N-CSR 1 mundovaln-csr12312023.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 811-21596

MUNDOVAL FUNDS
(Exact name of registrant as specified in charter)

7855 Ivanhoe Avenue, #210, La Jolla, CA 92037
(Address of principal executive offices) (Zip code)

Arthur Q. Johnson
Mundoval Funds
7855 Ivanhoe Avenue, #210, La Jolla, CA 92037
(Name and address of agent for service)

 

Registrant’s telephone number, including area code: (858) 454-4837

Date of fiscal year end: December 31

Date of reporting period: December 31, 2023

 

Item 1. Report to Stockholders.

Mundoval Fund

ANNUAL REPORT

December 31, 2023                                                                                 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mundoval Fund
Annual Report
December 31, 2023


Dear Shareholders,

For the year ended December 31, 2023, the Mundoval Fund (the “Fund”) returned 15.78% versus 23.79% for the MSCI World Index. Since inception on September 3, 2004, the average annualized rate of return through December 31, 2023, for the Mundoval Fund was 7.51% versus 7.97% for the MSCI World Index.

Assets under management in the Fund as of December 31, 2023, were $25.68 million. During the year shares of Alibaba Group Holding, Tyson Foods Inc. and Meta Platforms were sold because the investment adviser believed them to be either fairly valued or determined that there were more attractive businesses to be purchased. New security positions for the year included Northrup Grumman Corp. and Elevance Health Inc. The geographic diversification of the Fund as of December 31, 2023, was 65.30% domestic stocks, 28.75% international stocks and 5.95% net cash equivalents. As of December 31, 2023, the Fund owned shares of common stock in 36 companies.

At the beginning of 2023 investors were focused on rising inflation and the uncertainty of continued interest rate increases by the Federal Reserve. By the fourth quarter, inflation had decreased sufficiently for the Federal Reserve to announce in December that it would hold interest rates steady. As a result of the improved economic conditions, the S&P 500 stock index increased by more than 25% in 2023. Seven technology centric businesses in the S&P 500 index, the so-called “Magnificent Seven,” represented 30% of its market capitalization and contributed nearly one-half of the overall gain for the index by year end. International stocks in developed markets, as measured by the MSCI EAFE Index, returned 18.42% for the year.

Mastercard reported during the third quarter that transactions increased by more than 30% on a year-over-year basis as consumer spending and cross-border travel remained resilient. Elevance Health announced that the company has achieved a compound annual growth rate of nearly 16% in reported earnings per share since 2018, surpassing its long-term target range of 12% to 15%. In addition, the company repurchased 5.8 million shares of its common stock in 2023 at a total cost of $2.7 billion. Internet search remained the largest contributor to revenue growth for Alphabet, Inc. after it reported consolidated revenue of $309 billion in 2023, an increase of 9% year-over-year. The company utilized $69 billion of free cash flow to repurchase $62 billion of its common stock during the year. Bank of America added 600,000 net new checking accounts during 2023 and reported that 67% of its customer deposit balances have been with the bank for ten years or longer.

Thank you for your business & continued support.

Sincerely yours,

Arthur Q. Johnson, CFA
Portfolio Manager

 

 

 

2023 Annual Report 1

Mundoval Fund                                                                                           


PERFORMANCE INFORMATION (Unaudited)

AVERAGE ANNUAL RATE OF RETURN (%) FOR PERIODS ENDED DECEMBER 31, 2023.

December 31, 2023 NAV $25.18

  1 Year(A)   3 Years(A)   5 Years(A)   7 Years(A)   10 Years(A)  
Mundoval Fund  15.78%   5.09%   12.84%   10.36%   6.93%  
MSCI World Index(B)  23.79%   7.27%   12.80%   10.72%   8.60%  

The Fund’s Total Annual Operating Expense Ratio per the May 1, 2023 prospectus (before any fee waiver) is 1.51%; 1.50% post waiver. The Total Annual Operating Expense Ratio may not correlate to the expense ratio in the Fund’s financial highlights because (a) the financial highlights only include the direct operating expenses incurred by the Fund, not the indirect costs of investing in the Fund, and (b) the impact of the management fee waiver that is outlined in Note 4.

(A) 1 Year, 3 Years, 5 Years, 7 Years and 10 Years returns include change in share prices and in each case includes reinvestment of any dividends and capital gain distributions. The inception date of the Mundoval Fund was September 3, 2004.

(B) The MSCI World Index is a free float-adjusted market capitalization index that is designed to measure global developed market equity performance in twenty-three countries in Europe, Australia, Asia, the Far East and North America.

PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. RETURNS DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. TO OBTAIN PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH END, PLEASE CALL 1-800-595-2877.

