Notes to the Financial Statements (Unaudited)
February 29, 2020
1. ORGANIZATION
Managed Portfolio Series (the “Trust”) was organized as a Delaware statutory trust on January 27, 2011. The Trust is registered under the Investment Company Act of 1940, as
amended (the “1940 Act”), as an open-end management investment company. The Principal Street High Income Municipal Fund (the “Fund”) is a diversified series with its own investment objectives and policies within the Trust. The investment objective
of the Fund is to provide current income exempt from regular federal income tax. The Fund is an investment company and accordingly follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board
(“FASB”) Accounting Standards Codification Topic 946 Financial Services – Investment Companies. The Fund currently offers one class of shares for purchase. The Institutional Class commenced operations on September 15, 2017. The Investor Class has
not yet commenced operations as of February 29, 2020. The Fund may issue an unlimited number of shares of beneficial interest, with no par value.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently followed by the Fund in preparation of its financial statements. These policies are in conformity
with generally accepted accounting principles in the United States of America (“GAAP”).
Security Valuation – All investments in securities are recorded at their estimated fair value, as described in
Note 3.
Federal Income Taxes – The Fund complies with the requirements of subchapter M of the Internal Revenue Code of
1986, as amended, necessary to qualify as a regulated investment company and distributes substantially all net taxable investment income and net realized gains to shareholders in a manner which results in no tax cost to the Fund. Therefore, no
federal income or excise tax provision is required. As of and during the period ended February 29, 2020, the Fund did not have any tax positions that did not meet the “more-likely-than-not” threshold of being sustained by the applicable tax
authority. The Fund recognizes interest and penalties, if any, related to unrecognized tax benefits on uncertain tax positions as income tax expense in the Statement of Operations. As of and during the period ended February 29, 2020, the Fund did
not incur any interest or penalties. The Fund is not subject to examination by U.S. tax authorities for tax years prior to the period ended August 31, 2018.
Security Transactions, Income, and Distributions – The Fund follows industry practice and records security
transactions on the trade date. Realized gains and losses on sales of securities are calculated on the basis of identified cost. Dividend income is recorded on the ex-dividend date and interest income is recorded on an accrual basis.
Withholding taxes on foreign dividends have been provided for in accordance with the Fund’s understanding of the applicable country’s tax rules and regulations. Discounts and premiums on securities purchased are amortized over the expected life
of the respective securities using the constant yield method.
The Fund will declare daily and pay monthly distributions of net investment income. The Fund will also distribute net realized capital gains, if any, at least annually.
Distributions to shareholders are recorded on the ex-dividend date. The treatment for financial reporting purposes of distributions made to shareholders during the year from net investment income or net realized capital gains may differ from their
ultimate treatment for federal income tax purposes. These differences are caused primarily by differences in the timing of the recognition of certain components of income, expense or realized capital gain for federal income tax purposes. Where
such differences are permanent in nature, GAAP requires that they be reclassified in the components of the net assets based on their ultimate characterization for federal income tax purposes. Any such reclassifications will have no effect on net
assets, results of operations or net asset values per share of the Fund.
PRINCIPAL STREET HIGH INCOME MUNICIPAL FUND
Notes to the Financial Statements (Unaudited) – Continued
February 29, 2020
Allocation of Expenses – Expenses associated with a specific fund in the Trust are charged to that fund. Common
Trust expenses are typically allocated evenly between the funds of the Trust, or by other equitable means.
Use of Estimates – The preparation of financial statements in conformity with GAAP requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
3. SECURITIES VALUATION
The Fund has adopted authoritative fair value accounting standards which establish an authoritative definition of fair value and set out a hierarchy for measuring fair value.
