PROSPECTUS April 1, 2019

Transcription

1 CVR DYNAMIC ALLOCATION FUND Institutional Shares (CVRAX) Investor Shares (CVRVX) PROSPECTUS April 1, 2019 Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Fund s shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports from the Fund or from your financial intermediary. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report. If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Fund or your financial intermediary electronically by contacting the Fund at (855) or cvrfunds.ta@atlanticfundservices.com, or by contacting your financial intermediary directly. You may elect to receive all future reports in paper free of charge. You can inform the Fund or your financial intermediary that you wish to continue receiving paper copies of your shareholder reports by contacting the Fund at (855) or cvrfunds.ta@atlanticfundservices.com, or by contacting your financial intermediary directly. Your election to receive reports in paper will apply to the CVR Dynamic Allocation Fund. The Securities and Exchange Commission has not approved or disapproved of these securities or passed upon the accuracy or adequacy of the disclosure in this Prospectus. Any representation to the contrary is a criminal offense.

2 TABLE OF CONTENTS Summary Section 1 Investment Objective 1 Fees and Expenses 1 Principal Investment Strategies 2 Principal Investment Risks 3 Performance Information 5 Management 6 Purchase and Sale of Fund Shares 6 Tax Information 7 Payments to Broker-Dealers and Other Financial Intermediaries 7 Details Regarding Principal Investment Strategies and Risks 8 Additional Information Regarding Principal Investment Strategies 8 Additional Information Regarding Principal Investment Risks 9 Management 12 The Adviser 12 Manager of Managers Structure 12 Portfolio Managers 13 Other Service Providers 13 Fund Expenses 13 Your Account 14 General Information 14 How to Contact the Fund 14 Choosing a Share Class 16 Buying Shares 17 Selling Shares 20 Retirement Accounts 23 Other Information 24 Financial Highlights 27 The Notice of Privacy Policy and Practices of the Fund is included with this Prospectus but is not considered to be part of the Prospectus.

3 SUMMARY SECTION Investment Objective The CVR Dynamic Allocation Fund (the Fund ) seeks long-term capital appreciation while preserving capital in declining markets. Fees and Expenses This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund. Shareholder Fees (fees paid directly from your investment) Institutional Shares Investor Shares Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of the offering price) None None Maximum Deferred Sales Charge (Load) (as a percentage of the offering price) None None Maximum Sales Charge (Load) Imposed on Reinvested Dividends and Distributions (as a percentage of the offering price) None None Redemption Fee (as a percentage of amount redeemed, if applicable) None None Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) Management Fees 1.10% 1.10% Distribution and/or Service (12b-1) Fees None 0.25% Other Expenses 1.06% 1.06% Total Annual Fund Operating Expenses 2.16% 2.41% Fee Waiver and/or Expense Reimbursement (1) (0.51)% (0.51)% Total Annual Fund Operating Expenses After Fee Waiver and/or Expense Reimbursement 1.65% 1.90% (1) CVR Portfolio Funds LLC (the Adviser ) has contractually agreed to waive its fee and/or reimburse Fund expenses to limit Total Annual Fund Operating Expenses After Fee Waiver and/or Expense Reimbursement (excluding all taxes, interest, portfolio transaction expenses, proxy expenses, and extraordinary expenses) of Institutional Shares and Investor Shares to 1.65% and 1.90%, respectively, through April 1, 2020 ( Expense Cap ). The Expense Cap may only be raised or eliminated with the consent of the Board of Trustees. The Adviser may be reimbursed by the Fund for fees waived and expenses reimbursed by the Adviser pursuant to the Expense Cap if such payment is approved by the Board, made within three years of the fee waiver or expense reimbursement, and does not cause the Total Annual Fund Operating Expenses After Fee Waiver and/or Expense Reimbursement of a class after giving effect to the recouped amount to exceed the lesser of (i) the then-current expense cap, and (ii) the expense cap in place at the time the fees/expenses were waived/reimbursed. Example. This Example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The Example assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and that the Fund s operating expenses remain the same, except that it reflects the Expense Cap through the time periods described above. Although your actual costs may be higher or lower, based on these assumptions, whether you do or do not redeem your shares at the end of each period described below, your costs would be: 1 Year 3 Years 5 Years 10 Years Institutional Shares $168 $627 $1,113 $2,453 Investor Shares $193 $703 $1,240 $2,708 Portfolio Turnover. The Fund pays transaction costs, such as commissions, when it buys and sells securities (or turns over its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes 1

