UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-23084
Series Portfolios Trust
(Exact name of registrant as specified in charter)
(Exact name of registrant as specified in charter)
615 East Michigan Street
Milwaukee, WI 53202
(Address of principal executive offices) (Zip code)
(Address of principal executive offices) (Zip code)
Ryan Roell, President
Series Portfolios Trust
c/o U.S. Bancorp Fund Services, LLC
777 East Wisconsin Ave, 5th Fl
Milwaukee, WI 53202
(Name and address of agent for service)
(Name and address of agent for service)
(414) 765-6839
Registrant's telephone number, including area code
Date of fiscal year end: December 31, 2021
Date of reporting period: June 30, 2021
Item 1. Report to Stockholders.
(a) | [Insert full text of semi-annual report here] |
Heitman US Real Estate Securities Fund
Institutional Class – htmix
Investor Class – htmnx
Semi-Annual Report
June 30, 2021
HEITMAN US REAL ESTATE SECURITIES FUND
2021 Semi-Annual Review
Over the six month period ended June 30, 2021, the FTSE NAREIT Equity REIT Index delivered gross total returns of 21.96%, outperforming the S&P 500 index which gained 15.25%. Heitman US Real Estate Securities outperformed the FTSE NAREIT Equity Index during this period as well.
Alongside commodities and small cap equities, the US REIT sector has been one of the best performing markets year to date.1 This appears to be a reversal of the lagging performance of the asset class delivered during COVID-19 induced lockdowns in 2020. In particular, the real estate sector has benefitted from the speed of reopening and improving strength of the world economy we observed and commented on in our first quarter report and this has broadly played out in the performance data.
The unprecedented levels of monetary and fiscal stimulus continue unabated and economic datapoints remain strong.2 However, the transmission effects beginning to be felt in bottlenecks in the real economy, are, we think, leading to building concerns of inflation. We remain watchful of leading and coincident indicators of inflation, and whether the phenomenon is transitory or a structural adjustment.
With pent up consumer spending, job hiring and commodities demand driving much of the economic rebound, the Heitman investment and research teams see much of the inflation concerns as a “catch up” of lost capacity in 2020 through temporary bottlenecks and the “base effect” of disinflation from 12 months ago. According to Bloomberg consensus estimates, it is unlikely that the US will recover all of its lost output until mid-2022 and longer for a number of other western economies. Nevertheless, the market was generally surprised by a number of US Federal Reserve Members calling for rate increases in 2022 and 2023 – much earlier than consensus estimates.
With this backdrop, the strong rotation into stocks and sectors leveraged to the reopening of the US economy that began back in November 2020 appears to have been largely priced into market expectations except for the hotel sector which looks to benefit from a near-term rebound in business travel.
Sector Review
There was a mixed performance outcome at the sector level with both “reopening” and “defensive” sectors leading performance. Regional Malls gained over 50% during the half after a challenging 2020 and clearly benefited from a reopening of the economy as well as a boost from pent up consumer spending. The residential sector was boosted by higher property prices, a better than expected leasing environment for coastal cities that had been impacted more severely by the pandemic.
The “defensive” Strip Centers and Self Storage also gained on improving leasing demand in the former from household formation in suburban locations. Additionally, tenants have enhanced their omnichannel strategy and are more effectively utilizing their store footprint to accommodate in person shopping as well as online delivery/pickup. Leasing demand also improved on the same theme for the storage sector.
___________
1. | Bloomberg. Performance presented in USD; 6 months ending 06/30/2021 |
2. | Bloomberg. Consensus Estimates, Various Central Bank Statements, Investment Bank Research |
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HEITMAN US REAL ESTATE SECURITIES FUND
Data Centers underperformed, largely as a reversion to already high valuations and growth expectations that disappointed. Whilst the sector remains strongly supported by long term secular demand trends, it was largely out of favor as investors rotated into more value-oriented sectors. The healthcare sector also lagged in the half for similar reasons.
In our opinion, work-from-home arrangements continue to cast uncertainty over the US office sector, which underperformed in the first half. In a recent transaction, Washington Real Estate Investment Trust announced a sale of their office portfolio to Brookfield Asset Management for $766m. By our investment team’s estimates, the value is around 20% lower than pre-COVID levels.
Towards the end of the half, mergers and corporate activity were a dominant theme with six mergers and acquisitions (“M&A”) transactions announced in the final months. In April, Kimco Realty Corp announced a deal to merge with Weingarten Realty Investors for $5.6Bn and Realty Income Corp agreed to acquire VEREIT Inc for $17.3Bn. In May, Monmouth Real Estate Investment Corporation agreed to be purchased for $3.4Bn by Equity Commonwealth and in June, Blackstone Group Equity and data center company QTS Realty Trust agreed to a ~$10Bn take private deal, Welltower Inc acquired an 86 property portfolio for $1.5Bn and New Senior Investment Group and Ventas Inc announced a transaction at a 31% premium.
Outlook
Our expectation is that the US REIT market will revert to a “stock-pickers” environment as the “re-opening” and “reflation” themes that have dominated performance since late 2020 are priced into expectations.
In terms of risks, we think broad based inflation pressures are building, and the removal of monetary stimulus is likely in the immediate horizon, leading to interest rate rises. Additionally, new, more contagious COVID-19 variants have the capacity to derail economic recovery.
The opportunities are also present. Rising inflation also implies rental growth (as a pass through for inflation) and we think improving economic activity will assist vacancy reduction and occupier demand. In a world of low interest rates, real estate and REITs are attractive investment destinations, particularly considering recent and expected private equity interest.
Whilst the valuation support for the US REITs sector is not as strong as 3 months ago given the strong performance, the group continues to trade at a wide spread to sovereign bonds and corporate credit yields. At the end of June, the FTSE NAREIT Equity REITs Total Return Index was trading at 3.1% dividend yield, 4.7% implied capitalization rate and a 14.9% premium to net asset value.
In our view, the next six months will display accelerating fundamentals from a supply and demand imbalance coupled with a “wall of capital” driving cap rate compression and M&A activity.
We continue to balance cyclical rebound investment themes (such as hotels and coastal office and residential exposures) against secular demand drivers via migration patterns from high cost to low cost markets, the shift of the omni channel presence to a physical open-air store, or work-from-home impacts.
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HEITMAN US REAL ESTATE SECURITIES FUND
Disclosures
− | Past performance is no guarantee of future results. |
− | The firm uses Bloomberg as its source for research, economic information and market data. |
− | The performance information in the preceding Commentary does not reflect the performance of any fund, product or account managed or serviced by Heitman. |
− | The views and opinions in the preceding Commentary are as of the date of publication and are subject to change. |
− | Mutual fund investing involves risk; principal loss is possible. Investments in REIT securities involve risks such as declines in the value of real estate and increased susceptibility to adverse economic regulatory expenses. Small- and medium-capitalization companies tend to have limited liquidity and greater price volatility than large-capitalization companies. The Fund is non-diversified, meaning it may concentrate its assets in fewer individual holdings than a diversified fund. Therefore, the Fund is more exposed to individual stock volatility than a diversified fund. The Fund is new with no operating history and there can be no assurance that the Fund will grow to or maintain an economically viable size. |
− | There is no guarantee that any market forecast set forth in this presentation will be realized. |
− | This material should not be relied upon as investment advice, does not constitute a recommendation to buy or sell a security or other investment and is not intended to predict or depict performance of any investment. |
− | Commentary not to be re-distributed without permission. |
− | Quasar Distributors, LLC is the distributor of the Heitman US Real Estate Securities Fund and Heitman Real Estate Securities LLC is the investment advisor. |
− | Must be preceded or accompanied by the Prospectus. |
− | Fund holdings and sector allocations are subject to change at any time and should not be considered recommendations to buy or sell any security. Please see the Schedule of Investments in this report for a complete list of fund holdings. |
− | The FTSE NAREIT (National Association of Real Estate Investment Trusts) Index is a total return performance index of all equity REITs tracked by FTSE NAREIT. The S&P 500 Index is an unmanaged index generally considered to be representative of the large cap segment of the market. The Indices are presented for illustrative purposes only and are not intended to imply Heitman’s past or future performance. The performance of the Indices assumes dividend reinvestment, but do not reflect transaction costs, advisory fees, custodian fees, trading costs and other costs of investment. Individuals cannot directly invest in any of the Indices described above. |
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HEITMAN US REAL ESTATE SECURITIES FUND
Expense Example (Unaudited)
June 30, 2021
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, and (2) ongoing costs, including management fees and other Fund specific expenses. The expense example is intended to help the shareholder understand ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the most recent period.
