--------------------------
OMB APPROVAL
--------------------------
OMB Number: 3235-0570
Expires: April 30, 2008
Estimated average burden
hours per response: 19.4
--------------------------
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 811-21868
---------
Surgeons Diversified Investment Fund
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
633 N. Clair Street Chicago, Illinois 60611
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Savitri P. Pai
Surgeons Asset Management, LLC 633 N. Clair Street Chicago, Illinois 60611
- --------------------------------------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: (312) 202-5056
--------------
Date of fiscal year end: August 31, 2007
---------------
Date of reporting period: August 31, 2007
---------------
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.
SURGEONS
DIVERSIFIED
INVESTMENT
FUND
[AMERICAN COLLEGE OF SURGEONS LOGO] Serving the membership of the
American College of Surgeons
ANNUAL REPORT
August 31, 2007
| DIVERSIFIED
| INVESTMENT
SURGEONS | FUND
SURGEONS DIVERSIFIED INVESTMENT FUND
================================================================================
Dear Fellow Shareholder,
We are pleased to share with you our first Annual Report for the Surgeons
Diversified Investment Fund (SDIF). As of the close of its annual reporting
period, August 31, 2007, SDIF produced a total return of 11.32%. During this
same time period, SDIF outperformed its hypothetical, unmanaged blended
benchmark, inclusive of fees and expenses. The hypothetical, unmanaged, blended
benchmark, comprised of 70% S&P 500 Index and 30% Lehman Brothers U.S. Aggregate
Bond Index, returned 11.14% during the same timeframe. Despite its strong
return, SDIF made no capital gains distributions and experienced negligible
portfolio turnover (4%), a benefit to shareholders in taxable accounts. Net
assets in SDIF were approximately $45 million on August 31, 2007.
SDIF'S ASSET ALLOCATION UNDERWENT ADJUSTMENT DURING THE FIRST YEAR.
One of SDIF's most important features is its managed asset allocation. During
the past year, SDIF's asset allocation shifted from its initial targets.
Exposure to the small cap asset class was reduced by 3% to a current target of
7%, as a result of its high relative valuations to the large cap asset class.
Additionally, an emerging markets component was added, with a 4% target of net
assets. Emerging markets exposure, notably in Asia, is expected to contribute
higher overall returns to SDIF, as well as to provide diversification outside of
existing international equity exposure. Currently, 43% of SDIF's equity exposure
is targeted to U.S. equities (8% large cap value, 8% large cap growth, 8% large
cap index, 6% REITs (real estate investment trusts), 6% energy, 3.5% small cap
value and 3.5% small cap growth). SDIF's non-U.S. equity exposure is allocated
with 23% to international equities and 4% to emerging market equities. The
remaining 30% of net assets is targeted towards fixed income.
MOST ASSET CLASSES CONTRIBUTED TO SDIF'S PERFORMANCE.
SDIF's overall performance since inception was aided by its energy,
international equity, large cap, emerging markets, fixed income and small cap
asset classes, while SDIF's REIT exposure detracted from SDIF's overall
performance. Higher oil prices aided the energy sector, while strength in
overseas economies produced strong demand for goods produced in the U.S.
Furthermore, the dollar's slide against the euro and British pound increased the
value of investments for Americans investing abroad, aiding our international
investments denominated in U.S. dollars. Our fixed income exposure added
stability and a reasonable return. Finally, bleak reports from housing builders,
resetting of adjustable rate mortgages at higher rates, and tighter lending
standards in light of the subprime mortgage troubles weighed heaviest on the
real estate industry.
MARKET CONDITIONS WERE AIDED BY GLOBAL LIQUIDITY AND SUBSEQUENTLY HARMED BY THE
CREDIT CRUNCH.
During the first part of SDIF's fiscal year, the equity markets benefited from
an abundance of cash that fueled mergers and acquisitions, thus lifting the
prices of equities worldwide. A brief sell-off in the markets occurred in late
February, prompted by declines in the Chinese markets. The declines were
short-lived and the markets continued their upward momentum. At the same time,
the bond markets responded to inflationary pressures as a result of economic
growth, which resulted in higher yields and lower
1
prices. In the final months of SDIF's fiscal year, the aforementioned global
liquidity disappeared, and in its place appeared a worldwide credit crunch. The
credit markets were squeezed and bank financing tightened, as a result of rising
subprime mortgage defaults and their effect on asset-backed securities. In
response, the European Central Bank, the Federal Reserve, and their counterparts
elsewhere around the world, acted to inject funds into money markets in order to
keep short-term interest rates from rising as demand for short-term funds
overwhelmed supply. The Federal Reserve acted further by lowering the discount
rate (the interest rate charged by the Federal Reserve to banking institutions).
Both actions by the Federal Reserve have been positive for the market and have
allowed it to meet its mandate of assuring the stability of the financial
system.
INVESTING FOR THE LONG TERM, INVESTING REGULARLY, WITH DIVERSIFICATION, AND
APPROPRIATE ASSET ALLOCATION.
Financial markets are always unpredictable, but investing for the long term and
investing regularly can even out the ups and downs of the market while keeping
one fully invested. Furthermore, studies indicate that diversification and asset
allocation are the most important determinants of a portfolio's long-term
success. We believe that SDIF provides an investor with a strong tool for such
success.
