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Expires: September 30, 2007
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hours per response: 19.4
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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 811-10529
-----------------------------------
The GKM Funds
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
11150 Santa Monica Boulevard, Suite 850 Los Angeles, California 23226
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Timothy J. Wahl
GKM Advisers, LLC 11150 Santa Monica Blvd., Suite 850 Los Angeles, CA 90025
- --------------------------------------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: (310) 268-2605
----------------------
Date of fiscal year end: July 31, 2005
----------------------------------
Date of reporting period: July 31, 2005
----------------------------------
Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
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[GRAPHIC OMITTED]
GKM
GKM FUNDS
GKM GROWTH FUND
ANNUAL REPORT
JULY 31, 2005
--------------------------------------------------------------------------
================================================================================
GKM GROWTH FUND
================================================================================
September 2005
Dear Shareholders:
As we close our third full fiscal year, I would like to thank you for joining us
as shareholders of the GKM Growth Fund. All of us at GKM Advisers continue to
share a common goal - helping our clients realize their financial objectives
through the long-term compounding of capital.
GKM GROWTH FUND PERFORMANCE AND SUMMARY
- ---------------------------------------
For the fiscal year ended July 31, 2005, the GKM Growth Fund and the Standard &
Poor's 500 Index each advanced 14.1%. For the three years ending July 31, 2005,
the Fund achieved an average annual gain of 13.7% versus the S&P 500 Index
average annual return of 12.6%.
Through the first eight months of 2005, the Dow Jones Industrial Average and the
NASDAQ Composite have each shown a decline for the year while the Oil and Gas
and Utility sectors of the Dow Jones Industrial Average are up over 30% and 15%,
respectively. This is the second consecutive year that the top performing
sectors of the equity markets are Energy and Utilities. While the Energy and
Utility industries have recently outperformed more traditional growth
industries, the GKM Growth Fund has no holdings in either sector as of July 31,
2005, as our goal remains to find and own the best companies within the areas of
the economy that we believe will show continuous and robust growth over many
years. Commodity-type stocks tend to go up and down, sometimes in quite volatile
fashion, while not typically being within the most attractive growth areas over
the long haul. Our largest sector concentrations currently are Information
Technology (34%), Healthcare (23%), and Industrials (17%).
Morningstar, Inc., a mutual fund rating service, categorizes the GKM Growth Fund
as a Large Cap Growth Fund. We are growth managers who measure a company's
success by its ability to generate long-term earnings growth. After five
consecutive years of growth stocks lagging value stocks, growth may likely play
some catch-up over the next few years. Not only has value outperformed growth,
but small and mid capitalization companies have significantly outperformed large
caps. The average market cap for the GKM Growth Fund is approximately $30
billion. The median market cap of our holdings is just over $10 billion. Even
though our growth style and company market capitalization has not been in favor,
we have outperformed our benchmark, the S & P 500, dating back to the Fund's
inception on December 28, 2001. After five years of large cap growth
underperformance, we are now observing increasing value in the established,
growing companies that we believe can continue to grow their top and bottom
lines for the foreseeable future.
In today's ever-changing and increasingly competitive financial marketplace,
knowledge is power. The age of information has inundated consumers with more
information than could have been imagined even ten years ago. But simply having
more information does not necessarily mean investors have more knowledge. Our
Fund's low portfolio turnover and consistent long-term growth are the result of
a disciplined approach to investing, exhaustive research and many decades of
investment experience (knowledge). For the twelve months ending July 31, 2005,
our portfolio turnover ratio remained quite low at 11%, compared to the average
portfolio turnover ratio for large-cap growth funds in excess of 100%, as
reported by Morningstar. This means that the average large-cap growth fund
essentially turns over its entire portfolio annually.
1
Our combination of low turnover and consistent investment returns is not
achievable unless you buy high quality, growing companies at reasonable prices
and limit your mistakes with those selections.
Another core discipline of the GKM Growth Fund is our acute attention to risk
control. Our primary means of controlling risk comes through diversification. We
manage risk by diversifying on three different levels. We attempt to mitigate
specific stock risk by owning over eighty stocks, mitigate sector risk by owning
eight of the ten S&P industry sectors and diversifying among small, medium and
large capitalization companies. Of course, we believe the most effective
strategy to control risk is to simply buy high-quality growing businesses that
we hope to own forever and buy them at prices when they are reasonably valued.
MARKET AND ECONOMIC OUTLOOK
- ----------------------------
The recession and recovery phases of the current cycle are behind us. The
economy has created four million jobs over the past two years and the
unemployment rate has fallen to a five-year low. The Federal Reserve has been
steadily removing the accommodative monetary policy that has been in place over
the past few years. Even with rising interest rates and near $70 per barrel oil,
consumers continue to spend thanks to government fiscal (spending) stimulus,
overall job growth and rising household incomes. The U.S. economy expanded at
more than a 3% rate in each of the last nine quarters with third quarter 2005
GDP expected to grow in excess of 3%, even after the effects of hurricane
Katrina. In our view, with balance sheets at their strongest in many decades,
Corporate America is well positioned to significantly increase spending as firms
have had dramatic profit growth and excellent cash flow.
Ever-higher oil prices act like a tax on the consumer that can derail economic
recoveries. The drag of rising energy prices also complicates monetary policy as
the heady pace of GDP growth may slow as inflation increases. The stagflation
scenario, slowing economic growth combined with increasing rates of inflation,
is what the economy experienced during the energy crises of the mid 1970's and
early 1980's. For now, inflation appears stable as core measures of inflation
have increased by less than 2 1/2% over the last 12 months and 10-year treasury
rates are back down around 4%.
The stock market abhors uncertainty and currently the economic indicators are
pointing in conflicting directions leading to abrupt shifts in market
psychology. When things are going well for the economy, very few believe that
they will ever go bad; when things are going badly, people have a hard time
believing they will ever improve. We remain confident in the strength of
capitalism, our economy, and common stocks remaining the asset class of choice
for the long-term growth of capital.
We welcome the opportunity to speak with you, our shareholders, should you have
any questions or comments regarding the GKM Growth Fund. Please feel free to
contact us via our web site at www.gkmadvisers.com or give us a call at (888)
456-9518.
