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: | 811-22172 |
Exact name of registrant as specified in charter: | World Funds Trust |
Address of principal executive offices: | 8730 Stony Point Parkway, Suite 205 Richmond, VA 23235 |
Name and address of agent for service | The Corporation Trust Co., Corporation Trust Center, 1209 Orange St., Wilmington, DE 19801
With Copy to:
John H. Lively Practus, LLP 11300 Tomahawk Creek Parkway, Suite 310 Leawood, KS 66211 |
Registrant’s telephone number, including area code: | (804) 267-7400 |
Date of fiscal year end: | September 30 |
Date of reporting period: | September 30, 2023 |
ITEM 1. (a) Report to Stockholders | |
Clifford Capital Partners Fund, Clifford Capital Focused Small Cap Value Fund and the Clifford Capital International Value Fund (the “Clifford Capital Funds”) |
ANNUAL REPORT
For the Year Ended September 30, 2023
Clifford Capital Partners Fund
Clifford Capital Focused Small Cap Value Fund
Clifford Capital International Value Fund
CLIFFORD CAPITAL FUNDS
Important Disclosure Statement
The Clifford Capital Partners Fund, the Clifford Capital Focused Small Cap Value Fund and the Clifford Capital International Value Fund (the “Funds”) prospectus and summary prospectus contain important information about the Funds’ investment objectives, potential risks, management fees, charges and expenses, and other information and should be read and considered carefully before investing. To obtain the Funds’ prospectus or summary prospectus containing this and other important information, please call 800-673-0550 or click here cliffordcap.com/fundreports. Please read the prospectus carefully before you invest. Foreside Fund Services, LLC is the distributor and Clifford Capital Partners, LLC (the “Advisor”) is the investment advisor of the Funds.
The performance data quoted represents past performance and is not a guarantee of future results. Current performance of the Funds’ may be lower or higher than the performance data quoted. Investment returns and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Information provided with respect to each Fund’s Performance Data, Portfolio Holdings, Sector Weightings, Number of Holdings and Expense Ratios are as of September 30, 2023 and are subject to change at any time. For most recent information, please call 800-673-0550.
The Advisor waived or reimbursed part of each Fund’s total expenses. Had the Advisor not waived or reimbursed expenses of the Funds, the Funds’ performance would have been lower.
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ANNUAL REPORT
Clifford Capital Funds
Shareholder Letter
Clifford Capital Partners Fund, Focused Small Cap Value Fund, and
International Value Fund (the “Funds”)
Annual Report for the Period October 1, 2022 – September 30, 2023
Clifford Capital Partners Fund Performance
| | Average Annual Returns as of September 30, 2023 | ||||||||
| | 1-Year |
| 3-Year |
| 5-Year |
| Average |
| Total |
Institutional Class (CLIFX) | | 7.17% | | 9.87% | | 4.84% | | 8.56% | | 121.14% |
Investor Class (CLFFX) | | 6.78% | | 9.56% | | 4.58% | | 8.32% | | 116.45% |
Russell 3000® Value Index1 | | 14.05% | | 11.19% | | 5.98% | | 7.85% | | 107.46% |
| | Average Annual Returns as of September 30, 2023 | ||||||||
| | 1-Year |
| 3-Year |
| 5-Year |
| Average |
| Total |
Super Institutional Class (CLIQX) | | 7.29% | | 9.94% | | n/a | | 6.70% | | 29.25% |
Russell 3000® Value Index | | 14.05% | | 11.19% | | n/a | | 6.91% | | 30.25% |
Expense Ratio based on the Fund's current prospectus Gross/Net: CLIFX 1.29%/0.90%; CLFFX 1.50%/1.15%; CLIQX 1.21%/0.82%
1The Russell 3000® Value Index is a capitalization-weighted index which is designed to measure performance of Russell 3000® Index companies with lower price-to-book ratios and lower forecasted growth values. Numbers presented include the reinvestment of dividends (total return).
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ANNUAL REPORT
Clifford Capital Funds
Shareholder Letter - continued
Clifford Capital Focused Small Cap Value Fund Performance
| | Average Annual Returns as of September 30, 2023 | ||||||||
| | 1-Year |
| 3-Year |
| 5-Year |
| Average |
| Total |
Institutional Class (FSVVX) | | 19.73% | | 13.33% | | n/a | | 7.13% | | 31.70% |
Russell 2000® Value Index2 | | 7.84% | | 13.32% | | n/a | | 5.50% | | 23.86% |
| | Average Annual Returns as of September 30, 2023 | ||||||||
| | 1-Year |
| 3-Year |
| 5-Year |
| Inception |
| Total |
Super Institutional Class (FSVQX) | | 19.72% | | 13.39% | | n/a | | 7.94% | | 32.32% |
Investor Class (FSVRX) | | 19.30% | | 13.03% | | n/a | | 7.59% | | 30.76% |
Russell 2000® Value Index | | 7.84% | | 13.32% | | n/a | | 4.66% | | 18.16% |
Expense Ratio based on the Fund's current prospectus Gross/Net: FSVVX 2.65%/1.05%; FSVQX 2.40%/0.97%; FSVRX 3.01%/1.30%
Clifford Capital International Value Fund Performance
| | Average Annual Returns as of September 30, 2023 | ||||||||
| | 1-Year |
| 3-Year |
| 5-Year |
| Average |
| Total |
Institutional Class (CCIVX) | | 24.04% | | n/a | | n/a | | 0.51% | | 0.72% |
Investor Class (CIIRX) | | 23.77% | | n/a | | n/a | | 0.27% | | 0.37% |
Super Institutional Class (CIVQX) | | 24.20% | | n/a | | n/a | | 0.60% | | 0.85% |
MSCI EAFE Value Index3 Net Return | | 26.31% | | n/a | | n/a | | 5.55% | | 7.13% |
2The Russell 2000® Value Index is a capitalization-weighted index which is designed to measure performance of Russell 2000® Index companies with lower price-to-book ratios and lower forecasted growth values. Numbers presented include the reinvestment of dividends (total return).
3The MSCI EAFE Value Index is a capitalization-weighted index which is designed to measure performance of large and mid cap securities across developed markets countries around the world, excluding the United States and Canada. Numbers presented to include the reinvestment of dividends, net of withholding taxes.
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ANNUAL REPORT
Clifford Capital Funds
Shareholder Letter - continued
Expense Ratio based on the Fund's current prospectus Gross/Net: CCIVX 28.72%/1.05%; CIIRX 28.97%/1.30%; CIVQX 28.33%/0.97%
Clifford Capital Partners, LLC (the “Adviser”) has contractually agreed to reduce fees and/or reimburse certain expenses for the Funds until January 31, 2025.
Performance data quoted represents past performance; past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance of the Funds may be lower or higher than the performance quoted. Performance data current to the most recent month end may be obtained by calling (800) 673-0550.
Invitation to Visit the Funds’ Website at cliffordcapfunds.com for Recent Commentary and Other Information
To communicate with shareholders on a regular basis, we invite you to bookmark the Clifford Capital Funds website at cliffordcapfunds.com where you may find the most recent quarterly commentary and other information relevant to the Funds. We hope you find this additional information insightful and instructive.
Performance Summary over the Past 12 Months
All the Funds posted solidly positive returns over the one-year period ended September 30, 2023, while results versus benchmarks were mixed.
Clifford Capital Partners Fund (“Partners Fund”)
The Partners Fund—an all-cap value strategy—posted positive total returns but trailed its benchmark during the past 12 months. This underperformance occurred during the U.S. regional bank crisis, which we think led to a significant stock market rotation during a 3-month period of March 1 – May 31, 2023, that was a major headwind to the Partners Fund.
This market rotation resulted in investors flocking to large cap technology stocks in a narrowly focused market. At the same time, the market’s least expensive companies and small cap stocks underperformed meaningfully, both of which were areas the Partners Fund had a significant weighting to, relative to its benchmark, given the attractive investments we found in those market subsets.
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ANNUAL REPORT
Clifford Capital Funds
Shareholder Letter - continued
The fourth calendar quarter of 2022 and the most recent quarter in 2023 were both solid quarters for the Partners Fund, but the first half of calendar 2023 (which encompassed the 3-month ‘bank crisis rotation’ of March-May) was a very difficult period, relative to the benchmark. We are encouraged by the significant value we see in the Partners Fund, and we think the strategy’s stocks became even more compelling during the difficult period in early 2023, which we believe will lead to a brighter future than the recent past.
Clifford Capital Focused Small Cap Value Fund (“FSCV Fund”)
The FSCV Fund significantly outperformed its benchmark over the one-year period ended September 30, 2023, thanks to a solid fourth calendar quarter in 2022 and large outperformance of its benchmark during the most recent quarter in 2023.
While the beforementioned bank crisis rotation also affected the FSCV Fund’s results in the first and second quarters of 2023, the effects were less dramatic compared to its benchmark, and the FSCV Fund has bounced back strongly. Most of the outperformance, in our opinion, was due to several positive stock-specific events that lifted the FSCV Fund’s performance in recent months. We still see strong value in the FSCV Fund’s stocks, which are trading at attractively low prices, based on our analysis.
Clifford Capital International Value Fund (“IV Fund”)
The IV Fund posted strong total returns over the one-year period but performed slightly below its benchmark. The first half of 2023 (January 1 – June 30, 2023) was solidly positive on an absolute return basis for the IV Fund, outperforming its benchmark. But that relative performance was offset by the fourth quarter of 2022 and the most recent quarter in 2023, when it lagged the benchmark. Over the past 12 months, the IV Fund’s results were aided by strong stock selection, particularly in Industrials where four stocks increased by more than 40%. This was partially offset by weakness in two Technology companies that were down about 10% each. We also noted that currency effects were a net negative during the 12-month period, accounting for all of the IV Fund’s underperformance, based on our calculations. Being underweight the Swiss franc and overweight the British pound and euro were the largest currency detractors, while being underweight the Japanese yen was the largest currency contributor.
5
ANNUAL REPORT
Clifford Capital Funds
Shareholder Letter - continued
Even though performance was slightly below its benchmark over the past 12 months, we are pleased with the strong returns of the IV Fund. We continue to see attractive value in the IV Fund’s individual stocks, and we are enthusiastic about the potential of international large cap stocks today, which we believe are much less expensive than large cap U.S. stocks.
Final Comments
Overall, we feel good about the positioning of the Funds today, and we believe each one is attractively valued at the end of September 2023.
Thank you for your investment in the Funds. We have high conviction in the Funds’ stocks, and we are invested alongside you. We appreciate your support, and we will continue to strive to prudently manage your money.
Sincerely yours,
Ryan Batchelor, CFA, CPA | Allan Nichols, CFA |
Must be preceded or accompanied by a current prospectus.
The Funds’ investment objectives, risks, charges and expenses must be considered carefully before investing. The prospectus contains this and other important information about the Funds, and it may be obtained by calling (800) 673-0550, or by going to the Clifford Capital Funds’ website at cliffordcapfunds.com and clicking on the “Prospectus” link. Read it carefully before investing.
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ANNUAL REPORT
Clifford Capital Funds
Shareholder Letter - continued
Information about Risk
Risks of Investing in Equity Securities. Overall equity market risks may affect the value of the Funds. Factors such as economic growth and market conditions, interest rate levels, and political events affect the securities markets. When the value of the Funds’ investments goes down, your investment in the Funds decreases in value and you could lose money.
Risks of Small-Cap and Mid-Cap Securities. Investing in the securities of small-cap and mid-cap companies generally involves substantially greater risk than investing in larger, more established companies.
Risks of Large-Cap Securities. Prices of securities of larger companies tend to be less volatile than companies with smaller market capitalizations. In exchange for this potentially lower risk, the Funds’ value may not rise as much as the value of funds that emphasize companies with smaller capitalizations.
Focused Investment Risk. The Funds are focused funds and generally hold stocks of between only 25 and 35 companies (Domestic Funds) and 25 to 45 companies in the IV Fund. Focused funds may invest a larger portion of their assets in the securities of a single issuer compared to a more diversified fund. Focusing investments in a small number of companies may subject the Funds to greater share price volatility and therefore a greater risk of loss because a single security’s increase or decrease in value may have a greater impact on the Funds’ value and total return. Economic, political or regulatory developments may have a greater impact on the value of the Funds’ portfolios than would be the case if the portfolios held more positions, and events affecting a small number of companies may have a significant and potentially adverse impact on the performance of the Funds. In addition, investors may buy or sell substantial amounts of Fund shares in response to factors affecting or expected to affect a small number of companies, resulting in extreme inflows and outflows of cash into or out of the Funds. To the extent such inflows or outflows of cash cause the Funds’ cash position or cash requirements to exceed normal levels, management of the Funds’ portfolio may be negatively affected.
Management Style Risk. Because the Funds invest primarily in value stocks (stocks that the Adviser believes are undervalued), the Funds’ performance may at times be better or worse than the performance of stock funds that focus on other types of stock strategies (e.g., growth stocks), or that have a broader investment style.
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ANNUAL REPORT
Clifford Capital Funds
Shareholder Letter - continued
Active Management Risk. The Funds are actively managed and are thus subject to management risk. The Adviser will apply its investment techniques and strategies in making investment decisions for the Funds, but there are no guarantees that its techniques will produce the intended results.
Market and Geopolitical Risk. Market risk includes the possibility that the Funds’ investments will decline in value because of a downturn in the stock market, reducing the value of individual companies’ stocks regardless of the success or failure of an individual company’s operations. The value of your investment in the Funds is based on the market prices of the securities the Funds hold. These prices change daily due to economic and other events that affect markets generally, as well as those that affect particular regions, countries, industries, companies or governments. The increasing interconnectivity between global economies and financial markets increases the likelihood that events or conditions in one region or financial market may adversely impact issuers in a different country, region or financial market. Securities in the Funds’ portfolios may underperform due to inflation (or expectations for inflation), interest rates, global demand for particular products or resources, natural disasters, pandemics, epidemics, terrorism, regulatory events and governmental or quasi-governmental actions. The occurrence of global events similar to those in recent years, such as terrorist attacks around the world, natural disasters, social and political discord or debt crises and downgrades, among others, may result in market volatility and may have long term effects on both the U.S. and global financial markets. There is a risk that you may lose money by investing in the Funds.
