How to Buy Shares
To help the government fight the funding of terrorism and money laundering activities, federal law requires all financial institutions to obtain, verify, and record information that identifies each person
who opens an account. This means that when you open an account, we will ask for your name, residential address, date of birth, government identification number and other information that will allow us to identify you. We may also ask to see your
driver’s license or other identifying documents, and may take additional steps to verify your identity. If we do not receive these required pieces of information, there may be a delay in processing your investment request, which could subject
your investment to market risk. If we are unable to immediately verify your identity, the Funds may restrict further investment until your identity is verified. If we are unable to verify your identity, the Funds reserve the right to close your
account without notice and return your investment to you at the applicable Fund’s Net Asset Value (“NAV”) determined on the day your account is closed. If we close your account because we are unable to verify your identity, your
investment will be subject to market fluctuation, which could result in a loss of a portion of your principal investment.
Shares of the Funds generally are available for purchase only by institutional clients, such as clients of registered investment advisers,
401(k) plan participants purchasing Fund shares through third party administrators, clients and employees of the adviser (including family members of such persons), and a limited number of certain other investors as approved from time to time by the
adviser. The adviser considers “institutional” investors to include mutual funds, insurance companies, broker-dealers, registered investment advisers, investment management consultants, banks, trust companies, and similar organizations.
Institutional investors may invest in the Funds either for their own accounts, or on behalf of their clients. All investments are subject to approval of the adviser. Each Fund reserves the right to reject any initial or additional investment.
The minimum initial investment in each Fund by an eligible investor is $5,000 ($2,500 for retirement accounts or
custodial accounts). The adviser may, in its sole discretion, waive these minimums in certain circumstances. Each Fund may waive or lower investment minimums for investors who invest in the Fund through an asset-based fee program made available
through a financial intermediary. If your investment is aggregated into an omnibus account established by an investment adviser, broker or other intermediary, the account minimums apply to the omnibus account, not to your individual investment;
however, the financial intermediary may also impose minimum requirements that are different from those set forth in this prospectus. If you choose to purchase or redeem shares directly from the Funds, you will not incur charges on purchases and
redemptions (other than for short-term redemptions). However, if you purchase or redeem shares through a broker-dealer or other intermediary, you may be charged a fee by that intermediary.
Initial Purchase
By Mail
– Your initial purchase request must
include:
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a completed and signed investment application form; and
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a personal check with name pre-printed (subject to the minimum amount) made payable to the applicable Fund.
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Mail the application and check to:
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U.S. Mail:
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Symons Institutional Funds
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c/o Huntington Asset Services, Inc.
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P.O. Box 6110
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Indianapolis, Indiana 46206-6110
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Symons Institutional Funds
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c/o Huntington Asset Services, Inc.
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2960 North Meridian Street, Suite 300
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Indianapolis, Indiana 46208
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By Wire
– You may also purchase shares of the Funds by wiring federal funds from your bank,
which may charge you a fee for doing so. To wire money, you must call Shareholder Services at (877) 679-6667 to obtain instructions on how to set up your account and to obtain an account number.
You must provide a signed application to Huntington Asset Services, Inc., at the above address in order to complete your initial wire
purchase. Wire orders will be accepted only on a day on which the Funds, the custodian and the transfer agent are open for business. A wire purchase will not be considered made until the wired money is received and the purchase is accepted by the
applicable Fund. The purchase price per share will be the NAV determined after the wire purchase is received by the applicable Fund. Any delays which may occur in wiring money, including delays which may occur in processing by the banks, are not the
responsibility of the Funds or the transfer agent. There is presently no fee for the receipt of wired funds, but the Funds may charge shareholders for this service in the future.
Additional Investments
The minimum for additional investments in each Fund
is $250. You may purchase additional shares of a Fund at any time by mail, wire or automatic investment. Each additional mail purchase request must contain:
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the name on your account(s)
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a check made payable to the applicable Fund
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Checks should be sent to the applicable Fund at the address listed under the heading “Initial Purchase – By Mail” in this prospectus. To send a bank wire, call Shareholder Services to
obtain instructions.
Automatic Investment Plan
You may make regular investments in the Funds with an Automatic Investment Plan by completing the appropriate section of the account application or completing a systematic investment plan form with the
proper signature guarantee and attaching a voided personal check. Investments may be made monthly to allow dollar-cost averaging by automatically deducting $250 or more from your bank checking account. You may change the amount of your monthly
purchase at any time. If an Automatic Investment Plan purchase is rejected by your bank, your shareholder account will be charged a fee to defray bank charges.
Tax-Sheltered Retirement Plans
Shares of the Funds may be an appropriate
investment medium for tax-sheltered retirement plans, including: individual retirement plans (IRAs); simplified employee pensions (SEPs); 401(k) plans; qualified corporate pension and profit-sharing plans (for employees); 403(b) plans and other
tax-deferred investment plans (for employees of public school systems and certain types of charitable organizations); and other qualified retirement plans. Please contact Shareholder Services at (877) 679-6667 for information regarding opening
an IRA or other retirement account. Please consult with an attorney or tax adviser regarding these plans. You must pay annual custodial fees for your IRA, usually by redemption of sufficient shares of the applicable Fund from your IRA, unless you
pay the fees directly to the IRA custodian. Call the Funds’ transfer agent about the IRA custodial fees.
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Other Purchase Information
A Fund may limit the amount of purchases and refuse to sell shares to any person. If your check or wire does not clear, you will be responsible for any loss incurred by the Fund. You may be prohibited or
restricted from making future purchases in the Funds. Checks must be made payable to the applicable Fund. The Funds and their transfer agent may refuse any purchase order for any reason. Cash, third party checks (except for properly endorsed IRA
rollover checks), counter checks, starter checks, traveler’s checks, money orders (other than money orders issued by a bank), credit card checks, and checks drawn on non-U.S. financial institutions will not be accepted. Cashier’s checks,
bank official checks, and bank money orders may be accepted in amounts greater than $10,000. In such cases, a fifteen (15) business day hold will be applied to the funds (which means that you may not redeem your shares until the holding period
has expired). Cashier’s checks and bank official checks in amounts less than $10,000 will also be accepted for IRA transfers from other financial institutions.
Each Fund has authorized certain broker-dealers and other financial institutions (including their designated intermediaries) to accept on its behalf purchase and sell orders. Each Fund is deemed to have
received an order when the authorized person or designee accepts the order, and the order is processed at the NAV next calculated thereafter. It is the responsibility of the broker-dealer or other financial institution to transmit orders promptly to
the Funds’ transfer agent.
How to Exchange Shares
You may exchange your shares of a Fund for shares of another Symons Institutional Fund. In general, the same rules and procedures that
apply to sales and purchases apply to exchanges. You may call Shareholder Services at (877) 679-6667 to exchange shares. An exchange may also be made by written request signed by all registered owners of the account mailed to the address listed
above.
An exchange is made by selling shares of one Fund and using the proceeds to buy shares of another Fund, with the NAV
for the sale and the purchase of each applicable Fund calculated on the same day. An exchange results in a sale of shares for federal income tax purposes. If you make use of the exchange privilege, you may realize either a long-term or short-term
capital gain or loss on the shares sold.
Requests for exchanges will be processed at the next calculated NAV after receipt
of the request (i.e., prior to close of trading on the New York Stock Exchange (“NYSE”), typically 4:00 p.m. Eastern time). Before making an exchange, you should consider the investment objective of the Fund to be purchased. If your
exchange creates a new account, you must satisfy the requirements of the Fund in which shares are being purchased. You may make an exchange to a new account or an existing account; however, the account ownership must be identical. Exchanges may be
made only in states where an exchange may legally be made. The Funds reserve the right to terminate or modify the exchange privilege at any time.
How to Redeem Shares
You may receive
redemption payments by check, ACH or federal wire transfer. The proceeds may be more or less than the purchase price of your shares, depending on the market value of the applicable Fund’s securities at the time of your redemption. A wire
transfer fee of $15 is charged to defray custodial charges for redemptions paid by wire transfer. This fee is subject to change. Any charges for wire redemptions will be deducted from your account by redemption of shares. The Funds do not intend to
redeem shares in any form except cash. However, if the aggregate amount you are redeeming is over the lesser of $250,000 or 1% of a Fund’s NAV within a 90-day period, the Fund has the right to redeem your shares by giving you the amount that
exceeds the lesser of $250,000 or 1% of the Fund’s NAV in securities instead of cash. In the event that an in-kind distribution is made, a shareholder may incur additional expenses, such as the payment of brokerage commissions, on the sale or
other disposition of the securities received from the Fund. If you redeem your shares through a broker-dealer or other institution, you may be charged a fee by that institution.
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By Mail –
You may redeem any part of your account in a Fund at no charge by
mail. Your request should be addressed to:
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U.S. Mail:
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Symons Institutional Funds
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c/o Huntington Asset Services, Inc.
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P.O. Box 6110
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Indianapolis, Indiana 46206-6110
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Overnight:
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Symons Institutional Funds
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c/o Huntington Asset Services, Inc.
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2960 North Meridian Street, Suite 300
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Indianapolis, Indiana 46208
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Your request for a redemption must include your letter of instruction, including the Fund name, account
number, account name(s), the address, and the dollar amount or number of shares you wish to redeem. Requests to sell shares that are received in good order are processed at the NAV next calculated after the Fund receives your order in proper form.
To be in proper order, your request must be signed by all registered share owner(s) in the exact name(s) and any special capacity in which they are registered. The Fund may require that signatures be guaranteed if you request the redemption check be
made payable to any person other than the shareholder(s) of record or mailed to an address other than the address of record, or if the mailing address has been changed within 30 days of the redemption request. The Fund may also require a signature
guarantee for redemptions of $25,000 or more. Signature guarantees are for the protection of shareholders. All documentation requiring a signature guarantee stamp must utilize a New Technology Medallion stamp, generally available from the bank where
you maintain a checking or savings account. You can obtain a signature guarantee from most banks and securities dealers, but not from a notary public. For joint accounts, both signatures must be guaranteed. Please call Shareholder Services at
(877) 679-6667
if you have questions. At the discretion of the Fund or its transfer agent, you may be required to furnish additional legal documents to insure proper authorization.
By Telephone –
You may redeem any part of your account (up to $25,000) in a Fund by calling Shareholder Services at
(877) 679-6667. You must first complete the Optional Telephone Redemption and Exchange section of the investment application or provide a signed letter of instruction with the proper signature guarantee stamp to institute this option. The Fund,
its transfer agent and custodian are not liable for following redemption instructions communicated by telephone to the extent that they reasonably believe the telephone instructions to be genuine. However, if they do not employ reasonable procedures
to confirm that telephone instructions are genuine, they may be liable for any losses due to unauthorized or fraudulent instructions. Procedures employed may include recording telephone instructions and requiring a form of personal identification
from the caller.
The Funds or the transfer agent may terminate the telephone redemption procedures at any time. During periods
of extreme market activity, it is possible that shareholders may encounter some difficulty in telephoning the Funds, although neither the Funds nor the transfer agent have ever experienced difficulties in receiving and in a timely fashion responding
to telephone requests for redemptions. If you are unable to reach the Funds by telephone, you may request a redemption by mail.
The
Funds’ Policy on Market Timing
The Funds discourage market timing. Market timing is an investment strategy using
frequent purchases, redemptions and/or exchanges in an attempt to profit from short-term market movements. Market timing may result in dilution of the value of a Fund’s shares held by long-term shareholders, disrupt portfolio management and
increase Fund expenses for all shareholders. The Board of Trustees has adopted a policy directing each Fund to reject any purchase order with respect to any investor, a related group of investors or their agent(s), where the Fund detects a pattern
of purchases and sales of the Fund’s shares that indicates market timing or trading that the Fund determines is abusive. This policy generally applies to all shareholders of the
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Funds. The Board of Trustees also has adopted a redemption policy to discourage short-term traders and/or market timers from investing in the Funds. A 2.00% short-term redemption fee will be
assessed by each Fund against investment proceeds withdrawn within 60 calendar days of investment. Fund shares received from reinvested distributions or capital gains are not subject to the redemption fee. After excluding any shares that are
associated with reinvested distributions from the redemption fee calculation, each Fund uses a “first-in, first-out” method to determine the 60-day holding period. Thus, if you bought shares on different days, the shares purchased first
will be redeemed first for purposes of determining whether the redemption fee applies. The proceeds collected from redemption fees will be retained by the applicable Fund for the benefit of existing shareholders. Huntington Asset Services, Inc.
performs automated monitoring of short-term trading activity with respect to the Funds. Instances of suspected short-term trading are investigated by the compliance department. If an instance is deemed a violation of the short-term trading policies
of the Funds, then the Funds’ adviser is notified and action, such as suspending future purchases, is taken. A quarterly certification reporting any instances of short-term trading in violation of the Funds’ policies is provided to the
Board of Trustees.
If you invest in a Fund through a bank, broker-dealer, 401(k) plan, financial adviser or financial
supermarket (“Financial Intermediary”), the Financial Intermediary may, in lieu of charging the redemption fee set forth in this prospectus, enforce its own market timing policy. “Omnibus accounts” that include multiple customers
of the Financial Intermediary also will be exempt from the redemption fee if the Financial Intermediary does not track and/or process redemption fees. Additionally, the transfer of shares from one retirement account to another, accounts
participating in a wrap fee program and redemptions caused by decisions of employer-sponsored retirement plans may be exempt from the redemption fee. Redemption fees may be waived for mandatory retirement withdrawals, systematic withdrawals,
redemptions made to pay for various administrative fees and, at the sole discretion of the adviser, due to changes in an investor’s circumstances, such as death. No exceptions will be granted to persons believed to be “market timers.”
