As filed with the Securities and Exchange Commission on May 17, 2017
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
Jessica Chase, Principal Executive Officer
Three Canal Plaza, Suite 600
Portland, Maine 04101
207-347-2000
Date of fiscal year end: September 30
Date of reporting period: October 1, 2016 – March 31, 2017
ITEM 1. REPORT TO STOCKHOLDERS.
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TABLE OF CONTENTS |
A Message to Our Shareholders | 1 |
Gurtin National Municipal Opportunistic Value Fund | |
Performance Chart and Analysis | 2 |
Schedule of Investments | 4 |
Statement of Assets and Liabilities | 7 |
Statement of Operations | 8 |
Statements of Changes in Net Assets | 9 |
Financial Highlights | 10 |
Gurtin California Municipal Opportunistic Value Fund | |
Performance Chart and Analysis | 12 |
Schedule of Investments | 14 |
Statement of Assets and Liabilities | 17 |
Statement of Operations | 18 |
Statements of Changes in Net Assets | 19 |
Financial Highlights | 20 |
Gurtin National Municipal Intermediate Value Fund | |
Performance Chart and Analysis | 21 |
Schedule of Investments | 22 |
Statement of Assets and Liabilities | 28 |
Statement of Operations | 29 |
Statements of Changes in Net Assets | 30 |
Financial Highlights | 31 |
Gurtin California Municipal Intermediate Value Fund | |
Performance Chart and Analysis | 32 |
Schedule of Investments | 33 |
Statement of Assets and Liabilities | 38 |
Statement of Operations | 39 |
Statements of Changes in Net Assets | 40 |
Financial Highlights | 41 |
Notes to Financial Statements | 42 |
Additional Information | 47 |
GURTIN VALUE FUNDS A MESSAGE TO OUR SHAREHOLDERS MARCH 31, 2017 |
Dear Shareholders:
Against a backdrop of surprise election results, stock market rallies, and municipal bond market volatility, most municipal bond investors would agree that the past 6 months ended March 31, 2017, have been nothing short of eventful. While the stock market exhaled a collective post-election sigh of relief following the U.S. presidential election, the November election's political upheaval and subsequent one party control of Congress and the White House led to municipal bond market volatility in the fourth quarter of 2016 before eventually stabilizing in the first quarter of 2017. Throughout it all, while not underestimating the impact of potential policy changes and political uncertainty on the economy and interest rates, we have continued to maintain our disciplined investment approach in our management of the Gurtin National Municipal Opportunistic Value Fund, Gurtin California Municipal Opportunistic Value Fund, Gurtin National Municipal Intermediate Value Fund, and Gurtin California Municipal Intermediate Value Fund (the Gurtin Funds).
The fourth quarter of 2016 served as a reminder that a forecast is not the equivalent of a foregone conclusion. Following the surprise outcome of the U.S. presidential election, uncertainty regarding potential tax policy changes and inflationary pressures associated with pro-growth policies led to notable volatility in the municipal market. As municipal yields spiked across the curve in the final two months of the year, the most significant increases were seen in the intermediate- to long-term portion of the yield curve. Not surprisingly, municipal bond investors subsequently ran for the exits – breaking municipal bond mutual funds' 13-month streak of net inflows with net outflows in November and December, and further contributing to volatility. Having maintained a watchful eye for the rocky path and random spread widening that we believed would be seen for intermediate municipal yields should the market experience volatility, the Gurtin Funds were able to take advantage of such instances in the fund outflow induced market dislocation.
As with all periods of market dislocation, the volatility was short-lived. As we entered 2017, even as the municipal market showed day-to-day and week-to-week volatility, we saw municipal bonds stabilize in the first quarter. As hopes for significant changes in tax policy have eroded, short- to intermediate-term municipal yields have declined relative to Treasury yields, whereas yields of municipals maturing in more than ten years have remained flat, mirroring Treasuries. Overall, municipal yields have stayed in a fairly tight range year-to-date, having moved only four basis points across the curve on average.
Looking forward, with the beliefs that the economy trumps politics and there continues to be opportunity in a rising rate backdrop, we remain focused on the Federal Reserve (Fed) and the economy, which has continued to expand at a modest pace, with inflation ticking up toward the Fed's 2% target.
Sincerely,
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William R. Gurtin
CEO, CIO, Managing Partner
Gurtin Fixed Income Management, LLC
CEO, CIO, Managing Partner
Gurtin Fixed Income Management, LLC
Important Information:
There can be no guarantee that any strategy (risk management) or otherwise will be successful. All investing involves risk, including the potential loss of principal.
Bonds: Investing in the bond market is subject to certain risks including market, interest-rate, issuer, credit and inflation risk; investments may be worth more or less than the original cost when redeemed. Income from municipal bonds may be subject to state and local taxes and at times the alternative minimum tax; a strategy concentrating in a single or limited number of states is subject to greater risk of adverse economic conditions and regulatory changes. The value of most bond funds and fixed income securities is impacted by changes in interest rates. Bonds and bond funds with longer durations tend to be more sensitive and more volatile than securities with shorter durations; bond prices generally fall as interest rates rise. Credit risk refers to an issuer's ability to make interest and principal payments when due.
GURTIN NATIONAL MUNICIPAL OPPORTUNISTIC VALUE FUND PERFORMANC CHART AND ANALYSIS MARCH 31, 2017 |
The following chart reflects the change in the value of a hypothetical $250,000 investment in Institutional Shares, including reinvested dividends and distributions, in Gurtin National Municipal Opportunistic Value Fund (the "Fund") compared with the performance of the benchmark, Bank of America Merrill Lynch Municipal Miscellaneous Index 7-12 Years ("BAML Muni Misc 7-12") and the Bank of America Merrill Lynch Municipal Blended Index ("BAML Muni Blended"), since inception. The BAML Muni Misc 7-12 was formerly known as the Merrill Lynch Municipal Miscellaneous 7-12 Years Index and measures the performance of municipal securities with a remaining term to final maturity greater than or equal to 7 years and less than 12 years. The BAML Muni Blended is a blend of 75% of The Bank of America Merrill Lynch 7-12 Year US Large Cap Municipal Securities Index, a subset of the Bank of America Merrill Lynch US Large Cap Municipal Securities Index including all securities with a remaining term to final maturity greater than or equal to 7 years and less than 12 years, and 25% of the Bank of America Merrill Lynch 12-22 Year US Large Cap Municipal Securities Index, a subset of the Bank of America Merrill Lynch US Large Cap Municipal Securities Index including all securities with a remaining term to final maturity greater than or equal to 12 years and less than 22 years. The total returns of both the BAML Muni Misc 7-12 and the BAML Muni Blended includes the reinvestment of dividends and income. The total return of the Fund includes operating expenses that reduce returns, while the total returns of the BAML Muni Misc 7-12 and the BAML Muni Blended does not include expenses. The Fund is professionally managed, while the BAML Muni Misc 7-12 and the BAML Muni Blended are unmanaged and are not available for investment.
![](https://capedge.com/proxy/N-CSRS/0001435109-17-000350/natmunioppvalperf.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) 342-5763. As stated in the Fund's current prospectus, the annual operating expense ratio (gross) is 0.71%. However, the Fund's adviser has contractually agreed to waive its fee and/or reimburse expenses to limit total operating expenses (excluding all taxes, interest, portfolio transaction expenses, acquired fund fees and expenses, proxy expenses and extraordinary expenses) to 0.60%, through February 1, 2018. During the period, certain fees were waived and/or expenses reimbursed; otherwise, returns would have been lower. 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. Returns greater than one year are annualized.
A privately offered fund managed by the Gurtin National Municipal Opportunistic Value Fund's Adviser and portfolio management team ("Predecessor Fund") reorganized into the Gurtin National Municipal Opportunistic Value Fund on November 3, 2014. This Predecessor Fund was organized on November 16, 2009, and commenced operations on May 3, 2010. The Predecessor Fund had an investment objective and strategies that were, in all material respects, identical to those of the Fund, and was managed in a manner that, in all material respects, complied with the investment guidelines and restrictions of the Gurtin National Municipal Opportunistic Value Fund. The Predecessor Fund, however, was not registered as an investment company under the Investment Company Act of 1940 (the "1940 Act"), and the Predecessor Fund was not subject to certain investment limitations, diversification requirements, liquidity requirements, and other restrictions imposed by the 1940 Act and the Internal Revenue Code of 1986 which, if applicable, may have adversely affected its performance. The Gurtin National Municipal Opportunistic Value Fund's performance for periods prior to the commencement of operations is that of the Predecessor Fund and is based on calculations that are different from the standardized method of calculations adopted by the SEC. The performance of the Predecessor Fund was calculated net of the Predecessor Fund's fees and expenses. The performance of the Predecessor Fund has not been restated to reflect the fees, estimated expenses and fee waivers and/or expense limitations of the Gurtin National Municipal Opportunistic Value Fund. If the performance of the Predecessor Fund had been restated to reflect the applicable fees and expenses of the Gurtin National Municipal Opportunistic Value Fund, the performance may have been higher or lower. Past performance is not indicative of future results.
Principal | Security Description | Rate | Maturity | Value |
Municipal Bonds - 96.0% | ||||||||||
California - 14.6% | ||||||||||
$ | 85,000 | California Health Facilities Financing Authority, California RB, Series A | 5.00 | % | 04/01/25 | $ | 85,247 | |||
500,000 | California State Public Works Board, California RB, Series B1 | 5.63 | 03/01/30 | 557,070 | ||||||
2,875,000 | California State Public Works Board, California RB, Series G | 5.00 | 11/01/37 | 3,221,869 | ||||||
1,000,000 | City of Fairfield, California COP, Series A (a) | 6.55 | 04/01/30 | 607,960 | ||||||
670,000 | County of San Bernardino, California COP | 5.00 | 08/01/28 | 671,601 | ||||||
1,450,000 | Golden State Tobacco Securitization Corp., California RB, Series A | 5.00 | 06/01/29 | 1,645,373 | ||||||
1,000,000 | Modesto Irrigation District, California RB (b) | 1.29 | 09/01/27 | 937,210 | ||||||
1,000,000 | Natomas Unified School District, California GOB (a) | 5.05 | 08/01/26 | 608,240 | ||||||
1,000,000 | Natomas Unified School District, California GOB (a) | 5.14 | 08/01/27 | 574,130 | ||||||
3,050,000 | Sacramento County Sanitation Districts Financing Authority, California RB, Series B (b) | 1.24 | 12/01/35 | 2,614,155 | ||||||
2,225,000 | State of California, California GOB | 5.50 | 08/01/29 | 2,355,296 | ||||||
130,000 | State of California, California GOB, Series 07 | 5.13 | 10/01/27 | 130,464 | ||||||
1,500,000 | Stockton East Water District, California COP, Series B (a) | 5.96-5.98 | 04/01/20 | 1,258,530 | ||||||
2,200,000 | Stockton East Water District, California COP, Series B (a) | 6.09 | 04/01/26 | 1,281,874 |
Principal | Security Description | Rate | Maturity | Value |
$ | 250,000 | Victor Valley Community College District, California GOB, Series A | 5.38 | % | 08/01/29 | $ | 274,578 | |||
16,823,597 | ||||||||||
Colorado - 1.2% | ||||||||||
1,250,000 | State of Colorado Department of Transportation, Colorado COP | 5.00 | 06/15/41 | 1,328,963 | ||||||
Connecticut - 2.6% | ||||||||||
3,000,000 | State of Connecticut, Connecticut GOB, Series A (b) | 1.86 | 03/01/24 | 2,986,590 | ||||||
District of Columbia - 3.7% | ||||||||||
1,350,000 | Metropolitan Washington Airports Authority, District of Columbia RB, Series B | 5.00 | 10/01/32 | 1,374,948 | ||||||
2,900,000 | Washington Convention & Sports Authority, District of Columbia RB, Series A | 4.50 | 10/01/30 | 2,907,685 | ||||||
4,282,633 | ||||||||||
Florida - 7.2% | ||||||||||
2,775,000 | County of Miami-Dade Transit System, Florida RB | 5.00 | 07/01/32 | 2,913,223 | ||||||
5,250,000 | County of Orange FL Tourist Development Tax, Florida RB | 5.00 | 10/01/19 | 5,358,307 | ||||||
8,271,530 | ||||||||||
Illinois - 23.4% | ||||||||||
2,465,000 | Chicago O'Hare International Airport, Illinois RB, Series B | 5.00 | 01/01/32 | 2,752,961 | ||||||
1,000,000 | Chicago O'Hare International Airport, Illinois RB, Series B | 5.00 | 01/01/33 | 1,120,170 | ||||||
1,000,000 | Chicago O'Hare International Airport, Illinois RB, Series B | 5.00 | 01/01/41 | 1,105,020 | ||||||
500,000 | Chicago Park District, Illinois GOB, Series A | 5.00 | 01/01/27 | 534,440 | ||||||
525,000 | Chicago Park District, Illinois GOB, Series A | 5.50 | 01/01/33 | 591,339 |
Principal | Security Description | Rate | Maturity | Value |
$ | 980,000 | Chicago Park District, Illinois GOB, Series A | 5.00 | % | 01/01/33 | $ | 1,029,382 | |||
3,000,000 | Chicago Park District, Illinois GOB, Series A | 5.75 | 01/01/38 | 3,429,630 | ||||||
1,975,000 | Chicago Park District, Illinois GOB, Series A | 5.00 | 01/01/40 | 2,093,105 | ||||||
1,500,000 | Chicago Park District, Illinois GOB, Series C | 5.00 | 01/01/27 | 1,611,105 | ||||||
920,000 | Chicago Park District, Illinois GOB, Series C | 5.00 | 01/01/29 | 983,186 | ||||||
1,250,000 | Illinois Finance Authority, Illinois RB | 5.00 | 07/01/46 | 1,262,875 | ||||||
1,000,000 | Illinois Finance Authority, Illinois RB, Series A | 5.25 | 08/15/33 | 1,043,890 | ||||||
3,500,000 | Illinois Finance Authority, Illinois RB, Series A | 5.00 | 02/15/45 | 3,726,800 | ||||||
525,000 | Illinois Finance Authority, Illinois RB, Series D | 6.25 | 11/01/28 | 567,950 | ||||||
1,805,000 | Illinois State Toll Highway Authority, Illinois RB, Series A | 5.00 | 01/01/40 | 1,986,601 | ||||||
1,030,000 | University of Illinois, Illinois RB, Series A | 5.13 | 04/01/36 | 1,107,899 | ||||||
900,000 | University of Illinois, Illinois RB, Series A | 5.00 | 04/01/39 | 972,153 | ||||||
825,000 | Will Grundy Etc Counties Community College District No. 525, Illinois GOB, Series B | 5.25 | 06/01/36 | 920,007 | ||||||
26,838,513 | ||||||||||
Indiana - 1.8% | ||||||||||
1,950,000 | Indiana Finance Authority, Indiana RB, Series A | 5.00 | 05/01/42 | 2,090,186 | ||||||
Kansas - 1.7% | ||||||||||
2,000,000 | State of Kansas Department of Transportation, Kansas RB, Series B-3 (b) | 0.77 | 09/01/17 | 1,999,640 | ||||||
Maryland - 0.6% | ||||||||||
625,000 | Montgomery County Housing Opportunites Commission, Maryland RB, Series C | 5.00 | 07/01/31 | 663,206 | ||||||
Principal | Security Description | Rate | Maturity | Value |
Massachusetts - 0.8% | ||||||||||
$ | 880,000 | Massachusetts Housing Finance Agency, Massachusetts RB, Series C | 5.00 | % | 12/01/30 | $ | 909,366 | |||
Michigan - 0.5% | ||||||||||
550,000 | Michigan State Building Authority, Michigan RB, Series A | 5.20 | 10/15/31 | 618,492 | ||||||
Missouri - 1.0% | ||||||||||
1,000,000 | City of St. Louis MO Airport Revenue, Missouri RB | 6.63 | 07/01/34 | 1,107,310 | ||||||
New York - 14.3% | ||||||||||
1,000,000 | Metropolitan Transportation Authority, New York RB, Series C | 5.00 | 11/15/28 | 1,045,680 | ||||||
1,000,000 | New York City Water & Sewer System, New York RB, Series A | 5.75 | 06/15/40 | 1,057,250 | ||||||
5,000,000 | New York City Water & Sewer System, New York RB, Series DD | 5.00 | 06/15/32 | 5,233,400 | ||||||
50,000 | New York State Dormitory Authority, New York RB | 5.75 | 02/15/19 | 50,199 | ||||||
1,000,000 | New York State Dormitory Authority, New York RB | 5.00 | 07/01/38 | 1,050,260 | ||||||
2,500,000 | New York State Dormitory Authority, New York RB | 5.00 | 07/01/46 | 2,526,075 | ||||||
3,650,000 | New York State Thruway Authority, New York RB, Series H | 5.00 | 01/01/25 | 3,762,967 | ||||||
1,410,000 | Schenectady Metroplex Development Authority, New York RB, Series A | 5.50 | 08/01/33 | 1,639,252 | ||||||
16,365,083 | ||||||||||
Ohio - 12.0% | ||||||||||
2,950,000 | American Municipal Power, Inc., Ohio RB, Series B | 5.00 | 02/15/37 | 3,226,680 | ||||||
5,225,000 | Ohio Higher Educational Facility Commission, Ohio RB, Series A | 5.25 | 01/01/33 | 5,367,695 |
Principal | Security Description | Rate | Maturity | Value |
$ | 5,000,000 | Ohio Higher Educational Facility Commission, Ohio RB, Series A | 5.50 | % | 01/01/43 | $ | 5,144,300 | |||
13,738,675 | ||||||||||
Pennsylvania - 3.6% | ||||||||||
1,300,000 | Elizabethtown Area School District, Pennsylvania GOB | 2.00 | 03/01/18 | 1,301,196 | ||||||
2,600,000 | Pennsylvania Turnpike Commission, Pennsylvania RB, Series A-1 | 5.00 | 12/01/41 | 2,858,492 | ||||||
4,159,688 | ||||||||||
Texas - 1.5% | ||||||||||
2,000,000 | County of Harris, Texas RB (b) | 1.37 | 08/15/35 | 1,700,620 | ||||||
Virginia - 2.4% | ||||||||||
2,775,000 | Fairfax County Redevelopment & Housing Authority, Virginia RB | 4.75 | 04/01/38 | 2,778,968 | ||||||
Washington - 3.1% | ||||||||||
1,715,000 | Central Puget Sound Regional Transit Authority, Washington RB | 4.75 | 02/01/28 | 1,816,888 | ||||||
1,455,000 | Everett Housing Authority, Washington RB (b) | 4.89 | 06/01/37 | 1,459,554 | ||||||
250,000 | State of Washington, Washington COP, Series D | 5.45 | 07/01/28 | 268,975 | ||||||
3,545,417 |
Total Municipal Bonds (Cost $108,344,400) | 110,208,477 |
Shares | Security Description | Value |
Money Market Fund - 2.7% | ||||||
3,084,670 | Fidelity Investments Money Market Government Portfolio – Class I, 0.57% (b) (Cost $3,084,670) | 3,084,670 | ||||
Total Investments - 98.7% (Cost $111,429,070)* | $ | 113,293,147 | |
Other Assets & Liabilities, Net – 1.3% | 1,497,537 | ||
Net Assets – 100.0% | $ | 114,790,684 |
(a) | Zero coupon bond. Interest rate presented is yield to maturity. |
(b) | Variable rate security. Rate presented is as of March 31, 2017. |
COP Certificate of Participation
GOB General Obligation Bond
RB Revenue Bond
* Cost for federal income tax purposes is substantially the same as for financial statement purposes and net unrealized appreciation consists of:
Gross Unrealized Appreciation | $ | 2,282,340 | ||
Gross Unrealized Depreciation | (418,263 | ) | ||
Net Unrealized Appreciation | $ | 1,864,077 |
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 March 31, 2017.
Valuation Inputs | Investments in Securities |
Level 1 - Quoted Prices | $ | - | ||
Level 2 - Other Significant Observable Inputs | 113,293,147 | |||
Level 3 - Significant Unobservable Inputs | - | |||
Total | $ | 113,293,147 |
The Level 2 value displayed in this table includes Municipal Bonds and a Money Market Fund. Refer to this Schedule of Investments for a further breakout of each Municipal Bond security by state.
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 March 31, 2017.
