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OMB APPROVAL
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OMB Number: 3235-0570
Expires: August 31, 2011
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hours per response: 18.9
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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 811-22162
---------------------------------------------
The RAM Funds
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
2331 Far Hills Avenue, Suite 200 Dayton, Ohio 45419
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Tina H. Bloom, Esq.
Ultimus Fund Solutions, LLC 225 Pictoria Drive, Suite 450 Cincinnati, Ohio 45246
- --------------------------------------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: (937) 643-1000
----------------------------
Date of fiscal year end: February 28, 2009
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Date of reporting period: August 31, 2008
----------------------------
Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
THE RAM FUNDS
RAM Capital Appreciation Fund
SEMI-ANNUAL REPORT
AUGUST 31, 2008
(UNAUDITED)
RAM CAPITAL APPRECIATION FUND
SUPPLEMENTARY PORTFOLIO INFORMATION
AUGUST 31, 2008 (UNAUDITED)
================================================================================
TOP 10 HOLDINGS
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SECURITY DESCRIPTION % OF NET ASSETS
-------------------------------------------------------------------
Merrill Lynch & Co., 4.831%, due 10/27/2008 9.26%
Federal National Mortgage Association 6.91%
Freddie Mac 6.88%
Citigroup, Inc. 6.84%
Merrill Lynch & Co., 4.831%, due 10/27/2008 6.54%
Wachovia Corp. 5.92%
Wells Fargo & Co. 4.09%
JP Morgan Chase & Co. 4.03%
Ford Motor Co., 7.25%, due 10/01/2008 2.63%
Wachovia Corp., 3.625%, due 02/17/2009 2.63%
PORTFOLIO INDUSTRIES
-------------------------------------------------------------------
INDUSTRY % OF NET ASSETS
---------------------------------------------------------
Capital Markets 23.20%
Diversified Financial Services 17.73%
Thrifts & Mortgage Finance 13.80%
Commercial Banks 13.64%
Oil, Gas and Consumable Fuels 3.62%
Tobacco 2.73%
Energy Equipment and Services 2.59%
Software 2.53%
Wireless Telecommunication Services 2.44%
Electric Utilities 2.04%
Pharmaceuticals 1.48%
Industrial Conglomerates 1.39%
Household Products 1.01%
Multi Utilities 0.92%
Metals & Mining 0.59%
Marine 0.53%
Healthcare Providers and Services 0.16%
RAM CAPITAL APPRECIATION FUND
SCHEDULE OF INVESTMENTS
AUGUST 31, 2008 (UNAUDITED)
================================================================================
SHARES COMMON STOCKS -- 31.60% VALUE
================================================================================
CAPITAL MARKETS -- 5.95%
1,200 AllianceBernstein Holding L.P. $ 65,076
150 BlackRock, Inc. 32,588
1,500 Charles Schwab Corp. (The) 35,985
300 Lehman Brothers Holdings, Inc. 4,827
700 Merrill Lynch & Co., Inc. 19,845
800 Raymond James Financial, Inc. 24,664
700 T Rowe Price Group, Inc. 41,552
------------
224,537
------------
COMMERCIAL BANKS -- 1.00%
1,700 Lloyds TSB Group PLC - ADR 37,808
------------
DIVERSIFIED FINANCIAL SERVICES -- 2.62%
3,000 Bank of America Corp. 93,420
300 Citigroup, Inc. 5,697
------------
99,117
------------
ELECTRIC UTILITIES -- 2.04%
2,000 Duke Energy Corp. 34,880
1,800 Great Plains Energy, Inc. 42,210
------------
77,090
------------
ENERGY EQUIPMENT AND SERVICES -- 2.59%
500 Schlumberger Ltd. 47,110
400 Transocean, Inc. 50,880
------------
97,990
------------
INDUSTRIAL CONGLOMERATES -- 1.39%
500 3M Co. 35,800
600 General Electric Co. 16,860
------------
52,660
------------
HEALTHCARE PROVIDERS AND SERVICES -- 0.16%
200 UnitedHealth Group, Inc. 6,090
------------
HOUSEHOLD PRODUCTS -- 1.01%
500 Colgate-Palmolive Co. 38,015
------------
MARINE -- 0.53%
800 Seaspan Corp. 19,904
------------
METALS & MINING -- 0.59%
500 Companhia Vale do Rio Doce - ADR 13,275
100 Fording Canadian Coal Trust 8,948
------------
22,223
------------
MULTI UTILITIES -- 0.92%
800 Dominion Resources, Inc. 34,824
------------
OIL, GAS AND CONSUMABLE FUELS -- 3.62%
200 Exxon Mobil Corp. 16,002
900 General Maritime Corp. 22,230
1,100 Marathon Oil Corp. 49,577
200 Range Resources Corp. 9,284
1,100 Teekay Tankers Ltd. 22,165
500 Valero Energy Corp 17,380
------------
136,638
------------
See accompanying notes to schedules of investments.