While the Funds attempt to deter market timing, there is no assurance that a Fund will be able to identify and eliminate all
market timers. For example, certain accounts called “omnibus accounts” include multiple shareholders. Despite a Fund’s efforts to detect and prevent abusive trading activities, it may be difficult to identify such activity in certain
omnibus accounts traded through a Financial Intermediary. Omnibus accounts typically provide a Fund with a net purchase or redemption request on any given day where purchasers of Fund shares and redeemers of Fund shares are netted against one
another and the identity of individual purchasers and redeemers whose orders are aggregated is not known by the Fund. Consequently, a Fund may not have knowledge of the identity of investors and their transactions. The netting effect often makes it
more difficult to apply redemption fees, and there can be no assurance that a Fund will be able to apply the fee to such accounts in an effective manner. Under a federal rule, each Fund is required to have an agreement with many of its Financial
Intermediaries obligating the Financial Intermediaries to provide, upon the Fund’s request, information regarding their customers and their transactions in the Fund. However, there can be no guarantee that all excessive, short-term or other
abusive trading activities will be detected, even with such an agreement in place. Certain Financial Intermediaries, in particular retirement plan sponsors and administrators, may have less restrictive policies regarding short-term trading. In
addition to the redemption fee, each Fund reserves the right to reject any purchase or exchange order for any reason, including purchase orders that it does not think are in the best interest of the Fund or its shareholders, or if the Fund thinks
that such trading is abusive. The Funds have not entered into any arrangements with any person to permit frequent purchases and redemptions of Fund shares.
STATEMENT OF ADDITIONAL INFORMATION
March 31, 2014
This
Statement of Additional Information (“SAI”) is not a prospectus. It should be read in conjunction with the Prospectus of the Symons Institutional Funds dated March 31, 2014. This SAI incorporates by reference the annual report to
shareholders of the Symons Institutional Funds for the fiscal year ended November 30, 2013. A free copy of the Prospectus or annual report can be obtained by writing the transfer agent at Huntington Asset Services, Inc., 2960 North Meridian
Street, Suite 300, Indianapolis, Indiana 46208, or by calling Shareholder Services at (877) 679-6667.
TABLE
OF CONTENTS
1
DESCRIPTION OF THE TRUST AND FUNDS
The Symons Value Institutional Fund (the “Value Fund”) was organized as a diversified series of Unified Series Trust (the
“Trust”) on November 13, 2006. The Value Fund was formerly known as the Symons Alpha Value Institutional Fund. The Symons Small Cap Institutional Fund (the “Small Cap Fund”) was organized as a diversified series of the Trust
on February 10, 2008. The Trust is an
open-end
investment company established under the laws of Ohio by an Agreement and Declaration of Trust dated October 17, 2002 (the “Trust Agreement”).
The Trust Agreement permits the Trustees to issue an unlimited number of shares of beneficial interest of separate series without par value. Each Fund is one of a series of funds currently authorized by the Trustees. The investment adviser to the
Funds is Symons Capital Management, Inc. (the “Adviser”). The Value Fund commenced operations on December 22, 2006. The Small Cap Fund commenced operations on May 6, 2008.
The Funds do not issue share certificates. All shares are held in non-certificated form registered on the books of the Funds and Huntington
Asset Services, Inc., the Funds’ transfer agent (the “Transfer Agent”) for the account of the shareholder. Each share of a series represents an equal proportionate interest in the assets and liabilities belonging to that series with
each other share of that series and is entitled to such dividends and distributions out of income belonging to the series as are declared by the Trustees. Each share has the same voting and other rights and preferences as any other shares of any
series of the Trust with respect to matters that affect the Trust as a whole. The shares do not have cumulative voting rights or any preemptive or conversion rights, and the Trustees have the authority from time to time to divide or combine the
shares of any series into a greater or lesser number of shares of that series so long as the proportionate beneficial interest in the assets belonging to that series and the rights of shares of any other series are in no way affected. Each of the
Value Fund and the Small Cap Fund (each a “Fund”) currently offers one class of shares, and may offer additional classes of shares in the future. In case of any liquidation of a series, the holders of shares of the series being liquidated
will be entitled to receive as a class a distribution out of the assets, net of the liabilities, belonging to that series. Expenses attributable to any series are borne by that series. Any general expenses of the Trust not readily identifiable as
belonging to a particular series are allocated by or under the direction of the Trustees in such manner as the Trustees determine to be fair and equitable. No shareholder is liable to further calls or to assessment by the Trust without his or her
express consent.
Any Trustee of the Trust may be removed by vote of the shareholders holding not less than two-thirds of the
outstanding shares of the Trust. The Trust does not hold an annual meeting of shareholders. When matters are submitted to shareholders for a vote, each shareholder is entitled to one vote for each whole share he or she owns and fractional votes for
fractional shares he or she owns. All shares of the Funds have equal voting rights and liquidation rights. The Trust Agreement can be amended by the Trustees, except that certain amendments that could adversely affect the rights of shareholders must
be approved by the shareholders affected. Each share of a Fund is subject to involuntary redemption if the Trustees determine to liquidate the Fund. A Fund will provide notice to the shareholders if the Board determines, in its sole judgment, to
liquidate the Fund, but the Fund will not be required to obtain shareholder approval prior to such liquidation. An involuntary redemption will create a capital gain or a capital loss, which may have tax consequences about which you should consult
your tax adviser.
For information concerning the purchase and redemption of shares of the Funds, see “How to Buy Shares” and
“How to Redeem Shares” in the Funds’ Prospectus. For a description of the methods used to determine the share price and value of the Funds’ assets, see “Determination of Net Asset Value” in the Funds’ Prospectus
and in this SAI.
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Each Fund may authorize one or more brokers or other intermediaries (an “Intermediary”)
to receive on its behalf purchase and redemption orders. Such Intermediaries would also be permitted to designate others to receive purchase and redemption orders on behalf of such Fund. A Fund will be deemed to have received a purchase or
redemption order when an authorized Intermediary or, if applicable, its authorized designee, receives the order. Customer orders will be priced at the applicable Fund’s net asset value next computed after they are received by an authorized
Intermediary and accepted by the Fund.
The performance of a Fund may be compared in publications to the performance of various indices
and investments for which reliable performance data is available. The performance of a Fund may be compared in publications to averages, performance rankings, or other information prepared by recognized mutual fund statistical services. The
Funds’ annual report contains additional performance information and will be made available to investors upon request and without charge.
ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS AND RISK CONSIDERATIONS
This section contains additional information regarding some
of the investments the Funds may make and some of the techniques they may use.
A.
Common Stocks and Equivalents
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Each Fund
will invest in common stock and common stock equivalents (such as rights and warrants, and convertible securities). Warrants are options to purchase equity securities at a specified price valid for a specific time period. Rights are similar to
warrants, but normally have a short duration and are distributed by the issuer to its shareholders. Warrants are instruments that entitle the holder to buy underlying equity securities at a specific price for a specific period of time. A warrant
tends to be more volatile than its underlying securities and ceases to have value if it is not exercised prior to its expiration date. In addition, changes in the value of a warrant do not necessarily correspond to changes in the value of its
underlying securities.
B.
Foreign Securities
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Each Fund may invest in foreign securities, either directly or indirectly
through depositary receipts, including American Depositary Receipts (“ADRs”), Global Depositary Receipts (“GDRs”) and other similar instruments. Generally, ADRs, in registered form, are denominated in U.S. dollars and are
designed for use in the U.S. securities markets, while GDRs, in bearer form, may be denominated in other currencies and are designed for use in multiple foreign securities markets. ADRs are receipts typically issued by a U.S. bank or trust company
evidencing ownership of the underlying securities. GDRs are foreign receipts evidencing a similar arrangement. For purposes of the Funds’ investment policies, ADRs and GDRs are deemed to have the same classification as the underlying securities
they represent, except that ADRs and GDRs shall be treated as indirect foreign investments. For example, an ADR or GDR representing ownership of common stock will be treated as common stock. Depositary receipts do not eliminate all of the risks
associated with direct investment in the securities of foreign issuers.
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ADRs are denominated in U.S. dollars and represent an interest in the right to receive securities
of foreign issuers deposited in a U.S. bank or correspondent bank. ADRs do not eliminate all risk inherent in investing in the securities of foreign issuers. However, by investing in ADRs rather than directly in equity securities of foreign issuers,
a Fund will avoid currency risks during the settlement period for either purchases or sales. GDRs are not necessarily denominated in the same currency as the underlying securities which they represent.
Depositary receipt facilities may be established as either “unsponsored” or “sponsored.” While depositary receipts issued
under these two types of facilities are in some respects similar, there are distinctions between them relating to the rights and obligations of depositary receipt holders and the practices of market participants.
A depositary may establish an unsponsored facility without participation by (or even necessarily the permission of) the issuer of the
deposited securities, although typically the depositary requests a letter of non-objection from such issuer prior to the establishment of the facility. Holders of unsponsored depositary receipts generally bear all the costs of such facility. The
depositary usually charges fees upon the deposit and withdrawal of the deposited securities, the conversion of dividends into U.S. dollars, the disposition of non-cash distributions, and the performance of other services. The depositary of an
unsponsored facility frequently is under no obligation to pass through voting rights to depositary receipt holders in respect of the deposited securities. In addition, an unsponsored facility is generally not obligated to distribute communications
received from the issuer of the deposited securities or to disclose material information about such issuer in the U.S. and there may not be a correlation between such information and the market value of the depositary receipts.
Sponsored depositary receipt facilities are created in generally the same manner as unsponsored facilities, except that the issuer of the
deposited securities enters into a deposit agreement with the depositary. The deposit agreement sets out the rights and responsibilities of the issuer, the depositary, and the depositary receipt holders. With sponsored facilities, the issuer of the
deposited securities generally will bear some of the costs relating to the facility (such as dividend payment fees of the depositary), although depositary receipt holders continue to bear certain other costs (such as deposit and withdrawal fees).
Under the terms of most sponsored arrangements, depositaries agree to distribute notices of shareholder meetings and voting instructions, and to provide shareholder communications and other information to the depositary receipt holders at the
request of the issuer of the deposited securities.
Other foreign securities may be denominated in U.S. dollars and trade on domestic
stock exchanges. Foreign investments can involve significant risks in addition to the risks inherent in U.S. investments. Securities of foreign companies may experience more rapid and extreme changes in value than securities of U.S. companies
because a limited number of companies represent a small number of industries. Many foreign countries lack uniform accounting and disclosure standards comparable to those applicable to U.S. companies, and it may be more difficult to obtain reliable
information regarding an issuer’s financial condition and operations. When a Fund invests in ADRs or other U.S. dollar-denominated foreign securities, it generally will not be subject to currency risk.
Investing abroad also involves different political and economic risks. Foreign investments may be affected by actions of foreign governments
adverse to the interests of U.S. investors, including the possibility of expropriation or nationalization of assets, confiscatory taxation, restrictions on U.S. investment or on the ability to repatriate assets or convert currency into U.S. dollars,
or other government intervention. There may be a greater possibility of default by foreign governments or foreign government-sponsored enterprises. Investments in foreign countries also involve a risk of local political, economic or social
instability, military action or unrest, or adverse diplomatic developments. There is no assurance that the Adviser will be able to anticipate or counter these potential events and their impacts on a Fund’s share price.
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C.
Income Trusts.
Each Fund may invest in income trusts, including real estate
investment trusts (“REITs”), business trusts and oil royalty trusts. Income trusts are operating businesses that have been put into a trust. Income trusts pay out the majority of their free cash flow to unit holders. The businesses that
are sold into these trusts are usually mature and stable income-producing companies that lend themselves to fixed (monthly or quarterly) distributions. These trusts are regarded as equity investments with fixed-income attributes or high-yield debt
with no fixed maturity date. These trusts typically offer regular income payments and a significant premium yield compared to other types of fixed income investments.
Real Estate Investment Trusts
. Each Fund may invest in REITs. A REIT is a corporation or business trust that invests substantially all
of its assets in interests in real estate. Equity REITs are those which purchase or lease land and buildings and generate income primarily from rental income. Equity REITs may also realize capital gains (or losses) when selling property that has
appreciated (or depreciated) in value. Mortgage REITs are those which invest in real estate mortgages and generate income primarily from interest payments on mortgage loans. Hybrid REITs generally invest in both real property and mortgages. The
Funds generally consider equity REITs to be equity securities, while mortgage REITs and hybrid REITs generally are considered fixed income securities. REITs are generally subject to risks associated with direct ownership of real estate, such as
decreases in real estate values or fluctuations in rental income caused by a variety of factors, including increases in interest rates, increases in property taxes and other operating costs, casualty or condemnation losses, possible environmental
liabilities and changes in supply and demand for properties. Risks associated with REIT investments include the fact that equity and mortgage REITs are dependent upon specialized management skills and are not fully diversified. These characteristics
subject REITs to the risks associated with financing a limited number of projects. They are also subject to heavy cash flow dependency, defaults by borrowers and self-liquidation. Additionally, equity REITs may be affected by any changes in the
value of the underlying property owned by the trusts, and mortgage REITs may be affected by the quality of any credit extended.