Sector Risk. The Funds may emphasize investment in one or more particular business sectors at times, which may cause the value of its share price to be more susceptible to the financial, market, or economic events affecting issuers and industries within those sectors than funds that do not emphasize investment in particular sectors. Economic or market factors, regulation or deregulation, and technological or other developments may negatively impact all companies in a particular sector and may increase the risk of loss of an investment in the Funds. This may increase the risk of loss associated with an investment in the Funds and increase the volatility of the Funds’ net asset value (“NAV”) per share.
Economic and Political Risks. These effects may be short-term by causing a change in the global markets that is corrected in a year or less, or they may have long-term impacts which may cause changes in the markets that may last for many years. In any given country, some factors may affect changes in one sector of the economy or one stock, but don’t have an impact on the overall market. The particular sector of the economy or the individual stock may be affected for a short or long-term.
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ANNUAL REPORT
Clifford Capital Funds
Shareholder Letter - continued
Emerging Markets Risk. Emerging market securities may present issuer, market, currency, liquidity, volatility, valuation, legal, political, and other risks different from, and potentially greater than, the risks of investing in securities of issuers in more developed markets. Emerging markets may have less established legal and accounting systems than those in more developed markets. Governments in emerging markets may be less stable and more likely to take extra-legal action with respect to companies, industries, assets, or foreign ownership than those in more developed markets. The economies of emerging markets may be dependent on relatively few industries and thus affected more severely by local or global changes. Emerging market securities may also be more volatile, more difficult to value, and have lower overall liquidity than securities economically tied to U.S. or developed non-U.S. issuer.
Non-U.S. Investment Risk. Securities of non-U.S. issuers (including American depository receipts (“ADRs”) and other securities that represent interests in a non-U.S. issuer’s securities) may be less liquid, more volatile, and harder to value than U.S. securities. Non-U.S. issuers may be subject to political, economic, or market instability, or unfavorable government action in their local jurisdictions or economic sanctions or other restrictions imposed by U.S. or foreign regulators. There may be less information publicly available about non-U.S. issuers and their securities and those issuers may be subject to lower levels of government regulation and oversight. These risks may be higher when investing in emerging market issuers. Certain of these elevated risks may also apply to securities of U.S. issuers with significant non-U.S. operations.
Foreign Currency Risk. Although the IV Fund will report its NAV and pay dividends in U.S. dollars, foreign securities often are purchased with and make any dividend and interest payments in foreign currencies. Therefore, the IV Fund’s NAV could decline solely as a result of changes in the exchange rates between foreign currencies and the U.S. dollar, particularly if the IV Fund invests a significant percentage of its assets in foreign securities or other assets denominated in currencies not tightly pegged to the U.S.
Inflation Risk. At any time, the Funds may have significant investments in cash or cash equivalents. When a substantial portion of a portfolio is held in cash or cash equivalents, there is the risk that the value of the cash account, including interest, will not keep pace with inflation, thus reducing purchasing power over time.
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ANNUAL REPORT
Clifford Capital Funds
Shareholder Letter - continued
Cybersecurity Risk. The Funds and its shareholders could be negatively impacted as a result of a cybersecurity breach. Cybersecurity breaches can include unauthorized access to systems, networks, or devices; infection from computer viruses or other malicious software code; and attacks that shut down, disable, slow, or otherwise disrupt operations, business processes, or website access or functionality.
The Clifford Capital Funds are distributed by Foreside Fund Services, LLC.
10
ANNUAL REPORT
Clifford Capital Partners Fund
| | Total Return | | Average Annual Return | ||||
| | One Year | | Five Years | | Since Inception | ||
| | | | 01/31/2014 to 09/30/2023 | | 10/17/2019 to 9/30/2023 | ||
Clifford Capital Partners Fund - Investor | | 6.78% | | 4.58% | | 8.32% | | N/A |
Clifford Capital Partners Fund - Institutional | | 7.17% | | 4.84% | | 8.56% | | N/A |
Clifford Capital Partners Fund - Super Institutional | | 7.29% | | N/A | | N/A | | 6.70% |
Russell 3000® Value Index | | 14.05% | | 5.98% | | 7.85% | | 6.91% |
Returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of shares. The total cumulative returns are historical in nature and measure net investment income and capital gain or loss from portfolio investments assuming reinvestments of dividends.
The Russell 3000® Value Index is generally considered to be representative of the performance of unmanaged common stocks that comprise the broad value segment of the U.S. securities markets. You cannot invest directly in this index. This index does not have an investment advisor and does not pay any commissions, expenses, or taxes. If this index did pay commissions, expenses, or taxes, its returns would be lower. The index is not adjusted to reflect expenses that the U.S. Securities and Exchange Commission (“SEC”) requires to be reflected in the Fund’s performance.
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ANNUAL REPORT
Clifford Capital Partners Fund
Portfolio Compositionas of September 30, 2023 (unaudited)
Holdings by Sector/Asset Class |
| Percentage of |
Common Stocks: | | |
Financials | | 22.22% |
Industrials | | 17.70% |
Information Technology | | 11.45% |
Health Care | | 9.46% |
Consumer Staples | | 9.38% |
Communication Services | | 9.09% |
Consumer Discretionary | | 7.92% |
Energy | | 6.69% |
Materials | | 3.92% |
Money Market Fund | | 2.05% |
| | 99.88% |
See Notes to Financial Statements
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ANNUAL REPORT
Clifford Capital Partners Fund
Schedule of InvestmentsSeptember 30, 2023
| | | Shares |
| Value | |
97.83% | COMMON STOCK | | | | | |
| ||||||
9.09% | COMMUNICATION SERVICES | | | | | |
| Liberty Media Corp-Liberty SiriusXM A(A) | | 179,700 | | $4,573,365 | |
| Vodafone Group plc ADR | | 318,200 | | 3,016,536 | |
| The Walt Disney Co(A) | | 35,200 | | 2,852,960 | |
| | | | | 10,442,861 | |
| ||||||
7.92% | CONSUMER DISCRETIONARY | | | | | |
| Big Lots, Inc.(A) | | 325,000 | | 1,660,750 | |
| eBay Inc. | | 87,000 | | 3,835,830 | |
| Perdoceo Education Corp. | | 211,100 | | 3,609,810 | |
| | | | | 9,106,390 | |
| ||||||
9.38% | CONSUMER STAPLES | | | | | |
| General Mills, Inc. | | 58,900 | | 3,769,011 | |
| Kenvue, Inc. | | 142,800 | | 2,867,424 | |
| The Kraft Heinz Co. | | 123,300 | | 4,147,812 | |
| | | | | 10,784,247 | |
| ||||||
6.69% | ENERGY | | | | | |
| Liberty Oilfield Services, Inc. | | 190,300 | | 3,524,356 | |
| Schlumberger Ltd. | | 71,400 | | 4,162,620 | |
| | | | | 7,686,976 | |
| ||||||
22.22% | FINANCIALS | | | | | |
| American Express Co. | | 29,400 | | 4,386,186 | |
| Community Trust Bancorp, Inc. | | 105,100 | | 3,600,726 | |
| CVB Financial Corp. | | 293,500 | | 4,863,295 | |
| EVERTEC, Inc. | | 119,000 | | 4,424,420 | |
| Fidelity National Information Services, Inc. | | 68,400 | | 3,780,468 | |
| Westamerica Bancorp. | | 103,600 | | 4,480,700 | |
| | | | | 25,535,795 | |
| ||||||
9.46% | HEALTH CARE | | | | | |
| Cardinal Health, Inc. | | 45,700 | | 3,967,674 | |
| GSK plc ADR | | 97,300 | | 3,527,125 | |
| Johnson & Johnson | | 21,700 | | 3,379,775 | |
| | | | | 10,874,574 | |
| | | | | | |
See Notes to Financial Statements
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ANNUAL REPORT
Clifford Capital Partners Fund
Schedule of Investments - continuedSeptember 30, 2023
| | | Shares |
| Value | |
17.70% | INDUSTRIALS | | | | | |
| 3M Co. | | 37,100 | | $3,473,302 | |
| Forward Air Corp. | | 46,000 | | 3,162,040 | |
| HNI Corp. | | 79,600 | | 2,756,548 | |
| Pitney Bowes, Inc. | | 1,438,400 | | 4,343,968 | |
| RTX Corp. | | 43,900 | | 3,159,483 | |
| Stericycle, Inc.(A) | | 77,000 | | 3,442,670 | |
| | | | | 20,338,011 | |
| | | | | | |
11.45% | INFORMATION TECHNOLOGY | | | | | |
| Cisco Systems, Inc. | | 66,700 | | 3,585,792 | |
| DXC Technology Co.(A) | | 178,200 | | 3,711,906 | |
| NCR Corp.(A) | | 217,600 | | 5,868,672 | |
| | | | | 13,166,370 | |
| | | | | | |
3.92% | MATERIALS | | | | | |
| Compass Minerals International, Inc. | | 84,500 | | 2,361,775 | |
| Sealed Air Corp. | | 65,300 | | 2,145,758 | |
| | | | | 4,507,533 | |
| | | | | | |
97.83% | TOTAL COMMON STOCK | | | | | |
| (Cost: $120,959,865) | | 112,442,757 | | ||
| | | | | | |
2.05% | MONEY MARKET FUND | | | | | |
| Federated Institutional Prime Obligations Fund Institutional Class 5.42%(B) | | 2,354,628 | | 2,355,304 | |
| (Cost: $2,355,304) | | | | | |
| | | | | | |
99.88% | TOTAL INVESTMENTS | | | | | |
| (Cost: $123,315,169) | | 114,798,061 | | ||
0.12% | Other assets, net of liabilities | | 137,135 | | ||
100.00% | NET ASSETS | | $114,935,196 | |
(A)Non-income producing
(B)Effective 7 day yield as of September 30, 2023
ADR - Security represented is held by the custodian bank in the form of American Depositary Receipts.
14
ANNUAL REPORT
Clifford Capital Focused Small Cap Value Fund
| | Total Return | | Average Annual Return | ||
| | One Year | | Since Inception | ||
| | | 10/01/2019 to 9/30/2023 | | 01/31/2020 to 9/30/2023 | |
Clifford Capital Focused Small Cap Fund - Institutional: | | 19.73% | | 7.13% | | N/A |
Clifford Capital Focused Small Cap Fund - Investor: | | 19.30% | | N/A | | 7.59% |
Clifford Capital Focused Small Cap Fund - Super Institutional: | | 19.72% | | N/A | | 7.94% |
Russell 2000® Value Index: | | 7.84% | | 5.50% | | 4.66% |
Returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of shares. The total cumulative returns are historical in nature and measure net investment income and capital gain or loss from portfolio investments assuming reinvestments of dividends.
The Russell 2000® Value Index is generally considered to be representative of the performance of unmanaged common stocks that comprise the broad value segment of the U.S. securities markets. You cannot invest directly in this index. This index does not have an investment advisor and does not pay any commissions, expenses, or taxes. If this index did pay commissions, expenses, or taxes, its returns would be lower. The index is not adjusted to reflect expenses that the U.S. Securities and Exchange Commission (“SEC”) requires to be reflected in the Fund’s performance.
15
ANNUAL REPORT
Clifford Capital Focused Small Cap Value Fund
Portfolio Compositionas of September 30, 2023 (unaudited)
Holdings by Sector/Asset Class |
| Percentage of |
Common Stocks: | | |
Industrials | | 24.27% |
Financials | | 22.62% |
Consumer Discretionary | | 15.99% |
Energy | | 7.71% |
Information Technology | | 7.65% |
Consumer Staples | | 6.40% |
Health Care | | 4.08% |
Communication Services | | 3.06% |
Materials | | 2.45% |
Preferred Stock | | 2.33% |
Money Market Fund | | 3.19% |
| | 99.75% |
See Notes to Financial Statements
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ANNUAL REPORT
Clifford Capital Focused Small Cap Value Fund
Schedule of InvestmentsSeptember 30, 2023
| | | Shares |
| Value | |
94.23% | COMMON STOCK | | | | | |
| | | | | | |
3.06% | COMMUNICATION SERVICES | | | | | |
| Millicom International Cellular SA(A) | | 15,490 | | $239,320 | |
| | | | | | |
15.99% | CONSUMER DISCRETIONARY | | | | | |
| Big Lots, Inc.(A) | | 21,350 | | 109,098 | |
| Perdoceo Education Corp. | | 12,140 | | 207,594 | |
| Urban Outfitters, Inc.(A) | | 7,900 | | 258,251 | |
| VOXX International Corp.(A) | | 19,360 | | 154,493 | |
| Winmark Corp. | | 770 | | 287,310 | |
| WW International, Inc.(A) | | 21,240 | | 235,127 | |
| | | | | 1,251,873 | |
| | | | | | |
6.40% | CONSUMER STAPLES | | | | | |
| Fresh Del Monte Produce, Inc. | | 10,250 | | 264,860 | |
| Reynolds Consumer Products, Inc. | | 9,220 | | 236,309 | |
| | | | | 501,169 | |
| | | | | | |
7.71% | ENERGY | | | | | |
| KLX Energy Services Holdings, Inc.(A) | | 24,500 | | 290,325 | |
| Liberty Oilfield Services, Inc. | | 16,910 | | 313,173 | |
| | | | | 603,498 | |
| | | | | | |
22.62% | FINANCIALS | | | | | |
| Community Trust Bancorp, Inc. | | 6,830 | | 233,996 | |
| CVB Financial Corp. | | 21,360 | | 353,935 | |
| EVERTEC, Inc. | | 7,340 | | 272,901 | |
| Glacier Bancorp, Inc. | | 4,940 | | 140,790 | |
| Hancock Whitney Corp. | | 4,640 | | 171,634 | |
| Westamerica Bancorp. | | 6,270 | | 271,178 | |
| The Western Union Co. | | 24,800 | | 326,864 | |
| | | | | 1,771,298 | |
| | | | | | |
4.08% | HEALTH CARE | | | | | |
| NextGen Healthcare, Inc.(A) | | 13,470 | | 319,643 | |
| | | | | | |
See Notes to Financial Statements
17
ANNUAL REPORT
Clifford Capital Focused Small Cap Value Fund
Schedule of Investments - continuedSeptember 30, 2023
| | | Shares |
| Value | |
24.27% | INDUSTRIALS | | | | | |
| Commercial Vehicle Group, Inc.(A) | | 28,830 | | $223,720 | |
| Forward Air Corp. | | 3,820 | | 262,587 | |
| HNI Corp. | | 6,050 | | 209,512 | |
| Pitney Bowes, Inc. | | 111,290 | | 336,096 | |
| Steelcase, Inc. | | 22,220 | | 248,197 | |
| Stericycle, Inc.(A) | | 6,870 | | 307,158 | |
| Thermon Group Holdings, Inc.(A) | | 11,410 | | 313,433 | |
| | | | | 1,900,703 | |
| ||||||
7.65% | INFORMATION TECHNOLOGY | | | | | |
| DXC Technology Co.(A) | | 11,370 | | 236,837 | |
| NCR Corp.(A) | | 13,430 | | 362,207 | |
| | | | | 599,044 | |
| ||||||
2.45% | MATERIALS | | | | | |
| Compass Minerals International, Inc. | | 6,870 | | 192,016 | |
| ||||||
94.23% | TOTAL COMMON STOCK | | | | | |
| (Cost: $6,262,471) | | 7,378,564 | | ||
| ||||||
2.33% | PREFERRED STOCK | | | | | |
| ||||||
2.33% | CONSUMER DISCRETIONARY | | | | | |
| Qurate Retail, Inc., Series V, 8.00% | | 6,360 | | 182,214 | |
| ||||||
2.33% | TOTAL PREFERRED STOCK | | | | | |
| (Cost: $239,328) | | 182,214 | | ||
| ||||||
2.19% | MONEY MARKET FUND | | | | | |
| Federated Institutional Prime Obligations Fund Institutional Class 5.42%(B) | | 250,355 | | 250,430 | |
| (Cost: $250,430) | | | | | |
| | | | | | |
99.75% | TOTAL INVESTMENTS | | | | | |
| (Cost: $6,752,229) | | 7,811,208 | | ||
0.25% | Other assets, net of liabilities | | 19,551 | | ||
100.00% | NET ASSETS | | $7,830,759 | |
(A)Non-income producing
(B)Effective 7 day yield as of September 30, 2023
18
ANNUAL REPORT
Clifford Capital International Value Fund
| | Total Return | | Average |
| | One Year | | Since Inception 5/6/2022 to 9/30/2023 |
Clifford Capital International Value Fund - Institutional | | 24.04% | | 0.51% |
Clifford Capital International Fund - Investor | | 23.77% | | 0.27% |
Clifford Capital International Value Fund - Super Institutional | | 24.20% | | 0.60% |
MSCI EAFE Value Net return Index | | 26.31% | | 5.55% |
Returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of shares. The total cumulative returns are historical in nature and measure net investment income and capital gain or loss from portfolio investments assuming reinvestments of dividends.