These standards require additional disclosures about the various inputs and valuation techniques used to develop the measurements of fair value, a discussion of changes in valuation techniques and related inputs during the period and expanded
disclosure of valuation Levels for major security types. These inputs are summarized in the three broad Levels listed below:
Level 1 –
|
Unadjusted quoted prices in active markets for identical assets or liabilities that the Fund has the ability to access.
|
|
|
Level 2 –
|
Observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These inputs may include quoted prices for the
identical instrument on an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates and similar data.
|
|
|
Level 3 –
|
Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available, representing the Fund’s own assumptions about the assumptions a market participant
would use in valuing the asset or liability and would be based on the best information available.
|
Following is a description of the valuation techniques applied to the Fund’s major categories of assets and liabilities measured at fair value on a recurring basis. The
Fund’s investments are carried at fair value.
Short-Term Investments – Investments in other mutual funds, including money market funds, are valued at their
net asset value per share. To the extent these securities are actively traded and valuation adjustments are not applied, they are categorized in Level 1 of the fair value hierarchy.
Fixed Income Securities – Municipal bonds are valued on the basis of valuations furnished by an independent
pricing service which utilizes both dealer-supplied valuations and formula-based techniques. The pricing service may consider recently executed transactions in securities of the issuer or comparable issuer, market price quotations (where
observable), bond spreads, and fundamental data relating to the issuer. Fixed income securities are categorized in the Level 2 of the fair value hierarchy.
Securities for which market quotations are not readily available, or if the closing price does not represent fair value, are valued following procedures approved by the Board
of Trustees (the “Board”). These procedures consider many factors, including the type of security, size of holding, trading volume and news events. There can be no assurance that the Fund could obtain the fair value assigned to a security if it
were to sell the security at approximately the time at which the Fund determines its net asset value per share. The Board has established a Valuation Committee to administer, implement, and oversee the fair valuation process, and to make fair value
decisions when necessary. The Board regularly reviews reports that describe any fair value determinations and methods.
PRINCIPAL STREET HIGH INCOME MUNICIPAL FUND
Notes to the Financial Statements (Unaudited) – Continued
February 29, 2020
The inputs or methodology used for valuing securities are not an indication of the risk associated with investing in those securities. The following is a summary of the
inputs used to value the Fund’s securities as of February 29, 2020:
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
Municipal Bonds
|
|
$
|
—
|
|
|
$
|
183,530,713
|
|
|
$
|
—
|
|
|
$
|
183,530,713
|
|
Corporate Bond
|
|
|
—
|
|
|
|
7,854,906
|
|
|
|
—
|
|
|
|
7,854,906
|
|
Short-Term Investment
|
|
|
1,885,735
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,885,735
|
|
Total Investments*
|
|
$
|
1,885,735
|
|
|
$
|
191,385,619
|
|
|
$
|
—
|
|
|
$
|
193,271,354
|
|
* Refer to the Schedule of Investments for further information on the classification of investments.
4. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has an agreement with the Adviser to furnish investment advisory services to the Fund. Pursuant to the Investment Advisory Agreement between the Trust and the
Adviser, the Adviser is entitled to receive, on a monthly basis, an annual advisory fee equal to 0.55% of the Fund’s average daily net assets.
The Fund’s Adviser has contractually agreed to waive a portion or all of its management fees and reimburse the Fund for its expenses to ensure that total annual operating
expenses (excluding acquired fund fees and expenses, leverage, interest, taxes, brokerage commissions, and extraordinary expenses) for the Fund do not exceed 0.73% of the Fund’s average daily net assets.
