N-CSR 1 egvf-ncsra.htm EVERMORE GLOBAL VALUE FUND ANNUAL REPORT 12-31-21
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 (811-22335)



Evermore Funds Trust
(Exact name of registrant as specified in charter)



89 Summit Avenue
Summit, New Jersey 07901
(Address of principal executive offices) (Zip code)



Eric LeGoff
89 Summit Ave, 3rd Floor
Summit, New Jersey 07901
(Name and address of agent for service)



(866) 383-7667
Registrant's telephone number, including area code



Date of fiscal year end: December 31, 2021



Date of reporting period:  January 1, 2021 through December 31, 2021



Item 1. Reports to Stockholders.

(a)




Evermore Global Value Fund
Annual Report  •  December 31, 2021



Table of Contents

Shareholder Letter & Management Discussion of Fund Performance (Unaudited)
   
1
       
Performance Information (Unaudited)
   
13
       
Sector Allocation (Unaudited)
   
14
       
Expense Example (Unaudited)
   
15
       
Schedule of Investments
   
16
       
Statement of Assets and Liabilities
   
20
       
Statement of Operations
   
21
       
Statements of Changes in Net Assets
   
22
       
Financial Highlights
   
23
       
Notes to Financial Statements
   
25
       
Report of Independent Registered Public Accounting Firm
   
37
       
Annual Review of Liquidity Risk Management Program (Unaudited)
   
38
       
Approval of Investment Advisory Agreement (Unaudited)
   
39
       
Trustees and Executive Officers (Unaudited)
   
40
       
Additional Information (Unaudited)
   
42
       
Privacy Notice (Unaudited)
   
43

 

Evermore Global Value Fund


Elements of Our Investment Approach
 
At Evermore Global Advisors, we seek to leverage our deep operating and investing experience, and extensive global relationships to identify and invest in special situations – companies around the world that have compelling valuations and are undergoing strategic changes which we believe will unlock value.
 
Seeking to Generate Value . . .
 
Catalyst-Driven Investing.  We do more than simply pick undervalued stocks and hope for their prices to rise.  We invest in companies where we have determined a series of catalysts exist to unlock value.  The catalysts we look for are not broadly recognized, but they are likely to have a significant impact on a stock’s performance over time.  Catalysts may include management changes, shareholder activism, and operational and financial restructurings (e.g., cost-cutting, asset sales, breakups, spinoffs, mergers, acquisitions, liquidations, share buybacks, recapitalizations, etc.).
 
Supporting Our Active Value Orientation . . .
   
Original Fact-Based Research.  We conduct our own, original fact-based research to validate management’s stated objectives and identify catalysts to unlock value.  We also perform detailed business segment analysis on each company we research.
   
Business Operating Experience.  Our senior team has hands-on business operating experience including starting and managing businesses, sitting on company boards, and assisting management of multi-national corporations restructure their businesses.  We rely on this experience to better evaluate investment opportunities.
   
A Global Network of Strategic Relationships.  Over the past 25+ years, members of our investment team have developed extensive global networks of strategic relationships, including individuals and families that control businesses, corporate board members, corporate management, regional brokerage firms, press contacts, etc.  We leverage these relationships to help generate ideas and better evaluate investment opportunities.
   
We Invest Like Owners.  When we are interested in an investment opportunity, we get to know the management team of the company, study the company’s business model, evaluate the competitive and regulatory environment, and test and crosscheck everything the management team tells us against our own experience.  We ask ourselves if we would want to own the entire company.  If the answer is No, we will not invest in the company.
   
Not Activists, Often Collaborators.  We almost always take the approach of collaborative engagement with management, rather than taking an aggressive activist stance.  On limited occasions, when we are not satisfied with the efforts of the incumbent company leadership, we may work with other shareholders to help facilitate change.
 
Executing Our Approach . . .
   
Concentration Maintains Focus.  Focused and disciplined investing means knowing our businesses intimately and staying patient as the process of value creation unfolds.  We maintain focus by typically investing in 30 to 40 names with a high percentage of investments in our top 10 holdings.
   
Investing Across the Capital Structure.  We evaluate all components of a company’s capital structure to determine where the best risk-adjusted return potential exists.  At times, we may invest in multiple parts of a company’s capital structure (e.g., investing in both a company’s debt and equity).
   
Targeting Complex Investment Opportunities.  We often research family-controlled holding companies or conglomerates that are often under-researched and/or misunderstood, which can create gaps between price and value.
   
Merger Arbitrage and Distressed Companies.  We may take advantage of announced merger and acquisition deals where an attractive spread (difference) exists between the market price and the announced deal price for the target company.  We also look for opportunities in distressed companies that have filed or may file for bankruptcy, distressed companies involved in reorganizations or financial restructurings, and distressed companies that emerged from bankruptcy or reorganization.
   
Tactically Managing Cash Levels.  We are not afraid to hold significant cash positions when it makes sense for the portfolio.
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Evermore Global Value Fund
 
A Letter from the Portfolio Manager
 
 
David Marcus
Portfolio Manager
 
“The big money is not in the buying or selling, but in the waiting.” – Charlie Munger
 
Dear Shareholder:
 
Before I get started with my review of 2021, I would like to wish you all the best for a happy, safe, healthy, and prosperous 2022.  Going into 2021, we were hopeful that the advent of COVID-19 vaccines would soon mark the end of the pandemic, but we have all had to endure the Delta and Omicron variants, which have continued to disrupt our work and personal lives.  More on the pandemic and its impact in a bit.
 
2021 was a frustrating year for us.  Actually, the last two years have been quite frustrating.  The performance of the Evermore Global Value Fund (the “Fund”) has been basically just about flat since the start of 2020, which certainly does not meet the standard we set for ourselves.  But the performance figures over the past two years do not tell the whole story.  We have had an enormous amount of activity behind the scenes that just hasn’t yet manifested itself into the Fund’s performance.  My goal for this letter is to, of course, update you on 2021, but also to share some of what we are hearing and seeing out there, discuss the inputs that help inform our investment decisions, and to be certain you understand how the Fund is positioned as 2022 begins.
 
Following the huge shock of the pandemic in 2020, last year was marked by several major discussion points:  unusual supply shortages, the surge in inflation, two new waves of the pandemic, and the looming crisis surrounding Russia and Ukraine. All of these factors that shaped 2021 have now cast a shadow over the early outlook for 2022.  Although I am an optimist and believe that positive corporate and economic fundamentals should prevail over time, there are still a few big picture issues that we do need to think about.
 
Beginning with the pandemic, we are cautiously optimistic we could be reaching the end.  Vaccines, natural immunity, and a weaker virus, together, are making it appear that serious COVID-19-related illnesses are in decline.  While anecdotal, we know many people who have tested positive for Omicron in the last few weeks, and every single one of them, and their families, are fine; their cases were extremely mild.  Now, this could just be a really fortunate group, but I hope the same can be said in your lives, among your friends and family.  But this is not to say all the risk is gone.  In my mind, the pandemic is still the number one market risk, as it is still possible a new, more aggressive variant could easily set back the complete reopening of society globally.  For example, just take a look at China.  They shut down some cities again to slow the spread of Omicron, and we saw the impact these new closures could have on the supply chain.  The spread of Omicron across Europe has also slowed down their economic rebound.  But, we remain hopeful that last year’s rollercoaster with so many fits and starts will not reoccur in the new year.
 
In 2020, we often spoke about pent-up demand, and in 2021 we saw that pent-up demand unleashed globally, which put real strain on global supply chains and systems.  This coiled spring-like flurry of activity shows us that economic activity really can bounce back fast once a pandemic wave fades.  But here we are again, another northern hemisphere winter with COVID-19-related slowdowns.  The truth is, yes, shutdowns really moderate business activity, everywhere, not just in China or Europe.  Supply and demand get out of whack, customers and businesses behave more cautiously, and these shifts lead to bottlenecks, rising backlogs, and in turn, more delays.  But much of this, on a day-to-day basis, seems like a lot of noise, and these starts and stops should become less frequent, and continue to dissipate.  And this improvement should have an enormously positive impact on supply chains.
 
Frankly, we believe the last two years point to the system just not being able to handle volatility and scale of what is still a growing world.  And, not coincidentally, this sub-optimal infrastructure is also why we are big believers in the modernization of industrial-type businesses in the years ahead.  Lucky for us, we believe we own a good number of companies that will benefit from this modernization and digitalization.  But more on that another time, let’s move on to inflation.
 
Inflation is a word that now strikes fear into the markets. Up until perhaps a year ago there was minimal focus on inflation as it had not been a concern for the markets for over a decade.  We talk to management teams all the time.  A key part of the discussion more recently is how inflation has, or will, impact their businesses.  A number of the CEOs with whom we have spoken discussed how some small, yet critical, components that once were maybe $1 per unit are now $100 per unit.  This may not be that big a problem if they are selling high-priced items, but if we are talking about a $275 item, it is a very big problem.  Companies can often pass through some, or all, of the cost increase, but in other cases it just is not possible.
 
We have a cross section of companies in the portfolio.  Some, like Universal Music, Nordic Entertainment Group and MTG, will see virtually no impact from raw materials inflation, as they are asset-light businesses.  Others, like Montana Aerospace, Lifco and Storskogen, will be impacted but have thus far been able to pass through most of the price increases.  And then there are companies like ZIM and MPC Container Ships that are actually benefiting from inflation, as well as supply chain and logistics issues.  Their charter rates have exploded with demand remaining strong.  Remember, the shippers get paid whether they are sitting at the port with goods to be disembarked or moving back and forth to and from China.
 
Let’s talk about the situation between Russia and Ukraine.  It is impossible to know what will happen here.  A Russian invasion of Ukraine could potentially send shivers around global markets for a while.  It might raise commodity prices and add to near-term inflationary pressures.  What we do know is that, suddenly, there are over one hundred thousand troops and heavy armaments on Ukraine’s Southeastern and
2

Northeastern borders.  And these forces are being supplemented with Russian forces in Belarus, close to Ukraine’s capital, Kyiv.  Simultaneously, Putin has demanded that NATO rollback forces from member states, which include the nations formally contained within the USSR like Latvia and Lithuania.  It seems, however, that he is about to achieve the opposite, as President Biden has considered plans which would send thousands of American troops and tank busters to Eastern Europe.  So, all of this means the situation has elevated risks.  In our view, it could end up being sabre rattling or it could be something much more.
 
So, what’s the punchline in these observations? In the absence of another mega shock, I continue to expect that 2022 will turn into a decent year for the world economy and a reasonable one for the markets.  We view occasional bouts of uncertainty, and market corrections, as buying opportunities.
 
I don’t hide the fact that I am a Warren Buffett fan – I’ve gone to Berkshire Hathaway’s annual meeting for over 20 years, and I’m going to go again in 2022.  But like Buffett and Munger preach, I think it’s much more important to focus on things you can control, what you own, what those assets are doing, and how they can benefit you in the future.
 
Over the last 18 months, you may have heard or read about how we refocused the portfolio – we have moved out of many commodity type businesses, and have owned more specialty and family-controlled businesses.  We believe it is key to have a deep understanding of how the value will get to the shareholders.  And I truly feel we do, when owning these types of companies.  And yet, here we are, frustrated with recent results, during extraordinary times.  Smaller caps have been penalized more severely than larger caps when the market has dropped.  In some cases, these price movements made little to no sense, especially in light of the catalysts we see on the horizon.  And not just any catalysts.  We focus only on those catalysts we believe can be reflected in the stock price.
 
Asset sales are a great example and we have seen quite a number in recent months.  Here are some examples:
 
Modern Times Group MTG AB had massive news in January when they announced the sale of their eSports division, at an incredible valuation.  The price was huge, over $1 billion, which was more than we estimated it was worth.  We believe this is transformative news and will lead to both a return of capital to shareholders and a net cash war chest for the company.
   
Several months ago, Vivendi SA announced a sale of 10% and then the spinoff of Universal Music Group.  This is the first step in the latest chapter of the transformation of Vivendi.  We expect more asset sales this year, which will bolster an already net cash balance sheet.
   
Bolloré Group announced they are in exclusive talks to sell their African ports business for over $6 billion.  This would be an enormous windfall creating yet another net cash balance sheet in the portfolio.
   
IAC/InterActiveCorp holding Turo Inc., a peer-to-peer car sharing service, filed for an initial public offering (IAC owns 27% of Turo equity).  Furthermore, IAC has a significant amount of net cash for future acquisitions.
   
Exor NV sold PartnerRe for $9 billion.  We estimate they now have a net cash position for new acquisitions and higher dividends.
   
Calumet Specialty Products Partners, L.P. has restructured its debt and is now aggressively moving to monetize its renewable diesel business, a game changer for the company and its shareholders.

So where are we today? We own a portfolio of exceptionally strong balance sheets – nearly 75% of the portfolio has virtually no debt or a net cash position.  We own businesses with solid underlying cash flows and potential for growth.  Frankly, we believe the quality of our portfolio is robust and we don’t remember a time where we have owned a portfolio with so many catalysts underway.  We are excited for the year ahead.
 
Portfolio Snapshot:  Bolloré Group / Vivendi SA / Universal Music Group
 
I have been talking about Vivendi for many years now – how it was undervalued and that their ownership of Universal Music Group was an incredible gem.  During 2012, Bolloré Group, which is led by Vincent Bolloré, sold their television programming assets to Vivendi in return for Vivendi shares and cash.  I had already been an investor in Bolloré since we started the Fund in 2010 and, in fact, I had owned the stock for many years before as well.  We had always viewed Vivendi as a media and telecom conglomerate that was exceptionally undermanaged – a perennial tomorrow story, and even more bluntly, a true value trap.  However, once we saw Bolloré take stock in Vivendi, we knew the game had changed.  Bolloré’s approach has always been to find good assets and businesses that were trading at bargain prices. Over the next few years, Bolloré steadily increased its ownership in Vivendi to just under 30% of the company.  Along the way, they took control of the Vivendi board and bought and sold several of its media assets in Europe.  Some were great purchases (e.g., a large stake in Ubisoft, which was later sold at a huge profit) and others not so great (e.g., Telecom Italia, currently the target of a bid from KKR). As Vivendi transformed from a debt laden holding company to a cash rich and slowly tightening vertical, the company began paying out larger dividends and bonus dividends.  This culminated in the fourth quarter of 2021 with the listing of Universal Music Group (“UMG”) and paying 60% of the company out as a dividend to the Vivendi shareholders while retaining a 10% holding (note that the company had previously sold 20% of UMG to Tencent Group in China and 10% to hedge fund Pershing Square).  While not the most tax efficient way to distribute this incredible asset, primarily because the company did not do a full spin out of UMG, the position has compounded at a mid to high teens return.
 
