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 811-04010
OCM Mutual Fund
---------------
(Exact name of registrant as specified in charter)
1536 Holmes Street
Livermore, California 94550
(Address of principal executive offices) (Zip code)
Gregory M. Orrell
Orrell Capital Management, Inc
1536 Holmes Street
Livermore, California 94550
(Name and address of agent for service)
Registrant's telephone number, including area code: (925) 455-0802
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Date of fiscal year end: November 30
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Date of reporting period: May 31, 2008
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ITEM 1. REPORT TO STOCKHOLDERS.
LOGO
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OCM GOLD FUND
=============
SEMI-ANNUAL REPORT
MAY 31, 2008
(UNAUDITED)
"THE UNLIMITED EXPANSION OF BANK PAPER HAS DRIVEN BRITAIN'S GOLD OUT OF
CIRCULATION AND IS CARRYING HER RAPIDLY TO BANKRUPTCY AS IT DID FRANCE, AS IT
DID US AND WILL DO US AGAIN SHOULD PAPER BE CIRCULATED EXCEPT UNDER THE MOST
RIGOROUS LIMITATIONS."
Thomas Jefferson, 1813
Dear Fellow Shareholder:
For the fiscal six month period ending May 31, 2008 your Fund gained 4.95%
(+0.23 after max. sales load) versus a decline of 4.47% for the S&P 500. The
Philadelphia Gold and Silver Index ("XAU") advanced 6.49% over the same period
as large cap gold shares outperformed your Fund's more diversified approach to
the gold industry of owning large and small cap mining shares. Over the long run
your Fund's strategy has outpaced the XAU index as demonstrated by the Fund's 3,
5 and 10 year track record versus the XAU (see table).
The unraveling of the credit markets continued in the first half of 2008,
forcing the Federal Reserve (the "Fed") to take unprecedented measures in order
to prevent a complete meltdown of the global financial system. In an effort to
provide liquidity to banks and brokerages, the Fed exchanged high quality
treasury bonds for much lower quality debt instruments including mortgage backed
securities and other asset backed securities of dubious value. Faced with the
choice of compromising the integrity of the dollar or risk systemic collapse,
the Fed has shown its willingness to sacrifice the dollar, in our opinion.
Consequently, the Fed's credibility as the steward of monetary policy is being
questioned by the market.
Repeated calls of "the worst is behind us" are but hopeful cries that are met
with revelations of more losses by financial institutions. The Fed engineered
bailout of Bear Stearns and their counterparties in derivative trades early in
the year was a stop-gap measure to buy time and hope. It appears both have run
out as government sponsored mortgage giants Fannie Mae and Freddie Mac with a
combined $5.3 trillion in debt teeter on the brink of insolvency threatening to
force the government to take the debt on to its balance sheet and thereby
doubling the amount of national debt outstanding.Additionally, share prices of
both regional and money center banks have collapsed as fear of the next casualty
of the credit market unraveling grips the markets raising the specter of further
government bailouts.
With confidence in financial markets fragile, gold has responded by trading
between $850 and $950 per ounce through the first half of the year with a brief
stint above $1,000 per ounce at the height of the Bear Stearns collapse (see
chart).We believe the environment for higher gold prices is excellent with gold
set to establish a new base of value above $1,000 per ounce. Major gold
producers, such as Goldcorp, Inc., Barrick Gold Corp., and NewmontMining Corp.,
are beginning to realize increased cash flow and earnings as gold price
increases are finally outstripping operating cost inflation. The lack of
operating leverage to higher gold prices, in our opinion, has led gold shares to
underperform the metal over the past year in contrast to gold shares historical
price movement ratio of 3 to 1 to the price of gold. Rising earnings for gold
shares should attract attention from investors in search of companies with
rising earnings versus the poor performance of earnings comparisons being
reported by a large segment of the economy, most notably finance and retail.
- 1 -
GOLD PRICE, DOLLAR PER OUNCE, LONDON PM FIX
Date US$
---- ---
4-Jan-00 281.50
3-Jul-00 287.65
2-Jan-01 271.10
2-Jul-01 268.35
2-Jan-02 278.35
1-Jul-02 312.10
2-Jan-03 343.80
1-Jul-03 350.20
2-Jan-04 415.25
1-Jul-04 394.80
4-Jan-05 427.75
1-Jul-05 432.60
3-Jan-06 530.00
3-Jul-06 622.95
2-Jan-07 639.75
2-Jul-07 654.75
2-Jan-08 846.75
1-Jul-08 937.50
Source: Global Insight
Share prices of junior gold producers and exploration and development companies
in general have dramatically underperformed the large cap gold shares. The
perceived higher risk profile of small cap stocks and the less liquid nature of
their share markets is the reason, in our opinion, along with the uncertainty of
the companies to tap capital markets for future funding. While we believe the
small caps in the gold sector represent excellent relative value to the large
caps at present, we are maintaining our disciplined tiered approach of owning
the major gold producers, with progressively smaller percentages of
intermediate/mid-tier producers, junior gold producers and exploration and
development companies. This allows your Fund to participate as investment
dollars move throughout the gold sector. Should values for junior mining shares
remain at depressed levels, major gold producers, in our opinion, will employ
growing cash balances to acquire relatively cheap ounces in the ground which
should lead to junior miners regaining investor interest.
