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 811-21836
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Giant 5 Funds
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(Exact name of registrant as specified in charter)
1155 Kelly Johnson Blvd., Suite 111
Colorado Springs, CO 80920
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(Address of principal executive offices) (Zip code)
Michael G. Willis
The Willis Group
1155 Kelly Johnson Blvd., 111
Colorado Springs, CO 80920
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(Name and address of agent for service)
Registrant's telephone number, including area code: (719) 884-7500
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Date of fiscal year end: March 31
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Date of reporting period: September 30, 2012
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ITEM 1. REPORTS TO STOCKHOLDERS.
The following is a copy of the report transmitted to shareholders pursuant to Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1).
Giant 5 Funds
Investor Shares
Semi-Annual Report
September 30, 2012
(Unaudited)
Giant 5 Total Investment System (FIVEX)
Giant 5 Total Index System (INDEX)
Invest in the Essentials
Invest for LifeTM
Investors should carefully read and consider the Funds’ investment objectives, risks, charges and expenses before investing or sending money. This and other important information is contained in the Prospectus, which can be obtained by calling 1-888-5Giant5 (1-888-544-2685) or downloaded on www.Giant5.com. Funds distributed by UMB Distribution Services, LLC. 803 W. Michigan St., Milwaukee, WI 53233
| Table of Contents | Semi-Annual Report September 30, 2012 (Unaudited) |
| Letter to Shareholders | | 2 |
| | | |
| Giant 5 Total Investment System | | |
| Schedule of Portfolio Investments | | 4 |
| Financial Statements | | 5 |
| Financial Highlights | | 7 |
| | | |
| Giant 5 Total Index System | | |
| Schedule of Portfolio Investments | | 8 |
| Financial Statements | | 9 |
| Financial Highlights | | 11 |
| | | |
| Notes to the Financial Statements | | 12 |
| Supplemental Information | | 17 |
Statement Regarding Availability of Quarterly Portfolio Schedule. (Unaudited)
The Giant 5 Funds file complete schedules of portfolio holdings for each Fund with the Securities and Exchange Commission (the “Commission”) for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Forms N-Q are available on the Commission’s website at http://www.sec.gov. The Funds’ Form N-Q may be reviewed and copied at the Commission’s Public Reference Room in Washington, D.C., and information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330; and the Funds make the information on Form N-Q available upon request without charge.
Statement Regarding Availability of Proxy Voting Policies and Procedures and Proxy Voting Record. (Unaudited)
A description of the policies and procedures the Funds use to determine how to vote proxies relating to the portfolio securities is available without charge, upon request, by calling 1-800-788-5680 or on the Commission’s website at http://www.sec.gov. A copy of the Funds’ voting record for the most recent 12-month period ended June 30 is also available at the SEC’s website at http://www.sec.gov.
October 31, 2012
Dear Shareholders,
A new global era has arrived. Wall Street is no longer the center of the financial universe, and the United States and Europe appear to be losing the political and economic dominance they have held over the rest of the world for the past 200 years. We believe the “Rise of the Rest” (those living outside of the United States and Europe), combined with the one global language and economy of the Internet, will be the two most significant factors driving the financial course of the next decade.
This new global economy and the rapid advancements in technology are changing the fundamentals of investing. There are roughly seven times as many people living outside of the United States and Europe as compared to those living within. We believe that the growth and consumption behavior of this huge demographic will drive prices sharply higher during this decade, creating a new cycle of inflation and a period of time that will likely become known as the “Decade of Inflation”.
If this past decade is any indication, it seems apparent that governments in general cannot control their spending and debt. Instead of being fiscally responsible by spending less than they take in, governments have used their ability to print money to make up the difference. As a result, we believe this debt will ultimately lead to a devaluing of all currencies that are not backed by hard assets such as gold. As these fiat currencies diminish in value, we believe that core commodities will increase in value and become a better global “currency”.
Not coincidentally, we believe core commodities represent a large percentage of the average investor’s annual budget. We believe that global consumption patterns, not the size and location of companies, now offer us the keys to unlocking the best asset allocation strategies for managing investment portfolios. Therefore, with the intention of offering a comprehensive investment process for investors who desire to focus on consumption, our portfolios focus on the 5 core themes of Energy, Raw Materials, Capital Markets, Bonds, and Real Estate. We do this by using an independent Fund of Funds structure and seeking to utilize a “best of” approach for both indexes (INDEX) and managers (FIVEX) within these 5 asset classes.
Our investment process, Consumption-Based Fundamental Asset Allocation (CFAA), introduces a new generation of asset management methodologies which use fundamental attributes of the investor, not the investment, as the primary determinant for all asset allocation decisions. Our “Invest Where You Spend” strategy is designed to invest in the areas our investors spend the majority of their money. By designing the portfolio around consumption and global spending patterns, our goal is to give investors the capability to meet their future spending needs on the budget items they spend most of their money. This, we believe, is the primary purpose of investing.
During the past 6 months, both FIVEX and INDEX have outperformed the Global Dow Index while underperforming the S&P 500 Index. I attribute our outperformance of the Global Dow to the strength of our commodity weighting. The S&P 500 Index has outperformed us due to its domestic focus. Since our inception 6 years ago, both of our Funds have underperformed their benchmark, the S&P 500® Index (see performance chart below). The primary reason that our funds underperformed our benchmark was due to a large divergence in performance between the US markets and the International markets, specifically during the past 18-months. Our funds are both global funds whereas the S&P 500 Index is domestic only. To illustrate, the Dow Jones Industrial Average was up +26.52% during the past 12-months ending 9/30/12. Whereas, the Global Dow Jones Total Return was up +14.09%, underperforming the Dow Jones Industrial Average by a huge margin (-12.43%). In addition, some of our underperformance has been due to a decrease in some of the core commodities that we overweight compared to the S&P 500® Index. We overweight these sectors compared to our benchmark because they represent a large portion of Investor’s spending. As a result of over-weighting core commodities when compared to the S&P500 Index, our portfolios usually will underperform during periods where core commodity prices fall over time. During the past year INDEX has outperformed FIVEX by over 200 basis points, however over the lifetime of both funds FIVEX holds nearly a 100 basis points advantage. Looking forward, we believe the prices of land, oil, metals, food and other raw materials will move higher as consumption increases due to a more efficient global economy and The Rise of the Rest.
Thank you for your continued trust as shareholders of Giant 5 Funds. We appreciate our investors and will continue to strive to place you first in all that we do.
Invest in the Essentials. Invest for Life.
Michael G. Willis
President
| | | | | | | | |
| | (Performance as of September 30, 2012) | | | 3-Year | 5-Year | Average Annual Since | |
| | | Six Month | 1-Year | Average | Average | Inception 5/1/06 | |
| | Total Investment System (FIVEX) | +2.65% | +16.61% | +7.14% | -0.52% | +2.85% | |
| | Total Index System (INDEX) | +1.57% | +19.05% | +7.09% | -0.80% | +1.92% | |
| | Global Dow (TR) | -2.40% | +14.09% | +2.66% | -4.65% | +2.32% | |
| | S&P 500 Index | +3.43% | +30.20% | +13.20% | +1.05% | +3.68% | |
| | | | | | | | |
The performance data quoted here represents past performance and past performance is not a guarantee of future results. Investment return and principal value will fluctuate, so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance information quoted. To obtain performance information current to the most recent month-end, please call 1-888-5GIANT5. Total Annual Fund Operating Expenses of the Total Investment System and Total Index System were 2.73% and 2.39%, respectively.
