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
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(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, 2009
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ITEM 1. REPORT TO STOCKHOLDERS.
LOGO
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OCM GOLD FUND
=============
SEMI-ANNUAL REPORT
MAY 31, 2009
(UNAUDITED)
Dear Fellow Shareholder:
Gold bullion remained well bid throughout the first half of the year with a June
30th London PM fix of $934.50, up 8.03% from year-end. For the fiscal six month
period ending May 30th covered in this report, the Fund rebounded from the
liquidity crisis lows to post a NAV gain of 66.64% (59.16% after maximum sales
load). The Philadelphia Gold and Silver Index (XAU) returned 58.15% over the
same period while the S&P 500 gained 4.05%. For the six month calendar period
ending June 30th, the Fund's NAV increased 17.17% (11.89% after maximum sales
load) versus a 12.58% gain for the XAU and 3.16% advance in the S&P 500.
GOLD PRICE, DOLLAR PER OUNCE, LONDON PM FIX
Date $US
31-Jan-00 283.30
31-May-00 272.25
29-Sep-00 273.65
28-Feb-01 266.70
31-Jul-01 265.90
30-Nov-01 275.50
30-Apr-02 308.20
30-Aug-02 312.80
31-Jan-03 367.50
30-May-03 361.40
31-Oct-03 386.25
27-Feb-04 395.85
30-Jul-04 391.40
30-Nov-04 453.40
29-Apr-05 435.70
31-Aug-05 433.25
31-Jan-06 568.75
31-May-06 653.00
29-Sep-06 599.25
28-Feb-07 664.20
29-Jun-07 650.50
30-Nov-07 783.50
31-Mar-08 933.50
29-Aug-08 833.00
31-Dec-08 869.75
29-May-09 975.50
Source: Global Insight
The rush for liquidity at the height of the credit crisis last fall helped
temporarily mask the inherent weakness in the U.S. dollar. It was only a matter
of time, in our opinion, before holders of U.S. dollar assets began questioning
the effects unprecedented monetary and fiscal stimulus employed to stem the
slide in the U.S. economy would have on the perceived and real value of the
dollar and U.S. government obligations. With the 2009 U.S. fiscal deficit
topping over $1 trillion, calls for a new reserve currency to replace the dollar
have grown louder from various corners of the globe, especially China. Fear of
the prospect of wholesale dumping of the U.S. dollar has become a real concern.
Accordingly, we believe an appreciation of gold's unique monetary attributes is
beginning to take root among a new generation of central bankers as evidenced by
China announcing an increase in its gold reserves in the first half of the year
and European central banks slowing gold sales to the lowest rate in over ten
years.
-1-
U.S. policy makers are holding their collective breath that the U.S. economy has
hit bottom and there will be no need for a further stimulus package that could
prompt an accelerated move out of the dollar. Despite the Obama Administration
efforts to find "green shoots" in the economy, the structural shift of consumer
attitudes to reducing debt and increasing savings is a recipe, in our opinion,
for further economic contraction as excess capacity is wrung out of the U.S. and
global economy. The downsizing of General Motors is just one example of the
seismic shift taking place. Consequently, we see unemployment continuing to
climb during the current economic cycle with business investment constrained and
residential and commercial property values both remaining under pressure.
Further, we believe state and municipal governments across the U.S. will face
ongoing declines in tax revenue forcing reduced services in order to balance
pension and debt obligations baked into the system. A second round of fiscal
stimulus seems an almost certainty, in our opinion, which market participants
are sure to smell out. We are concerned a rout of the dollar may ensue as the
stimulus package is deemed to be a bridge too far on the back of the previous
monetary and fiscal stimulus and therefore more than international dollar
holders are willing to stomach.
Historically, currency weakness has been combated with higher interest rates as
the risk of currency depreciation is offset with the reward of higher rates. In
our opinion, there would be little political tolerance in the current
environment for higher interest rates in the U.S., not to mention the potential
disastrous impact higher rates could have on the trillions of dollars of
interest rate related derivatives outstanding in the hands of weakened financial
institutions. Should the market no longer be willing to finance the U.S.