Thank you for your investment with SDIF. We look forward to our continued growth
with you.
John L. Cameron, MD, FACS
CHAIRMAN, BOARD OF TRUSTEES
SURGEONS DIVERSIFIED INVESTMENT FUND
Savitri P. Pai, Esq.
PRESIDENT
SURGEONS DIVERSIFIED INVESTMENT FUND
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. INVESTMENT RESULTS AND
PRINCIPAL VALUE WILL FLUCTUATE SO THAT SHARES, WHEN REDEEMED, MAY BE WORTH MORE
OR LESS THAN THEIR ORIGINAL COST. CURRENT PERFORMANCE MAY BE HIGHER OR LOWER
THAN THE PERFORMANCE DATA QUOTED. PERFORMANCE DATA CURRENT TO THE MOST RECENT
MONTH-END, ARE AVAILABLE BY CALLING 1-800-208-6070.
An investor should consider the investment objectives, risks, charges and
expenses of the Fund carefully before investing. The Fund's prospectuses contain
this and other important information. To obtain a copy of the Fund's prospectus
please call 1-800-208-6070 and a copy will be sent to you free of charge or
visit SDIF's website at www.surgeonsfund.com. Please read the prospectus
carefully before you invest. SDIF is distributed by Ultimus Fund Distributors,
LLC.
The Letter to Shareholders seeks to describe some of the Manager's current
opinions and views of the financial markets. Although the Manager believes it
has a reasonable basis for any opinions or views expressed, actual results may
differ, sometimes significantly so, from those expected or expressed.
2
SURGEONS DIVERSIFIED INVESTMENT FUND
PORTFOLIO INFORMATION
AUGUST 31, 2007 (UNAUDITED)
================================================================================
GROWTH OF $10,000 OVER THE PERIOD SINCE
INCEPTION FOR AN INVESTMENT MADE ON SEPTEMBER 22, 2006
[LINE GRAPH OMITTED}
Past performance is not predictive of future performance.
Total Return(a) Final Value
Since Inception(b) of a $10,000
(for period ended August 31, 2007) Investment
- ----------------------------------------------------------------------------------------------------------------------
Surgeons Diversified Investment Fund 11.32% $ 11,132
- ----------------------------------------------------------------------------------------------------------------------
Blended S&P 500/Lehman Brothers U.S. Aggregate Index* 11.14% 11,114
- ----------------------------------------------------------------------------------------------------------------------
S&P 500 Index** 14.07% 11,407
- ----------------------------------------------------------------------------------------------------------------------
Lehman Brothers U.S. Aggregate Index*** 4.28% 10,428
- ----------------------------------------------------------------------------------------------------------------------
* The blend of the S&P 500 Index and Lehman Brothers U.S. Aggregate Index is
comprised of 70% S&P 500 Index and 30% Lehman Brothers U.S. Aggregate
Index.
** The Standard & Poor's Composite Index of 500 stocks is a widely
recognized, unmanaged index of common stock prices.
*** Lehman Brothers U.S. Aggregate Bond Index is the broadest measure of the
taxable U.S. bond market, including most Treasury, agency, corporate,
mortgage-backed, asset-backed, and international dollar-denominated
issues, all with investment-grade ratings and maturities of 1 year or
more.
(a) The total return shown does not reflect the deduction of taxes a
shareholder would pay on Fund distributions or the redemption of Fund
shares.
(b) Commencement of operations was September 22, 2006.
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. INVESTMENT RETURN AND SHARE
PRICE WILL FLUCTUATE WITH MARKET CONDITIONS, AND INVESTORS MAY HAVE A GAIN OR
LOSS WHEN SHARES ARE SOLD. FUND PERFORMANCE CHANGES OVER TIME AND CURRENTLY MAY
BE LOWER OR HIGHER THAN STATED ABOVE. PERFORMANCE IS UPDATED MONTHLY AND IS
AVAILABLE BY CALLING 800-208-6070. VISIT THE FUND'S WEBSITE WWW.SURGEONSFUND.COM
FOR CURRENT CALENDAR QUARTER PERFORMANCE INFORMATION.
3
SURGEONS DIVERSIFIED INVESTMENT FUND
PORTFOLIO INFORMATION
AUGUST 31, 2007 (UNAUDITED)
================================================================================
ASSET ALLOCATION (% OF NET ASSETS)
- --------------------------------------------------------------------------------
[PIE CHART OMITTED] Emerging Market - 2.2%
Energy - 6.2%
International - 24.5%
Large Cap Growth - 8.5%
Large Cap Index - 7.9%
Large Cap Value - 8.4%
REITs - 5.9%
Short-Term Investments - 0.2%
Small Cap Growth - 3.4%
Small Cap Value - 3.4%
U.S. Fixed Income - 29.4%
4
SURGEONS DIVERSIFIED INVESTMENT FUND
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 2007
================================================================================
ASSETS
Investments in securities:
At acquisition cost ................................................... $ 43,751,913
============
At market value (Note 1) .............................................. $ 44,785,943
Dividends receivable .................................................... 388
Receivable for capital shares sold ...................................... 33,621
Other assets ............................................................ 41,392
------------
TOTAL ASSETS .......................................................... 44,861,344
------------
LIABILITIES
Payable for investment securities purchased ............................. 33,000
Payable to the Manager (Note 4) ......................................... 25,680
Payable to Administrator (Note 4) ....................................... 9,930
Payable to Custodian (Note 4) ........................................... 900
Other accrued expenses .................................................. 8,910
------------
TOTAL LIABILITIES ..................................................... 78,420
------------
NET ASSETS ................................................................. $ 44,782,924
============
Net assets consist of:
Paid-in capital ............................................................ $ 43,642,601
Accumulated undistributed net investment income ............................ 139,325
Accumulated net realized losses from security transactions ................. (33,032)
Net unrealized appreciation on investments ................................. 1,034,030
------------
Net assets ................................................................. $ 44,782,924
============
Shares of beneficial interest outstanding (unlimited number of
shares authorized, no par value) ........................................ 4,061,412
============
Net asset value, offering price and redemption price per share (Note 1) .... $ 11.03
============
See accompanying notes to financial statements.
