N-CSR 1 gold-portfolio_ncsr.htm N-CSR

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 811-22756

 

Advisors Preferred Trust

(Exact name of registrant as specified in charter)

 

1445 Research Blvd, Suite 530, Rockville, MD 20850

(Address of principal executive offices) (Zip code)

 

The Corporation Trust Company

1209 Orange Street Wilmington, DE 19801

(Name and address of agent for service)

 

Registrant's telephone number, including area code: 631-470-2734

 

Date of fiscal year end: 12/31

 

Date of reporting period: 12/31/23

 

Item 1. Reports to Stockholders.

 

 

 

 

 

 

 

 

 

 

 

 

 

The Gold Bullion Strategy
Portfolio

 

 

 

 

 

Annual Report

December 31, 2023

 

 

 

 

 

 

 

 

 

1-855-650-QGLD (7453)

www.advisorspreferred.com

 

Distributed by Ceros Financial Services, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2023

 

Dear Shareholders,

 

This Annual Report for The Gold Bullion Strategy Portfolio (“Portfolio”) covers the period from January 1, 2023 to December 31, 2023. Flexible Plan Investments, Ltd. serves as the sub-advisor to The Gold Bullion Strategy Portfolio. During the period, the Portfolio returned 10.51%, compared with a return of 12.82% in the S&P GSCI Gold Index, while the S&P 500 TR Index returned 26.29%. The sub-index of the S&P GSCI provides investors with a reliable and publicly available benchmark tracking the COMEX gold future.

 

Gold’s positive performance during the period was largely driven by demand from global central banks, its traditional use as a hedge by investors, and a weaker U.S. dollar. Efforts to stabilize balance sheets led central banks to accumulate the asset at elevated levels during the period. Additionally, events like the banking crisis in March, continued and escalating geopolitical conflict, and concerns about the level of U.S. debt prompted investors to add gold to their portfolios as a risk hedge. The period also proved not to be an exception of the historical trend of gold moving inversely versus the U.S. dollar.

 

The Gold Bullion Strategy Portfolio seeks returns that reflect the daily performance of the price of gold bullion and, as such, is a vehicle for investors to capture potential returns resulting from those movements. To meet its goal, the Portfolio utilizes gold bullion-related futures contracts and exchange-traded funds (ETFs). Additionally, in an effort to reflect the daily performance of the price of gold bullion net of fees, the Portfolio invests in investment-grade fixed income corporate notes and bonds, with an objective of generating interest income to partially offset those fees. The Portfolio’s underperformance versus the S&P GSCI Gold Index for the period can largely be attributed to unfavorable effects from rising interest rates and portfolio expenses.

 

The Portfolio continues to endeavor to execute its strategy consistently, regardless of the market environment or perceived outlook for gold. As always, the advisor and sub-advisor reiterate the value of gold in portfolios as a diversifier given its historically low correlation to most other asset classes.

 

We encourage our investors to maintain a long-term perspective as the market reacts to inevitable challenges and opportunities. As an asset class, gold historically has been uncorrelated with other asset classes and tended to provide a valuable hedge to investor portfolios in times of market volatility or economic and geopolitical uncertainty. We thank you for your confidence in The Gold Bullion Strategy Portfolio and its potential to help you achieve your financial goals.

 

Best regards,  
   
Jerry Wagner Catherine Ayers-Rigsby
   
Flexible Plan Investments, Ltd. Advisors Preferred

1

 

The Gold Bullion Strategy Portfolio
Portfolio Review (Unaudited)
December 31, 2023

 

The Portfolio’s performance figures* for the periods ended December 31, 2023, as compared to its benchmarks:

 

    Annualized
        Since Inception
  One Year Five Year Ten Year November 1, 2013
The Gold Bullion Strategy Portfolio 10.51% 6.87% 2.98% 2.21%
S&P 500 Total Return Index ** 26.29% 15.69% 12.03% 12.40%
S&P GSCI Gold Index*** 12.82% 8.88% 4.70% 3.71%

 

*The performance data quoted is historical. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance data quoted. The principal value and investment return of an investment will fluctuate so that your shares, when redeemed, may be worth more or less than their original cost. The returns shown do not reflect the deduction of taxes that a shareholder would pay on Portfolio distributions or on the redemptions of Portfolio shares as well as other charges and expenses of the insurance contract, or separate account. Returns greater than 1 year are annualized. The Portfolio’s total annual operating expense ratio including underlying funds, as provided in the Portfolio’s prospectus dated May 1, 2023, was 1.58%. For performance information current to the most recent month-end, please call 1-855-650-7453.

 

**The S&P 500 Total Return Index is an unmanaged composite of 500 large capitalization companies and includes the reinvestment of dividends. This index is widely used by professional investors as a performance benchmark for large-cap stocks. Investors cannot invest directly in an index.

 

***The S&P GSCI Gold Index, a sub-index of the S&P GSCI, provides investors with a reliable and publicly available benchmark tracking the COMEX gold future. The index is designed to be tradable, readily accessible to market participants, and cost efficient to implement. Investors cannot directly invest in an index.

 

Comparison of the Change in Value of a $10,000 Investment | December 31, 2013 – December 31, 2023
Past performance is not necessarily indicative of future results.

 

(LINEGRAPH)

 

The Portfolio’s holdings as of December 31, 2023 by types of investments are as follows:

 

Holdings by type of Investment*:  % of Net Assets 
Exchange Traded Funds:     
Fixed Income Funds   40.0%
Commodity Fund   1.0%
Short-Term Investments   54.5%
Other Assets in Excess of Liabilities   4.5%
    100.0%

 

*The Holdings by type of Investment detailed do not include derivative exposure.

 

Please refer to the Consolidated Portfolio of Investments and the Shareholder Letter in this report for a detailed listing of the Portfolio’s holdings.

2

 

THE GOLD BULLION STRATEGY PORTFOLIO
CONSOLIDATED PORTFOLIO OF INVESTMENTS
December 31, 2023

 

Shares      Fair Value 
     EXCHANGE-TRADED FUNDS — 41.0%     
     COMMODITY - 1.0%     
 1,171   SPDR Gold Shares(a),(b)  $223,895 
           
     FIXED INCOME - 40.0%     
 45,280   iShares 0-3 Month Treasury Bond ETF   4,540,226 
 49,680   SPDR Bloomberg 1-3 Month T-Bill ETF   4,540,255 
         9,080,481 
           
     TOTAL EXCHANGE-TRADED FUNDS (Cost $9,321,973)   9,304,376 
           
     SHORT-TERM INVESTMENTS — 54.5%     
     MONEY MARKET FUNDS - 54.5%     
 2,450,458   DWS Government Money Market Series, Institutional Class, 5.30%(c)   2,450,458 
 2,450,458   Fidelity Government Portfolio, Class I, 5.24%(c)   2,450,458 
 2,450,458   First American Government Obligations Fund, Class Z, 5.24%(c)   2,450,458 
 2,574,782   First American Government Obligations Fund, Class Z, 5.24%(b),(c)   2,574,782 
 2,450,458   STIT - Treasury Portfolio, Institutional Class, 5.26%(c)   2,450,458 
     TOTAL MONEY MARKET FUNDS (Cost $12,376,614)   12,376,614 
           
     TOTAL SHORT-TERM INVESTMENTS (Cost $12,376,614)   12,376,614 
           
           
     TOTAL INVESTMENTS - 95.5% (Cost $21,698,587)  $21,680,990 
     OTHER ASSETS IN EXCESS OF LIABILITIES - 4.5%   1,019,391 
     NET ASSETS - 100.0%  $22,700,381 

 

OPEN FUTURES CONTRACTS 
Number of
Contracts		   Open Long Futures Contracts  Expiration  Notional
Amount		   Unrealized
Appreciation		 
 109   COMEX Gold 100 Troy Ounces Future(b)  02/27/2024  $22,594,610   $442,740 
     TOTAL FUTURES CONTRACTS             

 

ETF - Exchange-Traded Fund
   
SPDR - Standard & Poor’s Depositary Receipt

 

(a) Non-income producing security.
   