We plan to keep the UMG investment as their prospects, being the largest music company in the world, are incredible over the coming years.  The company now has a currency, their stock, for partnerships and acquisitions. They have a strong balance sheet, and they have an unparalleled catalogue of artists from Taylor Swift to ABBA, Justin Bieber, Bon Jovi and many others on top of a back catalogue from Frank Sinatra, Marvin Gaye, Queen and many others.  The company is finding all kinds of new ways to monetize the old library via streaming and the demands of so many new media networks for movies and television shows, video and mobile gaming and other areas that are developing including in the world of tomorrow, the Metaverse.
3

Bolloré Group itself is also undergoing a major transformation.  Just before year end 2021, the company announced it had entered into exclusive negotiations to sell their portfolio of African ports.  The proceeds may be in excess of $6 billion, which would give Bolloré an incredible war chest for acquisitions.  We would not be surprised to see Bolloré increase their holdings in transportation and logistics businesses.  Nor would it be a surprise if the company looked to acquire/merge with Vivendi and slowly transform the way their business empire is focused and managed with other M&A to continue the transformation as Vincent Bolloré continues the process of handing control of the group to two of his sons – Yannick, who is currently the Chairman of Vivendi and Cyrille, who is the Chairman of Bolloré Group.
 
Year-End Portfolio Highlights
 
The Fund ended the quarter with $226.6 million in net assets and 34 issuer positions.  As of quarter end, 56.9% of the Fund’s net assets were in micro- and small-capitalization (up to $2 billion) companies; 16.5% were in mid-capitalization (between $2 billion and $10 billion) companies; and 23.1% were in large- capitalization (> $10 billion) companies.  The Fund had 3.4% of its net assets in cash and equivalents as of December 31, 2021.  Set forth below please find the following geographic and strategy classification breakdowns (shown as a % of Fund net assets) as of year end.
 
Region Exposure
 
Strategy Classification
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
Country Exposure
 
 
Throughout the course of 2021, the Fund initiated 18 new positions and exited 15 portfolio positions.  Please note that the Fund’s portfolio turnover in 2021 was 33.4%.
 
I would like to highlight several of the Fund’s investments we initiated during the year.  Please also see detailed summaries of the largest contributors to and detractors from the Fund’s 2021 investment performance in the Management’s Discussion of Fund Performance section of this Annual Report.
4

ZIM Integrated Shipping Services (ZIM US)
 
The Fund initiated its position in ZIM Integrated Shipping Services (“ZIM”) in the first quarter of 2021 and it was one of the Fund’s top performing positions for the year.  Please see a detailed discussion of ZIM in the Management’s Discussion of Fund Performance section of this Annual Report.
 
Hemnet Group AB (HEM SS)
 
The Fund initiated its position in Hemnet Group (“Hemnet”) during the second quarter of 2021 when it participated in the company’s initial public offering.  Hemnet is the leading online real estate classifieds business in Sweden.  The company was created in 1998 by the larger Swedish real estate broker community and media outlets (Dagens Nyheter, Göteborgs-Posten), and for its first 15 years in existence the organization did not charge sellers a fee for listing a property. While nominal listing fees were instituted in 2013, Hemnet’s commercialization journey really only began in 2017, after General Atlantic and Sprints Capital acquired control of the firm.  Hemnet remains in the early innings of its business transformation.
 
As has been demonstrated internationally and across several industry verticals including real estate, online classifieds markets are typically a “winner takes most” market where strong network effects consistently reinforce the top player’s market position.  In Hemnet’s case, sellers are incentivized to list their property on Hemnet given the site’s strong traffic levels (at least 11x greater traffic than its closest competitor) and relatively low listing fee (on average a base listing fee is just ~0.05% of a property’s value).  Just as importantly, brokers are incentivized to pitch sellers on Hemnet as a listing venue as they receive commissions and fees from Hemnet.  This aligned relationship between sellers and brokers results in a positive feedback loop, providing Hemnet a near impenetrable moat around its business.
 
Today, Hemnet’s dominance in the Swedish market cannot be overstated.  More than 90% of all properties sold in Sweden are listed on Hemnet, and the brand enjoys near 100% awareness among buyers and sellers.  Per the company, in 2020 Hemnet had on average 63 million monthly web/app sessions; for context, Sweden has a population of ~10 million.  And, according to YouGov, the only media brands in Sweden that rank higher than Hemnet in the eyes of consumers are Spotify, Netflix, YouTube, and SVT (the Swedish national public television broadcaster).
 
We decided to participate in the company’s IPO even though Hemnet did not necessarily screen as cheap on near term estimates, but we believed the business was massively under-earning given that it priced its product well below the economic value it provides customers.  For example, Australian peer REA Group (REA AU) realizes fees equal to 0.33% of the sales price for an average property.  This is about 5.5x the rate that Hemnet realizes, despite Hemnet enjoying a more dominant relative market position (for instance, REA site traffic is 2x that of its nearest competitor vs. 11x for Hemnet).  Coupled with a very low level of capital intensity and the rollout of new service offerings, we believed this latent pricing opportunity would provide a powerful tailwind and allow for free cash flow to compound at a strong double-digit compound annual growth rate (“CAGR”) for many years to come.  Over time, we believed Hemnet shares will compound in value at a similar CAGR as free cash flow.
 
Shares of Hemnet have appreciated nicely since the IPO.  We paid an IPO price of SEK 115 for Hemnet shares in late April and shares closed the year at SEK 167.30.
 
MPC Container Ships AS (MPCC NO)
 
We initiated our position in MPC Container Ships AS (“MPCC”) during the third quarter of 2021.  MPCC is a $1.24 billion market capitalization (as of year-end) large container ship operator specializing in intra-regional trade routes.  It is the largest owner and operator of feeder container vessels (1,000-4,000 twenty-foot equivalent unit (“TEU”), smaller end of the range) globally with a total fleet of 66 vessels and approximately 142,000 TEU of total carrying capacity.
 
We had been closely monitoring MPCC since it was founded and listed in June 2017.  While we were invited to participate in the initial and subsequent equity raises, we decided to pass as it was in its formative stages and the then newly formed vehicle was created to opportunistically acquire new and secondhand vessels.  Starting in late 2015 we have gained a deep knowledge of the shipping space, and specifically the container segment, through our past investments (and current investment in ZIM Integrated Shipping Services that was initiated in January 2021).
 
MPCC’s recent acquisition of its competitor, Songa Containers, was the impetus for us to revisit the investment case.  We believe this was a transformational and highly accretive acquisition that added 11 vessels ranging from 1,000 TEU to 4,250 TEU to MPCC’s fleet that now marks the company achieving its critical mass and optimal level of operational scale.  Songa Containers was privately owned by Arne Blystad, a well-regarded Norwegian billionaire investor and shipping magnate who we have gotten to know extremely well.  Arne Blystad was the founder and chairman of one of Evermore’s past investments – Songa Bulk – a dry bulk operator that eventually merged with Star Bulk (larger competitor).  Arne Blystad and his affiliated entities own 5% of MPCC.
 
Like the strong cash flow generation that we have observed at ZIM, we believed MPCC was positioned similarly with its focus on value creation for shareholders through dividends and potentially special dividends.  Based on the current strong backlog and continued positive charter rate development we saw, we believed MPCC could become net debt free / net cash early in 2022.  We believed the market was not giving any credit to the near- and medium-term charters that MPCC had already secured and was too fixated on the “high” container rates that the industry was currently benefiting from.  While we fully appreciated and recognized that these peak rates were unsustainable, the reality is that port congestion was continuing to worsen and that supply chain disruptions were continuing to persist (with bigger spillover issues that span beyond the ports).
5

MPCC was a compelling opportunity, trading at the time of our initial purchase at 2.5x our estimate of next year’s EBITDA, much of which has been de-risked through near-term charters that have been secured.  Further, we believed that MPCC could opportunistically sell its older feeder vessels at significant premiums based on recent transactions in the secondhand vessel market.
 
Storskogen Group AB (STORB SS)
 
The Fund initiated its position in Storskogen Group AB (“Storskogen”) during the fourth quarter of 2021.  Founded in 2012, Storskogen is a $10.2 billion market cap (as of year-end), Sweden-based diversified “compounder” with a long-term focus on acquiring well-run, small- and medium-sized companies that are cash generative with market leading positions in their respective niche markets.  While Sweden was its core market during its formative years, Storskogen expanded to the broader Nordic markets including Finland, Denmark, Norway, the UK and Switzerland.  Starting in 2020, Storskogen has further expanded its reach to select European countries with acquisitions in Germany, Switzerland and the UK.  For example, the acquisition of Artum, the leading Swiss industrial holding company, which Daniel Kaplan (CEO and co-founder) refers to as a “mini-Storskogen,” will facilitate greater access to opportunities in Europe and especially the DACH region.  Storskogen focuses on three business areas: Services (construction, infrastructure, logistics, digital service, etc.), Trade (distributors, brands and producers) and Industry (manufacturing, automation, industrial technology and product solutions).
 
We participated in the IPO at SEK 38.50 per share, which started trading on October 6th of 2021.  Our longstanding relationships with the bankers on the IPO afforded us the opportunity to get “wall crossed” on the transaction.  Ahead of the IPO, we spent a lot of time getting to know management and understanding the entrepreneurial DNA driving this M&A machine.  The founders, Daniel Kaplan, Alexander Murad Bjärgård (current head of M&A) and Ronnie Bergström (former head of the Industry Business Area), who in aggregate control over 50% of the voting shares, have built an exceptional acquisition platform for profitable, stable and market leading companies.
 
Similar to Evermore’s IPO investment in Lifco (12x share price appreciation from its 11/2014 listing through year-end 2021), we categorize Storskogen as an M&A compounder, a family-controlled company that has created substantial value through its focus on buying, building, and scaling up its portfolio via acquisitions in addition to organic growth.  Storskogen has an equally impressive track record of acquisitive growth having completed 152 acquisitions since inception (as of 11/2021).  During the same period, there have been no divestments or impairments in the portfolio.  Given the robust pipeline, we believe management has already earmarked attractive targets to deploy some of the SEK 7.2 billion of IPO net proceeds in short order.
 
Bottom Line
 
The pandemic has been a boon to some investors and not so good for others. We are in the latter group.  Both 2020 and 2021 have been frustrating and disappointing overall for us and our investors.  We have taken a lot of punches.  However, we believe that the end result of the pain and frustration has put the Fund’s portfolio in a very healthy position going forward.
 
Inflationary pressures, the ongoing impact of the pandemic on the supply chain, and the Russia-Ukraine situation will continue to create choppy markets.  That said, we expect earnings to continue to be strong across many of the sectors and companies in which the Fund invests, which we believe should translate to an improved performance profile for the Fund in the new year.
 
Thank you for your continued support and confidence.  We wish you and your families a safe, healthy and prosperous 2022.
 
 
David E. Marcus
Portfolio Manager
6

Management’s Discussion of Fund Performance
 
2021 was another challenging year for the Fund.  After three quarters, the Fund’s investment performance was basically flat.  The Fund posted strong investment results in the fourth quarter, which translated to shares of the Fund ending up over 6% for the year.  Specifically, for the year ended December 31, 2021, Institutional Class shares of the Fund were up 6.16%, lagging the performance of two of the three benchmark indices shown in the chart below – the HFRX Event Driven Index (“HFRX ED”) was up 0.48%, the MSCI All Country World Index ex USA (“MSCI ACWI ex USA”) was up 7.82%, and the MSCI All Country World Index (“MSCI ACWI”) was up 18.54%.
 
Investment Performance for the Year Ended December 31, 2021
 
 
Two of the top five contributors to Fund performance in 2021 were U.S. companies, one was a Middle Eastern company, one was an Asian company, and one was a European company.  All of the top five detractors to Fund performance were European companies.  In 2021, the Fund’s foreign currency forward contract positions meaningfully contributed to Fund performance, while portfolio hedges were collectively a small detractor to Fund performance.  The largest equity contributors and detractors to Fund performance (aside from forward contract positions) for the year were:
 
Top Contributors to Fund Performance
Top Detractors From Fund Performance
Calumet Specialty Products Partners, L.P. (U.S.)
Atlantic Sapphire ASA (Sweden)
ZIM Integrated Shipping Services Ltd. (Israel)
Modern Times Group MTG AB (Sweden)
KKR & Co. Inc. (U.S.)
Aker Biomarine ASA (Norway)
MagnaChip Semiconductor Corp. (South Korea)
LPKF Laser & Electronics AG (Germany)
Storskogen Group AB (Sweden)
Ice Group AS (Norway)

Please find a discussion below about the three largest contributors and three largest detractors to Fund performance in 2021.
 
Calumet Specialty Products Partners, L.P. (CLMT US)
 
Calumet Specialty Products Partners, L.P. (“Calumet”), a U.S.-based B2B and B2C producer of specialty lubricants, waxes, solvents, and fuels, was the largest contributor to Fund performance during 2021, with its units appreciating approximately 322%.  Calumet has been a Fund holding since January 2020, with the original thesis that the company would find a buyer for its non-core Great Falls Montana refinery on an “as is” basis in order to significantly deleverage its stretched balance sheet.  The Fund first purchased units at around $3.65, and at the time, our estimate of the company’s intrinsic value was about $6.00 per unit.
 
However, as 2020 got underway, and lockdowns took their toll on the demand for gasoline and jet fuel, bids that did materialize for Great Falls came in at opportunistically low levels.  Similarly, a rumored process to explore the sale of Calumet’s Performance Brands division apparently also yielded unsatisfactory feedback from potential bidders.
 
Behind the scenes, management had been exploring the potential value uplift to Great Falls through its conversion from a petroleum fuels refinery to one also capable of producing renewable diesel (“RD”).  It is important to note that RD is not the same as biodiesel or ethanol.  Instead, it is a highly sought-after fuel which can serve as up to a 100% drop-in replacement for petroleum-derived diesel without any engine modification or excess wear and tear.
7

Renewable diesel is playing an ever-increasing role in the decarbonization of truck fleets and other heavy diesel users, and its production is highly incentivized through tax credits and other governmental programs.  As the Calumet team dug in, the projected economics of the conversion project continued to improve.  In fact, given Great Fall’s location, in close proximity to key inputs to production (camelina, soy, corn, animal tallows), as well as end-demand in the Pacific Northwest and British Columbia (where strong economic incentive structures for RD exist), we believe this asset may be the single most advantaged renewable diesel project in all of North America.
 
