Form 497K VELA Funds
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|SUMMARY PROSPECTUS||January 30, 2023|
Small Cap Fund
Class A (VESAX)
Class I (VESMX)
|Before you invest, you may want to review the Funds prospectus and Statement of Additional Information (SAI), which contain more information about the Fund and its risks. You can find the Funds Prospectus, SAI and other information about the Fund online at https://funddocs.filepoint.com/vela/. You can also get this information at no cost by calling 1-833-399-1001 or by sending an email request to [email protected] The current Prospectus and SAI, dated January 30, 2023, are incorporated by reference into this Summary Prospectus.|
The investment objective of the VELA Small Cap Fund is to provide long-term capital appreciation.
Fees and Expenses of the Fund
This table describes the fees and expenses that you may pay if you buy, hold, and sell shares of the fund. You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the tables and examples below. You may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $100,000 in VELA Funds. More information about these and other discounts is available from your financial professional and in the Sales Charges section on page 39 of the funds Prospectus.
(fees paid directly from your investment)
|Class A||Class I|
|Maximum Sales Charge (Load) Imposed on Purchases as a% of Offering Price||5.00%||None|
|Maximum Deferred Sales Charge (on redemptions in the first year as a percentage of the amount invested or the current value, whichever is less)||None||None|
Annual Fund Operating Expenses
(expenses that you pay each year as a percentage of the value of your investment)
|Class A||Class I|
|Distribution (12b-1) fees||0.25%||0.00%|
|Other expenses (administrative fees)1, 2||0.42%||0.42%|
|Acquired fund fees and expenses||0.02%||0.02%|
|Total annual fund operating expenses3||1.44%||1.19%|
|(1)||The funds Other expenses have been restated to reflect current fees.|
|(2)||The funds investment adviser, VELA Investment Management, LLC (the Adviser), pays most of the funds operating expenses (with certain exceptions) in return for an administrative fee (exclusive of the management fee, brokerage and other expenses of executing fund transactions; taxes or governmental fees; costs of borrowing (such as interest charges and dividend expenses on securities sold short); litigation and indemnification expenses and other extraordinary expenses not incurred in the ordinary course of the funds business, as well as any expenses incurred pursuant to the funds Rule 12b-1 Distribution Plan).|
|(3)||Total annual fund operating expenses will not correlate to the funds ratio of total expenses to average net assets in the funds Financial Highlights, which reflects the operating expenses of the fund, but does not include Acquired fund fees and expenses.|
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. It also shows costs if you sold your shares at the end of the period or continued to hold them. The Example also assumes that your investment has a 5% return each year and that the funds operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
|1 Year||3 Years||5 Years||10 Years|
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 annual fund operating expenses or in the Example, affect the funds performance. During the most recent fiscal year, the funds portfolio turnover was 43% of the average value of its portfolio.
Principal Investment Strategy
The fund, under normal market conditions, invests at least 80% of its net assets in U.S. equity securities with small market capitalizations that the Adviser believes are undervalued. Equity securities consist of common and preferred stocks. Small cap companies are defined by the fund as companies with market capitalizations in the range of those market capitalizations of companies included in the Russell 2000 Index at the time of purchase. The capitalization range of the Russell 2000 Index is between $14.72 million and $10.8 billion as of September 30, 2022. The size of the companies included in the Russell 2000 Index will change with market conditions.
The Adviser focuses on estimating a companys value independent of its current stock price. To estimate a companys value, the Adviser concentrates on the fundamental economic drivers of the business. The primary focus is on bottom-up analysis, which takes into consideration earnings, revenue growth, operating margins, balance sheet strength, free cash flow generation, management stewardship, and other economic factors. The Adviser also typically considers the level of industry competition, regulatory factors, the threat of technological obsolescence, and a variety of other industry factors. If the Advisers estimate of a companys value differs sufficiently from the current market price, the company may be an attractive investment opportunity. In constructing a portfolio of securities, the Adviser is not constrained by the sector or industry weights in the benchmark. The Adviser relies on individual stock selection and discipline in the investment process to add value. The highest portfolio security weights are assigned to companies where the Adviser has the highest level of conviction.
Once a stock is selected, the Adviser continues to monitor the companys strategies, financial performance, and competitive environment. The Adviser may sell a security as it reaches the Advisers estimate of the companys value if it believes that the companys earnings, revenue growth, operating margin or other economic factors are deteriorating, if the companys stock price is discounting more than the companys long range earnings potential, or if it identifies a stock that it believes offers a better investment opportunity.
The fund may buy and sell (write) put options or covered call options to gain or hedge exposure to certain types of securities and generate additional income.