(b) All or a portion of this investment is a holding of the GBSP Fund Ltd.
   
(c) Rate disclosed is the seven-day effective yield as of December 31, 2023.

 

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

3

 

The Gold Bullion Strategy Portfolio
Consolidated Statement of Assets and Liabilities
December 31, 2023

 

ASSETS     
Investment securities:     
At cost  $21,698,587 
At value  $21,680,990 
Unrealized appreciation on futures contracts   442,740 
Deposit with broker for futures contracts   436,891 
Receivable for securities sold   238,274 
Dividends and interest receivable   52,879 
TOTAL ASSETS   22,851,774 
      
LIABILITIES     
Payable for Portfolio shares redeemed   94,355 
Payable to related parties   21,864 
Investment advisory fees payable   13,843 
Payable for investments purchased   11,680 
Distribution (12b-1) fees payable   9,651 
TOTAL LIABILITIES   151,393 
      
NET ASSETS  $22,700,381 
      
Composition of Net Assets:     
Paid in capital   21,695,660 
Accumulated earnings   1,004,721 
NET ASSETS  $22,700,381 
      
Net Asset Value Per Share:     
Shares:     
Net Assets  $22,700,381 
Shares of beneficial interest outstanding ($0 par value, unlimited shares authorized)   996,349 
Net asset value (Net Assets ÷ Shares Outstanding), offering price and redemption price per share  $22.78 

 

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

4

 

The Gold Bullion Strategy Portfolio
Consolidated Statement of Operations
For the Year Ended December 31, 2023

 

INVESTMENT INCOME     
Interest  $573,678 
Dividends   425,663 
Securities lending   9,992 
TOTAL INVESTMENT INCOME   1,009,333 
      
EXPENSES     
Investment advisory fees   161,325 
Distribution fees   107,550 
Administrative services fees   47,230 
Miscellaneous expenses   9,000 
TOTAL EXPENSES   325,105 
Less: Fees waived by the Advisor   (9,000)
NET EXPENSES   316,105 
      
NET INVESTMENT INCOME   693,228 
      
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FUTURES CONTRACTS     
Net realized gain from:     
Investments   34,004 
Futures contracts   1,339,524 
Net Realized Gain on Investments and Futures Contracts   1,373,528 
      
Net change in unrealized appreciation (depreciation) on:     
Investments   (13,350)
Futures contracts   (180,480)
Net Change in Unrealized Depreciation on Investments and Futures Contracts   (193,830)
      
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS AND FUTURES CONTRACTS   1,179,698 
      
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS  $1,872,926 

 

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

5

 

The Gold Bullion Strategy Portfolio
Consolidated Statements of Changes in Net Assets

 

   For the   For the 
   Year Ended   Year Ended 
   December 31, 2023   December 31, 2022 
         
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS          
Net investment income  $693,228   $54,569 
Net realized gain (loss) on investments and futures contracts   1,373,528    (1,636,220)
Gain distributions from underlying investment companies   —    293 
Net change in unrealized appreciation (depreciation) on investments & futures contracts   (193,830)   231,759 
Net increase (decrease) in net assets resulting from operations   1,872,926    (1,349,599)
           
DISTRIBUTIONS TO SHAREHOLDERS          
From earnings   (39,404)   — 
Total distributions to shareholders   (39,404)   — 
           
SHARES OF BENEFICIAL INTEREST          
Proceeds from shares sold   20,699,800    20,375,737 
Reinvestment of dividends and distributions   39,404    — 
Payments for shares redeemed   (17,573,234)   (21,940,057)
Net increase (decrease) from shares of beneficial interest transactions   3,165,970    (1,564,320)
           
NET INCREASE (DECREASE) IN NET ASSETS   4,999,492    (2,913,919)
           
NET ASSETS          
Beginning of year   17,700,889    20,614,808 
End of year  $22,700,381   $17,700,889 
           
SHARE ACTIVITY          
Shares Sold   944,630    955,848 
Shares Reinvested   1,725    — 
Shares Redeemed   (807,103)   (1,046,618)
Net increase (decrease) in shares of beneficial interest outstanding   139,252    (90,770)

 

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

6

 

The Gold Bullion Strategy Portfolio
Consolidated Financial Highlights

 

Per Share Data and Ratios for a Share of Beneficial Interest Outstanding Throughout Each Year

 

   Year Ended December 31, 
   2023   2022   2021   2020   2019 
                     
Net asset value, beginning of year  $20.65   $21.75   $26.63   $23.62   $20.06 
Income (loss) from investment operations:                         
Net investment income (loss) (a)   0.70    0.06    (0.13)   (0.05)   0.18 
Net realized and unrealized gain (loss)   1.47    (1.16)   (1.48)   4.73    3.43 
Total income (loss) from investment operations   2.17    (1.10)   (1.61)   4.68    3.61 
Less distributions:                         
Distributions from net investment income   (0.04)   —    (3.27)   (1.66)   (0.05)
Distributions from net realized gains   —    —    —    (0.01)   — 
Total distributions   (0.04)   —    (3.27)   (1.67)   (0.05)
                          
Net asset value, end of year  $22.78   $20.65   $21.75   $26.63   $23.62 
                          
Total return (b)   10.51%   (5.06)%   (5.87)%   19.69%   17.99% (c)
Net assets, end of year (in 000s)  $22,700   $17,701   $20,615   $22,928   $12,961 
Ratios/Supplemental Data:                         
Ratio of gross expenses to average net assets (d)   1.51%   1.43%   1.47%   1.55%   1.52%
Ratio of net expenses to average net assets (d)   1.47%   1.43%   1.47%   1.55%   1.52%
Ratios of net investment income (loss) to average net assets (d,e)   3.22%   0.29%   (0.51)%   (0.20)%   0.82%
Portfolio turnover rate   194%   359%   184%   215%   163%

 

(a)Per share amounts calculated using the average shares method, which more appropriately presents the per share data for the year.

 

(b)Total returns assume reinvestments of all distributions.

 

(c)Includes adjustments in accordance with accounting principles generally accepted in the United States and, consequently, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset values and returns for shareholder transactions.

 

(d)The ratios of expenses to average net assets and net investment income (loss) to average net assets do not reflect the expenses of the underlying investment companies in which the Portfolio invests.

 

(e)Recognition of net investment income (loss) by the Portfolio is affected by the timing and declaration of dividends by the underlying investment companies in which the Portfolio invests.

 

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

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The Gold Bullion Strategy Portfolio
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023

 

1.ORGANIZATION

 

The Gold Bullion Strategy Portfolio (the “Portfolio”) is a diversified series of shares of Advisors Preferred Trust (the “Trust”), a statutory trust organized under the laws of the State of Delaware on August 15, 2012 and registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. The Portfolio currently offers shares at net asset value. The Portfolio seeks returns that reflect the performance of the price of gold bullion. The Portfolio commenced operations on November 1, 2013. The Portfolio is a “fund of funds”, in that the Portfolio will generally invest in other investment companies.

