N-CSR 1 fp0044665_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: 811-23177

 

GOEHRING & ROZENCWAJG INVESTMENT FUNDS

(Exact name of Registrant as specified in charter)

 

110 Wall Street

New York, NY 10005-5991

(Address of principal executive offices) (Zip code)

 

Registrant’s Telephone Number, including Area Code: (646) 216-9777

 

Adam A. Rozencwajg

Goehring & Rozencwajg Associates, LLC

110 Wall Street

New York, NY 10005-5991

(Name and address of agent for service)

 

With copies To:

 

James M. Forbes, Esq.

Ropes & Gray LLP

Prudential Tower

800 Boylston St.

Boston, MA 02199-3600

 

Date of fiscal year end: May 31

 

Date of reporting period: June 1, 2018 - May 31, 2019

 
 

Item 1. Report to Stockholders. 

 

   

 

TABLE OF CONTENTS

 

Manager Commentary 1
Disclosure of Fund Expenses 8
Schedule of Investments 9
Statement of Assets and Liabilities 12
Statement of Operations 13
Statements of Changes in Net Assets 14
Financial Highlights 15
Notes to Financial Statements 17
Report of Independent Registered Public Accounting Firm 26
Additional Information 27
Trustees and Officers 28
   

 

Goehring & Rozencwajg Resources Fund Manager Commentary

 

May 31, 2019 (Unaudited)

 

May 31, 2019

Dear Shareholders:

 

Investment Results

The Goehring & Rozencwajg Resources Fund Retail Share Class declined by 32.0% from May 31th, 2018 until May 31st, 2019. The Fund trailed both the Lipper Natural Resources Index(1), which declined by 21.3%, and the MSCI All Country World Index(2), which declined slightly by 1.3% between May 31st, 2018 and May 31st, 2019. The Fund’s investments in uranium related equities were the largest contributors to positive absolute performance, while the Fund’s investments in oil & gas exploration and production related securities was the largest detractor from absolute performance.

 

Market Environment

During the period, natural resource related securities performed poorly and lagged the broad market. Energy prices were extremely weak during the fourth calendar quarter of 2018 after advancements from May 31st, 2018 through September 30th, 2018. From May 31st, 2018 until May 31st, 2019, West Texas Intermediate (“WTI”) crude declined by 20.2%, while Brent crude declined by 16.9%. Crude’s weakness was due to an increase in Organization of Petroleum Exporting Countries ("OPEC") crude oil production in response to Iranian crude oil sanctions that were expected to take effect in the fourth calendar quarter of 2018. As a result, both US and Organization for Economic Cooperation and Development ("OECD") crude oil and refined product inventories built relative to seasonal levels throughout the second half of 2018, putting pressure on crude oil prices. Energy related securities performed worse than the oil price during the period with many oil companies declining by nearly 40% between May 31st, 2018 and May 31st, 2019. Some oil related equities approached their February 2016 lows, despite the fact that oil prices remained nearly 70% higher than in 2016. Market sentiment remained extremely cautious regarding energy related securities as worries about OPEC production and excess inventories once again took center stage. Copper prices declined by 13.9% between May 31st, 2018 and May 31st, 2019 on concerns regarding US/China trade wars. Gold prices advanced by 0.5% between May 31st, 2018 and May 31st, 2019, while silver prices fell 11.3%. Grain prices were mixed during the period, with corn advanced by 8.4%, while wheat declined by 4.4% and soybeans declined by 13.8% between May 31st, 2018 and May 31st 2019. Spot uranium prices advanced during the period by approximately 6%.

 

Investment Analysis

The Fund’s investments in uranium related securities were the largest contributors to positive absolute performance. The Fund’s three largest individual contributors to absolute performance were the following:

 

ERO CN – Shares of ERO Copper advanced by 67.40% (in US dollar terms) during the period, driven by continued exploration and development success at their MSCA Mining Complex and Boa Esperanca copper projects.

 

KAP LI – Shares of NAC Kataztomprom JSC-GDR advanced by 31.47% (the security is priced in US dollars) from its IPO on November 13th, 2018 until May 31st, 2019. The strong performance was driven by renewed investor interest in the uranium industry as well as several positive initiation reports by brokers.

 

 

Annual Report | May 31, 2019 1
   

 

Goehring & Rozencwajg Resources Fund Manager Commentary

 

May 31, 2019 (Unaudited)

 

DGC CN – Shares of Detour Gold Corporation advanced by 19.17% (in US dollar terms) during the period, due to strong operational results at their flagship property as well as the favorable resolution of issues raised by an activist shareholder and a strong gold price.

 

The Fund’s investments in energy related securities were the largest contributors to negative absolute performance. The Fund’s three largest individual detractors from absolute performance were the following:

 

ESV – Shares of Ensco Rowan PLC – Class A declined by 67.81% during the period, driven by extremely negative investor sentiment towards offshore drilling securities.

 

DO – Shares of Diamond Offshore declined by 56.66% during the period, driven by extremely negative investor sentiment towards offshore drilling securities.

 

PDCE – Shares of PDC Energy declined by 49.55% during the period, driven by concerns regarding Colorado’s oil and gas regulations, negative earnings announcements and general investor bearishness towards energy-related securities.

 

Market Outlook

The period between May 31st, 2018 and May 31st, 2019 was incredibly volatile for commodity prices and natural resource related securities. Oil and oil-related securities rallied at the beginning of the period as both US and OECD crude and product inventories declined relative to their seasonal averages. Oil-related securities rallied as well because investors believed geopolitical tensions with Iran would leave global oil markets tight throughout 2018. WTI oil prices peaked at $76.41 per barrel on October 3rd, 2018, representing their highest level since 2014. Brent prices peaked at $86.29 per barrel on October 3rd, 2018, also representing their highest level since 2014. In anticipation of renewed US sanctions against Iran, the rest of OPEC materially increased crude oil production throughout the summer of 2018 in an effort to ease concerns among market participants. In October 2018, the US announced sanction waivers for countries representing nearly 75% of Iran’s oil exports, thereby greatly reducing the impact of the sanctions. Oil prices collapsed as market participants worried about the new higher level of OPEC production and elevated inventory levels, as well as the impact of US/China trade wars on global demand. As a result, WTI oil prices fell to $42.53 per barrel on December 24th 2018, while Brent prices fell to $50.47 on December 24th 2018. Oil related securities declined more than the oil price and several oil-related equities traded below their 2016 lows despite the fact that crude oil prices were nearly 70% above the 2016 low levels. In November 2018, OPEC announced renewed production curtailments once it was clear that the increased production brought on to offset sanctioned Iranian production was no longer needed. Our models indicate that both US and OECD inventories will continue to decline relative to seasonal averages as we progress through 2019. Thus far, both US and OECD inventories started the year by once again normalizing relative to long-term averages, although recent US data suggests a short-term build-up in inventory levels once again. At this point, we are waiting on more data to determine whether we will change our outlook, but as of now, we continue to believe global oil markets are tight and inventories will continue their declines relative to seasonal averages. Given the recent sell-off in energy-related equities, our models indicate that many oil-related stocks represent extreme levels of valuation. Given we continue to believe that oil prices will advance during the second half of 2019 and that oil-related securities represent extreme low levels of valuation, we continue to favor oil-related securities in the portfolio.

 

 

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Goehring & Rozencwajg Resources Fund Manager Commentary

 

May 31, 2019 (Unaudited)

 

Copper related securities have been volatile in recent months, as investors weigh the impact of US/China trade wars on global copper demand. While any such demand will likely impact the price of both copper and copper-related equities, our models continue to point to medium- and long-term copper shortages driven by a combination of lackluster mine supply growth and very strong non-OECD refined copper demand growth. Furthermore, the increase penetration of renewable energy will have very positive impacts on global refined copper demand growth. Gold and gold-related equities were strong owing to the perceived increase in geopolitical risks. We continue to monitor the price of gold relative to the price of crude oil as a general barometer of the relative valuation between the two commodities and based upon that ratio (24.4x as at May 31st 2019 using WTI crude prices), we continue to prefer crude and oil-related equity investments.

