$
46,645,433
   
$
206,441,809
   
$
24,649,139
 
CALCULATION OF NET ASSET VALUE PER SHARE
                       
Investor Class:
                       
Net assets
 
$
9,355,540
   
$
9,520,553
   
$
1,333,056
 
Shares outstanding (unlimited number of shares, no par value)
   
716,455
     
911,183
     
127,054
 
Net asset value, offering and redemption price per share(1)
 
$
13.06
   
$
10.45
   
$
10.49
 
Institutional Class:
                       
Net assets
 
$
37,289,893
   
$
196,921,256
   
$
23,316,083
 
Shares outstanding (unlimited number of shares, no par value)
   
2,847,255
     
18,805,470
     
2,193,889
 
Net asset value, offering and redemption price per share(1)
 
$
13.10
   
$
10.47
   
$
10.63
 

(1)
A redemption fee of 1.00% is assessed against shares redeemed within 30 days of purchase for the Mid Cap Value Fund and 60 days for the Emerging Markets Value Fund and Long/Short Value Fund.

The accompanying notes are an integral part of these financial statements.

30

Pzena Funds
Statements of Assets and Liabilities (Continued)
August 31, 2018 (Unaudited)

         
PZENA
 
   
PZENA
   
INTERNATIONAL
 
   
SMALL CAP
   
SMALL CAP
 
   
VALUE FUND
   
VALUE FUND
 
ASSETS:
           
Investments in securities, at value (cost $20,807,412 and $2,011,122, respectively)
 
$
22,411,262
   
$
2,021,464
 
Foreign currency, at value (cost $0 and $0, respectively)
   
     
 
Deposits for short sales
   
     
 
Receivables
               
Fund shares sold
   
16,456
     
 
Securities sold
   
     
 
Dividends and interest
   
26,515
     
3,214
 
Dividend tax reclaim
   
     
507
 
Due from advisor (Note 4)
   
     
4,590
 
Prepaid expenses
   
21,464
     
30,888
 
Total assets
   
22,475,697
     
2,060,663
 
LIABILITIES:
               
Short securities, at value (proceeds received $0 and $0, respectively)
   
     
 
Payables
               
  Margin
   
     
 
  Securities purchased
   
19,260
     
 
  Due to advisor (Note 4)
   
4,261
     
 
  Administration and fund accounting fees
   
14,375
     
14,069
 
  Audit fees
   
10,853
     
4,090
 
  Transfer agent fees and expenses
   
6,474
     
5,575
 
  12b-1 fees
   
2,797
     
413
 
  Miscellaneous
   
4,326
     
3,432
 
  Chief Compliance Officer fee
   
1,538
     
1,483
 
  Legal fees
   
941
     
688
 
  Custody fees
   
1,427
     
7,177
 
  Shareholder servicing fees
   
555
     
85
 
  Shareholder reporting
   
2,433
     
1,007
 
  Fund shares redeemed
   
124
     
 
  Currency
   
     
 
  Dividends payable
   
     
 
  Broker interest and fees payable
   
     
 
  Trustee fees
   
     
1,881
 
Total liabilities
   
69,364
     
39,900
 
NET ASSETS
 
$
22,406,333
   
$
2,020,763
 
NET ASSETS CONSIST OF:
               
Capital stock
 
$
20,297,853
   
$
2,000,000
 
Accumulated net investment income
   
8,081
     
5,941
 
Accumulated net realized gain from investments and foreign currency
   
496,549
     
4,476
 
Unrealized net appreciation on:
               
  Investments
   
1,603,850
     
10,346
 
  Securities sold short
   
     
 
Total net assets
 
$
22,406,333
   
$
2,020,763
 
CALCULATION OF NET ASSET VALUE PER SHARE
               
Investor Class:
               
Net assets
 
$
6,528,202
   
$
1,010,091
 
Shares outstanding (unlimited number of shares, no par value)
   
528,175
     
100,000
 
Net asset value, offering and redemption price per share(1)
 
$
12.36
   
$
10.10
 
Institutional Class:
               
Net assets
 
$
15,878,131
   
$
1,010,672
 
Shares outstanding (unlimited number of shares, no par value)
   
1,274,239
     
100,000
 
Net asset value, offering and redemption price per share(1)
 
$
12.46
   
$
10.11
 

(1)
A redemption fee of 1.00% is assessed against shares redeemed within 30 days of purchase for the Small Cap Value Fund and 60 days for the International Small Cap Value Fund.

The accompanying notes are an integral part of these financial statements.

31

Pzena Funds
Statements of Operations
For the period ended August 31, 2018 (Unaudited)

         
PZENA
       
   
PZENA
   
EMERGING
   
PZENA
 
   
MID CAP
   
MARKETS
   
LONG/SHORT
 
   
VALUE FUND
   
VALUE FUND
   
VALUE FUND
 
INVESTMENT INCOME:
                 
Dividends (Net of foreign taxes withheld and issuance fees of $1,158,
                 
  $269,402, and $1,695, respectively)
 
$
519,974
   
$
2,554,364
   
$
327,271
 
Interest income
   
12,673
     
83,033
     
80,925
 
Total investment income
   
532,647
     
2,637,397
     
408,196
 
                         
EXPENSES:
                       
Investment advisory fees (Note 4)
   
182,208
     
590,123
     
193,756
 
Administration and accounting fees (Note 4)
   
43,154
     
48,885
     
46,645
 
Federal and state registration fees
   
18,040
     
18,266
     
16,907
 
Transfer agent fees and expenses (Note 4)
   
17,962
     
19,621
     
17,325
 
Distribution fees – Investor Class (Note 5)
   
11,211
     
14,295
     
3,025
 
Audit fees
   
10,853
     
10,853
     
10,853
 
Trustee fees and expenses
   
6,136
     
6,026
     
5,834
 
Chief Compliance Officer fees and expenses (Note 4)
   
4,537
     
4,537
     
4,537
 
Shareholder servicing fees – Investor Class (Note 6)
   
4,105
     
5,432
     
723
 
Custody fees (Note 4)
   
3,090
     
27,921
     
51,472
 
Reports to shareholders
   
2,323
     
5,327
     
1,999
 
Legal fees
   
2,186
     
2,186
     
2,185
 
Insurance expense
   
525
     
1,077
     
526
 
Other expenses
   
3,434
     
6,021
     
4,181
 
Total expenses before dividend expense on securities sold short and interest expense
   
309,764
     
760,570
     
359,968
 
Dividend and interest expense on securities sold short
   
     
     
114,764
 
Total expenses before reimbursement from advisor
   
309,764
     
760,570
     
474,732
 
Expense reimbursement from advisor (Note 4)
   
(89,464
)
   
(3,189
)
   
(130,173
)
Net expenses
   
220,300
     
757,381
     
344,559
 
NET INVESTMENT INCOME
   
312,347
     
1,880,016
     
63,637
 
                         
REALIZED AND UNREALIZED GAINS/(LOSSES):
                       
Net realized gain/(loss) on:
                       
  Investments
   
483,036
     
30,486
     
715,080
 
  Securities sold short
   
     
     
(712,884
)
Net change in unrealized appreciation/(depreciation) on:
                       
  Investments
   
(323,544
)
   
(9,293,903
)
   
(470,926
)
  Securities sold short
   
     
     
(419,789
)
Net gain/(loss) on investments
   
159,492
     
(9,263,417
)
   
(888,519
)
NET INCREASE/(DECREASE) IN NET ASSETS
                       
  RESULTING FROM OPERATIONS
 
$
471,839
   
$
(7,383,401
)
 
$
(824,882
)

The accompanying notes are an integral part of these financial statements.

32

Pzena Funds
Statements of Operations (Continued)
For the period ended August 31, 2018 (Unaudited)

         
PZENA
 
   
PZENA
   
INTERNATIONAL
 
   
SMALL CAP
   
SMALL CAP
 
   
VALUE FUND
   
VALUE FUND
 
INVESTMENT INCOME:
           
Dividends (Net of foreign taxes withheld and issuance fees of $70 and $1,105, respectively)
 
$
128,895
   
$
10,190
 
Interest income
   
7,491
     
193
 
Total investment income
   
136,386
     
10,383
 
                 
EXPENSES:
               
Investment advisory fees (Note 4)
   
93,347
     
3,306
 
Administration and accounting fees (Note 4)
   
43,061
     
14,069
 
Federal and state registration fees
   
15,261
     
6,072
 
Transfer agent fees and expenses (Note 4)
   
19,152
     
5,576
 
Distribution fees – Investor Class (Note 5)
   
7,830
     
413
 
Audit fees
   
10,853
     
4,090
 
Trustee fees and expenses
   
5,961
     
1,881
 
Chief Compliance Officer fees and expenses (Note 4)
   
4,537
     
1,483
 
Shareholder servicing fees – Investor Class (Note 6)
   
2,563
     
165
 
Custody fees (Note 4)
   
2,872
     
7,177
 
Reports to shareholders
   
3,384
     
1,007
 
Legal fees
   
2,189
     
688
 
Insurance expense
   
524
     
 
Other expenses
   
3,476
     
3,432
 
Total expenses before dividend expense on securities sold short and interest expense
   
215,010
     
49,359
 
Dividend and interest expense on securities sold short
   
     
 
Total expenses before reimbursement from advisor
   
215,010
     
49,359
 
Expense reimbursement from advisor (Note 4)
   
(86,705
)
   
(44,917
)
Net expenses
   
128,305
     
4,442
 
NET INVESTMENT INCOME
   
8,081
     
5,941
 
                 
REALIZED AND UNREALIZED GAINS:
               
Net realized gain on:
               
  Investments
   
207,498
     
4,476
 
  Securities sold short
   
     
 
Net change in unrealized appreciation/(depreciation) on:
               
  Investments
   
1,628,507
     
10,346
 
  Securities sold short
   
     
 
Net gain on investments
   
1,836,005
     
14,822
 
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS
 
$
1,844,086
   
$
20,763
 

The accompanying notes are an integral part of these financial statements.

33

Pzena Mid Cap Value Fund
Statements of Changes in Net Assets


   
Six Months Ended
   
Year Ended
 
   
August 31, 2018
   
February 28,
 
   
(Unaudited)
   
2018
 
INCREASE/(DECREASE) IN NET ASSETS FROM:
           
OPERATIONS:
           
Net investment income
 
$
312,347
   
$
48,926
 
Net realized gain on investments
   
483,036
     
481,078
 
Change in unrealized appreciation on investments
   
(323,544
)
   
(651,787
)
Net increase/(decrease) in net assets resulting from operations
   
471,839
     
(121,783
)
                 
DISTRIBUTIONS:
               
Net investment income – Investor Class
   
     
(12,019
)
Net investment income – Institutional Class
   
     
(33,531
)
Net realized gain on investments – Investor Class
   
     
(66,822
)
Net realized gain on investments – Institutional Class
   
     
(111,230
)
Net decrease in net assets resulting from distributions paid
   
     
(223,602
)
                 
CAPITAL SHARE TRANSACTIONS:
               
Proceeds from shares subscribed – Investor Class
   
1,057,533
     
6,347,056
 
Proceeds from shares subscribed – Institutional Class
   
4,764,033
     
30,542,966
 
Net asset value of shares issued to shareholders
               
  in payment of distributions declared – Investor Class
   
     
78,686
 
Net asset value of shares issued to shareholders
               
  in payment of distributions declared – Institutional Class
   
     
144,761
 
Payments for shares redeemed – Investor Class
   
(390,551
)
   
(500,431
)(2)
Payments for shares redeemed – Institutional Class
   
(987,658
)(1)
   
(35,143
)
Net increase in net assets derived from capital share transactions
   
4,443,357
     
36,577,895
 
                 
TOTAL INCREASE IN NET ASSETS
   
4,915,196
     
36,232,510
 
                 
NET ASSETS:
               
Beginning of period
   
41,730,237
     
5,497,727
 
End of period
 
$
46,645,433
   
$
41,730,237
 
                 
Accumulated net investment income, end of period
 
$
315,516
   
$
3,169
 
                 
CHANGES IN SHARES OUTSTANDING:
               
Shares sold – Investor Class
   
81,520
     
475,427
 
Shares sold – Institutional Class
   
361,933
     
2,328,994
 
Shares issued in reinvestments of dividends and distributions – Investor Class
   
     
6,058
 
Shares issued in reinvestments of dividends and distributions – Institutional Class
   
     
11,144
 
Shares redeemed – Investor Class
   
(30,147
)
   
(40,003
)
Shares redeemed – Institutional Class
   
(76,579
)
   
(2,889
)
Net increase in shares outstanding
   
336,727
     
2,778,731
 

(1) 
Net of redemption fees of $5,412.
(2) 
Net of redemption fees of $64.