The MSCI EAFE Value Net Return Index captures large and mid cap securities exhibiting overall value style characteristics across Developed Markets countries around the world, excluding the US and Canada. The value investment style characteristics for index construction are definded using three variables: book value to price, 12-month forward earnings to price and dividend yield. With 461 constituents, the index targets 50% coverage of the free float-adjusted market capitalization of the MSCI EAFE Index.
19
ANNUAL REPORT
Clifford Capital International Value Fund
Portfolio Compositionas of September 30, 2023 (unaudited)
Holdings by Sector/Asset Class |
| Percentage of |
Common Stocks: | | |
Financials | | 18.78% |
Health Care | | 17.22% |
Communication Services | | 13.73% |
Industrials | | 13.09% |
Consumer Staples | | 8.56% |
Energy | | 8.54% |
Information Technology | | 7.60% |
Utilities | | 5.14% |
Consumer Discretionary | | 4.00% |
Materials | | 2.13% |
| | 98.79% |
See Notes to Financial Statements
20
ANNUAL REPORT
Clifford Capital International Value Fund
Schedule of Investments
September 30, 2023
| | | Shares |
| Value | |
98.79% | COMMON STOCKS | | | | | |
| ||||||
1.88% | CANADA | | | | | |
| Enbridge, Inc. | | 2,560 | | $84,966 | |
| ||||||
3.82% | CHINA | | | | | |
| CITIC Ltd. | | 113,000 | | 103,895 | |
| Ping An Insurance Group Company of China Ltd. | | 12,000 | | 68,727 | |
| | | | | 172,622 | |
| ||||||
2.58% | FINLAND | | | | | |
| Nokia Oyj ADR | | 31,130 | | 116,426 | |
| ||||||
18.51% | FRANCE | | | | | |
| Airbus SE | | 1,000 | | 134,250 | |
| Capgemini SE | | 400 | | 70,117 | |
| Carrefour SA | | 7,400 | | 127,408 | |
| Engie SA | | 8,440 | | 129,654 | |
| Schneider Electric SE | | 470 | | 78,004 | |
| Societe Generale SA | | 7,220 | | 175,910 | |
| Worldline SA(A) | | 4,300 | | 121,156 | |
| | | | | 836,499 | |
| ||||||
10.83% | GERMANY | | | | | |
| BASF SE | | 2,120 | | 96,267 | |
| Bayer AG | | 2,020 | | 97,065 | |
| Continental AG | | 1,600 | | 112,931 | |
| Fresenius Medical Care AG & Co. KGaA ADR | | 5,340 | | 115,024 | |
| Volkswagen AG | | 590 | | 67,954 | |
| | | | | 489,241 | |
| ||||||
1.89% | HONG KONG | | | | | |
| CK Hutchison Holdings Ltd. | | 16,000 | | 85,609 | |
| ||||||
2.27% | ITALY | | | | | |
| Enel SpA | | 16,670 | | 102,574 | |
| | | | | | |
See Notes to Financial Statements
21
ANNUAL REPORT
Clifford Capital International Value Fund
Schedule of Investments - continuedSeptember 30, 2023
| | | Shares |
| Value | |
5.76% | JAPAN | | | | | |
| Astellas Pharma, Inc. | | 7,300 | | $101,313 | |
| Takeda Pharmaceutical Co. Ltd. ADR | | 10,280 | | 159,032 | |
| | | | | 260,345 | |
| | | | | | |
6.42% | NETHERLANDS | | | | | |
| Koninklijke Ahold Delhaize NV | | 3,840 | | 115,787 | |
| Koninklijke Philips NV ADR(A) | | 8,740 | | 174,276 | |
| | | | | 290,063 | |
| | | | | | |
7.78% | SPAIN | | | | | |
| Banco Santander SA ADR | | 52,230 | | 196,385 | |
| Telefonica SA ADR | | 38,160 | | 155,311 | |
| | | | | 351,696 | |
| | | | | | |
2.28% | SWEDEN | | | | | |
| Telefonaktiebolaget LM Ericsson ADR | | 21,190 | | 102,983 | |
| | | | | | |
2.91% | SWITZERLAND | | | | | |
| Roche Holding AG | | 480 | | 131,333 | |
| | | | | | |
1.19% | TAIWAN | | | | | |
| Taiwan Semiconductor Manufacturing Co., Ltd. ADR | | 620 | | 53,878 | |
| | | | | | |
27.74% | UNITED KINGDOM | | | | | |
| Aviva plc | | 18,290 | | 86,987 | |
| BAE Systems plc | | 5,580 | | 67,932 | |
| BT Group plc | | 98,430 | | 140,151 | |
| HSBC Holdings plc ADR | | 5,060 | | 199,668 | |
| Liberty Global plc- Class A(A) | | 8,920 | | 152,710 | |
| Rolls-Royce Holdings plc(A) | | 45,180 | | 121,770 | |
| Shell plc ADR | | 2,620 | | 168,676 | |
| Unilever plc ADR | | 2,910 | | 143,754 | |
| Vodafone Group plc ADR | | 18,160 | | 172,157 | |
| | | | | 1,253,805 | |
| | | | | | |
See Notes to Financial Statements
22
ANNUAL REPORT
Clifford Capital International Value Fund
Schedule of Investments - continuedSeptember 30, 2023
| | | Shares |
| Value | |
2.93% | UNITED STATES | | | | | |
| Schlumberger, Ltd. | | 2,270 | | $132,341 | |
| | | | | | |
98.79% | TOTAL COMMON STOCKS | | | | | |
| (Cost: $4,602,377) | | 4,464,381 | | ||
| | | | | | |
98.79% | TOTAL INVESTMENTS | | | | | |
| (Cost: $4,602,377) | | 4,464,381 | | ||
1.21% | Other assets, net of liablities | | 54,684 | | ||
100.00% | NET ASSETS | | $4,519,065 | |
(A)Non-income producing
ADR - Security represented is held by the custodian bank in the form of American Depositary Receipts.
See Notes to Financial Statements
23
ANNUAL REPORT
CLIFFORD CAPITAL FUNDS
Statements of Assets and LiabilitiesSeptember 30, 2023
| | Clifford Capital Partners Fund |
| Clifford Capital Focused Small Cap Value Fund |
| Clifford Capital International Value Fund | |
ASSETS | | | | | | | |
Investments at value(1) | | $114,798,061 | | $7,811,208 | | $4,464,381 | |
Cash and cash equivalents | | — | | — | | 213,916 | |
Receivable for investments sold | | 832,812 | | — | | — | |
Receivable for capital stock sold | | 3,209 | | 1,387 | | 24 | |
Dividends and interest receivable | | 107,669 | | 4,484 | | 13,321 | |
Due from advisor | | — | | 14,089 | | — | |
Prepaid expenses | | 18,089 |
| 7,174 |
| 452 | |
TOTAL ASSETS | | 115,759,840 |
| 7,838,342 |
| 4,692,094 | |
| | | | | | | |
LIABILITIES | | | | | | | |
Payable for securities purchased | | 694,656 | | — | | 126,688 | |
Payable for capital stock redeemed | | 33,772 | | — | | — | |
Accrued investment advisory fees | | 72,611 | | — | | 38,692 | |
Accrued 12b-1 fees | | 3,307 | | 17 | | 59 | |
Accrued administration, transfer agent and accounting fees | | 14,690 | | 5,357 | | 4,058 | |
Other accrued expenses | | 5,608 |
| 2,209 |
| 3,532 | |
TOTAL LIABILITIES | | 824,644 |
| 7,583 |
| 173,029 | |
NET ASSETS | | $114,935,196 |
| $7,830,759 |
| $4,519,065 | |
| | | | | | | |
NET ASSETS CONSIST OF: | | | | | | | |
Paid-in capital applicable to 6,709,423, 718,016 and 457,226 no par value shares of beneficial interest outstanding, unlimited shares authorized | | 118,592,437 | | 8,233,044 | | 4,650,115 | |
Distributable earnings (accumulated deficits) | | (3,657,241 | ) | (402,285 | ) | (131,050 | ) |
Net Assets | | $114,935,196 |
| $7,830,759 |
| $4,519,065 | |
| | | | | | | |
See Notes to Financial Statements
24
ANNUAL REPORT
CLIFFORD CAPITAL FUNDS
Statements of Assets and Liabilities - continuedSeptember 30, 2023
| | Clifford Capital Partners Fund |
| Clifford Capital Focused Small Cap Value Fund |
| Clifford Capital International Value Fund | |
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE | | | | | | | |
NET ASSETS | | | | | | | |
Investor Class | | $519,570 | | $19,897 | | $17,081 | |
Institutional Class | | 114,403,594 | | 7,808,215 | | 4,147,625 | |
Super Institutional Class | | 12,032 |
| 2,647 |
| 354,359 | |
Total | | $114,935,196 |
| $7,830,759 |
| $4,519,065 | |
SHARES OUTSTANDING | | | | | | | |
Investor Class | | 30,707 | | 1,835 | | 1,732 | |
Institutional Class | | 6,678,018 | | 715,937 | | 419,660 | |
Super Institutional Class | | 698 |
| 244 |
| 35,834 | |
Total | | 6,709,423 |
| 718,016 |
| 457,226 | |
NET ASSET VALUE PER SHARE | | | | | | | |
Investor Class | | $16.92 | | $10.84 | | $9.86 | |
Institutional Class | | $17.13 | | $10.91 | | $9.88 | |
Super Institutional Class | | $17.24 |
| $10.85 |
| $9.89 | |
Redemption Price Per Share(2) | | | | | | | |
Investor Class | | $16.58 |
| $10.62 |
| $9.66 | |
| | | | | | | |
(1)Identified cost of | | $123,315,169 |
| $6,752,229 |
| $4,602,377 | |
(2)Includes Redemption Fee of 2% for investments held for less than 60 days.