4 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 Fund s performance. During the most recent fiscal year, the Fund s portfolio turnover rate was 129% of the average value of its portfolio. Principal Investment Strategies The Fund takes a risk managed approach in pursuit of its investment objective by employing two principal investment strategies, Focused Equity and Defensive Equity, and seeks to deliver equity returns with less volatility than the S&P 500 Index. The Fund s portfolio is constructed using fundamental screens and quantitative research. The Fund pursues its investment objective by investing in the equity securities of U.S.-listed small-, mid- and large-cap companies, as well as exchange-traded funds ( ETFs ). The Fund may also invest in options on securities and indices. In addition, in an effort to hedge against equity volatility and preserve capital, the Adviser may invest a portion of the Fund s assets in cash or cash equivalents including, but not limited to, short-term investment funds and/or U.S. Government securities. The Fund s investments in options on securities are intended to provide downside protection on individual securities held in the Fund s portfolio. The Fund s investments in options on indices are intended to hedge against a declining equity market. The Fund s investments in U.S. Government securities may include U.S. Treasury securities and zero coupon bonds. Such investments may be used as an alternative to cash for liquidity purposes, for hedging purposes, or to enhance returns. The strategies employed by the Fund are: Focused Equity: The Adviser s security selection process begins with screening a universe of U.S. listed securities included in the S&P 500 Index, Russell 3000 Index, S&P 600 Smallcap Index, and S&P 400 Midcap Index. The securities are ranked based on metrics such as price to cash flow, earnings yield, and return on invested capital, leading to a portfolio of approximately of the highest ranked stocks. Defensive Equity: The Defensive Equity strategy primarily invests in U.S. listed ETFs and/or baskets of equity securities, including common and preferred stocks, representing sectors or industry groups that are chosen for exposure to growth-oriented themes of the U.S. economy. To manage risk and support the Adviser s objective of preserving capital in declining markets, the Adviser utilizes a quantitative model to determine when abnormal market conditions exist. The model analyzes price and volatility changes of the U.S. equity market, as well as of each sector or industry group (or proxy thereon) in which the Fund is invested. The model determines the percentage of strategy assets to be invested in each sector/industry group, or in cash in the event that the model determines a given sector is expected to depreciate in value. The investment strategy of the Fund acknowledges a broad range of economic outcomes and is structured to outperform the HFRX Equity Hedge Index over a full market cycle. In summary, the Focused Equity strategy seeks to deliver outsized long-term equity returns by holding a concentrated basket of profitable companies that trade at a discount to the equity market as a whole. The Defensive Equity strategy uses a quantitative model, as discussed above, to determine a preference for holding cash versus having exposure to a given sector or industry group. Together, the Focused Equity and Defensive Equity strategies seek to provide equity-like returns with less volatility than the market. The Fund is not limited by a fixed allocation of assets to either strategy and, depending on market conditions and judgment of the Adviser, may invest a significant portion of the Fund s assets in either strategy to the exclusion of the other. Additionally, a portion of the Fund s assets may be held in cash or cash equivalent investments for liquidity purposes, for hedging purposes, or to enhance returns. The result is dynamic equity exposure in the Fund, allowing for equity returns in appreciating markets and capital protection in declining markets. The Adviser may sell a security when the Adviser s metrics indicate it to be overvalued relative to other securities in the universe or to be an otherwise unattractive investment. 2

5 Temporary Defensive Position. In order to respond to adverse market, economic, political or other conditions, the Fund may assume a temporary defensive position that is inconsistent with its principal investment objective and/or strategies and may invest, without limitation, in cash or high-quality cash equivalents (including money market instruments, commercial paper, certificates of deposit, banker s acceptances and time deposits). A defensive position, taken at the wrong time, may have an adverse impact on the Fund s performance. The Fund may be unable to achieve its investment objective during the employment of a temporary defensive position. Principal Investment Risks Losing all or a portion of your investment is a risk of investing in the Fund. An investment in the Fund is not a deposit in a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. More information on the Fund s principal investment strategies and principal risks is contained in the Fund s Statement of Additional Information (the SAI ). The following principal risks could affect the value of your investment: Asset Allocation Risk. The Fund s ability to achieve its investment objective depends upon the Adviser s analysis of various factors and Adviser s ability to select the appropriate mix of asset classes based on its analysis of such factors, which may prove incorrect. The Fund may experience losses or poor relative performance if the Adviser allocates a significant portion of the Fund s assets to an asset class that does not perform as the Adviser anticipated, including relative to other asset classes. The Fund may underperform funds that allocate their assets differently than the Fund. Cash and Cash Equivalents Risk. To the extent the Fund holds cash and cash equivalents positions, even strategically, the Fund risks achieving lower returns and potential lost opportunities to participate in market appreciation, which could negatively impact the Fund s performance and ability to achieve its investment objective. This is particularly true when the market for other investments in which the Fund may invest is rapidly rising. Common and Preferred Stock Risk. Common stock generally is subordinate to preferred stock upon the liquidation or bankruptcy of the issuing company. Preferred stocks are sensitive to movements in interest rates. The Fund s common and preferred stock holdings may decline in value because of changes in price of a particular holding or a broad stock market decline. The value of a security may decline for a number of reasons which directly relate to the issuer of a security. Consumer Discretionary Sector Risk. Consumer discretionary products and services are non essential products and services whose demand tends to increase as consumers' disposable income increases, such as automobiles, apparel, electronics, home furnishings, and travel and leisure products and services. Investments in this sector can be significantly affected by the performance of the overall economy, interest rates, competition, and consumer confidence. Success can depend heavily on disposable household income and consumer spending. Changes in demographics and consumer tastes can also affect the demand for, and success of, consumer discretionary products. The prices of raw materials fluctuate in response to a number of factors, including changes in government agricultural support programs, exchange rates, import and export controls, changes in international agricultural and trading policies and seasonal and weather conditions. Companies in the consumer discretionary sector may be subject to severe competition, which may also have an adverse impact on their profitability. Exchange Traded Funds Risk. An investment in an ETF involves substantially the same risks as investing directly in the underlying securities. An ETF may not achieve its investment objective or execute its investment strategy effectively, which may adversely affect the Fund s performance. The Fund must pay its pro rata portion of an ETF s fees and expenses. Shares of an ETF may trade at a premium or discount to the net asset value of its portfolio securities. Trading in an ETF may be halted if the trading in one or more of the ETF s underlying securities is halted. Only a limited number of institutional investors, known as authorized participants, are authorized to purchase and redeem shares from an ETF. As a result, an ETF may trade at a material discount to NAV if authorized participants exit the business or otherwise become unable to process creation and/or redemption orders. In addition, there may be a limited number of market makers and/or liquidity providers in the marketplace such that active trading markets may not develop. 3