 

2023 Annual Report 2

Expense Example (Unaudited)

Shareholders of this Fund incur ongoing expenses consisting solely of management fees, net of applicable waivers. Although the Fund charges no sales loads or transaction fees, you will be assessed fees for outgoing wire transfers, returned checks and stop payment orders at prevailing rates charged by Mutual Shareholder Services, LLC, the Fund’s transfer agent. IRA accounts will be charged an $8.00 annual maintenance fee. Additionally, your account will be indirectly subject to the expenses of any underlying funds. The following example is intended to help you understand your ongoing costs of investing in the Fund and to compare these costs with similar costs of investing in other mutual funds. The example is based on an investment of $1,000 invested in the Fund on July 1, 2023, and held through December 31, 2023.

Actual Expenses

The first line of the table below provides information about actual account values and actual expenses. In order to estimate the expenses a shareholder paid during the period covered by this report, shareholders can divide their account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6) and then multiply the result by the number in the first line under the heading entitled “Expenses Paid 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 paid by a shareholder for the period. Shareholders may use this information to compare the ongoing costs of investing in this Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in other funds' shareholder reports.

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 the charges assessed by Mutual Shareholder Services, LLC as described above, or the expenses of underlying funds. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

            Expenses Paid 
    Beginning    Ending    During the Period* 
    Account Value    Account Value    July 1, 2023 to 
    July 1, 2023    December 31, 2023    December 31, 2023 
 
Actual    $1,000.00    $1,012.85    $7.61 
 
Hypothetical    $1,000.00    $1,017.64    $7.63 
(5% annual return             
before expenses)             

*      Expenses are equal to the Fund’s annualized expense ratio of 1.50%, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period ended December 31, 2023).
 

 

2023 Annual Report 3

Mundoval Fund
by Industry Sectors (as a percentage of Net Assets)
as of December 31, 2023
(Unaudited)


*Net Cash represents cash equivalents and liabilities in excess of other assets.

Availability of Quarterly Schedule of Investments (Unaudited)

The Fund publicly files its complete schedule of portfolio holdings with the Securities and Exchange Commission (“SEC”) for the first and third quarters of each fiscal year on Form N-PORT. The Fund’s Forms N-PORT are available on the SEC’s website at http://www.sec.gov.

Proxy Voting Guidelines (Unaudited)

Mundoval Capital Management, Inc., the Fund’s Adviser, is responsible for exercising the voting rights associated with the securities held by the Fund. A description of the policies and procedures used by the Adviser in fulfilling this responsibility is available without charge by calling our toll free number (1-800-595-2877) or by visiting the Fund’s website at www.mundoval.com. This information is also included in the Fund’s Statement of Additional Information, which is available on the SEC’s website at http://www.sec.gov.

Form N-PX provides information regarding how the Fund voted proxies with regards to portfolio securities held during the most recent 12-month period ended June 30th and is available without charge, upon request, by calling our toll free number (1-800-595-2877). This information is also available on the SEC’s website at http://www.sec.gov.

 

2023 Annual Report 4

 
Mundoval Fund         
 
    Schedule of Investments
    December 31, 2023
Shares    Fair Value  % of Net Assets
COMMON STOCKS         
Aerospace & Defense         
           3,500 Airbus SE **  $ 134,995  0.53 % 
Aircraft Engines & Engine Parts         
             800 Honeywell International Inc.    167,768     
           4,000 RTX Corp.    336,560     
    504,328  1.96 % 
Beverages         
           4,000 Diageo PLC **    582,640     
         12,000 LVMH Moët Hennessy Louis Vuitton **    1,949,400     
    2,532,040  9.86 % 
Cable & Other Pay Television Services         
           2,064 The Walt Disney Company *    186,359  0.73 % 
Electronic Computers         
         10,000 Apple Inc.    1,925,300  7.50 % 
Fabricated Rubber Products, NEC         
             400 West Pharmaceutical Services, Inc.    140,848  0.55 % 
Fire, Marine & Casualty Insurance         
           1,600 Berkshire Hathaway Inc. Class B *    570,656  2.22 % 
Food and Kindred Products         
           6,000 Nestlé S.A. **    693,780  2.70 % 
Guided Missiles & Space Vehicles & Parts         
             700 Lockheed Martin Corporation    317,268  1.24 % 
Hospital & Medical Service Plans         
             400 Elevance Health, Inc.    188,624  0.73 % 
Industrial Inorganic Chemicals         
             400 Linde PLC (United Kingdom)    164,284  0.64 % 
Interactive Media & Services         
           2,000 Tencent Holdings Limited **    75,580  0.29 % 
National Commercial Banks         
         25,000 Bank of America Corporation    841,750     
             500 Capital One Financial Corporation    65,560     
    907,310  3.53 % 
Perfumes, Cosmetics & Other Toilet Preparations         
           5,000 The Estée Lauder Companies Inc. Class A    731,250  2.85 % 
Pharmaceutical Preparations         
           2,000 Merck & Co.    218,040     
         20,000 Novo Nordisk A/S **    2,069,000     
         11,500 Roche Holding Ltd. **    416,645     
    2,703,685  10.53 % 
Plastic Material, Synth Resin/Rubber, Cellulose (No Glass)         
             200 Celanese Corporation    31,074  0.12 % 
Retail - Family Clothing Stores         
         12,000 The TJX Companies, Inc.    1,125,720  4.38 % 
Retail - Variety Stores         
             100 Costco Wholesale Corporation    66,008  0.26 % 
Rubber & Plastics Footwear         
           8,000 NIKE, Inc. Class B    868,560  3.38 % 
Search, Detection, Navigation, Guidance, Aeronautical Systems         
             400 Northrop Grumman Corp.    187,256  0.73 % 
Security Brokers, Dealers & Flotation Companies         
             150 BlackRock, Inc.    121,770  0.47 % 