 

Extreme flooding throughout the US Mid-West during the spring of 2019 has delayed the planting of large portions of the US corn and soy crop. We believe global grain demand has been very strong over the past several years. At the same time, global crop yields have achieved record or near-record levels in most major grain growing areas, resulting in surging supply. We have long argued that any factor impairing global yields would have a large impact on grain inventory carry-out levels since demand is extremely strong, and this is exactly what we believe is happening as we progress throughout 2019. By May 31st, 2019, US corn prices had rallied from $3.50 per bushel to approximately $4.27 per bushel – a level not seen since 2016. While soy prices were slower to respond, we expect that weather-related tightness in the corn market will likely spill into the other grain markets as well.

 

Ultimately, we have not materially changed our outlook and continue to believe that oil related securities will be very strong performers going forward.

 

Adam Rozencwajg, CFA

Goehring & Rozencwajg Associates, LLC

 

Past performance does not guarantee future results. Fund prices fluctuate as the underlying assets have exposure to market fluctuations and other risks, as described in the Fund’s prospectus. Please visit www.gr-funds.com or call 1-844-464-6467 to obtain current performance information and for the current prospectus and statement of additional information.

 

This report is for the information of shareholders of Goehring & Rozencwajg Resources Fund. It is not authorized for distribution to prospective investors unless preceded or accompanied by a prospectus. Please read the prospectus carefully before investing.

 

The views of Goehring & Rozencwajg Associates, LLC and information discussed in this commentary are as of the date of publication, are subject to change, and may not reflect the writer's current views. The views expressed are those of the author only, and represent an assessment of market conditions at a specific point in time, are opinions only and should not be relied upon as investment advice regarding a particular investment or markets in general. Such information does not constitute a recommendation to buy or sell specific securities or investment vehicles. It should not be assumed that any investment will be profitable or will equal the performance of the Fund or any securities or any sectors mentioned in this letter. The subject matter contained in this letter has been derived from several sources believed to be reliable and accurate at the time of compilation.

 

 

Annual Report | May 31, 2019 3
   

 

Goehring & Rozencwajg Resources Fund Manager Commentary

 

May 31, 2019 (Unaudited)

 

Neither Goehring & Rozencwajg Associates, LLC nor the Fund accepts any liability for losses either direct or consequential caused by the use of this information.

 

Diversification does not eliminate the risk of experiencing investment losses.

 

The Goehring & Rozencwajg Resources Fund is distributed by ALPS Distributors, Inc. Goehring & Rozencwajg is not affiliated with ALPS Distributors, Inc.

 

The Fund is subject to investment risks, including possible loss of the principal amount invested, and therefore is not suitable for all investors. The Fund may not achieve its objectives.

 

Adam Rozencwajg is a registered representative of ALPS Distributors, Inc. CFA Institute Marks are trademarks owned by the CFA Institute.

 

(1)Lipper Natural Resources Index is an unmanaged equally weighted index of the largest mutual funds in the Lipper Natural Resources category of funds. Index returns reflect the reinvestment of income dividends and capital gains, if any. The Index is not actively managed and does not reflect any deductions for fees, expenses or taxes. An investor may not invest directly into the Index.

 

(2)MSCI All Country World Index (ACWI), a broad-based securities index that will be used as a benchmark for assessing the performance of the Fund. The MSCI ACWI is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed and emerging markets. Performance data shown for the MSCI ACWI is net of dividend tax withholding. MSCI data may not be reproduced or used for any other purpose. MSCI provides no warranties, has not prepared or approved this report, and has no liability hereunder. The Index is not actively managed and does not reflect any deductions for fees, expenses or taxes. An investor may not invest directly into the Index.

 

 

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Goehring & Rozencwajg Resources Fund Manager Commentary

 

May 31, 2019 (Unaudited)

 

AVERAGE ANNUAL TOTAL RETURN (for the period ended May 31, 2019)

 

 

    Since Expense Ratio(2)
  1 Year Inception(1) Gross Net(3)
Goehring & Rozencwajg Resources Fund - Institutional - NAV -31.67% -15.19% 3.52% 0.92%
Goehring & Rozencwajg Resources Fund - Retail - NAV -32.00% -15.50% 4.82% 1.25%
MSCI All Country World Index (ACWI)(4) -1.29% 8.73%    
Lipper Natural Resources Index(5) -21.28% -6.92%    

 

TOP TEN HOLDINGS

(as a % of Net Assets)*

 

Cameco Corp. 6.2%
Nutrien Ltd. 5.7%
ERO Copper Corp. 5.1%
Pioneer Natural Resources Co. 5.1%
Uranium Participation Corp. 4.7%
Apergy Corp. 4.6%
NAC Kazatomprom JSC 4.5%
Mosaic Co. 3.8%
Range Resources Corp. 3.3%
Parsley Energy, Inc. - Class A 3.0%
Top Ten Holdings 46.0%

 

INDUSTRY SECTOR ALLOCATION

(as a % of Net Assets)*

 

Base Metals 33.7%
Exploration & Production 29.5%
Oil & Gas Services & Equipment 14.8%
Agricultural Chemicals 9.6%
Precious Metal Mining 7.6%
Other Mined Minerals 0.8%
Application Software 0.1%
Cash, Cash Equivalents, & Other Net Assets 4.0%

 

*Fund holdings and sector allocations are subject to change at any time and are not recommendations to buy or sell any security. Please refer to the Schedules of Investments for a complete list of Fund holdings. Holdings are as of May 31, 2019.

 

The performance quoted represents past performance, does not guarantee future results and current performance may be lower or higher than the data quoted. The investment return and principal value of an investment will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Shares of the Fund redeemed or exchanged within 30 days of purchase are subject to a 2% redemption fee. Performance does not reflect this fee, which if deducted would reduce an individual's return. To obtain the Fund’s most recent month-end performance, visit www.gr-funds.com or call 1-844-464-6467. This report is for the information of shareholders of Goehring & Rozencwajg Resources Fund. It is not authorized for distribution to prospective investors unless preceded or accompanied by a prospectus. Please read the prospectus carefully before investing.

 

The table does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

 

Subject to investment risks, including possible loss of the principal amount invested.

 

(1)The Fund commenced operations on December 30, 2016.

 

(2)Ratios as of the Prospectus dated September 30, 2018 and may differ from the ratios presented in the Financial Highlights.

 

 

Annual Report | May 31, 2019 5
   

 

Goehring & Rozencwajg Resources Fund Manager Commentary

 

May 31, 2019 (Unaudited)

 

(3)Goehring & Rozencwajg Associates, LLC, the Fund’s investment adviser (the “Adviser”), has contractually agreed to limit the amount of the Fund’s total annual fund operating expenses, exclusive of Acquired Fund Fees and Expenses, brokerage expenses, interest expense, taxes and extraordinary expenses, to 0.92% and 1.25% of the Fund’s average daily net assets for Institutional Class shares and Retail Class shares, respectively. This agreement is in effect through September 30, 2019, may only be terminated before then by the Board of Trustees, and is reevaluated on an annual basis. With respect to the Fund, the Adviser shall be permitted to recover, on a class-by-class basis, expenses it has borne subsequent to the effective date of the agreement described above (whether through reduction of its management fee or otherwise) only to the extent that the Fund’s expenses in later periods fall below the lesser of (1) the expense limit in effect at the time the Adviser waives or limits the expenses and (2) the expense limit in effect at the time the Adviser seeks to recover the expenses; provided, however, that the Fund will not be obligated to pay any such reduced fees and expenses more than three years after the date on which the fee and expense was reduced.

 

(4)MSCI All Country World Index (ACWI), a broad-based securities index that will be used as a benchmark for assessing the performance of the Fund, and the Lipper Natural Resources Index, an additional comparative index. The MSCI ACWI is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed and emerging markets. Performance data shown for the MSCI ACWI is net of dividend tax withholding. MSCI data may not be reproduced or used for any other purpose. MSCI provides no warranties, has not prepared or approved this report, and has no liability hereunder. The Index is not actively managed and does not reflect any deductions for fees, expenses or taxes. An investor may not invest directly into the Index.

 

(5)Lipper Natural Resources Index is an unmanaged equally weighted index of the largest mutual funds in the Lipper Natural Resources category of funds. Index returns reflect the reinvestment of income dividends and capital gains, if any. The Index is not actively managed and does not reflect any deductions for fees, expenses or taxes. An investor may not invest directly into the Index.

 

 

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Goehring & Rozencwajg Resources Fund Manager Commentary

 

May 31, 2019 (Unaudited)

 

GROWTH OF $100,000 INVESTMENT IN THE FUND (for the period ended May 31, 2019)

 

 

 

The chart shown above represent a hypothetical investment of $100,000 in the Fund’s Institutional Class shares for the period from inception to May 31, 2019. All returns reflect reinvested dividends, but do not reflect the deduction of taxes that an investor would pay on distributions or redemptions.