Government's spending practices on favorable terms, the most likely policy
response, we believe, would be further monetization of U.S. debt by the Federal
Reserve. Cries for a new reserve currency would no doubt be deafening by holders
of large dollar reserves if the scenario plays out as we suspect. In turn, we
believe the stampede into gold by those who understand the consequences of an
overtly weak dollar policy would be akin to Niagara Falls trying to get through
a garden hose.
While gold shares have come up off their lows, they have not yet returned to
valuation levels that persisted prior to the credit crisis of last year. In our
opinion, the shares of major and intermediate gold producers remain
approximately 30% below the valuations levels gold shares have traditionally
traded at versus gold for the past 25 years. With investors searching for gold
assets as a means to hedge against further dollar declines, we believe the
prospect of higher gold prices combined with a return to historical valuation
levels is promising for the future performance of the Fund. Despite the
volatility in the gold share market, our investment approach has been to not
time the ups and downs, as we believe gold remains firmly entrenched in a bull
market and it is imperative for our shareholders to be fully exposed to gold
assets in this period of currency debasement. Over the first half of the year,
the Fund continued to hold a large percentage of its portfolio in growth
oriented gold producers; Goldcorp, Inc., Agnico-Eagle Mines Ltd., Randgold
Resources Ltd. ADR and Kinross Gold Corp. On the exploration and development
front, we have been adding positions in the portfolio to companies with large
resource positions that we believe major companies will seek out to acquire in
order to replace reserves.
-2-
As a shareholder of the OCM Gold Fund, as well as its
manager, I would like to take this opportunity to thank each of you for your
shareholding and confidence in the OCM Gold Fund. 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 questions regarding your
account, please contact Shareholder Services at 1-800-628-9403.
Sincerely,
/S/ GREGORY M. ORRELL
- ---------------------
Gregory M. Orrell
PORTFOLIO MANAGER
JULY 22, 2009
Performance as of May 31, 2009
- --------------------------------------------------------------------------------
Philadelphia
OCMGX OCMGX Gold Index S & P
(without load) (with load) (XAU) 500
- --------------------------------------------------------------------------------
Six Months 66.64% 59.16% 58.15% 4.05%
- --------------------------------------------------------------------------------
One Year (2.42%) (6.79%) (10.85%) (32.57%)
- --------------------------------------------------------------------------------
3 Year Annualized 8.52% 6.87% 5.05% (8.24%)
- --------------------------------------------------------------------------------
5 Year Annualized 17.94% 16.86% 13.49% (1.90%)
- --------------------------------------------------------------------------------
10 Year Annualized 19.20% 18.65% 11.76% (1.71%)
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THE PERFORMANCE DATA QUOTED ABOVE REPRESENTS PAST PERFORMANCE. CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED ABOVE. PAST
PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. THE INVESTMENT RETURN AND
PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT INVESTOR'S SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. THE FUND'S TOTAL
ANNUAL OPERATING EXPENSES FOR THE OCM GOLD FUND ARE 1.99%. PLEASE REVIEW THE
FUND'S PROSPECTUS FOR MORE INFORMATION REGARDING THE FUND'S FEES AND EXPENSES.
FOR PERFORMANCE INFORMATION CURRENT TO THE MOST RECENT MONTH-END, PLEASE CALL
TOLL-FREE 800-628-9403. 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.
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-
Performance as of June 30, 2009
- --------------------------------------------------------------------------------
Philadelphia
OCMGX OCMGX Gold Index S & P
(without load) (with load) (XAU) 500
- --------------------------------------------------------------------------------
Six Months 17.17% 11.89% 12.58% 3.16%
- --------------------------------------------------------------------------------
One Year (19.06%) (22.70%) (28.09%) (26.21%)
- --------------------------------------------------------------------------------
3 Year Annualized 4.27% 2.69% (0.06%) (8.22%)
- --------------------------------------------------------------------------------
5 Year Annualized 15.35% 14.30% 11.21% (2.24%)
- --------------------------------------------------------------------------------
10 Year Annualized 17.17% 16.64% 9.15% (2.22%)
- --------------------------------------------------------------------------------
THE PERFORMANCE DATA QUOTED ABOVE REPRESENTS PAST PERFORMANCE. CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED ABOVE. PAST
PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. THE INVESTMENT RETURN AND
PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT INVESTOR'S SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. THE FUND'S TOTAL
ANNUAL OPERATING EXPENSES FOR THE OCM GOLD FUND ARE 1.99%. PLEASE REVIEW THE
FUND'S PROSPECTUS FOR MORE INFORMATION REGARDING THE FUND'S FEES AND EXPENSES.