 

2.SIGNIFICANT ACCOUNTING POLICIES

 

The following is a summary of significant accounting policies followed by the Portfolio in preparation of its consolidated financial statements. These policies are in conformity with U.S. generally accepted accounting principles (“GAAP”). The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting year. Actual results could differ from those estimates. The Portfolio is an investment company and accordingly follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standard Codification Topic 946, Financial Services – Investment Companies.

 

Securities Valuation – Portfolio securities will be valued each day at the last quoted sales price on each security’s primary exchange, and securities traded or dealt in upon one or more securities exchanges (whether domestic or foreign) for which market quotations were readily available and not subject to restrictions against resale will be valued at the last quoted sales price on the primary exchange or, in the absence of a sale on the primary exchange, at the mean of the current bid and ask price on the primary exchange. Securities primarily traded in the National Association of Securities Dealers’ Automated Quotation System (“NASDAQ”) National Market System for which market quotations are readily available shall be valued using the NASDAQ Official Closing Price. Futures and future options are valued at 4:00 p.m. Eastern Time or, in the absence of a settled price, at the last bid price on the day of valuation. Investments in open-end mutual funds are valued at net asset value. Short-term debt obligations having 60 days or less remaining until maturity, at the time of purchase, may be valued at amortized cost.

 

GBSP Fund Limited (“GBSP Fund Ltd.”) is a wholly-owned and controlled foreign subsidiary of the Portfolio that can invest in gold bullion-related exchange traded funds (“ETFs”), exchange traded notes (“ETNs”), physical gold bullion and derivatives. See “Consolidation of Subsidiary” for additional information.

 

The Portfolio may hold securities, such as private investments, interests in commodity pools, other non-traded securities or temporarily illiquid securities, for which market quotations are not readily available or are determined to be unreliable. These securities will be valued at their fair value as determined using the “fair value” procedures approved by the Trust’s Board of Trustees (the “Board”). The Board has delegated execution of these procedures to a fair value committee composed of one or more representatives from each of the (i) Trust, (ii) administrator, and (iii) advisor and/or sub-advisor. The committee may also enlist third party consultants such as a valuation specialist at a public accounting firm, valuation consultant or financial officer of a security issuer on an as-needed basis to assist in determining a security-specific fair value. The Board reviews and ratifies the execution of this process and the resultant fair value prices at least quarterly to assure the process produces reliable results.

 

Fair Valuation Process – As noted above, the fair value committee is composed of one or more representatives from each of the (i) Trust, (ii) administrator, and (iii) advisor and/or sub-advisor. The applicable investments are valued collectively via inputs from each of these groups. For example, fair value determinations are required for the following securities: (i) securities for which market quotations are insufficient or not readily available on a particular business day (including securities for which there is a short and temporary lapse in the provision of a

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The Gold Bullion Strategy Portfolio
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2023

 

price by the regular pricing source), (ii) securities for which, in the judgment of the advisor, the prices or values available do not represent the fair value of the instrument. Factors which may cause the advisor to make such a judgment include, but are not limited to, the following: only a bid price or an asked price is available; the spread between bid and asked prices is substantial; the frequency of sales; the thinness of the market; the size of reported trades; and actions of the securities markets, such as the suspension or limitation of trading; (iii) securities determined to be illiquid; (iv) securities with respect to which an event that will affect the value thereof has occurred (a “significant event”) since the closing prices were established on the principal exchange on which they are traded, but prior to the Portfolio’s calculation of its net asset value. Restricted or illiquid securities, such as private investments or non-traded securities are valued via inputs from the advisor based upon the current bid for the security from two or more independent dealers or other parties reasonably familiar with the facts and circumstances of the security (who should take into consideration all relevant factors as may be appropriate under the circumstances). If the advisor is unable to obtain a current bid from such independent dealers or other independent parties, the fair value committee shall determine the fair value of such security using the following factors: (i) the type of security; (ii) the cost at date of purchase; (iii) the size and nature of the Portfolio’s holdings; (iv) the discount from market value of unrestricted securities of the same class at the time of purchase and subsequent thereto; (v) information as to any transactions or offers with respect to the security; (vi) the nature and duration of restrictions on disposition of the security and the existence of any registration rights; (vii) how the yield of the security compares to similar securities of companies of similar or equal creditworthiness; (viii) the level of recent trades of similar or comparable securities; (ix) the liquidity characteristics of the security; (x) current market conditions; and (xi) the market value of any securities into which the security is convertible or exchangeable.

 

Valuation of Investment Companies – The Portfolio may invest in portfolios of open-end or closed-end investment companies (the “Underlying Funds”). The Underlying Funds value securities in their portfolios for which market quotations are readily available at their market values (generally the last reported sale price) and all other securities and assets at their fair value to the methods established by the board of directors of the Underlying Funds.

 

Open-ended mutual funds are valued at their respective net asset values as reported by such investment companies and ETFs. The shares of many closed-end investment companies, after their initial public offering, frequently trade at a price per share, which is different than the net asset value per share. The difference represents a market premium or market discount of such shares. There can be no assurances that the market discount or market premium on shares of any closed-end investment company purchased by the Portfolio will not change.

 

The Portfolio utilizes various methods to measure the fair value of all of its investments on a recurring basis. GAAP establishes a hierarchy that prioritizes inputs to valuation methods. The three levels of input are:

 

Level 1 – Unadjusted quoted prices in active markets for identical assets and liabilities that the Portfolio 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.

 

Level 3 – Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available, representing the Portfolio’s 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.

 

The availability of observable inputs can vary from security to security and is affected by a wide variety of factors, including, for example, the type of security, whether the security is new and not yet established in the marketplace, the liquidity of markets, and other characteristics particular to the security. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3.

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The Gold Bullion Strategy Portfolio
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2023

 

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

 

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The following table summarizes the inputs used as of December 31, 2023 for the Portfolio’s investments measured at fair value:

 

Assets *  Level 1   Level 2   Level 3   Total 
Investments:                
Exchange-Traded Funds  $9,304,376   $—   $—   $9,304,376 
Short-Term Investments   12,376,614    —    —    12,376,614 
Total Investments  $21,680,990   $—   $—   $21,680,990 
Derivatives                    
Futures Contracts   442,740    —    —    442,740 
Total Assets  $22,123,730   $—   $—   $22,123,730 

 

*Refer to the Consolidated Portfolio of Investments for sector classifications.

 

The Portfolio did not hold any Level 2 or Level 3 securities as of fiscal year end.

 

Consolidation of Subsidiary – The consolidated financial statements of the Portfolio include the accounts of GBSP Fund Ltd., a wholly-owned controlled subsidiary. All inter-company accounts and transactions have been eliminated in consolidation. The Portfolio may invest up to 25% of its total assets in GBSP Fund Ltd., which acts as an investment vehicle in order to affect certain investments consistent with the Portfolio’s investment objectives and policies. The subsidiary commenced operations on November 15, 2013 and is an exempted Cayman Islands company with limited liability.