Sincerely,
Timothy J. Wahl, CPA
President and Co-Portfolio Manager
GKM Advisers
2
GKM GROWTH FUND
PERFORMANCE INFORMATION
JULY 31, 2005 (UNAUDITED)
================================================================================
COMPARISON OF THE CHANGE IN VALUE OF A $10,000 INVESTMENT IN
GKM GROWTH FUND AND THE S&P 500 INDEX
[GRAPHIC OMITTED]
GKM Growth Fund S&P 500 Index
--------------- -------------
12/28/2001 10,000 12/28/2001 10,000
1/31/2002 9,800 1/31/2002 9,744
4/30/2002 9,700 4/30/2002 9,315
7/31/2002 8,560 7/31/2002 7,918
10/31/2002 8,620 10/31/2002 7,729
1/31/2003 8,510 1/31/2003 7,501
4/30/2003 9,130 4/30/2003 8,075
7/31/2003 9,780 7/31/2003 8,761
10/31/2003 10,700 10/31/2003 9,337
1/31/2004 11,350 1/31/2004 10,095
4/30/2004 11,100 4/30/2004 9,922
7/31/2004 11,030 7/31/2004 9,915
10/31/2004 11,650 10/31/2004 10,216
1/31/2005 12,210 1/31/2005 10,723
4/30/2005 11,600 4/30/2005 10,551
7/31/2005 12,580 7/31/2005 11,308
Past performance is not predictive of future performance.
-----------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS*
(FOR PERIODS ENDED JULY 31, 2005)
1 Year Since Inception**
------ ---------------
GKM Growth Fund 14.05% 6.60%
S&P 500 14.05% 3.48%
-----------------------------------------------------------
* The total returns shown do not reflect the deduction of taxes that a
shareholder would pay on fund distributions or the redemption of fund shares.
** Initial public offering of shares was December 28, 2001.
3
GKM GROWTH FUND
PORTFOLIO INFORMATION
JULY 31, 2005 (UNAUDITED)
================================================================================
INDUSTRY CONCENTRATION VS. THE S&P 500 INDEX
[GRAPHIC OMITTED]
GKM Growth Fund S&P 500 Index
--------------- -------------
Energy 0.0% 9.0%
Materials 5.4% 3.0%
Industrials 17.2% 11.1%
Consumer Discretionary 12.1% 11.7%
Consumer Staples 3.7% 10.1%
Health Care 22.8% 13.2%
Financials 2.6% 19.9%
Information Technology 33.5% 15.4%
Telecommunication Services 2.7% 3.2%
Utilities 0.0% 3.4%
TOP 10 HOLDINGS
% OF
SECURITY DESCRIPTION NET ASSETS
--------------------------------------------- ------------
Scotts Miracle-Gro Company (The) - Class A 2.6%
Microsoft Corporation 2.5%
Google, Inc. 2.4%
Medtronic, Inc. 2.2%
Harman International Industries, Inc. 2.1%
Trimble Navigation Ltd. 2.1%
Bausch & Lomb, Inc. 2.0%
Bed, Bath & Beyond, Inc. 1.8%
Men's Warehouse, Inc. (The) 1.7%
International Business Machines Corporation 1.7%
4
GKM FUNDS
GKM GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 2005
================================================================================
ASSETS
Investments in securities:
At acquisition cost ...................................... $ 28,315,501
============
At value (Note 1) ........................................ $ 35,838,210
Dividends receivable ....................................... 7,099
Receivable for capital shares sold ......................... 2,212
Other assets ............................................... 249
------------
Total Assets ........................................... 35,847,770
------------
LIABILITIES
Bank overdraft ............................................. 5,085
Accrued investment advisory fees (Note 3) .................. 33,031
Accrued trustees' fees ..................................... 1,750
------------
Total Liabilities ...................................... 39,866
------------
NET ASSETS ................................................... $ 35,807,904
============
Net assets consist of:
Paid-in capital ............................................ $ 29,244,652
Accumulated net realized losses from security transactions . (959,457)
Net unrealized appreciation on investments ................. 7,522,709
------------
Net assets ................................................... $ 35,807,904
============
Shares of beneficial interest outstanding (unlimited number of
shares authorized, no par value) ........................... 2,845,953
============
Net asset value, redemption price and offering price per share
(Note 1) ................................................... $ 12.58
============
See accompanying notes to financial statements.
5
GKM FUNDS
GKM GROWTH FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JULY 31, 2005
================================================================================
INVESTMENT INCOME
Dividends (Net of foreign tax of $3,910) ................... $ 322,509
------------
EXPENSES
Investment advisory fees (Note 3) .......................... 401,093
Trustees' fees ............................................. 2,993
------------
TOTAL EXPENSES ........................................... 404,086
------------
NET INVESTMENT LOSS .......................................... (81,577)
------------
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS
Net realized losses from security transactions ............. (498,312)
Net change in unrealized appreciation/depreciation on
investments .............................................. 4,179,319
------------
NET REALIZED AND UNREALIZED GAINS ON INVESTMENTS ............. 3,681,007
------------
NET INCREASE IN NET ASSETS FROM OPERATIONS ................... $ 3,599,430
============
See accompanying notes to financial statements.
6
GKM FUNDS
GKM GROWTH FUND
STATEMENTS OF CHANGES IN NET ASSETS
=====================================================================================
YEAR YEAR
ENDED ENDED
JULY 31, 2005 JULY 31, 2004
- -------------------------------------------------------------------------------------
FROM OPERATIONS
Net investment loss .............................. $ (81,577) $ (107,951)
Net realized losses from security transactions ... (498,312) (222,103)
Net change in unrealized appreciation/
depreciation on investments .................... 4,179,319 2,140,164
------------ ------------
Net increase in net assets resulting from operations 3,599,430 1,810,110
------------ ------------
FROM CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold ........................ 11,738,195 8,075,822
Payments for shares redeemed ..................... (2,181,964) (1,188,383)
------------ ------------
Net increase in net assets from
capital share transactions ....................... 9,556,231 6,887,439
------------ ------------
TOTAL INCREASE IN NET ASSETS ....................... 13,155,661 8,697,549
NET ASSETS
Beginning of year ................................ 22,652,243 13,954,694
------------ ------------
End of year ...................................... $ 35,807,904 $ 22,652,243
============ ============
UNDISTRIBUTED NET INVESTMENT INCOME ................ $ -- $ --
============ ============
CAPITAL SHARE ACTIVITY
Sold ............................................. 976,173 733,367
Redeemed ......................................... (183,095) (107,194)
------------ ------------
Net increase in shares outstanding ............... 793,078 626,173
Shares outstanding, beginning of year ............ 2,052,875 1,426,702
------------ ------------
Shares outstanding, end of year .................. 2,845,953 2,052,875
============ ============
See accompanying notes to financial statements.
