ROPES & GRAY LLP
191 NORTH WACKER DRIVE
32nd FLOOR
CHICAGO, ILLINOIS 60606-4302
WWW.ROPESGRAY.COM
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Elizabeth Madsen
(312) 845-1381
elizabeth.madsen@ropesgray.com |
Re: |
Westchester Capital Funds (Registration Nos. 333-187583 and 811-22818) (“WCM”) and The Merger Fund (Registration Nos. 002-76969 and 811-03445) (“TMF”, and together with WCM, each a “Trust” and together, the “Trusts”)
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- 2 -
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April 14, 2021 |
1.
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Comment: Please provide a completed fee table for each Fund in the correspondence filing.
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Shareholder Fees
(fees paid directly from your investment)
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Investor
Class
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Institutional
Class
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Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price)
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None
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None
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Maximum Deferred Sales Charge (Load)
(as a percentage of offering price)
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None
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None
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Maximum Sales Charge (Load) Imposed on Reinvested Dividends
and Other Distributions (as a percentage of offering price)
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None
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None
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Redemption Fee (as a percentage of amount redeemed)
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None
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None
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Exchange Fee
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None
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None
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Annual Fund Operating Expenses
(expenses that you pay each year as a
percentage of the value of your
investment)
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Investor
Class
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Institutional
Class
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Management Fees
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1.00%
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1.00%
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Distribution and/or Service (12b-1) Fees
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0.25%
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N/A
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Total Other Expenses
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0.26%
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0.22%
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Dividends and Interest on Short
Positions and Borrowing Expense
on Securities Sold Short
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0.02%
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0.02%
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Remaining Other Expenses
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0.24%
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0.20%
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Acquired Fund Fees and Expenses(1)
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0.05%
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0.05%
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Total Annual Fund Operating Expenses
Before Fee Waiver(2)
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1.56%
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1.27%
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Fee Waiver(2)
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(0.02)%
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(0.02)%
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Total Annual Fund Operating Expenses
After Fee Waiver(2)
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1.54%
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1.25%
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- 3 -
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April 14, 2021 |
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Investor
Class
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Institutional
Class
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Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price)
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None
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None
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Maximum Deferred Sales Charge (Load)
(as a percentage of offering price)
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None
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None
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Maximum Sales Charge (Load) Imposed on Reinvested Dividends
and Other Distributions (as a percentage of offering price)
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None
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None
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Redemption Fee (as a percentage of amount redeemed)
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None
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None
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Exchange Fee
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None
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None
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Annual Fund Operating Expenses
(expenses that you pay each year as
a percentage of the value of your
investment)
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Investor
Class
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Institutional
Class
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Management Fees
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1.25%
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1.25%
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Distribution and/or Service (12b-1)
Fees
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0.25%
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N/A
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Total Other Expenses
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0.49%
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0.49%
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Dividends and Interest on Short
Positions and Borrowing
Expense on Securities Sold
Short
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0.17%
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0.17%
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Remaining Other Expenses(1)
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0.32%
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0.32%
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Acquired Fund Fees and
Expenses(2)
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0.06%
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0.06%
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Total Annual Fund Operating
Expenses Before Expense Waiver
and Reimbursement(3)
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2.05%
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1.80%
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- 4 -
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April 14, 2021 |
Expense Waiver and
Reimbursement(3)
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0.00%
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0.00%
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Total Annual Fund Operating
Expenses After Expense Waiver
and Reimbursement(3)
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2.05%
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1.80%
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Investor
Class
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Institutional
Class
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Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price)
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None
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None
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Maximum Deferred Sales Charge (Load)
(as a percentage of offering price)
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None
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None
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Maximum Sales Charge (Load) Imposed on Reinvested Dividends
and Other Distributions (as a percentage of offering price)
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None
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None
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Redemption Fee (as a percentage of amount redeemed)
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None
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None
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Exchange Fee
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None
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None
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Annual Fund Operating Expenses:
(expenses that you pay each year as a percentage of the value of your
investment)
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Investor
Class
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Institutional
Class
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Management Fees
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1.00%
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1.00%
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Distribution and/or Service (12b-1) Fees
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0.25%
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0.00%
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Total Other Expenses
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4.44%
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4.44%
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- 5 -
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April 14, 2021 |
Interest on Short Positions and on Reverse Repurchase Agreements and
Borrowing Expense on Securities Sold Short
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2.31%
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2.31%
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Remaining Other Expenses
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2.13%
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2.13%
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Acquired Fund Fees and Expenses (1)
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0.02%
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0.02%
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Total Annual Fund Operating Expenses Before Expense Waiver and
Reimbursement
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5.71%
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5.46%
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Fee Waiver and Reimbursement(2)
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(1.49)%
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(1.49)%
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Total Annual Fund Operating Expenses After Expense Waiver and
Reimbursement(2)
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4.22%
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3.97%
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2.