In February 2021, the decision to move forward with the RD conversion was made public and the market cheered the development.  What would end up being especially unique in this case, is that the Great Falls refining complex could practically and legally be carved into two, whereby legacy refining units could continue to process crude into specialty asphalts and fuels (a stable, niche, and cash flowing business), while what is now known as Montana Renewables LLC (“MRL”) could simultaneously produce up to 18,000bpd of RD and support its own ownership and capital structures.
 
CLMT units continued to perform well in Q2 and Q3, as Calumet’s core Specialties Business showed strong demand growth even amid rising input costs and supply chain disruptions.  However, for much of the year there also existed a cloud of uncertainty regarding how Calumet would fund the approximately $200 million in conversion costs the MRL conversion project would entail, given Calumet’s already heavily indebted balance sheet.  This changed in November 2021 when the company finally announced funding plans that were well worthy of the approximately nine months we were forced to wait for them.  Ultimately Calumet did not need to directly sell any equity in MRL, which had been our base case assumption and would have been fairly dilutive given its pre-revenue state.  Instead, enough progress at MRL around design, engineering, and long-lead time component procurement progress had been made under Calumet’s stewardship that MRL itself was able to borrow (read: non-recourse to Calumet) $300 million via a privately placed callable convertible term loan featuring a market-adjustable strike price, which came in at an all-in cost below our expectations.  The market has taken notice, as have analysts that have turned quite constructive on units post this financing announcement.  We believe this term loan looks very much like bridge project financing that may ultimately be repaid as soon as later this year as management continues to seek external validation on the value of the RD asset.
 
We see a number of viable paths toward a market-based valuation at the now-carved-out MRL that might take the market by surprise.  All the while, Calumet’s Specialties Business, comprised of both B2B and B2C lines, has been running very well and is seeing incredibly strong demand growth.  As such, we feel Calumet enters 2022 in a position of significant strength and flexibility.  Consider that Calumet, whose Specialties Business alone, we believe, justifies the partnership’s entire $2.5 billion enterprise value at year-end, still retains 100% of MRL, which may prove to be worth north of $3 billion in the medium term.  We believe MRL is seeing strong interest from ESG investors, infrastructure funds, SPACs, and strategics alike, for such a unique asset.  Despite units appreciating significantly over our holding period, we continue to see significant asymmetry in the situation and maintain a sizable position.
 
Units of CLMT closed the year at $13.20.
 
ZIM Integrated Shipping Services (ZIM US)
 
ZIM Integrated Shipping Services Ltd. (“ZIM”) was the second largest contributor to the Fund’s performance in 2021.  The Fund initiated its position in ZIM during the first quarter of 2021.  As special situations investors, we occasionally identify and take advantage of short-term security pricing irregularities in businesses undergoing a change in their capital structure.  In the case of ZIM, we capitalized on a crisis created by what we observed to be a combination of timing and a slightly mismanaged IPO process.
 
ZIM is an Israel-based containership operator with an asset light business model and global niche approach to operations.  The company was created in 1945 and currently accounts for approximately 1.5% of global market share, making it one of the larger players in the movement of cargo in key markets around the world.  ZIM is controlled by Kenon Holdings (28% stake), which in turn is controlled by Israel Corp, one of the largest conglomerates in Israel. Israel Corp is the investment vehicle for Idan Ofer, a billionaire shipping magnate who also controls Eastern Pacific Shipping, a privately held shipping company with a fleet comprised of over 200 dry bulk and container ships and crude tankers.
 
ZIM has evolved into a true turnaround story, going from a third- to first-quartile container operator (in terms of operating margins).  Their success was in large part due to the new management put in place in 2017 and through its strategic partnership with the 2M alliance (Maersk and MSC, the two largest players worldwide) starting in late 2018.  Credit can be given to CEO Eli Glickman, who has steered the company in a new direction by shifting to an asset light company; one that operates within select niche routes and that strengthens its platform by investing heavily in technology.
 
We were attracted to the situation precisely because of their unique business structure, which was created as a result of ZIM selling all its ships many years ago.  The company essentially arbitrages various short- and medium-term containership leases (i.e., charter-in) with their aggressive use of technology to manage all aspects of ship management, fuel, navigation, etc.  This asset light model works well as the duration of the chartered-in vessels is largely matched with the charters to end customers and is also structured with certain triggers for early termination that minimizes company exposure if freight rates go in the wrong direction.
 
ZIM was an incredibly interesting situation overall, especially with the massive amounts of economic stimulus just getting deployed across Europe and the planned mega spending here in the U.S. as additional underpinnings for robust conditions.  Even more exciting, as the company approached its IPO, we thought the stock was being incredibly mispriced, and was available to investors at an extremely compelling valuation.  Assuming the midpoint of the indicative IPO price range, the shares would be brought to market at about 3x our 2021 expected earnings before interest, taxes, depreciation, and amortization (“EBITDA”).  We were interested.
8

However, as is so often demonstrated in special situation maritime investing, timing is everything; a lesson that we have learned the last five years.  Leading up to the IPO, we spent time getting to know the management of the company, how they built the business, how they went from a low-tech traditional container operator to a high-tech model in all aspects of the business.  We decided to participate in the IPO.  There was a day in late January, just as we had given our indication of interest in the IPO to the bankers and the company, when the global markets sold off precipitously.  The shipping sector sold off dramatically on the afternoon the deal was supposed to price (for reference, the S&P and NASDAQ both closed down more than -2.5% that day).  We suggested to the bankers that they pull the deal and come back in a few weeks.  However, with ZIM scheduled to be the first U.S. shipping IPO in the last five years and the media limelight (and fanfare) too great at that point, the decision was made to plow forward.
 
We decided to walk away on the day the books would close on the deal, which was the first time that Evermore had ever pulled an order at such a late stage.  We felt the bankers were using the wrong strategy and the stock would fare poorly, especially as the deal was likely to price at $15 per share, below the indicative price range of $16 to $19 per share.  The bankers asked at what price we would be willing to invest. For us, this question confirmed that the decision to pull our order was correct.
 
ZIM was priced at $15 per share and it promptly collapsed to an intraday low of $11.34 on the first day of trading.  We felt this was a short-term crisis created by the bankers mismanaging the process and was not a true reflection of the company.  So, we started buying in the open market after the stock had collapsed.  The more transactional oriented hedge fund investors could not sell it fast enough.  We ended up buying a nice sized position between $11.50 and $12.50 per share.
 
There were several notable developments during 2021.  Given the company’s unique asset light business model and targeted, global niche approach, ZIM continued to generate exceptionally strong cash flows which were used to further pay down debt.  With the early redemption of unsecured notes, ZIM was no longer subject to certain dividend restrictions, ZIM paid out a special dividend of $2 per share during the third quarter (September 15th).  ZIM has continued to strengthen its balance sheet ending its recent quarter with $22 million in net debt (0.0x net debt/EBITDA).  Given our expectation for continued robust earnings, we believe ZIM is well positioned to inflect to a net cash position over the coming months.
 
Management raised 2021 full-year EBITDA guidance every quarter since its listing, going from $1.4 to $1.6 billion to $6.2 to $6.4 billion (as of November 2021).  Starting in the third quarter, ZIM initiated a dividend policy where approximately 20% of the quarter’s net income would be paid every quarter.  A quarterly dividend of $2.50 per share was declared for the third quarter and paid in December 2021.
 
The remarkable container market strength that we have seen starting in the second half of 2020 has continued into 2021, as demand for containerized goods and containerships remains strong.  Based on our diligence, we see continued strength going in 2022 but we will continue to closely monitor the rate development and supply/demand dynamics in the container segment.  We continue to have high conviction in our ZIM position.
 
Shares of ZIM closed the year at $58.86 and $4.50 in dividends were paid in 2021.
 
KKR & Co. Inc. (KKR US)
 
KKR & Co. Inc. (“KKR”) was the third largest contributor to Fund performance in 2021 as the firm had a banner year across the board.  Benefitting from secular tailwinds behind the shift to alternatives, KKR had a record fundraising year – for the twelve months ending 12/31/21, the firm raised $121 billion, a firm record for any full calendar year.  Fund performance remained strong, as evidenced by a 46% trailing twelve-month gross return on their flagship private equity funds (as of 12/31/21).  And, the firm closed on its majority purchase of Global Atlantic, adding nearly $100 billion of permanent capital to the firm’s fee-paying assets under management base.  Looking forward, the outlook for KKR remains constructive, and we remain optimistic of the firm’s ability to compound shareholder value at an attractive rate going forward.
 
Shares of KKR closed the year at $74.50.
 
Atlantic Sapphire ASA (ASA NO)
 
Atlantic Sapphire ASA (“Sapphire”) was the largest detractor from Fund performance in 2021, with its shares falling by 64.8% in the period.  The lion’s share of the drawdown was felt in the third quarter (-62%) amid a string of operational issues and negative headlines that came to light throughout the middle of the year.  We discussed the selloff and its causes in some detail in our Q3 Fund commentary.  We are happy to report that no major negative events have occurred since a devastating fire destroyed the company’s Danish facility in September.  Shares recovered somewhat in the fourth quarter (+21%) as the market perhaps digested the fact that the contemplated insurance proceeds from this event would likely far eclipse the intrinsic value of the asset.  And, after two separate site visits to Sapphire’s farm during the fourth quarter, we observed the most stable biological conditions in the facility’s history.
 
For those new to Atlantic Sapphire, the company is revolutionizing the salmon industry as the first scaled land-based salmon farmer.  Using recirculating aquaculture system (“RAS”) technology within a broadly patented process, Sapphire is delivering a safer, cleaner, fresher, and less-carbon intensive salmon to North America than product imported from traditional net pen farms in coastal waters from the likes of Norway and Chile.  Recently completed, Phase 1 of Sapphire’s Homestead, Florida facility is technically capable of producing 9,500 metric tons (“MT”) of salmon annually, though the company does not expect to achieve this run-rate until the second half of 2022.  The company is also well under way with an incremental 15,000 MT capacity Phase 2 expansion in Homestead and ultimately sees potential for over 200,000 MT of capacity in and around its current farm.
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While the business case is sound in our view, the company still has to prove to the market it can reach operational stability and approach nameplate capacity at Phase 1.  In this regard, 2021 had a number of setbacks, including a mass salmon mortality in Florida, elevated costs that persist due to a chiller plant breakdown, and a temporary shortage of liquid oxygen, a key input to maintaining healthy water conditions for the fish.  But where we feel the market is getting it wrong is extrapolating into the future what should be one-off events of the past—largely stemming from COVID-related construction delays and issues that forced Phase 1 to begin farming operations before being fully and properly commissioned – as issues that will recur with similar frequency and severity.
 
Focusing on the core tenets of the investment case, Sapphire’s Phase 1 is already producing a healthy and great-tasting salmon that commands a significant price premium across the nearly 2,000 retail outlets it sells through today.  Further, the market for salmon in North America will remain undersupplied, and we have no reason to believe that this import deficit won’t grow considerably into the future (consider British Columbia is attempting to ban the practice of net pen farming over environmental concerns).  In fact, amid COVID-19 lockdowns, volumes of salmon sold through the U.S. grocery channel have been bolstered considerably, a phenomenon those we speak to in the industry believe has structurally expanded the size of Sapphire’s core market.  Lastly, Phase 1 biological stability has never looked better, and Phase 2 looks to benefit massively from the lessons learned from the missteps of Phase 1.  Phase 2’s new engineering and construction teams are already demonstrating vastly better control over those who were in charge of Phase 1.
 
Regarding the financing of Phase 2, we believe investor concerns over the potential for significant equity raises near today’s levels are unrealistic.  The company last reported $88 million on its balance sheet.  Existing liquidity, along with likely insurance proceeds from the fire in Denmark and potential for increased debt draws, should give the company time to demonstrate Phase 1 viability, which we trust will correspond to a recovery in its share price.  To aid investors and analysts in following the status of farm operations, management has committed to providing monthly key performance indicators so that the market can regain confidence that the company is making progress toward nameplate harvest volumes.
 
If a funding gap does exist, and Sapphire’s equity remains at levels the board feels are too low to fund further construction, there is no proverbial gun to anyone’s head.  Management has clearly laid out a thoughtful roadmap for how the company could potentially defer Phase 2 capital expenditures, were it necessary.  According to our conversations with the company, this might actually reduce the overall Phase 2 budget given today’s logjammed global supply chain.  While discussing financing options, we would be remiss if we did not point out that given Sapphire’s stumbles, the industry is currently seeing a dearth of financings for any other sizeable land-based farming projects that might one day seek to compete with Sapphire.
 
Putting it all together, for reasons we can understand, we believe the market is simply far too pessimistic on Sapphire’s ability to achieve run-rate harvest volumes while financing its continued capacity expansion.  Lending credence to our views was the November 2021 announcement that Skretting, the world’s leading fish feed producer, would construct a feed facility on or near Sapphire’s Homestead farm and enter into a long-term supply agreement with the company.  We estimate that any purpose-built facility would not turn an economic profit for Skretting until it supported harvests at Sapphire of at least 30,000 MT annually.  It thus strikes us that Skretting (which as a supplier to every major salmon producer today, has one of the best perches from which to make a determination), would not have committed significant time, energy, or capital to this project had it seen any significant impediments to Sapphire’s short-to-medium term capacity ramp.
 
From a valuation standpoint, once Phase 1 is fully ramped, we believe its cash flows alone can largely support today’s enterprise value.  Thus, future capacity additions, which promise much reduced design, construction, and operational risks (to say nothing of the increased asset turnover we expect over time across the entire Sapphire system from continued advances in genetics and feed science), amount to significant and free optionality.  During the third quarter, when shares were under the most acute price pressure of the year, the Fund joined several of Sapphire’s insiders in buying shares.
 
Sapphire shares closed the year at NOK 42.25.
 
Modern Times Group MTG AB (MTGB SS)
 
Despite having achieved a number of key milestones during the year, Modern Times Group MTG AB (“MTG”) was the second largest detractor to Fund performance in 2021.  MTG is a $1.13 billion market cap, Sweden-based holding company with gaming and Esports assets.  There were several notable developments in 2021, namely the three key acquisitions the company consummated during the year.  In the first half of 2021, MTG closed on two transformative acquisitions: Hutch Games, a UK-based, leading developer of free-to-play mobile racing games (e.g., F1 Manager, Top Drives and Rebel Racing) and Ninja Kiwi, a New Zealand-based, market leading developer of tower defense strategy games (e.g., Bloons IP franchise and SAS zombie action shooter RPG).  In July 2021, MTG announced the acquisition of PlaySimple, a rapidly growing and highly profitable developer that is the global leader in mobile word, casual games.  In our view, the addition of PlaySimple further diversifies MTG’s gaming portfolio and provides an analytics platform that can be applied to the broader portfolio.
 
