AS FILED WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION ON AUGUST 28, 2013
File No. 033-42484
File No. 811-06400
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
POST-EFFECTIVE AMENDMENT NO. 220 /X/
AND
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 221 /X/
THE ADVISORS' INNER CIRCLE FUND
(Exact Name of Registrant as Specified in Charter)
101 Federal Street
Boston, Massachusetts 02110
(Address of Principal Executive Offices, Zip Code)
1-800-932-7781
(Registrant's Telephone Number)
Michael Beattie
c/o SEI Corporation
One Freedom Valley Drive
Oaks, Pennsylvania 19456
(Name and Address of Agent for Service)
Copy to:
Timothy W. Levin, Esquire Dianne M. Descoteaux, Esquire
Morgan, Lewis & Bockius LLP c/o SEI Corporation
1701 Market Street One Freedom Valley Drive
Philadelphia, Pennsylvania 19103 Oaks, Pennsylvania 19456
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It is proposed that this filing become effective (check appropriate box)
/X/ Immediately upon filing pursuant to paragraph (b)
/ / On [date] pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)(1)
/ / 75 days after filing pursuant to paragraph (a)(2)
/ / On [date] pursuant to paragraph (a) of Rule 485
CAMBIAR AGGRESSIVE VALUE FUND
TICKER SYMBOL:
INSTITUTIONAL CLASS SHARES PROSPECTUS
SEPTEMBER 1, 2013
THE ADVISORS' INNER CIRCLE FUND
[CAMBIAR INVESTORS LOGO]
MANAGER FOR ALL SEASONS
THE U.S. SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED
THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
CMB-PS-007-1000
TABLE OF CONTENTS
PAGE
CAMBIAR AGGRESSIVE VALUE FUND ............................................ 1
FUND INVESTMENT OBJECTIVE ........................................... 1
FUND FEES AND EXPENSES .............................................. 1
PRINCIPAL INVESTMENT STRATEGIES ..................................... 2
PRINCIPAL RISKS OF INVESTING IN THE FUND ............................ 3
PERFORMANCE INFORMATION ............................................. 5
INVESTMENT ADVISER .................................................. 6
PORTFOLIO MANAGER ................................................... 6
PURCHASING AND SELLING FUND SHARESX ................................. 6
TAX INFORMATION ..................................................... 7
PAYMENTS TO BROKER-DEALERS AND
OTHER FINANCIAL INTERMEDIARIES .................................... 7
INVESTING WITH THE CAMBIAR FUNDS ......................................... 8
BUYING FUND SHARES .................................................. 8
REDEEMING FUND SHARES ............................................... 10
EXCHANGING FUND SHARES .............................................. 11
TRANSACTION POLICIES ................................................ 12
ACCOUNT POLICIES .................................................... 15
ADDITIONAL INFORMATION ABOUT THE FUND .................................... 20
OTHER INVESTMENT PRACTICES AND STRATEGIES ........................... 20
INVESTMENT MANAGEMENT ............................................... 21
SHAREHOLDER SERVICING ARRANGEMENTS .................................. 22
PAYMENTS TO FINANCIAL INTERMEDIARIES ................................ 22
FINANCIAL HIGHLIGHTS ..................................................... 23
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INSTITUTIONAL CLASS SHARES OF THE CAMBIAR AGGRESSIVE VALUE FUND ARE CURRENTLY
NOT AVAILABLE FOR PURCHASE
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CAMBIAR AGGRESSIVE VALUE FUND
FUND INVESTMENT OBJECTIVE
The Cambiar Aggressive Value Fund (the "Fund") seeks long-term capital
appreciation.
FUND FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
Institutional Class Shares of the Fund.
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
Redemption Fee (as a percentage of amount redeemed, if 2.00%
shares redeemed have been held for less than 90 days)
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT YOU PAY EACH YEAR AS A PERCENTAGE
OF THE VALUE OF YOUR INVESTMENT)
Management Fees 1.00%
Other Expenses(2) 0.15%
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Total Annual Fund Operating Expenses 1.15%
Less Fee Reductions and/or Expense Reimbursements (0.05)%
-------
Total Annual Fund Operating Expenses After Fee Reductions 1.10%
and/or Expense Reimbursements(1)
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(1) Cambiar Investors LLC (the "Adviser") has contractually agreed to reduce
fees and reimburse expenses in order to keep net operating expenses
(excluding interest, taxes, brokerage commissions, acquired fund fees and
expenses, and extraordinary expenses (collectively, "excluded expenses"))
from exceeding 1.10% of the Fund's Institutional Class Shares' average
daily net assets until September 1, 2014. In addition, if at any point
Total Annual Fund Operating Expenses (not including excluded expenses) are
below the expense cap, the Adviser may receive from the Fund the difference
between the Total Annual Fund Operating Expenses (not including excluded
expenses) and the expense cap to recover all or a portion of its prior fee
reductions or expense reimbursements made during the preceding three-year
period during which this Agreement (or any prior agreement) was in place.
This Agreement may be terminated: (i) by the Board, for any reason at any
time; or (ii) by the Adviser, upon ninety (90) days' prior written notice
to the Trust, effective as of the close of business on September 1, 2014.
(2) Other Expenses for this class are based on estimates in the current year.
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 Fund's operating expenses (including one year of capped expenses in each
period) remain the same. Although your actual costs may be higher or lower,
based on these assumptions your costs would be:
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1 YEAR 3 YEARS 5 YEARS 10 YEARS
$112 $360 $628 $1,393
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 rate
may indicate higher transaction costs and may result in higher taxes when Fund
shares are held in a taxable account. These costs, which are not reflected in
total annual fund operating expenses or in the example, affect the Fund's
performance. During its most recent fiscal year, the Fund's portfolio turnover
rate was 85% of the average value of its portfolio.
PRINCIPAL INVESTMENT STRATEGIES
Normally, the Fund invests at least 65% of its net assets in equity securities
of U.S. and non-U.S. companies within any market capitalization range. The
equity securities in which the Fund will invest may include convertible
securities. The Fund may also sell securities short as part of its investment
strategy. In addition, the Fund may invest in derivatives, including options
and total return swaps, in an effort to increase returns, to hedge against the
risk of unfavorable price movements in the underlying instruments, to provide
economic exposure to a security or issuer, to manage cash flows or currency
exposure, to address tax considerations, or as an alternative to selling a
security short.
The Fund typically invests in a portfolio of 20-30 issuers that Cambiar
Investors LLC ("Cambiar" or the "Adviser") believes represent the best
opportunities for long-term capital appreciation. Due to the focused nature of
the Fund's investment strategy, the Fund is considered to be non-diversified.
The Adviser's primary analysis criteria is active individual company selection
based on the relative merits and valuation of the underlying corporate entity.
The Adviser employs a relative value approach, whereby it searches for
companies trading at the low end of historic and sectoral valuation ranges,
with a strong market position or product franchise and good overall financial
condition. The Adviser's selection and screening criteria are extremely
qualitative, and the Adviser makes little attempt to time market or sector
movements.
Consistent with its effort to create a focused portfolio of the companies which
it believes represent the best opportunities for long-term capital
appreciation, the Adviser may at times allocate a significant percentage of the
Fund's assets to securities of non-U.S. companies that trade in either domestic
or foreign markets. The Adviser may invest in securities of companies in
"emerging market" countries. An "emerging market" country is any country
determined by the Adviser to have an emerging market economy, considering
factors such as the country's credit rating, its political and economic
stability, and the development of its financial and capital markets. Typically,
emerging markets are in countries that are in the process of industrialization,
with lower gross national products than more developed countries. The Adviser's
allocation among various foreign countries does not seek to replicate any
particular index's country allocation by global capitalization or regional
capitalization. There is no limit on investments in securities of foreign
issuers, including emerging markets issuers.
The following are typical factors the Adviser considers when purchasing
stocks:
o Low price-earnings ratio relative to historic norms and peer group;
o Low cash flow multiple relative to historic norms and peer group;
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o New product and/or restructuring potential under-appreciated by the
marketplace;
o Sudden stock price decline caused by flight of "momentum investors"
with little change in fundamentals; and
o Excessive investor pessimism in relation to overall outlook for
company over the medium to long term.
The Adviser's short strategy is utilized opportunistically and is driven by the
same underlying philosophy and investment process as the long portion of the
portfolio. If the Adviser determines that a company does not have the
underlying fundamentals to be added to the Fund as a long position, it will
consider using the stock speculatively as a short position or as a paired trade
to hedge a long position in the Fund.
The Adviser may sell a stock that the Fund holds long because:
o It realizes positive developments and achieves its target price;
o It experiences exaggerated price moves relative to actual
developments; or
o It experiences a change in or deteriorating fundamentals.
Due to its investment strategy, the Fund may buy and sell securities
frequently. Such a strategy often involves higher expenses, including brokerage
commissions, and may increase the amount of capital gains (in particular,
short-term gains) realized by the Fund. Shareholders may pay tax on such
capital gains. In addition, the use of short sales may cause the Fund to have
higher expenses (especially interest on borrowings and dividend expenses) than
those of other equity mutual funds.
PRINCIPAL RISKS OF INVESTING IN THE FUND
As with all mutual funds, a shareholder is subject to the risk that his or her
investment could lose money. A Fund share is not a bank deposit and is not
insured or guaranteed by the FDIC or any government agency. The principal risk
factors affecting shareholders' investments in the Fund are set forth below.
Since it purchases equity securities, the Fund is subject to the risk that
stock prices will fall over short or extended periods of time. Historically,
the equity markets have moved in cycles, and the value of the Fund's equity
securities may fluctuate drastically from day to day. Individual companies may
report poor results or be negatively affected by industry and/or economic
trends and developments. The prices of securities issued by such companies may
suffer a decline in response. These factors contribute to price volatility,
which is the principal risk of investing in the Fund. This risk is greater for
small- and medium-sized companies, which tend to be more vulnerable to adverse
developments than larger companies.
When the Fund invests in foreign securities, it will be subject to risks not
typically associated with domestic securities. Although American Depositary
Receipts ("ADRs") and European Depositary Receipts ("EDRs") are alternatives to
directly purchasing the underlying foreign securities in their national markets
and currencies, they are also subject to many of the risks associated with
investing directly in foreign securities. Foreign investments, especially
investments in emerging markets, can be riskier and more volatile than
investments in the United States. Adverse political and economic developments
or changes in the value of foreign currency can make it difficult for the Fund
to sell its securities and could reduce the value of your shares. Differences
in tax and accounting standards and difficulties in obtaining information about
foreign companies can negatively affect investment decisions.
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The Fund's investments in foreign securities are also subject to the risk that
the securities may be difficult to value and/or valued incorrectly.
Investments in emerging markets securities are considered speculative and
subject to heightened risks in addition to the general risks of investing in
non-U.S. securities. Unlike more established markets, emerging markets may have
governments that are less stable, markets that are less liquid and economies
that are less developed. In addition, the securities markets of emerging market
countries may consist of companies with smaller market capitalizations and may
suffer periods of relative illiquidity; significant price volatility;
restrictions on foreign investment; and possible restrictions on repatriation
of investment income and capital. Furthermore, foreign investors may be
required to register the proceeds of sales, and future economic or political
crises could lead to price controls, forced mergers, expropriation or
confiscatory taxation, seizure, nationalization or creation of government
monopolies.
Fund investments in foreign currencies and securities denominated in foreign
currencies are subject to currency risk. As a result, the value of securities
denominated in foreign currencies can change significantly when foreign
currencies strengthen or weaken relative to the U.S. dollar. Additionally, the
value of the Fund's assets measured in U.S. dollars may be affected by exchange
control regulations. The Fund will generally incur transaction costs in
connection with conversions between various currencies which will negatively
impact performance.
The Fund may invest in convertible securities, which generally offer lower
interest or dividend yields than non-convertible securities of similar quality.
The market values of convertible securities tend to decline as interest rates
increase and, conversely, to increase as interest rates decline. However, a
convertible security's market value tends to reflect the market price of the
common stock of the issuing company when the stock price is greater than the
convertible security's conversion price. The conversion price is defined as the
predetermined price at which the convertible could be exchanged for the
associated stock. A convertible security may lose all of its value if the value
of the underlying stock falls below the conversion price of the security. As
the market price of the underlying common stock declines, the price of the
convertible security tends to be influenced more by the yield of the
convertible security. Thus, it may not decline in price to the same extent as
the underlying common stock. In the event of a liquidation of the issuing
company, holders of convertible securities would be paid before the company's
common stock holders. Consequently, the issuer's convertible securities
generally entail less risk than its common stock.
The Fund may invest in derivatives. Derivatives are often more volatile than
other investments and may magnify the Fund's gains or losses. There are various
factors that affect the Fund's ability to achieve its objective with
derivatives. Successful use of a derivative depends upon the degree to which
prices of the underlying assets correlate with price movements in the
derivatives the Fund buys or sells. The Fund could be negatively affected if
the change in market value of its securities fails to correlate perfectly with
the values of the derivatives it purchased or sold. The lack of a liquid
secondary market for a derivative may prevent the Fund from closing its
derivative positions and could adversely impact its ability to achieve its
objective and to realize profits or limit losses. Since derivatives may be
purchased for a fraction of their value, a relatively small price movement in a
derivative may result in an immediate and substantial loss or gain to the Fund.
Derivatives are often more volatile than other investments and the Fund may
lose more in a derivative than it originally invested in it. There can be no
assurance that the Adviser's use of derivatives will be successful in achieving
their intended goals.
Additionally, derivative instruments, particularly market access products, are
subject to counterparty risk, meaning that the party that issues the derivative
may experience a significant credit event and may be unwilling or unable to
make timely settlement payments or otherwise honor its obligations. When
determining whether a counterparty is creditworthy, the Adviser considers
factors such as credit rating
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agency analysis, broker-dealer credit spreads and financial statements among
others. The Adviser regularly monitors the creditworthiness of each
counterparty that the Fund enters into a transaction with and maintains an
approved list of counterparties.
The Fund may purchase or sell options, which involve the payment or receipt of
a premium by the investor and the corresponding right or obligation, as the
case may be, to either purchase or sell the underlying security for a specific
price at a certain time or during a certain period. Purchasing options involves
the risk that the underlying instrument will not change price in the manner
expected, so that the investor loses its premium. Selling options involves
potentially greater risk because the investor is exposed to the extent of the
actual price movement in the underlying security rather than only the premium
payment received (which could result in a potentially unlimited loss).
Over-the-counter options also involve counterparty risk.
The Fund may enter into total return swaps, which are contracts whereby one
party agrees to make payments of the total return from a reference instrument
during a specified period, in return for payments equal to a fixed or floating
rate of interest or the total return from another underlying reference
instrument. A reference instrument may be a single asset, a pool of assets or
an index of assets. The primary risks associated with total return swaps are
counterparty risk, which means the counterparty fails to meet its obligations,
and market risk, meaning that the Fund is subject to the risk that it could
lose its entire investment.
When the Fund sells securities "short," the Fund may be subject to
substantially higher risks and greater volatility than most mutual funds. The
Fund seeks to increase return and reduce risk by using short sales and other
forms of volatile financial derivatives such as options. Short sales are
speculative investments that will cause the Fund to lose money if the value of
a security does not go down as the Adviser expects. Because the market price of
the security sold short could increase without limit, the Fund could be subject
to a theoretically unlimited loss, although the Fund may be able to limit any
such losses by purchasing the security sold short. Short sales can also be used
as a hedge and therefore lower the overall risk of the Fund.
The Fund is non-diversified, which means that it may invest in the securities
of relatively few issuers. As a result, the Fund may be more susceptible to a
single adverse economic or political occurrence affecting one or more of these
issuers, and may experience increased volatility due to its investments in
those securities.
The Fund pursues a "value style" of investing. Value investing focuses on
companies whose stock appears undervalued in light of factors such as the
company's earnings, book value, revenues or cash flow. If the Adviser's
assessment of a company's value or prospects for exceeding earnings
expectations or market conditions is inaccurate, the Fund could suffer losses
or produce poor performance relative to other funds. In addition, "value
stocks" can continue to be undervalued by the market for long periods of time.
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund by showing changes in the Fund's
performance from year to year and by showing how the Fund's average annual
total returns for 1 and 5 years and since inception compare with those of a
broad measure of market performance. Of course, the Fund's past performance
(before and after taxes) does not necessarily indicate how the Fund will
perform in the future.
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As of the date of this prospectus, Institutional Class Shares of the Fund have
not commenced operations and therefore have no performance information to
report. The performance information provided shows the returns of Investor
Class Shares of the Fund, which are offered in a separate prospectus.
Institutional Class Shares of the Fund would have substantially similar
performance as Investor Class Shares because the shares are invested in the
same portfolio of securities and the annual returns would differ only to the
extent that the expenses of Institutional Class Shares are lower. Updated
performance information is available by calling 1-866-777-8227.
2008 (43.82)%
2009 77.88%
2010 38.54%
2011 (17.25)%
2012 5.98%
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During the periods shown in the chart, the Fund's Investor Class Shares'
highest return for a quarter was 30.74% (quarter ended 09/30/2009) and the
lowest return for a quarter was (32.69)% (quarter ended 09/30/2011). The Fund's
Investor Class Shares' total return from 1/1/2013 to 6/30/2013 was 14.65% .
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED DECEMBER 31, 2012
After-tax returns are calculated using the historical highest individual
federal marginal income tax rates and do not reflect the impact of state and
local taxes. Actual after-tax returns depend on an investor's tax situation and
may differ from those shown. After-tax returns shown are not relevant to
investors who hold their Fund shares through tax-deferred arrangements, such as
401(k) plans or individual retirement accounts.
SINCE INCEPTION
INVESTOR CLASS SHARES 1 YEAR 5 YEARS (08/31/07)
------------------------------------------------------------------------------------------------------------------------------------
Fund Returns Before Taxes 5.98% 3.95% 4.04%
Fund Returns After 5.98% 3.23% 3.35%
Taxes on Distributions
Fund Returns After Taxes on Distributions and Sale of 3.89% 2.99% 3.09%
Fund Shares
Russell 3000([R]) Index (reflects no deduction for fees, 16.42% 2.04% 1.95%
expenses, or taxes)
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INVESTMENT ADVISER
Cambiar Investors LLC
PORTFOLIO MANAGER
Brian M. Barish, CFA, President, Director of Research, joined the Adviser in
1997 and has managed the Fund since its inception.
PURCHASING AND SELLING FUND SHARES
To purchase shares of the Fund for the first time, you must invest at least
$5,000,000. The Fund reserves the right to waive the minimum initial investment
amounts in its sole discretion. If the fund elects to do so, the Fund reserves
the right to transfer shares purchased below the minimum investment, on a
tax-free
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basis, from Institutional Class Shares to Investor Class Shares of the Fund.
There is no minimum for subsequent investments.
If you own your shares directly, you may redeem your shares on any day the New
York Stock Exchange ("NYSE") is open for business by contacting the Fund
directly by mail or telephone at 1-866-777-8227.
If you own your shares through an account with an investment professional or
other institution, contact that investment professional or institution to
redeem your shares.
TAX INFORMATION
The Fund intends to make distributions that may be taxed as ordinary income or
capital gains, unless you are investing through a tax-deferred arrangement,
such as a 401(k) or individual retirement account, in which case your
distribution will be taxed when withdrawn from the tax-deferred account.
PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES
If you purchase shares of 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 intermediary's web
site for more information.
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INVESTING WITH THE CAMBIAR FUNDS
For information regarding the federal income tax consequences of transactions
in shares of the Fund, including information about cost basis reporting, see
"Federal Taxes."
BUYING FUND SHARES
To purchase Institutional Class Shares directly from the Fund through its
transfer agent, complete and send in the account application. If you need an
account application or have questions, please call 1-866-777-8227.
All investments must be made by check, wire or ACH. All checks must be payable
in U.S. dollars and drawn on U.S. financial institutions. The Fund does not
accept purchases made by third-party checks, credit cards, credit card checks,
cash, traveler's checks, money orders or cashier's checks.
The Fund does not generally accept investments by non-U.S. persons. Non-U.S.
persons may be permitted to invest in the Fund subject to the satisfaction of
enhanced due diligence. Please contact the Fund for more information.
BY MAIL
You can open an account with the Fund by sending a check and your account
application to the address below. You can add to an existing account by sending
the Fund a check and, if possible, the "Invest by Mail" stub that accompanies
your statement. Be sure your check identifies clearly your name, your account
number and the name of the Fund.
REGULAR MAIL ADDRESS
The Cambiar Funds
P.O. Box 219009
Kansas City, MO 64121-9009
EXPRESS MAIL ADDRESS
The Cambiar Funds
c/o DST Systems, Inc.
430 West 7th Street
Kansas City, MO 64105
The share price used to fill the purchase order is the next price calculated by
the Fund after the Fund's transfer agent receives the order in proper form
(meaning that it is complete and contains all necessary information, and has
all supporting documentation such as proper signature guarantees, IRA rollover
forms, etc.) at the P.O. Box provided for regular mail delivery or the office
address provided for express mail delivery.
BY WIRE
To open an account by wire, call 1-866-777-8227 for details. To add to an
existing account by wire, wire your money using the wiring instructions set
forth below (be sure to include the Fund name and your account number).
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WIRING INSTRUCTIONS
UMB Bank, N.A.
ABA# 101000695
The Cambiar Funds
DDA Acct. # 9871063178
Ref: Fund name/account number/account name
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BY AUTOMATIC INVESTMENT PLAN (VIA AUTOMATED CLEARING HOUSE OR ACH)
You may not open an account via ACH. However, once you have established an
account, you can set up an automatic investment plan by mailing a completed
application to the Fund. To cancel or change a plan, write to the Fund at: The
Cambiar Funds, P.O. Box 219009, Kansas City, MO 64121 (Express Mail Address:
The Cambiar Funds c/o DST Systems, Inc., 430 West 7th Street, Kansas City, MO
64105). Allow up to 15 days to create the plan and 3 days to cancel or change
it.
PURCHASES IN-KIND
Subject to the approval of the Fund, an investor may purchase shares of the
Fund with liquid securities and other assets that are eligible for purchase by
the Fund (consistent with the Fund's investment policies and restrictions) and
that have a value that is readily ascertainable in accordance with the Fund's
valuation policies. These transactions will be effected only if the Adviser
deems the security to be an appropriate investment for the Fund. Assets
purchased by the Fund in such a transaction will be valued in accordance with
procedures adopted by the Fund. The Fund reserves the right to amend or
terminate this practice at any time.
MINIMUM INVESTMENTS
The minimum investment in Institutional Class Shares of the Fund is $5,000,000.
The Fund reserves the right to waive the minimum initial investment amounts in
its sole discretion. If the fund elects to do so, the Fund reserves the right
to transfer shares purchased below the minimum investment, on a tax-free basis,
from Institutional Class Shares to Investor Class Shares of the Fund. There is
no minimum for subsequent investments.
FUND CODES
The Fund's reference information, which is listed below, will be helpful to you
when you contact the Fund to purchase or exchange Institutional Class Shares,
check the Fund's daily net asset value per share ("NAV") or obtain additional
information.
FUND NAME TRADING SYMBOL CUSIP FUND CODE
Cambiar Aggressive Value Fund
REDEEMING FUND SHARES
BY MAIL
You may contact the Fund directly by mail at: The Cambiar Funds, P.O. Box
219009, Kansas City, MO 64121 (Express Mail Address: The Cambiar Funds c/o DST
Systems, Inc., 430 West 7th Street, Kansas City, MO 64105). Send a letter to
the Fund signed by all registered parties on the account specifying:
o The Fund name;
o The account number;
o The dollar amount or number of shares you wish to redeem;
o The account name(s); and
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o The address to which redemption (sale) proceeds should be sent.
The share price used to fill the sell order is the next price calculated by the
Fund after the Fund's transfer agent receives the order in proper form (meaning
that it is complete and contains all necessary information, and has all
supporting documentation such as proper signature guarantees, IRA rollover
forms, etc.) at the P.O. Box provided for regular mail delivery or the office
address provided for express mail delivery.
All registered share owner(s) must sign the letter in the exact name(s) in
which their account is registered and must designate any special capacity in
which they are registered.
Certain redemption requests will require a signature guarantee by an eligible
guarantor institution. Eligible guarantors include commercial banks, savings
and loans, savings banks, trust companies, credit unions, member firms of a
national stock exchange, or any other member or participant of an approved
signature guarantor program. For example, signature guarantees may be required
if your address of record has changed in the last 30 days, you want the
proceeds sent to a bank other than the bank of record on your account, or if
you ask that the proceeds be sent to a different person or address. Please note
that a notary public is not an acceptable provider of a signature guarantee and
that we must be provided with the original guarantee. Signature guarantees are
for the protection of our shareholders. Before it grants a redemption request,
the Fund may require a shareholder to furnish additional legal documents to
insure proper authorization.
Accounts held by a corporation, trust, fiduciary or partnership may require
additional documentation along with a signature guaranteed letter of
instruction. The Funds participate in the Paperless Legal Program (the
"Program"), which eliminates the need for accompanying paper documentation on
legal securities transfers. Requests received with a Medallion Signature
Guarantee will be reviewed for the proper criteria to meet the guidelines of
the Program and may not require additional documentation. Please contact
Shareholder Services at 1-866-777-8227 for more information.
BY TELEPHONE
You must first establish the telephone redemption privilege (and, if desired,
the wire and/or ACH redemption privilege) by completing the appropriate sections
of the account application.
Call 1-866-777-8227 to redeem your shares. Based on your instructions, the
Fund will mail your proceeds to you or send them to your bank by either Fed
wire or ACH.
EXCHANGING FUND SHARES
At no charge, you may exchange Institutional Class Shares of one Cambiar Fund
for Institutional Class Shares of another Cambiar Fund by writing to or calling
the Fund, subject to any applicable minimum investment requirements. You may
only exchange shares between accounts with identical registrations (i.e., the
same names and addresses).
The exchange privilege is not intended as a vehicle for short-term or excessive
trading. The Fund may suspend or terminate your exchange privilege if you
engage in a pattern of exchanges that is excessive, as determined at the sole
discretion of the Fund. For more information about the Fund's policy on
excessive trading, see "Excessive Trading Policies and Procedures."
-11-
TRANSACTION POLICIES
CALCULATING YOUR SHARE PRICE
You may buy, sell or exchange shares of the Fund on each day the NYSE is open
for business (a "Business Day") at a price equal to its net asset value ("NAV")
next computed after the Fund receives your order in good form. The Fund
calculates NAV once each Business Day as of the close of normal trading on the
NYSE (normally, 4:00 p.m., Eastern Time). To receive the current Business Day's
NAV, the Fund or an authorized institution must receive your order in good form
(meaning that it is complete, contains all necessary information, and has all
supporting documentation such as proper signature guarantees, IRA rollover
forms, etc.) before the close of trading on the NYSE that day. Otherwise, you
will receive the NAV that is calculated at the close of trading on the
following Business Day. If the NYSE closes early - such as on days in advance
of certain generally observed holidays - the Fund will calculate NAV as of the
earlier closing time. The Fund will not accept orders that request a particular
day or price for the transaction or any other special conditions.
Shares will not be priced on days that the NYSE is closed for trading,
including nationally observed holidays. Since securities that are traded on
foreign exchanges may trade on days when the NYSE is closed, the value of the
Fund may change on days when you are unable to purchase or redeem shares.
The Fund calculates its NAV by adding the total value of its assets,
subtracting its liabilities and then dividing the result by the number of
shares outstanding. In calculating NAV, the Fund generally values its
investment portfolios at market price. If market prices are not readily
available or the Fund reasonably believes that they are unreliable, such as in
the case of a security value that has been materially affected by events
occurring after the relevant market closes, but before the time as of which the
Fund calculates NAV, the Fund is required to price those securities at fair
value as determined in good faith using methods approved by the Board of
Trustees (the "Board"). Pursuant to the policies adopted by, and under the
ultimate supervision of the Board, these methods are implemented through the
Fund's Fair Value Pricing Committee, members of which are appointed by the
Board. The Fund's determination of a security's fair value price often involves
the consideration of a number of subjective factors, and is therefore subject
to the unavoidable risk that the value that the Fund assigns to a security may
be higher or lower than the security's value would be if a reliable market
quotation for the security was readily available.
With respect to non-U.S. securities held by the Fund, the Fund may take factors
influencing specific markets or issuers into consideration in determining the
fair value of a non-U.S. security. International securities markets may be open
on days when the U.S. markets are closed. In such cases, the value of any
international securities owned by the Fund may be significantly affected on
days when investors cannot buy or sell shares. In addition, due to the
difference in times between the close of the international markets and the time
as of which the Fund prices its shares, the value the Fund assigns to
securities may not be the same as the quoted or published prices of those
securities on their primary markets or exchanges. In determining fair value
prices, the Fund may consider the performance of securities on their primary
exchanges, foreign currency appreciation/depreciation, securities market
movements in the United States, or other relevant information related to the
securities.
There may be limited circumstances in which the Fund would price securities at
fair value for stocks of U. S. companies that are traded on U.S. exchanges --
for example, if the exchange on which a portfolio
-12-
security is principally traded closed early or if trading in a particular
security was halted during the day and did not resume prior to the time the
Fund calculated its NAV.
When valuing fixed income securities with remaining maturities of more than 60
days, the Fund uses the value of the security provided by pricing services. The
values provided by a pricing service may be based upon market quotations for
the same security if a quotation is readily available, or may be based upon the
values of securities expected to trade in a similar manner or a pricing matrix.
When valuing fixed income securities with remaining maturities of 60 days or
less, the Fund uses the security's amortized cost. Amortized cost and the use
of a pricing matrix in valuing fixed income securities are forms of fair value
pricing.
Securities, options, futures contracts and other assets (including swap
agreements) for which market quotations are not readily available will be
valued at their fair value as determined in good faith by or under the
direction of the Board.
BUYING OR SELLING SHARES THROUGH A FINANCIAL INTERMEDIARY
In addition to being able to buy and sell Fund shares directly from the Fund
through its transfer agent, you may also buy or sell shares of the Fund through
accounts with financial intermediaries such as brokers and other institutions
that are authorized to place trades in Fund shares for their customers. When
you purchase or sell Fund shares through a financial intermediary (rather than
directly from the Fund), you may have to transmit your purchase and sale
requests to the financial intermediary at an earlier time for your transaction
to become effective that day. This allows the financial intermediary time to
process your requests and transmit them to the Fund prior to the time the Fund
calculates its NAV that day. Your financial intermediary is responsible for
transmitting all purchase and redemption requests, investment information,
documentation and money to the Fund on time. If your financial intermediary
fails to do so, it may be responsible for any resulting fees or losses. Unless
your financial intermediary is an authorized institution (defined below),
orders transmitted by the financial intermediary and received by the Fund after
the time NAV is calculated for a particular day will receive the following
day's NAV.
Certain financial intermediaries, including certain broker-dealers and
shareholder organizations, are authorized to act as agent on behalf of the Fund
with respect to the receipt of purchase and redemption requests for Fund shares
("authorized institutions"). These requests are executed at the NAV next
determined after the authorized institution receives the request. To determine
whether your financial intermediary is an authorized institution such that it
may act as agent on behalf of the Fund with respect to purchase and redemption
requests for Fund shares, you should contact them directly.
If you deal directly with a financial intermediary, you will have to follow
their procedures for transacting with the Fund. Your financial intermediary may
charge a fee for your purchase and/or redemption transactions. For more
information about how to purchase or sell Fund shares through a financial
intermediary, you should contact your authorized institution directly.
IN-KIND TRANSACTIONS
Under certain conditions and at the Fund's discretion, you may pay for shares
of the Fund with securities instead of cash. In addition, the Fund may pay part
of your redemption proceeds (in excess of $250,000) with securities instead of
cash. It is highly unlikely that your shares would ever be redeemed in kind,
but if they were you would have to pay transaction costs to sell the securities
distributed to you, as well as taxes on any capital gains from the sale as with
any redemption. In addition, you would continue to be subject to the risks of
any market fluctuation in the value of the securities you receive in kind until
they are sold.
-13-
REDEMPTION FEE
In an effort to discourage short-term trading and defray costs incurred by
shareholders as a result of short-term trading, the Fund charges a 2.00%
redemption fee on redemptions of shares that have been held for less than 90
days. The fee is deducted from the sale proceeds and cannot be paid separately,
and any proceeds of the fee are credited to the assets of the Fund from which
the redemption was made. The fee does not apply to shares purchased with
reinvested dividends or distributions. In determining how long shares of the
Fund have been held, the Fund assumes that shares held by the investor the
longest period of time will be sold first.
The redemption fee is applicable to Fund shares purchased either directly from
the Fund or through a financial intermediary, such as a broker-dealer.
Transactions through financial intermediaries typically are placed with the
Fund on an omnibus basis and include both purchase and sale transactions placed
on behalf of multiple investors. The Fund requests that financial
intermediaries assess the redemption fee on customer accounts and collect and
remit the proceeds to the Fund. However, the Fund recognizes that due to
operational and systems limitations, intermediaries' methods for tracking and
calculating the fee may be inadequate or differ in some respects from the
Fund's. Therefore, to the extent that financial intermediaries are unable to
collect the redemption fee, the Fund may not be able to defray the expenses
associated with those short-term trades made by that financial intermediary's
customers.
The Fund reserves the right to waive its redemption fee at its discretion when
it believes such waiver is in the best interests of the Fund, including with
respect to certain categories of redemptions that the Fund reasonably believes
may not raise frequent trading or market timing concerns. These categories
currently include, but are not limited to, the following: (i) participants in
certain group retirement plans whose processing systems are incapable of
properly applying the redemption fee to underlying shareholders; (ii)
redemptions resulting from certain transfers upon the death of a shareholder;
(iii) redemptions by certain pension plans as required by law or by regulatory
authorities; (iv) systematic withdrawals; and (v) retirement loans and
withdrawals.
PAYMENT OF REDEMPTION PROCEEDS
Your proceeds can be wired to your bank account (may be subject to a $10 fee),
sent to you by check or sent via ACH to your bank account once you have
established banking instructions with the Fund. The Fund will pay for all
shares redeemed within seven days after it receives a redemption request in
proper form, meaning that it is complete and contains all necessary information
and has all supporting documentation (such as proper signature guarantees, IRA
rollover forms, etc.).
The Fund may require that signatures be guaranteed by a bank or member firm of
a national securities exchange. Signature guarantees are for the protection of
shareholders. Before they grant a redemption request, the Fund may require a
shareholder to furnish additional legal documents to insure proper
authorization.
If you redeem shares that were purchased by check or through ACH, you will not
receive your redemption proceeds until the check has cleared or the ACH
transaction has been completed, which may take up to 15 days from the purchase
date.
TELEPHONE TRANSACTIONS
The Fund will employ reasonable procedures to confirm that instructions
communicated by telephone are genuine. Therefore, the Fund will not be
responsible for any loss, liability, cost or expense for following instructions
received by telephone reasonably believed to be genuine.
-14-
RIGHTS RESERVED BY THE FUND
PURCHASES
At any time and without notice, the Fund may:
o Stop offering shares;
o Reject any purchase order; or
o Bar an investor engaged in a pattern of excessive trading from buying
shares. (Excessive trading can adversely impact performance by
disrupting management and by increasing expenses.) The Fund will
consider various factors in determining whether an investor has
engaged in excessive trading. These factors include, but are not
limited to, the investor's historic trading patterns, the number of
transactions, the size of the transactions, the time between
transactions and the percentage of the investor's account involved in
each transaction. For more information about the Fund's policies on
excessive trading, see "Excessive Trading Policies and Procedures."
REDEMPTIONS
At any time and without notice, the Fund may change or eliminate any of the
redemption methods described above, except redemption by mail. The Fund may
suspend your right to redeem if:
o Trading on the NYSE is restricted or halted; or
o The U. S. Securities and Exchange Commission allows the Fund to delay
redemptions.
EXCHANGES
The Fund may:
o Modify or cancel the exchange program at any time on 60 days' written
notice to shareholders;
o Reject any request for an exchange; or
o Limit or cancel a shareholder's exchange privilege, especially when
an investor is engaged in a pattern of excessive trading.
ACCOUNT POLICIES
EXCESSIVE TRADING POLICIES AND PROCEDURES
The Fund is intended for long-term investment purposes only and discourages
shareholders from engaging in "market timing" or other types of excessive
short-term trading. This frequent trading into and out of the Fund may present
risks to the Fund's long-term shareholders and could adversely affect
shareholder returns. The risks posed by frequent trading include interfering
with the efficient implementation of the Fund's investment strategies,
triggering the recognition of taxable gains and losses on the sale of Fund
investments, requiring the Fund to maintain higher cash balances to meet
redemption requests, and experiencing increased transaction costs.
-15-
In addition, because the Fund invests in foreign securities traded primarily on
markets that close prior to the time the Fund determines its NAV, the risks
posed by frequent trading may have a greater potential to dilute the value of
Fund shares held by long-term shareholders than funds investing exclusively in
U.S. securities. In instances where a significant event that affects the value
of one or more foreign securities held by the Fund takes place after the close
of the primary foreign market, but before the time that the Fund determines its
NAV, certain investors may seek to take advantage of the fact that there will
be a delay in the adjustment of the market price for a security caused by this
event until the foreign market reopens (sometimes referred to as "price" or
"time zone" arbitrage). Shareholders who attempt this type of arbitrage may
dilute the value of the Fund's shares if the price of the Fund's foreign
securities do not reflect their fair value. Although the Fund has procedures
designed to determine the fair value of foreign securities for purposes of
calculating its NAV when such an event has occurred, fair value pricing,
because it involves judgments that are inherently subjective, may not always
eliminate the risk of price arbitrage. For more information on how the Fund
uses fair value pricing, see "Calculating Your Share Price."
Because the Fund may invest in mid and small capitalization securities, which
often trade in lower volumes and may be less liquid, the Fund may be more
susceptible to the risks posed by frequent trading because frequent
transactions in the Fund's shares may have a greater impact on the market
prices of these types of securities. In addition, because frequent trading may
cause the Fund to attempt to maintain higher cash positions, changes to the
Fund's holdings in response to frequent trading may impact the market prices of
such relatively thinly traded securities held by the Fund.
The Fund's service providers will take steps reasonably designed to detect and
deter frequent trading by shareholders pursuant to the Fund's policies and
procedures described in this prospectus and approved by the Fund's Board. For
purposes of applying these policies, the Fund's service providers may consider
the trading history of accounts under common ownership or control. The Fund's
policies and procedures include:
o Shareholders are restricted from making more than 3 "round trips"
into or out of the Fund per year. If, to the knowledge of the Fund, a
shareholder exceeds this amount, the Fund and/or its service providers
may, at their discretion, reject any additional purchase or exchange
orders. The Fund defines a "round trip" as a purchase into the Fund by
a shareholder, followed by a subsequent redemption out of the Fund, of
an amount the Adviser reasonably believes would be harmful or
disruptive to the Fund.
o The Fund assesses a redemption fee of 2.00% on redemptions by
shareholders of Fund shares held for less than 90 days (subject to
certain exceptions as discussed in "Redemption Fee").
o The Fund reserves the right to reject any purchase or exchange
request by any investor or group of investors for any reason without
prior notice, including, in particular, if the Fund or its Adviser
reasonably believes that the trading activity would be harmful or
disruptive to the Fund.
The Fund and/or its service providers seek to apply these policies to the best
of their abilities uniformly and in a manner they believe is consistent with
the interests of the Fund's long-term shareholders. The Fund does not knowingly
accommodate frequent purchases and redemptions by Fund shareholders. Although
these policies are designed to deter frequent trading, none of these measures
alone nor all of them taken together eliminate the possibility that frequent
trading in the Fund will occur. Systematic purchases and redemptions are exempt
from these policies.
-16-
Financial intermediaries (such as investment advisers and broker-dealers) often
establish omnibus accounts in the Fund for their customers through which
transactions are placed. The Fund has entered into "information sharing
agreements" with these financial intermediaries, which permit the Fund to
obtain, upon request, information about the trading activity of the
intermediary's customers that invest in the Fund. If the Fund or its service
providers identify omnibus account level trading patterns that have the
potential to be detrimental to the Fund, the Fund or its service providers may,
in their sole discretion, request from the financial intermediary information
concerning the trading activity of its customers. Based upon a review of that
information, if the Fund or its service providers determine that the trading
activity of any customer may be detrimental to the Fund, they may, in their
sole discretion, request the financial intermediary to restrict or limit
further trading in the Fund by that customer. If the Fund is not satisfied that
the intermediary has taken appropriate action, the Fund may terminate the
intermediary's ability to transact in Fund shares. When information regarding
transactions in the Fund's shares is requested by the Fund and such information
is in the possession of a person that is itself a financial intermediary to a
financial intermediary (an "indirect intermediary"), any financial intermediary
with whom the Fund has an information sharing agreement is obligated to obtain
transaction information from the indirect intermediary or, if directed by the
Fund, to restrict or prohibit the indirect intermediary from purchasing shares
of the Fund on behalf of other persons.
The Fund and its service providers will use reasonable efforts to work with
financial intermediaries to identify excessive short-term trading in omnibus
accounts that may be detrimental to the Fund. However, there can be no
assurance that the monitoring of omnibus account level trading will enable the
Fund to identify or prevent all such trading by a financial intermediary's
customers. Please contact your financial intermediary for more information.
CUSTOMER IDENTIFICATION AND VERIFICATION
To help the government fight the funding of terrorism and money laundering
activities, federal law requires all financial institutions to obtain, verify,
and record information that identifies each person who opens an account.
What this means to you: When you open an account, the Fund will ask your name,
address, date of birth, and other information that will allow the Fund to
identify you. This information is subject to verification to ensure the
identity of all persons opening a mutual fund account.
The Fund is required by law to reject your new account application if the
required identifying information is not provided.
In certain instances, the Fund is required to collect documents to fulfill its
legal obligation. Documents provided in connection with your application will
be used solely to establish and verify a customer's identity.
Attempts to collect the missing information required on the application will be
performed by either contacting you or, if applicable, your broker. If this
information cannot be obtained within a timeframe established in the sole
discretion of the Fund, your application will be rejected.
Upon receipt of your application in proper form (meaning that it is complete
and contains all necessary information, and has all supporting documentation
such as proper signature guarantees, IRA rollover forms, etc.), or upon receipt
of all identifying information required on the application, your investment
will be received and your order will be processed at the NAV next-determined.
-17-
The Fund reserves the right to close or liquidate your account at the NAV next
-determined and remit proceeds to you via check if they are unable to verify
your identity. Attempts to verify your identity will be performed within a
timeframe established in the sole discretion of the Fund. Further, the Fund
reserves the right to hold your proceeds until your original check clears the
bank, which may take up to 15 days from the date of purchase. In such an
instance, you may be subject to a gain or loss on Fund shares and will be
subject to corresponding tax implications.
ANTI-MONEY LAUNDERING PROGRAM
Customer identification and verification is part of the Fund's overall
obligation to deter money laundering under federal law. The Fund has adopted an
Anti-Money Laundering Compliance Program designed to prevent the Fund from
being used for money laundering or the financing of illegal activities. In
this regard, the Fund reserves the right to: (i) refuse, cancel or rescind any
purchase or exchange order; (ii) freeze any account and/or suspend account
services; or (iii) involuntarily close your account in cases of threatening
conduct or suspected fraudulent or illegal activity. These actions will be
taken when, in the sole discretion of Fund management, they are deemed to be in
the best interest of the Fund or in cases when the Fund is requested or
compelled to do so by governmental or law enforcement authority. If your
account is closed at the request of governmental or law enforcement authority,
you may not receive proceeds of the redemption if the Fund is required to
withhold such proceeds.
SMALL ACCOUNTS
The Fund may redeem your shares without your permission if the value of your
account falls below $2,500,000. This provision does not apply:
o To retirement accounts and certain other accounts; or
o When the value of your account falls because of market fluctuations
and not your redemptions.
The Fund will provide you at least 30 days' written notice to allow you time to
add to your account and avoid the sale of your shares.
DISTRIBUTIONS
Normally, the Fund distributes its net investment income and its net capital
gains, if any, at least once a year. The Fund will automatically reinvest
dividends and distributions in additional shares of the Fund, unless you elect
on your account application to receive them in cash.
FEDERAL TAXES
The following is a summary of the federal income tax consequences of investing
in the Fund. This summary does not apply to shares held in an individual
retirement account or other tax-qualified plan, which are not subject to
current tax. Transactions relating to shares held in such accounts may,
however, be taxable at some time in the future. You should always consult your
tax advisor for specific guidance regarding the federal, state and local tax
effect of your investment in the Fund.
TAXES ON DISTRIBUTIONS
The Fund will distribute substantially all of its net investment income and its
net realized capital gains, if any. The dividends and distributions you
receive, whether in cash or reinvested in additional shares of the
-18-
Fund, may be subject to federal, state, and local taxation, depending upon your
tax situation. Income distributions, including distributions of net short-term
capital gains but excluding distributions of qualified dividend income, are
generally taxable at ordinary income tax rates. Capital gains distributions and
distributions that are designated by the Fund as qualified dividend income are
generally taxable at the rates applicable to long-term capital gains. Once a
year, the Fund will send you a statement showing the types and total amount of
distributions you received during the previous year.
Effective beginning January 1,2013, U.S. individuals with income exceeding
$200,000 ($250,000 if married and filing jointly) are subject to a new 3.8%
Medicare contribution tax on their "net investment income," including interest,
dividends, and capital gains (including capital gains realized on the sale or
exchange of shares of the Fund).
You should note that if you purchase shares just before a distribution, the
purchase price would reflect the amount of the upcoming distribution. In this
case, you would be taxed on the entire amount of the distribution received,
even though, as an economic matter, the distribution simply constitutes a
return of your investment. This is known as "buying a dividend" and should be
avoided by taxable investors. Call 1-866-777-8227 to find out when the Fund
expects to make a distribution to shareholders.
TAXES ON THE SALE OR EXCHANGE OF FUND SHARES
Each sale or exchange of shares of the Fund may be a taxable event. For tax
purposes, an exchange of shares of one Cambiar Fund for another is the same as
a sale.
A sale of Fund shares may result in a capital gain or loss to you. The gain or
loss generally will be treated as short term if you held the shares 12 months
or less, long term if you held the shares for longer.
The Fund (or its administrative agent) must report to the Internal Revenue
Service ("IRS") and furnish to Fund shareholders cost basis information for
Fund shares purchased on or after January 1, 2012, and sold on or after that
date. In addition to reporting the gross proceeds from the sale of Fund shares,
the Fund is also required to report the cost basis information for such shares
and indicate whether these shares had a short-term or long-term holding period.
For each sale of Fund shares, the Fund will permit shareholders to elect from
among several IRS-accepted cost basis methods, including average cost. In the
absence of an election, the Fund will use the average basis method as the
default cost basis method. The cost basis method elected by a Fund shareholder
(or the cost basis method applied by default) for each sale of Fund shares may
not be changed after the settlement date of each such sale of Fund shares. Fund
shareholders should consult with 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.
INVESTMENTS IN FOREIGN SECURITIES
To the extent that the Fund invests in foreign securities, it may be subject to
foreign withholding taxes with respect to dividends or interest the Fund
received from sources in foreign countries. If more than 50% of the total
assets of the Fund consist of foreign securities, the Fund will be eligible to
elect to treat some of those taxes as a distribution to shareholders, which
would allow shareholders to offset some of their U.S. federal income tax.
ADDITIONAL INFORMATION ABOUT TAXES
More information about taxes is in the SAI.
-19-
ADDITIONAL INFORMATION ABOUT THE FUND
The investment objective of the Fund is to seek long-term capital appreciation.
The investment objective of the Fund may be changed without shareholder
approval.
OTHER INVESTMENT PRACTICES AND STRATEGIES
The Fund may employ non-principal investment practices that this prospectus
does not describe, such as when-issued and forward commitment transactions,
lending of securities, borrowing and other techniques. In addition, the Fund
may use the investment strategies described below. For more information
concerning any of the Fund's investment practices and risks, please read the
SAI.
DERIVATIVES
The Fund may invest in derivatives, a category of investments that includes
forward foreign currency exchange contracts, futures, options and swaps, in an
effort to increase returns, to hedge against the risk of unfavorable price
movements in the underlying instruments, to provide economic exposure to a
security or issuer, to manage cash flows or currency exposure, to address tax
considerations, or as an alternative to selling a security short. Forward
foreign currency exchange contracts, futures, options and swaps are called
derivatives because their value is based on an underlying asset or economic
factor. Derivatives are often more volatile than other investments and may
magnify the Fund's gains or losses. There are various factors that affect the
Fund's ability to achieve its objectives with derivatives. Successful use of a
derivative depends on the degree to which prices of the underlying assets
correlate with price movements in the derivatives the Fund buys or sells. The
Fund could be negatively affected if the change in market value of its
securities fails to correlate perfectly with the values of the derivatives it
purchased or sold.
SHORT-TERM INVESTING
The investments and strategies described in this prospectus are those that are
used under normal circumstances. During unusual economic, market, political or
other circumstances, the Fund may invest up to 100% of its assets in
short-term, high quality debt instruments, such as U.S. government securities.
These instruments would not ordinarily be consistent with the Fund's principal
investment strategies, and may prevent the Fund from achieving its investment
objective. The Fund will use a temporary strategy if the Adviser believes that
pursuing the Fund's investment objectives will subject it to a significant risk
of loss.
When the Adviser pursues a temporary defensive strategy, the Fund may not
profit from favorable developments that it would have otherwise profited from
if it were pursuing its normal strategies.
INFORMATION ABOUT PORTFOLIO HOLDINGS
The Fund generally posts a detailed list of its securities (portfolio holdings)
as of the most recent calendar month end, 30 days after the end of the calendar
month. In addition, the Fund generally posts its ten largest portfolio
holdings, and the percentage that each of these holdings represents of the
Fund's total assets, as of the most recent calendar month end, 10 calendar days
after the end of the calendar month. These postings can be found on the
internet at http://aicfundholdings.com/cambiar and generally remain until
replaced by new postings as described above. The Adviser may exclude any
portion of the Fund's portfolio holdings from publication when deemed in the
best interest of the Fund. Please consult the Fund's SAI for a description of
the policies and procedures that govern disclosure of the Fund's portfolio
holdings.
-20-
INVESTMENT MANAGEMENT
INVESTMENT ADVISER
Cambiar Investors LLC, a Delaware limited liability corporation located at 2401
East Second Avenue, Suite 500, Denver, Colorado 80206, serves as the investment
adviser to the Fund. Cambiar manages and supervises the investment of the
Fund's assets on a discretionary basis, subject to oversight by the Board. For
its services, the Adviser is entitled to a fee, which is calculated daily and
paid monthly, at an annual rate of the average daily net assets of the Fund, as
set forth in the table below. As of June 30, 2013, the Adviser had
approximately $7.3 billion in assets under management. Cambiar has provided
investment management services to corporations, foundations, endowments,
pension and profit sharing plans, trusts, estates and other institutions and
individuals since 1973.
The Adviser has contractually agreed to reduce its fees and reimburse expenses
of the Institutional Class Shares of the Fund in order to keep net operating
expenses (excluding interest, taxes, brokerage commissions, acquired fund fees
and expenses, and extraordinary expenses (collectively, "excluded expenses"))
from exceeding the amount listed in the table below, as a percentage of average
daily net assets, until September 1, 2014. To maintain this expense limit, the
Adviser may reduce a portion of its management fee and/or reimburse certain
expenses of the Fund. In addition, if at any point total annual Fund operating
expenses (not including excluded expenses) are below the expense cap, the
Adviser may receive from the Fund the difference between the Fund's total
annual Fund operating expenses (not including excluded expenses) and the
expense cap to recover all or a portion of its prior fee reductions or expense
reimbursements made during the preceding three year period during which the
Agreement (or any prior agreement) was in place.
Cambiar
Aggressive
Value Fund
-----------------------------------------------------
Management Fees 1.00%
-----------------------------------------------------
Expense Limits -- Institutional 1.10%
Class
-----------------------------------------------------
|
A discussion regarding the basis for the Board's approval of the Fund's
investment advisory agreement can be found in the Fund's October 31, 2013
Semi-Annual Report to Shareholders, which covers the period from May 1, 2013 to
October 31, 2013.
PORTFOLIO MANAGER
Brian M. Barish serves as the sole portfolio manager of the Cambiar Aggressive
Value Fund. The SAI provides additional information about Mr. Barish's
compensation, other accounts managed, and ownership of Fund shares.
Brian M. Barish, CFA, President, Director of Research, joined the Adviser in
1997 and has over 23 years of investment experience. He serves as the sole
portfolio manager of the Cambiar Aggressive Value Fund. He focuses on the
technology, media, aerospace and defense sectors. Prior to joining the Adviser,
Mr. Barish served as Director of Emerging Markets Research for Lazard Freres &
Co., a New York based investment bank. He has also served as a securities
analyst with Bear, Stearns & Co. and Arnhold S. Bleichroeder, a New York based
research firm. Mr. Barish received a BA in Economics and Philosophy from the
University of California, Berkeley, and holds the Chartered Financial Analyst
designation.
-21-
SHAREHOLDER SERVICING ARRANGEMENTS
The Fund may compensate financial intermediaries for providing a variety of
services to shareholders. Financial intermediaries include brokers, dealers,
banks (including bank trust departments), trust companies, registered
investment advisers, financial planners, retirement plan administrators,
insurance companies, and any other institution having a service,
administration, or any similar arrangement with the Fund, its service providers
or its respective affiliates. This section and the following section briefly
describe how financial intermediaries may be paid for providing these
services.
The Fund generally pays financial intermediaries a fee that is based on the
assets of the Fund that are attributable to investments by customers of the
financial intermediary. These shareholder services for which financial
intermediaries are compensated, which do not include distribution related
services, may include record-keeping, transaction processing for shareholders'
accounts and certain shareholder services not currently offered to shareholders
that deal directly with the Fund. In addition to these payments, your financial
intermediary may charge you account fees, transaction fees for buying or
redeeming shares of the Fund or other fees for servicing your account. Your
financial intermediary should provide a schedule of its fees and services to
you upon request. The Fund does not pay these service fees on shares purchased
directly. In addition to payments made directly to financial intermediaries by
the Fund, the Adviser or its affiliates may, at their own expense, pay
financial intermediaries for these and other services to Fund shareholders, as
described in the section below.
PAYMENTS TO FINANCIAL INTERMEDIARIES
From time to time, the Adviser and/or its affiliates, in their discretion, may
make payments to certain affiliated or unaffiliated financial intermediaries to
compensate them for the costs associated with distribution, marketing,
administration and shareholder servicing support. These payments are sometimes
characterized as "revenue sharing" payments and are made out of the Adviser's
and/or its affiliates' own legitimate profits or other resources, and are not
paid by the Fund.
A financial intermediary may provide these services with respect to Fund shares
sold or held through programs such as retirement plans, qualified tuition
programs, fund supermarkets, fee-based advisory or wrap fee programs, bank
trust programs, and insurance (e.g., individual or group annuity) programs. In
addition, financial intermediaries may receive payments for making shares of
the Fund available to their customers or registered representatives, including
providing the Fund with "shelf space," placing it on a preferred or recommended
fund list, or promoting the Fund in certain sales programs that are sponsored
by financial intermediaries. To the extent permitted by SEC and Financial
Industry Regulatory Authority ("FINRA") rules and other applicable laws and
regulations, the Adviser and/or its affiliates may pay or allow other
promotional incentives or payments to financial intermediaries. For more
information please see "Payments to Financial Intermediaries" in the Fund's
SAI.
The level of payments to individual financial intermediaries varies in any
given year and may be negotiated on the basis of sales of Fund shares, the
amount of Fund assets serviced by the financial intermediary or the quality of
the financial intermediary's relationship with the Adviser and/or its
affiliates. These payments may be more or less than the payments received by
the financial intermediaries from other mutual funds and may influence a
financial intermediary to favor the sales of certain funds or share classes
over others. In certain instances, the payments could be significant and may
cause a conflict of interest for your financial intermediary. Any such payments
will not change the NAV or price of the Fund's shares. Please contact your
financial intermediary for information about any payments it may receive in
connection with the sale of Fund shares or the provision of services to the
Fund, as well as information about any fees and/or commissions it charges.
-22-
FINANCIAL HIGHLIGHTS
As of the date of this prospectus, Institutional Class Shares of the Fund had
not commenced operations. The tables that follow present performance
information about the Investor Class Shares of the Fund. The financial
highlights table is intended to help you understand the financial performance
of the Fund for the past five fiscal years. Certain information contained in
the tables reflects the financial results for a single Investor Class Share of
the Fund. The total returns in the tables represent the rate that an investor
would have earned or lost on an investment in the Fund assuming all dividends
and distributions were reinvested. Performance and expense ratios of
Institutional Class Shares would differ as a result of class specific expenses.
The financial highlights below have not been adjusted to reflect this. The
information provided below has been audited by Ernst & Young LLP, independent
registered public accounting firm of the Fund. The financial statements and the
unqualified opinion of Ernst & Young LLP are included in the 2013 Annual Report
of the Fund, which is available upon request by calling the Fund at
1-866-777-8227.
-23-
--------------------------------------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
APRIL 30, APRIL 30, APRIL 30, APRIL 30, APRIL 30,
AGGRESSIVE VALUE FUND 2013 2012 2011 2010 2009
--------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period 10.94% $16.25 $10.93 $6.24 $10.77
Income (Loss) from Operations:
Net Investment Income (Loss)(1) 0.01 (0.03) (0.12) (0.01) 0.02
Net Realized and Unrealized Gain (Loss) 1.41 (4.73) 5.89 4.70 (4.42)
-------- -------- -------- ------- -------
Total From Operations 1.42 (4.76) 5.77 4.69 (4.40)
-------- -------- -------- ------- -------
Dividends and Distributions:
Net Investment Income -- -- (0.03) -- --
Net Realized Gain -- (0.55) (0.46) -- (0.14)
Return of Capital -- 0.00(2) -- -- 0.00(2)
-------- -------- -------- ------- -------
Total Dividends and Distributions -- (0.55) (0.49) -- (0.14)
-------- -------- -------- ------- -------
Redemption Fees(1) 0.00(2) -- 0.04 0.00(2) 0.01
-------- -------- -------- ------- -------
Net Asset Value, End of Period $12.36 $10.94 $16.25 $10.93 $6.24
======== ======== ======== ======= =======
Total Return(3) 12.98% (29.09)% 54.32% 75.16% (40.52)%
======== ======== ======== ======= =======
Ratios and Supplemental Data
Net Assets, End of Period (Thousands) $134,748 $227,573 $390,335 $29,716 $16,620
Ratio of Expenses to Average Net Assets 1.35% 1.35% 1.36% 1.50% 1.50%
Ratio of Expenses to Average
Net Assets (Excluding Waivers,
Expense Reimbursements and Fees
Paid Indirectly) 1.40% 1.40% 1.45% 1.71% 1.70%
Ratio of Net Investment Income
(Loss) to Average Net Assets 0.12% (0.27)% (0.89)% (0.14)% 0.25%
Portfolio Turnover Rate 85% 196% 128% 205% 296%
|
(1) Per share data calculated using average shares method.
(2) Amount represents less than $0.01 per share.
(3) Total return is for the period indicated and has not been annualized.
Total return would have been lower had the Adviser not waived a portion of
its fee. Returns shown do not reflect the deduction of taxes that a
shareholder would pay on Fund distributions or the redemption of Fund
shares.
Amounts designated as "--" are $0 or have been rounded to $0.
-24-
THE CAMBIAR FUNDS
Investors who want more information about the Fund should read the Fund's
Annual/Semi-Annual Reports and the SAI. The Annual/Semi-Annual Reports of the
Fund provide additional information about its investments. In the Annual
Report, you will also find a discussion of the market conditions and investment
strategies that significantly affected the performance of the Fund during the
last fiscal year. The SAI contains additional detailed information about the
Fund and is incorporated by reference into (is legally a part of) this
prospectus.
Investors can receive free copies of the SAI, shareholder reports, the Fund's
privacy policy and other information about the Fund and can make shareholder
inquiries on the Fund's website at www.cambiar.com or by writing to or
calling:
The Cambiar Funds
P.O. Box 219009
Kansas City, MO 64121
(Toll free) 1-866-777-8227
You can also obtain the SAI or the Annual and Semi-Annual Reports, as well as
other information about The Advisors' Inner Circle Fund, from the EDGAR
Database on the SEC's website at: http://www.sec.gov. You may review and copy
documents at the SEC Public Reference Room in Washington, DC (for information
on the operation of the Public Reference Room, call 202-551-8090). You may
request documents by mail from the SEC, upon payment of a duplicating fee, by
writing to: U.S. Securities and Exchange Commission, Public Reference Section,
Washington, DC 20549-1520. You may also obtain this information, upon payment
of a duplicating fee, by e-mailing the SEC at the following address:
publicinfo@sec.gov.
The Trust's Investment Company Act of 1940 file number is 811-06400.
CMB-PS-007-1000
[CAMBIAR INVESTORS LOGO]
CAMBIAR OPPORTUNITY FUND
TICKER SYMBOL: CAMOX
CAMBIAR INTERNATIONAL EQUITY FUND
TICKER SYMBOL: CAMIX
CAMBIAR SMALL CAP FUND
TICKER SYMBOL: CAMSX
CAMBIAR AGGRESSIVE VALUE FUND
TICKER SYMBOL: CAMAX
CAMBIAR SMID FUND
TICKER SYMBOL: CAMMX
CAMBIAR GLOBAL SELECT FUND
TICKER SYMBOL: CAMGX
INVESTOR CLASS SHARES PROSPECTUS
SEPTEMBER 1, 2013
THE ADVISORS' INNER CIRCLE FUND
[CAMBIAR INVESTORS LOGO]
MANAGER FOR ALL SEASONS
THE U.S. SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED
THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
CMB-PS-004-0400
TABLE OF CONTENTS
PAGE
CAMBIAR OPPORTUNITY FUND ................................................... 1
FUND INVESTMENT OBJECTIVE ............................................. 1
FUND FEES AND EXPENSES ................................................ 1
PRINCIPAL INVESTMENT STRATEGIES ....................................... 2
PRINCIPAL RISKS OF INVESTING IN THE FUND .............................. 3
PERFORMANCE INFORMATION ............................................... 4
INVESTMENT ADVISER .................................................... 5
PORTFOLIO MANAGERS .................................................... 5
PURCHASING AND SELLING FUND SHARES .................................... 5
CAMBIAR INTERNATIONAL EQUITY FUND .......................................... 7
FUND INVESTMENT OBJECTIVE ............................................. 7
FUND FEES AND EXPENSES ................................................ 7
PRINCIPAL INVESTMENT STRATEGIES ....................................... 8
PRINCIPAL RISKS OF INVESTING IN THE FUND .............................. 9
PERFORMANCE INFORMATION ............................................... 11
INVESTMENT ADVISER .................................................... 12
PORTFOLIO MANAGERS .................................................... 12
PURCHASING AND SELLING FUND SHARES .................................... 12
CAMBIAR SMALL CAP FUND ..................................................... 14
FUND INVESTMENT OBJECTIVE ............................................. 14
FUND FEES AND EXPENSES ................................................ 14
PRINCIPAL INVESTMENT STRATEGIES ....................................... 15
PRINCIPAL RISKS OF INVESTING IN THE FUND .............................. 16
PERFORMANCE INFORMATION ............................................... 16
INVESTMENT ADVISER .................................................... 17
PORTFOLIO MANAGERS .................................................... 17
PURCHASING AND SELLING FUND SHARES .................................... 18
CAMBIAR AGGRESSIVE VALUE FUND .............................................. 19
FUND INVESTMENT OBJECTIVE ............................................. 19
FUND FEES AND EXPENSES ................................................ 19
PRINCIPAL INVESTMENT STRATEGIES ....................................... 20
PRINCIPAL RISKS OF INVESTING IN THE FUND .............................. 21
PERFORMANCE INFORMATION ............................................... 24
INVESTMENT ADVISER .................................................... 24
PORTFOLIO MANAGER ..................................................... 24
PURCHASING AND SELLING FUND SHARES .................................... 25
CAMBIAR SMID FUND .......................................................... 26
FUND INVESTMENT OBJECTIVE ............................................. 26
FUND FEES AND EXPENSES ................................................ 26
PRINCIPAL INVESTMENT STRATEGIES ....................................... 27
PRINCIPAL RISKS OF INVESTING IN THE FUND .............................. 28
PERFORMANCE INFORMATION ............................................... 28
INVESTMENT ADVISER .................................................... 29
PORTFOLIO MANAGERS .................................................... 29
PURCHASING AND SELLING FUND SHARES .................................... 30
|
-i-
TABLE OF CONTENTS
(continued)
PAGE
CAMBIAR GLOBAL SELECT FUND ................................................. 31
FUND INVESTMENT OBJECTIVE ............................................. 31
FUND FEES AND EXPENSES ................................................ 31
PRINCIPAL INVESTMENT STRATEGIES ....................................... 32
PRINCIPAL RISKS OF INVESTING IN THE FUND .............................. 33
PERFORMANCE INFORMATION ............................................... 34
INVESTMENT ADVISER .................................................... 35
PORTFOLIO MANAGERS .................................................... 35
PURCHASING AND SELLING FUND SHARES .................................... 35
SUMMARY INFORMATION ABOUT TAXES AND FINANCIAL INTERMEDIARY
COMPENSATION .......................................................... 36
INVESTING WITH THE CAMBIAR FUNDS ........................................... 37
BUYING FUND SHARES .................................................... 37
REDEEMING FUND SHARES ................................................. 40
EXCHANGING FUND SHARES ................................................ 43
TRANSACTION POLICIES .................................................. 43
ACCOUNT POLICIES ...................................................... 46
ADDITIONAL INFORMATION ABOUT THE FUNDS ..................................... 51
OTHER INVESTMENT PRACTICES AND STRATEGIES ............................. 51
INVESTMENT MANAGEMENT ................................................. 53
MORE INFORMATION ABOUT THE FUNDS' HISTORY AND PERFORMANCE ............. 55
SHAREHOLDER SERVICING ARRANGEMENTS .................................... 56
PAYMENTS TO FINANCIAL INTERMEDIARIES .................................. 57
FINANCIAL HIGHLIGHTS ....................................................... 58
|
-ii-
CAMBIAR OPPORTUNITY FUND
FUND INVESTMENT OBJECTIVE
The Cambiar Opportunity Fund (the "Fund") seeks total return and capital
preservation.
FUND FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
Investor Class Shares of the Fund.
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT YOU PAY EACH YEAR AS A PERCENTAGE
OF THE VALUE OF YOUR INVESTMENT)
Management Fees(1) 0.90%
Other Expenses 0.11%
Shareholder Service Fees 0.25%
Acquired Fund Fees and Expenses 0.01%
-------
Total Annual Fund Operating Expenses(2) 1.27%
Less Fee Reductions and/or Expense Reimbursements (0.06)%
-------
Total Annual Fund Operating Expenses After Fee Reductions
and/or Expense Reimbursements(2,3) 1.21%
|
(1) Management Fees have been restated to reflect current fees.
(2) The Total Annual Fund Operating Expenses in this fee table, both before
and after fee reductions and/or expense reimbursements, do not correlate to
the expense ratio in the Fund's Financial Highlights because the Financial
Highlights include only the direct operating expenses incurred by the Fund,
and exclude Acquired Fund Fees and Expenses.
(3) Cambiar Investors LLC (the "Adviser") has contractually agreed to reduce
fees and reimburse expenses in order to keep net operating expenses
(excluding interest, taxes, brokerage commissions, Acquired Fund Fees and
Expenses, and extraordinary expenses (collectively, "excluded expenses"))
from exceeding 1.20% of the Fund's Investor Class Shares' average daily net
assets until September 1, 2014. In addition, if at any point Total Annual
Fund Operating Expenses (not including excluded expenses) are below the
expense cap, the Adviser may receive from the Fund the difference between
the Total Annual Fund Operating Expenses (not including excluded expenses)
and the expense cap to recover all or a portion of its prior fee reductions
or expense reimbursements made during the preceding three-year period
during which this Agreement (or any prior agreement) was in place. This
Agreement may be terminated: (i) by the Board, for any reason at any time;
or (ii) by the Adviser, upon ninety (90) days' prior written notice to the
Trust, effective as of the close of business on September 1, 2014.
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 Fund's operating expenses (including one year of capped expenses in each
period) remain the same. Although your actual costs may be higher or lower,
based on these assumptions your costs would be:
1
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$123 $397 $691 $1,529
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 rate
may indicate higher transaction costs and may result in higher taxes when Fund
shares are held in a taxable account. These costs, which are not reflected in
total annual fund operating expenses or in the example, affect the Fund's
performance. During its most recent fiscal year, the Fund's portfolio turnover
rate was 64% of the average value of its portfolio.
PRINCIPAL INVESTMENT STRATEGIES
The goal of the Fund is to provide above-average performance in both rising and
falling market periods by investing in stocks that have limited downside risk
and positive upside potential. Normally, the Fund invests at least 65% of its
net assets in common stocks of companies with market capitalizations over $1
billion at the time of purchase. In addition, the Fund may invest in
derivatives, including options and total return swaps, in an effort to increase
returns, to hedge against the risk of unfavorable price movements in the
underlying instruments, to provide economic exposure to a security or issuer,
to manage cash flows or currency exposure, or to address tax considerations.
Cambiar Investors LLC's ("Cambiar" or the "Adviser") investment professionals
work as a team to develop investment ideas by analyzing company and industry
statements, monitoring Wall Street and other research sources, and interviewing
company management. The Adviser also evaluates economic conditions and fiscal
and monetary policies. The Adviser's approach focuses first on individual
stocks and then on industries or sectors. The Adviser does not attempt to time
the market. The Adviser tries to select quality companies:
o Possessing above-average financial characteristics;
o Having seasoned management;
o Enjoying product or market advantages;
o Whose stock is selling at a low relative historical valuation based
on ratios such as price-to-earnings, price-to-book, price-to-sales and
price-to-cash flow;
o Experiencing positive developments not yet recognized by the markets,
such as positive changes in management, improved margins, corporate
restructuring or new products; and/or
o Possessing significant appreciation potential within 12 to 18 months.
The Adviser may sell a stock because:
o It realizes positive developments and achieves its target price;
o It experiences exaggerated price moves relative to actual
developments;
2
o It becomes overweighted in the portfolio; or
o It experiences a change in or deteriorating fundamentals.
PRINCIPAL RISKS OF INVESTING IN THE FUND
As with all mutual funds, a shareholder is subject to the risk that his or her
investment could lose money. A Fund share is not a bank deposit and is not
insured or guaranteed by the FDIC or any government agency. The principal risk
factors affecting shareholders' investments in the Fund are set forth below.
Since it purchases equity securities, the Fund is subject to the risk that
stock prices will fall over short or extended periods of time. Historically,
the equity markets have moved in cycles, and the value of the Fund's equity
securities may fluctuate drastically from day to day. Individual companies may
report poor results or be negatively affected by industry and/or economic
trends and developments. The prices of securities issued by such companies may
suffer a decline in response. These factors contribute to price volatility,
which is the principal risk of investing in the Fund. This risk is greater for
small- and medium-sized companies, which tend to be more vulnerable to adverse
developments than larger companies.
The Fund may invest in derivatives. Derivatives are often more volatile than
other investments and may magnify the Fund's gains or losses. There are various
factors that affect the Fund's ability to achieve its objective with
derivatives. Successful use of a derivative depends upon the degree to which
prices of the underlying assets correlate with price movements in the
derivatives the Fund buys or sells. The Fund could be negatively affected if
the change in market value of its securities fails to correlate perfectly with
the values of the derivatives it purchased or sold. The lack of a liquid
secondary market for a derivative may prevent the Fund from closing its
derivative positions and could adversely impact its ability to achieve its
objective and to realize profits or limit losses. Since derivatives may be
purchased for a fraction of their value, a relatively small price movement in a
derivative may result in an immediate and substantial loss or gain to the Fund.
Derivatives are often more volatile than other investments and the Fund may
lose more in a derivative than it originally invested in it. There can be no
assurance that the Adviser's use of derivatives will be successful in achieving
their intended goals.
Additionally, derivative instruments, particularly market access products, are
subject to counterparty risk, meaning that the party that issues the derivative
may experience a significant credit event and may be unwilling or unable to
make timely settlement payments or otherwise honor its obligations. When
determining whether a counterparty is creditworthy, the Adviser considers
factors such as credit rating agency analysis, broker-dealer credit spreads and
financial statements among others. The Adviser regularly monitors the
creditworthiness of each counterparty that the Fund enters into a transaction
with and maintains an approved list of counterparties.
The Fund may purchase or sell options, which involve the payment or receipt of
a premium by the investor and the corresponding right or obligation, as the
case may be, to either purchase or sell the underlying security for a specific
price at a certain time or during a certain period. Purchasing options involves
the risk that the underlying instrument will not change price in the manner
expected, so that the investor loses its premium. Selling options involves
potentially greater risk because the investor is exposed to the extent of the
actual price movement in the underlying security rather than only the premium
payment received (which could result in a potentially unlimited loss).
Over-the-counter options also involve counterparty risk.
3
The Fund may enter into total return swaps, which are contracts whereby one
party agrees to make payments of the total return from a reference instrument
during a specified period, in return for payments equal to a fixed or floating
rate of interest or the total return from another underlying reference
instrument. A reference instrument may be a single asset, a pool of assets or
an index of assets. The primary risks associated with total return swaps are
counterparty risk, which means the counterparty fails to meet its obligations,
and market risk, meaning that the Fund is subject to the risk that it could
lose its entire investment.
The Fund pursues a "value style" of investing. Value investing focuses on
companies whose stock appears undervalued in light of factors such as the
company's earnings, book value, revenues or cash flow. If the Adviser's
assessment of a company's value or prospects for exceeding earnings
expectations or market conditions is inaccurate, the Fund could suffer losses
or produce poor performance relative to other funds. In addition, "value
stocks" can continue to be undervalued by the market for long periods of time.
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund by showing changes in the Fund's
performance from year to year and by showing how the Fund's average annual
total returns for 1, 5 and 10 years and since inception compare with those of a
broad measure of market performance. Of course, the Fund's past performance
(before and after taxes) does not necessarily indicate how the Fund will
perform in the future.
Updated performance information is available on the Fund's website at
www.cambiar.com or by calling 1-866-777-8227.
2003 35.23%
2004 15.05%
2005 7.01%
2006 16.64%
2007 (1.86)%
2008 (40.61)%
2009 41.70%
2010 18.94%
2011 (8.69)%
2012 8.56%
|
During the periods shown in the chart, the Fund's Investor Class Shares'
highest return for a quarter was 22.84% (quarter ended 06/30/2003) and the
lowest return for a quarter was (24.06)% (quarter ended 12/31/2008). The
Fund's Investor Class Shares total return from 1/1/2013 to 6/30/2013 was
16.20%.
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED DECEMBER 31, 2012
After-tax returns are calculated using the historical highest individual
federal marginal income tax rates and do not reflect the impact of state and
local taxes. Actual after-tax returns depend on an investor's tax situation and
may differ from those shown. After-tax returns shown are not
4
relevant to investors who hold their Fund shares through tax-deferred
arrangements, such as 401(k) plans or individual retirement accounts.
SINCE
INCEPTION
INVESTOR CLASS SHARES 1 YEAR 5 YEARS 10 YEARS (06/30/98)
------------------------------------------------------------------------------------------------------------------------------------
Fund Returns Before Taxes 8.56% (0.15)% 6.58% 7.13%
Fund Returns After Taxes on Distributions 8.39% (0.34)% 6.35% 6.23%
Fund Returns After Taxes on Distributions and
Sale of Fund Shares 5.80% (0.18)% 5.76% 5.80%
S&P 500 ([R]) Index (reflects no deduction for fees,
expenses, or taxes) 16.00% 1.66% 7.10% 3.46%
|
INVESTMENT ADVISER
Cambiar Investors LLC
PORTFOLIO MANAGERS
Brian M. Barish, CFA, President, Director of Research, joined the Adviser in
1997 and has served as Lead Manager of the portfolio team for the Fund since
its inception.
Maria L. Mendelsberg, CFA, Principal, joined the Adviser in 1997 and has served
on the portfolio team for the Fund since its inception.
Anna (Ania) A. Aldrich, CFA, Principal, joined the Adviser in 1999 and has
served on the portfolio team for the Fund since 1999.
Timothy A. Beranek, Principal, joined the Adviser in 1999 and has served on the
portfolio team for the Fund since 1999.
Andrew P. Baumbusch, Principal, joined the Adviser in 2004 and has served on
the portfolio team for the Fund since 2004.
Jeffrey H. Susman, Senior Investment Analyst, joined the Adviser in 2005 and
has served on the portfolio team for the Fund since 2005.
PURCHASING AND SELLING FUND SHARES
To purchase shares of the Fund for the first time, you must invest at least
$2,500 ($500 for individual retirement accounts ("IRAs") and $250 for Spousal
IRAs). Thereafter your investments must be at least $100.
If you own your shares directly, you may redeem your shares on any day the New
York Stock Exchange ("NYSE") is open for business by contacting the Fund
directly by mail or telephone at 1-866-777-8227.
If you own your shares through an account with an investment professional or
other institution, contact that investment professional or institution to
redeem your shares.
5
FOR IMPORTANT INFORMATION ABOUT TAXES AND FINANCIAL INTERMEDIARY COMPENSATION,
PLEASE TURN TO "SUMMARY INFORMATION ABOUT TAXES AND FINANCIAL INTERMEDIARY
COMPENSATION" ON PAGE 37 OF THE PROSPECTUS.
6
CAMBIAR INTERNATIONAL EQUITY FUND
FUND INVESTMENT OBJECTIVE
The Cambiar International Equity Fund (the "Fund") seeks total return and
capital preservation.
FUND FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
Investor Class Shares of the Fund.
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
Redemption Fee (as a percentage of amount redeemed, if shares
redeemed have been held for less than 90 days) 2.00%
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT YOU PAY EACH YEAR AS A PERCENTAGE
OF THE VALUE OF YOUR INVESTMENT)
Management Fees(1) 0.90%
Other Expenses 0.57%
Shareholder Service Fees 0.25%
-------
Total Annual Fund Operating Expenses 1.72%
Less Fee Reductions and/or Expense Reimbursements (0.52)%
-------
Total Annual Fund Operating Expenses After Fee Reductions 1.20%
and/or Expense Reimbursements(2,3)
|
(1) Management Fees have been restated to reflect current fees.
(2) Cambiar Investors LLC (the "Adviser") has contractually agreed to reduce
fees and reimburse expenses in order to keep net operating expenses
(excluding interest, taxes, brokerage commissions, acquired fund fees and
expenses, and extraordinary expenses (collectively, "excluded expenses"))
from exceeding 1.20% of the Fund's Investor Class Shares' average daily net
assets until September 1, 2014. In addition, if at any point Total Annual
Fund Operating Expenses (not including excluded expenses) are below the
expense cap, the Adviser may receive from the Fund the difference between
the Total Annual Fund Operating Expenses (not including excluded expenses)
and the expense cap to recover all or a portion of its prior fee reductions
or expense reimbursements made during the preceding three-year period
during which this Agreement (or any prior agreement) was in place. This
Agreement may be terminated: (i) by the Board, for any reason at any time;
or (ii) by the Adviser, upon ninety (90) days' prior written notice to the
Trust, effective as of the close of business on September 1, 2014.
(3) The Total Annual Fund Operating Expenses After Fee Reductions and/or
Expense Reimbursements do not correlate to the Ratio of Expenses to Average
Net Assets in the Fund's Financial Highlights because prior to September 1,
2012 the expense cap was 1.30%.
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 Fund's operating expenses (including one year
7
of capped expenses in each period) remain the same. Although your actual costs
may be higher or lower, based on these assumptions your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$122 $491 $885 $1,987
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 rate
may indicate higher transaction costs and may result in higher taxes when Fund
shares are held in a taxable account. These costs, which are not reflected in
total annual fund operating expenses or in the example, affect the Fund's
performance. During its most recent fiscal year, the Fund's portfolio turnover
rate was 75% of the average value of its portfolio.
PRINCIPAL INVESTMENT STRATEGIES
The goal of the Fund is to provide above-average performance in both rising and
falling market periods by investing in stocks that have limited downside risk
and positive upside potential. The Fund normally seeks to achieve its goal by
investing at least 80% of its net assets, plus any borrowings for investment
purposes, in equity securities of foreign companies. This investment policy may
be changed by the Fund upon 60 days' prior notice to shareholders. In addition,
the Fund may invest in derivatives, including options and total return swaps,
in an effort to increase returns, to hedge against the risk of unfavorable
price movements in the underlying instruments, to provide economic exposure to
a security or issuer, to manage cash flows or currency exposure, or to address
tax considerations.
In selecting investments for the Fund, the Fund's adviser, Cambiar Investors
LLC ("Cambiar" or the "Adviser"), focuses predominantly on medium to large
market capitalization equity securities of non-U.S. companies, foreign
companies with U.S.-only listings and some U.S. corporations where the
preponderance of business activity lies outside the United States. The majority
of these companies operate in "established" markets; however, when
opportunities warrant, the Adviser may invest, without limit, in securities of
companies in "emerging market" countries. An "emerging market" country is any
country determined by the Adviser to have an emerging market economy,
considering factors such as the country's credit rating, its political and
economic stability and the development of its financial and capital markets.
Typically, emerging markets are in countries that are in the process of
industrialization, with lower gross national products than more developed
countries. In many circumstances, the Fund purchases American Depositary
Receipt listings ("ADRs") of foreign companies on U.S. exchanges, rather than
foreign shares on foreign exchanges, to facilitate greater liquidity and lower
custodial expenses.
The Adviser's primary analysis criteria is active individual company selection
based on the relative merits and valuation of the underlying corporate entity.
The Adviser employs a relative value approach, whereby it searches for
companies trading at the low end of historic and sectoral valuation ranges,
with a strong market position or product franchise and good overall financial
condition. The Adviser's selection and screening criteria are extremely
qualitative, and the Adviser makes little attempt to time market or sector
movements. The following are typical factors the Adviser considers when
purchasing stocks:
8
o Low price-earnings ratio relative to historic norms and peer group;
o Low cash flow multiple relative to historic norms and peer group;
o New product and/or restructuring potential under-appreciated by the
marketplace;
o Sudden stock price decline caused by flight of "momentum investors"
with little change in fundamentals; and
o Excessive investor pessimism in relation to overall outlook for
company over the medium to long term.
The Adviser also utilizes active country selection as a secondary selection
criteria, which is overlaid on the bottom-up criteria described above. The
Adviser's country allocation does not seek to replicate any particular index's
country allocation by global capitalization or regional capitalization.
However, the Adviser seeks to avoid specific countries where it is deemed that
there exists a high likelihood of economic and financial turbulence due to poor
or worsening economic fundamentals, and may seek larger positions in countries
where specific economic risk factors are overestimated by the marketplace,
causing depressed valuations. A similar approach will be used with regard to
overweighting or underweighting specific industrial sectors by country.
The Adviser will tend to hold securities for longer periods of time. Positions
held will be carefully re-examined when, for example:
o The stock has realized its price target;
o It experiences exaggerated price moves relative to actual
developments; or
o There is a material change in company fundamentals or market
conditions.
PRINCIPAL RISKS OF INVESTING IN THE FUND
As with all mutual funds, a shareholder is subject to the risk that his or her
investment could lose money. A Fund share is not a bank deposit and is not
insured or guaranteed by the FDIC or any government agency. The principal risk
factors affecting shareholders' investments in the Fund are set forth below.
Since it purchases equity securities, the Fund is subject to the risk that
stock prices will fall over short or extended periods of time. Historically,
the equity markets have moved in cycles, and the value of the Fund's equity
securities may fluctuate drastically from day to day. Individual companies may
report poor results or be negatively affected by industry and/or economic
trends and developments. The prices of securities issued by such companies may
suffer a decline in response. These factors contribute to price volatility,
which is the principal risk of investing in the Fund. This risk is greater for
small- and medium-sized companies, which tend to be more vulnerable to adverse
developments than larger companies.
When the Fund invests in foreign securities, it will be subject to risks not
typically associated with domestic securities. Although ADRs and European
Depositary Receipts ("EDRs") are alternatives to directly purchasing the
underlying foreign securities in their national markets and currencies, they
are also subject to many of the risks associated with investing directly in
foreign
9
securities. Foreign investments, especially investments in emerging markets,
can be riskier and more volatile than investments in the United States.
Adverse political and economic developments or changes in the value of foreign
currency can make it difficult for the Fund to sell its securities and could
reduce the value of your shares. Differences in tax and accounting standards
and difficulties in obtaining information about foreign companies can
negatively affect investment decisions. The Fund's investments in foreign
securities are also subject to the risk that the securities may be difficult to
value and/or valued incorrectly.
Investments in emerging markets securities are considered speculative and
subject to heightened risks in addition to the general risks of investing in
non-U.S. securities. Unlike more established markets, emerging markets may have
governments that are less stable, markets that are less liquid and economies
that are less developed. In addition, the securities markets of emerging market
countries may consist of companies with smaller market capitalizations and may
suffer periods of relative illiquidity; significant price volatility;
restrictions on foreign investment; and possible restrictions on repatriation
of investment income and capital. Furthermore, foreign investors may be
required to register the proceeds of sales, and future economic or political
crises could lead to price controls, forced mergers, expropriation or
confiscatory taxation, seizure, nationalization or creation of government
monopolies.
Fund investments in foreign currencies and securities denominated in foreign
currencies are subject to currency risk. As a result, the value of securities
denominated in foreign currencies can change significantly when foreign
currencies strengthen or weaken relative to the U.S. dollar. Additionally, the
value of a Fund's assets measured in U.S. dollars may be affected by exchange
control regulations. The Fund will generally incur transaction costs in
connection with conversions between various currencies which will negatively
impact performance.
The Fund may invest in derivatives. Derivatives are often more volatile than
other investments and may magnify the Fund's gains or losses. There are various
factors that affect the Fund's ability to achieve its objective with
derivatives. Successful use of a derivative depends upon the degree to which
prices of the underlying assets correlate with price movements in the
derivatives the Fund buys or sells. The Fund could be negatively affected if
the change in market value of its securities fails to correlate perfectly with
the values of the derivatives it purchased or sold. The lack of a liquid
secondary market for a derivative may prevent the Fund from closing its
derivative positions and could adversely impact its ability to achieve its
objective and to realize profits or limit losses. Since derivatives may be
purchased for a fraction of their value, a relatively small price movement in a
derivative may result in an immediate and substantial loss or gain to the Fund.
Derivatives are often more volatile than other investments and the Fund may
lose more in a derivative than it originally invested in it. There can be no
assurance that the Adviser's use of derivatives will be successful in achieving
their intended goals.
Additionally, derivative instruments, particularly market access products, are
subject to counterparty risk, meaning that the party that issues the derivative
may experience a significant credit event and may be unwilling or unable to
make timely settlement payments or otherwise honor its obligations. When
determining whether a counterparty is creditworthy, the Adviser considers
factors such as credit rating agency analysis, broker-dealer credit spreads and
financial statements among others. The Adviser regularly monitors the
creditworthiness of each counterparty that the Fund enters into a transaction
with and maintains an approved list of counterparties.
The Fund may purchase or sell options, which involve the payment or receipt of
a premium by the investor and the corresponding right or obligation, as the
case may be, to either purchase or
10
sell the underlying security for a specific price at a certain time or during a
certain period. Purchasing options involves the risk that the underlying
instrument will not change price in the manner expected, so that the investor
loses its premium. Selling options involves potentially greater risk because
the investor is exposed to the extent of the actual price movement in the
underlying security rather than only the premium payment received (which could
result in a potentially unlimited loss). Over-the-counter options also involve
counterparty risk.
The Fund may enter into total return swaps, which are contracts whereby one
party agrees to make payments of the total return from a reference instrument
during a specified period, in return for payments equal to a fixed or floating
rate of interest or the total return from another underlying reference
instrument. A reference instrument may be a single asset, a pool of assets or
an index of assets. The primary risks associated with total return swaps are
counterparty risk, which means the counterparty fails to meet its obligations,
and market risk, meaning that the Fund is subject to the risk that it could
lose its entire investment.
The Fund pursues a "value style" of investing. Value investing focuses on
companies whose stock appears undervalued in light of factors such as the
company's earnings, book value, revenues or cash flow. If the Adviser's
assessment of a company's value or prospects for exceeding earnings
expectations or market conditions is inaccurate, the fund could suffer losses
or produce poor performance relative to other funds. In addition, "value
stocks" can continue to be undervalued by the market for long periods of time.
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in Investor Class Shares of the Fund by showing
changes in the Fund's Investor Class Shares' performance from year to year and
by showing how the Fund's Investor Class Shares' average annual total returns
for 1, 5 and 10 years and since inception compare with those of a broad measure
of market performance. Of course, the Fund's past performance (before and after
taxes) does not necessarily indicate how the Fund will perform in the future.
Updated performance information is available on the Fund's website at
www.cambiar.com or by calling 1-866-777-8227.
2003 38.37%
2004 15.48%
2005 5.55%
2006 29.04%
2007 19.68%
2008 (49.73)%
2009 42.88%
2010 12.83%
2011 (8.08)%
2012 16.95%
|
During the periods shown in the chart, the Fund's Investor Class Shares'
highest return for a quarter was 29.93% (quarter ended 06/30/2003) and the
lowest return for a quarter was (32.95)% (quarter ended 09/30/2008). The
Fund's Investor Class Shares total return from 1/1/2013 to 6/30/2013 was
6.24%.
11
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED DECEMBER 31, 2012
After-tax returns are calculated using the historical highest individual
federal marginal income tax rates and do not reflect the impact of state and
local taxes. Actual after-tax returns depend on an investor's tax situation and
may differ from those shown. After-tax returns shown are not relevant to
investors who hold their Fund shares through tax-deferred arrangements, such as
401(k) plans or individual retirement accounts.
Returns after taxes on distributions and sale of Fund shares may be higher than
before-tax returns when a net capital loss occurs upon the redemption of Fund
shares.
SINCE
INCEPTION
INVESTOR CLASS SHARES 1 YEAR 5 YEARS 10 YEARS (09/02/97)
------------------------------------------------------------------------------------------------------------------------------------
Fund Returns Before Taxes 16.95% (2.72)% 8.54% 8.04%
Fund on Distributions 16.93% (3.00)% 7.91% 7.57%
Fund Returns After Taxes on Distributions and 11.61% (2.27)% 7.61% 7.29%
Sale of Fund Shares
Morgan Stanley Capital International EAFE 17.32% (3.69)% 8.21% 4.10%
Index (reflects no deduction for fees,
expenses, or taxes)
|
INVESTMENT ADVISER
Cambiar Investors LLC
PORTFOLIO MANAGERS
Brian M. Barish, CFA, President, Director of Research, joined the Adviser in
1997, is Co-Lead Manager of the Fund and has served on the portfolio team for
the Fund since its inception.
Jennifer M. Dunne, CFA, Vice President, joined the Adviser in 2005, is Co-Lead
Manager of the Fund and has served on the portfolio team for the Fund since
2005.
Anna (Ania) A. Aldrich, CFA, Principal, joined the Adviser in 1999 and has
served on the portfolio team for the Fund since 1999.
Andrew P. Baumbusch, Principal, joined the Adviser in 2004 and has served on
the portfolio team for the Fund since 2004.
Todd L. Edwards, Ph.D., International Investment Analyst, joined the Adviser in
2007 and has served on the portfolio team for the Fund since 2007.
Alvaro Shiraishi, International Investment Analyst, joined the Adviser in 2007
and has served on the portfolio team for the Fund since 2007.
PURCHASING AND SELLING FUND SHARES
To purchase shares of the Fund for the first time, you must invest at least
$2,500 ($500 for individual retirement accounts ("IRAs") and $250 for Spousal
IRAs). Thereafter your investments must be at least $100.
12
If you own your shares directly, you may redeem your shares on any day the New
York Stock Exchange ("NYSE") is open for business by contacting the Fund
directly by mail or telephone at 1-866-777-8227.
If you own your shares through an account with an investment professional or
other institution, contact that investment professional or institution to
redeem your shares.
FOR IMPORTANT INFORMATION ABOUT TAXES AND FINANCIAL INTERMEDIARY COMPENSATION,
PLEASE TURN TO "SUMMARY INFORMATION ABOUT TAXES AND FINANCIAL INTERMEDIARY
COMPENSATION" ON PAGE 37 OF THE PROSPECTUS.
13
CAMBIAR SMALL CAP FUND
FUND INVESTMENT OBJECTIVE
The Cambiar Small Cap Fund (the "Fund") seeks long-term capital appreciation.
FUND FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
Investor Class Shares of the Fund.
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
Redemption Fee (as a percentage of amount redeemed, if shares
redeemed have been held for less than 90 days) 2.00%
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT YOU PAY EACH YEAR AS A PERCENTAGE
OF THE VALUE OF YOUR INVESTMENT)
Management Fees 1.05%
Other Expenses 0.11%
Shareholder Service Fees 0.25%
Acquired Fund Fees and Expenses 0.01%
-------
Total Annual Fund Operating Expenses(1) 1.42%
Less Fee Reductions and/or Expense Reimbursements (0.11)%
-------
Total Annual Fund Operating Expenses After Fee Reductions 1.31%
and/or Expense Reimbursements(1,2)
|
(1) The Total Annual Fund Operating Expenses in this fee table, both before
and after fee reductions and/or expense reimbursements, do not correlate to
the expense ratio in the Fund's Financial Highlights because the Financial
Highlights include only the direct operating expenses incurred by the Fund,
and exclude Acquired Fund Fees and Expenses.
(2) Cambiar Investors LLC (the "Adviser") has contractually agreed to reduce
fees and reimburse expenses in order to keep net operating expenses
(excluding interest, taxes, brokerage commissions, Acquired Fund Fees and
Expenses, and extraordinary expenses (collectively, "excluded expenses"))
from exceeding 1.30% of the Fund's Investor Class Shares' average daily net
assets until September 1, 2014. In addition, if at any point Total Annual
Fund Operating Expenses (not including excluded expenses) are below the
expense cap, the Adviser may receive from the Fund the difference between
the Total Annual Fund Operating Expenses (not including excluded expenses)
and the expense cap to recover all or a portion of its prior fee reductions
or expense reimbursements made during the preceding three-year period
during which this Agreement (or any prior agreement) was in place. This
Agreement may be terminated: (i) by the Board, for any reason at any time;
or (ii) by the Adviser, upon ninety (90) days' prior written notice to the
Trust, effective as of the close of business on September 1, 2014.
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 Fund's operating expenses (including one year
14
of capped expenses in each period) remain the same. Although your actual costs
may be higher or lower, based on these assumptions your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$133 $439 $766 $1,692
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 rate
may indicate higher transaction costs and may result in higher taxes when Fund
shares are held in a taxable account. These costs, which are not reflected in
total annual fund operating expenses or in the example, affect the Fund's
performance. During its most recent fiscal year, the Fund's portfolio turnover
rate was 71% of the average value of its portfolio.
PRINCIPAL INVESTMENT STRATEGIES
Under normal circumstances, the Fund invests at least 80% of its net assets,
plus any borrowings for investment purposes, in common stocks of small-cap
companies. This investment policy may be changed by the Fund upon 60 days'
prior notice to shareholders. The Fund considers small-cap companies to be
those with market capitalizations not greater than either that of the largest
company in the Russell 2000 Index ($7.6 billion as of July 31, 2013) or $3.5
billion, whichever is greater at the time of purchase.
Cambiar Investors LLC's ("Cambiar" or the "Adviser") investment professionals
work as a team to develop investment ideas by analyzing company and industry
statements, monitoring Wall Street and other research sources and interviewing
company management. The Adviser also evaluates economic conditions and fiscal
and monetary policies. The Adviser's approach focuses first on individual
stocks and then on industries or sectors. The Adviser does not attempt to time
the market. The Adviser tries to select quality companies:
o Possessing above-average financial characteristics;
o Having seasoned management;
o Enjoying product or market advantages;
o Whose stock is selling at a low relative historical valuation based
on ratios such as price-to-earnings, price-to-book, price-to-sales and
price-to-cash flow;
o Experiencing positive developments not yet recognized by the markets,
such as positive changes in management, improved margins, corporate
restructuring or new products; and/or
o Possessing significant appreciation potential within 12 to 18 months.
The Adviser may sell a stock because:
o It realizes positive developments and achieves its target price;
15
o It experiences exaggerated price moves relative to actual
developments;
o It becomes overweighted in the portfolio; or
o It experiences a change in or deteriorating fundamentals.
Due to its investment strategy, the Fund may buy and sell securities
frequently. Such a strategy often involves higher expenses, including brokerage
commissions, and may increase the amount of capital gains (in particular,
short-term gains) realized by the Fund. Shareholders may pay tax on such
capital gains.
PRINCIPAL RISKS OF INVESTING IN THE FUND
As with all mutual funds, a shareholder is subject to the risk that his or her
investment could lose money. A Fund share is not a bank deposit and is not
insured or guaranteed by the FDIC or any government agency. The principal risk
factors affecting shareholders' investments in the Fund are set forth below.
Since it purchases equity securities, the Fund is subject to the risk that
stock prices will fall over short or extended periods of time. Historically,
the equity markets have moved in cycles, and the value of the Fund's equity
securities may fluctuate drastically from day to day. Individual companies may
report poor results or be negatively affected by industry and/or economic
trends and developments. The prices of securities issued by such companies may
suffer a decline in response. These factors contribute to price volatility,
which is the principal risk of investing in the Fund.
The Fund is also subject to the risk that small capitalization stocks may
underperform other segments of the equity market or the equity market as a
whole. The small-capitalization companies that the Fund invests in may be more
vulnerable to adverse business or economic events than larger, more established
companies. In particular, these small-sized companies may pose additional
risks, including liquidity risk, because these companies tend to have limited
product lines, markets and financial resources, and may depend upon a
relatively small management group. Therefore, small-cap stocks may be more
volatile than those of larger companies. These securities may be traded
over-the-counter or listed on an exchange.
The Fund pursues a "value style" of investing. Value investing focuses on
companies whose stock appears undervalued in light of factors such as the
company's earnings, book value, revenues or cash flow. If the Adviser's
assessment of a company's value or prospects for exceeding earnings
expectations or market conditions is inaccurate, the Fund could suffer losses
or produce poor performance relative to other funds. In addition, "value
stocks" can continue to be undervalued by the market for long periods of time.
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in Investor Class Shares of the Fund by showing
changes in the Fund's Investor Class Shares' performance from year to year and
by showing how the Fund's Investor Class Shares' average annual total returns
for 1 and 5 years and since inception compare with those of a broad measure of
market performance. Of course, the Fund's past performance (before and after
taxes) does not necessarily indicate how the Fund will perform in the future.
16
Updated performance information is available on the Fund's website at
www.cambiar.com or by calling 1-866-777-8227.
2005 19.98%
2006 21.15%
2007 (3.88)%
2008 (36.27)%
2009 45.12%
2010 35.73%
2011 (1.34)%
2012 13.07%
During the periods shown in the chart, the Fund's Investor Class Shares'
highest return for a quarter was 23.25% (quarter ended 06/30/2009) and the
lowest return for a quarter was (27.38)% (quarter ended 12/31/2008). The
Fund's Investor Class Shares total return from 1/1/2013 to 6/30/2013 was
13.68%.
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED DECEMBER 31, 2012
After-tax returns are calculated using the historical highest individual
federal marginal income tax rates and do not reflect the impact of state and
local taxes. Actual after-tax returns depend on an investor's tax situation and
may differ from those shown. After-tax returns shown are not relevant to
investors who hold their Fund shares through tax-deferred arrangements, such as
401(k) plans or individual retirement accounts.
SINCE
INCEPTION
INVESTOR CLASS SHARES 1 YEAR 5 YEARS (08/31/04)
------------------------------------------------------------------------------------------------------------------------------------
Fund Returns Before Taxes 13.07% 6.97% 10.08%
Fund Returns After Taxes on Distributions 12.82% 6.73% 9.40%
Fund Returns After Taxes on Distributions and 8.83% 5.93% 8.52%
Sale of Fund Shares
Russell 2000([R]) Index (reflects no deduction for fees, 16.35% 3.56% 6.82%
expenses, or taxes)
|
INVESTMENT ADVISER
Cambiar Investors LLC
PORTFOLIO MANAGERS
Brian M. Barish, CFA, President, Director of Research, joined the Adviser in
1997 and has served on the portfolio team for the Fund since its inception.
Maria L. Mendelsberg, CFA, Principal, joined the Adviser in 1997 and has served
on the portfolio team for the Fund since its inception.
Anna (Ania) A. Aldrich, CFA, Principal, joined the Adviser in 1999 and has
served on the portfolio team for the Fund since its inception.
17
Timothy A. Beranek, Principal, joined the Adviser in 1999 and has served on the
portfolio team for the Fund since its inception.
Andrew P. Baumbusch, Principal, joined the Adviser in 2004 and has served on
the portfolio team for the Fund since its inception.
