Form N-CSRS NORTHERN LIGHTS FUND For: May 31

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 811-22549

 

Northern Lights Fund Trust II

(Exact name of registrant as specified in charter)

 

17645 Wright Street, Omaha, Nebraska 68130

(Address of principal executive offices) (Zip code)

 

Rich Malinowski, Gemini Fund Services, LLC

80 Arkay Drive., Hauppauge, NY 11788

(Name and address of agent for service)

 

Registrant's telephone number, including area code: 631-470-2600

 

Date of fiscal year end: 11/30

 

Date of reporting period: 5/31/19

 

Item 1. Reports to Stockholders.

 

	North Star Opportunity Fund
	Class I Shares (Symbol: NSOIX)
	Class A Shares (Symbol: NSOPX)
	North Star Micro Cap Fund
	Class I Shares (Symbol: NSMVX)
	North Star Dividend Fund
	Class I Shares (Symbol: NSDVX)
	North Star Bond Fund
	Class I Shares (Symbol: NSBDX)
		Semi-Annual Report
		May 31, 2019
	www.nsinvestfunds.com
	Investor Information: 1-312-580-0900
	Distributed by Northern Lights Distributors, LLC
	Member FINRA

Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Fund’s shareholder reports like this one will no longer be sent by mail, unless you specifically request paper copies of the reports. Instead, the reports will be made available on the Fund’s website www.nsinvestfunds.com, and you will be notified by mail each time a report is posted and provided with a website link to access the report.

 

If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Fund electronically or to continue receiving paper copies of shareholder reports, which are available free of charge, by contacting your financial intermediary (such as a broker-dealer or bank) or, if you are a direct investor, by following the instructions included with paper Fund documents that have been mailed to you.

 

The North Star Mutual Fund Family consists of four funds; The North Star Opportunity Fund, the North Star Micro Cap Fund, the North Star Dividend Fund, and the North Star Bond Fund. The first three funds share the objective of producing long-term capital appreciation by investing primarily in the common stocks of publicly traded companies that are trading at attractive enterprise values relative to their free cash flow, while the fourth invests in fixed income securities to generate monthly income:

 

☐

The North Star Opportunity Fund’s range of investments may include smaller, underfollowed companies to the largest multinational organizations as well as fixed income securities. The result is a diversified Micro to Macro portfolio of stocks and fixed income securities structured to offer a relatively high yield with relatively low volatility. As of 05-31-2019 58.7% of the portfolio is in large and mid- cap stocks, and 19.3% in small and micro-cap stocks, with 17.8% in fixed income securities and 4.2% in cash.

 

☐

The North Star Micro Cap Fund invests in the common stocks of misunderstood or underfollowed companies with under $500 million capitalizations.

 

☐

The North Star Dividend Fund’s primary objective is to generate monthly income. The Fund seeks to achieve its objectives by investing in a diversified portfolio of common stocks of companies with under $ 1 billion market capitalization which offer attractive dividend yields.

 

☐

The North Star Bond Fund will generally focus on bonds issued by companies with market capitalizations of less than $2.5 billion.

 

The first half of our fiscal year got off to a rough start, with the S&P 500 declining 14.82% between November 30th and December 24th. The narrative that had turned bearish in the fall, with the Fed removing “accommodative” from its monetary policy statement and Trump imposing 10% tariffs on $250 billion of Chinese goods, remained in place. Fear of higher interest rates and elevated input costs translated to lower growth expectations and reductions in earnings forecasts. Volatility soared, and stocks prices retreated. There must have been something magic in Santa’s sled as perceptions of Fed and Trade policies shifted by December 26, leading to a sharp rebound in stock prices and new record highs by the end of April. The month of May was anything but merry, as President Trump kick off the month by tweeting that trade negotiations with the Chinese were going too slowly and that the tariff truce would end that Friday unless a deal was agreed to on Thursday. Global stock markets shed an estimated $2 trillion in value as that deadline approached. Concerns over a global economic slowdown as a result of these trade disruptions led to expectations of Fed policy shifting from further tightening to rate cuts. The “dovish” tilt of the Fed combined with intermittent tweet-induced hopes for a trade deal seemed to provide a floor under the market, which finished the six-month period slightly lower than where it started.

 

The Dollar ignored the stock market roller coaster ride and remained steady throughout the period. The yield on the Ten-Year Treasury, on the other hand, dropped almost on a straight line from 3% to 2.12%,

 

THE CIVIC OPERA BUILDING • 20 NORTH WACKER DRIVE • SUITE 1416 • CHICAGO, ILLINOIS 60606

312.580.0900 PHONE • 312.580.0901 FAX

 

4799-NLD-7/1/2019

 

suggesting an economic slowdown to many economists. Meanwhile the U.S. economy remained very resilient, with very low unemployment and very high consumer confidence. At North Star, our focus is on companies which typically derive most of their revenue domestically. In our recent meetings with the management teams of our portfolio companies, we were generally impressed by their recent results, as well as their optimistic outlook for the future, although the unknown derivative consequences of the “evolving” trade policy are clearly headwinds for all companies. The Funds’ results for the period ending 05-31-2019 are detailed below.

 

				Total Return for the			NAV			Distributions			NAV			Total Assets
	Fund			6 Month Period			05/31/2019			During Period			11/30/18			(in 000’s)
	North Star Opportunity Fund A			-2.89%			$12.54			$0.6272			$13.57			$34,600
	North Star Opportunity Fund I			-2.72%			$12.50			$0.6396			$13.52			$82,628
	North Star Micro Cap Fund I			-1.33%			$24.71			$1.7154			$26.86			$73,493
	North Star Dividend Fund I			-3.29%			$18.35			$1.0773			$20.09			$74,120
	North Star Bond Fund I			3.28%			$9.57			$0.1774			$9.44			$23,256

Our outlook for the rest of 2019 is mixed, with near full employment and a high level of consumer confidence on the one hand, and significant trade and supply chain related headwinds on the other hand. The Manufacturing sector has slowed, as companies seek clarification on the global trade and supply chain landscape. The highly charged political environment could also prove to be a distraction. As such, we will continue to position the portfolios somewhat on the conservative side, focusing on individual companies with solid prospects that are trading at reasonable valuations.

 

We are very excited to announce that on February 15, 2019 the Regal Total Return Fund merged into the North Star Opportunity Fund, and Jim Tassoni joined the team as a portfolio manager. As a result we have been able to expand our research capacity and lower the expense ratio of the Fund.

 

We thank you for your investment in the North Star Funds.

 

THE CIVIC OPERA BUILDING • 20 NORTH WACKER DRIVE • SUITE 1416 • CHICAGO, ILLINOIS 60606

312.580.0900 PHONE • 312.580.0901 FAX

 

4799-NLD-7/1/2019

 

Please remember that past performance may not be indicative and is no guarantee of future results. The fund performance data quoted here represents past performance. Current performance may be lower or higher than the performance data quoted above. Investment return and principal value will fluctuate, so that shares, when redeemed, may be worth more or less than their original cost. A Fund’s performance, especially for very short periods of time, should not be the sole factor in making your investment decisions. For current performance information, please visit www.nsinvestfunds.com or call 1-312-580-0900. All performance figures reflect fee waivers and expense subsidies, without which performance figures would have been lower.

 

The indices shown are for informational purposes only and are not reflective of any investment. As it is not possible to invest in the indices, the data shown does not reflect or compare features of an actual investment, such as its objectives, costs and expenses, liquidity, safety, guarantees or insurance, fluctuation of principal or return, or tax features. Past performance is no guarantee of future results.

 

S&P 500 Index is an unmanaged composite of 500 large capitalization companies. This index is widely used by professional investors as a performance benchmark for large-cap stocks.

 

Russell 2000^® Index is an unmanaged index that is a widely recognized indicator of small capitalization company performance. It includes approximately 2000 of the smallest securities based on a combination of their market cap and current index membership.

 

THE CIVIC OPERA BUILDING • 20 NORTH WACKER DRIVE • SUITE 1416 • CHICAGO, ILLINOIS 60606

312.580.0900 PHONE • 312.580.0901 FAX

 

4799-NLD-7/1/2019

North Star Opportunity Fund

PORTFOLIO REVIEW (Unaudited)

May 31, 2019

 

The Fund’s performance* figures for the periods ended May 31, 2019, compared to its benchmark:

 

										Since		Since
						Five Year		Ten Year		Inception**		Inception***
		Six Months		One Year		(Annualized)		(Annualized)		(Annualized)		(Annualized)
North Star Opportunity Fund – Class A		(2.89)%		(0.45)%		3.61%		N/A		8.24%		N/A
North Star Opportunity Fund – Class A with load		(8.48)%		(6.21)%		2.39%		N/A		7.39%		N/A
North Star Opportunity Fund – Class I (a)		(2.72)%		(0.15)%		3.78%		9.87%		N/A		5.02%
S&P 500 Total Return Index (b)		0.74%		3.78%		9.66%		13.95%		13.94%		7.75%

 

*

Past performance is not predictive of future results. The performance comparison includes reinvestment of all dividends and capital gains and has been adjusted for the Class A maximum applicable sales charge of 5.75%. Shares held for less than 30 days are subject to a 2.00% redemption fee. The total operating expense ratios (including indirect expenses), as stated in the Fund’s Prospectus dated April 1, 2019, are 1.68% and 1.43% for Class A and Class I shares, respectively. The investment return and principal value of an investment will fluctuate. An investor’s shares, when redeemed, may be worth more or less than the original cost. Total return is calculated assuming reinvestment of all dividends and distributions. The returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemptions of Fund shares. Returns greater than 1 year are annualized. Total returns would have been lower had the advisor not waived its fees and reimbursed a portion of the fund’s expenses. For performance information current to the most recent month-end, please call 1-312-580-0900.

 

**

Inception date is December 15, 2011.

 

***

Inception date is December 31, 2006 (Predecessor Fund).

 

(a)

The North Star Opportunity Fund is the successor to the North Star Opportunity Fund, L.P. (the “Predecessor Fund”), which transferred its assets to the Fund in connection with the Fund’s commencement of operations. The Predecessor Fund was managed by the same adviser who currently manages the Fund, and had substantially similar investment objectives and strategies to those of the Fund. The performance includes the performance of the Predecessor Fund prior to the commencement of the Fund’s operations. The Predecessor Fund’s performance has been adjusted to reflect the annual deduction of fees and expenses applicable to the Class I Shares. The Predecessor Fund was not registered as a mutual fund under the Investment Company Act of 1940, as amended (the “1940 Act”), and therefore was not subject to certain investment restrictions, limitations and diversification requirements imposed by the 1940 Act and the Internal Revenue Code of 1986, as amended (the “Code”). If the Predecessor Fund had been registered under the 1940 Act, its performance may have been different.

 

(b)

The S&P 500 Total Return Index is an unmanaged market capitalization-weighted index which is comprised of 500 of the largest U.S. domiciled companies and includes the reinvestment of all dividends. Investors cannot invest directly in an index or benchmark.

 

The Fund’s Top Ten Industries are as follows:

 

Industries		% of Net Assets
Retail			9.0	%
U.S. Treasury Obligations			8.5	%
Pharmaceuticals			6.7	%
Media			6.1	%
Electrical Components & Equipment			4.9	%
Limited Partnership			4.8	%
Banks			4.6	%
Telecommunications			4.5	%
Internet			3.9	%
Software			3.5	%
Other Industries			38.8	%
Short-Term Investments and Other Assets Net of Liabilities			4.7	%
			100.0	%

 

Please refer to the Portfolio of Investments in this semi-annual report for a detailed analysis of the Fund’s holdings.

North Star Micro Cap Fund

PORTFOLIO REVIEW (Unaudited)

May 31, 2019

 

The Fund’s performance* figures for the periods ended May 31, 2019, compared to its benchmark:

 

										Since
						Five Year		Ten Year		Inception**
		Six Months		One Year		(Annualized)		(Annualized)		(Annualized)
North Star Micro Cap Fund – Class I (a)		(1.33)%		(9.71)%		2.81%		11.37%		9.68%
Morningstar US Small Value PR Index (b)		(8.62)%		(14.44)%		1.03%		10.05%		5.77%

 

*

Past performance is not predictive of future results. The performance comparison includes reinvestment of all dividends and capital gains. Shares held for less than 30 days are subject to a 2.00% redemption fee. The total operating expense ratio (including indirect expenses), as stated in the Fund’s Prospectus dated April 1, 2019, is 1.42% for Class I shares. The investment return and principal value of an investment will fluctuate. An investor’s shares, when redeemed, may be worth more or less than the original cost. Total return is calculated assuming reinvestment of all dividends and distributions. The returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemptions of Fund shares. Returns greater than 1 year are annualized. Total returns would have been lower had the advisor not waived its fees and reimbursed a portion of the Fund’s expenses. For performance information current to the most recent month-end, please call 1-312-580-0900.

 

**

Inception date is December 31, 1997 (Predecessor Fund).

 

(a)

The North Star Micro Cap Fund is the successor to the Kuby Gottlieb Special Value Fund, L.P. (the “Predecessor Fund”), which transferred its assets to the North Star Micro Cap Fund in connection with the North Star Micro Cap Fund’s commencement of operations. The Predecessor Fund was managed by the same adviser who currently manages the North Star Micro Cap Fund, and had substantially similar investment objectives and strategies to those of the North Star Micro Cap Fund. The performance includes the performance of the Predecessor Fund prior to the commencement of the North Star Micro Cap Fund’s operations. The Predecessor Fund’s performance has been adjusted to reflect the annual deduction of fees and expenses applicable to the Class I Shares. The Predecessor Fund was not registered as a mutual fund under the Investment Company Act of 1940, as amended (the “1940 Act”), and therefore was not subject to certain investment restrictions, limitations and diversification requirements imposed by the 1940 Act and the Internal Revenue Code of 1986, as amended (the “Code”). If the Predecessor Fund had been registered under the 1940 Act, its performance may have been different.

 

(b)

The Morningstar US Small Value PR Index measures the performance of small-cap stocks with relatively low prices given anticipated per-share earnings, book value, cash flow, sales and dividends.

 

The Fund’s Top Ten Industries are as follows:

 

Industries		% of Net Assets
Retail			16.9	%
Apparel			10.5	%
Leisure Time			9.4	%
Commercial Services			6.8	%
Household Products/Wares			6.0	%
Electrical Components & Equipment			5.0	%
Auto Manufacturers			4.0	%
Electronics			3.8	%
Machinery - Diversified			3.5	%
Metal Fabricate/Hardware			3.5	%
Other Industries			25.2	%
Short-Term Investments and Other Assets Net of Liabilities			5.4	%
			100.0	%

 

Please refer to the Portfolio of Investments in this semi-annual report for a detailed analysis of the Fund’s holdings.