FOR PERFORMANCE INFORMATION CURRENT TO THE MOST RECENT MONTH-END, PLEASE CALL
TOLL-FREE 800-628-9403. 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.
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.
Investing in the OCM Gold Fund involves risks including the loss of principal.
Many of the companies in which the Fund invests are smaller capitalization
companies which may subject the fund to greater risk than securities of larger,
more-established companies, as they often have limited product lines, markets or
financial resources and may be subject to more-abrupt market movements. The Fund
also invests in securities of gold and precious metals which may be subject to
greater price fluctuations over short periods of time. The Fund is a
non-diversified investment company meaning it will invest in fewer securities
than diversified investment companies and its performance may be more volatile.
The Fund contains international securities that may provide the opportunity for
greater return but also have special risks associated with foreign investing
including fluctuations in currency, government regulation, differences in
accounting standards and liquidity.
-4-
OCM GOLD FUND
SCHEDULE OF INVESTMENTS - MAY 31, 2009
(UNAUDITED)
- --------------------------------------------------------------------------------
SHARES VALUE
- --------------------------------------------------------------------------------
COMMON STOCKS 92.3%
MAJOR GOLD PRODUCERS 40.4%
225,000 AngloGold Ashanti Ltd. ADR ......... $ 9,524,250
75,000 Barrick Gold Corp. ................. 2,856,000
10,000 Freeport-McMoRan Copper & Gold, Inc. 544,300
270,000 Gold Fields Ltd. ADR ............... 3,666,600
500,050 Goldcorp, Inc. ..................... 19,866,987
100,000 Harmony Gold Mining Co., Ltd. ADR* . 1,210,000
430,680 Kinross Gold Corp. ................. 8,708,350
107,333 Lihir Gold Ltd.* ................... 280,940
32,200 Lihir Gold Ltd. ADR* ............... 832,370
116,500 Newmont Mining Corp. ............... 5,693,355
---------------
53,183,152
---------------
INTERMEDIATE/MID-TIER GOLD PRODUCERS 31.8%
161,860 Agnico-Eagle Mines Ltd. ............ 10,012,660
650,000 Centerra Gold, Inc.* ............... 4,330,170
430,000 Eldorado Gold Corp.* ............... 4,265,600
504,800 IAMGOLD Corp. ...................... 5,689,096
500,000 OZ Minerals Ltd. ................... 350,196
140,000 Randgold Resources Ltd. ADR ........ 9,773,400
634,750 Yamana Gold, Inc. .................. 7,471,007
---------------
41,892,129
---------------
JUNIOR GOLD PRODUCERS 8.9%
250,000 Aurizon Mines Ltd.* ................ 1,110,000
300,000 Capstone Mining Corp.* ............. 635,152
291,200 Claude Resources, Inc.* ............ 236,510
150,000 Jaguar Mining, Inc.* ............... 1,314,109
281,011 Kingsgate Consolidated Ltd.* ....... 1,360,855
300,000 Red Back Mining, Inc.* ............. 2,860,924
815,500 San Gold Corp.* .................... 1,793,535
133,700 SEMAFO, Inc.* ...................... 305,028
283,333 Sino Gold Mining Ltd.* ............. 1,478,693
200,000 Western Goldfields, Inc.* .......... 618,000
---------------
11,712,806
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- --------------------------------------------------------------------------------
SHARES VALUE
- --------------------------------------------------------------------------------
EXPLORATION AND DEVELOPMENT COMPANIES 5.2%
375,000 Amazon Mining Holding PLC* ......... $ 102,665
250,000 Anatolia Minerals Development Ltd.* 743,749
58,200 Aquiline Resources, Inc.* .......... 124,813
400,000 Argentex Mining Corp.* ............. 288,000
479,600 B2Gold Corp.* ...................... 367,644
700,000 Brazauro Resources Corp.* .......... 396,058
126,707 DOT Resources Ltd.* ................ 10,985
500,000 Evolving Gold Corp.* ............... 209,892
215,600 Geologix Explorations, Inc.* ....... 39,350
829,500 Grayd Resource Corp.* .............. 370,921
250,000 Great Basin Gold Ltd.* ............. 392,500
