N-CSR 1 fp0050883_ncsr.htm

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 811-22888

 

Wildermuth Endowment Fund

(Exact name of registrant as specified in charter)

 

818 A1A Hwy, Suite 301

Ponte Vedra Beach, Florida 32082

(Address of principal executive offices) (Zip code)

 

Daniel Wildermuth

Wildermuth Advisory, LLC

818 A1A Hwy, Suite 301

Ponte Vedra Beach, Florida 32082

(Name and address of agent for service)

 

COPIES TO:

 

John H. Grady

Practus, LLP

1062 East Lancaster Avenue, Suite 15-A

Rosemont, Pennsylvania 19010

 

Registrant's telephone number, including area code: (888) 445-6032

 

Date of fiscal year end: December 31

 

Date of reporting period: December 31, 2019

 

 

 

Item 1. Reports to Stockholders.

 

 

 

 

 

ANNUAL REPORT

 

December 31, 2019

 

WWW.WILDERMUTHENDOWMENTFUND.COM ● 1-888-445-6032 ●
DISTRIBUTED BY WILDERMUTH SECURITIES, LLC AND
UMB DISTRIBUTION SERVICES, LLC (MEMBERS OF FINRA)

 

 

Wildermuth Endowment Fund

 

Table of Contents

 

Rule 30e-3 Notice for Delivery of Shareholder Reports

2

Letter to Shareholders

3

Portfolio Review

6

Portfolio Composition

8

Schedule of Investments

9

Statement of Assets and Liabilities

16

Statement of Operations

17

Statements of Changes in Net Assets

18

Statement of Cash Flows

20

Financial Highlights

21

Notes to Financial Statements

24

Report of Independent Registered Public Accounting Firm

41

Trustees and Officers

42

Additional Information

45

Privacy Policy

47

 

 

Wildermuth Endowment Fund

 

Optional Delivery of Shareholder Reports Notice

 

Dear Wildermuth Endowment Fund Shareholder:

 

The Wildermuth Endowment Fund (the “Fund”) is a closed-end fund registered with the Securities and Exchange Commission (the “Commission”) under the Investment Company Act of 1940, as amended, and operates as an “interval fund” thereunder. The Fund is obligated to provide each of its shareholders with paper copies of its annual and semi-annual reports.

 

In June 2018, the Commission approved of a new, optional “notice and access” method for delivery of annual and semi-annual shareholder reports to investors in certain registered investment funds.

 

Under new Rule 30e-3 (the “Rule”), funds may deliver their annual and semi-annual shareholder reports by making them publicly accessible on a website, free of charge, and sending investors a paper notice of the availability of each report by mail. Investors who prefer to receive the full shareholder reports in paper form may, at any time, choose that option free of charge.

 

Please be advised that the Fund intends to rely on the new Rule 30e-3.

 

You are receiving this notice now because the Fund may elect to rely on the Rule as of January 1, 2021, and funds must provide notice to shareholders at least two (2) years prior to relying on the Rule.

 

Under the circumstances, this notice would permit the Fund to mail notices to shareholders instead of mailing paper forms of its annual and semi-annual reports as early as two (2) years from the date of the original notice that was mailed to shareholders on March 1, 2019 for the December 31, 2018 annual report.

 

Sincerely,

 

 

Daniel Wildermuth
Wildermuth Endowment Fund

 

2

 

 

Wildermuth Endowment Fund

 

Letter to Shareholders

December 31, 2019

 

Dear Investor:

 

We are pleased to present this annual report for the Wildermuth Endowment Fund (the “Fund”) covering the 12 months from January 1, 2019, to December 31, 2019. For the one year ended December 31, 2019, fee-waived returns were 11.65% for the Fund Class A-shares, 10.74% for the Fund Class C-shares, and 12.06% for the Fund Class I-shares.

 

The Fund’s performance for the same period trailed the strong positive returns of 22.18% that was generated by a 60% stock and 40% bond portfolio (as represented by a 60% S&P 500 Total Return Index1 and 40% Barclays U.S Aggregate Bond Index2).

 

The Fund’s performance on the year resulted from positive returns of most asset classes and particularly traditional equities and fixed income. The inclusion of multiple different asset classes produced the desirable impact of strong positive Fund returns that were less volatile than either broad U.S. equity or a blended portfolio consisting of 60% stocks and 40% bonds.

 

The asset class producing the strongest individual performance on the year was unsurprisingly U.S. equities, followed by international equities. While the exposure to these asset classes was relatively low throughout all of 2019, their strong positive performance provided a welcome boost to overall Fund returns.

 

The asset class that generated the largest percentage of total Fund performance was predictably private equity, given its large percentage of total Fund assets. Ongoing company growth and development contributed to the increases in valuations of many of the Fund’s holdings across private equity, and value increases more than offset some declines in other companies including both equity and debt positions across all private company holdings.

 

The real estate sector also produced solid returns via a combination of placement fees, rental income, and capital appreciation. The fixed income allocation percentage was negligible resulting in a limited impact on the sector. While hedge funds and absolute return strategies trailed most other asset classes within the portfolio, returns were positive on the year. The major area of underperformance for 2019 was natural resources, including losses in oil and gas, along with some other natural resource holdings. The Fund’s relatively small exposure to the sector minimized portfolio impact.

 

Looking forward to the next decade, we continue to see expanded opportunities within non-traditional asset classes, particularly private equity and real estate. Recent challenges to the global economy and the resulting impact of the COVID-19 lockdown on various asset prices have further muted our equity market expectations in the immediate to mid-term future. The challenges follow a favorable run for U.S. public equities lasting more than a decade. As a result, while we will continue to maintain limited exposure to equities, we intend to act opportunistically across private markets when possible to secure and maintain exposure to attractive private investments and unique asset classes. As we look forward, we believe the Fund is uniquely positioned to potentially benefit from the current investment environment.

 

Thank you for your continued confidence and support.

 

Sincerely,

 

 

Daniel Wildermuth
President and Chief Executive Officer, and
Chairman and Trustee of the Fund
June 2020

 

1

The S &P 500 Total Return Index is a registered trademark of Standard & Poor’s and is an unmanaged broadly-based index of the common stock prices of 500 large U.S. companies that includes the reinvestment of dividends. Unlike mutual funds, indices are not managed, and do not incur fees or expenses. You cannot invest directly in an index.

 

2

The Barclays U.S. Aggregate Bond Index is an unmanaged, broad based index measuring intermediate terms bonds. It is not possible to invest directly in an index.

 

3

 

 

Wildermuth Endowment Fund

 

Letter to Shareholders - Continued
December 31, 2019

 

The Wildermuth Endowment Fund is a closed-end interval Fund. The Fund is considered illiquid and not suitable for all investors.

 

Past performance is not a guarantee of future results. Investors should carefully consider the investment objectives, risks, charges, and expenses of the Fund before investing. This and other important information is contained within the Fund’s Prospectus, which can be obtained by calling (888) 445-6032 or by visiting our website www.widlermuthendowmentfund.com. The Fund’s Prospectus should be read carefully before investing.

 

Investing in the Fund involves risk, including those summarized below. Endowments have a long-term investment time horizon with low liquidity needs that can take advantage of all of many different asset classes. Investors should consider how closely their investment goals and needs match those of endowments. An investment in the Fund is generally subject to market risk, including the possible loss of the entire principal amount invested. An investment in the Fund represents an indirect investment in the securities owned by the Fund.

 

You should consider the shares to be an illiquid investment. Even though the Fund will make periodic repurchase offers to repurchase a portion of the shares to provide some liquidity to shareholders, only a limited number of shares will be eligible for repurchase by us. Once each quarter, the Fund will offer to repurchase at net asset value (NAV) per share no less than 5% of the outstanding shares of the Fund, unless such offer is suspended or postponed in accordance with regulatory requirements. The Fund may increase the size of these offerings up to a maximum of 25% of the Fund’s outstanding shares, at the sole discretion of the Board, but it is not expected that the Board will do so.

 

You should consider that you may not have immediate access to the money you invest for an indefinite period of time. An investment in our shares is not suitable for you if you need immediate access to the money you invest. There is no guarantee that you will be able to tender all or any of the requested Fund shares in periodic repurchase offer.

 

Endowments have a long term investment time horizon with low liquidity needs. Investors should consider how closely their investment goals and needs match those of endowments.

 

Certain investments in the Fund are illiquid making it difficult to sell these securities and possibly requiring the Fund to sell at an unfavorable time or price. The value of certain Fund investments, in particular, non-traded investment vehicles, will be difficult to determine and the valuations provided will likely vary from the amounts the Fund would receive upon sale or disposition of its investments.

 

Like all financial instruments, the value of these securities may move up or down, sometimes rapidly and unpredictably. The value of your investment in the Fund at any point in time may be worth less than the value of your original investment, even after taking into account any reinvestment of dividends and distributions.

 

When the Fund invests in equity securities, the Fund’s investments in those securities are subject to price fluctuations based on a number of reasons for issuer-specific and broader economic or international considerations. They may also decline due to factors which affect a particular industry or industries. In addition, equity securities prices may be particularly sensitive to rising interest rates, as the cost of capital rises and borrowing costs increase.

 

The Fund may invest in publicly-traded and non-traded REITs or privately offered pooled investment vehicles that hold real estate as well as invest in real estate directly through entities owned or controlled directly or indirectly by the Fund. As a result, the Fund’s portfolio may be significantly impacted by the performance of the real estate market and may experience more volatility and be exposed to greater risk than a more diversified portfolio.

 

REIT share prices may decline because of adverse developments affecting the real estate industry and real property values. In general, real estate values can be affected by a variety of factors, including supply and demand for properties, the economic health of the country or of different regions, and the strength of specific industries that rent properties.

 

Exposure to the commodities markets may subject the Fund to greater volatility than investments in more traditional securities. The value of commodity-linked investments may be affected by changes in overall market movements, commodity index volatility, changes in interest rates, or factors affecting a particular industry or commodity, such as weather, and international economic, political and regulatory developments.

 

4

 

 

Wildermuth Endowment Fund

 

Letter to Shareholders - Continued
December 31, 2019

 

The Fund may invest in medium- and small-capitalization companies, which may be newly formed or have limited product lines, distribution channels and financial or managerial resources. The risks associated with these investments are generally greater than those associated with investments in the securities of larger, more-established companies. This may cause the Fund’s net asset value to be more volatile when compared to investment companies that focus only on large-capitalization companies.

 

The Fund is classified as a non-diversified management investment company under the Investment Company Act of 1940, as amended. This means that the Fund may invest a greater portion of its assets in a limited number of issuers than would be the case if the Fund were classified as a diversified management investment company. Accordingly, the Fund may be more sensitive to any single economic, business, political or regulatory occurrence than the value of shares of a diversified investment company.

 

The shares have no history of public trading, nor is it intended that the shares will be listed on a public exchange at this time.

 

We do not expect a secondary market in the shares to develop. Even if any such market were to develop, closed-end fund shares trade frequently at a discount from net asset value, which creates a risk of loss for investors purchasing shares in the initial public offering.

 

5

 

 

Wildermuth Endowment Fund

 

Portfolio Review

December 31, 2019 (Unaudited)

 

The Fund’s performance figures* for each of the periods ended December 31, 2019, compared to its benchmarks:

 

 

Five
Years

Three
Years

One
Year

Annualized
Since Inception1

Class A

9.12%

8.21%

11.65%

9.12%

Class A with Load2

7.77%

6.01%

5.26%

7.77%

S&P 500® Total Return Index**

11.70%

15.27%

31.49%

11.70%

Bloomberg Barclays U.S. Aggregate Bond Index***

3.05%

4.03%

8.72%

3.05%

 

 

Three
Years

One
Year

Annualized
Since Inception3

Class C

7.36%

10.74%

8.74%

Class C with Sales Charge4

7.36%

9.74%

8.74%

S&P 500® Total Return Index**

15.27%

31.49%

15.46%

Bloomberg Barclays U.S. Aggregate Bond Index***

4.03%

8.72%

3.39%

 

 

One
Year

Annualized
Since Inception5

Class I

12.06%

8.01%

S&P 500® Total Return Index**

31.49%

14.28%

Bloomberg Barclays U.S. Aggregate Bond Index***

8.72%

3.91%

 

1

The Class A inception date was December 31, 2014.

 

2

Calculated using a maximum sales load. The maximum sales load was 6.00% from the Class A inception date through October 19, 2017. Effective October 20, 2017 the maximum sales load is 5.75%.

 

3

The Class C inception date was March 14, 2016.

 

4

Class C shares are subject to a Contingent Deferred Sales Charge of 1.00% on any shares redeemed within 365 days of purchase.

 

5

The Class I inception date was April 28, 2017.

 

*

The performance data quoted here represents past performance. Current performance may be lower or higher than the performance data quoted above. Investment return and principal value will fluctuate, so that shares, when redeemed, may be worth more or less than their original cost. The returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemptions of Fund shares. Past performance is no guarantee of future results. Class A has a total annual operating expense of 3.98%, Class C has a total annual operating expense of 4.73%, and Class I has a total annual operating expense of 3.73%, per the prospectus dated May 1, 2019.

 

**

The S&P 500® Total Return Index is an unmanaged market capitalization-weighted index of 500 widely held common stocks. Investors cannot invest directly in an index.

 

***

The Bloomberg Barclays U.S. Aggregate Bond Index is a broad-based benchmark that measures the investment grade, U.S. dollar-denominated, fixed-rate taxable bond market, including Treasuries, government-related and corporate securities, MBS (agency fixed-rate and hybrid ARM pass-through securities), ABS, and CMBS. Investors cannot invest directly in an index.

 

 

 

6

 

 

Wildermuth Endowment Fund

 

Portfolio Review - Continued
December 31, 2019 (Unaudited)

 

Growth of a $10,000 Investment

 

 

Holdings by type of Investment

% of
Net Assets

 

* Represents less than 0.4% of net assets.

Public Equities

14.4%

Exchange Traded Funds

8.6

Commodity & Natural Resource Investments

2.9

Direct Private Equity

31.9

Direct Real Estate

6.4

Hedge Funds

3.8

Private Equity Debt

6.1

Private Equity Funds

7.1

Private Real Estate Investments

10.0

Public Real Estate Investments

0.3

Real Estate Loans

3.6

Warrants

1.2

Short-Term Investments

2.1

Other Assets and Liabilities

1.6

 

100.0%

 

Please refer to the Schedule of Investments in this Annual Report for detailed analysis of the Fund’s Holdings.

