Merk Absolute Return Currency Fund Investor Shares (MABFX) Institutional Shares (MAAIX) Merk Hard Currency Fund Investor Shares (MERKX) Institutional Shares (MHCIX) Prospectus August 1, 2018 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.
Table of Contents Summary Section 1 This important section summarizes each Fund s objectives, strategies, fees, risks, past performance, portfolio turnover and the portfolio manager and your account and other information. Merk Absolute Return Currency Fund 1 Merk Hard Currency Fund 8 Details Regarding the Funds Principal Investment Strategies 15 This section includes additional information about each Fund s investment strategies. Merk Absolute Return Currency Fund 15 Merk Hard Currency Fund 17 Additional Information Regarding the Funds Principal Investment Risks 19 This section includes additional information about each Fund s investment risks. Management 26 Investment Adviser 26 Portfolio Manager 26 Other Service Providers 27 Fund Expenses 27 Your Account 28 How to Contact the Funds 28 General Information 28 Choosing a Share Class 31 Buying Shares 31 Selling Shares 35 Exchanging Shares 38 Retirement Accounts 39 Other Information 40 Financial Highlights 43 The Notice of Privacy Policy and Practices of the Funds is included with this Prospectus but is not considered to be part of the Prospectus.
SUMMARY SECTION Merk Absolute Return Currency Fund - Investor Shares and Institutional Shares Investment Objective The Merk Absolute Return Currency Fund (the Fund in this section) seeks to generate positive absolute returns by investing in securities and instruments that create exposure to currencies. 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) Investor Shares Institutional 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 Exchange 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 1.00% 1.00% Distribution and/or Service (12b-1) Fees 0.25% None Other Expenses 0.05% 0.05% Total Annual Fund Operating Expenses 1.30% 1.05% 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. 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
1 Year 3 Years 5 Years 10 Years Investor Shares $132 $412 $713 $1,568 Institutional Shares $107 $334 $579 $1,283 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 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 97% of the average value of its portfolio.the portfolio turnover rate is calculated without regard to any securities whose maturities or expiration dates at the time of acquisition were one year or less. Principal Investment Strategies Under normal market conditions, the Fund invests at least 80% of the value of its net assets (plus borrowings for investment purposes) in money market instruments and high quality debt securities denominated in a currency to which the Fund seeks exposure or in a combination of U.S. dollar denominated securities and forward currency contracts that expose the Fund to such currencies. Over time, the Fund seeks to generate more gains from securities other than derivatives. Positive absolute returns may be generated from the income produced by the debt securities, plus (minus) the gains (losses) resulting from fluctuations in the values of currencies relative to the U.S. dollar. Absolute returns means positive returns over a complete market cycle, irrespective of prevailing market conditions. For purposes of pursuing its investment goal, the Fund will be exposed primarily to currencies of developed countries that, in the opinion of Merk Investments LLC ( Adviser ), the Fund s investment adviser, have liquid currency markets. The Fund s investments could focus in one or more geographic regions, depending on the Adviser s assessment of market conditions. The Fund typically will buy and sell currencies in the spot and forward markets. In addition, the Fund will normally enter into derivative currency transactions, including currency forwards, options on securities, options on currencies, currency futures contracts, options on currency futures contracts, currency swaps, and cross currency swaps. In seeking to achieve positive absolute returns, the Adviser makes currency exposure allocations based on quantitative and qualitative analysis in the context of strategic and tactical considerations. Systematic trading signals are derived from these analyses and may be aggregated using market regime analysis. Strategic versus Tactical. The Adviser considers factors that lead to gradual allocation changes over months as strategic. In contrast, the Adviser considers factors that lead to allocation changes over shorter periods as tactical. The Fund s enhanced tactical strategies include, among others, risk sentiment analysis, technical analysis, an integration of quantitative and qualitative analyses seeking to project the Adviser s macro-economic views to currency allocation, and more integrated and active risk management techniques. Quantitative Analysis. The Adviser may consider quantitative factors to determine portfolio allocations. Quantitative factors that the Adviser may consider include fundamental and statistical technical analysis of currency, financial markets and economic data. Fundamental considerations may include a country s gross domestic product or the central bank s benchmark interest rate. Technical considerations may include the relative performance of currencies over time. Statistical analysis may include the use of probability theory and mathematical optimizations. Additionally, the Adviser may utilize statistical methods to manage overall portfolio risk. 2