7
GKM FUNDS
GKM GROWTH FUND
FINANCIAL HIGHLIGHTS
=======================================================================================================================
Per Share Data and Ratios for a Share Outstanding Throughout Each Period
=======================================================================================================================
YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED
JULY 31, JULY 31, JULY 31, JULY 31,
2005 2004 2003 2002(a)
=======================================================================================================================
Net asset value at beginning of period .. $ 11.03 $ 9.78 $ 8.56 $ 10.00
------------- ------------- ------------- -------------
Income (loss) from investment operations:
Net investment loss ................... (0.03) (0.05) (0.04) (0.01)
Net realized and unrealized gains
(losses) on investments ............. 1.58 1.30 1.26 (1.43)
------------- ------------- ------------- -------------
Total from investment operations ....... 1.55 1.25 1.22 (1.44)
------------- ------------- ------------- -------------
Net asset value at end of period ........ $ 12.58 $ 11.03 $ 9.78 $ 8.56
============= ============= ============= =============
Total return ............................ 14.05% 12.78% 14.25% (14.40)%(b)
============= ============= ============= =============
Net assets at end of period ............. $ 35,807,904 $ 22,652,243 $ 13,954,694 $ 7,240,624
============= ============= ============= =============
Ratio of expenses to average net assets . 1.41% 1.42% 1.43% 1.46%(c)
Ratio of net investment loss to
average net assets .................... (0.28%) (0.56%) (0.49%) (0.72%)(c)
Portfolio turnover rate ................. 11% 8% 5% 1%(c)
(a) Represents the period from the commencement of operations (December 28,
2001) through July 31, 2002.
(b) Not annualized.
(c) Annualized.
See accompanying notes to financial statements.
8
GKM FUNDS
GKM GROWTH FUND
PORTFOLIO OF INVESTMENTS
JULY 31, 2005
================================================================================
SHARES COMMON STOCKS -- 100.1% VALUE
- --------------------------------------------------------------------------------
AIR FREIGHT AND COURIERS -- 2.4%
5,300 FedEx Corporation ................................... $ 445,677
5,700 United Parcel Service, Inc. - Class B ............... 415,929
-----------
861,606
-----------
BANKS -- 0.5%
2,800 Wells Fargo & Company ............................... 171,752
-----------
BIOTECHNOLOGY -- 5.1%
5,300 Amgen, Inc.* ........................................ 422,675
11,400 Covance, Inc.* ...................................... 564,870
9,500 Dionex Corporation* ................................. 438,520
2,200 Genzyme Corporation* ................................ 163,702
11,600 ID Biomedical Corporation* .......................... 237,336
-----------
1,827,103
-----------
CHEMICALS -- 4.7%
9,500 International Flavors & Fragrances, Inc. ............ 360,240
11,800 Scotts Miracle-Gro Company (The) - Class A* ......... 925,120
6,300 Sigma-Aldrich Corporation ........................... 404,208
-----------
1,689,568
-----------
COMMERCIAL SERVICES AND SUPPLIES -- 6.5%
3,300 Automatic Data Processing, Inc. ..................... 146,553
12,700 Ecolab, Inc. ........................................ 426,466
5,500 Graco, Inc. ......................................... 210,265
12,700 Manpower, Inc. ...................................... 607,060
11,700 Pitney Bowes, Inc. .................................. 521,586
14,700 Waste Management, Inc. .............................. 413,364
-----------
2,325,294
-----------
COMMUNICATIONS EQUIPMENT -- 3.2%
21,100 Corning, Inc.* ...................................... 401,955
13,700 QUALCOMM, Inc. ...................................... 541,013
19,500 Tellabs, Inc.* ...................................... 189,540
-----------
1,132,508
-----------
COMPUTERS AND PERIPHERALS -- 3.5%
11,600 Intergraph Corporation* ............................. 441,148
7,400 International Business Machines Corporation ......... 617,604
3,100 Lexmark International, Inc. - Class A* .............. 194,370
-----------
1,253,122
-----------
DIVERSIFIED FINANCIALS -- 2.2%
5,300 Bear Stearns Companies, Inc. (The) .................. 541,183
2,200 Lehman Brothers Holdings, Inc. ...................... 231,286
-----------
772,469
-----------
9
GKM FUNDS
GKM GROWTH FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
JULY 31, 2005
================================================================================
SHARES COMMON STOCKS -- 100.1% (CONTINUED) VALUE
- --------------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATIONS SERVICES -- 1.7%
37,200 Nokia Corporation - ADR ............................. $ 593,340
-----------
ELECTRICAL EQUIPMENT -- 2.1%
18,900 Trimble Navigation Ltd.* ............................ 736,344
-----------
ELECTRONIC EQUIPMENT AND INSTRUMENTS -- 8.3%
10,600 Diebold, Inc. ....................................... 526,608
40,000 Flextronics International Ltd.* ..................... 541,600
8,400 Garmin Ltd. ......................................... 461,076
8,600 Harman International Industries, Inc. ............... 739,170
24,800 LoJack Corporation* ................................. 473,680
20,000 Symbol Technologies, Inc. ........................... 232,800
-----------
2,974,934
-----------
FOOD AND DRUG RETAILING -- 2.3%
10,500 Sysco Corporation ................................... 378,630
3,200 Whole Foods Market, Inc. ............................ 436,832
-----------
815,462
-----------
FOOD PRODUCTS -- 0.7%
4,200 Hershey Foods Corporation ........................... 268,254
-----------
HEALTH CARE EQUIPMENT AND SUPPLIES -- 9.4%
8,600 Bausch & Lomb, Inc. ................................. 727,990
12,700 Henry Schein, Inc.* ................................. 548,259
14,700 Medtronic, Inc. ..................................... 792,918
10,500 Patterson Companies, Inc.* .......................... 468,300
16,000 STERIS Corporation* ................................. 434,720
7,500 Stryker Corporation ................................. 405,675
-----------
3,377,862
-----------
HEALTH CARE PROVIDERS AND SERVICES -- 1.2%
8,800 UnitedHealth Group, Inc. ............................ 460,240
-----------
HOTELS, RESTAURANTS & LEISURE -- 2.7%
7,200 Harrah's Entertainment, Inc. ........................ 566,928
15,900 Hilton Hotels Corporation ........................... 393,525
-----------
