Securities
Act Registration No. 333-178833
Investment Company Act Registration No. 811-22655
As
filed with the Securities and Exchange Commission on October 19, 2023
SECURITIES
AND EXCHANGE COMMISSION
Washington, D. C. 20549
REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933 x
o | Pre-Effective Amendment No. |
x | Post-Effective Amendment No. 58 5 |
and/or
REGISTRATION
STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 x
x | Amendment No. 58 8 |
(Check
appropriate box or boxes.)
Northern
Lights Fund Trust III
(Exact Name of Registrant as Specified in Charter)
225
Pictoria Drive, Suite 450, Cincinnati, OH 45246
(Address of Principal Executive Offices) (Zip Code)
Registrants
Telephone Number, including Area Code: (631) 490-4300
The
Corporation Trust Company
1209 Orange Street
Wilmington, DE 19801
(Name and Address of Agent for Service)
With
copy to:
JoAnn Thompson 41 Columbus, 614-469-3265 614-469-3361 |
Brian Ultimus 225 Cincinnati, (631) 470-2688 |
Approximate
date of proposed public offering: As soon as practicable after the effective date of the Registration Statement.
It
is proposed that this filing will become effective:
o | Immediately upon filing pursuant to paragraph (b) |
o | On (date) pursuant to paragraph (b) |
x | 60 days after filing pursuant to paragraph (a)(1) |
o | On (date) pursuant to paragraph (a)(1) |
o | 75 days after filing pursuant to paragraph (a)(2) |
o | On (date) pursuant to paragraph (a)(2) of Rule 485. |
If
appropriate, check the following box:
o | This post-effective amendment designates a new effective date for a previously filed post-effective amendment. |
Table
of Contents
Page | |
COUNTERPOINT TACTICAL INCOME FUND – FUND SUMMARY | 1 |
Investment Objective | 1 |
Fees and Expenses of the Fund | 1 |
Principal Investment Strategies | 1 |
Principal Investment Risks | 2 |
Performance | 4 |
Purchase and Sale of Fund Shares | 5 |
Tax Information | 5 |
Payments to Broker-Dealers and Other Financial Intermediaries | 5 |
COUNTERPOINT TACTICAL EQUITY FUND – FUND SUMMARY | 6 |
Investment Objective | 6 |
Fees and Expenses of the Fund | 6 |
Principal Investment Strategies | 6 |
Principal Investment Risks | 7 |
Performance | 9 |
Purchase and Sale of Fund Shares | 10 |
Tax Information | 10 |
Payments to Broker-Dealers and Other Financial Intermediaries | 10 |
COUNTERPOINT TACTICAL MUNICIPAL FUND – FUND SUMMARY | 11 |
Investment Objective | 11 |
Fees and Expenses of the Fund | 11 |
Principal Investment Strategies | 12 |
Principal Investment Risks | 12 |
Performance | 13 |
Purchase and Sale of Fund Shares | 14 |
Tax Information | 14 |
Payments to Broker-Dealers and Other Financial Intermediaries | 14 |
ADDITIONAL INFORMATION ABOUT PRINCIPAL INVESTMENT STRATEGIES AND RELATED RISKS | 15 |
Investment Objectives | 15 |
Principal Investment Strategies | 15 |
Principal Investment Risks | 17 |
Temporary Investments | 22 |
Portfolio Holdings Disclosure | 22 |
Cybersecurity | 22 |
MANAGEMENT | 23 |
Investment Adviser | 23 |
Portfolio Managers | 24 |
HOW SHARES ARE PRICED | 25 |
HOW TO PURCHASE SHARES | 26 |
HOW TO REDEEM SHARES | 31 |
FREQUENT PURCHASES AND REDEMPTIONS OF FUND SHARES | 33 |
TAX STATUS, DIVIDENDS AND DISTRIBUTIONS | 34 |
DISTRIBUTION OF SHARES | 35 |
Distributor | 35 |
Distribution Fees | 35 |
Additional Compensation to Financial Intermediaries | 35 |
Householding | 35 |
FINANCIAL HIGHLIGHTS | 36 |
PRIVACY NOTICE | 37 |
APPENDIX A | 39 |
COUNTERPOINT
TACTICAL INCOME FUND – FUND SUMMARY
Investment
Objective: The Counterpoint Tactical Income Fund (the Fund) seeks income and capital preservation.
Fees
and Expenses of the Fund: This table describes the fees and expenses that you may pay if you buy, hold and sell shares of the Fund.
You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table
and example below. You may qualify for sales charge discounts on purchases of Class A shares if you and your family invest, or agree
to invest in the future, at least $25,000 in the Fund. More information about these and other discounts is available from your financial
professional and under the heading How to Purchase Shares on page [ ] of this Prospectus. In addition, descriptions
of sales load waivers and/or discounts for Class A shares with respect to certain financial intermediaries are reproduced in Appendix
A: Intermediary-Specific Sales Charge Waivers and Discounts in the Prospectus based on information provided by the financial intermediary.
Shareholder Fees (fees paid directly from your investment) |
Class A |
Class C |
Class I |
Maximum Sales Charge (Load) Imposed on purchases (as a percentage of offering price) |
4.50% | None | None |
Maximum Deferred Sales Charge (Load) |
None | None | None |
Redemption Fee |
None | None | None |
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) |
|||
Management Fees |
1.25% | 1.25% | 1.25% |
Distribution and Service (12b-1) Fees |
0.25% | 1.00% | 0.00% |
Other Expenses |
[ ]% |
[ ]% |
[ ]% |
Acquired Fund Fees and Expenses(1) |
[ ]% |
[ ]% |
[ ]% |
Total Annual Fund Operating Expenses |
[ ]% |
[ ]% |
[ ]% |
(1) | Acquired Fund Fees and Expenses are the indirect costs of investing in other investment companies, including exchange traded funds. The operating expenses in this fee table will not correlate to the expense ratio in the Funds financial highlights because the financial statements include only the direct operating expenses incurred by the Fund, not the indirect costs of investing in other investment companies. |
Example:
This Example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds.
The
Example assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your shares at the end of those
periods. The Example also assumes that your investment has a 5% return each year and that the Funds operating expenses remain
the same. Although your actual costs may be higher or lower, based upon these assumptions your costs would be:
Class | 1 Year |
3 Years |
5 Years |
10 Years |
A | $[ ] |
$[ ] |
$[ ] |
$[ ] |
C | $[ ] |
$[ ] |
$[ ] |
$[ ] |
I | $[ ] |
$[ ] |
$[ ] |
$[ ] |
Portfolio
Turnover: The Fund pays transaction costs, such as commissions, when it buys and sells securities (or turns over
its portfolio). A higher portfolio turnover may indicate higher transaction costs and may result in higher taxes when Fund shares are
held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the Example, affect the Funds
performance. During the fiscal year ended September 30, 2023, the Funds portfolio turnover rate was [ ]% of the average value
of its portfolio.
Principal
Investment Strategies: To pursue its investment objective, the Fund invests in mutual funds, closed-end funds and passively and actively
managed exchange traded funds (ETFs) that invest in (i) high yield instruments (also known as junk bonds)
(including bonds, bank loans, preferred stock, floating rate bonds and debt and municipal high yield debt); (ii) obligations issued or
guaranteed by the United States government, its agencies or instrumentalities, including U.S. treasuries (with an average duration of
up to 5 years); and (iii) cash and cash equivalents (including money market funds). The Fund may also invest in these types of securities
directly. The Funds adviser, Counterpoint Funds, LLC (the Adviser) uses a proprietary quantitative model that seeks
to identify the trends in the market for high yield instruments. To hedge against or replicate credit and interest rate exposure, the
Fund also invests directly in derivatives (including U.S. treasury futures and credit default swaps) and may borrow an amount up to 33 1/3%
of its total assets (including the amount borrowed). The Fund invests in high yield instruments of any maturity or duration when the
model determines that the market for high yield instruments is stable or trending upwards and either U.S. Treasuries or cash and cash
equivalents when the model determines that the market for high yield instruments is trending downwards. By tactically allocating its
investments among the securities described above, the Fund seeks to reduce its exposure to declines in the market for high yield instruments,
thereby limiting portfolio volatility in down-trending markets (downside volatility) and downside loss.
The
Adviser uses a quantitative model that takes into account macro market data and other market-based inputs and metrics to seek to identify
market trends. When making investment decisions for the Fund, the portfolio managers consider both the outputs of the model as well as
an assessment of current market conditions, the average credit quality of the portfolio, the average duration of the portfolio and other
factors. When the Fund is invested in high yield instruments, the portfolio managers consider the relative risk adjusted net returns
of available high yield instruments.
Principal
Investment Risks: As with all mutual funds, there is the risk that you could lose money through your investment in the Fund. The
Fund is not intended to be a complete investment program. Many factors affect the Funds net asset value (NAV) and
performance.
● | Cash and Cash Equivalents Risk. When the Fund is out of the market and invests in cash and cash equivalents, there is a risk that the market will begin to rise rapidly, and the Fund will not be able to reinvest its cash positions into areas of the advancing market quickly enough to capture the initial returns of changing market conditions. |
● | Credit Risk. The risk that the Fund could lose money if the issuer or guarantor of a fixed income security is unwilling or unable to make timely payments to meet its contractual obligations. |
● | Derivatives Risk. The derivative instruments in which the Fund may invest either directly or through an underlying fund may be more volatile than other instruments. The risks associated with investments in derivatives also include liquidity, interest rate, market, credit and management risks, mispricing or improper valuation. Changes in the market value of a derivative may not correlate perfectly with the underlying asset, rate or index, and the Fund could lose more than the principal amount invested. In addition, if a derivative is being used for hedging purposes there can be no assurance given that each derivative position will achieve a perfect correlation with the security or currency against which it is being hedged, or that a particular derivative position will be available when sought by the portfolio manager. |
● | Fixed Income Risk. When the Fund invests in fixed income securities, the value of your investment in the Fund will fluctuate with changes in interest rates. Typically, a rise in interest rates causes a decline in the value of fixed income securities or derivatives owned by the Fund. In general, the market price of fixed income securities with longer maturities will increase or decrease more in response to changes in interest rates than shorter-term securities. Other risk factors include credit risk (the debtor may default) and prepayment risk (the debtor may pay its obligation early, reducing the amount of interest payments). These risks could affect the value of a particular investment by the Fund, possibly causing the Funds share price and total return to be reduced and fluctuate more than other types of investments. |
● | Futures Risk. The Funds use of futures involves risks different from, or possibly greater than, the risks associated with investing directly in securities and other traditional investments. These risks include (i) leverage risk (ii) risk of mispricing or improper valuation; and (iii) the risk that changes in the value of the futures contract may not correlate perfectly with the underlying index. Investments in futures involve leverage, which means a small percentage of assets invested in futures can have a disproportionately large impact on the Fund. This risk could cause the Fund to lose more than the principal amount invested. Futures contracts may become mispriced or improperly valued when compared to the Advisers expectation and may not produce the desired investment results. Additionally, changes in the value of futures contracts may not track or correlate perfectly with the underlying index because of temporary, or even long-term, supply and demand imbalances and because futures do not pay dividends unlike the stocks upon which they are based. |
● | High-Yield Fixed Income Securities (Junk Bond) Risk. The fixed income securities held by the Fund that are rated below investment grade are subject to additional risk factors such as increased possibility of default, illiquidity of the security, and changes in value based on public perception of the issuer. Such securities are generally considered speculative because they present a greater risk of loss, including default, than higher quality fixed income securities. |
● | Interest Rate Risk. Fixed income securities are subject to the risk that the securities could lose value because of interest rate changes. For example, bonds tend to decrease in value if interest rates rise. Fixed income securities with longer maturities sometimes offer higher yields but are subject to greater price shifts as a result of interest rate changes than fixed income securities with shorter maturities. Current conditions may result in a rise in interest rates, which in turn may result in a decline in the value of the bond investments held by the Fund. As a result, interest rate risk may be heightened. |
● | Investment Companies Risk. When the Fund invests in other investment companies, it will bear additional expenses based on its proportionate share of the other investment companys operating expenses, including the potential duplication of management fees. The risk of owning an investment company generally reflects the risk of owning the underlying investments the investment company holds. The Fund also will incur brokerage costs when it purchases and sells investment companies. In addition, ETFs and exchanged-traded closed-end fund shares may be subject to the following risks that do not apply to conventional mutual funds: (i) the market price of shares may trade above or below their NAV, (ii) an active trading market for shares may not develop or be maintained; or (iii) trading of shares may be halted if the listing exchanges officials deem such action appropriate, the shares are delisted from the exchange, or the activation of market-wide circuit breakers (which are tied to large decreases in stock prices) halts stock trading generally. |
● | Issuer-Specific Risk. The value of a specific security can be more volatile than the market as a whole and may perform worse than the market as a whole. |
● | Leveraging Risk. Using derivatives can create leverage, which can magnify the Funds potential for gain or loss and, therefore, amplify the effects of market volatility of the Funds share price. |
● | Liquidity Risk. Liquidity risk exists when particular investments of the Fund would be difficult to purchase or sell, possibly preventing the Fund from selling such illiquid securities at an advantageous time or price, or possibly requiring the Fund to dispose of other investments at unfavorable times or prices in order to satisfy its obligations. |
● | Management Risk. The Advisers reliance on its strategy and judgments about the attractiveness, value and potential appreciation of particular securities and the tactical allocation among the Funds investments may prove to be incorrect and may not produce the desired results. |
● | Market and Geopolitical Risk. The increasing interconnectivity between global economies and financial markets increases the likelihood that events or conditions in one region or financial market may adversely impact issuers in a different country, region or financial market. Securities in the Funds portfolio may underperform due to inflation (or expectations for inflation), interest rates, global demand for particular products or resources, natural disasters, climate change and climate-related events, pandemics, epidemics, terrorism, international conflicts, regulatory events and governmental or quasi-governmental actions. The occurrence of global events similar to those in recent years may result in market volatility and may have long term effects on both the U.S. and global financial markets. |
● | Model Risk. Like all quantitative analysis, the Advisers investment model carries a risk that the mathematical model used might be based on one or more incorrect assumptions. Rapidly changing and unforeseen market dynamics could also lead to a decrease in short term effectiveness of the Advisers algorithmic model. No assurance can be given that the Fund will be successful under all or any market conditions. |
● | Portfolio Turnover Risk. Increased portfolio turnover causes the Fund to incur higher brokerage costs, which may adversely affect the Funds performance and may produce increased taxable distributions. |
● | Swap Risk. Swaps are subject to tracking risk because they may not be perfect substitutes for the instruments they are intended to hedge or replace. Over the counter swaps are subject to counterparty default. Leverage inherent in derivatives will tend to magnify the Funds losses. |
● | U.S. Government Securities Risk. Treasury obligations may differ in their interest rates, maturities, times of issuance and other characteristics. Obligations of U.S. government agencies and authorities are supported by varying degrees of credit but generally are not backed by the full faith and credit of the U.S. government. No assurance can be given that the U.S. government will provide financial support to its agencies and authorities if it is not obligated by law to do so. In addition, the value of U.S. government securities may be affected by changes in the credit rating of the U.S. government. |
Performance:
The bar chart and performance table show the variability of the Funds returns over time, which is some indication of the risks
of investing in the Fund by comparing the Funds performance with a broad measure of market performance. The bar chart shows performance
of the Funds Class I shares for each full calendar year since the Funds inception. The performance table compares the performance
of the Fund over time to the performance of a broad-based market index. You should be aware that the Funds past performance (before
and after taxes) may not be an indication of how the Fund will perform in the future. Although Class A and Class C shares have similar
returns to Class I shares because the classes are invested in the same portfolio of securities, the returns for Class A and Class C shares
are different from Class I shares because Class A and Class C shares have different expenses than Class I shares. Updated performance
information is available at no cost by visiting www.counterpointfunds.com or by calling 1-844-273-8637.
Class
I Performance Bar Chart For Calendar Years Ended December 31
[TO
BE UPDATED]
Best Quarter: |
[ ] |
[ ]% |
Worst Quarter: |
[ ] |
[ ]% |
Performance
Table
Average
Annual Total Returns
(For
the periods ended December 31, 2022)
One Year |
Five Years |
Since Inception (12-4-14) |
|
Class I shares |
|||
Return before taxes |
[ ]% |
[ ]% |
[ ]% |
Return after taxes on distributions |
[ ]% |
[ ]% |
[ ]% |
Return after taxes on distributions and sale of Fund shares |
[ ]% |
[ ]% |
[ ]% |
Class A shares |
|||
Return before taxes |
[ ]% |
[ ]% |
[ ]% |
Class C shares |
|||
Return before taxes |
[ ]% |
[ ]% |
[ ]% |
Bloomberg U.S. Aggregate Bond Index(1) (reflects no deduction for fees, expenses or taxes) |
[ ]% |
[ ]% |
[ ]% |
(1) | The Bloomberg U.S. Aggregate Bond Index is an unmanaged index comprised of U.S. investment grade, fixed rate bond market securities, including government, government agency, corporate and mortgage-backed securities between one and ten years. Index returns assume reinvestment of dividends. Investors may not invest in the Index directly. Unlike the Funds returns, the Index does not reflect any fees or expenses. |
After-tax
returns were calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state
and local taxes. Actual after-tax returns depend on an investors tax situation and may differ from those shown, and after-tax
returns shown are not relevant to investors who hold shares of the Fund through tax-deferred arrangements, such as 401(k) plans or individual
retirement accounts. After tax returns for the share classes which are not presented will vary from the after-tax returns of Class I
shares.
Investment
Adviser: Counterpoint Funds, LLC
Portfolio
Managers: Michael Krause, CFA, co-founder of the Adviser, has served the Fund as a portfolio manager since it commenced operations
in December 2014. Joseph Engelberg, Ph.D., Chief Research Officer of the Adviser, has served the Fund as a portfolio manager since September
2017.
Purchase
and Sale of Fund Shares: The investment minimums for the Fund are:
Class | Initial Investment |
Subsequent Investment |
||
Regular Account |
Retirement Account |
Regular Account |
Retirement Account |
|
A | $5,000 | $1,000 | $250 | $100 |
C | $5,000 | $1,000 | $250 | $100 |
I | $100,000 | $100,000 | $1,000 | $1,000 |
The
Fund reserves the right to waive any investment minimum. You may purchase and redeem shares of the Fund on any day that the New York
Stock Exchange is open. Redemption requests may be made in writing, by telephone, or through a financial intermediary and will be paid
by ACH, check or wire transfer.
Tax
Information: Dividends and capital gain distributions you receive from the Fund, whether you reinvest your distributions in additional
Fund shares or receive them in cash, are taxable to you at either ordinary income or capital gains tax rates unless you are investing
through a tax-deferred plan such as an IRA or 401(k) plan. However, these dividend and capital gain distributions may be taxable upon
their eventual withdrawal from tax-deferred plans.
Payments
to Broker-Dealers and Other Financial Intermediaries: If you purchase the Fund through a broker-dealer or other financial intermediary
(such as a bank), the Fund and its related companies may pay the intermediary for the sale of Fund shares and related services. These
payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the
Fund over another investment. Ask your salesperson or visit your financial intermediarys website for more information.
COUNTERPOINT
TACTICAL EQUITY FUND – FUND SUMMARY
Investment
Objective: The Counterpoint Tactical Equity Fund (the Fund) seeks capital appreciation and preservation.
Fees
and Expenses of the Fund: This table describes the fees and expenses that you may pay if you buy, hold and sell shares of the Fund.
You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table
and example below. You may qualify for sales charge discounts on purchases of Class A shares if you and your family invest, or agree
to invest in the future, at least $25,000 in the Fund. More information about these and other discounts is available from your financial
professional and under the heading How to Purchase Shares on page [ ] of this Prospectus. In addition, descriptions
of sales load waivers and/or discounts for Class A shares with respect to certain financial intermediaries are reproduced in Appendix
A: Intermediary-Specific Sales Charge Waivers and Discounts in the Prospectus based on information provided by the financial intermediary.
Shareholder Fees (fees paid directly from your investment) |
Class A |
Class C |
Class I |
Maximum Sales Charge (Load) Imposed on purchases (as a percentage of offering price) |
5.75% | None | None |
Maximum Deferred Sales Charge (Load) |
None | None | None |
Redemption Fee |
None | None | None |
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) |
|||
Management Fees |
1.25% | 1.25% | 1.25% |
Distribution and Service (12b-1) Fees |
0.25% | 1.00% | 0.00% |
Other Expenses |
[ ]% |
[ ]% |
[ ]% |
Acquired Fund Fees and Expenses(1) |
[ ]% |
[ ]% |
[ ]% |
Total Annual Fund Operating Expenses |
[ ]% |
[ ]% |
[ ]% |
Fee Waiver and Expense Reimbursement(2) |
[ ]% |
[ ]% |
[ ]% |
Total Annual Fund Operating Expenses After Fee Waiver |
[ ]% |
[ ]% |
[ ]% |
(1) | Acquired Fund Fees and Expenses are the indirect costs of investing in other investment companies, including exchange traded funds. The operating expenses in this fee table will not correlate to the expense ratio in the Funds financial highlights because the financial statements include only the direct operating expenses incurred by the Fund, not the indirect costs of investing in other investment companies. |
(2) | The Funds adviser has contractually agreed to waive its fees and reimburse expenses of the Fund, at least until February 1, 2025 to ensure that Total Annual Fund Operating Expenses After Fee Waiver and Reimbursement (excluding (i) any front-end or contingent deferred loads; (ii) brokerage fees and commissions; (iii) acquired fund fees and expenses; (iii) borrowing costs (such as interest and dividend expense on securities sold short); (iv) taxes; and (v) extraordinary expenses, such as litigation expenses (which may include indemnification of Fund officers and Trustees, contractual indemnification of Fund service providers (other than the Funds adviser))) do not exceed 2.00%, 2.75% and 1.75% of average daily net assets attributable to Class A, Class C, and Class I shares, respectively. These fee waivers and expense reimbursements are subject to possible recoupment from the Fund within the three years after the fees are waived or reimbursed, if such recoupment can be achieved within the lesser of the foregoing limits or limits in place at time of recoupment. This agreement may be terminated by the Board of Trustees only on 60 days written notice to the Funds adviser. |
Example:
This Example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds.
The
Example assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your shares at the end of those
periods. The Example also assumes that your investment has a 5% return each year and that the Funds operating expenses remain
the same. Although your actual costs may be higher or lower, based upon these assumptions your costs would be:
Class | 1 Year |
3 Years |
5 Years |
10 Years |
A | $[ ] |
$[ ] |
$[ ] |
$[ ] |
C | $[ ] |
$[ ] |
$[ ] |
$[ ] |
I | $[ ] |
$[ ] |
$[ ] |
$[ ] |
Portfolio
Turnover: The Fund pays transaction costs, such as commissions, when it buys and sells securities (or turns over
its portfolio). A higher portfolio turnover may indicate higher transaction costs and may result in higher taxes when Fund shares are
held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the Example, affect the Funds
performance. During the fiscal year ended September 30, 2023, the Funds portfolio turnover rate was [ ]% of the average value
of its portfolio.
Principal
Investment Strategies: Under normal market conditions, the Fund invests at least 80% of its assets (plus the amount of borrowings,
if any) in long and short positions in equity instruments of any market capitalization. Equity instruments include domestic and foreign
common stock, preferred stock, depositary receipts, equity swaps (including single-name, index, and basket swaps), options, equity index
futures, and other investment companies (such as exchange traded funds (ETFs), mutual funds, and closed-end funds) that
invest in these types of securities. The Fund may hedge exposure to foreign currencies using foreign currency forwards or futures.
In
managing the Fund, the Funds adviser, Counterpoint Funds, LLC (the Adviser), employs a strategy that generates returns
from two sources: (1) stock selection and (2) tactical market exposure.
Stock
Selection. The Adviser selects the particular stocks on which to go long and short based on multi-factor quantitative models. The
models are based on proprietary research related to economic indicators and investment anomalies found in peer-reviewed academic journals.
An investment anomaly refers to a situation when a security or group of securities performs contrary to the notion of efficient markets,
which states that security prices reflect all available information at any point in time. Published papers in academic finance journals
have identified more than one hundred investment anomalies. An example of such an anomaly is the asset growth anomaly where the literature
has shown that companies that are more aggressive with spending their capital have worse average stock performance than companies that
are more conservative in their capital expenditures. Perfect market efficiency would not yield any market outperformance from investment
decisions based on publicly available accounting data such as this.
The
Fund seeks to target the best performing, recent, and persistent anomalies. The Fund may invest in stocks that provide exposure to a
wide variety of anomalies. The Advisers strategy may seek to capitalize on many market anomalies at any one time. The Adviser
may adjust its model to include newer and more effective anomalies and pare down exposure to older underperforming anomalies on a regular
basis. The signals from these models indicate which stocks are undervalued and likely to increase in price and which stocks are overvalued
and likely to decrease in price. The Adviser takes long positions in undervalued securities and short positions in overvalued securities.
Tactical
Market Exposure. The Adviser varies the Funds equity exposure using a tactical proprietary model of market returns. When the
tactical model forecasts lower market returns, the Fund targets a market-neutral (zero beta) allocation to stocks with a gross equity
exposure (long positions plus short positions) of at least 80%. Beta is a measure of the volatility, or systematic risk, of a security
or a portfolio in comparison to the market as a whole. Beta is assigned a number. A beta of 1 indicates that the securitys price
moves with the market. A beta of less than 1 means that the security is theoretically less volatile than the market. A beta of greater
than 1 indicates that the securitys price is theoretically more volatile than the market. The remaining 0-20% of the total portfolio
assets are invested either directly, or indirectly through ETFs, mutual funds, or derivatives, in U.S. treasury instruments and investment
grade debt. When the model forecasts higher market returns, the Adviser selects a blend of equity index futures, equity index ETFs, and/or
equity index swaps based on various factors (liquidity, tracking error, and cost) to achieve exposure to the equity markets with a beta
between 0.8 and 0.85.
Principal
Investment Risks: As with all mutual funds, there is the risk that you could lose money through your investment in the Fund. The
Fund is not intended to be a complete investment program. Many factors affect the Funds net asset value (NAV) and
performance.
● | Depositary Receipt Risk. To the extent the Fund invests in stocks of foreign corporations, the Funds investment in such stocks may also be in the form of depositary receipts or other securities convertible into securities of foreign issuers, including American Depositary Receipts (ADRs). While the use of ADRs, which are traded on exchanges and represent an ownership in a foreign security, provide an alternative to directly purchasing the underlying foreign securities in their respective national markets and currencies, investments in ADRs continue to be subject to many of the risks associated with investing directly in foreign securities. |
● | Derivatives Risk. The derivative instruments in which the Fund may invest either directly or through an underlying fund, may be more volatile than other instruments. The risks associated with investments in derivatives also include liquidity, interest rate, market, credit and management risks, mispricing or improper valuation. Changes in the market value of a derivative may not correlate perfectly with the underlying asset, rate or index, and the Fund could lose more than the principal amount invested. In addition, if a derivative is being used for hedging purposes there can be no assurance given that each derivative position will achieve a perfect correlation with the security or currency against which it is being hedged, or that a particular derivative position will be available when sought by the portfolio managers. |
● | Equity Risk. The NAV of the Fund will fluctuate based on changes in the value of the U.S. and/or foreign equity securities held by the Fund. Equity prices can fall rapidly in response to developments affecting a specific company or industry, or to changing economic, political or market conditions. |
● | Fixed Income Risk. When the Fund invests in fixed income securities, the value of your investment in the Fund will fluctuate with changes in interest rates. Typically, a rise in interest rates causes a decline in the value of fixed income securities or derivatives owned by the Fund. In general, the market price of fixed income securities with longer maturities will increase or decrease more in response to changes in interest rates than shorter-term securities. Other risk factors include credit risk (the debtor may default) and prepayment risk (the debtor may pay its obligation early, reducing the amount of interest payments). These risks could affect the value of a particular investment by the Fund, possibly causing the Funds share price and total return to be reduced and fluctuate more than other types of investments. |
● | Foreign Securities Risk. Since the Funds investments may include foreign securities, the Fund is subject to risks beyond those associated with investing in domestic securities. Foreign companies are generally not subject to the same regulatory requirements of U.S. companies thereby resulting in less publicly available information about these companies. In addition, foreign accounting, auditing and financial reporting standards generally differ from those applicable to U.S. companies. |
● | Futures Risk. The Funds use of futures involves risks different from, or possibly greater than, the risks associated with investing directly in securities and other traditional investments. These risks include (i) leverage risk (ii) risk of mispricing or improper valuation; and (iii) the risk that changes in the value of the futures contract may not correlate perfectly with the underlying index. Investments in futures involve leverage, which means a small percentage of assets invested in futures can have a disproportionately large impact on the Fund. This risk could cause the Fund to lose more than the principal amount invested. Futures contracts may become mispriced or improperly valued when compared to the Advisers expectation and may not produce the desired investment results. Additionally, changes in the value of futures contracts may not track or correlate perfectly with the underlying index because of temporary, or even long-term, supply and demand imbalances and because futures do not pay dividends unlike the stocks upon which they are based. |
● | Investment Companies Risk. When the Fund invests in other investment companies, it will bear additional expenses based on its proportionate share of the other investment companys operating expenses, including the potential duplication of management fees. The risk of owning an investment company generally reflects the risk of owning the underlying investments the investment company holds. The Fund also will incur brokerage costs when it purchases and sells investment companies. In addition, ETFs and exchanged-traded closed-end fund shares may be subject to the following risks that do not apply to conventional mutual funds: (i) the market price of shares may trade above or below their NAV, (ii) an active trading market for shares may not develop or be maintained; or (iii) trading of shares may be halted if the listing exchanges officials deem such action appropriate, the shares are delisted from the exchange, or the activation of market-wide circuit breakers (which are tied to large decreases in stock prices) halts stock trading generally. |
● | Issuer-Specific Risk. The value of a specific security can be more volatile than the market as a whole and may perform worse than the market as a whole. |
● | Large Capitalization Risk. Large capitalization companies may be less able than smaller capitalization companies to adapt to changing market conditions. Large capitalization companies may be more mature and subject to more limited growth potential compared with smaller capitalization companies. During different market cycles, the performance of large capitalization companies has trailed the overall performance of the broader securities markets. |
● | Leveraging Risk. Using derivatives can create leverage, which can magnify the Funds potential for gain or loss and, therefore, amplify the effects of market volatility of the Funds share price. |
● | Management Risk. The Advisers reliance on its strategy and judgments about the attractiveness, value and potential appreciation of particular securities and the tactical allocation among the Funds investments may prove to be incorrect and may not produce the desired results. |
● | Market and Geopolitical Risk. The increasing interconnectivity between global economies and financial markets increases the likelihood that events or conditions in one region or financial market may adversely impact issuers in a different country, region or financial market. Securities in the Funds portfolio may underperform due to inflation (or expectations for inflation), interest rates, global demand for particular products or resources, natural disasters, climate change and climate-related events, pandemics, epidemics, terrorism, international conflicts, regulatory events and governmental or quasi-governmental actions. The occurrence of global events similar to those in recent years may result in market volatility and may have long term effects on both the U.S. and global financial markets. |
● | Model Risk. Like any quantitative analysis, the Advisers investment model carries a risk that the mathematical model used might be based on one or more incorrect assumptions. Rapidly changing and unforeseen market dynamics could also lead to a decrease in short term effectiveness of the Advisers algorithmic model. No assurance can be given that the Fund will be successful under all or any market conditions. |
● | Options Risk. There are risks associated with the sale and purchase of call and put options. As a seller (writer) of a put option, the Fund will tend to lose money if the value of the reference index or security falls below the strike price. As the seller (writer) of a call option, the Fund will tend to lose money if the value of the reference index or security rises above the strike price. As the buyer of a put or call option, the Fund risks losing the entire premium invested in the option if the Fund does not exercise the option. |
● | Portfolio Turnover Risk. Increased portfolio turnover causes the Fund to incur higher brokerage costs, which may adversely affect the Funds performance and may produce increased taxable distributions. |
● | Short Selling Risk. If a security sold short or other instrument increases in price, the Fund may have to cover its short position at a higher price than the short sale price, resulting in a loss. The Fund may not be able to successfully implement its short sale strategy due to limited availability of desired securities or for other reasons. |
● | Small and Medium Capitalization Stock Risk. The earnings and prospects of small and medium sized companies are more volatile than larger companies and may experience higher failure rates than larger companies. Small and medium sized companies normally have a lower trading volume than larger companies, which may tend to make their market price fall more disproportionately than larger companies in response to selling pressures and may have limited markets, product lines, or financial resources and lack management experience. |
● | Swap Risk. Swaps are subject to tracking risk because they may not be perfect substitutes for the instruments they are intended to hedge or replace. Over the counter swaps are subject to counterparty default. Leverage inherent in derivatives will tend to magnify the Funds losses. |
● | U.S. Government Securities Risk. Treasury obligations may differ in their interest rates, maturities, times of issuance and other characteristics. Obligations of U.S. government agencies and authorities are supported by varying degrees of credit but generally are not backed by the full faith and credit of the U.S. government. No assurance can be given that the U.S. government will provide financial support to its agencies and authorities if it is not obligated by law to do so. In addition, the value of U.S. government securities may be affected by changes in the credit rating of the U.S. government. |
Performance:
The bar chart and performance table show the variability of the Funds returns, over time which is some indication of the risks
of investing in the Fund by comparing the Funds performance with a broad measure of market performance. The bar chart shows performance
of the Funds Class I shares for each full calendar year since the Funds inception. The performance table compares the performance
of the Fund over time to the performance of a broad-based market index, supplemental index, and a blend of two indices which the Adviser
believes illustrates a closer representation of the Funds portfolio composition. You should be aware that the Funds past
performance (before and after taxes) may not be an indication of how the Fund will perform in the future. Although Class A and Class
C shares have similar returns to Class I shares because the classes are invested in the same portfolio of securities, the returns for
Class A and Class C shares are different from Class I shares because Class A and Class C shares have different expenses than Class I
shares. Updated performance information is available at no cost by visiting www.counterpointfunds.com or by calling 1-844-273-8637.
Class
I Performance Bar Chart For Calendar Years Ended December 31
[TO
BE UPDATED]
Best Quarter: |
[ ] |
[ ]% |
Worst Quarter: |
[ ] |
[ ]% |
Performance
Table
Average
Annual Total Returns
(For
the periods ended December 31, 2022)
One Year |
Five Years |
Since Inception (11-30-15) |
|
Class I shares |
|||
Return before taxes |
[ ]% |
[ ]% |
[ ]% |
Return after taxes on distributions |
[ ]% |
[ ]% |
[ ]% |
Return after taxes on distributions and sale of Fund shares |
[ ]% |
[ ]% |
[ ]% |
Class A shares |
|||
Return before taxes |
[ ]% |
[ ]% |
[ ]% |
Class C shares |
|||
Return before taxes |
[ ]% |
[ ]% |
[ ]% |
S&P 500 Total Return Index(1) (reflects no deduction for fees, expenses or taxes) |
[ ]% |
[ ]% |
[ ]% |
Bloomberg 1-3 Month U.S. Treasury Bill Index(2) (reflects no deduction for fees, expenses or taxes) |
[ ]% |
[ ]% |
[ ]% |
Counterpoint Tactical Equity Fund Blended Index(3) (reflects no deduction for fees, expenses or taxes) |
[ ]% |
[ ]% |
[ ]% |
(1) | The S&P 500 Total Return Index is an unmanaged free-float capitalization-weighted index which measures the performance of 500 large-cap common stocks actively traded in the United States. Index returns assume reinvestment of dividends. Investors may not invest in the Index directly. Unlike the Funds returns, the Index does not reflect any fees or expenses. |
(2) | The Bloomberg 1-3 Month U.S. Treasury Bill Index is designed to measure the performance of public obligations of the U.S. Treasury that have a remaining maturity of greater than or equal to 1 month and less than 3 months. Index returns assume reinvestment of dividends. Investors may not invest in the Index directly. Unlike the Funds returns, the Index does not reflect any fees or expenses. |
(3) | The Counterpoint Tactical Equity Fund Blended Index is a composite of 50% of the S&P 500 Total Return Index and 50% of the Bloomberg 1-3 Month U.S. Treasury Bill Index. Index returns assume reinvestment of dividends. Investors may not invest in the Index directly. Unlike the Funds returns, the Index does not reflect any fees or expenses. |
After-tax
returns were calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state
and local taxes. Actual after-tax returns depend on an investors tax situation and may differ from those shown, and after-tax
returns shown are not relevant to investors who hold shares of the Fund through tax-deferred arrangements, such as 401(k) plans or individual
retirement accounts. After tax returns for the share classes which are not presented will vary from the after-tax returns of Class I
shares.
Investment
Adviser: Counterpoint Funds, LLC
Portfolio
Managers: Each of Joseph Engelberg, Ph.D., Chief Research Officer of the Adviser, and Michael Krause, CFA, co-founder of the Adviser,
has served the Fund as a portfolio manager since it commenced operations in November 2015.
Purchase
and Sale of Fund Shares: The investment minimums for the Fund are:
Class | Initial Investment |
Subsequent Investment |
||
Regular Account |
Retirement Account |
Regular Account |
Retirement Account |
|
A | $5,000 | $1,000 | $250 | $100 |
C | $5,000 | $1,000 | $250 | $100 |
I | $100,000 | $100,000 | $1,000 | $1,000 |
The
Fund reserves the right to waive any investment minimum. You may purchase and redeem shares of the Fund on any day that the New York
Stock Exchange is open. Redemption requests may be made in writing, by telephone, or through a financial intermediary and will be paid
by ACH, check or wire transfer.
Tax
Information: Dividends and capital gain distributions you receive from the Fund, whether you reinvest your distributions in additional
Fund shares or receive them in cash, are taxable to you at either ordinary income or capital gains tax rates unless you are investing
through a tax-deferred plan such as an IRA or 401(k) plan. However, these dividend and capital gain distributions may be taxable upon
their eventual withdrawal from tax-deferred plans.
Payments
to Broker-Dealers and Other Financial Intermediaries: If you purchase the Fund through a broker-dealer or other financial intermediary
(such as a bank), the Fund and its related companies may pay the intermediary for the sale of Fund shares and related services. These
payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the
Fund over another investment. Ask your salesperson or visit your financial intermediarys website for more information.
COUNTERPOINT
TACTICAL MUNICIPAL FUND – FUND SUMMARY
Investment
Objective: The Counterpoint Tactical Municipal Fund (the Fund) seeks tax-free income and capital preservation.
Fees
and Expenses of the Fund: This table describes the fees and expenses that you may pay if you buy, hold and sell shares of the Fund.
You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table
and example below. You may qualify for sales charge discounts on purchases of Class A shares if you and your family invest, or agree
to invest in the future, at least $25,000 in the Fund. More information about these and other discounts is available from your financial
professional and under the heading How to Purchase Shares on page [ ] of this Prospectus. In addition, descriptions
of sales load waivers and/or discounts for Class A shares with respect to certain financial intermediaries are reproduced in Appendix
A: Intermediary-Specific Sales Charge Waivers and Discounts in the Prospectus based on information provided by the financial intermediary.
Shareholder Fees (fees paid directly from your investment) |
Class A |
Class C |
Class I |
Maximum Sales Charge (Load) Imposed on purchases (as a percentage of offering price) |
4.50% | None | None |
Maximum Deferred Sales Charge (Load) |
None | None | None |
Redemption Fee |
None | None | None |
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) |
|||
Management Fees |
0.70% | 0.70% | 0.70% |
Distribution and Service (12b-1) Fees |
0.25% | 1.00% | 0.00% |
Other Expenses |
[ ]% |
[ ]% |
[ ]% |
Acquired Fund Fees and Expenses(1) |
[ ]% |
[ ]% |
[ ]% |
Expense Recapture(2) |
[ ]% |
[ ]% |
[ ]% |
Total Annual Fund Operating Expenses |
[ ]% |
[ ]% |
[ ]% |
(1) | Acquired Fund Fees and Expenses are the indirect costs of investing in other investment companies, including exchange traded funds (ETFs). The operating expenses in this fee table will not correlate to the expense ratio in the Funds financial highlights because the financial statements include only the direct operating expenses incurred by the Fund, not the indirect costs of investing in other investment companies. |
(2) | The Funds adviser has contractually agreed to waive its fees and reimburse expenses of the Fund, at least until February 1, 2025 to ensure that Total Annual Fund Operating Expenses After Fee Waiver and Reimbursement (excluding (i) any front-end or contingent deferred loads; (ii) brokerage fees and commissions; (iii) acquired fund fees and expenses; (iii) borrowing costs (such as interest and dividend expense on securities sold short); (iv) taxes; and (v) extraordinary expenses, such as litigation expenses (which may include indemnification of Fund officers and Trustees, contractual indemnification of Fund service providers (other than the Funds adviser))) does not exceed 1.25%, 2.00% and 1.00% of average daily net assets attributable to Class A, Class C, and Class I shares, respectively. These fee waivers and expense reimbursements are subject to possible recoupment from the Fund within the three years after the fees are waived or reimbursed, if such recoupment can be achieved within the lesser of the foregoing limits or limits in place at time of recoupment. This agreement may be terminated by the Board of Trustees only on 60 days written notice to the Funds adviser. |
Example:
This Example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds.