The accompanying notes are an integral part of these financial statements.

34

Pzena Emerging Markets Value Fund
Statements of Changes in Net Assets


   
Six Months Ended
   
Year Ended
 
   
August 31, 2018
   
February 28,
 
   
(Unaudited)
   
2018
 
INCREASE/(DECREASE) IN NET ASSETS FROM:
           
OPERATIONS:
           
Net investment income
 
$
1,880,016
   
$
573,333
 
Net realized gain on investments
   
30,486
     
690,670
 
Change in unrealized appreciation on investments
   
(9,293,903
)
   
6,217,631
 
Net increase/(decrease) in net assets resulting from operations
   
(7,383,401
)
   
7,481,634
 
                 
DISTRIBUTIONS:
               
Net investment income – Investor Class
   
     
(109,674
)
Net investment income – Institutional Class
   
     
(485,782
)
Net decrease in net assets resulting from distributions paid
   
     
(595,456
)
                 
CAPITAL SHARE TRANSACTIONS:
               
Proceeds from shares subscribed – Investor Class
   
4,084,721
     
8,491,754
 
Proceeds from shares subscribed – Institutional Class
   
163,877,147
     
13,603,544
 
Net asset value of shares issued to shareholders
               
  in payment of distributions declared – Investor Class
   
     
109,644
 
Net asset value of shares issued to shareholders
               
  in payment of distributions declared – Institutional Class
   
     
427,668
 
Payments for shares redeemed – Investor Class
   
(4,492,040
)(1)
   
(1,242,060
)(3)
Payments for shares redeemed – Institutional Class
   
(1,890,391
)(2)
   
(565,096
)
Net increase in net assets derived from capital share transactions
   
161,579,437
     
20,825,454
 
                 
TOTAL INCREASE IN NET ASSETS
   
154,196,036
     
27,711,632
 
                 
NET ASSETS:
               
Beginning of period
   
52,245,773
     
24,534,141
 
End of period
 
$
206,441,809
   
$
52,245,773
 
                 
Accumulated net investment income/(loss), end of period
 
$
1,823,382
   
$
(56,634
)
                 
CHANGES IN SHARES OUTSTANDING:
               
Shares sold – Investor Class
   
374,432
     
788,690
 
Shares sold – Institutional Class
   
15,393,429
     
1,303,876
 
Shares issued in reinvestments of dividends and distributions – Investor Class
   
     
10,180
 
Shares issued in reinvestments of dividends and distributions – Institutional Class
   
     
39,746
 
Shares redeemed – Investor Class
   
(424,988
)
   
(123,586
)
Shares redeemed – Institutional Class
   
(183,586
)
   
(50,685
)
Net increase in shares outstanding
   
15,159,287
     
1,968,221
 

(1) 
Net of redemption fees of $1,195.
(2) 
Net of redemption fees of $10.
(3) 
Net of redemption fees of $2,944.

The accompanying notes are an integral part of these financial statements.

35

Pzena Long/Short Value Fund
Statements of Changes in Net Assets


   
Six Months Ended
   
Year Ended
 
   
August 31, 2018
   
February 28,
 
   
(Unaudited)
   
2018
 
INCREASE/(DECREASE) IN NET ASSETS FROM:
           
OPERATIONS:
           
Net investment income
 
$
63,637
   
$
7,029
 
Net realized gain on investments
   
2,196
     
269,707
 
Net change in unrealized appreciation/(depreciation) on investments
   
(890,715
)
   
37,994
 
Net increase/(decrease) in net assets resulting from operations
   
(824,882
)
   
314,730
 
                 
CAPITAL SHARE TRANSACTIONS:
               
Proceeds from shares subscribed – Investor Class
   
11,923
     
1,228,965
 
Proceeds from shares subscribed – Institutional Class
   
5,590,314
     
14,333,569
 
Payments for shares redeemed – Investor Class
   
(1,111,540
)
   
(51,399
)
Payments for shares redeemed – Institutional Class
   
(78,791
)
   
(7,887
)
Net increase in net assets derived from capital share transactions
   
4,411,906
     
15,503,248
 
                 
TOTAL INCREASE IN NET ASSETS
   
3,587,024
     
15,817,978
 
                 
NET ASSETS:
               
Beginning of period
   
21,062,115
     
5,244,137
 
End of period
 
$
24,649,139
   
$
21,062,115
 
                 
Accumulated net investment income, end of period
 
$
69,560
   
$
5,923
 
                 
CHANGES IN SHARES OUTSTANDING:
               
Shares sold – Investor Class
   
1,115
     
118,938
 
Shares sold – Institutional Class
   
509,961
     
1,314,725
 
Shares redeemed – Investor Class
   
(105,428
)
   
(4,893
)
Shares redeemed – Institutional Class
   
(7,303
)
   
(716
)
Net increase in shares outstanding
   
398,345
     
1,428,054
 


The accompanying notes are an integral part of these financial statements.

36

Pzena Small Cap Value Fund
Statements of Changes in Net Assets


   
Six Months Ended
   
Year Ended
 
   
August 31, 2018
   
February 28,
 
   
(Unaudited)
   
2018
 
INCREASE/(DECREASE) IN NET ASSETS FROM:
           
OPERATIONS:
           
Net investment income/(loss)
 
$
8,081
   
$
(6,882
)
Net realized gain on investments
   
207,498
     
1,299,334
 
Net change in unrealized appreciation/(depreciation) on investments
   
1,628,507
     
(1,407,655
)
Net increase/(decrease) in net assets resulting from operations
   
1,844,086
     
(115,203
)
                 
DISTRIBUTIONS:
               
Net realized gain on investments – Investor Class
   
     
(387,060
)
Net realized gain on investments – Institutional Class
   
     
(665,676
)
Net decrease in net assets resulting from distributions paid
   
     
(1,052,736
)
                 
CAPITAL SHARE TRANSACTIONS:
               
Proceeds from shares subscribed – Investor Class
   
585,834
     
1,704,252
 
Proceeds from shares subscribed – Institutional Class
   
5,229,326
     
6,377,437
 
Net asset value of shares issued to shareholders
               
  in payment of distributions declared – Investor Class
   
     
387,060
 
Net asset value of shares issued to shareholders
               
  in payment of distributions declared – Institutional Class
   
     
506,119
 
Payments for shares redeemed – Investor Class
   
(271,145
)
   
(1,804,598
)
Payments for shares redeemed – Institutional Class
   
(919,852
)
   
(4,888,473
)(1)
Net increase in net assets derived from capital share transactions
   
4,624,163
     
2,281,797
 
                 
TOTAL INCREASE IN NET ASSETS
   
6,468,249
     
1,113,858
 
                 
NET ASSETS:
               
Beginning of period
   
15,938,084
     
14,824,226
 
End of period
 
$
22,406,333
   
$
15,938,084
 
                 
Accumulated net investment income, end of period
 
$
8,081
   
$
 
                 
CHANGES IN SHARES OUTSTANDING:
               
Shares sold – Investor Class
   
47,765
     
147,004
 
Shares sold – Institutional Class
   
421,347
     
548,715
 
Shares issued in reinvestments of dividends and distributions – Investor Class
   
     
34,223
 
Shares issued in reinvestments of dividends and distributions – Institutional Class
   
     
44,474
 
Shares redeemed – Investor Class
   
(22,459
)
   
(155,781
)
Shares redeemed – Institutional Class
   
(73,852
)
   
(426,250
)
Net increase in shares outstanding
   
372,801
     
192,385
 

(1) 
Net of redemption fees of $11.

The accompanying notes are an integral part of these financial statements.

37

Pzena International Small Cap Value Fund
Statement of Changes in Net Assets


   
For the Period
 
   
July 2, 2018(1)
 
   
through
 
   
August 31, 2018
 
   
(Unaudited)
 
INCREASE IN NET ASSETS FROM:
     
OPERATIONS:
     
Net investment income
 
$
5,941
 
Net realized gain on investments
   
4,476
 
Change in unrealized appreciation on investments
   
10,346
 
Net increase in net assets resulting from operations
   
20,763
 
         
CAPITAL SHARE TRANSACTIONS:
       
Proceeds from shares subscribed – Investor Class
   
1,000,000
 
Proceeds from shares subscribed – Institutional Class
   
1,000,000
 
Net increase in net assets derived from capital share transactions
   
2,000,000
 
         
TOTAL INCREASE IN NET ASSETS
   
2,020,763
 
         
NET ASSETS:
       
Beginning of period
   
 
End of period
 
$
2,020,763
 
         
Accumulated net investment income, end of period
 
$
5,941
 
         
CHANGES IN SHARES OUTSTANDING:
       
Shares sold – Investor Class
   
100,000
 
Shares sold – Institutional Class
   
100,000
 
Net increase in shares outstanding
   
200,000
 

(1)
Commencement of operations.

The accompanying notes are an integral part of these financial statements.

38

Pzena Long/Short Value Fund
Statement of Cash Flows


   
For the Six
 
   
Months Ended
 
   
August 31, 2018
 
   
(Unaudited)
 
CASH FLOWS FROM OPERATING ACTIVITIES:
     
Net decrease in net assets resulting from operations
 
$
(824,882
)
Adjustments to reconcile net increase in net assets from operations to net cash used in operating activities:
       
Purchases of investments
   
(13,019,415
)
Purchases to cover securities sold short
   
17,749,542
 
Proceeds from sales of long-term investments
   
7,352,856
 
Proceeds from securities sold short
   
(14,699,600
)
Purchases of short-term investments, net
   
182,150
 
Net realized gain on investments
   
(715,080
)
Net realized loss on short transactions
   
712,884
 
Change in unrealized appreciation on investments
   
470,926
 
Change in unrealized appreciation on short transactions
   
419,789
 
(Increases)/Decreases in operating assets:
       
Increase in dividends and interest receivable
   
(29,032
)
Increase in deposits at broker for short sales
   
(3,977,661
)
Decrease in receivable from Advisor
   
5,704
 
Decrease in prepaid expenses and other assets
   
3,034
 
Increases/(Decreases) in operating liabilities:
       
Increase in dividends payable on short positions
   
3,833
 
Increase in payable to broker
   
1,915,768
 
Increase in other accrued expenses
   
35,746
 
Net cash used in operating activities
   
(4,413,438
)
         
CASH FLOWS FROM FINANCING ACTIVITIES:
       
Proceeds from shares sold
   
5,603,769
 
Payment on shares redeemed
   
(1,190,331
)
Net cash provided by financing activities
   
4,413,438
 
         
Net change in cash
   
 
         
CASH:
       
Beginning balance
   
 
Ending balance
 
$
 
         
SUPPLEMENTAL DISCLOSURES:
       
Non-cash financing activities – decrease in receivable for Fund shares sold
 
$
(1,532
)

The accompanying notes are an integral part of these financial statements.

39

Pzena Mid Cap Value Fund – Investor Class
Financial Highlights


For a share outstanding throughout each period
                           
For the Period
 
   
Six Months Ended
   
Year Ended
   
Year Ended
   
Year Ended
   
March 31, 2014(1)
 
   
August 31, 2018
   
February 28,
   
February 28,
   
February 29,
   
through
 
   
(Unaudited)
   
2018
   
2017
   
2016
   
February 28, 2015
 
PER SHARE DATA:
                             
Net asset value, beginning of period
 
$
12.92
   
$
12.26
   
$
8.70
   
$
10.51
   
$
10.00
 
                                         
Income from investment operations:
                                       
Net investment income
   
0.07
     
0.05
     
0.05
     
0.07
     
 
Net realized and unrealized gain/(loss)
                                       
  on investments
   
0.07
     
0.94
     
3.58
     
(1.55
)
   
0.81
 
Total from investment operations
   
0.14
     
0.99
     
3.63
     
(1.48
)
   
0.81
 
                                         
Less distributions:
                                       
Dividends from net investment income
   
     
(0.05
)
   
(0.07
)
   
(0.05
)
   
(0.01
)
Dividends from net realized gain on investments
   
     
(0.28
)
   
     
(0.28
)
   
(0.29
)
Total distributions
   
     
(0.33
)
   
(0.07
)
   
(0.33
)
   
(0.30
)
                                         
Redemption fees retained
   
     
0.00
(2) 
   
     
     
 
                                         
Net asset value, end of period
 
$
13.06
   
$
12.92
   
$
12.26
   
$
8.70
   
$
10.51
 
                                         
TOTAL RETURN
   
1.08
%(3)
   
8.09
%
   
41.73
%
   
-14.44
%
   
8.36
%(3)
                                         
SUPPLEMENTAL DATA AND RATIOS:
                                       
Net assets, end of period (thousands)
 
$
9,356
   
$
8,593
   
$
2,741
   
$
1,053
   
$
1,148
 
Ratio of expenses to average net assets:
                                       
Before expense reimbursement
   
1.63
%(4)
   
3.63
%
   
6.90
%
   
8.51
%
   
11.32
%(4)
After expense reimbursement
   
1.24
%(4)
   
1.22
%(5)
   
1.35
%
   
1.17
%
   
1.35
%(4)
Ratio of net investment income/(loss)
                                       
  to average net assets:
                                       
Before expense reimbursement
   
0.71
%(4)
   
(2.09
)%
   
(5.04
)%
   
(6.64
)%
   
(9.94
)%(4)
After expense reimbursement
   
1.10
%(4)
   
0.32
%
   
0.51
%
   
0.70
%
   
0.03
%(4)
Portfolio turnover rate(6)
   
17
%(3)
   
16
%
   
26
%
   
43
%
   
22
%(3)

(1) 
Commencement of operations.
(2) 
Amount is less than $0.01.
(3) 
Not annualized.
(4) 
Annualized.
(5) 
Effective October 12, 2017, the advisor contractually agreed to lower the net annual operating expense limit to 1.25%.
(6) 
Portfolio turnover is calculated on the basis of the Fund as a whole.