The underperformance of MTG shares during the year was attributable to exogenous factors, largely sector rotation and investor sentiment towards the gaming sector.  China’s decision to clamp down on video game playing time (limited to 3 hours per week, comprised of 1 hour per day on Friday and weekends) dragged down the entire sector, in spite of MTG having no exposure to China.  While we were frustrated about the share price performance, especially during the third and fourth quarters where there was limited company-specific news flow, we continue to believe MTG is well positioned to continue its strategic initiatives for both the gaming and the Esports segments.
 
In early 2022, MTG announced the sale of its Esports business (ESL Gaming) for $1.05 billion to Savvy Gaming Group, an Esports holding company owned by the sovereign wealth fund of Saudi Arabia.  We believe this is a marquee deal for MTG’s gaming assets, where the valuation
10

is significantly higher than our estimate of intrinsic value for this segment.  MTG intends to return at least 40% of net proceeds (tax free) to shareholders after the deal closes in the second quarter of 2022.  Going forward, MTG will have net cash on the balance sheet, as they continue to focus on their remaining core gaming business.
 
At the onset of the new year, we have already seen mega deals announced in the gaming sector.  In early January, the U.S.-based game publisher, Take-Two Interactive, announced it will acquire Zynga, an online and mobile game developer for $12.7 billion enterprise value, implying a transaction multiple of 30x trailing twelve months 9/30/21 adj. EBITDA and 20x 2021 consensus EBITDA.  Within a week later, Microsoft announced the acquisition of Activision Blizzard for almost $68 billion (18x 2021 adj. EBITDA and 17x consensus EBITDA).  MTG is a prime target in our view, as we expect to see more consolidation in the gaming space.
 
MTG shares closed the year at SEK 92.40.
 
Aker BioMarine ASA (AKBM NO)
 
Aker Biomarine ASA (“Aker Biomarine”) was the third largest significant detractor from Fund performance in 2021, with shares down 53.8% in the period.  Having invested in the company in its June 2020 IPO, it was extremely frustrating to see the investment case not play out according to our original thesis.  The company, based in Norway and majority-owned by Aker ASA, is the leader in krill harvesting and processing, with an approximate 70% market share of the global annual krill catch.
 
Our original view was that Aker Biomarine was in a fantastic position to leverage its recently concluded investment cycle, with a state-of-the-art vessel coming online imminently and a bolt-on in the OTC pharmaceutical space having been newly integrated.  We believed volume demand would see continued growth across the company’s various product lines.  But it was the particular strength in the further-downstream and higher value-added Superba products that we expected to drive a multi-year favorable mix-shift for the business.
 
Unfortunately, during the time of the Fund’s ownership, two major unforeseen issues developed over time that simply overwhelmed our positive outlook.  The first was a deterioration in the key, but fledgling, market of South Korea for AKBM’s Superba products, which as mentioned above, are a key driver to company profitability.  From a standing start, the market developed quickly as celebrity doctor programs (e.g. Dr. Oz) had rightfully touted krill oil’s clear benefits over traditional fish oils which drove leading per-capita consumption trends for the country.  A key benefit is the fact that the fatty acids in krill oil are found in the form of phospholipids, which is widely believed to help increase their absorption and effectiveness over those found in triglyceride form.  Further benefits unique to krill oil include: 1) the antioxidant astaxanthin, which has been shown to have anti-inflammatory properties; 2) choline, which supports proper cell structure and promotes cardiovascular, liver, and cognitive health; and 3) an ability to reduce “bad” cholesterol (LDL) levels among users.
 
Unfortunately, this quickly developing market effectively had its legs swept out from under it when adulterated and substandard imported krill oil made its way into the country.  South Korea’s Ministry of Food and Drug Safety (MFDS) temporarily halted all imports of krill oil while it investigated.  Aker BioMarine was never implicated in the scandal, and the MFDS found no issues with any of its products.  In fact, for some time, the company’s products were the only krill oils allowed back into the country.  However, despite the market officially being reopened, in practical terms, the damage done to what was an emerging product category.  It may take years for this scare to fade in the market’s collective mind.
 
The other major issue that developed was unfavorable krill farming conditions beyond what the company has experienced in recent history.  While there has been some variation in annual catches in recent years, 2021 stood out for its very low krill swarm densities.  These persistently disappointing catch volumes persisted for much of the farming season and led to the other key tenet of our investment thesis—leveraging growing volumes over fixed costs —to be questioned in the short term.  We simply underestimated the role Mother Nature can play for this industry when she does not feel like cooperating.  Overall, the Fund exited its position in the company in Q4 2021 at a loss and redeployed the capital into more compelling situations.
 
As of December 31, 2021, the Fund’s ten largest issuer positions, which represented approximately 51.1% of the Fund’s net assets, were as follows:
 
 
Issuer
Country
% Net Assets
 
 
Calumet Specialty Products
U.S.
9.74%
 
 
Lamington Road DAC
U.S.
7.14%
 
 
Modern Times Group – B Shares
Sweden
6.15%
 
 
Storskogen Group AB-B-W/I
Sweden
4.63%
 
 
Nordic Entertainment Group
Sweden
4.12%
 
 
Lifco AB – B Shares
Sweden
4.04%
 
 
Atlantic Sapphire AS
Norway
3.91%
 
 
KKR & Co Inc – A
U.S.
3.85%
 
 
ZIM Integrated Shipping Services
Israel
3.88%
 
 
Montana Aerospace AG
Switzerland
3.59%
 

At year-end 2021, the Fund’s cash and equivalents position stood at approximately 3.44%.
 
Thank you for your continued utilization of the Evermore Global Value Fund, and we look forward to writing you again later this year.
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Opinions expressed are those of Evermore Global Advisors and are subject to change, are not guaranteed and should not be considered investment advice.
 
Past performance does not guarantee future results.
 
Earnings growth is not representative of the Fund’s future performance.
 
“EBITDA” is the acronym for earnings before interest, taxes, depreciation and amortization.
 
“Market Cap” is the market price of an entire company, calculated by multiplying the number of shares outstanding by the price per share.
 
“Cash Flow” is the total amount of money being transferred into an out of a business, especially as affecting liquidity.
 
“Free cash flow” is earnings before depreciation, amortization, and non-cash charges minus maintenance capital expenditures.
 
“Return on Equity” is a measure of the profitability of a business in relation to the equity.
 
“Return of capital” is a payment, or return, received from an investment that is not considered a taxable event and is not taxed as income.
 
While the Fund is no load, management fees and other expenses still apply. Please refer to the prospectus for further details.
 
Mutual fund investing involves risk. Principal loss is possible. Investments in foreign securities involve greater volatility and political, economic and currency risks and differences in accounting methods.  Investing in smaller companies involves additional risks such as limited liquidity and greater volatility.  The Fund may make short sales of securities, which involve the risk that losses may exceed the original amount invested in the securities. Investments in debt securities typically decrease in value when interest rates rise. This risk is usually greater for longer-term debt securities. Investment in lower-rated, non-rated and distressed securities presents a greater risk of loss to principal and interest than higher-rated securities. Due to the focused portfolio, the fund may have more volatility and more risk than a fund that invests in a greater number of securities. Additional special risks relevant to the fund involve derivatives and hedging. Please refer to the prospectus for further details.  This report is not authorized for distribution to prospective investors unless accompanied or proceeded by a current Evermore Global Value Fund summary prospectus or prospectus which contains more complete information about the Fund’s investment objectives, risks, fees and expenses.
 
Please refer to the Schedules of Investments for complete holdings information. Fund holdings and sector allocations are subject to change at any time and are not recommendations to buy or sell any security.
 
The MSCI All-Country World ex-US Index (MSCI AWCI ex USA) is a free float-adjusted market capitalization index that is designed to measure equity market performance in the global developed and emerging markets, excluding the US. The Index consists of 45 developed and emerging market countries. The Index is net of foreign withholding taxes on dividends.
 
The MSCI All-Country World Index (MSCI AWCI) is an unmanaged index comprised of 48 country indices, including 23 developed and 25 emerging market country indices, and is calculated with dividends reinvested after deduction of holding tax. The index is a trademark of Morgan Stanley Capital International and is not available for direct investment.
 
Hedge Fund Research, Inc. (HFR) utilizes a UCITSIII compliant methodology to construct the HFRX Hedge Fund Indices. The methodology is based on defined and predetermined rules and objective criteria to select and rebalance components to maximize representation of the Hedge Fund Universe. The HFR Event-Driven (Total) Index is being used under license from Hedge Fund Research, Inc. which does not approve or endorse Fund.
 
It is not possible to invest directly in an index.
 
Must be preceded or accompanied by a prospectus.
 
From its inception through December 31, 2019, the Evermore Global Value Fund was distributed by Quasar Distributors, LLC. Quasar Distributors, LLC is affiliated with US Bancorp Fund Services, LLC and US Bank N.A.  Effective January 1, 2020, the Evermore Global Value Fund is being distributed by Compass Distributors, LLC.  Compass Distributors, LLC is an affiliate of Foreside Financial Group, LLC, which was recently acquired by an affiliate of Genstar Capital.
12

Evermore Global Value Fund

PERFORMANCE INFORMATION (Unaudited)

Value of $10,000 vs. MSCI All-Country World Index ex USA & HFRX Event Driven Index

 

Total Annualized Returns For the Periods Ended December 31, 2021:
 
         
Since
Value of
         
Inception
$10,000
 
1 Year
3 Year
5 Year
10 Year
(1/1/2010)
(12/31/2021)
Investor Class
5.93%
7.20%
2.91%
7.27%
4.50%
$16,959
Institutional Class
6.16%
7.47%
3.16%
7.54%
4.75%
$17,457
MSCI All-Country World Index ex USA
7.82%
13.18%
9.61%
7.28%
5.66%
$19,371
HFRX Event Driven Index
0.48%
6.36%
2.50%
3.08%
2.30%
$13,132

This chart illustrates the performance of a hypothetical $10,000 investment made in the Investor Class shares on January 1, 2010, and is not intended to imply any future performance. The returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. The chart assumes reinvestment of capital gains and dividends for a fund and dividends for an index. Index returns do not reflect the effects of fees and expenses. It is not possible to invest directly in an index.
13

Evermore Global Value Fund

SECTOR ALLOCATION* as a Percentage of Total Portfolio at December 31, 2021 (Unaudited)


*
Data is expressed as a percentage of total portfolio.  Data expressed excludes collateral on loaned securities, written options and forward foreign currency contracts.  Please refer to the Schedule of Investments, Schedule of Options Written and Schedule of Forward Foreign Currency Contracts for more details on the Fund’s individual holdings.
14

Evermore Global Value Fund

EXPENSE EXAMPLE for the Six Months Ended December 31, 2021 (Unaudited)

As a shareholder of the Evermore Global Value Fund (the “Fund”), you incur two types of costs: (1) transaction costs, and (2) ongoing costs, including investment advisory fees, distribution fees, and other Fund expenses.  This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.  The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (07/01/21 – 12/31/21).
 
Actual Expenses
 
The first line of the table below provides information about actual account values based on actual returns and actual expenses.  You will be assessed fees for outgoing wire transfers, returned checks and stop payment orders at prevailing rates charged by U.S. Bancorp Fund Services, LLC, the Fund’s transfer agent.  If you request a redemption be made by wire transfer, currently a $15.00 fee is charged by the Fund’s transfer agent. You will be charged a redemption fee equal to 2% of the net amount of the redemption if you redeem shares less than 90 calendar days after you purchase them. An Individual Retirement Account (“IRA”) will be charged a $15.00 annual maintenance fee. To the extent the Fund invests in shares of other investment companies as part of its investment strategy, you will indirectly bear your proportionate share of any fees and expenses charged by the underlying funds in which the Fund invests in addition to the expenses of the Fund.  Actual expenses of the underlying funds may vary.  These expenses are not included in the example below.  The example below includes, but is not limited to, investment advisory fees, shareholder servicing fees, fund accounting fees, custody fees and transfer agent fees.  However, the example below does not include portfolio trading commissions and related expenses, and other extraordinary expenses as determined under generally accepted accounting principles.  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 on the next page provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratios and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.  The hypothetical account value 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), redemption fees or exchange fees.  Therefore, the second line of the table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds.  In addition, if these transactional costs were included, your costs would have been higher.
 