5
SURGEONS DIVERSIFIED INVESTMENT FUND
STATEMENT OF OPERATIONS
PERIOD ENDED AUGUST 31, 2007(a)
================================================================================
INVESTMENT INCOME
Dividends ............................................................... $ 752,018
------------
EXPENSES
Investment management fees (Note 4) ..................................... 275,547
Administration fees (Note 4) ............................................ 44,536
Professional fees ....................................................... 40,156
Registration fees ....................................................... 39,975
Fund accounting fees (Note 4) ........................................... 30,265
Compliance service fees ................................................. 27,636
Transfer agent and shareholder services fees (Note 4) ................... 16,500
Printing, postage and supplies .......................................... 16,063
Trustees' fees and expenses ............................................. 15,676
Custodian fees (Note 4) ................................................. 9,796
Insurance expense ....................................................... 9,080
Other expenses .......................................................... 17,564
------------
TOTAL EXPENSES ........................................................ 542,794
Less fees waived by the Manager (Note 4) ................................ (170,806)
------------
NET EXPENSES .......................................................... 371,988
------------
NET INVESTMENT INCOME ...................................................... 380,030
------------
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS
Net realized losses from security transactions .......................... (33,032)
Net change in unrealized appreciation/depreciation on investments ....... 1,034,030
------------
NET REALIZED AND UNREALIZED GAINS ON INVESTMENTS ........................... 1,000,998
------------
NET INCREASE IN NET ASSETS FROM OPERATIONS ................................. $ 1,381,028
============
(a) Represents the period from the commencement of operations on September 22,
2006 through August 31, 2007.
See accompanying notes to financial statements.
6
SURGEONS DIVERSIFIED INVESTMENT FUND
STATEMENT OF CHANGES IN NET ASSETS
PERIOD ENDED AUGUST 31, 2007(a)
================================================================================
FROM OPERATIONS
Net investment income ................................................... $ 380,030
Net realized losses from security transactions .......................... (33,032)
Net change in unrealized appreciation/depreciation on investments ....... 1,034,030
------------
Net increase in net assets from operations ................................. 1,381,028
------------
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income .............................................. (240,705)
------------
FROM CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold ............................................... 43,546,517
Net asset value of shares issued in
reinvestment of distributions to shareholders ......................... 240,705
Payments for shares redeemed ............................................ (244,621)
------------
Net increase in net assets from capital share transactions ................. 43,542,601
------------
TOTAL INCREASE IN NET ASSETS ............................................... 44,682,924
NET ASSETS
Beginning of period ..................................................... 100,000
------------
End of period ........................................................... $ 44,782,924
============
ACCUMULATED UNDISTRIBUTED NET INVESTMENT INCOME ............................ $ 139,325
============
CAPITAL SHARE ACTIVITY
Sold .................................................................... 4,051,041
Reinvested .............................................................. 22,623
Redeemed ................................................................ (22,252)
------------
Net increase in shares outstanding ...................................... 4,051,412
Shares outstanding at beginning of period ............................... 10,000
------------
Shares outstanding at end of period ..................................... 4,061,412
============
(a) Represents the period from the commencement of operations on September 22,
2006 through August 31, 2007.
See accompanying notes to financial statements.
7
SURGEONS DIVERSIFIED INVESTMENT FUND
FINANCIAL HIGHLIGHTS
================================================================================
SELECTED PER SHARE DATA AND RATIOS FOR A SHARE OUTSTANDING
THROUGHOUT THE PERIOD ENDED AUGUST 31, 2007(a)
- --------------------------------------------------------------------------------
Net asset value at beginning of period ...................... $ 10.00
------------
Income from investment operations:
Net investment income .................................... 0.13
Net realized and unrealized gains on investments ......... 1.00
------------
Total from investment operations ............................ 1.13
------------
Less distributions:
Dividends from net investment income ..................... (0.10)
------------
Net asset value at end of period ............................ $ 11.03
============
Total return (b) ............................................ 11.32%(c)
============
Net assets at end of period (000's) ......................... $ 44,783
============
Ratio of net expenses to average net assets (d) ............. 1.35%(e)
Ratio of net investment income to average net assets ........ 1.37%(e)
Portfolio turnover rate ..................................... 4%(c)
(a) Represents the period from the commencement of operations on September 22,
2006 through August 31, 2007.