In our opinion, the unraveling of the credit markets precipitated by the over
issuance of credit to marginal borrowers is far from over. We are entering a
period whereby lending institutions are contracting the availability of credit
in response to shrinking capital bases. A vicious cycle can be envisioned where
contracting credit leads to a serious economic downturn putting yet further
pressure on the banks' loan portfolios. The dilemma for the Fed will be to find
avenues to inject credit into the economy without destroying the value of the
U.S. dollar. It appears to us Fed Chairman Bernanke's theory of dropping money
from helicopters to stave off deflation may be tested. In any event, dollar
weakness could accelerate as markets view the Fed having to embrace inflation as
it did in the 1970's in an effort to stave off a prolonged recession. In a
period of depreciating financial assets, investors, including central banks,
will find comfort in the fact the gold is an owned asset and not someone else's
liability.
- 2 -
We appreciate your shareholding and confidence in the OCM Gold Fund and we look
forward to meeting the investment objective of preserving your purchasing power.
Should you have any questions regarding the Fund or gold, please contact your
financial adviser or you may contact us directly at 1-800-779-4681. For question
regarding your account, please contact Shareholder Service at 1-800-628-9403.
Sincerely,
/S/ GREGORY M. ORRELL /S/ TIMOTHY G. CHURCH
- ---------------------- ---------------------
Gregory M. Orrell Timothy G. Church
PORTFOLIO MANAGER ASSISTANT PORTFOLIO MANAGER
JULY 15, 2008
Performance as of May 31, 2008
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OCMGX OCMGX Philadelphia
(NAV) (max load) Gold Index (XAU)
- --------------------------------------------------------------------------------
Six Months + 4.95% + 0.23% + 6.49%
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One year +24.67% +19.08% +30.86%
- --------------------------------------------------------------------------------
3 year Annualized +35.65% +33.59% +29.50%
- --------------------------------------------------------------------------------
5 year Annualized +23.70% +22.55% +21.17%
- --------------------------------------------------------------------------------
10 Year Annualized +17.14% +16.61% +10.87%
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The returns shown include the reinvestment of all dividends but do not reflect
the deduction of taxes that a shareholder would pay on fund distributions or the
redemption of fund shares. Past performance is not indicative of future results.
The Philadelphia Gold and Silver Index (XAU) is an unmanaged
capitalization-weighted index composed of 16 companies listed on U.S. exchanges
involved in the gold and silver mining industry. The index is generally
considered as representative of the gold and silver share market.
- 3 -
OCM GOLD FUND
SCHEDULE OF INVESTMENTS - MAY 31, 2008
(UNAUDITED)
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SHARES VALUE
- --------------------------------------------------------------------------------
COMMON STOCKS 93.2%
MAJOR GOLD PRODUCERS 38.6%
20,000 AngloGold Ashanti Ltd. ADR ................... $ 695,800
75,000 Barrick Gold Corp. ........................... 3,021,750
10,000 Freeport-McMoRan Copper & Gold, Inc. ......... 1,157,100
270,000 Gold Fields Ltd. ADR ......................... 3,491,100
666,250 Goldcorp, Inc. ............................... 26,743,275
200,000 Harmony Gold Mining Co. Ltd. ADR* ............ 2,380,000
22,235 Kinross Gold Corp. ........................... 443,492
408,445 Kinross Gold Corp. ADR ....................... 8,156,647
32,200 Lihir Gold Ltd. ADR* ......................... 927,038
107,333 Lihir Gold Ltd.* ............................. 304,970
124,994 Newmont Mining Corp. ......................... 5,940,965
-------------
53,262,137
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INTERMEDIATE/MID-TIER GOLD PRODUCERS 25.3%
161,860 Agnico-Eagle Mines Ltd. ...................... 11,441,884
430,000 Eldorado Gold Corp.* ......................... 3,483,446
504,800 I AMGOLD Corp. ............................... 2,983,368
500,000 Oxiana Ltd. .................................. 1,473,112
140,000 Randgold Resources Ltd. ADR .................. 5,936,000
634,750 Yamana Gold, Inc. ............................ 9,698,980
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35,016,790
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JUNIOR GOLD PRODUCERS 11.4%
599,000 Alhambra Resources Ltd.* ..................... 548,546
250,000 Aurizon Mines Ltd.* .......................... 1,200,000
400,000 Capstone Mining Corp . * ..................... 1,706,753
21,429 Central Sun Mining, Inc. ..................... 44,207
291,200 Claude Resources, Inc. ....................... 266,672
457,000 Golden Cycle Gold Corp.* ..................... 4,889,900
250,000 Great Basin Gold Ltd.* ....................... 867,500
50,000 Jaguar Mining, Inc. .......................... 566,066
300,000 Red Back Mining, Inc.* ....................... 2,391,064
665,500 San Gold Corp.* .............................. 1,111,734
583,333 Sino Gold Mining Ltd.* ....................... 1,529,047
500,000 Yukon-Nevada Gold Corp.* ..................... 699,407
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15,820,896
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SHARES VALUE
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EXPLORATION AND DEVELOPMENT COMPANIES 8.0%