The example reflects the fee waiver and expense reimbursement for the duration of the waiver/reimbursement period only.
The
Example assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your shares at the end of those
periods. The Example also assumes that your investment has a 5% return each year and that the Funds operating expenses remain
the same. Although your actual costs may be higher or lower, based upon these assumptions your costs would be:
Class | 1 Year |
3 Years |
5 Years |
10 Years |
A | $[ ] |
$[ ] |
$[ ] |
$[ ] |
C | $[ ] |
$[ ] |
$[ ] |
$[ ] |
I | $[ ] |
$[ ] |
$[ ] |
$[ ] |
Portfolio
Turnover: The Fund pays transaction costs, such as commissions, when it buys and sells securities (or turns over
its portfolio). A higher portfolio turnover may indicate higher transaction costs and may result in higher taxes when Fund shares are
held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the Example, affect the Funds
performance. During the fiscal year ended September 30, 2023, the Funds portfolio turnover rate was [ ]% of the average value
of its portfolio.
Principal
Investment Strategies: Under normal circumstances, the Fund invests at least 80% of its net assets (plus the amount of borrowings,
if any) in, or derives at least 80% of its income from, municipal bonds. Municipal bonds are securities exempt from regular federal income
tax and generally issued by or on behalf of states and local governments and their agencies, authorities and other instrumentalities.
The Fund may indirectly and directly invest in issuers located in U.S. territories, commonwealths, possessions or protectorates. The
Funds adviser, Counterpoint Funds, LLC (the Adviser), uses a proprietary quantitative model that seeks to identify
trends in the high-yield municipal bond market.
● | The Fund invests in mutual funds, passively and actively managed ETFs, and closed-end funds (collectively, Bond Funds) that invest primarily in high-yield municipal bonds when the model indicates the high-yield municipal bond market is stable or trending upwards. |
● | The Fund invests in Bond Funds that invest primarily in higher quality municipal bonds when the model indicates the high-yield municipal bond market is trending downwards. |
By
tactically allocating the Funds investments, the Adviser seeks to reduce the Funds exposure to declines in the high-yield
municipal bond market, attempting to limit downside portfolio volatility. To hedge against or replicate interest rate exposure, the Fund
may also invest in U.S. treasury futures.
The
Fund may also invest in municipal securities directly, and may invest, without limitation, in securities, the income from which may subject
you to the federal alternative minimum tax. The Fund may invest in debt securities of any credit quality or maturity. The Fund is not
constrained in the range of maturities or geographical diversification it may assume from acquired fund holdings. The Fund may invest
up to 100% of its assets in below investment grade securities.
Principal
Investment Risks: As with all mutual funds, there is the risk that you could lose money through your investment in the Fund. The
Fund is not intended to be a complete investment program. Many factors affect the Funds net asset value (NAV) and
performance.
● | Credit Risk. The risk that the Fund could lose money if the issuer or guarantor of a fixed income security is unwilling or unable to make timely payments to meet its contractual obligations. |
● | Fixed Income Risk. When the Fund invests in fixed income securities, the value of your investment in the Fund will fluctuate with changes in interest rates. Typically, a rise in interest rates causes a decline in the value of fixed income securities or derivatives owned by the Fund. In general, the market price of fixed income securities with longer maturities will increase or decrease more in response to changes in interest rates than shorter term securities. Other risk factors include credit risk (the debtor may default) and prepayment risk (the debtor may pay its obligation early, reducing the amount of interest payments). These risks could affect the value of a particular investment by the Fund, possibly causing the Funds share price and total return to be reduced and fluctuate more than other types of investments. |
● | Futures Risk. The Funds use of futures involves risks different from, or possibly greater than, the risks associated with investing directly in securities and other traditional investments. These risks include (i) leverage risk, (ii) risk of mispricing or improper valuation, and (iii) the risk that changes in the value of the futures contract may not correlate perfectly with the value of the Bond Funds they are intended to hedge or replicate. Investments in futures involve leverage, which means a small percentage of assets invested in futures can have a disproportionately large impact on the Fund. This risk could cause the Fund to lose more than the principal amount invested. |
● | High-Yield Fixed Income Securities Risk. The fixed income securities held by the Fund that are rated below investment grade are subject to additional risk factors such as increased possibility of default, illiquidity of the security, and changes in value based on public perception of the issuer. Such securities are generally considered speculative because they present a greater risk of loss, including default, than higher quality fixed income securities. |
● | Interest Rate Risk. Fixed income securities are subject to the risk that the securities could lose value because of interest rate changes. For example, bonds tend to decrease in value if interest rates rise. Fixed income securities with longer maturities sometimes offer higher yields, but are subject to greater price shifts as a result of interest rate changes than fixed income securities with shorter maturities. Current conditions may result in a rise in interest rates, which in turn may result in a decline in the value of the bond investments held by the Fund. As a result, interest rate risk may be heightened. |
● | Investment Companies Risk. When the Fund invests in other investment companies, it will bear additional expenses based on its proportionate share of the other investment companys operating expenses, including the potential duplication of management fees. The risk of owning an investment company generally reflects the risk of owning the underlying investments the investment company holds. The Fund also will incur brokerage costs when it purchases and sells investment companies. In addition, ETFs and exchanged-traded closed-end fund shares may be subject to the following risks that do not apply to conventional mutual funds: (i) the market price of shares may trade above or below their NAV, (ii) an active trading market for shares may not develop or be maintained; or (iii) trading of shares may be halted if the listing exchanges officials deem such action appropriate, the shares are delisted from the exchange, or the activation of market-wide circuit breakers (which are tied to large decreases in stock prices) halts stock trading generally. |
● | Management Risk. The Advisers reliance on its strategy and judgments about the attractiveness, value and potential appreciation of particular securities and the tactical allocation among the Funds investments may prove to be incorrect and may not produce the desired results. |
● | Market and Geopolitical Risk. The increasing interconnectivity between global economies and financial markets increases the likelihood that events or conditions in one region or financial market may adversely impact issuers in a different country, region or financial market. Securities in the Funds portfolio may underperform due to inflation (or expectations for inflation), interest rates, global demand for particular products or resources, natural disasters, climate change and climate-related events, pandemics, epidemics, terrorism, international conflicts, regulatory events and governmental or quasi-governmental actions. The occurrence of global events similar to those in recent years may result in market volatility and may have long term effects on both the U.S. and global financial markets. |
● | Model Risk. Like all quantitative analysis, the Advisers investment model carries a risk that the mathematical model used might be based on one or more incorrect assumptions. Rapidly changing and unforeseen market dynamics could also lead to a decrease in short term effectiveness of the Advisers algorithmic model. No assurance can be given that the fund will be successful under all or any market conditions. |
● | Municipal Bond Risk. The underlying funds in which the Fund may invest may be affected significantly by the economic, regulatory or political developments affecting the municipality that issued the debt. There is no guarantee that a municipality will pay interest or repay principal. |
● | Portfolio Turnover Risk. A higher portfolio turnover will result in higher transactional and brokerage costs. |
● | U.S. Government Securities Risk. Treasury obligations may differ in their interest rates, maturities, times of issuance and other characteristics. Obligations of U.S. government agencies and authorities are supported by varying degrees of credit but generally are not backed by the full faith and credit of the U.S. government. No assurance can be given that the U.S. government will provide financial support to its agencies and authorities if it is not obligated by law to do so. In addition, the value of U.S. government securities may be affected by changes in the credit rating of the U.S. government. |
Performance:
The bar chart and performance table show the variability of the Funds returns over time, which is some indication of the risks
of investing in the Fund by comparing the Funds performance with a broad measure of market performance. The bar chart shows performance
of the Funds Class I shares for each full calendar year since the Funds inception. The performance table compares the performance
of the Fund over time to the performance of a broad-based market index. You should be aware that the Funds past performance (before
and after taxes) may not be an indication of how the Fund will perform in the future. Although Class A and Class C shares have similar
returns to Class I shares because the classes are invested in the same portfolio of securities, the returns for Class A and Class C shares
are different from Class I shares because Class A and Class C shares have different expenses than Class I shares. Updated performance
information is available at no cost by visiting www.counterpointfunds.com or by calling 1-844-273-8637.
Class
I Performance Bar Chart For Calendar Year Ended December 31
[TO
BE UPDATED]
Best Quarter: |
[ ] |
[ ]% |
Worst Quarter: |
[ ] |
[ ]% |
Performance
Table
Average
Annual Total Returns
(For
periods ended December 31, 2022)
One Year |
Since Inception (6/11/2018) |
|
Class I shares |
||
Return before taxes |
[ ]% |
[ ]% |
Return after taxes on distributions |
[ ]% |
[ ]% |
Return after taxes on distributions and sale of Fund shares |
[ ]% |
[ ]% |
Class A shares |
||
Return before taxes |
[ ]% |
[ ]% |
Class C shares |
||
Return before taxes |
[ ]% |
[ ]% |
Bloomberg U.S Municipal Bond Index(1) (reflects no deduction for fees, expenses or taxes) |
[ ]% |
[ ]% |
(1) | The Bloomberg U.S. Municipal Bond Index covers the USD-denominated long-term tax exempt bond market. The index has four main sectors: state and local general obligation bonds, revenue bonds, insured bonds and pre-refunded bonds. Index returns assume reinvestment of dividends. Investors may not invest in the Index directly. Unlike the Funds returns, the Index does not reflect any fees or expenses. |
After-tax
returns were calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state
and local taxes. Actual after-tax returns depend on an investors tax situation and may differ from those shown, and after-tax
returns shown are not relevant to investors who hold shares of the Fund through tax-deferred arrangements, such as 401(k) plans or individual
retirement accounts. After tax returns for the share classes which are not presented will vary from the after-tax returns of Class I
shares.
Investment
Adviser: Counterpoint Funds, LLC
Portfolio
Managers: Each of Joseph Engelberg, Ph.D., Chief Research Officer of the Adviser, and Michael Krause, CFA, co-founder of the Adviser,
has served the Fund as a Portfolio Manager since it commenced operations in June 2018.
Purchase
and Sale of Fund Shares: The investment minimums for the Fund are:
Class | Initial Investment |
Subsequent Investment |
||
Regular Account |
Retirement Account |
Regular Account |
Retirement Account |
|
A | $5,000 | $1,000 | $250 | $100 |
C | $5,000 | $1,000 | $250 | $100 |
I | $100,000 | $100,000 | $1,000 | $1,000 |
The
Fund reserves the right to waive any investment minimum. You may purchase and redeem shares of the Fund on any day that the New York
Stock Exchange (NYSE) is open. Redemption requests may be made in writing, by telephone, or through a financial intermediary
and will be paid by ACH, check or wire transfer.
Tax
Information: Dividends and capital gain distributions you receive from the Fund, whether you reinvest your distributions in additional
Fund shares or receive them in cash, are taxable to you at either ordinary income or capital gains tax rates unless you are investing
through a tax-deferred plan such as an IRA or 401(k) plan. However, these dividend and capital gain distributions may be taxable upon
their eventual withdrawal from tax-deferred plans.
Payments
to Broker-Dealers and Other Financial Intermediaries: If you purchase the Fund through a broker-dealer or other financial intermediary
(such as a bank), the Fund and its related companies may pay the intermediary for the sale of Fund shares and related services. These
payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the
Fund over another investment. Ask your salesperson or visit your financial intermediarys website for more information.
ADDITIONAL
INFORMATION ABOUT PRINCIPAL INVESTMENT STRATEGIES AND RELATED RISKS
Investment
Objectives:
The
Counterpoint Tactical Income Fund seeks income and capital preservation.
The
Counterpoint Tactical Equity Fund seeks capital appreciation and preservation.
The
Counterpoint Tactical Municipal Fund seeks tax-free income and capital preservation.
Each
Funds investment objective may be changed by the Board of Trustees upon 60 days written notice to shareholders.
Principal
Investment Strategies:
Counterpoint
Tactical Income Fund
To
pursue its investment objective, the Fund invests in mutual funds, closed-end funds and passively and actively managed exchange traded
funds (ETFs) that invest in (i) high yield instruments (also known as junk) (including bonds, bank loans,
preferred stock, floating rate bonds and debt and municipal high yield debt); (ii) obligations issued or guaranteed by the United States
government, its agencies or instrumentalities including U.S. treasuries (with an average duration up to 5 years); and (iii) cash and
cash equivalents (including and money market funds). The Fund may also invest in these types of securities directly. Counterpoint Funds,
LLC (the Adviser) uses a proprietary quantitative model that seeks to identify the trends in the market for high yield
instruments. To hedge against or replicate credit and interest rate exposure, the Fund also invests directly in derivatives (including
U.S. treasury futures and credit default swaps) and may borrow an amount up to 33 1/3% of its total assets (including the amount borrowed).
The Fund invests in high yield instruments of any maturity or duration when the model determines that the market for high yield instruments
is stable or trending upwards and either U.S. Treasuries or cash and cash equivalents when the model determines that the market for high
yield instruments is trending downwards. By tactically allocating its investments among the securities described above, the Fund seeks
to reduce its exposure to declines in the market for high yield instruments, thereby limiting portfolio volatility in down-trending markets
(downside volatility) and downside loss.
The
Advisers quantitative model takes into account macro market data and other market-based inputs and metrics to seek to identify
market trends. When making investment decisions for the Fund, the portfolio managers consider both the outputs of the model as well as
an assessment of current market conditions, the average credit quality of the portfolio, the average duration of the portfolio and other
factors. When the Fund is invested in high yield instruments, the portfolio managers consider the relative risk adjusted net returns
of available high yield instruments.
Counterpoint
Tactical Equity Fund
Under
normal market conditions, the Fund invests at least 80% of its assets (plus the amount of borrowings, if any) in long and short positions
in equity instruments of any market capitalization. Equity instruments include domestic and foreign common stock, preferred stock, depositary
receipts, equity swaps (including single-name, index, and basket swaps), options, equity index futures, and other investment companies
(such as ETFs, mutual funds, and closed-end funds) that invest in these types of securities. The Fund may hedge exposure to foreign currencies
using foreign currency forwards or futures.
In
managing the Fund, the Adviser, employs a strategy that generates returns from two sources: (1) stock selection and (2) tactical
market exposure.
Stock
Selection. The Adviser selects the particular stocks on which to go long and short based on quantitative models. The models are based
on proprietary research related to economic indicators and investment anomalies found in peer-reviewed academic journals. An investment
anomaly refers to a situation when a security or group of securities performs contrary to the notion of efficient markets, which states
that security prices reflect all available information at any point in time. Published papers in academic finance journals have identified
more than one hundred investment anomalies. An example of such an anomaly is the asset growth anomaly where the literature has shown
that companies that are more aggressive with spending their capital have worse average stock performance than companies that are more
conservative in their capital expenditures. Perfect market efficiency would not yield any market outperformance from investment decisions
based on publicly available accounting data such as this.
The
Fund seeks to target the best performing, recent, and persistent anomalies. The Fund may invest in stocks that provide exposure to a
wide variety of anomalies. The Advisers strategy may seek to capitalize on many market anomalies at any one time. The Adviser
may adjust its model to include newer and more effective anomalies and pare down exposure to older underperforming anomalies on a regular
basis. The signals from these models indicate which stocks are undervalued and likely to increase in price and which stocks are overvalued
and likely to decrease in price. The Adviser takes long positions in the undervalued securities and short positions in the overvalued
securities.
Tactical
Market Exposure. The Adviser varies the Funds equity exposure using a tactical proprietary model of market returns. When the
tactical model forecasts lower market returns, the Fund targets a market-neutral (zero beta) allocation to stocks with a gross equity
exposure (long positions plus short positions) of at least 80%. Beta is a measure of the volatility, or systematic risk, of a security
or a portfolio in comparison to the market as a whole. Beta is assigned a number. A beta of 1 indicates that the securitys price
moves with the market. A beta of less than 1 means that the security is theoretically less volatile than the market. A beta of greater
than 1 indicates that the securitys price is theoretically more volatile than the market. The remaining 0%-20% of the total portfolio
assets are invested either directly, or indirectly through ETFs, mutual funds, or derivatives, in U.S. treasury instruments and investment
grade debt. When the model forecasts higher market returns, the Fund targets a net long equity exposure above 80% with long equity positions
in excess of short equity positions and no long positions in U.S. treasury instruments or investment grade debt.
Counterpoint
Tactical Municipal Fund
Under
normal circumstances, the Fund invests at least 80% of its net assets (plus the amount of borrowings, if any) in, or derives at least
80% of its income from, municipal bonds. Municipal bonds are securities exempt from regular federal income tax and generally issued by
or on behalf of states and local governments and their agencies, authorities and other instrumentalities. The Adviser uses a proprietary
quantitative model that seeks to identify trends in the high-yield municipal bond market.
● | The Fund invests in mutual funds, passively and actively managed ETFs, and closed-end funds (collectively, Bond Funds) that invest primarily in high-yield municipal bonds when the model indicates the high-yield municipal bond market is stable or trending upwards. |
● | The Fund invests in Bond Funds that invest primarily in higher quality municipal bonds when the model indicates the high-yield municipal bond market is trending downwards. |
By
tactically allocating the Funds investments, the Adviser seeks to reduce the Funds exposure to declines in the high-yield
municipal bond market, attempting to limit downside portfolio volatility. To hedge against or replicate interest rate exposure, the Fund
may also invest in U.S. treasury futures.
The
Fund may also invest in municipal securities directly, and may invest, without limitation, in securities, the income from which may subject
you to the federal alternative minimum tax. The Fund may invest in debt securities of any credit quality or maturity. The Fund may invest
up to 100% of its assets in below investment grade securities (securities rated BB+ or below and Ba1 or below by a Nationally Recognized
Statistical Rating Organization, or unrated but determined by the Adviser to be of equivalent quality). Such securities are also known
as junk bonds and high-yield bonds. Some of the securities held by the Bond Funds in which the Fund invests
may have credit and liquidity support features, including guarantees and letters of credit. The Fund may also invest in Bond Funds that
hold so-called distressed debt. Distressed debt includes securities of issuers experiencing financial or operating difficulties,
securities where the issuer has defaulted in the payment of interest or principal or in the performance of its covenants or agreements,
securities of issuers that may be involved in bankruptcy proceedings, reorganizations or financial restructurings.
The
Advisers quantitative model takes into account macro market data and other market-based inputs and metrics to seek to identify
market trends. When making investment decisions for the Fund, the Adviser considers both the outputs of the model as well as its assessment
of current market conditions, the average credit quality of the portfolio, the average duration of the portfolio and other factors. When
selecting high-yield Bond Funds, the Adviser considers the relative risk adjusted net returns of available Bond Funds.
Principal
Investment Risks:
The
following risks apply to each Funds direct investments as well as its investments in other investment companies as noted in the
table below.
Counterpoint Tactical Income Fund |
Counterpoint Tactical Equity Fund |
Counterpoint Tactical Municipal Fund |
|
Cash and Cash Equivalents Risk |
X | ||
Credit Risk |
X | X | |
Depositary Receipt Risk |
X | ||
Derivatives Risk |
X | X | |
Equity Risk |
X | ||
Fixed Income Risk |
X | X | X |
Foreign Securities Risk |
X | ||
Futures Risk |
X | X | X |
High-Yield Fixed Income Securities Risk |
X | X | |
Interest Rate Risk |
X | X | |
Investment Companies Risk |
X | X | X |
Issuer-Specific Risk |
X | X | |
Large Capitalization Risk |
X | ||
Leveraging Risk |
X | X | |
Liquidity Risk |
X | ||
Management Risk |
X | X | X |
Market and Geopolitical Risk |
X | X | X |
Model Risk |
X | X | X |
Municipal Bond Risk |
X | ||
Options Risk |
X | ||
Portfolio Turnover Risk |
X | X | X |
Short Selling Risk |
X | ||
Small and Medium Capitalization Stock Risk |
X | ||
Swap Risk |
X | X | |
U.S. Government Securities Risk |
X | X | X |
● | Cash and Cash Equivalents Risk: When the Fund is out of the market and invests in cash and cash equivalents, there is a risk that the market will begin to rise rapidly, and the Fund will not be able to reinvest its cash positions into areas of the advancing market quickly enough to capture the initial returns of changing market conditions. |
● | Credit Risk. The risk that issuers or guarantors of a fixed income security cannot or will not make payments on the securities and other investments held by the Fund, resulting in losses to the Fund. In addition, the credit quality of securities held by the Fund may be lowered if an issuers financial condition changes, which may lower their value and may affect their liquidity. |
● | Depositary Receipt Risk. To the extent the Fund invests in stocks of foreign corporations, the Funds investment in such stocks may also be in the form of depositary receipts or other securities convertible into securities of foreign issuers, including American Depositary Receipts (ADRs). While the use of ADRs, which are traded on exchanges and represent an ownership in a foreign security, provide an alternative to directly purchasing the underlying foreign securities in their respective national markets and currencies, investments in ADRs continue to be subject to many of the risks associated with investing directly in foreign securities. |
● | Derivatives Risk. Derivatives are financial instruments whose value is typically based on the value of a security, commodity or index. These instruments include futures contracts, swap agreements and similar instruments. The Funds use of derivative instruments involves risks different from, and possibly greater than, the risks associated with investing directly in securities and other more traditional investments, and certain derivatives may create a risk of loss greater than the amount invested. |
Investing
for hedging purposes or to increase the Funds return may result in certain additional transaction costs that may reduce the Funds
performance. When used for hedging purposes, no assurance can be given that each derivative position will achieve a perfect correlation
with the security against which it is being hedged. Because the markets for certain derivative instruments are relatively new, suitable
derivatives transactions may not be available in all circumstances for risk management or other purposes and there can be no assurance
that a particular derivative position will be available when sought by the Adviser or that such techniques will be utilized by the Adviser.
The
market value of derivative instruments and securities may be more volatile than that of other instruments, and each type of derivative
instrument may have its own special risks, including the risk of mispricing or improper valuation of derivatives and the inability of
derivatives to correlate perfectly with underlying assets, rates, and indices. Many derivatives, in particular privately negotiated derivatives,
are complex and often valued subjectively. Improper valuations can result in increased cash payment requirements to counterparties or
a loss of value to the Fund. The value of derivatives may not correlate perfectly, or at all, with the value of the assets, reference
rates or indices they are designed to closely track.
Derivatives
are subject to a number of other risks, including liquidity risk (the possibility that the derivative may be difficult to purchase or
sell and the Adviser may be unable to initiate a transaction or liquidate a position at an advantageous time or price), leverage risk
(the possibility that adverse changes in the value or level of the underlying asset, reference rate or index can result in loss of an
amount substantially greater than the amount invested in the derivative), interest rate risk (some derivatives are more sensitive to
interest rate changes and market price fluctuations), and counterparty risk (the risk that a counterparty may be unable to perform according
to a contract, and that any deterioration in a counterpartys creditworthiness could adversely affect the instrument). In addition,
because derivative products are highly specialized, investment techniques and risk analyses employed with respect to investments in derivatives
are different from those associated with stocks and bonds. Finally, the Funds use of derivatives may cause the Fund to realize
higher amounts of short-term capital gains (generally taxed at ordinary income tax rates) than if the Fund had not used such instruments.
Derivative instruments are also subject to the risk that the market value of an instrument will change to the detriment of the Fund.
If the Adviser inaccurately forecasts the values of securities, interest rates or other economic factors in using derivatives, the Fund
might have been in a better position if it had not entered into the transaction at all. Some strategies involving derivative instruments
can reduce the risk of loss, but they can also reduce the opportunity for gain or result in losses by offsetting favorable price movements
in other investments held by the Fund. The Fund may also have to buy or sell a security at a disadvantageous time or price because regulations
require funds to maintain offsetting positions or asset coverage in connection with certain derivatives transactions.
● | Equity Risk. The NAV of the Fund will fluctuate based on changes in the value of the U.S. and/or foreign equity securities held by the Fund. Equity prices can fall rapidly in response to developments affecting a specific company or industry, or to changing economic, political or market conditions. |
● | Fixed Income Risk. The Fund may invest directly in fixed income securities or through investment companies. Fixed income risk factors include credit risk (the debtor may default) and prepayment risk (the debtor may pay its obligation early or later than expected, potentially reducing the amount of interest payments or extending time to principal repayment). These risks could affect the value of a particular investment possibly causing the Funds share price and total return to be reduced and fluctuate more than other types of investments. When the Fund invests in fixed income securities the value of your investment in the Fund will fluctuate with changes in interest rates. Typically, a rise in interest rates causes a decline in the value of fixed income securities. In general, the market price of debt securities with longer maturities will increase or decrease more in response to changes in interest rates than shorter-term securities. Current conditions may result in a rise in interest rates, which in turn may result in a decline in the value of the bond investments held by the Fund. As a result, for the present, interest rate risk may be heightened. |
● | Foreign Securities Risk. To the extent the underlying funds invest in foreign securities, the Fund could be subject to greater risks because the Funds performance may depend on issues other than the performance of a particular company or U.S. market sector. Changes in foreign economies and political climates are more likely to affect the Fund than a mutual fund that invests exclusively in U.S. companies. The value of foreign securities is also affected by the value of the local currency relative to the U.S. dollar. There may also be less government supervision of foreign markets, resulting in non-uniform accounting practices and less publicly available information. The values of foreign investments may be affected by changes in exchange control regulations, application of foreign tax laws (including withholding tax), changes in governmental administration or economic or monetary policy (in this country or abroad) or changed circumstances in dealings between nations. In addition, foreign brokerage commissions, custody fees and other costs of investing in foreign securities are generally higher than in the United States. Investments in foreign issues could be affected by other factors not present in the United States, including expropriation, armed conflict, confiscatory taxation, and potential difficulties in enforcing contractual obligations. As a result, the Fund may be exposed to greater risk and will be more dependent on the Advisers ability to assess such risk than if the Fund invested solely in more developed countries. |
● | Futures Risk. The Funds use of futures involves risks different from, or possibly greater than, the risks associated with investing directly in securities and other traditional investments. These risks include (i) leverage risk (ii) risk of mispricing or improper valuation; and (iii) the risk that changes in the value of the futures contract may not correlate perfectly with the underlying index. Investments in futures involve leverage, which means a small percentage of assets invested in futures can have a disproportionately large impact on a Fund. This risk could cause a Fund to lose more than the principal amount invested. Futures contracts may become mispriced or improperly valued when compared to the Advisers expectation and may not produce the desired investment results. Additionally, changes in the value of futures contracts may not track or correlate perfectly with the underlying index because of temporary, or even long-term, supply and demand imbalances and because futures do not pay dividends unlike the stocks upon which they are based. |
● | High-Yield Fixed Income Securities Risk. High-yield fixed income securities or junk bonds are fixed income securities rated below investment grade by a nationally recognized statistical rating organization (NRSRO). Although junk bonds generally pay higher rates of interest than higher-rated securities, they are subject to a greater risk of loss of income and principal. Junk bonds are subject to greater credit risk than higher-grade securities and have a higher risk of default. Companies issuing high-yield junk bonds are more likely to experience financial difficulties that may lead to a weakened capacity to make principal and interest payments than issuers of higher-grade securities. Issuers of junk bonds are often highly leveraged and are more vulnerable to changes in the economy, such as a recession or rising interest rates, which may affect their ability to meet their interest or principal payment obligations. |
● | Interest Rate Risk. Fixed income securities are subject to the risk that the securities could lose value because of interest rate changes. For example, bonds tend to decrease in value if interest rates rise. Fixed income securities with longer maturities sometimes offer higher yields, but are subject to greater price shifts as a result of interest rate changes than fixed income securities with shorter maturities. Current conditions may result in a rise in interest rates, which in turn may result in a decline in the value of the bond investments held by the Fund. As a result, interest rate risk may be heightened. |
● | Investment Companies Risk. When a Fund invests in other investment companies, it will bear additional expenses based on its proportionate share of the other investment companys operating expenses, including the potential duplication of management fees. The risk of owning an investment company generally reflects the risk of owning the underlying investments the investment company holds. A Fund also will incur brokerage costs when it purchases and sells investment companies. In addition, ETFs and exchanged-traded closed-end fund shares may be subject to the following risks that do not apply to conventional mutual funds: (i) the market price of shares may trade above or below their NAV, (ii) an active trading market for shares may not develop or be maintained; or (iii) trading of shares may be halted if the listing exchanges officials deem such action appropriate, the shares are delisted from the exchange, or the activation of market-wide circuit breakers (which are tied to large decreases in stock prices) halts stock trading generally. |
● | Issuer-Specific Risk. The value of a specific security can be more volatile than the market as a whole and may perform worse than the market as a whole. The value of large cap securities, as represented by the S&P 500 Index, can be more volatile than smaller cap securities due to differing market reactions to adverse issuer, political, regulatory, market, or economic developments. |
● | Large Capitalization Risk. Large-capitalization companies may be less able than smaller capitalization companies to adapt to changing market conditions. Large-capitalization companies may be more mature and subject to more limited growth potential compared with smaller capitalization companies. During different market cycles, the performance of large capitalization companies has trailed the overall performance of the broader securities markets. |
● | Leveraging Risk. A Funds use of leverage will magnify the Funds gain or loss. Futures require relatively small cash investment to control large amounts of derivatives, which magnifies gains and losses to the Fund. Leveraging the Fund creates an opportunity for increased returns but, at the same time, creates special risk considerations. For example, leveraging may exaggerate changes in the NAV of the Funds shares and in the yield on the Funds portfolio. |
● | Liquidity Risk. Trading opportunities are more limited for fixed income securities that have not received any credit ratings, have received ratings below investment grade or are not widely held. These features make it more difficult to sell or buy a security at a favorable price or time. Consequently, the Fund may have to accept a lower price to sell a security, sell other securities to raise cash or give up an investment opportunity, any of which could have a negative effect on its performance. Infrequent trading of securities may also lead to an increase in their price volatility. Liquidity risk also refers to the possibility that the Fund may not be able to sell a security or close out an investment contract when it wants to. If this happens, the Fund will be required to hold the security or keep the position open, and it could incur losses. |
● | Management Risk. The Advisers reliance on its strategy and its judgments about the value and potential appreciation securities in which each Fund invests may prove to be incorrect, including the Advisers tactical allocation of the Funds portfolio among its investments. The ability of the Fund to meet its investment objective is directly related to the Advisers proprietary investment process. The Advisers assessment of the relative value of securities, their attractiveness and potential appreciation of particular investments in which the Fund invests may prove to be incorrect and there is no guarantee that the Advisers investment strategy will produce the desired results. |
● | Market and Geopolitical Risk. The increasing interconnectivity between global economies and financial markets increases the likelihood that events or conditions in one region or financial market may adversely impact issuers in a different country, region or financial market. Securities in the Funds portfolios may underperform due to inflation (or expectations for inflation), interest rates, global demand for particular products or resources, natural disasters, climate change and climate-related events, pandemics, epidemics, terrorism, international conflicts, regulatory events and governmental or quasi-governmental actions. The occurrence of global events similar to those in recent years, such as terrorist attacks around the world, natural disasters, social and political discord or debt crises and downgrades, among others, may result in market volatility and may have long term effects on both the U.S. and global financial markets. It is difficult to predict when similar events affecting the U.S. or global financial markets may occur, the effects that such events may have and the duration of those effects. Any such event(s) could have a significant adverse impact on the value and risk profile of a Funds portfolio. The coronavirus (COVID-19) global pandemic and the aggressive responses taken by many governments, including closing borders, restricting international and domestic travel, and the imposition of prolonged quarantines or similar restrictions, as well as the forced or voluntary closure of, or operational changes to, many retail and other businesses, had negative impacts, and in many cases severe negative impacts, on markets worldwide. It is not known how long such impacts, or any future impacts of other significant events described above, will or would last, but there could be a prolonged period of global economic slowdown, which may impact your Fund investment. Therefore, a Fund could lose money over short periods due to short-term market movements and over longer periods during more prolonged market downturns. During a general market downturn, multiple asset classes may be negatively affected. Changes in market conditions and interest rates can have the same impact on all types of securities and instruments. In times of severe market disruptions you could lose your entire investment. |
● | Model Risk. Like all quantitative analysis, the Advisers investment model carries a risk that the mathematical model used might be based on one or more incorrect assumptions. Rapidly changing and unforeseen market dynamics could also lead to a decrease in short term effectiveness of the Advisers algorithmic model. No assurance can be given that the Funds will be successful under all or any market conditions. |
● | Municipal Bond Risk. The underlying funds that invest in municipal bonds may be affected significantly by the economic, regulatory or political developments affecting the municipality that issued the debt. There is no guarantee that a municipality will pay interest or repay principal. In addition, the ability of an issuer to make payments or repay interest may be affected by litigation or bankruptcy. In the event of such an issuers bankruptcy, an underlying fund investing in the issuers securities could experience delays in collecting principal and interest, and the underlying fund may not, in all circumstances, be able to collect all principal and interest to which it is entitled. To enforce its rights in the event of a default in the payment of interest or repayment of principal, or both, an underlying fund may, in some instances, take possession of, and manage, the assets securing the issuers obligations on such securities, which may increase the underlying funds operating expenses. Any income derived from the underlying funds ownership or operation of such assets may not be tax-exempt. Municipal bonds are generally subject to interest rate, credit and market risk. |
Because
many municipal bonds are issued to finance similar projects (such as those relating to education, health care, housing, transportation,
and utilities), conditions in those sectors may affect the overall municipal securities market. In addition, changes in the financial
condition of an individual municipal issuer can affect the overall municipal market. Municipal bonds backed by current or anticipated
revenues from a specific project or specific assets can be negatively affected by the discontinuance of the supporting taxation or the
inability to collect revenues for the specific project or specific assets. Municipal bonds are subject to the risk that the Internal
Revenue Service (the IRS) may determine that an issuer has not complied with applicable tax requirements and that interest
from the municipal bond is taxable, which may result in a significant decline in the value of the security. Municipal bonds may be less
liquid than taxable bonds and there may be less publicly available information on the financial condition of municipal bond issuers than
for issuers of other securities, and the investment performance of an underlying fund investing in municipal bonds may therefore be more
dependent on the analytical abilities of the Adviser than if the underlying fund held other types of investments such as stocks or taxable
bonds. The secondary market for municipal bonds also tends to be less well-developed or liquid than many other securities markets, a
by-product of lower capital commitments to the asset class by the dealer community, which may adversely affect an underlying funds
ability to sell municipal bonds it holds at attractive prices or value municipal bonds.
● | Options Risk. The Fund may lose the entire put option premium paid if the underlying security does not decrease in value at expiration. Put options may not be an effective hedge because they may have imperfect correlation to the value of the Funds portfolio securities. Purchased put options may decline in value due to changes in price of the underlying security, passage of time and changes in volatility. Written call and put options may limit the Funds participation in equity market gains and may magnify the losses if the price of the written option instrument increases in value between the date when the Fund writes the option and the date on which the Fund purchases an offsetting position. The Fund will incur a loss as a result of a written options (also known as a short position) if the price of the written option instrument increases in value between the date when the Fund writes the option and the date on which the Fund purchases an offsetting position. The Funds losses are potentially large in a written put transaction and potentially unlimited in an unhedged written call transaction. |
● | Portfolio Turnover Risk. Increased portfolio turnover causes the Funds to incur higher brokerage costs, which may adversely affect a Funds performance and may produce increased taxable distributions. |
● | Short Selling Risk. If a security or other instrument sold short increases in price, the Fund may have to cover its short position at a higher price than the short sale price, resulting in a loss. The Fund may have substantial short security positions and must borrow those securities to make delivery to the buyer. The Fund may not be able to borrow a security that it needs to deliver or it may not be able to close out a short position at an acceptable price and may have to sell related long positions before it had intended to do so. Thus, the Fund may not be able to successfully implement its short sale strategy due to limited availability of desired securities or for other reasons. |
The
Fund also may be required to pay a commission and other transaction costs, which would increase the cost of the security sold short.
The amount of any gain will be decreased, and the amount of any loss increased, by the amount of the commission, dividends, interest
or expenses the Fund may be required to pay in connection with the short sale.
Until
the Fund replaces a borrowed security, it is required to maintain a segregated account of cash or liquid assets with a broker or custodian
to cover the Funds short position. Generally, securities held in a segregated account cannot be sold unless they are replaced
with other liquid assets. The Funds ability to access the pledged collateral may also be impaired in the event the broker fails
to comply with the terms of the contract. In such instances, the Fund may not be able to substitute or sell the pledged collateral. Additionally,
the Fund must maintain sufficient liquid assets (less any additional collateral pledged to the broker), marked-to-market daily, to cover
the short sale obligations. This may limit the Funds investment flexibility, as well as its ability to meet redemption requests
or other current obligations.
Because
losses on short sales arise from increases in the value of the security sold short, such losses are theoretically unlimited. By contrast,
a loss on a long position arises from decreases in the value of the security and is limited by the fact that a securitys value
cannot go below zero.
● | Small and Medium Capitalization Stock Risk. The earnings and prospects of small and medium sized companies are more volatile than larger companies and may experience higher failure rates than larger companies. Small and medium sized companies normally have a lower trading volume than larger companies, which may tend to make their market price fall more disproportionately than larger companies in response to selling pressures and may have limited markets, product lines, or financial resources and lack management experience. |
● | Swap Risk. The Fund may use swaps to enhance returns and manage risk. The Funds use of swaps involves risks different from, or possibly greater than, the risks associated with investing directly in securities and other traditional investments. These risks include (i) the risk that the counterparty to a derivative transaction may not fulfill its contractual obligations; (ii) risk of mispricing or improper valuation; and (iii) the risk that changes in the value of the derivative may not correlate perfectly with the underlying asset, rate or index. Derivative prices are highly volatile and may fluctuate substantially during a short period of time. Such prices are influenced by numerous factors that affect the markets, including, but not limited to: changing supply and demand relationships; government programs and policies; national and international political and economic events, changes in interest rates, inflation and deflation and changes in supply and demand relationships. Trading derivative instruments involves risks different from, or possibly greater than, the risks associated with investing directly in securities. Derivative contracts ordinarily have leverage inherent in their terms. The low margin deposits normally required in trading derivatives, including futures contracts, permit a high degree of leverage. Accordingly, a relatively small price movement may result in an immediate and substantial loss to the Fund. The use of leverage may also cause the Fund to liquidate portfolio positions when it would not be advantageous to do so in order to satisfy its obligations or to meet collateral segregation requirements. The use of leveraged derivatives can magnify the Funds potential for loss and, therefore, amplify the effects of market volatility on the Funds share price. |
● | U.S. Government Securities Risk. Treasury obligations may differ in their interest rates, maturities, times of issuance and other characteristics. Obligations of U.S. government agencies and authorities are supported by varying degrees of credit but generally are not backed by the full faith and credit of the U.S. government. No assurance can be given that the U.S. government will provide financial support to its agencies and authorities if it is not obligated by law to do so. In addition, the value of U.S. government securities may be affected by changes in the credit rating of the U.S. government. |
Temporary
Investments: To respond to adverse market, economic, political or other conditions, each Fund may invest 100% of its total assets,
without limitation, in high-quality short-term debt securities and money market instruments. These short-term debt securities and money
market instruments include: shares of money market mutual funds, commercial paper, certificates of deposit, bankers acceptances,
U.S. government securities and repurchase agreements. While a Fund is in a defensive position, the opportunity to achieve its investment
objective will be limited, and it could reduce the benefit from any upswing in the market. Furthermore, to the extent that a Fund invests
in money market mutual funds for cash positions, there will be some duplication of expenses because shareholders will pay the fees and
expenses of the Fund and, indirectly, the fees and expenses of the underlying money market funds. Each Fund may also invest a substantial
portion of its assets in such instruments at any time to maintain liquidity or pending selection of investments in accordance with its
policies.
Portfolio
Holdings Disclosure: A description of the Funds policies regarding the release of portfolio holdings information is available
in the Funds Statement of Additional Information (SAI).
Cybersecurity:
The computer systems, networks and devices used by the Funds and their service providers to carry out routine business operations
employ a variety of protections designed to prevent damage or interruption from computer viruses, network failures, computer and telecommunication
failures, infiltration by unauthorized persons and security breaches. Despite the various protections utilized by the Funds and their
service providers, systems, networks, or devices potentially can be breached. The Funds and their shareholders could be negatively impacted
as a result of a cybersecurity breach.
