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: 811-21927
AMM Funds
(Exact Name of Registrant as Specified in Charter)
PO Box 675203
14249 Rancho Santa Fe Farms Road
Rancho Santa Fe, CA 92067
(Address of Principal Executive Offices) (Zip Code)
Gabriel B. Wisdom
PO Box 675203
14249 Rancho Santa Fe Farms Road
Rancho Santa Fe, CA 92067
(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: 858-755-0909
Date of fiscal year end: July 31
Date of reporting period: July 31, 2008
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.
ANNUAL REPORT
AMM FUNDS
THE FALLEN ANGELS VALUE FUND
THE FALLEN ANGELS INCOME FUND
July 31, 2008
AMM FUNDS
PRESIDENT’S MESSAGE TO FELLOW
SHAREHOLDERS
JULY 31, 2008
Dear Fellow Shareholders,
Fallen Angels is an old Wall Street term to describe securities that are depressed, but should rise again. Based on our criteria, there are now an excess of attractive opportunities in the financial markets. The magnitude of declines for income oriented securities has been startling. In part, because we maintained very high levels of cash, The Fallen Angels Income Fund (NASDAQ FAINX) portfolio has declined less than it otherwise may have. The same is true of The Fallen Angels Value Fund (NASDAQ FAVLX). Our objective going forward is to do what we do best; buy high quality investments when they go on sale. With a lot of "dry powder," we expect to be more fully invested sometime in the near future.
BUY FEAR, SELL EUPHORIA
For the fiscal year ended July 31, 2008, the Fallen Angels Income Fund has declined 11.74%, while the Fallen Angels Value Fund has declined 10.63%. Like most disciplined bargain hunters, we waited patiently to purchase securities for the Funds’ portfolios, and they declined even further. When this occurs during bear markets, it can really shake your confidence. It's a natural human tendency is to extrapolate the past into the future, assuming irrationally that whatever has gone down will continue to fall further. Recent events in the banking and financial sectors have created a wave of hysteria and alarm, and thousands of investors have wanted out at any price. There have been hundreds of comparisons to "The Great Depression" as the press and public conjure up every worst case scenario imaginable.
FORCES THAT CREATE FALLEN ANGELS OPPORTUNITIES - THE THREE "I"s
Of the various forces that result in extremely depressed pricing opportunities, crashes and panics are the very best. Warren Buffett once remarked that in every market cycle there are three "I"s. The innovator is the first "I," followed by the imitator. The third "I" in the cycle is the idiot. During the last few years, many large investment banks created, sold and purchased for themselves irresponsible mortgage products. They were the the third "I." The consequences have been eerily similar to dozens of market panics in recent times. 2001, 1998, 1994, 1989, 1987, 1983, and 1975 were periods when people felt immobilized by fear.
AMM FUNDS
PRESIDENT’S MESSAGE TO FELLOW
SHAREHOLDERS - CONTINUED
JULY 31, 2008
A U.S. TRADITION DATING BACK TO 1792 AND ALEXANDER HAMILTON
The Wall Street Journal's Michael M. Phillips recently outlined what has happened so many times throughout U.S. history when "the bubble pops, lenders freeze, depositors lose faith, and panic spreads." Beginning with the panic of 1792 when George Washington was president, the United States has a long history of stepping in when nobody else will. Back then, Treasury Secretary Hamilton coordinated a government bailout by borrowing money to buy troubled debt. Today's officials are putting together a rescue package that will essentially do the same thing. Similar panics drove prices to extreme levels again in 1819, 1841, 1907, 1933, and in 1989 due to the savings and loan crisis.
WHAT WE'VE LEARNED
Panics and shakeouts have produced many of the greatest opportunities for bargain hunters. When the market had turned irrational or overly pessimistic was precisely the best time to be a buyer. It's never easy to do, because what you buy during bear markets may fall even further. Time is the value investor's ally, and we will continue to take advantage of opportunities on behalf of our shareholders during, what will no doubt be remembered as "The Panic of 2008." When this cycle is over and a new one begins, it is our goal and objective to provide you with a bountiful harvest from today's crop of Fallen Angels.
Sincerely Yours,
Gabriel B. Wisdom Portfolio Manager / President AMM Funds | Michael J. Moore Portfolio Manager / Treasurer AMM Funds |
AMM FUNDS
THE FALLEN ANGELS VALUE FUND
PERFORMANCE ILLUSTRATION
JULY 31, 2008
FUND/INDEX 1 YEAR SINCE INCEPTION (11/10/2006)
The Fallen Angels Value Fund (10.63) % (7.39) %
S&P 500 Index (11.09)% (5.21) %
The chart assumes an initial gross investment of $10,000 made on 11/10/2006 (inception).
PERFORMANCE IS HISTORICAL AND DOES NOT GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT AN INVESTORS SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. THE RETURNS SHOWN DO NOT REFLECT DEDUCTION OF TAXES THAT A SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR REDEMPTION OF FUND SHARES. CURRENT PERFORMANCE MAY BE HIGHER OR LOWER THAN PERFORMANCE QUOTED, THE RETURNS SHOWN DO NOT REFLECT EXPENSES WHICH HAVE BEEN DEDUCTED FROM THE FUNDS RETURN. THE FUNDS INVESTMENT OBJECTIVES, RISKS AND CHANGES AND EXPENSES MUST BE CONSIDERED CAREFULLY BEFORE INVESTING. PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH-END MAY BE OBTAINED BY CALLING (866) 663-8023.
The Standard & Poor’s 500 Index (“S&P 500”) is a market value-weighted index, representing the aggregate market value of the common equity of 500 stocks primarily traded on the New York Stock Exchange. The S&P 500 is a widely recognized, unmanaged index of common stock prices. The figures for the S&P 500 reflect all dividends reinvested but do no reflect any deductions for fees, expenses or taxes.
AMM FUNDS
THE FALLEN ANGELS INCOME FUND
PERFORMANCE ILLUSTRATION
JULY 31, 2008
FUND/INDEX SINCE INCEPTION (11/10/2006) 1 YEAR
The Fallen Angels Income Fund (11.46) % (11.74)%
iBoxx $ Liquid High Yield Index 1.18 % 2.69%
Dow Jones Moderate Portfolio Index 3.54% (3.46)%
The chart assumes an initial gross investment of $10,000 made on 11/10/2006 (inception).
PERFORMANCE IS HISTORICAL AND DOES NOT GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT AN INVESTORS SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. THE RETURNS SHOWN DO NOT REFLECT DEDUCTION OF TAXES THAT A SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR REDEMPTION OF FUND SHARES. CURRENT PERFORMANCE MAY BE HIGHER OR LOWER THAN PERFORMANCE QUOTED. THE RETURNS SHOWN DO NOT REFLECT EXPENSES WHICH HAVE BEEN DEDUCTED FROM THE FUND’S RETURN. THE FUNDS INVESTMENT OBJECTIVES, RISKS AND CHANGES AND EXPENSES MUST BE CONSIDERED CAREFULLY BEFORE INVESTING. PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH-END MAY BE OBTAINED BY CALLING (866) 663-8023.