Opinions expressed above are subject to change at any time, are not guaranteed and should not be considered investment advice.
Fund holdings and sector allocations are subject to change at any time and are not recommendations to buy or sell any security. Please refer to the schedule of investments for a complete list of Fund holdings.
Equity securities are more volatile and carry more risk than other forms of investing, including investment in high grade fixed income securities. Fixed income securities are subject to interest rate risk. Investments concentrated in one economic sector, such as, Energy, Raw materials and Real Estate, experience greater volatility than more broadly based investments. International investing is subject to greater volatility due to such factors as change in currency rates, foreign taxation, differences in auditing and other financial standards, and political and environmental instability.
The S&P Index and Global Dow Total Return are unmanaged indexes of stocks. Unlike mutual funds, indexes are typically not subject to fees or expenses. It is not possible to invest directly in an index. The Global Dow (TR) is an equal-weighted stock index consisting of the stocks of 150 top companies from around the world as selected by Dow Jones editors and is designed to reflect the global stock market giving preferences to companies with a global reach.
The shareholder letter included in this report contains certain forward-looking statements about the factors that may affect the performance of the Funds in the future. These statements are based on Fund management’s predictions and expectations concerning certain future events and their expected impact on the Funds, such as performance of the economy as a whole and of specific industry sectors, changes in the levels of interest rates, the impact of developing world events, and other factors that may influence the future performance of the Funds. Management believes these forward-looking statements to be reasonable, although they are inherently uncertain and difficult to predict. Actual events may cause adjustments in portfolio management strategies from those currently expected to be employed.
A “basis point” is a unit that is equal to 1/100th of 1%.
| Schedule of Portfolio Investments | Giant 5 Total Investment System September 30, 2012 (Unaudited) |
| | | | | | Fair | |
| Security Description | | Shares | | | Value | |
| INVESTMENT COMPANIES - 99.3% | | | | | | |
| E.I.I. International Property Fund, Class I | | | 109,132 | | | $ | 1,891,263 | |
| Fidelity Select Materials Portfolio | | | 29,578 | | | | 2,102,425 | |
| First Eagle Global Fund, Class I | | | 11,610 | | | | 578,159 | |
| First Eagle Overseas Fund, Class I | | | 37,412 | | | | 850,371 | |
| Franklin Mutual European Fund, Class Z | | | 8,464 | | | | 174,352 | |
| ICON Energy Fund, Class S | | | 53,823 | | | | 1,032,319 | |
| Natixis Loomis Sayles Global Equity | | | | | | | | |
| and Income Fund, Class Y | | | 82,487 | | | | 1,414,657 | |
| Nuveen Real Estate | | | | | | | | |
| Securities Fund, Class Y | | | 49,124 | | | | 1,053,708 | |
| Oppenheimer International | | | | | | | | |
| Bond Fund, Class Y | | | 80,031 | | | | 522,601 | |
| Van Eck International Investors | | | | | | | | |
| Gold Fund, Class I | | | 44,674 | | | | 1,099,416 | |
| Vanguard Energy Fund, Admiral Shares | | | 17,288 | | | | 1,987,909 | |
| Vanguard Inflation-Protected Securities | | | | | | | | |
| Fund, Admiral Shares | | | 84,463 | | | | 2,462,932 | |
| Total Investment Companies | | | | | | | | |
| (Cost $11,839,541) | | | | | | | 15,170,112 | |
| | | | | | | | | |
| SHORT-TERM INVESTMENTS - 0.7% | | | | | | | | |
| Fidelity Institutional Treasury Portfolio, | | | | | | | | |
Class I, 0.010%(a) | | | 108,035 | | | | 108,035 | |
| Total Short-Term Investments | | | | | | | | |
| (Cost $108,035) | | | | | | | 108,035 | |
| Total Investments - 100.0% | | | | | | | | |
| (Cost $11,947,576) | | | | | | | 15,278,147 | |
| Liabilities in Excess of | | | | | | | | |
Other Assets – (0.0)%(b) | | | | | | | (7,336 | ) |
| NET ASSETS -100.0% | | | | | | $ | 15,270,811 | |
Giant 5 Total Investment System
Sector Breakdown
(Based on Total Investments) (Unaudited)
| (a) | Variable rate security; the rate shown represents the rate at September 30, 2012. |
| (b) | Amount rounds to less than 0.05%. |
See Notes to the Financial Statements.
| Financial Statements | Giant 5 Total Investment System |
| STATEMENT OF ASSETS AND LIABILITIES | | | |
| September 30, 2012 (Unaudited) | | | |
| | | | |
| Assets: | | | |
| Investment securities at fair value | | | |
| (cost $11,947,576) | | $ | 15,278,147 | |
| Dividends receivable | | | 7,471 | |
| Prepaid expenses | | | 18,635 | |
| Total Assets | | | 15,304,253 | |
| | | | | |
| Liabilities: | | | | |
| Payable to Adviser | | | 8,436 | |
| Payable for 12b-1 fees | | | 2,141 | |
| Other payables | | | 22,865 | |
| Total Liabilities | | | 33,442 | |
| | | | | |
| Net Assets | | $ | 15,270,811 | |
| | | | | |
| Net assets consist of: | | | | |
| Paid-in-capital | | $ | 17,921,478 | |
| Undistributed net investment loss | | | (61,577 | ) |
| Accumulated undistributed net realized losses | | | (5,919,661 | ) |
| Net unrealized appreciation on investments | | | 3,330,571 | |
| | | | | |
| Net Assets | | $ | 15,270,811 | |
| | | | | |
| Capital Shares: | | | | |
| Investor Shares Outstanding (no par value, | | | | |
| unlimited number of shares authorized) | | | 1,009,164 | |
| | | | | |
| Net Asset Value, Offering Price | | | | |
| and Redemption Price Per Share | | $ | 15.13 | |
| | | | | |
| | | | | |
| | | | | |
| STATEMENT OF OPERATIONS | | | | |
| For the period ended September 30, 2012 (Unaudited) | | | | |
| | | | | |
| Investment Income: | | | | |
| Dividends | | $ | 46,909 | |
| Total Investment Income | | | 46,909 | |
| | | | | |
| Expenses: | | | | |
| Investment advisory fees | | | 50,831 | |
| Fund administration fees | | | 34,476 | |
| Transfer Agency fees | | | 25,468 | |
| 12b-1 fees | | | 12,897 | |
| Blue Sky fees | | | 9,872 | |
| Audit fees | | | 7,284 | |
| Custody fees | | | 5,967 | |
| Insurance | | | 4,706 | |
| CCO fees | | | 2,641 | |
| Pricing fees | | | 1,248 | |
| Printing fees | | | 1,189 | |
| Legal fees | | | 1,176 | |
| Trustees fees | | | 307 | |
| Miscellaneous fees | | | 360 | |
| Total Expenses | | | 158,422 | |
| | | | | |
| Net Investment Loss | | | (111,513 | ) |
| | | | | |
| Net Realized and Unrealized | | | | |
| Gains on Investments: | | | | |
| Net realized gains from investment transactions | | | 373,984 | |
| Net realized gain distributions | | | | |
| from underlying funds | | | 11,209 | |
| Change in unrealized appreciation on investments | | | 55,609 | |
| Net realized and unrealized gains on investments | | | 440,802 | |
| | | | | |
| Change in net assets resulting from operations | | $ | 329,289 | |
See Notes to the Financial Statements.