 

7

 

 

Wildermuth Endowment Fund

 

Portfolio Composition

December 31, 2019

 

Country of Investment

 

Fair
Value

   

% of
Net Assets

 

Australia

  $ 536,456       0.3%  

Belgium

    360,323       0.2  

Bermuda

    626,839       0.3  

Canada

    1,155,796       0.7  

Colombia

    29,740       0.0  

France

    2,402,389       1.4  

Germany

    494,643       0.3  

Ireland

    9,686,191       5.6  

Japan

    1,335,511       0.8  

Luxembourg

    4,791,189       2.8  

Netherlands

    517,763       0.3  

New Zealand

    500,000       0.3  

Singapore

    746,755       0.4  

Spain

    193,485       0.1  

Switzerland

    746,684       0.4  

United Kingdom

    817,703       0.5  

United States

    145,830,242       84.0  

Other Assets & Liabilities, net

    2,737,201       1.6  
    $ 173,508,910       100.0%  

 

8

 

 

Wildermuth Endowment Fund

 

Schedule of Investments

December 31, 2019

 

 

Interests,
Shares,
Principal
Amount,
or Units

     

Fair Value

 
       

PUBLIC EQUITIES — 14.4%

       
       

ADVERTISING — 0.2%

       
    47,413  

National CineMedia, Inc.

  $ 345,641  
                 
       

APPAREL — 0.2%

       
    538  

Kering

    353,393  
                 
       

BANKS — 0.1%

       
    3,970  

Bank of New York Mellon Corp.

    199,810  
                 
       

BEVERAGES — 0.2%

       
    1,938  

Pernod Ricard SA

    346,747  
                 
       

BIOTECHNOLOGY — 0.6%

       
    1,043  

CSL, Ltd.

    202,177  
    2,270  

Regeneron Pharmaceuticals, Inc.(a)

    852,340  
              1,054,517  
       

BUILDING MATERIALS — 0.5%

       
    4,422  

LafargeHolcim, Ltd.(a)

    245,210  
    8,550  

Owens Corning

    556,776  
              801,986  
       

CHEMICALS — 0.0%

       
    700  

FMC Corp.

    69,874  
                 
       

COMMERCIAL SERVICES — 0.7%

       
    15,046  

McMillan Shakespeare, Ltd.

    138,551  
    3,207  

S&P Global, Inc.

    875,671  
    977  

Wirecard AG

    117,889  
              1,132,111  
       

COSMETICS/PERSONAL CARE — 0.7%

       
    9,240  

Procter & Gamble Co.

    1,154,076  
                 
       

DISTRIBUTION/WHOLESALE — 0.5%

       
    27,674  

Inchcape PLC

    258,814  
    15,593  

Triton International, Ltd.

    626,838  
              885,652  
       

DIVERSIFIED FINANCIAL SERVICES — 0.6%

       
    7,985  

LPL Financial Holdings, Inc.

    736,616  
    46,619  

Mitsubishi UFJ Lease & Finance Co., Ltd.

    302,857  
              1,039,473  
       

ELECTRIC — 0.3%

       
    15,000  

Clearway Energy, Inc. - Class A

    286,800  
    14,300  

Clearway Energy, Inc. - Class C

    285,285  
              572,085  

 

See accompanying notes to financial statements.

 

9

 

 

Wildermuth Endowment Fund

 

Schedule of Investments - Continued
December 31, 2019

 

 

Interests,
Shares,
Principal
Amount,
or Units

     

Fair Value

 
       

PUBLIC EQUITIES (CONTINUED)

       
       

ELECTRONICS — 0.1%

       
    3,860  

nVent Electric PLC

  $ 98,739  
                 
       

ENERGY-ALTERNATE SOURCES — 0.3%

       
    11,025  

Siemens Gamesa Renewable Energy SA

    193,485  
    27,642  

TransAlta Renewables, Inc.

    330,817  
              524,302  
       

ENGINEERING & CONSTRUCTION — 0.1%

       
    9,400  

HomeServe PLC

    157,393  
                 
       

FOOD — 0.7%

       
    975  

JM Smucker Co.

    101,527  
    4,030  

Mondelez International, Inc. - Class A

    221,972  
    7,920  

Sysco Corp.

    677,477  
    1,150  

TreeHouse Foods, Inc.(a)

    55,775  
    1,066  

Tyson Foods, Inc. - Class A

    97,049  
              1,153,800  
       

HEALTHCARE-PRODUCTS — 0.4%

       
    15,516  

Boston Scientific Corp.(a)

    701,634  
                 
       

HEALTHCARE-SERVICES — 0.7%

       
    14,479  

Centene Corp.(a)

    910,295  
    3,380  

Fresenius SE & Co. KGaA

    190,378  
    3,839  

Ramsay Health Care, Ltd.

    195,728  
              1,296,401  
       

HOME FURNISHINGS — 0.2%

       
    5,930  

Sony Corp., ADR

    403,240  
                 
       

INTERNET — 0.8%

       
    546  

Alphabet, Inc. - Class A(a)

    731,307  
    3,536  

Facebook, Inc. - Class A(a)

    725,764  
              1,457,071  
       

LODGING — 0.6%

       
    67,800  

Extended Stay America, Inc.

    1,007,508  
                 
       

MACHINERY-CONSTRUCTION & MINING — 0.3%

       
    8,224  

ABB, Ltd.

    198,467  
    22,255  

Mitsubishi Electric Corp.

    306,870  
              505,337  
       

MACHINERY-DIVERSIFIED — 0.5%

       
    1,025  

AGCO Corp.

    79,181  
    4,157  

Cummins, Inc.

    743,937  
    394  

Deere & Co.

    68,264  
              891,382  

 

See accompanying notes to financial statements.

 

10

 

 

Wildermuth Endowment Fund

 

Schedule of Investments - Continued
December 31, 2019

 

 

Interests,
Shares,
Principal
Amount,
or Units

     

Fair Value

 
       

PUBLIC EQUITIES (CONTINUED)

       
       

MINING — 0.2%

       
    29,500  

Endeavour Silver Corp.(a)

  $ 71,095  
    1,075  

Rio Tinto PLC, ADR

    63,812  
    2,810  

Teck Resources, Ltd.

    48,810  
    39,053  

Yamana Gold, Inc.

    154,259  
              337,976  
       

MISCELLANEOUS MANUFACTURING — 0.1%

       
    17,040  

General Electric Co.

    190,166  
                 
       

OIL & GAS — 0.2%

       
    1,490  

Ecopetrol S.A., ADR

    29,740  
    68,500  

QEP Resources, Inc.

    308,250  
    475  

Royal Dutch Shell PLC, Class A, ADR

    28,016  
       

 

    366,006  
       

PHARMACEUTICALS — 0.8%

       
    6,220  

Dechra Pharmaceuticals PLC

    238,946  
    4,082  

Johnson & Johnson

    595,441  
    3,200  

Novartis AG, ADR

    303,008  
    2,491  

UCB SA

    198,240  
       

 

    1,335,635  
       

PIPELINES — 0.5%

       
    2,000  

CNX Midstream Partners LP

    32,920  
    10,220  

Enable Midstream Partners LP

    102,507  
    13,850  

Enbridge, Inc.

    550,814  
    1,716  

Genesis Energy LP

    35,144  
    888  

Phillips 66 Partners LP

    54,736  
       

 

    776,121  
       

REAL ESTATE — 0.1%

       
    2,000  

Atenor

    162,083  
                 
       

REITS — 0.2%

       
    41,123  

VEREIT, Inc. - REIT

    379,977  
                 
       

RETAIL — 0.5%

       
    12,212  

Walgreens Boots Alliance, Inc.

    720,020  
    7,520  

Wendy’s Co.

    167,019  
       

 

    887,039  
       

SEMICONDUCTORS — 2.1%

       
    2,363  

Broadcom, Ltd.

    746,756  
    16,346  

Intel Corp.

    978,308  
    2,716  

NXP Semiconductors NV

    345,638  
    8,840  

Qorvo, Inc.(a)

    1,027,473  
    32,990  

Xperi Corp.

    610,315  
       

 

    3,708,490  

 

See accompanying notes to financial statements.

 

11

 

 

Wildermuth Endowment Fund

 

Schedule of Investments - Continued
December 31, 2019

 

 

Interests,
Shares,
Principal
Amount,
or Units

     

Fair Value

 
       

PUBLIC EQUITIES (CONTINUED)

       
       

SOFTWARE — 0.2%

       
    11,262  

ICT Group NV

  $ 144,109  
    1,380  

SAP SE

    186,375  
       

 

    330,484  
       

TELECOMMUNICATIONS — 0.2%

       
    11,538  

NTT DOCOMO, Inc.

    322,544  
                 
       

TOTAL PUBLIC EQUITIES (Cost $21,982,808)

    24,948,693  
                 
       

EXCHANGE TRADED FUNDS — 8.6%

       
       

DEBT FUNDS — 2.0%

       
    15,720  

Invesco International Corporate Bond

    426,641  
    1,618  

iShares iBoxx High Yield Corporate Bond

    142,287  
    31,000  

Vanguard Intermediate-Term Corporate Bond

    2,831,230  
       

 

    3,400,158  
       

EQUITY FUNDS — 6.6%

       
    44,389  

Emerging Markets Internet and Ecommerce

    1,566,932  
    37,354  

iShares MSCI Brazil

    1,772,447  
    36,530  

iShares MSCI India

    1,284,030  
    28,850  

iShares MSCI Indonesia

    740,291  
    34,400  

iShares MSCI Malaysia

    980,744  
    36,756  

iShares MSCI Taiwan

    1,511,774  
    51,512  

VanEck Vectors Russia

    1,286,255  
    29,000  

WisdomTree China ex-State-Owned Enterprises Fund

    2,409,888  
              11,552,361  
                 
       

TOTAL EXCHANGE TRADED FUNDS (Cost $14,027,958)

    14,952,519  
                 
       

COMMODITY & NATURAL RESOURCE INVESTMENTS — 2.9%

       
    953  

Casillas Petroleum Resource Partners, LLC(b)(c)(d)(e)(f)

    1,286,160  
    2,050,000  

CM Funding, LLC(b)(c)(d)(e)(f)

    856,643  
     

Kayne Anderson Energy Fund VII LP(c)(e)(g)

    1,492,471  
    2,080,000  

Thunder Investment Partners, LLC(b)(c)(d)(e)(f)

    1,438,189  
       

TOTAL COMMODITY & NATURAL RESOURCE INVESTMENTS (Cost $6,632,577)

    5,073,463  
                 
       

DIRECT PRIVATE EQUITY — 31.9%

       
    159  

Atlas Fintech Holdings Corp. - Class A Share Interests(b)(c)(d)(e)

    1,272,000  
    2,500  

Clear Guide Medical, Inc. - Series A Preferred Stock(b)(c)(d)(e)(f)

    4,902,056  
    134,898  

Clear Guide Medical, Inc. - Series A-2 Preferred Stock(b)(c)(d)(e)(f)

    955,816  
    634,619  

Clear Guide Medical, Inc. - Series A-3 Preferred Stock(b)(c)(d)(e)(f)

    4,248,609  
    828,254  

Clearsense, LLC - Class C Preferred Shares(b)(c)(d)(e)(f)

    8,148,270  
    250,000  

Content Management Live, LLC(b)(c)(d)(e)(f)

    250,000  
    3,385,201  

DSI Digital, LLC - Series A Convertible Preferred Units(b)(c)(d)(e)(f)

    13,191,310  
    8,800  

GigaPro, Inc. - Common Units(b)(c)(d)(e)(f)

    7,615,550  

 

See accompanying notes to financial statements.

 

12

 

 

Wildermuth Endowment Fund

 

Schedule of Investments - Continued
December 31, 2019

 

 

Interests,
Shares,
Principal
Amount,
or Units

     

Fair Value

 
       

DIRECT PRIVATE EQUITY (CONTINUED)

       
     

Level ATI HoldCo, LLC - Class A(b)(c)(d)(e)(f)

  $ 3,040,100  
    3,500,000  

Metro Diner, LLC - Series B Units(c)(d)(e)(f)

    2,940,000  
    1,880,968  

Metro Diner, LLC - Series II Common Units(c)(d)(e)(f)

    1,795,894  
    635,838  

Waratek, Ltd. - Series B-1(b)(c)(d)(e)(f)

    3,149,601  
    756,826  

Waratek, Ltd. - Series B-2(b)(c)(d)(e)(f)

    3,817,736  
     

WG Pitts Caribbean, LLC - Common Units(b)(c)(d)(e)(f)

     
       

TOTAL DIRECT PRIVATE EQUITY (Cost $30,553,608)

    55,326,942  
                 
       

DIRECT REAL ESTATE — 6.4%

       
     

Brookwood SFL Investor Co-Investment Vehicle, LLC(c)(e)

    1,630,603  
    439,716  

Dog Wood Park of Northeast Florida, LLC, 9.50%, 12/21/2020(c)(d)(e)(f)(h)

    357,105  
    400,000  

Hauiki Hui, LLC, 9.50%, 12/21/2019(b)(c)(d)(e)(f)(h)

    230,672  
    1,800,000  

LaGrange Senior Living, LLC - Class A Interests(b)(c)(d)(e)

    1,800,000  
     

Polara Builder II, LLC(b)(c)(d)(e)(f)

    5,660,763  
     

RS17 Rexburg Preferred LLC - Series A Preferred Interests(b)(c)(d)(e)(f)

    1,434,299  
       

TOTAL DIRECT REAL ESTATE (Cost $9,636,581)

    11,113,442  
                 
       

HEDGE FUNDS — 3.8%

       
     

Altegris Millennium Fund LP(c)(e)(g)(i)

    1,089,134  
     

CRC Bond Opportunity Trading Fund LP(c)(e)(g)(i)

    2,658,089  
     

EJF Trust Preferred Fund LP(c)(e)(g)(i)

    812,800  
     

Rosebrook Opportunities Fund LP(c)(e)(g)(i)

    1,516,893  
     

Tides Capital Gamma LP(b)(c)(e)(g)(i)

    566,324  
       

TOTAL HEDGE FUNDS (Cost $6,617,605)

    6,643,240  
                 
       

PRIVATE EQUITY DEBT — 6.1%

       
  $ 1,988,889  

Aetius Intermediate Company, LLC, LIBOR 1 Month + 9.50%, 12/20/2023(c)(d)(e)(j)

    1,988,889  
    1,500,000  

Atlas Fintech Holdings Corp. - Convertible Note, 8.00%, 6/20/2020(b)(c)(d)(e)

    1,500,000  
    884,450  

GigaPro, Inc. - Secured Note, 12.00%, 8/7/2021(b)(c)(d)(e)

    884,450  
    933,333  

Schweizer - RSG, LLC - Promissory Note, LIBOR 1 Month + 12.00%, 1/22/2021(c)(d)(e)(j)

    933,333  
    1,000,000  

Sequin, Inc. - Convertible Note, 8.00%, 6/28/2022(b)(c)(d)(e)

    1,000,000  
    500,000  

The Work Shop Limited T/A RIP Global - Convertible Note, 10.00%, 5/22/2022(b)(c)(d)(e)

    500,000  
    1,500,000  

Waratek, Ltd. - Convertible Note, 12.00%, 4/12/2021(b)(c)(d)(e)(f)

    1,920,001  
    2,000,000  

WG Pitts Caribbean, LLC - Promissory Note, 5.00%, 10/12/2020(b)(c)(d)(e)(f)

    1,815,745  
       

TOTAL PRIVATE EQUITY DEBT (Cost $9,861,077)

    10,542,418  
                 
       

PRIVATE EQUITY FUNDS — 7.1%

       
     

Abbott Secondary Opportunities LP(c)(e)(g)(i)

    1,551,688  
     

Auda Capital SCS SICAV SIF - Auda Asia Secondary Fund(c)(e)(g)(i)

    2,043,564  
     

Committed Advisors Secondary Fund III(c)(e)(g)(i)

    1,702,248  
     

EJF Sidecar Fund, Series LLC - Small Financial Equities Series(c)(e)(g)(i)

    1,055,628  
    10  

GPB Automotive Portfolio LP(c)(d)(e)(f)(g)

    155,838  
     

Gravity Ranch Fund I LP(b)(c)(e)(g)(i)

    23,043  
     

Greenspring Opportunities V, LP(c)(e)(g)(i)

    612,502  

 

See accompanying notes to financial statements.