The iBoxx USD Liquid High Yield Index comprises the most liquid USD denominated sub-investment grade issues. Markit iBoxx indices cover the cash bond market and provide a transparent view of the most actively traded portion of the market. The indices are ideal benchmarks for professional use, as they comprise liquid investment grade issues. Underlying bond prices and indices are available in real time for Euro and Sterling and end of day for USD and Asia.
The Dow Jones Relative Risk Indexes measure the performance of conservative, moderate and aggressive portfolios based on incremental levels of potential risk. The indexes are designed to systematically measure various levels of risk relative to the risk
of a global all-stock index. Investors can identify an appropriate benchmark as the index that has the most similar historic risk characteristics.
AMM FUNDS
THE FALLEN ANGELS VALUE FUND
PORTFOLIO ANALYSIS
JULY 31, 2008 (UNAUDITED)
The following chart gives a visual breakdown of the Fund by the industry sectors the underlying securities represent as a percentage of the portfolio of investments.
AMM FUNDS
THE FALLEN ANGELS INCOME FUND
PORTFOLIO ANALYSIS
JULY 31, 2008 (UNAUDITED)
The following chart gives a visual breakdown of the Fund by the class of securities the underlying securities represent as a percentage of the portfolio of investments.
Shares | Value | |
COMMON STOCKS - 63.14% | ||
Accident & Health Insurance - 2.51% | ||
4,000 | StanCorp Financial Group, Inc. | $ 197,560 |
9,500 | Unitedhealth Group, Inc. | 266,760 |
464,320 | ||
Beverages - 2.33% | ||
6,000 | Brown-Forman Corp. Class B | 431,760 |
Computer Communications Equipment - 3.26% | ||
14,000 | Analog Devices, Inc. | 427,140 |
8,000 | Cisco Systems, Inc. * | 175,920 |
603,060 | ||
Crude Petroleum & Natural Gas - 8.27% | ||
10,000 | Chesapeake Energy Corp. | 501,500 |
2,500 | China Petroleum & Chemical Corp. ADR (China) | 263,100 |
6,000 | Denbury Resources Inc. * | 168,840 |
3,000 | Ensco International, Inc. | 207,420 |
2,000 | Occidental Petroleum Corp. | 157,660 |
5,000 | Petro-Canada (Canada) | 231,150 |
1,529,670 | ||
Electromedical & Electrotherapy - 2.28% | ||
8,000 | Medtronic Inc. | 422,640 |
Electronic & Other Electrical - 1.83% | ||
12,000 | General Electric Co. | 339,480 |
Finance Services - 1.79% | ||
5,000 | American Express Co. | 185,600 |
10,000 | Discover Financial Services | 146,500 |
332,100 | ||
Fire, Marine & Casualty Insurance - 3.45% | ||
3 | Berkshire Hathaway, Inc. Class A * | 343,350 |
937 | Alleghany Corp. * | 295,408 |
638,758 | ||
Leather & Leather Products - 0.83% | ||
6,000 | Coach, Inc. * | 153,060 |
Men's & Boys' Furnishings - 1.54% | ||
10,000 | Cintas Corp. | 284,400 |
* Non-income producing security during the period.
ADR- American Depository Receipt.
The accompanying notes are an integral part of the financial statements.
AMM FUNDS
THE FALLEN ANGELS VALUE FUND
SCHEDULE OF INVESTMENTS - CONTINUED
JULY 31, 2008
Shares | Value | |
Motors & Generators - 1.58% | ||
6,000 | Emerson Electric Co. | 292,200 |
National Bank - 1.02% | ||
20,000 | National Bank of Greece ADR (Greece) | 188,000 |
Retail-Drug Stores And Proprietary Stores - 1.95% | ||
10,500 | Walgreen Co. | 360,570 |
Retail-Eating & Drinking Place - 1.54% | ||
20,000 | Jamba, Inc. * | 19,800 |
18,000 | Starbucks Corp. * | 264,420 |
284,220 | ||
Retail-Family Clothing Store - 0.91% | ||
12,000 | American Eagle Outfitters, Inc. | 168,000 |
Soap, Detergents, Cleaning Preparations, Perfumes, Cosmetics - 2.12% | ||
6,000 | Procter & Gamble Co. | 392,880 |
Services-Computer Programming - 3.04% | ||
13,000 | Cognizant Technology Solutions Corp. * | 364,910 |
5,000 | Infosys Technologies Ltd. ADR (India) | 196,950 |
561,860 | ||
Services-Consulting - 4.85% | ||
12,000 | Accenture Ltd. Class A | 501,120 |
8,000 | Satyam Computer Services Ltd. ADR (India) | 170,720 |
20,000 | Wipro Ltd. ADR (India) | 225,200 |
897,040 | ||
Services-Engineering, Accounting, Research, Management - 2.13% | ||
12,000 | Paychex, Inc. | 395,040 |
Services-Information & Telecommunications - 2.27% | ||
5,000 | Perusahaan Perseroan Persero PT Telekomunikasi Indonesia TBK ADR (Indonesia) | 164,900 |
12,000 | SK Telecom Co. Ltd. ADR * (South Korea) | 255,840 |
420,740 | ||
Services-Logistics - 2.43% | ||
5,000 | Expeditors International of Washington, Inc. | 177,550 |
15,000 | UTI Worldwide, Inc. | 272,850 |
450,400 |
* Non-income producing security during the period.
ADR- American Depository Receipt.
The accompanying notes are an integral part of the financial statements.
