N-14/A 1 d245298dn14a.htm N-14/A N-14/A
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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON 09/16/2016

SECURITIES ACT REGISTRATION NO. 333-212260

 

 

 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM N-14

 

 

REGISTRATION STATEMENT

UNDER

   THE SECURITIES ACT OF 1933   [X]
   Pre-Effective Amendment No.   4
   Post-Effective Amendment No.   [  ]

and

(Exact name of Registrant as Specified in Charter)

 

 

AMERICAN PENSION INVESTORS TRUST

 

 

2303 YORKTOWN AVENUE

LYNCHBURG, VA 24501

434-846-1361

(Name and Address of Agent for Service)

DAVID D. BASTEN

2303 YORKTOWN AVENUE

LYNCHBURG, VA 24501

Please send copy of communications to:

DAVID D JONES, ESQUIRE

DRAKE COMPLIANCE, LLC

422 FLEMING STREET, SUITE 7

KEY WEST, FL 33040

W. LEE H. DUNHAM, ESQUIRE

SULLIVAN & WORCESTER LLP

ONE POST OFFICE SQUARE

BOSTON, MA 02109

 

 

Title of Securities Being Registered: Shares of a series of the Registrant.

Filing Fee: No filing fee is required because Registrant is relying on Section 24(f) of the Investment Company Act of 1940, as amended, pursuant to which it has registered a indefinite number of shares.

Approximate date of proposed public offering: As soon as practicable after the effective date of the Registration Statement.

Effective Date: Pursuant to Rule 488 of the Securities Act of 1933, as amended, it is proposed that this filing will become effective on September 19, 2016 in accordance with Rule 488 of the Securities Act of 1933 or on such date as the Commission may determine.

 

 

 


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AMERICAN PENSION INVESTORS TRUST

The API Efficient Frontier Value Fund

a series of

American Pension Investors Trust

2303 Yorktown Avenue

Lynchburg, Virginia 24501

Dear Shareholder:

We are writing to let you know about important developments involving the API Efficient Frontier Value Fund (the “Value Fund”). Yorktown Management & Research Company, Inc. (“Yorktown”), the investment advisor to the API Funds, after careful consideration, has proposed a tax-free reorganization of the Value Fund into another series of the Trust, the API Capital Income Fund (the “Capital Income Fund”). Your Fund’s current operating expenses are expected to be reduced following the reorganization since the Capital Income Fund in most cases has a lower expense ratio than the Value Fund. Moreover, shareholders will not pay any costs associated with the reorganization, which will be borne by Yorktown. As a shareholder of the Value Fund, you are being asked to vote on this proposal.

The reorganization is designed to achieve economies of scale by combining the Value Fund with the Capital Income Fund. On the date of the reorganization, your shares will automatically be converted into shares of the Capital Income Fund, which has similar investment objectives, investment strategies and risk factors as the Value Fund. In fact, all of the securities that are allowed to be held by the Value Fund are also allowed to be held by the Capital Income Fund. However, there are essential differences between the funds. Most importantly, the Capital Income Fund also offers exposure to fixed income investments and has as part of its investment objective the achievement of current income; the Value Fund invests primarily in a portfolio of domestic equity securities. Because the two funds do not have identical investment objectives and strategies, shareholders must consider if the resulting investment in the Capital Income Fund is consistent with their investment objectives.

We believe the combination of the two series of the Trust will provide the opportunity for improved operating efficiencies as the fixed costs of operating a mutual fund can be spread over a larger pool of assets. As a result of the larger asset size of the combined fund, the projected expense ratio of the Capital Income Fund is expected to be lower following the reorganization. Because the process used by Yorktown to select equity investments in the Funds is substantially identical, and the portfolio of equity securities held by the Value Fund is complementary to the equity portfolio held by the Capital Income Fund, we believe that the Value Fund can be absorbed into the Capital Income Fund without issue. Lastly, the reorganization is designed to reduce product overlap in the Trust by combining the Value Fund with the Capital Income Fund. For these and other reasons, shareholders are expected to benefit from the reorganization.

On September 29, 2016 at 10:00 a.m., at the offices of Yorktown, the Trust’s investment adviser, 2303 Yorktown Avenue, Lynchburg, VA 24501, a Special Meeting of Shareholders of the Value Fund will be held. The purpose of the meeting is to consider and approve an Agreement and Plan of Reorganization providing for the reorganization of the Value Fund into the Capital Income Fund. If the reorganization is approved and completed, you will become a shareholder of the Capital Income Fund.

Formal notice of this Meeting appears in the enclosed Prospectus/Proxy Statement as well as a description of the proposed reorganization. The form of Agreement and Plan of Reorganization is attached as Appendix A to the Prospectus/Proxy Statement. The Board of Trustees believes that this transaction is in the best interests of shareholders of the Value Fund and has unanimously recommended that shareholders vote “FOR” the proposal.

 

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In connection with the reorganization you should note the following:

 

   

The reorganization is intended to qualify as a tax-free transaction. As a condition to the closing of the reorganization, both funds will receive an opinion of legal counsel as to the tax-free nature of the reorganization for U.S. federal income tax purposes.

 

   

The value of the shares in the Capital Income Fund you receive in the reorganization will equal the value of the shares you exchange from the Value Fund.

 

   

The reorganization is also expected to provide shareholders the opportunity to potentially benefit from economies of scale.

The Board of Trustees of the Trust has fixed the close of business on July 25, 2016 as the record date for the Meeting. Shareholders of record on that date are entitled to notice of, and to vote at the Meeting. Your vote is important no matter how many shares you own. In addition to voting by mail, you may vote by telephone or through the Internet as follows:

 

TO VOTE BY TELEPHONE:

   TO VOTE BY INTERNET:

1)      Read the Prospectus/Proxy Statement and have the enclosed proxy card at hand

  

1)      Read the Prospectus/Proxy Statement and have the enclosed proxy card at hand

2)      Call the toll-free number that appears on the enclosed proxy card and follow the simple instructions

  

2)      Go to the website that appears on the enclosed proxy card and follow the simple instructions

We encourage you to vote by telephone or through the internet using the control number that appears on the enclosed proxy card. Use of telephone or internet voting will reduce the time and costs associated with this proxy solicitation. Whichever method you choose, please read the enclosed Prospectus/Proxy Statement carefully before you vote.

If you have any questions after considering the enclosed materials, please call 1-800-544-6060. Please take this opportunity to vote. Thank you for your participation and for your continued support.

Respectfully,

David D. Basten

President, API Efficient Frontier Value Fund

 

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NOTICE OF MEETING OF SHAREHOLDERS

OF THE

API EFFICIENT FRONTIER VALUE FUND

A series of

American Pension Investors Trust

TO BE HELD ON SEPTEMBER 29, 2016

To Shareholders of the API Efficient Frontier Value Fund:

NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders (the “Meeting”) of the API Efficient Frontier Value Fund (the “Value Fund”), a series of American Pension Investors Trust (the “Trust”), will be held at 10:00 a.m. Eastern Time on September 29, 2016, at the offices of Yorktown Management & Research Company (“Yorktown”) at 2303 Yorktown Avenue, Lynchburg, VA 24501, to consider and vote on the following:

1. Approval of the Agreement and Plan of Reorganization and related transactions that provide for the transfer of all of the assets of the Value Fund to the API Capital Income Fund (the “Capital Income Fund”) in exchange for shares of the Capital Income Fund and the assumption by the Capital Income Fund of the known liabilities of the Value Fund, and the distribution of such shares to shareholders in complete liquidation of the Value Fund, all as described in the attached Prospectus/Proxy Statement.

2. To transact any other business that may properly come before the Meeting or any postponement or adjournment thereof.

The proposed reorganization is described in the attached Prospectus/Proxy Statement. The form of Agreement and Plan of Reorganization is attached as Appendix A to the Prospectus/Proxy Statement.

The Board of Trustees of the Trust has fixed the close of business on July 25, 2016 as the record date for the Meeting. Shareholders of record on that date are entitled to notice of, and to vote at, the Meeting.

By Order of the Board of Trustees,

David D. Basten

President

API Efficient Frontier Value Fund September 19, 2016

YOUR VOTE IS IMPORTANT. PLEASE VOTE BY TELEPHONE OR THROUGH THE INTERNET BY FOLLOWING THE INSTRUCTIONS ON YOUR PROXY CARD WHETHER OR NOT YOU PLAN TO BE PRESENT AT THE MEETING. YOU MAY ALSO VOTE BY SIGNING THE ENCLOSED PROXY AND RETURNING IT IN THE ENCLOSED ENVELOPE. NO POSTAGE IS NECESSARY IF MAILED IN THE UNITED STATES. THE PROXY IS REVOCABLE AND WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU ATTEND THE MEETING.

 

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PROSPECTUS/PROXY STATEMENT

SEPTEMBER 15, 2016

Acquisition of the Assets and Liabilities of

API Efficient Frontier Value Fund

By and in Exchange for Shares of

API Capital Income Fund

each a series of

American Pension Investors Trust

2303 Yorktown Avenue

Lynchburg, Virginia 24501

(1-800-544-6060)

This Prospectus/Proxy Statement is being furnished to shareholders of the API Efficient Frontier Value Fund (the “Value Fund”), a series of American Pension Investors Trust (the “Trust”), in connection with a Meeting of Shareholders of the Value Fund (the “Meeting”) to be held at 10:00 a.m. Eastern Time on September 29, 2016, at the offices of the Trust’s investment adviser, Yorktown Management & Research Company, Inc. (“Yorktown”), 2303 Yorktown Avenue, Lynchburg, VA 24501. At the Meeting, shareholders of the Value Fund will be asked to approve an Agreement and Plan of Reorganization, pursuant to which the Value Fund will be reorganized into the API Capital Income Fund (the “Reorganization”). The Value Fund and the API Capital Income Fund (the “Capital Income Fund”) are referred to herein collectively as the “Funds” and individually as a “Fund.”

TABLE OF CONTENTS

 

I.   

GENERAL INFORMATION

     5   
II.   

INTRODUCTION

     6   
III.   

QUESTIONS AND ANSWERS REGARDING THE REORGANIZATION

     6   
IV.    PROPOSAL: REORGANIZATION OF THE API EFFICIENT FRONTIER VALUE FUND INTO THE API CAPITAL INCOME FUND      14   
V.   

OTHER INFORMATION

     18   
VI.   

VOTING INFORMATION

     19   
VII.   

FINANCIAL STATEMENTS AND EXPERTS

     21   
VIII.   

LEGAL MATTERS

     21   
IX.   

INFORMATION FILED WITH THE SEC

     21   
APPENDIX A:  

AGREEMENT AND PLAN OF REORGANIZATION

     22   
APPENDIX B:  

PRINCIPAL INVESTMENT STRATEGIES OF THE FUNDS

     33   
APPENDIX C:  

PRINCIPAL RISKS OF INVESTING IN THE FUNDS

     35   
PROXY     
PROSPECTUS OF VALUE FUND AND CAPITAL INCOME FUND      Provided Separately   

 

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I.

GENERAL INFORMATION

This Prospectus/Proxy Statement concisely sets forth information you should know before voting on the following proposal:

Proposal - To be Voted on by Shareholders of the Value Fund

Approval of the Agreement and Plan of Reorganization and related transactions that provide for the transfer of all of the assets of the Value Fund to the Capital Income Fund in exchange for shares of the Capital Income Fund and the assumption by the Capital Income Fund of the known liabilities of the Value Fund, and the distribution of such shares to shareholders in complete liquidation of the Value Fund, all as described in this Prospectus/Proxy Statement.

Please read this Prospectus/Proxy Statement carefully and keep it for future reference. This Prospectus/Proxy Statement and related proxy materials are first being made available to shareholders on or about September 19, 2016. Shareholders of record as of the close of business on July 25, 2016 are entitled to vote at the Meeting and any adjournments thereof.

Additional information concerning each Fund and the Reorganization is contained in the documents described below, all of which have been filed with the Securities and Exchange Commission (“SEC”) and are hereby incorporated by reference into this Prospectus/Proxy Statement to the extent allowed by the Securities Act of 1933 and Form N-14. A copy of the prospectus of the Value Fund and Capital Income Fund will be provided to you upon request

 

Information about the Value Fund and the Capital Income Fund

  

How to Obtain this Information

Prospectus of API Funds, dated May 31, 2016, as supplemented from time to time.

  

Copies are available upon request and without charge if you:

 

Visit www.apifunds.com on the Internet; or

 

Write to The API Funds

c/o Ultimus Asset Services, LLC

P.O. Box 46707

Cincinnati, Ohio 45246; or

Call 1-800-544-6060

Statement of Additional Information of API Funds, dated May 31, 2016, as supplemented from time to time.

  

Audited financial statements and related report of independent registered public accounting firm of API Funds included in the Annual Report to Shareholders for the fiscal year ended January 31, 2016.

  

Information about the Reorganization

 

Statement of Additional Information dated September 19, 2016 which relates to this Prospectus/Proxy Statement and the Reorganization.

  

Copies are available upon request and without charge if you:

 

Visit www.apifunds.com on the Internet; or

 

Write to API Funds

c/o Ultimues Asset Services, LLC

P.O. Box 46707

Cincinnati, Ohio 45246; or

 

Call 1-800-544-6060

All of the foregoing Fund documents can be viewed online or downloaded from the EDGAR database without charge on the SEC’s Internet site at www.sec.gov. Shareholders can review and copy information about the Funds by visiting the SEC’s Public Reference Room in Washington, D.C. 20549-1520. Shareholders can obtain copies, upon payment of a duplicating fee, by sending an e-mail request to publicinfo@sec.gov or by writing the Public Reference Section Washington D.C., 20549-1520. Information on the operation of the Public Reference Room may be obtained by calling 1-202-551-8090.

 

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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS/PROXY STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIME.

 

II.

INTRODUCTION

This Prospectus/Proxy Statement relates to the reorganization of the Value Fund into the Capital Income Fund. In the reorganization, all of the assets of the Value Fund will be acquired by the Capital Income Fund in exchange for shares of the Capital Income Fund. Following shareholder approval, shares of the Capital Income Fund will be distributed to the shareholders of the Value Fund in accordance with their respective percentage ownership interests in the Value Fund on the closing date, which is expected to be on or around October 10, 2016. The Value Fund will then be terminated. These events, collectively, are referred to in this Prospectus/Proxy Statement as the “Reorganization.”

It is intended that, as a result of the proposed Reorganization, each of the Value Fund’s shareholders will receive on a tax-free basis (for U.S. federal income tax purposes) a number of full and fractional shares of the Capital Income Fund with an aggregate net asset value equal to the aggregate net asset value of the shares of the Value Fund held by such shareholder immediately prior to the closing of the Reorganization.

Until the closing date, shareholders of the Value Fund will continue to be able to redeem their shares at the next determined share price after receipt of a redemption request in proper form by Ultimus Asset Services, LLC, the Fund’s transfer agent (the “Transfer Agent”). (See “How to Redeem Shares” in the Value Fund’s Prospectus dated May 31, 2016.) If the Reorganization is consummated, shareholders will be free to redeem shares of the Capital Income Fund they receive in the transaction at the next determined share price after receipt of a redemption request in proper form by the Transfer Agent.

Shareholders of the Value Fund are being asked to approve the Agreement and Plan of Reorganization. A copy of the form of Agreement and Plan of Reorganization is attached as Appendix A. By approving the Agreement and Plan of Reorganization, the Value Fund’s shareholders are approving the Reorganization, which includes the liquidation and termination of the Value Fund. The Agreement and Plan of Reorganization has been approved by the Board of Trustees of the Trust.

If the Value Fund’s shareholders do not approve the Reorganization, the Board of Trustees of the Trust will consider what other action, if any, should be taken in the best interests of the Value Fund and its shareholders. Possible alternatives to the Reorganization may include liquidating the Value Fund or the continued operation of the Fund.

 

III.

QUESTIONS AND ANSWERS REGARDING THE REORGANIZATION

The following questions and answers provide an overview of key features of the proposed Reorganization. Please call 1-800-544-6060 with any questions about the Reorganization or this Prospectus/Proxy Statement generally or to obtain a copy of the prospectus and statement of additional information of the Funds.

 

1.

Why is the Reorganization being proposed?

The Reorganization is being proposed in order to achieve operating efficiencies and lower operating expenses and to provide an opportunity for a more efficient investment management process. The Reorganization may benefit you by reducing operating expenses due to the spreading of fixed costs over a larger pool of assets. Your fund’s current operating expenses are expected to be reduced since the Capital Income Fund has a lower expense ratio than the Value Fund.

 

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2.

How do the Trustees recommend that I vote?

The Trustees of the Trust, including the Trustees who are not “interested persons,” as such term is defined in the Investment Company Act of 1940, as amended (the “1940 Act”), of the Trust (the “Independent Trustees”), have concluded that the Reorganization will be in the best interests of shareholders of the Value Fund and that their interests will not be diluted as a result of the Reorganization. Before approving the Agreement and Plan of Reorganization, the Trustees considered the similarities in the investment objectives and principal investment strategies of the Value Fund and the Capital Income Fund, as well as the other potential benefits (i.e. lower operating expenses) of the Reorganization to shareholders of the Value Fund. The Board of Trustees of the Trust believes that the completion of the proposed Reorganization will enable shareholders of the Value Fund to benefit from, among other things:

 

   

the fact that the expenses of the Capital Income Fund are expected to be generally lower than the expenses of the Value Fund; and

 

   

the potential to achieve operating efficiencies and economies of scale.

After careful consideration, the Board of Trustees of the Trust determined that the proposed Reorganization is in the best interests of the Value Fund and its shareholders. The Board strongly urges you to vote FOR approval of the Reorganization.

 

3.

How do the fees and expenses of the Capital Income Fund compare to those of the Value Fund, and what are they estimated to be following the Reorganization?

Each Fund offers Class A Shares, Class L Shares, and Institutional Class Shares. The shareholder fees for each Share Class are identical for both Funds and will not change after the reorganization. The shareholder fee table is set forth below:

 

Shareholder Fees

(fees paid directly from your investment)

   Class A    Class L    Institutional
Class

Maximum sales charge (load) imposed on purchases

(as percentage of offering price)

   5.75%    None    None

Maximum deferred sales charges (load)

(as a percentage of the lesser of original purchase price or redemption proceeds)

   1.00%(1)    None    None

Maximum Account fee (for accounts under $500)

   $25/yr    $25/yr    $25/yr

 

(1)

Large purchases of Class A shares (greater than $1million) are generally subject to a CDSC of 1.00% if the shares are redeemed during the first 18 months after purchase, unless the dealer, at its discretion, has waived the commision advance paid by the Distributor.

As shown in the expense tables below, the annual expense ratios for all share classes of the Capital Income Fund after the Reorganization are expected to be lower than or essentially equal to the annual expense ratios of each share class of the Value Fund.

The advisory fees accrued by the Value Fund during the most recently completed fiscal year were at the rate of 0.90% of the Fund’s average daily net assets; however the advisory fee paid by the Capital Income Fund was equal to 0.60% of the Fund’s average daily net assets.

The following tables show the fees and expenses of each Fund, by Share Class, for its most recently audited fiscal year as well as the pro forma fees and expenses for the Capital Income Fund, by Share Class, for its fiscal year ending January 31, 2017 assuming that the Reorganization occurs on September 10, 2016. The examples following the table will help you compare the cost of investing in each Share Class of the Value Fund with the

 

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estimated cost of investing in each Share Class of the Capital Income Fund (based on the pro forma fees and expenses) after the Reorganization.

EXPENSE EXAMPLE

CLASS A

 

Based on Fiscal Years Ended January 31:

   2016     2016     2017  
     Value Fund     Capital
Income Fund
    Pro Forma:
Capital Income
Fund
 

Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)

      

Management Fee

     0.90     0.60     0.60

Distribution/Service (12b-1) Fees (1)

     0.00     0.50     0.50

Other Expenses

     0.66     0.56     0.45

Acquired Fund Fees and Expenses (2)

     0.03     0.18     0.05

Total Annual Fund Operating Expenses

     1.59     1.84     1.60

 

(1)

Distribution/Service (12b-1) Fees are fees charged to the Fund for marketing and distribution activities primarily aimed at assisting in the sale of Fund shares. Class A shares of the Value Fund do not have 12b-1 fees. If the Value Fund is reorganized into the Capital Income Fund, Class A shareholders of the Value Fund would receive Class A shares of the Capital Income Fund, which are subject to 12b-1 fees. The effect of this action would be that the expenses for former Value Fund shareholders would increase. The Trust believes that the lower investment advisory fees and other savings resulting from economies of scale will likely offset the expense increase.