Qualitative Analysis. Qualitative factors that the Adviser may consider include an analysis of monetary policies pursued by central banks and economic environments; a country s perceived political stability; the risk of government intervention in its financial markets; and proprietary analysis on the outlook of a country s currency. Additionally, the Adviser may utilize qualitative and quantitative analysis to manage overall portfolio risk. Market Regime Analysis. The Adviser uses a proprietary statistical framework to identity dynamics in market regimes that are defined by risk characteristics. Market Regime analysis and statistical analysis are utilized to provide a probabilistic system that governs the process of aggregating trading signals received from quantitative and qualitative analysis. Strategy Enhancements. Effective June 30, 2012, the Fund s principal investment strategies were enhanced in an effort to achieve a more tactical focus. Such strategy enhancements included, among others, risk sentiment analysis, technical analysis, an integration of quantitative and qualitative analyses seeking to project the Adviser s macro-economic views to currency allocation, and more integrated and active risk management techniques. Once the Adviser has determined the appropriate currency exposure levels, the Adviser normally selects instruments to create a liquid portfolio of short duration. To mitigate interest rate and credit risk to its portfolio, the Fund typically maintains a weighted average portfolio maturity of less than eighteen months and buys money market and other short-term debt instruments that are issued by entities with an outstanding unsecured debt issue rated in the top three rating categories by one or more U.S. nationally recognized services or that the Adviser considers comparable in quality to such instruments. When selecting debt securities for the portfolio, the Adviser may sacrifice yield in return for high credit quality. In addition, the Adviser may use derivative instruments to shift the Fund s currency exposures. The Fund may invest a significant portion of the Fund s total assets in cash or cash equivalents if the Adviser s process does not identify other appropriate investments for the Fund. Principal Investment Risks The Fund s net asset value ( NAV ) and investment return will fluctuate based upon changes in the value of its portfolio securities. You could lose money on your investment in the Fund, and the Fund could underperform other investments. There is no guarantee that the Fund will meet its investment objective. An investment in the Fund is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. It is important that you closely review and understand the risks of investing in the Fund prior to making an investment in 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. Counterparty Risk. A counterparty to a derivative or other financial instrument entered into by the Fund may become bankrupt or otherwise fail to perform its obligations. The Fund may experience delays in obtaining recovery or obtain limited or no recovery in such circumstances. Currency Exchange Rate Risk. Currency exchange rates may fluctuate significantly over short periods of time and can be unpredictably affected by political developments or government intervention. Changes in currency exchange rates will 3
affect the value of the Fund s investments. Currency management strategies, including currency forwards and cross currency forwards, options on currencies, currency futures contracts, options on currency futures contracts, currency swaps, cross currency swaps, and cross-hedging, may substantially change the Fund s exposure to currency exchange rates and could result in losses to the Fund. Derivatives Risk. The risks of investments in derivatives, including swaps, options, futures contracts and options on futures contracts, include the risk that derivatives may result in losses that are potentially unlimited and that partially or completely offset gains in portfolio positions. Derivative transactions may not be liquid. Many derivatives subject the Fund to Counterparty Risk, as discussed in this Prospectus. Fixed-Income Securities Risk. The Fund may invest in fixed-income (debt) securities, which are generally subject to the following risks: Credit Risk. The financial condition of an issuer of a fixed-income security may cause the issuer to default. A decline in an issuer s credit rating may cause a decrease in the value of the security and an increase