375,000 Amazon Mining Holding PLC* ................... $ 245,295
187,500 Anatolia Minerals Development Ltd.* .......... 652,863
500,000 Andean American Mining Corp. ................. 271,712
58,200 Aquiline Resources, Inc.* .................... 444,539
400,000 Argentex Mining Corp. *+ ..................... 414,000
250,000 Australian Solomons Gold Ltd.* ............... 125,792
700,000 Brazauro Resources Corp.* .................... 612,860
126,707 DOT Resources Ltd .* ......................... 14,664
500,000 Evolving Gold Corp.* ......................... 342,156
300,000 Fury Explorations Ltd. * ..................... 190,198
215,600 Geologix Explorations, Inc.* ................. 499,024
800,000 Grayd Resource Corp. * ....................... 442,790
100,000 Guyana Goldfields, Inc. ...................... 467,948
500,000 Hana Mining Ltd.* ............................ 261,648
100,000 Keegan Resources, Inc. ....................... 368,000
300,000 MAG Silver Corp.* ............................ 3,502,063
287,500 Majestic Gold Corp.* ......................... 20,253
125,000 Mansfield Minerals, Inc.* .................... 377,378
250,000 Maximus Ventures Ltd.* ....................... 69,186
500,000 Mediterranean Resources Ltd.* ................ 93,086
120,000 Pediment Exploration Ltd.* ................... 190,802
200,000 Radius Gold, Inc.* ........................... 55,349
300,000 Sabina Silver Corp.* ......................... 473,986
273,500 Sinchao Metals Corp.* ........................ 92,203
207,700 Sunridge Gold Corp.* ......................... 179,754
500,000 TNR Gold Corp.* .............................. 120,761
192,307 Volta Resources, Inc. ........................ 114,180
200,000 Western Goldfields, Inc.* .................... 468,000
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11,110,490
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OTHER 4.1%
206,812 Altius Minerals Corp.* ....................... 2,713,926
229,200 International Royalty Corp. .................. 1,379,306
50,000 Royal Gold, Inc. ............................. 1,537,000
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5,630,232
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See notes to financial statements.
- 4 -
OCM GOLD FUND
SCHEDULE OF INVESTMENTS - MAY 31, 2008
(UNAUDITED)
- --------------------------------------------------------------------------------
SHARES VALUE
- --------------------------------------------------------------------------------
PRIMARY SILVER PRODUCERS 5.8%
225,000 Fortuna Silver Mines, Inc.* .................. $ 518,516
200,000 Hecla Mining Co.* ............................ 1,803,999
48,075 Pan American Silver Corp.* ................... 1,593,147
190,000 Silver Wheaton Corp.* ........................ 2,757,149
359,997 Silverstone Resources Corp * ................. 970,909
700,000 US Silver Corp.* ............................. 316,997
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7,960,717
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TOTAL COMMON STOCKS
(Cost $44,244,957) ........................... 128,801,262
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EXCHANGE TRADED FUNDS 5.2%
9,000 iShares Silver Trust* ........................ 1,500,570
65,000 SPDR Gold Trust* ............................. 5,679,700
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TOTAL EXCHANGE TRADED FUNDS
(Cost $3,931,360) ............................ 7,180,270
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WARRANTS 0.6%
187,500 Amazon Mining Holding PLC + * #
Exercise Price 1.55 CAD, Exp. 11/16/2009 ... --
4,928 AngloGold Ashanti Ltd. *
Exercise Price $27.81, Exp. 6/23/2008 ...... 45,830
200,000 Argentex Mining Corp. *+#
Exercise Price $1.60, Exp. 9/19/2009 ....... --
125,000 Australian Solomons Gold Ltd.*
Exercise Price 1.71 CAD, Exp. 8/28/2008 .... 1,887
75,000 Central Sun Mining, Inc.*
Exercise Price 1.25 CAD, Exp. 11/26/2008 ... 1,510
89,000 Endeavour Mining Capital Corp.*
Exercise Price 5.50 CAD, Exp. 11/10/2008 ... 184,502
150,000 Fury Explorations Ltd.*+#
Exercise Price 1.25 CAD, Exp. 9/20/2008 .... --
143,750 Majestic Gold Corp.* +#
Exercise Price 0.60 CAD, Exp. 5/3/2009 ..... --
35,000 Nevsun Resources*+#
Exercise Price 10.00 CAD, Exp. 12/18/2008 .. --
- --------------------------------------------------------------------------------
SHARES VALUE
- --------------------------------------------------------------------------------
WARRANTS (CONTINUED)
60,000 Pediment Exploration Ltd.* +#
Exercise Price 3.75 CAD, Exp. 11/16/2009 ... $ --
150,000 San Gold Corp.*+#
Exercise Price 2.00 CAD, Exp. 05/28/2009 ... --
250,000 Silver Wheaton Corp.*
Exercise Price 4.00 CAD, Exp. 8/5/2009 ..... 528,328
100,000 Yukon-Nevada Gold Corp.*
Exercise Price 3.00 CAD, Exp. 6/20/2012 .... 49,814
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TOTAL WARRANTS
(Cost $17,918) ............................... 811,871
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SHORT-TERM INVESTMENT 1.4%
1,906,997 UMB Money Market Fiduciary, 0.92% ............ 1,906,997
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TOTAL SHORT-TERM INVESTMENTS
(Cost $1,906,997) ............................ 1,906,997
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TOTAL INVESTMENTS
(Cost $50,101,232) .................... 100.4% 138,700,400
LIABILITIES LESS ...................................... (0.4)% (502,331)
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NET ASSETS ............................................ 100.0% $ 138,198,069
=============
- -------------
ADR -- American Depository Receipts.