Jeffrey H. Susman, Senior Investment Analyst, joined the Adviser in 2005 and
has served on the portfolio team for the Fund since 2005.
PURCHASING AND SELLING FUND SHARES
Investor Class shares of the Fund are closed to new investors.
However, existing shareholders of Investor Class shares of the Fund and certain
eligible investors, as set forth in the prospectus, may purchase additional
Investor Class shares of the Fund in amounts of at least $100 through existing
or new accounts and reinvest dividends and capital gains distributions.
If you own your shares directly, you may redeem your shares on any day the New
York Stock Exchange ("NYSE") is open for business by contacting the Fund
directly by mail or telephone at 1-866-777-8227.
If you own your shares through an account with an investment professional or
other institution, contact that investment professional or institution to
redeem your shares.
FOR IMPORTANT INFORMATION ABOUT TAXES AND FINANCIAL INTERMEDIARY COMPENSATION,
PLEASE TURN TO "SUMMARY INFORMATION ABOUT TAXES AND FINANCIAL INTERMEDIARY
COMPENSATION" ON PAGE 37 OF THE PROSPECTUS
18
CAMBIAR AGGRESSIVE VALUE FUND
FUND INVESTMENT OBJECTIVE
The Cambiar Aggressive Value Fund (the "Fund") seeks long-term capital
appreciation.
FUND FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
Investor Class Shares of the Fund.
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
Redemption Fee (as a percentage of amount redeemed, if shares
redeemed have been held for less than 90 days) 2.00%
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT YOU PAY EACH YEAR AS A PERCENTAGE
OF THE VALUE OF YOUR INVESTMENT)
Management Fees 1.00%
Other Expenses 0.15%
Shareholder Service Fees 0.25%
-------
Total Annual Fund Operating Expenses 1.40%
Less Fee Reductions and/or Expense Reimbursements(1) (0.05)%
-------
Total Annual Fund Operating Expenses After Fee Reductions 1.35%
and/or Expense Reimbursements
|
(1) Cambiar Investors LLC (the "Adviser") has contractually agreed to reduce
fees and reimburse expenses in order to keep net operating expenses
(excluding interest, taxes, brokerage commissions, acquired fund fees and
expenses, and extraordinary expenses (collectively, "excluded expenses"))
from exceeding 1.35% of the Fund's Investor Class Shares' average daily net
assets until September 1, 2014. In addition, if at any point Total Annual
Fund Operating Expenses (not including excluded expenses) are below the
expense cap, the Adviser may receive from the Fund the difference between
the Total Annual Fund Operating Expenses (not including excluded expenses)
and the expense cap to recover all or a portion of its prior fee reductions
or expense reimbursements made during the preceding three-year period
during which this Agreement (or any prior agreement) was in place. This
Agreement may be terminated: (i) by the Board, for any reason at any time;
or (ii) by the Adviser, upon ninety (90) days' prior written notice to the
Trust, effective as of the close of business on September 1, 2014.
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 Fund's operating expenses (including one year of capped expenses in each
period) remain the same. Although your actual costs may be higher or lower,
based on these assumptions your costs would be:
19
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$137 $438 $761 $1,675
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 rate
may indicate higher transaction costs and may result in higher taxes when Fund
shares are held in a taxable account. These costs, which are not reflected in
total annual fund operating expenses or in the example, affect the Fund's
performance. During its most recent fiscal year, the Fund's portfolio turnover
rate was 85% of the average value of its portfolio.
PRINCIPAL INVESTMENT STRATEGIES
Normally, the Fund invests at least 65% of its net assets in equity securities
of U.S. and non-U.S. companies within any market capitalization range. The
equity securities in which the Fund will invest may include convertible
securities. The Fund may also sell securities short as part of its investment
strategy. In addition, the Fund may invest in derivatives, including options
and total return swaps, in an effort to increase returns, to hedge against the
risk of unfavorable price movements in the underlying instruments, to provide
economic exposure to a security or issuer, to manage cash flows or currency
exposure, to address tax considerations, or as an alternative to selling a
security short.
The Fund typically invests in a portfolio of 20-30 issuers that Cambiar
Investors LLC ("Cambiar" or the "Adviser") believes represent the best
opportunities for long-term capital appreciation. Due to the focused nature of
the Fund's investment strategy, the Fund is considered to be non-diversified.
The Adviser's primary analysis criteria is active individual company selection
based on the relative merits and valuation of the underlying corporate entity.
The Adviser employs a relative value approach, whereby it searches for
companies trading at the low end of historic and sectoral valuation ranges,
with a strong market position or product franchise and good overall financial
condition. The Adviser's selection and screening criteria are extremely
qualitative, and the Adviser makes little attempt to time market or sector
movements.
Consistent with its effort to create a focused portfolio of the companies which
it believes represent the best opportunities for long-term capital
appreciation, the Adviser may at times allocate a significant percentage of the
Fund's assets to securities of non-U.S. companies that trade in either domestic
or foreign markets. The Adviser may invest in securities of companies in
"emerging market" countries. An "emerging market" country is any country
determined by the Adviser to have an emerging market economy, considering
factors such as the country's credit rating, its political and economic
stability, and the development of its financial and capital markets. Typically,
emerging markets are in countries that are in the process of industrialization,
with lower gross national products than more developed countries. The
Adviser's allocation among various foreign countries does not seek to replicate
any particular index's country allocation by global capitalization or regional
capitalization. There is no limit on investments in securities of foreign
issuers, including emerging markets issuers.
The following are typical factors the Adviser considers when purchasing
stocks:
o Low price-earnings ratio relative to historic norms and peer group;
20
o Low cash flow multiple relative to historic norms and peer group;
o New product and/or restructuring potential under-appreciated by the
marketplace;
o Sudden stock price decline caused by flight of "momentum investors"
with little change in fundamentals; and
o Excessive investor pessimism in relation to overall outlook for
company over the medium to long term.
The Adviser's short strategy is utilized opportunistically and is driven by the
same underlying philosophy and investment process as the long portion of the
portfolio. If the Adviser determines that a company does not have the
underlying fundamentals to be added to the Fund as a long position, it will
consider using the stock speculatively as a short position or as a paired trade
to hedge a long position in the Fund.
The Adviser may sell a stock that the Fund holds long because:
o It realizes positive developments and achieves its target price;
o It experiences exaggerated price moves relative to actual
developments; or
o It experiences a change in or deteriorating fundamentals.
Due to its investment strategy, the Fund may buy and sell securities
frequently. Such a strategy often involves higher expenses, including brokerage
commissions, and may increase the amount of capital gains (in particular,
short-term gains) realized by the Fund. Shareholders may pay tax on such
capital gains. In addition, the use of short sales may cause the Fund to have
higher expenses (especially interest on borrowings and dividend expenses) than
those of other equity mutual funds.
PRINCIPAL RISKS OF INVESTING IN THE FUND
As with all mutual funds, a shareholder is subject to the risk that his or her
investment could lose money. A Fund share is not a bank deposit and is not
insured or guaranteed by the FDIC or any government agency. The principal risk
factors affecting shareholders' investments in the Fund are set forth below.
Since it purchases equity securities, the Fund is subject to the risk that
stock prices will fall over short or extended periods of time. Historically,
the equity markets have moved in cycles, and the value of the Fund's equity
securities may fluctuate drastically from day to day. Individual companies may
report poor results or be negatively affected by industry and/or economic
trends and developments. The prices of securities issued by such companies may
suffer a decline in response. These factors contribute to price volatility,
which is the principal risk of investing in the Fund. This risk is greater for
small- and medium-sized companies, which tend to be more vulnerable to adverse
developments than larger companies.
When the Fund invests in foreign securities, it will be subject to risks not
typically associated with domestic securities. Although American Depositary
Receipts ("ADRs") and European Depositary Receipts ("EDRs") are alternatives to
directly purchasing the underlying foreign securities in their national markets
and currencies, they are also subject to many of the risks
21
associated with investing directly in foreign securities. Foreign investments,
especially investments in emerging markets, can be riskier and more volatile
than investments in the United States. Adverse political and economic
developments or changes in the value of foreign currency can make it difficult
for the Fund to sell its securities and could reduce the value of your shares.
Differences in tax and accounting standards and difficulties in obtaining
information about foreign companies can negatively affect investment decisions.
The Fund's investments in foreign securities are also subject to the risk that
the securities may be difficult to value and/or valued incorrectly.
Investments in emerging markets securities are considered speculative and
subject to heightened risks in addition to the general risks of investing in
non-U.S. securities. Unlike more established markets, emerging markets may have
governments that are less stable, markets that are less liquid and economies
that are less developed. In addition, the securities markets of emerging market
countries may consist of companies with smaller market capitalizations and may
suffer periods of relative illiquidity; significant price volatility;
restrictions on foreign investment; and possible restrictions on repatriation
of investment income and capital. Furthermore, foreign investors may be
required to register the proceeds of sales, and future economic or political
crises could lead to price controls, forced mergers, expropriation or
confiscatory taxation, seizure, nationalization or creation of government
monopolies.
Fund investments in foreign currencies and securities denominated in foreign
currencies are subject to currency risk. As a result, the value of securities
denominated in foreign currencies can change significantly when foreign
currencies strengthen or weaken relative to the U.S. dollar. Additionally, the
value of a Fund's assets measured in U.S. dollars may be affected by exchange
control regulations. The Fund will generally incur transaction costs in
connection with conversions between various currencies which will negatively
impact performance.
The Fund may invest in convertible securities, which generally offer lower
interest or dividend yields than non-convertible securities of similar quality.
The market values of convertible securities tend to decline as interest rates
increase and, conversely, to increase as interest rates decline. However, a
convertible security's market value tends to reflect the market price of the
common stock of the issuing company when the stock price is greater than the
convertible security's conversion price. The conversion price is defined as the
predetermined price at which the convertible could be exchanged for the
associated stock. A convertible security may lose all of its value if the value
of the underlying stock falls below the conversion price of the security. As
the market price of the underlying common stock declines, the price of the
convertible security tends to be influenced more by the yield of the
convertible security. Thus, it may not decline in price to the same extent as
the underlying common stock. In the event of a liquidation of the issuing
company, holders of convertible securities would be paid before the company's
common stock holders. Consequently, the issuer's convertible securities
generally entail less risk than its common stock.
The Fund may invest in derivatives. Derivatives are often more volatile than
other investments and may magnify the Fund's gains or losses. There are various
factors that affect the Fund's ability to achieve its objective with
derivatives. Successful use of a derivative depends upon the degree to which
prices of the underlying assets correlate with price movements in the
derivatives the Fund buys or sells. The Fund could be negatively affected if
the change in market value of its securities fails to correlate perfectly with
the values of the derivatives it purchased or sold. The lack of a liquid
secondary market for a derivative may prevent the Fund from closing its
derivative positions and could adversely impact its ability to achieve its
objective and to realize profits or limit losses. Since derivatives may be
purchased for a fraction of their value, a
22
relatively small price movement in a derivative may result in an immediate and
substantial loss or gain to the Fund. Derivatives are often more volatile than
other investments and the Fund may lose more in a derivative than it originally
invested in it. There can be no assurance that the Adviser's use of derivatives
will be successful in achieving their intended goals.
Additionally, derivative instruments, particularly market access products, are
subject to counterparty risk, meaning that the party that issues the derivative
may experience a significant credit event and may be unwilling or unable to
make timely settlement payments or otherwise honor its obligations. When
determining whether a counterparty is creditworthy, the Adviser considers
factors such as credit rating agency analysis, broker-dealer credit spreads and
financial statements among others. The Adviser regularly monitors the
creditworthiness of each counterparty that the Fund enters into a transaction
with and maintains an approved list of counterparties.
The Fund may purchase or sell options, which involve the payment or receipt of
a premium by the investor and the corresponding right or obligation, as the
case may be, to either purchase or sell the underlying security for a specific
price at a certain time or during a certain period. Purchasing options involves
the risk that the underlying instrument will not change price in the manner
expected, so that the investor loses its premium. Selling options involves
potentially greater risk because the investor is exposed to the extent of the
actual price movement in the underlying security rather than only the premium
payment received (which could result in a potentially unlimited loss).
Over-the-counter options also involve counterparty risk.
The Fund may enter into total return swaps, which are contracts whereby one
party agrees to make payments of the total return from a reference instrument
during a specified period, in return for payments equal to a fixed or floating
rate of interest or the total return from another underlying reference
instrument. A reference instrument may be a single asset, a pool of assets or
an index of assets. The primary risks associated with total return swaps are
counterparty risk, which means the counterparty fails to meet its obligations,
and market risk, meaning that the Fund is subject to the risk that it could
lose its entire investment.
When the Fund sells securities "short," the Fund may be subject to
substantially higher risks and greater volatility than most mutual funds. The
Fund seeks to increase return and reduce risk by using short sales and other
forms of volatile financial derivatives such as options. Short sales are
speculative investments that will cause the Fund to lose money if the value of
a security does not go down as the Adviser expects. Because the market price of
the security sold short could increase without limit, the Fund could be subject
to a theoretically unlimited loss, although the Fund may be able to limit any
such losses by purchasing the security sold short. Short sales can also be used
as a hedge and therefore lower the overall risk of the Fund.
The Fund is non-diversified, which means that it may invest in the securities
of relatively few issuers. As a result, the Fund may be more susceptible to a
single adverse economic or political occurrence affecting one or more of these
issuers, and may experience increased volatility due to its investments in
those securities.
The Fund pursues a "value style" of investing. Value investing focuses on
companies whose stock appears undervalued in light of factors such as the
company's earnings, book value, revenues or cash flow. If the Adviser's
assessment of a company's value or prospects for exceeding earnings
expectations or market conditions is inaccurate, the Fund could suffer losses
or produce poor performance relative to other funds. In addition, "value
stocks" can continue to be undervalued by the market for long periods of time.
23
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund by showing changes in the Fund's
performance from year to year and by showing how the Fund's average annual
total returns for 1 and 5 years and since inception compare with those of a
broad measure of market performance. Of course, the Fund's past performance
(before and after taxes) does not necessarily indicate how the Fund will
perform in the future. Updated performance information is available on the
Fund's website at www.cambiar.com or by calling 1-866-777-8227.
2008 (43.82)%
2009 77.88%
2010 38.54%
2011 (17.25)%
2012 5.98%
During the periods shown in the chart, the Fund's Investor Class Shares'
highest return for a quarter was 30.74% (quarter ended 09/30/2009) and the
lowest return for a quarter was (36.29)% (quarter ended 09/30/2011). The
Fund's Investor Class Shares' total return from 1/1/2013 to 6/30/2013 was
14.65% .
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED DECEMBER 31, 2012
After-tax returns are calculated using the historical highest individual
federal marginal income tax rates and do not reflect the impact of state and
local taxes. Actual after-tax returns depend on an investor's tax situation and
may differ from those shown. After-tax returns shown are not relevant to
investors who hold their Fund shares through tax-deferred arrangements, such as
401(k) plans or individual retirement accounts.
SINCE
INCEPTION
INVESTOR CLASS SHARES 1 YEAR 5 YEARS (08/31/07)
------------------------------------------------------------------------------------------------------------------------------------
Fund Returns Before Taxes 5.98% 3.95% 4.04%
Fund Returns After Taxes on Distributions 5.98% 3.23% 3.35%
Fund Returns After Taxes on Distributions and Sale 3.89% 2.99% 3.09%
of Fund Shares
Russell 3000([R]) Index (reflects no deduction for fees, 16.42% 2.04% 1.95%
expenses, or taxes)
|
INVESTMENT ADVISER
Cambiar Investors LLC
PORTFOLIO MANAGER
Brian M. Barish, CFA, President, Director of Research, joined the Adviser in
1997 and has managed the Fund since its inception.
24
PURCHASING AND SELLING FUND SHARES
To purchase shares of the Fund for the first time, you must invest at least
$2,500 ($500 for individual retirement accounts ("IRAs") and $250 for Spousal
IRAs). Thereafter your investments must be at least $100.
If you own your shares directly, you may redeem your shares on any day the New
York Stock Exchange ("NYSE") is open for business by contacting the Fund
directly by mail or telephone at 1-866-777-8227.
If you own your shares through an account with an investment professional or
other institution, contact that investment professional or institution to
redeem your shares.
FOR IMPORTANT INFORMATION ABOUT TAXES AND FINANCIAL INTERMEDIARY COMPENSATION,
PLEASE TURN TO "SUMMARY INFORMATION ABOUT TAXES AND FINANCIAL INTERMEDIARY
COMPENSATION" ON PAGE 37 OF THE PROSPECTUS.
25
CAMBIAR SMID FUND
FUND INVESTMENT OBJECTIVE
The Cambiar SMID Fund (the "Fund") seeks long-term capital appreciation.
FUND FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
Investor Class Shares of the Fund.
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
Redemption Fee (as a percentage of amount redeemed, if shares
redeemed have been held for less than 90 days) 2.00%
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT YOU PAY EACH YEAR AS A PERCENTAGE
OF THE VALUE OF YOUR INVESTMENT)
Management Fees 1.05%
Other Expenses 5.87%
Shareholder Service Fees 0.25%
Acquired Fund Fees and Expenses 0.01%
-------
Total Annual Fund Operating Expenses(1) 7.18%
Less Fee Reductions and/or Expense Reimbursements (5.82)%
-------
Total Annual Fund Operating Expenses After Fee Reductions 1.36%
and/or Expense Reimbursements(1,2)
|
(1) The Total Annual Fund Operating Expenses in this fee table, both before
and after fee reductions and/or expense reimbursements, do not correlate to
the expense ratio in the Fund's Financial Highlights because the Financial
Highlights include only the direct operating expenses incurred by the Fund,
and exclude Acquired Fund Fees and Expenses.
(2) Cambiar Investors LLC (the "Adviser") has contractually agreed to reduce
fees and reimburse expenses in order to keep net operating expenses
(excluding interest, taxes, brokerage commissions, Acquired Fund Fees and
Expenses, and extraordinary expenses (collectively, "excluded expenses"))
from exceeding 1.35% of the Fund's Investor Class Shares' average daily net
assets until September 1, 2014. In addition, if at any point Total Annual
Fund Operating Expenses (not including excluded expenses) are below the
expense cap, the Adviser may receive from the Fund the difference between
the Total Annual Fund Operating Expenses (not including excluded expenses)
and the expense cap to recover all or a portion of its prior fee reductions
or expense reimbursements made during the preceding three-year period
during which this Agreement (or any prior agreement) was in place. This
Agreement may be terminated: (i) by the Board, for any reason at any time;
or (ii) by the Adviser, upon ninety (90) days' prior written notice to the
Trust, effective as of the close of business on September 1, 2014.
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 Fund's operating expenses (including one year
26
of capped expenses in each period) remain the same. Although your actual costs
may be higher or lower, based on these assumptions your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$138 $1,594 $2,988 $6,214
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 rate
may indicate higher transaction costs and may result in higher taxes when Fund
shares are held in a taxable account. These costs, which are not reflected in
total annual fund operating expenses or in the example, affect the Fund's
performance. During its most recent fiscal year, the Fund's portfolio turnover
rate was 105% of the average value of its portfolio.
PRINCIPAL INVESTMENT STRATEGIES
Under normal circumstances, the Fund invests at least 80% of its net assets,
plus any borrowings for investment purposes, in common stocks of small- to
mid-sized companies. This investment policy may be changed by the Fund upon 60
days' prior notice to shareholders. The Fund considers small- and mid-sized
companies to be those companies with market capitalizations of up to $12
billion at the time of purchase. The Fund normally invests in 35-45 common
stocks.
Cambiar Investors LLC's ("Cambiar" or the "Adviser") investment professionals
work as a team to develop investment ideas by analyzing company and industry
statements, monitoring Wall Street and other research sources and interviewing
company management. The Adviser also evaluates economic conditions and fiscal
and monetary policies. The Adviser's approach focuses first on individual
stocks and then on industries or sectors. The Adviser does not attempt to time
the market. The Adviser tries to select quality companies:
o Possessing above-average financial characteristics;
o Having seasoned management;
o Enjoying product or market advantages;
o Whose stock is selling at a low relative historical valuation based
on ratios such as price-to-earnings, price-to-book, price-to-sales and
price-to-cash flow;
o Experiencing positive developments not yet recognized by the markets,
such as positive changes in management, improved margins, corporate
restructuring or new products; and/or
o Possessing significant appreciation potential within 12 to 18 months.
The Adviser may sell a stock because:
o It realizes positive developments and achieves its target price;
o It experiences exaggerated price moves relative to actual
developments;
27
o It becomes overweighted in the portfolio; or
o It experiences a change in or deteriorating fundamentals.
PRINCIPAL RISKS OF INVESTING IN THE FUND
As with all mutual funds, a shareholder is subject to the risk that his or her
investment could lose money. A Fund share is not a bank deposit and is not
insured or guaranteed by the FDIC or any government agency. The principal risk
factors affecting shareholders' investments in the Fund are set forth below.
Since it purchases equity securities, the Fund is subject to the risk that
stock prices will fall over short or extended periods of time. Historically,
the equity markets have moved in cycles, and the value of the Fund's equity
securities may fluctuate drastically from day to day. Individual companies may
report poor results or be negatively affected by industry and/or economic
trends and developments. The prices of securities issued by such companies may
suffer a decline in response. These factors contribute to price volatility,
which is the principal risk of investing in the Fund.
The Fund is also subject to the risk that the mid- and small capitalization
stocks may underperform other segments of the equity market or the equity
market as a whole. The mid- and small-capitalization companies that the Fund
invests in may be more vulnerable to adverse business or economic events than
larger, more established companies. In particular, these mid-and small-sized
companies may pose additional risks, including liquidity risk, because these
companies tend to have limited product lines, markets and financial resources,
and may depend upon a relatively small management group. Therefore, mid- and
small-cap stocks may be more volatile than those of larger companies. These
securities may be traded over-the-counter or listed on an exchange.
The Fund invests in the securities of relatively few issuers. As a result, the
Fund may be more susceptible to a single adverse economic or political
occurrence affecting one or more of these issuers, and may experience increased
volatility due to its investments in those securities.
The Fund pursues a "value style" of investing. Value investing focuses on
companies whose stock appears undervalued in light of factors such as the
company's earnings, book value, revenues or cash flow. If the Adviser's
assessment of a company's value or prospects for exceeding earnings
expectations or market conditions is inaccurate, the Fund could suffer losses
or produce poor performance relative to other funds. In addition, "value
stocks" can continue to be undervalued by the market for long periods of time.
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund by showing how the Fund's average
annual total returns for 1 year and since inception compare with those of a
broad measure of market performance. Of course, the Fund's past performance
(before and after taxes) does not necessarily indicate how the Fund will
perform in the future.
Updated performance information is available on the Fund's website at
www.cambiar.com or by calling 1-866-777-8227.
28
2012 11.77%
During the periods shown in the chart, the Fund's Investor Class Shares'
highest return for a quarter was 11.66% (quarter ended 3/31/2012) and the
lowest return for a quarter was (9.81)% (quarter ended 6/30/2012). The Fund's
Investor Class Shares total return from 1/1/2013 to 6/30/2013 was 19.71% .
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED DECEMBER 31, 2012
After-tax returns are calculated using the historical highest individual
federal marginal income tax rates and do not reflect the impact of state and
local taxes. Actual after-tax returns depend on an investor's tax situation and
may differ from those shown. After-tax returns shown are not relevant to
investors who hold their Fund shares through tax-deferred arrangements, such as
401(k) plans or individual retirement accounts.
Returns after taxes on distributions and sale of Fund shares may be higher than
before-tax returns when a net capital loss occurs upon the redemption of Fund
shares.
SINCE
INCEPTION
INVESTOR CLASS SHARES 1 YEAR (05/31/11)
--------------------------------------------------------------------------------
Fund Returns Before Taxes 11.77% (2.61)%
Fund Returns After Taxes on Distributions 11.77% (2.61)%
Fund Returns After Taxes on Distributions and
Sale of Fund Shares 7.65% (2.22)%
Russell 2500 Index (reflects no deduction for fees,
expenses, or taxes) 17.88% 2.51%
|
INVESTMENT ADVISER
Cambiar Investors LLC
PORTFOLIO MANAGERS
Brian M. Barish, CFA, President, Director of Research, joined the Adviser in
1997 and has served on the portfolio team for the Fund since its inception.
Maria L. Mendelsberg, CFA, Principal, joined the Adviser in 1997 and has served
on the portfolio team for the Fund since its inception.
Anna (Ania) A. Aldrich, CFA, Principal, joined the Adviser in 1999 and has
served on the portfolio team for the Fund since its inception.
Timothy A. Beranek, Principal, joined the Adviser in 1999 and has served on the
portfolio team for the Fund since its inception.
Andrew P. Baumbusch, Principal, joined the Adviser in 2004 and has served on
the portfolio team for the Fund since its inception.
29
Jeffrey H. Susman, Senior Investment Analyst, joined the Adviser in 2005 and
has served on the portfolio team for the Fund since its inception.
PURCHASING AND SELLING FUND SHARES
To purchase shares of the Fund for the first time, you must invest at least
$2,500 ($500 for individual retirement accounts ("IRAs") and $250 for Spousal
IRAs). Thereafter your investments must be at least $100.
If you own your shares directly, you may redeem your shares on any day the New
York Stock Exchange ("NYSE") is open for business by contacting the Fund
directly by mail or telephone at 1-866-777-8227.
If you own your shares through an account with an investment professional or
other institution, contact that investment professional or institution to
redeem your shares.
FOR IMPORTANT INFORMATION ABOUT TAXES AND FINANCIAL INTERMEDIARY COMPENSATION,
PLEASE TURN TO "SUMMARY INFORMATION ABOUT TAXES AND FINANCIAL INTERMEDIARY
COMPENSATION" ON PAGE 37 OF THE PROSPECTUS.
30
CAMBIAR GLOBAL SELECT FUND
FUND INVESTMENT OBJECTIVE
The Cambiar Global Select Fund (the "Fund") seeks long-term capital
appreciation.
FUND FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
Investor Class Shares of the Fund.
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
Redemption Fee (as a percentage of amount redeemed, if shares
redeemed have been held for less than 90 days) 2.00%
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT YOU PAY EACH YEAR AS A PERCENTAGE
OF THE VALUE OF YOUR INVESTMENT)
Management Fees 1.00%
Other Expenses 8.64%
Shareholder Service Fees 0.25%
Acquired Fund Fees and Expenses 0.01%
-------
Total Annual Fund Operating Expenses(1) 9.90%
Less Fee Reductions and/or Expense Reimbursements (8.59)%
-------
Total Annual Fund Operating Expenses After Fee Reductions
and/or Expense Reimbursements(1,2) 1.31%
|
(1) The Total Annual Fund Operating Expenses in this fee table, both before
and after fee reductions and/or expense reimbursements, do not correlate to
the expense ratio in the Fund's Financial Highlights because the Financial
Highlights include only the direct operating expenses incurred by the Fund,
and exclude Acquired Fund Fees and Expenses.
(2) Cambiar Investors LLC (the "Adviser") has contractually agreed to reduce
fees and reimburse expenses in order to keep net operating expenses
(excluding interest, taxes, brokerage commissions, Acquired Fund Fees and
Expenses, and extraordinary expenses (collectively, "excluded expenses"))
from exceeding 1.30% of the Fund's Investor Class Shares' average daily net
assets until September 1, 2014. In addition, if at any point Total Annual
Fund Operating Expenses (not including excluded expenses) are below the
expense cap, the Adviser may receive from the Fund the difference between
the Total Annual Fund Operating Expenses (not including excluded expenses)
and the expense cap to recover all or a portion of its prior fee reductions
or expense reimbursements made during the preceding three-year period
during which this Agreement (or any prior agreement) was in place. This
Agreement may be terminated: (i) by the Board, for any reason at any time;
or (ii) by the Adviser, upon ninety (90) days' prior written notice to the
Trust, effective as of the close of business on September 1, 2014.
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.
31
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 Fund's operating expenses (including one year of capped expenses in each
period) remain the same. Although your actual costs may be higher or lower,
based on these assumptions your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$133 $2,087 $3,854 $7,567
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 rate
may indicate higher transaction costs and may result in higher taxes when Fund
shares are held in a taxable account. These costs, which are not reflected in
total annual fund operating expenses or in the example, affect the Fund's
performance. During its most recent fiscal year, the Fund's portfolio turnover
rate was 70% of the average value of its portfolio.
PRINCIPAL INVESTMENT STRATEGIES
Under normal circumstances, the Fund invests at least 80% of its net assets in
equity securities of companies located throughout the world. The equity
securities in which the Fund generally invests are common stocks and American
Depositary Receipts ("ADRs"). The Fund may invest in securities of companies of
any market capitalization and expects, under normal market conditions, to
invest at least 40% of its assets in non-U.S. companies. The Adviser considers
a company to be a "non-U.S. company" if: (i) 50% of the company's assets are
located outside of the United States; or (ii) 50% of the company's revenues are
generated outside of the United States; or (iii) the company is domiciled or
doing a substantial amount of business outside of the United States. The
majority of these companies operate in "established" markets; however, when
opportunities warrant, the Adviser may invest up to 25% of its assets in
securities of companies in "emerging market" countries. An "emerging market"
country is any country determined by the Adviser to have an emerging market
economy, considering factors such as the country's credit rating, its political
and economic stability and the development of its financial and capital
markets. Typically, emerging markets are in countries that are in the process
of industrialization, with lower gross national products than more developed
countries. In many circumstances, the Fund purchases ADRs of foreign companies
on U.S. exchanges, rather than foreign shares on foreign exchanges, to
facilitate greater liquidity and lower custodial expenses.
Cambiar Investors LLC's ("Cambiar" or the "Adviser") investment professionals
work as a team to develop investment ideas by analyzing company and industry
statements, monitoring Wall Street and other research sources and interviewing
company management. The Adviser also evaluates economic conditions and fiscal
and monetary policies. The Adviser's approach focuses first on individual
stocks and then on industries or sectors. The Adviser does not attempt to time
the market. The Adviser tries to select quality companies:
o Possessing above-average financial characteristics;
o Having seasoned management;
o Enjoying product or market advantages;
32
o Whose stock is selling at a low relative historical valuation based
on ratios such as price-to-earnings, price-to-book, price-to-sales and
price-to-cash flow;
o Experiencing positive developments not yet recognized by the markets,
such as positive changes in management, improved margins, corporate
restructuring or new products; and/or
o Possessing significant appreciation potential within 12 to 18 months.
The Adviser may sell a stock because:
o It realizes positive developments and achieves its target price;
o It experiences exaggerated price moves relative to actual
developments;
o It becomes overweighted in the portfolio; or
o It experiences a change in or deteriorating fundamentals.
PRINCIPAL RISKS OF INVESTING IN THE FUND
As with all mutual funds, a shareholder is subject to the risk that his or her
investment could lose money. A Fund share is not a bank deposit and is not
insured or guaranteed by the FDIC or any government agency. The principal risk
factors affecting shareholders' investments in the Fund are set forth below.
Since it purchases equity securities, the Fund is subject to the risk that
stock prices will fall over short or extended periods of time. Historically,
the equity markets have moved in cycles, and the value of the Fund's equity
securities may fluctuate drastically from day to day. Individual companies may
report poor results or be negatively affected by industry and/or economic
trends and developments. The prices of securities issued by such companies may
suffer a decline in response. These factors contribute to price volatility,
which is the principal risk of investing in the Fund.
The Fund is also subject to the risk that the mid- and small-capitalization
stocks may underperform other segments of the equity market or the equity
market as a whole. The mid- and small-capitalization companies that the Fund
invests in may be more vulnerable to adverse business or economic events than
larger, more established companies. In particular, these mid-and small-sized
companies may pose additional risks, including liquidity risk, because these
companies tend to have limited product lines, markets and financial resources,
and may depend upon a relatively small management group. Therefore, mid- and
small-cap stocks may be more volatile than those of larger companies. These
securities may be traded over-the-counter or listed on an exchange.
When the Fund invests in foreign securities, it will be subject to risks not
typically associated with domestic securities. Although ADRs and European
Depositary Receipts ("EDRs") are alternatives to directly purchasing the
underlying foreign securities in their national markets and currencies, they
are also subject to many of the risks associated with investing directly in
foreign securities. Foreign investments, especially investments in emerging
markets, can be riskier and more volatile than investments in the United
States. Adverse political and economic developments or changes in the value of
foreign currency can make it difficult for the Fund to sell
33
its securities and could reduce the value of your shares. Differences in tax
and accounting standards and difficulties in obtaining information about
foreign companies can negatively affect investment decisions. The Fund's
investments in foreign securities are also subject to the risk that the
securities may be difficult to value and/or valued incorrectly.
Investments in emerging markets securities are considered speculative and
subject to heightened risks in addition to the general risks of investing in
non-U.S. securities. Unlike more established markets, emerging markets may have
governments that are less stable, markets that are less liquid and economies
that are less developed. In addition, the securities markets of emerging market
countries may consist of companies with smaller market capitalizations and may
suffer periods of relative illiquidity; significant price volatility;
restrictions on foreign investment; and possible restrictions on repatriation
of investment income and capital. Furthermore, foreign investors may be
required to register the proceeds of sales, and future economic or political
crises could lead to price controls, forced mergers, expropriation or
confiscatory taxation, seizure, nationalization or creation of government
monopolies.
Fund investments in foreign currencies and securities denominated in foreign
currencies are subject to currency risk. As a result, the value of securities
denominated in foreign currencies can change significantly when foreign
currencies strengthen or weaken relative to the U.S. dollar. Additionally, the
value of a Fund's assets measured in U.S. dollars may be affected by exchange
control regulations. The Fund will generally incur transaction costs in
connection with conversions between various currencies which will negatively
impact performance.
The Fund pursues a "value style" of investing. Value investing focuses on
companies whose stock appears undervalued in light of factors such as the
company's earnings, book value, revenues or cash flow. If the Adviser's
assessment of a company's value or prospects for exceeding earnings
expectations or market conditions is inaccurate, the Fund could suffer losses
or produce poor performance relative to other funds. In addition, "value
stocks" can continue to be undervalued by the market for long periods of time.
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund by showing how the Fund's average
annual total returns for 1 year and since inception compare with those of a
broad measure of market performance. Of course, the Fund's past performance
(before and after taxes) does not necessarily indicate how the Fund will
perform in the future.
Updated performance information is available on the Fund's website at
www.cambiar.com or by calling 1-866-777-8227.
2012 13.51%
During the periods shown in the chart, the Fund's Investor Class Shares'
highest return for a quarter was 11.69% (quarter ended 3/31/2012) and the
lowest return for a quarter was (8.61)% (quarter ended 6/30/2012). The Fund's
Investor Class Shares total return from 1/1/2013 to 6/30/2013 was 14.00%.
34
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED DECEMBER 31, 2012
After-tax returns are calculated using the historical highest individual
federal marginal income tax rates and do not reflect the impact of state and
local taxes. Actual after-tax returns depend on an investor's tax situation and
may differ from those shown. After-tax returns shown are not relevant to
investors who hold their Fund shares through tax-deferred arrangements, such as
401(k) plans or individual retirement accounts.
SINCE
INCEPTION
INVESTOR CLASS SHARES 1 YEAR (11/30/11)
--------------------------------------------------------------------------------
Fund Returns Before Taxes 13.51% 13.34%
Fund Returns After Taxes on Distributions 12.88% 12.77%
Fund Returns After Taxes on Distributions and
Sale of Fund Shares 9.23% 11.19%
MSCI All Country World Index (reflects no
deduction for fees, expenses, or taxes) 16.13% 14.59%
|
INVESTMENT ADVISER
Cambiar Investors LLC
PORTFOLIO MANAGERS
Anna (Ania) A. Aldrich, CFA, Principal, joined the Adviser in 1999 and has
served on the portfolio team for the Fund since its inception.
Todd L. Edwards, PhD, International Investment Analyst, joined the Adviser in
2007 and has served on the portfolio team for the Fund since its inception.
Alvaro Shiraishi, International Investment Analyst, joined the Adviser in 2007
and has served on the portfolio team for the Fund since its inception.
PURCHASING AND SELLING FUND SHARES
To purchase shares of the Fund for the first time, you must invest at least
$2,500 ($500 for individual retirement accounts ("IRAs") and $250 for Spousal
IRAs). Thereafter your investments must be at least $100.
If you own your shares directly, you may redeem your shares on any day the New
York Stock Exchange ("NYSE") is open for business by contacting the Fund
directly by mail or telephone at 1-866-777-8227.
If you own your shares through an account with an investment professional or
other institution, contact that investment professional or institution to
redeem your shares.
FOR IMPORTANT INFORMATION ABOUT TAXES AND FINANCIAL INTERMEDIARY COMPENSATION,
PLEASE TURN TO "SUMMARY INFORMATION ABOUT TAXES AND FINANCIAL INTERMEDIARY
COMPENSATION" ON PAGE 37 OF THE PROSPECTUS.
35
SUMMARY INFORMATION ABOUT TAXES AND FINANCIAL INTERMEDIARY COMPENSATION
TAX INFORMATION
Each Fund intends to make distributions that may be taxed as ordinary income or
capital gains, unless you are investing through a tax-deferred arrangement,
such as a 401(k) or individual retirement account, in which case your
distribution will be taxed when withdrawn from the tax-deferred account.
PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES
If you purchase shares of a Fund through a broker-dealer or other financial
intermediary (such as a bank), the Funds and their 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 a Fund over another
investment. Ask your salesperson or visit your financial intermediary's web
site for more information.
36
INVESTING WITH THE CAMBIAR FUNDS
For information regarding the federal income tax consequences of transactions
in shares of a Fund, including information about cost basis reporting, see
"Federal Taxes."
BUYING FUND SHARES
To purchase Investor Class Shares directly from the Funds through their
transfer agent, complete and send in the account application. If you need an
account application or have questions, please call 1-866-777-8227.
All investments must be made by check, wire or ACH. All checks must be payable
in U.S. dollars and drawn on U.S. financial institutions. The Funds do not
accept purchases made by third-party checks, credit cards, credit card checks,
cash, traveler's checks, money orders or cashier's checks.
The Funds do not generally accept investments by non-U.S. persons. Non-U.S.
persons may be permitted to invest in the Funds subject to the satisfaction of
enhanced due diligence. Please contact the Funds for more information.
Investor Class shares of the Cambiar Small Cap Fund are closed to new
investors. However, existing shareholders of Investor Class shares of the
Cambiar Small Cap Fund and certain eligible investors, as set forth below, may
purchase additional Investor Class shares of the Cambiar Small Cap Fund through
existing or new accounts and reinvest dividends and capital gains
distributions. Existing shareholders and eligible investors include:
o Shareholders of Investor Class shares of the Cambiar Small Cap Fund
as of April 30, 2013;
o Qualified defined contribution retirement plans with participants
holding Investor Class shares of the Cambiar Small Cap Fund as of
April 30, 2013, and participants of such plans regardless of whether
they hold Investor Class shares of the Cambiar Small Cap Fund as of
April 30,2013;
o Clients of certain fee based advisory programs sponsored by financial
intermediaries for which investment decisions are made on a
centralized basis at the discretion of the firm (e. g. , model
portfolios managed by a firm or its investment committee);
o An employee of Cambiar; or
o A trustee of the Advisors' Inner Circle Fund.
The Cambiar Small Cap Fund reserves the right, in its sole discretion, to
determine the criteria for qualification as an eligible investor and to reject
any purchase order. Sales of Investor Class shares of the Cambiar Small Cap
Fund may be further restricted or reopened in the future. Institutional Class
shares of the Cambiar Small Cap Fund, which are offered in a different
prospectus, will remain open to new investors.
37
BY MAIL
You can open an account with the Funds by sending a check and your account
application to the address below. You can add to an existing account by sending
the Funds a check and, if possible, the "Invest by Mail" stub that accompanies
your statement. Be sure your check identifies clearly your name, your account
number and the name of the Fund.
REGULAR MAIL ADDRESS
The Cambiar Funds
P.O. Box 219009
Kansas City, MO 64121-9009
EXPRESS MAIL ADDRESS
The Cambiar Funds
c/o DST Systems, Inc.
430 West 7th Street
Kansas City, MO 64105
The share price used to fill the purchase order is the next price calculated by
the Fund after the Fund's transfer agent receives the order in proper form
(meaning that it is complete and contains all necessary information, and has
all supporting documentation such as proper signature guarantees, IRA rollover
forms, etc.) at the P.O. Box provided for regular mail delivery or the office
address provided for express mail delivery.
BY WIRE
To open an account by wire, call 1-866-777-8227 for details. To add to an
existing account by wire, wire your money using the wiring instructions set
forth below (be sure to include the Fund name and your account number).
WIRING INSTRUCTIONS
UMB Bank, N.A.
ABA# 101000695
The Cambiar Funds
DDA Acct. # 9871063178
Ref: Fund name/account number/account name
38
BY AUTOMATIC INVESTMENT PLAN (VIA AUTOMATED CLEARING HOUSE OR ACH)
You may not open an account via ACH. However, once you have established an
account, you can set up an automatic investment plan by mailing a completed
application to the Funds. To cancel or change a plan, write to the Funds at:
The Cambiar Funds, P.O. Box 219009, Kansas City, MO 64121 (Express Mail
Address: The Cambiar Funds c/o DST Systems, Inc., 430 West 7th Street, Kansas
City, MO 64105). Allow up to 15 days to create the plan and 3 days to cancel or
change it.
PURCHASES IN-KIND
Subject to the approval of the Funds, an investor may purchase shares of a Fund
with liquid securities and other assets that are eligible for purchase by the
Fund (consistent with the Fund's investment policies and restrictions) and that
have a value that is readily ascertainable in accordance with the Fund's
valuation policies. These transactions will be effected only if the Adviser
deems the security to be an appropriate investment for the Fund. Assets
purchased by the Fund in such a transaction will be valued in accordance with
procedures adopted by the Fund. The Fund reserves the right to amend or
terminate this practice at any time.
MINIMUM INVESTMENTS
You can open an account with any Fund, except the Cambiar Small Cap Fund, with
a minimum initial investment of $2,500 ($500 for individual retirement accounts
("IRAs") and $250 for Spousal IRAs). Investor Class shares of the Cambiar
Small Cap Fund are closed to new investors. Thereafter your investments must be
at least $100 for each Fund. Each Fund reserves the right to waive the minimum
investment amounts in its sole discretion.
FUND CODES
Each Fund's reference information, which is listed below, will be helpful to
you when you contact the Funds to purchase or exchange Investor Class Shares,
check a Fund's daily net asset value per share ("NAV") or obtain additional
information.
--------------------------------------------------------------------------------
FUND NAME TRADING SYMBOL CUSIP FUND CODE
--------------------------------------------------------------------------------
Cambiar Opportunity Fund CAMOX 00758M261 1262
--------------------------------------------------------------------------------
Cambiar International Equity Fund CAMIX 00758M139 1269
--------------------------------------------------------------------------------
Cambiar Small Cap Fund CAMSX 0075W0817 1363
--------------------------------------------------------------------------------
Cambiar Aggressive Value Fund CAMAX 0075W0650 1365
--------------------------------------------------------------------------------
Cambiar SMID Fund CAMMX 00769G766 1270
--------------------------------------------------------------------------------
Cambiar Global Select Fund CAMGX 00769G113 1366
--------------------------------------------------------------------------------
|
39
REDEEMING FUND SHARES
BY MAIL
You may contact the Funds directly by mail at: The Cambiar Funds, P.O. Box
219009, Kansas City, MO 64121 (Express Mail Address: The Cambiar Funds c/o DST
Systems, Inc., 430 West 7th Street, Kansas City, MO 64105). Send a letter to
the Funds signed by all registered parties on the account specifying:
o The Fund name;
o The account number;
o The dollar amount or number of shares you wish to redeem;
o The account name(s); and
o The address to which redemption (sale) proceeds should be sent.
The share price used to fill the sell order is the next price calculated by the
Fund after the Fund's transfer agent receives the order in proper form (meaning
that it is complete and contains all necessary information, and has all
supporting documentation such as proper signature guarantees, IRA rollover
forms, etc.) at the P.O. Box provided for regular mail delivery or the office
address provided for express mail delivery.
All registered share owner(s) must sign the letter in the exact name(s) in
which their account is registered and must designate any special capacity in
which they are registered.
Certain redemption requests will require a signature guarantee by an eligible
guarantor institution. Eligible guarantors include commercial banks, savings
and loans, savings banks, trust companies, credit unions, member firms of a
national stock exchange, or any other member or participant of an
approved signature guarantor program. For example, signature guarantees may be
required if your address of record has changed in the last 30 days, you want
the proceeds sent to a bank other than the bank of record on your account, or
if you ask that the proceeds be sent to a different person or address. Please
note that a notary public is not an acceptable provider of a signature
guarantee and that we must be provided with the original guarantee. Signature
guarantees are for the protection of our shareholders. Before it grants a
redemption request, a Fund may require a shareholder to furnish additional
legal documents to insure proper authorization.
Accounts held by a corporation, trust, fiduciary or partnership may require
additional documentation along with a signature guaranteed letter of
instruction. The Funds participate in the Paperless Legal Program (the
"Program"), which eliminates the need for accompanying paper documentation on
legal securities transfers. Requests received with a Medallion Signature
Guarantee will be reviewed for the proper criteria to meet the guidelines of
the Program and may not require additional documentation. Please contact
Shareholder Services at 1-866-777-8227 for more information.
40
BY TELEPHONE
You must first establish the telephone redemption privilege (and, if desired,
the wire or ACH redemption privilege) by completing the appropriate sections of
the account application.
Call 1-866-777-8227 to redeem your shares. Based on your instructions, the
Funds will mail your proceeds to you or send them to your bank by either Fed
wire or ACH.
41
BY SYSTEMATIC WITHDRAWAL PLAN (VIA ACH)
If your account balance is at least $10,000, you may transfer as little as $100
per month from your account to another financial institution through a
Systematic Withdrawal Plan (via ACH). To participate in this service, you must
complete the appropriate sections of the account application and mail it to the
Funds.
EXCHANGING FUND SHARES
At no charge, you may exchange Investor Class Shares of one Cambiar Fund for
Investor Class Shares of another Cambiar Fund by writing to or calling the
Funds, subject to any applicable minimum investment and investor eligibility
requirements. You may only exchange shares between accounts with identical
registrations (i.e., the same names and addresses).
The exchange privilege is not intended as a vehicle for short-term or excessive
trading. A Fund may suspend or terminate your exchange privilege if you engage
in a pattern of exchanges that is excessive, as determined at the sole
discretion of the Funds. For more information about the Funds' policy on
excessive trading, see "Excessive Trading Policies and Procedures."
TRANSACTION POLICIES
CALCULATING YOUR SHARE PRICE
You may buy, sell or exchange shares of a Fund on each day the NYSE is open for
business (a "Business Day") at a price equal to its net asset value ("NAV")
next computed after the Fund receives your order in good form. The Funds
calculate NAV once each Business Day as of the close of normal trading on the
NYSE (normally, 4:00 p.m., Eastern Time). To receive the current Business Day's
NAV, the Funds or an authorized institution must receive your order in good
form (meaning that it is complete, contains all necessary information, and has
all supporting documentation such as proper signature guarantees, IRA rollover
forms, etc.) before the close of trading on the NYSE that day. Otherwise, you
will receive the NAV that is calculated at the close of trading on the
following Business Day. If the NYSE closes early - such as on days in advance
of certain generally observed holidays - the Funds will calculate NAV as of the
earlier closing time. The Funds will not accept orders that request a
particular day or price for the transaction or any other special conditions.
Shares will not be priced on days that the NYSE is closed for trading,
including nationally observed holidays. Since securities that are traded on
foreign exchanges may trade on days when the NYSE is closed, the value of the
Funds may change on days when you are unable to purchase or redeem shares.
Each Fund calculates its NAV by adding the total value of its assets,
subtracting its liabilities and then dividing the result by the number of
shares outstanding. In calculating NAV, the Funds generally value their
investment portfolios at market price. If market prices are not readily
available or the Funds reasonably believe that they are unreliable, such as in
the case of a security value that has been materially affected by events
occurring after the relevant market closes, but before the time as of which a
Fund calculates NAV, the Funds are required to price those securities at fair
value as determined in good faith using methods approved by the Board of
Trustees (the "Board"). Pursuant to the policies adopted by, and under the
ultimate supervision of the Board, these methods are implemented through the
Funds' Fair Value Pricing Committee, members of which are appointed by the
Board. The Funds' determination of a security's fair
42
value price often involves the consideration of a number of subjective factors,
and is therefore subject to the unavoidable risk that the value that the Funds
assign to a security may be higher or lower than the security's value would be
if a reliable market quotation for the security was readily available.
With respect to non-U.S. securities held by the Cambiar International Equity
Fund, the Cambiar Aggressive Value Fund or the Cambiar Global Select Fund, the
Funds may take factors influencing specific markets or issuers into
consideration in determining the fair value of a non-U.S. security.
International securities markets may be open on days when the U.S. markets are
closed. In such cases, the value of any international securities owned by the
Funds may be significantly affected on days when investors cannot buy or sell
shares. In addition, due to the difference in times between the close of the
international markets and the time as of which a Fund prices its shares, the
value the Funds assign to securities may not be the same as the quoted or
published prices of those securities on their primary markets or exchanges. In
determining fair value prices, the Funds may consider the performance of
securities on their primary exchanges, foreign currency
appreciation/depreciation, securities market movements in the United States, or
other relevant information related to the securities.
There may be limited circumstances in which a Fund would price securities at
fair value for stocks of U.S. companies that are traded on U.S. exchanges --
for example, if the exchange on which a portfolio security is principally
traded closed early or if trading in a particular security was halted during
the day and did not resume prior to the time the Fund calculated its NAV.
When valuing fixed income securities with remaining maturities of more than 60
days, the Funds use the value of the security provided by pricing services.
The values provided by a pricing service may be based upon market quotations
for the same security if a quotation is readily available, or may be based upon
the values of securities expected to trade in a similar manner or a pricing
matrix. When valuing fixed income securities with remaining maturities of 60
days or less, the Funds use the security's amortized cost. Amortized cost and
the use of a pricing matrix in valuing fixed income securities are forms of
fair value pricing.
Securities, options, futures contracts and other assets (including swap
agreements) for which market quotations are not readily available will be
valued at their fair value as determined in good faith by or under the
direction of the Board.
BUYING OR SELLING SHARES THROUGH A FINANCIAL INTERMEDIARY
In addition to being able to buy and sell Fund shares directly from the Funds
through their transfer agent, you may also buy or sell shares of the Funds
through accounts with financial intermediaries such as brokers and other
institutions that are authorized to place trades in Fund shares for their
customers. When you purchase or sell Fund shares through a financial
intermediary (rather than directly from the Fund), you may have to transmit
your purchase and sale requests to the financial intermediary at an earlier
time for your transaction to become effective that day. This allows the
financial intermediary time to process your requests and transmit them to the
Funds prior to the time the Funds calculate their NAV that day. Your financial
intermediary is responsible for transmitting all purchase and redemption
requests, investment information, documentation and money to the Funds on time.
If your financial intermediary fails to do so, it may be responsible for any
resulting fees or losses. Unless your financial intermediary is an authorized
institution (defined below), orders transmitted by the financial intermediary
and received by the Funds after the time NAV is calculated for a particular day
will receive the following day's NAV.
43
Certain financial intermediaries, including certain broker-dealers and
shareholder organizations, are authorized to act as agent on behalf of the
Funds with respect to the receipt of purchase and redemption requests for Fund
shares ("authorized institutions"). These requests are executed at the NAV next
determined after the authorized institution receives the request. To determine
whether your financial intermediary is an authorized institution such that it
may act as agent on behalf of the Funds with respect to purchase and redemption
requests for Fund shares, you should contact them directly.
If you deal directly with a financial intermediary, you will have to follow
their procedures for transacting with the Funds. Your financial intermediary
may charge a fee for your purchase and/or redemption transactions. For more
information about how to purchase or sell Fund shares through a financial
intermediary, you should contact your authorized institution directly.
IN-KIND TRANSACTIONS
Under certain conditions and at the Funds' discretion, you may pay for shares
of the Funds with securities instead of cash. In addition, the Funds may pay
part of your redemption proceeds (in excess of $250,000) with securities
instead of cash. It is highly unlikely that your shares would ever be redeemed
in kind, but if they were you would have to pay transaction costs to sell the
securities distributed to you, as well as taxes on any capital gains from the
sale as with any redemption. In addition, you would continue to be subject to
the risks of any market fluctuation in the value of the securities you receive
in kind until they are sold.
REDEMPTION FEE
In an effort to discourage short-term trading and defray costs incurred by
shareholders as a result of short-term trading, the Cambiar International
Equity Fund, the Cambiar Small Cap Fund, the Cambiar Aggressive Value Fund, the
Cambiar SMID Fund and the Cambiar Global Select Fund each charge a 2.00%
redemption fee on redemptions of shares that have been held for less than 90
days. The fee is deducted from the sale proceeds and cannot be paid separately,
and any proceeds of the fee are credited to the assets of the Fund from which
the redemption was made. The fee does not apply to shares purchased with
reinvested dividends or distributions. In determining how long shares of a
Fund have been held, the Fund assumes that shares held by the investor the
longest period of time will be sold first.
The redemption fee is applicable to Fund shares purchased either directly from
the Funds or through a financial intermediary, such as a broker-dealer.
Transactions through financial intermediaries typically are placed with the
Funds on an omnibus basis and include both purchase and sale transactions
placed on behalf of multiple investors. Each Fund requests that financial
intermediaries assess the redemption fee on customer accounts and collect and
remit the proceeds to the Fund. However, each Fund recognizes that due to
operational and systems limitations, intermediaries' methods for tracking and
calculating the fee may be inadequate or differ in some respects from the
Fund's. Therefore, to the extent that financial intermediaries are unable to
collect the redemption fee, a Fund may not be able to defray the expenses
associated with those short-term trades made by that financial intermediary's
customers.
The Cambiar International Equity Fund, the Cambiar Small Cap Fund, the Cambiar
Aggressive Value Fund, the Cambiar SMID Fund and the Cambiar Global Select Fund
each reserve the right to waive its redemption fee at its discretion when it
believes such waiver is in the best interests of the Fund, including with
respect to certain categories of redemptions that the Fund reasonably believes
may not raise frequent trading or market timing concerns. These categories
currently
44
include, but are not limited to, the following: (i) participants in certain
group retirement plans whose processing systems are incapable of properly
applying the redemption fee to underlying shareholders; (ii) redemptions
resulting from certain transfers upon the death of a shareholder; (iii)
redemptions by certain pension plans as required by law or by regulatory
authorities; (iv) systematic withdrawals; and (v) retirement loans and
withdrawals.
PAYMENT OF REDEMPTION PROCEEDS
Your proceeds can be wired to your bank account (may be subject to a $10 fee),
sent to you by check or sent via ACH to your bank account once you have
established banking instructions with the Funds. The Funds will pay for all
shares redeemed within seven days after they receive a redemption request in
proper form, meaning that it is complete and contains all necessary information
and has all supporting documentation (such as proper signature guarantees, IRA
rollover forms, etc.).
The Funds may require that signatures be guaranteed by a bank or member firm of
a national securities exchange. Signature guarantees are for the protection of
shareholders. Before they grant a redemption request, the Funds may require a
shareholder to furnish additional legal documents to insure proper
authorization.
If you redeem shares that were purchased by check or through ACH, you will not
receive your redemption proceeds until the check has cleared or the ACH
transaction has been completed, which may take up to 15 days from the purchase
date.
TELEPHONE TRANSACTIONS
The Funds will employ reasonable procedures to confirm that instructions
communicated by telephone are genuine. Therefore, the Funds will not be
responsible for any loss, liability, cost or expense for following instructions
received by telephone reasonably believed to be genuine.
RIGHTS RESERVED BY THE FUNDS
PURCHASES
At any time and without notice, the Funds may:
o Stop offering shares;
o Reject any purchase order; or
o Bar an investor engaged in a pattern of excessive trading from buying
shares. (Excessive trading can adversely impact performance by
disrupting management and by increasing expenses. ) The Funds will
consider various factors in determining whether an investor has
engaged in excessive trading. These factors include, but are not
limited to, the investor's historic trading patterns, the number of
transactions, the size of the transactions, the time between
transactions and the percentage of the investor's account involved in
each transaction. For more information about the Funds' policies on
excessive trading, see "Excessive Trading Policies and Procedures. "
45
REDEMPTIONS
At any time and without notice, the Funds may change or eliminate any of the
redemption methods described above, except redemption by mail. The Funds may
suspend your right to redeem if:
o Trading on the NYSE is restricted or halted; or
o The U. S. Securities and Exchange Commission allows the Funds to
delay redemptions.
EXCHANGES
The Funds may:
o Modify or cancel the exchange program at any time on 60 days' written
notice to shareholders;
o Reject any request for an exchange; or
o Limit or cancel a shareholder's exchange privilege, especially when
an investor is engaged in a pattern of excessive trading.
ACCOUNT POLICIES
EXCESSIVE TRADING POLICIES AND PROCEDURES
The Funds are intended for long-term investment purposes only and discourage
shareholders from engaging in "market timing" or other types of excessive
short-term trading. This frequent trading into and out of the Funds may present
risks to the Funds' long-term shareholders, and could adversely affect
shareholder returns. The risks posed by frequent trading include interfering
with the efficient implementation of each Fund's investment strategies,
triggering the recognition of taxable gains and losses on the sale of Fund
investments, requiring each Fund to maintain higher cash balances to meet
redemption requests, and experiencing increased transaction costs.
In addition, because the Cambiar International Equity Fund, the Cambiar
Aggressive Value Fund and the Cambiar Global Select Fund invest in foreign
securities traded primarily on markets that close prior to the time the Funds
determine their NAV, the risks posed by frequent trading may have a greater
potential to dilute the value of Fund shares held by long-term shareholders
than funds investing exclusively in U.S. securities. In instances where a
significant event that affects the value of one or more foreign securities held
by a Fund takes place after the close of the primary foreign market, but before
the time that the Fund determines its NAV, certain investors may seek to take
advantage of the fact that there will be a delay in the adjustment of the
market price for a security caused by this event until the foreign market
reopens (sometimes referred to as "price" or "time zone" arbitrage).
Shareholders who attempt this type of arbitrage may dilute the value of the
Fund's shares if the price of the Fund's foreign securities do not reflect
their fair value. Although the Funds have procedures designed to determine the
fair value of foreign securities for purposes of calculating their NAV when
such an event has occurred, fair value pricing, because it involves judgments
which are inherently subjective, may not always eliminate the risk of price
arbitrage. For more information on how the Funds use fair value pricing, see
"Calculating Your Share Price."
46
Because the Funds may invest in mid- and small capitalization securities which
often trade in lower volumes and may be less liquid, the Funds may be more
susceptible to the risks posed by frequent trading because frequent
transactions in the Funds' shares may have a greater impact on the market
prices of these types of securities. In addition, because frequent trading may
cause a Fund to attempt to maintain higher cash positions, changes to a Fund's
holdings in response to frequent trading may impact the market prices of such
relatively thinly traded securities held by a Fund.
The Funds' service providers will take steps reasonably designed to detect and
deter frequent trading by shareholders pursuant to the Funds' policies and
procedures described in this prospectus and approved by the Funds' Board. For
purposes of applying these policies, the Funds' service providers may consider
the trading history of accounts under common ownership or control. The Funds'
policies and procedures include:
o Shareholders are restricted from making more than 3 "round trips"
into or out of each Fund per year. If, to the knowledge of the Funds,
a shareholder exceeds this amount, the Funds and/or their service
providers may, at their discretion, reject any additional purchase or
exchange orders. The Funds define a "round trip" as a purchase into a
Fund by a shareholder, followed by a subsequent redemption out of the
Fund, of an amount the Adviser reasonably believes would be harmful or
disruptive to the Fund.
o The Cambiar International Equity Fund, the Cambiar Small Cap Fund,
the Cambiar Aggressive Value Fund, the Cambiar SMID Fund and the
Cambiar Global Select Fund each assess a redemption fee of 2.00% on
redemptions by shareholders of Fund shares held for less than 90 days
(subject to certain exceptions as discussed in "Redemption Fee").
o Each Fund reserves the right to reject any purchase or exchange
request by any investor or group of investors for any reason without
prior notice, including, in particular, if the Fund or its Adviser
reasonably believes that the trading activity would be harmful or
disruptive to the Fund.
Each Fund and/or its service providers seek to apply these policies to the best
of their abilities uniformly and in a manner they believe is consistent with
the interests of the Fund's long-term shareholders. The Funds do not knowingly
accommodate frequent purchases and redemptions by Fund shareholders. Although
these policies are designed to deter frequent trading, none of these measures
alone nor all of them taken together eliminate the possibility that frequent
trading in a Fund will occur. Systematic purchases and redemptions are exempt
from these policies.
Financial intermediaries (such as investment advisers and broker-dealers) often
establish omnibus accounts in the Funds for their customers through which
transactions are placed. The Funds have entered into "information sharing
agreements" with these financial intermediaries, which permit the Funds to
obtain, upon request, information about the trading activity of the
intermediary's customers that invest in the Funds. If the Funds or their
service providers identify omnibus account level trading patterns that have the
potential to be detrimental to the Funds, the Funds or their service providers
may, in their sole discretion, request from the financial intermediary
information concerning the trading activity of its customers. Based upon a
review of that information, if the Funds or their service providers determine
that the trading activity of any customer may be detrimental to the Funds, they
may, in their sole discretion, request the financial intermediary to restrict
or limit further trading in the Funds by that customer. If the Funds are not
47
satisfied that the intermediary has taken appropriate action, the Funds may
terminate the intermediary's ability to transact in Fund shares. When
information regarding transactions in the Funds' shares is requested by the
Funds and such information is in the possession of a person that is itself a
financial intermediary to a financial intermediary (an "indirect
intermediary"), any financial intermediary with whom the Funds have an
information sharing agreement is obligated to obtain transaction information
from the indirect intermediary or, if directed by the Funds, to restrict or
prohibit the indirect intermediary from purchasing shares of the Funds on
behalf of other persons.
The Funds and their service providers will use reasonable efforts to work with
financial intermediaries to identify excessive short-term trading in omnibus
accounts that may be detrimental to the Funds. However, there can be no
assurance that the monitoring of omnibus account level trading will enable the
Funds to identify or prevent all such trading by a financial intermediary's
customers. Please contact your financial intermediary for more information.
CUSTOMER IDENTIFICATION AND VERIFICATION
To help the government fight the funding of terrorism and money laundering
activities, federal law requires all financial institutions to obtain, verify,
and record information that identifies each person who opens an account.
What this means to you: When you open an account, the Funds will ask your name,
address, date of birth, and other information that will allow the Funds to
identify you. This information is subject to verification to ensure the
identity of all persons opening a mutual fund account.
The Funds are required by law to reject your new account application if the
required identifying information is not provided.
In certain instances, the Funds are required to collect documents to fulfill
their legal obligation. Documents provided in connection with your application
will be used solely to establish and verify a customer's identity.
Attempts to collect the missing information required on the application will be
performed by either contacting you or, if applicable, your broker. If this
information cannot be obtained within a timeframe established in the sole
discretion of the Funds, your application will be rejected.
Upon receipt of your application in proper form (meaning that it is complete
and contains all necessary information, and has all supporting documentation
such as proper signature guarantees, IRA rollover forms, etc.), or upon receipt
of all identifying information required on the application, your investment
will be received and your order will be processed at the NAV next-determined.
The Funds reserve the right to close or liquidate your account at the NAV
next-determined and remit proceeds to you via check if they are unable to
verify your identity. Attempts to verify your identity will be performed within
a timeframe established in the sole discretion of the Funds. Further, the Funds
reserve the right to hold your proceeds until your original check clears the
bank, which may take up to 15 days from the date of purchase. In such an
instance, you may be subject to a gain or loss on Fund shares and will be
subject to corresponding tax implications.
48
ANTI-MONEY LAUNDERING PROGRAM
Customer identification and verification is part of the Funds' overall
obligation to deter money laundering under federal law. The Funds have adopted
an Anti-Money Laundering Compliance Program designed to prevent the Funds from
being used for money laundering or the financing of illegal activities. In this
regard, the Funds reserve the right to: (i) refuse, cancel or rescind any
purchase or exchange order; (ii) freeze any account and/or suspend account
services; or (iii) involuntarily close your account in cases of threatening
conduct or suspected fraudulent or illegal activity. These actions will be
taken when, in the sole discretion of Fund management, they are deemed to be in
the best interest of the Funds or in cases when the Funds are requested or
compelled to do so by governmental or law enforcement authority. If your
account is closed at the request of governmental or law enforcement authority,
you may not receive proceeds of the redemption if the Funds are required to
withhold such proceeds.
SMALL ACCOUNTS
Each Fund may redeem your shares without your permission if the value of your
account falls below $1250 for the Fund. This provision does not apply:
o To retirement accounts and certain other accounts; or
o When the value of your account falls because of market fluctuations
and not your redemptions.
The Funds will provide you at least 30 days' written notice to allow you time
to add to your account and avoid the sale of your shares.
DISTRIBUTIONS
Normally, each Fund distributes its net investment income and its net capital
gains, if any, at least once a year. The Funds will automatically reinvest
dividends and distributions in additional shares of a Fund, unless you elect on
your account application to receive them in cash.
FEDERAL TAXES
The following is a summary of the federal income tax consequences of investing
in the Funds. This summary does not apply to shares held in an individual
retirement account or other tax-qualified plan, which are not subject to
current tax. Transactions relating to shares held in such accounts may,
however, be taxable at some time in the future. You should always consult your
tax advisor for specific guidance regarding the federal, state and local tax
effect of your investment in the Funds.
TAXES ON DISTRIBUTIONS
Each Fund will distribute substantially all of its net investment income and
its net realized capital gains, if any. The dividends and distributions you
receive, whether in cash or reinvested in additional shares of the Funds, may
be subject to federal, state, and local taxation, depending upon your tax
situation. Income distributions, including distributions of net short-term
capital gains but excluding distributions of qualified dividend income, are
generally taxable at ordinary income tax rates. Capital gains distributions and
distributions that are designated by the Funds as qualified dividend income are
generally taxable at the rates applicable to long-term capital gains. Once a
year, each Fund will send you a statement showing the types and total amount of
distributions you received during the previous year.
49
Effective beginning January 1, 2013, U.S. individuals with income exceeding
$200,000 ($250,000 if married and filing jointly) are subject to a new 3.8%
Medicare contribution tax on their "net investment income," including interest,
dividends, and capital gains (including capital gains realized on the sale or
exchange of shares of the Funds).
You should note that if you purchase shares just before a distribution, the
purchase price would reflect the amount of the upcoming distribution. In this
case, you would be taxed on the entire amount of the distribution received,
even though, as an economic matter, the distribution simply constitutes a
return of your investment. This is known as "buying a dividend" and should be
avoided by taxable investors. Call 1-866-777-8227 to find out when the Funds
expect to make a distribution to shareholders.
TAXES ON THE SALE OR EXCHANGE OF FUND SHARES
Each sale or exchange of shares of the Funds may be a taxable event. For tax
purposes, an exchange of shares of one Cambiar Fund for another is the same as
a sale.
A sale of Fund shares may result in a capital gain or loss to you. The gain or
loss generally will be treated as short term if you held the shares 12 months
or less, long term if you held the shares for longer.
The Funds (or their administrative agent) must report to the Internal Revenue
Service ("IRS") and furnish to Fund shareholders cost basis information for
Fund shares purchased on or after January 1, 2012, and sold on or after that
date. In addition to reporting the gross proceeds from the sale of Fund shares,
a Fund is also required to report the cost basis information for such shares
and indicate whether these shares had a short-term or long-term holding period.
For each sale of Fund shares, a Fund will permit shareholders to elect from
among several IRS-accepted cost basis methods, including average cost. In the
absence of an election, a Fund will use the average basis method as the default
cost basis method. The cost basis method elected by a Fund shareholder (or the
cost basis method applied by default) for each sale of Fund shares may not be
changed after the settlement date of each such sale of Fund shares. Fund
shareholders should consult with 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.
INVESTMENTS IN FOREIGN SECURITIES
To the extent that the Funds invest in foreign securities, they may be subject
to foreign withholding taxes with respect to dividends or interest the Funds
received from sources in foreign countries. If more than 50% of the total
assets of a Fund consist of foreign securities, that Fund will be eligible to
elect to treat some of those taxes as a distribution to shareholders, which
would allow shareholders to offset some of their U.S. federal income tax.
ADDITIONAL INFORMATION ABOUT TAXES
More information about taxes is in the SAI.
50
ADDITIONAL INFORMATION ABOUT THE FUNDS
The investment objective of the Cambiar Opportunity Fund and the Cambiar
International Equity Fund is to seek total return and capital preservation. The
investment objective of the Cambiar Small Cap Fund, the Cambiar Aggressive
Value Fund, the Cambiar SMID Fund and the Cambiar Global Select Fund is to seek
long-term capital appreciation. The investment objective of each Fund may be
changed without shareholder approval. In addition to their investment
objectives, the Cambiar Opportunity Fund and the Cambiar International Equity
Fund each have a goal to provide above-average performance in both rising and
falling market periods by investing in stocks that have limited downside risk
and positive upside potential.
OTHER INVESTMENT PRACTICES AND STRATEGIES
Each Fund may employ non-principal investment practices that this prospectus
does not describe, such as when-issued and forward commitment transactions,
lending of securities, borrowing and other techniques. In addition, each Fund
may use the investment strategies described below. For more information
concerning any of the Funds' investment practices and risks, please read the
SAI.
DERIVATIVES
The Funds may invest in derivatives, a category of investments that includes
forward foreign currency exchange contracts, futures, options and swaps, in an
effort to increase returns, to hedge against the risk of unfavorable price
movements in the underlying instruments, to provide economic exposure to a
security or issuer, to manage cash flows or currency exposure, to address tax
considerations, or as an alternative to selling a security short. Forward
foreign currency exchange contracts, futures, options and swaps are called
derivatives because their value is based on an underlying asset or economic
factor. Derivatives are often more volatile than other investments and may
magnify the Funds' gains or losses. There are various factors that affect each
Fund's ability to achieve its objectives with derivatives. Successful use of a
derivative depends on the degree to which prices of the underlying assets
correlate with price movements in the derivatives the Funds buy or sell. The
Funds could be negatively affected if the change in market value of their
securities fails to correlate perfectly with the values of the derivatives they
purchased or sold.
SHORT-TERM INVESTING
The investments and strategies described in this prospectus are those that are
used under normal circumstances. During unusual economic, market, political or
other circumstances, each Fund may invest up to 100% of its assets in
short-term, high quality debt instruments, such as U.S. government securities.
These instruments would not ordinarily be consistent with the Funds' principal
investment strategies, and may prevent the Funds from achieving their
investment objectives. The Funds will use a temporary strategy if the Adviser
believes that pursuing the Funds' investment objectives will subject them to a
significant risk of loss. Each of the Cambiar International Equity Fund, the
Cambiar Small Cap Fund and the Cambiar SMID Fund has a policy requiring it to
invest, under normal circumstances, at least 80% of its net assets, plus any
borrowings for investment purposes, in particular types of securities as
described in each Fund's principal investment strategies. In addition to the
temporary measures described above, each Fund may also temporarily deviate from
its 80% policy in other limited, appropriate circumstances, such as unusually
large cash inflows or redemptions.
51
When the Adviser pursues a temporary defensive strategy, the Funds may not
profit from favorable developments that they would have otherwise profited from
if they were pursuing their normal strategies.
INFORMATION ABOUT PORTFOLIO HOLDINGS
The Funds generally post a detailed list of their securities (portfolio
holdings) as of the most recent calendar month end, 30 days after the end of
the calendar month. In addition, the Funds generally post their ten largest
portfolio holdings, and the percentage that each of these holdings represents
of each Fund's total assets, as of the most recent calendar month end, 10
calendar days after the end of the calendar month. These postings can be found
on the internet at http://aicfundholdings.com/cambiar and generally remain
until replaced by new postings as described above. The Adviser may exclude any
portion of the Funds' portfolio holdings from publication when deemed in the
best interest of the Funds. Please consult the Funds' SAI for a description of
the policies and procedures that govern disclosure of the Funds' portfolio
holdings.
52
INVESTMENT MANAGEMENT
INVESTMENT ADVISER
Cambiar Investors LLC, a Delaware limited liability corporation located at 2401
East Second Avenue, Suite 500, Denver, Colorado 80206, serves as the investment
adviser to each of the Funds. Cambiar manages and supervises the investment of
each Fund's assets on a discretionary basis, subject to oversight by the Board.
For its services, the Adviser is entitled to a fee, which is calculated daily
and paid monthly, at an annual rate of the average daily net assets of each
Fund, as set forth in the table below. As of June 30, 2013, the Adviser had
approximately 7.3 billion in assets under management. Cambiar has provided
investment management services to corporations, foundations, endowments,
pension and profit sharing plans, trusts, estates and other institutions and
individuals since 1973.
The Adviser has contractually agreed to reduce its fees and reimburse expenses
of the Investor Class Shares of each Fund in order to keep net operating
expenses (excluding interest, taxes, brokerage commissions, acquired fund fees
and expenses, and extraordinary expenses (collectively, "excluded expenses"))
from exceeding the amounts listed in the table below, as a percentage of
average daily net assets, until September 1, 2014. To maintain these expense
limits, the Adviser may reduce a portion of its management fee and/or reimburse
certain expenses of the Funds. In addition, if at any point total annual Fund
operating expenses (not including excluded expenses) are below the expense
caps, the Adviser may receive from the Fund the difference between each Fund's
total annual Fund operating expenses (not including excluded expenses) and the
expense caps to recover all or a portion of its prior fee reductions or expense
reimbursements made during the preceding three year period during which the
agreement (or any prior agreement) was in place. The table also lists the
amount each Fund paid the Adviser during the most recent fiscal year, as a
percentage of its average daily net assets.
------------------------------------------------------------------------------------------------------------------------------------
Cambiar Cambiar Cambiar Cambiar Cambiar Cambiar
Opportunity Fund International Small Cap Aggressive SMID Fund Global
Equity Fund Fund Value Fund Select Fund
------------------------------------------------------------------------------------------------------------------------------------
Management Fees 0.90% for first $2.5 0.90%(2) 1.05% 1.00% 1.05% 1.00%
billion
0.75% above $2.5
billion(1)
------------------------------------------------------------------------------------------------------------------------------------
Expense Limits --
Investor Class 1.20% 1.20% 1.30% 1.35% 1.35% 1.30%
------------------------------------------------------------------------------------------------------------------------------------
Advisory Fee Paid
During the Most
Recent Fiscal Year 0.83% 0.76% 0.94% 0.95% 0 0
(after waivers)
------------------------------------------------------------------------------------------------------------------------------------
|
(1) Prior to September 1, 2013, the management fee for the Cambiar Opportunity
Fund was 1.00% for the first $500 million, 0.90% of assets between $500
million and $2.5 billion, and 0.75% for excess of $2.5 billion.
(2) Prior to September 1, 2013, the management fee for the Cambiar
International Equity Fund was 1.05%.
A discussion regarding the basis for Board approval of the Funds' investment
advisory agreements will be available in the Funds' October 31, 2013 Semi-Annual
Report to Shareholders, which will cover the period from May 1, 2013 to October
31, 2013.
53
PORTFOLIO MANAGERS
The Cambiar Opportunity Fund, the Cambiar International Equity Fund, the
Cambiar Small Cap Fund, the Cambiar SMID Fund and the Cambiar Global Select
Fund are each managed by a team of investment professionals that are jointly
and primarily responsible for the day-to-day management of these Funds. Brian
M. Barish serves as the sole portfolio manager of the Cambiar Aggressive Value
Fund. The SAI provides additional information about the portfolio managers'
compensation, other accounts managed, and ownership of Fund shares.
Brian M. Barish, CFA, President, Director of Research, joined the Adviser in
1997 and has over 23 years of investment experience. He serves as the sole
portfolio manager of the Cambiar Aggressive Value Fund and also serves as the
Lead Manager of the investment team of the Cambiar Opportunity Fund and
Co-Manager of the Cambiar International Equity Fund, the Cambiar Small Cap Fund
and the Cambiar SMID Fund. He focuses on the technology, media, aerospace and
defense sectors. Prior to joining the Adviser, Mr. Barish served as Director of
Emerging Markets Research for Lazard Freres & Co., a New York based investment
bank. He has also served as a securities analyst with Bear, Stearns & Co. and
Arnhold S. Bleichroeder, a New York based research firm. Mr. Barish received a
BA in Economics and Philosophy from the University of California, Berkeley, and
holds the Chartered Financial Analyst designation.
Maria L. Mendelsberg, CFA, Principal, joined the Adviser in 1997 and has over
19 years of investment experience. She co-manages the Cambiar Opportunity Fund,
the Cambiar Small Cap Fund and the Cambiar SMID Fund, with a focus on the
health care and retail sectors. Prior to joining the Adviser, Ms. Mendelsberg
served as an investment analyst for Eaton Vance Management, a Boston based
investment company. Before launching her investment career, she spent many
years working in retail management. Ms. Mendelsberg received a BA in Economics
and Classics from Brown University, and holds the Chartered Financial Analyst
designation.
Anna (Ania) A. Aldrich, CFA, Principal, joined the Adviser in 1999 and has over
23 years of investment experience. She co-manages the Cambiar Opportunity
Fund, the Cambiar International Equity Fund, the Cambiar Small Cap Fund, the
Cambiar SMID Fund and the Cambiar Global Select Fund, with a focus on the
financial services and consumer products sectors. Prior to joining the Adviser,
Ms. Aldrich was a global equity analyst at Bankers Trust, a New York based
investment company, covering the financial services and transportation sectors.
She began her career as a senior investor relations professional at BET PLC, a
New York based communications firm. Ms. Aldrich holds an MBA in Finance from
Fordham University and a BA in Computer Science from Hunter College. She also
holds the Chartered Financial Analyst designation.
Timothy A. Beranek, Principal, joined the Adviser in 1999 and has over 20 years
of investment experience. He co-manages the Cambiar Opportunity Fund, the
Cambiar Small Cap Fund and the Cambiar SMID Fund, with a focus on the utilities
and basic materials sectors. Prior to joining the Adviser, Mr. Beranek was with
Resources Trust where he had responsibility for oversight of financial controls
for the company's mutual fund trading relationships. He began his career with
Merrill Lynch. Mr. Beranek holds a Masters in Finance from the University of
Colorado and a BS in Economics from the University of South Dakota.
Jennifer M. Dunne, CFA, Vice President, joined the Adviser in 2005 and has over
18 years of investment experience. She co-manages the Cambiar International
Equity Fund with a focus on the energy, industrials, utilities and basic
materials sectors. Prior to joining the Adviser, Ms. Dunne was a senior equity
analyst at Founders Asset Management LLC, a Colorado based asset
54
management firm. Ms. Dunne holds a graduate diploma from the London School of
Economics as well as a Masters of Economics from the University of British
Columbia and a BA from the University of Colorado, Boulder. She also holds the
Chartered Financial Analyst designation.
Andrew P. Baumbusch, Principal, joined the Adviser in 2004 and has over 14
years of investment experience. He co-manages the Cambiar Opportunity Fund, the
Cambiar International Equity Fund, the Cambiar Small Cap Fund and the Cambiar
SMID Fund, with a focus on the industrials, media and telecom sectors. Prior to
joining the Adviser, Mr. Baumbusch served as an investment analyst at Franklin
Templeton, Atrium Capital and Alex Brown & Sons. Mr. Baumbusch holds an MBA
from the Stanford Graduate School of Business and a BA in Economics from
Princeton University.
Todd L. Edwards, PhD, joined the Adviser in 2007 and has over 17 years of
investment experience. He co-manages the Cambiar Global Select Fund and Cambiar
International Equity Fund with a focus on non-U.S. company coverage in the
financial services and consumer staple sectors. In addition, Mr. Edwards is
responsible for the Adviser's macroeconomic and policy research efforts. Prior
to joining the Adviser, he was a Director in the Global Emerging Markets Group
at Citigroup. Before that, he served as Director of Research and Equity
Strategist at BBVA Securities. Mr. Edwards began his investment career as a
research analyst at Salomon Brothers. An accomplished author, he has written
books on Brazil and Argentina. Mr. Edwards received a PhD and MA from Tulane
University and a BA from Colorado College.
Alvaro Shiraishi, International Investment Analyst, joined the Adviser in 2007
and has over 19 years of investment experience. Mr. Shiraishi co-manages the
Cambiar Global Select Fund and Cambiar International Equity Fund. He is
responsible for non-U.S. company coverage in the basic materials and consumer
discretionary sectors. Prior to joining the Adviser, he worked at Aon
Corporation in Chicago, where he conducted risk management research for the
industrials and construction industries. Mr. Shiraishi began his investment
career as an equity analyst for UBS. Mr. Shiraishi received a BA in Economics
from Universidad Panamericana in Mexico City.
Jeffrey H. Susman, Senior Investment Analyst, joined the Adviser in 2005 and
has over 13 years of investment experience. He co-manages the Cambiar
Opportunity Fund, the Cambiar Small Cap Fund and the Cambiar SMID Fund. Mr.
Susman is responsible for company coverage in the consumer discretionary and
technology sectors. Prior to joining the Adviser, he worked at UBS Investment
Bank, where he was an associate analyst on the Global Communications Equipment
Equity Research Team. Mr. Susman began his investment career as a Research
Associate at Wellington Management. Mr. Susman received an MBA in Finance and
Corporate Strategy from the University of Michigan and a BA in Economics and
International Relations from Tufts University.
MORE INFORMATION ABOUT THE FUNDS' HISTORY AND PERFORMANCE
Cambiar Opportunity Fund
Effective June 24, 2002, the Cambiar Opportunity Fund ("Opportunity Fund")
became the successor to a separate mutual fund, the UAM Funds Trust Cambiar
Opportunity Portfolio (the "Predecessor Opportunity Fund"). The Predecessor
Opportunity Fund was managed by the same Adviser that currently manages the
Opportunity Fund, had identical investment objectives and strategies as the
Opportunity Fund and was subject to substantially similar fees and
expenses. The performance shown in the performance table on page 6 of this
prospectus represents the performance of the Predecessor Opportunity Fund
for periods prior to June 24, 2002.
55
Cambiar International Equity Fund
Effective September 9, 2002, the Cambiar International Equity Fund
("International Equity Fund") became the successor to the Cambiar
International Equity Trust (the "Predecessor International Fund"), an
unregistered, similarly managed fund. The Predecessor International Fund
was managed by the same Adviser that currently manages the International
Equity Fund and had identical investment objectives and strategies as the
International Equity Fund. The performance shown in the performance table
on page 13 of this prospectus represents the performance of the Predecessor
International Fund for periods prior to September 9, 2002, adjusted to
reflect expenses for the International Equity Fund. The Predecessor
International Fund was not a registered mutual fund and so it was not
subject to the same investment and tax restrictions as the International
Equity Fund. If it had been, the Predecessor International Fund's
performance may have been lower.
Cambiar Small Cap Fund
Prior to September 1, 2009, the Cambiar Small Cap Fund's ("Small Cap Fund")
investment strategy also included investments in common stocks of
medium-sized companies, in addition to investments in common stocks of
small-sized companies; therefore, the performance shown in the bar chart
and performance table on page 18 of this prospectus for periods prior to
September 1, 2009 may have differed had the Small Cap Fund's current
investment strategy been in effect during those periods.
SHAREHOLDER SERVICING ARRANGEMENTS
The Funds may compensate financial intermediaries for providing a variety of
services to shareholders. Financial intermediaries include brokers, dealers,
banks (including bank trust departments), trust companies, registered
investment advisers, financial planners, retirement plan administrators,
insurance companies, and any other institution having a service,
administration, or any similar arrangement with the Funds, their service
providers or their respective affiliates. This section and the following
section briefly describe how financial intermediaries may be paid for providing
these services.
The Funds generally pay financial intermediaries a fee that is based on the
assets of each Fund that are attributable to investments by customers of the
financial intermediary. These shareholder services for which financial
intermediaries are compensated, which do not include distribution related
services, may include record-keeping, transaction processing for shareholders'
accounts and certain shareholder services not currently offered to shareholders
that deal directly with the Funds. In addition to these payments, your
financial intermediary may charge you account fees, transaction fees for buying
or redeeming shares of the Funds or other fees for servicing your account. Your
financial intermediary should provide a schedule of its fees and services to
you upon request.
The Funds have adopted a shareholder servicing plan that provides that each
Fund may pay financial intermediaries for shareholder services in an annual
amount not to exceed 0.25% based on each Fund's Investor Class Shares' average
daily net assets. The Funds do not pay these
56
service fees on shares purchased directly. In addition to payments made
directly to financial intermediaries by the Funds, the Adviser or its
affiliates may, at their own expense, pay financial intermediaries for these
and other services to Fund shareholders, as described in the section below.
PAYMENTS TO FINANCIAL INTERMEDIARIES
From time to time, the Adviser and/or its affiliates, in their discretion, may
make payments to certain affiliated or unaffiliated financial intermediaries to
compensate them for the costs associated with distribution, marketing,
administration and shareholder servicing support. These payments may be in
addition to any shareholder servicing payments that are reflected in the fee
table sections of this prospectus. These payments are sometimes characterized
as "revenue sharing" payments and are made out of the Adviser's and/or its
affiliates' own legitimate profits or other resources, and are not paid by the
Funds.
A financial intermediary may provide these services with respect to Fund shares
sold or held through programs such as retirement plans, qualified tuition
programs, fund supermarkets, fee-based advisory or wrap fee programs, bank
trust programs, and insurance (e.g., individual or group annuity) programs. In
addition, financial intermediaries may receive payments for making shares of
the Funds available to their customers or registered representatives, including
providing a Fund with "shelf space," placing it on a preferred or recommended
fund list, or promoting the Fund in certain sales programs that are sponsored
by financial intermediaries. To the extent permitted by SEC and Financial
Industry Regulatory Authority ("FINRA") rules and other applicable laws and
regulations, the Adviser and/or its affiliates may pay or allow other
promotional incentives or payments to financial intermediaries. For more
information please see "Payments to Financial Intermediaries" in the Funds'
SAI.
The level of payments to individual financial intermediaries varies in any
given year and may be negotiated on the basis of sales of Fund shares, the
amount of Fund assets serviced by the financial intermediary or the quality of
the financial intermediary's relationship with the Adviser and/or its
affiliates. These payments may be more or less than the payments received by
the financial intermediaries from other mutual funds and may influence a
financial intermediary to favor the sales of certain funds or share classes
over others. In certain instances, the payments could be significant and may
cause a conflict of interest for your financial intermediary. Any such payments
will not change the NAV or price of a Fund's shares. Please contact your
financial intermediary for information about any payments it may receive in
connection with the sale of Fund shares or the provision of services to the
Funds, as well as information about any fees and/or commissions it charges.
57
FINANCIAL HIGHLIGHTS
The tables that follow present performance information about the Investor Class
Shares of the Funds. The financial highlights table is intended to help you
understand the financial performance of each Fund for the past five fiscal
years or the period of the Fund's operations. Certain information contained in
the tables reflects the financial results for a single Investor Class Share of
each Fund. The total returns in the tables represent the rate that an investor
would have earned or lost on an investment in the Funds assuming all dividends
and distributions were reinvested. The information provided below has been
audited by Ernst & Young LLP, independent registered public accounting firm of
the Funds. The financial statements and the unqualified opinion of Ernst &
Young LLP are included in the 2013 Annual Report of the Funds, which is
available upon request by calling the Funds at 1-866-777-8227.
58
------------------------------------------------------------------------------------------------------------------------------------
YEARS ENDED APRIL 30,
------------------------------------------------------------------------------------------------------------------------------------
OPPORTUNITY FUND 2013 2012 2011 2010 2009
------------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Year $17.90 $20.38 $16.31 $11.43 $18.65
Income (Loss) from Operations:
Net Investment Income(1) 0.19 0.13 0.07 0.13 0.11
Net Realized and Unrealized Gain (Loss) 2.55 (2.52) 4.18 4.77 (7.04)
------ ------ ------ ------ ------
Total From Operations 2.74 (2.39) 4.25 4.90 (6.93)
------ ------ ------ ------ ------
Dividends and Distributions:
Net Investment Income (0.19) (0.09) (0.18) (0.02) (0.09)
Net Realized Gain -- -- -- -- (0.20)
------ ------ ------ ------ ------
Total Dividends and Distributions (0.19) (0.09) (0.18) (0.02) (0.29)
------ ------ ------ ------ ------
Net Asset Value, End of Year $20.45 $17.90 $20.38 $16.31 $11.43
====== ====== ====== ====== ======
Total Return(2) 15.51% (11.71)% 26.19% 42.89% (37.05)%
====== ====== ====== ====== ======
Ratios and Supplemental Data
Net Assets, End of Year (Thousands) $496,247 $923,887 $1,279,183 $811,337 $634,969
Ratio of Expenses to Average Net Assets 1.20% 1.20% 1.20% 1.20% 1.20%
Ratio of Expenses to Average Net Assets
(Excluding Waivers and Fees Paid 1.31% 1.30% 1.33% 1.35% 1.35%
Indirectly)
Ratio of Net Investment Income to
Average Net Assets 1.08% 0.73% 0.36% 0.91% 0.83%
Portfolio Turnover Rate 64% 62% 63% 78% 131%
|
(1) Per share data calculated using the average shares method.
(2) Total return is for the period indicated and has not been annualized.
Total return would have been lower had the Adviser not waived a portion of
its fee. Returns shown do not reflect the deduction of taxes that a
shareholder would pay on Fund distributions or the redemption of Fund
shares.
Amounts designated as "--" are $0 or have been rounded to $0.
59
------------------------------------------------------------------------------------------------------------------------------------
YEARS ENDED APRIL 30,
------------------------------------------------------------------------------------------------------------------------------------
INTERNATIONAL EQUITY FUND 2013 2012 2011 2010 2009
------------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Year $19.54 $21.63 $17.32 $12.11 $25.85
Income (Loss) from Operations:
Net Investment Income(1) 0.25 0.33 0.20 0.22 0.16
Net Realized and Unrealized Gain 2.29 (2.24) 4.32 4.99 (12.44)
(Loss) ------ ------ ------ ------ ------
Total From Operations 2.54 (1.91) 4.52 5.21 (12.28)
------ ------ ------ ------ ------
Dividends and Distributions:
Net Investment Income (0.31) (0.18) (0.21) -- (0.14)
Net Realized Gain -- -- -- -- (1.31)
Return of Capital -- -- -- -- (0.01)
------ ------ ------ ------ ------
Total Dividends and Distributions (0.31) (0.18) (0.21) -- (1.46)
------ ------ ------ ------ ------
Redemption Fees(1,2) 0.00 0.00 0.00 0.00 0.00
------ ------ ------ ------ ------
Net Asset Value, End of Year $21.77 $19.54 $21.63 $17.32 $12.11
====== ====== ====== ====== ======
Total Return(3) 13.12% (8.72)% 26.27% 43.02% (47.44)%
====== ====== ====== ====== ======
Ratios and Supplemental Data
Net Assets, End of Year (Thousands) $30,615 $35,285 $38,356 $25,517 $18,710
Ratio of Expenses to Average Net
Assets 1.23% 1.30% 1.30% 1.30% 1.38%(4)
Ratio of Expenses to Average Net
Assets (Excluding Waivers and
Fees Paid Indirectly) 1.70% 1.61% 1.68% 1.75% 1.65%
Ratio of Net Investment Income to
Average Net Assets 1.29% 1.73% 1.11% 1.39% 1.00%
Portfolio Turnover Rate 75% 62% 69% 86% 161%
|
(1) Per share data calculated using the average shares method.
(2) Amount represents less than $0.01 per share.
(3) Total return is for the period indicated and has not been annualized.
Total return would have been lower had the Adviser not waived a portion of
its fee. Returns shown do not reflect the deduction of taxes that a
shareholder would pay on Fund distributions or the redemption of Fund
shares.
(4) The expense ratio includes fees paid indirectly. Had these been excluded
the ratio would have been 1.39%.
Amounts designated as "--" are $0 or have been rounded to $0.
60
------------------------------------------------------------------------------------------------------------------------------------
YEARS ENDED APRIL 30,
------------------------------------------------------------------------------------------------------------------------------------
SMALL CAP FUND 2013 2012 2011 2010 2009
------------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Year $18.76 $19.76 $15.03 $9.59 $13.53
Income (Loss) from Operations:
Net Investment Loss(1) (0.07) (0.10) (0.07) (0.06) (0.05)
Net Realized and Unrealized Gain 1.72 (0.35)(4) 4.79 5.50 (3.89)
(Loss) ------ ------ ------ ----- ------
Total From Operations 1.65 (0.45) 4.72 5.44 (3.94)
------ ------ ------ ----- ------
Dividends and Distributions:
Net Realized Gain (0.28) (0.55) -- -- --
------ ------ ------ ----- ------
Total Dividends and (0.28) (0.55) -- -- --
------ ------ ------ ----- ------
Distributions
Redemption Fees(1) 0.00(2) 0.00(2) 0.01 0.00(2) 0.00(2)
------ ------ ------ ----- ------
Net Asset Value, End of Year $20.13 $18.76 $19.76 $15.03 $9.59
====== ====== ====== ====== ======
Total Return(5) 8.96% (1.80)% 31.47% 56.73% (29.12)%
====== ====== ====== ====== ======
Ratios and Supplemental Data
Net Assets, End of Year
(Thousands) $849,731 $800,200 $559,940 $122,384 $39,184
Ratio of Expenses to Average Net
Assets 1.30% 1.26% 1.25% 1.24% 1.32%(3)
Ratio of Expenses to Average Net
Assets (Excluding Waivers and
Fees Paid Indirectly) 1.41% 1.38% 1.43% 1.60% 1.58%
Ratio of Net Investment Loss to
Average Net Assets (0.38)% (0.55)% (0.44)% (0.52)% (0.42)%
Portfolio Turnover Rate 71% 70% 85% 99% 103%
|
(1) Per share data calculated using the average shares method.
(2) Amount represents less than $0.01 per share.
(3) The expense ratio includes fees paid indirectly. Had these been excluded
the ratio would have been 1.34%.
(4) The amount shown for the year ended April 30, 2012, for a share
outstanding throughout the period does not accord with the aggregate net
gains on investments for that period because of the sales and repurchase of
Fund shares in relation to fluctuating market value of the investments of
the Fund.
(5) Total return is for the period indicated and has not been annualized.
Total return would have been lower had the Adviser not waived a portion of
its fee. Returns shown do not reflect the deduction of taxes that a
shareholder would pay on Fund distributions or the redemption of Fund
shares.
Amounts designated as "--" are $0 or have been rounded to $0.
61
------------------------------------------------------------------------------------------------------------------------------------
YEARS ENDED APRIL 30,
------------------------------------------------------------------------------------------------------------------------------------
AGGRESSIVE VALUE FUND 2013 2012 2011 2010 2009
------------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Year $10.94 $16.25 $10.93 $6.24 $10.77
Income (Loss) from Operations:
Net Investment Income (Loss)(1) 0.01 (0.03) (0.12) (0.01) 0.02
Net Realized and Unrealized Gain (Loss) 1.41 (4.73) 5.89 4.70 (4.42)
------ ------ ------ ----- ------
Total From Operations 1.42 (4.76) 5.77 4.69 (4.40)
------ ------ ------ ----- ------
Dividends and Distributions:
Net Investment Income -- -- (0.03) -- --
Net Realized Gain -- (0.55) (0.46) -- (0.14)
Return of Capital -- 0.00(2) -- -- 0.00(2)
------ ------ ------ ----- ------
Total Dividends and Distributions -- (0.55) (0.49) -- (0.14)
------ ------ ------ ----- ------
Redemption Fees(1) 0.00(2) -- 0.04 0.00(2) 0.01
------ ------ ------ ----- ------
Net Asset Value, End of Year $12.36 $10.94 $16.25 $10.93 $6.24
====== ====== ====== ====== ======
Total Return(3) 12.98% (29.09)% 54.32% 75.16% (40.52)%
====== ====== ====== ====== ======
Ratios and Supplemental Data
Net Assets, End of Period (Thousands) $134,748 $227,573 $390,335 $29,716 $16,620
Ratio of Expenses to Average Net Assets 1.35% 1.35% 1.36% 1.50% 1.50%
Ratio of Expenses to Average Net Assets
(Excluding Waivers, Expense Reimbursements
and Fees Paid Indirectly) 1.40% 1.40% 1.45% 1.71% 1.70%
Ratio of Net Investment Income (Loss) to Average
Net Assets 0.12% (0.27)% (0.89)% (0.14)% 0.25%
Portfolio Turnover Rate 85% 196% 128% 205% 296%
|
(1) Per share data calculated using the average shares method.
(2) Amount represents less than $0.01 per share.
(3) Total return is for the period indicated and has not been annualized.
Total return would have been lower had the Adviser not waived a portion of
its fee. Returns shown do not reflect the deduction of taxes that a
shareholder would pay on Fund distributions or the redemption of Fund
shares.
Amounts designated as "--" are $0 or have been rounded to $0.
62
------------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED MAY 31, 2011(1) TO
APRIL 30, APRIL 30,
------------------------------------------------------------------------------------------------------------------------------------
SMID FUND 2013 2012
------------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Year $9.56 $10.00
Income (Loss) from Operations:
Net Investment Income (Loss)(5) (0.01) (0.04)
Net Realized and Unrealized Gain (Loss) 1.30 (0.40)
------ ------
Total From Operations 1.29 (0.44)
------ ------
Net Asset Value, End of Year $10.85 $9.56
====== ======
Total Return(4) 13.49% (4.40)%
====== ======
Ratios and Supplemental Data
Net Assets, End of Period (Thousands) $1,814 $1,603
Ratio of Expenses to Average Net Assets 1.35% 1.35%(2)
Ratio of Expenses to Average Net Assets (Excluding Waivers, Expense
Reimbursements and Fees Paid Indirectly) 7.17% 8.56%(2)
Ratio of Net Investment Income (Loss) to Average Net Assets (0.16)% (0.44)%(2)
Portfolio Turnover Rate 105% 96%(3)
|
(1) Commencement of Operations
(2) Annualized
(3) Portfolio turnover is for the period indicated and has not been
annualized.
(4) Total return is for the period indicated and has not been annualized.
Total return would have been lower had the Adviser not waived its fee and
reimbursed other operating expenses. Returns shown do not reflect the
deduction of taxes that a shareholder would pay on Fund distributions or
the redemption of Fund shares.
(5) Per share data calculated using the average shares method.
Amounts designated as "--" are $0 or have been rounded to $0.
63
------------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED NOVEMBER 30,
APRIL 30, 2011(1) TO APRIL
30,
------------------------------------------------------------------------------------------------------------------------------------
GLOBAL SELECT FUND 2013 2012
------------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Year $11.07 $10.00
Income (Loss) from Operations:
Net Investment Income(5) 0.09 0.03
Net Realized and Unrealized Gain 1.63 1.04
------ ------
Total From Operations 1.72 1.07
------ ------
Dividends and Distributions:
Net Investment Income (0.10) --
Net Realized Gain (0.20) --
------ ------
Total Dividends and Distributions (0.30) --
------ ------
Redemption Fees(5) 0.00(6) --
------ ------
Net Asset Value, End of Year $12.49 $11.07
====== ======
Total Return(4) 16.00% 10.70%
====== ======
Ratios and Supplemental Data
Net Assets, End of Period (Thousands) $1,413 $1,210
Ratio of Expenses to Average Net Assets 1.30% 1.30%(2)
Ratio of Expenses to Average Net Assets (Excluding Waivers, Expense
Reimbursements and Fees Paid Indirectly) 9.89% 15.05%(2)
Ratio of Net Investment Income (Loss) to Average Net Assets 0.77% 0.70%(2)
Portfolio Turnover Rate 70% 22%(3)
|
(1) Commencement of Operations
(2) Annualized
(3) Portfolio turnover is for the period indicated and has not been
annualized.
(4) Total return is for the period indicated and has not been annualized.
Total return would have been lower had the Adviser not waived its fee and
reimbursed other operating expenses. Returns shown do not reflect the
deduction of taxes that a shareholder would pay on Fund distributions or
the redemption of Fund shares.
(5) Per share data calculated using the average shares method.
(6) Amount represents less than $0.01 per share.
Amounts designated as "--" are $0 or have been rounded to $0.
64
THE CAMBIAR FUNDS
Investors who want more information about the Funds should read the Funds'
Annual/Semi-Annual Reports and the SAI. The Annual/Semi-Annual Reports of the
Funds provide additional information about their investments. In the Annual
Report, you will also find a discussion of the market conditions and investment
strategies that significantly affected the performance of the Funds during the
last fiscal year. The SAI contains additional detailed information about the
Funds and is incorporated by reference into (is legally a part of) this
prospectus.