RAM CAPITAL APPRECIATION FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
AUGUST 31, 2008 (UNAUDITED)
================================================================================
SHARES COMMON STOCKS -- 31.60% (CONTINUED) VALUE
================================================================================
PHARMACEUTICALS -- 1.48%
2,000 Bristol-Myers Squibb Co. $ 42,680
700 Pfizer, Inc. 13,377
------------
56,057
------------
SOFTWARE -- 2.53%
3,500 Microsoft Corp. 95,515
------------
TOBACCO -- 2.73%
300 Altria Group, Inc. 6,309
1,800 Philip Morris International, Inc. 96,660
------------
102,969
------------
WIRELESS TELECOMMUNICATION SERVICES -- 2.44%
3,600 Vodafone Group PLC - ADR 91,980
------------
TOTAL COMMON STOCKS (Cost $1,236,037) $ 1,193,417
------------
================================================================================
SHARES PREFERRED STOCKS -- 41.22% VALUE
================================================================================
CAPITAL MARKETS -- 6.54%
12,000 Merrill Lynch & Co. $ 246,960
------------
COMMERCIAL BANKS -- 10.01%
12,000 Wachovia Corp. 223,680
6,000 Wells Fargo & Co. 154,440
------------
378,120
------------
DIVERSIFIED FINANCIAL SERVICES -- 10.87%
13,000 Citigroup, Inc. 258,440
6,000 JP Morgan Chase & Co. 152,340
------------
410,780
------------
THRIFTS & MORTGAGE FINANCE -- 13.80%
18,200 Federal National Mortgage Association 261,170
18,500 Freddie Mac 259,925
------------
521,095
------------
TOTAL PREFERRED STOCKS (Cost $1,910,003) $ 1,556,955
------------
================================================================================
PAR VALUE CORPORATE BONDS -- 17.58% VALUE
================================================================================
$ 50,000 Countrywide Financial Corp., 6.25%, due 04/15/2009 $ 49,500
100,000 Ford Motor Co., 7.25%, due 10/01/2008 99,250
12,000 Ford Motor Co., 5.80%, due 01/12/2009 11,775
25,000 Lehman Brothers Holdings, Inc., 3.60%, due 03/13/2009 24,645
30,000 Lehman Brothers Holdings, Inc., 7.875%, due 08/15/2010 29,910
350,000 Merrill Lynch & Co., 4.831%, due 10/27/2008 349,814
100,000 Wachovia Corp., 3.625%, due 02/17/2009 99,236
------------
TOTAL CORPORATE BONDS (Cost $666,988) $ 664,130
------------
See accompanying notes to schedules of investments.
RAM CAPITAL APPRECIATION FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
AUGUST 31, 2008 (UNAUDITED)
================================================================================
SHARES MONEY MARKET FUNDS -- 11.41% VALUE
================================================================================
430,927 Fidelity Institutional Money Market Portfolio -
Select Class, 2.627%* (Cost $430,927) $ 430,927
------------
TOTAL INVESTMENTS AT VALUE -- 101.81%
(Cost $4,243,955) 3,845,429
LIABILITIES IN EXCESS OF OTHER ASSETS -- (1.81%) (68,537)
------------
NET ASSETS -- 100.00% $ 3,776,892
============
* Rate shown is the 7-day effective yield at August 31, 2008.
ADR - American Depositary Receipt
See accompanying notes to schedules of investments.