AFAPORTFOLIO HOLDINGS | ||
% of Total Investments | ||
Municipal Bonds | 97.3 | % |
Money Market Fund | 2.7 | % |
100.0 | % |
ASSETS | ||||||
. | Total investments, at value (Cost $111,429,070) | $ | 113,293,147 | |||
Receivables: | ||||||
Fund shares sold | 299,980 | |||||
Dividends and interest | 1,347,892 | |||||
Prepaid expenses | 9,342 | |||||
Total Assets | 114,950,361 | |||||
LIABILITIES | ||||||
Payables: | ||||||
Fund shares redeemed | 84,948 | |||||
Distributions payable | 10,491 | |||||
Accrued Liabilities: | ||||||
Investment adviser fees | 39,227 | |||||
Trustees' fees and expenses | 489 | |||||
Fund services fees | 9,984 | |||||
Other expenses | 14,538 | |||||
Total Liabilities | 159,677 | |||||
NET ASSETS | $ | 114,790,684 | ||||
COMPONENTS OF NET ASSETS | ||||||
Paid-in capital | $ | 112,888,808 | ||||
Distributions in excess of net investment income | (173 | ) | ||||
Accumulated net realized gain | 37,972 | |||||
Net unrealized appreciation | 1,864,077 | |||||
NET ASSETS | $ | 114,790,684 | ||||
SHARES OF BENEFICIAL INTEREST AT NO PAR VALUE (UNLIMITED SHARES AUTHORIZED) | 11,492,673 | |||||
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE | $ | 9.99 | ||||
GURTIN NATIONAL MUNICIPAL OPPORTUNISTIC VALUE FUND STATEMENT OF OPERATIONS SIX MONTHS ENDED MARCH 31, 2017 |
INVESTMENT INCOME | |||||||
Dividend income | . | $ | 9,711 | ||||
Interest income | 1,413,360 | ||||||
Total Investment Income | 1,423,071 | ||||||
EXPENSES | |||||||
Investment adviser fees | 260,672 | ||||||
Fund services fees | 72,745 | ||||||
Custodian fees | 6,140 | ||||||
Registration fees | 8,596 | ||||||
Professional fees | 17,494 | ||||||
Trustees' fees and expenses | 3,879 | ||||||
Miscellaneous expenses | 26,888 | ||||||
Total Expenses | 396,414 | ||||||
Fees waived and expenses reimbursed | (48,853 | ) | |||||
Net Expenses | 347,561 | ||||||
NET INVESTMENT INCOME | 1,075,510 | ||||||
NET REALIZED AND UNREALIZED GAIN (LOSS) | |||||||
Net realized gain on investments | 38,428 | ||||||
Net change in unrealized appreciation (depreciation) on investments | (1,622,291 | ) | |||||
NET REALIZED AND UNREALIZED LOSS | (1,583,863 | ) | |||||
DECREASE IN NET ASSETS RESULTING FROM OPERATIONS | $ | (508,353 | ) | ||||
GURTIN NATIONAL MUNICIPAL OPPORTUNISTIC VALUE FUND STATEMENTS OF CHANGES IN NET ASSETS |
For the Six Months Ended March 31, 2017 | For the Year Ended September 30, 2016 | ||||||||||
OPERATIONS | |||||||||||
Net investment income | $ | 1,075,510 | $ | 1,933,580 | |||||||
Net realized gain | 38,428 | 224,340 | |||||||||
Net change in unrealized appreciation (depreciation) | (1,622,291 | ) | 1,229,771 | ||||||||
Increase (Decrease) in Net Assets Resulting from Operations | (508,353 | ) | 3,387,691 | ||||||||
DISTRIBUTIONS TO SHAREHOLDERS FROM | |||||||||||
Net investment income | (1,075,464 | ) | (1,933,804 | ) | |||||||
Net realized gain | (208,685 | ) | - | ||||||||
Total Distributions to Shareholders | (1,284,149 | ) | (1,933,804 | ) | |||||||
CAPITAL SHARE TRANSACTIONS | |||||||||||
Sale of shares | 21,522,615 | 27,315,987 | |||||||||
Reinvestment of distributions | 1,174,935 | 1,729,254 | |||||||||
Redemption of shares | (15,036,584 | ) | (13,308,725 | ) | |||||||
Increase in Net Assets from Capital Share Transactions | 7,660,966 | 15,736,516 | |||||||||
Increase in Net Assets | 5,868,464 | 17,190,403 | |||||||||
NET ASSETS | |||||||||||
Beginning of Period | 108,922,220 | 91,731,817 | |||||||||
End of Period (Including line (a)) | $ | 114,790,684 | $ | 108,922,220 | |||||||
SHARE TRANSACTIONS | |||||||||||
Sale of shares | 2,148,324 | 2,713,337 | |||||||||
Reinvestment of distributions | 117,737 | 171,051 | |||||||||
Redemption of shares | (1,505,242 | ) | (1,315,943 | ) | |||||||
Increase in Shares | 760,819 | 1,568,445 | |||||||||
(a) | Distributions in excess of net investment income | $ | (173 | ) | $ | (219 | ) |
GURTIN NATIONAL MUNICIPAL OPPORTUNISTIC VALUE FUND FINANCIAL HIGHLIGHTS |
These financial highlights reflect selected data for a share outstanding throughout each period. | |||||||||||||
For the Six Months Ended March 31, 2017 | For the Year Ended September 30, 2016 | November 3, 2014 (a) through September 30, 2015 | |||||||||||
INSTITUTIONAL CLASS | |||||||||||||
NET ASSET VALUE, Beginning of Period | $ | 10.15 | $ | 10.01 | $ | 10.00 | |||||||
INVESTMENT OPERATIONS | |||||||||||||
Net investment income (b) | 0.09 | 0.18 | 0.20 | ||||||||||
Net realized and unrealized gain (loss) | (0.14 | ) | 0.14 | 0.02 | |||||||||
Total from Investment Operations | (0.05 | ) | 0.32 | 0.22 | |||||||||
DISTRIBUTIONS TO SHAREHOLDERS FROM | |||||||||||||
Net investment income | (0.09 | ) | (0.18 | ) | (0.21 | ) | |||||||
Net realized gain | (0.02 | ) | — | — | |||||||||
Total Distributions to Shareholders | (0.11 | ) | (0.18 | ) | (0.21 | ) | |||||||
NET ASSET VALUE, End of Period | $ | 9.99 | $ | 10.15 | $ | 10.01 | |||||||
TOTAL RETURN | (0.49 | )%(c) | 3.26 | % | 2.18 | %(c) | |||||||
RATIOS/SUPPLEMENTARY DATA | |||||||||||||
Net Assets at End of Period (000's omitted) | $114,791 | $108,922 | $91,732 | ||||||||||
Ratios to Average Net Assets: | |||||||||||||
Net investment income | 1.85 | %(d) | 1.81 | % | 2.21 | %(d) | |||||||
Net expenses | 0.60 | %(d) | 0.60 | % | 0.60 | %(d) | |||||||
Gross expenses (e) | 0.68 | %(d) | 0.71 | % | 0.93 | %(d) | |||||||
PORTFOLIO TURNOVER RATE | 35 | %(c) | 59 | % | 32 | %(c) | |||||||
(a) | Commencement of operations. | ||||||||||||
(b) | Calculated based on average shares outstanding during each period. | ||||||||||||
(c) | Not annualized. | ||||||||||||
(d) | Annualized. | ||||||||||||
(e) | Reflects the expense ratio excluding any waivers and/or reimbursements. |
[INTENTIONALLY LEFT BLANK] 11 |
GURTIN CALIFORNIA MUNICIPAL OPPORTUNISTIC VALUE FUND PERFORMANCE CHART AND ANALYSIS MARCH 31, 2017 |
The following chart reflects the change in the value of a hypothetical $250,000 investment in Institutional Shares, including reinvested dividends and distributions, in Gurtin California Municipal Opportunistic Value Fund (the "Fund") compared with the performance of the benchmark, Bank of America Merrill Lynch Municipal Miscellaneous Index 7-12 Years ("BAML Muni Misc 7-12") and the Bank of America Merrill Lynch Municipal Blended Index ("BAML Muni Blended"), since inception. The BAML Muni Misc 7-12 was formerly known as the Merrill Lynch Municipal Miscellaneous 7-12 Years Index and measures the performance of municipal securities with a remaining term to final maturity greater than or equal to 7 years and less than 12 years. The BAML Muni Blended is a blend of 75% of The Bank of America Merrill Lynch 7-12 Year US Large Cap Municipal Securities Index, a subset of the Bank of America Merrill Lynch US Large Cap Municipal Securities Index including all securities with a remaining term to final maturity greater than or equal to 7 years and less than 12 years, and 25% of the Bank of America Merrill Lynch 12-22 Year US Large Cap Municipal Securities Index, a subset of the Bank of America Merrill Lynch US Large Cap Municipal Securities Index including all securities with a remaining term to final maturity greater than or equal to 12 years and less than 22 years. The total returns of both the BAML Muni Misc 7-12 and the BAML Muni Blended includes the reinvestment of dividends and income. The total return of the Fund includes operating expenses that reduce returns, while the total returns of the BAML Muni Misc 7-12 and the BAML Muni Blended does not include expenses. The Fund is professionally managed, while the BAML Muni Misc 7-12 and the BAML Muni Blended are unmanaged and are not available for investment.
![](https://capedge.com/proxy/N-CSRS/0001435109-17-000350/calmunioppvalperf.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) 342-5763. As stated in the Fund's current prospectus, the annual operating expense ratio (gross) is 0.65%. However, the Fund's adviser has contractually agreed to waive its fee and/or reimburse expenses to limit total operating expenses (excluding all taxes, interest, portfolio transaction expenses, acquired fund fees and expenses, proxy expenses and extraordinary expenses) to 0.60%, through February 1, 2018. During the period, certain fees were waived and/or expenses reimbursed; otherwise, returns would have been lower. 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. Returns greater than one year are annualized.
12 |
GURTIN CALIFORNIA MUNICIPAL OPPORTUNISTIC VALUE FUND PERFORMANCE CHART AND ANALYSIS MARCH 31, 2017 |
A privately offered fund managed by the Gurtin California Municipal Opportunistic Value Fund's Adviser and portfolio management team ("Predecessor Fund") reorganized into the Gurtin California Municipal Opportunistic Value Fund on November 3, 2014. This Predecessor Fund was organized on November 16, 2009, and commenced operations on May 3, 2010. The Predecessor Fund had an investment objective and strategies that were, in all material respects, identical to those of the Fund, and was managed in a manner that, in all material respects, complied with the investment guidelines and restrictions of the Gurtin California Municipal Opportunistic Value Fund. The Predecessor Fund, however, was not registered as an investment company under the Investment Company Act of 1940 (the "1940 Act"), and the Predecessor Fund was not subject to certain investment limitations, diversification requirements, liquidity requirements, and other restrictions imposed by the 1940 Act and the Internal Revenue Code of 1986 which, if applicable, may have adversely affected its performance. The Gurtin California Municipal Opportunistic Value Fund's performance for periods prior to the commencement of operations is that of the Predecessor Fund and is based on calculations that are different from the standardized method of calculations adopted by the SEC. The performance of the Predecessor Fund was calculated net of the Predecessor Fund's fees and expenses. The performance of the Predecessor Fund has not been restated to reflect the fees, estimated expenses and fee waivers and/or expense limitations of the Gurtin California Municipal Opportunistic Value Fund. If the performance of the Predecessor Fund had been restated to reflect the applicable fees and expenses of the Gurtin California Municipal Opportunistic Value Fund, the performance may have been higher or lower. Past performance is not indicative of future results.
Principal | Security Description | Rate | Maturity | Value |
Municipal Bonds - 98.8% | ||||||||||
California - 89.8% | ||||||||||
$ | 1,000,000 | Abag Finance Authority for Nonprofit Corps, California RB | 5.00 | % | 01/01/33 | $ | 1,129,130 | |||
1,160,000 | Alameda Public Financing Authority, California RB, Series A | 5.25 | 07/01/29 | 1,276,093 | ||||||
7,655,000 | Anaheim Housing & Public Improvements Authority, California RB | 5.00 | 10/01/33 | 8,534,636 | ||||||
2,465,000 | Anaheim Housing & Public Improvements Authority, California RB | 5.00 | 10/01/34 | 2,748,253 | ||||||
12,735,000 | Bay Area Toll Authority, California RB, Series B (a) | 1.50 | 04/01/47 | 12,761,871 | ||||||
290,000 | Bret Harte Union High School District, California COP | 4.25 | 09/01/20 | 290,769 | ||||||
700,000 | California Infrastructure & Economic Development Bank, California RB | 5.00 | 08/15/23 | 736,680 | ||||||
500,000 | California Infrastructure & Economic Development Bank, California RB | 5.75 | 08/15/29 | 560,600 | ||||||
500,000 | California State Public Works Board, California RB, Series B | 6.00 | 04/01/27 | 545,520 | ||||||
500,000 | California State Public Works Board, California RB, Series B1 | 5.40 | 03/01/26 | 552,585 | ||||||
4,100,000 | California State Public Works Board, California RB, Series G | 5.00 | 11/01/37 | 4,594,665 | ||||||
1,000,000 | California State Public Works Board, California RB, Series G1 | 5.75 | 10/01/30 | 1,102,600 | ||||||
600,000 | California State Public Works Board, California RB, Series I-1 | 6.13 | 11/01/29 | 675,096 | ||||||
3,505,000 | California State University, California RB, Series A | 5.00 | 11/01/32 | 3,517,653 |
Principal | Security Description | Rate | Maturity | Value |
$ | 2,175,000 | California Statewide Communities Development Authority, California RB, Series A | 5.00 | % | 08/15/46 | $ | 2,393,501 | |||
1,000,000 | Centinela Valley Union High School District, California GOB, Series B | 5.75 | 08/01/30 | 1,234,910 | ||||||
1,910,000 | Centinela Valley Union High School District, California GOB, Series B | 5.75 | 08/01/33 | 2,358,678 | ||||||
1,000,000 | Chino Valley Unified School District, California GOB (b) | 5.85 | 08/01/26 | 643,470 | ||||||
3,000,000 | Chino Valley Unified School District, California GOB (b) | 4.62 | 08/01/29 | 1,667,880 | ||||||
7,505,000 | City & County of San Francisco CA, California COP, Series B | 5.00 | 09/01/17 | 7,636,638 | ||||||
2,000,000 | City of Fairfield, California COP, Series A (b) | 6.55 | 04/01/30 | 1,215,920 | ||||||
1,000,000 | City of Fresno Water System, California RB, Series A | 5.25 | 06/01/18 | 1,003,640 | ||||||
1,690,000 | City of Vallejo Water Revenue, California RB | 5.00 | 05/01/18 | 1,695,526 | ||||||
2,575,000 | Coachella Valley Unified School District, California GOB, Series D | 5.00 | 08/01/37 | 2,848,362 | ||||||
1,400,000 | County of San Bernardino, California COP | 5.00 | 08/01/28 | 1,403,346 | ||||||
1,275,000 | County of San Bernardino, California COP | 4.75 | 08/01/28 | 1,278,481 | ||||||
2,835,000 | Dublin Unified School District, California GOB, Series D (b) | 5.73 | 08/01/34 | 1,055,896 | ||||||
1,500,000 | Elk Grove Finance Authority, California Special Tax Bond | 5.00 | 09/01/38 | 1,669,695 | ||||||
1,600,000 | Fresno Unified School District, California GOB, Series G (b) | 6.10 | 08/01/41 | 365,472 | ||||||
4,340,000 | Golden State Tobacco Securitization Corp., California RB | 5.00 | 06/01/40 | 4,818,268 |
Principal | Security Description | Rate | Maturity | Value |
$ | 125,000 | Golden State Tobacco Securitization Corp., California RB, Series A | 4.60 | % | 06/01/23 | $ | 129,621 | |||
1,000,000 | Los Angeles Community Redevelopment Agency, California RB | 5.00 | 09/01/37 | 1,003,040 | ||||||
340,000 | Los Angeles County Regional Financing Authority, California RB, Series B-1 | 3.00 | 11/15/21 | 340,530 | ||||||
1,050,000 | Los Angeles County Schools Regionalized Business Services Corp., California COP, Series B | 4.75 | 06/01/27 | 1,057,130 | ||||||
2,000,000 | Los Angeles Department of Water & Power Power System Revenue, California RB | 5.25 | 07/01/38 | 2,106,200 | ||||||
6,000,000 | Los Angeles Department of Water & Power, California RB | 5.00 | 07/01/38 | 6,057,420 | ||||||
1,000,000 | Los Angeles Department of Water & Power, California RB, Series A-1 | 5.00 | 07/01/37 | 1,009,150 | ||||||
5,140,000 | Los Angeles Department of Water, California RB, Series A-1 | 5.00 | 07/01/39 | 5,187,031 | ||||||
10,050,000 | Los Angeles Unified School District, California GOB, Series A-1 | 4.50 | 07/01/25 | 10,145,776 | ||||||
8,575,000 | Metropolitan Water District of Southern California, California RB | 5.00 | 07/01/37 | 8,661,179 | ||||||
5,000,000 | Metropolitan Water District of Southern California, California RB, Series A4 (a) | 1.29 | 07/01/36 | 5,002,050 | ||||||
1,600,000 | Modesto Irrigation District, California RB (a) | 1.34 | 09/01/37 | 1,362,448 | ||||||
3,185,000 | Modesto Irrigation District, California RB (a) | 1.29 | 09/01/27 | 2,985,014 |
Principal | Security Description | Rate | Maturity | Value |
$ | 2,650,000 | Oakland Unified School District/Alameda County, California GOB | 6.63 | % | 08/01/38 | $ | 3,180,344 | |||
770,000 | Oxnard School District, California GOB, Series A | 5.75 | 08/01/30 | 918,125 | ||||||
2,500,000 | Port of Oakland, California RB, Series P | 5.00 | 05/01/33 | 2,725,425 | ||||||
5,120,000 | Regents of the University of California Medical Center Pooled Revenue, California RB, Series C2 (a) | 1.44 | 05/15/43 | 4,227,226 | ||||||
9,525,000 | Sacramento County Sanitation Districts Financing Authority, California RB, Series B (a) | 1.24 | 12/01/35 | 8,163,877 | ||||||
2,000,000 | Sacramento County Water Financing Authority, California RB, Series B (a) | 1.26 | 06/01/34 | 1,744,280 | ||||||
5,475,000 | San Bernardino City Unified School District, California GOB, Series C | 5.00 | 08/01/40 | 6,126,908 | ||||||
1,000,000 | San Diego Public Facilities Financing Authority, California RB, Series A | 5.25 | 04/15/29 | 1,113,860 | ||||||
2,500,000 | San Jose Redevelopment Agency, California Tax Allocation Bond, Series D | 5.00 | 08/01/21 | 2,533,475 | ||||||
2,275,000 | San Jose Unified School District, California GOB, Series D | 5.00 | 08/01/32 | 2,397,281 | ||||||
895,000 | San Mateo Union High School District, California GOB, Series A (b) | 6.02 | 09/01/25 | 640,829 | ||||||
105,000 | San Mateo Union High School District, California GOB, Series A (b) | 6.02 | 09/01/25 | 75,687 | ||||||
2,355,000 | Sierra View Local Health Care District, California RB | 5.25 | 07/01/37 | 2,381,635 | ||||||
5,000 | State of California, California GOB | 5.00 | 10/01/28 | 5,018 |
Principal | Security Description | Rate | Maturity | Value |
$ | 4,000,000 | State of California, California GOB | 5.50 | % | 08/01/29 | $ | 4,234,240 | ||||
1,330,000 | State of California, California GOB | 4.50 | 08/01/30 | 1,333,392 | |||||||
305,000 | State of California, California GOB | 5.00 | 11/01/37 | 312,582 | |||||||
220,000 | State of California, California GOB | 5.00 | 11/01/37 | 224,717 | |||||||
2,825,000 | State of California, California GOB | 5.00 | 11/01/37 | 2,895,229 | |||||||
1,710,000 | State of California, California GOB | 5.00 | 04/01/38 | 1,773,321 | |||||||
135,000 | State of California, California GOB, Series 07 | 5.13 | 10/01/27 | 135,482 | |||||||
85,000 | State of California, California GOB, Series 2007 | 5.75 | 05/01/30 | 85,326 | |||||||
3,300,000 | Stockton East Water District, California COP, Series B (b) | 5.96-6.00 | 04/01/21 | 2,607,132 | |||||||
2,000,000 | Stockton East Water District, California COP, Series B (b) | 6.08 | 04/01/25 | 1,238,540 | |||||||
1,300,000 | Stockton Public Financing Authority, California RB, Series A | 6.25 | 10/01/40 | 1,568,060 | |||||||
775,000 | Stockton Unified School District, California GOB | 5.00 | 07/01/27 | 879,346 | |||||||
1,600,000 | Tulare County Board of Education, California COP | 5.38 | 05/01/33 | 1,791,408 | |||||||
3,590,000 | University of California, California RB | 3.00 | 05/15/17 | 3,600,231 | |||||||
250,000 | Victor Valley Community College District, California GOB, Series A | 5.38 | 08/01/29 | 274,578 | |||||||
176,549,977 | |||||||||||
Illinois - 9.0% | |||||||||||
1,000,000 | Chicago Park District, Illinois GOB, Series A | 5.00 | 01/01/30 | 1,087,550 | |||||||
1,000,000 | Chicago Park District, Illinois GOB, Series A | 5.00 | 01/01/35 | 1,065,890 | |||||||
2,050,000 | Chicago Park District, Illinois GOB, Series A | 5.75 | 01/01/38 | 2,343,580 | |||||||
2,325,000 | Chicago Park District, Illinois GOB, Series A | 5.00 | 01/01/40 | 2,464,035 | |||||||
1,755,000 | Chicago Park District, Illinois GOB, Series B | 5.00 | 01/01/26 | 1,952,087 |
Principal | Security Description | Rate | Maturity | Value |
$ | 1,000,000 | Chicago Park District, Illinois GOB, Series B | 5.00 | % | 01/01/26 | $ | 1,112,300 | |||
1,580,000 | Chicago Park District, Illinois GOB, Series C | 5.00 | 01/01/23 | 1,743,151 | ||||||
1,600,000 | Chicago Park District, Illinois GOB, Series C | 5.25 | 01/01/37 | 1,716,768 | ||||||
3,895,000 | Chicago Park District, Illinois GOB, Series C | 5.25 | 01/01/40 | 4,162,041 |
17,647,402 | ||||||
Total Municipal Bonds (Cost $190,472,712) | 194,197,379 | |||||
Shares | Security Description | Value | ||||
Money Market Fund - 0.3% | ||||||
641,646 | Fidelity Investments Money Market Government Portfolio – Class I, 0.57% (a) (Cost $641,646) | 641,646 | ||||
Total Investments - 99.1% (Cost $191,114,358)* | $ | 194,839,025 |
Other Assets & Liabilities, Net – 0.9% | 1,780,628 | ||
Net Assets – 100.0% | $ | 196,619,653 |
(a) | Variable rate security. Rate presented is as of March 31, 2017. |
(b) | Zero coupon bond. Interest rate presented is yield to maturity. |
COP Certificate of Participation
GOB General Obligation Bond
RB | Revenue Bond |
* Cost for federal income tax purposes is substantially the same as for financial statement purposes and net unrealized appreciation consists of:
Gross Unrealized Appreciation | $ | 4,925,536 | ||
Gross Unrealized Depreciation | (1,200,869 | ) | ||
Net Unrealized Appreciation | $ | 3,724,667 |
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 March 31, 2017.