 

* Non-Income Producing Securities.
** ADR - American Depositary Receipt.

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

2023 Annual Report 5

Mundoval Fund
 
    Schedule of Investments
    December 31, 2023
Shares    Fair Value     % of Net Assets  
COMMON STOCKS           
Security & Commodity Brokers, Dealers, Exchanges & Services           
           6,500 T. Rowe Price Group, Inc.  $ 699,985   2.73 % 
Semiconductors & Related Devices           
           2,000 Intel Corporation    100,500      
           7,500 Taiwan Semiconductor Manufacturing Company Ltd. **    780,000      
    880,500   3.43 % 
Services - Business Services, NEC           
           7,000 MasterCard Incorporated Class A    2,985,570      
             700 Visa Inc. Class A    182,245      
    3,167,815   12.33 % 
Services - Computer Programming, Data Processing, Etc.           
         14,000 Alphabet Inc. Class A *    1,955,660      
         12,000 Alphabet Inc. Class C *    1,691,160      
    3,646,820   14.20 % 
Services - Prepackaged Software           
              600 Microsoft Corporation    225,624   0.88 % 
Soap, Detergents, Cleaning Preparations, Perfumes, Cosmetics           
           6,000 Unilever PLC **    290,880   1.13 % 
Special Industry Machinery, NEC           
             300 ASML Holding N.V. **    227,076   0.88 % 
Sugar & Confectionery Products           
           4,500 The Hershey Company    838,980   3.27 % 
Total for Common Stocks (Cost - $8,185,168)    24,154,375   94.05 % 
Money Market Funds           
1,543,972 Invesco Short-Term Investments Trust Treasury           
                         Portfolio Institutional Class 5.27% ***    1,543,972   6.01 % 
(Cost - $1,543,972)           
                       Total Investment Securities    25,698,347   100.06 % 
(Cost - $9,729,140)           
                       Liabilities in Excess of Other Assets    (14,631 )  -0.06 % 
                       Net Assets  $ 25,683,716   100.00 % 
 
 
 
 
SUMMARY OF COMMON STOCKS BY COUNTRY           
        % of Common  
    Fair Value   Stocks  
China  $ 75,580   0.31 % 
Denmark    2,069,000   8.57 % 
France    1,949,400   8.07 % 
Netherlands    362,071   1.50 % 
Switzerland    1,110,425   4.60 % 
Taiwan    780,000   3.23 % 
United Kingdom    1,037,804   4.30 % 
United States    16,770,095   69.42 % 
  $ 24,154,375   100.00 % 


 

* Non-Income Producing Securities.
** ADR - American Depositary Receipt.
*** The yield shown represents the 7-day yield at December 31, 2023.

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

2023 Annual Report 6

Mundoval Fund
 
Statement of Assets and Liabilities       
   December 31, 2023       
 
Assets:       
   Investment Securities at Fair Value  $ 25,698,347  
         (Cost - $9,729,140)       
   Dividends Receivable    17,661  
            Total Assets    25,716,008  
Liabilities:       
   Payable to Adviser    32,292  
            Total Liabilities    32,292  
Net Assets  $ 25,683,716  
 
Net Assets Consist of:       
   Paid In Capital  $ 9,238,526  
   Total Distributable Earnings    16,445,190  
Net Assets, for 1,019,881 Shares Outstanding  $ 25,683,716  
 (Without par value, unlimited shares authorized)       
Net Asset Value, Offering and Redemption Price       
   Per Share ($25,683,716/1,019,881 shares)  $ 25.18  
Statement of Operations
   For the fiscal year ended December 31, 2023
 
Investment Income:       
   Dividends (Net of foreign withholding taxes of $15,138*)  $ 371,934  
         Total Investment Income    371,934  
Expenses:       
   Management Fees    375,898  
         Total Expenses    375,898  
   Less: Expenses Waived    (878 ) 
         Net Expenses    375,020  
 
Net Investment Loss    (3,086 ) 
 
Net Realized and Unrealized Gain on Investments:       
   Net Realized Gain on Investments    1,261,600  
   Change in Net Unrealized Appreciation on Investments    2,348,365  
Net Realized and Unrealized Gain on Investments    3,609,965  
 
Net Increase in Net Assets from Operations  $ 3,606,879  


 

* Foreign withholding taxes on foreign dividends have been provided for in accordance with
the Fund’s understanding of the applicable countries’ tax rules and rates.