(2)

Acquired Fund Fees and Expenses are the indirect expenses incurred by a fund when it buys the securities of other mutual funds or other investment company securities. The Capital Income Fund’s Adviser believes that after the reorganization, the Capital Income Fund will not invest in other investment company securities to the extent it has done so in the past, due to the large influx of income producing securities from the Value Fund. As a result, these expenses are expected to decline significantly. However, the Capital Income Fund may liquidate certain investment company securities after the reorganization, which could have negative tax consequences to some shareholders.

EXPENSE EXAMPLE

CLASS L

 

Based on Fiscal Years Ended January 31:

   2016     2016     2017  
     Value Fund     Capital
Income Fund
    Pro Forma:
Capital Income
Fund
 

Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)

      

Management Fee

     0.90     0.60     0.60

Distribution/Service (12b-1) Fees

     0.90     1.00     1.00

Other Expenses

     0.66     0.56     0.45

Acquired Fund Fees and Expenses (2)

     0.03     0.18     0.05

Total Annual Fund Operating Expenses

     2.49     2.34     2.10

 

(2)

Acquired Fund Fees and Expenses are the indirect expenses incurred by a fund when it buys the securities of other mutual funds or other investment company securities. The Capital Income Fund’s Adviser believes that after the reorganization, the Capital Income Fund will not invest in other investment company securities

 

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to the extent it has done so in the past, due to the large influx of income producing securities from the Value Fund. As a result, these expenses are expected to decline significantly. However, the Capital Income Fund may liquidate certain investment company securities after the reorganization, which could have negative tax consequences to some shareholders.

EXPENSE EXAMPLE

INSTITUTIONAL CLASS

 

Based on Fiscal Years Ended January 31:

   2016     2016     2017  
     Value Fund     Capital
Income Fund
    Pro Forma:
Capital Income
Fund
 

Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)

      

Management Fee

     0.90     0.60     0.60

Distribution/Service (12b-1) Fees

     0.00     0.00     0.00

Other Expenses

     0.66     0.56     0.45

Acquired Fund Fees and Expenses (2)

     0.03     0.18     0.05

Total Annual Fund Operating Expenses

     1.59     1.34     1.10

 

(2)

Acquired Fund Fees and Expenses are the indirect expenses incurred by a fund when it buys the securities of other mutual funds or other investment company securities. The Capital Income Fund’s Adviser believes that after the reorganization, the Capital Income Fund will not invest in other investment company securities to the extent it has done so in the past, due to the large influx of income producing securities from the Value Fund. As a result, these expenses are expected to decline significantly. However, the Capital Income Fund may liquidate certain investment company securities after the reorganization, which could have negative tax consequences to some shareholders.

Expense Examples. The expense examples shown below are intended to help you compare the cost of investing in each Share Class of the Value Fund with the cost of investing in each Share Class of the Capital Income Fund. The examples assume that you invest $10,000 for the time periods indicated. The examples also assume that your investment has a 5% return each year and that each Fund’s operating expenses remain the same. All expense information is based on the information set forth in the expense table above, including pro forma expense information for the Capital Income Fund. Your actual costs may be higher or lower than those shown below.

 

     Class A Shares  
     Value Fund      Capital
Income Fund
     Pro Forma:
Capital Income
Fund
 

1 Year

   $ 727       $ 751       $ 728   

3 Years

   $ 1,048       $ 1,120       $ 1,051   

5 Years

   $ 1,391       $ 1,513       $ 1,396   

10 Years

   $ 2,356       $ 2,609       $ 2,366   

 

     Class L Shares  
     Value Fund      Capital
Income Fund
     Pro Forma:
Capital Income
Fund
 

1 Year

   $ 252       $ 237       $ 213   

3 Years

   $ 776       $ 730       $ 658   

5 Years

   $ 1,326       $ 1,250       $ 1,129   

10 Years

   $ 2,826       $ 2,676       $ 2,431   

 

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     Institutional Class Shares  
     Value Fund      Capital
Income Fund
     Pro Forma:
Capital Income
Fund
 

1 Year

   $ 162       $ 136       $ 112   

3 Years

   $ 502       $ 425       $ 350   

5 Years

   $ 866       $ 734       $ 606   

10 Years

   $ 1,889       $ 1,613       $ 1,340   

 

4.

How do the investment objectives and principal investment strategies of the Value Fund compare to those of the Capital Income Fund?

The Funds have similar investment objectives and principal investment strategies with respect to their equity investments, but the primary focus of their investment objectives is different. With respect to the differences between the investment objectives of the two Funds, the Value Fund concentrates on achieving growth of capital, with income as a secondary component. The Capital Income Fund, on the other hand, concentrates on achieving high current income, with growth of capital as a secondary component. As a result, the primary focus of the Funds is reversed.

The investment objectives of the Value Fund are growth of capital, as well as income. The Value Fund may invest in the common stock of U.S. and foreign issuers that the Adviser believes are undervalued in relation to the quality of the securities and the long-term earning power of their issuers, regardless of short-term indicators. The Value Fund may also invest in other U.S. and foreign securities, including securities convertible into common stock and securities issued through private placements; securities issued by Underlying Funds; ETF’s; real estate investment trusts and other issuers that invest, deal, or otherwise engage in transactions in real estate; and other instruments.

The investment objectives of the Capital Income Fund are high current income, as well as growth of capital and income. The Capital Income Fund may invest in the common stock of U.S. and foreign issuers and in other U.S. and foreign securities, including securities convertible into common stock and securities issued through private placements; securities issued by investment companies that seek to achieve an objective of total return by investing in income-producing equity securities (including dividend-paying common stocks and convertible securities), long-, intermediate- or short-term bonds and other fixed-income securities (such as U.S. Government securities, corporate bonds, commercial paper and preferred stocks); ETF’s; real estate investment trusts and other issuers that invest, deal, or otherwise engage in transactions in real estate; debt securities; and other instruments.

The process used by Yorktown to select equity investments for the Funds is substantially similar. Yorktown seeks financially strong companies that offer above average earnings and relatively modest valuations. Yorktown uses a multi-factor screening process within a defined universe to select investments for each Fund. The process emphasizes securities with the most compelling earnings and valuation profiles based upon a variety of characteristics, including earnings momentum, earnings volatility, earnings estimate revisions, earnings surprises and price/earnings ratios.

As of January 31, 2016, the portfolios of the Value Fund and the Capital Income Fund were structured as follows:

 

Security Type

   Value
Fund
    Capital
Income
Fund
 

Common Stocks

     88.0     88.7

Corporate Bonds and Notes

     —          0.9

Investment Companies

     12.1     10.2

Real Estate Investment Trusts

     —          0.2

 

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Although each Fund’s equity securities consist primarily of common stocks, each may invest a portion of its assets in other equity securities, including exchange-traded funds (“ETFs”), preferred stocks, convertible preferred stocks and convertible bonds that are rated at the time of purchase in the four highest grades assigned by a nationally recognized rating agency, or unrated securities determined by Yorktown to be of comparable quality. As of March 31, 2016, each Fund held one identical ETF. The ETF comprised 1.4% of the portfolio of the Value Fund and 2.0% of the portfolio of the Capital Income Fund. As of January 31, 2016, Fixed income securities (corporate bonds and notes) comprised nearly one percent of the Capital Income Fund, vs. no such holdings in the Value Fund. This difference highlights the different focus of the two Funds. Current income is a more important consideration for the Capital Income Fund- hence the additional holdings of fixed income securities.

A security may be sold by the Funds when it no longer meets Yorktown’s investment criteria, when there are more attractive investment opportunities or when the fundamentals of the issuer’s business or general market conditions have changed. For a description of each Fund’s portfolio investments, see the March 31, 2016 Annual Report for the API Funds.

For more information regarding the principal investment strategies of the Funds, see “Principal Investment Strategies” in Appendix B.

 

5.

How do the risks of investing in The API Efficient Frontier Value Fund compare to the risks of investing in The API Capital Income Fund?

Because the investment process for the selection of equity securities and the equity holdings as of January 31, 2016 for each are complementary for each Fund, they are both subject to many of the same risks associated with equity investments. The difference in risk characteristics between the Funds is that a portion of the Capital Income Fund’s portfolio consists of fixed income securities and is therefore subject to the risks associated with fixed income investments. The value of the fixed income securities held by the Capital Income Fund will fluctuate based on a variety of factors, including: interest rates, general bond market conditions, the maturity of the security and the creditworthiness of an issuer. Because the two Funds do not have identical investment strategies, shareholders must consider if the resulting investment in the Capital Income Fund is consistent with their investment objectives.

Each Fund is subject to the risk that you could lose all or a portion of the money you invest and there is no assurance that either Fund will achieve its investment objective(s). Upon redemption, an investment in either Fund may be worth less than its original cost. Each Fund, by itself, does not provide a complete investment program. Because the Funds are actively managed, they are subject to the risk that the investment strategies, techniques and risk analyses employed by Yorktown may not produce the desired results. Yorktown’s method of security selection may not be successful and could cause a Fund to underperform other funds with similar investment strategies. Also, because the Funds’ equity investment selections are chosen from a defined universe of the stocks in the S&P 500 Index and the 50 largest stocks in the S&P 400 MidCap Index, the Funds are subject to the risks of investing in larger capitalization companies. Larger capitalization companies may be unable to respond quickly to new competitive challenges, such as changes in technology and consumer tastes, and may not be able to attain the high growth rate of successful smaller companies, especially during extended periods of economic expansion.

For more information regarding the principal risks of the Funds, see “Principal Risks” in Appendix C.

 

6.

What is the performance record of the Funds?

The following charts show the past performance record of each Fund for the past ten calendar years. The charts give you an indication of the risks and variability of investing in the Funds by showing how their performance has varied from year to year. Each Fund can also experience short-term performance swings as indicated in the high and low quarter information at the bottom of each chart. How a Fund has performed in the past is not

 

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necessarily an indication of how the Fund will perform in the future. Updated performance information, current to the most recent month-end, is available by calling 1-800-544-6060.

 

Year by year annual returns for
calendar years ending on December 31

   Value Fund
Class L Shares
   Capital Income Fund
Class L Shares

2006

   +11.05%    20.06%

2007

   +10.16%    10.60%

2008

   -50.33%    -41.48%

2009

   +35.54%    37.94%

2010

   +20.125    14.75%

2011

   -7.46%    -0.25%

2012

   +9.23%    10.58%

2013

   +31.50%    18.28%

2014

   +2.37%    2.82%

2015

   -3.72%    -4.55%

Best Quarter

   +22.01% (09/30/2009)    +23.96% (6/30/09)

Worst Quarter

   -33.98% (12/31/2008)    -27.96% (12/31/08)

 

Average Annual Total Returns for the Value Fund’s Class L Shares

(for periods ending on December 31, 2015)

   One Year     Five Years     Ten Years  

Return Before Taxes

     (3.72 )%      5.55     2.63

Return After-Taxes on Distributions (1)

     (3.72 )%      5.55     2.14

Return After-Taxes on Distributions and Sale of Fund Shares (1)

     (2.10 )%      4.33     2.21

MSCI World Free GTR Index (2)

(reflects no deduction for fees, expenses or taxes)

     (0.32 )%      8.19     5.56

 

Average Annual Total Returns for the Capital Fund’s Class L Shares

(for periods ending on December 31, 2015)

   One Year     Five Years     Ten years  

Return Before Taxes

     (4.55 )%      5.07     4.65

Return After-Taxes on Distributions (1)

     (6.19 )%      4.12     3.73

Return After-Taxes on Distributions and Sale of Fund Shares (1)

     (1.77 )%      3.67     3.50

MSCI World Free GTR Index (2)

(reflects no deduction for fee, expenses or taxes)

     (0.32 )%      8.19     5.56

 

(1)

After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor’s tax situation and may differ from those shown. After-tax returns shown are not relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts. After-Tax Returns are shown for only Class L Shares. After-tax returns for Class A and Institutional Class Shares will vary.

(2)

The MSCI World Free GTR USD is a free float-adjusted market capitalization index that is designed to measure global developed market equity performance. As of May 31,2016 the MSCIWorld Index consisted of the following 23 developed market country indices Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Hong Kong, Ireland, Israel, Italy, Japan, Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, the United Kingdom and the United States.

For a detailed discussion of the manner of calculating total return, please see the Funds’ Statement of Additional Information. Generally, the calculations of total return assume the reinvestment of all dividends and capital gains distributions on the reinvestment date and the deduction of all recurring expenses that were charged to shareholder accounts.

Important information about the Funds’ performance is also contained in the Letter to Shareholder section of the API Funds’ most recent annual report.

 

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7.

Will I Be Able to Purchase, Exchange and Redeem Shares and Receive Distributions the Same Way?

The Reorganization will not affect your right to purchase and redeem shares, to exchange shares and to receive distributions. After the Reorganization, you will be able to purchase additional shares, redeem shares, and receive distributions of the Capital Income Fund in the same manner as you did for your shares of the Value Fund before the Reorganization. The minimum initial investment in each Fund is $1,000 for Class A and Class L shares, and $1,000,000 for Institutional Class Shares. The minimum additional investment in the Funds is $100 for Class A and Class L Shares and $100,000 for Institutional Class Shares, These requirements will remain the same following the Reorganization.

After the Reorganization, shareholders who receive shares of the Capital Income Fund in connection with the Reorganization will be able to purchase additional shares of the Capital Income Fund, subject to the rights and restrictions currently in place for the Funds.

 

8.

Who will be the Investment Adviser and Portfolio Managers of the Capital Income Fund after the Reorganization?

Yorktown is the investment adviser to each of the Funds. Yorktown is responsible for furnishing an investment program for the Funds, making the day-to-day investment decisions and arranging the execution of portfolio transactions. Yorktown is located at 2303 Yorktown Avenue, Lynchburg, Virginia 24501 and has approximately $1.0 billion of assets under management as of May 31, 2016. The controlling shareholder of Yorktown is David D. Basten, who is a founding partner, President and Chief Investment Officer of Yorktown.

The co-portfolio managers for both Funds are David M. Basten, Brentz East, and Michael Dixon. Yorktown and the portfolio managers listed above will continue to manage the Capital Income Fund in their same capacities following the Reorganization.

The business experience of the portfolio managers for the Capital Income Fund is described below:

 

   

Mr. David D. Basten currently serves as Chief Investment Officer and President of Yorktown and has been with the firm since 1985. Mr. Basten has been a co-portfolio manager of the Capital Income Fund since its inception. Mr. Basten has been an investment professional for over forty years.

 

   

Mr. David M. Basten, is a Managing Director of Yorktown and has been with the firm since 2005. Mr. Basten has served as a co-portfolio manager since 2005 and prior to that held various positions at the Adviser, including as a securities analyst.

 

   

Mrs. Brentz East has served as portfolio manager since 2011 and prior to that held various positions at the Adviser, including as a securities analyst.

 

   

Mr. Michael Dixon has served as portfolio manager since 2012 and prior to that was an account manager with the firm Flippin, Bruce, & Porter, Inc., from May, 2002 to 2012. Mr. Dixon has over fifteen years of experience in the financial services industry.

 

9.

How do the advisory fees of the Value Fund compare to those of the Capital Income Fund?

The Funds have very different advisory fee rates. The advisory fee payable to the Adviser for the Value Fund is 0.90%, calculated at an annual rate of the average daily net assets for the Fund. The advisory fee payable to the Adviser for the Capital Income Fund is 0.60%, calculated at an annual rate of the average daily net assets for the Fund. During the fiscal year ended January 31, 2016, the Value Fund paid advisory fees equal to 0.90% of its average daily net assets and the Capital Income Fund paid advisory fees equal to 0.60% of its average daily net assets.

 

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10.

What shares of the Capital Income Fund will shareholders of the Value Fund receive if the Reorganization occurs?

Shareholders of the Value Fund will receive shares of the Capital Income Fund in an amount equal to the aggregate net asset value of the Value Fund shares exchanged therefor. Whichever Share Class of the Value Fund are owned by the shareholder prior to the reorganization, the shareholder will own the same Share Class after the reorganization.

 

11.

What are the U.S. federal income tax consequences of the Reorganization?

The Reorganization is intended to be a tax-free reorganization for U.S. federal income tax purposes. This means that neither the Value Fund nor shareholders of the Value Fund are expected to recognize a gain or loss directly as a result of the Reorganization. It should be noted, however, that the Value Fund may make one or more distributions to shareholders prior to the closing of the Reorganization. Any such distribution generally will be taxable to shareholders as ordinary income or a capital gain.

The adjusted tax basis of the Value Fund’s shares is expected to carry over to shareholders’ new shares in the Capital Income Fund that are received in the Reorganization in exchange for those Value Fund shares, and the holding period in the shares of the Capital Income Fund received is expected to be determined by including the holding period of those Value Fund shares, provided that the shareholder held those Value Fund shares as capital assets on the date of the Reorganization.

At any time prior to the consummation of the Reorganization, a shareholder may redeem shares, resulting in recognition of gain or loss for U.S. federal income tax purposes if the shares are held in a taxable account. Please see “U.S. Federal Income Tax Consequences,” below for additional information.

 

12.

Who will pay the Expenses of the Reorganization?

Yorktown has agreed to pay all costs and expenses in connection with the Reorganization, which include the cost of preparing, printing and mailing this Prospectus/Proxy Statement and all other costs in connection with the Reorganization. Shareholders of the Value Fund will not bear the costs of the Reorganization, except they will bear the cost of any brokerage fees and expenses incurred as a result of selling securities held by the Value Fund prior to the Reorganization. Yorktown will pay all of the expenses of the Reorganization, even in the event the Reorganization is not consummated.

 

IV.

PROPOSAL: REORGANIZATION OF THE API EFFICIENT FRONTIER VALUE FUND INTO THE API CAPITAL INCOME FUND

Introduction. This Prospectus/Proxy Statement is furnished in connection with the solicitation of proxies from shareholders of the Value Fund by and on behalf of the Board of Trustees of the Trust for use at the Meeting.

Terms of the Proposed Reorganization. Shareholders of the Value Fund are being asked to vote for the approval of the Agreement and Plan of Reorganization. If approved by the Value Fund’s shareholders, the Reorganization is expected to occur on or around September 10, 2016, or such other date as the parties may agree, under the Agreement and Plan of Reorganization (the “Closing Date”). If the Agreement and Plan of Reorganization is not approved by the shareholders of the Value Fund, the Board of Trustees of the Trust will consider what other action, if any, should be taken in the best interests of the Value Fund and its shareholders. Possible alternatives to the Reorganization may include liquidating the Value Fund or the continued operation of the Fund.

The following is a brief summary of the principal terms of the Agreement and Plan of Reorganization. This summary is qualified in its entirety by the form of Agreement and Plan of Reorganization attached to this

 

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Prospectus/Proxy Statement as Appendix A. You should read Appendix A for a more complete understanding of the Agreement and Plan of Reorganization.

 

   

The Value Fund will transfer all of its assets and known liabilities to the Capital Income Fund in exchange for shares of the Capital Income Fund with an aggregate net asset value equal to the net asset value of the transferred assets and liabilities.

 

   

The assets and liabilities of the Value Fund and the Capital Income Fund will be valued as of the close of regular trading on the New York Stock Exchange on the business day immediately preceding the Closing Date, using the valuation policies and procedures of the Trust.

 

   

The shares of the Capital Income Fund received by the Value Fund will be distributed to the shareholders of the Value Fund in an amount equal to the aggregate net asset value of the Value Fund shares exchanged therefor, in full liquidation of the Value Fund.

 

   

As part of the Reorganization, the Value Fund’s affairs will be wound up, and the Value Fund will be terminated under state law.

The Reorganization requires approval by shareholders of the Value Fund and satisfaction of a number of other conditions. The Reorganization may be terminated at any time under certain other circumstances.

The API Capital Income Fund Shares. If the Reorganization occurs, shareholders of the Value Fund will receive shares of the Capital Income Fund in an amount equal to the aggregate net asset value of the Value Fund shares exchanged therefor. The Capital Income Fund shares that a Value Fund shareholder will receive will have the following characteristics:

 

   

They will have an aggregate net asset value equal to the aggregate net asset value of a shareholder’s shares of the Value Fund as of the business day before the closing of the Reorganization, as determined using the Trust’s valuation policies and procedures.

 

   

The procedures for purchasing and redeeming a shareholder’s shares will not change as a result of the Reorganization.

 

   

Shareholders will have voting and other rights the same as those they currently have, but as shareholders of the Capital Income Fund.