100,000 Guyana Goldfields, Inc.* ........... 396,970
200,000 International Tower Hill Mines Ltd.* 660,704
200,000 Keegan Resources, Inc.* ............ 560,000
300,000 MAG Silver Corp.* .................. 1,700,128
120,000 Pediment Gold Corp.* ............... 105,129
200,000 Radius Gold, Inc.* ................. 41,978
300,000 Sabina Silver Corp.* ............... 268,297
144,500 Sinchao Metals Corp.* .............. 16,483
192,307 Volta Resources, Inc.* ............. 27,202
---------------
6,823,468
---------------
PRIMARY SILVER PRODUCERS 2.3%
225,000 Fortuna Silver Mines, Inc.* ........ 207,383
48,075 Pan American Silver Corp.* ......... 1,125,916
166,599 Silver Wheaton Corp.* .............. 1,746,877
---------------
3,080,176
---------------
OTHER 3.7%
206,812 Altius Minerals Corp.* ............. 1,370,191
14,800 Franco-Nevada Corp. ................ 409,910
65,000 Royal Gold, Inc. ................... 3,027,050
---------------
4,807,151
---------------
TOTAL COMMON STOCKS
(Cost $39,891,402) ................. 121,498,882
---------------
See notes to financial statements.
-5-
OCM GOLD FUND
SCHEDULE OF INVESTMENTS - MAY 31, 2009 (CONTINUED)
(UNAUDITED)
- --------------------------------------------------------------------------------
SHARES VALUE
- --------------------------------------------------------------------------------
EXCHANGE TRADED FUNDS 5.8%
90,000 iShares Silver Trust* .............. $ 1,392,300
65,000 SPDR Gold Trust* ................... 6,253,650
---------------
TOTAL EXCHANGE TRADED FUNDS
(Cost $3,931,360) .................. 7,645,950
---------------
WARRANTS 0.3%
187,500 Amazon Mining Holding PLC*+#
Exercise Price 1.55 CAD,
Exp. 11/16/2009 .................... --
200,000 Argentex Mining Corp.*+#
Exercise Price $1.60,
Exp. 9/19/2009 ..................... --
150,000 EMC Metals Corp.*+#
Exercise Price 3.35 CAD,
Exp. 8/15/2011 ..................... --
37,500 Golden Predator Royalty & Development Corp.*
Exercise Price 1.34 CAD,
Exp. 8/15/2011 ..................... 1,968
143,750 Majestic Gold Corp.*+#
Exercise Price 0.60 CAD,
Exp. 6/1/2009 ...................... --
60,000 Pediment Exploration Ltd.*+#
Exercise Price 3.75 CAD,
Exp. 11/16/2009 .................... --
250,000 Silver Wheaton Corp.*
Exercise Price 4.00 CAD,
Exp. 8/5/2009 ...................... 339,934
100,000 Yukon-Nevada Gold Corp.*
Exercise Price 3.00 CAD,
Exp. 6/20/2012 ..................... 7,757
---------------
TOTAL WARRANTS
(Cost $0) .......................... 349,659
---------------
- --------------------------------------------------------------------------------
SHARES VALUE
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENT 2.1%
2,813,969 UMB Money Market Fiduciary, 0.05% ...... $ 2,813,969
---------------
TOTAL SHORT-TERM INVESTMENTS
(Cost $2,813,969) ......................... 2,813,969
---------------
TOTAL INVESTMENTS
(Cost $46,636,731) ............... 100.5% 132,308,460
LIABILITIES LESS OTHER ASSETS ........... (0.5)% (620,821)
---------------
TOTAL NET ASSETS ........................ 100.0% $ 131,687,639
===============
- -------------
ADR - American Depository Receipts.
PLC - Public Limited Company.
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 proce- dures established by the Fund's
Board of Trustees.
See notes to financial statements.
-6-
OCM GOLD FUND
SCHEDULE OF INVESTMENTS - MAY 31, 2009 (CONTINUED)
(UNAUDITED)
SUMMARY OF INVESTMENTS BY COUNTRY
PERCENT OF
COUNTRY MARKET VALUE INVESTMENT SECURITIES
- --------------------------------------------------------------------------------
Australia $ 3,189,744 2.4%
Canada 83,715,866 63.3
Jersey 9,773,400 7.4
New Guinea 1,113,311 0.8
South Africa 14,400,850 10.9
United Kingdom 102,665 0.1
United States(1) 20,012,624 15.1
- --------------------------------------------------------------------------------
TOTAL $132,308,460 100.0%
- --------------------------------------------------------------------------------
(1) Includes short-term securities.