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

2023 Annual Report 7

Mundoval Fund
 
Statements of Changes in Net Assets             
    1/1/2023     1/1/2022  
    to     to  
    12/31/2023     12/31/2022  
From Operations:             
   Net Investment Income/(Loss)  $ (3,086 )  $ (58,529 ) 
   Net Realized Gain on Investments    1,261,600     658,591  
   Change in Net Unrealized Appreciation on Investments    2,348,365     (5,996,445 ) 
   Increase/(Decrease) in Net Assets from Operations    3,606,879     (5,396,383 ) 
From Distributions to Shareholders:    (787,763 )    (656,445 ) 
From Capital Share Transactions:             
   Proceeds From Sale of Shares    113,144     228,075  
   Shares Issued on Reinvestment of Dividends    302,736     252,861  
   Cost of Shares Redeemed    (495,650 )    (1,461,841 ) 
Net Decrease from Shareholder Activity    (79,770 )    (980,905 ) 
 
Net Increase/(Decrease) in Net Assets    2,739,346     (7,033,733 ) 
 
Net Assets at Beginning of Year    22,944,370     29,978,103  
Net Assets at End of Year  $ 25,683,716   $ 22,944,370  
 
Share Transactions:             
   Issued    4,616     9,505  
   Reinvested    12,153     11,385  
   Redeemed    (20,041 )    (57,630 ) 
Net Decrease in Shares    (3,272 )    (36,740 ) 
Shares Outstanding Beginning of Year    1,023,153     1,059,893  
Shares Outstanding End of Year    1,019,881     1,023,153

Financial Highlights                               
Selected data for a share outstanding                               
 throughout each year:    1/1/2023     1/1/2022     1/1/2021     1/1/2020     1/1/2019  
    to     to     to     to     to  
    12/31/2023     12/31/2022     12/31/2021     12/31/2020     12/31/2019  
Net Asset Value -                               
   Beginning of Year  $ 22.43   $ 28.28   $ 24.10   $ 22.02   $ 16.13  
Net Investment Income/(Loss) (a)    -   +   (0.06 )    (0.10 )    (0.05 )    0.06  
Net Gain/(Loss) on Investments                               
   (Realized and Unrealized)    3.53     (5.14 )    5.57     3.30     5.94  
Total from Investment Operations    3.53     (5.20 )    5.47     3.25     6.00  
 
Distributions (From Net Investment Income)    -     -     -     (0.03 )    (0.06 ) 
Distributions (From Realized Capital Gains)    (0.78 )    (0.65 )    (1.29 )    (1.14 )    (0.05 ) 
   Total Distributions    (0.78 )    (0.65 )    (1.29 )    (1.17 )    (0.11 ) 
 
Net Asset Value -                               
   End of Year  $ 25.18   $ 22.43   $ 28.28   $ 24.10   $ 22.02  
Total Return (b)    15.78 %   (18.38 )%      22.81 %   14.86 %   37.23 % 
Ratios/Supplemental Data                               
Net Assets - End of Year (Thousands)  $ 25,684   $ 22,944   $ 29,978   $ 25,020   $ 25,288  
Before Waiver                               
 Ratio of Expenses to Average Net Assets    1.50 %   1.50 %    1.50 %   1.50 %   1.50 % 
After Waiver                               
 Ratio of Expenses to Average Net Assets    1.50 %   1.49 %    1.48 %   1.50 %   1.50 % 
 Ratio of Net Investment Income/(Loss) to                               
   Average Net Assets    -0.01 %   -0.24 %    -0.36 %   -0.24 %   0.29 % 
Portfolio Turnover Rate    2.52 %   6.42 %    5.03 %      2.30 %       9.14 % 

+ Per share amount less than +/- $0.005.
(a) Per share amounts were calculated using the average shares method.
(b) Total return in the above table represents the rate that the investor would have earned or lost on an invest-
ment in the Fund assuming reinvestment of dividends and distributions.

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

2023 Annual Report 8

NOTES TO FINANCIAL STATEMENTS
MUNDOVAL FUND
December 31, 2023


1.) ORGANIZATION
The Mundoval Fund (the “Fund”) is a diversified series of the Mundoval Funds (the “Trust”), an open-end management investment company. The Trust was organized in Ohio as a business trust on March 24, 2004, and may offer shares of beneficial interest in a number of separate series, each series representing a distinct fund with its own investment objectives and policies. The Trust is registered as an open-end management investment company under the Investment Company Act of 1940, as amended (the “1940 Act”). The Fund commenced operations on September 3, 2004. The Fund’s investment objective is long-term capital appreciation.

2.) SIGNIFICANT ACCOUNTING POLICIES
The Fund is an investment company and accordingly follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 946 Financial Services - Investment Companies. The financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The Fund follows the significant accounting policies described in this section.

