As filed with the Securities and Exchange Commission on February 12, 2015
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-22842
FORUM FUNDS II
Three Canal Plaza, Suite 600
Portland, Maine 04101
Stacey E. Hong, Principal Executive Officer
Three Canal Plaza, Suite 600
Portland, Maine 04101
207-347-2000
Date of fiscal year end: June 30
Date of reporting period: July 18, 2014 – December 31, 2014
ITEM 1. REPORT TO STOCKHOLDERS.
![](https://capedge.com/proxy/N-CSRS/0001435109-15-000093/acuitasfrontcover.jpg)
TABLE OF CONTENTS
Acuitas International Small Cap Fund | |
Performance Chart and Analysis | 2 |
Schedule of Investments | 3 |
Statement of Assets and Liabilities | 8 |
Statement of Operations | 9 |
Statement of Changes in Net Assets | 10 |
Financial Highlights | 11 |
Acuitas US Microcap Fund | |
Performance Chart and Analysis | 12 |
Schedule of Investments | 13 |
Statement of Assets and Liabilities | 15 |
Statement of Operations | 16 |
Statement of Changes in Net Assets | 17 |
Financial Highlights | 18 |
Notes to Financial Statements | 19 |
Additional Information | 24 |
PERFORMANCE CHART AND ANALYSIS
DECEMBER 31, 2014
The following chart reflects the change in the value of a hypothetical $100,000 investment in Institutional Shares, including reinvested dividends and distributions, in Acuitas International Small Cap Fund (the “Fund”) compared with the performance of the benchmark, Russell Global Ex-US Small Cap Index (“Russell Global ex US”), since inception. The Russell Global ex US is an unmanaged index that offers investors access to the small-cap segment of the global equity market, excluding companies assigned to the US. The total return of the Russell Global ex US includes the reinvestment of dividends and income. The total return of the Fund includes operating expenses that reduce returns, while the total return of the Russell Global ex US does not include expenses. The Fund is professionally managed while the Russell Global ex US is unmanaged and is not available for investment.
![](https://capedge.com/proxy/N-CSRS/0001435109-15-000093/aiscperformance.jpg)
Performance data quoted represents past performance and is no guarantee of future results. Current performance may be lower or higher than the performance data quoted. Investment return and principal value will fluctuate so that shares, when redeemed, may be worth more or less than original cost. For the most recent month-end performance, please call (844) 805-5628. Shares redeemed within 60 days of purchase will be charged a 1.00% redemption fee. As stated in the Fund's prospectus, the annual operating expense ratios (gross) for Institutional and Investor Shares are 2.09% and 2.89%, respectively. The Fund's adviser has contractually agreed to waive its fee and/or reimburse expenses to limit total annual fund operating expenses (excluding all taxes, interest, portfolio transaction expenses, acquired fund fees and expenses, proxy expenses and extraordinary expenses) to 1.50% and 1.75% for Institutional and Investor Shares, respectively, through November 1, 2015. The Fund may repay the Adviser for fees waived and expenses reimbursed pursuant to the expense cap if such payment (1) is made within three years of the fee waiver or expense reimbursement, (2) is approved by the Board of Trustees and (3) does not cause the net annual fund operating expenses of the Fund class to exceed the expense cap in place at the time the fees were waived. The performance table and graph do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
2
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2014
Shares | Security Description | Value |
Equity Securities - 94.7% | |||||||
Common Stock - 94.6% | |||||||
Australia - 2.1% | |||||||
48,148 | APN News & Media, Ltd. (a) | $ | 32,822 | ||||
96,135 | Decmil Group, Ltd. | 114,980 | |||||
69,910 | Echo Entertainment Group, Ltd. | 216,312 | |||||
28,526 | GrainCorp, Ltd., Class A | 192,131 | |||||
122,794 | Orora, Ltd. | 195,486 | |||||
4,543 | Sandfire Resources NL | 16,876 | |||||
27,580 | Sigma Pharmaceuticals, Ltd. | 16,662 | |||||
17,358 | Tassal Group, Ltd. | 55,409 | |||||
840,678 | |||||||
Austria - 2.0% | |||||||
13,639 | BUWOG AG (a) | 270,334 | |||||
3,372 | Oesterreichische Post AG | 164,762 | |||||
11,040 | Palfinger AG | 280,404 | |||||
533 | Semperit AG Holding | 25,914 | |||||
1,167 | Zumtobel Group AG | 26,414 | |||||
767,828 | |||||||
Belgium - 1.4% | |||||||
11,752 | AGFA-Gevaert NV (a) | 29,721 | |||||
2,861 | Befimmo SA REIT | 208,444 | |||||
2,051 | Cie d'Entreprises CFE | 211,004 | |||||
2,405 | Melexis NV | 109,131 | |||||
558,300 | |||||||
Bermuda - 0.5% | |||||||
18,178 | Catlin Group, Ltd. | 190,109 | |||||
Brazil - 2.4% | |||||||
88,700 | BR Properties SA | 342,026 | |||||
269,470 | Gafisa SA | 223,021 | |||||
12,280 | Magazine Luiza SA | 35,618 | |||||
76,810 | MRV Engenharia e Participacoes SA | 216,716 | |||||
43,031 | QGEP Participacoes SA | 116,554 | |||||
933,935 | |||||||
Canada - 2.6% | |||||||
43,210 | Canam Group, Inc. | 421,389 | |||||
3,543 | Dominion Diamond Corp. (a) | 63,645 | |||||
9,660 | Finning International, Inc. | 209,779 | |||||
25,386 | Genesis Land Development Corp. (a) | 84,125 | |||||
38,540 | Precision Drilling Corp. | 234,199 | |||||
1,013,137 | |||||||
China - 1.9% | |||||||
406,836 | China Lesso Group Holdings, Ltd. | 199,361 | |||||
734,010 | Daphne International Holdings, Ltd. | 266,925 | |||||
234,000 | Zhejiang Expressway Co., Ltd. | 271,881 | |||||
738,167 | |||||||
Denmark - 1.1% | |||||||
20,196 | D/S Norden A/S | 431,193 | |||||
Faroe Islands - 0.0% | |||||||
872 | Bakkafrost P/F | 19,597 | |||||
Finland - 0.1% | |||||||
4,764 | Technopolis OYJ | 21,329 | |||||
France - 3.8% | |||||||
768 | Cegedim SA (a) | 27,118 | |||||
4,230 | Eurazeo SA | 297,949 | |||||
53,106 | EuropaCorp (a) | 279,535 | |||||
4,040 | Neopost SA | 230,473 | |||||
2,859 | Saft Groupe SA | 87,007 | |||||
16,299 | Technicolor SA (a) | 91,493 |
Shares | Security Description | Value |
1,441 | Teleperformance | $ | 98,396 | ||||
5,722 | Vallourec SA | 157,519 | |||||
5,060 | Vetoquinol SA (a) | 219,810 | |||||
1,489,300 | |||||||
Georgia - 0.5% | |||||||
6,720 | Bank of Georgia Holdings PLC | 217,436 | |||||
Germany - 7.6% | |||||||
2,774 | Aareal Bank AG | 111,744 | |||||
650 | Amadeus Fire AG | 49,080 | |||||
6,390 | Aurubis AG | 359,896 | |||||
337 | Bechtle AG | 26,906 | |||||
166 | Bertrandt AG | 23,100 | |||||
8,150 | Carl Zeiss Meditec AG | 208,086 | |||||
770 | Cewe Stiftung & Co. KGAA | 47,994 | |||||
44,550 | Deutz AG | 215,631 | |||||
8,963 | Dialog Semiconductor PLC (a) | 318,050 | |||||
7,711 | DMG MORI SEIKI AG | 219,271 | |||||
5,696 | Duerr AG | 504,941 | |||||
951 | Homag Group AG | 34,523 | |||||
2,796 | Krones AG | 273,235 | |||||
675 | Nemetschek AG | 68,291 | |||||
16,614 | Nordex SE (a) | 301,657 | |||||
4,656 | Rheinmetall AG | 204,345 | |||||
661 | Stroeer Media SE | 19,772 | |||||
2,986,522 | |||||||
Gibraltar - 1.1% | |||||||
63,044 | 888 Holdings PLC | 136,091 | |||||
164,090 | Bwin.Party Digital Entertainment PLC | 301,274 | |||||
437,365 | |||||||
Greece - 0.3% | |||||||
23,660 | Hellenic Exchanges - Athens Stock Exchange SA Holding | 133,129 | |||||
Hong Kong - 4.7% | |||||||
125,000 | Brightoil Petroleum Holdings, Ltd. (a) | 31,755 | |||||
56,255 | China Cord Blood Corp. (a) | 254,273 | |||||
376,917 | Dah Chong Hong Holdings, Ltd. | 203,656 | |||||
1,637,200 | Dorsett Hospitality International, Ltd. | 280,796 | |||||
80,000 | Emperor International Holdings, Ltd. | 17,435 | |||||
71,000 | Far East Consortium International, Ltd. | 27,559 | |||||
53,000 | Huabao International Holdings, Ltd. | 43,263 | |||||
58,000 | IT, Ltd. | 16,754 | |||||
426,000 | Ju Teng International Holdings, Ltd. | 209,851 | |||||
146,000 | Lifestyle International Holdings, Ltd. | 307,263 | |||||
3,118,996 | REXLot Holdings, Ltd. | 253,392 | |||||
65,000 | SmarTone Telecommunications Holdings, Ltd. | 108,967 | |||||
102,000 | Tianjin Development Holdings, Ltd. | 75,369 | |||||
1,830,333 | |||||||
Ireland - 0.7% | |||||||
12,011 | Smurfit Kappa Group PLC | 270,331 | |||||
Isle Of Man - 1.2% | |||||||
5,565 | Optimal Payments PLC (a) | 29,729 | |||||
41,210 | Playtech PLC | 442,544 | |||||
472,273 | |||||||
Italy - 3.2% | |||||||
5,105 | ACEA SpA | 55,225 | |||||
2,313 | Amplifon SpA | 13,726 | |||||
29,274 | Ansaldo STS SpA | 295,074 | |||||
9,620 | Banca Generali SpA | 268,318 | |||||
7,321 | Biesse SpA | 82,918 |
See Notes to Financial Statements. 3
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2014
Shares | Security Description | Value |
9,842 | Brembo SpA | $ | 329,888 | ||||
11,750 | MARR SpA | 209,290 | |||||
1,254,439 | |||||||
Japan - 23.2% | |||||||
17,800 | Alpine Electronics, Inc. | 296,617 | |||||
9,800 | Arcs Co., Ltd. | 203,478 | |||||
2,300 | BML, Inc. | 61,350 | |||||
3,500 | Canon Marketing Japan, Inc. | 59,843 | |||||
3,400 | Cawachi, Ltd. | 50,668 | |||||
19,000 | Chiyoda Corp. | 159,576 | |||||
25,000 | Chugoku Marine Paints, Ltd. | 213,725 | |||||
23,000 | Daihen Corp. | 116,939 | |||||
1,100 | Daikokutenbussan Co., Ltd. | 31,913 | |||||
9,200 | Daiseki Co., Ltd. | 160,912 | |||||