Fees waived and expenses reimbursed by the Adviser may be recouped by the Adviser for a period of thirty-six months following the month during which such waiver or
reimbursement was made if such recoupment can be achieved without exceeding the expense limit in effect at the time the expense reimbursement occurred. The Operating Expense Limitation Agreement is indefinite in term but cannot be terminated within
a year after the effective date of the Fund’s prospectus. After that date, the agreement may be terminated at any time upon 60 days’ written notice by the Board or the Adviser, with the consent of the Board. Waived fees and reimbursed expenses
subject to potential recovery by month of expiration are as follows:
|
Expiration
|
|
Amount
|
|
|
September 2020 – August 2021
|
|
$
|
139,647
|
|
|
September 2021 – August 2022
|
|
$
|
89,831
|
|
|
September 2022 – February 2023
|
|
$
|
20,101
|
|
U.S. Bancorp Fund Services, LLC (the “Administrator”), doing business as U.S. Bank Global Fund Services, acts as the Fund’s Administrator, Transfer Agent, and Fund
Accountant. U.S. Bank N.A. (the “Custodian”) serves as the Custodian to the Fund. The Custodian is an affiliate of the Administrator. The Administrator performs various administrative and accounting services for the Fund. The Administrator
prepares various federal and state regulatory filings, reports and returns for the Fund; prepares reports and materials to be supplied to the Trustees; monitors the activities of the Custodian; coordinates the payment of the Fund’s expenses and
reviews the Fund’s expense accruals. The officers of the Trust, including the Chief Compliance Officer, are employees of the Administrator. As compensation for its services, the Administrator is entitled to a monthly fee at an annual rate based
upon the average daily net assets of the Fund, subject to annual minimums. Fees paid by the Fund for administration and accounting, transfer agency, custody and compliance services for the period ended February 29, 2020 are disclosed in the
Statements of Operations.
PRINCIPAL STREET HIGH INCOME MUNICIPAL FUND
Notes to the Financial Statements (Unaudited) – Continued
February 29, 2020
Quasar Distributors, LLC (the “Distributor”) acts as the Fund’s principal underwriter in a continuous public offering of the Fund’s shares. The Distributor is an affiliate of
the Administrator.
5. CAPITAL SHARE TRANSACTIONS
Transactions in shares of the Fund were as follows:
|
|
For the
|
|
|
|
|
|
|
Six Months Ended
|
|
|
Year Ended
|
|
|
|
February 29, 2020
|
|
|
August 31, 2019
|
|
Shares sold
|
|
|
5,805,994
|
|
|
|
8,744,462
|
|
Shares issued to holders in reinvestment of distributions
|
|
|
456,712
|
|
|
|
633,381
|
|
Shares redeemed
|
|
|
(2,583,352
|
)
|
|
|
(2,083,184
|
)
|
Net increase in shares
|
|
|
3,679,354
|
|
|
|
7,294,659
|
|
6. INVESTMENT TRANSACTIONS
The aggregate purchases and sales, excluding short-term investments, by the Fund for the period ended February 29, 2020, were as follows:
|
U.S. Government Securities
|
|
|
Other
|
|
Purchases
|
|
|
Sales
|
|
|
Purchases
|
|
|
Sales
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
66,215,083
|
|
|
$
|
30,738,138
|
7. FEDERAL TAX INFORMATION
The aggregate gross unrealized appreciation and depreciation of securities held by the Fund and the total cost of securities for federal income tax purposes as of August 31,
2019, the Fund’s most recently completed fiscal year end, were as follows:
Aggregate
|
Aggregate
|
|
Federal
|
Gross
|
Gross
|
Net
|
Income
|
Appreciation
|
Depreciation
|
Appreciation
|
Tax Cost
|
$5,687,334
|
$(2,302,360)
|
$3,384,974
|
$152,641,411
|
Any difference between book-basis and tax-basis unrealized appreciation (depreciation) would be attributable primarily to the tax deferral of losses on wash sales. For the
year ended August 31, 2019, there were no differences.
At August 31, 2019, components of distributable earnings on a tax-basis were as follows:
Undistributed
|
Undistributed
|
Undistributed
|
Other
|
|
Total
|
Taxable
|
Tax Exempt
|
Long-Term
|
Accumulated
|
Unrealized
|
Distributable
|
Ordinary Income
|
Ordinary Income
|
Capital Gains
|
Losses
|
Appreciation
|
Earnings
|
$243,622
|
$60,226
|
$125,345
|
$(73,042)
|
$3,384,974
|
$3,741,125
|
As of August 31, 2019, the Fund did not have any capital loss carryovers. A regulated investment company may elect for any taxable year to treat any portion of any qualified
late year loss as arising on the first day of the next taxable year. Qualified late year losses are certain capital, and ordinary losses which occur during the portion of the Fund’s taxable year subsequent to October 31 and December 31,
respectively. For the taxable year ended August 31, 2019, the Fund did not defer any qualified late year losses.