Valuation Inputs | Investments in Securities | |||
Level 1 - Quoted Prices | $ | - | ||
Level 2 - Other Significant Observable Inputs | 194,839,025 | |||
Level 3 - Significant Unobservable Inputs | - | |||
Total | $ | 194,839,025 |
The Level 2 value displayed in this table includes Municipal Bonds and a Money Market Fund. Refer to this Schedule of Investments for a further breakout of each Municipal Bond security by state.
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 March 31, 2017.
PORTFOLIO HOLDINGS | ||
% of Total Investments | ||
Municipal Bonds | 99.7 | % |
Money Market Funds | 0.3 | % |
100.0 | % |
ASSETS | ||||||
. | Total investments, at value (Cost $191,114,358) | $ | 194,839,025 | |||
Receivables: | ||||||
Dividends and interest | 2,011,558 | |||||
Prepaid expenses | 1,581 | |||||
Total Assets | 196,852,164 | |||||
LIABILITIES | ||||||
Payables: | ||||||
Fund shares redeemed | 113,420 | |||||
Distributions payable | 13,814 | |||||
Accrued Liabilities: | ||||||
Investment adviser fees | 72,931 | |||||
Trustees' fees and expenses | 752 | |||||
Fund services fees | 13,736 | |||||
Other expenses | 17,858 | |||||
Total Liabilities | 232,511 | |||||
NET ASSETS | $ | 196,619,653 | ||||
COMPONENTS OF NET ASSETS | ||||||
Paid-in capital | $ | 192,916,456 | ||||
Distributions in excess of net investment income | (634 | ) | ||||
Accumulated net realized loss | (20,836 | ) | ||||
Net unrealized appreciation | 3,724,667 | |||||
NET ASSETS | $ | 196,619,653 | ||||
SHARES OF BENEFICIAL INTEREST AT NO PAR VALUE (UNLIMITED SHARES AUTHORIZED) | 19,691,946 | |||||
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE | $ | 9.98 | ||||
INVESTMENT INCOME | |||||||
Dividend income | . | $ | 12,984 | ||||
Interest income | 2,335,850 | ||||||
Total Investment Income | 2,348,834 | ||||||
EXPENSES | |||||||
Investment adviser fees | 425,924 | ||||||
Fund services fees | 104,687 | ||||||
Custodian fees | 9,749 | ||||||
Registration fees | 900 | ||||||
Professional fees | 20,025 | ||||||
Trustees' fees and expenses | 5,583 | ||||||
Miscellaneous expenses | 40,076 | ||||||
Total Expenses | 606,944 | ||||||
Fees waived and expenses reimbursed | (39,045 | ) | |||||
Net Expenses | 567,899 | ||||||
NET INVESTMENT INCOME | 1,780,935 | ||||||
NET REALIZED AND UNREALIZED GAIN (LOSS) | |||||||
Net realized loss on investments | (20,820 | ) | |||||
Net change in unrealized appreciation (depreciation) on investments | (3,791,110 | ) | |||||
NET REALIZED AND UNREALIZED LOSS | (3,811,930 | ) | |||||
DECREASE IN NET ASSETS RESULTING FROM OPERATIONS | $ | (2,030,995 | ) | ||||
See Notes to Financial Statements. | 18 |
GURTIN CALIFORNIA MUNICIPAL OPPORTUNISTIC VALUE FUND STATEMENTS OF CHANGES IN NET ASSETS |
For the Six Months Ended March 31, 2017 | For the Year Ended September 30, 2016 | ||||||||||
OPERATIONS | |||||||||||
Net investment income | $ | 1,780,935 | $ | 3,567,139 | |||||||
Net realized gain (loss) | (20,820 | ) | 393,489 | ||||||||
Net change in unrealized appreciation (depreciation) | (3,791,110 | ) | 2,280,170 | ||||||||
Increase (Decrease) in Net Assets Resulting from Operations | (2,030,995 | ) | 6,240,798 | ||||||||
DISTRIBUTIONS TO SHAREHOLDERS FROM | |||||||||||
Net investment income | (1,781,591 | ) | (3,567,134 | ) | |||||||
Net realized gain | (306,163 | ) | - | ||||||||
Total Distributions to Shareholders | (2,087,754 | ) | (3,567,134 | ) | |||||||
CAPITAL SHARE TRANSACTIONS | |||||||||||
Sale of shares | 25,552,928 | 40,612,199 | |||||||||
Reinvestment of distributions | 2,020,140 | 3,404,936 | |||||||||
Redemption of shares | (17,297,041 | ) | (18,693,551 | ) | |||||||
Increase in Net Assets from Capital Share Transactions | 10,276,027 | 25,323,584 | |||||||||
Increase in Net Assets | 6,157,278 | 27,997,248 | |||||||||
NET ASSETS | |||||||||||
Beginning of Period | 190,462,375 | 162,465,127 | |||||||||
End of Period (Including line (a)) | $ | 196,619,653 | $ | 190,462,375 | |||||||
SHARE TRANSACTIONS | |||||||||||
Sale of shares | 2,566,914 | 4,002,872 | |||||||||
Reinvestment of distributions | 202,135 | 334,511 | |||||||||
Redemption of shares | (1,728,590 | ) | (1,834,265 | ) | |||||||
Increase in Shares | 1,040,459 | 2,503,118 | |||||||||
(a) | Undistributed (distributions in excess of) net investment income | $ | (634 | ) | $ | 22 |
See Notes to Financial Statements. | 19 |
GURTIN CALIFORNIA MUNICIPAL OPPORTUNISTIC VALUE FUND FINANCIAL HIGHLIGHTS |
These financial highlights reflect selected data for a share outstanding throughout each period. | |||||||||||||
For the Six Months Ended March 31, 2017 | For the Year Ended September 30, 2016 | November 3, 2014 (a) through September 30, 2015 | |||||||||||
INSTITUTIONAL CLASS | |||||||||||||
NET ASSET VALUE, Beginning of Period | $ | 10.21 | $ | 10.06 | $ | 10.00 | |||||||
INVESTMENT OPERATIONS | |||||||||||||
Net investment income (b) | 0.09 | 0.20 | 0.19 | ||||||||||
Net realized and unrealized gain (loss) | (0.21 | ) | 0.15 | 0.07 | |||||||||
Total from Investment Operations | (0.12 | ) | 0.35 | 0.26 | |||||||||
DISTRIBUTIONS TO SHAREHOLDERS FROM | |||||||||||||
Net investment income | (0.09 | ) | (0.20 | ) | (0.20 | ) | |||||||
Net realized gain | (0.02 | ) | — | — | |||||||||
Total Distributions to Shareholders | (0.11 | ) | (0.20 | ) | (0.20 | ) | |||||||
NET ASSET VALUE, End of Period | $ | 9.98 | $ | 10.21 | $ | 10.06 | |||||||
TOTAL RETURN | (1.17 | )%(c) | 3.49 | % | 2.55 | %(c) | |||||||
RATIOS/SUPPLEMENTARY DATA | |||||||||||||
Net Assets at End of Period (000's omitted) | $196,620 | $190,462 | $162,465 | ||||||||||
Ratios to Average Net Assets: | |||||||||||||
Net investment income | 1.88 | %(d) | 1.94 | % | 2.09 | %(d) | |||||||
Net expenses | 0.60 | %(d) | 0.60 | % | 0.60 | %(d) | |||||||
Gross expenses (e) | 0.64 | %(d) | 0.65 | % | 0.79 | %(d) | |||||||
PORTFOLIO TURNOVER RATE | 21 | %(c) | 58 | % | 83 | %(c) | |||||||
(a) | Commencement of operations. | ||||||||||||
(b) | Calculated based on average shares outstanding during each period. | ||||||||||||
(c) | Not annualized. | ||||||||||||
(d) | Annualized. | ||||||||||||
(e) | Reflects the expense ratio excluding any waivers and/or reimbursements. |
The following chart reflects the change in the value of a hypothetical $250,000 investment in Institutional Shares, including reinvested dividends and distributions, in Gurtin National Municipal Intermediate Value Fund (the "Fund") compared with the performance of the benchmark, Bank of America Merrill Lynch Municipal Blended 85% Index ("BAML Muni Blended 85%") and the Bank of America Merrill Lynch 1-12 Year Municipal Index ("BAML 1-2 Muni Index"), since inception. The BAML Muni Blended 85% is a blend of 85% of the Bank of America Merrill Lynch 3-15 Year US Municipal Securities Index, a subset of the Bank of America Merrill Lynch US Municipal Securities Index including all securities with a remaining term to final maturity greater than or equal to three years and less than twelve years, and 15% of the Bank of America Merrill Lynch 1-3 Year US Municipal Securities Index, a subset of the Bank of America Merrill Lynch US Municipal Securities Index including all securities with a remaining term to final maturity greater than or equal to one year and less than three years. BAML 1-12 Year Muni is an unmanaged, market-weighted index that includes investment-grade municipal bonds with maturities greater than one year but less than twelve years. The total returns of both the BAML Muni Blended 85% and the BAML Muni Index 1-12 includes the reinvestment of dividends and income. The total return of the Fund includes operating expenses that reduce returns, while the total returns of the BAML Muni Blended 85% and the BAML Muni Index 1-12 does not include expenses. The Fund is professionally managed, while the BAML Muni Blended 85% and the BAML Muni Index 1-12 are unmanaged and are not available for investment.
![](https://capedge.com/proxy/N-CSRS/0001435109-17-000350/natmuniintvalperf.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) 342-5763. As stated in the Fund's current prospectus, the annual operating expense ratio (gross) is 0.67%. However, the Fund's adviser has contractually agreed to waive its fee and/or reimburse expenses to limit total operating expenses (excluding all taxes, interest, portfolio transaction expenses, acquired fund fees and expenses, proxy expenses and extraordinary expenses) to 0.39%, through February 1, 2018. During the period, certain fees were waived and/or expenses reimbursed; otherwise, returns would have been lower. 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. Returns greater than one year are annualized.
21 |
GURTIN NATIONAL MUNICIPAL INTERMEDIATE VALUE FUND SCHEDULE OF INVESTMENTS MARCH 31, 2017 |
Principal | Security Description | Rate | Maturity | Value |
$ | 1,140,000 | Cook County Community High School District No. 218 Oak Lawn, Illinois GOB | 5.00 | % | 12/01/23 | $ | 1,312,573 | |||
635,000 | Cook County Community High School District No. 218 Oak Lawn, Illinois GOB | 4.25 | 12/01/24 | 695,433 | ||||||
645,000 | Cook County Community High School District No. 218 Oak Lawn, Illinois GOB | 4.00 | 12/01/24 | 701,218 | ||||||
535,000 | Cook County School District No. 111 Burbank, Illinois GOB | 4.00 | 12/01/23 | 580,924 | ||||||
1,000,000 | Cook County School District No. 111 Burbank, Illinois GOB | 4.00 | 12/01/25 | 1,083,590 | ||||||
725,000 | Cook County School District No. 111 Burbank, Illinois GOB | 4.00 | 12/01/29 | 756,654 | ||||||
1,020,000 | Cook County School District No. 111 Burbank, Illinois GOB | 4.00 | 12/01/30 | 1,057,383 | ||||||
240,000 | Cook County School District No. 29 Sunset Ridge, Illinois RB, Series A | 3.00 | 12/01/20 | 248,899 | ||||||
570,000 | Cook County School District No. 81 Schiller Park, Illinois GOB, Series B | 4.00 | 12/01/19 | 603,003 | ||||||
1,500,000 | Cook County Township High School District No. 227 Rich Township, Illinois GOB | 2.00 | 12/01/18 | 1,521,345 | ||||||
825,000 | Du Page County School District No. 33 West Chicago, Illinois GOB, Series B | 4.00 | 12/01/26 | 884,664 | ||||||
500,000 | Illinois Finance Authority, Illinois RB | 5.00 | 11/15/25 | 559,950 | ||||||
4,560,000 | University of Illinois, Illinois RB | 5.00 | 04/01/26 | 5,060,870 | ||||||
700,000 | University of Illinois, Illinois RB, Series A | 5.00 | 04/01/30 | 784,903 |
Principal | Security Description | Rate | Maturity | Value |
$ | 780,000 | Will Grundy Etc Counties Community College District No. 525, Illinois GOB | 5.75 | % | 06/01/25 | $ | 819,796 | ||||
32,581,567 | |||||||||||
Indiana - 0.3% | |||||||||||
545,000 | South Madison Middle School Building Corp., Indiana RB | 2.00 | 07/15/18 | 551,698 | |||||||
Kentucky - 4.3% | |||||||||||
300,000 | Boone County School District Finance Corp., Kentucky RB | 3.00 | 04/01/25 | 309,831 | |||||||
400,000 | Corbin Independent School District Finance Corp., Kentucky RB | 2.00 | 02/01/22 | 400,080 | |||||||
425,000 | Corbin Independent School District Finance Corp., Kentucky RB | 3.00 | 02/01/25 | 436,101 | |||||||
630,000 | Corbin Independent School District Finance Corp., Kentucky RB | 3.00 | 02/01/26 | 637,925 | |||||||
420,000 | Grant County School District Finance Corp., Kentucky RB | 3.00 | 04/01/24 | 429,610 | |||||||
280,000 | Kenton County School District Finance Corp., Kentucky RB | 3.00 | 02/01/26 | 280,134 | |||||||
250,000 | Kentucky State Property & Building Commission, Kentucky RB | 2.50 | 10/01/18 | 255,285 | |||||||
1,175,000 | Kentucky State Property & Building Commission, Kentucky RB | 5.75 | 11/01/19 | 1,258,519 | |||||||
775,000 | Madison County School District Finance Corp., Kentucky RB | 5.00 | 05/01/22 | 886,058 | |||||||
630,000 | Madison County School District Finance Corp., Kentucky RB | 5.00 | 05/01/23 | 730,063 | |||||||
1,040,000 | Meade County School District Finance Corp., Kentucky RB | 5.00 | 09/01/20 | 1,153,911 |
See Notes to Financial Statements. | 23 |
GURTIN NATIONAL MUNICIPAL INTERMEDIATE VALUE FUND SCHEDULE OF INVESTMENTS MARCH 31, 2017 |
Principal | Security Description | Rate | Maturity | Value |
$ | 475,000 | Owensboro Independent School District Finance Corp., Kentucky RB | 4.00 | % | 09/01/20 | $ | 508,597 | ||||
7,286,114 | |||||||||||
Louisiana - 8.9% | |||||||||||
1,265,000 | Louisiana Public Facilities Authority, Louisiana RB | 5.00 | 06/01/22 | 1,439,671 | |||||||
1,650,000 | State of Louisiana, Louisiana GOB, Series A | 5.00 | 08/01/21 | 1,877,354 | |||||||
3,365,000 | State of Louisiana, Louisiana GOB, Series A | 5.00 | 04/01/27 | 3,997,990 | |||||||
3,000,000 | State of Louisiana, Louisiana GOB, Series B | 5.00 | 08/01/26 | 3,572,190 | |||||||
2,375,000 | State of Louisiana, Louisiana GOB, Series B | 5.00 | 08/01/29 | 2,758,040 | |||||||
1,345,000 | State of Louisiana, Louisiana GOB, Series C | 5.00 | 07/15/24 | 1,568,472 | |||||||
15,213,717 | |||||||||||
Michigan - 4.5% | |||||||||||
175,000 | Battle Creek School District, Michigan GOB | 5.00 | 05/01/28 | 201,894 | |||||||
1,065,000 | Bellevue Community Schools, Michigan GOB, Series A | 5.00 | 05/01/31 | 1,217,753 | |||||||
350,000 | Central Michigan University, Michigan RB | 5.00 | 10/01/24 | 414,491 | |||||||
225,000 | Charles Stewart Mott Community College, Michigan GOB | 3.00 | 05/01/24 | 233,449 | |||||||
1,215,000 | Durand Area Schools, Michigan GOB | 5.00 | 05/01/28 | 1,404,297 | |||||||
1,225,000 | Durand Area Schools, Michigan GOB | 5.00 | 05/01/29 | 1,406,961 | |||||||
500,000 | Howell Public Schools, Michigan GOB, Series B | 5.00 | 05/01/25 | 556,940 | |||||||
695,000 | L'Anse Creuse Public Schools, Michigan GOB | 5.00 | 05/01/25 | 821,831 | |||||||
210,000 | Lansing School District, Michigan GOB | 5.00 | 05/01/21 | 236,634 | |||||||
785,000 | Oakland University, Michigan RB | 5.00 | 03/01/29 | 906,259 | |||||||
200,000 | Rockford Public Schools, Michigan GOB | 5.00 | 05/01/22 | 228,452 | |||||||
7,628,961 |
Principal | Security Description | Rate | Maturity | Value |
Minnesota - 0.1% | |||||||||||
$ | 225,000 | County of Wright, Minnesota GOB, Series A | 4.50 | % | 12/01/19 | $ | 229,986 | ||||
Missouri - 2.8% | |||||||||||
1,690,000 | City of Cape Girardeau, Missouri RB | 2.00 | 06/01/19 | 1,712,815 | |||||||
1,095,000 | City of Springfield, Missouri RB, Series B | 2.00 | 05/01/22 | 1,093,971 | |||||||
1,250,000 | City of Springfield, Missouri RB, Series B | 3.00 | 05/01/23 | 1,298,225 | |||||||
250,000 | Liberty Public School District No. 53, Missouri COP | 3.00 | 04/01/20 | 260,287 | |||||||
300,000 | Missouri Joint Municipal Electric Utility Commission, Missouri RB, Series A | 5.00 | 01/01/24 | 349,548 | |||||||
4,714,846 | |||||||||||
New Jersey - 10.3% | |||||||||||
200,000 | Borough of Tuckerton, New Jersey GOB | 2.00 | 03/01/18 | 201,582 | |||||||
1,000,000 | Essex County Improvement Authority, New Jersey RB | 4.75 | 11/01/32 | 1,017,340 | |||||||
1,035,000 | Haddonfield Public Schools District, New Jersey GOB | 2.00 | 09/01/20 | 1,040,661 | |||||||
2,945,000 | New Jersey Health Care Facilities Financing Authority, New Jersey RB, Series A | 5.00 | 07/01/22 | 3,374,528 | |||||||
3,175,000 | New Jersey Health Care Facilities Financing Authority, New Jersey RB, Series A | 5.00 | 07/01/23 | 3,685,413 | |||||||
4,280,000 | New Jersey Health Care Facilities Financing Authority, New Jersey RB, Series A | 5.00 | 07/01/24 | 5,003,919 | |||||||
985,000 | Township of Berkeley, New Jersey GOB | 3.00 | 05/15/21 | 1,035,176 | |||||||
1,020,000 | Township of Berkeley, New Jersey GOB | 3.00 | 05/15/22 | 1,071,041 |
See Notes to Financial Statements. | 24 |
GURTIN NATIONAL MUNICIPAL INTERMEDIATE VALUE FUND SCHEDULE OF INVESTMENTS MARCH 31, 2017 |
Principal | Security Description | Rate | Maturity | Value |
$ | 1,145,000 | Township of Berkeley, New Jersey GOB | 3.00 | % | 05/15/23 | $ | 1,197,327 | ||||
17,626,987 | |||||||||||
New York - 1.8% | |||||||||||
400,000 | Metropolitan Transportation Authority, New York RB, Series H | 5.00 | 11/15/30 | 458,636 | |||||||
1,000,000 | New York City Transitional Finance Authority Future Tax Secured, New York RB, Series I2 | 5.00 | 11/01/21 | 1,117,050 | |||||||
1,330,000 | New York State Dormitory Authority, New York RB | 5.00 | 07/01/30 | 1,512,955 | |||||||
3,088,641 | |||||||||||
North Dakota - 0.3% | |||||||||||
460,000 | City of Mandan, North Dakota GOB, Series B | 5.00 | 05/01/18 | 479,775 | |||||||
Ohio - 1.7% | |||||||||||
2,200,000 | Ohio Higher Educational Facility Commission, Ohio RB, Series A | 5.13 | 01/01/28 | 2,260,038 | |||||||
200,000 | Trotwood-Madison City School District, Ohio COP | 4.00 | 12/01/23 | 222,750 | |||||||
200,000 | Trotwood-Madison City School District, Ohio COP | 4.00 | 12/01/24 | 223,766 | |||||||
215,000 | Trotwood-Madison City School District, Ohio COP | 4.00 | 12/01/25 | 241,200 | |||||||
2,947,754 | |||||||||||
Oklahoma - 1.1% | |||||||||||
1,800,000 | Cleveland County Independent School District No. 2 Moore, Oklahoma GOB | 2.75 | 03/01/21 | 1,877,598 | |||||||
Pennsylvania - 20.0% | |||||||||||
845,000 | Cameron County School District, Pennsylvania GOB | 2.00 | 09/01/19 | 853,974 | |||||||