The accompanying notes are an integral part of these financial statements.

40

Pzena Mid Cap Value Fund – Institutional Class
Financial Highlights


For a share outstanding throughout each period
                           
For the Period
 
   
Six Months Ended
   
Year Ended
   
Year Ended
   
Year Ended
   
March 31, 2014(1)
 
   
August 31, 2018
   
February 28,
   
February 28,
   
February 29,
   
through
 
   
(Unaudited)
   
2018
   
2017
   
2016
   
February 28, 2015
 
PER SHARE DATA:
                             
Net asset value, beginning of period
 
$
12.93
   
$
12.27
   
$
8.70
   
$
10.52
   
$
10.00
 
                                         
Income from investment operations:
                                       
Net investment income
   
0.09
     
0.09
     
0.09
     
0.08
     
0.03
 
Net realized and unrealized gain/(loss)
                                       
  on investments
   
0.08
     
0.94
     
3.58
     
(1.55
)
   
0.81
 
Total from investment operations
   
0.17
     
1.03
     
3.67
     
(1.47
)
   
0.84
 
                                         
Less distributions:
                                       
Dividends from net investment income
   
     
(0.09
)
   
(0.10
)
   
(0.07
)
   
(0.03
)
Dividends from net realized gain on investments
   
     
(0.28
)
   
     
(0.28
)
   
(0.29
)
Total distributions
   
     
(0.37
)
   
(0.10
)
   
(0.35
)
   
(0.32
)
                                         
Redemption fees retained
   
0.00
(2) 
   
     
     
     
 
                                         
Net asset value, end of period
 
$
13.10
   
$
12.93
   
$
12.27
   
$
8.70
   
$
10.52
 
                                         
TOTAL RETURN
   
1.31
%(3)
   
8.36
%
   
42.21
%
   
-14.31
%
   
8.73
%(3)
                                         
SUPPLEMENTAL DATA AND RATIOS:
                                       
Net assets, end of period (thousands)
 
$
37,290
   
$
33,137
   
$
2,757
   
$
1,528
   
$
1,407
 
Ratio of expenses to average net assets:
                                       
Before expense reimbursement
   
1.29
%(4)
   
2.83
%
   
6.64
%
   
8.25
%
   
10.94
%(4)
After expense reimbursement
   
0.90
%(4)
   
0.93
%(5)
   
1.00
%
   
1.00
%
   
1.00
%(4)
Ratio of net investment income/(loss)
                                       
  to average net assets:
                                       
Before expense reimbursement
   
1.05
%(4)
   
(1.27
)%
   
(4.77
)%
   
(6.39
)%
   
(9.56
)%(4)
After expense reimbursement
   
1.44
%(4)
   
0.63
%
   
0.87
%
   
0.86
%
   
0.38
%(4)
Portfolio turnover rate(6)
   
17
%(3)
   
16
%
   
26
%
   
43
%
   
22
%(3)

(1) 
Commencement of operations.
(2) 
Amount is less than $0.01.
(3) 
Not annualized.
(4) 
Annualized.
(5) 
Effective October 12, 2017, the advisor contractually agreed to lower the net annual operating expense limit to 0.90%.
(6) 
Portfolio turnover is calculated on the basis of the Fund as a whole.


The accompanying notes are an integral part of these financial statements.
41



Pzena Emerging Markets Value Fund – Investor Class
Financial Highlights


For a share outstanding throughout each period
                           
For the Period
 
   
Six Months Ended
   
Year Ended
   
Year Ended
   
Year Ended
   
March 31, 2014(1)
 
   
August 31, 2018
   
February 28,
   
February 28,
   
February 29,
   
through
 
   
(Unaudited)
   
2018
   
2017
   
2016
   
February 28, 2015
 
PER SHARE DATA:
                             
Net asset value, beginning of period
 
$
11.46
   
$
9.47
   
$
6.74
   
$
9.04
   
$
10.00
 
                                         
Income from investment operations:
                                       
Net investment income
   
0.16
     
0.07
     
0.03
     
0.13
     
0.06
 
Net realized and unrealized gain/(loss)
                                       
  on investments
   
(1.17
)
   
2.06
     
2.76
     
(2.29
)
   
(0.99
)
Total from investment operations
   
(1.01
)
   
2.13
     
2.79
     
(2.16
)
   
(0.93
)
                                         
Less distributions:
                                       
Dividends from net investment income
   
     
(0.14
)
   
(0.06
)
   
(0.14
)
   
(0.01
)
Dividends from net realized gain on investments
   
     
     
     
     
(0.02
)
Total distributions
   
     
(0.14
)
   
(0.06
)
   
(0.14
)
   
(0.03
)
                                         
Redemption fees retained
   
0.00
(2) 
   
0.00
(2) 
   
0.00
(2) 
   
     
 
                                         
Net asset value, end of period
 
$
10.45
   
$
11.46
   
$
9.47
   
$
6.74
   
$
9.04
 
                                         
TOTAL RETURN
   
-8.81
%(3)
   
22.56
%
   
41.63
%
   
-24.02
%
   
-9.28
%(3)
                                         
SUPPLEMENTAL DATA AND RATIOS:
                                       
Net assets, end of period (thousands)
 
$
9,521
   
$
11,023
   
$
2,713
   
$
811
   
$
1,186
 
Ratio of expenses to average net assets:
                                       
Before expense reimbursement
   
1.63
%(4)
   
2.03
%
   
3.19
%
   
3.26
%
   
7.95
%(4)
After expense reimbursement
   
1.59
%(4)
   
1.57
%
   
1.60
%
   
1.55
%
   
1.75
%(4)
Ratio of net investment income/(loss)
                                       
  to average net assets:
                                       
Before expense reimbursement
   
2.55
%(4)
   
0.42
%
   
(0.91
)%
   
(0.36
)%
   
(5.50
)%(4)
After expense reimbursement
   
2.59
%(4)
   
0.88
%
   
0.68
%
   
1.35
%
   
0.70
%(4)
Portfolio turnover rate(5)
   
25
%(3)
   
7
%
   
29
%
   
22
%
   
13
%(3)

(1) 
Commencement of operations.
(2) 
Amount is less than $0.01.
(3) 
Not annualized.
(4) 
Annualized.
(5) 
Portfolio turnover is calculated on the basis of the Fund as a whole.


The accompanying notes are an integral part of these financial statements.
42


Pzena Emerging Markets Value Fund – Institutional Class
Financial Highlights


For a share outstanding throughout each period
                           
For the Period
 
   
Six Months Ended
   
Year Ended
   
Year Ended
   
Year Ended
   
March 31, 2014(1)
 
   
August 31, 2018
   
February 28,
   
February 28,
   
February 29,
   
through
 
   
(Unaudited)
   
2018
   
2017
   
2016
   
February 28, 2015
 
PER SHARE DATA:
                             
Net asset value, beginning of period
 
$
11.46
   
$
9.48
   
$
6.74
   
$
9.04
   
$
10.00
 
                                         
Income from investment operations:
                                       
Net investment income
   
0.09
     
0.17
     
0.10
     
0.13
     
0.03
 
Net realized and unrealized gain/(loss)
                                       
  on investments
   
(1.08
)
   
1.97
     
2.72
     
(2.27
)
   
(0.93
)
Total from investment operations
   
(0.99
)
   
2.14
     
2.82
     
(2.14
)
   
(0.90
)
                                         
Less distributions:
                                       
Dividends from net investment income
   
     
(0.16
)
   
(0.08
)
   
(0.16
)
   
(0.04
)
Dividends from net realized gain on investments
   
     
     
     
     
(0.02
)
Total distributions
   
     
(0.16
)
   
(0.08
)
   
(0.16
)
   
(0.06
)
                                         
Redemption fees retained
   
0.00
(2) 
   
     
     
     
 
                                         
Net asset value, end of period
 
$
10.47
   
$
11.46
   
$
9.48
   
$
6.74
   
$
9.04
 
                                         
TOTAL RETURN
   
-8.64
%(3)
   
22.63
%
   
42.01
%
   
-23.78
%
   
-9.06
%(3)
                                         
SUPPLEMENTAL DATA AND RATIOS:
                                       
Net assets, end of period (thousands)
 
$
196,921
   
$
41,223
   
$
21,821
   
$
10,302
   
$
15,092
 
Ratio of expenses to average net assets:
                                       
Before expense reimbursement
   
1.25
%(4)
   
1.75
%
   
2.88
%
   
3.02
%
   
4.48
%(4)
After expense reimbursement
   
1.25
%(4)
   
1.25
%
   
1.25
%
   
1.40
%
   
1.40
%(4)
Ratio of net investment income/(loss)
                                       
  to average net assets:
                                       
Before expense reimbursement
   
3.25
%(4)
   
1.10
%
   
(0.45
)%
   
(0.15
)%
   
(2.79
)%(4)
After expense reimbursement
   
3.25
%(4)
   
1.60
%
   
1.18
%
   
1.47
%
   
0.29
%(4)
Portfolio turnover rate(5)
   
25
%(3)
   
7
%
   
29
%
   
22
%
   
13
%(3)

(1) 
Commencement of operations.
(2) 
Amount is less than $0.01.
(3) 
Not annualized.
(4) 
Annualized.
(5) 
Portfolio turnover is calculated on the basis of the Fund as a whole.

The accompanying notes are an integral part of these financial statements.

43

Pzena Long/Short Value Fund – Investor Class
Financial Highlights


For a share outstanding throughout each period
                           
For the Period
 
   
Six Months Ended
   
Year Ended
   
Year Ended
   
Year Ended
   
March 31, 2014(1)
 
   
August 31, 2018
   
February 28,
   
February 28,
   
February 29,
   
through
 
   
(Unaudited)
   
2018
   
2017
   
2016
   
February 28, 2015
 
PER SHARE DATA:
                             
Net asset value, beginning of period
 
$
10.85
   
$
10.54
   
$
9.01
   
$
9.32
   
$
10.00
 
                                         
Income from investment operations:
                                       
Net investment income/(loss)
   
(0.02
)
   
0.04
     
(0.04
)
   
(0.05
)
   
(0.10
)
Net realized and unrealized gain/(loss)
                                       
  on investments
   
(0.34
)
   
0.27
     
1.66
     
(0.26
)
   
(0.07
)
Total from investment operations
   
(0.36
)
   
0.31
     
1.62
     
(0.31
)
   
(0.17
)
                                         
Less distributions:
                                       
Dividends from net realized gain on investments
   
     
     
(0.09
)
   
     
(0.51
)
Total distributions
   
     
     
(0.09
)
   
     
(0.51
)
                                         
Net asset value, end of period
 
$
10.49
   
$
10.85
   
$
10.54
   
$
9.01
   
$
9.32
 
                                         
TOTAL RETURN
   
-3.32
%(2)
   
2.94
%
   
18.00
%
   
-3.33
%
   
-1.70
%(2)
                                         
SUPPLEMENTAL DATA AND RATIOS:
                                       
Net assets, end of period (thousands)
 
$
1,333
   
$
2,510
   
$
1,236
   
$
967
   
$
995
 
Ratio of expenses to average net assets:
                                       
Before expense reimbursement
   
3.93
%(3)
   
7.38
%
   
9.63
%
   
10.64
%
   
14.15
%(3)
After expense reimbursement
   
2.93
%(3)
   
2.74
%
   
2.88
%
   
2.97
%
   
3.12
%(3)
Ratio of expenses excluding dividend and interest
                                       
  expense on short positions to average net assets:
                                       
Before expense reimbursement and/or waivers
   
3.06
%(3)
   
6.64
%
   
8.85
%
   
9.58
%
   
13.13
%(3)
After expense reimbursements and/or waivers
   
2.06
%(3)
   
2.00
%
   
2.10
%
   
1.91
%
   
2.10
%(3)
Ratio of net investment income/(loss)
                                       
  to average net assets(4):
                                       
Before expense reimbursement
   
(0.77
)%(3)
   
(4.72
)%
   
(7.19
)%
   
(8.27
)%
   
(12.20
)%(3)
After expense reimbursement
   
0.23
%(3)
   
(0.08
)%
   
(0.44
)%
   
(0.60
)%
   
(1.17
)%(3)
Portfolio turnover rate(5)
   
28
%(2)
   
36
%
   
59
%
   
51
%
   
148
%(2)

(1) 
Commencement of operations.
(2) 
Not annualized.
(3) 
Annualized.
(4) 
The net investment loss ratios include dividend and interest expense on short positions.
(5) 
Portfolio turnover is calculated on the basis of the Fund as a whole.