CAD -- Canadian Dollars.
* Non-income producing security.
+ Illiquid security. Security is valued at fair value in accordance with
procedures established by the Fund's Board of Trustees.
# Security exempt from registration under Rule 144A of the Securities Act of
1933, as amended, or otherwise restricted. These securities may be resold in
transactions exempt from registration, normally to qualified institutional
buyers. The securities are valued at fair value in accordance with procedures
established by the Fund's Board of Trustees.
See notes to financial statements.
- 5 -
OCM GOLD FUND
SCHEDULE OF INVESTMENTS - MAY 31, 2008 (CONTINUED)
(UNAUDITED)
At May 31, 2008, restricted securities totaled $414,000 or 0.3% of net assets
and consisted of the following securities:
MAY 31, 2008
CARRYING VALUE ACQUISITION
ISSUER PER UNIT COST DATE
- --------------------------------------------------------------------------------
Argentex Mining Corp. $1.035 $1.25 03/19/2008
Argentex Mining Corp. Warrants
Exercise Price $1.60, Exp. 09/19/2009 -- -- 03/19/2008
- --------------------------------------------------------------------------------
SUMMARY OF INVESTMENTS BY COUNTRY
PERCENT OF
COUNTRY MARKET VALUE INVESTMENT SECURITIES
- --------------------------------------------------------------------------------
Australia $ 3,129,839 2.3%
Canada 96,312,172 69.4
Cayman Islands 184,502 0.1
Jersey 5,936,000 4.3
New Guinea 1,232,008 0.9
South Africa 6,566,900 4.7
United Kingdom 245,295 0.2
United States(1) 25,093,684 18.1
- --------------------------------------------------------------------------------
TOTAL $138,700,400 100.0%
- --------------------------------------------------------------------------------
(1) Includes short-term securities.
See notes to financial statements.
- 6 -
OCM GOLD FUND
STATEMENT OF ASSETS AND LIABILITIES - MAY 31, 2008
(UNAUDITED)
ASSETS:
Investments in unaffiliated issuers, at value (cost $50,101,232) $ 138,700,400
Interest and dividends receivable .............................. 37,390
Receivable for fund shares sold ................................ 83,248
Prepaid expenses and other assets .............................. 15,488
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Total assets ................................................. 138,836,526
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LIABILITIES:
Payable for securities purchased ............................... 127,835
Payable for fund shares redeemed ............................... 98,909
Due to investment adviser ...................................... 95,742
Accrued distribution fees ...................................... 235,747
Accrued trustees fees .......................................... 2,006
Accrued Chief Compliance Officer fees .......................... 430
Accrued expenses and other liabilities ......................... 77,788
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Total liabilities ............................................ 638,457
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Net Assets ................................................... $ 138,198,069
=============
NET ASSETS CONSIST OF:
Shares of beneficial interest, no par value;
unlimited shares authorized .................................. $ 48,556,652
Undistributed net investment loss .............................. (3,303,928)
Undistributed net realized gain on investments and
foreign currency transactions ................................ 4,346,074
Net unrealized appreciation on investments and
foreign currency translations ................................ 88,599,271
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Net Assets ..................................................... $ 138,198,069
=============
CALCULATION OF MAXIMUM OFFERING PRICE:
Net asset value and redemption price per share(1) .............. $ 21.09
Maximum sales charge (4.50% of offering price) ................. 0.99
-------------
Offering price to public ....................................... $ 22.08
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Shares outstanding ............................................. 6,551,647
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- ------------
(1) A 1.50% redemption fee is imposed on redemptions of shares held less than
three months.
See notes to financial statements.
- 7 -
OCM GOLD FUND
STATEMENT OF OPERATIONS - SIX MONTHS ENDED MAY 31, 2008
(UNAUDITED)
INVESTMENT INCOME:
Interest .................................................... $ 19,549
Dividends (net of foreign withholding taxes of $25,243) ..... 241,351
-----------
Total investment income ................................... 260,900
-----------
EXPENSES:
Distribution fees ........................................... 615,051
Investment advisory fees .................................... 592,868
Fund administration and accounting fees ..................... 86,831
Transfer agent fees and expenses ............................ 35,654
Professional fees ........................................... 31,223
Custody fees ................................................ 13,617
Federal and state registration fees ......................... 10,258
Chief Compliance Officer fees ............................... 6,492
Reports to shareholders ..................................... 5,304
Trustees' fees .............................................. 4,010
Other expenses .............................................. 4,285
-----------
Total expenses ............................................ 1,405,593
-----------
Net investment loss ....................................... (1,144,693)
-----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments and foreign
currency transactions ..................................... 5,689,725
Net change in unrealized appreciation/depreciation
on investments and foreign currency translations .......... 2,004,681
-----------
Net gain on investments ................................... 7,694,406
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS .......... $ 6,549,713
===========
See notes to financial statements.