The Actual Expenses comparison provides information about actual account values and actual expenses. A shareholder may use the information in this line, together with the amount invested, to estimate the expenses paid over the period. A shareholder may divide his/her account value by $1,000 (e.g., an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses paid on his/her account during this period.
The Hypothetical Example for Comparison Purposes provides information about hypothetical account values and hypothetical expenses based on each Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses paid for the period. A shareholder may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, a shareholder would compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.
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), redemptions fees or exchange fees. Therefore, the Hypothetical Example for Comparisons Purposes is useful in comparing ongoing costs only and will not help to determine the relevant total costs of owning different funds. In addition, if these transactional costs were included, shareholder costs would have been higher.
Annualized Net | Beginning | Ending | Expenses Paid | |
Expense Ratio | Account Value | Account Value | During Period(1) | |
(6/30/2021) | (1/1/2021) | (6/30/2021) | (1/1/2021 to 6/30/2021) | |
Institutional Class | ||||
Actual(2) | 0.77% | $1,000.00 | $1,226.20 | $4.25 |
Hypothetical (5% annual | ||||
return before expenses) | 0.77% | $1,000.00 | $1,020.98 | $3.86 |
Investor Class | ||||
Actual(2) | 1.02% | $1,000.00 | $1,224.50 | $5.63 |
Hypothetical (5% annual | ||||
return before expenses) | 1.02% | $1,000.00 | $1,019.74 | $5.11 |
(1) | Expenses are equal to the Fund’s annualized expense ratio for the period multiplied by the average account value over the period, multiplied by 181/365 to reflect its six-month period. |
(2) | Based on the actual returns for the period from January 1, 2021 through June 30, 2021 of 22.62% and 22.45% for the Institutional Class and Investor Class, respectively. |
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HEITMAN US REAL ESTATE SECURITIES FUND
Allocation of Portfolio (Unaudited)(1)
June 30, 2021
(% of Net Assets)
Top 10 REIT Holdings (Unaudited)(1)
As of June 30, 2021
(% of Net Assets)
Equinix, Inc. | 9.86% | ||
Public Storage | 7.68% | ||
Welltower, Inc. | 6.98% | ||
AvalonBay Communities, Inc. | 6.92% | ||
Prologis, Inc. | 4.81% | ||
Duke Realty Corporation | 4.75% | ||
Sun Communities, Inc. | 4.60% | ||
Invitation Homes, Inc. | 4.48% | ||
Camden Property Trust | 4.36% | ||
VICI Properties, Inc. | 3.81% |
(1) | Data expressed as a percentage of net assets as of June 30, 2021. Please refer to the Schedule of Investments for more details on the Fund’s individual holdings. |
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HEITMAN US REAL ESTATE SECURITIES FUND
Schedule of Investments (Unaudited)
June 30, 2021
Shares | Value | |||||||
REAL ESTATE INVESTMENT TRUSTS (REITs) – 99.55% | ||||||||
Diversified REITs – 1.10% | ||||||||
American Assets Trust, Inc. | 37,853 | $ | 1,411,538 | |||||
Health Care REITs – 13.72% | ||||||||
Healthpeak Properties, Inc. | 124,437 | 4,142,508 | ||||||
New Senior Investment Group, Inc. | 132,681 | 1,164,939 | ||||||
Physicians Realty Trust | 181,723 | 3,356,424 | ||||||
Welltower, Inc. | 108,167 | 8,988,678 | ||||||
17,652,549 | ||||||||
Hotel & Resort REITs – 6.17% | ||||||||
Pebblebrook Hotel Trust | 175,113 | 4,123,911 | ||||||
RLJ Lodging Trust | 97,270 | 1,481,422 | ||||||
Sunstone Hotel Investors, Inc. (a) | 188,386 | 2,339,754 | ||||||
7,945,087 | ||||||||
Industrial REITs – 14.69% | ||||||||
Duke Realty Corporation | 129,112 | 6,113,453 | ||||||
First Industrial Realty Trust, Inc. | 83,590 | 4,365,906 | ||||||
Prologis, Inc. | 51,790 | 6,190,459 | ||||||
Rexford Industrial Realty, Inc. | 39,190 | 2,231,870 | ||||||
18,901,688 | ||||||||
Office REITs – 6.91% | ||||||||
Kilroy Realty Corporation | 61,514 | 4,283,835 | ||||||
Mack-Cali Realty Corporation (a) | 25,383 | 435,318 | ||||||
Piedmont Office Realty Trust, Inc., Class A | 195,682 | 3,614,247 | ||||||
Postal Realty Trust, Inc., Class A | 30,511 | 556,521 | ||||||
8,889,921 | ||||||||
Residential REITs – 21.63% | ||||||||
AvalonBay Communities, Inc. | 42,644 | 8,899,376 | ||||||
Camden Property Trust | 42,260 | 5,606,634 | ||||||
Centerspace | 20,920 | 1,650,588 | ||||||
Invitation Homes, Inc. | 154,657 | 5,767,160 | ||||||
Sun Communities, Inc. | 34,520 | 5,916,728 | ||||||
27,840,486 | ||||||||
Retail REITs – 12.75% | ||||||||
Acadia Realty Trust | 34,053 | 747,804 | ||||||
Federal Realty Investment Trust | 31,593 | 3,701,752 | ||||||
Kimco Realty Corporation | 76,428 | 1,593,524 | ||||||
NETSTREIT Corporation | 91,574 | 2,111,696 | ||||||
Realty Income Corporation | 52,222 | 3,485,296 |
The accompanying notes are an integral part of these financial statements.