| Financial Statements | Giant 5 Total Investment System |
| | | Period Ended | | | | |
| | | September 30, 2012 | | | Year Ended | |
| | | (Unaudited) | | | March 31, 2012 | |
| STATEMENTS OF CHANGES IN NET ASSETS | | | | | | |
| Increase/(Decrease) in Net Assets from Operations | | | | | | |
| Net investment income/(loss) | | $ | (111,513 | ) | | $ | 49,988 | |
| Net realized gains/(losses) from investment transactions | | | 373,984 | | | | (507,859 | ) |
| Net realized gain distributions from underlying funds | | | 11,209 | | | | 205,786 | |
| Change in unrealized appreciation/(depreciation) on investments | | | 55,609 | | | | (1,085,544 | ) |
| Change in net assets resulting from operations | | | 329,289 | | | | (1,337,629 | ) |
| | | | | | | | | |
| Distributions to Shareholders | | | | | | | | |
| Net investment income | | | — | | | | (18,306 | ) |
| Change in net assets resulting from distributions to shareholders | | | — | | | | (18,306 | ) |
| | | | | | | | | |
| Capital Share Transactions | | | | | | | | |
| Proceeds from sale of shares | | | 171,228 | | | | 232,365 | |
| Distributions reinvested | | | — | | | | 18,113 | |
| Cost of shares redeemed | | | (1,613,618 | ) | | | (2,426,472 | ) |
| Change in net assets resulting from capital share transactions | | | (1,442,390 | ) | | | (2,175,994 | ) |
| Net decrease in net assets | | | (1,113,101 | ) | | | (3,531,929 | ) |
| | | | | | | | | |
| Net Assets | | | | | | | | |
| Beginning of period | | | 16,383,912 | | | | 19,915,841 | |
| End of period | | $ | 15,270,811 | | | $ | 16,383,912 | |
| Accumulated undistributed net investment income/(loss) at end of period | | | (61,577 | ) | | | 49,936 | |
| | | | | | | | | |
| Share Information | | | | | | | | |
| Shares sold | | | 12,081 | | | | 15,760 | |
| Distributions reinvested | | | — | | | | 1,315 | |
| Shares redeemed | | | (114,003 | ) | | | (163,316 | ) |
| Net change resulting from share transactions | | | (101,922 | ) | | | (146,241 | ) |
See Notes to the Financial Statements.
| Financial Highlights | Giant 5 Total Investment System |
| The table below sets forth financial data | | Period Ended | | | Year Ended | | | Year Ended | | | Year Ended | | | Year Ended | | | Year Ended | |
| for a share outstanding in the Fund | | September 30, 2012 | | | March 31, | | | March 31, | | | March 31, | | | March 31, | | | March 31, | |
| throughout each period presented: | | (Unaudited) | | | 2012 | | | 2011 | | | 2010 | | | 2009 | | | 2008 | |
| | | | | | | | | | | | | | | | | | | |
| Per share data: | | | | | | | | | | | | | | | | | | |
| Net Asset Value - | | | | | | | | | | | | | | | | | | |
| Beginning of Period | | $ | 14.75 | | | $ | 15.84 | | | $ | 13.28 | | | $ | 8.68 | | | $ | 15.64 | | | $ | 16.27 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Income/(loss) from | | | | | | | | | | | | | | | | | | | | | | | | |
| Investment Operations: | | | | | | | | | | | | | | | | | | | | | | | | |
| Net investment income/(loss) | | | (0.11 | ) | | | 0.05 | | | | — | (a) | | | 0.03 | | | | (0.03 | ) | | | 0.65 | |
| Net realized and unrealized | | | | | | | | | | | | | | | | | | | | | | | | |
| gains/(losses) on investments | | | 0.49 | | | | (1.12 | ) | | | 2.60 | | | | 4.57 | (b) | | | (6.35 | ) | | | 0.13 | (b) |
| Total from investment operations | | | 0.38 | | | | (1.07 | ) | | | 2.60 | | | | 4.60 | | | | (6.38 | ) | | | 0.78 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Less Distributions Declared | | | | | | | | | | | | | | | | | | | | | | | | |
| to Shareholders: | | | | | | | | | | | | | | | | | | | | | | | | |
| Net investment income | | | — | | | | (0.02 | ) | | | (0.04 | ) | | | — | | | | — | | | | (0.65 | ) |
| Net realized gains | | | — | | | | — | | | | — | | | | — | | | | (0.58 | ) | | | (0.76 | ) |
| Total distributions | | | — | | | | (0.02 | ) | | | (0.04 | ) | | | — | | | | (0.58 | ) | | | (1.41 | ) |
| Paid-in capital from | | | | | | | | | | | | | | | | | | | | | | | | |
| redemption fees | | | — | (c) | | | — | (c) | | | — | (c) | | | — | (c) | | | — | (c) | | | — | (a)(c) |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Net Asset Value - End of Period | | $ | 15.13 | | | $ | 14.75 | | | $ | 15.84 | | | $ | 13.28 | | | $ | 8.68 | | | $ | 15.64 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Total Return(d) | | | 2.65 | %(e) | | | (6.84 | )% | | | 19.59 | % | | | 53.00 | % | | | (41.06 | )% | | | 4.39 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Ratios (to average net assets) | | | | | | | | | | | | | | | | | | | | | | | | |
| Supplemental Data: | | | | | | | | | | | | | | | | | | | | | | | | |
| Net assets at end of period (000s) | | $ | 15,271 | | | $ | 16,384 | | | $ | 19,916 | | | $ | 18,816 | | | $ | 13,197 | | | $ | 30,374 | |
| Ratio of expenses to | | | | | | | | | | | | | | | | | | | | | | | | |
average net assets(f) | | | 2.09 | %(g) | | | 1.98 | % | | | 1.91 | % | | | 1.89 | % | | | 1.64 | % | | | 1.37 | %(h) |
| Net investment income/(loss) | | | | | | | | | | | | | | | | | | | | | | | | |
to average net assets(i) | | | (1.47 | )%(g) | | | 0.28 | % | | | — | %(j) | | | 0.24 | % | | | (0.18 | )% | | | 3.94 | % |
| Portfolio turnover | | | 1.97 | %(k) | | | 15.21 | % | | | 7.23 | % | | | 8.84 | % | | | 58.81 | % | | | 51.90 | % |
| (b) | Realized and unrealized gains and losses per share in this caption are balancing amounts necessary to reconcile the change in net asset value per share in the period. It does not agree to the aggregate gains and losses in the Statement of Operations due to the fluctuation in share transactions for the period. |
| (c) | Effective September 14, 2007, the Fund no longer imposed a redemption fee for sales of shares done within 180 days of purchase. |
| (d) | Total return in the above table represents the rate of return that the investor would have earned or lost on an investment in the Fund assuming the reinvestment of dividends. |
| (f) | This ratio excludes the impact of expenses of the registered investment companies and exchange-traded funds in which the Fund invests. |
| (h) | For the period July 1, 2007 through March 31, 2008, the expense ratio of the Fund was capped at 1.35%. There were no reimbursements required to be made by the Adviser for that period. |
| (i) | Recognition of the net investment income by the Fund is affected by the timing of the declaration of dividends by the underlying investment companies and exchange-traded funds in which the Fund invests. |
See Notes to the Financial Statements.
