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: 811-21532
Frank Funds
(Exact Name of Registrant as Specified in Charter)
739 Crandon Blvd. Unit 202
Key Biscayne, FL 33149
(Address of Principal Executive Offices)(Zip Code)
Brian J. Frank, Frank Capital Partners LLC
739 Crandon Blvd. Unit 202
Key Biscayne, FL 33149
(Name and Address of Agent for Service)
With copy to:
JoAnn M. Strasser, Thompson Hine LLP
312 Walnut Street, 14th Floor, Cincinnati, Ohio 45202
Registrant’s Telephone Number, including Area Code: 973-887-7698
Date of fiscal year end: June 30
Date of reporting period: December 31, 2014
Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget ("OMB") control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.
Item 1. Reports to Stockholders.
FRANK FUNDS
SEMI-ANNUAL REPORT
FRANK VALUE FUND
Class C – FNKCX
Institutional Class – FNKIX
Investor Class – FRNKX
LEIGH BALDWIN TOTAL RETURN FUND – LEBOX
December 31, 2014
(UNAUDITED)
FRANK VALUE FUND
PORTFOLIO ANALYSIS
DECEMBER 31, 2014 (UNAUDITED)
The following chart gives a visual breakdown of the Frank Value Fund (the “Value Fund”) by the industry sectors, while the underlying securities represent a percentage of the portfolio of investments.
Sectors are based on Morningstar® classifications.
LEIGH BALDWIN TOTAL RETURN FUND
PORTFOLIO ANALYSIS
DECEMBER 31, 2014 (UNAUDITED)
The following chart gives a visual breakdown of the Leigh Baldwin Total Return Fund (the “Baldwin Fund”) by the industry sectors, while the underlying securities represent a percentage of the portfolio of investments.
Sectors are based on Morningstar® classifications.
Excludes Written Options.
|
| Value Fund |
|
|
| Schedule of Investments |
|
|
| December 31, 2014 (Unaudited) |
|
|
|
|
|
Shares |
|
| Value |
|
|
|
|
COMMON STOCKS - 64.29% |
| ||
|
|
|
|
Arrangement of Transportation - 2.78% |
| ||
64,363 |
| Roadrunner Transportation Systems, Inc. * | $ 1,502,876 |
|
|
|
|
Electronic Computers - 2.98% |
| ||
36,923 |
| Teradata Corp. * | 1,612,797 |
|
|
|
|
Consumer Electronics - 4.51% |
| ||
22,110 |
| Apple, Inc. | 2,440,502 |
|
|
|
|
Finance Services - 10.59% |
| ||
90,384 |
| Blackhawk Network Holdings, Inc. Class A * | 3,506,899 |
127,107 |
| Xoom Corp. * | 2,225,644 |
|
|
| 5,732,543 |
Fire, Marine & Casualty Insurance - 11.10% |
| ||
22,102 |
| Berkshire Hathaway, Inc. Class B * | 3,318,615 |
82,331 |
| Greenlight Capital Reinsurance, Ltd. Class A * | 2,688,107 |
|
|
| 6,006,722 |
Gold and Silver Ores - 2.36% |
| ||
68,832 |
| Goldcorp, Inc. | 1,274,769 |
|
|
|
|
Leather & Leather Products - 2.50% |
| ||
66,299 |
| Vera Bradley, Inc. * | 1,351,174 |
|
|
|
|
Retail-Apparel & Accessory Stores - 2.40% |
| ||
77,776 |
| Francesca's Holding Corp. * | 1,298,859 |
|
|
|
|
Retail-Food Stores - 2.84% |
| ||
31,667 |
| Vitamin Shoppe, Inc. * | 1,538,383 |
|
|
|
|
Services-Business Services, NEC - 2.43% |
| ||
95,329 |
| RPX Corp. * | 1,313,634 |
|
|
|
|
Services-Computer Programming, Date Processing, ETC - 1.58% |
| ||
28,240 |
| Mantech International Corp. Class A | 853,695 |
|
|
|
|
Services-Educational Services - 3.02% |
| ||
44,400 |
| American Public Education, Inc. * | 1,637,028 |
|
|
|
|
Services-Engineering, Accounting, Research, Management - 3.91% |
| ||
42,694 |
| Science Applications International Corp. | 2,114,634 |
|
|
|
|
Services-Miscellaneous Business - 1.82% |
| ||
148,330 |
| Performant Financial Corp. * | 986,395 |
|
|
|
|
Services-Miscellaneous Health & Allied Services, NEC - 3.48% |
| ||
41,072 |
| IPC Healthcare, Inc. * | 1,884,794 |
|
|
|
|
Services-Prepackaged Software - 5.99% |
| ||
69,832 |
| Microsoft Corp. | 3,243,696 |
|
|
|
|
|
|
|
|
TOTAL FOR COMMON STOCKS (Cost $29,659,067) - 64.29% | 34,792,501 | ||
|
|
|
|
CORPORATE BONDS - 6.47% |
| ||
250,000 |
| Bank Baroda New York NY 0.40%, 2/26/15 | 249,982 |
250,000 |
| Bank of China Ltd. New York NY 0.30%, 2/18/15 | 249,955 |
250,000 |
| Bank of India, New York NY 0.35%, 2/25/15 | 249,966 |
250,000 |
| Beal Bank Las Vegas NV 0.30%, 2/18/15 | 249,956 |
250,000 |
| Citizen's Bank NA Providence RI 0.30%, 2/26/15 | 249,947 |
250,000 |
| Citizens Bank of Pennsylvania 0.30%, 2/26/15 | 249,947 |
250,000 |
| First Capital Bank Louisville KY 0.15%, 1/26/15 | 249,959 |
250,000 |
| Homestreet Bank Seattle WA 0.15%, 1/20/15 | 249,971 |
250,000 |
| Mizrahi Tefahot Bank Ltd. Los Angeles CA 0.25%, 2/19/15 | 249,940 |
250,000 |
| Pacific Western Bank 0.30%, 3/05/15 | 249,938 |
250,000 |
| People's United Bank Bridgeport CT 0.20%, 2/19/15 | 249,925 |
250,000 |
| Santander Bank NA 0.30%, 3/03/15 | 249,942 |
250,000 |
| State Bank of India Chicago IL 0.30%, 2/17/15 | 249,957 |
250,000 |
| Western Alliance Bank 0.15%, 2/13/15 | 249,922 |
|
|
|
|
TOTAL FOR CORPORATE BONDS (Cost $3,500,000) - 6.47% | 3,499,307 | ||
|
|
|
|
PUT OPTIONS - 0.00% * |
| ||
Shares Subject |
| Underlying Security |
|
to Put |
| Expiration Date/Exercise Price |
|
|
|
|
|
|
| Currency Shares Japanese Yen ETF (FXY) |
|
20,000 |
| January 2015 Put @ $70.00 | - |
|
|
|
|
|
| Japan 10 Year Bond Future (JBF) |
|
3,000,000 |
| January 2015 Put @ $140.50 | - |
|
|
|
|
|
| Japan 10 Year Bond Future (JBG) |
|
3,000,000 |
| February 2015 Put @ $141.50 | - |
|
|
|
|
|
| Japan 10 Year Bond Future (JBH) |
|
10,000,000 |
| March 2015 Put @ $140.50 | - |
|
|
|
|
|
| Total (Premiums Paid $2,444) - 0.00% | - |
|
|
|
|
SHORT TERM INVESTMENTS - 28.69% |
| ||
15,528,946 |
| Fidelity Institutional Money Market Portfolio 0.09% ** | 15,528,946 |
TOTAL FOR SHORT TERM INVESTMENTS (Cost $15,528,946) - 28.69% | 15,528,946 | ||
|
|
|
|
TOTAL INVESTMENTS (Cost $48,690,457) - 99.45% | 53,820,754 | ||
|
|
|
|
OTHER ASSETS IN EXCESS OF LIABILITIES - 0.55% | 297,320 | ||
|
|
|
|
NET ASSETS - 100.00% | $ 54,118,074 | ||
|
|
|
|
* Non-income producing securities during the period. |
| ||
** Variable rate security; the coupon rate shown represents the yield at December 31, 2014. |
| ||
The accompanying notes are an integral part of these financial statements. |
|
|
| Baldwin Fund |
|
|
| Schedule of Investments |
|
|
| December 31, 2014 (Unaudited) |
|
|
|
|
|
Shares |
|
| Value |
|
|
|
|
COMMON STOCKS - 88.13% |
| ||
|
|
|
|
Apparel Stores - 0.81% |
|
| |
500 |
| Lululemon Athletica, Inc. (Canada) * | $ 27,895 |
|
|
|
|
Beverages - 4.66% |
|
|
|
3,800 |
| Coca Cola Co. | 160,436 |
|
|
|
|
Dolls & Stuffed Toys - 4.86% |
| ||
5,400 |
| Mattel, Inc. | 167,103 |
|
|
|
|
Drilling Oil & Gas Wells - 0.32% |
| ||
600 |
| Transocean Ltd. | 10,998 |
|
|
|
|
Electronic Computers - 0.93% |
| ||
200 |
| International Business Machines, Inc. | 32,088 |
|
|
|
|
Engines & Turbines - 4.61% |
| ||
1,100 |
| Cummins, Inc. | 158,587 |
|
|
|
|
Farm Machinery & Equipment - 0.77% |
| ||
300 |
| Deer & Co. | 26,541 |
|
|
|
|
Finance Services - 3.38% |
| ||
1,000 |
| Lendingclub Corp. * | 25,300 |
7,000 |
| Oneida Financial Corp. | 91,000 |
|
|
| 116,300 |
Investment Advice - 3.71% |
| ||
4,000 |
| Apollo Global Management, LLC | 94,320 |
600 |
| Franklin Resources, Inc. | 33,222 |
|
|
| 127,542 |
Laboratory Analytical Instruments - 4.83% |
| ||
900 |
| Ilumina, Inc. * | 166,122 |
|
|
|
|
Life Insurance - 0.79% |
|
|
|
300 |
| Prudential Financial, Inc. | 27,138 |
|
|
|
|
Metal Mining - 5.85% |
|
|
|
400 |
| BHP Billiton Ltd. | 18,928 |
7,800 |
| Freeport-McMoRan Inc. | 182,208 |
|
|
| 201,136 |
Motor Vehicle Parts & Accessories - 1.06% |
| ||
1,000 |
| Gentherm, Inc. * | 36,620 |
|
|
|
|
Motor Vehicles & Passenger Car Bodies - 5.08% |
| ||
5,000 |
| General Motors Co. | 174,550 |
|
|
|
|
National Commercial Banks - 5.30% |
| ||
2,600 |
| JPMorgan Chase & Co. | 162,708 |
2,000 |
| Valley National Bank | 19,420 |
|
|
| 182,128 |
Oil & Gas Field Services, NEC - 1.74% |
| ||
700 |
| Schlumberger Ltd. | 59,787 |
|
|
|
|
Patent Owners & Lessors - 1.60% |
| ||
4,000 |
| RPX Corp. * | 55,120 |
|
|
|
|
Petroleum Refining - 1.08% |
| ||
400 |
| Exxon Mobil Corp. | 36,980 |
|
|
|
|
Pharmaceutical Preparations - 6.53% |
| ||
3,000 |
| Bristol Myers Squibb Co. | 177,090 |
2,000 |
| Mankind Corp. * | 10,430 |
1,000 |
| Synta Pharmaceuticals, Inc. * | 2,650 |
600 |
| Teva Pharmaceuticals Industries Ltd. | 34,506 |
|
|
| 224,676 |
Retail-Catalog & Mail-Order Houses - 4.51% |
| ||
500 |
| Amazon.com, Inc. * | 155,175 |
|
|
|
|
Retail-Eating Places - 4.93% |
| ||
1,700 |
| McDonald's Corp. | 159,290 |
800 |
| Potbelly Corp. * | 10,296 |
|
|
| 169,586 |
Retail-Grocery Stores - 0.99% |
| ||
1,000 |
| Sprouts Farmers Market, Inc. * | 33,980 |
|
|
|
|
Securities Brokers, Dealers & Flotation Companies - 1.13% |
| ||
200 |
| Goldman Sachs Group, Inc. | 38,766 |
|
|
|
|
