Fund
Profile
BRANDES
INVESTMENT TRUST
|
|
●
|
Brandes
Institutional Enhanced Income Fund
|
This
profile summarizes key information about Brandes Institutional Enhanced Income
Fund (the “Fund”) that is included in the Fund’s prospectus. The
Fund’s prospectus includes additional information about the Fund, including a
more detailed description of the risks associated with investing in the Fund
that you may want to consider before you invest.
You may
obtain the prospectus and other information about the Fund at no cost to you by
calling (800) 331-2979 or contacting your financial representative.
Investment
Objective of the Fund
The Fund
seeks to maximize total return, consisting of both current income and capital
appreciation.
Principal
Investment Strategies of the Fund
The Fund
actively manages a diversified portfolio comprised approximately 70% of debt
securities and 30% of equity securities. Its debt obligations include, but are
not limited to, debt securities issued by U.S. and foreign companies, debt
obligations issued or guaranteed by the U.S. Government and foreign governments
and their agencies and instrumentalities, and U.S. and foreign mortgage-backed
securities, collateralized mortgage obligations and asset-backed debt
securities. Its equity securities include common and preferred stocks
of U.S. and foreign companies and securities convertible into such
stocks.
Brandes
Investment Partners, L.P., the investment advisor to the Fund (the “Advisor”),
generally uses the principles of value investing to analyze and select debt
securities for the Fund’s investment portfolio. The Fund invests in debt
securities that can be purchased at prices or yield premiums over U.S. Treasury
securities (or other risk free securities) which the Advisor believes to be
attractive based on the Advisor’s assessment of each debt security’s
intrinsic value. The Advisor’s assessment of intrinsic value is based upon an
analysis of the issuers’ ability to repay, the quality of the collateral (if
any), liquidity, and other factors. The Advisor may also employ other types of
analysis in assessing the attractiveness of a debt security, relying on present
day pricing information, roll-down analysis, comparisons of a debt security’s
yield with yields offered by other debt securities of similar quality and
average life, and scenario analysis.
The Fund
invests in both investment-grade debt securities and non-investment grade debt
securities (also known as “high-yield bonds” or “junk bonds”). The Advisor deems
any debt security rated at least BBB- (or its equivalent) by one or more of
Moody’s, Standard & Poor’s, or Fitch, or any debt security that has been
determined by the Advisor to be of comparable quality, to be investment grade.
At least 75% of the Fund’s debt securities must be investment grade, measured at
the time of purchase. Non-investment grade debt securities may be rated as low
as D, may be in default of payment of principal and/or interest, or may not be
rated.
Although
the Fund invests in debt securities of any maturity, the duration of the Fund’s
portfolio is generally expected to be within a 20% margin (higher or lower) of
the Barclays Capital U.S. Aggregate Bond Index duration. Other than
in periods of unusual market conditions, which could continue for an extended
period, this margin will normally be within 10% of the Barclays
Capital U.S. Aggregate Bond Index duration.
The
Fund’s equity investments are generally issued by U.S. and foreign companies
whose market capitalizations (market value of publicly traded securities) rank
in the top 250 companies worldwide.
The
Advisor generally uses the principles of value investing in selecting equity
securities for the Fund’s portfolio. Applying this philosophy, the
Advisor views stocks as small pieces of businesses for sale. It seeks to
purchase a diversified group of these businesses when they are undervalued -- at
prices its research indicates are well below their true long-term, or intrinsic,
values. By purchasing equity securities whose current prices it believes are
considerably below their intrinsic values, the Advisor believes it can buy not
only a possible margin-of-safety against price declines, but also an attractive
opportunity for profit over the business cycle.
The
Fund’s portfolio is not subject to any specific geographic diversification
requirements. Countries in which the Fund may invest include the
United States and the nations of Europe, North and South America, Australia,
Africa and Asia. Generally no more than 10% of the value of the
Fund’s total equity assets, measured at the time of purchase, may be invested in
equity securities of companies located in emerging securities markets throughout
the world. The Fund may invest up to 25% of its total fixed income
assets, measured at the time of purchase, in non-U.S. dollar securities, and may
engage in currency hedging.
The Fund
may use derivative instruments, such as options contracts, futures contracts and
swap agreements, for risk management purposes or otherwise as part of its
investment strategies.
Additional
information about the Fund’s investments will be available in the Fund’s annual
and semi-annual reports to shareholders. In the Fund’s annual report,
you will find a discussion of the market conditions and investment strategies
that significantly affected the Fund’s performance during the period of the
report. You may obtain these reports at no cost by calling (800)
331-2979 or by visiting the Fund’s website at www.brandesinstitutionalfunds.com.
|
Principal
Risks of Investing in the
Fund
|
General Risk of Fixed Income
Securities. As with most fixed income funds, the income on and
value of your shares in the Fund will fluctuate along with interest rates. When
interest rates rise, the market prices of the debt securities the Fund owns
usually decline. When interest rates fall, the prices of these securities
usually increase. Generally, the longer the Fund’s average portfolio maturity
and the lower the average quality of its portfolio, the greater the price
fluctuation. The price of any security owned by the Fund may also fall in
response to events affecting the issuer of the security, such as its ability to
continue to make principal and interest payments or changes in its credit
rating.
Interest Rate
Risk. The income generated by debt securities owned by the
Fund will be affected by changing interest rates. In addition, as
interest rates rise the values of fixed income securities held by the Fund are
likely to decrease. Securities with longer durations tend to be more
sensitive to changes in interest rates, usually making them more volatile than
securities with shorter durations. Falling interest rates may cause
an issuer to redeem or “call” a security before its stated maturity, which may
result in the Fund having to reinvest the proceeds in lower yielding
securities.
Credit Risk. Fixed
income securities are subject to varying degrees of credit risk, which are often
reflected in credit ratings. The value of an issuer’s securities held
by the Fund may decline in response to adverse developments with respect to the
issuer. In addition, the Fund could lose money if the issuer or
guarantor of a fixed income security is unable or unwilling to make timely
principal and interest payments or to otherwise honor its
obligations.
Liquidity
Risk. Liquidity risk exists when particular investments are
difficult to purchase or sell. The Fund’s investments in illiquid securities may
reduce the return of the Fund because it may be unable to sell such illiquid
securities at an advantageous time or price. Investments in foreign securities,
derivatives (e.g., options on securities, securities indexes, and foreign
currencies) and securities with substantial market or credit risk tend to have
the greatest exposure to liquidity risk.
High Yield Risk. As
a result of its investments in high yield securities and unrated securities of
similar credit quality, the Fund may be subject to greater levels of interest
rate, credit and liquidity risk than portfolios that do not invest in such
securities. High yield securities are considered predominantly speculative with
respect to the issuer’s continuing ability to make principal and interest
payments. In addition, an economic downturn or period of rising
interest rates could adversely affect the market for high yield securities and
reduce the Fund’s ability to sell its high yield securities. If the issuer of a
security is in default with respect to interest payments or principal payments,
the Fund may lose its entire investment in the security.
Mortgage
Risk. Mortgage-related securities are subject to certain
additional risks. Rising interest rates tend to extend the duration of
mortgage-related securities, making them more sensitive to changes in interest
rates. As a result, when holding mortgage-related securities in a
period of rising interest rates, the Fund may exhibit additional
volatility. In addition, mortgage-related securities are subject to
prepayment risk. When interest rates decline, borrowers may pay off
their mortgages sooner than expected. This can reduce the returns of the Fund
because it will have to reinvest that money at the lower prevailing interest
rates.