960,453
-----------
INDUSTRIAL CONGLOMERATES -- 2.6%
7,300 3M Company .......................................... 547,500
10,800 General Electric Company ............................ 372,600
-----------
920,100
-----------
10
GKM FUNDS
GKM GROWTH FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
JULY 31, 2005
================================================================================
SHARES COMMON STOCKS -- 100.1% (CONTINUED) VALUE
- --------------------------------------------------------------------------------
INFORMATION TECHNOLOGY CONSULTING
AND SERVICES -- 2.6%
17,900 Accenture Ltd. - Class A* ........................... $ 448,216
9,500 Affiliated Computer Services, Inc. - Class A* ....... 474,715
-----------
922,931
-----------
INTERNET SOFTWARE AND SERVICES -- 4.3%
20,000 Cisco Systems, Inc.* ................................ 383,000
3,000 Google, Inc. - Class A* ............................. 863,280
11,700 VeriSign, Inc.* ..................................... 307,827
-----------
1,554,107
-----------
MACHINERY -- 2.4%
2,600 Caterpillar, Inc. ................................... 140,166
2,000 Ingersoll-Rand Company Ltd. - Class A ............... 156,340
18,100 Pall Corporation .................................... 560,557
-----------
857,063
-----------
MEDIA -- 3.9%
13,500 Comcast Corporation - Class A* ...................... 414,855
10,300 McGraw-Hill Companies, Inc. (The) ................... 473,903
10,500 Meredith Corporation ................................ 519,750
-----------
1,408,508
-----------
METALS AND MINING -- 0.7%
4,500 Nucor Corporation ................................... 249,525
-----------
PERSONAL PRODUCTS -- 0.7%
5,500 Alberto-Culver Company .............................. 248,160
-----------
PHARMACEUTICALS -- 6.9%
11,700 Abbott Laboratories ................................. 545,571
27,400 deCODE genetics, Inc.* .............................. 268,520
7,800 Eli Lilly and Company ............................... 439,296
3,200 Johnson & Johnson ................................... 204,672
11,600 Novartis AG - ADR ................................... 565,036
1,000 Roche Holding Ltd. - Sponsored ADR .................. 68,000
12,600 Teva Pharmaceutical Industries Ltd. - ADR ........... 395,640
-----------
2,486,735
-----------
SEMICONDUCTOR EQUIPMENT AND PRODUCTS -- 3.8%
33,000 Applied Materials, Inc. ............................. 609,180
13,700 Intel Corporation ................................... 371,818
7,400 Intersil Corporation - Class A ...................... 143,338
7,400 Texas Instruments, Inc. ............................. 235,024
-----------
1,359,360
-----------
11
GKM FUNDS
GKM GROWTH FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
JULY 31, 2005
================================================================================
SHARES COMMON STOCKS -- 100.1% (CONTINUED) VALUE
- --------------------------------------------------------------------------------
SOFTWARE -- 7.8%
19,000 Adobe Systems, Inc. ................................. $ 563,160
21,200 Citrix Systems, Inc.* ............................... 505,196
2,200 Electronic Arts, Inc.* .............................. 126,720
35,000 Microsoft Corporation ............................... 896,350
20,000 Oracle Corporation* ................................. 271,600
10,500 SAP AG - Sponsored ADR .............................. 449,610
-----------
2,812,636
-----------
SPECIALTY RETAIL -- 4.6%
13,700 Bed Bath & Beyond, Inc.* ............................ 628,830
17,250 Men's Wearhouse, Inc. (The)* ........................ 620,310
13,700 PETsMART, Inc. ...................................... 407,575
-----------
1,656,715
-----------
TEXTILES AND APPAREL -- 0.9%
3,700 Nike, Inc. - Class B ................................ 310,060
-----------
TRADING COMPANIES AND DISTRIBUTORS -- 1.3%
7,300 Grainger (W.W.), Inc. ............................... 454,936
-----------
WIRELESS TELECOMMUNICATIONS SERVICES -- 1.1%
12,700 Amdocs Ltd.* ........................................ 377,063
-----------
TOTAL COMMON STOCKS -- 100.1% (Cost $28,315,501)..... $35,838,210
LIABILITIES IN EXCESS OF OTHER ASSETS -- (0.1%)...... (30,306)
-----------
NET ASSETS -- 100.0%................................. $35,807,904
===========
* Non-income producing security
ADR - American Depositary Receipt
See accompanying notes to financial statements.
12
GKM FUNDS
GKM GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
JULY 31, 2005
================================================================================
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The GKM Growth Fund (the "Fund") is a diversified series of The GKM Funds (the
"Trust"), an open-end management investment company established under the laws
of Ohio by an Agreement and Declaration of Trust dated October 2, 2001. The
public offering of shares of the Fund commenced on December 28, 2001.
The investment objective of the Fund is long term capital appreciation.
The following is a summary of the Fund's significant accounting policies:
SECURITIES VALUATION - Equity securities generally are valued by using market
quotations, but may be valued on the basis of prices furnished by a pricing
service when the Adviser believes such prices accurately reflect the fair market
value of such securities. Securities that are traded on any stock exchange are
generally valued at the last quoted sale price. Lacking a last sale price, an
exchange traded security is generally valued at its last bid price. Securities
traded in the NASDAQ over-the-counter market are generally valued at the NASDAQ
Official Closing Price. When market quotations are not readily available, when
the Adviser determines that the market quotation or the price provided by the
pricing service does not accurately reflect the current market value or when
restricted securities are being valued, such securities are valued as determined
in good faith by the Adviser, in conformity with guidelines adopted by and
subject to review of the Board of Trustees of the Trust.
SHARE VALUATION - The net asset value of the Fund's shares is calculated at the
close of trading on the New York Stock Exchange (normally 4:00 p.m., Eastern
time) on each day that the Trust is open for business. The net asset value is
calculated by dividing the value of the Fund's total assets, minus liabilities,
by the total number of shares outstanding. The offering price and redemption
price per share is equal to the net asset value per share.