 
Beginning
Ending
Expenses Paid
 
Account Value
Account Value
During the Period
 
07/01/21
12/31/21
07/01/21 – 12/31/21*
Investor Class Actual*
$1,000
$   984.20
$7.90
Investor Class Hypothetical (5% annual return before expenses)
$1,000
$1,017.24
$8.03
       
Institutional Class Actual*
$1,000
$   984.90
$6.65
Institutional Class Hypothetical (5% annual return before expenses)
$1,000
$1,018.50
$6.77

*
Expenses are equal to the Fund’s expense ratios for the most recent six-month period of 1.58% for Investor Class shares and 1.33% for Institutional Class shares multiplied by the average account value over the period multiplied by 184/365 (to reflect the one-half year period).
15

Evermore Global Value Fund

SCHEDULE OF INVESTMENTS at December 31, 2021

Shares
     
Value
 
COMMON STOCKS – 89.3%
     
   
Aerospace & Defense – 3.6%
 
 
218,744
 
Montana Aerospace AG (Switzerland)(1)
 
$
8,126,080
 
   
Biotechnology – 3.0%
 
 
310,661
 
Vivoryon Therapeutics NV (Netherlands)(1)
   
6,720,054
 
   
Capital Markets – 6.7%
 
 
117,155
 
KKR & Co, Inc. – Class A (United States)
   
8,728,047
 
 
245,727
 
Tikehau Capital SCA (France)
   
6,504,415
 
           
15,232,462
 
   
Consumer Finance – 0.3%
 
 
16,710,000
 
Lamington Road Grantor
       
     
  Trust (United States)(1)(3)(4)(7)(8)
   
701,820
 
   
Diversified Financial Services – 3.9%
 
 
520,550
 
ESG Core Investments BV (Netherlands)(1)
   
5,707,174
 
 
87,100
 
Italmobiliare SpA (Italy)
   
3,222,804
 
           
8,929,978
 
   
Electronic Equipment – 2.2%
 
 
226,003
 
LPKF Laser & Electronics AG (Germany)(2)
   
5,027,721
 
   
Entertainment – 6.1%
 
 
1,362,441
 
Modern Times Group MTG AB –
       
     
  B Shares (Sweden)(1)
   
13,931,691
 
   
Food Products – 3.9%
 
 
1,847,504
 
Atlantic Sapphire AS (Norway)(1)(2)
   
8,863,521
 
   
Independent Power and Renewable Electricity Producers – 2.1%
 
 
1,257,000
 
Aker Horizons AS (Norway)(1)
   
4,716,667
 
   
Industrial Conglomerates – 14.1%
 
 
1,557,000
 
Storskogen Group AB – Class B (Sweden)(1)
   
10,502,109
 
 
305,885
 
LIFCO AB (Sweden)
   
9,163,484
 
 
68,968
 
EXOR NV (Netherlands)
   
6,199,935
 
 
1,031,827
 
Bollore SA (France)
   
5,779,688
 
           
31,645,216
 
   
Interactive Media & Services – 0.8%
 
 
45,500
 
Social Chain AG (Germany)(1)
   
1,854,500
 
   
IT Services – 3.0%
 
 
827,000
 
Byggfakta Group Nordic Holdco AB (Sweden)(1)
   
5,948,850
 
 
45,000
 
Hemnet Group AB (Sweden)(1)
   
833,149
 
           
6,781,999
 
   
Marine – 10.1%
 
 
139,700
 
Zim Integrated Shipping – Service
       
     
  Shares – ADR (Israel)
   
8,222,743
 
 
1,628,349
 
Cadeler A/S (Denmark)(1)
   
6,745,226
 
 
1,568,000
 
MPC Container Ships AS (Norway)(1)
   
4,371,110
 
 
453,208
 
Eneti, Inc. – ADR (Monaco)
   
3,507,830
 
           
22,846,909
 
   
Media – 13.2%
 
 
179,697
 
Nordic Entertainment Group AB –
       
     
  Class B (Sweden)(1)
   
9,330,674
 
 
612,600
 
Group Nine Acquisition Corp. –
       
     
  Class A (United States)(1)
   
5,972,850
 
 
39,051
 
IAC InterActive Corp. (United States)(1)
   
5,104,356
 
 
158,988
 
Universal Music Group NV (Netherlands)
   
4,485,368
 
 
623,652
 
Aimia, Inc. (Canada)(1)
   
2,440,474
 
 
178,588
 
Vivendi SA (France)
   
2,417,500
 
           
29,751,222
 
   
Oil, Gas & Consumable Fuels – 9.7%
 
 
1,672,349
 
Calumet Specialty Products
       
     
  Partners LP (United States)(1)
   
22,075,007
 
   
Pharmaceuticals – 0.8%
 
 
1,255,000
 
Acacia Pharma Group PLC (Belgium)
   
1,817,453
 
   
Semiconductors & Semiconductor Equipment – 3.1%
 
 
339,657
 
MagnaChip Semiconductor Corp. (South Korea)(1)
   
7,122,607
 
   
Technology Hardware, Storage & Peripherals – 2.7%
 
 
239,413
 
S&T AG (Austria)(2)
   
3,995,895
 
 
291,681
 
VIA Optronics AG – ADR (Germany)(1)
   
2,143,855
 
           
6,139,750
 
   
TOTAL COMMON STOCKS
 
   (Cost $144,655,465)
   
202,284,657
 
               
Principal
           
Amount
           
CORPORATE OBLIGATIONS – 6.8%
 
   
Consumer Finance – 6.8%
 
$
15,140,944
 
Lamington Road DAC
       
     
  9.750% Cash or 14.000% PIK,
       
     
  4/7/2121 (United States)(3)(4)(7)(8)
   
15,401,368
 
   
TOTAL CORPORATE OBLIGATIONS
 
   (Cost $14,570,940)
   
15,401,368
 
               
Shares
           
WARRANTS – 0.2%
 
   
Consumer Finance – 0.0%(9)
 
 
4,344,786
 
Lamington Road Grantor Trust Warrant,
       
     
  Expiration: July, 2025,
       
     
  Exercise Price $0.20 (United States)(1)(3)(4)(7)(8)
   
73,831
 
   
Diversified Financial Services – 0.1%
 
 
1,000,000
 
2MX Organic SA,
       
     
  Expiration: November, 2025,
       
     
  Exercise Price $11.50 (France)(1)(7)
   
224,853
 
 
124,678
 
ESG Core Investments BV,
       
     
  Expiration: December, 2027,
       
     
  Exercise Price $0.20 (Netherlands)(1)(7)
   
91,555
 
           
316,408
 
Media – 0.1%
 
 
278,333
 
Group Nine Acquisition Corp. – Class A,
       
     
  Expiration: January, 2026,
       
     
  Exercise Price $11.50 (United States)(1)(7)
   
144,734
 
TOTAL WARRANTS
 
   (Cost $1,006,594)
   
534,973
 

The accompanying notes are an integral part of these financial statements.
16

Evermore Global Value Fund

SCHEDULE OF INVESTMENTS at December 31, 2021, Continued

                  
Notional
 

 
Contracts(5)
   
Value
 
Value
 
CALL OPTIONS PURCHASED – 0.3%
 
 
1,000
 
ZIM Integrated
       
     
  Shipping Services Ltd.,
       
     
  Expiration: March, 2022,
       
     
  Strike Price $60.00
       
     
  (Israel)
 
$
5,886,000
   
$
520,000
 
                       
 
1,000
 
ZIM Integrated
               
     
  Shipping Services Ltd.,
               
     
  Expiration: March, 2022,
               
     
  Strike Price $85.00
               
     
  (Israel)
   
5,886,000
     
50,000
 
                       
TOTAL CALL OPTIONS PURCHASED
   (Cost $413,743)
               
570,000
 

           
           
Shares
     
 
SHORT-TERM INVESTMENT – 3.0%
 
Money Market – 3.0%
 
6,882,581
 
First American Treasury Obligations Fund –
     
     
  Class X, 0.01%(6)
 

6,882,581
 
TOTAL SHORT-TERM INVESTMENT
   (Cost $6,882,581)
   
6,882,581
 
               
SECURITIES HELD AS COLLATERAL ON LOANED SECURITIES – 3.3%
Money Market – 3.3%
 
7,541,333
 
First American Government Obligations
       
     
  Fund – Class X, 0.03%(6)
   
7,541,333
 
 
TOTAL SECURITIES HELD AS COLLATERAL ON LOANED SECURITIES
   (Cost $7,541,333)
   
7,541,333
 
TOTAL INVESTMENTS IN SECURITIES – 102.9%
   (Cost $175,070,656)
   
233,214,912
 
Liabilities in Excess of Other Assets – (2.9)%
   
(6,625,677
)
TOTAL NET ASSETS – 100.0%
 
$
226,589,235
 

Percentages are stated as a percent of net assets.
(1)
Non-income producing security.
(2)
All or a portion of this security is on loan. At December 31, 2021 the total value of securities on loan was $7,218,576, which represents 3.2% of total net assets. The remaining contractual maturity of all of the securities lending transactions is overnight and continuous.
(3)
These securities were fair valued in good faith by the Adviser’s Valuation Committee. The aggregate value of these securities at December 31, 2021 were $16,177,019, which represents 7.1% of net assets.
(4)
Affiliated company as defined by the Investment Company Act of 1940. Please refer to Note 6 for further disclosures related to these affiliated securities.
(5)
100 shares per contract.
(6)
Seven-day yield as of December 31, 2021.
(7)
The Advisor has deemed all or a portion of these securities as illiquid. These securities have a value of $16,638,161, which represents 7.3% of total net assets at December 31, 2021.
(8)
Value determined using significant unobservable inputs.
(9)
Less than 0.1%.

Glossary of Terms
ADR – American Depositary Receipt

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, Inc. and S&P and has been licensed for use by the Fund’s Administrator, 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.
17

Evermore Global Value Fund

SCHEDULE OF INVESTMENTS at December 31, 2021, Continued

COUNTRY ALLOCATION for Investments in Securities at December 31, 2021

Country
 
Long Exposure
United States^
   
32.1
%
Sweden
   
21.9
%
Netherlands
   
10.2
%
Norway
   
7.9
%
France
   
6.6
%
Germany
   
4.0
%
Israel
   
3.9
%
Switzerland
   
3.6
%
South Korea
   
3.1
%
Denmark
   
3.0
%
Austria
   
1.8
%
Monaco
   
1.5
%
Italy
   
1.4
%
Canada
   
1.1
%
Belgium
   
    0.8
%
Total
   
102.9
%

Percentages are stated as a percent of net assets.

^
United States allocation includes Short-Term Investment-Money Market Fund of 3.0% and Securities Held as Collateral on Loaned Securities of 3.3%

SCHEDULE OF OPTIONS WRITTEN as of December 31, 2021

        
Notional
       
Contracts(1)
     
Value
   
Value
 
CALL OPTIONS WRITTEN – 0.3%
 
 
2,000
 
ZIM Integrated
           
     
  Shipping Services Ltd.,
           
     
  Expiration: March, 2022,
           
     
  Strike Price $65.00
           
     
  (Israel)
 
$
11,772,000
   
$
720,000
 
   
TOTAL CALL OPTIONS WRITTEN
 
   (Premiums Received $426,255)
   
720,000
 
 
TOTAL CALL OPTIONS WRITTEN
   (Premiums Received $426,255)
   
$
720,000
 

(1)
100 shares per contract.

The accompanying notes are an integral part of these financial statements.
18

Evermore Global Value Fund

SCHEDULE OF INVESTMENTS at December 31, 2021, Continued

SCHEDULE OF FORWARD FOREIGN CURRENCY CONTRACTS at December 31, 2021

As of December 31, 2021, the Fund had the following forward currency contracts outstanding
 
   
Currency to be Received
   
Currency to be Delivered
 
             
USD Value at
            
USD Value at
   
Net Unrealized
 
             
December 31,
            
December 31,
   
Appreciation
 
Settlement Date
 
Amount
 
Currency
 
2021
   
Amount
 
Currency
 
2021
   
(Depreciation)
 
1/31/22
   
50,755,950
 
USD
 
$
50,755,950
     
45,000,000
 
EUR
 
$
51,265,197
   
$
(509,247
)(a)
1/31/22
   
48,234,895
 
USD
   
48,234,895
     
440,000,000
 
SEK
   
48,704,952
     
(470,057
)(a)
1/31/22
   
13,966,886
 
USD
   
13,966,886
     
125,000,000
 
NOK
   
14,185,961
     
(219,075
)(a)
1/31/22
   
7,146,260
 
USD
   
7,146,260
     
6,600,000
 
CHF
   
7,249,098
     
(102,838
)(a)
1/31/22
   
2,243,610
 
USD
   
2,243,610
     
2,900,000
 
CAD
   
2,292,504
     
(48,894
)(a)
               
$
122,347,601
              
$
123,697,711
   
$
(1,350,110
)

CAD
Canadian Dollar
CHF
Swiss Franc
EUR
Euro
NOK
Norwegian Krone
SEK
Swedish Krona
USD
U.S. Dollars

(a)
Counterparty: forward foreign currency contracts outstanding with Bank of New York Mellon.

The accompanying notes are an integral part of these financial statements.
19

Evermore Global Value Fund

STATEMENT OF ASSETS AND LIABILITIES at December 31, 2021

ASSETS
     
Investments in unaffiliated securities, at value (cost $157,157,716)(1) (Note 2)
 
$
217,037,893
 
Investments in affiliated securities, at value (cost $17,912,940) (Notes 2 and 6)
   
16,177,019
 
Cash
   
212
 
Foreign Currencies
   
7
 
Receivables:
       
Investment securities sold
   
969,091
 
Fund shares sold
   
27,701
 
Dividends and interest, net of foreign withholding taxes
   
4,143
 
Dividend reclaims
   
807,460
 
Due from broker
   
1,706,322
 
Securities lending income
   
19,345
 
Prepaid expenses
   
74,001
 
Total assets
   
236,823,194
 
         
LIABILITIES
       
Unrealized depreciation on forward foreign currency contracts
   
1,350,110
 
Written options, at value (premiums received $426,255)
   
720,000
 
Payables:
       
Fund shares redeemed
   
160,257
 
Collateral for securities out on loan, at value
   
7,541,333
 
Investment advisory fees
   
194,917
 
Administration fees
   
40,466
 
Trustee fees
   
16,006
 
Custody fees
   
11,203
 
Distribution fees – Investor Class
   
4,773
 
Fund accounting fees
   
1,241
 
Transfer agent fees
   
17,056
 
Other accrued fees
   
176,597
 
Total liabilities
   
10,233,959
 
NET ASSETS
 
$
226,589,235
 
         
COMPONENTS OF NET ASSETS
       
Paid-in capital
 
$
225,421,222
 
Total distributable earnings
   
1,168,013
 
Net assets
 
$
226,589,235
 
Investor Class:
       
Net assets
 
$
23,009,187
 
Shares issued and outstanding (unlimited number of shares authorized without par value)
   
1,684,354
 
Net asset value
 
$
13.66
 
Institutional Class:
       
Net assets
 
$
203,580,048
 
Shares issued and outstanding (unlimited number of shares authorized without par value)
   
14,781,410
 
Net asset value
 
$
13.77
 

(1)
The market value of securities out on loan was $7,218,576 as of December 31, 2021.