Cybersecurity
breaches can include unauthorized access to systems, networks, or devices; infection from computer viruses or other malicious software
code; and attacks that shut down, disable, slow, or otherwise disrupt operations, business processes, or website access or functionality.
Cybersecurity breaches may cause disruptions and impact the Funds business operations, potentially resulting in financial losses;
interference with each Funds ability to calculate its net asset value; impediments to trading; the inability of each Fund, the
Adviser, and other service providers to transact business; violations of applicable privacy and other laws; regulatory fines, penalties,
reputational damage, reimbursement or other compensation costs, or additional compliance costs; as well as the inadvertent release of
confidential information.
Similar
adverse consequences could result from cybersecurity breaches affecting issuers of securities in which the Funds invest; counterparties
with which the Funds engage in transactions; governmental and other regulatory authorities; exchange and other financial market operators,
banks, brokers, dealers, insurance companies, and other financial institutions (including financial intermediaries and service providers
for the Funds shareholders); and other parties. In addition, substantial costs may be incurred by these entities in order to prevent
any cybersecurity breaches in the future.
MANAGEMENT
Investment
Adviser: Counterpoint Funds, LLC, 12760 High Bluff Drive, Suite 280, San Diego, California 92130, serves as investment adviser to
the Funds. Subject to the oversight of the Board of Trustees, the Adviser is responsible for management of the Funds investment
portfolios. The Adviser is responsible for selecting the Funds investments according to each Funds investment objective,
policies and restrictions. The Adviser was established in 2014 for the purpose of managing mutual funds. As of September 30, 202 3 ,
the Adviser had approximately $ [ ] in assets under management. Pursuant to advisory agreements between the Trust, on behalf of
each Fund, and the Adviser, the Adviser is entitled to receive, on a quarterly basis, the annual advisory fee in an amount listed in
the table below as a percentage of each Funds average daily net assets.
The
Adviser has contractually agreed to waive its fees and reimburse expenses of each Fund, at least until February 1, 202 5 , to ensure
that Total Annual Fund Operating Expenses After Fee Waiver and Reimbursement (excluding (i) any front-end or contingent deferred loads;
(ii) brokerage fees and commissions, (iii) acquired fund fees and expenses; (iii) borrowing costs (such as interest and dividend expense
on securities sold short); (iv) taxes; and (v) extraordinary expenses, such as litigation expenses (which may include indemnification
of Fund officers and Trustees, contractual indemnification of Fund service providers (other than the Adviser))) will not exceed the percentages
show in the table below. These fee waivers and expense reimbursements are subject to possible recoupment from each Fund within the three
years after the fees were waived or reimbursed, if such recoupment can be achieved within the lesser of the foregoing expense limits
or the expense limits in place at the time of recoupment. These agreements may be terminated only by the Board of Trustees on 60 days
written notice to the Adviser. Fee waiver and reimbursement arrangements can decrease each Funds expenses and boost its performance.
A discussion regarding the basis for the Board of Trustees renewal of the advisory agreements with respect to the Funds is available
in the Funds Semi-Annual Report to Shareholders dated March 31, 202 3 . The advisory agreements with respect to the Funds
were most recently renewed by the Board of Trustees at a meeting held on August 23-24 , 202 3 . A discussion regarding the
basis for that renewal will be available in the Funds Semi-Annual Report to Shareholders dated March 31, 202 4 .
Each
Funds advisory fees and expense limits are as shown below:
Fund | Advisory Fee |
Expense Limitation |
Counterpoint Tactical Income Fund |
1.25% | Class A 2.00% Class C 2.75% Class I 1.75% |
Counterpoint Tactical Equity Fund |
1.25% | Class A 2.00% Class C 2.75% Class I 1.75% |
Counterpoint Tactical Municipal Fund |
0.70% | Class A 1.25% Class C 2.00% Class I 1.00% |
During
the fiscal period and year ended September 30, 202 3 , each Fund paid an aggregate of the percentage shown below of its average
net assets to the Adviser (after fee waivers and recapture, as applicable).
Fund | Net Management Fee Received After Waivers/ Recoupment |
Counterpoint Tactical Income Fund |
[ ] % |
Counterpoint Tactical Equity Fund |
[ ] % |
Counterpoint Tactical Municipal Fund |
[ ] % |
Portfolio
Managers: The Funds are managed on a day-to-day basis by Michael Krause, CFA, and Joseph Engelberg, Ph.D. Mr. Krause has served
as portfolio manager of each Fund since their inception. Dr. Engelberg has served as portfolio manager of the Counterpoint Tactical Income
Fund since 2017 and as portfolio manager of the Counterpoint Tactical Equity Fund and Counterpoint Tactical Municipal Fund since their
inception.
Mr.
Krause is a co-founder of the Adviser. Prior to founding the Adviser in 2014, Mr. Krause co-founded Counterpoint Asset Management, LLC
in 2012 to offer quantitative investment strategies to investment clients. Mr. Krause is a CFA® charter holder. He earned his MBA
from the Rady School of Management at the University of California at San Diego and a Bachelor of Arts in Economics from San Diego State
University. Prior to his career in investment management, Mr. Krause worked as a computer and information technology consultant and co-founded
Exchange Network Services, Inc., an internet service provider, which earned him the Ernst and Young Entrepreneur of the Year, Northeast
Ohio regional award in 1998.
Dr.
Engelberg has served as Chief Research Officer of the Adviser since 2015. Dr. Engelberg is also a Professor of Finance at University
California San Diego, Rady School of Management. Prior to joining the Adviser, Dr. Engelberg co-founded Counterpoint Asset Management,
LLC in 2012. He earned his Ph.D. in Finance from the Kellogg School of Management at Northwestern University and earned his B.A. in Mathematics
and B.S. in Business Administration from the University of Southern California.
The
SAI provides additional information about each portfolio managers compensation, other accounts managed by the portfolio managers,
and each portfolio managers ownership in the applicable Fund.
HOW
SHARES ARE PRICED
Shares
of each Fund are sold at net asset value (NAV). The NAV of each Fund is determined at the close of regular trading (normally
4:00 p.m. Eastern Time) on each day the NYSE is open for business. NAV is computed by determining, on a per class basis, the aggregate
market value of all assets of a Fund, less its liabilities, divided by the total number of shares outstanding ((assets-liabilities)/number
of shares = NAV). The NYSE is closed on weekends and New Years Day, Martin Luther King, Jr. Day, Presidents Day, Good Friday,
Memorial Day, Juneteenth, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. The NAV takes into account, on a per class
basis, the expenses and fees of a Fund, including management, administration, and distribution fees, which are accrued daily. The determination
of NAV for a share class for a particular day is applicable to all applications for the purchase of shares, as well as all requests for
the redemption of shares, received by the Fund (or an authorized broker or agent, or its authorized designee) before the close of trading
on the NYSE on that day.
Generally,
each Funds securities are valued each day at the last quoted sales price on each securitys primary exchange. Securities
traded or dealt in upon one or more securities exchanges (whether domestic or foreign) for which market quotations are readily available
and not subject to restrictions against resale shall be valued at the last quoted sales price on the primary exchange or, in the absence
of a sale on the primary exchange, at the mean between the current bid ask prices on such exchanges. Securities primarily traded in the
National Association of Securities Dealers Automated Quotation System (NASDAQ) National Market System for which
market quotations are readily available shall be valued using the NASDAQ Official Closing Price. Securities that are not traded or dealt
in any securities exchange (whether domestic or foreign) and for which over-the-counter market quotations are readily available generally
shall be valued at the last sale price or, in the absence of a sale, at the mean between the current bid and ask price on such over-the-counter
market. Debt securities not traded on an exchange may be valued at prices supplied by a pricing agent(s) based on broker or dealer supplied
valuations or matrix pricing, a method of valuing securities by reference to the value of other securities with similar characteristics,
such as rating, interest rate and maturity.
If
market quotations are not readily available, securities will be valued at their fair market value as determined using the fair
value procedures approved by the Board of Trustees. Fair value pricing involves subjective judgments and it is possible that the
fair value determined for a security may be materially different from the value that could be realized upon the sale of that security.
The fair value prices can differ from market prices when they become available or when a price becomes available. The Board of Trustees
has delegated execution of these procedures to the Adviser. The Adviser may also enlist third party consultants such as an audit firm
or financial officer of a security issuer on an as-needed basis to assist in determining a security-specific fair value. The Board of
Trustees reviews and ratifies the execution of this process and the resultant fair value prices at least quarterly to assure the process
produces reliable results.
Each
Fund may use independent pricing services to assist in calculating the value of its securities. In addition, market prices for foreign
securities are not determined at the same time of day as the NAV for each Fund. Because the Funds may invest in underlying ETFs which
hold portfolio securities primarily listed on foreign exchanges, and these exchanges may trade on weekends or other days when the underlying
ETFs do not price their shares, the value of some of the Funds portfolio securities may change on days when you may not be able
to buy or sell Fund shares.
In
computing NAV, each Fund values its foreign securities at the latest closing price on the exchange in which they are traded immediately
prior to closing of the NYSE. Prices of foreign securities quoted in foreign currencies are translated into U.S. dollars at current rates.
If events materially affecting the value of a security in each Funds portfolio, particularly foreign securities, occur after the
close of trading on a foreign market but before each Fund prices its shares, the security may be priced using alternative market prices
provided by a pricing service. For example, if trading in a portfolio security is halted and does not resume before the Funds calculate
their NAV, alternative market prices may be used to value the security. Without a fair value price, short-term traders could take advantage
of the arbitrage opportunity and dilute the NAV of long-term investors. Fair valuation of each Funds portfolio securities can
serve to reduce arbitrage opportunities available to short-term traders, but there is no assurance that fair value pricing policies will
prevent dilution of each Funds NAV by short term traders. The determination of fair value involves subjective judgments. As a
result, using fair value to price a security may result in a price materially different from the prices used by other mutual funds to
determine NAV, or from the price that may be realized upon the actual sale of the security.
With
respect to any portion of a Funds assets that are invested in one or more open-end management investment companies registered
under the Investment Company Act of 1940, as amended, the Funds NAV is calculated based upon the NAVs of those open-end management
investment companies, and the prospectuses for these companies explain the circumstances under which those companies will use fair value
pricing and the effects of using fair value pricing.
HOW
TO PURCHASE SHARES
Share
Classes
This
Prospectus describes three classes of shares offered by each Fund: Class A, Class C and Class I. Each Fund offers these classes of shares
so that you can choose the class that best suits your investment needs. Refer to the information below so that you can choose the class
that best suits your investment needs. The main differences between each class are sales charges, ongoing fees and minimum investment.
For information on ongoing distribution fees, see Distribution Fees on page [ ] of this Prospectus. Each class of shares
in each Fund represents interest in the same portfolio of investments within the applicable Fund. There is no investment minimum on reinvested
distributions and the Funds may change investment minimums at any time. The Funds reserve the right to waive sales charges, as described
below. The Funds and the Adviser may each waive investment minimums at their individual discretion. Not all share classes may be available
for purchase in all states.
Factors
to Consider When Choosing a Share Class
When
deciding which class of shares of a Fund to purchase, you should consider your investment goals, present and future amounts you may invest
in the Funds, and the length of time you intend to hold your shares. To help you make a determination as to which class of shares to
buy, please refer back to the examples of expenses over time in the Fees and Expenses of the Fund section for the applicable Fund in
this Prospectus. You also may wish to consult with your financial adviser for advice with regard to which share class would be most appropriate
for you.
Class
A Shares
Class
A shares are offered at the public offering price, which is NAV per share plus the applicable sales charge and are subject to 12b-1 distribution
fees of up to 0.25% on an annualized basis of the average daily net assets as reimbursement or compensation for service and distribution-related
activities with respect to the Fund and/or shareholder services (also known as 12b-1 fees). The sales charge varies, depending
on how much you invest. There are no sales charges on reinvested distributions. You can also qualify for a sales charge reduction or
waiver through a right of accumulation or a letter of intent if you are a U.S. resident. See the discussions of Right of Accumulation
and Letter of Intent below. The Funds reserve the right to waive any load as described below.
In
addition, a financial intermediary may offer Class A shares subject to variations in or elimination of a Funds sales charges (variations),
provided such variations are described in Appendix A. All variations described in Appendix A are applied by the identified financial
intermediary. Sales charge variations may apply to purchases, sales, exchanges and reinvestments of Fund shares and a shareholder transacting
in Class A shares through an intermediary identified on Appendix A should read the terms and conditions of Appendix A carefully. A variation
that is specific to a particular financial intermediary is not applicable to shares held directly with a Fund or through another intermediary.
Please consult your financial intermediary with respect to any variations listed in Appendix A.
The
following sales charges apply to your purchases of Class A shares of the Counterpoint Tactical Income Fund and Counterpoint Tactical
Municipal Fund:
Amount Invested |
Sales Charge as a % of Offering Price(1) |
Sales Charge as a % of Amount Invested |
Dealer Reallowance(2) |
Under $25,000 |
4.50% | 4.71% | 4.00% |
$25,000 – $49,999 |
3.75% | 3.90% | 3.25% |
$50,000 – $99,999 |
3.00% | 3.09% | 2.50% |
$100,000 – $249,999 |
2.25% | 2.30% | 2.00% |
$250,000 – $499,999 |
1.75% | 1.78% | 1.50% |
$500,000 – $999,999 |
1.25% | 1.27% | 1.00% |
$1,000,000 and above |
0.00% | 0.00% | 0.00% |
(1) | Offering price includes the front-end sales load. The sales charge you pay may differ slightly from the amount set forth above because of rounding that occurs in the calculations used to determine your sales charge. |
(2) | Dealer reallowance is the amount of sales charge paid to the selling broker-dealer, while the distributor retains the balance. |
The
following sales charges apply to your purchases of Class A shares of the Counterpoint Tactical Equity Fund:
Amount Invested |
Sales Charge as a % of Offering Price(1) |
Sales Charge as a % of Amount Invested |
Dealer |
Under $25,000 |
5.75% | 6.10% | 5.00% |
$25,000 – $99,999 |
4.75% | 4.99% | 4.00% |
$100,000 – $249,999 |
3.75% | 3.90% | 3.25% |
$250,000 – $499,999 |
2.75% | 2.83% | 2.25% |
$500,000 – $999,999 |
1.50% | 1.52% | 1.00% |
$1,000,000 and above |
0.00% | 0.00% | 0.00% |
(1) | Offering price includes the front-end sales load. The sales charge you pay may differ slightly from the amount set forth above because of rounding that occurs in the calculations used to determine your sales charge. |
(2) | Dealer reallowance is the amount of sales charge paid to the selling broker-dealer, while the distributor retains the balance. |
How
to Reduce Your Sales Charge
You
may be eligible to purchase Class A shares at a reduced sales charge. To qualify for these reductions, you must notify the distributor,
Northern Lights Distributors, LLC (the Distributor), in writing and supply your account number at the time of purchase.
You may combine your purchase with those of your immediate family (your spouse and your children under the age of 21) for
purposes of determining eligibility. If applicable, you will need to provide the account numbers of your spouse and your minor children
as well as the ages of your minor children.
Rights
of Accumulation: To qualify for the lower sales charge rates that apply to larger purchases of Class A shares, you may combine your
new purchases of Class A shares with Class A shares of the Fund that you already own. The applicable initial sales charge for the new
purchase is based on the total of your current purchase and the current value of all other Class A shares that you own. The reduced sales
charge will apply only to current purchases and must be requested in writing when you buy your shares.
Shares
of the Funds held as follows cannot be combined with your current purchase for purposes of reduced sales charges:
● | Shares held indirectly through financial intermediaries other than your current purchase broker-dealer (for example, a different broker-dealer, a bank, a separate insurance company account or an investment adviser); |
● | Shares held through an administrator or trustee/custodian of an Employer Sponsored Retirement Plan (for example, a 401(k) plan) other than employer-sponsored IRAs; and |
● | Shares held directly in the Fund account on which the broker-dealer (financial adviser) of record is different than your current purchase broker-dealer. |
Letters
of Intent: Under a Letter of Intent (LOI), you commit to purchase a specified dollar amount of Class A shares of a
Fund, with a minimum of $25,000, during a 13-month period. The 13-month period begins upon the date of the LOI. At your written request,
Class A shares purchases made during the 90 days prior to the LOI may be included. The amount you agree to purchase determines the initial
sales charge you pay. If the full-face amount of the LOI is not invested by the end of the 13-month period, your account will be adjusted
to the higher initial sales charge level for the amount actually invested. You are not legally bound by the terms of your LOI to purchase
the amount of your shares stated in the LOI. The LOI does, however, authorize a Fund to hold in escrow 5% of the total amount you intend
to purchase. If you do not complete the total intended purchase at the end of the 13-month period, the Funds transfer agent will
redeem the necessary portion of the escrowed shares to make up the difference between the reduced rate sales charge (based on the amount
you intended to purchase) and the sales charge that would normally apply (based on the actual amount you purchased).
Repurchase
of Class A Shares: If you have redeemed Class A shares of a Fund within the past 120 days, you may repurchase an equivalent amount
of Class A shares of the same Fund at NAV, without the normal front-end sales charge. In effect, this allows you to reacquire shares
that you may have had to redeem, without repaying the front-end sales charge. You may exercise this privilege only once and must notify
the Fund that you intend to do so in writing. The Funds must receive your purchase order within 120 days of your redemption. Note that
if you reacquire shares through separate installments (e.g., through monthly or quarterly repurchases), the sales charge waiver will
only apply to those portions of your repurchase order received within 120 days of your redemption.
Sales
Charge Waivers
The
sales charge on purchases of Class A shares is waived for certain types of investors, including:
● | Current and retired directors and officers of a Fund sponsored by the Adviser or any of its subsidiaries, their immediate family members (i.e., spouse, children, mother or father) and any purchases referred through the Adviser. |
● | Employees of the Adviser and their immediate family members, or any full-time employee or registered representative of the Distributor or of broker-dealers having dealer agreements with the Distributor (a Selling Broker) and their immediate family members (or any trust, pension, profit sharing or other benefit plan for the benefit of such persons). |
● | Any full-time employee of a bank, savings and loan, credit union or other financial institution that utilizes a Selling Broker to clear purchases of a Funds shares and their immediate family members. |
● | Participants in certain wrap-fee or asset allocation programs or other fee-based arrangements sponsored by broker-dealers and other financial institutions that have entered into agreements with the Distributor. |
● | Clients of financial intermediaries that have entered into arrangements with the Distributor providing for the shares to be used in particular investment products made available to such clients and for which such registered investment advisers may charge a separate fee. |
● | Institutional investors (which may include bank trust departments and registered investment advisers). |
● | Any accounts established on behalf of registered investment advisers or their clients by broker-dealers that charge a transaction fee and that have entered into agreements with the Distributor. |
● | Separate accounts used to fund certain unregistered variable annuity contracts or Section 403(b) or 401(a) or (k) accounts. |
● | Employer-sponsored retirement or benefit plans with total plan assets in excess of $5 million where the plans investments in a Fund are part of an omnibus account. A minimum initial investment of $1 million in a Fund is required. The Distributor in its sole discretion may waive these minimum dollar requirements. |
The
Funds do not waive sales charges for the reinvestment of proceeds from the sale of shares of a different fund where those shares were
subject to a front-end sales charge (sometimes called a NAV transfer). Whether a sales charge waiver is available for your
retirement plan or charitable account depends upon the policies and procedures of your intermediary. Please consult your financial adviser
for further information.
Class
C Shares
Class
C shares of the Funds are offered at their NAV without an initial sales charge. This means that 100% of your initial investment is placed
into shares of the Funds. Class C shares pay up to 1.00% on an annualized basis of the average daily net assets as reimbursement or compensation
for service and distribution-related activities with respect to a Fund and/or shareholder services. Over time, fees paid under this distribution
and service plan will increase the cost of a Class C shareholders investment and may cost more than other types of sales charges.
Class
I Shares
Class
I shares of the Funds are sold at NAV without an initial sales charge and are not subject to 12b-1 distribution fees. This means that
100% of your initial investment is placed into shares of the Fund.
Class
I shares are available to certain institutional investors, and directly to certain individual investors as set forth below:
● | Institutional investors may include, but are not limited to, corporations, retirement plans, foundations/endowments and investors who purchase through a wrap account offered through a selling group member that enters into a wrap fee program agreement with the Distributor. |
● | Individual investors include trustees, officers and employees of the Trust and its affiliates, and immediate family members of all such persons. |
● | Clients of the Adviser or purchases referred through the Adviser. |
● | To investors on certain brokerage platforms. |
For
accounts sold through financial intermediaries, it is the primary responsibility of the financial intermediary to ensure compliance with
eligibility requirements such as investor type and investment minimums. An investor transacting through a broker acting as an agent for
the investor may be required to pay a commission and/or other forms of compensation to the broker. Each Fund may change its investment
minimum at any time. Each Fund and the Adviser may waive the Funds investment minimum at their individual discretion. Class I
shares may not be available for purchase in all states.
Exchange
Privilege
Shares
of one Fund may be exchanged without payment of any exchange fee for shares of the other Fund of the same class at their respective net
asset values, given that the accounts have the same registration. Minimums to establish or subsequent purchase minimums apply. For example,
you can exchange Class A shares of the Counterpoint Tactical Income Fund for Class A shares of the Counterpoint Tactical Equity Fund.
Shares of the Fund selected for exchange must be available for sale in your state of residence. You must meet the minimum purchase requirements
for the Fund you purchase by exchange. For tax purposes, exchanges of shares involve a sale of shares of the Fund you own and a purchase
of the shares of the other Fund, which may result in a capital gain or loss. In order to exchange shares of a Fund on a particular day,
the Fund or its designated agent must receive your request before the close
of
regular trading on the NYSE (normally 4:00 p.m. Eastern Time) that day. Exchanges are made at the NAV determined after the order is considered
received. You will not be charged the upfront sales charge on exchanges of Class A shares.
Converting
Shares
Shareholders
of a Fund may elect on a voluntary basis to convert their shares in one class of the Fund into shares of a different class of the same
Fund, subject to satisfying the eligibility requirements for investment in the new share class.
Shares
held through a financial intermediary offering different programs and fee structures that has an agreement with the Advisor or the Distributor
may be converted by the financial intermediary, without notice, to another share class of the Funds, including share classes with a higher
expense ratio than the original share class, if such conversion is consistent with the fee based or wrap fee programs policies.
All
permissible conversions will be made on the basis of the relevant NAVs of the two classes without the imposition of any front-end sales
load. A share conversion within a Fund will not result in a capital gain or loss for federal income tax purposes. The Funds may change,
suspend or terminate this these conversion features at any time.
Minimum
and Additional Investment Amounts: The minimum initial and subsequent investment by class of shares is:
Class | Initial Investment |
Subsequent Investment |
||
Regular Account |
Retirement Account |
Regular Account |
Retirement Account |
|
A | $5,000 | $1,000 | $250 | $100 |
C | $5,000 | $1,000 | $250 | $100 |
I | $100,000 | $100,000 | $1,000 | $1,000 |
The
Funds reserve the right to waive any minimum. There is no minimum investment requirement when you are buying shares by reinvesting dividends
and distributions from the Funds.
You
may purchase shares of the Funds by sending a completed application form to the following address:
Regular Counterpoint Tactical Income Fund Counterpoint Tactical Equity Fund Counterpoint Tactical Municipal Fund c/o Ultimus Fund Solutions, LLC P.O. Box 541150 Omaha, Nebraska 68154 |
Express/Overnight Counterpoint Tactical Income Fund Counterpoint Tactical Equity Fund Counterpoint Tactical Municipal Fund c/o Ultimus Fund Solutions, LLC 4221 North 203rd Street, Suite 100 Elkhorn, Nebraska 68022-3474 |
The
USA PATRIOT Act requires financial institutions, including the Funds, to adopt certain policies and programs to prevent money-laundering
activities, including procedures to verify the identity of customers opening new accounts. As requested on the application, you should
supply your full name, date of birth, social security number and permanent street address. Mailing addresses containing a P.O. Box
will not be accepted. This information will assist the Funds in verifying your identity. Until such verification is made, the Funds may
temporarily limit additional share purchases. In addition, the Funds may limit additional share purchases or close an account if it is
unable to verify a shareholders identity. As required by law, the Funds may employ various procedures, such as comparing the information
to fraud databases or requesting additional information or documentation from you, to ensure that the information supplied by you is
correct.
Purchase
through Brokers: You may invest in the Funds through brokers or agents who have entered into selling agreements with the Distributor.
The brokers and agents are authorized to receive purchase and redemption orders on behalf of the Funds. Such brokers are authorized to
designate other intermediaries to receive purchase and redemption orders on the Funds behalf. The Funds will be deemed to have
received a purchase or redemption order when an authorized broker or, if applicable, a brokers authorized designee receives the order.
The broker or agent may set their own initial and subsequent investment minimums. You may be charged a fee if you use a broker or agent
to buy or redeem shares of the Funds. Finally, various servicing agents use procedures and impose restrictions that may be in addition
to, or different from those applicable to investors purchasing shares directly from the Funds. You should carefully read the program
materials provided to you by your servicing agent.
Purchase
through the Internet: You may purchase the Funds shares and redeem the Funds shares through the website www.counterpointfunds.com.
To establish Internet transaction privileges, you must enroll through the website. You automatically have the ability to establish Internet
transaction privileges unless you decline the privileges on your New Account Application or IRA Application. You will be required to
enter into a users agreement through the website in order to enroll in these privileges. In order to conduct Internet transactions,
you must have telephone transaction privileges. To purchase shares through the website you must also have ACH instructions on your account.
Redemption
proceeds may be sent to you by check to the address of record, or if your account has existing bank information, by wire or
ACH.
Only bank accounts held at domestic financial institutions that are ACH members can be used for transactions through the website. Transactions
through the website are subject to the same minimums as other transaction methods.
You
should be aware that the Internet is an unsecured, unstable, unregulated and unpredictable environment. Your ability to use the website
for transactions is dependent upon the Internet and equipment, software, systems, data and services provided by various vendors and third
parties. While the Funds and their service providers have established certain security procedures, the Funds, the Distributor and the
transfer agent cannot assure you that trading information will be completely secure.
There
may also be delays, malfunctions, or other inconveniences generally associated with this medium. There also may be times when the website
is unavailable for Fund transactions or other purposes. Should this happen, you should consider purchasing or redeeming shares by another
method. Neither the Funds nor their transfer agent, the Distributor nor the Adviser will be liable for any such delays or malfunctions
or unauthorized interception or access to communications or account information.
Purchase
by Wire: If you wish to wire money to make an investment in the Funds, please call the Funds at 1-844-273-8637 for wiring instructions
and to notify the Funds that a wire transfer is coming. Any commercial bank can transfer same-day funds via wire. The Funds normally
accept wired funds for investment on the day received if they are received by the Funds designated bank before the close of regular
trading on the NYSE. Your bank may charge you a fee for wiring same-day funds.
Automated
Clearing House (ACH) Purchase: Current shareholders may purchase additional shares via Automated Clearing House (ACH).
To have this option added to your account, please send a letter to the Fund requesting this option and supply a voided check for the
bank account. Only bank accounts held at domestic institutions that are ACH members may be used for these transactions.
You
may not use ACH transactions for your initial purchase of Fund shares. ACH purchases will be effective at the closing price per share
on the business day after the order is placed. The Fund may alter, modify or terminate this purchase option at any time.
Shares
purchased by ACH will not be available for redemption until the transactions have cleared. Shares purchased via ACH transfer may take
up to 15 days to clear.
To
establish internet transaction privileges, you must enroll through the website. You automatically have the ability to establish internet
transaction privileges unless you decline the privileges on your New Account Application or IRA Application. You will be required to
enter into a users agreement through the website in order to enroll in these privileges. To purchase shares through the website,
you must also have ACH instructions on your account. Redemption proceeds may be sent to you by check to the address or record, or if
your account has existing bank information, by wire or ACH. Only bank accounts held at domestic financial institutions that are ACH members
can be used for transactions through the Funds website. Transactions through the website are subject to the same minimums and
maximums as other transaction methods. Please call 844-273-8637 for assistance in establishing online access.
Automatic
Investment Plan: You may participate in the Funds Automatic Investment Plan, an investment plan that automatically moves money
from your bank account and invests it in the Funds through the use of electronic funds transfers or automatic bank drafts. You may elect
to make subsequent investments by transfers of a minimum of $50 on specified days of each month into your established Fund account. Please
contact the Funds at 1-844-273-8637 for more information about the Funds Automatic Investment Plan.
The
Funds, however, reserve the right, in their sole discretion, to reject any application to purchase shares. Applications will not be accepted
unless they are accompanied by a check drawn on a U.S. bank, thrift institutions, or credit union in U.S. funds for the full amount of
the shares to be purchased. After you open an account, you may purchase additional shares by sending a check together with written instructions
stating the name(s) on the account and the account number, to the above address. Cash, third party checks (except for properly endorsed
IRA rollover checks), counter checks, starter checks, travelers checks, money orders, credit card checks, and checks drawn on
non-U.S. financial institutions will not be accepted. Cashiers checks, bank official checks, and bank money orders are reviewed
on a case-by-case basis and may be accepted under certain circumstances. In such cases, a 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). Make all checks payable to Counterpoint
Tactical Income Fund, Counterpoint Tactical Equity Fund, or Counterpoint Tactical Municipal Fund,
as applicable. Redemptions of shares of a Fund purchased by check may be subject to a hold period
until the check has been cleared by the issuing bank. To avoid such holding periods, shares may be purchased through a broker or by wire,
as described in this section.
Note:
Ultimus Fund Solutions, LLC, the Funds transfer agent (the Transfer Agent), will charge a $25 fee against a
shareholders account, in addition to any loss sustained by a Fund, for any check or electronic payment returned to the Transfer
Agent for insufficient funds.
When
Order is Processed: All shares will be purchased at the NAV per share (plus applicable sales charges, if any) next determined after
the Funds receive your application or request in good order. All requests received in good order by the Funds before the close of regular
trading on the NYSE (normally 4:00 p.m. Eastern Time) every day the NYSE is open for business will be processed on that
same
day. Requests received after 4:00 p.m. will be processed on the next business day.
Good
● the
● the
● a
● check |
Retirement
Plans: You may purchase shares of the Funds for your individual retirement plans. Please call the Funds at 1-844-273-8637 for
the most current listing and appropriate disclosure documentation on how to open a retirement account.
HOW
TO REDEEM SHARES
Redeeming
Shares: The Funds typically expect that it will take up to three business days following the receipt of your redemption request to
pay out redemption proceeds by check or electronic transfer. The Funds typically expect to pay redemptions from cash, cash equivalents,
proceeds from the sale of Fund shares, any lines of credit, and then from the sale of portfolio securities. These redemption payment
methods will be used in regular and stressed market conditions. You may redeem all or any portion of the shares credited to your account
by submitting a written request for redemption to:
Regular Counterpoint Tactical Income Fund Counterpoint Tactical Equity Fund Counterpoint Tactical Municipal Fund c/o Ultimus Fund Solutions, LLC P.O. Box 541150 Omaha, Nebraska 68154 |
Express/Overnight Counterpoint Tactical Income Fund Counterpoint Tactical Equity Fund Counterpoint Tactical Municipal Fund c/o Ultimus Fund Solutions, LLC 4221 North 203rd Street, Suite 100 Elkhorn, Nebraska 68022-3474 |
Redemptions
by Telephone: The telephone redemption privilege is automatically available to all new accounts. If you do not want the telephone
redemption privilege, you must indicate this in the appropriate area on your account application or you must write to the Funds and instruct
them to remove this privilege from your account.
The
proceeds will be sent by mail to the address designated on your account or wired directly to your existing account in a bank or brokerage
firm in the United States as designated on your application. To redeem by telephone, call 1-844-273-8637. If you own an IRA account and
wish to redeem by telephone, you will be asked whether or not the Funds should withhold federal income tax.
During
periods of high market activity, you may encounter higher than usual wait times. Please allow sufficient time to ensure that you will
be able to complete your telephone transaction prior to market close. Neither the Funds nor their Transfer Agent will be held liable
if you are unable to place your trade due to high call volume.
The
Funds reserve the right to suspend the telephone redemption privileges with respect to your account if the name(s) or the address on
the account has been changed within the previous 30 days. Neither the Funds, the Transfer Agent, nor their respective affiliates will
be liable for complying with telephone instructions they reasonably believe to be genuine or for any loss, damage, cost or expenses in
acting on such telephone instructions and you will be required to bear the risk of any such loss. The Funds or the Transfer Agent, or
both, will employ reasonable procedures to determine that telephone instructions are genuine. If the Funds and/or the Transfer Agent
do not employ these procedures, they may be liable to you for losses due to unauthorized or fraudulent instructions. These procedures
may include, among others, requiring forms of personal identification prior to acting upon telephone instructions, providing written
confirmation of the transactions and/or tape-recording telephone instructions.
Redemptions
through Broker: If shares of the Funds are held by a broker-dealer, financial institution or other servicing agent, you must contact
that servicing agent to redeem shares of the Funds. The servicing agent may charge a fee for this service.
Redemptions
by Wire: You may request that your redemption proceeds be wired directly to your bank account. The Transfer Agent imposes a $15 fee
for each wire redemption and deducts the fee directly from your account. Your bank may also impose a fee for the incoming wire.
Systematic
Withdrawal Plan: If your individual accounts, IRA or other qualified plan account have a current account value of at least $10,000,
you may participate in the Funds Systematic Withdrawal Plan, an investment plan that automatically moves money to your bank account
from the Funds through the use of electronic funds transfers. You may elect to make subsequent withdrawals by transfers of a minimum
of $250 on specified days of each month into your established bank account. Please contact the Funds at 1-844-273-8637 for more information
about the Funds Systematic Withdrawal Plan.
Redemptions
in Kind: The Funds reserve the right to honor requests for redemption or repurchase orders by making payment in whole or in part
in readily marketable securities (redemption in kind) if the amount is greater than the lesser of $250,000 or 1% of the
Funds assets. The securities will be chosen by the Funds and valued under the Funds NAV procedures. A shareholder will
be exposed to market risk until these securities are converted to cash and may incur transaction expenses in converting these securities
to cash.
When
Redemptions are Sent: Once a Fund receives your redemption request in good order as described below, it will issue
a check based on the next determined NAV following your redemption request. If you purchase shares using a check and soon after request
a redemption, your redemption proceeds, which are payable at the next determined NAV following
the receipt your redemption request in good order, as described below, will not be sent until the check used for
your purchase has cleared your bank.
Good
● The
● The
● The
● If |
When
You Need Medallion Signature Guarantees: If you wish to change the bank or brokerage account that you have designated on your account,
you may do so at any time by writing to the Funds with your signature guaranteed. A medallion signature guarantee assures that a signature
is genuine and protects you from unauthorized account transfers. You will need your signature guaranteed if:
● | you request a redemption to be made payable to a person not on record with the Funds; |
● | you request that a redemption be mailed to an address other than that on record with the Funds; |
● | the proceeds of a requested redemption exceed $50,000; |
● | any redemption is transmitted by federal wire transfer to a bank other than the bank of record; or |
● | your address was changed within 30 days of your redemption request. |
Signatures
may be guaranteed by any eligible guarantor institution (including banks, brokers and dealers, credit unions, national securities exchanges,
registered securities associations, clearing agencies and savings associations). Further documentation will be required to change the
designated account if shares are held by a corporation, fiduciary or other organization. A notary public cannot guarantee signatures.
Retirement
Plans: If you own an IRA or other retirement plan, you must indicate on your redemption request whether the Funds should withhold
federal income tax. Unless you elect in your redemption request that you do not want to have federal tax withheld, the redemption will
be subject to withholding.
Low
Balances: If at any time your account balance in a Fund falls below $1,000, the Fund may notify you that, unless the account is brought
up to at least $1,000 within 30 days of the notice; your account could be closed. After the notice period, the Fund may redeem all of
your shares and close your account by sending you a check to the address of record. Your account will not be closed if the account balance
drops below required minimums due to a decline in NAV.
FREQUENT
PURCHASES AND REDEMPTIONS OF FUND SHARES
The
Funds discourage and do not accommodate market timing. Frequent trading into and out of the Funds can harm all Fund shareholders by disrupting
the Funds investment strategies, increasing Fund expenses, decreasing tax efficiency and diluting the value of shares held by
long-term shareholders. The Funds are designed for long-term investors and is not intended for market timing or other disruptive trading
activities. Accordingly, the Board of Trustees has approved policies that seek to curb these disruptive activities while recognizing
that shareholders may have a legitimate need to adjust their Fund investments as their financial needs or circumstances change. The Funds
currently use several methods to reduce the risk of market timing. These methods include:
● | Committing staff to review, on a continuing basis, recent trading activity in order to identify trading activity that may be contrary to the Funds Market Timing Trading Policy, |
● | Rejecting or limiting specific purchase requests; and |
● | Rejecting purchase requests from certain investors. |
Though
these methods involve judgments that are inherently subjective and involve some selectivity in their application, the Funds seek to make
judgments and applications that are consistent with the interests of the Funds shareholders.
Based
on the frequency of redemptions in your account, the Adviser or Transfer Agent may in its sole discretion determine that your trading
activity is detrimental to the Funds as described in the Funds Market Timing Trading Policy and elect to reject or limit the amount,
number, frequency or method for requesting future purchases or exchanges into the Funds.
The
Funds reserve the right to reject or restrict purchase requests for any reason, particularly when the shareholders trading activity
suggests that the shareholder may be engaged in market timing or other disruptive trading activities. Neither the Funds nor the Adviser
will be liable for any losses resulting from rejected purchase orders. The Adviser may also bar an investor who has violated these policies
(and the investors financial advisor) from opening new accounts with the Funds.
Although
the Funds attempt to limit disruptive trading activities, some investors use a variety of strategies to hide their identities and their
trading practices. There can be no guarantee that the Funds will be able to identify or limit these activities. Omnibus account arrangements
are common forms of holding shares of the Funds. While the Funds encourage financial intermediaries to apply the Funds Market
Timing Trading Policy to their customers who invest indirectly in the Funds, the Funds are limited in its ability to monitor the trading
activity or enforce the Funds Market Timing Trading Policy with respect to customers of financial intermediaries. For example,
should it occur, the Funds may not be able to detect market timing that may be facilitated by financial intermediaries or made difficult
to identify in the omnibus accounts used by those intermediaries for aggregated purchases, exchanges and redemptions on behalf of all
their customers. More specifically, unless the financial intermediaries have the ability to apply the Funds Market Timing Trading
Policy to their customers through such methods as implementing short-term trading limitations or restrictions and monitoring trading
activity for what might be market timing, the Funds may not be able to determine whether trading by customers of financial intermediaries
is contrary to the Funds Market Timing Trading Policy. Brokers maintaining omnibus accounts with the Funds have agreed to provide
shareholder transaction information to the extent known to the broker to the Funds upon request. If a Fund or its Transfer Agent or shareholder
servicing agent suspects there is market timing activity in the account, the Fund will seek full cooperation from the service provider
maintaining the account to identify the underlying participant. At the request of the Adviser, the service providers may take immediate
action to stop any further short-term trading by such participants.
TAX
STATUS, DIVIDENDS AND DISTRIBUTIONS
Any
sale or exchange of the Funds shares may generate tax liability (unless you are a tax-exempt investor or your investment is in
a qualified retirement account). When you redeem your shares you may realize a taxable gain or loss. This is measured by the difference
between the proceeds of the sale and the tax basis for the shares you sold. (To aid in computing your tax basis, you generally should
retain your account statements for the period that you hold shares in the Funds.)
The
Funds intend to distribute substantially all of their net investment income monthly and net capital gains annually in December. Distributions
will be reinvested in shares of each Fund unless you elect to receive cash. Dividends from net investment income (including any excess
of net short-term capital gain over net long-term capital loss) are taxable to investors as ordinary income, while distributions of net
capital gain (the excess of net long-term capital gain over net short-term capital loss) are generally taxable as long-term capital gain,
regardless of your holding period for the shares. Any dividends or capital gain distributions you receive from a Fund will normally be
taxable to you when made, regardless of whether you reinvest dividends or capital gain distributions or receive them in cash. Certain
dividends or distributions declared in October, November or December will be taxed to shareholders as if received in December if they
are paid during the following January. Each year, the Funds will inform you of the amount and type of your distributions. IRAs and other
qualified retirement plans are exempt from federal income taxation until retirement proceeds are paid out to the participant.
Your
redemptions, including exchanges, may result in a capital gain or loss for federal tax purposes. A capital gain or loss on your investment
is the difference between the cost of your shares, including any sales charges, and the amount you receive when you sell them.