Equity Securities
Risk. The values of equity securities fluctuate in response to
the activities of individual companies and general stock market and economic
conditions, and stock prices may go down over short or even extended
periods. Stocks are more volatile – likely to go up or down in price,
sometimes suddenly – and are riskier than some other forms of investment, such
as short-term high grade fixed income securities. “Value” equity
securities can underperform the stock market as a whole and other types of
equity securities. Such securities can continue to be undervalued by
the market for long periods of time and may never realize the full value
anticipated by the Advisor.
Foreign Securities
Risk. Investments in foreign securities involve special
risks. Investments in securities issued by entities outside the
United States may be affected by conditions affecting local or regional
political, social or economic stability; different accounting, auditing,
financial reporting and legal standards and practices in some countries;
expropriations; changes in tax policy; greater market volatility; and differing
securities market structures and practices. Because the Fund may
invest in securities payable in foreign (non-U.S.) currencies, it is also
subject to the risk that those currencies will decline in value relative to the
U.S. dollar, thus reducing the Fund’s return.
Emerging Markets and Related
Risks. Investing in emerging market securities involves risks
which are in addition to the usual risks inherent in foreign
investments. Some emerging markets countries may have fixed or
managed currencies that are not free-floating against the U.S. dollar. Certain
of these currencies have experienced substantial fluctuations or a steady
devaluation relative to the U.S. dollar. The economies of some countries may
differ favorably or unfavorably from the U.S. economy in such respects as rate
of growth of gross domestic product, rate of inflation, capital reinvestment,
resource self-sufficiency, number and depth of industries forming the economy’s
base, condition and stability of financial institutions, governmental controls
and investment restrictions that are subject to political change and balance of
payments position. Further, investors may face greater difficulties
or restrictions with respect to investments made in emerging markets countries
than in the U.S.
Emerging
securities markets typically have substantially less volume than U.S. markets,
securities in many of such markets are less liquid, and their prices often are
more volatile than those of comparable U.S. companies. Such markets
often have different clearance and settlement procedures for securities
transactions, and in some markets there have been times when settlements have
been unable to keep pace with the volume of transactions, making it difficult to
conduct transactions. Delays in settlement could result in temporary
periods when assets which the Fund desires to invest in emerging markets may be
uninvested. Settlement problems in emerging markets countries also
could cause the Fund to miss attractive investment
opportunities. Satisfactory custodial services may not be available
in some emerging markets countries, which may result in the Fund’s incurring
additional costs and delays in the transportation and custody of such
securities.
Derivative
Risks. The Fund’s use of derivative instruments involves risks
different from, and possibly greater than, the risks associated with investing
directly in securities and other traditional investments. Derivatives
are subject to a number of risks described elsewhere in this section, such as
liquidity risk, interest rate risk, and credit risk. They also
involve the risk of mispricing or improper valuation, risks inherent to
fluctuating markets, portfolio management risks, the risk of imperfect
documentation and the risk that changes in the value of the derivative may not
correlate perfectly with the underlying asset, rate or index. When
investing in a derivative instrument, the Fund could lose more than the
principal amount invested. Also, suitable derivative transactions may
not be available in all circumstances and there can be no assurance that the
Fund will engage in these transactions to reduce exposure to other risks when
that would be beneficial. In addition, the Fund’s use of derivatives
may increase the taxes payable by shareholders.
Portfolio Turnover
Risk. The Fund is actively managed, which means that the
Advisor may frequently buy and sell securities. Frequent trading
increases a Fund’s portfolio turnover rate and may increase transaction costs,
such as brokerage commissions and taxes. Increased transaction costs
could detract from a Fund’s performance. Additionally, due to the
institutional nature of the shareholders in the Funds, redemption requests could
be large. In order to satisfy such redemption requests, a Fund may be
forced to sell securities with built-in capital gains that will be taxable to
taxable shareholders.
Bar
Chart and Performance Table
The table
below gives some indication of the risks of an investment in the Fund by
comparing the Fund’s performance with the Barclays Capital U.S. Aggregate Bond
Index. The return information provided illustrates how the Fund’s
performance can vary, which is one indication of the risks of investing in the
Fund. The chart and table assume reinvestment of dividends and
distributions. The Fund’s past performance, before and after taxes,
does not necessarily indicate how the Fund will perform in the
future.
During
the period shown in the bar chart, the highest quarterly return was -1.33% (2nd
quarter, 2008) and the lowest quarterly return was –10.56% (4th quarter,
2008).
Average
Annualized Total Returns
|
Brandes Institutional Enhanced Income
Fund
Class I Shares
|
1 Year
|
|
Since
Inception(1)
|
|
|
Return
Before Taxes
|
-22.87%
|
|
-22.69%
|
|
|
Return
After Taxes on Distributions (2)
|
-24.20%
|
|
-24.02%
|
|
|
Return
After Taxes on Distributions and Sale of Fund Shares (2)
|
-14.45%
|
|
-19.75%
|
|
|
Class E
Shares
|
-22.97%
|
|
-22.81%
|
|
|
Barclays
Capital U.S. Aggregate Bond Index (3)
|
5.24%
|
|
5.53%
|
|
(1) Class
I shares commenced operation on December 28, 2007. Class E shares
commenced operation on May 28, 2008. “Since Inception” returns are
provided since inception of the Class I shares on December 28,
2007. Performance shown for the Class E shares reflects the
performance of the Class I shares adjusted to reflect Class E
expenses.
(2)
After-tax returns are calculated using the highest historical 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, and after-tax returns shown are not relevant to
investors who hold their Fund shares through tax-deferred arrangements, such as
401(k) plans or individual retirement accounts. After-tax returns are
shown for Class I shares only and after-tax returns for other Classes will
vary.
(3) The
Barclays Capital U.S. Aggregate Bond Index (formerly known as the Lehman
Brothers U.S. Aggregate Bond Index) is an unmanaged index consisting of U.S.
dollar-denominated, fixed-rate, taxable bonds. The Index includes bonds from the
Treasury, Government-Related, Corporate, Mortgage-Backed Securities agency
fixed-rate and hybrid adjustable-rate mortgage passthroughs), Asset-Backed
Securities and Commercial Mortgage-Backed Securities sectors. Securities must be
rated investment grade (Baa3/BBB-/BBB- or above) by Moody’s, S&P, and Fitch,
respectively. When all three agencies rate an issue, a median or “two out of
three” rating is used to determine Index eligibility by dropping the highest and
lowest rating. When a rating from only two agencies is available, the lower
(“most conservative”) of the two is used. When a rating from only one agency is
available, that rating is used to determine Index eligibility. The
Index does not reflect investment management fees, expenses or
taxes. Direct investment in an index is not
possible.
Fees
and Expenses
The Fund
has three classes of shares – Class I shares for institutional investors, Class
E shares which pay service fees to intermediaries providing non-distribution
services to their clients who own shares of the Fund, and Class S shares which
pay intermediaries fees for providing distribution services to their clients who
own shares of the Fund. Class S shares are not currently being
sold.