PRINCIPAL STREET HIGH INCOME MUNICIPAL FUND
Notes to the Financial Statements (Unaudited) – Continued
February 29, 2020
The tax character of distributions paid for the period ended February 29, 2020, were as follows:
Taxable
|
Tax Exempt
|
|
|
Ordinary
|
Ordinary
|
Long Term
|
|
Income*
|
Income
|
Capital Gains
|
Total
|
$497,209
|
$4,620,341
|
$173,371
|
$5,290,921
|
The tax character of distributions paid for the year ended August 31, 2019, were as follows:
Taxable
|
Tax Exempt
|
|
|
Ordinary
|
Ordinary
|
Long Term
|
|
Income*
|
Income
|
Capital Gains
|
Total
|
$1,612,916
|
$5,770,309
|
$ —
|
$7,383,225
|
* For federal income tax purposes, distributions of short-term capital gains are treated as taxable ordinary income distributions.
8. LINE OF CREDIT
The Fund has established an unsecured line of credit (“LOC”) in the amount of $35,000,000, 15% of gross market value of the Fund, or 33.33% of the fair value of the Fund’s
investments, whichever is less. Prior to December 11, 2019, the LOC was limited to the lesser of $10,000,000, 15% of gross market value of the Fund, or 33.33% of the fair value of the Fund’s investments. The LOC matures unless renewed on July 24,
2020. This LOC is intended to provide short-term financing, if necessary, subject to certain restrictions and covenants in connection with shareholder redemptions and other short-term liquidity needs of the Fund. The LOC is with the Custodian.
Interest is charged at the prime rate which was 4.75% as of February 29, 2020. The interest rate during the period was between 4.75%-5.25%. The Fund has authorized the Custodian to charge any of the Fund’s accounts for any missed payments. The
weighted average interest rate paid on outstanding borrowings for the Fund was 4.80%. For the period ended February 29, 2020, the Fund’s LOC activity was as follows:
|
|
Amount
|
|
|
Date of
|
|
Average
|
Outstanding as of
|
Interest
|
Maximum
|
Maximum
|
LOC Agent
|
Borrowings
|
February 29, 2020
|
Expense
|
Borrowing
|
Borrowing
|
U.S. Bank N.A.
|
$127,396
|
$ —
|
$3,092
|
$4,813,000
|
12/4/2019
|
9. CONTROL OWNERSHIP
The beneficial ownership, either directly or indirectly, of more than 25% of the voting securities of a fund creates a presumption of control of that fund, under Section
2(a)(9) of the Investment Company Act of 1940. As of February 29, 2020, Charles Schwab & Co., Inc., for the benefit of its customers, owned 44.98% of the outstanding shares of the Fund.
10. SUBSEQUENT EVENTS
The global outbreak of COVID-19 has disrupted economic markets and the full prolonged economic impact is uncertain. The operational and financial performance of issuers in
securities for which the Fund invests depend on future developments of the pandemic, such as duration and spread of the virus. These developments may impact the value of the Fund’s investments.
PRINCIPAL STREET HIGH INCOME MUNICIPAL FUND
Notes to the Financial Statements (Unaudited) – Continued
February 29, 2020
Effective March 31, 2020, Foreside Financial Group, LLC (“Foreside”) acquired Quasar Distributors, LLC (“Quasar”), the Fund’s distributor, from U.S. Bancorp. As a result of
the acquisition, Quasar became a wholly-owned broker-dealer subsidiary of Foreside and is no longer affiliated with U.S. Bancorp. The Board has approved a new Distribution Agreement to enable Quasar to continue serving as the Fund’s distributor.