See notes to financial statements.
-7-
OCM GOLD FUND
STATEMENT OF ASSETS AND LIABILITIES - MAY 31, 2009
(UNAUDITED)
ASSETS:
Investments in unaffiliated issuers,
at value (cost $46,636,731) ............................. $ 132,308,460
Foreign cash, at value (cost $263,158) ................... 273,773
Interest and dividends receivable ........................ 12,884
Receivable for fund shares sold .......................... 146,202
Prepaid expenses and other assets ........................ 19,416
-------------
Total assets ............................................ 132,760,735
-------------
LIABILITIES:
Payable for securities purchased ......................... 550,183
Payable for fund shares redeemed ......................... 79,043
Due to investment adviser ................................ 88,790
Accrued distribution fees ................................ 290,912
Accrued trustees' fees ................................... 1,674
Accrued expenses and other liabilities ................... 62,494
-------------
Total liabilities ....................................... 1,073,096
-------------
Net Assets .............................................. $ 131,687,639
=============
NET ASSETS CONSIST OF:
Shares of beneficial interest, no par value;
unlimited shares authorized ............................. $ 44,910,767
Undistributed net investment loss ........................ (895,076)
Undistributed net realized gain on
investments and foreign currency transactions ........... 2,000,219
Net unrealized appreciation on investments
and foreign currency translations ....................... 85,671,729
-------------
Net Assets .............................................. $ 131,687,639
=============
CALCULATION OF MAXIMUM OFFERING PRICE:
Net asset value and redemption price per share ........... $ 20.58
Maximum sales charge (4.50% of offering price) ........... 0.97
-------------
Offering price to public ................................. $ 21.55
-------------
Shares outstanding ....................................... 6,398,053
=============
See notes to financial statements.
-8-
OCM GOLD FUND
STATEMENT OF OPERATIONS - SIX MONTHS ENDED MAY 31, 2009
(UNAUDITED)
INVESTMENT INCOME:
Interest .................................................... $ 2,129
Dividends (net of foreign withholding taxes of $23,357) ..... 199,688
------------
Total investment income .................................... 201,817
------------
EXPENSES:
Investment advisory fees .................................... 451,301
Distribution fees ........................................... 423,587
Fund administration and accounting fees ..................... 59,800
Transfer agent fees and expenses ............................ 46,594
Professional fees ........................................... 28,644
Federal and state registration fees ......................... 14,765
Chief Compliance Officer fees ............................... 12,952
Custody fees ................................................ 11,954
Reports to shareholders ..................................... 10,108
Trustees' fees .............................................. 3,674
Other expenses .............................................. 3,350
------------
Total expenses ............................................. 1,066,729
------------
Net investment loss ........................................ (864,912)
------------
REALIZED AND UNREALIZED GAIN/LOSS ON INVESTMENTS:
Net realized gain on investments and foreign
currency transactions ...................................... 1,961,247
Net change in unrealized appreciation/depreciation
on investments and foreign currency translations ........... 51,392,907
------------
Net gain on investments ..................................... 53,354,154
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS .......... $ 52,489,242
============
See notes to financial statements.