 

A summary of the Portfolio’s investment in GBSP Fund Ltd. is as follows:

 

    GBSP Fund Ltd. Net  
  Inception Date of Assets at % Of Net Assets at
  GBSP Fund Ltd. December 31, 2023 December 31, 2023
GBSP Fund Ltd. 11/15/2013 $3,793,270 16.71%

 

Security Transactions and Related Income – Security transactions are accounted for on trade date. Interest income is recognized on an accrual basis. Discounts are accreted and premiums are amortized on securities purchased over the lives of the respective securities using effective yield method. Dividend income is recorded on the ex-dividend date. Realized gains or losses from sales of securities are determined by comparing the identified cost of the security lot sold with the net sales proceeds. Withholding taxes on foreign dividends have been provided for in accordance with the Portfolio’s understanding of the applicable country’s tax rules and rates.

 

Dividends and Distributions to Shareholders – Dividends from net investment income and distributable net realized capital gains, if any, are declared and distributed annually. Dividends from net investment income and distributions from net realized gains are recorded on ex-dividend date and are determined in accordance with federal income tax regulations, which may differ from GAAP. These “book/tax” differences are considered either temporary (i.e., deferred losses, capital loss carry forwards) or permanent in nature. To the extent these differences are permanent in nature, such amounts are reclassified within the composition of net assets based on their federal tax basis treatment; temporary differences do not require reclassification. These reclassifications have no effect on net assets, results from operations or net asset value per share of the Portfolio.

10

 

The Gold Bullion Strategy Portfolio
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2023

 

Federal Income Tax – It is the Portfolio’s policy to continue to qualify as a regulated investment company by complying with the provisions of the Internal Revenue Code that are applicable to regulated investment companies and to distribute substantially all of its taxable income and net realized gains to shareholders. Therefore, no federal income tax provision is required.

 

The Portfolio recognizes the tax benefits of uncertain tax positions only where the position is “more likely than not” to be sustained assuming examination by tax authorities. Management has analyzed the Portfolio’s tax positions, and has concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions expected to be taken on returns filed. The Portfolio identifies its major tax jurisdictions as U.S. Federal, and foreign jurisdictions where the Portfolio makes significant investments; however the Portfolio is 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.

 

The Portfolio recognizes interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the Consolidated Statement of Operations. During the year, the Portfolio did not incur any interest or penalties.

 

For tax purposes, GBSP Fund Ltd. is an exempted Cayman Islands investment company. GBSP Fund Ltd. has received an undertaking from the Government of the Cayman Islands exempting it from all local income, profits and capital gains taxes. No such taxes are levied in the Cayman Islands at the present time. For U.S. income tax purposes, GBSP Fund Ltd. is a Controlled Foreign Corporation and as such is not subject to U.S. income tax. However, a portion of GBSP Fund Ltd.’s net income and capital gain, to the extent of its earnings and profits, will be included each year in the Portfolio’s investment company taxable income.

 

Expenses – Expenses of the Trust that are directly identifiable to a specific portfolio (or fund) are charged to that portfolio. Expenses which are not readily identifiable to a specific portfolio are allocated in such a manner as deemed equitable, taking into consideration the nature and type of expense and the relative sizes of the portfolios in the Trust.

 

Indemnification – The Trust indemnifies its officers and Trustees for certain liabilities that may arise from the performance of their duties to the Trust. Additionally, in the normal course of business, the Portfolio enters into contracts that contain a variety of representations and warranties and which provide general indemnities. The Portfolio’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Portfolio that have not yet occurred. However, based on experience, the risk of loss due to these warranties and indemnities appears to be remote.

 

3.RISKS

 

Principal Investment Risk – As with all mutual funds, there is the risk that you could lose money through your investment in the Portfolio. The Portfolio is not intended to be a complete investment program. Many factors affect the Portfolio’s net asset value and performance. The following risks apply to the Portfolio through its direct investments as well as indirectly through investments in Underlying Funds and the subsidiary (GBSP Fund Ltd.).

 

General Market Risk – The risk that the value of the Portfolio’s shares will fluctuate based on the performance of the Portfolio’s investments and other factors affecting the commodities and/or securities market generally. Unexpected local, regional or global events, such as war; acts of terrorism; financial, political or social disruptions; natural, environmental or man-made disasters; the spread of infectious illnesses or other public health issues; and recessions and depressions could have a significant impact on the Portfolio and its investments and may impair market liquidity. Such events can cause investor fear, which can adversely affect the economies of nations, regions and the market in general, in ways that cannot necessarily be foreseen.

 

Exchange Traded Funds – The Portfolio may invest in ETFs. ETFs are typically a type of index fund bought and sold on a securities exchange. An ETF trades like common stock and typically represents a fixed portfolio of securities designed to track the performance and dividend yield of a particular domestic or foreign market index.

11

 

The Gold Bullion Strategy Portfolio
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2023

 

The Portfolio may purchase an ETF to temporarily gain exposure to a portion of the U.S. or a foreign market while awaiting purchase of underlying securities. The risks of owning an ETF generally reflect the risks of owning the underlying securities they are designed to track, although the lack of liquidity on an ETF could result in it being more volatile.

 

Mutual Fund and ETN Risk – Mutual funds and exchange traded notes (“ETNs”) are subject to investment advisory or management and other expenses, which will be indirectly paid by the Portfolio. Each is subject to specific risks, depending on investment strategy. Also, each may be subject to leverage risk, which will magnify losses. ETNs are subject to default risks. ETNs may not provide an effective substitute for gold bullion because changes in derivative prices held by these instruments may not track those of the underlying gold bullion.

 

Futures Contracts – The Portfolio is subject to commodity risk in the normal course of pursuing its investment objective. The Portfolio may purchase or sell futures contracts to gain exposure to, or hedge against, changes in the value of equities and interest rates. Initial margin deposits required upon entering into futures contracts are satisfied by the segregation of specific securities or cash as collateral for the account of the broker (the Portfolio’s agent in acquiring the futures position). During the year the futures contracts are open, changes in the value of the contracts are recognized as unrealized gains or losses by “marking to market” on a daily basis to reflect the market value of the contracts at the end of each day’s trading. Variation margin payments are received or made depending upon whether unrealized gains or losses are incurred. When the contracts are closed, the Portfolio recognizes a realized gain or loss equal to the difference between the proceeds from, or cost of, the closing transaction and the Portfolio’s basis in the contract. If the Portfolio was unable to liquidate a futures contract and/or enter into an offsetting closing transaction, the Portfolio would continue to be subject to market risk with respect to the value of the contracts and continue to be required to maintain the margin deposits on the futures contracts. The Portfolio segregates cash having a value at least equal to the amount of the current obligation under any open futures contract. Risks may exceed amounts recognized in the Consolidated Statement of Assets and Liabilities. With futures, there is minimal counterparty credit risk to the Portfolio because futures are exchange traded and the exchange’s clearinghouse, as counterparty to all exchange traded futures, guarantees the futures against default. During the normal course of business, the Portfolio purchases and sells various financial instruments, which may result in risks, the amount of which is not apparent from the consolidated financial statements.

 

Derivatives Risk – Futures are subject to inherent leverage that may magnify Portfolio losses. These derivatives may not provide an effective substitute for gold bullion because changes in derivative prices may not track those of the underlying gold bullion. Also, over-the-counter forwards are subject to counterparty default risk.

 

Gold Risk – The price of gold may be volatile and gold bullion-related ETFs, ETNs and derivatives may be highly sensitive to the price of gold. The price of gold bullion can be significantly affected by international monetary and political developments such as currency devaluation or revaluation, central bank movements, economic and social conditions within a country, transactional or trade imbalances, or trade or currency restrictions between countries. Physical Gold bullion has sales commission, storage, insurance and auditing expenses.