| Schedule of Portfolio Investments | Giant 5 Total Index System September 30, 2012 (Unaudited) |
| | | | | | Fair | |
| Security Description | | Shares | | | Value | |
| EXCHANGE TRADED FUNDS - 79.5% | | | | | | |
| CurrencyShares Swiss Franc Trust* | | | 1,000 | | | $ | 104,690 | |
| Energy Select Sector SPDR Fund | | | 11,633 | | | | 854,793 | |
| First Trust NASDAQ-100 | | | | | | | | |
| Equal Weighted Index Fund | | | 13,000 | | | | 337,350 | |
| Guggenheim S&P 500 Equal Weight ETF | | | 16,000 | | | | 834,880 | |
| Market Vectors Agribusiness ETF | | | 14,500 | | | | 750,955 | |
| PowerShares DB Oil Fund* | | | 4,000 | | | | 104,440 | |
| PowerShares FTSE RAFI U.S. 1000 | | | | | | | | |
| Portfolio | | | 8,655 | | | | 532,629 | |
| PowerShares FTSE RAFI U.S. 1500 | | | | | | | | |
| Small-Mid Portfolio | | | 7,370 | | | | 499,096 | |
| SPDR S&P Oil & Gas | | | | | | | | |
| Equipment & Services ETF | | | 6,000 | | | | 203,880 | |
| SPDR S&P Oil & Gas | | | | | | | | |
| Exploration & Production ETF | | | 4,000 | | | | 222,760 | |
| Vanguard Energy ETF | | | 12,200 | | | | 1,305,156 | |
| Vanguard Global ex-U.S. | | | | | | | | |
| Real Estate ETF | | | 29,769 | | | | 1,531,020 | |
| Vanguard Information Technology ETF | | | 5,000 | | | | 367,000 | |
| Vanguard Materials ETF | | | 18,000 | | | | 1,492,200 | |
| Vanguard REIT ETF | | | 18,700 | | | | 1,214,939 | |
| WisdomTree Commodity | | | | | | | | |
| Country Equity Fund | | | 20,000 | | | | 608,456 | |
| Total Exchange Traded Funds | | | | | | | | |
| (Cost $8,615,095) | | | | | | | 10,964,244 | |
| | | | | | | | | |
| EXCHANGE TRADED NOTES - 19.7% | | | | | | | | |
| ETRACS UBS Bloomberg | | | | | | | | |
| CMCI Gold ETN* | | | 26,976 | | | $ | 1,266,793 | |
| ETRACS UBS Bloomberg | | | | | | | | |
| CMCI Silver ETN* | | | 10,000 | | | | 485,600 | |
| iPath Dow Jones-UBS Precious Metals | | | | | | | | |
| Subindex Total Return ETN* | | | 10,000 | | | | 964,550 | |
| Total Exchange Traded Notes | | | | | | | | |
| (Cost $2,321,795) | | | | | | | 2,716,943 | |
| | | | | | | | | |
| SHORT-TERM INVESTMENTS - 0.8% | | | | | | | | |
| Fidelity Institutional Treasury Portfolio, | | | | | | | | |
Class I, 0.010%(a) | | | 108,833 | | | | 108,833 | |
| Total Short-Term Investments | | | | | | | | |
| (Cost $108,833) | | | | | | | 108,833 | |
| Total Investments - 100.0% | | | | | | | | |
| (Cost $11,045,723) | | | | | | | 13,790,020 | |
| Liabilities in Excess of | | | | | | | | |
Other Assets – (0.0)%(b) | | | | | | | (6,443 | ) |
| NET ASSETS -100.0% | | | | | | $ | 13,783,577 | |
Giant 5 Total Index System
Sector Breakdown
(Based on Total Investments) (Unaudited)
| (a) | Variable rate security; the rate shown represents the rate at September 30, 2012. |
| (b) | Amount rounds to less than 0.05%. |
See Notes to the Financial Statements.
| Financial Statements | Giant 5 Total Index System |
| STATEMENT OF ASSETS AND LIABILITIES | | | |
| September 30, 2012 (Unaudited) | | | |
| | | | |
| Assets: | | | |
| Investment securities at fair | | | |
| value (cost $11,045,723) | | $ | 13,790,020 | |
| Dividends receivable | | | 4,650 | |
| Prepaid expenses | | | 18,196 | |
| Total Assets | | | 13,812,866 | |
| | | | | |
| Liabilities: | | | | |
| Payable to Adviser | | | 7,619 | |
| Payable for 12b-1 fees | | | 1,933 | |
| Other payables | | | 19,737 | |
| Total Liabilities | | | 29,289 | |
| | | | | |
| Net Assets | | $ | 13,783,577 | |
| | | | | |
| Net assets consist of: | | | | |
| Paid-in-capital | | $ | 15,933,276 | |
| Undistributed net investment loss | | | (61,610 | ) |
| Accumulated undistributed net realized losses | | | (4,832,386 | ) |
| Net unrealized appreciation on investments | | | 2,744,297 | |
| | | | | |
| Net Assets | | $ | 13,783,577 | |
| | | | | |
| Capital Shares: | | | | |
| Investor Shares Outstanding (no par value, | | | | |
| unlimited number of shares authorized) | | | 927,292 | |
| | | | | |
| Net Asset Value, Offering Price | | | | |
| and Redemption Price Per Share | | $ | 14.86 | |
| | | | |
| STATEMENT OF OPERATIONS | | | | |
| For the period ended September 30, 2012 (Unaudited) | | | | |
| | | | | |
| Investment Income: | | | | |
| Dividends | | $ | 81,843 | |
| Total Investment Income | | | 81,843 | |
| | | | | |
| Expenses: | | | | |
| Investment advisory fees | | | 45,642 | |
| Fund administration fees | | | 30,952 | |
| Transfer Agency fees | | | 22,417 | |
| 12b-1 fees | | | 11,581 | |
| Blue Sky fees | | | 9,856 | |
| Audit fees | | | 7,284 | |
| Custody fees | | | 5,704 | |
| Insurance | | | 4,022 | |
| CCO fees | | | 2,371 | |
| Pricing fees | | | 1,545 | |
| Printing fees | | | 952 | |
| Legal fees | | | 808 | |
| Trustees fees | | | 258 | |
| Miscellaneous fees | | | 61 | |
| Total Expenses | | | 143,453 | |
| | | | | |
| Net Investment Loss | | | (61,610 | ) |
| | | | | |
| Net Realized and Unrealized | | | | |
| Gains/(Losses) on Investments: | | | | |
| Net realized losses from investment transactions | | | (143,164 | ) |
| Change in unrealized appreciation on investments | | | 366,082 | |
| Net realized and unrealized gains on investments | | | 222,918 | |
| | �� | | | |
| Change in net assets resulting from operations | | $ | 161,308 | |
See Notes to the Financial Statements.