Investors can receive free copies of the SAI, shareholder reports, the Funds'
privacy policy and other information about the Funds and can make shareholder
inquiries on the Funds' website at www.cambiar.com or by writing to or
calling:
The Cambiar Funds
P.O. Box 219009
Kansas City, MO 64121
(Toll free)1-866-777-8227
You can also obtain the SAI or the Annual and Semi-Annual Reports, as well as
other information about The Advisors' Inner Circle Fund, from the EDGAR
Database on the SEC's website at: http://www.sec.gov. You may review and copy
documents at the SEC Public Reference Room in Washington, DC (for information
on the operation of the Public Reference Room, call 202-551-8090). You may
request documents by mail from the SEC, upon payment of a duplicating fee, by
writing to: U.S. Securities and Exchange Commission, Public Reference Section,
Washington, DC 20549-1520. You may also obtain this information, upon payment
of a duplicating fee, by e-mailing the SEC at the following address:
publicinfo@sec.gov.
The Trust's Investment Company Act of 1940 file number is 811-06400.
CMB-PS-004-0400
[CAMBIAR INVESTORS LOGO]
CAMBIAR OPPORTUNITY FUND
TICKER SYMBOL: CAMWX
CAMBIAR INTERNATIONAL EQUITY FUND
TICKER SYMBOL: CAMYX
CAMBIAR SMALL CAP FUND
TICKER SYMBOL: CAMZX
INSTITUTIONAL CLASS SHARES PROSPECTUS
SEPTEMBER 1, 2013
THE ADVISORS' INNER CIRCLE FUND
[CAMBIAR INVESTORS LOGO]
MANAGER FOR ALL SEASONS
THE U.S. SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED
THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
CMB-PS-002-1000
TABLE OF CONTENTS
PAGE
CAMBIAR OPPORTUNITY FUND ............................................... 1
FUND INVESTMENT OBJECTIVE ......................................... 1
FUND FEES AND EXPENSES ............................................ 1
PRINCIPAL INVESTMENT STRATEGIES ................................... 2
PRINCIPAL RISKS OF INVESTING IN THE FUND .......................... 3
PERFORMANCE INFORMATION ........................................... 4
INVESTMENT ADVISER ................................................ 5
PORTFOLIO MANAGERS ................................................ 5
CAMBIAR INTERNATIONAL EQUITY FUND ...................................... 6
FUND INVESTMENT OBJECTIVE ......................................... 6
FUND FEES AND EXPENSES ............................................ 6
PRINCIPAL INVESTMENT STRATEGIES ................................... 7
PRINCIPAL RISKS OF INVESTING IN THE FUND .......................... 8
PERFORMANCE INFORMATION ........................................... 10
INVESTMENT ADVISER ................................................ 11
PORTFOLIO MANAGERS ................................................ 11
CAMBIAR SMALL CAP FUND ................................................. 13
FUND INVESTMENT OBJECTIVE ......................................... 13
FUND FEES AND EXPENSES ............................................ 13
PRINCIPAL INVESTMENT STRATEGIES ................................... 14
PRINCIPAL RISKS OF INVESTING IN THE FUND .......................... 15
PERFORMANCE INFORMATION ........................................... 15
INVESTMENT ADVISER ................................................ 16
PORTFOLIO MANAGERS ................................................ 16
SUMMARY INFORMATION ABOUT THE PURCHASE AND SALE OF FUND SHARES,
TAXES AND FINANCIAL INTERMEDIARY COMPENSATION ..................... 18
INVESTING WITH THE CAMBIAR FUNDS ....................................... 19
BUYING FUND SHARES ................................................ 19
REDEEMING FUND SHARES ............................................. 21
EXCHANGING FUND SHARES ............................................ 22
TRANSACTION POLICIES .............................................. 22
ACCOUNT POLICIES .................................................. 26
ADDITIONAL INFORMATION ABOUT THE FUNDS ................................. 32
OTHER INVESTMENT PRACTICES AND STRATEGIES .................... 32
INVESTMENT MANAGEMENT ........................................ 33
MORE INFORMATION ABOUT THE FUNDS' HISTORY AND PERFORMANCE ......... 36
SHAREHOLDER SERVICING ARRANGEMENTS ................................ 36
PAYMENTS TO FINANCIAL INTERMEDIARIES .............................. 37
FINANCIAL HIGHLIGHTS ................................................... 38
|
-i-
CAMBIAR OPPORTUNITY FUND
FUND INVESTMENT OBJECTIVE
The Cambiar Opportunity Fund (the "Fund") seeks total return and capital
preservation.
FUND FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
Institutional Class Shares of the Fund.
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT YOU PAY EACH YEAR AS A PERCENTAGE
OF THE VALUE OF YOUR INVESTMENT)
Management Fees(1) 0.90%
Other Expenses 0.11%
Acquired Fund Fees and Expenses 0.01%
-------
Total Annual Fund Operating Expenses(2) 1.02%
Less Fee Reductions and/or Expense Reimbursements (0.06)%
-------
Total Annual Fund Operating Expenses After Fee Reductions 0.96%
and/or Expense Reimbursements(2,3)
|
(1) Management Fees have been restated to reflect current fees.
(2) The Total Annual Fund Operating Expenses in this fee table, both before
and after fee reductions and/or expense reimbursements, do not correlate to
the expense ratio in the Fund's Financial Highlights because the Financial
Highlights include only the direct operating expenses incurred by the Fund,
and exclude Acquired Fund Fees and Expenses.
(3) Cambiar Investors LLC (the "Adviser") has contractually agreed to reduce
fees and reimburse expenses in order to keep net operating expenses
(excluding interest, taxes, brokerage commissions, Acquired Fund Fees and
Expenses, and extraordinary expenses (collectively, "excluded expenses"))
from exceeding 0.95% of the Fund's Institutional Class Shares' average
daily net assets until September 1, 2014. In addition, if at any point
Total Annual Fund Operating Expenses (not including excluded expenses) are
below the expense cap, the Adviser may receive from the Fund the difference
between the Total Annual Fund Operating Expenses (not including excluded
expenses) and the expense cap to recover all or a portion of its prior fee
reductions or expense reimbursements made during the preceding three-year
period during which this Agreement (or any prior agreement) was in place.
This Agreement may be terminated: (i) by the Board, for any reason at any
time; or (ii) by the Adviser, upon ninety (90) days' prior written notice
to the Trust, effective as of the close of business on September 1, 2014.
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 Fund's operating expenses (including one year of capped expenses in each
period) remain the same. Although your actual costs may be higher or lower,
based on these assumptions your costs would be:
1
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$98 $319 $557 $1,242
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 rate
may indicate higher transaction costs and may result in higher taxes when Fund
shares are held in a taxable account. These costs, which are not reflected in
total annual fund operating expenses or in the example, affect the Fund's
performance. During its most recent fiscal year, the Fund's portfolio turnover
rate was 64% of the average value of its portfolio.
PRINCIPAL INVESTMENT STRATEGIES
The goal of the Fund is to provide above-average performance in both rising and
falling market periods by investing in stocks that have limited downside risk
and positive upside potential. Normally, the Fund invests at least 65% of its
net assets in common stocks of companies with market capitalizations over $1
billion at the time of purchase. In addition, the Fund may invest in
derivatives, including options and total return swaps, in an effort to increase
returns, to hedge against the risk of unfavorable price movements in the
underlying instruments, to provide economic exposure to a security or issuer,
to manage cash flows or currency exposure, or to address tax considerations.
Cambiar Investors LLC's ("Cambiar" or the "Adviser") investment professionals
work as a team to develop investment ideas by analyzing company and industry
statements, monitoring Wall Street and other research sources, and interviewing
company management. The Adviser also evaluates economic conditions and fiscal
and monetary policies. The Adviser's approach focuses first on individual
stocks and then on industries or sectors. The Adviser does not attempt to time
the market. The Adviser tries to select quality companies:
o Possessing above-average financial characteristics;
o Having seasoned management;
o Enjoying product or market advantages;
o Whose stock is selling at a low relative historical valuation based
on ratios such as price-to-earnings, price-to-book, price-to-sales and
price-to-cash flow;
o Experiencing positive developments not yet recognized by the markets,
such as positive changes in management, improved margins, corporate
restructuring or new products; and/or
o Possessing significant appreciation potential within 12 to 18 months.
The Adviser may sell a stock because:
o It realizes positive developments and achieves its target price;
o It experiences exaggerated price moves relative to actual
developments;
2
o It becomes overweighted in the portfolio; or
o It experiences a change in or deteriorating fundamentals.
PRINCIPAL RISKS OF INVESTING IN THE FUND
As with all mutual funds, a shareholder is subject to the risk that his or her
investment could lose money. A Fund share is not a bank deposit and is not
insured or guaranteed by the FDIC or any government agency. The principal risk
factors affecting shareholders' investments in the Fund are set forth below.
Since it purchases equity securities, the Fund is subject to the risk that
stock prices will fall over short or extended periods of time. Historically,
the equity markets have moved in cycles, and the value of the Fund's equity
securities may fluctuate drastically from day to day. Individual companies may
report poor results or be negatively affected by industry and/or economic
trends and developments. The prices of securities issued by such companies may
suffer a decline in response. These factors contribute to price volatility,
which is the principal risk of investing in the Fund. This risk is greater for
small- and medium-sized companies, which tend to be more vulnerable to adverse
developments than larger companies.
The Fund may invest in derivatives. Derivatives are often more volatile than
other investments and may magnify the Fund's gains or losses. There are various
factors that affect the Fund's ability to achieve its objective with
derivatives. Successful use of a derivative depends upon the degree to which
prices of the underlying assets correlate with price movements in the
derivatives the Fund buys or sells. The Fund could be negatively affected if
the change in market value of its securities fails to correlate perfectly with
the values of the derivatives it purchased or sold. The lack of a liquid
secondary market for a derivative may prevent the Fund from closing its
derivative positions and could adversely impact its ability to achieve its
objective and to realize profits or limit losses. Since derivatives may be
purchased for a fraction of their value, a relatively small price movement in a
derivative may result in an immediate and substantial loss or gain to the Fund.
Derivatives are often more volatile than other investments and the Fund may
lose more in a derivative than it originally invested in it. There can be no
assurance that the Adviser's use of derivatives will be successful in achieving
their intended goals.
Additionally, derivative instruments, particularly market access products, are
subject to counterparty risk, meaning that the party that issues the derivative
may experience a significant credit event and may be unwilling or unable to
make timely settlement payments or otherwise honor its obligations. When
determining whether a counterparty is creditworthy, the Adviser considers
factors such as credit rating agency analysis, broker-dealer credit spreads and
financial statements among others. The Adviser regularly monitors the
creditworthiness of each counterparty that the Fund enters into a transaction
with and maintains an approved list of counterparties.
The Fund may purchase or sell options, which involve the payment or receipt of
a premium by the investor and the corresponding right or obligation, as the
case may be, to either purchase or sell the underlying security for a specific
price at a certain time or during a certain period. Purchasing options involves
the risk that the underlying instrument will not change price in the manner
expected, so that the investor loses its premium. Selling options involves
potentially greater risk because the investor is exposed to the extent of the
actual price movement in the underlying security rather than only the premium
payment received (which could result in a potentially unlimited loss).
Over-the-counter options also involve counterparty risk.
3
The Fund may enter into total return swaps, which are contracts whereby one
party agrees to make payments of the total return from a reference instrument
during a specified period, in return for payments equal to a fixed or floating
rate of interest or the total return from another underlying reference
instrument. A reference instrument may be a single asset, a pool of assets or
an index of assets. The primary risks associated with total return swaps are
counterparty risk, which means the counterparty fails to meet its obligations,
and market risk, meaning that the Fund is subject to the risk that it could
lose its entire investment.
The Fund pursues a "value style" of investing. Value investing focuses on
companies whose stock appears undervalued in light of factors such as the
company's earnings, book value, revenues or cash flow. If the Adviser's
assessment of a company's value or prospects for exceeding earnings
expectations or market conditions is inaccurate, the Fund could suffer losses
or produce poor performance relative to other funds. In addition, "value
stocks" can continue to be undervalued by the market for long periods of time.
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund by showing changes in the Fund's
performance from year to year and by showing how the Fund's average annual
total returns for 1, 5 and 10 years and since inception compare with those of a
broad measure of market performance. Of course, the Fund's past performance
(before and after taxes) does not necessarily indicate how the Fund will
perform in the future.
The performance information provided includes the returns of Investor Class
Shares for periods before November 3, 2005. Investor Class Shares of the Fund
are offered in a separate prospectus. Institutional Class Shares would have
substantially similar performance as Investor Class Shares because the shares
are invested in the same portfolio of securities and the annual returns would
differ only to the extent that expenses of Institutional Class Shares are
lower. Updated performance information is available on the Fund's website at
www.cambiar.com or by calling 1-866-777-8227.
2003 35.23%
2004 15.05%
2005 7.07%
2006 16.96%
2007 (1.66)%
2008 (40.46)%
2009 42.14%
2010 19.22%
2011 (8.48)%
2012 8.86%
|
During the periods shown in the chart, the highest return for a quarter was
22.84% (quarter ended 06/30/2003) and the lowest return for a quarter was
(24.02)% (quarter ended 12/31/2008). The Fund's Institutional Class Shares
total return from 1/1/2013 to 6/30/2013 was 16.34% .
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED DECEMBER 31, 2012
After-tax returns are calculated using the historical highest individual
federal marginal income tax rates and do not reflect the impact of state and
local taxes. Actual after-tax returns depend on an investor's tax situation and
may differ from those shown. After-tax returns shown are not
4
relevant to investors who hold their Fund shares through tax-deferred
arrangements, such as 401(k) plans or individual retirement accounts.
SINCE
INCEPTION
INSTITUTIONAL CLASS SHARES 1 YEAR 5 YEARS 10 YEARS (06/30/98)
------------------------------------------------------------------------------------------------------------------------------------
Fund Returns Before Taxes 8.86% 0.10% 6.77% 7.26%
Fund Returns After Taxes on Distributions 8.62% (0.14)% 6.48% 6.31%
Fund Returns After Taxes on Distributions and 6.07% 0.02% 5.90% 5.89%
Sale of Fund Shares
S&P 500 ([R]) Index (reflects no deduction for fees, 16.00% 1.66% 7.10% 3.46%
expenses, or taxes)
|
INVESTMENT ADVISER
Cambiar Investors LLC
PORTFOLIO MANAGERS
Brian M. Barish, CFA, President, Director of Research, joined the Adviser in
1997 and has served as Lead Manager of the portfolio team for the Fund since
its inception.
Maria L. Mendelsberg, CFA, Principal, joined the Adviser in 1997 and has served
on the portfolio team for the Fund since its inception.
Anna (Ania) A. Aldrich, CFA, Principal, joined the Adviser in 1999 and has
served on the portfolio team for the Fund since 1999.
Timothy A. Beranek, Principal, joined the Adviser in 1999 and has served on the
portfolio team for the Fund since 1999.
Andrew P. Baumbusch, Principal, joined the Adviser in 2004 and has served on
the portfolio team for the Fund since 2004.
Jeffrey H. Susman, Senior Investment Analyst, joined the Adviser in 2005 and
has served on the portfolio team for the Fund since 2005.
FOR IMPORTANT INFORMATION ABOUT THE PURCHASE AND SALE OF FUND SHARES, TAXES AND
FINANCIAL INTERMEDIARY COMPENSATION, PLEASE TURN TO "SUMMARY INFORMATION ABOUT
PURCHASING AND SELLING FUND SHARES, TAXES AND FINANCIAL INTERMEDIARY
COMPENSATION" ON PAGE 18 OF THE PROSPECTUS.
5
CAMBIAR INTERNATIONAL EQUITY FUND
FUND INVESTMENT OBJECTIVE
The Cambiar International Equity Fund (the "Fund") seeks total return and
capital preservation.
FUND FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
Institutional Class Shares of the Fund.
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
Redemption Fee (as a percentage of amount redeemed, if 2.00%
shares redeemed have been held for less than 90
days)
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT YOU PAY EACH YEAR AS A PERCENTAGE
OF THE VALUE OF YOUR INVESTMENT)
Management Fees(1) 0.90%
Other Expenses 0.64%
-------
Total Annual Fund Operating Expenses 1.54%
Less Fee Reductions and/or Expense Reimbursements (0.59)%
-------
Total Annual Fund Operating Expenses After Fee Reductions 0.95%
and/or Expense Reimbursements(2)
|
(1) Management Fees have been restated to reflect current fees.
(2) Cambiar Investors LLC (the "Adviser") has contractually agreed to reduce
fees and reimburse expenses in order to keep net operating expenses
(excluding interest, taxes, brokerage commissions, acquired fund fees and
expenses, and extraordinary expenses (collectively, "excluded expenses"))
from exceeding 0.95% of the Fund's Institutional Class Shares' average
daily net assets until September 1, 2014. In addition, if at any point
Total Annual Fund Operating Expenses (not including excluded expenses) are
below the expense cap, the Adviser may receive from the Fund the difference
between the Total Annual Fund Operating Expenses (not including excluded
expenses) and the expense cap to recover all or a portion of its prior fee
reductions or expense reimbursements made during the preceding three-year
period during which this Agreement (or any prior agreement) was in place.
This Agreement may be terminated: (i) by the Board, for any reason at any
time; or (ii) by the Adviser, upon ninety (90) days' prior written notice
to the Trust, effective as of the close of business on September 1, 2014.
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 Fund's operating expenses (including one year of capped expenses in each
period) remain the same. Although your actual costs may be higher or lower,
based on these assumptions your costs would be:
6
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$97 $429 $784 $1,784
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 rate
may indicate higher transaction costs and may result in higher taxes when Fund
shares are held in a taxable account. These costs, which are not reflected in
total annual fund operating expenses or in the example, affect the Fund's
performance. During its most recent fiscal year, the Fund's portfolio turnover
rate was 75% of the average value of its portfolio.
PRINCIPAL INVESTMENT STRATEGIES
The goal of the Fund is to provide above-average performance in both rising and
falling market periods by investing in stocks that have limited downside risk
and positive upside potential. The Fund normally seeks to achieve its goal by
investing at least 80% of its net assets, plus any borrowings for investment
purposes, in equity securities of foreign companies. This investment policy may
be changed by the Fund upon 60 days' prior notice to shareholders. In addition,
the Fund may invest in derivatives, including options and total return swaps,
in an effort to increase returns, to hedge against the risk of unfavorable
price movements in the underlying instruments, to provide economic exposure to
a security or issuer, to manage cash flows or currency exposure, or to address
tax considerations.
In selecting investments for the Fund, the Fund's adviser, Cambiar Investors
LLC ("Cambiar" or the "Adviser"), focuses predominantly on medium to large
market capitalization equity securities of non-U.S. companies, foreign
companies with U.S.-only listings and some U.S. corporations where the
preponderance of business activity lies outside the United States. The majority
of these companies operate in "established" markets; however, when
opportunities warrant, the Adviser may invest, without limit, in securities of
companies in "emerging market" countries. An "emerging market" country is any
country determined by the Adviser to have an emerging market economy,
considering factors such as the country's credit rating, its political and
economic stability and the development of its financial and capital markets.
Typically, emerging markets are in countries that are in the process of
industrialization, with lower gross national products than more developed
countries. In many circumstances, the Fund purchases American Depositary
Receipt listings ("ADRs") of foreign companies on U.S. exchanges, rather than
foreign shares on foreign exchanges, to facilitate greater liquidity and lower
custodial expenses.
The Adviser's primary analysis criteria is active individual company selection
based on the relative merits and valuation of the underlying corporate entity.
The Adviser employs a relative value approach, whereby it searches for
companies trading at the low end of historic and sectoral valuation ranges,
with a strong market position or product franchise and good overall financial
condition. The Adviser's selection and screening criteria are extremely
qualitative, and the Adviser makes little attempt to time market or sector
movements. The following are typical factors the Adviser considers when
purchasing stocks:
o Low price-earnings ratio relative to historic norms and peer group;
o Low cash flow multiple relative to historic norms and peer group;
o New product and/or restructuring potential under-appreciated by the
marketplace;
7
o Sudden stock price decline caused by flight of "momentum investors"
with little change in fundamentals; and
o Excessive investor pessimism in relation to overall outlook for
company over the medium to long term.
The Adviser also utilizes active country selection as a secondary selection
criteria, which is overlaid on the bottom-up criteria described above. The
Adviser's country allocation does not seek to replicate any particular index's
country allocation by global capitalization or regional capitalization.
However, the Adviser seeks to avoid specific countries where it is deemed that
there exists a high likelihood of economic and financial turbulence due to poor
or worsening economic fundamentals, and may seek larger positions in countries
where specific economic risk factors are overestimated by the marketplace,
causing depressed valuations. A similar approach will be used with regard to
overweighting or underweighting specific industrial sectors by country.
The Adviser will tend to hold securities for longer periods of time. Positions
held will be carefully re-examined when, for example:
o The stock has realized its price target;
o It experiences exaggerated price moves relative to actual
developments; or
o There is a material change in company fundamentals or market
conditions.
PRINCIPAL RISKS OF INVESTING IN THE FUND
As with all mutual funds, a shareholder is subject to the risk that his or her
investment could lose money. A Fund share is not a bank deposit and is not
insured or guaranteed by the FDIC or any government agency. The principal risk
factors affecting shareholders' investments in the Fund are set forth below.
Since it purchases equity securities, the Fund is subject to the risk that
stock prices will fall over short or extended periods of time. Historically,
the equity markets have moved in cycles, and the value of the Fund's equity
securities may fluctuate drastically from day to day. Individual companies may
report poor results or be negatively affected by industry and/or economic
trends and developments. The prices of securities issued by such companies may
suffer a decline in response. These factors contribute to price volatility,
which is the principal risk of investing in the Fund. This risk is greater for
small- and medium-sized companies, which tend to be more vulnerable to adverse
developments than larger companies.
When the Fund invests in foreign securities, it will be subject to risks not
typically associated with domestic securities. Although ADRs and European
Depositary Receipts ("EDRs") are alternatives to directly purchasing the
underlying foreign securities in their national markets and currencies, they
are also subject to many of the risks associated with investing directly in
foreign securities. Foreign investments, especially investments in emerging
markets, can be riskier and more volatile than investments in the United
States. Adverse political and economic developments or changes in the value of
foreign currency can make it difficult for the Fund to sell its securities and
could reduce the value of your shares. Differences in tax and accounting
standards and difficulties in obtaining information about foreign companies can
negatively affect
8
investment decisions. The Fund's investments in foreign securities are also
subject to the risk that the securities may be difficult to value and/or valued
incorrectly.
Investments in emerging markets securities are considered speculative and
subject to heightened risks in addition to the general risks of investing in
non-U.S. securities. Unlike more established markets, emerging markets may have
governments that are less stable, markets that are less liquid and economies
that are less developed. In addition, the securities markets of emerging market
countries may consist of companies with smaller market capitalizations and may
suffer periods of relative illiquidity; significant price volatility;
restrictions on foreign investment; and possible restrictions on repatriation
of investment income and capital. Furthermore, foreign investors may be
required to register the proceeds of sales, and future economic or political
crises could lead to price controls, forced mergers, expropriation or
confiscatory taxation, seizure, nationalization or creation of government
monopolies.
Fund investments in foreign currencies and securities denominated in foreign
currencies are subject to currency risk. As a result, the value of securities
denominated in foreign currencies can change significantly when foreign
currencies strengthen or weaken relative to the U.S. dollar. Additionally, the
value of the Fund's assets measured in U.S. dollars may be affected by exchange
control regulations. The Fund will generally incur transaction costs in
connection with conversions between various currencies which will negatively
impact performance.
The Fund may invest in derivatives. Derivatives are often more volatile than
other investments and may magnify the Fund's gains or losses. There are various
factors that affect the Fund's ability to achieve its objective with
derivatives. Successful use of a derivative depends upon the degree to which
prices of the underlying assets correlate with price movements in the
derivatives the Fund buys or sells. The Fund could be negatively affected if
the change in market value of its securities fails to correlate perfectly with
the values of the derivatives it purchased or sold. The lack of a liquid
secondary market for a derivative may prevent the Fund from closing its
derivative positions and could adversely impact its ability to achieve its
objective and to realize profits or limit losses. Since derivatives may be
purchased for a fraction of their value, a relatively small price movement in a
derivative may result in an immediate and substantial loss or gain to the Fund.
Derivatives are often more volatile than other investments and the Fund may
lose more in a derivative than it originally invested in it. There can be no
assurance that the Adviser's use of derivatives will be successful in achieving
their intended goals.
Additionally, derivative instruments, particularly market access products, are
subject to counterparty risk, meaning that the party that issues the derivative
may experience a significant credit event and may be unwilling or unable to
make timely settlement payments or otherwise honor its obligations. When
determining whether a counterparty is creditworthy, the Adviser considers
factors such as credit rating agency analysis, broker-dealer credit spreads and
financial statements among others. The Adviser regularly monitors the
creditworthiness of each counterparty that the Fund enters into a transaction
with and maintains an approved list of counterparties.
The Fund may purchase or sell options, which involve the payment or receipt of
a premium by the investor and the corresponding right or obligation, as the
case may be, to either purchase or sell the underlying security for a specific
price at a certain time or during a certain period. Purchasing options involves
the risk that the underlying instrument will not change price in the manner
expected, so that the investor loses its premium. Selling options involves
potentially greater risk because the investor is exposed to the extent of the
actual price movement in the
9
underlying security rather than only the premium payment received (which could
result in a potentially unlimited loss). Over-the-counter options also involve
counterparty risk.
The Fund may enter into total return swaps, which are contracts whereby one
party agrees to make payments of the total return from a reference instrument
during a specified period, in return for payments equal to a fixed or floating
rate of interest or the total return from another underlying reference
instrument. A reference instrument may be a single asset, a pool of assets or
an index of assets. The primary risks associated with total return swaps are
counterparty risk, which means the counterparty fails to meet its obligations,
and market risk, meaning that the Fund is subject to the risk that it could
lose its entire investment.
The Fund pursues a "value style" of investing. Value investing focuses on
companies whose stock appears undervalued in light of factors such as the
company's earnings, book value, revenues or cash flow. If the Adviser's
assessment of a company's value or prospects for exceeding earnings
expectations or market conditions is inaccurate, the fund could suffer losses
or produce poor performance relative to other funds. In addition, "value
stocks" can continue to be undervalued by the market for long periods of time.
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund by showing changes in the Fund's
performance from year to year and by showing how the Fund's average annual
total returns for 1, 5 and 10 years and since inception compare with those of a
broad measure of market performance. Of course, the Fund's past performance
(before and after taxes) does not necessarily indicate how the Fund will
perform in the future.
Institutional Class Shares of the Fund commenced operations on November 30,
2012 and therefore do not have a full calendar year of performance information
to report. The performance information provided shows the returns of the
Investor Class Shares of the Fund, which are offered in a separate prospectus.
Institutional Class Shares of the Fund would have substantially similar
performance as Investor Class Shares because the shares are invested in the
same portfolio of securities and the annual returns would differ only to the
extent that the expenses of Institutional Class Shares are lower. Updated
performance information is available by calling 1-866-777-8227.
2003 38.37%
2004 15.48%
2005 5.55%
2006 29.04%
2007 19.68%
2008 (49.73)%
2009 42.88%
2010 12.83%
2011 (8.08)%
2012 16.95%
|
During the periods shown in the chart, the Fund's Investor Class Shares'
highest return for a quarter was 29.93% (quarter ended 06/30/2003) and the
lowest return for a quarter was (32.95)%
10
(quarter ended 09/30/2008). The Fund's Investor Class Shares total return from
1/1/2013 to 6/30/2013 was 6.24% .
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED DECEMBER 31, 2012
After-tax returns are calculated using the historical highest individual
federal marginal income tax rates and do not reflect the impact of state and
local taxes. Actual after-tax returns depend on an investor's tax situation and
may differ from those shown. After-tax returns shown are not relevant to
investors who hold their Fund shares through tax-deferred arrangements, such as
401(k) plans or individual retirement accounts.
Returns after taxes on distributions and sale of Fund shares may be higher than
before-tax returns when a net capital loss occurs upon the redemption of Fund
shares.
SINCE
INCEPTION
INVESTOR CLASS SHARES 1 YEAR 5 YEARS 10 YEARS (09/02/97)
------------------------------------------------------------------------------------------------------------------------------------
Fund Returns Before Taxes 16.95% (2.72)% 8.54% 8.04%
Fund Returns After 16.93% (3.00)% 7.91% 7.57%
Taxes on Distributions
Fund Returns After Taxes on Distributions and Sale of
Fund Shares 11.61% (2.27)% 7.61% 7.29%
Morgan Stanley Capital International EAFE Index
(reflects no deduction for fees, expenses, or taxes) 17.32% (3.69)% 8.21% 4.10%
|
INVESTMENT ADVISER
Cambiar Investors LLC
PORTFOLIO MANAGERS
Brian M. Barish, CFA, President, Director of Research, joined the Adviser in
1997, is Co-Lead Manager of the Fund and has served on the portfolio team for
the Fund since its inception.
Jennifer M. Dunne, CFA, Vice President, joined the Adviser in 2005, is Co-Lead
Manager of the Fund and has served on the portfolio team for the Fund since
2005.
Anna (Ania) A. Aldrich, CFA, Principal, joined the Adviser in 1999 and has
served on the portfolio team for the Fund since 1999.
Andrew P. Baumbusch, Principal, joined the Adviser in 2004 and has served on
the portfolio team for the Fund since 2004.
Todd L. Edwards, Ph.D., International Investment Analyst, joined the Adviser in
2007 and has served on the portfolio team for the Fund since 2007.
Alvaro Shiraishi, International Investment Analyst, joined the Adviser in 2007
and has served on the portfolio team for the Fund since 2007.
11
FOR IMPORTANT INFORMATION ABOUT THE PURCHASE AND SALE OF FUND SHARES, TAXES AND
FINANCIAL INTERMEDIARY COMPENSATION, PLEASE TURN TO "SUMMARY INFORMATION ABOUT
PURCHASING AND SELLING FUND SHARES, TAXES AND FINANCIAL INTERMEDIARY
COMPENSATION" ON PAGE 18 OF THE PROSPECTUS.
12
CAMBIAR SMALL CAP FUND
FUND INVESTMENT OBJECTIVE
The Cambiar Small Cap Fund (the "Fund") seeks long-term capital appreciation.
FUND FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
Institutional Class Shares of the Fund.
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
Redemption Fee (as a percentage of amount redeemed, if 2.00%
shares redeemed have been held for less than 90 days)
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT YOU PAY EACH YEAR AS A PERCENTAGE
OF THE VALUE OF YOUR INVESTMENT)
Management Fees 1.05%
Other Expenses 0.11%
Acquired Fund Fees and Expenses 0.01%
-------
Total Annual Fund Operating Expenses(1) 1.17%
Less Fee Reductions and/or Expense Reimbursements (0.11)%
-------
Total Annual Fund Operating Expenses After Fee Reductions 1.06%
and/or Expense Reimbursements(1,2)
|
(1) The Total Annual Fund Operating Expenses in this fee table, both before
and after fee reductions and/or expense reimbursements, do not correlate to
the expense ratio in the Fund's Financial Highlights because the Financial
Highlights include only the direct operating expenses incurred by the Fund,
and exclude Acquired Fund Fees and Expenses.
(2) Cambiar Investors LLC (the "Adviser") has contractually agreed to reduce
fees and reimburse expenses in order to keep net operating expenses
(excluding interest, taxes, brokerage commissions, Acquired Fund Fees and
Expenses, and extraordinary expenses (collectively, "excluded expenses"))
from exceeding 1.05% of the Fund's Institutional Class Shares' average
daily net assets until September 1, 2014. In addition, if at any point
Total Annual Fund Operating Expenses (not including excluded expenses) are
below the expense cap, the Adviser may receive from the Fund the difference
between the Total Annual Fund Operating Expenses (not including excluded
expenses) and the expense cap to recover all or a portion of its prior fee
reductions or expense reimbursements made during the preceding three-year
period during which this Agreement (or any prior agreement) was in place.
This Agreement may be terminated: (i) by the Board, for any reason at any
time; or (ii) by the Adviser, upon ninety (90) days' prior written notice
to the Trust, effective as of the close of business on September 1, 2014.
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 Fund's operating expenses (including one year
13
of capped expenses in each period) remain the same. Although your actual costs
may be higher or lower, based on these assumptions your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$108 $361 $633 $1,411
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 rate
may indicate higher transaction costs and may result in higher taxes when Fund
shares are held in a taxable account. These costs, which are not reflected in
total annual fund operating expenses or in the example, affect the Fund's
performance. During its most recent fiscal year, the Fund's portfolio turnover
rate was 71% of the average value of its portfolio.
PRINCIPAL INVESTMENT STRATEGIES
Under normal circumstances, the Fund invests at least 80% of its net assets,
plus any borrowings for investment purposes, in common stocks of small cap
companies. This investment policy may be changed by the Fund upon 60 days'
prior notice to shareholders. The Fund considers small-cap companies to be
those with market capitalizations not greater than either that of the largest
company in the Russell 2000 Index ($7.6 billion as of July 31, 2013) or $3.5
billion, whichever is greater at the time of purchase.
Cambiar Investors LLC's ("Cambiar" or the "Adviser") investment professionals
work as a team to develop investment ideas by analyzing company and industry
statements, monitoring Wall Street and other research sources and interviewing
company management. The Adviser also evaluates economic conditions and fiscal
and monetary policies. The Adviser's approach focuses first on individual
stocks and then on industries or sectors. The Adviser does not attempt to time
the market. The Adviser tries to select quality companies:
o Possessing above-average financial characteristics;
o Having seasoned management;
o Enjoying product or market advantages;
o Whose stock is selling at a low relative historical valuation based
on ratios such as price-to-earnings, price-to-book, price-to-sales and
price-to-cash flow;
o Experiencing positive developments not yet recognized by the markets,
such as positive changes in management, improved margins, corporate
restructuring or new products; and/or
o Possessing significant appreciation potential within 12 to 18 months.
The Adviser may sell a stock because:
o It realizes positive developments and achieves its target price;
14
o It experiences exaggerated price moves relative to actual
developments;
o It becomes overweighted in the portfolio; or
o It experiences a change in or deteriorating fundamentals.
Due to its investment strategy, the Fund may buy and sell securities
frequently. Such a strategy often involves higher expenses, including brokerage
commissions, and may increase the amount of capital gains (in particular,
short-term gains) realized by the Fund. Shareholders may pay tax on such
capital gains.
PRINCIPAL RISKS OF INVESTING IN THE FUND
As with all mutual funds, a shareholder is subject to the risk that his or her
investment could lose money. A Fund share is not a bank deposit and is not
insured or guaranteed by the FDIC or any government agency. The principal risk
factors affecting shareholders' investments in the Fund are set forth below.
Since it purchases equity securities, the Fund is subject to the risk that
stock prices will fall over short or extended periods of time. Historically,
the equity markets have moved in cycles, and the value of the Fund's equity
securities may fluctuate drastically from day to day. Individual companies may
report poor results or be negatively affected by industry and/or economic
trends and developments. The prices of securities issued by such companies may
suffer a decline in response. These factors contribute to price volatility,
which is the principal risk of investing in the Fund.
The Fund is also subject to the risk that small capitalization stocks may
underperform other segments of the equity market or the equity market as a
whole. The small-capitalization companies that the Fund invests in may be more
vulnerable to adverse business or economic events than larger, more established
companies. In particular, these small-sized companies may pose additional
risks, including liquidity risk, because these companies tend to have limited
product lines, markets and financial resources, and may depend upon a
relatively small management group. Therefore, small-cap stocks may be more
volatile than those of larger companies. These securities may be traded
over-the-counter or listed on an exchange.
The Fund pursues a "value style" of investing. Value investing focuses on
companies whose stock appears undervalued in light of factors such as the
company's earnings, book value, revenues or cash flow. If the Adviser's
assessment of a company's value or prospects for exceeding earnings
expectations or market conditions is inaccurate, the Fund could suffer losses
or produce poor performance relative to other funds. In addition, "value
stocks" can continue to be undervalued by the market for long periods of time.
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund by showing changes in the Fund's
performance from year to year and by showing how the Fund's average annual
total returns for 1 and 5 years and since inception compare with those of a
broad measure of market performance. Of course, the Fund's past performance
(before and after taxes) does not necessarily indicate how the Fund will
perform in the future.
15
The performance information provided includes the returns of Investor Class
Shares for periods prior to October 31, 2008. Investor Class Shares of the Fund
are offered in a separate prospectus. Institutional Class Shares would have
substantially similar performance as Investor Class Shares because the shares
are invested in the same portfolio of securities and the annual returns would
differ only to the extent that the expenses of Institutional Class Shares are
lower. Updated performance information is available by calling
1-866-777-8227.
2005 19.98%
2006 21.15%
2007 (3.88)%
2008 (36.19)%
2009 45.40%
2010 35.93%
2011 (1.16)%
2012 13.40%
During the periods shown in the chart, the highest return for a quarter was
23.35% (quarter ended 06/30/2009) and the lowest return for a quarter was
(27.30)% (quarter ended 12/31/2008). The Fund's Institutional Class Shares
total return from 1/1/2013 to 6/30/2013 was 13.87% .
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED DECEMBER 31, 2012
After-tax returns are calculated using the historical highest individual
federal marginal income tax rates and do not reflect the impact of state and
local taxes. Actual after-tax returns depend on an investor's tax situation and
may differ from those shown. After-tax returns shown are not relevant to
investors who hold their Fund shares through tax-deferred arrangements, such as
401(k) plans or individual retirement accounts.
SINCE
INCEPTION
INSTITUTIONAL CLASS SHARES 1 YEAR 5 YEARS (8/31/04)
------------------------------------------------------------------------------------------------------------------------------------
Fund Returns Before Taxes 13.40% 7.17% 10.21%
Fund Returns After Taxes on Distributions 13.15% 6.92% 9.50%
Fund Returns After Taxes on Distributions and 9.04% 6.10% 8.60%
Sale of Fund Shares
Russell 2000([R]) Index (reflects no deduction for fees, 16.35% 3.56% 6.82%
expenses, or taxes)
|
INVESTMENT ADVISER
Cambiar Investors LLC
PORTFOLIO MANAGERS
Brian M. Barish, CFA, President, Director of Research, joined the Adviser in
1997 and has served on the portfolio team for the Fund since its inception.
Maria L. Mendelsberg, CFA, Principal, joined the Adviser in 1997 and has served
on the portfolio team for the Fund since its inception.
16
Anna (Ania) A. Aldrich, CFA, Principal, joined the Adviser in 1999 and has
served on the portfolio team for the Fund since its inception.
Timothy A. Beranek, Principal, joined the Adviser in 1999 and has served on the
portfolio team for the Fund since its inception.
Andrew P. Baumbusch, Principal, joined the Adviser in 2004 and has served on
the portfolio team for the Fund since its inception.
Jeffrey H. Susman, Senior Investment Analyst, joined the Adviser in 2005 and
has served on the portfolio team for the Fund since 2005.
FOR IMPORTANT INFORMATION ABOUT THE PURCHASE AND SALE OF FUND SHARES, TAXES AND
FINANCIAL INTERMEDIARY COMPENSATION, PLEASE TURN TO "SUMMARY INFORMATION ABOUT
PURCHASING AND SELLING FUND SHARES, TAXES AND FINANCIAL INTERMEDIARY
COMPENSATION" ON PAGE 18 OF THE PROSPECTUS.
17
SUMMARY INFORMATION ABOUT THE PURCHASE AND SALE OF FUND SHARES, TAXES AND
FINANCIAL INTERMEDIARY COMPENSATION
PURCHASING AND SELLING FUND SHARES
To purchase shares of a Fund for the first time, you must invest at least
$5,000,000. Each Fund reserves the right to waive the minimum initial
investment amounts in its sole discretion. If the fund elects to do so, the
Fund reserves the right to transfer shares purchased below the minimum
investment, on a tax-free basis, from Institutional Class Shares to Investor
Class Shares of the Fund. There is no minimum for subsequent investments.
If you own your shares directly, you may redeem your shares on any day the New
York Stock Exchange ("NYSE") is open for business by contacting the Funds
directly by mail or telephone at 1-866-777-8227.
If you own your shares through an account with an investment professional or
other institution, contact that investment professional or institution to
redeem your shares.
TAX INFORMATION
Each Fund intends to make distributions that may be taxed as ordinary income or
capital gains, unless you are investing through a tax-deferred arrangement,
such as a 401(k) or individual retirement account, in which case your
distribution will be taxed when withdrawn from the tax-deferred account.
PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES
If you purchase shares of a Fund through a broker-dealer or other financial
intermediary (such as a bank), the Funds and their 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 a Fund over another
investment. Ask your salesperson or visit your financial intermediary's web
site for more information.
18
INVESTING WITH THE CAMBIAR FUNDS
For information regarding the federal income tax consequences of transactions
in shares of a Fund, including information about cost basis reporting, see
"Federal Taxes."
BUYING FUND SHARES
To purchase Institutional Class Shares directly from the Funds through their
transfer agent, complete and send in the account application. If you need an
account application or have questions, please call 1-866-777-8227.
All investments must be made by check, wire or ACH. All checks must be payable
in U.S. dollars and drawn on U.S. financial institutions. The Funds do not
accept purchases made by third-party checks, credit cards, credit card checks,
cash, traveler's checks, money orders or cashier's checks.
The Funds do not generally accept investments by non-U.S. persons. Non-U.S.
persons may be permitted to invest in the Funds subject to the satisfaction of
enhanced due diligence. Please contact the Funds for more information.
BY MAIL
You can open an account with the Funds by sending a check and your account
application to the address below. You can add to an existing account by sending
the Funds a check and, if possible, the "Invest by Mail" stub that accompanies
your statement. Be sure your check identifies clearly your name, your account
number and the name of the Fund.
REGULAR MAIL ADDRESS
The Cambiar Funds
P.O. Box 219009
Kansas City, MO 64121-9009
EXPRESS MAIL ADDRESS
The Cambiar Funds
c/o DST Systems, Inc.
430 West 7th Street
Kansas City, MO 64105
The share price used to fill the purchase order is the next price calculated by
the Fund after the Fund's transfer agent receives the order in proper form
(meaning that it is complete and contains all necessary information, and has
all supporting documentation such as proper signature guarantees, IRA rollover
forms, etc.) at the P.O. Box provided for regular mail delivery or the office
address provided for express mail delivery.
19
BY WIRE
To open an account by wire, call 1-866-777-8227 for details. To add to an
existing account by wire, wire your money using the wiring instructions set
forth below (be sure to include the Fund name and your account number).
WIRING INSTRUCTIONS
UMB Bank, N.A.
ABA# 101000695
The Cambiar Funds
DDA Acct. #9871063178
Ref: Fund name/account number/account name
BY AUTOMATIC INVESTMENT PLAN (VIA AUTOMATED CLEARING HOUSE OR ACH)
You may not open an account via ACH. However, once you have established an
account, you can set up an automatic investment plan by mailing a completed
application to the Funds. To cancel or change a plan, write to the Funds at:
The Cambiar Funds, P.O. Box 219009, Kansas City, MO 64121 (Express Mail
Address: The Cambiar Funds c/o DST Systems, Inc., 430 West 7th Street, Kansas
City, MO 64105). Allow up to 15 days to create the plan and 3 days to cancel or
change it.
PURCHASES IN-KIND
Subject to the approval of the Funds, an investor may purchase shares of a Fund
with liquid securities and other assets that are eligible for purchase by the
Fund (consistent with the Fund's investment policies and restrictions) and that
have a value that is readily ascertainable in accordance with the Fund's
valuation policies. These transactions will be effected only if the Adviser
deems the security to be an appropriate investment for the Fund. Assets
purchased by the Fund in such a transaction will be valued in accordance with
procedures adopted by the Fund. The Fund reserves the right to amend or
terminate this practice at any time.
20
MINIMUM INVESTMENTS
The minimum investment in Institutional Class Shares of each Fund is
$5,000,000. Each Fund reserves the right to waive the minimum initial
investment amounts in its sole discretion. If the fund elects to do so, the
Fund reserves the right to transfer shares purchased below the minimum
investment, on a tax-free basis, from Institutional Class Shares to Investor
Class Shares of the Fund. There is no minimum for subsequent investments.
FUND CODES
Each Fund's reference information, which is listed below, will be helpful to
you when you contact the Funds to purchase or exchange Institutional Class
Shares, check a Fund's daily net asset value per share ("NAV") or obtain
additional information.
--------------------------------------------------------------------------------
FUND NAME TRADING SYMBOL CUSIP FUND CODE
--------------------------------------------------------------------------------
Cambiar Opportunity Fund CAMWX 0075W0825 1362
--------------------------------------------------------------------------------
Cambiar International Equity Fund CAMYX 00769G0543 1209
--------------------------------------------------------------------------------
Cambiar Small Cap Fund CAMZX 0075W0593 1364
--------------------------------------------------------------------------------
|
REDEEMING FUND SHARES
BY MAIL
You may contact the Funds directly by mail at: The Cambiar Funds, P.O. Box
219009, Kansas City, MO 64121 (Express Mail Address: The Cambiar Funds c/o DST
Systems, Inc., 430 West 7th Street, Kansas City, MO 64105). Send a letter to
the Funds signed by all registered parties on the account specifying:
o The Fund name;
o The account number;
o The dollar amount or number of shares you wish to redeem;
o The account name(s); and
o The address to which redemption (sale) proceeds should be sent.
The share price used to fill the sell order is the next price calculated by the
Fund after the Fund's transfer agent receives the order in proper form (meaning
that it is complete and contains all necessary information, and has all
supporting documentation such as proper signature guarantees, IRA rollover
forms, etc.) at the P.O. Box provided for regular mail delivery or the office
address provided for express mail delivery.
All registered share owner(s) must sign the letter in the exact name(s) in
which their account is registered and must designate any special capacity in
which they are registered.
21
Certain redemption requests will require a signature guarantee by an eligible
guarantor institution. Eligible guarantors include commercial banks, savings
and loans, savings banks, trust companies, credit unions, member firms of a
national stock exchange, or any other member or participant of an
approved signature guarantor program. For example, signature guarantees may be
required if your address of record has changed in the last 30 days, you want
the proceeds sent to a bank other than the bank of record on your account, or
if you ask that the proceeds be sent to a different person or address. Please
note that a notary public is not an acceptable provider of a signature
guarantee and that we must be provided with the original guarantee. Signature
guarantees are for the protection of our shareholders. Before it grants a
redemption request, a Fund may require a shareholder to furnish additional
legal documents to insure proper authorization.
Accounts held by a corporation, trust, fiduciary or partnership may require
additional documentation along with a signature guaranteed letter of
instruction. The Funds participate in the Paperless Legal Program (the
"Program"), which eliminates the need for accompanying paper documentation on
legal securities transfers. Requests received with a Medallion Signature
Guarantee will be reviewed for the proper criteria to meet the guidelines of
the Program and may not require additional documentation. Please contact
Shareholder Services at 1-866-777-8227 for more information.
BY TELEPHONE
You must first establish the telephone redemption privilege (and, if desired,
the wire and/or ACH redemption privilege) by completing the appropriate sections
of the account application.
Call 1-866-777-8227 to redeem your shares. Based on your instructions, the
Funds will mail your proceeds to you or send them to your bank by either Fed
wire or ACH.
EXCHANGING FUND SHARES
At no charge, you may exchange Institutional Class Shares of one Cambiar Fund
for Institutional Class Shares of another Cambiar Fund by writing to or calling
the Funds, subject to any applicable minimum investment requirements. You may
only exchange shares between accounts with identical registrations (i.e., the
same names and addresses).
The exchange privilege is not intended as a vehicle for short-term or excessive
trading. A Fund may suspend or terminate your exchange privilege if you engage
in a pattern of exchanges that is excessive, as determined at the sole
discretion of the Funds. For more information about the Funds' policy on
excessive trading, see "Excessive Trading Policies and Procedures."
TRANSACTION POLICIES
CALCULATING YOUR SHARE PRICE
You may buy, sell or exchange shares of a Fund on each day the NYSE is open for
business (a "Business Day") at a price equal to its net asset value ("NAV")
next computed after the Fund receives your order in good form. The Funds
calculate NAV once each Business Day as of the close of normal trading on the
NYSE (normally, 4:00 p.m., Eastern Time). To receive the current Business Day's
NAV, the Funds or an authorized institution must receive your order in good
form (meaning that it is complete, contains all necessary information, and has
all supporting documentation such as proper signature guarantees, IRA rollover
forms, etc.) before the close of
22
trading on the NYSE that day. Otherwise, you will receive the NAV that is
calculated at the close of trading on the following Business Day. If the NYSE
closes early - such as on days in advance of certain generally observed
holidays - the Funds will calculate NAV as of the earlier closing time. The
Funds will not accept orders that request a particular day or price for the
transaction or any other special conditions.
Shares will not be priced on days that the NYSE is closed for trading,
including nationally observed holidays. Since securities that are traded on
foreign exchanges may trade on days when the NYSE is closed, the value of the
Funds may change on days when you are unable to purchase or redeem shares.
Each Fund calculates its NAV by adding the total value of its assets,
subtracting its liabilities and then dividing the result by the number of
shares outstanding. In calculating NAV, the Funds generally value their
investment portfolios at market price. If market prices are not readily
available or the Funds reasonably believe that they are unreliable, such as in
the case of a security value that has been materially affected by events
occurring after the relevant market closes, but before the time as of which a
Fund calculates NAV, the Funds are required to price those securities at fair
value as determined in good faith using methods approved by the Board of
Trustees (the "Board"). Pursuant to the policies adopted by, and under the
ultimate supervision of the Board, these methods are implemented through the
Funds' Fair Value Pricing Committee, members of which are appointed by the
Board. The Funds' determination of a security's fair value price often involves
the consideration of a number of subjective factors, and is therefore subject
to the unavoidable risk that the value that the Funds assign to a security may
be higher or lower than the security's value would be if a reliable market
quotation for the security was readily available.
With respect to non-U.S. securities held by the Cambiar International Equity
Fund, the Fund may take factors influencing specific markets or issuers into
consideration in determining the fair value of a non-U.S. security.
International securities markets may be open on days when the U.S. markets are
closed. In such cases, the value of any international securities owned by the
Cambiar International Equity Fund may be significantly affected on days when
investors cannot buy or sell shares. In addition, due to the difference in
times between the close of the international markets and the time as of which
the Fund prices its shares, the value the Fund assigns to securities may not be
the same as the quoted or published prices of those securities on their primary
markets or exchanges. In determining fair value prices, the Cambiar
International Equity Fund may consider the performance of securities on their
primary exchanges, foreign currency appreciation/depreciation, securities
market movements in the United States, or other relevant information related to
the securities.
There may be limited circumstances in which a Fund would price securities at
fair value for stocks of U.S. companies that are traded on U.S. exchanges-- for
example, if the exchange on which a portfolio security is principally traded
closed early or if trading in a particular security was halted during the day
and did not resume prior to the time the Fund calculated its NAV.
When valuing fixed income securities with remaining maturities of more than 60
days, the Funds use the value of the security provided by pricing services.
The values provided by a pricing service may be based upon market quotations
for the same security if a quotation is readily available, or may be based upon
the values of securities expected to trade in a similar manner or a pricing
matrix. When valuing fixed income securities with remaining maturities of 60
days or less, the Funds use the security's amortized cost. Amortized cost and
the use of a pricing matrix in valuing fixed income securities are forms of
fair value pricing.
23
Securities, options, futures contracts and other assets (including swap
agreements) for which market quotations are not readily available will be
valued at their fair value as determined in good faith by or under the
direction of the Board.
BUYING OR SELLING SHARES THROUGH A FINANCIAL INTERMEDIARY
In addition to being able to buy and sell Fund shares directly from the Funds
through their transfer agent, you may also buy or sell shares of the Funds
through accounts with financial intermediaries such as brokers and other
institutions that are authorized to place trades in Fund shares for their
customers. When you purchase or sell Fund shares through a financial
intermediary (rather than directly from the Funds), you may have to transmit
your purchase and sale requests to the financial intermediary at an earlier
time for your transaction to become effective that day. This allows the
financial intermediary time to process your requests and transmit them to the
Funds prior to the time the Funds calculate their NAV that day. Your financial
intermediary is responsible for transmitting all purchase and redemption
requests, investment information, documentation and money to the Funds on time.
If your financial intermediary fails to do so, it may be responsible for any
resulting fees or losses. Unless your financial intermediary is an authorized
institution (defined below), orders transmitted by the financial intermediary
and received by the Funds after the time NAV is calculated for a particular day
will receive the following day's NAV.
Certain financial intermediaries, including certain broker-dealers and
shareholder organizations, are authorized to act as agent on behalf of the
Funds with respect to the receipt of purchase and redemption requests for Fund
shares ("authorized institutions"). These requests are executed at the NAV next
determined after the authorized institution receives the request. To determine
whether your financial intermediary is an authorized institution such that it
may act as agent on behalf of the Funds with respect to purchase and redemption
requests for Fund shares, you should contact them directly.
If you deal directly with a financial intermediary, you will have to follow
their procedures for transacting with the Funds. Your financial intermediary
may charge a fee for your purchase and/or redemption transactions. For more
information about how to purchase or sell Fund shares through a financial
intermediary, you should contact your authorized institution directly.
IN-KIND TRANSACTIONS
Under certain conditions and at the Funds' discretion, you may pay for shares
of the Funds with securities instead of cash. In addition, the Funds may pay
part of your redemption proceeds (in excess of $250,000) with securities
instead of cash. It is highly unlikely that your shares would ever be redeemed
in kind, but if they were you would have to pay transaction costs to sell the
securities distributed to you, as well as taxes on any capital gains from the
sale as with any redemption. In addition, you would continue to be subject to
the risks of any market fluctuation in the value of the securities you receive
in kind until they are sold.
REDEMPTION FEE
In an effort to discourage short-term trading and defray costs incurred by
shareholders as a result of short-term trading, the Cambiar Small Cap Fund and
the Cambiar International Equity Fund each charge a 2.00% redemption fee on
redemptions of shares that have been held for less than 90 days. The fee is
deducted from the sale proceeds and cannot be paid separately, and any proceeds
of the fee are credited to the assets of the Fund from which the redemption was
made. The fee
24
does not apply to shares purchased with reinvested dividends or distributions.
In determining how long shares of a Fund have been held, the Fund assumes that
shares held by the investor the longest period of time will be sold first.
The redemption fee is applicable to Fund shares purchased either directly from
the Funds or through a financial intermediary, such as a broker-dealer.
Transactions through financial intermediaries typically are placed with the
Funds on an omnibus basis and include both purchase and sale transactions
placed on behalf of multiple investors. Each Fund requests that financial
intermediaries assess the redemption fee on customer accounts and collect and
remit the proceeds to the appropriate Fund. However, each Fund recognizes that
due to operational and systems limitations, intermediaries' methods for
tracking and calculating the fee may be inadequate or differ in some respects
from the Fund's. Therefore, to the extent that financial intermediaries are
unable to collect the redemption fee, a Fund may not be able to defray the
expenses associated with those short-term trades made by that financial
intermediary's customers.
The Cambiar International Equity Fund and Cambiar Small Cap Fund each reserve
the right to waive its redemption fee at its discretion when it believes such
waiver is in the best interests of the Fund, including with respect to certain
categories of redemptions that the Fund reasonably believes may not raise
frequent trading or market timing concerns. These categories currently include,
but are not limited to, the following: (i) participants in certain group
retirement plans whose processing systems are incapable of properly applying
the redemption fee to underlying shareholders; (ii) redemptions resulting from
certain transfers upon the death of a shareholder; (iii) redemptions by certain
pension plans as required by law or by regulatory authorities; (iv) systematic
withdrawals; and (v) retirement loans and withdrawals.
PAYMENT OF REDEMPTION PROCEEDS
Your proceeds can be wired to your bank account (may be subject to a $10 fee),
sent to you by check or sent via ACH to your bank account once you have
established banking instructions with the Funds. The Funds will pay for all
shares redeemed within seven days after they receive a redemption request in
proper form, meaning that it is complete and contains all necessary information
and has all supporting documentation (such as proper signature guarantees, IRA
rollover forms, etc.).
The Funds may require that signatures be guaranteed by a bank or member firm of
a national securities exchange. Signature guarantees are for the protection of
shareholders. Before they grant a redemption request, the Funds may require a
shareholder to furnish additional legal documents to insure proper
authorization.
If you redeem shares that were purchased by check or through ACH, you will not
receive your redemption proceeds until the check has cleared or the ACH
transaction has been completed, which may take up to 15 days from the purchase
date.
TELEPHONE TRANSACTIONS
The Funds will employ reasonable procedures to confirm that instructions
communicated by telephone are genuine. Therefore, the Funds will not be
responsible for any loss, liability, cost or expense for following instructions
received by telephone reasonably believed to be genuine.
25
RIGHTS RESERVED BY THE FUNDS
PURCHASES
At any time and without notice, the Funds may:
o Stop offering shares;
o Reject any purchase order; or
o Bar an investor engaged in a pattern of excessive trading from buying
shares. (Excessive trading can adversely impact performance by
disrupting management and by increasing expenses. ) The Funds will
consider various factors in determining whether an investor has
engaged in excessive trading. These factors include, but are not
limited to, the investor's historic trading patterns, the number of
transactions, the size of the transactions, the time between
transactions and the percentage of the investor's account involved in
each transaction. For more information about the Funds' policies on
excessive trading, see "Excessive Trading Policies and Procedures. "
REDEMPTIONS
At any time and without notice, the Funds may change or eliminate any of the
redemption methods described above, except redemption by mail. The Funds may
suspend your right to redeem if:
o Trading on the NYSE is restricted or halted; or
o The U. S. Securities and Exchange Commission allows the Funds to
delay redemptions.
EXCHANGES
The Funds may:
o Modify or cancel the exchange program at any time on 60 days' written
notice to shareholders;
o Reject any request for an exchange; or
o Limit or cancel a shareholder's exchange privilege, especially when
an investor is engaged in a pattern of excessive trading.
ACCOUNT POLICIES
EXCESSIVE TRADING POLICIES AND PROCEDURES
The Funds are intended for long-term investment purposes only and discourage
shareholders from engaging in "market timing" or other types of excessive
short-term trading. This frequent trading into and out of the Funds may present
risks to the Funds' long-term shareholders and could adversely affect
shareholder returns. The risks posed by frequent trading include interfering
with the efficient implementation of each Fund's investment strategies,
triggering the recognition of
26
taxable gains and losses on the sale of Fund investments, requiring each Fund
to maintain higher cash balances to meet redemption requests, and experiencing
increased transaction costs.
In addition, because the Cambiar International Equity Fund invests in foreign
securities traded primarily on markets that close prior to the time the Fund
determines its NAV, the risks posed by frequent trading may have a greater
potential to dilute the value of Fund shares held by long-term shareholders
than funds investing exclusively in U.S. securities. In instances where a
significant event that affects the value of one or more foreign securities held
by the Fund takes place after the close of the primary foreign market, but
before the time that the Fund determines its NAV, certain investors may seek to
take advantage of the fact that there will be a delay in the adjustment of the
market price for a security caused by this event until the foreign market
reopens (sometimes referred to as "price" or "time zone" arbitrage).
Shareholders who attempt this type of arbitrage may dilute the value of the
Fund's shares if the price of the Fund's foreign securities do not reflect
their fair value. Although the Fund has procedures designed to determine the
fair value of foreign securities for purposes of calculating their NAV when
such an event has occurred, fair value pricing, because it involves judgments
which are inherently subjective, may not always eliminate the risk of price
arbitrage. For more information on how the Fund uses fair value pricing, see
"Calculating Your Share Price."
Because the Funds may invest in mid and small capitalization securities which
often trade in lower volumes and may be less liquid, the Funds may be more
susceptible to the risks posed by frequent trading because frequent
transactions in the Funds' shares may have a greater impact on the market
prices of these types of securities. In addition, because frequent trading may
cause a Fund to attempt to maintain higher cash positions, changes to a Fund's
holdings in response to frequent trading may impact the market prices of such
relatively thinly traded securities held by a Fund.
The Funds' service providers will take steps reasonably designed to detect and
deter frequent trading by shareholders pursuant to the Funds' policies and
procedures described in this prospectus and approved by the Funds' Board. For
purposes of applying these policies, the Funds' service providers may consider
the trading history of accounts under common ownership or control. The Funds'
policies and procedures include:
o Shareholders are restricted from making more than 3 "round trips"
into or out of each Fund per year. If, to the knowledge of the Funds,
a shareholder exceeds this amount, the Funds and/or their service
providers may, at their discretion, reject any additional purchase or
exchange orders. The Funds define a "round trip" as a purchase into a
Fund by a shareholder, followed by a subsequent redemption out of the
Fund, of an amount the Adviser reasonably believes would be harmful or
disruptive to the Fund.
o The Cambiar International Equity Fund and Cambiar Small Cap Fund each
assess a redemption fee of 2.00% on redemptions by shareholders of
Fund shares held for less than 90 days (subject to certain exceptions
as discussed in "Redemption Fee").
o Each Fund reserves the right to reject any purchase or exchange
request by any investor or group of investors for any reason without
prior notice, including, in particular, if the Fund or its Adviser
reasonably believes that the trading activity would be harmful or
disruptive to the Fund.
27
Each Fund and/or its service providers seek to apply these policies to the best
of their abilities uniformly and in a manner they believe is consistent with
the interests of the Fund's long-term shareholders. The Funds do not knowingly
accommodate frequent purchases and redemptions by Fund shareholders. Although
these policies are designed to deter frequent trading, none of these measures
alone nor all of them taken together eliminate the possibility that frequent
trading in a Fund will occur. Systematic purchases and redemptions are exempt
from these policies.
Financial intermediaries (such as investment advisers and broker-dealers) often
establish omnibus accounts in the Funds for their customers through which
transactions are placed. The Funds have entered into "information sharing
agreements" with these financial intermediaries, which permit the Funds to
obtain, upon request, information about the trading activity of the
intermediary's customers that invest in the Funds. If the Funds or their
service providers identify omnibus account level trading patterns that have the
potential to be detrimental to the Funds, the Funds or their service providers
may, in their sole discretion, request from the financial intermediary
information concerning the trading activity of its customers. Based upon a
review of that information, if the Funds or their service providers determine
that the trading activity of any customer may be detrimental to the Funds, they
may, in their sole discretion, request the financial intermediary to restrict
or limit further trading in the Funds by that customer. If the Funds are not
satisfied that the intermediary has taken appropriate action, the Funds may
terminate the intermediary's ability to transact in Fund shares. When
information regarding transactions in the Funds' shares is requested by the
Funds and such information is in the possession of a person that is itself a
financial intermediary to a financial intermediary (an "indirect
intermediary"), any financial intermediary with whom the Funds have an
information sharing agreement is obligated to obtain transaction information
from the indirect intermediary or, if directed by the Funds, to restrict or
prohibit the indirect intermediary from purchasing shares of the Funds on
behalf of other persons.
The Funds and their service providers will use reasonable efforts to work with
financial intermediaries to identify excessive short-term trading in omnibus
accounts that may be detrimental to the Funds. However, there can be no
assurance that the monitoring of omnibus account level trading will enable the
Funds to identify or prevent all such trading by a financial intermediary's
customers. Please contact your financial intermediary for more information.
28
CUSTOMER IDENTIFICATION AND VERIFICATION
To help the government fight the funding of terrorism and money laundering
activities, federal law requires all financial institutions to obtain, verify,
and record information that identifies each person who opens an account.
What this means to you: When you open an account, the Funds will ask your name,
address, date of birth, and other information that will allow the Funds to
identify you. This information is subject to verification to ensure the
identity of all persons opening a mutual fund account.
The Funds are required by law to reject your new account application if the
required identifying information is not provided.
In certain instances, the Funds are required to collect documents to fulfill
their legal obligation. Documents provided in connection with your application
will be used solely to establish and verify a customer's identity.
Attempts to collect the missing information required on the application will be
performed by either contacting you or, if applicable, your broker. If this
information cannot be obtained within a timeframe established in the sole
discretion of the Funds, your application will be rejected.
Upon receipt of your application in proper form (meaning that it is complete
and contains all necessary information, and has all supporting documentation
such as proper signature guarantees, IRA rollover forms, etc.), or upon receipt
of all identifying information required on the application, your investment
will be received and your order will be processed at the NAV next-determined.
The Funds reserve the right to close or liquidate your account at the NAV next
-determined and remit proceeds to you via check if they are unable to verify
your identity. Attempts to verify your identity will be performed within a
timeframe established in the sole discretion of the Funds. Further, the Funds
reserve the right to hold your proceeds until your original check clears the
bank, which may take up to 15 days from the date of purchase. In such an
instance, you may be subject to a gain or loss on Fund shares and will be
subject to corresponding tax implications.
ANTI-MONEY LAUNDERING PROGRAM
Customer identification and verification is part of the Funds' overall
obligation to deter money laundering under federal law. The Funds have adopted
an Anti-Money Laundering Compliance Program designed to prevent the Funds from
being used for money laundering or the financing of illegal activities. In this
regard, the Funds reserve the right to: (i) refuse, cancel or rescind any
purchase or exchange order; (ii) freeze any account and/or suspend account
services; or (iii) involuntarily close your account in cases of threatening
conduct or suspected fraudulent or illegal activity. These actions will be
taken when, in the sole discretion of Fund management, they are deemed to be in
the best interest of the Funds or in cases when the Funds are requested or
compelled to do so by governmental or law enforcement authority. If your
account is closed at the request of governmental or law enforcement authority,
you may not receive proceeds of the redemption if the Funds are required to
withhold such proceeds.
29
SMALL ACCOUNTS
The Funds may redeem your shares without your permission if the value of your
account falls below $2,500,000. This provision does not apply:
o To retirement accounts and certain other accounts; or
o When the value of your account falls because of market fluctuations
and not your redemptions.
The Funds will provide you at least 30 days' written notice to allow you time
to add to your account and avoid the sale of your shares.
DISTRIBUTIONS
Normally, each Fund distributes its net investment income and its net capital
gains, if any, at least once a year. The Funds will automatically reinvest
dividends and distributions in additional shares of a Fund, unless you elect on
your account application to receive them in cash.
FEDERAL TAXES
The following is a summary of the federal income tax consequences of investing
in the Funds. This summary does not apply to shares held in an individual
retirement account or other tax-qualified plan, which are not subject to
current tax. Transactions relating to shares held in such accounts may,
however, be taxable at some time in the future. You should always consult your
tax advisor for specific guidance regarding the federal, state and local tax
effect of your investment in the Funds.
TAXES ON DISTRIBUTIONS
Each Fund will distribute substantially all of its net investment income and
its net realized capital gains, if any. The dividends and distributions you
receive, whether in cash or reinvested in additional shares of the Funds, may
be subject to federal, state, and local taxation, depending upon your tax
situation. Income distributions, including distributions of net short-term
capital gains but excluding distributions of qualified dividend income, are
generally taxable at ordinary income tax rates. Capital gains distributions and
distributions that are designated by the Funds as qualified dividend income are
generally taxable at the rates applicable to long-term capital gains. Once a
year, each Fund will send you a statement showing the types and total amount of
distributions you received during the previous year.
Effective beginning January 1, 2013, U.S. individuals with income exceeding
$200,000 ($250,000 if married and filing jointly) are subject to a new 3.8%
Medicare contribution tax on their "net investment income," including interest,
dividends, and capital gains (including capital gains realized on the sale or
exchange of shares of the Funds).
You should note that if you purchase shares just before a distribution, the
purchase price would reflect the amount of the upcoming distribution. In this
case, you would be taxed on the entire amount of the distribution received,
even though, as an economic matter, the distribution simply constitutes a
return of your investment. This is known as "buying a dividend" and should be
avoided by taxable investors. Call 1-866-777-8227 to find out when the Funds
expect to make a distribution to shareholders.
30
TAXES ON THE SALE OR EXCHANGE OF FUND SHARES
Each sale or exchange of shares of the Funds may be a taxable event. For tax
purposes, an exchange of shares of one Cambiar Fund for another is the same as
a sale.
A sale of Fund shares may result in a capital gain or loss to you. The gain or
loss generally will be treated as short term if you held the shares 12 months
or less, long term if you held the shares for longer.
The Funds (or their administrative agent) must report to the Internal Revenue
Service ("IRS") and furnish to Fund shareholders cost basis information for
Fund shares purchased on or after January 1, 2012, and sold on or after that
date. In addition to reporting the gross proceeds from the sale of Fund shares,
a Fund is also required to report the cost basis information for such shares
and indicate whether these shares had a short-term or long-term holding period.
For each sale of Fund shares, a Fund will permit shareholders to elect from
among several IRS-accepted cost basis methods, including average cost. In the
absence of an election, a Fund will use the average basis method as the default
cost basis method. The cost basis method elected by a Fund shareholder (or the
cost basis method applied by default) for each sale of Fund shares may not be
changed after the settlement date of each such sale of Fund shares. Fund
shareholders should consult with 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.
INVESTMENT IN FOREIGN SECURITIES
To the extent that the Funds invest in foreign securities, they may be subject
to foreign withholding taxes with respect to dividends or interest the Funds
received from sources in foreign countries. If more than 50% of the total
assets of a Fund consist of foreign securities, that Fund will be eligible to
elect to treat some of those taxes as a distribution to shareholders, which
would allow shareholders to offset some of their U.S. federal income tax.
ADDITIONAL INFORMATION ABOUT TAXES
More information about taxes is in the SAI.
31
ADDITIONAL INFORMATION ABOUT THE FUNDS
The investment objectives of the Cambiar Opportunity Fund and Cambiar
International Equity Fund are to seek total return and capital preservation.
The investment objective of the Cambiar Small Cap Fund is to seek long-term
capital appreciation. The investment objective of each Fund may be changed
without shareholder approval. In addition to their investment objectives, the
Cambiar Opportunity Fund and Cambiar International Equity Fund each have a goal
to provide above-average performance in both rising and falling market periods
by investing in stocks that have limited downside risk and positive upside
potential.
OTHER INVESTMENT PRACTICES AND STRATEGIES
Each Fund may employ non-principal investment practices that this prospectus
does not describe, such as when-issued and forward commitment transactions,
lending of securities, borrowing and other techniques. In addition, each Fund
may use the investment strategies described below. For more information
concerning any of the Funds' investment practices and risks, please read the
SAI.
DERIVATIVES
The Funds may invest in derivatives, a category of investments that includes
forward foreign currency exchange contracts, futures, options and swaps, in an
effort to increase returns, to hedge against the risk of unfavorable price
movements in the underlying instruments, to provide economic exposure to a
security or issuer, to manage cash flows or currency exposure, to address tax
considerations, or as an alternative to selling a security short. Forward
foreign currency exchange contracts, futures, options and swaps are called
derivatives because their value is based on an underlying asset or economic
factor. Derivatives are often more volatile than other investments and may
magnify the Funds' gains or losses. There are various factors that affect each
Fund's ability to achieve its objectives with derivatives. Successful use of a
derivative depends on the degree to which prices of the underlying assets
correlate with price movements in the derivatives the Funds buy or sell. The
Funds could be negatively affected if the change in market value of their
securities fails to correlate perfectly with the values of the derivatives they
purchased or sold.
SHORT-TERM INVESTING
The investments and strategies described in this prospectus are those that are
used under normal circumstances. During unusual economic, market, political or
other circumstances, each Fund may invest up to 100% of its assets in
short-term, high quality debt instruments, such as U.S. government securities.
These instruments would not ordinarily be consistent with the Funds' principal
investment strategies, and may prevent the Funds from achieving their
investment objectives. The Funds will use a temporary strategy if the Adviser
believes that pursuing the Funds' investment objectives will subject them to a
significant risk of loss. Each of the Cambiar Small Cap Fund and the Cambiar
International Equity Fund has a policy requiring it to invest, under normal
circumstances, at least 80% of its net assets, plus any borrowings for
investment purposes, in particular types of securities as described in each
Fund's principal investment strategies. In addition to the temporary measures
described above, each Fund may also temporarily deviate from its 80% policy in
other limited, appropriate circumstances, such as unusually large cash inflows
or redemptions.
32
When the Adviser pursues a temporary defensive strategy, the Funds may not
profit from favorable developments that they would have otherwise profited from
if they were pursuing their normal strategies.
INFORMATION ABOUT PORTFOLIO HOLDINGS
The Funds generally post a detailed list of their securities (portfolio
holdings) as of the most recent calendar month end, 30 days after the end of
the calendar month. In addition, the Funds generally post their ten largest
portfolio holdings, and the percentage that each of these holdings represents
of each Fund's total assets, as of the most recent calendar month end, 10
calendar days after the end of the calendar month. These postings can be found
on the internet at http://aicfundholdings.com/cambiar and generally remain
until replaced by new postings as described above. The Adviser may exclude any
portion of the Funds' portfolio holdings from publication when deemed in the
best interest of the Funds. Please consult the Funds' SAI for a description of
the policies and procedures that govern disclosure of the Funds' portfolio
holdings.
INVESTMENT MANAGEMENT
INVESTMENT ADVISER
Cambiar Investors LLC, a Delaware limited liability corporation located at 2401
East Second Avenue, Suite 500, Denver, Colorado 80206, serves as the investment
adviser to each of the Funds. Cambiar manages and supervises the investment of
each Fund's assets on a discretionary basis, subject to oversight by the Board.
For its services, the Adviser is entitled to a fee, which is calculated daily
and paid monthly, at an annual rate of the average daily net assets of each
Fund, as set forth in the table below. As of June 30, 2013, the Adviser had
approximately $7.3 billion in assets under management. Cambiar has provided
investment management services to corporations, foundations, endowments,
pension and profit sharing plans, trusts, estates and other institutions and
individuals since 1973.
The Adviser has contractually agreed to reduce its fees and reimburse expenses
of the Institutional Class Shares of each Fund in order to keep net operating
expenses (excluding interest, taxes, brokerage commissions, acquired fund fees
and expenses, and extraordinary expenses (collectively, "excluded expenses"))
from exceeding the amounts listed in the table below, as a percentage of
average daily net assets, until September 1, 2014. To maintain these expense
limits, the Adviser may reduce a portion of its management fee and/or reimburse
certain expenses of the Funds. In addition, if at any point total annual Fund
operating expenses (not including excluded expenses) are below the expense
caps, the Adviser may receive from the Fund the difference between each Fund's
total annual Fund operating expenses (not including excluded expenses) and the
expense caps to recover all or a portion of its prior fee reductions or expense
reimbursements made during the preceding three year period during which the
agreement (or any prior agreement) was in place. The table also lists the
amount each Fund paid the Adviser during the most recent fiscal year, as a
percentage of its average daily net assets.
Cambiar
Cambiar International Cambiar
Opportunity Equity Small Cap
Fund Fund(2) Fund
------------------------------------------------------------------------------------------------------------------------------------
Management Fees 0.90% for first $2.5 billion 0.90%(1) 1.05%
0.75% above $2.5 billion(3)
------------------------------------------------------------------------------------------------------------------------------------
Expense Limits -- Institutional 0.95% 0.95% 1.05%
Class
------------------------------------------------------------------------------------------------------------------------------------
Advisory Fee Paid During the 0.83% 0.42% 0.94%
Most Recent Fiscal Year (after
waivers)
------------------------------------------------------------------------------------------------------------------------------------
|
(1) Prior to September 1, 2013, the management fee for the Cambiar
International Equity Fund was 1.05%.
(2) Institutional Class Shares of the Cambiar International Equity Fund
commenced operations on November 30, 2012.
(3) Prior to September 1, 2013, the management fee for the Cambiar Opportunity
Fund was 1.00% for the first $500 million, 0.90% of assets between $500
million and $2.5 billion, and 0.75% for excess of $2.5 billion.
33
A discussion regarding the basis for Board approval of the Funds' investment
advisory agreements will be available in the Funds' October 31, 2013 Semi-Annual
Report to Shareholders, which will cover the period from May 1, 2013 to October
31, 2013.
PORTFOLIO MANAGERS
The Funds are each managed by a team of investment professionals that are
jointly and primarily responsible for the day-to-day management of the Funds.
The SAI provides additional information about the portfolio managers'
compensation, other accounts managed, and ownership of Fund shares.
Brian M. Barish, CFA, President, Director of Research, joined the Adviser in
1997 and has over 23 years of investment experience. He serves as the Lead
Manager of the investment team of the Cambiar Opportunity Fund and Co-Manager
of the Cambiar Small Cap Fund and Cambiar International Equity Fund. He focuses
on the technology, media, aerospace and defense sectors. Prior to joining the
Adviser, Mr. Barish served as Director of Emerging Markets Research for Lazard
Freres & Co., a New York based investment bank. He has also served as a
securities analyst with Bear, Stearns & Co. and Arnhold S. Bleichroeder, a New
York based research firm. Mr. Barish received a BA in Economics and Philosophy
from the University of California, Berkeley, and holds the Chartered Financial
Analyst designation.
Maria L. Mendelsberg, CFA, Principal, joined the Adviser in 1997 and has over
19 years of investment experience. She co-manages the Cambiar Opportunity Fund
and Cambiar Small Cap Fund, with a focus on the health care and retail sectors.
Prior to joining the Adviser, Ms. Mendelsberg served as an investment analyst
for Eaton Vance Management, a Boston based investment company. Before launching
her investment career, she spent many years working in retail management. Ms.
Mendelsberg received a BA in Economics and Classics from Brown University, and
holds the Chartered Financial Analyst designation.
Anna (Ania) A. Aldrich, CFA, Principal, joined the Adviser in 1999 and has over
23 years of investment experience. She co-manages each Fund, with a focus on
the financial services and consumer products sectors. Prior to joining the
Adviser, Ms. Aldrich was a global equity analyst at Bankers Trust, a New York
based investment company, covering the financial services and transportation
sectors. She began her career as a senior investor relations professional at
BET PLC, a New York based communications firm. Ms. Aldrich holds an MBA in
Finance from Fordham University and a BA in Computer Science from Hunter
College. She also holds the Chartered Financial Analyst designation.
34
Timothy A. Beranek, Principal, joined the Adviser in 1999 and has over 20 years
of investment experience. He co-manages the Cambiar Opportunity Fund and
Cambiar Small Cap Fund with a focus on the utilities and basic materials
sectors. Prior to joining the Adviser, Mr. Beranek was with Resources Trust
where he had responsibility for oversight of financial controls for the
company's mutual fund trading relationships. He began his career with Merrill
Lynch. Mr. Beranek holds a Masters in Finance from the University of Colorado
and a BS in Economics from the University of South Dakota.
Andrew P. Baumbusch, Principal, joined the Adviser in 2004 and has over 14
years of investment experience. He co-manages the Funds with a focus on the
industrials, media and telecom sectors. Prior to joining the Adviser, Mr.
Baumbusch served as an investment analyst at Franklin Templeton, Atrium Capital
and Alex Brown & Sons. Mr. Baumbusch holds an MBA from the Stanford Graduate
School of Business and a BA in Economics from Princeton University.
Jennifer M. Dunne, CFA, Vice President, joined the Adviser in 2005 and has over
18 years of investment experience. She co-manages the Cambiar International
Equity Fund with a focus on the energy, industrials, utilities and basic
materials sectors. Prior to joining the Adviser, Ms. Dunne was a senior equity
analyst at Founders Asset Management LLC, a Colorado based asset management
firm. Ms. Dunne holds a graduate diploma from the London School of Economics as
well as a Masters of Economics from the University of British Columbia and a BA
from the University of Colorado, Boulder. She also holds the Chartered
Financial Analyst designation.
Todd L. Edwards, PhD, joined the Adviser in 2007 and has over 17 years of
investment experience. He co-manages the Cambiar International Equity Fund with
a focus on non-U.S. company coverage in the financial services and consumer
staple sectors. In addition, Mr. Edwards is responsible for the Adviser's
macroeconomic and policy research efforts. Prior to joining the Adviser, he was
a Director in the Global Emerging Markets Group at Citigroup. Before that, he
served as Director of Research and Equity Strategist at BBVA Securities. Mr.
Edwards began his investment career as a research analyst at Salomon Brothers.
An accomplished author, he has written books on Brazil and Argentina. Mr.
Edwards received a Ph.D. and MA from Tulane University and a BA from Colorado
College.
Alvaro Shiraishi, International Investment Analyst, joined the Adviser in 2007
and has over 19 years of investment experience. Mr. Shiraishi co-manages the
Cambiar International Equity Fund. He is responsible for non-U.S. company
coverage in the basic materials and consumer discretionary sectors. Prior to
joining the Adviser, he worked at Aon Corporation in Chicago, where he
conducted risk management research for the industrials and construction
industries. Mr. Shiraishi began his investment career as an equity analyst for
UBS. Mr. Shiraishi received a BA in Economics from Universidad Panamericana in
Mexico City.
Jeffrey H. Susman, Senior Investment Analyst, joined the Adviser in 2005 and
has over 13 years of investment experience. He co-manages the Cambiar
Opportunity Fund and Cambiar Small Cap Fund. Mr. Susman is responsible for
company coverage in the consumer discretionary and technology sectors. Prior to
joining the Adviser, he worked at UBS Investment Bank, where he was an
associate analyst on the Global Communications Equipment Equity Research Team.
Mr. Susman began his investment career as a Research Associate at Wellington
Management. Mr. Susman received an MBA in Finance and Corporate Strategy from
the University of Michigan and a BA in Economics and International Relations
from Tufts University.
35
MORE INFORMATION ABOUT THE FUNDS' HISTORY AND PERFORMANCE
CAMBIAR OPPORTUNITY FUND
Effective June 24, 2002, the Cambiar Opportunity Fund ("Opportunity Fund")
became the successor to a separate mutual fund, the UAM Funds Trust Cambiar
Opportunity Portfolio (the "Predecessor Opportunity Fund"). The Predecessor
Opportunity Fund was managed by the same Adviser that currently manages the
Opportunity Fund, had identical investment objectives and strategies as the
Opportunity Fund and was subject to substantially similar fees and expenses.
The performance shown in the performance table on page 5 of this prospectus
represents the performance of the Predecessor Opportunity Fund for periods
prior to June 24, 2002.
CAMBIAR INTERNATIONAL EQUITY FUND
Effective September 9, 2002, the Fund became the successor to the Cambiar
International Equity Trust (the "Predecessor International Fund"), an
unregistered, similarly managed fund. The Predecessor International Fund was
managed by the same Adviser that currently manages the Fund and had identical
investment objectives and strategies as the Fund. The performance shown in the
performance table on page 11 of this prospectus represents the performance of
the Predecessor International Fund for periods prior to September 9, 2002,
adjusted to reflect expenses for the Fund. The Predecessor International Fund
was not a registered mutual fund and so it was not subject to the same
investment and tax restrictions as the Fund. If it had been, the Predecessor
International Fund's performance may have been lower.
CAMBIAR SMALL CAP FUND
Prior to September 1, 2009, the Cambiar Small Cap Fund's ("Small Cap Fund")
investment strategy also included investments in common stocks of medium-sized
companies, in addition to investments in common stocks of small-sized
companies; therefore, the performance shown in the bar chart and performance
table on page 16 of this prospectus for periods prior to September 1, 2009 may
have differed had the Small Cap Fund's current investment strategy been in
effect during those periods.
SHAREHOLDER SERVICING ARRANGEMENTS
The Funds may compensate financial intermediaries for providing a variety of
services to shareholders. Financial intermediaries include brokers, dealers,
banks (including bank trust departments), trust companies, registered
investment advisers, financial planners, retirement plan administrators,
insurance companies, and any other institution having a service,
administration, or any similar arrangement with the Funds, their service
providers or their respective affiliates. This section and the following
section briefly describe how financial intermediaries may be paid for providing
these services.
The Funds generally pay financial intermediaries a fee that is based on the
assets of each Fund that are attributable to investments by customers of the
financial intermediary. These shareholder services for which financial
intermediaries are compensated, which do not include distribution related
services, may include record-keeping, transaction processing for shareholders'
accounts and certain shareholder services not currently offered to shareholders
that deal directly with the Funds. In addition to these payments, your
financial intermediary may charge you account fees, transaction fees for buying
or redeeming shares of the Funds or other fees for servicing your account. Your
financial intermediary should provide a schedule of its fees and services to
you upon request. The Funds do not pay these service fees on shares purchased
directly. In addition to payments made directly to financial intermediaries by
the Funds, the Adviser or its affiliates
36
may, at their own expense, pay financial intermediaries for these and other
services to Fund shareholders, as described in the section below.
PAYMENTS TO FINANCIAL INTERMEDIARIES
From time to time, the Adviser and/or its affiliates, in their discretion, may
make payments to certain affiliated or unaffiliated financial intermediaries to
compensate them for the costs associated with distribution, marketing,
administration and shareholder servicing support. These payments are sometimes
characterized as "revenue sharing" payments and are made out of the Adviser's
and/or its affiliates' own legitimate profits or other resources, and are not
paid by the Funds.
A financial intermediary may provide these services with respect to Fund shares
sold or held through programs such as retirement plans, qualified tuition
programs, fund supermarkets, fee-based advisory or wrap fee programs, bank
trust programs, and insurance (e.g., individual or group annuity) programs. In
addition, financial intermediaries may receive payments for making shares of
the Funds available to their customers or registered representatives, including
providing a Fund with "shelf space," placing it on a preferred or recommended
fund list, or promoting the Fund in certain sales programs that are sponsored
by financial intermediaries. To the extent permitted by SEC and Financial
Industry Regulatory Authority ("FINRA") rules and other applicable laws and
regulations, the Adviser and/or its affiliates may pay or allow other
promotional incentives or payments to financial intermediaries. For more
information please see "Payments to Financial Intermediaries" in the Funds'
SAI.
The level of payments to individual financial intermediaries varies in any
given year and may be negotiated on the basis of sales of Fund shares, the
amount of Fund assets serviced by the financial intermediary or the quality of
the financial intermediary's relationship with the Adviser and/or its
affiliates. These payments may be more or less than the payments received by
the financial intermediaries from other mutual funds and may influence a
financial intermediary to favor the sales of certain funds or share classes
over others. In certain instances, the payments could be significant and may
cause a conflict of interest for your financial intermediary. Any such payments
will not change the NAV or price of a Fund's shares. Please contact your
financial intermediary for information about any payments it may receive in
connection with the sale of Fund shares or the provision of services to the
Funds, as well as information about any fees and/or commissions it charges.
37
FINANCIAL HIGHLIGHTS
The tables that follow present performance information about the Institutional
Class Shares of the Funds. The financial highlights table is intended to help
you understand the financial performance of each Fund for the past five fiscal
years or the period of the Fund's operations. Certain information contained in
the tables reflects the financial results for a single Institutional Class
Share of each Fund. The total returns in the tables represent the rate that an
investor would have earned or lost on an investment in the Funds assuming all
dividends and distributions were reinvested. The information provided below has
been audited by Ernst & Young LLP, independent registered public accounting
firm of the Funds. The financial statements and the unqualified opinion of
Ernst & Young LLP are included in the 2013 Annual Report of the Funds, which is
available upon request by calling the Funds at 1-866-777-8227.
38
YEARS ENDED APRIL 30,
------------------------------------------------------------------------------------------------------------------------------------
OPPORTUNITY FUND 2013 2012 2011 2010 2009
------------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of
Year $17.91 $20.40 $16.32 $11.43 $18.68
Income (Loss) from Operations:
Net Investment Income(1) 0.24 0.17 0.11 0.17 0.14
Net Realized and Unrealized
Gain (Loss) 2.54 (2.53) 4.19 4.78 (7.07)
------ ------ ------ ------ ------
Total From Operations 2.78 (2.36) 4.30 4.95 (6.93)
------ ------ ------ ------ ------
Dividends and Distributions:
Net Investment Income (0.26) (0.13) (0.22) (0.06) (0.12)
Net Realized Gain -- -- -- -- (0.20)
------ ------ ------ ------ ------
Total Dividends and
Distributions (0.26) (0.13) (0.22) (0.06) (0.32)
------ ------ ------ ------ ------
Net Asset Value, End of Year $20.43 $17.91 $20.40 $16.32 $11.43
====== ====== ====== ====== ======
Total Return(2) 15.76% (11.50)% 26.53% 43.29% (36.94)%
====== ====== ====== ====== ======
Ratios and Supplemental Data
Net Assets, End of Years
(Thousands) $282,857 $377,445 $378,342 $332,988 $234,117
Ratio of Expenses to Average
Net Assets 0.95% 0.95% 0.95% 0.95% 0.95%
Ratio of Expenses to Average
Net Assets (Excluding
Waivers, Expense 1.06% 1.05% 1.08% 1.10% 1.08%
Reimbursements and Fees
Paid Indirectly)
Ratio of Net Investment
Income to Average Net
Assets 1.33% 0.96% 0.66% 1.15% 0.99%
Portfolio Turnover Rate 64% 62% 63% 78% 131%
|
(1) Per share data calculated using the average shares method.
(2) Total return is for the period indicated and has not been annualized.
Total return would have been lower had the Adviser not waived a
portion of its fees. Returns shown do not reflect the deduction of
taxes that a shareholder would pay on Fund distributions or the
redemption of Fund shares.
Amounts designated as "--" are $0 or have been rounded to $0.
39
NOVEMBER
30,
2012(1) TO
APRIL 30,
INTERNATIONAL EQUITY FUND 2013
--------------------------------------------------------------------------------
Net Asset Value, Beginning of Year $19.85
Income (Loss) from Operations:
Net Investment Income(5) 0.18
Net Realized and Unrealized Gain 2.07
(Loss) ------
Total From Operations 2.25
------
Dividends and Distributions:
Net Investment Income (0.31)
Net Realized Gain --
------
Total Dividends and Distributions (0.31)
------
Redemption Fees(5,6) 0.00
------
Net Asset Value, End of Year $21.79
======
Total Return(4) 11.48%
======
Ratios and Supplemental Data
Net Assets, End of Year (Thousands) $8,243
Ratio of Expenses to Average Net
Assets 0.95%(2)
Ratio of Expenses to Average Net
Assets (Excluding Waivers and
Fees Paid Indirectly) 1.59%(2)
Ratio of Net Investment Income to
Average Net Assets 2.04%(2)
Portfolio Turnover Rate 75%(3)
(1) Commencement of Operations
|
(2) Annualized
(3) Portfolio turnover is for the Fund for the year ended April 30, 2013.
(4) Total return is for the period indicated and has not been annualized.
Total return would have been lower had the Adviser not waived a portion of
its fee and reimbursed other operating expenses. Returns shown do not
reflect the deduction of taxes that a shareholder would pay on Fund
distributions or the redemption of Fund shares.
(5) Per share data calculated using the average shares method.
(6) Amount represents less than $0.01 per share.
Amounts designated as "--" are $0 or have been rounded to $0.
40
------------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED APRIL 30, OCTOBER 31,
2008(1) TO APRIL
30,
------------------------------------------------------------------------------------------------------------------------------------
SMALL CAP FUND 2013 2012 2011 2010 2009
------------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Year $18.90 $19.86 $15.08 $9.60 $9.60
Income (Loss) from Operations:
Net Investment Income (Loss)(5) (0.03) (0.06) (0.07) (0.07) 0.01
Net Realized and Unrealized Gain (Loss) 1.75 (0.35)(8) 4.85 5.55 (0.01)
------ ------ ------ ----- -----
Total From Operations 1.72 (0.41) 4.78 5.48 --
------ ------ ------ ----- -----
Dividends and Distributions:
Net Realized Gain (0.28) (0.55) -- -- --
------ ------ ------ ----- -----
Total Dividends and Distributions (0.28) (0.55) -- -- --
------ ------ ------ ----- -----
Redemption Fees(5,6) 0.00 0.00 0.00 0.00 0.00
------ ------ ------ ----- -----
Net Asset Value, End of Year $20.34 $18.90 $19.86 $15.08 $9.60
====== ====== ====== ====== =====
Total Return(4) 9.27% (1.59)% 31.70% 57.08% 0.00%
====== ====== ====== ====== =====
Ratios and Supplemental Data
Net Assets, End of Period (Thousands) $519,452 $250,209 $147,410 $8,388 $656
Ratio of Expenses to Average Net 1.05% 1.05% 1.05% 1.05% 1.05%(2,7)
Assets
Ratio of Expenses to Average Net
Assets (Excluding Waivers and Fees
Paid Indirectly) 1.16% 1.17% 1.23% 1.42% 1.66%(2)
Ratio of Net Investment Income (Loss) (0.15)% (0.35)% (0.38)% (0.49)% 0.12%(2)
to Average Net Assets
Portfolio Turnover Rate 71% 70% 85% 99% 103%(3)
|
(1) Commencement of operations
(2) Annualized
(3) Portfolio turnover is for the Fund for the year ended April 30, 2009.
(4) Total return is for the period indicated and have not been annualized.
Total return would have been lower had the Adviser not waived a portion of
its fee. Returns shown do not reflect the deduction of taxes that a
shareholder would pay on Fund distributions or the redemption of Fund
shares.
(5) Per share data calculated using the average shares method.
(6) Amount represents less than $0.01 per share.
(7) The expense ratio includes fees paid indirectly. Had these been excluded
the ratio would have been 1.10%.
(8) The amount shown for the year ended April 30, 2012, for a share
outstanding throughout the period does not accord with the aggregate net
gains on investments for that period because of the sales and repurchase of
Fund shares in relation to fluctuating market value of the investments of
the Fund.
Amounts designated as "--" are $0 or have been rounded to $0.
41
THE CAMBIAR FUNDS
Investors who want more information about the Funds should read the Funds'
Annual/Semi-Annual Reports and the SAI. The Annual/Semi-Annual Reports of the
Funds provide additional information about their investments. In the Annual
Report, you will also find a discussion of the market conditions and investment
strategies that significantly affected the performance of the Funds during the
last fiscal year. The SAI contains additional detailed information about the
Funds and is incorporated by reference into (is legally a part of) this
prospectus.
Investors can receive free copies of the SAI, shareholder reports, the Funds'
privacy policy and other information about the Funds and can make shareholder
inquiries on the Funds' website at www.cambiar.com or by writing to or
calling:
The Cambiar Funds
P.O. Box 219009
Kansas City, MO 64121
(Toll free) 1-866-777-8227
You can also obtain the SAI or the Annual and Semi-Annual Reports, as well as
other information about The Advisors' Inner Circle Fund, from the EDGAR
Database on the SEC's website at: http://www.sec.gov. You may review and copy
documents at the SEC Public Reference Room in Washington, DC (for information
on the operation of the Public Reference Room, call 202-551-8090). You may
request documents by mail from the SEC, upon payment of a duplicating fee, by
writing to: U.S. Securities and Exchange Commission, Public Reference Section,
Washington, DC 20549-1520. You may also obtain this information, upon payment
of a duplicating fee, by e-mailing the SEC at the following address:
publicinfo@sec.gov.
The Trust's Investment Company Act of 1940 file number is 811-06400.
CMB-PS-002-1000
[CAMBIAR INVESTORS LOGO]
STATEMENT OF ADDITIONAL INFORMATION
CAMBIAR OPPORTUNITY FUND
(INSTITUTIONAL CLASS SHARES: CAMWX)
(INVESTOR CLASS SHARES: CAMOX)
CAMBIAR INTERNATIONAL EQUITY FUND
(INSTITUTIONAL CLASS SHARES:CAMYX)
(INVESTOR CLASS SHARES: CAMIX)
CAMBIAR SMALL CAP FUND
(INSTITUTIONAL CLASS SHARES: CAMZX)
(INVESTOR CLASS SHARES: CAMSX)
CAMBIAR AGGRESSIVE VALUE FUND
(INSTITUTIONAL CLASS SHARES: )
(INVESTOR CLASS SHARES: CAMAX)
CAMBIAR SMID FUND
(INVESTOR CLASS SHARES: CAMMX)
CAMBIAR GLOBAL SELECT FUND
(INVESTOR CLASS SHARES: CAMGX)
EACH, A SERIES OF THE ADVISORS' INNER CIRCLE FUND
SEPTEMBER 1, 2013
INVESTMENT ADVISER:
CAMBIAR INVESTORS LLC
This Statement of Additional Information (the "SAI") is not a prospectus. This
SAI relates to the following series of the Trust (each, a "Fund" and
collectively, the "Funds"):
CAMBIAR OPPORTUNITY FUND (THE "OPPORTUNITY FUND")
CAMBIAR INTERNATIONAL EQUITY FUND (THE "INTERNATIONAL FUND")
CAMBIAR SMALL CAP FUND (THE "SMALL CAP FUND")
CAMBIAR AGGRESSIVE VALUE FUND (THE "AGGRESSIVE VALUE FUND")
CAMBIAR SMID FUND (THE "SMID FUND")
CAMBIAR GLOBAL SELECT FUND (THE "GLOBAL SELECT FUND")
As of the date of this SAI, Institutional Class Shares of the Aggressive Value
Fund are not available for purchase and Investor Class Shares of the Small Cap
Fund are closed to new investors. This SAI should be read in conjunction with
the Funds' prospectuses dated September 1, 2013. Capitalized terms not defined
herein are defined in the prospectuses. The Funds' financial statements and
financial highlights including notes thereto, and the report of Ernst & Young
LLP for the fiscal year ended April 30, 2013 are contained in the 2013 Annual
Report to Shareholders and are incorporated by reference into and are deemed to
be part of this SAI. A copy of the Funds' 2013 Annual Report to Shareholders
accompanies the delivery of this SAI. Shareholders may obtain copies of the
Funds' prospectuses or Annual Report free of charge by writing to the Cambiar
Funds, P.O. Box 219009, Kansas City, MO 64121-9009 (Express Mail Address: The
Cambiar Funds c/o DST Systems, Inc., 430 West 7th Street, Kansas City, MO
64105), or by calling the Funds at 1-866-777-8227.
CMB-SX-003-0400
i
TABLE OF CONTENTS
THE TRUST ................................................................ S-1
DESCRIPTION OF PERMITTED INVESTMENTS ..................................... S-2
INVESTMENT POLICIES OF THE FUNDS ......................................... S-29
INVESTMENT ADVISORY AND OTHER SERVICES ................................... S-34
PORTFOLIO MANAGERS ....................................................... S-37
THE ADMINISTRATOR ........................................................ S-39
THE DISTRIBUTOR .......................................................... S-40
SHAREHOLDER SERVICES ..................................................... S-40
PAYMENTS TO FINANCIAL INTERMEDIARIES ..................................... S-41
TRANSFER AGENT ........................................................... S-42
CUSTODIAN ................................................................ S-42
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ............................ S-42
LEGAL COUNSEL ............................................................ S-42
TRUSTEES AND OFFICERS OF THE TRUST ....................................... S-42
PURCHASING AND REDEEMING SHARES .......................................... S-52
DETERMINATION OF NET ASSET VALUE ......................................... S-53
TAXES .................................................................... S-54
BROKERAGE ALLOCATION AND OTHER PRACTICES ................................. S-60
DISCLOSURE OF PORTFOLIO HOLDINGS ......................................... S-63
DESCRIPTION OF SHARES .................................................... S-65
SHAREHOLDER LIABILITY .................................................... S-65
LIMITATION OF TRUSTEES' LIABILITY ........................................ S-65
PROXY VOTING ............................................................. S-65
CODES OF ETHICS .......................................................... S-66
5% AND 25% SHAREHOLDERS .................................................. S-66
APPENDIX A -- DESCRIPTION OF RATINGS ..................................... A-1
APPENDIX B - PROXY VOTING POLICIES AND PROCEDURES ........................ B-1
|
September 1, 2013 CMB-SX-003-0400
ii
THE TRUST
GENERAL. Each Fund is a separate series of the Trust, an open-end investment
management company established under Massachusetts law as a Massachusetts
voluntary association (commonly known as a business trust) under a Declaration
of Trust dated July 18, 1991, as amended and restated February 18, 1997 and
amended May 15, 2012. The Declaration of Trust permits the Trust to offer
separate series ("funds") of shares of beneficial interest ("shares"). The
Trust reserves the right to create and issue shares of additional funds. Each
fund is a separate mutual fund, and each share of each fund represents an equal
proportionate interest in that fund. All consideration received by the Trust
for shares of any fund, and all assets of such fund, belong solely to that fund
and would be subject to any liabilities related thereto. Each Fund pays its (i)
operating expenses, including fees of its service providers, expenses of
preparing prospectuses, proxy solicitation material and reports to
shareholders, costs of custodial services and registering its shares under
federal and state securities laws, pricing and insurance expenses, brokerage
costs, interest charges, taxes and organization expenses and (ii) pro rata
share of the Fund's other expenses, including audit and legal expenses.
Expenses attributable to a specific fund shall be payable solely out of the
assets of that fund. Expenses not attributable to a specific fund are allocated
across all of the funds on the basis of relative net assets. The other funds of
the Trust are described in one or more separate Statements of Additional
Information.
DESCRIPTION OF MULTIPLE CLASSES OF SHARES. The Trust is authorized to offer
shares of the Funds (except for the SMID Fund and the Global Select Fund) in
the following classes: Investor Class Shares and Institutional Class Shares;
however, the Aggressive Value Fund currently only offers Investor Class Shares.
