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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 811-07292
---------------------------------------------
North American Government Bond Fund, Inc.
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(Exact name of registrant as specified in charter)
40 West 57th Street, 18th Floor New York, New York 10019
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(Address of principal executive offices) (Zip code)
R. Alan Medaugh, President
ISI, Inc. 40 West 57th Street, 18th Floor New York, New York 10019
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(Name and address of agent for service)
Registrant's telephone number, including area code: (212) 446-5600
----------------------------
Date of fiscal year end: October 31, 2009
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Date of reporting period: April 30, 2009
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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.
ISI International
Strategy &
Investment
================================================================================
SEMI-ANNUAL REPORT
APRIL 30, 2009
(UNAUDITED)
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TOTAL RETURN
US TREASURY
FUND, INC.
MANAGED MUNICIPAL
FUND, INC.
NORTH AMERICAN
GOVERNMENT BOND
FUND, INC.
ISI STRATEGY
FUND, INC.
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================================================================================
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ISI FUNDS SEMI-ANNUAL REPORT -- TABLE OF CONTENTS
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Investment Advisor's Message .............................................. 1
Performance Comparisons ................................................... 2
Shareholder Expense Examples .............................................. 10
Portfolio Profiles ........................................................ 12
Schedules of Investments .................................................. 13
Statements of Assets and Liabilities ...................................... 26
Statements of Operations .................................................. 29
Statements of Changes in Net Assets ....................................... 31
Financial Highlights ...................................................... 36
Notes to Financial Statements ............................................. 41
Notice to Shareholders .................................................... 49
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INVESTMENT ADVISOR'S MESSAGE
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Dear Shareholder:
I am pleased to present the semi-annual report to shareholders for the ISI
Funds. This report covers the six-month reporting period ended April 30, 2009.
For this period, Total Return US Treasury Fund, Inc. ('Total Return') produced a
+8.79% return; Managed Municipal Fund, Inc. ('Managed Municipal') produced a
+8.78% return; North American Government Bond Fund, Inc. ('North American')
produced a +7.22% return in its Class A Shares and a +6.89% return in its Class
C Shares; and ISI Strategy Fund ('Strategy') produced a -3.12% return. These
figures assume the reinvestment of dividends and capital gain distributions, and
exclude the impact of any sales charges.
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND IS NO GUARANTEE OF
FUTURE RESULTS. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE
DATA QUOTED. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN
INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN ORIGINAL COST.
FOR THE MOST RECENT MONTH-END PERFORMANCE OF A FUND, PLEASE CALL (800) 882-8585.
DESCRIPTION OF FUND OBJECTIVES
Total Return, Managed Municipal, North American and Strategy, (each a 'Fund' and
collectively, the 'Funds') are registered under the Investment Company Act of
1940 as open-end management investment companies. The Funds are organized as
corporations under the laws of the state of Maryland.
International Strategy & Investment, Inc. ('ISI') manages all four Funds. Total
Return's investment objective is to achieve a high level of total return with
relative stability of principal and, secondarily, high current income consistent
with an investment in securities issued by the United States Treasury. Managed
Municipal's investment objective is designed to provide a high level of total
return with relative stability of principal and, secondarily, high current
income exempt from federal income tax through investment in a portfolio
consisting primarily of tax-free municipal obligations. North American's
investment objective is designed to provide a high level of current income,
consistent with prudent investment risk. Strategy's investment objective is
designed to maximize total return through a combination of long-term growth of
capital and current income.
We would like to welcome new investors to the ISI Funds and thank those who have
been with us for some time. We appreciate your confidence.