| Financial Statements | Giant 5 Total Index System |
| | | Period Ended | | | | |
| | | September 30, 2012 | | | Year Ended | |
| | | (Unaudited) | | | March 31, 2012 | |
| STATEMENTS OF CHANGES IN NET ASSETS | | | | | | |
| Increase/(Decrease) in Net Assets from Operations | | | | | | |
| Net investment income/(loss) | | $ | (61,610 | ) | | $ | 27,447 | |
| Net realized losses from investment transactions | | | (143,164 | ) | | | (2,257,098 | ) |
| Change in unrealized appreciation on investments | | | 366,082 | | | | 1,366,891 | |
| Change in net assets resulting from operations | | | 161,308 | | | | (862,760 | ) |
| | | | | | | | | |
| Distributions to Shareholders | | | | | | | | |
| Net investment income | | | — | | | | (73,309 | ) |
| Change in net assets resulting from distributions to shareholders | | | — | | | | (73,309 | ) |
| | | | | | | | | |
| Capital Share Transactions | | | | | | | | |
| Proceeds from sale of shares | | | 49,712 | | | | 257,940 | |
| Distributions reinvested | | | — | | | | 72,418 | |
| Cost of shares redeemed | | | (1,172,557 | ) | | | (1,416,254 | ) |
| Change in net assets resulting from capital share transactions | | | (1,122,845 | ) | | | (1,085,896 | ) |
| Net decrease in net assets | | | (961,537 | ) | | | (2,021,965 | ) |
| | | | | | | | | |
| Net Assets | | | | | | | | |
| Beginning of period | | | 14,745,114 | | | | 16,767,079 | |
| End of period | | $ | 13,783,577 | | | $ | 14,745,114 | |
| Accumulated undistributed net investment income/(loss) at end of period | | | (61,610 | ) | | | — | |
| | | | | | | | | |
| Share Information | | | | | | | | |
| Shares sold | | | 3,479 | | | | 17,750 | |
| Distributions reinvested | | | — | | | | 5,437 | |
| Shares redeemed | | | (84,224 | ) | | | (96,450 | ) |
| Net change resulting from share transactions | | | (80,745 | ) | | | (73,263 | ) |
See Notes to the Financial Statements.
| Financial Highlights | Giant 5 Total Index System |
| The table below sets forth financial data | | Period Ended | | | Year Ended | | | Year Ended | | | Year Ended | | | Year Ended | | | Year Ended | |
| for a share outstanding in the Fund | | September 30, 2012 | | | March 31, | | | March 31, | | | March 31, | | | March 31, | | | March 31, | |
| throughout each period presented: | | (Unaudited) | | | 2012 | | | 2011 | | | 2010 | | | 2009 | | | 2008 | |
| | | | | | | | | | | | | | | | | | | |
| Per share data: | | | | | | | | | | | | | | | | | | |
| Net Asset Value - | | | | | | | | | | | | | | | | | | |
| Beginning of Period | | $ | 14.63 | | | $ | 15.51 | | | $ | 13.08 | | | $ | 8.62 | | | $ | 15.36 | | | $ | 16.24 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Income/(Loss) from | | | | | | | | | | | | | | | | | | | | | | | | |
| Investment Operations: | | | | | | | | | | | | | | | | | | | | | | | | |
| Net investment income/(loss) | | | (0.07 | ) | | | 0.02 | | | | 0.11 | | | | 0.07 | | | | 0.20 | | | | 0.18 | |
| Net realized and unrealized | | | | | | | | | | | | | | | | | | | | | | | | |
| gains/(losses) on investments | | | 0.30 | | | | (0.83 | ) | | | 2.43 | | | | 4.47 | | | | (6.57 | )(a) | | | 0.01 | (a) |
| Total from investment operations | | | 0.23 | | | | (0.81 | ) | | | 2.54 | | | | 4.54 | | | | (6.37 | ) | | | 0.19 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Less Distributions Declared | | | | | | | | | | | | | | | | | | | | | | | | |
| to Shareholders: | | | | | | | | | | | | | | | | | | | | | | | | |
| Net investment income | | | — | | | | (0.07 | ) | | | (0.11 | ) | | | (0.08 | ) | | | (0.18 | ) | | | (0.18 | ) |
| Net realized gains | | | — | | | | — | | | | — | | | | — | | | | (0.19 | ) | | | (0.89 | ) |
| Total distributions | | | — | | | | (0.07 | ) | | | (0.11 | ) | | | (0.08 | ) | | | (0.37 | ) | | | (1.07 | ) |
| Paid-in capital | | | | | | | | | | | | | | | | | | | | | | | | |
| from redemption fees | | | — | (b) | | | — | (b) | | | — | (b) | | | — | (b) | | | — | (b) | | | — | (b)(c) |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Net Asset Value - End of Period | | $ | 14.86 | | | $ | 14.63 | | | $ | 15.51 | | | $ | 13.08 | | | $ | 8.62 | | | $ | 15.36 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Total Return(d) | | | 1.57 | %(e) | | | (5.16 | )% | | | 19.43 | % | | | 52.70 | % | | | (41.75 | )% | | | 0.91 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Ratios (to average net assets) | | | | | | | | | | | | | | | | | | | | | | | | |
| Supplemental Data: | | | | | | | | | | | | | | | | | | | | | | | | |
| Net assets at end of period (000s) | | $ | 13,784 | | | $ | 14,745 | | | $ | 16,767 | | | $ | 15,521 | | | $ | 10,957 | | | $ | 20,395 | |
| Ratio of expenses | | | | | | | | | | | | | | | | | | | | | | | | |
to average net assets(f) | | | 2.11 | %(g) | | | 2.03 | % | | | 1.97 | % | | | 1.94 | % | | | 1.74 | % | | | 1.42 | %(h) |
| Net investment income/ | | | | | | | | | | | | | | | | | | | | | | | | |
(loss) to average net assets(i) | | | (0.90 | )%(g) | | | 0.18 | % | | | 0.76 | % | | | 0.57 | % | | | 1.44 | % | | | 1.20 | % |
| Portfolio turnover | | | 1.54 | %(e) | | | 45.32 | % | | | 29.07 | % | | | 11.14 | % | | | 66.67 | % | | | 110.31 | % |
| (a) | Realized and unrealized gains and losses per share in this caption are balancing amounts necessary to reconcile the change in net asset value per share in the period. It does not agree to the aggregate gains and losses in the Statement of Operations due to the fluctuation in share transactions for the period. |
| (b) | Effective September 14, 2007, the Fund no longer imposed a redemption fee for sales of shares done within 180 days of purchase. |
| (d) | Total return in the above table represents the rate of return that the investor would have earned or lost on an investment in the Fund assuming the reinvestment of dividends. |
| (f) | This ratio excludes the impact of expenses of the registered investment companies and exchange-traded funds in which the Fund invests. |
| (h) | For the period July 1, 2007 through March 31, 2008, the expense ratio of the Fund was capped at 1.35%. There were no reimbursements required to be made by the Adviser for that period. |
| (i) | Recognition of the net investment income by the Fund is affected by the timing of the declaration of dividends by the underlying investment companies and exchange-traded funds in which the Fund invests. |
See Notes to the Financial Statements.
| Notes to the Financial Statements | Giant 5 Funds September 30, 2012 (Unaudited) |
Giant 5 Funds (the “Trust”) was organized as a trust under the laws of the State of Delaware on November 9, 2005. The Trust is an open-end investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”). The Trust is authorized to issue an unlimited number of shares, which are units of beneficial interest with no par value. The Trust currently offers shares of two series, each of which has different and distinct strategies and policies: the Giant 5 Total Investment System and the Giant 5 Total Index System (individually a “Fund,” collectively the “Funds”). Each of the Funds commenced operations on May 1, 2006.
