Item 1. Report to Stockholders.
Cheswold Lane International High Dividend Fund - Annual Report - December 31, 2013
Cheswold Lane International High Dividend Fund
Table of Contents
December 31, 2013
|
Shareholder Letter
|
3
|
|
Performance Summary
|
5
|
|
Portfolio Characteristics
|
6
|
|
Schedule of Investments
|
8
|
|
Financial Statements
|
11
|
|
Financial Highlights
|
14
|
|
Notes to Financial Statements
|
15
|
|
Report of Independent Registered Public Accounting Firm
|
22
|
|
Expense Example
|
23
|
|
Trustee and Officer Information
|
24
|
|
Additional Tax Information
|
26
|
|
Proxy Voting
|
26
|
|
Portfolio Holdings Disclosure
|
26
|
This report has been prepared for shareholders and may be distributed to others only if preceded or accompanied by a current prospectus.
Except for historical information, the matters discussed in this report may constitute forward-looking statements. These include any predictions, assessments, analyses or outlooks for individual securities, industries, market sectors and/or markets. These statements involve risks and uncertainties. In addition to the general risks described for the Fund in the current prospectus, other factors bearing on these statements include the accuracy of the Adviser's forecasts and predictions, and the appropriateness of the investment programs designed by the Adviser to implement its strategies efficiently and effectively. Any one or more of these factors, as well as other risks affecting the securities markets and investment instruments generally, could cause the actual results of the Fund to differ materially as compared to applicable benchmarks.
Cheswold Lane International High Dividend Fund - Annual Report - December 31, 2013
Dear Fellow Shareholders,
Thank you for your continued support of the Cheswold Lane International High Dividend Fund. Total return for the Fund, net of fees was 15.7% in 2013, compared to 22.8% for the MSCI-EAFE® Index. Our Fund’s relative underperformance was driven by overweight positions in Asia and underweight positions in European cyclical securities.
Market Review – 2013
For a second year in a row, US and other developed market equities were the star asset class across the globe. Emerging markets earned low single digit returns in local currency and negative returns in US dollars. Emerging countries were large beneficiaries of US Quantitative Easing (“QE”), as capital crowded out of the US bond market and found its way to many emerging country bond markets. However, during the summer of 2013, Federal Reserve (the “Fed”) Chairman Ben Bernanke (as of February 2014, Ben Bernanke is the former Federal Reserve Chairman) called the peak in QE and capital began rotating out of emerging countries. Countries which relied heavily on foreign buyers of emerging bonds experienced the most stress during 2013. US government bonds depreciated in value as long term interest rates increased by more than 100 basis points
1
during the year. Improving economic data from Europe, especially the UK, attracted investment flows into international equity funds. In Japan, the initial success of recent economic policies led by Prime Minister Shinzu Abe (also known as “Abenomics”) was reflected in 55% equity returns in local terms and 27% in US dollars. The Bank of Japan followed the Fed and European Central Bank in proclaiming to do “whatever it takes” to kick start the Japanese economy and cure the country of deflation. Retail investors, often a contrary indicator, have returned to equities lured by recent high returns and loses on bond investments.
Our portfolio struggled to keep up with our benchmark this year. Small, economically sensitive and high beta was a winning combination in 2013; however, this is not our Fund’s investment style. Our stock selection in Japan was also less than stellar. While still strong for the year, the Japanese market faded in the 2nd half of the year, as the outlook for Europe brightened. This is another clear sign to us that the velocity of global capital has accelerated. However, we believe earnings results over the next couple of quarters will confirm the investment thesis of our Japanese holdings, especially positions initiated in 2013. Our view is that the Abe government sees Abenomics as a “last chance” to reinvigorate the economy. The US and Europe have allowed the Japanese to devalue their currency in order to increase profits, generate inflation and spur economic growth. With the profits and inflation in hand, it’s time for the Abe government to implement structural reform to generate sustainable economic growth; this is the so called “Third Arrow” of Abenomics. In their own words, senior Abe economic policy makers believe that if the country doesn’t follow through with structural reform that they would be viewed as “quick-buck artists” by their global peers. It wasn’t lost in translation and we agree. This does however make us incrementally more bearish on the yen. We can foresee the Bank of Japan continuing to help major exporters and real asset owners (real estate, stocks, etc…) as a carrot for higher capital expenditures, wages, and regulatory reform. Net/Net, this makes the return hurdle higher for domestic oriented Japanese stocks in our portfolio.
Cheswold Lane International High Dividend Fund - Annual Report - December 31, 2013
In Europe, equity markets tracked the upward movement of economic surveys. The cyclical sectors have led the market, especially periphery banks; but for the first time in several years a “buy domestic Europe” investment theme has taken root in the markets. Despite depressed telecom, retail, media and utility stocks, continued negative earnings revisions stocks in these sectors in Europe rallied sharply in the 2nd half of the year. The consensus management word of the 3Q earnings season was “stabilization.” This was enough to drive global money flows into Europe and push valuation multiples to the high end of the 10 year P/E
2
multiple range. Market performance has narrowed significantly because the cyclical sectors look poised to see their first increases in earnings in several years; while global defensive stocks are struggling with earnings, growth headwinds from lower emerging market demand and foreign exchange translation losses. Our estimate is that the foreign exchange effects will be lapped by the 2nd quarter of 2014. Emerging market demand growth remains highly variable, but we think a number of countries are going to see improving trends in 2014 – Indonesia, India, Vietnam, Brazil and many resource rich countries in West and East Africa. China remains a challenging call to make.
We encourage you to visit our website
www.cheswoldlanefunds.com
for more detailed information regarding our investment strategy. As always, we welcome your comments and questions at
info@cheswoldlane.com
. Thank you again for the trust you have bestowed upon us in choosing the Cheswold Lane International High Dividend Fund.
Sincerely,
Eric Scharpf
President of Cheswold Lane Funds
|
1
|
Basis Point is a unit that is equal to 1/100
th
of 1% and is used to denote the change in a financial instrument.
|
|
2
|
P/E (Price-Earnings Ratio) is a valuation ratio of a fund’s current share price compared to its per-share earnings.
|
Cheswold Lane International High Dividend Fund - Annual Report - December 31, 2013
Cheswold Lane International High Dividend Fund
Performance Summary
(Unaudited)
Comparison of a Hypothetical $500,000 Investment
in the Cheswold Lane International High Dividend Fund and the MSCI EAFE
®
Index*
From 6/29/06** through 12/31/13
Total Returns
For the periods ended December 31, 2013
|
|
One Year
|
Five Year
|
Since Inception**
|
|
|
|
|
|
|
Cheswold Lane International High Dividend Fund
|
15.65%
|
12.11%
|
3.03%
|
|
MSCI EAFE
®
Index
|
22.78%
|
12.44%
|
4.01%
|
|
*
|
The MSCI EAFE® Index (Europe, Australasia, Far East) is a free float-adjusted market capitalization index that is designed to measure the equity market performance of developed markets, excluding the U.S. and Canada. The MSCI EAFE® Index consisted of the following 21 developed markets country indices: Australia, Austria, Belgium, Denmark, Finland, France, Germany, Hong Kong, Ireland, Israel, Italy, Japan, the Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland and the United Kingdom. The index is unmanaged. The index reflects the reinvestment of dividends on securities in the index, but does not reflect any deduction for fees, expenses or taxes. A direct investment in an index is not possible.