Factors Considered by the Board of Trustees of the Trust

The Reorganization will combine two series of the Trust having similar investment objectives and investment policies into one series and is designed to achieve operating efficiencies due to the spreading of fixed costs over a larger pool of assets. At a regular meeting held on June 15, 2016, all of the Trustees of the Trust, including the Independent Trustees, considered and approved the Reorganization. They determined that the Reorganization was in the best interests of existing shareholders of the Value Fund and that their interests would not be diluted as a result of the transaction contemplated by the Reorganization.

Before approving the Agreement and Plan of Reorganization, the Trustees evaluated extensive information provided by management of the Trust and reviewed various factors about the Funds and the proposed Reorganization. The Trustees considered the relative asset size of the Value Fund, including the benefits of combining the assets of the Value Fund and the Capital Income Fund to create a larger combined entity. As of July 31, 2016, the total assets of the Value Fund were $20,234,741 and the total assets of the Capital Income Fund were $32,233,926. If the Reorganization were completed as of that date, the Capital Income Fund would have total assets of approximately $52,468,667.

The Trustees considered that the operating expenses of the Capital Income Fund upon completion of the Reorganization are projected to be less than those of the Value Fund. The Trustees considered the similarities of

 

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the Funds’ investment processes, objectives and strategies and their portfolios, noting that as of January 31, 2016, the Funds had complementary equity security holdings. The Trustees further considered the performance records of the Funds and noted that the annualized performance of the Capital Income Fund for the 5-, and 10-year periods ended December 31, 2015 was higher than that of Value Fund. The Value Fund slightly outperformed the Capital Income Fund for the 1-year period ended December 31, 2015.

In addition, the Trustees considered, among other things:

 

   

The terms and conditions of the Reorganization;

 

   

The fact that the Reorganization would not result in the dilution of shareholders’ interests;

 

   

The expense ratios, fees and expenses of the Value Fund and the anticipated expense ratios, fees and expenses of the Capital Income Fund which are projected to be lower than the Value Fund;

 

   

The comparative performance information, including the overall performance results of the Capital Income Fund during the past 10 calendar years;

 

   

The investment objective and policies of each Fund;

 

   

The composition of each Fund’s portfolio and the ability of shareholders of the Value Fund to obtain fixed-income exposure from investments in the Capital Income Fund;

 

   

The investment personnel, expertise and resources of Yorktown;

 

   

The fact that the Reorganization will provide continuity in the investment process for shareholders of the Value Fund because Yorktown is also the investment adviser for the Capital Income Fund;

 

   

The fact that Yorktown will bear all of the expenses incurred by the Value Fund and the Capital Income Fund in connection with the Reorganization;

 

   

The potential benefits to shareholders, including operating efficiencies that may be achieved from the Reorganization;

 

   

The fact that the Capital Income Fund will assume all of the known liabilities of the Value Fund;

 

   

The fact that the Reorganization is expected to be a tax-free transaction for Federal income tax purposes; and

 

   

The fact that shareholders of the Value Fund will continue to have the ability to redeem their shares prior to the Reorganization.

After reviewing the foregoing factors, the Trustees of the Trust, in their business judgment, determined that the Reorganization is in the best interests of the Value Fund’s shareholders. The Trustees of the Trust have also approved the Agreement and Plan of Reorganization on behalf of the Capital Income Fund. A vote of shareholders of the Capital Income Fund is not needed to approve the Reorganization. The Trustees did not place any specific emphasis on any one factor when considering the proposed reorganization. Instead, the Trustees approved the reorganization based on the totality of factors indicating that it would be in the shareholders’ best interest to do so.

U.S. Federal Income Tax Consequences

The Reorganization is intended to be a tax-free reorganization for U.S. federal income tax purposes. Sullivan & Worcester LLP, counsel to the Trust, will deliver to the Capital Income Fund and the Value Fund an opinion, and the closing of the Reorganization will be conditioned on receipt of such an opinion, substantially to the effect that, while the matter is not entirely free from doubt, on the basis of existing provisions of the Internal Revenue

 

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Code of 1986, as amended (the “Code”), the Treasury regulations promulgated thereunder, current administrative rules, pronouncements, and court decisions, for U.S. federal income tax purposes:

 

   

The Reorganization will constitute a reorganization within the meaning of Section 368(a) of the Code, and the Value Fund and the Capital Income Fund will each be a “party to a reorganization” within the meaning of Section 368(b) of the Code;

 

   

Under Code Section 361, no gain or loss will be recognized by the Value Fund (i) upon the transfer of its assets to the Capital Income Fund in exchange for shares of the Capital Income Fund and the assumption by the Capital Income Fund of the known liabilities of the Value Fund or (ii) upon the distribution of shares of the Capital Income Fund by the Value Fund to its shareholders in liquidation;

 

   

Under Code Section 354, no gain or loss will be recognized by shareholders of the Value Fund upon the exchange of all of their Fund shares for shares of the Capital Income Fund in the Reorganization;

 

   

Under Code Section 358, the aggregate tax basis of shares of the Capital Income Fund to be received by each Value Fund shareholder in exchange for his or her Fund shares in the Reorganization will be the same as the aggregate tax basis of the Value Fund shares exchanged therefor;

 

   

Under Section 1223(1) of the Code, the Value Fund shareholder’s holding period for shares of the Capital Income Fund to be received pursuant to the Reorganization will be determined by including the holding period for the Value Fund shares exchanged therefor, provided that the shareholder held those Fund shares as a capital asset on the date of the exchange;

 

   

Under Code Section 1032, no gain or loss will be recognized by the Capital Income Fund upon receipt of the assets of the Value Fund pursuant to the Reorganization in exchange for the assumption by the Capital Income Fund of the known liabilities of the Value Fund and issuance of shares of the Capital Income Fund;

 

   

Under Code Section 362(b), the tax basis of the assets that the Capital Income Fund acquires from the Value Fund in the Reorganization will be the same as the Value Fund’s tax basis of such assets immediately prior to such transfer;

 

   

Under Code Section 1223(2), the holding period for the assets that the Capital Income Fund receives from the Value Fund in the Reorganization will include the periods during which such assets were held by the Value Fund; and

 

   

The Capital Income Fund will succeed to and take into account all items of the Value Fund described in Code Section 381(c) subject to the conditions and limitations specified in Code Sections 381, 382, 383, and 384 and the Treasury regulations thereunder.

The Sullivan & Worcester LLP opinion will be based on certain factual certifications made by officers of the Trust and will also be based on customary assumptions. The opinion is not a guarantee that the tax consequences of the Reorganization will be as described above. There is no assurance that the Internal Revenue Service (“IRS”) or a court would agree with Sullivan & Worcester’s opinion. An opinion of counsel is not binding upon the IRS or the courts. If the Reorganization were consummated but did not qualify as a tax-free reorganization under the Code, a shareholder of the Value Fund would recognize a taxable gain or loss equal to the difference between his or her tax basis in his or her Value Fund shares and the fair market value of the shares of the Capital Income Fund he or she received in the Reorganization.

Although the Reorganization is expected to be tax-free for shareholders, the Value Fund may make one or more distributions to shareholders prior to the closing of the Reorganization. Any such distribution generally will be taxable to shareholders as ordinary income or a capital gain.

This description of the U.S. federal income tax consequences of the Reorganization is made without regard to the particular facts and circumstances of any shareholder. Shareholders are urged to consult their own tax advisors as to the specific consequences to them of the Reorganization, including the applicability and effect of state, local, non-U.S., and other tax laws.

 

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V.

OTHER INFORMATION

Form of Organization. The Trust is an open-end management investment company registered with the SEC under the 1940 Act that continuously offers shares to the public. The Trust is organized as a Massachusetts business trust and is governed by its Agreement and Declaration of Trust, as amended, and its By-laws under applicable Massachusetts and federal laws. The Trust currently consists of eight series, including the Funds. The Capital Income Fund is classified as a diversified fund, and the Value Fund is classified as a non-diversified fund

Service Providers. The following table identifies certain of the service providers for the Funds, prior to and following the proposed Reorganization. The address of the Distributor is 225 Pictoria Drive, Suite 450, Cincinnati Ohio 45246.

 

(Both Funds)

  

Distributor:

     Unified Financial Securities, LLC   

Transfer Agent:

     Ultimus Asset Services, LLC   

Custodian:

     Huntington Bank, N.A.   

Independent Registered Public Accountant:

     Tait, Weller & Baker   

Financial Intermediary Compensation. If you purchase shares of the Capital Income Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund and its related companies may pay the intermediary for the sale of Fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information.

Portfolio Turnover. Each Fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over”) its portfolio. A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the expense example shown under “How do the Fees and Expenses of the Capital Income Fund compare to those of the Value Fund, and what are they estimated to be following the Reorganization?” affect each Fund’s performance. During the fiscal year ended January 31, 2016, the portfolio turnover rate was 30% for the Value Fund and 30% for the Capital Income Fund. The portfolio turnover rate of the Capital Income Fund is not expected to exceed 100% annually.

Existing and Pro Forma Capitalization. The following table shows on an unaudited basis as of January 31, 2016: (i) the capitalization of the Value Fund and the Capital Income Fund and (ii) on an unaudited basis as of January 31, 2016, the pro forma capitalization of the Capital Income Fund, as adjusted giving effect to the proposed Reorganization.

 

     Value Fund      Capital
Income Fund
     Pro
Forma
Adjustments
     API Capital
Income Fund
Pro Forma

Combined
 

Net asset value:

           

Class A

   $ 14,220,842       $ 5,503,854               $ 19,724,696   

Class L

   $ 7,626,322       $ 9,364,249               $ 16,990,571   

Institutional Class

   $ 1,414,214       $ 18,373,930               $ 19,788,144   

Shares outstanding:

           

Class A

     876,215         141,839         (509,695      508,359   

Class L

     523,485         248,415         (321,173      450,727   

Institutional Class

     84,720         464,266         (48,995      499,991   

Net asset value per share:

           

Class A

     16.23         38.80            38.80   

Class L

     14.57         37.70            37.70   

Institutional Class

     16.69         39.58            39.58   

 

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The capitalization of the Value Fund, and consequently the pro forma capitalization of the Capital Income Fund, is likely to be different at the effective time of the Reorganization as a result of market movements and daily share purchase and redemption activity, as well as the effects of other ongoing operations of the Value Fund prior to the completion of the Reorganization.

THE BOARD OF TRUSTEES OF THE TRUST RECOMMENDS THAT SHAREHOLDERS OF THE API EFFICIENT FRONTIER VALUE FUND APPROVE THE AGREEMENT AND PLAN OF REORGANIZATION.

 

VI.

VOTING INFORMATION

Record Date. The Board of Trustees of Trust has fixed the close of business on July 25, 2016 (the “Record Date”) as the record date for the determination of shareholders entitled to notice of, and to vote at, the Meeting and at any postponements or adjournments thereof.

As of the Record Date, the number of outstanding shares of the Value Fund entitled to vote was 1,195,314.301. All full shares are entitled to one vote, with proportional voting for fractional shares.

5% Shareholders. As of the Record Date, the Trustees and officers of the Trust owned less than 1% of the outstanding shares of the Value Fund. As of the Record Date, the following shareholders owned of record five percent or more of the Value Fund:

 

Account Name & Address

   Share
Class
     Total Shares      % of Share
Class
 

National Financial Services, LLC FBO Client Accts.

7 Easton Oval # EA4E70

Columbus, OH 43219

     A         520,891.174         75.87

Pershing, LLC, FBO Client Accts

1 Pershing Plaza

Jersey City, NJ 07399-002

     A         63,812.610         9.29

Wallace Huff DDS, Inc.

3708 S. Main Street, Suite C

Blacksburg, VA 24060

     L         50,525.563         10.73

Pershing, LLC, FBO Client Accts

1 Pershing Plaza

Jersey City, NJ 07399-002

     L         50,959.038         10.82

Charles Mann TTEE

930 Tahoe Blvd. 802 521

Incline Village, NV 89451

     I         16,137.433         42.69

LPL Financial FBO Client Accounts

4707 Executive Drive

San Diego, CA 92121

     I         7,868.248         20.81

Tracy D. Wilkins

6254 Chestnut Ridge Road

Riner, VA 24149

     I         3,650.098         9.66

Pershing, LLC, FBO Client Accts

1 Pershing Plaza

Jersey City, NJ 07399-002

     I         3,126.954         8.27

 

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Required Vote for the Proposal

Quorum; Adjournments. A quorum is the number of shares legally required to be at a meeting in order to conduct business. The presence, in person or by proxy, of the holders of a majority of the outstanding shares of the Value Fund entitled to vote is necessary to constitute a quorum at the Meeting. Proxies properly executed and marked with a negative vote or an abstention will be considered to be present at the Meeting for purposes of determining the existence of a quorum for the transaction of business. If the Meeting is called to order but a quorum is not present at the Meeting, the persons named as proxies may vote those proxies that have been received to adjourn the Meeting to a later date. If a quorum is present at the Meeting but sufficient votes to approve the Reorganization are not received, the persons named as proxies may propose one or more adjournments of the Meeting to permit further solicitation of proxies. Any such adjournment will require the affirmative vote of a majority of those shares represented at the Meeting in person or by proxy. The persons named as proxies will vote those proxies received that voted in favor of the Reorganization in favor of such an adjournment as to the Reorganization and will vote those proxies received that voted against the Reorganization against any such adjournment.

The vote of a majority of the outstanding shares of the Value Fund entitled to vote is required to approve the Reorganization.

Abstentions and “broker non-votes” are counted for purposes of determining whether a quorum is present but do not represent votes cast with respect to the Reorganization. “Broker non-votes” are shares held by a broker or nominee for which an executed proxy is received by the Trust, but are not voted because instructions have not been received from the beneficial owners or persons entitled to vote and the broker or nominee does not have discretionary voting power. Accordingly, abstentions and “broker non-votes” will effectively be a vote against the Reorganization, for which the required vote is a percentage of the outstanding voting shares and will have no effect on a vote for adjournment.

The Trustees of the Trust intend to vote all of their shares in favor of the Reorganization. If shareholders of the Value Fund do not approve the Reorganization, the Board of Trustees of the Trust may consider possible alternative arrangements in the best interests of the Value Fund and its shareholders.

Voting Process. Shareholders can vote in either of the following ways:

 

   

By mail, by filling out and returning the enclosed proxy card;

 

   

By automated telephone service (call the toll-free number listed on your proxy card);

 

   

By voting through the Internet (at the address listed on your proxy card); or

 

   

In person at the Meeting.

The Internet and telephone voting procedures are designed to authenticate shareholder identities, to allow shareholders to give their voting instructions, and to confirm that shareholders’ instructions have been recorded properly. Proxies may be revoked at any time before they are voted either (i) by a written revocation received by the Secretary of the Trust, (ii) by properly executing a later-dated proxy, or (iii) by attending the Meeting and voting in person. If you choose to vote by mail and you are an individual account owner, please sign exactly as your name appears on the proxy card. Either owner of a joint account may sign the proxy card, but the signer’s name must exactly match the name that appears on the card.

Costs of Reorganization. Yorktown has agreed to pay all costs and expenses in connection with the Reorganization, which include the cost of preparing, printing and mailing this Prospectus/Proxy Statement and all other costs in connection with the Reorganization. Shareholders of the Value Fund will not bear the costs of the Reorganization, except they will bear the cost of any brokerage fees and expenses incurred as a result of any selling of securities held by the Value Fund prior to the Reorganization; however, we do not believe that any

 

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such costs and expenses will be incurred. Yorktown will pay all of the expenses of the Reorganization, even in the event the Reorganization is not consummated.

The Trust has retained AST Fund Solutions to solicit proxies for the Meeting. AST Fund Solutions is responsible for printing proxy cards, mailing proxy material to shareholders, soliciting broker-dealer firms, custodians, nominees and fiduciaries, tabulating the returned proxies and performing other proxy solicitation services. The anticipated cost of these services is approximately $12,000 and will be paid by Yorktown.

Other Business. The Meeting has been called to transact any business that properly comes before it. The only business that management of the Value Fund intends to present or knows that others will present is the Proposal to approve the Agreement and Plan of Reorganization. If any other matters properly come before the Meeting, and on all matters incidental to the conduct of the Meeting, the persons named as proxies intend to vote the proxies in accordance with their judgment, unless the Secretary of Trust has previously received written contrary instructions from the shareholder entitled to vote the shares.

 

VII.

FINANCIAL STATEMENTS AND EXPERTS

The Annual Report to Shareholders of the Trust relating to the API Funds for the year ended January 31, 2016, including the financial statements and financial highlights for periods indicated therein, audited by Tait, Weller & Baker, independent registered public accounting firm, has been incorporated by reference herein in reliance on their report given on the authority of said firm as experts in accounting and auditing.

 

VIII.

LEGAL MATTERS

Certain legal matters concerning the issuance of shares of the Capital Income Fund will be passed upon by Sullivan & Worcester LLP, counsel to the Trust.

 

IX.

INFORMATION FILED WITH THE SEC

Additional information about the Capital Income Fund is included in the Statement of Additional Information dated August 26, 2016, relating to this Prospectus/Proxy Statement, which has been filed with the SEC under the Securities Act of 1933. A copy of the Statement of Additional Information relating to this Prospectus/Proxy Statement may be obtained without charge by calling 1-800-544-6060.

Proxy material, reports, proxy and information statements, registration statements and other information filed by the Trust can be inspected and copied (for a duplication fee) at the SEC’s public reference facilities located at 100 F Street, N.E., Washington, D.C. 20549, or at the SEC’s Midwest Regional Office (175 W. Jackson Boulevard, Suite 900, Chicago, IL 60604). You may obtain copies of this information, with payment of a duplication fee, by electronic request at the following e-mail address: publicinfo@sec.gov, or by writing the SEC’s Public Reference Branch, Office of Consumer Affairs and Informational Services, SEC, Washington, D.C. 20549 or by calling 1-202-551-8090. You may also access reports and other information about the Fund on the EDGAR database on the SEC’s Internet site at http://www.sec.gov.

 

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APPENDIX A: AGREEMENT AND PLAN OF REORGANIZATION

THIS AGREEMENT AND PLAN OF REORGANIZATION (the “Agreement”) is made as of this 29th day of September, 2016, by and among American Pension Investors Trust, a Massachusetts business trust, with its principal place of business at 2303 Yorktown Avenue, Lynchburg, VA 24501 (the “Trust”), with respect to the API Capital Income Fund (the “Acquiring Fund”), and the Trust with respect to the API Efficient Frontier Value Fund (the “Acquired Fund”), and Yorktown Research and Management Company, Inc., a Virginia corporation with its principal place of business at 2303 Yorktown Avenue, Lynchburg, VA 24501 (for purposes of Sections 9.1, 9.2 and 11.2 of the Agreement only).

This Agreement is intended to be and is adopted as a “plan of reorganization” within the meaning of the regulations under Section 368(a)(1)(F) of the United States Internal Revenue Code of 1986, as amended. The reorganization (the “Reorganization”) will consist of (i) the transfer of all of the assets of the Acquired Fund in exchange solely for shares of beneficial interest, without par value, of the Acquiring Fund (the “Acquiring Fund Shares”); (ii) the assumption by the Acquiring Fund of all of the known liabilities of the Acquired Fund; and (iii) the distribution, after the Closing Date hereinafter referred to, of the Acquiring Fund Shares to the shareholders of the Acquired Fund in liquidation of the Acquired Fund as provided herein, all upon the terms and conditions hereinafter set forth in this Agreement.

WHEREAS, the Acquiring Fund is a separate series of the Trust, an open-end, registered investment company of the management type under the Investment Company Act of 1940, as amended (“1940 Act”);

WHEREAS, the Acquired Fund is a separate series of the Trust, an open-end, registered investment company of the management type under the 1940 Act and the Acquired Fund owns securities that generally are assets of the character in which the Acquiring Fund is permitted to invest;

WHEREAS, the Acquired Fund and the Acquiring Fund are authorized to issue their shares of beneficial interest;

WHEREAS, the Trustees of the Trust have determined that the transactions contemplated herein will be in the best interests of the Acquiring Fund and its shareholders and that the interests of the existing shareholders of the Acquiring Fund will not be diluted as a result of the transactions contemplated herein;

WHEREAS, the Trustees of the Trust have determined that the Acquired Fund should exchange all of its assets and known liabilities for Acquiring Fund Shares and that the interests of the existing shareholders of the Acquired Fund will not be diluted as a result of the transactions contemplated herein;

NOW, THEREFORE, in consideration of the premises and of the covenants and agreements hereinafter set forth, the parties hereto covenant and agree as follows:

ARTICLE I

TRANSFER OF ASSETS OF THE ACQUIRED FUND IN EXCHANGE FOR THE ACQUIRING FUND SHARES AND ASSUMPTION OF ACQUIRED FUND KNOWN LIABILITIES AND LIQUIDATION OF THE ACQUIRED FUND

1.1 THE EXCHANGE. Subject to the terms and conditions herein set forth and on the basis of the representations and warranties contained herein, the Acquired Fund agrees to transfer all of the Acquired Fund’s assets as set forth in paragraph 1.2 to the Acquiring Fund. The Acquiring Fund agrees in exchange for the Acquired Fund’s assets (i) to deliver to the Acquired Fund the number of Acquiring Fund Shares, including fractional Acquiring Fund Shares, computed in the manner and as of the time and date set forth in paragraphs 2.2 and 2.3; and (ii) to assume the known liabilities of the Acquired Fund, as set forth in paragraph 1.3. Such transactions shall take place on the Closing Date provided for in paragraph 3.1.