in investment risk and price volatility. Interest Rate Risk. An increase in interest rates typically causes a decrease in the value of fixed-income securities in which the Fund may invest. Given that interest rates are near historic lows, risks associated with rising rates are heightened. Foreign Instruments Risk. Foreign investments are subject to risks that include international trade, currency, political, regulatory and diplomatic risks, which may affect their value. Also, foreign instruments are subject to the risk that their market price may not reflect the issuer s condition because there is not sufficient publicly available information about the issuer. Government supervision and regulation of foreign stock exchanges, currency markets, trading systems and brokers may be less than in the U.S. European Market Risk. The risk of investing in Europe may be heightened due to the recent referendum in which the United Kingdom voted to withdraw from membership in the European Union. In addition, if one or more countries were to exit the European Union or abandon the use of the euro as a currency, the value of investments tied to those countries or the euro could decline significantly and unpredictably. Any such event could have a material adverse impact on the value and risk profile of the Fund s portfolio. Forward Currency Contract Risk. Entering into forward currency transactions may generate profits or losses for the Fund depending upon movements in the currencies in which the forward currency contract is denominated. The use of forward currency contracts subjects the Fund to Counterparty Risk, as discussed in this Prospectus. Assets used as cover or held in an account cannot be sold while the position in the corresponding derivative is open, unless they are replaced with appropriate assets. As a result, the commitment of a large portion of the Fund s assets to cover or to segregated accounts could impede portfolio management or the Fund s ability to meet redemption requests or other current obligations. Futures Contract Risk. There may be an imperfect correlation between the changes in market value of the securities held by the Fund and the prices of futures contracts. Futures contracts may expose the Fund to Leverage Risk, as discussed in this Prospectus. Geographic Focus Risk. The Fund may be particularly susceptible to economic, political or regulatory events affecting those countries or regions in which the Fund focuses its investments. 4
Leverage Risk. Certain derivative transactions, such as those involving foreign currency contracts and futures contracts, may give rise to leverage, causing the Fund to be more volatile than if it had not been leveraged. Liquidity Risk. Certain securities and derivatives held by the Fund may be difficult to sell at the time and price the Adviser would like. As a result, the Fund may have to hold these investments longer than it would like and may forego other investment opportunities. There is the possibility that the Fund may lose money or be prevented from realizing capital gains if it cannot sell a security at a particular time and price. 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. 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. 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. Portfolio Turnover Risk. A high level of portfolio turnover may have a negative impact on performance by increasing transaction costs and generating greater tax liabilities for shareholders. The Adviser can engage in frequent trading on occasion, if it believes it is in the Fund s best interests and in the implementation of its strategy. This frequent trading can affect performance through increased brokerage and other transaction costs, such as increased custody costs. Quantitative Investing Risk. The factors used in quantitative analysis and the weight placed on those factors may not be predictive of security s value. Among other things, the quantitative analysis may be adversely affected by reliance on erroneous or outdated data or flawed models or computer systems. Tax Risk. In order to avoid paying taxes at the Fund level, the Fund must qualify as a regulated investment company ( RIC ), deriving at least 90% of its gross income for each taxable year from sources treated as qualifying income under the Internal Revenue Code of 1986, as amended ( IRC ). If the Fund s foreign currency gains were excluded from the definition of qualifying income, the Fund may fail to qualify as a RIC or may change its investment strategy or liquidate. 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 Investor 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. Because the Investor Shares have higher expenses than the Institutional Shares, the performance of the Investor Shares would be lower than the performance that the Institutional Shares realized for the same period. Updated performance information is available at www.merkfunds.com or by calling (866) MERK FUND or (866) 637-5386 (toll free). Performance information represents only past performance and does not necessarily indicate future results. 5