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HEITMAN US REAL ESTATE SECURITIES FUND
Schedule of Investments (Unaudited) – Continued
June 30, 2021
Shares | Value | |||||||
Retail REITs – 12.75% – Continued | ||||||||
SITE Centers Corporation | 151,442 | $ | 2,280,717 | |||||
Weingarten Realty Investors | 77,435 | 2,483,340 | ||||||
16,404,129 | ||||||||
Specialized REITs – 22.58% | ||||||||
EPR Properties (a) | 30,046 | 1,582,823 | ||||||
Equinix, Inc. | 15,816 | 12,693,922 | ||||||
Public Storage | 32,880 | 9,886,687 | ||||||
VICI Properties, Inc. | 157,936 | 4,899,175 | ||||||
29,062,607 | ||||||||
Total REITs | ||||||||
(Cost $108,555,852) | 128,108,005 | |||||||
SHORT-TERM INVESTMENTS – 0.70% | ||||||||
Money Market Fund – 0.70% | ||||||||
First American Treasury Obligations Fund, Class X, 0.01% (b) | 898,323 | 898,323 | ||||||
Total Short-Term Investments | ||||||||
(Cost $898,323) | 898,323 | |||||||
Total Investments | ||||||||
(Cost $109,454,175) – 100.25% | 129,006,328 | |||||||
Other Liabilities in Excess of Assets (0.25)% | (318,445 | ) | ||||||
Total Net Assets – 100.00% | $ | 128,687,883 |
(a) | Non-income producing security. |
(b) | The rate quoted is the annualized seven-day effective yield as of June 30, 2021. |
The Global Industry Classification Standard (GICS®) was developed by and/or is the exclusive property of MSCI, Inc. and Standard & Poor Financial Services LLC (“S&P”). GICS is a service mark of MSCI and S&P and has been licensed for use by U.S. Bancorp Fund Services, LLC, doing business as U.S. Bank Global Fund Services (“Fund Services”).
The accompanying notes are an integral part of these financial statements.
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HEITMAN US REAL ESTATE SECURITIES FUND
Statement of Assets and Liabilities (Unaudited)
June 30, 2021
ASSETS: | ||||
Investments, at value (Cost $109,454,175) | $ | 129,006,328 | ||
Receivable for investments sold | 96,339 | |||
Dividends and interest receivable | 333,190 | |||
Prepaid expenses and other receivables | 29,461 | |||
Total assets | 129,465,318 | |||
LIABILITIES: | ||||
Payable for Fund shares redeemed | 577,279 | |||
Payable for investments purchased | 97,078 | |||
Payable to the Adviser | 44,377 | |||
Payable for fund administration and fund accounting fees | 24,697 | |||
Payable for transfer agent fees and expenses | 12,351 | |||
Payable for custodian fees | 3,027 | |||
Payable for compliance fees | 2,584 | |||
Distribution fees payable | 39 | |||
Accrued expenses and other liabilities | 16,003 | |||
Total liabilities | 777,435 | |||
NET ASSETS | $ | 128,687,883 | ||
NET ASSETS CONSIST OF: | ||||
Paid-in capital | $ | 106,946,316 | ||
Total distributable income | 21,741,567 | |||
Total net assets | $ | 128,687,883 |
Institutional | Investor | |||||||
Class Shares | Class Shares | |||||||
Net assets | $ | 128,662,770 | $ | 25,113 | ||||
Shares issued and outstanding(1) | 10,558,051 | 2,066 | ||||||
Net asset value, offering, and redemption price per share(2) | $ | 12.19 | $ | 12.16 |
(1) | Unlimited shares authorized without par value. |
(2) | A redemption fee of 1.00% may be charged on shares redeemed within 30 days of purchase. |
The accompanying notes are an integral part of these financial statements.
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HEITMAN US REAL ESTATE SECURITIES FUND
Statement of Operations (Unaudited)
For the Six Months Ended June 30, 2021
INVESTMENT INCOME: | ||||
Dividend income | $ | 1,732,084 | ||
Interest income | 105 | |||
Total investment income | 1,732,189 | |||
EXPENSES: | ||||
Investment advisory fees (See Note 3) | 330,607 | |||
Fund administration and fund accounting fees (See Note 3) | 70,082 | |||
Transfer agent fees (See Note 3) | 34,666 | |||
Federal and state registration fees | 23,942 | |||
Audit fees | 11,158 | |||
Legal fees | 10,721 | |||
Custodian fees (See Note 3) | 9,337 | |||
Compliance fees (See Note 3) | 7,851 | |||
Trustees’ fees (See Note 3) | 6,509 | |||
Sub-transfer agent fees – Institutional Class | 4,020 | |||
Reports to shareholders | 3,428 | |||
Distribution fees – Investor Class (See Note 5) | 27 | |||
Other | 4,610 | |||
Total expenses before reimbursement | 516,958 | |||
Less: Expense reimbursement by Adviser (See Note 3) | (70,304 | ) | ||
Net expenses | 446,654 | |||
NET INVESTMENT INCOME | 1,285,535 | |||
REALIZED AND CHANGE IN UNREALIZED GAIN ON INVESTMENTS: | ||||
Net realized gain on investments | 5,239,208 | |||
Net change in unrealized appreciation on investments | 17,280,311 | |||
Net realized and change in unrealized gain on investments | 22,519,519 | |||
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS | $ | 23,805,054 |
The accompanying notes are an integral part of these financial statements.
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HEITMAN US REAL ESTATE SECURITIES FUND
Statements of Changes in Net Assets
Six Months Ended | ||||||||
June 30, 2021 | For the Year Ended | |||||||
(Unaudited) | December 31, 2020 | |||||||
OPERATIONS: | ||||||||
Net investment income | $ | 1,285,535 | $ | 697,887 | ||||
Net realized gain (loss) on investments | 5,239,208 | (3,070,963 | ) | |||||
Change in unrealized appreciation on investments | 17,280,311 | 1,235,889 | ||||||
Net increase (decrease) in net assets resulting from operations | 23,805,054 | (1,137,187 | ) | |||||
DISTRIBUTIONS TO SHAREHOLDERS: | ||||||||
From distributable earnings | ||||||||
Institutional Class | (1,075,181 | ) | (1,118,369 | ) | ||||
Investor Class | (188 | ) | (328 | ) | ||||
From return of capital | ||||||||
Institutional Class | — | (250 | ) | |||||
Investor Class | — | — | ||||||
Total distributions to shareholders | (1,075,369 | ) | (1,118,947 | ) | ||||
CAPITAL SHARE TRANSACTIONS: | ||||||||
Net increase (decrease) in net assets resulting | ||||||||
from capital share transactions(1) | (2,315,892 | ) | 66,928,321 | |||||
NET INCREASE IN NET ASSETS | 20,413,793 | 64,672,187 | ||||||
NET ASSETS: | ||||||||
Beginning of period | 108,274,090 | 43,601,903 | ||||||
End of period | $ | 128,687,883 | $ | 108,274,090 |
(1) | A summary of capital share transactions is as follows: |
Six Months Ended | ||||||||||||||||
June 30, 2021 | For the Year Ended | |||||||||||||||
SHARE TRANSACTIONS: | (Unaudited) | December 31, 2020 | ||||||||||||||
Institutional Class | Shares | Amount | Shares | Amount | ||||||||||||
Issued | 37,528 | $ | 401,918 | 1,615,452 | $ | 16,029,710 | ||||||||||
Issued in transfer-in-kind | — | — | 5,042,906 | 50,328,202 | ||||||||||||
Issued to holders in reinvestment of dividends | 84,399 | 969,502 | 108,176 | 1,006,054 | ||||||||||||
Redeemed | (359,277 | ) | (3,690,020 | ) | (41,006 | ) | (443,076 | ) | ||||||||
Net increase (decrease) in Institutional Class | (237,350 | ) | $ | (2,318,600 | ) | 6,725,528 | $ | 66,920,890 | ||||||||
Investor Class | ||||||||||||||||
Issued | 239 | $ | 2,520 | 750 | $ | 7,230 | ||||||||||
Issued to holders in reinvestment of dividends | 17 | 188 | 22 | 201 | ||||||||||||
Net increase in Investor Class | 256 | 2,708 | 772 | 7,431 | ||||||||||||
Net increase (decrease) in shares outstanding | (237,094 | ) | $ | (2,315,892 | ) | 6,726,300 | $ | 66,928,321 |
The accompanying notes are an integral part of these financial statements.