(b) Total return is a measure of the change in value of an investment in the
Fund over the period covered, which assumes any dividends or capital gains
distributions are reinvested in shares of the Fund. The return shown does
not reflect the deduction of taxes a shareholder would pay on Fund
distributions or the redemption of Fund shares.
(c) Not annualized.
(d) Absent investment management fee waivers by the Manager, the ratio of
expenses to average net assets would have been 1.96%(e) for the period
ended August 31, 2007 (Note 4).
(e) Annualized.
See accompanying notes to financial statements.
8
SURGEONS DIVERSIFIED INVESTMENT FUND
PORTFOLIO OF INVESTMENTS
AUGUST 31, 2007
================================================================================
SHARES EXCHANGE-TRADED FUNDS -- 99.8% VALUE
- --------------------------------------------------------------------------------
EMERGING MARKET -- 2.2%
10,574 Vanguard Emerging Markets Stock Index Fund............. $ 999,137
-----------
ENERGY -- 6.2%
21,646 iShares S&P Global Energy Sector Index Fund............ 2,762,895
-----------
INTERNATIONAL -- 24.5%
139,902 iShares MSCI EAFE Index Fund........................... 10,971,115
-----------
LARGE CAP GROWTH -- 8.5%
64,468 iShares Russell 1000 Growth Index Fund................. 3,808,770
-----------
LARGE CAP INDEX -- 7.9%
24,071 S&P Depositary Receipts Trust Series 1................. 3,552,639
-----------
LARGE CAP VALUE -- 8.4%
44,842 iShares Russell 1000 Value Index Fund.................. 3,751,482
-----------
REITS -- 5.9%
35,290 iShares Dow Jones U.S. Real Estate Index Fund.......... 2,614,989
-----------
SMALL CAP GROWTH -- 3.4%
18,477 iShares Russell 2000 Growth Index Fund................. 1,538,210
-----------
SMALL CAP VALUE -- 3.4%
19,910 iShares Russell 2000 Value Index Fund.................. 1,526,699
-----------
U.S. FIXED INCOME -- 29.4%
131,808 iShares Lehman Aggregate Bond Fund..................... 13,149,166
-----------
TOTAL EXCHANGE-TRADED FUNDS (Cost $43,641,072)......... $44,675,102
-----------
================================================================================
SHARES SHORT-TERM INVESTMENTS -- 0.2% VALUE
- --------------------------------------------------------------------------------
110,841 Northern Institutional Government Fund -
Select Class (Cost $110,841)......................... $ 110,841
-----------
TOTAL INVESTMENTS AT VALUE -- 100.0%
(Cost $43,751,913)................................... $44,785,943
LIABILITIES IN EXCESS OF OTHER ASSETS -- (0.0%)........ (3,019)
-----------
TOTAL NET ASSETS -- 100.0%............................. $44,782,924
===========
See accompanying notes to financial statements.
9
SURGEONS DIVERSIFIED INVESTMENT FUND
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 2007
================================================================================
1. ORGANIZATION
Surgeons Diversified Investment Fund (the "Fund") is an open-end diversified
management investment company established as an Ohio business trust under a
Declaration of Trust dated March 2, 2006. On July 27, 2006, 10,000 shares of the
Fund were issued for cash, at $10.00 per share, to Surgeons Asset Management,
LLC (the "Manager"), the investment manager to the Fund. The public offering of
shares of the Fund commenced on September 22, 2006. The Fund had no operations
prior to the public offering of shares except for the initial issuance of shares
to the Manager.
The investment objective of the Fund is to provide long-term capital
appreciation and income.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the Fund's significant accounting policies:
SECURITIES VALUATION - The Fund's portfolio securities are valued as of the
close of the regular session of trading on the New York Stock Exchange ("NYSE")
(normally 4:00 p.m., Eastern time). Securities, other than options, listed on
the NYSE or other exchanges are valued on the basis of their last sale price on
the exchanges on which they are primarily traded. However, if the last sale
price on the NYSE is different than the last sale price on any other exchange,
the NYSE price will be used. If there are no sales on that day, the securities
are valued at the closing bid price on the NYSE or other primary exchange for
that day. Securities which are quoted by NASDAQ are valued at the NASDAQ
Official Closing Price. If there are no sales on that day, the securities are
valued at the last bid price as reported by NASDAQ. Securities traded in the
over-the-counter market are valued at the last sales price, if available,
otherwise at the mean of the closing bid and ask prices. In the event that
market quotations are not readily available, securities and other assets are
valued at fair value as determined in accordance with procedures adopted by the
Board of Trustees.
SHARE VALUATION - The net asset value per share of the Fund is calculated daily
by dividing the total value of the Fund's assets, less liabilities, by the
number of shares outstanding. The offering price and redemption price per share
of the Fund is equal to the net asset value per share.
INVESTMENT INCOME - Dividend income is recorded on the ex-dividend date.
Interest income is accrued as earned.
SECURITY TRANSACTIONS - Security transactions are accounted for on the trade
date. Gains and losses on securities sold are determined on a specific
identification basis.