1,020,000 | Cameron County School District, Pennsylvania GOB | 3.00 | 09/01/20 | 1,060,127 | |||||||
1,060,000 | Cameron County School District, Pennsylvania GOB | 3.00 | 09/01/21 | 1,105,326 |
Principal | Security Description | Rate | Maturity | Value |
$ | 1,025,000 | Cameron County School District, Pennsylvania GOB | 2.00 | % | 09/01/22 | $ | 1,014,576 | |||
230,000 | Clearfield Area School District, Pennsylvania GOB | 3.00 | 09/01/24 | 230,129 | ||||||
1,500,000 | Commonwealth Financing Authority, Pennsylvania RB, Series B-1 | 5.00 | 06/01/25 | 1,743,945 | ||||||
3,560,000 | Commonwealth of Pennsylvania, Pennsylvania GOB | 5.00 | 01/15/27 | 4,201,939 | ||||||
500,000 | Commonwealth of Pennsylvania, Pennsylvania GOB, First Series | 5.00 | 11/15/22 | 567,740 | ||||||
1,555,000 | Commonwealth of Pennsylvania, Pennsylvania GOB, First Series | 5.00 | 03/15/24 | 1,814,032 | ||||||
300,000 | Commonwealth of Pennsylvania, Pennsylvania GOB, First Series | 5.00 | 04/01/26 | 342,630 | ||||||
1,125,000 | Commonwealth of Pennsylvania, Pennsylvania GOB, First Series | 5.00 | 09/15/26 | 1,328,681 | ||||||
1,825,000 | Commonwealth of Pennsylvania, Pennsylvania GOB, First Series | 5.00 | 03/15/27 | 2,106,159 | ||||||
810,000 | Commonwealth of Pennsylvania, Pennsylvania GOB, First Series | 5.00 | 05/15/27 | 846,741 | ||||||
700,000 | Commonwealth of Pennsylvania, Pennsylvania GOB, First Series | 5.00 | 06/01/28 | 787,374 | ||||||
600,000 | Commonwealth of Pennsylvania, Pennsylvania GOB, Second Series | 5.00 | 10/15/23 | 700,500 | ||||||
2,575,000 | Commonwealth of Pennsylvania, Pennsylvania GOB, Second Series A | 5.00 | 05/01/21 | 2,831,908 | ||||||
2,000,000 | Commonwealth of Pennsylvania, Pennsylvania GOB, Second Series D | 5.00 | 08/15/31 | 2,259,360 | ||||||
365,000 | Deer Lakes School District, Pennsylvania GOB | 2.63 | 04/01/25 | 365,376 |
See Notes to Financial Statements. | 25 |
GURTIN NATIONAL MUNICIPAL INTERMEDIATE VALUE FUND SCHEDULE OF INVESTMENTS MARCH 31, 2017 |
Principal | Security Description | Rate | Maturity | Value |
$ | 1,460,000 | East Stroudsburg Area School District, Pennsylvania GOB | 2.00 | % | 09/01/21 | $ | 1,473,797 | |||
110,000 | East Stroudsburg Area School District, Pennsylvania GOB | 5.00 | 09/01/29 | 114,107 | ||||||
615,000 | Erie Parking Authority, Pennsylvania RB | 4.00 | 09/01/21 | 666,457 | ||||||
250,000 | Hampton Township School District, Pennsylvania GOB, Series A | 3.00 | 11/15/17 | 253,120 | ||||||
425,000 | Northern Tioga School District, Pennsylvania GOB | 2.00 | 04/01/21 | 431,732 | ||||||
1,320,000 | Northern York County School District, Pennsylvania GOB | 5.00 | 11/15/29 | 1,510,397 | ||||||
265,000 | Pennsylvania State University, Pennsylvania RB, Series A | 5.00 | 03/01/28 | 284,477 | ||||||
200,000 | Pennsylvania Turnpike Commission, Pennsylvania RB, Series B | 5.00 | 12/01/25 | 236,484 | ||||||
750,000 | Red Lion Area School District, Pennsylvania GOB | 5.00 | 05/01/23 | 782,820 | ||||||
680,000 | South Middleton School District, Pennsylvania GOB | 3.00 | 09/01/26 | 691,227 | ||||||
525,000 | The Hospitals & Higher Education Facilities Authority of Philadelphia, Pennsylvania RB, Series D | 5.00 | 07/01/32 | 578,256 | ||||||
1,300,000 | The Hospitals & Higher Education Facilities Authority of Philadelphia, Pennsylvania RB, Series D | 5.00 | 07/01/28 | 1,446,601 | ||||||
35,000 | West Allegheny School District, Pennsylvania GOB | 3.20 | 09/01/24 | 35,040 | ||||||
430,000 | Wyalusing Area School District, Pennsylvania GOB | 2.00 | 04/01/21 | 433,642 |
Principal | Security Description | Rate | Maturity | Value |
$ | 1,120,000 | York Suburban School District, Pennsylvania GOB | 2.25 | % | 05/01/23 | $ | 1,122,610 | ||||
34,221,284 | |||||||||||
Rhode Island - 0.6% | |||||||||||
900,000 | Rhode Island Health & Educational Building Corp., Rhode Island RB, Series A | 5.00 | 09/15/30 | 1,031,733 | |||||||
South Dakota - 0.3% | |||||||||||
315,000 | South Dakota Board of Regents, South Dakota RB | 4.00 | 04/01/18 | 324,428 | |||||||
250,000 | South Dakota Board of Regents, South Dakota RB | 5.00 | 04/01/19 | 268,487 | |||||||
592,915 | |||||||||||
Tennessee - 0.6% | |||||||||||
1,000,000 | Tennessee State School Bond Authority, Tennessee RB, Second Series C | 5.00 | 05/01/32 | 1,003,040 | |||||||
Texas - 5.2% | |||||||||||
750,000 | Brazoria-Fort Bend County Municipal Utility District No. 1, Texas GOB | 2.00 | 09/01/19 | 757,905 | |||||||
845,000 | Brazoria-Fort Bend County Municipal Utility District No. 1, Texas GOB | 3.00 | 09/01/23 | 870,223 | |||||||
300,000 | City of Houston, Texas GOB, Series A | 5.00 | 03/01/24 | 341,898 | |||||||
295,000 | City of League City, Texas GOB, Series B | 5.00 | 02/15/30 | 326,406 | |||||||
500,000 | Dallas/Fort Worth International Airport, Texas RB | 5.25 | 11/01/27 | 570,960 | |||||||
200,000 | Fort Bend County Municipal Utility District No. 2, Texas GOB | 4.35 | 10/01/29 | 203,532 | |||||||
1,310,000 | Harris County Municipal Utility District No. 153, Texas GOB | 2.00 | 09/01/20 | 1,320,061 | |||||||
750,000 | Harris County Municipal Utility District No. 290, Texas GOB | 2.00 | 09/01/21 | 750,502 | |||||||
235,000 | Harris County Municipal Utility District No. 383, Texas GOB | 2.00 | 09/01/19 | 239,065 |
See Notes to Financial Statements. | 26 |
GURTIN NATIONAL MUNICIPAL INTERMEDIATE VALUE FUND SCHEDULE OF INVESTMENTS MARCH 31, 2017 |
Principal | Security Description | Rate | Maturity | Value |
$ | 255,000 | Harris County Municipal Utility District No. 383, Texas GOB | 3.00 | % | 09/01/20 | $ | 267,717 | ||||
200,000 | Harris County Municipal Utility District No. 383, Texas GOB | 2.00 | 09/01/20 | 203,672 | |||||||
235,000 | Harris County Municipal Utility District No. 383, Texas GOB | 2.00 | 09/01/21 | 238,751 | |||||||
235,000 | Harris County Municipal Utility District No. 383, Texas GOB | 3.00 | 09/01/24 | 247,775 | |||||||
235,000 | Harris County Municipal Utility District No. 383, Texas GOB | 3.00 | 09/01/25 | 245,281 | |||||||
900,000 | Lower Colorado River Authority, Texas RB | 5.00 | 05/15/27 | 1,015,569 | |||||||
275,000 | Lower Colorado River Authority, Texas RB | 5.00 | 05/15/30 | 301,012 | |||||||
330,000 | Reagan County Independent School District, Texas GOB | 3.00 | 02/15/23 | 330,337 | |||||||
590,000 | Travis County Water Control & Improvement District No. 17, Texas GOB | 3.00 | 11/01/25 | 595,499 | |||||||
8,826,165 | |||||||||||
Vermont - 0.1% | |||||||||||
180,000 | Vermont Housing Finance Agency, Vermont RB, Series B | 1.95 | 05/01/23 | 177,084 | |||||||
Washington - 0.3% | |||||||||||
395,000 | Grant County Public Utility District No. 2, Washington RB, Series B | 5.00 | 01/01/26 | 467,392 | |||||||
West Virginia - 1.0% | |||||||||||
1,000,000 | School Building Authority of West Virginia, West Virginia RB, Series A | 5.00 | 07/01/21 | 1,010,610 | |||||||
560,000 | West Virginia Economic Development Authority, West Virginia RB, Series A | 5.00 | 06/01/26 | 637,101 | |||||||
1,647,711 |
Principal | Security Description | Rate | Maturity | Value |
Wisconsin - 1.4% | |||||||||||
$ | 600,000 | Evansville Community School District, Wisconsin GOB | 3.00 | % | 04/01/19 | $ | 620,982 | ||||
1,500,000 | Wisconsin Health & Educational Facilities Authority, Wisconsin RB | 5.00 | 04/01/27 | 1,787,310 | |||||||
2,408,292 |
Total Municipal Bonds (Cost $170,776,651) | 168,183,676 |
Shares | Security Description | Value |
Money Market Fund - 1.7% | ||||||
2,931,021 | Fidelity Investments Money Market Government Portfolio - Class I, 0.57% (b) (Cost $2,931,021) | 2,931,021 | ||||
Total Investments - 100.1% (Cost $173,707,672)* | $ | 171,114,697 |
Other Assets & Liabilities, Net – (0.1)% | (164,895 | ) | |
Net Assets – 100.0% | $ | 170,949,802 |
(a) | Zero coupon bond. Interest rate presented is yield to maturity. |
(b) | Variable rate security. Rate presented is as of March 31, 2017. |
COP Certificate of Participation
GOB General Obligation Bond
RB Revenue Bond
* Cost for federal income tax purposes is substantially the same as for financial statement purposes and net unrealized depreciation consists of:
Gross Unrealized Appreciation | $ | 358,991 | ||
Gross Unrealized Depreciation | (2,951,966 | ) | ||
Net Unrealized Depreciation | $ | (2,592,975 | ) |
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 March 31, 2017.
Valuation Inputs | Investments in Securities |
Level 1 - Quoted Prices | $ | - | ||
Level 2 - Other Significant Observable Inputs | 171,114,697 | |||
Level 3 - Significant Unobservable Inputs | - | |||
Total | $ | 171,114,697 |
The Level 2 value displayed in this table includes Municipal Bonds and a Money Market Fund. Refer to this Schedule of Investments for a further breakout of each Municipal Bond security by state.
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 March 31, 2017.
A
PORTFOLIO HOLDINGS | ||
% of Total Investments | ||
Municipal Bonds | 98.3 | % |
Money Market Fund | 1.7 | % |
100.0 | % |
See Notes to Financial Statements. | 27 |
GURTIN NATIONAL MUNICIPAL INTERMEDIATE VALUE FUND STATEMENT OF ASSETS AND LIABILITIES MARCH 31, 2017 |
ASSETS | ||||||
. | Total investments, at value (Cost $173,707,672) | $ | 171,114,697 | |||
Receivables: | ||||||
Fund shares sold | 151,780 | |||||
Dividends and interest | 1,730,581 | |||||
Prepaid expenses | 9,342 | |||||
Total Assets | 173,006,400 | |||||
LIABILITIES | ||||||
Payables: | ||||||
Investment securities purchased | 1,739,535 | |||||
Fund shares redeemed | 236,540 | |||||
Distributions payable | 17,057 | |||||
Accrued Liabilities: | ||||||
Investment adviser fees | 29,873 | |||||
Trustees' fees and expenses | 699 | |||||
Fund services fees | 15,019 | |||||
Other expenses | 17,875 | |||||
Total Liabilities | 2,056,598 | |||||
NET ASSETS | $ | 170,949,802 | ||||
COMPONENTS OF NET ASSETS | ||||||
Paid-in capital | $ | 173,853,088 | ||||
Undistributed net investment income | 190 | |||||
Accumulated net realized loss | (310,501 | ) | ||||
Net unrealized depreciation | (2,592,975 | ) | ||||
NET ASSETS | $ | 170,949,802 | ||||
SHARES OF BENEFICIAL INTEREST AT NO PAR VALUE (UNLIMITED SHARES AUTHORIZED) | 17,166,767 | |||||
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE | $ | 9.96 | ||||
See Notes to Financial Statements. | 28 |
GURTIN NATIONAL MUNICIPAL INTERMEDIATE VALUE FUND STATEMENT OF OPERATIONS SIX MONTHS ENDED MARCH 31, 2017 |
INVESTMENT INCOME | |||||||
Dividend income | . | $ | 10,349 | ||||
Interest income | 1,462,926 | ||||||
Total Investment Income | 1,473,275 | ||||||
EXPENSES | |||||||
Investment adviser fees | 274,082 | ||||||
Fund services fees | 91,619 | ||||||
Custodian fees | 7,988 | ||||||
Registration fees | 8,418 | ||||||
Professional fees | 18,619 | ||||||
Trustees' fees and expenses | 4,888 | ||||||
Offering costs | 5,066 | ||||||
Miscellaneous expenses | 32,631 | ||||||
Total Expenses | 443,311 | ||||||
Fees waived and expenses reimbursed | (137,905 | ) | |||||
Net Expenses | 305,406 | ||||||
NET INVESTMENT INCOME | 1,167,869 | ||||||
NET REALIZED AND UNREALIZED GAIN (LOSS) | |||||||
Net realized loss on investments | (310,420 | ) | |||||
Net change in unrealized appreciation (depreciation) on investments | (3,872,995 | ) | |||||
NET REALIZED AND UNREALIZED LOSS | (4,183,415 | ) | |||||
DECREASE IN NET ASSETS RESULTING FROM OPERATIONS | $ | (3,015,546 | ) | ||||
See Notes to Financial Statements. | 29 |
GURTIN NATIONAL MUNICIPAL INTERMEDIATE VALUE FUND STATEMENTS OF CHANGES IN NET ASSETS |
For the Six Months Ended March 31, 2017 | December 1, 2015* Through September 30, 2016 | ||||||||||
OPERATIONS | |||||||||||
Net investment income | $ | 1,167,869 | $ | 814,941 | |||||||
Net realized gain (loss) | (310,420 | ) | 33,787 | ||||||||
Net change in unrealized appreciation (depreciation) | (3,872,995 | ) | 1,280,020 | ||||||||
Increase (Decrease) in Net Assets Resulting from Operations | (3,015,546 | ) | 2,128,748 | ||||||||
DISTRIBUTIONS TO SHAREHOLDERS FROM | |||||||||||
Net investment income | (1,167,682 | ) | (814,938 | ) | |||||||
Net realized gain | (33,868 | ) | - | ||||||||
Total Distributions to Shareholders | (1,201,550 | ) | (814,938 | ) | |||||||
CAPITAL SHARE TRANSACTIONS | |||||||||||
Sale of shares | 34,445,012 | 165,143,617 | |||||||||
Reinvestment of distributions | 1,105,308 | 744,221 | |||||||||
Redemption of shares | (10,197,925 | ) | (17,387,145 | ) | |||||||
Increase in Net Assets from Capital Share Transactions | 25,352,395 | 148,500,693 | |||||||||
Increase in Net Assets | 21,135,299 | 149,814,503 | |||||||||
NET ASSETS | |||||||||||
Beginning of Period | 149,814,503 | - | |||||||||
End of Period (Including line (a)) | $ | 170,949,802 | $ | 149,814,503 | |||||||
SHARE TRANSACTIONS | |||||||||||
Sale of shares | 3,479,824 | 16,240,358 | |||||||||
Reinvestment of distributions | 111,289 | 72,613 | |||||||||
Redemption of shares | (1,028,460 | ) | (1,708,857 | ) | |||||||
Increase in Shares | 2,562,653 | 14,604,114 | |||||||||
(a) | Undistributed net investment income | $ | 190 | $ | 3 | ||||||
* | Commencement of operations. |
See Notes to Financial Statements. | 30 |
GURTIN NATIONAL MUNICIPAL INTERMEDIATE VALUE FUND FINANCIAL HIGHLIGHTS |
These financial highlights reflect selected data for a share outstanding throughout each period.
For the Six Months Ended March 31, 2017 | December 1, 2015 (a) through September 30, 2016 | ||||||||
INSTITUTIONAL CLASS | |||||||||
NET ASSET VALUE, Beginning of Period | $ | 10.26 | $ | 10.00 | |||||
INVESTMENT OPERATIONS | |||||||||
Net investment income (b) | 0.07 | 0.10 | |||||||
Net realized and unrealized gain (loss) | (0.30 | ) | 0.26 | ||||||
Total from Investment Operations | (0.23 | ) | 0.36 | ||||||
DISTRIBUTIONS TO SHAREHOLDERS FROM | |||||||||
Net investment income | (0.07 | ) | (0.10 | ) | |||||
Net realized gain | — | (c) | — | ||||||
Total Distributions to Shareholders | (0.07 | ) | (0.10 | ) | |||||
NET ASSET VALUE, End of Period | $ | 9.96 | $ | 10.26 | |||||
TOTAL RETURN | (2.18 | )%(d) | 3.63 | %(d) | |||||
RATIOS/SUPPLEMENTARY DATA | |||||||||
Net Assets at End of Period (000's omitted) | $170,950 | $149,815 | |||||||
Ratios to Average Net Assets: | |||||||||
Net investment income | 1.49 | %(e) | 1.24 | %(e) | |||||
Net expenses | 0.39 | %(e) | 0.39 | %(e) | |||||
Gross expenses (f) | 0.57 | %(e) | 0.66 | %(e) | |||||
PORTFOLIO TURNOVER RATE | 7 | %(d) | 9 | %(d) | |||||
(a) | Commencement of operations. | ||||||||
(b) | Calculated based on average shares outstanding during each 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. | 31 |
GURTIN CALIFORNIA MUNICIPAL INTERMEDIATE VALUE FUND PERFORMANCE CHART AND ANALYSIS MARCH 31, 2017 |
The following chart reflects the change in the value of a hypothetical $250,000 investment in Insitutional Shares, including reinvested dividends and distributions, in Gurtin California Municipal Intermediate Value Fund (the "Fund") compared with the performance of the benchmark, Bank of America Merrill Lynch Municipal Blended 85% Index ("BAML Muni Blended 85%") and the Bank of America Merrill Lynch 1-12 Year Municipal Index ("BAML 1-2 Muni Index"), since inception. The BAML Muni Blended 85% is a blend of 85% of the Bank of America Merrill Lynch 3-15 Year US Municipal Securities Index, a subset of the Bank of America Merrill Lynch US Municipal Securities Index including all securities with a remaining term to final maturity greater than or equal to three years and less than twelve years, and 15% of the Bank of America Merrill Lynch 1-3 Year US Municipal Securities Index, a subset of the Bank of America Merrill Lynch US Municipal Securities Index including all securities with a remaining term to final maturity greater than or equal to one year and less than three years. BAML 1-12 Year Muni is an unmanaged, market-weighted index that includes investment-grade municipal bonds with maturities greater than one year but less than twelve years. The total returns of both the BAML Muni Blended 85% and the BAML Muni Index 1-12 include the reinvestment of dividends and income. The total return of the Fund includes operating expenses that reduce returns, while the total returns of the BAML Muni Blended 85% and the BAML Muni Index 1-12 does not include expenses. The Fund is professionally managed, while the BAML Muni Blended 85% and the BAML Muni Index 1-12 are unmanaged and are not available for investment.
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) 342-5763. As stated in the Fund's current prospectus, the annual operating expense ratio (gross) is 0.85%. However, the Fund's adviser has contractually agreed to waive its fee and/or reimburse expenses to limit total operating expenses (excluding all taxes, interest, portfolio transaction expenses, acquired fund fees and expenses, proxy expenses and extraordinary expenses) to 0.39%, through February 1, 2018. During the period, certain fees were waived and/or expenses reimbursed; otherwise, returns would have been lower. 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. Returns greater than one year are annualized.