- 8 -
OCM GOLD FUND
STATEMENTS OF CHANGES IN NET ASSETS
SIX MONTHS ENDED YEAR ENDED
MAY 31, 2008 NOV. 30,
(UNAUDITED) 2007
-------------- -------------
OPERATIONS:
Net investment loss ................................ $ (1,144,693) $ (1,813,932)
Net realized gain on investments and
foreign currency transactions .................... 5,689,725 8,400,525
Net change in unrealized appreciation/depreciation
on investments and foreign currency translations 2,004,681 11,847,045
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Net increase in net assets resulting from operations 6,549,713 18,433,638
------------- -------------
DISTRIBUTIONS PAID TO SHAREHOLDERS:
Dividends from net investment income ............... -- --
Distributions paid from net realized gains ......... (8,998,120) (10,048,572)
------------- -------------
Total distributions ................................ (8,998,120) (10,048,572)
------------- -------------
FUND SHARE TRANSACTIONS:
Net proceeds from shares sold ...................... 7,687,682 14,220,807
Distributions reinvested ........................... 8,489,751 8,876,117
Payment for shares redeemed(1) ..................... (11,772,047) (14,997,190)
------------- -------------
Net increase in net assets from
fund share transactions .......................... 4,405,386 8,099,734
------------- -------------
TOTAL INCREASE IN NET ASSETS ......................... 1,956,979 16,484,800
NET ASSETS, BEGINNING OF PERIOD ...................... 136,241,090 119,756,290
------------- -------------
NET ASSETS, END OF PERIOD ............................ $ 138,198,069 $ 136,241,090
============= =============
UNDISTRIBUTED NET INVESTMENT LOSS .................... $ (3,303,928) $ (2,159,235)
============= =============
TRANSACTIONS IN SHARES:
Shares sold ........................................ 349,237 727,987
Shares issued on reinvestment of distributions ..... 415,350 510,122
Shares redeemed .................................... (551,244) (758,285)
------------- -------------
Net increase in shares outstanding ................. 213,343 479,824
============= =============
(1) Net of redemption fees of $6,796 and $2,617 for the six months ended May 31,
2008, and year ended November 30, 2007, respectively.
See notes to financial statements.
- 9 -
OCM GOLD FUND
NOTES TO FINANCIAL STATEMENTS - MAY 31, 2008
(UNAUDITED)
NOTE 1. ORGANIZATION
OCM Mutual Fund (the "Trust") is registered under the Investment
Company Act of 1940, as amended, as an open-end management investment company.
The Trust was organized as a Massachusetts business trust on January 6, 1984 and
consists of the OCM Gold Fund (the "Fund"). The investment objective for the
Fund is long-term growth of capital through investing primarily in equity
securities of domestic and foreign companies engaged in activities related to
gold and precious metals.
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed
by the Fund in the preparation of its financial statements.
SECURITY VALUATION -- Portfolio securities that are listed on national
securities exchanges are valued at the last sale price as of the close of
business of such securities exchanges, or, in the absence of recorded sales, at
the average of readily available closing bid and ask prices on such exchanges.
NASDAQ National Market(R) and SmallCap(R) securities are valued at the NASDAQ
Official Closing Price ("NOCP"). If a NOCP is not issued for a given day, these
securities are valued at the average of readily available closing bid and asked
prices. Unlisted securities are valued at the average of the quoted bid and ask
prices in the over-the-counter market. Short-term investments which mature in
less than 60 days are valued at amortized cost (unless the Board of Trustees
determines that this method does not represent fair value). Short-term
investments which mature after 60 days are valued at market. Securities and
other assets for which market quotations are not readily available are valued at
fair value as determined in good faith by the investment adviser under
procedures established by and under the general supervision and responsibility
of the Trust's Board of Trustees. For each investment that is fair valued, the
investment adviser considers, to the extent applicable, various factors
including, but not limited to, the type of security, the financial condition of
the company, comparable companies in the public market, the nature and duration
of the cause for a quotation not being readily available and other relevant
factors.
In September 2006, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 157, "Fair Value Measurements"
("FAS 157") effective for fiscal years beginning after November 15, 2007. FAS
157 defines fair value, establishes a framework for measuring fair value in
generally accepted accounting principles (GAAP), and expands disclosures about
fair value measurements. The Fund adopted FAS 157 during fiscal 2008. Under FAS
157, various inputs are used in determining the value of the Fund's investments.
These inputs are summarized into three broad levels and described below:
o Level 1 - quoted prices in active markets for identical securities
o Level 2 - other significant observable inputs (including quoted prices
for similar securities, interest rates, and evaluated quotation
obtained from pricing services)
o Level 3 - significant unobservable inputs (including the Fund's own
assumptions in determining the fair value of investments)
The inputs or methodology used for valuing securities are not an
indication of the risk associated with investing in those securities. The
following is a summary of the inputs used, as of May 31, 2008, in valuing the
Fund's assets:
- --------------------------------------------------------------------------------
INVESTMENT IN OTHER FINANCIAL
VALUATION INPUTS SECURITIES INSTRUMENTS*
- --------------------------------------------------------------------------------
Level 1 - Quoted Prices $138,286,400 --
- --------------------------------------------------------------------------------
Level 2 - Other Significant Observable Inputs 414,000 --
- --------------------------------------------------------------------------------
Level 3 - Significant Unobservable Inputs -- --
- --------------------------------------------------------------------------------
Total $138,700,400 -- *
- --------------------------------------------------------------------------------
* Other financial instruments include futures, forwards and swap contracts.