The Trust is authorized to offer shares of the SMID Fund and the Global Select
Fund in Investor Class Shares. The different classes provide for variations in
shareholder servicing expenses and in the minimum investment requirements.
Minimum investment requirements and investor eligibility are described in the
prospectuses. For more information on shareholder servicing expenses, see
"Shareholder Services." The Trust reserves the right to create and issue
additional classes of shares.
HISTORY OF THE FUNDS. The Opportunity Fund is the successor to the UAM Funds
Trust Cambiar Opportunity Portfolio (the "Predecessor Opportunity Fund"), a
separate registered investment company. The Predecessor Opportunity Fund was
managed by Cambiar Investors LLC ("Cambiar" or the "Adviser") using the same
investment objective, investment strategies, policies and restrictions as those
used by the Opportunity Fund. The Predecessor Opportunity Fund's date of
inception was June 30, 1998. The Predecessor Opportunity Fund dissolved and
reorganized into the Opportunity Fund on June 24, 2002. Substantially all of
the assets of the Predecessor Opportunity Fund were acquired by the Opportunity
Fund in connection with its commencement of operations on June 24, 2002.
The International Fund is the successor to the Cambiar International Equity
Trust (the "Predecessor International Fund," and, together with the
"Predecessor Opportunity Fund," the "Predecessor Funds"), a separate
unregistered investment company. The Predecessor International Fund was managed
by the Adviser using the same investment objective, strategies, policies and
restrictions as those used by the International Fund. The Predecessor
International Fund's date of inception was August 31, 1997. The Predecessor
International Fund dissolved and reorganized into the International Fund on
September 9, 2002. Substantially all of the assets of the Predecessor
International Fund were acquired by the International Fund in connection with
its commencement of operations on September 9, 2002.
VOTING RIGHTS. Each shareholder of record is entitled to one vote for each
share held on the record date for the meeting. Each Fund will vote separately
on matters relating solely to it. As a Massachusetts voluntary association,
the Trust is not required, and does not intend, to hold annual meetings of
shareholders. Shareholders' approval will be sought, however, for certain
changes in the operation of the Trust and for the election of trustees under
certain circumstances. Under the Declaration of Trust, the trustees have the
power to liquidate one or more
S-1
Funds without shareholder approval. While the trustees have no present
intention of exercising this power, they may do so if a Fund fails to reach a
viable size within a reasonable amount of time or such other reasons as may be
determined by the Trust's Board of Trustees (each, a "Trustee" and
collectively, the "Board").
In addition, a Trustee may be removed by the remaining Trustees or by
shareholders at a special meeting called upon written request of shareholders
owning at least 10% of the outstanding shares of the Trust. In the event that
such a meeting is requested, the Trust will provide appropriate assistance and
information to the shareholders requesting the meeting.
Any series of the Trust created on or after November 11, 1996 may reorganize or
merge with one or more other series of the Trust or of another investment
company. Any such reorganization or merger shall be pursuant to the terms and
conditions specified in an agreement and plan of reorganization authorized and
approved by the Trustees and entered into by the relevant series in connection
therewith. In addition, such reorganization or merger may be authorized by vote
of a majority of the Trustees then in office and, to the extent permitted by
applicable law and the Declaration of Trust, without the approval of
shareholders of any series.
NON-DIVERSIFICATION. Each Fund, with the exception of the Aggressive Value
Fund, is classified as "diversified" investment company under the Investment
Company Act of 1940, as amended (the "1940 Act"). Under the 1940 Act, The
Aggressive Value Fund is non-diversified, as that term is defined in the 1940
Act, which means that a relatively high percentage of assets of the Fund may be
invested in securities of a limited number of issuers. The value of the shares
of the Fund may be more susceptible to any single economic, political or
regulatory occurrence than the shares of a diversified investment company would
be. The Fund intends to satisfy the diversification requirements necessary to
qualify as a regulated investment company under the Internal Revenue Code of
1986, as amended (the "Code"). For more information, see "Taxes" below in this
SAI.
DESCRIPTION OF PERMITTED INVESTMENTS
Each Fund's investment objectives and principal investment strategies are
described in the prospectuses. The following information supplements, and
should be read in conjunction with, the prospectuses. The Fund may invest in
any of the following instruments or engage in any of the following investment
practices unless such investment or activity is inconsistent with or is not
permitted by the Fund's stated investment policies, including those stated
below.
DEBT SECURITIES
Corporations and governments use debt securities to borrow money from
investors. Most debt securities promise a variable or fixed rate of return and
repayment of the amount borrowed at maturity. Some debt securities, such as
zero-coupon bonds, do not pay current interest and are purchased at a discount
from their face value.
TYPES OF DEBT SECURITIES:
U.S. GOVERNMENT SECURITIES - The Fund may invest in U.S. government securities.
Securities issued or guaranteed by the U.S. government or its agencies or
instrumentalities include U.S. Treasury securities, which are backed by the
full faith and credit of the U.S. Treasury and which differ only in their
interest rates, maturities, and times of issuance. U.S. Treasury bills have
initial maturities of one-year or less; U.S. Treasury notes have initial
maturities of one to ten years; and U.S. Treasury bonds generally have initial
maturities of greater than ten years. Certain U.S. government securities are
issued or guaranteed by agencies or instrumentalities of the U.S. government
including, but not limited to, obligations of U.S. government agencies or
instrumentalities such as the Federal National Mortgage Association ("Fannie
Mae"), the Government National Mortgage Association
S-2
("Ginnie Mae"), the Small Business Administration, the Federal Farm Credit
Administration, the Federal Home Loan Banks, Banks for Cooperatives (including
the Central Bank for Cooperatives), the Federal Land Banks, the Federal
Intermediate Credit Banks, the Tennessee Valley Authority, the Export-Import
Bank of the United States, the Commodity Credit Corporation, the Federal
Financing Bank, the Student Loan Marketing Association, the National Credit
Union Administration and the Federal Agricultural Mortgage Corporation ("Farmer
Mac").
Some obligations issued or guaranteed by U.S. government agencies and
instrumentalities, including, for example, Ginnie Mae pass-through
certificates, are supported by the full faith and credit of the U.S. Treasury.
Other obligations issued by or guaranteed by federal agencies, such as those
securities issued by Fannie Mae, are supported by the discretionary authority
of the U.S. government to purchase certain obligations of the federal agency.
While other obligations issued by or guaranteed by federal agencies, such as
those of the Federal Home Loan Banks, are supported by the right of the issuer
to borrow from the U.S. Treasury, while the U.S. government provides financial
support to such U.S. government-sponsored federal agencies, no assurance can be
given that the U.S. government will always do so, since the U.S. government is
not so obligated by law. U.S. Treasury notes and bonds typically pay coupon
interest semi-annually and repay the principal at maturity.
On September 7, 2008, the U.S. Treasury announced a federal takeover of Fannie
Mae and the Federal Home Loan Mortgage Corporation ("Freddie Mac"), placing the
two federal instrumentalities in conservatorship. Under the takeover, the U.S.
Treasury agreed to acquire $1 billion of senior preferred stock of each
instrumentality and obtained warrants for the purchase of common stock of each
instrumentality (the "Senior Preferred Stock Purchase Agreement" or
"Agreement"). Under the Agreement, the U.S. Treasury pledged to provide up to
$200 billion per instrumentality as needed, including the contribution of cash
capital to the instrumentalities in the event their liabilities exceed their
assets. This was intended to ensure that the instrumentalities maintain a
positive net worth and meet their financial obligations, preventing mandatory
triggering of receivership. On December 24, 2009, the U.S. Treasury announced
that it was amending the Agreement to allow the $200 billion cap on the U.S.
Treasury's funding commitment to increase as necessary to accommodate any
cumulative reduction in net worth through the end of 2012. The unlimited
support the U.S. Treasury extended to the two companies expired at the
beginning of 2013 -- Fannie Mae's support is now capped at $125 billion and
Freddie Mac has a limit of $149 billion.
On August 17, 2012, the U.S. Treasury announced that it was again amending the
Agreement to terminate the requirement that Fannie Mae and Freddie Mac each pay
a 10% annual dividend. Instead, the companies will transfer to the U.S.
Treasury on a quarterly basis all profits earned during a quarter that exceed a
capital reserve amount of $3 billion. It is believed that the new amendment
puts Fannie Mae and Freddie Mac in a better position to service their debt
because the companies no longer have to borrow from the U.S. Treasury to make
fixed dividend payments. As part of the new terms, Fannie Mae and Freddie Mac
also will be required to reduce their investment portfolios at an annual rate
of 15 percent instead of the previous 10 percent, which puts each of them on
track to cut their portfolios to a targeted $250 billion in 2018.
Fannie Mae and Freddie Mac are the subject of several continuing class action
lawsuits and investigations by federal regulators over certain accounting,
disclosure or corporate governance matters, which (along with any resulting
financial restatements) may adversely affect the guaranteeing entities.
Importantly, the future of the entities is in serious question as the U.S.
Government reportedly is considering multiple options, ranging from
nationalization, privatization, consolidation, or abolishment of the entities.
o U. S. TREASURY OBLIGATIONS. U. S. Treasury obligations consist of bills,
notes and bonds issued by the U. S. Treasury and separately traded interest
and principal component parts of such obligations that are transferable
through the federal book-entry system known as Separately Traded Registered
Interest and Principal Securities ("STRIPS") and Treasury Receipts ("TRs").
S-3
o RECEIPTS. Interests in separately traded interest and principal component
parts of U. S. government obligations that are issued by banks or brokerage
firms and are created by depositing U. S. government obligations into a
special account at a custodian bank. The custodian holds the interest and
principal payments for the benefit of the registered owners of the
certificates or receipts. The custodian arranges for the issuance of the
certificates or receipts evidencing ownership and maintains the register.
TRs and STRIPS are interests in accounts sponsored by the U. S. Treasury.
Receipts are sold as zero coupon securities.
o U. S. GOVERNMENT ZERO COUPON SECURITIES. STRIPS and receipts are sold as
zero coupon securities, that is, fixed income securities that have been
stripped of their unmatured interest coupons. Zero coupon securities are
sold at a (usually substantial) discount and redeemed at face value at
their maturity date without interim cash payments of interest or principal.
The amount of this discount is accreted over the life of the security, and
the accretion constitutes the income earned on the security for both
accounting and tax purposes. Because of these features, the market prices
of zero coupon securities are generally more volatile than the market
prices of securities that have similar maturity but that pay interest
periodically. Zero coupon securities are likely to respond to a greater
degree to interest rate changes than are non-zero coupon securities with
similar maturity and credit qualities.
o U. S. GOVERNMENT AGENCIES. Some obligations issued or guaranteed by
agencies of the U. S. government are supported by the full faith and credit
of the U. S. Treasury, others are supported by the right of the issuer to
borrow from the U. S. Treasury, while still others are supported only by
the credit of the instrumentality. Guarantees of principal by agencies or
instrumentalities of the U. S. government may be a guarantee of payment at
the maturity of the obligation so that in the event of a default prior to
maturity there might not be a market and thus no means of realizing on the
obligation prior to maturity. Guarantees as to the timely payment of
principal and interest do not extend to the value or yield of these
securities nor to the value of the Fund's shares.
CORPORATE BONDS - Corporations issue bonds and notes to raise money for working
capital or for capital expenditures such as plant construction, equipment
purchases and expansion. In return for the money loaned to the corporation by
investors, the corporation promises to pay investors interest, and repay the
principal amount of the bond or note.
MORTGAGE-BACKED SECURITIES - Mortgage-backed securities are interests in pools
of mortgage loans that various governmental, government-related and private
organizations assemble as securities for sale to investors. Unlike most debt
securities, which pay interest periodically and repay principal at maturity or
on specified call dates, mortgage-backed securities make monthly payments that
consist of both interest and principal payments. In effect, these payments are
a "pass-through" of the monthly payments made by the individual borrowers on
their mortgage loans, net of any fees paid to the issuer or guarantor of such
securities. Since homeowners usually have the option of paying either part or
all of the loan balance before maturity, the effective maturity of a
mortgage-backed security is often shorter than is stated.
Governmental entities, private insurers and mortgage poolers may insure or
guarantee the timely payment of interest and principal of these pools through
various forms of insurance or guarantees, including individual loan, title,
pool and hazard insurance and letters of credit. The Adviser will consider such
insurance and guarantees and the creditworthiness of the issuers thereof in
determining whether a mortgage-related security meets its investment quality
standards. It is possible that the private insurers or guarantors will not meet
their obligations under the insurance policies or guarantee arrangements.
Although the market for such securities is becoming increasingly liquid,
securities issued by certain private organizations may not be readily
marketable.
S-4
COMMERCIAL BANKS, SAVINGS AND LOAN INSTITUTIONS, PRIVATE MORTGAGE INSURANCE
COMPANIES, MORTGAGE BANKERS AND OTHER SECONDARY MARKET ISSUERS - Commercial
banks, savings and loan institutions, private mortgage insurance companies,
mortgage bankers and other secondary market issuers also create pass-through
pools of conventional mortgage loans. In addition to guaranteeing the
mortgage-related security, such issuers may service and/or have originated the
underlying mortgage loans. Pools created by these issuers generally offer a
higher rate of interest than pools created by GNMA, FNMA and Freddie Mac
because they are not guaranteed by a government agency.
RISKS OF MORTGAGE-BACKED SECURITIES - Yield characteristics of mortgage-backed
securities differ from those of traditional debt securities in a variety of
ways. The most significant differences of mortgage-backed securities are: 1)
payments of interest and principal are more frequent (usually monthly) and 2)
falling interest rates generally cause individual borrowers to pay off their
mortgage earlier than expected, which results in prepayments of principal on
the securities, thus forcing the Fund to reinvest the money at a lower interest
rate. In addition to risks associated with changes in interest rates described
in "Factors Affecting the Value of Debt Securities," a variety of economic,
geographic, social and other factors, such as the sale of the underlying
property, refinancing or foreclosure, can cause investors to repay the loans
underlying a mortgage-backed security sooner than expected. When prepayment
occurs, the Funds may have to reinvest its principal at a rate of interest that
is lower than the rate on existing mortgage-backed securities.
OTHER ASSET-BACKED SECURITIES - These securities are interests in pools of a
broad range of assets other than mortgages, such as automobile loans, computer
leases and credit card receivables. Like mortgage-backed securities, these
securities are pass-through. In general, the collateral supporting these
securities is of shorter maturity than mortgage loans and is less likely to
experience substantial prepayments with interest rate fluctuations, but may
still be subject to prepayment risk.
Asset-backed securities present certain risks that are not presented by
mortgage-backed securities. Primarily, these securities may not have the
benefit of any security interest in the related assets, which raises the
possibility that recoveries on repossessed collateral may not be available to
support payments on these securities. For example, credit card receivables are
generally unsecured and the debtors are entitled to the protection of a number
of state and federal consumer credit laws, many of which allow debtors to
reduce their balances by offsetting certain amounts owed on the credit cards.
Most issuers of asset-backed securities backed by automobile receivables permit
the servicers of such receivables to retain possession of the underlying
obligations. If the servicer were to sell these obligations to another party,
there is a risk that the purchaser would acquire an interest superior to that
of the holders of the related asset-backed securities. Due to the quantity of
vehicles involved and requirements under state laws, asset-backed securities
backed by automobile receivables may not have a proper security interest in all
of the obligations backing such receivables.
To lessen the effect of failures by obligors on underlying assets to make
payments, the entity administering the pool of assets may agree to ensure the
receipt of payments on the underlying pool occurs in a timely fashion
("liquidity protection"). In addition, asset-backed securities may obtain
insurance, such as guarantees, policies or letters of credit obtained by the
issuer or sponsor from third parties, for some or all of the assets in the pool
("credit support"). Delinquency or loss more than that anticipated or failure
of the credit support could adversely affect the return on an investment in
such a security.
The Funds may also invest in residual interests in asset-backed securities,
which consist of the excess cash flow remaining after making required payments
on the securities and paying related administrative expenses. The amount of
residual cash flow resulting from a particular issue of asset-backed securities
depends in part on the characteristics of the underlying assets, the coupon
rates on the securities, prevailing interest rates, the amount of
administrative expenses and the actual prepayment experience on the underlying
assets.
S-5
SHORT-TERM INVESTMENTS - To earn a return on uninvested assets, meet
anticipated redemptions, or for temporary defensive purposes, a Fund may invest
a portion of its assets in the short-term securities listed below, U.S.
government securities and investment-grade corporate debt securities. Unless
otherwise specified, a short-term debt security has a maturity of one year or
less.
BANK OBLIGATIONS - The Funds will only invest in a security issued by a
commercial bank if the bank:
o Has total assets of at least $1 billion, or the equivalent in other
currencies (based on the most recent publicly available information about
the bank);
o Is a U.S. bank and a member of the Federal Deposit Insurance Corporation;
and
o Is a foreign branch of a U.S. bank and the Adviser believes the security
is of an investment quality comparable with other debt securities that the
Funds may purchase.
TIME DEPOSITS - Time deposits are non-negotiable deposits, such as savings
accounts or certificates of deposit, held by a financial institution for a
fixed term with the understanding that the depositor can withdraw its money
only by giving notice to the institution. However, there may be early
withdrawal penalties depending upon market conditions and the remaining
maturity of the obligation. The Funds may only purchase time deposits maturing
from two business days through seven calendar days.
CERTIFICATES OF DEPOSIT - Certificates of deposit are negotiable certificates
issued against funds deposited in a commercial bank or savings and loan
association for a definite period of time and earning a specified return.
BANKERS' ACCEPTANCE - A bankers' acceptance is a time draft drawn on a
commercial bank by a borrower, usually in connection with an international
commercial transaction (to finance the import, export, transfer or storage of
goods).
COMMERCIAL PAPER - Commercial paper is a short-term obligation with a maturity
ranging from 1 to 270 days issued by banks, corporations and other borrowers.
Such investments are unsecured and usually discounted. The Funds may invest in
commercial paper rated A-1 or A-2 by Standard and Poor's Ratings Services
("S&P") or Prime-1 or Prime-2 by Moody's Investors Service, Inc. ("Moody's"),
or, if not rated, issued by a corporation having an outstanding unsecured debt
issue rated A or better by Moody's or by S&P. See "Appendix A - Ratings" for a
description of commercial paper ratings.
STRIPPED MORTGAGE-BACKED SECURITIES - Stripped mortgage-backed securities are
derivative multiple-class mortgage-backed securities. Stripped mortgage-backed
securities usually have two classes that receive different proportions of
interest and principal distributions on a pool of mortgage assets. Typically,
one class will receive some of the interest and most of the principal, while
the other class will receive most of the interest and the remaining principal.
In extreme cases, one class will receive all of the interest ("interest only"
or "IO" class) while the other class will receive the entire principal
("principal only" or "PO" class). The cash flow and yields on IOs and POs are
extremely sensitive to the rate of principal payments (including prepayments)
on the underlying mortgage loans or mortgage-backed securities. A rapid rate of
principal payments may adversely affect the yield to maturity of IOs and could
cause the total loss of investment. Slower than anticipated prepayments of
principal may adversely affect the yield to maturity of a PO. The yields and
market risk of interest only and principal only stripped mortgage-backed
securities, respectively, may be more volatile than those of other fixed income
securities, including traditional mortgage-backed securities.
YANKEE BONDS - Yankee bonds are dollar-denominated bonds issued inside the
United States by foreign entities. Investments in these securities involve
certain risks that are not typically associated with investing in domestic
securities. See "Foreign Securities."
S-6
ZERO COUPON BONDS - These securities make no periodic payments of interest, but
instead are sold at a discount from their face value. When held to maturity,
their entire income, which consists of accretion of discount, comes from the
difference between the issue price and their value at maturity. The amount of
the discount rate varies depending on factors including the time remaining
until maturity, prevailing interest rates, the security's liquidity and the
issuer's credit quality. The market value of zero coupon securities may exhibit
greater price volatility than ordinary debt securities because a stripped
security will have a longer duration than an ordinary debt security with the
same maturity. A Fund's investments in pay-in-kind, delayed and zero coupon
bonds may require it to sell certain of its portfolio securities to generate
sufficient cash to satisfy certain income distribution requirements.
These securities may include treasury securities that have had their interest
payments ("coupons") separated from the underlying principal ("corpus") by
their holder, typically a custodian bank or investment brokerage firm. Once the
holder of the security has stripped or separated corpus and coupons, it may
sell each component separately. The principal or corpus is then sold at a deep
discount because the buyer receives only the right to receive a future fixed
payment on the security and does not receive any rights to periodic interest
(cash) payments. Typically, the coupons are sold separately or grouped with
other coupons with like maturity dates and sold bundled in such form. The
underlying treasury security is held in book-entry form at the Federal Reserve
Bank or, in the case of bearer securities (I.E., unregistered securities which
are owned ostensibly by the bearer or holder thereof), in trust on behalf of
the owners thereof. Purchasers of stripped obligations acquire, in effect,
discount obligations that are economically identical to the zero coupon
securities that the U.S. Treasury sells itself.
The U.S. Treasury has facilitated transfers of ownership of zero coupon
securities by accounting separately for the beneficial ownership of particular
interest coupon and corpus payments on Treasury securities through the Federal
Reserve book-entry record keeping system. Under a Federal Reserve program known
as "STRIPS" or "Separate Trading of Registered Interest and Principal of
Securities," a Fund may record its beneficial ownership of the coupon or corpus
directly in the book-entry record-keeping system.
TERMS TO UNDERSTAND:
MATURITY - Every debt security has a stated maturity date when the issuer must
repay the amount it borrowed (principal) from investors. Some debt securities,
however, are callable, meaning the issuer can repay the principal earlier, on
or after specified dates (call dates). Debt securities are most likely to be
called when interest rates are falling because the issuer can refinance at a
lower rate, similar to a homeowner refinancing a mortgage. The effective
maturity of a debt security is usually its nearest call date.
Mutual funds that invest in debt securities have no real maturity. Instead,
they calculate their weighted average maturity. This number is an average of
the effective or anticipated maturity of each debt security held by the mutual
fund, with the maturity of each security weighted by the percentage of the
assets of the mutual fund it represents.
DURATION - Duration is a calculation that seeks to measure the price
sensitivity of a debt security, or of a mutual fund that invests in debt
securities, to changes in interest rates. It measures sensitivity more
accurately than maturity because it takes into account the time value of cash
flows generated over the life of a debt security. Future interest payments and
principal payments are discounted to reflect their present value and then are
multiplied by the number of years they will be received to produce a value
expressed in years -- the duration. Effective duration takes into account call
features and sinking fund prepayments that may shorten the life of a debt
security.
An effective duration of four years, for example, would suggest that for each
1% reduction in interest rates at all maturity levels, the price of a security
is estimated to increase by 4%. An increase in rates by the same magnitude is
estimated to reduce the price of the security by 4%. By knowing the yield and
the effective duration of a debt
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security, one can estimate total return based on an expectation of how much
interest rates, in general, will change. While serving as a good estimator of
prospective returns, effective duration is an imperfect measure.
FACTORS AFFECTING THE VALUE OF DEBT SECURITIES - The total return of a debt
instrument is composed of two elements: the percentage change in the security's
price and interest income earned. The yield to maturity of a debt security
estimates its total return only if the price of the debt security remains
unchanged during the holding period and the coupon interest is reinvested at
the same yield to maturity. The total return of a debt instrument, therefore,
will be determined not only by how much interest is earned, but also by how
much the price of the security and interest rates change.
INTEREST RATES
The price of a debt security generally moves in the opposite direction from
interest rates (I.E., if interest rates go up, the value of the bond will go
down, and vice versa).
o PREPAYMENT RISK
This risk affects mainly mortgage-backed securities. Unlike other debt
securities, falling interest rates can adversely affect the value of
mortgage-backed securities, which may cause your share price to fall. Lower
rates motivate borrowers to pay off the instruments underlying mortgage-backed
and asset-backed securities earlier than expected, resulting in prepayments on
the securities. A Fund may then have to reinvest the proceeds from such
prepayments at lower interest rates, which can reduce its yield. The unexpected
timing of mortgage and asset-backed prepayments caused by the variations in
interest rates may also shorten or lengthen the average maturity of a Fund. If
left unattended, drifts in the average maturity of a Fund can have the
unintended effect of increasing or reducing the effective duration of the Fund,
which may adversely affect the expected performance of the Fund.
o EXTENSION RISK
The other side of prepayment risk occurs when interest rates are rising. Rising
interest rates can cause a Fund's average maturity to lengthen unexpectedly due
to a drop in mortgage prepayments. This would increase the sensitivity of a
Fund to rising rates and its potential for price declines. Extending the
average life of a mortgage-backed security increases the risk of depreciation
due to future increases in market interest rates. For these reasons,
mortgage-backed securities may be less effective than other types of U.S.
government securities as a means of "locking in" interest rates.
o CREDIT RATING
Coupon interest is offered to investors of debt securities as compensation for
assuming risk, although short-term Treasury securities, such as three-month
treasury bills, are considered "risk-free." Corporate securities offer higher
yields than Treasury securities because their payment of interest and complete
repayment of principal is less certain. The credit rating or financial
condition of an issuer may affect the value of a debt security. Generally, the
lower the quality rating of a security, the greater the risks that the issuer
will fail to pay interest and return principal. To compensate investors for
taking on increased risk, issuers with lower credit ratings usually offer their
investors a higher "risk premium" in the form of higher interest rates than
those available from comparable Treasury securities.
Changes in investor confidence regarding the certainty of interest and
principal payments of a corporate debt security will result in an adjustment to
this "risk premium." Since an issuer's outstanding debt carries a fixed coupon,
adjustments to the risk premium must occur in the price, which affects the
yield to maturity of the bond.
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If an issuer defaults or becomes unable to honor its financial obligations, the
bond may lose some or all of its value.
A security rated within the four highest rating categories by a rating agency
is called investment-grade because its issuer is more likely to pay interest
and repay principal than an issuer of a lower rated bond. Adverse economic
conditions or changing circumstances, however, may weaken the capacity of the
issuer to pay interest and repay principal. If a security is not rated or is
rated under a different system, the Adviser may determine that it is of
investment-grade. The Adviser may retain securities that are downgraded, if it
believes that keeping those securities is warranted.
Debt securities rated below investment-grade ("junk bonds") are highly
speculative securities that are usually issued by smaller, less credit worthy
and/or highly leveraged (indebted) companies. A corporation may issue a junk
bond because of a corporate restructuring or other similar event. Compared with
investment-grade bonds, junk bonds carry a greater degree of risk and are less
likely to make payments of interest and principal. Market developments and the
financial and business condition of the corporation issuing these securities
influence their price and liquidity more than changes in interest rates, when
compared to investment-grade debt securities. Insufficient liquidity in the
junk bond market may make it more difficult to dispose of junk bonds and may
cause the Funds to experience sudden and substantial price declines. A lack of
reliable, objective data or market quotations may make it more difficult to
value junk bonds accurately.
Rating agencies are organizations that assign ratings to securities based
primarily on the rating agency's assessment of the issuer's financial strength.
The Funds currently use ratings compiled by Moody's, S&P, and Fitch. Credit
ratings are only an agency's opinion, not an absolute standard of quality, and
they do not reflect an evaluation of market risk. The section "Appendix A --
Description of Ratings" contains further information concerning the ratings of
certain rating agencies and their significance.
The Adviser may use ratings produced by rating agencies as guidelines to
determine the rating of a security at the time a Fund buys it. A rating agency
may change its credit ratings at any time. The Adviser monitors the rating of
the security and will take appropriate actions if a rating agency reduces the
security's rating. The Funds are not obligated to dispose of securities whose
issuers subsequently are in default or which are downgraded. The Funds may
invest in securities of any rating.
DERIVATIVES
Derivatives are financial instruments whose value is based on an underlying
asset, such as a stock or a bond, or an underlying economic factor, such as an
interest rate or a market benchmark. Unless otherwise stated in the Funds'
prospectuses, the Funds may use derivatives for risk management purposes,
including to gain exposure to various markets in a cost efficient manner, to
reduce transaction costs or to remain fully invested. A Fund may also invest in
derivatives to protect it from broad fluctuations in market prices, interest
rates or foreign currency exchange rates (a practice known as "hedging"). When
hedging is successful, a Fund will have offset any depreciation in the value of
its portfolio securities by the appreciation in the value of the derivative
position. Although techniques other than the sale and purchase of derivatives
could be used to control the exposure of a Fund to market fluctuations, the use
of derivatives may be a more effective means of hedging this exposure.
Because many derivatives have a leverage or borrowing component, adverse
changes in the value or level of the underlying asset, reference rate, or index
can result in a loss substantially greater than the amount invested in the
derivative itself. Certain derivatives have the potential for unlimited loss,
regardless of the size of the initial investment. Accordingly, certain
derivative transactions may be considered to constitute borrowing transactions
for purposes of the Investment Company Act of 1940, as amended ("1940 Act").
Such a derivative transaction will not be considered to constitute the issuance
of a "senior security" by a Fund, and therefore such transaction will not be
subject to the 300% asset coverage requirement otherwise applicable to
borrowings by the Fund, if the
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Fund covers the transaction or segregates sufficient liquid assets (or such
assets are "earmarked" on the Fund's books) in accordance with the requirements
and interpretations of the SEC and its staff.
As a result of recent amendments to rules under the Commodity Exchange
Act("CEA") by the Commodity Futures Trading Commission ("CFTC"), a Fund must
either operate within certain guidelines and restrictions with respect to the
Fund's use of futures, options on such futures, commodity options and certain
swaps, or the Adviser will be subject to registration with the CFTC as a
"commodity pool operator" ("CPO").
Consistent with the CFTC's new regulations, the Trust, on behalf of the Funds,
has claimed an exclusion from the definition of the term CPO under the CEA and,
therefore, the Funds are not subject to registration or regulation as CPOs
under the CEA. As a result, the Funds will operate within certain guidelines
and restrictions with respect to their use of futures, options on such futures,
commodity options and certain swaps.
TYPES OF DERIVATIVES:
FUTURES - A futures contract is an agreement between two parties whereby one
party sells and the other party agrees to buy a specified amount of a financial
instrument at an agreed upon price and time. The financial instrument
underlying the contract may be a stock, stock index, bond, bond index, interest
rate, foreign exchange rate or other similar instrument. Agreeing to buy the
underlying financial information is called buying a futures contract or taking
a long position in the contract. Likewise, agreeing to sell the underlying
financial instrument is called selling a futures contract or taking a short
position in the contract.
Futures contracts are traded in the United States on commodity exchanges or
boards of trade - known as "contract markets" - approved for such trading and
regulated by the Commodity Futures Trading Commission ("CFTC"). These contract
markets standardize the terms, including the maturity date and underlying
financial instrument, of all futures contracts.
Unlike other securities, the parties to a futures contract do not have to pay
for or deliver the underlying financial instrument until some future date (the
delivery date). Contract markets require both the purchaser and seller to
deposit "initial margin" with a futures broker, known as a futures commission
merchant or custodian bank, when they enter into the contract. Initial margin
deposits are typically equal to a percentage of the contract's value. After
they open a futures contract, the parties to the transaction must compare the
purchase price of the contract to its daily market value. If the value of the
futures contract changes in such a way that a party's position declines, that
party must make additional "variation margin" payments so that the margin
payment is adequate. On the other hand, the value of the contract may change in
such a way that there is excess margin on deposit, possibly entitling the party
that has a gain to receive all or a portion of this amount. This process is
known as "marking to the market."
Although the actual terms of a futures contract call for the actual delivery of
and payment for the underlying security, in many cases the parties may close
the contract early by taking an opposite position in an identical contract. If
the sale price upon closing out the contract is less than the original purchase
price, the person closing out the contract will realize a loss. If the sale
price upon closing out the contract is more than the original purchase price,
the person closing out the contract will realize a gain. If the purchase price
upon closing out the contract is more than the original sale price, the person
closing out the contract will realize a loss. If the purchase price upon
closing out the contract is less than the original sale price, the person
closing out the contract will realize a gain.
A Fund may incur commission expenses when it opens or closes a futures
position.
OPTIONS - An option is a contract between two parties for the purchase and sale
of a financial instrument for a specified price (known as the "strike price" or
"exercise price") at any time during the option period. Unlike a
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futures contract, an option grants a right (not an obligation) to buy or sell a
financial instrument. Generally, a seller of an option can grant a buyer two
kinds of rights: a "call" (the right to buy the security) or a "put" (the right
to sell the security). Options have various types of underlying instruments,
including specific securities, indices of securities prices, foreign
currencies, interest rates and futures contracts. Options may be traded on an
exchange (exchange-traded-options) or may be customized agreements between the
parties (over-the-counter or "OTC" options). Like futures, a financial
intermediary, known as a clearing corporation, financially backs
exchange-traded options. However, OTC options have no such intermediary and are
subject to the risk that the counter-party will not fulfill its obligations
under the contract.
o PURCHASING PUT AND CALL OPTIONS
When a Fund purchases a put option, it buys the right to sell the instrument
underlying the option at a fixed strike price. In return for this right, the
Fund pays the current market price for the option (known as the "option
premium"). A Fund may purchase put options to offset or hedge against a decline
in the market value of its securities ("protective puts") or to benefit from a
decline in the price of securities that it does not own. A Fund would
ordinarily realize a gain if, during the option period, the value of the
underlying securities decreased below the exercise price sufficiently to cover
the premium and transaction costs. However, if the price of the underlying
instrument does not fall enough to offset the cost of purchasing the option, a
put buyer would lose the premium and related transaction costs.
Call options are similar to put options, except that a Fund obtains the right
to purchase, rather than sell, the underlying instrument at the option's strike
price. A Fund would normally purchase call options in anticipation of an
increase in the market value of securities it owns or wants to buy. A Fund
would ordinarily realize a gain if, during the option period, the value of the
underlying instrument exceeded the exercise price plus the premium paid and
related transaction costs. Otherwise, a Fund would realize either no gain or a
loss on the purchase of the call option.
The purchaser of an option may terminate its position by:
o Allowing it to expire and losing its entire premium;
o Exercising the option and either selling (in the case of a put
option) or buying (in the case of a call option) the underlying
instrument at the strike price; or
o Closing it out in the secondary market at its current price.
o SELLING (WRITING) PUT AND CALL OPTIONS
When a Fund writes a call option it assumes an obligation to sell specified
securities to the holder of the option at a specified price if the option is
exercised at any time before the expiration date. Similarly, when a Fund writes
a put option it assumes an obligation to purchase specified securities from the
option holder at a specified price if the option is exercised at any time
before the expiration date. A Fund may terminate its position in an
exchange-traded put option before exercise by buying an option identical to the
one it has written. Similarly, it may cancel an OTC option by entering into an
offsetting transaction with the counter-party to the option.
A Fund could try to hedge against an increase in the value of securities it
would like to acquire by writing a put option on those securities. If security
prices rise, a Fund would expect the put option to expire and the premium it
received to offset the increase in the security's value. If security prices
remain the same over time, a Fund would hope to profit by closing out the put
option at a lower price. If security prices fall, a Fund may lose an amount of
money equal to the difference between the value of the security and the premium
it received. Writing covered put
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options may deprive a Fund of the opportunity to profit from a decrease in the
market price of the securities it would like to acquire.
The characteristics of writing call options are similar to those of writing put
options, except that call writers expect to profit if prices remain the same or
fall. A Fund could try to hedge against a decline in the value of securities it
already owns by writing a call option. If the price of that security falls as
expected, the Fund would expect the option to expire and the premium it
received to offset the decline of the security's value. However, a Fund must be
prepared to deliver the underlying instrument in return for the strike price,
which may deprive it of the opportunity to profit from an increase in the
market price of the securities it holds.
The Funds are permitted only to write covered options. At the time of selling
the call option, the Funds may cover the option by owning, among other things:
o The underlying security (or securities convertible into the
underlying security without additional consideration), index, interest
rate, foreign currency or futures contract;
o A call option on the same security or index with the same or lesser
exercise price;
o A call option on the same security or index with a greater exercise
price and segregating cash or liquid securities in an amount equal to
the difference between the exercise prices;
o Cash or liquid securities equal to at least the market value of the
optioned securities, interest rate, foreign currency or futures
contract; or
o In the case of an index, the portfolio of securities that corresponds
to the index.
At the time of selling a put option, a Fund may cover the put option by, among
other things:
o Entering into a short position in the underlying security;
o Purchasing a put option on the same security, index, interest rate,
foreign currency or futures contract with the same or greater exercise
price;
o Purchasing a put option on the same security, index, interest rate,
foreign currency or futures contract with a lesser exercise price and
segregating cash or liquid securities in an amount equal to the
difference between the exercise prices; or
o Maintaining the entire exercise price in liquid securities.
o OPTIONS ON SECURITIES INDICES
Options on securities indices are similar to options on securities, except that
the exercise of securities index options requires cash settlement payments and
does not involve the actual purchase or sale of securities. In addition,
securities index options are designed to reflect price fluctuations in a group
of securities or segment of the securities market rather than price
fluctuations in a single security.
o OPTIONS ON FUTURES
An option on a futures contract provides the holder with the right to buy a
futures contract (in the case of a call option) or sell a futures contract (in
the case of a put option) at a fixed time and price. Upon exercise of the
option by the holder, the contract market clearing house establishes a
corresponding short position for the writer
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of the option (in the case of a call option) or a corresponding long position
(in the case of a put option). If the option is exercised, the parties will be
subject to the futures contracts. In addition, the writer of an option on a
futures contract is subject to initial and variation margin requirements on the
option position. Options on futures contracts are traded on the same contract
market as the underlying futures contract.
The buyer or seller of an option on a futures contract may terminate the option
early by purchasing or selling an option of the same series (I.E., the same
exercise price and expiration date) as the option previously purchased or sold.
The difference between the premiums paid and received represents the trader's
profit or loss on the transaction.
A Fund may purchase put and call options on futures contracts instead of
selling or buying futures contracts. A Fund may buy a put option on a futures
contract for the same reasons it would sell a futures contract. It also may
purchase such put options in order to hedge a long position in the underlying
futures contract. A Fund may buy call options on futures contracts for the same
purpose as the actual purchase of the futures contracts, such as in
anticipation of favorable market conditions.
A Fund may write a call option on a futures contract to hedge against a decline
in the prices of the instrument underlying the futures contracts. If the price
of the futures contract at expiration were below the exercise price, the Fund
would retain the option premium, which would offset, in part, any decline in
the value of its portfolio securities.
The writing of a put option on a futures contract is similar to the purchase of
the futures contracts, except that, if the market price declines, the Fund
would pay more than the market price for the underlying instrument. The premium
received on the sale of the put option, less any transaction costs, would
reduce the net cost to a Fund.
o COMBINED POSITIONS
A Fund may purchase and write options in combination with each other, or in
combination with futures or forward contracts, to adjust the risk and return
characteristics of the overall position. For example, a Fund could construct a
combined position whose risk and return characteristics are similar to selling a
futures contract by purchasing a put option and writing a call option on the
same underlying instrument. Alternatively, a Fund could write a call option at
one strike price and buy a call option at a lower price to reduce the risk of
the written call option in the event of a substantial price increase. Because
combined options positions involve multiple trades, they result in higher
transaction costs and may be more difficult to open and close out.
o FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
A forward foreign currency contract involves an obligation to purchase or sell a
specific amount of currency at a future date or date range at a specific price.
In the case of a cancelable forward contract, the holder has the unilateral
right to cancel the contract at maturity by paying a specified fee. Forward
foreign currency exchange contracts differ from foreign currency futures
contracts in certain respects. Unlike futures contracts, forward contracts:
o Do not have standard maturity dates or amounts (I.E., the parties to
the contract may fix the maturity date and the amount);
o Are traded in the inter-bank markets conducted directly between
currency traders (usually large commercial banks) and their customers,
as opposed to futures contracts which are traded only on exchanges
regulated by the CFTC;
o Do not require an initial margin deposit; and
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o May be closed by entering into a closing transaction with the
currency trader who is a party to the original forward contract, as
opposed to a commodities exchange.
FOREIGN CURRENCY HEDGING STRATEGIES - A "settlement hedge" or "transaction
hedge" is designed to protect a Fund against an adverse change in foreign
currency values between the date a security is purchased or sold and the date
on which payment is made or received. Entering into a forward contract for the
purchase or sale of the amount of foreign currency involved in an underlying
security transaction for a fixed amount of U.S. dollars "locks in" the U.S.
dollar price of the security. A Fund may also use forward contracts to purchase
or sell a foreign currency when it anticipates purchasing or selling securities
denominated in foreign currency, even if it has not yet selected the specific
investments.
A Fund may use forward contracts to hedge against a decline in the value of
existing investments denominated in foreign currency. Such a hedge, sometimes
referred to as a "position hedge," would tend to offset both positive and
negative currency fluctuations, but would not offset changes in security values
caused by other factors. A Fund could also hedge the position by selling
another currency expected to perform similarly to the currency in which a
Fund's investment is denominated. This type of hedge, sometimes referred to as
a "proxy hedge," could offer advantages in terms of cost, yield, or efficiency,
but generally would not hedge currency exposure as effectively as a direct
hedge into U.S. dollars. Proxy hedges may result in losses if the currency used
to hedge does not perform similarly to the currency in which the hedged
securities are denominated.
Transaction and position hedging do not eliminate fluctuations in the
underlying prices of the securities that a Fund owns or intends to purchase or
sell. They simply establish a rate of exchange that one can achieve at some
future point in time. Additionally, these techniques tend to minimize the risk
of loss due to a decline in the value of the hedged currency and to limit any
potential gain that might result from the increase in value of such currency.
A Fund may enter into forward contracts to shift its investment exposure from
one currency into another. Such transactions may call for the delivery of one
foreign currency in exchange for another foreign currency, including currencies
in which its securities are not then denominated. This may include shifting
exposure from U.S. dollars to a foreign currency, or from one foreign currency
to another foreign currency. This type of strategy, sometimes known as a
"cross-hedge," will tend to reduce or eliminate exposure to the currency that
is sold, and increase exposure to the currency that is purchased. Cross-hedges
may protect against losses resulting from a decline in the hedged currency, but
will cause a Fund to assume the risk of fluctuations in the value of the
currency it purchases. Cross-hedging transactions also involve the risk of
imperfect correlation between changes in the values of the currencies
involved.
It is difficult to forecast with precision the market value of portfolio
securities at the expiration or maturity of a forward or futures contract.
Accordingly, a Fund may have to purchase additional foreign currency on the
spot market if the market value of a security it is hedging is less than the
amount of foreign currency it is obligated to deliver. Conversely, a Fund may
have to sell on the spot market some of the foreign currency it received upon
the sale of a security if the market value of such security exceeds the amount
of foreign currency it is obligated to deliver.
SWAPS, CAPS, COLLARS AND FLOORS
SWAP AGREEMENTS - A swap is a financial instrument that typically involves the
exchange of cash flows between two parties on specified dates (settlement
dates), where the cash flows are based on agreed-upon prices, rates, indices,
etc. The nominal amount on which the cash flows are calculated is called the
notional amount. Swaps are individually negotiated and structured to include
exposure to a variety of different types of investments or market factors, such
as interest rates, foreign currency rates, mortgage securities, corporate
borrowing rates, security prices or inflation rates.
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Swap agreements may increase or decrease the overall volatility of the
investments of a Fund and its share price. The performance of swap agreements
may be affected by a change in the specific interest rate, currency, or other
factors that determine the amounts of payments due to and from a Fund. If a
swap agreement calls for payments by a Fund, the Fund must be prepared to make
such payments when due. In addition, if the counter-party's creditworthiness
declined, the value of a swap agreement would be likely to decline, potentially
resulting in losses.
Generally, swap agreements have a fixed maturity date that will be agreed upon
by the parties. The agreement can be terminated before the maturity date under
certain circumstances, such as default by one of the parties or insolvency,
among others, and can be transferred by a party only with the prior written
consent of the other party. A Fund may be able to eliminate its exposure under
a swap agreement either by assignment or by other disposition, or by entering
into an offsetting swap agreement with the same party or a similarly
creditworthy party. If the counter-party is unable to meet its obligations
under the contract, declares bankruptcy, defaults or becomes insolvent, a Fund
may not be able to recover the money it expected to receive under the contract.
The Fund will not enter into any swap agreement unless the Adviser believes
that the other party to the transaction is creditworthy.
A swap agreement can be a form of leverage, which can magnify a Fund's gains or
losses. In order to reduce the risk associated with leveraging, a Fund may
cover its current obligations under swap agreements according to guidelines
established by the Securities and Exchange Commission (the "SEC"). If a Fund
enters into a swap agreement on a net basis, it will segregate assets with a
daily value at least equal to the excess, if any, of the Fund's accrued
obligations under the swap agreement over the accrued amount the Fund is
entitled to receive under the agreement. If a Fund enters into a swap agreement
on other than a net basis, it will segregate assets with a value equal to the
full amount of the Fund's accrued obligations under the agreement.
o EQUITY SWAPS
In a typical equity swap, one party agrees to pay another party the return on a
stock, stock index or basket of stocks in return for a specified interest rate.
By entering into an equity index swap, for example, the index receiver can
gain exposure to stocks making up the index of securities without actually
purchasing those stocks. Equity index swaps involve not only the risk
associated with investment in the securities represented in the index, but also
the risk that the performance of such securities, including dividends, will not
exceed the return on the interest rate that a Fund will be committed to pay.
o TOTAL RETURN SWAPS
Total return swaps are contracts in which one party agrees to make payments of
the total return from a reference instrument -- which may be a single asset, a
pool of assets or an index of assets -- during a specified period, in return
for payments equal to a fixed or floating rate of interest or the total return
from another underlying reference instrument. The total return includes
appreciation or depreciation on the underlying asset, plus any interest or
dividend payments. Payments under the swap are based upon an agreed upon
principal amount but, since the principal amount is not exchanged, it
represents neither an asset nor a liability to either counterparty, and is
referred to as notional. Total return swaps are marked to market daily using
different sources, including quotations from counterparties, pricing services,
brokers or market makers. The unrealized appreciation (depreciation) related
to the change in the valuation of the notional amount of the swap is combined
with the amount due to a Fund at termination or settlement. The primary risks
associated with total return swaps are credit risks (if the counterparty fails
to meet its obligations) and market risk (if there is no liquid market for the
agreement or unfavorable changes occur to the underlying reference
instrument).
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o INTEREST RATE SWAPS
Interest rate swaps are financial instruments that involve the exchange of one
type of interest rate for another type of interest rate cash flow on specified
dates in the future. Some of the different types of interest rate swaps are
"fixed-for floating rate swaps," "termed basis swaps" and "index amortizing
swaps." Fixed-for floating rate swaps involve the exchange of fixed interest
rate cash flows for floating rate cash flows. Termed basis swaps entail cash
flows to both parties based on floating interest rates, where the interest rate
indices are different. Index amortizing swaps are typically fixed-for floating
swaps where the notional amount changes if certain conditions are met.
Like a traditional investment in a debt security, a Fund could lose money by
investing in an interest rate swap if interest rates change adversely. For
example, if a Fund enters into a swap where it agrees to exchange a floating
rate of interest for a fixed rate of interest, a Fund may have to pay more
money than it receives. Similarly, if a Fund enters into a swap where it agrees
to exchange a fixed rate of interest for a floating rate of interest, a Fund
may receive less money than it has agreed to pay.
o CURRENCY SWAPS
A currency swap is an agreement between two parties in which one party agrees to
make interest rate payments in one currency and the other promises to make
interest rate payments in another currency. A Fund may enter into a currency
swap when it has one currency and desires a different currency. Typically, the
interest rates that determine the currency swap payments are fixed, although
occasionally one or both parties may pay a floating rate of interest. Unlike an
interest rate swap, however, the principal amounts are exchanged at the
beginning of the contract and returned at the end of the contract. Changes in
foreign exchange rates and changes in interest rates, as described above may
negatively affect currency swaps.
CAPS, COLLARS AND FLOORS - Caps and floors have an effect similar to buying or
writing options. In a typical cap or floor agreement, one party agrees to make
payments only under specified circumstances, usually in return for payment of a
fee by the other party. For example, the buyer of an interest rate cap obtains
the right to receive payments to the extent that a specified interest rate
exceeds an agreed-upon level. The seller of an interest rate floor is obligated
to make payments to the extent that a specified interest rate falls below an
agreed-upon level. An interest rate collar combines elements of buying a cap
and selling a floor.
RISKS OF DERIVATIVES:
While transactions in derivatives may reduce certain risks, these transactions
themselves entail certain other risks. For example, unanticipated changes in
interest rates, securities prices or currency exchange rates may result in a
poorer overall performance of a Fund than if it had not entered into any
derivatives transactions. Derivatives may magnify a Fund's gains or losses,
causing it to make or lose substantially more than it invested.
When used for hedging purposes, increases in the value of the securities a Fund
holds or intends to acquire should offset any losses incurred with a
derivative. Purchasing derivatives for purposes other than hedging could expose
a Fund to greater risks.
CORRELATION OF PRICES - A Fund's ability to hedge its securities through
derivatives depends on the degree to which price movements in the underlying
index or instrument correlate with price movements in the relevant securities.
In the case of poor correlation, the price of the securities a Fund is hedging
may not move in the same amount, or even in the same direction as the hedging
instrument. The Adviser will try to minimize this risk by investing only in
those contracts whose behavior it expects to resemble with the portfolio
securities it is trying to hedge. However, if a Fund's prediction of interest
and currency rates, market value, volatility or other economic factors is
incorrect, a Fund may lose money, or may not make as much money as it expected.
S-16
Derivative prices can diverge from the prices of their underlying instruments,
even if the characteristics of the underlying instruments are very similar to
the derivative. Listed below are some of the factors that may cause such a
divergence:
o current and anticipated short-term interest rates, changes in volatility
of the underlying instrument, and the time remaining until expiration of
the contract;
o a difference between the derivatives and securities markets, including
different levels of demand, how the instruments are traded, the imposition
of daily price fluctuation limits or trading of an instrument stops; and
o differences between the derivatives, such as different margin
requirements, different liquidity of such markets and the participation of
speculators in such markets.
Derivatives based upon a narrower index of securities, such as those of a
particular industry group, may present greater risk than derivatives based on a
broad market index. Since narrower indices are made up of a smaller number of
securities, they are more susceptible to rapid and extreme price fluctuations
because of changes in the value of those securities.
While currency futures and options values are expected to correlate with
exchange rates, they may not reflect other factors that affect the value of the
investments of a Fund. A currency hedge, for example, should protect a
yen-denominated security from a decline in the yen, but will not protect a Fund
against a price decline resulting from deterioration in the issuer's
creditworthiness. Because the value of a Fund's foreign-denominated investments
changes in response to many factors other than exchange rates, it may not be
possible to match the amount of currency options and futures to the value of a
Fund's investments precisely over time.
LACK OF LIQUIDITY - Before a futures contract or option is exercised or
expires, a Fund can terminate it only by entering into a closing purchase or
sale transaction. Moreover, a Fund may close out a futures contract only on the
exchange the contract was initially traded. Although a Fund intends to purchase
options and futures only where there appears to be an active market, there is
no guarantee that such a liquid market will exist. If there is no secondary
market for the contract, or the market is illiquid, a Fund may not be able to
close out its position. In an illiquid market, a Fund may:
o have to sell securities to meet its daily margin requirements at a time
when it is disadvantageous to do so;
o have to purchase or sell the instrument underlying the contract;
o not be able to hedge its investments; and/or
o not be able to realize profits or limit its losses.
Derivatives may become illiquid (I.E., difficult to sell at a desired time and
price) under a variety of market conditions. For example:
o an exchange may suspend or limit trading in a particular derivative
instrument, an entire category of derivatives or all derivatives, which
sometimes occurs because of increased market volatility;
o unusual or unforeseen circumstances may interrupt normal operations of an
exchange;
o the facilities of the exchange may not be adequate to handle current
trading volume;
S-17
o equipment failures, government intervention, insolvency of a brokerage
firm or clearing house or other occurrences may disrupt normal trading
activity; or
o investors may lose interest in a particular derivative or category of
derivatives.
MANAGEMENT RISK - If the Adviser incorrectly predicts stock market and interest
rate trends, a Fund may lose money by investing in derivatives. For example, if
a Fund were to write a call option based on the Adviser's expectation that the
price of the underlying security would fall, but the price were to rise
instead, a Fund could be required to sell the security upon exercise at a price
below the current market price. Similarly, if a Fund were to write a put option
based on the Adviser's expectation that the price of the underlying security
would rise, but the price were to fall instead, a Fund could be required to
purchase the security upon exercise at a price higher than the current market
price.
PRICING RISK - At times, market conditions might make it hard to value some
investments. For example, if a Fund has valued its securities too high, you may
end up paying too much for Fund shares when you buy into a Fund. If a Fund
underestimates its price, you may not receive the full market value for your
Fund shares when you sell.
MARGIN - Because of the low margin deposits required upon the opening of a
derivative position, such transactions involve an extremely high degree of
leverage. Consequently, a relatively small price movement in a derivative may
result in an immediate and substantial loss (as well as gain) to a Fund and it
may lose more than it originally invested in the derivative.
If the price of a futures contract changes adversely, a Fund may have to sell
securities at a time when it is disadvantageous to do so to meet its minimum
daily margin requirement. A Fund may lose its margin deposits if a
broker-dealer with whom it has an open futures contract or related option
becomes insolvent or declares bankruptcy.
VOLATILITY AND LEVERAGE - The prices of derivatives are volatile (I.E., they
may change rapidly, substantially and unpredictably) and are influenced by a
variety of factors, including:
o actual and anticipated changes in interest rates;
o fiscal and monetary policies; and
o national and international political events.
Most exchanges limit the amount by which the price of a derivative can change
during a single trading day. Daily trading limits establish the maximum amount
that the price of a derivative may vary from the settlement price of that
derivative at the end of trading on the previous day. Once the price of a
derivative reaches this value, a Fund may not trade that derivative at a price
beyond that limit. The daily limit governs only price movements during a given
day and does not limit potential gains or losses. Derivative prices have
occasionally moved to the daily limit for several consecutive trading days,
preventing prompt liquidation of the derivative.
Because many derivatives have a leverage or borrowing component, adverse
changes in the value or level of the underlying asset, reference rate, or index
can result in a loss substantially greater than the amount invested in the
derivative itself. Certain derivatives have the potential for unlimited loss,
regardless of the size of the initial investment. Accordingly, certain
derivative transactions may be considered to constitute borrowing transactions
for purposes of the 1940 Act. Such a derivative transaction will not be
considered to constitute the issuance of a "senior security" by the Fund, and
therefore such a transaction will not be subject to the 300% asset coverage
requirement otherwise applicable to borrowings by a Fund, if the Fund covers
the transaction or segregates sufficient liquid assets in accordance with these
requirements, and subject to certain risks.
S-18
EQUITY SECURITIES
TYPES OF EQUITY SECURITIES:
COMMON STOCKS - Common stocks represent units of ownership in a company. Common
stocks usually carry voting rights and earn dividends. Unlike preferred stocks,
which are described below, dividends on common stocks are not fixed but are
declared at the discretion of the company's board of directors.
PREFERRED STOCKS - Preferred stocks are also units of ownership in a company.
Preferred stocks normally have preference over common stock in the payment of
dividends and the liquidation of the company. However, in all other respects,
preferred stocks are subordinated to the liabilities of the issuer. Unlike
common stocks, preferred stocks are generally not entitled to vote on corporate
matters. Types of preferred stocks include adjustable-rate preferred stock,
fixed dividend preferred stock, perpetual preferred stock, and sinking fund
preferred stock. Generally, the market values of preferred stock with a fixed
dividend rate and no conversion element varies inversely with interest rates
and perceived credit risk.
CONVERTIBLE SECURITIES - Convertible securities are securities that may be
exchanged for, converted into, or exercised to acquire a predetermined number
of shares of the issuer's common stock at a Fund's option during a specified
time period (such as convertible preferred stocks, convertible debentures and
warrants). A convertible security is generally a fixed income security that is
senior to common stock in an issuer's capital structure, but is usually
subordinated to similar non-convertible securities. In exchange for the
conversion feature, many corporations will pay a lower rate of interest on
convertible securities than debt securities of the same corporation. In
general, the market value of a convertible security is at least the higher of
its "investment value" (I.E., its value as a fixed income security) or its
"conversion value" (I.E., its value upon conversion into its underlying common
stock).
Convertible securities are subject to the same risks as similar securities
without the convertible feature. The price of a convertible security is more
volatile during times of steady interest rates than other types of debt
securities. The price of a convertible security tends to increase as the market
value of the underlying stock rises, whereas it tends to decrease as the market
value of the underlying common stock declines.
A synthetic convertible security is a combination investment in which a Fund
purchases both (i) high-grade cash equivalents or a high grade debt obligation
of an issuer or U.S. government securities and (ii) call options or warrants on
the common stock of the same or different issuer with some or all of the
anticipated interest income from the associated debt obligation that is earned
over the holding period of the option or warrant.
While providing a fixed income stream (generally higher in yield than the
income derivable from common stock but lower than that afforded by a similar
non-convertible security), a convertible security also affords an investor the
opportunity, through its conversion feature, to participate in the capital
appreciation attendant upon a market price advance in the convertible
security's underlying common stock. A synthetic convertible position has
similar investment characteristics, but may differ with respect to credit
quality, time to maturity, trading characteristics, and other factors. Because
a Fund will create synthetic convertible positions only out of high grade fixed
income securities, the credit rating associated with a Fund's synthetic
convertible investments is generally expected to be higher than that of the
average convertible security, many of which are rated below high grade.
However, because the options used to create synthetic convertible positions
will generally have expirations between one month and three years of the time
of purchase, the maturity of these positions will generally be shorter than
average for convertible securities. Since the option component of a convertible
security or synthetic convertible position is a wasting asset (in the sense of
losing "time value" as maturity approaches), a synthetic convertible position
may lose such value more rapidly than a convertible security of longer
maturity; however, the gain in option value due to appreciation of the
underlying stock may exceed such time value loss, the market price of the
option component generally reflects these differences in maturities, and the
Adviser takes such differences into account
S-19
when evaluating such positions. When a synthetic convertible position "matures"
because of the expiration of the associated option, a Fund may extend the
maturity by investing in a new option with longer maturity on the common stock
of the same or different issuer. If a Fund does not so extend the maturity of a
position, it may continue to hold the associated fixed income security.
RIGHTS AND WARRANTS - A right is a privilege granted to existing shareholders
of a corporation to subscribe to shares of a new issue of common stock before
it is issued. Rights normally have a short life of usually two to four weeks,
are freely transferable and entitle the holder to buy the new common stock at a
lower price than the public offering price. Warrants are securities that are
usually issued together with a debt security or preferred stock and that give
the holder the right to buy proportionate amount of common stock at a specified
price. Warrants are freely transferable and are traded on major exchanges.
Unlike rights, warrants normally have a life that is measured in years and
entitles the holder to buy common stock of a company at a price that is usually
higher than the market price at the time the warrant is issued. Corporations
often issue warrants to make the accompanying debt security more attractive.
An investment in warrants and rights may entail greater risks than certain
other types of investments. Generally, rights and warrants do not carry the
right to receive dividends or exercise voting rights with respect to the
underlying securities, and they do not represent any rights in the assets of
the issuer. In addition, their value does not necessarily change with the value
of the underlying securities, and they cease to have value if they are not
exercised on or before their expiration date. Investing in rights and warrants
increases the potential profit or loss to be realized from the investment as
compared with investing the same amount in the underlying securities.
RISKS OF INVESTING IN EQUITY SECURITIES:
GENERAL RISKS OF INVESTING IN STOCKS - While investing in stocks allows
investors to participate in the benefits of owning a company, such investors
must accept the risks of ownership. Unlike bondholders, who have preference to
a company's earnings and cash flow, preferred stockholders, followed by common
stockholders in order of priority, are entitled only to the residual amount
after a company meets its other obligations. For this reason, the value of a
company's stock will usually react more strongly to actual or perceived changes
in the company's financial condition or prospects than its debt obligations.
Stockholders of a company that fares poorly can lose money.
Stock markets tend to move in cycles with short or extended periods of rising
and falling stock prices. The value of a company's stock may fall because of:
o Factors that directly relate to that company, such as decisions made by
its management or lower demand for the company's products or services;
o Factors affecting an entire industry, such as increases in production
costs; and
o Changes in general financial market conditions that are relatively
unrelated to the company or its industry, such as changes in interest
rates, currency exchange rates or inflation rates.
Because preferred stock is generally junior to debt securities and other
obligations of the issuer, deterioration in the credit quality of the issuer
will cause greater changes in the value of a preferred stock than in a more
senior debt security with similar stated yield characteristics.
SMALL- AND MEDIUM-SIZED COMPANIES - Investors in small- and medium-sized
companies typically take on greater risk and price volatility than they would
by investing in larger, more established companies. This increased risk may be
due to the greater business risks of their small or medium size, limited
markets and financial resources, narrow product lines and frequent lack of
management depth. The securities of small- and
S-20
medium-sized companies are often traded in the over-the-counter market and
might not be traded in volumes typical of securities traded on a national
securities exchange. Thus, the securities of small and medium capitalization
companies are likely to be less liquid, and subject to more abrupt or erratic
market movements, than securities of larger, more established companies.
TECHNOLOGY COMPANIES - Stocks of technology companies have tended to be subject
to greater volatility than securities of companies that are not dependent upon
or associated with technological issues. Technology companies operate in
various industries. Since these industries frequently share common
characteristics, an event or issue affecting one industry may significantly
influence other, related industries. For example, technology companies may be
strongly affected by worldwide scientific or technological developments and
their products and services may be subject to governmental regulation or
adversely affected by governmental policies.
INITIAL PUBLIC OFFERINGS ("IPOS") - A Fund may invest a portion of its assets
in securities of companies offering shares in IPOs. IPOs may have a magnified
performance impact on a Fund with a small asset base. The impact of IPOs on a
Fund's performance likely will decrease as the Fund's asset size increases,
which could reduce the Fund's total returns. IPOs may not be consistently
available to a Fund for investing, particularly as the Fund's asset base grows.
Because IPO shares frequently are volatile in price, a Fund may hold IPO shares
for a very short period of time. This may increase the turnover of a Fund's
portfolio and may lead to increased expenses for a Fund, such as commissions
and transaction costs. By selling IPO shares, a Fund may realize taxable gains
it will subsequently distribute to shareholders. In addition, the market for
IPO shares can be speculative and/or inactive for extended periods of time. The
limited number of shares available for trading in some IPOs may make it more
difficult for a Fund to buy or sell significant amounts of shares without an
unfavorable impact on prevailing prices. Holders of IPO shares can be affected
by substantial dilution in the value of their shares, by sales of additional
shares and by concentration of control in existing management and principal
shareholders.
A Fund's investment in IPO shares may include the securities of unseasoned
companies (companies with less than three years of continuous operations),
which presents risks considerably greater than common stocks of more
established companies. These companies may have limited operating histories and
their prospects for profitability may be uncertain. These companies may be
involved in new and evolving businesses and may be vulnerable to competition
and changes in technology, markets and economic conditions. They may be more
dependent on key managers and third parties and may have limited product
lines.
FOREIGN SECURITIES
Foreign securities are debt and equity securities that are traded in markets
outside of the U.S. The markets in which these securities are located can be
developed or emerging. Investors can invest in foreign securities in a number
of ways:
o They can invest directly in foreign securities denominated in a foreign
currency;
o They can invest in American Depositary Receipts, European Depositary
Receipts and other similar global instruments; and
o They can invest in investment funds.
TYPES OF FOREIGN SECURITIES:
AMERICAN DEPOSITARY RECEIPTS ("ADRS") -- ADRs, as well as other "hybrid" forms
of ADRs, including European Depositary Receipts ("EDRs") and Global Depositary
Receipts ("GDRs") are certificates evidencing ownership of shares of a foreign
issuer. These certificates are issued by depository banks and generally trade
on an established market in the U.S. or elsewhere. A custodian bank or similar
financial institution in the issuer's
S-21
home country holds the underlying shares in trust. The depository bank may not
have physical custody of the underlying securities at all times and may charge
fees for various services, including forwarding dividends and interest and
corporate actions. ADRs are alternatives to directly purchasing the underlying
foreign securities in their national markets and currencies. ADRs are subject
to many of the risks associated with investing directly in foreign securities.
EDRs are similar to ADRs, except that they are typically issued by European
banks or trust companies.
Investments in the securities of foreign issuers may subject a Fund to
investment risks that differ in some respects from those related to investments
in securities of U.S. issuers. Such risks include future adverse political and
economic developments, possible imposition of withholding taxes on income,
possible seizure, nationalization or expropriation of foreign deposits,
possible establishment of exchange controls or taxation at the source or
greater fluctuation in value due to changes in exchange rates. Foreign issuers
of securities often engage in business practices different from those of
domestic issuers of similar securities, and there may be less information
publicly available about foreign issuers. In addition, foreign issuers are,
generally speaking, subject to less government supervision and regulation and
different accounting treatment than are those in the U.S.
ADRs can be sponsored or unsponsored. While these types are similar, there are
differences regarding a holder's rights and obligations and the practices of
market participants. A depository may establish an unsponsored facility without
participation by (or acquiescence of) the underlying issuer; typically,
however, the depository requests a letter of non-objection from the underlying
issuer prior to establishing the facility. Holders of unsponsored depositary
receipts generally bear all the costs of the facility. The depository usually
charges fees upon the deposit and withdrawal of the underlying securities, the
conversion of dividends into U.S. dollars or other currency, the disposition of
non-cash distributions, and the performance of other services. Sponsored
depositary receipt facilities are created in generally the same manner as
unsponsored facilities, except that sponsored depositary receipts are
established jointly by a depository and the underlying issuer through a deposit
agreement. The deposit agreement sets out the rights and responsibilities of
the underlying issuer, the depository, and the depositary receipt holders. With
sponsored facilities, the underlying issuer typically bears some of the costs
of the depositary receipts (such as dividend payment fees of the depository),
although most sponsored depositary receipts holders may bear costs such as
deposit and withdrawal fees. Depositories of most sponsored depositary receipts
agree to distribute notices of shareholder meetings, voting instructions, and
other shareholder communications and information to the depositary receipt
holders at the underlying issuer's request. The depositary of an unsponsored
facility frequently is under no obligation to distribute shareholder
communications received from the issuer of the deposited security or to pass
through, to the holders of the receipts, voting rights with respect to the
deposited securities.
EMERGING MARKETS - An "emerging market country" is generally a country that the
International Bank for Reconstruction and Development (World Bank) and the
International Finance Corporation would consider to be an emerging or
developing country. Typically, emerging markets are in countries that are in
the process of industrialization, with lower gross national products (GNP) than
more developed countries. There are currently over 130 countries that the
international financial community generally considers to be emerging or
developing countries, approximately 40 of which currently have stock markets.
These countries generally include every nation in the world except the United
States, Canada, Japan, Australia, New Zealand and most nations located in
Western Europe.
INVESTMENT FUNDS - Some emerging countries currently prohibit direct foreign
investment in the securities of their companies. Certain emerging countries,
however, permit indirect foreign investment in the securities of companies
listed and traded on their stock exchanges through investment funds that they
have specifically authorized. Investment in these investment funds are subject
to the provisions of the 1940 Act. If a Fund invests in such investment funds,
shareholders will bear not only their proportionate share of the expenses of
the Fund (including operating expenses and the fees of the Adviser), but also
will indirectly bear similar expenses of the
S-22
underlying investment funds. In addition, these investment funds may trade at a
premium over their net asset value.
RISKS OF FOREIGN SECURITIES:
Foreign securities, foreign currencies, and securities issued by U.S. entities
with substantial foreign operations may involve significant risks in addition
to the risks inherent in U.S. investments.
POLITICAL AND ECONOMIC FACTORS - Local political, economic, regulatory, or
social instability, military action or unrest, or adverse diplomatic
developments may affect the value of foreign investments. Listed below are some
of the more important political and economic factors that could negatively
affect an investment in foreign securities:
o The economies of foreign countries may differ from the economy of the
United States in such areas as growth of gross national product, rate of
inflation, capital reinvestment, resource self-sufficiency, budget deficits
and national debt;
o Foreign governments sometimes participate to a significant degree, through
ownership interests or regulation, in their respective economies. Actions
by these governments could significantly influence the market prices of
securities and payment of dividends;
o The economies of many foreign countries are dependent on international
trade and their trading partners and they could be severely affected if
their trading partners were to enact protective trade barriers and economic
conditions;
o The internal policies of a particular foreign country may be less stable
than in the United States. Other countries face significant external
political risks, such as possible claims of sovereignty by other countries
or tense and sometimes hostile border clashes; and
o A foreign government may act adversely to the interests of U.S. investors,
including expropriation or nationalization of assets, confiscatory taxation
and other restrictions on U.S. investment. A country may restrict or
control foreign investments in its securities markets. These restrictions
could limit a fund's ability to invest in a particular country or make it
very expensive for a Fund to invest in that country. Some countries require
prior governmental approval, limit the types or amount of securities or
companies in which a foreigner can invest. Other countries may restrict the
ability of foreign investors to repatriate their investment income and
capital gains.
INFORMATION AND SUPERVISION - There is generally less publicly available
information about foreign companies than companies based in the United States.
For example, there are often no reports and ratings published about foreign
companies comparable to the ones written about U.S. companies. Foreign
companies are typically not subject to uniform accounting, auditing and
financial reporting standards, practices and requirements comparable to those
applicable to U.S. companies. The lack of comparable information makes
investment decisions concerning foreign companies more difficult and less
reliable than those concerning domestic companies.
STOCK EXCHANGE AND MARKET RISK - The Adviser anticipates that, in most cases,
an exchange or over-the-counter ("OTC") market located outside of the United
States will be the best available market for foreign securities. Foreign stock
markets, while growing in volume and sophistication, are generally not as
developed as the markets in the United States. Foreign stock markets tend to
differ from those in the United States in a number of ways.
S-23
Foreign stock markets:
o Are generally more volatile than, and not as developed or efficient as,
those in the United States;
o Have substantially less volume;
o Trade securities that tend to be less liquid and experience rapid and
erratic price movements;
o Have generally higher commissions and are subject to set minimum rates, as
opposed to negotiated rates;
o Employ trading, settlement and custodial practices less developed than
those in U.S. markets; and
o May have different settlement practices, which may cause delays and
increase the potential for failed settlements.
Foreign markets may offer less protection to shareholders than U.S. markets
because:
o Foreign accounting, auditing, and financial reporting requirements may
render a foreign corporate balance sheet more difficult to understand and
interpret than one subject to U.S. law and standards;
o Adequate public information on foreign issuers may not be available, and
it may be difficult to secure dividends and information regarding corporate
actions on a timely basis;
o In general, there is less overall governmental supervision and regulation
of securities exchanges, brokers, and listed companies than in the United
States;
o OTC markets tend to be less regulated than stock exchange markets and, in
certain countries, may be totally unregulated;
o Economic or political concerns may influence regulatory enforcement and
may make it difficult for shareholders to enforce their legal rights; and
o Restrictions on transferring securities within the United States or to
U.S. persons may make a particular security less liquid than foreign
securities of the same class that are not subject to such restrictions.
FOREIGN CURRENCY RISK - While the Funds denominate their net asset value in
U.S. dollars, the securities of foreign companies are frequently denominated in
foreign currencies. Thus, a change in the value of a foreign currency against
the U.S. dollar will result in a corresponding change in value of securities
denominated in that currency. Some of the factors that may impair the
investments denominated in a foreign currency are:
o It may be expensive to convert foreign currencies into U.S. dollars and
vice versa;
o Complex political and economic factors may significantly affect the values
of various currencies, including the U.S. dollar, and their exchange rates;
o Government intervention may increase risks involved in purchasing or
selling foreign currency options, forward contracts and futures contracts,
since exchange rates may not be free to fluctuate in response to other
market forces;
o There may be no systematic reporting of last sale information for foreign
currencies or regulatory requirement that quotations available through
dealers or other market sources be firm or revised on a timely basis;
S-24
o Available quotation information is generally representative of very large
round-lot transactions in the inter- bank market and thus may not reflect
exchange rates for smaller odd-lot transactions (less than $1 million)
where rates may be less favorable; and
o The inter-bank market in foreign currencies is a global, around-the-clock
market. To the extent that a market is closed while the markets for the
underlying currencies remain open, certain markets may not always reflect
significant price and rate movements.
TAXES - Certain foreign governments levy withholding taxes on dividend and
interest income. Although in some countries it is possible for a Fund to
recover a portion of these taxes, the portion that cannot be recovered will
reduce the income a Fund receives from its investments. The Funds do not expect
such foreign withholding taxes to have a significant impact on performance.
EMERGING MARKETS - Investing in emerging markets may magnify the risks of
foreign investing. Security prices in emerging markets can be significantly
more volatile than those in more developed markets, reflecting the greater
uncertainties of investing in less established markets and economies. In
particular, countries with emerging markets may:
o Have relatively unstable governments;
o Present greater risks of nationalization of businesses, restrictions on
foreign ownership and prohibitions on the repatriation of assets;
o Offer less protection of property rights than more developed countries;
and
o Have economies that are based on only a few industries, may be highly
vulnerable to changes in local or global trade conditions, and may suffer
from extreme and volatile debt burdens or inflation rates.
Local securities markets may trade a small number of securities and may be
unable to respond effectively to increases in trading volume, potentially
making prompt liquidation of holdings difficult or impossible at times.
INVESTMENT COMPANIES
A Fund may invest in shares of other investment companies, to the extent
permitted by applicable law and subject to certain restrictions. These
investment companies typically incur fees that are separate from those fees
incurred directly by a Fund. A Fund's purchase of such investment company
securities results in the layering of expenses, such that shareholders would
indirectly bear a proportionate share of the operating expenses of such
investment companies, including advisory fees, in addition to paying a Fund's
expenses. Unless an exception is available, Section 12(d)(1)(A) of the 1940 Act
prohibits a fund from (i) acquiring more than 3% of the voting shares of any
one investment company, (ii) investing more than 5% of its total assets in any
one investment company, and (iii) investing more than 10% of its total assets
in all investment companies combined, including its ETF investments.
For hedging or other purposes, a Fund may invest in investment companies that
seek to track the composition and/or performance of specific indexes or
portions of specific indexes. Certain of these investment companies, known as
exchange-traded funds, are traded on a securities exchange. The market prices
of index-based investments will fluctuate in accordance with changes in the
underlying portfolio securities of the investment company and also due to
supply and demand of the investment company's shares on the exchange upon which
the shares are traded. Index-based investments may not replicate or otherwise
match the composition or performance of their specified index due to
transaction costs, among other things.
S-25
Pursuant to orders issued by the SEC to each of certain iShares, Market
Vectors, Vanguard, ProShares, PowerShares, Guggenheim (formerly, Claymore),
Direxion, Wisdom Tree, Rydex, First Trust and SPDR exchange-traded funds
(collectively, the "ETFs") and procedures approved by the Board, the Funds may
invest in the ETFs in excess of the 3% limit described above, provided that the
Funds otherwise comply with the conditions of the SEC order, as it may be
amended, and any other applicable investment limitations. Neither the ETFs nor
their investment advisers make any representations regarding the advisability
of investing in the ETFs.
REPURCHASE AGREEMENTS
A repurchase agreement is an agreement in which one party sells securities to
another party in return for cash with an agreement to repurchase equivalent
securities at an agreed-upon price and on an agreed-upon future date. A Fund
may enter into repurchase agreements with financial institutions and follow
certain procedures designed to minimize the risks inherent in such agreements.
These procedures include effecting repurchase transactions only with large,
well-capitalized and well-established financial institutions deemed
creditworthy by the advisers. The repurchase agreements entered into by a Fund
will provide that the underlying collateral shall have a value equal to at
least 102% of the resale price stated in the agreement at all times. The
advisers monitor compliance with this requirement as well as the ongoing
financial condition and creditworthiness of the counterparty. Under all
repurchase agreements entered into by a Fund, the custodian or its agent must
take possession of the underlying collateral.
In the event of a default or bankruptcy by a selling financial institution, a
Fund will seek to liquidate such collateral. However, the exercising of each
Fund's right to liquidate such collateral could involve certain costs or delays
and, to the extent that proceeds from any sale upon a default of the obligation
to repurchase were less than the repurchase price, the Fund could suffer a
loss. At times, the investments of each of the Funds in repurchase agreements
may be substantial when, in the view of the advisers, liquidity or other
considerations so warrant.
REVERSE REPURCHASE AGREEMENTS
Reverse repurchase agreements involve sales by a Fund of portfolio assets
concurrently with an agreement by the Fund to repurchase the same assets at a
later date at a fixed price. Generally, the effect of such a transaction is
that the Fund can recover all or most of the cash invested in the portfolio
securities involved during the term of the reverse repurchase agreement, while
the Fund will be able to keep the interest income associated with those
portfolio securities. Such transactions are advantageous only if the interest
cost to the Fund of the reverse repurchase transaction is less than the cost of
obtaining the cash otherwise. Opportunities to achieve this advantage may not
always be available, and the Funds intend to use the reverse repurchase
technique only when it will be advantageous to the Funds. Each Fund will
establish a segregated account with the Trust's custodian bank in which the
Fund will maintain cash or cash equivalents or other portfolio securities equal
in value to the Fund's obligations in respect of reverse repurchase agreements.
Reverse repurchase agreement are considered to be borrowings under the 1940
Act. Although there is no limit on the percentage of Fund assets that can be
used in connection with reverse repurchase agreements, no Fund expects to
engage, under normal circumstances, in reverse repurchase agreements with
respect to more than 33 1/3% of its total assets.
RESTRICTED AND ILLIQUID SECURITIES
While the Funds do not anticipate doing so, each Fund may purchase illiquid
securities, including securities that are not readily marketable and securities
that are not registered ("restricted securities") under the Securities Act of
1933, as amended (the "1933 Act"), but which can be offered and sold to
"qualified institutional buyers" under Rule 144A under the 1933 Act. A Fund
will not hold more than 15% of its net assets in illiquid securities. If the
percentage of a Fund's net assets held in illiquid securities exceeds 15% due
to market activity, the Fund will take appropriate measures to reduce its
holdings of illiquid securities. Illiquid securities are securities that can
not be
S-26
sold or disposed of in the ordinary course of business within seven business
days at approximately the value at which they are being carried on the Fund's
books. Illiquid securities may include a wide variety of investments, such as
repurchase agreements maturing in more than seven days, OTC options contracts
and certain other derivatives (including certain swap agreements), fixed time
deposits that are not subject to prepayment or do not provide for withdrawal
penalties upon prepayment (other than overnight deposits), participation
interests in loans, commercial paper issued pursuant to Section 4(2) of the
1933 Act), and securities whose disposition is restricted under the federal
securities laws. Illiquid securities include restricted, privately placed
securities that, under the federal securities laws, generally may be resold
only to qualified institutional buyers. If a substantial market develops for a
restricted security (or other illiquid investment) held by the Fund, it may be
treated as a liquid security, in accordance with procedures and guidelines
approved by the Trust's Board of Trustees (the "Board"). This generally
includes securities that are unregistered that can be sold to qualified
institutional buyers in accordance with Rule 144A under the 1933 Act or
securities that are exempt from registration under the 1933 Act, such as
commercial paper. While the Adviser monitors the liquidity of restricted
securities on a daily basis, the Board oversees and retains ultimate
responsibility for the Adviser's liquidity determinations. Several factors that
the Board considers in monitoring these decisions include the valuation of a
security, the availability of qualified institutional buyers, brokers and
dealers that trade in the security, and the availability of information about
the security's issuer.
SECURITIES LENDING
The Funds may lend portfolio securities to brokers, dealers and other financial
organizations that meet capital and other credit requirements or other criteria
established by the Board. These loans, if and when made, may not exceed 33 1/3%
of the total asset value of the Funds (including the loan collateral). The
Funds will not lend portfolio securities to its Adviser or its affiliates
unless permissible under the 1940 Act and the rules and promulgations
thereunder. Loans of portfolio securities will be fully collateralized by cash,
letters of credit or U.S. government securities, and the collateral will be
maintained in an amount equal to at least 100% of the current market value of
the loaned securities by marking to market daily. Any gain or loss in the
market price of the securities loaned that might occur during the term of the
loan would be for the account of the Funds.
The Funds may pay a part of the interest earned from the investment of
collateral, or other fee, to an unaffiliated third party for acting as the
Funds' securities lending agent but will bear all of any losses from the
investment of collateral.
By lending its securities, a Fund may increase its income by receiving payments
from the borrower that reflect the amount of any interest or any dividends
payable on the loaned securities as well as by either investing cash collateral
received from the borrower in short-term instruments or obtaining a fee from
the borrower when U.S. government securities or letters of credit are used as
collateral. Each Fund will adhere to the following conditions whenever its
portfolio securities are loaned: (i) the Fund must receive at least 100% cash
collateral or equivalent securities of the type discussed in the preceding
paragraph from the borrower; (ii) the borrower must increase such collateral
whenever the market value of the securities rises above the level of such
collateral; (iii) the Fund must be able to terminate the loan on demand; (iv)
the Fund must receive reasonable interest on the loan, as well as any
dividends, interest or other distributions on the loaned securities and any
increase in market value; (v) the Fund may pay only reasonable fees in
connection with the loan (which fees may include fees payable to the lending
agent, the borrower, the Fund's administrator and the custodian); and (vi)
voting rights on the loaned securities may pass to the borrower, provided,
however, that if a material event adversely affecting the investment occurs,
the Fund must terminate the loan and regain the right to vote the securities.
The Board has adopted procedures reasonably designed to ensure that the
foregoing criteria will be met. Loan agreements involve certain risks in the
event of default or insolvency of the borrower, including possible delays or
restrictions upon a Fund's ability to recover the loaned securities or dispose
of the collateral for the loan, which could give rise to loss
S-27
because of adverse market action, expenses and/or delays in connection with the
disposition of the underlying securities.
SHORT SALES
DESCRIPTION OF SHORT SALES:
Selling a security short is when an investor sells a security it does not own.
To sell a security short an investor must borrow the security from someone else
to deliver to the buyer. The investor then replaces the security it borrowed by
purchasing it at the market price at or before the time of replacement. Until
it replaces the security, the investor repays the person that lent it the
security for any interest or dividends that may have accrued during the period
of the loan.
Investors typically sell securities short to:
o Take advantage of an anticipated decline in prices.
o Protect a profit in a security it already owns.
A Fund can lose money if the price of the security it sold short increases
between the date of the short sale and the date on which the Fund replaces the
borrowed security. Because the market price of the security sold short could
increase without limit, a Fund could also be subject to a theoretically
unlimited loss. Likewise, a Fund can profit if the price of the security
declines between those dates. Because the market price of the security sold
short could increase without limit, the Fund could also be subject to a
theoretically unlimited loss.
To borrow the security, a Fund may be required to pay a premium, which would
increase the cost of the security sold. The Funds will also incur transaction
costs in effecting short sales. A Fund's gains and losses will be decreased or
increased, as the case may be, by the amount of the premium, dividends,
interest, or expenses the Funds may be required to pay in connection with a
short sale.
The broker will retain the net proceeds of the short sale, to the extent
necessary to meet margin requirements, until the short position is closed out.
SHORT SALES AGAINST THE BOX - In addition, a Fund may engage in short sales
"against the box." In a short sale against the box, a Fund agrees to sell at a
future date a security that it either currently owns or has the right to
acquire at no extra cost. A Fund will incur transaction costs to open, maintain
and close short sales against the box. For tax purposes, a short sale against
the box may be a taxable event to the Funds.
RESTRICTIONS ON SHORT SALES:
A Fund will not short sell a security if:
o After giving effect to such short sale, the total market value of all
securities sold short would exceed 25% of the value of a Fund's net assets;
o The market value of the securities of any single issuer that have been
sold short by a Fund would exceed two percent (2%) of the value of a Fund's
net assets; or
o Any security sold short would constitute more than two percent (2%) of any
class of the issuer's securities.
S-28
Whenever a Fund sells a security short, its custodian segregates an amount of
cash or liquid securities equal to the difference between: (a) the market value
of the securities sold short at the time they were sold short; and (b) any cash
or U.S. government securities the Fund is required to deposit with the broker
in connection with the short sale (not including the proceeds from the short
sale). The segregated assets are marked to market daily in an attempt to ensure
that the amount deposited in the segregated account plus the amount deposited
with the broker is at least equal to the market value of the securities at the
time they were sold short.
WHEN -ISSUED, DELAYED -- DELIVERY AND FORWARD TRANSACTIONS
A when-issued security is one whose terms are available and for which a market
exists, but which have not been issued. In a forward delivery transaction, a
Fund contracts to purchase securities for a fixed price at a future date beyond
customary settlement time. "Delayed-delivery" refers to securities transactions
on the secondary market where settlement occurs in the future. In each of these
transactions, the parties fix the payment obligation and the interest rate that
they will receive on the securities at the time the parties enter the
commitment; however, they do not pay money or deliver securities until a later
date. Typically, no income accrues on securities a Fund has committed to
purchase before the securities are delivered, although the Fund may earn income
on securities it has in a segregated account to cover its position. A Fund will
only enter into these types of transactions with the intention of actually
acquiring the securities, but may sell them before the settlement date.
A Fund uses when-issued, delayed-delivery and forward delivery transactions to
secure what it considers an advantageous price and yield at the time of
purchase. When a Fund engages in when-issued, delayed-delivery or forward
delivery transactions, it relies on the other party to consummate the sale. If
the other party fails to complete the sale, a Fund may miss the opportunity to
obtain the security at a favorable price or yield.
When purchasing a security on a when-issued, delayed delivery, or forward
delivery basis, a Fund assumes the rights and risks of ownership of the
security, including the risk of price and yield changes. At the time of
settlement, the market value of the security may be more or less than the
purchase price. The yield available in the market when the delivery takes place
also may be higher than those obtained in the transaction itself. Because a
Fund does not pay for the security until the delivery date, these risks are in
addition to the risks associated with its other investments.
A Fund will segregate cash or liquid securities equal in value to commitments
for the when-issued, delayed delivery or forward delivery transactions. A Fund
will segregate additional liquid assets daily so that the value of such assets
is equal to the amount of the commitments.
INVESTMENT POLICIES OF THE FUNDS
Each Fund will determine compliance with the investment limitation percentages
below (with the exception of a limitation relating to borrowing and illiquid
securities) and other applicable investment requirements in this SAI
immediately after and as a result of its acquisition of such security or other
asset. Accordingly, each Fund generally will not consider changes in values,
net assets or other circumstances when determining whether the investment
complies with its investment limitations.
FUNDAMENTAL POLICIES:
The following investment limitations are fundamental, which means that the
Funds cannot change them without approval by the vote of a majority of the
outstanding voting securities of a Fund. The phrase "majority of the
outstanding shares" means the vote of (i) 67% or more of a Fund's shares
present at a meeting, if more than 50% of the outstanding shares of the Fund
are present or represented by proxy, or (ii) more than 50% of a Fund's
outstanding shares, whichever is less.
S-29
Each Fund (except the Aggressive Value Fund) may not:
o Make any investment inconsistent with its classification as a diversified
series of an open-end investment company under the 1940 Act.
o Borrow money, except to the extent permitted by applicable law, as amended
and interpreted or modified from time to time by any regulatory authority
having jurisdiction and the guidelines set forth in a Fund's prospectus and
SAI as they may be amended from time to time.
o Issue senior securities, except to the extent permitted by applicable law,
as amended and interpreted or modified from time to time by any regulatory
authority having jurisdiction.
o Underwrite securities of other issuers, except insofar as a Fund may
technically be deemed to be an underwriter under the 1933 Act in connection
with the purchase or sale of its portfolio securities.
o Concentrate (invest 25% of its assets) its investments in the securities
of one or more issuers conducting their principal business activities in
the same industry or group of industries (other than securities issued or
guaranteed by the U.S. government or its agencies or instrumentalities).
o Purchase or sell real estate, except: (1) to the extent permitted by
applicable law, as amended and interpreted or modified from time to time by
any regulatory authority having jurisdiction; (2) that a Fund may invest
in, securities of issuers that deal or invest in real estate; and (3) that
a Fund may purchase securities secured by real estate or interests therein.
o Purchase or sell commodities or contracts on commodities except that a
Fund may engage in financial futures contracts and related options and
currency contracts and related options and may otherwise do so in
accordance with applicable law and without registering as a commodity pool
operator under the Commodity Exchange Act.
o Make loans to other persons, except that a Fund may lend its portfolio
securities in accordance with applicable law, as amended and interpreted or
modified from time to time by any regulatory authority having jurisdiction
and the guidelines set forth in a Fund's prospectus and SAI as they may be
amended from time to time. The acquisition of investment securities or
other investment instruments shall not be deemed to be the making of a
loan.
The Aggressive Value Fund may not:
o Borrow money, except to the extent permitted by applicable law, as amended
and interpreted or modified from time to time by any regulatory authority
having jurisdiction and the guidelines set forth in the Fund's prospectus
and SAI as they may be amended from time to time.
o Issue senior securities, except to the extent permitted by applicable law,
as amended and interpreted or modified from time to time by any regulatory
authority having jurisdiction.
o Underwrite securities of other issuers, except insofar as the Fund may
technically be deemed to be an underwriter under the 1933 Act in connection
with the purchase or sale of its portfolio securities.
o Concentrate (invest 25% of its assets) its investments in the securities
of one or more issuers conducting their principal business activities in
the same industry or group of industries (other than securities issued or
guaranteed by the U.S. government or its agencies or instrumentalities).
S-30
o Purchase or sell real estate, except: (1) to the extent permitted by
applicable law, as amended and interpreted or modified from time to time by any
regulatory authority having jurisdiction; (2) that the Fund may invest in,
securities of issuers that deal or invest in real estate; and (3) that the Fund
may purchase securities secured by real estate or interests therein.
o Purchase or sell commodities or contracts on commodities except that the Fund
may engage in financial futures contracts and related options and currency
contracts and related options and may otherwise do so in accordance with
applicable law and without registering as a commodity pool operator under the
Commodity Exchange Act.
o Make loans to other persons, except that the Fund may lend its portfolio
securities in accordance with applicable law, as amended and interpreted or
modified from time to time by any regulatory authority having jurisdiction and
the guidelines set forth in the Fund's prospectus and SAI as they may be
amended from time to time. The acquisition of investment securities or other
investment instruments shall not be deemed to be the making of a loan.
NON-FUNDAMENTAL POLICIES:
In addition to each Fund's investment objective, the following limitations are
non-fundamental, which means a Fund may change them without shareholder
approval. Each Fund (except the Aggressive Value Fund and SMID Fund) may:
o Not (i) purchase securities of any issuer (except securities of other
investment companies, securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities and repurchase agreements
involving such securities) if, as a result, more than 5% of the total
assets of a Fund would be invested in the securities of such issuer; or
(ii) acquire more than 10% of the outstanding voting securities of any one
issuer. This restriction applies to 75% of a Fund's total assets.
o Not borrow money, except that: (1) a Fund may borrow from banks (as
defined in the 1940 Act) or enter into reverse repurchase agreements, in
amounts up to 33 1/3% of its total assets (including the amount borrowed);
(2) a Fund may borrow up to an additional 5% of its total assets for
temporary purposes; (3) a Fund may obtain such short-term credit as may be
necessary for the clearance of purchases and sales of portfolio securities;
and (4) a Fund may purchase securities on margin and engage in short sales
to the extent permitted by applicable law.
Notwithstanding the investment restrictions above, a Fund may not borrow
amounts in excess of 33 1/3% of its total assets, taken at market value,
and then only from banks as a temporary measure for extraordinary or
emergency purposes such as the redemption of portfolio shares. A Fund will
not purchase securities while borrowings are outstanding except to exercise
prior commitments and to exercise subscription rights.
o Purchase and sell currencies or securities on a when-issued, delayed
delivery or forward-commitment basis.
o Purchase and sell foreign currency, purchase options on foreign currency
and foreign currency exchange contracts.
o Invest in the securities of foreign issuers.
o Purchase shares of other investment companies to the extent permitted by
applicable law.
S-31
o Notwithstanding any fundamental policy or other limitation, invest all of
its investable assets in securities of a single open-end management
investment company with substantially the same investment objectives,
policies and limitations.
o Hold illiquid and restricted securities to the extent permitted by
applicable law. Each Fund intends to follow the policies of the SEC as they
are adopted from time to time with respect to illiquid securities,
including: (1) treating as illiquid securities that may not be disposed of
in the ordinary course of business within seven days at approximately the
value at which a Fund has valued the investment on its books; and (2)
investing no more than 15% of its net assets in such securities.
o Write covered call options and may buy and sell put and call options.
o Enter into repurchase agreements.
o Lend portfolio securities to registered broker-dealers or other
institutional investors. These loans may not exceed 33 1/3% of the Fund's
total assets taken at market value. In addition, a Fund must receive at
least 100% collateral.
o Sell securities short and engage in short sales "against the box."
o Enter into swap transactions.
In addition:
o The Small Cap Fund may not change its investment strategy to invest at
least 80% of its net assets, plus the amount of any borrowings for
investment purposes, in small capitalization companies at the time of
purchase without 60 days' prior notice to shareholders; and
o The International Equity Fund may not change its investment strategy to
invest at least 80% of its net assets, plus the amount of any borrowings
for investment purposes, in equity securities of foreign companies without
60 days' prior notice to shareholders.
The Aggressive Value Fund may:
o Not borrow money in an amount exceeding 33 1/3% of the value of its total
assets, provided that investment strategies which either obligate the Fund
to purchase securities or require the Fund to cover a position by
segregating assets or entering into an offsetting position shall not be
subject to this limitation. To the extent that its borrowings exceed 5% of
its assets: (i) all borrowings will be repaid before the Fund makes
additional investments; and (ii) asset coverage of at least 300% is
required.
o Not purchase securities on margin, except such short-term credits as may
be necessary for the clearance of purchases and sales of securities and
provided that margin deposits in connection with futures contracts, options
on futures or other derivative instruments shall not constitute purchasing
securities on margin.
o Purchase and sell currencies or securities on a when-issued, delayed
delivery or forward-commitment basis.
o Purchase and sell foreign currency, purchase options on foreign currency
and foreign currency exchange contracts.
o Invest in the securities of foreign issuers.
S-32
o Purchase shares of other investment companies to the extent permitted by
applicable law.
o Notwithstanding any fundamental policy or other limitation, invest all of
its investable assets in securities of a single open-end management
investment company with substantially the same investment objectives,
policies and limitations.
o Hold illiquid and restricted securities to the extent permitted by
applicable law. The Fund intends to follow the policies of the SEC as they
are adopted from time to time with respect to illiquid securities,
including: (1) treating as illiquid securities that may not be disposed of
in the ordinary course of business within seven days at approximately the
value at which the Fund has valued the investment on its books; and (2)
investing no more than 15% of its net assets in such securities.
o Write covered call options and may buy and sell put and call options.
o Enter into repurchase agreements.
o Lend portfolio securities to registered broker-dealers or other
institutional investors. These loans may not exceed 33 1/3% of the Fund's
total assets taken at market value. In addition, the Fund must receive at
least 100% collateral.
o Sell securities short and engage in short sales "against the box."
o Enter into swap transactions.
The SMID Fund may:
o Not (i) purchase securities of any issuer (except securities of other
investment companies, securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities and repurchase agreements
involving such securities) if, as a result, more than 5% of the total
assets of the Fund would be invested in the securities of such issuer; or
(ii) acquire more than 10% of the outstanding voting securities of any one
issuer. This restriction applies to 75% of the Fund's total assets.
o Not borrow money in an amount exceeding 33 1/3% of the value of its total
assets, provided that investment strategies which either obligate the Fund
to purchase securities or require the Fund to cover a position by
segregating assets or entering into an offsetting position shall not be
subject to this limitation. To the extent that its borrowings exceed 5% of
its assets: (i) all borrowings will be repaid before the Fund makes
additional investments; and (ii) asset coverage of at least 300% is
required.
o Purchase and sell currencies or securities on a when-issued, delayed
delivery or forward-commitment basis.
o Purchase and sell foreign currency, purchase options on foreign currency
and foreign currency exchange contracts.
o Invest in the securities of foreign issuers.
o Purchase shares of other investment companies to the extent permitted by
applicable law.
o Notwithstanding any fundamental policy or other limitation, invest all of
its investable assets in securities of a single open-end management
investment company with substantially the same investment objectives,
policies and limitations.
S-33
o Hold illiquid and restricted securities to the extent permitted by
applicable law. The Fund intends to follow the policies of the SEC as they
are adopted from time to time with respect to illiquid securities,
including: (1) treating as illiquid securities that may not be disposed of
in the ordinary course of business within seven days at approximately the
value at which the Fund has valued the investment on its books; and (2)
investing no more than 15% of its net assets in such securities.
o Write covered call options and may buy and sell put and call options.
o Enter into repurchase agreements.
o Lend portfolio securities to registered broker-dealers or other
institutional investors. These loans may not exceed 33 1/3% of the Fund's
total assets taken at market value. In addition, the Fund must receive at
least 100% collateral.
o Sell securities short and engage in short sales "against the box."
o Enter into swap transactions.
In addition:
o The SMID Fund may not change its investment strategy to invest at least
80% of its net assets, plus the amount of any borrowings for investment
purposes, in small to mid-sized companies at the time of purchase without
60 days' prior notice to shareholders.
INVESTMENT ADVISORY AND OTHER SERVICES
INVESTMENT ADVISER. Cambiar Investors LLC (the "Adviser"), a Delaware limited
liability corporation located at 2401 East Second Avenue, Suite 500, Denver,
Colorado 80206, serves as the investment adviser to the Funds. The Adviser
manages and supervises the investment of each Fund's assets on a discretionary
basis. As of June 30, 2013, the Adviser had approximately $7.3 billion in
assets under management. The Adviser and its predecessor, Cambiar Investors,
Inc., which was an affiliate of Old Mutual (US) Holdings, Inc. (formerly United
Asset Management Company) ("Old Mutual"), have provided investment management
services to corporations, foundations, endowments, pension and profit sharing
plans, trusts, estates and other institutions as well as individuals since
1973. The Adviser is owned by Cambiar LLP. Cambiar LLP is controlled by 16
partners of Cambiar LLP who were formerly senior officers of Cambiar Investors,
Inc.
ADVISORY AGREEMENT WITH THE TRUST. The Trust and the Adviser have entered into
an investment advisory agreement (the "Advisory Agreement"). Under the Advisory
Agreement, the Adviser serves as the investment adviser and makes the
investment decisions for each of the Funds and continuously reviews, supervises
and administers the investment program of each Fund, subject to the supervision
of, and policies established by, the Trustees of the Trust. After the initial
two year term, the continuance of the Advisory Agreement must be specifically
approved at least annually: (i) by the vote of the Trustees or by a vote of the
shareholders of each Fund; and (ii) by the vote of a majority of the Trustees
who are not parties to the Advisory Agreement or "interested persons" of any
party thereto, cast in person at a meeting called for the purpose of voting on
such approval. The Advisory Agreement will terminate automatically in the event
of its assignment, and is terminable at any time without penalty by the
Trustees of the Trust or, with respect to any Fund, by a majority of the
outstanding shares of that Fund, on not less than 30 days' nor more than 60
days' written notice to the Adviser, or by the Adviser on 90 days' written
notice to the Trust. The Advisory Agreement provides that the Adviser shall not
be protected against any liability to the Trust or its shareholders by reason
of willful misfeasance, bad faith or gross negligence on its part in the
performance of its duties or from reckless disregard of its obligations or
duties
S-34
thereunder. As used in this Advisory Agreement, the terms "majority of the
outstanding voting securities," "interested persons" and "assignment" have the
same meaning as such terms in the 1940 Act.
ADVISORY FEES PAID TO THE ADVISER. For its services, the International Equity
Fund, the Small Cap Fund, the Aggressive Value Fund, the SMID Fund and the
Global Select Fund pay the Adviser a fee calculated at an annual rate of 0.90%,
1.05%, 1.00%, 1.05% and 1.00%, respectively of each Fund's average daily net
assets. The Opportunity Fund pays the Adviser a fee calculated at an annual
rate of 0.90% for the first $2.5 billion of average daily net assets and 0.75%
for average daily net assets in excess of $2.5 billion. Prior to September 1,
2013, the management fee for the International Equity Fund was 1.05% and the
management fee for the Opportunity Fund was 1.00% for the first $500 million of
average daily net assets, 0.90% for the next $2 billion of average daily net
assets, and 0.75% for average daily net assets in excess of $2.5 billion.
The Adviser has contractually agreed to reduce fees and reimburse expenses for
each Fund in order to keep net operating expenses (excluding interest, taxes,
brokerage commissions, acquired fund fees and expenses, and extraordinary
expenses (collectively, "excluded expenses")) from exceeding the amounts listed
in the table below, as a percentage of average daily net assets, until
September 1, 2014. The Adviser may renew these contractual fee waivers for
subsequent periods. In addition, if at any point it becomes unnecessary for the
Adviser to reduce fees or make expense reimbursements, the Adviser may receive
from the Fund the difference between the total annual fund operating expenses
(not including excluded expenses) and the amounts listed below for each Fund to
recover all or a portion of its prior fee reductions or expense reimbursements
made during the preceding three-year period during which this agreement (or any
prior agreement) was in place. To maintain these expense limits, the Adviser
may reduce a portion of its management fees and/or reimburse certain expenses
of each Fund.
