World Funds Trust N-CSRSCertified semi-annual shareholder report (management investment company)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES

ITEM 1.(a).  Reports to Stockholders. 

LDR Real Estate Value-Opportunity Fund Tailored Shareholder Report

LDR Real Estate Value-Opportunity Fund Tailored Shareholder Report

semi-annual Shareholder Report June 30, 2024 LDR Real Estate Value-Opportunity Fund Institutional Class Shares ticker: HLRRX

This semi-annual shareholder report contains important information about the LDR Real Estate Value-Opportunity Fund, Institutional Class Shares for the period January 1, 2024 to June 30, 2024. You can find additional information about the Fund at ldrfunds.com. You can also contact us at (800) 673-0550. Distributed by Foreside Fund Services, LLC.

What were the Fund costs for the period?

(based on a hypothetical $10,000 investment)

Fund Name	Costs of a $10,000 investment	Costs paid as a percentage of a $10,000 investment
LDR Real Estate Value-Opportunity Fund, Institutional Class Shares	$ 96.71¹	1.96%¹

¹ The advisor waived or reimbursed part of the Fund's total expenses. Had the advisor not waived or reimbursed expenses of the Fund, the Fund's costs would have been higher.

 

What did the Fund invest in?

(% of Net Assets as of June 30, 2024)

Sector Breakdown

Sector	% of Net Assets
DIVERSIFIED/OTHER	0.141
HEALTHCARE	0.127
INDUSTRIAL	0.042
MORTGAGE	0.061
OFFICE	0.075
RESIDENTIAL	0.196
RETAIL	0.192

Top Ten Holdings
The Real Estate Select Sector SPDR Fund	10.38 %
Healthcare Realty Trust, Inc.	6.46 %
Healthpeak Properties, Inc.	6.25 %
Urban Edge Properties	5.96 %
Kite Realty Group Trust	5.94 %
Independence Realty Trust, Inc.	5.76 %
UMH Properties, Inc.	5.45 %
Brixmor Property Group, Inc.	5.05 %
Howard Hughes Holdings, Inc.	4.99 %
Veris Residential, Inc.	4.76 %

How has the Fund changed?

CHANGES TO ANNUAL AND SEMI-ANNUAL REPORTS The Securities and Exchange Commission (SEC) has adopted rule and form amendments which have resulted in changes to the design and delivery of Annual and Semi-Annual Fund Reports (Reports). Reports are now streamlined to highlight key information. Certain information previously included in Reports, including financial statements, no longer appear in the Reports but will be available online within the Semi-Annual and Annual Financials and Other Information, delivered free of charge to shareholders upon request, and filed with the SEC. EXPENSE LIMITATION AGREEMENT DISCONTINUED Effective May 1, 2024, the adviser discontinued the Fund's expense limitation agreement, to which the adviser had agreed to waive its fees and reimburse expenses so that the Fund's total annual operating expenses did not exceed 1.00% of the Fund's daily net assets (with certain exceptions). Accordingly, the Fund's total operating expenses increased beginning May 1, 2024 without the effect of the expense limitation agreement in place.

 

For additional information about the Fund; including its prospectus, financial information, holdings and proxy information, visit ldrfunds.com.

Key Fund Statistics

(as of June 30, 2024)

Net Assets (Millions)	$ 11.79
Number of Holdings	23
Portfolio Turnover Rate	7.03 %

LDR Real Estate Value-Opportunity Fund Tailored Shareholder Report

LDR Real Estate Value-Opportunity Fund Tailored Shareholder Report

semi-annual Shareholder Report June 30, 2024 LDR Real Estate Value-Opportunity Fund Platform Class Shares ticker: HLPPX

This semi-annual shareholder report contains important information about the LDR Real Estate Value-Opportunity Fund, Platform Class Shares for the period January 1, 2024 to June 30, 2024. You can find additional information about the Fund at ldrfunds.com. You can also contact us at (800) 673-0550. Distributed by Foreside Fund Services, LLC.