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HEITMAN US REAL ESTATE SECURITIES FUND
Financial Highlights
Six Months Ended | Year Ended | Year Ended | Year Ended | |||||||||||||
June 30, 2021 | December 31, | December 31, | December 31, | |||||||||||||
(Unaudited) | 2020 | 2019 | 2018(1) | |||||||||||||
Institutional Class | ||||||||||||||||
PER SHARE DATA(2): | ||||||||||||||||
Net asset value, beginning of period | $ | 10.03 | $ | 10.71 | $ | 9.21 | $ | 10.00 | ||||||||
INVESTMENT OPERATIONS: | ||||||||||||||||
Net investment income(3) | 0.12 | 0.16 | 0.15 | 0.27 | ||||||||||||
Net realized and unrealized | ||||||||||||||||
gain (loss) on investments | 2.14 | (0.64 | ) | 2.08 | (0.61 | ) | ||||||||||
Total from investment operations | 2.26 | (0.48 | ) | 2.23 | (0.34 | ) | ||||||||||
LESS DISTRIBUTIONS FROM: | ||||||||||||||||
Net investment income | (0.10 | ) | (0.18 | ) | (0.19 | ) | (0.14 | ) | ||||||||
Net realized gains | — | (0.02 | ) | (0.54 | ) | (0.28 | ) | |||||||||
Return of capital | — | (0.00 | )(4) | — | (0.03 | ) | ||||||||||
Total distributions | (0.10 | ) | (0.20 | ) | (0.73 | ) | (0.45 | ) | ||||||||
Redemption fees | — | — | — | 0.00 | (4) | |||||||||||
Net asset value, end of period | $ | 12.19 | $ | 10.03 | $ | 10.71 | $ | 9.21 | ||||||||
TOTAL RETURN(5) | 22.62 | % | -4.28 | % | 24.50 | % | -3.52 | % | ||||||||
SUPPLEMENTAL DATA AND RATIOS: | ||||||||||||||||
Net assets, end of period (in thousands) | $ | 128,663 | $ | 108,256 | $ | 43,591 | $ | 16,880 | ||||||||
Ratio of gross expenses to average net assets: | ||||||||||||||||
Before expense reimbursement(6) | 0.89 | % | 1.29 | % | 1.45 | % | 3.40 | % | ||||||||
After expense reimbursement(6) | 0.77 | % | 0.77 | % | 0.77 | % | 0.48 | %(7) | ||||||||
Ratio of net investment income | ||||||||||||||||
to average net assets(6) | 2.22 | % | 1.65 | % | 1.39 | % | 2.67 | % | ||||||||
Portfolio turnover rate(5)(8) | 61 | % | 216 | % | 149 | % | 148 | % |
(1) | Inception date of the Fund was January 1, 2018. |
(2) | For an Institutional Class share outstanding for the entire year. |
(3) | Calculated based on average shares outstanding during the year. |
(4) | Amount per share is less than $0.005. |
(5) | Not annualized for periods less than one year. |
(6) | Annualized for periods less than one year. |
(7) | The effect of the voluntary expense reimbursement on an Investor Class share as of December 31, 2018 was 0.285%. |
(8) | The portfolio turnover disclosed is for the Fund as a whole. The numerator for the portfolio turnover rate includes the lesser of purchases or sales (excluding short-term investments). The denominator includes the average fair value of long positions throughout the period. |
The accompanying notes are an integral part of these financial statements.
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HEITMAN US REAL ESTATE SECURITIES FUND
Financial Highlights
Six Months Ended | Year Ended | Year Ended | Year Ended | |||||||||||||
June 30, 2021 | December 31, | December 31, | December 31, | |||||||||||||
(Unaudited) | 2020 | 2019 | 2018(1) | |||||||||||||
Investor Class | ||||||||||||||||
PER SHARE DATA(2): | ||||||||||||||||
Net asset value, beginning of period | $ | 10.01 | $ | 10.70 | $ | 9.20 | $ | 10.00 | ||||||||
INVESTMENT OPERATIONS: | ||||||||||||||||
Net investment income(3) | 0.11 | 0.13 | 0.13 | 0.20 | ||||||||||||
Net realized and unrealized | ||||||||||||||||
gain (loss) on investments | 2.13 | (0.64 | ) | 2.08 | (0.57 | ) | ||||||||||
Total from investment operations | 2.24 | (0.51 | ) | 2.21 | (0.37 | ) | ||||||||||
LESS DISTRIBUTIONS FROM: | ||||||||||||||||
Net investment income | (0.09 | ) | (0.16 | ) | (0.17 | ) | (0.12 | ) | ||||||||
Net realized gains | — | (0.02 | ) | (0.54 | ) | (0.28 | ) | |||||||||
Return of capital | — | (0.00 | )(4) | — | (0.03 | ) | ||||||||||
Total distributions | (0.09 | ) | (0.18 | ) | (0.71 | ) | (0.43 | ) | ||||||||
Net asset value, end of period | $ | 12.16 | $ | 10.01 | $ | 10.70 | $ | 9.20 | ||||||||
TOTAL RETURN(5) | 22.45 | % | -4.51 | % | 24.22 | % | -3.86 | % | ||||||||
SUPPLEMENTAL DATA AND RATIOS: | ||||||||||||||||
Net assets, end of period (in thousands) | $ | 25 | $ | 18 | $ | 11 | $ | 9 | ||||||||
Ratio of gross expenses to average net assets: | ||||||||||||||||
Before expense reimbursement(6) | 1.14 | % | 1.52 | % | 1.70 | % | 12.23 | % | ||||||||
After expense reimbursement(6) | 1.02 | % | 1.02 | % | 1.02 | % | 0.73 | %(7) | ||||||||
Ratio of net investment income | ||||||||||||||||
to average net assets(6) | 1.98 | % | 1.42 | % | 1.14 | % | 2.07 | % | ||||||||
Portfolio turnover rate(5)(8) | 61 | % | 216 | % | 149 | % | 148 | % |
(1) | Inception date of the Fund was January 1, 2018. |
(2) | For an Investor Class share outstanding for the entire year. |
(3) | Calculated based on average shares outstanding during the year. |
(4) | Amount per share is less than $0.005. |
(5) | Not annualized for periods less than one year. |
(6) | Annualized for periods less than one year. |
(7) | The effect of the voluntary expense reimbursement on an Investor Class share as of December 31, 2018 was 0.285%. |
(8) | The portfolio turnover disclosed is for the Fund as a whole. The numerator for the portfolio turnover rate includes the lesser of purchases or sales (excluding short-term investments). The denominator includes the average fair value of long positions throughout the year. |
The accompanying notes are an integral part of these financial statements.
12
HEITMAN US REAL ESTATE SECURITIES FUND
Notes to the Financial Statements (Unaudited)
June 30, 2021
1. ORGANIZATION
Series Portfolios Trust (the “Trust”) was organized as a Delaware statutory trust under a Declaration of Trust dated July 27, 2015. The Trust is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. The Heitman US Real Estate Securities Fund (the “Fund”) is a “non-diversified company” as that term is defined in the 1940 Act. Investment advisory services are provided to the Fund by Heitman Real Estate Securities, LLC (the “Adviser”), pursuant to the Investment Advisory Agreement (the “Advisory Agreement”). The Adviser’s parent company is Heitman LLC. The Adviser may be deemed to be controlled by KE I LLC, a Delaware limited liability company that is 100% owned by and controlled by the employees of Heitman LLC.