--------------------------------------------------------------------------------
FUND INSTITUTIONAL INVESTOR
--------------------------------------------------------------------------------
Opportunity Fund 0.95% 1.20%
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International Equity Fund 0.95% 1.20%
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Small Cap Fund 1.05% 1.30%
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Aggressive Value Fund 1.10%(1) 1.35%
--------------------------------------------------------------------------------
SMID Fund N/A(2) 1.35%
--------------------------------------------------------------------------------
Global Select Fund N/A(2) 1.30%
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|
(1) As of the date of this SAI, Institutional Class Shares of the Aggressive
Value Fund are not offered.
(2) The SMID Fund and Global Select Fund do not offer Institutional Class
Shares.
For the last three fiscal years ended April 30, 2011, 2012, and 2013 the Funds
paid the following in management fees to the Adviser:
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FEES WAIVED
FUND CONTRACTUAL ADVISORY FEES PAID BY THE ADVISER TOTAL FEES PAID TO THE ADVISER(1)
------------------------------------------------------------------------------------------------------------------------------------
2011 2012 2013 2011 2012 2013 2011 2012 2013
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Opportunity
Fund $10,817,406 $12,771,59 $9,417,741 $1,533,967 $1,352,441 $1,133,347 $9,283,439 $11,419,118 $8,284,394
------------------------------------------------------------------------------------------------------------------------------------
International
Equity Fund $303,025 $332,517 $349,540 $108,616 $98,491 $159,106 $194,409 $234,026 $190,434
------------------------------------------------------------------------------------------------------------------------------------
Small Cap
Fund $3,059,102 $8,626,932 $11,485,702 $521,720 $977,921 $1,205,134 $2,537,382 $7,649,011 $10,280,568
------------------------------------------------------------------------------------------------------------------------------------
Aggressive
Value Fund $898,836 $2,535,431 $1,488,469 $74,496 $110,565 $76,734 $824,340 $2,424,866 $970,158
------------------------------------------------------------------------------------------------------------------------------------
SMID Fund N/A(2) $13,509(3) $16,467 N/A(2) $13,509(3) $16,467 N/A(2) $0(3) $0
------------------------------------------------------------------------------------------------------------------------------------
Global Select N/A(2) $4,605(4) $12,275 N/A(2) $4,605(4) $12,275 N/A(2) $0(4) $0
Fund
------------------------------------------------------------------------------------------------------------------------------------
|
S-35
(1) For the fiscal year that ended April 30, 2012, the Adviser additionally
reimbursed fees of $79,064 for the SMID Fund and $58,682 for the Global
Select Fund to maintain the stated expense cap under its contractual
expense limitation agreement with the Funds. For the fiscal year that ended
April 30, 2013, the Adviser additionally reimbursed fees of $75,066 for the
SMID Fund and $93,428 for the Global Select Fund to maintain the stated
expense cap under its contractual expense limitation agreement with the
Funds.
(2) Not in operation during the period.
(3) Represents the period from May 31, 2011 (commencement of operations) to
April 30, 2012.
(4) Represents the period from November 30, 2011 (commencement of operations)
to April 30, 2012.
S-36
PORTFOLIO MANAGERS
This section includes information about the Funds' portfolio managers,
including information about other accounts managed, the dollar range of Fund
shares owned and how the portfolio manager is compensated.
COMPENSATION. The Adviser compensates the Funds' portfolio managers for their
management of the Fund and the Adviser's other accounts. The portfolio
managers' compensation consists of an industry competitive base salary,
discretionary cash bonus, and a profit-sharing contribution at year-end. While
Cambiar's investment professionals receive a competitive salary plus a bonus
tied to firm and individual performance, contributions are also measured
through performance attribution which details individual stock and sector
selection as well as overall "value added" for the firm. This would include
assistance with product development and client service. Company equity is also
available to reward key employees. The following table represents the
benchmarks against which each portfolio manager's pre-tax performance results
are compared:
--------------------------------------------------------------------------------
INVESTMENT STRATEGY BENCHMARK
--------------------------------------------------------------------------------
Opportunity Fund S&P 500(R) Index
--------------------------------------------------------------------------------
International Equity Fund MSCI EAFE Index
--------------------------------------------------------------------------------
Small Cap Fund Russell 2000(R) Index
--------------------------------------------------------------------------------
Aggressive Value Fund Russell 3000(R) Index
--------------------------------------------------------------------------------
SMID Fund Russell 2500(R) Index
--------------------------------------------------------------------------------
Global Select Fund MSCI ACWI Index
--------------------------------------------------------------------------------
|
FUND SHARES OWNED BY THE PORTFOLIO MANAGERS. The following table shows the
dollar amount range of the portfolio managers' "beneficial ownership" of shares
of the Funds. Dollar amount ranges disclosed are established by the SEC.
"Beneficial ownership" is determined in accordance with Rule 16a-1(a)(2) under
the Securities Exchange Act of 1934, as amended (the "1934 Act").
S-37
--------------------------------------------------------------------------------
NAME DOLLAR RANGE OF FUND SHARES(1)
--------------------------------------------------------------------------------
Over $1,000,000 (Opportunity Fund)
Over $1,000,000 (International Equity Fund)
Brian M. Barish Over $1,000,000 (Small Cap Fund)
Over $1,000,000 (Aggressive Value Fund)
$100,001 - $500,000 (SMID Fund)
--------------------------------------------------------------------------------
$1 - $10,000 (Opportunity Fund)
$10,001 - $50,000 (International Equity Fund)
Maria L. Mendelsberg $100,001 - $500,000 (Small Cap Fund)
$10,001 - $50,000 (Aggressive Value Fund)
--------------------------------------------------------------------------------
$100,001 - $500,000 (Opportunity Fund)
$100,001 - $500,000 (International Equity Fund)
Anna (Ania) A. Aldrich $100,001 - $500,000 (Small Cap Fund)
$100,001 - $500,000 (Aggressive Value Fund)
--------------------------------------------------------------------------------
$100,001 - $500,000 (Opportunity Fund)
$50,001 - $100,000 (International Equity Fund)
Timothy A. Beranek $50,001 - $100,000 (Small Cap Fund)
--------------------------------------------------------------------------------
Jennifer M. Dunne $500,001 - $1,000,000 (International Equity Fund)
--------------------------------------------------------------------------------
Andrew P. Baumbusch NONE
--------------------------------------------------------------------------------
$100,001 - $500,000 (Opportunity Fund)
Todd L. Edwards $100,001 - $500,000 (International Equity Fund)
--------------------------------------------------------------------------------
$10,001 - $50,000 (International Equity Fund)
Alvaro Shiraishi $10,001 - $50,000 (Aggressive Value Fund)
$50,001 - $100,000 (Global Select Fund)
--------------------------------------------------------------------------------
$100,001 - $500,000 (Opportunity Fund)
$10,001 - $50,000 (International Equity Fund)
Jeffrey H. Susman $100,001 - $500,000 (Small Cap Fund)
$10,001 - $50,000 (Aggressive Value Fund)
--------------------------------------------------------------------------------
|
(1) Valuation date is April 30, 2013.
OTHER ACCOUNTS. In addition to the Funds, the portfolio managers are
responsible for the day-to-day management of certain other accounts, as
follows. None of the accounts listed below are subject to a performance based
advisory fee. The information below is provided as of April 30, 2013.
S-38
--------------------------------------------------------------------------------------------
REGISTERED INVESTMENT OTHER POOLED INVESTMENT
COMPANIES VEHICLES OTHER ACCOUNTS
--------------------------------------------------------------------------------------------
NUMBER OF TOTAL ASSETS NUMBER OF TOTAL ASSETS NUMBER OF TOTAL ASSETS
NAME ACCOUNTS (IN MILLIONS) ACCOUNTS (IN MILLIONS) ACCOUNTS (IN MILLIONS)
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
Anna (Ania) A. 0 $0 0 $0 80 $138
Aldrich
--------------------------------------------------------------------------------------------
Brian M. 1 $275 0 $0 34 $2,153
Barish
--------------------------------------------------------------------------------------------
Andrew 2 $512 0 $0 331 $2,380
Baumbusch
--------------------------------------------------------------------------------------------
Tim A. 0 $0 0 $0 2 $760
Beranek
--------------------------------------------------------------------------------------------
Jennifer M. 0 $0 0 $0 483 $501
Dunne
--------------------------------------------------------------------------------------------
Maria L. 0 $0 0 $0 6,880 $2,026
Mendelsberg
--------------------------------------------------------------------------------------------
Todd 0 $0 0 $0 0 $0
Edwards
--------------------------------------------------------------------------------------------
Alavrio 0 $0 0 $0 0 $0
Shiraishi
--------------------------------------------------------------------------------------------
Jeffrey H. 0 $0 0 $0 0 $0
Susman
--------------------------------------------------------------------------------------------
|
CONFLICTS OF INTERESTS. The portfolio managers' management of "other accounts"
may give rise to potential conflicts of interest in connection with his or her
management of a Fund's investments, on the one hand, and the investments of the
other accounts, on the other. The other accounts may have the same investment
objective as a Fund. Therefore, a potential conflict of interest may arise as
a result of the identical investment objectives, whereby the portfolio manager
could favor one account over another. Another potential conflict could include
the portfolio manager's knowledge about the size, timing and possible market
impact of Fund trades, whereby the portfolio manager could use this information
to the advantage of other accounts and to the disadvantage of a Fund.
THE ADMINISTRATOR
GENERAL. SEI Investments Global Funds Services (the "Administrator"), a
Delaware statutory trust, has its principal business offices at One Freedom
Valley Drive, Oaks, Pennsylvania 19456. SEI Investments Management Corporation
("SIMC"), a wholly-owned subsidiary of SEI Investments Company ("SEI
Investments"), is the owner of all beneficial interest in the Administrator.
SEI Investments and its subsidiaries and affiliates, including the
Administrator, are leading providers of fund evaluation services, trust
accounting systems, and brokerage and information services to financial
institutions, institutional investors, and money managers. The Administrator
and its affiliates also serve as administrator or sub-administrator to other
mutual funds.
ADMINISTRATION AGREEMENT WITH THE TRUST. The Trust and the Administrator have
entered into an administration agreement (the "Administration Agreement") dated
November 14, 1991, as amended and restated November 12, 2002. Under the
Administration Agreement, the Administrator provides the Trust with
administrative services, including regulatory reporting and all necessary
office space, equipment, personnel and facilities. Pursuant to a schedule to
the Administration Agreement, the Administrator also serves as the shareholder
servicing agent for each Fund whereby the Administrator provides certain
shareholder services to each Fund.
The Administration Agreement provides that the Administrator shall not be
liable for any error of judgment or mistake of law or for any loss suffered by
the Trust in connection with the matters to which the Administration Agreement
relates, except a loss resulting from willful misfeasance, bad faith or gross
negligence on the part of the Administrator in the performance of its duties or
from reckless disregard by it of its duties and obligations thereunder.
ADMINISTRATION FEES PAID TO THE ADMINISTRATOR. For its services under the
Administration Agreement, the Administrator is entitled to the greater of its
Basis Point Fee or its Portfolio Minimum Fee. The Basis Point Fee
S-39
will be calculated as follows: 0.06% for the first $1 billion in assets, 0.045%
for the next $2 billion in assets, 0.03% for the next $3 billion in assets,
0.025% for the next $4 billion in assets and 0.02% for all assets greater than
$10 billion. The Basis Point Fee is calculated based on the aggregate total
average daily net assets of the Cambiar Funds administered during the period.
Basis Point fees so calculated shall be allocated to each Cambiar Fund on a pro
rata basis based on the average daily net assets of each such Cambiar Fund
during the period. The Portfolio Minimum Fee shall be $50,000 for each Cambiar
Fund plus $10,000 for each class of shares, not including the first class, of
each Cambiar Fund.
For the fiscal years ended April 30, 2011, 2012, and 2013, the Funds paid the
following administration fees:
--------------------------------------------------------------------------------
ADMINISTRATION FEES PAID
--------------------------------------------------------------------------------
FUND 2011 2012 2013
--------------------------------------------------------------------------------
Opportunity Fund $706,288 $734,903 $511,099
--------------------------------------------------------------------------------
International Equity Fund $17,826 $17,030 $17,183
--------------------------------------------------------------------------------
Small Cap Fund $174,289 $440,136 $564,874
--------------------------------------------------------------------------------
Aggressive Value Fund $52,018 $136,798 $76,777
--------------------------------------------------------------------------------
SMID Fund N/A(1) $691(2) $810
--------------------------------------------------------------------------------
Global Select Fund N/A(1) $238(3) $634
--------------------------------------------------------------------------------
|
(1) Not in operation during the period.
(2) Represents the period from May 31, 2011 (commencement of operations) to
April 30, 2012.
(3) Represents the period from November 30, 2011 (commencement of operations)
to April 30, 2012.
THE DISTRIBUTOR
The Trust and SEI Investments Distribution Co. (the "Distributor"), a
wholly-owned subsidiary of SEI Investments and an affiliate of the
Administrator, are parties to a distribution agreement dated November 4, 1991,
as amended and restated November 14, 2005 and as amended August 30, 2010 (the
"Distribution Agreement") whereby the Distributor acts as principal underwriter
for the Trust's shares. The principal business address of the Distributor is
One Freedom Valley Drive, Oaks, Pennsylvania 19456.
The continuance of the Distribution Agreement must be specifically approved at
least annually: (i) by the vote of the Trustees or by a vote of the
shareholders of the Fund; and (ii) by the vote of a majority of the Trustees
who are not "interested persons" of the Trust and have no direct or indirect
financial interest in the operations of the Distribution Agreement or any
related agreement, cast in person at a meeting called for the purpose of voting
on such approval. The Distribution Agreement will terminate automatically in
the event of its assignment (as such term is defined in the 1940 Act), and is
terminable at any time without penalty by the Trustees of the Trust or, with
respect to any Fund, by a majority of the outstanding shares of that Fund, upon
not more than 60 days' written notice by either party. The Distribution
Agreement provides that the Distributor shall not be protected against any
liability to the Trust or its shareholders by reason of willful misfeasance,
bad faith or gross negligence on its part in the performance of its duties or
from reckless disregard of its obligations or duties thereunder.
SHAREHOLDER SERVICES
SHAREHOLDER SERVICING PLAN. The Funds have adopted a shareholder servicing plan
(the "Service Plan") under which a shareholder servicing fee of up to 0.25% of
average daily net assets attributable to the Investor Class Shares of a Fund
will be paid to other service providers. Under the Service Plan, other service
providers may perform, or may compensate other service providers for performing
certain shareholder and administrative services as discussed below.
S-40
DESCRIPTION OF SHAREHOLDER SERVICES. Shareholder services may include: (i)
maintaining accounts relating to clients that invest in shares; (ii) arranging
for bank wires; (iii) responding to client inquiries relating to the services
performed by the services provider; (iv) responding to inquiries from clients
concerning their investment in shares; (v) assisting clients in changing
dividend options, account designations and addresses; (vi) providing
information periodically to clients showing their position in shares; (vii)
forwarding shareholder communications from the Fund such as proxies,
shareholder reports, annual reports, and dividend distribution and tax notices
to clients; and (viii) processing dividend payments from a Fund on behalf of
clients.
PAYMENTS TO FINANCIAL INTERMEDIARIES
Financial intermediaries may receive payments from the own resources of the
Adviser and/or its affiliates as incentives to market the Funds, to cooperate
with the promotional efforts of the Funds, and/or in recognition of their
marketing, administrative services, and/or processing support. Such services
include, but are not limited to: process and mail trade confirmations to
clients; process and mail monthly client statements for fund shareholders;
capture, process and mail tax data to fund shareholders; issue and mail
dividend checks to shareholders that select cash distributions; prepare record
date lists of shareholders for proxy solicitations and mail proxy materials to
shareholders; trade execution via FundSERV; proper settlement of all
transactions; collect and post distributions to shareholder accounts; automated
sweep of proceeds from redemptions; handle organizational actions such as fund
mergers and name changes; provide a dedicated shareholder service center that
addresses all client and broker inquiries regarding operational issuers and
fund investment performance; establish, maintain and process systematic
withdrawals and automated investment plans; establish and maintain shareholder
account registrations and distribution options; process purchases,
liquidations, exchanges, transfers, dividend options and maintain address
changes; and process 12b-1 payments.
Marketing support and/or administrative services payments may be made to
financial intermediaries that sell Fund shares or provide services to the
Funds, the Distributor or shareholders of the Funds through the financial
intermediary's retail distribution channel and/or through programs such as
retirement programs, qualified tuition programs, fund supermarkets, fee-based
advisory or wrap fee programs, bank trust programs, and insurance (e.g.,
individual or group annuity) programs. In addition to the opportunity to
participate in a financial intermediary's retail distribution channel or
program, payments may include one or more of the following: business planning
assistance; educating financial intermediary personnel about the Funds;
assistance with Fund shareholder financial planning; placement on the financial
intermediary's preferred or recommended fund list; access to sales
representatives and management representatives of the financial intermediary;
program administration; fund/investment selection and monitoring; enrollment;
and education. A financial intermediary may perform the services itself or may
arrange with a third party to perform the services.
The Adviser and/or its affiliates may also make payments out of their own
resources to certain financial intermediaries that sell Fund shares to help
offset the financial intermediaries' costs associated with client account
maintenance support, statement preparation, and transaction processing. From
time to time, out of the own resources of the Adviser and/or its affiliates,
additional payments may be made to financial intermediaries that sell or
provide services in connection with the sale of Fund shares or the servicing of
shareholder accounts. Such payments may include payment or reimbursement to, or
on behalf of, financial intermediaries for costs associated with the purchase
of products or services used in connection with sales and marketing,
participation in and/or presentation at conferences or seminars, sales or
training programs, client and investor entertainment and events, and other
sponsored events, and travel expenses, including lodging incurred by registered
representatives and other employees in connection with training and educational
meetings, client prospecting, retention, and due diligence trips.
S-41
TRANSFER AGENT
DST Systems, Inc., 333 W. 11th Street, Kansas City, Missouri 64105 (the
"Transfer Agent"), serves as the transfer agent and dividend disbursing agent
for the Funds under a transfer agency agreement with the Trust.
CUSTODIAN
Union Bank, N.A., 475 Sansome Street, 15th Floor, San Francisco, California
94111 (the "Custodian") serves as the custodian of the Funds. The Custodian
holds cash, securities and other assets of the Funds as required by the 1940
Act.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Ernst & Young LLP, One Commerce Square, 2005 Market Street, Suite 700,
Philadelphia, Pennsylvania 19103, serves as independent registered public
accounting firm for the Funds. The financial statements and financial
highlights, including the notes thereto, for the fiscal year ended April 30,
2013 have been audited by Ernst & Young LLP, as indicated in their report with
respect thereto, and are incorporated by reference in reliance on the authority
of their report as experts in accounting and auditing.
LEGAL COUNSEL
Morgan, Lewis & Bockius LLP, 1701 Market Street, Philadelphia, Pennsylvania
19103-2921, serves as legal counsel to the Trust.
TRUSTEES AND OFFICERS OF THE TRUST
BOARD RESPONSIBILITIES. The management and affairs of the Trust and its series,
including the Fund described in this SAI, are overseen by the Trustees. The
Board has approved contracts, as described above, under which certain companies
provide essential management services to the Trust.
Like most mutual funds, the day-to-day business of the Trust, including the
management of risk, is performed by third party service providers, such as the
Adviser, Distributor and Administrator. The Trustees are responsible for
overseeing the Trust's service providers and, thus, have oversight
responsibility with respect to risk management performed by those service
providers. Risk management seeks to identify and address risks, i.e., events
or circumstances that could have material adverse effects on the business,
operations, shareholder services, investment performance or reputation of the
funds. The funds and their service providers employ a variety of processes,
procedures and controls to identify various possible events or circumstances,
to lessen the probability of their occurrence and/or to mitigate the effects of
such events or circumstances if they do occur. Each service provider is
responsible for one or more discrete aspects of the Trust's business (e.g., the
Adviser is responsible for the day-to-day management of the Fund's portfolio
investments) and, consequently, for managing the risks associated with that
business. The Board has emphasized to the funds' service providers the
importance of maintaining vigorous risk management.
The Trustees' role in risk oversight begins before the inception of a fund, at
which time certain of the fund's service providers present the Board with
information concerning the investment objectives, strategies and risks of the
fund as well as proposed investment limitations for the fund. Additionally, the
fund's adviser provides the Board with an overview of, among other things, its
investment philosophy, brokerage practices and compliance infrastructure.
Thereafter, the Board continues its oversight function as various personnel,
including the Trust's Chief Compliance Officer, as well as personnel of the
adviser and other service providers, such as the fund's independent
accountants, make periodic reports to the Audit Committee or to the Board with
respect to various
S-42
aspects of risk management. The Board and the Audit Committee oversee efforts
by management and service providers to manage risks to which the funds may be
exposed.
The Board is responsible for overseeing the nature, extent and quality of the
services provided to the funds by the adviser and receives information about
those services at its regular meetings. In addition, on an annual basis, in
connection with its consideration of whether to renew the advisory agreement
with the adviser, the Board meets with the adviser to review such services.
Among other things, the Board regularly considers the adviser's adherence to
the funds' investment restrictions and compliance with various fund policies
and procedures and with applicable securities regulations. The Board also
reviews information about the funds' investments, including, for example,
portfolio holdings schedules and reports on the adviser's use of derivatives in
managing the funds, if any, as well as reports on the funds' investments in
ETFs, if any.
The Trust's Chief Compliance Officer reports regularly to the Board to review
and discuss compliance issues and fund and adviser risk assessments. At least
annually, the Trust's Chief Compliance Officer provides the Board with a report
reviewing the adequacy and effectiveness of the Trust's policies and procedures
and those of its service providers, including the adviser. The report addresses
the operation of the policies and procedures of the Trust and each service
provider since the date of the last report; any material changes to the
policies and procedures since the date of the last report; any recommendations
for material changes to the policies and procedures; and any material
compliance matters since the date of the last report.
The Board receives reports from the funds' service providers regarding
operational risks and risks related to the valuation and liquidity of portfolio
securities. The Trust's Fair Value Pricing Committee makes regular reports to
the Board concerning investments for which market quotations are not readily
available. Annually, the independent registered public accounting firm reviews
with the Audit Committee its audit of the funds' financial statements, focusing
on major areas of risk encountered by the funds and noting any significant
deficiencies or material weaknesses in the funds' internal controls.
Additionally, in connection with its oversight function, the Board oversees
fund management's implementation of disclosure controls and procedures, which
are designed to ensure that information required to be disclosed by the Trust
in its periodic reports with the SEC are recorded, processed, summarized, and
reported within the required time periods. The Board also oversees the Trust's
internal controls over financial reporting, which comprise policies and
procedures designed to provide reasonable assurance regarding the reliability
of the Trust's financial reporting and the preparation of the Trust's financial
statements.
From their review of these reports and discussions with the adviser, the Chief
Compliance Officer, the independent registered public accounting firm and other
service providers, the Board and the Audit Committee learn in detail about the
material risks of the funds, thereby facilitating a dialogue about how
management and service providers identify and mitigate those risks.
The Board recognizes that not all risks that may affect the funds can be
identified and/or quantified, that it may not be practical or cost-effective to
eliminate or mitigate certain risks, that it may be necessary to bear certain
risks (such as investment-related risks) to achieve the funds' goals, and that
the processes, procedures and controls employed to address certain risks may be
limited in their effectiveness. Moreover, reports received by the Trustees as
to risk management matters are typically summaries of the relevant information.
Most of the funds' investment management and business affairs are carried out
by or through the funds' adviser and other service providers, each of which has
an independent interest in risk management but whose policies and the methods
by which one or more risk management functions are carried out may differ from
the funds' and each other's in the setting of priorities, the resources
available or the effectiveness of relevant controls. As a result of the
foregoing and other factors, the Board's ability to monitor and manage risk, as
a practical matter, is subject to limitations.
S-43
MEMBERS OF THE BOARD. There are ten members of the Board of Trustees, eight of
whom are not interested persons of the Trust, as that term is defined in the
1940 Act ("independent Trustees"). Robert Nesher, an interested person of the
Trust, serves as Chairman of the Board. George Sullivan, an independent
Trustee, serves as the lead independent Trustee. The Trust has determined its
leadership structure is appropriate given the specific characteristics and
circumstances of the Trust. The Trust made this determination in consideration
of, among other things, the fact that the independent Trustees constitute a
super-majority (80%) of the Board, the fact that the chairperson of each
Committee of the Board is an independent Trustee, the amount of assets under
management in the Trust, and the number of funds (and classes of shares)
overseen by the Board. The Board also believes that its leadership structure
facilitates the orderly and efficient flow of information to the independent
Trustees from fund management.
The Board of Trustees has three standing committees: the Audit Committee,
Governance Committee and Fair Value Pricing Committee. The Audit Committee and
Governance Committee are chaired by an independent Trustee and composed of all
of the independent Trustees. In addition, the Board of Trustees has a lead
independent Trustee.
In his role as lead independent Trustee, Mr. Sullivan, among other things: (i)
presides over Board meetings in the absence of the Chairman of the Board; (ii)
presides over executive sessions of the independent Trustees; (iii) along with
the Chairman of the Board, oversees the development of agendas for Board
meetings; (iv) facilitates communication between the independent Trustees and
management, and among the independent Trustees; (v) serves as a key point
person for dealings between the independent Trustees and management; and (vi)
has such other responsibilities as the Board or independent Trustees determine
from time to time.
Set forth below are the names, dates of birth, position with the Trust, length
of term of office, and the principal occupations and other directorships held
during at least the last five years of each of the persons currently serving as
a Trustee of the Trust. Unless otherwise noted, the business address of each
Trustee is SEI Investments Company, One Freedom Valley Drive, Oaks,
Pennsylvania 19456.
------------------------------------------------------------------------------------------------------------------
POSITION WITH
NAME AND DATE TRUST AND LENGTH PRINCIPAL OCCUPATIONS OTHER DIRECTORSHIPS HELD IN THE
OF BIRTH OF TERM IN THE PAST 5 YEARS PAST 5 YEARS
------------------------------------------------------------------------------------------------------------------
INTERESTED TRUSTEES
------------------------------------------------------------------------------------------------------------------
Robert Nesher Chairman of the SEI employee 1974 to Current Directorships: Trustee of
(08/17/46) Board of Trustees(1) present; currently The Advisors' Inner Circle Fund II,
(since 1991) performs various Bishop Street Funds, SEI Daily
services on behalf of Income Trust, SEI Institutional
SEI Investments for International Trust, SEI Institutional
which Mr. Nesher is Investments Trust, SEI Institutional
compensated. Managed Trust, SEI Liquid Asset
President and Director Trust, SEI Asset Allocation Trust,
of SEI Structured SEI Tax Exempt Trust, Adviser
Credit Fund, LP. Managed Trust and New Covenant
President and Chief Funds. Director of SEI Global
Executive Officer of Master Fund plc, SEI Global Assets
SEI Alpha Strategy Fund plc, SEI Global Investments
Portfolios, LP, June Fund plc, SEI Investments--Global
2007 to present. Funds Services, Limited, SEI
President and Director Investments Global, Limited, SEI
of SEI Opportunity Investments (Europe) Ltd., SEI
Fund, L.P. to 2010. Investments--Unit Trust
Management (UK) Limited, SEI
Multi-Strategy Funds PLC, SEI
Global Nominee Ltd and SEI Alpha
Strategy Portfolios, LP.
Former Directorships: Director of
SEI Opportunity Fund, L.P. to 2010.
------------------------------------------------------------------------------------------------------------------
|
S-44
------------------------------------------------------------------------------------------------------------------
POSITION WITH
NAME AND DATE TRUST AND LENGTH PRINCIPAL OCCUPATIONS OTHER DIRECTORSHIPS HELD IN THE
OF BIRTH OF TERM IN THE PAST 5 YEARS PAST 5 YEARS
------------------------------------------------------------------------------------------------------------------
William M. Doran Trustee(1) Self-Employed Current Directorships: Trustee of
(05/26/40) (since 1991) Consultant since 2003. The Advisors' Inner Circle Fund II,
Partner at Morgan, Bishop Street Funds, SEI Daily
Lewis & Bockius LLP Income Trust, SEI Institutional
(law firm) from 1976 to International Trust, SEI Institutional
2003. Counsel to the Investments Trust, SEI Institutional
Trust, SEI Investments, Managed Trust, SEI Liquid Asset
SIMC, the Trust, SEI Asset Allocation Trust,
Administrator and the SEI Tax Exempt Trust, Adviser
Distributor. Managed Trust and New Covenant
Funds. Director of SEI Alpha
Strategy Portfolios, LP. Director of
SEI Investments (Europe), Limited,
SEI Investments--Global Funds
Services, Limited, SEI Investments
Global, Limited, SEI Investments
(Asia), Limited, SEI Asset Korea
Co., Ltd., SEI Global Nominee Ltd.
and SEI Investments -- Unit Trust
Management (UK) Limited.
Director of the Distributor since
2003.
------------------------------------------------------------------------------------------------------------------
INDEPENDENT TRUSTEES
------------------------------------------------------------------------------------------------------------------
Charles E. Carlbom Trustee Self-Employed Current Directorships: Trustee of
(08/20/34) (since 2005) Business Consultant, The Advisors' Inner Circle Fund II
Business Projects Inc., and Bishop Street Funds. Director of
since 1997. Oregon Transfer Co.
------------------------------------------------------------------------------------------------------------------
John K. Darr Trustee Retired. Chief Current Directorships: Trustee of
(08/17/44) (since 2008) Executive Officer, The Advisors' Inner Circle Fund II
Office of Finance, and Bishop Street Funds. Director of
Federal Home Loan Federal Home Loan Bank of
Banks, from 1992 to Pittsburgh, Manna, Inc. (non-profit
2007. developer of affordable housing for
ownership) and Meals on Wheels,
Lewes/Rehoboth Beach.
------------------------------------------------------------------------------------------------------------------
Joseph T. Grause, Jr. Trustee Self Employed Current Directorships: Trustee of
(05/28/52) (since 2011) Consultant since The Advisors' Inner Circle Fund II
January 2012. Director and Bishop Street Funds. Director of
of Endowments and The Korea Fund, Inc.
Foundations,
Morningstar Investment
Management,
Morningstar, Inc.,
------------------------------------------------------------------------------------------------------------------
|
S-45
------------------------------------------------------------------------------------------------------------------
POSITION WITH
NAME AND DATE TRUST AND LENGTH PRINCIPAL OCCUPATIONS OTHER DIRECTORSHIPS HELD IN THE
OF BIRTH OF TERM IN THE PAST 5 YEARS PAST 5 YEARS
------------------------------------------------------------------------------------------------------------------
February 2010 to May
2011. Director of
International
Consulting and Chief
Executive Officer of
Morningstar Associates
Europe Limited,
Morningstar, Inc., May
2007 to February 2010.
Country Manager --
Morningstar UK
Limited, Morningstar,
Inc., June 2005 to May
2007.
------------------------------------------------------------------------------------------------------------------
Mitchell A. Johnson Trustee Retired. Private Current Directorships: Trustee of
(03/01/42) (since 2005) Investor since 1994. The Advisors' Inner Circle Fund II,
Bishop Street Funds, SEI Asset
Allocation Trust, SEI Daily Income
Trust, SEI Institutional International
Trust, SEI Institutional Managed
Trust, SEI Institutional Investments
Trust, SEI Liquid Asset Trust, SEI
Tax Exempt Trust, Adviser
Managed Trust and New Covenant
Funds. Director of SEI Alpha
Strategy Portfolios, LP. Director of
Federal Agricultural Mortgage
Corporation (Farmer Mac) since
1997.
------------------------------------------------------------------------------------------------------------------
Betty L. Krikorian Trustee Vice President, Current Directorships: Trustee of
(01/23/43) (since 2005) Compliance, AARP The Advisors' Inner Circle Fund II
Financial Inc., from and Bishop Street Funds.
2008 to 2010. Self-
Employed Legal and
Financial Services
Consultant since 2003.
Counsel (in-house) for
State Street Bank from
1995 to 2003.
------------------------------------------------------------------------------------------------------------------
Bruce Speca Trustee Global Head of Asset Current Directorships: Trustee of
(02/12/56) (since 2011) Allocation, Manulife The Advisors' Inner Circle Fund II
Asset Management and Bishop Street Funds.
(subsidiary of Manulife
Financial), June 2010 to
May 2011. Executive
Vice President --
Investment
Management Services,
John Hancock Financial
Services (subsidiary of
Manulife Financial),
June 2003 to June
2010.
------------------------------------------------------------------------------------------------------------------
|
S-46
------------------------------------------------------------------------------------------------------------------
POSITION WITH
NAME AND DATE TRUST AND LENGTH PRINCIPAL OCCUPATIONS OTHER DIRECTORSHIPS HELD IN THE
OF BIRTH OF TERM IN THE PAST 5 YEARS PAST 5 YEARS
------------------------------------------------------------------------------------------------------------------
James M. Storey Trustee Attorney, Solo Current Directorships:
(04/12/31) (since 1994) Practitioner since 1994. Trustee/Director of The Advisors'
Inner Circle Fund II, Bishop Street
Funds and U.S. Charitable Gift
Trust. Trustee of SEI Daily Income
Trust, SEI Institutional International
Trust, SEI Institutional Investments
Trust, SEI Institutional Managed
Trust, SEI Liquid Asset Trust, SEI
Asset Allocation Trust, SEI Tax
Exempt Trust and SEI Alpha
Strategy Portfolios, L.P. until
December 2010.
------------------------------------------------------------------------------------------------------------------
George J. Sullivan, Jr. Trustee Retired since January Current Directorships: Trustee/
(11/13/42) (since 1999) 2012. Self-employed Director of State Street Navigator
Consultant, Newfound Securities Lending Trust, The
Lead Independent Consultants Inc., April Advisors' Inner Circle Fund II,
Trustee 1997 to December Bishop Street Funds, SEI Structured
2011. Credit Fund, LP, SEI Daily Income
Trust, SEI Institutional International
Trust, SEI Institutional Investments
Trust, SEI Institutional Managed
Trust, SEI Liquid Asset Trust, SEI
Asset Allocation Trust, SEI Tax
Exempt Trust, SEI Alpha Strategy
Portfolios, LP, Adviser Managed
Trust and New Covenant Funds.
Member of the independent review
committee for SEI's Canadian-
registered mutual funds.
Former Directorships: Director of
SEI Opportunity Fund, L.P. to 2010.
------------------------------------------------------------------------------------------------------------------
|
(1) Denotes Trustees who may be deemed to be "interested" persons of the Fund
as that term is defined in the 1940 Act by virtue of their affiliation with
the Distributor and/or its affiliates.
INDIVIDUAL TRUSTEE QUALIFICATIONS.
The Trust has concluded that each of the Trustees should serve on the Board
because of their ability to review and understand information about the Fund
provided to them by management, to identify and request other
S-47
information they may deem relevant to the performance of their duties, to
question management and other service providers regarding material factors
bearing on the management and administration of the Fund, and to exercise their
business judgment in a manner that serves the best interests of the Fund's
shareholders. The Trust has concluded that each of the Trustees should serve
as a Trustee based on their own experience, qualifications, attributes and
skills as described below.
The Trust has concluded that Mr. Nesher should serve as Trustee because of the
experience he has gained in his various roles with SEI Investments Company,
which he joined in 1974, his knowledge of and experience in the financial
services industry, and the experience he has gained serving as a trustee of the
Trust since 1991.
The Trust has concluded that Mr. Doran should serve as Trustee because of the
experience he gained serving as a Partner in the Investment Management and
Securities Industry Practice of a large law firm, his experience in and
knowledge of the financial services industry, and the experience he has gained
serving as a trustee of the Trust since 1991.
The Trust has concluded that Mr. Carlbom should serve as Trustee because of the
business experience he gained as President and CEO of a large distribution
cooperative and Chairman of a consulting company, his knowledge of the
financial services industry, and the experience he has gained serving as a
trustee of the Trust since 2005.
The Trust has concluded that Mr. Darr should serve as Trustee because of his
background in economics, the business experience he gained in a variety of
roles with different financial and banking institutions and as a founder of a
money management firm, his knowledge of the financial services industry, and
the experience he has gained serving as a trustee of the Trust since 2008.
The Trust has concluded that Mr. Grause should serve as Trustee because of the
knowledge and experience he gained in a variety of leadership roles with
different financial institutions, his knowledge of the mutual fund and
investment management industries, and his past experience as an interested
trustee and chair of the investment committee for a multi-managed investment
company.
The Trust has concluded that Mr. Johnson should serve as Trustee because of the
experience he gained as a senior vice president, corporate finance, of a
Fortune 500 company, his experience in and knowledge of the financial services
and banking industries, the experience he gained serving as a director of other
mutual funds, and the experience he has gained serving as a trustee of the
Trust since 2005.
The Trust has concluded that Ms. Krikorian should serve as Trustee because of
the experience she gained serving as a legal and financial services consultant,
in-house counsel to a large custodian bank and Vice President of Compliance of
an investment adviser, her background in fiduciary and banking law, her
experience in and knowledge of the financial services industry, and the
experience she has gained serving as a trustee of the Trust since 2005.
The Trust has concluded that Mr. Speca should serve as Trustee because of the
knowledge and experience he gained serving as president of a mutual fund
company and portfolio manager for a $95 billion complex of asset allocation
funds, and his over 25 years of experience working in a management capacity
with mutual fund boards.
The Trust has concluded that Mr. Storey should serve as Trustee because of the
mutual fund governance experience he gained as an Investment Management
attorney, both in private practice and with the SEC, his background serving as
counsel to numerous mutual fund boards of trustees, his knowledge of the 1940
Act, his experience in and knowledge of the financial services industry, and
the experience he has gained serving as a trustee of the Trust since 1994.
S-48
The Trust has concluded that Mr. Sullivan should serve as Trustee because of
the experience he gained as a certified public accountant and financial
consultant, his experience in and knowledge of public company accounting and
auditing and the financial services industry, the experience he gained as an
officer of a large financial services firm in its operations department, and
his experience from serving as a trustee of the Trust since 1999.
In its periodic assessment of the effectiveness of the Board, the Board
considers the complementary individual skills and experience of the individual
Trustees primarily in the broader context of the Board's overall composition so
that the Board, as a body, possesses the appropriate (and appropriately
diverse) skills and experience to oversee the business of the funds.
BOARD COMMITTEES. The Board has established the following standing committees:
o AUDIT COMMITTEE. The Board has a standing Audit Committee that is composed
of each of the independent Trustees of the Trust. The Audit Committee
operates under a written charter approved by the Board. The principal
responsibilities of the Audit Committee include: (i) recommending which
firm to engage as each fund's independent registered public accounting firm
and whether to terminate this relationship; (ii) reviewing the independent
registered public accounting firm's compensation, the proposed scope and
terms of its engagement, and the firm's independence; (iii) pre-approving
audit and non-audit services provided by each fund's independent registered
public accounting firm to the Trust and certain other affiliated entities;
(iv) serving as a channel of communication between the independent
registered public accounting firm and the Trustees; (v) reviewing the
results of each external audit, including any qualifications in the
independent registered public accounting firm's opinion, any related
management letter, management's responses to recommendations made by the
independent registered public accounting firm in connection with the audit,
reports submitted to the Committee by the internal auditing department of
the Trust's Administrator that are material to the Trust as a whole, if
any, and management's responses to any such reports; (vi) reviewing each
fund's audited financial statements and considering any significant
disputes between the Trust's management and the independent registered
public accounting firm that arose in connection with the preparation of
those financial statements; (vii) considering, in consultation with the
independent registered public accounting firm and the Trust's senior
internal accounting executive, if any, the independent registered public
accounting firms' reports on the adequacy of the Trust's internal financial
controls; (viii) reviewing, in consultation with each fund's independent
registered public accounting firm, major changes regarding auditing and
accounting principles and practices to be followed when preparing each
fund's financial statements; and (ix) other audit related matters. Messrs.
Carlbom, Darr, Grause, Johnson, Speca, Storey and Sullivan and Ms.
Krikorian currently serve as members of the Audit Committee. Mr. Sullivan
serves as the Chairman of the Audit Committee. The Audit Committee meets
periodically, as necessary, and met four (4) times during the most recently
completed fiscal year.
o FAIR VALUE PRICING COMMITTEE. The Board has a standing Fair Value Pricing
Committee that is composed of at least one Trustee and various
representatives of the Trust's service providers, as appointed by the
Board. The Fair Value Pricing Committee operates under procedures approved
by the Board. The principal responsibility of the Fair Value Pricing
Committee is to determine the fair value of securities for which current
market quotations are not readily available. The Fair Value Pricing
Committee's determinations are reviewed by the Board. Mr. Nesher,
interested trustee, currently serves as the Board's delegate on the Fair
Value Pricing Committee. The Fair Value Pricing Committee meets
periodically, as necessary, and met twenty-two (22) times during the most
recently completed fiscal year.
o GOVERNANCE COMMITTEE. The Board has a standing Governance Committee
(formerly the Nominating Committee) that is composed of each of the
independent Trustees of the Trust. The Governance Committee operates under
a written charter approved by the Board. The principal responsibilities of
the Governance
S-49
Committee include: (i) considering and reviewing Board governance and
compensation issues; (ii) conducting a self-assessment of the Board's
operations; (iii) selecting and nominating all persons to serve as
independent Trustees and evaluating the qualifications of "interested"
Trustee candidates; and (iv) reviewing shareholder recommendations for
nominations to fill vacancies on the Board if such recommendations are
submitted in writing and addressed to the Committee at the Trust's office.
Ms. Krikorian and Messrs. Carlbom, Darr, Grause, Johnson, Speca, Storey and
Sullivan currently serve as members of the Governance Committee. Ms.
Krikorian serves as the Chairman of the Governance Committee. The
Governance Committee meets periodically, as necessary, and did not meet
during the most recently completed fiscal year.
FUND SHARES OWNED BY BOARD MEMBERS. The following table shows the dollar amount
range of each Trustee's "beneficial ownership" of shares of the Fund as of the
end of the most recently completed calendar year. Dollar amount ranges
disclosed are established by the SEC. "Beneficial ownership" is determined in
accordance with Rule 16a-1(a)(2) under the 1934 Act. The Trustees and officers
of the Trust own less than 1% of the outstanding shares of the Trust.
------------------------------------------------------------------------------------
DOLLAR RANGE OF AGGREGATE DOLLAR RANGE OF SHARES
NAME FUND SHARES (FUND) (ALL FUNDS (1))
------------------------------------------------------------------------------------
INTERESTED TRUSTEES
------------------------------------------------------------------------------------
------------------------------------------------------------------------------------
Doran None None
------------------------------------------------------------------------------------
Nesher None None
------------------------------------------------------------------------------------
INDEPENDENT TRUSTEES
------------------------------------------------------------------------------------
Carlbom None None
------------------------------------------------------------------------------------
Darr None None
------------------------------------------------------------------------------------
Grause None None
------------------------------------------------------------------------------------
Johnson Over $100,000 Over $100,000
(Cambiar
Opportunity
Fund)
------------------------------------------------------------------------------------
Krikorian None None
------------------------------------------------------------------------------------
Speca None None
------------------------------------------------------------------------------------
Storey None None
------------------------------------------------------------------------------------
Sullivan None None
------------------------------------------------------------------------------------
|
(1) Valuation date is December 31, 2012.
BOARD COMPENSATION. The Trust paid the following fees to the Trustees during
its most recently completed fiscal year.
---------------------------------------------------------------------------------------------------------------------
PENSION OR
RETIREMENT
AGGREGATE BENEFITS ACCRUED ESTIMATED ANNUAL
COMPENSATION FROM AS PART OF FUND BENEFITS UPON TOTAL COMPENSATION FROM THE TRUST
NAME THE TRUST EXPENSES RETIREMENT AND FUND COMPLEX(1)
---------------------------------------------------------------------------------------------------------------------
INTERESTED TRUSTEES
---------------------------------------------------------------------------------------------------------------------
Doran(2) $0 N/A N/A $0 for service on one (1) board
---------------------------------------------------------------------------------------------------------------------
Nesher(2) $0 N/A N/A $0 for service on one (1) board
---------------------------------------------------------------------------------------------------------------------
INDEPENDENT TRUSTEES
---------------------------------------------------------------------------------------------------------------------
Carlbom $60,712 N/A N/A $60,712 for service on one (1) board
---------------------------------------------------------------------------------------------------------------------
Darr $60,712 N/A N/A $60,712 for service on one (1) board
---------------------------------------------------------------------------------------------------------------------
Grause $60,712 N/A N/A $60,712 for service on one (1) board
---------------------------------------------------------------------------------------------------------------------
Johnson $60,712 N/A N/A $60,712 for service on one (1) board
---------------------------------------------------------------------------------------------------------------------
Krikorian $60,712 N/A N/A $60,712 for service on one (1) board
---------------------------------------------------------------------------------------------------------------------
Speca $60,712 N/A N/A $60,712 for service on one (1) board
---------------------------------------------------------------------------------------------------------------------
Storey $60,712 N/A N/A $60,712 for service on one (1) board
---------------------------------------------------------------------------------------------------------------------
Sullivan $60,712 N/A N/A $60,712 for service on one (1) board
---------------------------------------------------------------------------------------------------------------------
|
(1) The Trust is the only investment company in the "Fund Complex."
(2) A Trustee who is an "interested person" as defined by the 1940 Act.
TRUST OFFICERS. Set forth below are the names, dates of birth, position with
the Trust, length of term of office, and the principal occupations for the last
five years of each of the persons currently serving as executive officers of
the Trust. Unless otherwise noted, the business address of each officer is SEI
Investments Company, One Freedom Valley Drive, Oaks, Pennsylvania 19456. The
Chief Compliance Officer is the only officer who receives compensation from the
Trust for his services.
Certain officers of the Trust also serve as officers of one or more mutual
funds for which SEI Investments Company or its affiliates act as investment
manager, administrator or distributor.
------------------------------------------------------------------------------------------------------------------------------------
NAME AND POSITION WITH PRINCIPAL OCCUPATIONS IN PAST 5 YEARS OTHER DIRECTORSHIPS HELD IN
DATE OF BIRTH TRUST AND LENGTH THE PAST 5 YEARS
OF TERM
------------------------------------------------------------------------------------------------------------------------------------
Michael Beattie President Director of Client Service, SEI None.
(03/13/65) (since 2011) Investments Company, since 2004.
------------------------------------------------------------------------------------------------------------------------------------
Michael Lawson Treasurer, Director, SEI Investments, Fund None.
(10/08/60) Controller and Accounting since July 2005. Manager,
Chief Financial SEI Investments, Fund Accounting at
Officer SEI Investments AVP from April 1995 to
(since 2005) February 1998 and November 1998 to
July 2005.
------------------------------------------------------------------------------------------------------------------------------------
Russell Emery Chief Compliance Chief Compliance Officer of SEI None.
(12/18/62) Officer Structured Credit Fund, LP and SEI
(since 2006) Alpha Strategy Portfolios, LP since June
2007. Chief Compliance Officer of The
Advisors' Inner Circle Fund II, Bishop
Street Funds, SEI Institutional Managed
Trust, SEI Asset Allocation Trust, SEI
Institutional International Trust, SEI
Institutional Investments Trust, SEI
Daily Income Trust, SEI Liquid Asset
Trust, SEI Tax Exempt Trust, Adviser
Managed Trust and New Covenant
Funds. Chief Compliance Officer of SEI
Opportunity Fund, L.P. until 2010.
Director of Investment Product
Management and Development, SEI
Investments, since February 2003; Senior
Investment Analyst -- Equity Team, SEI
Investments, from March 2000 to
February 2003.
------------------------------------------------------------------------------------------------------------------------------------
|
S-51
------------------------------------------------------------------------------------------------------------------------------------
NAME AND POSITION WITH PRINCIPAL OCCUPATIONS IN PAST 5 YEARS OTHER DIRECTORSHIPS HELD IN
DATE OF BIRTH TRUST AND LENGTH THE PAST 5 YEARS
OF TERM
------------------------------------------------------------------------------------------------------------------------------------
Timothy D. Barto Vice President and General Counsel and Secretary of SIMC None.
(03/28/68) Assistant Secretary and the Administrator since 2004. Vice
(since 1999) President of SIMC and the Administrator
since 1999. Vice President and Assistant
Secretary of SEI Investments since 2001.
Assistant Secretary of SIMC, the
Administrator and the Distributor, and
Vice President of the Distributor from
1999 to 2003.
------------------------------------------------------------------------------------------------------------------------------------
Dianne M. Vice President Counsel at SEI Investments since 2010. None.
Descoteaux and Secretary Associate at Morgan, Lewis & Bockius
(07/18/77) (since 2011) LLP from 2006 to 2010. Associate at
Morrison & Foerster LLP from 2003 to
2006. Associate at Stradley Ronon
Stevens & Young LLP from 2002 to
2003.
------------------------------------------------------------------------------------------------------------------------------------
John Munch Vice President and Attorney, SEI Investments Company, None
(05/07/71) Assistant Secretary since 2001. General Counsel, SEI
(since 2012) Investments Distribution Co., since 2004.
------------------------------------------------------------------------------------------------------------------------------------
Edward Privacy Officer Compliance Manager of SEI Investments None.
McCusker (since 2013) Company, May 2011 -- April 2013.
(11/18/83) Project Manager and AML Operations
AML Officer Lead of SEI Private Trust Company,
(since 2013) September 2010 -- May 2011. Private
Banking Client Service Professional of
SEI Private Banking and Trust,
September 2008 -- September 2010.
------------------------------------------------------------------------------------------------------------------------------------
|
PURCHASING AND REDEEMING SHARES
Purchases and redemptions may be made through the Transfer Agent on any day the
New York Stock Exchange ("NYSE") is open for business. Shares of each Fund are
offered and redeemed on a continuous basis. Currently, the Trust is closed for
business when the following holidays are observed: New Year's Day, Martin
Luther King Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving and Christmas.
It is currently the Trust's policy to pay all redemptions in cash. The Trust
retains the right, however, to alter this policy to provide for redemptions in
whole or in part by a distribution in-kind of securities held by a Fund in lieu
of cash. Shareholders may incur brokerage charges on the sale of any such
securities so received in payment of redemptions. A shareholder will at all
times be entitled to aggregate cash redemptions from all funds of the Trust up
to the lesser of $250,000 or 1% of the Trust's net assets during any 90-day
period. The Trust has obtained an exemptive order from the SEC that permits the
Trust to make in-kind redemptions to those shareholders of the Trust that are
affiliated with the Trust solely by their ownership of a certain percentage of
the Trust's investment portfolios.
The Trust reserves the right to suspend the right of redemption and/or to
postpone the date of payment upon redemption for any period on which trading on
the NYSE is restricted, or during the existence of an emergency
S-52
(as determined by the SEC by rule or regulation) as a result of which disposal
or valuation of a Fund's securities is not reasonably practicable, or for such
other periods as the SEC has by order permitted. The Trust also reserves the
right to suspend sales of shares of any Fund for any period during which the
NYSE, the Adviser, the Administrator, the Transfer Agent and/or the Custodian
are not open for business.
Each of the Funds has no current intention to allow purchases in-kind, but
under certain circumstances they may allow investors to purchase shares by
contributing securities in-kind to the Funds, provided that the securities used
to purchase Fund shares are appropriate investments for the Funds, are
consistent with the Funds' investment objective and policies, and meet any
other applicable criteria established by the Adviser, such as liquidity. The
Funds will value the securities in accordance with its policies and procedures
with respect to the valuation of portfolio securities, as of the time at which
the Funds determine their net asset value per share of a Fund or Funds (the
"NAV") on the day that the securities are contributed to the Funds in-kind.
The Adviser has the sole discretion with respect to determining whether
particular securities may be used as payment in-kind for Fund shares.
DETERMINATION OF NET ASSET VALUE
SECURITY VALUATION. Securities listed on a securities exchange, market or
automated quotation system for which quotations are readily available (except
for securities traded on NASDAQ) are valued at the last quoted sale price on
the primary exchange or market (foreign or domestic) on which they are traded,
or, if there is no such reported sale, at the most recent quoted bid price. For
securities traded on NASDAQ, the NASDAQ Official Closing Price will be used.
The prices for foreign securities are reported in local currency and converted
to U.S. dollars using currency exchange rates. Prices for most securities held
by the Funds are provided daily by recognized independent pricing agents. If a
security price cannot be obtained from an independent, third-party pricing
agent, the Funds seek to obtain a bid price from at least one independent
broker.
FAIR VALUE PROCEDURES. Securities for which market prices are not "readily
available" are valued in accordance with Fair Value Procedures established by
the Trust's Board of Trustees (the "Board"). The Funds' Fair Value Procedures
are implemented through a Fair Value Committee (the "Committee") designated by
the Board. Some of the more common reasons that may necessitate that a security
be valued using Fair Value Procedures include: the security's trading has been
halted or suspended; the security has been de-listed from a national exchange;
the security's primary trading market is temporarily closed at a time when
under normal conditions it would be open; or the security's primary pricing
source is not able or willing to provide a price. When a security is valued in
accordance with the Fair Value Procedures, the Committee will determine the
value after taking into consideration relevant information reasonably available
to the Committee.
USE OF THIRD-PARTY INDEPENDENT PRICING AGENTS. The International Equity Fund,
the Aggressive Value Fund and the Global Select Fund use FT Interactive ("FT")
as a third party fair valuation vendor. FT provides a fair value for foreign
securities held by the Fund based on certain factors and methodologies
(involving, generally, tracking valuation correlations between the U.S. market
and each non-U.S. security) applied by FT in the event that there is a movement
in the U.S. market that exceeds a specific threshold that has been established
by the Committee. The Committee has also established a "confidence interval"
which is used to determine the level of correlation between the value of a
foreign security and movements in the U.S. market before a particular security
is fair valued when the threshold is exceeded. In the event that the threshold
established by the Committee is exceeded on a specific day, the International
Equity Fund, the Aggressive Value Fund and the Global Select Fund value the
non-U.S. securities in their portfolios that exceed the applicable "confidence
interval" based upon the fair values provided by FT. In such event, it is not
necessary to hold a Committee meeting. In the event that the Adviser believes
that the fair values provided by FT are not reliable, the Adviser contacts the
Fund's Administrator and requests that a meeting of the Committee be held.
S-53
Options for which the primary market is a national securities exchange are
valued at the last quoted sale price on the primary exchange or market (foreign
or domestic) on which they are traded, or, if there is no such reported sale,
at the most recent quoted bid price for long options, and the most recent ask
price for written options. Options not traded on a national securities exchange
are valued in accordance with Fair Value Procedures established by the Funds'
Board of Trustees.
For securities that principally trade on a foreign market or exchange, a
significant gap in time can exist between the time of a particular security's
last trade and the time at which the Fund calculates its net asset value. The
closing prices of such securities may no longer reflect their market value at
the time the Fund calculates net asset value if an event that could materially
affect the value of those securities (a "Significant Event") has occurred
between the time of the security's last close and the time that the Fund
calculates net asset value. A Significant Event may relate to a single issuer
or to an entire market sector. If the adviser of the Fund becomes aware of a
Significant Event that has occurred with respect to a security or group of
securities after the closing of the exchange or market on which the security or
securities principally trade, but before the time at which the Fund calculates
net asset value, it may request that a Committee Meeting be called.
In addition, the Fund's administrator monitors price movements among certain
selected indices, securities and/or baskets of securities that may be an
indicator that the closing prices received earlier from foreign exchanges or
markets may not reflect market value at the time the Fund calculates net asset
value. If price movements in a monitored index or security exceed levels
established by the administrator, the administrator notifies the adviser if the
Fund is holding the relevant security that such limits have been exceeded. In
such event, the adviser makes the determination whether a Committee Meeting
should be called based on the information provided.
TAXES
The following is only a summary of certain additional federal income tax
considerations generally affecting each Fund and its shareholders that is
intended to supplement the discussion contained in the Funds' prospectuses. No
attempt is made to present a detailed explanation of the tax treatment of each
Fund or its shareholders, and the discussion here and in the Funds'
prospectuses is not intended as a substitute for careful tax planning.
Shareholders are urged to consult with their tax advisors with specific
reference to their own tax situations, including their state, local, and
foreign tax liabilities.
The following general discussion of certain federal income tax consequences is
based on the Code and the regulations issued thereunder as in effect on the
date of this SAI. New legislation, as well as administrative changes or court
decisions, may significantly change the conclusions expressed herein, and may
have a retroactive effect with respect to the transactions contemplated
herein.
QUALIFICATIONS AS A RIC. Each Fund intends to qualify and elects to be treated
as a RIC under Subchapter M of the Code. By following such a policy, each Fund
expects to eliminate or reduce to a nominal amount the federal taxes to which
it may be subject. The Board reserves the right not to maintain the
qualification of a Fund as a RIC if it determines such course of action to be
beneficial to shareholders.
In order to be taxable as a RIC, each Fund must distribute annually to its
shareholders at least 90% of its net investment income (generally net
investment income plus the excess, if any, of net short-term capital gains over
net long-term capital losses, less operating expenses) and at least 90% of its
net tax exempt interest income, for each tax year, if any, to its shareholders
("Distribution Requirement") and also must meet several additional
requirements. Among these requirements are the following: (i) at least 90% of
each Fund's gross income each taxable year must be derived from dividends,
interest, payments with respect to securities loans, gains from the sale or
other disposition of stock, securities or foreign currencies, and certain other
income, including, generally, certain gains from options, futures, and forward
contracts derived with respect to its business of investing in such
S-54
stock, securities or currencies, and net income derived from an interest in a
qualified publicly traded partnership; (ii) at the end of each fiscal quarter
of each Fund's taxable year, at least 50% of the market value of its total
assets must be represented by cash and cash items, U.S. government securities,
securities of other RICs, and other securities, with such other securities
limited, in respect to any one issuer, to an amount not greater than 5% of the
value of the Fund's total assets or more than 10% of the outstanding voting
securities of such issuer, including the equity securities of a qualified
publicly traded partnership; and (iii) at the end of each fiscal quarter of
each Fund's taxable year, not more than 25% of the value of its total assets
may be invested in the securities (other than U.S. government securities or
securities of other RICs) of any one issuer or two or more issuers that the
Fund controls and which are engaged in the same, similar, or related trades or
businesses, or the securities of one or more qualified publicly traded
partnerships.
If a Fund fails to satisfy the qualifying income or diversification
requirements in any taxable year, the Fund may be eligible for relief
provisions if the failures are due to reasonable cause and not willful neglect
and if a penalty tax is paid with respect to each failure to satisfy the
applicable requirements. Additionally, relief is provided for certain de
minimis failures of the diversification requirements where the Fund corrects
the failure within a specified period. If a Fund fails to qualify as a RIC for
any year, and these relief provisions are not available, all of its income will
be subject to federal income tax at regular corporate rates without any
deduction for distributions to shareholders. In such case, its shareholders
would generally be taxed as if they received ordinary dividends to the extent
of the Fund's current and accumulated earnings and profits, although corporate
shareholders could be eligible for the dividends received deduction and
individuals may be able to benefit from the lower tax rates available to
qualified dividend income. In addition, the Fund could be required to recognize
unrealized gains, pay substantial taxes and interest and make substantial
distributions before requalifying as a RIC.
For taxable years beginning after December 22, 2010, a Fund may elect to treat
part or all of any "qualified late year loss" as if it had been incurred in the
succeeding taxable year in determining the Fund's taxable income, net capital
gain, net short-term capital gain, and earnings and profits. The effect of this
election is to treat any such "qualified late year loss" as if it had been
incurred in the succeeding taxable year in characterizing Fund distributions
for any calendar. A "qualified late year loss" generally includes net capital
loss, net long-term capital loss, or net short-term capital loss incurred after
October 31 of the current taxable year (commonly referred to as "post-October
losses") and certain other late-year losses.
If a Fund has a "net capital loss" (that is, capital losses in excess of
capital gains) for a taxable year beginning after December 22, 2010 (a
"Post-2010 Loss"), the excess of the Fund's net short-term capital losses over
its net long-term capital gains is treated as a short-term capital loss arising
on the first day of the Fund's next taxable year, and the excess (if any) of
the Fund's net long-term capital losses over its net short-term capital gains
is treated as a long-term capital loss arising on the first day of the Fund's
next taxable year. The Fund's unused capital loss carryforwards that arose in
taxable years that began on or before December 22, 2010 ("Pre-2011 Losses" are
available to be applied against future capital gains, if any, realized by the
Fund prior to the expiration of those carryforwards, generally eight years
after the year in which they arose. The Fund's Post-2010 Losses must be fully
utilized before the Fund will be permitted to utilize carryforwards of Pre-2011
Losses. In addition, the carryover of capital losses may be limited under the
general loss limitation rules if the Fund experiences an ownership change as
defined in the Code.
FEDERAL EXCISE TAX. Notwithstanding the Distribution Requirement described
above, which only requires a Fund to distribute at least 90% of its annual
investment company income and does not require any minimum distribution of net
capital gain, a Fund will be subject to a nondeductible 4% federal excise tax
to the extent it fails to distribute, by the end of any calendar year, at least
98% of its ordinary income for that year and 98.2% of its capital gain net
income (the excess of short- and long-term capital gain over short- and
long-term capital loss) for the one-year period ending on October 31 of that
year, plus certain other amounts. Each Fund intends to make
S-55
sufficient distributions to avoid liability for federal excise tax, but can
make no assurances that such tax will be completely eliminated. A Fund may in
certain circumstances be required to liquidate Fund investments in order to
make sufficient distributions to avoid federal excise tax liability at a time
when the investment adviser might not otherwise have chosen to do so, and
liquidation of investments in such circumstances may affect the ability of a
Fund to satisfy the requirement for qualification as a RIC.
SHAREHOLDER TREATMENT. Each Fund receives income generally in the form of
dividends and interest on investments. This income, plus net short-term capital
gains, if any, less expenses incurred in the operation of a Fund, constitutes
the Fund's net investment income from which dividends may be paid to you. Any
distributions by a Fund from such income will be taxable to you as ordinary
income or at the lower capital gains rates that apply to individuals receiving
qualified dividend income, whether you take them in cash or in additional
shares.
Distributions by each Fund will be eligible for the reduced maximum tax rate to
individuals of 20% (lower rates apply to individuals in lower tax brackets) to
the extent that the Fund receives qualified dividend income on the securities
it holds and the Fund designates the distributions as qualified dividend
income. Qualified dividend income is, in general, dividend income from taxable
domestic corporations and certain foreign corporations (e.g., foreign
corporations incorporated in a possession of the United States or in certain
countries with a comprehensive tax treaty with the United States, or the stock
of which is readily tradable on an established securities market in the United
States). A dividend will not be treated as qualified dividend income to the
extent that (i) the shareholder has not held the shares on which the dividend
was paid for more than 60 days during the 121-day period that begins on the
date that is 60 days before the date on which the shares become "ex-dividend"
(which is the day on which declared distributions (dividends or capital gains)
are deducted from the Fund's assets before it calculates the net asset value)
with respect to such dividend, (ii) the Fund has not satisfied similar holding
period requirements with respect to the securities it holds that paid the
dividends distributed to the shareholder, (iii) the shareholder is under an
obligation (whether pursuant to a short sale or otherwise) to make related
payments with respect to substantially similar or related property, or (iv) the
shareholder elects to treat such dividend as investment income under section
163(d)(4)(B) of the Code. Distributions by the Fund of its net short-term
capital gains will be taxable as ordinary income. Capital gain distributions
consisting of the Fund's net capital gains will be taxable as long-term capital
gains regardless of how long you have held your shares. Each Fund will inform
you of the amount your ordinary income dividends, qualified dividend income and
capital gains distributions, if any, at the time they are paid and will advise
you of their tax status for federal income tax purposes shortly after the close
of each calendar year.
A Fund's dividends that are paid to their corporate shareholders and are
designated by the Fund as attributable to qualifying dividends it received from
U.S. domestic corporations may be eligible, in the hands of such shareholders,
for the 70% corporate dividends received deduction, subject to certain holding
period requirements and debt financing limitations. Generally, and subject to
certain limitations (including certain holding period limitations), a dividend
will be treated as a qualifying dividend if it has been received from a
domestic corporation. All dividends (including the deducted portion) must be
included in your alternative minimum taxable income calculation.
Effective beginning January 1, 2013, U.S. individuals with income exceeding
$200,000 ($250,000 if married and filing jointly) are subject to a new 3.8%
Medicare contribution tax on their "net investment income," including interest,
dividends, and capital gains (including capital gains realized on the sale or
exchange of Fund shares).
If a Fund's distributions exceed its taxable income and capital gains realized
during a taxable year, all or a portion of the distributions made in the same
taxable year may be recharacterized as a return of capital to the shareholders.
A return of capital distribution will generally not be taxable, but will reduce
each shareholder's cost basis in a Fund and result in a higher reported capital
gain or lower reported capital loss when those shares on which the distribution
was received are sold.
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A dividend or distribution received shortly after the purchase of shares
reduces the net asset value of the shares by the amount of the dividend or
distribution and, although in effect a return of capital, will be taxable to
the shareholder. If the net asset value of shares were reduced below the
shareholder's cost by dividends or distributions representing gains realized on
sales of securities, such dividends or distributions would be a return of
investment though taxable to the shareholder in the same manner as other
dividends or distributions.
Dividends declared to shareholders of record in October, November or December
and actually paid in January of the following year will be treated as having
been received by shareholders on December 31 of the calendar year in which
declared. Under this rule, therefore, a shareholder may be taxed in one year on
dividends or distributions actually received in January of the following year.
Any gain or loss recognized on a sale, exchange, or redemption of shares of a
Fund by a shareholder who is not a dealer in securities will generally, for
individual shareholders, be treated as a long-term capital gain or loss if the
shares have been held for more than twelve months and otherwise will be treated
as a short-term capital gain or loss. However, if shares on which a shareholder
has received a net capital gain distribution are subsequently sold, exchanged,
or redeemed and such shares have been held for six months or less, any loss
recognized will be treated as a long-term capital loss to the extent of the net
capital gain distribution. In addition, the loss realized on a sale or other
disposition of shares will be disallowed to the extent a shareholder
repurchases (or enters into a contract to or option to repurchase) shares
within a period of 61 days (beginning 30 days before and ending 30 days after
the disposition of the shares). This loss disallowance rule will apply to
shares received through the reinvestment of dividends during the 61-day
period.
Each Fund (or its administrative agent) is required to report to the Internal
Revenue Services ("IRS") and furnish to Fund shareholders the cost basis
information for Fund shares purchased on or after January 1, 2012, and sold on
or after that date. In addition to the requirement to report the gross proceeds
from the sale of Fund shares, each Fund is also be required to report the cost
basis information for such shares and indicate whether these shares had a
short-term or long-term holding period. For each sale of Fund shares each Fund
will permit Fund shareholders to elect from among several IRS-accepted cost
basis methods, including average cost. In the absence of an election, the
Funds will use the average basis method as their default cost basis method. The
cost basis method elected by the Fund shareholder (or the cost basis method
applied by default) for each sale of Fund shares may not be changed after the
settlement date of each such sale of Fund shares. Fund shareholders should
consult with 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. The requirement to report the gross proceeds
from the sale of Fund shares continues to apply to all Fund shares acquired
through December 31, 2011, and sold on and after that date.
FOREIGN TAXES. Dividends and interest received by a Fund from foreign sources
may be subject to income, withholding or other taxes imposed by foreign
countries and United States possessions that would reduce the yield on such
securities. Tax conventions between certain countries and the United States may
reduce or eliminate these taxes. Foreign countries generally do not impose
taxes on capital gains with respect to investments by foreign investors. If
more than 50% of the value of a Fund's total assets at the close of its taxable
year consists of stocks or securities of foreign corporations, the Fund will be
eligible to, and will, file an election with the IRS that may enable
shareholders, in effect, to receive either the benefit of a foreign tax credit,
or a deduction from such taxes, with respect to any foreign and U.S.
possessions income taxes paid by a Fund, subject to certain limitations.
Pursuant to the election, a Fund will treat those taxes as dividends paid to
its shareholders. Each such shareholder will be required to include a
proportionate share of those taxes in gross income as income received from a
foreign source and must treat the amount so included as if the shareholder had
paid the foreign tax directly. The shareholder may then either deduct the taxes
deemed paid by him or her in computing his or her taxable income or,
alternatively, use the foregoing information in calculating any foreign tax
credit (subject to significant
S-57
limitations) they may be entitled to use against their federal income tax. If a
Fund makes the election, such Fund will report annually to its shareholders the
respective amounts per share of the Fund's income from sources within, and
taxes paid to, foreign countries and U.S. possessions.
Foreign tax credits, if any, received by a Fund as a result of an investment in
another RIC (including an ETF which is taxable as a RIC) will not be passed
through to you unless the Fund qualifies as a "qualified fund of funds" under
the Code. If a Fund is a "qualified fund of funds" it will be eligible to file
an election with the IRS that will enable the Fund to pass along these foreign
tax credits to its shareholders. A Fund will be treated as a "qualified fund of
funds" under the Code if at least 50% of the value of the Fund's total assets
(at the close of each quarter of the Fund's taxable year) is represented by
interests in other RICs.
TAX TREATMENT OF COMPLEX SECURITIES. Each Fund may invest in complex
securities. These investments may be subject to numerous special and complex
tax rules. These rules could affect whether gains and losses recognized by a
Fund are treated as ordinary income or capital gain, accelerate the recognition
of income to the Fund and/or defer the Fund's ability to recognize losses, and,
in limited cases, subject the Fund to U.S. federal income tax on income from
certain of its foreign securities. In turn, these rules may affect the amount,
timing or character of the income distributed to you by each Fund.
Each Fund is required for federal income tax purposes to mark-to-market and
recognize as income for each taxable year its net unrealized gains and losses
on certain futures contracts as of the end of the year as well as those
actually realized during the year. Gain or loss from futures and options
contracts on broad-based indexes required to be marked to market will be 60%
long-term and 40% short-term capital gain or loss. Application of this rule may
alter the timing and character of distributions to shareholders. A Fund may be
required to defer the recognition of losses on futures contracts, options
contracts and swaps to the extent of any unrecognized gains on offsetting
positions held by the Fund. It is anticipated that any net gain realized from
the closing out of futures or options contracts with respect to securities will
be considered gain from the sale of securities and therefore will be qualifying
income for purposes of the 90% requirement described above in the paragraph
discussing the requirements for qualification as a RIC. Each Fund distributes
to shareholders at least annually any net capital gains which have been
recognized for federal income tax purposes, including unrealized gains at the
end of a Fund's fiscal year on futures or options transactions. Such
distributions are combined with distributions of capital gains realized on a
Fund's other investments and shareholders are advised on the nature of the
distributions.
As a result of entering into swap contracts, a Fund may make or receive
periodic net payments. Such Fund may also make or receive a payment when a swap
is terminated prior to maturity through an assignment of the swap or other
closing transaction. Periodic payments on a swap will generally constitute
ordinary income or loss, while termination of a swap will generally result in
capital gain or loss (which may be a long-term capital gain or loss if a Fund
has been a party to the swap for more than one year). The tax treatment of many
types of credit default swaps is uncertain.
Investments by a Fund in zero coupon or other discount securities will result
in income to the Fund equal to a portion of the excess face value of the
securities over their issue price (the "original issue discount" or "OID") each
year that the securities are held, even though the Fund receives no cash
interest payments. In other circumstances, whether pursuant to the terms of a
security or as a result of other factors outside the control of the Fund, the
Fund may recognize income without receiving a commensurate amount of cash.
Such income is included in determining the amount of income that the Fund must
distribute to maintain its status as a RIC and to avoid the payment of federal
income tax, including excise tax discussed above. Because such income may not
be matched by a corresponding cash distribution to the Fund, the Fund may be
required to borrow money or dispose of other securities to be able to make
distributions to its shareholders.
Any market discount recognized on a bond is taxable as ordinary income. A
market discount bond is a bond
S-58
acquired in the secondary market at a price below redemption value or adjusted
issue price if issued with original issue discount. Absent an election by the
fund to include the market discount in income as it accrues, gain on the Fund's
disposition of such an obligation will be treated as ordinary income rather
than capital gain to the extent of the accrued market discount.
A Fund's transactions in foreign currencies and forward foreign currency
contracts will be subject to special provisions of the Code that, among other
things, may affect the character of gains and losses realized by the Fund
(i.e., may affect whether gains or losses are ordinary or capital), accelerate
recognition of income to the Fund and defer losses. These rules could therefore
affect the character, amount, and timing of distributions to shareholders. Most
foreign exchange gains realized on the sale of debt securities are treated as
ordinary income by a Fund. Similarly, foreign exchange losses realized by a
Fund on the sale debt securities are generally treated as ordinary losses by
the Fund. These gains- when distributed- will be taxed to you as ordinary
dividends, and any losses will reduce the Fund's ordinary income otherwise
available for distribution to you and may cause some or all of the Fund's
previously distributed income to be classified as a return of capital.
If a Fund owns shares in certain foreign investment entities, referred to as
"passive foreign investment companies" or "PFICs", the Fund will be subject to
one of the following special tax regimes: (i) the Fund would be liable for U.S.
federal income tax, and an additional interest charge, on a portion of any
"excess distribution" from such foreign entity or any gain from the disposition
of such shares, even if the entire distribution or gain is paid out by the Fund
as a dividend to its shareholders; (ii) if the Fund were able and elected to
treat a PFIC as a "qualified electing fund" or "QEF", the Fund would be
required each year to include in income, and distribute to shareholders in
accordance with the distribution requirements set forth above, the Fund's pro
rata share of the ordinary earnings and net capital gains of the PFIC, whether
or not such earnings or gains are distributed to the Fund; or (iii) the Fund
may be entitled to mark-to-market annually shares of the PFIC, and in such
event would be required to distribute to shareholders any such mark-to-market
gains in accordance with the distribution requirements set forth above.
BACKUP WITHHOLDING. In certain cases, each Fund will be required to withhold at
a rate of 28% and remit to the U.S. Treasury, such withheld amounts on any
distributions paid to a shareholder who (1) has failed to provide a correct
taxpayer identification number, (2) is subject to backup withholding by the
IRS, (3) has not certified to that Fund that such shareholder is not subject to
backup withholding, or (4) has not certified that such shareholder is a U.S.
person or U.S. resident alien.
TAX SHELTER REPORTING REGULATIONS. Under U.S. Treasury regulations, generally,
if a shareholder recognizes a loss of $2 million or more for an individual
shareholder or $10 million or more for a corporate shareholder, the shareholder
must file with the IRS a disclosure statement on Form 8886. Direct shareholders
of portfolio securities are in many cases excepted from this reporting
requirement, but under current guidance, shareholders of a RIC such as a Fund
are not excepted. Future guidance may extend the current exception from this
reporting requirement to shareholders of most or all RICs. The fact that a loss
is reportable under these regulations does not affect the legal determination
of whether the taxpayer's treatment of the loss is proper. Shareholders should
consult their tax advisors to determine the applicability of these regulations
in light of their individual circumstances.
NON-U.S. SHAREHOLDERS. Non-U.S. investors in a Fund may be subject to U.S.
withholding and estate tax and may be subject to additional reporting
obligations and are therefore strongly encouraged to consult their tax advisors
prior to investing in a Fund.
A U.S. withholding tax at a 30% rate will be imposed on dividends beginning
after June 30, 2014 (and proceeds of sales in respect of each Fund's shares
received by such Fund's shareholders beginning after December 31, 2016) for
shareholders who own their shares through foreign accounts or foreign
intermediaries if certain
S-59
disclosure requirements related to U.S. accounts or ownership are not
satisfied. Each Fund will not pay any additional amounts in respect to any
amounts withheld. Under certain circumstances, a foreign shareholder may be
eligible for refunds or credits of such taxes.
TAX-EXEMPT SHAREHOLDERS. Certain tax-exempt shareholders, including qualified
pension plans, individual retirement accounts, salary deferral arrangements,
401(k)s, and other tax-exempt entities, generally are exempt from federal
income taxation except with respect to their unrelated business taxable income
("UBTI"). Under current law, the Fund generally serves to block UBTI from being
realized by its tax-exempt shareholders. However, notwithstanding the
foregoing, the tax-exempt shareholder could realize UBTI by virtue of an
investment in the Fund where, for example: (i) the Fund invests in residual
interests of Real Estate Mortgage Investment Conduits (REMICs); (ii) the Fund
invests in a REIT that is a taxable mortgage pool (TMP) or that has a
subsidiary that is a TMP or that invests in the residual interest of a REMIC;
or (iii) shares in the Fund constitute debt-financed property in the hands of
the tax-exempt shareholder within the meaning of section 514(b) of the Code.
Charitable remainder trusts are subject to special rules and should consult
their tax advisor. The IRS has issued guidance with respect to these issues and
prospective shareholders, especially charitable remainder trusts, are
encouraged to consult with their tax advisors regarding these issues.
STATE TAXES. It is expected that each Fund will not be liable for any corporate
excise, income or franchise tax in Massachusetts if it qualifies as a RIC for
federal income tax purposes. Depending upon state and local law, distributions
by each Fund to its shareholders and the ownership of such shares may be
subject to state and local taxes. Rules of state and local taxation of dividend
and capital gains distributions from RICs often differ from rules for federal
income taxation described above.
Many states grant tax-free status to dividends paid to you from interest earned
on direct obligations of the U.S. government, subject in some states to minimum
investment requirements that must be met by a fund. Investment in GNMA or FNMA
securities, banker's acceptances, commercial paper, and repurchase agreements
collateralized by U.S. government securities do not generally qualify for such
tax-free treatment.
Shareholders should consult their own tax advisors regarding the effect of
federal, state and local taxes on an investment in Fund shares.
BROKERAGE ALLOCATION AND OTHER PRACTICES
BROKERAGE TRANSACTIONS. Generally, equity securities, both listed and over the
counter, are bought and sold through brokerage transactions for which
commissions are payable. Purchases from underwriters will include the
underwriting commission or concession, and purchases from dealers serving as
market makers will include a dealer's mark-up or reflect a dealer's mark-down.
Money market securities and other debt securities are usually bought and sold
directly from the issuer or an underwriter or market maker for the securities.
Generally, a Fund will not pay brokerage commissions for such purchases. When a
debt security is bought from an underwriter, the purchase price will usually
include an underwriting commission or concession. The purchase price for
securities bought from dealers serving as market makers will similarly include
the dealer's mark up or reflect a dealer's mark down. When a Fund executes
transactions in the OTC market, it will generally deal with primary market
makers unless prices that are more favorable are otherwise obtainable.
In addition, the Adviser may place a combined order for two or more accounts it
manages, including a Fund engaged in the purchase or sale of the same security
if, in its judgment, joint execution is in the best interest of each
participant and will result in best price and execution. Transactions
involving commingled orders are allocated in a manner deemed equitable to each
account or fund. Although it is recognized that, in some cases, the joint
execution of orders could adversely affect the price or volume of the security
that a particular account or the Funds may obtain, it is the opinion of the
Adviser and the Board that the advantages of combined orders outweigh
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the possible disadvantages of separate transactions. Nonetheless, the Adviser
believes that the ability of a Fund to participate in higher volume
transactions will generally be beneficial to the Funds.
For the fiscal years ended April 30, 2011, 2012, and 2013, the Funds paid the
following aggregate brokerage commissions on portfolio transactions:
AGGREGATE DOLLAR AMOUNT
FUND OF BROKERAGE COMMISSIONS PAID
2011 2012 2013
--------------------------------------------------------------------------------
Opportunity Fund $2,486,275 $2,212,822 $1,360,908
--------------------------------------------------------------------------------
International Fund $74,682 $62,425 $80,726
--------------------------------------------------------------------------------
Small Cap Fund $951,692 $1,719,041 $1,914,435
--------------------------------------------------------------------------------
Aggressive Value Fund $1,288,742 $2,692,874 $1,020,072
--------------------------------------------------------------------------------
SMID Fund N/A(1) $2,658(2) $4,305
--------------------------------------------------------------------------------
Global Select Fund N/A(1) $1,577(3) $1,760
--------------------------------------------------------------------------------
|
(1) Not in operation during the period.
(2) Represents the period from May 31, 2011 (commencement of operations) to
April 30, 2012.
(3) Represents the period from November 30, 2011 (commencement of operations)
to April 30, 2012.
BROKERAGE SELECTION. The Trust does not expect to use one particular broker or
dealer, and when one or more brokers is believed capable of providing the best
combination of price and execution, the Adviser may select a broker based upon
brokerage or research services provided to the Adviser. The Adviser may pay a
higher commission than otherwise obtainable from other brokers in return for
such services only if a good faith determination is made that the commission is
reasonable in relation to the services provided.
Section 28(e) of the 1934 Act permits the Adviser, under certain circumstances,
to cause each Fund to pay a broker or dealer a commission for effecting a
transaction in excess of the amount of commission another broker or dealer
would have charged for effecting the transaction in recognition of the value of
brokerage and research services provided by the broker or dealer. In addition
to agency transactions, the Adviser may receive brokerage and research services
in connection with certain riskless principal transactions, in accordance with
applicable SEC guidance. Brokerage and research services include: (1)
furnishing advice as to the value of securities, the advisability of investing
in, purchasing or selling securities, and the availability of securities or
purchasers or sellers of securities; (2) furnishing analyses and reports
concerning issuers, industries, securities, economic factors and trends,
portfolio strategy, and the performance of accounts; and (3) effecting
securities transactions and performing functions incidental thereto (such as
clearance, settlement, and custody). In the case of research services, the
Adviser believes that access to independent investment research is beneficial
to their investment decision-making processes and, therefore, to each Fund.
To the extent that research services may be a factor in selecting brokers, such
services may be in written form or through direct contact with individuals and
may include information as to particular companies and securities as well as
market, economic, or institutional areas and information which assists in the
valuation and pricing of investments. Examples of research-oriented services
for which the adviser might utilize Fund commissions include research reports
and other information on the economy, industries, sectors, groups of
securities, individual companies, statistical information, political
developments, technical market action, pricing and appraisal services, credit
analysis, risk measurement analysis, performance and other analysis. The
Adviser may use research services furnished by brokers in servicing all client
accounts and not all services may necessarily be used in connection with the
account that paid commissions to the broker providing such services.
Information so received by the Adviser will be in addition to and not in lieu
of the services required to be performed by the Funds' Adviser under the
Advisory Agreement. Any advisory or other fees paid to the Adviser are not
reduced as a result of the receipt of research services.
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In some cases the Adviser may receive a service from a broker that has both a
"research" and a "non-research" use. When this occurs, the Adviser makes a
good faith allocation, under all the circumstances, between the research and
non-research uses of the service. The percentage of the service that is used
for research purposes may be paid for with client commissions, while the
Adviser will use its own funds to pay for the percentage of the service that is
used for non-research purposes. In making this good faith allocation, the
Adviser faces a potential conflict of interest, but the Adviser believes that
its allocation procedures are reasonably designed to ensure that it
appropriately allocates the anticipated use of such services to their research
and non-research uses.
From time to time, a Fund may purchase new issues of securities for clients in
a fixed price offering. In these situations, the seller may be a member of the
selling group that will, in addition to selling securities, provide the Adviser
with research services. The Financial Industry Regulatory Authority ("FINRA")
has adopted rules expressly permitting these types of arrangements under
certain circumstances. Generally, the seller will provide research "credits" in
these situations at a rate that is higher than that which is available for
typical secondary market transactions. These arrangements may not fall within
the safe harbor of Section 28(e).
Cambiar utilizes a Commission Sharing Arrangement ("CSA") to obtain research
from certain macro research firms with Instinet being the executing broker and
facilitator of the CSA. Allocations to the macro research firms are determined
by Cambiar's broker-vote process.
For the fiscal year ended April 30, 2013 the Funds paid the following
commissions through the CSA program:
COMMISSION SHARING ARRANGEMENT ("CSA")
--------------------------------------------------------------------------------
FUND TOTAL DOLLAR AMOUNT OF TOTAL DOLLAR AMOUNT OF
BROKERAGE COMMISSIONS FOR TRANSACTIONS INVOLVING
RESEARCH SERVICES (CSA) BROKERAGE COMMISSIONS FOR
RESEARCH SERVICES (CSA)
--------------------------------------------------------------------------------
Opportunity Fund $30,993 $32,712,720
International Fund $ 990 $ 737,342
Small Cap Fund $ 490 $ 471,235
Aggressive Value Fund $14,227 $ 7,473,210
SMID Fund $ 15 $ 14,912
Global Select Fund $ 9 $ 8,853
--------------------------------------------------------------------------------
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BROKERAGE WITH FUND AFFILIATES. A Fund may execute brokerage or other agency
transactions through registered broker-dealer affiliates of either the Fund,
the Adviser or the Distributor for a commission in conformity with the 1940
Act, the 1934 Act and rules promulgated by the SEC. Under the 1940 Act and the
1934 Act, affiliated broker-dealers are permitted to receive and retain
compensation for effecting portfolio transactions for the Funds on an exchange
if a written contract is in effect between the affiliate and the Funds
expressly permitting the affiliate to receive and retain such compensation.
These rules further require that commissions paid to the affiliate by the Funds
for exchange transactions not exceed "usual and customary" brokerage
commissions. The rules define "usual and customary" commissions to include
amounts which are "reasonable and fair compared to the commission, fee or other
remuneration received or to be received by other brokers in connection with
comparable transactions involving similar securities being purchased or sold on
a securities exchange during a comparable period of time." The Trustees,
including those who are not "interested persons" of the Funds, have adopted
procedures for evaluating the reasonableness of commissions paid to affiliates
and review these procedures periodically.
For the fiscal years ended April 30, 2011, 2012, and 2013, the Funds paid no
brokerage commissions on portfolio transactions effected by affiliated
brokers.
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SECURITIES OF "REGULAR BROKER-DEALERS." The Funds are required to identify any
securities of their "regular brokers and dealers" (as such term is defined in
the 1940 Act) that the Funds held during their most recent fiscal year. During
the fiscal year that ended April 30, 2013, the Funds did not hold any
securities of "regular broker-dealers."
PORTFOLIO TURNOVER RATE. Portfolio turnover rate is defined under SEC rules as
the value of the securities purchased or securities sold, excluding all
securities whose maturities at the time of acquisition were one-year or less,
divided by the average monthly value of such securities owned during the year.
Based on this definition, instruments with remaining maturities of less than
one-year are excluded from the calculation of the portfolio turnover rate. The
Funds may at times hold investments in short-term instruments, which are
excluded for purposes of computing portfolio turnover. For the Funds' two most
recently completed fiscal years ended April 30, 2012 and 2013, the portfolio
turnover rates for the Funds were as follows:
--------------------------------------------------------------------------------
FUND PORTFOLIO TURNOVER RATE
--------------------------------------------------------------------------------
2012 2013
--------------------------------------------------------------------------------
Opportunity Fund 62% 64%
--------------------------------------------------------------------------------
International Equity Fund 62% 75%
--------------------------------------------------------------------------------
Small Cap Fund 70% 71%
--------------------------------------------------------------------------------
Aggressive Value Fund 196% 85%(3)
--------------------------------------------------------------------------------
SMID Fund 96%(1) 105%
--------------------------------------------------------------------------------
Global Select Fund 22%(2) 70%
--------------------------------------------------------------------------------
|
(1) Represents the period from May 31, 2011 (commencement of operations) to
April 30, 2012.
(2) Represents the period from November 30, 2011 (commencement of operations)
to April 30, 2012.
(3) The portfolio turnover rate of the Aggressive Value Fund was lower during
the fiscal period ended April 30, 2013 because of the overall reduction of
market volatility during the period.
DISCLOSURE OF PORTFOLIO HOLDINGS
The Board has approved a policy and procedures that govern the timing and
circumstances regarding the disclosure of Fund portfolio holdings information
to shareholders and third parties. These policies and procedures are designed
to ensure that disclosure of information regarding the Funds' portfolio
securities is in the best interests of Fund shareholders, on the one hand, and
include procedures to address conflicts between the interests of the Funds'
shareholders and those of the Funds' Adviser, principal underwriter, or any
affiliated person of the Funds, the Adviser, or the principal underwriter, on
the other. Pursuant to such procedures, the Board has authorized the Adviser's
Chief Compliance Officer ("Adviser CCO") to authorize the release of the Funds'
portfolio holdings, as necessary, in conformity with the foregoing principles.
The Adviser CCO, either directly or through reports by the Funds' Chief
Compliance Officer reports quarterly to the Board regarding the operation and
administration of such policies and procedures.
Pursuant to applicable law, the Funds are required to disclose their complete
portfolio holdings quarterly, within 60 days of the end of each fiscal quarter
(currently, each July 31, October 31, January 31 and April 30, ). Each Fund
will disclose a complete or summary schedule of investments (which includes
each Fund's 50 largest holdings in unaffiliated issuers and each investment in
unaffiliated issuers that exceeds one percent of the Fund's net asset value
("Summary Schedule")) in its semi-annual and annual reports which are
distributed to Fund shareholders. Each Fund's complete schedule of investments
following the first and third fiscal quarters is available in quarterly
holdings reports filed with the SEC on Form N-Q, and each Fund's complete
schedule of investments following the second and fourth fiscal quarters is
available in shareholder reports filed with the SEC on Form N-CSR.
S-63
Fund filings on Form N-Q and Form N-CSR are not distributed to Fund
shareholders but are available, free of charge, on the EDGAR database on the
SEC's website at www.sec.gov. Should a Fund include only a Summary Schedule
rather than a complete schedule of investments in its semi-annual and annual
reports, its Form N-CSR will be available without charge, upon request, by
calling 1-866-777-8227. These reports are also available, free of charge, on
the Adviser's website at www.cambiar.com.
The Funds generally post a detailed list of their securities (portfolio
holdings) as of the most recent calendar month end, 30 days after the end of
the calendar month. In addition, the Funds generally post their ten largest
portfolio holdings, and the percentage that each of these holdings represents
of each Fund's total assets, as of the most recent calendar month end, 10
calendar days after the end of the calendar month. These postings can be found
on the internet at http://aicfundholdings.com/cambiar and generally remain
until replaced by new postings as described above. The Adviser may exclude any
portion of the Funds' portfolio holdings from publication when deemed in the
best interest of the Funds. Please consult the Funds' SAI for a description of
the policies and procedures that govern disclosure of the Funds' portfolio
holdings.
In addition to information provided to shareholders and the general public,
portfolio holdings information may be disclosed as frequently as daily to
certain service providers, such as the custodian, administrator, the financial
printer or transfer agent, in connection with their services to the Funds. From
time to time rating and ranking organizations, such as S&P, Lipper and
Morningstar, Inc., may request non-public portfolio holdings information in
connection with rating the Funds. Similarly, institutional investors, financial
planners, pension plan sponsors and/or their consultants or other third-parties
may request portfolio holdings information in order to assess the risks of a
Fund's portfolio along with related performance attribution statistics.
The Funds' policies and procedures provide that the Adviser's CCO may authorize
disclosure of non-public portfolio holdings information to such parties at
differing times and/or with different lag times. Prior to making any disclosure
to a third party the Adviser's CCO must determine that such disclosure serves a
reasonable business purpose, is in the best interests of the Funds'
shareholders and that conflicts between the interests of the Funds'
shareholders and those of the Fund's Adviser, principal underwriter, or any
affiliated person of the Funds are addressed. Complete portfolio holdings
information may be disclosed no more frequently than monthly to ratings
agencies, consultants and other qualified financial professionals or
individuals. The monthly disclosures will not be made sooner than three days
after the date of the information.
The Adviser currently has arrangements to provide: Opportunity Fund non-public
portfolio holdings information to Russell Mellon and Watershed Investment
Consultants, Inc.; International Equity Fund non-public holdings information to
Mercer Investments and Russell Mellon; and Small Cap Fund non-public holdings
information to Russell Mellon and Morgan Stanley Smith Barney LLC. The Adviser
reports the complete portfolio (including security name, ticker, cusip, number
of shares, current market value and percentage of portfolio), as well as
percentage weightings for the top ten holdings. This is generally sent on a
quarterly basis, but may vary. The lag time for such disclosures will also
vary. The portfolio holdings are used to create 1) a quarterly profile to
educate brokers and 2) to conduct quarterly due diligence on the Fund. This
information is considered confidential and will not be distributed to the
public. The Funds believe these disclosures serve a legitimate business
purpose. The Funds' Chief Compliance Officer will regularly review these
arrangements and will make periodic reports to the Board regarding disclosure
pursuant to such arrangements.
With the exception of disclosures to rating and ranking organizations as
described above, the Funds require any third party receiving non-public
holdings information to enter into a confidentiality agreement with the Fund or
the Adviser. The confidentiality agreement provides, among other things, that
non-public portfolio holdings information will be kept confidential and that
the recipient has a duty not to trade on the non-public information
S-64
and will use such information solely to analyze and rank the Funds, or to
perform due diligence and asset allocation, depending on the recipient of the
information.
The Funds' policies and procedures prohibit any compensation or other
consideration from being paid to or received by any party in connection with
the disclosure of portfolio holdings information, including the Funds, Adviser
and its affiliates or recipient of the Funds' portfolio holdings information.
DESCRIPTION OF SHARES
The Declaration of Trust authorizes the issuance of an unlimited number of
portfolios and shares of each portfolio. Each share of a portfolio represents
an equal proportionate interest in that portfolio with each other share. Shares
are entitled upon liquidation to a pro rata share in the net assets of the
portfolio. Shareholders have no preemptive rights. The Declaration of Trust
provides that the Trustees of the Trust may create additional series or classes
of shares. All consideration received by a Fund for shares of any portfolio and
all assets in which such consideration is invested would belong to that
portfolio and would be subject to the liabilities related thereto. Share
certificates representing shares will not be issued. The Trust has received a
legal opinion to the effect that each Fund's shares are fully paid and
non-assessable.
SHAREHOLDER LIABILITY
The Trust is an entity of the type commonly known as a "Massachusetts business
trust." Under Massachusetts law, shareholders of such a trust could, under
certain circumstances, be held personally liable as partners for the
obligations of the trust. Even if, however, the Trust were held to be a
partnership, the possibility of the shareholders incurring financial loss for
that reason appears remote because the Trust's Declaration of Trust contains an
express disclaimer of shareholder liability for obligations of the Trust and
requires that notice of such disclaimer be given in each agreement, obligation
or instrument entered into or executed by or on behalf of the Trust or the
Trustees, and because the Declaration of Trust provides for indemnification out
of the Trust property for any shareholder held personally liable for the
obligations of the Trust.
LIMITATION OF TRUSTEES' LIABILITY
The Declaration of Trust provides that a Trustee shall be liable only for his
or her own willful defaults and, if reasonable care has been exercised in the
selection of officers, agents, employees or investment advisers, shall not be
liable for any neglect or wrongdoing of any such person. The Declaration of
Trust also provides that the Trust will indemnify its Trustees and officers
against liabilities and expenses incurred in connection with actual or
threatened litigation in which they may be involved because of their offices
with the Trust, unless it is determined in the manner provided in the
Declaration of Trust that they have not acted in good faith in the reasonable
belief that their actions were in the best interests of the Trust. However,
nothing in the Declaration of Trust shall protect or indemnify a Trustee
against any liability for his or her willful misfeasance, bad faith, gross
negligence or reckless disregard of his or her duties. Nothing contained in
this section attempts to disclaim a Trustee's individual liability in any
manner inconsistent with the federal securities laws.
PROXY VOTING
The Board has delegated responsibility for decisions regarding proxy voting for
securities held by the Fund to the Adviser. The Adviser will vote such proxies
in accordance with its proxy policies and procedures, which are included in
Appendix B to this SAI.
S-65
The Trust is required to disclose annually the Fund's complete proxy voting
record during the most recent 12-month period ended June 30 on Form N-PX. This
voting record is available: (i) without charge, upon request, by calling
1-855-727-6346; and (ii) on the SEC's website at http://www.sec.gov.
CODES OF ETHICS
The Board, on behalf of the Trust, has adopted a Code of Ethics pursuant to
Rule 17j-1 under the 1940 Act. In addition, the Adviser, Distributor and the
Administrator have adopted Codes of Ethics pursuant to Rule 17j-1. These Codes
of Ethics (each a "Code of Ethics" and together the "Codes of Ethics") apply to
the personal investing activities of trustees, officers and certain employees
("access persons"). Rule 17j-1 and the Codes of Ethics are designed to prevent
unlawful practices in connection with the purchase or sale of securities by
access persons. Under each Code of Ethics, access persons are permitted to
invest in securities, including securities that may be purchased or held by the
Fund, but are required to report their personal securities transactions for
monitoring purposes. The Codes of Ethics further require certain access
persons to obtain approval before investing in initial public offerings and
limited offerings. Copies of these Codes of Ethics are on file with the SEC,
and are available to the public.
5% AND 25% SHAREHOLDERS
As of August 5, 2013, the following persons were the only persons who were
record owners (or to the knowledge of the Trust, beneficial owners) of 5% and
25% or more of any class of shares of a Fund. The Trust believes that most of
the shares referred to below were held by the persons below in accounts for
their fiduciary, agency or custodial customers. Persons owning of record or
beneficially more than 25% of a Fund's outstanding shares may be deemed to
"control" the Fund within the meaning of the 1940 Act. Shareholders controlling
a Fund may have a significant impact on any shareholder vote of the Fund.