 

13

 

 

Wildermuth Endowment Fund

 

Schedule of Investments - Continued
December 31, 2019

 

 

Interests,
Shares,
Principal
Amount,
or Units

     

Fair Value

 
       

PRIVATE EQUITY FUNDS (CONTINUED)

       
     

Madryn Health Partners LP(c)(e)(g)(i)

  $ 1,884,620  
     

PineBridge Secondary Partners IV SLP(c)(e)(g)(i)

    1,297,257  
     

Star Mountain Diversified Credit Income Fund III LP(c)(e)(g)(i)

    967,650  
     

Star Mountain Diversified Small Business Access Fund II LP(c)(e)(g)(i)

    1,092,136  
       

TOTAL PRIVATE EQUITY FUNDS (Cost $11,647,867)

    12,386,174  
                 
       

PRIVATE REAL ESTATE INVESTMENTS — 10.0%

       
    95,075  

ARCTRUST, Inc.(c)(e)(g)

    1,337,396  
    23,529  

Broadstone Net Lease, Inc.(c)(e)(g)

    2,000,000  
    2,465,209  

Carlyle Europe Realty Fund, S.C.Sp.(c)(e)(g)(i)

    2,747,625  
    157,812  

Cottonwood Residential II, Inc.(c)(e)(g)

    3,378,755  
     

Cygnus Property Fund V, LLC(b)(c)(e)(g)

    1,752,097  
     

Harbert Seniors Housing Fund I LP(c)(e)(g)

    1,339,608  
     

Harbert Seniors Housing Fund II LP(c)(e)(g)

    328,977  
     

PCG Select Series I LLC - Series A Preferred Stock(c)(e)(g)

    322,785  
    789  

PRISA III Fund LP(c)(e)(g)

    1,490,196  
     

RRA Credit Opportunity Fund LP(b)(c)(e)(g)

    975,012  
    56  

Shopoff Land Fund III LP(c)(e)(g)

    33,053  
    728,136  

Stonehill Strategic Hotel Credit Opportunity Fund II LP(c)(e)(g)

    1,011,182  
     

Walton Street Real Estate Fund VIII LP(c)(e)(g)

    655,431  
       

TOTAL PRIVATE REAL ESTATE INVESTMENTS (Cost $16,232,686)

    17,372,117  
                 
       

PUBLIC REAL ESTATE INVESTMENTS — 0.3%

       
    136,771  

Highlands REIT, Inc.(c)(e)

    49,238  
    153,283  

Inventrust Properties Corp.(c)(e)

    481,308  
    3,330  

Phillips Edison Grocery Center(c)(e)

    36,961  
       

TOTAL PUBLIC REAL ESTATE INVESTMENTS (Cost $400,806)

    567,507  
                 
       

REAL ESTATE LOANS — 3.6%

       
  $ 1,794,571  

Airport Center Development Partners, LLC, 10.50%, 4/10/2020(c)(d)(e)

    1,794,571  
    1,741,602  

GT Operating Company, Inc., 10.50%, 6/8/2020(c)(d)(e)

    1,741,602  
    679,962  

Park City (PCG), 10.50%, 11/26/2020(c)(d)(e)

    679,962  
    2,000,000  

Westgate at Powers, LLC, 10.50%, 6/21/2021(c)(d)(e)

    2,000,000  
       

TOTAL REAL ESTATE LOANS (Cost $5,919,529)

    6,216,135  
                 
       

WARRANTS — 1.2%

       
    100  

Atlas Fintech Holdings Corp., Exercise Price $13,000, Expiration Date,12/30/2021(a)(b)(c)(d)(e)

    87,955  
    44  

Atlas Fintech Holdings Corp., Exercise Price $14,950, Expiration Date,12/30/2022(a)(b)(c)(d)(e)

    26,642  
    475  

Atlas Fintech Holdings Corp., Exercise Price $8,000, Expiration Date,12/30/2021(a)(b)(c)(d)(e)

    1,091,788  
    1,442  

Schweizer RSG, LLC, Exercise Price $112.50, Expiration Date,1/21/2028(a)(c)(d)(e)(f)

    1,846  
    388,869  

Waratek, Ltd., Exercise Price 0.01 Euro, Expiration Date,1/22/2028(a)(b)(c)(d)(e)(f)

    798,853  
       

TOTAL WARRANTS (Cost $0)

    2,007,084  
                 

 

See accompanying notes to financial statements.

 

14

 

 

Wildermuth Endowment Fund

 

Schedule of Investments - Continued
December 31, 2019

 

 

Interests,
Shares,
Principal
Amount,
or Units

     

Fair Value

 
       

SHORT-TERM INVESTMENTS — 2.1%

       
    3,621,975  

Fidelity Institutional Government Portfolio - Institutional Class, 1.49%(k)

  $ 3,621,975  
       

TOTAL SHORT-TERM INVESTMENTS (Cost $3,621,975)

    3,621,975  
                 
       

TOTAL INVESTMENTS — 98.4% (Cost $137,135,077)

    170,771,709  
       

Other assets less liabilities — 1.6%

    2,737,201  
       

TOTAL NET ASSETS — 100.0%

  $ 173,508,910  

 

ADR – American Depository Receipt

 

LIBOR – London Inter-Bank Offered Rate

 

LLC – Limited Liability Company

 

LP – Limited Partnership

 

PLC – Public Limited Company

 

REIT – Real Estate Investment Trusts

 

SLP – Special Limited Partnership

 

(a)

Non-income Producing

 

(b)

Denotes an investment in an affiliated entity. Please refer to Note 8, Investments in Affiliated Issuers, in the Notes to the Financial Statements.

 

(c)

Illiquid Security. As of December 31, 2019 these securities amounted to $127,248,522, representing 73.34% of total net assets.

 

(d)

Level 3 security in accordance with fair value hierarchy.

 

(e)

Restricted Security. As of December 31, 2019 these securities amounted to $127,248,522, representing 73.34% of total net assets. Please refer to Note 7, Investments in Restricted Securities, in the Notes to the Financial Statements.

 

(f)

Security fair valued using method determined in good faith by the Fair Value Committee designated by the Board of Trustees. As of December 31, 2019 these securities amounted to $70,011,056, representing 40.35% of total net assets.

 

(g)

Private Fund. As of December 31, 2019 these securities amounted to $37,894,002, representing 21.84% of total net assets.

 

(h)

Security is in default.

 

(i)

Private Investment Company. As of December 31, 2019 these securities amounted to $21,621,201, representing 12.46% of total net assets.

 

(j)

Denotes a floating rate security. Floating rate securities are securities whose yields vary with a designated market index or market rate.

 

(k)

Represents the current rate as of December 31, 2019.

 

See accompanying notes to financial statements.

 

15

 

 

Wildermuth Endowment Fund

 

Statement of Assets and Liabilities

As of December 31, 2019

 

Assets:

       

Investments in unaffiliated issuers at fair value (cost $85,787,630)

  $ 94,532,025  

Investments in affiliated issuers at fair value (cost $51,347,447)

    76,239,684  

Receivables:

       

Due from Investment Adviser (Note 4)

    681,549  

Investment securities sold

    55,556  

Dividends and interest

    987,837  

Fund shares sold

    106,074  

Return of capital

    449,580  

Prepaid expenses

    10,571  

Other receivable

    780,218  

Total assets

    173,843,094  
         

Liabilities:

       

Payables:

       

Professional fees

    121,561  

Shareholder servicing fees

    28,591  

Transfer agent fees and expenses

    26,890  

Fund accounting and administration fees

    26,353  

Custody fees

    5,563  

Distribution fees

    35,274  

Accrued other liabilities

    89,952  

Total liabilities

    334,184  

Net Assets

  $ 173,508,910  
         

Net Assets Consist of:

       

Paid in capital (unlimited shares authorized, 25,000,000 shares registered, no par value)

  $ 144,810,471  

Total distributable earnings

    28,698,439  

Net Assets

  $ 173,508,910  
         

Net Assets:

       

Class A

  $ 80,691,969  

Class C

    54,613,748  

Class I

    38,203,193  

Net Assets

  $ 173,508,910  
         

Shares of Beneficial Interest Issued and Outstanding:

       

Class A shares

    5,856,246  

Class C shares

    4,083,848  

Class I shares

    2,747,412  

Total Shares Outstanding

    12,687,506  
         

Net Asset Value, Offering Price and Redemption Proceeds Per Share:(1)

       

Class A

  $ 13.78  

Class C(2)

  $ 13.37  

Class I

  $ 13.91  

Class A - Maximum offering price per share (Net asset value per share divided by 0.9425)(3)

  $ 14.62  

 

(1)

Redemptions made within 90 days of purchase may be assessed a redemption fee of 2.00%.

 

(2)

Class C Shares of the Fund are subject to a Contingent Deferred Sales Charge (“CDSC”) of 1.00% on any shares sold within 365 days of purchase.

 

(3)

Reflects a maximum sales charge of 5.75%.

 

See accompanying notes to financial statements.

 

16

 

 

Wildermuth Endowment Fund

 

Statement of Operations

For the year December 31, 2019

 

Investment Income:

       

Interest from unaffiliated issuers

  $ 1,018,235  

Dividends from affiliated issuers

    818,702  

Dividends from unaffiliated issuers (net of foreign withholding taxes of $21,110)

    490,287  

Interest from affiliated issuers

    355,184  

Other income

    105,519  

Total investment income

    2,787,927  
         

Expenses:

       

Investment Advisory fees (see Note 4)

    2,240,498  

Legal fees

    496,419  

Transfer agent fees

    427,795  

Distribution fees - Class C

    353,489  

Shareholder servicing fees - Class A & Class C

    321,630  

Accounting and administration servicing fees

    263,458  

Printing and postage expenses

    122,465  

Audit fees

    102,500  

Registration fees

    64,420  

Pricing and valuation service fees

    63,660  

Chief compliance officer fees

    56,649  

Chief financial officer fees

    53,049  

Trustees’ fees

    52,250  

Custodian fees

    34,069  

Miscellaneous expenses

    31,464  

Insurance expense

    22,226  

Total expenses

    4,706,041  

Expenses waived by Adviser (see Note 4)

    (670,176 )

Net expenses

    4,035,865  

Net investment loss

    (1,247,938 )
         

Realized and Unrealized Gain (Loss) on Investments and foreign currency:

       

Net realized gain (loss) on:

       

Investments in unaffiliated issuers

    (2,815,475 )

Investments in affiliated issuers

    (5,816,795 )

Foreign currency transactions

    9,357  

Total net realized loss

    (8,622,913 )

Net change in unrealized appreciation (depreciation) on:

       

Investments in unaffiliated issuers

    5,261,786  

Investments in affiliated issuers

    19,286,388  

Foreign currency translations

    (1,083 )

Total net change in unrealized appreciation

    24,547,091  

Net realized and unrealized gain on investments and foreign currency

    15,924,178  
         

Net Increase in Net Assets Resulting from Operations

  $ 14,676,240  

 

See accompanying notes to financial statements.

 

17

 

 

Wildermuth Endowment Fund

 

Statements of Changes in Net Assets

 

   

For the
year ended
December 31,
2019

   

For the
year ended
December 31,
2018

 

Increase/(Decrease) in Net Assets From:

               

Operations:

               

Net investment income (loss)

  $ (1,247,938 )   $ 302,332  

Net realized loss on investments

    (8,622,913 )     (2,099,476 )

Distributions of realized gains by underlying unaffiliated investment companies

          20,409  

Net change in unrealized appreciation (depreciation) on investments

    24,547,091       (680,968 )

Net increase (decrease) in net assets resulting from operations

    14,676,240       (2,457,703 )
                 

Distributions to Shareholders:

               

Distributions:

               

Class A

          (155,481 )

Class C

          (82,554 )

Class I

          (26,761 )

Total:

          (264,796 )
                 

From other sources (tax return of capital):

               

Class A

    (2,301,159 )     (1,624,661 )

Class C

    (1,288,847 )     (742,631 )

Class I

    (822,680 )     (150,628 )

Total:

    (4,412,686 )     (2,517,920 )

Total distributions to shareholders

  $ (4,412,686 )   $ (2,782,716 )

 

See accompanying notes to financial statements.

 

18

 

 

Wildermuth Endowment Fund

 

Statements of Changes in Net Assets - Continued

 

   

For the
year ended
December 31,
2019

   

For the
year ended
December 31,
2018

 

Capital Share Transactions:

               

Net proceeds from Class A shares sold

  $ 34,124,083     $ 17,912,089  

Net proceeds from Class C shares sold

    17,098,216       19,446,103  

Net proceeds from Class I shares sold

    27,493,959       12,590,689  

Reinvestment of distributions from Class A shares

    1,090,416       824,185  

Reinvestment of distributions from Class C shares

    1,088,395       643,074  

Reinvestment of distributions from Class I shares

    661,696       153,500  

Cost of Class A shares redeemed

    (30,119,763 )     (8,303,887 )

Cost of Class C shares redeemed

    (2,590,991 )     (855,874 )

Cost of Class I shares redeemed

    (3,395,157 )     (347,141 )

Redemption fees

    16,452       6,127  

Capital contribution from affiliate (Note 4)

    663,313        

Net increase from capital share transactions

    46,130,619       42,068,865  
                 

Net change in net assets

    56,394,173       36,828,446  
                 

Net Assets:

               

Beginning of year

    117,114,737       80,286,291  

End of year

  $ 173,508,910     $ 117,114,737  
                 

Share Activity:

               

Issuance of Class A shares

    2,524,088       1,353,041  

Issuance of Class C shares

    1,302,018       1,494,895  

Issuance of Class I shares

    1,999,921       938,087  

Class A shares reinvested

    80,385       62,261  

Class C shares reinvested

    82,487       49,579  

Class I shares reinvested

    47,928       11,487  

Class A shares redeemed

    (2,197,236 )     (628,135 )

Class C shares redeemed

    (194,887 )     (65,941 )

Class I shares redeemed

    (245,199 )     (26,151 )

Net increase in shares of beneficial interest outstanding

    3,399,505       3,189,123  

 

See accompanying notes to financial statements.