32 |
GURTIN CALIFORNIA MUNICIPAL INTERMEDIATE VALUE FUND SCHEDULE OF INVESTMENTS MARCH 31, 2017 |
Principal | Security Description | Rate | Maturity | Value |
Municipal Bonds - 97.6% | ||||||||||
Arkansas - 0.6% | ||||||||||
$ | 420,000 | Bentonville School District No. 6, Arkansas GOB | 4.50 | % | 06/01/30 | $ | 422,377 | |||
California - 86.6% | ||||||||||
715,000 | Baldwin Park Unified School District, California GOB | 4.00 | 08/01/22 | 790,840 | ||||||
1,035,000 | California Health Facilities Financing Authority, California RB | 5.00 | 10/01/33 | 1,159,283 | ||||||
750,000 | California State Public Works Board, California RB, Series D | 5.00 | 06/01/25 | 900,600 | ||||||
650,000 | California Statewide Communities Development Authority, California RB | 4.00 | 11/01/22 | 714,188 | ||||||
200,000 | California Statewide Communities Development Authority, California RB | 5.00 | 11/15/23 | 234,516 | ||||||
425,000 | Campbell Union High School District, California COP | 5.00 | 08/01/22 | 431,069 | ||||||
350,000 | Campbell Union High School District, California COP | 5.00 | 08/01/24 | 354,998 | ||||||
300,000 | Campbell Union High School District, California COP | 5.00 | 08/01/27 | 304,284 | ||||||
710,000 | Capistrano Unified School District Community Facilities District No. 90-2, California Special Tax Bond | 2.50 | 09/01/21 | 730,888 | ||||||
800,000 | Capistrano Unified School District Community Facilities District No. 90-2, California Special Tax Bond | 3.00 | 09/01/23 | 835,320 |
Principal | Security Description | Rate | Maturity | Value |
$ | 2,050,000 | Capistrano Unified School District School Facilities Improvement District No. 1, California GOB, Series B (a) | 2.29 | % | 08/01/20 | $ | 1,878,948 | |||
750,000 | Centinela Valley Union High School District, California GOB, Series B | 5.75 | 08/01/30 | 926,183 | ||||||
275,000 | Central Unified School District, California GOB | 5.50 | 08/01/29 | 302,827 | ||||||
855,000 | Chula Vista Elementary School District, California COP | 5.00 | 09/01/22 | 990,158 | ||||||
610,000 | Chula Vista Elementary School District, California COP | 5.00 | 09/01/23 | 716,329 | ||||||
380,000 | Chula Vista Elementary School District, California COP, Series A | 5.00 | 09/01/19 | 413,744 | ||||||
305,000 | City of Laguna Beach, California Special Assessment Bond | 2.00 | 09/02/21 | 303,408 | ||||||
400,000 | City of Los Angeles Department of Airports, California RB, Series B | 5.00 | 05/15/30 | 452,524 | ||||||
840,000 | City of Rocklin, California Special Tax Bond | 3.50 | 09/01/26 | 842,411 | ||||||
200,000 | City of Sacramento, California Special Tax Bond | 5.00 | 09/01/24 | 229,660 | ||||||
745,000 | City of San Clemente, California Special Assessment Bond | 3.00 | 09/02/19 | 774,375 | ||||||
720,000 | City of Tulare California Sewer Revenue, California RB | 5.00 | 11/15/28 | 843,437 | ||||||
250,000 | City of Ukiah California Water Revenue, California RB | 4.00 | 09/01/18 | 260,630 | ||||||
275,000 | Colton Public Financing Authority, California RB, Series A | 5.00 | 04/01/24 | 309,540 | ||||||
500,000 | Compton Unified School District, California GOB, Series D (a) | 1.42 | 06/01/18 | 492,230 |
See Notes to Financial Statements. | 33 |
GURTIN CALIFORNIA MUNICIPAL INTERMEDIATE VALUE FUND SCHEDULE OF INVESTMENTS MARCH 31, 2017 |
Principal | Security Description | Rate | Maturity | Value |
$ | 580,000 | Corona Public Financing Authority, California RB | 5.00 | % | 11/01/26 | $ | 692,137 | |||
625,000 | Corona-Norco Unified School District Public Financing Authority, California Special Tax Bond, Series A | 5.00 | 09/01/26 | 715,225 | ||||||
715,000 | Cosumnes Community Services District, California COP | 3.00 | 09/01/19 | 742,070 | ||||||
520,000 | Cosumnes Community Services District, California COP | 3.00 | 09/01/20 | 543,275 | ||||||
675,000 | Cosumnes Community Services District, California COP | 4.00 | 09/01/24 | 745,220 | ||||||
295,000 | County of Santa Cruz, California COP | 5.00 | 08/01/23 | 343,088 | ||||||
510,000 | Elk Grove Finance Authority, California Special Tax Bond | 5.00 | 09/01/25 | 603,809 | ||||||
905,000 | Folsom Redevelopment Agency Successor Agency, California Tax Allocation Bond, Series A | 4.00 | 08/01/28 | 977,463 | ||||||
1,475,000 | Fresno County Financing Authority, California RB | 5.00 | 04/01/27 | 1,751,282 | ||||||
1,500,000 | Fresno County Financing Authority, California RB | 5.00 | 04/01/28 | 1,762,890 | ||||||
330,000 | Gilroy Unified School District, California COP | 4.00 | 04/01/26 | 368,765 | ||||||
1,015,000 | Golden State Tobacco Securitization Corp., California RB, Series A | 5.00 | 06/01/29 | 1,151,761 | ||||||
250,000 | Golden State Tobacco Securitization Corp., California RB, Series A | 5.00 | 06/01/30 | 282,175 | ||||||
660,000 | Imperial Community College District, California GOB | 5.00 | 08/01/29 | 749,951 |
Principal | Security Description | Rate | Maturity | Value |
$ | 580,000 | Irvine Unified School District No. 1, California Special Tax Bond, Series 1 | 5.00 | % | 09/01/23 | $ | 671,286 | |||
205,000 | Los Angeles County Redevelopment Refunding Agency, California Tax Allocation Bond, Series A | 5.00 | 09/01/20 | 228,733 | ||||||
510,000 | Lynwood Unified School District, California COP | 5.00 | 10/01/20 | 567,686 | ||||||
655,000 | Lynwood Unified School District, California COP | 5.00 | 10/01/24 | 770,391 | ||||||
695,000 | Lynwood Unified School District, California COP | 5.00 | 10/01/25 | 823,512 | ||||||
375,000 | Lynwood Unified School District, California COP | 5.00 | 10/01/28 | 436,260 | ||||||
270,000 | Modesto Irrigation District Electric System Revenue, California RB, Series B | 5.00 | 10/01/27 | 299,759 | ||||||
280,000 | Mojave Unified School District School Facilities Improvement District No. 1, California GOB | 4.00 | 08/01/20 | 303,050 | ||||||
1,000,000 | Municipal Improvement Corp. of Los Angeles, California RB, Series B | 5.00 | 11/01/26 | 1,209,160 | ||||||
400,000 | Orange Redevelopment Agency Successor Agency, California Tax Allocation Bond | 5.00 | 09/01/22 | 459,236 | ||||||
855,000 | Palmdale Elementary School District, California COP, Series A | 3.00 | 10/01/21 | 894,236 | ||||||
350,000 | Perris Joint Powers Authority, California Special Tax Bond, Series E | 2.00 | 09/01/18 | 351,281 | ||||||
200,000 | Placentia-Yorba Linda Unified School District, California COP, Series A | 5.00 | 10/01/25 | 236,982 |
See Notes to Financial Statements. | 34 |
GURTIN CALIFORNIA MUNICIPAL INTERMEDIATE VALUE FUND SCHEDULE OF INVESTMENTS MARCH 31, 2017 |
See Notes to Financial Statements. | 35 |
GURTIN CALIFORNIA MUNICIPAL INTERMEDIATE VALUE FUND SCHEDULE OF INVESTMENTS MARCH 31, 2017 |
Principal | Security Description | Rate | Maturity | Value |
$ | 1,200,000 | Stockton Unified School District, California GOB, Series B | 5.00 | % | 08/01/27 | $ | 1,420,668 | |||
310,000 | Travis Unified School District, California COP | 4.00 | 09/01/19 | 330,175 | ||||||
375,000 | Travis Unified School District, California COP | 4.00 | 09/01/22 | 412,706 | ||||||
685,000 | Tulare City School District, California COP | 2.00 | 11/01/21 | 685,192 | ||||||
500,000 | Val Verde Unified School District, California COP, Series A | 4.10 | 03/01/20 | 525,475 | ||||||
215,000 | Val Verde Unified School District, California COP, Series A | 5.00 | 08/01/26 | 255,796 | ||||||
1,000,000 | Val Verde Unified School District, California GOB, Series A | 5.00 | 08/01/26 | 1,201,170 | ||||||
850,000 | Victor Valley Union High School District, California COP, Series A | 2.00 | 11/15/24 | 826,846 | ||||||
300,000 | Waugh School District, California Special Tax Bond | 4.00 | 09/01/20 | 326,697 | ||||||
60,771,340 | ||||||||||
Illinois - 8.7% | ||||||||||
1,000,000 | Chicago Park District, Illinois GOB, Series A | 5.00 | 01/01/30 | 1,109,780 | ||||||
1,000,000 | Chicago Park District, Illinois GOB, Series A | 5.00 | 01/01/31 | 1,102,650 | ||||||
1,000,000 | Chicago Park District, Illinois GOB, Series B | 5.00 | 01/01/31 | 1,102,650 | ||||||
1,175,000 | Chicago Park District, Illinois GOB, Series C | 5.00 | 01/01/24 | 1,276,849 | ||||||
625,000 | Chicago Park District, Illinois GOB, Series C | 5.00 | 01/01/25 | 679,637 | ||||||
500,000 | Chicago Park District, Illinois GOB, Series C | 5.00 | 01/01/25 | 560,345 | ||||||
255,000 | Grundy & Kendall Counties Consolidated Grade School District No. 60, Illinois GOB, Series C | 4.00 | 02/01/21 | 273,980 | ||||||
6,105,891 |
Principal | Security Description | Rate | Maturity | Value |
Kentucky - 0.2% | ||||||||||
$ | 125,000 | Corbin Independent School District Finance Corp., Kentucky RB | 3.00 | % | 02/01/26 | $ | 125,633 | |||
Michigan - 0.4% | ||||||||||
285,000 | Macomb Township Building Authority, Michigan RB | 4.25 | 04/01/23 | 292,843 | ||||||
Pennsylvania - 0.3% | ||||||||||
225,000 | Wellsboro Area School District, Pennsylvania GOB | 3.00 | 04/15/21 | 237,308 | ||||||
Texas - 0.8% | ||||||||||
575,000 | Travis County Water Control & Improvement District No. 17, Texas GOB | 3.00 | 11/01/25 | 580,359 | ||||||
Total Municipal Bonds (Cost $70,041,720) | 68,535,751 |
Shares | Security Description | Value |
Money Market Fund - 2.5% | |||||||
1,737,410 | Fidelity Investments Money Market Government Portfolio – Class I, 0.57% (b) (Cost $1,737,410) | 1,737,410 | |||||
Total Investments - 100.1% (Cost $71,779,130)* | $ | 70,273,161 |
Other Assets & Liabilities, Net – (0.1)% | (71,675 | ) | |
Net Assets – 100.0% | $ | 70,201,486 |
(a) | Zero coupon bond. Interest rate presented is yield to maturity. |
(b) | Variable rate security. Rate presented is as of March 31, 2017. |
COP Certificate of Participation
GOB General Obligation Bond
RB Revenue Bond
* Cost for federal income tax purposes is substantially the same as for financial statement purposes and net unrealized depreciation consists of:
Gross Unrealized Appreciation | $ | 111,237 | ||
Gross Unrealized Depreciation | (1,617,206 | ) | ||
Net Unrealized Depreciation | $ | (1,505,969 | ) |
See Notes to Financial Statements. | 36 |
GURTIN CALIFORNIA MUNICIPAL INTERMEDIATE VALUE FUND SCHEDULE OF INVESTMENTS MARCH 31, 2017 |
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 March 31, 2017.
Valuation Inputs | Investments in Securities |
Level 1 - Quoted Prices | $ | - | ||
Level 2 - Other Significant Observable Inputs | 70,273,161 | |||
Level 3 - Significant Unobservable Inputs | - | |||
Total | $ | 70,273,161 |
The Level 2 value displayed in this table includes Municipal Bonds and a Money Market Fund. Refer to this Schedule of Investments for a further breakout of each Municipal Bond security by state.
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 March 31, 2017.
AFA
PORTFOLIO HOLDINGS | ||
% of Total Investments | ||
Municipal Bonds | 97.5 | % |
Money Market Fund | 2.5 | % |
100.0 | % |
See Notes to Financial Statements. | 37 |
GURTIN CALIFORNIA MUNICIPAL INTERMEDIATE VALUE FUND STATEMENT OF ASSETS AND LIABILITIES MARCH 31, 2017 |
ASSETS | ||||||
. | Total investments, at value (Cost $71,779,130) | $ | 70,273,161 | |||
Receivables: | ||||||
Fund shares sold | 586,300 | |||||
Dividends and interest | 669,143 | |||||
Prepaid expenses | 4,190 | |||||
Total Assets | 71,532,794 | |||||
LIABILITIES | ||||||
Payables: | ||||||
Investment securities purchased | 1,280,163 | |||||
Fund shares redeemed | 21,090 | |||||
Distributions payable | 332 | |||||
Accrued Liabilities: | ||||||
Investment adviser fees | 7,394 | |||||
Trustees' fees and expenses | 294 | |||||
Fund services fees | 10,113 | |||||
Other expenses | 11,922 | |||||
Total Liabilities | 1,331,308 | |||||
NET ASSETS | $ | 70,201,486 | ||||
COMPONENTS OF NET ASSETS | ||||||
Paid-in capital | $ | 71,732,552 | ||||
Undistributed net investment income | 14 | |||||
Accumulated net realized loss | (25,111 | ) | ||||
Net unrealized depreciation | (1,505,969 | ) | ||||
NET ASSETS | $ | 70,201,486 | ||||
SHARES OF BENEFICIAL INTEREST AT NO PAR VALUE (UNLIMITED SHARES AUTHORIZED) | 7,063,562 | |||||
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE | $ | 9.94 | ||||
INVESTMENT INCOME | |||||||
Dividend income | . | $ | 3,597 | ||||
Interest income | 606,274 | ||||||
Total Investment Income | 609,871 | ||||||
EXPENSES | |||||||
Investment adviser fees | 117,359 | ||||||
Fund services fees | 52,527 | ||||||
Custodian fees | 3,471 | ||||||
Registration fees | 3,370 | ||||||
Professional fees | 15,492 | ||||||
Trustees' fees and expenses | 2,733 | ||||||
Offering costs | 3,749 | ||||||
Miscellaneous expenses | 19,717 | ||||||
Total Expenses | 218,418 | ||||||
Fees waived and expenses reimbursed | (87,646 | ) | |||||
Net Expenses | 130,772 | ||||||
NET INVESTMENT INCOME | 479,099 | ||||||
NET REALIZED AND UNREALIZED GAIN (LOSS) | |||||||
Net realized loss on investments | (25,096 | ) | |||||
Net change in unrealized appreciation (depreciation) on investments | (2,120,867 | ) | |||||
NET REALIZED AND UNREALIZED LOSS | (2,145,963 | ) | |||||
DECREASE IN NET ASSETS RESULTING FROM OPERATIONS | $ | (1,666,864 | ) | ||||
See Notes to Financial Statements. | 39 |
GURTIN CALIFORNIA MUNICIPAL INTERMEDIATE VALUE FUND STATEMENTS OF CHANGES IN NET ASSETS |
# | |||||||||||
For the Six Months Ended March 31, 2017 | December 7, 2015* Through September 30, 2016 | ||||||||||
OPERATIONS | |||||||||||
Net investment income | $ | 479,099 | $ | 342,938 | |||||||
Net realized gain (loss) | (25,096 | ) | 1,041 | ||||||||
Net change in unrealized appreciation (depreciation) | (2,120,867 | ) | 614,898 | ||||||||
Increase (Decrease) in Net Assets Resulting from Operations | (1,666,864 | ) | 958,877 | ||||||||
DISTRIBUTIONS TO SHAREHOLDERS FROM | |||||||||||
Net investment income | (479,088 | ) | (342,935 | ) | |||||||
Net realized gain | (1,056 | ) | - | ||||||||
Total Distributions to Shareholders | (480,144 | ) | (342,935 | ) | |||||||
CAPITAL SHARE TRANSACTIONS | |||||||||||
Sale of shares | 20,253,546 | 61,366,574 | |||||||||
Reinvestment of distributions | 477,738 | 339,173 | |||||||||
Redemption of shares | (10,131,295 | ) | (573,184 | ) | |||||||
Increase in Net Assets from Capital Share Transactions | 10,599,989 | 61,132,563 | |||||||||
Increase in Net Assets | 8,452,981 | 61,748,505 | |||||||||
NET ASSETS | |||||||||||
Beginning of Period | 61,748,505 | - | |||||||||
End of Period (Including line (a)) | $ | 70,201,486 | $ | 61,748,505 | |||||||
SHARE TRANSACTIONS | |||||||||||
Sale of shares | 2,030,830 | 6,041,100 | |||||||||
Reinvestment of distributions | 48,228 | 33,194 | |||||||||
Redemption of shares | (1,033,756 | ) | (56,034 | ) | |||||||
Increase in Shares | 1,045,302 | 6,018,260 | |||||||||
(a) | Undistributed net investment income | $ | 14 | $ | 3 | ||||||
* | Commencement of operations. |
See Notes to Financial Statements. | 40 |
GURTIN CALIFORNIA MUNICIPAL INTERMEDIATE VALUE FUND FINANCIAL HIGHLIGHTS |
These financial highlights reflect selected data for a share outstanding throughout each period.
For the Six Months Ended March 31, 2017 | December 7, 2015 (a) through September 30, 2016 | ||||||||
INSTITUTIONAL CLASS | |||||||||
NET ASSET VALUE, Beginning of Period | $ | 10.26 | $ | 10.00 | |||||
INVESTMENT OPERATIONS | |||||||||
Net investment income (b) | 0.07 | 0.10 | |||||||
Net realized and unrealized gain (loss) | (0.32 | ) | 0.26 | ||||||
Total from Investment Operations | (0.25 | ) | 0.36 | ||||||
DISTRIBUTIONS TO SHAREHOLDERS FROM | |||||||||
Net investment income | (0.07 | ) | (0.10 | ) | |||||
Net realized gain | — | (c) | — | ||||||
Total Distributions to Shareholders | (0.07 | ) | (0.10 | ) | |||||
NET ASSET VALUE, End of Period | $ | 9.94 | $ | 10.26 | |||||
TOTAL RETURN | (2.42 | )%(d) | 3.56 | %(d) | |||||
RATIOS/SUPPLEMENTARY DATA | |||||||||
Net Assets at End of Period (000's omitted) | $70,201 | $61,749 | |||||||
Ratios to Average Net Assets: | |||||||||
Net investment income | 1.43 | %(e) | 1.19 | %(e) | |||||
Net expenses | 0.39 | %(e) | 0.39 | %(e) | |||||
Gross expenses (f) | 0.65 | %(e) | 0.84 | %(e) | |||||
PORTFOLIO TURNOVER RATE | 4 | %(d) | 5 | %(d) | |||||
(a) | Commencement of operations. | ||||||||
(b) | Calculated based on average shares outstanding during each 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. | 41 |
GURTIN VALUE FUNDS NOTES TO FINANCIAL STATEMENTS MARCH 31, 2017 |
Note 1. Organization
Gurtin National Municipal Opportunistic Value Fund, Gurtin California Municipal Opportunistic Value Fund, Gurtin National Municipal Intermediate Value Fund and Gurtin California Municipal Intermediate Value Fund (individually, a "Fund" and collectively, the "Funds") are non-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, as amended (the "Act"). 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 March 31, 2017, Investor Shares for each Fund had not commenced operations. The Gurtin National Municipal Opportunistic Value Fund's investment objective is to provide current income exempt from regular federal income tax while seeking to preserve capital and liquidity. The Gurtin California Municipal Opportunistic Value Fund's investment objective is to provide current income exempt from regular federal income tax and California state personal income taxes while seeking to preserve capital and liquidity. The Gurtin National Municipal Intermediate Value Fund's investment objective is to provide current income exempt from regular federal income tax while seeking to preserve capital and liquidity. The Gurtin California Municipal Intermediate Value Fund's investment objective is to provide current income exempt from regular federal income tax and California state personal income taxes while seeking to preserve capital and liquidity.
The Gurtin National Municipal Opportunistic Value Fund and Gurtin California Municipal Opportunistic Value Fund commenced operations on November 3, 2014, after they acquired the net assets of privately offered funds managed by the Funds' adviser and portfolio management team (each a "Predecessor Fund" and collectively the "Predecessor Funds"). The Predecessor Funds of the Gurtin National Municipal Opportunistic Value Fund and Gurtin California Municipal Opportunistic Value Fund commenced operations on May 3, 2010.
On November 3, 2014, the Predecessor Funds reorganized into the Gurtin National Municipal Opportunistic Value Fund and Gurtin California Municipal Opportunistic Value Fund. The reorganization of net assets and unrealized gain from this tax-free transaction were as follows:
Fund | Date of Contribution | Net Assets | Shares Issued | Unrealized Gain on Investments Received from Reorganization | ||||
Gurtin National Municipal Opportunistic Value Fund | November 3, 2014 | $46,288,768 | 4,628,877 | $2,085,304 | ||||
Gurtin California Municipal Opportunistic Value Fund | November 3, 2014 | 83,099,170 | 8,309,917 | 4,405,323 |
Effective August 1, 2016 Gurtin National Municipal Value Fund and Gurtin California Municipal Value Fund were renamed Gurtin National Municipal Opportunistic Value Fund and Gurtin California Municipal Opportunistic Value Fund, respectively.
The Gurtin National Municipal Intermediate Value Fund and Gurtin California Municipal Intermediate Value Fund commenced operations on December 1, 2015, and December 7, 2015, respectively.