Services-Computer Programming, Data Processing, Etc. - 2.26% |
| ||
100 |
| Google, Inc. * | 52,640 |
700 |
| Twitter, Inc. * | 25,109 |
|
|
| 77,749 |
Services-Motion Picture & Video Tape Productions - 0.65% |
| ||
1,000 |
| Dreamworks Animation SKG, Inc. * | 22,330 |
|
|
|
|
Services-Prepackaged Software - 0.96% |
| ||
1,000 |
| 3D Systems Corp. * | 32,870 |
|
|
|
|
Services-Video Tape Rental - 3.97% |
| ||
400 |
| Netflix, Inc. * | 136,644 |
|
|
|
|
Specialty Cleaning, Polishing - 0.91% |
| ||
300 |
| Clorox Co. | 31,263 |
|
|
|
|
Telephone Communications (No Radio Telephone) - 8.96% |
| ||
5,000 |
| AT&T Corp. | 167,950 |
3,000 |
| Verizon Communications, Inc. | 140,340 |
|
|
| 308,290 |
Tobacco Products - 0.95% |
| ||
400 |
| Philip Morris International, Inc. | 32,580 |
|
|
|
|
TOTAL FOR COMMON STOCKS (Cost $3,071,664) - 88.13% | 3,030,980 | ||
|
|
|
|
CLOSED END MUTUAL FUND - 0.42% |
| ||
1,000 |
| Royce Value Trust, Inc. | 14,330 |
TOTAL FOR CLOSED END MUTUAL FUND (Cost $14,573) - 0.42% | 14,330 | ||
|
|
|
|
EXCHANGE TRADED FUNDS - 6.15% |
| ||
12,000 |
| Aberdeen Asia Pacific Fund | 66,600 |
8,000 |
| The Gamco Global Gold, Natural Resources & Income Trust | 56,000 |
500 |
| SPDR Dow Jones Industrial Average ETF | 88,940 |
TOTAL FOR EXCHANGE TRADED FUNDS (Cost $275,342) - 6.15% | 211,540 | ||
|
|
|
|
REAL ESTATE INVESTMENT TRUSTS - 0.26% |
| ||
1,000 |
| American Realty Capital Properties, Inc. | 9,050 |
TOTAL FOR REAL ESTATE INVESTMENT TRUSTS (Cost $7,855) - 0.26% | 9,050 | ||
|
|
|
|
|
|
|
|
PUT OPTIONS - 1.60% * |
| ||
Shares Subject |
| Underlying Security |
|
to Put |
| Expiration Date/Exercise Price |
|
|
|
|
|
|
| Amazon.com, Inc. |
|
200 |
| February 2015 Put @ $290.00 | 1,730 |
|
|
|
|
|
| Amazon.com, Inc. |
|
200 |
| February 2015 Put @ $310.00 | 3,400 |
|
|
|
|
|
| American Realty Capital Properties, Inc. |
|
1,000 |
| January 2015 Put @ $9.00 | 350 |
|
|
|
|
|
| Apollo Global Management, LLC |
|
3,000 |
| January 2015 Put @ $22.50 | 450 |
|
|
|
|
|
| AT&T, Inc. |
|
4,000 |
| February 2015 Put @ $32.00 | 1,960 |
|
|
|
|
|
| Bristol-Myers Squibb Co. |
|
1,500 |
| February 2015 Put @ $62.50 | 6,075 |
|
|
|
|
|
| Bristol-Myers Squibb Co. |
|
1,000 |
| February 2015 Put @ $57.50 | 1,490 |
|
|
|
|
|
| Coca-Cola Co. |
|
3,000 |
| January 2015 Put @ $42.50 | 1,800 |
|
|
|
|
|
| Cummins, Inc. |
|
900 |
| January 2015 Put @ $140.00 | 945 |
|
|
|
|
|
| Freeport-McMoRan, Inc. |
|
3,500 |
| February 2015 Put @ $20.00 | 1,540 |
|
|
|
|
|
| Freeport-McMoRan, Inc. |
|
3,500 |
| February 2015 Put @ $22.00 | 3,360 |
|
|
|
|
|
| General Motors Co. |
|
4,000 |
| January 2015 Put @ $32.00 | 320 |
|
|
|
|
|
| Illumina, Inc. |
|
400 |
| February 2015 Put @ $175.00 | 2,920 |
|
|
|
|
|
| Illumina, Inc. |
|
400 |
| February 2015 Put @ $190.00 | 5,400 |
|
|
|
|
|
| JPMorgan Chase & Co. |
|
900 |
| February 2015 Put @ $62.50 | 1,719 |
|
|
|
|
|
| JPMorgan Chase & Co. |
|
1,300 |
| February 2015 Put @ $65.00 | 3,848 |
|
|
|
|
|
| Luluemon Athletica, Inc. |
|
2,000 |
| January 2015 Put @ $42.50 | 160 |
|
|
|
|
|
| Mattel, Inc. |
|
4,500 |
| January 2015 Put @ $30.00 | 1,080 |
|
|
|
|
|
| McDonald's Corp. |
|
1,400 |
| February 2015 Put @ $92.50 | 3,220 |
|
|
|
|
|
| Netflix, Inc. |
|
100 |
| February 2015 Put @ $335.00 | 1,925 |
|
|
|
|
|
| Netflix, Inc. |
|
200 |
| February 2015 Put @ $350.00 | 5,240 |
|
|
|
|
|
| Schlumberger Ltd. |
|
400 |
| January 2015 Put @ $82.50 | 584 |
|
|
|
|
|
| Verizon Communications, Inc. |
|
1,500 |
| February 2015 Put @ $45.00 | 1,035 |
|
|
|
|
|
| Verizon Communications, Inc. |
|
1,500 |
| February 2015 Put @ $49.00 | 4,350 |
|
|
|
|
|
| Waste Management, Inc. |
|
2,800 |
| January 2015 Put @ $47.00 | 0 |
|
|
|
|
|
| Total (Premiums Paid $80,163) - 1.60% | 54,901 |
|
|
|
|
SHORT TERM INVESTMENTS - 14.05% |
| ||
483,091 |
| Fidelity Government Fund Class-I 0.01% ** | 483,091 |
|
|
|
|
TOTAL FOR SHORT TERM INVESTMENTS - (Cost $483,091) 14.05% | 483,091 | ||
|
|
|
|
TOTAL INVESTMENTS (Cost $3,932,688) - 110.61% | 3,803,892 | ||
|
|
|
|
LIABILITIES IN EXCESS OF OTHER ASSETS - (10.61)% | (364,908) | ||
|
|
|
|
NET ASSETS - 100.00% | $ 3,438,984 | ||
|
|
|
|
* Non-income producing securities during the period. |
| ||
** Variable rate security; the coupon rate shown represents the yield at December 31, 2014. |
| ||
ADR - American Depository Receipt. |
| ||
|
|
|
|
The accompanying notes are an integral part of these financial statements. |
|
Baldwin Fund | |||
Schedule of Call Options Written | |||
December 31, 2014 (Unaudited) | |||
|
|
|
|
| CALL OPTIONS WRITTEN * |
|
|
|
|
|
|
| Underlying Security | Shares Subject |
|
| Expiration Date/Exercise Price | to Call | Value |
|
|
|
|
| 3D Systems Corp. |
|
|
| January 2015 Call @ $32.00 | 1,000 | $ 1,900 |
|
|
|
|
| Amazon.com, Inc. |
|
|
| February 2015 Call @ $290.00 | 100 | 3,035 |
|
|
|
|
| Amazon.com, Inc. |
|
|
| January 2015 Call @ $290.00 | 200 | 4,800 |
|
|
|
|
| Amazon.com, Inc. |
|
|
| January 2015 Call @ $305.00 | 200 | 2,070 |
|
|
|
|
| American Realty Capital Properties, Inc. |
|
|
| January 2015 Call @ $9.00 | 1,000 | 400 |
|
|
|
|
| Apollo Global Management, LLC |
|
|
| January 2015 Call @ $22.50 | 4,000 | 6,200 |
|
|
|
|
| AT&T, Inc. |
|
|
| January 2015 Call @ $34.00 | 4,000 | 600 |
|
|
|
|
| AT&T, Inc. |
|
|
| February 2015 Call @ $32.00 | 1,000 | 1,740 |
|
|
|
|
| BHP Billiton Ltd. |
|
|
| January 2015 Call @ $47.50 | 400 | 512 |
|
|
|
|
| Bristol Myers Squibb Co. |
|
|
| February 2015 Call @ $60.00 | 1,500 | 2,805 |
|
|
|
|
| Bristol Myers Squibb Co. |
|
|
| January 2015 Call @ $62.50 | 1,500 | 420 |
|
|
|
|
| Clorox Co. |
|
|
| January 2015 Call @ $97.50 | 300 | 2,460 |
|
|
|
|
| Coca-Cola Co. |
|
|
| January 2015 Call @ $42.50 | 800 | 368 |
|
|
|
|
| Coca-Cola Co. |
|
|
| January 2015 Call @ $43.50 | 3,000 | 240 |
|
|
|
|
| Cummins, Inc. |
|
|
| January 2015 Call @ $140.00 | 200 | 1,160 |
|
|
|
|
| Cummins, Inc. |
|
|
| January 2015 Call @ $145.00 | 900 | 2,025 |
|
|
|
|
| Deer & Co. |
|
|
| January 2015 Call @ $90.00 | 300 | 183 |
|
|
|
|
| DreamWorks Animation SKG, Inc. |
|
|
| January 2015 Call @ $23.00 | 1,000 | 570 |
|
|
|
|
| Exxon Mobil Corp. |
|
|
| January 2015 Call @ $90.00 | 400 | 1,360 |
|
|
|
|
| Franklin Resources, Inc. |
|
|
| January 2015 Call @ $55.00 | 600 | 0 |
|
|
|
|
| Freeport-McMoran, Inc. |
|
|
| February 2015 Call @ $20.00 | 800 | 3,056 |
|
|
|
|
| Freeport-McMoran, Inc. |
|
|
| January 2015 Call @ $20.00 | 3,500 | 12,425 |
|
|
|
|
| Freeport-McMoran, Inc. |
|
|
| January 2015 Call @ $23.00 | 3,500 | 3,080 |
|
|
|
|
| General Motors Co. |
|
|
| January 2015 Call @ $32.00 | 1,000 | 3,070 |
|
|
|
|
| General Motors Co. |
|
|
| January 2015 Call @ $34.00 | 4,000 | 5,000 |
|
|
|
|
| Gentherm, Inc. |
|
|
| January 2015 Call @ $40.00 | 1,000 | 300 |
|
|
|
|
| Goldman Sachs Group, Inc. |
|
|
| January 2015 Call @ $185.00 | 200 | 2,020 |
|
|
|
|
| Google, Inc. |
|
|
| January 2015 Call @ $525.00 | 100 | 360 |
|
|
|
|
| Illumina, Inc. |
|
|
| January 2015 Call @ $175.00 | 400 | 5,920 |
|
|
|
|
| Illumina, Inc. |
|
|
| January 2015 Call @ $182.50 | 100 | 1,000 |
|
|
|
|
| Illumina, Inc. |
|
|
| January 2015 Call @ $190.00 | 400 | 2,720 |
|
|
|
|
| International Business Machines, Inc. |
|
|
| January 2015 Call @ $155.00 | 200 | 1,300 |
|
|
|
|
| JPMorgan Chase & Co. |
|
|
| February 2015 Call @ $62.50 | 1,300 | 2,275 |
|
|
|
|
| JPMorgan Chase & Co. |
|
|
| February 2015 Call @ $64.00 | 1,300 | 1,001 |
|
|
|
|
| LendingClub Corp. |
|
|
| February 2015 Call @ $28.00 | 1,000 | 940 |
|
|
|
|
| Lululemon Athletica, Inc. |
|
|
| January 2015 Call @ $42.50 | 500 | 7,200 |
|
|
|
|
| Mattel, Inc. |
|
|
| January 2015 Call @ $30.00 | 900 | 1,125 |
|
|
|
|
| Mattel, Inc. |
|
|
| January 2015 Call @ $31.00 | 4,500 | 2,925 |
|
|
|
|
| McDonald's Corp. |
|
|
| February 2015 Call @ $92.50 | 300 | 1,107 |
|
|
|
|
| McDonald's Corp. |
|
|
| January 2015 Call @ $96.00 | 1,400 | 1,820 |
|
|
|
|
| Netflix, Inc. |
|
|
| February 2015 Call @ $335.00 | 200 | 5,406 |
|
|
|
|
| Netflix, Inc. |
|
|
| January 2015 Call @ $350.00 | 200 | 900 |
|
|
|
|
| Philip Morris International, Inc. |
|
|
| January 2015 Call @ $82.50 | 400 | 288 |
|
|
|
|
| Potbelly Corp. |
|
|
| January 2015 Call @ $12.50 | 800 | 600 |
|
|
|
|
| Prudential Financial, Inc. |
|
|
| January 2015 Call @ $82.50 | 300 | 2,505 |
|
|
|
|
| Radient Pharmaceuticals Corp. |
|
|
| February 2015 Call @ $15.00 | 4,000 | 1,200 |
|
|
|
|
| SPDR Dow Jones Industrial Average ETF |
|
|
| December 2014 Call @ $174.00 | 500 | 2,750 |
|
|
|
|
| Schlumberger Ltd. |
|
|
| January 2015 Call @ $85.00 | 400 | 1,120 |
|
|
|
|
| Schlumberger Ltd. |
|
|