6 Hedging Risk. Gains or losses from positions in hedging instruments, such as options, may be much greater than the instrument s original cost. The counterparty may be unable to honor its financial obligation to the Fund. In addition, the Fund may be unable to close the transaction at the time and price the Adviser would like. This may result in a loss to the Fund. High Portfolio Turnover Risk. The Fund s strategy may result in high portfolio turnover rates, which may increase the Fund s brokerage commission costs and negatively impact the Fund s performance. Such portfolio turnover also may generate net short-term capital gains. Large Capitalization Company Risk. The Fund s investments in large capitalization companies may underperform other segments of the market because they may be less responsive to competitive challenges and opportunities and unable to attain high growth rates during periods of economic expansion. Management Risk. The Fund s ability to achieve its investment objective depends on the ability of the Adviser to correctly identify economic trends. Market Events Risk. Turbulence in the financial markets and reduced liquidity in equity, credit and fixed-income markets may negatively affect issuers worldwide, which could have an adverse effect on the Fund. In addition, there is a risk that policy changes by the Federal Reserve and/or other government actors, such as increasing interest rates, could cause increased volatility in financial markets, and higher levels of Fund redemptions, which could have a negative impact on the Fund. Trade barriers and other protectionist trade policies (including those in the U.S.) may also have a negative impact on the Fund. Historically, market cycles have included both positive ( boom ) and negative ( bust ) periods. Since approximately 2008, however, the market has largely moved upward. The market, accordingly, may be poised for a correction or downturn. Such a correction or downturn may adversely affect the Fund. Mid Capitalization Company Risk. Investments in mid capitalization companies may be less liquid and their securities prices may fluctuate more than those of larger, more established companies. These factors could adversely affect the Fund s ability to sell such securities at a desirable time and price. Model and Data Risk. Given the complexity of the investments and strategies of the Fund, the Adviser relies heavily on quantitative models supplied by third parties and information and data supplied by third parties ( Models and Data ). Models and Data are used to construct sets of transactions and investments, to provide risk management insights, and to assist in hedging the Fund s investments. When Models and Data prove to be incorrect or incomplete, any decisions made in reliance thereon expose the Fund to potential risks. Similarly, any hedging based on faulty Models and Data may prove to be unsuccessful. Some of the models used by the Adviser for the Fund are predictive in nature. The use of predictive models has inherent risks. Because predictive models are usually constructed based on historical data supplied by third parties, the success of relying on such models may depend heavily on the accuracy and reliability of the supplied historical data. All models rely on correct market data inputs. If incorrect market data is entered into even a well-founded model, the resulting information will be incorrect. However, even if market data is input correctly, model prices will often differ substantially from market prices, especially for instruments with complex characteristics, such as derivative instruments. Options Risk. The price of an option, which is a function of interest rates, volatility, dividends, the exercise price, stock price and other market factors, may change rapidly over time. Price valuations or market movements may not justify purchasing options on individual securities, stock indexes or ETFs, or, if purchased, the options may expire unexercised, causing the Fund to lose the premium paid for the options. Small Capitalization Company Risk. The Fund s investments in small capitalization companies may be less liquid and their securities prices may fluctuate more than those of larger, more established companies. These factors could adversely affect the Fund s ability to sell such securities at a desirable time and price. 4