 

Investing in the Fund is subject to investment risks, including possible loss of the principal amount invested.

 

The Fund also offers Retail Class shares, performance for which is not reflected in the graphs above. The performance of Retail Class shares is likely to be lower than the performance of the Institutional Class shares shown in the graphs above because of higher expenses paid by shareholders investing in the Retail Class shares as compared to Institutional Class shares.

 

 

Annual Report | May 31, 2019 7
   

 

Goehring & Rozencwajg Resources Fund Disclosure of Fund Expenses

 

May 31, 2019 (Unaudited)

 

As a shareholder of the Goehring & Rozencwajg Resources Fund (the “Fund”), you will incur two types of costs: (1) transaction costs, including applicable redemption fees; and (2) ongoing costs, including management fees and other Fund expenses. The following examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The examples are based on an investment of $1,000 invested on December 1, 2018 and held until May 31, 2019.

 

Actual Expenses. The first line of each table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.

 

Hypothetical Example for Comparison Purposes. The second line of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other mutual funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. The expenses shown in the table are meant to highlight ongoing Fund costs only and do not reflect transaction fees, such as redemption fees or exchange fees. Therefore, the second line of each table below is useful in comparing ongoing costs only, and may not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

 

  Beginning Account Value December 1, 2018 Ending Account Value May 31, 2019 Expense Ratio(a) Expenses Paid, and During Period December 1, 2018 - May 31, 2019(b)
Institutional Class        
Actual $1,000.00 $817.30 0.92% $4.17
Hypothetical (5% return before expenses) $1,000.00 $1,020.34 0.92% $4.63
Retail Class        
Actual $1,000.00 $815.00 1.25% $5.66
Hypothetical (5% return before expenses) $1,000.00 $1,018.70 1.25% $6.29

 

(a)Annualized, based on the Fund's most recent fiscal half-year expenses.
(b)Expenses are equal to the Fund’s annualized expense ratio, multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half year (182), divided by 365.

 

 

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Goehring & Rozencwajg Resources Fund Schedule of Investments

 

May 31, 2019

 

Security Description  Shares   Value 
COMMON STOCKS (95.9%)          
ENERGY (44.1%)          
Exploration & Production (29.5%)          
Berry Petroleum Corp. - Class A   66,800   $718,100 
Carrizo Oil & Gas, Inc.(a)   49,900    507,982 
Centennial Resource Development, Inc. -Class A(a)   50,800    401,320 
Chaparral Energy, Inc. - Class A(a)   22,400    94,528 
Concho Resources, Inc.   5,312    520,629 
Diamondback Energy, Inc.   8,302    814,094 
Encana Corp.   79,213    417,453 
Matador Resources Co.(a)   54,700    899,268 
Parsley Energy, Inc. - Class A(a)   53,300    950,339 
PDC Energy, Inc.(a)   27,300    833,196 
Pioneer Natural Resources Co.   11,300    1,604,148 
Range Resources Corp.   135,000    1,055,700 
Roan Resources, Inc.(a)   40,430    84,499 
Tellurian, Inc.(a)   56,200    432,178 
         9,333,434 
Oil & Gas Services & Equipment (14.6%)          
AKITA Drilling Ltd. - Class A   52,571    109,296 
Apergy Corp.(a)   47,400    1,469,874 
Basic Energy Services, Inc.(a)   37,300    71,243 
CES Energy Solutions Corp.   74,000    119,902 
Diamond Offshore Drilling, Inc.(a)   92,500    727,975 
Ensco PLC - Class A   100,673    842,633 
Jones Energy II, Inc.(a)   152    4,104 
Noble Corp. PLC(a)   179,000    347,260 
Transocean Ltd.(a)   152,605    946,151 
         4,638,438 
MATERIALS (51.7%)          
Agricultural Chemicals (9.6%)          
Mosaic Co.   56,800    1,219,496 
Nutrien Ltd.   37,200    1,813,128 
         3,032,624 
Base Metals (33.7%)          
Amerigo Resources Ltd.(a)   556,700    267,723 
Cameco Corp.   194,400    1,961,496 
Copper Mountain Mining Corp.(a)   385,300    230,906 
ERO Copper Corp.(a)   131,600    1,616,277 
Excelsior Mining Corp.(a)   277,200    194,836 
First Quantum Minerals Ltd.   49,300    358,917 
Freeport-McMoRan, Inc.   54,500    529,195 
Hudbay Minerals, Inc.   88,600    435,265 
Ivanhoe Mines Ltd. - Class A(a)   232,200    560,056 
Lundin Mining Corp.   106,600    476,372 

 

See Notes to Financial Statements.

 

Annual Report | May 31, 2019 9
   

 

Goehring & Rozencwajg Resources Fund Schedule of Investments

 

May 31, 2019

 

Security Description  Shares   Value 
Base Metals (continued)          
Mako Mining Corp.(a)   1,169,300   $99,489 
NAC Kazatomprom JSC(a)(b)   93,244    1,421,971 
Southern Copper Corp.   14,800    499,204 
Trilogy Metals, Inc.(a)   170,400    457,644 
Turquoise Hill Resources Ltd.(a)   99,300    119,160 
Uranium Participation Corp.(a)   458,900    1,476,927 
         10,705,438 
Other Mined Minerals (0.8%)          
Mountain Province Diamonds, Inc.   267,000    260,758 
           
Precious Metal Mining (7.6%)          
Detour Gold Corp.(a)   79,000    745,228 
Endeavour Mining Corp.(a)   29,400    438,955 
IAMGOLD Corp.(a)   69,300    173,943 
Marathon Gold Corp.(a)   392,600    319,518 
Maverix Metals, Inc.(a)   54,700    218,541 
Roxgold, Inc.(a)   423,500    347,799 
TMAC Resources, Inc.(a)(b)   37,800    171,437 
         2,415,421 
TECHNOLOGY (0.1%)          
Application Software (0.1%)          
Arias Intel Corp.(a)   1,466    21,867 
           
TOTAL COMMON STOCKS          
(Cost $39,785,550)        30,407,980 
           
WARRANTS (0.2%)          
ENERGY (0.2%)          
Oil & Gas Services & Equipment (0.2%)          
Jones Energy II, Inc., Expires 05/17/2024, Strike Price $31.67   672    0 
Tidewater, Inc., Expires 11/14/2042, Strike Price $0.01   3,561    75,849 
         75,849 
           
TOTAL WARRANTS          
(Cost $132,718)        75,849 

 

See Notes to Financial Statements.

 

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Goehring & Rozencwajg Resources Fund Schedule of Investments

 

May 31, 2019

 

Security Description  Shares   Value 
SHORT TERM INVESTMENTS (4.0%)          
Dreyfus Treasury Securities Cash Management, Institutional Class (7 day yield 2.246%)   1,256,256   $1,256,256 
           
TOTAL SHORT TERM INVESTMENTS          
(Cost $1,256,256)        1,256,256 
           
TOTAL INVESTMENTS - (100.1%)          
(Cost $41,174,524)        31,740,085 
           
Liabilities in Excess of Other Assets - (-0.1%)        (40,745)
           
NET ASSETS - (100.0%)       $31,699,340 

 

(a)Non-income producing security.
(b)Securities were originally issued pursuant to Regulation S under the Securities Act of 1933, which exempts securities offered and sold outside of the United States from registration. Such securities cannot be sold in the United States without either an effective registration statement filed pursuant to the Securities Act of 1933, or pursuant to an exemption from registration. As of May 31, 2019, the aggregate market value of those securities was $1,593,408, which represents approximately 5.03% of net assets.

 

See Notes to Financial Statements.