 

4.INVESTMENT TRANSACTIONS

 

For the year ended December 31, 2023, cost of purchases and proceeds from sales of portfolio securities, other than short-term investments, amounted to $19,129,230 and $17,147,541, respectively.

 

5.OFFSETTING OF FINANCIAL ASSETS AND DERIVATIVE ASSETS

 

Impact of Derivatives on the Consolidated Statement of Assets and Liabilities and Consolidated Statement of Operations

 

The Portfolio’s policy is to recognize a gross asset or liability equal to the unrealized appreciation/(depreciation) on futures contracts. During the year ended December 31, 2023, the Portfolio was subject to a master netting

12

 

The Gold Bullion Strategy Portfolio
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2023

 

arrangement. The following table shows additional information regarding the offsetting of assets and liabilities at December 31, 2023:

 

               Gross Amounts Not Offset in the     
               Consolidated Statement of Assets &     
Assets:              Liabilities     
           Net Amounts of             
       Gross Amounts   Assets or Liabilities             
   Gross Amounts   Offset in the   Presented in the             
   of Recognized   Consolidated   Consolidated       Cash Collateral     
   Assets or   Statement of Assets   Statement of Assets   Financial   Received or     
Description  Liabilities   & Liabilities   & Liabilities   Instruments   Pledged(1)   Net Amount 
Futures Contracts  $442,740   $—   $442,740   $—   $—   $442,740 
Total  $442,740   $—   $442,740   $—   $—   $442,740 

 

(1)Detailed collateral amounts are presented in the Consolidated Statement of Assets and Liabilities.

 

The Portfolio and GBSP Fund Ltd. use derivative instruments as part of their principal investment strategy to achieve their investment objective. For additional discussion on the risks associated with the derivative instruments, see Note 2.

 

The following is a summary of the location of derivative investments on the Portfolio’s Consolidated Statement of Assets and Liabilities as of December 31, 2023:

 

Derivative Investment Type Location on the Consolidated Statement of Assets and Liabilities
Futures Contracts Unrealized appreciation on futures contracts

 

At December 31, 2023, the fair value of derivative instruments was as follows:

 

Asset Derivatives 
Derivative Investment Type  Commodity Risk   Total 
Futures Contracts  $442,740   $442,740 

 

The following is a summary of the location of derivative investments on the Portfolio’s Consolidated Statement of Operations for the year ended December 31, 2023:

 

Derivative Investment Type Location of Gain/Loss on Derivative
Futures Contracts Net realized gain from futures contracts
  Net change in unrealized depreciation on futures contracts

 

The following is a summary of the Portfolio’s realized gain (loss) and unrealized appreciation/(depreciation) on derivative investments recognized in the Consolidated Statement of Operations categorized by primary risk exposure for the year ended December 31, 2023:

 

Realized gain on derivatives recognized in the Consolidated Statement of Operations 
Derivative Investment Type  Commodity Risk   Total 
Futures Contracts  $1,339,524   $1,339,524 

 

Change in unrealized appreciation (depreciation) on derivatives recognized in the Consolidated Statement of Operations 
Derivative Investment Type  Commodity Risk   Total 
Futures Contracts  $(180,480)  $(180,480)

 

The derivative instruments outstanding as of December 31, 2023 as disclosed in the Consolidated Portfolio of Investments and in the Notes to Consolidated Financial Statements and the amounts of realized and changes in unrealized gains and losses on futures contracts during the year as disclosed in the Consolidated Statement of Operations serve as indicators of the volume of derivative activity for the Portfolio.

13

 

The Gold Bullion Strategy Portfolio
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2023

 

6.INVESTMENT ADVISORY AGREEMENT AND TRANSACTIONS WITH RELATED PARTIES

 

Advisors Preferred LLC (“Advisor”), serves as investment adviser to the Portfolio. The Advisor has engaged Flexible Plan Investments, Ltd. (the “Sub-Advisor”) to serve as the sub-advisor to the Portfolio. Sub-Advisor expenses are the responsibility of the Advisor.

 

Pursuant to an advisory agreement with the Portfolio, the Advisor, under the oversight of the Board, directs the daily operations of the Portfolio and supervises the performance of administrative and professional services provided by others. As compensation for its services and the related expenses borne by the Advisor, the Portfolio pays the Advisor a fee, computed and accrued daily and paid monthly, at an annual rate of 0.75% of the Portfolio’s average daily net assets. Pursuant to the advisory agreement, the Advisor earned $161,325 in advisory fees for the year ended December 31, 2023.

 

Pursuant to a liquidity program administrator agreement with the Portfolio, the Advisor, provides a liquidity program administrator who, directs the operations of the Portfolio’s liquidity risk management program. As compensation for its services and the related expenses borne by the Advisor, the Portfolio pay the Adviser out of pocket expenses and an annual fee of $9,000. The liquidity program administrator agreement became effective June 1, 2021. Pursuant to the liquidity program administrator agreement, the Advisor earned $0 (net of voluntary waivers) in the Statement of Operations (miscellaneous expenses) for the year ended December 31, 2023.

 

Ultimus Fund Solutions, LLC (“UFS”), provides administration, fund accounting, and transfer agent services to the Trust. Pursuant to separate servicing agreements with UFS, the Portfolio pays UFS customary fees for providing administration, fund accounting and transfer agent services to the Portfolio as shown in the consolidated Statement of Operations under Administrative services fees. Under the terms of the Portfolio’s agreement with UFS, UFS pays for certain operating expenses of the Portfolio. Certain officers of the Trust are also officers of UFS, and are not paid any fees directly by the Portfolio for serving in such capacities.

 

In addition, certain affiliates of UFS provide services to the Portfolio as follows:

 

Blu Giant, LLC (“Blu Giant”), Blu Giant, an affiliate of UFS, provides EDGAR conversion and filing services as well as print management services for the Portfolio on an ad-hoc basis. For the provision of these services, Blu Giant receives customary fees from the Portfolio. These expenses are the responsibility of UFS.

 

The Board has adopted a Distribution Plan and Agreement (the “Plan”) pursuant to Rule 12b-1 under the 1940 Act. The Plan provides that a monthly distribution and service fee is calculated by the Portfolio at an annual rate of up to 0.75% of its average daily net assets and is paid to Ceros Financial Services, Inc. (“Ceros”), a registered broker/dealer and an affiliate of the Advisor, and principal underwriter of the Portfolio, to provide compensation for ongoing shareholder servicing and distribution-related activities or services and/or maintenance of accounts, not otherwise required to be provided by the Advisor. Currently, the Portfolio is incurring 0.50%. The Plan is a compensation plan, which means that compensation is provided regardless of 12b-1 expenses incurred. For the year ended December 31, 2023, pursuant to the Plan, distribution fees were $107,550, paid by the Portfolio.

 

Each Trustee who is not an “interested person” of the Trust or Advisor is compensated at a rate of $72,000 per year plus $2,500 minimum per meeting for certain special meetings, which varies based on the matters submitted, as well as for reimbursement for any reasonable expenses incurred attending the meetings, paid quarterly. The “interested persons” who serve as Trustees of the Trust receive no compensation for their services as Trustees. None of the executive officers receive compensation from the Trust. Interested trustees of the Trust are also officers or employees of the Advisor and its affiliates. The Advisor pays trustee fees.