Business Trusts.
A business trust is an income trust where the principal business of the underlying corporation or other entity is in
the manufacturing, service or general industrial sectors. It is anticipated that the number of businesses constituted or reorganized as income trusts will increase significantly in the future. Conversion to the income trust structure is attractive
to many existing mature businesses with relatively high, stable cash flows and low capital expenditure requirements, due to tax efficiency and investor demand for high-yielding equity securities. One of the primary attractions of business trusts, in
addition to their relatively high yield, is their ability to enhance diversification in the portfolio as business trusts may cover a broad range of industries and geographies, including public refrigerated warehousing, mining, coal distribution,
sugar distribution, forest products, retail sales, food sales and processing, chemical recovery and processing, data processing, gas marketing and check printing. Each business represented is typically characterized by long life assets or businesses
that have exhibited a high degree of stability. Investments in business trusts are subject to various risks, including risks related to the underlying operating companies controlled by such trusts. These risks may include lack of or limited
operating histories and increased susceptibility to interest rate risks.
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Oil Royalty Trusts.
A royalty trust typically controls an operating company which
purchases oil and gas properties using the trust’s capital. The royalty trust then receives royalties and/or interest payments from its operating company, and distributes them as income to its unit holders. Units of the royalty trust represent
an economic interest in the underlying assets of the trust.
Each Fund may invest in oil royalty trusts that are traded on U.S. stock
exchanges. Oil royalty trusts are income trusts that own or control oil and gas operating companies. Oil royalty trusts pay out substantially all of the cash flow they receive from the production and sale of underlying crude oil and natural gas
reserves to shareholders (unit holders) in the form of monthly dividends (distributions). As a result of distributing the bulk of their cash flow to unit holders, royalty trusts are effectively precluded from internally originating new oil and gas
prospects. Therefore, these royalty trusts typically grow through acquisition of producing companies or those with proven reserves of oil and gas, funded through the issuance of additional equity or, where the trust is able, additional debt.
Consequently, oil royalty trusts are considered less exposed to the uncertainties faced by a traditional oil and gas exploration and production corporation. However, oil royalty trusts are still exposed to commodity risk and reserve risk, as well as
operating risk.
The operations and financial conditions of oil royalty trusts, and the amount of distributions or dividends paid on their
securities is dependent on oil prices. Prices for commodities vary and are determined by supply and demand factors, including weather, and general economic and political conditions. A decline in oil prices could have a substantial adverse effect on
the operations and financial conditions of the trusts. Such trusts also are subject to the risk of an adverse change in the regulation of the natural resource industry and other operational risks relating to the energy sector. In addition, the
underlying operating companies held or controlled by the trusts are usually involved in oil exploration; however, such companies may not be successful in holding, discovering, or exploiting adequate commercial quantities of oil, the failure of which
will adversely affect their values. Even if successful, oil and gas prices have fluctuated widely during recent years and may continue to do so in the future. The Adviser expects that the combination of global growth in demand and depleting
reserves, together with current geopolitical instability, could continue to support strong crude oil prices over the long term. However, there is no guarantee that these prices will not decline. Declining crude oil prices may cause a Fund to incur
losses on its investments. In addition, the demand in and supply to the developing markets could be affected by other factors such as restrictions on imports, increased taxation, and creation of government monopolies, as well as social, economic and
political uncertainty and instability. Furthermore, there is no guarantee that non-conventional sources of natural gas will not be discovered which would adversely affect the oil industry.
Moreover, as the underlying oil and gas reserves are produced the remaining reserves attributable to a royalty trust are depleted. The ability
of a royalty trust to replace reserves is therefore fundamental to its ability to maintain distribution levels and unit prices over time. Certain royalty trusts have demonstrated consistent positive reserve growth year-over-year and, as such,
certain royalty trusts have been successful to date in this respect and are thus currently trading at unit prices significantly higher than those of five or ten years ago. Oil royalty trusts manage reserve depletion through reserve additions
resulting from internal capital development activities and through acquisitions.
When a Fund invests in foreign oil royalty trusts, it
will also be subject to foreign securities risks which are more fully described above.
6
D.
Investment Company Securities
.
Each Fund may invest in shares of other
investment companies, such as other mutual funds, money market funds, unit investment trusts, and exchange-traded funds (“ETFs”). For example, a Fund may invest in ETFs whose investments are consistent with the Fund’s own investment
strategy. In addition, a Fund also may invest in ETFs that do not meet such investment strategy, for defensive and other purposes. Additionally, the Funds may invest in new exchange-traded shares as they become available. As a shareholder of an
investment company, a Fund will indirectly bear its pro rata portion of service and other fees of such other investment company, which are in addition to the fees the Fund pays its service providers. For example, shareholders may incur expenses
associated with capital gains distributions by a Fund as well as the underlying funds in which the Fund invests. Shareholders also may incur increased transaction costs as a result of a Fund’s portfolio turnover rate and/or because of the high
portfolio turnover rates in the underlying funds. Each Fund is independent from any of the underlying funds in which it invests and it has no voice in or control over the investment strategies, policies or decisions of the underlying funds. A
Fund’s only option is to redeem its investment in an underlying fund in the event of dissatisfaction with the fund.
E.
Inverse
Exchange-Traded Funds (“ETFs”).
Each Fund may invest in inverse ETFs, including leveraged ETFs. Inverse ETFs seek to provide investment results that match a certain percentage of the inverse of the results of a specific index on a
daily or monthly basis. Inverse ETFs are subject to additional risk not generally associated with traditional ETFs. Inverse ETFs seek to negatively correlate with the performance of a particular index by using various forms of derivative
transactions, including by short-selling the underlying index. Leveraged ETFs seek to multiply the negative return of the tracked index (e.g., twice the inverse return). An investment in an inverse ETF will decrease in value when the value of the
underlying index rises. For example, an inverse ETF tracking the S&P 500 Index will gain 1% when the S&P 500 falls 1% (if it is a leveraged ETF that seeks twice the inverse return, it will gain 2%), and will lose 1% if the S&P 500 gains
1% (if it is a leveraged ETF that seeks twice the inverse return, it will lose 2%). By investing in leveraged ETFs and gaining magnified short exposure to a particular index, a Fund can commit fewer assets to the investment in the securities
represented in the index than would otherwise be required.
Inverse ETFs present all of the risks that regular ETFs present. In addition,
inverse ETFs determine their inverse return on a day-to-day or monthly basis and, as a result, there is no guarantee that the ETF’s actual long-term returns will be equal to the daily or monthly return that a Fund seeks to achieve. For
example, on a long-term basis (e.g., a period of 6 months or a year), the return of a leveraged ETF may in fact be considerably less than two times the long-term inverse return of the tracked index. Furthermore, because inverse ETFs achieve
their results by using derivative instruments, they are subject to the risks associated with derivative transactions, including the risk that the value of the derivatives may rise or fall more rapidly than other investments, thereby causing the
inverse ETF to lose money and, consequently, the value of the Fund’s investment to decrease. Investing in derivative instruments also involves the risk that other parties to the derivative contract may fail to meet their obligations, which
could cause losses to the inverse ETF. Short sales in particular are subject to the risk that, if the price of the security sold short increases, the inverse ETF may have to cover its short position at a higher price than the short sale price,
resulting in a loss to the inverse ETF and, indirectly, to the Fund. An inverse ETF’s use of these techniques will make a Fund’s investment in the ETF more volatile than if the Fund were to invest directly in the securities underlying the
tracked index, or in an ETF that does not use leverage or derivative instruments. However, by investing in an inverse ETF rather than directly purchasing and/or selling derivative instruments, a Fund will limit its potential loss solely to the
amount actually invested in the ETF (that is, the Fund will not lose more than the principal amount invested in the inverse ETF). Inverse ETFs may also incur capital gains, some of which may be taxed as ordinary income, thereby increasing the
amounts of a Fund’s taxable distributions.
7
F.
Securities Lending
. Each Fund may, from time to time, lend securities to banks,
brokers and dealers and receive as collateral cash, U.S. Government obligations or irrevocable bank letters of credit (or any combination thereof), which collateral will be required to be maintained at all times in an amount equal to at least 100%
of the current value of the loaned securities plus accrued interest. Each Fund’s securities lending practices will be limited to no more than 33% of its total assets.
To be acceptable as collateral, letters of credit must be issued by a bank that is deemed satisfactory by the Adviser, and must obligate the
bank to pay amounts demanded by a Fund if the demand meets the terms of the letter. The Fund receives amounts equal to the dividends or interest on the loaned securities and also receives one or more of (a) negotiated loan fees,
(b) interest on securities used as collateral, or (c) interest on short-term debt securities purchased with such collateral; either type of interest may be shared with the borrower. The Fund may also pay fees to placing brokers as well as
custodial and administrative fees in connection with its securities loans. However, fees may only be paid to a placing broker if (a) the Adviser determines that such fees paid to the placing broker are reasonable and based solely upon services
rendered, and (b) the Board of Trustees of the Trust separately considers the propriety of any fee shared by the placing broker with the borrower and determines that the fees paid to the placing broker are not used to compensate the Adviser or
any of its affiliated persons.
Loans of securities involve risks of delay in receiving additional collateral or in recovering the
securities lent or even loss of rights in the collateral in the event of the insolvency of the borrower of the securities. The terms of a Fund’s loans must meet applicable tests under the Internal Revenue Code of 1986, as amended (the
“Code”) and must permit the Fund to re-acquire loaned securities on five days’ notice or in time to vote on any important matter. The Fund will have the right to regain record ownership of loaned securities in order to exercise
beneficial rights.
G.
Options
.
Each Fund may use options for any lawful purpose consistent with its investment objective
such as hedging or managing risk. An option is a contract in which the “holder” (the buyer) pays a certain amount (“premium”) to the “writer” (the seller) to obtain the right, but not the obligation, to buy from the
writer (in a “call”) or sell to the writer (in a “put”) a specific asset at an agreed upon price (“strike price” or “exercise price”) at or before a certain time (“expiration date”). The holder pays
the premium at inception and has no further financial obligation. The holder of an option will benefit from favorable movements in the price of the underlying asset but is not exposed to corresponding losses due to adverse movements in the value of
the underlying asset. The writer of an option will receive fees or premiums but is exposed to losses due to adverse changes in the value of the underlying asset. Each Fund may buy (hold) or write (sell) put and call options on assets, such as
securities, currencies, financial commodities, and indices of debt and equity securities (“underlying assets”) and enter into closing transactions with respect to such options to terminate an existing position. Options used by a Fund may
include European, American, and Bermuda style options. If an option is exercisable only at maturity, it is a “European” option; if it is also exercisable prior to maturity, it is an “American” option. If it is exercisable only at
certain times, it is a “Bermuda” option.
8
The purchase of a call option serves as a long hedge, and the purchase of a put option serves as
a short hedge. Writing put or call options can enable a Fund to enhance income by reason of the premiums paid by the purchaser of such options. Writing call options serves as a limited short hedge because declines in the value of the hedged
investment would be offset to the extent of the premium received for writing the option. However, if the security appreciates to a price higher than the exercise price of the call option, it can be expected that the option will be exercised and a
Fund will be obligated to sell the security at less than its market value or will be obligated to purchase the security at a price greater than that at which the security must be sold under the option. All or a portion of any assets used as cover
for over-the-counter (“OTC”) options written by a Fund may be considered illiquid. Writing put options serves as a limited long hedge because decreases in the value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security depreciates to a price lower than the exercise price of the put option, it can be expected that the put option will be exercised and a Fund will be obligated to purchase the security at more
than its market value.
The value of an option position will reflect, among other things, the historical price volatility of the
underlying investment, the current market value of the underlying investment, the time remaining until expiration, the relationship of the exercise price to the market price of the underlying investment, and general market conditions.
Each Fund may effectively terminate its right or obligation under an option by entering into a closing transaction. For example, a Fund may
terminate its obligation under a call or put option that it had written by purchasing an identical call or put option; this is known as a closing purchase transaction. Conversely, a Fund may terminate a position in a put or call option it had
purchased by writing an identical put or call option; this is known as a closing sale transaction. Closing transactions permit a Fund to realize the profit or limit the loss on an option position prior to its exercise or expiration.
Each Fund may purchase or write both exchange-traded and OTC options. Exchange-traded options are issued by a clearing organization affiliated
with the exchange on which the option is listed that, in effect, guarantees completion of every exchange-traded option transaction. In contrast, OTC options are contracts between a Fund and the other party to the transaction
(“counterparty”) (usually a securities dealer or a bank) with no clearing organization guarantee. Thus, when a Fund purchases or writes an OTC option, it relies on the counterparty to make or take delivery of the underlying investment upon
exercise of the option. Failure by the counterparty to do so would result in the loss of any premium paid by the Fund as well as the loss of any expected benefit of the transaction.
Each Fund’s ability to establish and close out positions in exchange-listed options depends on the existence of a liquid market. Each
Fund intends to purchase or write only those exchange-traded options for which there appears to be a liquid secondary market. However, there can be no assurance that such a market will exist at any particular time. Closing transactions can be made
for OTC options only by negotiating directly with the counterparty, or by a transaction in the secondary market if any such market exists. Although each Fund will enter into OTC options only with counterparties that are expected to be capable of
entering into closing transactions with a Fund, there is no assurance that a Fund will in fact be able to close out an OTC option at a favorable price prior to expiration. In the event of insolvency of the counterparty, a Fund might be unable to
close out an OTC option position at any time prior to its expiration. If a Fund were unable to effect a closing transaction for an option it had purchased, it would have to exercise the option to realize any profit.