The
Funds must report to the IRS and furnish to shareholders the cost basis information for shares purchased and sold. The Funds have chosen
average cost as their standing (default) tax lot identification method for all shareholders, which means the Funds will use this method
to determine which specific shares are deemed to be sold when there are multiple purchases on different dates at differing NAVs, and
the entire position is not sold at one time. Shareholders may, however, choose a method other than the Funds standing method at
the time of their purchase or upon sale of covered shares. Shareholders should consult their tax advisors to determine the best
IRS-accepted cost basis method for their tax situation and to obtain more information about how cost basis reporting applies to them.
Shareholders also should carefully review the cost basis information provided to them by the Funds and make any additional basis, holding
period or other adjustments that are required when reporting these amounts on their federal income tax returns.
On
the account application, you will be asked to certify that your social security number or taxpayer identification number is correct and
that you are not subject to backup withholding for failing to report income to the IRS. If you are subject to backup withholding or you
did not certify your taxpayer identification number, the IRS requires the Funds to withhold a percentage of any dividend, redemption
or exchange proceeds. Each Fund reserves the right to reject any application that does not include a certified social security or taxpayer
identification number. If you do not have a social security number, you should indicate on the purchase form that your application to
obtain a number is pending. Each Fund is required to withhold taxes if a number is not delivered to the Fund within seven days.
This
summary is not intended to be and should not be construed to be legal or tax advice. You should consult your own tax advisors to determine
the tax consequences of owning the Funds shares.
DISTRIBUTION
OF SHARES
Distributor:
Northern Lights Distributors, LLC, 4221 North 203rd Street, Suite 100, Elkhorn, Nebraska 68022-3474, is the distributor
for the shares of the Funds. Northern Lights Distributors, LLC is a registered broker-dealer and member of the Financial Industry Regulatory
Authority, Inc. (FINRA). Shares of the Funds are offered on a continuous basis.
Distribution
Fees: The Trust, on behalf of the Funds, has adopted the Trusts Master Distribution and Shareholder Servicing Plan for Class
A shares and Class C shares of the Funds (each a Plan and collectively, the Plans) under Rule 12b-1, pursuant
to which the Funds pay the Distributor an annual fee for distribution and shareholder servicing expenses of 0.25% of each Funds
average daily net assets attributable to the Class A shares and 1.00% of each Funds average daily net assets attributable to the
Class C shares. Class I shares do not have a Plan. Because these fees are paid out of the Funds assets on an on-going basis, over
time these fees will increase the cost of your investment and may cost you more than paying other types of sales charges.
The
Distributor and other entities are paid under the Plans for services provided and the expenses borne by the Distributor and others in
the distribution of Fund shares, including the payment of commissions for sales of the shares and incentive compensation to and expenses
of dealers and others who engage in or support distribution of shares or who service shareholder accounts, including overhead and telephone
expenses; printing and distribution of prospectuses and reports used in connection with the offering of the Funds shares to other
than current shareholders; and preparation, printing and distribution of sales literature and advertising materials. In addition, the
Distributor or other entities may utilize fees paid pursuant to the Plans to compensate dealers or other entities for their opportunity
costs in advancing such amounts, which compensation would be in the form of a carrying charge on any un-reimbursed expenses.
Additional
Compensation to Financial Intermediaries: The Distributor, its affiliates, and the Adviser and its affiliates may, at their own expense
and out of their own assets including their legitimate profits from Fund-related activities, provide additional cash payments to financial
intermediaries who sell shares of the Funds or assist in the marketing of the Funds. Financial intermediaries include brokers, financial
planners, banks, insurance companies, retirement or 401(k) plan administrators and others. These payments may be in addition to the Rule
12b-1 fees and any sales charges that are disclosed elsewhere in this Prospectus. These payments are generally made to financial intermediaries
that provide shareholder or administrative services, or marketing support. Marketing support may include access to sales meetings, sales
representatives and financial intermediary management representatives, inclusion of the Funds on a sales list, including a preferred
or select sales list, or other sales programs. These payments also may be made as an expense reimbursement in cases where the financial
intermediary provides shareholder services to Fund shareholders. The Distributor may, from time to time, provide promotional incentives
to certain investment firms. Such incentives may, at the Distributors discretion, be limited to investment firms who allow their
individual selling representatives to participate in such additional compensation.
Householding:
To reduce expenses, the Funds mail only one copy of a Prospectus and each Annual and Semi-Annual report to those addresses shared
by accounts that have elected to receive paper copies of these documents. If you wish to receive individual copies of these documents,
please call the Funds at 1-844-273-8637 on days the Funds are open for business or contact your financial institution. The Funds will
begin sending you individual copies thirty days after receiving your request.
FINANCIAL
HIGHLIGHTS
The
financial highlights table is intended to help you understand each Funds financial performance for the past 5 years or, if shorter,
the period of the Funds operations. Certain information reflects financial results for a single Fund share. The total returns
in the table represent the rate that an investor would have earned (or lost) on an investment in a Fund (assuming reinvestment of all
dividends and distributions). This information has been derived from the financial statements audited by [ ] whose report, along
with each Funds financial statements, which are incorporated by reference into the SAI, and are included in the Funds September
30, 202 3 Annual Report, which is available at no charge upon request.
Rev.
June 2021
PRIVACY
NOTICE
FACTS | WHAT DOES NORTHERN LIGHTS FUND TRUST III DO WITH YOUR PERSONAL INFORMATION? |
|
Why? | Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do. |
|
What? | The types of personal information we collect and share depend on the product or service you have with us. This information can include: |
|
● Social
● Assets
● Retirement
● Transaction
● Checking |
● Purchase
● Account
● Account
● Wire Transfer Instructions
|
|
When you are no longer our customer, we continue to share your information as described in this notice. |
||
How? | All financial companies need to share customers personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers personal information; the reasons Northern Lights Fund Trust III chooses to share; and whether you can limit this sharing. |
Reasons we can share your personal information |
Does Northern Lights Fund Trust III share? |
Can you limit this sharing? |
For our everyday business purposes – such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus |
Yes | No |
For our marketing purposes – to offer our products and services to you |
No | We dont share |
For joint marketing with other financial companies |
No | We dont share |
For our affiliates everyday business purposes – information about your transactions and experiences |
No | We dont share |
For our affiliates everyday business purposes – information about your creditworthiness |
No | We dont share |
For nonaffiliates to market to you |
No | We dont share |
Questions? | Call (631) 490-4300 |
Who we are |
|
Who is providing this notice? |
Northern |
What we do |
|
How does Northern Lights Fund Trust III protect my personal information? |
To
Our |
How does Northern Lights Fund Trust III collect my personal information? |
We
● Open
● Provide
● Give
● Make
● Make
● Tell
● Tells
● Show
● Show
We |
Why cant I limit all sharing? |
Federal
● Sharing
● Affiliates
● Sharing
State |
Definitions | |
Affiliates |
Companies
● Northern |
Nonaffiliates |
Companies
● Northern |
Joint marketing |
A
● Northern |
Appendix
A: Intermediary-Specific Sales Charge Waivers and Discounts
Intermediary-Defined
Sales Charge Waiver Policies
The
availability of certain initial or deferred sales charge waivers and discounts may depend on the particular financial intermediary or
type of account through which you purchase or hold Fund shares.
Financial
Intermediaries may have different policies and procedures regarding the availability of front-end sales load waivers or contingent deferred
(back-end) sales load (CDSC) waivers, which are discussed below. In all instances, it is the purchasers responsibility
to notify the funds or the purchasers financial intermediary at the time of purchase of any relationship or other facts qualifying
the purchaser for sales charge waivers or discounts. For waivers and discounts not available through a particular financial intermediary,
shareholders will have to purchase fund shares directly from the funds or through another intermediary to receive these waivers or discounts.
Raymond
James & Associates, Inc., Raymond James Financial Services, Inc. and each entitys affiliates (Raymond James)
Effective
March 1, 2019, shareholders purchasing Fund shares through a Raymond James platform or through an introducing broker-dealer or independent
registered investment adviser for which Raymond James provides trade execution, clearance, and/or custody services, will be eligible
only for the following load waivers (front-end sales charge waivers and contingent deferred, or back-end, sales charge waivers) and discounts,
which may differ from those disclosed elsewhere in the Funds Prospectus or SAI.
Front-end
sales load waivers on Class A shares available at Raymond James
● | Shares purchased in an investment advisory program. |
● | Shares purchased within the same fund family through a systematic reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same Fund (but not any other fund within the fund family). |
● | Employees and registered representatives of Raymond James or its affiliates and their family members as designated by Raymond James. |
● | Shares purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred sales load (known as Rights of Reinstatement). |
● | A shareholder in the Funds Class C shares will have their shares converted at NAV to Class A shares of the Funds if the shares are no longer subject to a CDSC and the conversion is in line with the policies and procedures of Raymond James. |
CDSC
Waivers on Classes A and C shares available at Raymond James
● | Death or disability of the shareholder. |
● | Shares sold as part of a systematic withdrawal plan as described in the Funds Prospectus. |
● | Return of excess contributions from an IRA Account. |
● | Shares sold as part of a required minimum distribution for IRA and retirement accounts due to the shareholder reaching the qualified age based on applicable IRS regulations as described in the Funds Prospectus. |
● | Shares sold to pay Raymond James fees but only if the transaction is initiated by Raymond James. |
● | Shares acquired through a right of reinstatement |
Front-end
load discounts available at Raymond James: breakpoints, and/or rights of accumulation and/or letters of intent
● | Breakpoints as described in this Prospectus. |
● | Rights of accumulation which entitle shareholders to breakpoint discounts will be automatically calculated based on the aggregated holding of fund family assets held by accounts within the purchasers household at Raymond James. Eligible fund family assets not held at Raymond James may be included in the calculation of rights of accumulation only if the shareholder notifies his or her financial advisor about such assets. |
● | Letters of intent which allow for breakpoint discounts based on anticipated purchases within a fund family, over a 13-month time period. Eligible fund family assets not held at Raymond James may be included in the calculation of letters of intent only if the shareholder notifies his or her financial advisor about such assets. |
Counterpoint
Tactical Income Fund
Counterpoint
Tactical Equity Fund
Counterpoint
Tactical Municipal Fund
Adviser | Counterpoint Funds, LLC 12760 High Bluff Drive, Suite 280 San Diego, California 92130 |
Distributor | Northern Lights Distributors, LLC 4221 North 203rd Street, Suite 100 Elkhorn, Nebraska 68022-3474 |
|
Independent Registered Public Accounting Firm |
[
|
Legal Counsel |
Thompson Hine LLP 41 South High Street, Suite 1700 Columbus, Ohio 43215 |
|
Custodian | JPMorgan Chase & Co. 270 Park Avenue New York, New York 10017 |
Transfer Agent |
Ultimus Fund Solutions, LLC 225 Pictoria Drive, Suite 450 Cincinnati, Ohio 45246 |
Additional
information about the Funds is included in the SAI dated [ ] , 2023. The SAI is incorporated into this Prospectus by reference
(i.e., legally made a part of this Prospectus). The SAI provides more details about the Funds policies and management. Additional
information about the Funds investments is available in the Funds Annual and Semi-Annual Reports to Shareholders. In the
Funds Annual Report, you will find a discussion of the market conditions and investment strategies that significantly affected
the Funds performance during its last fiscal year.
To
obtain a free copy of the SAI, Annual and Semi-Annual Reports to Shareholders, or other information about the Funds, or to make shareholder
inquiries about the Funds, please call 1-844-273-8637 or visit www.counterpointfunds.com. You may also write to:
Counterpoint
Tactical Income Fund
Counterpoint
Tactical Equity Fund
Counterpoint
Tactical Municipal Fund
c/o
Ultimus Fund Solutions, LLC
225
Pictoria Drive, Suite 450
Cincinnati,
OH 45246
Reports
and other information about each Fund are available on the EDGAR Database on the SECs Internet site at http://www.sec.gov. Copies
of the information may be obtained, after paying a duplicating fee, by electronic request at the following E-mail address: [email protected].
Investment
Company Act File # 811-22655
Counterpoint Tactical Income Fund |
Class A CPATX |
Class C CPCTX |
Class I CPITX |
Counterpoint Tactical Equity Fund |
Class A CPAEX |
Class C CPCEX |
Class I CPIEX |
Counterpoint Tactical Municipal Fund |
Class A TMNAX |
Class C TMNCX |
Class I TMNIX |
each a series of Northern Lights Fund Trust III |
STATEMENT OF ADDITIONAL INFORMATION |
[ ] , 2023 |
This Statement of Additional Information (SAI) is not a Prospectus and should be read in conjunction with the Prospectus of the Counterpoint Tactical Income Fund, Counterpoint Tactical Equity Fund and Counterpoint Tactical Municipal Fund (each a Fund and, collectively the Funds) dated [ ] , 2023, which is incorporated by reference into this SAI (i.e., legally made a part of this SAI). Copies may be obtained without charge by contacting the Funds Transfer Agent, Ultimus Fund Solutions, LLC, 225 Pictoria Drive, Suite 450, Cincinnati, Ohio 45246 or by calling 1-844-273-8637. You may also obtain a prospectus by visiting the Funds website at www.counterpointfunds.com. |
TABLE OF CONTENTS
THE FUNDS |
[ ] |
INVESTMENTS AND RISKS |
[ ] |
PORTFOLIO TURNOVER |
[ ] |
INVESTMENT RESTRICTIONS |
[ ] |
INVESTMENT ADVISER |
[ ] |
PORTFOLIO MANAGERS |
[ ] |
ALLOCATION OF BROKERAGE |
[ ] |
POLICIES AND PROCEDURES FOR DISCLOSURE OF PORTFOLIO HOLDINGS |
[ ] |
OTHER SERVICE PROVIDERS |
[ ] |
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM |
[ ] |
LEGAL COUNSEL |
[ ] |
DISTRIBUTOR | [ ] |
DESCRIPTION OF SHARES |
[ ] |
CODE OF ETHICS |
[ ] |
PROXY VOTING POLICIES |
[ ] |
PURCHASE, REDEMPTION AND PRICING OF FUND SHARES |
[ ] |
TAX STATUS |
[ ] |
ANTI-MONEY LAUNDERING PROGRAM |
[ ] |
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES |
[ ] |
MANAGEMENT | [ ] |
FINANCIAL STATEMENTS |
[ ] |
APPENDIX A – PROXY VOTING POLICIES AND PROCEDURES |
A-1 |
The
Funds are each a diversified series of Northern Lights Fund Trust III, a Delaware statutory trust organized on December 5, 2011 (the
Trust). The Trust is registered as an open-end management investment company. The Trust is governed by its Board of Trustees
(the Board).
The
Funds may issue an unlimited number of shares of beneficial interest. All shares of the Funds have equal rights and privileges. Each
share of the Funds is entitled to one vote on all matters as to which shares are entitled to vote. In addition, each share of the Funds
is entitled to participate equally with other shares, on a class-specific basis, (i) in dividends and distributions declared by the applicable
Fund and (ii) on liquidation to its proportionate share of the assets remaining after satisfaction of outstanding liabilities. Shares
of each Fund are fully paid, non-assessable and fully transferable and have no pre-emptive, conversion or exchange rights. Fractional
shares have proportionately the same rights, including voting rights, as are provided for a full share.
Counterpoint
Funds, LLC (the Adviser) is the Funds investment adviser. The Funds investment objectives, restrictions and
policies are more fully described here and in the Prospectus. The Board may start other series and offer shares of a new fund under the
Trust at any time.
Each
Fund offers three classes of shares: Class A shares, Class C shares, and Class I shares. Each share class represents an interest in the
same assets of the applicable Fund, has the same rights and is identical in all material respects except that (i) each class of shares
may be subject to different (or no) sales loads; (ii) each class of shares may bear different (or no) distribution fees; (iii) each class
of shares may have different shareholder features, such as minimum investment amounts; (iv) certain other class-specific expenses will
be borne solely by the class to which such expenses are attributable, including transfer agent fees attributable to a specific class
of shares, printing and postage expenses related to preparing and distributing materials to current shareholders of a specific class,
registration fees paid by a specific class of shares, the expenses of administrative personnel and services required to support the shareholders
of a specific class, litigation or other legal expenses relating to a class of shares, Board fees or expenses paid as a result of issues
relating to a specific class of shares and accounting fees and expenses relating to a specific class of shares and (v) each class has
exclusive voting rights with respect to matters relating to its own distribution arrangements. The Board may classify and reclassify
the shares of the Funds into additional classes of shares at a future date.
Under
the Trusts Agreement and Declaration of Trust, each Trustee will continue in office until the termination of the Trust or his/her earlier
death, incapacity, resignation or removal. Shareholders can remove a Trustee to the extent provided by the Investment Company Act of
1940, as amended (the 1940 Act) and the rules and regulations promulgated thereunder. Vacancies may be filled by a majority
of the remaining Trustees, except insofar as the 1940 Act may require the election by shareholders. As a result, normally no annual or
regular meetings of shareholders will be held unless matters arise requiring a vote of shareholders under the Agreement and Declaration
of Trust or the 1940 Act.
The
investment objectives of the Funds and the descriptions of the Funds principal investment strategies are set forth under Principal
Investment Strategies in the Prospectus. Each Funds investment objective is not fundamental and may be changed without the approval
of a majority of the outstanding voting securities of the Trust.
The
following pages contain more detailed information about the types of instruments in which the Funds may invest, strategies the Adviser
may employ in pursuit of the Funds investment objectives and a summary of related risks.
Equity
Securities
Equity
securities in which the Funds invest include common stocks, preferred stocks and securities convertible into common stocks, such as convertible
bonds, warrants, rights and options. The value of equity securities varies in response to many factors, including the activities and
financial condition of individual companies, the business market in which individual companies compete and general market and economic
conditions. Equity securities fluctuate in value, often based on factors unrelated to the value of the issuer of the securities, and
such fluctuations can be significant.
Common
Stock
Common
stock represents an equity (ownership) interest in a company, and usually possesses voting rights and earns dividends. Dividends on common
stock are not fixed but are declared at the discretion of the issuer. Common stock generally represents the riskiest investment in a
company. In addition, common stock generally has the greatest appreciation and depreciation potential because increases and decreases
in earnings are usually reflected in a companys stock price.
Preferred
Stock
The
Funds may invest in preferred stock with no minimum credit rating. Preferred stock is a class of stock having a preference over common
stock as to the payment of dividends and the recovery of investment should a company be liquidated, although preferred stock is usually
junior to the debt securities of the issuer. Preferred stock typically does not possess voting rights and its market value may change
based on changes in interest rates.
The
fundamental risk of investing in common and preferred stock is the risk that the value of the stock might decrease. Stock values fluctuate
in response to the activities of an individual company or in response to general market and/or economic conditions. Historically, common
stocks have provided greater long-term returns and have entailed greater short-term risks than preferred stocks, fixed-income securities
and money market investments. The market value of all securities, including common and preferred stocks, is based upon the markets perception
of value and not necessarily the book value of an issuer or other objective measures of a companys worth.
Fixed
Income/Debt/Bond Securities
Yields
on fixed income securities are dependent on a variety of factors, including the general conditions of the money market and other fixed
income securities markets, the size of a particular offering, the maturity of the obligation and the rating of the issue. An investment
in a Fund is subject to risk even if all fixed income securities in the Funds portfolio are paid in full at maturity. All fixed
income securities, including U.S. government securities, can change in value when there is a change in interest rates or the issuers
actual or perceived creditworthiness or ability to meet its obligations.
There
is normally an inverse relationship between the market value of securities sensitive to prevailing interest rates and actual changes
in interest rates. In other words, an increase in interest rates produces a decrease in market value. The longer the remaining maturity
(and duration) of a security, the greater will be the effect of interest rate changes on the market value of that security. Changes in
the ability of an issuer to make payments of interest and principal and in the markets perception of an issuers creditworthiness
will also affect the market value of the debt securities of that issuer. Obligations of issuers of fixed income securities (including
municipal securities) are subject to the provisions of bankruptcy, insolvency, and other laws affecting the rights and remedies of creditors,
such as the Federal Bankruptcy Reform Act of 1978. In addition, the obligations of municipal issuers may become subject to laws enacted
in the future by Congress, state legislatures, or referenda extending the time for payment of principal and/or interest, or imposing
other constraints upon enforcement of such obligations or upon the ability of municipalities to levy taxes. Changes in the ability of
an issuer to make payments of interest and principal and in the markets perception of an issuers creditworthiness will also affect
the market value of the debt securities of that issuer. The possibility exists, therefore, that, the ability of any issuer to pay, when
due, the principal of and interest on its debt securities may become impaired.
The
corporate debt securities in which the Funds may invest include corporate bonds and notes and short-term investments such as commercial
paper and variable rate demand notes. Commercial paper (short-term promissory notes) is issued by companies to finance their or their
affiliates current obligations and is frequently unsecured. Variable and floating rate demand notes are unsecured obligations typically
redeemable upon not more than 30 days notice. These obligations include master demand notes that permit investment of fluctuating amounts
at varying rates of interest pursuant to a direct arrangement with the issuer of the instrument. The issuer of these obligations often
has the right, after a given period, to prepay the outstanding principal amount of the obligations upon a specified number of days notice.
These obligations generally are not traded, nor generally is there an established secondary market for these obligations. To the extent
a demand note does not have a 7-day or shorter demand feature and there is no readily available market for the obligation, it is treated
as an illiquid security.
The
Funds may invest in sovereign bonds. Sovereign bonds involve special risks not present in corporate bonds. The governmental authority
that controls the repayment of the bonds may be unable or unwilling to make interest payments and/or repay the principal on its bonds.
If an issuer of sovereign bonds defaults on payments of principal and/or interest, the Funds may have limited recourse against the issuer.
In the past, certain governments of emerging market countries have declared themselves unable to meet their financial obligations on
a timely basis, which has resulted in losses to holders of such governments debt.
A
sovereign debtors willingness or ability to repay principal and pay interest in a timely manner may be affected by, among other
factors, its cash flow situation, the extent of its foreign currency reserves, the availability of sufficient foreign exchange, the relative
size of the debt service burden, the sovereign debtors policy toward principal international lenders and local political constraints.
Sovereign debtors may also be dependent on expected disbursements from foreign governments, multilateral agencies and other entities
to reduce principal and interest arrearages on their debt. The failure of a sovereign debtor to implement economic reforms, achieve specified
levels of economic performance or repay principal or interest when due may result in the cancellation of third-party commitments to lend
funds to the sovereign debtor, which may further impair such debtors ability or willingness to service its debts.
The
Funds may invest in debt securities, including non-investment grade debt securities. The following describes some of the risks associated
with fixed income debt securities:
Interest
Rate Risk. Debt securities have varying levels of sensitivity to changes in interest rates. In general, the price of a debt security
can fall when interest rates rise and can rise when interest rates fall. Securities with longer maturities and mortgage securities can
be more sensitive to interest rate changes although they usually offer higher yields to compensate investors for the greater risks. The
longer the maturity of the security, the greater the impact a change in interest rates could have on the securitys price. In addition,
short-term and long-term interest rates do not necessarily move in the same amount or the same direction. Short-term securities tend
to react to changes in short-term interest rates and long-term securities tend to react to changes in long-term interest rates.
Credit
Risk. Fixed income securities have speculative characteristics and changes in economic conditions or other circumstances that are
more likely to lead to a weakened capacity of those issuers to make principal or interest payments, as compared to issuers of more highly
rated securities.
Extension
Risk. The Funds are subject to the risk that an issuer will exercise its right to pay principal on an obligation held by the Funds
(such as mortgage-backed securities) later than expected. This may happen when there is a rise in interest rates. These events may lengthen
the duration (i.e., interest rate sensitivity) and potentially reduce the value of these securities.
Prepayment
Risk. Certain types of debt securities, such as mortgage-backed securities, have yield and maturity characteristics corresponding
to underlying assets. Unlike traditional debt securities, which may pay a fixed rate of interest until maturity when the entire principal
amount comes due, payments on certain mortgage-backed securities may include both interest and a partial payment of principal. Besides
the scheduled repayment of principal, payments of principal may result from the voluntary prepayment, refinancing, or foreclosure of
the underlying mortgage loans.
Securities
subject to prepayment are less effective than other types of securities as a means of locking in attractive long-term interest
rates. One reason is the need to reinvest prepayments of principal; another is the possibility of significant unscheduled prepayments
resulting from declines in interest rates. These prepayments would have to be reinvested at lower rates. As a result, these securities
may have less potential for capital appreciation during periods of declining interest rates than other securities of comparable maturities,
although they may have a similar risk of decline in market value during periods of rising interest rates. Prepayments may also significantly
shorten the effective maturities of these securities, especially during periods of declining interest rates. Conversely, during periods
of rising interest rates, a reduction in prepayments may increase the effective maturities of these securities, subjecting them to a
greater risk of decline in market value in response to rising interest rates than traditional debt securities and, therefore, potentially
increasing the volatility of the Funds.
At
times, some of the mortgage-backed securities in which the Funds may invest will have higher than market interest rates and therefore
will be purchased at a premium above their par value. Prepayments may cause losses in securities purchased at a premium, as unscheduled
prepayments, which are made at par, will cause the Funds to experience a loss equal to any unamortized premium.
Certificates
of Deposit and Bankers Acceptances
Certificates
of deposit are receipts issued by a depository institution in exchange for the deposit of funds. The issuer agrees to pay the amount
deposited plus interest to the bearer of the receipt on the date specified on the certificate. The certificate usually can be traded
in the secondary market prior to maturity.
The
Funds may invest in insured bank obligations. The Federal Deposit Insurance Corporation (FDIC) insures the deposits of federally
insured banks and savings and loan associations (collectively referred to as banks) up to $250,000. The Funds may purchase
bank obligations that are fully insured as to principal by the FDIC. Currently, to remain fully insured as to principal, these investments
must
be limited to $250,000 per bank; if the principal amount and accrued interest together exceed $250,000, the excess principal and accrued
interest will not be insured. Insured bank obligations may have limited marketability.
Bankers
acceptances typically arise from short-term credit arrangements designed to enable businesses to obtain funds to finance commercial transactions.
Generally, an acceptance is a time draft drawn on a bank by an exporter or an importer to obtain a stated amount of funds to pay for
specific merchandise. The draft is then accepted by a bank that, in effect, unconditionally guarantees to pay the face value
of the instrument on its maturity date. The acceptance may then be held by the accepting bank as an earning asset or it may be sold in
the secondary market at the going rate of discount for a specific maturity. Although maturities for acceptances can be as long as 270
days, most acceptances have maturities of six months or less.
Time
Deposits and Variable Rate Notes
The
Funds may invest in fixed time deposits, whether or not subject to withdrawal penalties. The commercial paper obligations, which each
Fund may buy are unsecured and may include variable rate notes. The nature and terms of a variable rate note (i.e., a Master Note)
permit the Funds to invest fluctuating amounts at varying rates of interest pursuant to a direct arrangement between each Fund as lender,
and the issuer, as borrower. It permits daily changes in the amounts borrowed. Each Fund has the right at any time to increase, up to
the full amount stated in the note agreement, or to decrease the amount outstanding under the note. The issuer may prepay at any time
and without penalty any part of or the full amount of the note. The note may or may not be backed by one or more bank letters of credit.
Because these notes are direct lending arrangements between a Fund and the issuer, it is not generally contemplated that they will be
traded; moreover, there is currently no secondary market for them. Except as specifically provided in the Prospectus, there is no limitation
on the type of issuer from whom these notes may be purchased; however, in connection with such purchase and on an ongoing basis, the
Adviser will consider the earning power, cash flow and other liquidity ratios of the issuer, and its ability to pay principal and interest
on demand, including a situation in which all holders of such notes made demand simultaneously. Variable rate notes are subject to the
Funds investment restriction on illiquid securities unless such notes can be put back to the issuer on demand within seven days.
Commercial
Paper
The
Funds may purchase commercial paper. Commercial paper consists of short-term (usually from 1 to 270 days) unsecured promissory notes
issued by corporations in order to finance their current operations. It may be secured by letters of credit, a surety bond or other forms
of collateral. Commercial paper is usually repaid at maturity by the issuer from the proceeds of the issuance of new commercial paper.
As a result, investment in commercial paper is subject to the risk the issuer cannot issue enough new commercial paper to satisfy its
outstanding commercial paper, also known as rollover risk. Commercial paper may become illiquid or may suffer from reduced liquidity
in certain circumstances. Like all fixed income securities, commercial paper prices are susceptible to fluctuations in interest rates.
If interest rates rise, commercial paper prices will decline. The short-term nature of a commercial paper investment makes it less susceptible
to interest rate risk than many other fixed income securities because interest rate risk typically increases as maturity lengths increase.
Commercial paper tends to yield smaller returns than longer-term corporate debt because securities with shorter maturities typically
have lower effective yields than those with longer maturities. As with all fixed income securities, there is a chance that the issuer
will default on its commercial paper obligation.
Repurchase
Agreements
The
Funds may enter into repurchase agreements. In a repurchase agreement, an investor (such as a Fund) purchases a security (known as the
underlying security) from a securities dealer or bank. Any such dealer or bank must be deemed creditworthy by the Adviser.
At that time, the bank or securities dealer agrees to repurchase the underlying security at a mutually agreed upon price on a designated
future date. The repurchase price may be higher than the purchase price, the difference being income to the applicable Fund, or the purchase
and repurchase prices may be the same, with interest at an agreed upon rate due to the Fund on repurchase. In either case, the income
to the applicable Fund generally will be unrelated to the interest rate on the underlying securities. Repurchase agreements must be fully
collateralized, in that the market value of the underlying securities (including accrued interest) must at all times be equal to
or greater than the repurchase price. Therefore, a repurchase agreement can be considered a loan collateralized by the underlying securities.
Repurchase
agreements are generally for a short period of time, often less than a week, and will generally be used by each Fund to invest excess
cash or as part of a temporary defensive strategy. Repurchase agreements that do not provide for payment within seven days will be treated
as illiquid securities. In the event of a bankruptcy or other default by the seller of a repurchase agreement, a Fund could experience
both delays in liquidating the underlying security and losses. These losses could result from: (a) possible decline in the
value
of the underlying security while a Fund is seeking to enforce its rights under the repurchase agreement; (b) possible reduced levels
of income or lack of access to income during this period; and (c) expenses of enforcing its rights.
High-Yield
Securities
The
Funds may invest in high-yield securities. High-yield, high risk bonds are securities that are generally rated below investment grade
by the primary rating agencies (BB+ or lower by S&P and Ba1 or lower by Moodys). Other terms used to describe such securities include
lower rated bonds, non-investment grade bonds, below investment grade bonds, and junk bonds.
These securities are considered to be high-risk investments. The risks include the following:
Greater
Risk of Loss. These securities are regarded as predominately speculative. There is a greater risk that issuers of lower rated securities
will default than issuers of higher rated securities. Issuers of lower rated securities generally are less creditworthy and may be highly
indebted, financially distressed, or bankrupt. These issuers are more vulnerable to real or perceived economic changes, political changes
or adverse industry developments. In addition, high-yield securities are frequently subordinated to the prior payment of senior indebtedness.
If an issuer fails to pay principal or interest, a Fund would experience a decrease in income and a decline in the market value of its
investments.
Sensitivity
to Interest Rate and Economic Changes. The income and market value of lower-rated securities may fluctuate more than higher rated
securities. Although non-investment grade securities tend to be less sensitive to interest rate changes than investment grade securities,
non-investment grade securities are more sensitive to short-term corporate, economic and market developments. During periods of economic
uncertainty and change, the market price of the investments in lower-rated securities may be volatile. The default rate for high-yield
bonds tends to be cyclical, with defaults rising in periods of economic downturn.
Valuation
Difficulties. It is often more difficult to value lower rated securities than higher rated securities. If an issuers financial condition
deteriorates, accurate financial and business information may be limited or unavailable. In addition, the lower-rated investments may
be thinly traded and there may be no established secondary market. Because of the lack of market pricing and current information for
investments in lower rated securities, valuation of such investments is much more dependent on judgment than is the case with higher
rated securities.
Liquidity.
There may be no established secondary or public market for investments in lower-rated securities. Such securities are frequently traded
in markets that may be relatively less liquid than the market for higher rated securities. In addition, relatively few institutional
purchasers may hold a major portion of an issue of lower-rated securities at times. As a result, the Funds may be required to sell investments
at substantial losses or retain them indefinitely when an issuers financial condition is deteriorating.
Credit
Quality. Credit quality of non-investment grade securities can change suddenly and unexpectedly, and even recently-issued credit
ratings may not fully reflect the actual risks posed by a particular high-yield security.
New
Legislation. Future legislation may have a possible negative impact on the market for high-yield, high risk bonds. New legislation,
if enacted, could have a material negative effect on the Funds investments in lower rated securities.
High-yield.
High risk investments may include the following:
Straight
fixed-income debt securities. These include bonds and other debt obligations that bear a fixed or variable rate of interest payable
at regular intervals and have a fixed or resettable maturity date. The particular terms of such securities vary and may include features
such as call provisions and sinking funds.
Zero-coupon
debt securities. These bear no interest obligation but are issued at a discount from their value at maturity. When held to maturity,
their entire return equals the difference between their issue price and their maturity value.
Zero-fixed-coupon
debt securities. These are zero-coupon debt securities that convert on a specified date to interest-bearing debt securities.
Pay-in-kind
bonds. These are bonds which allow the issuer, at its option, to make current interest payments on the bonds either in cash or in
additional bonds. These are bonds sold without registration under the Securities Act of 1933, as amended (Securities Act),
usually to a relatively small number of institutional investors.
Convertible
Securities. These are bonds or preferred stock that may be converted to common stock.
Preferred
Stock. These are stocks that generally pay a dividend at a specified rate and have preference over common stock in the payment of
dividends and in liquidation.
Loan
Participations and Assignments. These are participations in, or assignments of all or a portion of loans to corporations or to governments,
including governments of less developed countries.
Securities
issued in connection with Reorganizations and Corporate Restructurings. In connection with reorganizing or restructuring of an issuer,
an issuer may issue common stock or other securities to holders of its debt securities. The Funds may hold such common stock and other
securities even if it does not invest in such securities.
Municipal
Government Obligations
In
general, municipal obligations are debt obligations issued by or on behalf of states, territories and possessions of the United States
(including the District of Columbia) and their political subdivisions, agencies and instrumentalities. Municipal obligations generally
include debt obligations issued to obtain funds for various public purposes. Certain types of municipal obligations are issued in whole
or in part to obtain funding for privately operated facilities or projects. Municipal obligations include general obligation bonds, revenue
bonds, industrial development bonds, notes and municipal lease obligations. Municipal obligations also include additional obligations,
the interest on which is exempt from federal income tax, that may become available in the future as long as the Board determines that
an investment in any such type of obligation is consistent with the applicable Funds investment objectives. Municipal obligations
may be fully or partially backed by local government, the credit of a private issuer, current or anticipated revenues from a specific
project or specific assets or domestic or foreign entities providing credit support such as letters of credit, guarantees or insurance.
Bonds
and Notes. General obligation bonds are secured by the issuers pledge of its full faith, credit and taxing power for the payment
of interest and principal. Revenue bonds are payable only from the revenues derived from a project or facility or from the proceeds of
a specified revenue source. Industrial development bonds are generally revenue bonds secured by payments from and the credit of private
users. Municipal notes are issued to meet the short-term funding requirements of state, regional and local governments. Municipal notes
include tax anticipation notes, bond anticipation notes, revenue anticipation notes, tax and revenue anticipation notes, construction
loan notes, short-term discount notes, tax-exempt commercial paper, demand notes and similar instruments.
Municipal
Lease Obligations. Municipal lease obligations may take the form of a lease, an installment purchase or a conditional sales contract.
They are issued by state and local governments and authorities to acquire land, equipment and facilities, such as vehicles, telecommunications
and computer equipment and other capital assets. The Funds may invest in underlying funds that purchase these lease obligations directly,
or it may purchase participation interests in such lease obligations (See Participation Interests section). States have different
requirements for issuing municipal debt and issuing municipal leases. Municipal leases are generally subject to greater risks than general
obligation or revenue bonds because they usually contain a non-appropriation clause, which provides that the issuer is not
obligated to make payments on the obligation in future years unless funds have been appropriated for this purpose each year. Such non-appropriation
clauses are required to avoid the municipal lease obligations from being treated as debt for state debt restriction purposes. Accordingly,
such obligations are subject to non-appropriation risk. Municipal leases may be secured by the underlying capital asset and
it may be difficult to dispose of any such asset in the event of non-appropriation or other default.
Master
Limited Partnerships (MLPs)
An
MLP is an entity that is generally taxed as a partnership for federal income tax purposes and that derives each year at least 90% of
its gross income from Qualifying Income. Qualifying Income for MLPs includes interest, dividends, real estate rents, gain
from the sale or disposition of real property, income and gain from commodities or commodity futures, and income and gain from mineral
or natural resources activities that generate Qualifying Income. MLP interests (known as units) are traded on securities exchanges or
over-the-counter. An MLPs organization as a partnership and compliance with the Qualifying Income rules generally eliminates federal
tax at the entity level.
An
MLP has one or more general partners (who may be individuals, corporations, or other partnerships) which manage the partnership, and
limited partners, which provide capital to the partnership but have no role in its management. Typically, the general partner is owned
by company management or another publicly traded sponsoring corporation. When an investor buys units in an MLP, the investor becomes
a limited partner.
MLPs
are formed in several ways. A nontraded partnership may decide to go public. Several nontraded partnerships may roll up into a single
MLP. A corporation may spin-off a group of assets or part of its business into an MLP of which it is the general partner, to realize
the assets full value on the marketplace by selling the assets and using the cash proceeds received from the MLP to address debt
obligations or to invest in higher growth opportunities, while retaining control of the MLP. A corporation may fully convert to an MLP,
although since 1986 the tax consequences have made this an unappealing option for most corporations. Unlike the ways described above,
it is also possible for a newly formed entity to commence operations as an MLP from its inception.
The
sponsor or general partner of an MLP, other energy companies, and utilities may sell assets to MLPs in order to generate cash to fund
expansion projects or repay debt. The MLP structure essentially transfers cash flows generated from these acquired assets directly to
MLP limited partner unitholders.
In
the case of an MLP buying assets from its sponsor or general partner the transaction is intended to be based upon comparable terms in
the acquisition market for similar assets. To help ensure that appropriate protections are in place, the board of the MLP generally creates
an independent committee to review and approve the terms of the transaction. The committee often obtains a fairness opinion and can retain
counsel or other experts to assist its evaluation. Since both parties normally have a significant equity stake in the MLP, both parties
are aligned to see that the transaction is accretive and fair to the MLP.
As
a motivation for the general partner to successfully manage the MLP and increase cash flows, the terms of MLPs typically provide that
the general partner receives a larger portion of the net income as distributions reach higher target levels. As cash flow grows, the
general partner receives a greater interest in the incremental income compared to the interest of limited partners. Although the percentages
vary among MLPs, the general partners marginal interest in distributions generally increases from 2% to 15% at the first designated
distribution target level moving up to 25% and ultimately 50% as pre-established distribution per unit thresholds are met. Nevertheless,
the aggregate amount distributed to limited partners will increase as MLP distributions reach higher target levels. Given this incentive
structure, the general partner has an incentive to streamline operations and undertake acquisitions and growth projects in order to increase
distributions to all partners.
Because
the MLP itself generally does not pay federal income tax, its income or loss is allocated to its investors, irrespective of whether the
investors receive any cash payment or other distributions from the MLP. An MLP typically makes quarterly cash distributions. Although
they resemble corporate dividends, MLP distributions are treated differently for tax purposes. The MLP distribution is treated as a return
of capital to the extent of the investors basis in his MLP interest and, to the extent the distribution exceeds the investors
basis in the MLP, generally as capital gain. The investors original basis is the price paid for the units. The basis is adjusted
downwards with each distribution and allocation of deductions (such as depreciation) and losses, and upwards with each allocation of
taxable income and gain.
The
partner will not incur federal income tax on distributions until: (1) he sells his MLP units and pays tax on his gain, which gain is
increased due to the basis decrease due to prior distributions; or (2) his basis reaches zero. When the units are sold, the difference
between the sales price and the investors adjusted basis is gain or loss for federal income tax purposes.
The
business of certain MLPs is affected by supply and demand for energy commodities because such MLPs derive revenue and income based upon
the volume of the underlying commodity produced, transported, processed, distributed, and/or marketed. Pipeline MLPs have indirect commodity
exposure to gas and oil price volatility because although they do not own the underlying energy commodity, the general level of commodity
prices may affect the volume of the commodity that the MLP delivers to its customers and the cost of providing services such as distributing
natural gas liquids (NGLs). The costs of natural gas pipeline MLPs to perform services may exceed the negotiated rates
under negotiated rate contracts. Specifically, processing MLPs may be directly affected by energy commodity prices. Propane
MLPs own the underlying energy commodity, and therefore have direct exposure to energy commodity prices, although the Adviser intends
to target high quality MLPs that seek to mitigate or manage direct margin exposure to commodity prices. However, the MLP industry in
general could be hurt by market perception that an MLPs performance and valuation are directly tied to commodity prices.