| January 2015 Call @ $87.00 | 200 | 190 |
|
|
|
|
| Schlumberger Ltd. |
|
|
| January 2015 Call @ $95.00 | 100 | 15 |
|
|
|
|
| Sprouts Farmers Market, Inc. |
|
|
| January 2015 Call @ $32.50 | 1,000 | 1,700 |
|
|
|
|
| Teva Pharmaceutical Industries, Ltd. |
|
|
| January 2015 Call @ $57.50 | 600 | 756 |
|
|
|
|
| Transocean Ltd. |
|
|
| January 2015 Call @ $20.00 | 600 | 18 |
|
|
|
|
| Twitter, Inc. |
|
|
| January 2015 Call @ $39.00 | 700 | 217 |
|
|
|
|
| Verizon Communications, Inc. |
|
|
| January 2015 Call @ $44.00 | 1,500 | 4,095 |
|
|
|
|
| Verizon Communications, Inc. |
|
|
| January 2015 Call @ $48.00 | 1,500 | 150 |
|
|
|
|
| Total (Premiums Received $90,804) |
| $ 113,402 |
|
|
|
|
* Non-income producing securities during the period. |
|
| |
The accompanying notes are an integral part of these financial statements. |
|
Frank Funds | ||||
Statements of Assets and Liabilities | ||||
December 31, 2014 (Unaudited) | ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Value Fund |
| Baldwin Fund |
Assets: |
|
|
|
|
Investments in Securities, at Value (Cost $48,690,457 and $3,932,688, respectively) | $ 53,820,754 |
| $ 3,803,892 | |
Cash Denominated in Foreign Currencies (Cost $1,366 and $0, respectively) | 1,367 |
| - | |
Cash |
| 15,576 |
| - |
Receivables: |
|
|
| |
Dividends and Interest | 2,313 |
| 5,944 | |
Due from Adviser | - |
| 10,579 | |
Shareholder Subscriptions | 103,355 |
| - | |
Portfolio Securities Sold | - |
| 256,747 | |
Prepaid Expenses | - |
| 6,874 | |
Total Assets | 53,943,365 |
| 4,084,036 | |
Liabilities: |
|
|
|
|
Covered Call Options Written at Fair Market Value |
|
|
| |
(premiums received $0 and $90,804) | - |
| 113,402 | |
Payables: |
|
|
|
|
Advisory Fees | 44,910 |
| - | |
Administrative Fees | 11,341 |
| 5,408 | |
Shareholder Redemptions | 8,485 |
| - | |
Portfolio Securities Purchased | - |
| 514,485 | |
Distribution Fees | 26,170 |
| 3,118 | |
Accrued Expenses | - |
| 8,639 | |
Total Liabilities | 90,906 |
| 645,052 | |
|
|
|
|
|
Net Assets |
| $ 53,852,459 |
| $ 3,438,984 |
|
|
|
|
|
Net Assets Consist of: |
|
|
| |
Paid In Capital | $ 48,187,247 |
| $ 4,196,108 | |
Undistributed Net Investment Income (Loss) | (202,575) |
| 14,743 | |
Accumulated Realized Gain (Loss) on Investments | 737,489 |
| (620,473) | |
Unrealized Appreciation (Depreciation) in Value of Investments and Foreign Currency | 5,130,298 |
| (151,394) | |
Net Assets, for 3,693,439 and 469,698 Shares Outstanding, respectively | $ 53,852,459 |
| $ 3,438,984 | |
|
|
|
|
|
Net Asset Value Per Share |
|
| $ 7.32 | |
|
|
|
|
|
Redemption Price Per Share ($7.32 x 0.98) * |
|
|
| $ 7.17 |
|
|
|
|
|
Investor Class: |
|
|
| |
|
|
|
|
|
Net Assets |
| $ 23,980,220 |
|
|
Shares outstanding (unlimited number of shares authorized with no par value) | 1,643,530 |
|
| |
Net Asset Value | $ 14.59 |
|
| |
Redemption Price Per Share ($14.59 x 0.98) * | $ 14.30 |
|
| |
|
|
|
|
|
Class C: |
|
|
|
|
|
|
|
|
|
Net Assets |
| $ 3,776,560 |
|
|
Shares outstanding (unlimited number of shares authorized with no par value) | 267,937 |
|
| |
Net Asset Value | $ 14.09 |
|
| |
Redemption Price Per Share ($14.09 x 0.98) * | $ 13.81 |
|
| |
|
|
|
|
|
Institutional Class: |
|
|
| |
|
|
|
|
|
Net Assets |
| $ 26,095,679 |
|
|
Shares outstanding (unlimited number of shares authorized with no par value) | 1,781,972 |
|
| |
Net Asset Value | $ 14.64 |
|
| |
Redemption Price Per Share ($14.64 x 0.98) * | $ 14.35 |
|
| |
|
|
|
|
|
* The Funds will impose a 2% redemption fee on shares redeemed within 5 business days of purchase. |
|
| ||
|
|
|
|
|
The accompanying notes are an integral part of these financial statements. |
|
|
|
Frank Funds | |||
Statements of Operations | |||
For the six months ended December 31, 2014 (Unaudited) | |||
|
|
|
|
|
|
|
|
|
|
|
|
|
| Value Fund | Baldwin Fund |
Investment Income: |
|
| |
Dividends (a) | $ 157,993 | $ 89,706 | |
Interest |
| 7,471 | 16 |
Total Investment Income | 165,464 | 89,722 | |
|
|
|
|
Expenses: |
|
|
|
Advisory Fees | 256,193 | 7,902 | |
Administration Fees | 64,695 | 30,246 | |
Transfer Agent Fees | - | 6,033 | |
Audit Fees | - | 5,596 | |
Distribution Fees (Class C - $17,368 and Investor Class - $29,783) | 47,151 | 17,561 | |
Legal Fees | - | 4,033 | |
Custody Fees | - | 5,520 | |
Printing and Mailing Expense | - | 313 | |
Registration Fees | - | 1,260 | |
Total Expenses | 368,039 | 78,464 | |
Fees Waived and Reimbursed by the Advisor | - | (47,733) | |
Net Expenses | 368,039 | 30,731 | |
|
|
|
|
Net Investment Income (Loss) | (202,575) | 58,991 | |
|
|
|
|
Realized and Unrealized Gain (Loss) on: |
|
| |
Realized Gain (Loss) on Investments | 1,323,110 | (65,066) | |
Realized Gain (Loss) on Options | (3,352) | 5,103 | |
Realized Loss on Foreign Currency Transactions | (140) | - | |
Realized Gain (Loss) on Investments, Options and Foreign Currency Transactions | 1,319,618 | (59,963) | |
|
|
|
|
Net Change in Unrealized Appreciation (Depreciation) on: |
|
| |
Investments | 447,320 | (73,369) | |
Options |
| (2,401) | (12,869) |
Foreign Currency Transactions | 1 | - | |
Change in Unrealized Appreciation (Depreciation) on Investments, Options and Foreign Currency Transactions | 444,920 | (86,238) | |
|
|
|
|
Realized and Unrealized Gain (Loss) on Investments, Options and Foreign Currency Transactions | 1,764,538 | (146,201) | |
|
|
|
|
Net Increase (Decrease) in Net Assets Resulting from Operations | $ 1,561,963 | $ (87,210) | |
|
|
|
|
(a) net of foreign withholding taxes of $3,044 and $1,169 respectively. |
|
| |
|
|
|
|
The accompanying notes are an integral part of these financial statements. |
|
|
Value Fund | |||
Statements of Changes in Net Assets | |||
|
|
|
|
|
|
|
|
|
| (Unaudited) |
|
|
| Six Months |
|
|
| Ended | Year Ended |
|
| 12/31/2014 | 6/30/2014 |
Increase (Decrease) in Net Assets From Operations: |
|
| |
Net Investment Loss | $ (202,575) | $ (196,691) | |
Net Realized Gain on Investments, Options, and Foreign Currency Transactions | 1,319,618 | 4,213,144 | |
Unrealized Appreciation on Investments, Options, and Foreign Currency Transactions | 444,920 | 1,131,645 | |
Net Increase in Net Assets Resulting from Operations | 1,561,963 | 5,148,098 | |
|
|
|
|
Distributions to Shareholders: |
|
| |
Net Investment Income | - | (5,591) | |
Realized Gains | (2,136,520) | (2,848,696) | |
Total Distributions Paid to Shareholders | (2,136,520) | (2,854,287) | |
|
|
|
|
Capital Share Transactions | 2,943,896 | 30,828,442 | |
|
|
|
|
Total Increase in Net Assets | 2,369,339 | 33,122,253 | |
|
|
|
|
Net Assets: |
|
|
|
Beginning of Period | 51,483,120 | 18,360,867 | |
|
|
|
|
End of Period (Including Undistributed Net Investment Income (Loss) |
|
| |
of $(202,575) and $0, respectively) | $53,852,459 | $ 51,483,120 | |
|
|
|
|
The accompanying notes are an integral part of these financial statements. |
|
|
Baldwin Fund | |||
Statements of Changes in Net Assets | |||
|
|
|
|
|
|
|
|
|
| (Unaudited) |
|
|
| Six Months |
|
|
| Ended | Year Ended |
|
| 12/31/2014 | 6/30/2014 |
Increase (Decrease) in Net Assets From Operations: |
|
| |
Net Investment Income | $ 58,991 | $ 63,313 | |
Net Realized Loss on Investments and Options | (59,963) | (143,760) | |
Unrealized Appreciation (Depreciation) on Investments and Options | (86,238) | 233,268 | |
Net Increase (Decrease) in Net Assets Resulting from Operations | (87,210) | 152,821 | |
|
|
|
|
Distributions to Shareholders: |
|
| |
Net Investment Income | (59,347) | (61,376) | |
Realized Gains | - | - | |
Total Distributions Paid to Shareholders | (59,347) | (61,376) | |
|
|
|
|
Capital Share Transactions | 90,614 | (131,910) | |
|
|
|
|
Total Decrease in Net Assets | (55,943) | (40,465) | |
|
|
|
|
Net Assets: |
|
|
|
Beginning of Period | 3,494,927 | 3,535,392 | |
|
|
|
|
End of Period (Including Undistributed Net Investment Income of $14,743 and $15,099, respectively) | $ 3,438,984 | $ 3,494,927 | |
|
|
|
|
The accompanying notes are an integral part of these financial statements. |
|
|
Value Fund - Institutional Class |
| |||||||
Financial Highlights |
| |||||||
Selected data for a share outstanding throughout the period. |
| |||||||
|
|
|
|
|
|
|
|
|
|
| (Unaudited) |
|
|
|
|
|
|
|
| Six Months |
|
|
|
| Period |
|
|
| Ended |
| Years Ended | Ended |
| ||
|
| 12/31/2014 |
| 6/30/2014 | 6/30/2013 | 6/30/2012 | 6/30/2011 | *** |
|
|
|
|
|
|
|
|
|
Net Asset Value, at Beginning of Period | $ 14.79 |
| $ 13.38 | $ 11.70 | $ 11.58 | $ 10.09 |
| |
|
|
|
|
|
|
|
|
|
Income From Investment Operations: |
|
|
|
|
|
|
| |
Net Investment Income (Loss) * | (0.04) |
| (0.05) | 0.05 | 0.03 | 0.02 |
| |