RAM CAPITAL APPRECIATION FUND
SCHEDULE OF OPEN OPTIONS WRITTEN
AUGUST 31, 2008 (UNAUDITED)
=============================================================================================
VALUE OF PREMIUMS
CONTRACTS WRITTEN PUT OPTIONS OPTIONS RECEIVED
=============================================================================================
300 Adobe Systems, Inc., 01/17/2009 at $35 $ 300 $ 609
400 Alcoa, Inc., 01/17/2009 at $30 935 900
300 AllianceBernstein Holding LP., 10/18/2008 at $55 952 894
3,500 Bank of America Corp., 11/22/2008 at $30 11,200 17,955
500 Bank of America Corp., 11/22/2008 at $32.50 2,187 1,180
300 Bank of America Corp., 11/22/2008 at $35 1,710 894
300 BP PLC - ADR, 01/17/2009 at $60 1,710 894
200 BP PLC - ADR, 01/17/2009 at $65 1,840 936
200 Bristol-Myers Squibb Co., 09/20/2009 at $20 30 228
1,500 Chesapeake Energy Corp., 01/17/2008 at $50 10,350 3,570
1,000 Citigroup, Inc., 12/20/2008 at $20 2,880 1,730
1,000 Colgate - Palmolive Co., 02/21/2009 at $65 1,075 1,177
800 Duke Energy Corp., 01/17/2009 at $17.50 760 784
400 Federal National Mortgage Association, 01/16/2010 at $20 5,760 1,712
1,000 General Electric Co., 01/16/2010 at $25 2,360 2,437
200 General Maritime Corp., 11/22/2008 at $20 85 316
500 General Maritime Corp., 02/21/2009 at $20 438 866
200 Kimberly-Clark Corp., 01/17/2009 at $60 585 506
100 Lehman Brothers Holdings, Inc., 01/17/2009 at $30 1,430 368
100 Marathon Oil Corp., 10/18/2008 at $40 65 253
1,000 Marathon Oil Corp., 01/17/2009 at $40 2,175 2,580
400 Merck & Co., Inc., 10/18/2008 at $37.50 1,150 1,092
400 Merck & Co., Inc., 01/17/2009 at $37.50 1,600 1,132
500 Merrill Lynch & Co., Inc., 10/18/2008 at $40 5,938 1,740
200 Merrill Lynch & Co., Inc., 10/18/2008 at $42.50 2,885 706
200 Microsoft Corp., 10/18/2008 at $26 110 266
1,000 Microsoft Corp., 04/18/2009 at $27 2,240 2,377
500 Philip Morris International, Inc., 01/17/2009 at $45 350 640
500 Philip Morris International, Inc., 03/21/2009 at $50 1,275 1,139
200 Raymond James Financial, Inc., 11/22/2008 at $22.50 135 406
100 Schlumberger Ltd., 11/22/2008 at $65 20 198
600 Schlumberger Ltd., 11/22/2008 at $85 1,920 1,698
400 Seaspan Corp., 11/22/2008 at $25 740 532
400 Seaspan Corp., 01/17/2009 at $22.50 510 752
600 UnitedHealth Group, Inc., 01/16/2010 at $22.50 1,050 1,186
400 Valero Energy Corp., 09/20/2008 at $45 4,080 876
200 Vodafone Group PLC - ADR, 01/17/2009 at $25 360 266
2,000 Vodafone Group PLC - ADR, 01/16/2010 at $25 8,300 6,560
---------- ----------
$ 81,490 $ 62,355
========== ==========
=============================================================================================
VALUE OF PREMIUMS
CONTRACTS WRITTEN CALL OPTIONS OPTIONS RECEIVED
=============================================================================================
100 Fording Canadian Coal Trust, 03/21/2009 at $90 $ 313 $ 318
---------- ----------
ADR - American Depositary Receipt
See accompanying notes to schedules of investments.
RAM CAPITAL APPRECIATION FUND
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 2008 (UNAUDITED)
================================================================================
ASSETS
Investments in securities:
At acquisition cost $ 4,243,955
============
At value (Note 1) $ 3,845,429
Cash 300
Dividends and interest receivable 23,841
Other assets 5,333
------------
TOTAL ASSETS 3,874,903
------------
LIABILITIES
Written options at value (premiums received $62,673)
(Notes 1 and 5) 81,803
Payable for investment securities purchased 3,991
Payable to Administrator (Note 2) 4,600
Other accrued expenses and liabilities 7,617
------------
TOTAL LIABILITIES 98,011
------------
NET ASSETS $ 3,776,892
============
Net assets consist of:
Paid-in capital $ 4,234,403
Accumulated undistributed net investment income 26,066
Accumulated net realized losses from security transactions (65,921)
Net unrealized depreciation on investments and options (417,656)
------------
Net assets $ 3,776,892
============
Shares of beneficial interest outstanding
(unlimited number of shares authorized, no par value) 471,558
============
Net asset value, offering price and redemption
price per share (Note 1) $ 8.01
============
See accompanying notes to financial statements.