Annual Returns as of December 31 Investor Shares 15% 10% 5% 0% 4.65 5.75 1.53 8.26 4.69-5% -1.31-10% -8.41-9.21-15% 2010 2011 2012 2013 2014 2015 2016 2017 During the period shown, the highest return for a quarter was 4.60% for the quarter ended March 31, 2016, and the lowest return was -9.60% for the quarter ended June 30, 2012. The calendar year-to-date total return as of June 30, 2018 was -5.74%. Average Annual Total Returns (For the periods ended December 31, 2017) 1 Year 5 Year Since Inception 09/09/09 Institutional Shares - Return Before Taxes 5.05% 2.32% 0.56% (1) Investor Shares - Return Before Taxes 4.69% 2.01% 0.30% Investor Shares - Return After Taxes on Distributions 2.54% 1.25% -0.26% Investor Shares - Return After Taxes on Distributions and Sale of Fund Shares 2.61% 1.19% -0.01% Citigroup 3-Month U.S. T-Bill Index (reflects no deduction for fees, expenses or taxes) 0.84% 0.24% 0.18% (2) (1) For the Institutional Shares, performance for the period is a blended average annual return which includes the returns of Investor Shares prior to April 1, 2010, the commencement of operations of Institutional Shares. (2) Since August 31, 2009. Citigroup 3-Month U.S. T-Bill Index is an unmanaged index representing monthly return equivalents of yield averages of the last 3-month Treasury Bill issues. 6
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 tax-advantaged arrangements, such as 401(k) plans or individual retirement accounts. 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. Merk Investments LLC ( Adviser ) is the Adviser to the Fund. Portfolio Manager. As Chief Investment Officer of the Adviser, Axel Merk is primarily responsible for the day-to-day management of the Fund. Mr. Merk relies on the support of an investment management team composed of investment professionals on the Adviser s staff, which provide research and analysis that may underpin the investment process utilized to manage the Fund. Mr. Merk was co-portfolio manager of the Fund since its inception in 2009 until July 31, 2012. On August 1, 2012, Mr. Merk became the sole portfolio manager. 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 (866) MERK FUND or (866) 637-5386 (toll free) or writing to the Fund at Merk Mutual Funds, P.O. Box 588, Portland, Maine 04112. 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 Investor Shares Minimum Additional Investment Minimum Initial Investment Institutional Shares Minimum Additional Investment Standard Accounts $2,500 $100 $250,000 None Retirement Accounts $1,000 $100 $250,000 None 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
SUMMARY SECTION Merk Hard Currency Fund - Investor Shares and Institutional Shares Investment Objective The Merk Hard Currency Fund (the Fund in this section) seeks to profit from a rise in hard currencies relative to the U.S. dollar. 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) Investor Shares Institutional 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 Exchange 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 1.00% 1.00% Distribution and/or Service (12b-1) Fees 0.25% None Other Expenses 0.05% 0.05% Total Annual Fund Operating Expenses 1.30% 1.05% 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. 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: 8
1 Year 3 Years 5 Years 10 Years Investor Shares $132 $412 $713 $1,568 Institutional Shares $107 $334 $579 $1,283 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 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 35% of the average value of its portfolio.the portfolio turnover rate is calculated without regard to any securities whose maturities or expiration dates at the time of acquisition were one year or less. Principal Investment Strategies Under normal market conditions, the Fund invests at least 80% of the value of its net assets (plus borrowings for investment purposes) in hard currency denominated investments. The Fund normally invests in a managed basket of hard currency denominated investments composed of high quality, short-term debt instruments, including sovereign debt, and indirectly in gold and gold-related securities. Hard currencies are currencies of countries pursuing what the Merk Investments LLC (the Adviser ) believes to be sound monetary policy and gold. Sound monetary policy is defined by the Adviser as providing an environment fostering long-term price stability. The Adviser considers gold to be the only currency with intrinsic value and, as such, qualifies as a hard currency. To the extent that the Fund invests in gold, it will normally do so indirectly through U.S. listed exchange-traded products ( ETPs ) that invest in gold bullion and futures contracts. The Fund may invest in ETPs sponsored by the Adviser or its affiliates. The Adviser will determine currency allocations based on an analysis of monetary policies pursued by central banks and economic environments. Once this determination has been made, money market or other debt