Net Gain on Securities (Realized and Unrealized) | 0.49 |
| 2.42 | 2.60 | 0.22 | 1.50 |
| |
Total from Investment Operations | 0.45 |
| 2.37 | 2.65 | 0.25 | 1.52 |
| |
|
|
|
|
|
|
|
|
|
Distributions: |
|
|
|
|
|
|
|
|
Net Investment Income | - |
| - | (0.03) | (0.02) | (0.03) |
| |
Realized Gains | (0.60) |
| (0.96) | (0.94) | (0.11) | - |
| |
Total from Distributions | (0.60) |
| (0.96) | (0.97) | (0.13) | (0.03) |
| |
|
|
|
|
|
|
|
|
|
Redemption Fees **** | - |
| - | - | - | - |
| |
|
|
|
|
|
|
|
|
|
Net Asset Value, at End of Period | $ 14.64 |
| $ 14.79 | $ 13.38 | $ 11.70 | $ 11.58 |
| |
|
|
|
|
|
|
|
|
|
Total Return ** | 3.03% | (b) | 17.83% | 24.40% | 2.28% | 15.07% | (b) | |
|
|
|
|
|
|
|
|
|
Ratios/Supplemental Data: |
|
|
|
|
|
|
| |
Net Assets at End of Period (Thousands) | $ 26,096 |
| $ 23,630 | $ 4,893 | $ 2,132 | $ 329 |
| |
Ratio of Expenses to Average Net Assets | 1.24% | (a) | 1.23% | 1.23% | 1.23% | 1.22% | (a) | |
Ratio of Net Investment Income (Loss) to Average Net Assets | (0.60)% | (a) | (0.31)% | 0.42% | 0.22% | 0.26% | (a) | |
Portfolio Turnover | 19.61% | (b) | 81.29% | 73.76% | 43.48% | 52.38% | (b) | |
|
|
|
|
|
|
|
|
|
* Per share net investment income (loss) has been determined on the basis of average shares outstanding during the period. |
|
|
|
| ||||
** Assumes reinvestment of dividends. |
|
|
|
|
|
|
| |
*** For the Period November 3, 2010 (commencement of investment operations) through June 30, 2011. |
|
|
|
| ||||
**** The Fund will impose a 2% redemption fee on shares redeemed within 5 business days of purchase. |
|
|
|
|
| |||
(a) Annualized |
|
|
|
|
|
|
|
|
(b) Not Annualized |
|
|
|
|
|
|
| |
The accompanying notes are an integral part of these financial statements. |
|
|
|
|
|
|
Value Fund - Class C |
| |||||||
Financial Highlights |
| |||||||
Selected data for a share outstanding throughout the period. |
| |||||||
|
|
|
|
|
|
|
|
|
|
| (Unaudited) |
|
|
|
|
|
|
|
| Six Months |
|
|
|
| Period |
|
|
| Ended |
| Years Ended | Ended |
| ||
|
| 12/31/2014 |
| 6/30/2014 | 6/30/2013 | 6/30/2012 | 6/30/2011 | *** |
|
|
|
|
|
|
|
|
|
Net Asset Value, at Beginning of Period | $ 14.33 |
| $ 13.11 | $ 11.57 | $ 11.52 | $ 9.32 |
| |
|
|
|
|
|
|
|
|
|
Income From Investment Operations: |
|
|
|
|
|
|
| |
Net Investment Loss * | (0.12) |
| (0.18) | (0.07) | (0.09) | (0.07) |
| |
Net Gain on Securities (Realized and Unrealized) | 0.48 |
| 2.36 | 2.54 | 0.24 | 2.27 |
| |
Total from Investment Operations | 0.36 |
| 2.18 | 2.47 | 0.15 | 2.20 |
| |
|
|
|
|
|
|
|
|
|
Distributions: |
|
|
|
|
|
|
|
|
Net Investment Income | - |
| - | - | - | - | (a) | |
Realized Gains | (0.60) |
| (0.96) | (0.93) | (0.11) | - |
| |
Total from Distributions | (0.60) |
| (0.96) | (0.93) | (0.11) | - |
| |
|
|
|
|
|
|
|
|
|
Redemption Fees **** | - |
| - | - | - | - |
| |
|
|
|
|
|
|
|
|
|
Net Asset Value, at End of Period | $ 14.09 |
| $ 14.33 | $ 13.11 | $ 11.57 | $ 11.52 |
| |
|
|
|
|
|
|
|
|
|
Total Return ** | 2.49% | (c) | 16.69% | 23.06% | 1.50% | 23.66% | (c) | |
|
|
|
|
|
|
|
|
|
Ratios/Supplemental Data: |
|
|
|
|
|
|
| |
Net Assets at End of Period (Thousands) | $ 3,777 |
| $ 3,281 | $ 1,458 | $ 1,908 | $ 3,102 |
| |
Ratio of Expenses to Average Net Assets | 2.24% | (b) | 2.24% | 2.24% | 2.24% | 2.22% | (b) | |
Ratio of Net Investment Loss to Average Net Assets | (1.60)% | (b) | (1.30)% | (0.62)% | (0.77)% | (0.80)% | (b) | |
Portfolio Turnover | 19.61% | (c) | 81.29% | 73.76% | 43.48% | 52.38% | (c) | |
|
|
|
|
|
|
|
|
|
* Per share net investment income (loss) has been determined on the basis of average shares outstanding during the period. |
|
|
| |||||
** Assumes reinvestment of dividends. |
|
|
|
|
|
|
| |
*** For the Period September 23, 2010 (commencement of investment operations) through June 30, 2011. |
|
|
|
| ||||
**** The Fund will impose a 2% redemption fee on shares redeemed within 5 business days of purchase. |
|
|
|
| ||||
(a) Amount calculated is less than $0.005 |
|
|
|
|
|
|
| |
(b) Annualized |
|
|
|
|
|
|
|
|
(c) Not Annualized |
|
|
|
|
|
|
| |
The accompanying notes are an integral part of these financial statements. |
|
|
|
|
|
|
Value Fund - Investor Class | ||||||||||
Financial Highlights | ||||||||||
Selected data for a share outstanding throughout the period. | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| (Unaudited) |
|
|
|
|
|
|
|
|
|
| Six Months |
|
|
|
|
|
|
|
|
|
| Ended |
| Years Ended | ||||||
|
| 12/31/2014 |
| 6/30/2014 |
| 6/30/2013 | 6/30/2012 |
| 6/30/2011 | 6/30/2010 |
|
|
|
|
|
|
|
|
|
|
|
Net Asset Value, at Beginning of Period | $ 14.76 |
| $ 13.38 |
| $ 11.71 | $ 11.59 |
| $ 8.40 | $ 7.40 | |
|
|
|
|
|
|
|
|
|
|
|
Income From Investment Operations: |
|
|
|
|
|
|
|
|
| |
Net Investment Income (Loss) * | (0.06) |
| (0.08) |
| 0.02 | 0.00 | (a) | (0.01) | (0.06) | |
Net Gain on Securities (Realized and Unrealized) | 0.49 |
| 2.42 |
| 2.59 | 0.23 |
| 3.20 | 1.06 | |
Total from Investment Operations | 0.43 |
| 2.34 |
| 2.61 | 0.23 |
| 3.19 | 1.00 | |
|
|
|
|
|
|
|
|
|
|
|
Distributions: |
|
|
|
|
|
|
|
|
|
|
Net Investment Income | - |
| - |
| (0.01) | - |
| - | - | |
Realized Gains | (0.60) |
| (0.96) |
| (0.93) | (0.11) |
| - | - | |
Total from Distributions | (0.60) |
| (0.96) |
| (0.94) | (0.11) |
| - | - | |
|
|
|
|
|
|
|
|
|
|
|
Redemption Fees *** | - |
| - | (a) | - | - |
| - | - | |
|
|
|
|
|
|
|
|
|
|
|
Net Asset Value, at End of Period | $ 14.59 |
| $ 14.76 |
| $ 13.38 | $ 11.71 |
| $ 11.59 | $ 8.40 | |
|
|
|
|
|
|
|
|
|
|
|
Total Return ** | 2.90% | (c) | 17.60% |
| 24.00% | 2.10% |
| 37.98% | 13.51% | |
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Ratios/Supplemental Data: |
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Net Assets at End of Period (Thousands) | $ 23,980 |
| $ 24,572 |
| $ 12,010 | $ 8,703 |
| $ 9,008 | $ 4,307 | |
Ratio of Expenses to Average Net Assets | 1.49% | (b) | 1.49% |
| 1.49% | 1.49% |
| 1.49% | 1.50% | |
Ratio of Net Investment Income (Loss) to Average Net Assets | (0.85)% | (b) | (0.54)% |
| 0.17% | (0.02)% |
| (0.07)% | (0.68)% | |
Portfolio Turnover | 19.61% | (c) | 81.29% |
| 73.76% | 43.48% |
| 52.38% | 58.68% | |
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* Per share net investment income (loss) has been determined on the basis of average shares outstanding during the period. |
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** Assumes reinvestment of dividends. |
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*** The Fund will impose a 2% redemption fee on shares redeemed within 5 business days of purchase. |
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(a) Amount calculated is less that $0.005 |
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(b) Annualized |
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(c) Not Annualized |
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The accompanying notes are an integral part of these financial statements. |
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Baldwin Fund | ||||||||
Financial Highlights | ||||||||
Selected data for a share outstanding throughout the period. | ||||||||
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| Six Months |
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| Ended |
| Years Ended | ||||
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| 12/31/2014 |
| 6/30/2014 | 6/30/2013 | 6/30/2012 | 6/30/2011 | 6/30/2010 |
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Net Asset Value, at Beginning of Period | $ 7.64 |
| $ 7.44 | $ 7.78 | $ 8.48 | $ 8.53 | $ 8.94 | |
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Income From Investment Operations: |
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Net Investment Income * | 0.13 |
| 0.14 | 0.13 | 0.06 | 0.15 | 0.20 | |
Net Gain (Loss) on Securities (Realized and Unrealized) | (0.32) |
| 0.19 | (0.37) | (0.57) | 0.44 | (0.11) | |
Total from Investment Operations | (0.19) |
| 0.33 | (0.24) | (0.51) | 0.59 | 0.09 | |
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Distributions: |
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Net Investment Income | (0.13) |
| (0.13) | (0.10) | (0.09) | (0.12) | (0.20) | |
Realized Gains | - |
| - | - | (0.10) | (0.52) | (0.30) | |
Total from Distributions | (0.13) |
| (0.13) | (0.10) | (0.19) | (0.64) | (0.50) | |
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Redemption Fees *** | - |
| - | - | - | - | - | |
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Net Asset Value, at End of Period | $ 7.32 |
| $ 7.64 | $ 7.44 | $ 7.78 | $ 8.48 | $ 8.53 | |
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Total Return ** | (2.53)% | (b) | 4.51% | (3.07)% | (6.08)% | 7.10% | 0.82% | |