The investment objective for each Fund is to seek total return. To pursue its investment objective, the Giant 5 Total Investment System will make investments primarily in other mutual funds that are not affiliated with the Fund. To pursue its investment objective, the Giant 5 Total Index System will primarily invest in unaffiliated index funds and exchange traded funds.
Each Fund is non-diversified, as that term is defined in the 1940 Act, and each Fund is a “fund of funds,” which means that generally each Fund invests in other mutual funds and exchange traded funds. The Trust has established two classes of shares: Investor Shares and Institutional Shares. While the Institutional Shares became effective during the year ended March 31, 2009, only Investor Shares have been offered and issued to date.
| 2. | Significant Accounting Policies |
The following is a summary of significant accounting policies followed by the Trust in the preparation of its financial statements. These policies are in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
Security Valuation:
The value of assets in a Fund’s portfolio is determined on the basis of their fair value, or where market quotations are not readily available or are deemed unreliable due to a significant event or otherwise, determined in good faith in accordance with the procedures established by, and under the general supervision of, the Funds’ Board of Trustees (the “Board”). The Funds may invest in securities that are primarily listed on foreign exchanges that trade on weekends or other days when the Funds do not price their shares. The value of portfolio securities held by the Funds may change on days when shareholders will not be able to purchase or redeem shares.
Generally, each of the underlying funds will be registered investment companies, therefore their net asset value per share (“NAV”) will be calculated as set forth in their prospectuses. As noted above, each Fund is a fund of funds, primarily invested in mutual funds and exchange traded funds that have their own internal fair pricing and valuation procedures. Due to this structure, the underlying funds’ policies will be used in the daily calculation of their NAV, which will, in turn, be used in calculating the Funds’ NAV. If for any reason, a fund held by the Funds’ does not provide its NAV to the Fund in a timely fashion for the Funds’ NAV calculation, for valuation purposes, the last available NAV for the mutual fund will be adjusted by the percentage a predetermined benchmark rose or declined on that particular trading day. Investments in securities traded on a national securities exchange, including exchange traded funds and exchange traded notes, are valued at the last reported sale price on the exchange on which they are primarily traded. Securities traded in the over-the-counter market and listed securities for which no sale was reported on that date are generally valued at the last quoted bid price. Money market instruments and other debt securities with remaining maturity of less than 60 days are valued at amortized cost, which approximates fair value.
A Fund will fair value price its securities when market quotations are not readily available. Generally, this would include securities for which trading has been halted, securities whose value has been materially affected by the occurrence of a significant event (as defined below), securities whose price has become stale (i.e., the market price has remained unchanged for five business days), and other securities where a market price is not available from either a national pricing service or a broker. In addition, the Pricing Committee will review exception priced securities (i.e., securities for which the fair value
Continued
| Notes to the Financial Statements | Giant 5 Funds September 30, 2012 (Unaudited) |
is provided by a quote from a single broker rather than a national pricing service) on a quarterly basis. In these situations, the Pricing Committee will employ certain Board-approved methodologies to determine a fair value for the securities. Fair valuations will be reviewed by the Board of Trustees on a quarterly basis. Fair value pricing should result in a more accurate determination of a Fund’s net asset value price, which should eliminate the potential for stale pricing arbitrage opportunities in a Fund. However, fair value pricing involves the risk that the values used by a Fund to price its investments may be different from those used by other investment companies and investors to price the same investments.
A “significant event” is one that occurred prior to a Fund’s valuation time, is not reflected in the most recent market price of a security, and materially affects the value of a security. Generally, such “significant events” relate to developments in foreign securities that occur after the close of trading in their respective markets. The Funds’ accounting agent may obtain fair value prices of foreign securities through utilization of a Fair Value Pricing Service previously approved by the Board where a movement in the U.S. equities market is sufficiently large to constitute a trigger established by the Pricing Committee.
U.S. GAAP establishes a hierarchy that prioritizes the various inputs used in determining the value of a Fund’s investments. The three broad levels of the hierarchy are described below:
| | ● Level 1 – | quoted prices for active markets for identical securities. |
| | ● Level 2 – | other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.). |
| | ● Level 3 – | significant unobservable inputs, including the Funds’ own assumptions in determining the fair value of investments. |
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The following is a summary of the inputs used to value the Funds’ investments as of September 30, 2012.
| Giant 5 Total Investment System | | | | | | | | | | | | |
| | | | | | Level 2 – | | | Level 3 – | | | | |
| | | Level 1 – | | | Other Significant | | | Significant | | | | |
| | | Quoted Prices | | | Observable Inputs | | | Unobservable Inputs | | | Total | |
| Investment Companies | | $ | 15,170,112 | | | $ | — | | | $ | — | | | $ | 15,170,112 | |
| Short-Term Investments | | | 108,035 | | | | — | | | | — | | | | 108,035 | |
| Total | | $ | 15,278,147 | | | $ | — | | | $ | — | | | $ | 15,278,147 | |
| | | | | | | | | | | | | | | | | |
| Giant 5 Total Index System | | | | | | | | | | | | | | | | |
| | | | | | | Level 2 – | | | Level 3 – | | | | | |
| | | Level 1 – | | | Other Significant | | | Significant | | | | | |
| | | Quoted Prices | | | Observable Inputs | | | Unobservable Inputs | | | Total | |
| Exchange Traded Funds | | $ | 10,964,244 | | | $ | — | | | $ | — | | | $ | 10,964,244 | |
| Exchange Traded Notes | | | 2,716,943 | | | | — | | | | — | | | | 2,716,943 | |
| Short-Term Investments | | | 108,833 | | | | — | | | | — | | | | 108,833 | |
| Total | | $ | 13,790,020 | | | $ | — | | | $ | — | | | $ | 13,790,020 | |
With respect to the Funds, there were no transfers into and out of Levels 1 and 2 during the current period presented. It is the Funds’ policy to recognize transfers into and out of Level 1 and 2 at the end of the reporting period.
The Funds did not hold any Level 2 or Level 3 securities during the period ended September 30, 2012.
Continued
| Notes to the Financial Statements | Giant 5 Funds September 30, 2012 (Unaudited) |
Investment Transactions and Related Income:
Investment transactions are recorded on a trade date for financial reporting purposes. Dividend income is recorded on the ex-dividend date. Securities gains and losses are calculated based on highest cost, long-term holdings, and where not applicable, the first-in, first-out method. Interest income is recognized on the accrual basis and includes, where applicable, the amortization or accretion of premium or discount.