What were the Fund costs for the period?

(based on a hypothetical $10,000 investment)

Fund Name	Costs of a $10,000 investment	Costs paid as a percentage of a $10,000 investment
LDR Real Estate Value-Opportunity Fund, Platform Class Shares	$ 114.41¹	2.32%¹

¹ The advisor waived or reimbursed part of the Fund's total expenses. Had the advisor not waived or reimbursed expenses of the Fund, the Fund's costs would have been higher.

 

What did the Fund invest in?

(% of Net Assets as of June 30, 2024)

Sector Breakdown

Sector	% of Net Assets
DIVERSIFIED/OTHER	0.141
HEALTHCARE	0.127
INDUSTRIAL	0.042
MORTGAGE	0.061
OFFICE	0.075
RESIDENTIAL	0.196
RETAIL	0.192

Top Ten Holdings
The Real Estate Select Sector SPDR Fund	10.38 %
Healthcare Realty Trust, Inc.	6.46 %
Healthpeak Properties, Inc.	6.25 %
Urban Edge Properties	5.96 %
Kite Realty Group Trust	5.94 %
Independence Realty Trust, Inc.	5.76 %
UMH Properties, Inc.	5.45 %
Brixmor Property Group, Inc.	5.05 %
Howard Hughes Holdings, Inc.	4.99 %
Veris Residential, Inc.	4.76 %

How has the Fund changed?

CHANGES TO ANNUAL AND SEMI-ANNUAL REPORTS The Securities and Exchange Commission (SEC) has adopted rule and form amendments which have resulted in changes to the design and delivery of Annual and Semi-Annual Fund Reports (Reports). Reports are now streamlined to highlight key information. Certain information previously included in Reports, including financial statements, no longer appear in the Reports but will be available online within the Semi-Annual and Annual Financials and Other Information, delivered free of charge to shareholders upon request, and filed with the SEC. EXPENSE LIMITATION AGREEMENT DISCONTINUED Effective May 1, 2024, the adviser discontinued the Fund's expense limitation agreement, to which the adviser had agreed to waive its fees and reimburse expenses so that the Fund's total annual operating expenses did not exceed 1.00% of the Fund's daily net assets (with certain exceptions). Accordingly, the Fund's total operating expenses increased beginning May 1, 2024 without the effect of the expense limitation agreement in place.

 

For additional information about the Fund; including its prospectus, financial information, holdings and proxy information, visit ldrfunds.com.

Key Fund Statistics

(as of June 30, 2024)

Net Assets (Millions)	$ 5.69
Number of Holdings	23
Portfolio Turnover Rate	7.03 %

ITEM 1.(b).  Not applicable.

Not applicable when filing a semi-annual report to shareholders.

Not applicable when filing a semi-annual report to shareholders.

Not applicable when filing a semi-annual report to shareholders.

Not applicable when filing a semi-annual report to shareholders. 

Not applicable.

Not applicable.

Reference Item 7 which includes remuneration paid to the Trustees in the Statement of Operations.

ADVISORY AGREEMENT RENEWAL

At a meeting held on June 25-26, 2024 (the “Meeting”), the Board of Trustees (the “Board”) of the World Funds Trust (the “Trust”) considered the renewal of the Investment Advisory Agreement (“Advisory Agreement”) between LDR Capital Management, LLC (“LDR”) and the Trust with respect to the LDR Real Estate Value-Opportunity Fund (the “Fund”). The Trust’s legal counsel (“Counsel”) discussed with the Trustees the types of information and factors that should be considered by the Board in order to make an informed decision regarding the approval of the continuation of the Advisory Agreement, including the following material factors: (i) the nature, extent, and quality of the services provided by LDR; (ii) the investment performance of the Fund and LDR; (iii) the costs of the services provided and profits realized by LDR from the relationship with the Fund; (iv) the extent to which economies of scale would be realized if the LDR Value Fund grows and whether advisory fee levels reflect those economies of scale for the benefit of the LDR Value Fund’s investors; and (v) LDR’s practices regarding possible conflicts of interest and other benefits to LDR from managing the Fund. The Board reflected on its discussions regarding the Advisory Agreement, the discontinuance of the expense limitation arrangements effective May 1, 2024 and the advisory services provided to the Fund by LDR with representatives of LDR during the Meeting. 