 

19

 

 

Wildermuth Endowment Fund

 

Statement of Cash Flows

 

   

For the
year ended
December 31,
2019

 

Cash flows from operating activities:

       

Net increase in net assets resulting from operations

  $ 14,676,240  

Adjustments to reconcile net increase in net assets resulting from operations to net cash used in operating activities:

       

Purchases of investments

    (81,140,044 )

Purchase of short term investments, net

    (2,165,268 )

Proceeds from sale of investments

    41,958,126  

Net realized loss from investments

    8,632,270  

Net realized gain from foreign currency transactions

    (9,357 )

Net unrealized appreciation on investments

    (24,548,174 )

Net unrealized depreciation on foreign currency translations

    1,083  

Return of capital and non-income distributions received

    2,079,366  
         

Changes in assets and liabilities

       

(Increase)/Decrease in assets:

       

Due from Investment Adviser

    (681,549 )

Dividend and interest receivable

    (55,257 )

Return of capital receivable

    (449,580 )

Receivable for investment securities sold

    (33,334 )

Other receivable

    (780,218 )

Funded commitment

    1,000,000  

Prepaid expenses

    13,146  

Increase/(Decrease) in liabilities:

       

Payable to custodian

    (219,780 )

Payable to Investment Adviser

    (62,851 )

Payable for professional fees

    11,756  

Payable for shareholder servicing fees

    5,553  

Payable for fund accounting and administration fees

    6,458  

Payable for custody fees

    1,055  

Payables for transfer agent fees and expenses

    3,962  

Payable for distribution fees

    11,636  

Accrued other liabilities

    (123,030 )

Net cash used in operating activities

    (41,867,791 )
         

Cash flows from financing activities:

       

Proceeds from shares sold

    78,857,842  

Cost of shares redeemed, net of redemption fees

    (36,089,459 )

Cash distributions paid, net of reinvestment

    (1,572,179 )

Capital contributions from affiliates

    663,313  

Net cash provided by financing activities

    41,859,517  
         

Effects of foreign currency exchange rate changes in cash

    8,274  
         

Net change in cash

     

Cash at beginning of year

     

Cash at end of year

  $  
         

Supplemental disclosure of non-cash activity:

       

Reinvestment of fund distributions

  $ 2,840,507  

 

See accompanying notes to financial statements.

 

20

 

 

Wildermuth Endowment Fund

 

Financial Highlights – Class A

 

Per share income and capital changes for a share outstanding throughout each period.

 

   

For the
year ended
December 31,
2019
(1)

   

For the
year ended
December 31,
2018
(1)

   

For the
year ended
December 31,
2017
(1)

   

For the
year ended
December 31,
2016
(1)

   

For the
year ended
December 31,
2015
(2)

 

Net asset value, beginning of period

  $ 12.69     $ 13.21     $ 11.81     $ 10.79     $ 10.00  
                                         

Income from Investment Operations:

                                       

Net investment income (loss)(3)

    (0.08 )     0.06       (0.04 )     0.01       0.05  

Net realized and unrealized gain (loss) on investments

    1.55       (0.23 )     1.80       1.19       0.93 (4) 

Total from investment operations

    1.47       (0.17 )     1.76       1.20       0.98  

Less Distributions:

                                       

From net investment income

                            (0.03 )

From return of capital

    (0.38 )     (0.32 )     (0.18 )     (0.18 )     (0.16 )

From net realized gains

          (0.03 )     (0.18 )            

Total distributions

    (0.38 )     (0.35 )     (0.36 )     (0.18 )     (0.19 )

Net asset value, end of period

  $ 13.78     $ 12.69     $ 13.21     $ 11.81     $ 10.79  
                                         

Total return(5)

    11.65 %(6)     (1.38 )%     15.07 %     11.27 %     9.74 %(7)
                                         

Ratios and Supplemental Data:

                                       

Net assets, end of period (in thousands)

  $ 80,692     $ 69,143     $ 61,568     $ 31,686     $ 14,467  

Ratio of gross expenses to average net assets(8)(12)

    2.97 %     3.21 %     3.32 %     4.73 %     16.65 %(9)

Ratio of net expenses to average net assets(8)(10)

    2.50 %     2.50 %     2.50 %     2.50 %     2.50 %(9)

Ratio of net investment income (loss) to average net assets(8)(11)

    (0.63 )%     0.45 %     (0.35 )%     0.07 %     0.49 %(9)

Portfolio turnover rate

    29 %     31 %     51 %     55 %     107 %(7)

 

(1)

Redemption fees consisted of per share amounts of less than $0.01.

 

(2)

The Fund commenced operations on January 2, 2015 (inception date 12/31/2014).

 

(3)

Per share amounts calculated using the average shares method.

 

(4)

Realized and unrealized gain per share does not correlate to the aggregate of the net realized and unrealized gains on the Statement of Operations for the period ended December 31, 2015, primarily due to the timing of sales and repurchases of the Fund’s shares in relation to fluctuating market values for the Fund’s portfolio.

 

(5)

Total returns would have been lower had certain expenses not been waived or absorbed by the Adviser. Returns shown do not include payment of a maximum sales load of offering price. If the sales charge was included total returns would be lower. The maximum sales load in 2016 and 2015 was 6.00% of offering price. Effective October 20, 2017 the maximum sales load was changed to 5.75% of offering price.

 

(6)

Total return would have been 11.24% absent the Capital Contribution from the Adviser (see Note 4).

 

(7)

Not annualized.

 

(8)

The ratios of expenses and net investment income to average net assets do not reflect the Fund’s proportionate share of income and expenses of underlying investment companies in which the Fund invests.

 

(9)

Annualized.

 

(10)

Represents the ratio of expenses to average net assets inclusive of fee waivers and/or expense reimbursements by Adviser.

 

(11)

Recognition of net investment income by the Fund is affected by the timing of the declaration of dividends by the underlying investment companies in which the Fund invests.

 

(12)Represents the ratio of expenses to average net assets absent fee waivers and/or expense reimbursements.

See accompanying notes to financial statements.

 

21

 

 

Wildermuth Endowment Fund

 

Financial Highlights – Class C

 

Per share income and capital changes for a share outstanding throughout each period.

 

   

For the
year ended
December 31,
2019
(1)

   

For the
year ended
December 31,
2018
(1)

   

For the
year ended
December 31,
2017

   

For the
period ended
December 31,
2016
(2)

 

Net asset value, beginning of period

  $ 12.40     $ 13.02     $ 11.73     $ 10.68  
                                 

Income from Investment Operations:

                               

Net investment loss(3)

    (0.18 )     (0.02 )     (0.13 )     (0.07 )

Net realized and unrealized gain (loss) on investments

    1.50       (0.25 )     1.78       1.25  

Total from investment operations

    1.32       (0.27 )     1.65       1.18  

Less Distributions:

                               

From return of capital

    (0.35 )     (0.32 )     (0.18 )     (0.13 )

From net realized gains

          (0.03 )     (0.18 )      

Total distributions

    (0.35 )     (0.35 )     (0.36 )     (0.13 )

Net asset value, end of period

  $ 13.37     $ 12.40     $ 13.02     $ 11.73  
                                 

Total return(4)

    10.74 %(6)     (2.18 )%     14.23 %     11.10 %(5)
                                 

Ratios and Supplemental Data:

                               

Net assets, end of period (in thousands)

  $ 54,614     $ 35,888     $ 18,435     $ 4,951  

Ratio of gross expenses to average net assets(7)(11)

    3.72 %     3.96 %     4.07 %     5.63 %(8)

Ratio of net expenses to average net assets(7)(8)

    3.25 %     3.25 %     3.25 %     3.25 %(8)

Ratio of net investment loss to average net assets(7)(10)

    (1.40 )%     (0.20 )%     (1.08 )%     (0.77 )%(8)

Portfolio turnover rate

    29 %     31 %     51 %     55 %(5)

 

(1)

Redemption fees consisted of per share amounts of less than $0.01.

 

(2)

Reflects operations for the period from March 14, 2016 (inception date) to December 31, 2016.

 

(3)

Per share amounts calculated using the average shares method.

 

(4)

Total returns would have been lower had certain expenses not been waived or absorbed by the Adviser. Returns shown do not include payment of a Contingent Deferred Sales Charge (“CDSC”) of 1.00% on any shares sold within 365 days of purchase. If the sales charge was included total returns would be lower.

 

(5)

Not annualized.

 

(6)

Total return would have been 10.33% absent the Capital Contribution from the Adviser (see Note 4).

 

(7)

The ratios of expenses and net investment income to average net assets do not reflect the Fund’s proportionate share of income and expenses of underlying investment companies in which the Fund invests.

 

(8)

Annualized.

 

(9)

Represents the ratio of expenses to average net assets inclusive of fee waivers and/or expense reimbursements by Adviser.

 

(10)

Recognition of net investment income by the Fund is affected by the timing of the declaration of dividends by the underlying investment companies in which the Fund invests.

 

(11)Represents the ratio of expenses to average net assets absent fee waivers and/or expense reimbursements.

 

See accompanying notes to financial statements.

 

22

 

 

Wildermuth Endowment Fund

 

Financial Highlights – Class I

 

Per share income and capital changes for a share outstanding throughout each period.

 

   

For the
year ended
December 31,
2019

   

For the
year ended
December 31,
2018

   

For the
period ended
December 31,
2017
(1)

 

Net asset value, beginning of period

  $ 12.79     $ 13.27     $ 12.26  
                         

Income from Investment Operations:

                       

Net investment income (loss)(2)

    (0.06 )     0.17       0.02  

Net realized and unrealized gain (loss) on investments

    1.58       (0.31 )     1.30  

Total from investment operations

    1.52       (0.14 )     1.32  

Less Distributions:

                       

From return of capital

    (0.41 )     (0.32 )     (0.13 )

From net realized gains

          (0.03 )     (0.18 )

Total distributions

    (0.41 )     (0.35 )     (0.31 )

Redemption Fees:

    0.01       0.01        

Net asset value, end of period

  $ 13.91     $ 12.79     $ 13.27  
                         

Total return

    12.06 %(3)     (1.07 )%     10.87 %(4)
                         

Ratios and Supplemental Data:

                       

Net assets, end of period (in thousands)

  $ 38,203     $ 12,084     $ 283  

Ratio of gross expenses to average net assets(5)(9)

    2.72 %     2.96 %     3.24 %(6)

Ratio of net expenses to average net assets(5)(7)

    2.25 %     2.25 %     2.25 %(6)

Ratio of net investment income (loss) to average net assets(5)(8)

    (0.42 )%     1.27 %     0.26 %(6)

Portfolio turnover rate

    29 %     31 %     51 %(4)

 

(1)

Reflects operations for the period from April 28, 2017 (inception date) to December 31, 2017.

 

(2)

Per share amounts calculated using the average shares method.

 

(3)

Total return would have been 11.58% absent the Capital Contribution from the Adviser (see Note 4).

 

(4)

Not annualized.

 

(5)

The ratios of expenses and net investment income to average net assets do not reflect the Fund’s proportionate share of income and expenses of underlying investment companies in which the Fund invests.

 

(6)

Annualized.

 

(7)

Represents the ratio of expenses to average net assets inclusive of fee waivers and/or expense reimbursements by Adviser.

 

(8)

Recognition of net investment income by the Fund is affected by the timing of the declaration of dividends by the underlying investment companies in which the Fund invests.

 

(9)Represents the ratio of expenses to average net assets absent fee waivers and/or expense reimbursements.

 

See accompanying notes to financial statements.

 

23

 

 

Wildermuth Endowment Fund

 

Notes to Financial Statements

December 31, 2019

 

1. ORGANIZATION

 

Wildermuth Endowment Fund (the “Fund”) is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as a non-diversified, closed-end management investment company that is operated as an interval fund. The Fund was organized as a Delaware statutory trust on August 28, 2013, and did not have any operations from that date until December 31, 2014, other than those relating to organizational matters and registration of its shares under applicable securities law. The Fund commenced operations on January 2, 2015. The Fund’s investment objective is to seek total return through a combination of long-term capital appreciation and income generation. The Fund will pursue its objective by investing in assets that Wildermuth Advisory, LLC (the “Adviser”) believes provide favorable long-term capital appreciation and risk-adjusted return potential, as well as in income-producing assets that the Adviser believes will provide consistent income generation and liquidity.

 

The Fund is engaged in a continuous offering, up to a maximum of 25 million shares of beneficial interest, and operates as an interval fund that offers to make quarterly repurchases of shares at the Fund’s net asset value (“NAV”). The Fund currently offers three different classes of shares: Class A, Class C, and Class I shares.

 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. These policies are in conformity with accounting principles generally accepted in the United States of America (“US GAAP”). The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses for the period. Actual results could differ from those estimates. The Fund is an investment company and follows the accounting and reporting requirements under Financial Accounting Standards Board (“FASB”) Accounting Standards (“ASC”) Topic 946, Financials Services – Investment Companies.

 

Investment Valuation – For purposes of determining the NAV of the Fund, and as applicable, readily marketable portfolio securities listed on the NYSE are valued, except as indicated below, at the last sale price reflected on the consolidated tape at the close of the NYSE on the business day as of which such value is being determined. If there has been no sale on such day, the securities are valued at the mean of the closing bid and asked prices on such day. If no bid or asked prices are quoted on such day or if market prices may be unreliable because of events occurring after the close of trading, then the security is valued by such method as the Fair Value Committee shall determine in good faith to reflect its fair market value. Readily marketable securities not listed on the NYSE but listed on other domestic or foreign securities exchanges are valued in a like manner. Portfolio securities traded on more than one securities exchange are valued at the last sale price on the business day as of which such value is being determined as reflected on the consolidated tape at the close of the exchange representing the principal market for such securities. Securities trading on NASDAQ are valued at the closing price, or, in the case of securities not reported by NASDAQ, a comparable source, as the Fair Value Committee deems appropriate to reflect their fair market value. If there has been no sale on such day, the securities are valued at the mean of the closing bid and asked prices for the day, or if no asked price is available, at the bid price. However, certain debt securities may be valued on the basis of prices provided by a pricing service based on broker or dealer supplied valuations or matrix pricing, a method of valuing securities by reference to the value of other securities with similar characteristics, such as rating, interest rate and maturity.

