ABSOLUTE Funds

Absolute Convertible Arbitrage Fund  [ARBIX]

Inception Date:
October 1, 2002

Structure:
Open-End Mutual Fund

Tickers:
ARBIX & ARBOX

Share Classes:
I-Share & NTF

Fund Administration:
Apex Fund Services

Distributor:
Foreside Fund Services, LLC

The Absolute Convertible Arbitrage Fund seeks to achieve positive absolute returns over the long-term with low volatility when compared to traditional market indices. To achieve this, Mohican, the sub-adviser to the Fund, expects to take advantage of the relationship between a company’s convertible bonds and its common stock in an effort to generate positive absolute returns over the long-term with lower volatility than traditional market indices.

The Fund is designed to complement either the alternatives or fixed income sleeve of a diversified portfolio and may be attractive to investors seeking moderate return with relatively low volatility.

In August 2017, the Absolute Convertible Arbitrage Fund was converted from a hedge fund managed by Mohican Financial Management since 2002

Best Fund, Alternative Equity Market Neutral Funds, over 3 Years

REFINITIV LIPPER FUND AWARDS:
Ranked #1 of 19 funds for the 3-year award period in the Alternative Equity Market Neutral Funds Classification for the United States, 2021 (as of March 11, 2021)

The Refinitiv Lipper Fund Awards, granted annually, highlight funds and fund companies that have excelled in delivering consistently strong risk-adjusted performance relative to their peers. The Refinitiv Lipper Fund Awards are based on the Refinitiv Lipper Leader for Consistent Return rating, which is a risk-adjusted performance measure calculated over 36, 60 and 120 months. The fund with the highest Refinitiv Lipper Leader for Consistent Return (Effective Return) value in each eligible classification wins the Refinitiv Lipper Fund Award. For more information, see www.lipperfundawards.com. Although Refinitiv makes reasonable efforts to ensure the accuracy and reliability of the data contained herein, the accuracy is not guaranteed by Refinitiv. © 2021 Refinitiv. All rights reserved. Used by permission and protected by the Copyright Laws of the United States. The printing, copying, redistribution, or retransmission of this Content without express written permission is prohibited).

Best Convertible Arbitrage Fund, 2018 Hedgeweek USA

HEDGEWEEK USA AWARD:
Nominated by institutional and high net worth investors as well as managers and other industry professionals at fund administrators, prime brokers, custodians and advisers – as ‘best in class’ in a series of categories. The firms with the most votes are subject to a final review by Hedgeweek’s Senior Editorial team.

* The Fund has not received this award since 2018

About the Subadviser

MOHICAN FINANCIAL MANAGEMENT has its roots in Cooperstown, NY and is currently located in Wilton, CT. Brothers Eric and Dan Hage founded Mohican in 2002 after working on the convertible bond desks at various Wall Street firms. Their experience encompasses all aspects of the convertibles market – research, sales, proprietary trading and fund management. Mohican’s singular focus is convertible arbitrage.
Eric Hage -Mohican Financial Management, LLC 2002-Present, Mohican Financial Management, Chief Investment Officer

1999-2002, Salomon Smith Barney, Director of Convertible Arbitrage
1994-1999, Salomon Smith Barney, Institutional Trader of Convertible Securities
1991-1994, Bear Stearns, Managing Director & Co-Head of Sales of Convertible Securities
1989-1991, Smith Barney, Assistant Trader of Convertible Securities
Columbia, University Business School, MBA, Cornell University, B.S. in Economics

Daniel Hage -Mohican Financial Management, LLC2002-Present, Mohican Financial Management, Senior Trader

2000-2002, CIBC World Markets, Sales Manager of Convertible Securities
1998-2000, Fahnestock, Convertible Bond Broker1995-1997, Murphy & Durieu, International & Domestic Convertible Bond Broker
University of Albany, MBA, LeMoyneCollege, B.S. in Business Administration

Dakota Portfolio Manager
Interview, March 2021

RIA Channel Portfolio Manager
Q&A, November 2017

Fund Literature

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Intro Presentation

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Prospectus

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Statement of Additional Information (SAI)

Additional Resources:

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Convertible Arbitrage: Where does it Fit?

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The Core Strength of Convertible Arbitrage

ARBIX: Diversification for Model Portfolios

(email request –financial professional use only)

Shareholder Reports

Semi-Annual Report – Period Ending 9/30/20
Absolute Funds Information Statement – 9/17/20
Annual Report – Period Ending 3/31/20
Semi-Annual Report – Period Ending 9/30/19
Annual Report – Period Ending 3/31/19
Semi-Annual Report – Period Ending 9/30/18
Annual Report – Period Ending 3/31/18
Semi-Annual Report – Period Ending 9/30/17

Portfolio Commentary

Portfolio Commentary for the Absolute Convertible Arbitrage Fund is provided on a regular basis and can be found below along with other “discussion” articles that are relevant to the Fund. Additional information can be found within the shareholder letters in the Annual and Semi-Annual Reports. If you are a financial adviser and would like to be added to our e-mail distribution list, contact us by e-mail.

Please note that this commentary provides a very detailed analysis of the Fund’s strategy. Some of this analysis may be difficult for the average investor to fully understand. It is presented here for those who may have an interest in such a discussion and as always, we encourage investors to discuss questions with their financial adviser.

  • Q420 Portfolio Commentary
    “…investors are in a tough spot on how to allocate to fixed income. On the one hand, if interest rates rise, investment grade bonds will struggle. On the other hand, if spreads widen, high yield will struggle. We believe convertible arbitrage, and ARBIX in particular, offers a compelling option to both investment grade and high yield.” [read all]

Fund Distribution Information

The Fund distributes income semi-annually in June and December and distributes long and short-term capital gains in December. This page will be updated with distribution amounts when the data becomes available.