Effective March 23, 2020, the Investor Class shares of the Fund (Ticker Symbol: GSTEX) were made available for purchase. The minimum initial investment amount for the Investor
Class shares of the Fund was increased from $1,000 to $25,000 and the minimum subsequent investment amount for the shares was increased to $1,000. In addition, the Board approved an increase in the 12b-1 fee for the Investor Class from 0.25% to
0.50%.
Management has performed an evaluation of subsequent events through the date this shareholder report was issued and has determined that no additional items require recognition
or disclosure.
PRINCIPAL STREET HIGH INCOME MUNICIPAL FUND
Additional Information (Unaudited)
February 29, 2020
APPROVAL OF INVESTMENT ADVISORY AGREEMENT – Principal Street Partners, LLC
At the regular meeting of the Board of Trustees of Managed Portfolio Series (“Trust”) on February 17-18, 2020, the Trust’s Board of Trustees (“Board”), each of whom were
present in person, including all of the Trustees who are not “interested persons” of the Trust, as that term is defined in Section 2(a)(19) of the Investment Company Act of 1940, as amended, (“Independent Trustees”) considered and approved the
continuation of the Investment Advisory Agreement between the Trust and Principal Street Partners, LLC (“Principal Street” or the “Adviser”) regarding the Principal Street High Income Municipal Fund (the “ Fund”) (the “Investment Advisory
Agreement”) for another annual term.
Prior to the meeting and at a meeting held on January 7, 2020, the Trustees received and considered information from Principal Street and the Trust’s administrator designed to
provide the Trustees with the information necessary to evaluate the continuance of the Investment Advisory Agreement (“Support Materials”). Before voting to approve the continuance of the Investment Advisory Agreement, the Trustees reviewed the
Support Materials with Trust management and with counsel to the Independent Trustees, and received a memorandum from such counsel discussing the legal standards for the Trustees’ consideration of the renewal of the Investment Advisory Agreement.
This information, together with the information provided to the Board throughout the course of the year, formed the primary (but not exclusive) basis for the Board’s determinations.
In determining whether to continue the Investment Advisory Agreement, the Trustees considered all factors they believed relevant, including the following with respect to
the Fund: (1) the nature, extent, and quality of the services provided by Principal Street with respect to the Fund; (2) the Fund’s historical performance and the performance of other investment accounts
managed by Principal Street; (3) the costs of the services provided and the profits realized by Principal Street, from services rendered to the Fund; (4) comparative fee and expense data for the Fund and other investment companies with similar
investment objectives; (5) the extent to which economies of scale may be realized as the Fund grows, and whether the advisory fee for the Fund reflects such economies of scale for the Fund’s benefit; and (6) other benefits to Principal Street
resulting from its relationship with the Fund. In their deliberations, the Trustees weighed to varying degrees the importance of the information provided to them and did not identify any particular information that was all-important or
controlling.
Based upon Principal Street’s presentation and information from Principal Street and the Trust’s administrator designed to provide the Trustees with the information necessary
to evaluate the terms of the Investment Advisory Agreement, the Board concluded that the overall arrangements between the Trust and Principal Street as set forth in the Investment Advisory Agreement, as it relates to the Fund, continue to be fair
and reasonable in light of the services that Principal Street performs, investment advisory fees that the Fund pays, and such other matters as the Trustees considered relevant in the exercise of their reasonable business judgment. The material
factors and conclusions that formed the basis of the Trustees’ determination to approve the continuation of the Investment Advisory Agreement are summarized below.