All investments carry a certain amount of risk and the fund cannot guarantee that it will achieve its investment objective. An investment in the fund is not a deposit or obligation of any bank, is not endorsed or guaranteed by any bank, and is not insured by the Federal Deposit Insurance Corporation (FDIC) or any other government agency. You may lose money by investing in the fund. Below are the principal risks of investing in the fund. All of the risks listed below are significant to the fund, regardless of the order in which they appear.
Market Risk. The market price of a security or instrument may decline, sometimes rapidly or unpredictably, due to general market conditions that are not specifically related to a particular company, such as real or perceived adverse economic or political conditions throughout the world, changes in the general outlook for corporate earnings, changes in interest or currency rates, or adverse investor sentiment generally. In addition, local, state, regional, or global events such as war, acts of terrorism, the spread of infectious illness or other public health issues, recessions, or other events could have a significant impact on the fund and its investments and could result in decreases to the funds net asset value. The market value of a security or instrument also may decline because of factors that affect a particular industry or industries, such as labor shortages or increased production costs and competitive conditions within an industry.
Political, geopolitical, natural and other events, including war, terrorism, trade disputes, government shutdowns, market closures, natural and environmental disasters, epidemics, pandemics and other public health crises and related events and governments reactions to such events have led, and in the future may lead, to economic uncertainty, decreased economic activity, increased market volatility and other disruptive effects on U.S. and global economies and markets. Such events may have significant adverse direct or indirect effects on the fund and its investments. For example, a widespread health crisis such as a global pandemic could cause substantial market volatility, exchange trading suspensions and closures, and impact the ability to complete redemptions, all of which could affect fund performance. A health crisis may exacerbate other pre -existing political, social, and economic risks. In addition, the increasing interconnectedness of markets around the world may result in many markets being affected by events or conditions in a single country or region or events affecting a single or small number of issuers.
Equity Market Risk. Overall stock market risks may affect the value of the fund. Factors such as U.S. economic growth and market conditions, interest rate levels, and political events affect the securities markets. When the value of the funds investments goes down, your investment in the fund decreases in value.
Management Risk. The Advisers judgments about the attractiveness, value and potential appreciation of a particular asset class or individual security in which the fund invests may prove to be incorrect and there is no guarantee that individual companies will perform as anticipated. The value of an individual company can be more volatile than the market as a whole, and the Advisers intrinsic value-oriented approach may fail to produce the intended results.
Small Cap Company Risk. Investments in small cap companies may be riskier than investments in larger, more established companies. The securities of smaller companies may trade less frequently and in smaller volumes than securities of larger companies. In addition, smaller companies may be
more vulnerable to economic, market and industry changes. As a result, share price changes may be more sudden or erratic than the prices of other equity securities, especially over the short term. Because smaller companies may have limited product lines, markets or financial resources or may depend on a few key employees, they may be more susceptible to particular economic events or competitive factors than large capitalization companies.
Large Cap Company Risk. Returns on investments in securities of larger companies could trail the returns on investments in securities of smaller and mid-sized companies. Larger companies may be unable to respond as quickly as smaller and mid -sized companies to competitive challenges or to changes in business, product, financial, or other market conditions. Larger companies may not be able to maintain growth at the high rates that may be achieved by well-managed smaller and mid-sized companies.
Derivatives Risk. Derivatives, including options, futures contracts, and forward contracts, may be riskier than other types of investments and may increase the volatility of the fund. Derivatives may be sensitive to changes in economic and market conditions and may create leverage, which could result in losses that significantly exceed the funds original investment. Derivatives expose the fund to counterparty risk, which is the risk that the derivative counterparty will not fulfill its contractual obligations (and includes credit risk associated with the counterparty). Certain derivatives are synthetic instruments that attempt to replicate the performance of certain reference assets. With regard to such derivatives, the fund does not have a claim on the reference assets and is subject to enhanced counterparty risk. Derivatives may not perform as expected, so the fund may not realize the intended benefits. When used for hedging, the change in value of a derivative may not correlate as expected with the currency, security or other risk being hedged. In addition, given their complexity, derivatives expose the fund to risks of mispricing or improper valuation. Certain of the funds transactions in derivatives could also affect the amount, timing and character of distributions to shareholders which may result in the fund realizing more short-term capital gain and ordinary income subject to tax at ordinary income tax rates than it would if it did not engage in such transactions, which may adversely impact the funds after-tax returns.
Options Risk. There are risks associated with buying and selling call and put options. If the fund buys a put or call option, the fund risks losing the entire premium invested in the option if the fund does not exercise the option. If the fund sells (writes) a put option, there is risk that the fund may be required to buy the underlying investment at a disadvantageous price. If the fund sells (writes) a covered call option, there is risk that the fund may be required to sell the underlying investment at a disadvantageous price. The fund will receive a premium from writing options, but the premium received may not be sufficient to offset any losses sustained from exercised options.