Shares | Value | |
Services-Software Design - 2.98% | ||
6,000 | Autodesk, Inc. * | 191,340 |
14,000 | Microsoft Corp. | 360,080 |
551,420 | ||
Services-Online Gaming - 0.98% | ||
7,000 | Shanda Interactive Entertainment Ltd. ADR * (China) | 180,810 |
Surgical & Medical Instruments - 1.90% | ||
5,000 | 3M Co. | 351,950 |
Wholesale-Agricultural Chemicals - 0.55% | ||
500 | Potash Corp. of Saskatchewan, Inc. (Canada) | 102,135 |
Wholesale-Groceries & Related - 2.15% | ||
14,000 | Sysco Corp. | 397,040 |
Wholesale-Industrial Machinery - 1.29% | ||
5,000 | MSC Industrial Direct Co., Inc. Class A | 238,500 |
Wholesale-Metals Service Centers & of Fices - 1.36% | ||
4,000 | Reliance Steel & Aluminum Co. | 252,640 |
TOTAL FOR COMMON STOCKS (Cost $12,099,351) - 63.14% | 11,684,693 | |
EXCHANGE TRADED FUNDS - 13.72% | ||
10,000 | ishares Dow Jones US Pharmaceuticals | 504,300 |
1,000 | SPDR Gold Shares * | 90,080 |
10,000 | Ultra Dow 30 Proshares | 607,800 |
10,000 | Ultra QQQ Proshares | 736,700 |
10,000 | Ultra S&P 500 Proshares | 600,700 |
TOTAL FOR EXCHANGE TRADED FUNDS (Cost $2,618,088) - 13.72% | 2,539,580 | |
SHORT TERM INVESTMENTS - 21.13% | ||
3,910,591 | Fidelity Money Market Portfolio Class Select 2.52%** (Cost $3,910,591) | 3,910,591 |
TOTAL INVESTMENTS (Cost $18,628,030) - 97.99% | 18,134,864 | |
OTHER ASSETS LESS LIABILITIES - 2.01% | 372,643 | |
NET ASSETS - 100.00% | $18,507,507 |
* Non-income producing security during the period.
ADR- American Depository Receipt.
** Variable rate security; the coupon rate shown represents the yield at July 31, 2008.
The accompanying notes are an integral part of the financial statements.
Shares | Value | |
CLOSED END MUTUAL FUNDS - 13.70% | ||
10,000 | Advantage Energy Income Fund (Canada) | $ 108,000 |
13,000 | Advent Claymore Convert Securities & Inc. Fund | 259,870 |
38,000 | Alliance Bernstein Income Fund | 308,940 |
5,000 | Cohen & Steers Premium, Inc. Realty Fund | 75,450 |
5,000 | Cohen & Steers REIT & Preferred, Inc. Fund | 94,850 |
10,000 | First Trust Aberdeen | 173,200 |
28,000 | High Yield Plus Fund, Inc. | 78,960 |
13,000 | Hyperion Brookfield Total Return Fund | 76,310 |
10,000 | Nicholas Applegate Convertible | 107,400 |
10,000 | Nuveen Equity Premium Advantage Fund | 149,100 |
20,000 | Nuveen Pref & Con Inc Fund II | 185,200 |
8,000 | Nuveen Muni Advantage Fund | 105,280 |
7,000 | Templeton Emerging Markets Income | 94,850 |
15,000 | Western Asset Emerging Markets Income II Fund, Inc. | 180,450 |
10,000 | Western Asset Emerging Markets Debt Fund, Inc. | 170,400 |
TOTAL FOR CLOSED END MUTUAL FUNDS (Cost $2,601,566 ) - 13.70% | 2,168,260 | |
EQUITY SECURITIES - 21.56% | ||
16,000 | Alpine Total Dynamic | 209,600 |
13,000 | BlackRock Global Equity | 175,760 |
15,000 | BlackRock Income Trust | 86,700 |
7,000 | BlackRock Real Asset Equity | 112,770 |
16,000 | BlackRock World Investment Trust | 233,920 |
25,000 | DWS Multi-Market Income Trust | 198,250 |
20,000 | Eaton Vance Tax Managed Global Opportunity Fund | 297,800 |
13,500 | Eaton Vance Tax Managed Buy-Write Opportunity Fund | 209,790 |
18,000 | Eaton Vance Tax-Mana | 267,300 |
35,000 | Liberty All-Star Equity Fund | 202,300 |
20,000 | MFS Charter Income Trust | 164,800 |
27,000 | Putman Income Premier Income Trust | 161,190 |
10,000 | Penn West Energy Trust (Canada) | 299,900 |
15,000 | Royce Value Fund | 235,200 |
4,606 | S&P 500 Geared Fund, Inc. | 68,353 |
45,000 | Sea Containers Ltd. (Bermuda) * | 1,800 |
2,000 | Source Capital, Inc. | 105,000 |
1,000 | SPDR Gold Trust * | 90,080 |
67,000 | Zweig Fund, Inc. | 290,780 |
TOTAL FOR EQUITY SECURITIES (Cost $3,940,378 ) - 21.56% | 3,411,293 |
* Non-income producing security during the period.
The accompanying notes are an integral part of the financial statements.
Shares | Value | |
PREFERRED SECURITIES - 21.52% | ||
11,900 | Allmerica Financial (Corts) 7.75% | 217,413 |
4,800 | AON Capital Trust A (Corts) 7.75% | 99,600 |
9,800 | Arch Cap Ltd Preferred 8.00% | 227,164 |
7,300 | BioMed Realty Trust 7.375% | 140,160 |
5,812 | Bristol-Meyers Squibb (Corts) 6.80% | 133,908 |
5,000 | Danaos Corp. (Greece) | 106,950 |
7,000 | Diana Shipping, Inc. (Greece) | 213,010 |
3,200 | Dpl Inc. 7.875% | 76,032 |
4,700 | Dpl, Inc.7.875% | 113,928 |
4,000 | Felcor Lodging Trust, Inc. 8.0% | 60,400 |
8,400 | Ford Motor Co (Cbtcs) 7.55% | 105,168 |
9,600 | Ford Motor Co 8.125% | 108,480 |
6,000 | General Motors 7.375% '51 Senior Notes | 66,960 |
4,200 | Hertz Corp. 7.00% | 74,760 |
500 | Hilton Hotels Corp 8.00% | 12,500 |
12,300 | Hospitality Property Trust 7.00% | 199,014 |
30,000 | ING Prime Rate Trust | 163,200 |
6,200 | JC Penney (Corts) 7.625% | 130,572 |
6,000 | LMG Pplus 6.70% | 96,198 |
5,000 | Morgan ST III 6.25% | 94,750 |
5,000 | Odyssey Re Holders Float US Lib + 325 | 90,800 |
16,600 | Saturns Tribune Co. 7.00% | 61,420 |
6,190 | SunAmerica (Corts) 6.70% | 113,587 |
9,400 | Telephone & Data 7.60% 12/01/41 | 181,044 |
8,500 | Unum Provident (Pplus) 7.40% | 180,625 |
9,400 | US Cellular 7.50% 6/15/34 | 199,280 |
25,000 | Van Kampen Senoir Income Trust | 137,250 |
TOTAL FOR PREFERRED SECURITIES (Cost $4,544,392 ) - 21.52% | 3,404,173 | |
SHORT TERM INVESTMENTS - 43.78% | ||
6,926,104 | Fidelity Money Market Portfolio Class Select 2.52%** (Cost $6,926,104) | 6,926,104 |
TOTAL INVESTMENTS (Cost $18,012,440) - 100.56% | 15,909,830 | |
LIABILITIES IN EXCESS OF OTHER ASSETS - (0.56)% | (88,564) | |
NET ASSETS - 100.00% | $15,821,266 |
** Variable rate security; the coupon rate shown represents the yield at July 31, 2008.
The accompanying notes are an integral part of the financial statements.