If you are a financial adviser and would like to be added to our e-mail distribution list contact us by e-mail.

2020 Distributions
December – Income & Capital Gains Distributions per share.
Class Income Long-Term Capital Gains Short-Term Capital Gains
Class ARBIX Income $0.00 Long-Term Capital Gains $0.31721 Short-Term Capital Gains $0.00
Class Ex Date Income 12/29/20 Long-Term Capital Gains 12/10/20 Short-Term Capital Gains 12/10/20
Class Record Date Income 12/30/20 Long-Term Capital Gains 12/11/20 Short-Term Capital Gains 12/11/20

.

June – Income Distributions per share
Class Income
Class ARBIX Income $0.00985
Class Ex Date Income 6/30/20
Class Record Date Income 6/29/20
2019 Distributions
December – Income & Capital Gains Distributions per share.
Class Income Long-Term Capital Gains Short-Term Capital Gains
Class ARBIX Income $0.04028
Long-Term Capital Gains $0.19170
Short-Term Capital Gains $0.00
Class Ex Date Income 12/31/19 Long-Term Capital Gains 12/13/19 Short-Term Capital Gains 12/13/19
Class Record Date Income 12/30/19 Long-Term Capital Gains 12/12/19 Short-Term Capital Gains 12/12/19

.

June – Income Distributions per share
Class Income
Class ARBIX Income $0.06637
Class Ex Date Income 6/28/19
Class Record Date Income 6/27/19
2018 Distributions
December – Income & Capital Gains Distributions per share.
Class Income Long-Term Capital Gains Short-Term Capital Gains
Class ARBIX Income $0.00
Long-Term Capital Gains $0.05991
Short-Term Capital Gains $0.09121
Class Ex Date Income 12/31/18 Long-Term Capital Gains 12/14/18 Short-Term Capital Gains 12/14/18
Class Record Date Income 12/28/18 Long-Term Capital Gains 12/13/18 Short-Term Capital Gains 12/13/18

.

June – Income Distributions per share
Class Income
Class ARBIX Income $0.04955
Class Ex Date Income 6/29/18
Class Record Date Income 6/28/18
2017 Distributions
December – Income & Capital Gains Distributions per share.
Class Income Long-Term Capital Gains Short-Term Capital Gains
Class ARBIX Income $0.00 Long-Term Capital Gains $0.00
Short-Term Capital Gains $0.02409
Class Ex Date Income 12/29/17 Long-Term Capital Gains 12/15/17 Short-Term Capital Gains 12/15/17
Class Record Date Income 12/28/17 Long-Term Capital Gains 12/14/17 Short-Term Capital Gains 12/14/17

Investing in the Fund

Purchasing Through a Financial Adviser:
The Absolute Convertible Arbitrage Fund may serve as an important piece of a diversified portfolio. We encourage investors to consult their financial advisers for guidance on asset allocation and the role of the Fund. Financial Advisers should contact us directly for information on the Fund and how it may be purchased. Go to Contact Information Page

Direct Investment in the Fund:
Investors may purchase the Fund directly from the Fund using the applications below. Please complete the applications and follow the purchasing instructions. For additional information, please call the Fund’s shareholder servicing department at 1-888-99-ABSOLUTE

Absolute Convertible Arbitrage Fund Application
Absolute Convertible Arbitrage Fund IRA Application
Absolute Convertible Arbitrage Fund IRA Transfer Form

Fund Risks & Disclosure

Past performance does not guarantee future results. The Fund’s net asset value and investment return will fluctuate based upon changes in the value of its portfolio securities. There is no assurance that the Fund will achieve its investment objective, and an investment in the Fund is not by itself a complete or balanced investment program. For a complete description of the Fund’s principal investment risks please refer to the prospectus.

Asset allocation decisions may not always be correct and may adversely affect Fund performance. The value of a convertible security is influenced by changes in interest rates, with investment value declining as interest rates increase and increasing as interest rates decline. The credit standing of the issuer and other factors also may have an effect on a convertible security’s investment value. Debt securities have interest rate, inflation and credit risks and are subject to prepayment and default risk. High yield and junk securities involve greater risk and tend to be more sensitive to economic conditions and credit risk. Short sales may be considered speculative and it may be difficult to purchase securities to meet delivery obligations. The Fund may leverage transactions which include selling securities short as well as borrowing for other than temporary or emergency purposes. Leverage creates the risk of magnified capital losses. Diversification does not prevent loss or enhance returns. Foreign investments present additional risk due to currency fluctuations, economic and political factors, government regulations, differences in accounting standards and other factors. Investments in emerging markets involve even greater risks. Small, mid and large cap stocks are subject to substantial risks such as market, business, size volatility, management experience, product diversification, financial resource, competitive strength, liquidity, and potential to fall out of favor that may cause their prices to fluctuate over time, sometimes rapidly and unpredictably. The Fund is actively managed and may experience high turnover. This may cause higher fees, expenses and taxes, which could detract from Fund performance. The Fund is new and has a limited history of operations.

These views are subject to change at any time based on market and other conditions, and Absolute Investment Advisers disclaims any responsibility to update such views. No forecasts can be guaranteed. These views may not be relied upon as investment advice or as an indication of trading intent on behalf of any Absolute Investment Advised investment product.

Alpha is the excess return on an investment after adjusting for market-related volatility. It is often considered to represent the value that a portfolio manager adds to or subtracts from a fund’s return.