 

Annual Report | May 31, 2019 11
   

 

Goehring & Rozencwajg Resources Fund Statement of Assets and Liabilities

 

May 31, 2019

 

ASSETS:    
Investments, at value (cost $41,174,524)  $31,740,085 
Receivable for shares sold   17,485 
Due from adviser   15,226 
Dividends receivable   4,477 
Interest receivable   1,876 
Prepaid assets   21,755 
Total Assets   31,800,904 
      
LIABILITIES:     
Payable to custodian   8,601 
Payable for administration fees   19,467 
Payable for distribution and service fees   8,471 
Payable to chief compliance officer   3,567 
Payable for transfer agency fees   10,516 
Payable for professional fees   45,308 
Accrued expenses and other liabilities   5,634 
Total Liabilities   101,564 
NET ASSETS  $31,699,340 
      
NET ASSETS CONSIST OF:     
Paid-in capital (Note 5)  $44,175,035 
Total distributable earnings   (12,475,695)
NET ASSETS  $31,699,340 
      
PRICING OF SHARES     
Institutional Class:     
Net Asset Value, offering and redemption price per share  $6.59 
Net Assets  $26,793,214 
Shares of beneficial interest outstanding   4,065,935 
Retail Class:     
Net Asset Value, offering and redemption price per share  $6.55 
Net Assets  $4,906,126 
Shares of beneficial interest outstanding   748,628 

 

See Notes to Financial Statements.

 

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Goehring & Rozencwajg Resources Fund Statement of Operations

 

For the Year ended May 31, 2019

 

INVESTMENT INCOME:    
Interest  $18,282 
Dividends   199,889 
Foreign taxes withheld   (14,403)
Total Investment Income   203,768 
      
EXPENSES:     
Investment advisory fee (Note 6)   317,249 
Administration fee   205,996 
Distribution and service fees     
Retail Class   25,336 
Custodian fee   51,605 
Professional fees   111,102 
Transfer agent fee   54,472 
Trustees fees and expenses   44,000 
Registration and filing fees   42,615 
Printing fees   10,163 
Chief compliance officer fee   41,601 
Insurance expense   10,424 
Other expenses   9,793 
Total Expenses   924,356 
Less fees waived/reimbursed by investment adviser     
Institutional Class   (449,420)
Retail Class   (125,419)
Total fees waived/reimbursed by investment adviser (Note 6)   (574,839)
Net Expenses   349,517 
NET INVESTMENT LOSS   (145,749)
      
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS:     
Net realized gain/(loss) on:     
Investments   (2,035,552)
Foreign currency transactions   (8,750)
Net realized loss   (2,044,302)
      
Change in unrealized appreciation/(depreciation) on:     
Investments   (11,649,398)
Net change in unrealized depreciation   (11,649,398)
      
NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS   (13,693,700)
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS  $(13,839,449)

 

See Notes to Financial Statements.

 

Annual Report | May 31, 2019 13
   

 

Goehring & Rozencwajg Resources Fund Statements of Changes in Net Assets

 

 

   For the Year Ended May 31, 2019   For the Year Ended May 31, 2018 
OPERATIONS:          
Net investment loss  $(145,749)  $(92,382)
Net realized loss   (2,044,302)   (244,741)
Net change in unrealized appreciation/(depreciation)   (11,649,398)   3,192,184 
Net increase/(decrease) in net assets resulting from operations   (13,839,449)   2,855,061 
           
DISTRIBUTIONS TO SHAREHOLDERS:(a)          
From distributable earnings          
Institutional   (242,364)   (120,221)
Retail   (60,622)   (31,512)
Total distributions   (302,986)   (151,733)
           
BENEFICIAL SHARE TRANSACTIONS (Note 5):          
Institutional Class          
Shares sold   17,438,237    21,614,987 
Dividends reinvested   234,504    120,221 
Shares redeemed   (6,572,230)   (85,497)
Net increase from beneficial share transactions   11,100,511    21,649,711 
Retail Class          
Shares sold   2,101,601    5,384,076 
Dividends reinvested   60,622    31,512 
Shares redeemed   (2,765,366)   (179,719)
Net increase/(decrease) from beneficial share transactions   (603,143)   5,235,869 
Net increase/(decrease) in net assets   (3,645,067)   29,588,908 
           
NET ASSETS:          
Beginning of year   35,344,407    5,755,499 
End of year  $31,699,340   $35,344,407(b)

 

(a)For the prior year ended May 31, 2018, Total Distributions consisted of Net Investment Income of $122,992 and Net Realized Gains of $28,741.
(b)For the year ended May 31, 2018, included accumulated net investment loss of $198,871.

 

See Notes to Financial Statements.

 

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Goehring & Rozencwajg Resources Fund Financial Highlights

 

Institutional Class For a share outstanding throughout the periods presented

 

   For the Year Ended May 31, 2019   For the Year Ended May 31, 2018   For the Period Ended May 31, 2017(a) 
NET ASSET VALUE, BEGINNING OF PERIOD  $9.76   $8.44   $10.00 
                
INCOME/(LOSS) FROM OPERATIONS:               
Net investment loss(b)   (0.03)   (0.04)   (0.01)
Net realized and unrealized gain/(loss) on investments   (3.06)   1.42    (1.55)
Total from investment operations   (3.09)   1.38    (1.56)
                
LESS DISTRIBUTIONS:               
From net investment income   (0.08)   (0.05)   – 
From net realized gains on investments   –    (0.01)   – 
Total distributions   (0.08)   (0.06)   – 
NET INCREASE/(DECREASE) IN NET ASSET VALUE   (3.17)   1.32    (1.56)
NET ASSET VALUE, END OF PERIOD  $6.59   $9.76   $8.44 
                
TOTAL RETURN   (31.67%)   16.40%   (15.60%)(c)
                
SUPPLEMENTAL DATA:               
Net assets, End of Period (in 000s)  $26,793   $26,647   $2,935 
                
RATIOS TO AVERAGE NET ASSETS               
Operating expenses excluding reimbursement/waiver   2.55%   4.21%   23.90%(d)
Operating expenses including reimbursement/waiver   0.92%   0.92%   0.92%(d)
Net investment loss including reimbursement/waiver   (0.40%)   (0.45%)   (0.28%)(d)
                
PORTFOLIO TURNOVER RATE   25%   15%   5%(e)

 

(a)Commenced operations on December 30, 2016.
(b)Calculated using the average shares method.
(c)Assumes an initial investment at commencement of operations, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal year. Total returns are for the period indicated and have not been annualized. Total returns would have been lower had certain expenses not been waived during the period. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
(d)Annualized.
(e)Portfolio turnover rate for periods less than one full year have not been annualized.

 

See Notes to Financial Statements.

 

Annual Report | May 31, 2019 15
   

 

Goehring & Rozencwajg Resources Fund Financial Highlights

 

Retail Class For a share outstanding throughout the periods presented

 

   For the Year Ended May 31, 2019   For the Year Ended May 31, 2018   For the Period Ended May 31, 2017(a) 
NET ASSET VALUE, BEGINNING OF PERIOD  $9.72   $8.42   $10.00 
                
INCOME/(LOSS) FROM OPERATIONS:               
Net investment loss(b)   (0.04)   (0.05)   (0.02)
Net realized and unrealized gain/(loss) on investments   (3.07)   1.41    (1.56)
Total from investment operations   (3.11)   1.36    (1.58)
                
LESS DISTRIBUTIONS:               
From net investment income   (0.06)   (0.05)   – 
From net realized gains on investments   –    (0.01)   – 
Total distributions   (0.06)   (0.06)   – 
NET INCREASE/(DECREASE) IN NET ASSET VALUE   (3.17)   1.30    (1.58)
NET ASSET VALUE, END OF PERIOD  $6.55   $9.72   $8.42 
                
TOTAL RETURN   (32.00%)   16.20%   (15.80%)(c)
                
SUPPLEMENTAL DATA:               
Net assets, End of Period (in 000s)  $4,906   $8,698   $2,821 
                
RATIOS TO AVERAGE NET ASSETS               
Operating expenses excluding reimbursement/waiver   2.88%   5.51%   24.63%(d)
Operating expenses including reimbursement/waiver   1.25%   1.25%   1.25%(d)
Net investment loss including reimbursement/waiver   (0.46%)   (0.52%)   (0.61%)(d)
                
PORTFOLIO TURNOVER RATE   25%   15%   5%(e)

 

(a)Commenced operations on December 30, 2016.
(b)Calculated using the average shares method.
(c)Assumes an initial investment at commencement of operations, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal year. Total returns are for the period indicated and have not been annualized. Total returns would have been lower had certain expenses not been waived during the period. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
(d)Annualized.
(e)Portfolio turnover rate for periods less than one full year have not been annualized.

 

See Notes to Financial Statements.