FOREIGN CURRENCY - Investment securities and other assets and
liabilities denominated in foreign currencies are translated into U.S. dollar
amounts at the date of valuation. Purchases and sales of investment securities
and income and expense items denominated in foreign currencies are translated
into U.S. dollar amounts on the respective dates of such transactions.
The Fund does not isolate that portion of the results of operations
resulting from changes in foreign exchange rates on investments from the
fluctuations arising from changes in market prices of securities held. Such
fluctuations are included with the net unrealized and realized gain or loss from
investments.
- 10 -
OCM GOLD FUND
NOTES TO FINANCIAL STATEMENTS - MAY 31, 2008 (CONTINUED)
(UNAUDITED)
Reported net realized foreign exchange gains or losses arise from sales
of foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the difference between the
amounts of dividends, interest and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains and losses arise from changes in the
fair value of assets and liabilities, other than investments in securities at
fiscal year end, resulting from changes in exchange rates.
FEDERAL INCOME TAXES - The Fund intends to comply with the requirements
of the Internal Revenue Code necessary to qualify as a regulated investment
company and to make the requisite distributions of income to its shareholders
which will be sufficient to relieve it from all or substantially all federal
income taxes.
In July 2006, the Financial Accounting Standards Board ("FASB") issued
Interpretation No. 48, "Accounting for Uncertainty in Income Taxes" ("FIN 48").
FIN 48 addresses the accounting for uncertainty in income taxes and establishes
for all entities, including pass-through entities, such as the Fund, a minimum
threshold for financial statement recognition of the benefit of positions taken
in filing tax returns (including whether an entity is taxable in a particular
jurisdiction). The Fund recognizes tax benefits only if it is more likely than
not that a tax position (including the Fund's assertion that its income is
exempt from tax) will be sustained upon examination. The Fund adopted FIN 48 in
fiscal 2008. The Fund had no material uncertain tax positions and has not
recorded a liability for unrecognized tax benefits as of May 31, 2008. Also, the
Fund had recognized no interest and penalties related to uncertain tax benefits
in 2008. At May 31, 2008, the fiscal years 2005 through 2008 remain open to
examination in the Fund's major tax jurisdictions.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME - Securities transactions
are accounted for on a trade date basis. Realized gains and losses on sales of
securities are calculated on the identified cost basis. Dividend income is
recorded on the ex-dividend date and interest income is recorded on an accrual
basis.
DISTRIBUTIONS TO SHAREHOLDERS - Distributions to shareholders are
recorded on the ex-dividend date. The Fund declares and pays dividends of net
investment income, if any, annually and distributes net realized gains, if any,
annually. The character of distributions made during the year from net
investment income or net realized gains may differ from the characterization for
federal income tax purposes due to differences in the recognition of income,
expense or gain items for financial statement and tax purposes. To the extent
that these differences are attributable to permanent book and tax accounting
differences, the components of net assets have been adjusted.
REDEMPTION FEE - A 1.50% redemption fee is retained by the Fund to
offset transaction costs and other expenses associated with short-term
investing. The fee is imposed on redemptions or exchanges of shares held less
than three months from their purchase date. The Fund records the fee as a
reduction of shares redeemed and as a credit to paid-in-capital. For the period
ended May 31, 2008, the Fund received $6,796 in redemption fees.
GUARANTEES AND INDEMNIFICATIONS - In the normal course of business, the
Fund enters into contracts with service providers that contain general
indemnification clauses. The Fund's maximum exposure under these arrangements is
unknown as this would involve future claims against the Fund that have not yet
occurred. Based on experience, the Fund expects the risk of loss to be remote.
USE OF ESTIMATES - The preparation of financial statements in
conformity with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts
of increases and decreases in net assets from operations during the reporting
period. Actual results could differ from those estimates.
NOTE 3. INVESTMENT ADVISORY AGREEMENT
The Fund has an investment advisory agreement with Orrell Capital
Management, Inc. ("OCM"). Under the agreement, the Fund pays OCM a fee computed
daily and payable monthly, at the following annual rates based upon average
daily net assets:
ASSETS FEE RATE
- ------ --------
$0 to $50 million ........................................... 1.000%
$50 million to $75 million .................................. 0.875%
$75 million to $100 million ................................. 0.750%
$100 million to $150 million ................................ 0.625%
$150 million to $250 million ................................ 0.500%
Over $250 million ........................................... 0.375%
- 11 -
OCM GOLD FUND
NOTES TO FINANCIAL STATEMENTS - MAY 31, 2008 (CONTINUED)
(UNAUDITED)
NOTE 4. DISTRIBUTION AGREEMENT AND PLAN
The Trust has adopted a Distribution Plan (the "Plan") pursuant to Rule
12b-1 under the Investment Company Act of 1940, as amended. The Plan authorizes
the Fund to reimburse the distributor for marketing expenses incurred in
distributing shares of each Fund, including the cost of printing sales material
and making payments to dealers of the Fund's shares, in any fiscal year, subject
to a limit of 0.99% of average daily net assets. Fees incurred by the Fund under
the Plan during the period ended May 31, 2008 are reflected in the Statement of
Operations. At May 31, 2008, $235,747 of Distributions Fees were available for
eligible 12b-1 expenses.