18,000 | Daiwabo Holdings Co., Ltd. | 31,558 | |||||
63,000 | Denki Kagaku Kogyo KK | 233,528 | |||||
47,500 | EDION Corp. | 336,283 | |||||
18,700 | EPS Corp. | 223,251 | |||||
17,800 | FIDEA Holdings Co., Ltd. | 32,693 | |||||
23,100 | Funai Electric Co., Ltd. (a) | 280,602 | |||||
2,700 | Geo Holdings Corp. | 21,752 | |||||
11,600 | Happinet Corp. | 146,138 | |||||
64,400 | Hitachi Zosen Corp. | 377,432 | |||||
4,600 | Hogy Medical Co., Ltd. | 211,221 | |||||
2,700 | Hosiden Corp. | 15,170 | |||||
13,500 | IT Holdings Corp. | 205,013 | |||||
3,000 | Jeol, Ltd. | 15,604 | |||||
17,000 | J-Oil Mills, Inc. | 55,493 | |||||
62,800 | JVC Kenwood Corp. (a) | 137,889 | |||||
3,200 | Kaga Electronics Co., Ltd. | 40,421 | |||||
84,000 | Kanematsu Corp. | 121,322 | |||||
1,400 | Kato Sangyo Co., Ltd. | 26,661 | |||||
2,500 | Kura Corp. | 70,859 | |||||
35,500 | Makino Milling Machine Co., Ltd. | 267,035 | |||||
30,000 | Marudai Food Co., Ltd. | 103,690 | |||||
31,700 | Marui Group Co., Ltd. | 289,529 | |||||
143,100 | Monex Group, Inc. | 345,266 | |||||
29,000 | Morinaga Milk Industry Co., Ltd. | 100,718 | |||||
5,700 | Nabtesco Corp. | 139,859 | |||||
2,300 | NEC Networks & System Integration Corp. | 48,024 | |||||
7,200 | NET One Systems Co., Ltd. | 42,798 | |||||
700 | Pal Co., Ltd. | 19,344 | |||||
38,700 | Pioneer Corp. (a) | 74,634 | |||||
50,900 | Round One Corp. | 299,162 | |||||
9,900 | Ryosan Co., Ltd. | 217,952 | |||||
4,500 | Saizeriya Co., Ltd. | 59,547 | |||||
10,000 | Sakai Chemical Industry Co., Ltd. | 31,892 | |||||
7,000 | Sanshin Electronics Co., Ltd. | 48,272 | |||||
22,000 | Sanyo Shokai, Ltd. | 53,815 | |||||
3,000 | Seino Holdings Co., Ltd. | 30,506 | |||||
16,000 | Star Micronics Co., Ltd. | 205,710 | |||||
73,000 | Sumitomo Heavy Industries, Ltd. | 397,971 | |||||
9,550 | Sumitomo Real Estate Sales Co., Ltd. | 217,103 | |||||
63,100 | Takara Leben Co., Ltd. | 276,570 | |||||
4,000 | Take And Give Needs Co., Ltd. | 32,727 | |||||
30,000 | Takuma Co., Ltd. | 202,121 | |||||
73,000 | The Nishi-Nippon City Bank, Ltd. | 213,308 | |||||
53,000 | The Nisshin Oillio Group, Ltd. | 186,283 | |||||
9,000 | The Shikoku Bank, Ltd. | 19,010 | |||||
2,600 | Toppan Forms Co., Ltd. | 26,352 | |||||
21,000 | Toyo Kanetsu KK | 43,129 | |||||
8,200 | Unipres Corp. | 135,685 | |||||
5,400 | Warabeya Nichiyo Co., Ltd. | 91,518 |
Shares | Security Description | Value |
8,500 | Xebio Co., Ltd. | $ | 142,637 | ||||
28,000 | Yamazaki Baking Co., Ltd. | 347,838 | |||||
5,000 | Yuasa Trading Co., Ltd. | 99,015 | |||||
18,800 | Yushin Precision Equipment Co., Ltd. | 360,995 | |||||
9,107,926 | |||||||
Malaysia - 0.5% | |||||||
32,400 | Berjaya Sports Toto Bhd | 32,525 | |||||
9,700 | Malaysian Pacific Industries Bhd | 12,567 | |||||
312,200 | Supermax Corp. Bhd | 150,006 | |||||
195,098 | |||||||
Malta - 0.4% | |||||||
2,370 | Unibet Group PLC, SDR | 149,730 | |||||
Mexico - 1.7% | |||||||
387,533 | Consorcio ARA SAB de CV (a) | 170,471 | |||||
14,507 | Corp Inmobiliaria Vesta SAB de CV | 28,790 | |||||
68,450 | Grupo Simec SAB de CV, Class B (a) | 235,316 | |||||
4,228 | Industrias Bachoco SAB de CV, Class B (a) | 17,750 | |||||
95,950 | TF Administradora Industrial S de RL de CV REIT (a) | 200,761 | |||||
653,088 | |||||||
Netherlands - 1.7% | |||||||
366 | ASM International NV | 15,545 | |||||
5,723 | BE Semiconductor Industries NV | 128,323 | |||||
11,344 | Delta Lloyd NV | 249,622 | |||||
32,180 | TNT Express NV | 215,763 | |||||
9,491 | TomTom NV (a) | 63,498 | |||||
672,751 | |||||||
Norway - 2.0% | |||||||
44,932 | Austevoll Seafood ASA | 280,335 | |||||
531,856 | Dolphin Group AS (a) | 206,948 | |||||
890 | Kongsberg Gruppen ASA | 14,688 | |||||
7,709 | Salmar ASA | 131,879 | |||||
230,000 | Vard Holdings, Ltd. (a) | 104,179 | |||||
3,126 | Veidekke ASA | 30,933 | |||||
768,962 | |||||||
Poland - 0.5% | |||||||
5,290 | Budimex SA | 211,418 | |||||
Portugal - 0.7% | |||||||
84,530 | Mota-Engil SGPS SA | 272,182 | |||||
Republic Of South Korea - 2.2% | |||||||
24,686 | Bixolon Co., Ltd. (a) | 238,067 | |||||
4,678 | Daeduck Electronics Co. (a) | 38,219 | |||||
9,124 | GS Retail Co., Ltd. (a) | 212,920 | |||||
329 | Hanjin Transportation Co., Ltd. (a) | 16,223 | |||||
10,019 | SL Corp. (a) | 158,605 | |||||
20,559 | Tongyang Life Insurance (a) | 201,073 | |||||
865,107 | |||||||
Singapore - 1.0% | |||||||
279,800 | Keppel DC REIT (a) | 205,945 | |||||
133,000 | Singapore Post, Ltd. | 192,775 | |||||
398,720 | |||||||
South Africa - 0.5% | |||||||
11,670 | Group Five, Ltd. | 29,488 | |||||
416,812 | KAP Industrial Holdings, Ltd. | 176,558 | |||||
206,046 | |||||||
Spain - 0.6% | |||||||
5,528 | CIE Automotive SA | 75,353 | |||||
7,517 | Papeles y Cartones de Europa SA | 34,838 | |||||
33,770 | Zeltia SA (a) | 109,105 | |||||
219,296 |
See Notes to Financial Statements. 4
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2014
Shares | Security Description | Value |
Sweden - 3.8% | |||||||
3,393 | Axfood AB | 203,043 | |||||
6,813 | Clas Ohlson AB, Class B | 117,766 | |||||
1,976 | Duni AB, Class A | 29,404 | |||||
3,601 | Granges AB (a) | 23,558 | |||||
10,577 | Haldex AB | 138,054 | |||||
15,096 | Intrum Justitia AB | 449,266 | |||||
14,086 | JM AB | 449,925 | |||||
20,963 | Klovern AB, Class A | 22,051 | |||||
589 | Loomis AB, Class B | 17,076 | |||||
1,008 | Net Entertainment NE AB, Class B | 34,007 | |||||
1,484,150 | |||||||
Switzerland - 2.4% | |||||||
3,170 | Coltene Holding AG | 200,875 | |||||
244 | Forbo Holding AG | 244,074 | |||||
13,290 | Gategroup Holding AG (a) | 379,638 | |||||
9,943 | Logitech International SA | 134,513 | |||||
959,100 | |||||||
Taiwan - 3.8% | |||||||
71,000 | Ability Enterprise Co., Ltd. | 37,407 | |||||
24,060 | Airtac International Group | 217,745 | |||||
107,780 | Chicony Electronics Co., Ltd. | 301,833 | |||||
260,300 | China Life Insurance Co., Ltd. | 216,628 | |||||
50,770 | Cleanaway Co., Ltd. | 235,359 | |||||
15,000 | Elite Semiconductor Memory Technology, Inc. | 24,302 | |||||
199,328 | King's Town Bank Co., Ltd. | 207,200 | |||||
9,000 | Sitronix Technology Corp. | 23,182 | |||||
5,000 | Soft-World International Corp. | 15,822 | |||||
156,000 | Tong Yang Industry Co., Ltd. | 180,919 | |||||
39,000 | Wan Hai Lines, Ltd. | 34,246 | |||||
1,494,643 | |||||||
Thailand - 0.5% | |||||||
31,700 | Thai Stanley Electric PCL, Class F | 194,632 | |||||
Turkey - 0.4% | |||||||
184,868 | Turkiye Sinai Kalkinma Bankasi AS | 159,959 | |||||
United Arab Emirates - 0.6% | |||||||
27,475 | Dragon Oil PLC | 230,171 | |||||
United Kingdom - 10.4% | |||||||
117,380 | Arrow Global Group PLC | 416,208 | |||||
2,812 | Bellway PLC | 84,982 | |||||
13,496 | Berendsen PLC | 231,384 | |||||
7,218 | Betfair Group PLC | 176,850 | |||||
19,549 | Bovis Homes Group PLC | 269,499 | |||||
17,677 | Domino's Pizza Group PLC | 193,548 | |||||
30,530 | Drax Group PLC | 219,172 | |||||
4,515 | Go-Ahead Group PLC | 173,042 | |||||
7,760 | Greggs PLC | 88,534 | |||||
20,219 | Halfords Group PLC | 147,987 | |||||
22,733 | Home Retail Group PLC | 73,521 | |||||
14,433 | Howden Joinery Group PLC | 90,656 | |||||
12,937 | Kennedy Wilson Europe Real Estate PLC | 212,726 | |||||
25,320 | Lookers PLC | 51,303 | |||||
340,880 | McBride PLC | 425,037 | |||||
44,270 | Michael Page International PLC | 284,208 | |||||
29,435 | N Brown Group PLC | 175,894 | |||||
32,415 | Novae Group PLC | 301,238 | |||||
44,650 | Pace PLC | 241,552 | |||||
77,753 | QinetiQ Group PLC | 227,708 | |||||
4,085,049 |
Shares | Security Description | Value |
Virgin Islands, British - 0.5% | |||||||
254,622 | Symphony International Holdings, Ltd. | $ | 206,244 | ||||
Total Common Stock (Cost $39,294,587) | 37,139,673 |
Shares | Security Description | Rate | Value |
Preferred Stock - 0.1% | ||||||||||
Brazil - 0.1% | ||||||||||
4,470 | Cia de Transmissao de Energia Eletrica Paulista (Cost $66,348) | 1.02 | % | 69,786 | ||||||
Total Equity Securities (Cost $39,360,935) | 37,209,459 |
Shares | Security Description | Value |
Money Market Fund - 5.1% | |||||||
1,990,003 | Short-Term Investments Trust Liquid Asset Portfolio, 0.01% (b) (Cost $1,990,003) | 1,990,003 | |||||
Total Investments - 99.8% (Cost $41,350,938)* | $ | 39,199,462 | |||||
Other Assets & Liabilities, Net – 0.2% | 67,975 | ||||||
Net Assets – 100.0% | $ | 39,267,437 |
PCL | Public Company Limited |
PLC | Public Limited Company |
REIT | Real Estate Investment Trust |
SDR | Swedish Depositary Receipt |
(a) | Non-income producing security. |
(b) | Variable rate security. Rate presented is as of December 31, 2014. |
* | Cost for federal income tax purposes is substantially the same as for financial statement purposes and net unrealized depreciation consists of: |
Gross Unrealized Appreciation | $ | 1,083,731 | ||
Gross Unrealized Depreciation | (3,235,207 | ) | ||
Net Unrealized Depreciation | $ | (2,151,476 | ) |
See Notes to Financial Statements. 5
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2014
The values of each individual forward currency contract outstanding in Acuitas International Small Cap Fund as of December 31, 2014, are disclosed in the table below.
