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 811-22054
Simple Capital Trust
(Exact name of registrant as specified in charter)
One Apple Hill
Suite 316
Natick, MA 01760
(Address of principal executive offices)(Zip code)
Oriosto Medrano Santana
One Apple Hill
Suite 316
Natick, Massachusetts 01760
(Name and address of agent for service)
Registrant's telephone number, including area code: 508-655-7948
Date of fiscal year end: June 30
Date of reporting period: December 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.
SEMI-ANNUAL REPORT
THE SIMPLE CAPITAL FUND
December 31, 2008
(UNAUDITED)
SIMPLE CAPITAL FUND
PERFORMANCE ILLUSTRATION
DECEMBER 31, 2008 (UNAUDITED)
AVERAGE ANNUAL RATE OF RETURN (%)
FOR PERIOD ENDED JUNE 30, 2008*
Since Inception (8/17/2007) | |
Simple Capital Fund (1) (10.40)% | |
S&P 500 Index (2) (9.90)% |
*August 17, 2007 (commencement of investment operations) through December 31, 2008.
(1) This chart assumes an initial investment of $10,000 made on 8/17/2007 (commencement of operations). Total return is based on the net change in NAV and assumes reinvestment of all dividends and other distributions.
Performance figures represent past performance, which is not predictive of future performance. Investment return and principal value will fluctuate so that your shares, when redeemed, may be worth more or less than their original cost. The returns shown do not reflect taxes that a shareholder would pay on Fund distributions or on redemption of Fund shares.
For performance information current to the most recent month-end, please call (866) 694-6672.
(2) 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 not reflect any deductions for fees, expenses or taxes.
THE SIMPLE CAPITAL FUND
PORTFOLIO ANALYSIS
DECEMBER 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.
|
| The Simple Capital Fund |
|
Schedule of Investments | |||
|
| December 31, 2008 (Unaudited) |
|
Shares | Value | ||
COMMON STOCKS - 90.31% | |||
Agriculture Production-Livestock & Animal Specialties - 0.47% | |||
100 | Companhia Vale ADS (Brazil) | $ 1,211 | |
Bottled & Canned Soft Drinks - 2.95% | |||
250 | Mexican Economic Development, Inc. (Mexico) | 7,532 | |
Cement, Hydraulic - 3.23% | |||
901 | Cemex SAB de CV ADR (Mexico) * | 8,235 | |
Cogneration Services & Small Power Producers - 0.39% | |||
1,129 | MMC Energy, Inc. * | 994 | |
Crude Petroleum & Natural Gas - 6.70% | |||
600 | Breitburn Energy Partners | 4,230 | |
400 | Pengrowth Energy Trust | 3,048 | |
400 | Petroleo Brasileiro (Brazil) | 9,796 | |
17,074 | |||
Deep Sea Foreign Transportation - 2.72% | |||
650 | Dryships, Inc. | 6,929 | |
Drilling Oil & Gas Wells - 3.15% | |||
4,023 | Chevron Prime | 6,879 | |
136 | Precision Drilling Trust | 1,138 | |
8,017 | |||
Electronic & Other Electrical Equipment - 4.77% | |||
750 | General Electric Co. | 12,150 | |
Finance Lessors - 0.71% | |||
400 | CIT Group, Inc. | 1,816 | |
Finance Services - 6.84% | |||
925 | American Express Company | 17,159 | |
700 | Consumer Portfolio Services, Inc. * | 276 | |
17,435 | |||
Fire, Marine & Casualty Insurance - 10.09% | |||
8 | Berkshire Hathaway, Inc. Class B * | 25,712 | |
General Industrial Machinery & Equipment - 1.38% | |||
100 | Illinois Tool Works, Inc. | 3,505 | |
Metal Mining - 1.89% | |||
300 | Southern Copper Corp. | 4,818 | |
Miscellaneous Industrial & Commercial Machinery & Equipment - 1.95% | |||
100 | Eaton Corp. | 4,971 | |
Miscellaneous Manufacturing Industries - 0.93% | |||
200 | International Game Technology | 2,378 | |
Operative Builders - 0.04% | |||
2,700 | WCI Communities, Inc. | 105 | |
Perfumes, Cosmetics & Other Toilet Preparations - 8.07% | |||
300 | Colgate-Palmolive Co. | 20,562 | |