DISTRIBUTIONS TO SHAREHOLDERS - Distributions to shareholders arising from net
investment income and net realized capital gains, if any, are distributed at
least once each year. The amount of distributions from net investment income and
net realized
10
SURGEONS DIVERSIFIED INVESTMENT FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
gains are determined in accordance with federal income tax regulations, which
may differ from accounting principles generally accepted in the United States of
America. The tax character of distributions paid during the period ended August
31, 2007 was ordinary income. Dividends and distributions to shareholders are
recorded on ex-dividend date.
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.
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 provision for income taxes is required.
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 August
31, 2007:
- --------------------------------------------------------------------------------
Cost of portfolio investments ................................. $ 43,765,546
============
Gross unrealized appreciation ................................. $ 1,625,637
Gross unrealized depreciation ................................. (605,240)
------------
Net unrealized appreciation ................................... $ 1,020,397
Undistributed ordinary income ................................. 139,325
Post-October losses ........................................... (19,399)
------------
Distributable earnings ........................................ $ 1,140,323
============
- --------------------------------------------------------------------------------
The Fund incurred net realized capital losses of $19,399 during the period
November 1, 2006 through August 31, 2007, which are treated for federal income
tax purposes as arising during the Fund's tax year ending August 31, 2008. These
"post-October" losses may be utilized in future years to offset net realized
capital gains prior to distributing such gains to shareholders.
3. INVESTMENT TRANSACTIONS
During the period ended August 31, 2007, cost of purchases and proceeds from
sales of investment securities, other than short-term investments and U.S.
government securities, amounted to $44,887,642 and $1,213,538, respectively.
11
SURGEONS DIVERSIFIED INVESTMENT FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
4. TRANSACTIONS WITH AFFILIATES
INVESTMENT MANAGEMENT CONTRACT
Under the terms of an Investment Management Contract between the Fund and the
Manager, the Manager serves as the investment manager to the Fund. For its
services, the Fund pays the Manager an investment management fee computed at the
annual rate of 1.00% of the Fund's average daily net assets. For the period
ended August 31, 2007, the Fund incurred $275,547 for investment management
fees.
Pursuant to an Expense Limitation Agreement, the Manager has contractually
agreed to waive its fees and/or reimburse the Fund for its ordinary operating
expenses to the extent necessary to maintain the total operating expenses of the
Fund to 1.35% of the Fund's average daily net assets through at least August 31,
2009. Any such fee waivers by the Manager through August 31, 2009, or
thereafter, or payments by the Manager of expenses which are the Fund's
obligation, are subject to repayment by the Fund, provided that the repayment
does not cause the Fund's ordinary operating expenses to exceed the 1.35% limit,
and provided further that the fees and expenses that are the subject of the
repayment were incurred within three years of the repayment. During the period
ended August 31, 2007, the Manager waived investment management fees of
$170,806, which remains available for recovery by the Manager until the year
ended August 31, 2010.
SUBADVISORY AGREEMENT
Northern Trust Investments, N.A. (the "ETF Subadviser"), has been retained by
the Manager to manage the Fund's investments in Exchange Traded Funds (the
"Underlying ETFs") pursuant to the terms of a Subadvisory Agreement between the
ETF Subadviser, the Manager and the Fund. The Manager (not the Fund) pays the
ETF Subadviser a fee based on the Fund's average daily net assets, subject to a
minimum annual fee. The ETF Subadviser is a wholly-owned subsidiary of The
Northern Trust Company, which is the principal subsidiary of Northern Trust
Corporation and serves as the Custodian to the Fund.
CUSTODY AGREEMENT
The Northern Trust Company (the "Custodian") serves as Custodian to the Trust
pursuant to a Custody Agreement. The Custodian's responsibilities include
safeguarding and controlling the Fund's cash and securities, handling the
receipt and delivery of securities, and collecting interest and dividends on the
Fund's investments. For the period ended August 31, 2007, the Fund incurred
$9,796 for custodian services.
ADMINISTRATION AGREEMENT
Under the terms of an Administration Agreement with the Fund, Ultimus Fund
Solutions, LLC ("Ultimus") supplies executive, administrative and regulatory
services to the Fund, supervises the preparation of tax returns, and coordinates
the preparation of reports to shareholders and reports to and filings with the
Securities and Exchange Commission ("SEC") and state securities authorities. For
these services, the Fund pays
12
SURGEONS DIVERSIFIED INVESTMENT FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
to Ultimus, on a monthly basis, a fee equal to 0.15% per annum of the Fund's
average daily net assets up to $50 million, 0.125% of such assets from $50
million to $100 million, 0.10% of such assets from $100 million to $250 million,
0.075% of such assets from $250 million to $500 million and 0.05% of such assets
in excess of $500 million, provided, however, that the minimum fee is $2,000 per
month. For the period ended August 31, 2007, the Fund incurred $44,536 for
administration services.
ACCOUNTING SERVICES AGREEMENT
Under the terms of a Fund Accounting Agreement with the Fund, Ultimus calculates
the daily net asset value per share and maintains the financial books and
records of the Fund. For these services, Ultimus receives a base fee of $2,500
per month, plus an asset-based fee at the annual rate of 0.01% of the first $500
million of the Fund's average daily net assets and 0.005% of such assets in
excess of $500 million. For the period ended August 31, 2007, the Fund incurred
$30,265 for fund accounting services. In addition, the Fund pays all costs of
external pricing services.