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Comment: For each Fund, please revise the paragraph describing the Fund’s investments in special purpose acquisition companies or similar special purpose entities that
pool funds to seek potential acquisition opportunities (collectively, “SPACs”) to briefly address the factors that the Funds’ adviser considers when deciding to make investment allocations to particular SPACs and please describe
SPAC-related investment strategy and risks in greater detail. The revised risk disclosure might address, for example, potential conflicts and potential for misalignment of incentives in the structure of SPACs, as well as the potential that
growth in SPAC offerings may increase competition for target companies and, as a result, contribute to a decline in deal quality.
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- 6 -
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April 14, 2021 |
3.
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Comment: It is the understanding of the Staff that SPACs are not a significant source of investment income in as much as they invest proceeds from initial public
offerings in U.S. Treasuries, typically. Please advise supplementally or revise the statement regarding potential for income from SPAC investments.
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4.
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Comment: The Staff notes that disclosure for EDF and CEF includes the following sentence: “The Fund may use some, none or all of these strategies at any one time, and
there is no limit on the percentage of the Fund’s assets that may be invested in any single type of strategy or investment.” Please describe supplementally how each Fund will determine how and to what extent the Fund will employ each
investment strategy. Please explain how this decision calculus is made.
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- 7 -
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April 14, 2021 |
5.
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Comment: Please provide in the correspondence filing the bracketed information pertaining to the percentage of EDF’s and CEF’s investment exposure to SPACs. Please
also consider adding this sentence for TMF.
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6.
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Comment: The Staff notes that the foreign investing risk disclosure includes a statement that “[t]he foregoing risks may apply to a greater extent to investments in
emerging market countries. The securities markets of emerging market countries are generally smaller, less developed, less liquid, and more volatile than the securities markets of the United States and developed countries.” Please provide
related risk disclosure concerning investments in emerging markets.
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- 8 -
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April 14, 2021 |
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1
Year
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5
Years
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10
Years
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Since
Inception
(1/31/1989)
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Investor Class Shares
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Return Before Taxes
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4.87%
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4.68%
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3.27%
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6.06%
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Return After Taxes on
Distributions
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3.58%
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3.99%
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2.52%
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4.38%
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Return After Taxes on
Distributions and Sale of
Fund Shares*
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2.96%
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3.41%
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2.30%
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4.20%
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Institutional Class Shares**
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Return Before Taxes
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5.15%
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5.00%
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3.49%
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6.13%
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ICE BofA Merrill Lynch
3-Month U.S. Treasury
Bill Index (reflects no
deduction for fees and
expenses)
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0.67%
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1.20%
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0.64%
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3.03%
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- 9 -
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April 14, 2021 |
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1 Year
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5 Year
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Since
Inception
(1/2/2014)
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Institutional Class Shares
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Return Before Taxes
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6.55%
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6.07%
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4.55%
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Return After Taxes on Distributions
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5.48%
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5.11%
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3.58%
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Return After Taxes on Distributions and Sale
of Fund Shares*
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4.15%
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4.36%
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3.16%
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Investor Class Shares**
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Return Before Taxes
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6.30%
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5.79%
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4.29%
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ICE BofA Merrill Lynch 3-Month U.S.
Treasury Bill Index (reflects no deduction
for fees and expenses)
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0.67%
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1.20%
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0.87%
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1 Year
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3 Year
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Since
Inception
(12/29/2017)
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Institutional Class Shares
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Return Before Taxes
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15.89%
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8.28%
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8.27%
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Return After Taxes on Distributions
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15.13%
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7.40%
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7.38%
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Return After Taxes on Distributions and Sale of
Fund Shares*
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9.48%
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6.03%
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6.02%
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Investor Class Shares
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Return Before Taxes
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16.08%**
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8.15%
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8.13%
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ICE BofA Merrill Lynch 3-Month U.S.
Treasury Bill Index (reflects no deduction for
fees and expenses)
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0.67%
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1.61%
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1.60%
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- 10 -
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April 14, 2021 |
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- 11 -
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April 14, 2021 |
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* * * * *
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Very truly yours,
/s/ Elizabeth Madsen
Elizabeth Madsen
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