In assessing these factors and reaching its decisions, the Board took into consideration information specifically prepared and/or presented by LDR in connection with the approval process, including information presented to the Board in LDR’s presentation at the Meeting. The Board requested and was provided with information and reports relevant to the approval of the Advisory Agreement, including: (i) reports regarding the services and support provided to the Fund and its shareholders; (ii) presentations by management of LDR addressing the investment strategy, personnel and operations utilized in managing the Fund; (iii) disclosure information contained in LDR’s Form ADV; and (iv) a memorandum from Trust counsel that summarized the fiduciary duties and responsibilities of the Board in reviewing and approving the Advisory Agreement, including the material factors set forth above and the types of information included in each factor that should be considered by the Board in order to make an informed decision to renew the Advisory Agreement.

The Board also requested and received various informational materials including, without limitation: (i) documents containing information about LDR, including financial information, a description of its personnel and the services to be provided to the Fund, information on investment advice, performance, summaries of anticipated fund expenses, its compliance program, current legal matters, and other general information; (ii) comparative expense and performance information for other mutual funds with strategies similar to the Fund; (iii) the anticipated effect of size on the Fund’s performance and expenses; and (iv) benefits to be realized by LDR from its relationship with the Fund. The Board did not identify any particular information that was most relevant to its consideration to approve the Advisory Agreement and each Trustee may have afforded different weight to the various factors.

In deciding whether to approve the Advisory Agreement, the Trustees considered numerous factors, including:

(1)       The nature, extent, and quality of the services to be provided by LDR.

In this regard, the Board considered the responsibilities of LDR under the Advisory Agreement. The Board reviewed the services provided to the Fund by LDR including, without limitation: LDR’s procedures for formulating investment recommendations and assuring compliance with the Fund’s investment objective and limitations and its efforts to promote the Fund and grow its assets. The Board considered: LDR’s staffing, personnel, and methods of operating; the education and experience of LDR’s personnel as well as their specific skill set suited to continue implementing the Fund’s investment strategy; and the description of LDR’s compliance program, policies and procedures. The Board considered that LDR has extensive experience in managing REIT and real estate related portfolios. After reviewing the foregoing and further information from LDR, the Board concluded that the quality, extent, and nature of the services to be provided by LDR were satisfactory and adequate for the Fund.

(2)        Investment Performance of the Fund and LDR.

The Board noted that the one-year and five-year return for the Fund for the periods ended April 30, 2024, exceeded the return of its benchmark index, and the median of its peer group and Morningstar category; however, the Fund underperformed its benchmark index, peer group and Morningstar category medians for the three-year period ended April 30, 2024. The Trustees further noted that for the ten-year period ended April 30, 2024, the Fund outperformed its benchmark index but underperformed the category and peer group medians. The Trustees observed that the Fund’s peer group for the one-, three-, five-, and ten-year periods consisted of sixteen, sixteen, thirteen, and eleven mutual funds, respectively, with average net assets between approximately $30 million and approximately $236 million within the Morningstar Real Estate Category. The Board also compared the investment performance of a separately managed account advised by LDR with an investment objective similar to the Fund, noting that the Fund underperformed the separately managed account in the past year. The Trustees considered the reasons for the differences in the Fund’s performance as compared to the separately managed account, as reported by LDR, noting that the difference in performance was primarily attributable to differences in expenses. Based on these considerations, the Board concluded that the performance of the Fund was satisfactory.