9
Each Fund may engage in options transactions on indices in much the same manner as the options on
securities discussed above, except the index options may serve as a hedge against overall fluctuations in the securities market represented by the relevant market index.
The writing and purchasing of options is a highly specialized activity that involves investment techniques and risks different from those
associated with ordinary portfolio securities transactions. Imperfect correlation between the options and securities markets may detract from the effectiveness of the attempted hedging.
H.
Preferred Stock
.
Preferred stock represents an equity or ownership interest in an issuer. Preferred stock normally pays
dividends at a specified rate and has precedence over common stock in the event the issuer is liquidated or declares bankruptcy. However, in the event an issuer is liquidated or declares bankruptcy, the claims of owners of bonds take precedence over
the claims of those who own preferred and common stock. Preferred stock, unlike common stock, often has a stated dividend rate payable from the corporation’s earnings. Preferred stock dividends may be cumulative or non-cumulative,
participating, or auction rate. “Cumulative” dividend provisions require all or a portion of prior unpaid dividends to be paid before dividends can be paid to the issuer’s common stock. “Participating” preferred stock may be
entitled to a dividend exceeding the stated dividend in certain cases. “Auction Rate” preferred stock is a floating rate preferred stock with the dividend rate reset by Dutch auction, typically every seven, 28, 35 or 49 days. The dividend
rate on auction rate preferred stock usually is subject to a maximum rate. If interest rates rise, the fixed dividend on preferred stocks may be less attractive, causing the price of such stocks to decline. Preferred stock may have mandatory sinking
fund provisions, as well as provisions allowing the stock to be called or redeemed, which can limit the benefit of a decline in interest rates. Preferred stock is subject to many of the risks to which common stock and debt securities are subject.
INVESTMENT LIMITATIONS
A
.
Fundamental
. The investment limitations described below have been adopted by the Trust with respect to the Funds and are
fundamental (“Fundamental”),
i.e.
, they may not be changed without the affirmative vote of a majority of the outstanding shares of the applicable Fund. As used in the Prospectus and this SAI, the term “majority of the
outstanding shares” of a Fund means the lesser of (1) 67% or more of the outstanding shares of the Fund present at a meeting, if the holders of more than 50% of the outstanding shares of the Fund are present or represented at such meeting;
or (2) more than 50% of the outstanding shares of the Fund. Other investment practices which may be changed by the Board of Trustees without the approval of shareholders to the extent permitted by applicable law, regulation or regulatory policy
are considered non-fundamental (“Non-Fundamental”).
1.
Borrowing Money
. Each Fund will not borrow money,
except (a) from a bank, provided that immediately after such borrowing there is an asset coverage of 300% for all borrowings of the Fund; or (b) from a bank or other persons for temporary purposes only, provided that such temporary
borrowings are in an amount not exceeding 5% of the Fund’s total assets at the time when the borrowing is made. This limitation does not preclude a Fund from entering into reverse repurchase transactions, provided that the Fund has an asset
coverage of 300% for all borrowings and repurchase commitments of the Fund pursuant to reverse repurchase transactions.
10
2.
Senior Securities
. Each Fund will not issue senior securities. This limitation is not
applicable to activities that may be deemed to involve the issuance or sale of a senior security by a Fund, provided that the Fund’s engagement in such activities is consistent with or permitted by the Investment Company Act of 1940, the rules
and regulations promulgated thereunder or interpretations of the SEC or its staff.
3.
Underwriting
. Each Fund will not act as
underwriter of securities issued by other persons. This limitation is not applicable to the extent that, in connection with the disposition of portfolio securities (including restricted securities), a Fund may be deemed an underwriter under certain
federal securities laws.
4.
Real Estate
. Each Fund will not purchase or sell real estate. This limitation is not applicable to
investments in marketable securities which are secured by or represent interests in real estate. This limitation does not preclude a Fund from investing in
mortgage-related
securities or investing in companies
engaged in the real estate business or that have a significant portion of their assets in real estate (including REITs).
5.
Commodities
. Each Fund will not purchase or sell commodities unless acquired as a result of ownership of securities or other investments. This limitation does not preclude a Fund from purchasing or selling options or futures contracts,
including commodities futures contracts, from investing in securities or other instruments backed by commodities or from investing in companies which are engaged in a commodities business or have a significant portion of their assets in commodities.
6.
Loans
. Each Fund will not make loans to other persons, except (a) by loaning portfolio securities, (b) by engaging in
repurchase agreements, or (c) by purchasing non-publicly offered debt securities. For purposes of this limitation, the term “loans” shall not include the purchase of a portion of an issue of publicly distributed bonds, debentures or
other securities.
7.
Concentration
. Each Fund will not invest 25% or more of its total assets in a particular industry. This
limitation is not applicable to investments in obligations issued or guaranteed by the U.S. government, its agencies and instrumentalities or repurchase agreements with respect thereto.
8.
Diversification
. With respect to 75% of its total assets, each Fund will not purchase securities issued by any one issuer (other than
cash, cash items, securities issued or guaranteed by the government of the United States or its agencies or instrumentalities, or securities of other investment companies) if, as a result at the time of such purchase, more than 5% of the value of
the Fund’s total assets would be invested in the securities of that issuer, or if it would own more than 10% of the outstanding voting securities of that issuer.
With respect to the percentages adopted by the Trust as maximum limitations on the Funds’ investment policies and limitations, an excess
above the fixed percentage will not be a violation of the policy or limitation unless the excess results immediately and directly from the acquisition of any security or the action taken. This paragraph does not apply to the borrowing policy set
forth in paragraph 1 above.
11
Notwithstanding any of the foregoing limitations, any investment company, whether organized as a
trust, association or corporation, or a personal holding company, may be merged or consolidated with or acquired by the Trust, provided that if such merger, consolidation or acquisition results in an investment in the securities of any issuer
prohibited by said paragraphs, the Trust shall, within ninety days after the consummation of such merger, consolidation or acquisition, dispose of all of the securities of such issuer so acquired or such portion thereof as shall bring the total
investment therein within the limitations imposed by said paragraphs above as of the date of consummation.
B
.
Non-Fundamental
. The following limitations have been adopted by the Trust with respect to the Funds and are Non-Fundamental (see “Investment Limitations— Fundamental” above).
1.
Pledging
. Each Fund will not mortgage, pledge, hypothecate or in any manner transfer, as security for indebtedness, any assets of the
Fund except as may be necessary in connection with borrowings described in Fundamental limitation (1) above. Margin deposits, security interests, liens and collateral arrangements with respect to transactions involving options, futures
contracts, short sales and other permitted investments and techniques are not deemed to be a mortgage, pledge or hypothecation of assets for purposes of this limitation.
2.
Borrowing
. Each Fund will not purchase any security while borrowings (including reverse repurchase agreements) representing more than
5% of its total assets are outstanding.
3.
Illiquid Securities
. The Funds will not purchase illiquid or restricted securities.
4.
Margin Purchases
. Each Fund will not purchase securities or evidences of interest thereon on “margin.” This limitation is
not applicable to short-term credit obtained by a Fund for the clearance of purchases and sales or redemption of securities, or to arrangements with respect to transactions involving options, futures contracts, short sales and other permitted
investments and techniques.
5.
Name Rule
. Under normal circumstances, the Small Cap Fund will invest at least 80% of its net assets
(including borrowings for investment purposes, if any) in equity securities of small capitalization companies. This investment policy may not be changed without at least 60 days’ prior written notice in plain English to the Fund’s
shareholders.
INVESTMENT ADVISER
Symons Capital Management, Inc., 650 Washington Road, Suite 800, Pittsburgh, PA, 15228, serves as the investment adviser to the Funds. The
Adviser has overall supervisory management responsibility for the general management and investment of each Fund’s portfolio. The Adviser sets the Funds’ overall investment strategies, identifies securities for investment, determines when
securities should be purchased or sold, selects brokers or dealers to execute transactions for each Fund’s portfolio and votes any proxies solicited by portfolio companies.
For its advisory services, the Adviser is paid a fee at the annual rate of 1.00% of the average daily net assets of the Value Fund, and a fee
at the annual rate of 1.10% of the average daily net assets of the Small Cap Fund. The Adviser has contractually agreed to waive its management fee and/or to reimburse certain operating expenses, but only to the extent necessary so that each
Fund’s total annual operating expenses, excluding brokerage fees and commissions; borrowing costs, such as (a) interest
12
and (b) dividend expenses on securities sold short; any 12b-1 fees; taxes; any indirect expenses, such as fees and expenses incurred by other investment companies in which the Fund may
invest; and extraordinary litigation expenses, do not exceed 1.21% of the Fund’s average daily net assets with respect to the Value Fund and 1.56% with respect to the Small Cap Fund. The contractual agreement is in effect through May 22,
2018 with respect to the Value Fund and March 31, 2016 with respect to the Small Cap Fund. Each fee waiver and expense reimbursement by the Adviser to a Fund is subject to repayment by the applicable Fund within the three fiscal years following
the fiscal year in which the particular expense or reimbursement was incurred, provided that the Fund is able to make the repayment without exceeding the applicable expense limitation described above.
The following tables describe the advisory fees paid to the Adviser by the Funds for the fiscal periods indicated.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value Fund
|
|
|
Fiscal Period Ended
|
|
Advisory
Fees
Accrued
|
|
|
Total Fees
Recouped,
(Reimbursed
and/or
Waived by
Adviser)
|
|
|
Net
Advisory
Fees Paid
|
|
|
November 30, 2013
|
|
$
|
879,741
|
|
|
$
|
(38,432
|
)
|
|
$
|
841,309
|
|
|
November 30, 2012
|
|
$
|
878,063
|
|
|
$
|
147,285
|
|
|
$
|
1,025,348
|
|
|
November 30, 2011
|
|
$
|
598,229
|
|
|
$
|
11,198
|
|
|
$
|
609,427
|
|
|
|
|
Small Cap Fund
|
|
|
Fiscal Period Ended
|
|
Advisory
Fees
Accrued
|
|
|
Total Fees
Reimbursed
and/or
Waived by
Adviser
|
|
|
Net
Advisory
Fees Paid
|
|
|
November 30, 2013
|
|
$
|
84,267
|
|
|
($
|
99,540
|
)
|
|
$
|
0
|
|
|
November 30, 2012
|
|
$
|
138,169
|
|
|
($
|
68,965
|
)
|
|
$
|
69,204
|
|
|
November 30, 2011
|
|
$
|
167,026
|
|
|
($
|
77,937
|
)
|
|
$
|
89,089
|
|
A discussion of the factors that the Board of Trustees considered in approving the management agreement
for each Fund is contained in the Funds’ annual report for the fiscal year ended November 30, 2013.
The Adviser retains the
right to use the name “Symons” in connection with another investment company or business enterprise with which the Adviser is or may become associated. The Trust’s right to use the name “Symons” automatically ceases 90 days
after termination of the Agreements and may be withdrawn by the Adviser on 90 days written notice.
The Adviser may pay certain financial
institutions (which may include banks, broker-dealers and other industry professionals) a fee for providing distribution related services and/or for performing certain administrative servicing functions for Fund shareholders to the extent these
institutions are allowed to do so by applicable statute, rule or regulation. These financial institutions may charge their customers fees for offering these services to the extent permitted by applicable regulatory authorities, and the overall
return to those shareholders availing themselves of the bank services will be lower than to those shareholders who do not. Each Fund may from time to time purchase securities issued by financial institutions that provide such services; however, in
selecting investments for the Fund, no preference will be shown for such securities.
13
About the Portfolio Managers
The Value Fund is managed by Mr. Colin E. Symons, CFA, the Chief Investment Officer for the Adviser. The Small Cap Fund is co-managed
by Mr. Symons and Matthew S. Karr Vice, President of Research for the Adviser (each, a “Portfolio Manager”). As of November 30, 2013, the Portfolio Managers were also responsible for the management of the following types of other
accounts in addition to the Funds:
|
|
|
|
|
|
|
|
|
|
|
Portfolio Manager
|
|
Total Accounts By Type
|
|
Total Assets By Account
Type
|
|
Number of Accounts by
Type Subject to a
Performance
Fee
|
|
Total Assets By Account
Type Subject to a
Performance
Fee
|
|
Colin E. Symons, CFA
|
|
Registered Investment Companies: 0
Pooled Investment Vehicles: 0
Other Accounts: 446
|
|
Registered Investment Companies: N/A
Pooled Investment Vehicles: N/A
Other Accounts: $416.06 million
|
|
Registered Investment Companies: N/A
Pooled Investment Vehicles: N/A
Other Accounts: 0
|
|
Registered Investment Companies: N/A
Pooled Investment Vehicles: N/A
Other Accounts: N/A
|
|
|
|
|
|
|
|
Matthew S. Karr
|
|
Registered Investment Companies: 0
Pooled Investment Vehicles: 0
Other Accounts: 0
|
|
Registered Investment Companies: N/A
Pooled Investment Vehicles: N/A
Other Accounts: N/A
|
|
Registered Investment Companies: N/A
Pooled Investment Vehicles: N/A
Other Accounts: N/A
|
|
Registered Investment Companies: N/A
Pooled Investment Vehicles: N/A
Other Accounts: N/A
|
At present, each Portfolio Manager receives a base salary and participates in a bonus pool that is
determined by his achievements, ability and teamwork. The bonus pool consists of the gross revenue of the Adviser less base salaries and operating expenses. The result is that every person at the Adviser has a material stake in the success of every
aspect of the Adviser’s work as a team.