-9-
OCM GOLD FUND
STATEMENTS OF CHANGES IN NET ASSETS
SIX MONTHS ENDED YEAR ENDED
MAY 31, 2009 NOV. 30,
(UNAUDITED) 2008
------------- -------------
OPERATIONS:
Net investment loss ................................... $ (864,912) $ (1,971,020)
Net realized gain on investments and
foreign currency transactions ........................ 1,961,247 1,699,108
Net change in unrealized appreciation/
depreciation on investments and
foreign currency translations ........................ 51,392,907 (52,315,767)
------------- -------------
Net increase/(decrease) in net assets
resulting from operations ............................ 52,489,242 (52,587,679)
------------- -------------
DISTRIBUTIONS PAID TO SHAREHOLDERS:
Distributions paid from net realized gains ............ -- (8,998,120)
------------- -------------
Total distributions ................................... -- (8,998,120)
------------- -------------
FUND SHARE TRANSACTIONS:
Net proceeds from shares sold ......................... 5,645,353 18,015,280
Distributions reinvested .............................. -- 8,489,751
Payment for shares redeemed(1) ........................ (5,099,406) (22,507,872)
------------- -------------
Net increase in net assets from fund share transactions 545,947 3,997,159
------------- -------------
TOTAL INCREASE/(DECREASE) IN NET ASSETS ................. 53,035,189 (57,588,640)
NET ASSETS, BEGINNING OF PERIOD ......................... 78,652,450 136,241,090
------------- -------------
NET ASSETS, END OF PERIOD ............................... $ 131,687,639 $ 78,652,450
============= =============
UNDISTRIBUTED NET INVESTMENT LOSS ....................... $ (895,076) $ (30,164)
============= =============
TRANSACTIONS IN SHARES:
Shares sold ........................................... 363,424 1,004,491
Shares issued on reinvestment of distributions ........ -- 415,350
Shares redeemed ....................................... (336,037) (1,387,479)
------------- -------------
Net increase in shares outstanding .................... 27,387 32,362
============= =============
(1) Net of redemption fees of $2,559 and $16,193 for the six months ended
May 31, 2009, and year ended November 30, 2008, respectively.
See notes to financial statements.
-10-
OCM GOLD FUND
NOTES TO FINANCIAL STATEMENTS - MAY 31, 2009
(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, 2009, in valuing the
Fund's assets:
- --------------------------------------------------------------------------------
VALUATION INPUTS INVESTMENT IN SECURITIES
- --------------------------------------------------------------------------------
Level 1 - Quoted Prices $ 132,308,460
- --------------------------------------------------------------------------------
Level 2 - Other Significant Observable Inputs --
- --------------------------------------------------------------------------------
Level 3 - Significant Unobservable Inputs --
- --------------------------------------------------------------------------------
Total $ 132,308,460
- --------------------------------------------------------------------------------
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 for the six
months ended May 31, 2009 are included within the realized and unrealized
gain/loss on investments section of the Statement of Operations.
-11-
OCM GOLD FUND
NOTES TO FINANCIAL STATEMENTS - MAY 31, 2009 (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. Such fluctuations for
the six months ended May 31, 2009 are included within the realized and
unrealized gain/loss on investments section of the Statement of Operations.
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, 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, 2009. Also, the Fund had recognized
no interest and penalties related to uncertain tax benefits in 2008. At May 31,
2009, 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 - 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 six
months ended May 31, 2009, the Fund received $2,559 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.
-12-
OCM GOLD FUND
NOTES TO FINANCIAL STATEMENTS - MAY 31, 2009 (CONTINUED)
(UNAUDITED)
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%
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, 2009 are reflected in the Statement of
Operations. At May 31, 2009, $290,912 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, 2009
were $4,365,636 and $2,993,014, respectively. There were no purchases or sales
of U.S. government obligations.
NOTE 6. FEDERAL INCOME TAX INFORMATION
At May 31, 2009, 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 ............................... $ 47,121,669
============
Unrealized appreciation ........................... $ 87,793,373
Unrealized depreciation ........................... (2,606,582)
------------
Net unrealized appreciation on investments ........ $ 85,186,791
============
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, 2008 and November 30, 2007 was as follows:
2008 2007
---- ----
Ordinary income .................. $ -- $ --
Net long-term capital gains ...... 8,998,120 10,048,572
----------- -----------
Total distributions .............. $ 8,998,120 $10,048,572
=========== ===========
-13-
OCM GOLD FUND
NOTES TO FINANCIAL STATEMENTS - MAY 31, 2009 (CONTINUED)
(UNAUDITED)
As of November 30, 2008 the components of accumulated earnings on a tax
basis were as follows:
Undistributed ordinary income ................... $ --
Undistributed long-term gains ................... 2,363
-----------
Tax accumulated earnings ........................ 2,363
Accumulated capital and other losses ............ --
Unrealized appreciation on investments .......... 34,285,267
-----------
Total accumulated earnings ...................... $34,287,630
===========
NOTE 7. 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.