|
|
**
|
Commencement of operations for the Cheswold Lane International High Dividend Fund was June 29, 2006.
|
The Fund's net expense ratio of 0.95% and gross expense ratio of 1.60% are reflective of the information disclosed in the Fund's prospectus dated April 30, 2013 and may differ from the expense ratios disclosed in this report. The Adviser has contractually agreed to waive all or a portion of its management fees and/or reimburse expenses at least through April 30, 2014 in order to keep the Fund's net annual operating expenses from exceeding 0.95% of its average daily net assets. Performance data quoted represents past performance which is not predictive of future performance. The investment return and principal value of Fund shares will fluctuate and when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance information quoted. To receive current performance to the most recent month end, please call 1‑800-771-4701. Please read prospectus carefully before investing.
The line graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
The Fund's results as shown are net of fees.
See the accompanying "Investments by Industry" schedule for the percentage of the Fund’s portfolio represented by the industries mentioned in this report. Portfolio holdings will change due to ongoing management of the Fund.
Cheswold Lane International High Dividend Fund - Annual Report - December 31, 2013
Cheswold Lane International High Dividend Fund
Portfolio Characteristics
December 31, 2013
|
Investments by Industry (unaudited)
|
|
(As a Percentage of Long-term Investments)
|
|
Adhesives
|
2.3
|
%
|
|
Agriculture
|
7.3
|
|
|
Apparel
|
0.5
|
|
|
Auto Manufacturers
|
1.8
|
|
|
Auto Parts & Equipment
|
2.2
|
|
|
Banks
|
12.1
|
|
|
Beverages
|
1.8
|
|
|
Chemicals
|
1.0
|
|
|
Distribution / Wholesale
|
2.6
|
|
|
Diversified Financial Services
|
1.4
|
|
|
Electric
|
1.4
|
|
|
Engineering & Construction
|
4.4
|
|
|
Food
|
10.9
|
|
|
Food Service
|
4.3
|
|
|
Healthcare - Services
|
0.9
|
|
|
Holding Companies - Diversified
|
1.7
|
|
|
Insurance
|
5.4
|
|
|
Iron / Steel
|
4.7
|
|
|
Machinery - Construction & Mining
|
1.6
|
|
|
Machinery - Diversified
|
0.6
|
|
|
Mining
|
1.7
|
|
|
Oil & Gas
|
10.1
|
|
|
Oil & Gas Services
|
3.3
|
|
|
Pharmaceuticals
|
12.1
|
|
|
Retail
|
1.5
|
|
|
Telecommunications
|
2.4
|
|
|
Total
|
100.0
|
%
|
See accompanying notes to financial statements.
Cheswold Lane International High Dividend Fund - Annual Report - December 31, 2013
Cheswold Lane International High Dividend Fund
Portfolio Characteristics (Continued)
December 31, 2013
|
Investments by Country (unaudited)
|
|
(As a Percentage of Long-term Investments)
|
|
Australia
|
7.5
|
%
|
|
France
|
8.7
|
|
|
Germany
|
4.8
|
|
|
Hong Kong
|
4.3
|
|
|
Italy
|
3.9
|
|
|
Japan
|
21.6
|
|
|
Netherlands
|
3.3
|
|
|
Singapore
|
5.9
|
|
|
Switzerland
|
12.0
|
|
|
United Kingdom
|
28.0
|
|
|
Total
|
100.0
|
%
|
See accompanying notes to financial statements.
Cheswold Lane International High Dividend Fund - Annual Report - December 31, 2013
Cheswold Lane International High Dividend Fund
Schedule of Investments
December 31, 2013
|
Number of
Shares
|
|
|
|
|
|
|
Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMMON STOCKS
|
|
|
99.4
|
%
|
|
|
|
|
|
|
COMMUNICATIONS
|
|
|
2.4
|
%
|
|
|
|
|
|
215,200
|
|
Vodafone Group PLC
|
|
|
|
|
|
$
|
844,550
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSUMER DISCRETIONARY
|
|
|
12.9
|
%
|
|
|
|
|
|
|
4,850
|
|
Casino Guichard-Perrachon S.A.
|
|
|
|
|
|
|
558,928
|
|
|
|
850
|
|
Christian Dior S.A.
|
|
|
|
|
|
|
160,610
|
|
|
|
7,300
|
|
Cie Generale des Etablissements Michelin
|
|
|
|
|
|
|
775,795
|
|
|
|
92,000
|
|
Compass Group PLC
|
|
|
|
|
|
|
1,474,681
|
|
|
|
21,000
|
|
Daihatsu Motor Co., Ltd.
|
|
|
|
|
|
|
356,968
|
|
|
|
2,900
|
|
Daimler AG
|
|
|
|
|
|
|
252,334
|
|
|
|
31,000
|
|
Jardine Cycle & Carriage Ltd.
|
|
|
|
|
|
|
883,082
|
|
|
|
|
|
|
|
|
|
|
|
|
4,462,398
|
|
|
|
|
|
CONSUMER STAPLES
|
|
|
22.3
|
%
|
|
|
|
|
|
|
6,000
|
|
Ain Pharmaciez, Inc.
|
|
|
|
|
|
|
295,899
|
|
|
|
30,800
|
|
British American Tobacco PLC
|
|
|
|
|
|
|
1,651,439
|
|
|
|
19,100
|
|
Diageo PLC
|
|
|
|
|
|
|
632,555
|
|
|
|
26,800
|
|
Japan Tobacco, Inc.
|
|
|
|
|
|
|
874,305
|
|
|
|
11,000
|
|
Jardine Matheson Holdings Ltd.
|
|
|
|
|
|
|
575,410
|
|
|
|
16,600
|
|
Nestle S.A.
|
|
|
|
|
|
|
1,224,025
|
|
|
|
9,700
|
|
Seven & I Holdings Co., Ltd.
|
|
|
|
|
|
|
386,768
|
|
|
|
3,600
|
|
Sogo Medical Co., Ltd.
|
|
|
|
|
|
|
137,705
|
|
|
|
5,100
|
|
Sugi Holdings Co., Ltd.
|
|
|
|
|
|
|
207,974
|
|
|
|
3,800
|
|
Sundrug Co., Ltd.
