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
811-09527
The DCM Series Trust
(Exact name of registrant as specified in charter)
7 Wells Avenue, Newton, MA 02459
(Address of principal executive offices)
(Zip code)
Emile Molineaux, Gemini Fund Services, LLC
150 Motor Parkway, Suite 205, Hauppauge, NY 11788
(Name and address of agent for service)
Registrant's telephone number, including area code:
617 527-0033
Date of fiscal year end:
9/30
Date of reporting period: 3/31/04
Item 1. Reports to Stockholders.
SEMI-ANNUAL REPORT | |
DCM GROWTH FUND | |
TRUSTEES | |
Scott Allen Stuart N. Cole Stephen Dephoure Jonathan J. Derby Mark A Derby Neal Shalom | |
INVESTMENT ADVISOR | |
Derby Capital Management, Inc. 7 Wells Avenue Newton, MA 02459 | |
ADMINISTRATOR | |
Gemini Fund Services, LLC 150 Motor Parkway Hauppauge, NY 11788 | |
CUSTODIAN | |
Bank of New York Co., Inc. 15 Broad Street, 7th Floor New York, NY 10286 | |
LEGAL COUNSEL | |
Goodwin Procter LLP Exchange Place Boston, MA 02109 | DCM Growth Fund |
INDEPENDENT ACCOUNTANTS | |
Russell, Brier & Co. Ten P.O. Square – 6th Floor Boston, MA 02109 | |
DCM Growth Fund c/o Gemini Fund Services, LLC Omaha, NE 68154-1952 www.dcmfunds.com | |
Member NASD/SIPC | |
Not FDIC Insured No Bank Guarantee May Lose Value | March 31, 2004 |
DCM GROWTH FUND | |||||||||
SCHEDULE OF INVESTMENTS | |||||||||
March 31, 2004 (Unaudited) | |||||||||
Market | |||||||||
Shares |
|
|
|
| Security | Value | |||
COMMON STOCK - 81.75% | |||||||||
Consumer Discretionary - 15.06% | |||||||||
Manufacturing - 3.19% | |||||||||
3,795 | American Standard Co., Inc. + | $ 431,681 | |||||||
Media - 4.06% | |||||||||
6,230 | Gannett, Inc. | 549,112 | |||||||
Retailing - 7.81% | |||||||||
7,491 | Home Depot, Inc. | 279,864 | |||||||
23,525 | Rent-A-Center Inc. + | 776,090 | |||||||
1,055,954 | |||||||||
Consumer Staples - 6.01% | |||||||||
Food, Beverage & Tobacco - 6.01% | |||||||||
33,750 | Coca-Cola Femsa, S.A. de C.V. | 813,037 | |||||||
Financials - 30.81% | |||||||||
Diversified Financials - 22.13% | |||||||||
8,788 | Bank of New York, Inc. | 276,822 | |||||||
18,432 | Citigroup, Inc. | 952,934 | |||||||
25,507 | Washington Mutual, Inc. | 1,089,404 | |||||||
11,891 | Wells Fargo & Co. | 673,863 | |||||||
2,993,023 | |||||||||
Insurance - 8.68% | |||||||||
10,152 | American International Group, Inc. | 724,345 | |||||||
11,788 | Hilb, Rogal and Hamilton Co. | 449,123 | |||||||
1,173,468 | |||||||||
Healthcare - 8.70% | |||||||||
Pharmaceuticals & Biotechnology - 4.35% | |||||||||
16,800 | Pfizer, Inc. | 588,840 | |||||||
Medical Laboratory & Testing Services- 4.35% | |||||||||
15,000 | Laboratory Corp. of America Holdings + | 588,750 | |||||||
Industrials - 15.44% | |||||||||
Capital Goods - 8.03% | |||||||||
14,448 | D.R. Horton, Inc. | 511,893 | |||||||
18,801 | General Electric Co. | 573,807 | |||||||
1,085,700 | |||||||||
Commercial Services & Supplies - 7.41% | |||||||||
22,556 | Bisys Group, Inc. + | 378,038 | |||||||
The accompanying notes are an integral part of these financial statements.