The accompanying notes are an integral part of these financial statements.
20

Evermore Global Value Fund

STATEMENT OF OPERATIONS for the Year Ended December 31, 2021

INVESTMENT INCOME
     
Income
     
Dividends (net of $1,043,868 foreign withholding taxes)
     
Unaffiliated securities
   
61,718
 
Non cash dividend from unaffiliated securities
   
5,420,718
 
Interest
       
Unaffiliated securities
   
692,237
 
Affiliated securities
   
1,132,975
 
Securities lending income
   
420,267
 
Total investment income
   
7,727,915
 
 
       
EXPENSES (Note 3)
       
Investment advisory fees
   
2,612,750
 
Administration fees
   
235,005
 
Legal fees
   
182,010
 
Transfer agent fees
   
123,418
 
Trustee fees
   
79,607
 
Distribution fees - Investor Class
   
62,732
 
Audit and tax fees
   
62,080
 
Custody fees
   
50,801
 
Registration fees
   
47,551
 
Chief Compliance Officer fees
   
42,535
 
Insurance fees
   
30,208
 
Shareholder reporting fees
   
15,144
 
Fund accounting fees
   
8,128
 
Miscellaneous fees
   
6,266
 
Interest expense
   
864
 
Total expenses
   
3,559,099
 
Net investment income
   
4,168,816
 
 
       
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FOREIGN CURRENCIES,
 
   FORWARD FOREIGN CURRENCY CONTRACTS & WRITTEN OPTIONS
 
Net realized gain (loss) on:
       
Investments in unaffiliated securities
   
16,525,675
 
Investments in affiliated securities
   
1,104,990
 
Foreign currencies
   
(132,835
)
Forward foreign currency contracts
   
9,540,219
 
Written options
   
417,161
 
Change in net unrealized appreciation (depreciation) on:
       
Investments in unaffiliated securities
   
(13,707,439
)
Investments in affiliated securities
   
(1,718,572
)
Foreign currencies
   
(61,194
)
Forward foreign currency contracts
   
903,051
 
Written options
   
(359,486
)
Net realized and unrealized gain (loss) on investments, foreign currencies,
       
  forward foreign currency contracts & written options
   
12,511,570
 
Net increase in net assets resulting from operations
 
$
16,680,386
 

The accompanying notes are an integral part of these financial statements.
21

Evermore Global Value Fund

STATEMENTS OF CHANGES IN NET ASSETS

   
Year Ended
   
Year Ended
 
   
December 31,
   
December 31,
 
   
2021
   
2020
 
INCREASE (DECREASE) IN NET ASSETS FROM:
           
             
OPERATIONS
           
Net investment income (loss)
 
$
4,168,816
   
$
603,496
 
Net realized gain (loss) on investments, foreign currency transactions,
               
  forward foreign currency contracts & written options
   
27,455,210
     
(84,290,710
)
Change in unrealized appreciation (depreciation) on investments, foreign currency
               
  transactions, forward foreign currency contracts & written options
   
(14,943,640
)
   
(9,856,574
)
Net increase (decrease) in net assets resulting from operations
   
16,680,386
     
(93,543,788
)
                 
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 5)
               
Investor Class
   
(599,203
)
   
(44,640
)
Institutional Class
   
(5,826,290
)
   
(498,356
)
Total distributions to shareholders
   
(6,425,493
)
   
(542,996
)
                 
CAPITAL SHARE TRANSACTIONS
               
Net decrease in net assets derived from net change in outstanding shares – Investor Class
   
(6,023,401
)
   
(24,437,444
)
Net decrease in net assets derived from net change in outstanding shares – Institutional Class
   
(58,962,614
)
   
(195,182,254
)
Total decrease in net assets from capital share transactions
   
(64,986,015
)
   
(219,619,698
)
Total decrease in net assets
   
(54,731,122
)
   
(313,706,482
)
                 
NET ASSETS
               
Beginning of period
   
281,320,357
     
595,026,839
 
End of period
 
$
226,589,235
   
$
281,320,357
 

 
Summary of capital share transactions is as follows:
               
     
Year Ended
   
Year Ended
 
     
December 31, 2021
   
December 31, 2020
 
 
Investor Class
 
Shares
   
Value
   
Shares
   
Value
 
 
Shares sold
   
185,192
   
$
2,607,506
     
409,819
   
$
4,573,508
 
 
Shares issued in reinvestment of distributions
   
43,349
     
585,217
     
3,391
     
42,084
 
 
Shares redeemed1
   
(655,279
)
   
(9,216,124
)
   
(2,600,979
)
   
(29,053,036
)
 
Net decrease
   
(426,738
)
 
$
(6,023,401
)
   
(2,187,769
)
 
$
(24,437,444
)
                                   
     
Year Ended
   
Year Ended
 
     
December 31, 2021
   
December 31, 2020
 
 
Institutional Class
 
Shares
   
Value
   
Shares
   
Value
 
 
Shares sold
   
1,656,438
   
$
23,481,894
     
3,879,793
   
$
44,140,309
 
 
Shares issued in reinvestment of distributions
   
414,328
     
5,639,010
     
38,642
     
483,418
 
 
Shares redeemed2
   
(6,263,848
)
   
(88,083,518
)
   
(22,145,690
)
   
(239,805,981
)
 
Net decrease
   
(4,193,082
)
 
$
(58,962,614
)
   
(18,227,255
)
 
$
(195,182,254
)

1
Net of redemption fees of $2,020 and $2,212, respectively.
2
Net of redemption fees of $11,826 and $21,920, respectively.

The accompanying notes are an integral part of these financial statements.
22

Evermore Global Value Fund

FINANCIAL HIGHLIGHTS For a capital share outstanding throughout the year

Investor Class
                             
   
Year Ended December 31,
 
   
2021
   
2020
   
2019
   
2018
   
2017
 
Net asset value, beginning of year
 
$
13.24
   
$
14.26
   
$
11.70
   
$
15.08
   
$
13.03
 
                                         
INCOME FROM INVESTMENT OPERATIONS
 
Net investment income (loss)*
   
0.19
     
(0.00
)1
   
0.09
     
0.06
     
(0.04
)
Net realized and unrealized gain (loss) on investments
   
0.59
     
(1.00
)
   
2.83
     
(3.16
)
   
2.48
 
Total from investment operations
   
0.78
     
(1.00
)
   
2.92
     
(3.10
)
   
2.44
 
                                         
LESS DISTRIBUTIONS
 
From net investment income
   
(0.36
)
   
(0.02
)
   
(0.10
)
   
(0.06
)
   
(0.03
)
Net realized gains
   
     
     
(0.26
)
   
(0.22
)
   
(0.36
)
Total distributions
   
(0.36
)
   
(0.02
)
   
(0.36
)
   
(0.28
)
   
(0.39
)
Paid-in capital from redemption fees
   
0.00
1 
   
0.00
1 
   
0.00
1 
   
0.00
1 
   
0.00
1 
Net asset value, end of year
 
$
13.66
   
$
13.24
   
$
14.26
   
$
11.70
   
$
15.08
 
Total return
   
5.93
%
   
(7.01
)%
   
25.05
%
   
(21.07
)%
   
18.72
%
                                         
SUPPLEMENTAL DATA
 
Net assets, end of year (thousands)
 
$
23,009
   
$
27,956
   
$
61,296
   
$
63,584
   
$
76,772
 
Portfolio turnover rate
   
33
%
   
21
%
   
28
%
   
29
%
   
26
%
                                         
RATIO OF EXPENSES TO AVERAGE NET ASSETS2
 
Before expenses absorbed or recouped, including
                                       
  interest and dividend expense
   
1.57
%
   
1.55
%
   
1.47
%
   
1.44
%
   
1.50
%
Before expenses absorbed or recouped, excluding
                                       
  interest and dividend expense
   
1.57
%
   
1.55
%
   
1.47
%
   
1.44
%
   
1.46
%
After expenses absorbed or recouped, including
                                       
  interest and dividend expense
   
1.57
%
   
1.55
%
   
1.47
%
   
1.44
%
   
1.50
%
After expenses absorbed or recouped, excluding
                                       
  interest and dividend expense
   
1.57
%
   
1.55
%
   
1.47
%
   
1.44
%
   
1.46
%
                                         
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS2
 
Before expenses absorbed or recouped, including
                                       
  interest and dividend expense
   
1.35
%
   
(0.04
)%
   
0.69
%
   
0.35
%
   
(0.29
)%
After expenses absorbed or recouped, including
                                       
  interest and dividend expense
   
1.35
%
   
(0.04
)%
   
0.69
%
   
0.35
%
   
(0.29
)%

Portfolio turnover is calculated for the Fund as a whole.
*
Calculated using the average shares outstanding method.
1
Amount less than $0.01.
2
Does not include expenses of the investment companies in which the Fund invests.

The accompanying notes are an integral part of these financial statements.
23

Evermore Global Value Fund

FINANCIAL HIGHLIGHTS For a capital share outstanding throughout the year, Continued

Institutional Class
                             
   
Year Ended December 31,
 
   
2021
   
2020
   
2019
   
2018
   
2017
 
Net asset value, beginning of year
 
$
13.35
   
$
14.35
   
$
11.77
   
$
15.20
   
$
13.10
 
                                         
INCOME FROM INVESTMENT OPERATIONS
 
Net investment income (loss)*
   
0.23
     
0.03
     
0.12
     
0.09
     
(0.00
)1
Net realized and unrealized gain (loss) on investments
   
0.59
     
(1.00
)
   
2.86
     
(3.30
)
   
2.49
 
Total from investment operations
   
0.82
     
(0.97
)
   
2.98
     
(3.21
)
   
2.49
 
                                         
LESS DISTRIBUTIONS
                                       
From net investment income
   
(0.40
)
   
(0.03
)
   
(0.14
)
   
0.00
1 
   
(0.03
)
Net realized gains
   
     
     
(0.26
)
   
(0.22
)
   
(0.36
)
Total distributions
   
(0.40
)
   
(0.03
)
   
(0.40
)
   
(0.22
)
   
(0.39
)
Paid-in capital from redemption fees
   
0.00
1 
   
0.00
1 
   
0.00
1 
   
0.00
1 
   
0.00
1 
Net asset value, end of year
 
$
13.77
   
$
13.35
   
$
14.35
   
$
11.77
   
$
15.20
 
Total return
   
6.16
%
   
(6.78
)%
   
25.41
%
   
(20.92
)%
   
19.01
%
                                         
SUPPLEMENTAL DATA
                                       
Net assets, end of year (thousands)
 
$
203,580
   
$
253,364
   
$
533,731
   
$
443,904
   
$
530,269
 
Portfolio turnover rate
   
33
%
   
21
%
   
28
%
   
29
%
   
26
%
                                         
RATIO OF EXPENSES TO AVERAGE NET ASSETS2
 
Before expenses absorbed or recouped, including
                                       
  interest and dividend expense
   
1.32
%
   
1.29
%
   
1.22
%
   
1.19
%
   
1.25
%
Before expenses absorbed or recouped, excluding
                                       
  interest and dividend expense
   
1.32
%
   
1.29
%
   
1.22
%
   
1.19
%
   
1.21
%
After expenses absorbed or recouped, including
                                       
  interest and dividend expense
   
1.32
%
   
1.29
%
   
1.22
%
   
1.19
%
   
1.25
%
After expenses absorbed or recouped, excluding
                                       
  interest and dividend expense
   
1.32
%
   
1.29
%
   
1.22
%
   
1.19
%
   
1.21
%
                                         
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS2
 
Before expenses absorbed or recouped, including
                                       
  interest and dividend expense
   
1.60
%
   
0.21
%
   
0.91
%
   
0.60
%
   
(0.02
)%
After expenses absorbed or recouped, including
                                       
  interest and dividend expense
   
1.60
%
   
0.21
%
   
0.91
%
   
0.60
%
   
(0.02
)%
 
Portfolio turnover is calculated for the Fund as a whole.
*
Calculated using the average shares outstanding method.
1
Amount less than $0.01.
2
Does not include expenses of the investment companies in which the Fund invests.

The accompanying notes are an integral part of these financial statements.
24

Evermore Global Value Fund

NOTES TO FINANCIAL STATEMENTS December 31, 2021

NOTE 1 – ORGANIZATION

The Evermore Global Value Fund (the “Fund”) is a series of shares of Evermore Funds Trust (the “Trust”), which is registered under the Investment Company Act of 1940, as amended (the “1940 Act”) as an open-end diversified management investment company.  The Fund commenced operations on January 1, 2010.  Evermore Global Advisors, LLC (the “Adviser”) serves as the investment adviser to the Fund.
 
The investment objective of the Fund is to seek capital appreciation by investing in securities from markets around the world, including U.S. markets.
 
The Fund is an investment company and accordingly follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standard Codification Topic 946 “Financial Services-Investment Companies.”
 
The Fund offers Investor Class and Institutional Class shares.  Each class of shares has equal rights as to earnings and assets except that each class bears different distribution expenses.  Each class of shares has exclusive voting rights with respect to matters that affect just that class.  Income, expenses (other than expenses attributable to a specific class), and realized and unrealized gains or losses on investments are allocated to each class of shares based on its relative net assets.  Investor Class shares have no sales charge.  Institutional Class shares have no sales charge and are offered primarily for direct investment by investors such as pension and profit sharing plans, employee benefit trusts, certain financial intermediaries, endowments, foundations and corporations.  For Investor Class and Institutional Class shares, the offering and redemption price per share for the Fund is equal to the Fund’s net asset value per share.  The Fund charges a 2.00% redemption fee on shares (both Investor Class and Institutional Class) held less than 90 days.
 
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant accounting policies consistently followed by the Fund.  These policies are in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”).
 
A.
Investment Valuation and Fair Value Measurement.  All domestic equity securities that are traded on a national securities exchange, except those listed on the National Association of Securities Dealers Automated Quotation System (“NASDAQ”) Global Market® are valued at the last reported sale price on the exchange on which the security is principally traded.  Securities traded on NASDAQ will be valued at the NASDAQ Official Closing Price on each business day.  If, on a particular day, an exchange-traded or NASDAQ security does not trade, then the mean between the most recent quoted bid and ask prices will be used, except on days when the ask price is more than 10% greater than the bid price. In such instances, the Adviser will price the security based on the fair value determined by the Adviser’s Valuation Committee.  All equity securities that are not traded on a listed exchange are valued at the last sale price in the over-the-counter (“OTC”) market.  If a non-exchange traded security does not trade on a particular day, then the mean between the last quoted closing bid and ask price will be used, except on days when the ask price is more than 10% greater than the bid price. In such instances, the Adviser will price the security based on the fair value determined by the Adviser’s Valuation Committee.
   
 
The Fund invests substantially in securities traded on foreign exchanges (see “Foreign Currency Translation” below).  Investments that are primarily traded on foreign exchanges are generally valued in their local currencies as of the close of their primary exchange or market, or if there were no transactions on such day, at the mean between the bid and ask prices, except on days when the ask price is more than 10% greater than the bid price. In such instances, the Adviser will price the security based on the fair value determined by the Adviser’s Valuation Committee. The local prices are converted to U.S. dollars using the applicable currency exchange rates as of the close of the New York Stock Exchange (“NYSE”).  Exchange rates are provided daily by recognized independent pricing agents.  Foreign currency forward contracts are valued at the current day’s interpolated foreign exchange rate, as calculated using the current day’s exchange rate, and the relevant forward rates provided by an independent pricing service.