RAM CAPITAL APPRECIATION FUND
STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED AUGUST 31, 2008* (UNAUDITED)
================================================================================
INVESTMENT INCOME
Interest $ 2,289
Dividends 31,060
------------
TOTAL INVESTMENT INCOME 33,349
------------
EXPENSES
Compliance service fees 10,411
Fund accounting fees (Note 2) 8,032
Professional fees 6,500
Administration fees (Note 2) 6,400
Investment advisory fees (Note 2) 4,370
Transfer agent fees (Note 2) 4,000
Trustees' fees and expenses 3,845
Custodian and bank service fees 3,734
Postage and supplies 2,849
Printing of shareholder reports 2,785
Insurance expense 2,666
Registration fees 950
Other expenses 1,409
------------
TOTAL EXPENSES 57,951
Fees waived by the Adviser (Note 2) (50,668)
------------
NET EXPENSES 7,283
------------
NET INVESTMENT INCOME 26,066
------------
REALIZED AND UNREALIZED LOSSES
ON INVESTMENTS
Net realized losses on security transactions (65,921)
Net change in unrealized depreciation on:
Options contracts (19,130)
Investments (398,526)
------------
NET REALIZED AND UNREALIZED LOSSES
ON INVESTMENTS (483,577)
------------
NET DECREASE IN NET ASSETS
FROM OPERATIONS $ (457,511)
============
* For the period from March 31, 2008, the Fund's inception date, to August
31, 2008
See accompanying notes to financial statements.
RAM CAPITAL APPRECIATION FUND
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD ENDED AUGUST 31, 2008* (UNAUDITED)
================================================================================
FROM OPERATIONS
Net investment income $ 26,066
Net realized losses on:
Security transactions (65,921)
Option contracts --
Net change in unrealized depreciation on:
Option contracts (19,130)
Investments (398,526)
------------
Net increase (decrease) in net assets
from operations (457,511)
------------
FROM CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold 4,134,403
Net asset value of shares issued in
reinvestment of distributions
to shareholders
Payments for shares redeemed --
------------
Net increase in net assets
from capital share transactions 4,134,403
------------
TOTAL INCREASE IN NET ASSETS 3,676,892
NET ASSETS
Beginning of year 100,000
------------
End of year $ 3,776,892
============
ACCUMULATED UNDISTRIBUTED
NET INVESTMENT INCOME $ 26,066
============
CAPITAL SHARE ACTIVITY
Sold 461,558
Reinvested --
Redeemed --
------------
Net increase in shares outstanding 461,558
------------
Shares outstanding at beginning of year 10,000
------------
Shares outstanding at end of year 471,558
============
* For the period from March 31, 2008, the Fund's inception date, to August
31, 2008
See accompanying notes to financial statements.
RAM CAPITAL APPRECIATION FUND
FINANCIAL HIGHLIGHTS
FOR THE PERIOD ENDED AUGUST 31, 2008(a) (UNAUDITED)
================================================================================
Net asset value at beginning of year $ 10.00
----------
Income (loss) from investment operations:
Net investment income 0.06
Net realized and unrealized losses on investments (2.05)
----------
Total from investment operations (1.99)
----------
Net asset value at end of year $ 8.01
==========
Total return (b) (19.90%)**
==========
Net assets at end of year (000's) $ 3,777
==========
Ratio of gross expenses to average net assets 7.91%*
Ratio of net expenses to average net assets 1.00%*
Ratio of net investment income to average net assets 3.56%*
Portfolio turnover rate 26%**
(a) For the period from March 31, 2008, the Fund's inception date, to August
31, 2008
(b) Total return is a measure of the change in value of an investment in the
Fund over the period, which assumes any dividends or capital gains
distributions are reinvested in shares of the Fund. Returns do not reflect
the deduction of taxes a shareholder would pay on Fund distributions or
the redemption of Fund shares.