DCM GROWTH FUND | |||||||||
SCHEDULE OF INVESTMENTS (Continued) | |||||||||
March 31, 2004 (Unaudited) | |||||||||
Shares / | Market | ||||||||
Principal ($) |
|
|
|
| Security | Value | |||
Commercial Services & Supplies - 7.41% (continued) | |||||||||
8,000 | Cendant Corp. | $ 195,120 | |||||||
8,401 | H&R Block, Inc. | 428,703 | |||||||
1,001,861 | |||||||||
Utilities - 5.73% | |||||||||
Energy/Pipelines - 5.73% | |||||||||
12,299 | Kinder Morgan, Inc. | 775,083 | |||||||
TOTAL COMMON STOCK | |||||||||
(Cost $9,472,939) | 11,056,509 | ||||||||
SHORT-TERM INVESTMENTS - 18.20% | |||||||||
Regulated Investment Companies - 9.33% | |||||||||
412,876 | BNY Hamilton Money Fund, Hamilton Shares, due 4/1/04 | 412,876 | |||||||
10 | Nuveen Quality Inc., Series M, | ||||||||
7 Day Auction Rate Preferred | 250,000 | ||||||||
24 | Pimco High Income Fund, | ||||||||
7 Day Auction Rate Preferred | 600,000 | ||||||||
1,262,876 | |||||||||
U.S. Treasury Bills - 8.87% | |||||||||
$ 400,000 | To yield 0.89%, due 4/8/04 | 399,938 | |||||||
$ 400,000 | To yield 0.93%, due 5/6/04 | 399,689 | |||||||
$ 400,000 | To yield 0.92%, due 6/3/04 | 399,454 | |||||||
1,199,081 | |||||||||
TOTAL SHORT-TERM INVESTMENTS | |||||||||
(Cost $2,461,957) | 2,461,957 | ||||||||
TOTAL INVESTMENTS | |||||||||
(Cost $11,934,896*) | 99.95% | $ 13,518,466 | |||||||
Other assets in excess of liabilities | 0.05% | 6,548 | |||||||
TOTAL NET ASSETS | 100.00% | $ 13,525,014 | |||||||
+ Non-income producing security. | |||||||||
* Aggregate cost for Federal income tax purposes is substantially the same. | |||||||||
The accompanying notes are an integral part of these financial statements.
DCM GROWTH FUND | ||||
STATEMENT OF ASSETS AND LIABILITIES | ||||
March 31, 2004 (Unaudited) | ||||
Assets: | ||||
Investments in securities, at value | ||||
(Cost $9,472,939) (Note 2) | $ 11,056,509 | |||
Short-term investments, at cost (Note 2) | 2,461,957 | |||
Dividends and interest receivable | 7,505 | |||
Prepaid expenses and other assets | 9,273 | |||
Total Assets | 13,535,244 | |||
Liabilities: | ||||
Investment advisory fees payable (Note 3) | 4,762 | |||
Accrued trustees' fees | 2,027 | |||
Accrued expenses and other liabilities | 3,441 | |||
Total Liabilities | 10,230 | |||
Net Assets | $ 13,525,014 | |||
Net Assets Consist Of: | ||||
Paid in capital | $ 16,451,413 | |||
Accumulated net investment loss | (3,717) | |||
Accumulated net realized loss from security transactions | (4,506,252) | |||
Net unrealized appreciation of investments | 1,583,570 | |||
$ 13,525,014 | ||||
Net asset value and redemption price per share |
| |||
($13,525,014/1,671,430 shares of capital stock outstanding) | $ 8.09 |
The accompanying notes are an integral part of these financial statements.
DCM GROWTH FUND | ||||
STATEMENT OF OPERATIONS | ||||
For the Six Months Ended March 31, 2004 (Unaudited) | ||||
Investment Income: | ||||
Dividends | $ 84,087 | |||
Interest | 5,347 | |||
Total investment income | 89,434 | |||
Expenses: | ||||
Advisory fees (Note 3) | 61,995 | |||
Administration fees | 23,498 | |||
Transfer agent fees | 12,236 | |||
Legal fees | 10,684 | |||
Audit fees | 5,269 | |||
Trustees' fees | 4,022 | |||
Registration fees | 3,630 | |||
Insurance expense | 3,525 | |||
Printing expense | 2,453 | |||
Custody fees | 1,319 | |||
Other expenses | 931 | |||
Total expenses | 129,562 | |||
Less: | ||||
Advisory fees waived and expenses reimbursed (Note 3) | (36,411) | |||
Net expenses | 93,151 | |||
Net investment loss | (3,717) | |||
Net Realized and Unrealized Gain | ||||
on Investments (Notes 2 and 4): | ||||
Net realized gain from security transactions | 442,037 | |||
Net change in unrealized appreciation (depreciation) of investments | 1,439,577 | |||
Net realized and unrealized gain on investments | 1,881,614 | |||
Net increase in net assets resulting from operations | $ 1,877,897 | |||
The accompanying notes are an integral part of these financial statements.