Pharmaceutical Preparations - 6.31% | |||
500 | Sanofi-Aventis (France) | 16,080 | |
Plastic Materials, Synthetic Resins & Nonvulcan Elastomers - 4.79% | |||
400 | Dow Chemical Co. | 6,036 | |
100 | Rohm & Haas Co. | 6,179 | |
12,215 | |||
Railroads, Line-Haul Operating - 2.97% | |||
100 | Burlington Northern Santa Fe Corp. | 7,571 | |
Savings Institution, Federally - 0.02% | |||
5,805 | PFF Bancorp, Inc. | 41 | |
Security Brokers, Dealers & Flotation Companies - 1.66% | |||
50 | Goldman Sachs Group, Inc. | 4,220 | |
Semiconductors & Related Devices - 2.24% | |||
400 | MEMC Electronics * | 5,712 | |
Services-Advertising Agencies - 1.06% | |||
100 | Omnicom Group, Inc. | 2,692 | |
Services-Business Services, NE - 1.00% | |||
200 | Comscore, Inc. * | 2,550 | |
Services-Computer Programming, Data Processing, Etc. - 1.74% | |||
100 | Factset Research Systems, Inc. | 4,424 | |
Services-Management Services - 0.80% | |||
1,200 | CRM Holdings, Ltd. * | 2,040 | |
Services-Personal Services - 3.46% | |||
300 | Weight Watchers International, Inc. | 8,826 | |
Services-Prepackaged Software - 0.76% | |||
100 | Microsoft Corp. | 1,944 | |
State Commercial Banks - 4.32% | |||
950 | Banco Itau Holding Financeira SA ADS (Brazil) | 11,020 | |
Trucking & Courier Services (No Air) - 2.16% | |||
100 | United Parcel Services, Inc. | 5,516 | |
Wholesale-Petroleum & Petroleum Products (No Bulk Stations) - 0.74% | |||
500 | Macquarie Infrastructure Co., LLC | 1,885 | |
TOTAL FOR COMMON STOCKS (Cost $323,872) - 90.31% | 230,180 | ||
SHORT TERM INVESTMENTS - 14.07% | |||
35,862 | Huntington Money Market Fund IV 1.00% ** (Cost $35,862) | 35,862 | |
TOTAL INVESTMENTS (Cost $359,734) - 104.38% | 266,042 | ||
LIABILITIES IN EXCESS OF OTHER ASSETS - (4.38)% | (11,155) | ||
NET ASSETS - 100.00% | $ 254,887 | ||
* Non-income producing securities during the period. | |||
** Variable rate security; the coupon rate shown represents the yield at December 31, 2008. | |||
ADR - American Depository Reciept | |||
The accompanying notes are an integral part of these financial statements. |
| The Simple Capital Fund |
|
Statement of Assets and Liabilities | ||
| December 31, 2008 (Unaudited) |
|
Assets: | ||
Investments in Securities, at Value (Cost $359,734) | $ 266,042 | |
Receivables: | ||
Dividends and Interest | 864 | |
Due from Advisor | 5,111 | |
Total Assets | 272,017 | |
Liabilities: | ||
Payables: | ||
Accrued Management Fees (Note 3) | 197 | |
Securities Purchased | 10,067 | |
Other Accrued Expenses | 6,866 | |
Total Liabilities | 17,130 | |
Net Assets | $ 254,887 | |
Net Assets Consist of: | ||
Paid In Capital | $ 396,537 | |
Accumulated Undistributed Net Investment Income | 1,236 | |
Accumulated Undistributed Realized Loss on Investments | (49,194) | |
Unrealized Depreciation in Value of Investments | (93,692) | |
Net Assets, for 40,827 Shares Outstanding | $ 254,887 | |
Net Asset Value Per Share | $ 6.24 | |
The accompanying notes are an integral part of these financial statements. |
| The Simple Capital Fund |
|
Statement of Operations | ||
| For the period ended December 31, 2008 (Unaudited) |
|
. | ||
Investment Income: | ||
Dividends (net of $265 of foreign tax withheld) | $ 3,383 | |
Interest | 191 | |
Total Investment Income | 3,574 | |
Expenses: | ||
Advisory Fees (Note 3) | 1,489 | |
Audit Fees | 5,796 | |
Transfer Agent Fees | 4,387 | |
Blue Sky Fees | 3,193 | |
Custodial Fees | 1,814 | |
Trustee Fees | 1,334 | |
Printing & Mailing | 202 | |
Miscellaneous Fees | 605 | |
Insurance Fees | 717 | |
Total Expenses | 19,537 | |
Fees Waived and Reimbursed by the Advisor (Note 3) | (17,453) | |
Net Expenses | 2,084 | |
Net Investment Income | 1,490 | |