The accompanying notes are an integral part of these financial statements.

44

Pzena Long/Short Value Fund – Institutional Class
Financial Highlights


For a share outstanding throughout each period
                           
For the Period
 
   
Six Months Ended
   
Year Ended
   
Year Ended
   
Year Ended
   
March 31, 2014(1)
 
   
August 31, 2018
   
February 28,
   
February 28,
   
February 29,
   
through
 
   
(Unaudited)
   
2018
   
2017
   
2016
   
February 28, 2015
 
PER SHARE DATA:
                             
Net asset value, beginning of period
 
$
10.97
   
$
10.63
   
$
9.05
   
$
9.35
   
$
10.00
 
                                         
Income from investment operations:
                                       
Net investment income/(loss)
   
0.03
     
(0.01
)
   
(0.01
)
   
(0.04
)
   
(0.04
)
Net realized and unrealized gain/(loss)
                                       
  on investments
   
(0.37
)
   
0.35
     
1.68
     
(0.26
)
   
(0.10
)
Total from investment operations
   
(0.34
)
   
0.34
     
1.67
     
(0.30
)
   
(0.14
)
                                         
Less distributions:
                                       
Dividends from net realized gain on investments
   
     
     
(0.09
)
   
     
(0.51
)
Total distributions
   
     
     
(0.09
)
   
     
(0.51
)
                                         
Net asset value, end of period
 
$
10.63
   
$
10.97
   
$
10.63
   
$
9.05
   
$
9.35
 
                                         
TOTAL RETURN
   
-3.10
%(2)
   
3.20
%
   
18.48
%
   
-3.21
%
   
-1.39
%(2)
                                         
SUPPLEMENTAL DATA AND RATIOS:
                                       
Net assets, end of period (thousands)
 
$
23,316
   
$
18,552
   
$
4,088
   
$
3,230
   
$
3,077
 
Ratio of expenses to average net assets:
                                       
Before expense reimbursement
   
3.65
%(3)
   
6.72
%
   
9.28
%
   
10.39
%
   
13.32
%(3)
After expense reimbursement
   
2.64
%(3)
   
2.49
%
   
2.53
%
   
2.81
%
   
2.79
%(3)
Ratio of expenses excluding dividend and interest
                                       
  expense on short positions to average net assets:
                                       
Before expense reimbursement and/or waivers
   
2.76
%(3)
   
5.98
%
   
8.50
%
   
9.33
%
   
12.28
%(3)
After expense reimbursements and/or waivers
   
1.75
%(3)
   
1.75
%
   
1.75
%
   
1.75
%
   
1.75
%(3)
Ratio of net investment income/(loss)
                                       
  to average net assets(4):
                                       
Before expense reimbursement
   
(0.49
)%(3)
   
(4.07
)%
   
(6.84
)%
   
(8.02
)%
   
(11.27
)%(3)
After expense reimbursement
   
0.52
%(3)
   
0.16
%
   
(0.09
)%
   
(0.44
)%
   
(0.74
)%(3)
Portfolio turnover rate(5)
   
28
%(2)
   
36
%
   
59
%
   
51
%
   
148
%(2)

(1) 
Commencement of operations.
(2) 
Not annualized.
(3) 
Annualized.
(4) 
The net investment loss ratios include dividend and interest expense on short positions.
(5) 
Portfolio turnover is calculated on the basis of the Fund as a whole.

The accompanying notes are an integral part of these financial statements.

45

Pzena Small Cap Value Fund – Investor Class
Financial Highlights


For a share outstanding throughout each period
               
For the Period
 
   
Six Months Ended
   
Year Ended
   
April 27, 2016(1)
 
   
August 31, 2018
   
February 28,
   
through
 
   
(Unaudited)
   
2018
   
February 28, 2017
 
PER SHARE DATA:
                 
Net asset value, beginning of period
 
$
11.10
   
$
11.96
   
$
10.00
 
                         
Income from investment operations:
                       
Net investment loss
   
(0.01
)
   
(0.03
)
   
(0.03
)
Net realized and unrealized gain on investments
   
1.27
     
0.03
     
2.00
 
Total from investment operations
   
1.26
     
     
1.97
 
                         
Less distributions:
                       
Dividends from net realized gain on investments
   
     
(0.86
)
   
(0.01
)
Total distributions
   
     
(0.86
)
   
(0.01
)
                         
Redemption fees retained
   
     
0.00
(2) 
   
0.00
(2) 
                         
Net asset value, end of period
 
$
12.36
   
$
11.10
   
$
11.96
 
                         
TOTAL RETURN
   
11.35
%(3)
   
-0.11
%
   
19.72
%(3)
                         
SUPPLEMENTAL DATA AND RATIOS:
                       
Net assets, end of period (thousands)
 
$
6,528
   
$
5,583
   
$
5,711
 
Ratio of expenses to average net assets:
                       
Before expense reimbursement
   
2.42
%(4)
   
2.91
%
   
4.96
%(4)
After expense reimbursement
   
1.53
%(4)
   
1.51
%
   
1.55
%(4)
Ratio of net investment income/(loss) to average net assets:
                       
Before expense reimbursement
   
(1.03
)%(4)
   
(1.65
)%
   
(3.79
)%(4)
After expense reimbursement
   
(0.14
)%(4)
   
(0.25
)%
   
(0.38
)%(4)
Portfolio turnover rate(5)
   
22
%(3)
   
56
%
   
13
%(3)

(1) 
Commencement of operations.
(2) 
Amount is less than $0.01.
(3) 
Not annualized.
(4) 
Annualized.
(5) 
Portfolio turnover is calculated on the basis of the Fund as a whole.

The accompanying notes are an integral part of these financial statements.

46

Pzena Small Cap Value Fund – Institutional Class
Financial Highlights


For a share outstanding throughout each period
               
For the Period
 
   
Six Months Ended
   
Year Ended
   
April 27, 2016(1)
 
   
August 31, 2018
   
February 28,
   
through
 
   
(Unaudited)
   
2018
   
February 28, 2017
 
PER SHARE DATA:
                 
Net asset value, beginning of period
 
$
11.17
   
$
11.99
   
$
10.00
 
                         
Income from investment operations:
                       
Net investment income/(loss)
   
0.01
     
0.01
     
(0.00
)(2)
Net realized and unrealized gain on investments
   
1.28
     
0.03
     
2.00
 
Total from investment operations
   
1.29
     
0.04
     
2.00
 
                         
Less distributions:
                       
Dividends from net investment income
   
     
     
(0.01
)
Dividends from net realized gain on investments
   
     
(0.86
)
   
 
Total distributions
   
     
(0.86
)
   
(0.01
)
                         
Redemption fees retained
   
     
0.00
(2) 
   
0.00
(2) 
                         
Net asset value, end of period
 
$
12.46
   
$
11.17
   
$
11.99
 
                         
TOTAL RETURN
   
11.55
%(3)
   
0.22
%
   
20.02
%(3)
                         
SUPPLEMENTAL DATA AND RATIOS:
                       
Net assets, end of period (thousands)
 
$
15,878
   
$
10,355
   
$
9,114
 
Ratio of expenses to average net assets:
                       
Before expense reimbursement
   
2.08
%(4)
   
2.56
%
   
4.31
%(4)
After expense reimbursement
   
1.20
%(4)
   
1.20
%
   
1.20
%(4)
Ratio of net investment income/(loss) to average net assets:
                       
Before expense reimbursement
   
(0.69
)%(4)
   
(1.27
)%
   
(3.20
)%(4)
After expense reimbursement
   
0.19
%(4)
   
0.09
%
   
(0.09
)%(4)
Portfolio turnover rate(5)
   
22
%(3)
   
56
%
   
13
%(3)

(1) 
Commencement of operations
(2) 
Amount is less than $0.01.
(3) 
Not annualized.
(4) 
Annualized
(5) 
Portfolio turnover is calculated on the basis of the Fund as a whole.

The accompanying notes are an integral part of these financial statements.

47

Pzena International Small Cap Value Fund – Investor Class
Financial Highlights


For a share outstanding throughout each period
   
For the Period
 
   
July 2, 2018(1)
 
   
through
 
   
August 31, 2018
 
   
(Unaudited)
 
PER SHARE DATA:
     
Net asset value, beginning of period
 
$
10.00
 
         
Income from investment operations:
       
Net investment income
   
0.03
 
Net realized and unrealized gain on investments
   
0.07
 
Total from investment operations
   
0.10
 
         
Net asset value, end of period
 
$
10.10
 
         
TOTAL RETURN
   
1.00
%(2)
         
SUPPLEMENTAL DATA AND RATIOS:
       
Net assets, end of period (thousands)
 
$
1,010
 
Ratio of expenses to average net assets:
       
Before expense reimbursement
   
15.11
%(3)
After expense reimbursement
   
1.52
%(3)
Ratio of net investment income/(loss) to average net assets:
       
Before expense reimbursement
   
(11.97
)%(3)
After expense reimbursement
   
1.62
%(3)
Portfolio turnover rate(4)
   
19
%(2)

(1) 
Commencement of operations.
(2) 
Not annualized.
(3) 
Annualized.
(4) 
Portfolio turnover is calculated on the basis of the Fund as a whole.

The accompanying notes are an integral part of these financial statements.

48

Pzena International Small Cap Value Fund – Institutional Class
Financial Highlights


For a share outstanding throughout each period
   
For the Period
 
   
July 2, 2018(1)
 
   
through
 
   
August 31, 2018
 
   
(Unaudited)
 
PER SHARE DATA:
     
Net asset value, beginning of period
 
$
10.00
 
         
Income from investment operations:
       
Net investment income
   
0.03
 
Net realized and unrealized gain on investments
   
0.08
 
Total from investment operations
   
0.11
 
         
Net asset value, end of period
 
$
10.11
 
         
TOTAL RETURN
   
1.10
%(2)
         
SUPPLEMENTAL DATA AND RATIOS:
       
Net assets, end of period (thousands)
 
$
1,011
 
Ratio of expenses to average net assets:
       
Before expense reimbursement
   
14.76
%(3)
After expense reimbursement
   
1.17
%(3)
Ratio of net investment income/(loss) to average net assets:
       
Before expense reimbursement
   
(11.62
)%(3)
After expense reimbursement
   
1.97
%(3)
Portfolio turnover rate(4)
   
19
%(2)

(1) 
Commencement of operations.
(2) 
Not annualized.
(3) 
Annualized.
(4) 
Portfolio turnover is calculated on the basis of the Fund as a whole.
 
 
The accompanying notes are an integral part of these financial statements.

49


Pzena Funds
Notes to Financial Statements
August 31, 2018 (Unaudited)
 
NOTE 1 – ORGANIZATION
 
The Pzena Mid Cap Value Fund (the “Mid Cap Value Fund”), Pzena Emerging Markets Value Fund (the “Emerging Markets Value Fund”), Pzena Long/Short Value Fund (the “Long/Short Value Fund”), the Pzena Small Cap Value Fund (the “Small Cap Value Fund”), and the Pzena International Small Cap Value Fund (the “International Small Cap Value Fund”), (collectively, the “Funds”), are each a diversified series of Advisors Series Trust (the “Trust”), which is registered under the Investment Company Act of 1940, as amended, (the “1940 Act”) as an open-end management investment company.  The Funds follow the investment company accounting and reporting guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standard Codification Topic 946 “Financial Services – Investment Companies”.
 