Equity securities in the gold mining industry, particularly the smaller
companies, may occasionally issue warrants as part of their capital structure. A
warrant gives the holder the right to purchase the underlying equity security at
the exercise price until the expiration date of the warrant. The Fund may hold
such warrants for exposure to smaller companies in the portfolio or other
reasons associated with the Fund's overall objective of long-term growth, though
warrants will typically not be a significant part of the Fund's portfolio. The
Fund's maximum risk in holding warrants is the loss of the entire amount paid
for the warrants. At May 31, 2009 the Fund held warrants as listed on the
Schedule of Investments.
-14-
OCM GOLD FUND
FINANCIAL HIGHLIGHTS
SIX MONTHS
ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
MAY 31, 2009 NOV. 30, NOV. 30, NOV. 30, NOV. 30, NOV. 30,
(UNAUDITED) 2008 2007 2006 2005 2004
---------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout each period)
Net asset value, beginning of period ... $ 12.35 $ 21.49 $ 20.44 $ 12.85 $ 12.76 $ 14.46
--------- ----------- --------- --------- ---------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss .................... (0.14) (0.31) (0.27) (0.29) (0.18) (0.18)
Net realized and unrealized gain
(loss) on investments and foreign
currency transactions ................ 8.37 (7.41) 3.06 7.88 0.69 (1.30)
--------- ----------- --------- --------- ---------- --------
Total from investment operations ....... 8.23 (7.72) 2.79 7.59 0.51 (1.48)
--------- ----------- --------- --------- ---------- --------
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 ......... $ 20.58 $ 12.35 $ 21.49 $ 20.44 $ 12.85 $ 12.76
========= =========== ========= ========= ========== ========
TOTAL RETURN* .......................... 66.64%(2) (38.55)% 15.64% 59.07% 4.34% (10.31)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (in 000's) ..... $ 131,688 $ 78,652 $ 136,241 $ 119,756 $ 78,528 $ 80,202
Ratio of expenses to average net assets:
Net of waivers and reimbursements .... 2.14%(1) 1.99% 1.93% 2.07% 2.24% 2.15%
Before waivers and reimbursements .... 2.14%(1) 1.99% 1.93% 2.07% 2.24% 2.17%
Ratio of net investment loss to
average net assets:
Net of waivers and reimbursements .... (1.73)%(1) (1.58)% (1.51)% (1.64)% (1.51)% (1.58)%
Before waivers and reimbursements .... (1.73)%(1) (1.58)% (1.51)% (1.64)% (1.51)% (1.60)%
Portfolio turnover rate ................ 3%(2) 5% 11% 20% 5% 12%
- -----------
* 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.
-15-
OCM GOLD FUND
EXPENSE EXAMPLE - FOR THE PERIOD ENDED MAY 31, 2009
(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; 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, 2008 to
May 31, 2009 (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
EXPENSES PAID
BEGINNING ENDING DURING THE
ACCOUNT VALUE ACCOUNT VALUE PERIOD ENDED
DECEMBER 1, 2008 MAY 31, 2009 MAY 31, 2009*
---------------- ------------ -------------
Actual $1,000.00 $1,666.40 $14.22
Hypothetical (5% return
before expenses) 1,000.00 1,014.34 10.74
- ---------
* Expenses are equal to the Fund's annualized expense ratio of 2.14% for the
period, multiplied by the average account value over the period, multiplied by
182/365 (to reflect the one-half year period).
-16-
OCM GOLD FUND
INVESTMENTS BY SECTOR (UNAUDITED)
AS A PERCENTAGE OF NET ASSETS
PIE CHART OMITTED
Major Gold Producers 40.2%
Intermediate/Mid-Tier Gold Producers 31.7%
Junior Gold Producers 8.8%
Exploration and Development Companies 5.2%
Other 3.6%
Exchange Traded Funds 5.8%
Primary Silver Producers 2.6%
Cash and Other Assets 2.1%
------------
Net Assets 100.0%
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, 2008 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.
-17-
OCM Gold Fund
Distributed by:
Northern Lights Distributors, LLC
4020 South 147th Street
Omaha, NE 68137
0913-NLD-7/29/2009
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 schedules 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: August 5, 2009
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: August 5, 2009
By: /s/ Jacklyn Orrell
------------------
Jacklyn Orrell
Secretary and Treasurer
Date: August 5, 2009