|
|
|
|
|
|
|
170,548
|
|
|
|
207,100
|
|
TESCO PLC
|
|
|
|
|
|
|
1,146,612
|
|
|
|
11,100
|
|
Unilever NV
|
|
|
|
|
|
|
447,039
|
|
|
|
|
|
|
|
|
|
|
|
|
7,750,279
|
|
|
|
|
|
ENERGY
|
|
|
14.9
|
%
|
|
|
|
|
|
|
46,450
|
|
BG Group PLC
|
|
|
|
|
|
|
997,994
|
|
|
|
26,900
|
|
ENI SpA
|
|
|
|
|
|
|
650,833
|
|
|
|
5,500
|
|
Ensco PLC - Cl. A
|
|
|
|
|
|
|
314,490
|
|
|
|
22,500
|
|
Japan Petroleum Exploration Co.
|
|
|
|
|
|
|
855,289
|
|
|
|
18,800
|
|
Modec, Inc.
|
|
|
|
|
|
|
541,586
|
|
|
|
18,960
|
|
Royal Dutch Shell PLC A Shares
|
|
|
|
|
|
|
679,094
|
|
|
|
33,200
|
|
Saipem SpA
|
|
|
|
|
|
|
714,620
|
|
|
|
4,500
|
|
Technip S.A.
|
|
|
|
|
|
|
432,480
|
|
|
|
|
|
|
|
|
|
|
|
|
5,186,386
|
|
|
|
|
|
FINANCIALS
|
|
|
18.8
|
%
|
|
|
|
|
|
|
42,800
|
|
Aberdeen Asset Management PLC
|
|
|
|
|
|
|
354,363
|
|
|
|
2,125
|
|
Allianz S.E.
|
|
|
|
|
|
|
383,174
|
|
|
|
20,625
|
|
Australia & New Zealand Banking Group Ltd.
|
|
|
|
|
|
|
593,521
|
|
|
|
12,400
|
|
AXA S.A.
|
|
|
|
|
|
|
344,757
|
|
|
|
2,500
|
|
BNP Paribas S.A.
|
|
|
|
|
|
|
194,834
|
|
|
|
67,795
|
|
Challenger Ltd.
|
|
|
|
|
|
|
375,294
|
|
|
|
7,800
|
|
Commonwealth Bank of Australia
|
|
|
|
|
|
|
541,821
|
|
See accompanying notes to financial statements.
Cheswold Lane International High Dividend Fund - Annual Report - December 31, 2013
Cheswold Lane International High Dividend Fund
Schedule of Investments (Continued)
December 31, 2013
|
Number of
Shares
|
|
|
|
|
|
|
Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCIALS (Continued)
|
|
|
|
|
|
|
|
|
160,400
|
|
Dah Sing Financial Holdings Ltd.
|
|
|
|
|
$
|
919,461
|
|
|
|
74,200
|
|
HSBC Holdings PLC
|
|
|
|
|
|
805,222
|
|
|
|
7,600
|
|
ORIX Corp.
|
|
|
|
|
|
133,901
|
|
|
|
87,000
|
|
Oversea-Chinese Banking Corp. Ltd.
|
|
|
|
|
|
703,170
|
|
|
|
34,000
|
|
Prudential PLC
|
|
|
|
|
|
754,430
|
|
|
|
26,000
|
|
United Overseas Bank Ltd.
|
|
|
|
|
|
437,591
|
|
|
|
|
|
|
|
|
|
|
|
6,541,539
|
|
|
|
|
|
HEALTH CARE
|
|
|
12.0
|
%
|
|
|
|
|
|
|
25,900
|
|
GlaxoSmithKline PLC
|
|
|
|
|
|
|
691,138
|
|
|
|
13,450
|
|
Novartis AG
|
|
|
|
|
|
|
1,081,363
|
|
|
|
6,570
|
|
Roche Holding AG
|
|
|
|
|
|
|
1,848,769
|
|
|
|
5,125
|
|
Sanofi
|
|
|
|
|
|
|
543,734
|
|
|
|
|
|
|
|
|
|
|
|
|
4,165,004
|
|
|
|
|
|
INDUSTRIALS
|
|
|
7.3
|
%
|
|
|
|
|
|
|
43,000
|
|
Chiyoda Corp.
|
|
|
|
|
|
|
625,929
|
|
|
|
7,650
|
|
Henkel AG & Co. KGaA
|
|
|
|
|
|
|
800,459
|
|
|
|
13,800
|
|
JGC Corp.
|
|
|
|
|
|
|
543,007
|
|
|
|
3,450
|
|
Rheinmetall AG
|
|
|
|
|
|
|
214,023
|
|
|
|
86,000
|
|
Toyo Engineering Corp.
|
|
|
|
|
|
|
351,111
|
|
|
|
|
|
|
|
|
|
|
|
|
2,534,529
|
|
|
|
|
|
MATERIALS
|
|
|
7.4
|
%
|
|
|
|
|
|
|
24,500
|
|
Air Water, Inc.
|
|
|
|
|
|
|
332,796
|
|
|
|
17,750
|
|
BHP Billiton Ltd.
|
|
|
|
|
|
|
602,074
|
|
|
|
122,600
|
|
Daido Steel Co., Ltd.
|
|
|
|
|
|
|
610,468
|
|
|
|
31,600
|
|
JFE Holdings, Inc.
|
|
|
|
|
|
|
754,183
|
|
|
|
80,500
|
|
Nippon Steel & Sumitomo Metal Corp.
|
|
|
|
|
|
|
270,297
|
|
|
|
|
|
|
|
|
|
|
|
|
2,569,818
|
|
|
|
|
|
UTILITIES
|
|
|
1.4
|
%
|
|
|
|
|
|
|
35,825
|
|
AGL Energy Ltd.
|
|
|
|
|
|
|
480,759
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL COMMON STOCKS (Cost $27,690,756)
|
|
|
|
|
|
|
34,535,262
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal
Amount
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SHORT-TERM INVESTMENT
|
|
|
0.1
|
%
|
|
|
|
|
|
|
|
|
Variable Rate Demand Deposit
|
|
|
|
|
|
|
|
|
|
$
|
43,168
|
|
UMB Bank Money Market Fiduciary, 0.01%
†
|
|
|
|
|
|
|
43,168
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL SHORT-TERM INVESTMENTS (Cost $43,168)
|
|
|
|
|
|
|
43,168
|
|
See accompanying notes to financial statements.
Cheswold Lane International High Dividend Fund - Annual Report - December 31, 2013
Cheswold Lane International High Dividend Fund
Schedule of Investments (Continued)
December 31, 2013
|
|
|
|
TOTAL INVESTMENTS (Cost $27,733,924)
|
|
|
99.5
|
%
|
|
$
|
34,578,430
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Assets, in Excess of Liabilities
|
|
|
0.5
|
%
|
|
|
184,559
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET ASSETS
|
|
|
100.0
|
%
|
|
$
|
34,762,989
|
|
PLC – Public Limited Company
|
†
|
Indicates yield as of December 31, 2013
|
See accompanying notes to financial statements.