See Notes to Financial Statements
25
ANNUAL REPORT
CLIFFORD CAPITAL FUNDS
Statements of OperationsFor the Year Ended September 30, 2023
| | Clifford Capital Partners Fund |
| Clifford Capital Focused Small Cap Value Fund |
| Clifford Capital International Value Fund | |
INVESTMENT INCOME | | | | | | | |
Dividends(1) | | $2,956,852 |
| $284,913 |
| $33,613 | |
Total investment income | | 2,956,852 |
| 284,913 |
| 33,613 | |
| | | | | | | |
EXPENSES | | | | | | | |
Investment advisory fees (Note 2) | | 843,518 | | 99,928 | | 7,171 | |
12b-1 and servicing fees - | | 1,882 | | 45 | | 43 | |
Recordkeeping and administrative services (Note 2) | | 115,184 | | 23,894 | | 9,414 | |
Accounting fees (Note 2) | | 61,514 | | 37,229 | | 41,390 | |
Custody fees | | 13,176 | | 5,408 | | 7,778 | |
Transfer agent fees (Note 2) | | 23,935 | | 21,491 | | 13,079 | |
Audit and tax fees | | 18,055 | | 20,094 | | 19,894 | |
Legal fees | | 24,014 | | 25,622 | | 15,808 | |
Filing and registration fees | | 51,839 | | 15,500 | | 1,499 | |
Trustee fees | | 11,890 | | 7,660 | | 7,209 | |
Compliance fees | | 8,575 | | 8,817 | | 5,410 | |
Shareholder reports | | 21,951 | | 18,672 | | 16,561 | |
Shareholder servicing (Note 2) | | | | | | | |
Investor Class | | 1,906 | | 45 | | — | |
Institutional Class | | 111,606 | | 19,007 | | — | |
Insurance fees | | 3,572 | | 2,906 | | 2,245 | |
Exchange fee | | 2,400 | | 2,400 | | 2,400 | |
Other | | 17,931 |
| 6,950 |
| 7,297 | |
Total expenses | | 1,332,948 | | 315,668 | | 157,198 | |
Fee waivers and reimbursed expenses (Note 2) | | (318,855 | ) | (199,043 | ) | (148,554 | ) |
Net expenses | | 1,014,093 |
| 116,625 |
| 8,644 | |
Net investment income (loss) | | 1,942,759 |
| 168,288 |
| 24,969 | |
| | | | | | | |
See Notes to Financial Statements
26
ANNUAL REPORT
CLIFFORD CAPITAL FUNDS
Statements of Operations - continuedFor the Year Ended September 30, 2023
| | Clifford Capital Partners Fund |
| Clifford Capital Focused Small Cap Value Fund |
| Clifford Capital International Value Fund | |
REALIZED AND UNREALIZED | | | | | | | |
Net realized gain (loss) | | 5,665,352 | | (1,115,244 | ) | 8,517 | |
Net realized gain (loss) on foreign currency transactions | | — |
| — |
| (24,603 | ) |
Total net realized gain (loss) | | 5,665,352 |
| (1,115,244 | ) | (16,086 | ) |
| | | | | | | |
Net increase (decrease) in unrealized appreciation (depreciation) of investments | | (1,786,068 | ) | 3,157,680 |
| (32,344 | ) |
| | | | | | | |
Net realized and unrealized gain (loss) on investments | | 3,879,284 |
| 2,042,436 |
| (48,430 | ) |
| | | | | | | |
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS | | $5,822,043 |
| $2,210,724 |
| $(23,461 | ) |
| | | | | | | |
(1) Net of foreign taxes withheld of | | $710 |
| — |
| $3,796 | |
This page intentionally left blank.
See Notes to Financial Statements
29
ANNUAL REPORT
See Notes to Financial Statements
28
ANNUAL REPORT
CLIFFORD CAPITAL FUNDS
Statements of Changes in Net Assets
CLIFFORD CAPITAL FUNDS
| | Clifford Capital | | Clifford Capital Focused | | Clifford Capital | | ||||||
| | Year Ended September 30, 2023 |
| Year Ended September 30, 2022 |
| Year Ended September 30, 2023 |
| Year Ended September 30, 2022 |
| Year Ended September 30, 2023 |
| May 6, 2022* through September 30, 2022 | |
Increase (Decrease) in Net Assets from | | | | | | | | | | | | | |
OPERATIONS | | | | | | | | | | | | | |
Net investment income (loss) | | $1,942,759 | | $1,030,216 | | $168,288 | | $119,198 | | $24,969 | | $12,313 | |
Net realized gain (loss) on investments and foreign currency transactions | | 5,665,352 | | 158,402 | | (1,115,244 | ) | 490,041 | | (16,086 | ) | (4,045 | ) |
Net increase (decrease) in unrealized appreciation (depreciation) of investments | | (1,786,068 | ) | (14,998,548 | ) | 3,157,680 |
| (3,748,485 | ) | (32,344 | ) | (105,654 | ) |
Increase (decrease) in net assets from operations | | 5,822,043 |
| (13,809,930 | ) | 2,210,724 |
| (3,139,246 | ) | (23,461 | ) | (97,386 | ) |
| | | | | | | | | | | | | |
DISTRIBUTIONS TO SHAREHOLDERS | | | | | | | | | | | | | |
Distributions | | | | | | | | | | | | | |
Investor Class | | (24,928 | ) | (21,906 | ) | (838 | ) | (1,148 | ) | (283 | ) | — | |
Institutional Class | | (2,279,933 | ) | (2,185,958 | ) | (597,303 | ) | (1,342,142 | ) | (4,387 | ) | — | |
Super Institutional Class | | (311 | ) | (799 | ) | (134 | ) | (325 | ) | (5,533 | ) | — | |
Decrease in net assets from distributions | | (2,305,172 | ) | (2,208,663 | ) | (598,275 | ) | (1,343,615 | ) | (10,203 | ) | — | |
| | | | | | | | | | | | | |
CAPITAL STOCK TRANSACTIONS (NOTE 5) | | | | | | | | | | | | | |
Shares sold | | | | | | | | | | | | | |
Investor Class | | 104,275 | | 819,057 | | 3,000 | | 7,700 | | — | | 17,010 | |
Institutional Class | | 40,301,058 | | 65,116,417 | | 1,107,198 | | 4,890,453 | | 4,035,467 | | 242,425 | |
Super Institutional Class | | — | | — | | — | | — | | 50,000 | | 295,010 | |
Distributions reinvested | | | | | | | | | | | | | |
Investor Class | | 24,928 | | 21,906 | | 838 | | 1,148 | | 283 | | — | |
Institutional Class | | 1,879,404 | | 2,016,284 | | 582,018 | | 1,342,142 | | 4,387 | | — | |
Super Institutional Class | | 311 | | 799 | | 134 | | 325 | | 5,533 | | — | |
Shares redeemed | | | | | | | | | | | | | |
Investor Class | | (853,786 | ) | (65,764 | )(1) | — | | — | | — | | — | |
Institutional Class | | (21,763,261 | ) | (10,426,273 | ) | (6,966,276 | ) | (1,936,934 | ) | — | | — | |
Super Institutional Class | | — |
| (5,000 | ) | — |
| — |
| — |
| — | |
Change in net assets from capital stock transactions | | 19,692,929 |
| 57,477,426 |
| (5,273,088 | ) | 4,304,834 |
| 4,095,670 |
| 554,445 | |
| | | | | | | | | | | | | |
See Notes to Financial Statements
31
ANNUAL REPORT
See Notes to Financial Statements
30
ANNUAL REPORT
CLIFFORD CAPITAL FUNDS
Statements of Changes in Net Assets - continued
| | Clifford Capital | | Clifford Capital Focused | | Clifford Capital | | ||||||
| | Year Ended September 30, 2023 |
| Year Ended September 30, 2022 |
| Year Ended September 30, 2023 |
| Year Ended September 30, 2022 |
| Year Ended September 30, 2023 |
| May 6, 2022* through September 30, 2022 | |
NET ASSETS | | | | | | | | | | | | | |
Increase (decrease) during period | | 23,209,800 | | 41,458,833 | | (3,660,639 | ) | (178,027 | ) | 4,062,006 | | 457,059 | |
Beginning of period | | 91,725,396 |
| 50,266,563 |
| 11,491,398 |
| 11,669,425 |
| 457,059 |
| — | |
End of period | | $114,935,196 |
| $91,725,396 |
| $7,830,759 |
| $11,491,398 |
| $4,519,065 |
| $457,059 | |
| | | | | | | | | | | | | |
(1)Includes redemption fees of: | | $— |
| $467 |
| $— |
| $— |
| $— |
| $— | |
*Commencement of operations.
CLIFFORD CAPITAL FUNDS
See Notes to Financial Statements
33
ANNUAL REPORT
CLIFFORD CAPITAL PARTNERS FUND
Selected Per Share Data Throughout Each Year
See Notes to Financial Statements
32
ANNUAL REPORT
CLIFFORD CAPITAL PARTNERS FUND
Financial Highlights
| | Investor Class | | ||||||||
| | Years ended September 30, | | ||||||||
| | 2023 |
| 2022 |
| 2021 |
| 2020(2) |
| 2019 | |
Net asset value, beginning of year | | $16.16 |
| $19.47 |
| $13.97 |
| $14.61 |
| $15.77 | |
| | | | | | | | | | | |
Investment activities | | | | | | | | | | | |
Net investment income (loss)(1) | | 0.29 | | 0.21 | | 0.25 | | 0.27 | | 0.20 | |
Net realized and unrealized gain (loss) on investments | | 0.83 |
| (2.70 | ) | 5.60 |
| (0.67 | ) | (0.64 | ) |
Total from investment activities | | 1.12 |
| (2.49 | ) | 5.85 |
| (0.40 | ) | (0.44 | ) |
Distributions | | | | | | | | | | | |
Net investment income | | (0.19 | ) | (0.28 | ) | (0.35 | ) | (0.24 | ) | (0.11 | ) |
Net realized gain | | (0.17 | ) | (0.54 | ) | — |
| — |
| (0.61 | ) |
Total distributions | | (0.36 | ) | (0.82 | ) | (0.35 | ) | (0.24 | ) | (0.72 | ) |
| | | | | | | | | | | |
Paid-in capital from redemption fees | | — |
| — | (3) | — |
| — |
| — | |
| | | | | | | | | | | |
Net asset value, end of year | | $16.92 |
| $16.16 |
| $19.47 |
| $13.97 |
| $14.61 | |
| | | | | | | | | | | |
Total Return | | 6.78 | % | (13.44 | %) | 42.29 | % | (2.86 | %) | (2.07 | %) |
Ratios/Supplemental Data | | | | | | | | | | | |
Ratios to average net assets | | | | | | | | | | | |
Expenses, gross | | 1.59 | % | 1.50 | % | 1.61 | % | 1.57 | % | 1.10 | % |
Expenses, net of fee waivers and reimbursements | | 1.15 | % | 1.15 | % | 1.15 | % | 1.13 | % | 1.10 | % |
Net investment income (loss) | | 1.61 | % | 1.12 | % | 1.32 | % | 1.93 | % | 1.39 | % |
Portfolio turnover rate | | 27.59 | % | 10.55 | % | 26.01 | % | 59.61 | % | 22.99 | % |
Net assets, end of period (000’s) | | $520 | | $1,123 | | $549 | | $397 | | $785 | |
(1)Per share amounts calculated using the average number of shares outstanding throughout the year.
(2)Prior to February 1, 2020 the Advisor paid all operating expenses except for management fees and 12b-1 expenses.
(3)Less than 0.005 per share.
See Notes to Financial Statements
35
ANNUAL REPORT
CLIFFORD CAPITAL PARTNERS FUND
Selected Per Share Data Throughout Each Year
See Notes to Financial Statements
34
ANNUAL REPORT
CLIFFORD CAPITAL PARTNERS FUND
Financial Highlights
| | Institutional Class | | ||||||||
| | Years ended September 30, | | ||||||||
| | 2023 |
| 2022 |
| 2021 |
| 2020(2) |
| 2019 | |
Net asset value, beginning of year | $16.31 |
| $19.61 |
| $14.03 |
| $14.65 |
| $15.83 | ||
| |||||||||||
Investment activities | |||||||||||
Net investment income (loss)(1) | | 0.31 | | 0.27 | | 0.29 | | 0.31 | | 0.23 | |
Net realized and unrealized gain (loss) on investments | | 0.88 |
| (2.74 | ) | 5.63 |
| (0.68 | ) | (0.65 | ) |
Total from investment activities | | 1.19 |
| (2.47 | ) | 5.92 |
| (0.37 | ) | (0.42 | ) |
Distributions | | | | | | | | | | | |
Net investment income | | (0.20 | ) | (0.29 | ) | (0.34 | ) | (0.25 | ) | (0.15 | ) |
Net realized gain | | (0.17 | ) | (0.54 | ) | — |
| — |
| (0.61 | ) |
Total distributions | | (0.37 | ) | (0.83 | ) | (0.34 | ) | (0.25 | ) | (0.76 | ) |
| | | | | | | | | | | |
Net asset value, end of year | | $17.13 |
| $16.31 |
| $19.61 |
| $14.03 |
| $14.65 | |
| | | | | | | | | | | |
Total Return | | 7.17 | % | (13.23 | %) | 42.63 | % | (2.68 | %) | (1.87 | %) |
Ratios/Supplemental Data | | | | | | | | | | | |
Ratios to average net assets | | | | | | | | | | | |
Expenses, gross | | 1.18 | % | 1.29 | % | 1.42 | % | 1.45 | % | 0.90 | % |
Expenses, net of fee waivers and reimbursements | | 0.90 | % | 0.90 | % | 0.90 | % | 0.90 | % | 0.90 | % |
Net investment income (loss) | | 1.73 | % | 1.46 | % | 1.51 | % | 2.28 | % | 1.60 | % |
Portfolio turnover rate | | 27.59 | % | 10.55 | % | 26.01 | % | 59.61 | % | 22.99 | % |
Net assets, end of year (000’s) | | $114,404 | | $90,591 | | $49,699 | | $24,549 | | $23,553 | |
(1)Per share amounts calculated using the average number of shares outstanding throughout the year.
(2)Prior to February 1, 2020 the Advisor paid all operating expenses except for management fees and 12b-1 expenses.
See Notes to Financial Statements
36
ANNUAL REPORT
CLIFFORD CAPITAL PARTNERS FUND
Financial HighlightsSelected Per Share Data Throughout Each Period
| | Super Institutional Class | | ||||||
| | Years ended September 30, | | Period | | ||||
| | 2023 |
| 2022 |
| 2021 |
| | |
Net asset value, | | $16.47 |
| $19.84 |
| $14.21 |
| $14.67 | |
| | | | | | | | | |
Investment activities | | | | | | | | | |
Net investment income (loss)(1) | | 0.33 | | 0.31 | | 0.31 | | 0.30 | |
Net realized and unrealized gain (loss) on investments | | 0.90 |
| (2.80 | ) | 5.70 |
| (0.70 | ) |
Total from investment activities | | 1.23 |
| (2.49 | ) | 6.01 |
| (0.40 | ) |
Distributions | | | | | | | | | |
Net investment income | | (0.29 | ) | (0.34 | ) | (0.38 | ) | (0.06 | ) |
Net realized gain | | (0.17 | ) | (0.54 | ) | — |
| — | |
Total distributions | | (0.46 | ) | (0.88 | ) | (0.38 | ) | (0.06 | ) |
| | | | | | | | | |
Net asset value, end of period | | $17.24 |
| $16.47 |
| $19.84 |
| $14.21 | |
| | | | | | | | | |
Total Return(3) | | 7.29 | % | (13.23 | %) | 42.74 | % | (2.74 | %) |
Ratios/Supplemental Data | | | | | | | | | |
Ratios to average net assets(4) | | | | | | | | | |
Expenses, gross | | 1.08 | % | 1.21 | % | 1.35 | % | 1.43 | % |
Expenses, net of fee waivers and reimbursements | | 0.82 | % | 0.82 | % | 0.82 | % | 0.85 | % |
Net investment income (loss) | | 1.84 | % | 1.64 | % | 1.65 | % | 2.29 | % |
Portfolio turnover rate(3) | | 27.59 | % | 10.55 | % | 26.01 | % | 59.61 | % |
Net assets, end of period (000’s) | | $12 | | $11 | | $18 | | $13 | |
(1)Per share amounts calculated using the average number of shares outstanding throughout the period.