Value-Oriented Investment Strategies Risk. Value stocks are those that are believed to be undervalued in comparison to their peers due to adverse business developments or other factors, or those where the Adviser believes the aggregate present value of the companys future cash flows is materially greater than that which the market is currently reflecting via the target companys share price. Value investing is subject to the risk that the market will not recognize a securitys inherent value for a long time or at all, or that a stock judged to be undervalued may actually be appropriately priced or overvalued. In addition, during some periods (which may be extensive), value stocks generally may be out of favor in the markets.
The following bar chart and table show two aspects of the fund: volatility and performance. The bar chart shows the volatility — or variability — of the funds annual total returns over time, and shows that fund performance can change from year to year. The table shows the funds average annual total returns for certain time periods compared to the returns of a broad -based securities index. The bar chart and table provide some indication of the risks of investing in the fund. Of course, the funds past performance is not necessarily an indication of its future performance. Updated performance information is available at no cost by visiting www.velafunds.com or by calling 1-833-399-1001.
Class I Annual Total Returns – Year Ended 12/31
During the period shown on the bar chart, the funds highest total return for a quarter was 22.48% (quarter ended March 31, 2021) and the funds lowest total return for a quarter was -11.02% (quarter ended June 30, 2022).
Average Annual Total Return as of 12/31/22
After-tax returns are calculated using the highest historical individual federal marginal income tax rate and do not reflect the impact of state and local taxes. Actual after-tax returns depend on a shareholders tax situation and may differ from those shown. After-tax returns are not relevant for shareholders who hold fund shares in tax-deferred accounts or to shares held by non-taxable entities. After-tax returns are shown for Class I shares only and will vary from the after-tax returns for the other share classes.
|Date of||One||Life of|
|Class I Return Before Taxes||9/30/20||-5.52%||22.99%|
|Return After Taxes on Distributions||-5.68%||22.76%|
|Return After Taxes on Distributions and Sale of Fund Shares||-3.16%||18.02%|
|Class A Return Before Taxes||9/30/20||-10.48%||19.89%|
|Russell 2000 Index*||-20.44%||8.44%|
|S&P SmallCap 600 Index||-16.10%||16.01%|
|*||In prior prospectuses, the Small Cap Fund compared its performance only against the S&P SmallCap 600 Index. The Funds Adviser believes the Russell 2000 Index is a more appropriate and accurate index against which to compare the Small Cap Funds investment strategy and, therefore, the Russell 2000 Index will replace the S&P SmallCap 600 Index as the Small Cap Funds primary benchmark in future comparisons.|
The Russell 2000 Index is an unmanaged market capitalization weighted index measuring performance of the smallest 2,000 companies by market capitalization in the Russell 3000 Index. The Russell 3000 Index is an unmanaged market capitalization weighted index measuring the performance of the 3,000 largest U.S. companies based on total market capitalization.
The S&P SmallCap 600 Index is an unmanaged capitalization weighted index that measures the performance of selected U.S. stocks with small market capitalizations.
You cannot invest directly in an index. Unlike mutual funds, an index does not incur expenses. If expenses were deducted, the actual returns of an index would be lower.
VELA Investment Management, LLC
The Adviser employs a team of portfolio managers who are jointly and primarily responsible for the day-to-day management of the fund.
The portfolio managers are:
Roderick Dillon, CFA
Since inception (September 2020)
Jeannette Hubbard, CFA
Since inception (September 2020)
Brian Hilderbrand, CFA
Since May 2021
Buying and Selling Fund Shares
Minimum Initial Investment
Class A: $1,000
Class I: $2,500
Minimum Subsequent Investment
Class A: None
Class I: None
To Place Orders
|Regular Mail:||Overnight Mail:|
|VELA Small Cap Fund||VELA Small Cap Fund|
|c/o Ultimus Fund Solutions, LLC||c/o Ultimus Fund Solutions, LLC|
|P.O. Box 541150||4221 N 203rd St, Suite 100|
|Omaha, NE 68154||Elkhorn, NE 68022|
In general, you can buy or sell (redeem) shares of the fund by mail or phone on any business day. You can generally pay for shares by check or wire. You may be charged wire fees or other transaction fees; ask your financial professional. When selling shares, you will receive a check, unless you request a wire. You may also buy and sell shares through a financial professional.
Dividends, Capital Gains and Taxes
For U.S. federal income tax purposes, the funds distributions may be taxable as ordinary income, capital gains, qualified dividend income, or section 199A dividends, except when your investment is in an IRA, 401(k) or other tax-advantaged investment plan. Subsequent withdrawals from such a tax-advantaged investment plan will be subject to special tax rules.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase shares through a broker-dealer or other financial intermediary (such as a bank), the fund and its related companies may pay the intermediary for the sale of fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the fund over another investment. Ask your salesperson or visit your financial intermediarys web site for more information.
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