TRANSFER AGENT AGREEMENT
Under the terms of a Transfer Agent and Shareholder Services Agreement with the
Fund, Ultimus maintains the records of each shareholder's account, answers
shareholders' inquiries concerning their accounts, processes purchase and
redemption of the Fund's shares, acts as dividend and distribution disbursing
agent and performs other shareholder service functions. For these services,
Ultimus receives a fee payable monthly at an annual rate of $20 per account,
provided, however, that the minimum fee is $1,500 per month. In addition, the
Fund pays out-of-pocket expenses, including but not limited to, postage and
supplies. For the period ended August 31, 2007, the Fund incurred $16,500 for
transfer agent and shareholder services.
DISTRIBUTION AGREEMENT
Pursuant to the terms of a Distribution Agreement with the Fund, Ultimus Fund
Distributors, LLC (the "Distributor") serves as the Fund's principal
underwriter. The Distributor receives annual compensation of $6,000 for such
services. The fees payable to the Distributor are currently paid by the Manager
(not the Fund).
Certain trustees and officers of the Fund are directors and officers of the
Manager, or of Ultimus, or of the Distributor.
DISTRIBUTION PLAN
The Fund has adopted a plan of distribution pursuant to and in accordance with
Rule 12b-1 of the Investment Company Act of 1940 (the "Plan") under which the
Fund may reimburse expenses related to the distribution and promotion of Fund
shares. The annual limitation for payment of such expenses pursuant to the Plan
is 0.25% of the Fund's average daily net assets. During the period ended August
31, 2007, the Fund did not pay any distribution related expenses.
13
SURGEONS DIVERSIFIED INVESTMENT FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
5. CONTINGENCIES AND COMMITMENTS
The Fund indemnifies its 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 that 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.
6. ACCOUNTING PRONOUNCEMENTS
On July 13, 2006, the Financial Accounting Standards Board ("FASB") released
FASB Interpretation No. 48 ("FIN 48") "Accounting for Uncertainty in Income
Taxes." FIN 48 provides guidance for how uncertain tax positions should be
recognized, measured, presented and disclosed in the financial statements. FIN
48 requires the evaluation of tax positions taken in the course of preparing the
Fund's tax returns to determine whether the tax positions are
"more-likely-than-not" of being sustained by the applicable tax authority. Tax
positions not deemed to meet the more-likely-than-not threshold would be
recorded as a tax benefit or expense in the current year. Adoption of FIN 48 is
required for fiscal years beginning after December 15, 2006 and is to be applied
to all open tax years as of the effective date. Recent SEC guidance allows
implementing FIN 48 in Fund NAV calculations as late as the Fund's last NAV
calculation in the first required financial statement reporting period. As a
result, the Fund will incorporate FIN 48 in its Semi-Annual Report on February
29, 2008. Management is in the process of determining the impact of the adoption
of FIN 48.
In September 2006, the FASB issued Statement on Financial Accounting Standards
("SFAS") No. 157, "Fair Value Measurements." This standard establishes a single
authoritative definition of fair value, sets out a framework for measuring fair
value and requires additional disclosures about fair value measurements. SFAS
No. 157 applies to fair value measurements already required or permitted by
existing standards. SFAS No. 157 is effective for financial statements issued
for fiscal years beginning after November 15, 2007 and interim periods within
those fiscal years. The changes to current generally accepted accounting
principles from the application of SFAS No. 157 relate to the definition of fair
value, the methods used to measure fair value, and the expanded disclosures
about fair value measurements. As of August 31, 2007, the Fund does not believe
the adoption of SFAS No. 157 will impact the amounts reported in the financial
statements, however, additional disclosures may be required about the inputs
used to develop the measurements and the effect of certain of the measurements
reported on the statement of changes in net assets for a fiscal period.
14
SURGEONS DIVERSIFIED INVESTMENT FUND
REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
================================================================================
The Board of Trustees and Shareholders of Surgeons Diversified Investment Fund:
We have audited the accompanying statement of assets and liabilities of Surgeons
Diversified Investment Fund (the Fund), including the schedule of investments,
as of August 31, 2007, and the related statement of operations, the statement of
changes in net assets, and the financial highlights from September 22, 2006
(commencement of operations) through the period 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.
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. We were
not engaged to perform an audit of the Fund's internal control over financial
reporting. Our audit included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Fund's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned as of August 31, 2007, by correspondence with the custodian and
broker. 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 the
Surgeons Diversified Investment Fund as of August 31, 2007, and the results of
its operations, the changes in its net assets, and the financial highlights from
September 22, 2006 (commencement of operations) through the period then ended,
in conformity with U.S. generally accepted accounting principles.
/s/ Ernst & Young LLP
Cincinnati, Ohio
October 12, 2007
15
SURGEONS DIVERSIFIED INVESTMENT 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 incur ongoing costs, including
management fees, distribution fees (12b-1) and other Fund 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 mutual fund's ongoing costs are expressed as a percentage of its average net
assets. This figure is known as the expense ratio. The expenses in the table
below are based on an investment of $1,000 made at the beginning of the period
shown and held for the six month period from March 1, 2007 through August 31,
2007.
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 that the expense ratio
is unchanged. In this case, because the return used is not the Fund's actual
return, the results do not apply to your investment. 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 or
redemption fees.
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.