* Annualized
** Not Annualized
See accompanying notes to financial statements.
RAM CAPITAL APPRECIATION FUND
NOTES TO THE FINANCIAL STATEMENTS
AUGUST 31, 2008 (UNAUDITED)
================================================================================
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
The RAM Capital Appreciation Fund (the "Fund") is a diversified series of The
RAM Funds (the "Trust"), an open-end management investment company established
as an Ohio business trust under a Declaration of Trust dated December 20, 2007.
On March 13, 2008, 10,000 shares of the Fund were issued for cash, at $10.00 per
share, to John C. Riazzi, who serves as the President and a Trustee of the
Trust. The Fund commenced operations on March 31, 2008.
The Fund's investment objective is long-term capital appreciation and income.
VALUATION OF SECURITIES AND OPTIONS
The Fund's portfolio securities are valued as of the close of business of the
regular session of trading on the New York Stock Exchange (normally 4:00 p.m.,
Eastern time). Securities which are traded on stock exchanges are valued on the
basis of their last sale prices on the exchanges on which they are primarily
traded, or, if not traded on a particular day, at the closing bid price.
Securities quoted by NASDAQ are valued at the NASDAQ Official Closing Price or,
if not traded on a particular day, at the last bid price as reported by NASDAQ.
Securities traded in the over-the-counter market are valued at the last sale
price, if available, otherwise, at the mean of the closing bid and ask prices.
Debt securities are valued at their current market value when available or their
fair value, which for securities with remaining maturities of 60 days or less
has been determined in good faith by the Board of Trustees to be represented by
amortized cost, absent unusual circumstances. Options traded on national
securities exchanges are valued at the last quoted sale price or, in absence of
a sale, at the mean of the closing bid and ask prices. Securities and other
assets for which market quotations are not readily available or are considered
to be unreliable due to significant market or other events are valued at their
fair value as determined in good faith in accordance with consistently applied
procedures established by and under the general supervision of the Board of
Trustees.
The Financial Accounting Standards Board's Statement on Financial Accounting
Standards ("SFAS") No. 157, "Fair Value Measurements" 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. 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.
Various inputs are used in determining the value of the Fund's investments.
These inputs are summarized in the three broad levels listed below:
Level 1 - quoted prices in active markets for identical securities
Level 2 - other significant observable inputs
Level 3 - significant unobservable inputs
The inputs or methodology used for valuing securities are not necessarily an
indication of the risk associated with investing in those securities.
The following is a summary of the inputs used to value the Fund's net assets as
of August 31, 2008:
VALUATION INPUTS
================================================================================
Level 1 - Quoted Prices $ 3,181,299
Level 2 - Other Significant Observable Inputs 664,130
------------
Total $ 3,845,429
============
RAM CAPITAL APPRECIATION FUND
NOTES TO THE FINANCIAL STATEMENTS
AUGUST 31, 2008 (UNAUDITED)
================================================================================
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, except that shares of the Fund are
subject to a redemption fee of 2% if redeemed within 90 days of the date of
purchase. During the period ended August 31, 2008, no redemption fees were
collected.
INVESTMENT INCOME
Interest income is accrued as earned. Dividend income is recorded on the
ex-dividend date. Discounts and premiums on fixed income securities purchased
are amortized over the lives of the securities.
SECURITY TRANSACTIONS
Security transactions are accounted for on trade date. Gains and losses on
securities 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 gains are
determined in accordance with federal income tax regulations, which may differ
from accounting principles generally accepted in the United States of America.
There were no distributions during the period ended August 31, 2008.
ESTIMATES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent 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 has 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 August
31, 2008:
Cost of portfolio investments
and written options $ 4,181,282
============
Gross unrealized appreciation $ 44,209
Gross unrealized depreciation (461,865)
------------
Net unrealized depreciation ($ 417,656)
Accumulated ordinary income 26,066
Other losses (65,921)
------------
Accumulated deficit ($ 457,511)
============
The Financial Accounting Standards Board's Interpretation No. 48 ("FIN 48")
"Accounting for Uncertainty in Income Taxes" 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
RAM CAPITAL APPRECIATION FUND
NOTES TO THE FINANCIAL STATEMENTS
AUGUST 31, 2008 (UNAUDITED)
================================================================================
FEDERAL INCOME TAX (CONTINUED)
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. As required
by FIN 48, management has concluded that no provision for income tax is required
in these financial statements.
