Income & Opportunity Fund (SOAOX)
Seeks to provide shareholders with current income and the potential for some capital appreciation.
The fund owns 78 positions in the following categories:
Fund Symbol: SOAOX
Inception Date: 07/08/2013
Net Assets: $24.9 million
Distribution Frequency: Semiannual
Net Expense Ratio:* 1.26%
*The adviser has contractually agreed
to waive advisory fees and/or reimburse expenses for the Income & Opportunity Fund until April 30, 2021.
An investment in the Fund may be suitable for intermediate to long-term investors who seek high current income and the potential for some capital appreciation. Investors should be willing to accept the risks and potential volatility of such investments.
Top Holdings by Percentage
American Municipal Power, Inc., Electric Lights; Power Improvements, 7.83%, 2/15/2041
City of Newport Beach, CA, Public Improvements, 7.17%, 7/1/20
Kansas Development Finance Authority, 4.73%, 4/15/2037
Pasco County School Board, School Improvements, 5.00%, 12/1/2037
City of Reading, PA, (AGM) (OID), 5.30%, 11/1/2033
New York State Dormitory Authority, 3.88%, 7/1/2046
Metropolitan Government of Nashville & Davidson County Convention Center Authority, 7.43%, 7/1/2043
City of Tucson, AZ, Certificate of Participation, (AGM), 4.83%, 7/1/2034
Texas Transportation Commission, 2.56%, 4/01/2042
The Fund has the flexibility to invest in the following securities to best achieve the objective of providing shareholders with the potential for both income and growth:
Equity securities, including common
stock, preferred stock and convertible
Fixed income securities, including
taxable municipal bonds, corporate
bonds and CMOs.
Real Estate Investment Trusts (REITs) including equity and mortgage REITs.
Master Limited Partnerships (MLPs).
Source: Ultimus Fund Solutions, LLC 9/30/20
Principal Risks of Investing in the Opportunity Fund: An investment in the Opportunity Fund could lose money over short or long periods of time. You should expect and be able to bear the risk that the Opportunity Fund’s share price may fluctuate within a wide range. There is no assurance that the Opportunity Fund will achieve its investment objective. The Opportunity Fund’s performance could be adversely affected by the following principal risks:
Limited Operating History. The Opportunity Fund has limited operating history having commenced on July 4, 2013. It is designed for long-term investors and not as a trading vehicle.
Market Risks. The market value of the Opportunity Fund’s investments in equities, including MLP common units, and fixed income securities will fluctuate as the respective markets fluctuate. Market risk may affect a single issuer, industry or sector of the economy or it may affect the market as a whole. The equity securities purchased by the Opportunity Fund may not appreciate in value as the Adviser anticipates.
Small Cap Company Risk. Smaller companies may present greater opportunities for capital appreciation but may involve greater risk than larger, more mature issuers.
Dividend Risk. There can be no assurance that a dividend-paying company will continue to make regular dividend payments.
Manager Risk, which is the possibility that poor security selection will cause the Opportunity Fund to underperform relevant benchmarks or other funds with similar investment objectives.
REITs. REITs are dependent upon management skills, are not diversified, are subject to heavy cash flow dependency, default by borrowers and self-liquidation. REITs are also subject to the possibilities of failing to qualify for tax free pass-through of income under the Code. Due to the cyclical nature of the real estate industry, REITs may under-perform in comparison with other investment sectors.
Interest Rate Risk. The Fund’s performance could be adversely affected by Interest Rate Risk, which is the possibility that overall bond prices will decline because of rising interest rates.
Credit Risk. The Opportunity Fund may be affected by Credit Risk, which is the possibility that the issuer of a bond will fail to pay interest and principal in a timely manner, or that negative perceptions of the issuer’s ability to make such payments will cause the price of that bond to decline. This risk may be greater to the extent that the Opportunity Fund may invest in junk bonds. The Opportunity Fund may be affected by Credit Risk of Lower Grade Securities, which is the possibility that securities rated below investment grade, or unrated of similar quality, (i.e., “junk bonds”), may be subject to greater price fluctuations and risks of loss of income and principal than investment-grade securities.
Call Risk. Another risk that could most adversely affect the Opportunity Fund’s performance is Call Risk, which is the possibility that during periods of falling interest rates, issuers of callable bonds may call (redeem) higher coupon bonds before their maturity dates. The Opportunity Fund would then lose potential price appreciation and would be forced to reinvest the unanticipated proceeds at lower interest rates, resulting in a decline in the Fund’s income.
CMOs. The Opportunity Fund may be affected by Credit Risk of CMOs, which is the possibility that the Opportunity Fund will be less likely to receive payments of principal and interest, and will be more likely to suffer a loss, if there are defaults on the mortgage loans underlying the CMOs. government guarantees. CMO collateral may also include different or specialized types of mortgage loans or mortgage loan pools, letters of credit, or other types of credit enhancements and these so-called “private label” CMOs are the sole obligation of their issuer.
MLP Risk. Investments in securities of MLPs involve risks that differ from investments in common stock including risks related to limited control and limited rights to vote on matters affecting the MLP, risks related to potential conflicts of interest between the MLP and the MLP’s general partner, cash flow risks, dilution risks and risks related to the general partner’s limited call right, as described in more detail in the prospectus. MLPs are master limited partnerships which are typically involved in everything from the exploration, processing, transport and refining to the marketing of natural resources such as natural gas and oil. Risks would include fluctuations in commodity prices, reduced volumes of oil or natural gas, reduced demand for the product, depletion of natural gas or oil reserves, changes in regulations, extreme weather and changes in interest rates. Potential investors should consult the prospectus for further information.
MLP Tax Risk. MLPs do not pay U.S. federal income tax at the partnership level. Rather, each partner is allocated a share of the partnership’s income, gains, losses, deductions and expenses. A change in current tax law, or a change in the underlying business mix of a given MLP, could result in an MLP being treated as a corporation. The classification of an MLP as a corporation for U.S. federal income tax purposes would have the effect of reducing the amount of cash available for distribution by the MLP.
Non-Diversification Risk. Another risk is Non- Diversification Risk, which is the risk that to the extent the Adviser determined to invest in a lesser number of securities, the Opportunity Fund may be more vulnerable to adverse events and/or market conditions affecting those particular securities as opposed to spreading that risk out over a greater number of securities.
There are risks inherent in investing. Past performance is no guarantee of future results.
Offering by prospectus only. Investors are advised to consider the Fund’s investment objectives, risks, charges and expenses before investing.
The prospectus contains this and other information about the investment company. Read the prospectus carefully before you invest or send money.
Neither the information, nor any statement expressed or implied herein, constitutes solicitation by David Lerner Associates, Inc. for the purchase or sale of any securities. For complete information regarding performance data current to the most recent month end and to obtain a prospectus, contact:
David Lerner Associates, Inc., 477 Jericho Turnpike, P.O. Box 9006, Syosset, New York 11791-9006, 1-800-367-3000. Member FINRA & SIPC.