SECURITY VALUATION: All investments in securities are valued as described in Note 3.

SHARE VALUATION: The net asset value (the “NAV”) is generally calculated as of the close of trading on the New York Stock Exchange (the “Exchange”) (normally 4:00 p.m. Eastern time) every day the Exchange is open. The NAV is calculated by taking the total value of the Fund’s assets, subtracting its liabilities, and then dividing by the total number of shares outstanding, rounded to the nearest cent. The offering price and redemption price per share are equal to the net asset value per share.

FEDERAL INCOME TAXES: The Fund’s policy is to continue to comply with the requirements of the Internal Revenue Code that are applicable to regulated investment companies and to distribute all of its taxable income to shareholders. Therefore, no Federal income tax provision is required. It is the Fund’s policy to distribute annually, prior to the end of the calendar year, dividends sufficient to satisfy excise tax requirements of the Internal Revenue Code. This Internal Revenue Code requirement may cause an excess of distributions over the book year-end accumulated income. In addition, it is the Fund’s policy to distribute annually, after the end of the fiscal year, any remaining net investment income and net realized capital gains.

The Fund recognizes the tax benefits of certain tax positions only where the position is “more likely than not” to be sustained assuming examination by tax authorities. Management has analyzed the Fund’s tax positions, and has concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions taken on returns filed for open tax years. The Fund identifies its major tax jurisdictions as U.S. Federal and California tax authorities; however the Fund is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next twelve months. The Fund recognizes interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the Statement of Operations. During the fiscal year ended December 31, 2023, the Fund did not incur any interest or penalties.

DISTRIBUTIONS TO SHAREHOLDERS: Distributions to shareholders, which are determined in accordance with income tax regulations, are recorded on the ex-dividend date. The treatment for financial reporting purposes of distributions made to shareholders during the year from net investment income or net realized capital gains may differ from their ultimate treatment for Federal income tax purposes. These differences are caused primarily by differences in the timing of the recognition of certain components of income, expenses or realized capital gain for Federal income tax purposes. Where such differences are permanent in nature, they are reclassified in the components of the net assets based on their ultimate characterization for Federal income tax purposes. Any such reclassifications will have no effect on net assets, results of operations or net asset values per share of the Fund.

USE OF ESTIMATES: The financial statements are prepared in accordance with GAAP, which 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.

 

2023 Annual Report 9

Notes to Financial Statements - continued

OTHER: The Fund records security transactions based on trade date. Dividend income is recognized on the ex-dividend date. Interest income, if any, is recognized on an accrual basis. The Fund uses the specific identification method in computing gain or loss on sale of investment securities. Withholding taxes on foreign dividends have been provided for in accordance with the Fund’s understanding of the applicable country’s tax rules and regulations.

3.) SECURITY VALUATIONS
The Fund utilizes various methods to measure the fair value of its investments on a recurring basis. GAAP establishes a hierarchy that prioritizes inputs to valuation methods. The three levels of inputs are:

Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities that the Fund has the ability to access.

Level 2 – Observable inputs other than quoted prices included in level 1 that are observable for the asset or liability, either directly or indirectly. These inputs may include quoted prices for the identical instrument in an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates and similar data.

Level 3 – Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available, representing the Fund’s own assumptions about the assumptions a market participant would use in valuing the asset or liability, and would be based on the best information available.

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.

FAIR VALUE MEASUREMENTS
A description of the valuation techniques applied to the Fund’s major categories of assets measured at fair value on a recurring basis follows.

Equity securities (common stocks, including ADRs). Equity securities generally are valued by using market quotations but may be valued on the basis of prices furnished by a pricing service when the Valuation Committee believes such prices accurately reflect the fair market value of such securities. Securities that are traded on any stock exchange or on the NASDAQ over-the-counter market are generally valued by the pricing service at the last quoted sale price. Lacking a last sale price, an equity security is generally valued by the pricing service at its last bid price. Generally, if the security is traded in an active market and is valued at the last sale price, the security is categorized as a level 1 security, and if an equity security is valued by the pricing service at its last bid, it is generally categorized as a level 2 security. When market quotations are not readily available, when the Valuation Committee determines that the market quotation or the price provided by the pricing service does not accurately reflect the current market value, or when restricted or illiquid securities are being valued, such securities are valued pursuant to the Trust's Fair Value Pricing procedures. The Trust’s Valuation Committee consists of the Trust’s independent trustees, and the Fund’s portfolio manager as a nonvoting member.

Money market funds. Money market funds are valued at net asset value provided by the funds and are classified in level 1 of the fair value hierarchy.