Note 2. Summary of Significant Accounting Policies
The Funds are investment companies and follow accounting and reporting guidance under Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 946, "Financial Services-Investment Companies". 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 period. Actual amounts could differ from those estimates. The following summarizes the significant accounting policies of each Fund:
Security Valuation – Securities are valued at market prices using the last quoted trade or official closing price from the
42 |
GURTIN VALUE FUNDS NOTES TO FINANCIAL STATEMENTS MARCH 31, 2017 |
principal exchange where the security is traded, as provided by independent pricing services on each Fund business day. In the absence of a last trade, securities are valued at the mean of the last bid and ask price provided by the pricing service. Debt securities may be valued at prices supplied by a fund's pricing agent based on broker or dealer supplied valuations or evaluated bid pricing. 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 not readily available or (2) the Fund 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 adhoc 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, as defined in Note 3, to provide valuation inputs. In determining fair valuations, inputs may include market-based analytics that 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.)
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 March 31, 2017, 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. 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.
Distributions to Shareholders – Distributions to shareholders of net investment income, if any, are declared daily and paid monthly. Distributions to shareholders of net capital gains, if any, are declared and paid 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 Chapter 1, Subtitle A, of the Internal Revenue Code of 1986, as amended ("Code"), and to distribute all of their taxable
43 |
GURTIN VALUE FUNDS NOTES TO FINANCIAL STATEMENTS MARCH 31, 2017 |
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. Each 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 March 31, 2017, 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.
Offering Costs – Offering costs of $30,398 and $22,494 for the Gurtin National Municipal Opportunistic Value Fund, Gurtin California Municipal Opportunistic Value Fund, Gurtin National Municipal Intermediate Value Fund and Gurtin California Municipal Intermediate Value Fund, respectively, consist of fees related to certain startup legal costs, initial registration filings, and printing and mailing of the initial prospectus. Such costs are amortized over a twelve-month period beginning with the commencement of operations of the Funds. During the period ended March 31, 2017, the Gurtin National Municipal Opportunistic Value Fund, Gurtin California Municipal Opportunistic Value Fund, Gurtin National Municipal Intermediate Value Fund and Gurtin California Municipal Intermediate Value Fund expensed $5,066 and $3,749, respectively.
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 – Gurtin Municipal Bond Management, LLC (the "Adviser") is the investment adviser to the Funds. Pursuant to an Investment Advisory Agreement, the Adviser receives an advisory fee, payable monthly, at an annual rate of 0.45% of the average daily net assets of Gurtin National Municipal Opportunistic Value Fund and Gurtin California Municipal Opportunistic Value Fund and 0.35% of the average daily net assets of Gurtin National Municipal Intermediate Value Fund and Gurtin California Municipal Intermediate Value Fund.
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. The fees related to these services are included in Fund services fees within the Statements of Operations. 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 fee of $16,000 ($21,000 for the Chairman). The Independent Trustees and Chairman may receive additional fees for special Board meetings. The Independent Trustees are also reimbursed for all reasonable out-of-pocket expenses incurred in connection with their duties as Trustees, including travel and related expenses incurred in attending Board meetings. The amount of Independent Trustees' fees attributable to each Fund is disclosed in the Statements 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.
44 |
GURTIN VALUE FUNDS NOTES TO FINANCIAL STATEMENTS MARCH 31, 2017 |
Note 4. Expense Reimbursement and Fees Waived
The Adviser has contractually agreed to waive a portion of its fee and reimburse certain expenses to limit total annual operating expenses (excluding all taxes, interest, portfolio transaction expenses, acquired fund fees and expenses, proxy expenses and extraordinary expenses) to 0.60% and 0.85% of average daily net assets through February 1, 2018, of the Gurtin National Municipal Opportunistic Value Fund and Gurtin California Municipal Opportunistic Value Fund's Institutional Shares and Investor Shares, respectively, and to 0.39% of average daily net assets through February 1, 2018, of the Gurtin National Municipal Intermediate Value Fund and Gurtin California Municipal Intermediate Value Fund's Institutional and Investor Shares. Other fund service providers have voluntarily agreed to waive a portion of their fees. Voluntary fee waivers may be reduced or eliminated at any time. For the period ended March 31, 2017, fees waived and expenses reimbursed were as follows:
Fund | Investment Adviser Fees Waived | Other Waivers | Total Fees Waived and/or Expenses Reimbursed | ||||||
Gurtin National Municipal Opportunistic Value Fund | $ | 35,642 | $ | 13,211 | $ | 48,853 | |||
Gurtin California Municipal Opportunistic Value Fund | 11,362 | 27,683 | 39,045 | ||||||
Gurtin National Municipal Intermediate Value Fund | 116,135 | 21,770 | 137,905 | ||||||
Gurtin California Municipal Intermediate Value Fund | 83,489 | 4,157 | 87,646 |
The Funds 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 and (3) does not cause the net annual operating expenses of each Fund to exceed the expense cap in place at the time the fees were waived/reimbursed. As of March 31, 2017, $298,749, $221,395, $265,023 and $200,691 are subject to recoupment by the Adviser for the Gurtin National Municipal Opportunistic Value Fund, Gurtin California Municipal Opportunistic Value Fund, Gurtin National Municipal Intermediate Value Fund and Gurtin California Municipal Intermediate Value Fund, respectively.
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 March 31, 2017, were as follows:
![](https://capedge.com/proxy/N-CSRS/0001435109-17-000350/image00001.jpg)
Purchases | Sales | ||||
Gurtin National Municipal Opportunistic Value Fund | $ | 44,003,918 | $ | 38,487,360 | |
Gurtin California Municipal Opportunistic Value Fund | 63,195,107 | 35,991,954 | |||
Gurtin National Municipal Intermediate Value Fund | 38,634,751 | 10,857,535 | |||
Gurtin California Municipal Intermediate Value Fund | 15,146,066 | 2,741,442 |
Note 6. Line of Credit
The Gurtin National Municipal Opportunistic Value Fund and Gurtin California Municipal Opportunistic Value Fund participate in a committed $14 million unsecured line of credit agreement with MUFG Union Bank, N.A.. The Gurtin National Municipal Opportunistic Value Fund and Gurtin California Municipal Opportunistic Value Fund may temporarily borrow from the line of credit to satisfy redemption requests or settle investment transactions. Interest is charged to each Fund based on its borrowings at an amount above the LIBOR rate. Because the line of credit is not available exclusively to Gurtin National Municipal Opportunistic Value Fund and Gurtin California Municipal Opportunistic Value Fund, they may be unable to borrow some or all of the Funds' requested amounts at any particular time. During the period ended March 31, 2017, the Gurtin National Municipal Opportunistic Value Fund and Gurtin California Municipal Opportunistic Value Fund had no outstanding balances pursuant to this line of credit.
45 |
GURTIN VALUE FUNDS NOTES TO FINANCIAL STATEMENTS MARCH 31, 2017 |
Note 7. Federal Income Tax
As of September 30, 2016, distributable earnings (accumulated loss) on a tax basis were as follows:
Other Temporary Differences | Undistributed Tax Exempt Income | Undistributed Ordinary Income | Undistributed Long-Term Gain | Unrealized Appreciation | Total | |||||||||||||||||||
Gurtin National Municipal Opportunistic Value Fund | $ | (14,573 | ) | $ | 12,626 | $ | 208,570 | $ | 1,387 | $ | 3,486,368 | $ | 3,694,378 | |||||||||||
Gurtin California Municipal Opportunistic Value Fund | (6,075 | ) | 5,359 | 306,885 | - | 7,515,777 | 7,821,946 | |||||||||||||||||
Gurtin National Municipal Intermediate Value Fund | (13,687 | ) | 13,387 | 34,144 | - | 1,279,966 | 1,313,810 | |||||||||||||||||
Gurtin California Municipal Intermediate Value Fund | (481 | ) | 484 | 1,041 | - | 614,898 | 615,942 |
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 end of period distributions payable in each Fund and wash sales in Gurtin National Municipal Intermediate Value Fund.
Note 8. Recent Accounting Pronouncements
In October 2016, the U.S. Securities and Exchange Commission ("SEC") issued a new rule, Investment Company Reporting Modernization, which, among other provisions, amends Regulation S-X to require standardized, enhanced disclosures, particularly related to derivatives, in investment company financial statements. Compliance with the amendments to Regulation S-X is required for financial statements filed with the SEC on or after August 1, 2017. Management is currently evaluating the impact that the amendments will have on the Funds' financial statements and related disclosures.
Note 9. 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.
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GURTIN VALUE FUNDS ADDITIONAL INFORMATION MARCH 31, 2017 |
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) 342-5763 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 each Fund's commencement of operations to June 30 is available, without charge and upon request, by calling (844) 342-5763 and 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 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 October 1, 2016, through March 31, 2017.
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. 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.
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GURTIN VALUE FUNDS ADDITIONAL INFORMATION MARCH 31, 2017 |
Beginning Account Value October 1, 2016 | Ending Account Value March 31, 2017 | Expenses Paid During Period * | Annualized Expense Ratio * | |||||||||||
Gurtin National Municipal Opportunistic Value Fund | ||||||||||||||
Actual | $ | 1,000.00 | $ | 995.10 | $ | 2.98 | 0.60% | |||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,021.94 | $ | 3.02 | 0.60% | |||||||
Gurtin California Municipal Opportunistic Value Fund | ||||||||||||||
Actual | $ | 1,000.00 | $ | 988.33 | $ | 2.97 | 0.60% | |||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,021.94 | $ | 3.02 | 0.60% | |||||||
Gurtin National Municipal Intermediate Value Fund | ||||||||||||||
Actual | $ | 1,000.00 | $ | 978.23 | $ | 1.92 | 0.39% | |||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,022.99 | $ | 1.97 | 0.39% | |||||||
Gurtin California Municipal Intermediate Value Fund | ||||||||||||||
Actual | $ | 1,000.00 | $ | 975.76 | $ | 1.92 | 0.39% | |||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,022.99 | $ | 1.97 | 0.39% |
* | 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 (182) divided by 365 to reflect the half-year period. |
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![](https://capedge.com/proxy/N-CSRS/0001435109-17-000350/baywoodfrontcover.jpg)
BAYWOOD VALUEPLUS FUND A MESSAGE TO OUR SHAREHOLDERS MARCH 31, 2017 |
Dear Shareholder,
We are pleased to report our economic and financial market perspectives and the investment activities for the Baywood ValuePlus Fund (the "Fund") for the six months ended March 31, 2017. The Fund is a large-capitalization value fund that purchases primarily dividend-paying companies traded on U.S. exchanges and uses SKBA's Relative Dividend Yield (RDY) discipline as the initial valuation framework. We believe that RDY points out attractive investment opportunities, not simply among companies with above-average dividend yield, but just as importantly among stocks for which low expectations are already discounted into their valuations at the time of purchase. This provides the potential for attractive capital appreciation opportunities, while offering desirable downside protection.
For a period fraught with nail-biting geo-political events and a post-election surge in Treasury bond yields, the Fund exceeded the return of the benchmarks and the median return of the Morningstar Large-Cap Value (LCV) funds in the final quarter of 2016 and lagged both in the first quarter of 2017. Earlier in the 2016 calendar year we increased ValuePlus' cyclical exposure when volatility widened the opportunity set. Taking advantage of these opportunities early in 2016 set up fourth quarter performance as financials and economically-sensitive stocks experienced a post-election surge based on the "hope" that the change in the party in power might lead to faster economic growth. As reality set in during the first quarter of 2017 that the Republican agenda would be much more difficult to achieve than market expectations, investors appeared to default back toward growth and technology stocks, with energy sector stocks producing negative returns during the market's overall advance. Despite the ups and downs of market sentiment and consensus expectations over the last twelve months, however, the Fund's total return exceeded both the S&P 500 and the median Morningstar LCV fund.
To repeat what may be a cliché – being a value investor is simple, but it is not easy. It is simple because the rules for successful investment are fairly well established. It is not easy, however, because we operate in a lonely place, where investors are too uncomfortable to move away from the consensus expectation that so often disagrees with our perspectives. But to use another cliché, no one ever made money by simply following the crowd, at least not over a longer timeframe.
So, in that vein we have been spending our time progressively taking advantage of the rolling-bear- markets in various sectors. From the peaks in 2013 and 2014, energy and commodities suffered a large decline in performance, providing investment opportunities from our RDY discipline in late 2015 and early 2016. Financials suffered from the extended decline in interest rates, creating further opportunities in the fourth quarter of 2016. In the second half of 2016, the healthcare sector's valuations become more depressed from severe political scrutiny over drug pricing. In the first quarter of 2017, consumer discretionary stocks, retailers in particular, suffered significant declines, creating opportunities in selective companies with good brand franchises. It is interesting to us that a recent sampling of Wall Street strategists—of Barrons magazine—almost universally suggest avoiding the consumer staples, REIT and utility sectors, sectors we have been underweight for over a year. Where were they last year, we ask? We believe today's current portfolio positioning could pay off for patient Fund investors in the coming year.
During the period we initiated positions in LBrands, Morgan Stanley, Cardinal Health, Novo Nordisk, Gilead Sciences, Intel, Hewlett Packard and Coach. Our attraction to these companies comes from the combination of depressed valuations and our confidence in their long-term fundamental business strategies; yet the return opportunities we see may take two to three years to be fully realized. Three out of the four positions we eliminated proved to be outstanding investments over just such time horizons (positions in Wells Fargo, Goldcorp, Baxter and Becton Dickinson among others were eliminated). We would like to continue such a record.
Our underweight position in electric utilities helped late in 2016 and hurt more recently due to fears that President Trump's agenda will not easily be fulfilled. We are underweight utilities and have been for years not because of the administration but because of significant risks we see in the sector. We will continue to be underweight until we witness an improvement in either valuations or fundamentals, and preferably in both. Utilities performed poorly at the end of 2016 and strongly early this year, behaving as "bond proxies" in the era of ultra-low interest rates; at some point this link will break. As many of the top performing sectors of 2016 performed poorly in the first quarter, so too did poor performing sectors last year perform well. None of these short-term patterns are indicative of any changes to company fundamentals, however, and as such we continue to find more opportunities in areas that are being neglected.
There is an irony that in spite of indices reaching new highs, as value investors we have been able to capture more sources of excess return than we have in years and our opportunity set has not diminished. What is important to us is not so much the level of the market as it is the volatility that may grip certain industries at any point in time. As we assess the new administration's first few months in office, recent low levels of stock market volatility are unlikely to continue. As investors looking to take advantage of
1 |
BAYWOOD VALUEPLUS FUND A MESSAGE TO OUR SHAREHOLDERS MARCH 31, 2017 |
volatility-driven mis-pricings, we expect this environment to be like many we have taken advantage of in the past. As with our actions in healthcare recently, we expect to find and purchase additional companies as they reach our level of valuation attraction.
For more detailed information on SKBA Capital Management, LLC and our investment process and perspectives, visit our website at www.SKBA.com.
Current and future portfolio holdings are subject to change and risk.
The Morningstar category is used to compare fund performance to its peers. It is not possible to invest directly into an index or category. Past performance is no guarantee of future results.
Risk Considerations: Mutual fund investing involves risk, including the possible loss of principal. The Fund primarily invests in undervalued securities, which may not appreciate in value as anticipated by the Advisor or remain undervalued for longer than anticipated. The Fund may invest in American Depositary Receipts (ADRs), which involves risks relating to political, economic or regulatory conditions in foreign countries and may cause greater volatility and less liquidity. The Fund may also invest in convertible securities and preferred stock, which may be adversely affected as interest rates rise.
2 |
BAYWOOD VALUEPLUS FUND SCHEDULE OF INVESTMENTS MARCH 31, 2017 |
![]() | Shares | Security Description | Value |
Common Stock - 94.9% | |||||||
Basic Materials - 5.7% | |||||||
500 | LyondellBasell Industries NV, Class A | $ | 45,595 | ||||
200 | Packaging Corp. of America | 18,324 | |||||
2,300 | The Mosaic Co. | 67,114 | |||||
131,033 | |||||||
Capital Goods / Industrials - 7.2% | |||||||
400 | Eaton Corp. PLC | 29,660 | |||||
400 | Republic Services, Inc. | 25,124 | |||||
300 | Stanley Black & Decker, Inc. | 39,861 | |||||
400 | The Boeing Co. | 70,744 | |||||
165,389 | |||||||
Consumer Cyclicals - 3.4% | |||||||
1,600 | Ford Motor Co. | 18,624 | |||||
600 | L Brands, Inc. | 28,260 | |||||
1,200 | Mattel, Inc. | 30,732 | |||||
77,616 | |||||||
Consumer Discretionary - 0.9% | |||||||
500 | Coach, Inc. | 20,665 | |||||
Consumer Staples - 8.3% | |||||||
500 | PepsiCo, Inc. | 55,930 | |||||
700 | The Procter & Gamble Co. | 62,895 | |||||
1,000 | Wal-Mart Stores, Inc. | 72,080 | |||||
190,905 | |||||||
Energy - 13.6% | |||||||
1,700 | BP PLC, ADR | 58,684 | |||||
300 | Chevron Corp. | 32,211 | |||||
700 | ConocoPhillips | 34,909 | |||||
600 | Helmerich & Payne, Inc. | 39,942 | |||||
1,300 | Occidental Petroleum Corp. | 82,368 | |||||
300 | Schlumberger, Ltd. | 23,430 | |||||
600 | Valero Energy Corp. | 39,774 | |||||
311,318 | |||||||
Financials - 20.1% | |||||||
900 | BB&T Corp. | 40,230 | |||||
600 | BOK Financial Corp. | 46,962 | |||||
340 | Chubb, Ltd. | 46,325 | |||||
1,200 | FNF Group | 46,728 | |||||
500 | JPMorgan Chase & Co. | 43,920 | |||||
500 | M&T Bank Corp. | 77,365 | |||||
1,100 | MetLife, Inc. | 58,102 | |||||
800 | Morgan Stanley | 34,272 | |||||
1,300 | U.S. Bancorp | 66,950 | |||||
460,854 | |||||||
Health Care - 14.7% | |||||||
900 | AbbVie, Inc. | 58,644 | |||||
300 | Cardinal Health, Inc. | 24,465 | |||||
800 | Eli Lilly & Co. | 67,288 | |||||
300 | Gilead Sciences, Inc. | 20,376 | |||||
1,100 | HealthSouth Corp. | 47,091 | |||||
200 | Johnson & Johnson | 24,910 |
![]() | Shares | Security Description | Value |
2,200 | Koninklijke Philips NV, ADR | $ | 70,642 | ||||
700 | Novo Nordisk A/S, ADR | 23,996 | |||||
337,412 | |||||||
Technology - 15.1% | |||||||
2,500 | Cisco Systems, Inc. | 84,500 | |||||
200 | Harris Corp. | 22,254 | |||||
1,500 | HP, Inc. | 26,820 | |||||
600 | Intel Corp. | 21,642 | |||||
200 | International Business Machines Corp. | 34,828 | |||||
700 | Microsoft Corp. | 46,102 | |||||
1,100 | QUALCOMM, Inc. | 63,074 | |||||
300 | TE Connectivity, Ltd. | 22,365 | |||||
300 | Texas Instruments, Inc. | 24,168 | |||||
345,753 | |||||||
Telecommunications - 2.3% | |||||||
1,100 | Verizon Communications, Inc. | 53,625 | |||||
Transportation - 2.4% | |||||||
300 | CH Robinson Worldwide, Inc. | 23,187 | |||||
300 | Union Pacific Corp. | 31,776 | |||||
54,963 | |||||||
Utilities - 1.2% | |||||||
800 | Exelon Corp. | 28,784 | |||||
Total Common Stock (Cost $1,935,776) | 2,178,317 |
Money Market Fund - 4.8% | |||||||
109,855 | Federated Government Obligations Fund, Institutional Class, 0.60% (a) (Cost $109,855) | 109,855 | |||||
Total Investments - 99.7% (Cost $2,045,631)* | $ | 2,288,172 |
Other Assets & Liabilities, Net – 0.3% | 6,634 | ||
Net Assets – 100.0% | $ | 2,294,806 |
ADR | American Depositary Receipt |
PLC | Public Limited Company |
(a) | Variable rate security. Rate presented is as of March 31, 2017. |
* Cost for federal income tax purposes is substantially the same as for financial statement purposes and net unrealized appreciation consists of:
Gross Unrealized Appreciation | $ | 280,175 | ||
Gross Unrealized Depreciation | (37,634 | ) | ||
Net Unrealized Appreciation | $ | 242,541 |
See Notes to Financial Statements. | 3 |
BAYWOOD VALUEPLUS FUND SCHEDULE OF INVESTMENTS MARCH 31, 2017 |
The following is a summary of the inputs used to value the Fund's investments as of March 31, 2017.
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.
Valuation Inputs | Investments in Securities |
Level 1 - Quoted Prices | $ | 2,178,317 | ||
Level 2 - Other Significant Observable Inputs | 109,855 | |||
Level 3 - Significant Unobservable Inputs | - | |||
Total | $ | 2,288,172 |
The Level 1 value displayed in this table is Common Stock. The Level 2 value displayed in this table is a Money Market Fund. Refer to this 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 March 31, 2017.