The primary investment objective of the Fund seeks to achieve long-term total return. The Fund commenced operations on January 1, 2018. The Fund is an investment company and accordingly follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (the “Codification”) Topic 946 Financial Services – Investment Companies. The Fund does not hold itself out as related to any other series of the Trust for purposes of investment and investor services, nor does it share the same investment adviser with any other series of the Trust.
The Fund offers two share classes, Institutional Class and Investor Class. Neither class of shares have any front end sales loads or deferred sales charges; however both classes have a 1.00% redemption fee on shares held 30 days or less. Investor Class shares are subject to a distribution fee and a shareholder servicing fee of up to 0.25% and 0.15% of average daily net assets, respectively. Institutional Class shares are not subject to a distribution fee or shareholder servicing fee.
The Fund may issue an unlimited number of shares of beneficial interest, with no par value. All shares of the Fund have equal rights and privileges except with respect to distribution and shareholder servicing fees and voting rights on matters affecting a single share class.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. These policies are in conformity with generally accepted accounting principles in the United States of America (“GAAP”).
A. Investment Valuation – The following is a summary of the Fund’s pricing procedures. It is intended to be a general discussion and may not necessarily reflect all the pricing procedures followed by the Fund. Equity securities, including common stocks, preferred stocks, and real estate investment trusts (“REITs”) that are traded on a national securities exchange, except those listed on the Nasdaq Global Market®, Nasdaq Global Select Market® and the Nasdaq Capital Market® exchanges (collectively “Nasdaq”), are valued at the last reported sale price on that exchange on which the security is principally traded. Securities traded on Nasdaq will be valued at the Nasdaq Official Closing Price (“NOCP”). If, on a particular day, an exchange traded or Nasdaq security does not trade, then the mean between the most recent quoted bid and asked prices will be used. All equity securities that are not traded on a listed exchange are valued at the last sale price in the over-the-counter market. If a non-exchange traded equity security does not trade on a particular day, then the mean between the last quoted closing bid and asked prices will be used. To the extent these securities are actively traded and valuation adjustments are not applied, they are categorized in Level 1 of the fair value hierarchy.
13
HEITMAN US REAL ESTATE SECURITIES FUND
Notes to the Financial Statements (Unaudited) – Continued
June 30, 2021
Fixed income securities, including short-term debt instruments having a maturity less than 60 days, are valued at the evaluated mean price supplied by an approved independent third-party pricing service (“Pricing Service”). These securities are categorized in Level 2 of the fair value hierarchy.
Exchange traded funds are valued at the last reported sale price on the exchange on which the security is principally traded. If, on a particular day, an exchange traded fund does not trade, then the mean between the most recent quoted bid and asked prices will be used. To the extent these securities are actively traded and valuation adjustments are not applied, they are categorized in Level 1 of the fair value hierarchy.
Investments in registered open–end investment companies (including money market funds), other than exchange traded funds, are valued at their reported net asset value (“NAV”) per share. To the extent these securities are valued at their NAV per share, they are categorized in Level 1 of the fair value hierarchy.
Securities for which market quotations are not readily available, or if the closing price does not represent fair value, are valued following procedures approved by the Board of Trustees (the “Board”). These procedures consider many factors, including the type of security, size of holding, trading volume and news events. There can be no assurance that the Fund could obtain the fair value assigned to a security if they were to sell the security at approximately the time at which the Fund determines their net asset values per share. The Board has established a Valuation Committee to administer, implement, and oversee the fair valuation process, and to make fair value decisions when necessary. The Board regularly reviews reports that describe any fair value determinations and methods.
The Fund has adopted authoritative fair value accounting standards which establish an authoritative definition of fair value and set out a hierarchy for measuring fair value. These standards require additional disclosures about the various inputs and valuation techniques used to develop the measurements of fair value, a discussion in changes in valuation techniques and related inputs during the period and expanded disclosure of valuation levels for major security types. These inputs are summarized in the three broad levels listed below:
Level 1 – | Unadjusted quoted prices in active markets for identical assets or liabilities that the Fund has the ability to access. |
Level 2 – | Observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates and similar data. |
Level 3 – | Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available, representing the Fund’s own assumptions about the assumptions a market participant would use in valuing the asset or liability, and would be based on the best information available. |
The inputs or methodology used for valuing securities are not an indication of the risk associated with investing in those securities.
14
HEITMAN US REAL ESTATE SECURITIES FUND
Notes to the Financial Statements (Unaudited) – Continued
June 30, 2021
The following table is a summary of the inputs used to value the Fund’s securities by level within the fair value hierarchy as of June 30, 2021:
Investments at Fair Value | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Assets | ||||||||||||||||
REITs(1) | $ | 128,108,005 | $ | — | $ | — | $ | 128,108,005 | ||||||||
Short-Term Investments | 898,323 | — | — | 898,323 | ||||||||||||
$ | 129,006,328 | $ | — | $ | — | $ | 129,006,328 |
(1) | Please refer to the Schedule of Investments to view REITs segregated by sub-industry type. |
During the year ended June 30, 2021, the Fund did not hold any Level 3 securities, nor were there any transfers into or out of Level 3.
B. REITs – Investments in the real estate industry involve particular risks. The real estate industry has been subject to substantial fluctuations and declines on a local, regional and national basis in the past and may continue to be in the future. Real property values and income from real property may decline due to general and local economic conditions, overbuilding and increased competition, increases in property taxes and operating expenses, changes in zoning laws, casualty or condemnation losses, regulatory limitations on rents, changes in neighborhoods and in demographics, increases in market interest rates, or other factors. Factors such as these may adversely affect companies that own and operate real estate directly, companies that lend to such companies, and companies that service the real estate industry.
Investments in REITs also involve risks. Equity REITs will be affected by changes in the values of and income from the properties they own, while Mortgage REITs may be affected by the credit quality of the mortgage loans they hold. In addition, REITs are dependent on specialized management skills and on their ability to generate cash flow for operating purposes and to make distributions to shareholders or unitholders. REITs may have limited diversification and are subject to risks associated with obtaining financing for real property. As well as to the risk of self-liquidation. REITs also can be adversely affected by their failure to qualify for preferential tax treatment of their income under the Internal Revenue Code of 1986, as amended (the “Code”), or their failure to maintain an exemption from registration under the 1940 Act. By investing in REITs indirectly through the Fund, a shareholder bears not only a proportionate share of the expenses of the Fund, but also may indirectly bear similar expenses of some of the REITs in which it invests.
Real property investments are also subject to risks which are specific to the investment sector or type of property in which the real estate companies are investing.