 

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Goehring & Rozencwajg Resources Fund Notes to Financial Statements

 

May 31, 2019

 

1. ORGANIZATION

 

The Goehring & Rozencwajg Resources Fund (the "Fund") is a no-load investment portfolio of Goehring & Rozencwajg Investment Funds (the “Trust”), an open-end series management investment company organized as a Massachusetts business trust on July 14, 2016, registered under the Investment Company Act of 1940, as amended (the “1940 Act”). The Fund commenced operations on December 30, 2016. The Fund is a diversified investment company with an investment objective which seeks to maximize total return, which consists of income on its investments and capital appreciation. The Fund currently offers Retail Class Shares and Institutional Class Shares. Each share class of the Fund represents an investment in the same portfolio of securities, but each share class has its own expense structures. The Board of Trustees (the “Board”) may establish additional funds and classes of shares at any time in the future without shareholder approval. The Fund’s Investment Adviser is Goehring & Rozencwajg Associates, LLC (the “Adviser”).

 

The Fund will concentrate its investments in the securities of natural resources companies and other investments which provide economic exposure to natural resources or natural resources companies. When a Fund concentrates its investments in a particular sector or in particular industries, financial, economic, business, and other developments affecting issuers in that sector or in those industries will have a greater effect on that Fund than if it had not concentrated its assets in that sector or in those industries. The Fund’s concentration in natural resources investments exposes it to the price movements of natural resources to a greater extent than if it were more broadly diversified. By investing primarily in natural resources investments, the Fund runs the risk of performing poorly during an economic downturn or a decline in demand for natural resources.

 

2. SIGNIFICANT ACCOUNTING POLICIES

 

The accompanying financial statements were prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of the financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the period. Actual results could differ from those estimates. The Fund is considered an investment company for financial reporting purposes under U.S. GAAP. The following is a summary of significant accounting policies consistently followed by the Fund in preparation of its financial statements.

 

Investment Valuation: The Fund generally values its securities based on market prices determined at the close of regular trading on the New York Stock Exchange (“NYSE”), normally 4:00 p.m. Eastern Time, on each day the NYSE is open for trading.

 

For equity securities that are traded on an exchange, the market price is usually the closing sale or official closing price on that exchange, or if there is no closing price or official closing price, the last sale price. If there have been no sales on that day, the securities are valued at the mean of the current bid and ask price. U.S. and non U.S. government and corporate debt securities are typically traded in the over-the-counter market internationally, and are generally valued using prices supplied by a pricing vendor approved by the Board of Trustees based on the mid point of quotes from multiple dealers and other factors deemed relevant by the pricing vendor. In the case of other securities not traded on an exchange, or if closing prices are not otherwise available, the market price is typically determined by independent third-party pricing vendors approved by the Fund’s Board of Trustees using a variety of pricing techniques and methodologies. U.S. government and agency securities are valued by a third-party pricing vendor at the mean between the closing bid and asked prices. Other than with respect to the debt securities discussed above, the market price for debt obligations is generally the price supplied by an independent third-party pricing service approved by the Fund’s Board of Trustees, which may use, instead of quotes from dealers, a matrix, formula or other method that takes into consideration market indices, yield curves and other specific adjustments. Derivatives are valued using market quotations, a price supplied by a pricing service or counterparty, or using the fair value procedures discussed below, depending on the type of derivative and the availability of market quotations. Short-term debt obligations that will mature in 60 days or less are valued at amortized cost, unless it is determined that using this method would not reflect an investment’s fair value. Investments in the underlying funds are based on the underlying fund’s net asset value. Available cash is generally invested into a money market fund by the Fund’s custodian, and is valued at the latest net asset value per share as reported to the Fund’s administrator.

 

 

Annual Report | May 31, 2019 17
   

 

Goehring & Rozencwajg Resources Fund Notes to Financial Statements

 

May 31, 2019

 

When the price quotations described above are not available, or when the Adviser believes that they are unreliable, the Fund’s assets may be priced using fair value procedures approved by the Board of Trustees. Because the Fund invests in investments that may be thinly traded or for which the price quotations described above may not be readily available or may be unreliable – such as securities of small capitalization companies, securities of issuers located in emerging markets, high yield securities and derivatives – the Fund may use fair valuation procedures more frequently than funds that invest primarily in securities that are more liquid – such as equity securities of large capitalization domestic issuers. The Fund may also use fair value procedures if the Adviser determines that a significant event has occurred between the time at which a market price is determined and the time at which the Fund’s NAV is calculated. In particular, the value of non-U.S. securities may be materially affected by events occurring after the close of the market on which they are traded, but before the Fund prices its shares.

 

Fair Value Measurements: The Fund discloses the classification of its fair value measurements following a three-tier hierarchy based on the inputs used to measure fair value. Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk. Inputs may be observable or unobservable. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability that are developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability that are developed based on the best information available.

 

Various inputs are used in determining the value of the Fund’s investments as of the end of the reporting period. When inputs used fall into different levels of the fair value hierarchy, the level in the hierarchy within which the fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The designated input levels are not necessarily an indication of the risk or liquidity associated with these investments. These inputs are categorized in the following hierarchy under applicable financial accounting standards:

 

 

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Goehring & Rozencwajg Resources Fund Notes to Financial Statements

 

May 31, 2019

 

Level 1 – Unadjusted quoted prices in active markets for identical investments, unrestricted assets or liabilities that the Fund has the ability to access at the measurement date;

 

Level 2 –Quoted prices which are not active, quoted prices for similar assets or liabilities in active markets or inputs other than quoted prices that are observable (either directly or indirectly) for substantially the full term of the asset or liability; and

 

Level 3 –Significant unobservable prices or inputs (including the Fund’s own assumptions in determining the fair value of investments) where there is little or no market activity for the asset or liability at the measurement date.

 

The following is a summary of each input used to value the Fund as of May 31, 2019:

 

Investments in Securities at Value*  Level 1 - Quoted Prices   Level 2 - Other Significant Observable Inputs   Level 3 - Significant Unobservable Inputs   Total 
Common Stocks  $30,407,980   $–   $–   $30,407,980 
Warrants   –    75,849    –    75,849 
Short Term Investments   1,256,256    –    –    1,256,256 
Total  $31,664,236   $75,849   $–   $31,740,085 

 

*See Schedule of Investments for industry classification.

 

Investment Transactions and Investment Income: Investment transactions are accounted for on the date the investments are purchased or sold (trade date). Realized gains and losses from investment transactions are reported on an identified cost basis. Interest income, which includes accretion of discounts, is accrued and recorded as earned. Dividend income is recognized on the ex-dividend date or for certain foreign securities, as soon as information is available to the Fund. All of the realized and unrealized gains and losses and net investment income, are allocated daily to each class in proportion to its average daily net assets.

 

Class Expenses: Expenses that are specific to a class of shares of the Fund, including distribution fees (Rule 12b-1 fees), are charged directly to that share class.

 

Federal Income Taxes: The Fund complies with the requirements under Subchapter M of the Internal Revenue Code of 1986, as amended, applicable to regulated investment companies and intends to distribute substantially all of its net taxable income and net capital gains, if any, each year so that the Fund will not be subject to excise tax on undistributed income and gains. The Fund is not subject to income taxes to the extent such distributions are made.

 

 

Annual Report | May 31, 2019 19
   

 

Goehring & Rozencwajg Resources Fund Notes to Financial Statements

 

May 31, 2019

 

As of and during the year ended May 31, 2019, the Fund did not have a liability for any unrecognized tax benefits. The Fund files U.S. federal, state, and local tax returns as required.

 

The Fund’s tax return is subject to examination by the relevant tax authorities until expiration of the applicable statute of limitations, which is generally three years after the filing of the tax return for federal purposes and three years for most state returns. Tax returns for open years have incorporated no uncertain tax positions that require a provision for income taxes.

 

Distributions to Shareholders: The Fund normally pays dividends and distributes capital gains, if any, on an annual basis. Income dividend distributions are derived from dividends and other income the Fund receives from its investments, including short-term capital gains. Long term capital gain distributions are derived from gains realized when the Fund sells a security it has owned for more than a year. The Fund may make additional distributions and dividends at other times if the portfolio manager believes doing so may be necessary for the Fund to avoid or reduce taxes.