DCM GROWTH FUND | |||||
STATEMENTS OF CHANGES IN NET ASSETS | |||||
|
|
|
|
|
|
For the Six | |||||
Months Ended | For the Year | ||||
March 31, 2004 | Ended | ||||
(Unaudited) | September 30, 2003 | ||||
From Operations: | |||||
Net investment loss | $ (3,717) | $ (8,450) | |||
Net realized gain from security transactions | 442,037 | (1,641,420) | |||
Net change in unrealized appreciation | |||||
(depreciation) of investments | 1,439,577 | 3,188,127 | |||
Net increase in net assets | |||||
resulting from operations | 1,877,897 | 1,538,257 | |||
From Capital Share Transactions: | |||||
Shares sold | 1,197,798 | 3,043,700 | |||
Shares redeemed | (293,877) | (981,207) | |||
Net increase in net assets from | |||||
capital share transactions | 903,921 | 2,062,493 | |||
Net increase in net assets | 2,781,818 | 3,600,750 | |||
Net Assets: | |||||
Beginning of Period | 10,743,196 | 7,142,446 | |||
End of Period* | $ 13,525,014 | $ 10,743,196 | |||
* Includes accumulated net investment loss of: | $ (3,717) | $ - | |||
Capital Share Transactions: | |||||
Shares sold | 154,990 | 473,112 | |||
Shares redeemed | (37,544) | (152,847) | |||
117,446 | 320,265 |
The accompanying notes are an integral part of these financial statements.
DCM GROWTH FUND | ||||||||||||
FINANCIAL HIGHLIGHTS | ||||||||||||
(For a share outstanding throughout each period) | ||||||||||||
For the Six | For the | For the | For the | For the | ||||||||
Months Ended | Year Ended | Year Ended | Year Ended | Period Ended | ||||||||
| March 31, 2004 | September 30, | September 30, | September 30, | September 30, | |||||||
(Unaudited) | 2003 | 2002 | 2001 | 2000 (1) | ||||||||
Net Asset Value, Beginning of Period | $ 6.91 | $ 5.79 | $ 6.51 | $ 10.06 | $ 10.00 | |||||||
Income (Loss) From | ||||||||||||
Investment Operations: | ||||||||||||
Net investment loss (2)(3) | (0.00) | * | (0.01) | ** | (0.03) | (0.10) | (0.09) | |||||
Net realized and unrealized gain (loss) | ||||||||||||
from investment operations (2) | 1.18 | 1.13 | (0.69) | (3.45) | 0.15 | |||||||
Total from investment operations | 1.18 | 1.12 | (0.72) | (3.55) | 0.06 | |||||||
Net Asset Value, End of Period | $ 8.09 | $ 6.91 | $ 5.79 | $ 6.51 | $ 10.06 | |||||||
Total Return (4) | 17.08% | 19.34% | (11.06)% | (35.29)% | 0.60% | |||||||
Ratios/Supplemental Data: | ||||||||||||
Net assets, end of period (000s) | $ 13,525 | $ 10,743 | $ 7,142 | $ 7,670 | $ 10,864 | |||||||
Ratio of expenses to average net | ||||||||||||
assets, before waiver/reimbursement | 2.09% | (5) | 2.55% | 2.54% | 2.22% | 2.61% | (5) | |||||
Ratio of net expenses to average net | ||||||||||||
assets, after waiver/reimbursement | 1.50% | (5) | 1.50% | 1.50% | 1.48% | 1.50% | (5) | |||||
Ratio of net investment loss to average | ||||||||||||
net assets, before waiver/reimbursement | (0.64)% | (5) | (1.14)% | (1.48)% | (1.36)% | (1.95)% | (5) | |||||
Ratio of net investment loss to average | ||||||||||||
net assets, after waiver/reimbursement | (0.08)% | (5) | (0.09)% | (0.44)% | (0.62)% | (0.83)% | (5) | |||||
Portfolio Turnover Rate | 18.84% | 41.99% | 31.51% | 40.14% | 62.69% | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) | For the period from October 19, 1999 (commencement of operations) to September 30, 2000. | |||||||||||
(2) | Per share amounts calculated using the monthly average shares method. | |||||||||||
(3) | For the period ended March 31, 2004, the years ended September 30, 2003, 2002 and 2001 and for the period ended | |||||||||||
September 30, 2000, the advisor voluntarily waived its fee and reimbursed other expenses. Had such actions not been | ||||||||||||
undertaken, net investment loss per share would have been $(0.02), $(0.07), $(0.10), $(0.22) and $(0.21), respectively. | ||||||||||||
(4) | Total returns are historical and assume changes in share price, reinvestment of dividends and capital gains distributions, | |||||||||||
if any. Total returns for periods less than one year are not annualized. | ||||||||||||
(5) | Annualized. | |||||||||||
* | Unrounded value is $(0.002). | |||||||||||
** | Unrounded value is $(0.006). | |||||||||||
The accompanying notes are an integral part of these financial statements.