• | Retail Properties. Retail properties are affected by the overall health of the applicable economy and may be adversely affected by the growth of alternative forms of retailing, bankruptcy, departure or cessation of operations of a tenant, a shift in consumer demand due to demographic changes, spending patterns and lease terminations. | |
• | Office Properties. Office properties are affected by the overall health of the economy and other factors such as a downturn in the businesses operated by their tenants, obsolescence and non-competitiveness. | |
• | Hotel Properties. The risks of hotel properties include, among other things, the necessity of a high level of continuing capital expenditures, competition, increases in operating costs which may not be offset by increases in revenues, dependence on business and commercial travelers and tourism, increases in fuel costs and other expenses of travel and adverse effects of general and local economic conditions. |
15
HEITMAN US REAL ESTATE SECURITIES FUND
Notes to the Financial Statements (Unaudited) – Continued
June 30, 2021
• | Healthcare Properties. Healthcare properties and healthcare providers are affected by several significant factors, including Federal, state and local laws governing licenses, certification, adequacy of care, pharmaceutical distribution, medical rates, equipment, personnel and other factors regarding operations; continued availability of revenue from government reimbursement programs (primarily Medicaid and Medicare); and competition on a local and regional basis. | |
• | Multifamily Properties. The value and successful operation of a multifamily property may be affected by a number of factors such as the location of the property, the ability of the management team, the level of mortgage rates, presence of competing properties, adverse economic conditions in the locale, oversupply and rent control laws or other laws affecting such properties. | |
• | Insurance Issues. Certain real estate companies may carry comprehensive liability, fire, flood, earthquake extended coverage and rental loss insurance with various policy specifications, limits and deductibles. | |
• | Credit Risk. Real estate investment trusts may be highly leveraged, and financial covenants may affect the ability of REITs to operate effectively. | |
• | Environmental Issues. In connection with the ownership (direct or indirect), operation, management and development of real properties that may contain hazardous or toxic substances, a portfolio company may be considered an owner, operator or responsible party of such properties and, therefore, may be potentially liable for removal or remediation costs, as well as certain other costs, including governmental fines and liabilities for injuries to persons and property. | |
• | Smaller Companies. Even the larger REITs in the industry tend to be small- to medium-sized companies in relation to the equity markets as a whole. REIT shares, therefore, can be more volatile than, and perform differently from, larger company stocks. | |
• | REIT Tax Issues. REITs are subject to a highly technical and complex set of provisions in the Code. It is possible that the Fund may invest in a real estate company which purports to be a REIT and that the company could fail to qualify as a REIT. In the event of any such unexpected failure to qualify as a REIT, the company would be subject to corporate level taxation, significantly reducing the return to the Fund on its investment in such a company. |
C. Foreign Securities and Currency Translation – Investment securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at the date of valuation. Purchases and sales of investment securities and income and expense items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not isolate the portion of the results of operations from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Reported net realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period-end, resulting from changes in exchange rates.
Investments in foreign securities entail certain risks. There may be a possibility of nationalization or expropriation of assets, confiscatory taxation, political or financial instability, and diplomatic developments that could affect the value of the Fund’s investments in certain foreign countries. Since foreign securities normally are denominated and traded in foreign currencies, the value of the Fund’s assets may be affected favorably or unfavorably by
16
HEITMAN US REAL ESTATE SECURITIES FUND
Notes to the Financial Statements (Unaudited) – Continued
June 30, 2021
currency exchange rates, currency exchange control regulations, foreign withholding taxes, and restrictions or prohibitions on the repatriation of foreign currencies. There may be less information publicly available about a foreign issuer than about a U.S. issuer, and foreign issuers are not generally subject to accounting, auditing, and financial reporting standards and practices comparable to those in the United States. The securities of some foreign issuers are less liquid and at times more volatile than securities of comparable U.S. issuers.
D. Cash and Cash Equivalents – The Fund considers highly liquid short-term fixed income investments purchased with an original maturity of less than three months to be cash equivalents. Cash equivalents are included in short-term investments on the Schedule of Investments as well as in investments on the Statement of Assets and Liabilities. Temporary cash overdrafts are reported as payable to custodian.
E. Guarantees and Indemnifications – In the normal course of business, the Fund enters into contracts with service providers that contain general indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Fund that have not yet occurred.
F. Security Transactions, Income and Expenses – The Fund follows industry practice and records security transactions on the trade date. Realized gains and losses on sales of securities are calculated on the basis of identified cost. Dividend income is recorded on the ex-dividend date and interest income and expense is recorded on an accrual basis. Withholding taxes on foreign dividends have been provided for in accordance with the Fund’s understanding of the applicable country’s tax rules and regulations. Dividends received from the Fund’s investment in REITs may be characterized as ordinary income, net capital gain, or a return of capital. The proper characterization of REIT distributions is generally not known until after the end of each calendar year. The Fund must use estimates in reporting the character of its income and distributions for financial statement purposes. The actual character of distributions to Fund shareholders will be reflected on the Form 1099 received by shareholders after the end of the calendar year. Due to the nature of REIT investments, a portion of the distributions received by a Fund shareholder may represent a return of capital. Discounts and premiums on securities purchased are amortized over the expected life of the respective securities using the effective interest method.
G. Allocation of Income, Expenses and Gains/Losses – Income, expenses (other than those deemed attributable to a specific share class), and gains and losses of the Fund are allocated daily to each class of shares based upon the ratio of net assets represented by each class as a percentage of the net assets of the Fund. Expenses deemed directly attributable to a class of shares are recorded by the specific class. Most Fund expenses are allocated by class based on relative net assets. Distribution fees are expensed at up to 0.25% of average daily net assets of Investor Class shares (See Note 5). Shareholder servicing fees are expensed at an annual rate of up to 0.15% of average daily net assets of Investor Class shares (See Note 5). Sub-transfer agent fees are allocated to the Institutional Class. Trust Expenses associated with a specific fund in the Trust are charged to that fund. Common Trust expenses are typically allocated evenly between the funds of the Trust, or by other equitable means.
H. Share Valuation – The NAV per share of the Fund is calculated by dividing the sum of the value of the securities held by the Fund, plus cash or other assets, minus all liabilities (including estimated accrued expenses) by the total number of shares outstanding for the Fund, rounded to the nearest cent. The Fund’s shares will not be priced on days which the New York Stock Exchange (“NYSE”) is closed for trading.
I. Use of Estimates – The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
17
HEITMAN US REAL ESTATE SECURITIES FUND
Notes to the Financial Statements (Unaudited) – Continued
June 30, 2021
J. Statement of Cash Flows – Pursuant to the Cash Flows Topic of the Codification, the Fund qualifies for an exemption from the requirement to provide a statement of cash flows and has elected not to provide a statement of cash flows.
3. RELATED PARTY TRANSACTIONS
The Trust has an agreement with the Adviser to furnish investment advisory services to the Fund. Pursuant to the Advisory Agreement, the Adviser is entitled to receive, on a monthly basis, an annual advisory fee equal to 0.57% of the Fund’s average daily net assets.