AFA
PORTFOLIO HOLDINGS | ||
% of Total Investments | ||
Basic Materials | 5.7 | % |
Capital Goods / Industrials | 8.6 | % |
Consumer Cyclicals | 3.4 | % |
Consumer Discretionary | 0.9 | % |
Consumer Staples | 8.3 | % |
Energy | 13.6 | % |
Financials | 20.1 | % |
Health Care | 14.8 | % |
Technology | 15.1 | % |
Telecommunications | 2.4 | % |
Transportation | 1.0 | % |
Utilities | 1.3 | % |
Money Market Fund | 4.8 | % |
100.0 | % |
See Notes to Financial Statements. | 4 |
BAYWOOD VALUEPLUS FUND STATEMENT OF ASSETS AND LIABILITIES MARCH 31, 2017 |
ASSETS | ||||||
. | Total investments, at value (Cost $2,045,631) | $ | 2,288,172 | |||
Receivables: | ||||||
Fund shares sold | 1,727 | |||||
Investment securities sold | 53,676 | |||||
Dividends | 3,304 | |||||
From investment advisor | 9,389 | |||||
Prepaid expenses | 22,118 | |||||
Total Assets | 2,378,386 | |||||
LIABILITIES | ||||||
Payables: | ||||||
Investment securities purchased | 70,983 | |||||
Accrued Liabilities: | ||||||
Trustees' fees and expenses | 30 | |||||
Fund services fees | 4,007 | |||||
Other expenses | 8,560 | |||||
Total Liabilities | 83,580 | |||||
NET ASSETS | $ | 2,294,806 | ||||
COMPONENTS OF NET ASSETS | ||||||
Paid-in capital | $ | 1,974,460 | ||||
Undistributed net investment income | 4,883 | |||||
Accumulated net realized gain | 72,922 | |||||
Net unrealized appreciation | 242,541 | |||||
NET ASSETS | $ | 2,294,806 | ||||
SHARES OF BENEFICIAL INTEREST AT NO PAR VALUE (UNLIMITED SHARES AUTHORIZED) | ||||||
Investor Shares | 99,796 | |||||
Institutional Shares | 39,468 | |||||
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE | ||||||
Investor Shares (based on net assets of $1,642,383) | $ | 16.46 | ||||
Institutional Shares (based on net assets of $652,423) | $ | 16.53 |
AFA
See Notes to Financial Statements. | 5 |
BAYWOOD VALUEPLUS FUND STATEMENT OF OPERATIONS SIX MONTHS ENDED MARCH 31, 2017 |
INVESTMENT INCOME | |||||||
Dividend income (Net of foreign withholding taxes of $53) | . | $ | 33,477 | ||||
Total Investment Income | 33,477 | ||||||
EXPENSES | |||||||
Investment advisor fees | 5,714 | ||||||
Fund services fees | 29,534 | ||||||
Transfer agent fees: | |||||||
Investor Shares | 8,774 | ||||||
Institutional Shares | 9,442 | ||||||
Distribution fees: | |||||||
Investor Shares | 2,130 | ||||||
Custodian fees | 2,457 | ||||||
Registration fees: | |||||||
Investor Shares | 6,920 | ||||||
Institutional Shares | 7,444 | ||||||
Professional fees | 13,145 | ||||||
Trustees' fees and expenses | 1,141 | ||||||
Miscellaneous expenses | 9,680 | ||||||
Total Expenses | 96,381 | ||||||
Fees waived and expenses reimbursed | (86,251 | ) | |||||
Net Expenses | 10,130 | ||||||
NET INVESTMENT INCOME | 23,347 | ||||||
NET REALIZED AND UNREALIZED GAIN (LOSS) | |||||||
Net realized gain on investments | 100,549 | ||||||
Net change in unrealized appreciation (depreciation) on investments | 71,683 | ||||||
NET REALIZED AND UNREALIZED GAIN | 172,232 | ||||||
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS | $ | 195,579 | |||||
See Notes to Financial Statements. | 6 |
BAYWOOD VALUEPLUS FUND STATEMENT OF CHANGES IN NET ASSETS |
For the Six Months Ended March 31, 2017 | December 1, 2015 Through September 30, 2016* | ||||||||||
OPERATIONS | |||||||||||
Net investment income | $ | 23,347 | $ | 33,702 | |||||||
Net realized gain | 100,549 | 54,453 | |||||||||
Net change in unrealized appreciation (depreciation) | 71,683 | 75,799 | |||||||||
Increase in Net Assets Resulting from Operations | 195,579 | 163,954 | |||||||||
DISTRIBUTIONS TO SHAREHOLDERS FROM | |||||||||||
Net investment income: | |||||||||||
Investor Shares | (16,413 | ) | (184,835 | ) | |||||||
Institutional Shares | (6,285 | ) | (59,920 | ) | |||||||
Net realized gain: | |||||||||||
Investor Shares | (29,530 | ) | (30,026 | ) | |||||||
Institutional Shares | (9,288 | ) | (9,339 | ) | |||||||
Total Distributions to Shareholders | (61,516 | ) | (284,120 | ) | |||||||
CAPITAL SHARE TRANSACTIONS | |||||||||||
Sale of shares: | |||||||||||
Investor Shares | 37,421 | 222,661 | |||||||||
Institutional Shares | 73,427 | 82,490 | |||||||||
Reinvestment of distributions: | |||||||||||
Investor Shares | 45,944 | 214,861 | |||||||||
Institutional Shares | 15,573 | 69,259 | |||||||||
Redemption of shares: | |||||||||||
1 | Investor Shares | (241,432 | ) | (4,481 | ) | ||||||
2 | Institutional Shares | (4,505 | ) | (17,824 | ) | ||||||
Increase (Decrease) in Net Assets from Capital Share Transactions | (73,572 | ) | 566,966 | ||||||||
Increase in Net Assets | 60,491 | 446,800 | |||||||||
NET ASSETS | |||||||||||
Beginning of Period | 2,234,315 | 1,787,515 | |||||||||
End of Period (Including line (a)) | $ | 2,294,806 | $ | 2,234,315 | |||||||
SHARE TRANSACTIONS | |||||||||||
Sale of shares: | |||||||||||
Investor Shares | 2,306 | 14,548 | |||||||||
Institutional Shares | 4,436 | 5,823 | |||||||||
Reinvestment of distributions: | |||||||||||
Investor Shares | 2,800 | 14,608 | |||||||||
Institutional Shares | 944 | 4,691 | |||||||||
Redemption of shares: | |||||||||||
Investor Shares | (14,730 | ) | (299 | ) | |||||||
Institutional Shares | (275 | ) | (1,208 | ) | |||||||
Increase (Decrease) in Shares | (4,519 | ) | 38,163 |
(a) | Undistributed net investment income | $ | 4,883 | $ | 4,234 | |||||
* | Effective March 24, 2016, the Fund changed its fiscal year end from November 30 to September 30. |
See Notes to Financial Statements. | 7 |
BAYWOOD VALUEPLUS FUND FINANCIAL HIGHLIGHTS |
These financial highlights reflect selected data for a share outstanding throughout each period. | |||||||||||||||||||
For the Six Months Ended March 31, 2017 | For the Period Ended September 30, 2016(a) | For the Year Ended November 30, 2015 | December 2, 2013 (b) Through November 30, 2014 | ||||||||||||||||
INVESTOR SHARES | |||||||||||||||||||
NET ASSET VALUE, Beginning of Period | $ | 15.52 | $ | 16.90 | $ | 19.28 | $ | 17.47 | |||||||||||
INVESTMENT OPERATIONS | |||||||||||||||||||
Net investment income (c) | 0.16 | 0.26 | 0.34 | 0.36 | |||||||||||||||
Net realized and unrealized gain (loss) | 1.20 | 0.93 | (1.06 | ) | 1.49 | ||||||||||||||
Total from Investment Operations | 1.36 | 1.19 | (0.72 | ) | 1.85 | ||||||||||||||
DISTRIBUTIONS TO SHAREHOLDERS FROM | |||||||||||||||||||
Net investment income | (0.15 | ) | (2.20 | ) | (0.26 | ) | (0.04 | ) | |||||||||||
Net realized gain | (0.27 | ) | (0.37 | ) | (1.40 | ) | — | ||||||||||||
Total Distributions to Shareholders | (0.42 | ) | (2.57 | ) | (1.66 | ) | (0.04 | ) | |||||||||||
NET ASSET VALUE, End of Period | $ | 16.46 | $ | 15.52 | $ | 16.90 | $ | 19.28 | |||||||||||
TOTAL RETURN | 8.77 | %(d) | 8.40 | % | (3.86 | )% | 10.59 | %(d) | |||||||||||
RATIOS/SUPPLEMENTARY DATA | |||||||||||||||||||
Net Assets at End of Period (000's omitted) | $1,642 | $1,699 | $1,362 | $1,471 | |||||||||||||||
Ratios to Average Net Assets: | |||||||||||||||||||
Net investment income | 1.98 | %(e) | 2.07 | % | 1.97 | % | 1.98 | %(e) | |||||||||||
Net expenses | 0.95 | %(e) | 0.95 | % | 0.95 | % | 0.95 | %(e) | |||||||||||
Gross expenses (f) | 7.39 | %(e) | 9.43 | % | 5.80 | % | 4.54 | %(e) | |||||||||||
PORTFOLIO TURNOVER RATE | 22 | %(d) | 22 | % | 32 | % | 35 | %(d) | |||||||||||
(a) | Effective March 24, 2016, the Fund changed its fiscal year end from November 30 to September 30. The information presented is for the period December 1, 2015 through September 30, 2016. | ||||||||||||||||||
(b) | Commencement of operations. | ||||||||||||||||||
(c) | Calculated based on average shares outstanding during each period. | ||||||||||||||||||
(d) | Not annualized. | ||||||||||||||||||
(e) | Annualized. | ||||||||||||||||||
(f) | Reflects the expense ratio excluding any waivers and/or reimbursements. |
See Notes to Financial Statements. | 8 |
BAYWOOD VALUEPLUS FUND FINANCIAL HIGHLIGHTS |
These financial highlights reflect selected data for a share outstanding throughout each period. | |||||||||||||||||
For the Six Months Ended March 31, 2017 | For the Period Ended September 30, 2016(a) | For the Year Ended November 30, 2015 | December 2, 2013 (b) Through November 30, 2014 | ||||||||||||||
INSTITUTIONAL SHARES | |||||||||||||||||
NET ASSET VALUE, Beginning of Period | $ | 15.59 | $ | 17.00 | $ | 19.42 | $ | 17.56 | |||||||||
INVESTMENT OPERATIONS | |||||||||||||||||
Net investment income (c) | 0.18 | 0.29 | 0.39 | 0.41 | |||||||||||||
Net realized and unrealized gain (loss) | 1.20 | 0.94 | (1.06 | ) | 1.50 | ||||||||||||
Total from Investment Operations | 1.38 | 1.23 | (0.67 | ) | 1.91 | ||||||||||||
DISTRIBUTIONS TO SHAREHOLDERS FROM | |||||||||||||||||
Net investment income | (0.17 | ) | (2.27 | ) | (0.35 | ) | (0.05 | ) | |||||||||
Net realized gain | (0.27 | ) | (0.37 | ) | (1.40 | ) | — | ||||||||||
Total Distributions to Shareholders | (0.44 | ) | (2.64 | ) | (1.75 | ) | (0.05 | ) | |||||||||
NET ASSET VALUE, End of Period | $ | 16.53 | $ | 15.59 | $ | 17.00 | $ | 19.42 | |||||||||
TOTAL RETURN | 8.86 | %(d) | 8.65 | % | (3.58 | )% | 10.87 | %(d) | |||||||||
RATIOS/SUPPLEMENTARY DATA | |||||||||||||||||
Net Assets at End of Period (000's omitted) | $652 | $536 | $426 | $11,067 | |||||||||||||
Ratios to Average Net Assets: | |||||||||||||||||
Net investment income | 2.22 | %(e) | 2.30 | % | 2.23 | % | 2.26 | %(e) | |||||||||
Net expenses | 0.70 | %(e) | 0.70 | % | 0.70 | % | 0.70 | %(e) | |||||||||
Gross expenses (f) | 11.45 | %(e) | 14.43 | % | 2.09 | % | 2.50 | %(e) | |||||||||
PORTFOLIO TURNOVER RATE | 22 | %(d) | 22 | % | 32 | % | 35 | %(d) | |||||||||
(a) | Effective March 24, 2016, the Fund changed its fiscal year end from November 30 to September 30. The inforrmation presented is for the period December 1, 2015 through September 30, 2016. | ||||||||||||||||
(b) | Commencement of operations. | ||||||||||||||||
(c) | Calculated based on average shares outstanding during each period. | ||||||||||||||||
(d) | Not annualized. | ||||||||||||||||
(e) | Annualized. | ||||||||||||||||
(f) | Reflects the expense ratio excluding any waivers and/or reimbursements. |
See Notes to Financial Statements. | 9 |
BAYWOOD SOCIALLYRESPONSIBLE FUND MARCH 31, 2017 |
Dear Shareholder,
We are pleased to report our economic and financial market perspectives and the investment activities for the Baywood SociallyResponsible Fund (the "Fund") for the six months ended March 31, 2017. The Fund is a mid-to-large capitalization value-oriented portfolio of stock holdings selected from a universe of stocks created through the application of inclusionary and exclusionary social screens and assessments of the ESG profile of each company. Among these stocks, we further evaluate and assess each prospective holding's valuation and fundamental business attraction to determine the current portfolio holdings. In selecting investments, we consider social criteria such as an issuer's community relations, corporate governance, employee diversity, employee relations, environmental impact and sustainability, human rights record and product safety. Using both quantitative and qualitative data, we also evaluate an issuer's involvement in specific revenue generating activities to determine whether the issuer's involvement was meaningful or incidental with respect to that activity.
For the six month period ending March 31, 2017, the Fund outperformed the MSCI KLD 400 Social Index and modestly underperformed the Russell 1000 Value Index and Morningstar's median Large-Cap Value (LCV) fund. In a period that witnessed an upheaval in the world's most important economy's political system, which whipsawed equities and resulted in a large dispersion of returns amongst managers, the steady returns the Fund achieved are no small feat. This was managed by not making bets on the outcome of Brexit, nor on the U.S. election nor on how many times the Fed will raises rates, but on purchasing companies whose valuations do not reflect positive effects should those or any other events occur. The strategy most certainly owned companies that benefited from both a rise in interest rates and the outcome of the election (if the two could even be separated), yet we most certainly did not pay up for the privilege. As a result over the last twelve months, the Fund exceeded the total return of the S&P 500 and Morningstar's median LCV fund.
Performance in the period can be best characterized by our "value" discipline, in which the culture of the firm and the people within it are loathe to over-pay for assets. The strategy accrued over 100 basis points against the Russell 1000 Value Index by simply being underweight the most expensive sectors. These aren't the high-flying stocks that pushed indices near highs last year (Facebook, Amazon, Netflix or Google), none of which we owned. Instead, these are your most traditionally defensive, stable, low beta stocks: consumer staples, real estate, telecom and utilities. Historically, these sectors tend to be out-of- favor in economic expansions due to slow growth and the majority of their earnings are distributed to shareholders as large dividends. However, they have behaved much differently recently than they have in the past as the ultra-low interest rate regime has forced investors to reach for yield, making them effective bond substitutes. This has pushed valuations to record highs, while at the same time each sector faces fundamental problems of their own that will result in them being more volatile going- forward. With seemingly unabated flows going into these sectors, others, by contrast, are being neglected.
Health care, in general, is one such sector and, as a result, we have spent much of our time looking for companies with strong fundamentals that are being mis-priced. Some of the highest returns recorded in the first quarter were in health care, the worst sector in the Russell 1000 Value for 2016. The rally occurred mostly in companies that were at multi-year lows from both decreased profitability and political rhetoric around drug pricing. We did not own these companies and therefore, despite the overweight position in health care, the selection effect offset the positive allocation contribution. The health care companies we do own will benefit from an aging population and the growing health care market, which produce steady earnings streams, strong cash flow and on the whole will likely behave more defensively as a group than other, more traditionally "defensive" sectors. LabCorp, Novo Nordisk and Cardinal Health were all added in the period and share those attributes.
In the fourth quarter of 2016, energy and financials accounted for nearly 95% of the Russell 1000 Value Index 6.5% return for the quarter. As such, the strategy's underweight position in financials and energy resulted in a modest shortfall. Other factors that detracted from performance were holdings within the consumer discretionary sector. Most of the weakness was offset by the contribution from our exposure to industrials as well as our decision to avoid the aforementioned "defensive" sectors. As it stands, the portfolio has a modest pro-cyclical bias, which increased throughout the period from our purchases of out-of-favor companies within economically sensitive sectors.
The first quarter of 2017 represented a reversal of sorts from what occurred in the market in 2016. Sectors that performed well in 2016 produced some of the lowest returns, and those that did the best took a breather. Financials and energy, both of which returned well in excess of the overall market in 2016, lagged the market in the first quarter of 2017.
Information technology was the best performing sector in the Russell 1000 Value Index for the quarter. Our overweight position contributed to returns, however one company's performance, Qualcomm, nearly offset the sector contributions. Qualcomm was one of the portfolios best performing stocks last year when attacks on its royalty stream began to fade from headlines and investors
10 |
BAYWOOD SOCIALLYRESPONSIBLE FUND MARCH 31, 2017 |
The following is a summary of the inputs used to value the Fund's investments as of March 31, 2017.
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.
Valuation Inputs | Investments in Securities |
Level 1 - Quoted Prices | $ | 7,775,838 | ||
Level 2 - Other Significant Observable Inputs | 463,860 | |||
Level 3 - Significant Unobservable Inputs | - | |||
Total | $ | 8,239,698 |
The Level 1 value displayed in this table is Common Stock. The Level 2 value displayed in this table is a Money Market Fund. Refer to this 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 Level 1, Level 2 and Level 3 for the period ended March 31, 2017.