Cheswold Lane International High Dividend Fund - Annual Report - December 31, 2013
Cheswold Lane International High Dividend Fund
Statement of Assets and Liabilities
December 31, 2013
|
ASSETS:
|
|
Investments at value (cost $27,733,924)
|
$
|
34,578,430
|
|
|
Foreign currency (cost $45,855)
|
|
46,053
|
|
|
Receivable for capital stock sold
|
|
16,700
|
|
|
Interest and dividends receivable
|
|
159,562
|
|
|
Prepaid expenses
|
|
10,199
|
|
|
|
|
Total assets
|
|
34,810,944
|
|
|
|
|
LIABILITIES:
|
|
Payables to related parties:
|
|
Investment adviser fees
|
|
6,983
|
|
|
Accrued expenses:
|
|
Professional fees
|
|
19,750
|
|
|
Administrative and fund accounting fees
|
|
6,370
|
|
|
Transfer agent fees and expenses
|
|
4,584
|
|
|
Custody fees
|
|
4,564
|
|
|
Trustees' fees
|
|
2,500
|
|
|
Other accrued expenses
|
|
3,204
|
|
|
|
|
Total liabilities
|
|
47,955
|
|
|
|
|
TOTAL NET ASSETS
|
|
$
|
34,762,989
|
|
|
|
|
NET ASSETS CONSIST OF:
|
|
Paid-in-capital
|
$
|
36,766,157
|
|
|
Distributions in excess of net investment income
|
|
(371,394)
|
|
|
Accumulated net realized loss on investments and foreign currency transactions
|
|
(8,480,304)
|
|
|
Net unrealized appreciation on investments and foreign currency translations
|
|
6,848,530
|
|
|
|
|
TOTAL NET ASSETS
|
|
$
|
34,762,989
|
|
|
|
|
SHARES OUTSTANDING, (no par value, unlimited shares of beneficial interest authorized)
|
|
2,295,295
|
|
|
|
|
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
(a)
|
|
$
|
15.15
|
|
|
(a)
|
A 2% redemption fee applies to shares sold within 90 days of purchase.
|
See accompanying notes to financial statements.
Cheswold Lane International High Dividend Fund - Annual Report - December 31, 2013
Cheswold Lane International High Dividend Fund
Statement of Operations
December 31, 2013
|
INVESTMENT INCOME:
|
|
Dividends (Net of $102,286 foreign tax withholding)
|
|
$
|
962,640
|
|
|
Interest
|
|
|
1,859
|
|
|
Total investment income
|
|
|
964,499
|
|
|
|
|
EXPENSES:
|
|
Investment advisory fees (related party)
|
|
|
297,116
|
|
|
Administrative and fund accounting fees
|
|
|
75,000
|
|
|
Professional fees
|
|
|
47,610
|
|
|
Transfer agent fees and expenses
|
|
|
27,396
|
|
|
Custody fees
|
|
|
22,836
|
|
|
Trustees' fees
|
|
|
10,000
|
|
|
Reports to shareholders
|
|
|
8,848
|
|
|
Insurance premiums
|
|
|
8,174
|
|
|
Federal and state registration fees
|
|
|
2,305
|
|
|
Miscellaneous expenses
|
|
|
15,148
|
|
|
Total expenses before fee waivers
|
|
|
514,433
|
|
|
Fee waivers
|
|
|
(200,810
|
)
|
|
|
|
Net expenses
|
|
|
313,623
|
|
|
|
|
NET INVESTMENT INCOME
|
|
|
650,876
|
|
|
|
|
REALIZED AND UNREALIZED GAIN ON INVESTMENTS AND FOREIGN CURRENCY
|
|
Net realized gain on investment transactions
|
|
|
1,370,858
|
|
|
Net realized gain on foreign currency transactions
|
|
|
9,341
|
|
|
Change in unrealized appreciation
|
|
|
|
|
|
on investments
|
|
|
2,713,971
|
|
|
on foreign currency translations
|
|
|
7,793
|
|
|
Net realized and unrealized gain on investments and foreign currency
|
|
|
4,101,963
|
|
|
|
|
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS
|
|
$
|
4,752,839
|
|
See accompanying notes to financial statements.
Cheswold Lane International High Dividend Fund - Annual Report - December 31, 2013
Cheswold Lane International High Dividend Fund
Statements of Changes in Net Assets
|
|
For the Year Ended
12/31/13
|
|
For the Year
Ended
12/31/12
|
|
OPERATIONS:
|
|
Net investment income
|
$
|
650,876
|
|
$
|
513,047
|
|
|
Net realized gain on investments
|
|
1,370,858
|
|
|
1,831,160
|
|
|
Net realized gain/(loss) on foreign currency transactions
|
|
9,341
|
|
|
(1,881)
|
|
|
Change in unrealized appreciation/(depreciation) on investments and foreign currency translations
|
|
2,721,764
|
|
|
2,893,315
|
|
|
|
|
Net increase in net assets resulting from operations
|
|
4,752,839
|
|
|
5,235,641
|
|
|
|
|
DISTRIBUTIONS:
|
|
From investment income ($0.56 per share, $0.31 per share)
|
|
(1,251,341)
|
|
|
(667,479)
|
|
|
|
|
Total distributions
|
|
(1,251,341)
|
|
|
(667,479)
|
|
|
|
|
SHARES OF BENEFICIAL INTEREST:
|
|
Proceeds from sale of shares
|
|
2,031,950
|
|
|
1,500
|
|
|
Proceeds from reinvestment of distributions
|
|
1,251,341
|
|
|
667,479
|
|
|
Redemption of shares
|
|
(1,522,096)
|
|
|
(1,131,273)
|
|
|
|
|
Net increase/(decrease) from shares of beneficial interest
|
|
1,761,195
|
|
|
(462,294)
|
|
|
|
|
TOTAL INCREASE IN NET ASSETS
|
|
5,262,693
|
|
|
4,105,868
|
|
|
|
|
NET ASSETS:
|
|
Beginning of year
|
|
29,500,296
|
|
|
25,394,428
|
|
|
End of year*
|
$
|
34,762,989
|
|
$
|
29,500,296
|
|
|
|
|
SHARES OF BENEFICIAL INTEREST IN SHARES:
|
|
Shares sold
|
|
144,482
|
|
|
128
|
|
|
Shares reinvested
|
|
85,386
|
|
|
54,421
|
|
|
Shares redeemed
|
|
(102,941
|
)
|
|
(83,880)
|
|
|
Net increase/(decrease)
|
|
126,927
|
|
|
(29,331)
|
|
|
*
|
Includes Distributions in excess of $(371,394) and $(140,265), for 12/31/13 and 12/31/12, respectively.
|
See accompanying notes to financial statements.