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Ratios/Supplemental Data: |
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Net Assets at End of Period (Thousands) | $ 3,439 |
| $ 3,495 | $ 3,535 | $ 3,807 | $ 4,038 | $ 3,324 | |
Before Reimbursement: |
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Ratio of Expenses to Average Net Assets | 4.47% | (a) | 4.17% | 4.27% | 4.23% | 4.47% | 5.94% | |
Ratio of Net Investment Income (Loss) to Average Net Assets | 0.64% | (a) | (0.62)% | (0.85)% | (1.76)% | (0.99)% | (1.94)% | |
After Reimbursement: |
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Ratio of Expenses to Average Net Assets | 1.75% | (a) | 1.75% | 1.75% | 1.75% | 1.75% | 1.75% | |
Ratio of Net Investment Income to Average Net Assets | 3.36% | (a) | 1.80% | 1.67% | 0.72% | 1.73% | 2.25% | |
Portfolio Turnover | 390.23% | (b) | 650.16% | 463.44% | 684.25% | 759.21% | 417.96% | |
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* Per share net investment income has been determined on the basis of average shares outstanding during the period. |
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** Assumes reinvestment of dividends. |
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*** The Fund will impose a 2% redemption fee on shares redeemed within 5 business days of purchase. |
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(a) Annualized |
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(b) Not Annualized |
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The accompanying notes are an integral part of these financial statements. |
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FRANK FUNDS
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2014 (UNAUDITED)
Note 1. Organization
Frank Funds (the “Trust”), is an open-end regulated investment company that was organized as an Ohio business trust on February 12, 2004. The Trust is permitted to issue an unlimited number of shares of beneficial interest of separate series, each series representing a distinct fund with its own investment objective and policies. At present, there are two series authorized by the Trust, the Frank Value Fund (the “Value Fund”) and the Leigh Baldwin Total Return Fund (the “Baldwin Fund”) (each a “Fund” and collectively the “Funds”). Frank Capital Partners LLC (“FCP” or “Frank Capital”) is the adviser to the Value Fund and Leigh Baldwin & Co., LLC (“LBC”) is the adviser to the Baldwin Fund. The Value Fund’s investment objective is to provide long-term capital appreciation. The Value Fund’s principal investment strategy is value investing. The Value Fund commenced operations on July 21, 2004. The Baldwin Fund’s investment objective is to provide total return. The Baldwin Fund seeks to achieve its investment objective by purchasing equity securities (including common stock, shares of other investment companies and exchange traded funds) and selling covered calls to generate income to the Baldwin Fund. The Baldwin Fund also utilizes put options in conjunction with the covered calls to limit the risk of ownership of the underlying equity securities. The Baldwin Fund commenced operations on August 1, 2008.
The Value Fund currently has 3 classes of shares; Investor Class shares, Class C shares, and Institutional Class shares. The share classes vary in distribution (12b-1) fee accruals.
Note 2. Summary of Significant Accounting Policies
The following is a summary of the significant accounting policies followed by the Funds in the preparation of its financial statements. These policies are in conformity with accounting principles generally accepted in the United States of America.
Security Valuation - All investments in securities are recorded at their estimated fair value, as described in Note 3.
Share Valuation - The price (net asset value) of the shares of each Fund is normally determined as of 4:00 p.m., Eastern time on each day the Funds are open for business and on any other day on which there is sufficient trading in the Funds’ securities to materially affect the net asset value. The Funds are normally open for business on every day except Saturdays, Sundays and the following holidays: New Year’s Day, Martin Luther King Day, Presidents Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas.
Redemption Fee - To discourage short-term trades by investors, the Funds will impose a redemption fee of 2.00% of the total redemption amount (calculated at market value) if shares are redeemed within five business days of purchase. There were no redemptions fees collected for the Value Fund during the six months ended December 31, 2014.
Security Transaction Timing - Security transactions are recorded on the dates transactions are entered into (the trade dates). Dividend income and distributions to shareholders are recognized on the ex-dividend date. Interest income is recognized on an accrual basis. The Funds use the identified cost basis in computing gain or loss on sale of investment securities. Discounts and premiums on securities purchased are amortized over the life of the respective securities. Withholding taxes on foreign dividends are provided for in accordance with the Funds’ understanding of the applicable country’s tax rules and rates.
Income Taxes - The Funds intend to continue to qualify each year as a “regulated investment company” under Subchapter M of the Internal Revenue Code of 1986, as amended. By so qualifying, the Funds will not be subject to federal income taxes to the extent that they distribute substantially all of their net investment income and any realized capital gains. It is the Funds’ policy to distribute annually, prior to the end of the calendar year, dividends sufficient to satisfy excise tax requirements of the Internal Revenue Service. This Internal Revenue Service requirement may cause an excess of distributions over the book year-end accumulated income.
In addition, GAAP requires management of the Funds to analyze all open tax years, fiscal years 2011-2013, as defined by IRS statue of limitations for all major industries, including federal tax authorities and certain tax authorities. As of and during the six months ended December 31, 2014, the Funds did not have a liability for any unrecognized tax benefits. The Funds have no examination in progress and is not aware of any tax positions for which it is reasonably possible that the total tax amounts of unrecognized tax benefits will significantly change in the next twelve months.
Distributions to Shareholders - The Funds intend to distribute to their shareholders substantially all of their net realized capital gains and net investment income, if any, at year-end. Distributions will be recorded on ex-dividend date.
Foreign Currency - Investment securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts based on the exchange rate of such currencies against U.S. dollars on the date of valuation. Purchases and sales of investment securities and income and expense items denominated in foreign currencies are translated into U.S. dollar amounts at the exchange rate in effect on the respective dates of such transactions.
Reported net realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund's books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period end, resulting from changes in exchange rates.
Option Writing - The Funds may invest in put and call options. When a fund writes an option, an amount equal to the premium received by the fund is recorded as a liability and is subsequently adjusted to the current fair value of the option written. Premiums received from writing options that expire unexercised are treated by the Funds on the expiration date as realized gains. The difference between the premium and the amount paid on effecting a closing purchase transaction, including brokerage commissions, is also treated as a realized gain, or, if the premium is less than the amount paid for the closing purchase transaction, as a realized loss. If a call option is exercised, the premium is added to the proceeds from the sale of the underlying security or currency in determining if the fund has a realized gain or loss. If a put option is exercised, the premium reduces the cost basis of the securities purchased by the fund. The Fund(s) as writer of an option bears the market risk of an unfavorable change in the price of the security underlying the written option.
Use of Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets during the reporting period. Actual results could differ from those estimates.