SECURITY TRANSACTIONS AND INVESTMENT INCOME - Security transactions are
accounted for on trade date. Gains and losses on securities sold are determined
on a specific identification basis. Dividend income is recorded on the
ex-dividend date. Interest income is accrued as earned.
DISTRIBUTIONS TO SHAREHOLDERS - Dividends arising from net investment income and
net capital gains, if any, are declared and paid annually in December. The
amount of distributions from net investment income and net realized gains are
determined in accordance with income tax regulations which may differ from
accounting principles generally accepted in the United States of America. There
were no distributions for the years ended July 31, 2005 and July 31, 2004.
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 at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates.
13
GKM FUNDS
GKM GROWTH FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
FEDERAL INCOME TAX - It is the Fund's policy to comply with the special
provisions of Subchapter M of the Internal Revenue Code applicable to regulated
investment companies. As provided therein, in any fiscal year in which the Fund
so qualifies and distributes at least 90% of its taxable net income, the Fund
(but not the shareholders) will be relieved of federal income tax on the income
distributed. Accordingly, no provisions for income taxes have been made.
In order to avoid imposition of the excise tax applicable to regulated
investment companies, it is also the Fund's intention to declare as dividends in
each calendar year at least 98% of its net investment income (earned during the
calendar year) and 98% of its net realized capital gains (earned during the
twelve months ended October 31) plus undistributed amounts from prior years.
The following information is computed on a tax basis for each item as of July
31, 2005:
- --------------------------------------------------------------------------------
Cost of portfolio investments ................................ $ 28,315,501
============
Gross unrealized appreciation ................................ $ 8,064,161
Gross unrealized depreciation ................................ (541,452)
------------
Net unrealized appreciation .................................. $ 7,522,709
Capital loss carryforwards ................................... (492,421)
Post-October losses .......................................... (467,036)
------------
Total distributable earnings ................................. $ 6,563,252
============
- --------------------------------------------------------------------------------
As of July 31, 2005, the Fund had capital loss carryforwards of $492,421, of
which $2,590 expires July 31, 2011, $341,864 expires July 31, 2012 and $147,967
expires July 31, 2013. In addition, the Fund had net realized capital losses of
$467,036 during the period November 1, 2004 through July 31, 2005, which are
treated for federal income tax purposes as arising during the Fund's tax year
ending July 31, 2006. These capital loss carryforwards and "post-October" losses
may be utilized in future years to offset net realized capital gains, if any,
prior to distributing such gains to shareholders.
For the year ended July 31, 2005, the Fund reclassified net investment losses of
$81,577 against paid-in-capital on the Statement of Assets and Liabilities. Such
reclassification, the result of permanent differences between financial
statement and income tax reporting requirements, has no effect on the Fund's net
assets or net asset value per share.
2. INVESTMENT TRANSACTIONS
During the year ended July 31, 2005, cost of purchases and proceeds from sales
of investment securities, other than short-term investments, amounted to
$13,050,619 and $3,225,248 respectively.
14
GKM FUNDS
GKM GROWTH FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
3. TRANSACTIONS WITH AFFILIATES
A Trustee and certain officers of the Trust are affiliated with the Adviser or
Ultimus Fund Solutions, LLC ("Ultimus"), the Fund's administrator, transfer
agent and fund accounting agent.
Under the terms of the Management Agreement between the Trust and the Adviser,
the Adviser serves as the investment adviser to the Fund. For its services, the
Fund pays the Adviser an investment management fee at the annual rate of 1.40%
of the Fund's average daily net assets. The Adviser pays all of the operating
expenses of the Fund except brokerage, taxes, borrowing costs, fees and expenses
of non-interested trustees, extraordinary expenses and distribution and/or
service related expenses incurred pursuant to Rule 12b-1 under the Investment
Company Act of 1940 (if any).
The Trust has entered into mutual fund services agreements with Ultimus,
pursuant to which Ultimus provides day-to-day operational services to the Fund
including, but not limited to, accounting, administrative, transfer agent,
dividend disbursing, and recordkeeping services. The fees payable to Ultimus are
paid by the Adviser (not the Fund).
The Trust has entered into a Distribution Agreement with Ultimus Fund
Distributors, LLC (the "Distributor"), pursuant to which the Distributor
provides distribution services to the Fund and serves as principal underwriter
to the Fund. The Distributor is a wholly-owned subsidiary of Ultimus. The fees
payable to the Distributor are paid by the Adviser (not the Fund).
4. CONTINGENCIES AND COMMITMENTS
The Fund indemnifies the Trust's officers and trustees for certain liabilities
that might arise from their performance of their duties to the Fund.
Additionally, in the normal course of business the Fund enters into contracts
that contain a variety of representations and warranties and which provide
general indemnifications. The Fund's maximum exposure under these arrangements
is unknown, as this would involve future claims that may be made against the
Fund that have not yet occurred. However, based on experience, the Fund expects
the risk of loss to be remote.
15
GKM FUNDS
GKM GROWTH FUND
REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
================================================================================
To the Shareholders and Board of Trustees
The GKM Funds
Los Angeles, California
We have audited the accompanying statement of assets and liabilities of GKM
Growth Fund (a series of shares of The GKM Funds), including the portfolio of
investments, as of July 31, 2005, and the related statement of operations, the
statement of changes in net assets and the financial highlights for the year
then ended. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audit. The statement of changes in net assets for the year ended July 31, 2004
and the financial highlights for each of the two years in the period then ended
and for the period December 28, 2001 through July 31, 2002 have been audited by
other auditors, whose report dated August 27, 2004 expressed an unqualified
opinion on such financial statement and financial highlights.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned as of July 31, 2005 by correspondence with the custodian. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of GKM
Growth Fund as of July 31, 2005, the results of its operations, the changes in
its net assets and its financial highlights for the year then ended, in
conformity with accounting principles generally accepted in the United States of
America.
/s/ Briggs, Bunting & Dougherty, LLP
Philadelphia, Pennsylvania
September 1, 2005
16
GKM FUNDS
GKM GROWTH FUND
ABOUT YOUR FUND'S EXPENSES (UNAUDITED)
================================================================================
We believe it is important for you to understand the impact of costs on your
investment. As a shareholder of the Fund, you will incur ongoing costs,
consisting of management fees and trustees fees and expenses. The following
examples are 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.