AFA
PORTFOLIO HOLDINGS | ||
% of Total Investments | ||
Basic Materials | 2.6 | % |
Capital Goods / Industrials | 7.3 | % |
Consumer Cyclicals | 3.3 | % |
Consumer Discretionary | 5.9 | % |
Consumer Staples | 4.2 | % |
Energy | 8.7 | % |
Financials | 21.6 | % |
Health Care | 20.1 | % |
Technology | 18.3 | % |
Telecommunications | 2.4 | % |
Money Market Fund | 5.6 | % |
100.0 | % |
AFA
See Notes to Financial Statements. | 13 |
BAYWOOD SOCIALLYRESPONSIBLE FUND MARCH 31, 2017 |
ASSETS | ||||||
. | Total investments, at value (Cost $7,341,811) | $ | 8,239,698 | |||
Receivables: | ||||||
Fund shares sold | 2,637 | |||||
Investment securities sold | 20,913 | |||||
Dividends | 10,277 | |||||
From investment advisor | 438 | |||||
Prepaid expenses | 19,287 | |||||
Total Assets | 8,293,250 | |||||
LIABILITIES | ||||||
Payables: | ||||||
Investment securities purchased | 49,564 | |||||
Fund shares redeemed | 3 | |||||
Accrued Liabilities: | ||||||
Trustees' fees and expenses | 25 | |||||
Fund services fees | 3,907 | |||||
Other expenses | 6,890 | |||||
Total Liabilities | 60,389 | |||||
NET ASSETS | $ | 8,232,861 | ||||
COMPONENTS OF NET ASSETS | ||||||
Paid-in capital | $ | 7,693,206 | ||||
Distributions in excess of net investment income | (220 | ) | ||||
Accumulated net realized loss | (358,012 | ) | ||||
Net unrealized appreciation | 897,887 | |||||
NET ASSETS | $ | 8,232,861 | ||||
SHARES OF BENEFICIAL INTEREST AT NO PAR VALUE (UNLIMITED SHARES AUTHORIZED) | ||||||
Investor Shares | 278,940 | |||||
Institutional Shares | 472,740 | |||||
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE | ||||||
Investor Shares (based on net assets of $3,057,913) | $ | 10.96 | ||||
Institutional Shares (based on net assets of $5,174,948) | $ | 10.95 |
See Notes to Financial Statements. | 14 |
BAYWOOD SOCIALLYRESPONSIBLE FUND SIX MONTHS ENDED MARCH 31, 2017 |
INVESTMENT INCOME | |||||||
Dividend income (Net of foreign withholding taxes of $4,148) | . | $ | 169,305 | ||||
Total Investment Income | 169,305 | ||||||
EXPENSES | |||||||
Investment advisor fees | 51,661 | ||||||
Fund services fees | 35,511 | ||||||
Transfer agent fees: | |||||||
Investor Shares | 8,431 | ||||||
Institutional Shares | 8,977 | ||||||
Distribution fees: | |||||||
Investor Shares | 11,726 | ||||||
Custodian fees | 2,372 | ||||||
Registration fees: | |||||||
Investor Shares | 5,455 | ||||||
Institutional Shares | 5,823 | ||||||
Professional fees | 13,236 | ||||||
Trustees' fees and expenses | 1,396 | ||||||
Miscellaneous expenses | 14,785 | ||||||
Total Expenses | 159,373 | ||||||
Fees waived and expenses reimbursed | (81,964 | ) | |||||
Net Expenses | 77,409 | ||||||
NET INVESTMENT INCOME | 91,896 | ||||||
NET REALIZED AND UNREALIZED GAIN (LOSS) | |||||||
Net realized gain on investments | 999,139 | ||||||
Net change in unrealized appreciation (depreciation) on investments | 96,307 | ||||||
NET REALIZED AND UNREALIZED GAIN | 1,095,446 | ||||||
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS | $ | 1,187,342 | |||||
See Notes to Financial Statements. | 15 |
BAYWOOD SOCIALLYRESPONSIBLE FUND |
For the Six Months Ended March 31, 2017 | For the Year Ended September 30, 2016 | ||||||||||
OPERATIONS | |||||||||||
Net investment income | $ | 91,896 | $ | 675,355 | |||||||
Net realized gain (loss) | 999,139 | (1,239,017 | ) | ||||||||
Net change in unrealized appreciation (depreciation) | 96,307 | 15,453,930 | |||||||||
Increase in Net Assets Resulting from Operations | 1,187,342 | 14,890,268 | |||||||||
DISTRIBUTIONS TO SHAREHOLDERS FROM | |||||||||||
Net investment income: | |||||||||||
Investor Shares | (45,896 | ) | (539,156 | ) | |||||||
Institutional Shares | (46,220 | ) | (213,418 | ) | |||||||
Net realized gain: | |||||||||||
Investor Shares | - | (1,155,096 | ) | ||||||||
Institutional Shares | - | (750,918 | ) | ||||||||
Total Distributions to Shareholders | (92,116 | ) | (2,658,588 | ) | |||||||
CAPITAL SHARE TRANSACTIONS | |||||||||||
Sale of shares: | |||||||||||
Investor Shares | 398,015 | 1,397,425 | |||||||||
Institutional Shares | 90,907 | 8,353,879 | |||||||||
Reinvestment of distributions: | |||||||||||
Investor Shares | 45,162 | 1,686,621 | |||||||||
Institutional Shares | 45,913 | 944,207 | |||||||||
Redemption of shares: | |||||||||||
1 | Investor Shares | (7,959,156 | ) | (14,388,052 | ) | ||||||
2 | Institutional Shares | (928,464 | ) | (256,204,428 | ) | ||||||
Decrease in Net Assets from Capital Share Transactions | (8,307,623 | ) | (258,210,348 | ) | |||||||
Decrease in Net Assets | (7,212,397 | ) | (245,978,668 | ) | |||||||
NET ASSETS | |||||||||||
Beginning of Period | 15,445,258 | 261,423,926 | |||||||||
End of Period (Including line (a)) | $ | 8,232,861 | $ | 15,445,258 | |||||||
SHARE TRANSACTIONS | |||||||||||
Sale of shares: | |||||||||||
Investor Shares | 37,166 | 152,505 | |||||||||
Institutional Shares | 8,357 | 792,315 | |||||||||
Reinvestment of distributions: | |||||||||||
Investor Shares | 4,220 | 172,979 | |||||||||
Institutional Shares | 4,240 | 96,286 | |||||||||
Redemption of shares: | |||||||||||
Investor Shares | (737,900 | ) | (1,619,069 | ) | |||||||
Institutional Shares | (87,059 | ) | (23,760,340 | ) | |||||||
Decrease in Shares | (770,976 | ) | (24,165,324 | ) | |||||||
(a) | Distributions in excess of net investment income | $ | (220 | ) | $ | - |
See Notes to Financial Statements. | 16 |
BAYWOOD SOCIALLYRESPONSIBLE FUND |
These financial highlights reflect selected data for a share outstanding throughout each period. | ||||||||||||||||||||||||
For the Six Months Ended | For the Years Ended September 30, | |||||||||||||||||||||||
INVESTOR SHARES | March 31, 2017 | 2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||
NET ASSET VALUE, Beginning of Period | $ | 10.14 | $ | 10.16 | $ | 11.42 | $ | 12.26 | $ | 10.04 | $ | 8.37 | ||||||||||||
INVESTMENT OPERATIONS | ||||||||||||||||||||||||
Net investment income (a) | 0.06 | 0.08 | 0.11 | 0.18 | 0.09 | 0.11 | ||||||||||||||||||
Net realized and unrealized gain (loss) | 0.82 | 0.71 | (0.98 | ) | 1.15 | 2.22 | 1.67 | |||||||||||||||||
Total from Investment Operations | 0.88 | 0.79 | (0.87 | ) | 1.33 | 2.31 | 1.78 | |||||||||||||||||
DISTRIBUTIONS TO SHAREHOLDERS FROM | ||||||||||||||||||||||||
Net investment income | (0.06 | ) | (0.28 | ) | (0.10 | ) | (0.15 | ) | (0.09 | ) | (0.11 | ) | ||||||||||||
Net realized gain | — | (0.53 | ) | (0.29 | ) | (2.02 | ) | — | — | |||||||||||||||
Total Distributions to Shareholders | (0.06 | ) | (0.81 | ) | (0.39 | ) | (2.17 | ) | (0.09 | ) | (0.11 | ) | ||||||||||||
NET ASSET VALUE, End of Period | $ | 10.96 | $ | 10.14 | $ | 10.16 | $ | 11.42 | $ | 12.26 | $ | 10.04 | ||||||||||||
TOTAL RETURN | 8.65 | %(b) | 8.28 | % | (7.86 | )% | 12.11 | % | 23.12 | % | 21.28 | % | ||||||||||||
RATIOS/SUPPLEMENTARY DATA | ||||||||||||||||||||||||
Net Assets at End of Period (000's omitted) | $3,058 | $9,890 | $23,045 | $26,763 | $31,387 | $25,631 | ||||||||||||||||||
Ratios to Average Net Assets: | ||||||||||||||||||||||||
Net investment income | 1.16 | %(c) | 0.77 | % | 0.99 | % | 1.55 | % | 0.81 | % | 1.13 | % | ||||||||||||
Net expenses | 1.14 | %(c) | 1.28 | % | 1.14 | % | 1.14 | % | 1.13 | % | 1.15 | % | ||||||||||||
Gross expenses (d) | 2.15 | %(c) | 1.84 | % | 1.37 | % | 1.46 | % | 1.38 | % | 1.40 | % | ||||||||||||
PORTFOLIO TURNOVER RATE | 22 | %(b) | 57 | % | 29 | % | 34 | % | 42 | % | 38 | % | ||||||||||||
(a) | Calculated based on average shares outstanding during each period. | |||||||||||||||||||||||
(b) | Not annualized. | |||||||||||||||||||||||
(c) | Annualized. | |||||||||||||||||||||||
(d) | Reflects the expense ratio excluding any waivers and/or reimbursements. |
See Notes to Financial Statements. | 17 |
BAYWOOD SOCIALLYRESPONSIBLE FUND |
These financial highlights reflect selected data for a share outstanding throughout each period. | ||||||||||||||||||||||||
For the Six Months Ended | For the Year Ended September 30, | |||||||||||||||||||||||
INSTITUTIONAL SHARES | March 31, 2017 | 2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||
NET ASSET VALUE, Beginning of Period | $ | 10.15 | $ | 10.18 | $ | 11.45 | $ | 12.28 | $ | 10.06 | $ | 8.38 | ||||||||||||
INVESTMENT OPERATIONS | ||||||||||||||||||||||||
Net investment income (a) | 0.07 | 0.14 | 0.14 | 0.19 | 0.12 | 0.13 | ||||||||||||||||||
Net realized and unrealized gain (loss) | 0.83 | 0.66 | (0.99 | ) | 1.18 | 2.22 | 1.68 | |||||||||||||||||
Total from Investment Operations | 0.90 | 0.80 | (0.85 | ) | 1.37 | 2.34 | 1.81 | |||||||||||||||||
DISTRIBUTIONS TO SHAREHOLDERS FROM | ||||||||||||||||||||||||
Net investment income | (0.10 | ) | (0.30 | ) | (0.13 | ) | (0.18 | ) | (0.12 | ) | (0.13 | ) | ||||||||||||
Net realized gain | — | (0.53 | ) | (0.29 | ) | (2.02 | ) | — | — | |||||||||||||||
Total Distributions to Shareholders | (0.10 | ) | (0.83 | ) | (0.42 | ) | (2.20 | ) | (0.12 | ) | (0.13 | ) | ||||||||||||
NET ASSET VALUE, End of Period | $ | 10.95 | $ | 10.15 | $ | 10.18 | $ | 11.45 | $ | 12.28 | $ | 10.06 | ||||||||||||
TOTAL RETURN | 8.84 | %(b) | 8.40 | % | (7.70 | )% | 12.46 | % | 23.38 | % | 21.63 | % | ||||||||||||
RATIOS/SUPPLEMENTARY DATA | ||||||||||||||||||||||||
Net Assets at End of Period (000's omitted) | $5,175 | $5,555 | $238,379 | $172,830 | $45,357 | $80,109 | ||||||||||||||||||
Ratios to Average Net Assets: | ||||||||||||||||||||||||
Net investment income | 1.39 | %(c) | 1.35 | % | 1.22 | % | 1.62 | % | 1.10 | % | 1.37 | % | ||||||||||||
Net expenses | 0.89 | %(c) | 0.89 | % | 0.89 | % | 0.89 | % | 0.87 | % | 0.90 | % | ||||||||||||
Gross expenses (d) | 2.17 | %(c) | 1.00 | % | 0.87 | %(e) | 0.96 | % | 0.87 | % | 0.90 | % | ||||||||||||
PORTFOLIO TURNOVER RATE | 22 | %(b) | 57 | % | 29 | % | 34 | % | 42 | % | 38 | % | ||||||||||||
(a) | Calculated based on average shares outstanding during each period. | |||||||||||||||||||||||
(b) | Not annualized. | |||||||||||||||||||||||
(c) | Annualized. | |||||||||||||||||||||||
(d) | Reflects the expense ratio excluding any waivers and/or reimbursements. | |||||||||||||||||||||||
(e) | Ratio includes waivers and previously waived investment advisory fees recovered. The impact of the recovered fees may cause a higher net expense ratio. |
See Notes to Financial Statements. | 18 |
BAYWOOD FUNDS MARCH 31, 2017 |
Note 1. Organization
Baywood ValuePlus Fund and Baywood SociallyResponsible 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, as amended (the "Act"). Under its Trust Instrument, the Trust is authorized to issue an unlimited number of each Fund's shares of beneficial interest without par value. The Baywood ValuePlus Fund commenced operations on December 2, 2013. The Baywood ValuePlus Fund currently offers two classes of shares: Investor Shares and Institutional Shares. The Baywood ValuePlus Fund seeks to achieve long-term capital appreciation by investing in undervalued equity securities.
On December 2, 2013, the Baywood ValuePlus Fund commenced operations through a reorganization of a collective investment trust into the Baywood ValuePlus Fund. The collective investment trust was previously managed by the Baywood ValuePlus Fund's Advisor and portfolio management team. This collective investment trust was organized and commenced operations on June 27, 2008. The collective investment trust had an investment objective and strategies that were, in all material respects, identical to those of the Baywood ValuePlus Fund. The net assets and unrealized gain received by the Baywood ValuePlus Fund from this tax-free reorganization were as follows:
Date of Contribution | Net Assets Investor Shares | Net Assets Institutional Shares | Shares Issued Investor Shares | Shares Issued Institutional Shares | Cost of Investments | Unrealized Gain on Investments | ||||||
December 2, 2013 | $2,099,735 | $10,168,720 | 120,217 | 579,166 | $9,396,973 | $2,372,564 |
In addition to the securities transferred in, as noted above, $498,918 of cash and other receivables were also transferred in as part of the reorganization.
The Baywood SociallyResponsible Fund commenced operations on January 3, 2005. The Baywood SociallyResponsible Fund currently offers two classes of shares: Investor Shares and Institutional Shares. The Baywood SociallyResponsible Fund seeks to provide long-term capital growth.
On December 7, 2015, at a special meeting of shareholders of Baywood SociallyResponsible Fund, formerly City National Rochdale Socially Responsible Equity Fund, a series of City National Rochdale Funds (the "Predecessor Fund"), the shareholders approved a proposal to reorganize the Predecessor Fund into the Baywood SociallyResponsible Fund, a newly created series of the Forum Funds II. The Predecessor Fund was sub-advised by the Fund's Advisor, SKBA Capital Management, LLC, with the same portfolio managers as Baywood SociallyResponsible Fund. The Baywood SociallyResponsible Fund is managed in a manner that is in all material respects equivalent to the management of the Predecessor Fund, including the investment objective, strategies, guidelines and restrictions. The primary purpose of the reorganization was to move the Predecessor Fund to a newly created series of Forum Funds II. As a result of the reorganization, the Baywood SociallyResponsible Fund is now operating under the supervision of a different board of trustees. On January 8, 2016, the Baywood SociallyResponsible Fund acquired all of the assets, subject to liabilities, of the Predecessor Fund. The shares of the Predecessor Fund were, in effect, exchanged on a tax-free basis for Shares of the Baywood SociallyResponsible Fund with the same aggregate value. No commission or other transactional fees were imposed on shareholders in connection with the tax-free exchange of their shares.
Note 2. Summary of Significant Accounting Policies
The Funds are investment companies and follow accounting and reporting guidance under Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 946, "Financial Services-Investment Companies". 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 period. Actual amounts could differ from those estimates. The following summarizes the significant accounting policies of each Fund:
Security Valuation – Securities are valued at market prices using the last quoted trade or official closing price from the principal exchange where the security is traded, as provided by independent pricing services on each Fund business day. In the absence of a last trade, securities are valued at the mean of the last bid and ask price provided by the pricing service. 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.
19 |
BAYWOOD FUNDS MARCH 31, 2017 |
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 not readily available or (2) the Fund 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 adhoc 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 Advisor, as defined in Note 3, to provide valuation inputs. In determining fair valuations, inputs may include market-based analytics that may consider related or comparable assets or liabilities, recent transactions, market multiples, book values and other relevant investment information. Advisor 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.)
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 March 31, 2017, for each Fund's investments is included in 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.
Distributions to Shareholders – Distributions to shareholders of net investment income, if any, are declared and paid annually. Distributions to shareholders of 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 Chapter 1, Subtitle A, of the Internal Revenue Code of 1986, as amended ("Code"), and to distribute all of its taxable income to shareholders. In addition, by distributing in each calendar year substantially all of its net investment income and capital gains, if any, the Fund 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. Each 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 March 31, 2017, 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.
The Fund's class-specific expenses are charged to the operations of that class of shares. Income and expenses (other than expenses
20 |
BAYWOOD FUNDS MARCH 31, 2017 |
attributable to a specific class) and realized and unrealized gains or losses on investments are allocated to each class of shares based on the class' respective net assets to the total net assets of each Fund.
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 Advisor – SKBA Capital Management, LLC (the "Advisor") is the investment advisor to the Funds. Pursuant to an Investment Advisory Agreement, the Advisor receives an advisory fee at an annual rate of 0.50% and 0.70% of the average daily net assets of Baywood ValuePlus Fund and Baywood SociallyResponsible Fund, respectively.
Distribution – Foreside Fund Services, LLC serves as each Fund's distributor (the "Distributor"). The Funds have adopted a Distribution Plan (the "Plan") in accordance with Rule 12b-1 of the Act. Under the Plan, each Fund may pay the Distributor and/or any other entity as authorized by the Board a fee of up to 0.25% of each Fund's average daily net assets of Investor Shares for providing distribution and/or shareholder services to the Funds. The Distributor is not affiliated with the Advisor 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. The fees related to these services are included in Fund services fees within the Statement of Operations. 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 fee of $16,000 ($21,000 for the Chairman). The Independent Trustees and Chairman may receive additional fees for special Board meetings. The Independent Trustees are also reimbursed for all reasonable out-of-pocket expenses incurred in connection with their duties as Trustees, including travel and related expenses incurred in attending Board meetings. The amount of Independent Trustees' fees attributable to each Fund is disclosed in the Statements 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. Expenses Reimbursed and Fees Waived
The Advisor has contractually agreed to waive its fee and/or reimburse certain expenses to limit total operating expenses (excluding all taxes, interest, portfolio transaction expenses, acquired fund fees and expenses, proxy expenses and extraordinary expenses) for Investor Shares to 0.95% and Institutional Shares to 0.70% through January 31, 2018, for Baywood ValuePlus Fund. The Advisor also has contractually agreed to waive its fees and/or reimburse certain expenses to limit total operating expenses (excluding all taxes, interest, portfolio transaction expenses, acquired fund fees and expenses, proxy expenses and extraordinary expenses) for Investor Shares to 1.14% and Institutional Shares to 0.89% through January 31, 2018 for Baywood SociallyResponsible Fund. Other Fund service providers have voluntarily agreed to waive and reimburse a portion of their fees. These voluntary fee waivers and reimbursements may be reduced or eliminated at any time. For the period ended March 31, 2017, fees waived and expenses reimbursed were as follows:
Investment Advisor Fees Waived | Investment Advisor Expenses Reimbursed | Other Waivers | Total Fees Waived and Expenses Reimbursed |
Baywood ValuePlus Fund | $ | 5,714 | $ | 58,251 | $ | 22,286 | $ | 86,251 | |||
Baywood SociallyResponsible Fund | 51,660 | 8,885 | 21,419 | 81,964 |
The Funds may repay the Advisor 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 and (3) does not cause the Funds net annual operating expenses of that class to exceed the expense cap in place at the time the fees were waived/reimbursed. As of March 31, 2017, $523,555 and $151,592, in the Baywood ValuePlus Fund and Baywood SociallyResponsible Fund, respectively is subject to recapture by the Advisor.
21 |
BAYWOOD FUNDS MARCH 31, 2017 |
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 March 31, 2017, were as follows:
![](https://capedge.com/proxy/N-CSRS/0001435109-17-000350/image00001.jpg)
Purchases | Sales | |||||
Baywood ValuePlus Fund | $ | 476,443 | $ | 607,628 | ||
Baywood SociallyResponsible Fund | 2,980,004 | 10,765,878 |
Note 6. Federal Income Tax
As of September 30, 2016, distributable earnings (accumulated loss) on a tax basis were as follows:
Undistributed Ordinary Income | Undistributed Long-Term Gain | Capital and Other Losses | Unrealized Appreciation (Depreciation) | Total |
Baywood ValuePlus Fund | $ | 4,234 | $ | 36,207 | $ | - | $ | 145,842 | $ | 186,283 | ||||||||||
Baywood SociallyResponsible Fund | - | - | (377,036 | ) | (178,535 | ) | (555,571 | ) | ||||||||||||
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 wash sales.
For tax purposes, the Baywood SociallyResponsible Fund's prior year post-October loss was $377,036 (realized during the period November 1, 2015 through September 30, 2016). This loss was recognized for tax purposes on the first business day of the Fund's current fiscal year, October 1, 2016.
Note 7. Recent Accounting Pronouncements
In October 2016, the U.S. Securities and Exchange Commission ("SEC") issued a new rule, Investment Company Reporting Modernization, which, among other provisions, amends Regulation S-X to require standardized, enhanced disclosures, particularly related to derivatives, in investment company financial statements. Compliance with the amendments to Regulation S-X is required for financial statements filed with the SEC on or after August 1, 2017. Management is currently evaluating the impact that the amendments will have on the Fund's financial statements and related disclosures.
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.
22 |
BAYWOOD FUNDS MARCH 31, 2017 |
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 (855) 409-2297 and on the U.S. Securities and Exchange Commision's website at www.sec.gov. Each Fund's proxy voting record for the most recent twelve-month period ended June 30 is available, without charge and upon request, by calling (855) 409-2297 and 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 Fund, you incur ongoing costs, including management fees, distribution (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 Fund 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 October 1, 2016, through March 31, 2017.
Actual Expenses – The first line under each share class 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 under each share class 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. 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.
Beginning | Ending | Expenses | Annualized | |||||||||
Account Value | Account Value | Paid During | Expense | |||||||||
October 1, 2016 | March 31, 2017 | Period* | Ratio* | |||||||||
Baywood ValuePlus Fund | ||||||||||||
Investor Shares | ||||||||||||
Actual | $ | 1,000.00 | $ | 1,087.66 | $ | 4.94 | 0.95 | % | ||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,020.19 | $ | 4.78 | 0.95 | % | ||||
Institutional Shares | ||||||||||||
Actual | $ | 1,000.00 | $ | 1,088.57 | $ | 3.64 | 0.70 | % | ||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,021.44 | $ | 3.53 | 0.70 | % | ||||
* | Expenses are equal to each Fund's annualized expense ratio multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year 182 divided by 365 to reflect the half-year period. |
23 |
BAYWOOD FUNDS MARCH 31, 2017 |
Beginning | Ending | Expenses | Annualized | ||||
Account Value | Account Value | Paid During | Expense | ||||
October 1, 2016 | March 31, 2017 | Period* | Ratio* |
Baywood SociallyResponsible Fund | |||||||||||
Investor Shares | |||||||||||
Actual | $ | 1,000.00 | $ | 1,086.53 | $ | 5.93 | 1.14 | % | |||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,019.25 | $ | 5.74 | 1.14 | % | |||
Institutional Shares | |||||||||||
Actual | $ | 1,000.00 | $ | 1,088.35 | $ | 4.63 | 0.89 | % | |||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,020.49 | $ | 4.48 | 0.89 | % | |||
* | Expenses are equal to each Fund's annualized expense ratio multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year (182) divided by 365 to reflect the half-year period. |
![](https://capedge.com/proxy/N-CSRS/0001435109-17-000350/baywoodbackcover.jpg)
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/ Jessica Chase | |
Jessica Chase, Principal Executive Officer | ||
Date | May 15, 2017 |
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/ Jessica Chase | |
Jessica Chase, Principal Executive Officer | ||
Date | May 15, 2017 |
By | /s/ Karen Shaw | |
Karen Shaw, Principal Financial Officer | ||
Date | May 15, 2017 |