Contracts to Purchase/(Sell) | Settlement Date | Settlement Value | Net Unrealized Appreciation (Depreciation) | ||||||||||
(31,659 | ) | Canadian Dollars | 01/05/15 | $ | 27,276 | $ | 28 | ||||||
(21,420 | ) | Canadian Dollars | 01/05/15 | 18,455 | 21 | ||||||||
17,524 | European Union Euro | 01/02/15 | (21,302 | ) | (98 | ) | |||||||
299,785 | Hong Kong Dollar | 01/05/15 | (38,644 | ) | 15 | ||||||||
20,233 | Thailand Baht | 01/05/15 | (615 | ) | - | ||||||||
60,699 | Thailand Baht | 01/05/15 | (1,846 | ) | (1 | ) | |||||||
$ | (35 | ) |
The inputs or methodology used for valuing securities are not necessarily an indication of the risks associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in Note 2 of the accompanying Notes to Financial Statements.
The following is a summary of the inputs used to value the Fund’s investments and other financial instruments and liabilities as of December 31, 2014.
Level 1 | Level 2 | Level 3 | Total |
Assets | ||||||||||||||||
Investments At Value | ||||||||||||||||
Common Stock | ||||||||||||||||
Australia | $ | 840,678 | $ | - | $ | - | $ | 840,678 | ||||||||
Austria | 767,828 | - | - | 767,828 | ||||||||||||
Belgium | 558,300 | - | - | 558,300 | ||||||||||||
Bermuda | 190,109 | - | - | 190,109 | ||||||||||||
Brazil | 933,935 | - | - | 933,935 | ||||||||||||
Canada | 1,013,137 | - | - | 1,013,137 | ||||||||||||
China | 738,167 | - | - | 738,167 | ||||||||||||
Denmark | 431,193 | - | - | 431,193 | ||||||||||||
Faroe Islands | 19,597 | - | - | 19,597 | ||||||||||||
Finland | 21,329 | - | - | 21,329 | ||||||||||||
France | 1,489,300 | - | - | 1,489,300 | ||||||||||||
Georgia | 217,436 | - | - | 217,436 | ||||||||||||
Germany | 2,986,522 | - | - | 2,986,522 | ||||||||||||
Gibraltar | 437,365 | - | - | 437,365 | ||||||||||||
Greece | 133,129 | - | - | 133,129 | ||||||||||||
Hong Kong | 1,830,333 | - | - | 1,830,333 | ||||||||||||
Ireland | 270,331 | - | - | 270,331 | ||||||||||||
Isle Of Man | 472,273 | - | - | 472,273 | ||||||||||||
Italy | 1,254,439 | - | - | 1,254,439 | ||||||||||||
Japan | 9,107,926 | - | - | 9,107,926 | ||||||||||||
Malaysia | 195,098 | - | - | 195,098 | ||||||||||||
Malta | 149,730 | - | - | 149,730 | ||||||||||||
Mexico | 653,088 | - | - | 653,088 | ||||||||||||
Netherlands | 672,751 | - | - | 672,751 | ||||||||||||
Norway | 768,962 | - | - | 768,962 | ||||||||||||
Poland | 211,418 | - | - | 211,418 | ||||||||||||
Portugal | 272,182 | - | - | 272,182 | ||||||||||||
Republic Of South Korea | 865,107 | - | - | 865,107 | ||||||||||||
Singapore | 398,720 | - | - | 398,720 | ||||||||||||
South Africa | 206,046 | - | - | 206,046 | ||||||||||||
Spain | 219,296 | - | - | 219,296 | ||||||||||||
Sweden | 1,484,150 | - | - | 1,484,150 | ||||||||||||
Switzerland | 959,100 | - | - | 959,100 | ||||||||||||
Taiwan | 1,494,643 | - | - | 1,494,643 |
See Notes to Financial Statements. 6
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2014
Level 1 | Level 2 | Level 3 | Total |
Thailand | $ | 194,632 | $ | - | $ | - | $ | 194,632 | ||||||||
Turkey | 159,959 | - | - | 159,959 | ||||||||||||
United Arab Emirates | 230,171 | - | - | 230,171 | ||||||||||||
United Kingdom | 4,085,049 | - | - | 4,085,049 | ||||||||||||
Virgin Islands, British | 206,244 | - | - | 206,244 | ||||||||||||
Preferred Stock | ||||||||||||||||
Brazil | 69,786 | - | - | 69,786 | ||||||||||||
Money Market Funds | - | 1,990,003 | - | 1,990,003 | ||||||||||||
Total Investments At Value | $ | 37,209,459 | $ | 1,990,003 | $ | - | $ | 39,199,462 |
Other Financial Instruments** | ||||||||||||||||
Forward Currency Contracts | - | 64 | - | 64 | ||||||||||||
Total Assets | $ | 37,209,459 | $ | 1,990,067 | $ | - | $ | 39,199,526 |
Liabilities | ||||||||||||||||
Other Financial Instruments** | ||||||||||||||||
Forward Currency Contracts | - | (99 | ) | - | (99 | ) | ||||||||||
Total Liabilities | $ | - | $ | (99 | ) | $ | - | $ | (99 | ) |
**Other Financial Instruments are derivatives not reflected in the schedule of investments, such as forward currency contracts, which are valued at the unrealized appreciation (depreciation) of the instrument at period end.
The Fund utilizes the end of period methodology when determining transfers. There were no transfers among Level 1, Level 2 and Level 3 for the period ended December 31, 2014.