7 U.S. Treasury and Agency Securities Risk. The Fund s investments in securities issued or guaranteed by the U.S. Treasury or its agencies and instrumentalities may be backed only by the credit of the agency or instrumentality and not by the full faith and credit of the United States. No assurance can be given that the U.S. government would provide financial support to its agencies and instrumentalities. Volatility Risk. The Fund may have investments that appreciate or decrease significantly in value over short periods of time. This may cause the Fund s net asset value per share to experience significant increases or declines in value over short periods of time. Zero Coupon Bonds. The market prices of these bonds generally are more volatile than the market prices of securities that pay interest on a regular basis. Since the Fund will not receive cash payments earned on these securities on a current basis, the Fund may be required to make distributions from other sources. This may result in higher portfolio turnover rates and the sale of securities at a time that is less favorable. Performance Information The bar chart and table that follow provide some indication of the risks of investing in the Fund by showing changes in the performance of the Institutional Shares of the Fund from year to year and by showing how the Fund s average annual returns compare with those of a broad measure of market performance. Performance for the period December 30, 2013, the date of the Fund s inception, through March 31, 2019, reflects the performance of the Fund s prior investment strategy. Updated performance information is available at cvrfunds.com or by calling (855) (toll free). Performance information (before and after taxes) represents only past performance and does not necessarily indicate future results. 20% Annual Returns as of December 31 Institutional Shares 15% 10% 5% % -5% -10% -15% % % During the period shown, the highest return for a quarter was 6.21% for the quarter ended December 31, 2016, and the lowest return was % for the quarter ended December 31,

8 Average Annual Total Returns (For the periods ended December 31, 2018) Institutional - Return Before Taxes 1 Year % 5 Year -0.41% Since Inception 12/30/ % Institutional - Return After Taxes on Distributions % -0.61% -0.59% Institutional - Return After Taxes on Distributions and Sale of Fund Shares -9.32% -0.29% -0.28% HFRX Equity Hedge Index (reflects no deduction for fees, expenses or taxes) -9.42% -0.25% -0.20% HFRX Equity Hedge Index is part of a series of benchmarks of hedge fund industry performance which are engineered to achieve representative performance of a larger universe of hedge fund strategies. Hedge Fund Research, Inc. employs the HFRX Methodology, a proprietary and highly quantitative process by which hedge funds are selected as constituents for the HFRX Indices. The index includes the reinvestment of dividends and does not reflect deduction of expenses. After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor s tax situation and may differ from those shown. After-tax returns shown are not relevant to investors who hold their Fund shares through taxadvantaged arrangements, such as 401(k) plans or individual retirement accounts. After-tax returns are shown only for the Institutional Shares of the Fund and after-tax returns for other share classes will vary. The return after taxes on distributions and sale of Fund shares may exceed the return before taxes due to an assumed tax benefit from any losses on a sale of Fund shares at the end of the measurement period. Management Investment Adviser. CVR Portfolio Funds LLC is the Fund s investment adviser. Portfolio Managers. Peter Higgins, CAIA and William Monaghan, CAIA, both of CVR Portfolio Funds LLC, have been co-portfolio managers of the Fund since its inception on December 30, 2013, and are jointly and primarily responsible for the day-to-day management of the Fund. Purchase and Sale of Fund Shares You may purchase or sell (redeem) shares of the Fund on any day that the New York Stock Exchange (the NYSE ) is open for business. You may purchase or redeem shares directly from the Fund by calling (855) (toll free) or writing to the Fund at CVR Dynamic Allocation Fund, P.O. Box 588, Portland, Maine You also may purchase or redeem shares of the Fund through your financial intermediary. The Fund accepts investments in the following minimum amounts: Minimum Initial Investment Institutional Shares Minimum Additional Investment Minimum Initial Investment Investor Shares Minimum Additional Investment Standard Accounts $5,000 None $2,500 $100 Retirement Accounts $5,000 None $2,500 $100 6

9 Tax Information Shareholders may receive distributions from the Fund, which may be taxed to shareholders other than tax-advantaged investors (such as tax-advantaged retirement plans and accounts) as ordinary income, capital gains, or some combination of both. If you are investing through a tax-advantaged account, you may still be subject to taxation upon withdrawals from that account. Payments to Broker-Dealers and Other Financial Intermediaries If you purchase the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund and its related companies may pay the intermediary for the sale of Fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary s website for more information. 7