The Portfolio Managers provide investment advisory services to other clients of the Adviser
in addition to managing the Funds. The Portfolio Managers are obligated to make investment decisions for a client based on each client’s specific investment objective, guidelines, restrictions and circumstances and other relevant factors, such
as the size of an available investment opportunity, the availability of other comparable investment opportunities and an obligation to treat all accounts fairly and equitably over time. Conflicts may arise as a result of a Portfolio Manager’s
multiple roles in managing a Fund and servicing other client accounts. For example, managing the other separate accounts may result in a Portfolio Manager devoting unequal time and attention to a Fund.
14
Due to similarities in the investment strategies of the Funds and certain other client accounts,
the Portfolio Managers’ duties may overlap. For example, the Portfolio Managers may be able to combine responsibilities, such as research and stock selection for the Funds and other separate accounts. However, to the extent that a Fund and
another of the Adviser’s clients seek to acquire the same security at about the same time, the Fund may not be able to acquire as large a position in such security as it desires or it may have to pay a higher price for the security. Similarly,
a Fund may not be able to obtain as large an execution of an order to sell or as high a price for any particular security if other clients desire to sell the same portfolio security at the same time. On the other hand, if the same securities are
bought or sold at the same time by more than one client, the resulting participation in volume transactions could produce better executions for the Fund. In the event that more than one client wants to purchase or sell the same security on a given
day and limited quantities are available, the Adviser has adopted trade allocation procedures pursuant to which purchases and sales normally will be made on a pro rata, average price per share basis, or such other method as it deems fair and
reasonable.
Even where a Fund and multiple separate accounts are managed using similar investment strategies, the Portfolio Managers may
take action with respect to the Fund that may differ from the timing or nature of action taken with respect to another client account. For example, there may be circumstances under which the Portfolio Managers will cause one or more separate
accounts to commit a larger percentage of their assets to an investment opportunity than the percentage of Fund assets that the Portfolio Managers commit to such investment, and vice versa. There also may be circumstances under which the Portfolio
Managers purchase or sell an investment for the separate accounts and do not purchase or sell the same investment for a Fund, or vice versa. Accordingly, the Fund’s performance may differ significantly from the results achieved by the
Adviser’s other clients. It is possible that one or more of the Adviser’s other client accounts may achieve investment results that are substantially more or less favorable than the results achieved by a Fund. Moreover, the Funds may
sustain losses during periods in which one or more separate accounts achieve significant profits.
Each Portfolio Manager may also carry
on investment activities for his own account(s) and/or the accounts of immediate family members. Conflicts may arise as a result of the Portfolio Managers’ differing economic interests in respect of such activities. Pursuant to the Code of
Ethics adopted by the Trust and the Adviser, each Portfolio Manager is prohibited from effecting transactions for his personal accounts which are contrary to recommendations being made to a Fund. In addition, each Portfolio Manager is prohibited
from competing with a Fund in connection with such transactions.
As of November 30, 2013, the Portfolio Managers owned shares of
the Funds as indicated in the table below.
|
|
|
|
|
|
|
Portfolio Manager
|
|
Value Fund
|
|
Small Cap Fund
|
|
Colin E. Symons
|
|
$1 – $10,000
|
|
None
|
|
Matthew S. Karr
|
|
None
|
|
None
|
15
TRUSTEES AND OFFICERS
GENERAL QUALIFICATIONS.
The Board of Trustees supervises the business activities of the Trust. Each Trustee serves as a trustee until
termination of the Trust unless the Trustee dies, resigns, retires, or is removed. The Chairman of the Board and more than 75% of the Trustees are “Independent Trustees,” which means that they are not “interested persons” (as
defined in the Investment Company Act of 1940) of the Trust or any adviser, sub-adviser or distributor of the Trust.
The following table
provides information regarding the Independent Trustees.
|
|
|
|
|
Name, Address*, (Age), Position
with Trust**, Term of Position with Trust
|
|
Principal Occupation During Past 5 Years
and Other Directorships
|
|
Gary E. Hippenstiel (Age – 66)
Chairman of the Audit and Pricing Committees
Independent Trustee, December 2002 to present
|
|
President and founder of Hippenstiel Investment Counsel LLC, a registered investment advisor, since November 2008; Director, Vice President and Chief Investment Officer of Legacy Trust Company, N.A. from September 1991 to September
2008; Chairman of the investment committee for W.H. Donner Foundation and Donner Canadian Foundation from June 2005 to September 2011; Chairman of investment committee for the Diana Davis Spencer Foundation since October 2011; Chairman and Founder,
Constitution Education Foundation since February 2011.
|
|
Stephen A. Little (Age – 67)
Chairman, December 2004 to present;
Independent Trustee, December 2002 to present
|
|
President and founder of The Rose, Inc., a registered investment advisor, since April 1993.
|
|
Daniel J. Condon (Age – 63)
Independent Trustee, December 2002 to
present
|
|
CEO of Standard Steel, LLC since August 2011; Director Steel Wheels Acquisition Corp. since August 2011; Director Standard Steel, Inc. since August 2011; President and CEO of International Crankshaft Inc., an automotive supply
manufacturing company, from 2004 to August 2011; Director International Crankshaft, Inc. since 2004; Chairman, SMI Crankshaft LLC, an automotive and truck supplier, from July 2010 to August 2011.
|
|
Ronald C. Tritschler (Age – 61)
Independent Trustee, January 2007 to present;
Interested Trustee, December 2002 to December 2006
|
|
Chief Executive Officer, Director and Legal Counsel of The Webb Companies, a national real estate company, since 2001; Director of First State Financial since 1998; Director, Vice President and Legal Counsel of The Traxx Companies,
an owner and operator of convenience stores, since 1989. Past Chairman, Bluegrass Tomorrow, nonprofit organization, and Chairman of The Lexington Convention and Visitors’ Bureau.
|
|
Kenneth G.Y. Grant (Age – 64)
Independent Trustee, May 2008 to present
|
|
Executive Vice President and Chief Officer , Corporate Development for Global Trust Company since 2008, Advisors Charitable Gift Fund since May 2005, Northeast Retirement Services, Inc. since February 2003 and Savings Banks
Employees Retirement Association since February 2003; Director, Lift Up Africa since 2008; Chair Investment Committee since January 2011 and past Chair, Board of Directors of Massachusetts Council of Churches; Member, Presbytery of Boston,
Presbyterian Church (U.S.A.) since June 1975.
|
|
*
|
The address for each trustee is 2960 N. Meridian St., Suite 300, Indianapolis, IN 46208.
|
|
**
|
As of the date of this SAI, the Trust currently consists of 17 series.
|
16
The following table provides information regarding the interested Trustee and the Officers of the
Trust.
|
|
|
|
|
Name, Address*, (Age), Position with
Trust,** Term of Position with Trust
|
|
Principal Occupation During Past 5 Years
and Other Directorships
|
|
Nancy V. Kelly (Age – 58)***
Trustee, November 2007 to present
|
|
Executive Vice President of Huntington National Bank, the Trust’s custodian, since December 2001; Director, Wedgewood Golf & Country Club since October 2008; Director, Greenlawn Cemetery since October 2007; Director,
Directions for Youth and Families, a social service agency, since August 2006.
|
|
John C. Swhear (Age – 52)
President, August 2013 to present
|
|
Vice President of Legal Administration and Compliance for Huntington Asset Services, Inc., the Trust’s administrator, since April 2007; Chief Compliance Officer and Vice President of Valued Advisers Trust since August 2008;
Interim President of Unified Series Trust from March 2012 to August 2013; Senior Vice President of Unified Series Trust from May 2007 to August 2013; Chief Compliance Officer of Unified Financial Securities, Inc., the Trust’s distributor, since
May 2007; Chief Compliance Officer and AML Officer of Capitol Series Trust since September 2013; Secretary of Huntington Funds from April 2010 to February 2012; President and Chief Executive Officer of Dreman Contrarian Funds, March 2010 to March
2011; Vice President and Acting Chief Executive Officer of Dreman Contrarian Funds, 2007 to March 2010.
|
|
Joseph L. Rezabek (Age – 45)
Senior Vice President, March 2013 to
present
|
|
President, Huntington Asset Services, Inc. since March 2012; Executive Vice President, The Huntington National Bank since March 2012; President of Huntington Funds since February 2013; President of Huntington Strategy Shares since
February 2013; Managing Director, Citi from 2006 to 2012.
|
|
Robert W. Silva (Age – 47)
Treasurer and Chief Financial Officer, June 2011
to present
|
|
Senior Vice President, Fund Administration for Huntington Asset Services, Inc., the Trust’s administrator, since October 2011, Vice President from September 2010 to October 2011; Treasurer of Huntington Funds since November
2010; Chief Financial Officer and Treasurer of Huntington Strategy Shares since November 2010; Treasurer and Chief Financial Officer of Dreman Contrarian Funds from March 2011 to February 2013; Treasurer of Valued Advisers Trust since February 2013;
Senior Vice President of Citi Fund Services Ohio, Inc. from September 2007 to September 2010.
|
|
Lynn E. Wood (Age – 67)
Chief Compliance Officer, October 2004 to
present
|
|
Managing Member, Buttonwood Compliance Partners, LLC, since May 2013; Chief Compliance Officer of Unified Series Trust, since October 2004.
|
|
Tara Pierson (Age – 39)
Secretary, May 2010 to present
|
|
Employed by Huntington Asset Services, Inc., the Trust’s Administrator, since February, 2000; Assistant Secretary of Dividend Growth Trust from March 2006 to February 2012. Assistant Secretary of the Trust from November 2008 to
May 2010.
|
|
*
|
The address for each trustee and officer is 2960 N. Meridian St., Suite 300, Indianapolis, IN 46208.
|
|
**
|
As of the date of this SAI, the Trust currently consists of 17 series.
|
|
***
|
Ms. Kelly is deemed an interested trustee because she is an officer of an entity that is under common control with Unified Financial Securities, Inc., one of the Trust’s distributors. The Board has reviewed
and approved this arrangement.
|
17
In addition to the information provided above, below is a summary of the specific experience,
qualifications, attributes or skills of each Trustee and the reason why he or she was selected to serve as Trustee:
Stephen A. Little
–
Mr. Little has been an Independent Trustee of the Trust since its inception in 2002, and he currently serves as Chairman of the Board. He previously served as trustee to three other registered investment companies. In 1993, he founded an
investment advisory firm that provides discretionary investment advice and advice on socially responsible investing. Mr. Little previously held NASD Series 6, 7, and 22 licenses. Mr. Little received a B.A. from Wabash College and a M. Div.
from Christian Theological Seminary. Prior to completing his education, Mr. Little served in the U.S. Marine Corps. Mr. Little was selected to serve as Trustee of the Trust based primarily on his experience in the investment management
industry.
Gary E. Hippenstiel –
Mr. Hippenstiel has served as a mutual fund trustee since 1995. He has been an Independent Trustee of
the Trust since its inception in 2002, and he currently serves as Chairman of the Audit and Pricing Committees of the Board of Trustees. He previously served as a trustee to three other registered investment companies and a variable insurance trust.
In 2008, Mr. Hippenstiel founded an investment consulting firm and he also serves as Chairman of the investment committee for two family foundations. Prior to that, he served as Chief Investment Officer of Legacy Trust Company
18
for 17 years, where he was responsible for establishing investment strategies and selecting and monitoring independent managers of trust accounts. Mr. Hippenstiel received a B.S. in Business
Administration and an M.B.A. in Finance from the University of California, Berkeley. Mr. Hippenstiel was selected as Trustee based primarily on his experience in the investment management industry.
Daniel J. Condon –
Mr. Condon has been an Independent Trustee of the Trust since its inception in 2002. He has also served as trustee of
three other registered investment companies. From 1990 to 2002, he served as Vice President and General Manager of an international automotive equipment manufacturing company. Since 2002, he has served as CEO of various multi-national companies.
Mr. Condon received a B.S. in Mechanical Engineering from Illinois Institute of Technology and an M.B.A. from Eastern Illinois University. He also received his registered Professional Engineer license. Mr. Condon was selected as Trustee
based on his over 22 years of international business experience.
Ronald C. Tritschler –
Mr. Tritschler has been a Trustee of the Trust
since its inception in 2002. He also has served as trustee of three other registered investment companies. Since 1989, he has been a director, vice president and general counsel of a company that operates convenience stores. Since 2001,
Mr. Tritschler has been CEO, director and general counsel of a national real estate company. He also is a director of a bank holding company. Mr. Tritschler received a B.A. in Business Administration from Baldwin-Wallace College and his
J.D. and M.B.A. from the University of Toledo. Mr. Tritschler was selected to serve as a Trustee based primarily on his substantial business and legal experience.