The primary investment objective for each Fund is to achieve long-term capital appreciation.  Currently, each Fund offers Investor Class and Institutional Class shares.  Each class of shares differs principally in its respective distribution and shareholder servicing expenses and sales charges, if any.  Each class of shares has identical rights to earnings, assets and voting privileges, except for class-specific expenses and exclusive rights to vote on matters affecting only individual classes.
 
The Mid Cap Value Fund, Emerging Markets Value Fund, and the Long/Short Value Fund commenced operations on March 31, 2014. The Small Cap Value Fund commenced operations on April 27, 2016, and the International Small Cap Value Fund commenced operations on July 2, 2018.
 
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES
 
The following is a summary of significant accounting policies consistently followed by the Funds in the preparation of their financial statements. These policies are in conformity with accounting principles generally accepted in the United States of America.
 
Security Valuation – All investments in securities are recorded at their estimated fair value, as described in Note 3.
 
Federal Income Taxes – It is the policy of the Funds to comply with the requirements of Subchapter M of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its taxable income to shareholders.  Therefore, no Federal income or excise tax provision is required.
 
The Funds recognize the tax benefits of uncertain tax positions only where the position is “more likely than not” to be sustained assuming examination by tax authorities.  The tax returns of the Funds’ prior three fiscal years are open for examination. Management has reviewed all open tax years in major jurisdictions and concluded that there is no impact on the Funds’ net assets and no tax liability resulting from unrecognized tax events relating to uncertain income tax positions taken or expected to be taken on a tax return. The Funds identify their major tax jurisdictions as U.S. Federal and the state of Wisconsin. The Funds are not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next twelve months.
 
Security Transactions, Income and Distributions – Security transactions are accounted for on the trade date. Realized gains and losses on securities sold are determined on the basis of identified cost.  Dividend income and distributions to shareholders are recorded on the ex-dividend date.  The Funds will make distributions of dividends and capital gains, if any, at least annually, typically in December.  The Funds may make any additional payment of dividends or distributions if they deem it desirable at any other time during the year. The amount of dividends and distributions to shareholders from net investment income and net realized capital gains is determined in accordance with Federal income tax regulations which differ from accounting principles generally accepted in the United States of America.
 
Investment income, expenses (other than those specific to the class of shares), and realized and unrealized gains and losses on investments are allocated to the separate classes of each Fund based upon their relative net assets on the date income is earned or expensed and realized and unrealized gains and losses are incurred.
 
The Funds are charged for those expenses that are directly attributable to the Fund, such as investment advisory, custody and transfer agent fees.  Expenses that are not attributable to the Funds are typically allocated among the Funds in proportion to their respective net assets.  Common expenses of the Trust are typically allocated among the funds in the Trust based on a fund’s respective net assets, or by other equitable means.
 
Reclassification of Capital Accounts – Accounting principles generally accepted in the United States of America require that certain components of net assets relating to permanent differences be reclassified between financial and tax reporting.  These reclassifications have no effect on net assets or net asset value per share.
 
50


 
Pzena Funds
Notes to Financial Statements (Continued)
August 31, 2018 (Unaudited)

Use of Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operation during the reporting period.  Actual results could differ from those estimates.
 
Redemption Fees – The Funds charge a 1% redemption fee to shareholders who redeem shares held for 30 days or less for the Mid Cap Value Fund and the Small Cap Value Fund and 60 days for the Emerging Markets Value Fund, Long/Short Value Fund, and the International Small Cap Value Fund.  Such fees are retained by the applicable Fund and accounted for as an addition to paid-in capital.  During the six-month period ended August 31, 2018, the Mid Cap Value Fund and Emerging Markets Value Fund retained $5,412 and $1,205, respectively, in redemption fees.
 
REITs – The Funds can make certain investments in real estate investment trusts (“REITs”) which pay dividends to their shareholders based upon funds available from operations.  It is quite common for these dividends to exceed the REITs’ taxable earnings and profits resulting in the excess portion of such dividends being designated as a return of capital.  Each Fund intends to include the gross dividends from such REITs in its annual distributions to its shareholders and, accordingly, a portion of each Fund’s distributions may also be designated as a return of capital.
 
Leverage and Short Sales – The Long/Short Value Fund may use leverage in connection with its investment activities and may effect short sales of securities.  Leverage can increase the investment returns of the Fund if the securities purchased increase in value in an amount exceeding the cost of the borrowing.  However, if the securities decrease in value, the Fund will suffer a greater loss than would have resulted without the use of leverage.  A short sale is the sale by the Fund of a security which it does not own in anticipation of purchasing the same security in the future at a lower price to close the short position.  A short sale will be successful if the price of the shorted security decreases.  However, if the underlying security goes up in price during the period in which the short position is outstanding, the Fund will realize a loss.  The risk on a short sale is unlimited because the Fund must buy the shorted security at the higher price to complete the transaction.  Therefore, short sales may be subject to greater risks than investments in long positions.
 
With a long position, the maximum sustainable loss is limited to the amount paid for the security plus the transaction costs, whereas there is no maximum attainable price of the shorted security.  The Fund would also incur increased transaction costs associated with selling securities short.  In addition, if the Fund sells securities short, it must maintain a segregated account with its custodian containing cash or high-grade securities equal to (i) the greater of the current market value of the securities sold short or the market value of such securities at the time they were sold short, less (ii) any collateral deposited with the Fund’s broker (not including the proceeds from the short sales).  The Fund may be required to add to the segregated account as the market price of a shorted security increases.  As a result of maintaining and adding to its segregated account, the Fund may maintain higher levels of cash or liquid assets (for example, U.S. Treasury bills, repurchase agreements, high quality commercial paper and long equity positions) for collateral needs thus reducing its overall managed assets available for trading purposes.  The Fund is obligated to pay the counterparty any dividends or interest due on securities sold short.  Such dividends and interest are recorded as an expense to the Fund.
 
Derivatives – The Funds have adopted the financial accounting reporting rules as required by the Derivatives and Hedging Topic of the FASB Accounting Standards Codification.  The Funds are required to include enhanced disclosure that enables investors to understand how and why an entity uses derivatives, how derivatives are accounted for, and how derivatives instruments affect an entity’s result of operations and financial position.  During the six-month period ended August 31, 2018, the Funds did not hold any derivative instruments.
 
Events Subsequent to the Fiscal Period End – In preparing the financial statements as of August 31, 2018, management considered the impact of subsequent events for the potential recognition or disclosure in these financial statements.
 
NOTE 3 – SECURITIES VALUATION
 
The Funds have adopted authoritative fair value accounting standards which establish an authoritative definition of fair value and set out a hierarchy for measuring fair value.  These standards require additional disclosures about the various inputs and valuation techniques used to develop the measurements of fair value, a discussion in changes in valuation techniques and related inputs during the period and expanded disclosure of valuation levels for major security types.  These inputs are summarized in the three broad levels listed below:
 
Level 1 –
Unadjusted quoted prices in active markets for identical assets or liabilities that the Fund has the ability to access.
   
Level 2 –
Observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates and similar data.
 
 
51

Pzena Funds
Notes to Financial Statements (Continued)
August 31, 2018 (Unaudited)
 
Level 3 –
Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available, representing the Funds’ own assumptions about the assumptions a market participant would use in valuing the asset or liability, and would be based on the best information available.
 
Following is a description of the valuation techniques applied to the Funds’ major categories of assets and liabilities measured at fair value on a recurring basis:
 
Each Fund determines the fair value of its investments and computes its net asset value per share as of the close of regular trading on the New York Stock Exchange (4:00pm EST).
 
Equity Securities – Equity securities, including common stocks, preferred stocks, foreign-issued common stocks, exchange-traded funds, closed-end mutual funds and real estate investment trusts (REITs), that are primarily traded on a national securities exchange shall be valued at the last sale price on the exchange on which they are primarily traded on the day of valuation or, if there has been no sale on such day, at the mean between the bid and asked prices.  Securities primarily traded in the NASDAQ Global Market System 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.  Over-the-counter securities which are not traded in the NASDAQ Global Market System shall be valued at the most recent sales price.  To the extent these securities are actively traded and valuation adjustments are not applied, they are categorized in Level 1 of the fair value hierarchy.
 
Participatory Notes – Participatory notes are valued with an evaluated price provided by an independent pricing service.  These securities will generally be classified in Level 2 of the fair value hierarchy.
 
Debt Securities – Debt securities, such as corporate bonds, asset backed securities, mortgage backed securities, municipal bonds, U.S. Treasuries and U.S. government agency issues are valued at market on the basis of valuations furnished by an independent pricing service which utilizes both dealer-supplied valuations and formula-based techniques.  The pricing service may consider recently executed transactions in securities of the issuer or comparable issuers, market price quotations (where observable), bond spreads, and fundamental data relating to the issuer.  In addition, the model may incorporate market observable data such as reported sales of similar securities, broker quotes, yields, bids, offers, and reference data.  Certain securities are valued principally using dealer quotations.  Debt securities having a maturity of 60 days or less are valued at the evaluated mean between the bid and asked price.  These securities will generally be classified in Level 2 of the fair value hierarchy.
 
Investment Companies – Investments in open-end mutual funds are valued at their net asset value per share.  To the extent, these securities are actively traded and valuation adjustments are not applied, they are categorized in Level 1 of the fair value hierarchy.
 
Short-Term Securities – Short-term securities having a maturity of less than 60 days are valued at the evaluated mean between bid and asked price.  To the extent the inputs are observable and timely, these securities would be classified in Level 2 of the fair value hierarchy.
 
Illiquid Securities – A security may be considered illiquid if it lacks a readily available market.  Securities are generally considered liquid if they can be sold or disposed of in the ordinary course of business within seven days at approximately the price at which the security is valued by the Funds.  Illiquid securities may be valued under methods approved by the Funds’ Board of Trustees as reflecting fair value.  The Funds intend to hold no more than 15% of its net assets in illiquid securities.
 
Certain restricted securities may be considered illiquid.  Restricted securities are often purchased in private placement transactions, are not registered under the Securities Act of 1933, may have contractual restrictions on resale, and may be valued under methods approved by the Funds’ Board of Trustees as reflecting fair value.  Certain restricted securities eligible for resale to qualified institutional investors, including Rule 144a securities, are not subject to the limitation on the Funds’ investment in illiquid securities if they are determined to be liquid in accordance with the procedures adopted by the Funds’ Board of Trustees.
 
Securities for which market quotations are not readily available or if the closing price does not represent fair value, are valued following procedures approved by the Board of Trustees (“Board”).  These procedures consider many factors, including the type of security, size of holding, trading volume and news events.  There can be no assurance that the Funds could obtain the fair value assigned to a security if they were to sell the security at approximately the time at which the Funds determine their net asset value per share.
 
The Board has delegated day-to-day valuation issues to a Valuation Committee of the Trust that comprises representatives from U.S. Bancorp Fund Services, LLC, the Funds’ administrator.  The function of the Valuation Committee is to value securities where current and reliable market quotations are not readily available or the closing price does not represent fair value by following procedures approved by the Board.  These procedures consider many factors, including the type of security, size of holding, trading volume and news events.  All actions taken by the Valuation Committee are subsequently reviewed and ratified by the Board.
 
52


 
Pzena Funds
Notes to Financial Statements (Continued)
August 31, 2018 (Unaudited)

Depending on the relative significance of the valuation inputs, fair valued securities may be classified in either Level 2 or Level 3 of the fair value hierarchy.
 
The inputs or methodology used for valuing securities are not an indication of the risk associated with investing in those securities.
 