As an
investor in the Fund, you will pay the following fees and expenses based on an
estimate of fees during the Fund’s first fiscal period. Annual Fund
operating expenses are paid out of Fund assets and are reflected in its share
price. If you purchase shares though a bank, broker or other
investment representative, it may charge you an account-level fee for additional
services provided to you in connection with your investment in the
Fund.
|
Shareholder
Fees
(fees
paid directly from your investment)
|
Enhanced
Income Fund
|
|
|
Class I
|
|
Class E
|
|
Class S
|
|
Maximum
Sales Charge (Load) Imposed on Purchases
|
None
|
|
None
|
|
None
|
|
Maximum
Sales Charge (Load) Imposed on Reinvested
Dividends
|
None
|
|
None
|
|
None
|
|
Maximum
Contingent Deferred Sales Charge
|
None
|
|
None
|
|
None
|
|
Redemption
Fee
|
None
|
|
None
|
|
None
|
|
Annual
Fund Operating Expenses*
(fees
paid from Fund assets)
|
|
|
|
|
|
|
Management
fees
|
0.40%
|
|
0.40%
|
|
0.40%
|
|
Distribution
(rule 12b-1) fees
|
0.00%
|
|
0.00%
|
|
0.25%
|
|
Other
expenses
|
|
|
|
|
|
|
Shareholder
service fees
|
0.05%
|
|
0.25%
|
|
0.00%
|
|
Other
expenses
|
5.18%
|
|
4.87%
|
|
0.15%
|
|
Total
other expenses
|
5.23%
|
|
5.12%
|
|
0.15%
|
|
|
|
|
|
|
|
|
Total
annual Fund operating expenses
|
5.63%
|
|
5.52%
|
|
0.80%
|
|
Fee
waiver/expense reimbursement
|
(5.08%)
|
|
(4.77%)
|
|
(0.05%)
|
|
Net
annual Fund operating expenses
|
0.55%
|
|
0.75%
|
|
0.75%
|
* The
Advisor has agreed with Brandes Investment Trust to limit the Fund’s Class I,
Class E and Class S annual operating expenses, including repayment of previous
waivers, to the following percentages of the Fund’s average daily net assets
attributable to such Classes through January 30, 20010 – 0.55%, 0.75%, and
0.75%, respectively.
Use the
following table to compare fees and expenses of the Fund with those of other
funds. It illustrates the amount of fees and expenses you would pay
assuming the following:
|
|
●
|
$10,000
investment in the Fund
|
|
|
●
|
all
distributions are reinvested
|
|
|
●
|
redemption
at the end of each period
|
|
|
●
|
no
changes in the Fund’s operating
expenses
|
|
|
●
|
reimbursement
of fees and expenses as indicated
above.
|
Because
these examples are hypothetical and for comparison only, your actual costs may
be different.
Expense
Examples
|
|
1 Year
|
|
3 Years
|
|
5 Years
|
|
10 Years
|
|
Enhanced
Income Fund – Class I
|
$56
|
|
$1,225
|
|
$2,379
|
|
$5,201
|
|
Enhanced
Income Fund – Class E
|
$77
|
|
$1,222
|
|
$2,355
|
|
$5,136
|
|
Enhanced
Income Fund – Class S
|
$77
|
|
$250
|
|
$439
|
|
$985
|
Investment
Advisor
The
Fund’s Advisor, Brandes Investment Partners, L.P., has been in business, through
various predecessor entities, since 1974. As of December 31, 2008,
the Advisor managed approximately $52.9 billion in assets for various clients,
including corporations, public and corporate pension plans, foundations and
charitable endowments, and individuals. The Advisor’s offices are at
11988 El Camino Real, Suite 500, San Diego, California 92130.
Managers of the Fund. The
Fund’s investment portfolio is team-managed by an investment committee of the
Advisor, whose members are senior portfolio management professionals of the
firm. The Advisor also provides certain officers for the
Trust.
How
To Buy Fund Shares
The Fund
has three Classes of shares – Class I, Class E and Class S
shares. Class S shares are not currently being sold. The
Fund sells shares only to certain institutional
investors. Institutions which may invest in the Fund include
qualified retirement and deferred compensation plans and trusts used to fund
those plans (including but not limited to those defined in section 401(a),
403(b), or 457 of the Internal Revenue Code (the “Code”)), “rabbi trusts,”
foundations, endowments, corporations and other taxable and tax-exempt investors
that would otherwise generally qualify as advisory clients of the
Advisor. Others who may invest in the Fund include Trustees of the
Trust, officers and employees of the Advisor, the Fund’s administrator and the
Fund’s distributor (the “Distributor”), their immediate family members, and
certain other persons determined from time to time by the Distributor (including
investment advisors or financial planners or their clients who may clear
transactions through a broker-dealer, bank or trust company which maintains an
omnibus account with the Fund’s transfer agent (the “Transfer
Agent”)). If you purchase or redeem shares through a trust
department, broker, dealer, agent, financial planner, financial services firm or
investment advisor, you may pay an additional service or transaction fee to that
institution. Except as indicated below, individual investors may not
purchase shares, either directly or through brokerage accounts.
Minimum
Initial Investment
The
minimum initial investment in each Class of the Fund is generally $5
million. There is no minimum subsequent investment. The
Distributor may waive the minimum investment for financial intermediaries and
other institutions making continuing investments in the Fund on behalf of
underlying investors and from time to time for other investors, including
retirement plans and employees of the Advisor.
Purchases
through a Securities Dealer
You may
purchase shares of the Fund through a securities dealer which has an agreement
with the Distributor (a “selected dealer”). Selected dealers are
authorized to designate other intermediaries to accept purchase and redemption
orders on the Fund’s behalf. The Fund will price your order for
shares of each Class at the net asset value per share (“NAV”) of the Class next
computed after it is accepted by an authorized dealer or the dealer’s authorized
designee. The Trust and the Distributor reserve the right to cancel
an order for which payment is not received from a selected dealer by the third
business day following the order. A selected dealer may impose
postage and handling charges on your order.
Purchases
through the Transfer Agent
To
purchase shares of the Fund directly from the Transfer Agent, complete the
Account Application (available from the Transfer Agent or a selected dealer) and
mail it to the Transfer Agent at the address shown on the
Application. You may pay by a check with the Application, or by a
wire transfer of funds as described below. You can make additional
investments by wire or by mailing a check, together with the investment form
from a recent account statement.
Wire
transfer instructions may be obtained by contacting the Transfer Agent at (800)
395-3807.
Exchanging
Your Shares
You may
exchange your shares of either Class of the Fund for shares of the same Class of
any other series of the Trust. Such exchange will be treated as a
sale of shares and may be subject to federal income tax.
How
to Sell Fund Shares
How
to Redeem Shares
Your
shares may be redeemed only by instructions from the registered owner of your
shareholder account. If you are a participant in a retirement or
other plan, direct your redemption requests to the plan sponsor or
administrator, which may have special procedures for processing such requests
and is responsible for forwarding requests to the Transfer Agent.
You may
redeem shares of either Class by contacting your selected dealer or authorized
intermediary. The selected dealer or authorized intermediary can
arrange for the repurchase of the shares through the Distributor at the NAV of
the Class next determined after the selected dealer or authorized intermediary
receives your instructions. The selected dealer or authorized
intermediary may charge you for this service. If your shares are held
in a selected dealer’s or authorized intermediary’s “street name,” you must
redeem them through the dealer or intermediary.
You may
also redeem shares by mailing instructions to the Transfer Agent, U.S. Bancorp
Fund Services, LLC, P.O. Box 701, Milwaukee, WI 53201-0701, or by delivering
instructions to the Transfer Agent at P.O. Box 701, Milwaukee, WI
53201-0701. The instructions must specify the name of the Fund, the
Class of shares to be redeemed, the number of shares or dollar amount to be
redeemed and your name and account number. A corporation,
partnership, trust or fiduciary redeeming shares must submit written evidence of
authority acceptable to the Transfer Agent and the signature must be medallion
guaranteed. The price you will receive for Fund shares redeemed is
the next determined NAV for the shares after the Transfer Agent has received a
completed redemption request.
Telephone
Redemptions
You may
establish telephone redemption privileges by checking the appropriate box on the
account application. You can then redeem shares by telephoning the
Transfer Agent at (800) 395-3807, between the hours of 9:00 a.m. and 4:00 p.m.