In accordance with the Trust's Valuation and Fair Value Pricing Policies and Procedures, it is incumbent upon the Valuation Committee to consider all appropriate factors relevant to the value of securities for which market quotations are not readily available. No single standard for determining fair value can be established, since fair value depends upon the circumstances of each individual case. As a general principle, the current fair value of an issue of securities being valued by the Valuation Committee would appear to be the amount that the owner might reasonably expect to receive for them upon their current sale. Methods that are in accordance with this principle may, for example, be based on (i) a multiple of earnings; (ii) a discount from market of a simi-

 

2023 Annual Report 10

Notes to Financial Statements - continued

lar freely traded security (including a derivative security or a basket of securities traded on other markets, exchanges or among dealers); or (iii) yield to maturity with respect to debt issues, or a combination of these or other methods.

The following table summarizes the inputs used to value the Fund’s assets measured at fair value as of December 31, 2023:

Valuation Inputs of Assets    Level 1    Level 2    Level 3    Total 
Common Stocks    $24,154,375    $0    $0    $24,154,375 
Money Market Funds       1,543,972      0      0        1,543,972 
Total    $25,698,347    $0    $0    $25,698,347 

The Fund did not hold any Level 3 assets during the fiscal year ended December 31, 2023.

The Fund did not invest in derivative instruments during the fiscal year ended December 31, 2023.

4.) INVESTMENT ADVISORY AGREEMENT
The Trust, on behalf of the Fund has entered into an investment advisory agreement (the “Management Agreement”) with Mundoval Capital Management, Inc. (the “Adviser”). Under the terms of the Management Agreement, the Adviser manages the investment portfolio of the Fund, subject to policies adopted by the Trust’s Board. Under the Management Agreement, the Adviser, at its own expense and without reimbursement from the Trust, furnishes office space and all necessary office facilities, equipment and executive personnel necessary for managing the assets of the Fund. The Adviser also pays the salaries and fees of all of its officers and employees that serve as officers and trustees of the Trust. The Adviser pays all operating expenses of the Fund with the exception of taxes, brokerage fees and commissions, acquired fund fees and expenses, borrowing costs (such as (a) interest and (b) dividend expenses on securities sold short), and extraordinary expenses. For its services, the Adviser receives an annual investment management fee payable monthly from the Fund of 1.50% of the average daily net assets of the Fund. The Adviser has agreed to waive, without recoupment, a portion of its management fee (the “Fee Waiver”) so that the management fee, on an annual basis, does not exceed (i) 1.25% of the Fund’s average daily net assets greater than $25 million and up to and including $75 million, and (ii) 1.00% of the Fund’s average daily net assets greater than $75 million. The Fee Waiver will automatically terminate on April 30, 2024, unless it is renewed by the Adviser. The Adviser may not terminate the Fee Waiver before April 30, 2024. For the fiscal year ended December 31, 2023, the Adviser earned management fees totaling $375,898, of which $32,292 was payable to the Adviser as of December 31, 2023. For the fiscal year ended December 31, 2023, the Adviser waived fees and/or reimbursed expenses in the amount of $878 with no recapture provision.

Arthur Q. Johnson is the control person of the Adviser and also serves as a trustee/officer of the Trust. This individual receives benefits from the Adviser resulting from management fees paid to the Adviser by the Fund.

5.) RELATED PARTY TRANSACTIONS
The Trustees who are not interested persons of the Fund were paid $1,500 each, for a total of $4,500, in Trustees fees by the Adviser for the fiscal year ended December 31, 2023. Under the Management Agreement, the Adviser pays these fees.

6.) INVESTMENTS
For the fiscal year ended December 31, 2023, purchases and sales of investment securities other than U.S. Government obligations and short-term investments aggregated $603,275 and $2,176,322, respectively. There were no purchases or sales of U.S. Government obligations.

7.) CONTROL OWNERSHIP
The beneficial ownership, either directly or indirectly, of more than 25% of the voting shares of a fund creates a presumption of control of a fund, under Section 2(a)(9) of the 1940 Act. As of December 31, 2023, Arthur Q. Johnson and immediate family members, located at 7855 Ivanhoe Ave., Suite 210, La Jolla, California, beneficially held 65.66% of the Fund, and therefore may be deemed to control the Fund. Mr. Johnson is the President of the Adviser and serves as a Trustee of the Trust.

8.) TAX MATTERS
For federal income tax purposes, the cost of investments owned at December 31, 2023, was $9,729,140. At December 31, 2023, the composition of unrealized appreciation (the excess of value over tax cost) and depreciation (the excess of tax cost over value) was as follows:

 

2023 Annual Report 11

Notes to Financial Statements - continued    
     
  Appreciation    (Depreciation)   Net Appreciation (Depreciation) 
  $15,973,851    ($4,644)    $15,969,207 

The tax character of distributions paid during the years shown below were as follows:

    Year Ended    Year Ended 
    December 31, 2023    December 31, 2022 
Ordinary Income    $            –    $            – 
Long-Term Capital Gain         787,763        656,445 
    $   787,763    $   656,445 

As of December 31, 2023, the components of distributable earnings (accumulated losses) on a tax basis were as follows:

Accumulated Undistributed Long-Term Capital Gains    $     475,983 
Unrealized Appreciation      15,969,207 
    $ 16,445,190 

As of December 31, 2023, there were no differences between book and tax basis unrealized appreciation.