The Adviser has contractually agreed to reduce its management fees and/or absorb expenses of the Fund to ensure that total annual operating expenses after fee waiver and/or expense reimbursement (excluding distribution fees – Investor Class (See Note 5), shareholder servicing fees – Investor Class (See Note 5), acquired fund fees and expenses, front-end or contingent deferred loads, dividends and interest on short positions, taxes, leverage interest, brokerage fees (including commissions, mark-ups and mark-downs, other transactional expenses, annual account fees for margin accounts, expenses incurred in connection with any merger or reorganization, or extraordinary expenses such as litigation) do not exceed 0.77% of the Fund’s average daily net asset value. The Adviser may request recoupment of previously waived fees and reimbursed Fund expenses from the Fund for three years from the date they were waived or reimbursed, provided that, after payment of the recoupment, the Total Annual Fund Operating Expenses do not exceed the lesser of the Expense Cap: (i) in effect at the time of the waiver or reimbursement; or (ii) in effect at the time of recoupment. Fees voluntarily waived are not subject to recoupment and will be absorbed by the Adviser. The Operating Expenses Limitation Agreement is in effect and cannot be terminated through April 30, 2030. Thereafter, the agreement may be terminated any time upon 60 days written notice and approval by the Board and the Adviser, with consent of the Board. Waived fees and reimbursed expenses subject to potential recovery by year of expiration are as follows:
Expiration | Amount | |
July 2021 to December 2021 | $123,021 | |
January 2022 to December 2022 | $208,444 | |
January 2023 to December 2023 | $218,062 | |
January 2024 to June 2024 | $ 70,304 |
U.S. Bancorp Fund Services, LLC, doing business as U.S. Bank Global Fund Services (“Fund Services” or the “Administrator”) acts as the Fund’s Administrator, transfer agent, and fund accountant. U.S. Bank N.A. (the “Custodian”) serves as the custodian to the Fund. The Custodian is an affiliate of the Administrator. The Administrator performs various administrative and accounting services for the Fund. The Administrator prepares various federal and state regulatory filings, reports and returns for the Fund; prepares reports and materials to be supplied to the Trustees; monitors the activities of the Fund’s custodian; coordinates the payment of the Fund’s expenses and reviews the Fund’s expense accruals. The officers of the Trust, including the Chief Compliance Officer, are employees of the Administrator. As compensation for its services, the Administrator is entitled to a monthly fee at an annual rate based upon the average daily net assets of the Fund, subject to annual minimums. Fees paid by the Fund for administration and accounting, transfer agency, custody and compliance services for the period ended June 30, 2021, are disclosed in the Statement of Operations.
Quasar Distributors, LLC is the Fund’s distributor (the “Distributor”). The Distributor is not affiliated with the Adviser, Fund Services, or its affiliated companies.
18
HEITMAN US REAL ESTATE SECURITIES FUND
Notes to the Financial Statements (Unaudited) – Continued
June 30, 2021
4. TAX FOOTNOTE
Federal Income Taxes – The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended, necessary to qualify as a regulated investment company and distributes substantially all net taxable investment income and net realized gains to shareholders in a manner which results in no tax cost to the Fund. Therefore, no federal income or excise tax provision is required. As of and during the period ended June 30, 2021, the Fund did not have any tax positions that did not meet the “more-likely-than-not” threshold of being sustained by the applicable tax authority and did not have liabilities for any unrecognized tax benefits. The Fund recognizes interest and penalties, if any, related to unrecognized tax benefits on uncertain tax positions as income tax expense in the Statement of Operations. The Fund is subject to examination by taxing authorities for the tax periods since the commencement of operations.
As of December 31, 2020, the Fund’s most recently completed fiscal year end, the components of accumulated earnings (losses) for income tax purposes were as follows:
Tax cost of investments* | $ | 107,324,807 | |||
Gross unrealized appreciation | $ | 3,461,080 | |||
Gross unrealized depreciation | (3,057,857 | ) | |||
Net unrealized depreciation | 403,223 | ||||
Undistributed ordinary income | — | ||||
Undistributed long-term capital gain | — | ||||
Other accumulated loss | (1,391,341 | ) | |||
Total accumulated deficit | $ | (988,118 | ) |
* | Represents cost for federal income tax purposes and differs from cost for financial reporting purposes due to wash sales. |
A regulated investment company may elect for any taxable year to treat any portion of any qualified late year loss as arising on the first day of the next taxable year. Qualified late year losses are certain capital, and ordinary losses which occur during the portion of the Fund’s taxable period subsequent to October 31. The Fund did not defer any late year losses. As of December 31, 2020 the Fund had $28,022 and $1,363,319 in long-term and short-term capital loss carryovers, respectively; which will be permitted to be carried over for an unlimited period.
Distributions to Shareholders – The Fund distributes substantially all net investment income, if any, and net realized capital gains, if any, annually. Distributions to shareholders are recorded on the ex-dividend date. The treatment for financial reporting purposes of distributions made to shareholders during the year from net investment income or net realized capital gains may differ from their treatment for federal income tax purposes. These differences are caused primarily by differences in the timing of the recognition of certain components of income, expense or realized capital gain for federal income tax purposes. Where such differences are permanent in nature, GAAP requires that they be reclassified in the components of the net assets based on their ultimate characterization for federal income tax purposes. Any such reclassifications will have no effect on net assets, results of operations or net asset values per share of the Fund.
19
HEITMAN US REAL ESTATE SECURITIES FUND
Notes to the Financial Statements (Unaudited) – Continued
June 30, 2021
The tax character of distributions paid for the period ended June 30, 2021 and year ended December 31, 2020 were as follows:
Ordinary Income* | Long-Term Capital Gain | Return of Capital | Total | |
2021 | $1,075,369 | $ — | $ — | $1,075,369 |
2020 | 876,810 | 241,887 | 250 | 1,118,947 |
* | For federal income tax purposes, distributions of short-term capital gains are treated as ordinary income distributions. |
5. DISTRIBUTION & SHAREHOLDER SERVICING FEES
The Fund has adopted a Distribution Plan pursuant to Rule 12b-1 (the “Plan”) for the Investor Class. The Plan permits the Fund to pay for distribution and related expenses at an annual rate of 0.25% average daily net assets of the Investor Class. Amounts paid under the Plan are paid to the Distributor to compensate it for costs of the services it provides to the Investor Class shares of the Fund and the expenses it bears in the distribution of the Fund’s Investor Class shares, including overhead and telephone expenses; printing and distribution of prospectuses and reports used in connection with the offering of the Fund’s Investor class shares to prospective investors; and preparation, printing, payments to intermediaries and distribution of sales literature and advertising materials.
Under the Plan, the Board will be furnished quarterly with information detailing the amount of expenses paid under the Plan and the purposes for which payments were made. The Plan may be terminated at any time by vote of a majority of the Board of the Trust who are not interested persons. Continuation of the Plan is considered by the Board no less frequently than annually. With the exception of the Distributor and the Adviser, in their capacities as the Fund’s principal underwriter and distribution coordinator, respectively, no interested person has or had a direct or indirect financial interest in the Plan or any related agreement. For the period ended June 30, 2021, the Investor Class incurred expenses of $27 pursuant to the Plan.
In addition, pursuant to a Shareholder Servicing Plan (the “Shareholder Servicing Plan”) adopted by the Trust on behalf of the Fund, the Adviser is authorized to engage financial institutions, securities dealers and other industry professionals (each a “Shareholder Servicing Agent”) to provide personal shareholder services relating to the servicing and maintenance of shareholder accounts not otherwise provided to the Fund. Payments made pursuant to the Shareholder Servicing Plan shall not exceed 0.15% of the average daily net asset value of the Investor Class of the Fund’s shares. For the period ended June 30, 2021, the Investor Class did not incur any expenses under the plan.
Payments made under the Shareholder Servicing Plan shall be used to compensate Shareholder Servicing Agents for providing general shareholder liaison services, including, but not limited to: (i) answering inquiries from shareholders regarding account status and history, the manner in which purchases and redemptions of the Fund shares may be affected, and other matters pertaining to the Fund; (ii) assisting shareholders in designating and changing dividend options, account designations and addresses; (iii) arranging for wiring of funds and transmitting and receiving funds in connection with orders to purchase or redeem fund shares; (iv) verifying and guaranteeing shareholder signatures in connection with orders to purchase or redeem fund shares; (v) providing such other similar services related to the maintenance of shareholder accounts; and (vi) providing necessary personnel and facilities to conduct the activities described above.