14

 

The Gold Bullion Strategy Portfolio
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2023

 

During the year ended December 31, 2023, Ceros executed trades on behalf of the Portfolio and received $2,363 in trade commissions.

 

7.CONTROL OWNERSHIP

 

The beneficial ownership, either directly or indirectly, of more than 25% of the voting securities of a Portfolio creates presumption of control of the Portfolio under Section 2(a)(9) of the 1940 Act. As of December 31, 2023, Jefferson National Life Insurance Co. held 100% of the voting securities of shares.

 

8.AGGREGATE UNREALIZED APPRECIATION AND DEPRECIATION – TAX BASIS

 

The identified cost of investments in securities owned by the Portfolio for federal income tax purposes excluding futures, and its respective gross unrealized appreciation and depreciation at December 31, 2023, were as follows:

 

    Gross Unrealized   Gross Unrealized   Net Unrealized 
Tax Cost   Appreciation   (Depreciation)   (Depreciation) 
$21,703,097   $2,953,694   $(2,975,801)  $(22,107)

 

9.DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF CAPITAL

 

The tax character of fund distributions paid for the year ended December 31, 2023, and 2022 was as follows:

 

   Fiscal Year Ended   Fiscal Year Ended 
   December 31, 2023   December 31, 2022 
Ordinary Income  $39,404   $— 
   $39,404   $— 

 

As of December 31, 2023, the components of accumulated earnings/(deficit) on a tax basis were as follows:

 

Undistributed   Undistributed   Post October Loss   Capital Loss   Other   Unrealized   Total 
Ordinary   Long-Term   and   Carry   Book/Tax   Appreciation/   Distributable Earnings/ 
Income   Gains   Late Year Loss   Forwards   Differences   (Depreciation)   (Accumulated Deficit) 
$1,878,860   $—   $—   $(852,032)  $—   $(22,107)  $1,004,721 

 

The difference between book basis and tax basis unrealized depreciation and accumulated net realized gains/(losses) is primarily attributable to the tax deferral of losses on wash sales.

 

At December 31, 2023, the Portfolio had capital loss carry forward for federal income tax purposes available to offset future capital gains, and utilized capital loss carryforwards, as follows:

 

            CLCF 
Short-Term   Long-Term   Total   Utilized 
$122,728   $729,304   $852,032   $9,734 

 

Permanent book and tax differences, primarily attributable to adjustments for the Portfolio’s holding in GBSP Ltd, resulted in reclassifications for the year ended December 31, 2023, as follows:

 

Paid In   Distributable 
Capital   Earnings 
$(1)  $1 

15

 

The Gold Bullion Strategy Portfolio
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2023

 

10.SECURITIES LENDING

 

The Portfolio has entered into a securities lending arrangement (the “Agreement”) with U.S. Bank (the “Lending Agent”). Under the terms of the Agreement, the Portfolio is authorized to loan securities to the Lending Agent. In exchange, the Portfolio receives cash and “non-cash” or “securities” collateral in the amount of at least 105% of the value of any loaned securities that are foreign securities or 102% of the value of any other loaned securities marked-to-market daily. Loans shall be marked to market daily and the margin restored in the event collateralization is below 100% of the value of securities loaned. The value of securities loaned is disclosed in a footnote on the Consolidated Statement of Assets and Liabilities and on the Consolidated Portfolio of Investments. Securities lending income is disclosed in the Portfolio’s Consolidated Statement of Operations. Although risk is mitigated by the collateral, the Portfolio could experience a delay in recovering its securities and possible loss of income or value if the Lending Agent fails to return the securities on loan. The Portfolio’s cash collateral received in securities lending transactions is invested in the Mount Vernon Liquid Assets Portfolio, LLC, a privately offered liquidity fund, as presented below. The investment objective is to seek to maximize current income to the extent consistent with the preservation of capital and liquidity and maintain a stable NAV of $1.00 per unit.

 

As of December 31, 2023, the Portfolio did not have any securities on loan.

 

11.RECENT REGULATORY UPDATES

 

On January 24, 2023, the SEC adopted rule and form amendments to require mutual funds and ETFs to transmit concise and visually engaging streamlined annual and semiannual reports to shareholders that highlight key information. Other information, including financial statements, will not appear in a streamlined shareholder report but must be available online, delivered free of charge upon request, and filed on a semiannual basis on Form N-CSR. The rule and form amendments have a compliance date of July 24, 2024. At this time, management is evaluating the impact of these amendments on the shareholder reports for the Portfolio.

 

12.SUBSEQUENT EVENTS

 

Subsequent events after the date of the Consolidated Statement of Assets and Liabilities have been evaluated through the date the financial statements were issued. Management has determined that no events or transactions occurred requiring adjustment or disclosure in the financial statements.

16

 

(COHEN LOGO)

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Shareholders of The Gold Bullion Strategy Portfolio and
Board of Trustees of Advisors Preferred Trust

 

Opinion on the Financial Statements

 

We have audited the accompanying consolidated statement of assets and liabilities, including the consolidated portfolio of investments, of The Gold Bullion Strategy Portfolio (the “Portfolio”), a series of Advisors Preferred Trust, as of December 31, 2023, the related consolidated statement of operations for the year then ended, the consolidated statements of changes in net assets for each of the two years in the period then ended, the consolidated financial highlights for each of the five years in the period then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Portfolio as of December 31, 2023, the results of its operations for the year then ended, the changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.

 

Basis for Opinion

 

These financial statements are the responsibility of the Portfolio’s management. Our responsibility is to express an opinion on the Portfolio’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Portfolio in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement whether due to error or fraud.

 

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2023, by correspondence with the custodian and brokers. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

 

We have served as the auditor of one or more investment companies advised by Advisors Preferred, LLC since 2012.

 

(SIGNATURE)

 

COHEN & COMPANY, LTD.

Philadelphia, Pennsylvania

February 14, 2024

 

COHEN & COMPANY, LTD.

800.229.1099 | 866.818.4538 fax | cohencpa.com

 

Registered with the Public Company Accounting Oversight Board

17

 

The Gold Bullion Strategy Portfolio
EXPENSE EXAMPLE (Unaudited)
December 31, 2023

 

As a shareholder of The Gold Bullion Strategy Portfolio, you incur ongoing costs, including management fees; distribution and/or service (12b-1) fees; and other Portfolio expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in The Gold Bullion Strategy Portfolio 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 and held for the entire period from July 1, 2023, through December 31, 2023.

 

Table 1. Actual Expenses

 

The “Actual Expenses” line in the table below provides information about actual account values and actual expenses. You may use the information below; 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 table under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.

 

Table 2. Hypothetical Example for Comparison Purposes

 

The “Hypothetical” line in the table below provides information about hypothetical account values and hypothetical expenses based on The Gold Bullion Strategy Portfolio’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Portfolio’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balances or expenses you paid for the period. You may use this information to compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.

 

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), or redemption fees. Therefore, the table 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.

 

Table 1        
  Annualized Beginning Ending Expenses Paid During
Actual Expense Account Account Period *
Expenses Ratio 7/1/2023 12/31/2023 7/1/2023-12/31/2023
The Gold Bullion Strategy Portfolio 1.48% $1,000.00 $1,061.90 $7.69
         
Table 2        
  Annualized Beginning Ending Expenses Paid During
Hypothetical Expense Account Account Period *
(5% return before expenses) Ratio 7/1/2023 12/31/2023 7/1/2023-12/31/2023
The Gold Bullion Strategy Portfolio 1.48% $1,000.00 $1,017.74 $7.53

 

*Expenses are equal to the average account value over the period, multiplied by the Portfolio’s annualized expense ratio, multiplied by the number of days in the period (184) divided by the numbers of days in the fiscal year (365).