North Star Dividend Fund

PORTFOLIO REVIEW (Unaudited)

May 31, 2019

 

The Fund’s performance* figures for the periods ended May 31, 2019, compared to its benchmark:

 

								Since
						Five Year		Inception**
		Six Months		One Year		(Annualized)		(Annualized)
North Star Dividend Fund – Class I (a)		(3.29)%		(11.17)%		4.81%		10.11%
Morningstar US Small Value PR Index (b)		(8.62)%		(14.44)%		1.03%		7.44%

*

Past performance is not predictive of future results. The performance comparison includes reinvestment of all dividends and capital gains. Shares held for less than 30 days are subject to a 2.00% redemption fee. The total operating expense ratio (including indirect expenses), as stated in the Fund’s Prospectus dated April 1, 2019, is 1.43% for Class I shares. The investment return and principal value of an investment will fluctuate. An investor’s shares, when redeemed, may be worth more or less than the original cost. Total return is calculated assuming reinvestment of all dividends and distributions. The returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemptions of Fund shares. Returns greater than 1 year are annualized. Total returns would have been lower had the adviser not waived its fees and reimbursed a portion of the Fund’s expenses. For performance information current to the most recent month-end, please call 1-312-580-0900.

 

**

Inception date is February 1, 2010.

 

(a)

The North Star Dividend Fund is the successor to the North Star Dividend Fund, L.P. (the “Predecessor Fund”), which transferred its assets to the North Star Dividend Fund in connection with the North Star Dividend Fund’s commencement of operations. The Predecessor Fund was managed by the same adviser who currently manages the North Star Dividend Fund, and had substantially similar investment objectives and strategies to those of the North Star Dividend Fund. The performance includes the performance of the Predecessor Fund prior to the commencement of the North Star Dividend Fund’s operations. The Predecessor Fund’s performance has been adjusted to reflect the annual deduction of fees and expenses applicable to the Class I Shares. The Predecessor Fund was not registered as a mutual fund under the Investment Company Act of 1940, as amended (the “1940 Act”), and therefore was not subject to certain investment restrictions, limitations and diversification requirements imposed by the 1940 Act and the Internal Revenue Code of 1986, as amended (the “Code”). If the Predecessor Fund had been registered under the 1940 Act, its performance may have been different.

 

(b)

The Morningstar US Small Value PR Index measures the performance of small-cap stocks with relatively low prices given anticipated per-share earnings, book value, cash flow, sales and dividends.

 

The Fund’s Top Ten Industries are as follows:

 

Industries		% of Net Assets
Commercial Services			8.7	%
REITS			7.3	%
Water			6.8	%
Home Furnishings			5.8	%
Media			5.3	%
Leisure Time			4.2	%
Office Furnishings			3.8	%
Insurance			3.6	%
Apparel			3.5	%
Food			3.3	%
Other Industries			44.1	%
Short-Term Investments and Other Assets Net of Liabilities			3.6	%
			100.0	%

Please refer to the Portfolio of Investments in this semi-annual report for a detailed analysis of the Fund’s holdings.

North Star Bond Fund

PORTFOLIO REVIEW (Unaudited)

May 31, 2019

 

The Fund’s performance* figures for the periods ended May 31, 2019, compared to its benchmark:

 

						Since
						Inception**
		Six Months		One Year		(Annualized)
North Star Bond Fund – Class I		3.27%		2.05%		2.33%
Barclays U.S. High Yield Ba/B Index (a)		5.76%		6.42%		5.34%

*

Past performance is not predictive of future results. Shares held for less than 30 days are subject to a 2.00% redemption fee. The performance comparison includes reinvestment of all dividends and capital gains. The total operating expense ratio (including indirect expenses), as stated in the Fund’s Prospectus dated April 1, 2019, is 1.78% for Class I shares. The investment return and principal value of an investment will fluctuate. An investor’s shares, when redeemed, may be worth more or less than the original cost. The Class I returns are calculated using the traded NAV on May 31, 2019. Total return is calculated assuming reinvestment of all dividends and distributions. The returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemptions of Fund shares. Total returns would have been lower had the adviser not waived its fees and reimbursed a portion of the Fund’s expenses. Performance figure is not annualized. For performance information current to the most recent month-end, please call 1-312-580-0900.

 

**

Inception date is December 19, 2014.

 

(a)

The Barclays U.S. High Yield Ba/B Index measures the performance of bonds with Ba or B ratings.

 

The Fund’s Top Ten Industries are as follows:

 

Industries		% of Net Assets
Media			10.8	%
Banks			8.1	%
Food			7.7	%
Entertainment			7.1	%
Retail			7.1	%
Telecommunications			6.7	%
Household Products/Wares			5.4	%
Private Equity			3.3	%
Diversified Financial Services			3.2	%
Commercial Services			2.9	%
Other Industries			32.9	%
Short-Term Investments and Other Assets Net of Liabilities			4.8	%
			100.0	%

Please refer to the Portfolio of Investments in this semi-annual report for a detailed analysis of the Fund’s holdings.

North Star Opportunity Fund

PORTFOLIO OF INVESTMENTS (Unaudited)

May 31, 2019

 

Shares						Value
				COMMON STOCK - 78.2%
				ADVERTISING - 1.8%
	330,008			National CineMedia, Inc.		$	2,161,552
				AEROSPACE/DEFENSE - 1.0%
	2,139			Northrop Grumman Corp.			648,652
	4,310			United Technologies Corp.			544,353
							1,193,005
				AIRLINES - 1.7%
	72,000			American Airlines Group, Inc.			1,960,560
				APPAREL - 2.0%
	101,000			Under Armour, Inc. *			2,302,800
				AUTO MANUFACTURERS - 2.1%
	130,000			Blue Bird Corp. *			2,446,600
				AUTO PARTS & EQUIPMENT - 1.6%
	34,000			BorgWarner, Inc.			1,206,320
	5,500			Lear Corp.			654,665
							1,860,985
				BANKS - 3.1%
	91,000			Bank of America Corp.			2,420,600
	66,000			Westpac Banking Corp. - ADR			1,254,000
							3,674,600
				BEVERAGES - 0.3%
	4,229			Anheuser-Busch InBev SA - ADR			344,240
				BIOTECHNOLOGY - 0.4%
	2,300			Biogen, Inc. *			504,367
				COMMERCIALS SERVICES - 0.6%
	5,548			Equifax, Inc.			670,753
				COMPUTERS - 1.8%
	12,000			Apple, Inc.			2,100,840
				DIVERSIFIED FINANCIAL SERVICES - 3.0%
	1,500			BlackRock, Inc.			623,340
	20,000			Charles Schwab Corp.			832,200
	65,000			Lazard Ltd.			2,025,400
							3,480,940
				ELECTRICAL COMPONENTS & EQUIPMENT - 4.9%
	8,138			Emerson Electric Co.			490,233
	1,575,571			Orion Energy Systems, Inc. *			3,040,852
	435,000			Pioneer Power Solutions, Inc. * <			2,196,750
							5,727,835
				ELECTRONICS - 1.6%
	62,000			ABB Ltd. - ADR			1,127,160
	7,047			Coherent, Inc. *			775,381
							1,902,541
				ENTERTAINMENT - 1.7%
	165,000			AMC Entertainment Holdings, Inc.			1,976,700

 

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

North Star Opportunity Fund

PORTFOLIO OF INVESTMENTS (Unaudited) (Continued)

May 31, 2019

 

Shares						Value
				COMMON STOCK - 78.2% (Continued)
				FOOD - 1.6%
	12,632			General Mills, Inc.		$	624,526
	44,000			Kraft Heinz Co.			1,216,600
							1,841,126
				HOME BUILDERS - 1.1%
	100,000			TRI Pointe Group, Inc. *			1,230,000
				HOUSEHOLD PRODUCTS/WARES - 2.1%
	126,001			Acme United Corp.			2,517,500
				INTERNET - 3.9%
	1,900			Alphabet, Inc. - Class A *			2,102,350
	354			Amazon.com, Inc. *			628,375
	3,972			Facebook, Inc. *			704,911
	28,500			Tencent Holdings Ltd. - ADR			1,190,160
							4,625,796
				LIMITED PARTNERSHIP - 4.8%
	84,000			Blackstone Group LP - MLP			3,179,400
	110,000			KKR & Co. LP			2,450,800
							5,630,200
				MACHINERY - CONSTRUCTION & MINING - 1.1%
	11,000			Caterpillar, Inc.			1,317,910
				MEDIA - 5.4%
	17,000			CBS Corp.			820,760
	155,000			Gannett Co., Inc.			1,218,300
	110,000			Grupo Televisa SAB - ADR			1,021,900
	409,976			Lee Enterprises, Inc. *			1,033,140
	30,500			Meredith Corp.			1,578,985
	4,741			Walt Disney Co.			626,002
							6,299,087
				MISCELLANEOUS MANUFACTURER - 1.0%
	63,000			Trinity Industries, Inc.			1,214,640
				OIL & GAS - 2.0%
	32,500			Exxon Mobil Corp.			2,300,025
				PHARMACEUTICALS - 6.7%
	25,000			Bristol-Myers Squibb Co.			1,134,250
	26,000			Cardinal Health, Inc.			1,093,820
	39,000			CVS Health Corp.			2,042,430
	13,000			Johnson & Johnson			1,704,950
	19,000			Zoetis, Inc. - Class A			1,919,950
							7,895,400
				PIPELINES - 1.2%
	39,000			Enbridge, Inc.			1,437,930
				RETAIL - 8.2%
	125,000			Denny’s Corp. *			2,460,000
	40,000			Movado Group, Inc.			1,030,400
	47,000			PetIQ, Inc. *			1,232,810

 

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

North Star Opportunity Fund

PORTFOLIO OF INVESTMENTS (Unaudited) (Continued)

May 31, 2019

 

Shares										Value
				COMMON STOCK - 78.2% (Continued)
				RETAIL - 8.2% (Continued)
	63,000			PetMed Express, Inc.						$	1,100,610
	25,500			Target Corp.							2,051,475
	95,000			Wendy’s Co.							1,747,050
											9,622,345
				SEMICONDUCTORS - 2.8%
	90,000			Advanced Micro Devices, Inc. *							2,466,900
	20,286			Applied Materials, Inc.							784,865
											3,251,765
				SOFTWARE - 3.5%
	7,500			Guidewire Software, Inc. *							753,900
	11,683			Oracle Corp.							591,160
	24,000			Paychex, Inc.							2,058,960
	4,282			salesforce.com, Inc. *							648,338
											4,052,358
				TELECOMMUNICATIONS - 3.4%
	1,284,990			Alaska Communications Systems Group, Inc. *							2,120,233
	62,000			AT&T, Inc.							1,895,960
											4,016,193
				TRANSPORTATION - 1.8%
	8,000			Kansas City Southern							906,240
	12,500			United Parcel Service, Inc. - Class B							1,161,500
											2,067,740
				TOTAL COMMON STOCK (Cost - $81,636,023)							91,628,333
				PREFERRED STOCK - 3.9%
				BANKS - 1.5%
	855,000			Citigroup, Inc., 5.95%							880,128
	835,000			Morgan Stanley, 5.55%							843,530
											1,723,658
				INVESTMENT COMPANIES - 1.7%
	41,500			Compass Diversified Holdings, 7.25%							878,140
	47,903			Compass Diversified Holdings, 7.875%							1,062,968
											1,941,108
				TRUCKING & LEASING - 0.7%
	8,500			General Finance Corp., 9.00%							873,587
				TOTAL PREFERRED STOCK (Cost - $4,652,592)							4,538,353
Par Value						Coupon Rate (%)		Maturity		Value
				CORPORATE BONDS - 4.7%
				BUILDING MATERIALS - 0.6%
$	650,000			US Concrete, Inc.		6.375		6/1/2024			664,625
				ELECTRONICS - 0.7%
	800,000			ADT Corp.		6.250		10/15/2021			840,000
				FOOD - 0.7%
	850,000			B&G Foods, Inc.		4.625		6/1/2021			851,063

 

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

North Star Opportunity Fund

PORTFOLIO OF INVESTMENTS (Unaudited) (Continued)

May 31, 2019

 

Par Value						Coupon Rate (%)		Maturity		Value
				CORPORATE BONDS - 4.7% (Continued)
				MEDIA - 0.7%
$	850,000			TEGNA, Inc. ^		4.875		9/15/2021		$	852,125
				OIL & GAS SERVICES - 0.1%
	500,000			Bristow Group, Inc.		6.250		10/15/2022			115,000
				RETAIL - 0.8%
	942,000			Wendy’s International LLC		7.000		12/15/2025			937,290
				TELECOMMUNICATIONS - 1.1%
	1,405,000			Consolidated Communications, Inc.		6.500		10/1/2022			1,289,087
				TOTAL CORPORATE BONDS (Cost - $5,853,924)							5,549,190
				U.S. TREASURY OBLIGATIONS - 8.5%
	10,000,000			United States Treasury Bill, 2.01% due 6/27/2019 ** (Cost - $9,983,180)							9,985,133
Shares
				SHORT-TERM INVESTMENTS - 4.2%
				MONEY MARKET FUND - 4.2%
	4,964,044			Fidelity Investments Money Market Funds - Government Portfolio, Class I, 2.27% *** (Cost - $4,964,044)							4,964,044
				TOTAL INVESTMENTS - 99.5% (Cost - $107,089,763)						$	116,665,053
				OTHER ASSETS IN EXCESS OF LIABILITIES - NET - 0.5%							563,355
				NET ASSETS - 100.0%						$	117,228,408

 

*

Non-income producing security.

 

<

Illiquid security. At May 31, 2019, the securities amounted to 1.9% of net assets.

 

^

Security exempt from registration under Rule 144A of the Securities Act of 1933. This security may be resold transactions exempt from registration to qualified institutional buyers. This security had a market value of and 0.7% of net assets.

 

**

Represents yield to maturity.

 

***

Money Market Fund; interest rate reflects seven-day effective yield on May 31, 2019.