Real
Estate Investment Trusts (REITs)
The
Funds may invest in the equity securities of REITs focused on the energy industry. A REIT is a corporation or business trust that invests
in real estate and derives its income from rents or sales of real property or interest on loans secured by mortgages on real property.
The market value of REITs may be affected by numerous factors, including decreases in the value of real estate, vacancies, decreases
in lease rates, defaults by lessees, changes in the tax laws or by their inability to qualify for the tax-free pass-through of their
income.
Energy
Trust Securities.
The
Funds may invest in U.S. royalty trusts. U.S. royalty trusts are generally not subject to U.S. federal corporate income taxation at the
trust or entity level. Instead, each unitholder of the U.S. royalty trust is required to take into account its share of all items of
the U.S. royalty trusts income, gain, loss, deduction and expense. It is possible that a Funds share of taxable income
from a U.S. royalty trust may exceed the cash actually distributed to it from the U.S. royalty trust in a given year. In such a case,
a Fund will have less after-tax cash available for distribution to shareholders.
Exchange-Traded
Notes (ETNs)
The
Funds may invest in ETNs, which are senior, unsecured, unsubordinated debt securities whose returns are linked to the performance of
a particular market benchmark or strategy, minus applicable fees. ETNs are traded on an exchange (e.g., the New York Stock Exchange)
during normal trading hours; however, investors also can hold ETNs until they mature. At maturity, the issuer pays to the investor a
cash amount equal to the principal amount, subject to the days market benchmark or strategy factor. ETNs do not make periodic
coupon payments or provide principal protection. ETNs are subject to credit risk, including the credit risk of the issuer, and the value
of the ETN may drop due to a downgrade in the issuers credit rating, despite the underlying market benchmark or strategy remaining
unchanged. The value of an ETN also may be influenced by time to maturity, level of supply and demand for the ETN, volatility and lack
of liquidity in underlying assets, changes in the applicable interest rates, changes in the issuers credit rating, and economic,
legal, political, or geographic events that affect the referenced underlying asset. When a Fund invests in ETNs, it will bear its proportionate
share of any fees and expenses borne by the ETN. A decision by a Fund to sell ETN holdings may be limited by the availability of a secondary
market. In addition, although an ETN may be listed on an exchange, the issuer may not be required to maintain the listing, and there
can be no assurance that a secondary market will exist for an ETN.
ETNs
also are subject to tax risk. No assurance can be given that the IRS will accept, or a court will uphold, how a Fund characterizes and
treats ETNs for tax purposes.
An
ETN that is tied to a specific market benchmark or strategy may not be able to replicate and maintain exactly the composition and relative
weighting of securities, commodities or other components in the applicable market benchmark or strategy. Some ETNs that use leverage
can, at times, be relatively illiquid, and thus they may be difficult to purchase or sell at a fair price. Leveraged ETNs are subject
to the same risk as other instruments that use leverage in any form. The market value of ETNs may differ from their market benchmark
or strategy. This difference in price may be due to the fact that the supply and demand in the market for ETNs at any point in time is
not always identical to the supply and demand in the market for the securities, commodities or other components underlying the market
benchmark or strategy that the ETN seeks to track. As a result, there may be times when an ETN trades at a premium or discount to its
market benchmark or strategy.
United
States Government Obligations
These
consist of various types of marketable securities issued by the United States Treasury, i.e., bills, notes and bonds. Such securities
are direct obligations of the United States government and differ mainly in the length of their maturity. Treasury bills, the most frequently
issued marketable government security, have a maturity of up to one year and are issued on a discount basis. The Funds may also invest
in Treasury Inflation-Protected Securities (TIPS). TIPS are special types of treasury bonds that were created in order
to offer bond investors protection from inflation. The values of the TIPS are automatically adjusted to the inflation rate as measured
by the Consumer Price Index (CPI). If the CPI goes up by half a percent, the value of the bond (the TIPS) would also go
up by half a percent. If the CPI falls, the value of the bond does not fall because the government guarantees that the original investment
will stay the same. TIPS decline in value when real interest rates rise. However, in certain interest rate environments, such as when
real interest rates are rising faster than nominal interest rates, TIPS may experience greater losses than other fixed income securities
with similar duration.
United
States Government Agency Obligations
These
consist of debt securities issued by agencies and instrumentalities of the United States government, including the various types of instruments
currently outstanding or which may be offered in the future. Agencies include, among others, the Federal Housing Administration, Government
National Mortgage Association (GNMA), Farmers Home Administration, Export-Import Bank of the United States, Maritime Administration,
and General Services Administration. Instrumentalities include, for example, each of the Federal Home Loan Banks, the National Bank for
Cooperatives, the Federal Home Loan Mortgage Corporation (FHLMC), the Farm Credit
Banks,
the Federal National Mortgage Association (FNMA), and the United States Postal Service. These securities are either: (i)
backed by the full faith and credit of the United States government (e.g., United States Treasury Bills); (ii) guaranteed by the United
States Treasury (e.g., GNMA mortgage-backed securities); (iii) supported by the issuing agencys or instrumentalitys right to borrow
from the United States Treasury (e.g., FNMA Discount Notes); or (iv) supported only by the issuing agencys or instrumentalitys own
credit (e.g., Tennessee Valley Association). On September 7, 2008, the U.S. Treasury Department and the Federal Housing Finance Authority
(the FHFA) announced that FNMA and FHLMC had been placed into conservatorship, a statutory process designed to stabilize
a troubled institution with the objective of returning the entity to normal business operations. The U.S. Treasury Department and the
FHFA at the same time established a secured lending facility and a Secured Stock Purchase Agreement with both FNMA and FHLMC to ensure
that each entity had the ability to fulfill its financial obligations. The FHFA announced that it does not anticipate any disruption
in pattern of payments or ongoing business operations of FNMA and FHLMC.
Government-related
guarantors (i.e., not backed by the full faith and credit of the United States government) include FNMA and FHLMC. FNMA is a government-sponsored
corporation owned entirely by private stockholders. It is subject to general regulation by the Secretary of Housing and Urban Development.
FNMA purchases conventional (i.e., not insured or guaranteed by any government agency) residential mortgages from a list of approved
seller/servicers which include state and federally chartered savings and loan associations, mutual savings banks, commercial banks and
credit unions and mortgage bankers. Pass-through securities issued by FNMA are guaranteed as to timely payment of principal and interest
by FNMA but are not backed by the full faith and credit of the United States government.
FHLMC
was created by Congress in 1970 for the purpose of increasing the availability of mortgage credit for residential housing. It is a government-sponsored
corporation formerly owned by the twelve Federal Home Loan Banks and now owned entirely by private stockholders. FHLMC issues Participation
Certificates (PCs), which represent interests in conventional mortgages from FHLMCs national portfolio. FHLMC guarantees
the timely payment of interest and ultimate collection of principal, but PCs are not backed by the full faith and credit of the United
States government. Commercial banks, savings and loan institutions, private mortgage insurance companies, mortgage bankers and other
secondary market issuers also create pass-through pools of conventional residential mortgage loans. Such issuers may, in addition, be
the originators and/or servicers of the underlying mortgage loans as well as the guarantors of the mortgage-related securities. Pools
created by such nongovernmental issuers generally offer a higher rate of interest than government and government-related pools because
there are no direct or indirect government or agency guarantees of payments in the former pools. However, timely payment of interest
and principal of these pools may be supported by various forms of insurance or guarantees, including individual loan, title, pool and
hazard insurance and letters of credit. The insurance and guarantees are issued by governmental entities, private insurers and the mortgage
poolers.
Securities
of Other Investment Companies
The
Funds may invest in securities issued by other investment companies. Each Fund intends to limit its investments in accordance with applicable
law or as permitted by Rule 12d1-4. Among other things, such law would limit these investments so that, as determined immediately after
a securities purchase is made by the Fund: (a) not more than 5% of the value of its total assets will be invested in the securities of
any one investment company (the 5% Limitation); (b) not more than 10% of the value of its total assets will be invested in
the aggregate in securities of investment companies as a group (the 10% Limitation); (c) not more than 3% of the outstanding
voting stock of any one investment company will be owned by the Fund (the 3% Limitation); and (d) not more than 10% of the
outstanding voting stock of any one closed-end investment company will be owned by the Fund together with all other investment companies
that have the same advisor. Under certain sets of conditions, different sets of restrictions may be applicable. As a shareholder of another
investment company, a Fund would bear, along with other shareholders, its proportionate share of that investment companys expenses,
including advisory fees. These expenses would be in addition to the advisory and other expenses that a Fund bears directly in connection
with its own operations. Investment companies in which a Fund may invest may also impose a sales or distribution charge in connection
with the purchase or redemption of their shares and other types of commissions or charges. Such charges will be payable by the Fund and,
therefore, will be borne directly by the Funds shareholders.
To
the extent applicable, the Funds intend to rely on Section 12(d)(1)(F) and Rule 12d1-4 under the 1940 Act which in conjunction with one
another allow registered investment companies (such as the Funds) to exceed the 3%, 5% and 10% Limitations , provided the aggregate sales
loads any investor pays (i.e., the combined distribution expenses of both the acquiring fund and the acquired funds) do not exceed the
limits on sales loads established by the Financial Industry Regulatory Authority (FINRA) for funds of funds, and the registered
investment company mirror votes any securities purchased pursuant to Section 12(d)(1)(F).
Closed-End
Investment Companies
The
Funds may invest its assets in closed-end investment companies (or closed-end funds), subject to the investment
restrictions set forth above. Shares of closed-end funds are typically offered to the public in a one-time initial public offering by
a group of underwriters who retain a spread or underwriting commission of between 4% or 6% of the initial public offering price. Such
securities are then listed for trading on the New York Stock Exchange, the National Association of Securities Dealers Automated Quotation
System (commonly known as NASDAQ) and, in some cases, may be traded in other over-the-counter markets. Because the shares
of closed-end funds cannot be redeemed upon demand to the issuer like the shares of an open-end investment company (such as a Fund),
investors seek to buy and sell shares of closed-end funds in the secondary market.
The
Funds generally purchase shares of closed-end funds only in the secondary market. Each Fund incurs normal brokerage costs on such purchases
similar to the expenses each Fund would incur for the purchase of securities of any other type of issuer in the secondary market. Each
Fund may, however, also purchase securities of a closed-end fund in an initial public offering when, in the opinion of the Funds
Adviser, based on a consideration of the nature of the closed-end funds proposed investments, the prevailing market conditions and the
level of demand for such securities, they represent an attractive opportunity for growth of capital. The initial offering price typically
will include a dealer spread, which may be higher than the applicable brokerage cost if a Fund purchased such securities in the secondary
market.
The
shares of many closed-end funds, after their initial public offering, frequently trade at a price per share, which is less than the net
asset value (NAV) per share, the difference representing the market discount of such shares. This market discount
may be due in part to the investment objective of long-term appreciation, which is sought by many closed-end funds, as well as to the
fact that the shares of closed-end funds are not redeemable by the holder upon demand to the issuer at the next determined NAV but rather
are subject to the principles of supply and demand in the secondary market. A relative lack of secondary market purchasers of closed-end
fund shares also may contribute to such shares trading at a discount to their NAV.
The
Funds may invest in shares of closed-end funds that are trading at a discount to NAV or at a premium to NAV. There can be no assurance
that the market discount on shares of any closed-end fund purchased by each Fund will ever decrease. In fact, it is possible that this
market discount may increase and a Fund may suffer realized or unrealized capital losses due to further decline in the market price of
the securities of such closed-end funds, thereby adversely affecting the NAV of the Funds shares. Similarly, there can be no assurance
that any shares of a closed-end fund purchased by each Fund at a premium will continue to trade at a premium or that the premium will
not decrease subsequent to a purchase of such shares by the Fund.
Closed-end
funds may issue senior securities (including preferred stock and debt obligations) for the purpose of leveraging the closed-end funds
common shares in an attempt to enhance the current return to such closed-end funds common shareholders. A Funds investment in
the common shares of closed-end funds that are financially leveraged may create an opportunity for greater total return on its investment,
but at the same time may be expected to exhibit more volatility in market price and NAV than an investment in shares of investment companies
without a leveraged capital structure.
Open-End
Investment Companies
Under
certain circumstances, an underlying fund may determine to make payment of a redemption by a Fund wholly or partly by a distribution
in kind of securities from its portfolio, in lieu of cash, in conformity with the rules of the SEC. In such cases, the Funds may hold
securities distributed by an underlying fund until the Adviser determines that it is appropriate to dispose of such securities.
Investment
decisions by the investment advisers of the underlying fund(s) are made independently of the Funds and the Adviser. Therefore, the investment
adviser of one underlying fund may be purchasing shares of the same issuer whose shares are being sold by the investment adviser of another
such fund. The result would be an indirect expense to a Fund without accomplishing any investment purpose.
Exchange
Traded Funds (ETFs)
ETFs
are generally passive funds that track their related index and have the flexibility of trading like a security. They are managed by professionals
and provide the investor with diversification, cost and tax efficiency, liquidity, marginability, are useful for hedging, have the ability
to go long and short, and some provide quarterly dividends. Additionally, some ETFs are unit investment trusts. ETFs typically have two
markets. The primary market is where institutions swap creation units in block-multiples of, for example, 50,000 shares for
in-kind securities and cash in the form of dividends. The secondary market is where individual investors can trade as little as a single
share during trading hours on the exchange. This is different from open-ended mutual funds that are traded after hours once the NAV is
calculated. ETFs share many similar risks with open-end and closed-end funds.
Foreign
Securities
General.
The Funds may invest in foreign securities and ETFs and other investment companies that hold a portfolio of foreign securities. Investing
in securities of foreign companies and countries involves certain considerations and risks that are not typically associated with investing
in U.S. government securities and securities of domestic companies. There may be less publicly available information about a foreign
issuer than a domestic one, and foreign companies are not generally subject to uniform accounting, auditing and financial standards and
requirements comparable to those applicable to U.S. companies. There may also be less government supervision and regulation of foreign
securities exchanges, brokers and listed companies than exists in the United States. Interest and dividends paid by foreign issuers may
be subject to withholding and other foreign taxes, which may decrease the net return on such investments as compared to dividends and
interest paid to a Fund by domestic companies or the U.S. government. There may be the possibility of expropriations, seizure or nationalization
of foreign deposits, confiscatory taxation, political, economic or social instability or diplomatic developments that could affect assets
of each Fund held in foreign countries. Finally, the establishment of exchange controls or other foreign governmental laws or restrictions
could adversely affect the payment of obligations.
To
the extent a Funds currency exchange transactions do not fully protect it against adverse changes in currency exchange rates, decreases
in the value of currencies of the foreign countries in which each Fund will invest relative to the U.S. dollar will result in a corresponding
decrease in the U.S. dollar value of the Funds assets denominated in those currencies (and possibly a corresponding increase in
the amount of securities required to be liquidated to meet distribution requirements). Conversely, increases in the value of currencies
of the foreign countries in which a Fund invests relative to the U.S. dollar will result in a corresponding increase in the U.S. dollar
value of the Funds assets (and possibly a corresponding decrease in the amount of securities to be liquidated).
Securities
Options
The
Funds may purchase and write (i.e., sell) put and call options. Such options may relate to particular securities or stock indices, and
may or may not be listed on a domestic or foreign securities exchange and may or may not be issued by the Options Clearing Corporation.
Options trading is a highly specialized activity that entails greater than ordinary investment risk. Options may be more volatile than
the underlying instruments, and therefore, on a percentage basis, an investment in options may be subject to greater fluctuation than
an investment in the underlying instruments themselves.
A
call option for a particular security gives the purchaser of the option the right to buy, and the writer (seller) the obligation to sell,
the underlying security at the stated exercise price at any time prior to the expiration of the option, regardless of the market price
of the security. The premium paid to the writer is in consideration for undertaking the obligation under the option contract. A put option
for a particular security gives the purchaser the right to sell the security at the stated exercise price at any time prior to the expiration
date of the option, regardless of the market price of the security.
Stock
index options are put options and call options on various stock indices. In most respects, they are identical to listed options on common
stocks. The primary difference between stock options and index options occurs when index options are exercised. In the case of stock
options, the underlying security, common stock, is delivered. However, upon the exercise of an index option, settlement does not occur
by delivery of the securities comprising the index. The option holder who exercises the index option receives an amount of cash if the
closing level of the stock index upon which the option is based is greater than, in the case of a call, or less than, in the case of
a put, the exercise price of the option. This amount of cash is equal to the difference between the closing price of the stock index
and the exercise price of the option expressed in dollars times a specified multiple. A stock index fluctuates with changes in the market
value of the stocks included in the index. For example, some stock index options are based on a broad market index, such as the Standard
& Poors 500® Index or the Value Line Composite Index or a narrower market index, such as the Standard & Poors 100®.
Indices may also be based on an industry or market segment, such as the NYSE Arca Oil Index. Options on stock indices are currently traded
on the Chicago Board Options Exchange, the New York Stock Exchange, and NASDAQ OMX PHLX.
A
Funds obligation to sell an instrument subject to a call option written by it, or to purchase an instrument subject to a put option
written by it, may be terminated prior to the expiration date of the option by the Funds execution of a closing purchase transaction,
which is effected by purchasing on an exchange an option of the same series (i.e., same underlying instrument, exercise price
and expiration date) as the option previously written. A closing purchase transaction will ordinarily be effected to realize a profit
on an outstanding option, to prevent an underlying instrument from being called, to permit the sale of the underlying instrument or to
permit the writing of a new option containing different terms on such underlying instrument. The cost of such a liquidation purchase
plus transactions costs may be greater than the premium received upon the original option, in which event a Fund will have paid a loss
in the transaction. There is no assurance that a liquid secondary market will exist for any particular option. An option writer unable
to effect
a
closing purchase transaction will not be able to sell the underlying instrument until the option expires or the optioned instrument is
delivered upon exercise. In such circumstances, the writer will be subject to the risk of market decline or appreciation in the instrument
during such period.
If
an option purchased by a Fund expires unexercised, the Fund realizes a loss equal to the premium paid. If a Fund enters into a closing
sale transaction on an option purchased by it, the Fund will realize a gain if the premium received by the Fund on the closing transaction
is more than the premium paid to purchase the option, or a loss if it is less. If an option written by a Fund expires on the stipulated
expiration date or if a Fund enters into a closing purchase transaction, it will realize a gain (or loss if the cost of a closing purchase
transaction exceeds the net premium received when the option is sold). If an option written by a Fund is exercised, the proceeds of the
sale will be increased by the net premium originally received and the Fund will realize a gain or loss.
Certain
Risks Regarding Options
There
are several risks associated with transactions in options. For example, there are significant differences between the securities and
options markets that could result in an imperfect correlation between these markets, causing a given transaction not to achieve its objectives.
In addition, a liquid secondary market for particular options, whether traded over-the-counter or on an exchange, may be absent for reasons
which include the following: there may be insufficient trading interest in certain options; restrictions may be imposed by an exchange
on opening transactions or closing transactions or both; trading halts, suspensions or other restrictions may be imposed with respect
to particular classes or series of options or underlying securities or currencies; unusual or unforeseen circumstances may interrupt
normal operations on an exchange; the facilities of an exchange or the Options Clearing Corporation may not at all times be adequate
to handle current trading value; or one or more exchanges could, for economic or other reasons, decide or be compelled at some future
date to discontinue the trading of options (or a particular class or series of options), in which event the secondary market on that
exchange (or in that class or series of options) would cease to exist, although outstanding options that had been issued by the Options
Clearing Corporation as a result of trades on that exchange would continue to be exercisable in accordance with their terms.
Successful
use by a Fund of options on stock indices will be subject to the ability of the Adviser to correctly predict movements in the directions
of the stock market. This requires different skills and techniques than predicting changes in the prices of individual securities. In
addition, a Funds ability to effectively hedge all or a portion of the securities in its portfolio, in anticipation of or during a market
decline, through transactions in put options on stock indices, depends on the degree to which price movements in the underlying index
correlate with the price movements of the securities held by the Fund. Inasmuch as a Funds securities will not duplicate the components
of an index, the correlation will not be perfect. Consequently, each Fund bears the risk that the prices of its securities being hedged
will not move in the same amount as the prices of its put options on the stock indices. It is also possible that there may be a negative
correlation between the index and the Funds securities that would result in a loss on both such securities and the options on
stock indices acquired by each Fund.
The
hours of trading for options may not conform to the hours during which the underlying securities are traded. To the extent that the options
markets close before the markets for the underlying securities, significant price and rate movements can take place in the underlying
markets that cannot be reflected in the options markets. The purchase of options is a highly specialized activity that involves investment
techniques and risks different from those associated with ordinary portfolio securities transactions. The purchase of stock index options
involves the risk that the premium and transaction costs paid by a Fund in purchasing an option will be lost as a result of unanticipated
movements in prices of the securities comprising the stock index on which the option is based.
There
is no assurance that a liquid secondary market on an options exchange will exist for any particular option, or at any particular time,
and for some options no secondary market on an exchange or elsewhere may exist. If a Fund is unable to close out a call option on securities
that it has written before the option is exercised, the Fund may be required to purchase the optioned securities in order to satisfy
its obligation under the option to deliver such securities. If a Fund is unable to effect a closing sale transaction with respect to
options on securities that it has purchased, it would have to exercise the option in order to realize any profit and would incur transaction
costs upon the purchase and sale of the underlying securities.
Cover
for Options Positions
Transactions
using options (other than options that a Fund has purchased) expose the Funds to an obligation to another party. The Funds will not enter
into any such transactions unless they own either (i) an offsetting (covered) position in securities or other options or
(ii) cash or liquid securities with a value sufficient at all times to cover its potential obligations not covered as provided in (i)
above.
Options
on Futures Contracts
The
Funds may purchase and sell options on the same types of futures in which it may invest. Options on futures are similar to options on
underlying instruments except that options on futures give the purchaser the right, in return for the premium paid, to assume a position
in a futures contract (a long position if the option is a call and a short position if the option is a put), rather than to purchase
or sell the futures contract, at a specified exercise price at any time during the period of the option. Upon exercise of the option,
the delivery of the futures position by the writer of the option to the holder of the option will be accompanied by the delivery of the
accumulated balance in the writers futures margin account which represents the amount by which the market price of the futures contract,
at exercise, exceeds (in the case of a call) or is less than (in the case of a put) the exercise price of the option on the futures contract.
Purchasers of options who fail to exercise their options prior to the exercise date suffer a loss of the premium paid.
Dealer
Options
The
Funds may engage in transactions involving dealer options as well as exchange-traded options. Certain additional risks are specific to
dealer options. While the Funds might look to a clearing corporation to exercise exchange-traded options, if a Fund were to purchase
a dealer option it would need to rely on the dealer from which it purchased the option to perform if the option were exercised. Failure
by the dealer to do so would result in the loss of the premium paid by a Fund as well as loss of the expected benefit of the transaction.
Exchange-traded
options generally have a continuous liquid market while dealer options may not. Consequently, each Fund may generally be able to realize
the value of a dealer option it has purchased only by exercising or reselling the option to the dealer who issued it. Similarly, when
each Fund writes a dealer option, it may generally be able to close out the option prior to its expiration only by entering into a closing
purchase transaction with the dealer to whom each Fund originally wrote the option. While each Fund will seek to enter into dealer options
only with dealers who will agree to and which are expected to be capable of entering into closing transactions with each Fund, there
can be no assurance that each Fund will at any time be able to liquidate a dealer option at a favorable price at any time prior to expiration.
Unless each Fund, as a covered dealer call option writer, is able to effect a closing purchase transaction, it will not be able to liquidate
securities (or other assets) used as cover until the option expires or is exercised. In the event of insolvency of the other party, each
Fund may be unable to liquidate a dealer option. With respect to options written by a Fund, the inability to enter into a closing transaction
may result in material losses to a Fund.
The
Staff of the SEC has taken the position that purchased dealer options are illiquid securities. In such cases, the dealer option would
be considered illiquid only to the extent the maximum purchase price under the formula exceeds the intrinsic value of the option. Accordingly,
each Fund will treat dealer options as subject to the Funds limitation on illiquid securities. If the SEC changes its position
on the liquidity of dealer options, each Fund will change its treatment of such instruments accordingly.
Futures
Contracts
A
futures contract provides for the future sale by one party and purchase by another party of a specified amount of a specific financial
instrument (e.g., units of a stock index) for a specified price, date, time and place designated at the time the contract is made. Brokerage
fees are paid when a futures contract is bought or sold and margin deposits must be maintained. Entering into a contract to buy is commonly
referred to as buying or purchasing a contract or holding a long position. Entering into a contract to sell is commonly referred to as
selling a contract or holding a short position.
Unlike
when a Fund purchases or sells a security, no price would be paid or received by a Fund upon the purchase or sale of a futures contract.
The margin required for a particular futures contract is set by the exchange on which the contract is traded, and may be significantly
modified from time to time by the exchange during the term of the contract. Futures contracts are customarily purchased and sold on margins
that may range upward from less than 5% of the value of the contract being traded.
If
the price of an open futures contract changes (by increase in underlying instrument or index in the case of a sale or by decrease in
the case of a purchase) so that the loss on the futures contract reaches a point at which the margin on deposit does not satisfy margin
requirements, the broker will require an increase in the margin. However, if the value of a position increases because of favorable price
changes in the futures contract so that the margin deposit exceeds the required margin, the broker will pay the excess to each Fund.
These
subsequent payments, called variation margin, to and from the futures broker, are made on a daily basis as the price of the
underlying assets fluctuate making the long and short positions in the futures contract more or less valuable, a process known as marking
to the market. Each Fund expects to earn interest income on its margin deposits.
Although
certain futures contracts, by their terms, require actual future delivery of and payment for the underlying instruments, in practice
most futures contracts are usually closed out before the delivery date. Closing out an open futures contract purchase or sale is effected
by entering into an offsetting futures contract sale or purchase, respectively, for the same aggregate amount of the identical underlying
instrument or index and the same delivery date. If the offsetting purchase price is less than the original sale price, a Fund realizes
a gain; if it is more, the Fund realizes a loss. Conversely, if the offsetting sale price is more than the original purchase price, a
Fund realizes a gain; if it is less, the Fund realizes a loss. The transaction costs must also be included in these calculations. There
can be no assurance, however, that a Fund will be able to enter into an offsetting transaction with respect to a particular futures contract
at a particular time. If a Fund is not able to enter into an offsetting transaction, the applicable Fund will continue to be required
to maintain the margin deposits on the futures contract.
Settlement
of a stock index futures contract may or may not be in the underlying instrument or index. If not in the underlying instrument or index,
then settlement will be made in cash, equivalent over time to the difference between the contract price and the actual price of the underlying
asset at the time the stock index futures contract expires.
Swap
Agreements
The
Funds may enter into swap agreements for purposes of attempting to gain exposure to equity, debt, commodities or other asset markets
without actually purchasing those assets, or to hedge a position. Swap agreements are two-party contracts entered into primarily by institutional
investors for periods ranging from a day to more than one year. In a standard swap transaction, two parties agree to exchange
the returns (or differentials in rates of return) earned or realized on particular predetermined investments or instruments. The gross
returns to be exchanged or swapped between the parties are calculated with respect to a notional amount, i.e.,
the return on or increase in value of a particular dollar amount invested in a basket of securities representing a particular
index.
Most
swap agreements entered into by the Funds calculate the obligations of the parties to the agreement on a net basis. Consequently,
the Funds current obligations (or rights) under a swap agreement will generally be equal only to the net amount to be paid or
received under the agreement based on the relative values of the positions held by each party to the agreement (the net amount).
Payments may be made at the conclusion of a swap agreement or periodically during its term.
Swap
agreements do not involve the delivery of securities or other underlying assets. Accordingly, if a swap is entered into on a net basis,
if the other party to a swap agreement defaults, a Funds risk of loss consists of the net amount of payments that the Fund is contractually
entitled to receive, if any.
The
net amount of the excess, if any, of a Funds obligations over its entitlements with respect to a swap agreement entered into on
a net basis will be accrued daily and an amount of cash or liquid asset having an aggregate NAV at least equal to the accrued excess
will be maintained in an account with the custodian (as defined under the section entitled Custodian). Each Fund will also
establish and maintain such accounts with respect to its total obligations under any swaps that are not entered into on a net basis.
Obligations under swap agreements so covered will not be construed to be senior securities for purposes of the Funds
investment restriction concerning senior securities.
Because
they are two-party contracts and because they may have terms of greater than seven days, swap agreements may be considered to be illiquid
for the Funds illiquid investment limitations. The Funds will not enter into any swap agreement unless the Adviser believes that
the other party to the transaction is creditworthy. The Funds bear the risk of loss of the amount expected to be received under a swap
agreement in the event of the default or bankruptcy of a swap agreement counterparty.
Each
Fund may enter into a swap agreement in circumstances where the Adviser believes that it may be more cost effective or practical than
buying the securities represented by such index or a futures contract or an option on such index. The counterparty to any swap agreement
will typically be a bank, investment banking firm or broker/dealer. The counterparty will generally agree to pay the Fund the amount,
if any, by which the notional amount of the swap agreement would have increased in value had it been invested in the particular stocks
represented in the index, plus the dividends that would have been received on those stocks. A Fund will agree to pay to the counterparty
a floating rate of interest on the notional amount of the swap agreement plus the amount, if any, by which the notional amount would
have decreased in value had it been invested in such stocks. Therefore, the return to a Fund on any swap agreement should be the gain
or loss on the notional amount plus dividends on the stocks less the interest paid by the Fund on the notional amount.
The
swap market has grown substantially in recent years with a large number of banks and investment banking firms acting both as principals
and as agents utilizing standardized swap documentation. As a result, the swap market has become relatively liquid in comparison with
the markets for other similar instruments that are traded in the over-the-counter market.
Regulation
as a Commodity Pool Operator
The
Adviser, on behalf of the Funds, has filed with the National Futures Association, a notice claiming an exclusion from the definition
of the term commodity pool operator under the Commodity Exchange Act, as amended, and the rules of the Commodity Futures
Trading Commission promulgated thereunder, with respect to the Funds operations. Accordingly, the Funds are not currently subject to
registration or regulation as a commodity pool operator.
When-Issued,
Forward Commitments and Delayed Settlements
The
Funds may purchase and sell securities on a when-issued, forward commitment or delayed settlement basis. The Funds do not intend to engage
in these transactions for speculative purposes but only in furtherance of its investment objectives.
The
Funds will purchase securities on a when-issued, forward commitment or delayed settlement basis only with the intention of completing
the transaction. If deemed advisable as a matter of investment strategy, however, a Fund may dispose of or renegotiate a commitment after
it is entered into, and may sell securities it has committed to purchase before those securities are delivered to the Fund on the settlement
date. In these cases, a Fund may realize a taxable capital gain or loss. When a Fund engages in when-issued, forward commitments and
delayed settlement transactions, it relies on the other party to consummate the trade. Failure of such party to do so may result in the
Fund incurring a loss or missing an opportunity to obtain a price credited to be advantageous.
The
market value of the securities underlying a when-issued purchase, forward commitment to purchase securities, or a delayed settlement
and any subsequent fluctuations in their market value, is taken into account when determining the market value of each Fund starting
on the day the Fund agrees to purchase the securities. Each Fund does not earn interest on the securities it has committed to purchase
until it has paid for and delivered on the settlement date.
Illiquid
and Restricted Securities
Each
Fund may invest up to 15% of its net assets in illiquid investments. Illiquid investments include securities subject to contractual or
legal restrictions on resale (e.g., because they have not been registered under the Securities Act) and securities that are otherwise
not readily marketable (e.g., because trading in the security is suspended or because market makers do not exist or will not entertain
bids or offers). Securities that have not been registered under the Securities Act are referred to as private placements or restricted
securities and are purchased directly from the issuer or in the secondary market. Foreign securities that are freely tradable in their
principal markets are not considered to be illiquid.
Restricted
securities and other illiquid investments may be subject to the potential for delays on resale and uncertainty in valuation. The Funds
might be unable to dispose of illiquid investments promptly or at reasonable prices and might thereby experience difficulty in satisfying
redemption requests from shareholders. The Funds might have to register restricted securities in order to dispose of them, resulting
in additional expense and delay. Adverse market conditions could impede such a public offering of securities.
A
large institutional market exists for certain securities that are not registered under the Securities Act, including foreign securities.
The fact that there are contractual or legal restrictions on resale to the general public or to certain institutions may not be indicative
of the liquidity of such investments. Rule 144A under the Securities Act allows such a broader institutional trading market for securities
otherwise subject to restrictions on resale to the general public. Rule 144A establishes a safe harbor from the registration
requirements of the Securities Act for resale of certain securities to qualified institutional buyers. Rule 144A has produced enhanced
liquidity for many restricted securities, and market liquidity for such securities may continue to expand as a result of this regulation
and the consequent existence of the PORTAL system, which is an automated system for the trading, clearance and settlement of unregistered
securities of domestic and foreign issuers sponsored by the Financial Industry Regulatory Authority, Inc. (FINRA).
Under
guidelines adopted by the Board, the Adviser may determine that particular Rule 144A securities, and commercial paper issued in reliance
on the private placement exemption from registration afforded by Section 4(a)(2) of the Securities Act, are liquid even though they are
not registered. A determination of whether such a security is liquid or not is a question of fact. In making this determination, the
Adviser considers, as it deems appropriate under the circumstances and among other factors: (1) the frequency of
trades
and quotes for the security; (2) the number of dealers willing to purchase or sell the security; (3) the number of other potential purchasers
of the security; (4) dealer undertakings to make a market in the security; (5) the nature of the security (e.g., debt or equity, date
of maturity, terms of dividend or interest payments, and other material terms) and the nature of the marketplace trades (e.g., the time
needed to dispose of the security, the method of soliciting offers, and the mechanics of transfer); and (6) the rating of the security
and the financial condition and prospects of the issuer. In the case of commercial paper, the Adviser also determines that the paper
(1) is not traded flat or in default as to principal and interest, and (2) is rated in one of the two highest rating categories by at
least two nationally recognized statistical rating organizations (NRSROs) or, if only one NRSRO rates the security, by that
NRSRO, or, if the security is unrated, the Adviser determines that it is of equivalent quality.
Rule
144A securities and Section 4(a)(2) commercial paper that have been deemed liquid as described above will continue to be monitored by
the Adviser to determine if the security is no longer liquid as the result of changed conditions. Investing in Rule 144A securities or
Section 4(a)(2) commercial paper could have the effect of increasing the amount of a Funds assets invested in illiquid securities if
institutional buyers are unwilling to purchase such securities.
Lending
Portfolio Securities
For
the purpose of achieving income, a Fund may lend its portfolio securities, provided (1) the loan is secured continuously by collateral
consisting of U.S. government securities or cash or cash equivalents (cash, U.S. government securities, negotiable certificates of deposit,
bankers acceptances or letters of credit) maintained on a daily mark-to-market basis in an amount at least equal to the current market
value of the securities loaned, (2) the Fund may at any time call the loan and obtain the return of securities loaned, (3) the Fund will
receive any interest or dividends received on the loaned securities, and (4) the aggregate value of the securities loaned will not at
any time exceed one-third of the total assets of the Funds.
Short
Sales
Short
Sales (excluding Short Sales Against the Box). The Funds may sell securities short. A short sale is a transaction in
which a Fund sells securities it does not own in anticipation of a decline in the market price of the securities.
To
deliver the securities to the buyer, a Fund must arrange through a broker to borrow the securities and, in so doing, the Fund becomes
obligated to replace the securities borrowed at their market price at the time of replacement, whatever that price may be. The Funds
will make a profit or incur a loss as a result of a short sale depending on whether the price of the securities decreases or increases
between the date of the short sale and the date on which the Fund purchases the security to replace the borrowed securities that have
been sold. The amount of any loss would be increased (and any gain decreased) by any premium or interest a Fund is required to pay in
connection with a short sale.
Each
Funds obligation to replace the securities borrowed in connection with a short sale will be secured by cash or liquid securities
deposited as collateral with the broker.
Short
Sales Against the Box. The Funds may engage in short sales against the box. In a short sale, a Fund sells
a borrowed security and has a corresponding obligation to the lender to return the identical security. The seller does not immediately
deliver the securities sold and is said to have a short position in those securities until delivery occurs. A Fund may engage in a short
sale if at the time of the short sale the Fund owns or has the right to obtain without additional cost an equal amount of the security
being sold short. This investment technique is known as a short sale against the box. It may be entered into by a Fund
to, for example, lock in a sale price for a security the Fund does not wish to sell immediately.
Each
Fund may make a short sale as a hedge, when it believes that the price of a security may decline, causing a decline in the value of a
security owned by a Fund (or a security convertible or exchangeable for such security). In such case, any future losses in a Funds
long position should be offset by a gain in the short position and, conversely, any gain in the long position should be reduced by a
loss in the short position. The extent to which such gains or losses are reduced will depend upon the amount of the security sold short
relative to the amount the Funds own. There will be certain additional transaction costs associated with short sales against the
box, but the Funds will endeavor to offset these costs with the income from the investment of the cash proceeds of short sales.
If
a Fund effects a short sale of securities at a time when it has an unrealized gain on the securities, it may be required to recognize
that gain as if it had actually sold the securities (as a constructive sale) on the date it effects the short sale. However,
such constructive sale treatment may not apply if the Fund closes out the short sale with securities other than the appreciated securities
held at the time of
the
short sale and if certain other conditions are satisfied. Uncertainty regarding the tax consequences of effecting short sales may limit
the extent to which the Fund may effect short sales.
The
Funds may engage in a high level of trading in seeking to achieve its investment objectives. The portfolio turnover rate for the Funds
is calculated by dividing the lesser of the purchases or sales of portfolio investments for the reporting period by the monthly average
value of the portfolio investments owned during the reporting period. A 100% portfolio turnover rate results, for example, if the equivalents
of all the securities in a Funds portfolio are replaced in a one-year period. The calculation excludes all securities, including
options, whose maturities or expiration dates at the time of acquisition are one year or less. Portfolio turnover may vary greatly from
year to year as well as within a particular year and may be affected by cash requirements for redemption or shares. The Funds are not
restricted by policy with regard to portfolio turnover and will make changes in its investment portfolio from time to time as business
and economic conditions as well as market prices may dictate.
The
table below displays the portfolio turnover rates for each Fund for the fiscal years ended September 30:
Fund | Portfolio Turnover Rates |
|
2022 | 2023 | |
Counterpoint Tactical Income Fund |
493% | [ ]% |
Counterpoint Tactical Equity Fund |
350% | [ ]% |
Counterpoint Tactical Municipal Fund |
563% | [ ]% |
The
Funds increase in portfolio turnover over the past fiscal year was due to increased trading activity as well as the increased use
of cash positions in each Fund. The SEC calculation methodology for turnover reduces the denominator by excluding cash or short-term
holdings, and thus overstates turnover ratios relative to more conventionally accepted measures of turnover which use the total net asset
value of the fund. For each product, the turnover ratio using this more conventional methodology of using ending month total net asset
value as denominator would be significantly lower, at [ ] % for Counterpoint Tactical Income Fund, [ ] %
for Counterpoint Tactical Equity Fund, and [ ] % for Counterpoint Tactical Municipal Fund.