16
SURGEONS DIVERSIFIED INVESTMENT FUND
ABOUT YOUR FUND'S EXPENSES (UNAUDITED)
(CONTINUED)
================================================================================
More information about the Fund's expenses, including annualized 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.
- --------------------------------------------------------------------------------
BEGINNING ENDING
ACCOUNT VALUE ACCOUNT VALUE EXPENSES PAID
MARCH 1, 2007 AUGUST 31, 2007 DURING PERIOD*
- --------------------------------------------------------------------------------
Based on Actual Fund Return $1,000.00 $1,029.90 $6.91
Based on Hypothetical 5% Return
(before expenses) $1,000.00 $1,018.40 $6.87
- --------------------------------------------------------------------------------
* Expenses are equal to the Fund's annualized expense ratio of 1.35% for the
period, multiplied by the average account value over the period,
multiplied by 184/365 (to reflect the one-half year period).
OTHER INFORMATION (UNAUDITED)
================================================================================
The Fund files a complete listing of portfolio holdings of the Fund with the
Securities and Exchange Commission ("SEC") as of the end of the first and third
quarters of each fiscal year on Form N-Q. The filings are available upon
request, by calling 1-800-282-1581. Furthermore, you may obtain a copy of these
filings on the SEC's website at http://www.sec.gov. The Fund'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.
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 1-800-208-6070, or on the SEC's 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 1-800-208-6070, or on the SEC's
website at http://www.sec.gov.
FEDERAL TAX INFORMATION (UNAUDITED)
================================================================================
In accordance with federal tax requirements, the following provides shareholders
with information concerning distributions from ordinary income and net realized
gains made by the Fund during the period ended August 31, 2007. For the period
ended August 31, 2007, certain dividends paid by the Fund may be subject to a
maximum tax rate of 15%, as provided by the Jobs and Growth Tax Relief
Reconciliation Act of 2003. The Fund intends to designate up to a maximum amount
of $240,705 as taxed at a maximum rate of 15%. Complete information will be
computed and reported in conjunction with your 2007 Form 1099-DIV.
17
SURGEONS DIVERSIFIED INVESTMENT FUND
BOARD OF TRUSTEES AND OFFICERS (UNAUDITED)
================================================================================
Overall responsibility for the management of the Trust rests with the Board of
Trustees. The Trustees serve for terms of indefinite duration until death,
resignation, retirement or removal from office. The Board of Trustees may fill
any vacancy on the Board provided that after such appointment, at least
two-thirds of the Trustees have been elected by shareholders. The Board of
Trustees elects the officers of the Trust. Each officer serves until the
election and qualification of his or her successor, or until he or she sooner
dies, resigns or is removed or disqualified.
The names, ages and addresses of the Trustees and executive officers, the date
each was first elected or appointed to office, their principal business
occupations and directorships of public companies they have held during the last
five years are shown below.
- --------------------------------------------------------------------------------------------------------
DATE FIRST NUMBER OF
NAME, AGE, ADDRESS, ELECTED OR PRINCIPAL OCCUPATIONS PORTFOLIOS IN FUND
POSITIONS HELD APPOINTED TO DURING PAST 5 YEARS AND COMPLEX OVERSEEN
WITH THE TRUST OFFICE OTHER DIRECTORSHIPS HELD BY TRUSTEE
- --------------------------------------------------------------------------------------------------------
INDEPENDENT TRUSTEES:
- --------------------------------------------------------------------------------------------------------
James W. Atkinson July 2006 Executive Vice President and 1
(age 57) Chief Financial Officer of
1320 N. State Parkway, 6A Ariel Capital Management, a
Chicago, IL 60610 registered investment adviser,
from 1995 to June 2005.
- --------------------------------------------------------------------------------------------------------
Michael Abecassis, M.D., MBA July 2006 Associate Medical Director, 1
(age 49) United Healthcare 1999 to
675 North St. Clair Street present; Associate Professor,
Galter 17-200 Northwestern University,
Chicago, IL 60611 2000 to September 2004;
and Professor at
Northwestern University
since September 2004.
- --------------------------------------------------------------------------------------------------------
INTERESTED TRUSTEE:
- --------------------------------------------------------------------------------------------------------
John L. Cameron, M.D.* July 2006 Professor, The Johns Hopkins 1
(age 71) Hospital, 1970 to present.
The Johns Hopkins Hospital
600 N. Wolfe St.
Blalock 679
Baltimore, MD 21287
- --------------------------------------------------------------------------------------------------------
18
SURGEONS DIVERSIFIED INVESTMENT FUND
BOARD OF TRUSTEES AND OFFICERS (UNAUDITED)
(CONTINUED)
================================================================================
- --------------------------------------------------------------------------------------------------------
DATE FIRST
NAME, AGE, ADDRESS, ELECTED OR PRINCIPAL OCCUPATIONS
POSITIONS HELD APPOINTED TO DURING PAST 5 YEARS AND
WITH THE TRUST OFFICE OTHER DIRECTORSHIPS HELD
- --------------------------------------------------------------------------------------------------------
EXECUTIVE OFFICERS:
- --------------------------------------------------------------------------------------------------------
Savitri P. Pai July 2006 Chief Operating Officer of Surgeons Asset
(age 41) Management, LLC since April 2006;
President General Counsel, Chief Compliance Officer
633 N. Saint Clair Street and Head of Operations for CCM Advisors,
Chicago, IL 60611 LLC (a registered investment adviser) and
Chief Legal Officer, Chief Compliance
Officer of AHA Investment Funds, Inc. (a
registered investment company) from March
2003 to March 2006; Director, General
Counsel, and Treasurer of Kenilworth Fund,
Inc. (a registered investment company) from
July 1993 to December 2002.