 

ADR - American Depositary Receipt

 

LLC - Limited Liability Company

 

LP - Limited Partnership

 

MLP - Master Limited Partnership

 

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

North Star Micro Cap Fund

PORTFOLIO OF INVESTMENTS (Unaudited)

May 31, 2019

 

Shares						Value
				COMMON STOCK - 94.6%
				APPAREL - 10.5%
	198,500			Lakeland Industries, Inc. *		$	2,421,700
	127,250			Rocky Brands, Inc.			3,112,535
	137,185			Superior Group of Cos, Inc.			2,196,332
							7,730,567
				AUTO MANUFACTURERS - 4.0%
	154,715			Blue Bird Corp. *			2,911,736
				AUTO PARTS & EQUIPMENT - 1.5%
	40,731			Miller Industries, Inc.			1,081,408
				BEVERAGES - 3.4%
	117,000			Farmer Brothers Co. *			2,143,440
	278,942			Truett-Hurst, Inc. - Class A * #			384,940
							2,528,380
				BUILDING MATERIALS - 1.1%
	233,668			LSI Industries, Inc.			827,185
				CHEMICALS - 2.2%
	161,000			Landec Corp. *			1,597,120
				COMMERCIAL SERVICES - 6.8%
	250,000			ARC Document Solutions, Inc. *			500,000
	130,500			Collectors Universe, Inc.			2,745,720
	56,300			SP Plus Corp. *			1,746,989
							4,992,709
				ELECTRICAL COMPONENTS & EQUIPMENT - 5.0%
	86,230			Graham Corp.			1,759,954
	429,614			Orion Energy Systems, Inc. *			829,155
	212,326			Pioneer Power Solutions, Inc. * <			1,072,246
							3,661,355
				ELECTRONICS - 3.8%
	22,000			Allied Motion Technologies, Inc.			714,340
	78,500			Napco Security Technologies, Inc. *			2,097,520
							2,811,860
				ENVIRONMENTAL CONTROL - 1.0%
	231,000			Sharps Compliance Corp. *			746,130
				HAND/MACHINE TOOLS - 3.2%
	110,951			QEP Co., Inc. * <			2,329,971
				HOME FURNISHINGS - 2.0%
	87,250			Flexsteel Industries, Inc.			1,496,338
				HOUSEHOLD PRODUCTS/WARES - 6.0%
	117,878			Acme United Corp.			2,355,202
	72,200			Central Garden & Pet Co. *			2,032,430
							4,387,632

 

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

North Star Micro Cap Fund

PORTFOLIO OF INVESTMENTS (Unaudited) (Continued)

May 31, 2019

 

Shares						Value
				COMMON STOCK - 94.6% (Continued)
				LEISURE TIME - 9.4%
	48,254			Bowl America, Inc.		$	687,620
	229,000			Escalade, Inc.			2,548,770
	37,500			Johnson Outdoors, Inc. - Class A			2,767,875
	74,000			OneSpaWorld Holdings Ltd. *			925,740
							6,930,005
				LODGING - 1.1%
	89,000			Century Casinos, Inc. *			777,860
				MACHINERY - DIVERSIFIED - 3.5%
	26,900			Alamo Group, Inc.			2,553,617
				MEDIA - 2.3%
	313,515			A. H. Belo Corp.			1,207,033
	143,350			NTN Buzztime, Inc. * #			501,725
							1,708,758
				METAL FABRICATE/HARDWARE - 3.5%
	106,472			Eastern Co.			2,589,399
				MINING - 2.5%
	23,000			United States Lime & Minerals, Inc.			1,878,180
				RETAIL - 16.9%
	148,300			1-800-Flowers.com, Inc. *			2,707,958
	74,500			Bassett Furniture Industries, Inc.			1,094,405
	103,500			Boot Barn Holdings, Inc. *			2,704,455
	25,000			Build-A-Bear Workshop, Inc. *			126,000
	238,000			Del Taco Restaurants, Inc. *			2,575,160
	74,000			Movado Group, Inc.			1,906,240
	1,301,410			US Auto Parts Network, Inc. *			1,327,438
							12,441,656
				SOFTWARE - 1.2%
	67,300			American Software, Inc.			852,691
				TELECOMMUNICATIONS - 1.0%
	440,000			Alaska Communications Systems Group, Inc. *			726,000
				TEXTILES - 2.7%
	395,468			Crown Crafts, Inc.			1,989,204
				TOTAL COMMON STOCK (Cost - $63,342,887)			69,549,761
				SHORT-TERM INVESTMENTS - 5.4%
				MONEY MARKET FUND - 5.4%
	3,966,671			Dreyfus Treasury & Agency Cash Management Fund, Institutional Class, 2.26% ** (Cost - $3,966,671)			3,966,671
				TOTAL INVESTMENTS - 100.0% (Cost - $67,309,558)		$	73,516,432
				OTHER ASSETS IN EXCESS OF LIABILITIES - NET - 0.0%			(23,587	)
				NET ASSETS - 100.0%		$	73,492,845

 

*

Non-income producing security.

 

#

Affiliated issuer.

 

<

Illiquid security. At May 31, 2019, these securities amounted to 4.6% of net assets.

 

**

Money Market Fund; interest rate reflects seven-day effective yield on May 31, 2019.

 

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

North Star Dividend Fund

PORTFOLIO OF INVESTMENTS (Unaudited)

May 31, 2019

 

Shares						Value
				COMMON STOCK - 96.4%
				ADVERTISING - 1.9%
	220,700			National CineMedia, Inc.		$	1,445,585
				APPAREL - 3.5%
	106,000			Rocky Brands, Inc.			2,592,760
				AUTO PARTS & EQUIPMENT - 3.2%
	64,000			Douglas Dynamics, Inc.			2,374,400
				BANKS - 0.9%
	27,500			Bar Harbor Bankshares			649,825
				BUILDING MATERIALS - 1.2%
	259,800			LSI Industries, Inc.			919,692
				CHEMICALS - 2.6%
	65,000			Oil-Dri Corporation of America			1,910,350
				COMMERCIAL SERVICES - 8.7%
	114,100			BG Staffing, Inc.			1,941,982
	157,800			Collectors Universe, Inc.			3,320,112
	37,000			Healthcare Services Group, Inc.			1,169,570
							6,431,664
				COMPUTERS - 1.4%
	118,500			TransAct Technologies, Inc.			1,020,285
				DIVERSIFIED FINANCIAL SERVICES - 2.8%
	71,000			Westwood Holdings Group, Inc.			2,078,170
				ELECTRIC - 1.4%
	16,000			MGE Energy, Inc.			1,059,840
				ENTERTAINMENT - 3.0%
	121,401			Speedway Motorsports, Inc.			2,204,642
				FOOD - 3.3%
	199,300			Rocky Mountain Chocolate Factory, Inc.			1,885,378
	20,000			Village Super Market, Inc. - Class A			529,600
							2,414,978
				GAS - 2.6%
	69,425			RGC Resources, Inc.			1,890,443
				HEALTHCARE - SERVICES - 0.7%
	50,700			Psychemedics Corp.			522,717
				HOME FURNISHINGS - 5.8%
	235,000			Daktronics, Inc.			1,459,350
	89,000			Ethan Allen Interiors, Inc.			1,888,580
	54,250			Flexsteel Industries, Inc.			930,388
							4,278,318

 

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

North Star Dividend Fund

PORTFOLIO OF INVESTMENTS (Unaudited) (Continued)

May 31, 2019

 

Shares						Value
				COMMON STOCK - 96.4% (Continued)
				HOUSEHOLD PRODUCTS/WARES - 2.1%
	79,000			Acme United Corp.		$	1,578,420
				INSURANCE - 3.6%
	30,100			Kansas City Life Insurance Co.			1,051,243
	544,220			Marketing Alliance, Inc. # *			1,616,332
							2,667,575
				INTERNET - 0.7%
	58,000			New Media Investment Group, Inc.			535,340
				INVESTMENT COMPANIES - 1.4%
	67,000			Compass Diversified Holdings - MLP			1,041,850
				LEISURE TIME - 4.2%
	40,142			Bowl America, Inc.			572,023
	231,500			Escalade, Inc.			2,576,595
							3,148,618
				MEDIA - 5.3%
	511,492			A.H. Belo Corp.			1,969,244
	145,131			Gannett Co., Inc.			1,140,730
	373,000			Salem Media Group, Inc.			757,190
	2,011			Value Line, Inc.			49,048
							3,916,212
				MISCELLANEOUS MANUFACTURER - 2.7%
	120,000			Myers Industries, Inc.			2,030,400
				OFFICE FURNISHINGS - 3.8%
	93,667			Kewaunee Scientific Corp.			2,013,840
	50,000			Steelcase, Inc.			802,000
							2,815,840
				OFFICE/BUSINESS EQUIPMENT - 3.3%
	94,400			AstroNova, Inc.			2,417,584
				REAL ESTATE - 1.9%
	25,000			McGrath RentCorp.			1,405,750
				REITS - 7.3%
	203,000			CatchMark Timber Trust, Inc. - Class A			1,910,230
	43,500			Chatham Lodging Trust			828,240
	191,000			Monmouth Real Estate Investment Corp.			2,662,540
							5,401,010
				RETAIL - 1.5%
	61,625			PetMed Express, Inc.			1,076,589
				SEMICONDUCTORS - 2.3%
	48,800			Brooks Automation, Inc.			1,731,912
				SOFTWARE - 2.5%
	143,550			American Software, Inc.			1,818,778

  

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

North Star Dividend Fund

PORTFOLIO OF INVESTMENTS (Unaudited) (Continued)

May 31, 2019

 

Shares						Value
				COMMON STOCK - 96.4% (Continued)
				TELECOMMUNICATIONS - 0.8%
	151,300			Consolidated Communications Holdings, Inc.		$	605,200
				TEXTILES - 3.2%
	474,100			Crown Crafts, Inc.			2,384,723
				WATER - 6.8%
	25,408			Artesian Resources Corp.			904,779
	164,000			Global Water Resources, Inc.			1,561,280
	23,400			Middlesex Water Co.			1,384,344
	34,975			York Water Co.			1,205,938
							5,056,341
				TOTAL COMMON STOCK (Cost - $67,305,528)			71,425,811
				SHORT-TERM INVESTMENTS - 4.0%
				MONEY MARKET FUND - 4.0%
	2,967,817			Dreyfus Treasury & Agency Cash Management Fund, Institutional Class, 2.26% ** (Cost - $2,967,817)			2,967,817
				TOTAL INVESTMENTS - 100.4% (Cost - $70,273,345)		$	74,393,628
				OTHER ASSETS IN EXCESS OF LIABILITIES - NET - (0.4)%			(273,814	)
				NET ASSETS - 100.0%		$	74,119,814

 

#

Affiliated issuer.

 

*

Illiquid security. At May 31, 2019, the illiquid security amounted to 2.2% of net assets.

 

**

Money Market Fund; interest rate reflects seven-day effective yield on May 31, 2019.

 

MLP - Master Limited Partnership

 

REITS - Real Estate Investment Trust

 

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

North Star Bond Fund

PORTFOLIO OF INVESTMENTS (Unaudited)

May 31, 2019

 

Shares										Value
				PREFERRED STOCK - 18.1%
				BANKS - 8.1%
	16,000			Bank of America Corp., 4.00%						$	355,520
	10,000			Cititgroup Capital XIII, 8.95%							273,100
	10,000			GMAC Capital Trust I, 8.30%							258,200
	250,000			Mellon Capital IV, 4.00%							208,554
	10,000			PNC Financial Services Group, Inc., 6.125%							266,900
	10,000			US Bancorp, 6.50%							268,800
	250,000			Wachovia Cap Trust III, 5.57%							248,679
											1,879,753
				DIVERSIFIED FINANCIAL SERVICES - 1.3%
	300,000			American Express Co., 4.90%							299,014
				ENTERTAINMENT - 1.7%
	16,000			Chicken Soup For The Soul Entertainment, Inc., 9.75%							401,600
				INVESTMENT COMPANIES - 2.0%
	21,000			Compass Diversified Holdings, 7.25%							444,360
	1,000			Compass Diversified Holdings, 7.875%							22,190
											466,550
				MEDIA - 1.3%
	300,000			Viacom, Inc., 5.875%							298,125
				PRIVATE EQUITY - 1.1%
	10,000			KKR & Co., Inc., 6.75%							264,300
				REITS - 1.3%
	12,000			Monmouth Real Estate Investment Corp., 6.125%							291,600
				TRUCKING & LEASING - 1.3%
	12,000			General Finance Corp., 8.125%							309,600
				TOTAL PREFERRED STOCK (Cost - $4,335,309)							4,210,542
Par Value						Coupon Rate (%)		Maturity
				CORPORATE BONDS - 74.9%
				APPAREL - 1.8%
$	450,000			Under Armour, Inc.		3.250		6/15/2026			415,794
				AUTO PARTS & EQUIPMENT - 2.5%
	590,000			Goodyear Tire & Rubber Co.		5.125		11/15/2023			587,788
				BUILDING MATERIALS - 2.6%
	600,000			US Concrete, Inc.		6.375		6/1/2024			613,500
				CHEMICALS - 2.8%
	655,000			CF Industries, Inc.		3.450		6/1/2023			639,444
				COMMERCIAL SERVICES - 2.9%
	650,000			Quad Graphics, Inc.		7.000		5/1/2022			669,500
				COSMETICS & TOILETRIES - 0.4%
	100,000			Edgewell Personal Care Co.		4.700		5/24/2022			100,177

 

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

North Star Bond Fund

PORTFOLIO OF INVESTMENTS (Unaudited) (Continued)

May 31, 2019

 

Par Value						Coupon Rate (%)		Maturity		Value
				CORPORATE BONDS - 74.9% (Continued)
				DIVERSIFIED FINANCIAL SERVICES - 1.9%
$	450,000			Jefferies Group LLC		8.500		7/15/2019		$	452,774
				ELECTRONICS - 2.0%
	250,000			ADT Corp.		6.250		10/15/2021			262,500
	200,000			ADT Corp.		3.500		7/15/2022			194,500
											457,000
				ENTERTAINMENT - 5.4%
	505,000			National CineMedia LLC		6.000		4/15/2022			510,681
	160,000			National CineMedia LLC		5.750		8/15/2026			151,600
	580,000			Speedway Motorsports, Inc.		5.125		2/1/2023			584,350
											1,246,631
				FOOD - 7.7%
	655,000			B&G Foods, Inc.		4.625		6/1/2021			655,819
	600,000			Ingles Markets, Inc.		5.750		6/15/2023			610,500
	525,000			TreeHouse Foods, Inc.		4.875		3/15/2022			526,312
											1,792,631
				HEALTHCARE - SERVICES - 2.5%
	572,000			DaVita HealthCare Partners, Inc.		5.750		8/15/2022			578,435
				HOUSEHOLD PRODUCTS/WARES - 5.4%
	625,000			ACCO Brands Corp. *		5.250		12/15/2024			622,062
	600,000			Central Garden & Pet Co.		6.125		11/15/2023			622,500
											1,244,562
				HOUSEWARES - 1.5%
	325,000			Scotts Miracle-Gro Co.		6.000		10/15/2023			337,594
				LEISURE TIME - 0.9%
	200,000			Royal Caribbean Cruises Ltd.		5.250		11/15/2022			215,966
				MACHINERY - DIVERSIFIED - 2.6%
	600,000			Tennant Co.		5.625		5/1/2025			610,500
				MEDIA - 9.5%
	400,000			AMC Networks, Inc.		4.750		12/15/2022			403,380
	650,000			Lee Enterprises, Inc. *		9.500		3/15/2022			663,812
	600,000			Salem Media Group, Inc. *		6.750		6/1/2024			534,000
	150,000			TEGNA, Inc.		5.125		7/15/2020			150,577
	450,000			TEGNA, Inc.		6.375		10/15/2023			462,375
											2,214,144
				MISCELLANEOUS MANUFACTURER - 2.8%
	670,000			Trinity Industries, Inc.		4.550		10/1/2024			643,037
				OIL & GAS - 2.6%
	110,000			Murphy Oil Corp.		4.000		6/1/2022			108,869
	500,000			Murphy Oil Corp.		4.200		12/1/2022			492,152
											601,021
				OIL & GAS SERVICES - 0.7%
	725,000			Bristow Group, Inc. ^ **		6.250		10/15/2022			166,750

 

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

North Star Bond Fund

PORTFOLIO OF INVESTMENTS (Unaudited) (Continued)

May 31, 2019

 

Par Value						Coupon Rate (%)		Maturity		Value
				CORPORATE BONDS - 74.9% (Continued)
				RETAIL - 7.1%
$	660,000			Brinker International, Inc.		3.875		5/15/2023		$	645,150
	400,000			Gap, Inc.		5.950		4/12/2021			414,711
	598,000			Wendy’s International LLC		7.000		12/15/2025			595,010
											1,654,871
				SEMICONDUCTORS - 2.6%
	550,000			Advanced Micro Devices, Inc.		7.500		8/15/2022			613,250
				TELECOMMUNICATIONS - 6.7%
	345,000			Anixter, Inc.		5.125		10/1/2021			353,287
	632,000			Cincinnati Bell, Inc. *		7.000		7/15/2024			548,260
	720,000			Consolidated Communications, Inc.		6.500		10/1/2022			660,600
											1,562,147
				TOTAL CORPORATE BONDS (Cost - $18,014,208)							17,417,516
				CONVERTIBLE BONDS - 2.2%
				PRIVATE EQUITY- 2.2%
	508,000			Hercules Capital, Inc. (Cost - $507,328)		4.375		2/1/2022			506,146
Shares
				SHORT-TERM INVESTMENTS - 3.7%
				MONEY MARKET FUND - 3.7%
	868,652			Fidelity Investments Money Market Funds - Treasury Portfolio, Class I, 2.26% *** (Cost - $868,652)							868,652
				TOTAL INVESTMENTS - 98.9% (Cost - $23,725,497)						$	23,002,856
				OTHER ASSETS IN EXCESS OF LIABILITIES - NET - 1.1%							253,547
				NET ASSETS - 100.0%						$	23,256,403

 

*

Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration to qualified institutional buyers. These securities had a fair value of $2,368,134 and 10.2% of net assets.