Expenses:
Expenses directly attributable to a Fund are charged directly to the Fund. Expenses relating to the Trust are allocated proportionately to each Fund within the Trust according to the relative net assets of each Fund or on another reasonable basis.
Distributions to Shareholders:
Dividends from net investment income, if any, are declared and distributed semi-annually for each Fund. Dividends from net realized gains, if any, are declared and distributed annually for each Fund.
The amounts of dividends from net investment income and of distributions from net realized gains, if any, are determined in accordance with federal income tax regulations and are recorded on the ex-dividend date. They may differ from U.S. GAAP. These “book/tax” differences are either considered temporary or permanent in nature. To the extent these differences are permanent in nature, such amounts are reclassified within the composition of net assets based on their federal tax-basis treatment; temporary differences do not require reclassification. As of March 31, 2012, permanent book to tax differences were as follows:
| | | | | | Undistributed Net | | | Accumulated Undistributed | |
| Fund | | Paid-in-Capital | | | Investment Income | | | Net Realized Losses | |
| Giant 5 Total Investment System Fund | | $ | — | | | $ | — | | | $ | — | |
| Giant 5 Total Index System Fund | | | (38,911 | ) | | | 39,034 | | | | (123 | ) |
Federal Income Taxes:
Each Fund intends to qualify as a regulated investment company by complying with the provisions available to certain investment companies, as defined in Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”), and to make distributions from net investment income and from net realized capital gains sufficient to relieve it from all, or substantially all, federal income and excise taxes. Therefore, no federal or excise tax provision is recorded.
As of and during the six months ended September 30, 2012, the Funds did not have a liability for any unrecognized tax benefits. The Funds recognize interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the Statement of Operations. During the year, the Funds did not incur any interest or penalties. The Funds are subject to examination by U.S. federal tax authorities for all open tax years (2008-2012).
Use of Estimates:
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.
| 3. | Related Party Transactions: |
Investment Adviser:
The Willis Group, Inc. (the “Adviser”) serves as the investment adviser to each Fund. Under the terms of the investment advisory agreement, the Adviser is entitled to receive fees computed daily and paid monthly at an annual rate of 0.67% of average net assets of each Fund. The Adviser makes the investment decisions for each of the Funds and continuously reviews, supervises and administers the investment program of each Fund, subject to the supervision of, and policies
Continued
| Notes to the Financial Statements | Giant 5 Funds September 30, 2012 (Unaudited) |
established by the Board. The amounts charged to the Funds for investment advisory services are reported within the Statement of Operations.
Certain trustees and officers of the Trust are also officers of the Adviser.
Distribution Plan:
Each Fund has adopted a Distribution Plan, pursuant to Rule 12b-1 under the 1940 Act (the “Distribution Plan”) with respect to its Investor Shares. Pursuant to the Distribution Plan, the Giant 5 Total Investment System and the Giant 5 Total Index System each will pay 0.17% of its average daily net assets attributable to its Investor Shares. The Distribution Plan provides that the Funds pay the Distributor and other organizations for distributing shares, advertising and marketing and for providing certain services to shareholders of the Investor Shares. The 12b-1 expenses incurred by the Funds are reported within the Statement of Operations.
| 4. | Purchases and Sales of Securities: |
Purchases and sales of investment securities, excluding short-term securities for the period ended September 30, 2012, totaled:
| | | Giant 5 Total | | | Giant 5 Total | |
| | | Investment System | | | Index System | |
| Purchases | | $ | 300,000 | | | $ | 209,118 | |
| Sales | | | 1,849,680 | | | | 1,480,761 | |
There were no purchases or sales of U.S. government securities for the period.
| 5. | Federal Tax Information: |
At September 30, 2012, the cost, gross unrealized appreciation and gross unrealized depreciation on securities, for federal income tax purposes, were as follows:
| | | Giant 5 Total | | | Giant 5 Total | |
| | | Investment System | | | Index System | |
| Tax Cost | | $ | 11,960,729 | | | $ | 11,045,723 | |
| Tax Unrealized Appreciation | | | 3,562,650 | | | | 2,850,994 | |
| Tax Unrealized (Depreciation) | | | (245,232 | ) | | | (106,697 | ) |
| Net Unrealized Appreciation | | | 3,317,418 | | | | 2,744,297 | |
The tax character of distributions paid during the fiscal years ended March 31, 2012 and March 31, 2011 were as follows:
| | | Giant 5 Total | | | Giant 5 Total | |
| | | Investment System | | | Index System | |
| | | 2012 | | | 2011 | | | 2012 | | | 2011 | |
| Distributions Paid from Ordinary Income | | $ | 18,306 | | | $ | 50,708 | | | $ | 73,309 | | | $ | 116,130 | |
| Distributions Paid from Net Long Term Capital Gains | | | — | | | | — | | | | — | | | | — | |
| Total Taxable Distributions | | | 18,306 | | | | 50,708 | | | | 73,309 | | | | 116,130 | |
| Return of Capital Distributions | | | — | | | | — | | | | — | | | | — | |
| Total Distributions Paid | | | 18,306 | | | | 50,708 | | | | 73,309 | | | | 116,130 | |
Continued
| Notes to the Financial Statements | Giant 5 Funds September 30, 2012 (Unaudited) |
As of March 31, 2012, the components of accumulated earnings/(deficit) were as follows:
| | | Giant 5 Total | | | Giant 5 Total | |
| | | Investment System | | | Index System | |
| Undistributed Ordinary Income | | $ | 49,936 | | | $ | — | |
| Undistributed Long Term Capital Gains | | | — | | | | — | |
| Accumulated Earnings | | | 49,936 | | | | — | |
| Distributions Payable | | | — | | | | — | |
| Accumulated Capital and Other Losses | | | (6,291,701 | ) | | | (4,689,222 | ) |
| Unrealized Appreciation | | | 3,261,809 | | | | 2,378,215 | |
| Total Accumulated Deficit | | | (2,979,956 | ) | | | (2,311,007 | ) |
The difference between book basis and tax-basis unrealized appreciation/(depreciation) is attributable primarily to the tax deferral of losses on wash sales and other temporary differences.
At March 31, 2012, the Funds had capital loss carryforwards, which reduce the Funds’ taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Code, and thus will reduce the amount of distributions to shareholders which would otherwise be necessary to relieve the Funds of any liability for federal tax. Pursuant to the Code, such capital loss carryforwards will expire as follows:
| | | Giant 5 Total | | | Giant 5 Total | |
| | | Investment System | | | Index System | |
| | | Short-Term | | | Long-Term | | | Short-Term | | | Long-Term | |
| Losses Expiring: | | | | | | | | | | | | |
| 2017 | | $ | 552,275 | | | $ | — | | | $ | — | | | $ | — | |
| 2018 | | | 5,437,353 | | | | — | | | | 2,417,963 | | | | — | |
| Losses Not Subject to Expiration | | | — | | | | 302,073 | | | | 787,547 | | | | 1,483,712 | |
| | | $ | 5,989,628 | | | $ | 302,073 | | | $ | 3,205,510 | | | $ | 1,483,712 | |
Under the recently enacted Regulated Investment Company Modernization Act of 2010 (the “Act”), the Funds will be permitted to carryforward capital losses incurred in taxable years beginning after December 22, 2010, the date of enactment of the Act, for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital loss that are carried forward will retain their character as either short-term or long-term capital losses rather than being considered all short-term as under previous law.