Eastern time on a day when the New York Stock Exchange is open for
trading. Proceeds for Fund shares redeemed by telephone will be
mailed by check to the address of record, sent by wire to a pre-determined bank
account of record or sent via the Automated clearing House (ACH) network to a
bank account of record on the following business day. Wires are
subject to a $15 fee paid by the shareholder. There is no charge when
proceeds are sent via the ACH system and credit is usually available within 2 –
3 days. Telephone trades must be received prior to market
close. During periods of high market activity, shareholders may
encounter higher than usual call waits. Please allow sufficient time
to place your telephone transaction. Once a telephone transaction has
been placed, it cannot be cancelled or modified.
In order
to arrange for telephone redemptions after an account has been opened or to
change the bank account or address designated to receive redemption proceeds, a
written request must be sent to the Transfer Agent. The request must
be signed by each shareholder of the account and may require signature
guarantees.
The Trust
will use procedures, such as requesting personal or specific information from
the person making the telephone redemption, designed to provide reasonable
verification of account ownership. The Trust reserves the right to
refuse a telephone redemption request if it believes that the person making the
request is neither the record owner of the shares being redeemed nor otherwise
authorized by the shareholder to request the redemption. You will be
promptly notified of any refused request for a telephone
redemption. If these normal identification procedures are not
followed, the Trust or its agents could be liable for any loss, liability or
cost which results from acting upon instructions of a person believed to be a
shareholder.
Redemption
Payments
Redemption
payments will be made within seven days after receipt by the Transfer Agent of
the written or telephone redemption request, any share certificates, and, if
required, a signature guarantee and any other necessary documents, except as
indicated below. In consideration of the best interests of the
remaining shareholders and to the extent permitted by law, the Trust reserves
the right to pay any redemption proceeds in whole or in part by distributing
securities held by the Fund instead of cash, although it is highly unlikely that
shares would ever be so redeemed “in kind.” If your shares are
redeemed in kind, you will incur transaction costs when you sell the securities
distributed to you. Payment may be postponed or the right of redemption
suspended at times when the New York Stock Exchange is closed for other than
customary weekends and holidays, when trading on such Exchange is restricted,
when an emergency exists as a result of which disposal by the Trust of
securities owned by the Fund is not reasonably practicable or it is not
reasonably practicable for the Trust fairly to determine the value of the Fund’s
net assets, or during any other period when the SEC so permits.
Redemption
proceeds are generally paid by check. However, at your request, the
Transfer Agent will wire redemption proceeds of $300 or more to your bank
account. Requests for redemption by wire should include the name,
location and ABA or bank routing number (if known) of the designated bank and
your bank account number.
Redemption
of Small Accounts
If the
value of your investment in the Fund falls below $100,000 because of
redemptions, the Trust may notify you, and if your investment value remains
below $100,000 for a continuous 60-day period, the Trust may redeem your shares
of the Fund. However, the Trust will not redeem shares based solely
upon changes in the market that reduce the NAV of your shares. The
minimum account size requirements do not apply to shares held by officers or
employees of the Advisor or its affiliates or Trustees of the
Trust. The Trust reserves the right to modify or terminate these
involuntary redemption features at any time upon 60 days’ notice.
Policy
on Disruptive Trading
The Fund
is designed as a long-term investment and, therefore, is not appropriate for
“market timing” or other trading strategies that entail rapid or frequent
investment and disinvestment which could disrupt orderly management of the
Fund’s investment portfolio (“disruptive trading”).
The Board
of Trustees has adopted policies and procedures reasonably designed to monitor
Fund trading activity and, in cases where disruptive trading activity is
detected, to take action to stop such activity. The Fund reserves the right
to modify these policies at any time without shareholder notice. In particular,
the Fund or the Distributor may, without any prior notice, reject a purchase
order of any person acting on behalf of any investor or investors whose pattern
of trading or transaction history involves, in the opinion of the Fund or the
Distributor, actual or potential harm to the Fund. The Distributor
considers certain factors, such as transaction size, type of transaction,
frequency of transaction and trade history, when determining whether to reject a
purchase order. Investors who have not engaged in disruptive trading
may also be prevented from purchasing shares of the Fund if the Fund or the
Distributor believes a financial intermediary or its representative associated
with that investor’s account has otherwise been involved in disruptive trading
on behalf of other accounts or investors.
Despite
the efforts of the Fund and the Distributor to prevent disruptive trading within
the Fund and the adverse impact of such activity, there is no guarantee that the
Fund’s policies and procedures will be effective. Disruptive trading
can not be detected until the investor has engaged in a pattern of such
activity, at which time the Fund may have experienced some or all of its adverse
affects. Disruptive trading may be difficult to detect because
investors may deploy a variety of strategies to avoid detection. In
seeking to prevent disruptive trading practices in the Fund, the Fund and the
Distributor consider only the information actually available to them at the
time.
In
addition, the Fund receives orders through financial intermediaries (such as
brokers) which may facilitate disruptive trading or utilize omnibus accounts
that make it more difficult to detect and stop disruptive trading within the
Fund. There may exist multiple tiers of the financial intermediary,
each utilizing an omnibus account structure, that may further compound the
difficulty to the Fund of detecting and stopping disruptive trading activity in
Fund shares. However, the Distributor has entered into written
agreements with the Fund’s financial intermediaries under which each
intermediary must, upon request, provide the Fund with certain shareholder and
identity trading information so that the Fund can enforce its disruptive trading
prevention policies.
To the
extent that the Fund or its agents are unable to curtail excessive or short term
trading (such as market timing), these practices may interfere with the
efficient management of the Fund’s portfolio, and may result in the Fund
engaging in certain activities to a greater extent then it otherwise would, such
as engaging in more frequent portfolio transactions and maintaining higher cash
balances. More frequent portfolio transactions would increase the
Fund’s transaction costs and decrease its investment performance, and
maintenance of a higher level of cash balances would likewise result in lower
Fund investment performance. The costs of such activities would be
borne by all Fund shareholders, including the long-term investors who do not
generate the costs. Additionally, frequent trading may also interfere
with the Advisor’s ability to efficiently manage the Fund and compromise its
portfolio management strategy.
Distributions
and Tax Information
The Fund
expects to pay income dividends monthly, and to make distributions of net
capital gains, if any, at least annually.
You may select one of the
following options:
|
|
o
|
Dividend
and capital gain distributions used to purchase additional shares of the
Fund. If you do not indicate a choice on your application, you
will be assigned this option.
|
|
|
o
|
Capital
gain distributions used to purchase additional shares of the
Fund. Dividend distributions sent to you by
check.
|
|
|
o
|
Dividend
and capital gain distributions sent to you by
check.
|
Distributions
are taxable regardless of whether you reinvest them or take them in
cash. Income is taxed at ordinary federal income tax
rates. Distributions will generally be taxed at ordinary federal
income tax rates unless designated as capital gains distributions or qualified
dividend distributions, in which case the distributions may be taxed at
preferential long-term capital gains rates. Dividends and interest
earned by the Fund may be subject to withholding and other taxes imposed by
foreign countries, at rates from 10% to 40%. However, under certain
circumstances you may be able to claim credits against your U.S. taxes for such
foreign taxes. The Fund will notify you each year of the amounts
available as credits.
Fund
Profile
BRANDES
INVESTMENT TRUST
|
|
●
|
Brandes
Institutional Core Plus Fixed Income
Fund
|
This
profile summarizes key information about Brandes Institutional Core Plus Fixed
Income Fund (the “Fund”) that is included in the Fund’s
prospectus. The Fund’s prospectus includes additional information
about the Fund, including a more detailed description of the risks associated
with investing in the Fund that you may want to consider before you
invest.