Realized and Unrealized Gain (Loss) on Investments: | ||
Realized Loss on Investments | (43,604) | |
Net Change in Unrealized Depreciation on Investments | (43,306) | |
Realized and Unrealized Loss on Investments | (86,910) | |
Net Decrease in Net Assets Resulting from Operations | $ (85,420) | |
The accompanying notes are an integral part of these financial statements. |
The Simple Capital Fund | |||
Statements of Changes in Net Assets | |||
|
|
|
|
(Unaudited) | |||
Six Months | Period * | ||
Ended | Ended | ||
12/31/2008 | 6/30/2008 | ||
Increase (Decrease) in Net Assets From Operations: | |||
Net Investment Income | $ 1,490 | $ 3,933 | |
Realized Gain (Loss) on Investments | (43,604) | 4,602 | |
Unrealized Depreciation on Investments | (43,306) | (50,386) | |
Net Decrease in Net Assets Resulting from Operations | (85,420) | (41,851) | |
Distributions to Shareholders: | |||
Net Investment Income | (4,189) | - | |
Realized Gains | (10,192) | - | |
Total Distributions Paid to Shareholders | (14,381) | - | |
Capital Share Transactions (Note 4) | 28,724 | 267,815 | |
Total Increase (Decrease) in Net Assets | (71,077) | 225,964 | |
Net Assets: | |||
Beginning of Period | 325,964 | 100,000 | |
End of Period (Including Undistributed Net Investment Income of $1,236, | $ 254,887 | $ 325,964 | |
and $3,933, respectively) | |||
* For the period August 17, 2007 (commencement of investment operations) through June 30, 2008. | |||
The accompanying notes are an integral part of these financial statements. |
The Simple Capital Fund | |||
Financial Highlights | |||
Selected data for a share outstanding throughout the period. | |||
(Unaudited) | |||
Six Months | Period * | ||
Ended | Ended | ||
12/31/2008 | 6/30/2008 | ||
Net Asset Value, at Beginning of Period | $ 8.96 | $ 10.00 | |
Income From Investment Operations: | |||
Net Investment Income ** | 0.04 | 0.15 | |
Net Gain (Loss) on Securities (Realized and Unrealized) | (2.38) | (1.19) | |
Total from Investment Operations | (2.34) | (1.04) | |
Distributions: | |||
Net Investment Income | (0.11) | - | |
Realized Gains | (0.27) | - | |
Total from Distributions | (0.38) | - | |
Net Asset Value, at End of Period | $ 6.24 | $ 8.96 | |
Total Return *** | (26.07%) | (10.40%) | |
Ratio of Expenses to Average Net Assets | |||
Before Waivers **** | 13.14% | 12.10% | |
After Waivers **** | 1.40% | 1.40% | |
Ratio of Net Investment Income to Average Net Assets | |||
Before Waivers **** | (10.74%) | (8.98%) | |
After Waivers **** | 1.00% | 1.71% | |
Portfolio Turnover | 97.19% | 121.02% | |
* For the period August 17, 2007 (commencement of investment operations) through June 30, 2008. | |||
** Per share net investment income has been determined on the basis of average shares outstanding during the period. | |||
*** Assumes reinvestment of dividends. | |||
**** Annualized | |||
The accompanying notes are an integral part of these financial statements. |
SIMPLE CAPITAL FUND
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2008 (UNAUDITED)
Note 1. Organization
The Simple Capital Fund (the “Fund”), is a non-diversified series of the Simple Capital Trust (the “Trust”), an open-end regulated investment company that was organized as a Massachusetts Business Trust on February 12, 2007. The Trust is permitted to issue an unlimited number of shares of beneficial interest of separate series, each series representing a distinct fund with its own investment objective and policies. At present, there is only one series authorized by the Trust. Simple Capital, LLC is the advisor to the Fund (the “Advisor”). The Fund’s investment objective is to provide long-term capital appreciation. The Fund’s principal investment strategy is value investing.