- --------------------------------------------------------------------------------------------------------
Mark J. Seger March 2006 Managing Director of Ultimus Fund
(age 45) Solutions, LLC (a registered transfer agent)
Treasurer and Ultimus Fund Distributors, LLC (a
225 Pictoria Drive, Suite 450 registered broker-dealer).
Cincinnati, OH 45246
- --------------------------------------------------------------------------------------------------------
Robert G. Dorsey July 2006 Managing Director of Ultimus Fund
(age 50) Solutions, LLC and Ultimus Fund
Vice President Distributors, LLC.
225 Pictoria Drive, Suite 450
Cincinnati, OH 45246
- --------------------------------------------------------------------------------------------------------
John F. Splain March 2006 Managing Director of Ultimus Fund
(age 51) Solutions, LLC and Ultimus Fund
Secretary Distributors, LLC.
225 Pictoria Drive, Suite 450
Cincinnati, OH 45246
- --------------------------------------------------------------------------------------------------------
David D. Jones July 2006 Managing Member, Drake Compliance,
(age 49) LLC (a compliance consulting firm) since
Chief Compliance Officer January 2004; Attorney, David Jones &
395 Sawdust Road #2137 Assoc., P.C. (a law firm) since January 1998;
The Woodlands, TX 77380 President & CEO, Citco Mutual Fund
Services, Inc. (a registered transfer agent)
from February 2001 to May 2003.
- --------------------------------------------------------------------------------------------------------
* John L. Cameron is deemed to be an interested person of the Fund because
of his leadership role in the American College of Surgeons.
Additional information about members of the Board of Trustees and Executive
Officers may be found in the Fund's Statement of Additional Information ("SAI").
To obtain a free copy of the SAI, please call 1-800-208-6070.
19
This page intentionally left blank.
This page intentionally left blank.
INVESTMENT MANAGER CUSTODIAN
Surgeons Asset Management, LLC The Northern Trust Company
633 North Saint Clair Street 50 South LaSalle Street
Chicago, Illinois 60611-3211 Chicago, Illinois 60675
312.202.5056
INDEPENDENT REGISTERED
SUBADVISER PUBLIC ACCOUNTING FIRM
Northern Trust Investments, N.A. Ernst & Young LLP
50 South LaSalle Street 1900 Scripps Center
Chicago, Illinois 60675 312 Walnut Street
Cincinnati, Ohio 45202
ADMINISTRATOR/TRANSFER AGENT LEGAL COUNSEL
Ultimus Fund Solutions, LLC Bell, Boyd & Lloyd LLP
225 Pictoria Drive, Suite 450 Three First National Plaza
Cincinnati, Ohio 45246 70 West Madison Street, Suite 3100
Chicago, Illinois 60602-4207
1-800.208.6070
[AMERICAN COLLEGE OF SURGEONS LOGO] Serving the membership of the
American College of Surgeons
| DIVERSIFIED
| INVESTMENT
SURGEONS | FUND
633 N. Saint Clair St.
Chicago, IL 60611
Voice 312.202.5056 Fax 312.202.5026
www.surgeonsfund.com
Investment Company Act File No. 811-21868
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 has at
least one audit committee financial expert serving on its audit committee. The
name of the audit committee financial expert is James W. Atkinson. Mr. Atkinson
is "independent" for purposes of this Item.
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 $29,000 with respect to the
registrant's fiscal year ended August 31, 2007.
(b) AUDIT-RELATED FEES. No fees were billed in the last fiscal year 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 $3,000 with respect to the registrant's fiscal
year ended August 31, 2007. 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 the last fiscal year 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) With respect to the fiscal year ended August 31, 2007, aggregate
non-audit fees of $3,000 were billed by the registrant's accountant
for services rendered to the registrant. No non-audit fees were
billed during the last fiscal year 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's Committee of Independent Trustees shall review shareholder
recommendations to fill vacancies on the registrant's board of trustees if such
recommendations are submitted in writing, addressed to the Committee at the
registrant's offices, and meet any minimum qualifications adopted by the
Committee from time to time. The Committee may adopt, by resolution, a policy
regarding its procedures for considering candidates for the board of trustees,
including any recommended by shareholders.
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 second fiscal quarter of the period covered by this
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) Surgeons Diversified Investment Fund
------------------------------------------------------------
By (Signature and Title)* /s/ Savitri P. Pai
--------------------------------------------------
Savitri P. Pai, President
Date November 2, 2007
-------------------------------------------
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/ Savitri P. Pai
--------------------------------------------------
Savitri P. Pai, President
Date November 2, 2007
-------------------------------------------
By (Signature and Title)* /s/ Mark J. Seger
-------------------------------------------------
Mark J. Seger, Treasurer
Date November 2, 2007
-------------------------------------------
* Print the name and title of each signing officer under his or her signature.