Subsequent events: Management has evaluated the impact of all subsequent events on the Funds through the issuance date of these financial statements and has noted no such events requiring disclosure.
Note 3. Fair Value of Investments
Processes and Structure
The Funds' Board of Trustees has adopted guidelines for valuing securities including in circumstances in which market quotes are not readily available and has delegated to each Fund's adviser the responsibility for determining fair value prices, subject to review by the Board of Trustees.
In accordance with the Trust’s good faith pricing guidelines, the adviser is required to consider all appropriate factors relevant to the value of securities for which it has determined other pricing sources are not available or reliable as described above. No single standard for determining fair value exists since fair value depends upon the circumstances of each individual case. As a general principle, the current fair value of an issue of securities being valued by the adviser would appear to be the amount which the owner might reasonably expect to receive for them upon their current sale. Methods which are in accord with this principle may, for example, be based on (i) a multiple of earnings; (ii) a discount from market of a similar freely traded security (including a derivative security or a basket of securities traded on other markets, exchanges or among dealers); or (iii) yield to maturity with respect to debt issues, or a combination of these and other methods.
Hierarchy of Fair Value Inputs
The Funds utilize various methods to measure the fair value of most of their investments on a recurring basis. GAAP establishes a hierarchy that prioritizes inputs to valuation techniques used to measure fair value. The three levels of inputs are as follows:
·
Level 1. Unadjusted quoted prices in active markets for identical assets or liabilities that the company 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 that relevant observable inputs are not available, representing the company's own assumptions about the assumptions that a market participant would use in valuing the asset or liability, and that would be based on the best information available.
The availability of observable inputs can vary from security to security and is affected by a wide variety of factors, including, for example, the type of security, whether the security is new and not yet established in the marketplace, the liquidity of markets, and other characteristics particular to the security. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in level 3.
The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety is determined based on the lowest level input that is significant to the fair value measurement in its entirety.
Fair Value Measurements
A description of the valuation techniques applied to the company's major categories of assets and liabilities measured at fair value on a recurring basis follows.
Equity securities (common and preferred stock). Securities traded on a national securities exchange (or reported on the NASDAQ national market) are stated at the last reported sales price on the day of valuation. To the extent these securities are actively traded, and valuation adjustments are not applied, they are categorized in level 1 of the fair value hierarchy. Certain foreign securities may be fair valued using a pricing service that considers the correlation of the trading patterns of the foreign security to the intraday trading in the U.S. markets for investments such as American Depositary Receipts, financial futures, Exchange Traded Funds, and the movement of the certain indexes of securities based on a statistical analysis of the historical relationship and that are categorized in level 2. Preferred stock and other equities traded on inactive markets or valued by reference to similar instruments are also categorized in level 2.
Fixed income securities (corporate bonds). The fair value of fixed income securities is estimated using various techniques, which may consider recently executed transactions in securities of the issuer or comparable issuers, market price quotations (when observable), bond spreads, fundamental data relating to the issuer, and credit default swap spreads adjusted for any basis difference between cash and derivative instruments. Although most fixed income securities are categorized in level 2 of the fair value hierarchy, in instances when lower relative weight is placed on transaction prices, quotations, or similar observable inputs, they are categorized in level 3.
Derivative Instruments (equity options) – Listed derivatives that are actively traded, and valuations adjustments are not applied, are valued based on quoted prices from the exchange and categorized in level 1 of the fair value hierarchy.
The following tables summarize the inputs used to value each Fund’s assets and liabilities measured at fair value as of December 31, 2014:
Value Fund |
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Financial Instruments - Assets | Level 1 | Level 2 | Level 3 | Total |
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Common Stocks | $ 34,792,501 | - | - | $ 34,792,501 |
Corporate Bonds | - | 3,499,307 | - | 3,499,307 |
Put Options | - | - | - | - |
Short-Term Investments | 15,528,946 | - | - | 15,528,946 |
Total | $ 50,321,447 | 3,499,307 | - | $ 53,820,754 |
Baldwin Fund |
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Financial Instruments - Assets | Level 1 | Level 2 | Level 3 | Total |
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Common Stocks | $ 3,030,980 | - | - | $ 3,030,980 |
Closed End Mutual Fund | 14,330 | - | - | 14,330 |
Exchange Traded Funds | 211,540 | - | - | 211,540 |
Real Estate Investment Trusts | 9,050 | - | - | 9,050 |
Put Options | 54,901 | - | - | 54,901 |
Short-Term Investments | 483,091 | - | - | 483,091 |
Total | $ 3,803,892 | - | - | $ 3,803,892 |
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Securities Sold Short - Liabilities | Level 1 | Level 2 | Level 3 | Total |
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Call Options | $ 113,402 | - | - | $ 113,402 |
Total | $ 113,402 | - | - | $ 113,402 |
The Funds did not hold any Level 3 assets during the six months ended December 31, 2014. There were no significant transfers into or out of Level 1 or Level 2 during the period. It is the Funds policy to recognize transfers into and out of Level 1 and Level 2 at the end of the reporting period.
Note 4. Investment Management and Administrative Agreements
Value Fund
The Trust has a Management Agreement with Frank Capital, with respect to the Value Fund. Under the terms of the Management Agreement, Frank Capital manages the investment portfolio of the Value Fund, subject to policies adopted by the Trust’s Board of Trustees. Under the Management Agreement, Frank Capital, at its own expense and without reimbursement from the Trust, furnishes office space and all necessary office facilities, and pays fees and expenses incurred by the Value Fund, including but not limited to, legal, auditing, accounting, and expenses of the custodian, along with equipment and executive personnel necessary for managing the assets of the Value Fund. Frank Capital also pays the salaries and fees of all its officers and employees that serve as officers and trustees of the Trust. Frank Capital pays all ordinary operating expenses of the Value Fund except brokerage fees and commissions, taxes, borrowing costs (such as (a) interest and (b) dividend expenses on securities sold short), acquired fund fees and expenses, and extraordinary expenses. For its services and the payment of Value Fund ordinary operating expenses, Frank Capital receives an annual investment management fee of 0.99% of the average daily net assets of the Value Fund. For the six months ended December 31, 2014, Frank Capital earned management fees of $256,193 from the Value Fund. As of December 31, 2014, the Value Fund owed Frank Capital $44,910 for management fees.
FCP also provides administrative services to the Value Fund under an Administration Agreement and receives a fee equal to 0.25% of the Value Fund’s average daily net assets for those services. Under the Administration Agreement, FCP pays all of the operating expenses of the Value Fund except management fees, Rule 12b-1 fees, brokerage, taxes, borrowing costs (such as interest and dividend expense of securities sold short), and extraordinary expenses. For the six months ended December 31, 2014 the Value Fund accrued $64,695 in administrative fees. At December 31, 2014, the Value Fund owed $11,341 in administrative fees.
Baldwin Fund
The Trust has a Management Agreement with LBC with respect to the Baldwin Fund. Under the terms of the Management Agreement, LBC manages the investment portfolio of the Baldwin Fund, subject to policies adopted by the Trust's Board of Trustees. Under the terms of the Management Agreement LBC pays all of the expenses of the Baldwin Fund except administrative fees, 12b-1 fees, brokerage fees and commissions, taxes, borrowing costs (such as interest and dividend expense of securities sold short) acquired fund fees and expenses and extraordinary expenses. As compensation for its management services, the Baldwin Fund is obligated to pay LBC a fee computed and accrued daily and paid monthly at an annual rate of 0.45% of the average daily net assets of the Baldwin Fund. For the six months ended December 31, 2014, LBC earned a fee of $7,902 from the Baldwin Fund.
LBC has contractually agreed to defer its fees and to reimburse 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, underlying fund fees, 12b-1 fees and expenses or extraordinary expenses such as litigation, at least until October 31, 2019, so that the total annual operating expenses will not exceed 1.75%, subject to possible recoupment from the Baldwin Fund in future years on a rolling three year basis (within the three years after the fees have been deferred or reimbursed) if such recoupment can be achieved within the foregoing expense limits. LBC reimbursed the Baldwin Fund $47,733 for expenses during the six months ended December 31, 2014. At June 30, 2014, the amount subject to future recoupment is as follows:
Fiscal Year Ended Recoverable Through Amount
June 30, 2012 June 30, 2015 $ 97,004
June 30, 2013 June 30, 2016 $ 93,594
June 30, 2014 June 30, 2017 $ 84,975
Note 5. Related Party Transactions
Brian J. Frank and Monique Weiss are the control persons of Frank Capital. Brian Frank also serves as a trustee of the Trust, and both Mr. Frank and Ms. Weiss serve as officers of the Trust. Mr. Frank and Ms. Weiss receive benefits from Frank Capital resulting from management fees paid to Frank Capital by the Value Fund.
The Baldwin Fund pays LBC brokerage commissions for executing securities transactions, which are separate from, and in addition to, the fees paid by the Baldwin Fund to LBC for advisory services. For the six months ended December 31, 2014, LBC was paid $20,750 in brokerage commissions. Frank Capital receives administration fees from the Baldwin Fund of $5,000 per month. Administrative fees paid to Frank Capital for the six months ended December 31, 2014, were $30,246. At December 31, 2014, the Baldwin Fund owed $5,408 in administrative fees to Frank Capital. LBC acts as the distributor of the Baldwin Fund. At December 31, 2014, the Adviser owed the Fund $10,579.
Note 6. Capital Share Transactions
The Trust is authorized to issue an unlimited number of shares of separate series. The total paid-in capital as of December 31, 2014, was $48,187,247 and $4,196,108 for the Value Fund and the Baldwin Fund, respectively. Transactions in capital were as follows:
Value Fund – Investor Class | July 1, 2014 through December 31, 2014 | July 1, 2013 through June 30, 2014 | ||
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| Shares | Amount | Shares | Amount |
Shares sold | 167,944 | $ 2,462,012 | 1,244,216 | $ 18,126,927 |
Shares reinvested | 55,354 | 813,153 | 71,633 | 1,040,833 |
Redemption Fees | - | - | - | 73 |
Shares redeemed | (244,995) | (3,591,949) | (548,070) | (8,037,537) |
Net Increase (Decrease) | (21,697) | $ (316,784) | 767,779 | $ 11,130,150 |
Value Fund – Class C | July 1, 2014 through December 31, 2014 | July 1, 2013 through June 30, 2014 | ||
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|
| Shares | Amount | Shares | Amount |
Shares sold | 39,234 | $ 561,287 | 163,003 | $ 2,291,685 |
Shares reinvested | 10,252 | 145,569 | 9,523 | 134,937 |
Shares redeemed | (10,526) | (149,279) | (54,752) | (809,132) |
Net Increase | 38,960 | $ 557,577 | 117,774 | $ 1,617,490 |
Value Fund – Institutional Class | July 1, 2014 through December 31, 2014 | July 1, 2013 through June 30, 2014 | ||
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|
| Shares | Amount | Shares | Amount |
Shares sold | 224,378 | $ 3,288,492 | 1,396,859 | $ 20,470,500 |
Shares reinvested | 65,554 | 966,926 | 89,521 | 1,302,531 |
Shares redeemed | (105,744) | (1,552,315) | (254,366) | (3,692,229) |
Net Increase | 184,188 | $ 2,703,103 | 1,232,014 | $ 18,080,802 |
Baldwin Fund | July 1, 2014 through December 31, 2014 | July 1, 2013 through June 30, 2014 | ||
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|
| Shares | Amount | Shares | Amount |
Shares sold | 11,029 | $ 83,069 | 23,765 | $ 179,363 |
Shares reinvested | 6,722 | 49,944 | 6,783 | 51,450 |
Shares redeemed | (5,646) | (42,399) | (47,913) | (362,723) |
Net Decrease | 12,105 | $ 90,614 | (17,365) | $ (131,910) |
Note 7. Options
Value Fund
As of December 31, 2014, the Value Fund held put options valued at $0.