PORTFOLIO HOLDINGS | ||||
% of Total Investments | ||||
Australia | 2.1 | % | ||
Austria | 2.0 | % | ||
Belgium | 1.4 | % | ||
Bermuda | 0.5 | % | ||
Brazil | 2.6 | % | ||
Canada | 2.6 | % | ||
China | 1.9 | % | ||
Denmark | 1.1 | % | ||
Faroe Islands | 0.0 | % | ||
Finland | 0.1 | % | ||
France | 3.8 | % | ||
Georgia | 0.6 | % | ||
Germany | 7.6 | % | ||
Gibraltar | 1.1 | % | ||
Greece | 0.3 | % | ||
Hong Kong | 4.7 | % | ||
Ireland | 0.7 | % | ||
Isle Of Man | 1.2 | % | ||
Italy | 3.2 | % | ||
Japan | 23.2 | % | ||
Malaysia | 0.5 | % | ||
Malta | 0.4 | % | ||
Mexico | 1.7 | % | ||
Netherlands | 1.7 | % | ||
Norway | 2.0 | % | ||
Poland | 0.5 | % | ||
Portugal | 0.7 | % | ||
Republic Of South Korea | 2.2 | % | ||
Singapore | 1.0 | % | ||
South Africa | 0.5 | % | ||
Spain | 0.6 | % | ||
Sweden | 3.8 | % | ||
Switzerland | 2.4 | % | ||
Taiwan | 3.8 | % | ||
Thailand | 0.5 | % | ||
Turkey | 0.4 | % | ||
United Arab Emirates | 0.6 | % | ||
United Kingdom | 10.4 | % | ||
Virgin Islands, British | 0.5 | % | ||
Money Market Fund | 5.1 | % | ||
100.0 | % |
See Notes to Financial Statements. 7
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 2014
ASSETS | ||||||
Total investments, at value (Cost $41,350,938) | $ | 39,199,462 | ||||
Foreign currency (Cost $69,045) | 69,371 | |||||
Receivables: | ||||||
Fund shares sold | 226,469 | |||||
Investment securities sold | 214,272 | |||||
Dividends | 36,533 | |||||
From investment adviser | 10,775 | |||||
Unrealized gain on forward currency contracts | 64 | |||||
Prepaid expenses | 126 | |||||
Deferred offering costs | 32,223 | |||||
Total Assets | 39,789,295 | |||||
LIABILITIES | ||||||
Unrealized loss on forward currency contracts | 99 | |||||
Payables: | ||||||
Investment securities purchased | 495,388 | |||||
Accrued Liabilities: | ||||||
Trustees’ fees and expenses | 1,371 | |||||
Fund services fees | 9,150 | |||||
Other expenses | 15,850 | |||||
Total Liabilities | 521,858 | |||||
NET ASSETS | $ | 39,267,437 | ||||
COMPONENTS OF NET ASSETS | ||||||
Paid-in capital | $ | 42,969,535 | ||||
Distributions in excess of net investment income | (45,663 | ) | ||||
Accumulated net realized loss | (1,503,828 | ) | ||||
Net unrealized depreciation | (2,152,607 | ) | ||||
NET ASSETS | $ | 39,267,437 | ||||
SHARES OF BENEFICIAL INTEREST AT NO PAR VALUE (UNLIMITED SHARES AUTHORIZED) | 4,349,062 | |||||
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE* | $ | 9.03 | ||||
* | Shares redeemed or exchanged within 60 days of purchase are charged a 1.00% redemption fee. |
See Notes to Financial Statements. 8
STATEMENT OF OPERATIONS
PERIOD ENDED DECEMBER 31, 2014
INVESTMENT INCOME | |||||||
Dividend income (Net of foreign withholding taxes of $25,689) | $ | 278,963 | |||||
EXPENSES | |||||||
Investment adviser fees | 199,109 | ||||||
Fund services fees | 67,298 | ||||||
Custodian fees | 44,379 | ||||||
Registration fees | 2,735 | ||||||
Professional fees | 15,362 | ||||||
Trustees' fees and expenses | 2,871 | ||||||
Offering costs | 29,438 | ||||||
Miscellaneous expenses | 30,179 | ||||||
Total Expenses | 391,371 | ||||||
Fees waived and expenses reimbursed | (142,484 | ) | |||||
Net Expenses | 248,887 | ||||||
NET INVESTMENT INCOME | 30,076 | ||||||
NET REALIZED AND UNREALIZED GAIN (LOSS) | |||||||
Net realized gain (loss) on: | |||||||
Investments | (1,454,818 | ) | |||||
Foreign currency transactions | (49,010 | ) | |||||
Net realized loss | (1,503,828 | ) | |||||
Net change in unrealized appreciation (depreciation) on: | |||||||
Investments | (2,151,476 | ) | |||||
Foreign currency translations | (1,131 | ) | |||||
Net change in unrealized appreciation (depreciation) | (2,152,607 | ) | |||||
NET REALIZED AND UNREALIZED LOSS | (3,656,435 | ) | |||||
DECREASE IN NET ASSETS RESULTING FROM OPERATIONS | $ | (3,626,359 | ) | ||||
* | Commencement of operations was July 18, 2014. |
See Notes to Financial Statements. 9
STATEMENT OF CHANGES IN NET ASSETS
July 18, 2014* through December 31, 2014 | |||||||
OPERATIONS | |||||||
Net investment income | $ | 30,076 | |||||
Net realized loss | (1,503,828 | ) | |||||
Net change in unrealized appreciation (depreciation) | (2,152,607 | ) | |||||
Decrease in Net Assets Resulting from Operations | (3,626,359 | ) | |||||
DISTRIBUTIONS TO SHAREHOLDERS FROM | |||||||
Net investment income | (75,739 | ) | |||||
CAPITAL SHARE TRANSACTIONS | |||||||
Sale of shares | 46,044,374 | ||||||
Reinvestment of distributions | 75,739 | ||||||
Redemption of shares | (3,152,218 | ) | |||||
Redemption fees | 1,640 | ||||||
Increase in Net Assets from Capital Share Transactions | 42,969,535 | ||||||
Increase in Net Assets | 39,267,437 | ||||||
NET ASSETS | |||||||
Beginning of Period | - | ||||||
End of Period (Including line (a)) | $ | 39,267,437 | |||||
SHARE TRANSACTIONS | |||||||
Sale of shares | 4,681,143 | ||||||
Reinvestment of distributions | 8,397 | ||||||
Redemption of shares | (340,478 | ) | |||||
Increase in Shares | 4,349,062 | ||||||
(a) | Distributions in excess of net investment income | $ | (45,663 | ) | |||
* | Commencement of operations. |
See Notes to Financial Statements. 10
FINANCIAL HIGHLIGHTS
These financial highlights reflect selected data for a share outstanding throughout the period. | |||||
July 18, 2014 (a) through December 31, 2014 | |||||
INSTITUTIONAL SHARES | |||||
NET ASSET VALUE, Beginning of Period | $ | 10.00 | |||
INVESTMENT OPERATIONS | |||||
Net investment income (b) | 0.01 | ||||
Net realized and unrealized loss | (0.96 | ) | |||
Total from Investment Operations | (0.95 | ) | |||
DISTRIBUTIONS TO SHAREHOLDERS FROM | |||||
Net investment income | (0.02 | ) | |||
REDEMPTION FEES (b) | — | (c) | |||
NET ASSET VALUE, End of Period | $ | 9.03 | |||
TOTAL RETURN | (9.52 | )%(d) | |||
RATIOS/SUPPLEMENTARY DATA | |||||
Net Assets at End of Period (000's omitted) | $39,267 | ||||
Ratios to Average Net Assets: | |||||
Net investment income | 0.18 | %(e) | |||
Net expenses | 1.50 | %(e) | |||
Gross expenses (f) | 2.37 | %(e) | |||
PORTFOLIO TURNOVER RATE | 53 | %(d) | |||
(a) | Commencement of operations. | ||||
(b) | Calculated based on average shares outstanding during the period. | ||||
(c) | Less than $0.01 per share. | ||||
(d) | Not annualized. | ||||
(e) | Annualized. | ||||
(f) | Reflects the expense ratio excluding any waivers and/or reimbursements. |
See Notes to Financial Statements. 11
PERFORMANCE CHART AND ANALYSIS
DECEMBER 31, 2014
The following chart reflects the change in the value of a hypothetical $100,000 investment in Institutional Shares, including reinvested dividends and distributions, in Acuitas US Microcap Fund (the “Fund”) compared with the performance of the benchmark, Russell Microcap® Index (“Russell Microcap”), since inception. The Russell Microcap is an unmanaged index that measures the performance of the microcap segment of US equity market, which consists of the smallest 1,000 securities in the Russell 2000® Index and the next 1,000 smallest eligible securities by market capitalization. The total return of the Russell Microcap includes the reinvestment of dividends and income. The total return of the Fund includes operating expenses that reduce returns, while the total return of the Russell Microcap does not include expenses. The Fund is professionally managed while the Russell Microcap is unmanaged and is not available for investment.
![](https://capedge.com/proxy/N-CSRS/0001435109-15-000093/ausmperformance.jpg)
Performance data quoted represents past performance and is no guarantee of future results. Current performance may be lower or higher than the performance data quoted. Investment return and principal value will fluctuate so that shares, when redeemed, may be worth more or less than original cost. For the most recent month-end performance, please call (844) 805-5628. Shares redeemed within 60 days of purchase will be charged a 1.00% redemption fee. As stated in the Fund's prospectus, the annual operating expense ratios (gross) for Institutional and Investor Shares are 2.16% and 2.97%, respectively. The Fund's adviser has contractually agreed to waive its fee and/or reimburse expenses to limit total annual fund operating expenses (excluding all taxes, interest, portfolio transaction expenses, acquired fund fees and expenses, proxy expenses and extraordinary expenses) to 1.70% and 1.95% for Institutional and Investor Shares, respectively, through November 1, 2015. The Fund may repay the Adviser for fees waived and expenses reimbursed pursuant to the expense cap if such payment (1) is made within three years of the fee waiver or expense reimbursement, (2) is approved by the Board of Trustees and (3) does not cause the net annual fund operating expenses of the Fund class to exceed the expense cap in place at the time the fees were waived. The performance table and graph do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
12
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2014
Shares | Security Description | Value |
Common Stock - 94.8% | |||||||
Consumer Discretionary - 14.4% | |||||||
17,632 | Build-A-Bear Workshop, Inc. (a) | $ | 354,403 | ||||
4,396 | Core-Mark Holding Co., Inc. | 272,244 | |||||
46,440 | Crown Crafts, Inc. | 357,588 | |||||