A fund's expenses are expressed as a percentage of its average net assets. This
figure is known as the expense ratio. The examples below are based on an
investment of $1,000 made at the beginning of the period shown and held for the
entire period, from February 1, 2005 to July 31, 2005.
The table below illustrates the Fund's costs in two ways:
ACTUAL FUND RETURN - This section helps you to estimate the actual expenses that
you paid over the period. The "Ending Account Value" shown is derived from the
Fund's actual return, and the third column shows the dollar amount of operating
expenses that would have been paid by an investor who started with $1,000 in the
Fund. You may use the information here, together with the amount you invested,
to estimate the expenses that you paid over the period.
To do so, simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
given for the Fund under the heading "Expenses Paid During Period."
HYPOTHETICAL 5% RETURN - This section is intended to help you compare the Fund's
costs with those of other mutual funds. It assumes that the Fund had an annual
return of 5% before expenses during the period shown, but uses the Fund's actual
expense ratio. In this case, because the return used is not the Fund's actual
return, the hypothetical account values and expenses shown may not be used to
estimate the actual ending account balance or expenses you paid for the period.
The example is useful in making comparisons because the Securities and Exchange
Commission requires all mutual funds to calculate expenses based on a 5% return.
You can assess the Fund's costs by comparing this hypothetical example with the
hypothetical examples that appear in shareholder reports of other funds.
Note that expenses shown in the table are meant to highlight and help you
compare ongoing costs only. The Fund does not charge any sales loads.
The calculations assume no shares were bought or sold during the period. Your
actual costs may have been higher or lower, depending on the amount of your
investment and the timing of any purchases or redemptions.
More information about the Fund's expenses, including historical annual expense
ratios, can be found in this report. For additional information on operating
expenses and other shareholder costs, please refer to the Fund's prospectus.
17
GKM FUNDS
GKM GROWTH FUND
ABOUT YOUR FUND'S EXPENSES (UNAUDITED)
(CONTINUED)
================================================================================
GKM GROWTH FUND
- --------------------------------------------------------------------------------
BEGINNING ENDING
ACCOUNT VALUE ACCOUNT VALUE EXPENSES PAID
FEBRUARY 1, 2005 JULY 31, 2005 DURING PERIOD*
- --------------------------------------------------------------------------------
Based on Actual Fund Return .... $1,000.00 $1,030.30 $7.10
Based on Hypothetical 5% Return
(before expenses) ............ $1,000.00 $1,017.80 $7.05
- --------------------------------------------------------------------------------
* Expenses are equal to GKM Growth Fund's annualized expense ratio of 1.41%
for the period, multiplied by the average account value over the period,
multiplied by 181/365 (to reflect the one-half year period).
OTHER INFORMATION (UNAUDITED)
================================================================================
A description of the policies and procedures that the Fund uses to vote proxies
relating to portfolio securities is available without charge upon request by
calling toll-free 1-888-GKM-9518, or on the Securities and Exchange Commission's
(the "SEC") website at HTTP://WWW.SEC.GOV. Information regarding how the Fund
voted proxies relating to portfolio securities during the most recent 12-month
period ended June 30 is available without charge upon request by calling
toll-free 1-888-GKM-9518, or on the SEC's website at HTTP://WWW.SEC.GOV.
The Trust files a complete listing of portfolio holdings for the Fund with the
SEC as of the first and third quarters of each fiscal year on Form N-Q. The
filings are available upon request, by calling 1-888-GKM-9518. Furthermore, you
may obtain a copy of the filing on the SEC's website at http://www.sec.gov. The
Trust's Forms N-Q may also be reviewed and copied at the SEC's Public Reference
Room in Washington, DC, and information on the operation of the Public Reference
Room may be obtained by calling 1-800-SEC-0330.
18
GKM FUNDS
GKM GROWTH FUND
INFORMATION REGARDING TRUSTEES AND OFFICERS
(UNAUDITED)
================================================================================
Overall responsibility for management of the Fund rests with the Board of
Trustees. The Trustees serve during the lifetime of the Trust and until its
termination, or until death, resignation, retirement or removal. The Trustees,
in turn, elect the officers of the Trust to actively supervise its day-to-day
operations.
The officers have been elected for an annual term. The following table provides
information regarding each Trustee who is not an "interested person" of the
Trust, as defined in the Investment Company Act of 1940.
- ---------------------------------------------------------------------------------------------
NAME, AGE AND ADDRESS POSITION(S) HELD WITH TRUST LENGTH OF TIME SERVED
- ---------------------------------------------------------------------------------------------
Darrin F. DelConte Trustee Since December 2001
11150 Santa Monica Blvd., Suite 850
Los Angeles, CA 90025
Year of Birth: 1966
- ---------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATIONS NUMBER OF PORTFOLIOS IN FUND OTHER DIRECTORSHIPS
DURING PAST 5 YEARS COMPLEX OVERSEEN BY TRUSTEE HELD BY TRUSTEE
- ---------------------------------------------------------------------------------------------
Darrin F. DelConte is Executive 1 None
Vice President of Pacific Marine
Maintenance Co. (a marine
maintenance company).
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
NAME, AGE AND ADDRESS POSITION(S) HELD WITH TRUST LENGTH OF TIME SERVED
- ---------------------------------------------------------------------------------------------
Nicholas G. Tonsich Trustee Since December 2001
11150 Santa Monica Blvd., Suite 850
Los Angeles, CA 90025
Year of Birth: 1961
- ---------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATIONS NUMBER OF PORTFOLIOS IN FUND OTHER DIRECTORSHIPS
DURING PAST 5 YEARS COMPLEX OVERSEEN BY TRUSTEE HELD BY TRUSTEE
- ---------------------------------------------------------------------------------------------
Nicholas G. Tonsich is a partner in 1 None
Glaser, Tonsich and Brajevich LLP
(a law firm).
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
NAME, AGE AND ADDRESS POSITION(S) HELD WITH TRUST LENGTH OF TIME SERVED
- ---------------------------------------------------------------------------------------------
Brian D. Horner Trustee Since January 2005
11150 Santa Monica Blvd., Suite 850
Los Angeles, CA 90025
Year of Birth: 1961
- ---------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATIONS NUMBER OF PORTFOLIOS IN FUND OTHER DIRECTORSHIPS
DURING PAST 5 YEARS COMPLEX OVERSEEN BY TRUSTEE HELD BY TRUSTEE
- ---------------------------------------------------------------------------------------------
Brian D. Horner is Chairman of 1 None
Venture West Funding, Inc. (a
mortgage brokerage firm).