instruments will be selected to create a liquid portfolio of short duration and high credit quality securities. The Adviser may adapt the currency allocations as its analysis of monetary policies and economic environments evolves. The Fund will specifically seek the currency risk of select countries pursuing what the Adviser believes are sound monetary policies. As long-term price stability is unlikely to be achieved by most currencies, if any, the Adviser focuses on countries with monetary policy that in the Adviser's view better fosters such stability. The Fund may from time to time focus its investment in just a few currencies that meet the Adviser s investment criteria for stringent monetary policies and practices. To mitigate interest rate and credit risk to its portfolio, the Fund typically maintains a weighted average portfolio maturity of less than eighteen months. In addition, the Fund only buys money market or other short-term debt instruments that are rated in the top three rating categories by one or more U.S. nationally recognized services or that the Adviser considers comparable in quality to such instruments. When selecting debt securities for the portfolio, the Adviser may sacrifice yield in return for high credit quality. To gain exposure to hard currencies, the Fund may also invest in a combination of fixed-income securities and forward currency contracts. Over time, the Fund seeks to generate more gains from securities than derivatives. The Fund may invest a significant portion of the Fund s total assets in cash or cash equivalents if the Adviser s process does not identify other appropriate investments for the Fund. The Fund is non-diversified. 9
Principal Investment Risks The Fund s net asset value ( NAV ) and investment return will fluctuate based upon changes in the value of its portfolio securities. You could lose money on your investment in the Fund, and the Fund could underperform other investments. There is no guarantee that the Fund will meet its investment objective. An investment in the Fund is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. It is important that you closely review and understand the risks of investing in the Fund prior to making an investment in 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. Counterparty Risk. A counterparty to a derivative or other financial instrument entered into by the Fund may become bankrupt or otherwise fail to perform its obligations. The Fund may experience delays in obtaining recovery or obtain limited or no recovery in such circumstances. Currency Exchange Rate Risk. Currency exchange rates may fluctuate significantly over short periods of time and can be unpredictably affected by political developments or government intervention. Changes in currency exchange rates will affect the value of the Fund s investments. Currency management strategies, including currency forwards and cross currency forwards, options on currencies, currency futures contracts, options on currency futures contracts, currency swaps, cross currency swaps, and cross-hedging, may substantially change the Fund s exposure to currency exchange rates and could result in losses to the Fund. Derivatives Risk. The risks of investments in derivatives, including swaps, options, futures contracts and options on futures contracts, include the risk that derivatives may result in losses that are potentially unlimited and that partially or completely offset gains in portfolio positions. Derivative transactions may not be liquid. Many derivatives subject the Fund to Counterparty Risk, as discussed in this Prospectus. Exchange-Traded Products Risk. The risks of investing in ETPs typically reflect the risks of the types of instruments in which such ETPs invest, spanning a wide range of commodities, derivatives, and/or other securities designed to track the price, performance and dividend yield of a particular commodity, security, securities market index or sector of an index. When the Fund invests in ETPs, shareholders bear their proportionate share of the fees and expenses of the ETP held by the Fund, as well as their proportionate share of the Fund s fees and expenses. Shares of ETPs may trade at a premium or discount to their NAV. The Fund may invest in ETPs sponsored by the Adviser or its affiliates. Fixed-Income Securities Risk. The Fund may invest in fixed-income (debt) securities, which are generally subject to the following risks: Credit Risk. The financial condition of an issuer of a fixed-income security may cause the issuer to default. A decline in an issuer s credit rating may cause a decrease in the value of the security and an increase in investment risk and price volatility. 10