 

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1.2 ASSETS TO BE ACQUIRED. The assets of the Acquired Fund to be acquired by the Acquiring Fund shall consist of all property, including, without limitation, all cash, securities, commodities, interests in futures and dividends or interest receivables, that is owned by the Acquired Fund and any deferred or prepaid expenses shown as an asset on the books of the Acquired Fund on the Closing Date.

The Acquired Fund has provided the Acquiring Fund with its most recent audited financial statements, which contain a list of all of the Acquired Fund’s assets as of the date thereof. The Acquired Fund hereby represents that as of the date of the execution of this Agreement there have been no material changes in its financial position as reflected in said financial statements other than those occurring in the ordinary course of its business in connection with the purchase and sale of securities and the payment of its normal operating expenses. The Acquired Fund reserves the right to sell any of such securities, but will not, without the prior written approval of the Acquiring Fund, acquire any additional securities other than securities of the type in which the Acquiring Fund is permitted to invest.

The Acquiring Fund will, within a reasonable time prior to the Closing Date, furnish the Acquired Fund with a list of the securities, if any, on the Acquired Fund’s list referred to in the second sentence of this paragraph that do not conform to the Acquiring Fund’s investment objectives, policies, and restrictions and the Acquired Fund will dispose of its fixed income securities and any other such securities prior to the Closing Date. The Acquired Fund will, within a reasonable period of time prior to the Closing Date, furnish the Acquiring Fund with a list of its portfolio securities and other investments. If it is determined that the Acquired Fund and the Acquiring Fund portfolios, when aggregated, would contain investments exceeding certain percentage limitations imposed upon the Acquiring Fund with respect to such investments, the Acquired Fund if requested by the Acquiring Fund will dispose of a sufficient amount of such investments as may be necessary to avoid violating such limitations as of the Closing Date. Notwithstanding the foregoing, nothing herein will require the Acquired Fund to dispose of any investments or securities if, in the reasonable judgment of the Acquired Fund, such disposition would violate the Acquired Fund’s fiduciary duty to its shareholders.

1.3 LIABILITIES TO BE ASSUMED. The Acquired Fund will endeavor to discharge all of its known liabilities and obligations prior to the Closing Date. The Acquiring Fund shall assume all of the Acquired Fund’s known liabilities and obligations reflected in the Acquired Fund’s net asset value as of the Closing Date.

1.4 LIQUIDATION AND DISTRIBUTION. On or as soon after the Closing Date as is conveniently practicable (the “Liquidation Date”),

(a) the Acquired Fund will liquidate and distribute pro rata to the Acquired Fund’s shareholders of record, determined as of the close of business on the Valuation Date, hereinafter referred to (the “Acquired Fund Shareholders”), the Acquiring Fund Shares received by the Acquired Fund pursuant to paragraph 1.1; and (b) the Acquired Fund will thereupon proceed to terminate as set forth in paragraph 1.8 below. Such liquidation and distribution will be accomplished by the transfer of the Acquiring Fund Shares then credited to the account of the Acquired Fund on the books of the Acquiring Fund to open accounts on the share records of the Acquiring Fund in the names of the Acquired Fund shareholders and representing the respective pro rata number of the Acquiring Fund Shares due such shareholders. All issued and outstanding shares of the Acquired Fund will simultaneously be canceled on the books of the Acquired Fund. The Acquiring Fund shall not issue certificates representing the Acquiring Fund Shares in connection with such exchange.

1.5 OWNERSHIP OF SHARES. Ownership of Acquiring Fund Shares will be shown on the books of the Acquiring Fund’s transfer agent. Shares of the Acquiring Fund will be issued in the manner described in the Prospectus/Proxy Statement which will be distributed to shareholders of the Acquired Fund as described in paragraph 4.1(o).

1.6 TRANSFER TAXES. Any transfer taxes payable upon issuance of the Acquiring Fund Shares in a name other than the registered holder of the Acquired Fund shares on the books of the Acquired Fund as of that time shall, as a condition of such issuance and transfer, be paid by the person to whom such Acquiring Fund Shares are to be issued and transferred.

 

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1.7 REPORTING RESPONSIBILITY. Any reporting responsibility of the Acquired Fund is and shall remain the responsibility of the Acquired Fund up to and including the Closing Date and such later date on which the Acquired Fund is terminated.

1.8 TERMINATION. The Trust shall take all necessary and appropriate steps under applicable law to terminate the Acquired Fund promptly following the Closing Date and the making of all distributions pursuant to paragraph 1.4.

ARTICLE II

VALUATION

2.1 VALUATION OF ASSETS. The value of the Acquired Fund’s assets to be acquired by the Acquiring Fund hereunder shall be the value of such assets computed as of the close of business on the business day next preceding the Closing Date (such time and date being hereinafter called the “Valuation Date”), using the valuation procedures set forth in the Trust’s Agreement and Declaration of Trust (“Declaration of Trust”) and the Acquired Fund’s then current prospectus and statement of additional information or such other valuation procedures as shall be mutually agreed upon by the parties.

2.2 VALUATION OF SHARES. The net asset value per share of the Acquiring Fund Shares shall be the net asset value per share computed as of the close of business on the New York Stock Exchange on the Valuation Date, using the valuation procedures set forth in the Trust’s Declaration of Trust and the Acquiring Fund’s then current prospectus and statement of additional information.

2.3 SHARES TO BE ISSUED. The number of full and fractional Acquiring Fund Shares to be issued in exchange for the Acquired Fund’s assets shall be determined by multiplying the outstanding shares of the Acquired Fund by the ratio computed by dividing the net asset value per share of the Acquired Fund by the net asset value per share of the Acquiring Fund on the Valuation Date, determined in accordance with paragraph 2.2. Shares of the Acquiring Fund will be issued for shares of the Acquired Fund.

2.4 DETERMINATION OF VALUE. All computations of value of the Acquiring Fund shall be made by Yorktown Research & Management Company, Inc. the administrator of the Acquiring Fund and the Acquired Fund, in accordance with its regular practice in pricing the shares and assets of the Acquiring Fund and the Acquired Fund.

ARTICLE III

CLOSING AND CLOSING DATE

3.1 CLOSING DATE. The closing of the Reorganization (the “Closing”) shall take place on or about October 10, 2016 or such other date as the parties may agree to in writing (the “Closing Date”). All acts taking place at the Closing shall be deemed to take place simultaneously immediately prior to the opening of business on the Closing Date unless otherwise provided. The Closing shall be held as of 9 AM a.m. Eastern Time at the offices of Ultimus Asset Services, LLC, or at such other time and/or place as the parties may agree.

3.2 EFFECT OF SUSPENSION IN TRADING. In the event that on the Valuation Date (a) the New York Stock Exchange or another primary trading market for portfolio securities of the Acquiring Fund or the Acquired Fund shall be closed to trading or trading thereon shall be restricted; or (b) trading or the reporting of trading on said Exchange or elsewhere shall be disrupted so that accurate appraisal of the value of the net assets of the Acquiring Fund or the Acquired Fund is impracticable, the Valuation Date (and the Closing Date) shall be postponed until the first business day after the day when trading shall have been fully resumed and reporting shall have been restored.

 

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3.3 TRANSFER AGENT’S CERTIFICATE. The Acquired Fund shall cause its transfer agent to deliver at the Closing a certificate of an authorized officer stating that its records contain the names and addresses of the Acquired Fund Shareholders and the number and percentage ownership of outstanding shares owned by each such shareholder immediately prior to the Closing. The Acquiring Fund shall issue and deliver, or cause its transfer agent, to issue and deliver, to the Secretary of the Trust a confirmation evidencing the Acquiring Fund Shares to be credited on the Closing Date or provide evidence satisfactory to the Acquired Fund that such Acquiring Fund Shares have been credited to the Acquired Fund’s account on the books of the Acquiring Fund. At the Closing, each party shall deliver to the other such bills of sale, checks, assignments, share certificates, if any, receipts and other documents as such other party or its counsel may reasonably request.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

4.1 REPRESENTATIONS OF THE ACQUIRED FUND. The Acquired Fund represents and warrants to the Acquiring Fund as follows:

(a) The Acquired Fund is a separate investment series of the Trust, a business trust duly organized, validly existing, and in good standing under the laws of Massachusetts.

(b) The Trust is registered as an investment company classified as a management company of the open-end type, and its registration with the U.S. Securities and Exchange Commission (the “Commission”) as an investment company under the 1940 Act is in full force and effect.

(c) The current prospectus and statement of additional information of the Acquired Fund conform in all material respects to the applicable requirements of the Securities Act of 1933, as amended (the “1933 Act”), and the 1940 Act and the rules and regulations of the Commission thereunder and do not include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.

(d) The Acquired Fund is not, and the execution, delivery, and performance of this Agreement will not result, in violation of any material provision of the Trust’s Declaration of Trust or By-Laws or of any material agreement, indenture, instrument, contract, lease, or other undertaking to which the Acquired Fund is a party or by which it is bound.

(e) The Acquired Fund has no material contracts or other commitments (other than this Agreement) that will be terminated with liability to it prior to the Closing Date, except for liabilities, if any, to be discharged as provided in paragraph 1.3 hereof.

(f) Except as otherwise disclosed in writing to and accepted by the Acquiring Fund, no litigation, administrative proceeding, or investigation of or before any court or governmental body is presently pending or to its knowledge threatened against the Acquired Fund or any of its properties or assets, which, if adversely determined, would materially and adversely affect its financial condition, the conduct of its business, or the ability of the Acquired Fund to carry out the transactions contemplated by this Agreement. The Acquired Fund knows of no facts that might form the basis for the institution of such proceedings and is not a party to or subject to the provisions of any order, decree, or judgment of any court or governmental body that materially and adversely affects its business or its ability to consummate the transactions herein contemplated.

(g) The audited financial statements of the Acquired Fund at January 31, 2016 are in accordance with generally accepted accounting principles consistently applied, and such statements (copies of which have been furnished to the Acquiring Fund) fairly reflect the financial condition of the Acquired Fund as of such date, and there are no known contingent liabilities of the Acquired Fund as of such date not disclosed therein.

 

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(h) Since May 31, 2016, there has not been any material adverse change in the Acquired Fund’s financial condition, assets, liabilities, or business other than changes occurring in the ordinary course of business, or any incurrence by the Acquired Fund of indebtedness maturing more than one year from the date such indebtedness was incurred, except as otherwise disclosed in writing to and accepted in writing by the Acquiring Fund. For the purposes of this subparagraph (h), a decline in the net asset value of the Acquired Fund shall not constitute a material adverse change.

(i) At the Closing Date, all federal and other tax returns and reports of the Acquired Fund required by law to have been filed by such date shall have been filed, and all federal and other taxes shown due on said returns and reports shall have been paid, or provision shall have been made for the payment thereof. To the best of the Acquired Fund’s knowledge, no such return is currently under audit, and no assessment has been asserted with respect to such returns.

(j) For each fiscal year of its operation, the Acquired Fund has met the requirements of Subchapter M of the Code for qualification and treatment as a regulated investment company and has distributed in each such year all net investment income and realized capital gains.

(k) All issued and outstanding shares of the Acquired Fund are, and at the Closing Date will be, duly and validly issued and outstanding, fully paid and non-assessable by the Acquired Fund. All of the issued and outstanding shares of the Acquired Fund will, at the time of the Closing Date, be held by the persons and in the amounts set forth in the records of the transfer agent as provided in paragraph 3.3. The Acquired Fund does not have outstanding any options, warrants, or other rights to subscribe for or purchase any of the Acquired Fund shares, nor is there outstanding any security convertible into any of the Acquired Fund shares.

(l) At the Closing Date, the Acquired Fund will have good and marketable title to the Acquired Fund’s assets to be transferred to the Acquiring Fund pursuant to paragraph 1.2 and full right, power, and authority to sell, assign, transfer, and deliver such assets hereunder, and, upon delivery and payment for such assets, the Acquiring Fund will acquire good and marketable title thereto, subject to no restrictions on the full transfer thereof, including such restrictions as might arise under the 1933 Act, other than as disclosed in writing to the Acquiring Fund and accepted in writing by the Acquiring Fund.

(m) The execution, delivery, and performance of this Agreement have been duly authorized by all necessary action on the part of the Acquired Fund and, subject to approval by the Acquired Fund’s shareholders, this Agreement constitutes a valid and binding obligation of the Acquired Fund, enforceable in accordance with its terms, subject as to enforcement, to bankruptcy, insolvency, reorganization, moratorium, and other laws relating to or affecting creditors’ rights and to general equity principles.

(n) The information furnished by the Acquired Fund for use in no-action letters, applications for orders, registration statements, proxy materials, and other documents that may be necessary in connection with the transactions contemplated hereby is accurate and complete in all material respects and complies in all material respects with federal securities and other laws and regulations thereunder applicable thereto, to the best of the Acquired Fund’s knowledge.

(o) The Acquired Fund has provided the Acquiring Fund with information reasonably necessary for the preparation of a Prospectus/Proxy Statement, in compliance with the 1933 Act, the Securities Exchange Act of 1934, as amended (the “1934 Act”) and the 1940 Act. The Prospectus/Proxy Statement (other than information therein that relates to the Acquiring Fund) does not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which such statements were made, not misleading.

 

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4.2 REPRESENTATIONS OF THE ACQUIRING FUND. The Acquiring Fund represents and warrants to the Acquired Fund as follows:

(a) The Acquiring Fund is a separate investment series of the Trust, a business trust duly organized, validly existing and in good standing under the laws of Massachusetts.

(b) The Trust is registered as an investment company classified as a management company of the open-end type, and its registration with the Commission as an investment company under the 1940 Act is in full force and effect.

(c) The Acquiring Fund is not, and the execution, delivery and performance of this Agreement will not result, in violation of the Trust’s Declaration of Trust or By-Laws or of any material agreement, indenture, instrument, contract, lease, or other undertaking to which the Acquiring Fund is a party or by which it is bound.

(d) Except as otherwise disclosed in writing to the Acquired Fund and accepted by the Acquired Fund, no litigation, administrative proceeding or investigation of or before any court or governmental body is presently pending or to its knowledge threatened against the Acquiring Fund or any of its properties or assets, which, if adversely determined, would materially and adversely affect its financial condition and the conduct of its business or the ability of the Acquiring Fund to carry out the transactions contemplated by this Agreement. The Acquiring Fund knows of no facts that might form the basis for the institution of such proceedings and is not a party to or subject to the provisions of any order, decree, or judgment of any court or governmental body that materially and adversely affects its business or its ability to consummate the transactions contemplated herein.

(e) The audited financial statements of the Acquiring Fund at January 31, 2016 are in accordance with generally accepted accounting principles consistently applied, and such statements (copies of which have been furnished to the Acquired Fund) fairly reflect the financial condition of the Acquiring Fund as of such date, and there are no known contingent liabilities of the Acquiring Fund as of such date not disclosed therein.

(f) Since May 31, 2016, there has not been any material adverse change in the Acquiring Fund’s financial condition, assets, liabilities, or business other than changes occurring in the ordinary course of business, or any incurrence by the Acquiring Fund of indebtedness maturing more than one year from the date such indebtedness was incurred, except as otherwise disclosed in writing to and accepted in writing by the Acquired Fund. For the purposes of this subparagraph (h), a decline in the net asset value of the Acquiring Fund shall not constitute a material adverse change.

(g) For each fiscal year of its operations, the Acquiring Fund has met the requirements of Subchapter M of the Code for qualification and treatment as a “regulated investment company” and has distributed in each such year all net investment income and realized capital gains.

(h) All issued and outstanding Acquiring Fund Shares are, and at the Closing Date will be, duly and validly issued and outstanding, fully paid and non-assessable. The Acquiring Fund does not have outstanding any options, warrants, or other rights to subscribe for or purchase any Acquiring Fund Shares, nor is there outstanding any security convertible into any Acquiring Fund Shares.

(i) The execution, delivery, and performance of this Agreement have been duly authorized by all necessary action on the part of the Acquiring Fund, and this Agreement constitutes a valid and binding obligation of the Acquiring Fund enforceable in accordance with its terms, subject as to enforcement, to bankruptcy, insolvency, reorganization, moratorium, and other laws relating to or affecting creditors’ rights and to general equity principles.

(j) The Acquiring Fund shares to be issued and delivered to the Acquired Fund, for the account of the Acquired Fund shareholders, pursuant to the terms of this Agreement will, at the Closing Date, have been duly authorized and, when so issued and delivered, will be duly and validly issued Acquiring Fund Shares, and will be fully paid and non-assessable.

 

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(k) The information furnished by the Acquiring Fund for use in no-action letters, applications for orders, registration statements, proxy materials, and other documents that may be necessary in connection with the transactions contemplated hereby is accurate and complete in all material respects and complies in all material respects with federal securities and other laws and regulations applicable thereto.

(l) The Prospectus/Proxy Statement (only insofar as it relates to the Acquiring Fund) does not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which such statements were made, not misleading.

(m) The Acquiring Fund agrees to use all reasonable efforts to obtain the approvals and authorizations required by the 1933 Act, the 1940 Act, and such of the state Blue Sky or securities laws as it may deem appropriate in order to continue its operations after the Closing Date.

ARTICLE V

COVENANTS OF THE ACQUIRING FUND AND THE ACQUIRED FUND

5.1 OPERATION IN ORDINARY COURSE. The Acquiring Fund and the Acquired Fund each will operate its business in the ordinary course between the date hereof and the Closing Date, it being understood that such ordinary course of business will include customary dividends and distributions and that the Acquired Fund will will declare and pay dividends as contemplated by Section 8.4.

5.2 INVESTMENT REPRESENTATION. The Acquired Fund covenants that the Acquiring Fund Shares to be issued hereunder are not being acquired for the purpose of making any distribution thereof other than in accordance with the terms of this Agreement.

5.3 ADDITIONAL INFORMATION. The Acquired Fund will assist the Acquiring Fund in obtaining such information as the Acquiring Fund reasonably requests concerning the beneficial ownership of the Acquired Fund shares.

5.4 SHAREHOLDER MEETING. The Trust will call a meeting of the shareholders of the Acquired Fund to be held prior to the Closing Date to consider and act upon this Agreement and take all other reasonable action necessary to obtain the required shareholder approval of the transactions contemplated hereby.

5.5 FURTHER ACTION. Subject to the provisions of this Agreement, the Acquiring Fund and the Acquired Fund will each take, or cause to be taken, all action, and do or cause to be done, all things reasonably necessary, proper or advisable to consummate and make effective the transactions contemplated by this Agreement, including any actions required to be taken after the Closing Date.

ARTICLE VI

CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED FUND

The obligations of the Acquired Fund to consummate the transactions provided for herein shall be subject, at its election, to the performance by the Acquiring Fund of all the obligations to be performed by it hereunder on or before the Closing Date, and, in addition thereto, the following further conditions:

6.1 All representations and warranties of the Acquiring Fund contained in this Agreement shall be true and correct as of the date hereof and as of the Closing Date with the same force and effect as if made on and as of the Closing Date, and the Acquiring Fund shall have delivered to the Acquired Fund a certificate executed in its name by the President or Vice President of the Acquiring Fund, in form and substance reasonably satisfactory to the Acquired Fund and dated as of the Closing Date, to such effect and as to such other matters as the Acquired Fund shall reasonably request.