 

3. TAX BASIS INFORMATION

 

Reclassifications: As of May 31, 2019, permanent differences on book and tax accounting were reclassified. These differences had no effect on net assets:

 

Paid-in Capital Distributable Earnings
– –

 

Tax Basis of Investments: As of May 31, 2019, the aggregate cost of investments, gross unrealized appreciation/(depreciation) and net unrealized appreciation/(depreciation) for Federal tax purposes was as follows:

 

Gross unrealized appreciation (excess of value over tax cost)  $819,876 
Gross unrealized depreciation (excess of tax cost over value)   (11,528,494)
Net unrealized depreciation  $(10,708,618)
Cost of investments for income tax purposes  $42,448,703 

 

Components of Distributable Earnings: As of May 31, 2019, components of distributable earnings were as follows:

 

Undistributed ordinary income  $25,846 
Accumulated capital loss   (1,792,923)
Net unrealized depreciation   (10,708,618)
Total  $(12,475,695)

 

 

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Goehring & Rozencwajg Resources Fund Notes to Financial Statements

 

May 31, 2019

 

Capital Losses: Under current law, capital losses maintain their character as short-term or long-term and are carried forward to the next tax year without expiration. As of the current fiscal year end, the following amounts are available as carry forwards to the next tax year:

 

Short-Term   Long-Term 
$222,886   $140,550 

 

Capital Losses arising in the post-October period of the current fiscal year may be deferred to the next fiscal year if the fund elects to defer the recognition of these losses. When this election is made, any losses recognized during the period are treated as having occurred on the first day of the next fiscal year separate from and in addition to the application of normal capital loss carry forwards as described above.

 

The Fund elects to defer to the period ending May 31, 2020, capital losses recognized during the period November 1, 2018 – May 31, 2019 in the amount of: $1,429,487

 

Tax Basis of Distributions to Shareholders: The character of distributions made during the year from net investment income or net realized gains may differ from its ultimate characterization for federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the fiscal year in which the income or realized gain were recorded by each Fund.

 

The tax character of distributions for the year ended May 31, 2019, were as follows:

 

Distributions Paid From:    
Ordinary Income  $302,986 
Total  $302,986 

 

The tax character of distributions for the year ended May 31, 2018, were as follows:

 

Distributions Paid From:    
Ordinary Income  $151,733 
Total  $151,733 

 

4. SECURITIES TRANSACTIONS

 

The cost of purchases and proceeds from sales of securities (excluding short-term securities) during the year ended May 31, 2019, was as follows:

 

Purchases of Securities   Proceeds from Sales of Securities 
$18,315,448   $8,672,150 

 

 

Annual Report | May 31, 2019 21
   

 

Goehring & Rozencwajg Resources Fund Notes to Financial Statements

 

May 31, 2019

 

5. SHARES OF BENEFICIAL INTEREST

 

The capitalization of the Fund consists of an unlimited number of shares of beneficial interest with no par value per share. Holders of the shares of the Fund have one vote for each share held and a proportionate fraction of a vote for each fractional share. All shares issued and outstanding are fully paid and are transferable and redeemable at the option of the shareholder. Purchasers of the shares do not have any obligation to make payments to the Fund or its creditors solely by reason of the purchaser’ ownership of the shares. Shares have no pre-emptive rights.

 

   For the Year Ended May 31, 2019   For the Year Ended May 31, 2018 
Institutional Class          
Shares sold   2,243,028    2,377,661 
Shares issued in reinvestment of distributions to shareholders   35,053    12,419 
Shares redeemed   (941,024)   (9,030)
Net increase in shares outstanding   1,337,057    2,381,050 
Retail Class          
Shares sold   226,684    575,899 
Shares issued in reinvestment of distributions to shareholders   9,102    3,269 
Shares redeemed   (382,400)   (18,736)
Net increase/(decrease) in shares outstanding   (146,614)   560,432 

 

Shares redeemed within 30 days of purchase may incur a 2% short-term redemption fee deducted from the redemption amount. The Fund had redemption fees of $391 during the year ended May 31, 2019, and had redemption fees of $736 during the year ended May 31, 2018.

 

6. MANAGEMENT AND RELATED-PARTY TRANSACTIONS

 

The Adviser, subject to the authority of the Board, is responsible for the overall management and administration of the Fund’s business affairs. The Adviser manages the investments of the Fund in accordance with the Fund’s investment objective, policies and limitations and investment guidelines established jointly by the Adviser and the Board. Pursuant to the Investment Advisory Agreement (the “Advisory Agreement”), the Fund pays the Adviser an annual management fee of 0.90%, based on the Fund’s average daily net assets. The management fee is paid on a monthly basis.

 

The Adviser has contractually agreed to limit the amount of the Fund’s total annual fund operating expenses, exclusive of acquired fund fees and expenses, brokerage expenses, interest expense, taxes and extraordinary expenses, to 0.92% and 1.25% of the Fund’s average daily net assets for Institutional Class shares and Retail Class shares, respectively. This agreement is in effect through September 30, 2019, may only be terminated before then by the Board, and is reevaluated on an annual basis. With respect to the Fund, the Adviser shall be permitted to recover, on a class-by-class basis, expenses it has borne subsequent to the effective date of the agreement described above (whether through reduction of its management fee or otherwise) only to the extent that the Fund’s expenses in later periods fall below the lesser of (1) the expense limit in effect at the time the Adviser waives or limits the expenses and (2) the expense limit in effect at the time the Adviser seeks to recover the expenses; provided, however, that the Fund will not be obligated to pay any such reduced fees and expenses more than three years after the date on which the fee and expense was reduced. Fees waived/reimbursed by the Adviser for the year ended May 31, 2019, are disclosed in the Statement of Operations.

 

 

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Goehring & Rozencwajg Resources Fund Notes to Financial Statements

 

May 31, 2019

 

For the year ended May 31, 2019, the fee waivers and/or reimbursements were as follows:

 

Fund  Fees Waived/Reimbursed by Adviser 
Institutional Class  $(449,420)
Retail Class   (125,419)
TOTAL  $(574,839)

 

As of May 31, 2019, the balances of recoupable expenses for the Fund were as follows:

 

Fund  Expiring in 2020   Expiring in 2021   Expiring in 2022 
Institutional Class  $261,278   $490,462   $449,420 
Retail Class   254,523    210,396    125,419 
TOTAL  $515,801   $700,858   $574,839 

 

Distributor: ALPS Distributors, Inc. (“ADI” or the “Distributor”) (an affiliate of ALPS Fund Services Inc. (“ALPS”)) acts as the distributor of the Fund’s shares pursuant to a Distribution Agreement with the Trust. Shares are sold on a continuous basis by ADI as agent for the Fund, although it is not obliged to sell any particular amount of shares.

 

ADI is not entitled to any compensation from the Fund for its services as Distributor; however, ADI receives compensation from the Adviser. ADI is registered as a broker-dealer with the U.S. Securities and Exchange Commission.

 

The Fund has adopted a Distribution and Services Plan pursuant to Rule 12b-1 of the 1940 Act. The Plan allows the Fund, as applicable, to use the Fund’s assets to pay fees in connection with the distribution and marketing of the Fund’s shares and/or the provision of shareholder services to the Fund’s shareholders. The Plan permits payment for services in connection with the administration of plans or programs that use shares of the Fund as their funding medium and for related expenses. The recipients of such payments may include other affiliates of the Adviser, broker-dealers, financial institutions, plan sponsors and administrators and other financial intermediaries through which investors may purchase shares of the Fund. The Plans permit the Fund to make total payments at an annual rate of up to 0.25% of the average daily net asset value of the Retail Class. Because these fees are paid out of the Fund’s assets on an ongoing basis, over time they will increase the cost of an investment in the Fund, and Plan fees may cost an investor more than other types of sales charges.

 

 

Annual Report | May 31, 2019 23
   

 

Goehring & Rozencwajg Resources Fund Notes to Financial Statements

 

May 31, 2019

 

Under the Shareholder Services Plan (a “Services Plan”), the Fund is authorized to compensate certain financial institutions, including broker-dealers and Fund affiliates which may include the Distributor, Adviser and/or the transfer agent (the “Participating Organizations”), for providing services to the Fund or the Fund’s shareholders. This compensation may be used by the financial institution for payments to financial institutions and persons who provide administrative and support services to their customers who may from time to time beneficially own Retail Class shares. The Services Plan permits the Fund to make total payments at an annual rate of up to 0.15% of the Fund’s average daily net assets attributable to its Retail Class shares. However, the Fund may pay fees under the Services Plan at a lesser rate. Shareholder Services Plan fees are included with distribution and service fees on the Statement of Operations.