You may
obtain the prospectus and other information about the Fund at no cost to you by
calling (800) 331-2979 or contacting your financial representative.
Investment
Objective of the Fund
The Fund
seeks to maximize total return, consisting of both current income and capital
appreciation.
Principal
Investment Strategies of the Fund
The Fund
actively manages a diversified portfolio comprised primarily of debt securities.
These include, but are not limited to, debt securities issued by U.S. and
foreign companies, debt obligations issued or guaranteed by the U.S. Government
and foreign governments and their agencies and instrumentalities, and U.S. and
foreign mortgage-backed securities, collateralized mortgage obligations and
asset-backed debt securities.
Brandes
Investment Partners, L.P., the investment advisor to the Fund (the “Advisor”),
generally uses the principles of value investing to analyze and select debt
securities for the Fund’s investment portfolio. The Fund invests in debt
securities that can be purchased at prices or yield premiums over U.S. Treasury
securities (or other risk free securities) which the Advisor believes to be
attractive based on the Advisor’s assessment of each security’s intrinsic value.
The Advisor’s assessment of intrinsic value is based upon an analysis of the
issuers’ ability to repay, the quality of the collateral (if any), liquidity,
and other factors. The Advisor may also employ other types of analysis in
assessing the attractiveness of a security, relying on present day pricing
information, roll-down analysis, comparisons of a security’s yield with yields
offered by other securities of similar quality and average life, and scenario
analysis.
The Fund
invests in both investment-grade securities and non-investment grade securities
(also known as “high-yield bonds” or “junk bonds”). The Advisor deems any
security rated at least BBB- (or its equivalent) by one or more of Moody’s
Investor Service, Inc., Standard & Poor’s Corporation, or Fitch Ratings,
Ltd., or any security that has been determined by the Advisor to be of
comparable quality, to be investment grade. At least 75% of the Fund’s debt
securities must be investment grade, measured at the time of purchase.
Non-investment grade securities may be rated as low as D, may be in default of
payment of principal and/or interest, or may not be rated.
Although
the Fund invests in debt securities of any maturity, the duration of the Fund’s
portfolio is generally expected to be within a 20% margin (higher or lower) of
the Barclays Capital U.S. Aggregate Bond Index. Other than in periods
of unusual market conditions, which could continue for an extended period, this
margin will normally be within 10% of the Barclays Capital U.S. Aggregate Bond
Index duration. The Fund will invest predominantly in
dollar-denominated debt obligations. However, the Fund may invest up
to 25% of its total fixed income assets, measured at the time of purchase, in
non-U.S. dollar securities, and may engage in currency hedging. The
Fund may use derivative instruments, such as options contracts, futures
contracts and swap agreements, for risk management purposes or otherwise as part
of its investment strategies.
Additional
information about the Fund’s investments will be available in the Fund’s annual
and semi-annual reports to shareholders. In the Fund’s annual report,
you will find a discussion of the market conditions and investment strategies
that significantly affected the Fund’s performance during the period of the
report. You may obtain these reports at no cost by calling (800)
331-2979 or by visiting the Fund’s website at www.brandesinstitutionalfunds.com.
Principal
Risks of Investing in the Fund
General Risk of Fixed Income
Securities. As with most fixed income funds, the income on and
value of your shares in the Fund will fluctuate along with interest rates. When
interest rates rise, the market prices of the debt securities the Fund owns
usually decline. When interest rates fall, the prices of these securities
usually increase. Generally, the longer the Fund’s average portfolio maturity
and the lower the average quality of its portfolio, the greater the price
fluctuation. The price of any security owned by the Fund may also fall in
response to events affecting the issuer of the security, such as its ability to
continue to make principal and interest payments or changes in its credit
rating.
Interest Rate
Risk. The income generated by debt securities owned by the
Fund will be affected by changing interest rates. In addition, as
interest rates rise the values of fixed income securities held by the Fund are
likely to decrease. Securities with longer durations tend to be more
sensitive to changes in interest rates, usually making them more volatile than
securities with shorter durations. Falling interest rates may cause
an issuer to redeem or “call” a security before its stated maturity, which may
result in the Fund having to reinvest the proceeds in lower yielding
securities.
Credit Risk. Fixed
income securities are subject to varying degrees of credit risk, which are often
reflected in credit ratings. The value of an issuer’s securities held
by the Fund may decline in response to adverse developments with respect to the
issuer. In addition, the Fund could lose money if the issuer or
guarantor of a fixed income security is unable or unwilling to make timely
principal and interest payments or to otherwise honor its
obligations.
Liquidity
Risk. Liquidity risk exists when particular investments are
difficult to purchase or sell. The Fund’s investments in illiquid securities may
reduce the return of the Fund because it may be unable to sell such illiquid
securities at an advantageous time or price. Investments in foreign securities,
derivatives (e.g., options on securities, securities indexes, and foreign
currencies) and securities with substantial market or credit risk tend to have
the greatest exposure to liquidity risk.
High Yield Risk. As
a result of its investments in high yield securities and unrated securities of
similar credit quality, the Fund may be subject to greater levels of interest
rate, credit and liquidity risk than portfolios that do not invest in such
securities. High yield securities are considered predominantly speculative with
respect to the issuer’s continuing ability to make principal and interest
payments. In addition, an economic downturn or period of rising
interest rates could adversely affect the market for high yield securities and
reduce the Fund’s ability to sell its high yield securities. If the issuer of a
security is in default with respect to interest payments or principal payments,
the Fund may lose its entire investment in the security.
Mortgage
Risk. Mortgage-related securities are subject to certain
additional risks. Rising interest rates tend to extend the duration of
mortgage-related securities, making them more sensitive to changes in interest
rates. As a result, when holding mortgage-related securities in a
period of rising interest rates, the Fund may exhibit additional
volatility. In addition, mortgage-related securities are subject to
prepayment risk. When interest rates decline, borrowers may pay off
their mortgages sooner than expected. This can reduce the returns of the Fund
because it will have to reinvest that money at the lower prevailing interest
rates.
Foreign Securities
Risk. Investments in foreign securities involve special
risks. Investments in securities issued by entities outside the
United States may be affected by conditions affecting local or regional
political, social or economic stability; different accounting, auditing,
financial reporting and legal standards and practices in some countries;
expropriations; changes in tax policy; greater market volatility; and differing
securities market structures and practices. Because the Fund may
invest in securities payable in foreign (non-U.S.) currencies, it is also
subject to the risk that those currencies will decline in value relative to the
U.S. dollar, thus reducing the Fund’s return.
Emerging Markets and Related
Risks. Investing in emerging market securities involves risks
which are in addition to the usual risks inherent in foreign
investments. Some emerging markets countries may have fixed or
managed currencies that are not free-floating against the U.S.
dollar.
Certain
of these currencies have experienced substantial fluctuations or a steady
devaluation relative to the U.S. dollar. The economies of some countries may
differ favorably or unfavorably from the U.S. economy in such respects as rate
of growth of gross domestic product, rate of inflation, capital reinvestment,
resource self-sufficiency, number and depth of industries forming the economy’s
base, condition and stability of financial institutions, governmental controls
and investment restrictions that are subject to political change and balance of
payments position. Further, investors may face greater difficulties
or restrictions with respect to investments made in emerging markets countries
than in the U.S.