 
There may be less publicly available information about a foreign company than about a U.S. company.  Foreign issuers may not be subject to accounting, auditing and financial reporting standards and requirements comparable to, or as uniform as, those of U.S. issuers.  The number of securities traded, and the frequency of such trading, in non-U.S. securities markets, while growing in volume, is for the most part, substantially less in U.S. markets.  As a result, securities of many foreign issuers may be less liquid and their prices more volatile than securities of comparable U.S. issues.  Transaction costs, the costs associated with buying and selling securities on non-U.S. securities markets may be higher than in the U.S. There is generally less government supervision and regulation of exchanges, brokers and issuers than there is in the U.S. The Fund’s foreign investments may include both voting and non-voting securities, sovereign debt and participations in foreign government deals.  The Fund may have greater difficulty taking appropriate legal action with respect to foreign issuers in U.S. courts.
   
 
For foreign securities traded on foreign exchanges, the Trust has selected Intercontinental Exchange’s Fair Value Information Services (“FVIS”) to provide pricing data with respect to foreign security holdings held by the Fund.  The use of this third-party pricing service is designed to capture events occurring after a foreign exchange closes that may affect the value of certain holdings of the Fund’s

 
25

Evermore Global Value Fund

NOTES TO FINANCIAL STATEMENTS December 31, 2021, Continued

 
securities traded on those foreign exchanges.  The Fund utilizes a “trigger level”, which is a pre-determined percentage move in a specified index that must occur before foreign securities will be fair value priced using FVIS prices. The Fund utilizes a “confidence interval” when determining the use of the FVIS prices. The confidence interval is a measure of the historical relationship that each foreign exchange traded security has to movements in various indices and the price of the security’s corresponding American Depositary Receipt, if one exists.  FVIS provides the confidence interval for each security for which it provides a price.  If the FVIS provided price falls within the confidence interval, the Fund will value the particular security at that price.  If the FVIS provided price does not fall within the confidence interval, the particular security will be valued at the preceding closing price on its respective foreign exchange, or if there were no transactions on such day, at the mean between the bid and asked prices. There were no foreign equities fair valued using FVIS as of December 31, 2021.
   
 
Securities for which quotations are not readily available are valued at their respective fair values as determined in good faith by the Advisor’s Valuation Committee.  When a security is “fair valued,” consideration is given to the facts and circumstances relevant to the particular situation, including a review of various factors set forth in the pricing procedures adopted by the Fund’s Board of Trustees (“Board”).  Fair value pricing is an inherently subjective process, and no single standard exists for determining fair value.  Different funds could reasonably arrive at different values for the same security.  The use of fair value pricing by a fund may cause the net asset value of its shares to differ significantly from the net asset value that would be calculated without regard to such considerations. The use of fair value pricing is approved by the Trust’s Board, and is in accordance with the provisions of the 1940 Act.

 
As described above, the Fund utilizes various methods to measure the fair value of its investments on a recurring basis.  U.S. GAAP establishes a hierarchy that prioritizes inputs to valuation methods.  The three levels of inputs are:

 
Level 1 —
 Unadjusted quoted prices in active markets for identical assets or liabilities that the Fund has the ability to access. The types of assets generally included in this category are domestic equities listed in active markets and foreign equities listed in active markets that have not been fair valued using FVIS.
     
 
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, credit risk, yield curves and similar data. The types of assets generally included in this category are bonds, financial instruments classified as derivatives and foreign equities fair valued using FVIS.
     
 
Level 3 —
Significant unobservable inputs that are supported by limited or no market activity. Level 3 may include financial instruments whose values are determined using indicative market quotes or required significant management judgment or estimation. These unobservable valuation inputs may include estimates for current yields, maturity/duration, prepayment speed, default rates and indicative market quotes for comparable investments along with other assumptions relating to credit quality, collateral value, complexity of the investment structure, general market conditions and liquidity. This category may also include investments where trading has been halted or there are certain restrictions on trading. While these investments are priced using unobservable inputs, the valuation of these investments reflects the best available data and management believes the prices are a reasonable representation of exit price.

 
The availability of observable inputs can vary from security to security and is affected by a wide variety of factors, including, for example, the type of security, whether the security is new and not yet established in the marketplace, the liquidity of markets, and other characteristics particular to the security. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3.
   
 
The inputs used to measure fair value may fall into different levels of the fair value hierarchy.  In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety, is determined based on the lowest level input that is significant to the fair value measurement in its entirety.
26

Evermore Global Value Fund

NOTES TO FINANCIAL STATEMENTS December 31, 2021, Continued

 
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The following is a summary of the level inputs used to value the Fund’s net assets as of December 31, 2021 (see Schedule of Investments for industry breakout):

 
Assets
 
Level 1
   
Level 2
   
Level 3
   
Total
 
 
Common Stocks
 
$
201,582,837
   
$
   
$
701,820
   
$
202,284,657
 
 
Corporate Obligations
   
     
     
15,401,368
     
15,401,368
 
 
Warrants
   
144,734
     
316,408
     
73,831
     
534,973
 
 
Call Options Purchased
   
     
570,000
     
     
570,000
 
 
Short-Term Investments
   
6,882,581
     
     
     
6,882,581
 
 
Investments Purchased With Proceeds From
                               
 
  Securities Lending Collateral
   
7,541,333
     
     
     
7,541,333
 
 
Total Investments in Securities
   
216,151,485
     
886,408
     
16,177,019
     
233,214,912
 
 
Total Assets
 
$
216,151,485
   
$
886,408
   
$
16,177,019
   
$
233,214,912
 
                                   
 
Liabilities
                               
 
Call Options Written*
 
$
   
$
720,000
   
$
   
$
720,000
 
 
Unrealized depreciation on
                               
 
  Forward Foreign Currency*
   
     
1,350,110
     
     
1,350,110
 
 
Total Liabilities
 
$
   
$
2,070,110
   
$
   
$
2,070,110
 

 
*
Forward foreign currency contracts are reflected at the unrealized appreciation (depreciation), while options written are reflected at value.

 
Below is a reconciliation of Level 3 assets for which significant unobservable inputs were used to determine fair value:

 
Description
 
Common Stocks
   
Corporate Obligations
   
Warrants
 
 
Balance as of January 1, 2021
 
$
4,049,932
   
$
   
$
677,209
 
 
   Purchases
   
     
     
 
 
   Sales proceeds and paydowns
   
(256,146
)
   
     
 
 
   Accreted discounts, net
   
     
     
 
 
   Corporate Actions
   
(6,770,966
)
   
     
 
 
   Realized gain (loss)
   
(8,946,513
)
   
     
 
 
   Change in unrealized appreciation (depreciation)
   
12,625,513
       
 
   
(603,378
)
 
   Transfers into/(out of) Level 3
   
     
15,401,368
(a) 
   
 
 
Balance as of December 31, 2021
 
$
701,820
   
$
15,401,368
   
$
73,831
 
 
Change in unrealized appreciation (depreciation) during the
                       
 
  year for Level 3 investments held at December 31, 2021
 
$
(2,640,180
)
 
$
830,429
   
$
73,831
 
 
 
(a)
One corporate obligation transferred from Level 2 to Level 3 due to a lack of observable market data resulting from a decrease in market activity for the security due to a reorganization of the company.

 
The Level 3 amounts disclosed in the table above consist of three securities that are fair valued in good faith, using significant unobservable inputs, by the Adviser’s Valuation Committee. The table below indicates the quantitative information about Level 3 fair value measurements for these securities:

         
Market Value
   
Valuation
Unobservable
 
Impact if Input
Investment Type
Fair Value
Methodology
Input Type
Inputs
Increases
Corporate Obligation
15,401,368
Discounted Cash Flows
Credit spreads
9.42% to 10.64%
Decrease
     
Discount rate
0.74% to 0.97%
Decrease
     
Illiquidity discount rate
2%
Decrease
           
Common Stock
    701,820
Market Approach
Liquidation Value
0.042 USD
Increase
           
Warrant
      73,831
Options Pricing Model
Illiquid discount rate
25%
Decrease
     
Default rate
1%
Decrease

B.
Option Writing.  Writing options may permit the writer to generate additional income in the form of the premium received for writing the option. The writer of an option may have no control over when the underlying reference instruments must be sold (in the case of a call option) or purchased (in the case of a put option) because the writer may be notified of exercise at any time prior to the expiration of the option (for American style options). In general, though, options are infrequently exercised prior to expiration. Whether or not
27

Evermore Global Value Fund

NOTES TO FINANCIAL STATEMENTS December 31, 2021, Continued

 
an option expires unexercised, the writer retains the amount of the premium. Writing “covered” call options means that the writer owns the underlying reference instrument that is subject to the call option. Call options may also be written on reference instruments that the writer does not own.
   
 
When a Fund writes an option, an amount equal to the premium received by the Fund is recorded as a liability and is subsequently adjusted to the current fair value of the option written.  Premiums received from writing options that expire unexercised are treated by the Fund on the expiration date as realized gains from investments.  The difference between the premium received and the amount paid for the closing purchase transaction, including brokerage commissions, is also treated as a realized gain, or, if the premium is less than the amount paid for the closing purchase transaction, as a realized loss.  If a call option is exercised, the premium is added to the proceeds from the sale of the underlying security or currency in determining whether the Fund has realized a gain or loss.  If a put option is exercised, the premium reduces the cost basis of the securities purchased by the Fund.  The Fund as writer of an option bears the market risk of an unfavorable change in the price of the security underlying the written option.
   
C.
Financial Derivative Instruments.  The Fund may use derivative instruments for risk management purposes and as part of its investment strategies. Generally, derivatives are financial instruments whose value depends on, or is derived from, the value of one or more underlying assets, reference rates, or indices (a “reference instrument”) and may relate to stocks, bonds, interest rates, currencies, commodities or related indices. Derivative instruments allow the Fund to gain or reduce exposure to the value of a reference instrument without actually owning or selling the instrument.
   
 
Derivative instruments may be used for “hedging,” which means that they may be used when the Adviser seeks to protect the Fund’s investments from a decline in value resulting from changes to interest rates, market prices, currency fluctuations or other market factors. Derivative instruments may also be used for other purposes, including to seek to increase liquidity, provide efficient portfolio management, broaden investment opportunities (including taking short or negative positions), implement a tax or cash management strategy, gain exposure to a particular security or segment of the market, modify the effective duration of the Fund’s portfolio investments and/or enhance total return. However derivative instruments are used, their successful use is not assured and will depend upon, among other factors, the Adviser’s ability to gauge relevant market movements.
   
 
During the year ended December 31, 2021, the Fund hedged most of its currency exposure through the use of forward foreign currency contracts. During the year, these forward foreign currency contracts have contributed positively to Fund performance.  The Fund also invests a small portion of its assets in options to hedge portfolio tail risk. The Advisor views these as “disability insurance”, for times when global markets experience significant volatility. These options positively affected Fund performance during the period.
   
 
Statement of Assets and Liabilities
   
 
The following table shows the fair value of derivative instruments as of December 31, 2021 and their location on the Fund’s Statement of Assets and Liabilities:

     
Asset Derivatives
 
Liability Derivatives
 
 
Derivative
 
Statement of Assets
     
Statement of Assets
     
 
Instruments
 
and Liabilities Location
 
Value
 
and Liabilities Location
 
Value
 
 
Foreign Exchange Contracts –
 
Unrealized appreciation on
 

 
Unrealized depreciation on
     
 
Forward foreign currency contracts
 
forward foreign
 
 
forward foreign
     
       
currency contracts
 
$
 
currency contracts
 
$
1,350,110
 
 
Equity Contracts – Options
 
Investments in unaffiliated
                 
       
securities, at value
   
570,000
 
Written options, at value
   
720,000
 
 
Total
     
$
570,000
     
$
2,070,110
 

 
Statement of Operations
   
 
The following table shows the effect of derivative instruments on the Statement of Operations for the year ended December 31, 2021:

     
Amount of Realized Gain/Loss on
 
     
Derivatives Recognized in Income
 
     
Forward
                   
     
Foreign
                   
     
Currency
   
Written
   
Purchased
       
     
Contracts
   
Options
   
Options*
   
Total
 
 
Foreign Exchange Contracts
 
$
9,540,219
   
$
   
$
   
$
9,540,219
 
 
Equity Contracts
   
     
417,161
     
277,749
     
694,910
 
 
Total
 
$
9,540,219
   
$
417,161
   
$
277,749
   
$
10,235,129
 

 
*
Included in net realized gain on investments in unaffiliated securities as reported on the Statement of Operations.
28

Evermore Global Value Fund

NOTES TO FINANCIAL STATEMENTS December 31, 2021, Continued

     
Change in Unrealized Appreciation or (Depreciation) on
 
     
Derivatives Recognized in Income
 
     
Forward
                   
     
Foreign
                   
     
Currency
   
Written
   
Purchased
       
     
Contracts
   
Options
   
Options*
   
Total
 
 
Foreign Exchange Contracts
 
$
903,051
   
$
   
$
   
$
903,051
 
 
Equity Contracts
   
     
(359,486
)
   
240,166
     
(119,320
)
 
Total
 
$
903,051
   
$
(359,486
)
 
$
240,166
   
$
783,731
 

 
*
Included in change in net unrealized appreciation (depreciation) on investments in unaffiliated securities as reported on the Statement of Operations.

 
The average monthly value outstanding of purchased and written options during the year ended December 31, 2021 were as follows:

 
Purchased Options
$972,558
 
Written Options
$(84,294)

 
The average monthly notional value outstanding of forward foreign currency contracts during the year ended December 31, 2021 was $145,443,051.
   
D.
Principal Risks from the Investments.
   
 
Currency Exchange Rate Risk – Foreign securities may be issued and traded in foreign currencies.  As a result, their values may be affected by changes in exchange rates between foreign currencies and the U.S. dollar, as well as between currencies of countries other than the U.S.  For example, if the value of the U.S. dollar goes up compared to a foreign currency, an investment traded in that foreign currency will go down in value because it will be worth fewer U.S. dollars.  The Fund may also employ strategies intended to increase exposure to certain currencies. Such currency transactions involve additional risks, and the Fund’s strategies, if unsuccessful, may decrease the value of the Fund.
   
 
Derivative Investment Risk – Derivatives are subject to a number of risks, such as interest rate risk, market risk, credit risk, and foreign exchange risk.  Changes in the value of the derivative may not correlate perfectly with the underlying asset, rate or index, and the Fund may lose more money than its initial investment in the derivative.  A small investment in a derivative could have a relatively large positive or negative impact on the performance of the Fund, potentially resulting in losses to Fund shareholders.
   