 

^

Non-income producing security.

 

**

Security is in default.

 

***

Money Market Fund; interest rate reflects seven-day effective yield on May 31, 2019.

 

LLC - Limited Liability Company

 

REITS - Real Estate Investment Trust

 

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

North Star Funds

STATEMENTS OF ASSETS AND LIABILITIES (Unaudited)

May 31, 2019

 

		North Star				North Star				North Star				North Star
		Opportunity				Micro Cap				Dividend				Bond
Assets:		Fund				Fund				Fund				Fund
Investments in Unaffiliated Securities at Cost		$	107,089,763			$	65,457,012			$	68,600,802			$	23,725,497
Investment in Non-controlled Affiliated Security at Cost			—				1,852,546				1,672,543				—
Total Securities at Cost			107,089,763				67,309,558				70,273,345				23,725,497
Investments in Unaffiliated Securities at Value		$	116,665,053			$	72,629,767			$	72,777,296			$	23,002,856
Investment in Non-controlled Affiliated Security at Value			—				886,665				1,616,332				—
Total Securities at Value			116,665,053				73,516,432				74,393,628				23,002,856
Dividends and Interest Receivable			388,476				93,694				202,845				316,907
Receivable for Fund Shares Sold			392,026				25				18,750				—
Prepaid Expenses and Other Assets			31,904				16,731				18,231				12,454
Total Assets			117,477,459				73,626,882				74,633,454				23,332,217
Liabilities:
Payable for Securities Purchased			31,708				—				378,768				—
Payable for Fund Shares Redeemed			43,381				—				—				18,473
Investment Advisory Fees Payable			101,401				65,404				65,431				26,689
Distribution (12b-1) Fees Payable			8,479				—				—				—
Payable to Related Parties			21,869				38,376				44,703				14,010
Audit and Tax Fees Payable			14,956				9,678				9,122				8,988
Accrued Expenses and Other Liabilities			27,257				20,579				15,616				7,654
Total Liabilities			249,051				134,037				513,640				75,814
Net Assets		$	117,228,408			$	73,492,845			$	74,119,814			$	23,256,403
Composition of Net Assets:
At May 31, 2019, Net Assets consisted of:
Paid-in-Capital		$	108,018,347			$	67,956,388			$	69,609,153			$	24,174,639
Accumulated Earnings/(Losses)			9,210,061				5,536,457				4,510,661				(918,236	)
Net Assets		$	117,228,408			$	73,492,845			$	74,119,814			$	23,256,403
Net Asset Value Per Share:
Class I Shares:
Net Assets		$	82,628,131			$	73,492,845			$	74,119,814			$	23,256,403
Shares of Beneficial Interest Outstanding ($0 par value, unlimited shares authorized)			6,609,486				2,974,506				4,039,966				2,429,322
Net Asset Value (Net Assets/Shares Outstanding), Offering Price and Redemption Price Per Share*		$	12.50			$	24.71			$	18.35			$	9.57	(a)
Class A Shares:
Net Assets		$	34,600,277
Shares of Beneficial Interest Outstanding ($0 par value, unlimited shares authorized)			2,758,295
Net Asset Value (Net Assets/Shares Outstanding) and Redemption Price Per Share*		$	12.54
Maximum Offering Price Per Share (Maximum Sales Charge of 5.75%)		$	13.31

 

*

The Funds charge a fee of 2.00% on redemptions of shares held for less than 30 days.

 

(a)

The NAV and Offering Price shown above differ from the traded NAV on May 31, 2019 due to financial statement rounding and/or financial statement adjustments.

 

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

North Star Funds

STATEMENTS OF OPERATIONS (Unaudited)

For the Six Months Ended May 31, 2019

 

		North Star				North Star				North Star				North Star
		Opportunity Fund				Micro Cap Fund				Dividend Fund				Bond Fund
Investment Income
Dividends from Unaffiliated Investments		$	1,403,349			$	541,313			$	1,704,085			$	113,132
Dividends from Affiliated Investments			—				—				140,022				—
Interest			338,629				47,447				37,238				500,241
Total Investment Income			1,741,978				588,760				1,881,345				613,373
Expenses
Investment Advisory Fees			515,451				376,905				384,350				96,472
Administrative Service Fees			49,057				55,261				55,837				19,651
Third Party Administrative Servicing Fees			37,704				39,130				42,588				12,572
Distribution (12b-1) Fees - Class A			26,732				—				—				—
Registration Fees			22,960				9,800				11,228				11,046
Transfer Agent Fees			19,160				7,224				12,012				8,204
Accounting Service Fees			18,459				16,581				18,410				4,074
Trustees’ Fees and Expenses			12,388				10,920				10,920				10,906
Legal Fees			8,360				10,584				8,960				12,390
Printing Expense			7,564				4,130				4,802				1,694
Audit and Tax Fees			6,076				9,212				9,128				8,652
Chief Compliance Officer Fees			5,426				5,180				5,642				2,422
Custodian Fees			4,598				4,732				5,208				2,254
Insurance Expense			3,612				3,220				3,458				518
Other Expenses			3,160				1,134				868				1,470
Total Expenses			740,707				554,013				573,411				192,325
Less: Fees Waived by the Adviser			(4,264	)			—				—				—
Net Expenses			736,443				554,013				573,411				192,325
Net Investment Income			1,005,535				34,747				1,307,934				421,048
Net Realized and Unrealized Gain/(Loss) on Investments
Net Realized Gain/(Loss):
on Unaffiliated Investments			(748,064	)			121,859				202,450				10,369
on Affiliated Investments			—				(270,859	)			—				—
on Foreign currency transactions			4,080				—				—				—
Total Net Realized Gain/(Loss):			(743,984	)			(149,000	)			202,450				10,369
Net Change in Unrealized Appreciation/(Depreciation):
on Unaffiliated Investments			(3,706,167	)			(1,282,374	)			(4,060,420	)			286,344
on Affiliated Investments			—				335,460				(8,076	)			—
on Foreign currency translations			(59	)			—				—				—
Total Net Change in Unrealized Appreciation/(Depreciation):			(3,706,226	)			(946,914	)			(4,068,496	)			286,344
Net Realized and Unrealized Gain/(Loss) on Investments			(4,450,210	)			(1,095,914	)			(3,866,046	)			296,713
Net Increase/(Decrease) in Net Assets Resulting From Operations		$	(3,444,675	)		$	(1,061,167	)		$	(2,558,112	)		$	717,761

 

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

North Star Funds

STATEMENTS OF CHANGES IN NET ASSETS

 

		North Star Opportunity Fund
		For the Six Months				For the Year
		Ended				Ended
		May 31, 2019				November 30, 2018
		(Unaudited)
Operations
Net Investment Income		$	1,005,535			$	1,778,089
Net Realized Gain/(Loss) on Investments			(743,984	)			3,111,478
Net Change in Unrealized Appreciation/(Depreciation) on Investments			(3,706,226	)			(2,367,423	)
Net Increase/(Decrease) in Net Assets Resulting From Operations			(3,444,675	)			2,522,144
Distributions to Shareholders:
Class I			(4,022,013	)			(2,258,317	)
Class A			(233,811	)			(403	)
Total Distributions Paid			(4,255,824	)			(2,258,720	)
Capital Shares of Beneficial Interest
Class I Shares:
Proceeds from Shares Sold (411,723 and 227,826 shares, respectively)			5,185,727				3,112,095
Distributions Reinvested (290,815 and 149,331 shares, respectively)			3,591,473				2,031,071
Cost of Shares Redeemed (341,905 and 149,100 shares, respectively)			(4,372,602	)			(2,041,663	)
Redemption Fee Proceeds			194				—
Total Class I Shares			4,404,792				3,101,503
Class A Shares:
Proceeds from Shares Sold (13,838 and 0 shares, respectively)			181,230				—
Proceeds from Shares Issued in Connection with Acquisition of Regal Total Return Fund (Note 10) (2,890,270 and 0 shares, respectively)			37,791,729				—
Distributions Reinvested (18,103 and 0 shares, respectively)			231,846				—
Cost of Shares Redeemed (165,124 and 0 shares, respectively)			(2,170,031	)			—
Total Class A Shares			36,034,774				—
Net Increase in Net Assets From Shares of Beneficial Interest			40,439,566				3,101,503
Total Increase in Net Assets			32,739,067				3,364,927
Net Assets
Beginning of Period			84,489,341				81,124,414
End of Period		$	117,228,408			$	84,489,341

 

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

North Star Funds

STATEMENTS OF CHANGES IN NET ASSETS

 

		North Star
		Micro Cap Fund
		For the Six Months				For the Year
		Ended				Ended
		May 31, 2019				November 30, 2018
		(Unaudited)
Operations
Net Investment Income		$	34,747			$	6,756
Net Realized Gain/(Loss) on Investments			(149,000	)			4,500,308
Net Change in Unrealized Appreciation/(Depreciation) on Investments			(946,914	)			(9,376,320	)
Net Decrease in Net Assets Resulting From Operations			(1,061,167	)			(4,869,256	)
Distributions to Shareholders:
Class I Shares:
Total Distributions Paid			(4,962,613	)			(2,567,005	)
Capital Shares of Beneficial Interest
Class I Shares:
Proceeds from Shares Sold (37,377 and 64,463 shares, respectively)			864,460				1,860,974
Distributions Reinvested (186,466 and 83,044 shares, respectively)			4,411,795				2,312,769
Cost of Shares Redeemed (143,376 and 70,050 shares, respectively)			(3,507,819	)			(1,994,054	)
Total Class I Shares			1,768,436				2,179,689
Total Decrease in Net Assets			(4,255,344	)			(5,256,572	)
Net Assets
Beginning of Period			77,748,189				83,004,761
End of Period		$	73,492,845			$	77,748,189

 

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

North Star Funds

STATEMENTS OF CHANGES IN NET ASSETS

 

		North Star
		Dividend Fund
		For the Six Months				For the Year
		Ended				Ended
		May 31, 2019				November 30, 2018
		(Unaudited)
Operations
Net Investment Income		$	1,307,934			$	1,867,383
Net Realized Gain on Investments			202,450				3,440,775
Net Change in Unrealized Appreciation/(Depreciation) on Investments			(4,068,496	)			(11,003,082	)
Net Decrease in Net Assets Resulting From Operations			(2,558,112	)			(5,694,924	)
Distributions to Shareholders:
Class I Shares:
Total Distributions Paid			(4,269,994	)			(1,843,416	)
Capital Shares of Beneficial Interest
Class I Shares:
Proceeds from Shares Sold (192,631 and 515,261 shares, respectively)			3,574,193				11,419,112
Distributions Reinvested (203,707 and 74,913 shares, respectively)			3,773,520				1,632,015
Cost of Shares Redeemed (294,876 and 334,552 shares, respectively)			(5,533,872	)			(7,141,116	)
Redemption Fee Proceeds			291				1,308
Total Class I Shares			1,814,132				5,911,319
Total Decrease in Net Assets			(5,013,974	)			(1,627,021	)
Net Assets
Beginning of Period			79,133,788				80,760,809
End of Period		$	74,119,814			$	79,133,788

 

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

North Star Funds

STATEMENTS OF CHANGES IN NET ASSETS

 

		North Star
		Bond Fund
		For the Six Months				For the Year
		Ended				Ended
		May 31, 2019				November 30, 2018
		(Unaudited)
Operations
Net Investment Income		$	421,048			$	821,911
Net Realized Gain/(Loss) on Investments			10,369				(87,311	)
Net Change in Unrealized Appreciation/(Depreciation) on Investments			286,344				(1,026,065	)
Net Increase/(Decrease) in Net Assets Resulting From Operations			717,761				(291,465	)
Distributions to Shareholders:
Class I Shares:
Total Distributions Paid			(424,963	)			(829,318	)
Capital Shares of Beneficial Interest
Class I Shares:
Proceeds from Shares Sold (193,370 and 180,222 shares, respectively)			1,847,162				1,767,650
Distributions Reinvested (35,644 and 56,012 shares, respectively)			340,280				545,079
Cost of Shares Redeemed (186,364 and 174,893 shares, respectively)			(1,763,085	)			(1,709,099	)
Redemption Fee Proceeds			—				498
Total Class I Shares			424,357				604,128
Total Increase/(Decrease) in Net Assets			717,155				(516,655	)
Net Assets
Beginning of Period			22,539,248				23,055,903
End of Period		$	23,256,403			$	22,539,248

 

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

North Star Funds

FINANCIAL HIGHLIGHTS

 

The table below sets forth financial data for one share of beneficial interest outstanding throughout each period.