Note 2. Summary of Significant Accounting Policies
The following is a summary of significant accounting policies employed by the Fund in preparing its financial statements:
Security Valuation - Security Valuations: The Fund’s investments are valued on the basis of official closing prices or market quotations. If official closing prices or market quotations are not readily available, or if a securities value has been materially affected by events occurring after the close of the market in which the security is principally traded but before 4:00 p.m. eastern time, that security will be valued at the fair value determined in good faith by the Advisor, subject to the review and oversight of the Fund’s Board of Trustees. The Fund may use an independent pricing service to determine the fair value of specific securities.
Investors may attempt to take advantage of anticipated price movements in securities held by the Fund based on events occurring after the close of a foreign market that may not be reflected in the Fund's NAV (referred to as “price arbitrage”). To the extent that the Fund does not accurately value securities, short-term arbitrage traders may dilute the NAV of the Fund, which negatively impacts long-term shareholders. Fair valuation of the Fund’s portfolio securities can serve to reduce arbitrage opportunities by short-term traders, but there is no assurance the Fund’s fair valuation policies will prevent dilution of the Fund’s NAV.
Equity Securities The Fund intends to be fully invested in equity securities. These securities generally are valued by using market quotations, but may be valued on the basis of prices furnished by a pricing service when the Advisor believes such prices accurately reflect the fair market value of such securities. Securities that are traded on any stock exchange or on the NASDAQ over-the-counter market are generally valued by the pricing service at the last quoted sale price. Lacking a last sale price, an equity security is generally valued by the pricing service at its last bid price. When market quotations are not readily available, when the Advisor determines that the market quotation or the price provided by the pricing service does not accurately reflect the current market value, or when restricted or illiquid securities are bei ng valued, such securities are valued as determined in good faith by the Board of Trustees. 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- The Fund may invest in money market instruments and other securities in U.S. dollar and non-U.S. dollar denominated money market instruments and other securities, including debt obligations issued by the U.S. and foreign national, provincial, state or municipal governments or their political subdivisions. The Fund may also invest in (1) money market instruments and other securities issued by international organizations designated or supported by governmental entities (e.g., the World Bank and the European Community); (2) non-dollar securities issued by the U.S. government; and (4) foreign corporations includes short-term government securities, floating and variable rate notes, commercial paper, repurchase agreements, CDs, time deposits, bankers' acceptance, and other short-term liquid instruments.
The Fund may also invest in U.S. and foreign government securities, corporate debt obligations variable amount master demand notes, variable and floating rate securities, repurchase agreements, commercial paper, bank instruments, real estate investment trusts (REITS) as well as other investment companies, convertible securities warrants and depository receipts.
Money market instruments and other securities in which the Fund may invest generally are valued by using market quotations, but may be valued on the basis of prices furnished by a pricing service when the Advisor believes such prices accurately reflect the fair market value of such securities. A pricing service utilizes electronic data processing
SIMPLE CAPITAL FUND
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2008 (UNAUDITED)
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 Advisor 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 Advisor, subject to review of the Board of Trustees.