10 DETAILS REGARDING PRINCIPAL INVESTMENT STRATEGIES AND RISKS The Fund seeks long-term capital appreciation while preserving capital in declining markets. The Fund s investment objective is non-fundamental and may be changed by the Board of Trustees without a vote of shareholders. The Fund, however, will provide shareholders with at least 60 days notice prior to making any changes to the investment objective. The investment policy of the portfolio reflects the opinion of the Adviser that financial markets will continue to exhibit marked fluctuations related to global central bank operations, interconnectivity of global markets, high-frequency trading and variability of global fund flows. The investment strategy of the Fund acknowledges a broad range of economic outcomes and is structured to outperform the HFRX Equity Hedge Index over a full market cycle. Additional Information Regarding Principal Investment Strategies The Fund takes a risk managed approach in pursuit of its investment objective by employing two principal investment strategies, Focused Equity and Defensive Equity, and seeks to deliver equity returns with less volatility than the S&P 500. The Fund s portfolio is constructed using fundamental screens and quantitative research. The Fund pursues its investment objective by investing in the equity securities of U.S-listed small-, mid- and large-cap companies, as well as exchange-traded funds ( ETFs ). The Fund may also invest in options on securities and indices. In addition, in an effort to hedge against equity volatility and preserve capital, the Adviser may invest a portion of the Fund s assets in cash or cash equivalents including, but not limited to, short-term investment funds and/or U.S. Government securities. The Fund s investments in options on securities are intended to provide downside protection on individual securities held in the Fund s portfolio. The Fund s investments in options on indices are intended to hedge against a declining equity market. The Fund s investments in U.S. Government securities may include U.S. Treasury securities and zero coupon bonds. Such investments may be used as an alternative to cash for liquidity purposes, for hedging purposes, or to enhance returns. The strategies employed by the Fund are: Focused Equity. The Adviser s security selection process begins with screening a universe of U.S. listed securities included in the S&P 500 Index, Russell 3000 Index, S&P 600 Smallcap Index, and S&P 400 Midcap Index. The securities are ranked based on metrics such as price to cash flow, earnings yield, and return on invested capital, leading to a portfolio of approximately of the highest ranked stocks. The custom fundamental screen identifies securities with a history of high profitability, low price to earnings ratios and low price to free cash flow. When measuring profitability, the Adviser may use fundamental metrics in addition to those named above, including dividends, sales, assets, and income. The Adviser retains full discretion to add, subtract or revise the factors utilized, weightings and processes applied to construct the portfolio as well as discretion to determine the market capitalization of securities for purchase by the Fund. By investing in a portfolio of approximately securities weighted by the Adviser s assessment of fundamental value, as opposed to market capitalization, the Adviser believes the Fund s portfolio will be weighted in favor of companies that present stronger fundamental characteristics and may outperform a market capitalization-weighted portfolio from the same universe of securities. Defensive Equity. The Defensive Equity strategy primarily invests in U.S. listed ETFs and/or baskets of equity securities, including common and preferred stocks, representing sectors or industry groups that are chosen for exposure to growthoriented themes of the U.S. economy. To manage risk and support the Adviser s objective of preserving capital in declining markets, the Adviser utilizes a quantitative model to determine when abnormal market conditions exist. The model analyzes price and volatility changes of the U.S. equity market, as well as of each sector or industry group (or proxy thereon) in which the Fund is invested. The model determines the percentage of strategy assets to be invested in each sector/industry group, or in cash in the event that the model determines a given sector is expected to depreciate in value. The Fund has the flexibility to be invested in any combination of ETFs and/or securities representing a proxy for chosen ETFs along with a combination of cash or high-quality short-term securities. The Adviser may sell a security when the Adviser s metrics indicate it to be overvalued relative to other securities in the universe or to be an otherwise unattractive investment. 8

11 Temporary Defensive Position. In order to respond to adverse market, economic, political or other conditions, the Fund may assume a temporary defensive position that is inconsistent with its principal investment objective and/or strategies and may invest, without limitation, in cash or high-quality cash equivalents (including money market instruments, commercial paper, certificates of deposit, banker s acceptances and time deposits). A defensive position, taken at the wrong time, may have an adverse impact on the Fund s performance. The Fund may be unable to achieve its investment objective during the employment of a temporary defensive position. Additional Information Regarding Principal Investment Risks The principal risks that may adversely affect the Fund s net asset value ( NAV ) per share or total return have previously been summarized under the Fund s Summary Section. These risks are discussed in more detail below. The Fund is designed for long-term investors and is not a complete investment program. You may lose money by investing in the Fund. Asset Allocation Risk. The Fund s ability to achieve its investment objective depends upon the Adviser s analysis of various factors and the Adviser s ability to select the appropriate mix of asset classes based on its analysis of such factors, which may prove incorrect. The Fund may experience losses or poor relative performance if the Adviser allocates a significant portion of the Fund s assets to an asset class that does not perform as the Adviser anticipated, including relative to other asset classes. The Fund may underperform funds that allocate their assets differently than the Fund. Cash and Cash Equivalents Risk. To the extent the Fund holds cash and cash equivalents positions, even strategically, the Fund risks achieving lower returns and potential lost opportunities to participate in market appreciation, which could negatively impact the Fund s performance and ability to achieve its investment objective. This is particularly true when the market for other investments in which the Fund may invest is rapidly rising. Holding cash subjects the Fund to the credit risk of the depositary institution. Common and Preferred Stock Risk. Common and preferred stocks may decline in value because of changes in price of a particular holding or a broad stock market decline. These fluctuations could be a drastic movement or a sustained trend. The value of a security may decline for a number of reasons which may relate directly to the issuer of a security, such as management performance, financial leverage and reduced demand for the issuer s goods or services or broader economic or market events, including changes in interest rates. Common stocks in general are subject to the risk of an issuer liquidating or declaring bankruptcy, in which case the claims of owners of the issuer s debt securities and preferred stock take precedence over the claims of common stockholders. Consumer Discretionary Sector Risk. Consumer discretionary products and services are non essential products and services whose demand tends to increase as consumers' disposable income increases, such as automobiles, apparel, electronics, home furnishings, and travel and leisure products and services. Investments in this sector can be significantly affected by the performance of the overall economy, interest rates, competition, and consumer confidence. Success can depend heavily on disposable household income and consumer spending. Changes in demographics and consumer tastes can also affect the demand for, and success of, consumer discretionary products. The prices of raw materials fluctuate in response to a number of factors, including changes in government agricultural support programs, exchange rates, import and export controls, changes in international agricultural and trading policies and seasonal and weather conditions. Companies in the consumer discretionary sector may be subject to severe competition, which may also have an adverse impact on their profitability. Exchange Traded Funds Risk. An investment in an ETF involves substantially the same risks as investing directly in the underlying securities. An ETF may not achieve its investment objective or execute its investment strategy effectively, which may adversely affect the Fund s performance. The Fund must pay its pro rata portion of an ETF s fees and expenses. Shares of an ETF may trade at a premium or discount to the net asset value of its portfolio securities. Trading in an ETF may be halted if the trading in one or more of the ETF s underlying securities is halted. Only a limited number of institutional investors, known as authorized participants, are authorized to purchase and redeem shares from an ETF. As a result, an ETF may trade at a material discount to NAV if authorized participants exit the business or 9