 

		North Star Opportunity Fund
		Class I
		For the Six Months				For the Year				For the Year				For the Year				For the Year				For the Year
		Ended				Ended				Ended				Ended				Ended				Ended
		May 31, 2019				November 30, 2018				November 30, 2017				November 30, 2016				November 30, 2015				November 30, 2014
		(Unaudited)
Net Asset Value, Beginning of Period		$	13.52			$	13.47			$	12.18			$	11.15			$	13.46			$	13.75
Activity From Investment Operations:
Net investment income (a)			0.13				0.29				0.18				0.16				0.27				0.20
Net gain (loss) from securities (both realized and unrealized)			(0.51	)			0.13				1.25				1.00				(1.36	)			0.95
Total from operations			(0.38	)			0.42				1.43				1.16				(1.09	)			1.15
Less Distributions From:
Net investment income			(0.12	)			(0.25	)			(0.13	)			(0.13	)			(0.28	)			(0.18	)
Net realized gains on investments			(0.52	)			(0.12	)			(0.01	)			—				(0.91	)			(1.26	)
Return of Capital			—				—				—				—				(0.03	)			—
Total Distributions			(0.64	)			(0.37	)			(0.14	)			(0.13	)			(1.22	)			(1.44	)
Redemption Fees			0.00	(b)			—				—				—				0.00	(b)			0.00	(b)
Net Asset Value, End of Period		$	12.50			$	13.52			$	13.47			$	12.18			$	11.15			$	13.46
Total Return (c)			(2.72	)% (d)			3.13	%			11.76	%			10.51	%			(8.47	)%			9.33	%
Ratios/Supplemental Data
Net assets, end of period (in 000’s)		$	82,628			$	84,473			$	81,108			$	74,341			$	70,824			$	76,459
Ratio to average net assets:
Expenses, Gross (e)			1.39	% (f)			1.42	%			1.42	%			1.49	%			1.36	%			1.31	%
Expenses, Net of waiver or recapture			1.38	% (f,g)			1.42	%			1.42	%			1.49	%			1.36	%			1.31	%
Net investment income			1.97	% (f)			2.11	%			1.40	%			1.40	%			2.26	%			1.58	%
Portfolio turnover rate			38	% (d)			44	%			47	%			61	%			61	%			53	%

 

(a)

Per share amounts are calculated using the average shares method, which more appropriately presents the per share data for the period.

 

(b)

Less than $0.005 per share.

 

(c)

Total returns are historical in nature and assume changes in share price, reinvestment of dividends and capital gains distributions, if any.

 

(d)

Not annualized.

 

(e)

Represents the ratio of expenses to average net assets absent any fee waivers, expense reimbursements and/or expense recapture by the Adviser.

 

(f)

Annualized.

 

(g)

Effective February 16, 2019, the expense limitation was reduced to 1.30%

 

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

North Star Funds

FINANCIAL HIGHLIGHTS

 

The table below sets forth financial data for one share of beneficial interest outstanding throughout each period.

 

		North Star Opportunity Fund
		Class A
		For the Six Months				For the Year				For the Year				For the Year				For the Year				For the Year
		Ended				Ended				Ended				Ended				Ended				Ended
		May 31, 2019				November 30, 2018				November 30, 2017				November 30, 2016				November 30, 2015				November 30, 2014
		(Unaudited)
Net Asset Value, Beginning of Period		$	13.57			$	13.51			$	12.22			$	11.15			$	13.46			$	13.75
Activity From Investment Operations:
Net investment income (a)			0.12				0.26				0.15				0.14				0.27				0.20
Net gain (loss) from securities (both realized and unrealized)			(0.52	)			0.13				1.24				1.04				(1.36	)			0.95
Total from operations			(0.40	)			0.39				1.39				1.18				(1.09	)			1.15
Less Distributions From:
Net investment income			(0.11	)			(0.21	)			(0.09	)			(0.11	)			(0.28	)			(0.18	)
Net realized gains on investments			(0.52	)			(0.12	)			(0.01	)			—				(0.91	)			(1.26	)
Return of Capital			—				—				—				—				(0.03	)			—
Total Distributions			(0.63	)			(0.33	)			(0.10	)			(0.11	)			(1.22	)			(1.44	)
Net Asset Value, End of Period			12.54				13.57				13.51			$	12.22			$	11.15			$	13.46
Total Return (b)			(2.89	)% (c)			2.92	%			11.44	%			10.49	%			(8.47	)%			9.33	%
Ratios/Supplemental Data
Net assets, end of period (in 000’s)		$	34,600			$	16			$	17			$	15			$	14	(d)		$	16	(d)
Ratio to average net assets:
Expenses, Gross (e)			1.56	% (f)			1.67	%			1.68	%			1.74	%			1.61	%			1.56	%
Expenses, Net of waiver or recapture			1.55	% (f,g)			1.67	%			1.68	%			1.74	%			1.61	%			1.56	%
Net investment income			1.77	% (f)			1.86	%			1.15	%			1.19	%			2.01	%			1.33	%
Portfolio turnover rate			38	% (c)			44	%			47	%			61	%			61	%			53	%

 

(a)

Per share amounts are calculated using the average shares method, which more appropriately presents the per share data for the period.

 

(b)

Total returns are historical in nature and assume changes in share price, reinvestment of dividends and capital gains distributions, if any.

 

(c)

Not annualized.

 

(d)

Actual net assets not truncated.

 

(e)

Represents the ratio of expenses to average net assets absent any fee waivers, expense reimbursements and/or expense recapture by the Adviser.

 

(f)

Annualized.

 

(g)

Effective February 16, 2019, the expense limitation was reduced to 1.55%.

 

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

North Star Funds

FINANCIAL HIGHLIGHTS

 

The table below sets forth financial data for one share of beneficial interest outstanding throughout each period.

 

		North Star Micro Cap Fund
		Class I
		For the Six Months				For the Year				For the Year				For the Year				For the Year				For the Year
		Ended				Ended				Ended				Ended				Ended				Ended
		May 31, 2019				November 30, 2018				November 30, 2017				November 30, 2016				November 30, 2015				November 30, 2014
		(Unaudited)
Net Asset Value, Beginning of Period		$	26.86			$	29.47			$	28.02			$	24.51			$	29.52			$	29.53
Activity From Investment Operations:
Net investment income (loss) (a)			0.01				0.00	(b)			(0.05	)			(0.05	)			0.12				0.01
Net gain (loss) from securities (both realized and unrealized)			(0.44	)			(1.70	)			2.43				4.76				(2.71	)			1.68
Total from operations			(0.43	)			(1.70	)			2.38				4.71				(2.59	)			1.69
Less Distributions From:
Net investment income			(0.04	)			—				—				(0.03	)			(0.14	)			—
Net realized gains on investments			(1.68	)			(0.91	)			(0.93	)			(1.17	)			(2.28	)			(1.70	)
Total Distributions			(1.72	)			(0.91	)			(0.93	)			(1.20	)			(2.42	)			(1.70	)
Net Asset Value, End of Period		$	24.71			$	26.86			$	29.47			$	28.02			$	24.51			$	29.52
Total Return (c)			(1.33	)% (d)			(5.87	)%			8.71	%			20.31	%			(9.49	)%			6.17	%
Ratios/Supplemental Data
Net assets, end of period (in 000’s)		$	73,493			$	77,748			$	83,005			$	77,742			$	66,677			$	71,429
Ratio to average net assets:
Expenses, Gross (e)			1.47	% (f)			1.39	%			1.39	%			1.46	%			1.35	%			1.34	%
Expenses, Net of waiver or recapture			1.47	% (f)			1.39	%			1.39	%			1.46	%			1.35	%			1.34	%
Net investment income (loss)			0.09	% (f)			0.01	%			(0.18	)%			(0.21	)%			0.44	%			0.05	%
Portfolio turnover rate			13	% (d)			32	%			28	%			33	%			34	%			31	%

 

(a)

Per share amounts are calculated using the average shares method, which more appropriately presents the per share data for the period.

 

(b)

Less than $0.005 per share.

 

(c)

Total returns are historical in nature and assume changes in share price, reinvestment of dividends and capital gains distributions, if any.

 

(d)

Not annualized.

 

(e)

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

 

(f)

Annualized.

 

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

North Star Funds

FINANCIAL HIGHLIGHTS

 

The table below sets forth financial data for one share of beneficial interest outstanding throughout each period.

 

		North Star Dividend Fund
		Class I
		For the Six Months				For the Year				For the Year				For the Year				For the Year				For the Year
		Ended				Ended				Ended				Ended				Ended				Ended
		May 31, 2019				November 30, 2018				November 30, 2017				November 30, 2016				November 30, 2015				November 30, 2014
		(Unaudited)
Net Asset Value, Beginning of Period		$	20.09			$	21.93			$	20.46			$	17.68			$	18.33			$	18.18
Activity From Investment Operations:
Net investment income (a)			0.32				0.49				0.47				0.39				0.50				0.44
Net gain (loss) from securities (both realized and unrealized)			(0.98	)			(1.85	)			2.04				2.94				(0.31	)			0.61
Total from operations			(0.66	)			(1.36	)			2.51				3.33				0.19				1.05
Less Distributions From:
Net investment income			(0.29	)			(0.48	)			(0.46	)			(0.38	)			(0.50	)			(0.45	)
Net realized gains on investments			(0.79	)			—				(0.51	)			(0.17	)			(0.34	)			(0.45	)
Return of Capital			—				—				(0.07	)			—				—				—
Total Distributions			(1.08	)			(0.48	)			(1.04	)			(0.55	)			(0.84	)			(0.90	)
Redemption Fees (b)			0.00				0.00				0.00				0.00				0.00				0.00
Net Asset Value, End of Period		$	18.35			$	20.09			$	21.93			$	20.46			$	17.68			$	18.33
Total Return (c)			(3.29	)% (d)			(6.35	)%			12.74	%			19.30	%			1.09	%			6.01	%
Ratios/Supplemental Data
Net assets, end of period (in 000’s)		$	74,120			$	79,134			$	80,761			$	67,886			$	50,922			$	49,417
Ratio to average net assets:
Expenses, Gross (e)			1.49	% (f)			1.42	%			1.41	%			1.48	%			1.39	%			1.38	%
Expenses, Net of waiver or recapture			1.49	% (f)			1.42	%			1.41	%			1.48	%			1.39	%			1.38	%
Net investment income			3.40	% (f)			2.21	%			2.29	%			2.12	%			2.80	%			2.43	%
Portfolio turnover rate			10	% (d)			20	%			18	%			23	%			25	%			22	%

 

(a)

Per share amounts are calculated using the average shares method, which more appropriately presents the per share data for the period.

 

(b)

Less than $0.005 per share.

 

(c)

Total returns are historical in nature and assume changes in share price, reinvestment of dividends and capital gains distributions, if any.

 

(d)

Not annualized.

 

(e)

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

 

(f)

Annualized.

 

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

North Star Funds

FINANCIAL HIGHLIGHTS

 

The table below sets forth financial data for one share of beneficial interest outstanding throughout each period.

 

		North Star Bond Fund
		Class I
		For the Six Months				For the Year				For the Year				For the Year				For the Period
		Ended				Ended				Ended				Ended				Ended
		May 31, 2019				November 30, 2018				November 30, 2017				November 30, 2016				November 30, 2015 (a)
		(Unaudited)
Net Asset Value, Beginning of Period		$	9.44			$	9.92			$	9.93			$	9.74			$	10.00
Activity From Investment Operations:
Net investment income (b)			0.18				0.35				0.32				0.31				0.28
Net gain (loss) from securities (both realized and unrealized)			0.13				(0.48	)			(0.02	)			0.22				(0.30	)
Total from operations			0.31				(0.13	)			0.30				0.53				(0.02	)
Less Distributions From:
Net investment income			(0.18	)			(0.35	)			(0.31	)			(0.31	)			(0.24	)
Net realized gains on investments			—				—				—				(0.03	)			—
Total Distributions			(0.18	)			(0.35	)			(0.31	)			(0.34	)			(0.24	)
Redemption Fees			—				0.00	(c)			—				—				0.00	(c)
Net Asset Value, End of Period		$	9.57			$	9.44			$	9.92			$	9.93			$	9.74
Total Return (d)			3.28	% (e)			(1.34	)%			3.09	%			5.55	%			(0.20	)% (e)
Ratios/Supplemental Data
Net assets, end of period (in 000’s)		$	23,256			$	22,539			$	23,056			$	16,390			$	10,556
Ratio to average net assets:
Expenses, Gross (f)			1.69	% (g)			1.68	%			1.71	%			1.70	%			2.48	% (g)
Expenses, Net of expense waiver or recapture			1.69	% (g)			1.77	%			1.79	%			1.79	%			1.79	% (g)
Net investment income			3.71	% (g)			3.57	%			3.16	%			3.16	%			3.02	% (g)
Portfolio turnover rate			10	% (e)			23	%			26	%			30	%			33	% (e)

 

(a)

The North Star Bond Fund commenced operations on December 19, 2014.

 

(b)

Per share amounts are calculated using the average shares method, which more appropriately presents the per share data for the period.

 

(c)

Less than $0.005 per share.

 

(d)

Total return represents aggregate total return based on Net Asset Value. Total returns are historical in nature and assume changes in share price, reinvestment of dividends and capital gains distributions, if any. Had the Adviser not absorbed a portion of the expenses for the period ended November 30, 2015, total returns would have been lower.

 

(e)

Not annualized.

 

(f)

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

 

(g)

Annualized.

 

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

North Star Funds

NOTES TO FINANCIAL STATEMENTS (Unaudited)

May 31, 2019

 

1.

ORGANIZATION

 

The North Star Opportunity Fund, the North Star Micro Cap Fund, the North Star Dividend Fund and the North Star Bond Fund (each a “Fund,” and together the “Funds”) are each a series of shares of beneficial interest of the Northern Lights Fund Trust II (the “Trust”), a trust organized under the laws of the State of Delaware on August 26, 2010, and are registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment companies.

 

The diversification policy of each Fund is as follows:

 

Fund
North Star Opportunity Fund		Diversified
North Star Micro Cap Fund		Diversified
North Star Dividend Fund		Diversified
North Star Bond Fund		Diversified

 

The investment objective of each Fund is as follows:

 

Fund		Primary Objective
North Star Opportunity Fund		To seek long-term capital appreciation
North Star Micro Cap Fund		Capital appreciation and to derive income from short term liquid securities
North Star Dividend Fund		To generate dividend income and to seek capital appreciation
North Star Bond Fund		To generate income, with preservation of capital

 

The North Star Micro Cap Fund is the successor to the Kuby Gottlieb Special Value Fund, L.P. (the “Predecessor Micro Cap Fund”), which transferred its assets to the North Star Micro Cap Fund in connection with the North Star Micro Cap Fund’s commencement of operations. The North Star Dividend Fund is the successor to the North Star Dividend Fund, L.P. (the “Predecessor Dividend Fund”), which transferred its assets to the North Star Dividend Fund in connection with the North Star Dividend Fund’s commencement of operations. The North Star Opportunity Fund is the successor to the North Star Opportunity Fund, L.P. (the “Predecessor North Star Opportunity Fund”), which transferred its assets to the Fund in connection with the North Star Opportunity Fund’s commencement of operations. The Predecessor Funds were managed by the same adviser who currently manages the Funds, and have substantially similar investment objectives and strategies to those of the Funds. Each Fund commenced operations on the following dates:

 

Fund		Date
North Star Opportunity Fund		December 15, 2011
North Star Micro Cap Fund		May 31, 2013
North Star Dividend Fund		May 31, 2013
North Star Bond Fund		December 19, 2014

The North Star Micro Cap Fund, the North Star Dividend Fund and North Star Bond Fund currently offer Class I shares. The North Star Opportunity Fund currently offers Class I and Class A shares. Class A shares are offered at net asset value plus a maximum sales charge of 5.75%. Class I shares are offered at net asset value. Each class represents an interest in the same assets of the Fund and classes are identical except for differences in their sales charge structures and ongoing service and distribution charges. All classes of shares have equal voting privileges except that each class has exclusive voting rights with respect to its service and/or distribution plans. The Funds’ income, expenses (other than class specific distribution fees) and realized and unrealized gains and losses are allocated proportionately each day based upon the relative net assets of each class.