(2)Commencement of operations.
(3)Total return and portfolio turnover rate are for the period indicated and have not been annualized for periods less than one year.
(4)Ratios to average net assets have been annualized for periods less than one year.
See Notes to Financial Statements
37
ANNUAL REPORT
CLIFFORD CAPITAL FOCUSED SMALL CAP VALUE FUND
Financial HighlightsSelected Per Share Data Throughout Each Period
| | Investor Class | | ||||||
| | Years ended September 30, | | Period | | ||||
| | 2023 |
| 2022 |
| 2021 |
| ||
Net asset value, | | $9.56 |
| $13.64 |
| $9.02 |
| $9.96 | |
| | | | | | | | | |
Investment activities | | | | | | | | | |
Net investment income (loss)(1) | | 0.14 | | 0.08 | | 0.05 | | 0.12 | |
Net realized and unrealized gain (loss) on investments | | 1.68 |
| (2.63 | ) | 4.76 |
| (1.06 | ) |
Total from investment activities | | 1.82 |
| (2.55 | ) | 4.81 |
| (0.94 | ) |
Distributions | | | | | | | | | |
Net investment income | | — | | (0.09 | ) | (0.19 | ) | — | |
Net realized gain | | (0.54 | ) | (1.44 | ) | — |
| — | |
Total distributions | | (0.54 | ) | (1.53 | ) | (0.19 | ) | — | |
| | | | | | | | | |
Net asset value, end of period | | $10.84 |
| $9.56 |
| $13.64 |
| $9.02 | |
| | | | | | | | | |
Total Return(3) | | 19.30 | % | (21.26 | %) | 53.71 | % | (9.44 | %) |
Ratios/Supplemental Data | | | | | | | | | |
Ratios to average net assets(4) | | | | | | | | | |
Expenses, gross | | 3.18 | % | 3.01 | % | 3.30 | % | 5.43 | % |
Expenses, net of fee waivers and reimbursements | | 1.30 | % | 1.30 | % | 1.30 | % | 1.30 | % |
Net investment income (loss) | | 1.30 | % | 0.63 | % | 0.38 | % | 2.15 | % |
Portfolio turnover rate(3) | | 34.00 | % | 43.27 | % | 40.68 | % | 102.07 | % |
Net assets, end of period (000’s) | | $20 | | $14 | | $10 | | $2 | |
(1)Per share amounts calculated using the average number of shares outstanding throughout the period.
(2)Commencement of operations
(3)Total return and portfolio turnover rate are for the period indicated and have not been annualized for periods less than one year.
(4)Ratios to average net assets have been annualized for periods less than one year.
See Notes to Financial Statements
38
ANNUAL REPORT
CLIFFORD CAPITAL FOCUSED SMALL CAP VALUE FUND
Financial HighlightsSelected Per Share Data Throughout Each Period
| | Institutional Class | | ||||||
| | Years ended September 30, | | Period | | ||||
| 2023 |
| 2022 |
| 2021 |
| | ||
Net asset value, | | $9.62 |
| $13.72 |
| $9.04 |
| $10.00 | |
| | | | | | | | | |
Investment activities | | | | | | | | | |
Net investment income (loss)(1) | | 0.16 | | 0.11 | | 0.11 | | 0.19 | |
Net realized and unrealized gain (loss) on investments | | 1.71 |
| (2.65 | ) | 4.74 |
| (1.14 | ) |
Total from investment activities | | 1.87 |
| (2.54 | ) | 4.85 |
| (0.95 | ) |
Distributions | | | | | | | | | |
Net investment income | | (0.04 | ) | (0.12 | ) | (0.17 | ) | (0.01 | ) |
Net realized gains | | (0.54 | ) | (1.44 | ) | — |
| — | (2) |
Total distributions | | (0.58 | ) | (1.56 | ) | (0.17 | ) | (0.01 | ) |
| | | | | | | | | |
Net asset value, end of period | | $10.91 |
| $9.62 |
| $13.72 |
| $9.04 | |
| | | | | | | | | |
Total Return(4) | | 19.73 | % | (21.06 | %) | 54.02 | % | (9.53 | %) |
Ratios/Supplemental Data | | | | | | | | | |
Ratios to average net assets(5) | | | | | | | | | |
Expenses, gross | | 2.84 | % | 2.65 | % | 3.01 | % | 6.47 | % |
Expenses, net of fee waivers and reimbursements | | 1.05 | % | 1.05 | % | 1.05 | % | 1.05 | % |
Net investment income (loss) | | 1.52 | % | 0.92 | % | 0.84 | % | 2.32 | % |
Portfolio turnover rate(4) | | 34.00 | % | 43.27 | % | 40.68 | % | 102.07 | % |
Net assets, end of period (000’s) | | $7,808 | | $11,475 | | $11,657 | | $4,532 | |
(1)Per share amounts calculated using the average number of shares outstanding throughout the period.
(2)Less than $0.005.
(3)Commencement of operations.
(4)Total return and portfolio turnover rate are for the period indicated and have not been annualized for periods less than one year.
(5)Ratios to average net assets have been annualized for periods less than one year.
See Notes to Financial Statements
39
ANNUAL REPORT
CLIFFORD CAPITAL FOCUSED SMALL CAP VALUE FUND
Financial HighlightsSelected Per Share Data Throughout Each Period
| | Super Institutional Class | | ||||||
| | Years ended September 30, | | Period | | ||||
| 2023 |
| 2022 |
| 2021 |
| |||
Net asset value, | | $9.57 |
| $13.67 |
| $9.04 |
| $9.96 | |
| | | | | | | | | |
Investment activities | | | | | | | | | |
Net investment income (loss)(1) | | 0.17 | | 0.13 | | 0.13 | | 0.14 | |
Net realized and unrealized gain (loss) on investments | | 1.69 |
| (2.64 | ) | 4.72 |
| (1.06 | ) |
Total from investment activities | | 1.86 |
| (2.51 | ) | 4.85 |
| (0.92 | ) |
Distributions | | | | | | | | | |
Net investment income | | (0.04 | ) | (0.15 | ) | (0.22 | ) | — | |
Net realized gain | | (0.54 | ) | (1.44 | ) | — |
| — | |
Total distributions | | (0.58 | ) | (1.59 | ) | (0.22 | ) | — | |
| | | | | | | | | |
Net asset value, end of period | | $10.85 |
| $9.57 |
| $13.67 |
| $9.04 | |
| | | | | | | | | |
Total Return(3) | | 19.72 | % | (20.98 | %) | 54.10 | % | (9.24 | %) |
Ratios/Supplemental Data | | | | | | | | | |
Ratios to average net assets(4) | | | | | | | | | |
Expenses, gross | | 2.61 | % | 2.40 | % | 2.93 | % | 5.19 | % |
Expenses, net of fee waivers and reimbursements | | 0.97 | % | 0.97 | % | 0.97 | % | 0.97 | % |
Net investment income (loss) | | 1.62 | % | 1.04 | % | 0.95 | % | 2.48 | % |
Portfolio turnover rate(3) | | 34.00 | % | 43.27 | % | 40.68 | % | 102.07 | % |
Net assets, end of period (000’s) | | $3 | | $2 | | $3 | | $2 | |
(1)Per share amounts calculated using the average number of shares outstanding throughout the period.
(2)Commencement of operations.
(3)Total return and portfolio turnover rate are for the period indicated and have not been annualized for periods less than one year.
(4)Ratios to average net assets have been annualized for periods less than one year.
See Notes to Financial Statements
40
ANNUAL REPORT
CLIFFORD CAPITAL INTERNATIONAL VALUE FUND
Financial HighlightsSelected Per Share Data Throughout Each Period
| | Investor Class | | ||
| | Year ended September 30, 2023 |
| Period | |
Net asset value, beginning of period | | $8.11 |
| $10.00 | |
| | | | | |
Investment activities | | | | | |
Net investment income (loss)(1) | | 0.25 | | 0.21 | |
Net realized and unrealized gain (loss) on investments | | 1.67 |
| (2.10 | ) |
Total from investment activities | | 1.92 |
| (1.89 | ) |
Distributions | | | | | |
Net investment income | | (0.17 | ) | — | |
Total distributions | | (0.17 | ) | — | |
| | | | | |
Net asset value, end of period | | $9.86 |
| $8.11 | |
| | | | | |
Total Return(3) | | 23.77 | % | (18.90 | %) |
Ratios/Supplemental Data | | | | | |
Ratios to average net assets(4) | | | | | |
Expenses, gross | | 27.49 | % | 28.97 | % |
Expenses, net of fee waivers and reimbursements | | 1.30 | % | 1.30 | % |
Net investment income (loss) | | 2.50 | % | 5.62 | % |
Portfolio turnover rate(3) | | 10.56 | % | 11.14 | % |
Net assets, end of period (000’s) | | $17 | | $14 | |
(1)Per share amounts calculated using the average number of shares outstanding throughout the period.
(2)Commencement of operations.
(3)Total return and portfolio turnover rate are for the period indicated and have not been annualized.
(4)Ratios to average net assets have been annualized.
See Notes to Financial Statements
41
ANNUAL REPORT
CLIFFORD CAPITAL INTERNATIONAL VALUE FUND
Financial HighlightsSelected Per Share Data Throughout Each Period
| | Institutional Class | | ||
| | Year ended September 30, 2023 |
| Period | |
Net asset value, beginning of period | | $8.12 |
| $10.00 | |
| | | | | |
Investment activities | | | | | |
Net investment income (loss)(1) | | 0.30 | | 0.22 | |
Net realized and unrealized gain (loss) on investments | | 1.64 |
| (2.10 | ) |
Total from investment activities | | 1.94 |
| (1.88 | ) |
Distributions | | | | | |
Net investment income | | (0.18 | ) | — | |
Total distributions | | (0.18 | ) | — | |
| | | | | |
Net asset value, end of period | | $9.88 |
| $8.12 | |
| | | | | |
Total Return(3) | | 24.04 | % | (18.80 | %) |
Ratios/Supplemental Data | | | | | |
Ratios to average net assets(4) | | | | | |
Expenses, gross | | 13.20 | % | 28.72 | % |
Expenses, net of fee waivers and reimbursements | | 1.05 | % | 1.05 | % |
Net investment income (loss) | | 3.06 | % | 5.87 | % |
Portfolio turnover rate(3) | | 10.56 | % | 11.14 | % |
Net assets, end of period (000’s) | | $4,148 | | $197 | |
(1) Per share amounts calculated using the average number of shares outstanding throughout the period.
(2) Commencement of operations.
(3) Total return and portfolio turnover rate are for the period indicated and have not been annualized.
(4) Ratios to average net assets have been annualized.
See Notes to Financial Statements
42
ANNUAL REPORT
CLIFFORD CAPITAL INTERNATIONAL VALUE FUND
Financial HighlightsSelected Per Share Data Throughout Each Period
| | Super Institutional Class | | ||
| | Year ended September 30, 2023 |
| Period | |
Net asset value, beginning of period | | $8.12 |
| $10.00 | |
| | | | | |
Investment activities | | | | | |
Net investment income (loss)(1) | | 0.28 | | 0.23 | |
Net realized and unrealized gain (loss) on investments | | 1.67 |
| (2.11 | ) |
Total from investment activities | | 1.95 |
| (1.88 | ) |
Distributions | | | | | |
Net investment income | | (0.18 | ) | — | |
Total distributions | | (0.18 | ) | — | |
| | | | | |
Net asset value, end of period | | $9.89 |
| $8.12 | |
| | | | | |
Total Return(3) | | 24.20 | % | (18.80 | %) |
Ratios/Supplemental Data | | | | | |
Ratios to average net assets(4) | | | | | |
Expenses, gross | | 26.69 | % | 28.33 | % |
Expenses, net of fee waivers and reimbursements | | 0.97 | % | 0.97 | % |
Net investment income (loss) | | 2.83 | % | 5.97 | % |
Portfolio turnover rate(3) | | 10.56 | % | 11.14 | % |
Net assets, end of period (000’s) | | $354 | | $246 | |
(1)Per share amounts calculated using the average number of shares outstanding throughout the period.
(2)Commencement of operations.
(3)Total return and portfolio turnover rate are for the period indicated and have not been annualized.
(4)Ratios to average net assets have been annualized.
43
ANNUAL REPORT
CLIFFORD CAPITAL FUNDS
Notes to Financial StatementsSeptember 30, 2023
NOTE 1 – ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The Clifford Capital Partners Fund, the Clifford Capital Focused Small Cap Value Fund and the Clifford Capital International Value Fund (each a “Fund” and collectively, the “Funds”) are diversified series of the World Funds Trust (the “Trust”). The Trust was organized as a Delaware statutory trust and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management company. The Clifford Capital Partners Fund (the “Partners Fund”) was established in January 2014 as a series of another registered investment company (the “predecessor trust”). On February 8, 2016, the Partners Fund was reorganized from a series of the predecessor trust into the Trust. On February 18, 2016, the Board of Trustees (the “Board”) of the Trust approved that the fiscal year end of the Partners Fund be changed to September 30. The Clifford Capital Focused Small Cap Value Fund (the “Focused SCV Fund”) commenced operations on October 1, 2019. The Clifford Capital International Value Fund (“International Value Fund”) commenced operations on May 6, 2022.
The investment objective of each of the Funds is to provide long-term capital appreciation.