Interest Rate Risk. An increase in interest rates typically causes a decrease in the value of fixed-income securities in which the Fund may invest. Given that interest rates are near historic lows, risks associated with rising rates are heightened. Focused Portfolio Risk. The Fund s portfolio investments may be more heavily weighted in one or more sectors or industries. Negative developments affecting those sectors or industries may result in greater market risk to the Fund than to a fund that is not weighted in those sectors or industries. Foreign Instruments Risk. Foreign investments are subject to risks that include international trade, currency, political, regulatory and diplomatic risks, which may affect their value. Also, foreign instruments are subject to the risk that their market price may not reflect the issuer s condition because there is not sufficient publicly available information about the issuer. Government supervision and regulation of foreign stock exchanges, currency markets, trading systems and brokers may be less than in the U.S. European Market Risk. The risk of investing in Europe may be heightened due to the recent referendum in which the United Kingdom voted to withdraw from membership in the European Union. In addition, if one or more countries were to exit the European Union or abandon the use of the euro as a currency, the value of investments tied to those countries or the euro could decline significantly and unpredictably. Any such event could have a material adverse impact on the value and risk profile of the Fund s portfolio. Forward Currency Contract Risk. Entering into forward currency transactions may generate profits or losses for the Fund depending upon movements in the currencies in which the forward currency contract is denominated. The use of forward currency contracts subjects the Fund to Counterparty Risk, as discussed in this Prospectus. Assets used as cover or held in an account cannot be sold while the position in the corresponding derivative is open, unless they are replaced with appropriate assets. As a result, the commitment of a large portion of the Fund s assets to cover or to segregated accounts could impede portfolio management or the Fund s ability to meet redemption requests or other current obligations. Futures Contract Risk. There may be an imperfect correlation between the changes in market value of the securities held by the Fund and the prices of futures contracts. Futures contracts may expose the Fund to Leverage Risk, as discussed in this Prospectus. Gold-Related Securities Risk. Investments in gold-related securities may be subject to greater volatility than investments in traditional securities. The value of gold-related securities may be affected by market movements and political, regulatory or other factors affecting the gold industry. Gold-related securities generate no interest or dividends, and the return from investments in gold-related securities will be derived solely from the price gains or losses from the commodity. Investments in gold and gold-related securities generally do not produce qualifying income for the Fund and may have negative tax consequences for the Fund. Leverage Risk. Certain derivative transactions, such as those involving foreign currency contracts and futures contracts, may give rise to leverage, causing the Fund to be more volatile than if it had not been leveraged. 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. 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 11
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. Non-Diversification Risk. The Fund is non-diversified. Investment by the Fund in securities of a limited number of issuers may expose it to greater market risk and potential monetary losses than if its assets were diversified among the securities of a greater number of issuers. Sovereign Debt Risk: Bonds issued by governments, sometimes referred to as sovereign debt, present risks not associated with investments in other types of bonds. The government or agency issuing the debt may be unable or unwilling to make interest payments and/or repay the principal owed. In such instance, the Fund may have limited recourse against the issuing government or agency. In the past, some countries have refused to honor their payment obligations on issued bonds. Tax Risk. In order to avoid paying taxes at the Fund level, the Fund must qualify as a regulated investment company ( RIC ), deriving at least 90% of its gross income for each taxable year from sources treated as qualifying income under the Internal Revenue Code of 1986, as amended ( IRC ). If the Fund s foreign currency gains were excluded from the definition of qualifying income, the Fund may fail to qualify as a RIC or may change its investment strategy or liquidate. 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 Investor 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. Because the Investor Shares have higher expenses than the Institutional Shares, the performance of the Investor Shares would be lower than the performance that the Institutional Shares realized for the same period. Updated performance information is available at www.merkfunds.com or by calling (866) MERK FUND or (866) 637-5386 (toll free). Performance information represents only past performance and does not necessarily indicate future results. 12