INVESTMENT RESTRICTIONS |
Each
Fund has adopted the following investment restrictions that may not be changed without approval by a majority of the outstanding
shares of the Fund which, as used in this SAI, means the vote of the lesser of (a) 67% or more of the shares of the Fund represented
at a meeting, if the holders of more than 50% of the outstanding shares of the Fund are present or represented by proxy, or (b) more
than 50% of the outstanding shares of the Fund. Unless otherwise noted, each Fund may not:
1. | 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 the Funds, provided that the Funds engagement in such activities is consistent with or permitted by the 1940 Act, the rules and regulations promulgated thereunder or interpretations of the SEC or its staff; |
2. | 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 Funds; 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 Funds total assets at the time when the borrowing is made. This limitation does not preclude the Funds from entering into reverse repurchase transactions, provided that each Fund has an asset coverage of 300% for all borrowings and repurchase commitments of the Fund pursuant to reverse repurchase transactions; |
3. | Purchase securities on margin, participate on a joint or joint and several basis in any securities trading account, or underwrite securities. The limitation does not preclude the Funds from obtaining such short-term credit as may be necessary for the clearance of purchases and sales of its portfolio securities, and except to the extent that the Funds may be deemed an underwriter under the Securities Act by virtue of disposing of portfolio securities; |
4. | Purchase or sell real estate or interests in real estate. This limitation is not applicable to investments in marketable securities that are secured by or represent interests in real estate. This limitation does not preclude the Funds 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 real estate investment trusts); |
5. | Invest 25% or more of the market value of its assets in the securities of companies engaged in any one industry (does not apply to investment in the securities of the U.S. government, its agencies or instrumentalities); |
6. | Purchase or sell commodities (unless acquired as a result of ownership of securities or other investments or through commodity forward contracts, futures contracts or options), except that the Fund may purchase and sell forward and futures contracts and options to the full extent permitted under the 1940 Act, sell foreign currency contracts in accordance with any rules of the Commodity Futures Trading Commission, invest in securities or other instruments backed by commodities, and invest in companies that are engaged in a commodities business or have a significant portion of their assets in commodities; or |
7. | The Counterpoint Tactical Income Fund may not make loans to others, except (a) through the purchase of debt securities in accordance with its investment objectives and policies, (b) to the extent the entry into a repurchase agreement is deemed to be a loan, and (c) by loaning portfolio securities. The Counterpoint Tactical Equity Fund may not make loans to others, except (a) where each loan is represented by a note executed by the borrower, (b) through the purchase of debt securities in accordance with its investment objectives and policies, (c) to the extent the entry into a repurchase agreement, in a manner consistent with the Funds investment policies or as otherwise permitted under the 1940 Act, is deemed to be a loan, and (d) by loaning portfolio securities. |
With
respect to interpretations of the SEC or its staff described in paragraph number 1 and 6 above, the SEC and its staff have identified
various securities trading practices and derivative instruments used by mutual funds that give rise to potential senior security issues
under Section 18(f) of the 1940 Act. The Funds observe the following policies, which are not deemed fundamental and which may be changed
without shareholder vote. The Funds may not:
1. | Invest in any issuer for purposes of exercising control or management; |
2. | Invest in securities of other investment companies except as permitted under the 1940 Act; |
3. | Invest, in the aggregate, more than 15% of its net assets, measured at time of purchase, in securities with legal or contractual restrictions on resale, securities, which are not readily marketable and repurchase agreements with more than seven days to maturity; or |
4. | Mortgage, pledge, hypothecate or in any manner transfer, as security for indebtedness, any assets of the Funds except as may be necessary in connection with borrowings described in limitation (2) 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. |
If
a restriction on a Funds investments is adhered to at the time an investment is made, a subsequent change in the percentage of
the Funds assets invested in certain securities or other instruments, or change in average duration of the Funds investment
portfolio, resulting from changes in the value of the Funds total assets, will not be considered a violation of the restriction; provided,
however, that the asset coverage requirement applicable to borrowings shall be maintained in the manner contemplated by applicable law.
With
respect to the fundamental investment restriction regarding concentration, each Fund will consider the concentration of any underlying
funds in which it invests when determining whether the Fund has complied with its concentration policy.
In
addition to the requirements set forth in Section 3816 of the Delaware Statutory Trust Act, a shareholder may bring a derivative action
on behalf of the Trust only if the shareholder first make a pre-suit demand upon the Board to bring the subject action unless such pre-suit
demand is excused. A demand on the Board shall only be excused if a majority of the Board, or a majority of any committee established
to consider the merits of such action, has a personal financial interest in the action at issue. A Trustee shall not be deemed to have
a personal financial interest in an action or otherwise be disqualified from ruling on a shareholder demand by virtue of the fact that
such Trustee receives remuneration from his or her service on the Board.
The
Adviser. Counterpoint Funds, LLC, 12760 High Bluff Drive, Suite 280, San Diego, California 92130, serves as investment adviser to
the Funds. Subject to the oversight of the Board, the Adviser is responsible for management of each Funds investment portfolio.
The Adviser is responsible for selecting each Funds investments according to the Funds investment objective, policies and
restrictions. As of September 30, 202 3 , the Adviser had approximately $ [ ] in assets under management. The Adviser
is controlled by Michael Krause, Daniel Krause and John Koudsi by virtue of their ownership of the Adviser.
Pursuant
to separate advisory agreements between the Trust, on behalf of each Fund (each an Advisory Agreement), and the Adviser,
the Adviser is entitled to receive, on a quarterly basis, the annual advisory fee in the amount listed in the table below as a percentage
of each Funds average daily net assets. Each Advisory Agreement continued in effect for two (2) years initially and thereafter
continues from year to year provided such continuance is approved at least annually by (a) a vote of the majority of the Independent
Trustees, cast in person at a meeting specifically called for the purpose of voting on such approval and by (b) the majority vote of
either the Board or the vote of a majority of the outstanding shares of the applicable Fund. Each Advisory Agreement may be terminated
without penalty on more than 60 days written notice by a vote of a majority of the Board, by the Adviser, or by holders of a majority
of that Funds outstanding shares. Each Advisory Agreement shall terminate automatically in the event of its assignment. The Advisory
Agreements for the Funds were last renewed by the Board at a meeting held on August 23-24 , 202 3 .
The
Adviser has contractually agreed to waive its fees and reimburse expenses of the Funds, at least until [ ] , 202 5 ,
to ensure that each Funds Total Annual Fund Operating Expenses After Fee Waiver and Reimbursement (excluding (i) any front-end
or contingent deferred loads; (ii) brokerage fees and commissions; (iii) acquired fund fees and expenses; (iv) borrowing costs (such
as interest and dividend expense on securities sold short); (v) taxes; and (vi) extraordinary expenses, such as litigation expenses (which
may include indemnification of Fund officers and Trustees, contractual indemnification of Fund service providers (other than the Adviser)))
will not exceed the percentages show in the table below. These fee waivers and expense reimbursements are subject to possible recoupment
from a Fund within the three years after the fees were waived or reimbursed, if such recoupment can be achieved within the lesser of
the foregoing expense limits or the expense limits in place at the time of recoupment. These agreements may be terminated by the Board
only on 60 days written notice to the Adviser. Fee waiver and reimbursement arrangements can decrease a Funds expenses and
boost its performance.
Each
Funds advisory fees and expense limits are as shown below:
Fund | Advisory Fee |
Expense Limitation |
Counterpoint Tactical Income Fund |
1.25% | Class A 2.00% Class C 2.75% Class I 1.75% |
Counterpoint Tactical Equity Fund |
1.25% | Class A 2.00% Class C 2.75% Class I 1.75% |
Counterpoint Tactical Municipal Fund |
0.70% | Class A 1.25% Class C 2.00% Class I 1.00% |
The
table below provides information about the advisory fees paid to the Adviser by the Funds for the fiscal year ended September 30, 2021.
Period or Year Ended September 30, 2021 |
||||||
Fund |
Management Fee |
Fees Earned by the Adviser |
Advisory Fees (Waived) Recaptured |
Net Fees Earned by the Adviser |
Expense Reimbursed |
Amount Subject to Recoupment |
Counterpoint Tactical Income Fund |
1.25% |
$8,599,713 | | $8,599,713 | | |
Counterpoint Tactical Equity Fund |
1.25% | $91,192 | $(91,192) | $0 | $40,300 | $131,492 |
Counterpoint Tactical Municipal Fund |
0.70% | $416,861 | $(87,657) | $329,204 | | $87,657 |
The
table below provides information about the advisory fees paid to the Adviser by the Funds for the fiscal year ended September 30, 2022.
Period or Year Ended September 30, 2022 |
||||||
Fund |
Management Fee |
Fees Earned by the Adviser |
Advisory Fees (Waived) Recaptured |
Net Fees Earned by the Adviser |
Expense Reimbursed |
Amount Subject to Recoupment |
Counterpoint Tactical Income Fund |
1.25% |
$10,920,487 | | $10,920,487 | — |
|
Counterpoint Tactical Equity Fund |
1.25% | $524,572 | $(42,239) | $482,333 | | $42,239 |
Counterpoint Tactical Municipal Fund |
0.70% | $887,260 | $34,541 | $921,801 | | $0 |
The
table below provides information about the advisory fees paid to the Adviser by the Funds for the fiscal year ended September 30, 2023.
Period or Year Ended September 30, 2022 |
||||||
Fund |
Management Fee |
Fees Earned by the Adviser |
Advisory Fees (Waived) Recaptured |
Net Fees Earned by the Adviser |
Expense Reimbursed |
Amount Subject to Recoupment |
Counterpoint Tactical Income Fund |
[ ]% |
$[ ] | $[ ] | $[ ] | $[ ] | $[ ] |
Counterpoint Tactical Equity Fund |
[ ]% |
$[ ] | $[ ] | $[ ] | $[ ] | $[ ] |
Counterpoint Tactical Municipal Fund |
[ ]% |
$[ ] | $[ ] | $[ ] | $[ ] | $[ ] |
Portfolio
Managers
As
described in the Prospectus, the portfolio managers listed below are responsible for the management of the Funds and, as of September
30, 202 3 , the other accounts set forth in the following tables.
Other Registered Investment Companies |
Other Pooled Investment Vehicles |
Other Accounts |
||||
Portfolio Manager |
Number | Total Assets |
Number | Total Assets |
Number | Total Assets |
Michael Krause |
[ ] | $ [ ] | [ ] | $ [ ] | [ ] | $ [ ] |
Joseph Engelberg |
[ ] | $ [ ] | [ ] | $ [ ] | [ ] | $ [ ] |
Of
the accounts above, the following are subject to performance-based fees.
Other Registered Investment Companies |
Other Pooled Investment Vehicles |
Other Accounts |
||||
Portfolio Manager |
Number | Total Assets |
Number | Total Assets |
Number | Total Assets |
Michael Krause |
[ ] | $ [ ] | [ ] | $ [ ] | [ ] | $ [ ] |
Joseph Engelberg |
[ ] | $ [ ] | [ ] | $ [ ] | [ ] | $ [ ] |
Conflicts
of Interest
As
indicated in the table above, the portfolio managers may manage numerous accounts for multiple clients. These accounts may include registered
investment companies, other types of pooled accounts (e.g., collective investment funds), and separate accounts
(i.e.,
accounts managed on behalf of individuals or public or private institutions). The portfolio managers make investment decisions for each
account based on the investment objectives and policies and other relevant investment considerations applicable to that portfolio.
When
a portfolio manager has responsibility for managing more than one account, potential conflicts of interest may arise. Those conflicts
could include preferential treatment of one account over others in terms of allocation of resources or of investment opportunities. For
instance, the Adviser may receive fees from certain accounts that are higher than the fee it receives from a Fund. In this instance,
a portfolio manager may have an incentive to favor the higher account over such Fund. The Adviser has adopted policies and procedures
designed to address these potential material conflicts. For instance, the portfolio managers are normally responsible for all accounts
within a certain investment discipline, and do not, absent special circumstances, differentiate among the various accounts when allocating
resources. Additionally, the Adviser utilizes a system for allocating investment opportunities among portfolios that is designed to provide
a fair and equitable allocation.
Compensation
Mr.
Krause shares in the profits of the Adviser due to his one-third ownership of the Adviser. Dr. Engelberg receives a percentage of the
Advisers net profits from some of the Funds.
Ownership
of Securities
As
of September 30, 202 3 , the portfolio managers beneficially owned the following amounts in the Funds:
Dollar Range of Shares Beneficially Owned of the: |
|||
Portfolio Manager |
Counterpoint Tactical Income Fund |
Counterpoint Tactical Equity Fund |
Counterpoint Tactical Municipal Fund |
Michael Krause |
$ [ ] | $ [ ] | $ [ ] |
Joseph Engelberg |
$[ ] | $ [ ] | $[ ] |
ALLOCATION OF BROKERAGE |
Subject
to the general oversight of the Board, the Adviser is responsible for making decisions with respect to the purchase and sale of portfolio
securities on behalf of the Funds. The Adviser is also responsible for the implementation of those decisions, including the selection
of broker-dealers to effect portfolio transactions, the negotiation of commissions, and the allocation of principal business and portfolio
brokerage.
In
purchasing and selling the Funds portfolio securities, it is the Advisers policy to obtain quality execution at the most
favorable prices through responsible broker-dealers and, in the case of agency transactions, at competitive commission rates where such
rates are negotiable. However, under certain conditions, the Funds may pay higher brokerage commissions in return for brokerage and research
services. In selecting broker-dealers to execute the Funds portfolio transactions, consideration is given to such factors as the
price of the security, the rate of the commission, the size and difficulty of the order, the reliability, integrity, financial condition,
general execution and operational capabilities of competing brokers and dealers, their expertise in particular markets and the brokerage
and research services they provide to the Adviser or the Funds. It is not the policy of the Adviser to seek the lowest available commission
rate where it is believed that a broker or dealer charging a higher commission rate would offer greater reliability or provide better
price or execution.
Transactions
on stock exchanges involve the payment of brokerage commissions. In transactions on stock exchanges in the United States, these commissions
are negotiated. Traditionally, commission rates have generally not been negotiated on stock markets outside the United States. In recent
years, however, an increasing number of overseas stock markets have adopted a system of negotiated rates, although a number of markets
continue to be subject to an established schedule of minimum commission rates. It is expected that equity securities will ordinarily
be purchased in the primary markets, whether over-the-counter or listed on an exchange, and that listed securities may be purchased in
the over-the-counter market if such market is deemed the primary market. In the case of securities traded on the over-the-counter markets,
there is generally no stated commission, but the price usually includes an undisclosed commission or markup. In underwritten offerings,
the price includes a disclosed, fixed commission or discount.
For
fixed income securities, it is expected that purchases and sales will ordinarily be transacted with the issuer, the issuers underwriter,
or with a primary market maker acting as principal on a net basis, with no brokerage commission being paid by the Funds.
However,
the price of the securities generally includes compensation, which is not disclosed separately. Transactions placed through dealers who
are serving as primary market makers reflect the spread between the bid and asked prices.
With
respect to equity and fixed income securities, the Adviser may effect principal transactions on behalf of the Funds with a broker or
dealer who furnishes brokerage and/or research services, designate any such broker or dealer to receive selling concessions, discounts
or other allowances or otherwise deal with any such broker or dealer in connection with the acquisition of securities in underwritings.
The prices each Fund pays to underwriters of newly-issued securities usually include a concession paid by the issuer to the underwriter.
The Adviser may receive research services in connection with brokerage transactions, including designations in fixed price offerings.
The
Adviser receives a wide range of research services from brokers and dealers covering investment opportunities throughout the world, including
information on the economies, industries, groups of securities, individual companies, statistics, political developments, technical market
action, pricing and appraisal services, and performance analyses of all the countries in which a Funds portfolio is likely to
be invested. The Adviser cannot readily determine the extent to which commissions charged by brokers reflect the value of their research
services, but brokers occasionally suggest a level of business they would like to receive in return for the brokerage and research services
they provide. To the extent that research services of value are provided by brokers, the Adviser may be relieved of expenses, which it
might otherwise bear. In some cases, research services are generated by third parties but are provided to the Adviser by or through brokers.
Certain
broker-dealers, which provide quality execution services, also furnish research services to the Adviser. The Adviser has adopted brokerage
allocation policies embodying the concepts of Section 28(e) of the Securities Exchange Act of 1934, which permits an investment adviser
to cause its clients to pay a broker which furnishes brokerage or research services a higher commission than that which might be charged
by another broker which does not furnish brokerage or research services, or which furnishes brokerage or research services deemed to
be of lesser value, if such commission is deemed reasonable in relation to the brokerage and research services provided by the broker,
viewed in terms of either that particular transaction or the overall responsibilities of the adviser with respect to the accounts as
to which it exercises investment discretion. Accordingly, the Adviser may assess the reasonableness of commissions in light of the total
brokerage and research services provided by each particular broker.
Portfolio
securities will not be purchased from or sold to the Adviser, or Northern Lights Distributors, LLC (the Distributor), or
any affiliated person of any of them acting as principal, except to the extent permitted by rule or order of the SEC.
The
table below provides information about the brokerage fees incurred by the Funds for the fiscal year ended September 30, 2021:
Fund | Brokerage Commissions |
Counterpoint Tactical Income Fund* |
$227,184 |
Counterpoint Tactical Equity Fund* |
$20,915 |
Counterpoint Tactical Municipal Fund |
$1,960 |
* | Brokerage commissions for Counterpoint Tactical Income Fund and Counterpoint Tactical Equity Fund varied due to the different types of securities being traded during the fiscal year. The Adviser believes commission rates were in line with market pricing. |
The
table below provides information about the brokerage fees incurred by the Funds for the fiscal year ended September 30, 2022:
Fund | Brokerage Commissions |
Counterpoint Tactical Income Fund* |
$332,221 |
Counterpoint Tactical Equity Fund* |
$200,961 |
Counterpoint Tactical Municipal Fund |
$2,853 |
* | Brokerage commissions for Counterpoint Tactical Income Fund and Counterpoint Tactical Equity Fund varied due to significantly increased size of fund assets. |
The
table below provides information about the brokerage fees incurred by the Funds for the fiscal year ended September 30, 2023:
Fund | Brokerage Commissions |
Counterpoint Tactical Income Fund* |
$[ ] |
Counterpoint Tactical Equity Fund* |
$[ ] |
Counterpoint Tactical Municipal Fund |
$[ ] |
POLICIES AND PROCEDURES FOR DISCLOSURE OF PORTFOLIO HOLDINGS |
The
Trust has adopted policies and procedures that govern the disclosure of the Funds portfolio holdings. These policies and procedures
are designed to ensure that such disclosure is in the best interests of Funds shareholders.
It
is the Trusts policy to: (1) ensure that any disclosure of portfolio holdings information is in the best interest of Trust shareholders;
(2) protect the confidentiality of portfolio holdings information; (3) have procedures in place to guard against personal trading based
on the information; and (4) ensure that the disclosure of portfolio holdings information does not create conflicts between the interests
of the Trusts shareholders and those of the Trusts affiliates.
Each
Fund discloses its portfolio holdings by distributing the annual and semi-annual reports to shareholders approximately two months after
the end of the fiscal year and semi-annual period. In addition, the Funds disclose their portfolio holdings reports on Forms N-CSR and
Form N-PORT two months after the end of each quarter/semi-annual period.
Within
thirty days after the end of each month, the Adviser posts on the Funds website a profile of each Fund which typically includes
each Funds top five holdings. The Funds may choose to make available, no sooner than thirty days after the end of each month,
a complete schedule of its portfolio holdings as of the last day of the month.
Under
limited circumstances, as described below, the Funds portfolio holdings may be disclosed to, or known by, certain third parties
in advance of their filing with the SEC on Form N-CSR or Form N-PORT. In each case, a determination has been made by the Trusts
Chief Compliance Officer that such advance disclosure is supported by a legitimate business purpose of the Funds and that the recipient
is subject to a duty to keep the information confidential.
Counterpoint
Funds, LLC. Personnel of the Adviser, including personnel responsible for managing the Funds portfolio, may have full daily
access to the Funds portfolio holdings since that information is necessary in order for them to provide management, administrative,
and investment services to the Funds. As required for purposes of analyzing the impact of existing and future market changes on the prices,
availability, demand and liquidity of such securities, as well as for the assistance of portfolio managers in the trading of such securities,
the Advisers personnel may also release and discuss certain portfolio holdings with various broker-dealers.
Ultimus
Fund Solutions, LLC. Ultimus Fund Solutions, LLC is the transfer agent, fund accountant, administrator and custody administrator
for the Funds; therefore, its personnel have full daily access to the Funds portfolio holdings since that information is necessary
in order for them to provide the agreed-upon services for the Trust.
JPMorgan
Chase & Co. JPMorgan Chase & Co. is custodian for the Funds; therefore, its personnel have full daily access to the Funds
portfolio holdings since that information is necessary in order for them to provide the agreed-upon services for the Trust.
[ ] .
[ ] is the Funds independent registered public accounting firm; therefore, its personnel have access to the
Funds portfolio holdings in connection with the audits of the Funds annual financial statements and providing other audit,
tax and related services to the Funds.
Counsel
to the Trust and Counsel to the Independent Trustees. Counsel to the Trust, counsel to the Independent Trustees and their respective
personnel have access to the Funds portfolio holdings in connection with the review of the Funds annual and semi-annual
shareholder reports and SEC filings.
Derivatives
Risk Consultant. The Trust has engaged a derivatives risk consultant (Consultant) to consult with the Board, and the
Adviser regarding the effectiveness of derivatives risk management. The Consultant therefore may have access to the Funds portfolio
holdings in order to provide such services to the Trust.
Additions
to List of Approved Recipients
The
Trusts Chief Compliance Officer is the person responsible, and whose prior approval is required, for any disclosure of the Funds
portfolio securities at any time or to any persons other than those described above. In such cases, the recipient must have a
legitimate
business need for the information in connection with the operation or administration of the Funds, as determined by the Trusts
Chief Compliance Officer, and must be subject to a duty to keep the information confidential and not to trade on any material non-public
information. There are no ongoing arrangements in place with respect to the disclosure of portfolio holdings. In no event shall the Funds,
the Adviser, or any other party receive any direct or indirect compensation in connection with the disclosure of information about the
Funds portfolio holdings.
Compliance
With Portfolio Holdings Disclosure Procedures
The
Trusts Chief Compliance Officer reports periodically to the Board with respect to compliance with the Funds portfolio holdings
disclosure procedures, and from time to time provides the Board any updates to the portfolio holdings disclosure policies and procedures.
There
is no assurance that the Trusts policies on disclosure of portfolio holdings will protect the Funds from the potential misuse of holdings
information by individuals or firms in possession of that information.
OTHER SERVICE PROVIDERS |
Fund
Administration, Fund Accounting and Transfer Agent Services
Ultimus
Fund Solutions, LLC (UFS), which has its principal office at 225 Pictoria Drive, Suite 450, Cincinnati, Ohio 45246, serves
as administrator, fund accountant and transfer agent for the Funds pursuant to a Fund Services Agreement (the Agreement)
with the Trust and subject to the supervision of the Board. UFS is primarily in the business of providing administrative, fund accounting
and transfer agent services to retail and institutional mutual funds. UFS is an affiliate of the Distributor. UFS may also provide persons
to serve as officers of the Funds. Such officers may be directors, officers or employees of UFS or its affiliates.
The
Agreement became effective on August 26, 2021 and remain ed in effect for two years from the effective date and will continue thereafter
in effect for successive twelve-month periods provided that such continuance is specifically approved at least annually by a majority
of the Board. The Agreement is terminable by the Board or UFS on 90 days written notice and may be assigned by either party, provided
that the Trust may not assign this agreement without the prior written consent of UFS. The Agreement provides that UFS shall be without
liability for any action reasonably taken or omitted pursuant to the Agreement.
Under
the Agreement, UFS performs administrative services, including: (1) monitoring the performance of administrative and professional services
rendered to the Trust by others service providers; (2) monitoring Fund holdings and operations for post-trade compliance with the Funds
registration statement and applicable laws and rules; (3) preparing and coordinating the printing of semi-annual and annual financial
statements; (4) preparing selected management reports for performance and compliance analyses; (5) preparing and disseminating materials
for and attending and participating in meetings of the Board; (6) determining income and capital gains available for distribution and
calculating distributions required to meet regulatory, income, and excise tax requirements; (7) reviewing the Trusts federal, state,
and local tax returns as prepared and signed by the Trusts independent public accountants; (8) preparing and maintaining the Trusts
operating expense budget to determine proper expense accruals to be charged to each Fund to calculate its daily NAV; (9) assisting in
and monitoring the preparation, filing, printing and where applicable, dissemination to shareholders of amendments to the Trusts
Registration Statement on Form N-1A, periodic reports to the Trustees, shareholders and the SEC, notices pursuant to Rule 24f-2, proxy
materials and reports to the SEC on Forms N-CEN, N-CSR, N-PORT and N-PX; (10) coordinating the Trusts audits and examinations by assisting
each Funds independent public accountants; (11) determining, in consultation with others, the jurisdictions in which shares of
the Trust shall be registered or qualified for sale and facilitate such registration or qualification; (12) monitoring sales of shares
and ensuring that the shares are properly and duly registered with the SEC; (13) monitoring the calculation of performance data for the
Fund; (14) preparing, or causing to be prepared, expense and financial reports; (15) preparing authorization for the payment of Trust
expenses and pay, from Trust assets, all bills of the Trust; (16) providing information typically supplied in the investment company
industry to companies that track or report price, performance or other information with respect to investment companies; (17) upon request,
assisting each Fund in the evaluation and selection of other service providers, such as independent public accountants, printers, EDGAR
providers and proxy solicitors (such parties may be affiliates of UFS); and (18) performing other services, recordkeeping and assistance
relating to the affairs of the Trust as the Trust may, from time to time, reasonably request.
UFS
also provides the Funds with accounting services, including: (i) daily computation of NAV; (ii) maintenance of security ledgers and books
and records as required by the 1940 Act; (iii) production of the Funds listings of portfolio securities and general ledger reports;
(iv) reconciliation of accounting records; (v) calculation of yield and total return for the Funds; (vi) maintenance of certain books
and records
described
in Rule 31a-1 under the 1940 Act, and reconciliation of account information and balances among the Custodian and Adviser; and (vii) monitoring
and evaluation of daily income and expense accruals, and sales and redemptions of shares of the Funds.
UFS
also acts as transfer, dividend disbursing, and shareholder servicing agent for the Funds pursuant to the Agreement. Under the Agreement,
UFS is responsible for administering and performing transfer agent functions, dividend distribution, shareholder administration, and
maintaining necessary records in accordance with applicable rules and regulations.
For
the services rendered to the Funds by UFS, the Funds pay UFS the greater of an annual minimum fee or an asset-based fee, which scales
downward based upon net assets for fund administration, fund accounting and transfer agency services. The Funds also pay UFS for any
out-of-pocket expenses.
For
the fiscal period or year ended September 30, 2021, the Funds incurred the following fees:
Fund | For Administration Services |
For Fund Accounting Services |
For Transfer Agent Services |
Counterpoint Tactical Income Fund |
$451,533 | $139,393 | $209,621 |
Counterpoint Tactical Equity Fund |
$22,464 | $7,748 | $38,473 |
Counterpoint Tactical Municipal Fund |
$47,743 | $17,492 | $41,973 |
For
the fiscal period or year ended September 30, 2022, the Funds incurred the following fees:
Fund | For Administration Services |
For Fund Accounting Services |
For Transfer Agent Services |
Counterpoint Tactical Income Fund |
$443,569 | $127,115 | $264,547 |
Counterpoint Tactical Equity Fund |
$34,744 | $11,010 | $46,377 |
Counterpoint Tactical Municipal Fund |
$72,494 | $23,467 | $43,754 |
For
the fiscal period or year ended September 30, 2023, the Funds incurred the following fees:
Fund | For Administration Services |
For Fund Accounting Services |
For Transfer Agent Services |
Counterpoint Tactical Income Fund |
$[ ] | $[ ] | $[ ] |
Counterpoint Tactical Equity Fund |
$[ ] | $[ ] | $[ ] |
Counterpoint Tactical Municipal Fund |
$[ ] | $[ ] | $[ ] |
Custodian
JPMorgan
Chase & Co., (the Custodian) located at 270 Park Avenue, New York, NY 10017, serves as the custodian of the Funds
assets pursuant to a custody agreement (the Custody Agreement) by and between the Custodian and the Trust on behalf of the
Funds. The Custodians responsibilities include safeguarding and controlling the Funds cash and securities, handling the receipt
and delivery of securities, and collecting interest and dividends on the Funds investments. Pursuant to the Custody Agreement,
the Custodian also maintains original entry documents and books of record and general ledgers; posts cash receipts and disbursements;
and records purchases and sales based upon communications from the Adviser. The Funds may employ foreign sub-custodians that are approved
by the Board to hold foreign assets.
Securities
Lending Activities
The
Funds have entered into a Securities Lending Authorization Agreement between the Trust, on behalf of each Fund, and Securities Finance
Trust Company (SFTC), under which SFTC serves as each Funds securities lending agent.
The
services provided by SFTC as securities lending agent are as follows: providing notification to the Custodian and to act with regard
to the lending of available securities; marketing available securities for securities lending purposes and to solicit competitive bids;
providing
upon request, credit information about approved borrowers and other institutions that may become approved borrowers and shall assist
in analyzing the creditworthiness of such institutions; creating a specific section on its auction website that is accessible only by
approved borrowers and other such entities as may be agreed upon form time to time; preparing financial analysis of bids received in
the auction process and make recommendations; preparing or causing to be prepared transactional confirmation in respect of each loan
effected; notifying Custodian whenever an available security loan has been agreed upon.
Compliance
Services
Northern
Lights Compliance Services, LLC (NLCS), located at 4221 North 203rd Street, Suite 100, Elkhorn, Nebraska 68022-3474,
an affiliate of UFS and the Distributor, provides a Chief Compliance Officer to the Trust as well as related compliance services pursuant
to a consulting agreement between NLCS and the Trust. NLCSs compliance services consist primarily of reviewing and assessing the
policies and procedures of the Trust and its service providers pertaining to compliance with applicable federal securities laws, including
Rule 38a-1 under the 1940 Act. For the services rendered to the Fund by NLCS, the Funds pay NLCS an annual fixed fee and an asset-based
fee, which scales downward based upon a Funds net assets. The Funds also pay NLCS for any out-of-pocket expenses.
For
the fiscal year ended September 30, 2021, the Funds incurred the following fees for compliance services:
Fund | Compliance Service Fees |
Counterpoint Tactical Income Fund |
$26,436 |
Counterpoint Tactical Equity Fund |
$6,500 |
Counterpoint Tactical Municipal Fund |
$7,939 |
For
the fiscal year ended September 30, 2022, the Funds incurred the following fees for compliance services:
Fund | Compliance Service Fees |
Counterpoint Tactical Income Fund |
$30,376 |
Counterpoint Tactical Equity Fund |
$8,976 |
Counterpoint Tactical Municipal Fund |
$11,501 |
For
the fiscal year ended September 30, 2023, the Funds incurred the following fees for compliance services:
Fund | Compliance Service Fees |
Counterpoint Tactical Income Fund |
$[ ] |
Counterpoint Tactical Equity Fund |
$[ ] |
Counterpoint Tactical Municipal Fund |
$[ ] |
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM |
The
Board, on behalf of the Funds, has selected [ ] , as their independent registered public accounting firm for the current
fiscal year. The firm provides services including (i) audit of the annual financial statements, and (ii) provides other audit, tax and
related services to the funds.
Thompson
Hine LLP, located at 41 South High Street, Suite 1700, Columbus, OH 43215 serves as the Trusts legal counsel.
Northern
Lights Distributors, LLC, located at 4221 North 203rd Street, Suite 100, Elkhorn, NE 68022-3474 serves as the principal
underwriter and national distributor for the shares of the Funds pursuant to an underwriting agreement with the Trust, on behalf of the
Funds, (the Underwriting Agreement). The Distributor is registered as a broker-dealer under the Securities Exchange Act of
1934 and each states securities laws and is a member of FINRA. The offering of the Funds shares is continuous. The Underwriting
Agreement
provides that the Distributor, as agent in connection with the distribution of Fund shares, will use reasonable efforts to facilitate
the sale of the Funds shares.
The
Underwriting Agreement provides that, unless sooner terminated, it continued in effect for two years initially and shall continue from
year to year thereafter, subject to annual approval by (a) the Board or a vote of a majority of the outstanding shares, and (b) by a
majority of the Trustees who are not interested persons of the Trust or of the Distributor by vote cast in person at a meeting called
for the purpose of voting on such approval.
The
Underwriting Agreement may be terminated by each Fund at any time, without the payment of any penalty, by vote of a majority of the Board
or by vote of a majority of the outstanding shares of the applicable Fund on 60 days written notice to the Distributor, or by
the Distributor at any time, without the payment of any penalty, on 60 days written notice to a Fund. The Underwriting Agreement
will automatically terminate in the event of its assignment.
The
following table sets forth the total compensation received by the Distributor from the Funds during the fiscal period ended September
30, 202 3 :
Fund | Net Underwriting Discounts and Commissions |
Compensation on Redemptions and Repurchases |
Brokerage Commissions |
Other Compensation |
COUNTERPOINT TACTICAL INCOME FUND – Class A |
$ [ ] | $ [ ] | $ [ ] | * |
COUNTERPOINT TACTICAL INCOME FUND – Class C |
$ [ ] | $ [ ] | $ [ ] | * |
COUNTERPOINT TACTICAL EQUITY FUND – Class A |
$ [ ] | $ [ ] | $ [ ] | * |
COUNTERPOINT TACTICAL EQUITY FUND – Class C |
$ [ ] | $ [ ] | $ [ ] | * |
COUNTERPOINT TACTICAL MUNICIPAL FUND CLASS A |
$ [ ] | $ [ ] | $ [ ] | * |
COUNTERPOINT TACTICAL MUNICIPAL FUND CLASS C |
$ [ ] | $ [ ] | $ [ ] | * |
* | The Distributor received $ [ ] from the Adviser as compensation for its distribution services to the Funds. |
The
Distributor also receives 12b-1 fees from the Funds as described under the following section entitled Rule 12b-1 Plan.
Rule
12b-1 Plan
The
Trust, on behalf of each Fund, has adopted the Trusts Master Distribution and Shareholder Servicing Plan for Class A and Class
C shares, pursuant to Rule 12b-1 under the 1940 Act (each a Plan, and collectively the Plans) pursuant to which
each Fund is authorized to pay the Distributor, as compensation for Distributors account maintenance services under the Plans, a distribution
and shareholder servicing fee at the rate of up to 0.25% for Class A and up to 1.00% for Class C shares of the Funds average daily net
assets attributable to the relevant class. Such fees are to be paid by each Fund monthly, or at such other intervals as the Board shall
determine. Such fees shall be based upon each Funds average daily net assets during the preceding month and shall be calculated and
accrued daily. The Funds may pay fees to the Distributor at a lesser rate, as agreed upon by the Board and the Distributor. The Plans
authorize payments to the Distributor as compensation for providing account maintenance services to Fund shareholders, including arranging
for certain securities dealers or brokers, administrators, and others (Recipients) to provide these services and paying compensation
for these services.
The
services to be provided by Recipients may include, but are not limited to, the following: assistance in the offering and sale of Fund
shares and in other aspects of the marketing of the shares to clients or prospective clients of the respective recipients; answering
routine inquiries concerning the Funds; assisting in the establishment and maintenance of accounts or sub-accounts in the Fund and in
processing purchase and redemption transactions; making the Funds investment plan and shareholder services available; and providing
such other information and services to investors in shares of each Fund as the Distributor or the Trust, on behalf of the Funds, may
reasonably request.
The
distribution services shall also include any advertising and marketing services provided by or arranged by the Distributor with respect
to the Funds.
The
Distributor is required to provide a written report, at least quarterly to the Board, specifying in reasonable detail the amounts expended
pursuant to the Plans and the purposes for which such expenditures were made. Further, the Distributor informs the Board of any Rule
12b-1 fees paid by the Distributor to Recipients.
The
Plans may not be amended to increase materially the amount of the Distributors compensation to be paid by the Funds, unless such amendment
is approved by the vote of a majority of the outstanding voting securities of the affected class of the applicable Fund (as defined in
the 1940 Act). All material amendments must be approved by a majority of the Board by votes cast in person at a meeting called for the
purpose of voting on a Plan. During the term of the Plans, the selection and nomination of non-interested Trustees of the Trust will
be committed to the discretion of current non-interested Trustees. The Distributor will preserve copies of the Plans, any related agreements,
and all reports, for a period of not less than six years from the date of such document and for at least the first two years in an easily
accessible place.
Any
agreement related to the Plans will be in writing and provide that: (a) it may be terminated by the Trust or the applicable Fund at any
time upon sixty days written notice, without the payment of any penalty, by vote of a majority of the Board, or by vote of a majority
of the outstanding voting securities of the Trust or the Fund; (b) it will automatically terminate in the event of its assignment (as
defined in the 1940 Act); and (c) it will continue in effect for a period of more than one year from the date of its execution or adoption
only so long as such continuance is specifically approved at least annually by a majority of the Board by votes cast in person at a meeting
called for the purpose of voting on such agreement.
During
the fiscal year ended September 30, 202 3 , the Counterpoint Tactical Income Fund, Counterpoint Tactical Equity Fund and Counterpoint
Tactical Municipal Fund paid $ [ ] , $ [ ] and $ [ ] , respectively, in distribution related fees pursuant
to the Plans, which were allocated as set forth below:
Actual 12b-1 Expenditures Paid by |
||||||
COUNTERPOINT FUNDS – Class A and Class C Shares |
||||||
During the Fiscal Year Ended September 30, 202 3 |
||||||
TACTICAL INCOME FUND – Class A |
TACTICAL INCOME FUND – Class C |
TACTICAL EQUITY FUND – Class A |
TACTICAL EQUITY FUND – Class C |
TACTICAL MUNICIPAL FUND CLASS A |
TACTICAL MUNICIPAL FUND CLASS C |
|
Advertising/Marketing | $ [ ] | $ [ ] | $ [ ] | $ [ ] | $ [ ] | $ [ ] |
Printing/Postage | $ [ ] | $ [ ] | $ [ ] | $ [ ] | $ [ ] | $ [ ] |
Payment to distributor |
$ [ ] | $ [ ] | $ [ ] | $ [ ] | $ [ ] | $ [ ] |
Payment to dealers |
$ [ ] | $ [ ] | $ [ ] | $[ ] | $ [ ] | $ [ ] |
Compensation to sales personnel |
$ [ ] | $ [ ] | $ [ ] | $ [ ] | $ [ ] | $ [ ] |
Other | $ [ ] | $ [ ] | $ [ ] | $[ ] | $ [ ] | $ [ ] |
Total | $ [ ] | $ [ ] | $ [ ] | $ [ ] | $ [ ] | $[ ] |
Each
share of beneficial interest of the Trust has one vote in the election of Trustees. Cumulative voting is not authorized for the Trust.
This means that the holders of more than 50% of the shares voting for the election of Trustees can elect 100% of the Trustees if they
choose to do so, and, in that event, the holders of the remaining shares will be unable to elect any Trustees.
Shareholders
of the Trust and any other future series of the Trust will vote in the aggregate and not by series except as otherwise required by law
or when the Board determines that the matter to be voted upon affects only the interest of the shareholders of a particular series or
classes. Matters such as election of Trustees are not subject to separate voting requirements and may be acted upon by shareholders of
the Trust voting without regard to series.
The
Trust is authorized to issue an unlimited number of shares of beneficial interest. Each share has equal dividend, distribution and liquidation
rights. There are no conversion or preemptive rights applicable to any shares of the Funds. All shares issued are fully paid and non-assessable.
The
Trust, the Adviser and the Distributor have each adopted a code of ethics under Rule 17j-1 under the 1940 Act that governs the personal
securities transactions of its board members, officers and employees who may have access to current trading information of the Trust.
Under the code of ethics adopted by the Trust, the Trustees is permitted to invest in securities that may also be purchased by the Fund.
In
addition, the Trust has adopted a code of ethics, which applies only to the Trusts executive officers (the Code) to ensure
that these officers promote professional conduct in the practice of corporate governance and management. The purpose behind these guidelines
is to promote (i) honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal
and professional relationships; (ii) full, fair, accurate, timely, and understandable disclosure in reports and documents that a registrant
files with, or submits to, the SEC and in other public communications made by the Funds; (iii) compliance with applicable governmental
laws, rule and regulations; (iv) the prompt internal reporting of violations of the Code to an appropriate person or persons identified
in the Code; and (v) accountability for adherence to the Code.
The
Board has adopted Proxy Voting Policies and Procedures (Policies) on behalf of the Trust, which delegate the responsibility
for voting proxies to the Adviser or its designee, subject to the Boards continuing oversight. The Policies require that the Adviser
or its designee vote proxies received in a manner consistent with the best interests of the Funds and shareholders. The Policies also
require the Adviser or its designee to present to the Board, at least annually, the Advisers Proxy Policies, or the proxy policies of
the Advisers designee, and a record of each proxy voted by the Adviser or its designee on behalf of the Funds, including a report on
the resolution of all proxies identified by the Adviser as involving a conflict of interest.
Where
a proxy proposal raises a material conflict between the Advisers interests and a Funds interests, the Adviser will resolve the
conflict by voting in accordance with the policy guidelines or at the clients directive using the recommendation of an independent third
party. If the third partys recommendations are not received in a timely fashion, the Adviser will abstain from voting the securities
held by that clients account. A copy of the Advisers proxy voting policies is attached hereto as Appendix A.
Information
regarding how the Funds voted proxies during the most recent 12-month period ended June 30 is (or will be) available without charge,
upon request, by calling toll free, 1-844-273-8637, by accessing the information on proxy voting filed by the Funds on Form N-PX on the
SECs website at www.sec.gov. In addition, a copy of the Policies is also available by calling 1-844-273-8637 and will be sent
within three business days of receipt of a request.
PURCHASE, REDEMPTION AND PRICING OF FUND SHARES |
Calculation
of Share Price
As
indicated in the Prospectus under the heading How Shares are Priced, the NAV of each Funds shares, by class, is determined
by dividing the total value of the Funds portfolio investments and other assets, less any liabilities, by the total number of shares
outstanding of each Fund, by class, respectively.