North Star Funds

NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)

May 31, 2019

 

2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

The following is a summary of significant accounting policies followed by the Funds in preparation of their financial statements. These policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses for the period. Actual results could differ from those estimates. The Funds are investment companies and accordingly follow the investment company accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standard Codification Topic 946 “Financial Services – Investment Companies” including FASB Accounting Standard Update ASU 2013-08.

 

Securities valuation – Securities listed on an exchange are valued at the last reported sale price at the close of the regular trading session of the primary exchange on the business day the value is being determined, or in the case of securities listed on NASDAQ at the NASDAQ Official Closing Price. In the absence of a sale such securities shall be valued at the mean between the current bid and ask prices on the day of valuation. Short-term investments that mature in 60 days or less may be valued at amortized cost, provided such valuations represent fair value. Debt securities (other than short-term obligations) are valued each day by an independent pricing service approved by the Board of Trustees (the “Board”) based on methods which include consideration of: yields or prices of securities of comparable quality, coupon, maturity and type, indications as to values from dealers, and general market conditions or market quotations from a major market maker in the securities. Investments in open-ended investment companies are valued at net asset value.

 

The Funds may hold securities, such as private investments, interests in commodity pools, other non-traded securities or temporarily illiquid securities, for which market quotations are not readily available or are determined to be unreliable. These securities will be valued using the “fair value” procedures approved by the Board. The Board has delegated execution of these procedures to a fair value team composed of one or more representatives from each of the (i) Trust, (ii) administrator, and (iii) advisor. The team may also enlist third party consultants such as a valuation specialist at a public accounting firm, valuation consultant or financial officer of a security issuer on an as-needed basis to assist in determining a security-specific fair value. The Board has also engaged a third party valuation firm to attend valuation meetings held by the Trust, review minutes of such meetings and report to the Board on a quarterly basis. The Board reviews and ratifies the execution of this process and the resultant fair value prices at least quarterly to assure the process produces reliable results.

 

Fair Valuation Process – As noted above, the fair value team is composed of one or more representatives from each of the (i) Trust, (ii) administrator, and (iii) adviser. The applicable investments are valued collectively via inputs from each of these groups. For example, fair value determinations are required for the following securities: (i) securities for which market quotations are insufficient or not readily available on a particular business day (including securities for which there is a short and temporary lapse in the provision of a price by the regular pricing source), (ii) securities for which, in the judgment of the adviser, the prices or values available do not represent the fair value of the instrument. Factors which may cause the adviser to make such a judgment include, but are not limited to, the following: only a bid price or an ask price is available; the spread between bid and ask prices is substantial; the frequency of sales; the thinness of the market; the size of reported trades; and actions of the securities markets, such as the suspension or limitation of trading; (iii) securities determined to be illiquid; (iv) securities with respect to which an event that will affect the value thereof has occurred (a “significant event”) since the closing prices were established on the principal exchange on which they are traded, but prior to the Fund’s calculation of its net asset value. Specifically, interests in commodity pools or managed futures pools are valued on a daily basis by reference to the closing market prices of each futures contract or other asset held by a pool, as adjusted for pool expenses. Restricted or illiquid securities, such as private investments or non-traded securities are valued via inputs from the adviser based upon the current bid for the security from two or more independent dealers or other parties reasonably familiar with the facts and circumstances of the security (who should take into consideration all relevant factors

North Star Funds

NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)

May 31, 2019

 

as may be appropriate under the circumstances). If the adviser is unable to obtain a current bid from such independent dealers or other independent parties, the fair value team shall determine the fair value of such security using the following factors: (i) the type of security; (ii) the cost at date of purchase; (iii) the size and nature of the Fund’s holdings; (iv) the discount from market value of unrestricted securities of the same class at the time of purchase and subsequent thereto; (v) information as to any transactions or offers with respect to the security; (vi) the nature and duration of restrictions on disposition of the security and the existence of any registration rights; (vii) how the yield of the security compares to similar securities of companies of similar or equal creditworthiness; (viii) the level of recent trades of similar or comparable securities; (ix) the liquidity characteristics of the security; (x) current market conditions; and (xi) the market value of any securities into which the security is convertible or exchangeable.

 

The Funds utilize various methods to measure the fair value of all of their investments on a recurring basis. GAAP establishes a hierarchy that prioritizes inputs to valuation methods. The three levels of input are:

 

Level 1 – Unadjusted quoted prices in active markets for identical assets and 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 on 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.

 

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The following tables summarize the inputs used as of May 31, 2019 for the Funds’ investments measured at fair value:

 

North Star Opportunity Fund

 

Assets *		Level 1				Level 2				Level 3				Total
Common Stock		$	89,431,583			$	2,196,750			$	—			$	91,628,333
Preferred Stock			4,538,353				—				—				4,538,353
Corporate Bonds			—				5,549,190				—				5,549,190
U.S. Treasury Obligations			—				9,985,133				—				9,985,133
Short-Term Investments			4,964,044				—				—				4,964,044
Total		$	98,933,980			$	17,731,073			$	—			$	116,665,053

North Star Funds

NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)

May 31, 2019

 

North Star Micro Cap Fund
Assets *		Level 1				Level 2				Level 3				Total
Common Stock		$	66,147,544			$	3,402,217			$	—			$	69,549,761
Short-Term Investments			3,966,671				—				—				3,966,671
Total		$	70,114,215			$	3,402,217			$	—			$	73,516,432
North Star Dividend Fund
Assets *		Level 1				Level 2				Level 3				Total
Common Stock		$	69,809,479			$	1,616,332			$	—			$	71,425,811
Short-Term Investments			2,967,817				—				—				2,967,817
Total		$	72,777,296			$	1,616,332			$	—			$	74,393,628
North Star Bond Fund
Assets *		Level 1				Level 2				Level 3				Total
Preferred Stock		$	4,210,542			$	—			$	—			$	4,210,542
Corporate Bonds			—				17,417,516				—				17,417,516
Convertible Bonds			—				506,146				—				506,146
Short-Term Investments			868,652				—				—				868,652
Total		$	5,079,194			$	17,923,662			$	—			$	23,002,856

 

The Funds did not hold any Level 3 securities during the period.

 

*

Refer to the Portfolios of Investments for security classifications.

 

Security Transactions and Investment Income – Investment security transactions are accounted for on a trade date basis. Cost is determined and gains and losses are based upon the specific identification method for both financial statement and federal income tax purposes. Dividend income is recorded on the ex-dividend date and interest income is recorded on the accrual basis. Purchase discounts and premiums on securities are accreted and amortized over the life of the respective securities.

 

Expenses – Expenses of the Trust that are directly identifiable to a specific fund are charged to that fund. Expenses, which are not readily identifiable to a specific fund, are allocated in such a manner as deemed equitable, taking into consideration the nature and type of expense and the relative sizes of the funds in the Trust.

 

Federal Income Taxes – Each Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code applicable to regulated investment companies and will distribute all of its taxable income, if any, to shareholders. Accordingly, no provision for Federal income taxes is required in the financial statements.

 

Each Fund recognizes the tax benefits of uncertain tax positions only where the position is “more likely than not” to be sustained assuming examination by tax authorities. Management has analyzed the North Star Opportunity Fund, North Star Micro Cap Fund, North Star Dividend Fund and North Star Bond Fund’s tax positions, and has concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions expected to be taken in the 2016 through 2018 tax returns. Management has analyzed each Fund’s tax positions, and has concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions expected to be taken in the Funds’ 2019 tax return for each Fund. Each Fund identifies its major tax jurisdictions as U.S. Federal, Ohio and foreign jurisdictions where the Fund may make significant investments. However, the Funds are 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.

North Star Funds

NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)

May 31, 2019

 

Distributions to Shareholders – The following table summarizes each Fund’s Investment Income and Capital Gain declaration policy:

 

Fund		Income Dividends		Capital Gains
North Star Opportunity Fund		Quarterly		Annually
North Star Micro Cap Fund		Annually		Annually
North Star Dividend Fund		Monthly		Annually
North Star Bond Fund		Monthly		Annually

 

Each Fund records dividends and distributions to its shareholders on the ex-dividend date. Dividends from net investment income and distributions from net realized gains are determined in accordance with federal income tax regulations, which may differ from GAAP. These “book/tax” differences are considered either temporary (e.g., deferred losses, capital loss carryforwards) or permanent in nature. To the extent these differences are permanent in nature, such amounts are reclassified within the composition of net assets based on their federal tax-basis treatment; temporary differences do not require reclassification. Any such reclassifications will have no effect on net assets, results of operations or net asset values per share of each Fund.

 

Indemnification – The Trust indemnifies its officers and trustees for certain liabilities that may arise from the performance of their duties to the Trust. Additionally, in the normal course of business, the Funds enter into contracts that contain a variety of representations and warranties and which provide general indemnities. Each Fund’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Fund that have not yet occurred. However, based on experience, the risk of loss due to these warranties and indemnities appears to be remote.

 

3.

INVESTMENT ADVISORY AGREEMENT AND TRANSACTIONS WITH RELATED PARTIES

 

Advisory Fees – North Star Investment Management Corp. serves as the Funds’ Investment Adviser (the “Adviser”). Pursuant to an Investment Advisory Agreement with the Funds, the Adviser, under the oversight of the Board, directs the daily operations of the Funds and supervises the performance of administrative and professional services provided by others. Under the terms of the Advisory Agreement, the Adviser receives monthly fees calculated at an annual rate of the average daily net assets of each Fund:

 

Fund		Advisory Fee
North Star Opportunity Fund*		1.00% on the first $100 million in net assets
		0.90% on assets greater than $100 million
North Star Micro Cap Fund		1.00%
North Star Dividend Fund		1.00%
North Star Bond Fund		0.85%

 

*

Prior to February 16, 2019, the Adviser received monthly fees calculated at an annual rate of 1.00% of the average daily net assets for the North Star Opportunity Fund.

 

For the six months ended May 31, 2019, the Adviser earned advisory fees of:

 

Fund		Advisory Fee
North Star Opportunity Fund		$	515,451
North Star Micro Cap Fund			376,905
North Star Dividend Fund			384,350
North Star Bond Fund			96,472

North Star Funds

NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)

May 31, 2019

 

The Adviser has contractually agreed, at least until March 31, 2020 for the North Star Micro Cap, North Star Dividend and North Star Bond Funds and through March 31, 2021 for the North Star Opportunity Fund, to waive all or part of its management fees and/or make payments to limit Funds expenses (exclusive of any front-end or contingent deferred loads, taxes, leverage interest, brokerage commissions, expenses incurred in connection with any merger or reorganization, dividend expense on securities sold short, acquired fund fees and expenses, or extraordinary expenses such as litigation) so that the total annual operating expenses of the Funds do not exceed 1.55% and 1.30% of the North Star Opportunity Fund’s average net assets, for Class A and Class I shares, respectively, 1.74% of the North Star Micro Cap Fund’s average net assets for Class I shares, 1.74% of the North Star Dividend Fund’s average net assets for Class I shares and 1.79% of the North Star Bond Fund’s average net assets for Class I shares. Prior to February 16, 2019, the Adviser contractually agreed that the total annual operating expenses for the North Star Opportunity Fund’s average net assets for Class A and Class I shares did not exceed 1.99% and 1.74%, respectively. The Adviser waived fees in the amount of $4,264 in the North Star Opportunity Fund for the six months ended May 31, 2019.

 

If the Adviser waives any fee or reimburses any expense pursuant to the Waiver Agreement, and the Fund’s Operating Expenses are subsequently less than 1.55% and 1.30% of the North Star Opportunity Fund’s average daily net assets attributable to Class I and Class A shares, respectively, 1.74% of the North Star Micro Cap Fund’s and North Star Dividend Fund’s average daily net assets for Class I shares and 1.79% of the North Star Bond Fund’s average daily net assets for Class I shares, the Adviser shall be entitled to recapture by the Funds for such waived fees or reimbursed expenses provided that such reimbursement does not cause the Funds expenses to exceed 1.55% and 1.30% of the North Star Opportunity Fund’s average daily net assets for Class I and Class A shares, respectively, 1.74% of the North Star Micro Cap Fund’s and North Star Dividend Fund’s average daily net assets for Class I shares and 1.79% of the North Star Bond Fund’s average daily net assets for Class I shares. If Fund Operating Expenses subsequently exceed 1.55% and 1.30% of the North Star Opportunity Fund’s Class I and Class A shares respectively, 1.74% of the North Star Micro Cap Fund’s and North Star Dividend Fund’s Class I shares and 1.79% of the North Star Bond Fund’s Class I shares per annum of the average daily net assets, the reimbursements shall be suspended.

 

The Adviser may seek reimbursement only for expenses waived or paid by it during the three fiscal years prior to such reimbursement; provided, however, that such expenses may only be reimbursed to the extent they were waived or paid after the date of the Waiver Agreement (or any similar agreement.) The Board may terminate this expense reimbursement arrangement at any time. For the fiscal year ended November 30, 2018, the North Star Micro Cap, North Star Dividend and North Star Bond Funds had no recapture available. As of May 31, 2019, the North Star Opportunity Fund has $4,264 available for recapture.

 

Distributor – The Board has adopted the Trust’s Master Distribution and Shareholder Service Plan (the “Plan”) pursuant to Rule 12b-1 under the 1940 Act. The distributor of the Funds is Northern Lights Distributors, LLC (the “Distributor”). The Board of Trustees of the Northern Lights Fund Trust II has adopted, on behalf of the North Star Opportunity Fund, a Distribution Plan pursuant to Rule 12b-1 under the Investment Company Act of 1940 (the “Plan”), as amended, to pay for certain distribution activities and shareholder services. Under the Plan, the Fund is permitted to pay 0.25% per year of its average daily net assets of Class A shares for such distribution and shareholder service activities. For the six months ended May 31, 2019, the North Star Opportunity Fund Class A shares incurred $26,732 in distribution fees.

 

The Distributor acts as the Funds’ principal underwriter in a continuous offering of each Fund’s shares. For the six months ended May 31, 2019, the Distributor received $28 in underwriting commissions, of which $2 was retained by the principal underwriter for sales of the North Star Opportunity Fund’s Class A shares.

North Star Funds

NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)

May 31, 2019

 

In addition, certain affiliates of the Distributor provide services to the Funds as follows:

 

Gemini Fund Services, LLC (“GFS”) – an affiliate of the Distributor, provides administration, fund accounting, and transfer agent services to the Trust. Pursuant to separate servicing agreements with GFS, the Fund pays GFS customary fees for providing administration, fund accounting and transfer agency services to the Fund. Certain officers of the Trust are also officers of GFS, and are not paid any fees directly by the Fund for serving in such capacities.

 

Northern Lights Compliance Services, LLC (“NLCS”) – NLCS, an affiliate of GFS and the Distributor, provides a Chief Compliance Officer to the Trust, as well as related compliance services, pursuant to a consulting agreement between NLCS and the Trust. Under the terms of such agreement, NLCS receives customary fees from the Funds.