SHAREHOLDER NUMBER OF SHARES % OF CLASS
CAMBIAR OPPORTUNITY FUND, INSTITUTIONAL CLASS SHARES
First Clearing LLC 8,237,793.2860 60.62%
Special Custody ACCT for the
Exclusive Benefit of Customer
2801 Market St.
Saint Louis, MO 63103-2523
--------------------------------------------------------------------------------
Charles Schwab & Co. Inc. 2,565,850.4460 18.88%
Reinvest Account
ATTN Mutual Fund
101 Montgomery St.
San Francisco, CA 94104-4151
--------------------------------------------------------------------------------
Morgan Stanley Smith Barney 1,023,025.0780 7.53%
Harborside Financial Center
Plaza 2 3rd Fl
Jersey City, NJ 07311
--------------------------------------------------------------------------------
National Financial SVCS Corp 922,467.6120 6.79%
For Exclusive Benefit of Our
Customers
ATTN Mutual Funds Dept 4th Fl
499 Washington Blvd
Jersey City, NJ 07310-2010
--------------------------------------------------------------------------------
|
S-66
CAMBIAR INTERNATIONAL EQUITY FUND, INSTITUTIONAL CLASS SHARES
National Financial SVCS Corp 268,674.1030 55.36 %
For Exclusive Benefit of Our
Customers
ATTN Mutual Funds Dept 4th Fl
499 Washington Blvd
Jersey City, NJ 07310-2010
--------------------------------------------------------------------------------
Brian M. Barish 116,729.5550 24.05%
75 S. Forest St.
Denver, CO 80246-1144
--------------------------------------------------------------------------------
Grant D. Barish 80,945.5170 16.68%
5761 Nassau Pl
Englewood, CO 80111-1021
--------------------------------------------------------------------------------
CAMBIAR SMALL CAP FUND, INSTITUTIONAL CLASS SHARES
--------------------------------------------------------------------------------
Charles Schwab & Co. Inc. 12,808,875.4780 46.09 %
Reinvest Account
ATTN Mutual Fund
101 Montgomery St.
San Francisco, CA 94104-4151
--------------------------------------------------------------------------------
National Financial SVCS Corp 5,527,403.0050 19.89%
For Exclusive Benefit of Our
Customers
ATTN Mutual Funds Dept 4th Fl
499 Washington Blvd
Jersey City, NJ 07310-2010
--------------------------------------------------------------------------------
Morgan Stanley Smith Barney 1,901,796.2760 6.84%
Harborside Financial Center
Plaza 2 3rd Fl
Jersey City, NJ 07311
--------------------------------------------------------------------------------
CAMBIAR OPPORTUNITY FUND, INVESTOR CLASS SHARES
--------------------------------------------------------------------------------
Charles Schwab & Co. Inc. 6,106,003.6520 26.56 %
Reinvest Account
ATTN Mutual Fund
101 Montgomery St.
San Francisco, CA 94104-4151
--------------------------------------------------------------------------------
National Financial SVCS Corp 4,856,609.3370 21.12%
For Exclusive Benefit of Our
Customers
ATTN Mutual Funds Dept 4th Fl
499 Washington Blvd
Jersey City, NJ 07310-2010
--------------------------------------------------------------------------------
Merrill Lynch Pierce Fenner & 3,944,414.5660 17.16%
Smith Inc
For the Sole Benefit of its
Customers
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
--------------------------------------------------------------------------------
Morgan Stanley Smith Barney 2,294,469.6820 9.98%
Harborside Financial Center
Plaza 2 3rd Fl
Jersey City, NJ 07311
--------------------------------------------------------------------------------
|
S-67
CAMBIAR INTERNATIONAL EQUITY FUND, INVESTOR CLASS SHARES
National Financial SVCS Corp 423,558.3850 27.98%
For Exclusive Benefit of Our
Customers
ATTN Mutual Funds Dept 4th Fl
499 Washington Blvd
Jersey City, NJ 07310-2010
--------------------------------------------------------------------------------
First Clearing LLC 227,014.4300 15.00%
Special Custody ACCT for the
Exclusive Benefit of Customer
2801 Market St.
Saint Louis, MO 63103-2523
--------------------------------------------------------------------------------
Morgan Stanley Smith Barney 134,415.1410 8.88%
Harborside Financial Center
Plaza 2 3rd Fl
Jersey City, NJ 07311
--------------------------------------------------------------------------------
Strear Farms Co. 77,816.9680 5.14%
ATTN Mr. Leonard Strear
6825 E Tennessee Ave STE 235
Denver, CO 80224-1630
--------------------------------------------------------------------------------
CAMBIAR SMID FUND, INVESTOR CLASS SHARES
--------------------------------------------------------------------------------
Cambiar Holdings LLLP 100,000.0000 59.13%
2401 E 2nd Ave. Ste 400
Denver, CO 80206-4716
--------------------------------------------------------------------------------
Brian M. Barish 52,356.0210 30.96%
75 S. Forest St.
Denver, CO 80246-1144
--------------------------------------------------------------------------------
National Financial SVCS Corp 13,551.8130 8.01%
For Exclusive Benefit of Our
Customers
ATTN Mutual Funds Dept 4th Fl
499 Washington Blvd
Jersey City, NJ 07310-2010
--------------------------------------------------------------------------------
CAMBIAR AGGRESSIVE VALUE FUND, INVESTOR CLASS SHARES
--------------------------------------------------------------------------------
National Financial SVCS Corp 3,039,359.8220 29.50%
For Exclusive Benefit of Our
Customers
ATTN Mutual Funds Dept 4th Fl
499 Washington Blvd
Jersey City, NJ 07310-2010
--------------------------------------------------------------------------------
Charles Schwab & Co. Inc. 2,510,959.3260 24.37%
Reinvest Account
ATTN Mutual Fund
101 Montgomery St.
San Francisco, CA 94104-4151
--------------------------------------------------------------------------------
BNYM IS Trust Co 963,489.9050 9.35%
FBO Wrap Clients
301 Bellevue Pkwy
Wilmington, DE 19809-3705
--------------------------------------------------------------------------------
|
S-68
Brian M. Barish 544,749.9660 5.29%
75 S. Forest St.
Denver, CO 80246-1144
CAMBIAR GLOBAL SELECT FUND, INVESTOR CLASS SHARES
Cambiar Holdings LLLP 102,810.5230 87.78%
2401 E 2nd Ave. Ste 400
Denver, CO 80206-4716
--------------------------------------------------------------------------------
National Financial SVCS Corp 14,303.0350 12.21%
For Exclusive Benefit of Our
Customers
ATTN Mutual Funds Dept 4th Fl
499 Washington Blvd
Jersey City, NJ 07310-2010
--------------------------------------------------------------------------------
CAMBIAR SMALL CAP FUND, INVESTOR CLASS SHARES
--------------------------------------------------------------------------------
Charles Schwab & Co. Inc. 5,564,292.7800 18.82%
Reinvest Account
ATTN Mutual Fund
101 Montgomery St.
San Francisco, CA 94104-4151
--------------------------------------------------------------------------------
Merrill Lynch Pierce Fenner & 5,076,337.4630 17.17%
Smith Inc
For the Sole Benefit of its
Customers
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
--------------------------------------------------------------------------------
National Financial SVCS Corp 4,596,788.8890 15.54%
For Exclusive Benefit of Our
Customers
ATTN Mutual Funds Dept 4th Fl
499 Washington Blvd
Jersey City, NJ 07310-2010
--------------------------------------------------------------------------------
Morgan Stanley Smith Barney 3,259,534.4410 11.02%
Harborside Financial Center
Plaza 2 3rd Fl
Jersey City, NJ 07311
--------------------------------------------------------------------------------
First Clearing LLC 2,956,657.5460 10.00%
Special Custody ACCT for the
Exclusive Benefit of Customer
2801 Market St.
Saint Louis, MO 63103-2523
--------------------------------------------------------------------------------
|
S-69
APPENDIX A -- DESCRIPTION OF RATINGS
DESCRIPTION OF RATINGS
The following descriptions of securities ratings have been published by Moody's
Investors Services, Inc. ("Moody's"), Standard & Poor's ("S&P"), and Fitch
Ratings ("Fitch"), respectively.
DESCRIPTION OF MOODY'S GLOBAL RATING SCALES
Ratings assigned on Moody's global long-term and short-term rating scales are
forward-looking opinions of the relative credit risks of financial obligations
issued by non-financial corporates, financial institutions, structured finance
vehicles, project finance vehicles, and public sector entities. Long-term
ratings are assigned to issuers or obligations with an original maturity of one
year or more and reflect both on the likelihood of a default on contractually
promised payments and the expected financial loss suffered in the event of
default.Short-term ratings are assigned to obligations with an original
maturity of thirteen months or less and reflect the likelihood of a default on
contractually promised payments.
DESCRIPTION OF MOODY'S LONG-TERM OBLIGATION RATINGS
Aaa Obligations rated Aaa are judged to be of the highest quality, subject to
the lowest level of credit risk.
Aa Obligations rated Aa are judged to be of high quality and are subject to
very low credit risk.
A Obligations rated A are considered upper-medium grade and are subject to low
credit risk.
Baa Obligations rated Baa are judged to be medium-grade and subject to moderate
credit risk and as such may possess certain speculative characteristics.
Ba Obligations rated Ba are judged to be speculative and are subject to
substantial credit risk.
B Obligations rated B are considered speculative and are subject to high credit
risk.
Caa Obligations rated Caa are judged to be speculative of poor standing and are
subject to very high credit risk.
Ca Obligations rated Ca are highly speculative and are likely in, or very near,
default, with some prospect of recovery of principal and interest.
C Obligations rated C are the lowest rated class and are typically in default,
with little prospect for recovery of principal or interest.
NOTE: Moody's appends numerical modifiers 1, 2, and 3 to each generic rating
classification from Aaa through Caa. The modifier 1 indicates that the
obligation ranks in the higher end of its generic rating category; the modifier
2 indicates a mid-range ranking; and the modifier 3 indicates a ranking in the
lower end of that generic rating category.
HYBRID INDICATOR (HYB)
The hybrid indicator (hyb) is appended to all ratings of hybrid securities
issued by banks, insurers, finance companies, and securities firms. By their
terms, hybrid securities allow for the omission of scheduled dividends,
interest, or principal payments, which can potentially result in impairment if
such an omission occurs. Hybrid securities may also be subject to contractually
allowable write-downs of principal that could result in impairment.
A-1
Together with the hybrid indicator, the long-term obligation rating assigned to
a hybrid security is an expression of the relative credit risk associated with
that security.
DESCRIPTION OF SHORT-TERM OBLIGATION RATINGS
Moody's employs the following designations to indicate the relative repayment
ability of rated issuers:
P-1 Issuers (or supporting institutions) rated Prime-1 have a superior ability
to repay short-term debt obligations.
P-2 Issuers (or supporting institutions) rated Prime-2 have a strong ability to
repay short-term debt obligations.
P-3 Issuers (or supporting institutions) rated Prime-3 have an acceptable
ability to repay short-term obligations.
NP Issuers (or supporting institutions) rated Not Prime do not fall within any
of the Prime rating categories.
DESCRIPTION OF MOODY'S US MUNICIPAL SHORT-TERM OBLIGATION RATINGS
The Municipal Investment Grade ("MIG") scale is used to rate US municipal bond
anticipation notes of up to three years maturity. Municipal notes rated on the
MIG scale may be secured by either pledged revenues or proceeds of a take-out
financing received prior to note maturity. MIG ratings expire at the maturity
of the obligation, and the issuer's long-term rating is only one consideration
in assigning the MIG rating. MIG ratings are divided into three levels--MIG 1
through MIG 3--while speculative grade short-term obligations are designated
SG.
MIG 1 This designation denotes superior credit quality. Excellent protection is
afforded by established cash flows, highly reliable liquidity support, or
demonstrated broad-based access to the market for refinancing.
MIG 2 This designation denotes strong credit quality. Margins of protection are
ample, although not as large as in the preceding group.
MIG 3 This designation denotes acceptable credit quality. Liquidity and
cash-flow protection may be narrow, and market access for refinancing is likely
to be less well-established.
SG This designation denotes speculative-grade credit quality. Debt instruments
in this category may lack sufficient margins of protection.
DESCRIPTION OF MOODY'S DEMAND OBLIGATION RATINGS
In the case of variable rate demand obligations ("VRDOs"), a two-component
rating is assigned: a long or short-term debt rating and a demand obligation
rating. The first element represents Moody's evaluation of risk associated with
scheduled principal and interest payments. The second element represents
Moody's evaluation of risk associated with the ability to receive purchase
price upon demand ("demand feature"). The second element uses a rating from a
variation of the MIG scale called the Variable Municipal Investment Grade
("VMIG") scale.
VMIG 1 This designation denotes superior credit quality. Excellent protection
is afforded by the superior short-term credit strength of the liquidity
provider and structural and legal protections that ensure the timely payment of
purchase price upon demand.
VMIG 2 This designation denotes strong credit quality. Good protection is
afforded by the strong short-term credit strength of the liquidity provider and
structural and legal protections that ensure the timely payment of purchase
price upon demand.
A-2
VMIG 3 This designation denotes acceptable credit quality. Adequate protection
is afforded by the satisfactory short-term credit strength of the liquidity
provider and structural and legal protections that ensure the timely payment of
purchase price upon demand.
SG This designation denotes speculative-grade credit quality. Demand features
rated in this category may be supported by a liquidity provider that does not
have an investment grade short-term rating or may lack the structural and/or
legal protections necessary to ensure the timely payment of purchase price upon
demand.
DESCRIPTION OF S&P'S ISSUE CREDIT RATINGS
An S&P's issue credit rating is a forward-looking opinion about the
creditworthiness of an obligor with respect to a specific financial obligation,
a specific class of financial obligations, or a specific financial program
(including ratings on medium-term note programs and commercial paper programs).
It takes into consideration the creditworthiness of guarantors, insurers, or
other forms of credit enhancement on the obligation and takes into account the
currency in which the obligation is denominated. The opinion reflects Standard
& Poor's view of the obligor's capacity and willingness to meet its financial
commitments as they come due, and may assess terms, such as collateral security
and subordination, which could affect ultimate payment in the event of
default.
Issue credit ratings can be either long-term or short-term. Short-term ratings
are generally assigned to those obligations considered short-term in the
relevant market. In the U.S., for example, that means obligations with an
original maturity of no more than 365 days--including commercial paper.
Short-term ratings are also used to indicate the creditworthiness of an obligor
with respect to put features on long-term obligations. The result is a dual
rating, in which the short-term rating addresses the put feature, in addition
to the usual long-term rating. Medium-term notes are assigned long-term
ratings.
Issue credit ratings are based, in varying degrees, on Standard & Poor's
analysis of the following considerations:
o Likelihood of payment--capacity and willingness of the obligor to meet its
financial commitment on an obligation in accordance with the terms of the
obligation;
o Nature of and provisions of the obligation;
o Protection afforded by, and relative position of, the obligation in the event
of bankruptcy, reorganization, or other arrangement under the laws of bankruptcy
and other laws affecting creditors' rights.
LONG-TERM ISSUE CREDIT RATINGS*
AAA An obligation rated 'AAA' has the highest rating assigned by S&P. The
obligor's capacity to meet its financial commitment on the obligation is
extremely strong.
AA An obligation rated 'AA' differs from the highest-rated obligations only to
a small degree. The obligor's capacity to meet its financial commitment on the
obligation is very strong.
A An obligation rated 'A' is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than obligations in
higher-rated categories. However, the obligor's capacity to meet its financial
commitment on the obligation is still strong.
BBB An obligation rated 'BBB' exhibits adequate protection parameters. However,
adverse economic conditions or changing circumstances are more likely to lead
to a weakened capacity of the obligor to meet its financial commitment on the
obligation.
A-3
BB; B; CCC; CC; AND C Obligations rated 'BB', 'B', 'CCC', 'CC', and 'C' are
regarded as having significant speculative characteristics. 'BB' indicates the
least degree of speculation and 'C' the highest. While such obligations will
likely have some quality and protective characteristics, these may be
outweighed by large uncertainties or major exposures to adverse conditions.
BB An obligation rated 'BB' is less vulnerable to nonpayment than other
speculative issues. However, it faces major ongoing uncertainties or exposure
to adverse business, financial, or economic conditions which could lead to the
obligor's inadequate capacity to meet its financial commitment on the
obligation.
B An obligation rated 'B' is more vulnerable to nonpayment than obligations
rated 'BB', but the obligor currently has the capacity to meet its financial
commitment on the obligation. Adverse business, financial, or economic
conditions will likely impair the obligor's capacity or willingness to meet its
financial commitment on the obligation.
CCC An obligation rated 'CCC' is currently vulnerable to nonpayment, and is
dependent upon favorable business, financial, and economic conditions for the
obligor to meet its financial commitment on the obligation. In the event of
adverse business, financial, or economic conditions, the obligor is not likely
to have the capacity to meet its financial commitment on the obligation.
CC An obligation rated 'CC' is currently highly vulnerable to nonpayment.
C A 'C' rating is assigned to obligations that are currently highly vulnerable
to nonpayment, obligations that have payment arrearages allowed by the terms of
the documents, or obligations of an issuer that is the subject of a bankruptcy
petition or similar action which have not experienced a payment default. Among
others, the 'C' rating may be assigned to subordinated debt, preferred stock or
other obligations on which cash payments have been suspended in accordance with
the instrument's terms or when preferred stock is the subject of a distressed
exchange offer, whereby some or all of the issue is either repurchased for an
amount of cash or replaced by other instruments having a total value that is
less than par.
D An obligation rated 'D' is in payment default. The 'D' rating category is
used when payments on an obligation are not made on the date due, unless
Standard & Poor's believes that such payments will be made within five business
days, irrespective of any grace period. The 'D' rating also will be used upon
the filing of a bankruptcy petition or the taking of similar action if payments
on an obligation are jeopardized. An obligation's rating is lowered to 'D' upon
completion of a distressed exchange offer, whereby some or all of the issue is
either repurchased for an amount of cash or replaced by other instruments
having a total value that is less than par.
NR This indicates that no rating has been requested, that there is insufficient
information on which to base a rating, or that Standard & Poor's does not rate
a particular obligation as a matter of policy.
* The ratings from 'AA' to 'CCC' may be modified by the addition of a plus (+)
or minus (-) sign to show relative standing within the major rating
categories.
SHORT-TERM ISSUE CREDIT RATINGS
A-1 A short-term obligation rated 'A-1' is rated in the highest category by
S&P. The obligor's capacity to meet its financial commitment on the obligation
is strong. Within this category, certain obligations are designated with a plus
sign (+). This indicates that the obligor's capacity to meet its financial
commitment on these obligations is extremely strong.
A-2 A short-term obligation rated 'A-2' is somewhat more susceptible to the
adverse effects of changes in circumstances and economic conditions than
obligations in higher rating categories. However, the obligor's capacity to
meet its financial commitment on the obligation is satisfactory.
A-3 A short-term obligation rated 'A-3' exhibits adequate protection
parameters. However, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity of the obligor to meet its financial
commitment on the obligation.
A-4
B A short-term obligion rated 'B' is regarded as vulnerable and has significant
speculative characteristics. The obligor currently has the capacity to meet its
financial commitments; however, it faces major ongoing uncertainties which
could lead to the obligor's inadequate capacity to meet its financial
commitments.
C A short-term obligation rated 'C' is currently vulnerable to nonpayment and
is dependent upon favorable business, financial, and economic conditions for
the obligor to meet its financial commitment on the obligation.
D A short-term obligation rated 'D' is in payment default. The 'D' rating
category is used when payments on an obligation are not made on the date due,
unless S&P believes that such payments will be made within any stated grace
period. However, any stated grace period longer than five business days will be
treated as five business days. The 'D' rating also will be used upon the filing
of a bankruptcy petition or the taking of a similar action if payments on an
obligation are jeopardized.
DESCRIPTION OF S&P'S MUNICIPAL SHORT-TERM NOTE RATINGS
An S&P's U.S. municipal note rating reflects S&P's opinion about the liquidity
factors and market access risks unique to the notes. Notes due in three years
or less will likely receive a note rating. Notes with an original maturity of
more than three years will most likely receive a long-term debt rating. In
determining which type of rating, if any, to assign, Standard & Poor's analysis
will review the following considerations:
o Amortization schedule--the larger the final maturity relative to other
maturities, the more likely it will be treated as a note; and
o Source of payment--the more dependent the issue is on the market for its
refinancing, the more likely it will be treated as a note.
S&P's municipal short-term note rating symbols are as follows:
SP-1 Strong capacity to pay principal and interest. An issue determined to
possess a very strong capacity to pay debt service is given a plus (+)
designation.
SP-2 Satisfactory capacity to pay principal and interest, with some
vulnerability to adverse financial and economic changes over the term of the
notes.
SP-3 Speculative capacity to pay principal and interest.
DESCRIPTION OF FITCH'S CREDIT RATINGS SCALES
Fitch's credit ratings provide an opinion on the relative ability of an entity
to meet financial commitments, such as interest, preferred dividends, repayment
of principal, insurance claims or counterparty obligations. Credit ratings are
used by investors as indications of the likelihood of receiving the money owed
to them in accordance with the terms on which they invested.
The terms "investment grade" and "speculative grade" have established
themselves over time as shorthand to describe the categories 'AAA' to 'BBB'
(investment grade) and 'BB' to 'D' (speculative grade). The terms "investment
grade" and "speculative grade" are market conventions, and do not imply any
recommendation or endorsement of a specific security for investment purposes.
"Investment grade" categories indicate relatively low to moderate credit risk,
while ratings in the "speculative" categories either signal a higher level of
credit risk or that a default has already occurred.
Fitch's credit ratings do not directly address any risk other than credit risk.
In particular, ratings do not deal with the risk of a market value loss on a
rated security due to changes in interest rates, liquidity and other market
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considerations. However, in terms of payment obligation on the rated liability,
market risk may be considered to the extent that it influences the ABILITY of
an issuer to pay upon a commitment. Ratings nonetheless do not reflect market
risk to the extent that they influence the size or other conditionality of the
OBLIGATION to pay upon a commitment (for example, in the case of index-linked
bonds).
In the default components of ratings assigned to individual obligations or
instruments, the agency typically rates to the likelihood of nonpayment or
default in accordance with the terms of that instrument's documentation. In
limited cases, Fitch may include additional considerations (I.E., rate to a
higher or lower standard than that implied in the obligation's documentation).
In such cases, the agency will make clear the assumptions underlying the
agency's opinion in the accompanying rating commentary.
DESCRIPTION OF FITCH'S LONG-TERM CORPORATE FINANCE OBLIGATIONS RATING SCALES
Fitch long-term obligations rating scales are as follows:
AAA Highest credit quality. 'AAA' ratings denote the lowest expectation of
credit risk. They are assigned only in cases of exceptionally strong capacity
for payment of financial commitments. This capacity is highly unlikely to be
adversely affected by foreseeable events.
AA Very high credit quality. 'AA' ratings denote expectations of very low
credit risk. They indicate very strong capacity for payment of financial
commitments. This capacity is not significantly vulnerable to foreseeable
events.
A High credit quality. 'A' ratings denote expectations of low credit risk. The
capacity for payment of financial commitments is considered strong. This
capacity may, nevertheless, be more vulnerable to adverse business or economic
conditions than is the case for higher ratings.
BBB Good credit quality. 'BBB' ratings indicate that expectations of credit
risk are currently low. The capacity for payment of financial commitments is
considered adequate but adverse business or economic conditions are more likely
to impair this capacity.
BB Speculative. 'BB' ratings indicate an elevated vulnerability to credit risk,
particularly in the event of adverse changes in business or economic conditions
over time; however, business or financial alternatives may be available to
allow financial commitments to be met.
B Highly speculative. 'B' ratings indicate that material credit risk is
present.
CCC 'CCC' ratings indicate that substantial credit risk is present.
CC 'CC' ratings indicate very high levels of credit risk.
C 'C' ratings indicate exceptionally high levels of credit risk.
NR This designation is used to denote securities not rated by Fitch where Fitch
has rated some, but not all, securities comprising an issuance capital
structure.
WD This designation indicates that the rating has been withdrawn and the issue
or issuer is no longer rated by Fitch.
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NOTE: The modifiers "+" or "-" may be appended to a rating to denote relative
status within major rating categories. Such suffixes are not added to the 'AAA'
obligation rating category, or to corporate finance obligation ratings in the
categories below 'B'.
DESCRIPTION OF FITCH'S SHORT-TERM RATINGS
A short-term issuer or obligation rating is based in all cases on the
short-term vulnerability to default of the rated entity or security stream and
relates to the capacity to meet financial obligations in accordance with the
documentation governing the relevant obligation. Short-Term Ratings are
assigned to obligations whose initial maturity is viewed as "short term" based
on market convention. Typically, this means up to 13 months for corporate,
sovereign, and structured obligations and up to 36 months for obligations in
U.S. public finance markets.
Fitch's short-term ratings are as follows:
F1 Highest short-term credit quality. Indicates the strongest intrinsic
capacity for timely payment of financial commitments; may have an added "+" to
denote any exceptionally strong credit feature.
F2 Good short-term credit quality. Good intrinsic capacity for timely payment
of financial commitments.
F3 Fair short-term credit quality. The intrinsic capacity for timely payment of
financial commitments is adequate.
B Speculative short-term credit quality. Minimal capacity for timely payment of
financial commitments, plus heightened vulnerability to near term adverse
changes in financial and economic conditions.
C High short-term default risk. Default is a real possibility.
RD Restricted default. Indicates an entity that has defaulted on one or more of
its financial commitments, although it continues to meet other financial
obligations. Applicable to entity ratings only.
D Default. Indicates a broad-based default event for an entity, or the default
of a short-term obligation.
NR This designation is used to denote securities not rated by Fitch where Fitch
has rated some, but not all, securities comprising an issuance capital
structure.
WD This designation indicates that the rating has been withdrawn and the issue
or issuer is no longer rated by Fitch.
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APPENDIX B - PROXY VOTING POLICIES AND PROCEDURES
CAMBIAR INVESTORS, LLC
PROXY VOTING AND CLASS ACTIONS
Last Updated January 31, 2013
PROXY VOTING POLICY AND PROCEDURES
OBJECTIVE:
The objective of Cambiar Investors, LLC's proxy voting process is to maximize
the long-term investment performance of our clients.
POLICY:
Cambiar will typically vote all proxy proposals in accordance with management
recommendations unless the effect of particular resolutions could adversely
affect shareholder value. In such cases, it is Cambiar's policy to vote against
these proposals. If Cambiar sees it necessary to become further involved, the
Analyst will directly engage management.
PROXY VOTING PROCEDURE:
The procedure for processing proxy ballots is as follows:
1. Custodians are directed to send all proxy material to Cambiar
Investors LLC. Cambiar has retained Glass Lewis & Co. to provide
independent research. Cambiar votes proxies through Broadridge's Proxy
Edge platform.
2. The Proxy Administrator reviews the research provided by Glass Lewis
& Co. for each company meeting and each proposal. If Glass Lewis'
recommendations agree and favor management, Cambiar votes according to
management's recommendations.
3. If non-routine proposals or proposals considered to have a potential
negative investment performance impact are discovered or Glass Lewis
recommends a vote against a management recommendation, the Proxy
Administrator will review the particular resolutions with the
Portfolio Manager responsible for the investment and vote per the
Portfolio Manager's recommendations.
Where a material conflict of interest has been identified, Cambiar
will notify its clients of the conflict and vote based on Glass
Lewis's recommendation to ensure the best economic interests of its
clients are met.
4. Cambiar keeps a record of all accounts and companies voted and
provide monthly and/or quarterly reports as required through the Proxy
Edge platform.
5. On a regular basis, the Proxy Administrator reviews the proxy voting
record with the Portfolio Managers.
6. Copies of this procedure can be obtained free of charge by:
> calling Cambiar Investors, LLC toll-free at 888-673-9950 or
> by visiting our web site at http://www. cambiar.com or
> by writing us at: 2401 E. Second Ave. #500, Denver, CO 80206
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7. By August 31, each year Cambiar's annual proxy voting record for the
previous 12 months ending June 30 may be obtained free of charge by:
> calling 888-673-9950 or
> by visiting our web site at http://www. cambiar.com or
> by writing us at: 2401 E. Second Ave. #500, Denver, CO 80206
CLASS ACTION PROCEDURES:
Cambiar has engaged a third party class action claims service, Class Actions
Claims Management, to provide securities class action research and proof of
claim filing services for our clients. Class Action Claims Management shall
participate in all relevant class actions.
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PROXY PAPER GUIDELINES
2013 PROXY SEASON
AN OVERVIEW OF
THE GLASS LEWIS APPROACH TO
PROXY ADVICE
B-3
GLASS
LEWIS & CO.
PROXY PAPER(TM)
GUIDELINES
2013 PROXY SEASON
AN OVERVIEW OF THE GLASS LEWIS
APPROACH TO PROXY ADVICE
UNITED STATES
COPYRIGHT 2012 GLASS LEWIS, & CO., LLC
TABLE
OF CONTENTS
I. OVERVIEW OF SIGNIFICANT UPDATES FOR 2013 1
II. A BOARD OF DIRECTORS THAT SERVES THE 3
INTERESTS OF SHAREHOLDERS
Election of Directors 3
Independence 3
Performance 6
Experience 14
Other Considerations 14
Controlled Companies 16
Unofficially Controlled Companies and 20-50% 17
Beneficial Owners
Exceptions for Recent IPOs 17
Mutual Fund Boards 18
Declassified Boards 19
Mandatory Director Term and Age limits 19
Requiring Two or More Nominees per Board Seat 20
Proxy Access 20
Majority Vote for the Election of Directors 20
The plurality vote standard 21
Advantages of a majority vote standard 21
III. TRANSPARENCY AND INTEGRITY OF FINANCIAL 22
REPORTING
Auditor Ratification 22
Voting Recommendations on Auditor Ratification 22
Pension Accounting Issues 23
IV. THE LINK BETWEEN COMPENSATION AND 24
PERFORMANCE
Advisory Vote on Executive Compensation ("Say-on- 24
Pay")
Say-on-Pay Voting Recommendations 25
|
I
Additional Scrutiny for Companies with Significant 26
Opposition in 2012
Short-Term Incentives 26
Long-Term Incentives 26
Pay for Performance 27
Recoupment ("Clawback") Provisions 27
Frequency of Say-on-Pay 28
Vote on Golden Parachute Arrangements 28
Equity-Based Compensation Plan Proposals 28
Option Exchanges 29
Option Backdating, Spring-Loading, and Bullet- 30
Dodging
162(m) Plans 31
Director Compensation Plans 31
V. GOVERNANCE STRUCTURE AND THE 32
SHAREHOLDER FRANCHISE
Anti-Takeover Measures 32
Poison Pills (Shareholder Rights Plans) 32
NOL Poison Pills 32
Fair Price Provisions 33
Reincorporation 33
Exclusive Forum Provisions 34
Authorized Shares 34
Advance Notice Requirements 35
Voting Structure 35
Cumulative Voting 35
Supermajority Vote Requirements 36
Transaction of Other Business 36
Anti-Greenmail Proposals 36
Mutual Funds: Investment Policies and Advisory 37
Agreements
Real Estate Investment Trusts 37
Preferred Stock Issuances at REITs 37
Business Development Companies 38
Authorization to Sell Shares at a Price below Net 38
Asset Value
VI. COMPENSATION, ENVIRONMENTAL, SOCIAL 39
|
AND GOVERNANCE SHAREHOLDER INITIATIVES
II
I. OVERVIEW OF SIGNIFICANT UPDATES FOR 2013
Glass Lewis evaluates these guidelines on an ongoing basis and formally updates
them on an annual basis. This year we've made noteworthy enhancements in the
following areas, which are summarized below but discussed in greater detail
throughout this document:
BOARD RESPONSIVENESS TO A SIGNIFICANT SHAREHOLDER VOTE
o We've included a general section clarifying our long-standing
approach in this area. Glass Lewis believes that any time 25% or more
of shareholders vote against the recommendation of management, the
board should demonstrate some level of engagement and responsiveness
to address the shareholder concerns.
THE ROLE OF A COMMITTEE CHAIRMAN
o We've included a general section explaining our analysis of the role
of a committee chairman. Glass Lewis believes that a designated
committee chairman maintains primary responsibility for the actions of
his or her respective committee. As such, many of our
committee-specific vote recommendations deal with the applicable
committee chair rather than the entire committee (depending on the
seriousness of the issue). However, in cases where we would ordinarily
recommend voting against a committee chairman but the chair is not
specified, we apply the following general rules, which apply
throughout our guidelines:
o If there is no committee chair, we recommend voting against the
longest-serving committee member or, if the longest-serving
committee member cannot be determined, the longest- serving board
member serving on the committee (i. e. in either case, the
"senior director");
o If there is no committee chair, but multiple senior directors
serving on the committee, we recommend voting against both (or
all) such senior directors.
PUBLIC COMPANY EXECUTIVES AND EXCESSIVE BOARD MEMBERSHIPS
o We typically recommend voting against a director who serves as an
executive officer of any public company while serving on more than two
other public company boards. However, we will not recommend voting
against the director at the company where he or she serves as an
executive officer, only at the other public companies where he or she
serves on the board.
EQUITY-BASED COMPENSATION PLAN PROPOSALS
o We've added an item to our list of overarching principles on which we
evaluate equity compensation plans, namely, that plans should not
count shares in ways that understate the potential dilution, or cost,
to common shareholders. This refers to "inverse" full-value award
multipliers.
EXCLUSIVE FORUM PROVISIONS
o While our general approach to exclusive forum provisions remains
unchanged--that we recommend that shareholders vote against any bylaw
or charter amendment seeking to adopt such a provision--we further
explain that in certain cases we may support such a provision if the
company: (i) provides a compelling argument on why the provision would
directly benefit shareholders; (ii) provides evidence of abuse of
legal process in other, non-favored jurisdictions; and (iii) maintains
a strong record of good corporate governance practices.
1
REAL ESTATE INVESTMENT TRUSTS
o We've included a general section on REITs and our approach to
evaluating preferred stock issuances at these firms.
BUSINESS DEVELOPMENT COMPANIES
o We've included a new section on our approach to analyzing business
development companies and requests to sell shares at prices below Net
Asset Value.
2
II. A BOARD OF DIRECTORS THAT SERVES THE INTERESTS OF SHAREHOLDERS
ELECTION OF DIRECTORS
The purpose of Glass Lewis' proxy research and advice is to facilitate
shareholder voting in favor of governance structures that will drive
performance, create shareholder value and maintain a proper tone at the top.
Glass Lewis looks for talented boards with a record of protecting shareholders
and delivering value over the medium- and long-term. We believe that boards
working to protect and enhance the best interests of shareholders are
independent, have directors with diverse backgrounds, have a record of positive
performance, and have members with a breadth and depth of relevant experience.
INDEPENDENCE
The independence of directors, or lack thereof, is ultimately demonstrated
through the decisions they make. In assessing the independence of directors, we
will take into consideration, when appropriate, whether a director has a track
record indicative of making objective decisions. Likewise, when assessing the
independence of directors we will also examine when a director's service track
record on multiple boards indicates a lack of objective decision-making.
Ultimately, we believe the determination of whether a director is independent
or not must take into consideration both compliance with the applicable
independence listing requirements as well as judgments made by the director.
We look at each director nominee to examine the director's relationships with
the company, the company's executives, and other directors. We do this to
evaluate whether personal, familial, or financial relationships (not including
director compensation) may impact the director's decisions. We believe that
such relationships make it difficult for a director to put shareholders'
interests above the director's or the related party's interests. We also
believe that a director who owns more than 20% of a company can exert
disproportionate influence on the board and, in particular, the audit
committee.
Thus, we put directors into three categories based on an examination of the
type of relationship they have with the company:
Independent Director -- An independent director has no material financial,
familial or other current relationships with the company, its executives, or
other board members, except for board service and standard fees paid for that
service. Relationships that existed within three to five years(1) before the
inquiry are usually considered "current" for purposes of this test.
In our view, a director who is currently serving in an interim management
position should be considered an insider, while a director who previously
served in an interim management position for less than one year and is no
longer serving in such capacity is considered independent. Moreover, a director
who previously served in an interim management position for over one year and
is no longer serving in such capacity is considered an affiliate for five years
following the date of his/her resignation or departure from the interim
management position. Glass Lewis applies a three-year look-back period to all
directors who have an affiliation with the company other than former
employment, for which we apply a five-year look-back.
(1) NASDAQ originally proposed a five-year look-back period but both it and the
NYSE ultimately settled on a three-year look-back prior to finalizing their
rules. A five-year standard is more appropriate, in our view, because we
believe that the unwinding of conflicting relationships between former
management and board members is more likely to be complete and final after five
years. However, Glass Lewis does not apply the five-year look-back period to
directors who have previously served as executives of the company on an interim
basis for less than one year.
3
Affiliated Director -- An affiliated director has a material financial,
familial or other relationship with the company or its executives, but is not
an employee of the company.(2) This includes directors whose employers have a
material financial relationship with the company.(3) In addition, we view a
director who owns or controls 20% or more of the company's voting stock as an
affiliate.(4) We view 20% shareholders as affiliates because they typically
have access to and involvement with the management of a company that is
fundamentally different from that of ordinary shareholders. More importantly,
20% holders may have interests that diverge from those of ordinary holders, for
reasons such as the liquidity (or lack thereof) of their holdings, personal tax
issues, etc.
Definition of "Material": A material relationship is one in which the dollar
value exceeds:
o $50,000 (or where no amount is disclosed) for directors who are paid
for a service they have agreed to perform for the company, outside of
their service as a direc-tor, including professional or other
services; or
o $120,000 (or where no amount is disclosed) for those directors
employed by a professional services firm such as a law firm,
investment bank, or consulting firm where the company pays the firm,
not the individual, for services. This dollar limit would also apply
to charitable contributions to schools where a board member is a
professor; or charities where a director serves on the board or is an
executive;(5) and any aircraft and real estate dealings between the
company and the director's firm; or
o 1% of either company's consolidated gross revenue for other business
relation-ships (e. g. , where the director is an executive officer of
a company that provides services or products to or receives services
or products from the company).(6)
Definition of "Familial": Familial relationships include a person's spouse,
parents, children, siblings, grandparents, uncles, aunts, cousins, nieces,
nephews, in-laws, and anyone (other than domestic employees) who shares such
person's home. A director is an affiliate if the director has a family member
who is employed by the company and who receives com-pensation of $120,000 or
more per year or the compensation is not disclosed.
Definition of "Company": A company includes any parent or subsidiary in a group
with the company or any entity that merged with, was acquired by, or acquired
the company.
Inside Director -- An inside director simultaneously serves as a director and
as an employee of the company. This category may include a chairman of the
board who acts as an employee of the company or is paid as an employee of the
company. In our view, an inside director who derives a greater amount of income
as a result of affiliated transactions with the company rather than through
compensation paid by the company (i.e., salary, bonus, etc. as a company
employee) faces a conflict between making decisions that are in the best
interests of the company versus those in the director's own best interests.
Therefore, we will recommend voting against such a director.
(2) If a company classifies one of its non-employee directors as
non-independent, Glass Lewis will classify that director as an affiliate.
(3) We allow a five-year grace period for former executives of the company or
merged companies who have consulting agreements with the surviving company. (We
do not automatically recommend voting against directors in such cases for the
first five years.) If the consulting agreement persists after this five-year
grace period, we apply the materiality thresholds outlined in the definition of
"material."
(4) This includes a director who serves on a board as a representative (as part
of his or her basic responsibilities) of an in-vestment firm with greater than
20% ownership. However, while we will generally consider him/her to be
affiliated, we will not recommend voting against unless (i) the investment firm
has disproportionate board representation or (ii) the director serves on the
audit committee.
(5) We will generally take into consideration the size and nature of such
charitable entities in relation to the company's size and industry along with
any other relevant factors such as the director's role at the charity. However,
unlike for other types of related party transactions, Glass Lewis generally
does not apply a look-back period to affiliated relationships involving
charitable contributions; if the relationship ceases, we will consider the
director to be independent.
(6) This includes cases where a director is employed by, or closely affiliated
with, a private equity firm that profits from an acquisition made by the
company. Unless disclosure suggests otherwise, we presume the director is
affiliated.
4
VOTING RECOMMENDATIONS ON THE BASIS OF BOARD INDEPENDENCE
Glass Lewis believes a board will be most effective in protecting shareholders'
interests if it is at least two-thirds independent. We note that each of the
Business Roundtable, the Conference Board, and the Council of Institutional
Investors advocates that two-thirds of the board be independent. Where more
than one-third of the members are affiliated or inside directors, we
typically(7) recommend voting against some of the inside and/or affiliated
directors in order to satisfy the two-thirds threshold.
In the case of a less than two-thirds independent board, Glass Lewis strongly
supports the existence of a presiding or lead director with authority to set
the meeting agendas and to lead sessions outside the insider chairman's
presence.
In addition, we scrutinize avowedly "independent" chairmen and lead directors.
We believe that they should be unquestionably independent or the company should
not tout them as such.
COMMITTEE INDEPENDENCE
We believe that only independent directors should serve on a company's audit,
compensation, nominating, and governance committees.(8) We typically recommend
that shareholders vote against any affiliated or inside director seeking
appointment to an audit, compensation, nominating, or governance committee, or
who has served in that capacity in the past year.
INDEPENDENT CHAIRMAN
Glass Lewis believes that separating the roles of CEO (or, more rarely, another
executive position) and chairman creates a better governance structure than a
combined CEO/chairman position. An executive manages the business according to
a course the board charts. Executives should report to the board regarding
their performance in achieving goals the board set. This is needlessly
complicated when a CEO chairs the board, since a CEO/chairman presumably will
have a significant influence over the board.
It can become difficult for a board to fulfill its role of overseer and policy
setter when a CEO/chairman controls the agenda and the boardroom discussion.
Such control can allow a CEO to have an entrenched position, leading to
longer-than-optimal terms, fewer checks on management, less scrutiny of the
business operation, and limitations on independent, shareholder-focused
goal-setting by the board.
A CEO should set the strategic course for the company, with the board's
approval, and the board should enable the CEO to carry out the CEO's vision for
accomplishing the board's objectives. Failure to achieve the board's objectives
should lead the board to replace that CEO with someone in whom the board has
confidence.
Likewise, an independent chairman can better oversee executives and set a
pro-shareholder agenda without the management conflicts that a CEO and other
executive insiders often face. Such oversight and concern for shareholders
allows for a more proactive and effective board of directors that is better
able to look out for the interests of shareholders.
Further, it is the board's responsibility to select a chief executive who can
best serve a company and its shareholders and to replace this person when his
or her duties have not been appropriately fulfilled. Such a replacement becomes
more difficult and happens less frequently when the chief executive is also in
the position of overseeing the board.
Glass Lewis believes that the installation of an independent chairman is almost
always a positive step FROM A corporate governance perspective and promotes the
best interests of shareholders. Further,
(7) With a staggered board, if the affiliates or insiders that we believe should
not be on the board are not up for election, we will express our concern
regarding those directors, but we will not recommend voting against the other
affiliates or insiders who are up for election just to achieve two-thirds
independence. However, we will consider recommending vot-ing against the
directors subject to our concern at their next election if the concerning issue
is not resolved.
(8) We will recommend voting against an audit committee member who owns 20% or
more of the company's stock, and we believe that there should be a maximum of
one director (or no directors if the committee is comprised of less than three
directors) who owns 20% or more of the company's stock on the compensation,
nominating, and governance committees.
5
the presence of an independent chairman fosters the creation of a thoughtful
and dynamic board, not dominated by the views of senior management.
Encouragingly, many companies appear to be moving in this direction--one study
even indicates that less than 12 percent of incoming CEOs in 2009 were awarded
the chairman title, versus 48 percent as recently as 2002.(9) Another study
finds that 41 percent of S&P 500 boards now separate the CEO and chairman
roles, up from 26 percent in 2001, although the same study found that of those
companies, only 21 percent have truly independent chairs.(10)
We do not recommend that shareholders vote against CEOs who chair the board.
However, we typically encourage our clients to support separating the roles of
chairman and CEO whenever that question is posed in a proxy (typically in the
form of a shareholder proposal), as we believe that it is in the long-term best
interests of the company and its shareholders.
PERFORMANCE
The most crucial test of a board's commitment to the company and its
shareholders lies in the actions of the board and its members. We look at the
performance of these individuals as directors and executives of the company and
of other companies where they have served.
VOTING RECOMMENDATIONS ON THE BASIS OF PERFORMANCE
We disfavor directors who have a record of not fulfilling their
responsibilities to shareholders at any company where they have held a board or
executive position. We typically recommend voting against:
1. A director who fails to attend a minimum of 75% of board and
applicable committee meetings, calculated in the aggregate.(11)
2. A director who belatedly filed a significant form(s) 4 or 5, or who
has a pattern of late filings if the late filing was the director's
fault (we look at these late filing situations on a case-by-case
basis).
3. A director who is also the CEO of a company where a serious and
material restatement has occurred after the CEO had previously
certified the pre-restatement financial statements.
4. A director who has received two against recommendations from Glass
Lewis for identical reasons within the prior year at different
companies (the same situation must also apply at the company being
analyzed).
5. All directors who served on the board if, for the last three years,
the company's performance has been in the bottom quartile of the
sector and the directors have not taken reasonable steps to address
the poor performance.
BOARD RESPONSIVENESS TO A SIGNIFICANT SHAREHOLDER VOTE
Glass Lewis believes that any time 25% or more of shareholders vote against the
recommendation of management, the board should demonstrate some level of
engagement and responsiveness to address the shareholder concerns. These
include instances when 25% or more of shareholders (excluding abstentions and
broker non-votes): WITHOLD votes from (or vote AGAINST) a director nominee,
vote AGAINST a management-sponsored proposal, or vote FOR a shareholder
proposal. In our view, a 25% threshold is significant enough to warrant a close
examination of the underlying issues and an evaluation of whether or not the
board responded appropriately following the vote. While the 25% threshold alone
will not automatically generate a negative vote recommendation from Glass Lewis
on a future proposal (e.g. to recom-mend against a director nominee, against a
say-on-pay proposal, etc.), it will bolster our argument to vote against
management's recommendation in the event we determine that the board did not
respond appropriately.
(9) Ken Favaro, Per-Ola Karlsson and Gary Neilson. "CEO Succession 2000-2009: A
Decade of Convergence and Compres-sion." Booz & Company (from
Strategy+Business, Issue 59, Summer 2010).
(10) Spencer Stuart Board Index, 2011, p. 6
(11) However, where a director has served for less than one full year, we will
typically not recommend voting against for failure to attend 75% of meetings.
Rather, we will note the poor attendance with a recommendation to track this
issue going forward. We will also refrain from recommending to vote against
directors when the proxy discloses that the di-rector missed the meetings due
to serious illness or other extenuating circumstances.
6
As a general framework, our evaluation of board responsiveness involves a
review of publicly available disclosures (e.g. the proxy statement, annual
report, 8-Ks, company website, etc.) released following the date of the
company's last annual meeting up through the publication date of our most
current Proxy Paper. Depending on the specific issue, our focus typically
includes, but is not limited to, the following:
o At the board level, any changes in directorships, committee
memberships, disclosure of related party transactions, meeting
attendance, or other responsibilities.
o Any revisions made to the company's articles of incorporation, bylaws
or other governance documents.
o Any press or news releases indicating changes in, or the adoption of,
new company policies, business practices or special reports.
o Any modifications made to the design and structure of the company's
compensation program.
Our Proxy Paper analysis will include a case-by-case assessment of the specific
elements of board responsiveness that we examined along with an explanation of
how that assessment impacts our current vote recommendations.
THE ROLE OF A COMMITTEE CHAIRMAN
Glass Lewis believes that a designated committee chairman maintains primary
responsibility for the actions of his or her respective committee. As such,
many of our committee-specific vote recommendations deal with the applicable
committee chair rather than the entire committee (depending on the seriousness
of the issue). However, in cases where we would ordinarily recommend voting
against a committee chairman but the chair is not specified, we apply the
following general rules, which apply throughout our guidelines:
o If there is no committee chair, we recommend voting against the
longest-serving committee member or, if the longest-serving committee
member cannot be determined, the longest-serving board member serving
on the committee (i. e. in either case, the "senior director");
o If there is no committee chair, but multiple senior directors serving
on the committee, we recommend voting against both (or all) such
senior directors.
In our view, companies should provide clear disclosure of which director is
charged with overseeing each committee. So in cases where that simple framework
is ignored and a reasonable analysis cannot determine which committee member is
the designated leader, we believe shareholder action against the longest
serving committee member(s) is warranted. Again, this only applies if we would
ordinarily recommend voting against the committee chair but there is either no
such position or no designated director in such role.
On the contrary, in cases where there is a designated committee chair and the
recommendation is to vote against the committee chair but the chair is not up
for election because the board is staggered, we do not recommend voting against
any members of the committee who are up for election; rather, we will simply
express our concern with regard to the committee chair.
AUDIT COMMITTEES AND PERFORMANCE
Audit committees play an integral role in overseeing the financial reporting
process because "[v] ibrant and stable capital markets depend on, among other
things, reliable, transparent, and objective financial information to support
an efficient and effective capital market process. The vital oversight role
audit committees play in the process of producing financial information has
never been more important."(12)
(12) Audit Committee Effectiveness -- What Works Best." PricewaterhouseCoopers.
The Institute of Internal Auditors Re-search Foundation. 2005.
7
When assessing an audit committee's performance, we are aware that an audit
committee does not prepare financial statements, is not responsible for making
the key judgments and assumptions that affect the financial statements, and
does not audit the numbers or the disclosures provided to investors. Rather, an
audit committee member monitors and oversees the process and procedures that
management and auditors perform. The 1999 Report and Recommendations of the
Blue Ribbon Committee on Improving the Effectiveness of Corporate Audit
Committees stated it best:
A proper and well-functioning system exists, therefore, when the three main
groups responsible for financial reporting -- the full board including the audit
committee, financial management including the internal auditors, and the outside
auditors -- form a 'three legged stool' that supports responsible financial
disclosure and active participatory oversight. However, in the view of the
Committee, the audit committee must be 'first among equals' in this process,
since the audit committee is an extension of the full board and hence the
ultimate monitor of the process.
STANDARDS FOR ASSESSING THE AUDIT COMMITTEE
For an audit committee to function effectively on investors' behalf, it must
include members withsufficient knowledge to diligently carry out their
responsibilities. In its audit and accounting recommendations, the Conference
Board Commission on Public Trust and Private Enterprise said "members of the
audit committee must be independent and have both knowledge and experience in
auditing financial matters."(13)
We are skeptical of audit committees where there are members that lack expertise
as a Certified Public Accountant (CPA), Chief Financial Officer (CFO) or
corporate controller or similar experience. While we will not necessarily vote
against members of an audit committee when such expertise is lacking, we are
more likely to vote against committee members when a problem such as a
restatement occurs and such expertise is lacking.
Glass Lewis generally assesses audit committees against the decisions they make
with respect to their oversight and monitoring role. The quality and integrity
of the financial statements and earnings reports, the completeness of
disclosures necessary for investors to make informed decisions, and the
effectiveness of the internal controls should provide reasonable assurance that
the financial statements are materially free from errors. The independence of
the external auditors and the results of their work all provide useful
information by which to assess the audit committee.
When assessing the decisions and actions of the audit committee, we typically
defer to its judgment and would vote in favor of its members, but we would
recommend voting against the following members under the following
circumstances:(14)
1. All members of the audit committee when options were backdated, there
is a lack of adequate controls in place, there was a resulting
restatement, and disclosures indicate there was a lack of
documentation with respect to the option grants.
2. The audit committee chair, if the audit committee does not have a
financial expert or the committee's financial expert does not have a
demonstrable financial background sufficient to understand the
financial issues unique to public companies.
3. The audit committee chair, if the audit committee did not meet at
least 4 times during the year.
4. The audit committee chair, if the committee has less than three
members.
5. Any audit committee member who sits on more than three public company
audit committees, unless the audit committee member is a retired CPA,
CFO, controller or has similar experience,
(13) Commission on Public Trust and Private Enterprise. The Conference Board.
2003.
(14) As discussed under the section labeled "Committee Chairman," where the
recommendation is to vote against the committee chair but the chair is not up
for election because the board is staggered, we do not recommend voting against
the members of the committee who are up for election; rather, we will simply
express our concern with regard to the committee chair.
8
in which case the limit shall be four committees, taking time and
availability into consideration including a review of the audit
committee member's attendance at all board and committee meetings.
(15)
6. All members of an audit committee who are up for election and who
served on the committee at the time of the audit, if audit and
audit-related fees total one-third or less of the total fees billed by
the auditor.
7. The audit committee chair when tax and/or other fees are greater than
audit and audit-related fees paid to the auditor for more than one
year in a row (in which case we also recommend against ratification of
the auditor).
8. All members of an audit committee where non-audit fees include fees
for tax services (including, but not limited to, such things as tax
avoidance or shelter schemes) for senior executives of the company.
Such services are now prohibited by the Public Company Accounting
Oversight Board ("PCAOB").
9. All members of an audit committee that reappointed an auditor that we
no longer consider to be independent for reasons unrelated to fee
proportions.
10. All members of an audit committee when audit fees are excessively
low, especially when compared with other companies in the same
industry.
11. The audit committee chair(16) if the committee failed to put auditor
ratification on the ballot for shareholder approval. However, if the
non-audit fees or tax fees exceed audit plus audit-related fees in
either the current or the prior year, then Glass Lewis will recommend
voting against the entire audit committee.
12. All members of an audit committee where the auditor has resigned and
reported that a section 10A(17) letter has been issued.
13. All members of an audit committee at a time when material accounting
fraud occurred at the company. (18)
14. All members of an audit committee at a time when annual and/or
multiple quarterly financial statements had to be restated, and any of
the following factors apply:
o The restatement involves fraud or manipulation by insiders;
o The restatement is accompanied by an SEC inquiry or
investigation;
o The restatement involves revenue recognition;
o The restatement results in a greater than 5% adjustment to costs
of goods sold, operating expense, or operating cash flows; or
o The restatement results in a greater than 5% adjustment to net
income, 10% adjustment to assets or shareholders equity, or cash
flows from financing or investing activities.
(15) Glass Lewis may exempt certain audit committee members from the above
threshold if, upon further analysis of relevant factors such as the director's
experience, the size, industry-mix and location of the companies involved and
the director's attendance at all the companies, we can reasonably determine
that the audit committee member is likely not hindered by multiple audit
committee commitments.
(16) As discussed under the section labeled "Committee Chairman," in all cases,
if the chair of the committee is not specified, we recommend voting against the
director who has been on the committee the longest.
(17) Auditors are required to report all potential illegal acts to management
and the audit committee unless they are clearly inconsequential in nature. If
the audit committee or the board fails to take appropriate action on an act that
has been determined to be a violation of the law, the independent auditor is
required to send a section 10A letter to the SEC. Such letters are rare and
therefore we believe should be taken seriously.
(18) Recent research indicates that revenue fraud now accounts for over 60% of
SEC fraud cases, and that companies that engage in fraud experience significant
negative abnormal stock price declines--facing bankruptcy, delisting, and
material asset sales at much higher rates than do non-fraud firms (Committee of
Sponsoring Organizations of the Treadway Commission. "Fraudulent Financial
Reporting: 1998-2007." May 2010).
9
15. All members of an audit committee if the company repeatedly fails to
file its financial reports in a timely fashion. For example, the
company has filed two or more quarterly or annual financial statements
late within the last 5 quarters.
16. All members of an audit committee when it has been disclosed that a
law enforcement agency has charged the company and/or its employees
with a violation of the Foreign Corrupt Practices Act (FCPA).
17. All members of an audit committee when the company has aggressive
accounting policies and/ or poor disclosure or lack of sufficient
transparency in its financial statements.
18. All members of the audit committee when there is a disagreement with
the auditor and the auditor resigns or is dismissed (e.g. the company
receives an adverse opinion on its financial statements from the
auditor)
19. All members of the audit committee if the contract with the auditor
specifically limits the auditor's liability to the company for
damages.(19)
20. All members of the audit committee who served since the date of the
company's last annual meeting, and when, since the last annual
meeting, the company has reported a material weakness that has not yet
been corrected, or, when the company has an ongoing material weakness
from a prior year that has not yet been corrected.
We also take a dim view of audit committee reports that are boilerplate, and
which provide little or no information or transparency to investors. When a
problem such as a material weakness, restatement or late filings occurs, we
take into consideration, in forming our judgment with respect to the audit
committee, the transparency of the audit committee report.
COMPENSATION COMMITTEE PERFORMANCE
Compensation committees have the final say in determining the compensation of
executives. This includes deciding the basis on which compensation is
determined, as well as the amounts and types of compensation to be paid. This
process begins with the hiring and initial establishment of employment
agreements, including the terms for such items as pay, pensions and severance
arrangements. It is important in establishing compensation arrangements that
compensation be consistent with, and based on the long-term economic
performance of, the business's long-term shareholders returns.
Compensation committees are also responsible for the oversight of the
transparency of compensation. This oversight includes disclosure of
compensation arrangements, the matrix used in assessing pay for performance,
and the use of compensation consultants. In order to ensure the independence of
the compensation consultant, we believe the compensation committee should only
engage a compensation consultant that is not also providing any services to the
company or management apart from their contract with the compensation
committee. It is important to investors that they have clear and complete
disclosure of all the significant terms of compensation arrangements in order
to make informed decisions with respect to the oversight and decisions of the
compensation committee.
Finally, compensation committees are responsible for oversight of internal
controls over the executive compensation process. This includes controls over
gathering information used to determine compensation, establishment of equity
award plans, and granting of equity awards. Lax controls can and have
contributed to conflicting information being obtained, for example through the
use of nonobjective consultants. Lax controls can also contribute to improper
awards of compensation such as through granting of backdated or spring-loaded
options, or granting of bonuses when triggers for bonus payments have not been
met.
Central to understanding the actions of a compensation committee is a careful
review of the Compensation Discussion and Analysis (CD&A) report included in
each company's proxy. We review
(19) The Council of Institutional Investors. "Corporate Governance Policies," p.
4, April 5, 2006; and "Letter from Council of Institutional Investors to the
AICPA," November 8, 2006.
10
the CD&A in our evaluation of the overall compensation practices of a company,
as overseen by the compensation committee. The CD&A is also integral to the
evaluation of compensation proposals at companies, such as advisory votes on
executive compensation, which allow shareholders to vote on the compensation
paid to a company's top executives.
When assessing the performance of compensation committees, we will recommend
voting against for the following:(20)
1. All members of the compensation committee who are up for election and
served at the time of poor pay-for-performance (e.g., a company
receives an F grade in our pay-for-performance analysis) when
shareholders are not provided with an advisory vote on executive
compensation at the annual meeting.(21)
2. Any member of the compensation committee who has served on the
compensation committee of at least two other public companies that
received F grades in our pay-for-performance model and who is also
suspect at the company in question.
3. The compensation committee chair if the company received two D grades
in consecutive years in our pay-for-performance analysis, and if
during the past year the Company performed the same as or worse than
its peers.(22)
4. All members of the compensation committee (during the relevant time
period) if the company entered into excessive employment agreements
and/or severance agreements.
5. All members of the compensation committee when performance goals were
changed (i.e., lowered) when employees failed or were unlikely to meet
original goals, or performance-based compensation was paid despite
goals not being attained.
6. All members of the compensation committee if excessive employee
perquisites and benefits were allowed.
7. The compensation committee chair if the compensation committee did
not meet during the year, but should have (e.g., because executive
compensation was restructured or a new executive was hired).
8. All members of the compensation committee when the company repriced
options or completed a "self tender offer" without shareholder
approval within the past two years.
9. All members of the compensation committee when vesting of
in-the-money options is accelerated or when fully vested options are
granted.
10. All members of the compensation committee when option exercise prices
were backdated. Glass Lewis will recommend voting against an executive
director who played a role in and participated in option backdating.
11. All members of the compensation committee when option exercise prices
were spring-loaded or
(20) As discussed under the section labeled "Committee Chairman," where the
recommendation is to vote against the committee chair and the chair is not up
for election because the board is staggered, we do not recommend voting against
any members of the committee who are up for election; rather, we will simply
express our concern with regard to the committee chair.
(21) Where there are multiple CEOs in one year, we will consider not
recommending against the compensation committee but will defer judgment on
compensation policies and practices until the next year or a full year after
arrival of the new CEO. In addition, if a company provides shareholders with a
say-on-pay proposal and receives an F grade in our pay-for-performance model, we
will recommend that shareholders only vote against the say-on-pay proposal
rather than the members of the compensation committee, unless the company
exhibits egregious practices. However, if the company receives successive F
grades, we will then recommend against the members of the compensation committee
in addition to recommending voting against the say-on-pay proposal.
(22) In cases where the company received two D grades in consecutive years, but
during the past year the company per-formed better than its peers or improved
from an F to a D grade year over year, we refrain from recommending to vote
against the compensation chair. In addition, if a company provides shareholders
with a say-on-pay proposal in this in-stance, we will consider voting against
the advisory vote rather than the compensation committee chair unless the
com-pany exhibits unquestionably egregious practices.
11
otherwise timed around the release of material information.
12. All members of the compensation committee when a new employment
contract is given to an executive that does not include a clawback
provision and the company had a material restatement, especially if
the restatement was due to fraud.
13. The chair of the compensation committee where the CD&A provides
insufficient or unclear information about performance metrics and
goals, where the CD&A indicates that pay is not tied to performance,
or where the compensation committee or management has excessive
discretion to alter performance terms or increase amounts of awards in
contravention of previously defined targets.
14. All members of the compensation committee during whose tenure the
committee failed to implement a shareholder proposal regarding a
compensation-related issue, where the proposal received the
affirmative vote of a majority of the voting shares at a shareholder
meeting, and when a reasonable analysis suggests that the compensation
committee (rather than the governance committee) should have taken
steps to implement the request.(23)
15. All members of a compensation committee during whose tenure the
committee failed to address shareholder concerns following majority
shareholder rejection of the say-on-pay proposal in the previous year.
Where the proposal was approved but there was a significant
shareholder vote (i.e., greater than 25% of votes cast) against the
say-on-pay proposal in the prior year, if there is no evidence that
the board responded accordingly to the vote including actively
engaging shareholders on this issue, we will also consider
recommending voting against the chairman of the compensation committee
or all members of the compensation committee, depending on the
severity and history of the compensation problems and the level of
vote against.
NOMINATING AND GOVERNANCE COMMITTEE PERFORMANCE
The nominating and governance committee, as an agency for the shareholders, is
responsible for the governance by the board of the company and its executives.
In performing this role, the board is responsible and accountable for selection
of objective and competent board members. It is also responsible for providing
leadership on governance policies adopted by the company, such as decisions to
implement shareholder proposals that have received a majority vote.
Consistent with Glass Lewis' philosophy that boards should have diverse
backgrounds and members with a breadth and depth of relevant experience, we
believe that nominating and governance committees should consider diversity
when making director nominations within the context of each specific company
and its industry. In our view, shareholders are best served when boards make an
effort to ensure a constituency that is not only reasonably diverse on the
basis of age, race, gender and ethnicity, but also on the basis of geographic
knowledge, industry experience and culture.
Regarding the nominating and or governance committee, we will recommend voting
against the following:(24)
1. All members of the governance committee(25) during whose tenure the board
failed to implement a shareholder proposal with a direct and substantial
impact on shareholders and their rights - i.e., where the proposal received
enough shareholder votes (at least a majority) to allow the board to
implement or begin to implement that proposal.(26) Examples of these types
of shareholder
(23) In all other instances (i.e. a non-compensation-related shareholder
proposal should have been implemented) we recommend that shareholders vote
against the members of the governance committee.
(24) As discussed in the guidelines section labeled "Committee Chairman," where
we would recommend to vote against the committee chair but the chair is not up
for election because the board is staggered, we do not recommend voting against
any members of the committee who are up for election; rather, we will simply
express our concern regarding the committee chair.
(25) If the board does not have a governance committee (or a committee that
serves such a purpose), we recommend voting against the entire board on this
basis.
(26) Where a compensation-related shareholder proposal should have been
implemented, and when a reasonable analysis suggests that the members of
12
proposals are majority vote to elect directors and to declassify the
board.
2. The governance committee chair,(27) when the chairman is not
independent and an independent lead or presiding director has not been
appointed.(28)
3. In the absence of a nominating committee, the governance committee
chair when there are less than five or the whole nominating committee
when there are more than 20 members on the board.
4. The governance committee chair, when the committee fails to meet at
all during the year.
5. The governance committee chair, when for two consecutive years the
company provides what we consider to be "inadequate" related party
transaction disclosure (i.e. the nature of such transactions and/or
the monetary amounts involved are unclear or excessively vague,
thereby preventing an average shareholder from being able to
reasonably interpret the independence status of multiple directors
above and beyond what the company maintains is compliant with SEC or
applicable stock-exchange listing requirements).
6. The governance committee chair, when during the past year the board
adopted a forum selection clause (i.e. an exclusive forum
provision)(29) without shareholder approval, or, if the board is
currently seeking shareholder approval of a forum selection clause
pursuant to a bundled bylaw amendment rather than as a separate
proposal.
Regarding the nominating committee, we will recommend voting against the
following:(30)
1. All members of the nominating committee, when the committee nominated
or renominated an individual who had a significant conflict of
interest or whose past actions demonstrated a lack of integrity or
inability to represent shareholder interests.
2. The nominating committee chair, if the nominating committee did not
meet during the year, but should have (i.e., because new directors
were nominated or appointed since the time of the last annual
meeting).
3. In the absence of a governance committee, the nominating committee
chair(31) when the chairman is not independent, and an independent
lead or presiding director has not been appointed.(32)
4. The nominating committee chair, when there are less than five or the
whole nominating committee when there are more than 20 members on the
board.(33)
5. The nominating committee chair, when a director received a greater
than 50% against vote the prior year and not only was the director not
removed, but the issues that raised shareholder concern were not
corrected.(34)
the compensation committee (rather than the governance committee) bear the
responsibility for failing to implement the request, we recommend that
shareholders only vote against members of the compensation committee.
(27) As discussed in the guidelines section labeled "Committee Chairman," if the
committee chair is not specified, we recommend voting against the director who
has been on the committee the longest. If the longest-serving committee member
cannot be determined, we will recommend voting against the longest-serving
board member serving on the committee.
(28) We believe that one independent individual should be appointed to serve as
the lead or presiding director. When such a position is rotated among directors
from meeting to meeting, we will recommend voting against as if there were no
lead or presiding director.
(29) A forum selection clause is a bylaw provision stipulating that a certain
state, typically Delaware, shall be the exclusive forum for all intra-corporate
disputes (e.g. shareholder derivative actions, assertions of claims of a breach
of fiduciary duty, etc.). Such a clause effectively limits a shareholder's
legal remedy regarding appropriate choice of venue and relat-ed relief offered
under that state's laws and rulings.
(30) As discussed in the guidelines section labeled "Committee Chairman," where
we would recommend to vote against the committee chair but the chair is not up
for election because the board is staggered, we do not recommend voting against
any members of the committee who are up for election; rather, we will simply
express our concern regarding the committee chair.
(31) As discussed under the section labeled "Committee Chairman," if the
committee chair is not specified, we will rec-ommend voting against the
director who has been on the committee the longest. If the longest-serving
committee member cannot be determined, we will recommend voting against the
longest-serving board member on the committee.
(32) In the absence of both a governance and a nominating committee, we will
recommend voting against the chairman of the board on this basis, unless if the
chairman also serves as the CEO, in which case we will recommend voting against
the director who has served on the board the longest.
(33) In the absence of both a governance and a nominating committee, we will
recommend voting against the chairman of the board on this basis, unless if the
chairman also serves as the CEO, in which case we will recommend voting against
the director who has served on the board the longest.
(34) Considering that shareholder discontent clearly relates to the director who
received a greater than 50% against vote rather than the nominating chair, we
review the validity of the issue(s) that initially raised shareholder concern,
follow-up on such matters, and only recommend voting against the
13
BOARD-LEVEL RISK MANAGEMENT OVERSIGHT
Glass Lewis evaluates the risk management function of a public company board on
a strictly case-by-case basis. Sound risk management, while necessary at all
companies, is particularly important at financial firms which inherently
maintain significant exposure to financial risk. We believe such financial
firms should have a chief risk officer reporting directly to the board and a
dedicated risk committee or a committee of the board charged with risk
oversight. Moreover, many non-financial firms maintain strategies which involve
a high level of exposure to financial risk. Similarly, since many non-financial
firms have significant hedging or trading strategies, including financial and
non-financial derivatives, those firms should also have a chief risk officer
and a risk committee.
Our views on risk oversight are consistent with those expressed by various
regulatory bodies. In its December 2009 Final Rule release on Proxy Disclosure
Enhancements, the SEC noted that risk oversight is a key competence of the
board and that additional disclosures would improve investor and shareholder
understanding of the role of the board in the organization's risk management
practices. The final rules, which became effective on February 28, 2010, now
explicitly require companies and mutual funds to describe (while allowing for
some degree of flexibility) the board's role in the oversight of risk.
When analyzing the risk management practices of public companies, we take note
of any significant losses or writedowns on financial assets and/or structured
transactions. In cases where a company has disclosed a sizable loss or
writedown, and where we find that the company's board-level risk committee
contributed to the loss through poor oversight, we would recommend that
shareholders vote against such committee members on that basis. In addition, in
cases where a company maintains a significant level of financial risk exposure
but fails to disclose any explicit form of board-level risk oversight
(committee or otherwise)(35), we will consider recommending to vote against the
chairman of the board on that basis. However, we generally would not recommend
voting against a combined chairman/CEO except in egregious cases.
EXPERIENCE
We find that a director's past conduct is often indicative of future conduct
and performance. We often find directors with a history of overpaying
executives or of serving on boards where avoidable disasters have occurred
appearing at companies that follow these same patterns. Glass Lewis has a
proprietary database of directors serving at over 8,000 of the most widely held
U.S. companies. We use this database to track the performance of directors
across companies.
VOTING RECOMMENDATIONS ON THE BASIS OF DIRECTOR EXPERIENCE
We typically recommend that shareholders vote against directors who have served
on boards or as executives of companies with records of poor performance,
inadequate risk oversight, overcompensation, audit- or accounting-related
issues, and/or other indicators of mismanagement or actions against the
interests of shareholders.(36)
Likewise, we examine the backgrounds of those who serve on key board committees
to ensure that they have the required skills and diverse backgrounds to make
informed judgments about the subject matter for which the committee is
responsible.
OTHER CONSIDERATIONS
In addition to the three key characteristics -- independence, performance,
experience -- that we use
nominating chair if a reasonable analysis suggests that it would be most
appropriate. In rare cases, we will consider recommending against the
nominating chair when a director receives a substantial (i.e., 25% or more)
vote against based on the same analysis.
(35) A committee responsible for risk management could be a dedicated risk
committee, or another board committee, usually the audit committee but
occasionally the finance committee, depending on a given company's board
structure and method of disclosure. At some companies, the entire board is
charged with risk management.
(36) We typically apply a three-year look-back to such issues and also research
to see whether the responsible directors have been up for election since the
time of the failure, and if so, we take into account the percentage of support
they received from shareholders.
14
to evaluate board members, we consider conflict-of-interest issues as well as
the size of the board of directors when making voting recommendations.
CONFLICTS OF INTEREST
We believe board members should be wholly free of identifiable and substantial
conflicts of interest, regardless of the overall level of independent directors
on the board. Accordingly, we recommend that shareholders vote against the
following types of affiliated or inside directors:
1. A CFO who is on the board: In our view, the CFO holds a unique
position relative to financial reporting and disclosure to
shareholders. Because of the critical importance of financial
disclosure and reporting, we believe the CFO should report to the
board and not be a member of it.
2. A director who is on an excessive number of boards: We will typically
recommend voting against a director who serves as an executive officer
of any public company while serving on more than two other public
company boards and any other director who serves on more than six
public company boards typically receives an against recommendation
from Glass Lewis.(37) Academic literature suggests that one board
takes up approximately 200 hours per year of each member's time. We
believe this limits the number of boards on which directors can
effectively serve, especially executives at other companies.(38)
Further, we note a recent study has shown that the average number of
outside board seats held by CEOs of S&P 500 companies is 0.6, down
from 0.8 in 2006 and 1.2 in 2001.(39)
3. A director, or a director who has an immediate family member,
providing material consulting or other material professional services
to the company: These services may include legal, consulting, or
financial services. We question the need for the company to have
consulting relationships with its directors. We view such
relationships as creating conflicts for directors, since they may be
forced to weigh their own interests against shareholder interests when
making board decisions. In addition, a company's decisions regarding
where to turn for the best professional services may be compromised
when doing business with the professional services firm of one of the
company's directors.
4. A director, or a director who has an immediate family member,
engaging in airplane, real estate, or similar deals, including
perquisite-type grants from the company, amounting to more than
$50,000: Directors who receive these sorts of payments from the
company will have to make unnecessarily complicated decisions that may
pit their interests against shareholder interests.
5. Interlocking directorships: CEOs or other top executives who serve on
each other's boards create an interlock that poses conflicts that
should be avoided to ensure the promotion of shareholder interests
above all else.(40)
6. All board members who served at a time when a poison pill was adopted
without shareholder approval within the prior twelve months.(41) In
the event a board is classified and shareholders are therefore unable
to vote against all directors, we will recommend voting against the
remaining directors the next year they are up for a shareholder vote.
(37) Glass Lewis will not recommend voting against the director at the company
where he or she serves as an executive officer, only at the other public
companies where he or she serves on the board.
(38) Our guidelines are similar to the standards set forth by the NACD in its
"Report of the NACD Blue Ribbon Commission on Director Professionalism," 2001
Edition, pp. 14-15 (also cited approvingly by the Conference Board in its
"Corporate Governance Best Practices: A Blueprint for the Post-Enron Era,"
2002, p. 17), which suggested that CEOs should not serve on more than 2
additional boards, persons with full-time work should not serve on more than 4
additional boards, and others should not serve on more than six boards.
(39) Spencer Stuart Board Index, 2011, p. 8.
(40) We do not apply a look-back period for this situation. The interlock policy
applies to both public and private companies. We will also evaluate multiple
board interlocks among non-insiders (i.e. multiple directors serving on the
same boards at other companies), for evidence of a pattern of poor oversight.
(41) Refer to Section V. Governance Structure and the Shareholder Franchise for
further discussion of our policies regarding anti-takeover measures, including
poison pills.
15
SIZE OF THE BOARD OF DIRECTORS
While we do not believe there is a universally applicable optimum board size,
we do believe boards should have at least five directors to ensure sufficient
diversity in decision-making and to enable the formation of key board
committees with independent directors. Conversely, we believe that boards with
more than 20 members will typically suffer under the weight of "too many cooks
in the kitchen" and have difficulty reaching consensus and making timely
decisions. Sometimes the presence of too many voices can make it difficult to
draw on the wisdom and experience in the room by virtue of the need to limit
the discussion so that each voice may be heard.
To that end, we typically recommend voting against the chairman of the
nominating committee at a board with fewer than five directors. With boards
consisting of more than 20 directors, we typically recommend voting against all
members of the nominating committee (or the governance committee, in the
absence of a nominating committee).(42)
CONTROLLED COMPANIES
Controlled companies present an exception to our independence recommendations.
The board's function is to protect shareholder interests; however, when an
individual or entity owns more than 50% of the voting shares, the interests of
the majority of shareholders are the interests of that entity or individual.
Consequently, Glass Lewis does not apply our usual two-thirds independence rule
and therefore we will not recommend voting against boards whose composition
reflects the makeup of the shareholder population.
INDEPENDENCE EXCEPTIONS
The independence exceptions that we make for controlled companies are as
follows:
1. We do not require that controlled companies have boards that are at
least two-thirds independent. So long as the insiders and/or
affiliates are connected with the controlling entity, we accept the
presence of non-independent board members.
2. The compensation committee and nominating and governance committees
do not need to consist solely of independent directors.
o We believe that standing nominating and corporate governance
committees at controlled companies are unnecessary. Although
having a committee charged with the duties of searching for,
selecting, and nominating independent directors can be
beneficial, the unique composition of a controlled company's
shareholder base makes such committees weak and irrelevant.
o Likewise, we believe that independent compensation committees at
controlled companies are unnecessary. Although independent
directors are the best choice for approving and monitoring senior
executives' pay, controlled companies serve a unique shareholder
population whose voting power ensures the protection of its
interests. As such, we believe that having affiliated directors
on a controlled company's compensation committee is acceptable.
However, given that a controlled company has certain obligations
to minority shareholders we feel that an insider should not serve
on the compensation committee. Therefore, Glass Lewis will
recommend voting against any insider (the CEO or otherwise)
serving on the compensation committee.
3. Controlled companies do not need an independent chairman or an
independent lead or presiding director. Although an independent
director in a position of authority on the board -- such as chairman
or presiding director -- can best carry out the board's duties,
controlled companies serve a unique shareholder population whose
voting power ensures the protection of its interests.
(42) The Conference Board, at p. 23 in its May 2003 report "Corporate Governance
Best Practices, Id.," quotes one of its roundtable participants as stating,
"[w]hen you've got a 20 or 30 person corporate board, it's one way of assuring
that nothing is ever going to happen that the CEO doesn't want to happen."
16
SIZE OF THE BOARD OF DIRECTORS
We have no board size requirements for controlled companies.
AUDIT COMMITTEE INDEPENDENCE
We believe that audit committees should consist solely of independent
directors. Regardless of a company's controlled status, the interests of all
shareholders must be protected by ensuring the integrity and accuracy of the
company's financial statements. Allowing affiliated directors to oversee the
preparation of financial reports could create an insurmountable conflict of
interest.
UNOFFICIALLY CONTROLLED COMPANIES AND 20-50% BENEFICIAL OWNERS
Where an individual or entity owns more than 50% of a company's voting power
but the company is not a "controlled" company as defined by relevant listing
standards, we apply a lower independence requirement of a majority of the board
but believe the company should otherwise be treated like another public
company; we will therefore apply all other standards as outlined above.
Similarly, where an individual or entity holds between 20-50% of a company's
voting power, but the company is not "controlled" and there is not a "majority"
owner, we believe it is reasonable to allow proportional representation on the
board and committees (excluding the audit committee) based on the individual or
entity's percentage of ownership.
EXCEPTIONS FOR RECENT IPOS
We believe companies that have recently completed an initial public offering
("IPO") should be allowed adequate time to fully comply with marketplace
listing requirements as well as to meet basic corporate governance standards.
We believe a one-year grace period immediately following the date of a
company's IPO is sufficient time for most companies to comply with all relevant
regulatory requirements and to meet such corporate governance standards. Except
in egregious cases, Glass Lewis refrains from issuing voting recommendations on
the basis of corporate governance best practices (eg. board independence,
committee membership and structure, meeting attendance, etc.) during the
one-year period following an IPO.
However, two specific cases warrant strong shareholder action against the board
of a company that completed an IPO within the past year:
1. Adoption of a poison pill: in cases where a board implements a poison
pill preceding an IPO, we will consider voting against the members of
the board who served during the period of the poison pill's adoption
if the board (i) did not also commit to submit the poison pill to a
shareholder vote within 12 months of the IPO or (ii) did not provide a
sound rationale for adopting the pill and the pill does not expire in
three years or less. In our view, adopting such an anti-takeover
device unfairly penalizes future shareholders who (except for electing
to buy or sell the stock) are unable to weigh in on a matter that
could potentially negatively impact their ownership interest. This
notion is strengthened when a board adopts a poison pill with a 5-10
year life immediately prior to having a public shareholder base so as
to insulate management for a substantial amount of time while
postponing and/or avoiding allowing public shareholders the ability to
vote on the pill's adoption. Such instances are indicative of boards
that may subvert shareholders' best interests following their IPO.
2. Adoption of an exclusive forum provision: consistent with our general
approach to boards that adopt exclusive forum provisions without
shareholder approval (refer to our discussion of nominating and
governance committee performance in Section I of the guidelines), in
cases where a board adopts such a provision for inclusion in a
company's charter or bylaws before the company's IPO, we will
recommend voting against the chairman of the govern-ance committee,
or, in the absence of such a committee, the chairman of the board, who
served during the period of time when the provision was adopted.
17
Further, shareholders should also be wary of companies in this category that
adopt supermajority voting requirements before their IPO. Absent explicit
provisions in the articles or bylaws stipulating that certain policies will be
phased out over a certain period of time (e.g. a predetermined declassification
of the board, a planned separation of the chairman and CEO, etc.) long-term
shareholders could find themselves in the predicament of having to attain a
supermajority vote to approve future proposals seeking to eliminate such
policies.
MUTUAL FUND BOARDS
Mutual funds, or investment companies, are structured differently from regular
public companies (i.e., operating companies). Typically, members of a fund's
adviser are on the board and management takes on a different role from that of
regular public companies. Thus, we focus on a short list of requirements,
although many of our guidelines remain the same.
The following mutual fund policies are similar to the policies for regular
public companies:
1. Size of the board of directors: The board should be made up of
between five and twenty directors.
2. The CFO on the board: Neither the CFO of the fund nor the CFO of the
fund's registered investment adviser should serve on the board.
3. Independence of the audit committee: The audit committee should
consist solely of independent directors.
4. Audit committee financial expert: At least one member of the audit
committee should be designated as the audit committee financial
expert.
The following differences from regular public companies apply at mutual funds:
1. Independence of the board: We believe that three-fourths of an
investment company's board should be made up of independent directors.
This is consistent with a proposed SEC rule on investment company
boards. The Investment Company Act requires 40% of the board to be
independent, but in 2001, the SEC amended the Exemptive Rules to
require that a majority of a mutual fund board be independent. In
2005, the SEC proposed increasing the independence threshold to 75%.
In 2006, a federal appeals court ordered that this rule amendment be
put back out for public comment, putting it back into "proposed rule"
status. Since mutual fund boards play a vital role in overseeing the
relationship between the fund and its investment manager, there is
greater need for independent oversight than there is for an operating
company board.
2. When the auditor is not up for ratification: We do not recommend
voting against the audit committee if the auditor is not up for
ratification because, due to the different legal structure of an
investment company compared to an operating company, the auditor for
the investment company (i.e., mutual fund) does not conduct the same
level of financial review for each investment company as for an
operating company.
3. Non-independent chairman: The SEC has proposed that the chairman of
the fund board be independent. We agree that the roles of a mutual
fund's chairman and CEO should be separate. Although we believe this
would be best at all companies, we recommend voting against the
chairman of an investment company's nominating committee as well as
the chairman of the board if the chairman and CEO of a mutual fund are
the same person and the fund does not have an independent lead or
presiding director. Seven former SEC commissioners support the
appointment of an independent chairman and we agree with them that "an
independent board chairman would be better able to create conditions
favoring the long-term interests of fund shareholders than would a
chairman who is an executive of the adviser." (See the comment letter
sent to the SEC in support of the proposed rule at
http://sec.gov/rules/proposed/s70304/ s70304-179.pdf)
4. Multiple funds overseen by the same director: Unlike service on a
public company board, mutual
18
fund boards require much less of a time commitment. Mutual fund
directors typically serve on dozens of other mutual fund boards, often
within the same fund complex. The Investment Company Institute's
("ICI") Overview of Fund Governance Practices, 1994-2010, indicates
that the average number of funds served by an independent director in
2010 was 49. Absent evidence that a specific director is hindered from
being an effective board member at a fund due to service on other
funds' boards, we refrain from maintaining a cap on the number of
outside mutual fund boards that we believe a director can serve on.
DECLASSIFIED BOARDS
Glass Lewis favors the repeal of staggered boards and the annual election of
directors. We believe staggered boards are less accountable to shareholders
than boards that are elected annually. Furthermore, we feel the annual election
of directors encourages board members to focus on shareholder interests.
Empirical studies have shown: (i) companies with staggered boards reduce a
firm's value; and (ii) in the context of hostile takeovers, staggered boards
operate as a takeover defense, which entrenches management, discourages
potential acquirers, and delivers a lower return to target shareholders.
In our view, there is no evidence to demonstrate that staggered boards improve
shareholder returns in a takeover context. Research shows that shareholders are
worse off when a staggered board blocks a transaction. A study by a group of
Harvard Law professors concluded that companies whose staggered boards
prevented a takeover "reduced shareholder returns for targets ... on the order
of eight to ten percent in the nine months after a hostile bid was
announced."(43) When a staggered board negotiates a friendly transaction, no
statistically significant difference in premiums occurs.(44) Further, one of
those same professors found that charter-based staggered boards "reduce the
market value of a firm by 4% to 6% of its market capitalization" and that
"staggered boards bring about and not merely reflect this reduction in market
value."(45) A subsequent study reaffirmed that classified boards reduce
shareholder value, finding "that the ongoing process of dismantling
staggered boards, encouraged by institutional investors, could well
contribute to increasing shareholder wealth."(46)
Shareholders have increasingly come to agree with this view. In 2011 more than
75% of S&P 500 companies had declassified boards, up from approximately 41% a
decade ago.(47) Clearly, more shareholders have supported the repeal of
classified boards. Resolutions relating to the repeal of staggered boards
garnered on average over 70% support among shareholders in 2008, whereas in
1987, only 16.4% of votes cast favored board declassification.(48)
Given the empirical evidence suggesting staggered boards reduce a company's
value and the increasing shareholder opposition to such a structure, Glass Lewis
supports the declassification of boards and the annual election of directors.
MANDATORY DIRECTOR TERM AND AGE LIMITS
Glass Lewis believes that director age and term limits typically are not in
shareholders' best interests. Too often age and term limits are used by boards
as a crutch to remove board members who have served for an extended period of
time. When used in that fashion, they are indicative of a board that has a
difficult time making "tough decisions."
(43) Lucian Bebchuk, John Coates IV, Guhan Subramanian, "The Powerful
Antitakeover Force of Staggered Boards: Further Findings and a Reply to
Symposium Participants," 55 Stanford Law Review 885-917 (2002), page 1.
(44) Id. at 2 ("Examining a sample of seventy-three negotiated transactions from
2000 to 2002, we find no systematic benefits in terms of higher premia to
boards that have [staggered structures].").
(45) Lucian Bebchuk, Alma Cohen, "The Costs of Entrenched Boards" (2004).
(46) Lucian Bebchuk, Alma Cohen and Charles C.Y. Wang, "Staggered Boards and the
Wealth of Shareholders: Evidence from a Natural Experiment," SSRN:
http://ssrn.com/abstract=1706806 (2010), p. 26.
(47) Spencer Stuart Board Index, 2011, p. 14
(48) Lucian Bebchuk, John Coates IV and Guhan Subramanian, "The Powerful
Antitakeover Force of Staggered Boards: Theory, Evidence, and Policy," 54
Stanford Law Review 887-951 (2002).
19
Academic literature suggests that there is no evidence of a correlation between
either length of tenure or age and director performance. On occasion, term
limits can be used as a means to remove a director for boards that are
unwilling to police their membership and to enforce turnover. Some shareholders
support term limits as a way to force change when boards are unwilling to do
so.
While we understand that age limits can be a way to force change where boards
are unwilling to make changes on their own, the long-term impact of age limits
restricts experienced and potentially valuable board members from service
through an arbitrary means. Further, age limits unfairly imply that older (or,
in rare cases, younger) directors cannot contribute to company oversight.
In our view, a director's experience can be a valuable asset to shareholders
because of the complex, critical issues that boards face. However, we support
periodic director rotation to ensure a fresh perspective in the boardroom and
the generation of new ideas and business strategies. We believe the board
should implement such rotation instead of relying on arbitrary limits. When
necessary, shareholders can address the issue of director rotation through
director elections.
We believe that shareholders are better off monitoring the board's approach to
corporate governance and the board's stewardship of company performance rather
than imposing inflexible rules that don't necessarily correlate with returns or
benefits for shareholders.
However, if a board adopts term/age limits, it should follow through and not
waive such limits. If the board waives its term/age limits, Glass Lewis will
consider recommending shareholders vote against the nominating and/or
governance committees, unless the rule was waived with sufficient explanation,
such as consummation of a corporate transaction like a merger.
REQUIRING TWO OR MORE NOMINEES PER BOARD SEAT
In an attempt to address lack of access to the ballot, shareholders sometimes
propose that the board give shareholders a choice of directors for each open
board seat in every election. However, we feel that policies requiring a
selection of multiple nominees for each board seat would discourage prospective
directors from accepting nominations. A prospective director could not be
confident either that he or she is the board's clear choice or that he or she
would be elected. Therefore, Glass Lewis generally will vote against such
proposals.
PROXY ACCESS
Proxy Access has garnered significant attention in recent years. As in 2012, we
expect to see a number of shareholder proposals regarding this topic in 2013
and perhaps even some companies unilaterally adopting some elements of proxy
access. However, considering the uncertainty in this area and the inherent
case-by-case nature of those situations, we refrain from establishing any
specific parameters at this time.
For a discussion of recent regulatory events in this area, along with a
detailed overview of the Glass Lewis approach to Shareholder Proposals
regarding Proxy Access, refer to GLASS LEWIS' GUIDELINES ON SHAREHOLDER
RESOLUTIONS AND INITIATIVES.
MAJORITY VOTE FOR THE ELECTION OF DIRECTORS
In stark contrast to the failure of shareholder access to gain acceptance,
majority voting for the election of directors is fast becoming the de facto
standard in corporate board elections. In our view, the majority voting
proposals are an effort to make the case for shareholder impact on director
elections on a company-specific basis.
While this proposal would not give shareholders the opportunity to nominate
directors or lead to elections where shareholders have a choice among director
candidates, if implemented, the proposal would allow shareholders to have a
voice in determining whether the nominees proposed by the board should actually
serve as the overseer-representatives of shareholders in the boardroom. We
20
believe this would be a favorable outcome for shareholders.
During the first half of 2012, Glass Lewis tracked over 35 shareholder
proposals seeking to require a majority vote to elect directors at annual
meetings in the U.S., roughly on par with what we reviewed in each of the past
several years, but a sharp contrast to the 147 proposals tracked during all of
2006. The large drop in the number of proposals being submitted in recent years
compared to 2006 is a result of many companies having already adopted some form
of majority voting, including approximately 79% of companies in the S&P 500
index, up from 56% in 2008.(49) During 2012 these proposals received on average
61.2% shareholder support (based on for and against votes), up from 54% in
2008.
THE PLURALITY VOTE STANDARD
Today, most US companies still elect directors by a plurality vote standard.
Under that standard, if one shareholder holding only one share votes in favor
of a nominee (including himself, if the director is a shareholder), that
nominee "wins" the election and assumes a seat on the board. The common concern
among companies with a plurality voting standard was the possibility that one
or more directors would not receive a majority of votes, resulting in "failed
elections." This was of particular concern during the 1980s, an era of frequent
takeovers and contests for control of companies.
ADVANTAGES OF A MAJORITY VOTE STANDARD
If a majority vote standard were implemented, a nominee would have to receive
the support of a majority of the shares voted in order to be elected. Thus,
shareholders could collectively vote to reject a director they believe will not
pursue their best interests. We think that this minimal amount of protection
for shareholders is reasonable and will not upset the corporate structure nor
reduce the willingness of qualified shareholder-focused directors to serve in
the future.
We believe that a majority vote standard will likely lead to more attentive
directors. Occasional use of this power will likely prevent the election of
directors with a record of ignoring shareholder interests in favor of other
interests that conflict with those of investors. Glass Lewis will generally
support proposals calling for the election of directors by a majority vote
except for use in contested director elections.
In response to the high level of support majority voting has garnered, many
companies have voluntarily taken steps to implement majority voting or modified
approaches to majority voting. These steps range from a modified approach
requiring directors that receive a majority of withheld votes to resign (e.g.,
Ashland Inc.) to actually requiring a majority vote of outstanding shares to
elect directors (e.g., Intel).
We feel that the modified approach does not go far enough because requiring a
director to resign is not the same as requiring a majority vote to elect a
director and does not allow shareholders a definitive voice in the election
process. Further, under the modified approach, the corporate governance
committee could reject a resignation and, even if it accepts the resignation,
the corporate governance committee decides on the director's replacement. And
since the modified approach is usually adopted as a policy by the board or a
board committee, it could be altered by the same board or committee at any
time.
(49) Spencer Stuart Board Index, 2011, p. 14
21
III. TRANSPARENCY AND INTEGRITY OF FINANCIAL REPORTING
AUDITOR RATIFICATION
The auditor's role as gatekeeper is crucial in ensuring the integrity and
transparency of the financial information necessary for protecting shareholder
value. Shareholders rely on the auditor to ask tough questions and to do a
thorough analysis of a company's books to ensure that the information provided
to shareholders is complete, accurate, fair, and that it is a reasonable
representation of a company's financial position. The only way shareholders can
make rational investment decisions is if the market is equipped with accurate
information about a company's fiscal health. As stated in the October 6, 2008
Final Report of the Advisory Committee on the Auditing Profession to the U.S.
Department of the Treasury:
"THE AUDITOR IS EXPECTED TO OFFER CRITICAL AND OBJECTIVE JUDGMENT ON
THE FINANCIAL MATTERS UNDER CONSIDERATION, AND ACTUAL AND PERCEIVED
ABSENCE OF CONFLICTS IS CRITICAL TO THAT EXPECTATION. THE COMMITTEE
BELIEVES THAT AUDITORS, INVESTORS, PUBLIC COMPANIES, AND OTHER MARKET
PARTICIPANTS MUST UNDERSTAND THE INDEPENDENCE REQUIREMENTS AND THEIR
OBJECTIVES, AND THAT AUDITORS MUST ADOPT A MINDSET OF SKEPTICISM WHEN
FACING SITUATIONS THAT MAY COMPROMISE THEIR INDEPENDENCE."
As such, shareholders should demand an objective, competent and diligent
auditor who performs at or above professional standards at every company in
which the investors hold an interest. Like directors, auditors should be free
from conflicts of interest and should avoid situations requiring a choice
between the auditor's interests and the public's interests. Almost without
exception, shareholders should be able to annually review an auditor's
performance and to annually ratify a board's auditor selection. Moreover, in
October 2008, the Advisory Committee on the Auditing Profession went even
further, and recommended that "to further enhance audit committee oversight and
auditor accountability ... disclosure in the company proxy statement regarding
shareholder ratification [should] include the name(s) of the senior auditing
partner(s) staffed on the engagement."(50)
On August 16, 2011, the PCAOB issued a Concept Release seeking public comment on
ways that audi-tor independence, objectivity and professional skepticism could
be enhanced, with a specific empha-sis on mandatory audit firm rotation. The
PCAOB convened several public roundtable meeting during 2012 to further discuss
such matters. Glass Lewis believes auditor rotation can ensure both the
inde-pendence of the auditor and the integrity of the audit; we will typically
recommend supporting pro-posals to require auditor rotation when the proposal
uses a reasonable period of time (usually not less than 5-7 years) particularly
at companies with a history of accounting problems.
VOTING RECOMMENDATIONS ON AUDITOR RATIFICATION
We generally support management's choice of auditor except when we believe the
auditor's independence or audit integrity has been compromised. Where a board
has not allowed shareholders to review and ratify an auditor, we typically
recommend voting against the audit committee chairman. When there have been
material restatements of annual financial statements or material weakness in
internal controls, we usually recommend voting against the entire audit
committee.
(50) "Final Report of the Advisory Committee on the Auditing Profession to the
U.S. Department of the Treasury." p. VIII:20, October 6, 2008.
22
Reasons why we may not recommend ratification of an auditor include:
1. When audit fees plus audit-related fees total less than the tax fees
and/or other non-audit fees.
2. Recent material restatements of annual financial statements,
including those resulting in the reporting of material weaknesses in
internal controls and including late filings by the company where the
auditor bears some responsibility for the restatement or late
filing.(51)
3. When the auditor performs prohibited services such as tax-shelter
work, tax services for the CEO or CFO, or contingent-fee work, such as
a fee based on a percentage of economic benefit to the company.
4. When audit fees are excessively low, especially when compared with
other companies in the same industry.
5. When the company has aggressive accounting policies.
6. When the company has poor disclosure or lack of transparency in its
financial statements.
7. Where the auditor limited its liability through its contract with the
company or the audit contract requires the corporation to use
alternative dispute resolution procedures without adequate
justification.
8. We also look for other relationships or concerns with the auditor
that might suggest a conflict between the auditor's interests and
shareholder interests.
PENSION ACCOUNTING ISSUES
A pension accounting question often raised in proxy proposals is what effect,
if any, projected returns on employee pension assets should have on a company's
net income. This issue often arises in the executive-compensation context in a
discussion of the extent to which pension accounting should be reflected in
business performance for purposes of calculating payments to executives.
Glass Lewis believes that pension credits should not be included in measuring
income that is used to award performance-based compensation. Because many of
the assumptions used in accounting for retirement plans are subject to the
company's discretion, management would have an obvious conflict of interest if
pay were tied to pension income. In our view, projected income from pensions
does not truly reflect a company's performance.
(51) An auditor does not audit interim financial statements. Thus, we generally
do not believe that an auditor should be opposed due to a restatement of
interim financial statements unless the nature of the misstatement is clear
from a reading of the incorrect financial statements.
23
IV. THE LINK BETWEEN COMPENSATION AND PERFORMANCE
Glass Lewis carefully reviews the compensation awarded to senior executives, as
we believe that this is an important area in which the board's priorities are
revealed. Glass Lewis strongly believes execu-tive compensation should be
linked directly with the performance of the business the executive is charged
with managing. We believe the most effective compensation arrangements provide
for an appropriate mix of performance-based short- and long-term incentives in
addition to base salary.
Glass Lewis believes that comprehensive, timely and transparent disclosure of
executive pay is critical to allowing shareholders to evaluate the extent to
which the pay is keeping pace with company performance. When reviewing proxy
materials, Glass Lewis examines whether the company discloses the performance
metrics used to determine executive compensation. We recognize performance
metrics must necessarily vary depending on the company and industry, among
other factors, and may include items such as total shareholder return, earning
per share growth, return on equity, return on assets and revenue growth.
However, we believe companies should disclose why the specific performance
metrics were selected and how the actions they are designed to incentivize will
lead to better corporate performance.
Moreover, it is rarely in shareholders' interests to disclose competitive data
about individual salaries below the senior executive level. Such disclosure
could create internal personnel discord that would be counterproductive for the
company and its shareholders. While we favor full disclosure for senior
executives and we view pay disclosure at the aggregate level (e.g., the number
of employees being paid over a certain amount or in certain categories) as
potentially useful, we do not believe shareholders need or will benefit from
detailed reports about individual management employees other than the most
senior executives.
ADVISORY VOTE ON EXECUTIVE COMPENSATION ("SAY-ON-PAY")
The Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank
Act") required most companies(52) to hold an advisory vote on executive
compensation at the first shareholder meeting that occurs six months after
enactment of the bill (January 21, 2011).
This practice of allowing shareholders a non-binding vote on a company's
compensation report is standard practice in many non-US countries, and has been
a requirement for most companies in the United Kingdom since 2003 and in
Australia since 2005. Although Say-on-Pay proposals are non-binding, a high
level of "against" or "abstain" votes indicate substantial shareholder concern
about a company's compensation policies and procedures.
Given the complexity of most companies' compensation programs, Glass Lewis
applies a highly nuanced approach when analyzing advisory votes on executive
compensation. We review each company's compensation on a case-by-case basis,
recognizing that each company must be examined in the context of industry,
size, maturity, performance, financial condition, its historic pay for
performance practices, and any other relevant internal or external factors.
We believe that each company should design and apply specific compensation
policies and practices that are appropriate to the circumstances of the company
and, in particular, will attract and retain competent executives and other
staff, while motivating them to grow the company's long-term
(52) Small reporting companies (as defined by the SEC as below $75,000,000 in
market capitalization) received a two-year reprieve and will only be subject to
say-on-pay requirements beginning at meetings held on or after January 21,
2013.
24
shareholder value.
Where we find those specific policies and practices serve to reasonably align
compensation with performance, and such practices are adequately disclosed,
Glass Lewis will recommend supporting the company's approach. If, however,
those specific policies and practices fail to demonstrably link compensation
with performance, Glass Lewis will generally recommend voting against the
say-on-pay proposal.
Glass Lewis focuses on four main areas when reviewing Say-on-Pay proposals:
o The overall design and structure of the Company's executive
compensation program including performance metrics;
o The quality and content of the Company's disclosure;
o The quantum paid to executives; and
o The link between compensation and performance as indicated by the
Company's current and past pay-for-performance grades
We also review any significant changes or modifications, and rationale for such
changes, made to the Company's compensation structure or award amounts,
including base salaries.
SAY-ON-PAY VOTING RECOMMENDATIONS
In cases where we find deficiencies in a company's compensation program's
design, implementation or management, we will recommend that shareholders vote
against the Say-on-Pay proposal. Generally such instances include evidence of a
pattern of poor pay-for-performance practices (i.e., deficient or failing pay
for performance grades), unclear or questionable disclosure regarding the
overall compensation structure (e.g., limited information regarding
benchmarking processes, limited rationale for bonus performance metrics and
targets, etc.), questionable adjustments to certain aspects of the overall
compensation structure (e.g., limited rationale for significant changes to
performance targets or metrics, the payout of guaranteed bonuses or sizable
retention grants, etc.), and/or other egregious compensation practices.
Although not an exhaustive list, the following issues when weighed together may
cause Glass Lewis to recommend voting against a say-on-pay vote:
o Inappropriate peer group and/or benchmarking issues
o Inadequate or no rationale for changes to peer groups
o Egregious or excessive bonuses, equity awards or severance payments,
including golden handshakes and golden parachutes
o Guaranteed bonuses
o Targeting overall levels of compensation at higher than median
without adequate justification
o Bonus or long-term plan targets set at less than mean or negative
performance levels
o Performance targets not sufficiently challenging, and/or providing
for high potential payouts
o Performance targets lowered, without justification
o Discretionary bonuses paid when short- or long-term incentive plan
targets were not met
o Executive pay high relative to peers not justified by outstanding
company performance
25
o The terms of the long-term incentive plans are inappropriate (please
see "Long-Term Incentives" below)
In the instance that a company has simply failed to provide sufficient
disclosure of its policies, we may recommend shareholders vote against this
proposal solely on this basis, regardless of the appropriateness of
compensation levels.
ADDITIONAL SCRUTINY FOR COMPANIES WITH SIGNIFICANT OPPOSITION IN 2012
At companies that received a significant shareholder vote (anything greater
than 25%) against their say on pay proposal in 2012, we believe the board
should demonstrate some level of engagement and responsiveness to the
shareholder concerns behind the discontent. While we recognize that sweeping
changes cannot be made to a compensation program without due consideration and
that a majority of shareholders voted in favor of the proposal, we will look
for disclosure in the proxy statement and other publicly-disclosed filings that
indicates the compensation committee is responding to the prior year's vote
results including engaging with large shareholders to identify the concerns
causing the substantial vote against. In the absence of any evidence that the
board is actively engaging shareholders on this issue and responding
accordingly, we will recommend holding compensation committee members
accountable for a failure to respond in consideration of the level of the vote
against and the severity and history of the compensation problems.
Where we identify egregious compensation practices, we may also recommend
voting against the compensation committee based on the practices or actions of
its members during the year, such as approving large one-off payments, the
inappropriate, unjustified use of discretion, or sustained poor pay for
performance practices.
SHORT-TERM INCENTIVES
A short-term bonus or incentive ("STI") should be demonstrably tied to
performance. Whenever possible, we believe a mix of corporate and individual
performance measures is appropriate. We would normally expect performance
measures for STIs to be based on internal financial measures such as net profit
after tax, EPS growth and divisional profitability as well as non-financial
factors such as those related to safety, environmental issues, and customer
satisfaction. However, we accept variations from these metrics if they are tied
to the Company's business drivers.
Further, the target and potential maximum awards that can be achieved under STI
awards should be disclosed. Shareholders should expect stretching performance
targets for the maximum award to be achieved. Any increase in the potential
maximum award should be clearly justified to shareholders.
Glass Lewis recognizes that disclosure of some measures may include
commercially confidential information. Therefore, we believe it may be
reasonable to exclude such information in some cases as long as the company
provides sufficient justification for non-disclosure. However, where a
short-term bonus has been paid, companies should disclose the extent to which
performance has been achieved against relevant targets, including disclosure of
the actual target achieved.
Where management has received significant STIs but short-term performance as
measured by such indicators as increase in profit and/or EPS growth over the
previous year prima facie appears to be poor or negative, we believe the
company should provide a clear explanation why these significant short-term
payments were made.