23,150 | Culp, Inc. | 501,892 | |||||
6,254 | Ethan Allen Interiors, Inc. | 193,687 | |||||
19,555 | Jamba, Inc. (a) | 295,085 | |||||
17,349 | MDC Partners, Inc., Class A | 394,169 | |||||
18,700 | Modine Manufacturing Co. (a) | 254,320 | |||||
4,400 | Perry Ellis International, Inc. (a) | 114,092 | |||||
1,000 | Saga Communications, Inc., Class A | 43,480 | |||||
18,893 | Sequential Brands Group, Inc. (a) | 246,932 | |||||
5,500 | Sonic Automotive, Inc., Class A | 148,720 | |||||
61,000 | Tandy Leather Factory, Inc. (a) | 550,830 | |||||
4,100 | The Marcus Corp. | 75,891 | |||||
6,200 | Tower International, Inc. (a) | 158,410 | |||||
7,750 | Winmark Corp. | 673,630 | |||||
4,635,373 | |||||||
Consumer Staples - 5.6% | |||||||
17,600 | ACCO Brands Corp. (a) | 158,576 | |||||
3,300 | Calavo Growers, Inc. | 156,090 | |||||
12,166 | Carriage Services, Inc. | 254,878 | |||||
9,200 | Central Garden and Pet Co., Class A (a) | 87,860 | |||||
6,500 | Global Cash Access Holdings, Inc. (a) | 46,475 | |||||
20,950 | John B Sanfilippo & Son, Inc. | 953,225 | |||||
13,546 | SunOpta, Inc. (a) | 160,520 | |||||
1,817,624 | |||||||
Energy - 1.2% | |||||||
5,800 | Natural Gas Services Group, Inc. (a) | 133,632 | |||||
29,849 | PetroQuest Energy, Inc. (a) | 111,635 | |||||
2,500 | REX American Resources Corp. (a) | 154,925 | |||||
400,192 | |||||||
Financial - 15.6% | |||||||
7,600 | Apollo Residential Mortgage, Inc. REIT | 119,852 | |||||
33,600 | Arbor Realty Trust, Inc. REIT | 227,472 | |||||
29,200 | Atlas Financial Holdings, Inc. (a) | 476,544 | |||||
11,300 | Berkshire Hills Bancorp, Inc. | 301,258 | |||||
32,650 | Customers Bancorp, Inc. (a) | 635,369 | |||||
1,847 | Diamond Hill Investment Group, Inc. (a) | 254,960 | |||||
9,200 | Excel Trust, Inc. REIT | 123,188 | |||||
2,400 | Financial Institutions, Inc. | 60,360 | |||||
14,400 | First Merchants Corp. | 327,600 | |||||
9,200 | JMP Group, Inc. | 70,104 | |||||
14,200 | MainSource Financial Group, Inc. | 297,064 | |||||
4,650 | Merchants Bancshares, Inc. | 142,430 | |||||
66,100 | MicroFinancial, Inc. | 674,550 | |||||
3,200 | Piper Jaffray Cos. (a) | 185,888 | |||||
6,400 | Premier Financial Bancorp, Inc. | 99,712 | |||||
19,911 | Pzena Investment Management, Inc., Class A | 188,358 | |||||
38,000 | Resource Capital Corp. REIT | 191,520 | |||||
13,200 | Stock Yards Bancorp, Inc. | 440,088 | |||||
12,600 | Walker & Dunlop, Inc. (a) | 221,004 | |||||
5,037,321 | |||||||
Healthcare – 19.7% | |||||||
4,917 | ABIOMED, Inc. (a) | 187,141 | |||||
32,200 | Addus HomeCare Corp. (a) | 781,494 | |||||
19,100 | Affymetrix, Inc. (a) | 188,517 | |||||
2,000 | Almost Family, Inc. (a) | 57,900 | |||||
1,800 | AMAG Pharmaceuticals, Inc. (a) | 76,716 | |||||
8,000 | Amicus Therapeutics, Inc. (a) | 66,560 |
Shares | Security Description | Value |
3,700 | Ardelyx, Inc. (a) | $ | 69,893 | ||||
11,602 | BioDelivery Sciences International, Inc. (a) | 139,456 | |||||
2,000 | BioSpecifics Technologies Corp. (a) | 77,240 | |||||
10,900 | Cambrex Corp. (a) | 235,658 | |||||
8,709 | Capital Senior Living Corp. (a) | 216,941 | |||||
4,100 | Eagle Pharmaceuticals, Inc. (a) | 63,550 | |||||
2,500 | Emergent Biosolutions, Inc. (a) | 68,075 | |||||
51,100 | Enzo Biochem, Inc. (a) | 226,884 | |||||
34,400 | Harvard Bioscience, Inc. (a) | 195,048 | |||||
12,700 | Heska Corp. (a) | 230,251 | |||||
4,600 | Infinity Pharmaceuticals, Inc. (a) | 77,694 | |||||
2,900 | MacroGenics, Inc. (a) | 101,703 | |||||
16,911 | Natus Medical, Inc. (a) | 609,472 | |||||
32,568 | NeoGenomics, Inc. (a) | 135,809 | |||||
15,282 | Omega Protein Corp. (a) | 161,531 | |||||
11,000 | PharMerica Corp. (a) | 227,810 | |||||
3,500 | Prothena Corp. PLC (a) | 72,660 | |||||
400 | Receptos, Inc. (a) | 49,004 | |||||
10,472 | Repligen Corp. (a) | 207,346 | |||||
34,300 | SciClone Pharmaceuticals, Inc. (a) | 300,468 | |||||
10,200 | Skilled Healthcare Group, Inc. (a) | 87,414 | |||||
2,825 | T2 Biosystems, Inc. (a) | 54,353 | |||||
47,193 | TearLab Corp. (a) | 125,061 | |||||
6,668 | The Providence Service Corp. (a) | 242,982 | |||||
9,200 | Triple-S Management Corp., Class B (a) | 219,972 | |||||
7,450 | US Physical Therapy, Inc. | 312,602 | |||||
8,100 | Utah Medical Products, Inc. | 486,405 | |||||
6,353,610 | |||||||
Industrial - 17.2% | |||||||
3,140 | ArcBest Corp. | 145,602 | |||||
7,568 | Bel Fuse, Inc. | 206,909 | |||||
20,100 | Blount International, Inc. (a) | 353,157 | |||||
15,500 | Chase Corp. | 557,845 | |||||
12,700 | Core Molding Technologies Inc (a) | 177,165 | |||||
6,500 | Ducommun, Inc. (a) | 164,320 | |||||
2,248 | DXP Enterprises, Inc. (a) | 113,591 | |||||
13,750 | Graham Corp. | 395,587 | |||||
3,342 | Huron Consulting Group, Inc. (a) | 228,559 | |||||
4,100 | Lydall, Inc. (a) | 134,562 | |||||
10,660 | Marten Transport, Ltd. | 233,028 | |||||
5,300 | MFRI, Inc. (a) | 37,153 | |||||
4,902 | NCI Building Systems, Inc. (a) | 90,785 | |||||
7,207 | Newport Corp. (a) | 137,726 | |||||
1,300 | Patrick Industries, Inc. (a) | 57,174 | |||||
5,500 | Quad/Graphics, Inc. | 126,280 | |||||
24,087 | Quality Distribution, Inc. (a) | 256,286 | |||||
2,700 | Standex International Corp. | 208,602 | |||||
53,800 | Transcat, Inc. (a) | 541,766 | |||||
8,923 | Tutor Perini Corp. (a) | 214,777 | |||||
44,477 | UFP Technologies, Inc. (a) | 1,093,467 | |||||
1,100 | VSE Corp. | 72,490 | |||||
5,546,831 | |||||||
Information Technology - 11.6% | |||||||
28,500 | Alpha & Omega Semiconductor, Ltd. (a) | 252,225 | |||||
55,600 | American Software, Inc., Class A | 506,516 | |||||
18,100 | Callidus Software, Inc. (a) | 295,573 | |||||
56,300 | Ciber Inc (a) | 199,865 | |||||
4,700 | DTS, Inc. (a) | 144,525 | |||||
27,570 | inContact, Inc. (a) | 242,340 | |||||
6,500 | Insight Enterprises, Inc. (a) | 168,285 | |||||
24,600 | Lattice Semiconductor Corp. (a) | 169,494 | |||||
19,331 | Maxwell Technologies, Inc. (a) | 176,298 | |||||
49,800 | Merge Healthcare, Inc. (a) | 177,288 |
See Notes to Financial Statements. 13
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2014
Shares | Security Description | Value |
9,119 | Monotype Imaging Holdings, Inc. | $ | 262,901 | ||||
12,837 | PDF Solutions, Inc. (a) | 190,758 | |||||
5,647 | Proofpoint, Inc. (a) | 272,355 | |||||
4,799 | Qualys, Inc. (a) | 181,162 | |||||
3,422 | SPS Commerce, Inc. (a) | 193,788 | |||||
12,900 | Sykes Enterprises, Inc. (a) | 302,763 | |||||
3,736,136 | |||||||
Materials - 2.9% | |||||||
46,250 | Landec Corp. (a) | 638,712 | |||||
24,300 | Mercer International, Inc. (a) | 298,647 | |||||
937,359 | |||||||
Telecommunication Services - 6.6% | |||||||
8,300 | Black Box Corp. | 198,370 | |||||
29,076 | Boingo Wireless, Inc. (a) | 223,013 | |||||
6,100 | Comtech Telecommunications Corp. | 192,272 | |||||
25,147 | Dice Holdings, Inc. (a) | 251,722 | |||||
29,867 | Entravision Communications Corp., Class A | 193,538 | |||||
11,600 | Inteliquent, Inc. | 227,708 | |||||
10,933 | Perficient, Inc. (a) | 203,682 | |||||
19,881 | Premiere Global Services, Inc. (a) | 211,136 | |||||
86,400 | TeleCommunication Systems, Inc., Class A (a) | 269,568 | |||||
43,700 | Vonage Holdings Corp. (a) | 166,497 | |||||
2,137,506 | |||||||
Total Common Stock (Cost $28,473,811) | 30,601,952 |
Investment Companies - 1.5% | |||||||
4,026 | PowerShares S&P SmallCap Health Care Portfolio | 240,513 | |||||
1,295 | SPDR S&P Biotech ETF | 241,699 | |||||
Total Investment Companies (Cost $439,588) | 482,212 |
Money Market Fund - 3.5% | |||||||
1,129,784 | Short-Term Investments Trust Liquid Asset Portfolio, 0.01% (b) (Cost $1,129,784) | 1,129,784 | |||||
Total Investments - 99.8% (Cost $30,043,183)* | $ | 32,213,948 | |||||
Other Assets & Liabilities, Net – 0.2% | 73,327 | ||||||
Net Assets – 100.0% | $ | 32,287,275 |
ETF | Exchange Traded Fund |
PLC | Public Limited Company |
REIT | Real Estate Investment Trust |
(a) | Non-income producing security. |
(b) | Variable rate security. Rate presented is as of December 31, 2014. |
* | Cost for federal income tax purposes is substantially the same as for financial statement purposes and net unrealized appreciation consists of: |
Gross Unrealized Appreciation | $ | 3,318,274 | ||
Gross Unrealized Depreciation | (1,147,509 | ) | ||
Net Unrealized Appreciation | $ | 2,170,765 |
The inputs or methodology used for valuing securities are not necessarily an indication of the risks associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in Note 2 of the accompanying Notes to Financial Statements.
The following is a summary of the inputs used to value the Fund’s investments as of December 31, 2014.
Valuation Inputs | Investments in Securities |
Level 1 - Quoted Prices | $ | 31,084,164 | ||
Level 2 - Other Significant Observable Inputs | 1,129,784 | |||
Level 3 - Significant Unobservable Inputs | - | |||
Total | $ | 32,213,948 |
The Level 1 value displayed in this table is Common Stock and Investment Companies. The Level 2 value displayed in this table is a Money Market Fund. Refer to the Schedule of Investments for a further breakout of each security by industry.
The Fund utilizes the end of period methodology when determining transfers. There were no transfers among Level 1, Level 2 and Level 3 for the period ended December 31, 2014.