 

Blu Giant, LLC (“Blu Giant”) – Blu Giant, an affiliate of GFS and the Distributor, provides EDGAR conversion and filing services as well as print management services for the Funds on an ad-hoc basis. For the provision of these services, Blu Giant receives customary fees from the Funds.

 

On February 1, 2019, NorthStar Financial Services Group, LLC, the parent company of GFS and its affiliated companies including NLD, NLCS and Blu Giant (collectively, the “Gemini Companies”), sold its interest in the Gemini Companies to a third party private equity firm that contemporaneously acquired Ultimus Fund Solutions, LLC (an independent mutual fund administration firm) and its affiliates (collectively, the “Ultimus Companies”).

 

4.

INVESTMENT TRANSACTIONS

 

The cost of purchases and proceeds from the sale of securities, other than short-term securities, for the six months ended May 31, 2019 were as follows:

 

Fund		Purchases				Sales
North Star Opportunity Fund		$	69,430,731			$	37,146,471
North Star Micro Cap Fund			9,536,484				10,565,468
North Star Dividend Fund			7,066,250				9,416,516
North Star Bond Fund			2,425,069				2,254,963

 

5.

CONTROL OWNERSHIP

 

The beneficial ownership, either directly or indirectly, of more than 25% of the voting securities of a Fund creates presumption of control of the Fund, under Section 2(a)(9) of the 1940 Act. As of May 31, 2019, NFS LLC held approximately 59.7% of the voting securities of the North Star Opportunity Fund, 69.6% of the North Star Micro Cap Fund, 67.8% of the North Star Dividend Fund and 80.6% of the North Star Bond Fund. The Trust has no knowledge as to whether all or any portion of the shares owned of record are also beneficially owned by NFS LLC.

 

6.

REDEMPTION FEES

 

The Funds may assess a short-term redemption fee of 2.00% of the total redemption amount if shareholders sell their shares after holding them for less than 30 days. The redemption fee is paid directly to the Funds. For the six months ended May 31, 2019 the North Star Opportunity Fund had $194 in redemption fees and the North Star Dividend Fund had $291 in redemption fees. The North Star Micro Cap Fund and North Star Bond Fund did not charge any redemption fees for the six months ended May 31, 2019.

North Star Funds

NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)

May 31, 2019

 

7.

INVESTMENTS IN AFFILIATED ISSUERS

 

An affiliated issuer is an issuer in which the Fund has ownership of at least 5% of the voting securities. Issuers which are affiliates of the North Star Micro Cap Fund and the North Star Dividend Fund at May 31, 2019, are noted in each Fund’s Portfolio of Investments.

 

Transactions during the period with companies which are affiliates are as follows:

  

North Star Micro Cap Fund
		Shares																												Net Change in
																		Dividends												Unrealized
		Beginning of												End of				Credited to				Realized								Appreciation
Description		Period				Purchases				Sales				Period				Income				Gain/(Loss)				Fair Value				(Depreciation)
NTN Buzztime, Inc.			143,350				—				—				143,350			$	—			$	—			$	501,725			$	174,886
Truett-Hurst, Inc. - Class A			405,200				—				(126,258	)			278,942				—				(270,859	)			384,940				160,574
North Star Dividend Fund
		Shares																												Net Change in
																		Dividends												Unrealized
		Beginning of												End of				Credited to				Realized								Appreciation
Description		Period				Purchases				Sales				Period				Income				Gain/(Loss)				Fair Value				(Depreciation)
Marketing Alliance, Inc.			536,720				7,500				—				544,220			$	140,022			$	—			$	1,616,332			$	(8,076	)

8.

AGGREGATE UNREALIZED APPRECIATION AND DEPRECIATION

 

The identified cost of investments in securities owned by each Fund for federal income tax purposes, and their respective gross unrealized appreciation and depreciation at May 31, 2019, were as follows:

 

														Net Unrealized
						Gross Unrealized				Gross Unrealized				Appreciation/
Fund		Tax Cost				Appreciation				Depreciation				(Depreciation)
North Star Opportunity Fund		$	106,811,825			$	16,995,618			$	(7,142,390	)		$	9,853,228
North Star Micro Cap Fund			67,750,083				15,758,660				(9,992,311	)			5,766,349
North Star Dividend Fund			71,641,413				12,905,716				(10,153,501	)			2,752,215
North Star Bond Fund			23,723,598				148,798				(869,540	)			(720,742	)

 

9.

DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF CAPITAL

 

The tax character of fund distributions for the following periods was as follows:

 

		For the period ended November 30, 2018												For the period ended November 30, 2017
		Ordinary				Long-Term								Ordinary				Long-Term				Return of
Fund		Income				Capital Gains				Total				Income				Capital Gains				Capital				Total
North Star Opportunity Fund		$	1,511,914			$	746,806			$	2,258,720			$	785,740			$	36,863			$	—			$	822,603
North Star Micro Cap Fund			—				2,567,005				2,567,005				—				2,582,363				—				2,582,363
North Star Dividend Fund			1,798,322				45,094				1,843,416				1,761,258				1,623,328				225,811				3,610,397
North Star Bond Fund			829,318				—				829,318				660,494				—				—				660,494

North Star Funds

NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)

May 31, 2019

 

As of November 30, 2018, the components of accumulated earnings/(deficit) on a tax basis were as follows:

 

		Undistributed				Undistributed				Capital Loss				Other				Post October Loss				Unrealized				Total
		Ordinary				Long-Term				Carry				Book/Tax				and				Appreciation/				Accumulated
Fund		Income				Capital Gains				Forwards				Differences				Late Year Loss				(Depreciation)				Earnings/(Deficits)
North Star Opportunity Fund		$	3,131,594			$	264,180			$	—			$	(33,076	)		$	(11,533	)		$	12,767,781			$	16,118,946
North Star Micro Cap Fund			—				4,788,281				—				440,525				(381,832	)			6,713,263				11,560,237
North Star Dividend Fund			—				3,053,993				—				1,464,063				—				6,820,711				11,338,767
North Star Bond Fund			18,058				—				(222,006	)			—				—				(1,007,086	)			(1,211,034	)

The difference between book basis and tax basis unrealized appreciation (depreciation), undistributed ordinary income (loss) and accumulated net realized gain (loss) from investments is primarily attributable to the tax deferral of losses on wash sales and adjustments for tax gain/loss due to the Funds’ conversion from limited partnerships and tax adjustments for partnerships, trust preferred securities, C-Corporations with return of capital distributions and perpetual bonds.

 

Capital losses incurred after October 31 within the fiscal year are deemed to arise on the first business day of the following fiscal year for tax purposes. The following Funds incurred and elected to defer such capital losses as follows:

 

Fund		Post October Losses
North Star Opportunity Fund		$	11,533
North Star Micro Cap Fund			381,832

 

At November 30, 2018, the following Funds had capital loss carry forwards for federal income tax purposes available to offset future capital gains as follows:

 

		Non-Expiring
Fund		Short-Term				Long-Term				Total				CLCF Utilized
North Star Dividend Fund		$	—			$	—			$	—			$	389,896
North Star Bond Fund			29,074				192,932				222,006				—

Permanent book and tax differences, primarily attributable to net operating losses, non-deductible expenses and adjustments for the tax gain/loss due to the Funds’ conversion from limited partnerships, resulted in reclassification for the following Funds for the period ended November 30, 2018 as follows:

 

		Paid				Accumulated
		In				Earnings
Fund		Capital				(Losses)
North Star Opportunity Fund		$	61,294			$	(61,294	)
North Star Micro Cap Fund			(106,290	)			106,290
North Star Dividend Fund			(53,463	)			53,463

North Star Funds

NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)

May 31, 2019

 

10.

FUND REORGANIZATION

 

On February 15, 2019, the North Star Opportunity Fund acquired the assets and certain liabilities of the Regal Total Return Fund (the “Acquired Fund”), pursuant to a plan of reorganization, approved by the Board of Trustees of the Trust, of both the Acquired Fund and the North Star Opportunity Fund. Total shares issued by the North Star Opportunity Fund and the total net assets of the Acquired Fund and the North Star Opportunity Fund on the date of the transfer were as follows:

 

Shares

Total Net

Total Net Assets

issued by

Assets of the

of the Fund after

Acquired Fund

the Fund

Acquired Fund

Merger

Regal Total Return Fund

2,890,270

$

37,791,729

$

122,911,897

As part of the reorganization, for each share they held, shareholders of the Acquired Fund received 0.8183 of the Class A Shares of the North Star Opportunity Fund.

 

The total net assets of the Acquired Fund before acquisition included unrealized appreciation of $791,614. Total net assets of the North Star Opportunity Fund immediately after the transfer were $122,911,897. The transaction was structured to qualify as a tax-free reorganization under the Internal Revenue Code of 1986, as amended.

 

Because the combined investment portfolios have been managed as a single portfolio since the acquisition was completed, it is not practicable to separate the amounts of revenue and earnings of the Acquired Fund that have been included in the North Star Opportunity Fund’s accompanying Statement of Operations since the close of business on February 15, 2019.

 

11.

NEW ACCOUNTING PRONOUNCEMENTS

 

In March 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2017-08, Receivables—Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities. The amendments in the ASU shorten the amortization period for certain callable debt securities, held at a premium, to be amortized to the earliest call date. The ASU does not require an accounting change for securities held at a discount; which continues to be amortized to maturity. The ASU is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2018. Management is currently evaluating the impact, if any, of applying this provision.

 

In August 2018, the FASB issued Accounting Standards Update (“ASU”) No. 2018-13, which changes certain fair value measurement disclosure requirements. The new ASU, in addition to other modifications and additions, removes the requirement to disclose the amount and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, and the policy for the timing of transfers between levels. For investment companies, the amendments are effective for financial statements issued for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is allowed. These amendments have been adopted with these financial statements.

 

12.

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 determined that no events or transactions occurred requiring adjustment or disclosure in the financial statements.

North Star Funds

EXPENSE EXAMPLE (Unaudited)

May 31, 2019

 

As a shareholder of each Fund you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchases of Class A shares; (2) ongoing costs, including management fees; distribution and/or service (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in a Fund and to compare these costs with the ongoing costs of investing in other mutual funds. Please note, the expenses shown in the tables are meant to highlight ongoing costs only and do not reflect any transactional costs.

 

This example is based on an investment of $1,000 invested for the period of time as indicated in the table below.

 

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

 

Hypothetical Examples 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 the 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 which may be applicable to your account. 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.

 

		Beginning		Ending		Expenses Paid
		Account Value		Account Value		During Period		Fund’s Annualized
Actual		12/1/2018		5/31/2019		12/1/18 – 5/31/19*		Expense Ratio
North Star Opportunity Fund
Class I		$1,000.00		$972.80		$6.79		1.38%
Class A		$1,000.00		$971.10		$7.62		1.55%
North Star Micro Cap Fund
Class I		$1,000.00		$986.70		$7.28		1.47%
North Star Dividend Fund
Class I		$1,000.00		$967.10		$7.31		1.49%
North Star Bond Fund
Class I		$1,000.00		$1,032.70		$8.56		1.69%

 

*

Expenses are equal to the average account value over the period, multiplied by the Fund’s annualized expense ratio, multiplied by the number of days in the period (182) divided by the number of days in the fiscal year (365).

North Star Funds

EXPENSE EXAMPLE (Unaudited) (Continued)

May 31, 2019

 

		Beginning		Ending		Expenses Paid
Hypothetical		Account Value		Account Value		During Period		Fund’s Annualized
(5% return before expenses)		12/1/2018		5/31/2019		12/1/18 – 5/31/19*		Expense Ratio
North Star Opportunity Fund
Class I		$1,000.00		$1,018.05		$6.94		1.38%
Class A		$1,000.00		$1,017.20		$7.80		1.55%
North Star Micro Cap Fund
Class I		$1,000.00		$1,017.60		$7.39		1.47%
North Star Dividend Fund
Class I		$1,000.00		$1,017.50		$7.49		1.49%
North Star Bond Fund
Class I		$1,000.00		$1,016.50		$8.50		1.69%

 

*

Expenses are equal to the average account value over the period, multiplied by the Fund’s annualized expense ratio, multiplied by the number of days in the period (182) divided by the number of days in the fiscal year (365).

North Star Funds

Additional Information (Unaudited)

May 31, 2019

 

FACTORS CONSIDERED BY THE TRUSTEES IN APPROVAL OF THE RENEWAL OF AN INVESTMENT ADVISORY AGREEMENT

 

At a Regular meeting (the “Meeting”) of the Board of Trustees (the “Board”) of Northern Lights Fund Trust II (the “Trust”) held on October 17-18, 2018, the Board, including the disinterested Trustees (the “Independent Trustees”), considered the renewal of the Investment Advisory Agreement between the Trust, on behalf of the North Star Opportunity Fund, North Star Dividend Fund, North Star Micro Cap Fund and the North Star Bond Fund (the “North Star Funds”) and North Star Investment Management Corporation (“North Star”) (the “North Star Advisory Agreement”).

 

Based on their evaluation of the information provided by North Star, in conjunction with each North Star Fund’s other service providers, the Board, by a unanimous vote (including a separate vote of the Independent Trustees), approved the North Star Advisory Agreement with respect to each of the North Star Funds.

 

In advance of the Meeting, the Board requested and received materials to assist them in considering the North Star Advisory Agreement. The materials provided contained information with respect to the factors enumerated below, including the North Star Advisory Agreement, a memorandum prepared by the Trust’s outside legal counsel discussing in detail the Trustees’ fiduciary obligations and the factors they should assess in considering the continuation of the North Star Advisory Agreement and comparative information relating to the advisory fee and other expenses of each of the North Star Funds. The materials also included due diligence materials relating to North Star (including due diligence questionnaires completed by North Star, select financial information of North Star, bibliographic information regarding North Star’s key management and investment advisory personnel, and comparative fee information relating to the Funds) and other pertinent information. At the Meeting, the Independent Trustees were advised by counsel that is experienced in Investment Company Act of 1940 matters and that is independent of fund management and met with such counsel separately from fund management.

 

The Board then reviewed and discussed the written materials that were provided in advance of the Meeting and deliberated on the renewal of the North Star Advisory Agreement. The Board relied upon the advice of independent legal counsel and their own business judgment in determining the material factors to be considered in evaluating the North Star Advisory Agreement and the weight to be given to each such factor. The conclusions reached by the Board were based on a comprehensive evaluation of all of the information provided and were not the result of any one factor. Moreover, each Trustee may have afforded different weight to the various factors in reaching his conclusions with respect to the North Star Advisory Agreement. In considering the renewal of the North Star Advisory Agreement, the Board reviewed and analyzed various factors that they determined were relevant, including the factors enumerated below.