New Accounting Pronouncements - In September 2006, FASB issued Financial Accounting Standards (FAS) No. 157 "Fair Value Measurements." This standard establishes a single authoritative definition of fair value, sets out a framework for measuring fair value and requires additional disclosure about fair value measurements. FAS No. 157 applies to fair value measurements already required or permitted by existing standards. In accordance with FAS No. 157, fair value is defined as the price that would be received by the Fund upon selling an asset or paid by the Fund to transfer a liability in an orderly transaction between market participants at the measurement date. In the absence of a principal market for the asset or liability, the assumption is that the transaction occurs on the most advantageous market for the asset or liability. FAS No. 157 established a three-tier fair value hierarchy that prior itizes the assumptions, also known as "inputs", to valuation techniques used by market participants to measure fair value. The term "inputs" refers broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk, for example, the risk inherent in a particular valuation technique used to measure fair value (such as pricing model) and/or the risk inherent in the inputs to the valuation technique. Inputs may be observable or unobservable. Observable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs are inputs that reflect the reporting entity's own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The valuation techniques used to measu re fair value should maximize the use of observable inputs and minimize the use of unobservable inputs. The three-tier hierarchy of inputs is summarized in three levels with the highest priority given to Level 1 and the lowest priority given to Level 3: Level 1 - quoted prices in active markets for identical securities, Level 2 - other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.) and Level 3 - significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments). The following is a summary of the inputs used as of December 31, 2008 in valuing the Fund's assets carried at fair value:
Investments Other Financial
Valuation Inputs: In Securities Instruments
Level 1 – Quoted Prices $266,042 $ -
Level 2 – Significant Other Observable Inputs - -
Level 3 – Significant Unobservable Inputs - -
Total $266,042 $ -
The Fund adopted Financial Accounting Standards Board (FASB) Interpretation No. 48 - Accounting for Uncertainty in Income Taxes on August 17, 2007. FASB Interpretation No. 48 requires the tax effects of certain tax positions to be recognized. These tax positions must meet a “more likely than not” standard that based on their technical merits, have a more than fifty 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 Fund does not believe that any adjustments were necessary to the financial statements at adoption.
Short Sales- The Fund may sell a security it does 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.
Share Valuation- The price (net asset value) of the shares of the 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.
SIMPLE CAPITAL FUND
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2008 (UNAUDITED)
Income Taxes- The Fund intends 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.
Distributions to Shareholders- The Fund intends to distribute to its shareholders substantially all of its net realized capital gains and net investment income, if any, at year-end. Distributions will be recorded on ex-dividend date. See Note 7 for additional dividend information.
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.
Security Transaction Timing- The Fund follows industry practice and records security transactions on the trade date. The specific identification method is used for determining gains or losses for financial statements and income tax purposes. Dividend income is recorded on the ex-dividend date and interest income is recorded on an accrual basis. Discounts and premiums are amortized over the useful lives of the respective securities. Withholding taxes on foreign dividends will be provided for in accordance with the Fund’s understanding of the applicable country’s tax rules and rates.
Note 3. Investment Management Agreement
The Fund has a management agreement with the Advisor to furnish investment advisory and management services to the Fund. The Fund will pay the Advisor a monthly fee based on the Fund’s average daily net assets at the annual rate of 1.00%. For the period ending December 31, 2008, the Advisor earned a fee of $1,489 from the Fund.
The Advisor has contractually agreed to waive fees and/or reimburse the expenses but only to the extent necessary to maintain the Fund’s total annual operating expenses (excluding brokerage costs; borrowing costs, such as (a) interest and (b) dividends on securities sold short; taxes; and extraordinary expenses) at 1.40% of its average daily net assets for the first five years of the operations of the Fund. The Advisor reimbursed the Fund $17,453 for expenses. The Advisor owed the Fund $5,111 and the Fund owed the Advisor $197 at December 31, 2008.