Nature, Extent and Quality of Services Provided. The Trustees considered the scope of services that Principal
Street provides under the Investment Advisory Agreement with respect to the Fund, noting that such services include, but are not limited to, the following: (1) investing the Fund’s assets consistent with the
Fund’s investment objective and investment policies; (2) determining the portfolio securities to be purchased, sold, or otherwise disposed of and the timing of such transactions; (3) voting all proxies, if any, with respect to the Fund’s
portfolio securities; (4) maintaining the required books and records for transactions effected by Principal Street on behalf of the Fund; (5) selecting broker-dealers to execute orders on behalf of the Fund; and (6) monitoring and maintaining the
Fund’s compliance with the Trust’s policies and procedures and with applicable securities laws. The Trustees noted that Principal Street is well capitalized. The Trustees also considered Principal Street’s assets under management. The Trustees
noted that Principal Street manages a composite of separately managed accounts with
PRINCIPAL STREET HIGH INCOME MUNICIPAL FUND
Additional Information (Unaudited) – Continued
February 29, 2020
investment objectives and investment strategies that are substantially similar to the Fund. The Trustees also considered the experience of the portfolio managers that
Principal Street utilizes in managing the Fund’s assets. The Trustees concluded that they were satisfied with the nature, extent, and quality of services that Principal Street provides to the Fund under the Investment Advisory Agreement.
Fund Historical Performance and the Overall Performance of Principal Street. In assessing the quality of the
portfolio management delivered by Principal Street, the Trustees considered the performance since the inception of the Fund on both an absolute basis and in comparison to an appropriate benchmark index and the Fund’s respective peer funds
according to Morningstar classifications. When comparing the Fund’s performance against its Morningstar peer group, the Trustees took into account that the investment objective and strategies of the Fund, as well as the Fund’s level of risk
tolerance, may differ significantly from the funds in the peer group. The Trustees noted that the Fund underperformed its peer group median and average over the year-to-date period ended October 31, 2019, but outperformed the peer group median
and average over the one-year period ended October 31, 2019. The Trustees also noted that the Fund underperformed its benchmark index over the year-to-date and one-year period ended October 31, 2019.
Cost of Advisory Services and Profitability. The Trustees considered the management fee that the Fund pays to
Principal Street under the Advisory Agreement. They also considered Principal Street’s profitability analysis for services that Principal Street renders to the Fund. In that regard, the Trustees noted that Principal Street waived a portion of
its management fees during the 12 months ended September 30, 2019. The Trustees noted that Principal Street manages separately managed accounts with investment strategies that are substantially similar to the Fund. The Trustees noted that the
management fee charged to the separately managed accounts are equal to or greater than or equal to the management fee charged by Principal Street to the Fund. The Trustees also noted that Principal Street has contractually agreed, for a period of
at least one year from the effective date of the Fund’s prospectus, to waive its management fees and reimburse the Fund for its operating expenses, as specified in the Fund’s prospectus. The Trustees determined that Principal Street’s service
relationship with the Fund yielded a reasonable profit.
Comparative Fee and Expense Data. The Trustees considered an analysis that the Trust’s administrator had
prepared, comparing the contractual expenses that the Fund bears relative to those of funds in the same Morningstar peer group. The Trustees noted that the Fund’s management fee was below the peer group median and average. In connection with
their review of the management fee, the Board considered the research-intensive nature of the Fund’s investment strategy, relative to other funds in the peer group. They also noted that the total contractual expenses of the Fund’s Institutional
Class (after management fee waivers and fund expense reimbursements) was below the peer group median and average. While recognizing that it is difficult to compare advisory fees because the scope of advisory services provided may vary from one
investment adviser to another, the Trustees concluded that Principal Street’s advisory fee is reasonable.
Economies of Scale. The Trustees considered whether the Fund would benefit from any economies of scale, noting
that the investment advisory fee for the Fund does not contain breakpoints. The Trustees took into account the fact that Principal Street had agreed to consider breakpoints in the future in response to asset growth in the Fund. The Trustees
concluded that it is not necessary to consider the implementation of fee breakpoints at this time, but committed to revisit this issue in the future as circumstances change and Fund asset levels increase.
Other Benefits. The Trustees considered the direct and indirect benefits that could be realized by Principal
Street from its relationship with the Fund. The Trustees noted that Principal Street does not use affiliated brokers to execute the Fund’s portfolio transactions. The Trustees considered that Principal Street may receive some form of
reputational benefit from services rendered to the Fund, but that such benefits are immaterial and cannot otherwise be quantified. The Trustees concluded that Principal Street does not receive additional material benefits from its relationship
with the Fund.