Value Fund | Income Fund | ||
Assets: | |||
Investments in Securities, at Value (Cost $18,628,030 and $18,012,440) | $18,134,864 | $15,909,830 | |
Cash | 4,000 | 2,000 | |
Receivables: | |||
Due From Broker | 465,920 | - | |
Dividends and Interest | 22,193 | 45,770 | |
Prepaid Expenses | 15,041 | 15,655 | |
Total Assets | 18,642,018 | 15,973,255 | |
Liabilities: | |||
Payables: | |||
Due To Broker | 99,985 | 119,840 | |
Shareholder Redemption | - | 1,000 | |
Accrued Management Fees | 15,754 | 13,527 | |
Accrued Administrative Fees | 7,877 | 6,755 | |
Other Accrued Expenses | 10,895 | 10,867 | |
Total Liabilities | 134,511 | 151,989 | |
Net Assets | $18,507,507 | $15,821,266 | |
Net Assets Consist of: | |||
Paid In Capital | $20,408,614 | $20,098,879 | |
Accumulated Undistributed Net Investment Income | 11,767 | - | |
Accumulated Realized Loss on Investments | (1,419,707) | (2,175,003) | |
Unrealized Depreciation in Value of Investments | (493,167) | (2,102,610) | |
Net Assets, for 2,025,330 and 2,026,822 Shares Outstanding | $18,507,507 | $15,821,266 | |
Net Asset Value Per Share | $ 9.14 | $ 7.81 |
The accompanying notes are an integral part of the financial statements.
Value Fund | Income Fund | ||
Investment Income: | |||
Dividends (net of foreign withholding of $2,017 and $44,637, respectively) | $ 230,623 | $ 1,334,561 | |
Interest | 200,887 | 118,045 | |
Total Investment Income | 431,510 | 1,452,606 | |
Expenses: | |||
Advisory Fees (Note 3) | 204,140 | 172,666 | |
Administrative Fees | 51,035 | 43,166 | |
Distribution (12b-1) Fees | 51,035 | 43,166 | |
Transfer Agent Fees | 9,386 | 9,386 | |
Registration Fees | 27,211 | 27,212 | |
Custodian Fees | 8,128 | 10,028 | |
Audit Fees | 10,427 | 10,527 | |
Legal Fees | 14,259 | 14,357 | |
Trustee Fees | 3,511 | 3,511 | |
Fund Accounting Fees | 21,000 | 21,000 | |
Printing and Mailing Fees | 2,400 | 2,422 | |
Miscellaneous Fees | 1,110 | 1,090 | |
Insurance Fees | 1,366 | 1,376 | |
Total Expenses | 405,008 | 359,907 | |
Net Investment Income | 26,502 | 1,092,699 | |
Realized and Unrealized Loss on Investments: | |||
Realized Loss on Investments | (1,631,640) | (2,145,550) | |
Capital Gain on Distributions from Portfolio Companies | - | 78,929 | |
Net Change in Unrealized Depreciation on Investments | (641,105) | (1,245,466) | |
Realized and Unrealized Loss on Investments | (2,272,745) | (3,312,087) | |
Net Decrease in Net Assets Resulting from Operations | $(2,246,243) | $(2,219,388) |
The accompanying notes are an integral part of the financial statements.
Year | Period * | ||
Ended | Ended | ||
7/31/2008 | 7/31/2007 | ||
Increase (Decrease) in Net Assets From Operations: | |||
Net Investment Income | $ 26,502 | $ 243,034 | |
Net Realized Gain (Loss) on Investments | (1,631,640) | 211,933 | |
Unrealized Appreciation (Depreciation) on Investments | (641,105) | 147,939 | |
Net Increase (Decrease) in Net Assets Resulting from Operations | (2,246,243) | 602,906 | |
Distributions to Shareholders: | |||
Net Investment Income | (187,015) | (70,755) | |
Realized Gains | - | - | |
Total Distributions Paid to Shareholders | (187,015) | (70,755) | |
Capital Share Transactions (Note 5) | (482,815) | 20,841,429 | |
Total Increase (Decrease) in Net Assets | (2,916,073) | 21,373,580 | |
Net Assets: | |||
Beginning of Period | 21,423,580 | 50,000 | |
End of Period (Including Undistributed Net Investment | |||
Income of $11,766 and $172,279, respectively) | $18,507,507 | $21,423,580 |
* For the period November 10, 2006 (commencement of investment operations) through
July 31, 2007.
The accompanying notes are an integral part of the financial statements.
Year | Period * | ||
Ended | Ended | ||
7/31/2008 | 7/31/2007 | ||
Increase (Decrease) in Net Assets From Operations: | |||
Net Investment Income | $ 1,092,699 | $ 720,913 | |
Net Realized Gain (Loss) on Investments | (2,145,550) | 38,174 | |
Capital Gain on Distributions from Portfolio Companies | 78,929 | - | |
Unrealized Depreciation on Investments | (1,245,466) | (857,145) | |
Net Decrease in Net Assets Resulting from Operations | (2,219,388) | (98,058) | |
Distributions to Shareholders: | |||
Net Investment Income | (1,198,693) | (784,329) | |
Realized Gain (Loss) | (108,382) | - | |
Total Distributions Paid to Shareholders | (1,307,075) | (784,329) | |
Capital Share Transactions (Note 5) | 743,019 | 19,437,097 | |
Total Increase (Decrease) in Net Assets | (2,783,444) | 18,554,710 | |
Net Assets: | |||
Beginning of Period | 18,604,710 | 50,000 | |
End of Period (Including Undistributed Net Investment | |||
Income of $0 and $0, respectively) | $15,821,266 | $18,604,710 |
* For the period November 10, 2006 (commencement of investment operations) through
July 31, 2007.
The accompanying notes are an integral part of the financial statements.