As of December 31, 2023, total distributable earnings was increased by $3,086 and paid in capital was decreased by $3,086. The adjustment was primarily related to the reclassification of net operating loss.

9.) CONCENTRATION OF SECTOR RISK
If the Fund has significant investments in the securities of issuers in industries within a particular sector, any development affecting that sector will have a greater impact on the value of the net assets of the Fund than would be the case if the Fund did not have significant investments in that sector. In addition, this may increase the risk of loss of an investment in the Fund and increase the volatility of the Fund’s NAV per share. From time to time, circumstances may affect a particular sector and the companies within such sector. For instance, economic or market factors, regulation or deregulation, and technological or other developments may negatively impact all companies in a particular sector and therefore the value of a Fund’s portfolio will be adversely affected. As of December 31, 2023, the Fund had 25.02% of the value of its net assets invested in stocks within the Information Technology sector.

10.) SUBSEQUENT EVENTS
Subsequent events after the date of the Statement of Assets and Liabilities have been evaluated through the date the financial statements were issued. Management has concluded that there is no impact requiring adjustment to or disclosure in the financial statements.

 

 

 

2023 Annual Report 12

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Trustees of
Mundoval Funds

Opinion on the Financial Statements

We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Mundoval Funds comprising Mundoval Fund (the “Fund”) as of December 31, 2023, the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the related notes, and the financial highlights for each of the five years in the period then ended (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 December 31, 2023, the results of its operations for the year then ended, the changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, 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.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2023, by correspondence with the custodian. 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. We believe that our audits provide a reasonable basis for our opinion.

We have served as the Fund’s auditor since 2004.


COHEN & COMPANY, LTD.
Milwaukee, Wisconsin
February 15, 2024

 

 

2023 Annual Report 13

TRUSTEES AND OFFICERS
(Unaudited)

The Board of Trustees supervises the business activities of the Trust. The names of the Trustees and executive officers of the Trust are shown below. Each Trustee serves until the Trustee dies, resigns, retires or is removed. Officers hold office for one year and until their respective successors are chosen and qualified.

The trustees and officers of the Trust and their principal business activities during the past five years are:

Interested Trustees and Officers

  Position    Principal  Number of  Other 
Name,  with the  Length of  Occupation(s)  Portfolios  Directorships 
Address(1),  Trust  Time  During  Overseen  Held By 
and Year of Birth    Served  Past 5 Years  By Trustee  Trustee 
 
Arthur Q. Johnson(2),    President, Secretary, Indefinite  President of Mundoval Capital     
Year of Birth: 1961  Treasurer  Term,  Management, Inc. (2002 – current),  1  None 
  and Trustee  Since 2004       
 
Natalie G. McIntosh,    Chief Compliance Indefinite  Chief Operating Officer and  N/A  N/A 
Year of Birth: 1982  Officer  Term,  Investment Advisory     
    Since 2006  Representative of Mundoval Capital     
      Management, Inc. (August 2006 –     
                                                                                             current).

(1) The address of each trustee and officer is c/o Mundoval Funds, 7855 Ivanhoe Ave., Ste. 210, La Jolla, CA 92037.
(2) Arthur Q. Johnson is considered an “interested person” as defined in Section 2(a)(19) of the Investment Company Act of 1940 by
virtue of his affiliation with the Adviser.

Independent Trustees           
 
Name,  Position  Length of  Principal Number of  Other 
Address(3),  with the  Time  Occupation(s) Portfolios  Directorships 
and Year of Birth  Trust  Served  During Overseen  Held By 
      Past 5 Years By Trustee  Trustee 
 
Martha G. Dennis,  Trustee  Indefinite  Principal, Gordian Knot 1  None 
PhD.,    Term, Since  (2005 – current).    
Year of Birth: 1942    July 2013       
 
Paul J. Dostart,  Trustee  Indefinite  Managing Partner of Dostart 1  None 
Year of Birth: 1951    Term, Since  Hannink LLP (1996 – current).    
    May 2014       
 
Selwyn Isakow,  Trustee  Indefinite  Chairman & CEO, The Oxford 1  None 
Year of Birth: 1952    Term,  Investment Group, Inc. (1985 – cur-    
    Since  rent). Chairman, CalPrivate Bank    
    February  (2006 – current). Chairman, Private     
    2012  Bancorp of America, Inc. (2015 –    
                                                                                            current).

(3) The address of each Trustee is c/o Mundoval Funds, 7855 Ivanhoe Ave., Ste. 210, La Jolla, CA 92037.

The Statement of Additional Information contains additional and more detailed information about the
Trustees and is available without charge by calling the transfer agent at 1-800-595-2877.