12 otherwise become unable to process creation and/or redemption orders. In addition, there may be a limited number of market makers and/or liquidity providers in the marketplace such that active trading markets may not develop. Hedging Risk. Gains or losses from positions in hedging instruments, such as options, may be much greater than the instrument s original cost. The counterparty may be unable to honor its financial obligation to the Fund. In addition, the Fund may be unable to close the transaction at the time it would like. If the Fund uses a hedging instrument at the wrong time or judges the market conditions incorrectly, the hedge might be unsuccessful, reduce the Fund s return, or result in a loss to the Fund. High Portfolio Turnover Risk. The Fund s investment strategy may result in high portfolio turnover rates. This may increase the Fund s brokerage commission costs. The performance of the Fund could be negatively impacted by the increased brokerage commission cost incurred by the Fund. Rapid portfolio turnover also exposes shareholders to a higher current realization of short-term capital gains, distributions of which would generally be taxed to you as ordinary income and thus cause you to pay higher taxes. Large Capitalization Company Risk. Investments in large capitalization companies may go in and out of favor based on market and economic conditions and may underperform other market segments. Some large capitalization companies may be unable to respond quickly to new competitive challenges or to attain the high growth rate of successful smaller companies, especially during extended periods of economic expansion. As such, returns on investments in stocks of large capitalization companies could trail the returns on investments in stocks of small and mid-sized capitalization companies. Management Risk. The Fund is actively managed and its performance will reflect the Adviser s ability to make investment decisions that are suited to achieving the Fund s investment objective. Investments selected by the Adviser for the Fund may not perform to expectations. This could result in the Fund s underperformance compared to other funds with similar investment objectives. Further, the Fund s performance may deviate from overall market returns to a greater degree than funds that do not employ a similar strategy. Market Events Risk. The Fund is designed for long-term investors who can accept the risks of investing in a portfolio with significant common stock holdings. Common stocks tend to be more volatile than other investment choices such as bonds and money market instruments. The value of the Fund s shares will go up and down as a result of the movement of the overall stock market or of the value of the individual securities held by the Fund, and you could lose money. Mid Capitalization Company Risk. Investments in mid capitalization companies may entail greater risks, and their securities prices may fluctuate more and have a higher degree of volatility than those of larger, more established companies. Securities of mid capitalization companies may be traded in lower volume and be less liquid. The general market may not favor mid capitalization companies in which the Fund invests and as a result the Fund could underperform the general market. Mid capitalization companies may have more limited product lines, markets and financial resources that make them more susceptible to economic and market setbacks. Additionally, information about these companies may not be readily available. These factors could adversely affect the Fund s ability to sell such securities at a desirable time and price. Model and Data Risk. Given the complexity of the investments and strategies of the Fund, the Adviser relies heavily on quantitative models supplied by third parties and information and data supplied by third parties ( Models and Data ). Models and Data are used to construct sets of transactions and investments, to provide risk management insights, and to assist in hedging the Fund s investments. When Models and Data prove to be incorrect or incomplete, any decisions made in reliance thereon expose the Fund to potential risks. Similarly, any hedging based on faulty Models and Data may prove to be unsuccessful. Some of the models used by the Adviser for the Fund are predictive in nature. The use of predictive models has inherent risks. Because predictive models are usually constructed based on historical data supplied by third parties, the success of relying on such models may depend heavily on the accuracy and reliability of the supplied historical data. 10