PORTFOLIO HOLDINGS | ||||
% of Total Investments | ||||
Consumer Discretionary | 14.4 | % | ||
Consumer Staples | 5.7 | % | ||
Energy | 1.3 | % | ||
Financial | 15.6 | % | ||
Healthcare | 19.7 | % | ||
Industrial | 17.2 | % | ||
Information Technology | 11.6 | % | ||
Materials | 2.9 | % | ||
Telecommunication Services | 6.6 | % | ||
Investment Companies | 1.5 | % | ||
Money Market Fund | 3.5 | % | ||
100.0 | % |
See Notes to Financial Statements. 14
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 2014
ASSETS | ||||||
Total investments, at value (Cost $30,043,183) | $ | 32,213,948 | ||||
Receivables: | ||||||
Fund shares sold | 87,960 | |||||
Investment securities sold | 34,847 | |||||
Dividends | 20,524 | |||||
Prepaid expenses | 135 | |||||
Deferred offering costs | 33,443 | |||||
Total Assets | 32,390,857 | |||||
LIABILITIES | ||||||
Payables: | ||||||
Investment securities purchased | 59,204 | |||||
Accrued Liabilities: | ||||||
Investment adviser fees | 21,428 | |||||
Trustees’ fees and expenses | 964 | |||||
Fund services fees | 6,790 | |||||
Other expenses | 15,196 | |||||
Total Liabilities | 103,582 | |||||
NET ASSETS | $ | 32,287,275 | ||||
COMPONENTS OF NET ASSETS | ||||||
Paid-in capital | $ | 30,765,845 | ||||
Accumulated net investment loss | (50,096 | ) | ||||
Accumulated net realized loss | (599,239 | ) | ||||
Net unrealized appreciation | 2,170,765 | |||||
NET ASSETS | $ | 32,287,275 | ||||
SHARES OF BENEFICIAL INTEREST AT NO PAR VALUE (UNLIMITED SHARES AUTHORIZED) | 3,083,543 | |||||
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE* | $ | 10.47 | ||||
* | Shares redeemed or exchanged within 60 days of purchase are charged a 1.00% redemption fee. |
See Notes to Financial Statements. 15
STATEMENT OF OPERATIONS
PERIOD ENDED DECEMBER 31, 2014
INVESTMENT INCOME | |||||||
Dividend income (Net of foreign withholding taxes of $907) | $ | 168,199 | |||||
Total Investment Income | 168,199 | ||||||
EXPENSES | |||||||
Investment adviser fees | 179,772 | ||||||
Fund services fees | 58,808 | ||||||
Custodian fees | 7,065 | ||||||
Registration fees | 2,243 | ||||||
Professional fees | 12,591 | ||||||
Trustees' fees and expenses | 2,464 | ||||||
Offering costs | 29,095 | ||||||
Miscellaneous expenses | 19,321 | ||||||
Total Expenses | 311,359 | ||||||
Fees waived and expenses reimbursed | (93,064 | ) | |||||
Net Expenses | 218,295 | ||||||
NET INVESTMENT LOSS | (50,096 | ) | |||||
NET REALIZED AND UNREALIZED GAIN (LOSS) | |||||||
Net realized loss on investments | (599,239 | ) | |||||
Net change in unrealized appreciation (depreciation) on investments | 2,170,765 | ||||||
NET REALIZED AND UNREALIZED GAIN | 1,571,526 | ||||||
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS | $ | 1,521,430 | |||||
* | Commencement of operations was July 18, 2014. |
See Notes to Financial Statements. 16
STATEMENT OF CHANGES IN NET ASSETS
July 18, 2014* through December 31, 2014 | |||||||
OPERATIONS | |||||||
Net investment loss | $ | (50,096 | ) | ||||
Net realized loss | (599,239 | ) | |||||
Net change in unrealized appreciation (depreciation) | 2,170,765 | ||||||
Increase in Net Assets Resulting from Operations | 1,521,430 | ||||||
CAPITAL SHARE TRANSACTIONS | |||||||
Sale of shares | 31,320,346 | ||||||
Redemption of shares | (555,456 | ) | |||||
Redemption fees | 955 | ||||||
Increase in Net Assets from Capital Share Transactions | 30,765,845 | ||||||
Increase in Net Assets | 32,287,275 | ||||||
NET ASSETS | |||||||
Beginning of Period | - | ||||||
End of Period (Including line (a)) | $ | 32,287,275 | |||||
SHARE TRANSACTIONS | |||||||
Sale of shares | 3,139,784 | ||||||
Redemption of shares | (56,241 | ) | |||||
Increase in Shares | 3,083,543 | ||||||
* | Commencement of operations. |
See Notes to Financial Statements. 17
FINANCIAL HIGHLIGHTS
These financial highlights reflect selected data for a share outstanding throughout the period. | |||||
July 18, 2014 (a) through December 31, 2014 | |||||
INSTITUTIONAL SHARES | |||||
NET ASSET VALUE, Beginning of Period | $ | 10.00 | |||
INVESTMENT OPERATIONS | |||||
Net investment loss (b) | (0.02 | ) | |||
Net realized and unrealized gain (loss) | 0.49 | ||||
Total from Investment Operations | 0.47 | ||||
REDEMPTION FEES (b) | — | (c) | |||
NET ASSET VALUE, End of Period | $ | 10.47 | |||
TOTAL RETURN | 4.70 | %(d) | |||
RATIOS/SUPPLEMENTARY DATA | |||||
Net Assets at End of Period (000's omitted) | $32,287 | ||||
Ratios to Average Net Assets: | |||||
Net investment loss | (0.40 | )%(e) | |||
Net expenses | 1.70 | %(e) | |||
Gross expenses (f) | 2.44 | %(e) | |||
PORTFOLIO TURNOVER RATE | 25 | %(d) | |||
(a) | Commencement of operations. | ||||
(b) | Calculated based on average shares outstanding during the period. | ||||
(c) | Less than $0.01 per share. | ||||
(d) | Not annualized. | ||||
(e) | Annualized. | ||||
(f) | Reflects the expense ratio excluding any waivers and/or reimbursements. |
See Notes to Financial Statements. 18
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2014
Note 1. Organization
Acuitas International Small Cap Fund and Acuitas US Microcap Fund (individually, a “Fund” and, collectively the “Funds”) are diversified portfolios of Forum Funds II (the “Trust”). The Trust is a Delaware statutory trust that is registered as an open-end, management investment company under the Investment Company Act of 1940 (the “Act”), as amended. Under its Trust Instrument, the Trust is authorized to issue an unlimited number of each Fund’s shares of beneficial interest without par value. Each Fund currently offers two class of shares: Institutional Shares and Investor Shares. As of December 31, 2014, Investor Shares had not commenced operations. Each Fund seeks capital appreciation and commenced operations on July 18, 2014.
Note 2. Summary of Significant Accounting Policies
These financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), which require management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities at the date of the financial statements, and the reported amounts of increases and decreases in net assets from operations during the fiscal year. Actual amounts could differ from those estimates. The following summarizes the significant accounting policies of each Fund:
Security Valuation – Exchange-traded securities and over-the-counter securities are valued using the last quoted trade or official closing price, provided by independent pricing services as of the close of trading on the market or exchange for which they are primarily traded, on each Fund business day. In the absence of a sale, such securities are valued at the mean of the last bid and ask price provided by independent pricing services. Non-exchange traded securities for which quotations are available are valued using the last quoted sales price, or in the absence of a sale, at the mean of the last bid and ask prices provided by independent pricing services. Forward currency contracts are generally valued at the mean of bid and ask prices for the time period interpolated from rates reported by an independent pricing service for proximate time periods. Exchange-traded options for which the last quoted sale price is outside the closing bid and ask price, will be valued at the mean of the closing bid and ask price. Shares of open-end mutual funds are valued at net asset value (“NAV”). Short-term investments that mature in 60 days or less may be valued at amortized cost.
Each Fund values its investments at fair value pursuant to procedures adopted by the Trust's Board of Trustees (the "Board") if (1) market quotations are insufficient or not readily available or (2) the adviser believes that the values available are unreliable. The Trust’s Valuation Committee, as defined in each Fund’s registration statement, performs certain functions as they relate to the administration and oversight of each Fund’s valuation procedures. Under these procedures, the Valuation Committee convenes on a regular and ad-hoc basis to review such investments and considers a number of factors, including valuation methodologies and significant unobservable inputs, when arriving at fair value.
The Valuation Committee may work with the adviser to provide valuation inputs. In determining fair valuations, inputs may include market-based analytics which may consider related or comparable assets or liabilities, recent transactions, market multiples, book values and other relevant investment information. Adviser inputs may include an income-based approach in which the anticipated future cash flows of the investment are discounted in determining fair value. Discounts may also be applied based on the nature or duration of any restrictions on the disposition of the investments. The Valuation Committee performs regular reviews of valuation methodologies, key inputs and assumptions, disposition analysis and market activity.
Fair valuation is based on subjective factors and, as a result, the fair value price of an investment may differ from the security’s market price and may not be the price at which the asset may be sold. Fair valuation could result in a different NAV than a NAV determined by using market quotes.
Each Fund has a three-tier fair value hierarchy. The basis of the tiers is dependent upon the various “inputs” used to determine the value of each Fund’s investments. These inputs are summarized in the three broad levels listed below:
Level 1 — quoted prices in active markets for identical assets and liabilities
Level 2 — other significant observable inputs (including quoted prices of similar securities, interest rates, prepayment speeds, credit risk, etc.)
19
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2014
Level 3 — significant unobservable inputs (including each Fund’s own assumptions in determining the fair value of investments)
The aggregate value by input level, as of December 31, 2014, for each Fund’s investments is included at the end of each Fund’s schedule of investments.
Security Transactions, Investment Income and Realized Gain and Loss – Investment transactions are accounted for on the trade date. Dividend income is recorded on the ex-dividend date. Foreign dividend income is recorded on the ex-dividend date or as soon as possible after each Fund determines the existence of a dividend declaration after exercising reasonable due diligence. Income and capital gains on some foreign securities may be subject to foreign withholding taxes, which are accrued as applicable. Interest income is recorded on an accrual basis. Premium is amortized and discount is accreted using the effective interest method. Identified cost of investments sold is used to determine the gain and loss for both financial statement and federal income tax purposes.