PRINCIPAL STREET HIGH INCOME MUNICIPAL FUND
Additional Information (Unaudited) – Continued
February 29, 2020
AVAILABILITY OF FUND PORTFOLIO INFORMATION
The Fund files a complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q or Part F of Form N-PORT (beginning with
filings after March 31, 2020). The Fund’s Form N-Q or Part F of Form N-PORT are available on the SEC’s website at www.sec.gov and may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. For information on the Public
Reference Room call 1-800-SEC-0330. In addition, the Fund’s Form N-Q or Part F of Form N-PORT is available without charge upon request by calling 1-877-914-7343.
AVAILABILITY OF PROXY VOTING INFORMATION
A description of the Fund’s Proxy Voting Policies and Procedures is available without charge, upon request, by calling 1-877-914-7343. Information regarding how the Fund
voted proxies relating to portfolio securities during the most recent 12-month period ended June 30, is available (1) without charge, upon request, by calling 1-877-914-7343, or (2) on the SEC’s website at www.sec.gov.
PRINCIPAL STREET HIGH INCOME MUNICIPAL FUND
Privacy Notice (Unaudited)
The Fund collects only relevant information about you that the law allows or requires it to have in order to conduct its business and properly service you. The Fund collects
financial and personal information about you (“Personal Information”) directly (e.g., information on account applications and other forms, such as your name, address, and social security number, and information provided to access account
information or conduct account transactions online, such as password, account number, e-mail address, and alternate telephone number), and indirectly (e.g., information about your transactions with us, such as transaction amounts, account balance
and account holdings).
The Fund does not disclose any non-public personal information about its shareholders or former shareholders other than for everyday business purposes such
as to process a transaction, service an account, respond to court orders and legal investigations or as otherwise permitted by law. Third parties that may receive this information include companies that provide transfer agency, technology and
administrative services to the Fund, as well as the Fund’s investment adviser who is an affiliate of the Fund. If you maintain a retirement/educational custodial account directly with the Fund, we may also disclose your Personal Information to the
custodian for that account for shareholder servicing purposes. The Fund limits access to your Personal Information provided to unaffiliated third parties to information necessary to carry out their assigned responsibilities to the Fund. All
shareholder records will be disposed of in accordance with applicable law. The Fund maintains physical, electronic and procedural safeguards to protect your Personal Information and requires its third-party service providers with access to such
information to treat your Personal Information with the same high degree of confidentiality.
In the event that you hold shares of the Fund through a financial intermediary, including, but not limited to, a broker-dealer, credit union, bank or trust
company, the privacy policy of your financial intermediary governs how your non-public personal information is shared with unaffiliated third parties.
(This Page Intentionally Left Blank.)
INVESTMENT ADVISER
Principal Street Partners, LLC
6075 Poplar Avenue, Suite 221
Memphis, TN 38119
DISTRIBUTOR
Quasar Distributors, LLC
111 E. Kilbourn Avenue, Suite 1250
Milwaukee, WI 53202
CUSTODIAN
U.S. Bank N.A.
1555 North Rivercenter Drive, Suite 302
Milwaukee, WI 53212
ADMINISTRATOR, FUND ACCOUNTANT
AND TRANSFER AGENT
U.S. Bancorp Fund Services, LLC
615 E. Michigan Street
Milwaukee, WI 53202
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Cohen & Company, Ltd.
342 N. Water Street, Suite 830
Milwaukee, WI 53202
LEGAL COUNSEL
Stradley Ronon Stevens & Young, LLP
2005 Market Street, Suite 2600
Philadelphia, PA 19103
This report should be accompanied or preceded by a prospectus.
The Fund’s Statement of Additional Information contains additional information about the
Fund’s trustees and is available without charge upon request by calling 1-877-914-7343.