DCM GROWTH FUND |
NOTES TO FINANCIAL STATEMENTS |
March 31, 2004 (Unaudited) |
Note 1. Organization
The DCM Growth Fund (the “Fund”), is organized as a series of the DCM Series Trust (the “Trust”), a Massachusetts business trust formed on August 5, 1999, and registered as an open-end, non-diversified, management investment company under the Investment Company Act of 1940, as amended (“1940 Act”). The Fund commenced operations on October 19, 1999. The Fund’s business and affairs are managed by its officers under the direction of its Board of Trustees. The Fund’s investment objective is to seek long-term growth of capital.
Note 2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the Fund. These policies are in conformity with accounting principles generally accepted in the United States of America.
A.
Security Valuation – Securities listed on a national securities exchange and certain over-the-counter securities are valued as of the close of each business day, at the last sales price on the exchange or the over-the-counter market in which such securities are primarily traded, or in the absence of recorded sales, the mean between the closing bid and ask prices. NASDAQ traded securities are valued at the NASDAQ official closing price (NOCP). Securities for which market quotations are not readily available are valued at their fair value following procedures approved by the Board of Trustees. Short-term investments held by the Fund that mature in 60 days or less are valued at amortized cost, which approximates market value.
B.
Security Transactions and Related Investment Income - Securities transactions are accounted for on the trade date. 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. Interest income is recorded on the accrual basis.
C.
Federal Income Taxes - The Fund intends to continue to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income to its shareholders. Therefore, no provision for Federal income tax is required.
At September 30, 2003, the DCM Growth Fund had, for Federal income tax purposes, approximately the following capital loss carryforwards available to offset future capital gains expiring on September 30 of the years below:
2008 | 2009 | 2010 | 2011 | Total | ||
Capital Loss Carryforwards | $358,000 | $1,463,000 | $1,486,000 | $1,641,000 | $4,948,000 |
To the extent that these carryforward losses are used to offset capital gains, it is probable that the gains so offset will not be distributed.
D.
Dividends and Distributions to Shareholders - The Fund records dividends and distributions to shareholders on the ex-dividend date. The Fund will distribute its net investment income, if any, and net realized capital gains, if any, annually.
E.
Use of Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 revenues and expenses during the reporting periods. Actual results could differ from those estimates.
DCM GROWTH FUND |
NOTES TO FINANCIAL STATEMENTS (Continued) |
March 31, 2004 (Unaudited) |
Note 3. Investment Advisory Fee and Other Transactions
The Trust has entered into an investment advisory agreement (the “Agreement”) with Derby Capital Management, Inc. (the “Advisor”). Pursuant to the Agreement, the Advisor manages the investment portfolio of the Fund, subject to policies adopted by the Trust’s Board of Trustees, and furnishes office space and all necessary facilities, equipment and executive personnel necessary for managing the day-to-day operations of the Fund. For its services, the Advisor receives a fee, paid monthly, calculated at an annual rate of 1.00% of the Fund’s average daily net assets.
The Advisor has voluntarily agreed to waive its advisory fee and reimburse other expenses to the extent the Fund’s operating expenses exceed 1.50% (excluding distribution and service fees, brokerage commissions, interest, taxes and extraordinary expenses, if any) of the Fund’s average daily net assets. For the six months ended March 31, 2004, the Advisor waived fees amounting to $36,411.