 

The “last reported” trade price or sale price or “closing” bid price of a security on any trading day shall be deemed to be: (a) with respect to securities traded primarily on the NYSE, the American Stock Exchange or NASDAQ, the last reported trade price or sale price, as the case may be, as of 4:00 p.m., Eastern Time, on that day, and (b) for securities listed, traded or quoted on any other exchange, market, system or service, the market price as of the end of the “regular hours” trading period that is generally accepted as such by such exchange, market, system or service. If, in the future, the benchmark times generally accepted in the securities industry for determining the market price of a stock as of a given trading day shall change from those set forth above, the fair market value of a security shall be determined as of such other generally accepted benchmark times.

 

Non-U.S. dollar denominated securities, if any, are valued as of the close of the NYSE at the closing price of such securities in their principal trading market, but may be valued at fair value if subsequent events occurring before the computation of NAV have materially affected the value of the securities. Trading may take place in foreign issues held by the Fund, if any, at times when the Fund is not open for business. As a result, the Fund’s NAV may change at times when it is not possible to purchase or sell shares of the Fund.

 

24

 

 

Wildermuth Endowment Fund

 

Notes to Financial Statements - Continued
December 31, 2019

 

If market quotations are not readily available, securities are valued at fair values as determined in good faith by the Board of Trustees (the “Board”). The Board has delegated the day-to-day responsibility for determining these fair values, in accordance with the policies it has approved, to the Fair Value Committee, subject to Valuation Committee and ultimately Board oversight. The Fair Value Committee will provide the Board with periodic reports, no less frequently than quarterly, that discuss the functioning of the valuation process, if applicable to that period, and that identify issues and valuation problems that have arisen, if any. As appropriate, the Valuation Committee and the Board will review any securities valued by the Fair Value Committee in accordance with the Fund’s valuation policies during these periodic reports.

 

Investments in private equity and private equity debt instruments initially will be valued at cost (purchase price plus all related acquisition costs and expenses, such as legal fees and closing costs) and thereafter will be revalued quarterly at fair value based on payment history, market conditions, collateral of underlying debt and credit quality of borrower.

 

As a general matter, the fair value of the Fund’s interest in Investment Funds that are Commodity and Natural Resource Investments, Direct Real Estate Funds, Hedge Funds, High Yield Loans, Private Equity Funds, Private Equity Debt, Private Real Estate Funds, Non-Traded REITs and Real Estate Loans (“Non-Traded Funds”), will represent the amount that the Fund could reasonably expect to receive from the Non-Traded Fund if the Fund’s interest was redeemed at the time of valuation, based on information reasonably available at the time the valuation is made and that the Fund believes to be reliable. Investments in Non-Traded Funds are recorded at fair value, using the Non-Traded Fund’s net asset value as a practical expedient. Based on guidance provided by FASB, investments for which fair value is measured using the net asset value practical expedient are not required to be categorized in the fair value hierarchy. In the event a Non-Traded Fund does not report a value to the Fund on a timely basis, the Fair Value Committee, acting under the Valuation Committee and ultimately the Board’s supervision and pursuant to policies implemented by the Board, will determine the fair value of the Fund’s investment based on the most recent value reported by the Non-Traded Fund, as well as any other relevant information available at the time the Fund values its investments. Following procedures adopted by the Board, in the absence of specific transaction activity in a particular investment fund, the Fair Value Committee will consider whether it is appropriate, in light of all relevant circumstances, to value the Fund’s investment at the NAV reported by the Non-Traded Fund at the time of valuation or to adjust the value to reflect a fair value.

 

Securities for which market quotations are not readily available (including restricted securities and private placements, if any) are valued at their fair value as determined in good faith under consistently applied procedures approved by the Board. Methodologies and factors used to fair value securities may include, but are not limited to, the analysis of current debt to cash flow, information of any recent sales, the analysis of the company’s financial statements, quotations or evaluated prices from broker-dealers, information obtained from the issuer or analysts and the nature of the existing market for securities with characteristics similar to such obligations. Valuations may be derived following a review of pertinent data (EBITDA, Revenue, etc.) from company financial statements, relevant market valuation multiples for comparable companies in comparable industries, recent transactions, and management assumptions. The Fund may use fair value pricing for foreign securities if a material event occurs that may affect the price of a security after the close of the foreign market or exchange (or on days the foreign market is closed) but before the Fund prices its portfolio, generally at 4:00 p.m. Eastern Time. Fair value pricing may also be used for securities acquired as a result of corporate restructurings or reorganizations, as reliable market quotations for such issues may not be readily available. For securities valued in good faith, the value of an investment used to determine the Fund’s net asset value may differ from published or quoted prices for the same investment. The valuations for these good faith securities are monitored and reviewed in accordance with the methodologies described above by the Fund’s Fair Value Committee on an ongoing basis as information becomes available but are evaluated at least quarterly. The good faith security valuations and fair value methodologies are reviewed and approved by the Fund’s Board on a quarterly basis. There can be no assurance that the Fund could obtain the fair value assigned to an investment if it were to sell the investment at the same time which the Fund determines its net asset value per share.

 

US GAAP defines fair value, establishes a three-tier framework for measuring fair value based on a hierarchy of inputs, and expands disclosure about fair value measurements. It also provides guidance on determining when there has been a significant decrease in the volume and level of activity for an asset or liability, when a transaction is not orderly and how that information must be incorporated into a fair value measurement. The hierarchy distinguishes between market data obtained from independent sources (observable inputs) and the Fund’s own market assumptions (unobservable inputs). These inputs are used in determining the fair value of the Fund’s investments. These inputs are summarized in the three broad levels listed below:

 

 

Level 1 – quoted prices in active markets for identical securities. An active market for the security is a market in which transactions occur with sufficient frequency and volume to provide pricing information on an ongoing basis. A quoted price in an active market provides the most reliable evidence of fair value.

 

25

 

 

Wildermuth Endowment Fund

 

Notes to Financial Statements - Continued
December 31, 2019

 

 

Level 2 – other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc. and quoted prices for identical or similar assets in markets that are not active.) Inputs that are derived principally from or corroborated by observable market data. An adjustment to any observable input that is significant to the fair value may render the measurement a Level 3 measurement.

 

 

Level 3 – significant unobservable inputs, including the Fund’s own assumptions in determining the fair value of investments.

 

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.

 

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 valuation inputs, representing 100% of the Fund’s investments, used to value the Fund’s assets and liabilities as of December 31, 2019:

 

           

Fair Value Measurements at the
End of the Reporting Period Using

         

Investment in Securities

 

Practical
Expedient**

   

Level 1
Quoted Prices

   

Level 2
Other Significant
Observable Inputs

   

Level 3
Significant
Unobservable
Inputs

   

Total

 

Security Type

                                       

Public Equities*

  $     $ 24,948,693     $     $     $ 24,948,693  

Exchange Traded Funds*

          14,952,519                   14,952,519  

Commodity & Natural Resource Investments

    1,492,471 (1)(6)(7)                  3,580,992       5,073,463  

Direct Private Equity

                      55,326,942       55,326,942  

Direct Real Estate

    1,630,603 (2)(6)(7)                  9,482,839       11,113,442  

Hedge Funds

    6,643,240 (3)(6)(7)                        6,643,240  

Private Equity Debt

                      10,542,418       10,542,418  

Private Equity Funds

    12,230,336 (4)(6)(8)                  155,838       12,386,174  

Private Real Estate Investments

    17,372,117 (5)(6)(9)                        17,372,117  

Public Real Estate Investments

          567,507                   567,507  

Real Estate Loans

                      6,216,135       6,216,135  

Warrants

                      2,007,084       2,007,084  

Short Term Investments

          3,621,975                   3,621,975  

Total

  $ 39,368,767     $ 44,090,694     $     $ 87,312,248     $ 170,771,709  

 

*

All sub-categories within the security type represent their respective evaluation status. For a detailed breakout by industry, please refer to the Schedule of Investments.

 

**

Certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been categorized in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the schedule of investments.

 

26

 

 

Wildermuth Endowment Fund

 

Notes to Financial Statements - Continued
December 31, 2019

 

(1)

Security

Withdrawals Permitted

Redemption Notice Period

Investment Objective

Investment Strategy

Lock Up Period

 

Kayne Anderson Energy Fund VII LP

Not Applicable

Not Applicable

Capital Gains

Purchase oil and gas companies; extraction and production companies.

N/A

             

(2)

Security

Withdrawals Permitted

Redemption Notice Period

Investment Objective

Investment Strategy

Lock Up Period

 

Brookwood SFL Investor Co-Investment Vehicle, LLC

Not Applicable

Not Applicable

Capital Gains and Current Income

Real Estate

N/A

             

(3)

Security

Withdrawals Permitted

Redemption Notice Period

Investment Objective

Investment Strategy

Lock Up Period

 

Altegris Millennium Fund LP

Quarterly

Not Applicable

Capital Gains and Income

Multistrategy hedge fund

N/A

 

CRC Bond Opportunity Trading Fund LP

Monthly

90 days

Capital Gains and Income

Opportunistic, event-driven credit fund focused on subordinated debt, preferred equity, and additional Tier 1 capital of banks and financial firms.

12 months

 

EJF Trust Preferred Fund LP

Not Applicable

Not Applicable

Capital Gains and Income

Event driven with focus on financials

3 years

 

Rosebrook Opportunities Fund LP

Not Applicable

Not Applicable

Capital Appreciation

Buying distressed hedge fund assets

N/A

 

Tides Capital Gamma LP

Not Applicable

Not Applicable

Capital Appreciation

Highly concentrated in public equity positions - Small Cap

N/A

             

(4)

Security

Withdrawals Permitted

Redemption Notice Period

Investment Objective

Investment Strategy

Lock Up Period

 

Abbot Secondary Opportunities LP

Not Applicable

Not Applicable

Capital Gains

Purchase private equity funds on secondary market

N/A

 

Auda Capital SCS SICAV SIF - Auda Asia Secondary Fund

Not Applicable

Not Applicable

Capital Gains and Dividends

Purchase private equity funds on the secondary market with exposure to Asian small to mid-sized privately owned companies.

N/A

 

Committed Advisors Secondary Fund III

Not Applicable

Not Applicable

Capital Gains

Private equity fund with a global focus

N/A

 

EJF Sidecar Fund, Series LLC - Small Financial Equities Series

Not Applicable

Not Applicable

Capital Gains and Dividends

Invests in equity of small depository institutions, including without limitation financial institutions that are impacted directly or indirectly by: (1) bank and thrift recapitalizations and/or restructurings; (2) merger and acquisition activity; and (3) government financial reform related policies.

N/A

 

Gravity Ranch Fund I LP

Not Applicable

Not Applicable

Capital Gains

Venture Capital investing

N/A

 

Greenspring Opportunities V, LP

Not Applicable

Not Applicable

Capital Appreciation

Direct investments in growth stage companies

N/A

 

Madryn Health Partners LP

Not Applicable

Not Applicable

Capital Gains

Invests in commercial-stage healthcare companies

N/A

 

PineBridge Secondary Partners IV SLP

Not Applicable

Not Applicable

Capital Appreciation

Private equity fund of funds

N/A

 

Star Mountain Diversified Credit Income Fund III LP

Not Applicable

Not Applicable

Capital Appreciation

Structured Credit

N/A

 

Star Mountain Diversified Small Business Access Fund II LP

Not Applicable

Not Applicable

Capital Appreciation

Structured Credit

N/A

 

27

 

 

Wildermuth Endowment Fund

 

Notes to Financial Statements - Continued
December 31, 2019

 

(5)

Security

Withdrawals Permitted

Redemption Notice Period

Investment Objective

Investment Strategy

Lock Up Period

 

ARCTRUST, Inc.

Suspended

30 days

Capital Appreciation and Income

Development, acquisition and financing of commercial properties

3 years

 

Broadstone Net Lease, Inc.

Quarterly

10 days

Capital Appreciation and Income

Real estate

N/A

 

Carlyle Europe Realty Fund, S.C.Sp

Not Applicable

Not Applicable

Capital Appreciation and Income

Primary focus is on large, more liquid Western European markets. Seek to invest at the intersection of hard asset and private equity.

N/A

 

Cottonwood Residential II, Inc.

Quarterly

Not Applicable

Capital Appreciation and Income

Development, acquisition and financing of multi-family properties

1 year

 

Cygnus Property Fund V, LLC

Not Applicable

Not Applicable

Capital Appreciation and Income

Distressed debt/special situation and opportunistic real estate investments.

N/A

 

Harbert Seniors Housing Fund I LP

Not Applicable

Not Applicable

Capital Appreciation and Income

Real estate

N/A

 

Harbert Seniors Housing Fund II LP

Not Applicable

Not Applicable

Capital Appreciation and Income

Real estate

N/A

 

PCG Select Series I LLC - Series A Preferred Stock

Not Applicable

Not Applicable

Income

Real estate loans

N/A

 

PRISA III Fund LP

Quarterly

90 days

Capital Appreciation and Income

Diversified value-add real estate portfolio that targets above average real estate returns.

N/A

 

RRA Credit Opportunity Fund LP

Not Applicable

Not Applicable

Current Income

Real estate backed lending

N/A

 

Shopoff Land Fund III

Not Applicable

Not Applicable

Capital Gains

Value added Real Estate

N/A

 

Stonehill Strategic Hotel Credit Opportunity Fund II LP

Not Applicable

Not Applicable

Capital Appreciation and Income

Value added lending to hospitality assets

N/A

 

Walton Street Real Estate Fund VIII LP

Not Applicable

Not Applicable

Capital Gains

Value added Real Estate

N/A

 

(6)

Redemption frequency and redemption notice period reflect general redemption terms, and exclude liquidity restrictions. Different tranches may have different liquidity terms and may be subject to investor level gates.

 

(7)

These investments are domiciled in the United States.

 

(8)

These investments are domiciled in the United States with the exception of Auda Capital SCS SICAV SIF - Auda Asia Secondary Fund which is domiciled in Luxembourg and and Committed Advisors Secondary Fund III which is domiciled in France.

 

(9)

These investments are domiciled in the United States with the exception of Carlyle Europe Realty Fund S.C.Sp. which is domiciled in Luxembourg.

 

The transfers out of Level 3 in the following table represent securities now being valued using net asset value per share practical expedient, which is not included in the fair value measurement hierarchy, or securities now being valued under Level 1 of the fair value measurement hierarchy due to the availability of observable inputs. There were no transfers into Level 3 during the reporting period.