- ---------------------------------------------------------------------------------------------
19
GKM FUNDS
GKM GROWTH FUND
INFORMATION REGARDING TRUSTEES AND OFFICERS
(UNAUDITED) (CONTINUED)
=============================================================================================
The following table provides information regarding each Trustee who is an "interested
person" of the Trust, as defined in the Investment Company Act of 1940, and each executive
officer of the Trust.
- ---------------------------------------------------------------------------------------------
NAME, AGE AND ADDRESS POSITION(S) HELD WITH TRUST LENGTH OF TIME SERVED
- ---------------------------------------------------------------------------------------------
Timothy J. Wahl1 President and Trustee Since October 2001
11150 Santa Monica Blvd., Suite 850
Los Angeles, CA 90025
Year of Birth: 1965
- ---------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATIONS NUMBER OF PORTFOLIOS IN FUND OTHER DIRECTORSHIPS
DURING PAST 5 YEARS COMPLEX OVERSEEN BY TRUSTEE HELD BY TRUSTEE
- ---------------------------------------------------------------------------------------------
Timothy J. Wahl is President, Director 1 None
and Investment Committee Member
of GKM Advisers, LLC. From January
2000 to July 2003, President and
Investment Committee Member of
GKM Advisors, Inc.
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
NAME, AGE AND ADDRESS POSITION(S) HELD WITH TRUST LENGTH OF TIME SERVED
- ---------------------------------------------------------------------------------------------
David L. Kahn Secretary and Since October 2001
11150 Santa Monica Blvd., Suite 850 Chief Compliance Officer
Los Angeles, CA 90025
Year of Birth: 1957
Secretary
- ---------------------------------------------------------------------------------------------
OTHER DIRECTORSHIPS
PRINCIPAL OCCUPATIONS DURING PAST 5 YEARS HELD BY TRUSTEE
- ---------------------------------------------------------------------------------------------
David L. Kahn is Operations Manager of GKM Advisers, LLC. N/A
From January 2000 to July 2003, Branch Manager with Gerard
Klauer Mattison & Co., Inc. (broker-dealer).
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
NAME, AGE AND ADDRESS POSITION(S) HELD WITH TRUST LENGTH OF TIME SERVED
- ---------------------------------------------------------------------------------------------
Robert G. Dorsey Vice President Since December 2001
225 Pictoria Drive, Suite 450
Cincinnati, OH 45246
Year of Birth: 1957
- ---------------------------------------------------------------------------------------------
OTHER DIRECTORSHIPS
PRINCIPAL OCCUPATIONS DURING PAST 5 YEARS HELD BY TRUSTEE
- ---------------------------------------------------------------------------------------------
Robert G. Dorsey is a Managing Director of Ultimus Fund N/A
Solutions, LLC and Ultimus Fund Distributors, LLC.
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
NAME, AGE AND ADDRESS POSITION(S) HELD WITH TRUST LENGTH OF TIME SERVED
- ---------------------------------------------------------------------------------------------
Mark J. Seger Treasurer Since December 2001
225 Pictoria Drive, Suite 450
Cincinnati, OH 45246
Year of Birth: 1962
- ---------------------------------------------------------------------------------------------
OTHER DIRECTORSHIPS
PRINCIPAL OCCUPATIONS DURING PAST 5 YEARS HELD BY TRUSTEE
- ---------------------------------------------------------------------------------------------
Mark J. Seger is a Managing Director of Ultimus Fund N/A
Solutions, LLC and Ultimus Fund Distributors, LLC.
- ---------------------------------------------------------------------------------------------
1 Mr. Wahl is an "interested person" of the Trust because he is an officer of the Trust and
of the Adviser.
Additional information about members of the Board of Trustees and the executive officers is
available in the Statement of Additional Information (SAI). To obtain a free copy of the SAI,
please call 1-888-GKM-9518.
20
GKM FUNDS
GKM GROWTH FUND
CHANGE IN INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM (UNAUDITED)
================================================================================
On March 24, 2005, Tait, Weller & Baker resigned as independent registered
public accounting firm of the Trust, and Briggs, Bunting & Dougherty, LLP was
selected as the Trust's new independent registered public accounting firm. The
Trust's selection of Briggs, Bunting & Dougherty, LLP as its independent
registered public accounting firm was approved by the Trust's audit committee
and by the Trust's Board of Trustees.
Tait, Weller & Baker's reports on the Fund's financial statements for the fiscal
years ended July 31, 2004 and 2003 did not contain an adverse opinion or a
disclaimer of opinion, nor were they qualified or modified as to uncertainty,
audit scope or accounting principles. During such fiscal years, and through the
date of Tait, Weller & Baker's resignation, there were no disagreements between
the Trust and Tait, Weller & Baker on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedures,
which disagreements, if not resolved to the satisfaction of Tait, Weller &
Baker, would have caused it to make reference to the subject matter of the
disagreements in connection with its reports on the financial statements for
such years.
21
================================================================================
--------------------------------------------------------------------------
GKM FUNDS
INVESTMENT ADVISER
GKM Advisers, LLC
11150 Santa Monica Boulevard
Suite 850
Los Angeles, California 90025
ADMINISTRATOR
Ultimus Fund Solutions, LLC
225 Pictoria Drive
Suite 450
Cincinnati, OH 45246
1.888.GKM.9518
CUSTODIAN
US Bank, N.A.
425 Walnut Street
Cincinnati, Ohio 45202
BOARD OF TRUSTEES
Darrin F. DelConte
Brian D. Horner
Nicholas G. Tonsich
Timothy J. Wahl
OFFICERS
Timothy J. Wahl, President
Robert G. Dorsey, Vice President
David L. Kahn, CCO and Secretary
Mark J. Seger, Treasurer
--------------------------------------------------------------------------
================================================================================
ITEM 2. CODE OF ETHICS.
As of the end of the period covered by this report, the registrant has adopted a
code of ethics that applies to the registrant's principal executive officer,
principal financial officer, principal accounting officer or controller, or
persons performing similar functions, regardless of whether these individuals
are employed by the registrant or a third party. Pursuant to Item 12(a)(1), a
copy of registrant's code of ethics is filed as an exhibit to this Form N-CSR.