Emerging
securities markets typically have substantially less volume than U.S. markets,
securities in many of such markets are less liquid, and their prices often are
more volatile than those of comparable U.S. companies. Such markets
often have different clearance and settlement procedures for securities
transactions, and in some markets there have been times when settlements have
been unable to keep pace with the volume of transactions, making it difficult to
conduct transactions. Delays in settlement could result in temporary
periods when assets which the Fund desires to invest in emerging markets may be
uninvested. Settlement problems in emerging markets countries also
could cause the Fund to miss attractive investment
opportunities. Satisfactory custodial services may not be available
in some emerging markets countries, which may result in the Fund’s incurring
additional costs and delays in the transportation and custody of such
securities.
Derivative
Risks. The Fund’s use of derivative instruments involves risks
different from, and possibly greater than, the risks associated with investing
directly in securities and other traditional investments. Derivatives
are subject to a number of risks described elsewhere in this section, such as
liquidity risk, interest rate risk, and credit risk. They also
involve the risk of mispricing or improper valuation, risks inherent to
fluctuating markets, portfolio management risks, the risk of imperfect
documentation and the risk that changes in the value of the derivative may not
correlate perfectly with the underlying asset, rate or index. When
investing in a derivative instrument, the Fund could lose more than the
principal amount invested. Also, suitable derivative transactions may
not be available in all circumstances and there can be no assurance that the
Fund will engage in these transactions to reduce exposure to other risks when
that would be beneficial. In addition, the Fund’s use of derivatives
may increase the taxes payable by shareholders.
Portfolio Turnover
Risk. The Fund is actively managed, which means that the
Advisor may frequently buy and sell securities. Frequent trading
increases a Fund’s portfolio turnover rate and may increase transaction costs,
such as brokerage commissions and taxes. Increased transaction costs
could detract from a Fund’s performance. Additionally, due to the
institutional nature of the shareholders in the Funds, redemption requests could
be large. In order to satisfy such redemption requests, a Fund may be
forced to sell securities with built-in capital gains that will be taxable to
taxable shareholders.
Bar
Chart and Performance Table
The table
below gives some indication of the risks of an investment in the Fund by
comparing the Fund’s performance with the Barclays Capital U.S. Aggregate Bond
Index and the Barclays Capital U.S. Intermediate Credit Bond
Index. The return information provided illustrates how the Fund’s
performance can vary, which is one indication of the risks of investing in the
Fund. The chart and table assume reinvestment of dividends and
distributions. The Fund’s past performance, before and after taxes,
does not necessarily indicate how the Fund will perform in the
future.
During
the period shown in the bar chart, the highest quarterly return was 0.07% (1st
quarter, 2008) and the lowest quarterly return was –8.97% (3rd quarter,
2008).
Average
Annualized Total Returns
|
Brandes Institutional Core Plus Fixed Income
Fund
Class I Shares
|
1
Year
|
|
Since
Inception(1)
|
|
|
Return
Before Taxes
|
-11.86%
|
|
-11.68%
|
|
|
Return
After Taxes on Distributions (2)
|
-13.72%
|
|
-13.54%
|
|
|
Return
After Taxes on Distributions and Sale of Fund Shares (2)
|
-7.62%
|
|
-10.88%
|
|
|
Class E
Shares
|
-12.06%
|
|
-11.88%
|
|
|
Barclays
Capital U.S. Aggregate Bond Index (3)
|
5.24%
|
|
5.53%
|
|
|
Barclays
Capital U.S. Intermediate Credit Bond Index (4)
|
-2.76%
|
|
-2.50%
|
|
(1) Class
I shares commenced operation on December 28, 2007. Class E shares
commenced operation on May 28, 2008. “Since Inception” returns are
provided since inception of the Class I shares on December 28,
2007. Performance shown for the Class E shares reflects the
performance of the Class I shares adjusted to reflect Class E
expenses.
(2)
After-tax returns are calculated using the highest historical 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, and after-tax returns shown are not relevant to
investors who hold their Fund shares through tax-deferred arrangements, such as
401(k) plans or individual retirement accounts. After-tax returns are
shown for Class I shares only and after-tax returns for other Classes will
vary.
(3) The
Barclays Capital U.S. Aggregate Bond Index (formerly known as the Lehman
Brothers U.S. Aggregate Bond Index) is an unmanaged index consisting of U.S.
dollar-denominated, fixed-rate, taxable bonds. The Index includes bonds from the
Treasury, Government-Related, Corporate, Mortgage-Backed Securities agency
fixed-rate and hybrid adjustable-rate mortgage passthroughs), Asset-Backed
Securities and Commercial Mortgage-Backed Securities sectors. Securities must be
rated investment grade (Baa3/BBB-/BBB- or above) by Moody’s, S&P, and Fitch,
respectively. When all three agencies rate an issue, a median or “two out of
three” rating is used to determine Index eligibility by dropping the highest and
lowest rating. When a rating from only two agencies is available, the lower
(“most conservative”) of the two is used. When a rating from only one agency is
available, that rating is used to determine Index eligibility. The
Index does not reflect investment management fees, expenses or
taxes. Direct investment in an index is not
possible.
(4) The
Barclays Capital U.S. Intermediate Credit Bond Index (formerly known as the
Lehman Brothers U.S. Intermediate Credit Bond Index) is an unmanaged index
consisting of U.S. dollar-denominated, publicly issued, fixed-rate corporate
securities. Issues must have at least $250 million par amount outstanding and
have a maturity from one up to (but not including) ten
years. Securities must be rated investment grade (Baa3/BBB-/BBB- or above) by
Moody’s, S&P, and Fitch, respectively. When all three agencies rate an
issue, a median or “two out of three” rating is used to determine Index
eligibility by dropping the highest and lowest rating. When a rating from only
two agencies is available, the lower (“most conservative”) of the two is used.
When a rating from only one agency is available, that rating is used to
determine Index eligibility. The Index does not reflect
investment management fees, expenses or taxes. Direct investment in
an index is not possible.
Fees
and Expenses
The Fund
has three classes of shares – Class I shares for institutional investors, Class
E shares which pay service fees to intermediaries providing non-distribution
services to their clients who own shares of the Fund, and Class S shares which
pay intermediaries fees for providing distribution services to their clients who
own shares of the Fund. Class S shares are not currently being
sold.
As an
investor in the Fund, you will pay the following fees and expenses based on an
estimate of fees during the Fund’s first fiscal period. Annual Fund
operating expenses are paid out of Fund assets and are reflected in its share
price. If you purchase shares though a bank, broker or other
investment representative, it may charge you an account-level fee for additional
services provided to you in connection with your investment in the
Fund.
|
Shareholder
Fees
(fees
paid directly from your investment)
|
Core
Plus Fund
|
|
|
Class I
|
|
Class E
|
|
Class S
|
|
Maximum
Sales Charge (Load) Imposed on Purchases
|
None
|
|
None
|
|
None
|
|
Maximum
Sales Charge (Load) Imposed on Reinvested Dividends
|
None
|
|
None
|
|
None
|
|
Maximum
Contingent Deferred Sales Charge
|
None
|
|
None
|
|
None
|
|
Redemption
Fee
|
None
|
|
None
|
|
None
|
|
Annual
Fund Operating Expenses*
(fees
paid from Fund assets)
|
|
|
|
|
Management
fees
|
0.35%
|
|
0.35%
|
|
0.35%
|
|
Distribution
(rule 12b-1) fees
|
0.00%
|
|
0.00%
|
|
0.25%
|
|
Other
expenses
|
|
|
|
|
|
|
Shareholder
service fees
|
0.05%
|
|
0.25%
|
|
0.00%
|
|
Other
expenses
|
7.53%
|
|
6.59%
|
|
0.15%
|
|
Total
other expenses
|
7.58%
|
|
6.84%
|
|
0.15%
|
|
|
|
|
|
|
|
|
Total
annual Fund operating expenses
|
7.93%
|
|
7.19%
|
|
0.75%
|
|
Fee
waiver/expense reimbursement
|
(7.43%)
|
|
(6.49%)
|
|
(0.05%)
|
|
Net
annual Fund operating expenses
|
0.50%
|
|
0.70%
|
|
0.70%
|
* The
Advisor has agreed with Brandes Investment Trust to limit the Fund’s Class I,
Class E and Class S annual operating expenses, including repayment of previous
waivers, to the following percentages of the Fund’s average daily net assets
attributable to such Classes through January 30, 2010 -- 0.50%, 0.70% and 0.70%,
respectively.