Kenneth G.Y. Grant –
Mr. Grant has been an Independent Trustee of the Trust since 2008. He is a founder of a trust company that offers
collective investment trust products to qualified plans. Mr. Grant has over 27 years of executive leadership experience, including experience in management, business development for financial services firms, strategic planning, and investing.
Mr. Grant also has experience developing trust and plan accounting services for institutional investors. He currently serves as a senior executive of a retirement plan services provider, as senior vice president of a retirement association and
as Treasurer of a council of churches. Mr. Grant received his B.A. in Psychology from Syracuse University, his Th.M. in Theology and Ethics from Boston University, and his M.B.A. from Clark University. Mr. Grant was selected to serve as a
Trustee based primarily on his substantial experience in the retirement plan and financial services industry.
Nancy V. Kelly
– Ms. Kelly
has been a Trustee of the Trust since 2007. She has served as Senior Risk Officer of Huntington National Bank’s Risk Administration business segment since August 2013. Prior to that, she served as Regulatory Reform Director of Huntington
National Bank’s Risk Management business segment from March 2012 to August 2013, Chief Administrative Officer of Huntington’s Wealth Advisors, Government Finance, and Home Lending business segment from November 2010 to March 2012, and
Executive Vice President of Huntington from December 2001 to November 2010. She is active as a community leader and she serves on the Board of several local organizations, including a youth social services agency. Ms. Kelly was selected to
serve as a Trustee based primarily on her experience in managing securities-related businesses operated by banks and her senior position within Huntington Bank, which is an affiliate of the Trust’s administrator and distributor and also serves
as custodian of certain series of the Trust. Ms. Kelly received a B.S. from Hood College in 1977, and an M.B.A. in 1981 from Xavier University.
19
Independent Trustees Messrs. Hippenstiel, Tritschler, Condon, and Little each have previous
experience serving as trustees to other multi-series trusts, which means that they are familiar with issues relating to overseeing multiple advisers and multiple funds. Messrs. Hippenstiel, Little, and Grant have experience conducting due diligence
on and evaluating investment advisers – Mr. Hippenstiel as the Chief Investment Officer of Legacy Trust, Mr. Little as the President of a registered investment adviser, and Mr. Grant as an officer of a bank which operated a
collective investment trust. This means that they are qualified to review annually each adviser’s qualifications, including the qualification of Symons Capital Management, Inc. to serve as adviser to the Funds. Ms. Kelly’s experience
as an officer of the Trust’s custodial bank and former supervisor of the Trust’s administrator provides the Independent Trustees with insight into the operations of the service providers and their day-to-day administration of the Funds.
RISK MANAGEMENT
. As part of its efforts to oversee risk management associated with the Trust, the Board has established the Audit
Committee, Pricing Committee, and the Advisory Contract Renewal Committee as described below:
|
|
•
|
|
The Audit Committee consists of Independent Trustees Messrs. Hippenstiel, Condon, Tritschler and Grant. The Audit Committee is responsible for overseeing the Trust’s accounting and financial reporting policies and
practices, internal controls and, as appropriate, the internal controls of certain service providers; overseeing the quality and objectivity of financial statements and the independent audits of the financial statements; and acting as a liaison
between the independent auditors and the full Board of Trustees. The Audit Committee met four times during the year ended December 31, 2013.
|
|
|
•
|
|
The Pricing Committee is responsible for reviewing and approving fair valuation determinations. The members of the Pricing Committee are all of the Trustees, except that any one member of the Pricing Committee
constitutes a quorum for purposes of reviewing and approving a fair value. In addition to meetings to approve fair valuations, the Pricing Committee met four times during the year ended December 31, 2013.
|
|
|
•
|
|
The Advisory Contract Renewal Committee is responsible for conducting due diligence on the initial approval and subsequent renewals of investment advisory contracts between the Trust and the advisers and sub-advisers to
each series of the Trust, and making a recommendation to the full Board of Trustees regarding approvals and renewals of these contracts. The Committee reviews materials of the type required by Section 15(c) of the Investment Company Act of
1940, which are provided by the investment advisers and sub-advisers and the Trust’s Administrator. The Committee also conducts interviews of advisers and sub-advisers to the Trust. The Advisory Contract Renewal Committee is comprised of all of
the Trustees, although at least two Independent Trustees are required to establish a quorum. This Committee held four meetings during the year ended December 31, 2013.
|
Each Committee meets at least quarterly, and reviews reports provided by administrative service providers, legal counsel and independent
accountants. The Committees report directly to the Board of Trustees.
The Independent Trustees have engaged their own independent legal
counsel to provide advice on regulatory, compliance and other topics. In addition, the Board has engaged on behalf of the Trust a full-time Chief Compliance Officer (“CCO”) who is responsible for overseeing compliance risks. He reports to
the Board at least quarterly any material compliance items that have arisen, and annually he provides to the Board a comprehensive compliance report outlining the effectiveness of compliance policies and procedures of the Trust and its service
providers. As part of the CCO’s risk oversight function, the CCO seeks to understand the risks inherent in the operations of the Trust’s series and their advisers and sub-advisers. Periodically the CCO provides reports to the Board that:
20
|
|
•
|
|
Assess the quality of the information the CCO receives from internal and external sources;
|
|
|
•
|
|
Assess how Trust personnel monitor and evaluate risks;
|
|
|
•
|
|
Assess the quality of the Trust’s risk management procedures and the effectiveness of the Trust’s organizational structure in implementing those procedures;
|
|
|
•
|
|
Consider feedback from and provide feedback regarding critical risk issues to Trust and administrative and advisory personnel responsible for implementing risk management programs; and
|
|
|
•
|
|
Consider economic, industry, and regulatory developments, and recommend changes to the Trust’s compliance programs as necessary to meet new regulations or industry developments.
|
The Trustees meet in-person on a quarterly basis, typically for two days of meetings. Trustees also participate in special meetings and
conference calls as needed. In addition to Board meetings, Trustees also participate in teleconferences each quarter to review and discuss 15(c) materials, and to interview advisers and sub-advisers whose contracts are up for renewal. Legal counsel
to the Trust provides quarterly reports to the Board regarding regulatory developments. On a quarterly basis, the Trustees review and discuss some or all of the following compliance and risk management reports relating to the series of the Trust:
|
|
(1)
|
Fund Performance/Morningstar Report/Portfolio Manager’s Commentary
|
|
|
(2)
|
Code of Ethics review
|
|
|
(4)
|
Distributor Compliance Reports
|
|
|
(5)
|
Timeliness of SEC Filings
|
|
|
(6)
|
Dividends and other Distributions
|
|
|
(7)
|
List of Brokers, Brokerage Commissions Paid and Average Commission Rate
|
|
|
(8)
|
Review of 12b-1 Payments
|
|
|
(9)
|
Multiple Class Expense Reports
|
|
|
(10)
|
Anti-Money Laundering/Customer Identification Reports
|
|
|
(11)
|
Administrator and CCO Compliance Reports
|
|
|
(l2)
|
Market Timing Reports
|
The Board of Trustees has not adopted a formal diversity policy. When
soliciting future nominees for Trustee, the Board will make efforts to identify and solicit qualified minorities and women.
On an annual
basis, the Trustees conduct an assessment of the Board’s and their individual effectiveness in overseeing the Trust. Based upon its assessment, the Board determines whether additional risk assessment or monitoring processes are required with
respect to the Trust or any of its service providers.
Based on the qualifications of each of the Trust’s Trustees and officers, the
risk management practices adopted by the Board, including a regular review of several compliance and operational reports, and the committee structure adopted by the Board, the Trust believes that its leadership is appropriate.
21
The following table provides information regarding shares of the Fund and other portfolios of the
Trust owned by each Trustee as of December 31, 2013.
|
|
|
|
|
|
|
Trustee
|
|
Dollar Range of the Funds’ Shares
|
|
Aggregate Dollar Range of Shares of All
Funds Within the Trust*
|
|
Gary E. Hippenstiel
|
|
None
|
|
None
|
|
Ronald C. Tritschler
|
|
None
|
|
$50,001 – $100,000
|
|
Stephen A. Little
|
|
None
|
|
None
|
|
Daniel J. Condon
|
|
None
|
|
None
|
|
Kenneth G.Y. Grant
|
|
None
|
|
$10,001 – $50,000
|
|
Nancy V. Kelly
|
|
None
|
|
None
|
|
*
|
The Trust currently consists of 17 series.
|
Set forth below are estimates of the annual
compensation to be paid to the Trustees and officers by each Fund on an individual basis and by the Trust on an aggregate basis. Trustees’ and officers’ fees and expenses are Trust expenses and each Fund incurs its share of such expenses,
which are allocated among the series of the Trust in such manner as the Trustees determine to be fair and equitable.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Independent Trustees
|
|
Aggregate
Compensation
from each Fund
|
|
|
Pension or
Retirement
Benefits Accrued
As Part of Fund
Expenses
|
|
|
Estimated Annual
Benefits Upon
Retirement
|
|
|
Total Compensation
from Trust
1
|
|
|
Gary E. Hippenstiel, Trustee and Chairman of the Audit Committee
|
|
$
|
2,541
|
2
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
43,200
|
|
|
Stephen A. Little, Chairman of the Board
|
|
$
|
2,541
|
2
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
43,200
|
|
|
Daniel J. Condon, Trustee
|
|
$
|
2,012
|
3
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
34,200
|
|
|
Ronald C. Tritschler, Trustee
|
|
$
|
2,012
|
3
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
34,200
|
|
|
Kenneth G.Y. Grant, Trustee
|
|
$
|
2,012
|
3
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
34,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interested Trustees and
Officers
|
|
Aggregate
Compensation
from each Fund
|
|
|
Pension or
Retirement
Benefits Accrued
As Part of Fund
Expenses
|
|
|
Estimated Annual
Benefits Upon
Retirement
|
|
|
Total Compensation
from Trust
1
|
|
|
Nancy V. Kelly, Trustee
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
John C. Swhear, President
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
Joseph L. Rezabek, Senior Vice President
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
Robert W. Silva, Treasurer and CFO
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
Lynn E. Wood, Chief Compliance Officer
|
|
$
|
7,353
|
4
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
125,000
|
5
,6
|
|
Tara Pierson, Secretary
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
1
|
The Trust currently consists of 17 series.
|
|
2
|
During the fiscal year ended November 30, 2013, this Trustee received a total of $2,081 from each Fund.
|
|
3
|
During the fiscal year ended November 30, 2013, this Trustee received a total of $1,817 from each Fund.
|
22
|
4
|
During the fiscal year ended November 30, 2013, the CCO received a total of 10,022 from each of the Value and Small Cap Funds.
|
|
5
|
This amount does not include the value of benefits provided to the CCO. In addition to the CCO’s salary listed in the table, the CCO is allocated $25,000 for potential bonus compensation, as well as to pay for the
CCO’s expenses in connection with compliance-related activities, including audits of advisers to the series of the Trust, attendance at compliance seminars, etc. These expenses are allocated to each series of the Trust in such manner as the
Trustees determine to be fair and equitable.
|
|
6
|
Effective June 1, 2013, the CCO’s compensation was reduced from $158,000 annually to $125,000 annually.
|
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
A principal shareholder is any person who owns (either of record or beneficially) 5% or more of the outstanding shares of a Fund. A control
person is one who owns, either directly or indirectly, more than 25% of the voting securities of a Fund or acknowledges the existence of such control. As a controlling shareholder, each of these persons could control the outcome of any proposal
submitted to the shareholders for approval, including changes to a Fund’s fundamental policies or the terms of the management agreement with the Adviser.
As of March 3, 2014, the following persons were deemed to be control persons or principal shareholders of the Value Fund:
|
|
|
|
|
|
|
|
|
|
|
Name and Address
|
|
% Ownership
|
|
|
Type of Ownership
|
|
|
Charles Schwab & Co.
101 Montgomery St.
San Francisco, CA 94104
|
|
|
31.41
|
%
|
|
|
Record
|
|
|
LPL Financial
9785 Towne Centre Dr.
San Diego, CA 92121
|
|
|
19.87
|
%
|
|
|
Record
|
|
|
CBNA
6 Rhoads Drive, Suite 7
Utica, NY 13502
|
|
|
10.38
|
%
|
|
|
Record
|
|
|
TD Ameritrade, Inc.
P.O. Box 2226
Omaha, NE 68103
|
|
|
6.15
|
%
|
|
|
Record
|
|
|
Salb & Co.
P.O. Box 5480
Johnstown, PA 15904
|
|
|
5.28
|
%
|
|
|
Record
|
|
As of March 3, 2014, the following person was deemed to be a control person or principal shareholder
of the Small Cap Fund:
|
|
|
|
|
|
|
|
|
|
|
Name and Address
|
|
% Ownership
|
|
|
Type of Ownership
|
|
|
Charles Schwab & Co.
101 Montgomery St.
San Francisco, CA 94104
|
|
|
92.05
|
%
|
|
|
Record
|
|
As of March 3, 2014, the Trustees and officers of the Trust did not own any shares of any Fund.