Cheswold Lane International High Dividend Fund - Annual Report - December 31, 2013
Cheswold Lane International High Dividend Fund
Financial Highlights
For a Fund Share Outstanding
Throughout Each Year
|
|
For the
Year Ended
12/31/13
|
|
|
For the
Year Ended
12/31/12
|
|
|
For the
Year Ended
12/31/11
|
|
|
For the
Year Ended
12/31/10
|
|
|
For the
Year Ended
12/31/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, beginning of year
|
$
|
13.60
|
|
|
$
|
11.56
|
|
|
$
|
12.94
|
|
|
$
|
13.00
|
|
|
$
|
9.60
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income/(Loss) From Investment Operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
0.30
|
|
|
|
0.24
|
|
|
|
0.23
|
|
|
|
0.18
|
|
|
|
0.20
|
|
|
Net realized and unrealized gain/(loss) on
investments and foreign currency transactions
|
|
1.81
|
|
|
|
2.11
|
|
|
|
(1.41
|
)
|
|
|
0.00
|
1
|
|
|
3.39
|
|
|
Total from investment operations
|
|
2.11
|
|
|
|
2.35
|
|
|
|
(1.18
|
)
|
|
|
0.18
|
|
|
|
3.59
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less Distributions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends from net investment income
|
|
(0.56
|
)
|
|
|
(0.31
|
)
|
|
|
(0.20
|
)
|
|
|
(0.24
|
)
|
|
|
(0.19
|
)
|
|
Distribution from net realized gains
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Total distributions
|
|
(0.56
|
)
|
|
|
(0.31
|
)
|
|
|
(0.20
|
)
|
|
|
(0.24
|
)
|
|
|
(0.19
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, end of year
|
$
|
15.15
|
|
|
$
|
13.60
|
|
|
$
|
11.56
|
|
|
$
|
12.94
|
|
|
$
|
13.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Return
2
|
|
15.65
|
%
|
|
|
20.60
|
%
|
|
|
(9.27
|
)%
|
|
|
1.53
|
%
|
|
|
37.84
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratios/Supplemental Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets, end of year (in 000s)
|
$
|
34,763
|
|
|
$
|
29,500
|
|
|
$
|
25,394
|
|
|
$
|
28,597
|
|
|
$
|
28,528
|
|
|
Ratio of expenses to average net assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net of waivers and reimbursements
|
|
0.95
|
%
|
|
|
1.15
|
%
|
|
|
1.15
|
%
|
|
|
1.15
|
%
|
|
|
1.15
|
%
|
|
Before waivers and reimbursements
|
|
1.56
|
%
|
|
|
1.60
|
%
|
|
|
1.57
|
%
|
|
|
1.56
|
%
|
|
|
1.64
|
%
|
|
Ratio of net investment income to average
net assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net of waivers and reimbursements
|
|
1.97
|
%
|
|
|
1.83
|
%
|
|
|
1.80
|
%
|
|
|
1.40
|
%
|
|
|
1.79
|
%
|
|
Before waivers and reimbursements
|
|
1.36
|
%
|
|
|
1.38
|
%
|
|
|
1.38
|
%
|
|
|
0.99
|
%
|
|
|
1.30
|
%
|
|
Portfolio turnover rate
|
|
38.24
|
%
|
|
|
55.08
|
%
|
|
|
52.18
|
%
|
|
|
64.79
|
%
|
|
|
36.90
|
%
|
|
1
|
Represents less than $0.01 per share.
|
|
2
|
Total returns shown are historical in nature and assume changes in share price and reinvestment of dividends and capital gain distributions, if any.
|
See accompanying notes to financial statements.
Cheswold Lane International High Dividend Fund - Annual Report - December 31, 2013
Cheswold Lane International High Dividend Fund
Notes to Financial Statements
December 31, 2013
Cheswold Lane Funds (the “Trust”) is registered under the Investment Company Act of 1940, as amended, as an open-end diversified management investment company. The Trust was organized as a Delaware statutory trust on April 12, 2006 and currently consists solely of one series of beneficial interest, the Cheswold Lane International High Dividend Fund (the “Fund”). The investment objective for the Fund is long-term growth of capital and income. The Fund commenced operations on June 29, 2006.
Note 2.
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 U.S. (“GAAP”).
Security Valuation
– In determining the Fund’s net asset value (“NAV”), portfolio securities primarily listed or traded on a national or foreign securities exchange, except for securities traded on the National Association of Securities Dealers’ Automated Quotation System (“NASDAQ”) and fixed income securities, are generally valued at the last sale price on that exchange, unless market prices are determined to be not readily available pursuant to the Fund’s pricing procedures. The Fund values NASDAQ traded securities using the NASDAQ Official Closing Price. Equity securities, to the extent these are actively traded are generally categorized in Level 1 of the fair value hierarchy. The Fund values short-term investments that will mature within 60 days at amortized cost, which approximates market value. In the event market quotations are not readily available, a “fair value” price will be determined in accordance with the Fund’s pricing procedures. Securities other than those listed above will be priced in accordance with the Fund’s registration statement and/or pricing procedures. In this circumstance, such securities may be categorized as Level 2 or Level 3 depending on the inputs used by the Adviser.
The Fund translates prices for its investments that are quoted in foreign currencies into U.S. dollars at current exchange rates. As a result, changes in the value of those currencies in relation to the U.S. dollar may affect the Fund’s NAV, which is calculated as of the close of regular trading on the New York Stock Exchange (“NYSE”). Because foreign markets may be open at different times than the NYSE, the value of the Fund’s shares may change on days when shareholders are not able to buy or sell them. If reported prices with respect to the Fund’s foreign investments are believed by Cheswold Lane Asset Management, LLC (the “Adviser”) to be stale or unreliable based upon certain triggering factors set forth in the pricing procedures approved by the Board, these investments will be valued at their fair value using a quantitative methodology. In this circumstance, such securities are categorized as Level 2. In addition, if, in the opinion of the Adviser, significant events materially affecting the values of the Fund’s foreign investments occur between the close of foreign markets and the close of regular trading on the NYSE, or if the values provided by the Adviser’s quantitative methodology are deemed by the Adviser not to reflect fair value, such foreign investments will be priced at fair value as determined in good faith by the Adviser. In this circumstance, such securities may be categorized as Level 2 or Level 3 depending on the inputs used by the Adviser. The Fund may rely on third-party pricing vendors to monitor for events that may materially affect the values of the Fund’s foreign investments during the period between the close of foreign markets and the close of regular trading on the NYSE.
Cheswold Lane International High Dividend Fund - Annual Report - December 31, 2013
Cheswold Lane International High Dividend Fund
Notes to Financial Statements (Continued)
December 31, 2013
The use of fair value pricing by the Fund may cause the NAV of its shares to differ from the NAV that would be calculated by using closing market prices. Due to the subjective nature of fair value pricing, the Fund’s value for a particular security may be different from the last quoted market price.
Under Fair Value Measurements, various inputs are used in determining the value of the Fund’s investments. These inputs are summarized into three broad levels as described 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.
• Level 2 − other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.) 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.