 

Nature, Extent and Quality of Services. The Board reviewed materials provided by North Star related to the proposed renewal of the North Star Advisory Agreement with respect to each of the North Star Funds, including its Form ADV and related schedules, a description of the manner in which investment decisions were made and executed, a review of the personnel performing services for each of the North Star Funds, including the individuals that primarily monitor and execute the investment process. The Board discussed the extent of the research capabilities, the quality of North Star’s compliance infrastructure and the experience of its investment advisory personnel. The Board noted that North Star was an experienced investment adviser with seasoned senior management and that the performance of the North Star Funds supported the quality and experience of the staff. Additionally, the Board received satisfactory responses from the representatives of North Star with respect to a series of important questions, including: whether North Star was involved in any lawsuits or pending regulatory actions; whether the advisory services provided to its other accounts would conflict with its advisory services provided to each of the North Star Funds; whether there were procedures in place to adequately allocate trades among its respective clients; and whether North Star’s CCO had processes in place to review the portfolio managers’ performance of their duties to ensure compliance under North Star’s compliance program. The Board reviewed the information provided on the practices for monitoring compliance with each of the North Star Funds’ investment limitations and discussed North Star’s compliance program with the CCO of the Trust. The Board noted that

North Star Funds

Additional Information (Unaudited) (Continued)

May 31, 2019

 

the CCO of the Trust continued to represent that North Star’s policies and procedures were reasonably designed to prevent violations of applicable securities laws. The Board also noted North Star’s representation that the prospectus and statement of additional information for the North Star Funds accurately describe the investment strategies of each of the North Star Funds. The Board then reviewed the capitalization of North Star based on financial information provided by and representations made by North Star and concluded that North Star was sufficiently well-capitalized, or its principals have the ability to make additional contributions in order to meet its obligations to each of the North Star Funds. The Board concluded that North Star had sufficient quality and depth of personnel, resources, investment methods and compliance policies and procedures essential to performing its duties under the North Star Agreement and that the nature, overall quality and extent of the advisory services to be provided by North Star to each of the North Star Funds were satisfactory.

 

Performance. The Board discussed the report prepared by Broadridge and reviewed the performance as compared to its peer group, Morningstar category and benchmark for the one year, three year, five year and since inception periods ended September 30, 2018 for North Star Opportunity, North Star Micro Cap and North Star Dividend, and the one year, three year and since inception periods ended September 30, 2018, for North Star Bond. With respect to North Star Opportunity, the Board noted that North Star Opportunity outperformed its peer group and Morningstar category median but underperformed its benchmark, for the one year and three year periods, outperformed its peer group median but underperformed its Morningstar category median and benchmark for the five year period and underperformed the peer group median, Morningstar category median and benchmark for the since inception period. The Board also discussed the Morningstar category for North Star Opportunity noting the adviser’s belief that it was not an ideal fit as North Star Opportunity is more small-cap oriented as compared to the Morningstar category which is mostly made up of funds investing in large-cap equities. The Board reviewed the performance of North Star Micro Cap noting that North Star Micro Cap had underperformed its benchmark, peer group median and Morningstar category median for the one year, five year and since inception periods, but had outperformed the peer group median and Morningstar category median while underperforming its benchmark for the three year period. The Board also reviewed the performance of North Star Dividend noting that North Star Dividend had underperformed its benchmark, peer group median and Morningstar category median for the one year and three year periods while outperforming the peer group median and Morningstar category median but underperforming the benchmark for the five year and since inception periods. The Board also reviewed the performance of North Star Bond noting that North Star Bond underperformed the benchmark, peer group median and Morningstar category median for the one year, three year and since inception periods. After further discussion, the Board concluded that although relative performance had slipped this past year, the performance of each of North Star Opportunity, North Star Micro Cap, North Star Dividend and North Star Bond was acceptable.

 

Fees and Expenses. As to the costs of the services provided by North Star, the Board reviewed and discussed each of the North Star Funds advisory fee and total operating expenses as compared to its peer group and its Morningstar category as presented in the Broadridge Reports. The Board noted that the advisory fee for each North Star Fund was near or at the top of its respective peer group and Morningstar category ranges. The Board further noted that North Star Opportunity, North Star Micro Cap and North Star Dividend were each being charged a 1.00% advisory fee by North Star which was above the Morningstar category median and peer group median for each Fund although not the highest in the peer group. With respect to North Star Bond, the Board noted the Fund’s 0.85% advisory fee was also higher than the peer group median and that the Fund’s higher net expense ratio may be explained by relatively lower asset levels than its peers and less ability to benefit from economies of scale.

 

The Board discussed North Star’s similarly managed accounts which were comparable to North Star Micro Cap and North Star Dividend noting the advisory fee of 0.50% was substantially less than the 1.00% advisory fee charged by North Star for those Funds. The Board noted, however, that North Star had represented to the Board that it charged a lower fee for such accounts as they are sub-advisory accounts where North Star only manages a portion of an account portfolio and did not have direct contact with the ultimate client and, as a result, North Star provided fewer services to such accounts.

North Star Funds

Additional Information (Unaudited) (Continued)

May 31, 2019

 

The Board then reviewed the contractual arrangements for each of the North Star Funds, which stated that North Star had agreed to waive or limit its advisory fee and/or reimburse expenses at least until March 31, 2020, in order to limit net annual operating expenses, exclusive of certain fees, so as not to exceed: 1.99%, 1.99%, and 1.74%, of North Star Opportunity’s average annual net assets for Class A, Class R and Class I Shares, respectively; 1.74%, 1.99% and 1.99% of North Star Dividend’s average annual net assets for Class I, Class R and Class A Shares, respectively; 1.74%, 1.99% and 1.99% of North Star Micro Cap’s average annual net assets for Class I, Class R and Class A Shares, respectively; and 1.99%, 1.99% and 1.79% of North Star Bond’s average annual net assets for or Class A, Class R and Class I Shares, respectively. The Board found such arrangements to be beneficial to shareholders. The Board further noted that each North Star Fund was currently operating below each of these expense caps. The Board concluded that based on North Star’s experience, expertise and services to the Funds, the advisory fee charged by North Star for each North Star Fund, although at or near the high end of each North Star Fund’s peer group, was not unreasonable.

 

Profitability. The Board also considered the level of profits that could be expected to accrue to North Star with respect to each of North Star Opportunity, North Star Dividend, North Star Micro Cap, and North Star Bond based on profitability reports and profitability analyses provided by North Star with respect to each North Star Fund. The Board also reviewed the selected financial information of North Star provided by North Star. After review and discussion, the Board concluded that the anticipated profit from North Star’s relationship with each of the North Star Funds was not excessive.

 

Economies of Scale. As to the extent to which each of the North Star Funds would realize economies of scale as it grew, and whether the fee levels reflect these economies of scale for the benefit of investors, the Board discussed the current size of each of the North Star Funds, North Star’s expectations for growth of each of the North Star Funds, and concluded that any material economies of scale would not be achieved in the near term. After further discussion, the Board noted they would revisit the possibility of adding break points with respect to a North Star Fund once a Fund approaches $250 million in assets.

 

Conclusion. The Board relied upon the advice of counsel, and their own business judgment in determining the material factors to be considered in evaluating the North Star Advisory Agreement and the weight to be given to each such factor. Accordingly, having requested and received such information from North Star as the Trustees believed to be reasonably necessary to evaluate the terms of the North Star Advisory Agreement, and as assisted by the advice of independent counsel, the Board, including a majority of the Independent Trustees, determined that, with respect to the North Star Advisory Agreement, (a) the terms of the North Star Advisory Agreement are reasonable; (b) the advisory fee is reasonable; and (c) the North Star Advisory Agreement is in the best interests of each North Star Fund and its shareholders. In considering the renewal of the North Star Advisory Agreement, the Board did not identify any one factor as all important, but rather considered these factors collectively and determined that approval of the renewal of the North Star Advisory Agreement was in the best interest of each North Star Fund and its shareholders. Moreover, the Board noted that each Trustee may have afforded different weight to the various factors in reaching his conclusions with respect to the North Star Advisory Agreement.

Privacy Policy

 

Rev. May 2019

 

FACTS	WHAT DOES NORTHERN LIGHTS FUND TRUST II (“NLFT II”) DO WITH YOUR PERSONAL INFORMATION?
Why?	Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do.
What?	The types of personal information we collect and share depend on the product or service you have with us. This information can include:
	●    Social Security number   ●    Employment information   ●    Account balances	●    Account transactions   ●    Income   ●    Investment experience
	When you are no longer our customer, we continue to share your information as described in this notice.
How?	All financial companies need to share a customer’s personal information to run their everyday business - to process transactions, maintain customer accounts, and report to credit bureaus. In the section below, we list the reasons financial companies can share their customer’s personal information; the reasons NLFT II chooses to share; and whether you can limit this sharing.

Reasons we can share your personal information	Does NLFT II share?	Can you limit this sharing?
For our everyday business purposes — such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus	Yes	No
For our marketing purposes — to offer our products and services to you	Yes	No
For joint marketing with other financial companies	Yes	No
For our affiliates’ everyday business purposes — information about your transactions and experiences	Yes	No
For our affiliates’ everyday business purposes — information about your creditworthiness	No	We don’t share
For nonaffiliates to market to you	No	We don’t share

Questions?

Call 1-402-493-4603

Who we are
Who is providing this notice?	Northern Lights Fund Trust II
What we do
How does NLFT II protect my personal information?	To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include computer safeguards and secured files and buildings.
How does NLFT II collect my personal information?	We collect your personal information, for example, when you
	●    open an account   ●    give us your income information   ●    provide employment information	●    provide account information   ●    give us your contact information
	We also collect your personal information from others, such as credit bureaus, affiliates, or other companies.
Why can’t I limit all sharing?	Federal law gives you the right to limit only   ●    sharing for affiliates’ everyday business purposes—information about your creditworthiness   ●    affiliates from using your information to market to you   ●    sharing for nonaffiliates to market to you   State laws and individual companies may give you additional rights to limit sharing.
Definitions
Affiliates	Companies related by common ownership or control. They can be financial and nonfinancial companies.   ●    Northern Lights Fund Trust II has no affiliates.
Nonaffiliates	Companies not related by common ownership or control. They can be financial and nonfinancial companies.   ●    NLFT II does not share with nonaffiliates so they can market to you.
Joint marketing	A formal agreement between nonaffiliated financial companies that together market financial products and services to you.   ●    Our joint marketing partners include other financial service companies.

Proxy Voting Policy

 

Information regarding how the Funds vote proxies relating to portfolio securities for the 12 month period ended June 30th as well as a description of the policies and procedures that the Funds used to determine how to vote proxies is available without charge, upon request, by calling 1-312-580-0900 or by referring to the Securities and Exchange Commission’s (“SEC”) website at http://www.sec.gov.

 

Portfolio Holdings

 

The Funds file their complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Form N-Q is available on the SEC’s website at http://www.sec.gov and may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC (1-800-SEC-0330). The information on Form N-Q is available without charge, upon request, by calling 1-312-580-0900.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

Investment Adviser

North Star Investment Management Corp.

20 N. Wacker Drive #1416

Chicago, IL 60606

Administrator

Gemini Fund Services, LLC

80 Arkay Drive

Hauppauge, NY 11788

 

Item 2. Code of Ethics. Not applicable.

 

Item 3. Audit Committee Financial Expert. Not applicable.

 

Item 4. Principal Accountant Fees and Services. Not applicable.

 

Item 5. Audit Committee of Listed Companies. Not applicable to open-end investment companies.

 

Item 6. Schedule of Investments. Schedule of investments in securities of unaffiliated issuers is included under Item 1.

 

Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Funds. Not applicable to open-end investment companies.

 

Item 8. Portfolio Managers of Closed-End Management Investment Companies. Not applicable to open-end investment companies.

 

Item 9. Purchases of Equity Securities by Closed-End Funds. Not applicable to open-end investment companies.

 

Item 10. Submission of Matters to a Vote of Security Holders. None

 

 

Item 11. Controls and Procedures.

 

(a)       Based on an evaluation of the Registrant’s disclosure controls and procedures as of a date within 90 days of filing date of this Form N-CSR, the principal executive officer and principal financial officer of the Registrant have concluded that the disclosure controls and procedures of the Registrant are reasonably designed to ensure that the information required in filings on Form N-CSR is recorded, processed, summarized, and reported by the filing date, including that information required to be disclosed is accumulated and communicated to the Registrant’s management, including the Registrant’s principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

 

(b)       There were no significant changes in the Registrant’s internal control over financial reporting that occurred during the Registrant’s last fiscal half-year that have materially affected, or are 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) Not applicable.

 

(a)(2) Certifications required by Section 302 of the Sarbanes-Oxley Act of 2002 (and Item 11(a)(2) of Form N-CSR) are filed herewith.

 

(a)(3) Not applicable for open-end investment companies.

 

(b)       Certifications required by Section 906 of the Sarbanes-Oxley Act of 2002 (and Item 11(b) of Form N-CSR) are 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.

 

(Registrant) Northern Lights Fund Trust II

 

By (Signature and Title)

/s/Kevin E. Wolf

Kevin E. Wolf, Principal Executive Officer/President

 

Date 8/5/19

 

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 (Signature and Title)

/s/Kevin E. Wolf

Kevin E. Wolf, Principal Executive Officer/President

 

Date 8/5/19

 

 

By (Signature and Title)

/s/ Erik Naviloff

Erik Naviloff, Principal Financial Officer/Treasurer

 

Date 8/5/19

 

CERTIFICATIONS

 

I, Kevin E. Wolf, certify that:

 

1.       I have reviewed this report on Form N-CSR of North Star Funds (a series of Northern Lights Fund Trust II);

 

2.       Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.       Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;

 

4.       The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:

 

a)       designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)       designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)       evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and

d)       disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.       The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

 

a)       all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and

b)       any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

 

 

Date: 8/5/19                                                                         /s/ Kevin E. Wolf

Kevin E. Wolf

Principal Executive Officer/President

 

 

 

 

 

 

 

 

 

 

 

 

 

I, Erik Naviloff, certify that:

 

1.       I have reviewed this report on Form N-CSR of North Star Funds (a series of Northern Lights Fund Trust II);

 

2.       Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.       Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;

 

4.       The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:

 

a)       designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)       designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)       evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and

d)       disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.       The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

 

a)       all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and

b)       any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

 

 

Date: 8/5/19                                                                       /s/ Erik Naviloff

Erik Naviloff

Principal Financial Officer/Treasurer

 

certification

Kevin E. Wolf, Principal Executive Officer/President, and Erik Naviloff, Principal Financial Officer/Treasurer of Northern Lights Fund Trust II (the “Registrant”), each certify to the best of his knowledge that:

1.       The Registrant’s periodic report on Form N-CSR for the period ended May 31, 2019 (the “Form N-CSR”) fully complies with the requirements of Sections 15(d) of the Securities Exchange Act of 1934, as amended; and

2.       The information contained in the Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

Principal Executive Officer/President                             Principal Financial Officer/Treasurer

Northern Lights Fund Trust II                                        Northern Lights Fund Trust II

 

 

/s/ Kevin E. Wolf                                                              /s/ Erik Naviloff

Kevin E. Wolf                                                                   Erik Naviloff

Date: 8/5/19                                                                      Date: 8/5/19

 

 

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to the Northern Lights Fund Trust II and will be retained by the Northern Lights Fund Trust II and furnished to the Securities and Exchange Commission (the “Commission”) or its staff upon request.

 

This certification is being furnished to the Commission solely pursuant to 18 U.S.C. § 1350 and is not being filed as part of the Form N-CSR filed with the Commission.