 

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ARTICLE VII

CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND

The obligations of the Acquiring Fund to complete the transactions provided for herein shall be subject, at its election, to the performance by the Acquired Fund of all the obligations to be performed by it hereunder on or before the Closing Date and, in addition thereto, the following conditions:

7.1 All representations and warranties of the Acquired Fund contained in this Agreement shall be true and correct as of the date hereof and as of the Closing Date with the same force and effect as if made on and as of the Closing Date and the Acquired Fund shall have delivered to the Acquiring Fund on the Closing Date a certificate executed in its name by the President or Vice President of the Acquired Fund, in form and substance satisfactory to the Acquiring Fund and dated as of the Closing Date, to such effect and as to such other matters as the Acquiring Fund shall reasonably request.

7.2 The Acquired Fund shall have delivered to the Acquiring Fund a statement of the Acquired Fund’s assets and liabilities, together with a list of the Acquired Fund’s portfolio securities showing the tax costs of such securities by lot and the holding periods of such securities, as of the Closing Date, certified by the Treasurer or Assistant Treasurer of the Trust.

ARTICLE VIII

FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF

THE ACQUIRING FUND AND THE ACQUIRED FUND

If any of the conditions set forth below do not exist on or before the Closing Date with respect to the Acquired Fund or the Acquiring Fund, the other party to this Agreement shall, at its option, not be required to consummate the transactions contemplated by this Agreement:

8.1. This Agreement and the transactions contemplated herein shall have been approved by the requisite vote of the holders of the outstanding shares of the Acquired Fund in accordance with the provisions of the Trust’s Agreement and Declaration of Trust and By-laws and certified copies of the resolutions evidencing such approval shall have been delivered to the Acquiring Fund. Notwithstanding anything herein to the contrary, neither the Acquiring Fund nor the Acquired Fund may waive the conditions set forth in this paragraph 8.1

8.2 On the Closing Date, the Commission shall not have issued an unfavorable report under Section 25(b) of the 1940 Act, nor instituted any proceeding seeking to enjoin the consummation of the transactions contemplated by this Agreement under Section 25(c) of the 1940 Act and no action, suit or other proceeding shall be threatened or pending before any court or governmental agency in which it is sought to restrain or prohibit, or obtain damages or other relief in connection with, this Agreement or the transactions contemplated herein.

8.3 All required consents of other parties and all other consents, orders, and permits of federal, state and local regulatory authorities (including those of the Commission and of state Blue Sky securities authorities, including any necessary “no-action” positions of and exemptive orders from such federal and state authorities) to permit consummation of the transactions contemplated hereby shall have been obtained, except where failure to obtain any such consent, order, or permit would not involve a risk of a material adverse effect on the assets or properties of the Acquiring Fund or the Acquired Fund, provided that either party hereto may for itself waive any of such conditions.

8.4 The Acquired Fund shall have declared a dividend or dividends which, together with all previous such dividends shall have the effect of distributing to the Acquiring Fund Shareholders all of the Acquired Fund’s investment company taxable income for all taxable periods ending on the Closing Date (computed without regard to any deduction for dividends paid) and all of the net capital gains realized in all taxable periods ending on the Closing Date (after reduction for any capital loss carryforward).

 

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8.5 The Trust shall have received a favorable opinion of Sullivan & Worcester LLP addressed to the Acquiring Fund and the Acquired Fund substantially to the effect that, while the matter is not entirely free from doubt, for federal income tax purposes:

(a) The transfer of all of the Acquired Fund assets in exchange solely for the Acquiring Fund Shares and the assumption by the Acquiring Fund of the liabilities of the Acquired Fund followed by the distribution of the Acquiring Fund Shares to the Acquired Fund Shareholders in dissolution and liquidation of the Acquired Fund will constitute a reorganization within the meaning of Section 368(a)(1)(C) of the Code, and the Acquiring Fund and the Acquired Fund will each be a “party to a reorganization” within the meaning of Section 368(b) of the Code;

(b) No gain or loss will be recognized by the Acquiring Fund upon the receipt of the assets of the Acquired Fund solely in exchange for the Acquiring Fund Shares and the assumption by the Acquiring Fund of the liabilities of the Acquired Fund;

(c) No gain or loss will be recognized by the Acquired Fund upon the transfer of the Acquired Fund assets to the Acquiring Fund in exchange for the Acquiring Fund Shares and the assumption by the Acquiring Fund of the liabilities of the Acquired Fund or upon the distribution (whether actual or constructive) of the Acquiring Fund Shares to the Acquired Fund Shareholders in exchange for their shares of the Acquired Fund;

(d) No gain or loss will be recognized by the Acquired Fund Shareholders upon the exchange of their Acquired Fund shares for the Acquiring Fund Shares in liquidation of the Acquired Fund;

(e) The aggregate tax basis for the Acquiring Fund Shares received by each Acquired Fund Shareholder pursuant to the Reorganization will be the same as the aggregate tax basis of the Acquired Fund shares held by such Shareholder immediately prior to the Closing, and the holding period of the Acquiring Fund Shares received by each Acquired Fund Shareholder will include the period during which the Acquired Fund shares exchanged therefor were held by such Shareholder (provided the Acquired Fund shares were held as capital assets on the date of the Closing).

(f) The tax basis of the Acquired Fund assets acquired by the Acquiring Fund will be the same as the tax basis of such assets to the Acquired Fund immediately prior to the Closing, and the holding period of the assets of the Acquired Fund in the hands of the Acquiring Fund will include the period during which those assets were held by the Acquired Fund.

(g) The Acquiring Fund will succeed to and take into account all items of the Acquired Fund described in Code Section 381(c) subject to the conditions and limitations specified in Code Sections 381, 382, 383 and 384 and the Treasury regulations thereunder.

ARTICLE IX

EXPENSES

9.1 Except as otherwise provided for herein, all expenses of the transactions contemplated by this Agreement incurred by the Acquired Fund and the Acquiring Fund, whether incurred before or after the date of this Agreement, will be borne by Yorktown Research & Management Company, Inc., the investment adviser to the Acquired Fund and the Acquiring Fund. Such expenses include, without limitation, (a) expenses incurred in connection with the entering into and the carrying out of the provisions of this Agreement; (b) expenses associated with the preparation and filing of the Prospectus/Proxy Statement covering the Acquiring Fund Shares to be issued pursuant to the provisions of this Agreement; (c) postage; (d) printing; (e) accounting fees; (f) legal fees; and (g) solicitation costs of the transaction. Notwithstanding the foregoing, the Acquired Fund shall pay its own federal and state registration fees.

 

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9.2 Yorktown Research & Management Company, Inc., the Acquiring Fund and the Acquired Fund represent and warrant that there are no brokers or finders entitled to receive any payments in connection with the transactions provided for herein, other than any brokerage fees and expenses incurred in connection with the purchase and sale of portfolio securities in connection with the Reorganization.

ARTICLE X

ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES

10.1 The Acquiring Fund and the Acquired Fund agree that neither party has made any representation, warranty or covenant not set forth herein as to the subject matter of this Agreement and that this Agreement constitutes the entire agreement between the parties.

10.2 The representations, warranties, and covenants contained in this Agreement or in any document delivered pursuant hereto or in connection herewith shall not survive the consummation of the transactions contemplated hereunder.

ARTICLE XI

TERMINATION

11.1 This Agreement may be terminated by the mutual agreement of the Acquiring Fund and the Acquired Fund. In addition, either the Acquiring Fund or the Acquired Fund may at its option terminate this Agreement at or prior to the Closing Date because:

(a) of a breach by the other of any representation, warranty, or agreement contained herein to be performed at or prior to the Closing Date, if not cured within 30 days of notice thereof; or

(b) a condition herein expressed to be precedent to the obligations of the terminating party has not been met and it reasonably appears that it will not or cannot be met in all material respects.

11.2 In the event of any such termination, in the absence of gross negligence or willful default, there shall be no liability for damages on the part of the Acquiring Fund, the Acquired Fund, the Trust or its Trustees or officers, to the other party, and Yorktown shall bear the expenses incidental to the preparation and carrying out of this Agreement as provided in paragraph 9.1.

ARTICLE XII

AMENDMENTS

12.1 This Agreement may be amended, modified, or supplemented in such manner as may be mutually agreed upon in writing by the authorized officers of the Trust; provided, however, that following the meeting of shareholders of the Acquired Fund pursuant to paragraph 5.4 of this Agreement, no such amendment may have the effect of changing the provision for determining the number of the Acquiring Fund Shares to be issued to the Acquired Fund Shareholders under this Agreement to the detriment of such Acquired Fund Shareholders without their further approval.

ARTICLE XIII

HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT

13.1 The Article and paragraph headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

 

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13.2 This Agreement may be executed in any number of counterparts, each of which shall be deemed an original.

13.3 This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts, without giving effect to the conflicts of law’s provisions thereof.

13.4 This Agreement shall bind and inure to the benefit of the parties hereto and their respective successors and assigns, but no assignment or transfer hereof or of any rights or obligations hereunder shall be made by any party without the written consent of the other party. Nothing herein expressed or implied is intended or shall be construed to confer upon or give any person, firm, or corporation, other than the parties hereto and their respective successors and permitted assigns, any rights or remedies under or by reason of this Agreement.

13.5 With respect to the Trust, the name used herein refers respectively to the trust created and, as the case may be, the Trustees, as trustees but not individually or personally, acting from time to time under organizational documents filed in Massachusetts, which are hereby referred to and are also on file at the principal offices of the Trust. The obligations of the Trust entered into in the name or on behalf thereof by any of the Trustees, representatives or agents of the Trust, are made not individually, but in such capacities, and are not binding upon any of the Trustees, shareholders or representatives of the Trust personally, but bind only the trust property, and all persons dealing with the Acquired Fund and the Acquiring Fund must look solely to the trust property belonging to the Acquired Fund and the Acquiring Fund for the enforcement of any claims against the Acquired Fund and the Acquiring Fund, respectively. The API Efficient Frontier Value Fund and The API Capital Income Fund are each investment series of the Trust and the parties acknowledge and agree that all acknowledgements, agreements, representations and warranties made by the Funds in this Agreement are made by the Trust on behalf of the Funds.

IN WITNESS WHEREOF, the parties have duly executed this Agreement, all as of the date first written above.

 

American Pension Investors Trust, on behalf of the API Efficient Frontier Value Fund     American Pension Investors Trust, on behalf of the API Capital Income Fund
BY:         BY:    
 

Name: David D. Basten

Title: President, The API Efficient Frontier Value Fund

     

Name: David D. Basten

Title: President, The API Capital Income Fund

Yorktown Management & Research Company, Inc.    
BY:          
 

Name: David M. Basten

Title: Managing Director

     

(As to Sections 9.1, 9.2 and 11.2 only)

 

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APPENDIX B: PRINCIPAL INVESTMENT STRATEGIES OF THE FUNDS

The API Capital Income Fund and The API Efficient Frontier Value Fund

Each Fund’s equity securities consists primarily of common stocks in a variety of companies, industries and economic sectors. In selecting equity securities for the Funds, Yorktown seeks financially strong, companies that offer above average earnings and relatively modest valuations. Yorktown uses a multi-factor screening process within a defined universe comprised of the stocks. The process emphasizes securities with the most compelling earnings and valuation profiles based upon a variety of characteristics, including earnings momentum, earnings volatility, earnings estimate revisions, earnings surprises and price/earnings ratios.

Each Fund may also invest a portion of its assets in other equity securities, including exchange- traded funds (“ETFs”), preferred stocks, convertible preferred stocks and convertible bonds that are rated at the time of purchase in the four highest grades assigned by a nationally recognized rating agency, or unrated securities determined by Yorktown to be of comparable quality. The Funds may invest in shares of ETFs if Yorktown believes it is advisable to adjust the Funds’ exposure to the broad market or to industry sectors without purchasing a large number of individual securities. Such ETFs will typically hold a portfolio of securities designed to track the performance of a particular index or market sector.

An security may be sold when it no longer meets Yorktown’s investment criteria, when there are more attractive investment opportunities, or when the fundamentals of the issuer’s business or general market conditions have changed

The API Capital Income Fund

The Capital Income Fund invests in securities that, in the Adviser’s opinion, offer the opportunity for high current income or growth of capital and income.

The Capital Income Fund may invest in the common stock of U.S. and foreign issuers and in other U.S. and foreign securities, including securities convertible into common stock and securities issued through private placements; securities issued by Underlying Funds that seek to achieve an objective of total return by investing in income-producing equity securities (including dividend-paying common stocks and convertible securities), long-, intermediate- or short-term bonds and other fixed-income securities (such as U.S. Government securities, corporate bonds, commercial paper and preferred stocks); ETF’s; real estate investment trusts and other issuers that invest, deal, or otherwise engage in transactions in real estate; debt securities; and other instruments.

The Adviser invests directly in equity or debt securities when it believes attractive investment opportunities exist. Attractive investments are securities that have been identified by the Adviser as trading below their current intrinsic value and that possess fundamental attributes that, in the Adviser’s opinion, indicate significant long term growth and income potential. Although the Adviser considers ratings in determining whether securities convertible into common stock or debt securities are appropriate investments for the Capital Income Fund, such securities may include investments rated below investment grade, commonly known to as “junk bonds.” When investing in Underlying Funds, the Adviser considers, among other things, the Underlying Funds’ past performance and their investment objectives and policies, the investment style, reputation and quality of their investment advisers and the Underlying Funds’ size and cost structure. The Adviser selects ETF’s in which to invest based on a number of factors, including an analysis of their past performance, market sector and liquidity. Through direct investments and indirect investments in Underlying Funds, and ETF’s, the Capital Income Fund may have significant exposure to foreign securities, high yield securities and equity-based, income producing securities.

The Adviser may sell a security or redeem shares of an Underlying Fund given a variety of circumstances, such as: when an investment no longer appears to the Adviser to offer the potential to achieve the Capital Income Fund’s investment objective; when an investment’s performance does not meet the Adviser’s expectations; when an investment opportunity arises that the Adviser believes is more compelling; to realize gains or limit losses; or to raise cash to meet shareholder redemptions or to pay expenses.

 

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The Fund may, from time to time, take temporary defensive positions that are inconsistent with the Fund’s principal investment strategies in attempting to respond to adverse market, economic, political, or other conditions. When the Fund takes a defensive position, the Fund’s assets may be held in cash and/or invested in money market mutual funds, money market instruments, including repurchase agreements or other short term securities considered by the Adviser to be of a defensive nature. When the Fund is invested in this manner, it may not achieve its investment objective.

The API Efficient Frontier Value Fund

The Value Fund invests in securities that, in the Adviser’s opinion, offer the opportunity for growth of capital and income.

The Value Fund may invest in the common stock of U.S. and foreign issuers that the Adviser believes are undervalued in relation to the quality of the securities and the long-term earning power of their issuers, regardless of short-term indicators. The Value Fund may also invest in other U.S. and foreign securities, including securities convertible into common stock and securities issued through private placements; securities issued by Underlying Funds; ETF’s; real estate investment trusts and other issuers that invest, deal, or otherwise engage in transactions in real estate; and other instruments.

The Adviser invests directly in equity or debt securities when it believes attractive investment opportunities exist. The Adviser believes that investing in temporarily depressed securities of sound, well-managed companies provides a greater potential for overall investment return than investing in securities selling at prices that reflect anticipated favorable developments. Securities may be undervalued because of many factors, including general market decline, earnings decline, poor economic conditions, tax losses or actual or anticipated unfavorable developments affecting the issuer. In selecting securities for investment, the Adviser focuses on securities with prices comparing favorably to historical or current price-earnings ratios, book value, return on equity, or the prospects for the companies in question. Although the Adviser considers ratings in determining whether securities convertible into common stock or debt securities are appropriate investments for the Value Fund, such securities may include investments rated below investment grade, commonly known as “junk bonds.” The Value Fund also may engage in leverage by borrowing up to one-third of the value of its net assets for investment purposes, in accordance with the provisions of the Investment Company Act of 1940, as amended (“1940 Act”).

When investing in Underlying Funds, the Adviser considers, among other things, the Underlying Funds’ past performance and their investment objectives and policies, the investment style, reputation and quality of their investment advisers and the Underlying Funds’ size and cost structure. The Adviser selects ETF’s in which to invest based on a number of factors, including an analysis of their past performance, market sector and liquidity. Through direct investments and indirect investments in Underlying Funds, and ETF’s, the Value Fund may have significant exposure to foreign securities, including emerging market securities, small-cap securities and specific sectors of the market.

The Adviser may sell a security or redeem shares of an Underlying Fund given a variety of circumstances, such as: when an investment no longer appears to the Adviser to offer the potential to achieve the Value Fund’s investment objective; when an investment’s performance does not meet the Adviser’s expectations; when an investment opportunity arises that the Adviser believes is more compelling; to realize gains or limit losses; or to raise cash to meet shareholder redemptions or to pay expenses.

The Fund may, from time to time, take temporary defensive positions that are inconsistent with the Fund’s principal investment strategies in attempting to respond to adverse market, economic, political, or other conditions. When the Fund takes a defensive position, the Fund’s assets may be held in cash and/or invested in money market mutual funds, money market instruments, including repurchase agreements or other short term securities considered by the Adviser to be of a defensive nature. When the Fund is invested in this manner, it may not achieve its investment objective.

 

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APPENDIX C: PRINCIPAL RISKS OF INVESTING IN THE FUNDS

The API Capital Income Fund and The API Efficient Frontier Value Fund

General Risks. There is a risk that you could lose all or a portion of your investment in the Fund. The value of your investment in the Fund will go up and down with the prices of the securities in which the Fund invests.

Equity Security Risk. Prices of equity securities generally fluctuate more than those of other securities, such as debt securities. Market risk, the risk that prices of securities will decrease because of the interplay of market forces, may affect a single issuer, industry or sector of the economy or may affect the market as a whole.

Company Risk. The Fund may invest in securities that involve certain special circumstances that the Adviser believes offer the opportunity for long-term capital appreciation. These investments may involve greater risks of loss than investments in securities of well-established companies with a history of consistent operating patterns.

Investment Company Risk. Any investment in an open-end or closed-end investment company involves risk and, although the Fund invests in a number of Underlying Funds, this practice does not eliminate investment risk. The value of shares of an Underlying Fund will go up and down in response to changes in the value of its portfolio holdings.

Underlying Fund Risk. None of the Underlying Funds are or will be affiliated with the Fund or the Adviser. Therefore, investment decisions by the investment advisers of the Underlying Funds are made independently of the Fund and the Fund’s Adviser. The investment adviser of one Underlying Fund may be purchasing securities of the same issuer whose securities are being sold by the investment adviser of another Underlying Fund. The result of this would be an indirect expense to the Fund without accomplishing any investment purpose.

Closed-End Fund Risk. Shares of closed-end funds frequently trade at a price per share that is less than the net asset value per share. There can be no assurance that the market discount on shares of any closed-end fund purchased by the Fund will ever decrease or that when the Fund seeks to sell shares of a closed-end fund it can receive the net asset value of those shares.

Business Development Companies Risk - Business Development Companies (“BDC’s) are a specialized form of closed-end fund that invest generally in small developing companies and financially troubled businesses. BDC’s invest in private companies and thinly traded securities of public companies, including debt instruments. Generally, little public information exists for private and thinly traded companies and there is a risk that investors may not be able to make fully informed investment decisions. Many debt investments in which a BDC may invest will not be rated by a credit rating agency and will be below investment grade quality. Risks faced by BDCs include: competition for limited BDC investment opportunities; the liquidity of a BDC’s private investments; uncertainty as to the value of a BDC’s private investments; risks associated with access to capital and leverage; and reliance on the management of a BDC. the Fund’s investments in BDC’s are similar and include portfolio company risk, leverage risk, market and valuation risk, price volatility risk and liquidity risk.

Exchange Traded Fund Risk. ETF’s and index funds are not managed in the traditional sense, using economic, financial and market analysis, and the adverse financial situation of an issuer will not directly result in its elimination from the index. In addition, investments in ETF’s involve risks similar to investments in closed-end funds including, but not limited to, the possibility that the shares of ETF’s may trade at a market discount.

Debt Security Risk. The values of debt securities held by the Fund are affected by rising and declining interest rates. In general, debt securities with longer term maturities tend to fall more in value when interest rates rise than debt securities with shorter terms. A debt security is also subject to credit risk, which is the possibility that the credit strength of an issuer will weaken and/or an issuer of a debt security will fail to make timely payments of principal or interest and the security will go into default, and therefore it may lose value if the issuer is unable to pay interest or repay principal when it is due.

 

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Junk Bonds or High Yield, High Risk Securities Risk. Bonds rated below investment grade (i.e., BB or lower by S&P or Ba or lower by Moody’s) are speculative in nature, involve greater risk of default by the issuing entity and may be subject to greater market fluctuations than higher rated fixed income securities.