During the period covered by this report, the code of ethics has not been
amended, and the registrant has not granted any waivers, including implicit
waivers, from the provisions of the code of ethics.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The registrant's board of trustees has determined that the registrant does not
have an audit committee financial expert serving on its audit committee. The
audit committee determined that, although none of its members meet the technical
definition of an audit committee financial expert, the members have sufficient
financial expertise to address any issues that are likely to come before the
committee. It was the consensus of the audit committee members that it is not
necessary at the present time for the committee to seek to recruit an additional
trustee who would qualify as an audit committee financial expert. It was the
view of the committee that, if novel issues ever arise, the committee will
consider hiring an expert to assist it as needed.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) AUDIT FEES. The aggregate fees billed for professional services
rendered by the principal accountant for the audit of the registrant's
annual financial statements or for services that are normally provided
by the accountant in connection with statutory and regulatory filings
or engagements were $12,000 with respect to the registrant's fiscal
year ended July 31, 2005. The aggregate fees billed for professional
services rendered by the registrant's former principal accountant for
the audit of the registrant's annual financial statements or for
services that are normally provided by the accountant in connection
with the statutory and regulatory filings or engagements were $9,500
with respect to the registrant's fiscal year ended July 31, 2004.
(b) AUDIT-RELATED FEES. No fees were billed in either of the last two
fiscal years for assurance and related services by the principal
accountant that are reasonably related to the performance of the audit
of the registrant's financial statements and are not reported under
paragraph (a) of this Item.
(c) TAX FEES. The aggregate fees billed for professional services rendered
by the principal accountant for tax compliance, tax advice, and tax
planning were $1,500 with respect to the registrant's fiscal year
ended July 31, 2005. The aggregate fees billed for professional
services rendered by the registrant's former principal accountant for
tax compliance, tax advice, and tax planning were $1,500 with respect
to the registrant's fiscal year ended July 31, 2004. The services
comprising these fees are the preparation of the registrant's federal
income and excise tax returns.
(d) ALL OTHER FEES. No fees were billed in either of the last two fiscal
years for products and services provided by the principal accountant,
other than the services reported in paragraphs (a) through (c) of this
Item.
(e)(1) The audit committee has not adopted pre-approval policies and
procedures described in paragraph (c)(7) of Rule 2-01 of Regulation
S-X.
(e)(2) None of the services described in paragraph (b) through (d) of this
Item were approved by the audit committee pursuant to paragraph
(c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
(f) Less than 50% of hours expended on the principal accountant's
engagement to audit the registrant's financial statements for the most
recent fiscal year were attributed to work performed by persons other
than the principal accountant's full-time, permanent employees.
(g) During the fiscal year ended July 31, 2005, aggregate non-audit fees
of $1,500 were billed by the registrant's accountant for services
rendered to the registrant. During the fiscal year ended July 31,
2004, aggregate non-audit fees of $1,500 were billed by the
registrant's former accountant for services rendered to the
registrant. No non-audit fees were billed in either of the last two
fiscal years by the registrant's accountant for services rendered to
the registrant's investment adviser (not including any sub-adviser
whose role is primarily portfolio management and is subcontracted with
or overseen by another investment adviser), and any entity
controlling, controlled by, or under common control with the adviser
that provides ongoing services to the registrant.
(h) The principal accountant has not provided any non-audit services to
the registrant's investment adviser (not including any sub-adviser
whose role is primarily portfolio management and is subcontracted with
or overseen by another investment adviser), and any entity
controlling, controlled by, or under common control with the
investment adviser that provides ongoing services to the registrant.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable
ITEM 6. SCHEDULE OF INVESTMENTS.
Not applicable [schedule filed with Item 1]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
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. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The registrant has not adopted procedures by which shareholders may recommend
nominees to the registrant's board of trustees.
ITEM 11. CONTROLS AND PROCEDURES.
(a) Based on their evaluation of the registrant's disclosure controls and
procedures (as defined in Rule 30a-3(c) under the Investment Company Act of
1940) as of a date within 90 days of the filing date of this report, the
registrant's principal executive officer and principal financial officer have
concluded that such disclosure controls and procedures are reasonably designed
and are operating effectively to ensure that material information relating to
the registrant, including its consolidated subsidiaries, is made known to them
by others within those entities, particularly during the period in which this
report is being prepared, and that the information required in filings on Form
N-CSR is recorded, processed, summarized, and reported on a timely basis.
(b) There were no changes in the registrant's internal control over financial
reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940)
that occurred during the registrant's most recent fiscal half-year (the
registrant's second fiscal half-year in the case of an annual report) that have
materially affected, or are reasonably likely to materially affect, the
registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
File the exhibits listed below as part of this Form. Letter or number the
exhibits in the sequence indicated.
(a)(1) Any code of ethics, or amendment thereto, that is the subject of the
disclosure required by Item 2, to the extent that the registrant intends to
satisfy the Item 2 requirements through filing of an exhibit: Attached hereto
(a)(2) A separate certification for each principal executive officer and
principal financial officer of the registrant as required by Rule 30a-2(a) under
the Act (17 CFR 270.30a-2(a)): Attached hereto
(a)(3) Any written solicitation to purchase securities under Rule 23c-1 under
the Act (17 CFR 270.23c-1) sent or given during the period covered by the report
by or on behalf of the registrant to 10 or more persons: Not applicable
(b) Certifications required by Rule 30a-2(b) under the Act (17 CFR
270.30a-2(b)): Attached hereto
Exhibit 99.CODE ETH Code of Ethics
Exhibit 99.CERT Certifications required by Rule 30a-2(a) under the Act
Exhibit 99.906CERT Certifications required by Rule 30a-2(b) under the Act
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.
(Registrant) The GKM Funds
---------------------------------------------------------
By (Signature and Title)* /s/ Timothy J. Wahl
-------------------------------------------
Timothy J. Wahl, President
Date September 21, 2005
------------------------------------------
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 (Signature and Title)* /s/ Timothy J. Wahl
-------------------------------------------
Timothy J. Wahl, President
Date September 21, 2005
------------------------------------------
By (Signature and Title)* /s/ Mark J. Seger
-------------------------------------------
Mark J. Seger, Treasurer
Date September 21, 2005
------------------------------------------
* Print the name and title of each signing officer under his or her signature.