In addition, the Fund has adopted Accounting Standards Update (“ASU”) No. 2011-04
Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs
which amends
Fair Value Measurements and Disclosures
to establish common requirements for measuring fair value and for disclosing information about fair value measurements in accordance with U.S. GAAP and International Financial Reporting Standards (“IFRSs”). Enhanced disclosure is required to detail any transfers in to and out of Level 1 and Level 2 measurements and Level 2 and Level 3 measurements and the reasons for the transfers.
Cheswold Lane International High Dividend Fund - Annual Report - December 31, 2013
Cheswold Lane International High Dividend Fund
Notes to Financial Statements (Continued)
December 31, 2013
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 inputs used to value the Fund’s investments as of December 31, 2013:
|
Sector
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
Communications
|
|
$
|
844,550
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
844,550
|
|
|
Consumer Discretionary
|
|
|
3,853,096
|
|
|
|
609,302
|
|
|
|
-
|
|
|
|
4,462,398
|
|
|
Consumer Staples
|
|
|
4,453,055
|
|
|
|
3,297,224
|
|
|
|
-
|
|
|
|
7,750,279
|
|
|
Energy
|
|
|
2,424,058
|
|
|
|
2,762,328
|
|
|
|
-
|
|
|
|
5,186,386
|
|
|
Financials
|
|
|
6,024,464
|
|
|
|
517,075
|
|
|
|
-
|
|
|
|
6,541,539
|
|
|
Health Care
|
|
|
1,234,872
|
|
|
|
2,930,132
|
|
|
|
-
|
|
|
|
4,165,004
|
|
|
Industrials
|
|
|
-
|
|
|
|
2,534,529
|
|
|
|
-
|
|
|
|
2,534,529
|
|
|
Materials
|
|
|
602,074
|
|
|
|
1,967,744
|
|
|
|
-
|
|
|
|
2,569,818
|
|
|
Utilities
|
|
|
480,759
|
|
|
|
-
|
|
|
|
-
|
|
|
|
480,759
|
|
|
Short-Term Investments
|
|
|
43,168
|
|
|
|
-
|
|
|
|
-
|
|
|
|
43,168
|
|
|
Total
|
|
$
|
19,960,096
|
|
|
$
|
14,618,334
|
|
|
$
|
-
|
|
|
$
|
34,578,430
|
|
It is the Fund’s policy to recognize transfers between Levels at the end of the period. In accordance with procedures established by, and under the general supervision of, the Fund’s Board of Trustees, at the end of the year, the Adviser valued securities at their fair value due to specific foreign markets observing holiday market closure. The Fund did not hold any Level 3 investments at December 31, 2013.
The following is a reconciliation of transfers between Levels from December 31, 2012 to December 31, 2013, represented by recognizing the December 31, 2013 fair value of securities previously classified as Level 2 as of December 31, 2012 that transferred hierarchies to Level 1 as of December 31, 2013:
|
Transfers into Level 1
|
|
$
|
15,550,593
|
|
|
Transfers out of Level 1
|
|
|
-
|
|
|
Net transfers in (out) of Level 1
|
|
$
|
15,550,593
|
|
|
Transfers into Level 2
|
|
$
|
-
|
|
|
Transfers out of Level 2
|
|
|
(15,550,593
|
)
|
|
Net transfers in (out) of Level 2
|
|
$
|
(15,550,593
|
)
|
Foreign Currency
– Investment securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at the date of valuation. Purchases and sales of investment securities and income and expense items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not isolate 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.
Cheswold Lane International High Dividend Fund - Annual Report - December 31, 2013
Cheswold Lane International High Dividend Fund
Notes to Financial Statements (Continued)
December 31, 2013
Reported net realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the fair value of assets and liabilities, other than investments in securities at fiscal year end, resulting from changes in exchange rates.
Federal Income Taxes
– The Fund’s policy is to comply with the requirements of Subchapter M of the Internal Revenue Code that are applicable to regulated investment companies and to distribute substantially all investment company taxable income and net capital gain to shareholders in a manner which results in no tax cost to the Fund. Therefore, no federal income tax provision is required.
Accounting for Uncertainty in Income Taxes
(the "Income Tax Statement") requires an evaluation of tax positions taken (or expected to be taken) in the course of preparing a Fund’s tax returns to determine whether these positions meet a “more-likely-than-not” standard that, based on the technical merits, have a more than fifty percent likelihood of being sustained by a taxing authority upon examination. A tax position that meets the “more-likely-than-not” recognition threshold is measured to determine the amount of benefit to recognize in the financial statements. The Fund recognizes interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the Statement of Operations.
The Income Tax Statement requires management of the Fund to analyze all open tax years 2010-2013, as defined by IRS statute of limitations for all major jurisdictions, including federal tax authorities and certain state tax authorities. As of and during the taxable year ended December 31, 2013, the Fund did not have a liability for any unrecognized tax benefits. The Fund has no examination in progress and is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
Securities Transactions and Investment Income
– Securities transactions are accounted for on a trade date basis. Realized gains and losses on sales of securities are calculated on the identified cost basis. Dividend income is recorded on the ex-dividend date net of foreign withholding taxes. Certain dividends from foreign securities may be recorded subsequent to the ex-dividend date as soon as the Fund is informed of such dividends. Interest income is recorded on an accrual basis.
Distributions to Shareholders
– Distributions to shareholders are recorded on the ex-dividend date. The Fund declares and pays dividends of net investment income, if any, semi-annually and distributes net realized gains, if any, annually. The character of distributions made during the year from net investment income or net realized gain may differ from the characterization for federal income tax purposes due to differences in the recognition of income, expense and gain/(loss) items for financial statement and tax purposes. Where appropriate, reclassifications between net asset accounts are made for such differences that are permanent in nature.
Redemption Fees
– Upon redemption of shares held 90 days or less, a redemption fee of 2% of the current NAV of the shares will be assessed and retained by the Fund for the benefit of the remaining shareholders. The redemption fee is accounted for as an addition to paid-in capital. There were no redemption fees paid to the Fund during the year ended December 31, 2013.
Cheswold Lane International High Dividend Fund - Annual Report - December 31, 2013
Cheswold Lane International High Dividend Fund
Notes to Financial Statements (Continued)
December 31, 2013
Guarantees and Indemnifications
– In the normal course of business, the Fund enters into contracts with service providers that contain general indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims against the Fund that have not yet occurred. Based on experience, the Fund expects the risk of loss to be remote.
Use of Estimates
– The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.
Subsequent Events
- E
vents and transactions
have been evaluated by management for
subsequent
events. Management has determined that there were no material events t
hat would require disclosure in
the Fund
’s
financial statements.
The Fund has an investment advisory agreement with the Adviser. Under the agreement, the Fund pays the Adviser a fee computed daily and payable monthly, fixed at 0.90% of the Fund’s average daily net assets.