SIMPLE CAPITAL FUND
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2008 (UNAUDITED)
Note 4. Capital Share Transactions
The Fund is authorized to issue an unlimited number of shares of separate series. The total paid-in capital as of December 31, 2008 was $396,537. Transactions in capital were as follows:
July 1, 2008 through December 31, 2008 | ||
Shares | Amount | |
Shares sold | 2,847 | $19,399 |
Shares reinvested | 2,365 | 14,381 |
Shares redeemed | (764) | (5,056) |
Increase | 4,448 | $28,724 |
August 17, 2007 (commencement of investment operations) through June 30, 2008 | ||
Shares | Amount | |
Shares sold | 29,060 | $292,830 |
Shares reinvested | - | - |
Shares redeemed | (2,681) | (25,015) |
Increase | 26,379 | $267,815 |
Note 5. Investment Transactions
For the period ending December 31, 2008, purchases and sales of investment securities other than U.S. Government obligations and short-term investments aggregated $299,794 and $272,176 respectively.
Note 6. Tax Matters
For Federal income tax purposes, the cost of investments owned at December 31, 2008 was $359,734, including short-term investments.
For federal income tax purposes the Fund paid a short term capital gain distribution of $0.2650 per share for $10,192 and an ordinary income distribution of $0.1089 for $4,189 for a total distribution of $14,381 for the period ended December 31, 2008.
At December 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:
Appreciation | Depreciation | Net Appreciation(Depreciation) |
$10,795 | ($104,487) | ($93,692) |
As of December 31, 2008 the components of distributable earnings on a tax basis were as follows:
Undistributed net investment income | $1,236 |
Undistributed short-term capital gain | ($43,600) |
Unrealized depreciation | ($99,286) |
The difference between the book cost and tax cost of investments represents wash sale transactions.
Note 7. 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. Norma Guerrero owns approximately 53% of the Fund.
SIMPLE CAPITAL FUND
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2008 (UNAUDITED)
Note 8. New Accounting Pronouncement
In March 2008, FASB issued the Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“SFAS 161”). SFAS 161 is effective for fiscal years and interim periods beginning after November 15, 2008. SFAS 161 requires enhanced disclosures about the Fund’s derivative and hedging activities, including how such activities are accounted for and their effect on the Fund’s financial position, performance and cash flows. Management is currently evaluating the impact the adoption of SFAS 161 will have on the Fund’s financial statements and related disclosures.
The Simple Capital Fund | |||
Expense Illustration | |||
December 31, 2008 (Unaudited) | |||
Expense Example | |||
As a shareholder of the Simple Capital Fund, 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, July 1, 2008 through December 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. | |||
Beginning Account Value | Ending Account Value | Expenses Paid During the Period* | |
July 1, 2008 | December 31, 2008 | July 1,2008 to December 31,2008 | |
Actual | $1,000.00 | $739.26 | $6.10 |
Hypothetical | |||
(5% Annual Return before expenses) | $1,000.00 | $1,018.05 | $7.08 |
* Expenses are equal to the Fund's annualized expense ratio of 1.40%, multiplied by the average account value over the period, multiplied by 183/365 (to reflect the one-half year period). |
THE SIMPLE CAPITAL FUND
ADDITIONAL INFORMATION
DECEMBER 31, 2008 (UNAUDITED)
TRUSTEES AND OFFICERS
The following table provides information regarding each Trustee who is not an “interested person” of the Trust, as defined in the Investment Company Act of 1940.