Generally,
the Funds domestic securities (including underlying ETFs which hold portfolio securities primarily listed on foreign (non-U.S.)
exchanges) are valued each day at the last quoted sales price on each securitys primary exchange. Securities traded or dealt in
upon one or more securities exchanges for which market quotations are readily available and not subject to restrictions against resale
shall be valued at the last quoted sales price on the primary exchange or, in the absence of a sale on the primary exchange, at the mean
between the current bid and ask prices on such exchange. Securities primarily traded in the NASDAQ National Market System for which market
quotations are readily available shall be valued using the NASDAQ Official Closing Price. If market quotations are not readily available,
securities will be valued at their fair market value as determined in good faith by the Adviser in accordance with procedures approved
by the Board and as further described below. Securities that are not traded or dealt in any securities exchange (whether domestic or
foreign) and for which over-the-counter market quotations are readily available generally shall be valued at the last sale price or,
in the absence of a sale, at the mean between the current bid and ask price on such over-the-counter market.
Certain
securities or investments for which daily market quotes are not readily available may be valued, pursuant to guidelines established by
the Board, with reference to other securities or indices. Debt securities not traded on an exchange may be valued at prices supplied
by a pricing agent(s) based on broker or dealer supplied valuations or matrix pricing, a method of valuing securities by reference to
the value of other securities with similar characteristics, such as rating, interest rate and maturity. Short-term debt obligations having
60 days or less remaining until maturity, at time of purchase, may be valued at amortized cost, which approximates fair value.
Exchange
traded options are valued at the last quoted sales price or, in the absence of a sale, at the mean between the current bid and ask prices
on the exchange on which such options are traded. Futures and options on futures are valued at the settlement price determined by the
exchange. Other securities for which market quotes are not readily available are valued at fair value as determined in good faith by
the Board or persons acting at their direction. Swap agreements and other derivatives are generally valued daily based upon quotations
from market makers or by a pricing service in accordance with the valuation procedures approved by the Board.
Under
certain circumstances, the Funds may use an independent pricing service to calculate the fair market value of foreign equity securities
on a daily basis by applying valuation factors to the last sale price or the mean price as noted above. The fair market values supplied
by the independent pricing service will generally reflect market trading that occurs after the close of the applicable foreign markets
of comparable securities or the value of other instruments that have a strong correlation to the fair-valued securities. The independent
pricing service will also take into account the current relevant currency exchange rate. A security that is fair valued may be valued
at a price higher or lower than actual market quotations or the value determined by other funds using their own fair valuation procedures.
Because foreign securities may trade on days when Fund shares are not priced, the value of securities held by the Funds can change on
days when Fund shares cannot be redeemed or purchased. In the event that a foreign securitys market quotations are not readily
available or are deemed unreliable (for reasons other than because the foreign exchange on which it trades closed before the Funds
calculation of NAV), the security will be valued at its fair market value as determined in good faith by the Adviser in accordance with
procedures approved by the Board as discussed below. Without fair valuation, it is possible that short-term traders could take advantage
of the arbitrage opportunity and dilute the NAV of long-term investors. Fair valuation of the Funds portfolio securities can serve
to reduce arbitrage opportunities available to short-term traders, but there is no assurance that it will prevent dilution of the Funds
NAV by short-term traders. In addition, because the Funds may invest in underlying ETFs which hold portfolio securities primarily listed
on foreign (non-U.S.) exchanges, and these exchanges may trade on weekends or other days when the underlying ETFs do not price their
shares, the value of these portfolio securities may change on days when you may not be able to buy or sell Fund shares.
Investments
initially valued in currencies other than the U.S. dollar are converted to U.S. dollars using exchange rates obtained from pricing services.
As a result, the NAV of the Funds shares may be affected by changes in the value of currencies in relation to the U.S. dollar.
The value of securities traded in markets outside the United States or denominated in currencies other than the U.S. dollar may be affected
significantly on a day that the New York Stock Exchange is closed and an investor is not able to purchase, redeem or exchange shares.
Fund
shares are valued at the close of regular trading on the New York Stock Exchange (normally 4:00 p.m., Eastern time) (the NYSE Close)
on each day that the New York Stock Exchange is open. For purposes of calculating the NAV, the Funds normally use pricing data for domestic
equity securities received shortly after the NYSE Close and does not normally take into account trading, clearances or settlements that
take place after the NYSE Close. Domestic fixed income and foreign securities are normally priced using data reflecting the earlier closing
of the principal markets for those securities. Information that becomes known to the Fund or its agents after the NAV has been calculated
on a particular day will not generally be used to retroactively adjust the price of the security or the NAV determined earlier that day.
When
market quotations are insufficient or not readily available, the Funds may value securities at fair value or estimate their value as
determined in good faith by the Board or its designees, pursuant to procedures approved by the Board. Fair valuation may also be used
by the Board if extraordinary events occur after the close of the relevant market but prior to the NYSE Close.
The
Funds may hold securities, such as private placements, interests in commodity pools, other non-traded securities or temporarily illiquid
securities, for which market quotations are not readily available or are determined to be unreliable. These securities will be valued
at their fair market value as determined using the fair value procedures approved by the Board. The Board has designated
the Adviser as its Valuation Designee for execution of these procedures. The Adviser may also enlist third party consultants
such as an audit firm or financial officer of a security issuer on an as-needed basis to assist in determining a security-specific fair
value. The Board reviews and ratifies the execution of this process and the resultant fair value prices at least quarterly to assure
the process produces reliable results.
Valuation
Process. Fair value determinations are required for the following securities: (i) securities for which market quotations are
insufficient or not readily available on a particular business day (including securities for which there is a short and temporary lapse
in the provision of a price by the regular pricing source); (ii) securities for which, in the judgment of the Adviser, the prices or
values available do not represent the fair value of the instrument. Factors which may cause the Adviser to make such a judgment include,
but are not limited to, the following: only a bid price or an asked price is available; the spread between bid and asked prices is substantial;
the frequency of sales; the thinness of the market; the size of reported trades; and actions of the securities markets, such as the suspension
or limitation of trading; (iii) securities determined to be illiquid; (iv) securities with respect to which an event that will affect
the value thereof has occurred (a significant event) since the closing prices were established on the principal exchange
on which they are traded, but prior to the Funds calculation of its NAV. Specifically, interests in commodity pools or managed
futures pools are valued on a daily basis by reference to the closing market prices of each futures contract or other asset held by a
pool, as adjusted for pool expenses. Restricted securities or illiquid investments, such as private placements or non-traded securities
are valued via inputs from the Adviser valuation based upon the current bid for the security from two or more independent dealers or
other parties reasonably familiar with the facts and circumstances of the security (who should take into consideration all relevant factors
as may be appropriate under the circumstances). If the Adviser is unable to obtain a current bid from such independent dealers or other
independent parties, the Adviser shall determine the fair value of such security using the following factors: (i) the type of security;
(ii) the cost at date of purchase; (iii) the size and nature of the Funds holdings; (iv) the discount from market value of unrestricted
securities of the same class at the time of purchase and subsequent thereto; (v) information as to any transactions or offers with respect
to the security; (vi) the nature and duration of restrictions on disposition of the security and the existence of any registration rights;
(vii) how the yield of the security compares to similar securities of companies of similar or equal creditworthiness; (viii) the level
of recent trades of similar or comparable securities; (ix) the liquidity characteristics of the security; (x) current market conditions;
and (xi) the market value of any securities into which the security is convertible or exchangeable.
Standards
For Fair Value Determinations. As a general principle, the fair value of a security is the amount that a Fund might reasonably
expect to realize upon its current sale. The Trust has adopted Financial Accounting Standards Board Statement of Financial Accounting
Standards Codification Topic 820, Fair Value Measurements and Disclosures (ASC 820). In accordance with ASC 820, fair value
is defined as the price that the Funds would receive upon selling an investment in a timely transaction to an independent buyer in the
principal or most advantageous market of the investment. ASC 820 establishes a three-tier hierarchy to maximize the use of observable
market data and minimize the use of unobservable inputs and to establish classification of fair value measurements for disclosure purposes.
Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about
risk, for example, the risk inherent in a particular valuation technique used to measure fair value including such a pricing model and/or
the risk inherent in the inputs to the valuation technique. Inputs may be observable or unobservable. Observable inputs are inputs that
reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from
sources independent of the reporting entity. Unobservable inputs are inputs that reflect the reporting entitys own assumptions about
the assumptions market participants would use in pricing the asset or liability, developed based on the best information available under
the circumstances.
Various
inputs are used in determining the value of each Funds investments relating to ASC 820. These inputs are summarized in the three broad
levels listed below.
Level
1 – quoted prices in active markets for identical securities.
Level
2 – other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit
risk, etc.)
Level
3 – significant unobservable inputs (including a Funds own assumptions in determining the fair value of investments).
The
Adviser takes into account the relevant factors and surrounding circumstances, which may include: (i) the nature and pricing history
(if any) of the security; (ii) whether any dealer quotations for the security are available; (iii) possible valuation methodologies that
could be used to determine the fair value of the security; (iv) the recommendation of a portfolio manager of the Funds with respect to
the valuation of the security; (v) whether the same or similar securities are held by other funds managed by the Adviser or other funds
and the method used to price the security in those funds; (vi) the extent to which the fair value to be determined for the security will
result from the use of data or formulae produced by independent third parties and (vii) the liquidity or illiquidity of the market for
the security.
Boards
Determination. The Board meets at least quarterly to consider the valuations provided by the Adviser and to ratify the valuations made
for the applicable securities. The Board considers the reports provided by the Adviser, including follow up studies of subsequent market-provided
prices when available, in reviewing and determining in good faith the fair value of the applicable portfolio securities.
The
Trust expects that the New York Stock Exchange (NYSE) will be closed on the following holidays: New Years Day, Martin
Luther King, Jr. Day, Presidents Day, Good Friday, Memorial Day, Juneteenth, Independence Day, Labor Day, Thanksgiving Day, and
Christmas Day.
The
following discussion is general in nature and should not be regarded as an exhaustive presentation of all possible tax ramifications.
All shareholders should consult a qualified tax adviser regarding their investment in the Funds.
Each
Fund intends to continue qualifying as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended
(the IRS Code), which requires compliance with certain requirements concerning the sources of its income, diversification
of its assets, and the amount and timing of its distributions to shareholders. Such qualification does not involve supervision of management
or investment practices or policies by any government agency or bureau. By so qualifying, a Fund should not be subject to federal income
or excise tax on its net investment income or net capital gain, which are distributed to shareholders in accordance with the applicable
timing requirements. Net investment income and net capital gain of the Funds will be computed in accordance with Section 852 of the IRS
Code.
As
of September 30, 202 3 , the components of accumulated earnings/(deficit) on a tax basis were as follows:
Undistributed Ordinary |
Undistributed | Undistributed | Post October Loss |
Capital Loss |
Other | Unrealized | Total | |||||||||||||||||||||||||
Tax-Exempt | Ordinary | Long-Term | and | Carry | Book/Tax | Appreciation/ | Accumulated | |||||||||||||||||||||||||
Portfolio | Income | Income | Capital Gains |
Late Year Loss |
Forwards | Differences | (Depreciation) | Earnings/(Deficits) | ||||||||||||||||||||||||
Counterpoint Tactical Income Fund |
$ | [ ] | $ | [ ] | $ | [ ] | $ | [ ] | $ | [ ] | $ | [ ] | [ ] | $ | [ ] | |||||||||||||||||
Counterpoint Tactical Equity Fund |
[ ] | [ ] | [ ] | [ ] | [ ] | [ ] | [ ] | [ ] | ||||||||||||||||||||||||
Counterpoint Tactical Municipal Fund |
[ ] | [ ] | [ ] | [ ] | [ ] | [ ] | [ ] | [ ] |
The
Funds intend to distribute all of its net investment income, any excess of net short-term capital gains over net long-term capital losses,
and any excess of net long-term capital gains over net short-term capital losses in accordance with the timing requirements imposed by
the IRS Code and therefore should not be required to pay any federal income or excise taxes. Distributions of net investment income and
net capital gain will be made after the end of each fiscal year. Both types of distributions will be in shares of the Fund unless a shareholder
elects to receive cash.
As
of September 30, 202 3 , the Funds had capital loss carry forwards (CLCF) for federal income tax purposes available
to offset future capital gains as follows:
Portfolio | Short-Term | Long-Term | Total | CLCF Utilized |
||||||||||||
Counterpoint Tactical Income Fund |
$ | [ ] | $ | [ ] | $ | [ ] | $ | [ ] | ||||||||
Counterpoint Tactical Equity Fund |
[ ] | [ ] | [ ] | [ ] | ||||||||||||
Counterpoint Tactical Municipal Fund |
[ ] | [ ] | [ ] | [ ] | ||||||||||||
To
be treated as a regulated investment company under Subchapter M of the IRS Code, each Fund must also (a) derive at least 90% of its gross
income from dividends, interest, payments with respect to securities loans, net income from certain publicly traded partnerships and
gains from the sale or other disposition of securities or foreign currencies, or other income (including, but not limited to, gains from
options, futures or forward contracts) derived with respect to the business of investing in such securities or currencies, and (b) diversify
its holdings so that, at the end of each fiscal quarter, (i) at least 50% of the market value of the Funds assets is represented by
cash, U.S. government securities and securities of other regulated investment companies, and other securities (for purposes of this calculation,
generally limited in respect of any one issuer, to an amount not greater than 5% of the market value of the Funds assets and 10% of
the outstanding voting securities of such issuer) and (ii) not more than 25% of the value of its assets is invested in the securities
of (other than U.S. government securities or the securities of other regulated investment companies) any one issuer, two or more issuers
which the Fund controls and which are determined to be engaged in the same or similar trades or businesses, or the securities of certain
publicly traded partnerships.
If
a Fund fails to qualify as a regulated investment company under Subchapter M in any fiscal year, it will be treated as a corporation
for federal income tax purposes. As such, the Fund would be required to pay income taxes on its net investment income and net realized
capital gains, if any, at the rates generally applicable to corporations. Shareholders of a Fund generally would not be liable for income
tax on the Funds net investment income or net realized capital gains in their individual capacities. Distributions to shareholders,
whether from a Funds net investment income or net realized capital gains, would be treated as taxable dividends to the extent of current
or accumulated earnings and profits of the Funds.
Each
Fund is subject to a 4% nondeductible excise tax on certain undistributed amounts of ordinary income and capital gain under a prescribed
formula contained in Section 4982 of the IRS Code. The formula requires payment to shareholders during a calendar year of distributions
representing at least 98% of a Funds ordinary income for the calendar year and at least 98.2% of its capital gain net income (i.e.,
the excess of its capital gains over capital losses) realized during the one-year period ending October 31 during such year plus 100%
of any income that was neither distributed nor taxed to the Fund during the preceding calendar year. Under ordinary circumstances, the
Funds expects to time their distributions so as to avoid liability for this tax.
The
following discussion of tax consequences is for the general information of shareholders that are subject to tax. Shareholders that are
IRAs or other qualified retirement plans are exempt from income taxation under the IRS Code.
Distributions
of taxable net investment income and the excess of net short-term capital gain over net long-term capital loss are generally taxable
to shareholders as ordinary income, unless such distributions are attributable to qualified dividend income eligible for
the reduced federal income tax rates applicable to long-term capital gains, provided certain holding period and other requirements are
satisfied.
Distributions
of net capital gain (capital gain dividends) generally are taxable to shareholders as long-term capital gain, regardless
of the length of time the shares of the Funds have been held by such shareholders.
Certain
U.S. shareholders, including individuals and estates and trusts, are subject to an additional 3.8% Medicare tax on all or a portion of
their net investment income, which should include dividends from the Funds and net gains from the disposition of shares
of the Funds. U.S. shareholders are urged to consult their own tax advisors regarding the implications of the additional Medicare tax
resulting from an investment in the Funds.
A
redemption of Fund shares by a shareholder will result in the recognition of taxable gain or loss in an amount equal to the difference
between the amount realized and the shareholders tax basis in his or her Fund shares. Such gain or loss is treated as a capital gain
or loss if the shares are held as capital assets. The gain or loss will generally be treated as long-term capital gain or loss if the
shares were held for more than one year and if not held for such period, as short-term capital gain or loss. However, any loss realized
upon the redemption of shares within six months from the date of their purchase will be treated as a long-term capital loss to the extent
of any amounts treated as capital gain dividends during such six-month period. All or a portion of any loss realized upon the redemption
of shares may be disallowed to the extent shares are purchased (including shares acquired by means of reinvested dividends) within 30
days before or after such redemption.
Distributions
of taxable net investment income and net capital gain will be taxable as described above, whether received in additional shares or cash.
Shareholders electing to receive distributions in the form of additional shares will have a cost basis for federal income tax purposes
in each share so received equal to the NAV of a share on the reinvestment date.
All
distributions of taxable net investment income and net capital gain, whether received in shares or in cash, must be reported by each
taxable shareholder on his or her federal income tax return. Dividends or distributions declared in October, November or December as
of a record date in such a month, if any, will be deemed to have been received by shareholders on December 31, if paid during January
of the following year. Redemptions of shares may result in tax consequences (gain or loss) to the shareholder and are also subject to
these reporting requirements.
Under
the IRS Code, the Funds will be required to report to the Internal Revenue Service all distributions of income and capital gains as well
as gross proceeds from the redemption or exchange of Fund shares, except in the case of certain exempt shareholders. Under the backup
withholding provisions of Section 3406 of the IRS Code, distributions of net investment income and net capital gain and proceeds from
the redemption or exchange of the shares of a regulated investment company may be subject to withholding of federal income tax in the
case of non-exempt shareholders who fail to furnish the investment company with their taxpayer identification numbers and with required
certifications regarding their status under the federal income tax law, or if a Fund is notified by the IRS or a broker that withholding
is required due to an incorrect TIN or a previous failure to report taxable interest or dividends. If the withholding provisions are
applicable, any such distributions and proceeds, whether taken in cash or reinvested in additional shares, will be reduced by the amounts
required to be withheld.
Payments
to a shareholder that is either a foreign financial institution (FFI) or a non-financial foreign entity (NFFE)
within the meaning of the Foreign Account Tax Compliance Act (FATCA) may be subject to a generally nonrefundable 30% withholding
tax on: (a) income dividends paid by a Fund and (b) certain capital gain distributions and the proceeds arising from the sale of Fund
shares paid by a Fund. FATCA withholding tax generally can be avoided: (a) by an FFI, subject to any applicable intergovernmental agreement
or other exemption, if it enters into a valid agreement with the IRS to, among other requirements, report required information about
certain direct and indirect ownership of foreign financial accounts held by U.S. persons with the FFI and (b) by an NFFE, if it: (i)
certifies that it has no substantial U.S. persons as owners or (ii) if it does have such owners, reports information relating to them.
A Fund may disclose the information that it receives from its shareholders to the IRS, non-U.S. taxing authorities or other parties as
necessary to comply with FATCA. Withholding also may be required if a foreign entity that is a shareholder of a Fund fails to provide
the Fund with appropriate certifications or other documentation concerning its status under FATCA.
Options,
Futures, Forward Contracts and Swap Agreements
To
the extent such investments are permissible for the Funds, the Funds transactions in options, futures contracts, hedging transactions,
forward contracts, straddles and foreign currencies will be subject to special tax rules (including mark-to-market, constructive sale,
straddle, wash sale and short sale rules), the effect of which may be to accelerate income to the Funds, defer losses to the Funds, cause
adjustments in the holding periods of the Funds securities, convert long-term capital gains into short-term capital gains and
convert short-term capital losses into long-term capital losses. These rules could therefore affect the amount, timing and character
of distributions to shareholders.
To
the extent such investments are permissible, certain of a Funds hedging activities (including its transactions, if any, in foreign
currencies or foreign currency-denominated instruments) are likely to produce a difference between its book income and its taxable income.
If a Funds book income exceeds its taxable income, the distribution (if any) of such excess book income will be treated as (i)
a dividend to the extent of a Funds remaining earnings and profits (including earnings and profits arising from tax-exempt income),
(ii) thereafter, as a return of capital to the extent of the recipients basis in the shares, and (iii) thereafter, as gain from the
sale or exchange of a capital asset. If a Funds book income is less than taxable income, the Fund could be required to make distributions
exceeding book income to qualify as a regular investment company that is accorded special tax treatment.
Passive
Foreign Investment Companies
Investment
by a Fund in certain passive foreign investment companies (PFICs) could subject the Fund to a U.S. federal income tax (including
interest charges) on distributions received from the company or on proceeds received from the disposition of shares in the company, which
tax cannot be eliminated by making distributions to Fund shareholders. However, a Fund may elect to treat a PFIC as a qualified electing
fund (QEF), in which case the Fund will be required to include its share of the companys income and net capital gains annually,
regardless of whether they receive any distribution from the company.
Each
Fund may make an election to mark the gains (and to a limited extent losses) in such holdings to the market as though it
had sold and repurchased its holdings in those PFICs on the last day of the Funds taxable year. Such gains and losses are treated
as ordinary income and loss. The QEF and mark-to-market elections may accelerate the recognition of income (without the receipt of cash)
and increase the amount required to be distributed for a Fund to avoid taxation. Making either of these elections therefore may require
a Fund to liquidate other investments (including when it is not advantageous to do so) to meet its distribution requirement, which also
may accelerate the recognition of gain and affect the Funds total return.
Foreign
Currency Transactions
The
Funds transactions in foreign currencies, foreign currency-denominated debt securities and certain foreign currency options, futures
contracts and forward contracts (and similar instruments) may give rise to ordinary income or loss to the extent such income or loss
results from fluctuations in the value of the foreign currency concerned.
Other
Regulated Investment Companies
Generally,
the character of the income or capital gains that each Fund receives from another investment company will pass through to the Funds
shareholders as long as the Fund and the other investment company each qualify as a regulated investment company. However, to the extent
that another investment company that qualifies as a regulated investment company realizes net losses on its investments for a given taxable
year, a Fund will not be able to recognize its share of those losses until it disposes of shares of such investment company. Moreover,
even when a Fund does make such a disposition, a portion of its loss may be recognized as a long-term capital loss, which will not be
treated as favorably for federal income tax purposes as an ordinary deduction. In particular, a Fund will not be able to offset any capital
losses from its dispositions of shares of other investment companies against its ordinary income. As a result of the foregoing rules,
and certain other special rules, it is possible that the amounts of net investment income and net capital gains that a Fund will be required
to distribute to shareholders will be greater than such amounts would have been had the Funds invested directly in the securities held
by the investment companies in which it invests, rather than investing in shares of the investment companies. For similar reasons, the
character of distributions from a Fund (e.g., long-term capital gain, qualified dividend income, etc.) will not necessarily be the same
as it would have been had the Fund invested directly in the securities held by the investment companies in which it invests.
Foreign
Taxation
Income
received by the Funds from sources within foreign countries may be subject to withholding and other taxes imposed by such countries.
Tax treaties and conventions between certain countries and the U.S. may reduce or eliminate such taxes. If more than 50% of the value
of the Funds total assets at the close of its taxable year consists of securities of foreign corporations, the Funds may be able
to elect to pass through to the Funds shareholders the amount of eligible foreign income and similar taxes paid by
the Funds. If this election is made, a shareholder generally subject to tax will be required to include in gross income (in addition
to taxable dividends actually received) his or her pro rata share of the foreign taxes paid by the Funds, and may be entitled either
to deduct (as an itemized deduction) his or her pro rata share of foreign taxes in computing his or her taxable income or to use it as
a foreign tax credit against his
or
her U.S. federal income tax liability, subject to certain limitations. In particular, a shareholder must hold his or her shares (without
protection from risk of loss) on the ex-dividend date and for at least 15 more days during the 30-day period surrounding the ex-dividend
date to be eligible to claim a foreign tax credit with respect to a gain dividend. No deduction for foreign taxes may be claimed by a
shareholder who does not itemize deductions. Each shareholder will be notified within 60 days after the close of the Funds taxable
year whether the foreign taxes paid by the Funds will pass through for that year.
Generally,
a credit for foreign taxes is subject to the limitation that it may not exceed the shareholders U.S. tax attributable to his or her
total foreign source taxable income. For this purpose, if the pass-through election is made, the source of a Funds income will
flow through to shareholders of the Fund. With respect to the Funds, gains from the sale of securities will be treated as derived from
U.S. sources and certain currency fluctuation gains, including fluctuation gains from foreign currency-denominated debt securities, receivables
and payables will be treated as ordinary income derived from U.S. sources. The limitation on the foreign tax credit is applied separately
to foreign source passive income, and to certain other types of income. A shareholder may be unable to claim a credit for the full amount
of his or her proportionate share of the foreign taxes paid by the Funds. The foreign tax credit can be used to offset only 90% of the
revised alternative minimum tax imposed on corporations and individuals and foreign taxes generally are not deductible in computing alternative
minimum taxable income.
Original
Issue Discount and Pay-In-Kind Securities
Current
federal tax law requires the holder of a U.S. Treasury or other fixed income zero coupon security to accrue as income each year a portion
of the discount at which the security was purchased, even though the holder receives no interest payment in cash on the security during
the year. In addition, pay-in-kind securities will give rise to income which is required to be distributed and is taxable even though
the Funds holding the security receives no interest payment in cash on the security during the year.
Some
of the debt securities (with a fixed maturity date of more than one year from the date of issuance) that may be acquired by the Funds
may be treated as debt securities that are issued originally at a discount. Generally, the amount of the original issue discount (OID)
is treated as interest income and is included in income over the term of the debt security, even though payment of that amount is not
received until a later time, usually when the debt security matures. A portion of the OID includable in income with respect to certain
high-yield corporate debt securities (including certain pay-in-kind securities) may be treated as a dividend for U.S. federal income
tax purposes.
Some
of the debt securities (with a fixed maturity date of more than one year from the date of issuance) that may be acquired by the Funds
in the secondary market may be treated as having market discount. Generally, any gain recognized on the disposition of, and any partial
payment of principal on, a debt security having market discount is treated as ordinary income to the extent the gain, or principal payment,
does not exceed the accrued market discount on such debt security. Market discount generally accrues in equal daily installments.
The Funds may make one or more of the elections applicable to debt securities having market discount, which could affect the character
and timing of recognition of income.
Some
debt securities (with a fixed maturity date of one year or less from the date of issuance) that may be acquired by the Fund may be treated
as having acquisition discount, or OID in the case of certain types of debt securities. Generally, the Funds will be required to include
the acquisition discount, or OID, in income over the term of the debt security, even though payment of that amount is not received until
a later time, usually when the debt security matures. The Funds may make one or more of the elections applicable to debt securities having
acquisition discount, or OID, which could affect the character and timing of recognition of income.
If
a Fund holds the foregoing kinds of securities, it may be required to pay out as an income distribution each year an amount, which is
greater than the total amount of cash interest the Fund actually received. Such distributions may be made from the cash assets of the
Fund or by liquidation of portfolio securities, if necessary (including when it is not advantageous to do so). The Fund may realize gains
or losses from such liquidations. In the event the Fund realizes net capital gains from such transactions, its shareholders may receive
a larger capital gain distribution, if any, than they would in the absence of such transactions.
Shareholders
of a Fund may be subject to state and local taxes on distributions received from the Fund and on redemptions of the Funds shares.
A
brief explanation of the form and character of the distribution accompany each distribution. After the end of each year, the Funds issue
to each shareholder a statement of the federal income tax status of all distributions.
Shareholders
should consult their tax advisers about the application of federal, state and local and foreign tax law in light of their particular
situation.
ANTI-MONEY LAUNDERING PROGRAM |
The
Trust has established an Anti-Money Laundering Compliance Program (the Program) as required by the Uniting and Strengthening
America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (USA PATRIOT Act). To ensure
compliance with this law, the Program provides for the development of internal practices, procedures and controls, designation of anti-money
laundering compliance officers, an ongoing training program and an independent audit function to determine the effectiveness of the Program.
The Trusts secretary serves as its Anti-Money Laundering Compliance Officer.
Procedures
to implement the Program include, but are not limited to, determining that the Distributor and Transfer Agent have established proper
anti-money laundering procedures, reporting suspicious and/or fraudulent activity and providing a complete and thorough review of all
new opening account applications. The Trust will not transact business with any person or entity whose identity cannot be adequately
verified under the provisions of the USA PATRIOT Act.
As
a result of the Program, the Trust may be required to freeze the account of a shareholder if the shareholder appears to be
involved in suspicious activity or if certain account information matches information on government lists of known terrorists or other
suspicious persons, or the Trust may be required to transfer the account or proceeds of the account to a governmental agency.
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 the Funds. A
control person is one who owns, either directly or indirectly more than 25% of the voting securities of a company or acknowledges the
existence of control. Shareholders who have the power to vote a large percentage of shares (at least 25%) of the Fund can control a Fund
and could determine the outcome of a shareholders meeting.
As
of [ ] , 2023, the following shareholder(s) of record owned 5% or more of the outstanding shares of each class of the Funds:
[TO
BE PROVIDED]
Management
Ownership Information. As of [ ] , 2023, the Trustees and officers of the Trust, as a group, beneficially owned less than
1% of the outstanding shares of each Fund.
The
business of the Trust is managed under the direction of the Board in accordance with the Agreement and Declaration of Trust and the Trusts
By-laws (the Governing Documents), which have been filed with the SEC and are available upon request. The Board consists
of four individuals, all of whom are not interested persons (as defined under the 1940 Act) of the Trust and the Adviser
(Independent Trustees). Pursuant to the Governing Documents, the Board shall elect officers including a President, a Secretary,
a Treasurer, a Principal Executive Officer and a Principal Accounting Officer. The Board retains the power to conduct, operate and carry
on the business of the Trust and has the power to incur and pay any expenses, which, in the opinion of the Board, are necessary or incidental
to carry out any of the Trusts purposes. The Board, officers, employees and agents of the Trust, when acting in such capacities, shall
not be subject to any personal liability except for his or her own bad faith, willful misfeasance, gross negligence or reckless disregard
of his or her duties.
Board
Leadership Structure. The Board is led by John V. Palancia, who has served as the Chairman of the Board since May 2014. The Board
(the Chairman) has not appointed a Lead Independent Trustee because all Trustees are Independent Trustees. Under the
Governing
Documents, the Chairman is responsible for (a) presiding at Board meetings, (b) calling special meetings on an as-needed basis, and (c)
execution and administration of Trust policies, including (i) setting the agendas for Board meetings and (ii) providing information to
the Board members in advance of each Board meeting and between Board meetings. Generally, the Trust believes it best to have a non-executive
Chairman, who together with the President (principal executive officer), are seen by its shareholders, business partners and other stakeholders
as providing strong leadership. The Trust believes that its Chairman, the independent chair of the Audit Committee, and, as an entity,
the full Board of Trustees, provide effective leadership that is in the best interests of the Trust, its funds and each shareholder.
Board
Risk Oversight. The Board is comprised entirely of Independent Trustees with an Audit Committee with a separate chair. The Board
is responsible for overseeing risk management, and the Board regularly engages in discussions of risk management and receives compliance
reports that inform its oversight of risk management from its Chief Compliance Officer at quarterly meetings and on an ad hoc basis,
when and if necessary. The Audit Committee considers financial risk and risk reporting within its area of responsibilities. Generally,
the Board believes that its oversight of material risks is adequately maintained through the compliance-reporting chain where the Chief
Compliance Officer is the primary recipient and communicator of such risk-related information.
Trustee
Qualifications.
Generally,
the Trust believes that each Trustee is competent to serve because of his or her individual overall merits including his or her: (i)
experience, (ii) qualifications, (iii) attributes and (iv) skills.
Patricia
Luscombe, CFA, has more than 30 years in financial advisory and valuation services. She has delivered a broad range of corporate finance
advice including fairness opinions and valuations. Ms. Luscombe joined Lincoln International in 2007 as a Managing Director and co-head
of Lincolns Valuations & Opinions Group. In this position, she assists regulated investment funds, business development companies,
private equity funds and hedge funds in the valuation of illiquid securities for fair value accounting purposes. Ms. Luscombes clients
range from closely held businesses to large, publicly-traded companies. Previously, Ms. Luscombe spent 16 years with Duff & Phelps
Corporation, as a Managing Director in the firms valuation and financial advisory business. Prior to joining Duff & Phelps Corporation,
Ms. Luscombe was an Associate at Smith Barney, a division of Citigroup Capital Markets, Inc., where she managed a variety of financial
transactions, including mergers and acquisitions, leveraged buyouts, and equity and debt financings. Ms. Luscombe is a member of the
Chicago Chapter of the Association for Corporate Growth, the Chartered Financial Analyst Society of Chicago and former president of the
Chicago Finance Exchange. Ms. Luscombe holds a Bachelor of Arts degree in economics from Stanford University, a Masters degree in economics
from the University of Chicago and a Master of Business Administration degree from the University of Chicago Booth School of Business.
In addition, Ms. Luscombe is licensed under the Series 24, 79 and 63 of FINRA.
John
V. Palancia has over 40 years of business experience in the financial services industry including serving as the Director of Global Futures
Operations for Merrill Lynch, Pierce, Fenner & Smith, Inc. (Merrill Lynch). Mr. Palancia possesses an in depth understanding
of broker-dealer operations from having served in various management capacities and has held industry registrations in both securities
and futures. Based on his service at Merrill Lynch, he also possesses a strong understanding of risk management, balance sheet analysis,
compliance and the regulatory framework under which regulated financial entities must operate. Additionally, he is well versed in the
regulatory framework under which investment companies must operate based on his service as a member of three other mutual fund boards.
This practical and extensive experience in the securities industry provides valuable insight into fund operations and enhances his ability
to effectively serve as chairman of the Board. Mr. Palancia is a member of the Investment Company Institute and Mutual Fund Directors
Forum. Mr. Palancia holds a Bachelor of Science degree in Economics.
Mark
H. Taylor has over 30 years of academic and professional experience in the accounting and auditing fields, which makes him particularly
qualified to chair the Boards Audit Committee. Dr. Taylor holds PhD, Masters and Bachelors degrees in Accountancy and is
a licensed Certified Public Accountant and serves as a member of two other mutual fund boards within the Northern Lights Fund Complex.
Dr. Taylor is the Director of the Lynn Pippenger School of Accountancy at the Muma College of Business at the University of South Florida
and has been serving a three-year term as President of the American Accounting Association (AAA) since August 2022 (as President-Elect
8/22-7/23, President 8/23-8/24, and Past President 8/24-8/25). Dr. Taylor previously served as Vice President-Finance of the AAA, and
as President of the Auditing Section of the AAA. He previously served a three-year term on the AICPAs Auditing Standards Board
and completed a fellowship in the Professional Practice Group of the Office of the Chief Accountant at the headquarters of the United
States Securities Exchange Commission. Dr. Taylor is a member of two research teams that received grants from the Center for Audit Quality
to study how accounting firms tone-at-the-top messaging impacts audit performance and how auditors manage the process of auditing
fair value measurements and other complex estimates in financial statements. Dr. Taylor has
had
his research widely published in leading academic accounting and practice journals. He has teaching interests in corporate governance
and accounting policy as well as auditing and assurance services at the graduate and undergraduate levels and possesses a strong understanding
of the regulatory framework under which investment companies operate.
Jeffery
D. Young has over 40 years of business management experience, including in the transportation industry and operations and information
technologies. He is currently Co-owner and Vice President of the Latin America Agriculture Development Corporation, an agribusiness exporting
fruit to the United States and other Central American countries. He has served as Assistant Vice President of Transportation Systems
at Union Pacific Railroad Company, where he was responsible for the development and implementation of large-scale command and control
systems that support railroad operations and safety. In this position, Mr. Young was heavily involved in the regulatory compliance of
safety and mission critical systems. Mr. Young also served as Chairman of the Association of American Railroads Policy Committee and
represented both Union Pacific Railroad and the railroad industry in safety and regulatory hearings with the National Transportation
Safety Board and the Federal Railroad Administration in Washington, DC. Mr. Young was a member of the Board of Directors of PS Technologies,
a Union Pacific affiliate serving as a technology supplier to the railroad industry. His practical business experience and understanding
of regulatory compliance provides a different perspective that brings diversity to Board deliberations.
Trustees
and Officers. The Trustees and officers of the Trust, together with information as to their principal business occupations during
the past five years and other information, are shown below. Unless otherwise noted, the address of each Trustee and officer is 225 Pictoria
Drive, Suite 450, Cincinnati, Ohio 45246.
Independent Trustees |
|||||
Name, Address, Year of Birth |
Position(s) Held with Registrant |
Length of Service and Term |
Principal Occupation(s) During Past 5 Years |
Number of Funds Overseen In The Fund Complex* |
Other Directorships Held During Past 5 Years** |
Patricia Luscombe 1961 |
Trustee | Since January 2015, Indefinite |
Managing Director of the Valuations and Opinions Group, Lincoln International LLC (since August 2007). |
4 | Northern Lights Fund Trust III (for series not affiliated with the Fund since 2015); Monetta Mutual Funds (since November 2015). |
John V. Palancia 1954 |
Trustee, Chairman |
Trustee, since February 2012, Indefinite; Chairman of the Board since May 2014. |
Retired (since 2011); formerly, Director of Global Futures Operations Control, Merrill Lynch, Pierce, Fenner & Smith, Inc. (1975-2011). |
4 | Northern Lights Fund Trust III (for series not affiliated with the Fund since 2012); Northern Lights Fund Trust (since 2011); Northern Lights Variable Trust (since 2011); Alternative Strategies Fund (since 2012). |
Mark H. Taylor 1964 |
Trustee, Chairman of the Audit Committee |
Since February 2012, Indefinite |
PhD (Accounting), CPA; Professor and Director, Lynn Pippenger School of Accountancy, Muma College of Business, University of South Florida (2019 – present); Professor and Department of Accountancy Chair, Case Western Reserve University (2009-2019); President, American Accounting Association (AAA) commencing August 2022 (President-Elect 2022-2023, President 2023-2024; Past President 2024-2025). AAA Vice President-Finance (2017-2020); President, Auditing Section of the AAA; Member, AICPA Auditing Standards Board (2009-2012); Academic Fellow, Office of the Chief Accountant, United States Securities Exchange Commission (2005-2006); Center for Audit Quality research grants (2014, 2012). |
4 | Northern Lights Fund Trust III (for series not affiliated with the Fund since 2012); Northern Lights Fund Trust (since 2007); Northern Lights Variable Trust (since 2007); Alternative Strategies Fund (since June 2010). |
Jeffery D. Young 1956 |
Trustee | Since January 2015, Indefinite |
Co-owner and Vice President, Latin America Agriculture Development Corp. (since May 2015); President, Celeritas Rail Consulting (since June 2014); Asst. Vice President – Transportation Systems, Union Pacific Railroad Company (June 1976 to April 2014). |
4 | Northern Lights Fund Trust III (for series not affiliated with the Fund since 2015). |
* | As of September 30, 202 3 , the Trust was comprised of 29 active portfolios managed by 1 4 unaffiliated investment advisers. The term Fund Complex applies only to the Funds and CP High Yield Trend ETF. The Funds and CP High Yield Trend ETF do not hold themselves out as related to any other series within the Trust for investment purposes, nor do they share the same investment adviser with any other series. |
** | Only includes directorships held within the past 5 years in a company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934 or subject to the requirements of Section 15(d) of the Securities Exchange Act of 1934, or any company registered as an investment company under the 1940 Act. |
Officers
of the Trust
Name, Address, Year of Birth |
Position Held with Registrant |
Length of Service and Term |
Principal Occupation(s) During Past 5 Years |
Brian |
President |
Since |
Vice President, Ultimus Fund Solutions, LLC (since 2020); Vice President, Gemini Fund Services, LLC (2015-2020). |
Timothy Burdick 1986 |
Vice President |
Since May 2023, indefinite |
Vice President and Senior Managing Counsel, Ultimus Fund Solutions, LLC (2023 – present); Vice President and Managing Counsel, Ultimus Fund Solutions, LLC (2022 – 2023); Assistant Vice President and Counsel, Ultimus Fund Solutions, LLC (2019 – 2022). |
Richard |
Treasurer |
Since |
Assistant Vice President, Ultimus Fund Solutions, LLC (since 2020); Assistant Vice President, Gemini Fund Services, LLC (2015-2020). |
Viktoriya |
Secretary |
Since |
Senior Legal Administrator, Ultimus Fund Solutions, LLC (since 2023); Legal Administrator II, Ultimus Fund Solutions, LLC (2021-2023); Legal Administrator I, Ultimus Fund Solutions, LLC (2019-2021); Legal Administration Associate, Gemini Fund Services, LLC (2017-2019). |
William |
Chief Compliance Officer |
Since |
Senior Compliance Officer of Northern Lights Compliance Services, LLC (since 2011). |
Audit
Committee. The Board has an Audit Committee that consists solely of Independent Trustees. The Audit Committees responsibilities
include: (i) recommending to the Board the selection, retention or termination of the Trusts independent auditors; (ii) reviewing with
the independent auditors the scope, performance and anticipated cost of their audit; (iii) discussing with the independent auditors certain
matters relating to the Trusts financial statements, including any adjustment to such financial statements recommended by such independent
auditors, or any other results of any audit; (iv) reviewing on a periodic basis a formal written statement from the independent auditors
with respect to their independence, discussing with the independent auditors any relationships or services disclosed in the statement
that may impact the objectivity and independence of the Trusts independent auditors and recommending that the Board take appropriate
action in response thereto to satisfy itself of the auditors independence; and (v) considering the comments of the independent auditors
and managements responses thereto with respect to the quality and adequacy of the Trusts accounting and financial reporting policies
and practices and internal controls. The Audit Committee operates pursuant to an Audit Committee Charter. Dr. Taylor is Chairman of the
Audit Committee. During the past fiscal year, the Audit Committee held five meetings.