The Adviser has contractually agreed to waive all or a portion of its management fees and/or reimburse expenses at least through April 30, 2014 in order to keep the Fund’s net annual fund operating expenses (excluding any taxes, interest, brokerage commissions and other costs relating to portfolio securities transactions (including the costs, fees and expenses associated with the Fund’s investments in other investment companies) and other extraordinary expenses) from exceeding 0.95% of its average daily net assets. After expense waivers, the management fee paid to the Adviser for the year ended December 31, 2013 was equal to 0.29% of the Fund’s average net assets.
The Fund paid $9,375 in fees for unaffiliated Trustees during the year ended December 31, 2013. No officer or Trustee who is affiliated with the Adviser currently receives any compensation from the Fund for acting as a Trustee or officer of the Fund.
Note 4.
Purchases and Sales of Securities
Purchases and sales of investment securities (excluding short-term securities) from January 1, 2013 to December 31, 2013 were $13,368,533 and $12,319,912, respectively.
Cheswold Lane International High Dividend Fund - Annual Report - December 31, 2013
Cheswold Lane International High Dividend Fund
Notes to Financial Statements (Continued)
December 31, 2013
Note 5.
Federal Income Tax Information
At December 31, 2013, gross unrealized appreciation and depreciation of investments owned by the Fund, based on cost for federal income tax purposes were as follows:
|
Cost of investments
|
|
$
|
28,256,768
|
|
|
Unrealized appreciation
|
|
|
6,952,326
|
|
|
Unrealized depreciation
|
|
|
(630,664
|
)
|
|
Net unrealized appreciation on investments
|
|
$
|
6,321,662
|
|
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 passive foreign investment companies.
As of December 31, 2013, the components of accumulated earnings (deficit) on a tax basis were as follows:
|
Undistributed ordinary income
|
|
$
|
144,976
|
|
|
Undistributed long-term gains
|
|
|
-
|
|
|
Tax accumulated earnings
|
|
|
144,976
|
|
|
Accumulated capital and other losses
|
|
|
(8,473,830
|
)
|
|
Unrealized appreciation on investments and foreign currency translations
|
|
|
6,325,686
|
|
|
Total accumulated earnings (deficit)
|
|
$
|
(2,003,168
|
)
|
The tax character of distributions paid during the fiscal year ended December 31, 2013 and fiscal year ended December 31, 2012 was as follows:
|
|
|
2013
|
|
|
2012
|
|
|
Distributions paid from ordinary income
|
|
$
|
1,251,341
|
|
|
$
|
667,479
|
|
|
Distributions paid from long-term capital gains
|
|
|
-
|
|
|
|
-
|
|
|
Total Distributions
|
|
$
|
1,251,341
|
|
|
$
|
667,479
|
|
Under the Regulated Investment Company Modernization Act of 2010 (the “Act”), the Fund is permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010, the date of the enactment of the Act, for an unlimited period. However, any losses incurred during those future taxable years are required to be utilized prior to the losses incurred in pre-enactment taxable years. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital losses that are carried forward will retain their character as either short-term or long-term capital losses rather than being considered all short-term as under previous law.
Cheswold Lane International High Dividend Fund - Annual Report - December 31, 2013
Cheswold Lane International High Dividend Fund
Notes to Financial Statements (Continued)
December 31, 2013
As of December 31, 2013, the Fund had accumulated capital loss carryforwards as follows:
|
|
|
Short-Term
|
|
|
Long-Term
|
|
|
Losses Expiring:
|
|
|
|
|
|
|
|
December 31, 2016
|
|
$
|
(2,383,443
|
)
|
|
$
|
-
|
|
|
December 31, 2017
|
|
|
(5,245,769
|
)
|
|
|
-
|
|
|
December 31, 2018
|
|
|
(402,406
|
)
|
|
|
-
|
|
|
Losses Not Subject to Expiration
|
|
|
-
|
|
|
|
(442,212
|
)
|
|
|
|
$
|
(8,031,618
|
)
|
|
$
|
(442,212
|
)
|
During the period ended December 31, 2013, the Fund utilized $995,089 of long-term non-expiring capital loss carryforwards.
Primarily as a result of differing book/tax treatment of foreign currency transactions and passive foreign investment companies, on December 31, 2013, undistributed net investment income was increased by $369,336, accumulated net realized loss on investments and foreign currency transactions was decreased by $369,337 and paid-in-capital was increased by $1. These reclassifications have no effect on the net assets of the Fund.
Note 6.
Risks and Concentrations
Because the Fund invests in foreign stocks, it will be affected by risks not typically associated with U.S. stocks. These risks include political and economic instability and different accounting and regulatory standards, as well as reduced liquidity and transparency compared to U.S. markets. In addition, the Fund will be subject to the risk that changes in the exchange rate between two currencies will adversely affect the value (in U.S. dollar terms) of an investment. Currency exchange rates may fluctuate significantly over short periods of time, causing (along with other factors) the Fund’s net asset value to fluctuate, which, in turn, may cause the value of the Fund’s shares to go up or down.
The Fund may invest an unlimited percent of the portfolio in dividend paying equity securities (including common, convertible and preferred stocks) of companies located in developed markets outside of the United States. The Fund considers foreign developed markets to consist of those countries that are represented in the MSCI EAFE
®
Index. As a result, the Fund may hold a concentrated amount of securities in a few countries at the discretion of the Adviser. Please see the “Portfolio Characteristics – Investments by Country” table for a percentage listing by country. Should the Adviser invest a concentrated amount of the portfolio in a few countries, the Fund will be particularly subject to the risks of investing in foreign stocks as described above.
As of December 31, 2013, the Fund had a shareholder that held 63.4% of the outstanding shares of the Fund. A significant redemption by this shareholder could affect the Fund’s liquidity and the future viability of the Fund. The shareholder is a retirement plan for a commercial entity in which the plan holds Fund shares for the benefit of the entity’s employees. The Fund is one of several investment options in the entity’s plan and employees are permitted to transfer some or all of their account balances into or out of the Fund at any time.
Cheswold Lane International High Dividend Fund - Annual Report - December 31, 2013
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees of Cheswold Lane Funds
and the Shareholders of Cheswold Lane International High Dividend Fund
We have audited the accompanying statement of assets and liabilities of Cheswold Lane International High Dividend Fund (the "Fund"), a series of Cheswold Lane Funds, including the schedule of investments, as of December 31, 2013, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period then ended and the financial highlights for each of the years in the five-year period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2013 by correspondence with the custodian. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Cheswold Lane International High Dividend Fund as of December 31, 2013, and the results of its operations for the year then ended, the changes in its net assets for each of the years in the two-year period then ended and the financial highlights for each of the years in the five-year period then ended, in conformity with accounting principles generally accepted in the United States of America.
|
|
|
|
|
BBD, LLP
|
Philadelphia, Pennsylvania
February 26, 2014
Cheswold Lane International High Dividend Fund - Annual Report - December 31, 2013
Cheswold Lane International High Dividend Fund
Expense Example
For the Period Ended December 31, 2013
(Unaudited)
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including redemption fees on certain redemptions; and (2) ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from July 1, 2013 to December 31, 2013 (the “Period”).