 

28

 

 

Wildermuth Endowment Fund

 

Notes to Financial Statements - Continued
December 31, 2019

 

The following is a roll forward of the activity in investments in which significant unobservable inputs (Level 3) were used in determining fair value on a recurring basis:

 

   

Beginning
balance
January 1,
2019

   

Transfers
into
Level 3
during the
period

   

Transfers
out of
Level 3
during the
period

   

Purchases or
Conversions

   

Sales or
Conversions

   

Net
realized
gain (loss)

   

Return of
Capital

   

Change
in net
unrealized
appreciation
(depreciation)

   

Ending
balance
December 31,
2019

 

Commodity & Natural Resource Investments

  $ 5,644,811     $     $     $     $     $     $ (173,966 )   $ (1,889,853 )   $ 3,580,992  

Direct Private Equity

    33,510,130             (500,000 )     10,494,060             (5,865,315 )           17,688,067       55,326,942  

Direct Real Estate

    4,579,320                   5,850,389       (1,404,000 )     18,520       (18,520 )     457,130       9,482,839  

High Yield Loans

    1,564,481                   1,298,894       (2,028,414 )     (763,517 )           (71,444 )      

Private Equity Debt

    4,073,118                   7,384,450       (1,313,334 )     39,778       (11,111 )     369,517       10,542,418  

Private Equity Funds

    457,314                                           (301,476 )     155,838  

Private Real Estate Investments

    3,287,260             (1,086,916 )     1,250,000       (3,205,829 )     370,684             (615,199 )      

Public Real Estate Investments

    173,991             (25,831 )           (135,263 )     12,547       (2,588 )     (22,856 )      

Real Estate Loans

    6,924,604                         (708,469 )     28,577       (27,229 )     (1,348 )     6,216,135  

Warrants

    736,973                                           1,270,111       2,007,084  
    $ 60,952,002     $     $ (1,612,747 )   $ 26,277,793     $ (8,795,309 )   $ (6,158,726 )   $ (233,414 )   $ 16,882,649     $ 87,312,248  

 

The change in net unrealized appreciation (depreciation) included in the Statement of Operations attributable to Level 3 investments that were held as of December 31, 2019 is $9,305,632.

 

The following is a summary of quantitative information about significant unobservable valuation inputs determined by management for Level 3 Fair Measurements for investments held as of December 31, 2019:

 

Type of Level 3
Investment

 

Fair Value as of
December 31, 2019

   

Valuation
Technique

   

Unobservable
Inputs

   

Range

   

Weighted
Average

 

Commodity & Natural Resource Investments

  $ 3,580,992       Income Approach       NYMEX future strip for WTI crude oil       $49.18/bbl - $57.21/bbl       $50.48  
                      NYMEX future strip for Henry Hub gas       $1.04/MCF-$3.13/MCF       $4.21  
                      ICE future strip for NGPL       $13.05/bbl - $19.27/bbl       $18.13  
                      Discount Rate       10.00%-25.00%       13.55%  
                      Risk Factor       50.00%-100.00%       63.63%  

Direct Real Estate

  7,682,839       Income Approach       Discount Rate       18.00%-20.00%       19.41%  
              Market Approach       Cap Rate       5.5-5.75       5.67  

Private Equity

                                       

Direct Private Equity

  54,054,942       Income Approach       Discount Rate       20.00%       20.00%  

Private Equity Debt

  3,735,746       Income Approach       Discount Rate       27.50%-28.00%       27.74%  

Private Equity Funds

    155,838       Market Approach       Discount Rate       55.00%       55.00%  

 

29

 

 

Wildermuth Endowment Fund

 

Notes to Financial Statements - Continued
December 31, 2019

 

Type of Level 3
Investment

 

Fair Value as of
December 31, 2019

   

Valuation
Technique

   

Unobservable
Inputs

   

Range

   

Weighted
Average

 

Warrants

  $ 800,699       Guideline company comparison       Projected revenue mulitple       .13x-5.0x       2.99  
                      LTM Revenue multiple       5x       5x  
              Option pricing method       Time to Liquidity       2-3       2.32  
                      Volatility       60.00%-70.00%       62.27%  
                      Risk Free Rate       1.56%-1.65%       1.58%  
              Market Yield Approach       Time to Liquidity       2       2  
                      LIBOR Swap Rate       1.65%       1.65%  
                      Credit Spread       5.25%       5.25%  

 

The following is a summary of quantative information about significant unobservable valuation inputs not determined by management for Level 3 Fair Measurements for investments held as of December 31, 2019:

 

Type of Level 3 Investment

 

Fair Value as of
December 31, 2019

   

Valuation Technique

 

Direct Real Estate

  $ 1,800,000       Recent Transaction Value  

Direct Private Equity

  1,272,000       Recent Transaction Value  

Private Equity Debt

  6,806,672       Recent Transaction Value  

Real Estate Loans

  6,216,135       Face Value  

Warrants

  1,206,385       Recent Transaction Value  

 

Security Transactions and Related Income – Security transactions are accounted for on trade date basis. Interest income is recognized on an accrual basis. Discounts are accreted and premiums are amortized on securities purchased over the lives of the respective securities. Dividend income is recorded on the ex-dividend date. Distributions from underlying investment companies are classified as investment income or realized gains based on the U.S. income tax characteristics of the distribution. Realized gains or losses from sales of securities are determined by comparing the identified cost of the security lot sold with the net sales proceeds.

 

Dividends and Distributions to Shareholders – Dividends from gross investment income are declared and distributed quarterly. Distributable net realized capital gains are declared and distributed annually. Dividends from gross investment income and distributions from net realized gains are recorded on ex- dividend date and determined in accordance with federal income tax regulations, which may differ from US GAAP. These “book/tax” differences are considered either temporary (i.e., deferred losses, capital loss carry forwards) or permanent in nature. To the extent these differences are permanent in nature, such amounts are reclassified within the composition of net assets based on their federal tax-basis treatment; temporary differences do not require reclassification.

 

Distributions received from investments in securities that represent a return of capital or capital gains are recorded as a reduction of cost of investment or as a realized gain, respectively. The calendar year-end amounts of ordinary income, capital gains, and return of capital included in distributions received from the Fund’s investments in real estate investment trusts (“REITs”) are reported to the Fund after the end of the calendar year; accordingly, the Fund estimates these amounts for accounting purposes until the characterization of REIT distributions is reported to the Fund after the end of the calendar year. Estimates are based on the most recent REIT distribution information available.

 

LIBOR Transition Risk – Certain instruments in which the Fund may invest rely in some fashion upon the London Interbank Offered Rate ("LIBOR"). The United Kingdom’s Financial Conduct Authority, which regulates LIBOR, has announced plans to phase out the use of LIBOR by the end of 2021. There remains uncertainty regarding the future utilization of LIBOR and the nature of any replacement rate, and any potential effects of the transition away from LIBOR on the Fund or on certain instruments in which the Fund invests

 

30

 

 

Wildermuth Endowment Fund

 

Notes to Financial Statements - Continued
December 31, 2019

 

are not known. The transition process may involve, among other things, increased volatility or illiquidity in markets for instruments that currently rely on LIBOR. The transition, as well as other unforeseen effects, may also result in a reduction in the value of certain instruments held by the Fund.

 

Investment Companies – The Fund may obtain investment exposure to various asset classes by investing in other investment companies, including registered investment companies, such as exchange-traded funds, mutual funds and closed-end funds, as well as hedge funds, private equity funds or other privately offered pooled investment vehicles that are not registered under the 1940 Act (collectively “Investment Funds”). Each Investment Fund is subject to specific risks, depending on the nature of the fund. These risks could include liquidity risk, sector risk, and foreign currency risk, as well as risks associated with fixed income securities and commodities among others. Also, the Fund’s performance depends in part upon the performance of the Investment Fund managers and selected strategies, the adherence by such Investment Fund managers to such selected strategies, the instruments used by such Investment Fund managers and the Adviser’s ability to select Investment Funds and strategies and effectively allocate Fund assets among them. By investing in Investment Funds indirectly through the Fund, the investor bears asset-based fees at the Fund level, in addition to any asset-based fees and/or performance-based fees and allocations at the Investment Fund level. Moreover, an investor in the Fund bears a proportionate share of the fees and expenses of the Fund (including organizational and offering expenses, operating costs, sales charges, brokerage transaction expenses, and administrative fees) and, indirectly, similar expenses of the Investment Funds. Thus, an investor in the Fund may be subject to higher fees and operating expenses than if he or she invested in an Investment Fund directly.

 

Federal Income Taxes – It is the Fund’s policy to qualify as a regulated investment company by complying with the provisions of the Internal Revenue Code that are applicable to regulated investment companies and to distribute substantially all of its taxable income and net realized gains to shareholders. Therefore, no federal income tax provision has been recorded.

 

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. 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 or expected to be taken on returns filed for tax years open for the current and prior three years. The Fund identifies its major tax jurisdictions as U.S. federal, and foreign jurisdictions where the Fund makes significant investments; 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.

 

Redemption Fee – For shares held for 90 days or less, the Fund will deduct a 2% redemption fee from the redemption amount if the shares are sold pursuant to the Fund’s quarterly repurchase program. Shares held longest will be treated as being repurchased first and shares held shortest as being repurchased last. The redemption fee does not apply to shares that were acquired through reinvestment of distributions. Shares held for more than 90 days are not subject to the 2% fee. Redemption fees are paid to the Fund directly and are designed to offset costs associated with fluctuations in Fund asset levels and cash flow caused by short-term shareholder trading. For the year ended December 31, 2019, the Fund had contributions to capital due to redemption fees in the amount of $16,452.

 

Indemnification – The Fund indemnifies its officers and trustees for certain liabilities that may arise from the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts that contain a variety of representations and warranties and which provide general indemnities. 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 industry experience, the risk of loss due to these warranties and indemnities appears to be remote.

 

Foreign Currency Translations – The accounting records of the Fund are maintained in U.S. dollars. All assets and liabilities denominated in foreign currencies are translated into U.S. dollars based on the rate of exchange of such currencies against U.S. dollars on the date of valuation. Purchases and sales of securities, income, and expenses are translated at the rate of exchange quoted on the respective date that such transactions are recorded. 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.

 

31

 

 

Wildermuth Endowment Fund

 

Notes to Financial Statements - Continued
December 31, 2019

 

Reported net realized foreign exchange gains or losses arise from sales of portfolio securities, sales and maturities of short-term securities, 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 value of assets and liabilities other than investments in securities at each reporting period, resulting from changes in the exchange rate.

 

3. INVESTMENT TRANSACTIONS

 

The cost of purchases and proceeds from the sale of securities, other than short-term investments, for the year ended December 31, 2019, amounted to $81,140,044 and $41,958,126, respectively.

 

4. ADVISORY FEE AND FUND TRANSACTIONS

 

Subsequent to December 31, 2019, it was determined that the valuation of the Fund’s investments in several issuers was determined without appropriately observable inputs during the period beginning in March 2019 through at least December 31, 2019. The reduction in value of these positions included in these financial statements from the final daily net asset value struck in December 2019 was approximately $5,000,000. In addition, the Fund erroneously carried duplicative dividend accruals for securities issued by several companies over the period from January 2019 to December 31, 2019. The accrual write-down resulted in a reduction in the Fund’s net assets of approximately $1,400,000.

 

The Fund has recognized a receivable due from the Investment Manager in the amount of approximately $563,000 for overpayments on share repurchase payments made to investors that redeemed shares during 2019 resulting from these valuations. There is also a receivable of approximately $101,000 for amounts owed to the Fund in connection with subscription underpayments resulting from these valuations. These amounts are included within Due from Investment Adviser on the Statement of Assets and Liabilities. The Investment Manager understands that there may be additional amounts owed to the Fund subsequent to December 31, 2019 related to these same issuers. Additionally, advisory fees that were paid to the Investment Manager and attributable to overstated net assets are due to the Fund, along with amounts needed under the Investment Manager’s expense limitation commitment.

 

Advisory Fees – The Adviser is entitled to receive a monthly fee equal to the annual rate of 1.50% of the Fund’s average daily net assets. For the year ended December 31, 2019, the Adviser earned $2,240,498 in advisory fees.

 

Expense limitation agreement – The Adviser and the Fund have entered into an expense limitation and reimbursement agreement (the “Expense Limitation Agreement”) under which the Adviser has agreed contractually to waive its fees and to pay or absorb the direct, ordinary operating expenses of the Fund (including offering and organizational expenses but excluding front-end or contingent deferred loads, brokerage fees and commissions, acquired fund fees and expenses, borrowing costs (such as interest and dividend expenses on securities sold short), taxes and extraordinary expenses such as litigation), to the extent that they exceed 2.50%, 3.25%, and 2.25% per annum of the Fund’s average daily net assets attributable to Class A, Class C, and Class I shares (the “Expense Limitation”), respectively, through December 31, 2020. In consideration of the Adviser’s agreement to limit the Fund’s expenses, the Fund has agreed to repay the Adviser in the amount of any fees waived and Fund expenses paid or absorbed. Any waiver or reimbursement of fees by the Adviser is subject to repayment by the Fund within three years following such waiver or reimbursement; provided, however, that (i) the Fund is able to make such repayment without exceeding the expense limitation in place at the time the fees being repaid were waived or the Fund’s current expense limitation, whichever is lower, and (ii) such repayment is approved by the Fund’s Board of Trustees. The Expense Limitation Agreement will remain in effect for successive twelve-month periods provided that such continuance is specifically approved at least annually by the Board of Trustees. The Expense Limitation Agreement may be terminated only by the Fund’s Board on 60 days’ written notice to the Adviser. During the year ended December 31, 2019, the Adviser did not recoup any expenses. As of December 31, 2019, $458,874 is subject to recoupment through December 31, 2020, $695,394 through December 31, 2021, $670,176 through December 31, 2022.

 

32

 

 

Wildermuth Endowment Fund

 

Notes to Financial Statements - Continued
December 31, 2019

 

Distribution Agreement – The Fund has adopted a Distribution Agreement (the “Agreement”). The Agreement provides that a monthly distribution fee is calculated at an annual rate equal to 0.75% of the Fund’s average daily net assets attributable to Class C. Class A and Class I shares are not currently subject to a distribution fee. For the year ended December 31, 2019, $353,489 had been accrued for Class C distribution fees.

 

Shareholder Services Plan – The Fund has adopted a Shareholder Services Plan and Agreement (the “Plan). The Plan provides that a monthly service fee is calculated up to an annual rate equal to 0.25% of average daily net assets separately attributable to Class A and Class C shares. Class I shares are not included under the Plan and are not subject to a 0.25% average daily net asset fee. For the year ended December 31, 2019, Class A had accrued $203,800 in shareholder service fees and Class C had accrued $117,830.