Distribution and shareholder servicing fees are not subject to the Operating Expenses Limitation Agreement (See Note 3) to reduce management fees and/or absorb Fund expenses by the Adviser. Distribution and shareholder servicing fees will increase the expenses beyond the Operating Expenses Limitation Agreement rate of 0.77% for the Investor Class shares.
20
HEITMAN US REAL ESTATE SECURITIES FUND
Notes to the Financial Statements (Unaudited) – Continued
June 30, 2021
6. INVESTMENT TRANSACTIONS
The aggregate purchases and sales, excluding short-term investments, by the Fund for the period ended June 30, 2021, were as follows:
Purchases | Sales | ||
U.S. Government | $ — | $ — | |
Other | 70,277,467 | 72,141,945 |
7. BENEFICIAL OWNERSHIP
The beneficial ownership, either directly or indirectly, of more than 25% of the voting securities of a fund creates a presumption of control of the fund, under Section 2(a)(9) of the Investment Company Act of 1940. As of June 30, 2021, two beneficial ownership accounts owned 73.86% of the outstanding shares of the Fund.
8. COVID-19
The global outbreak of COVID-19 (commonly referred to as “coronavirus”) has disrupted economic markets and the prolonged economic impact is uncertain. The ultimate economic fallout from the pandemic, and the long-term impact on economies, markets, and industries and individual issuers, are not known. The operational and financial performance of the issuers of securities in which the Fund invests depends on future developments, including the duration and spread of the outbreak, and such uncertainty may in turn adversely affect the value of liquidity of the Fund’s investments, impair the Fund’s ability to satisfy redemption requests, and negatively impact the Fund’s performance.
9. SUBSEQUENT EVENTS
On July 7, 2021, Foreside Financial Group, LLC (“Foreside”), the parent company of Quasar Distributors, LLC (“Quasar”), the Fund’s distributor, announced that it had entered into a definitive purchase and sale agreement with Genstar Capital (“Genstar”) such that Genstar would acquire a majority stake in Foreside. The transaction is expected to close at the end of the third quarter of 2021. Quasar will remain the Fund’s distributor at the close of the transaction, subject to Board approval. On July 22, 2021, the Board approved a new Distribution Agreement to enable Quasar to continue serving as the Fund’s Distributor.
Management has evaluated events and transactions for potential recognition or disclosure through the date the financial statements were issued and has determined that no additional items require recognition or disclosure.
21
HEITMAN US REAL ESTATE SECURITIES FUND
Additional Information (Unaudited)
June 30, 2021
AVAILABILITY OF FUND PORTFOLIO INFORMATION
The Fund files complete schedules of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Part F of Form N-PORT, which is available on the SEC’s website at www.sec.gov. The Fund’s Part F of Form N-PORT may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. For information on the Public Reference Room call 1-800-SEC-0330. In addition, the Fund’s Part F of Form N-PORT is available without charge upon request by calling 1-888-799-2944.
AVAILABILITY OF PROXY VOTING INFORMATION
A description of the Fund’s Proxy Voting Policies and Procedures is available without charge, upon request, by calling 1-888-799-2944. Information regarding how the Fund voted proxies relating to portfolio securities during the most recent period ended June 30, is available (1) without charge, upon request, by calling 1-888-799-2944, or (1) on the SEC’s website at www.sec.gov.
22
HEITMAN US REAL ESTATE SECURITIES FUND
Privacy Notice (Unaudited)
The Fund collects non-public information about you from the following sources:
• | Information we receive about you on applications or other forms; | |
• | Information you give us orally; and/or | |
• | Information about your transactions with us or others |
We do not disclose any non-public personal information about our customers or former customers without the customer’s authorization, except as permitted by law. We may share information with affiliated and unaffiliated third parties with whom we have contracts for servicing the Fund. We will provide unaffiliated third parties with only the information necessary to carry out their assigned responsibilities. We maintain physical, electronic and procedural safeguards to guard your personal information and require third parties to treat your personal information with the same high degree of confidentiality.
In the event that you hold shares of the Fund through a financial intermediary, including, but not limited to, a broker- dealer, bank, or trust company, the privacy policy of your financial intermediary would govern how your non-public personal information would be shared with unaffiliated third parties.
23
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INVESTMENT ADVISER
Heitman Real Estate Securities, LLC
191 North Wacker Drive
Chicago, IL 60606
DISTRIBUTOR
Quasar Distributors, LLC
111 East Kilbourn Avenue, Suite 2200
Milwaukee, WI 53202
CUSTODIAN
U.S. Bank N.A.
1555 North Rivercenter Drive
Milwaukee, WI 53212
ADMINISTRATOR, FUND ACCOUNTANT AND TRANSFER AGENT
U.S. Bancorp Fund Services, LLC
615 East Michigan Street
Milwaukee, WI 53202
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Cohen & Company, Ltd.
342 North Water Street, Suite 830
Milwaukee, WI 53202
LEGAL COUNSEL
Goodwin Procter LLP
1900 N Street, NW
Washington, DC 20036
This report should be accompanied or preceded by a prospectus.
The Fund’s Statement of Additional Information contains additional information about
the Fund’s trustees and is available without charge upon request by calling 1-888-799-2944.
(b) | Not applicable. |
Item 2. Code of Ethics.
Not applicable for semi-annual reports.
Item 3. Audit Committee Financial Expert.
Not applicable for semi-annual reports.
Item 4. Principal Accountant Fees and Services.
Not applicable for semi-annual reports.
Item 5. Audit Committee of Listed Registrants.
Not applicable for semi-annual reports.
Item 6. Schedule of Investments.
(a) | Schedule of Investments is included as part of the report to shareholders filed under Item 1 of this Form. |
(b) | Not applicable |
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Not applicable to open-end investment companies.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable to open-end investment companies.
Item 9. Purchases of Equity Securities by Closed‑End Management Investment Company and Affiliated Purchases.
Not applicable to open-end investment companies.
Item 10. Submission of Matters to a Vote of Security Holders.
There have been no material changes to the procedures by which shareholders may recommend nominees to the registrant’s board of trustees.
Item 11. Controls and Procedures.
(a) | The Registrant’s President and Treasurer have reviewed the Registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940 (the “Act”)) as of a date within 90 days of the filing of this report, as required by Rule 30a-3(b) under the Act and Rules 13a-15(b) or 15d‑15(b) under the Securities Exchange Act of 1934. Based on their review, such officers have concluded that the disclosure controls and procedures are effective in ensuring that information required to be disclosed in this report is appropriately recorded, processed, summarized and reported and made known to them by others within the Registrant and by the Registrant’s service provider. |
(b) | There were no significant changes in the Registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the Act) that occurred during the second fiscal quarter of the period covered by this report that 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 to open-end investment companies.
Item 13. Exhibits.
(a) | (1) Any code of ethics or amendment thereto, that is subject of the disclosure required by Item 2, to the extent that the registrant intends to satisfy Item 2 requirements through filing an exhibit. Not applicable for semi-annual reports. |
(3) Any written solicitation to purchase securities under Rule 23c‑1 under the Act sent or given during the period covered by the report by or on behalf of the registrant to 10 or more persons. Not applicable to open-end investment companies.
(4) Change in the registrant’s independent public accountant. There was no change in the registrant’s independent public accountant for the period covered by this report.
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) Series Portfolios Trust
By (Signature and Title) /s/ Ryan Roell
Ryan Roell, President
Date September 2, 2021
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/ Ryan Roell
Ryan Roell, President
Date September 2, 2021
By (Signature and Title) ) /s/ Cullen Small
Cullen Small, Treasurer
Date September 2, 2021