Use the
following table to compare fees and expenses of the Fund with those of other
funds. It illustrates the amount of fees and expenses you would pay
assuming the following:
|
|
●
|
$10,000
investment in the Fund
|
|
|
●
|
all
distributions are reinvested
|
|
|
●
|
redemption
at the end of each period
|
|
|
●
|
no
changes in the Fund’s operating
expenses
|
|
|
●
|
reimbursement
of fees and expenses as indicated
above.
|
Because
these examples are hypothetical and for comparison only, your actual costs may
be different.
Expense
Examples
|
|
1 Year
|
|
3 Years
|
|
5 Years
|
|
10 Years
|
|
Core
Plus Fund – Class I
|
$51
|
|
$1,660
|
|
$3,177
|
|
$6,595
|
|
Core
Plus Fund – Class E
|
$72
|
|
$1,539
|
|
$2,942
|
|
$6,191
|
|
Core
Plus Fund – Class S
|
$72
|
|
$235
|
|
$412
|
|
$926
|
Investment
Advisor
The
Fund’s Advisor, Brandes Investment Partners, L.P., has been in business, through
various predecessor entities, since 1974. As of December 31, 2008,
the Advisor managed approximately $52.9 billion in assets for various
clients, including corporations, public and corporate pension plans, foundations
and charitable endowments, and individuals. The Advisor’s offices are
at 11988 El Camino Real, Suite 500, San Diego, California 92130.
Managers of the Fund. The
Fund’s investment portfolio is team-managed by an investment committee of the
Advisor, whose members are senior portfolio management professionals of the
firm. The Advisor also provides certain officers for the
Trust. All investment decisions for the Fund are the responsibility
of the Advisor’s Fixed Income Investment Committee (“Committee”). The
members of the Committee are Charles S. Gramling, CFA, David J. Gilson, CFA, and
Clifford Schireson. The Committee reviews the research and trade
recommendations provided to it by members of the Advisor’s Fixed Income
Group. The members of the Committee discuss the recommendations with
the Fixed Income Group and make purchase and sell decisions based upon a
unanimous vote of the voting members of the Committee (currently Messrs.
Gramling and Gilson).
Mr.
Gramling joined the Advisor in 1999 and is co-head of its Fixed Income
Group. Prior to joining the Advisor he was Senior Vice President and
Portfolio Manager with Scudder Kemper Investments.
Mr.
Gilson joined the Advisor in 2002 and is an Associate Portfolio Manager and
Analyst for the Group. From 2001 until joining the Advisor, he was
President of VALUE Restoration, Inc., a turnaround management consulting
practice. From 1999 until joining VALUE Restoration, Inc., he was
Chief Financial Officer of James Page Brewing Company.
Mr.
Schireson joined the Advisor in 2004 and is the co-head of its Fixed Income
Group and its director of institutional services. From 1998 until
joining the Advisor, he was Managing Director of Robeco USA, LLC, an
international investment advisor.
How
To Buy Fund Shares
The Fund
has three Classes of shares – Class I, Class E and Class S
shares. Class S shares are not currently being sold. The
Fund sells shares only to certain institutional
investors. Institutions which may invest in the Fund include
qualified retirement and deferred compensation plans and trusts used to fund
those plans (including but not limited to those defined in section 401(a),
403(b), or 457 of the Internal Revenue Code (the “Code”)), “rabbi trusts,”
foundations, endowments, corporations and other taxable and tax-exempt investors
that would otherwise generally qualify as advisory clients of the
Advisor. Others who may invest in the Fund include Trustees of the
Trust, officers and employees of the Advisor, the Fund’s administrator and the
Fund’s distributor (the “Distributor”), their immediate family members, and
certain other persons determined from time to time by the Distributor (including
investment advisors or financial planners or their clients who may clear
transactions through a broker-dealer, bank or trust company which maintains an
omnibus account with the Fund’s transfer agent (the “Transfer
Agent”)). If you purchase or redeem shares through a trust
department, broker, dealer, agent, financial planner, financial services firm or
investment advisor, you may pay an additional service or transaction fee to that
institution. Except as indicated below, individual investors may not
purchase shares, either directly or through brokerage accounts.
Minimum
Initial Investment
The
minimum initial investment in each Class of the Fund is generally $5
million. There is no minimum subsequent investment. The
Distributor may waive the minimum investment for financial intermediaries and
other institutions making continuing investments in the Fund on behalf of
underlying investors and from time to time for other investors, including
retirement plans and employees of the Advisor.
Purchases
through a Securities Dealer
You may
purchase shares of the Fund through a securities dealer which has an agreement
with the Distributor (a “selected dealer”). Selected dealers are
authorized to designate other intermediaries to accept purchase and redemption
orders on the Fund’s behalf. The Fund will price your order for
shares of each Class at the net asset value per share (“NAV”) of the Class next
computed after it is accepted by an authorized dealer or the dealer’s authorized
designee. The Trust and the Distributor reserve the right to cancel
an order for which payment is not received from a selected dealer by the third
business day following the order. A selected dealer may impose
postage and handling charges on your order.
Purchases
through the Transfer Agent
To
purchase shares of the Fund directly from the Transfer Agent, complete the
Account Application (available from the Transfer Agent or a selected dealer) and
mail it to the Transfer Agent at the address shown on the
Application. You may pay by a check with the Application, or by a
wire transfer of funds as described below. You can make additional
investments by wire or by mailing a check, together with the investment form
from a recent account statement.
Wire
transfer instructions may be obtained by contacting the Transfer Agent at (800)
395-3807.
Exchanging
Your Shares
You may
exchange your shares of either Class of the Fund for shares of the same Class of
any other series of the Trust. Such exchange will be treated as a
sale of shares and may be subject to federal income tax.
How
to Sell Fund Shares
How
to Redeem Shares
Your
shares may be redeemed only by instructions from the registered owner of your
shareholder account. If you are a participant in a retirement or
other plan, direct your redemption requests to the plan sponsor or
administrator, which may have special procedures for processing such requests
and is responsible for forwarding requests to the Transfer Agent.
You may
redeem shares of either Class by contacting your selected dealer or authorized
intermediary. The selected dealer or authorized intermediary can
arrange for the repurchase of the shares through the Distributor at the NAV of
the Class next determined after the selected dealer or authorized intermediary
receives your instructions. The selected dealer or authorized
intermediary may charge you for this service. If your shares are held
in a selected dealer’s or authorized intermediary’s “street name,” you must
redeem them through the dealer or intermediary.
You may
also redeem shares by mailing instructions to the Transfer Agent, U.S. Bancorp
Fund Services, LLC, P.O. Box 701, Milwaukee, WI 53201-0701, or by delivering
instructions to the Transfer Agent at P.O. Box 701, Milwaukee, WI
53201-0701. The instructions must specify the name of the Fund, the
Class of shares to be redeemed, the number of shares or dollar amount to be
redeemed and your name and account number. A corporation,
partnership, trust or fiduciary redeeming shares must submit written evidence of
authority acceptable to the Transfer Agent and the signature must be medallion
guaranteed. The price you will receive for Fund shares redeemed is
the next determined NAV for the shares after the Transfer Agent has received a
completed redemption request.