Foreign Currency Translations – Foreign currency amounts are translated into U.S. dollars as follows: (1) assets and liabilities at the rate of exchange at the end of the respective period; and (2) purchases and sales of securities and income and expenses at the rate of exchange prevailing on the dates of such transactions. The portion of the results of operations arising from changes in the exchange rates and the portion due to fluctuations arising from changes in the market prices of securities are not isolated. Such fluctuations are included with the net realized and unrealized gain or loss on investments.
Foreign Currency Transactions – Each Fund may enter into transactions to purchase or sell foreign currency contracts and options on foreign currency. Forward currency contracts are agreements to exchange one currency for another at a future date and at a specified price. A fund may use forward currency contracts to facilitate transactions in foreign securities, to manage a fund’s foreign currency exposure and to protect the U.S. dollar value of its underlying portfolio securities against the effect of possible adverse movements in foreign exchange rates. These contracts are intrinsically valued daily based on forward rates, and a fund’s net equity therein, representing unrealized gain or loss on the contracts as measured by the difference between the forward foreign exchange rates at the dates of entry into the contracts and the forward rates at the reporting date, is recorded as a component of net asset value. These instruments involve market risk, credit risk, or both kinds of risks, in excess of the amount recognized in the Statement of Assets and Liabilities. Risks arise from the possible inability of counterparties to meet the terms of their contracts and from movement in currency and securities values and interest rates. Due to the risks associated with these transactions, a fund could incur losses up to the entire contract amount, which may exceed the net unrealized value included in its net asset value. The values of each individual forward currency contract outstanding in Acuitas International Small Cap Fund as of December 31, 2014, are disclosed in Acuitas International Small Cap Fund’s Schedule of Investments.
Distributions to Shareholders – Distributions to shareholders of net investment income and net capital gains, if any, are declared and paid at least annually. Distributions to shareholders are recorded on the ex-dividend date. Distributions are based on amounts calculated in accordance with applicable federal income tax regulations, which may differ from GAAP. These differences are due primarily to differing treatments of income and gain on various investment securities held by each Fund, timing differences and differing characterizations of distributions made by each Fund.
Federal Taxes – Each Fund intends to continue to qualify each year as a regulated investment company under Subchapter M of the Internal Revenue Code and to distribute all of their taxable income to shareholders. In addition, by distributing in each calendar year substantially all of their net investment income and capital gains, if any, the Funds will not be subject to a federal excise tax. Therefore, no federal income or excise tax provision is required. Each Fund files a U.S. federal income and excise tax return as required. A fund’s federal income tax returns are subject to examination by the Internal Revenue Service for a period of three fiscal years after they are filed. As of December 31, 2014, there are no uncertain tax positions that would require financial statement recognition, de-recognition, or disclosure.
Income and Expense Allocation – The Trust accounts separately for the assets, liabilities and operations of each of its investment portfolios. Expenses that are directly attributable to more than one investment portfolio are allocated among the respective investment portfolios in an equitable manner.
20
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2014
Redemption Fees – A shareholder who redeems or exchanges shares within 60 days of purchase will incur a redemption fee of 1.00% of the current net asset value of shares redeemed or exchanged, subject to certain limitations. The fee is charged for the benefit of the remaining shareholders and will be paid to each Fund to help offset transaction costs. The fee is accounted for as an addition to paid-in capital. Each Fund reserves the right to modify the terms of or terminate the fee at any time. There are limited exceptions to the imposition of the redemption fee.
Offering Costs – Offering costs of $61,661 and $62,538 for the Acuitas International Small Cap Fund and Acuitas US Microcap Fund, respectively, consist of fees related to the mailing and printing of the initial prospectus, certain startup legal costs, and initial registration filings. Such costs are amortized over a twelve-month period beginning with the commencement of operations of the Funds.
Commitments and Contingencies – In the normal course of business, each Fund enters into contracts that provide general indemnifications by each Fund to the counterparty to the contract. Each Fund’s maximum exposure under these arrangements is dependent on future claims that may be made against each Fund and, therefore, cannot be estimated; however, based on experience, the risk of loss from such claims is considered remote.
Note 3. Fees and Expenses
Investment Adviser – Acuitas Investments, LLC (the “Adviser”) is the investment adviser to the Funds. Pursuant to an Investment Advisory Agreement, the Adviser receives an advisory fee at an annual rate of 1.20% and 1.40% of the average daily net assets of Acuitas International Small Cap Fund and Acuitas US Microcap Fund, respectively.
Each sub-advisory fee, calculated as a percentage of each Fund’s average daily net assets, is paid by the Adviser.
Distribution – Foreside Fund Services, LLC serves as each Fund’s distributor (the “Distributor”). The Funds have adopted a Distribution Plan (the “Plan”) for Investor Shares in accordance with Rule 12b-1 of the Act. Under the Plan, the Funds pay the Distributor and/or any other entity as authorized by the Board a fee of up to 0.25% of the average daily net assets of Investor Shares. The Distributor is not affiliated with the Adviser or Atlantic Fund Administration, LLC (d/b/a Atlantic Fund Services) (“Atlantic”) or their affiliates.
Other Service Providers – Atlantic provides fund accounting, fund administration, compliance and transfer agency services to each Fund. Atlantic also provides certain shareholder report production, and EDGAR conversion and filing services. Pursuant to an Atlantic services agreement, each Fund pays Atlantic customary fees for its services. Atlantic provides a Principal Executive Officer, a Principal Financial Officer, a Chief Compliance Officer, and an Anti-Money Laundering Officer to each Fund, as well as certain additional compliance support functions.
Trustees and Officers – The Trust pays each Independent Trustee an annual retainer fee of $5,000 for service to the Trust ($20,000 for the Chairman). Effective January 1, 2015, the Trust will pay each Independent Trustee an annual retainer fee of $16,000 for service to the Trust ($21,000 for the Chairman). The Independent Trustees and Chairman may receive additional fees for special Board meetings. Each Independent Trustee is also reimbursed for all reasonable out-of-pocket expenses incurred in connection with his duties as a Trustee, including travel and related expenses incurred in attending Board meetings. The amount of Independent Trustees’ fees attributable to each Fund is disclosed in the Statement of Operations. Certain officers of the Trust are also officers or employees of the above named service providers, and during their terms of office received no compensation from each Fund.
Note 4. Expense Reimbursement and Fees Waived
The Adviser has contractually agreed to waive its fee and/or reimburse expenses to limit total annual fund operating expenses (excluding all taxes, interest, portfolio transaction expenses, acquired fund fees and expenses, proxy expenses and extraordinary expenses) of Institutional Shares to 1.50% and Investor Shares to 1.75% through November 1, 2015 for Acuitas International Small Cap Fund. The Adviser has also contractually agreed to waive its fees and/or reimburse expenses to limit total annual operating expenses (excluding all taxes, interest, portfolio transaction expenses, acquired fund fees and expenses, proxy expenses and extraordinary expenses) of Institutional Shares to 1.70% and Investor Shares to 1.95% through
21
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2014
November 1, 2015 for Acuitas US Microcap Fund. For the period July 18, 2014, through December 31, 2014, the Adviser waived fees and/or reimbursed expenses as follows:
Investment Adviser Fees Waived | Other Waivers | Total Fees Waived | ||||||||||
Acuitas International Small Cap Fund | $ | 124,802 | $ | 17,682 | $ | 142,484 | ||||||
Acuitas US Microcap Fund | 76,056 | 17,008 | 93,064 |
Each Fund may repay the Adviser for fees waived and expenses reimbursed pursuant to the expense cap if such payment (1) is made within three years of the fee waiver or expense reimbursement (2) is approved by the Board of Trustees and (3) does not cause the net annual fund operating expenses of the Fund class to exceed the expense cap in place at the time the fees were waived. As of December 31, 2014, the following amounts are subject to recapture by theAdviser:
Amount of Fees Waived and/or Expenses Reimbursed | Expiration Date to Recoup Fees Waived and/or Expenses Reimbursed | Fees Recouped | |||||||
Acuitas International Small Cap Fund | $ | 124,802 | June 30, 2018 | $ | - | ||||
Acuitas US Microcap Fund | 76,056 | June 30, 2018 | - |
Note 5. Security Transactions
The cost of purchases and proceeds from sales of investment securities (including maturities), other than short-term investments during the period ended December 31, 2014, were as follows:
Purchases | Sales | ||||
Acuitas International Small Cap Fund | $ | 59,706,810 | $18,891,058 | ||
Acuitas US Microcap Fund | 36,557,087 | 7,044,448 |
Note 6. Summary of Derivative Activity
The volume of open derivative positions may vary on a daily basis as Acuitas International Small Cap Fund transacts derivative contracts in order to achieve the exposure desired by the Adviser. The notional value of activity for the period ended December 31, 2014, for any derivative type that was held during the period is as follows:
Forward Currency Contracts | $ 19,987,419 |
Acuitas International Small Cap Fund’s use of derivatives during the period ended December 31, 2014, was limited to forward currency contracts.
Following is a summary of the effect of derivatives on the Statement of Assets and Liabilities in the Acuitas International Small Cap Fund as of December 31, 2014:
Location: | Forward Currency Contracts | ||||
Asset derivatives: | |||||
Unrealized gain on forward currency contracts | $ | 64 |
Liability derivatives: | |||||
Unrealized loss on forward currency contracts | (99 | ) |
22
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2014
Realized and unrealized gains and losses on derivatives contracts during the period ended December 31, 2014, by Acuitas International Small Cap Fund are recorded in the following locations on the Statement of Operations:
Location: | Forward Currency Contracts | |||
Net realized gain (loss) on: | ||||
Foreign currency transactions | $ | (81,483 | ) | |
Total net realized gain (loss) | (81,483 | ) | ||
Net change in unrealized appreciation (depreciation) on: | ||||
Foreign currency translations | (35 | ) | ||
Total net change in unrealized appreciation (depreciation) | (35 | ) |
Asset (Liability) amounts shown in the table below represent amounts for derivative related investments at December 31, 2014. These amounts may be collateralized by cash or financial instruments.