Foreign Securities Risk. The Fund’s direct or indirect investments in foreign securities, including depositary receipts, involve risks not associated with investing in U.S. securities that can adversely affect the Fund’s performance. Foreign markets, particularly emerging markets, may be less liquid, more volatile and subject to less government supervision than domestic markets. The value of the Fund’s investment may be negatively affected by changes in the exchange rates between the U.S. dollar and foreign currencies. There may be difficulties enforcing contractual obligations, and it may take more time for trades to clear and settle.

Emerging Market Risk. There are greater risks involved in investing in emerging market countries and/or their securities markets. Generally, economic structures in these countries are less diverse and mature than those in developed countries, and their political systems are less stable. Investments in emerging markets countries may be affected by national policies that restrict foreign investment in certain issuers or industries.

Small-Cap Company Risk. The Fund’s investments in small-cap companies may involve greater risks than investments in larger, more established issuers. Smaller companies generally have narrower product lines, more limited financial resources and more limited trading markets for their stock, as compared with larger companies. Their securities may be less well-known and trade less frequently and in more limited volume than the securities of larger, more established companies.

Real Estate Investment Trusts. Investments in real estate investment trusts and other issuers that invest, deal, or otherwise engage in transactions in or hold real estate or interests therein expose the Fund to risks similar to investing directly in real estate and the value of these investments may be affected by changes in the value of the underlying real estate, the creditworthiness of the issuer of the investments, and changes in property taxes, interest rates and the real estate regulatory environment.

Convertible Securities Risk. A convertible security is a bond, debenture, note, preferred stock or other security that may be converted into or exchanged for a prescribed amount of common stock of the same or a different issuer within a particular period of time at a specified price or formula. A convertible security entitles the holder to receive the interest paid or accrued on debt or the dividend paid on preferred stock until the convertible security matures or is redeemed, converted or exchanged. Before conversion or exchange, such securities ordinarily provide a stream of income with generally higher yields than common stocks of the same or similar issuers, but lower than the yield on non-convertible debt. The value of a convertible security is a function of (1) its yield in comparison with the yields of other securities of comparable maturity and quality that do not have a conversion privilege and (2) its worth, at market value, if converted into or exchanged for the underlying common stock. Convertible securities are typically issued by smaller capitalized companies whose stock prices may be volatile. The price of a convertible security often reflects such variations in the price of the underlying common stock in a way that non-convertible debt does not.

Leverage Risk. Leveraging may exaggerate the effect on the net asset value of any increase or decrease in the market value of the Fund’s portfolio securities. Money borrowed will be subject to interest and other costs, which may not be recovered by appreciation of the securities purchased. When appropriate or as required by law, the Fund will segregate assets used in connection with leveraging strategies.

The API Efficient Frontier Value Fund

Non-Diversification Risk. The Fund is a non-diversified Fund. Non-diversified funds may invest in fewer issuers than diversified funds. Thus, the value of a non-diversified fund’s shares may vary more widely, and a non-diversified fund may be subject to greater investment and credit risk than if it invested more broadly. The Fund may invest in Underlying Funds that are also non-diversified, which may increase the risk of the Fund.

 

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AMERICAN PENSION INVESTORS TRUST

STATEMENT OF ADDITIONAL INFORMATION

The API Capital Income Fund

The API Efficient Frontier Value Fund

September 19, 2016

This Statement of Additional Information (the “SAI”) relates to the proposed reorganization (the “Reorganization”) of The API Efficient Frontier Value Fund (the “Acquired Fund”), with and into The API Capital Income Fund (the “Acquiring Fund”), each a series of American Pension Investors Trust (the “Trust”).

This SAI contains information which may be of interest to shareholders but which is not included in the Prospectus/Proxy Statement dated September 19, 2016 (the “Prospectus/Proxy Statement”) of the Acquiring Fund which relates to the Reorganization. As described in the Prospectus/Proxy Statement, the Reorganization would involve the transfer of all of the assets of the Acquired Fund in exchange for shares of the Acquiring Fund and the assumption by the Acquiring Fund of the known liabilities of the Acquired Fund. The Acquired Fund would distribute the Acquiring Fund shares it receives to its shareholders in complete liquidation of the Acquired Fund.

This SAI is not a prospectus and should be read in conjunction with the Prospectus/Proxy Statement. The Prospectus/Proxy Statement has been filed with the Securities and Exchange Commission (the “SEC”) and is available upon request and without charge by contacting the Trust at 2303 Yorktown Avenue, Lynchburg, VA 24501 or by calling 800-544-6060.

TABLE OF CONTENTS

 

     Page  

Additional Information About the Acquiring Fund

     2   

Financial Statements

     2   

A.     Incorporation by Reference

     2   

B.     Unaudited Pro Forma Combined Financial Statements

     2   

 

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Table of Contents
  I.

Additional Information about the Acquiring Fund

This SAI is accompanied by the information concerning the Acquiring Fund and the Acquired Fund in the Statement of Additional Information for the Funds dated May 31, 2016, which was filed electronically with the SEC and is incorporated by reference herein.

 

  II.

Financial Statements

 

  A.

Incorporation by Reference

This SAI is accompanied by the following documents, each of which was filed electronically with the SEC and is incorporated by reference herein:

 

  1.

Audited financial statements, including any notes thereto, and the Independent Registered Public Accounting Firm’s report thereon, relating to the Acquired Fund and the Acquiring Fund, which are included in the Trust’s Annual Report for the year ended January 31, 2016, as filed with the SEC on April 7, 2016 on Form N-CSR.

 

  B.

Unaudited Pro Forma Combined Financial Statements

Unaudited pro forma combined financial statements for the Acquiring Fund relating to the Reorganization, dated January 31, 2016, assuming the Reorganization had been consummated on February 1, 2015, including notes to such pro forma financial statements, are set forth below. The following pro forma combined financial statements should be read in conjunction with the separate financial statements of the Acquiring Fund contained within the Annual Report referred to in the preceding section.

 

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API Capital Income Fund / API Efficient Frontier Value Fund

Pro Forma Combined Schedule of Investments

January 31, 2016 (Unaudited)

 

API Capital
Income Fund

    API Value
Fund
    Pro Forma
Combined
API Capital
Income Fund
Fund
         API Capital
Income Fund
    API Value
Fund
    Pro Forma Combined
API Capital Income
Fund Fund
 

Number of
Shares

    Number of
Shares
    Number of
Shares
         Market
Value
    Market
Value
    Market Value  
      

COMMON STOCKS

     
      

Consumer Discretionary

     
  —          2,000        2,000      

Adidas AG

    —        $ 102,880      $ 102,880   
  —          700        700      

Advance Auto Parts, Inc.

    —          106,435      $ 106,435   
  —          4,000        4,000      

Bayerische Motoren Werke (BMW) AG

    —          111,080      $ 111,080   
  —          2,200        2,200      

Bed Bath & Beyond, Inc.*

    —          94,974      $ 94,974   
  —          2,500        2,500      

Carnival Corporation

    —          120,325      $ 120,325   
  —          2,400        2,400      

CBS Corporation Class B

    —          114,000      $ 114,000   
  3,100        —          3,100      

Coach, Inc.

  $ 114,855        —        $ 114,855   
  2,000        —          2,000      

Darden Restaurants, Inc.

    126,120        —        $ 126,120   
  —          1,200        1,200      

Delphi Automotive PLC

    —          77,928      $ 77,928   
  —          1,600        1,600      

Dollar Tree, Inc.*

    —          130,112      $ 130,112   
  —          4,000        4,000      

DreamWorks Animation SKG, Inc.*

    —          102,560      $ 102,560   
  —          4,500        4,500      

D.R. Horton, Inc.

    —          123,795      $ 123,795   
  —          45,000        45,000      

Esprit Holdings Limited

    —          85,500      $ 85,500   
  —          900        900      

Ferrari NV*

    —          35,793      $ 35,793   
  —          9,000        9,000      

Fiat Chrysler Automobiles NV*

    —          63,360      $ 63,360   
  7,000        —          7,000      

Ford Motor Company

    83,580        —        $ 83,580   
  3,000        —          3,000      

Garmin Ltd.

    105,540        —        $ 105,540   
  45,000        —          45,000      

GKN plc

    178,650        —        $ 178,650   
  14,950        —          14,950      

Greene King PLC

    187,623        —        $ 187,623   
  4,400        —          4,400      

Grupo Televisa S.A.B.

    —          116,512      $ 116,512   
  1,000        —          1,000      

Harman International Inustries, Inc.

    —          74,390      $ 74,390   
  13,500        —          13,500      

Hennes & Mauritz AB

    87,615        —        $ 87,615   
  —          5,400        5,400      

Hilton Worldwide Holdings, Inc.*

    —          96,174      $ 96,174   
  —          1,100        1,100      

Home Depot, Inc.

    —          138,336      $ 138,336   
  —          4,800        4,800      

Honda Motor Co., Ltd.

    —          129,696      $ 129,696   
  5,600        —          5,600      

InterContinental Hotels Group PLC

    185,584        —        $ 185,584   
  —          3,300        3,300      

ITV plc

    —          127,743      $ 127,743   
  2,300        —          2,300      

Kohl’s Corporation

    114,425        —        $ 114,425   
  —          2,600        2,600      

Las Vegas Sands Corp.

    —          117,260      $ 117,260   
  —          2,000        2,000      

Magna International, Inc.

    —          69,180      $ 69,180   
  4,000        —          4,000      

Mattel, Inc.

    110,360        —        $ 110,360   
  1,500        —          1,500      

McDonald’s Corp.

    185,670        —        $ 185,670   
  12,300        —          12,300      

MDC Partners, Inc.

    240,342        —        $ 240,342   
  —          525        525      

Mohawk Industries, Inc.*

    —          87,365      $ 87,365   
  —          4,000        4,000      

New Oriental Education & Technology Group, Inc.*

    —          125,640      $ 125,640   
  —          6,500        6,500      

Nissan Motor Co., Ltd.

    —          128,570      $ 128,570   
  —          2,000        2,000      

Nordstrom, Inc.

    —          98,200      $ 98,200   
  2,500        —          2,500      

Omnicom Group, Inc.

    183,375        —        $ 183,375   
  9,500        —          9,500      

ProSiebenSat.1 Media SE

    118,275        —        $ 118,275   
  —          900        900      

Ralph Lauren Corporation

    —          101,250      $ 101,250   
  5,200        —          5,200      

Regal Entertainment Group

    89,700        —        $ 89,700   
  —          1,700        1,700      

Scripps Networks Interactive, Inc.

      103,649      $ 103,649   
  5,000        —          5,000      

Shaw Communications, Inc.

    86,400        —        $ 86,400   

 

F-1


Table of Contents

API Capital
Income Fund

    API Value
Fund
    Pro Forma
Combined
API Capital
Income Fund
Fund
         API Capital
Income Fund
    API Value
Fund
    Pro Forma Combined
API Capital Income
Fund Fund
 

Number of
Shares

    Number of
Shares
    Number of
Shares
         Market
Value
    Market
Value
    Market Value  
  4,500        —          4,500      

Six Flags Entertainment Corporation

    226,215        —        $ 226,215   
  5,000        —          5,000      

Speedway Motorsports, Inc.

    94,350        —        $ 94,350   
  —          1,500        1,500      

Starwood Hotels & Resorts Worldwide, Inc.

    —          93,360      $ 93,360   
  2,800        —          2,800      

Target Corporation

    202,776        —        $ 202,776   
  —          1,300        1,300      

Tempur-Pedic International, Inc.*

    —          78,442      $ 78,442   
  —          1,400        1,400      

Time Warner, Inc.

    —          98,616      $ 98,616   
  —          1,400        1,400      

TJX Companies, Inc.

    —          99,736      $ 99,736   
  850        —          850      

Toyota Motor Corporation

    102,026        —        $ 102,026   
  —          5,400        5,400      

Twenty-First Century Fox, Inc. -Class A

    —          145,638      $ 145,638   
  —          5,600        5,600      

2U, Inc.*

    —          113,064      $ 113,064   
  2,250        —          2,250      

Viacom, Inc. Class B

    102,690        —        $ 102,690   
  —          6,700        6,700      

Vivendi SA

    —          139,896      $ 139,896   
  —          1,300        1,300      

Walt Disney Company

    —          124,566      $ 124,566   
  1,700        —          1,700      

Whitbread PLC

    96,900        —        $ 96,900   
  6,000        —          6,000      

World Wrestling Entertainment, Inc.

    107,400        —        $ 107,400   
  1,100        —          1,100      

WPP plc

    119,680        —        $ 119,680   
        

 

 

   

 

 

   

 

 

 
           3,250,151        3,676,025      $ 6,926,176   
        

 

 

   

 

 

   

 

 

 
      

Consumer Staples

     
  2,500        —          2,500      

Altria Group, Inc.

    152,775        —        $ 152,775   
  —          15,500        15,500      

Ambev SA

    —          72,385      $ 72,385   
  1,100        —          1,100      

Anheuser-Busch InBev NV

    138,424        —        $ 138,424   
  1,900        —          1,900      

Archer-Daniels-Midland Company

    67,165        —        $ 67,165   
  1,800        —          1,800      

British American Tobacco PLC

    199,818        —        $ 199,818   
  —          1,600        1,600      

Bunge Ltd.

    —          99,216      $ 99,216   
  —          3,000        3,000      

Carrefour SA

    —          85,200      $ 85,200   
  —          3,000        3,000      

Coca-Cola Enterprises, Inc.

    —          139,260      $ 139,260   
  2,900        —          2,900      

Coca Cola Co.

    124,468        —        $ 124,468   
  3,700        —          3,700      

ConAgra Foods, Inc.

    154,068        —        $ 154,068   
  —          1,200        1,200      

CVS Health Corporation

    —          115,908      $ 115,908   
  1,800        —          1,800      

Diageo Plc ADR

    193,806        —        $ 193,806   
  —          500        500      

Energizer Holdings, Inc.

    —          16,020      $ 16,020   
  2,500        —          2,500      

General Mills, Inc.

    141,275        —        $ 141,275   
  1,000        —          1,000      

Imperial Tobacco Group plc

    108,365        —        $ 108,365   
  1,500        —          1,500      

Kellogg Corporation

    110,160        —        $ 110,160   
  —          1,900        1,900      

Keurig Green Mountain, Inc.

    —          169,575      $ 169,575   
  1,300        —          1,300      

Kimberly-Clark Corporation

    166,946        —        $ 166,946   
  69,000        —          69,000      

Kimberly-Clark de Mexico, S.A.B. de C.V.

    165,600        —        $ 165,600   
  2,000        —          2,000      

Kraft Heinz Company

    156,120        —        $ 156,120   
  —          12,500        12,500      

Marine Harvest ASA*

    —          169,750      $ 169,750   
  5,000        —          5,000      

Mondelez International, Inc.

    215,500        —        $ 215,500   
  2,500        —          2,500      

Nestle SA

    184,350        —        $ 184,350   
  —          12,500        12,500      

Orkla ASA

    —          99,875      $ 99,875   
  —          1,400        1,400      

PepsiCo, Inc.

    —          139,020      $ 139,020   
  1,800        —          1,800      

Philip Morris International, Inc.

    162,018        —        $ 162,018   
  1,500        —          1,500      

Procter & Gamble Company

    122,535        —        $ 122,535   
  9,000        —          9,000      

Reckitt Benckiser Group PLC

    161,640        —        $ 161,640   
  3,500        —          3,500      

Reynolds American, Inc.

    174,825        —        $ 174,825   

 

F-2


Table of Contents

API Capital
Income Fund

    API Value
Fund
    Pro Forma
Combined
API Capital
Income Fund
Fund
         API Capital
Income Fund
    API Value
Fund
    Pro Forma Combined
API Capital Income
Fund Fund
 

Number of
Shares

    Number of
Shares
    Number of
Shares
         Market
Value
    Market
Value
    Market Value  
  5,000        —          5,000      

Sysco Corporation

    199,050        —        $ 199,050   
  —          2,500        2,500      

Unilever PLC

    —          110,675      $ 110,675   
  1,800        —          1,800      

Walgreens Boots Alliance, Inc.

    143,496        —        $ 143,496   
  —          1,400        1,400      

Wal-Mart Stores, Inc.

    —          92,904      $ 92,904   
  3,300        —          3,300      

Woolworths Limited

    54,516        —        $ 54,516   
        

 

 

   

 

 

   

 

 

 
           3,296,920        1,309,788      $ 4,606,708   
        

 

 

   

 

 

   

 

 

 
      

Energy

     
  —          1,550        1,550      

Anadarko Petroleum Corporation

    —          60,590      $ 60,590   
  —          2,100        2,100      

Baker Hughes, Inc.

    —          91,371      $ 91,371   
  2,550        —          2,550      

Chevron Corporation

    220,499        —        $ 220,499   
  2,860        —          2,860      

China Petroleum & Chemical Corporation

    161,047        —        $ 161,047   
  —          2,000        2,000      

ConocoPhillips

    —          78,160      $ 78,160   
  3,000        —          3,000      

Eni S.p.A. ADR

    86,850        0      $ 86,850   
  —          2,100        2,100      

Halliburton Company

    —          66,759      $ 66,759   
  —          1,000        1,000      

Helmerich & Payne, Inc.

    —          50,800      $ 50,800   
  —          900        900      

Koninklijke Vopak NV

    —          39,060      $ 39,060   
  —          2,200        2,200      

Noble Energy, Inc.

    —          71,214      $ 71,214   
  —          1,200        1,200      

Occidental Petroleum Corporation

    —          82,596      $ 82,596   
  —          1,600        1,600      

Phillips 66

    —          128,240      $ 128,240   
  3,600        —          3,600      

Royal Dutch Shell PLC

    158,148        —        $ 158,148   
  —          1,500        1,500      

Schlumberger Ltd.

    —          108,405      $ 108,405   
  —          3,500        3,500      

Spectra Energy Corp.

    —          96,075      $ 96,075   
  6,900        —          6,900      

Suncor Energy, Inc.

    162,495        —        $ 162,495   
  4,042        —          4,042      

Total SA ADR

    179,141        —        $ 179,141   
  4,000        —          4,000      

TransCanada Corp.

    138,240        —        $ 138,240   
  —          9,800        9,800      

Weatherford International Ltd.*

    —          66,052      $ 66,052   
  5,500        —          5,500      

Williams Companies, Inc.

    106,150        —        $ 106,150   
        

 

 

   

 

 

   

 

 

 
           1,212,570        939,322      $ 2,151,892   
        

 

 

   

 

 

   

 

 

 
      

Financials

      $ 0   
  23,300        —          23,300      

Aberdeen Asset Management plc

    81,084        —        $ 81,084   
    20,426        

AEGON N.V.

      116,020     
  2,000        —          2,000      

Aflac, Inc.

    115,920        —        $ 115,920   
  11,000        —          11,000      

Allianz SE

    178,200        —        $ 178,200   
    1,450        

Allstate Corporation

      87,870     
    2,100        

American International Group, Inc.

      118,608     
    1,100        

Ameriprise Financial, Inc.

      99,715     
  15,000        —          15,000      

Aviva plc ADR

    207,000        —        $ 207,000   
  8,700        4,500        13,200      

AXA SA

    214,020        110,700      $ 324,720   
  19,876        —          19,876      

Banco Santander SA

    83,280        —        $ 83,280   
  —          6,000        6,000      

Bank of America Corporation

    —          84,840      $ 84,840   
  —          2,800        2,800      

Bank of New York Mellon Corporation

    —          101,416      $ 101,416   
  —          9,500        9,500      

Barclays PLC

    —          102,410      $ 102,410   
  5,800        —          5,800      

BB&T Corporation

    189,428        —        $ 189,428   
  —          1,000        1,000      

Berkshire Hathaway, Inc. Class B*

    —          129,770      $ 129,770   
  12,000        —          12,000      

BGC Partners, Inc. Class A

    109,800        —        $ 109,800   
  500        —          500      

BlackRock, Inc.

    157,130        —        $ 157,130   
  —          5,450        5,450      

BNP Paribas S.A.

    —          129,939      $ 129,939   

 

F-3


Table of Contents

API Capital
Income Fund

    API Value
Fund
    Pro Forma
Combined
API Capital
Income Fund
Fund
         API Capital
Income Fund
    API Value
Fund
    Pro Forma Combined
API Capital Income
Fund Fund
 

Number of
Shares

    Number of
Shares
    Number of
Shares
         Market
Value
    Market
Value
    Market Value  
  —          4,800        4,800      

BofI Holding, Inc.*

    —          82,368      $ 82,368   
  6,191        —          6,191      

Blue Capital Holdings Ltd.