LONG-TERM INCENTIVES
Glass Lewis recognizes the value of equity-based incentive programs. When used
appropriately, they can provide a vehicle for linking an executive's pay to
company performance, thereby aligning their interests with those of
shareholders. In addition, equity-based compensation can be an effective way to
attract, retain and motivate key employees.
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There are certain elements that Glass Lewis believes are common to most
well-structured long-term incentive ("LTI") plans. These include:
o No re-testing or lowering of performance conditions
o Performance metrics that cannot be easily manipulated by management
o Two or more performance metrics
o At least one relative performance metric that compares the company's
performance to a relevant peer group or index
o Performance periods of at least three years
o Stretching metrics that incentivize executives to strive for
outstanding performance
o Individual limits expressed as a percentage of base salary
Performance measures should be carefully selected and should relate to the
specific business/industry in which the company operates and, especially, the
key value drivers of the company's business.
Glass Lewis believes that measuring a company's performance with multiple
metrics serves to provide a more complete picture of the company's performance
than a single metric, which may focus too much management attention on a single
target and is therefore more susceptible to manipulation. External benchmarks
should be disclosed and transparent, such as total shareholder return ("TSR")
against a well-selected sector index, peer group or other performance hurdle.
The rationale behind the selection of a specific index or peer group should be
disclosed. Internal benchmarks (e.g. earnings per share growth) should also be
disclosed and transparent, unless a cogent case for confidentiality is made and
fully explained.
We also believe shareholders should evaluate the relative success of a
company's compensation programs, particularly existing equity-based incentive
plans, in linking pay and performance in evaluating new LTI plans to determine
the impact of additional stock awards. We will therefore review the company's
pay-for-performance grade, see below for more information, and specifically the
proportion of total compensation that is stock-based.
PAY FOR PERFORMANCE
Glass Lewis believes an integral part of a well-structured compensation package
is a successful link between pay and performance. Therefore, Glass Lewis
developed a proprietary pay-for-performance model to evaluate the link between
pay and performance of the top five executives at US companies. Our model
benchmarks these executives' pay and company performance against peers selected
by Equilar's market-based peer groups and across five performance metrics. By
measuring the magnitude of the gap between two weighted-average percentile
rankings (executive compensation and performance), we grade companies from a
school letter system: "A", "B", "F", etc. The grades guide our evaluation of
compensation committee effectiveness and we generally recommend voting against
compensation committee of companies with a pattern of failing our
pay-for-performance analysis.
We also use this analysis to inform our voting decisions on say-on-pay
proposals. As such, if a company receives a failing grade from our proprietary
model, we are likely to recommend shareholders to vote against the say-on-pay
proposal. However, there may be exceptions to this rule such as when a company
makes significant enhancements to its compensation programs.
RECOUPMENT ("CLAWBACK") PROVISIONS
Section 954 of the Dodd-Frank Act requires the SEC to create a rule requiring
listed companies to adopt policies for recouping certain compensation during a
three-year look-back period. The rule applies
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to incentive-based compensation paid to current or former executives if the
company is required to prepare an accounting restatement due to erroneous data
resulting from material non-compliance with any financial reporting
requirements under the securities laws.
These recoupment provisions are more stringent than under Section 304 of the
Sarbanes-Oxley Act in three respects: (i) the provisions extend to current or
former executive officers rather than only to the CEO and CFO; (ii) it has a
three-year look-back period (rather than a twelve-month look-back period); and
(iii) it allows for recovery of compensation based upon a financial restatement
due to erroneous data, and therefore does not require misconduct on the part of
the executive or other employees.
FREQUENCY OF SAY-ON-PAY
The Dodd-Frank Act also requires companies to allow shareholders a non-binding
vote on the frequency of say-on-pay votes, i.e. every one, two or three years.
Additionally, Dodd-Frank requires companies to hold such votes on the frequency
of say-on-pay votes at least once every six years.
We believe companies should submit say-on-pay votes to shareholders every year.
We believe that the time and financial burdens to a company with regard to an
annual vote are relatively small and incremental and are outweighed by the
benefits to shareholders through more frequent accountability. Implementing
biannual or triennial votes on executive compensation limits shareholders'
ability to hold the board accountable for its compensation practices through
means other than voting against the compensation committee. Unless a company
provides a compelling rationale or unique circumstances for say-on-pay votes
less frequent than annually, we will generally recommend that shareholders
support annual votes on compensation.
VOTE ON GOLDEN PARACHUTE ARRANGEMENTS
The Dodd-Frank Act also requires companies to provide shareholders with a
separate non-binding vote on approval of golden parachute compensation
arrangements in connection with certain change-in-control transactions.
However, if the golden parachute arrangements have previously been subject to a
say-on-pay vote which shareholders approved, then this required vote is
waived.
Glass Lewis believes the narrative and tabular disclosure of golden parachute
arrangements will benefit all shareholders. Glass Lewis will analyze each
golden parachute arrangement on a case-by-case basis, taking into account,
among other items: the ultimate value of the payments particularly compared to
the value of the transaction, the tenure and position of the executives in
question, and the type of triggers involved (single vs double).
EQUITY-BASED COMPENSATION PLAN PROPOSALS
We believe that equity compensation awards are useful, when not abused, for
retaining employees and providing an incentive for them to act in a way that
will improve company performance. Glass Lewis evaluates equity-based
compensation plans using a detailed model and analytical review.
Equity-based compensation programs have important differences from cash
compensation plans and bonus programs. Accordingly, our model and analysis
takes into account factors such as plan administration, the method and terms of
exercise, repricing history, express or implied rights to reprice, and the
presence of evergreen provisions.
Our analysis is primarily quantitative and focused on the plan's cost as
compared with the business's operating metrics. We run twenty different
analyses, comparing the program with absolute limits we believe are key to
equity value creation and with a carefully chosen peer group. In general, our
model seeks to determine whether the proposed plan is either absolutely
excessive or is more than one standard deviation away from the average plan for
the peer group on a range of criteria, including dilution to shareholders and
the projected annual cost relative to the company's financial performance. Each
of the twenty analyses (and their constituent parts) is weighted and the plan
is scored in accordance with that weight.
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In our analysis, we compare the program's expected annual expense with the
business's operating metrics to help determine whether the plan is excessive in
light of company performance. We also compare the option plan's expected annual
cost to the enterprise value of the firm rather than to market capitalization
because the employees, managers and directors of the firm contribute to the
creation of enterprise value but not necessarily market capitalization (the
biggest difference is seen where cash represents the vast majority of market
capitalization). Finally, we do not rely exclusively on relative comparisons
with averages because, in addition to creeping averages serving to inflate
compensation, we believe that some absolute limits are warranted.
We evaluate equity plans based on certain overarching principles:
1. Companies should seek more shares only when needed.
2. Requested share amounts should be small enough that companies seek
shareholder approval every three to four years (or more frequently).
3. If a plan is relatively expensive, it should not grant options solely
to senior executives and board members.
4. Annual net share count and voting power dilution should be limited.
5. Annual cost of the plan (especially if not shown on the income
statement) should be reasonable as a percentage of financial results
and should be in line with the peer group.
6. The expected annual cost of the plan should be proportional to the
business's value.
7. The intrinsic value that option grantees received in the past should
be reasonable compared with the business's financial results.
8. Plans should deliver value on a per-employee basis when compared with
programs at peer companies.
9. Plans should not permit re-pricing of stock options.
10. Plans should not contain excessively liberal administrative or
payment terms.
11. Plans should not count shares in ways that understate the potential
dilution, or cost, to common shareholders. This refers to "inverse"
full-value award multipliers.
12. Selected performance metrics should be challenging and appropriate,
and should be subject to relative performance measurements.
13. Stock grants should be subject to minimum vesting and/or holding
periods sufficient to ensure sustainable performance and promote
retention.
OPTION EXCHANGES
Glass Lewis views option repricing plans and option exchange programs with
great skepticism. Shareholders have substantial risk in owning stock and we
believe that the employees, officers, and directors who receive stock options
should be similarly situated to align their interests with shareholder
interests.
We are concerned that option grantees who believe they will be "rescued" from
underwater options will be more inclined to take unjustifiable risks. Moreover,
a predictable pattern of repricing or exchanges substantially alters a stock
option's value because options that will practically never expire deeply out of
the money are worth far more than options that carry a risk of expiration.
In short, repricings and option exchange programs change the bargain between
shareholders and employees after the bargain has been struck.
There is one circumstance in which a repricing or option exchange program is
acceptable: if macroeconomic or industry trends, rather than specific company
issues, cause a stock's value to decline dramatically and the repricing is
necessary to motivate and retain employees. In this circumstance, we
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think it fair to conclude that option grantees may be suffering from a risk
that was not foreseeable when the original "bargain" was struck. In such a
circumstance, we will recommend supporting a repricing only if the following
conditions are true:
1. Officers and board members cannot participate in the program;
2. The stock decline mirrors the market or industry price decline in
terms of timing and approximates the decline in magnitude;
3. The exchange is value-neutral or value-creative to shareholders using
very conservative assumptions and with a recognition of the adverse
selection problems inherent in voluntary programs; and
4. Management and the board make a cogent case for needing to motivate
and retain existing employees, such as being in a competitive
employment market.
OPTION BACKDATING, SPRING-LOADING, AND BULLET-DODGING
Glass Lewis views option backdating, and the related practices of
spring-loading and bullet-dodging, as egregious actions that warrant holding
the appropriate management and board members responsible. These practices are
similar to re-pricing options and eliminate much of the downside risk inherent
in an option grant that is designed to induce recipients to maximize
shareholder return.
Backdating an option is the act of changing an option's grant date from the
actual grant date to an earlier date when the market price of the underlying
stock was lower, resulting in a lower exercise price for the option. Since
2006, Glass Lewis has identified over 270 companies that have disclosed
internal or government investigations into their past stock-option grants.
Spring-loading is granting stock options while in possession of material,
positive information that has not been disclosed publicly. Bullet-dodging is
delaying the grants of stock options until after the release of material,
negative information. This can allow option grants to be made at a lower price
either before the release of positive news or following the release of negative
news, assuming the stock's price will move up or down in response to the
information. This raises a concern similar to that of insider trading, or the
trading on material non-public information.
The exercise price for an option is determined on the day of grant, providing
the recipient with the same market risk as an investor who bought shares on
that date. However, where options were backdated, the executive or the board
(or the compensation committee) changed the grant date retroactively. The new
date may be at or near the lowest price for the year or period. This would be
like allowing an investor to look back and select the lowest price of the year
at which to buy shares.
A 2006 study of option grants made between 1996 and 2005 at 8,000 companies
found that option backdating can be an indication of poor internal controls.
The study found that option backdating was more likely to occur at companies
without a majority independent board and with a long-serving CEO; both factors,
the study concluded, were associated with greater CEO influence on the
company's compensation and governance practices.(53)
Where a company granted backdated options to an executive who is also a
director, Glass Lewis will recommend voting against that executive/director,
regardless of who decided to make the award. In addition, Glass Lewis will
recommend voting against those directors who either approved or allowed the
backdating. Glass Lewis feels that executives and directors who either benefited
from backdated options or authorized the practice have breached their fiduciary
responsibility to shareholders.
Given the severe tax and legal liabilities to the company from backdating,
Glass Lewis will consider recommending voting against members of the audit
committee who served when options were backdated, a restatement occurs,
material weaknesses in internal controls exist and disclosures indicate there
was a lack of documentation. These committee members failed in their
responsibility to ensure the integrity of the company's financial reports.
(53) Lucian Bebchuk, Yaniv Grinstein and Urs Peyer. "LUCKY CEOs." November,
2006.
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When a company has engaged in spring-loading or bullet-dodging, Glass Lewis
will consider recommending voting against the compensation committee members
where there has been a pattern of granting options at or near historic lows.
Glass Lewis will also recommend voting against executives serving on the board
who benefited from the spring-loading or bullet-dodging.
162(M) PLANS
Section 162(m) of the Internal Revenue Code allows companies to deduct
compensation in excess of $1 million for the CEO and the next three most highly
compensated executive officers, excluding the CFO, upon shareholder approval of
the excess compensation. Glass Lewis recognizes the value of executive
incentive programs and the tax benefit of shareholder-approved incentive
plans.
We believe the best practice for companies is to provide robust disclosure to
shareholders so that they can make fully-informed judgments about the
reasonableness of the proposed compensation plan. To allow for meaningful
shareholder review, we prefer that disclosure should include specific
performance metrics, a maximum award pool, and a maximum award amount per
employee. We also believe it is important to analyze the estimated grants to
see if they are reasonable and in line with the company's peers.
We typically recommend voting against a 162(m) plan where: a company fails to
provide at least a list of performance targets; a company fails to provide one
of either a total pool or an individual maximum; or the proposed plan is
excessive when compared with the plans of the company's peers.
The company's record of aligning pay with performance (as evaluated using our
proprietary pay-for-performance model) also plays a role in our recommendation.
Where a company has a record of setting reasonable pay relative to business
performance, we generally recommend voting in favor of a plan even if the plan
caps seem large relative to peers because we recognize the value in special pay
arrangements for continued exceptional performance.
As with all other issues we review, our goal is to provide consistent but
contextual advice given the specifics of the company and ongoing performance.
Overall, we recognize that it is generally not in shareholders' best interests
to vote against such a plan and forgo the potential tax benefit since
shareholder rejection of such plans will not curtail the awards; it will only
prevent the tax deduction associated with them.
DIRECTOR COMPENSATION PLANS
Glass Lewis believes that non-employee directors should receive reasonable and
appropriate compensation for the time and effort they spend serving on the
board and its committees. Director fees should be competitive in order to
retain and attract qualified individuals. But excessive fees represent a
financial cost to the company and threaten to compromise the objectivity and
independence of non-employee directors. Therefore, a balance is required. We
will consider recommending supporting compensation plans that include option
grants or other equity-based awards that help to align the interests of outside
directors with those of shareholders. However, equity grants to directors
should not be performance-based to ensure directors are not incentivized in the
same manner as executives but rather serve as a check on imprudent risk-taking
in executive compensation plan design.
Glass Lewis uses a proprietary model and analyst review to evaluate the costs
of equity plans compared to the plans of peer companies with similar market
capitalizations. We use the results of this model to guide our voting
recommendations on stock-based director compensation plans.
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V. GOVERNANCE STRUCTURE AND THE SHAREHOLDER FRANCHISE
ANTI-TAKEOVER MEASURES
POISON PILLS (SHAREHOLDER RIGHTS PLANS)
Glass Lewis believes that poison pill plans are not generally in shareholders'
best interests. They can reduce management accountability by substantially
limiting opportunities for corporate takeovers. Rights plans can thus prevent
shareholders from receiving a buy-out premium for their stock. Typically we
recommend that shareholders vote against these plans to protect their financial
interests and ensure that they have an opportunity to consider any offer for
their shares, especially those at a premium.
We believe boards should be given wide latitude in directing company activities
and in charting the company's course. However, on an issue such as this, where
the link between the shareholders' financial interests and their right to
consider and accept buyout offers is substantial, we believe that shareholders
should be allowed to vote on whether they support such a plan's implementation.
This issue is different from other matters that are typically left to board
discretion. Its potential impact on and relation to shareholders is direct and
substantial. It is also an issue in which management interests may be different
from those of shareholders; thus, ensuring that shareholders have a voice is
the only way to safeguard their interests.
In certain circumstances, we will support a poison pill that is limited in
scope to accomplish a particular objective, such as the closing of an important
merger, or a pill that contains what we believe to be a reasonable qualifying
offer clause. We will consider supporting a poison pill plan if the qualifying
offer clause includes each of the following attributes:
1. The form of offer is not required to be an all-cash transaction;
2. The offer is not required to remain open for more than 90 business
days;
3. The offeror is permitted to amend the offer, reduce the offer, or
otherwise change the terms;
4. There is no fairness opinion requirement; and
5. There is a low to no premium requirement.
Where these requirements are met, we typically feel comfortable that
shareholders will have the opportunity to voice their opinion on any legitimate
offer.
NOL POISON PILLS
Similarly, Glass Lewis may consider supporting a limited poison pill in the
unique event that a company seeks shareholder approval of a rights plan for the
express purpose of preserving Net Operating Losses (NOLs). While companies with
NOLs can generally carry these losses forward to offset future taxable income,
Section 382 of the Internal Revenue Code limits companies' ability to use NOLs
in the event of a "change of ownership."(54) In this case, a company may adopt
or amend a poison pill ("NOL pill") in order to prevent an inadvertent change
of ownership by multiple investors purchasing small chunks of stock at the same
time, and thereby preserve the ability to carry the NOLs forward. Often such
NOL pills have trigger thresholds much lower than the common 15% or 20%
thresholds, with some NOL pill triggers as low as 5%.
(54) Section 382 of the Internal Revenue Code refers to a "change of ownership"
of more than 50 percentage points by one or more 5% shareholders within a
three-year period. The statute is intended to deter the "trafficking" of net
operating losses.
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Glass Lewis evaluates NOL pills on a strictly case-by-case basis taking into
consideration, among other factors, the value of the NOLs to the company, the
likelihood of a change of ownership based on the size of the holding and the
nature of the larger shareholders, the trigger threshold and whether the term
of the plan is limited in duration (i.e., whether it contains a reasonable
"sunset" provision) or is subject to periodic board review and/or shareholder
ratification. However, we will recommend that shareholders vote against a
proposal to adopt or amend a pill to include NOL protective provisions if the
company has adopted a more narrowly tailored means of preventing a change in
control to preserve its NOLs. For example, a company may limit share transfers
in its charter to prevent a change of ownership from occurring.
Furthermore, we believe that shareholders should be offered the opportunity to
vote on any adoption or renewal of a NOL pill regardless of any potential tax
benefit that it offers a company. As such, we will consider recommending voting
against those members of the board who served at the time when an NOL pill was
adopted without shareholder approval within the prior twelve months and where
the NOL pill is not subject to shareholder ratification.
FAIR PRICE PROVISIONS
Fair price provisions, which are rare, require that certain minimum price and
procedural requirements be observed by any party that acquires more than a
specified percentage of a corporation's common stock. The provision is intended
to protect minority shareholder value when an acquirer seeks to accomplish a
merger or other transaction which would eliminate or change the interests of
the minority stockholders. The provision is generally applied against the
acquirer unless the takeover is approved by a majority of "continuing
directors" and holders of a majority, in some cases a supermajority as high as
80%, of the combined voting power of all stock entitled to vote to alter,
amend, or repeal the above provisions.
The effect of a fair price provision is to require approval of any merger or
business combination with an "interested stockholder" by 51% of the voting
stock of the company, excluding the shares held by the interested stockholder.
An interested stockholder is generally considered to be a holder of 10% or more
of the company's outstanding stock, but the trigger can vary.
Generally, provisions are put in place for the ostensible purpose of preventing
a back-end merger where the interested stockholder would be able to pay a lower
price for the remaining shares of the company than he or she paid to gain
control. The effect of a fair price provision on shareholders, however, is to
limit their ability to gain a premium for their shares through a partial tender
offer or open market acquisition which typically raise the share price, often
significantly. A fair price provision discourages such transactions because of
the potential costs of seeking shareholder approval and because of the
restrictions on purchase price for completing a merger or other transaction at
a later time.
Glass Lewis believes that fair price provisions, while sometimes protecting
shareholders from abuse in a takeover situation, more often act as an
impediment to takeovers, potentially limiting gains to shareholders from a
variety of transactions that could significantly increase share price. In some
cases, even the independent directors of the board cannot make exceptions when
such exceptions may be in the best interests of shareholders. Given the
existence of state law protections for minority shareholders such as Section
203 of the Delaware Corporations Code, we believe it is in the best interests
of shareholders to remove fair price provisions.
REINCORPORATION
In general, Glass Lewis believes that the board is in the best position to
determine the appropriate jurisdiction of incorporation for the company. When
examining a management proposal to reincorporate to a different state or
country, we review the relevant financial benefits, generally related to
improved corporate tax treatment, as well as changes in corporate governance
provisions, especially those
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relating to shareholder rights, resulting from the change in domicile. Where
the financial benefits are de minimis and there is a decrease in shareholder
rights, we will recommend voting against the transaction.
However, costly, shareholder-initiated reincorporations are typically not the
best route to achieve the furtherance of shareholder rights. We believe
shareholders are generally better served by proposing specific shareholder
resolutions addressing pertinent issues which may be implemented at a lower
cost, and perhaps even with board approval. However, when shareholders propose
a shift into a jurisdiction with enhanced shareholder rights, Glass Lewis
examines the significant ways would the Company benefit from shifting
jurisdictions including the following:
1. Is the board sufficiently independent?
2. Does the Company have anti-takeover protections such as a poison pill
or classified board in place?
3. Has the board been previously unresponsive to shareholders (such as
failing to implement a shareholder proposal that received majority
shareholder support)?
4. Do shareholders have the right to call special meetings of
shareholders?
5. Are there other material governance issues at the Company?
6. Has the Company's performance matched or exceeded its peers in the
past one and three years?
7. How has the Company ranked in Glass Lewis' pay-for-performance
analysis during the last three years?
8. Does the company have an independent chairman?
We note, however, that we will only support shareholder proposals to change a
company's place of incorporation in exceptional circumstances.
EXCLUSIVE FORUM PROVISIONS
Glass Lewis believes that charter or bylaw provisions limiting a shareholder's
choice of legal venue are not in the best interests of shareholders. Such
clauses may effectively discourage the use of shareholder derivative claims by
increasing their associated costs and making them more difficult to pursue. As
such, shareholders should be wary about approving any limitation on their legal
recourse including limiting themselves to a single jurisdiction (e.g. Delaware)
without compelling evidence that it will benefit shareholders.
For this reason, we recommend that shareholders vote against any bylaw or
charter amendment seeking to adopt an exclusive forum provision unless the
company: (i) provides a compelling argument on why the provision would directly
benefit shareholders; (ii) provides evidence of abuse of legal process in
other, non-favored jurisdictions; and (ii) maintains a strong record of good
corporate governance practices.
Moreover, in the event a board seeks shareholder approval of a forum selection
clause pursuant to a bundled bylaw amendment rather than as a separate
proposal, we will weigh the importance of the other bundled provisions when
determining the vote recommendation on the proposal. We will nonetheless
recommend voting against the chairman of the governance committee for bundling
disparate proposals into a single proposal (refer to our discussion of
nominating and governance committee performance in Section I of the
guidelines).
AUTHORIZED SHARES
Glass Lewis believes that adequate capital stock is important to a company's
operation. When analyzing a request for additional shares, we typically review
four common reasons why a company might need additional capital stock:
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1. Stock Split -- We typically consider three metrics when evaluating
whether we think a stock split is likely or necessary: The historical
stock pre-split price, if any; the current price relative to the
company's most common trading price over the past 52 weeks; and some
absolute limits on stock price that, in our view, either always make a
stock split appropriate if desired by management or would almost never
be a reasonable price at which to split a stock.
2. Shareholder Defenses -- Additional authorized shares could be used to
bolster takeover defenses such as a poison pill. Proxy filings often
discuss the usefulness of additional shares in defending against or
discouraging a hostile takeover as a reason for a requested increase.
Glass Lewis is typically against such defenses and will oppose actions
intended to bolster such defenses.
3. Financing for Acquisitions -- We look at whether the company has a
history of using stock for acquisitions and attempt to determine what
levels of stock have typically been required to accomplish such
transactions. Likewise, we look to see whether this is discussed as a
reason for additional shares in the proxy.
4. Financing for Operations -- We review the company's cash position and
its ability to secure financing through borrowing or other means. We
look at the company's history of capitalization and whether the
company has had to use stock in the recent past as a means of raising
capital.
Issuing additional shares can dilute existing holders in limited circumstances.
Further, the availability of additional shares, where the board has discretion
to implement a poison pill, can often serve as a deterrent to interested
suitors. Accordingly, where we find that the company has not detailed a plan
for use of the proposed shares, or where the number of shares far exceeds those
needed to accomplish a detailed plan, we typically recommend against the
authorization of additional shares.
While we think that having adequate shares to allow management to make quick
decisions and effectively operate the business is critical, we prefer that, for
significant transactions, management come to shareholders to justify their use
of additional shares rather than providing a blank check in the form of a large
pool of unallocated shares available for any purpose.
ADVANCE NOTICE REQUIREMENTS
We typically recommend that shareholders vote against proposals that would
require advance notice of shareholder proposals or of director nominees.
These proposals typically attempt to require a certain amount of notice before
shareholders are allowed to place proposals on the ballot. Notice requirements
typically range between three to six months prior to the annual meeting.
Advance notice requirements typically make it impossible for a shareholder who
misses the deadline to present a shareholder proposal or a director nominee
that might be in the best interests of the company and its shareholders.
We believe shareholders should be able to review and vote on all proposals and
director nominees. Shareholders can always vote against proposals that appear
with little prior notice. Shareholders, as owners of a business, are capable of
identifying issues on which they have sufficient information and ignoring
issues on which they have insufficient information. Setting arbitrary notice
restrictions limits the opportunity for shareholders to raise issues that may
come up after the window closes.
VOTING STRUCTURE
CUMULATIVE VOTING
Cumulative voting increases the ability of minority shareholders to elect a
director by allowing shareholders to cast as many shares of the stock they own
multiplied by the number of directors to be elected. As companies generally
have multiple nominees up for election, cumulative voting allows shareholders
to cast all of their votes for a single nominee, or a smaller number of
nominees than up for election, thereby raising the likelihood of electing one
or more of their preferred nominees
35
to the board. It can be important when a board is controlled by insiders or
affiliates and where the company's ownership structure includes one or more
shareholders who control a majority-voting block of company stock.
Glass Lewis believes that cumulative voting generally acts as a safeguard for
shareholders by ensuring that those who hold a significant minority of shares
can elect a candidate of their choosing to the board. This allows the creation
of boards that are responsive to the interests of all shareholders rather than
just a small group of large holders.
However, academic literature indicates that where a highly independent board is
in place and the company has a shareholder-friendly governance structure,
shareholders may be better off without cumulative voting. The analysis
underlying this literature indicates that shareholder returns at firms with
good governance structures are lower and that boards can become factionalized
and prone to evaluating the needs of special interests over the general
interests of shareholders collectively.
We review cumulative voting proposals on a case-by-case basis, factoring in the
independence of the board and the status of the company's governance structure.
But we typically find these proposals on ballots at companies where
independence is lacking and where the appropriate checks and balances favoring
shareholders are not in place. In those instances we typically recommend in
favor of cumulative voting.
Where a company has adopted a true majority vote standard (i.e., where a
director must receive a majority of votes cast to be elected, as opposed to a
modified policy indicated by a resignation policy only), Glass Lewis will
recommend voting against cumulative voting proposals due to the incompatibility
of the two election methods. For companies that have not adopted a true
majority voting standard but have adopted some form of majority voting, Glass
Lewis will also generally recommend voting against cumulative voting proposals
if the company has not adopted antitakeover protections and has been responsive
to shareholders.
Where a company has not adopted a majority voting standard and is facing both a
shareholder proposal to adopt majority voting and a shareholder proposal to
adopt cumulative voting, Glass Lewis will support only the majority voting
proposal. When a company has both majority voting and cumulative voting in
place, there is a higher likelihood of one or more directors not being elected
as a result of not receiving a majority vote. This is because shareholders
exercising the right to cumulate their votes could unintentionally cause the
failed election of one or more directors for whom shareholders do not cumulate
votes.
SUPERMAJORITY VOTE REQUIREMENTS
Glass Lewis believes that supermajority vote requirements impede shareholder
action on ballot items critical to shareholder interests. An example is in the
takeover context, where supermajority vote requirements can strongly limit the
voice of shareholders in making decisions on such crucial matters as selling
the business. This in turn degrades share value and can limit the possibility
of buyout premiums to shareholders. Moreover, we believe that a supermajority
vote requirement can enable a small group of shareholders to overrule the will
of the majority shareholders. We believe that a simple majority is appropriate
to approve all matters presented to shareholders.
TRANSACTION OF OTHER BUSINESS
We typically recommend that shareholders not give their proxy to management to
vote on any other business items that may properly come before an annual or
special meeting. In our opinion, granting unfettered discretion is unwise.
ANTI-GREENMAIL PROPOSALS
Glass Lewis will support proposals to adopt a provision preventing the payment
of greenmail, which would serve to prevent companies from buying back company
stock at significant premiums from
36
a certain shareholder. Since a large or majority shareholder could attempt to
compel a board into purchasing its shares at a large premium, the
anti-greenmail provision would generally require that a majority of
shareholders other than the majority shareholder approve the buyback.
MUTUAL FUNDS: INVESTMENT POLICIES AND ADVISORY AGREEMENTS
Glass Lewis believes that decisions about a fund's structure and/or a fund's
relationship with its investment advisor or sub-advisors are generally best
left to management and the members of the board, absent a showing of egregious
or illegal conduct that might threaten shareholder value. As such, we focus our
analyses of such proposals on the following main areas:
o The terms of any amended advisory or sub-advisory agreement;
o Any changes in the fee structure paid to the investment advisor; and
o Any material changes to the fund's investment objective or strategy.
We generally support amendments to a fund's investment advisory agreement
absent a material change that is not in the best interests of shareholders. A
significant increase in the fees paid to an investment advisor would be reason
for us to consider recommending voting against a proposed amendment to an
investment advisory agreement. However, in certain cases, we are more inclined
to support an increase in advisory fees if such increases result from being
performance-based rather than asset-based. Furthermore, we generally support
sub-advisory agreements between a fund's advisor and sub-advisor, primarily
because the fees received by the sub-advisor are paid by the advisor, and not
by the fund.
In matters pertaining to a fund's investment objective or strategy, we believe
shareholders are best served when a fund's objective or strategy closely
resembles the investment discipline shareholders understood and selected when
they initially bought into the fund. As such, we generally recommend voting
against amendments to a fund's investment objective or strategy when the
proposed changes would leave shareholders with stakes in a fund that is
noticeably different than when originally contemplated, and which could
therefore potentially negatively impact some investors' diversification
strategies.
REAL ESTATE INVESTMENT TRUSTS
The complex organizational, operational, tax and compliance requirements of
Real Estate Investment Trusts ("REITs") provide for a unique shareholder
evaluation. In simple terms, a REIT must have a minimum of 100 shareholders
(the "100 Shareholder Test") and no more than 50% of the value of its shares
can be held by five or fewer individuals (the "5/50 Test"). At least 75% of a
REITs' assets must be in real estate, it must derive 75% of its gross income
from rents or mortgage interest, and it must pay out 90% of its taxable
earnings as dividends. In addition, as a publicly traded security listed on a
stock exchange, a REIT must comply with the same general listing requirements
as a publicly traded equity.
In order to comply with such requirements, REITs typically include percentage
ownership limitations in their organizational documents, usually in the range
of 5% to 10% of the REITs outstanding shares. Given the complexities of REITs
as an asset class, Glass Lewis applies a highly nuanced approach in our
evaluation of REIT proposals, especially regarding changes in authorized share
capital, including pre-ferred stock.
PREFERRED STOCK ISSUANCES AT REITS
Glass Lewis is generally against the authorization of preferred shares that
allows the board to determine the preferences, limitations and rights of the
preferred shares (known as "blank-check preferred stock"). We believe that
granting such broad discretion should be of concern to common shareholders,
since blank-check preferred stock could be used as an antitakeover device or in
some other fash-
37
ion that adversely affects the voting power or financial interests of common
shareholders. However, given the requirement that a REIT must distribute 90% of
its net income annually, it is inhibited from retaining capital to make
investments in its business. As such, we recognize that equity financing likely
plays a key role in a REIT's growth and creation of shareholder value.
Moreover, shareholder concern regarding the use of preferred stock as an
anti-takeover mechanism may be allayed by the fact that most REITs maintain
ownership limitations in their certificates of incorporation. For these
reasons, along with the fact that REITs typically do not engage in private
placements of preferred stock (which result in the rights of common
shareholders being adversely impacted), we may support requests to authorize
shares of blank-check preferred stock at REITs.
BUSINESS DEVELOPMENT COMPANIES
Business Development Companies ("BDCs") were created by the U.S. Congress in
1980; they are regulated under the Investment Company Act of 1940 and are taxed
as regulated investment companies ("RICs") under the Internal Revenue Code.
BDCs typically operate as publicly traded private equity firms that invest in
early stage to mature private companies as well as small public companies. BDCs
realize operating income when their investments are sold off, and therefore
maintain complex organizational, operational, tax and compliance requirements
that are similar to those of REITs--the most evident of which is that BDCs must
distribute at least 90% of their taxable earnings as dividends.
AUTHORIZATION TO SELL SHARES AT A PRICE BELOW NET ASSET VALUE
Considering that BDCs are required to distribute nearly all their earnings to
shareholders, theysometimes need to offer additional shares of common stock in
the public markets to finance operations and acquisitions. However, shareholder
approval is required in order for a BDC to sell shares of common stock at a
price below Net Asset Value ("NAV"). Glass Lewis evaluates these proposals using
a case-by-case approach, but will recommend supporting such requests if the
following conditions are met:
1. The authorization to allow share issuances below NAV has an
expiration date of one year or less from the date that shareholders
approve the underlying proposal (i.e. the meeting date);
2. The proposed discount below NAV is minimal (ideally no greater than
20%);
3. The board specifies that the issuance will have a minimal or modest
dilutive effect (ideally no greater than 25% of the Company's
then-outstanding common stock prior to the issuance); and
4. A majority of the Company's independent directors who do not have a
financial interest in the issuance approve the sale.
In short, we believe BDCs should demonstrate a responsible approach to issuing
shares below NAV, by proactively addressing shareholder concerns regarding the
potential dilution of the requested share issuance, and explaining if and how
the Company's past below-NAV share issuances have benefitted the Company.
38
VI. COMPENSATION, ENVIRONMENTAL, SOCIAL AND GOVERNANCE SHAREHOLDER INITIATIVES
OVERVIEW
Glass Lewis typically prefers to leave decisions regarding day-to-day
management and policy decisions, including those related to social,
environmental or political issues, to management and the board, except when
there is a clear link between the proposal and value enhancement or risk
mitigation. We feel strongly that shareholders should not attempt to
micromanage the company, its businesses or its executives through the
shareholder initiative process. Rather, we believe shareholders should use
their influence to push for governance structures that protect shareholders and
promote director accountability. Shareholders should then put in place a board
they can trust to make informed decisions that are in the best interests of the
business and its owners, and then hold directors accountable for management and
policy decisions through board elections. However, we recognize that support of
appropriately crafted shareholder initiatives may at times serve to promote or
protect shareholder value.
To this end, Glass Lewis evaluates shareholder proposals on a case-by-case
basis. We generally recommend supporting shareholder proposals calling for the
elimination of, as well as to require shareholder approval of, antitakeover
devices such as poison pills and classified boards. We generally recommend
supporting proposals likely to increase and/or protect shareholder value and
also those that promote the furtherance of shareholder rights. In addition, we
also generally recommend supporting proposals that promote director
accountability and those that seek to improve compensation practices,
especially those promoting a closer link between compensation and performance.
FOR A DETAILED REVIEW OF COMPENSATION, ENVIRONMENTAL, SOCIAL AND GOVERNANCE
SHAREHOLDER INITIATIVES, PLEASE REFER TO OUR COMPREHENSIVE PROXY PAPER
GUIDELINES ON SHAREHOLDER INITIATIVES.
39
DISCLAIMER
This document sets forth the proxy voting policy and guidelines of Glass, Lewis
& Co., LLC. The policies included herein have been developed based on Glass
Lewis' experience with proxy voting and corporate governance issues and are not
tailored to any specific person. Moreover, these guidelines are not intended to
be exhaustive and do not include all potential voting issues. The information
included herein is reviewed periodically and updated or revised as necessary.
Glass Lewis is not responsible for any actions taken or not taken on the basis
of this information. This document may not be reproduced or distributed in any
manner without the written permission of Glass Lewis.
COPYRIGHT [C] 2012 GLASS, LEWIS & CO., LLC. ALL RIGHTS RESERVED.
40
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PART C: OTHER INFORMATION
ITEM 28. EXHIBITS:
(a)(1) Amended and Restated Agreement and Declaration of Trust of The Advisors'
Inner Circle Fund (the "Registrant") dated July 18, 1991, as amended and
restated February 18, 1997, is incorporated herein by reference to exhibit
(1)(b) of Post-Effective Amendment No. 28 to the Registrant's Registration
Statement on Form N-1A (File No. 33-42484), filed with the U.S. Securities and
Exchange Commission (the "SEC") via EDGAR Accession No. 0000950109-97-001691 on
February 27, 1997.
(a)(2) Amendment No. 1, dated May 15, 2012, to the Registrant's Amended and
Restated Agreement and Declaration of Trust dated July 18, 1991, as amended and
restated February 18, 1997, is incorporated herein by reference to exhibit
(a)(2) of Post-Effective Amendment No. 190 to the Registrant's Registration
Statement on Form N-1A (File No. 33-42484), filed with the SEC via EDGAR
Accession No. 0001135428-12-000262 on May 23, 2012.
(b) Registrant's Second Amended and Restated By-Laws are incorporated herein by
reference to exhibit (b) of Post-Effective Amendment No. 179 to the Registrant's
Registration Statement on Form N-1A (File No. 33-42484), filed with the SEC via
EDGAR Accession No. 0001135428-12-000087 on February 28, 2012.
(c) Not Applicable.
(d)(1) Investment Advisory Agreement dated August 15, 1994 between the
Registrant and HGK Asset Management, Inc. is incorporated herein by reference
to exhibit (5)(e) of Post- Effective Amendment No. 24 to the Registrant's
Registration Statement on Form N-1A (File No. 33-42484), filed with the SEC via
EDGAR Accession No. 0000950109-96- 001199 on February 28, 1996.
(d)(2) Expense Limitation Agreement dated March 1, 2008 between the Registrant
and HGK Asset Management, Inc. is incorporated herein by reference to exhibit
(d)(2) of Post- Effective Amendment No. 111 to the Registrant's Registration
Statement on Form N-1A (File No. 33-42484), filed with the SEC via EDGAR
Accession No. 0001135428-09-000276 on July 2, 2009.
(d)(3) Revised Schedule A dated March 1, 2010 to the Expense Limitation
Agreement dated March 1, 2008 between the Registrant and HGK Asset Management,
Inc. is incorporated herein by reference to exhibit (d)(3) of Post-Effective
Amendment No. 124 to the Registrant's Registration Statement on Form N-1A (File
No. 33-42484), filed with the SEC via EDGAR Accession No. 0001135428-10-000245
on June 30, 2010.
(d)(4) Investment Advisory Agreement dated November 21, 1994 between the
Registrant and AIG Global Investment Corp. (now, AIG Asset Management (U.S.),
LLC) is incorporated herein by reference to exhibit (5)(f) of Post-Effective
Amendment No. 28 to the Registrant's Registration Statement on Form N-1A (File
No. 33-42484), filed with the SEC via EDGAR Accession No. 0000950109-97-001691
on February 27, 1997.
(d)(5) Assignment and Assumption Agreement dated December 31, 2003 between AIG
Capital Management Corp. and AIG Global Investment Corp. (now, AIG Asset
Management (U.S.), LLC) is incorporated herein by reference to exhibit (d)(31)
of Post-Effective Amendment No. 69 to the Registrant's Registration Statement
on Form N-1A (File No. 33-42484), filed with the SEC via EDGAR Accession No.
0001135428-04-000095 on March 1, 2004.
1
(d)(6) Investment Advisory Agreement dated May 3, 1995 between the Registrant
and First Manhattan Co. is incorporated herein by reference to exhibit (5)(g)
of Post-Effective Amendment No. 24 to the Registrant's Registration Statement
on Form N-1A (File No. 33-42484), filed with the SEC via EDGAR Accession No.
0000950109-96-001199 on February 28, 1996.
(d)(7) Amended and Restated Schedule dated May 19, 1998 to the Investment
Advisory Agreement dated May 3, 1995 between the Registrant and First Manhattan
Co. is incorporated herein by reference to exhibit (d)(9) of Post-Effective
Amendment No. 34 to the Registrant's Registration Statement on Form N-1A (File
No. 33-42484), filed with the SEC via EDGAR Accession No. 0001047469-98-021496
on May 21, 1998.
(d)(8) Investment Advisory Agreement dated March 15, 1999 between the
Registrant and LSV Asset Management is incorporated herein by reference to
exhibit (d)(8) of Post-Effective Amendment No. 46 to the Registrant's
Registration Statement on Form N-1A (File No. 33-42484), filed with the SEC via
EDGAR Accession No. 0001135428-01-500070 on June 22, 2001.
(d)(9) Revised Schedule to the Investment Advisory Agreement dated March 15,
1999 between the Registrant and LSV Asset Management is incorporated herein by
reference to exhibit (d)(9) of Post-Effective Amendment No. 207 to the
Registrant's Registration Statement on Form N-1A (File No. 33-42484), filed
with the SEC via EDGAR Accession No. 0001135428-13-000118 on March 1, 2013.
(d)(10) Amended and Restated Expense Limitation Agreement dated February 13,
2013 between the Registrant and LSV Asset Management, relating to the LSV
Family of Funds, is incorporated herein by reference to exhibit (d)(10) of
Post-Effective Amendment No. 207 to the Registrant's Registration Statement on
Form N-1A (File No. 33-42484), filed with the SEC via EDGAR Accession No.
0001135428-13-000118 on March 1, 2013.
(d)(11) Investment Advisory Agreement dated June 24, 2002 between the
Registrant and Acadian Asset Management, Inc. (now, Acadian Asset Management
LLC) is incorporated herein by reference to exhibit (d)(17) of Post-Effective
Amendment No. 55 to the Registrant's Registration Statement on Form N-1A (File
No. 33-42484), filed with the SEC via EDGAR Accession No. 0001135428-02-000263
on August 30, 2002.
(d)(12) Amended Schedule A to the Investment Advisory Agreement dated June 24,
2002 between the Registrant and Acadian Asset Management, Inc. (now Acadian
Asset Management, LLC) is incorporated herein by reference to exhibit (d)(12)
of Post-Effective Amendment No. 127 to the Registrant's Registration Statement
on Form N-1A (File No. 33-42484), filed with the SEC via EDGAR Accession No.
0001135428-10- 000392 on September 3, 2010.
(d)(13) Expense Limitation Agreement dated December 16, 2010, between the
Registrant and Acadian Asset Management LLC, is incorporated herein by
reference to exhibit (d)(13) of Post-Effective Amendment No. 183 to the
Registrant's Registration Statement on Form N-1A (File No. 33-42484), filed
with the SEC on March 28, 2012.
(d)(14) Investment Advisory Agreement dated June 24, 2002 between the
Registrant and Cambiar Investors LLC is incorporated herein by reference to
exhibit (d)(19) of Post-Effective Amendment No. 55 to the Registrant's
Registration Statement on Form N-1A (File No. 33-42484), filed with the SEC via
EDGAR Accession No. 0001135428-02-000263 on August 30, 2002.
(d)(15) Amended Schedule A, dated August 13, 2013, to the Investment Advisory
Agreement dated June 24, 2002 between the Registrant and Cambiar Investors LLC
is filed herewith.
2
(d)(16) Amended and Restated Expense Limitation Agreement, dated September 1,
2010, is filed herewith.
(d)(17) Amended Schedule A, dated August 13, 2013, to the Amended and Restated
Expense Limitation Agreement, dated September 1, 2010, between the Registrant
and Cambiar Investors LLC is filed herewith.
(d)(18) Investment Advisory Agreement dated June 24, 2002 between the
Registrant and Investment Counselors of Maryland, LLC is incorporated herein by
reference to exhibit (d)(23) of Post-Effective Amendment No. 55 to the
Registrant's Registration Statement on Form N-1A (File No. 33-42484), filed
with the SEC via EDGAR Accession No. 0001135428-02-000263 on August 30, 2002.
(d)(19) Investment Advisory Agreement dated June 24, 2002 between the
Registrant and C.S. McKee, L.P. is incorporated herein by reference to exhibit
(d)(24) of Post-Effective Amendment No. 55 to the Registrant's Registration
Statement on Form N-1A (File No. 33-42484), filed with the SEC via EDGAR
Accession No. 0001135428-02-000263 on August 30, 2002.
(d)(20) Investment Advisory Agreement dated August 8, 2008 between the
Registrant and Rice, Hall James & Associates LLC is incorporated herein by
reference to exhibit (d)(16) of Post-Effective Amendment No. 116 to the
Registrant's Registration Statement on Form N-1A (File No. 33-42484), filed
with the SEC via EDGAR Accession No. 0001135428-09-000641 on December 18,
2009.
(d)(21) Expense Limitation Agreement dated March 1, 2008, between the
Registrant and Rice Hall James & Associates, LLC, relating to the Rice Hall
James Family of Funds, is incorporated herein by reference to exhibit (d)(20)
of Post-Effective Amendment No. 207 to the Registrant's Registration Statement
on Form N-1A (File No. 33-42484), filed with the SEC via EDGAR Accession No.
0001135428-13-000118 on March 1, 2013.
(d)(22) Investment Advisory Agreement dated June 24, 2002 between the
Registrant and Thompson, Siegel & Walmsley, Inc. (now, Thompson, Siegel &
Walmsley LLC) is incorporated herein by reference to exhibit (d)(27) of
Post-Effective Amendment No. 55 to the Registrant's Registration Statement on
Form N-1A (File No. 33-42484), filed with the SEC via EDGAR Accession No.
0001135428-02-000263 on August 30, 2002.
(d)(23) Amendment and Revised Schedule A dated June 1, 2010 to the Investment
Advisory Agreement dated June 24, 2002 between the Registrant and Thompson,
Siegel & Walmsley, Inc. (now, Thompson, Siegel & Walmsley LLC) is incorporated
herein by reference to exhibit (d)(21) of Post-Effective Amendment No. 126 to
the Registrant's Registration Statement on Form N-1A (File No. 33-42484), filed
with the SEC via EDGAR Accession No. 0001135428-10-000336 on August 30, 2010.
(d)(24) Investment Advisory Agreement dated January 29, 2010 between the
Registrant and PNC Capital Advisors, LLC, relating to the UA S&P 500 Index
Fund, is incorporated herein by reference to exhibit (d)(23) of Post-Effective
Amendment No. 207 to the Registrant's Registration Statement on Form N-1A (File
No. 33-42484), filed with the SEC via EDGAR Accession No. 0001135428-13-000118
on March 1, 2013.
(d)(25) Investment Advisory Agreement dated May 28, 2004 between the Registrant
and Haverford Investment Management, Inc. is incorporated herein by reference
to exhibit (d)(30) of Post-Effective Amendment No. 79 to the Registrant's
Registration Statement on Form N-1A (File No. 33-42484), filed with the SEC via
EDGAR Accession No. 0001135428-05-000093 on February 25, 2005.
3
(d)(26) Expense Limitation Agreement dated March 1, 2008, between the
Registrant and Haverford Investment Management, Inc., relating to the Haverford
Quality Growth Stock Fund, is incorporated herein by reference to exhibit
(d)(25) of Post-Effective Amendment No. 207 to the Registrant's Registration
Statement on Form N-1A (File No. 33-42484), filed with the SEC via EDGAR
Accession No. 0001135428-13-000118 on March 1, 2013.
(d)(27) Investment Advisory Agreement dated December 16, 2005 between the
Registrant and Westwood Management Corp. is incorporated herein by reference to
exhibit (d)(28) of Post-Effective Amendment No. 88 to the Registrant's
Registration Statement on Form N-1A (File No. 33-42484), filed with the SEC via
EDGAR Accession No. 0001135428-06-000081 on February 28, 2006.
(d)(28) Schedule A, dated December 16, 2005, as last amended November 14, 2012,
to the Investment Advisory Agreement dated December 16, 2005 between the
Registrant and Westwood Management Corp. is incorporated herein by reference to
exhibit (d)(27) of Post-Effective Amendment No. 202 to the Registrant's
Registration Statement on Form N-1A (File No. 33-42484), filed with the SEC via
EDGAR Accession No. 0001135428-12-000594 on December 19, 2012.
(d)(29) Amended and Restated Expense Limitation Agreement dated February 26,
2013, between the Registrant and Westwood Management Corp., relating to the
Westwood Family of Funds, is incorporated herein by reference to exhibit
(d)(28) of Post-Effective Amendment No. 207 to the Registrant's Registration
Statement on Form N-1A (File No. 33-42484), filed with the SEC via EDGAR
Accession No. 0001135428-13-000118 on March 1, 2013.
(d)(30) Investment Sub-Advisory Agreement dated December 27, 2011, between
Westwood Management Corp. and SKY Harbor Capital Management, LLC, relating to
the Westwood Short Duration High Yield Fund, is incorporated herein by
reference to exhibit (d)(29) of Post-Effective Amendment No. 207 to the
Registrant's Registration Statement on Form N-1A (File No. 33-42484), filed
with the SEC via EDGAR Accession No. 0001135428-13-000118 on March 1, 2013.
(d)(31) Investment Advisory Agreement dated February 27, 2006 between the
Registrant and Edgewood Management LLC is incorporated herein by reference to
exhibit (d)(33) of Post-Effective Amendment No. 95 to the Registrant's
Registration Statement on Form N-1A (File No. 33-42484), filed with the SEC via
EDGAR Accession No. 0001135428-07-000007 on January 12, 2007.
(d)(32) Expense Limitation Agreement dated March 1, 2008 between the Registrant
and Edgewood Management LLC is incorporated herein by reference to exhibit
(d)(28) of Post-Effective Amendment No. 124 to the Registrant's Registration
Statement on Form N-1A (File No. 33-42484), filed with the SEC via EDGAR
Accession No. 0001135428-10-000245 on June 30, 2010.
(d)(33) Investment Advisory Agreement dated September 21, 2009 between the
Registrant and Pennant Management, Inc. is incorporated herein by reference to
exhibit (d)(30) of Post- Effective Amendment No. 115 to the Registrant's
Registration Statement on Form N-1A (File No. 33-42484), filed with the SEC via
EDGAR Accession No. 0001135428-09- 000594 on November 30, 2009.
(d)(34) Investment Advisory Agreement dated March 31, 2010 between the
Registrant and Sands Capital Management, LLC is incorporated herein by
reference to exhibit (d)(30) of Post-Effective Amendment No. 123 to the
Registrant's Registration Statement on Form N-1A (File No. 33-42484), filed
with the SEC via EDGAR Accession No. 0001135428-10-000173 on April 30, 2010.
4
(d)(35) Expense Limitation Agreement dated March 31, 2010, between the
Registrant and Sands Capital Management, LLC, relating to the Sands Capital
Global Growth Fund, is incorporated herein by reference to exhibit (d)(34) of
Post-Effective Amendment No. 207 to the Registrant's Registration Statement on
Form N-1A (File No. 33-42484), filed with the SEC via EDGAR Accession No.
0001135428-13-000118 on March 1, 2013.
(d)(36) Investment Advisory Agreement dated March 24, 2011, between the
Registrant and AlphaOne Investment Services, LLC, relating to the AlphaOne
Family of Funds, is incorporated herein by reference to exhibit (d)(35) of
Post-Effective Amendment No. 207 to the Registrant's Registration Statement on
Form N-1A (File No. 33-42484), filed with the SEC via EDGAR Accession No.
0001135428-13-000118 on March 1, 2013.
(d)(37) Expense Limitation Agreement, effective as of March 28, 2011, between
the Registrant and AlphaOne Investment Services, LLC, relating to the AlphaOne
Family of Funds, is incorporated herein by reference to exhibit (d)(43) of
Post-Effective Amendment No. 154 to the Registrant's Registration Statement on
Form N-1A (File No. 33-42484), filed with the SEC via EDGAR Accession No.
0001135428-11-000353 on June 29, 2011.
(d)(38) Investment Advisory Agreement dated June 20, 2011, between the
Registrant and Loomis, Sayles & Company, L.P., relating to the Loomis Sayles
Full Discretion Institutional Securitized Fund, is incorporated herein by
reference to exhibit (d)(37) of Post-Effective Amendment No. 207 to the
Registrant's Registration Statement on Form N-1A (File No. 33-42484), filed
with the SEC via EDGAR Accession No. 0001135428-13-000118 on March 1, 2013.
(d)(39) Expense Limitation Agreement dated December 15, 2011, between the
Registrant and Loomis, Sayles & Company, L.P., relating to the Loomis Sayles
Full Discretion Institutional Securitized Fund, is incorporated herein by
reference to exhibit (d)(38) of Post-Effective Amendment No. 207 to the
Registrant's Registration Statement on Form N-1A (File No. 33-42484), filed
with the SEC via EDGAR Accession No. 0001135428-13-000118 on March 1, 2013.
(d)(40) Investment Advisory Agreement dated December 19, 2011, between the
Registrant and CBRE Clarion Securities LLC, relating to the CBRE Clarion
Long/Short Fund and CBRE Clarion Global Infrastructure Value Fund, is
incorporated herein by reference to exhibit (d)(39) of Post-Effective Amendment
No. 207 to the Registrant's Registration Statement on Form N-1A (File No.
33-42484), filed with the SEC via EDGAR Accession No. 0001135428-13-000118 on
March 1, 2013.
(d)(41) Revised Schedule A dated May 14, 2013 to the Investment Advisory
Agreement between the Registrant and CBRE Clarion Securities LLC, relating to
the CBRE Clarion Long/Short Fund and CBRE Clarion Global Infrastructure Value
Fund, is incorporated herein by reference to exhibit (d)(40) of Post-Effective
Amendment No. 214 to the Registrant's Registration Statement on Form N-1A (File
No. 33-42484), filed with the SEC on June 28, 2013.
(d)(42) Amended and restated Expense Limitation Agreement dated May 14, 2013
between the Registrant and CBRE Clarion Securities LLC, relating to the CBRE
Clarion Long/Short Fund and CBRE Clarion Global Infrastructure Value Fund, is
incorporated herein by reference to exhibit (d)(41) of Post-Effective Amendment
No. 214 to the Registrant's Registration Statement on Form N-1A (File No.
33-42484), filed with the SEC on June 28, 2013.
(d)(43) Investment Advisory Agreement dated February 20, 2012, between the
Registrant and Hamlin Capital Management, LLC, relating to the Hamlin High
Dividend Equity Fund, is incorporated herein by reference to exhibit (d)(45) of
Post-Effective Amendment No. 183 to the Registrant's Registration
5
Statement on Form N-1A (File No. 33-42484), filed with the SEC via EDGAR
Accession No. 0001135428-12-000195 on March 28, 2012.
(d)(44) Amended and Restated Expense Limitation Agreement dated April 30, 2013,
between the Registrant and Hamlin Capital Management, LLC, relating to the
Hamlin High Dividend Equity Fund, is incorporated herein by reference to
exhibit (d)(42) of Post-Effective Amendment No. 210 to the Registrant's
Registration Statement on Form N-1A (File No. 33-42484), filed with the SEC via
EDGAR Accession No. 0001135428-13-000257 on April 30, 2013.
(d)(45) Investment Advisory Agreement between the Trust and Citigroup First
Investment Management Americas LLC, relating to the Citi Market Pilot 2020
Fund, Citi Market Pilot 2030 Fund and Citi Market Pilot 2040 Fund, is
incorporated herein by reference to exhibit (d)(47) of Post-Effective Amendment
No. 190 to the Registrant's Registration Statement on Form N-1A (File No.
33-42484), filed with the SEC via EDGAR Accession No. 0001135428-12-000262 on
May 23, 2012.
(d)(46) Expense Limitation Agreement between the Registrant and Citigroup First
Investment Management Americas LLC, relating to the Citi Market Pilot 2020
Fund, Citi Market Pilot 2030 Fund and Citi Market Pilot 2040 Fund, is
incorporated herein by reference to exhibit (d)(48) of Post-Effective Amendment
No. 190 to the Registrant's Registration Statement on Form N-1A (File No.
33-42484), filed with the SEC via EDGAR Accession No. 0001135428-12-000262 on
May 23, 2012.
(d)(47) Investment Advisory Agreement dated February 3, 2012, between the Trust
and Thomson Horstmann & Bryant, Inc., relating to the Thomson Horstmann &
Bryant MicroCap Fund and Thomson Horstmann & Bryant Small Cap Value Fund, is
incorporated herein by reference to exhibit (d)(45) of Post-Effective Amendment
No. 207 to the Registrant's Registration Statement on Form N-1A (File No.
33-42484), filed with the SEC via EDGAR Accession No. 0001135428-13-000118 on
March 1, 2013.
(d)(48) Expense Limitation Agreement dated March 28, 2012, between the
Registrant and Thomson Horstmann & Bryant, Inc., relating to the Thomson
Horstmann & Bryant MicroCap Fund and Thomson Horstmann & Bryant Small Cap Value
Fund, is incorporated herein by reference to exhibit (d)(46) of Post-Effective
Amendment No. 207 to the Registrant's Registration Statement on Form N-1A (File
No. 33-42484), filed with the SEC via EDGAR Accession No. 0001135428-13-000118
on March 1, 2013.
(d)(49) Amended Schedule A to the Investment Advisory Agreement dated February
3, 2012, between the Trust and Thomson Horstmann & Bryant, Inc., relating to
the Thomson Horstmann & Bryant MicroCap Fund and Thomson Horstmann & Bryant
Small Cap Value Fund, to be filed by amendment.
(d)(50) Amended Schedule A to the Expense Limitation Agreement dated March 28,
2012, between the Registrant and Thomson Horstmann & Bryant, Inc., relating to
the Thomson Horstmann & Bryant MicroCap Fund and Thomson Horstmann & Bryant
Small Cap Value Fund, to be filed by amendment.
(d)(51) Investment Advisory Agreement between the Trust and Cornerstone
Advisors, Inc., relating to the Cornerstone Advisors Global Public Equity Fund,
Cornerstone Advisors Income Opportunities Fund, Cornerstone Advisors Public
Alternatives Fund and Cornerstone Advisors Real Assets Fund, is incorporated
herein by reference to exhibit (d)(51) of Post-Effective Amendment No. 193 to
the Registrant's Registration Statement on Form N-1A (File Nos. 33-42484),
filed with the SEC via EDGAR Accession No. 0001135428-12-000370 on August 22,
2012.
(d)(52) Investment Sub-Advisory Agreement between Cornerstone Advisors, Inc.
and Parametric Portfolio Associates LLC, relating to the Cornerstone Advisors
Global Public Equity Fund, is incorporated herein by reference to exhibit
(d)(52) of Post-Effective Amendment No. 193 to the
6
Registrant's Registration Statement on Form N-1A (File Nos. 33-42484), filed
with the SEC via EDGAR Accession No. 0001135428-12-000370 on August 22, 2012.
(d)(53) Investment Sub-Advisory Agreement between Cornerstone Advisors, Inc.
and LSV Asset Management, relating to the Cornerstone Advisors Global Public
Equity Fund, is incorporated herein by reference to exhibit (d)(53) of
Post-Effective Amendment No. 193 to the Registrant's Registration Statement on
Form N-1A (File Nos. 33-42484), filed with the SEC via EDGAR Accession No.
0001135428-12-000370 on August 22, 2012.
(d)(54) Investment Sub-Advisory Agreement between Cornerstone Advisors, Inc.
and Harris Associates L.P., relating to the Cornerstone Advisors Global Public
Equity Fund, is incorporated herein by reference to exhibit (d)(54) of
Post-Effective Amendment No. 193 to the Registrant's Registration Statement on
Form N-1A (File Nos. 33-42484), filed with the SEC via EDGAR Accession No.
0001135428-12-000370 on August 22, 2012.
(d)(55) Investment Sub-Advisory Agreement between Cornerstone Advisors, Inc.
and Thornburg Investment Management Inc, relating to the Cornerstone Advisors
Global Public Equity Fund, is incorporated herein by reference to exhibit
(d)(55) of Post-Effective Amendment No. 193 to the Registrant's Registration
Statement on Form N-1A (File Nos. 33-42484), filed with the SEC via EDGAR
Accession No. 0001135428-12-000370 on August 22, 2012.
(d)(56) Investment Sub-Advisory Agreement between Cornerstone Advisors, Inc.
and Marsico Capital Management, LLC, relating to the Cornerstone Advisors
Global Public Equity Fund, is incorporated herein by reference to exhibit
(d)(56) of Post-Effective Amendment No. 193 to the Registrant's Registration
Statement on Form N-1A (File Nos. 33-42484), filed with the SEC via EDGAR
Accession No. 0001135428-12-000370 on August 22, 2012.
(d)(57) Investment Sub-Advisory Agreement between Cornerstone Advisors, Inc.
and Turner Investments, L.P., relating to the Cornerstone Advisors Global
Public Equity Fund and Cornerstone Advisors Public Alternatives Fund, is
incorporated herein by reference to exhibit (d)(57) of Post-Effective Amendment
No. 193 to the Registrant's Registration Statement on Form N-1A (File Nos.
33-42484), filed with the SEC via EDGAR Accession No. 0001135428-12-000370 on
August 22, 2012.
(d)(58) Investment Sub-Advisory Agreement between Cornerstone Advisors, Inc.
and Cramer Rosenthal McGlynn LLC, relating to the Cornerstone Advisors Global
Public Equity Fund, is incorporated herein by reference to exhibit (d)(58) of
Post-Effective Amendment No. 193 to the Registrant's Registration Statement on
Form N-1A (File Nos. 33-42484), filed with the SEC via EDGAR Accession No.
0001135428-12-000370 on August 22, 2012.
(d)(59) Investment Sub-Advisory Agreement between Cornerstone Advisors, Inc.
and Fairpointe Capital LLC, relating to the Cornerstone Advisors Global Public
Equity Fund, is incorporated herein by reference to exhibit (d)(59) of
Post-Effective Amendment No. 193 to the Registrant's Registration Statement on
Form N-1A (File Nos. 33-42484), filed with the SEC via EDGAR Accession No.
0001135428-12-000370 on August 22, 2012.
(d)(60) Investment Sub-Advisory Agreement between Cornerstone Advisors, Inc.
and Phocas Financial Corporation, relating to the Cornerstone Advisors Global
Public Equity Fund, is incorporated herein by reference to exhibit (d)(60) of
Post-Effective Amendment No. 193 to the Registrant's Registration Statement on
Form N-1A (File Nos. 33-42484), filed with the SEC via EDGAR Accession No.
0001135428-12-000370 on August 22, 2012.
7
(d)(61) Investment Sub-Advisory Agreement between Cornerstone Advisors, Inc.
and TCW Investment Management Company, relating to the Cornerstone Advisors
Global Public Equity Fund, to be filed by amendment.
(d)(62) Investment Sub-Advisory Agreement between Cornerstone Advisors, Inc.
and Allianz Global Investors Capital LLC, relating to the Cornerstone Advisors
Global Public Equity Fund, is incorporated herein by reference to exhibit
(d)(62) of Post-Effective Amendment No. 193 to the Registrant's Registration
Statement on Form N-1A (File Nos. 33-42484), filed with the SEC via EDGAR
Accession No. 0001135428-12-000370 on August 22, 2012.
(d)(63) Investment Sub-Advisory Agreement between Cornerstone Advisors, Inc.
and Acadian Asset Management LLC, relating to the Cornerstone Advisors Global
Public Equity Fund, is incorporated herein by reference to exhibit (d)(63) of
Post-Effective Amendment No. 193 to the Registrant's Registration Statement on
Form N-1A (File Nos. 33-42484), filed with the SEC via EDGAR Accession No.
0001135428-12-000370 on August 22, 2012.
(d)(64) Investment Sub-Advisory Agreement between Cornerstone Advisors, Inc.
and Driehaus Capital Management LLC, relating to the Cornerstone Advisors
Global Public Equity Fund, is incorporated herein by reference to exhibit
(d)(64) of Post-Effective Amendment No. 193 to the Registrant's Registration
Statement on Form N-1A (File Nos. 33-42484), filed with the SEC via EDGAR
Accession No. 0001135428-12-000370 on August 22, 2012.
(d)(65) Investment Sub-Advisory Agreement between Cornerstone Advisors, Inc.
and OFI SteelPath, Inc., relating to the Cornerstone Advisors Income
Opportunities Fund, to be filed by amendment.
(d)(66) Investment Sub-Advisory Agreement between Cornerstone Advisors, Inc.
and AlphaSimplex Group, LLC, relating to the Cornerstone Advisors Public
Alternatives Fund, is incorporated herein by reference to exhibit (d)(66) of
Post-Effective Amendment No. 193 to the Registrant's Registration Statement on
Form N-1A (File Nos. 33-42484), filed with the SEC via EDGAR Accession No.
0001135428-12-000370 on August 22, 2012.
(d)(67) Investment Sub-Advisory Agreement between Cornerstone Advisors, Inc.
and AQR Capital Management, LLC, relating to the Cornerstone Advisors Public
Alternatives Fund, is incorporated herein by reference to exhibit (d)(67) of
Post-Effective Amendment No. 193 to the Registrant's Registration Statement on
Form N-1A (File Nos. 33-42484), filed with the SEC via EDGAR Accession No.
0001135428-12-000370 on August 22, 2012.
(d)(68) Investment Sub-Advisory Agreement between Cornerstone Advisors, Inc.
and ClariVest Asset Management LLC, relating to the Cornerstone Advisors Public
Alternatives Fund, to be filed by amendment.
(d)(69) Investment Sub-Advisory Agreement between Cornerstone Advisors, Inc.
and Kayne Anderson Capital Advisors, L.P., relating to the Cornerstone Advisors
Real Assets Fund, is incorporated herein by reference to exhibit (d)(69) of
Post-Effective Amendment No. 193 to the Registrant's Registration Statement on
Form N-1A (File Nos. 33-42484), filed with the SEC via EDGAR Accession No.
0001135428-12-000370 on August 22, 2012.
(d)(70) Investment Sub-Advisory Agreement between Cornerstone Advisors, Inc.
and BlackRock Investment Management, LLC, relating to the Cornerstone Advisors
Real Assets Fund, is incorporated herein by reference to exhibit (d)(70) of
Post-Effective Amendment No. 193 to the Registrant's
8
Registration Statement on Form N-1A (File Nos. 33-42484), filed with the SEC
via EDGAR Accession No. 0001135428-12-000370 on August 22, 2012.
(d)(71) Form of Investment Advisory Agreement between the Registrant and
Harvest Global Investments Limited is incorporated herein by reference to
exhibit (d)(71) of Post-Effective Amendment No. 200 to the Registrant's
Registration Statement on Form N-1A (File No. 33-42484), filed with the SEC via
EDGAR Accession No. 0001135428-12-000571 on December 7, 2012.
(d)(72) Form of Expense Limitation Agreement between the Registrant and Harvest
Global Investments Limited is incorporated herein by reference to exhibit
(d)(72) of Post-Effective Amendment No. 200 to the Registrant's Registration
Statement on Form N-1A (File No. 33-42484), filed with the SEC via EDGAR
Accession No. 0001135428-12-000571 on December 7, 2012.
(d)(73) Investment Advisory Agreement between the Registrant and Stein Roe
Investment Counsel, Inc., relating to the AT Family of Funds, to be filed by
amendment.
(d)(74) Expense Limitation Agreement between the Registrant and Stein Roe
Investment Counsel, Inc., relating to the AT Family of Funds, to be filed by
amendment.
(d)(75) Investment Advisory Agreement between the Registrant and Fayez Sarofim
& Co., relating to the Sarofim Equity Fund, is incorporated herein by reference
to exhibit (d)(74) of Post-Effective Amendment No. 219 to the Registrant's
Registration Statement on Form N-1A (File No. 33-42484), filed with the SEC via
EDGAR Accession No. 0001135428-13-000386 on July 26, 2013.
(d)(76) Expense Limitation Agreement between the Registrant and Fayez Sarofim &
Co., relating to the Sarofim Equity Fund, is incorporated herein by reference
to exhibit (d)(75) of Post-Effective Amendment No. 219 to the Registrant's
Registration Statement on Form N-1A (File No. 33-42484), filed with the SEC via
EDGAR Accession No. 0001135428-13-000386 on July 26, 2013.
(e)(1) Distribution Agreement dated November 14, 1991, as amended and restated
August 8, 1994, between the Registrant and SEI Financial Services Company (now,
SEI Investments Distribution Co.) is incorporated herein by reference to
exhibit (6) of Post-Effective Amendment No. 24 to the Registrant's Registration
Statement on Form N-1A (File No. 33-42484), filed with the SEC via EDGAR
Accession No. 0000950109-96-001199 on February 28, 1996.
(e)(2) Distribution Agreement dated November 14, 1991, as amended and restated
November 12, 2002, between the Registrant and SEI Investments Distribution Co.
(formerly, SEI Financial Services Company) is incorporated herein by reference
to exhibit (e)(4) of Post- Effective Amendment No. 62 to the Registrant's
Registration Statement on Form N-1A (File No. 33-42484), filed with the SEC via
EDGAR Accession No. 0001135428-03- 000108 on February 28, 2003.
(e)(3) Amendment No. 1, effective as of August 30, 2010, to the Distribution
Agreement dated November 14, 1991, as amended and restated November 12, 2002,
between the Registrant and SEI Investments Distribution Co. (formerly, SEI
Financial Services Company), is incorporated herein by reference to exhibit
(e)(3) of Post-Effective Amendment No. 158 to the Registrant's Registration
Statement on Form N-1A (File No. 33-42484), filed with the SEC via EDGAR
Accession No. 0001135428-11-000517 on September 16, 2011.
(e)(4) Amended and Restated Sub-Distribution and Servicing Agreement dated
November 10, 1997 between SEI Investments Company and AIG Equity Sales
Corporation is incorporated herein by reference to exhibit (6)(c) of
Post-Effective Amendment No. 32 to the Registrant's Registration Statement
9
on Form N-1A (File No. 33-42484), filed with the SEC via EDGAR Accession No.
0001047469-98-008087 on February 27, 1998.
(e)(5) Revised Form of Amended Sub-Distribution and Servicing Agreement for SEI
Investments Distribution Co. is incorporated herein by reference to exhibit
(e)(2) of Post-Effective Amendment No. 76 to the Registration Statement of The
Advisors' Inner Circle Fund II (File No. 33-50718), filed with the SEC via
EDGAR Accession No. 0001135428-08-000222 on May 30, 2008.
(f) Not applicable.
(g)(1) Custodian Agreement dated August 12, 1991 between the Registrant and
CoreStates Bank N.A. (now, US Bank, National Association) is incorporated
herein by reference to exhibit (6) of Post-Effective Amendment No. 28 to the
Registrant's Registration Statement on Form N-1A (File No. 33-42484), filed
with the SEC via EDGAR Accession No. 0000950109-97-001691 on February 27,
1997.
(g)(2) Amendment dated May 21, 2001 to the Custodian Agreement dated August 12,
1991 between the Registrant and First Union National Bank (now, U.S. Bank,
National Association) is incorporated herein by reference to exhibit (g)(4) of
Post-Effective Amendment No. 51 to the Registrant's Registration Statement on
Form N-1A (File No. 33-42484), filed with the SEC via EDGAR Accession No.
0001135428-02-000175 on June 14, 2002.
(g)(3) Amended Fee Schedule dated February 18, 2004 to the Custodian Agreement
dated August 12, 1991 between the Registrant and Wachovia Bank, National
Association (now U.S. Bank, National Association) is incorporated herein by
reference to exhibit (g)(7) of Post-Effective Amendment No. 69 to the
Registrant's Registration Statement on Form N- 1A (File No. 33-42484), filed
with the SEC via EDGAR Accession No. 0001135428-04- 000095 on March 1, 2004.
(g)(4) Amendment and Assignment dated August 8, 2006 to the Custodian Agreement
dated August 12, 1991 between the Registrant and Wachovia Bank, N.A., (now U.S.
Bank, National Association) assigning the Custodian Agreement to U.S. Bank,
National Association is incorporated herein by reference to exhibit (g)(5) of
Post-Effective Amendment No. 92 to the Registrant's Registration Statement on
Form N-1A (File No. 33-42484), filed with the SEC via EDGAR Accession No.
0001135428-06-000367 on August 28, 2006.
(g)(5) Amendment dated March 14, 2007 to the Custodian Agreement dated August
12, 1991 between the Registrant and U.S. Bank, National Association is
incorporated herein by reference to exhibit (g)(8) of Post-Effective Amendment
No. 97 to the Registrant's Registration Statement on Form N-1A (File No.
33-42484), filed with the SEC via EDGAR Accession No. 0001135428-07-000146 on
April 30, 2007.
(g)(6) Custodian Agreement dated November 13, 2007 between the Registrant and
Union Bank of California, N.A., to be filed by amendment.
(g)(7) Custody Agreement dated February 3, 2003 between the Registrant and
National City Bank is incorporated herein by reference to exhibit (g)(5) of
Post-Effective Amendment No. 66 to the Registrant's Registration Statement on
Form N-1A (File No. 33-42484), filed with the SEC via EDGAR Accession No.
0001135428-03-000264 on April 30, 2003.
(g)(8) Amended Fee Schedule dated February 19, 2003 to the Custody Agreement
dated February 3, 2003 between the Registrant and National City Bank is
incorporated herein by reference to exhibit (g)(6) of Post-Effective Amendment
No. 68 to the Registrant's Registration Statement on Form N-1A (File No.
33-42484), filed with the SEC via EDGAR Accession No. 0001135428-03-000630 on
December 29, 2003.
10
(g)(9) Custody Agreement between the Registrant and The Northern Trust Company,
to be filed by amendment.
(g)(10) Global Custodial Services Agreement between the Registrant and Citi
Global Transaction Services, to be filed by amendment.
(g)(11) Amended Fee Schedule to the Global Custodial Services Agreement between
the Registrant and Citi Global Transaction Services, to be filed by amendment.
(g)(12) Custodial Services Agreement between the Registrant and The Bank of New
York Mellon, relating to the Cambiar Aggressive Value Fund and Cambiar
Opportunity Fund, to be filed by amendment.
(h)(1) Administration Agreement dated November 14, 1991, as amended and
restated November 12, 2002, between the Registrant and SEI Investments Global
Funds Services, is incorporated herein by reference to exhibit (h)(3) of
Post-Effective Amendment No. 207 to the Registrant's Registration Statement on
Form N-1A (File No. 33-42484), filed with the SEC via EDGAR Accession No.
0001135428-13-000118 on March 1, 2013.
(h)(2) Consent to Assignment and Assumption of Administration Agreement dated
June 1, 1996 between the Registrant and SEI Financial Management Corporation
(now, SEI Investments Global Funds Services) is incorporated herein by
reference to exhibit (9)(f) of Post-Effective Amendment No. 28 to the
Registrant's Registration Statement on Form N-1A (File No. 33-42484), filed
with the SEC via EDGAR Accession No. 0000950109-97-001691 on February 27,
1997.
(h)(3) Transfer Agency and Services Agreement dated October 1, 2000, as amended
and restated February 21, 2001, between the Registrant and Forum Shareholder
Services, LLC (now, Citi Fund Services, LLC) is incorporated herein by
reference to exhibit (h)(24) of Post-Effective Amendment No. 98 to the
Registrant's Registration Statement on Form N-1A (File No. 33-42484), filed
with the SEC via EDGAR Accession No. 0001135428-07-000218 on June 15, 2007.
(h)(4) AML Delegation Amendment dated May 20, 2003 to the Transfer Agency and
Services Agreement dated October 1, 2000, as amended and restated February 21,
2001, between the Registrant and Forum Shareholder Services, LLC (now, Citi
Fund Services, LLC) is incorporated herein by reference to exhibit (h)(64) of
Post-Effective Amendment No. 68 to the Registrant's Registration Statement on
Form N-1A (File No. 33-42484), filed with the SEC via EDGAR Accession No.
0001135428-03-000630 on December 29, 2003.
(h)(5) Transfer Agency and Service Agreement dated January 15, 2003 between the
Registrant and State Street Bank and Trust Company is incorporated herein by
reference to exhibit (h)(62) of Post-Effective Amendment No. 67 to the
Registrant's Registration Statement on Form N-1A (File No. 33-42484), filed
with the SEC via EDGAR Accession No. 0001135428-03-000495 on August 28, 2003.
(h)(6) AML Delegation Amendment dated May 20, 2003 to the Transfer Agency and
Service Agreement dated January 15, 2003 between the Registrant and State
Street Bank and Trust Company is incorporated herein by reference to exhibit
(h)(65) of Post-Effective Amendment No. 68 to the Registrant's Registration
Statement on Form N-1A (File No. 33-42484), filed with the SEC via EDGAR
Accession No. 0001135428-03-000630 on December 29, 2003.
11
(h)(7) Agency Agreement dated April 1, 2006 between the Registrant and DST
Systems, Inc., is incorporated herein by reference to exhibit (h)(7) of
Post-Effective Amendment No. 190 to the Registrant's Registration Statement on
Form N-1A (File No. 33-42484), filed with the SEC via EDGAR Accession No.
0001135428-12-000262 on May 23, 2012.
(h)(8) Amendment dated April 1, 2009 to the Agency Agreement dated April 1,
2006 between the Registrant and DST Systems, Inc., to be filed by amendment.
(h)(9) Amended Fee Schedule, dated August 30, 2012, to the Agency Agreement
dated April 1, 2006 between the Registrant and DST Systems, Inc. is
incorporated herein by reference to exhibit (h)(10) of Post-Effective Amendment
No. 193 to the Registrant's Registration Statement on Form N-1A (File Nos.
33-42484), filed with the SEC via EDGAR Accession No. 0001135428-12-000370 on
August 22, 2012.
(h)(10) Transfer Agency Agreement dated May 31, 2007 between the Registrant and
UMB Fund Services, Inc. is incorporated herein by reference to exhibit (h)(30)
of Post-Effective Amendment No. 99 to the Registrant's Registration Statement
on Form N-1A (File No. 33-42484), filed with the SEC via EDGAR Accession No.
0001135428-07-000376 on August 28, 2007.
(h)(11) Transfer Agency Services Agreement between the Registrant and Atlantic
Fund Services, to be filed by amendment.
(h)(12) Transfer Agency Agreement between the Registrant and Boston Financial
Data Services, Inc., to be filed by amendment.
(h)(13) Amendment to the Transfer Agency Agreement between the Registrant and
Boston Financial Data Services, Inc., to be filed by amendment.
(h)(14) Shareholder Services Plan, relating to the Investor Class Shares of the
Cambiar Funds, is incorporated herein by reference to exhibit (m)(6) of
Post-Effective Amendment No. 71 to the Registrant's Registration Statement on
Form N-1A (File No. 33-42484), filed with the SEC via EDGAR Accession No.
0001135428-04-000154 on April 16, 2004.
(h)(15) Revised Exhibit A to the Shareholder Services Plan, relating to
Investor Class Shares of the Cambiar Funds, is incorporated herein by reference
to exhibit (h)(11) of Post- Effective Amendment No. 168 to the Registrant's
Registration Statement on Form N-1A (File No. 33-42484), filed with the SEC via
EDGAR Accession No. 0001135428-11- 000735 on November 30, 2011.
(h)(16) Shareholder Services Plan, relating to the Retail Class Shares of the
Edgewood Growth Fund, is incorporated herein by reference to exhibit (h)(42) of
Post-Effective Amendment No. 89 to the Registrant's Registration Statement on
Form N-1A (File No. 33-42484), filed with the SEC via EDGAR Accession No.
0001135428-06-000148 on April 14, 2006.
(h)(17) Shareholder Services Plan, relating to Institutional Shares of the
Westwood Funds, is incorporated herein by reference to exhibit (h)(36) of
Post-Effective Amendment No. 100 to the Registrants Registration Statement on
Form N-1A (File No. 33-42484), filed with the SEC via EDGAR Accession No.
0001135428-07-000518 on November 15, 2007.
(h)(18) Exhibit A to the Shareholder Services Plan, relating to the
Institutional Shares of the Westwood Funds, is incorporated herein by reference
to exhibit (h)(14) of Post-Effective Amendment No. 140 to the Registrant's
Registration Statement on Form N-1A (File No. 33-42484), filed with the SEC via
EDGAR Accession No. 0001135428-11-000194 on March 28, 2011.
12
(h)(19) Shareholder Services Plan, relating to the Investor Class Shares of the
Sands Capital Global Growth Fund, is incorporated herein by reference to
exhibit (h)(30) of Post- Effective Amendment No. 120 to the Registrant's
Registration Statement on Form N-1A (File No. 33-42484), filed with the SEC on
March 1, 2010.
(h)(20) Shareholder Services Plan, relating to R Class Shares of the AlphaOne
Funds, is incorporated herein by reference to exhibit (h)(17) of Post-Effective
Amendment No. 141 to the Registrant's Registration Statement on Form N-1A (File
No. 33-42484), filed with the SEC via EDGAR Accession No. 0001135428-11-000199
on March 30, 2011.
(h)(21) Shareholder Services Plan, relating to Investor Class and Institutional
Shares of the CBRE Clarion Long/Short Fund and CBRE Clarion Global
Infrastructure Value Fund, is incorporated herein by reference to exhibit
(h)(17) of Post-Effective Amendment No. 171 to the Registrant's Registration
Statement on Form N-1A (File No. 33-42484), filed with the SEC via EDGAR
Accession No. 0001135428-11-000783 on December 28, 2011.
(h)(22) Revised Schedule A dated May 14, 2013 to the Shareholder Services Plan,
relating to Investor Class and Institutional Shares of the CBRE Clarion
Long/Short Fund and CBRE Clarion Global Infrastructure Value Fund, is
incorporated herein by reference to exhibit (h)(22) of Post-Effective Amendment
No. 214 to the Registrant's Registration Statement on Form N-1A (File No.
33-42484), filed with the SEC on June 28, 2013.
(h)(23) Shareholder Services Plan, relating to the A Shares of the Citi Market
Pilot 2020 Fund, Citi Market Pilot 2030 Fund and Citi Market Pilot 2040 Fund,
to be filed by amendment.
(h)(24) Shareholder Services Plan, relating to the Investor Class Shares of the
Hamlin High Dividend Equity Fund, is incorporated herein by reference to
exhibit (h)(22) of Post- Effective Amendment No. 183 to the Registrant's
Registration Statement on Form N-1A (File No. 33-42484), filed with the SEC via
EDGAR Accession No. 0001135428-12-000195 on March 28, 2012.
(h)(25) Shareholder Services Plan, relating to the Investor Class Shares of the
Thomson Horstmann & Bryant MicroCap Fund and Thomson Horstmann & Bryant Small
Cap Value Fund, is incorporated herein by reference to exhibit (h)(23) of
Post-Effective Amendment No. 184 to the Registrant's Registration Statement on
Form N-1A (File No. 33-42484), filed with the SEC via EDGAR Accession No.
0001135428-12-000197 on March 28, 2012.
(h)(26) Revised Schedule A to the Shareholder Services Plan, relating to the
Investor Class Shares of the Thomson Horstmann & Bryant MicroCap Fund and
Thomson Horstmann & Bryant Small Cap Value Fund, to be filed by amendment.
(h)(27) Shareholder Services Plan, relating to the Institutional Shares of the
Cornerstone Advisors Global Public Equity Fund, Cornerstone Advisors Income
Opportunities Fund, Cornerstone Advisors Public Alternatives Fund and
Cornerstone Advisors Real Assets Fund, is incorporated herein by reference to
exhibit (h)(26) of Post-Effective Amendment No. 193 to the Registrant's
Registration Statement on Form N-1A (File Nos. 33-42484), filed with the SEC
via EDGAR Accession No. 0001135428-12-000370 on August 22, 2012.
(h)(28) Shareholder Services Plan, relating to the Investor Class Shares of the
AT Family of Funds, to be filed by amendment.
13
(i) Opinion and Consent of Counsel, Morgan, Lewis and Bockius, LLP, relating to
the Institutional and Investor Class Shares of the Cambiar Funds, is filed
herewith.
(j) Consent of independent registered public accounting firm, Ernst & Young
LLP, is filed herewith.
(k) Not Applicable.
(l) Not Applicable.
(m)(1) Distribution Plan dated August 8, 1994, as amended August 14, 2000, is
incorporated herein by reference to exhibit (m) of Post-Effective Amendment No.
41 to the Registrant's Registration Statement on Form N-1A (File No. 33-42484),
filed with the SEC via EDGAR Accession No. 0000950109-00-004829 on December 13,
2000.
(m)(2) Schedule A, as last amended August 13, 2013, to the Distribution Plan
dated August 8, 1994, as amended August 14, 2000, to be filed by amendment.
(m)(3) Distribution Plan dated September 17, 2002, relating to Investor Shares
of the Rice Hall James Mid Cap Portfolio, is incorporated herein by reference
to exhibit (m)(6) of Post- Effective Amendment No. 74 to the Registrant's
Registration Statement on Form N-1A (File No. 33-42484), filed with the SEC via
EDGAR Accession No. 0001135428-04- 000242 on June 1, 2004.
(m)(4) Amended Schedule A dated November 13, 2007 to the Distribution Plan
dated September 17, 2002, relating to Investor Shares of the Rice Hall James
Mid Cap Portfolio, is incorporated herein by reference to exhibit (m)(4) of
Post-Effective Amendment No. 111 to the Registrant's Registration Statement on
Form N-1A (File No. 33-42484), filed with the SEC via EDGAR Accession No.
0001135428-09-000276 on July 2, 2009.
(n)(1) Registrant's Amended and Restated Rule 18f-3 Plan dated February 21,
2007 (including Schedules and Certificates of Class Designation thereto) is
incorporated herein by reference to exhibit (n) of Post-Effective Amendment No.
127 to the Registrant's Registration Statement on Form N-1A (File No.
33-42484), filed with the SEC via EDGAR Accession No. 0001135428-10-000392 on
September 3, 2010.
(n)(2) Revised Schedule F and Certificates of Class Designation to the
Registrant's Amended and Restated Rule 18f-3 Plan dated February 21, 2007,
relating to the Westwood Family of Funds, are incorporated herein by reference
to exhibit (n)(2) of Post-Effective Amendment No. 202 to the Registrant's
Registration Statement on Form N-1A (File No. 33-42484), filed with the SEC via
EDGAR Accession No. 0001135428-12-000594 on December 19, 2012.
(n)(3) Schedule I and Certificates of Class Designation to the Registrant's
Amended and Restated Rule 18f-3 Multiple Class Plan dated February 21, 2007,
relating to the AlphaOne Family of Funds, are incorporated herein by reference
to exhibit (n)(4) of Post- Effective Amendment No. 141 to the Registrant's
Registration Statement on Form N-1A (File No. 33-42484), filed with the SEC via
EDGAR Accession No. 0001135428-11-000199 on March 30, 2011.
(n)(4) Revised Schedule C and Certificates of Class Designation to the
Registrant's Amended and Restated Rule 18f-3 Plan dated February 21, 2007,
relating to the Cambiar Funds, is filed herewith.
(n)(5) Revised Schedule J and Certificates of Class Designation to the
Registrant's Amended and Restated Rule 18f-3 Plan dated February 21, 2007,
relating to the CBRE Clarion Long/Short Fund and CBRE Clarion Global
Infrastructure Value Fund, are incorporated herein by reference to exhibit
(n)(5) of Post-
14
Effective Amendment No. 214 to the Registrant's Registration Statement on Form
N-1A (File No. 33-42484), filed with the SEC on June 28, 2013.
(n)(6) Schedule K and Certificates of Class Designation to the Registrant's
Amended and Restated Rule 18f-3 Plan dated February 21, 2007, relating to the
Citi Market Pilot 2020 Fund, Citi Market Pilot 2030 Fund and Citi Market Pilot
2040 Fund, is incorporated herein by reference to exhibit (n)(7) of
Post-Effective Amendment No. 190 to the Registrant's Registration Statement on
Form N-1A (File No. 33-42484), filed with the SEC via EDGAR Accession No.
0001135428-12-000262 on May 23, 2012.
(n)(7) Schedule N and Certificate of Class Designation to the Registrant's
Amended and Restated Rule 18f-3 Plan dated February 21, 2007, relating to the
Harvest China All Assets Fund and the Harvest Intermediate Bond Fund , is
incorporated herein by reference to exhibit (n)(8) of Post-Effective Amendment
No. 200 to the Registrant's Registration Statement on Form N-1A (File No.
33-42484), filed with the SEC via EDGAR Accession No. 0001135428-12-000571 on
December 7, 2012.
(n)(8) Schedule O and Certificate of Class Designation to the Registrant's
Amended and Restated Rule 18f-3 Plan dated February 21, 2007, relating to the
AT Family of Funds, to be filed by amendment.
(n)(9) Revised Schedule M and Certificate of Class Designation to the
Registrant's Amended and Restated Rule 18f-3 Plan dated February 21, 2007,
relating to the Thomson Horstmann & Bryant MicroCap Fund and Thomson Horstmann
& Bryant Small Cap Value Fund, to be filed by amendment.
(o) Not Applicable.
(p)(1) Registrant's Code of Ethics dated November 2007 is incorporated herein
by reference to exhibit (h)(36) of Post-Effective Amendment No. 100 to the
Registrant's Registration Statement on Form N-1A (File No. 33-42484), filed
with the SEC via EDGAR Accession No. 0001135428-07-000518 on November 15,
2007.
(p)(2) HGK Asset Management, Inc. Revised Code of Ethics dated October 23, 2009
is incorporated herein by reference to exhibit (h)(30) of Post-Effective
Amendment No. 120 to the Registrant's Registration Statement on Form N-1A (File
No. 33-42484), filed with the SEC on March 1, 2010.
(p)(3) LSV Asset Management Revised Code of Ethics dated January 19, 2007 is
incorporated herein by reference to exhibit (p)(3) of Post-Effective Amendment
No. 97 to the Registrant's Registration Statement on Form N-1A (File No.
33-42484), filed with the SEC via EDGAR Accession No. 0001135428-07-000146 on
April 30, 2007.
(p)(4) Cambiar Investors LLC Revised Code of Ethics dated January 2012 is
incorporated herein by reference to exhibit (p)(4) of Post-Effective Amendment
No. 194 to the Registrant's Registration Statement on Form N-1A (File No.
33-42484), filed with the SEC via EDGAR Accession No. 0001135428-12-000394 on
August 28, 2012.
(p)(5) Investment Counselors of Maryland, LLC Revised Code of Ethics dated
March 13, 2007 is incorporated herein by reference to exhibit (p)(8) of
Post-Effective Amendment No. 97 to the Registrant's Registration Statement on
Form N-1A (File No. 33-42484), filed with the SEC via EDGAR Accession No.
0001135428-07-000146 on April 30, 2007.
(p)(6) C.S. McKee, LLP Revised Code of Ethics, to be filed by amendment.
15
(p)(7) Thompson, Siegel & Walmsley, LLC Revised Code of Ethics, is incorporated
herein by reference to exhibit (p)(7) of Post-Effective Amendment No. 207 to
the Registrant's Registration Statement on Form N-1A (File No. 33-42484), filed
with the SEC via EDGAR Accession No. 0001135428-13-000118 on March 1, 2013.
(p)(8) First Manhattan Co. Revised Code of Ethics dated December 2006 is
incorporated herein by reference to exhibit (p)(11) of Post-Effective Amendment
No. 97 to the Registrant's Registration Statement on Form N-1A (File No.
33-42484), filed with the SEC via EDGAR Accession No. 0001135428-07-000146 on
April 30, 2007.
(p)(9) Haverford Investment Management, Inc. Revised Code of Ethics, is
incorporated herein by reference to exhibit (p)(9) of Post-Effective Amendment
No. 207 to the Registrant's Registration Statement on Form N-1A (File No.
33-42484), filed with the SEC via EDGAR Accession No. 0001135428-13-000118 on
March 1, 2013.
(p)(10) AIG Asset Management (U.S.), LLC Revised Code of Ethics dated September
13, 2007 is incorporated herein by reference to exhibit (p)(12) of
Post-Effective Amendment No. 100 to the Registrant's Registration Statement on
Form N-1A (File No. 33-42484), filed with the SEC via EDGAR Accession No.
0001135428-07-000518 on November 15, 2007.
(p)(11) Rice Hall James & Associates, LLC Revised Code of Ethics, is
incorporated herein by reference to exhibit (p)(11) of Post-Effective Amendment
No. 207 to the Registrant's Registration Statement on Form N-1A (File No.
33-42484), filed with the SEC via EDGAR Accession No. 0001135428-13-000118 on
March 1, 2013.
(p)(12) Acadian Asset Management, LLC Revised Code of Ethics is incorporated
herein by reference to exhibit (p)(12) of Post-Effective Amendment No. 193 to
the Registrant's Registration Statement on Form N-1A (File Nos. 33-42484),
filed with the SEC via EDGAR Accession No. 0001135428-12-000370 on August 22,
2012.
(p)(13) Westwood Management Corp. Revised Code of Ethics is incorporated herein
by reference to exhibit (p)(13) of Post-Effective Amendment No. 207 to the
Registrant's Registration Statement on Form N-1A (File No. 33-42484), filed
with the SEC via EDGAR Accession No. 0001135428-13-000118 on March 1, 2013.
(p)(14) Edgewood Management LLC Revised Code of Ethics, to be filed by
amendment.
(p)(15) PNC Capital Advisors, LLC Code of Ethics dated October 8, 2009 is
incorporated herein by reference to exhibit (h)(30) of Post-Effective Amendment
No. 120 to the Registrant's Registration Statement on Form N-1A (File No.
33-42484), filed with the SEC on March 1, 2010.
(p)(16) Pennant Management, Inc. Code of Ethics is incorporated herein by
reference to exhibit (p)(19) of Post-Effective Amendment No. 112 to the
Registrant's Registration Statement on Form N-1A (File No. 33-42484), filed
with the SEC via EDGAR Accession No. 0001135428-09-000365 on August 21, 2009.
(p)(17) Sands Capital Management, LLC Code of Ethics is incorporated herein by
reference to exhibit (p)(19) of Post-Effective Amendment No. 117 to the
Registrant's Registration Statement on Form N-1A (File No. 33-42484), filed
with the SEC via EDGAR Accession No. 0001135428-10-000009 on January 15, 2010.
16
(p)(18) AlphaOne Investment Services, LLC Code of Ethics dated May 1, 2011, is
incorporated herein by reference to exhibit (p)(20) of Post-Effective Amendment
No. 158 to the Registrant's Registration Statement on Form N-1A (File No.
33-42484), filed with the SEC via EDGAR Accession No. 0001135428-11-000517 on
September 16, 2011.
(p)(19) Loomis, Sayles & Company L.P. Code of Ethics is incorporated herein by
reference to exhibit (p)(19) of Post-Effective Amendment No. 207 to the
Registrant's Registration Statement on Form N-1A (File No. 33-42484), filed
with the SEC via EDGAR Accession No. 0001135428-13-000118 on March 1, 2013.
(p)(20) CBRE Clarion Securities LLC Code of Ethics is incorporated herein by
reference to exhibit (p)(20) of Post-Effective Amendment No. 207 to the
Registrant's Registration Statement on Form N-1A (File No. 33-42484), filed
with the SEC via EDGAR Accession No. 0001135428-13-000118 on March 1, 2013.
(p)(21) SKY Harbor Capital Management, LLC Code of Ethics is incorporated
herein by reference to exhibit (p)(21) of Post-Effective Amendment No. 207 to
the Registrant's Registration Statement on Form N-1A (File No. 33-42484), filed
with the SEC via EDGAR Accession No. 0001135428-13-000118 on March 1, 2013.
(p)(22) Hamlin Capital Management, LLC Code of Ethics, is incorporated herein
by reference to exhibit (p)(23) of Post-Effective Amendment No. 184 to the
Registrant's Registration Statement on Form N-1A (File No. 33-42484), filed
with the SEC via EDGAR Accession No. 0001135428-12-000197 on March 28, 2012.
(p)(23) Thomson Horstmann & Bryant, Inc. Code of Ethics, is incorporated herein
by reference to exhibit (p)(24) of Post-Effective Amendment No. 184 to the
Registrant's Registration Statement on Form N-1A (File No. 33-42484), filed
with the SEC via EDGAR Accession No. 0001135428-12-000197 on March 28, 2012.
(p)(24) SEI Investments Distribution Co. Code of Ethics as revised December 18,
2012 is filed herewith.
(p)(25) Citigroup First Investment Management Americas LLC Code of Ethics is
incorporated herein by reference to exhibit (p)(26) of Post-Effective Amendment
No. 190 to the Registrant's Registration Statement on Form N-1A (File No.
33-42484), filed with the SEC via EDGAR Accession No. 0001135428-12-000262 on
May 23, 2012.
(p)(26) Cornerstone Advisors, Inc. Code of Ethics is incorporated herein by
reference to exhibit (p)(27) of Post-Effective Amendment No. 193 to the
Registrant's Registration Statement on Form N-1A (File Nos. 33-42484), filed
with the SEC via EDGAR Accession No. 0001135428-12-000370 on August 22, 2012.
(p)(27) Parametric Portfolio Associates LLC Code of Ethics is incorporated
herein by reference to exhibit (p)(28) of Post-Effective Amendment No. 193 to
the Registrant's Registration Statement on Form N-1A (File Nos. 33-42484),
filed with the SEC via EDGAR Accession No. 0001135428-12-000370 on August 22,
2012.
(p)(28) Harris Associates L.P. Code of Ethics is incorporated herein by
reference to exhibit (p)(29) of Post-Effective Amendment No. 193 to the
Registrant's Registration Statement on Form N-1A (File Nos. 33-42484), filed
with the SEC via EDGAR Accession No. 0001135428-12-000370 on August 22, 2012.
17
(p)(29) Thornburg Investment Management Inc Code of Ethics is incorporated
herein by reference to exhibit (p)(30) of Post-Effective Amendment No. 193 to
the Registrant's Registration Statement on Form N-1A (File Nos. 33-42484),
filed with the SEC via EDGAR Accession No. 0001135428-12-000370 on August 22,
2012.
(p)(30) Marsico Capital Management, LLC Revised Code of Ethics is incorporated
herein by reference to exhibit (p)(30) of Post-Effective Amendment No. 207 to
the Registrant's Registration Statement on Form N-1A (File No. 33-42484), filed
with the SEC via EDGAR Accession No. 0001135428-13-000118 on March 1, 2013.
(p)(31) Turner Investments, L.P. Code of Ethics is incorporated herein by
reference to exhibit (p)(32) of Post-Effective Amendment No. 193 to the
Registrant's Registration Statement on Form N-1A (File Nos. 33-42484), filed
with the SEC via EDGAR Accession No. 0001135428-12-000370 on August 22, 2012.
(p)(32) Cramer Rosenthal McGlynn LLC Code of Ethics is incorporated herein by
reference to exhibit (p)(33) of Post-Effective Amendment No. 193 to the
Registrant's Registration Statement on Form N-1A (File Nos. 33-42484), filed
with the SEC via EDGAR Accession No. 0001135428-12-000370 on August 22, 2012.
(p)(33) Fairpointe Capital LLC Code of Ethics is incorporated herein by
reference to exhibit (p)(34) of Post-Effective Amendment No. 193 to the
Registrant's Registration Statement on Form N-1A (File Nos. 33-42484), filed
with the SEC via EDGAR Accession No. 0001135428-12-000370 on August 22, 2012.
(p)(34) Phocas Financial Corporation Code of Ethics is incorporated herein by
reference to exhibit (p)(35) of Post-Effective Amendment No. 193 to the
Registrant's Registration Statement on Form N-1A (File Nos. 33-42484), filed
with the SEC via EDGAR Accession No. 0001135428-12-000370 on August 22, 2012.
(p)(35) TCW Investment Management Company Code of Ethics, to be filed by
amendment.
(p)(36) Amendment to the TCW Investment Management Company Code of Ethics is
incorporated herein by reference to exhibit (p)(37) of Post-Effective Amendment
No. 193 to the Registrant's Registration Statement on Form N-1A (File Nos.
33-42484), filed with the SEC via EDGAR Accession No. 0001135428-12-000370 on
August 22, 2012.
(p)(37) Allianz Global Investors Capital LLC Code of Ethics is incorporated
herein by reference to exhibit (p)(38) of Post-Effective Amendment No. 193 to
the Registrant's Registration Statement on Form N-1A (File Nos. 33-42484),
filed with the SEC via EDGAR Accession No. 0001135428-12-000370 on August 22,
2012.
(p)(38) Driehaus Capital Management LLC Revised Code of Ethics is incorporated
herein by reference to exhibit (p)(38) of Post-Effective Amendment No. 207 to
the Registrant's Registration Statement on Form N-1A (File No. 33-42484), filed
with the SEC via EDGAR Accession No. 0001135428-13-000118 on March 1, 2013.
(p)(39) OFI SteelPath, Inc. Code of Ethics is incorporated herein by reference
to exhibit (p)(39) of Post-Effective Amendment No. 207 to the Registrant's
Registration Statement on Form N-1A (File No. 33-42484), filed with the SEC via
EDGAR Accession No. 0001135428-13-000118 on March 1, 2013.
(p)(40) AlphaSimplex Group, LLC Code of Ethics is incorporated herein by
reference to exhibit (p)(41) of Post-Effective Amendment No. 193 to the
Registrant's Registration Statement on Form N-1A (File
18
Nos. 33-42484), filed with the SEC via EDGAR Accession No. 0001135428-12-000370
on August 22, 2012.