The following is a summary of the inputs used to value the Funds’ securities as of August 31, 2018:
 
Mid Cap Value Fund
 
Level 1
   
Level 2
   
Level 3
   
Total
 
Common Stocks
                       
Consumer Discretionary
 
$
5,326,103
   
$
   
$
   
$
5,326,103
 
Energy
   
3,728,039
     
     
     
3,728,039
 
Financial Services
   
15,318,366
     
     
     
15,318,366
 
Health Care
   
4,562,087
     
     
     
4,562,087
 
Materials & Processing
   
1,375,296
     
     
     
1,375,296
 
Producer Durables
   
8,638,463
     
     
     
8,638,463
 
Technology
   
5,107,077
     
     
     
5,107,077
 
Utilities
   
1,434,689
     
     
     
1,434,689
 
Total Common Stocks
   
45,490,120
     
     
     
45,490,120
 
Short-Term Investments
   
1,342,508
     
     
     
1,342,508
 
Total Investments in Securities
 
$
46,832,628
   
$
   
$
   
$
46,832,628
 
                                 
Emerging Markets Value Fund
 
Level 1
   
Level 2
   
Level 3
   
Total
 
Common Stocks
                               
Brazil
 
$
3,999,055
   
$
   
$
   
$
3,999,055
 
China
   
45,420,272
     
     
     
45,420,272
 
Czech Republic
   
4,161,805
     
     
     
4,161,805
 
Greece
   
152,410
     
150,688
     
     
303,098
 
Hong Kong
   
5,443,867
     
     
     
5,443,867
 
Hungary
   
2,264,471
     
     
     
2,264,471
 
India
   
9,273,731
     
     
     
9,273,731
 
Indonesia
   
1,365,124
     
     
     
1,365,124
 
Malaysia
   
4,087,338
     
     
     
4,087,338
 
Poland
   
2,552,138
     
     
     
2,552,138
 
Republic of Korea
   
36,211,173
     
     
     
36,211,173
 
Romania
   
1,324,147
     
     
     
1,324,147
 
Russian Federation
   
15,668,810
     
     
     
15,668,810
 
Singapore
   
4,936,330
     
     
     
4,936,330
 
South Africa
   
7,256,953
     
     
     
7,256,953
 
Taiwan
   
17,675,797
     
     
     
17,675,797
 
Thailand
   
4,966,685
     
     
     
4,966,685
 
Turkey
   
2,007,491
     
     
     
2,007,491
 
United Arab Emirates
   
893,317
     
     
     
893,317
 
United Kingdom
   
5,691,025
     
     
     
5,691,025
 
United States
   
9,286,093
     
     
     
9,286,093
 
Total Common Stocks
   
184,638,032
     
150,688
     
     
184,788,720
 
Preferred Stocks
                               
Brazil
   
4,666,990
     
     
     
4,666,990
 
Republic of Korea
   
5,008,837
     
     
     
5,008,837
 
Total Preferred Stocks
   
9,675,827
     
     
     
9,675,827
 
Short-Term Investments
   
11,447,396
     
     
     
11,447,396
 
Total Investments in Securities
 
$
205,761,255
   
$
150,688
   
$
   
$
205,911,943
 
53


 
Pzena Funds
Notes to Financial Statements (Continued)
August 31, 2018 (Unaudited)

Long/Short Value Fund
 
Level 1
   
Level 2
   
Level 3
   
Total
 
Common Stocks
                       
Consumer Discretionary
 
$
3,190,053
   
$
   
$
   
$
3,190,053
 
Consumer Staples
   
509,566
     
     
     
509,566
 
Energy
   
3,023,650
     
     
     
3,023,650
 
Financial Services
   
7,559,921
     
     
     
7,559,921
 
Health Care
   
3,741,990
     
     
     
3,741,990
 
Materials & Processing
   
673,482
     
     
     
673,482
 
Producer Durables
   
2,148,814
     
     
     
2,148,814
 
Technology
   
3,760,873
     
     
     
3,760,873
 
Utilities
   
1,472,666
     
     
     
1,472,666
 
Total Common Stocks
   
26,081,015
     
     
     
26,081,015
 
REITs
   
1,602,736
     
     
     
1,602,736
 
Short-Term Investments
   
139,589
     
     
     
139,589
 
Total Investments in Securities
 
$
27,823,340
   
$
   
$
   
$
27,823,340
 
                                 
Long/Short Value Fund (Continued)
 
Level 1
   
Level 2
   
Level 3
   
Total
 
Securities Sold Short
                               
Common Stock
                               
Consumer Discretionary
 
$
1,682,513
   
$
   
$
   
$
1,682,513
 
Consumer Staples
   
1,373,682
     
     
     
1,373,682
 
Energy
   
959,803
     
     
     
959,803
 
Financial Services
   
1,347,641
     
     
     
1,347,641
 
Health Care
   
807,830
     
     
     
807,830
 
Materials & Processing
   
1,646,606
     
     
     
1,646,606
 
Producer Durables
   
2,351,454
     
     
     
2,351,454
 
Technology
   
1,979,650
     
     
     
1,979,650
 
Utilities
   
381,950
     
     
     
381,950
 
Total Common Stocks
   
12,531,129
     
     
     
12,531,129
 
REITs
   
2,159,241
     
     
     
2,159,241
 
Total Securities Sold Short
 
$
14,690,370
   
$
   
$
   
$
14,690,370
 
                                 
Small Cap Value Fund
 
Level 1
   
Level 2
   
Level 3
   
Total
 
Common Stocks
                               
Consumer Discretionary
 
$
514,435
   
$
   
$
   
$
514,435
 
Consumer Staples
   
843,778
     
     
     
843,778
 
Energy
   
1,053,146
     
     
     
1,053,146
 
Financial Services
   
7,316,565
     
     
     
7,316,565
 
Health Care
   
883,423
     
     
     
883,423
 
Materials & Processing
   
2,325,294
     
     
     
2,325,294
 
Producer Durables
   
5,826,169
     
     
     
5,826,169
 
Technology
   
2,980,393
     
     
     
2,980,393
 
Total Common Stocks
   
21,743,203
     
     
     
21,743,203
 
REITs
   
230,110
     
     
     
230,110
 
Short-Term Investments
   
437,949
     
     
     
437,949
 
Total Investments in Securities
 
$
22,411,262
   
$
   
$
   
$
22,411,262
 

 
54

Pzena Funds
Notes to Financial Statements (Continued)
August 31, 2018 (Unaudited)
 
International Small Cap Value Fund
 
Level 1
   
Level 2
   
Level 3
   
Total
 
Common Stocks
                       
Australia
 
$
33,120
   
$
   
$
   
$
33,120
 
Austria
   
40,528
     
     
     
40,528
 
Belgium
   
35,712
     
     
     
35,712
 
Bermuda
   
53,175
     
     
     
53,175
 
Canada
   
175,273
     
     
     
175,273
 
Cayman Islands
   
48,273
     
     
     
48,273
 
France
   
225,541
     
     
     
225,541
 
Germany
   
147,472
     
     
     
147,472
 
Ireland
   
75,328
     
     
     
75,328
 
Italy
   
137,857
     
     
     
137,857
 
Japan
   
359,062
     
     
     
359,062
 
Netherlands
   
139,753
     
     
     
139,753
 
Spain
   
79,587
     
     
     
79,587
 
Switzerland
   
28,417
     
     
     
28,417
 
United Kingdom
   
395,116
     
     
     
395,116
 
Total Common Stocks
   
1,974,214
     
     
     
1,974,214
 
Preferred Stocks
                               
Germany
   
33,882
     
     
     
33,882
 
Total Preferred Stocks
   
33,882
     
     
     
33,882
 
Short-Term Investments
   
13,368
     
     
     
13,368
 
Total Investments in Securities
 
$
2,021,464
   
$
   
$
   
$
2,021,464
 
 
Refer to the Funds’ Schedule of Investments for a detailed break-out of securities.  Transfers between levels are recognized at August 31, 2018, the end of the reporting period.  During the six-month period ended August 31, 2018, the Emerging Markets Fund recognized transfers between Levels 1 and 2. Below is a reconciliation that details the transfers of securities between Level 1 and Level 2 during the reporting period:
 
   
Common Stock
 
Transfers into Level 1
 
$
 
Transfers out of Level 1
   
(150,688
)
Net Transfers into/(out of) Level 1
 
$
(150,688
)
         
Transfers into Level 2
 
$
150,688
 
Transfers out of Level 2
   
 
Net transfers into/(out of) Level 2
 
$
150,688
 
 
The Emerging Markets Value Fund transferred $150,688 from Level 1 to Level 2 at August 31, 2018. The security was transferred due to lack of an active market on August 31, 2018, but was actively traded on February 28, 2018.
 
The Mid Cap Value Fund, Long/Short Value Fund, Small Cap Value Fund, and International Small Cap Value Fund recognized no transfers between levels during the six-month period ended August 31, 2018.  The Emerging Markets Value Fund did not recognize any other transfers between levels during the six-month period ended August 31, 2018.
 
55


 
Pzena Funds
Notes to Financial Statements (Continued)
August 31, 2018 (Unaudited)

The following is a reconciliation of the Emerging Markets Value Fund’s Level 3 investments for which significant unobservable inputs were used in determining fair value:
 
Pzena Emerging Markets Value Fund
 
Level 3 Reconciliation Disclosure
   
Rights
   
Total
 
Balance as of February 28, 2018
 
$
35,337
   
$
35,337
 
Exercised
   
(46,441
)
   
(46,441
)
Change in unrealized depreciation
   
11,104
     
11,104
 
Balance as of August 31, 2018
 
$
   
$
 
Change in unrealized depreciation during the period for
               
  Level 3 investments held at August 31, 2018
 
$
11,104
         
 
The Level 3 investments as of August 31, 2018 represented 0.00% of net assets and did not warrant a disclosure of significant unobservable valuation inputs.
 
NOTE 4 – INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
 
The Funds have an investment advisory agreement with Pzena Investment Management, LLC. (the “Advisor”) pursuant to which the Advisor is responsible for providing investment management services to each Fund.  The Advisor furnished all investment advice, office space and facilities, and provides most of the personnel needed by the Funds.  As compensation for its services, the Advisor is entitled to a monthly management fee, based upon the average daily net assets of the Funds at the annual rates of:
 
Mid Cap Value Fund
0.80%
Emerging Markets Value Fund
1.00%
Long/Short Value Fund
1.50%
Small Cap Value Fund
0.95%
International Small Cap Value Fund
1.00%
 
For the six-month period ended August 31, 2018, the Funds incurred the following in advisory fees:
 
   
Advisory Fees
 
Mid Cap Value Fund
 
$
182,208
 
Emerging Markets Value Fund
   
590,123
 
Long/Short Value Fund
   
193,756
 
Small Cap Value Fund
   
93,347
 
International Small Cap Value Fund
   
3,306
 
 
The Funds are responsible for their own operating expenses.  The Advisor has contractually agreed to waive its fees and/or absorb expenses of the Funds to ensure that the net annual operating expenses (excluding Acquired Fund Fees and Expenses, taxes, interest and dividends on securities sold short and extraordinary expenses) do not exceed the following amounts of the average daily net assets for each class of shares:
 
 
Investor Class
Institutional Class
Mid Cap Value Fund
1.25%
0.90%
Emerging Markets Value Fund
1.60%
1.25%
Long/Short Value Fund
2.10%
1.75%
Small Cap Value Fund
1.55%
1.20%
International Small Cap Value Fund
1.52%
1.17%
 
Any such reduction made by the Advisor in its fees or payment of expenses which are the Funds’ obligation are subject to reimbursement by the Funds to the Advisor, if so requested by the Advisor, in any subsequent month in the three year period from the date of the management fee reduction and expense payment if the aggregate amount actually paid by the Funds toward the operating expenses for such fiscal year (taking into account the reimbursement) will not cause the Fund to exceed the lesser of: (1) the expense limitation in place at the time of the management fee reduction and expense payment; or (2) the expense limitation in place at the time of the reimbursement. Any such reimbursement is also contingent upon Board of Trustees review and approval at the time the reimbursement is made. Such reimbursement may not be paid prior to the Funds’ payment of current ordinary operating expenses.  For
 
56

 
Pzena Funds
Notes to Financial Statements (Continued)
August 31, 2018 (Unaudited)

the six-month period ended August 31, 2018, the Advisor reduced its fees and reduced other operating expenses in the amount of $89,464 for the Mid Cap Value Fund, $3,189 for the Emerging Markets Value Fund, $130,173 for the Long/Short Value Fund, $86,705 for the Small Cap Value Fund, and $44,917 for the International Small Cap Value Fund. Cumulative expenses subject to recapture pursuant to the aforementioned conditions and the period of expiration are as follows:
 
   
8/31/19
   
8/31/20
   
8/31/21
   
Total
 
Mid Cap Value Fund
 
$
187,531
   
$
195,323
   
$
188,601
   
$
571,455
 
Emerging Markets Value Fund
   
230,807
     
207,762
     
120,352
     
558,921
 
Long/Short Value Fund
   
300,981
     
328,247
     
285,197
     
914,425
 
Small Cap Value Fund
   
84,776
     
188,659
     
174,708
     
448,143
 
International Small Cap Value Fund
   
     
     
44,917
     
44,917
 
 
U.S. Bancorp Fund Services, LLC ("Fund Services" or the "Administrator"), doing business as U.S. Bank Global Fund Services, serves as the Funds' administrator, fund accountant and transfer agent.  In those capacities, Fund Services maintains the Fund's books and records, calculates the Fund's NAV, prepares various federal and state regulatory filings, coordinates the payment of fund expenses, reviews expense accruals and prepares materials supplied of the Board of Trustees. The officers of the Trust and the Chief Compliance Officer are also employees of Fund Services.
 