    111,686        —        $ 111,686   
  1,800        —          1,800      

Canadian Imperial Bank of Commerce

    116,730        —        $ 116,730   
  5,000        —          5,000      

Charles Schwab Corporation

    127,650        —        $ 127,650   
    7,900        7,900      

CK Hutchison Holdings Limited

    —          97,170      $ 97,170   
  1,300        —          1,300      

CME Group, Inc.

    116,805        —        $ 116,805   
  —          6,453        6,453      

Credit Suisse Group AG

    —          114,863      $ 114,863   
  —          2,000        2,000      

Discover Financial Services

    —          91,580      $ 91,580   
  —          3,000        3,000      

Eaton Vance Corp.

    —          85,980      $ 85,980   
  1,500        —          1,500      

Erie Indemnity Co.

    144,165        —        $ 144,165   
  —          4,900        4,900      

Federated Investors, Inc.

    —          123,921      $ 123,921   
  7,000        —          7,000      

Flushing Financial Corporation

    154,000        —        $ 154,000   
  —          2,400        2,400      

Franklin Resources, Inc.

    —          83,184      $ 83,184   
  —          750        750      

Goldman Sachs Group, Inc.

    —          121,170      $ 121,170   
  —          39,000        39,000      

Great Eagle Holdings Limited

    —          109,200      $ 109,200   
  —          33,000        33,000      

Hang Lung Properties Limited

    —          60,390      $ 60,390   
  —          2,500        2,500      

Hartford Financial Services Group, Inc.

    —          100,450      $ 100,450   
  3,000        —          3,000      

Horace Mann Educators Corporation

    92,160        —        $ 92,160   
  3,300        —          3,300      

HSBC Holdings plc

    116,820        —        $ 116,820   
  —          16,000        16,000      

ICICI Bank Limited

    —          106,400      $ 106,400   
  —          13,000        13,000      

ING Groep N.V.*

    —          150,670      $ 150,670   
  —          450        450      

Intercontinental Exchange, Inc.

    —          118,710      $ 118,710   
  —          8,400        8,400      

Intesa Sanpaolo S.p.A.

    —          143,052      $ 143,052   
  —          3,800        3,800      

Invesco Ltd.

    —          113,734      $ 113,734   
  3,500        —          3,500      

JPMorgan Chase & Co.

    208,250        —        $ 208,250   
  —          3,000        3,000      

KB Financial Group, Inc.*

    —          75,480      $ 75,480   
  —          7,500        7,500      

KeyCorp

    —          83,700      $ 83,700   
  —          2,000        2,000      

Lincoln National Corporation

    —          78,920      $ 78,920   
  —          20,000        20,000      

Lloyds Banking Group plc

    —          76,200      $ 76,200   
  2,000        —          2,000      

M & T Bank Corp.

    220,360        —        $ 220,360   
  10,000        —          10,000      

Maiden Holdings, Ltd.

    128,000        —        $ 128,000   
  8,000        —          8,000      

Manulife Financial Corporation

    110,880        —        $ 110,880   
  —          3,300        3,300      

MetLife, Inc.

    —          147,345      $ 147,345   
  —          22,000        22,000      

Mitsubishi UFJ Financial Group, Inc.

    —          111,540      $ 111,540   
  9,000        —          9,000      

Muenchener Rueckversicherungs-Gesellschaft AG

    173,160        —        $ 173,160   
  —          2,200        2,200      

Nasdaq, Inc.

    —          136,400        136,400   
  7,000        —          7,000      

OceanFirst Financial Corp.

    124,040        —        $ 124,040   
  —          1,200        1,200      

PNC Financial Services Group, Inc.

    —          103,980      $ 103,980   
  —          3,000        3,000      

PRA Group, Inc.*

    —          89,250      $ 89,250   
  —          2,500        2,500      

Principal Financial Group, Inc.

    —          95,000      $ 95,000   
  —          1,800        1,800      

Prudential Financial, Inc.

    —          126,144      $ 126,144   
  30,000        —          30,000      

SCOR SE

    106,800        —        $ 106,800   
  2,400        —          2,400      

Societe Generale SA

    91,464        —        $ 91,464   
  13,500        —          13,500      

Standard Chartered plc

    90,585        —        $ 90,585   
  5,500        —          5,500      

State Auto Financial Corp.

    120,065        —        $ 120,065   
  —          2,800        2,800      

SunTrust Banks, Inc.

    —          102,424      $ 102,424   
  12,000        —          12,000      

Svenska Handelsbanken AB

    75,240        —        $ 75,240   
  4,000        —          4,000      

Swedbank AB

    84,040        —        $ 84,040   
  3,000        —          3,000      

T. Rowe Price Group, Inc.

    212,850        —        $ 212,850   

 

F-4


Table of Contents

API Capital
Income Fund

    API Value
Fund
    Pro Forma
Combined
API Capital
Income Fund
Fund
         API Capital
Income Fund
    API Value
Fund
    Pro Forma Combined
API Capital Income
Fund Fund
 

Number of
Shares

    Number of
Shares
    Number of
Shares
         Market
Value
    Market
Value
    Market Value  
  —          5,000        5,000      

UBS AG

    —          83,200      $ 83,200   
  —          2,800        2,800      

Wells Fargo & Company

    —          140,644      $ 140,644   
  5,300        —          5,300      

Westpac Banking Corporation

    116,335        —        $ 116,335   
  —          3,600        3,600      

Zions Bancorporation

    —          81,648      $ 81,648   
        

 

 

   

 

 

   

 

 

 
           4,177,947        4,316,005      $ 8,493,952   
        

 

 

   

 

 

   

 

 

 
      

Health Care

     
  —          2,300        2,300      

Abbott Laboratories

    —          87,055      $ 87,055   
  1,900        1,500        3,400      

AbbVie, Inc.

    104,310        82,350      $ 186,660   
  —          3,500        3,500      

Alere, Inc.*

    —          130,200      $ 130,200   
  —          580        580      

Alexion Pharmaceuticals, Inc.*

    —          84,639      $ 84,639   
  —          532        532      

Allergan plc*

    —          151,317      $ 151,317   
  —          1,000        1,000      

AmerisourceBergen Corporation

    —          89,560      $ 89,560   
  —          800        800      

Amgen, Inc.

    —          122,184      $ 122,184   
  6,400        —          6,400      

Astrazeneca PLC

    206,208        —        $ 206,208   
  —          2,600        2,600      

Baxalta, Inc.

    —          104,026      $ 104,026   
  —          760        760      

Bayer AG

    —          85,409      $ 85,409   
  950        —          950      

Becton, Dickinson and Company

    138,102        —        $ 138,102   
  3,000        —          3,000      

Bristol-Myers Squibb Company

    186,480        —        $ 186,480   
  1,400        —          1,400      

Eli Lilly & Co.

    110,740        —        $ 110,740   
  —          1,800        1,800      

Endo International PLC*

    —          99,846      $ 99,846   
  —          2,350        2,350      

Fresenius Medical Care AG & Co.

    —          104,552      $ 104,552   
  —          1,100        1,100      

Gilead Sciences, Inc.

    —          91,300      $ 91,300   
  5,000        —          5,000      

GlaxoSmithKline PLC

    206,450        —        $ 206,450   
  —          1,000        1,000      

Jazz Pharmaceuticals Plc*

    —          128,740      $ 128,740   
  1,100        1,300        2,400      

Johnson & Johnson

    114,884        135,772      $ 250,656   
  —          900        900      

Laboratory Corporation of America Holdings*

    —          101,115      $ 101,115   
  —          450        450      

McKesson Corporation

    —          72,441      $ 72,441   
  —          1,300        1,300      

Medtronic, PLC

    —          98,696      $ 98,696   
  4,500        —          4,500      

Merck & Co., Inc.

    228,015        —        $ 228,015   
  2,100        1,700        3,800      

Novartis AG

    163,737        132,549      $ 296,286   
  5,900        —          5,900      

Pfizer, Inc.

    179,891        —        $ 179,891   
  5,900        —          5,900      

Roche Holding AG

    191,278        —        $ 191,278   
  5,500        —          5,500      

Sanofi ADR

    229,020        —        $ 229,020   
  —          500        500      

Shire PLC

    —          84,150      $ 84,150   
  —          1,100        1,100      

Stryker Corporation

    —          109,065      $ 109,065   
  —          2,200        2,200      

Tenet Healthcare Corporation*

    —          59,664      $ 59,664   
  —          2,500        2,500      

Teva Pharmaceutical Industries Ltd.

    —          153,700      $ 153,700   
  —          1,250        1,250      

Thermo Fisher Scientific, Inc.

    —          165,075      $ 165,075   
  —          1,100        1,100      

UnitedHealth Group, Inc.

    —          126,676      $ 126,676   
        

 

 

   

 

 

   

 

 

 
           2,059,115        2,600,081      $ 4,659,196   
        

 

 

   

 

 

   

 

 

 
      

Industrials

     
  —          5,100        5,100      

ABB Limited*

    —          88,230      $ 88,230   
  3,500        —          3,500      

Adecco SA*

    107,310        —        $ 107,310   
  —          2,300        2,300      

ADT Corporation

    —          68,034      $ 68,034   
  —          2,200        2,200      

AerCap Holdings NV*

    —          67,562      $ 67,562   
  1,700        —          1,700      

Airbus Group SE

    106,488        —        $ 106,488   
  9,500        —          9,500      

Aircastle Ltd.

    163,115        —        $ 163,115   

 

F-5


Table of Contents

API Capital
Income Fund

    API Value
Fund
    Pro Forma
Combined
API Capital
Income Fund
Fund
         API Capital
Income Fund
    API Value
Fund
    Pro Forma Combined
API Capital Income
Fund Fund
 

Number of
Shares

    Number of
Shares
    Number of
Shares
         Market
Value
    Market
Value
    Market Value  
  13,500        —          13,500      

Atlantia S.p.A.

    177,120        —        $ 177,120   
  —          3,000        3,000      

Babcock & Wilcox Enterprises, Inc.

    —          61,950      $ 61,950   
  —          8,400        8,400      

Babcock International Group plc

    —          109,536      $ 109,536   
  —          1,100        1,100      

Boeing Company

    —          132,143      $ 132,143   
  2,800        —          2,800      

Bouygues SA

    109,396        —        $ 109,396   
  7,400        —          7,400      

Brambles Limited

    117,142        —        $ 117,142   
  —          4,000        4,000      

BWX Technologies, Inc.

    —          119,760      $ 119,760   
  2,400        —          2,400      

Caterpillar, Inc.

    149,376        —        $ 149,376   
  2,700        —          2,700      

CLARCOR Inc.

    126,522        —        $ 126,522   
  10,000        —          10,000      

Covanta Holding Corporation

    141,400        —        $ 141,400   
  3,700        —          3,700      

CSX Corporation

    85,174        —        $ 85,174   
  1,500        —          1,500      

Deere & Company

    115,515        —        $ 115,515   
  —          4,000        4,000      

easyJet plc

    —          88,240      $ 88,240   
  —          4,000        4,000      

Embraer SA ADR

    —          100,730      $ 100,730   
  3,700        —          3,700      

Emerson Electric Co.

    170,126        0      $ 170,126   
  6,400        —          6,400      

Experian PLC

    110,080        —        $ 110,080   
  —          3,500        3,500      

FedEx Corporation

    —          146,168      $ 146,168   
  —          1,100        1,100      

Ferrovial S.A.

    —          0      $ 0   
  —          2,168        2,168      

Flowserve Corporation

    —          47,067      $ 47,067   
  15,200        —          15,200      

Fly Leasing Ltd.

    178,752        —        $ 178,752   
  1,300        —          1,300      

General Dynamics Corporation

    173,901        —        $ 173,901   
  6,000        —          6,000      

General Electric Company

    174,600        —        $ 174,600   
  3,500        —          3,500      

Healthcare Services Group, Inc.

    123,795        —        $ 123,795   
  —          1,300        1,300      

Hillenbrand, Inc.

    —          50,232      $ 50,232   
  3,500        —          3,500      

HNI Corporation

    119,070        —        $ 119,070   
  41,000        —          41,000      

Hopewell Holdings Limited

    123,410        —        $ 123,410   
  1,300        —          1,300      

Illinois Tool Works, Inc.

    117,091        —        $ 117,091   
  12,500        —          12,500      

International Consolidated Airlines Group SA

    96,125        —        $ 96,125   
  —          3,600        3,600      

J.B. Hunt Transport Services, Inc.

    —          97,488      $ 97,488   
  —          1,400        1,400      

Koninklijke Philips Electronics N.V.

    —          101,780      $ 101,780   
  4,500        —          4,500      

Knoll, Inc.

    82,575        132,066      $ 214,641   
  —          4,950        4,950      

L-3 Communications Holdings, Inc.

    —          110,998      $ 110,998   
  800        —          800      

Lockheed Martin Corporation

    168,800        —        $ 168,800   
  2,000        —          2,000      

Macquarie Infrastructure Corporation

    134,120        —        $ 134,120   
  —          3,650        3,650      

NIDEC CORPORATION

    —          62,269      $ 62,269   
  3,500        —          3,500      

Nielsen Holdings PLC

    168,560        —        $ 168,560   
  1,300        —          1,300      

Norfolk Southern Corp.

    91,650        —        $ 91,650   
  —          1,000        1,000      

Orbital ATK, Inc.

    —          90,230      $ 90,230   
  —          2,000        2,000      

Old Dominion Freight Line, Inc.*

    —          109,660      $ 109,660   
  —          2,400        2,400      

Owens Corning, Inc.*

    —          110,856      $ 110,856   
  2,300        —          2,300      

Republic Services, Inc.

    100,510        —        $ 100,510   
  8,400        —          8,400      

Royal Mail plc

    112,392        —        $ 112,392   
  —          1,700        1,700      

Ryder System, Inc.

    —          90,389      $ 90,389   
  8,900        —          8,900      

Schneider Electric SE

    94,785        —        $ 94,785   
  —          8,800        8,800      

Smiths Group plc

    —          120,824      $ 120,824   
  —          1,300        1,300      

Standex International Corporation

    —          93,886      $ 93,886   
  —          1,100        1,100      

Stericycle, Inc.*

    —          132,385      $ 132,385   
  11,000        —          11,000      

Sydney Airport

    51,700        —        $ 51,700   
  800        —          800      

3M Co.

    120,800        —        $ 120,800   
  —          1,500        1,500      

United Continental Holdings, Inc.*

    —          72,420      $ 72,420   

 

F-6


Table of Contents

API Capital
Income Fund

    API Value
Fund
    Pro Forma
Combined
API Capital
Income Fund
Fund
         API Capital
Income Fund
    API Value
Fund
    Pro Forma Combined
API Capital Income
Fund Fund
 

Number of
Shares

    Number of
Shares
    Number of
Shares
         Market
Value
    Market
Value
    Market Value  
  1,000        —          1,000      

United Parcel Service, Inc.

    93,200        —        $ 93,200   
  —          1,200        1,200      

United Technologies Corporation

    —          105,228      $ 105,228   
  —          5,400        5,400      

USG Corporation*

    —          96,606      $ 96,606   
  10,600        —          10,600      

Vinci SA

    179,882        —        $ 179,882   
  15,000        —          15,000      

Wolseley plc

    75,450        —        $ 75,450   
  —          3,100        3,100      

XPO Logistics, Inc.*

    —          70,835      $ 70,835   
        

 

 

   

 

 

   

 

 

 
           4,259,932        2,677,572      $ 6,937,504   
        

 

 

   

 

 

   

 

 

 
      

Information Technology

     
  —          3,500        3,500      

Activision Blizzard, Inc.

    —          121,870      $ 121,870   
  —          1,800        1,800      

Analog Devices, Inc.

    —          96,948      $ 96,948   
  —          8,300        8,300      

Applied Materials, Inc.

    —          146,495      $ 146,495   
  —          3,500        3,500      

ARM Holdings plc

    —          150,780      $ 150,780   
  1,500        —          1,500      

ASML Holding N.V.

    137,760        —        $ 137,760   
  —          2,000        2,000      

Autodesk, Inc.*

    —          93,640      $ 93,640   
  —          1,000        1,000      

Avago Technologies Ltd.

    —          133,710      $ 133,710   
  —          480        480      

Baidu, Inc.*

    —          78,370      $ 78,370   
  2,200        —          2,200      

Broadridge Financial Solutions, Inc.

    117,832        —        $ 117,832   
  —          5,000        5,000      

CA, Inc.

    —          143,650      $ 143,650   
  —          2,300        2,300      

Cavium, Inc.*

    —          132,871      $ 132,871   
  —          5,500        5,500      

Cisco Systems, Inc.

    —          130,845      $ 130,845   
  —          1,700        1,700      

Cognizant Technology Solutions Corporation*

    —          107,627      $ 107,627   
  —          6,000        6,000      

Corning, Inc.

    —          111,660      $ 111,660   
  27,400        —          27,400      

Electrocomponents plc

    81,652        —        $ 81,652   
  11,500        —          11,500      

Ericsson (LM) Telephone Co.

    102,350        —        $ 102,350   
  —          3,400        3,400      

FLIR Systems, Inc.

    —          99,416      $ 99,416   
  1,500        —          1,500      

IAC/InterActiveCorp

    77,910        —        $ 77,910   
  —          500        500      

International Business Machines, Inc.

    —          62,395      $ 62,395   
  10,000        —          10,000      

Intersil Corporation

    130,000        —        $ 130,000   
  —          4,600        4,600      

Jabil Circuit, Inc.

    —          91,586      $ 91,586   
  2,100        —          2,100      

KLA-Tencor Corporation

    140,679        —        $ 140,679   
  —          2,000        2,000      

Lam Research Corporation*

    —          143,580      $ 143,580   
  3,200        —          3,200      

Linear Technology Corporation

    136,736        —        $ 136,736   
  —          1,400        1,400      

MasterCard, Inc.

    —          124,642      $ 124,642   
  3,000        —          3,000      

Maxim Integrated Products, Inc.

    100,200        —        $ 100,200   
  2,200        —          2,200      

Microchip Technology, Inc.

    98,582        —        $ 98,582   
  4,000        —          4,000      

Microsoft Corporation

    220,360        —        $ 220,360   
  —          700        700      

NetEase, Inc.

    —          109,298      $ 109,298   
  —          2,650        2,650      

NICE Systems Limited

    —          160,405      $ 160,405   
  —          5,000        5,000      

NVIDIA Corporation

    —          146,450      $ 146,450   
  3,500        —          3,500      

Paychex, Inc.

    167,510        —        $ 167,510   
  —          2,500        2,500      

Proofpoint, Inc.*

    —          125,900      $ 125,900   
  —          1,800        1,800      

Qorvo, Inc.*

    —          71,280      $ 71,280   
  1,800        —          1,800      

QUALCOMM, Inc.

    81,612        —        $ 81,612   
    2,300        2,300      

SAP SE

    —          183,540      $ 183,540   
  4,500        —          4,500      

Taiwan Semiconductor Manufacturing Company Ltd.

    100,575        —        $ 100,575   
  2,200        —          2,200      

Texas Instruments, Inc.

    116,446        —        $ 116,446   
  —          2,200        2,200      

Total System Services, Inc.

    —          88,352      $ 88,352   
  —          3,500        3,500      

United Internet AG

    —          179,970      $ 179,970   

 

F-7


Table of Contents

API Capital
Income Fund

    API Value
Fund
    Pro Forma
Combined
API Capital
Income Fund
Fund
         API Capital
Income Fund
    API Value
Fund
    Pro Forma Combined
API Capital Income
Fund Fund
 

Number of
Shares

    Number of
Shares
    Number of
Shares
         Market
Value
    Market
Value
    Market Value  
  —          1,600        1,600      

Visa, Inc.

    —          119,184      $ 119,184   
  —          4,900        4,900      

WNS Holdings Ltd.*

    —          140,581      $ 140,581   
  2,500        —          2,500      

Xilinx, Inc.

    125,675        —        $ 125,675   
        

 

 

   

 

 

   

 

 

 
           1,935,879        3,295,045      $ 5,230,924   
        

 

 

   

 

 

   

 

 

 
      

Materials

     
  1,000        —          1,000      

Air Products and Chemicals, Inc.

    126,710        —        $ 126,710   
  1,700        —          1,700      

Akzo Nobel N.V.

    108,443        —        $ 108,443   
  —          9,500        9,500      

Alcoa, Inc.