18

 

The Gold Bullion Strategy Portfolio
SUPPLEMENTAL INFORMATION (Unaudited)
December 31, 2023

 

Independent Trustees

 

The following table provides information regarding each Trustee who is not an “interested person” of the Trust, as defined in the 1940 Act.

 

Name, Address 1 and
Year of Birth		 Position(s)
Held with
the Trust		 Term of
Office/Length
of Time Served		 Principal Occupation(s) During Past
5 Years		 Number of
Portfolios in
Fund Complex
Overseen by
Trustee 2		 Other
Directorships
Held by Trustee
During Past 5
Years
Charles R. Ranson
Born: 1947		 Trustee Indefinite, since
November 2012		 Principal, Ranson & Associates (business consultancy) (Since 2003); 23 Northern Lights Fund Trust IV (40 series) (Since July 2015)
Felix Rivera
Born: 1963		 Trustee Indefinite, since
November 2012		 Managing Partner, Independent Channel Advisors, LLC consultancy Practice), (since January 2011) 23 Centerstone Investors Trust (2 series) (2016 to 2021), Alpha Alternative Assets Fund (since November 2022), Roundhill ETF Trust (since October 2023)
David Feldman
Born: 1963		 Trustee Indefinite, Since
September 2017		 Independent Consultant (since January 2015). Head of Intermediary Sales, Baron Capital Inc. (February 2010 to December 2014) 23 None

 

1.Unless otherwise specified, the mailing address of each Trustee is c/o Advisors Preferred Trust, 1145 Research Blvd., Suite 530, Rockville, MD 20850.

 

2.The “Fund Complex” consists of the series of the Trust.

 

AP 12/31/23 v1

19

 

The Gold Bullion Strategy Portfolio
SUPPLEMENTAL INFORMATION (Unaudited) (Continued)
December 31, 2023

 

Interested Trustees and Officers

 

The following table provides information regarding each Trustee who is an “interested person” of the Trust, as defined in the 1940 Act, and each officer of the Trust.

 

Name, Address 1
and Year of Birth		 Position(s)
Held with
the Fund		 Term of Office/
Length of Time
Served		 Principal Occupation(s) During Past 5
Years		 Number of
Portfolios in
Fund Complex
Overseen by
Trustee2		 Other
Directorships
Held by
Trustee
Catherine Ayers-Rigsby(3)
Born: 1948		 Trustee, Chairperson, President Indefinite; since
November 2012		 CEO, Advisors Preferred, LLC (since April 2011); President, Ceros Financial Services, Inc. (broker/dealer) (since August 2009) ; President, Atcap Partners, LLC (investment adviser) (since July 2011) 23 None
Brian S. Humphrey(4)
Born: 1972		 Trustee Indefinite; since
November 2012		 Managing Director, Ceros Financial Services, Inc (since January 2011); 23 None
Christine Casares
Born: 1975		 Treasurer One Year; since
May 2019		 Vice President, Tax Administration, Ultimus Fund Solutions, LLC (since January 2016); Assistant Vice President, Tax Administration (February 2012 – January 2016) N/A N/A
Angela Holland
Born: 1970		 Chief Compliance Officer One Year; since
July 2020		 Chief Compliance Officer, Advisors Preferred, LLC (since March 2022); Chief Compliance Officer, Ceros Financial Services, Inc. (since January 2016), Chief Compliance Office, AtCap Partners, LLC (investment adviser) (since March 2022) and Innovation X Advisors, Inc. (investment adviser) (since July 2022); Compliance Manager, Advisors Preferred, LLC (April 2012-March 2022); Compliance Manager, AtCap April 2012-March 2022) N/A N/A
Jimmy Chao
Born: 1971		 Assistant Treasurer One Year; Since
November 2017		 Assistant Vice President, Fund Administration Ultimus Fund Solutions, LLC (since April 2012) N/A N/A
Jeff Meacham
Born: 1976		 Assistant Treasurer One Year; since
November 2021		 Trader, Ceros Financial Services, Inc. N/A N/A
Daniel Gibson
Born: 1984		 Assistant Treasurer & Secretary One Year; since
November 2021;
One Year; Since
October 2022		 Trader/Dealers & Commissions Specialist, Ceros Financial Services, Inc. N/A N/A
Teresa M. Ritchie
Born: 1959		 Assistant Secretary One Year since
October 2022		 Legal Administration, Ultimus Fund Solutions, LLC since May 2012) N/A N/A

 

1.The address of each Trustee is Advisors Preferred Trust, 1445 Research Blvd., Suite 530, Rockville, MD 20850. The address of D, Gibson, A. Holland and J. Meacham is Advisors Preferred Trust. The address of C. Casares, J. Chao, and T. Ritchie is Ultimus Fund Solutions, LLC, 80 Arkay Drive, Suite 110, Hauppauge, NY 11788.

 

2.The “Fund Complex” consists of the series of the Trust.

 

3.Ms. Ayers-Rigsby is an interested Trustees because she is an officer of the Trust, an officer of the Trust’s investment adviser and an officer of the Trust’s principal underwriter.

 

4.Mr. Humphrey is an interested Trustee because he is an officer of the Trust’s principal underwriter.

 

The Funds’ Statement of Additional Information includes additional information about the Trustees and is available free of charge by calling toll- free 1-855-650-7453.

 

AP 12/31/23 v1

20

 

PRIVACY NOTICE 

 

Rev. May 2014

 

FACTS WHAT DOES ADVISORS PREFERRED TRUST DO WITH YOUR PERSONAL INFORMATION?
   
Why? Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do.
   
What? The types of personal information we collect and share depend on the product or service you have with us. This information can include:
   
   ■ Social Security number ■ Purchase History
         
  ■ Assets ■ Account Balances
         
  ■ Retirement Assets ■ Account Transactions
         
  ■ Transaction History ■ Wire Transfer Instructions
         
  ■ Checking Account Information    
   
  When you are no longer our customer, we continue to share your information as described in this notice.
   
How? All financial companies need to share customers’ personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers’ personal information; the reasons Advisors Preferred Trust chooses to share; and whether you can limit this sharing.

  

Reasons we can share your personal information Does Advisors
Preferred Trust
share?		 Can you limit this
sharing?

For our everyday business purposes –

such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus

 Yes No

For our marketing purposes –

to offer our products and services to you

 No We don’t share
For joint marketing with other financial companies No We don’t share

For our affiliates’ everyday business purposes –

information about your transactions and experiences

 No We don’t share

For our affiliates’ everyday business purposes –

information about your creditworthiness

 No We don’t share
For nonaffiliates to market to you No We don’t share

 

Questions?   Call 1-855-650-7453

21

 

Who we are

Who is providing this notice?

 

Advisors Preferred Trust

What we do
How does Advisors Preferred Trust protect my personal information?

To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include computer safeguards and secured files and buildings.

 

Our service providers are held accountable for adhering to strict policies and procedures to prevent any misuse of your nonpublic personal information.

How does Advisors Preferred Trust collect my personal information?