2. FEES AND TRANSACTIONS WITH AFFILIATES
The managing member and controlling shareholder of the Adviser is the President
and a Trustee of the Trust. Certain other officers of the Trust are also
officers of Ultimus Fund Solutions, LLC ("Ultimus"), the Fund's administrator,
transfer agent and fund accounting agent.
ADVISORY AGREEMENT
Riazzi Asset Management, LLC (the "Adviser") is the investment adviser to the
Fund. For its services, the Fund pays the Adviser an investment advisory fee,
which is computed and accrued daily and paid monthly, computed at the annual
rate of 0.60% of the Fund's average daily net assets. The Adviser has
contractually agreed, for a period of three years from the Fund's commencement
of operations, to reduce its management fees and to absorb the Fund's operating
expenses to the extent necessary to limit the Fund's annual ordinary operating
expenses to an amount not exceeding 1.00% of the Fund's average daily net
assets. Any fee reductions or expense reimbursements by the Adviser are subject
to repayment by the Fund for a period of three years after such fees and
expenses were incurred, provided that the repayments do not cause the Fund's
ordinary operating expenses to exceed the 1.00% limit. As of August 31, 2008,
the Adviser may in the future recoup fees waived and expenses reimbursed
totaling $50,668. The Adviser may recapture this amount no later than February
28, 2011.
ADMINISTRATION AGREEMENT
Under the terms of an Administration Agreement, Ultimus supplies non-investment
related statistical and research data, internal regulatory compliance services
and executive and administrative services for the Fund. Ultimus supervises the
preparation of tax returns, reports to shareholders of the Fund, reports to and
filings with the Securities and Exchange Commission and state securities
commissions and materials for meetings of the Board of Trustees. For these
services, Ultimus receives a monthly fee at an annual rate of 0.15% of the
Fund's average daily net assets up to $50 million; 0.125% of such assets between
$50 million and $100 million; 0.10% of such assets between $100 million and $250
million; 0.075% of such assets between $250 million and $500 million; and 0.05%
of such assets in excess of $500 million, subject to a minimum monthly fee of
$2,000. The fee payable to Ultimus is discounted by 20% during the first year
and 15% during the second year or until such time as the net assets of the Fund
reach $20 million, but in no event later than 2 years from the date of the
Fund's commencement of operations.
ACCOUNTING SERVICES AGREEMENT
Under the terms of an Accounting Services Agreement, 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 fee, based on current asset
levels, of $2,500 per month from the Fund. The fee payable to Ultimus is
discounted by 20% during the first year and 15% during the second year or until
such time as the net assets of the Fund reach $20 million, but in no event later
than 2 years from the date of the Fund's commencement of operations.
RAM CAPITAL APPRECIATION FUND
NOTES TO THE FINANCIAL STATEMENTS
AUGUST 31, 2008 (UNAUDITED)
================================================================================
TRANSFER AGENT AGREEMENT
Under the terms of a Transfer Agent and Shareholder Services Agreement, Ultimus
maintains the records of each shareholder's account, answers shareholders'
inquiries concerning their accounts, processes purchases and redemptions of the
Fund's shares, acts as dividend and distribution disbursing agent and performs
other shareholder service functions. For these services, Ultimus receives a
monthly fee at an annual rate of $20 per shareholder account, subject to a
$1,500 minimum monthly fee, provided, however, that the minimum fee is $1,000
per month if the Fund has 25 shareholder accounts or less, $1,250 if the Fund
has more than 25 but less than 100 shareholder accounts, and $1,500 per month if
the Fund has 100 shareholder accounts or more. In addition, the Fund reimburses
Ultimus for out-of-pocket expenses including, but not limited to, postage and
supplies.
DISTRIBUTION AGREEMENT
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
for the Fund. The Distributor is a wholly owned subsidiary of Ultimus. The
Distributor receives no compensation from the Fund for acting as principal
underwriter. However, the Distributor receives annual compensation of $6,000
from the Adviser for such services.