NOTE 5. PURCHASES AND SALES OF SECURITIES
Purchases and sales of investment securities (excluding short-term
securities and U.S. government obligations) for the period ended May 31, 2008
were $5,284,605 and $8,744,462, respectively. There were no purchases or sales
of U.S. government obligations.
NOTE 6. FEDERAL INCOME TAX INFORMATION
At May 31, 2008, gross unrealized appreciation and depreciation of
investments owned by the Fund, based on cost for federal income tax purposes
were as follows:
Cost of investments ........................... $ 51,326,883
============
Unrealized appreciation ....................... $ 89,911,194
Unrealized depreciation ....................... (2,537,677)
------------
Net unrealized appreciation on investments .... $ 87,373,517
============
The difference between cost amounts for financial statement and federal
income tax purposes is due primarily to investments in passive foreign
investment companies ("PFICs").
The tax character of distributions paid during the fiscal years ended
November 30, 2007 and 2006 was as follows:
2007 2006
---- ----
Ordinary income .............................. $ -- $--
Net long-term capital gains .................. 10,048,572 --
=========== -------
Total distributions .......................... $10,048,572 $--
=========== =======
As of November 30, 2007 the components of accumulated earnings on a tax
basis were as follows:
Undistributed ordinary income .......................... $ 219,986
Undistributed long-term gains .......................... 7,438,001
-----------
Tax accumulated earnings ............................... 7,657,987
Accumulated capital and other losses ................... --
Unrealized appreciation on investments ................. 84,431,738
Unrealized appreciation on foreign currency ............ 99
-----------
Total accumulated earnings ............................. $92,089,824
===========
- 12 -
OCM GOLD FUND
NOTES TO FINANCIAL STATEMENTS - MAY 31, 2008 (CONTINUED)
(UNAUDITED)
NOTE 7. OFFERING PRICE PER SHARE
A maximum front-end sales charge of 4.50% is imposed on purchases of
the Fund's shares. For the period ended May 31, 2008, the Fund was advised that
the Distributor received $17,075 of sales charges from sales of the Fund's
shares.
NOTE 8. CONCENTRATION OF RISK
Investing in foreign securities involves certain risks not necessarily
found in U.S. markets. These include risks associated with adverse changes in
economic, political, regulatory and other conditions, changes in currency
exchange rates, exchange control regulations, expropriation of assets or
nationalization, imposition of withholding taxes on dividend or interest
payments or capital gains, and possible difficulty in obtaining and enforcing
judgments against foreign entities. Further, issuers of foreign securities are
subject to different, and often less comprehensive, accounting, reporting and
disclosure requirements than domestic issuers.
As the Fund concentrates its investments in the gold mining industry, a
development adversely affecting the industry (for example, changes in the mining
laws which increases production costs or a significant decrease in the market
price of gold) would have a greater adverse effect on the Fund than it would if
the Fund invested in a number of different industries.
- 13 -
OCM GOLD FUND
FINANCIAL HIGHLIGHTS
SIX MONTHS
ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
MAY 31, 2008 NOV. 30, NOV. 30, NOV. 30, NOV. 30, NOV. 30,
(UNAUDITED) 2007 2006 2005 2004 2003
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout each period)
Net asset value, beginning of period .............. $ 21.49 $ 20.44 $ 12.85 $ 12.76 $ 14.46 $ 7.53
--------- --------- --------- -------- --------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss ............................... (0.16) (0.27) (0.29) (0.18) (0.18) (0.12)
Net realized and unrealized gain
(loss) on investments and foreign
currency transactions ........................... 1.18 3.06 7.88 0.69 (1.30) 7.05
--------- --------- --------- -------- --------- --------
Total from investment operations .................. 1.02 2.79 7.59 0.51 (1.48) 6.93
--------- --------- --------- -------- --------- --------
LESS DISTRIBUTIONS:
Dividends from net investment income .............. -- -- -- (0.11) (0.01) --
Distribution from net realized gains .............. (1.42) (1.74) -- (0.31) (0.21) --
--------- --------- --------- -------- --------- --------
Total distributions ............................... (1.42) (1.74) -- (0.42) (0.22) --
--------- --------- --------- -------- --------- --------
Net asset value, end of period .................... $ 21.09 $ 21.49 $ 20.44 $ 12.85 $ 12.76 $ 14.46
========= ========= ========= ======== ========= ========
TOTAL RETURN* ..................................... 4.95%(2) 15.64% 59.07% 4.34% (10.31)% 92.03%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (in 000's) ................ $ 138,198 $ 136,241 $ 119,756 $ 78,528 $ 80,202 $ 84,230
Ratio of expenses to average net assets:
Net of waivers and reimbursements ............... 1.94%(1) 1.93% 2.07% 2.24% 2.15% 2.39%
Before waivers and reimbursements ............... 1.94%(1) 1.93% 2.07% 2.24% 2.17% 2.39%
Ratio of net investment loss to average net assets:
Net of waivers and reimbursements ............... (1.58)%(1) (1.51)% (1.64)% (1.51)% (1.58)% (1.42)%
Before waivers and reimbursements ............... (1.58)%(1) (1.51)% (1.64)% (1.51)% (1.60)% (1.42)%
Portfolio turnover rate ........................... 4%(2) 11% 20% 5% 12% 17%
- ---------
* Assumes no sales charge.