Annual Returns as of December 31 Investor Shares 20% 15% 13.84 10% 9.08 5% 4.63 4.11 0% -5% -10% -15% -4.94-0.77-2.76-8.49-12.08-0.33-20% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 During the period shown, the highest return for a quarter was 9.05% for the quarter ended September 30, 2010, and the lowest return was -9.01% for the quarter ended March 31, 2015. The calendar year-to-date total return as of June 30, 2018 was -3.26%. Average Annual Total Returns (For the periods ended December 31, 2017) 1 Year 5 Year 10 Year Institutional Shares - Return Before Taxes 9.42% -2.89% 0.17% (1) Investor Shares - Return Before Taxes 9.08% -3.18% -0.05% Investor Shares - Return After Taxes on Distributions 9.08% -3.45% -0.51% Investor Shares - Return After Taxes on Distributions and Sale of Fund Shares 5.14% -2.47% -0.13% JPMorgan 3-Month Global Cash Index (reflects no deduction for fees, expenses or taxes) 10.24% -2.58% -0.54% (1) For the Institutional Shares, performance for the period is a blended average annual return which includes the returns of Investor Shares prior to April 1, 2010, the commencement of operations of Institutional Shares. JPMorgan 3-Month Global Cash Index is an equal-weighted aggregate of the cash indices of 13 countries designed to track total returns of three-month constant maturity euro-currency deposits. The euro-currency deposits are short-term securities consistent across all markets in terms of liquidity, maturity and credit quality. The index is unmanaged and includes reinvested distributions. 13
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 tax-advantaged arrangements, such as 401(k) plans or individual retirement accounts. 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. Merk Investments LLC ( Adviser ) is the Adviser to the Fund. Portfolio Manager. As Chief Investment Officer of the Adviser, Axel Merk is primarily responsible for the day-to-day management of the Fund. Mr. Merk relies on the support of an investment management team composed of investment professionals on the Adviser s staff, which provide research and analysis that may underpin the investment process utilized to manage the Fund.Mr. Merk has been portfolio manager of the Fund since its inception in 2005. 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 (866) MERK FUND or (866) 637-5386 (toll free) or writing to the Fund at Merk Mutual Funds, P.O. Box 588, Portland, Maine 04112. 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 Investor Shares Minimum Additional Investment Minimum Initial Investment Institutional Shares Minimum Additional Investment Standard Accounts $2,500 $100 $250,000 None Retirement Accounts $1,000 $100 $250,000 None 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. 14
DETAILS REGARDING PRINCIPAL INVESTMENT STRATEGIES Concepts to Understand The value of the Funds shares will fluctuate. The Funds are not a substitute for a money market fund. High Quality Debt Security means an instrument issued by an entity with an outstanding unsecured debt issue rated in the top tier ratings by a U.S. nationally recognized ratings service such as Moody s Investors Service, Inc., Standard & Poor s Financial Services, LLC and Fitch, Inc., or that the Adviser considers comparable in quality to instruments rated in the top tier. Debt Securities are securities issued by domestic and foreign governments, financial institutions, corporations and other entities to borrow money. The issuer pays a fixed, floating or variable rate of interest and must repay the amount borrowed at maturity. Maturity means the date on which a debt security is (or may be) due and payable. Duration is a measure of a bond or bond fund s price sensitivity to changes in interest rates. Duration is defined as the weighted average term to maturity of a security s cash flows, where the weights are the present value of each cash flow as a percentage to the security s price. The greater a bond or fund s duration, the greater its price volatility in response to changes in interest rates. For example, if interest rates changed by one percent, the value of a security having an effective duration of two years generally would vary by two percent. Merk Absolute Return Currency Fund Investor Shares and Institutional Shares Additional Information Regarding Principal Investment Strategies The Merk Absolute Return Currency Fund (the Fund in this section) seeks to generate positive absolute returns by investing in securities and instruments that create exposure to currencies. Absolute returns means a positive return over a complete market cycle, irrespective of prevailing market conditions. A full market cycle is generally considered to be the movement from a period of strong performance and rising prices through a period of weak performance and falling prices, then back again to a new period of strong performance. The length of a full market cycle can vary from a few months to a few years. 