 

Fund Administrator Fees and Expenses: ALPS Fund Services, Inc. (“ALPS”) serves as administrator to the Fund. Pursuant to an Administration Agreement, ALPS provides operational services to the Fund including, but not limited to, fund accounting and fund administration and generally assist in the Fund’s operations. Several officers of the Trust are employees of ALPS. The Fund’s administration fee is accrued on a daily basis and paid monthly. Administration fees paid by the Fund for the year ended May 31, 2019, are disclosed in the Statement of Operations.

 

The Administrator is also reimbursed by the Fund for certain out-of-pocket expenses.

 

Transfer Agent: ALPS serves as transfer, dividend paying and shareholder servicing agent for the Fund. ALPS receives an annual minimum fee, a fee based upon the number of shareholder accounts, and is also reimbursed by the Fund for certain out-of-pocket expenses. Transfer agent fees paid by the Fund for the year ended May 31, 2019, are disclosed in the Statement of Operations.

 

Compliance Services: ALPS provides services that assist the Fund’s chief compliance officer in monitoring and testing the policies and procedures of the Fund in conjunction with requirements under Rule 38a-1 under the 1940 Act and receives an annual base fee. ALPS is reimbursed for certain out-of-pocket expenses by the Fund. Compliance services fees paid by the Fund for the year ended May 31, 2019, are disclosed in the Statement of Operations.

 

Beneficial Ownership: The beneficial ownership, either directly or indirectly, of more than 25% of the voting securities of a fund creates a presumption of control of the Fund under Section 2(a)(9) of the 1940 Act. As of May 31, 2019, the following entities beneficially owned 25% or greater of a Fund’s outstanding shares:

 

Goehring and Rozencwajg Resources Fund Beneficial Owner Percentage
Institutional Leigh Goehring 37.47%
Retail Leigh Goehring 62.21%

 

 

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Goehring & Rozencwajg Resources Fund Notes to Financial Statements

 

May 31, 2019

 

7. SEC REGULATIONS

 

On October 4, 2018, the SEC amended Regulation S-X to require certain financial statement disclosure requirements to conform them to US Generally Accepted Accounting Principles for investment companies. Effective November 4, 2018, the Fund adopted disclosure requirement changes for Regulation S-X and these changes are reflected throughout this report. The Funds’ adoption of those amendments, effective with the financial statements prepared as of May 31, 2019, had no effect on the Funds’ net assets or results of operations.

 

8. RECENT ACCOUNTING PRONOUNCEMENT

 

In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-13, which changes the fair value measurement disclosure requirements of FASB Accounting Standards Codification Topic 820, Fair Value Measurement. The update to Topic 820 includes new, eliminated, and modified disclosure requirements. ASU 2018-13 is effective for fiscal years beginning after December 15, 2019, including interim periods. Early adoption is permitted for any eliminated or modified disclosures. Management has evaluated the impact of this ASU and has adopted the changes into these financial statements which had no material impact on the Fund's financial statements prepared as of May 31, 2019.

 

9. INDEMNIFICATIONS

 

Under the Fund’s organizational documents, its officers and Trustees are indemnified against certain liability arising out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts with service providers that may contain general indemnification clauses, which may permit indemnification to the extent permissible under applicable law. The Fund’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Trust that have not yet occurred.

 

 

Annual Report | May 31, 2019 25
   

 

Goehring & Rozencwajg Report of Independent
Resources Fund Registered Public Accounting Firm

 

 

Grant Thornton LLP
Two Commerce Square
2001 Market Street, Suite 700
  Philadelphia, PA 19103
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM  
  T 215.561.4200
Board of Trustees and Shareholders F 215.561.1066
Goehring & Rozencwajg Resources Fund www.GrantThornton.com

 

Opinion on the financial statements

We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Goehring & Rozencwajg Resources Fund (the “Fund”), a portfolio of the Goehring & Rozencwajg Investment Funds, as of May 31, 2019, and the related statement of operations for the year then ended, and the statements of changes in net assets for each of the two years in the period ended May 31, 2019, and the financial highlights for each of the two years in the period ended May 31, 2019, and for the period from December 30, 2016 (date of commencement of operations) through May 31, 2017, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of May 31, 2019 and the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended May 31, 2019, and its financial highlights for each of the two years in the period ended May 31, 2019 and for the period from December 30, 2016 (date of commencement of operations) through May 31, 2017, in conformity with accounting principles generally accepted in the United States of America.

 

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 the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB.

 

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. 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 supporting 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 May 31, 2019, by correspondence with the custodian. We believe that our audits provide a reasonable basis for our opinion.

 

We have served as the Fund’s auditor since 2016.

 

 

Philadelphia, Pennsylvania

 

July 30, 2019

 

Grant Thornton LLP

U.S. member firm of Grant Thornton International Ltd

 

 

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Goehring & Rozencwajg Resources Fund Additional Information

 

May 31, 2019 (Unaudited)

 

1. FUND HOLDINGS

 

The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (the “SEC”) for the first and third quarters of each fiscal year on Form N-Q within 60 days after the end of the period. Copies of the Fund’s Form N-Q are available without charge on the SEC website at http://www.sec.gov. You may also review and copy the Form N-Q at the SEC’s Public Reference Room in Washington, DC. For more information about the operation of the Public Reference Room, please call the SEC at 1-800-SEC-0330.

 

2. FUND PROXY VOTING POLICIES, PROCEDURES AND SUMMARIES

 

The Fund’s policies and procedures used in determining how to vote proxies and information regarding how the Fund’s voted proxies relating to portfolio securities during the most recent prior 12-month period ending May 31 are available without charge, (1) upon request, by calling (toll-free) 1-844-464-6467 and (2) on the SEC’s website at http://www.sec.gov.

 

3. TAX DESIGNATIONS

 

The Goehring & Rozencwajg Natural Resources Fund designates the following for federal income tax purposes for the calendar year ended December 31, 2018:

 

Qualified Dividend Income – 48.67%

Corporate Dividends Received Deduction – 27.62%

 

In early 2019, if applicable, shareholders of record should have received this information for the distributions paid to them by the Fund during the calendar year 2018 via Form 1099. The Fund will notify shareholders in early 2020 of amounts paid to them by the Fund, if any, during the calendar year 2019.

 

 

Annual Report | May 31, 2019 27
   

 

Goehring & Rozencwajg Resources Fund Trustees and Officers

 

May 31, 2019 (Unaudited)

 

Additional information regarding the Fund’s trustees is included in the Statement of Additional Information, which can be obtained without charge by calling 1-844-464-6467.

 

The business and affairs of the Fund are managed under the direction of the Board. The Board approves all significant agreements between the Fund and the persons or companies that furnish services to the Fund, including agreements with its distributor, investment adviser, administrator, custodian and transfer agent.

 

The name, age and principal occupations for the past five years of the Trustees and officers of the Trust are listed below, along with the number of portfolios in the fund complex overseen by and the other directorships held by each Trustee. The business address for each Trustee and officer of the Trust is c/o Goehring & Rozencwajg Associates, LLC, 110 Wall Street, New York, NY 10005.

 

TRUSTEES          
Name and Year of Birth Position with the Trust Term of Office And Length of Time Served(1) Principal Occupation(s) During Past 5 Years Number of Portfolios in Fund Complex Overseen by Trustee(2) Other Directorships Held by Trustee

Mark Kellstrom

(1961)

 Independent Trustee Since September 7, 2016 Independent Consultant for Financial and Capital Market Transactions since October 2018; Managing Director, Bradley Woods & Co. Ltd. (an investment banking firm) from March 2014 to October 2018; Senior Partner, Strategic Energy Research & Capital, LLC (a broker dealer) from December 2006 to March 2014. 1 Endowment Committee, Grace Church (Madison, N.J.).

J. Douglas Newsome

(1960)

 Independent Trustee Since October 25, 2016 Managing Director, Perkins Fund Marketing, LLC (a broker dealer) since August 2012; Consultant, Rumson Associates LLC since September 2011; Senior Managing Director, OmniCap, LLC (a broker dealer) from February 2012 to August 2012. 1 None.

Edward O’Brien

(1985)

 Independent Trustee Since October 25, 2016 Capital Markets & Marketing, Xcoal Energy & Resources, since January 2017; Chief Executive Officer, Doyle Trading Consultants, LLC (an energy market research consultancy) since July 2014; President, Doyle Trading Consultants, LLC, from June 2011 to June 2014. 1 None.