 

Trustees – Each Independent Trustee receives a retainer of $5,000 per year, plus $2,500 for each board or board committee meeting the trustee attends in person ($3,000 for attendance by the chairperson of the audit committee at each meeting of the audit committee), or $500 for each meeting the trustee attends telephonically. If there is a meeting of the Board and one or more committees in a single day, the fees will be limited to $3,000 per day ($3,500 for the chairperson of the audit committee if there is a meeting of such committee) for an in person meeting and $750 ($1,000 for the chairperson of the audit committee if there is a meeting of such committee) for meetings attended telephonically. No “interested persons” who serve as Trustees of the Fund received any compensation for their services as Trustees. None of the executive officers received compensation from the Fund.

 

5. FEDERAL TAX INFORMATION

 

At December 31, 2019, gross unrealized appreciation and depreciation on investments based on cost for federal income tax purposes were as follows:

 

Cost of investments

  $ 132,570,193  

Gross unrealized appreciation

  $ 46,703,092  

Gross unrealized depreciation

    (8,501,576 )

Net unrealized appreciation on investments

  $ 38,201,516  

 

The difference between cost amounts for financial statement and federal income tax purposes is due primarily to timing differences in recognizing certain gains and losses in security transactions and investments in partnerships.

 

U.S. GAAP requires that certain components of net assets 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, 2019, permanent differences in book and tax accounting have been reclassified to paid-in capital and distributable earnings. These reclassifications relate primarily to the differing tax treatment of income from paydowns, net operating losses, distributions and income from partnership investments, and foreign currency gains and losses.

 

 

Increase (Decrease)

 
 

Paid in
Capital

   

Distributable
Earnings

 
  $ (4,993,779 )   $ 4,993,779  

 

As of December 31, 2019, the components of accumulated earnings (deficit) on a tax basis were as follows:

 

Accumulated capital and other losses

  $ (9,499,596 )

Net unrealized appreciation on investments

    38,201,516  

Net unrealized depreciation on foreign currency translations

    (3,481 )

Total accumulated earnings (deficit)

  $ 28,698,439  

 

33

 

 

Wildermuth Endowment Fund

 

Notes to Financial Statements - Continued
December 31, 2019

 

The tax character of distributions paid during the fiscal years ended December 31, 2019 and December 31, 2018 were as follows:

 

   

2019

   

2018

 

Distributions paid from:

               

Ordinary income

  $     $  

Long-term capital gains

          264,796  

Return of capital

    4,412,686       2,517,920  

Total distributions paid

  $ 4,412,686     $ 2,782,716  

 

As of December 31, 2019, the Fund had net capital loss carryovers as follows:

 

Not subject to expiration:

       

Short Term

  $ 9,499,596  

Long Term

     
    $ 9,499,596  

 

Capital loss carryovers are available to offset future realized capital gains and thereby reduce further taxable gain distributions.

 

6. REPURCHASE OFFERS

 

Pursuant to Rule 23c-3 under the Investment Company Act of 1940, as amended, the Fund offers shareholders on a quarterly basis the option of redeeming shares, at net asset value, of no less than 5% of the shares outstanding. There is no guarantee that shareholders will be able to sell all of the shares they desire in a quarterly repurchase offer, although each shareholder will have the right to require the Fund to purchase up to and including 5% of such shareholder’s shares in each quarterly repurchase. Limited liquidity will be provided to shareholders only through the Fund’s quarterly repurchases.

 

During the year ended December 31, 2019, the Fund completed four quarterly repurchase offers. The results of those repurchase offers were as follows:

 

Repurchase Pricing Date

 

January 30, 2019

   

April 30, 2019

   

July 30, 2019

   

October 30, 2019

 

% of Shares Offered - Total Fund

    5.00 %     5.00 %     5.42 %*     5.61 %*

Number of Shares Offered - Total Fund

    481,624       563,143       649,005       702,065  

Pricing Date Net Asset Value - Class A

  $ 13.28     $ 13.59     $ 13.66     $ 13.79  

Pricing Date Net Asset Value - Class C

  $ 12.98     $ 13.25     $ 13.29     $ 13.39  

Pricing Date Net Asset Value - Class I

  $ 13.39     $ 13.70     $ 13.79     $ 13.94  

Number of Shares Tendered - Class A

    96,624       309,907       527,605       465,049  

Number of Shares Tendered - Class C

    25,491       16,118       57,976       97,437  

Number of Shares Tendered - Class I

    10,416       32,005       63,424       139,579  

% of Shares Tendered - Total Fund

    1.38 %     3.18 %     5.42 %     5.61 %

 

*

At the sole discretion of the Board, the Fund offered to repurchase up to an additional 2% of the outstanding shares bringing the total eligible Repurchase Offer Amount to 7%.

 

34

 

 

Wildermuth Endowment Fund

 

Notes to Financial Statements - Continued
December 31, 2019

 

7. INVESTMENTS IN RESTRICTED SECURITIES

 

Restricted securities include securities that have not been registered under the Securities Act of 1933, as amended, and securities that are subject to restrictions on resale. The Fund may invest in restricted securities that are consistent with the Fund’s investment objectives and investment strategies. Investments in restricted securities are valued at fair value as determined in good faith in accordance with procedures adopted by the Board of Trustees. It is possible that the estimated value may differ significantly from the amount that might ultimately be realized in the near term, and the difference could be material.

 

Additional information on each restricted security held by the Fund on December 31, 2019 is as follows:

 

Security

 

Initial
Acquisition Date

   

Shares,
Principal Amount
or Units

   

Cost

   

Fair
Value

   

% of
Net Assets

 

Abbott Secondary Opportunities LP

April 13, 2017

        $ 1,173,183     $ 1,551,688       0.89%  

Aetius Intermediate Company, LLC, LIBOR 1 Month + 9.50%, 12/20/2023

December 26, 2019

    1,988,889       1,988,889       1,988,889       1.15%  

Airport Center Development Partners, LLC, 10.50%, 4/10/2020

September 28, 2018

    1,794,571       1,740,734       1,794,571       1.03%  

Altegris Millennium Fund LP

December 20, 2018

          1,000,000       1,089,134       0.63%  

ARCTRUST, Inc.

June 30, 2016

    95,075       1,046,310       1,337,396       0.77%  

Atlas Fintech Holdings Corp. - Class A Share Interests

December 20, 2016

    159       1,506,000       1,272,000       0.73%  

Atlas Fintech Holdings Corp. - Convertible Note, 8.00%, 6/20/2020

June 20, 2019

    1,500,000       1,500,000       1,500,000       0.86%  

Atlas Fintech Holdings Corp., Exercise Price $13,000, Expiration Date 12/30/2021

December 20, 2016

    100             87,955       0.05%  

Atlas Fintech Holdings Corp., Exercise Price $14,950, Expiration Date 12/30/2022

December 20, 2016

    44             26,642       0.02%  

Atlas Fintech Holdings Corp., Exercise Price $8,000, Expiration Date 12/30/2021

December 23, 2019

    475             1,091,788       0.63%  

Auda Capital SCS SICAV SIF- Auda Asia Secondary Fund

April 2, 2018

          1,988,718       2,043,564       1.18%  

Broadstone Net Lease, Inc.

September 12, 2019

    23,529       1,979,294       2,000,000       1.15%  

Brookwood SFL Investor Co-Investment Vehicle, LLC

November 3, 2017

          1,017,978       1,630,603       0.94%  

Carlyle Europe Realty Fund, S.C.Sp.

December 19, 2018

    2,465,209       2,783,240       2,747,625       1.58%  

Casillas Petroleum Resource Partners, LLC

October 11, 2016

    953       952,711       1,286,160       0.74%  

Clear Guide Medical, Inc. - Series A Preferred Stock

April 19, 2016

    2,500       2,250,000       4,902,056       2.82%  

 

35

 

 

Wildermuth Endowment Fund

 

Notes to Financial Statements - Continued
December 31, 2019

 

Security

 

Initial
Acquisition Date

   

Shares,
Principal Amount
or Units

   

Cost

   

Fair
Value

   

% of
Net Assets

 

Clear Guide Medical, Inc. - Series A-2 Preferred Stock

March 6, 2018

    134,898     $ 500,000     $ 955,816       0.55%  

Clear Guide Medical, Inc. - Series A-3 Preferred Stock

July 16, 2018

    634,619       2,335,394       4,248,609       2.45%  

Clearsense, LLC - Class C Preferred Shares

February 20, 2019

    828,254       3,649,865       8,148,270       4.70%  

CM Funding, LLC

December 14, 2018

    2,050,000       1,876,034       856,643       0.49%  

Committed Advisors Secondary Fund III

March 30, 2017

          1,250,806       1,702,248       0.98%  

Content Management Live, LLC

December 17, 2019

    250,000       250,000       250,000       0.14%  

Cottonwood Residential II, Inc.

June 12, 2019

    157,812       2,922,142       3,378,755       1.95%  

CRC Bond Opportunity Trading Fund LP

June 7, 2019

          2,500,000       2,658,089       1.53%  

Cygnus Property Fund V, LLC

October 30, 2018

          1,920,198       1,752,097       1.01%  

Dog Wood Park of Northeast Florida, LLC, 9.50%, 12/21/2020

March 21, 2017

    439,716       382,000       357,105       0.21%  

DSI Digital, LLC - Series A Convertible Preferred Units

November 29, 2017

    3,385,201       5,000,000       13,191,310       7.60%  

EJF Sidecar Fund, Series LLC - Small Financial Equities Series

October 25, 2017

          977,661       1,055,628       0.61%  

EJF Trust Preferred Fund LP

August 23, 2017

          611,119       812,800       0.47%  

GigaPro, Inc. - Common Units

August 8, 2019

    8,800       2,758,800       7,615,550       4.39%  

GigaPro, Inc. - Secured Note, 12.00%, 8/7/2021

August 8, 2019

    884,450       884,450       884,450       0.51%  

GPB Automotive Portfolio LP

March 13, 2015

    10       500,000       155,838       0.09%  

Gravity Ranch Fund I LP

June 13, 2017

          500,000       23,043       0.01%  

Greenspring Opportunities V, LP

January 18, 2018

          520,000       612,502       0.35%  

GT Operating Company, Inc., 10.50%, 6/8/2020

July 3, 2018

    1,741,602       1,663,230       1,741,602       1.00%  

Harbert Seniors Housing Fund I LP

February 24, 2017

          1,145,715       1,339,608       0.77%  

Harbert Seniors Housing Fund II LP

September 10, 2019

          451,516       328,977       0.19%  

Hauiki Hui, LLC, 9.50%, 12/21/2019

January 4, 2017

    400,000       382,000       230,672       0.13%  

Highlands REIT, Inc.

April 28, 2016

    136,771       34,827       49,238       0.03%  

Inventrust Properties Corp.

March 2, 2015

    153,283       341,340       481,308       0.28%  

Kayne Anderson Energy Fund VII LP

September 12, 2016

          1,723,832       1,492,471       0.86%  

LaGrange Senior Living, LLC - Class A Interests

September 11, 2019

    1,800,000       1,800,000       1,800,000       1.04%  

Level ATI HoldCo, LLC - Class A

September 10, 2018

          1,690,000       3,040,100       1.75%  

 

36

 

 

Wildermuth Endowment Fund

 

Notes to Financial Statements - Continued
December 31, 2019

 

Security

 

Initial
Acquisition Date

   

Shares,
Principal Amount
or Units

   

Cost

   

Fair
Value

   

% of
Net Assets

 

Madryn Health Partners LP

September 28, 2018

        $ 1,750,133     $ 1,884,620       1.09%  

Metro Diner, LLC - Series B Units

November 16, 2017

    3,500,000       2,276,542       2,940,000       1.69%  

Metro Diner, LLC - Series II Common Units

November 16, 2017

    1,880,968       1,223,458       1,795,894       1.04%  

Park City (PCG), 10.50%, 11/26/2020

March 16, 2018

    679,962       625,565       679,962       0.39%  

PCG Select Series I LLC - Series A Preferred Stock

June 23, 2016

          610,698       322,785       0.19%  

Phillips Edison Grocery Center

February 3, 2016

    3,330       24,638       36,961       0.02%  

PineBridge Secondary Partners IV SLP

September 19, 2017

          1,101,326       1,297,257       0.75%  

Polara Builder II, LLC

June 15, 2018

          5,084,603       5,660,763       3.26%  

PRISA III Fund LP

September 26, 2017

    789       1,315,954       1,490,196       0.86%  

Rosebrook Opportunities Fund LP

February 2, 2017

          1,506,486       1,516,893       0.87%  

RRA Credit Opportunity Fund LP

December 12, 2017

          769,882       975,012       0.56%  

RS17 Rexburg Preferred LLC - Series A Preferred Interests

September 21, 2017

          970,000       1,434,299       0.83%  

Schweizer - RSG, LLC - Promissory Note, LIBOR 1 Month + 12.00%, 1/22/2021

February 6, 2018

    933,333       913,778       933,333       0.54%  

Schweizer RSG, LLC, Exercise Price $112.50, Expiration Date 1/21/2028

February 6, 2018

    1,442             1,846       0.01%  

Sequin, Inc. - Convertible Note, 8.00%, 6/28/2022

July 1, 2019

    1,000,000       1,000,000       1,000,000       0.57%  

Shopoff Land Fund III LP

April 28, 2015

    56       40,203       33,053       0.02%  

Star Mountain Diversified Credit Income Fund III LP

June 20, 2019

          968,070       967,650       0.56%  

Star Mountain Diversified Small Business Access Fund II LP

June 2, 2017

          917,970       1,092,136       0.63%  

Stonehill Strategic Hotel Credit Opportunity Fund II LP

July 18, 2016

    728,136       728,136       1,011,182       0.58%  

The Work Shop Limited T/A RIP Global - Convertible Note, 10.00%, 5/22/2022

November 22, 2019

    500,000       500,000       500,000       0.29%  

Thunder Investment Partners, LLC

November 2, 2018

    2,080,000       2,080,000       1,438,189       0.83%  

Tides Capital Gamma LP

November 30, 2018

          1,000,000       566,324       0.33%  

Walton Street Real Estate Fund VIII LP

May 24, 2017

          519,398       655,431       0.38%  

Waratek, Ltd. - Convertible Note, 12.00%, 4/12/2021

March 25, 2019

    1,500,000       1,500,000       1,920,001       1.11%  

Waratek, Ltd. - Series B-1

June 5, 2018

    635,838       2,990,570       3,149,601       1.82%  

 

37

 

 

Wildermuth Endowment Fund

 

Notes to Financial Statements - Continued
December 31, 2019

 

Security

 

Initial
Acquisition Date

   

Shares,
Principal Amount
or Units

   

Cost

   

Fair
Value

   

% of
Net Assets

 

Waratek, Ltd. - Series B-2

December 28, 2017

    756,826     $ 3,696,940     $ 3,817,736       2.20%  

Waratek, Ltd., Exercise Price 0.01 Euro, Expiration Date 1/22/2028

June 5, 2018

    388,869             798,853       0.46%  

Westgate at Powers, LLC, 10.50%, 6/21/2021

January 17, 2018

    2,000,000       1,890,000       2,000,000       1.15%  

WG Pitts Caribbean, LLC - Common Units

October 12, 2018

          426,040       0       0.00%  

WG Pitts Caribbean, LLC - Promissory Note, 5.00%, 10/12/2020

October 12, 2018

    2,000,000       1,573,960       1,815,745       1.05%  
                    $ 97,502,336     $ 127,248,522          

 

8. INVESTMENTS IN AFFILIATED ISSUERS

 

Issuers that are considered affiliates, as defined in Section 2(a)(3) of the 1940 Act, of the Fund at period-end are noted in the Fund’s Schedule of Investments. The table below reflects transactions during the period with entities that are affiliates as of December 31, 2019 and may include acquisitions of new investments, prior year holdings that became affiliated during the period, and prior period affiliated holdings that are no longer affiliated as of period-end.