COMPLIANCE CONSULTING AGREEMENT
Under the terms of a Compliance Consulting Agreement, Drake Compliance, LLC
("Drake") provides ongoing regulatory compliance consulting, monitoring and
reporting services for the Fund. In addition, a principal of Drake serves as the
Trust's Chief Compliance Officer as required under Rule 38a-1 of the Investment
Company Act of 1940. For these services, Drake receives $2,000 per month from
the Fund. In addition, the Fund reimburses certain out-of-pocket expenses
incurred by Drake including, but not limited to, postage and supplies and travel
expenses.
3. BENEFICIAL OWNERSHIP
The beneficial ownership, either directly or indirectly of more than 25% of the
voting securities of a fund creates a presumption of control of the fund, under
section 2(a)(9) of the Investment Company Act of 1940. As of August 31, 2008,
John C. Riazzi owned 48.5% of the outstanding shares of the Fund and the 2008
Ann Fitzgerald & Carmen J. Riazzi Grantor Charitable Lead Trust owned 45.9% of
the outstanding shares of the Fund.
4. INVESTMENT TRANSACTIONS
During the period ended August 31, 2008, cost of purchases and proceeds from
sales and maturities of investment securities, other than short-term investments
and U.S. government securities, amounted to $3,592,012 and $348,145,
respectively.
5. OPTION CONTRACTS WRITTEN
Transactions in option contracts written by the Fund during the period ended
August 31, 2008 were as follows:
NUMBER OF PUT
CONTRACTS PUT PREMIUMS
OPTIONS OUTSTANDING BEGINNING OF PERIOD -- $ --
Options Written 227 63,774
Options Exercised (3) (1,419)
------------ ------------
OUTSTANDING, END OF PERIOD 224 $ 62,355
============ ============
NUMBER OF CALL
CONTRACTS CALL PREMIUMS
OPTIONS OUTSTANDING BEGINNING OF PERIOD -- $ --
Options Written 1 318
------------ ------------
OUTSTANDING, END OF PERIOD 1 $ 318
============ ============
RAM CAPITAL APPRECIATION FUND
NOTES TO THE FINANCIAL STATEMENTS
AUGUST 31, 2008 (UNAUDITED)
================================================================================
6. 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.
7. SUBSEQUENT EVENT
The Trust's Board of Trustees has approved the mandatory redemption of all of
the Fund's shares and the liquidation of the Fund. It anticipated that all
outstanding shares of the Fund will be redeemed and the Fund will discontinue
operations on or about November 26, 2008. Effective October 27, 2008, the Fund
has terminated the public offering of its shares.
RAM CAPITAL APPRECIATION FUND
NOTES TO THE FINANCIAL STATEMENTS
AUGUST 31, 2008 (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 two types of costs: (1)
transaction costs, including redemption fees; and (2) ongoing costs, including
management fees and other Fund expenses. The following example is intended to
help you understand your ongoing costs (in dollars) of investing in the Fund and
to compare these costs with the ongoing costs of investing in other mutual
funds.
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 ongoing costs reflected
in the table are based on an investment of $1,000 made at the beginning of the
period covered by this report, March 31, 2008, and held until the end of the
period, August 31, 2008.
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. However, a
redemption fee of 2% is applied on the sale of shares purchased within 180 days
of the date of their purchase. The calculations below 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 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.
Ending
Beginning Account Value Expenses Paid
Account Value August 31, During
March 31, 2008 2008 Period*
Based on Actual Fund Return $ 1,000.00 $ 801.00 $ 3.80
Based on Hypothetical 5% Return $ 1,000.00 $ 1,016.88 $ 4.25
*Expenses are equal to the Fund's annualized expense ratio of 1.00% for the
period, multiplied by the average account value over the period, multiplied by
154/365 (to reflect period covered by this report)
RAM CAPITAL APPRECIATION FUND
NOTES TO THE FINANCIAL STATEMENTS
AUGUST 31, 2008 (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 1-888-884-8099, or on the Securities and Exchange Commission's
(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 also available without charge upon request by calling toll-free
1-800-281-3217, 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. These
filings are available upon request by calling 1-888-884-8099. Furthermore, you
may obtain a copy of these filings 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.