 
Emerging Market Risk – The risks of foreign investments in emerging market countries may involve risks greater than, or in addition to, the risks of investing in more developed countries. Emerging markets are generally smaller, less developed, less liquid, and more volatile than developed markets. For example, political and economic structures in these countries may be less established and may change rapidly.  These countries also are more likely to experience high levels of inflation, deflation or currency devaluation, which can harm their economies and securities markets and increase volatility.  In fact, short-term volatility in these markets and declines of 50% or more are not uncommon.  Restrictions on currency trading that may be imposed by emerging market countries will have an adverse effect on the value of the securities of companies that trade or operate in such countries.
   
 
Foreign Securities Risk – Securities of companies located outside the U.S. involve additional risks that can increase the potential for losses in the Fund to the extent that it invests in these securities. Investments in foreign securities may be affected by currency controls and exchange rates; different accounting, auditing, financial reporting, and legal standards and practices; expropriation; changes in tax policy; greater market volatility; differing securities market structures; higher transaction costs; and various administrative difficulties, such as delays in clearing and settling portfolio transactions or in receiving payment of dividends. Certain of these risks also may apply to securities of U.S. companies with significant foreign operations. These risks can increase the potential for losses in the Fund and affect its share price.  To the extent that the Fund’s assets are significantly invested in a single country or geographic region, the Fund will be subject to the risks associated with that particular country or region.
   
 
Industrials Sector Risk – The Fund may invest to a significant extent in the industrials sector of the economy. The value of securities issued by companies in the industrials sector may be adversely affected by supply and demand related to their specific products or services and industrials sector products in general. The products of manufacturing companies may face obsolescence due to rapid technological developments and frequent new product introduction. Government regulations, world events, economic conditions and exchange rates may adversely affect the performance of companies in the industrials sector. Companies in the industrials sector may be adversely affected by liability for environmental damage and product liability claims. The industrials sector may also be adversely affected by changes or trends in commodity prices, which may be influenced by unpredictable factors.
   
 
Consumer Discretionary Risk – The consumer discretionary sector includes companies in industries such as consumer services, household durables, leisure products, textiles, apparel and luxury goods, hotels, restaurants, retailing, e-commerce and automobiles.
29

Evermore Global Value Fund

NOTES TO FINANCIAL STATEMENTS December 31, 2021, Continued

 
Companies in the consumer discretionary sector may be significantly impacted by the performance of the overall domestic and global economy and interest rates. The consumer discretionary sector relies heavily on disposable household income and spending. Companies in this sector may be subject to severe competition, which may have an adverse impact on their respective profitability. The retail industry can be significantly affected by changes in the demographics and consumer tastes, which can also affect the demand for, and success of, consumer products and services in the marketplace.
   
E.
Offsetting Assets and Liabilities.  The Fund is subject to various Master Netting Arrangements, which govern the terms of certain transactions with select counterparties. The Master Netting Arrangements allow the Fund to close out and net its total exposure to a counterparty in the event of a default with respect to all the transactions governed under a single agreement with a counterparty. The Master Netting Arrangements also specify collateral posting arrangements at pre-arranged exposure levels. Under the Master Netting Arrangements, collateral is routinely transferred if the total net exposure to certain transactions (net of existing collateral already in place) governed under the relevant Master Netting Arrangement with a counterparty in a given account exceeds a specified threshold depending on the counterparty and the type of Master Netting Arrangement.
   
 
The table below, as of December 31, 2021, discloses both gross information and net information about instruments and transactions eligible for offset in the Statement of Assets and Liabilities and instruments and transactions that are subject to an agreement similar to a master netting agreement, as well as amounts related to collateral held at clearing brokers and counterparties.  For financial reporting purposes, the Fund does not offset derivative assets and liabilities, and any related collateral received or pledged, on the Statement of Assets and Liabilities.

 
Assets
                                   
                       
Gross Amounts not
       
                       
offset in the Statement of
       
                 
Net
   
Assets and Liabilities
       
 
 
Gross
   
Gross
   
Amounts
                   
 
 
Amounts
   
Amounts
   
Presented
                   
 
 
Presented in
   
Offset in the
   
in the
                   
 

 
Statement of
   
Statement of
   
Statement of
                   
 
Description/
 
Assets &
   
Assets and
   
Assets and
   
Financial
   
Collateral
   
Net
 
 
Counterparty
 
Liabilities
   
Liabilities
   
Liabilities
   
Instruments
   
Received
   
Amount
 
 
Securities out on loan
                                   
 
  U.S. Bank N.A.
 
$
7,218,576
   
$
   
$
7,218,576
   
$
   
$
(7,218,576
)1
 
$
 
     
$
7,218,576
   
$
   
$
7,218,576
   
$
   
$
(7,218,576
)
 
$
 
                                                   
 
Liabilities
                                               
                             
Gross Amounts not
         
                             
offset in the Statement of
         
                     
Net
   
Assets and Liabilities
         
 
 
Gross
           
Amounts
                         
 
 
Amounts
   
Financial
   
Presented
                         
 
 
Presented in
   
Instruments
   
in the
                         
 

 
Statement of
   
with
   
Statement of
                         
 
Description/
 
Assets &
   
Allowable
   
Assets and
   
Financial
   
Collateral
   
Net
 
 
Counterparty
 
Liabilities
   
Netting
   
Liabilities
   
Instruments
   
Pledged
   
Amount
 
 
Forward Foreign
                                               
 
Currency Contracts
                                               
 
  Bank of New York
 
$
1,350,110
   
$
   
$
1,350,110
   
$
   
$
   
$
1,350,110
 
 
Written Options
                                               
 
  Cowen, Inc.
   
720,000
     
     
720,000
     
     
(720,000
)
   
 
     
$
2,070,110
   
$
   
$
2,070,110
   
$
   
$
(720,000
)
 
$
1,350,110
 

 
1
The Fund received cash collateral of $7,541,333, which was subsequently invested in the First American Government Obligations Fund - Class X as reported in the Schedule of Investments.

 
In some instances, the collateral amounts disclosed in the tables were adjusted due to the requirement to limit the collateral amounts to avoid the effect of overcollateralization.  Actual collateral received/pledged may be more than the amounts disclosed herein.
   
F.
Foreign 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.
30

Evermore Global Value Fund

NOTES TO FINANCIAL STATEMENTS December 31, 2021, Continued

 
The Fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held.  Such fluctuations are included with the net realized and unrealized gain or loss from investments.
   
 
The Fund reports net realized foreign exchange gains or losses that 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 year end, resulting from changes in exchange rates.
   
G.
Federal Income Taxes.  The Fund has elected to be taxed as a “regulated investment company” and intends to distribute substantially all taxable income to its shareholders and otherwise comply with the provisions of Subchapter M of the Internal Revenue Code applicable to regulated investment companies.  Therefore, no provision for federal income taxes or excise taxes has been made.
   
 
In order to avoid imposition of the excise tax applicable to regulated investment companies, the Fund intends to declare each year as dividends in each calendar year at least 98.0% of its net investment income (earned during the calendar year) and 98.2% of its net realized capital gains (earned during the twelve months ended October 31) plus undistributed amounts, if any, from prior years.
   
 
A regulated investment company may elect to treat any portion of its qualified late year losses as arising on the first day of the next taxable year. Qualified late year losses are any ordinary and net capital losses incurred between November 1 and the end of the fiscal year, December 31. For the taxable year ended December 31, 2021, the Fund does not intend to defer any late-year ordinary and capital losses.
   
 
As of December 31, 2021, the Fund had Short Term Capital Loss Carryovers of $2,448,232 and Long Term Capital Loss Carryovers of $50,444,707 available for federal income tax purposes. During the tax year ended December 31, 2021, the Fund utilized $8,269,302 of Short Term Capital Loss Carryover and $21,271,301 of Long Term Capital Loss Carryover.
   
 
Additionally, U.S. generally accepted accounting principles require that certain components of net assets relating to permanent differences be reclassified between financial and tax reporting. These reclassifications have no effect on net assets or net asset value per share. For the year ended December 31, 2021, the Fund had no reclassifications of net assets.
   
 
The Fund recognizes the tax benefits of uncertain tax positions only where the position is “more likely than not” to be sustained assuming examination by tax authorities. The Fund recognizes interest and penalties, if any, related to unrecognized tax benefits as other expense in the Statement of Operations. Management has analyzed the Fund’s tax positions, and has concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions taken on returns filed for the open tax years (2018-2020), or expected to be taken in the Fund’s 2021 tax returns. The Fund identifies its major tax jurisdictions as U.S. Federal, New Jersey State, and Massachusetts State; however the Fund is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next twelve months. Generally, tax authorities can examine all tax returns filed for the last three years.
   
H.
Forward Foreign Currency Contracts.  The Fund may enter into forward foreign currency contracts as hedges against either specific transactions or fund positions. The aggregate principal amount of the contracts are not recorded because the Fund intends to settle the contracts prior to delivery. All commitments are marked-to-market daily at the applicable foreign exchange rate, and any resulting unrealized gains or losses are recorded currently. The Fund realizes gains or losses at the time the forward contracts are extinguished. For federal income tax purposes, the Fund elected capital treatment for all realized and unrealized transactions on forward foreign currency contracts during the year December 31, 2021.
   
 
The use of forward foreign currency contracts does not eliminate fluctuations in the underlying prices of the securities, but it does establish a rate of exchange that can be achieved in the future. Although forward foreign currency contracts limit the risk of loss due to a decline in the value of the hedged currency, they also limit a potential gain that might result should the value of the currency increase.  These contracts involve market risk in excess of the amount reflected in the Fund’s Statement of Assets and Liabilities.  The face or contract amount in U.S. dollars reflects the total exposure the Fund has in that particular currency contract. In addition, there could be exposure to risks (limited to the amount of unrealized gains) if the counterparties to the contracts are unable to meet the terms of their contracts.
   
 
The Fund helps manage counterparty credit risk by entering into agreements only with counterparties the Adviser believes have the financial resources to honor their obligations and by having the Adviser monitor the financial stability of counterparties.  Collateral pledges are monitored and subsequently adjusted if and when the valuations fluctuate, either up or down by at least the predetermined threshold amount.
31

Evermore Global Value Fund

NOTES TO FINANCIAL STATEMENTS December 31, 2021, Continued

I.
Short Sales.  The Fund may make short sales of securities, including “short sales against the box.” In a short transaction, a fund sells a security it does not own in anticipation that the market price of that security will decline.  The Fund expects to make short sales (i) as a form of hedging to offset potential declines in long positions in similar securities, (ii) in order to maintain portfolio flexibility and  (iii) for profit.
   
 
When the Fund makes a short sale, its broker borrows the security to be sold short and the broker-dealer maintains the proceeds of the short sale while the short position is open.  The Fund must keep the proceeds account marked to market and must post additional collateral for its obligation to deliver securities to replace the securities that were borrowed and sold short. The Fund may have to pay a fee to borrow particular securities and is often obligated to pay over any payments received on such borrowed securities.
   
 
A Fund’s obligation to replace borrowed securities will be secured by collateral deposited with the broker-dealer or the Fund’s custodian bank, usually cash, U.S. government securities or other high grade liquid securities similar to those borrowed.  The Fund will also be required to segregate similar collateral to the extent, if any (excluding any proceeds of the short sales), necessary so that the value of both collateral deposits in the aggregate is at all times equal to at least 100% of the current market value of the security sold short.
   
 
Short sales carry risks of loss if the price of the security sold short increases after the sale.  In this situation, when a Fund replaces the borrowed security by buying the security in the securities market, the Fund may pay more for the security than it has received from the purchaser in the short sale.  A Fund may, however, profit from a change in the value of the security sold short, if the price decreases.
   
J.
Security Transactions and Investment Income.  Investment securities transactions are accounted for on the trade date.  Gains and losses realized on sales of securities are determined on a high cost basis.  Discounts/premiums on debt securities purchased are accreted/ amortized over the life of the respective securities using the effective interest method.  Dividend income is recorded on the ex-dividend date.  Interest income is recorded on an accrual basis. Other non-cash dividends are recognized as investment income at the fair value of the property received. Withholding taxes on foreign dividends have been provided for in accordance with the Trust’s understanding of the applicable country’s tax rules and rates.
   
K.
Distributions to Shareholders.  Distributions to shareholders from net investment income and net realized gains on securities for the Fund, which are determined in accordance with income tax regulations, are normally declared and paid on an annual basis.  Distributions are recorded on the ex-dividend date.  The Fund may also pay a special distribution at the end of the calendar year to comply with Federal tax requirements.
   
L.
Use of Estimates.  The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amount of revenue and expenses during the reporting period.  Actual results could differ from those estimates.
   
M.
Share Valuation.  The net asset value (“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 the days on which the NYSE is closed for trading. As discussed in Note 1, certain shares are subject to a redemption fee if sold before a specified holding period.  Any redemption fees are deducted from the redemption proceeds otherwise payable to the shareholder.  The Fund retains the fee charged as paid-in-capital and such fees become part of the Fund’ daily NAV calculation.
   
N.
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.  However, based on experience, the Fund expects the risk of loss to be remote.
   
O.
Securities Lending.  The Fund is authorized to lend securities it holds to brokers, and other financial organizations. This activity is subject to an agreement where U.S. Bank N.A. act as the Fund’s agent. When loaning securities, the Fund retains the benefits of owning the securities, including the economic equivalent of dividends or interest generated by the security. Pursuant to these agreements, income earned from the securities lending program is paid to the Fund, net of any fees paid to U.S. Bank N.A. and is recognized as “Securities lending income” on the Statement of Operations.
   
 
Lending of the Fund’s securities exposes the Fund to risks such as the following: (i) the borrower may fail to return the loaned securities, (ii) the borrower may not be able to provide additional collateral in instances when the value of the collateral is less than the loaned securities, (iii) the Fund may experience delays in recovery of the loaned securities or delays in access to collateral, or (iv) the Fund may experience losses related to the reinvestment of collateral. To minimize these risks, loans must be continuously secured by collateral consisting of cash or securities issued or guaranteed by the U.S. government or one of its agencies or instrumentalities, or an irrevocable standby letter of credit or any combination thereof. The collateral and the securities loaned shall be marked to market daily. Upon the origination of any loan, collateral required by U.S. Bank N.A. shall be equal to 100% of the market value (plus accrued