Quasar Distributors, LLC (the "Distributor") acts as the Fund's principal underwriter in a continuous public offering of the Fund's shares.  U.S. Bank N.A. serves as custodian (the "Custodian") to the Fund.  Both the Distributor and Custodian are affiliates of the Administrator.
 
For the six-month period ended August 31, 2018, the Funds incurred the following expenses for administration, fund accounting, transfer agency, custody and Chief Compliance Officer fees:
 
         
Emerging
               
International
 
   
Mid Cap
   
Markets
   
Long/Short
   
Small Cap
   
Small Cap
 
   
Value Fund
   
Value Fund
   
Value Fund
   
Value Fund
   
Value Fund
 
Administration and accounting
 
$
43,154
   
$
48,885
   
$
46,645
   
$
43,061
   
$
14,069
 
Custody
   
3,090
     
27,921
     
51,472
     
2,872
     
7,177
 
Transfer Agency(a)
   
16,605
     
16,657
     
16,569
     
18,072
     
5,400
 
Chief Compliance Officer
   
4,537
     
4,537
     
4,537
     
4,537
     
1,483
 
 
(a) 
Does not include out-of-pocket expenses
 
At August 31, 2018, the Funds had payables due to Fund Services for administration, fund accounting, transfer agency and Chief Compliance Officer fees and to U.S. Bank N.A. for custody fees in the following amounts:
 
         
Emerging
               
International
 
   
Mid Cap
   
Markets
   
Long/Short
   
Small Cap
   
Small Cap
 
   
Value Fund
   
Value Fund
   
Value Fund
   
Value Fund
   
Value Fund
 
Administration and accounting
 
$
14,368
   
$
15,416
   
$
15,495
   
$
14,375
   
$
14,069
 
Custody
   
807
     
     
39,684
     
1,427
     
7,177
 
Transfer Agency(a)
   
5,526
     
5,551
     
5,518
     
5,908
     
5,399
 
Chief Compliance Officer
   
1,537
     
1,537
     
1,537
     
1,538
     
1,483
 
 
(a) 
Does not include out-of-pocket expenses
 
NOTE 5 – 12b-1 DISTRIBUTION FEES
 
The Funds have adopted a Distribution Plan pursuant to Rule 12b-1 (the “Plan”).  The Plan permits the Funds to pay for distribution and related expenses at an annual rate of up to 0.25% of the average daily net assets of the Funds’ Investor Class shares.  The expenses covered by the Plan may include the cost in connection with the promotion and distribution of shares and the provision of personal services to shareholders, including, but not necessarily limited to, advertising, compensation to underwriters, dealers and selling personnel, the printing and mailing of prospectuses to other than current Fund shareholders, and the printing and mailing of sales literature.  Payments made pursuant to the Plan will represent compensation for distribution and service activities, not reimbursements
 
57

 
Pzena Funds
Notes to Financial Statements (Continued)
August 31, 2018 (Unaudited)
 
for specific expenses incurred.  For the six-month period ended August 31, 2018, the Mid Cap Value Fund, Emerging Markets Value Fund, Long/Short Value Fund, Small Cap Value Fund, and International Small Cap Value Fund incurred distribution expenses on their Investor Class shares of $11,211, $14,295, $3,025, $7,830, and $413, respectively.
 
NOTE 6 – SHAREHOLDER SERVICING FEES
 
The Funds have entered into a shareholder servicing agreement (the “Agreement”) with the Advisor, under which the Advisor will provide, or arrange for others to provide, certain specified shareholder services.  As compensation for the provision of shareholder services, the Funds may pay servicing fees at an annual rate of up to 0.10% of the average daily net assets of the Investor Class shares.  Payments to the Advisor under the Agreement may reimburse the Advisor for payments it makes to selected brokers, dealers and administrators which have entered into service agreements with the Advisor for services provided to shareholders of each Fund.  The services provided by such intermediaries are primarily designed to assist shareholders of the Funds and include the furnishing of office space and equipment, telephone facilities, personnel, and assistance to the Funds in servicing such shareholders.  Services provided by such intermediaries also include the provision of support services to the Funds and include establishing and maintaining shareholders’ accounts and record processing, purchase and redemption transactions, answering routine client inquiries regarding the Funds, and providing such other personal services to shareholders as the Funds may reasonably request.  For the six-month period ended August 31, 2018, the Mid Cap Value Fund, Emerging Markets Value Fund, Long/Short Value Fund, Small Cap Value Fund, and International Small Cap Value Fund incurred shareholder servicing expenses on their Investor Class shares of $4,105, $5,432, $723, $2,563, and $165, respectively.
 
NOTE 7 – PURCHASES AND SALES OF SECURITIES
 
For the six-month period ended August 31, 2018, the cost of purchases and the proceeds from sales of securities, excluding short-term securities, were as follows:
 
   
Purchases
   
Sales
 
Mid Cap Value Fund
 
$
19,915,623
   
$
7,347,499
 
Emerging Markets Value Fund
   
182,744,759
     
26,995,143
 
Long/Short Value Fund
   
13,019,415
     
7,346,839
 
Small Cap Value Fund
   
8,937,512
     
4,017,847
 
International Small Cap Value Fund
   
2,307,760
     
313,355
 
 
There were no purchases or sales of long-term U.S. Government securities.
 
NOTE 8 – CONTROL OWNERSHIP
 
The beneficial ownership, either directly or indirectly of more than 25% of the voting securities of a Fund creates a presumption of control of the Fund, under Section 2(a)(9) of the 1940 Act.  The following table reflects shareholders that maintain accounts of more than 25% of the voting securities of a Fund as of August 31, 2018:
 
 
Mid Cap Value Fund
 
Investor Class
Institutional Class
Charles Schwab & Co., Inc.
73%
30%
National Financial Services, LLC
37%
   
 
Emerging Markets Value Fund
 
Investor Class
Institutional Class
LPL Financial
59%
     
   
 
Long/Short Value Fund
 
Investor Class
Institutional Class
Pzena Investment Management, LLC
84%
ValueQuest Partners, LLC
81%

 
58


 
Pzena Funds
Notes to Financial Statements (Continued)
August 31, 2018 (Unaudited)

 
Small Cap Value Fund
 
Investor Class
Institutional Class
Charles Schwab & Co., Inc.
77%
National Financial Services, LLC
33%
Pershing, LLC
54%
   
 
International Small Cap Value Fund
 
Investor Class
Institutional Class
Pzena Investment Management, LLC
100%
100%
 
NOTE 9 – INCOME TAXES AND DISTRIBUTIONS TO SHAREHOLDERS
 
As of February 28, 2018, the Funds’ most recently completed fiscal year end, the components of accumulated earnings/(losses) on a tax basis were as follows:
 
         
Emerging
               
International
 
   
Mid Cap
   
Markets
   
Long/Short
   
Small Cap
   
Small Cap
 
   
Value Fund
   
Value Fund
   
Value Fund
   
Value Fund
   
Value Fund
 
Cost of investments(a)
 
$
33,618,849
   
$
43,114,251
   
$
11,048,878
   
$
16,156,155
     
N/A
 
Gross unrealized appreciation
   
1,510,164
     
8,572,801
     
1,460,987
     
1,527,517
     
N/A
 
Gross unrealized depreciation
   
(1,436,495
)
   
(1,313,814
)
   
(922,843
)
   
(1,636,868
)
   
N/A
 
Net unrealized appreciation/(depreciation)
   
73,669
     
7,258,987
     
538,144
     
(109,351
)
   
N/A
 
Undistributed ordinary income
   
16,061
     
     
5,923
     
73,960
     
N/A
 
Undistributed long-term capital gain
   
327,050
     
     
197,402
     
299,785
     
N/A
 
Total distributable earnings
   
343,111
     
     
203,325
     
373,745
     
N/A
 
Other accumulated gains/(losses)
   
     
(647,029
)
   
     
     
N/A
 
Total accumulated earnings/(losses)
 
$
416,780
   
$
6,611,958
   
$
741,469
   
$
264,394
     
N/A
 
 
(a)
The difference between the book basis and tax basis net unrealized depreciation is attributable primarily to the tax deferral of losses on wash sales adjustments.
 
At February 28, 2018, the following Fund had tax basis capital losses to offset future capital gains:
 
 
Capital Loss Carryover
Expires
Emerging Markets Value Fund
   
Long-Term
$613,079
Indefinite
 
The tax character of distributions paid during the six-month period ended August 31, 2018 and for the year ended February 28, 2018 were as follows:
 
   
Six Month Ended
   
Year Ended
 
   
August 31, 2018
   
February 28, 2018
 
Mid Cap Value Fund
           
Ordinary income
 
$
   
$
95,287
 
Long-Term Capital Gain
   
     
128,315
 
                 
Emerging Markets Value Fund
               
Ordinary income
 
$
   
$
595,456
 
                 
Small Cap Value Fund
               
Ordinary income
 
$
   
$
695,179
 
Long-Term Capital Gain
   
     
357,557
 
 
Ordinary income distributions may include dividends paid from short-term capital gains.
 
59

 
Pzena Funds
Notes to Financial Statements (Continued)
August 31, 2018 (Unaudited)

At February 28, 2018, the following Fund deferred, on a tax basis, post-October losses:
 
 
Post-October
Late Year Ordinary
 
Capital Loss
Loss Deferral
Emerging Markets Value Fund
$—
$33,950
 
NOTE 10 – PRINCIPAL RISKS
 
Below is a summary of some, but not all, of the principal risks of investing in the Funds, each of which may adversely affect a Fund’s net asset value and total return. The Funds’ most recent prospectus provides further descriptions of each Fund’s investment objective, principal investment strategies and principal risks. The following risks apply to all Funds, unless specifically noted.
 
Market Risk. The value of each 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 Funds, and you could lose money.
 
Equity Risk. The risks that could affect the value of the Funds’ shares and the total return on your investment include the possibility that the equity securities held by the Funds will experience sudden, unpredictable drops in value or long periods of decline in value. Equity securities generally have greater price volatility than fixed income securities.
 
Foreign Securities Risk. Foreign securities 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 than U.S. securities, which could affect the Funds’ investments. Foreign securities may be adversely affected by political instability; changes in currency exchange rates; inefficient markets and higher transaction costs; foreign economic conditions; or inadequate or different regulatory and accounting standards.
 
• Value Style Investing Risk. The Adviser follows an investing style that favors value investments. The value investing style may over time go in and out of favor. At times when the value investing style is out of favor, the Funds may underperform other funds that use different investing styles.
 
Mid Cap Company Risk (Mid Cap Value Fund). A mid cap company may be more vulnerable to adverse business or economic events than stocks of larger companies. These stocks present greater risks than securities of larger, more diversified companies.
 
Emerging Markets Risk (Emerging Markets Value Fund and International Small Cap Value Fund). Emerging markets are markets of countries in the initial stages of industrialization and that generally have low per capita income. In addition to the risks of foreign securities in general, emerging markets are generally more volatile, have relatively unstable governments, social and legal systems that do not protect shareholders, economies based on only a few industries and securities markets that are substantially smaller, less liquid and more volatile with less government oversight than more developed countries.
 
Currency Risk (Emerging Markets Value Fund and International Small Cap Value Fund). Changes in foreign currency exchange rates will affect the value of what each Fund owns and each Fund’s share price. Generally, when the U.S. dollar rises in value against a foreign currency, an investment in that country loses value because that currency is worth fewer U.S. dollars. Devaluation of a currency by a country’s government or banking authority also will have a significant impact on the value of any investments denominated in that currency. Currency markets generally are not as regulated as securities markets and the risk is especially high in emerging markets.
 
P-Note Risk (Emerging Markets Value Fund). P-Notes are a type of equity-linked derivative which generally are traded over-the-counter. Even though a P-Note is intended to reflect the performance of the underlying equity security, the performance of a P-Note will not replicate exactly the performance of the issuers or markets that the P-Note seeks to replicate due to transaction costs and other expenses. In addition, P-Notes are subject to counterparty risk, which is the risk that the broker-dealer or bank that issues the P-Notes will not fulfill its contractual obligation to complete the transaction with the Fund.
 