(p)(41) AQR Capital Management, LLC Code of Ethics is incorporated herein by
reference to exhibit (p)(42) of Post-Effective Amendment No. 193 to the
Registrant's Registration Statement on Form N-1A (File Nos. 33-42484), filed
with the SEC via EDGAR Accession No. 0001135428-12-000370 on August 22, 2012.
(p)(42) ClariVest Asset Management LLC Revised Code of Ethics is incorporated
herein by reference to exhibit (p)(42) of Post-Effective Amendment No. 207 to
the Registrant's Registration Statement on Form N-1A (File No. 33-42484), filed
with the SEC via EDGAR Accession No. 0001135428-13-000118 on March 1, 2013.
(p)(43) Kayne Anderson Capital Advisors, L.P. Code of Ethics is incorporated
herein by reference to exhibit (p)(44) of Post-Effective Amendment No. 193 to
the Registrant's Registration Statement on Form N-1A (File Nos. 33-42484),
filed with the SEC via EDGAR Accession No. 0001135428-12-000370 on August 22,
2012.
(p)(44) BlackRock Financial Management, LLC Code of Ethics is incorporated
herein by reference to exhibit (p)(45) of Post-Effective Amendment No. 193 to
the Registrant's Registration Statement on Form N-1A (File Nos. 33-42484),
filed with the SEC via EDGAR Accession No. 0001135428-12-000370 on August 22,
2012.
(p)(45) Harvest Global Investments Limited Code of Ethics is incorporated
herein by reference to exhibit (p)(46) of Post-Effective Amendment No. 200 to
the Registrant's Registration Statement on Form N-1A (File No. 33-42484), filed
with the SEC via EDGAR Accession No. 0001135428-12-000571 on December 7, 2012.
(p)(46) Stein Roe Investment Counsel, Inc. Code of Ethics, to be filed by
amendment.
(p)(47) Fayez Sarofim & Co. Code of Ethics dated June 14, 2012 is incorporated
herein by reference to exhibit (p)(47) of Post-Effective Amendment No. 215 to
the Registrant's Registration Statement on Form N-1A (File No. 033-42484),
filed with the SEC via EDGAR Accession No. 0001135428-13-000356 on June 28,
2013.
(p)(48) SEI Investments Global Funds Services Code of Ethics dated June 2012 is
filed herewith.
(q) Powers of Attorney for Ms. Betty L. Krikorian and Messrs. Robert A. Nesher,
Michael Lawson, William M. Doran, John K. Darr, George J. Sullivan, Jr.,
Charles E. Carlbom, James M. Storey, Philip T. Masterson, Mitchell A. Johnson,
Bruce Speca and Joseph T. Grause are herein incorporated by reference to
Exhibit (q) of Post-Effective Amendment No. 212 to the Registrant's
Registration Statement on Form N-1A (File No. 033-42484), filed with the SEC
via EDGAR Accession No. 0001135428-13-000327 on June 18, 2013.
ITEM 29. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT:
Not Applicable.
ITEM 30. INDEMNIFICATION:
19
Article VIII of the Agreement and Declaration of Trust filed as Exhibit (a) to
the Registrant's Registration Statement is incorporated herein by reference.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 (the "1933 Act") may be permitted to trustees, directors, officers and
controlling persons of the Registrant by the Registrant pursuant to the
Agreement and Declaration of Trust or otherwise, the Registrant is aware that
in the opinion of the SEC, such indemnification is against public policy as
expressed in the 1933 Act and, therefore, is 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 trustees, directors, officers or
controlling persons of the Registrant in connection with the successful defense
of any act, suit or proceeding) is asserted by such trustees, directors,
officers or controlling persons in connection with the shares 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 1933 Act and will be governed by the final adjudication of
such issues.
ITEM 31. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISERS:
The following lists any other business, profession, vocation or employment of a
substantial nature in which each investment adviser, and each director, officer
or partner of that investment adviser, is or has been engaged within the last
two fiscal years for his or her own account or in the capacity of director,
officer, employee, partner, or trustee. Unless noted below, none of the
investment advisers, and/or director, officer or partner of each investment
adviser, is or has been engaged within the last two fiscal years in any other
business, profession, vocation or employment of a substantial nature for his or
her own account or in the capacity of director, officer, employee, partner or
trustee.
ACADIAN ASSET MANAGEMENT LLC
Acadian Asset Management LLC ("Acadian") serves as the investment adviser to
the Acadian Emerging Markets Portfolio and Acadian Emerging Markets Debt Fund
and as an investment sub-adviser to the Cornerstone Advisors Global Public
Equity Fund. The principal address of Acadian is 260 Franklin Street, Boston,
Massachusetts 02110. Acadian is an investment adviser registered under the
Investment Advisers Act of 1940.
--------------------------------------------------------------------------------------------------------
NAME AND POSITION WITH NAME OF OTHER COMPANY CONNECTION WITH OTHER COMPANY
INVESTMENT ADVISER
--------------------------------------------------------------------------------------------------------
Laurent De Greef, Member of Acadian Asset Management Managing Director, asset
Board of Managers (UK) Ltd management
--------------------------------------------------------------------------------------------------------
John Chisholm, Executive Acadian Asset Management
Vice President, CIO, Member (UK) Ltd Director, asset management
of Board of Managers
--------------------------------------------------------------------------------------------------------
Acadian Asset Management Director, asset management
(UK) Ltd
Churchill Franklin, Executive --------------------------------------------------------------------------
Vice President, COO, Acadian Asset Management
Member of Board of (Australia) Ltd Director, asset management
Managers --------------------------------------------------------------------------
Acadian Cayman Limited G.P. Director, asset management
--------------------------------------------------------------------------------------------------------
Ronald Frashure, Chairman, Acadian Asset Management Director, asset management
Member of Board of (Singapore) Pte Ltd
Managers --------------------------------------------------------------------------
Acadian Cayman Limited G.P. Director, asset management
--------------------------------------------------------------------------------------------------------
Mark Minichiello, Executive Acadian Asset Management Director, asset management
Vice President, COO, (UK) Ltd
Treasurer, Secretary, Member --------------------------------------------------------------------------
of Board of Managers Acadian Asset Management
(Singapore) Pte Ltd Director, asset management
--------------------------------------------------------------------------------------------------------
19
|
--------------------------------------------------------------------------------------------------------
NAME AND POSITION WITH NAME OF OTHER COMPANY CONNECTION WITH OTHER COMPANY
INVESTMENT ADVISER
--------------------------------------------------------------------------------------------------------
Ross Dowd, Executive Vice Acadian Asset Management Director, asset management
President, Head of Client (UK) Ltd
Service, Member of Board of ----------------------------------------------------------------------------
Managers Acadian Cayman Limited G.P. Director, asset management
----------------------------------------------------------------------------
Acadian Asset Management Director, asset management
(Singapore) Pte Ltd
--------------------------------------------------------------------------------------------------------
Linda Gibson, Member of Director, Executive Vice
Board of Managers President and Head of Global
Distribution - Old Mutual (US)
Holdings Inc. (a holding
company);
Acadian Asset Management LLC
(an investment advisor);
Barrow, Hanley, Mewhinney &
Strauss, LLC (an investment
advisor);
The Campbell Group, Inc. (a
holding company for The
Campbell Group LLC)
Echo Point Investment
Management, LLC (an
investment advisor);
Old Mutual (HFL) Inc. (a
holding company for Heitman Affiliated Directorships
affiliated financial services
firms);
Investment Counselors of
Maryland, LLC (an investment
advisor);
Old Mutual Asset Management
International, Ltd. (an investment
advisor);
Copper Rock Capital Partners,
LLC (an investment advisor);
Old Mutual Investment Partners
(a registered broker-dealer);
Rogge Global Partners plc (an
investment advisor);
Thompson, Siegel & Walmsley
LLC (an investment advisor)
--------------------------------------------------------------------------------------------------------
Matthew Berger, Member of Senior Vice President, Finance
Board of Managers and Affiliate Management - Old
Mutual (US) Holdings Inc. (a
holding company); Affiliated Directorships
Acadian Asset Management LLC
(investment advisor)
--------------------------------------------------------------------------------------------------------
Christopher Hadley, Member Executive Vice President, Head
of Board of Managers of Human Resources - Old
Mutual (US) Holdings Inc. (a Affiliated Directorships
--------------------------------------------------------------------------------------------------------
20
|
--------------------------------------------------------------------------------------------------------
NAME AND POSITION WITH NAME OF OTHER COMPANY CONNECTION WITH OTHER COMPANY
INVESTMENT ADVISER
--------------------------------------------------------------------------------------------------------
holding company);
Acadian Asset Management LLC
(an investment advisor)
--------------------------------------------------------------------------------------------------------
Aidan Riordan, Member of Executive Vice President, Head
Board of Managers of Affiliate Management - Old
Mutual (US) Holdings Inc. (a
holding company);
Acadian Asset Management LLC Affiliated Directorships
(an investment advisor);
Copper Rock Capital Partners
LLC (an investment advisor);
Echo Point Investment
Management, LLC (an
investment advisor)
--------------------------------------------------------------------------------------------------------
Stephen Belgrad, Member of Director, Chief Financial Officer
Board of Managers and Executive Vice President-
Old Mutual (US) Holdings Inc.
(a holding company); Acadian
Asset Management LLC (an
investment advisor);
Old Mutual Asset Management Affiliated Directorships
International, Ltd. (an investment
advisor)
--------------------------------------------------------------------------------------------------------
AIG ASSET MANAGEMENT (U.S.), LLC
AIG Asset Management (U.S.), LLC ("AIG") serves as the investment adviser for
the AIG Money Market Fund. The principal address of AIG is 80 Pine Street, New
York, New York 10005. AIG is an investment adviser registered under the
Investment Advisers Act of 1940.
During the last two fiscal years, no director, officer or partner of AIG has
engaged in any other business, profession, vocation or employment of a
substantial nature for his or her own account or in the capacity of director,
officer, employee, partner or trustee.
ALLIANZ GLOBAL INVESTORS U.S. LLC
Allianz Global Investors U.S. LLC ("Allianz Global Investors U.S.") serves as
an investment sub-adviser for the Cornerstone Advisors Global Public Equity
Fund. The principal address of Allianz Global Investors U.S. is 1633 Broadway,
New York, NY 10019. Allianz Global Investors U.S. is an investment adviser
registered under the Investment Advisers Act of 1940.
During the last two fiscal years, no director, officer or partner of Allianz
Global Investors U.S. has engaged in any other business, profession, vocation
or employment of a substantial nature for his or her own account or in the
capacity of director, officer, employee, partner or trustee.
21
|
ALPHAONE INVESTMENT SERVICES, LLC
AlphaOne Investment Services, LLC ("AlphaOne") serves as the investment adviser
for the AlphaOne Small Cap Growth Fund, AlphaOne Micro Cap Equity Fund and
AlphaOne U.S. Equity Long Short Fund. The principal address of AlphaOne is One
Tower Bridge, 100 Front Street, Suite 1250, West Conshohocken, PA 19428.
AlphaOne is an investment adviser registered under the Investment Advisers Act
of 1940.
During the last two fiscal years, no director, officer or partner of AlphaOne
has engaged in any other business, profession, vocation or employment of a
substantial nature for his or her own account or in the capacity of director,
officer, employee, partner or trustee.
ALPHASIMPLEX GROUP, LLC
AlphaSimplex Group, LLC ("AlphaSimplex") serves as an investment sub-adviser
for the Cornerstone Advisors Public Alternatives Fund. The principal address of
AlphaSimplex is One Cambridge Center, Cambridge, Massachusetts 02142.
AlphaSimplex is an investment adviser registered under the Investment Advisers
Act of 1940.
--------------------------------------------------------------------------------------------------------
NAME AND POSITION WITH NAME AND PRINCIPAL BUSINESS CONNECTION WITH OTHER
INVESTMENT ADVISER ADDRESS OF OTHER COMPANY COMPANY
--------------------------------------------------------------------------------------------------------
Andrew W. Lo Massachusetts Institute of
Chief Investment Technology (MIT) -- Sloan School Charles E. and Susan T. Harris
Strategist, Chairman of the of Management Professor
Board 100 Main Street ----------------------------------------
E62-618
Cambridge, MA 02142 Director of the Laboratory for
United States Financial Engineering
--------------------------------------------------------------------------------------------------------
AQR CAPITAL MANAGEMENT, LLC
AQR Capital Management, LLC ("AQR") serves as an investment sub-adviser for the
Cornerstone Advisors Public Alternatives Fund. The principal address of AQR is
Two Greenwich Plaza, 3rd Floor, Greenwich, Connecticut 06830. AQR is an
investment adviser registered under the Investment Advisers Act of 1940.
--------------------------------------------------------------------------------------------------------
NAME AND POSITION WITH NAME AND PRINCIPAL BUSINESS CONNECTION WITH OTHER
INVESTMENT ADVISER ADDRESS OF OTHER COMPANY COMPANY
--------------------------------------------------------------------------------------------------------
Lasse Pedersen, NYU Stern School of Business John A. Paulson Professor of
Principal Henry Kaufman Management Center Finance and Alternative
44 West Fourth Street Investments, 2009 -- present (on
New York, NY 10012 leave)
--------------------------------------------------------------------------------
Copenhagen Business School Professor (2011-present)
Howitzvej 60,
2000 Frederiksberg, Denmark
3815 3815
---------------------------------------------------------------------------------
Financial Times Stock Exchange Advisory Board Member (2009-
(FTSE) present)
1270 Avenue of the Americas
New York, NY 10020
---------------------------------------------------------------------------------
NASDAQ OMX Economic Advisory Board
One Liberty Plaza Member (2008-2011)
New York, NY
--------------------------------------------------------------------------------------------------------
22
|
--------------------------------------------------------------------------------------------------------
NAME AND POSITION WITH NAME AND PRINCIPAL BUSINESS CONNECTION WITH OTHER
INVESTMENT ADVISER ADDRESS OF OTHER COMPANY COMPANY
--------------------------------------------------------------------------------------------------------
American Finance Association Director (2011-present)
Haas School of Business
University of California
Berkeley, CA 94729-1900
---------------------------------------------------------------------------------
Federal Reserve Bank of New York Member of Monetary Policy
33 Liberty Street Panel (2010-2011)
New York, NY 10045 Member of Liquidity Working
Group (2009-2011)
--------------------------------------------------------------------------------------------------------
John Howard, AllianceBernstein Chief Financial Officer, March
Principal and Chief 1345 Avenue of the Americas 2010 through February 2011
Operating Officer New York, New York 10105
--------------------------------------------------------------------------------------------------------
BLACKROCK FINANCIAL MANAGEMENT, LLC
BlackRock Financial Management, LLC ("BlackRock") serves as an investment
sub-adviser for the Cornerstone Advisors Real Assets Fund. The principal
address of BlackRock is 55 East 52(nd) Street New York, New York 10055.
BlackRock is an investment adviser registered under the Investment Advisers Act
of 1940.
The information required by this Item 31 with respect to each director, officer
or partner of BlackRock for the fiscal years ended October 31, 2011 and 2012 is
incorporated herein by reference to Form ADV filed by BlackRock with the SEC.
CAMBIAR INVESTORS LLC
Cambiar Investors LLC ("Cambiar") serves as the investment adviser to the
Cambiar Opportunity Fund, the Cambiar International Equity Fund, the Cambiar
Small Cap Fund, the Cambiar Aggressive Value Fund, the Cambiar SMID Fund
and the Cambiar Global Select Fund. The principal address of Cambiar is 2401
East Second Street, Suite 400, Denver, Colorado 80206. Cambiar is an investment
adviser registered under the Investment Advisers Act of 1940.
For the fiscal years ended April 2012 and 2013, no director, officer or partner
of Cambiar has been engaged in any other business, profession, vocation or
employment of a substantial nature for his or her own account or in the capacity
of director, officer, employee, partner or trustee.
CBRE CLARION SECURITIES LLC
CBRE Clarion Securities LLC ("CBRE Clarion") serves as the investment adviser
for the CBRE Clarion Long/Short Fund and the CBRE Clarion Global Infrastructure
Value Fund. The principal address of CBRE Clarion is 201 King of Prussia Road,
Suite 600, Radnor, PA 19087. CBRE Clarion is an investment adviser registered
under the Investment Advisers Act of 1940.
--------------------------------------------------------------------------------------------------------
NAME AND POSITION WITH NAME AND PRINCIPAL BUSINESS CONNECTION WITH OTHER
INVESTMENT ADVISER ADDRESS OF OTHER COMPANY COMPANY
--------------------------------------------------------------------------------------------------------
T. Ritson Ferguson CBRE Clarion Global Real Estate Interested Trustee
Income Fund (IGR)
Chief Executive Officer
and Co-Chief Investment c/o 201 King of Prussia Road, Suite
Officer 600, Radnor, PA 19087
--------------------------------------------------------------------------------------------------------
23
|
--------------------------------------------------------------------------------------------------------
NAME AND POSITION WITH NAME AND PRINCIPAL BUSINESS CONNECTION WITH OTHER
INVESTMENT ADVISER ADDRESS OF OTHER COMPANY COMPANY
--------------------------------------------------------------------------------------------------------
CBRE Clarion Global, Ltd. Director
c/o 201 King of Prussia Road, Suite
600, Radnor, PA 19087
--------------------------------------------------------------------------------------------------------
Joseph P. Smith CBRE Clarion Global, Ltd. Director
Managing Director and c/o 201 King of Prussia Road, Suite
Co-Chief Investment 600, Radnor, PA 19087
Officer
--------------------------------------------------------------------------------------------------------
Jarrett B. Kling Hirtle Callaghan Trust Trustee
Managing Director -- Sales 300 Barr Harbor Dr, Suite 500
and Marketing West Conshohocken, PA 19428
-----------------------------------------------------------------------------
Old Mutual Funds I Trustee (resigned 2012)
4643 South Ulster Street
Suite 600
Denver, CO 80237-2853
-----------------------------------------------------------------------------
Old Mutual Funds II Trustee (resigned 2012)
4643 South Ulster Street
Suite 600
Denver, CO 80237-2853
-----------------------------------------------------------------------------
Boys and Girls Clubs of America National Trustee
1275 Peachtree Street NE
Atlanta, GA 30309-3506
--------------------------------------------------------------------------------------------------------
William Zitelli CBRE Clarion Global Real Estate Chief Compliance Officer
General Counsel Income Fund (IGR)
c/o 201 King of Prussia Road, Suite
600, Radnor, PA 19087
--------------------------------------------------------------------------------------------------------
Jonathan Blome CBRE Clarion Global Real Estate Chief Financial Officer
Chief Financial Officer Income Fund (IGR)
c/o 201 King of Prussia Road, Suite
600, Radnor, PA 19087
--------------------------------------------------------------------------------------------------------
24
|
CITIGROUP FIRST INVESTMENT MANAGEMENT AMERICAS LLC
Citigroup First Investment Management Americas LLC ("Citi") serves as the
investment adviser for the Citi Market Pilot 2020 Fund, Citi Market Pilot 2030
Fund and Citi Market Pilot 2040 Fund. The principal address of Citi is 388
Greenwich Street, New York, New York 10013. Citi is an investment adviser
registered under the Investment Advisers Act of 1940. [To be completed by
amendment.]
--------------------------------------------------------------------------------------------------------
NAME AND POSITION WITH NAME AND PRINCIPAL BUSINESS CONNECTION WITH OTHER
INVESTMENT ADVISER ADDRESS OF OTHER COMPANY COMPANY
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
CLARIVEST ASSET MANAGEMENT LLC
ClariVest Asset Management LLC ("ClariVest") serves as an investment
sub-adviser for the Cornerstone Advisors Public Alternatives Fund. The
principal address of ClariVest is 11452 El Camino Real, Suite 250, San Diego,
California 92130. ClariVest is an investment adviser registered under the
Investment Advisers Act of 1940.
--------------------------------------------------------------------------------------------------------
NAME AND POSITION WITH NAME AND PRINCIPAL BUSINESS CONNECTION WITH OTHER
INVESTMENT ADVISER ADDRESS OF OTHER COMPANY COMPANY
--------------------------------------------------------------------------------------------------------
Richard Rossi Eagle Asset Management Inc. Director, President, Co-Chief
Manager 880 Carillon Parkway Operating Officer
St Petersburg, FL 33716
---------------------------------------------------------------------------------
ClariVest Asset Management LLC Manager
11452 El Camino Real
Suite 250
San Diego, CA 92130
--------------------------------------------------------------------------------------------------------
J. Cooper Abbott Eagle Asset Management Inc. Director, Executive Vice
Manager 880 Carillon Parkway President - Investments, Co-Chief
St Petersburg, FL 33716 Operating Officer
---------------------------------------------------------------------------------
ClariVest Asset Management LLC Manager
11452 El Camino Real
Suite 250
San Diego, CA 92130
--------------------------------------------------------------------------------------------------------
Courtland James Eagle Asset Management Inc. Vice President, Business
Manager 880 Carillon Parkway Development
St Petersburg, FL 33716
---------------------------------------------------------------------------------
ClariVest Asset Management LLC Manager
11452 El Camino Real
Suite 250
San Diego, CA 92130
--------------------------------------------------------------------------------------------------------
25
|
CORNERSTONE ADVISORS, INC.
Cornerstone Advisors, Inc. ("Cornerstone") serves as the investment adviser for
the Cornerstone Advisors Global Public Equity, Cornerstone Advisors Income
Opportunities, Cornerstone Advisors Public Alternatives and Cornerstone
Advisors Real Assets Funds. The principal address of Cornerstone is 225
108th Avenue NE, Suite 400, Bellevue, Washington 98004-5782. Cornerstone is an
investment adviser registered under the Investment Advisers Act of 1940.
--------------------------------------------------------------------------------------------------------
NAME AND POSITION WITH NAME AND PRINCIPAL BUSINESS CONNECTION WITH OTHER
INVESTMENT ADVISER ADDRESS OF OTHER COMPANY COMPANY
--------------------------------------------------------------------------------------------------------
William Savoy BSquare Director
Director / Shareholder 110 -- 110(th) Avenue NE, Suite 200
Bellevue, WA 98004
--------------------------------------------------------------------------------------------------------
William Cornelius Tum-a-Lum Lumber Interim CEO
Director 432 SE Dorion
Pendleton, OR 97801
--------------------------------------------------------------------------------------------------------
Anne Farrell Seattle Foundation President Emeritus
Director 1200 -- 5(th) Avenue, Suite 1300
Seattle, WA 98101
---------------------------------------------------------------------------------
REI Director
6750 S 228(th)
Kent, WA 98032
--------------------------------------------------------------------------------------------------------
CRAMER ROSENTHAL MCGLYNN LLC
Cramer Rosenthal McGlynn LLC ("CRM") serves as an investment sub-adviser for
the Cornerstone Advisors Global Public Equity Fund. The principal address of
CRM is 520 Madison Avenue, 20th Floor, New York, NY 10022. CRM is an investment
adviser registered under the Investment Advisers Act of 1940.
During the last two fiscal years, no director, officer or partner of CRM has
engaged in any other business, profession, vocation or employment of a
substantial nature in the capacity of director, officer, employee, partner or
trustee.
C. S. MCKEE, L.P.
C. S. McKee, L.P. ("C.S. McKee") serves as the investment adviser to the McKee
International Equity Portfolio. The principal address of C.S. McKee is One
Gateway Center, Pittsburgh, Pennsylvania 15222. C.S. McKee is an investment
adviser registered under the Investment Advisers Act of 1940. The information
listed below is for the fiscal years ended October 31, 2011 and 2012.
--------------------------------------------------------------------------------------------------------
NAME AND POSITION WITH NAME AND PRINCIPAL BUSINESS CONNECTION WITH OTHER
INVESTMENT ADVISER ADDRESS OF OTHER COMPANY COMPANY
--------------------------------------------------------------------------------------------------------
Gregory M. Melvin Dartmouth Capital, Inc. President
Chief Investment Officer 750 Stonegate Drive
Wexford, PA 15090
--------------------------------------------------------------------------------------------------------
26
|
DRIEHAUS CAPITAL MANAGEMENT LLC
Driehaus Capital Management LLC ("Driehaus") serves as an investment
sub-adviser for the Cornerstone Advisors Global Public Equity Fund. The
principal address of Driehaus is 25 East Erie Street, Chicago, IL 60611.
Driehaus is an investment adviser registered under the Investment Advisers Act
of 1940. The information listed below is as of December 31, 2012 and is true
for fiscal years 2011 and 2012 unless otherwise noted.
--------------------------------------------------------------------------------------------------------
NAME AND POSITION WITH NAME OF OTHER COMPANY CONNECTION WITH OTHER
INVESTMENT ADVISER COMPANY
--------------------------------------------------------------------------------------------------------
Richard H. Driehaus Driehaus Capital Holdings LLC* Chairman
Chairman and Chief ---------------------------------------------------------------------------
Investment Officer Driehaus Mutual Funds** Trustee
---------------------------------------------------------------------------
Driehaus Securities LLC*** Chairman
--------------------------------------------------------------------------------------------------------
Robert H. Gordon Driehaus Capital Holdings LLC* President and Chief Executive
President and Chief Officer
Executive Officer ---------------------------------------------------------------------------
Driehaus Mutual Funds** President since 2011; Senior
Vice President from 2006 to
2011.
---------------------------------------------------------------------------
Driehaus Securities LLC*** President and Chief Executive
Officer
--------------------------------------------------------------------------------------------------------
Janet L. McWilliams Driehaus Capital Holdings LLC* Senior Vice President and
Managing Director, Secretary since 2012.
Secretary and General ---------------------------------------------------------------------------
Counsel since 2012; Driehaus Mutual Funds** Assistant Vice President since
Assistant Vice President and 2006; Chief Compliance Officer
Chief Compliance Officer from 2006 to 2012.
from 2006 to 2012. ---------------------------------------------------------------------------
Driehaus Securities LLC*** Managing Director, Secretary
and General Counsel since 2012;
Assistant Vice President and
Chief Compliance Officer from
2006 to 2012.
--------------------------------------------------------------------------------------------------------
Michelle L. Cahoon Driehaus Capital Holdings LLC* Vice President, Treasurer and
Managing Director, Chief Financial Officer
Treasurer and Chief ---------------------------------------------------------------------------
Financial Officer Driehaus Mutual Funds** Vice President and Treasurer
---------------------------------------------------------------------------
Driehaus Securities LLC*** Managing Director, Treasurer
and Chief Financial Officer
--------------------------------------------------------------------------------------------------------
Stephen T. Weber Driehaus Securities LLC*** Managing Director, Sales and
Managing Director, Sales Relationship Management
and Relationship
Management
--------------------------------------------------------------------------------------------------------
Kaaren Sagastume Driehaus Securities LLC*** Managing Director, IT,
Managing Director, IT, Operations and Trading
Operations and Trading
--------------------------------------------------------------------------------------------------------
Thomas M. Seftenberg Driehaus Securities LLC*** Managing Director, Relationship
Managing Director, Management and Marketing
Relationship Management
and Marketing
--------------------------------------------------------------------------------------------------------
Michael R. Shoemaker Driehaus Mutual Funds** Assistant Vice President and
Assistant Vice President and Chief Compliance Officer
Chief Compliance Officer ---------------------------------------------------------------------------
since 2012; Associate Chief Driehaus Securities LLC*** Assistant Vice President and
Compliance Officer from Chief Compliance Officer
2011 to 2012; Senior ---------------------------------------------------------------------------
Compliance Analyst from Pacific Investment Management Compliance Officer from 2010
Company LLC to 2011.
860 Newport Center Drive
--------------------------------------------------------------------------------------------------------
27
|
--------------------------------------------------------------------------------------------------------
2007 to 2010. Newport Beach, CA 92660
--------------------------------------------------------------------------------------------------------
Michael P. Kailus Driehaus Mutual Funds** Assistant Secretary and Anti-
Assistant Secretary since Money Laundering Compliance
2010. Officer since 2010.
------------------------------------------------------------------------------
Driehaus Securities LLC*** Assistant Secretary since 2010.
------------------------------------------------------------------------------
Superfund USA, LLC Associate General Counsel from
850 W Jackson Blvd, Ste. 600 2005 to 2010.
Chicago, IL 60607
--------------------------------------------------------------------------------------------------------
* Driehaus Capital Holdings LLC, located at 25 East Erie Street, Chicago, IL
60611, is a holding company and is the majority owner of Driehaus Capital
Management LLC and Driehaus Securities LLC.
** Driehaus Mutual Funds, located at 25 East Erie Street, Chicago, IL 60611, is
an open-end management investment company registered with the U.S. Securities
and Exchange Commission under the Investment Company Act of 1940.
*** Driehaus Securities LLC, located at 25 East Erie Street, Chicago, IL 60611,
is a limited-purpose broker-dealer registered with the Financial Industry
Regulatory Authority ("FINRA") and the U.S. Securities and Exchange
Commission.
EDGEWOOD MANAGEMENT LLC
Edgewood Management LLC ("Edgewood") serves as the investment adviser to the
Edgewood Growth Fund. The principal address of Edgewood is 350 Park Avenue,
18th Floor, New York, New York 10022-6057. Edgewood is an investment adviser
registered under the Investment Advisers Act of 1940.
During the last two fiscal years, no director, officer or partner of Edgewood
has engaged in any other business, profession, vocation or employment of a
substantial nature in the capacity of director, officer, employee, partner or
trustee.
FAIRPOINTE CAPITAL LLC
Fairpointe Capital LLC ("Fairpointe") serves as an investment sub-adviser for
the Cornerstone Advisors Global Public Equity Fund. The principal address of
Fairpointe is One N. Franklin Street, Suite 3300, Chicago, IL 60606. Fairpointe
is an investment adviser registered under the Investment Advisers Act of 1940.
During the last two fiscal years, no director, officer or partner of Fairpointe
has engaged in any other business, profession, vocation or employment of a
substantial nature in the capacity of director, officer, employee, partner or
trustee.
28
|
FAYEZ SAROFIM & CO.
Fayez Sarofim & Co. ("Fayez Sarofim") serves as the investment adviser for the
Sarofim Equity Fund. The principal address of Fayez Sarofim is 2907 Two Houston
Center, 909 Fannin Street, Houston, Texas 77010. Fayez Sarofim is an investment
adviser registered under the Investment Advisers Act of 1940.
--------------------------------------------------------------------------------------------------------
NAME AND POSITION WITH NAME AND PRINCIPAL BUSINESS CONNECTION WITH OTHER
INVESTMENT ADVISER ADDRESS OF OTHER COMPANY COMPANY
--------------------------------------------------------------------------------------------------------
Fayez Sarofim Kemper Corporation Director
Chairman, Chief Executive One East Wacker Drive
Officer, Chief Investment Officer Chicago, IL 60601
and Director
--------------------------------------------------------------------------------------------------------
Sarofim Trust Co. Chairman
Two Houston Center
Suite 2907
Houston, TX 77010
--------------------------------------------------------------------------------------------------------
Sarofim Realty Advisors Co. Chairman and Director
8115 Preston Road
Suite 400
Dallas, TX 75225
--------------------------------------------------------------------------------------------------------
Sarofim International Chairman, Chief Executive
Management Company Officer, Chief Investment Officer
Two Houston Center and Director
Suite 2907
Houston, TX 77010
--------------------------------------------------------------------------------------------------------
Sarofim Advisors Group, Inc. Chairman, Chief Executive
Two Houston Center Officer, Chief Investment Officer
Suite 2907 and Director
Houston, TX 77010
--------------------------------------------------------------------------------------------------------
The Sarofim Group, Inc. Chairman, Chief Executive
Two Houston Center Officer and Director
Suite 2907
Houston, TX 77010
--------------------------------------------------------------------------------------------------------
Kinder Morgan, Inc. Director
500 Dallas
Suite 1000
Houston, TX 77002
--------------------------------------------------------------------------------------------------------
Kinder Morgan Holdco, LLC Board of Managers Member
500 Dallas
Suite 1000
Houston, TX 77002
--------------------------------------------------------------------------------------------------------
Artisan Network, Inc. Director
800 Peachtree Street NW
Atlanta, GA 30309
--------------------------------------------------------------------------------------------------------
Christopher B. Sarofim Kemper Corporation Director
Vice Chairman One East Wacker Drive
Chicago, IL 60601
--------------------------------------------------------------------------------------------------------
Sarofim Trust Co. Vice Chairman
Two Houston Center
Suite 2907
Houston, TX 77010
--------------------------------------------------------------------------------------------------------
Sarofim International Vice Chairman and President
Management Company
Two Houston Center
Suite 2907
Houston, TX 77010
--------------------------------------------------------------------------------------------------------
29
|
--------------------------------------------------------------------------------------------------------
Sarofim Advisors Group, Inc. Vice Chairman
Two Houston Center
Suite 2907
Houston, TX 77010
--------------------------------------------------------------------------------------------------------
The Sarofim Group, Inc. Vice Chairman
Two Houston Center
Suite 2907
Houston, TX 77010
--------------------------------------------------------------------------------------------------------
Raye G. White Sarofim Trust Co. President, Chief Executive
Executive Vice President, Two Houston Center Officer, Secretary, Treasurer and
Secretary, Treasurer and Director Suite 2907 Director
Houston, TX 77010
--------------------------------------------------------------------------------------------------------
Sarofim International Executive Vice President,
Management Company Secretary, Treasurer and Director
Two Houston Center
Suite 2907
Houston, TX 77010
--------------------------------------------------------------------------------------------------------
Sarofim Advisors Group, Inc. Executive Vice President,
Two Houston Center Secretary, Treasurer and Director
Suite 2907
Houston, TX 77010
--------------------------------------------------------------------------------------------------------
Sarofim Realty Advisors Co. Secretary, Treasurer and Director
8115 Preston Road
Suite 400
Dallas, TX 75225
--------------------------------------------------------------------------------------------------------
The Sarofim Group, Inc. Executive Vice President,
Two Houston Center Secretary, Treasurer and Director
Suite 2907
Houston, TX 77010
--------------------------------------------------------------------------------------------------------
William Gentry Lee, Jr., CFA Sarofim Trust Co. Senior Vice President
President Two Houston Center
Suite 2907
Houston, TX 77010
--------------------------------------------------------------------------------------------------------
Sarofim International Senior Vice President
Management Company
Two Houston Center
Suite 2907
Houston, TX 77010
--------------------------------------------------------------------------------------------------------
Sarofim Advisors Group, Inc. President
Two Houston Center
Suite 2907
Houston, TX 77010
--------------------------------------------------------------------------------------------------------
Sarofim Realty Advisors Co. Senior Vice President
8115 Preston Road
Suite 400
Dallas, TX 75225
--------------------------------------------------------------------------------------------------------
The Sarofim Group, Inc. President
Two Houston Center
Suite 2907
Houston, TX 77010
--------------------------------------------------------------------------------------------------------
30
|
--------------------------------------------------------------------------------------------------------
Jeffrey M. Jacobe, CFA Sarofim Trust Co. Senior Vice President and
Senior Vice President and Two Houston Center Director of Investments
Director of Investments Suite 2907
Houston, TX 77010
--------------------------------------------------------------------------------------------------------
Sarofim International Senior Vice President and
Management Company Director of Investments
Two Houston Center
Suite 2907
Houston, TX 77010
--------------------------------------------------------------------------------------------------------
Sarofim Advisors Group, Inc. Senior Vice President and
Two Houston Center Director of Investments
Suite 2907
Houston, TX 77010
--------------------------------------------------------------------------------------------------------
The Sarofim Group, Inc. Senior Vice President and
Two Houston Center Director of Investments
Suite 2907
Houston, TX 77010
--------------------------------------------------------------------------------------------------------
Ralph B. Thomas, CFA Sarofim Trust Co. Senior Vice President and
Senior Vice President Two Houston Center Director
Suite 2907
Houston, TX 77010
--------------------------------------------------------------------------------------------------------
Sarofim International Senior Vice President
Management Company
Two Houston Center
Suite 2907
Houston, TX 77010
--------------------------------------------------------------------------------------------------------
Sarofim Advisors Group, Inc. Senior Vice President
Two Houston Center
Suite 2907
Houston, TX 77010
--------------------------------------------------------------------------------------------------------
The Sarofim Group, Inc. Senior Vice President
Two Houston Center
Suite 2907
Houston, TX 77010
--------------------------------------------------------------------------------------------------------
Charles E. Sheedy, CFA Sarofim Trust Co. Senior Vice President and
Senior Vice President Two Houston Center Director
Suite 2907
Houston, TX 77010
--------------------------------------------------------------------------------------------------------
Sarofim Realty Advisors Co. Vice Chairman
8115 Preston Road
Suite 400
Dallas, TX 75225
--------------------------------------------------------------------------------------------------------
Sarofim International Senior Vice President
Management Company
Two Houston Center
Suite 2907
Houston, TX 77010
--------------------------------------------------------------------------------------------------------
Sarofim Advisors Group, Inc. Senior Vice President
Two Houston Center
Suite 2907
Houston, TX 77010
--------------------------------------------------------------------------------------------------------
31
|
--------------------------------------------------------------------------------------------------------
The Sarofim Group, Inc. Senior Vice President
Two Houston Center
Suite 2907
Houston, TX 77010
--------------------------------------------------------------------------------------------------------
Reynaldo Reza, CFA Sarofim Trust Co. Vice President
Vice President Two Houston Center
Suite 2907
Houston, TX 77010
--------------------------------------------------------------------------------------------------------
Sarofim International Vice President
Management Company
Two Houston Center
Suite 2907
Houston, TX 77010
--------------------------------------------------------------------------------------------------------
Sarofim Advisors Group, Inc. Vice President
Two Houston Center
Suite 2907
Houston, TX 77010
--------------------------------------------------------------------------------------------------------
The Sarofim Group, Inc. Vice President
Two Houston Center
Suite 2907
Houston, TX 77010
--------------------------------------------------------------------------------------------------------
Alan R. Christensen, CFA Sarofim Trust Co. Vice President and Chief
Vice President and Chief Two Houston Center Operating Officer
Operating Officer Suite 2907
Houston, TX 77010
--------------------------------------------------------------------------------------------------------
Sarofim International Vice President and Chief
Management Company Operating Officer
Two Houston Center
Suite 2907
Houston, TX 77010
--------------------------------------------------------------------------------------------------------
Sarofim Advisors Group, Inc. Vice President and Chief
Two Houston Center Operating Officer
Suite 2907
Houston, TX 77010
--------------------------------------------------------------------------------------------------------
The Sarofim Group, Inc. Vice President and Chief
Two Houston Center Operating Officer
Suite 2907
Houston, TX 77010
--------------------------------------------------------------------------------------------------------
Catherine P. Crain, CFA Sarofim Trust Co. Vice President
Vice President and Director of Two Houston Center
Marketing and Client Service Suite 2907
Houston, TX 77010
--------------------------------------------------------------------------------------------------------
Sarofim International Vice President
Management Company
Two Houston Center
Suite 2907
Houston, TX 77010
--------------------------------------------------------------------------------------------------------
Sarofim Advisors Group, Inc. Vice President
Two Houston Center
Suite 2907
Houston, TX 77010
--------------------------------------------------------------------------------------------------------
32
|
--------------------------------------------------------------------------------------------------------
The Sarofim Group, Inc. Vice President
Two Houston Center
Suite 2907
Houston, TX 77010
--------------------------------------------------------------------------------------------------------
Robert M. Hopson III Sarofim Trust Co. Vice President
Vice President Two Houston Center
Suite 2907
Houston, TX 77010
--------------------------------------------------------------------------------------------------------
Sarofim International Vice President
Management Company
Two Houston Center
Suite 2907
Houston, TX 77010
--------------------------------------------------------------------------------------------------------
Sarofim Advisors Group, Inc. Vice President
Two Houston Center
Suite 2907
Houston, TX 77010
--------------------------------------------------------------------------------------------------------
The Sarofim Group, Inc. Vice President
Two Houston Center
Suite 2907
Houston, TX 77010
--------------------------------------------------------------------------------------------------------
David T. Searls III Sarofim Trust Co. Vice President
Vice President Two Houston Center
Suite 2907
Houston, TX 77010
--------------------------------------------------------------------------------------------------------
Sarofim International Vice President
Management Company
Two Houston Center
Suite 2907
Houston, TX 77010
--------------------------------------------------------------------------------------------------------
Sarofim Advisors Group, Inc. Vice President
Two Houston Center
Suite 2907
Houston, TX 77010
--------------------------------------------------------------------------------------------------------
The Sarofim Group, Inc. Vice President
Two Houston Center
Suite 2907
Houston, TX 77010
--------------------------------------------------------------------------------------------------------
Credit Suisse Securities (USA) Director, Private Bank
LLC
11 Madison Avenue
New York, NY 10010
--------------------------------------------------------------------------------------------------------
Daniel S. Crumrine Sarofim Trust Co. Vice President and Chief
Vice President and Chief Two Houston Center Financial Officer
Financial Officer Suite 2907
Houston, TX 77010
--------------------------------------------------------------------------------------------------------
Sarofim Realty Advisors Co. Vice President and Chief
8115 Preston Road Financial Officer
Suite 400
Dallas, TX 75225
--------------------------------------------------------------------------------------------------------
33
|
--------------------------------------------------------------------------------------------------------
Sarofim International Vice President and Chief
Management Company Financial Officer
Two Houston Center
Suite 2907
Houston, TX 77010
--------------------------------------------------------------------------------------------------------
Sarofim Advisors Group, Inc. Vice President and Chief
Two Houston Center Financial Officer
Suite 2907
Houston, TX 77010
--------------------------------------------------------------------------------------------------------
The Sarofim Group, Inc. Vice President and Chief
Two Houston Center Financial Officer
Suite 2907
Houston, TX 77010
--------------------------------------------------------------------------------------------------------
Nancy Gilbert Sarofim Trust Co. Vice President
Vice President Two Houston Center
Suite 2907
Houston, TX 77010
--------------------------------------------------------------------------------------------------------
Sarofim International Vice President
Management Company
Two Houston Center
Suite 2907
Houston, TX 77010
--------------------------------------------------------------------------------------------------------
Sarofim Advisors Group, Inc. Vice President
Two Houston Center
Suite 2907
Houston, TX 77010
--------------------------------------------------------------------------------------------------------
The Sarofim Group, Inc. Vice President
Two Houston Center
Suite 2907
Houston, TX 77010
--------------------------------------------------------------------------------------------------------
John M. Ratcliff Sarofim Trust Co. Vice President
Vice President Two Houston Center
Suite 2907
Houston, TX 77010
--------------------------------------------------------------------------------------------------------
Sarofim Realty Advisors Co. Vice President
8115 Preston Road
Suite 400
Dallas, TX 75225
--------------------------------------------------------------------------------------------------------
Sarofim International Vice President
Management Company
Two Houston Center
Suite 2907
Houston, TX 77010
--------------------------------------------------------------------------------------------------------
Sarofim Advisors Group, Inc. Vice President
Two Houston Center
Suite 2907
Houston, TX 77010
--------------------------------------------------------------------------------------------------------
The Sarofim Group, Inc. Vice President
Two Houston Center
Suite 2907
Houston, TX 77010
--------------------------------------------------------------------------------------------------------
FIRST MANHATTAN CO.
First Manhattan Co. ("FMC") serves as the investment adviser for the FMC Select
Fund and FMC Strategic Value Fund. The principal address of FMC is 399 Park
Avenue, New York, New York 10022-7001. FMC is an investment adviser registered
under the Investment Advisers Act of 1940. The information listed below is for
the fiscal years ended October 31, 2010 and 2011.
34
|
--------------------------------------------------------------------------------------------------------
NAME AND POSITION WITH NAME OF OTHER COMPANY CONNECTION WITH OTHER
INVESTMENT ADVISER COMPANY
--------------------------------------------------------------------------------------------------------
David Sanford Gottesman, Berkshire Hathaway, Inc. Member, Board of Directors
Senior Managing Director ---------------------------------------------------------------------------
American Museum of Natural Trustee
History
---------------------------------------------------------------------------
Mount Sinai Center Trustee
---------------------------------------------------------------------------
Yeshiva University Trustee
--------------------------------------------------------------------------------------------------------
Daniel Rosenbloom, Senior NYU Medical Center Associate Trustee
Managing Director ---------------------------------------------------------------------------
National Foundation for Facial Trustee
Reconstruction
--------------------------------------------------------------------------------------------------------
Charles M. Rosenthal, Senior Carnegie Hall Trustee
Managing Director ---------------------------------------------------------------------------
Marine Biological Laboratory Trustee
--------------------------------------------------------------------------------------------------------
Arthur Joel Stainman, Senior Ark Restaurants Corp. Member, Board of Directors
Managing Director ---------------------------------------------------------------------------
Rider University Trustee
--------------------------------------------------------------------------------------------------------
Robert W. Gottesman, Chief Gruss Foundation Trustee
Executive Officer and Senior
Managing Director
--------------------------------------------------------------------------------------------------------
William F. Guardenier, John Hart Hunter Foundation Trustee
Senior Managing Director ---------------------------------------------------------------------------
New Hampton School Trustee
--------------------------------------------------------------------------------------------------------
HAMLIN CAPITAL MANAGEMENT, LLC
Hamlin Capital Management, LLC ("Hamlin") serves as the investment adviser for
the Hamlin High Dividend Equity Fund. The principal address of Hamlin is 640
Fifth Avenue, 6th Floor, New York, NY 10019. Hamlin is an investment adviser
registered under the Investment Advisers Act of 1940.
--------------------------------------------------------------------------------------------------------
NAME AND POSITION WITH NAME AND PRINCIPAL BUSINESS CONNECTION WITH OTHER
INVESTMENT ADVISER ADDRESS OF OTHER COMPANY COMPANY
--------------------------------------------------------------------------------------------------------
Mark Stitzer -- Managing Hamlin Capital Advisors, LLC Owner
Partner 5550 West Executive Drive,
Suite 540
Tampa, FL 33609
--------------------------------------------------------------------------------------------------------
Joseph Bridy -- Partner & Hamlin Capital Advisors, LLC Owner
Fixed Income Portfolio 5550 West Executive Drive,
Manager Suite 540
Tampa, FL 33609
--------------------------------------------------------------------------------------------------------
Chris D'Agnes -- Partner Hamlin Capital Advisors, LLC Owner
& Equity Portfolio 5550 West Executive Drive,
Manager Suite 540
Tampa, FL 33609
--------------------------------------------------------------------------------------------------------
Charlie Garland -- Partner Hamlin Capital Advisors, LLC Owner
and Equity Portfolio 5550 West Executive Drive,
Manager Suite 540
Tampa, FL 33609
--------------------------------------------------------------------------------------------------------
Deborah Finegan -- Partner Hamlin Capital Advisors, LLC Owner
& Chief Operating Officer 5550 West Executive Drive,
Suite 540
Tampa, FL 33609
--------------------------------------------------------------------------------------------------------
35
|
HARRIS ASSOCIATES L.P.
Harris Associates L.P. ("Harris") is a registered investment adviser under the
Investment Advisers Act of 1940. Harris serves as an investment sub-adviser for
the Cornerstone Advisors Global Public Equity Fund. The directors and executive
officers of Harris, or Harris Associates, Inc. ("HAI"), its general partner,
have had as their sole business, profession, vocation or employment during the
past two years only their duties as executive officers/employees of Harris;
Harris' ultimate parent company, Natixis Global Asset Management ("NGAM"); HAI;
Harris Associates Investment Trust ("HAIT"), a U.S. registered investment
company consisting of the seven Oakmark Funds for which Harris serves as the
advisor and sponsor; and/or Harris Associates Securities L.P. ("HASLP"), an
affiliated limited-purpose broker-dealer of which Harris is a limited partner.
The business address of Harris, HAI, HAIT and HASLP is Two North LaSalle Street,
Suite 500, Chicago, Illinois 60602.
--------------------------------------------------------------------------------------------------------
NAME AND POSITION WITH NAME OF OTHER COMPANY CONNECTION WITH OTHER
INVESTMENT ADVISER COMPANY
--------------------------------------------------------------------------------------------------------
Robert M. Levy HAI Director, Chairman and Chief
Chairman, Chief Investment Investment Officer, Domestic
Officer, Domestic Equity and Equity
Portfolio Manager ------------------------------------------------------------------------
HAIT Executive Vice President
------------------------------------------------------------------------
HASLP Chairman and Chief Investment
Officer, Domestic Equity
--------------------------------------------------------------------------------------------------------
Kristi L. Rowsell HAI Director and President
President ------------------------------------------------------------------------
HAIT Trustee and President
------------------------------------------------------------------------
HASLP President
--------------------------------------------------------------------------------------------------------
Anthony P. Coniaris HAIT Portfolio Manager (Oakmark
Portfolio Manager and Analyst Select Fund), since 2013
--------------------------------------------------------------------------------------------------------
John N. Desmond HAI Chief Operating Officer
Chief Operating Officer ------------------------------------------------------------------------
HAIT Vice President
------------------------------------------------------------------------
HASLP Chief Operating Officer
--------------------------------------------------------------------------------------------------------
Thomas E. Herman HAI Chief Financial Officer and
Chief Financial Officer and Treasurer
Treasurer ------------------------------------------------------------------------
HAIT Principal Financial Officer, since
2011
------------------------------------------------------------------------
HASLP Chief Financial Officer and
Treasurer
--------------------------------------------------------------------------------------------------------
David G. Herro HAI Director, Vice President and
Vice President, Chief Chief Investment Officer,
Investment Officer, International Equity
International Equity, Portfolio ------------------------------------------------------------------------
Manager and Analyst HAIT Vice President and Portfolio
Manager (Oakmark Global Select
Fund, Oakmark International
Fund and Oakmark International
Small Cap Fund)
--------------------------------------------------------------------------------------------------------
Edward S. Loeb HAI Vice President, since 2012
Vice President and Portfolio
Manager
--------------------------------------------------------------------------------------------------------
Colin P. McFarland HAI Chief Compliance Officer
Chief Compliance Officer
--------------------------------------------------------------------------------------------------------
Clyde S. McGregor HAI Vice President
Vice President and Portfolio ------------------------------------------------------------------------
Manager HAIT Vice President and Portfolio
Manager (Oakmark Equity and
Income Fund and Oakmark
Global Fund)
--------------------------------------------------------------------------------------------------------
Thomas W. Murray HAI Vice President and Director of
Vice President, Director of Domestic Research, since 2012
Domestic Research, Portfolio ------------------------------------------------------------------------
Manager and Analyst HAIT Vice President and Portfolio
Manager (Oakmark Select Fund),
since 2013
--------------------------------------------------------------------------------------------------------
Michael J. Neary HAI Managing Director, Marketing
and Client Relations
--------------------------------------------------------------------------------------------------------
36
|
--------------------------------------------------------------------------------------------------------
Vice President and Managing
Director, Marketing and Client HAIT Vice President
Relations
--------------------------------------------------------------------------------------------------------
William C. Nygren HAI Vice President
Vice President, Portfolio -------------------------------------------------------------------------
Manager and Analyst HAIT Vice President and Portfolio
Manager (Oakmark Fund,
Oakmark Select Fund and
Oakmark Global Select Fund)
--------------------------------------------------------------------------------------------------------
Janet L. Reali HAI Director, Vice President, General
Vice President, General Counsel and Secretary
Counsel and Secretary -------------------------------------------------------------------------
HAIT Vice President, Secretary and
Chief Legal Officer
-------------------------------------------------------------------------
HASLP General Counsel and Chief
Compliance Officer
--------------------------------------------------------------------------------------------------------
Robert A. Taylor HAI Vice President and Director of
Vice President, Director of International Research
International Research, -------------------------------------------------------------------------
Portfolio Manager and Analyst HAIT Vice President and Portfolio
Manager (Oakmark Global Fund
and Oakmark International Fund)
--------------------------------------------------------------------------------------------------------
Pierre Servant HAI Director
-------------------------------------------------------------------------
Natixis Global Asset Chief Executive Officer and
Management Member of Executive Committee
21 quai d'Austerlitz 75013
Paris, France
--------------------------------------------------------------------------------------------------------
John Hailer HAI Director
-------------------------------------------------------------------------
Natixis Global Asset President and Chief Executive
Management LLC Officer
399 Boylston Street
Boston, MA 02116
--------------------------------------------------------------------------------------------------------
HARVEST GLOBAL INVESTMENTS LIMITED
Harvest Global Investments Limited ("Harvest") serves as the investment adviser
for the Harvest China All Assets Fund and the Harvest Intermediate Bond Fund.
The principal address of Harvest is 31/F One Exchange Square, 8 Connaught
Place, Central Hong Kong. Harvest is an investment adviser registered under the
Investment Advisers Act of 1940. [To be completed by amendment.]
--------------------------------------------------------------------------------------------------------
NAME AND POSITION WITH NAME AND PRINCIPAL BUSINESS CONNECTION WITH OTHER
INVESTMENT ADVISER ADDRESS OF OTHER COMPANY COMPANY
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
HAVERFORD FINANCIAL SERVICES, INC.
Haverford Financial Services, Inc. ("Haverford") serves as the investment
adviser for the Haverford Quality Growth Stock Fund. The principal address of
Haverford is Three Radnor Corporate Center, Suite 450, Radnor, Pennsylvania
19087-4546. Haverford is an investment adviser registered under the Investment
Advisers Act of 1940. The information listed below is for the fiscal years
ended October 31, 2011 and 2012.
--------------------------------------------------------------------------------------------------------
NAME AND POSITION WITH NAME AND PRINCIPAL BUSINESS CONNECTION WITH OTHER
INVESTMENT ADVISER ADDRESS OF OTHER COMPANY COMPANY
--------------------------------------------------------------------------------------------------------
George W. Connell The Haverford Trust Company Vice Chairman & Indirect Owner
--------------------------------------------------------------------------------------------------------
37
|
--------------------------------------------------------------------------------------------------------
NAME AND POSITION WITH NAME AND PRINCIPAL BUSINESS CONNECTION WITH OTHER
INVESTMENT ADVISER ADDRESS OF OTHER COMPANY COMPANY
--------------------------------------------------------------------------------------------------------
Vice Chairman & Owner 3 Radnor Corporate Center,
Suite 450
Radnor, PA 19087
------------------------------------------------------------------------------
Haverford Trust Securities, Inc. Vice Chairman & Indirect Owner
3 Radnor Corporate Center,
Suite 450
Radnor, PA 19087
------------------------------------------------------------------------------
Drexel Morgan & Co. CEO, President & Owner
3 Radnor Corporate Center,
Suite 450
Radnor, PA 19087
------------------------------------------------------------------------------
Drexel Morgan Capital Advisers, Director, Indirect Owner
Inc.
3 Radnor Corporate Center,
Suite 305
Radnor, PA 19087
--------------------------------------------------------------------------------------------------------
Joseph J. McLaughlin The Haverford Trust Company Chairman & CEO
Chairman, CEO & President 3 Radnor Corporate Center,
Suite 450
Radnor, PA 19087
------------------------------------------------------------------------------
Haverford Trust Securities, Inc. Registered Representative
3 Radnor Corporate Center,
Suite 450
Radnor, PA 19087
--------------------------------------------------------------------------------------------------------
Binney H. C. Wietlisbach The Haverford Trust Company President
Executive Vice President 3 Radnor Corporate Center,
Suite 450
Radnor, PA 19087
------------------------------------------------------------------------------
Haverford Trust Securities, Inc. CEO & President
3 Radnor Corporate Center,
Suite 450
Radnor, PA 19087
--------------------------------------------------------------------------------------------------------
Henry B. Smith The Haverford Trust Company Vice President & CIO
Vice President and CIO 3 Radnor Corporate Center,
Suite 450
Radnor, PA 19087
------------------------------------------------------------------------------
Haverford Trust Securities, Inc. Registered Representative
3 Radnor Corporate Center,
Suite 450
Radnor, PA 19087
--------------------------------------------------------------------------------------------------------
38
|
--------------------------------------------------------------------------------------------------------
NAME AND POSITION WITH NAME AND PRINCIPAL BUSINESS CONNECTION WITH OTHER
INVESTMENT ADVISER ADDRESS OF OTHER COMPANY COMPANY
--------------------------------------------------------------------------------------------------------
David Brune The Haverford Trust Company Vice President
Vice President 3 Radnor Corporate Center,
Suite 450
Radnor, PA 19087
-------------------------------------------------------------------------------
Haverford Trust Securities, Inc. Registered Representative
3 Radnor Corporate Center,
Suite 450
Radnor, PA 19087
--------------------------------------------------------------------------------------------------------
John H. Donaldson The Haverford Trust Company Vice President
Vice President 3 Radnor Corporate Center,
Suite 450
Radnor, PA 19087
--------------------------------------------------------------------------------------------------------
Timothy A. Hoyle The Haverford Trust Company Vice President
Vice President 3 Radnor Corporate Center,
Suite 450
Radnor, PA 19087
-------------------------------------------------------------------------------
Haverford Trust Securities, Inc. Registered Representative
3 Radnor Corporate Center,
Suite 450
Radnor, PA 19087
--------------------------------------------------------------------------------------------------------
Jeffrey M. Bagley The Haverford Trust Company Vice President
Vice President 3 Radnor Corporate Center,
Suite 450
Radnor, PA 19087
--------------------------------------------------------------------------------------------------------
MarieElena V. Ness The Haverford Trust Company VP & Chief Compliance Officer
Chief Compliance Officer 3 Radnor Corporate Center,
Suite 450
Radnor, PA 19087
-------------------------------------------------------------------------------
Haverford Trust Securities, Inc. VP & Chief Compliance Officer
3 Radnor Corporate Center,
Suite 450
Radnor, PA 19087
-------------------------------------------------------------------------------
Drexel Morgan & Co. VP & Chief Compliance Officer
3 Radnor Corporate Center,
Suite 450
Radnor, PA 19087
-------------------------------------------------------------------------------
Regulatory Compliance Assistance, Sole Member
LLC
--------------------------------------------------------------------------------------------------------
39
|
INVESTMENT COUNSELORS OF MARYLAND, LLC
Investment Counselors of Maryland, LLC ("ICM") serves as the investment adviser
to the ICM Small Company Portfolio. The principal address of ICM is 803
Cathedral Street, Baltimore, Maryland 21201. ICM is an investment adviser
registered under the Investment Advisers Act of 1940. The information listed
below is for the fiscal years ended October 31, 2011 and 2012.
--------------------------------------------------------------------------------------------------------
NAME AND POSITION WITH NAME AND PRINCIPAL BUSINESS CONNECTION WITH OTHER
INVESTMENT ADVISER ADDRESS OF OTHER COMPANY COMPANY
--------------------------------------------------------------------------------------------------------
William V. Heaphy, CFA Cognapse, Inc. Director
CIO, Portfolio Manager 458 Main Street
Reisterstown, MD 21136
--------------------------------------------------------------------------------------------------------
KAYNE ANDERSON CAPITAL ADVISORS, L.P.
Kayne Anderson Capital Advisors, L.P. ("KACALP") serves as an investment
sub-adviser for the Cornerstone Advisors Real Assets Fund. The principal
address of KACALP is 1800 Avenue of the Stars, Third Floor, Los Angeles,
California 90067. KACALP is an investment adviser registered under the
Investment Advisers Act of 1940.
During the last two fiscal years, the KACALP portfolio manager responsible for
the management of the Cornerstone Advisors Real Assets Fund has not engaged in
any other business profession, vocation or employment of a substantial nature
in the capacity of director, officer, employee, partner or trustee.
LOOMIS, SAYLES & COMPANY, L.P.
Loomis, Sayles & Company, L.P. ("Loomis Sayles") serves as the investment
adviser to the Loomis Sayles Full Discretion Institutional Securitized Fund.
The address of Loomis Sayles is One Financial Center, Boston, Massachusetts
02111. Loomis Sayles is an investment adviser registered under the Investment
Advisers Act of 1940. The information listed below is for the fiscal years
ended October 31, 2011 and 2012. Unless otherwise noted, the principal address
of each business listed below is One Financial Center, Boston, Massachusetts
02111.
--------------------------------------------------------------------------------------------------------
NAME AND POSITION WITH NAME AND PRINCIPAL BUSINESS CONNECTION WITH OTHER
INVESTMENT ADVISER ADDRESS OF OTHER COMPANY COMPANY
--------------------------------------------------------------------------------------------------------
Robert J. Blanding Loomis Sayles Funds I President, CEO and Trustee
Chairman, President and ------------------------------------------------------------------------------
Chief Executive Officer Loomis Sayles Funds II CEO and Trustee
------------------------------------------------------------------------------
Natixis Funds Trust I Trustee
------------------------------------------------------------------------------
Natixis Funds Trust II Trustee
------------------------------------------------------------------------------
Natixis Funds Trust III Trustee
------------------------------------------------------------------------------
Natixis Funds Trust IV Trustee
------------------------------------------------------------------------------
Gateway Trust Trustee
------------------------------------------------------------------------------
Hansberger International Series Trustee
------------------------------------------------------------------------------
Loomis Sayles Distributors, Inc. Director
------------------------------------------------------------------------------
Loomis Sayles Investments Asia Director
Pte. Ltd.
------------------------------------------------------------------------------
Loomis Sayles Investments Alternate Director
Limited
--------------------------------------------------------------------------------------------------------
Daniel J. Fuss Loomis Sayles Funds I Executive Vice President
Vice Chairman and ------------------------------------------------------------------------------
Executive Vice Loomis Sayles Funds II Executive Vice President
President
--------------------------------------------------------------------------------------------------------
Pierre P. Servant Natixis Global Asset Management President and CEO
Director 300 Boylston Street
Boston, MA 02116
------------------------------------------------------------------------------
Natixis Member of the Executive
Committee
--------------------------------------------------------------------------------------------------------
John T. Hailer NGAM Advisors, L.P. President and CEO
Director ------------------------------------------------------------------------------
Natixis Global Asset Management, President and CEO
L.P.
------------------------------------------------------------------------------
Natixis Funds Trust I Trustee
------------------------------------------------------------------------------
Natixis Funds Trust II Trustee
------------------------------------------------------------------------------
Natixis Funds Trust III Trustee
------------------------------------------------------------------------------
Natixis Funds Trust IV Trustee
------------------------------------------------------------------------------
Natixis Cash Management Trust Trustee
------------------------------------------------------------------------------
Gateway Trust Trustee
------------------------------------------------------------------------------
Hansberger International Series Trustee
------------------------------------------------------------------------------
Loomis Sayles Funds I Trustee
------------------------------------------------------------------------------
Loomis Sayles Funds II Trustee
--------------------------------------------------------------------------------------------------------
Kevin P. Charleston Loomis Sayles Trust Co., LLC Manager and President
Executive Vice
President and Chief
Financial Officer
--------------------------------------------------------------------------------------------------------
John F. Gallagher III Loomis Sayles Distributors, Inc. President
Executive Vice
President and Director
of Institutional Services
--------------------------------------------------------------------------------------------------------
40
|
--------------------------------------------------------------------------------------------------------
NAME AND POSITION WITH NAME AND PRINCIPAL BUSINESS CONNECTION WITH OTHER
INVESTMENT ADVISER ADDRESS OF OTHER COMPANY COMPANY
--------------------------------------------------------------------------------------------------------
Lauriann Kloppenburg Loomis Sayles Trust Co., LLC Manager
Executive Vice
President and Chief
Strategy Officer
--------------------------------------------------------------------------------------------------------
Jean S. Loewenberg Loomis Sayles Distributors, Inc. Director
Executive Vice ------------------------------------------------------------------------------
President, General Loomis Sayles Trust Co., LLC Manager and Secretary
Counsel and Secretary
--------------------------------------------------------------------------------------------------------
LSV ASSET MANAGEMENT
LSV Asset Management ("LSV") serves as the investment adviser to the LSV Value
Equity Fund, the LSV Conservative Core Equity Fund and the LSV Conservative
Value Equity Fund. LSV serves as the investment sub-adviser to the Cornerstone
Advisors Global Public Equity Fund. The address of LSV is 155 North Wacker
Drive, Suite 4600, Chicago, Illinois 60606. LSV is an investment adviser
registered under the Investment Advisers Act of 1940.
During the last two fiscal years, no director, officer or partner of LSV has
engaged in any other business, profession, vocation or employment of a
substantial nature in the capacity of director, officer, employee, partner or
trustee.
MARSICO CAPITAL MANAGEMENT, LLC
Marsico Capital Management, LLC ("Marsico") serves as an investment sub-adviser
for the Cornerstone Advisors Global Public Equity Fund. The principal address
of Marsico is 1200 17th Street, Suite 1600,
41
|
Denver, CO 80202. Marsico is an investment adviser registered under the
Investment Advisers Act of 1940.
During the last two fiscal years, no director, officer or partner of Marsico
has engaged in any other business, profession, vocation or employment of a
substantial nature in the capacity of director, officer, employee, partner or
trustee.
OFI STEELPATH, INC.
OFI SteelPath, Inc. ("OFI SteelPath") serves as an investment sub-adviser for
the Cornerstone Advisors Income Opportunities Fund. The principal address of
OFI SteelPath is 2100 McKinney Ave., Suite 1401, Dallas, Texas 75201. OFI
SteelPath is an investment adviser registered under the Investment Advisers Act
of 1940.
--------------------------------------------------------------------------------------------------------
NAME AND POSITION WITH NAME AND PRINCIPAL BUSINESS CONNECTION WITH OTHER
INVESTMENT ADVISER ADDRESS OF OTHER COMPANY COMPANY
--------------------------------------------------------------------------------------------------------
Gabriel Hammond GKD Index Partners, LLC Majority Partner
CEO, Portfolio Manager 1717 McKinney Avenue
Suite 1450
Dallas, TX 75202
---------------------------------------------------------------------------------
PostRock Energy Corp. Past Board Member (2011)
210 Park Ave.
Suite 2750
Oklahoma City, OK 73102
--------------------------------------------------------------------------------------------------------
James McCain Ranger Funds Investment Trust Independent Trustee
CCO 300 Crescent Court, Ste. 1100
Dallas, TX 75201
--------------------------------------------------------------------------------------------------------
PARAMETRIC PORTFOLIO ASSOCIATES LLC
Parametric Portfolio Associates LLC ("Parametric") serves as an investment
sub-adviser for the Cornerstone Advisors Global Public Equity Fund. The
principal address of Parametric is 1918 Eighth Avenue, Suite 3100, Seattle,
Washington 98101. Parametric is an investment adviser registered under the
Investment Advisers Act of 1940.
During the last two fiscal years, no director, officer or partner of Parametric
has engaged in any other business, profession, vocation or employment of a
substantial nature in the capacity of director, officer, employee, partner or
trustee.
PENNANT MANAGEMENT, INC.
Pennant Management, Inc. ("Pennant") serves as the investment adviser to the
USFS Funds Limited Duration Government Fund and USFS Funds Tactical Asset
Allocation Fund. The address of Pennant is 11270 West Park Place, Suite 1025,
Milwaukee, Wisconsin 53224. Pennant is an investment adviser registered under
the Investment Advisers Act of 1940. The information listed below is for the
fiscal years ended December 31, 2010 and 2011.
42
|
--------------------------------------------------------------------------------------------------------
NAME AND POSITION WITH NAME OF OTHER COMPANY CONNECTION WITH OTHER COMPANY
INVESTMENT ADVISER
--------------------------------------------------------------------------------------------------------
Mark A. Elste U.S. Fiduciary Services Senior Executive Vice President, COO
CIO -----------------------------------------------------------------------------
GreatBanc Trust Company Director
-----------------------------------------------------------------------------
Salem Trust Company Director
-----------------------------------------------------------------------------
USF Affiliate Services, Inc. Director
-----------------------------------------------------------------------------
Waretech, Inc. Director
-----------------------------------------------------------------------------
CIB Marine Bancshares, Inc. Director
(CIBM)
--------------------------------------------------------------------------------------------------------
Scott M. Conger, Chief Stone Pillar Advisors, Ltd Director, Treasury Analysis
Compliance Officer, Senior -----------------------------------------------------------------------------
Vice President AMCORE Bank, N.A. Vice President & Assistant Treasurer
--------------------------------------------------------------------------------------------------------
Michael Welgat U.S. Fiduciary Services CEO, President, Director
Director GreatBanc Trust Company Director
Salem Trust Company Director
USF Affiliate Services, Inc. Director
Waretech, Inc. Director
--------------------------------------------------------------------------------------------------------
Todd C. Johnson U.S. Fiduciary Services Director
Director Todd C. Johnson CPA
Affinity, Inc. Director
DigiTenna, Inc. Director
Jaws, Inc. Director & Officer
PB Properties, LLC Managing Partner
ALJ Family Partnership General Partner
Carl & Irma Swenson Director & Officer
Foundation Director & Officer
RAJ Ministries Director / Officer
New Beginnings Are
Possible
--------------------------------------------------------------------------------------------------------
PHOCAS FINANCIAL CORPORATION
Phocas Financial Corporation ("Phocas") serves as an investment sub-adviser for
the Cornerstone Advisors Global Public Equity Fund. The principal address of
Phocas is 980 Atlantic Avenue, Suite 106, Alameda, CA 94501. Phocas is an
investment adviser registered under the Investment Advisers Act of 1940.
During the last two fiscal years, no director, officer or partner of Phocas has
engaged in any other business, profession, vocation or employment of a
substantial nature in the capacity of director, officer, employee, partner or
trustee.
PNC CAPITAL ADVISORS, LLC
PNC Capital Advisors, LLC ("PNC Capital") serves as investment adviser to the
United Association S&P 500 Index Fund. PNC Capital was formed as a result of
the merger of Allegiant Asset Management Company, the former investment adviser
to the United Association S&P 500 Index Fund, with its affiliate, PNC Capital
Advisors, Inc. PNC Capital is a Delaware limited liability company and an
indirect wholly owned subsidiary of The PNC Financial Services Group, Inc.
("PNC"), a publicly held bank holding company, and is registered as an
investment adviser under the Investment Advisers Act of 1940.
43
|
Effective January 1, 2009, Allegiant Asset Management Company became an indirect
wholly owned subsidiary of PNC. Prior to such date, Allegiant Asset Management
Company was an indirect wholly owned subsidiary of National City Corporation.
PNC Capital also provides investment advisory to other institutions and
individuals and provides investment advisory and administrative services to
other investment companies
The information listed below is for the fiscal years ended October 31, 2011 and
2012.
--------------------------------------------------------------------------------------------------------
NAME AND POSITION WITH NAME AND PRINCIPAL BUSINESS CONNECTION WITH OTHER
INVESTMENT ADVISER ADDRESS OF OTHER COMPANY COMPANY
--------------------------------------------------------------------------------------------------------
Kevin A. McCreadie PNC Bank Executive Vice President
Director, President and Chief 22 Delaware Avenue
Executive Officer Wilmington DE 19801
--------------------------------------------------------------------------
PNC Funds, PNC Advantage Funds President
and PNC IG Fund GP, LLC
One East Pratt Street -- 5th Floor
Baltimore, MD 21202
--------------------------------------------------------------------------------------------------------
Robert Q. Reilly PNC Bank Executive Vice President
Director 22 Delaware Avenue
Wilmington DE 19801
--------------------------------------------------------------------------------------------------------
Bryan K. Garlock PNC Bank Executive Vice President &
Director 22 Delaware Avenue Chief Operating Officer
Wilmington DE 19801
--------------------------------------------------------------------------------------------------------
Jennifer A. Laclair PNC Bank Chief Financial Officer, Asset
Director 22 Delaware Avenue Management Group division
Wilmington DE 19801
--------------------------------------------------------------------------------------------------------
RICE HALL JAMES & ASSOCIATES, LLC
Rice Hall James & Associates, LLC ("Rice Hall James") serves as the investment
adviser to the Rice Hall James Micro Cap Portfolio, Rice Hall James Mid Cap
Portfolio and Rice Hall James Small Cap Portfolio. The principal address of
Rice Hall James is 600 West Broadway, Suite 1000, San Diego, California
92101-3383. Rice Hall James is an investment adviser registered under the
Investment Advisers Act of 1940.
For the fiscal years ended October 31, 2011 and 2012, none of the directors,
officers or partners of Rice Hall James is or has been engaged in any other
business, profession, vocation or employment of a substantial nature for his or
her own account or in the capacity of director, officer, employee, partner or
trustee.
SANDS CAPITAL MANAGEMENT, LLC
Sands Capital Management, LLC ("Sands Capital") serves as the investment
adviser to the Sands Capital Global Growth Fund. The principal address of Sands
Capital is 1101 Wilson Boulevard, Suite 2300, Arlington, VA 22209. Sands
Capital is an investment adviser registered under the Investment Advisers Act
of 1940.
For the fiscal years ended October 31, 2011 and 2012, none of the directors,
officers or partners of Sands Capital is or has been engaged in any other
business, profession, vocation or employment of a substantial nature for his or
her own account or in the capacity of director, officer, employee, partner or
trustee.
SKY HARBOR CAPITAL MANAGEMENT, LLC
SKY Harbor Capital Management LLC ("SKY Harbor") serves as investment
sub-adviser for the Registrant's Westwood Short Duration High Yield Fund. The
principal address of SKY Harbor is 20
44
|
Horseneck Lane, Greenwich, CT 06830. SKY Harbor is an investment adviser
registered with the SEC under the Investment Advisers Act of 1940.
SKY Harbor's Board consists of three management directors who are the
co-founders of the firm and three outside directors. For the fiscal years ended
October 31, 2011 and 2012, none of the management directors, officers or
employees of SKY Harbor is or has been engaged in any other business,
profession, vocation or employment of a substantial nature for his or her own
account or in the capacity of director, officer, employee, partner or trustee.
The outside directors of SKY Harbor are engaged in other activities as set
forth in the chart below.
--------------------------------------------------------------------------------------------------------
NAME AND POSITION WITH NAME AND PRINCIPAL BUSINESS CONNECTION WITH OTHER
INVESTMENT ADVISER ADDRESS OF OTHER COMPANY COMPANY
--------------------------------------------------------------------------------------------------------
Meryl D. Hartzband Stone Point Capital, LLC Chief Investment Officer
Director 20 Horseneck Lane
Greenwich, CT 06830 USA
--------------------------------------------------------------------------------------------------------
David J. Wermuth Stone Point Capital, LLC Senior Principal and General
Director 20 Horseneck Lane Counsel
Greenwich, CT 06830 USA
--------------------------------------------------------------------------------------------------------
Fayez S. Muhtadie Stone Point Capital, LLC Principal
Director 20 Horseneck Lane
Greenwich, CT 06830 USA
--------------------------------------------------------------------------------------------------------
STEIN ROE INVESTMENT COUNSEL, INC.
Stein Roe Investment Counsel, Inc. ("Stein Roe") serves as investment
sub-adviser for the Registrant's AT Disciplined Equity Fund, AT Income
Opportunities Fund and AT Mid Cap Equity Fund. The principal address of Stein
Roe is One South Wacker Drive, Suite 3500, Chicago, Illinois 60606. Stein Roe
is an investment adviser registered with the SEC under the Investment Advisers
Act of 1940. The information listed below is provided as of [date]. [To be
updated by amendment]
--------------------------------------------------------------------------------------------------------
NAME AND POSITION WITH CONNECTION WITH OTHER
INVESTMENT ADVISER NAME OF OTHER COMPANY COMPANY
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
THOMSON HORSTMANN & BRYANT, INC.
Thomson Horstmann & Bryant, Inc. ("THB") serves as the investment adviser for
the Thomson Horstmann & Bryant MicroCap Fund and the Thomson Horstmann & Bryant
Small Cap Value Fund . The principal address of THB is 501 Merritt 7, Norwalk,
CT 06851. THB is an investment adviser registered under the Investment Advisers
Act of 1940.
During the last two fiscal years, no director, officer or partner of Thomson
Horstmann & Bryant, Inc. has engaged in any other business, profession,
vocation or employment of a substantial nature in the capacity of director,
officer, employee, partner or trustee.
TCW INVESTMENT MANAGEMENT COMPANY
TCW Investment Management Company ("TIMCO") serves as an investment sub-adviser
for the Cornerstone Advisors Global Public Equity Fund. The principal address
of TIMCO is 865 South Figueroa Street, Suite 1800, Los Angeles, CA 90017. TIMCO
is an investment adviser registered under the Investment Advisers Act of 1940.
During the last two fiscal years, no director, officer or partner of TIMCO has
engaged in any other business, profession, vocation or employment of a
substantial nature in the capacity of director, officer, employee, partner or
trustee.
THOMPSON, SIEGEL & WALMSLEY LLC
Thompson, Siegel & Walmsley LLC ("TS&W") serves as the investment adviser to
the TS&W Equity Portfolio and the TS&W Fixed Income Portfolio. The principal
address of TS&W is 6806 Paragon Place, Suite 300, P.O. Box 6883, Richmond,
Virginia 23230. TS&W is an investment adviser registered under the Investment
Advisers Act of 1940.
45
|
During the last two fiscal years, no director, officer or partner of TS&W has
engaged in any other business, profession, vocation or employment of a
substantial nature in the capacity of director, officer, employee, partner or
trustee.
THORNBURG INVESTMENT MANAGEMENT INC
Thornburg Investment Management Inc ("Thornburg") serves as an investment
sub-adviser to the Cornerstone Advisors Global Public Equity Fund. The
principal address of Thornburg is 2300 North Ridgetop Road, Santa Fe, New
Mexico, 87506. Thornburg is an investment adviser registered under the
Investment Advisers Act of 1940.
--------------------------------------------------------------------------------------------------------
NAME AND POSITION WITH NAME AND PRINCIPAL BUSINESS CONNECTION WITH OTHER
INVESTMENT ADVISER ADDRESS OF OTHER COMPANY COMPANY
--------------------------------------------------------------------------------------------------------
Garrett Thornburg, Thornburg Securities Corporation, Chairman
Chairman 2300 North Ridgetop Road,
Santa Fe, NM 87506
---------------------------------------------------------------------------------
Thornburg Investment Trust, 2300 Chairman
North Ridgetop Road,
Santa Fe, NM 87506
---------------------------------------------------------------------------------
WEL, Inc., 2300 North Ridgetop Chairman, controlling interest
Road, Santa, Fe NM 87506
---------------------------------------------------------------------------------
Chamisa Energy, 2300 North Wel, Inc. is the managing
Ridgetop Road, Santa, Fe NM 87506 member and has a controlling
interest
--------------------------------------------------------------------------------------------------------
TURNER INVESTMENTS, L.P.
Turner Investments, L.P. ("Turner") serves as an investment sub-adviser for the
Cornerstone Advisors Global Public Equity and Cornerstone Advisors Public
Alternatives Funds. The principal address of Turner is 1205 Westlakes Drive,
Suite 100, Berwyn, Pennsylvania 19312-2414. Turner is an investment adviser
registered under the Investment Advisers Act of 1940.
--------------------------------------------------------------------------------------------------------
NAME AND POSITION WITH NAME AND PRINCIPAL BUSINESS CONNECTION WITH OTHER
INVESTMENT ADVISER ADDRESS OF OTHER COMPANY COMPANY
--------------------------------------------------------------------------------------------------------
Thomas R. Trala Turner Funds President and Trustee
Chief Operating and Financial P.O. Box 219805
Officer, Executive Managing Kansas City, MO 64121-9805
Director --------------------------------------------------------------------------
Turner International Ltd. Trustee
12 Plumtree Court
London, EC4A 4HT
--------------------------------------------------------------------------
Turner Investment Partners Chief Executive Officer and
(Australia) Pty. Ltd. Chief Financial Officer
c/o Compliance & Risk Services
Pty. Ltd.
Level 9, 63 Exhibition Street
Melbourne, Victoria 3000
Australia
--------------------------------------------------------------------------------------------------------
Thomas R. Trala Widener School of Business Advisory Board
Chief Operating and Financial Administration
Officer, Executive Managing 1 University Place
Director Chester, PA 19013
--------------------------------------------------------------------------------------------------------
46
|
--------------------------------------------------------------------------------------------------------
Mark D. Turner Turner International Ltd. Trustee
President, Senior 12 Plumtree Court
Portfolio Manager London, EC4A 4HT
------------------------------------------------------------------------
The Haverford School Trustee
450 Lancaster Avenue,
Haverford, PA 19041
------------------------------------------------------------------------
CityTeam International (Chester) Board of Directors
11 West 7(th) Street,
Chester, PA 19013
------------------------------------------------------------------------
The Philadelphia Ronald Board of Directors
McDonald House
3925 Chestnut Street,
Philadelphia, PA 19104-3110
--------------------------------------------------------------------------------------------------------
Robert E. Turner Bradley University Board of Directors
Chairman, Chief Investment 1501 W. Bradley Ave
Officer Peoria, IL 61625
------------------------------------------------------------------------
Delaware Valley Friends School Board Member
19 E. Central Avenue,
Paoli, PA 19301
------------------------------------------------------------------------
University of Notre Dame School Advisory Council
of Architecture
110 Bond Hall,
Notre Dame, IN 46556
------------------------------------------------------------------------
Drexel University President's Leadership Council
3141 Chestnut Street
Philadelphia, PA 19104
--------------------------------------------------------------------------------------------------------
Christopher K. McHugh Philadelphia University Trustee
Vice Chairman, Senior Portfolio 4201 Henry Avenue,
Manager Philadelphia, PA 19144-5497
--------------------------------------------------------------------------------------------------------
WESTWOOD MANAGEMENT CORP.
Westwood Management Corp. ("Westwood") serves as the investment adviser for the
Westwood Income Opportunity Fund, Westwood SMidCap Fund, Westwood SMidCap Plus
Fund, Westwood LargeCap Value Fund, Westwood SmallCap Value Fund, Westwood
Dividend Growth Fund, Westwood Short Duration High Yield Fund, Westwood Global
Equity Fund, Westwood Global Dividend Fund, Westwood Emerging Markets Fund and
Westwood Emerging Markets Plus Fund. The principal address of Westwood is 200
Crescent Court, Suite 1200, Dallas, Texas 75201. Westwood is an investment
adviser registered under the Investment Advisers Act of 1940. The information
listed below is for the fiscal year ended 2012.
--------------------------------------------------------------------------------------------------------
NAME AND POSITION WITH NAME AND PRINCIPAL BUSINESS CONNECTION WITH OTHER
INVESTMENT ADVISER ADDRESS OF OTHER COMPANY COMPANY
--------------------------------------------------------------------------------------------------------
Brian Casey Westwood Holdings Group, Inc.* President and Chief Executive
President and Chief (NYSE: WHG) Officer and Director
Executive Officer and 200 Crescent Court, Suite 1200
Director Dallas, TX 75201
---------------------------------------------------------------------------------
Westwood Trust** President and Director
200 Crescent Court, Suite 1200
Dallas, TX 75201
--------------------------------------------------------------------------------------------------------
47
|
--------------------------------------------------------------------------------------------------------
NAME AND POSITION WITH NAME AND PRINCIPAL BUSINESS CONNECTION WITH OTHER
INVESTMENT ADVISER ADDRESS OF OTHER COMPANY COMPANY
--------------------------------------------------------------------------------------------------------
Westwood International Advisors Inc. (a) Chief Executive Officer
161 Bay Street, Suite 3950
Toronto, Ontario M5J 2S1
--------------------------------------------------------------------------------------------------------
Mark R. Freeman, CFA Westwood Holdings Group, Inc.* Chief Investment Officer
Executive Vice President (NYSE: WHG)
and Chief Investment 200 Crescent Court, Suite 1200
Officer Dallas, TX 75201
--------------------------------------------------------------------------------------------------------
Mark Wallace Westwood Holdings Group, Inc.* Chief Financial Officer
Chief Financial Officer (NYSE: WHG)
200 Crescent Court, Suite 1200
Dallas, TX 75201
-------------------------------------------------------------------------------
Westwood Advisors, LLC*** Chief Financial Officer
One Pacific Place
1125 South 103(rd) Street, Ste. 580
Omaha, NE 68124
--------------------------------------------------------------------------------------------------------
Sylvia L. Fry Westwood Holdings Group, Inc.* Chief Compliance Officer
Chief Compliance Officer (NYSE: WHG)
200 Crescent Court, Suite 1200
Dallas, TX 75201
-------------------------------------------------------------------------------
Westwood Trust** Chief Compliance Officer
200 Crescent Court, Suite 1200
Dallas, TX 75201
-------------------------------------------------------------------------------
Westwood Advisors, LLC*** Chief Compliance Officer
One Pacific Place
1125 South 103(rd) Street, Ste. 580
Omaha, NE 68124
--------------------------------------------------------------------------------------------------------
* Westwood Management Corp., Westwood Trust, Westwood Advisors, LLC, and
Westwood International Advisors Inc. are wholly owned subsidiaries of
Westwood Holdings Group, Inc., a publicly traded company on the NYSE (NYSE:
WHG).
** Westwood Trust provides trust and custodial services and participation in
common trust funds that it sponsors to institutions and high net worth
individuals.
*** Westwood Advisors, LLC (formerly McCarthy Group Advisors, LLC) is an SEC
registered investment adviser located in Omaha, NE that manages investment
Limited Liability Companies and an investment Limited Partnership.
(a) Westwood International Advisors Inc. is a Canadian Corporation located in
Toronto, Ontario that is registered with the Ontario Securities Commission
as a Portfolio Manager and Exempt Market Dealer.
The information listed below is for the fiscal year ended October 31, 2011.
--------------------------------------------------------------------------------------------------------
NAME AND POSITION WITH NAME AND PRINCIPAL BUSINESS CONNECTION WITH OTHER
INVESTMENT ADVISER ADDRESS OF OTHER COMPANY COMPANY
--------------------------------------------------------------------------------------------------------
Susan Byrne Westwood Holdings Group, Inc.* Co-Chief Investment Officer
Chief Investment Officer and (NYSE: WHG) and Chairman of the Board
Chairman of the Board 200 Crescent Court, Suite 1200
Dallas, TX 75201
--------------------------------------------------------------------------------------------------------
48
|
--------------------------------------------------------------------------------------------------------
NAME AND POSITION WITH NAME AND PRINCIPAL BUSINESS CONNECTION WITH OTHER
INVESTMENT ADVISER ADDRESS OF OTHER COMPANY COMPANY
--------------------------------------------------------------------------------------------------------
Brian Casey Westwood Holdings Group, Inc.* President and Chief Executive
President and Chief Executive (NYSE: WHG) Officer and Director
Officer and Director 200 Crescent Court, Suite 1200
Dallas, TX 75201
--------------------------------------------------------------------------
Westwood Trust** President and Director
200 Crescent Court, Suite 1200
Dallas, TX 75201
--------------------------------------------------------------------------
Westwood International Advisors Inc. (a) Chief Executive Officer
161 Bay Street, Suite 3950
Toronto, Ontario M5J 2S1
--------------------------------------------------------------------------------------------------------
Mark R. Freeman, CFA Westwood Holdings Group, Inc.* Co-Chief Investment Officer
Co-Chief Investment Officer (NYSE: WHG)
200 Crescent Court, Suite 1200
Dallas, TX 75201
--------------------------------------------------------------------------------------------------------
William R. Hardcastle Westwood Holdings Group, Inc.* Chief Financial Officer
Chief Financial Officer (NYSE: WHG)
200 Crescent Court, Suite 1200
Dallas, TX 75201
--------------------------------------------------------------------------
Westwood Advisors, LLC*** Chief Financial Officer
One Pacific Place
1125 South 103(rd) Street, Ste. 580
Omaha, NE 68124
--------------------------------------------------------------------------------------------------------
Sylvia L. Fry Westwood Holdings Group, Inc.* Chief Compliance Officer
Chief Compliance Officer (NYSE: WHG)
200 Crescent Court, Suite 1200
Dallas, TX 75201
--------------------------------------------------------------------------
Westwood Trust** Chief Compliance Officer
200 Crescent Court, Suite 1200
Dallas, TX 75201
--------------------------------------------------------------------------
Westwood Advisors, LLC*** Chief Compliance Officer
One Pacific Place
1125 South 103(rd) Street, Ste. 580
Omaha, NE 68124
--------------------------------------------------------------------------------------------------------
|
* Westwood Management Corp., Westwood Trust, Westwood Advisors, LLC, and
Westwood International Advisors LLC are wholly owned subsidiaries of
Westwood Holdings Group, Inc., a publicly traded company on the NYSE (NYSE:
WHG).
** Westwood Trust provides trust and custodial services and participation in
common trust funds that it sponsors to institutions and high net worth
individuals.
*** Westwood Advisors, LLC (formerly McCarthy Group Advisors, LLC) is an SEC
registered investment adviser located in Omaha, NE that manages investment
Limited Liability Companies and an investment Limited Partnership.
(a) Westwood International Advisors Inc. is a Canadian Corporation located in
Toronto, Ontario that is registered with the Ontario Securities Commission
as a Portfolio Manager and Exempt Market Dealer.
49
ITEM 32. PRINCIPAL UNDERWRITERS
(a) Furnish the name of each investment company (other than the Registrant) for
which each principal underwriter currently distributing the securities of the
Registrant also acts as a principal underwriter, distributor or investment
adviser.
Registrant's distributor, SEI Investments Distribution Co. (the "Distributor"),
acts as distributor for:
SEI Daily Income Trust July 15, 1982
SEI Liquid Asset Trust November 29, 1982
SEI Tax Exempt Trust December 3, 1982
SEI Institutional Managed Trust January 22, 1987
SEI Institutional International Trust August 30, 1988
The Advisors' Inner Circle Fund II January 28, 1993
Bishop Street Funds January 27, 1995
SEI Asset Allocation Trust April 1, 1996
SEI Institutional Investments Trust June 14, 1996
CNI Charter Funds April 1, 1999
Causeway Capital Management Trust September 20, 2001
ProShares Trust November 14, 2005
Community Reinvestment Act Qualified Investment Fund January 8, 2007
SEI Alpha Strategy Portfolios, LP June 29, 2007
TD Asset Management USA Funds July 25, 2007
SEI Structured Credit Fund, LP July 31, 2007
Wilshire Mutual Funds, Inc. July 12, 2008
Wilshire Variable Insurance Trust July 12, 2008
Global X Funds October 24, 2008
ProShares Trust II November 17, 2008
Exchange Traded Concepts Trust (f/k/a FaithShares Trust) August 7, 2009
Schwab Strategic Trust October 12, 2009
RiverPark Funds September 8, 2010
Adviser Managed Trust Fund December 10, 2010
Huntington Strategy Shares July 26, 2011
New Covenant Funds March 23, 2012
Cambria ETF Trust August 30, 2012
Highland Funds I (f/k/a Pyxis Funds I) September 25, 2012
KraneShares Trust December 18, 2012
LocalShares Investment Trust May 6, 2013
|
The Distributor provides numerous financial services to investment managers,
pension plan sponsors, and bank trust departments. These services include
portfolio evaluation, performance measurement and consulting services ("Funds
Evaluation") and automated execution, clearing and settlement of securities
transactions ("MarketLink").
50
(b) Furnish the Information required by the following table with respect to
each director, officer or partner of each principal underwriter named in the
answer to Item 25 of Part B. Unless otherwise noted, the business address of
each director or officer is Oaks, PA 19456.
POSITION AND OFFICE POSITIONS AND OFFICES
NAME WITH UNDERWRITER WITH REGISTRANT
---- ------------------- ---------------------
William M. Doran Director --
Edward D. Loughlin Director --
Wayne M. Withrow Director --
Kevin P. Barr President & Chief Executive Officer --
Maxine J. Chou Chief Financial Officer, Chief Operations
Officer, & Treasurer --
Karen E. LaTourette Chief Compliance Officer, Anti-Money
Laundering Officer & Assistant Secretary --
John C. Munch General Counsel & Secretary --
Mark J. Held Senior Vice President --
Lori L. White Vice President & Assistant Secretary --
John P. Coary Vice President & Assistant Secretary --
John J. Cronin Vice President --
Robert M. Silvestri Vice President --
|
ITEM 33. LOCATION OF ACCOUNTS AND RECORDS:
Books or other documents required to be maintained by Section 31(a) of the
Investment Company Act of 1940, and the rules promulgated thereunder, are
maintained as follows:
(a) With respect to Rules 31a-1(a); 31a-1(b)(1); (2)(a) and (b); (3); (6);
(8); (12); and 31a-1 (d), the required books and records are maintained at
the offices of Registrant's custodians:
U.S. Bank, National Association Union Bank of California, N.A.
800 Nicollett Mall 475 Sansome Street
Minneapolis, Minnesota 55402-4302 15(th) Floor
San Francisco, California 94111
National City Bank The Northern Trust Company
National City Center 50 LaSalle Street
1900 East Ninth Street Chicago, Illinois 60675
Cleveland, Ohio 44114
|
(b)/(c) With respect to Rules 31a-1(a); 31a-1 (b)(1),(4); (2)(C) and (D); (4);
(5); (6); (8); (9); (10); (11); and 31a-1(f), the required books and
records are maintained at the offices of Registrant's administrator:
SEI Investments Global Funds Services
One Freedom Valley Drive
Oaks, Pennsylvania 19456
(c) With respect to Rules 31a-1 (b)(5), (6), (9) and (10) and 31a-1 (f), the
required books and records are maintained at the offices of the
Registrant's investment advisers:
51
Acadian Asset Management LLC
260 Franklin Street
Boston, Massachusetts 02110
AIG Asset Management (U.S.), LLC
70 Pine Street, 20th Floor
New York, New York 10270
Allianz Global Investors U.S. LLC
1633 Broadway
New York, NY 10019
AlphaOne Investment Services, LLC
One Tower Bridge
100 Front Street, Suite 1250
West Conshohocken, PA 19428
AlphaSimplex Group, LLC
One Cambridge Center
Cambridge, Massachusetts 02142
AQR Capital Management, LLC
Two Greenwich Plaza, 3rd Floor
Greenwich, Connecticut 06830
BlackRock Financial Management, LLC
55 East 52(nd) Street
New York, NY 10055
Cambiar Investors LLC
2401 East Second Street, Suite 400
Denver, Colorado 80206
CBRE Clarion Securities LLC
201 King of Prussia Road, Suite 600
Radnor, PA 19087
Citigroup First Investment Management Americas LLC
388 Greenwich Street
New York, New York 10013
ClariVest Asset Management LLC
11452 El Camino Real, Suite 250
San Diego, CA 92130
Cornerstone Advisors, Inc.
225 108th Avenue NE, Suite 400
Bellevue, Washington 98004-5782
52
Cramer Rosenthal McGlynn LLC
520 Madison Avenue, 20th Floor
New York, New York 10022
C.S. McKee, LLP
One Gateway Center
Pittsburgh, Pennsylvania 15222
Driehaus Capital Management LLC
25 East Erie Street
Chicago, Illinois 60611-2703
Edgewood Management LLC
305 Park Avenue, 18th Floor
New York, New York 10022-6057
Fairpointe Capital LLC
One North Franklin Street, Suite 3300
Chicago, Illinois 60606-2401
Fayez Sarofim & Co.
2907 Two Houston Center
909 Fannin Street
Houston, Texas 77010
First Manhattan Co.
399 Park Avenue
New York, New York 10022-7001
Hamlin Capital Management, LLC
640 Fifth Avenue, 6th Floor
New York, New York 10019
Harris Associates L.P.
Two North LaSalle Street, Suite 500
Chicago, Illinois 60602-3790
Harvest Global Investments Limited
31/F One Exchange Square
8 Connaught Place,
Central Hong Kong
Haverford Investment Management, Inc.
Three Radnor Corporate Center, Suite 450
Radnor, Pennsylvania 19087-4546
HGK Asset Management, Inc.
Newport Tower
525 Washington Blvd.
Jersey City, New Jersey 07310
Investment Counselors of Maryland, LLC
803 Cathedral Street
Baltimore, Maryland 21201
53
Kayne Anderson Capital Advisors, L.P.
1800 Avenue of the Stars, Third Floor
Los Angeles, California 90067
Loomis, Sayles & Company, L.P.
One Financial Center
Boston, Massachusetts 02111-2621
LSV Asset Management
155 North Wacker Drive, Suite 4600,
Chicago, Illinois 60606
Marsico Capital Management, LLC
1200 17th Street, Suite 1600
Denver, Colorado 80202-5824
OFI SteelPath, Inc.
2100 McKinney Ave., Suite 1401
Dallas, Texas 75201
Parametric Portfolio Associates LLC
1918 Eighth Avenue, Suite 3100
Seattle, Washington 98109
Pennant Management, Inc.
11270 West Park Place, Suite 1025
Milwaukee, Wisconsin 53224
Phocas Financial Corporation
980 Atlantic Avenue, Suite 106
Alameda, California 94501-1001
PNC Capital Advisors, LLC
One East Pratt Street, 5th Floor
Baltimore, MD 21202
Rice Hall James & Associates, LLC
600 West Broadway, Suite 1000
San Diego, California 92101-3383
Sands Capital Management, LLC
1101 Wilson Boulevard, Suite 2300
Arlington, VA 22209
SKY Harbor Capital Management, LLC
20 Horseneck Lane
Greenwich, CT 06830
Stein Roe Investment Counsel, Inc.
One South Wacker Drive, Suite 3500
Chicago, Illinois 60606
TCW Investment Management Company
865 South Figueroa Street, Suite 1800
Los Angeles, CA 90017
54
Thomson Horstmann & Bryant, Inc.
501 Merritt 7
Norwalk, CT 06851
Thompson, Siegel & Walmsley LLC
6806 Paragon Place, Suite 300
Richmond, Virginia 23230
Thornburg Investment Management Inc
2300 North Ridgetop Road
Santa Fe, New Mexico 87506
Turner Investments, L.P.
1205 Westlakes Drive, Suite 100
Berwyn, Pennsylvania 19312-2414
Westwood Management Corp.
200 Crescent Court, Suite 1200
Dallas, Texas 75201
56
ITEM 34. MANAGEMENT SERVICES: None.
ITEM 35. UNDERTAKINGS: None.
57
NOTICE
A copy of the Agreement and Declaration of Trust for The Advisors' Inner Circle
Fund (the "Trust") is on file with the Secretary of State of the Commonwealth
of Massachusetts and notice is hereby given that this registration statement
has been executed on behalf of the Trust by an officer of the Trust as an
officer and by its trustees as trustees and not individually and the
obligations of or arising out of this registration statement are not binding
upon any of the trustees, officers, or shareholders individually but are
binding only upon the assets and property of the Trust.
58
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, and the
Investment Company Act of 1940, as amended, the Registrant certifies that it
meets all of the requirements for effectiveness of this Registration Statement
pursuant to Rule 485(b) under the Securities Act of 1933, as amended, and has
duly caused this Post-Effective Amendment No. 220 to Registration Statement No.
033-42484 to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Oaks, Commonwealth of Pennsylvania on the 28th day
of August, 2013.
THE ADVISORS' INNER CIRCLE FUND
By: *
Michael Beattie, President
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Amendment to the Registration Statement has been signed below by the following
persons in the capacities and on the date(s) indicated.
* Trustee August 28, 2013
------------------------
Charles E. Carlbom
* Trustee August 28, 2013
------------------------
John K. Darr
* Trustee August 28, 2013
------------------------
William M. Doran
* Trustee August 28, 2013
------------------------
Joseph T. Grause, Jr.
* Trustee August 28, 2013
------------------------
Mitchell A. Johnson
* Trustee August 28, 2013
------------------------
Betty L. Krikorian
* Trustee August 28, 2013
------------------------
Robert A. Nesher
* Trustee August 28, 2013
------------------------
Bruce Speca
* Trustee August 28, 2013
------------------------
James M. Storey
* Trustee August 28, 2013
------------------------
George J. Sullivan, Jr.
* President August 28, 2013
------------------------
Michael Beattie
* Treasurer, Controller & August 28, 2013
------------------------ Chief Financial Officer
Michael Lawson
* By: /s/ Dianne M. Descoteaux
----------------------------------------------------------
Dianne M. Descoteaux, pursuant to Powers of Attorney dated
May 15, 2013, incorporated herein by reference to Exhibit
(q) of Post-Effective Amendment No. 212, filed on June 18,
2013.
|
59
EXHIBIT INDEX
EXHIBIT DESCRIPTION
(d)(15) Amended Schedule A, dated August 13, 2013, to the Investment
Advisory Agreement dated June 24, 2002 between the Registrant and
Cambiar Investors LLC
(d)(16) Amended and Restated Expense Limitation Agreement, dated
September 1, 2010
(d)(17) Amended Schedule A, dated August 13, 2013, to the Amended and
Restated Expense Limitation Agreement, dated September 1, 2010,
between the Registrant and Cambiar Investors LLC
(i) Opinion and Consent of Counsel, Morgan, Lewis and Bockius, LLP,
relating to the Institutional and Investor Class Shares of the
Cambiar Funds
(j) Consent of independent registered public accounting firm, Ernst
& Young LLP
(n)(4) Revised Schedule C and Certificates of Class Designation to the
Registrant's Amended and Restated Rule 18f-3 Plan dated February
21, 2007, relating to the Cambiar Funds
(p)(24) SEI Investments Distribution Co. Code of Ethics as revised
December 18, 2012
(p)(48) SEI Investments Global Funds Services Code of Ethics dated June
2012
|
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