Year | Period * | |||
Ended | Ended | |||
7/31/2008 | 7/31/2007 | |||
Net Asset Value, at Beginning of Period | $ 10.32 | $ 10.00 | ||
Income From Investment Operations: | ||||
Net Investment Income ** | 0.01 | 0.13 | ||
Net Gain (Loss) on Securities (Realized and Unrealized) | (1.10) | 0.23 | ||
Total from Investment Operations | (1.09) | 0.36 | ||
Distributions: | ||||
Net Investment Income | (0.09) | (0.04) | ||
Realized Gains | 0.00 | 0.00 | ||
Total from Distributions | (0.09) | (0.04) | ||
Net Asset Value, at End of Period | $ 9.14 | $ 10.32 | ||
Total Return *** | (10.63)% | 3.62% | ||
Ratios/Supplemental Data: | ||||
Net Assets at End of Period (Thousands) | $ 18,507 | $ 21,424 | ||
Before Waivers | ||||
Ratio of Expenses to Average Net Assets | 1.99% | 1.91% | (a) | |
Ratio of Net Investment Income (Loss) to Average Net Assets | 0.13% | 1.60% | (a) | |
After Waivers | ||||
Ratio of Expenses to Average Net Assets | 1.99% | 1.74% | (a) | |
Ratio of Net Investment Income to Average Net Assets | 0.13% | 1.77% | (a) | |
Portfolio Turnover | 451.20% | 31.18% |
* For the period November 10, 2006 (commencement of investment operations) through
July 31, 2007.
** Per share net investment income has been determined on the basis of average shares
outstanding during the period.
*** Assumes reinvestment of dividends.
(a) Annualized
The accompanying notes are an integral part of the financial statements.
Year | Period * | |||
Ended | Ended | |||
7/31/2008 | 7/31/2007 | |||
Net Asset Value, at Beginning of Period | $ 9.54 | $ 10.00 | ||
Income From Investment Operations: | ||||
Net Investment Income ** | 0.56 | 0.48 | ||
Net Gain (Loss) on Securities (Realized and Unrealized) | (1.61) | (0.45) | ||
Total from Investment Operations | (1.05) | 0.03 | ||
Distributions: | ||||
Net Investment Income | (0.62) | (0.49) | ||
Realized Gains | (0.06) | - | ||
Total from Distributions | (0.68) | (0.49) | ||
Net Asset Value, at End of Period | $ 7.81 | $ 9.54 | ||
Total Return *** | (11.65)% | 0.22% | ||
Ratios/Supplemental Data: | ||||
Net Assets at End of Period (Thousands) | $ 15,822 | $ 18,605 | ||
Before Waivers | ||||
Ratio of Expenses to Average Net Assets | 2.09% | 2.02% | (a) | |
Ratio of Net Investment Income (Loss) to Average Net Assets | 6.35% | 6.64% | (a) | |
After Waivers | ||||
Ratio of Expenses to Average Net Assets | 2.09% | 1.88% | (a) | |
Ratio of Net Investment Income to Average Net Assets | 6.35% | 6.78% | (a) | |
Portfolio Turnover | 138.49% | 96.47% |
* For the period November 10, 2006 (commencement of investment operations) through
July 31, 2007.
** Per share net investment income has been determined on the basis of average shares
outstanding during the period.
*** Assumes reinvestment of dividends.
(a) Annualized
The accompanying notes are an integral part of the financial statements.
AMM FUNDS
THE FALLEN ANGELS VALUE FUND
THE FALLEN ANGELS INCOME FUND
NOTES TO FINANCIAL STATEMENTS
JULY 31, 2008
Note 1. Organization
The Fallen Angels Value Fund and the Fallen Angels Income Fund (each a “Fund” and collectively, the “Funds”) are diversified series of AMM Funds (the “Trust”), an open-end investment company that was organized as an Ohio business trust on June 20, 2006. The Funds commenced operations on November 10, 2006. The Trust is permitted to issue an unlimited number of shares of beneficial interest of separate series. The Funds are the only series currently authorized by the Board of Trustees (“the Board”). The investment adviser to the Funds is American Money Management, LLC (the “Advisor”).
The Fallen Angels Value Fund’s investment objective is to seek long-term capital appreciation. The Fallen Angels Income Fund’s investment objective is to seek high current income with the potential for capital appreciation.
Note 2. Summary of Significant Accounting Policies
The following is a summary of significant accounting policies employed by the Funds in preparing their financial statements:
Security Valuation- Each Fund’s assets are generally valued at their market value using market quotations. If market prices are not available or, in the Advisor’s opinion, market prices do not reflect fair value, or if an event occurs after the close of trading on the domestic or foreign exchange or market on which the security is principally traded (but prior to the time the NAV is calculated) that materially affects fair value, the Advisor will value a Fund’s assets at their fair value in accordance with policies approved by the Funds’ Board of Trustees. For example, fair value pricing may be used if an event occurs after the close of the foreign market that could have an impact on the foreign securities value. The Board has adopted guidelines for good faith pricing, and has delegated to the Advisor the responsibility for determining fair value prices, subject to review by the Board of Trustees.
Fixed income securities generally are valued by using market quotations, but may be valued on the basis of prices furnished by a pricing service when the Adviser believes such prices accurately reflect the fair market value of such securities. A pricing service utilities electronic data processing techniques based on yield spreads relating to securities with similar characteristics to determine prices for normal institutional – size trading units of debt securities without regard to sale or bid prices. If the Adviser decides that a price provided by the pricing service does not accurately reflect the fair market value of the securities, when prices are not readily available from a pricing service, or when restricted or illiquid securities are being valued, securities are valued at fair value as determined in good faith by the Adviser, in conformity with guidelines adopted by and subject to revie w of the Board of Trustees. Short term investments in fixed income securities with maturities of less than 60 days when acquired, or which subsequently are within 60 days of maturity, are valued by using the amortized cost method of valuation, which the Board has determined will represent fair value.
AMM FUNDS
THE FALLEN ANGELS VALUE FUND
THE FALLEN ANGELS INCOME FUND
NOTES TO FINANCIAL STATEMENTS - CONTINUED
JULY 31, 2008
In accordance with the Trust’s good faith pricing guidelines, the Advisor is required to consider all appropriate factors relevant to the value of securities for which it had determined other pricing sources are not available or reliable as described above. No single standard for determining fair value controls, 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 Advisor 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 (included 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.
Option Writing- When either 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 Fund on the expiration date as realized gains from investments. 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 whether the Fund has realized a gain or loss. If a put option is exercised, the premium reduces the cost basis of the securities purchased by the Fund. T he Fund as writer of an option bears the market risk of an unfavorable change in the price of the security underlying the written option.
Repurchase Agreements- In connection with transactions in repurchase agreements, it is the Funds’ policy that its custodian take possession of the underlying collateral securities, the fair value of which exceeds the principal amount of the repurchase transaction, including accrued interest, at all times. If the seller defaults, and the fair value of the collateral declines, realization of the collateral by the Fund may be delayed or limited.