13 All models rely on correct market data inputs. If incorrect market data is entered into even a well-founded model, the resulting information will be incorrect. However, even if market data is input correctly, model prices will often differ substantially from market prices, especially for instruments with complex characteristics, such as derivative instruments. Options Risk. The price of an option, which is a function of interest rates, volatility, dividends, the exercise price, stock price and other market factors, may change rapidly over time. Price valuations or market movements may not justify purchasing options on individual securities, stock indexes or ETFs, or, if purchased, the options may expire unexercised, causing the Fund to lose the premium paid for the options. The Fund will suffer a loss in connection with the purchase of options if securities prices do not move in the direction anticipated by the Fund when purchasing the option. The Fund runs the risk of losing the entire premium paid for the option, plus transaction costs. The potential for loss related to writing a covered call option is limited to foregoing the potential increase in the value of the underlying security over the sum of the call price of the option and the premium received by the writer. The potential for loss related to writing put options is limited to the exercise price, less the premium received. Small Capitalization Company Risk. Investments in small capitalization companies may entail greater risks and their securities prices may fluctuate more and have a higher degree of volatility than those of larger, more established companies. Securities of small capitalization companies may be traded in lower volume and be less liquid. At certain times, the general market may not favor the smaller, growth-oriented companies in which the Fund invests and as a result the Fund could underperform the general market. Smaller companies may have more limited product lines, markets and financial resources that make them more susceptible to economic and market setbacks. Additionally, information about these companies may not be readily available. The smaller the company, the greater effect these risks may have on the company s operations and performance which could have a significant impact on the price of the security. These factors could adversely affect the Fund s ability to sell such securities at a desirable time and price. U.S. Treasury and Agency Securities Risk. The Fund may invest in securities issued or guaranteed by the U.S. Treasury or its agencies and instrumentalities. Certain of these agency or instrumentality securities the Fund may purchase are backed only by the credit of the agency or instrumentality and not by the full faith and credit of the United States. No assurance can be given that the U.S. government would provide financial support to its agencies and instrumentalities if not required to do so by law. In addition, the value of U.S. government securities may be affected by changes in the credit rating of the U.S. government. Volatility Risk. The Fund may have investments that appreciate or decrease significantly in value over short periods of time. This may cause the Fund s net asset value per share to experience significant increases or declines in value over short periods of time. Zero Coupon Bonds. Because zero coupon bonds do not make interest payments for a certain period of time, they are generally purchased by a Fund at a deep discount and their value fluctuates more in response to interest rate changes than does the value of debt obligations that make current interest payments. The degree of fluctuation with interest rate changes is greater when the deferred period is longer. The market prices of these bonds generally are more volatile than the market prices of securities that pay interest on a regular basis. Since a Fund will not receive cash payments earned on these securities on a current basis, the Fund may be required to make distributions from other sources. This may result in higher portfolio turnover rates and the sale of securities at a time that is less favorable. 11

14 MANAGEMENT The CVR Dynamic Allocation Fund (the Fund ) is a series of Forum Funds II (the Trust ), an open-end, management investment company (mutual fund). The Board of Trustees (the Board ) oversees the management of the Fund and meets periodically to review the Fund s performance, monitor investment activities and practices and discuss other matters affecting the Fund. Additional information regarding the Board and the Trust s executive officers may be found in the Fund s SAI, which is available from the Adviser s website at cvrfunds.com. The Adviser The Fund s investment adviser is CVR Portfolio Funds LLC (the Adviser ), One Bromfield Street, Suite 5100, Boston, MA The Adviser is a registered investment adviser under the Investment Advisers Act of 1940 and provides investment advisory services to the Fund. As of February 28, 2019, the Adviser had over $15.4 million of assets under management. With respect to the Fund, the Adviser has claimed an exclusion from regulation with the Commodity Futures Trading Commission ( CFTC ) as a commodity pool operator ( CPO ) pursuant to CFTC Regulation 4.5 under the Commodity Exchange Act and is exempt from registration as a commodity trading adviser under CFTC Regulation 4.14(a)(8). The Adviser receives an advisory fee from the Fund at an annual rate equal to 1.10% of the Fund s average annual daily net assets under the terms of the Advisory Agreement. The actual advisory fee rate retained by the Adviser for the fiscal year ended November 30, 2018 was 0.75%. The Adviser has contractually agreed to waive its fee and/or reimburse Fund expenses to limit the Fund s Total Annual Fund Operating Expenses After Fee Waiver and/or Expense Reimbursement (excluding all taxes, interest, portfolio transaction expenses, proxy expenses and extraordinary expenses) of Institutional Shares to 1.65%, and Investor Shares to 1.90% through at least April 1, 2020 ( Expense Cap ). The Expense Cap may only be raised or eliminated with the consent of the Board of Trustees. The Adviser may be reimbursed by the Fund for fees waived and expenses reimbursed by the Adviser pursuant to the Expense Cap if such payment is approved by the Board, made within three years of the fee waiver or expense reimbursement and does not cause the Total Annual Fund Operating Expenses After Fee Waiver and/or Expense Reimbursement of the Fund after giving effect to the recouped amount to exceed the lesser of (i) the then-current expense cap, and (ii) the expense cap in place at the time the fees/expenses were waived/reimbursed. Total Annual Fund Operating Expenses After Fee Waiver and/or Expense Reimbursement will increase if exclusions from the Expense Cap apply. A discussion summarizing the basis on which the Board approved the Advisory Agreement will be included in the Fund s semi-annual report for the period ending May 31, Manager of Managers Structure The Fund s Board and its shareholders have approved a manager of managers structure that permits the Adviser to appoint and replace Subadvisers and enter into, materially amend and terminate sub-advisory agreements with other investment managers with respect to the Fund, subject to Board approval but without shareholder approval (the Manager Of Managers Structure ). The ability to implement the Manager Of Managers Structure with respect to the Fund is pursuant to an exemptive order from the SEC ( Exemptive Relief ). Pursuant to the Exemptive Relief, the Fund is required to notify shareholders of the retention of a new Subadviser within 90 days of the hiring of the new Subadviser. In the future, the Adviser may propose to appoint or replace one or more Subadviser subject to Board approval and applicable shareholder notice requirements. The Manager Of Managers Structure enables the Fund to operate with greater efficiency and without incurring the expense and delays associated with obtaining shareholder approval of such subadvisory agreements. Under the Manager Of Managers Structure, the Adviser maintains the ultimate responsibility, subject to the oversight of the Board, to oversee the Subadviser and recommend their hiring and replacement. The Manager Of Managers Structure provides the Adviser with the discretion to terminate any Subadviser and allocate and reallocate the Fund s assets for management among the Subadviser and itself. The Manager Of Managers Structure permits disclosure of the fees paid to Subadvisers in the aggregate in its registration statement (both as a dollar amount and as a percentage of the Fund s net assets), but 12