The Trust has entered into an Administrative Service Agreement and a Transfer Agency and Service Agreement (“Agreements”) with Gemini Fund Services, LLC (“GFS”). Pursuant to the Agreements, GFS serves as Administrator, Transfer Agent and Dividend Disbursing and Fund Accounting Agent to the Fund. For these services, the Fund pays GFS an annual fee, paid monthly, based on a percentage of the Fund’s average daily net assets, subject to certain minimum requirements.
Effective February 2, 2004, Aquarius Fund Distributors, LLC (“AFD”) became the Distributor of the Trust. Orbitex Funds Distributor, Inc. acted as the Distributor prior to February 2, 2004. The Trust has adopted a Distribution Plan (“Plan”) pursuant to Rule 12b-1 under the 1940 Act. Pursuant to the Plan, the Distributor will pay the promotional and advertising expenses related to the distribution of the Fund’s shares and for the printing of all Fund prospectuses used in connection with distribution and sale of the Fund’s shares. The Fund will pay the Distributor a fee calculated at an annual rate of .25% of the Fund’s average daily net assets. During the six months ended March 31, 2004, the Plan was not in effect, hence the Fund did not accrue any fees and no payments were made.
Note 4. Investment Transactions
During the six months ended March 31, 2004, the cost of purchases and proceeds from sales of investment securities, excluding short-term securities, aggregated $3,290,828 and $1,948,629, respectively.
At March 31, 2004, the aggregate gross unrealized appreciation and depreciation of investments for Federal income tax purposes were as follows:
Gross unrealized appreciation……………………… | $2,018,605 | ||
Gross unrealized depreciation……………………… | (435,035) | ||
Net unrealized appreciation………………………… | $1,583,570 |
DCM GROWTH FUND |
NOTES TO FINANCIAL STATEMENTS (Continued) |
March 31, 2004 (Unaudited) |
Note 5. Tax Components of Capital and Other
The DCM Growth Fund did not make any distributions to shareholders during the year ended September 30, 2003.
As of September 30, 2003, the components of distributable earnings on a tax basis were as follows:
Undistributed net investment income | Capital loss carryforwards | Unrealized appreciation | |||
- | $(4,948,000) | $143,993 |
For the year ended September 30, 2003, the Fund made the following reclassifications as the result of
book to tax differences resulting from operating losses:
Decrease accumulated net investment loss | Decrease paid-in capital | Increase (decrease) accumulated net realized loss on investments | |||
$167,962 | $(167,962) | - |
Net assets of the Fund were unaffected by the reclassifications above.
Note 6. Subsequent Event
Effective April 15, 2004, the DCM Growth Fund became known as the “DCM Fund.” The Fund’s investment objective and policies will remain as stated in the Fund’s prospectus and statement of additional information.
DCM Growth Fund
Item 2. Code of Ethics. Not applicable for semi-annual reports.
Item 3. Audit Committee Financial Expert. Not applicable for semi-annual reports.
Item 4. Principal Accountant Fees and Services. Not applicable for semi-annual reports.
Item 5. Audit Committee of Listed Companies. Not applicable to open-end investment companies.
Item 6. Schedule of Investments. See Item 1.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Funds. Not applicable to open-end investment companies.
Item 8. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers. Not applicable to open-end investment companies.
Item 9. Submission of Matters to a Vote of Security Holder. None.
Item 10. Controls and Procedures.
(a)
Based on an evaluation of the registrant’s disclosure controls and procedures as of March 31, 2004, the disclosure controls and procedures are reasonably designed to ensure that the information required in filings on Forms N-CSR is recorded, processed, summarized, and reported on a timely basis.
(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 11. Exhibits.
(a)(1) Not applicable.
(a)(2) Certification(s) 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.
(b) Certification(s) 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)
The DCM Series Trust
By (Signature and Title)
*
/s/
Mark Alan Derby
Mark Alan Derby, President
Date
5/25/04
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/
Mark Alan Derby
Mark Alan Derby, President
Date
5/25/04
By (Signature and Title)
*
/s/
Jonathan Jay Derby
Jonathan Jay Derby, Vice President, Treasurer and Secretary
Date
5/25/04
* Print the name and title of each signing officer under his or her signature.