(1) Annualized for periods less than one year.
(2) Not annualized for periods less than one year.
See notes to financial statements.
- 14 -
OCM GOLD FUND
EXPENSE EXAMPLE - FOR THE SIX MONTHS ENDED MAY 31, 2008
(UNAUDITED)
As a shareholder of the OCM Gold Fund (the "Fund"), you incur two types
of costs: (1) transaction costs, including sales charges (loads) on purchase
payments and redemption fees on certain redemptions (the Fund imposes a 1.50%
redemption fee on shares held less than 3 months after purchase); and (2)
ongoing costs, including management fees; distribution (12b-1) 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 from December 1, 2007 to
May 31, 2008 (the "period").
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 you paid over
the period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 equals 8.6), then multiply the result by the
number in the first line under the heading entitled "Expenses Paid During the
Period" to estimate the expenses you paid on your account during the 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 the Fund and other funds. To do so, compare this
5% hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight
your ongoing costs only and do not reflect any transactional costs, such as
sales charges (loads) and redemption fees. Therefore, the second line of the
table is useful in comparing the ongoing costs only, and will not help you
determine the relative total costs of owning different funds. In addition, if
these transactional costs were included, your costs could have been higher.
EXPENSES PAID DURING THE PERIOD
BEGINNING ENDING DURING THE
ACCOUNT VALUE ACCOUNT VALUE PERIOD ENDED
DECEMBER 1, 2007 MAY 31, 2008 MAY 31, 2008*
---------------- ------------ -------------
Actual $1,000.00 $1,049.50 $9.95
Hypothetical (5% return
before expenses) 1,000.00 1,015.29 9.79
- --------------
* Expenses are equal to the Fund's annualized expense ratio of 1.94% for the
period, multiplied by the average account value over the period, multiplied
by 183/366 (to reflect the one-half year period).
- 15 -
OCM GOLD FUND
INVESTMENTS BY SECTOR (UNAUDITED)
AS A PERCENTAGE OF NET ASSETS
PIE CHART OMITTED
Major Gold Producers 38.6%
Intermediate/Mid-Tier
Gold Producers 25.3%
Junior Gold Producers 11.5%
Exploration and Development
Companies 8.0%
Primary Silver Producers 6.2%
Exchange Traded Funds 5.2%
Other 4.2%
Cash and Other Assets 1.0%
A description of the Fund's proxy voting policies and procedures and a
record of the Fund's proxy votes for the year ended June 30, 2007 are available
without charge, upon request by calling toll free 1-800-779-4681 and on the
Securities and Exchange Commission's (SEC) website at http://www.sec.gov.
The Fund will file its complete schedule of investments with the SEC
for the first and third quarters of each fiscal year on Form N-Q. The Fund's
Forms N-Q will be available on the EDGAR database on the SEC's website at
http://www.sec.gov. These Forms may also be reviewed and copied at the SEC's
Public Reference Room in Washington, D.C. Information about the operation of the
Public Reference Room may be obtained by calling 1-800-SEC-0330.
- 16 -
OCM Gold Fund
Distributed by:
Syndicated Capital, Inc.
1299 Ocean Avenue, Suite 210
Santa Monica, CA 90401
ITEM 2. CODE OF ETHICS.
Not applicable to semi-annual reports.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable to semi-annual reports.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Not applicable to semi-annual reports.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS
Not applicable to semi-annual reports.
ITEM 6. SCHEDULE OF INVESTMENTS
The schedule of investments in securities in unaffiliated issuers are included
as part of the reports to shareholders filed under Item 1.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS Not applicable.
ITEM 10. SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS
As of the end of the period covered by this report, the registrant had not
adopted any procedures by which shareholders may recommend nominees to the
registrant's Board of Directors.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's certifying officers have concluded that the
registrant's disclosure controls and procedures (as defined in Rule
30a-2 under the Investment Company Act of 1940 (the "Act")) are
effective in design and operation and are sufficient to form the basis
of the certifications required by Rule 30a-2 under the Act, based on
their evaluation of these disclosure controls and procedures within 90
days of the filing date of this report on Form N-CSR.
(b) Not applicable.
ITEM 12. EXHIBITS.
(a)(1) Code of Ethics - Not applicable.
(a)(2) Certification for each principal executive and principal financial
officer of the registrant as required by Rule 30a-2 under the Act (17 CFR
270.30a-2(a)) - Filed as an attachment to this filing.
(b) Certifications required by Rule 30a-2(b) under the Act (17 CFR
270.30a-2(b)), Rule 13a-14(b) or Rule 15d-14(b) under the Exchange Act (17 CFR
240.13a-14(b) or 240.15d-14(b)), and Section 1350 of Chapter 63 of Title 18 of
the United States Code (18 U.S.C. 1350) - Filed as an attachment to this filing.
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.
OCM Mutual Fund
By: /s/ GREGORY M. ORRELL
---------------------
Gregory M. Orrell
President
Date: July 31, 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/ GREGORY M. ORRELL
---------------------
Gregory M. Orrell
President
Date: July 31, 2008
By: /s/ JACKLYN ORELL
---------------------
Jacklyn Orrell
Secretary and Treasurer
Date: July 31, 2008