The following is a summary of significant accounting policies consistently followed by the Funds. The policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The Funds follow the investment company accounting and reporting guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standard Codification Topic 946 “Financial Services – Investment Companies”.
Security Valuation
The Funds’ securities are valued at current market prices. Investments in securities traded on national securities exchanges are valued at the last reported sale price. For securities traded on NASDAQ, the NASDAQ Official Closing Price will be used. Other securities traded in the over-the-counter market and listed securities for which no sales are reported on a given date are valued at the last reported bid price. Debt securities are valued by appraising them at prices supplied by a pricing agent approved by the Board, which prices may reflect broker-dealer supplied valuations and electronic data processing techniques. Short-term debt securities (less than 60 days to maturity) are valued at their fair value using amortized cost. Investments in investment companies and money market funds are valued at net asset value per share. Other assets for which market prices are not readily available are valued at their fair value as
44
ANNUAL REPORT
CLIFFORD CAPITAL FUNDS
Notes to Financial Statements - continuedSeptember 30, 2023
determined in good faith under procedures set by the Board. Although the Board is ultimately responsible for fair value determinations under Rule 2a-5 of the 1940 Act, the Board has delegated day-to-day responsibility for oversight of the valuation of the Funds’ assets to Clifford Capital Partners, LLC (the “Advisor”) as the Valuation Designee pursuant to the Funds’ policies and procedures. Generally, trading in corporate bonds, U.S. government securities and money market instruments is substantially completed each day at various times before the scheduled close of the New York Stock Exchange (“NYSE”). The value of these securities used in computing the net asset value (“NAV”) is determined as of such times.
The Trust has a policy that contemplates the use of fair value pricing to determine the NAV per share of the Funds when market prices are unavailable as well as under special circumstances, such as: (i) if the primary market for a portfolio security suspends or limits trading or price movements of the security; and (ii) when an event occurs after the close of the exchange on which a portfolio security is principally traded that is likely to have changed the value of the security.
When the Trust uses fair value pricing to determine the NAV per share of the Funds, securities will not be priced on the basis of quotations from the primary market in which they are traded, but rather may be priced by another method that the Valuation Designee believes accurately reflects fair value. Any method used will be approved by the Board and results will be monitored to evaluate accuracy. The Funds’ policy is intended to result in a calculation of the Funds’ NAV that fairly reflects security values as of the time of pricing.
Various inputs are used in determining the value of the Funds’ investments. GAAP established a three-tier hierarchy of inputs to establish a classification of fair value measurements for disclosure purposes. Level 1 includes quoted prices in active markets for identical securities. Level 2 includes other significant observable market-based inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.). Level 3 includes significant unobservable inputs (including the Funds’ own assumptions in determining fair value of investments).
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
45
ANNUAL REPORT
CLIFFORD CAPITAL FUNDS
Notes to Financial Statements - continuedSeptember 30, 2023
The following is a summary of the level of inputs used to value the Funds’ investments as of September 30, 2023:
| | Level 1 |
| Level 2 |
| Level 3 |
| Total | |
Partners Fund | | | | | | | | | |
Common Stock | | $112,442,757 | | $— | | $— | | $112,442,757 | |
Money Market Fund | | 2,355,304 |
| — |
| — |
| 2,355,304 | |
| $114,798,061 |
| $— |
| $— |
| $114,798,061 | | |
| | | | | | | | | |
Focused SCV Fund | | | | | | | | | |
Common Stock | | $7,378,564 | | $— | | $— | | $7,378,564 | |
Preferred Stock | | 182,214 | | — | | — | | 182,214 | |
Money Market Fund | | 250,430 |
| — |
| — |
| 250,430 | |
| $7,811,208 |
| $— |
| $— |
| $7,811,208 | | |
| | | | | | | | | |
International Value Fund | | | | | | | | | |
Common Stocks | | $4,464,381 |
| $— |
| $— |
| $4,464,381 | |
| | $4,464,381 |
| $— |
| $— |
| $4,464,381 | |
Refer to the Funds’ Schedule of Investments for a listing of the securities by security type and sector.
The Funds held no Level 3 securities at any time during the year ended September 30, 2023.
Security Transactions and Income
Security 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. The cost of securities sold is determined generally on a specific identification basis. Withholding taxes on foreign dividends have been provided for in accordance with the Funds’ understanding of the applicable country’s tax rules and rates.
Cash and cash equivalents consist of overnight deposits with the custodian bank which earn interest at the current market rate.
46
ANNUAL REPORT
CLIFFORD CAPITAL FUNDS
Notes to Financial Statements - continuedSeptember 30, 2023
Foreign Currency Translation
The books and records of the Funds are maintained in U.S. dollars. Investment valuations and other assets and liabilities initially expressed in foreign currencies are converted each business day into U.S. dollars based upon current exchange rates. Prevailing foreign exchange rates may generally be obtained at the close of the NYSE (normally, 4:00 p.m. Eastern Time). The portion of realized and unrealized gains or losses on investments due to fluctuations in foreign currency exchange rates is not separately disclosed and is included in realized and unrealized gains or losses on investments, when applicable.
Foreign Securities
The Funds may directly purchase securities of foreign issuers. Investing in securities of foreign issuers involves special risks not typically associated with investing in securities of U.S. issuers. The risks include possible revaluation of currencies, the ability to repatriate funds, less complete financial information about companies and possible future adverse political and economic developments. Moreover, securities of many foreign issuers and their markets may be less liquid and their prices more volatile than those of securities of comparable U.S. issuers.
Certain foreign countries impose a capital gains tax which is accrued by the Funds based on the unrealized appreciation, if any, on affected securities. Any accrual would reduce a Fund’s net asset value (“NAV”). The tax is paid when the gain is realized and is included in capital gains tax in the Statements of Operations. During the year ended September 30, 2023, no foreign capital gains tax was accrued or paid by the Funds.
Accounting Estimates
In preparing financial statements in conformity with GAAP, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosures of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.
Federal Income Taxes
The Funds have complied and intend to continue to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income to its shareholders. The Funds also intend to distribute sufficient net investment income and net capital gains, if any,
47
ANNUAL REPORT
CLIFFORD CAPITAL FUNDS
Notes to Financial Statements - continuedSeptember 30, 2023
so that it will not be subject to excise tax on undistributed income and gains. Therefore, no federal income tax or excise provision is required. The Funds identify their major tax jurisdiction as U. S. Federal.
Management has concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions taken in the Funds’ tax returns. The Funds have no examinations in progress and management is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. Interest and penalties, if any, associated with any federal or state income tax obligations are recorded as income tax expense as incurred. The Funds are not subject to examination by U.S. tax authorities for tax years prior to the period ended September 30, 2020.
Reclassification of Capital Accounts
Certain components of net assets are reclassified relating to permanent differences between financial and tax reporting. These reclassifications are caused primarily by differences in the timing of the recognition of certain components of income, expenses or realized capital gains for federal income tax purposes and have no effect on net assets or net asset value per share. For the year ended September 30, 2023, such reclassifications were due to the utilization of earnings and profits distributed to shareholders on redemption of fund shares.
Partners Fund | | | |
Paid-in capital | | $236,000 | |
Distributable earnings | | (236,000 | ) |
Class Net Asset Values and Expenses
All income, expenses not attributable to a particular class, and realized and unrealized gains, are allocated to each class based on relative net assets on a daily basis for purposes of determining the net asset value of each class. Each class bears different distribution expenses. Ratios are calculated by adjusting the expense and net investment income ratios for the Funds for the entire period for the effect of expenses applicable for each class. Expenses incurred by the Trust that do not relate to a specific fund of the Trust are allocated to the individual funds based on each fund’s relative net assets or another appropriate basis as determined by the Board.
The Funds currently offer three classes of shares: Investor Class, Institutional Class and Super Institutional Class. Each class of shares has equal rights as to assets of the Funds, and the classes are identical except for differences in their
48
ANNUAL REPORT
CLIFFORD CAPITAL FUNDS
Notes to Financial Statements - continuedSeptember 30, 2023
sales charge structures, ongoing distribution and service fees, and shareholder servicing fees. Income, expenses (other than distribution and service fees and shareholder servicing fees), and realized and unrealized gains or losses on investments are allocated to each class of shares based upon its relative net assets. All classes have equal voting privileges, except where otherwise required by law or when the Trustees determine that the matter to be voted on affects only the interests of the shareholders of a particular class. Investor Class shares include a redemption fee of 2% on the proceeds of Investor Class shares redeemed after being held for 60 days or less. Institutional and Super Institutional Class shares are not subject to a redemption fee.
NOTE 2 – INVESTMENT ADVISORY AND DISTRIBUTION AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES
Pursuant to an Investment Advisory Agreement, the Advisor provides investment services advisory services to the Funds for an investment management fee equal to 0.75%, 0.90% and 0.85% of the daily net assets of the Partners Fund, the Focused SCV Fund and the International Value Fund, respectively.
The Advisor earned and waived advisory fees and reimbursed Fund expenses for the year ended September 30, 2023 as follows:
Fund |
| Fee |
| Investment |
| Investment |
| Expenses | |
Partners Fund | | 0.75% | | $843,518 | | $318,855 | | $— | |
Focused SCV Fund | | 0.90% | | 99,928 | | 99,928 | | 99,115 | |
International Value Fund | | 0.85% | | 7,171 | | 7,171 | | 141,383 | |
The Advisor entered into an Expense Limitation Agreement, whereby the Advisor has contractually agreed to waive or reduce its fees and to assume other expenses of the Funds’, if necessary, in amounts that limit “Total Annual Fund Operating Expenses” (exclusive of interest, taxes, brokerage commissions, acquired fund fees and expenses, other expenditures which are capitalized in accordance with GAAP, other extraordinary expenses not incurred in the ordinary course of the Funds’ business, dividend expense on short sales and expenses incurred under a plan of distribution adopted pursuant to Rule 12b-1 under the 1940 Act, each as applicable) to not more than 0.90% for the Partners Fund’s Investor and Institutional Class, 0.82% for the Partners Fund’s Super Institutional Class, 1.05% for the Focused SCV Fund’s Investor and Institutional Class and 0.97% for the Focused SCV Fund’s Super Institutional Class, 1.05% for the International Value Fund’s Investor and Institutional Class and 0.97% for the International Value Fund’s Super Institutional Class. The expense limitation
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agreement may be terminated prior to January 31, 2025 by the Advisor or the Board only by mutual written consent. Each waiver and/or reimbursement of an expense by the Advisor is subject to repayment by the applicable Fund within three years following the date such waiver and/or reimbursement was made, provided that the Fund is able to make the repayment without exceeding the expense limitation in place at the time of the waiver or reimbursement and at the time the waiver or reimbursement is recouped.
The total amount of recoverable fee waivers and expense reimbursements for the Funds as of September 30, 2023, and expiration dates are as follows:
| | Recoverable Fee Waivers and Expense | | ||||||
Fund |
| 2024 |
| 2025 |
| 2026 |
| Total | |
Partners Fund | | $207,680 | | $274,989 | | $318,855 | | $801,524 | |
Focused SCV Fund | | 187,472 | | 208,197 | | 199,043 | | 594,712 | |
International Value Fund | | — | | 57,224 | | 148,554 | | 205,778 | |
The Funds have adopted a Distribution and Shareholder Services Plan Pursuant to Rule 12b-1 (the “Plan”) for the Investor Class shares. Pursuant to the Plan, the Funds may compensate financial intermediaries that provide services for shareholders of the Funds. The Plan provides that the Funds will pay an annual rate of up to 0.25% of the average daily net assets of the Funds’ Investor Class shares for activities relating to these services. Such activities may include the provision of sub-accounting, recordkeeping and/ or administrative services, responding to customer inquiries, and providing information on customer investments. Because the shareholder services fees are paid out of the Funds’ assets on an on-going basis, these fees, over time, will increase the cost of your investment and may cost you more than paying other types of sales charges. The Plan, while primarily intended to compensate for shareholder services expenses, was adopted pursuant to Rule 12b-1 under the 1940 Act, and it therefore may be used to pay for certain expenditures related to financing distribution related activities of the Funds.
The Funds have adopted a shareholder services plan for its Investor Class and Institutional Class shares. Under a shareholder services plan, the Funds may pay an authorized firm up to 0.25% on an annualized basis of average daily net assets attributable to its customers who are shareholders. For this fee, the authorized firms may provide a variety of services, including but not limited to: (i) arranging for bank wires; (ii) responding to inquiries from shareholders concerning their investment in the Fund; (iii) assisting shareholders in changing dividend options, account designations and addresses; (iv) providing information periodically to shareholders showing their position in Fund shares; (v) forwarding shareholder
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Notes to Financial Statements - continuedSeptember 30, 2023
communications from the Funds such as proxies, shareholder reports, annual reports, and dividend distribution and tax notices; (vi) processing purchase, exchange and redemption requests from shareholders and placing orders with the Funds or its service providers; (vii) providing sub-accounting with respect to Fund shares; and (viii) processing dividend payments from the Funds on behalf of shareholders.
For the year ended September 30, 2023, the following fees were incurred:
Fund |
| Class |
| Type of Expense |
| Fees Incurred | |
Partners Fund | | Investor Class | | 12b-1 | | $1,882 | |
Partners Fund | | Investor Class | | Shareholder servicing | | 1,906 | |
Partners Fund | | Institutional Class | | Shareholder servicing | | 111,606 | |
Focused SCV Fund | | Investor Class | | 12b-1 | | 45 | |
Focused SCV Fund | | Investor Class | | Shareholder servicing | | 45 | |
Focused SCV Fund | | Institutional Class | | Shareholder servicing | | 19,007 | |
International Value Fund | | Investor Class | | 12b-1 | | 43 | |
Commonwealth Fund Services, Inc. (“CFS”) acts as the Funds’ administrator, transfer and dividend disbursing agent and fund accountant. As administrator, CFS provides shareholder, recordkeeping, administrative and blue-sky filing services. Fees to CFS are computed daily and paid monthly. For the year ended September 30, 2023, the following fees were paid by each Fund to CFS:
Fund |
| Administration |
| Transfer |
| Fund | |
Partners Fund | | $109,739 | | $18,174 | | $54,363 | |
Focused SCV Fund | | 18,448 | | 19,063 | | 30,077 | |
International Value Fund | | 3,968 | | 11,484 | | 21,178 | |
The amounts reflected on the Statements of Operations for Administration, Transfer Agent and Accounting fees include some out of pocket expenses not paid to CFS.