RAM CAPITAL APPRECIATION FUND
APPROVAL OF INVESTMENT ADVISORY AGREEMENT (UNAUDITED)
================================================================================
The Board of Trustees, including the Independent Trustees voting separately,
reviewed and approved the Fund's Investment Advisory Agreement with the Adviser
at an in-person meeting held on March 10, 2008, at which all of the Trustees
were present.
In the course of their deliberations, the Independent Trustees were advised by
independent counsel of their obligations in determining to approve the
Investment Advisory Agreement. The Trustees received and reviewed a substantial
amount of information provided by the Adviser in response to requests of the
Trustees and counsel.
In considering the Investment Advisory Agreement and reaching their conclusions
with respect thereto, the Trustees reviewed and analyzed various factors that
they determined were relevant, including the factors described below.
NATURE, EXTENT AND QUALITY OF SERVICES
- --------------------------------------
The Trustees received and considered various data and information regarding the
nature, extent and quality of services to be provided to the Fund by the
Adviser. The most recent investment adviser registration form ("Form ADV") for
the Adviser was reviewed by the Trustees. The Trustees specifically reviewed the
qualifications, background and responsibilities of John C. Riazzi, the founder
of the Adviser and the person who oversees the day-to-day investment management
and operations of the Fund, including Mr. Riazzi's portfolio management
responsibilities and the support resources available to him for investment
research. The Board concluded that it was satisfied with the nature, extent and
quality of the investment advisory services to be provided to the Fund by the
Adviser.
EXPENSES AND PERFORMANCE
- ------------------------
The Board of Trustees considered statistical information regarding the Fund's
projected expense ratio and its various components, including the contractual
advisory fee and fee reductions and/or expense reimbursements. It also
considered a comparison of these fees to the expense information for the Fund's
peer group, as determined by the Adviser. The Fund's overall expense ratio,
after contractual fee reductions, was compared to funds within the Morningstar
category of "U.S. Large Cap Value Funds." The Trustees observed that the overall
expense ratio of the Fund, after fee reductions, will be lower than the average
expense ratio for U.S. Large Cap Value Funds. The Trustees also observed that,
under the expense cap arrangement agreed to by the Adviser, shareholders of the
Fund are guaranteed a competitive expense ratio during the infancy stages (first
three years) of the Fund's operations. The Trustees noted that because the Fund
has not yet commenced operations, it does not have a performance track record.
INVESTMENT ADVISORY FEE RATES
- -----------------------------
The Trustees reviewed and considered the proposed contractual investment
advisory fee rate payable by the Fund to the Adviser for investment advisory
services. Additionally, the Trustees received and considered information
comparing the Fund's advisory fee rate with those of the other funds in its
relevant peer group, as defined above. The Trustees concluded that the advisory
fee rate for the Fund was lower than the average rate presented for its peer
group.
PROFITABILITY
- -------------
The Trustees reviewed the Adviser's balance sheet as of December 31, 2007 and
considered its financial condition. The Trustees considered the level of Fund
assets necessary for the Adviser to "break even," the projected profits of the
Adviser and the other ancillary benefits that the Adviser may receive with
regard to providing advisory services to the Fund and concluded that, in light
of the fact that the Fund is new, with limited assets, these factors are only
secondary factors at this time.
ECONOMIES OF SCALE
- ------------------
The Trustees considered economies of scale, noting that at this stage, the Fund
has not had an opportunity to recognize any economies of scale. The Trustees
observed that as the Fund grows in assets, this factor will become more relevant
to their consideration process.
CONCLUSION
- ----------
After full consideration of the above factors as well as other factors, the
Trustees, including all of the Independent Trustees, unanimously concluded that
approval of the Investment Advisory Agreement was in the best interests of the
Fund and its shareholders.
ITEM 2. CODE OF ETHICS.
Not required
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not required
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not required
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. 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: Not required
(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.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 RAM Funds
-------------------------------------------------------------------
By (Signature and Title)* /s/ John C. Riazzi
--------------------------------------------------
John C. Riazzi, President
Date November 4, 2008
-----------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ John C. Riazzi
--------------------------------------------------
John C. Riazzi, President
Date November 4, 2008
-----------------------------
By (Signature and Title)* /s/ Mark J. Seger
--------------------------------------------------
Mark J. Seger, Treasurer
Date November 4, 2008
-----------------------------
* Print the name and title of each signing officer under his or her signature.