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 Fund typically will buy and sell currencies in the spot and forward markets. In addition, the Fund will normally enter into derivative currency transactions, including currency forwards, options on securities, options on currencies, currency futures contracts, options on currency futures contracts, currency swaps, and cross currency swaps. The currencies in which the Fund may invest include, but are not limited to, the following currencies: Argentine Peso (ARS), Australian Dollar (AUD), Brazilian Real (BRL), British Pound (GBP), Canadian Dollar (CAD), Chilean Peso (CLP), Chinese Renminbi (CNY), Colombian Peso (COP), Czech Koruna (CZK), Danish Krone (DKK), Euro (EUR), Hong Kong Dollar (HKD), Hungarian Forint (HUF), Iceland Krona (ISK), Indian Rupee (INR), Indonesian Rupiah (IDR), Israeli Shekel (ILS), Japanese Yen (JPY), Malaysian Ringgit (MYR), Mexican Peso (MXN), New Zealand Dollar (NZD), Norwegian Krone (NOK), Pakistani Rupee (PKR), Peruvian New Sol (PEN), Philippine Peso (PHP), Polish Zloty (PLN), Russian Ruble (RUB), Singapore Dollar (SGD), South African Rand (ZAR), South Korean Won (KRW), Swedish Krona (SEK), Swiss Franc (CHF), Taiwanese Dollar (TWD), Thai Baht (THB), Thai Baht Onshore (THO), Turkish Lira (TRY), U.S. Dollar (USD), and successor currencies of the aforementioned currencies, if any. The Fund may also invest in other securities whose performance is expected to have a high correlation to the performance of currencies. To the extent the Fund retains various fixed-income instruments to settle derivative contracts, the Adviser expects such instruments to generate income for the Fund. The value of such investments (to the extent used to cover the Fund s net exposure under 15
Forward Currency Contract means an agreement to buy or sell a specified amount of currency at a set price on a future date. When combined with U.S. dollar denominated money market instruments, it may obtain a result that is substantially the same as a direct investment in a foreign currency denominated instrument. Non-Deliverable Forward Contract ( NDF ) means a cash-settled, short-term Forward Currency Contract on a foreign currency, where the profit or loss at the time at the settlement date is calculated by taking the difference between the agreed upon exchange rate and the spot rate at the time of settlement for an agreed upon notional amount. This combination may obtain a result that is substantially the same as a direct investment in a foreign currency denominated instrument. NDF contracts are not deliverable due to regulatory restrictions on the underlying currency. Futures Contracts are standardized bilateral agreements, generally traded on an exchange, where one party agrees to accept, and the other party agrees to make, delivery of cash, securities or commodities, as called for in the contract, at a specified date and at an agreed upon price. An index futures contract involves the delivery of an amount of cash equal to a specified dollar amount multiplied by the difference between the index value at the close of trading of the contract and at the price designated by the futures contract. the forward foreign currency contracts and similar instruments) and forward contracts and other instruments that provide investment exposure to currencies will be counted for purposes of the Fund s 80% policy. The Adviser may focus the Fund s exposure to a few currencies that meet the Adviser s qualitative and quantitative investment factors. The Adviser s analysis of monetary policies evaluates decision-making processes of central banks. The Adviser s analysis of macroeconomic environments is driven by fundamental research focusing on assessing economic data and dynamics driving government policy. As the Adviser s analysis of monetary policies and economic environments evolves, currencies may be sold and re-deployed as part of the allocation process. Allocation changes may happen gradually over time or based on short-term changes in assessment. Allocation changes may lead to transactions in both the currency markets and applicable local fixed-income markets. The money market or other debt instruments in which the Fund may invest include instruments issued by the U.S. and foreign national, provincial, state or municipal governments or their political subdivisions or agencies; central banks, sovereign entities, supranational organizations or special purpose entities organized or backed by any of the foregoing entities ( Special Purpose Entities ); U.S. and foreign corporations; and debt obligations issued by entities that the Adviser considers to be comparable to entities in the categories enumerated above. Regarding fixed-income securities, the Adviser seeks to invest in high-quality debt instruments; should the Adviser deem that a security is no longer considered high credit quality, the security may be sold. The Fund may invest a significant portion of the Fund s total assets in cash or cash equivalents if the Adviser s process does not identify other appropriate investments for the Fund. 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. 16