Actual Expenses
The first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses you paid over the Period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 equals 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During the Period” to estimate the expenses you paid on your account during the 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 funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as redemption fees. Therefore, the second line of the table is useful in comparing the ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs could have been higher.
Expenses Paid During the Period
|
|
Beginning account
value July 1, 2013
|
Ending account value
December 31, 2013
|
Expenses paid
during the period
ended
December 31, 2013
1
|
|
Actual Example
|
$1,000.00
|
$1,135.80
|
$5.10
|
|
Hypothetical Example, assuming a 5% return before expenses
|
1,000.00
|
1,020.22
|
4.83
|
|
1
|
Expenses are equal to the Fund’s annualized expense ratio of 0.95% multiplied by the average account value over the period, multiplied by 184/365 (to reflect the six-month period).
|
Cheswold Lane International High Dividend Fund - Annual Report - December 31, 2013
Cheswold Lane International High Dividend Fund
Trustee and Officer Information
(Unaudited)
|
Name,
Address and
Age as of
12/31/13
|
Position(s)
Held with
the Trust
|
Term of Office
and Length
of Time Served
|
Principal Occupation(s)
During Past 5 Years
|
Number of Portfolios in Fund Complex Overseen by Trustee
|
Other
Directorships
Held by
Trustee
|
|
Interested Trustee
|
|
|
|
|
|
|
Eric F. Scharpf *
Cheswold Lane Funds
100 Front Street
W. Conshohocken, PA 19428
Age: 44
|
Trustee, President
and Chief Executive Officer
|
Indefinite,
since 2006
|
Managing Partner, Cheswold Lane Asset Management, LLC (the “Adviser”), since 2006;
Partner/Senior Portfolio Manager,
Chartwell Investment Partners (2004-2005); P
ortfolio Manager/Research Analyst,
Miller Anderson & Sherrerd (an asset management company) (1997-2003)
|
1
|
None
|
|
Independent Trustees
|
|
Dr. George E. Boudreau
Cheswold Lane Funds
100 Front Street
W. Conshohocken, PA 19428
Age: 67
|
Trustee
|
Indefinite,
since 2006
|
Founder and Partner, the Pennsylvania Dental Group (1974 to present)
|
1
|
None
|
|
Eugenie G. Logue
Cheswold Lane Funds
100 Front Street
W. Conshohocken, PA 19428
Age: 44
|
Trustee
|
Indefinite,
since 2006
|
Principal,
Rosemont Investment Partners, LLC (a private equity firm), since 2002;
Associate,
SGI Capital (a private equity firm)
(1999 – 2002)
|
1
|
None
|
|
Stanley J. Koreyva, Jr.
Cheswold Lane Funds
100 Front Street
W. Conshohocken, PA 19428
Age: 54
|
Trustee
|
Indefinite,
since 2006
|
Executive Vice President and Chief Operating Officer, Amboy Bank, since 2004;
Chief Financial Officer, Amboy Bank
(1998-2004)
|
1
|
None
|
|
Michael M. Dewey
Cheswold Lane Funds
100 Front Street
W. Conshohocken, PA 19428
Age: 44
|
Trustee
|
Indefinite,
since 2013
|
Executive Director, Beach Investment Counsel, Inc., since 2012; Executive Director, LGL Partners (2011-2012); Managing Director, Defiance Asset Management, LLC, (2005-2011); Vice President, J.P. Morgan Private Bank, (1992-2005)
|
1
|
None
|
|
*
|
Mr. Scharpf is an “Interested Trustee” of Cheswold Lane Funds, as defined in the Investment Company Act of 1940, because he is the Managing Partner of the Adviser. Mr. Scharpf and Ms. Colleen Quinn Scharpf are married to each other.
|
Cheswold Lane International High Dividend Fund - Annual Report - December 31, 2013
The officers of
the Trust not named above are:
|
Name, Address and Age as
of 12/31/13
|
Position(s) Held
with the Trust
|
Length of
Time Served
|
Principal Occupation(s) During Past 5 Years
|
|
Matthew Taylor
Cheswold Lane Funds
100 Front Street
W. Conshohocken, PA 19428
Age: 41
|
Executive Vice President, Treasurer and Chief Financial Officer
|
Since 2006
|
Partner/Portfolio Manager, the Adviser, since 2006;
Partner/Portfolio Manager,
Chartwell Investment Partners (2004-2006);
Portfolio Manager/Research Analyst,
Miller Anderson & Sherrerd (an asset management company) (2000-2003)
|
|
Colleen Quinn Scharpf
Cheswold Lane Funds
100 Front Street
W. Conshohocken, PA 19428
Age: 44
|
Secretary and Chief Compliance Officer
|
Since 2006
|
President, Chief Operating Officer and Chief Compliance Officer, the Adviser, since 2006;
Director of Investments,
Board of Pensions of the Presbyterian Church (U.S.A.)
(2003-2006);
Senior Member,
Strategic Relationship Team,
Putnam Investments
(1996 – 2003)
|
The Statement of Additional Information contains additional information about the Fund’s trustees and is available, without charge, upon request by calling 1-800-771-4701.
Cheswold Lane International High Dividend Fund - Annual Report - December 31, 2013
Cheswold Lane International High Dividend Fund
Other Information
For the Period Ended December 31, 2013
(Unaudited)
Additional Tax Information
For the period ended December 31, 2013, 69.54% of dividends paid from net investment income from the Fund are designated as qualified dividend income.
Pursuant to Section 853 of the Internal Revenue Code of 1986, as amended, the Cheswold Lane International High Dividend Fund designates $861,611 of income derived from foreign sources and $51,265 of foreign taxes paid for the period ended December 31, 2013.
Of the ordinary income (including short-term capital gains) distributions made by the Cheswold Lane International High Dividend Fund during the year ended December 31, 2013, the proportionate share of income derived from foreign sources attributable to one share of stock, or the amount determined to be necessary, is $0.3754 and the proportionate share of foreign taxes attributable to one share of stock is $0.0223.
Proxy Voting
A description of the Fund’s proxy voting policies and procedures applicable to portfolio securities and a record of the Fund’s proxy votes for the most recent 12-month period ended June 30 are available without charge, upon request, by calling 1-800-632-1320 and on the Securities and Exchange Commission’s website at
www.sec.gov
. Information as of June 30 each year will generally be available by the following August 31.
Portfolio Holdings Disclosure
The Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. You may view the Fund’s Form N-Q on the SEC’s website at
www.sec.gov
. The Fund’s Form N-Q may also be reviewed and copied at the SEC’s Public Reference Room in Washington D.C. Information about the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330.
Cheswold Lane International High Dividend Fund - Annual Report - December 31, 2013
UMB Distribution Services, LLC, Distributor
803 West Michigan Street
Milwaukee, Wisconsin 53233