Compensation
of Directors. Effective January 1, 2022, each Trustee receives a quarterly fee of $26,000, allocated among each of the various portfolios
comprising the Trust, for his or her attendance at the regularly scheduled meetings of the Board, to be paid in advance of each calendar
quarter, as well as reimbursement for any reasonable expenses incurred. Effective January 1, 2022, in addition to the quarterly fees
and reimbursements, the Chairman of the Board receives a quarterly fee of $6,250, and the Audit Committee
Chairman
receives a quarterly fee of $4,500. From January 1, 2021 through December 31, 2021, each Trustee who was not affiliated with the Trust
or an investment adviser to any series of the Trust received a quarterly fee of $23,500, allocated among each of the various portfolios
comprising the Trust, for his or her attendance at the regularly scheduled meetings of the Board, paid in advance of each calendar quarter,
as well as reimbursement for any reasonable expenses incurred. From April 1, 2019 through December 31, 2020, each Trustee who was not
affiliated with the Trust or an investment adviser to any series of the Trust received a quarterly fee of $21,500, allocated among each
of the various portfolios comprising the Trust, for his or her attendance at the regularly scheduled meetings of the Board, paid in advance
of each calendar quarter, as well as reimbursement for any reasonable expenses incurred. From January 1, 2017 through December 31, 2021,
in addition to the quarterly fees and reimbursements, the Chairman of the Board received a quarterly fee of $5,000, and the Audit Committee
Chairman received a quarterly fee of $3,750.
Additionally,
in the event an in-person meeting of the Board other than its regularly scheduled meetings (a Special Meeting) is required,
each Independent Trustee will receive a fee of $2,500 per Special Meeting, as well as reimbursement for any reasonable expenses incurred,
to be paid by the relevant series of the Trust or its investment adviser depending on the circumstances necessitating the Special Meeting.
None of the executive officers receive compensation from the Trust.
The
table below detail the amount of compensation the Board received from the Funds during the fiscal year ended September 30, 202 3 .
The Trust does not have a bonus, profit sharing, pension or retirement plan.
Name and Position |
Counterpoint Tactical Income Fund |
Counterpoint Tactical Equity Fund |
Counterpoint Tactical Municipal Fund |
CP High Yield Trend ETF |
Pension or Retirement Benefits Accrued as Part of Fund Expenses |
Estimated Annual Benefits Upon Retirement |
Total Compensation From Fund Complex* Paid to Trustees |
Patricia Luscombe |
$ [ ] | $ [ ] | $ [ ] | $ [ ] | None | None | $ [ ] |
John V. Palancia |
$ [ ] | $ [ ] | $ [ ] | $ [ ] | None | None | $ [ ] |
Mark H. Taylor |
$ [ ] |
$ [ ] |
$ [ ] | $ [ ] | None | None | $ [ ] |
Jeffery D. Young |
$ [ ] | $ [ ] | $ [ ] | $ [ ] | None | None | $ [ ] |
* | There are currently numerous series comprising the Trust. The term Fund Complex refers only to the Funds and CP High Yield Trend ETF, and not to any other series of the Trust. For the fiscal year ended September 30, 202 3 , the aggregate independent Trustees fees paid by the entire Trust were $ [ ] . |
Trustees
Ownership of Shares in the Funds. As of December 31, 2022, the Trustees beneficially owned the following amounts in the Funds:
Name of Trustee |
Dollar Range of Equity Securities in the Funds |
Aggregate Dollar Range of Equity Securities in All Registered Investment Companies Overseen by Trustee in Family of Investment Companies* |
Patricia Luscombe |
None | $10,001-$50,000 |
John V. Palancia |
None | $10,001-$50,000 |
Mark H. Taylor |
None | $10,001-$50,000 |
Jeffery D. Young |
None | None |
* | The Family of Investment Companies includes the following registered management investment companies in addition to the Trust: Northern Lights Fund Trust, Northern Lights Fund Trust II, Northern Lights Fund Trust IV and Northern Lights Variable Trust. |
The
audited financial statements and report of the independent registered public accounting firm required to be included in this SAI are
hereby incorporated by reference to the Annual Report for the Funds for the fiscal year ended September 30, 2023 . You may obtain
a copy of the Annual Report without charge by calling the Funds at 1-844-273-8637.
APPENDIX
A
Counterpoint Funds, LLC
Proxy
Voting Policies and Procedures
June 20, 2023
Pursuant
to Rule 206(4)-6 of the Advisers Act, a registered investment adviser who exercises voting authority with respect to client securities
must adopt and implement written policies and procedures:
1. | That are reasonably designed to ensure that the adviser votes client securities in the best interest of clients; and |
2. | Which include how the adviser will address material conflicts that may arise between the advisers interests and those of the client. |
Additionally,
pursuant to the rule advisers must disclose to clients how they may obtain information from the adviser about how the adviser voted with
respect to their securities; and describe to clients the advisers proxy voting policies and procedures and, upon request, furnish
a copy of the policies and procedures to the requesting client.
These
policies and procedures, which may be amended from time to time, apply to the voting of proxies by Counterpoint Mutual Funds, LLC (Adviser)
for accounts over which Adviser has proxy voting authority. These policies and procedures, as dated above, supersede all previously dated
versions.
SECTION
1 – PROXY VOTING GUIDELINES
Adviser
has hired Broadridge Investor Communication Solutions, Inc. (Broadridge) to provide to Adviser through the ProxyEdge®
platform, the corporate governance voting recommendations provided by Egan-Jones Proxy Service (Egan-Jones) to vote proxies
for its clients. Adviser therefore has adopted and implemented this Proxy Voting Policy and Procedures, based on those of Egan-Jones.
Any questions about this document should be directed to Advisers Chief Compliance Officer.
The
fundamental guideline followed by Adviser in voting proxies is to make every effort to confirm that the manner in which shares are voted
is in the best interest of clients and the value of the investment. Absent special circumstances of the types described below, it is
the policy of Adviser to exercise its proxy voting discretion in accordance with the Egan-Jones Proxy Voting Principles summarized in
Exhibit A (the Proxy Voting Guidelines). The Proxy Voting Guidelines are applicable to the voting of domestic and
global proxies.
SECTION
2 – PROXY VOTING PROCEDURES
Adviser
has implemented the following procedures to confirm that proxies are voted in the best interest of its clients:
1. | Adviser will maintain a list of all clients for which it votes proxies. |
2. | Adviser will confirm that Broadridge is the designated party to receive proxy voting materials from companies or intermediaries. |
3. | Broadridge will receive all proxy voting materials and will be responsible for ensuring that proxies are voted and submitted in a timely manner. |
4. | Adviser will review that Broadridge casts votes consistent with our Proxy Voting Guidelines outlined in Exhibit A attached. |
SECTION
3 – ERISA ACCOUNTS
Plans
governed by the Employee Retirement Income Security Act of 1974, as amended (ERISA), are to be administered consistent with
the terms of the governing plan documents and applicable provisions of ERISA. In cases where sole proxy voting discretion rests with
Adviser, the foregoing policies and procedures will be followed, subject to the fiduciary responsibility standards of ERISA. These standards
generally require fiduciaries to act prudently and to discharge their duties solely in the interests of participants and beneficiaries.
The Department of Labor has indicated that the voting decisions of ERISA fiduciaries must generally focus on the course that would most
likely increase the value of the stock being voted.
The
documents governing ERISA individual account plans may set forth various procedures for voting employer securities held by
the plan. Where authority over the investment of plan assets is granted to plan participants, many individual account plans provide that
proxies for employer securities will be voted in accordance with directions received from plan participants as to shares allocated
to
their plan accounts. In some cases, the governing plan documents may further provide that unallocated shares and/or allocated shares
for which no participant directions are received will be voted in accordance with a proportional voting method in which such shares are
voted proportionately in the same manner as are allocated shares for which directions from participants have been received. Consistent
with Labor Department positions, it is the policy of Adviser to follow the provisions of a plans governing documents in the voting
of employer securities, unless it determines that to do so would breach its fiduciary duties under ERISA.
SECTION
4 – CLOSED-END AND OPEN-END MUTUAL FUNDS
Proxies
for securities held within closed-end and open-end registered management investment companies (the Fund) that we manage will
be voted subject to any applicable investment restrictions of the Fund and, to the extent applicable, in accordance with any resolutions
or other instructions approved by authorized persons of the Fund.
Adviser
intends to comply with the safe harbor of section 12(d)(1)(F) and Rule 12d1-3 of the Investment Company Act of 1940. Adviser will mirror
vote proposals on proxies issued by underlying investment companies. Mirror voting means that the Fund votes its shares in the same proportion
that all shares of the underlying funds are voted, or in accordance with instructions received from fund shareholders.
Adviser
will provide such records and reports as required by the Fund for the Fund to file Form N-PX.
SECTION
5 – OBLIGATION TO MULTIPLE CLIENTS
Adviser
advises two types of clients: fixed income funds and equity funds. The fixed income funds hold only other funds, and are mandated to
execute mirror voting policies (see Section 4 above), therefore the Adviser does not have voting discretion in this case. For the equity
funds, the Adviser advises funds that execute an identical stock selection strategy. By design, vote recommendations will be made as
described in Section 1 above, and such decisions are in the clients best interest as the positions are uniform in character.
SECTION
6 – OTHER SPECIAL SITUATIONS
Adviser
may choose not to vote proxies in certain situations or for certain accounts, such as: 1) where a client has informed Adviser that it
wishes to retain the right to vote the proxy, Adviser will instruct the custodian to send the proxy material directly to the client,
2) where Adviser deems the cost of voting would exceed any anticipated benefit to the client, 3) where a proxy is received for a client
account that has been terminated with Adviser, 4) where a proxy is received for a security that Adviser no longer manages (e.g., Adviser
had previously sold the entire position), and/or 5) where the exercise of voting rights could restrict the ability of an accounts
portfolio manager to freely trade the security in question (as is the case, for example, in certain foreign jurisdictions known as blocking
markets).
In
addition, if any accounts over which Adviser has proxy-voting discretion participate in securities lending programs administered by the
custodian or a third party, Adviser will be unable to vote any security that is out on loan to a borrower because title to loaned securities
passes to the borrower. If Adviser has investment discretion over such account(s), however, it reserves the right to instruct the lending
agent to terminate a loan in situations where the matter to be voted upon is deemed to be material to the investment and the benefits
of voting the security are deemed to outweigh the costs of terminating the loan.
SECTION
7 – CLASS ACTIONS
Adviser
has hired Broadridge to seek recovery in class action settlements. Broadridge will file class action proof of claim forms with the claims
administrator. The claims administrator dispenses the money from the settlement fund to those persons or entities with valid claims.
Broadridge is entitled to a contingency fee of 20% of the total reimbursement of securities class action settlements it collects of behalf
of Advisers clients.
SECTION
8 – CONFLICTS OF INTEREST
Adviser
may occasionally be subject to conflicts of interest in the voting of proxies due to business or personal relationships it maintains
with persons having an interest in the outcome of certain votes. For example, Adviser and/or one of its employees may occasionally have
business or personal relationships with other proponents of proxy proposals, participants in proxy contests, corporate directors or candidates
for directorships.
If
at any time the CCO or Broadridge become aware of any type of potential or actual conflict of interest relating to a particular proxy
proposal, such conflict will be handled in accordance with the following:
1. | Where the Egan-Jones Proxy Voting Principles outline a voting position as either for or against such proxy proposal, voting will be in accordance with Egan-Jones Proxy Voting Principles. |
2. | Where the Egan-Jones Proxy Voting Principles outline a voting position to be determined on a case by case basis for such proxy proposal, or such proposal is not listed in the Egan-Jones Proxy Voting Principles, then one of the two following methods will be selected by Adviser depending upon the facts and circumstances of each situation and the requirements of applicable law: |
A. | Voting the proxy in accordance with the voting recommendation of Egan-Jones. |
B. | Voting the proxy pursuant to client direction. |
SECTION
9 – PROXY VOTING RECORDS
Adviser
will maintain the following records under these policies and procedures:
5. | A copy of all policies and procedures. |
6. | A copy of each proxy statement Adviser receives regarding clients securities. |
7. | A record of each vote cast by Adviser on behalf of a client. |
8. | A copy of any document created by Adviser that was material to making a decision on how to vote proxies on behalf of a client or that memorialize the basis for that decision. |
9. | A copy of each written client request for information on how Adviser voted proxies on behalf of the requesting client, and a copy of any written response by Adviser to any (written or oral) client request for information on how Adviser voted proxies on behalf of the requesting client. |
The
foregoing records will be retained for such period of time as is required to comply with applicable laws and regulations. Adviser may
rely on one or more third parties to create and retain the records referred to in these policies.
SECTION
10 – CLIENT DISCLOSURES
A
copy of these policies and procedures will be provided to clients upon request. In addition, copies of the above outlined records, as
they relate to particular clients, will be provided to those clients upon request.
EXHIBIT
A
PROXY
VOTING GUIDELINES
Adviser
intends to comply with the safe harbor of section 12(d)(1)(F) and Rule 12d1-3 of the Investment Company Act of 1940. Adviser will mirror
vote proposals on proxies issued by underlying investment companies. Mirror voting means that the Fund votes its shares in the same proportion
that all shares of the underlying funds are voted, or in accordance with instructions received from fund shareholders.
For
any other securities, the Adviser will exercise its proxy voting discretion in accordance with the most recent Egan-Jones Proxy Services
Standard Proxy Voting Principles and Guidelines.
PART
C
OTHER
INFORMATION
Item
28. Exhibits.
Each
of the Exhibits incorporated by reference below are found in File Nos. 811-22655, 333-178833.
(a)
Articles of Incorporation.
(c)
Instruments Defining Rights of Security Holder. None other than in the Declaration of Trust and By-Laws of the Registrant.
(d)
Investment Advisory Contracts.
(ix)
Investment Advisory Agreement between PlanRock Investment Management, LLC, and Registrant, with respect to the PlanRock Market Neutral
Income ETF, PlanRock Income Rotation ETF, Plan Rock Equity Rotation ETF, and PlanRock Alternative Equity ETF to be filed by subsequent
amendment.
(xiv)
Investment Advisory Agreement between Swan Capital Management, LLC and Registrant with respect to the Swan Enhanced Dividend Income ETF
to be filed by subsequent amendment.
(xxv)
Investment Advisory Agreement between Counterpoint Funds, LLC and Registrant with respect to the Counterpoint Quantitative Equity ETF
to be filed by subsequent amendment.
(xxviii)
Investment Sub-Advisory Agreement between Swan Capital Management, LLC and Swan Global Management, LLC with respect to the Swan Enhanced
Dividend Income ETF to be filed by subsequent amendment.
(e)
Underwriting Contracts.
(f)
Bonus or Profit Sharing Contracts. None.
(g)
Custodial Agreement.
(vi)(b)
Second Amendment to the Custody and Transfer Agency Agreement between the Registrant and Brown Brothers Harriman & Co. to be filed
by subsequent amendment.
(vi)(c)
Third Amendment to the Custody and Transfer Agency Agreement between the Registrant and Brown Brothers Harriman & Co. to be filed
by subsequent amendment.
(h)
Other Material Contracts.
(xiii)
Expense Limitation Agreement between Counterpoint Funds, LLC and Registrant, with respect to Counterpoint Quantitative Equity ETF to
be filed by subsequent amendment.
(xxxiii)
Expense Limitation Agreement between PlanRock Investment Management, LLC, and Registrant, with respect to the PlanRock Market Neutral
Income ETF, PlanRock Income Rotation ETF, Plan Rock Equity Rotation ETF, and PlanRock Alternative Equity ETF to be filed by subsequent
amendment.
(xxxiv)
Expense Limitation Agreement between Swan Capital Management, LLC, and Registrant, with respect to the Swan Enhanced Dividend Income
ETF to be filed by subsequent amendment.
(xxxv)
Rule 12d1-4 Fund of Funds Investment Agreements.
(a) | Legal Consent to be filed by subsequent amendment. |
(j)
Other Opinions. None.
(k)
Omitted Financial Statements. None.
(l)
Initial Capital Agreements. None.
(m)
Rule 12b-1 Plans.
(ix)(a)
Amended and Restated Exhibit A to Master Distribution and Shareholder Servicing Plan Pursuant to Rule 12b-1 for ETF Shares to be filed
by subsequent amendment.
(n)
Reserved.
(o)
Code of Ethics.
(xiii)
Code of Ethics of PlanRock Investment Management, LLC to be filed by subsequent amendment.
(xviii)
Reserved.
(p)
Powers of Attorney.
Item
29. Control Persons. None.
Item
30. Indemnification.
Generally,
certain of the agreements with the Trust, or related to the Trust, provide indemnification of the Trusts Trustees, officers, the
underwriter, and certain Trust affiliates. Insurance carried by the Trust provides indemnification of the Trustees and officers.
The details of these sources of indemnification and insurance follow.
Article
VIII, Section 2(a) of the Agreement and Declaration of Trust provides that to the fullest extent that limitations on the liability of
Trustees and officers are permitted by the Delaware Statutory Trust Act of 2002, the officers and Trustees shall not be responsible or
liable in any event for any act or omission of: any agent or employee of the Trust; any investment adviser or principal underwriter of
the Trust; or with respect to each Trustee and officer, the act or omission of any other Trustee or officer, respectively. The Trust,
out of the Trust Property, is required to indemnify and hold harmless each and every officer and Trustee from and against any and all
claims and demands whatsoever arising out of or related to such officers or Trustees performance of his or her duties as
an officer or Trustee of the Trust. This limitation on liability applies to events occurring at the time a person serves as a Trustee
or officer of the Trust whether or not such person is a Trustee or officer at the time of any proceeding in which liability is asserted.
Nothing contained in the Agreement and Declaration of Trust indemnifies, holds harmless or protects any officer or Trustee from or against
any liability to the Trust or any shareholder to which such person would otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of such persons office.
Article
VIII, Section 2(b) provides that every note, bond, contract, instrument, certificate or undertaking and every other act or document whatsoever
issued, executed or done by or on behalf of the Trust, the officers or the Trustees or any of them in connection with the Trust shall
be conclusively deemed to have been issued, executed or done only in such Persons capacity as Trustee and/or as officer, and such
Trustee or officer, as applicable, shall not be personally liable therefore, except as described in the last sentence of the first paragraph
of Section 2 of Article VIII.
Insofar
as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to trustees, officers and controlling persons
of the Registrant pursuant to the provisions of Delaware law and the Agreement and Declaration of the Registrant or the By-Laws of the
Registrant, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred or paid by a trustee, officer or controlling person of
the Trust in the successful defense of any action, suit or proceeding) is asserted by such trustee, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of such issue.
Pursuant
to the Underwriting Agreement between the Trust and Northern Lights Distributors, LLC (NLD), the Trust agrees to indemnify,
defend and hold NLD, its several officers and managers, and any person who controls NLD within the meaning of Section 15 of the Securities
Act free and harmless from and against any and all claims, demands, liabilities and expenses (including the reasonable cost of investigating
or defending such claims, demands or liabilities and any reasonable counsel fees incurred in connection therewith) which NLD, its officers
and managers, or any such controlling persons, may incur under the Securities Act, the 1940 Act, or common law or otherwise, arising
out of or based upon: (i) any untrue statement, or alleged untrue statement, of a material fact required to be stated in either any Registration
Statement or any Prospectus, (ii) the breach of any representations, warranties or obligations set forth in the Underwriting Agreement,
(iii) any omission, or alleged omission, to state a material fact required to be stated in any Registration Statement or any Prospectus
or necessary to make the statements in any of them not misleading, (iv) the Trusts failure to maintain an effective Registration
statement and Prospectus with respect to Shares of the Funds that are the subject of the claim or demand, (v) the Trusts failure
to provide NLD with advertising or sales materials to be filed with the FINRA on a timely basis, (vi) the Trusts failure to properly
register Fund Shares under applicable state laws, or (vii) reasonable actions taken by NLD resulting from NLDs reliance on instructions
received from an officer, agent or legal counsel of the Trust.
Pursuant
to the Underwriting Agreement, NLD agrees to indemnify, defend and hold the Trust, its several officers and Board members, and any person
who controls the Trust within the meaning of Section 15 of the Securities Act, free and harmless from and against any and all claims,
demands, liabilities and expenses (including the reasonable cost of investigating or defending such claims, demands or liabilities and
any reasonable counsel fees incurred in connection therewith) which the Trust, its officers or Board members, or any such controlling
person, may incur under the Securities Act, the 1940 Act, or under common law or otherwise, but only to the extent that such liability
or expense incurred by the Trust , its officers or Board members, or such controlling person results from such claims or demands: (i)
arising out of or based upon any sales literature, advertisements, information, statements or representations made by NLD and unauthorized
by the Trust or any Disqualifying Conduct in connection with the offering and sale of any Shares, or (ii) arising out of or based upon
any untrue, or alleged untrue, statement of a material fact contained in information furnished in writing by NLD to the Fund specifically
for use in the Trusts Registration Statement and used in the answers to any of the items of the Registration Statement or
in the corresponding statements made in the Prospectus, or shall arise out of or be based upon any omission, or alleged omission, to
state a material fact in connection with such information furnished in writing by NLD to the Trust and required to be stated in
such answers or necessary to make such information not misleading.
Pursuant
to the Fund Services Agreement and the ETF Fund Services Agreement (the Fund Services Agreements), each between the Trust
and Ultimus Fund Solutions, LLC (UFS), the Trust agrees to indemnify and hold UFS harmless from and against any and all losses, damages,
costs, charges, reasonable counsel fees, payments, expenses and liability arising out of or attributable to the Trusts refusal
or failure to comply with the terms of each Fund Services Agreement, or which arise out of the Trusts lack of good faith, gross
negligence or willful misconduct with respect to the Trusts performance under or in connection with each Fund Services Agreement.
Pursuant
to the Fund Services agreements, UFS shall indemnify and hold the Trust and each applicable Fund harmless from and against any and all
losses, damages, costs, charges, reasonable attorney or consultant fees, payments, expenses and liability arising out of or attributable
to UFSs refusal or failure to comply with the terms of each Fund Services Agreement, breach of any representation or warranty
made by UFS contained in each Fund Services Agreement or which arise out of UFSs lack of good faith, gross negligence, willful
misconduct or reckless disregard of its duties with respect to UFSs performance under or in connection with each Fund Services
Agreement.
Pursuant
to the Consulting Services Agreement (Consulting Agreement) with Northern Lights Compliance Services, LLC (NLCS), the Trust
agrees to indemnify and hold NLCS harmless from and against any and all losses, damages, costs, charges, reasonable counsel fees, payments,
expenses and liability arising out of or attributable to (i) the Trusts refusal or failure to comply with the terms of the Consulting
Agreement, (ii) the Trusts lack of good faith, gross negligence or willful misconduct with respect to the Trusts performance
under or in connection with this Agreement, or (iii) all reasonable actions taken by NLCS hereunder in good faith.
Pursuant
to the Consulting Agreement, NLCS shall indemnify and hold the Trust and each Fund harmless from and against any and all losses, damages,
costs, charges, reasonable counsel fees, payments, expenses and liabilities arising out of or attributable to NLCSs refusal or
failure to comply with the terms of the Consulting Agreement, or which arise out of NLCSs lack of good faith, gross negligence
or willful misconduct with respect to NLCS performance under or in connection with the Consulting Agreement.
The
Trust maintains a mutual fund directors and officers liability policy. The policy, under certain circumstances, such as the inability
of the Trust to indemnify Trustees and officers provides coverage to Trustees and officers. Coverage under the policy would include
losses by reason of any act, error, omission, misstatement, misleading statement, neglect or certain breaches of duty.
Generally,
each management agreement or investment advisory agreement provides that neither the adviser nor any director, manager, officer or employee
of the adviser performing services for the Trust at the direction or request of the adviser in connection with the advisers discharge
of its obligations under the agreement shall be liable for any error of judgment or mistake of law or for any loss suffered by the Trust
in connection with any matter to which the agreement relates, and the adviser shall not be responsible for any action of the Trustees
of the Trust in following or declining to follow any advice or recommendation of the adviser or any sub-adviser retained by the adviser
pursuant to Section 9 of the agreement; PROVIDED, that nothing contained in the agreement shall be construed (i) to protect the adviser
against any liability to the Trust or its shareholders to which the adviser would otherwise be subject by reason of willful misfeasance,
bad faith, or gross negligence in the performance of the advisers duties, or by reason of the advisers reckless disregard of its obligations
and duties under the agreement, or (ii) to protect any director, manager, officer or employee of the adviser who is or was a Trustee
or officer of the Trust against any liability of the Trust or its shareholders to which such person would otherwise be subject by reason
of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of such persons office
with the Trust. Additionally, generally, each sub-advisory agreement provides that the subadviser shall indemnify the adviser,
the Trust and each Fund, and their respective affiliates and controlling persons for any liability and expenses, including without limitation
reasonable attorneys fees and expenses, which the adviser, the Trust and/or the Fund and their respective affiliates and controlling
persons may sustain as a result of the subadvisers willful misfeasance, bad faith, gross negligence, reckless disregard of its duties
hereunder or violation of applicable law, including, without limitation, the federal and state securities laws. Generally, each
sub-advisory agreement provides that adviser shall
indemnify the subadviser, its affiliates and its controlling persons, for any liability
and expenses, including without limitation reasonable attorneys fees and expenses, which may be sustained as a result of the advisers
willful misfeasance, bad faith, gross negligence, reckless disregard of its duties hereunder or violation of applicable law, including,
without limitation, the federal and state securities laws.
Pursuant
to the Investment Advisory Agreement (Advisory Agreement) with First Pacific Advisors, LP (FPA), the Trust,
on behalf of FPA Global Equity ETF, agrees to indemnify and hold harmless FPA and any director, partner, manager, officer or employee
thereof (the Indemnified Persons) from all taxes, charges, expenses, assessments, claims and liabilities, and expenses,
including (without limitation) reasonable attorneys fees and disbursements, arising out of any investment, or for any other act
or omission in the performance by such person or persons of their respective duties, except that such Indemnified Persons shall not be
indemnified against any liability resulting: (i) from such persons breach of fiduciary duty with respect to receipt of compensation
for services; (ii) from such persons own willful misfeasance, bad faith, gross negligence, or, reckless disregard of its duties
and obligations under this Agreement; (ii) liabilities arising from such persons violations of applicable law, including but not
limited to the Act, the 1933 Act, the 1934 Act, the Advisers Act, any state and foreign securities laws, and the Internal Revenue Code
of 1986, all as amended from time to time; (iii) the accuracy and completeness (and liability for the lack thereof) of statements in
FPA Global Equity ETFs Registration Statement provided by FPA and relating to FPA and FPAs affiliates and the Funds
investment strategies and related risks, and any other information supplied by the Adviser for inclusion therein; and (iv) any loss (including
transaction costs) incurred by FPA Global Equity ETF as a result of any trade error or investment made by FPA as described in Section
11.2 of the Advisory Agreement. The indemnification obligations described in the Advisory Agreement are limited to the assets of FPA
Global Equity ETF and shall not extend to the assets of the Trust as a whole.
Item
31. Activities of Investment Advisor and Sub-Advisor.
Certain
information pertaining to the business and other connections of each Advisor of each series of the Trust is hereby incorporated herein
by reference to the section of the respective Prospectus captioned Investment Advisor and to the section of the respective
Statement of Additional Information captioned Investment Advisory and Other Services. The information required by this Item
31 with respect to each director, officer or partner of each Advisor is incorporated by reference to the Advisors Uniform Application
for Investment Adviser Registration (Form ADV) on file with the Securities and Exchange Commission (SEC). Each
Advisors Form ADV may be obtained, free of charge, at the SECs website at www.adviserinfo.sec.gov, and may be requested by File No.
as follows:
Swan
Capital Management, LLC, the Advisor of the Swan Defined Risk Fund, Swan Defined Risk Emerging Markets Fund, Swan Defined Risk Foreign
Fund, Swan Defined Risk U.S. Small Cap Fund, Swan Defined Risk Growth Fund and Swan Enhanced Dividend Income ETF – File No. 801-76701.
Swan
Global Management, LLC, the Sub-Advisor of the Swan Defined Risk Fund, Swan Defined Risk Emerging Markets Fund, Swan Defined Risk Foreign
Fund, Swan Defined Risk U.S. Small Cap Fund, Swan Defined Risk Growth Fund and Swan Enhanced Dividend Income ETF – File No. 801-80552.
Pinnacle
Family Advisors, LLC, the Advisor of the Pinnacle Multi-Strategy Core Fund – File No. 801-78013.
Stonebridge
Capital Advisors, LLC, the Advisor of The Covered Bridge Fund– File No. 801-53760.
First
Associated Investment Advisors, the Advisor of The Teberg Fund – File No. 801-60972.
RESQ
Investment Partners, LLC, the Advisor of the RESQ Dynamic Allocation Fund and RESQ Strategic Income Fund – File No. 801-78822.
Horizon
Capital Management, Inc., the Advisor of the Issachar Fund – File No. 801-26038.
Newfound
Research LLC, the Advisor of the Return Stacked® Risk Managed U.S. Stocks & Bonds Fund– File No. 801-73042.
Howard
Capital Management, Inc., the Advisor of the HCM Tactical Growth Fund, HCM Dividend Sector Plus Fund, HCM Income Plus Fund, HCM Defender
500 Index ETF, HCM Defender 100 Index ETF and HCM Dynamic Income Fund – File No. 801-69763.
Counterpoint
Funds, LLC, the Advisor of the Counterpoint Tactical Income Fund, Counterpoint Tactical Equity Fund, Counterpoint Tactical Municipal
Fund, CP High Yield Trend ETF and Counterpoint Quantitative Equity ETF – File No. 801-80197.
Absolute
Capital Management, LLC, the Advisor of Absolute Capital Asset Allocator Fund and Absolute Capital Defender Fund – File No. 801-61336.
Boyd
Watterson Asset Management, LLC, the Advisor of Boyd Watterson Limited Duration Enhanced Income Fund – File No. 801-57468.
Centerstone
Investors, LLC, the Advisor of the Centerstone Investors Fund and Centerstone International Fund – File No. 801-107361.
Dakota
Wealth, LLC, the Advisor of the Persimmon Long/Short Fund File No. 801-114097.
First
Pacific Advisors, LP, the Advisor of the FPA Global Equity ETF File No. 801-67160.
Rondure
Global Advisors, LLC, the Advisor of the Rondure New World Fund and Rondure Overseas Fund File No. 801-108903.
PlanRock
Investment Management, LLC, the Advisor of the PlanRock Market Neutral Income ETF, PlanRock Income Rotation ETF, Plan Rock Equity Rotation
ETF, and PlanRock Alternative Equity ETF File No. [ ]
Item
32. Principal Underwriter.
(a)
Northern Lights Distributors, LLC (NLD), is the principal underwriter for all series of Mutual Fund & Variable Insurance
Trust. NLD also acts as principal underwriter for the following:
NLD
also acts as a principal underwriter to the following investment companies: Absolute Core Strategy ETF, Advisor One Funds, Arrow ETF
Trust, DWA Tactical ETF, Arrow QVM Equity Factor ETF, Arrow Reserve Capital Management ETF, Arrow Dogs of the World ETF, Arrow DWA Country
Rotation ETF, Arrow ETF Trust, Ballast Small/Mid Cap ETF, Boyar Value Fund Inc., Copeland Trust, Humankind Benefit Corporation, Miller
Investment Trust, Mutual Fund and Variable Insurance Trust, Mutual Fund Series Trust, New Age Alpha Trust, Northern Lights Fund
Trust, Northern Lights Fund Trust II, Northern Lights Fund Trust III, Grandeur Peak Global Trust, Northern Lights Fund Trust IV, Northern
Lights Variable Trust, PREDEX, Princeton Private Investment Access Fund, The North Country Funds, The Saratoga Advantage Trust, Tributary
Funds, Inc., Two Roads Shared Trust, and Uncommon Investment Funds Trust.
(b)
NLD is registered with the Securities and Exchange Commission as a broker-dealer and is a member of the Financial Industry Regulatory
Authority (FINRA). The principal business address of NLD is 4221 North 203rd St., Suite 100, Elkhorn, NE
68022 NLD is an affiliate of Ultimus Fund Solutions, LLC. Both NLD and Ultimus Fund Solutions, LLC are under common ownership of The
Ultimus Fund Group, LLC. To the best of Registrants knowledge, the following are the
members and officers of NLD:
Name |
Positions |
Positions |
Kevin Guerette |
President | None |
Stephen Preston |
Treasurer, Chief Compliance Officer, Finance and Operations Principal, and AML Compliance Officer |
None |
William J. Strait |
Manager, Secretary, and General Counsel |
None |
Melvin Van Cleave |
Chief Information Securities Officer |
None |
David James |
Manager | None |
(c) | Not Applicable. No underwriting commissions are paid in connection with the sale of Registrants Shares. |
Item
33. Location of Accounts and Records.
All
accounts, books and documents required to be maintained by the Registrant pursuant to Section 31(a) of the Investment Company Act of
1940 and Rules 31a-1 through 31a-3 thereunder are maintained at the office of the Registrant, Adviser, Sub-Adviser, Principal Underwriter,
Transfer Agent, Fund Accountant, Administrator and Custodian at the addresses stated in the SAI.
Swan
Capital Management, LLC 1099 Main Ave., Ste. 260, Durango, CO 81301, pursuant to the Investment Advisory Agreement with the Trust, maintains
all records required pursuant to such agreement with respect to the Swan Defined Risk Fund, Swan Defined Risk Emerging Markets Fund,
Swan Defined Risk Foreign Fund, Swan Defined Risk U.S. Small Cap Fund, Swan Defined Risk Growth Fund and Swan Enhanced Dividend Income
ETF.
Pinnacle
Family Advisors, LLC, 620 W. Republic Road, Suite 104, Springfield, MO 65810 pursuant to the Advisory Agreement with Trust, maintains
all records required pursuant to such agreement with respect to the Pinnacle Multi-Strategy Core Fund.
Stonebridge
Capital Advisors, LLC, 2550 University Avenue West, Suite 180 South, Saint Paul, MN 55114 pursuant to the Advisory Agreement with Trust,
maintains all records required pursuant to such agreement with respect to The Covered Bridge Fund.
First
Associated Investment Advisors, Inc., 5161 Miller Trunk Highway Duluth, MN 55811 pursuant to the Advisory Agreement with Trust, maintains
all records required pursuant to such agreement with respect to The Teberg Fund.
RESQ
Investment Partners, LLC 9383 East Bahia Drive, Suite 120, Scottsdale, AZ 85260 pursuant to the Advisory Agreement with Trust, maintains
all records required pursuant to such agreement with respect to RESQ Dynamic Allocation Fund and RESQ Strategic Income Fund.
Horizon
Capital Management, Inc. 106 Valerie Drive, Lafayette, LA 70508 pursuant to the Advisory Agreement with Trust, maintains all records
required pursuant to such agreement with respect to the Issachar Fund.
Newfound
Research LLC, 380 Washington Street, 2nd Floor, Wellesley Hills, Massachusetts 02481 pursuant to the Advisory Agreement with Trust, maintains
all records required pursuant to such agreement with respect to the Return Stacked® Risk Managed U.S. Stocks & Bonds Fund.
Howard
Capital Management, Inc., 1145 Hembree Road, Rosewell, GA 30076 pursuant to the Advisory Agreement with Trust, maintains all records
required pursuant to such agreement with respect to the HCM Tactical Growth Fund, HCM Dividend Sector Plus Fund, HCM Income Plus Fund,
HCM Defender 500 Index ETF, HCM Defender 100 Index ETF and HCM Dynamic Income Fund.
Counterpoint
Funds, LLC 12760 High Bluff Drive, Suite 280, San Diego, CA 92130 pursuant to the Advisory Agreement with Trust, maintains all records
required pursuant to such agreement with respect to the Counterpoint Tactical Income Fund, Counterpoint Tactical Equity Fund, Counterpoint
Tactical Municipal Fund, CP High Yield Trend ETF and Counterpoint Quantitative Equity ETF.
Swan
Global Management, LLC 41 Shell Castle, Humacao, PR 00791 pursuant to the Sub-Advisory Agreement with Swan Capital Management, Inc.,
maintains all records required pursuant to such agreement with respect to the Swan Defined Risk Fund, Swan Defined Risk Emerging Markets
Fund, Swan Defined Risk Foreign Fund, Swan Defined Risk U.S. Small Cap Fund, Swan Defined Risk Growth Fund and Swan Enhanced Dividend
Income ETF.
Absolute
Capital Management, LLC 101 Pennsylvania Boulevard, Pittsburgh, PA 15228 pursuant to the Advisory Agreement with Trust, maintains all
records required pursuant to such agreement with respect to the Absolute Capital Asset Allocator Fund and Absolute Capital Defender Fund.
Boyd
Watterson Asset Management, LLC 1301 East 9th Street, Suite 2900, Cleveland, OH 44114 pursuant to the Advisory Agreement with
Trust, maintains all records required pursuant to such agreement with respect to the Boyd Watterson Limited Duration Enhanced Income
Fund.
Centerstone
Investors, LLC 228 Park Avenue S, Suite 75938, New York, NY 10003 pursuant to the Advisory Agreement with Trust, maintains all records
required pursuant to such agreement with respect to the Centerstone Investors Fund and Centerstone International Fund.
Dakota
Wealth, LLC 11376 N. Jog Road Suite 101, Palm Beach Gardens, FL 33418 pursuant to the Advisory Agreement with Trust, maintains all records
required pursuant to such agreement with respect to the Persimmon Long/Short Fund.
First
Pacific Advisors, LP 11601 Wilshire Boulevard, Suite 1200 Los Angeles, CA 90025 pursuant to the Advisory Agreement with Trust, maintains
all records required pursuant to such agreement with respect to the FPA Global Equity ETF.
Rondure
Global Advisors, LLC 136 South Main Street, Suite 720, Salt Lake City, UT 84101 pursuant to the Advisory Agreement with Trust, maintains
all records required pursuant to such agreement with respect to the Rondure New World Fund and Rondure Overseas Fund.
PlanRock
Investment Management, LLC, 1850 General George Patton Drive, Suite 205, Franklin, TN 37067 pursuant to the Advisory Agreement with Trust,
maintains all records required pursuant to such agreement with respect to the PlanRock Market Neutral Income ETF, PlanRock Income Rotation
ETF, Plan Rock Equity Rotation ETF, and PlanRock Alternative Equity ETF.
Item
34. Management Services. Not applicable.
Item
35. Undertakings. The Registrant undertakes that each Subsidiary and each Director of each Subsidiary hereby consents to service of process
within the United States, and to examination of its books and records.
SIGNATURES
Pursuant
to the requirements of the Securities Act of 1933, as amended, and the Investment Company Act of 1940, as amended, the Registrant has
duly caused this registration statement to be signed on its behalf by the undersigned, duly authorized, in the City of Fort Salonga,
and State of New York, on the 19th day of October, 2023.
Northern Lights Fund Trust III |
|||
By: | /s/ Brian Curley |
||
Brian Curley, President |
Pursuant
to the requirements of the Securities Act, this registration statement has been signed below by the following persons in the capacities
indicated on the dates indicated.
Northern
Lights Fund Trust III
Name | Title |
/s/ Brian Curley |
President and Principal Executive Officer |
Richard Gleason* |
Treasurer and Principal Accounting Officer |
Patricia Luscombe* |
Independent Trustee |
John V. Palancia* |
Independent Trustee |
Mark H. Taylor* |
Independent Trustee |
Jeffery D. Young* |
Independent Trustee |
*By: | Date: | |||
/s/ Brian Curley |
October 19, 2023 | |||
Brian Curley |
*Attorney-in-Fact
– Pursuant to Powers of Attorney as previously filed on May 30, 2023.