23
PORTFOLIO TURNOVER
The Funds may sell portfolio securities without regard to the length of time they have been held when, in the opinion of the Adviser,
investment considerations warrant such action. Each Fund’s portfolio turnover rate is the percentage of its portfolio that is bought and sold to exchange for other securities and is expressed as a percentage of its total assets. A high
rate of portfolio turnover (100% or more) generally leads to higher transaction costs and may result in a greater number of taxable transactions. The following table sets forth each Fund’s turnover rate for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
Fund
|
|
Fiscal Year Ended
November 30, 2012
|
|
|
Fiscal Year Ended
November 30, 2013
|
|
|
Value Fund
|
|
|
28
|
%
|
|
|
45
|
%
|
|
Small Cap Fund
|
|
|
56
|
%
|
|
|
52
|
%
|
ANTI-MONEY LAUNDERING COMPLIANCE PROGRAM
Customer identification and verification is part of the Funds’ overall obligation to prevent money laundering under federal law. The
Trust has, on behalf of the Funds, adopted an anti-money laundering compliance program designed to prevent the Funds from being used for money laundering or financing of terrorist activities (the “AML Compliance Program”). The Trust has
delegated the responsibility to implement the AML Compliance Program to the Transfer Agent, subject to oversight by the Trust’s Chief Compliance Officer and, ultimately, by the Board of Trustees.
When you open an account with a Fund, the Transfer Agent will request that you provide your name, physical address, date of birth, and Social
Security number or tax identification number. You may also be asked for other information that, in the Transfer Agent’s discretion, will allow the Fund to verify your identity. Entities are also required to provide additional documentation.
This information will be verified to ensure the identity of all persons opening an account with the Fund. The Fund reserves the right to (i) refuse, cancel or rescind any purchase or exchange order, (ii) freeze any account and/or suspend
account activities, or (iii) involuntarily redeem your account in cases of threatening conduct or suspected fraudulent or illegal activity. These actions will be taken when, in the sole discretion of the Transfer Agent, they are deemed to be in
the best interest of the Fund, or in cases where the Fund is requested or compelled to do so by governmental or law enforcement authority.
PORTFOLIO TRANSACTIONS AND BROKERAGE
Subject to policies established by the Board of Trustees of the Trust, the Adviser is
responsible for each Fund’s portfolio decisions and the placing of each Fund’s portfolio transactions. In placing portfolio transactions, the Adviser seeks the best qualitative execution for the Funds, taking into account such factors as
price (including the applicable brokerage commission or dealer spread), the execution capability, financial responsibility and responsiveness of the broker or dealer and the brokerage and research services provided by the broker or dealer. The
Adviser generally seeks favorable prices and commission rates that are reasonable in relation to the benefits received.
24
The Adviser is specifically authorized to select brokers or dealers who also provide brokerage
and research services to the Funds and/or the other accounts over which the Adviser exercises investment discretion and to pay such brokers or dealers a commission in excess of the commission another broker or dealer would charge if the Adviser
determines in good faith that the commission is reasonable in relation to the value of the brokerage and research services provided. The determination may be viewed in terms of a particular transaction or the Adviser’s overall responsibilities
with respect to the Funds and to other accounts over which it exercises investment discretion.
Research services include supplemental
research, securities and economic analyses, statistical services and information with respect to the availability of securities or purchasers or sellers of securities and analyses of reports concerning performance of accounts. The research services
and other information furnished by brokers through whom the Funds effect securities transactions may also be used by the Adviser in servicing all of its accounts. Similarly, research and information provided by brokers or dealers serving other
clients may be useful to the Adviser in connection with its services to the Funds. For the fiscal year ended November 30, 2013, the Adviser did not direct any brokerage transactions on behalf of the Funds to brokers on the basis of research
services provided by such brokers.
When a Fund and another of the Adviser’s clients seek to purchase or sell the same security at or
about the same time, the Adviser may execute the transaction on a combined (“blocked”) basis, through one or more broker-dealers. Blocked transactions can produce better execution for the Funds and other accounts managed by the Adviser
because of the increased volume of each such transaction. If the entire blocked order is not filled, a Fund may not be able to acquire as large a position in such security as it desires, or it may have to pay a higher price for the security.
Similarly, the Fund may not be able to obtain as large an execution of an order to sell, or as high a price for any particular portfolio security, if the Adviser is selling the same portfolio security for its other client accounts at the same time.
In the event that more than one client wants to purchase or sell the same security on a given date, the purchases and sales will normally be made on a pro rata average price per share basis.
Over-the-counter transactions will be placed either directly with principal market makers or with
broker-dealers,
if the same or a better price, including commissions and executions, is available. Fixed income securities are normally purchased directly from the issuer, an underwriter or a market maker.
Purchases include a concession paid by the issuer to the underwriter and the purchase price paid to a market maker may include the spread between the bid and asked prices.
The following table presents information about the brokerage commissions paid by the Funds to brokers during the periods indicated.
|
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|
|
|
|
|
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Fund
|
|
Fiscal Year Ended
November 30, 2011
|
|
|
Fiscal Year Ended
November 30, 2012
|
|
|
Fiscal Year Ended
November 30, 2013
|
|
|
Value Fund
|
|
$
|
85,438
|
|
|
$
|
47,198
|
|
|
$
|
55,163
|
|
|
Small Cap Fund
|
|
$
|
71,773
|
|
|
$
|
22,665
|
|
|
$
|
9,381
|
|
The Trust, the Adviser and the Funds’ Distributor as defined herein have each adopted a Code of
Ethics pursuant to Rule 17j-1 of the 1940 Act, and the Adviser’s Code of Ethics also conforms to Rule 204A-1 under the Investment Advisers Act of 1940. The personnel subject to the Codes are permitted to invest in securities, including
securities that may be purchased or held by the Funds. You may obtain copies of the Codes from the Trust, free of charge, by calling Shareholder Services at (877) 679-6667. You may also obtain copies of the Trust’s Code from documents
filed with SEC and available on the SEC’s web site at
www.sec.gov
.
25
DISCLOSURE OF PORTFOLIO HOLDINGS
Each Fund is required to include a schedule of portfolio holdings in its annual and semi-annual reports to shareholders, which reports are sent
to shareholders within 60 days of the end of the second and fourth fiscal quarters and which are filed with the SEC on Form N-CSR within 70 days of the end of the second and fourth fiscal quarters. Each Fund also is required to file a schedule of
portfolio holdings with the SEC on Form N-Q within 60 days of the end of the first and third fiscal quarters. A Fund must provide a copy of the complete schedule of portfolio holdings as filed with the SEC to any shareholder of the Fund, upon
request, free of charge. This policy is applied uniformly to all shareholders of the Funds without regard to the type of requesting shareholder (i.e., regardless of whether the shareholder is an individual or institutional investor).
Each Fund releases portfolio holdings to third party servicing agents on a daily basis in order for those parties to perform their duties on
behalf of the Fund. These third party servicing agents include the Adviser, Distributor, Transfer Agent, fund accounting agent, administrator and custodian. A Fund also may disclose portfolio holdings, as needed, to auditors, legal counsel, proxy
voting services (if applicable), printers, pricing services, parties to merger and reorganization agreements and their agents, and prospective or newly hired investment advisers or sub-advisers. The lag between the date of the information and the
date on which the information is disclosed will vary based on the identity of the party to whom the information is disclosed. For instance, the information may be provided to auditors within days of the end of an annual period, while the information
may be given to legal counsel or prospective sub-advisers at any time. This information is disclosed to all such third parties under conditions of confidentiality. “Conditions of confidentiality” include (i) confidentiality clauses in
written agreements, (ii) confidentiality implied by the nature of the relationship (e.g., attorney-client relationship), (iii) confidentiality required by fiduciary or regulatory principles (e.g., custody relationships), or
(iv) understandings or expectations between the parties that the information will be kept confidential. Third party servicing agents generally are subject to an independent obligation not to trade on confidential information under their code of
ethics and/or as a result of common law precedents; however, the Funds do not require an independent confirmation from the third parties that they will not trade on the confidential information.
Additionally, each Fund may enter into ongoing arrangements to release portfolio holdings to Morningstar, Inc., Lipper, Inc., Bloomberg,
Standard & Poor’s, Thompson Financial and Vickers-Stock (“Rating Agencies”) in order for those organizations to assign a rating or ranking to the Fund. In these instances, portfolio holdings will be supplied within
approximately 25 days after the end of the month. The Rating Agencies may make a Fund’s top portfolio holdings available on their websites and may make the Fund’s complete portfolio holdings available to their subscribers for a
fee. Neither the Funds, the Adviser, nor any of their affiliates receive any portion of this fee. Information released to Rating Agencies is not released under conditions of confidentiality nor is it subject to prohibitions on trading
based on the information. Each Fund also has the option to post its complete portfolio holdings to its website within approximately 25 days after the end of the month. If posted, the information will remain posted on the website until
replaced by the information for the succeeding month. If the Funds do not have a website or the website is for some reason inoperable, the information will be supplied no more frequently than quarterly and on a delayed basis.
26
Except as described above, each Fund is prohibited from entering into any arrangements with any
person to make available information about the Fund’s portfolio holdings without the prior authorization of the Chief Compliance Officer and the specific approval of the Board. The Adviser must submit any proposed arrangement pursuant
to which the Adviser intends to disclose a Fund’s portfolio holdings to the Board, which will review such arrangement to determine whether the arrangement is in the best interests of Fund shareholders. Additionally, the Adviser and any
affiliated persons of the Adviser are prohibited from receiving compensation or other consideration, for themselves or on behalf of a Fund, as a result of disclosing the Fund’s portfolio holdings. A Fund will not disclose portfolio holdings as
described above to third parties that the Fund knows will use the information for personal securities transactions.
PROXY
VOTING POLICY
The Trust and the Adviser each have adopted proxy voting policies and procedures reasonably designed to ensure that
proxies are voted in shareholders’ best interests. As a brief summary, the Trust’s policy delegates responsibility regarding proxy voting to the Adviser, subject to the Adviser’s proxy voting policy and the supervision of the Board of
Trustees.
Absent mitigating circumstances and/or conflicts of interest, it is the Adviser’s general policy to vote proxies
consistent with the recommendation of the senior management of the issuer. Notwithstanding the foregoing, the Adviser often will vote against a management recommendation with respect to stock option and other executive compensation plan matters. The
Adviser monitors corporate actions of issuers of the Funds’ portfolio securities in a manner consistent with the Adviser’s fiduciary duty to vote proxies in the best interests of its clients.
The Trust’s policy provides that, if a conflict of interest between the Adviser or its affiliates and a Fund arises with respect to any
proxy, the Adviser must fully disclose the conflict to the Board of Trustees and vote the proxy in accordance with the Board’s instructions. The Board shall make the proxy voting decision that in its judgment, after reviewing the recommendation
of the Adviser, is most consistent with the Adviser’s proxy voting policies and in the best interests of Fund shareholders. When the Board is required to make a proxy voting decision, only the Trustees without a conflict of interest with regard
to the security in question or the matter to be voted upon shall be permitted to participate in the decision of how the Fund’s vote will be cast.
You may obtain a copy of the Trust’s and the Adviser’s proxy voting policies by calling Shareholder Services at (877) 679-6667
or by writing to the Transfer Agent at Huntington Asset Services, Inc., 2960 N. Meridian Street, Suite 300, Indianapolis, IN 46208, Attn: Unified Series Trust Chief Compliance Officer. A copy of the policies will be mailed to you within three days
of receipt of your request. You also may obtain a copy of the policies from Fund documents filed with the SEC, which are available on the SEC’s web site at
www.sec.gov
. A copy of the votes cast by each Fund with respect to portfolio
securities during the most recent 12-month period ended June 30th will be filed by the Fund with the SEC on Form N-PX. Each Fund’s proxy voting record will be available to shareholders free of charge upon request by calling or writing the
Fund as described above or from the SEC’s web site.
27
DETERMINATION OF NET ASSET VALUE
The net asset value of the shares of each Fund is determined as of the close of trading (normally 4:00 p.m. Eastern time) on each day the
Trust, its custodian, and the Transfer Agent are open for business and on any other day on which there is sufficient trading in a Fund’s securities to materially affect the net asset value. The Trust is open for business on every day on which
the New York Stock Exchange (“NYSE”) is open for trading. The NYSE is closed on Saturdays, Sundays and the following holidays: New Year’s Day, Martin Luther King, Jr. Day, Presidents’ Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving and Christmas. For a description of the methods used to determine the net asset value (share price), see “Determination of Net Asset Value” in the Prospectus.
Equity securities generally are valued by using market quotations furnished by a pricing service when the Adviser believes such prices
accurately reflect the fair market value of such securities. Securities that are traded on any stock exchange are generally valued by the pricing service at the last quoted sale price. Lacking a last sale price, an exchange traded security is
generally valued by the pricing service at its last bid price. Securities traded in the NASDAQ over-the-counter market are generally valued by the pricing service at the NASDAQ Official Closing Price. When market quotations are not readily
available, when the Adviser determines that the market quotation or the price provided by the pricing service does not accurately reflect the current market value, or when restricted or illiquid securities are being valued, such securities are
valued at a fair value as determined by the Adviser in good faith according to procedures adopted by the Board of Trustees. The Board of Trustees annually approves the pricing services used by the fund accounting agent. The fund accounting agent
maintains a pricing review committee which consults with an Independent Trustee who is a member of the Pricing Committee as fair valuation issues arise. Fair valued securities held by a Fund (if any) are reviewed by the Board of Trustees on a
quarterly basis.
Each Fund’s net asset value per share is computed by dividing the value of the securities held by the Fund plus any
cash or other assets (including interest and dividends accrued but not yet received) minus all liabilities (including accrued expenses) by the total number of shares in the Fund outstanding at such time.