Financial Futures Contracts- Each Fund invests in financial futures contracts solely for the purpose of hedging its existing portfolio securities, or securities that the Fund intends to purchase, against fluctuations in fair value caused by changes in prevailing market interest rates. Upon entering into a financial futures contract, the Fund is required to pledge to the broker an amount of cash, U.S. government securities, or other assets, equal to a certain percentage of the contract amount (initial margin deposit). Subsequent payments, known as “variation margin,” are made or received by the Fund each day, depending on the daily fluctuations in the fair value of the underlying security. The Fund recognizes a gain or loss equal to the daily variation margin. Should market conditions move unexpectedly, the Fund may not achieve the anticipated benefits of the financial futures contracts and may r ealize a loss. The use of futures transactions involves the
AMM FUNDS
THE FALLEN ANGELS VALUE FUND
THE FALLEN ANGELS INCOME FUND
NOTES TO FINANCIAL STATEMENTS - CONTINUED
JULY 31, 2008
risk of imperfect correlation in movements in the price of futures contracts, interest rates, and the underlying hedged assets.
Short Sales- The Funds may sell a security that they do not own in anticipation of a decline in the fair value of that security. When the Fund sells a security short, it must borrow the security sold short and deliver it to the broker-dealer through which it made the short sale. A gain, limited to the price at which the Fund sold the security short, or a loss, unlimited in size, will be recognized upon the termination of a short sale.
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 Fund will not be subject to federal income taxes to the extent that it distributes substantially all of its net investment income and any realized capital gains. It is the Fund’s policy to distribute annually, prior to the end of the calendar year, dividends sufficient to satisfy excise tax requirements of the Internal Revenue Service. This Internal Revenue Service requirement may cause an excess of distributions over the book year-end accumulated income.
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 Fund is open for business and on any other day on which there is sufficient trading in the Fund’s securities to materially affect the net asset value. The Fund is 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.
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. Each Fund uses 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 Fund’s understanding of the applicable country’s tax rules and rates.
New Accounting Pronouncements - The Funds adopted Financial Accounting Standards Board (FASB) Interpretation No. 48 – Accounting for Uncertainty in Income Taxes, on July 1, 2007. FASB Interpretation No. 48 requires that the tax effects of certain tax positions be recognized. These tax provisions must meet a “more likely than not” standard that based on their technical merits, have a more than 50 percent likelihood of being sustained upon examination. At adoption, the financial statements must be adjusted to reflect only those tax positions that are more likely than not of being sustained. Management of the Funds does not believe that any adjustments were necessary to the financial statements at adoption.
In September 2006, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“FAS 157”). FAS 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. FAS 157 establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from sources independent of the reporting entity (observable inputs) and (2) the reporting entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). FAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and is to be applied prospectively as of the beginning of the fiscal year in which FAS 157 initially applied. Management is currently evaluating the application of FAS 157 to Funds and will provide additional information in relation to FAS 157 on the Funds’ semi-annual financial statements for the period ending January 31, 2009.
Distributions to Shareholders- Each Fund typically will distribute substantially all of its net investment income in the form of dividends and capital gains to its shareholders. The Fallen Angels Value Fund will distribute dividends and capital gains annually, and expects that distributions will consist primarily of capital gains. The Fallen Angels Income Fund will distribute dividends monthly and capital gains annually, and expects that distributions will consist primarily of ordinary income. Distributions will be recorded on ex-dividend date.
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 increase and decreases in net assets from operations during the reporting period. Actual results could differ from these estimates.
Other- Generally accepted accounting principles require that permanent financial reporting tax differences relating to shareholder distributions be reclassified to paid in capital.
Note 3. Investment Management and Service Agreements
The Trust has a management agreement (the “Management Agreement”) with American Money Management, LLC (the “Advisor”) to furnish investment advisory and management services to the Funds. Under the Management Agreement, each Fund will pay the Advisor a monthly fee based on the Fund’s average daily net assets at the annual rate of 1.00% per Fund. For the year ended July 31, 2008, the Advisor earned a fee of $204,140 and $172,666 for the Value Fund and Income Fund, respectively. The Funds owed the Advisor $15,754 and $13,527 for the Value Fund and Income Fund, respectively, as of July 31, 2008.
The Trust also has an administration agreement with the Advisor to furnish sponsorship, administrative and supervisory services as may from time to time be reasonably requested by the Trust and in general to provide supervision of the overall operations of the Trust. Under this agreement, each Fund pays the Advisor a monthly fee based on the Fund’s average daily net assets at the annual rate of 0.25%. For the period, the Advisor earned a fee of $51,035 and $43,166 from the Value Fund and Income Fund, respectively. The Funds owed the Advisor $3,939 and $3,382 for the Value Fund and Income Fund, respectively, as of July 31, 2008.
The Funds have adopted a Plan pursuant to Rule 12b-1 under the 1940 Act whereby the Funds pay the Advisor for certain distribution and promotion expenses activities which are primarily intended to result in the sale of the Funds’ shares, including, but not limited to: advertising, printing of prospectuses and reports for prospective shareholders, preparation and distribution of advertising materials and sales literature, and payments to dealers and shareholder servicing agents who enter into agreements with the Funds. The Funds’ incur such distribution expenses at the rate of 0.25% per annum of the Funds average net assets. For the year ended July 31, 2008, the Plan accrued fees of $51,035 and $43,166 under the plan from the Value Fund and Income Fund, respectively. The Funds owed the Advisor $3,938 and $3,373 for the Value Fund and Income Fund, respectively as of July 31, 2008.
Note 4. Related Party Transactions
Gabriel B. Wisdom is the control person of the Advisor and also serves as a trustee and officer of the Trust. Mr. Wisdom receives benefits from the Advisor resulting from management, administration and distribution (12b-1) fees paid to the Advisor by the Funds.
Note 5. Capital Share Transactions
The Funds are authorized to issue an unlimited number of shares with no par value of separate series. Paid in capital at July 31, 2008 was $20,408,614 and $20,098,879 representing 2,025,330 and 2,026,822 shares outstanding for the Value Fund and Income Fund, respectively.
Transactions in capital stock for the period ended July 31, 2008 were as follows:
Value Fund | Income Fund | |||
Shares | Amount | Shares | Amount | |
Shares Sold | 294,361 | $2,927,460 | 376,583 | $3,361,619 |
Shares issued in reinvestment of distributions | 18,608 | 187,015 | 147,051 | 1,303,019 |
Shares redeemed | (362,874) | (3,597,290) | (446,254) | (3,921,619) |
Net Increase (decrease) | (49,905) | $(482,815) | (77,380) | $743,019 |
Paid in capital at July 31, 2007 was $20,891,429 and $19,487,097 representing 2,075,235 and $1,949,441 shares outstanding for the Value Fund and Income Fund, respectively.