Transactions in put options purchased during the six months ended December 31, 2014, were as follows:
| Number of |
| Premiums Paid |
| Contracts |
| |
Options outstanding at June 30, 2014 | 100,000 |
| $ 1,030 |
Options purchased | 390,200 |
| 4,766 |
Options expired | (330,000) |
| (3,352) |
Options terminated | - |
| - |
Options outstanding at December 31, 2014 | 160,200 |
| $ 2,444 |
The location on the statement of assets and liabilities of the Value Fund’s derivative positions, which are not accounted for as hedging instruments under GAAP, is as follows:
| Liability Derivatives |
| Asset Derivatives |
Call options written | $ - | Investments in Securities | $ - |
Realized and unrealized gains and losses on derivatives contracts entered into during the six months ended December 31, 2014, by the Value Fund are recorded in the following locations in the Statement of Operations:
| Realized | Unrealized | ||
| Location | Gain/(Loss) | Location | Gain/(Loss) |
Options | Realized Gain |
| Change in Unrealized |
|
Written and | (Loss) on Options | $ (3,352) | Appreciation/(Depreciation) | $(2,401) |
Purchased |
|
| on Options |
|
Baldwin Fund
As of December 31, 2014, the Baldwin Fund had outstanding written call options valued at $113,402.
Transactions in written call options during the six months ended December 31, 2014, were as follows:
| Number of |
| Premiums Received |
| Contracts |
| |
Options outstanding at June 30, 2014 | 363 |
| $ 17,635 |
Options written | 3,989 |
| 352,890 |
Options exercised | (1,062) |
| (103,300) |
Options expired | (1,783) |
| (105,935) |
Options terminated in closing purchase transaction | (889) |
| (70,486) |
Options outstanding at December 31, 2014 | 618 |
| $ 90,804 |
As of December 31, 2014, the Baldwin Fund held put options valued at $54,901.
Transactions in call and put options purchased during the six months ended December 31, 2014, were as follows:
| Number of |
| Premiums Paid |
| Contracts |
| |
Options outstanding at June 30, 2014 | 333 |
| $ 21,447 |
Options purchased | 2,030 |
| 257,574 |
Options exercised | (675) |
| (63,584) |
Options expired | (687) |
| (63,045) |
Options terminated | (569) |
| (72,229) |
Options outstanding at December 31, 2014 | 432 |
| $ 80,163 |
The location on the statement of assets and liabilities of the Baldwin Fund’s derivative positions, which are not accounted for as hedging instruments under GAAP, is as follows:
| Liability Derivatives |
| Asset Derivatives |
Call options written | $113,402 | Investments in Securities | $54,901 |
Realized and unrealized gains and losses on derivatives contracts entered into during the six months ended December 31, 2014, by the Baldwin Fund are recorded in the following locations in the Statement of Operations:
| Realized | Unrealized | ||
| Location | Gain/(Loss) | Location | Gain/(Loss) |
Options | Realized Gain |
| Change in Unrealized |
|
Written and | (Loss) on Options | $5,103 | Appreciation/(Depreciation) | $(12,869) |
Purchased |
|
| on Options |
|
The selling of written call options may tend to reduce the volatility of the Funds because the premiums received from selling the options will reduce any losses on the underlying securities, but only by the amount of the premiums. However, selling the options may also limit the Funds’ gain on the underlying securities. Written call options expose the Funds to minimal counterparty risk since they are exchange-traded and the exchange’s clearing house guarantees the options against default.
The Funds engage in option transactions involving individual securities and stock indexes. An option involves either: (a) the right or the obligation to buy or sell a specific instrument at a specific price until the expiration date of the option; or (b) the right to receive payments or the obligation to make payments representing the difference between the closing price of a stock index and the exercise price of the option expressed in dollars times a specified multiple until the expiration date of the option. The Funds may purchase and write options. Options are sold (written) on securities and stock indexes. The purchaser of an option on a security pays the seller (the writer) a premium for the right granted but is not obligated to buy or sell the underlying security. The purchaser of an option on a stock index pays the seller a premium for the right granted, and in return the seller of such an option is obligated to make the payment. A writer of an option may terminate the obligation prior to expiration of the option by making an offsetting purchase of an identical option. Options are traded on organized exchanges and in the over-the-counter market. To cover the potential obligations involved in writing options, a Fund will either: (a) own the underlying security, or in the case of an option on a market index, will hold a portfolio of stocks substantially replicating the movement of the index; or (b) the Fund will segregate with the custodian high grade liquid assets sufficient to purchase the underlying security or equal to the market value of the stock index option, marked to market daily.
The purchase of options limits a Fund's potential loss to the amount of the premium paid and can afford the Fund the opportunity to profit from favorable movements in the price of an underlying security to a greater extent than if transactions were effected in the security directly. However, the purchase of an option could result in the Fund losing a greater percentage of its investment than if the transaction were effected directly. When a Fund writes a call option, it will receive a premium, but it will give up the opportunity to profit from a price increase in the underlying security above the exercise price as long as its obligation as a writer continues, and it will retain the risk of loss should the price of the security decline. When a Fund writes a put option, it will assume the risk that the price of the underlying security or instrument will fall below the exercise price, in which case a Fund may be required to purchase the security or instrument at a higher price than the market price of the security or instrument. In addition, there can be no assurance that the Fund can affect a closing transaction on a particular option it has written. Further, the total premium paid for any option may be lost if a Fund does not exercise the option.
The Funds engage in option transactions involving securities and stock indices in order to gain exposure to particular securities or markets, in connection with hedging transactions, or to try to enhance returns. Options require additional skills and techniques beyond normal portfolio management. The Funds’ use of options involves risk that such instruments may not work as intended due to unanticipated developments, especially in abnormal market conditions, or if the Adviser makes an error in judgment, or other causes. The use of options may magnify the increase or decrease in the performance of the Funds, and may also subject the Funds to higher price volatility.
The premiums paid for the options represent the cost of the investment and the options are valued daily at their closing price. The Funds recognize a realized gain or loss when the option is sold or expired. Option holdings within the Funds, which may include put options and call options, are subject to loss of value with the passage of time, and may experience a total loss of value upon expiration. With options, there is minimal counterparty risk to the Funds since they are exchange traded.
Note 8. Investment Transactions
For the six months ended December 31, 2014, purchases and sales of investment securities other than U.S. Government obligations and short-term investments for the Value Fund aggregated $7,032,595 and $12,680,174, respectively. Purchases and sales of options for the Value Fund aggregated $4,765 and $0, respectively.
For the six months ended December 31, 2014, purchases and sales of investment securities other than U.S. Government obligations, short-term investments and for the Baldwin Fund aggregated $13,990,646 and $12,557,725, respectively. Purchases and sales of options for the Baldwin Fund aggregated $436,288 and $454,907, respectively.
Note 9. Tax Matters
Each Funds' tax basis capital gains and losses and undistributed ordinary income are determined only at the end of each fiscal year. For tax purposes, at June 30, 2014, the following represents the tax basis capital gains and losses and undistributed ordinary income:
Value Fund | Baldwin Fund | |
|
|
|
Undistributed ordinary income | $ - | $ 15,099 |
|
|
|
Undistributed realized capital gain (loss) | $ 1,689,547 | $ - |
|
|
|
Short-term capital loss carryforward no expiration + | $ - | $ (314,635) |
Long-term capital loss carryforward no expiration + | - | (13,709) |
Total | $ - | $ (328,344) |
|
|
|
Post-October capital loss deferrals realized between 11/1/2013 and 6/30/2014 * | $ - | $ 230,151 |
As of December 31, 2014, the tax basis components of distributable earnings, unrealized appreciation (depreciation) and cost of investment securities were as follows:
Value Fund | Baldwin Fund | |
|
|
|
Gross unrealized appreciation on investment securities | $ 6,362,427 | $ 65,038 |
Gross unrealized depreciation on investment securities | (1,232,129) | (216,432) |
Net unrealized depreciation on investment securities | $ 5,130,298 | $ (151,394) |
|
|
|
Cost of investment securities, including Short Term investments ** | $ 48,690,457 | $ 3,932,688 |
*These deferrals are considered incurred in the subsequent year.
** The difference between book and tax cost represents disallowed wash sales for tax purposes.
+ The capital loss carryforward will be used to offset any capital gains realized by the Baldwin Fund in future years through the expiration date. The Baldwin Fund will not make distributions from capital gains while a capital loss carry forward remains.
The Regulated Investment Company Modernization Act of 2010 (the “Act”) was enacted on December 22, 2010. The Act makes changes to several tax rules impacting the Fund. In general, some provisions of the Act, not including the changes to capital loss carryforwards, are effective for the Fund’s fiscal year ending June 30, 2011. Although the Act provides several benefits, including the unlimited carryover of future capital losses, there may be a greater likelihood that all or a portion of the Fund’s pre-enactment capital loss carryovers may expire without being utilized due to the fact that post-enactment capital losses get utilized before pre-enactment capital loss carryovers.