Gross Asset (Liability) as Presented in the Statements of Assets and Liabilities | Financial Instruments (Received) Pledged** | Cash Collateral (Received) Pledged** | Net Amount | |||||||||||||
Acuitas International Small Cap Fund | ||||||||||||||||
Assets: | ||||||||||||||||
Over-the-counter derivatives* | $ | 64 | $ | (64 | ) | $ | - | $ | - | |||||||
Liabilities: | ||||||||||||||||
Over-the-counter derivatives* | (99 | ) | 99 |
* | Over-the-counter derivatives consists of forward currency contracts. The amounts disclosed above represent the exposure to one or more counterparties. For further detail on individual derivative contracts and the corresponding unrealized appreciation (depreciation), see the Schedule of Investments. |
** | The actual financial instruments and cash collateral (received) pledged may be in excess of the amounts shown in the table. The table only reflects collateral amounts up to the amount of the financial instrument disclosed on the Statements of Assets and Liabilities. |
Note 7. Federal Income Tax
Distributions paid during the fiscal period ended as noted are characterized for tax purposes as follows:
Ordinary Income | ||||
Acuitas International Small Cap Fund | ||||
2014 | $ | 75,739 |
As of December 31, 2014, distributable earnings (accumulated loss) on a tax basis are as follows:
Undistributed Ordinary Income | Capital and Other Losses | Unrealized Appreciation (Depreciation) | Total |
Acuitas US Microcap Fund | $ | - | $ | (587,425 | ) | $ | 2,166,173 | $ | 1,578,748 | |||||||
Acuitas International Small Cap Fund | 18,355 | (1,310,989 | ) | (2,409,464 | ) | (3,702,098 | ) |
The difference between components of distributable earnings on a tax basis and the amounts reflected in the Statements of Assets and Liabilities are primarily due to currency contracts, investments in passive foreign investment companies and wash sales in the Acuitas International Small Cap Fund and real estate investment trusts and wash sales in the Acuitas US Microcap Fund.
Note 8. Subsequent Events
Subsequent events occurring after the date of this report through the date these financial statements were issued have been evaluated for potential impact and each Fund has had no such events.
23
ADDITIONAL INFORMATION
DECEMBER 31, 2014
Investment Advisory Agreement Approval
The investment advisory agreements between the investment adviser and the Trust, as well as the subadvisory agreements between the investment adviser and the investment subadvisers, must be approved for initial terms no greater than two years, and must be renewed at least annually thereafter by the vote of the Trustees, including a majority of the Trustees who are not parties to the agreements or “interested persons” of any party thereto (the “Independent Trustees”).
On June 12, 2014, the Board met in person, joined by representatives of the Adviser, independent legal counsel to the Independent Trustees (“Independent Legal Counsel”), and others to consider information related to the approval of the investment advisory agreement between the Trust, on behalf of each Fund, and the Adviser as well as the approval of the investment subadvisory agreements between the Adviser and the proposed subadvisers for the Funds (collectively, the “agreements”). The subadvisers of the Acuitas International Small Cap Fund are Advisory Research, Inc., Algert Coldiron Investors, and DePrince, Race & Zollo, Inc. The subadvisers of the Acuitas US Microcap Fund are ClariVest Asset Management, LLC, Falcon Point Capital, LLC, and Opus Capital Management. A description of the Board’s conclusions in approving the agreements follows.
In preparation for its June meeting of the Board of Trustees of the Trust (“June Meeting”), the Board was presented with a wide range of information to assist in their deliberations. Those materials included information from Lipper Inc. (“Lipper”), a leading independent source of data about the mutual fund industry, which compared each Fund’s total investment advisory fees and total expenses with a group of peer funds that were selected by Lipper, before and after waivers. Those materials also included a copy of the proposed agreements. The Board considered future potential economies of scale resulting from potential future increases in the size of the Funds and the extent to which it could later be appropriate for some portion of the benefit of these economies of scale to be shared with the Funds’ shareholders. The Board also received a memorandum from Independent Legal Counsel concerning their responsibilities with respect to the approval of the investment advisory agreements, and met in executive session with Independent Legal Counsel while deliberating.
The Board also reviewed information that was provided by the Adviser and proposed subadvisers concerning the following:
· | The terms of the proposed agreements, including the fees payable under the agreements, and the commitment of the Adviser to provide expense caps and fee waivers for the Funds; |
· | The manner in which the Funds’ shares would be distributed and the presence of a distribution fee that could be paid by the Funds; |
· | The nature and extent of the services to be provided by the Adviser and each subadviser, including information about the investment objective, policies and strategies applicable to each Fund; |
· | The personnel of the Adviser and each subadviser, including educational background, experience in the investment management industry, and the ability of the Adviser and each subadviser to retain qualified personnel; |
· | The compliance programs of the Adviser and each subadviser; |
· | The financial condition and stability of the Adviser and each subadviser; |
· | The potential for the Adviser and each subadviser to derive benefits that are ancillary to serving as an investment adviser to the Funds; |
· | The investment performance of the Adviser and the subadvisers with respect to similarly managed accounts, and the investing philosophies of the Adviser and subadvisers; |
· | The profitability of the Adviser from the advisory fee to be paid by each of the Funds. The Board did not consider information regarding the costs of services provided or profits realized by the subadvisers from their relationships with the Funds, noting instead the arms-length nature of the relationship between the Adviser and each subadviser with respect to the negotiation of the advisory fee rate on behalf of the respective Fund and that the Adviser, and not the respective Fund, was responsible for paying the subadvisory fee due under each subadvisory agreement. |
At the June Meeting, the Board reviewed, evaluated, and discussed among themselves and with the Adviser and Independent Legal Counsel, among other things, the information referenced above. The Board also considered the overall reputation, capabilities, and commitment of the Adviser and each subadviser to provide high-quality service to the Funds. After discussion and consideration amongst themselves, and with the Adviser and Independent Legal Counsel, the Board concluded that the nature and extent of the investment advisory and subadvisory services to be provided by the Adviser and
24
ADDITIONAL INFORMATION
DECEMBER 31, 2014
each subadviser to the Funds would be appropriate and consistent with the terms of the investment advisory and subadvisory agreements, including the amount of fees to be paid under the agreements. At the June Meeting, the Board unanimously approved the investment advisory and subadvisory agreements. The Board agreed that no single factor was determinative of their decision to approve the investment advisory or subadvisory agreements.
Proxy Voting Information
A description of the policies and procedures that each Fund uses to determine how to vote proxies relating to securities held in each Fund’s portfolio is available, without charge and upon request, by calling (844) 805-5628 and on the U.S. Securities and Exchange Commission’s (the “SEC”) website at www.sec.gov. Each Fund’s proxy voting record for the period from the Fund’s commencement of operations to June 30 will be available, without charge and upon request, by calling (844) 805-5628 and no later than August 31 of this year on the SEC’s website at www.sec.gov.
Availability of Quarterly Portfolio Schedules
Each Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. These filings are available, without charge and upon request on the SEC’s website at www.sec.gov or may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling (800) SEC-0330.
Shareholder Expense Example
As a shareholder of the Funds, you incur two types of costs: (1) transaction costs, including redemption fees, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees (for Investor Shares only) and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Funds, and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from July 18, 2014 (commencment of operations), through December 31, 2014.
Actual Expenses – The first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during the period.
Hypothetical Example for Comparison Purposes – The second line of the table below provides information about hypothetical account values and hypothetical expenses based on each Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not each Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in each Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as redemption fees. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
25
ADDITIONAL INFORMATION
DECEMBER 31, 2014
Beginning Account Value July 18, 2014 | Ending Account Value December 31, 2014 | Expenses Paid During Period * | Annualized Expense Ratio * | ||||||||
Acuitas International Small Cap Fund | |||||||||||
Actual | $ | 1,000.00 | $ | 904.75 | $ | 6.50 | 1.50% | ||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,017.64 | $ | 7.63 | 1.50% | ||||
Acuitas US Microcap Fund | |||||||||||
Actual | $ | 1,000.00 | $ | 1,047.00 | $ | 7.91 | 1.70% | ||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,016.64 | $ | 8.64 | 1.70% |
* | Expenses are equal to each Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year divided by 365 to reflect the half-year period (except that the average account values reflect the Fund’s actual return information for the 166-day period between July 18, 2014, the commencement date of Fund operations, through December 31, 2014). |
26
FOR MORE INFORMATION
Investment Adviser
Acuitas Investments, LLC
520 Pike Street, Suite 1221
Seattle, WA 98101
www.acuitasinvestments.com
Transfer Agent
Atlantic Fund Services, LLC
P.O. Box 588
Portland, ME 04112
www.atlanticfundservices.com
Distributor
Foreside Fund Services, LLC
Three Canal Plaza, Suite 100
Portland, ME 04101
www.foreside.com
Acuitas International Small Cap Fund
Acuitas US Microcap Fund
P.O. Box 588
Portland, ME 04112
(844) 805-5628
This report is submitted for the general information of the shareholders of the Funds. It is not authorized for distribution to prospective investors unless preceded or accompanied by an effective prospectus, which includes information regarding the Funds’ risks, objectives, fees and expenses, experience of its management, and other information.
220-SAR-1214
ITEM 2. CODE OF ETHICS.
Not applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable
ITEM 6. INVESTMENTS.
(a) | Included as part of report to shareholders under Item 1. |
(b) | Not applicable. |
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Registrant does not accept nominees to the board of trustees from shareholders.
ITEM 11. CONTROLS AND PROCEDURES
(a) The Registrant’s Principal Executive Officer and Principal Financial Officer have concluded that the Registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940 (the “Act”)) are effective, based on their evaluation of the controls and procedures required by Rule 30a-3(b) under the Act and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934, as of a date within 90 days of the filing date of this report.
(b) There were no changes in the Registrant’s internal control over financial reporting (as defined in
Rule 30a-3(d) under the Act) that occurred during the second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Registrant’s internal control over financial reporting.
ITEM 12. EXHIBITS.
(a)(1) Not applicable.
(a)(2) Certifications pursuant to Rule 30a-2(a) of the Act, and Section 302 of the Sarbanes-Oxley Act of 2002. (Exhibits filed herewith)
(a)(3) Not applicable.
(b) Certifications pursuant to Rule 30a-2(b) of the Act, and Section 906 of the Sarbanes-Oxley Act of 2002. (Exhibit filed herewith)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Registrant Forum Funds II
By | /s/ Stacey E. Hong | |
Stacey E. Hong, Principal Executive Officer | ||
Date | 2/10/15 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
By | /s/ Stacey E. Hong | |
Stacey E. Hong, Principal Executive Officer | ||
Date | 2/10/15 |
By | /s/ Karen Shaw | |
Karen Shaw, Principal Financial Officer | ||
Date | 2/10/15 |