The beneficial ownership, either directly or indirectly, of more than 25% of the voting securities creates a presumption of control of the Funds, under Section 2(a)(9) of the 1940 Act. As of September 30, 2012, TD Ameritrade Clearing, Inc., for the benefit of its customers, had ownership in the Giant 5 Total Investment System and the Giant 5 Total Index System in the amounts of 67.2% and 73.1%, respectively.
| Supplemental Information | Giant 5 Funds September 30, 2012 (Unaudited) |
Expense Example (Investor Class)
As a shareholder of the Giant 5 Funds, you incur two types of costs: (1) transaction costs, including exchange fees; and (2) ongoing costs, including investment advisory fees, distribution (12b-1) fees, and other Fund expenses. The Examples below are 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.
Each is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from April 1, 2012 through September 30, 2012.
Actual Expenses
The table below provides information about actual account values and actual expenses. You may use the information below, together with the amount you invested, to estimate the expenses 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 table under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during the period.
| | | | Expenses paid | Expense Ratio |
| | Beginning account | Ending account | during period | during period |
| | value 4/1/12 | value 9/30/12 | 4/1/12 - 9/30/12(1) | 4/1/12 - 9/30/12(1) |
| Giant 5 Total Investment System | $1,000.00 | $1,026.50 | $10.61 | 2.09% |
| Giant 5 Total Index System | $1,000.00 | $1,015.70 | $10.64 | 2.11% |
Hypothetical Example for Comparison Purposes
The table below provides information about hypothetical account values and hypothetical expenses based on the Giant 5 Funds’ actual expense ratios and an assumed rate of return of 5% per year before expenses, which is not the Funds’ 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. However, you may use this information to compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or exchange fees, if applicable. Therefore, the table is useful in comparing the ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| | | | Expenses paid | Expense Ratio |
| | Beginning account | Ending account | during period | during period |
| | value 4/1/12 | value 9/30/12 | 4/1/12 - 9/30/12(1) | 4/1/12 - 9/30/12(1) |
| Giant 5 Total Investment System | $1,000.00 | $1,014.53 | $10.55 | 2.09% |
| Giant 5 Total Index System | $1,000.00 | $1,014.44 | $10.64 | 2.11% |
| (1) | Expenses are equal to the average account value times the annualized expense ratio of the Giant 5 Total Investment System and the Giant 5 Total Index System of 2.09% and 2.11%, respectively, multiplied by the number of days in the period (183), divided by the number of days in the fiscal year (365). |
| Supplemental Information | Giant 5 Funds September 30, 2012 (Unaudited) |
Investment Adviser Contract Approval
The Investment Advisory Agreement with the Trust was formally considered for renewal by the independent members of the Board of Trustees (the “Trustees”) at its in-person board meeting held on May 16, 2012. In conducting their review, the Trustees addressed a variety of factors including: a description of personnel and services provided to the Funds, investment advice and performance, brokerage practices and allocation of portfolio transactions, fees, other benefits and profitability, compliance program, and summary of key procedures regarding best execution, market timing, late trading, revenue sharing, selection of brokers soft dollars, trade allocations, trading of fund shares by insiders, affiliates and possible conflicts.
Independent counsel reviewed with the Trustees’ their general and specific responsibilities with respect to the approval of the Advisory Agreement under the Investment Company of 1940 Act. Independent counsel reiterated to the Trustees the importance of their being fully informed, and of the care and conscientiousness with which they perform their duties in considering approved and renewal of the Advisory Agreement, which are imposed by statute and the courts.
The Trustees reviewed the services that the Adviser had provided to the Funds, including but not limited to, generally managing each Fund’s investments in accordance with its stated investment objectives and policies. The Trustees also reviewed the Expense Reimbursement Agreement provided in their materials.
The Trustees discussed the cost of the services provided by the Adviser. The Trustees noted that the Adviser is responsible for the payment of all expenses (other than direct Fund expenses) necessary to execute its duties and responsibilities under the Advisory Agreement. As part of their analysis, the Board reviewed an analysis of advisory and total fees and found the fees reasonable for the services provided.
In considering the nature, extent and quality of the services provided by the Adviser, the Board considered a presentation by the Adviser and written materials provided in advance of the meeting describing the portfolio management, shareholder communication, and regulatory compliance services provided by the Adviser to the Funds, as well as the Adviser’s financial condition. The Adviser also explained marketing efforts to increase the assets of the Funds in order to lower the total expenses to shareholders.
The Board compared the performance of the Funds to their benchmark indices over various periods of time and concluded that the performance of the Funds supported the continuation of the Advisory Agreement. In addition to the absolute performance of the Funds, the Board also noted that the Funds adhered to their investment style.
The Trustees reviewed comparative fee information for funds similar in nature to the Giant 5 Funds. The Trustees concluded that the management fee of each Fund was reasonable in relation to the fees reviewed. The Trustees also considered comparative information regarding administrative or service fees, as well as overall expense ratios.
Based on their review and consideration of all such matters the Trustees considered to be relevant in the exercise of their reasonable business judgment, including most particularly those identified above, the Board of Trustees concluded that the Investment Advisory Agreement enables the Funds to obtain high quality services at a cost that is appropriate, reasonable and in the best interests of investors. Following an executive session with independent counsel and without management present, the Trustees approved the renewal of the Investment Advisory Agreement and determined the compensation payable under such Agreement to be fair and reasonable.
The Board’s conclusions were based on comprehensive consideration of all information presented to them and not the result of any single controlling factor.
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Funds distributed by UMB Distribution Services, LLC
© 2012 Giant 5 Funds, Colorado
ITEM 2. CODE OF ETHICS.
Not applicable to semi-annual reports.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable to semi-annual reports.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Not applicable to semi-annual reports.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS.
This information is included as part of the report to shareholders filed under Item 1 of this Form.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANIES AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
ITEM 11. CONTROLS AND PROCEDURES.
(a) Based on an evaluation of the disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended, the “Disclosure Controls”) as of a date within 90 days of the filing date (the “Filing Date”) of this Form N-CSR (the “Report”), the registrant's principal executive officer and principal financial officer have concluded that the Disclosure Controls are effectively designed to ensure that information that is required to be disclosed by the registrant in the Report is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, including ensuring that information required to be disclosed in the Report is accumulated and communicated to the registrant’s management, including the registrant’s principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosures.
(b) There were no changes in the registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) that occurred during the second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
(a)(1) Not Applicable
(a)(2) Certifications pursuant to rule 30a-2(a) are attached hereto.
(a)(3) Not Applicable
(b) Certifications pursuant to rule 30a-2(b) are furnished 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.
Giant 5 Funds
/s/Michael G. Willis
Michael G. Willis
President
(Principal Executive Officer and Principal Financial Officer)
December 3, 2012
Date
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 person on behalf of the registrant and in the capacities and on the dates indicated.
/s/Michael G. Willis
Michael G. Willis
President
(Principal Executive Officer)
/s/Michael G. Willis
Michael G. Willis
(Principal Financial Officer)