 

Security Description

 

Beginning
balance
January 1,
2019

   

Purchases or
Conversions

   

Sales or
Conversions

   

Change in
securities
meeting the
definition of
an affiliated
investment

   

Change in
Unrealized
Appreciation
(Depreciation)

   

Net
Realized
Gain (Loss)

   

Tax Basis
or Return
of Capital
Adjustments

   

Ending
Value
December 31,
2019

   

Investment
Income

 

Atlas Fintech Holdings Corp. - Class A Share Interests(1)

  $     $     $     $ 1,506,000     $ (234,000 )   $     $     $ 1,272,000     $  

Atlas Fintech Holdings Corp - Convertible Note 8.00%, 6/20/2020

          1,500,000                                     1,500,000       64,110  

Atlas Fintech Holdings Corp. Exercise Price $13,000 Expiration Date 12/30/2021(1)

                            87,955                   87,955        

Atlas Fintech Holdings Corp. Exercise Price $14,950 Expiration Date 12/30/2022(1)

                            26,642                   26,642        

Atlas Fintech Holdings Corp. Exercise Price $8,000 Expiration Date 12/30/2021

                            1,091,788                   1,091,788        

Brookwood SFL Investor Co-Investment Vehicle, LLC(2)

    1,551,334                   (1,124,249 )     (427,085 )                        

Casillas Petroleum Resource Parnters, LLC(1)

                      952,711       333,449                   1,286,160        

Clear Guide Medical, Inc.- Convertible Note, 10.00%, 1/6/2020

    1,032,487             (780,000 )           (282,487 )     30,000                   3,683  

Clear Guide Medical, Inc.- Series A Preferred Stock(3)

    3,802,700                         1,099,356                   4,902,056        

Clear Guide Medical, Inc.- Series A-2 Preferred Stock(3)

    724,389                         231,427                   955,816        

 

38

 

 

Wildermuth Endowment Fund

 

Notes to Financial Statements - Continued
December 31, 2019

 

Security Description

 

Beginning
balance
January 1,
2019

   

Purchases or
Conversions

   

Sales or
Conversions

   

Change in
securities
meeting the
definition of
an affiliated
investment

   

Change in
Unrealized
Appreciation
(Depreciation)

   

Net
Realized
Gain (Loss)

   

Tax Basis
or Return
of Capital
Adjustments

   

Ending
Value
December 31,
2019

   

Investment
Income

 

Clear Guide Medical, Inc.- Series A-3 Preferred Stock(3)

  $ 688,328     $ 1,835,394     $     $     $ 1,724,887     $     $     $ 4,248,609     $  

Clearsense, LLC - Class C Preferred Shares

          3,649,865                   4,498,405                   8,148,270        

Content Management Live, LLC(3)

          250,000                                     250,000        

CM Funding, LLC(3)

    2,050,000                         (1,019,392 )           (173,965 )     856,643       100,445  

Cygnus Property Fund V, LLC

    2,000,000                         (168,100 )           (79,803 )     1,752,097        

DSI Digital, LLC - Series A Convertible Preferred Units(3)

    3,000,000       2,000,000                   8,191,310                   13,191,310        

GigaPro, Inc. - Common Units(3)

          2,758,800                   4,856,750                   7,615,550        

GigaPro, Inc. LLC - Secured Note, 8.00%, 8/7/2021(3)

          884,450                                     884,450       33,828  

Gravity Ranch Fund I LP(1)

                      500,000       (476,957 )                 23,043        

Hauiki Hui, LLC, 9.50%, 12/21/2019(1)

                      382,000       (151,328 )                 230,672       38,302  

LaGrange Senior Living, LLC - Class A Interests(3)

          1,800,000                                     1,800,000        

Level ATI HoldCo, LLC - Class A(3)

    2,385,261                         654,839                   3,040,100        

Polara Builder II, LLC(3)

    2,471,990       4,050,389       (1,404,000 )           542,384       18,520       (18,520 )     5,660,763       523,692  

Rosebrook Opportunities Fund LP(2)

    1,283,000                   (1,830,810 )     547,810                          

RS17 Rexburg Preferred LLC - Series A Preferred Interests

  $ 1,307,330                         126,969                   1,434,299        

RRA Credit Opportunity Fund LP

    456,870       1,450,299                   139,258             (1,071,415 )     975,012       3,691  

Schweizer RSG, LLC, Exercise Price $112.50, Expiration Date 1/22/2028 (2)

    15,270                         (15,270 )                        

Sequin, Inc. - Convertible Note, 8.00%, 6/28/2022

          1,000,000                                     1,000,000       32,444  

The Work Shop Limited T/A RIP Global - Convertible Note, 10.00%, 5/22/2022

          500,000                                     500,000       5,556  

Tides Capital Gamma LP(3)

    856,821                         (290,497 )                 566,324        

Thunder Investment Partners, LLC(3)

    2,080,000                         (641,811 )                 1,438,189       190,874  

Tout, Inc. - New Preferred Shares

    7,900,001                         (2,034,686 )     (5,865,315 )                  

Waratek, Ltd. - Series B-1

    2,957,410                         192,191                   3,149,601        

Waratek, Ltd. - Series B-2

    3,787,611                         30,125                   3,817,736        

Waratek, Ltd. - Convertible Note, 12.00%, 4/12/2021

          1,500,000                   420,001                   1,920,001        

Waratek, Ltd., Exercise Price 0.01 Euro, Expiration Date 01/22/2028

    382,147                         416,706                   798,853        

WG Pitts Caribbean, LLC - Common Units(3)

    426,036                         (426,036 )                        

WG Pitts Caribbean, LLC - Promissory Note, 5.00%, 10/12/2020(1)

                      1,573,960       241,785                   1,815,745       177,261  
    $ 41,158,985     $ 23,179,197     $ (2,184,000 )   $ 1,959,612     $ 19,286,388     $ (5,816,795 )   $ (1,343,703 )   $ 76,239,684     $ 1,173,886  

 

(1)

Security was held in the portfolio as of December 31, 2018 but did not meet the definition of an affiliated investment.

 

39

 

 

Wildermuth Endowment Fund

 

Notes to Financial Statements - Continued
December 31, 2019

 

(2)

Affiliated security as December 31, 2018, but no longer meeting the 5% ownership in voting securities definition for the period ended December 31, 2019. The inclusion in the table above is to provide the net change for affiliated securities as a whole. The security is held in the portolio, see the Schedule of Investments for the current value.

 

(3)

Affiliated investments for which ownership exceeds 25% of the Investment Fund’s Capital.

 

9. OFFERING PRICE PER SHARE

 

Class A shares are offered subject to a maximum sales charge of 5.75% of the offering price, while Class C shares and Class I shares are not subject to a sales charge. Class C shares are subject to a 1% contingent deferred sales charges on shares redeemed during the first 365 days after purchase, while Class A shares and Class I shares are not subject to a contingent deferred sales charge. For the year ended December 31, 2019, the various broker dealers received $850,102 in underwriting commissions for sales of shares. For the year ended December 31, 2019, contingent deferred sales charges in the amount of $3,551 were applied to Class C shareholders.

 

10. COMMITMENTS

 

The Fund is required to provide financial support in the form of investment commitments to certain investees as part of the conditions for entering into such investments. As of December 31, 2019, the Fund had unfunded commitments in the amount of $21,478,774. The Adviser monitors capital call activity and regularly reviews the Fund’s cash position. In the event the Fund receives a capital call in excess of the Fund’s cash position and the Fund has not received enough incoming shareholder subscriptions to meet the capital call requirement, the Adviser would liquidate public security positions held in the Fund’s portfolio to satisfy the capital commitment.

 

11. SUBSEQUENT EVENTS

 

Subsequent events after the balance sheet date have been evaluated through the date the financial statements were issued.

 

The Fund completed a quarterly repurchase offer on January 30, 2020. 136,866 shares of Class A, 33,815 shares of Class C, and 145,202 shares of Class I were tendered. The shares tendered represented 2.40% of the Fund’s outstanding shares on the Repurchase Pricing Date.

 

An outbreak of respiratory disease caused by a novel coronavirus was first detected in China in December 2019 and subsequently spread internationally. This coronavirus has resulted in closing borders, enhanced health screenings, healthcare service preparation and delivery, quarantines, cancellations, disruptions to supply chains and customer activity, as well as general concern and uncertainty. The impact of this coronavirus may be short term or may last for an extended period of time and result in a substantial economic downturn. Health crises caused by outbreaks, such as the coronavirus outbreak, may exacerbate other pre-existing political, social and economic risks. The impact of this outbreak, and other epidemics and pandemics that may arise in the future, could negatively affect the worldwide economy, as well as the economies of individual countries, individual companies and the market in general in significant and unforeseen ways. Any such impact could adversely affect the performance of the securities in which the Fund invests and may lead to losses on your investment in the Fund.

 

40

 

 

Wildermuth Endowment Fund

 

Report of Independent Registered Public Accounting Firm

 

To the Shareholders and the Board of Trustees of Wildermuth Endowment Fund

 

Opinion on the Financial Statements

 

We have audited the accompanying statement of assets and liabilities, including the schedule of investments of Wildermuth Endowment Fund (the Fund) as of December 31, 2019, the related statements of operations and cash flows for the year then ended, the statements of changes in net assets, including the related notes, and the financial highlights for each of the three years in the period then ended (collectively, the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2019, the results of its operations and its cash flows for the year then ended, the changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the three years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.

 

The financial highlights for the year ended December 31, 2016 and for the period from January 2, 2015 (commencement of operations) to December 31, 2015 for the Fund were audited by other auditors. Those auditors expressed an unqualified opinion on those financial statements and financial highlights in their report dated February 28, 2017.

 

Basis for Opinion

 

These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion.

 

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2019, by correspondence with the custodian, counterparties, underlying fund advisors or by other audit procedures, where replies were not received. We believe that our audits provide a reasonable basis for our opinion.

 

/s/ RSM US LLP

 

We have served as the auditor of one or more Wildermuth Advisory, LLC’s advised investment companies since 2018.

 

Boston, Massachusetts
June 29, 2020

 

41

 

 

Wildermuth Endowment Fund

 

Trustees and Officers
December 31, 2019 (Unaudited)

 

Trustees

 

Following is a list of the trustees of the Trust and their principal occupation over the last five years.

 

Independent Trustees

Name, Age,
Address*

Position/Term
of Office**

Principal Occupation(s)
During Past 5 Years

Number of
Portfolios
Overseen
in Fund
Complex***

Other Directorships Held by
Trustee During Last 5 Years

Anthony Lewis, Age 73

Trustee, Since December 2013

Chairman and CEO of The Lewis Group USA (executive consulting firm)

1

Director, Torotel Inc. (Magnetics, Aerospace and Defense); Member of Special Committee, Risk committee, Past Chairman of the Compensation Committee, and Past member of the audit committee: Trustee, and Alternate Lead Trustee, Northern Lights Fund Trust II (mutual fund complex)

R. Martel Day, Age 70

Trustee, Since December 2013

Principal of NLR Advisory Services, LLC (since 2013)

1

Director, and Member of the Audit Committee, Jones Lang LaSalle Income Property Trust; Director, Inland Bancorp, Inc.; Former Director and Past Chairman, Investment Program Association; Director, SFA Holdings

Randall D. Fretz, Age 67

Trustee, Since December 2013

Principal, Aperio Advisory Services, LLC (since 2017); Consultant/Chief of Staff, Kids II (design/manufacture children’s products)(2014-2016)

1

None

 

 

42

 

 

Wildermuth Endowment Fund

 

Trustees and Officers - Continued
December 31, 2019 (Unaudited)

 

Interested Trustees and Officers

Name, Age,
Address*

Position/Term
of Office**

Principal Occupation(s)
During Past 5 Years

Number of
Portfolios
Overseen
in Fund
Complex***

Other Directorships Held by
Trustee During Last 5 Years

Daniel Wildermuth^,
Age 56

Trustee, Chairman of the Board, President and Chief Executive Officer

President and CEO, Wildermuth Advisory, LLC from 2013 to present; CEO, Kalos Capital and associated Kalos companies from 2001 to present; CEO, Wildermuth Asset Management from 2016 to present; CEO, Wildermuth Securities from 2017 to present.

1

Director, Waratek Inc, 2017 to present; Chairman and Director, ClearGuide Medical, Inc. 2016 to present; Director, DSI Digital, 2017 to present; Director, Gigapro, 2019 to present; Director, Kingdom Investments, 2018 to present; Director, Clearsense, 2019 to present.

Carol Wildermuth^,
Age 55

Trustee and Executive Vice President

CFO, Wildermuth Advisory 2013 to present; President, Wildermuth Securities 2017 to present; President, Kalos Companies, 2016 to 2019; CFO, Kalos Companies, 2019 to present.

1

None

Gerard Scarpati, Age 64

Treasurer and Chief Financial Officer

Director, Vigilant Compliance, LLC (an investment management services company) from February 2010 to present.

N/A

N/A

Bernadette Murphy,
Age 55

Chief Compliance Officer

Director, Vigilant Compliance, LLC from July 2018 to present; Director of Compliance and Operations, B. Riley Dialectic Capital Management, LLC from April 2017 to July 2018; Chief Compliance Officer, Dialectic Capital Management, LP from October 2015 to April 2017; Vice President Administration/Compliance Manager from 2013-2015, Dialectic Capital Management, LLC

N/A

N/A

Candice Lightfoot^,
Age 38