We collect your personal information, for example, when you

 

■    Open an account

 

■    Provide account information

 

■    Give us your contact information

 

■    Make deposits or withdrawals from your account

 

■    Make a wire transfer

 

■    Tell us where to send the money

 

■    Tells us who receives the money

 

■    Show your government-issued ID

 

■    Show your driver’s license

 

We also collect your personal information from other companies.

Why can’t I limit all sharing?

Federal law gives you the right to limit only  

■    Sharing for affiliates’ everyday business purposes – information about your creditworthiness

■    Affiliates from using your information to market to you

 

■    Sharing for nonaffiliates to market to you

 

State laws and individual companies may give you additional rights to limit sharing.

Definitions
Affiliates

Companies related by common ownership or control. They can be financial and nonfinancial companies.

 

■    Advisors Preferred Trust does not share with our affiliates.

Nonaffiliates

Companies not related by common ownership or control. They can be financial and nonfinancial companies.  

■    Advisors Preferred Trust does not share with nonaffiliates so they can market to you.

Joint marketing

A formal agreement between nonaffiliated financial companies that together market financial products or services to you.

 

■    Advisors Preferred Trust doesn’t jointly market.

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PROXY VOTING POLICY

 

Information regarding how the Portfolio voted proxies relating to portfolio securities for the most recent twelve month period ended June 30 as well as a description of the policies and procedures that the Portfolio uses to determine how to vote proxies is available without charge, upon request, by calling 1-855-650-7453 or by referring to the Security and Exchange Commission’s (“SEC”) website at http://www.sec.gov.

 

PORTFOLIO HOLDINGS

 

The Portfolio files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT, within sixty days after the end of the period. Form N-PORT reports are available on the SEC’s website at http://www.sec.gov. The information on Form N-PORT is available without charge, upon request, by calling 1-855-650-7453.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INVESTMENT ADVISOR

Advisors Preferred LLC

1445 Research Blvd., Suite 530

Rockville, MD 20850

 

SUB-ADVISOR

Flexible Plan Investments, Ltd.

3883 Telegraph Road, Suite 100

Bloomfield Hills, MI 48302

 

ADMINISTRATOR

Ultimus Fund Solutions, LLC

225 Pictoria Drive, Suite 450

Cincinnati, OH 45246

 

 

 

 

 

GOLDVIT-AR23

 

 

(b) Not applicable.

 

Item 2. Code of Ethics.

 

(a)       As of the end of the period covered by this report, the registrant has adopted a code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party.

 

(b)        For purposes of this item, “code of ethics” means written standards that are reasonably designed to deter wrongdoing and to promote:

 

(1)Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;
(2)Full, fair, accurate, timely, and understandable disclosure in reports and documents that a registrant files with, or submits to, the Commission and in other public communications made by the registrant;

(3)        Compliance with applicable governmental laws, rules, and regulations;

(4)The prompt internal reporting of violations of the code to an appropriate person or persons identified in the code; and

(5)        Accountability for adherence to the code.

 

 
 

(c)        Amendments: During the period covered by the report, there have not been any amendments to the provisions of the code of ethics.

 

(d)        Waivers: During the period covered by the report, the registrant has not granted any express or implicit waivers from the provisions of the code of ethics.

 

(e) The Code of Ethics is not posted on Registrant’ website.

 

(f) A copy of the Code of Ethics is attached as an exhibit.

 

Item 3. Audit Committee Financial Expert.

 

(a)       The Registrant’s board of trustees has determined that Felix Rivera is an audit committee financial expert, as defined in Item 3 of Form N-CSR. Mr. Rivera is independent for purposes of this Item 3.

 

Item 4. Principal Accountant Fees and Services.

 

(a)Audit Fees

2023 - $14,000

2022 - $13,250

 

(b)Audit-Related Fees

2023 – N/A

2022 – N/A

 

(c)Tax Fees

2023 - $3,000

2022 - $3,000

 

 Preparation of Federal & State income tax returns, assistance with calculation of required income, capital gain and excise distributions and preparation of Federal excise tax returns.

 

(d)All Other Fees

2023 - N/A

2022 - N/A

 

 

(e)(1) Audit Committee’s Pre-Approval Policies

 

The registrant’s Audit Committee is required to pre-approve all audit services and, when appropriate, any non-audit services (including audit-related, tax and all other services) to the registrant. The registrant’s Audit Committee also is required to pre-approve, when appropriate, any non-audit services (including audit-related, tax and all other services) to its adviser, or any entity controlling, controlled by or under common control with the adviser that provides ongoing services to the registrant, to the extent that the services may be determined to have an impact on the operations or financial reporting of the registrant. Services are reviewed on an engagement by engagement basis by the Audit Committee.

 

 
 

 

(2)Percentages of Services Approved by the Audit Committee

                                    2023                2022

Audit-Related Fees:      0.00%               0.00%

Tax Fees:                     0.00%              0.00%

All Other Fees:             0.00%               0.00%

 

(f)During the audit of registrant's financial statements for the most recent fiscal year, less than 50 percent of the hours expended on the principal accountant's engagement were attributed to work performed by persons other than the principal accountant's full-time, permanent employees.

 

(g)The aggregate non-audit fees billed by the registrant's accountant for services rendered to the registrant, and rendered to the registrant's investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant:

 

2023 – $3,000

2022 - $3,000

 

 

(h)        The registrant's audit committee has considered whether the provision of non-audit services to the registrant's investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant, that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X, is compatible with maintaining the principal accountant's independence.

 

(i) Not applicable.

 

(j) Not applicable.

 

Item 5. Audit Committee of Listed Companies. Not applicable to open-end investment companies.

 

Item 6. Schedule of Investments. Schedule of investments in securities of unaffiliated issuers is included under Item 1.

 

Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Funds. 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 Funds. Not applicable to open-end investment companies.

 

Item 10. Submission of Matters to a Vote of Security Holders. None

 

Item 11. Controls and Procedures.

 

 
 

(a)       Based on an evaluation of the Registrant’s disclosure controls and procedures as of a date within 90 days of filing date of this Form N-CSR, the principal executive officer and principal financial officer of the Registrant have concluded that the disclosure controls and procedures of the Registrant are reasonably designed to ensure that the information required in filings on Form N-CSR is recorded, processed, summarized, and reported by the filing date, including that information required to be disclosed is accumulated and communicated to the Registrant’s management, including the Registrant’s principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

 

(b)       There were no significant changes in the Registrant’s internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Registrant’s internal control over financial reporting.

 

Item 12. Disclosure of Securities Lending Activities for Closed-End Management Investment Companies. Not applicable.

 

Item 13. Exhibits.

 

(a)(1) Code of Ethics filed herewith.

 

(a)(2) Certifications required by Section 302 of the Sarbanes-Oxley Act of 2002 (and Item 11(a)(2) of Form N-CSR) are filed herewith.

 

(a)(3) Not applicable for open-end investment companies.

 

(b)Certifications required by Section 906 of the Sarbanes-Oxley Act of 2002 (and Item 11(b) of Form N-CSR) are filed 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 Preferred Trust

 

By (Signature and Title)

/s/ Catherine Ayers-Rigsby

Catherine Ayer-Rigsby, President/Principal Executive Officer

 

Date 2/21/24

 

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/Catherine Ayers-Rigsby

 
 

Catherine Ayer-Rigsby, President/Principal Executive Officer

 

Date 2/21/24

 

 

By (Signature and Title)

/s/ Christine Casares

Christine Casares, Treasurer/Principal Financial Officer

 

Date 2/21/24