 

2023 Annual Report 14

Board of Trustees
Martha G. Dennis, PhD.
Paul J. Dostart
Selwyn Isakow
Arthur Q. Johnson

Investment Adviser
Mundoval Capital Management, Inc.
7855 Ivanhoe Ave., Suite 210
La Jolla, CA 92037

Counsel
Thompson Hine LLP
312 Walnut Street, 14th Floor
Cincinnati, OH 45202

Custodian
U.S. Bank, NA
425 Walnut Street
P.O. Box 1118
Cincinnati, OH 45201

Dividend Paying Agent,
Shareholders' Servicing Agent,
Transfer Agent
Mutual Shareholder Services
8000 Town Centre Dr., Suite 400
Broadview Hts., OH 44147

Fund Administrator
Premier Fund Solutions, Inc.
1939 Friendship Dr., Suite C
El Cajon, CA 92020

Independent Registered
Public Accounting Firm
Cohen & Company, Ltd.
342 North Water Street
Suite 830
Milwaukee, WI 53202

 

 

This report is provided for the general information of the shareholders of the Mundoval
Fund. This report is not intended for distribution to prospective investors in the Fund,
unless preceded or accompanied by an effective prospectus.

(b) Not applicable.

Item 2. Code of Ethics.

The registrant has adopted a code of ethics that applies to the registrant’s principal executive officer and the principal financial officer. The registrant has not made any amendments to its code of ethics during the covered period. The registrant has not granted any waivers from any provisions of the code of ethics during the covered period. A copy of the registrant’s Code of Ethics is filed herewith.

Item 3. Audit Committee Financial Expert.

The registrant’s Board of Trustees has determined that Selwyn Isakow is an audit committee finical expert. Mr. Isakow is independent for purposes of this Item 3.

Item 4. Principal Accountant Fees and Services.

(a-d) The following table details the aggregate fees billed for each of the last two fiscal years for audit fees, audit-related fees, tax fees and other fees by the principal accountant to the registrant. The principal accountant has provided no services to the adviser or any entity controlled by, or under common control with the adviser that provides ongoing services to the registrant.

    FYE 12/31/2023    FYE 12/31/2022 
Audit Fees    $14,750    $14,750 
Audit-Related Fees    $0    $0 
Tax Fees    $3,500    $3,500 
All Other Fees    $750    $750 

Nature of Tax Fees: preparation of Excise Tax Statement and 1120 RIC.
All Other Fees: Semi-Annual Report Review

(e) (1) The audit committee approves all audit and non-audit related services and, therefore, has not adopted pre-approval policies and procedures described in paragraph (c)(7) of Rule 2-01 of Regulation S-X.

(e) (2) None of the services described in paragraph (b) through (d) of this Item were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.

(f) All of the principal accountant’s hours spent on auditing the registrant’s financial statements were attributed to work performed by full-time permanent employees of the principal accountant.

(g) The following table indicates the aggregate non-audit fees billed by the registrant’s principal accountant for services to the registrant , the registrant’s investment adviser (not sub-adviser), and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant, for the last two years.

Non-Audit Fees    FYE 12/31/2023    FYE 12/31/2022 
Registrant    $4,250    $4,250 
Registrant’s Investment Adviser    $0    $0 

(h) The principal accountant provided no services to the investment adviser or any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant.

(i) Not applicable.

(j) Not applicable.

Item 5. Audit Committee of Listed Companies. Not applicable.

Item 6. Investments.

(a) Not applicable. Schedule filed with Item 1.

(b) Not applicable.

Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. Not applicable.

Item 8. Portfolio Managers of Closed End Management Investment Companies. Not applicable.

Item 9. Purchases of Equity Securities by Closed-End Management Investment Companies and Affiliated Purchasers. Not applicable.

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

The registrant has not adopted procedures by which shareholders may recommend nominees to the registrant’s board of trustees.

Item 11. Controls and Procedures.

(a) The Registrant’s president and chief financial officer concluded that the disclosure controls and procedures (as defined in Rule 30a-3(c) under the Act (17 CFR 270.30a -3(c))) as of a date within 90 days of the filing date of the report that includes the disclosure required by this paragraph, based on the evaluation of these controls and procedures required by Rule 30a-3(b) under the Act (17 CFR 270.30a -3(b)) and Rules 13a-15(b) or 15d-15(b) under the Exchange Act (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 Act (17 CFR 270.30a -3(d)) that occurred during 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.

Item 13. Exhibits.

(a)(1) Code of Ethics. Filed herewith.

(a)(2) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Filed herewith.

(a)(3) Not applicable.

(a)(4) Not applicable.

(b) Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Filed herewith.

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.

  Mundoval Funds

  By: /s/Arthur Q. Johnson
Arthur Q. Johnson
President

  Date: Feb 27, 2024

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.

  By: /s/Arthur Q. Johnson
Arthur Q. Johnson
President

 

Date: Feb 27, 2024

 

  By: /s/Arthur Q. Johnson
Arthur Q. Johnson
Chief Financial Officer

          Date: Feb 27, 2024