Certain officers of the Trust are also officers and/or directors of CFS. Additionally, Practus LLP, serves as legal counsel to the Trust. John H. Lively, Secretary of the Trust, is Managing Partner of Practus LLP. J. Stephen King, Jr., Assistant Secretary of the Trust, is a Partner of Practus, LLP. Gino E. Malaspina, Assistant Secretary of the Trust, serves as Counsel of Practus, LLP. Neither the officers and/or directors of CFS, Mr. Lively, Mr. King or Mr. Malaspina receive any special compensation from the Trust or the Funds for serving as officers of the Trust.
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ANNUAL REPORT
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Notes to Financial Statements - continuedSeptember 30, 2023
NOTE 3 – INVESTMENTS
The costs of purchases and proceeds from the sales of securities other than short-term investments for the year ended September 30, 2023 were as follows:
Fund |
| Purchases |
| Sales | |
Partners Fund | | $53,079,618 | | $29,982,374 | |
Focused SCV Fund | | 3,670,049 | | 9,386,266 | |
International Value Fund | | 4,140,386 | | 93,683 | |
NOTE 4 – DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF CAPITAL
Distributions from net investment income and realized gains, if any, are recorded on the ex-dividend date. Income distributions and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP.
The tax character of distributions paid during the year ended September 30, 2023 and the year/period ended September 30, 2022 were as follows:
| | Partners Fund | | ||
| | Year ended |
| Year ended | |
Distributions paid from: | | | | | |
Ordinary income | | $1,926,627 | | $1,419,973 | |
Realized gains | | 378,545 |
| 786,690 | |
| | $2,305,172 |
| $2,208,663 | |
| | Focused SCV Fund | | ||
| | Year ended |
| Year ended | |
Distributions paid from: | | | | | |
Ordinary income | | $40,591 | | $1,026,598 | |
Realized gains | | 557,684 |
| 317,017 | |
| | $598,275 |
| $1,343,615 | |
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Notes to Financial Statements - continuedSeptember 30, 2023
| | International Value Fund | | ||
| | Year ended |
| Period ended | |
Distributions paid from: | | | | | |
Ordinary income | | $10,203 | | $— | |
Realized gains | | — |
| — | |
| | $10,203 |
| $— | |
As of September 30, 2023, the components of distributable earnings (accumulated deficits) on a tax basis were as follows:
| | Partners Fund |
| Focused |
| International Value Fund | |
Accumulated net investment | | $2,205,317 | | $168,358 | | $4,130 | |
Accumulated net realized | | 3,452,630 | | — | | 2,920 | |
Other losses | | — | | (1,123,916 | ) | — | |
Net unrealized appreciation (depreciation) on investments | | (9,315,188 | ) | 553,273 |
| (138,100 | ) |
| | $(3,657,241 | ) | $(402,285 | ) | $(131,050 | ) |
As of September 30, 2023, the Focused SCV Fund had a capital loss carryforward of $1,123,916, of which $596,806 is considered short term and $527,110 is considered long term. These losses may be carried forward indefinitely.
As of September 30, 2023, the cost of securities for Federal Income tax purposes and the related tax-based net unrealized appreciation (depreciation) consists of:
Fund |
| Cost |
| Gross |
| Gross |
| Total | |
Partners Fund | | $124,113,249 | | $8,388,488 | | $(17,703,676 | ) | $(9,315,188 | ) |
Focused SCV Fund | | 7,257,936 | | 1,498,077 | | (944,804 | ) | 553,273 | |
International Value Fund | | 4,602,479 | | 86,903 | | (225,003 | ) | (138,100 | ) |
The difference between book basis and tax basis net unrealized appreciation (depreciation) is attributable primarily to the deferral of wash sale losses.
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Notes to Financial Statements - continuedSeptember 30, 2023
NOTE 5 –TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Capital stock transactions were:
| | Partners Fund | | ||||
| | Year ended September 30, 2023 | | ||||
| | Investor | Institutional Class | Super Institutional Class | | ||
Shares sold | | 6,102 | | 2,265,836 | | — | |
Shares reinvested | | 1,383 | | 103,378 | | 17 | |
Shares redeemed | | (46,281 | ) | (1,246,963 | ) | — | |
Net increase (decrease) | | (38,796 | ) | 1,122,251 | 17 | |
| | Partners Fund | | ||||
| | Year ended September 30, 2022 | | ||||
| | Investor | Institutional Class | Super Institutional Class | | ||
| 43,583 | | 3,470,855 | | — | | |
Shares reinvested | | 1,142 | | 104,363 | | 41 | |
Shares redeemed | | (3,422 | ) | (553,605 | ) | (265 | ) |
Net increase (decrease) | | 41,303 | 3,021,613 | (224 | ) |
| | Focused SCV Fund | | ||||
| | Year ended September 30, 2023 | | ||||
| | Investor | Institutional Class | Super Institutional Class | | ||
Shares sold | | 280 | | 99,846 | | — | |
Shares reinvested | | 81 | | 55,695 | | 13 | |
Shares redeemed | | — | (632,659 | ) | — | | |
Net increase (decrease) | | 361 | (477,118 | ) | 13 | |
| | Focused SCV Fund | | ||||
| | Year ended September 30, 2022 | | ||||
| | Investor | Institutional Class | Super Institutional Class | | ||
Shares sold | | 661 | | 427,294 | | — | |
Shares reinvested | | 93 | | 107,976 | | 26 | |
Shares redeemed | | — | (191,763 | ) | — | | |
Net increase (decrease) | | 754 | 343,507 | 26 | |
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Notes to Financial Statements - continuedSeptember 30, 2023
| | International Value Fund | | ||||
| | Year ended September 30, 2023 | | ||||
| | Investor | Institutional Class | Super Institutional Class | | ||
Shares sold | | — | | 394,943 | | 4,869 | |
Shares reinvested | | 31 | | 474 | | 598 | |
Shares redeemed | | — | — | — | | ||
Net increase (decrease) | | 31 | 395,417 | 5,467 | |
| | International Value Fund | | ||||
| | Period from May 6, 2022 to September 30, 2022 | | ||||
| | Investor |
| Institutional Class |
| Super Institutional Class | |
Shares sold | | 1,701 | | 24,243 | | 30,367 | |
Shares reinvested | | — | | — | | — | |
Shares redeemed | | — | — | — | | ||
Net increase (decrease) | | 1,701 | 24,243 | 30,367 | |
NOTE 6 – RECENT MARKET EVENTS
Market Disruption and Geopolitical Events. Geopolitical and other events, such as war, terrorist attacks, natural disasters, epidemics or pandemics could result in unplanned or significant securities market closures, volatility or declines. Russia’s recent military invasion of Ukraine and the resulting broad-ranging economic sanctions imposed by the United States and other countries, as well as the potential spillover effects of Israel-Hamas war, may continue to disrupt securities markets and adversely affect global economies and companies, thereby decreasing the value of the Funds’ investments. Additionally, sudden or significant changes in the supply or prices of commodities or other economic inputs may have material and unexpected effects on both global securities markets and individual countries, regions, industries, or companies, which could reduce the value of the Funds’ investments.
Cyber Security Risk. Failures or breaches of the electronic systems of the Advisor and the Funds’ other service providers, market makers, or the issuers of securities in which the Funds invest have the ability to cause disruptions and negatively impact the Funds’ business operations, potentially resulting in financial losses to the Funds and their shareholders. While the Funds have established business continuity plans and risk management systems seeking
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ANNUAL REPORT
CLIFFORD CAPITAL FUNDS
Notes to Financial Statements - continuedSeptember 30, 2023
to address system breaches or failures, there are inherent limitations in such plans and systems. Furthermore, the Funds cannot control the cyber security plans and systems of the Funds’ service providers, market makers, or issuers of securities in which the Funds invest.
NOTE 7 – SECTOR RISK
If a Fund has significant investments in the securities of issuers in industries within a particular sector, any development affecting that sector will have a greater impact on the value of the net assets of that Fund than would be the case if the Fund did not have significant investments in that sector. In addition, this may increase the risk of loss of an investment in the Fund and increase the volatility of the Fund’s NAV per share. From time to time, circumstances may affect a particular sector and the companies within such sector. For instance, economic or market factors, regulation or deregulation, and technological or other developments may negatively impact all companies in a particular sector and therefore the value of a Fund’s portfolio will be adversely affected. As of September 30, 2023, 22.22% and 17.70% of the value of the net assets of the Partners Fund were invested in securities within the Financials and Industrials sectors, respectively; 24.27%, 22.62% and 18.32% of the value of the net assets of the Focused SCV Fund were invested in securities within the Industrials, Financials and Consumer Discretionary sectors, respectively; 18.78% and 17.22% of the value of the net assets of the International Value Fund were invested in securities within the Financials and Health Care sectors, respectively.
NOTE 8 – CONCENTRATION RISK
Concentration risk in mutual funds refers to the risk of investing in a mutual fund that has a disproportionately large percentage of its assets invested in a single country or region. This can be a concern for investors who are looking to diversify their portfolio and reduce risk. If the country or region in which the mutual fund is invested experiences an economic downturn, financial crisis, currency devaluation, natural disaster, or geopolitical event, it is likely to negatively affect all of the stocks in that country or region. As of September 30, 2023, 27.74% of the value of the net assets of the International Value Fund were invested in securities within the United Kingdom.
NOTE 9 – CONTROL PERSONS AND PRINCIPAL SECURITIES HOLDERS
A principal shareholder is any person who owns (either of record or beneficially) 5% or more of the outstanding shares of the Fund. A control person is one who owns, (either directly or indirectly), more than 25% of the voting securities of a fund
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CLIFFORD CAPITAL FUNDS
Notes to Financial Statements - continuedSeptember 30, 2023
or acknowledges the existence of such control. As a controlling shareholder, each of these persons could control the outcome of any proposal submitted to the shareholders for approval, including changes to a fund's fundamental policies or the terms of the management agreements with the Advisor. At September 30, 2023, one shareholder owned 79.15% of the outstanding shares of the International Value Fund.
NOTE 10 – SUBSEQUENT EVENTS
Management has evaluated all transactions and events subsequent to the date of the Statements of Assets and Liabilities through the date on which these financial statements were issued and has noted no additional items require disclosure.
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ANNUAL REPORT
CLIFFORD CAPITAL FUNDS
Report of Independent Registered Public Accounting Firm
To the Shareholders of Clifford Capital Partners Fund, Clifford Capital Focused Small Cap Value Fund and Clifford Capital International Value Fund and Board of Trustees of World Funds Trust
Opinion on the Financial Statements
We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of Clifford Capital Partners Fund, Clifford Capital Focused Small Cap Value Fund and Clifford Capital International Value Fund (the “Funds”), each a series of World Funds Trust, as of September 30, 2023, the related statements of operations and changes in net assets, the related notes, and the financial highlights for each of the periods indicated below (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of each of the Funds as of September 30, 2023, the results of their operations, the changes in net assets, and the financial highlights for each of the periods indicated below, in conformity with accounting principles generally accepted in the United States of America.
Fund Name |
| Statements of Operations |
| Statements of |
| Financial Highlights |
Clifford Capital Partners Fund | | For the year ended September 30, 2023 | | For the years ended September 30, 2023 and 2022 | | For the years ended September 30, 2023, 2022, 2021, 2020 and 2019 |
Clifford Capital Focused Small Cap Value Fund | | For the year ended September 30, 2023 | | For the years ended September 30, 2023 and 2022 | | For the years ended September 30, 2023, 2022, and 2021, and for the period from October 1, 2019 (commencement of operations) through September 30, 2020 |
Clifford Capital International Value Fund | | For the year ended September 30, 2023 | | For the year ended September 30, 2023, and the period from May 6, 2022 (commencement of operations) through September 30, 2022 |
Basis for Opinion
These financial statements are the responsibility of the Funds’ management. Our responsibility is to express an opinion on the Funds’ financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and
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Report of Independent Registered Public Accounting Firm - continued
are required to be independent with respect to the Funds in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of September 30, 2023, by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
We have served as the Funds’ auditor since 2014.
COHEN & COMPANY, LTD.
Cleveland, Ohio
November 29, 2023
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ANNUAL REPORT
World Funds Trust (the “Trust”)
Supplemental Information (unaudited)
Information pertaining to the trustees and officers of the Trust is set forth below. The names, addresses and ages of the trustees and officers of the Trust, together with information as to their principal occupations during the past five years, are listed below. The Statement of Additional Information (the “SAI”) includes additional information about the trustees and is available without charge upon request by calling, toll-free, 800-673-0550.
The mailing address of each Trustee and officer is 8730 Stony Point Parkway, Suite 205, Richmond, Virginia 23235, unless otherwise indicated.