REDEMPTION IN-KIND
The Funds do not intend to redeem shares in any form except cash. However, if the aggregate amount being redeemed within any 90-day period is
over the lesser of $250,000 or 1% of a Fund’s net asset value, pursuant to a Rule 18f-1 plan filed by the Trust on behalf of the Funds, each Fund has the right to redeem your shares by giving you the amount that exceeds the lesser of $250,000
or 1% of the Fund’s net asset value in securities instead of cash. In the event that an in-kind distribution is made, a shareholder may incur additional expenses, such as the payment of brokerage commissions, on the sale or other disposition of
the securities received from the Fund.
28
STATUS AND TAXATION OF THE FUNDS
Each Fund was organized as a series of a business trust, and intends to qualify for treatment as a regulated investment company (a
“RIC”) under the Internal Revenue Code of 1986, as amended (the “Code”) in each taxable year. There can be no assurance that it actually will so qualify. If a Fund qualifies as a RIC, its dividend and capital gain distributions
generally are subject only to a single level of taxation, to the shareholders. This differs from distributions of a regular business corporation which, in general, are taxed first as taxable income of the distributing corporation, and then again as
dividend income of the shareholder.
Redemption of Fund shares will result in a taxable gain or loss to the redeeming shareholder,
depending on whether the redemption proceeds are more or less than the shareholder’s adjusted basis for the redeemed shares.
If a
Fund does qualify as a RIC but (in a particular calendar year) distributes less than 98% of its ordinary income and 98.2% of its capital gain net income (as the Code defines each such term), the Fund is subject to an excise tax. The excise tax,
if applicable, is 4% of the excess of the amount required to have been distributed over the amount actually distributed for the applicable year. If a Fund does
not
qualify as a RIC, its income will be subject to taxation as a regular
business corporation, without reduction by dividends paid to shareholders of the Fund.
To continue to qualify for treatment as a RIC
under Subchapter M of the Code, each Fund must, among other requirements:
|
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•
|
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Derive at least 90% of its gross income each taxable year from dividends, interest, payments with respect to securities loans, gains from the sale or other disposition of stock or securities or foreign currencies, and
certain other income (including gains from options, futures, or forward contracts derived with respect to the RIC’s business of investing in stock securities, or foreign currencies) (the “Income Requirement”);
|
|
|
•
|
|
Diversify its investments in securities within certain statutory limits; and
|
|
|
•
|
|
Distribute annually to its shareholders at least 90% of its investment company taxable income (generally, taxable net investment income less net capital gain) (the “Distribution Requirement”).
|
Pursuant to the Regulated Investment Company Modernization Act of 2010 (the “Modernization Act”), if a Fund
fails the gross income test for a taxable year, it will nevertheless be considered to have satisfied the test for such year if (i) the Fund satisfies certain procedural requirements and (ii) the Fund’s failure to satisfy the gross
income test is due to reasonable cause and not due to willful neglect. However, in such case, a tax is imposed on the Fund for the taxable year in which, absent the application of this provision, it would have failed the gross income test equal to
the amount by which (i) the Fund’s non-qualifying gross income exceeds (ii) one-ninth of the Fund’s qualifying gross income, each as determined for purposes of applying the gross income test for such year.
Also pursuant to the Modernization Act, if a Fund fails the asset diversification test as of the end of a quarter, it will nevertheless be
considered to have satisfied the test as of the end of such quarter in the following circumstances. If a Fund’s failure to satisfy the asset diversification test at the end of the quarter is due to the ownership of assets the total value of
which does not exceed the lesser of (i) one percent of the total value of the Fund’s assets at the end of such quarter and (ii) $10,000,000 (a “de minimis failure”), the Fund will be considered to have satisfied the asset
diversification test as
29
of the end of such quarter if, within six months of the last day of the quarter in which the Fund identifies that it failed the asset diversification test (or such other prescribed time period),
the Fund either disposes of assets in order to satisfy the asset diversification test, or otherwise satisfies the asset diversification test.
In the case of a failure to satisfy the asset diversification test at the end of a quarter in a case that does not constitute a de minimis
failure, a Fund will nevertheless be considered to have satisfied the asset diversification test as of the end of such quarter if (i) the Fund satisfies certain procedural requirements; (ii) the Fund’s failure to satisfy the asset
diversification test is due to reasonable cause and not due to willful neglect; and (iii) within six months of the last day of the quarter in which the Fund identifies that it failed the asset diversification test (or such other prescribed time
period), the Fund either disposes of assets in order to satisfy the asset diversification test, or otherwise satisfies the asset diversification test. However, in this case, a tax is imposed on the Fund, at the current rate of 35%, on the net income
generated by the assets that caused the Fund to fail the asset diversification test during the period for which the asset diversification test was not met. However, in all events, such tax will not be less than $50,000.
Hedging strategies, to reduce risk in various ways, are subject to complex rules that determine, for federal income tax purposes, the
character and time for recognition of gains and losses that a Fund realizes in connection with the hedge. A Fund’s income from derivative instruments, in each case derived with respect to its business of making investments, should qualify as
allowable income for the Fund under the Income Requirement.
Each Fund’s net realized capital gains from securities transactions will
be distributed only after reducing such gains by the amount of any available capital loss carryforwards. As of November 30, 2013, the Value Fund had no capital loss carryforwards available for federal tax purposes, and the Small Cap Fund had
available for federal tax purposes an unused capital loss carryforward of $5,155. Capital losses, if any, incurred by a Fund in taxable years of the Fund beginning after November 30, 2011 will have an indefinite carryover period pursuant to the
provisions of the Modernization Act, and must be utilized prior to pre-enactment loss carryforwards.
Fund distributions received by
your qualified retirement plan, such as a 401(k) plan or IRA, are generally tax-deferred; this means that you are not required to report Fund distributions on your income tax return when paid to your plan, but, rather, when your plan makes payments
to you or your beneficiary. Special rules apply to payouts from Roth and Education IRAs.
The portion of the dividends a Fund pays (other
than capital gain distributions) that does not exceed the aggregate dividends it receives from U.S. corporations will be eligible for the dividends received deduction allowed to corporations; however, dividends received by a corporate shareholder
and deducted by it pursuant to the dividends received deduction are subject indirectly to the federal alternative minimum tax.
If you are
a non-retirement plan holder, a Fund will send you a Form 1099 each year that tells you the amount of distributions you received for the prior calendar year, the tax status of those distributions, and a list of reportable sale transactions.
Generally, each Fund’s distributions are taxable to you in the year you received them. However, any dividends that are declared in October, November
30
or December but paid in January are taxable as if received in December of the year they are declared. Investors should be careful to consider the tax consequences of buying shares shortly before
a distribution. The price of shares purchased at that time may reflect the amount of the anticipated distribution. However, any such distribution will be taxable to the purchaser of the shares and may result in a decline in the share value by the
amount of the distribution.
If shares of a Fund are purchased within 30 days before or after redeeming other shares of the Fund at a
loss, all or a portion of that loss will not be deductible and will increase the basis of the newly purchased shares. If shares of a Fund are sold at a loss after being held by a shareholder for six-months or less, the loss will be a long-term,
instead of a short-term, capital loss to the extent of any capital gain distributions received on the shares.
The foregoing is only
a summary of some of the important federal income tax considerations affecting the Fund and its shareholders and is not intended as a substitute for careful tax planning.
Accordingly, prospective investors should consult their own tax advisers
for more detailed information regarding the above and for information regarding federal, state, local and foreign taxes.
CUSTODIAN
Huntington National Bank, 41 South High Street, Columbus, Ohio 43215, is Custodian of each Fund’s investments. The Custodian acts as the
Funds’ depository, safekeeps portfolio securities, collects all income and other payments with respect thereto, disburses funds at the Funds’ request and maintains records in connection with its duties. A Trustee of the Trust is a member
of the Custodian’s management. The Custodian’s parent company, Huntington Bancshares, Inc., is also the parent company of Huntington Asset Services, Inc. (“Huntington”), the Trust’s transfer agent, fund accountant and
administrator, and of Unified Financial Securities, Inc. (the “Distributor”), the Trust’s distributor. Huntington and the Distributor each operates as a wholly-owned subsidiary of Huntington Bancshares, Inc.
For its custodial services, the Custodian receives a monthly fee from each Fund based on the market value of assets under custody. The monthly
fee is equal to an annual rate of 0.0125% of the first $75 million of market value; 0.0100% of the next $75 million of market value; and 0.0075% of market value in excess of $150 million. The Custodian also receives various transaction-based fees.
The fees paid to the Custodian by each Fund are subject to a $250 monthly minimum fee per Fund.
FUND SERVICES
Huntington Asset Services, Inc. (“Huntington”), 2960 N. Meridian St., Suite 300, Indianapolis, IN 46208, acts as the Funds’
transfer agent, fund accountant, and administrator. Huntington is a wholly-owned subsidiary of Huntington Bancshares, the parent company of the Custodian and the Distributor. Certain officers of the Trust also are officers of Huntington.
31
Huntington maintains the records of each shareholder’s account, answers shareholders’
inquiries concerning their accounts, processes purchases and redemptions of each Fund’s shares, acts as dividend and distribution disbursing agent, and performs other transfer agent and shareholder service functions. For its services as a
transfer agent, Huntington receives a monthly fee of $1.33 per shareholder account, subject to a minimum monthly fee of $3,750, which fee is prorated between the Funds based on individual asset levels.
In addition, Huntington provides the Funds with fund accounting services, which include certain monthly reports, record keeping and other
management-related services. For its services as fund accountant, Huntington receives a monthly fee from each Fund equal to an annual rate of 0.04% of the Fund’s average daily net assets up to $100 million; 0.03% of the Fund’s average
daily net assets from $100 million to $250 million; and 0.02% of the Fund’s average daily net assets over $250 million, subject to a total minimum monthly fee of $6,250, which fee is prorated between the Funds based on individual asset levels.
Huntington also provides the Funds with administrative services, including all regulatory reporting and necessary office equipment,
personnel and facilities. For these services, Huntington receives a monthly fee from each Fund equal to an annual rate of 0.08% of the Fund’s average daily net assets up to $100 million; 0.06% of the Fund’s average daily net assets
from $100 million to $250 million; and 0.04% of the Fund’s average daily net assets over $250 million, subject to a total minimum monthly fee of $6,250, which fee is prorated among the three Symons Institutional Funds based on individual asset
levels. Huntington also receives a compliance program services fee of $700 per month from each Fund.
The following table provides
information regarding transfer agent, fund accounting and administrative services fees paid by each Fund during the periods indicated. The amounts given include reimbursement for various out-of-pocket expenses, and may include amounts paid to
various third parties as compensation for sub-transfer agency services.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value Fund
|
|
Fiscal Year Ended
November 30, 2011
|
|
|
Fiscal Year Ended
November 30, 2012
|
|
|
Fiscal Year Ended
November 30, 2013
|
|
|
Transfer Agent Fees
|
|
$
|
49,857
|
|
|
$
|
49,555
|
|
|
$
|
49,106
|
|
|
Fund Accounting Fees
|
|
$
|
52,760
|
|
|
$
|
40,296
|
|
|
$
|
45,969
|
|
|
Administrative Fees
|
|
$
|
52,760
|
|
|
$
|
67,474
|
|
|
$
|
69,842
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Small Cap Fund
|
|
Fiscal Year Ended
November 30, 2011
|
|
|
Fiscal Year Ended
November 30, 2012
|
|
|
Fiscal Year Ended
November 30, 2013
|
|
|
Transfer Agent Fees
|
|
$
|
26,598
|
|
|
$
|
24,346
|
|
|
$
|
24,470
|
|
|
Fund Accounting Fees
|
|
$
|
14,339
|
|
|
$
|
4,975
|
|
|
$
|
3,965
|
|
|
Administrative Fees
|
|
$
|
14,427
|
|
|
$
|
9,447
|
|
|
$
|
6,016
|
|
32
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The firm of Cohen Fund Audit Services, Ltd. (“Cohen”), 1350 Euclid Avenue, Suite 800, Cleveland, Ohio 44115 has been selected as
Independent Registered Public Accounting Firm for the Funds for the fiscal year ending November 30, 2014. Cohen will perform an annual audit of the Funds’ financial statements and will provide financial, tax and accounting services, as
requested, in accordance with applicable law and regulations.
DISTRIBUTOR
Unified Financial Securities, Inc., 2960 North Meridian Street, Suite 300, Indianapolis, Indiana 46208, is the exclusive agent for distribution
of shares of the Funds. Certain officers of the Trust are also officers of the Distributor, and a Trustee of the Trust is an officer of the Custodian, which, together with the Distributor and Huntington, are wholly-owned subsidiaries of Huntington
Bancshares. As a result, such persons may be deemed to be affiliates of the Distributor.
The Distributor is obligated to sell the shares
of each Fund on a best efforts basis only against purchase orders for the shares. Shares of each Fund are offered to the public on a continuous basis.
FINANCIAL STATEMENTS
The financial statements and the report of the Independent Registered Public Accounting Firm for the Funds required to be included in the SAI
are hereby incorporated by reference to the Funds’ Annual Report to Shareholders for the fiscal year ended November 30, 2013, filed electronically on February 4, 2014 (File No. 811-21237). The Funds will provide the Annual Report
without charge upon written request or request by telephone.
33