    —          69,255      $ 69,255   
  —          1,600        1,600      

BASF SE

    —          106,512      $ 106,512   
  —          1,700        1,700      

Celanese Corporation

    —          108,239      $ 108,239   
  —          1,850        1,850      

Crown Holdings, Inc.*

    —          84,878      $ 84,878   
  3,925        —          3,925      

Dow Chemical Company

    164,850        —        $ 164,850   
  2,500        —          2,500      

E. I. du Pont de Nemours and Company

    131,900        —        $ 131,900   
  2,400        3,400        5,800      

International Paper Company

    82,104        116,314      $ 198,418   
  —          2,600        2,600      

Koninklijke DSM NV

    —          125,398      $ 125,398   
  —          7,900        7,900      

Linde AG

    —          107,203      $ 107,203   
  2,000        —          2,000      

LyondellBasell Industries NV

    155,940        —        $ 155,940   
  1,400        —          1,400      

Monsanto Corporation

    126,840        —        $ 126,840   
  4,100        —          4,100      

Nucor Corporation

    160,187        —        $ 160,187   
  6,939        —          6,939      

Olin Corporation

    117,547        —        $ 117,547   
  —          2,500        2,500      

PolyOne Corporation

    —          67,650      $ 67,650   
  4,300        —          4,300      

Smurfit Kappa Group PLC

    93,181        —        $ 93,181   
  3,500        —          3,500      

Sonoco Products Co.

    138,285        —        $ 138,285   
  —          2,450        2,450      

Syngenta AG ADS

    —          181,006      $ 181,006   
  —          1,350        1,350      

Vulcan Materials Company

    —          119,070      $ 119,070   
  2,200        —          2,200      

WestRock Company

    77,616        —        $ 77,616   
        

 

 

   

 

 

   

 

 

 
           1,483,603        1,085,525      $ 2,569,128   
        

 

 

   

 

 

   

 

 

 
      

Real Estate Investment Trusts

  

 
  4,000        —          4,000      

Agree Realty Corp.

    147,680        —        $ 147,680   
  7,000        —          7,000      

Apollo Residential Mortgage, Inc.

    75,950        —        $ 75,950   
  9,000        —          9,000      

CBL & Associates Poperties, Inc.

    96,750        —        $ 96,750   
  20,000        —          20,000      

City Office REIT, Inc.

    235,000        —        $ 235,000   
  8,000        —          8,000      

Colony Capital, Inc.

    137,840        —        $ 137,840   
  5,000        —          5,000      

Corrections Corporation of America

    144,050        —        $ 144,050   
  1,800        —          1,800      

Crown Castle International Corp.

    155,160        —        $ 155,160   
  12,759        —          12,759      

Gramercy Property Trust, Inc.

    93,268        —        $ 93,268   
  10,000        —          10,000      

New Senior Investment Group, Inc.

    91,900        —        $ 91,900   
  8,600        —          8,600      

New York REIT, Inc.

    88,408        —        $ 88,408   
  5,000        —          5,000      

Outfront Media, Inc.

    108,750        —        $ 108,750   
  6,500        —          6,500      

PennyMac Mortgage Investment Trust

    88,075        —        $ 88,075   
  7,000        —          7,000      

Physicians Realty Trust

    119,490        —        $ 119,490   
  2,500        —          2,500      

Plum Creek Timber Company, Inc.

    101,275        —        $ 101,275   
  9,000        —          9,000      

Preferred Apartment Communities, Inc.

    108,450        —        $ 108,450   
  4,500        —          4,500      

Rayonier, Inc.

    94,905        —        $ 94,905   
  7,000        —          7,000      

Redwood Trust, Inc.

    75,390        —        $ 75,390   
  2,600        —          2,600      

Ryman Hospitality Properties, Inc.

    122,070        —        $ 122,070   
  13,000        —          13,000      

Spirit Realty Capital, Inc.

    136,240        —        $ 136,240   
  8,000        —          8,000      

Summit Hotel Properties, Inc.

    81,200        —        $ 81,200   
  14,400        —          14,400      

Two Harbors Investment Corp.

    109,440        —        $ 109,440   
        

 

 

   

 

 

   

 

 

 
           2,411,291        —        $ 2,411,291   
        

 

 

   

 

 

   

 

 

 

 

F-8


Table of Contents

API Capital
Income Fund

    API Value
Fund
    Pro Forma
Combined
API Capital
Income Fund
Fund
         API Capital
Income Fund
    API Value
Fund
    Pro Forma Combined
API Capital Income
Fund Fund
 

Number of
Shares

    Number of
Shares
    Number of
Shares
         Market
Value
    Market
Value
    Market Value  
      

Telecommunication Services

  

 
  6,500        —          6,500      

A T & T, Inc.

    234,390        —        $ 234,390   
  7,000        —          7,000      

BCE, Inc.

    282,100        —        $ 282,100   
  40,700        —          40,700      

Bezeq Israeli Telecommunication Corporation Ltd.

    87,098        —        $ 87,098   
  —          2,100        

China Mobile Limited

    —          114,513      $ 114,513   
  5,000        —          5,000      

Cogent Communications Holdings, Inc.

    167,050        —        $ 167,050   
  5,800        —          5,800      

Deutsche Telekom AG

    101,036        —        $ 101,036   
  1,900        —          1,900      

Millicom International Cellular S.A.

    83,410        —        $ 83,410   
  10,500        —          10,500      

MTN Group Limited

    93,135        —        $ 93,135   
  5,000        —          5,000      

NTT DOCOMO, Inc. ADR

    112,750        —        $ 112,750   
  5,000        —          5,000      

Singapore Telecommunications Limited

    123,500        —        $ 123,500   
  —          2,600        

SoftBank Corp.

    —          114,400      $ 114,400   
  2,700        —          2,700      

Swisscom AG

    133,650        —        $ 133,650   
  24,000        —          24,000      

TDC A/S

    102,480        —        $ 102,480   
  —          12,800        

Telecom Italia S.p.A.*

    —          142,720      $ 142,720   
  11,314        —          11,314      

Telefonica S.A.

    118,684        —        $ 118,684   
  2,300        —          2,300      

Telenor ASA

    112,263        —        $ 112,263   
  10,000        —          10,000      

TeliaSonera AB

    93,900        —        $ 93,900   
  7,000        —          7,000      

Telstra Corporation Limited

    139,510        —        $ 139,510   
  5,600        —          5,600      

TELUS Corporation

    155,288        —        $ 155,288   
  —          12,000        12,000      

Turkcell Iletisim Hizmetleri AS

    —          106,320      $ 106,320   
          

 

 

   
  4,409        —          4,409      

Verizon Communications, Inc.

    220,318        —        $ 220,318   
  6,000        —          6,000      

Vodafone Group PLC

    193,200        —        $ 193,200   
        

 

 

   

 

 

   

 

 

 
           2,553,762        477,953      $ 3,031,715   
        

 

 

   

 

 

   

 

 

 
      

Utilities

  

 
  2,200        —          2,200      

AGL Resources, Inc.

    139,832        —        $ 139,832   
  3,000        —          3,000      

American Electric Power Company, Inc.

    182,910        —        $ 182,910   
  5,000        —          5,000      

California Water Service Group

    125,450        —        $ 125,450   
  6,500        —          6,500      

CMS Energy Corporation

    252,720        —        $ 252,720   
  2,500        —          2,500      

Dominion Resources, Inc.

    180,425        —        $ 180,425   
  1,500        —          1,500      

DTE Energy Company

    127,515        —        $ 127,515   
  2,800        —          2,800      

Duke Energy Corporation

    210,840        —        $ 210,840   
  9,800        —          9,800      

Electricite de France

    25,480        —        $ 25,480   
  10,700        —          10,700      

Enagas SA

    153,866        —        $ 153,866   
  5,900        —          5,900      

Exelon Corporation

    174,463        —        $ 174,463   
  3,300        —          3,300      

FirstEnergy Corp.

    109,098        —        $ 109,098   
  5,200        —          5,200      

Iberdrola S.A.

    146,484        —        $ 146,484   
  2,000        —          2,000      

National Grid PLC

    141,620        —        $ 141,620   
  1,600        —          1,600      

NextEra Energy, Inc.

    178,736        —        $ 178,736   
  2,700        —          2,700      

Pinnacle West Capital Corp.

    179,037        —        $ 179,037   
  3,000        —          3,000      

SCANA Corp.

    188,850        —        $ 188,850   
  20,000        —          20,000      

Snam S.p.A.

    112,000        —        $ 112,000   
  4,100        —          4,100      

SSE PLC

    84,706        —        $ 84,706   
  5,100        —          5,100      

United Utilities Group PLC

    139,332        —        $ 139,332   
  —          1,900        1,900      

WEC Energy Group, Inc.

      104,935      $ 104,935   
        

 

 

   

 

 

   

 

 

 
           2,853,364        104,935      $ 2,958,299   
        

 

 

   

 

 

   

 

 

 
      

TOTAL COMMON STOCKS

    29,494,534        20,482,251      $ 49,976,785   
        

 

 

   

 

 

   

 

 

 

 

F-9


Table of Contents

API Capital
Income Fund

    API Value
Fund
    Pro Forma
Combined
API Capital
Income Fund
Fund
         API Capital
Income Fund
    API Value
Fund
    Pro Forma Combined
API Capital Income
Fund Fund
 

Number of
Shares

    Number of
Shares
    Number of
Shares
         Market
Value
    Market
Value
    Market Value  
      

CORPORATE BONDS & NOTES

  

  $305,000        —          305,000      

Credit Suisse AG Contingent Coupon Callable Yield Notes, Variable

    282,763        —        $ 282,763   
        

 

 

   

 

 

   

 

 

 
      

TOTAL CORPORATE BONDS & NOTES

    282,763        —        $ 282,763   
        

 

 

   

 

 

   

 

 

 
      

INVESTMENT COMPANIES

  

      

Business Development Companies

  

 
  13,000        —          13,000      

Ares Capital Corp.

    180,700        —        $ 180,700   
  10,000        —          10,000      

Hercules Technology Growth Capital, Inc.

    109,800        —        $ 109,800   
  13,000        —          13,000      

Monroe Capital Corporation

    148,980        —        $ 148,980   
  5,800        —          5,800      

Triangle Capital Corporation

    103,994        —        $ 103,994   
  3,500        —          3,500      

TriplePoint Venture Growth BDC Corp.

    36,995        —        $ 36,995   
        

 

 

   

 

 

   

 

 

 
           580,469        —        $ 580,469   
        

 

 

   

 

 

   

 

 

 
      

Exchange Traded Funds

  

 
  4,000        —          4,000      

Deutsche X-Trackers MSCI All World ex US Hedged Equity ETF

    88,200        —        $ 88,200   
  4,000        4,500        8,500      

Deutsche X-Trackers MSCI EAFE Hedged Equity ETF

    104,280        117,315      $ 221,595   
  5,200        6,500        11,700      

Deutsche X-Trackers MSCI Emerging Markets Hedged Equity ETF

    90,792        113,490      $ 204,282   
  7,000        —          7,000      

Deutsche X-Trackers MSCI Europe Hedged Equity ETF

    173,600        —        $ 173,600   
  2,500        3,000        5,500      

Deutsche X-Trackers MSCI Japan Hedged Equity ETF

    90,850        109,020      $ 199,870   
    1,200        

iShares Core MSCI Europe ETF

    —          47,664      $ 47,664   
    3,250        

iShares Europe ETF

    —          123,370      $ 123,370   
  7,000        —          7,000      

iShares International Select Dividend ETF

    191,100        —        $ 191,100   
  5,000        —          5,000      

iShares MSCI Australia ETF

    88,200        —        $ 88,200   
    3,200        

iShares MSCI Belgium Capped ETF

    —          54,912      $ 54,912   
    2,700        

iShares MSCI EAFE Value ETF

    —          117,126      $ 117,126   
    1,500        

iShares MSCI Eurozone ETF

    —          49,800      $ 49,800   
    2,000        

iShares MSCI France ETF

    —          46,580      $ 46,580   
    1,900        

iShares MSCI Germany ETF

    —          46,227      $ 46,227   
    1,150        

iShares MSCI Germany Small-Cap ETF

    —          44,230      $ 44,230   
    3,500        

iShares MSCI Italy Capped ETF

    —          42,245      $ 42,245   
    10,000        

iShares MSCI Japan ETF

    —          115,000      $ 115,000   
  5,200        —          5,200      

iShares MSCI Pacific ex-Japan ETF

    183,976        —        $ 183,976   
  5,000        —          5,000      

iShares MSCI Singapore ETF

    46,950        —        $ 46,950   
    2,700        

iShares MSCI Spain Capped ETF

    —          71,172      $ 71,172   
    1,100        

iShares MSCI United Kingdom Small-Cap ETF

    —          39,672      $ 39,672   
  3,600        5,400        9,000      

Schwab International Equity ETF

    93,852        140,778      $ 234,630   
  3,500        4,650        8,150      

Schwab International Small-Cap Equity ETF

    93,975        124,853      $ 218,828   
  3,000        —          3,000      

SPDR Euro STOXX 50 ETF

    96,990        —        $ 96,990   
    3,500        

Vanguard FTSE All World ex-U.S. ETF

    —          143,325      $ 143,325   

 

F-10


Table of Contents

API Capital
Income Fund

    API Value
Fund
    Pro Forma
Combined
API Capital
Income Fund
Fund
         API Capital
Income Fund
    API Value
Fund
    Pro Forma Combined
API Capital Income
Fund Fund
 

Number of
Shares

    Number of
Shares
    Number of
Shares
         Market
Value
    Market
Value
    Market Value  
  2,800        4,200        7,000      

Vanguard FTSE Developed Markets ETF

    97,132        145,698      $ 242,830   
  4,550        3,000        7,550      

Vanguard FTSE Europe ETF

    214,169        141,210      $ 355,379   
  7,500        —          7,500      

Wilshire Micro-Cap ETF

    174,075        —        $ 174,075   
  2,000        2,500        4,500      

WisdomTree Europe Hedged Equity Fund

    103,980        129,975      $ 233,955   
    2,000        

WisdomTree Europe Hedged SmallCap Equity Fund

    —          46,380      $ 46,380   
    2,600        

WisdomTree Europe SmallCap Dividend Fund

    —          137,436      $ 137,436   
  4,500        3,000        7,500      

WisdomTree International Equity Fund

    199,800        133,200      $ 333,000   
  4,200        —          4,200      

WisdomTree Europe SmallCap Dividend Fund

    222,012        —        $ 222,012   
        

 

 

   

 

 

   

 

 

 
           2,353,933        2,280,678      $ 4,634,611   
        

 

 

   

 

 

   

 

 

 
      

Money Market Funds - 1.4%

  

 
  460,773        529,582        990,355      

Fidelity Institutional Money Market Portfolio

    460,773        529,582      $ 990,355   
        

 

 

   

 

 

   

 

 

 
      

TOTAL INVESTMENT COMPANIES

    3,395,175        2,810,260      $ 6,205,435   
        

 

 

   

 

 

   

 

 

 
      

PREFERRED STOCKS - 0.2%

  

      

Real Estate Investment Trusts - 0.2%

  

 
  50,000        —          50,000      

Wheeler Real Estate Investment Trust, Inc., 9% Preferred Series B

    73,000        —        $ 73,000   
        

 

 

     

 

 

 
      

TOTAL PREFERRED STOCKS

    73,000        —        $ 73,000   
        

 

 

     

 

 

 
      

TOTAL INVESTMENTS

    33,245,472        23,292,511      $ 56,537,983   
            

 

 

 
      

Liabilities in Excess of Other Assets

    (3,439     (31,133     34,572   
      

Net Assets

    33,242,033        23,261,378      $ 56,503,411   
        

 

 

   

 

 

   

 

 

 

 

*

Non-income producing security.

See accompanying notes to financial statements.

The Value Fund’s Adviser does not intend to sell any of the Fund’s securities in respect of the reorganization.

 

 

F-11


Table of Contents

The API Capital Income Fund / The API Efficient Frontier Value Fund

Pro Forma Combined Statement of Assets and Liabilities

January 31, 2016 (Unaudited)

 

     API Capital
Income Fund
     API Value
Fund
     Adjustments     Pro Forma
Combined
 

ASSETS

          

Investments in unaffiliated issuers at value

   $ 33,245,472       $ 23,292,511         $ 56,537,983   

Dividends and interest receivable

     47,147         14,078           61,225   

Receivable for securities sold

             —     

Receivable for shareholder purchases

          

Other assets

     2,469         1,865           4,334   
  

 

 

    

 

 

      

Total Assets

     33,295,088         23,308,454           56,603,542   
  

 

 

    

 

 

      

 

 

 

Liabilities

          

Payable for shareholder redemptions

     60              60   

Accrued distribution fees

     10,264         5,865           16,129   

Accrued advisory fees

     17,012         18,483           35,495   

Accrued accounting service fees

     3,617         3,539           7,156   

Payable for securities purchased

             —     

Other accrued expenses

     22,102         19,189           41,291   
  

 

 

    

 

 

      

 

 

 

Total liabilities

     53,055         47,076           100,131   
  

 

 

    

 

 

      

 

 

 

Net assets

   $ 33,242,033       $ 23,261,378       $        $ 56,503,411   
  

 

 

    

 

 

    

 

 

   

 

 

 

Shares of beneficial interest (unlimited number of no par value shares authorized (Note 7)

          

Class A: Shares outstanding

     141,839         876,215         (509,695 )*      508,359   
  

 

 

    

 

 

      

 

 

 

Net asset value per share

   $ 38.80       $ 16.23       $ 16.23      $ 38.80   
  

 

 

    

 

 

      

 

 

 

Maximum offering price per share (Note 2)

   $ 41.17       $ 17.22       $ 17.22      $ 41.17   
  

 

 

    

 

 

      

 

 

 

Class L: Shares outstanding

     248,415         523,485         (321,173 )*      450,727   
  

 

 

    

 

 

      

 

 

 

Net asset value per share

   $ 37.70       $ 14.57       $ 14.57      $ 37.70   
  

 

 

    

 

 

      

 

 

 

Institutional Class: Shares outstanding

     464,266         84,720         (48,995 )*      499,991   
  

 

 

    

 

 

      

 

 

 

Net asset value per share

   $ 39.58       $ 16.69       $ 16.69      $ 39.58   
  

 

 

    

 

 

      

 

 

 

Net assets consist of

          

Paid-in capital

   $ 31,340,815       $ 20,666,158         $ 52,006,973   

Undistributed net investment income (loss)

     435,929         69,602           505,531   

Accumulated net realized gain (loss) from security transactions

     89,505         705,906           795,411   

Unrealized appreciation on investments

     1,375,784         1,819,712           3,195,496   
  

 

 

    

 

 

      

Net assets applicable to outstanding shares of beneficial interest

   $ 33,242,033       $ 23,261,378       $        $ 56,503,411   
  

 

 

    

 

 

    

 

 

   

 

 

 

 

*

Share adjustments reflect calculation of Value Fund Shares being converted to Capital Income Fund Shares.

See accompanying notes to financial statements.

 

 

F-12


Table of Contents

The API Capital Income Fund / The API Efficient Frontier Value Fund

Pro Forma Combined Income Statement

For the Year Ended January 31, 2016 (Unaudited)

 

     API Capital
Income Fund
    API Value
Fund
    Adjustments      Pro Forma
Combined
 

Investment Income

         

Dividends from unaffiliated issuers

   $ 1,415,680      $ 597,529         $ 2,013,209   

Dividends from affiliated issuers

            —     

Interest

     45,450        —             45,450   
  

 

 

   

 

 

      

 

 

 

Total income

     1,461,130        597,529         $ 2,058,659   
  

 

 

   

 

 

      

 

 

 

Expenses

         

Investment advisory fees

     225,472        257,388        (85,796      397,064   

Distribution fees

            —     

Class L

     111,314        82,007        9,112 (a)       202,433   

Class A

     31,076          90,198 (a)       121,274   

Accounting service fees

     43,758        42,860        (40,000 )(a)(b)       46,618   

Transfer agent fees

     58,201        46,337        (33,000 )(a)(b)       71,538   

Custodial fees

     8,776        7,768           16,544   

Professional fees

     13,867        12,656        (10,000 )(a)(b)       16,523   

Registration fees

     42,733        41,976        (31,482 )(b)       53,227   

Trustee fees

     4,920        3,690           8,610   

Insurance

     2,886        2,360           5,246   

Shareholder reports

     5,868        4,382           10,250   

Miscellaneous

     28,101        26,503           54,604   
  

 

 

   

 

 

   

 

 

    

 

 

 
         

Total operating expenses

     576,972        527,927        (100,968      1,003,931   

Net investment income (loss)

     884,158        69,602