Short Sales Risk (Long/Short Value Fund). A short sale is the sale by the Fund of a security which it does not own in anticipation of purchasing the same security in the future at a lower price to close the short position. A short sale will be successful if the price of the shorted security decreases. However, if the underlying security goes up in price during the period in which the short position is outstanding, the Long/Short Fund will realize a loss. The risk on a short sale is unlimited because the Fund must buy the shorted security at the higher price to complete the transaction. Therefore, short sales may be subject to greater risks than investments in long positions.
 
60


 
Pzena Funds
Notes to Financial Statements (Continued)
August 31, 2018 (Unaudited)

Portfolio Turnover Risk (Long/Short Value Fund). A high portfolio turnover rate (100% or more) has the potential to result in the realization and distribution to shareholders of higher capital gains, which may subject you to a higher tax liability.
 
Small Cap Company Risk (Small Cap Value Fund and International Small Cap Value Fund). Investing in securities of small cap companies may involve greater risk than investing in larger, more established companies because they can be subject to more abrupt or erratic share price changes. Smaller companies may have limited product lines, or limited market or financial resources and their management may be dependent on a limited number of key individuals. Securities of these companies may have limited market liquidity and their prices may be more volatile. These stocks present greater risks than securities of larger, more diversified companies.
 
 
 
 
 
 
61

 
Pzena Funds
Expense Example
August 31, 2018 (Unaudited)

As a shareholder of a Fund, you incur two types of costs: (1) transaction costs including sales charges (loads), if applicable; redemption fees, if applicable; and exchange fees; and (2) ongoing costs, including management fees; distribution and/or service (12b-1 fees); and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
 
The Example is based on an investment of $1,000 invested at the beginning of the period indicated and held for the entire period from March 1, 2018 to August 31, 2018.
 
Actual Expenses
 
The information in the table under the heading “Actual” provides information about actual account values and actual expenses. You may use the information in these columns together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the row entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.  There are some account fees that are charged to certain types of accounts, such as Individual Retirement Accounts (generally, a $15 fee is charged to the account annually) that would increase the amount of expenses paid on your account.  The example below does not include portfolio trading commissions and related expenses, and other extraordinary expenses as determined under generally accepted accounting principles.
 
Hypothetical Example for Comparison Purposes
 
The information in the table under the heading “Hypothetical (5% return before expenses)” provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.  As noted above, there are some account fees that are charged to certain types of accounts that would increase the amount of expense paid on your account.
 
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the information under the heading “Hypothetical (5% return before expenses)” is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
 

 

62


Pzena Funds
Expense Example (Continued)
August 31, 2018 (Unaudited)
 
   
Beginning
   
Ending
   
Expenses Paid
 
   
Account Value
   
Account Value
   
During Period(1)
 
Investor Class
 
3/1/18
   
8/31/18
   
3/1/18 – 8/31/18
 
Actual
                 
Mid Cap Value Fund
 
$
1,000.00
   
$
1,010.80
   
$
6.28
 
Emerging Markets Value Fund
   
1,000.00
     
911.90
     
7.66
 
Long/Short Value Fund
   
1,000.00
     
966.80
     
14.48
 
Small Cap Value Fund
   
1,000.00
     
1,113.50
     
8.15
 
International Small Cap Value Fund
   
1,000.00
     
1,010.00
     
2.51
 
                         
Hypothetical (5% return before expenses)
                       
Mid Cap Value Fund
 
$
1,000.00
   
$
1,018.95
   
$
6.31
 
Emerging Markets Value Fund
   
1,000.00
     
1,017.19
     
8.08
 
Long/Short Value Fund
   
1,000.00
     
1,010.49
     
14.80
 
Small Cap Value Fund
   
1,000.00
     
1,017.49
     
7.78
 
International Small Cap Value Fund
   
1,000.00
     
1,005.72
     
2.51
 
 
(1)
The Mid Cap Value Fund, Emerging Markets Value Fund, Long/Short Value Fund, the Small Cap Value Fund, and the International Small Cap Value Fund expenses are equal to the expense ratio of 1.24%, 1.59%, 2.92%, 1.53%, and 1.52%, respectively, multiplied by the average account value over the period, multiplied by 184/365 days (to reflect the six month period of operation of the Mid Cap Value Fund, Emerging Markets Value Fund, Long/Short Fund, and the Small Cap Value Fund), and 60/365 days (to reflect the shortened period of operation of the International Small Cap Value Fund). The ending account values in the table are based on its actual total returns of the Investor Class shares of the Mid Cap Value Fund, Emerging Markets Value Fund, Long/Short Value Fund, Small Cap Value Fund, and International Small Cap Value Fund. Each of the Fund’s Investor Class shares returned 1.08%, -8.81%, -3.32%, 11.35%, and 1.00%, respectively.

   
Beginning
   
Ending
   
Expenses Paid
 
   
Account Value
   
Account Value
   
During Period(2)
 
Institutional Class
 
3/1/18
   
8/31/18
   
3/1/18 – 8/31/18
 
Actual
                 
Mid Cap Value Fund
 
$
1,000.00
   
$
1,013.10
   
$
4.57
 
Emerging Markets Value Fund
   
1,000.00
     
913.60
     
6.03
 
Long/Short Value Fund
   
1,000.00
     
969.00
     
13.34
 
Small Cap Value Fund
   
1,000.00
     
1,115.50
     
6.40
 
International Small Cap Value Fund
   
1,000.00
     
1,011.00
     
1.93
 
                         
Hypothetical (5% return before expenses)
                       
Mid Cap Value Fund
 
$
1,000.00
   
$
1,020.67
   
$
4.58
 
Emerging Markets Value Fund
   
1,000.00
     
1,018.90
     
6.36
 
Long/Short Value Fund
   
1,000.00
     
1,011.95
     
13.34
 
Small Cap Value Fund
   
1,000.00
     
1,019.16
     
6.11
 
International Small Cap Value Fund
   
1,000.00
     
1,006.30
     
1.93
 
 
(2)
The Mid Cap Value Fund, Emerging Markets Value Fund, Long/Short Value Fund, the Small Cap Value Fund, and the International Small Cap Value Fund expenses are equal to the expense ratio of 0.90%, 1.25%, 2.63%, 1.20%, and 1.17%, respectively, multiplied by the average account value over the period, multiplied by 184/365 days (to reflect the six month period of operation of the Mid Cap Value Fund, Emerging Markets Value Fund, Long/Short Fund, and the Small Cap Value Fund), and 60/365 days (to reflect the shortened period of operation of the International Small Cap Value Fund). The ending account values in the table are based on its actual total returns of the Institutional Class shares of the Mid Cap Value Fund, Emerging Markets Value Fund, Long/Short Value Fund, Small Cap Value Fund, and International Small Cap Value Fund. Each of the Fund’s Institutional Class shares returned 1.31%, -8.64%, -3.10%, 11.55%, and 1.10%, respectively.
 
 
 
63

Pzena Funds
Notice to Shareholders
August 31, 2018 (Unaudited)
 
How to Obtain a Copy of the Funds’ Proxy Voting Policies
 
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, by calling 1-844-PZN-1996 (1-844-796-1996) or on the U.S. Securities and Exchange Commission’s (“SEC”) website at http://www.sec.gov.
 
 
How to Obtain a Copy of the Funds’ Proxy Voting Records for the 12-Month Period Ended June 30
 
Information regarding how a Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available without charge, upon request, by calling 1-844-PZN-1996 (1-844-796-1996). Furthermore, you can obtain a Fund’s proxy voting records on the SEC’s website at http://www.sec.gov.
 
 
Quarterly Filings on Form N-Q
 
The Funds file their complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov. A Fund’s Form N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC, and information on the operation of the Public Reference Room may be obtained by calling 1-202-551-8090. Information included in the Funds’ Form N-Q is also available, upon request, by calling 1-844-PZN-1996 (1-844-796-1996).
 
 
Householding
 
In an effort to decrease costs, the Transfer Agent intends to reduce the number of duplicate prospectuses, annual and semi-annual reports, proxy statements and other regulatory documents you receive by sending only one copy of each to those addresses shared by two or more accounts and to shareholders the Transfer Agent reasonably believes are from the same family or household.  Once implemented, if you would like to discontinue householding for your accounts, please call toll-free at 1-844-PZN-1996 (1-844-796-1996) to request individual copies of these documents.  Once the Transfer Agent receives notice to stop householding, the Transfer Agent will begin sending individual copies thirty days after receiving your request.  This policy does not apply to account statements.
 

64


Pzena Funds
Privacy Notice


The Funds collect 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 Funds.  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 Funds 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.
 
 
 
 
 
65




Investment Advisor
Pzena Investment Management, LLC
320 Park Avenue, 8th Floor
New York, New York 10022


Independent Registered Public Accounting Firm
Tait, Weller & Baker LLP
1818 Market Street, Suite 2400
Philadelphia, Pennsylvania 19103


Legal Counsel
Schiff Hardin LLP
666 Fifth Avenue, Suite 1700
New York, New York 10103


Custodian
US, Bank N.A.
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
777 East Wisconsin Avenue, 6th Floor
Milwaukee, Wisconsin 53202














This report is intended for the shareholders of the Funds and may not be used as sales literature unless preceded or accompanied by a current prospectus, To obtain a free prospectus, please call 1-844-PZN-l996 (l-844-796-1996).
 
 
ZP-SEMI

Item 2. Code of Ethics.

Not applicable for semi-annual reports.

Item 3. Audit Committee Financial Expert.

Not applicable for semi-annual reports.

Item 4. Principal Accountant Fees and Services.

Not applicable for semi-annual reports.

Item 5. Audit Committee of Listed Registrants.

(a)  Not applicable to registrants who are not listed issuers (as defined in Rule 10A-3 under the Securities Exchange Act of 1934).
 
(b)  Not Applicable.

Item 6. Investments.

(a)
Schedule of Investments is included as part of the report to shareholders filed under Item 1 of this Form.
(b)
Not Applicable.

Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.

Not applicable to open-end investment companies.

Item 8. Portfolio Managers of Closed-End Management Investment Companies.

Not applicable to open-end investment companies.

Item 9. Purchases of Equity Securities by Closed‑End Management Investment Company and Affiliated Purchasers.

Not applicable to open-end investment companies.
 
Item 10. Submission of Matters to a Vote of Security Holders.

There have been no material changes to the procedures by which shareholders may recommend nominees to the Registrant’s Board of Trustees.

Item 11. Controls and Procedures.

(a)
The Registrant’s Vice President/Secretary/Principal Executive Officer and Vice President/Treasurer/Principal Financial Officer have reviewed the Registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended, (the “Act”)) as of a date within 90 days of the filing of this report, as required by Rule 30a-3(b) under the Act and Rules 13a-15(b) or 15d‑15(b) under the Securities Exchange Act of 1934.  Based on their review, such officers have concluded that the disclosure controls and procedures are effective in ensuring that information required to be disclosed in this report is appropriately recorded, processed, summarized and reported and made known to them by others within the Registrant and by the Registrant’s service provider.

(b)
There were no changes in the Registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the Act) that occurred during the second fiscal quarter of the period covered by this report that have materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting.

Item 12. Disclosure of Securities Lending Activities for Closed-End Management Investment Companies

Not applicable to open-end investment companies.

Item 13. Exhibits.

(a)
(1) Any code of ethics or amendment thereto, that is the subject of the disclosure required by Item 2, to the extent that the registrant intends to satisfy Item 2 requirements through filing an exhibit. Not Applicable.

(2) A separate certification for each principal executive and principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.  Filed herewith.

(3) Any written solicitation to purchase securities under Rule 23c‑1 under the Act sent or given during the period covered by the report by or on behalf of the registrant to 10 or more persons.  Not applicable to open-end investment companies.

(4) Change in the registrant’s independent public accountant.  There was no change in the registrant’s independent public accountant for the period covered by this report.
 
(b)
Certifications pursuant to Section 906 of the Sarbanes‑Oxley Act of 2002.  Furnished herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


(Registrant)  Advisors Series Trust

By (Signature and Title)      /s/ Emily R. Enslow
Emily R. Enslow, Vice President/Secretary/Principal Executive Officer

Date    11/7/2018


Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By (Signature and Title)      /s/ Emily R. Enslow
Emily R. Enslow, Vice President/Secretary/Principal Executive Officer

Date    11/7/2018

By (Signature and Title)      /s/ Cheryl L. King
Cheryl L. King, Vice President/Treasurer/Principal Financial Officer

Date    11/7/2018