Name, Age and Address | Position & Length of Time Served with the Trust | Principal Occupations During Past 5 Years and Current Directorships |
Peter Delaney, 42 7 Oak Court, Poughkeepsie, NY 12603 | since inception of Fund and until a successor is elected and qualified | Founder and President, Staff Line, Inc., since 2000. |
Jose P. Sanchez, 34 40 Kingston Street, Lawrence, MA 01843 | since inception of Fund and until a successor is elected and qualified | Engineer, Flir Systems, since 1996 |
Ryan Hanna, 37 11 Langdon Avenue, Watertown, MA 02472 | since inception of Fund and until a successor is elected and qualified | Securities Analyst, Cambridge Trust Company, since 2001 |
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, Age and Address | Position and Length of Time Served with the Fund | Principal Occupations During Past 5 Years and Current Directorships |
Oriosto Medrano, 34 c/o Simple Capital, LLC One Apple Hill Suite 316 Natick, MA 01760 | Chief Executive Officer and Chief Compliance Officer Since inception of Fund and until a successor is elected and qualified | Chief Executive Officer and Co-Managing Member, Simple Capital, LLC – October 2005 through present; Consultant – BISYS Regulatory Services, 2004-2007; Examiner, U.S. Securities and Exchange Commission, 2003-2004, Paralegal, Hale & Dorr, LLP, 2001-2003. |
Barry McNeil, 38 c/o Simple Capital, LLC One Apple Hill Suite 316 Natick, MA 01760 | Treasurer, Principal Accounting and Financial Officer Since inception of Fund and until a successor is elected and qualified | Chief Financial Officer and Co-Managing Member, Simple Capital, LLC – January 2007 through present; The Mathworks 2002 through 2007, John Hancock Financial Services 1995- 2002 |
THE SIMPLE CAPITAL FUND
ADDITIONAL INFORMATION (CONTINUED)
DECEMBER 31, 2008 (UNAUDITED)
The Fund's Statement of Additional Information ("SAI") includes additional information about the trustees and is available, without charge, upon request. You may call toll-free 1 (866) 694-6672 to request a copy of the SAI or to make shareholder inquiries.
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 6-month period ended December 31 are available without charge upon request by (1) calling the Fund at (866) 694-6672 and (2) from Fund documents filed with the Securities and Exchange Commission ("SEC") on the SEC's website at www.sec.gov.
The Fund files a complete schedule of investments with the SEC for the first and third quarter of each fiscal year on Form N-Q. The Fund’s first and third fiscal quarters end on September 30 and March 31. The Form N-Q filing must be made within 60 days of the end of the quarter. The 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 1 (866) 694-6672.
Board of Trustees
Peter Delaney
Jose P. Sanchez
Ryan Hanna
Investment Adviser
Simple Capital, LLC
One Apple Hill, Suite 316
Natick, Massachusetts 01760
Dividend Paying Agent,
Shareholders’ Servicing Agent,
Transfer Agent
Mutual Shareholder Services, LLC
8000 Town Centre Drive, Suite 400
Broadview Heights, OH 44147
Custodian
The Huntington National Bank
7 Easton Oval, Columbus, Ohio 43219
Independent Registered Public Accounting Firm
Sanville & Company
1514 Old York Road, Abington, PA 19001
This report is provided for the general information of the shareholders of The Simple Capital Fund. This report is not intended for distribution to prospective investors in the fund, unless preceded or accompanied by an effective prospectus.
Item 2. Code of Ethics Not applicable.
Item 3. Audit Committee Financial Expert Not applicable.
Item 4. Principal Accountant Fees and Services Not applicable.
Item 5. Audit Committee of Listed Companies. Not applicable.
Item 6. Schedule of Investments. Included in Report to Shareholders.
Item 7. Disclosure of Closed End fund Proxy Voting Policies/Procedures. 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. Not applicable.
Item 11. Controls and Procedures.
(a)
Disclosure Controls & Procedures. Principal executive and financial officers have concluded that Registrant’s disclosure controls & procedures are effective based on their evaluation as of a date within 90 days of the filing date of this report.
(b)
Internal Controls. There were no significant changes in Registrant’s internal controls of in other factors that could significantly effect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
Item 12. Exhibits.
(a)(1)
EX-99.CERT. Filed herewith.
(a)(2)
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, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Simple Capital Trust
By /s/ Oriosto Medrano Santana
*Oriosto Medrano Santana
President and Treasurer
Date: March 4, 2009
*Print the name and title of each signing officer under his or her signature.