Transactions in capital stock for the period ended July 31, 2007 were as follows:
Value Fund | Income Fund | |||
Shares | Amount | Shares | Amount | |
Shares Sold | 2,277,564 | $22,955,080 | 2,156,956 | $21,569,687 |
Shares issued in reinvestment of distributions | 7,047 | 70,755 | 79,371 | 784,267 |
Shares redeemed | (214,376) | (2,184,406) | (291,886) | (2,916,857) |
Net Increase | 2,070,235 | $20,841,429 | 1,944,441 | $19,437,097 |
Note 6. Investment Transactions
For the period ended July 31, 2008, purchases and sales of investment securities other than U.S. Government obligations aggregated $70,075,193 and $69,833,533 for the Value Fund and $19,508,295 and $24,490,767 for the Income Fund, respectively.Purchases and sales of U.S. Government obligations aggregated $0 and $0, respectively for each Fund.
Note 7. Tax Matters
For Federal income tax purposes, the cost of investments owned at July 31, 2008 was $19,139,945 for the Value Fund and $18,022,006 for the Income Fund.
At July 31, 2008, the composition of unrealized appreciation (the excess of value over tax cost) and depreciation (the excess of tax cost over value) was as follows:
Value Fund | ||
Appreciation | Depreciation | Net Appreciation(Depreciation) |
$138,175 | ($1,137,705) | ($999,530) |
Income Fund | ||
Appreciation | Depreciation | Net Appreciation(Depreciation) |
$9,069 | ($2,121,244) | ($2,112,175) |
The difference between book and tax cost for the Funds represents wash sales transactions.
As of July 31, 2008, the components of distributable earnings on a tax basis were as follows:
Value Fund | |
Undistributed ordinary income | $11,766 |
Accumulated net realized losses from investments | (326,583)* |
Unrealized depreciation on investments | (493,167) |
* The Value Fund has elected to push $581,209 of post October 2007 losses to fiscal year 2009.
Income Fund | |
Undistributed ordinary income | $0 |
Accumulated net realized losses from investments | (15,492) |
Unrealized depreciation on investments | (2,102,610) |
* The Income Fund has elected to push $2,078,952 of post October 2007 losses to fiscal year 2009.
The Funds paid income distributions of $0.0918 and $0.62 per share for total distributions of $187,015 and $1,198,693 for the Value Fund and Income Fund for the period ended July 31, 2008. The Income Fund paid a short term capital gain of $0.0567 for a total distribution of $108,382.
The tax character of the distributions paid was as follows:
Value Fund | Income Fund | |
Ordinary Income | $187,015 | $1,198,693 |
Capital Gains | $0 | $108,382 |
The accumulated loss carryovers as of July 31, 2008 expire as follows:
Value Fund | Income Fund | |
2016 | $326,583 | $15,492 |
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 8. 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 of July 31, 2008, Charles Schwab for the benefit of its customers owned, in aggregate, approximately 96.44% and 93.46% of the Value Fund and Income Fund, respectively, and may be deemed to control the Funds.
AMM FUNDS
THE FALLEN ANGELS VALUE FUND
THE FALLEN ANGELS INCOME FUND
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
JULY 31, 2008
To the Shareholders and Board of Trustees of AMM Funds
We have audited the accompanying statements of assets and liabilities of The Fallen Angels Value Fund and The Fallen Angels Income Fund (the “Funds”), both a series of AMM Funds, including the schedules of investments as of July 31, 2008 and the related statements of operations for the period then ended, and changes in net assets and financial highlights for the period then ended and for the period November 10, 2006 (commencement of investment operations) through July 31, 2007. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities and cash owned as of July 31, 2008, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of The Fallen Angels Value Fund and The Fallen Angels Income Fund (the “Funds”), both a series of AMM Funds, as of July 31, 2008, the results of their operations and changes in their net assets and the financial highlights for the periods indicated therein in conformity with accounting principles generally accepted in the United States of America.
Abington, Pennsylvania
September 24, 2008
AMM FUNDS
THE FALLEN ANGELS VALUE FUND
THE FALLEN ANGELS INCOME FUND
EXPENSE ILLUSTRATION
JULY 31, 2008 (UNAUDITED)
Expense Example
As a shareholder of the Fallen Angels Funds, you incur ongoing costs which typically consist of management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period, February 1, 2008 through July 31, 2008.
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 this Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
AMM FUNDS
THE FALLEN ANGELS VALUE FUND
THE FALLEN ANGLES INCOME FUND
EXPENSE ILLUSTRATION - CONTINUED
JULY 31, 2008 (UNAUDITED)
Fallen Angels Value Fund
Beginning Account Value | Ending Account Value | Expenses Paid During Period * | |
2/1/2008 | 7/31/2008 | 2/1/2008 to 7/31/2008 | |
Actual | $1,000.00 | $954.07 | $9.57 |
Hypothetical (5% Annual | |||
Return before expenses) | $1,000.00 | $1,015.07 | $9.87 |
* Expenses are equal to the Fund's annualized expense ratio of 1.97%, multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
Fallen Angels Income Fund
Beginning Account Value | Ending Account Value | Expenses Paid During Period * | |
2/1/2008 | 7/31/2008 | 2/1/2008 to 7/31/2008 | |
Actual | $1,000.00 | $943.56 | $10.10 |
Hypothetical (5% Annual | |||
Return before expenses) | $1,000.00 | $1,014.67 | $10.27 |
* Expenses are equal to the Fund's annualized expense ratio of 2.09%, multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
AMM FUNDS
THE FALLEN ANGELS VALUE FUND
THE FALLEN ANGLES INCOME FUND
TRUSTEES AND OFFICERS
JULY 31, 2008 (UNAUDITED)
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 serves as a Trustee until the termination of the Trust unless the Trustee dies, resigns, retires or is removed.
Name, Address and Age | Position & Length of Time Served with the Trust | Number of Portfolios Overseen | Principal Occupations During Past 5 Years and Current Directorships |
Kelly C. Huang c/o American Money Management P.O. Box 675203 Rancho Santa Fe, CA 92067 Age: 42 | Trustee since August 2006. | 2 | Management Consultant, self-employed (2002-present); Consultant, East Bay Small Business Development Center (2007-present); Consultant, Pyxis (2/2002-4/2002) (medical equipment); Product Manager, Supplypro (2000-2001) (industrial supply) |
Ingram S. Chodorow Placontrol, Inc. 12760 High Bluff Drive Suite 210 San Diego, CA 92130 Age: 69 | Trustee since August 2006. | 2 | President/CEO, Placontrol, Inc. (1973-present) (manufacturing and marketing dental flossers); CEO, Redfield Corp. (1987-2002) (manufacturing and marketing medical devices); CEO/President, Technalytics, Inc. (1969-present) (medical patents licensing) |
Linda J. Rock 1946 Zapo St. Del Mar, CA 92014 Age: 51 | Trustee since August 2006. | 2 | Management consultant, self-employed (1990-present); Partner, Venture Management Associates (1999-2003) (investment banking, corporate development); Director, Garden Fresh Restaurant Corp (1986-1990) (restaurant chain), Consultant, Bain & Company (1983-1986). |
Miro Copic c/o American Money Management P.O. Box 675203 Rancho Santa Fe, CA 92067 Age: 46 | Trustee since August 2006. | 2 | President/CEO, BottomLine Marketing (2001-present) (marketing); Senior Vice President, Marketing and Product Management, Hasbro, Inc. (Wizards of the Coast), (media/entertainment); (2002-2003); CEO, iGrapevine, ideaEdge Ventures (2001-2002); NewsCorp (1997-2000); Savoy Brands (1994-1997); PepsiCo (1987-1994) |
AMM FUNDS
THE FALLEN ANGELS VALUE FUND
THE FALLEN ANGLES INCOME FUND
TRUSTEES AND OFFICERS - CONTINUED
JULY 31, 2008 (UNAUDITED)
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.