 

(1)Each Trustee serves until retirement, resignation or removal from the Board.
(2)For purposes of this table, the GRA Fund Complex includes only the Trust.

 

 

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Goehring & Rozencwajg Resources Fund Trustees and Officers

 

May 31, 2019 (Unaudited)

 

Name and Year of Birth Position with the Trust Term of Office And Length of Time Served(1) Principal Occupation(s) During Past 5 Years Number of Portfolios in Fund Complex Overseen by Trustee(2) Other Directorships Held by Trustee

Thomas B. Stiles, II

(1940)

 Independent Trustee Since September 7, 2016 President/ Chairman of the Board (since 1998) and Board Member (since 1973), Cedar Lawn Corporation (a non-profit cemetery). 1 Vice Chairman, Laguna Art Museum; Director (from October 2003 to September 2015) and Non-Executive Chairman of the Board (from April 2009 to July 2013), Sanford C. Bernstein Fund, Inc.

Adam A. Rozencwajg(3)

(1984)

 Interested Trustee and Chairman of the Board Since July 14, 2016 Managing Partner, Goehring & Rozencwajg Associates, LLC (an investment advisor) since January 2016; Vice President, Chilton Investment Company, LLC (a hedge fund) from October 2007 to December 2015. 1 None.

 

(1)Each Trustee serves until retirement, resignation or removal from the Board.
(2)For purposes of this table, the GRA Fund Complex includes only the Trust.
(3)Mr. Rozencwajg is an interested person of the Trust (as defined in the 1940 Act) (an “Interested Trustee”) because of his position with GRA.

 

 

Annual Report | May 31, 2019 29
   

 

Goehring & Rozencwajg Resources Fund Trustees and Officers

 

May 31, 2019 (Unaudited)

 

OFFICERS      
Name and Year of Birth Position with the Trust Term of Office And Length of Time Served(1) Principal Occupation(s) During Past 5 Years

Adam A. Rozencwajg

(1984)

 President, Chief Executive Officer, Treasurer, and Chief Financial Officer Since July 14, 2016. Managing Partner, Goehring & Rozencwajg Associates, LLC (an investment advisor) since January 2016; Vice President, Chilton Investment Company, LLC (a hedge fund) from October 2007 to December 2015.

Lucas Foss

(1977)

 Chief Compliance Officer Since December 11, 2017 Vice President and Deputy Chief Compliance Officer, ALPS Holdings, Inc. since November 2017; Director of Compliance, Transamerica Asset Management from 2015 to November 2017; Deputy Chief Compliance Officer, ALPS Fund Service, Inc. from 2012 to 2015.

Edward Corrao

(1965)

 Clerk Since September 13, 2017. Vice President and Lead Legal Counsel, ALPS Fund Services, Inc. since May 2017; Vice President and Senior Legal Counsel, State Street Global Advisers from September 2011 to March 2017.

 

(1)Officers are typically elected every year, unless an officer earlier retires, resigns or is removed from office.

 

None of the Independent Trustees or their immediate family members owns securities in the Adviser or Distributor, nor do they own securities in any entity directly or indirectly controlling, controlled by or under common control with the Adviser or Distributor.

 

 

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Page Intentionally Left Blank

 

   

 

   

 

Item 2.Code of Ethics.

 

(a)The Registrant, as of the end of the period covered by this report, has adopted a code of ethics that applies to the Registrant’s principal executive officer, principal financial officer, principal accounting officer or controller or any persons performing similar functions on behalf of the Registrant.

 

(b)Not applicable.

 

(c)During the period covered by this report, no amendments to the provisions of the code of ethics adopted in Item 2(a) above were made.

 

(d)During the period covered by this report, no implicit or explicit waivers to the provisions of the code of ethics adopted in Item 2(a) above were granted.

 

(e)Not applicable.

 

(f)The Registrant’s Code of Ethics is attached as Exhibit 12.A.1. hereto.

 

Item 3.Audit Committee Financial Expert.

 

The Board of Trustees has determined that no members of the Audit Committee are an "audit committee financial expert" as that term is defined under applicable regulatory guidelines.

 

Item 4.Principal Accountant Fees and Services.

 

(a)Audit Fees: For the Registrant’s fiscal year ended May 31, 2019 and May 31, 2018, the aggregate fees billed for professional services rendered by the principal accountant for the audit of the Registrant’s annual financial statements were $29,000 and $29,150 respectively.

 

(b)Audit-Related Fees: The aggregate fees billed for the registrant's fiscal years ended May 31, 2019 and May 31, 2018 for assurance and related services by the registrant's principal accountant reasonably related to the performance of audit of the registrant's financial statements and not reported under Paragraph (a) of this Item were $0 and $0 respectively. Such services consisted of a report of the Fund's transfer agent internal controls pursuant to rule 17AD-13, semi-annual report review and a report on the Fund's anti-money laundering controls and policies.
 
 
(c)Tax Fees: For the Registrant’s fiscal year ended May 31, 2019 and May 31, 2018, the aggregate fees billed for professional services rendered by the principal accountant for tax compliance, tax advice and tax planning were $3,900 and $3,750. The fiscal year 2019 and 2018 tax fees were for services pertaining to federal and state income tax return review, review of year-end dividend distributions and excise tax preparation.

 

(d)All Other Fees: For the Registrant’s fiscal years ended May 31, 2019 and May 31, 2018, aggregate fees billed to the Registrant by the principal accountant for services provided by the principal accountant other than the services reported in paragraphs (a) through (c) of this Item 4 were $1,500 and $1,500.

 

(e)(e)(1) Audit Committee Pre-Approval Policies and Procedures: All services to be performed by the Registrant's principal accountant must be pre-approved by the Registrant's Audit Committee.

 

(e)(2)No services described in paragraphs (b) through (d) of this Item 4 were approved by the Registrant’s audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.

 

(f)Not applicable.

 

(g)The aggregate non-audit fees of $0 and $0 were billed by the registrant’s principal accountant for services rendered to the registrant, and rendered to the registrant’s investment adviser, and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant for each of the fiscal years ended May 31, 2019 and May 31, 2018.

 

(h)Not applicable.

 

Item 5.Audit Committee of Listed Registrants.

 

Not applicable to Registrant.

 

Item 6.Investments.

 

(a)Schedule of Investments is included as part of the Report to Stockholders filed under Item 1 of this Form N-CSR.

 

(b)Not applicable.
 
 

Item 7.Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.

 

Not applicable to Registrant.

 

Item 8.Portfolio Managers of Closed-End Management Investment Companies.

 

Not applicable to Registrant.

 

Item 9.Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.

 

Not applicable to Registrant.

 

Item 10.Submission of Matters to Vote of Security Holders.

 

There have been no material changes to the procedures by which shareholders may recommend nominees to the Registrant’s Board of Trustees, where those changes were implemented after the Registrant last provided disclosure in response to the requirements of Item 407(c)(2) of Regulation S-K, or this Item.

 

Item 11.Controls and Procedures.

 

(a)The Registrant’s principal executive officer and principal financial officer have concluded that the Registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended) are effective based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this report.

 

(b)There was no change in the Registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940, as amended) during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting.

 

Item 12.Disclosure of Securities Lending Activities for Closed-end Management Investment Companies.

 

Not applicable to Registrant.

 

Item 13.Exhibits.

 

(a)(1)The Code of Ethics that applies to the Registrant’s principal executive officer and principal financial officer is attached hereto as Exhibit 12.A.1.
 
 

(a)(2)The certifications required by Rule 30a-2(a) of the Investment Company Act of 1940, as amended, and Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto as Exhibit 99.Cert.

 

(a)(3)Not applicable.

 

(b)The certifications by the Registrant’s principal executive officer and principal financial officer, as required by Rule 30a-2(b) of the Investment Company Act of 1940, as amended, and Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto as Exhibit 99.906Cert.
 
 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  Goehring & Rozencwajg Investment Funds  
       
  By: /s/ Adam A. Rozencwajg  
    Adam A. Rozencwajg  
  President  
       
  Date: August 8, 2019  

 

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this Report has been signed below on behalf of the Registrant and in the capacities and on the dates indicated.

 

  Goehring & Rozencwajg Investment Funds  
       
  By: /s/ Adam A. Rozencwajg  
    Adam A. Rozencwajg  
    Principal Executive Officer and Principal Financial Officer  
       
  Date: August 8, 2019