NON-INTERESTED TRUSTEES
NAME, AGE AND POSITION WITH THE TRUST |
| TERM OF OFFICE AND LENGTH OF TIME SERVED |
| PRINCIPAL OCCUPATION(S) DURING THE PAST |
| NUMBER OF FUNDS IN FUND COMPLEX OVERSEEN BY TRUSTEE |
| OTHER DIRECTORSHIPS |
David J. Urban (68) Trustee | | Indefinite, Since June 2010 | | Dean Emeritus (since 2023) and Professor of Marketing (since 2013), Jones College of Business, Middle Tennessee State University since July 2013. | | 20 | | Independent Trustee for the ETF Opportunities Trust for the thirty-eight series of that Trust (registered investment company) |
Mary Lou H. Ivey (65) Trustee | | Indefinite, Since June 2010 | | Senior Vice President, Episcopal Church Building Fund (national nonprofit organization), since January 2022. Accountant, Harris, Hardy & Johnstone, P.C., (accounting firm), from 2008-2021. | | 20 | | Independent Trustee for the ETF Opportunities Trust for the thirty-eight series of that Trust (registered investment company) |
Theo H. Pitt, Jr. (87) Trustee | | Indefinite, Since August 2013 | | Senior Partner, Community Financial Institutions Consulting (bank consulting) since 1997. | | 20 | | Independent Trustee of Chesapeake Investment Trust for the one series of that trust; Chairman of Hillman Capital Management Investment Trust; Starboard Investment Trust for the eleven series of that trust; and ETF Opportunities Trust for the thirty-eight series of that Trust (all registered investment companies) |
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ANNUAL REPORT
World Funds Trust (the “Trust”)
Supplemental Information (unaudited) - continued
OFFICERS WHO ARE NOT TRUSTEES
NAME, AGE AND |
| TERM OF OFFICE |
| PRINCIPAL OCCUPATION(S) DURING THE PAST FIVE YEARS |
David A. Bogaert (60) President | | Indefinite, Since August 2017 | | Managing Director of Business Development, Commonwealth Fund Services, Inc. October 2013 to present. |
Karen M. Shupe (59) Treasurer and Principal Executive Officer | | Indefinite, Since June 2008 | | Managing Director of Fund Operations, Commonwealth Fund Services, Inc., 2003 to present. |
Ann T. MacDonald (69) Assistant Treasurer and Principal Financial Officer | | Indefinite, Since November 2015 | | Managing Director, Fund Accounting and Administration, Commonwealth Fund Services, Inc., 2003 to present. |
John H. Lively (54) Secretary | | Indefinite, Since November 2013 | | Attorney, Practus LLP, (law firm), May 2018 to present; Attorney, The Law Offices of John H. Lively & Associates, Inc. (law firm), March 2010 to May 2018. |
J. Stephen King (60) Assistant Secretary | | Indefinite, Since November 2022 | | Attorney, Practus LLP (law firm), 2020 to present; Senior Vice President and Associate General Counsel, The TCW Group, Inc. (investment management firm), 2017 to 2019. |
Gino E. Malaspina (55) Assistant Secretary | | Indefinite, Since November 2022 | | Attorney, Practus LLP (law firm), since August 2022; Vice President and Senior Counsel, State Street Corporation, October 2019 to July 2022; Senior Counsel, Apex Fund Services (formerly, Atlantic Fund Services), June 2014 to October 2019. |
Holly B. Giangiulio (61) Assistant Secretary | | Indefinite, Since November 2015 | | Managing Director, Corporate Operations, Commonwealth Fund Services, Inc., January 2015 to present, |
Laura B. Wright (51) Assistant Secretary | | Indefinite, Since May 2022 | | Manager, Fund Administration, Commonwealth Fund Services, Inc. August 2023 to present; Fund Administrator, Commonwealth Fund Services, Inc., 2016 to 2023. |
Julian G. Winters (54) Chief Compliance Officer | | Indefinite, Since August 2013 | | Managing Member of Watermark Solutions, LLC (investment compliance and consulting) since March 2007. |
VOTING PROXIES ON FUND PORTFOLIO SECURITIES
A description of the policies and procedures that the Funds use to determine how to vote proxies relating to securities held in the Funds’ portfolio is available, without charge and upon request, by calling 800-673-0550 or on the SEC’s website at https://www.sec.gov. Information regarding how the Funds voted proxies relating to portfolio securities during the most recent twelve months ended June 30 is available on or through the SEC’s website at https://www.sec.gov.
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ANNUAL REPORT
World Funds Trust (the “Trust”)
Supplemental Information (unaudited) - continued
QUARTERLY PORTFOLIO HOLDINGS
Each Fund files with the SEC a complete schedule of its portfolio holdings, as of the close of the first and third quarters of its fiscal year, on “Form N-PORT”. These filings are available, without charge and upon request, by calling 800-673-0550 or on the SEC’s website at https://www.sec.gov.
FUNDS’ LIQUIDITY RISK MANAGEMENT PROGRAM
The Funds have adopted and implemented a written liquidity risk management program as required by Rule 22e-4 under the 1940 Act. The program is reasonably designed to assess and manage the Funds’ liquidity risk, taking into consideration the Funds’ investment strategy and the liquidity of its portfolio investments during normal and reasonably foreseeable stressed conditions; its short and long-term cash flow projections; and its cash holdings. The Funds’ Board of Trustees approved the appointment of the Advisor as the Funds’ Liquidity Risk Management Administrator. The Advisor has appointed representatives from their compliance, trading, and portfolio management departments to assist in the program’s administration and oversight and for reporting to the Board on at least an annual basis regarding the program’s operation and effectiveness. The Liquidity Risk Management Administrator performed an assessment of the Funds’ liquidity risk profile, considering information gathered and its actual experience in administering the program and presented a written report to the Board of Trustees for consideration during the period covered by this annual report. The report concluded that (i) the Funds did not experience significant liquidity challenges during the covered period; (ii) the Funds’ investment strategies remain appropriate for an open-end fund; and (iii) the Funds’ liquidity risk management program is reasonably designed to assess and manage its liquidity risk.
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ANNUAL REPORT
CLIFFORD CAPITAL FUNDS
Fund Expenses (unaudited)
Fund Expenses Example
As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including redemption fees and (2) ongoing costs, including management fees, distributions (12b-1) fees 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 six months, April 1, 2023, and held for the six months ended September 30, 2023.
Actual Expenses Example
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 the Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table below provides information about hypothetical account values and hypothetical expenses based on the Funds’ actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Funds’ 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 the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
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Fund Expenses (unaudited) - continued
| | Beginning |
| Ending |
| Annualized |
| Expenses Paid |
Partners Fund | | | | | | | | |
Investor Class Actual | | $1,000.00 | | $998.23 | | 1.15% | | $5.76 |
Investor Class Hypothetical(2) | | $1,000.00 | | $1,019.30 | | 1.15% | | $5.82 |
Institutional Class Actual | | $1,000.00 | | $998.83 | | 0.90% | | $4.51 |
Institutional Class Hypothetical(2) | | $1,000.00 | | $1,020.56 | | 0.90% | | $4.56 |
Super Institutional Class Actual | | $1,000.00 | | $998.84 | | 0.82% | | $4.11 |
Super Institutional Class Hypothetical(2) | | $1,000.00 | | $1,020.96 | | 0.82% | | $4.15 |
Focused SCV Fund | | | | | | | | |
Investor Class Actual | | $1,000.00 | | $1,033.56 | | 1.30% | | $6.63 |
Investor Class Hypothetical(2) | | $1,000.00 | | $1,018.55 | | 1.30% | | $6.58 |
Institutional Class Actual | | $1,000.00 | | $1,034.37 | | 1.05% | | $5.35 |
Institutional Class Hypothetical(2) | | $1,000.00 | | $1,019.80 | | 1.05% | | $5.32 |
Super Institutional Class Actual | | $1,000.00 | | $1,030.53 | | 0.97% | | $4.94 |
Super Institutional Class Hypothetical(2) | | $1,000.00 | | $1,020.21 | | 0.97% | | $4.91 |
International Value Fund | | | | | | | | |
Investor Class Actual | | $1,000.00 | | $982.81 | | 1.30% | | $6.46 |
Investor Class Hypothetical(2) | | $1,000.00 | | $1,018.55 | | 1.30% | | $6.58 |
Institutional Class Actual | | $1,000.00 | | $983.32 | | 1.05% | | $5.22 |
Institutional Class Hypothetical(2) | | $1,000.00 | | $1,019.80 | | 1.05% | | $5.32 |
Super Institutional Class Actual | | $1,000.00 | | $983.81 | | 0.97% | | $4.82 |
Super Institutional Class Hypothetical(2) | | $1,000.00 | | $1,020.21 | | 0.97% | | $4.91 |
(1) Expenses are equal to the Funds annualized expense ratio multiplied by the average account value for the period, multiplied by 183 days in the most recent fiscal period divided by 365 days in the current year.
(2)5% return before expenses.
64
ANNUAL REPORT
CLIFFORD CAPITAL FUNDS
Privacy Notice
The following is a description of the Funds’ policies regarding disclosure of nonpublic personal information that you provide to the Funds or that the Funds collect from other sources. In the event that you hold shares of the Funds through a broker-dealer or other financial intermediary, the privacy policy of your financial intermediary would govern how your nonpublic personal information would be shared with unaffiliated third parties.
Categories of Information the Funds Collect. The Funds collect the following nonpublic personal information about you:
•Information the Funds receive from you on or in applications or other forms, correspondence, or conversations (such as your name, address, phone number, social security number, assets, income and date of birth); and
•Information about your transactions with the Funds, its affiliates, or others (such as your account number and balance, payment history, parties to transactions, cost basis information, and other financial information).
Categories of Information the Funds Disclose. The Funds do not disclose any non-public personal information about their current or former shareholders to unaffiliated third parties, except as required or permitted by law. The Funds are permitted by law to disclose all of the information it collects, as described above, to their service providers (such as the Funds’ custodian, administrator and transfer agent) to process your transactions and otherwise provide services to you.
Confidentiality and Security. The Funds restrict access to your nonpublic personal information to those persons who require such information to provide products or services to you. The Funds maintain physical, electronic, and procedural safeguards that comply with federal standards to guard your nonpublic personal information.
The Funds’ Privacy Notice is not part of this Annual Report.
Investment Adviser:
Clifford Capital Partners, LLC
363 S. Main Street, Suite 101
Alpine, Utah 84004
Distributor:
Foreside Fund Services, LLC
Three Canal Plaza, Suite 100
Portland, Maine 04101
Transfer Agent, Fund Accounting and Fund Administration:
Commonwealth Fund Services, Inc.
8730 Stony Point Parkway, Suite 205
Richmond, Virginia 23235
Custodian:
Fifth Third Bank
38 Fountain Square Plaza
Cincinnati, Ohio 45263
Legal Counsel:
Practus LLP
11300 Tomahawk Creek Parkway, Suite 310
Leawood, Kansas 66211
Independent Registered Public Accounting Firm:
Cohen & Company, Ltd.
1350 Euclid Avenue, Suite 800
Cleveland, Ohio 44115
ITEM 1. (b) | Not applicable. |
ITEM 2. | CODE OF ETHICS. |
(a) The registrant, as of the end of the period covered by this report, has adopted a code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party.
(c) There have been no amendments, during the period covered by this report, to a provision of the code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party, and that relates to any element of the code of ethics description.
(d) The registrant has not granted any waivers, including an implicit waiver, from a provision of the code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party, that relates to one or more of the items set forth in paragraph (b) of this item’s instructions.
(f) The code of ethics is attached hereto as exhibit13(a)(1).
ITEM 3. | AUDIT COMMITTEE FINANCIAL EXPERT. |
(a)(1) The registrant does not have an audit committee financial expert serving on its audit committee.
(a)(2) Not applicable.
(a)(3) At this time, the registrant believes that the collective experience provided by the members of the audit committee together offer the registrant adequate oversight for the registrant’s level of financial complexity.
ITEM 4. | PRINCIPAL ACCOUNTANT FEES AND SERVICES. |
(a) Audit Fees. The aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for the audit of the registrant’s annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years are $50,050 for 2023 and $45,500 for 2022.
(b) Audit-Related Fees. The aggregate fees billed in each of the last two fiscal years for assurance and related services by the principal accountant that are reasonably related to the performance of the audit of the registrant’s financial statements and are not reported under paragraph (a) of this Item are $0 for 2023 and $0 for 2022.
(c) Tax Fees. The aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning are $10,450 for 2023 and $9,500 for 2022. The nature of the services comprising these fees include preparation of excise filings and income tax returns and assistance with calculation of required income, capital gain and excise distributions.
(d) All Other Fees. The aggregate fees billed in each of the last two fiscal years for products and services provided by the principal accountant, other than the services reported in paragraphs (a) through (c) of this Item are and $0 for 2023 and $0 for 2022.
(e)(1) Disclose the audit committee’s pre-approval policies and procedures described in paragraph (c)(7) of Rule 2-01 of Regulation S-X.
Pursuant to its charter, the registrant’s Audit Committee must pre-approve all audit and non-audit services to be provided to the registrant. The Audit Committee also pre-approves any non-audit services provided by the registrant’s principal accountant to the investment adviser or any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant, if the engagement relates directly to the operations and financial reporting of the registrant.
(e)(2) The percentage of services described in each of paragraphs (b) through (d) of this Item that were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X are as follows:
(b) NA
(c) 100%
(d) NA
(f) The percentage of hours expended on the principal accountant’s engagement to audit the registrant’s financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant’s full-time, permanent employees was zero percent (0%).
(g) The aggregate non-audit fees billed by the registrant’s accountant for services rendered to the registrant, and rendered to the registrant’s investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant for each of the last two fiscal years of the registrant was $0 for 2023 and $0 for 2022.
(h) Not applicable.
(i) Not applicable.
(j) Not applicable.
ITEM 5. | AUDIT COMMITTEE OF LISTED REGISTRANTS. |
Not applicable.
ITEM 6. | SCHEDULE OF INVESTMENTS. |
(a) Schedule filed under Item 1 of the Form.
(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. |
Not applicable.
ITEM 11. | CONTROLS AND PROCEDURES. |
(a) The registrant’s principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”) (17 CFR 270.30a-3(c))) are effective, as of a date within 90 days of the filing date of the report that includes the disclosure required by this paragraph, based on their evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and Rules 13a- 15(b) or 15d-15(b) under the Securities Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or 240.15d- 15(b)).
(b) There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR 270.30a-3(d)) that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.
ITEM 12. | DISCLOSURE OF SECURITIES LENDING ACTIVITIES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. |
Not applicable.
ITEM 13. | EXHIBITS. |
(a)(2) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto.
(a)(3) Solicitations to purchase securities under Rule 23c-1 under the Act: Not applicable.
(a)(4) Change in registrant’s independent public accounting firm: Not applicable.
(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto.
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: World Funds Trust
By (Signature and Title)*: | /s/ Karen Shupe |
Karen Shupe Principal Executive Officer | |
Date: December 8, 2023 |
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 (Signature and Title)*: | /s/ Karen Shupe |
Karen Shupe Principal Executive Officer | |
Date: December 8, 2023 | |
By (Signature and Title)*: | /s/ Ann MacDonald |
Ann MacDonald Principal Financial Officer | |
Date: December 8, 2023 |
* Print the name and title of each signing officer under his or her signature.