Name, Address, and Age | Position and Length of Time Served with the Trust | Number of Portfolios Overseen | Principal Occupations During Past 5 Years and Current Directorships |
Gabriel B. Wisdom1 P.O. Box 675203 Rancho Santa Fe, CA 92067 Age: 58 | Trustee since June 2006; President since August 2006. | 2 | Chief Executive Officer and Managing Director, American Money Management, LLC (1999 to present) |
Michael J. Moore P.O. Box 675203 Rancho Santa Fe, CA 92067 Age 32 | Treasurer since August 2006. | N/A | Chief Investment Officer, American Money Management (2001 to present); |
Joseph D. Dang P.O. Box 675203 Rancho Santa Fe, CA 92067 Age: 31 | Secretary since June 2006; CCO since August 2006. | N/A | Counsel and Chief Compliance Officer, American Money Management, LLC (2005 to present); Financial Analyst/Financial Planner, Ayco (financial planning subsidiary of Goldman Sachs) (2004 to 2005); Contract Attorney (2003; 4/2005-7/2005); University of San Diego School of Law (1999 to 2002) |
1 Gabriel B. Wisdom is considered an "Interested” Trustee as defined in the Investment Company Act of 1940, as amended, because he is an officer of the Trust and President of the Funds' investment adviser.
AMM FUNDS
THE FALLEN ANGELS VALUE FUND
THE FALLEN ANGELS INCOME FUND
ADDITIONAL INFORMATION - CONTINUED
JULY 31, 2008 (UNAUDITED)
Additional Information
The Funds’ Statement of Additional Information ("SAI") includes additional information about the trustees and is available, without charge, upon request. You may call toll-free (866) 663-8023 to request a copy of the SAI or to make shareholder inquiries.
Proxy Voting
The Funds’ Advisor is responsible for exercising the voting rights associated with the securities held by the Fund. A description of the policies and procedures used by the Advisor in fulfilling this responsibility is available without charge by calling (866) 663-8023. It is also included in the Funds’ State of Additional Information, which is available on the Securities and Exchange Commission’s website at http://www.sec.gov.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and information regarding how the Fund voted proxies during the most recent 12-month period ended June 30, are available without charge upon request by (1) calling the Fund at (800) 595-4866 and (2) from Fund documents filed with the Securities and Exchange Commission ("SEC") on the SEC's website at www.sec.gov.
Portfolio Holdings
The Funds file 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 April 30 and October 31. The Fund’s 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 the Fund at (866) 663-8023.
Board of Trustees
Ingram S. Chodorow
Miro Copic
Kelly C. Huang
Linda J. Rock
Gabriel B. Wisdom
Investment Adviser
American Money Management, LLC
P.O. Box 675203
Rancho Santa Fe, CA 92067
Dividend Paying Agent,
Shareholders’ Servicing Agent,
Transfer Agent
Mutual Shareholder Services, LLC
Custodian
U.S. Bank, NA
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 AMM Funds. 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.
(a) As of the end of the period covered by this report, the registrant has adopted a code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third part.
(b) For purposes of this item, “code of ethics” means written standards that are reasonably designed to deter wrongdoing and to promote:
(1) Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;
(2) Full, fair, accurate, timely, and understandable disclosure in reports and documents that a registrant files with, or submits to, the Commission and in other public communications made by the registrant;
(3) Compliance with applicable governmental laws, rules, and regulations;
(4) The prompt internal reporting of violations of the code to an appropriate person or persons identified in the code; and
(5) Accountability for adherence to the code.
(c) Amendments: During the period covered by the report, there have not been any amendments to the provisions of the code of ethics.
(d) Waivers: During the period covered by the report, the registrant has not granted any express or implicit waivers from the provisions of the code of ethics.
(e) Not applicable.
(f) Code of Ethics is filed herewith.
Item 3. Audit Committee Financial Expert.
The Board has determined that no one on the committee qualified as a financial expert; however the Board also determined that collectively the Audit Committee members have the requisite knowledge and experience to perform the Audit Committee duties.
Item 4. Principal Accountant Fees and Services.
(a)
Audit Fees
FY 2008
$19,000
(b)
Audit-Related Fees
Registrant
Adviser
FY 2008
$ 0
$ 0
(c)
Tax Fees
Registrant
Adviser
FY 2008
$ 3,000
$ 0
Nature of the fees:
Preparation of tax returns
(d)
All Other Fees
Registrant
Adviser
FY 2008
$ 0
$ 0
(e)
(1)
Audit Committee’s Pre-Approval Policies
The audit committee has not adopted pre-approval policies and procedures described in paragraph (c)(7) of Rule 2-01 of Regulation S-X.
(2)
Percentages of Services Approved by the Audit Committee
None of the services described in paragraph (b) through (d) of this Item were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
(f)
During audit of registrant's financial statements for the most recent fiscal year, less than 50 percent of the hours expended on the principal accountant's engagement were attributed to work performed by persons other than the principal accountant's full-time, permanent employees.
(g)
The aggregate non-audit fees billed by the registrant's accountant for services rendered to the registrant, and rendered to the registrant's investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant:
Registrant
Adviser
FY 2008
$ 3,000
$ 0
(h)
Not applicable. The auditor performed no services for the registrant's investment adviser or any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant.
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)
Based on an evaluation of the registrant’s disclosure controls and procedures as of July 22, 2008, the disclosure controls and procedures are reasonably designed to ensure that the information required in filings on Forms N-CSR is recorded, processed, summarized, and reported on a timely basis.
(b)
There were no significant changes in the registrant’s internal control over financial reporting that occurred during the registrant’s first 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.
AMM Funds
By /s/Gabriel B. Wisdom, President
Gabriel B. Wisdom
President
Date: October 9, 2008
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/Gabriel B. Wisdom, President
Gabriel B. Wisdom
President
Date October 9, 2008
By /s/Michael Moore
Michael Moore
Treasurer
Date October 9, 2008