15 does not permit investment management fees paid by the Fund to be increased without shareholder approval, nor does it change the Adviser s responsibilities to the Fund including responsibility for all advisory services furnished by a Subadviser. Portfolio Managers Peter Higgins and William Monaghan, both of CVR Portfolio Funds LLC, have been the co-portfolio managers of the Fund since its inception on December 30, 2013, and are jointly and primarily responsible for the day-to-day management of the Fund. Peter Higgins Prior to joining the Adviser in 2013, Mr. Higgins, from 2011 through 2013, had been a Managing Director at State Street as an institutional equity trader in State Street s Global Markets Group. Prior to State Street, he held the position of Partner and Head of Trading at Pulse Trading, a Boston-based institutional broker/ dealer, from 2004 to Mr. Higgins holds the Charted Alternative Investment Analyst designation ( CAIA ). William Monaghan Prior to joining the Adviser in 2013, Mr. Monaghan, from 2010 through 2013, was a Partner and Senior Consultant for CTC Consulting, an investment consulting firm providing investment advice to high net worth families, multi-family offices, trust, endowments, foundations and pension plans. He was a voting member of CTC s Investment Committee. Prior to CTC Consulting, from , Mr. Monaghan was founder and Chief Investment Officer of Pinyon Peak Capital Management LLC, a diversified fund of hedge funds. Mr. Monaghan holds the Charted Alternative Investment Analyst designation ( CAIA ). The SAI provides additional information about the compensation of the Portfolio Managers, other accounts managed by the Portfolio Managers and the ownership of Fund shares by the Portfolio Managers. Other Service Providers Atlantic Fund Administration, LLC (d/b/a Atlantic Fund Services) ( Atlantic ), a wholly owned subsidiary of Apex US Holdings LLC, provides fund accounting, fund administration, and compliance services to the Fund and the Trust and supplies certain officers of the Trust, including a Principal Executive Officer, a Principal Financial Officer, a Chief Compliance Officer, an Anti-Money Laundering Compliance Officer and additional compliance support personnel. Atlantic Shareholder Services, LLC, a wholly owned subsidiary of Atlantic, provides transfer agency services to the Fund and the Trust. Foreside Fund Services, LLC (the Distributor ), the Trust s principal underwriter, acts as the Trust s distributor in connection with the offering of Fund shares. The Distributor may enter into arrangements with banks, broker-dealers and other financial intermediaries through which investors may purchase or redeem shares. The Distributor is not affiliated with the Adviser or with Atlantic or their affiliates. Fund Expenses The Fund is charged for those expenses that are directly attributable to it, while other expenses are allocated proportionately among the Fund and other series of the Trust based upon methods approved by the Board. Expenses that are directly attributable to a specific class of shares, such as distribution fees and shareholder servicing fees, are charged directly to that class. The Adviser or other service providers may waive all or any portion of their fees and may reimburse certain expenses of the Fund. Service provider waivers may be different in dollar and percentage amount for different classes of the Fund, as applicable, may be voluntary, and do not affect the Adviser s contractual waiver. Any agreement to waive fees or to reimburse expenses increases the investment performance of the applicable Fund and its share classes for the period during which the waiver or reimbursement is in effect. Current Adviser fee waiver and/or expense reimbursements are reflected in the section titled Fees and Expenses. 13