In considering the costs of the services provided and profits realized by LDR from the relationship with the Fund, the Trustees considered LDR’s staffing, personnel, and methods of operating; the financial condition of LDR and the level of commitment to the Fund by LDR; the asset levels of the Fund; and the overall expenses of the Fund. The Trustees considered financial statements of LDR and discussed the financial stability and profitability of the firm. The Trustees considered the Fund’s advisory fee payable to LDR and that the Fund’s expense limitation agreement was discontinued effective May 1, 2024. Accordingly, the Fund’s expenses are higher without the effect of the expense limitation agreement.

The Board considered the fees and expenses of the Fund (including the advisory fee) relative to other funds comparable in terms of the type of fund, the nature of its investment strategy, its style of investment management, and its size, among other factors, as derived by Broadridge from Morningstar data. The Board noted that the Fund’s net expense ratio is higher than the median of its peer group and Morningstar category. The Trustees further noted that the Fund’s gross advisory fee is higher than its peer group and Morningstar category; however, the Trustees considered LDR’s representation that the advisory fee is appropriate given the differentiated, small capitalization focus of the Fund. The Trustees also compared the advisory fees charged to the Fund with the advisory fee charged to a separately managed account advised by LDR with an investment objective similar to that of the Fund. The Trustees noted the reasons for the differences in fees compared to the Fund, as reported by LDR. The separately managed account is charged an annual advisory fee of 0.60%, which is lower than the Fund’s advisory fee payable to LDR, and in line with current pricing levels within the public pension fund market. The Trustees further considered that the Fund was not profitable to LDR. Following this comparison and upon further consideration and discussion of the foregoing, the Board concluded that the fees to be paid to LDR by the Fund are fair and reasonable.

In this regard, the Trustees considered the Fund’s proposed fee arrangements with LDR. The Trustees observed that the advisory fee is the same as asset levels increase, so no economies of scale accrued to benefit Fund shareholders under the present fee structure. The Trustees further noted that Fund shareholders no longer benefit from the expense limitation agreement and therefore, as of May 1, 2024, shareholder expenses increased with the discontinuation of the expense limitation agreement. The Trustees considered LDRs representation to consider breakpoints in the advisory fee if Fund assets increase and that LDR is currently exploring various strategic options to increase Fund assets. Following further discussion of the Fund’s asset levels, expectations for growth under LDR’s management, and levels of fees, as well as the other contractual fee structures that were in place for the Fund, the Trustees determined that the Fund’s advisory fee arrangements, in light of all the facts and circumstances, were fair and reasonable.

(5)       Possible conflicts of interest and benefits derived by LDR.

In considering LDR’s practices regarding conflicts of interest, the Trustees evaluated the potential for conflicts of interest and considered such matters as the experience and ability of the advisory and compliance personnel assigned to the Fund, the basis for soft dollar payments with broker-dealers, and the basis of decisions to buy or sell securities for the Fund and/or other clients of LDR. The Trustees considered that LDR indicated that it may benefit from a more diversified product line and the ability to enhance the firm’s internal research capabilities through a soft-dollar relationship. Based on the foregoing, the Trustees determined that LDR’s standards and practices relating to the identification and mitigation of possible conflicts of interest were satisfactory.

After additional consideration of the factors delineated in the memorandum provided by Trust counsel and further discussion and careful review by the Board, the Trustees determined that the compensation payable under the Advisory Agreement was fair, reasonable and within a range of what could have been negotiated at arms-length in light of all the surrounding circumstances, and the Board approved the Advisory Agreement for a one-year period.

Not applicable.

 
 Not applicable.

Not applicable to this Registrant because it is not a closed-end management investment company.

There have been no material changes to the procedures by which shareholders may recommend nominees to the registrant’s board of trustees.

(a) The registrant’s principal executive and principal financial officers, or persons performing similar functions, 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 (the “1940 Act”) (17 CFR 270.30a-3(c))) are effective, as of a date within 90 days of the filing date of the report that includes the disclosure required by this paragraph, based on their evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or 240.15d- 15(b)).

(b) There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR 270.30a-3(d)) that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.

Not applicable.

Not applicable.

SIGNATURES

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

Registrant:   World Funds Trust

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

* Print the name and title of each signing officer under his or her signature.