Telephone
Redemptions
You may
establish telephone redemption privileges by checking the appropriate box on the
account application. You can then redeem shares by telephoning the
Transfer Agent at (800) 395-3807, between the hours of 9:00 a.m. and 4:00 p.m.
Eastern time on a day when the New York Stock Exchange is open for
trading. Proceeds for Fund shares redeemed by telephone will be
mailed by check to the address of record, sent by wire to a pre-determined bank
account of record or sent via the Automated clearing House (ACH) network to a
bank account of record on the following business day. Wires are
subject to a $15 fee paid by the shareholder. There is no charge when
proceeds are sent via the ACH system and credit is usually available within 2 –
3 days. Telephone trades must be received prior to market
close. During periods of high market activity, shareholders may
encounter higher than usual call waits. Please allow sufficient time
to place your telephone transaction. Once a telephone transaction has
been placed, it cannot be cancelled or modified.
In order
to arrange for telephone redemptions after an account has been opened or to
change the bank account or address designated to receive redemption proceeds, a
written request must be sent to the Transfer Agent. The request must
be signed by each shareholder of the account and may require signature
guarantees.
The Trust
will use procedures, such as requesting personal or specific information from
the person making the telephone redemption, designed to provide reasonable
verification account ownership. The Trust reserves the right to
refuse a telephone redemption request if it believes that the person making the
request is neither the record owner of the shares being redeemed nor otherwise
authorized by the shareholder to request the redemption. You will be
promptly notified of any refused request for a telephone
redemption. If these normal identification procedures are not
followed, the Trust or its agents could be liable for any loss, liability or
cost which results from acting upon instructions of a person believed to be a
shareholder.
Redemption
Payments
Redemption
payments will be made within seven days after receipt by the Transfer Agent of
the written or telephone redemption request, any share certificates, and, if
required, a signature guarantee and any other necessary documents, except as
indicated below. In consideration of the best interests of the
remaining shareholders and to the extent permitted by law, the Trust reserves
the right to pay any redemption proceeds in whole or in part by distributing
securities held by the Fund instead of cash, although it is highly unlikely that
shares would ever be so redeemed “in kind.” If your shares are
redeemed in kind, you will incur transaction costs when you sell the securities
distributed to you. Payment may be postponed or the right of redemption
suspended at times when the New York Stock Exchange is closed for other than
customary weekends and holidays, when trading on such Exchange is restricted,
when an emergency exists as a result of which disposal by the Trust of
securities owned by the Fund is not reasonably practicable or it is not
reasonably practicable for the Trust fairly to determine the value of the Fund’s
net assets, or during any other period when the SEC so permits.
Redemption
proceeds are generally paid by check. However, at your request, the
Transfer Agent will wire redemption proceeds of $300 or more to your bank
account. Requests for redemption by wire should include the name,
location and ABA or bank routing number (if known) of the designated bank and
your bank account number.
Redemption
of Small Accounts
If the
value of your investment in the Fund falls below $100,000 because of
redemptions, the Trust may notify you, and if your investment value remains
below $100,000 for a continuous 60-day period, the Trust may redeem your shares
of the Fund. However, the Trust will not redeem shares based solely
upon changes in the market that reduce the NAV of your shares. The
minimum account size requirements do not apply to shares held by officers or
employees of the Advisor or its affiliates or Trustees of the
Trust. The Trust reserves the right to modify or terminate these
involuntary redemption features at any time upon 60 days’ notice.
Policy
on Disruptive Trading
The Fund
is designed as a long-term investment and, therefore, is not appropriate for
“market timing” or other trading strategies that entail rapid or frequent
investment and disinvestment which could disrupt orderly management of the
Fund’s investment portfolio (“disruptive trading”).
The Board
of Trustees has adopted policies and procedures reasonably designed to monitor
Fund trading activity and, in cases where disruptive trading activity is
detected, to take action to stop such activity. The Fund reserves the right
to modify these policies at any time without shareholder notice. In
particular, the Fund or the Distributor may, without any prior notice, reject a
purchase order of any person acting on behalf of any investor or investors whose
pattern of trading or transaction history involves, in the opinion of the Fund
or the Distributor, actual or potential harm to the Fund. The
Distributor considers certain factors, such as transaction size, type of
transaction, frequency of transaction and trade history, when determining
whether to reject a purchase order. Investors who have not engaged in
disruptive trading may also be prevented from purchasing shares of the Fund if
the Fund or the Distributor believes a financial intermediary or its
representative associated with that investor’s account has otherwise been
involved in disruptive trading on behalf of other accounts or
investors.
Despite
the efforts of the Fund and the Distributor to prevent disruptive trading within
the Fund and the adverse impact of such activity, there is no guarantee that the
Fund’s policies and procedures will be effective. Disruptive trading
can not be detected until the investor has engaged in a pattern of such
activity, at which time the Fund may have experienced some or all of its adverse
affects. Disruptive trading may be difficult to detect because
investors may deploy a variety of strategies to avoid detection. In
seeking to prevent disruptive trading practices in the Fund, the Fund and the
Distributor consider only the information actually available to them at the
time.
In
addition, the Fund receives orders through financial intermediaries (such as
brokers) which may facilitate disruptive trading or utilize omnibus accounts
that make it more difficult to detect and stop disruptive trading within the
Fund. There may exist multiple tiers of the financial intermediary,
each utilizing an omnibus account structure, that may further compound the
difficulty to the Fund of detecting and stopping disruptive trading activity in
Fund shares. However, the Distributor has entered into written
agreements with the Fund’s financial intermediaries under which each
intermediary must, upon request, provide the Fund with certain shareholder and
identity trading information so that the Fund can enforce its disruptive trading
prevention policies.
To the
extent that the Fund or its agents are unable to curtail excessive or short term
trading (such as market timing), these practices may interfere with the
efficient management of the Fund’s portfolio, and may result in the Fund
engaging in certain activities to a greater extent then it otherwise would, such
as engaging in more frequent portfolio transactions and maintaining higher cash
balances. More frequent portfolio transactions would increase the
Fund’s transaction costs and decrease its investment performance, and
maintenance of a higher level of cash balances would likewise result in lower
Fund investment performance. The costs of such activities would be
borne by all Fund shareholders, including the long-term investors who do not
generate the costs. Additionally, frequent trading may also interfere
with the Advisor’s ability to efficiently manage the Fund and compromise its
portfolio management strategy.
Distributions
and Tax Information
The Fund
expects to pay income dividends monthly, and to make distributions of net
capital gains, if any, at least annually.
You may
select one of the following options:
|
|
o
|
Dividend
and capital gain distributions used to purchase additional shares of the
Fund. If you do not indicate a choice on your application, you
will be assigned this option.
|
|
|
o
|
Capital
gain distributions used to purchase additional shares of the
Fund. Dividend distributions sent to you by
check.
|
|
|
o
|
Dividend
and capital gain distributions sent to you by
check.
|
Distributions
are taxable regardless of whether you reinvest them or take them in
cash. Income is taxed at ordinary federal income tax
rates. Distributions will generally be taxed at ordinary federal
income tax rates unless designated as capital gains distributions or qualified
dividend distributions, in which case the distributions may be taxed at
preferential long-term capital gains rates. Dividends and interest
earned by the Fund may be subject to withholding and other taxes imposed by
foreign countries, at rates from 10% to 40%. However, under certain
circumstances you may be able to claim credits against your U.S. taxes for such
foreign taxes. The Fund will notify you each year of the amounts
available as credits.