The Funds paid the following distributions for the six months ended December 31, 2014 and year ended June 30, 2014 were as follows:
Value Fund |
|
|
|
|
Periods Ended |
| $ Amount |
| Tax Character |
|
| Institutional Class |
|
|
12/31/2014 |
| $ 136,532 |
| Short-term capital gain |
12/31/2014 |
| $ 896,546 |
| Long-term capital gain |
6/30/2014 |
| $ 571,129 |
| Short-term capital gain |
6/30/2014 |
| $ 846,260 |
| Long-term capital gain |
6/30/2014 |
| $ 3,006 |
| Ordinary income |
|
|
|
|
|
|
| Class C |
|
|
12/31/2014 |
| $ 20,498 |
| Short-term capital gain |
12/31/2014 |
| $ 134,604 |
| Long-term capital gain |
6/30/2014 |
| $ 54,842 |
| Short-term capital gain |
6/30/2014 |
| $ 81,264 |
| Long-term capital gain |
|
|
|
|
|
|
| Investor Class |
|
|
12/31/2014 |
| $ 125,332 |
| Short-term capital gain |
12/31/2014 |
| $ 823,008 |
| Long-term capital gain |
6/30/2014 |
| $ 521,894 |
| Short-term capital gain |
6/30/2014 |
| $ 773,307 |
| Long-term capital gain |
6/30/2014 |
| $ 2,585 |
| Ordinary income |
|
|
|
|
|
Baldwin Fund |
|
|
|
|
Periods Ended |
| $ Amount |
| Tax Character |
12/31/2014 |
| $ 59,347 |
| Ordinary income |
6/30/2014 |
| $ 61,376 |
| Ordinary income |
For the six months ended December 31, 2014, the tax character of the distributions paid were as follows:
| Value Fund | Baldwin Fund |
Distributions paid from: |
|
|
Ordinary Income | $ - | $59,347 |
Realized Gains | $2,136,520 | $ - |
Total Distributions Paid | $2,136,520 | $59,347 |
Permanent book and tax differences relating to shareholder distributions may result in reclassifications to paid in capital and may affect the per-share allocation between net investment income and realized and unrealized gain/loss. Undistributed net investment income and accumulated undistributed net realized gain/loss on investment transactions may include temporary book and tax differences which reverse in subsequent periods. Any taxable income or gain remaining at fiscal year end is distributed in the following year.
Note 10. Control and Ownership
The beneficial ownership, either directly or indirectly, of more than 25% of the voting securities of a fund creates a presumption of control of the fund, under Section 2(a)(9) of the Investment Company Act of 1940, as amended. As of December 31, 2014, NFS, LLC owned approximately 88.31% of the Baldwin Fund, for the benefit of others, and may be deemed to control the Baldwin Fund. As of December 31, 2014, NFS, LLC owned approximately 75.84% of the Value Fund, for the benefit of others, and may be deemed to control the Value Fund.
Note 11. Distribution and Service Fees
The Value Fund has adopted plans under Rule 12b-1 that allow the Value Fund to pay distribution fees for the sale and distribution of its Investor Class and Class C shares as well as shareholder services. Investor Class and Class C shareholders of the Fund may pay annual 12b-1 expenses of up to 0.25% and 1.00%, respectively. For the six months ended December 31, 2014, the Investor Class accrued $29,783 in distribution fees and Class C accrued $17,368 in distribution fees. At December 31, 2014, the Value Fund owed $26,170 in distribution fees.
The Baldwin Fund has adopted a plan under Rule 12b-1 of the 1940 Act that allows the Baldwin Fund to pay distribution and service fees annually for the sale and distribution of shares and servicing of shareholders (“12b-1 fees”). The Fund pays distribution fees of 0.75% of the Fund’s average daily net assets to Leigh Baldwin, as the Fund’s distributor. For the six months ended December 31, 2014, the Baldwin Fund accrued $17,561 in 12b-1 fees. At December 31, 2014, the Baldwin Fund owed $3,118 in distribution fees.
Note 12. New Accounting Pronouncements
In June 2014, FASB issued ASU No. 2014-11, Transfers and Servicing (Topic 860), Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures. The ASU changes the accounting for certain repurchase agreements and expands disclosure requirements related to repurchase agreements, securities lending, repurchase-to-maturity and similar transactions. The ASU is effective for interim and annual reporting periods beginning after December 15, 2014. Management is currently evaluating the impact, if any, of applying this position.
Frank Funds |
Expense Illustration |
December 31, 2014 (Unaudited) |
Expense Example
As a shareholder of the Value Fund or Baldwin Fund, you typically incur two types of costs: (1) transactions costs, including, deferred sales, charges (loads) and redemption fees; and (2) ongoing costs, including management fees and distribution and/or service (12b-1) fees. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds.
With respect to the Funds the Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period of July 1, 2014 through December 31, 2014.
Actual Expenses
The first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses 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 Period" to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in these Funds 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.
Value Fund - Investor Class |
|
| |
| Beginning Account Value | Ending Account Value | Expenses Paid During the Period * |
| July 1, 2014 | December 31, 2014 | July 1, 2014 to December 31, 2014 |
|
|
|
|
Actual | $1,000.00 | $1,028.99 | $7.62 |
Hypothetical (5% Annual |
|
|
|
Return before expenses) | $1,000.00 | $1,017.69 | $7.58 |
|
|
|
|
* Expenses are equal to the Fund's annualized expense ratio of 1.49%, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). | |||
|
|
|
|
Value Fund - Class C |
|
|
|
| Beginning Account Value | Ending Account Value | Expenses Paid During the Period * |
| July 1, 2014 | December 31, 2014 | July 1, 2014 to December 31, 2014 |
|
|
|
|
Actual | $1,000.00 | $1,024.94 | $11.43 |
Hypothetical (5% Annual |
|
|
|
Return before expenses) | $1,000.00 | $1,013.91 | $11.37 |
|
|
|
|
* Expenses are equal to the Fund's annualized expense ratio of 2.24%, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). | |||
|
|
|
|
Value Fund - Institutional Class |
|
| |
| Beginning Account Value | Ending Account Value | Expenses Paid During the Period * |
| July 1, 2014 | December 31, 2014 | July 1, 2014 to December 31, 2014 |
|
|
|
|
Actual | $1,000.00 | $1,030.26 | $6.35 |
Hypothetical (5% Annual |
|
|
|
Return before expenses) | $1,000.00 | $1,018.95 | $6.31 |
|
|
|
|
* Expenses are equal to the Fund's annualized expense ratio of 1.24%, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). | |||
|
|
|
|
Baldwin Fund |
|
|
|
| Beginning Account Value | Ending Account Value | Expenses Paid During the Period * |
| July 1, 2014 | December 31, 2014 | July 1, 2014 to December 31, 2014 |
|
|
|
|
Actual | $1,000.00 | $974.69 | $8.71 |
Hypothetical (5% Annual |
|
|
|
Return before expenses) | $1,000.00 | $1,016.38 | $8.89 |
|
|
|
|
* Expenses are equal to the Fund's annualized expense ratio of 1.75%, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). |
FRANK FUNDS
BOARD OF TRUSTEES
DECEMBER 31, 2014 (UNAUDITED)
TRUSTEES AND OFFICERS
The following table provides information regarding each Trustee who is not an “interested person” of the Trust, as defined in the Investment Company Act of 1940. Each Trustee has an indefinite term.
Name, Address and Age | Position & Length of Time Served with the Trust | Principal Occupations During Past 5 Years and Current Directorships |
Jason W. Frey, 739 Crandon Blvd., Unit 202 Key Biscayne, FL 33149 Age: 35 | Trustee since June 2004. | Software Developer, Red Hat Inc., an enterprise software company, December 2012 to present; ManageIQ, Inc., a virtualization software company, October 2007 to December 2012. |
Hemanshu Patel 739 Crandon Blvd., Unit 202 Key Biscayne, FL 33149 Age: 30 | Trustee since January 2010. | Associate , J. W. Childs Associates, private equity firm, November 2007 to present. |
Andrea Goncalves 739 Crandon Blvd., Unit 202 Key Biscayne, FL 33149 Age: 32 | Trustee since January 2010. | Senior Accountant, Security Atlantic Mortgage / REMM, mortgage company, May 2006 to present. |
The following table provides information regarding each Trustee who is an “interested person” of the Trust, as defined in the Investment Company Act of 1940, and each officer of the Trust. Each Trustee and Officer of the Trust has an indefinite term.
1 Brian J. Frank is considered an “Interested” Trustee, as defined in the Investment Company Act of 1940, as amended, because he is affiliated with the Adviser. Brian Frank and Monique Weiss are married.
Additional information regarding the Trustees and Officers is available in the Funds’ Statement of Additional Information.
FRANK FUNDS
ADDITIONAL INFORMATION
DECEMBER 31, 2014 (UNAUDITED)
Each Fund’s Statement of Additional Information ("SAI") includes additional information about the trustees and is available, without charge, upon request. You may call toll-free (888) 217-5426 to request a copy of the SAI or to make shareholder inquiries.
A description of the policies and procedures that each Fund uses to determine how to vote proxies relating to portfolio securities and information regarding how each Fund voted proxies during the most recent 12-month period ended June 30 are available without charge upon request by (1) calling (888) 217-5426 and (2) from the documents filed with the Securities and Exchange Commission ("SEC") on the SEC's website at www.sec.gov.
Each Fund files a complete schedule of investments with the SEC for the first and third quarter of each fiscal year on Form N-Q. The Funds’ first and third fiscal quarters end on September 30 and March 31. The Form N-Q filing must be made within 60 days of the end of the quarter. The Funds’ Forms N-Q are available on the SEC’s website at http://sec.gov, or they may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC (call 1-800-732-0330 for information on the operation of the Public Reference Room). You may also obtain copies by calling (888) 217-5426.
Board of Trustees
Brian J. Frank
Jason W. Frey
Andrea Goncalves
Hemanshu Patel
Investment Advisers
Frank Capital Partners, LLC
739 Crandon Blvd., Unit 202
Key Biscayne, FL 33149
Leigh Baldwin & Co., LLC
112 Albany Street, P.O. Box 660
Cazenovia, NY 13035
Dividend Paying Agent,
Shareholders’ Servicing Agent,
Transfer Agent
Mutual Shareholder Services, LLC
Custodian
Huntington National Bank
Independent Registered Public Accounting Firm
Sanville & Company
Legal Counsel
Thompson Hine LLP
This report is provided for the general information of the shareholders of the Value Fund and the Baldwin Fund. This report is not intended for distribution to prospective investors in the Funds, unless preceded or accompanied by an effective prospectus.
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.
Item 6. Schedule of Investments. Not applicable – schedule filed with Item 1.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Funds. Not applicable.
Item 8. Portfolio Managers of Closed-End Funds. Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Funds. Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
The registrant has not adopted procedures by which shareholders may recommend nominees to the registrant's board of trustees.
Item 11. Controls and Procedures.
(a)
Disclosure Controls & Procedures. Principal executive and financial officers have concluded that Registrant’s disclosure controls & procedures are effective based on their evaluation as of a date within 90 days of the filing date of this report.
(b)
There were no significant changes in the registrant’s internal control over financial reporting that occurred during the registrant’s second fiscal half-year that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.
Item 12. Exhibits.
(a)(1)
EX-99.CODE ETH. Not applicable.
(a)(2)
EX-99.CERT. Filed herewith.
(a)(3)
Any written solicitation to purchase securities under Rule 23c-1 under the Act (17 CFR 270.23c-1) sent or given during the period covered by the report by or on behalf of the registrant to 10 or more persons. Not applicable.
(b)
EX-99.906CERT. Filed herewith.
SIGNATURES
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.
Frank Funds
By /s/Brian J. Frank, President & Treasurer
Brian J. Frank
President & Treasurer
Date: March 3, 2015
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By /s/Brian J. Frank, President & Treasurer
Brian J. Frank
President & Treasurer
Date March 3, 2015