Sincerely,
/s/ R. Alan Medaugh
R. Alan Medaugh
President
May 27, 2009
1
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TOTAL RETURN US TREASURY FUND -
PERFORMANCE COMPARISON(1)
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TOTAL RETURN US TREASURY FUND - ISI SHARES, BARCLAYS CAPITAL
TREASURY INDEX, BARCLAYS CAPITAL INTERMEDIATE TREASURY INDEX AND
BARCLAYS CAPITAL LONG-TERM TREASURY INDEX: VALUE OF A $10,000
INVESTMENT (FOR 10 YEARS ENDED APRIL 30, 2009)
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[LINE GRAPH OMITTED]
Barclays Barclays Barclays
Total Return Capital Capital Capital
US Treasury Treasury Intermediate Long-Term
Fund Index Treasury Index Treasury Index
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4/30/1999 $ 9,700 $10,000 $10,000 $10,000
4/30/2000 9,915 10,222 10,223 10,206
4/30/2001 10,801 11,338 11,361 11,292
4/30/2002 11,492 12,165 12,147 12,179
4/30/2003 12,861 13,580 13,228 14,272
4/30/2004 12,849 13,650 13,352 14,197
4/30/2005 13,603 14,358 13,707 15,991
4/30/2006 13,447 14,326 13,798 15,482
4/30/2007 14,452 15,309 14,633 16,992
4/30/2008 15,529 16,798 16,048 18,684
4/30/2009 16,951 18,035 17,142 20,423
2
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TOTAL RETURN US TREASURY FUND -
PERFORMANCE COMPARISON(1) (CONTINUED)
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CUMULATIVE TOTAL RETURNS (WITH LOAD) AVERAGE ANNUAL TOTAL RETURNS (WITH LOAD)
----------------------------------------------------------- ------------------------------------------------
PERIODS ENDED SINCE SINCE
APRIL 30, 2009 6 MONTHS 1 YEAR 3 YEARS 5 YEARS 10 YEARS INCEPTION(2) 1 YEAR 3 YEARS 5 YEARS 10 YEARS INCEPTION(2)
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Total Return US
Treasury Fund 5.49% 5.89% 22.28% 27.98% 69.43% 305.43% 5.89% 6.94% 5.06% 5.41% 6.99%
Barclays Capital
Treasury Index(3) 5.48% 7.36% 25.89% 32.12% 80.35% 341.40% 7.36% 7.97% 5.73% 6.07% 7.45%
Barclays Capital
Intermediate
Treasury Index(3) 4.27% 6.80% 24.24% 28.39% 71.42% 290.32% 6.80% 7.50% 5.12% 5.54% 6.81%
Barclays Capital
Long-Term
Treasury Index(3) 10.24% 9.30% 31.91% 43.85% 104.23% 513.98% 9.30% 9.67% 7.54% 7.40% 9.18%
1 PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. Investment return
and principal value will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their original cost. The
performance information presented in the graph and table above does not
reflect the deduction of taxes that a shareholder would pay on Fund
distributions or the redemption of Fund shares. All performance assumes
the reinvestment of dividends and capital gain distributions and includes
the Fund's maximum 3.00% sales charge. Distributions of the Fund's capital
gains and non-US Treasury income may be subject to state and local taxes.
Management is not aware of any single index that is truly representative
of the Fund since its active maturity management policy allows the manager
to adjust the weighted average maturity throughout each US Treasury
sector. Currently the Fund's weighted average maturity is approximately
7.12 years.
2 The Fund's inception date is August 10, 1988. Benchmark returns are for
the periods beginning August 31, 1988.
3 The Barclays Capital Treasury Index is an unmanaged index reflecting the
performance of all public Treasury obligations and does not focus on one
particular segment of the Treasury market. The Barclays Capital
Intermediate Treasury Index is an unmanaged index reflecting the
performance of US Treasury securities in the intermediate-term Treasury
sector. The Barclays Capital Long-Term Treasury Index is an unmanaged
index reflecting the performance of US Treasury securities in the
long-term Treasury sector. Benchmark returns do not reflect expenses or
sales charges that have been deducted from the Fund's returns.
3
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MANAGED MUNICIPAL FUND -
PERFORMANCE COMPARISON(1)
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MANAGED MUNICIPAL FUND, BARCLAYS CAPITAL GENERAL OBLIGATION INDEX,
BARCLAYS CAPITAL PREREFUNDED MUNICIPAL BOND INDEX AND CONSUMER PRICE INDEX:
VALUE OF A $10,000 INVESTMENT (FOR 10 YEARS ENDED APRIL 30, 2009)
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[LINE GRAPH OMITTED]
Barclays Capital Barclays Capital
Managed General Prerefunded Consumer
Municipal Obligation Municipal Price
Fund Index Bond Index Index
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4/30/1999 $ 9,700 $10,000 $10,000 $10,000
4/30/2000 9,490 9,947 10,113 10,307
4/30/2001 10,413 10,940 10,917 10,644
4/30/2002 11,051 11,698 11,613 10,818
4/30/2003 11,953 12,657 12,441 11,059
4/30/2004 12,002 12,969 12,625 11,312
4/30/2005 12,662 13,775 13,079 11,709
4/30/2006 12,754 14,008 13,231 12,124
4/30/2007 13,391 14,791 13,820 12,347
4/30/2008 13,878 15,430 14,634 12,870
4/30/2009 14,533 16,281 15,682 12,805
4
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MANAGED MUNICIPAL FUND -
PERFORMANCE COMPARISON(1) (CONTINUED)
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CUMULATIVE TOTAL RETURNS (WITH LOAD) AVERAGE ANNUAL TOTAL RETURNS (WITH LOAD)
----------------------------------------------------------- ------------------------------------------------
PERIODS ENDED SINCE SINCE
APRIL 30, 2009 6 MONTHS 1 YEAR 3 YEARS 5 YEARS 10 YEARS INCEPTION(2) 1 YEAR 3 YEARS 5 YEARS 10 YEARS INCEPTION(2)
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Managed Municipal
Fund 5.50% 1.54% 10.49% 17.46% 45.28% 168.01% 1.54% 3.38% 3.27% 3.81% 5.28%
Barclays Capital
General Obligation
Index(3) 8.57% 5.50% 16.23% 25.53% 62.81% 219.23% 5.50% 5.14% 4.65% 4.99% 6.24%
Barclays Capital
Prerefunded
Municipal
Bond Index(3) 6.47% 7.17% 18.52% 24.21% 56.82% 183.15% 7.17% 5.83% 4.43% 4.60% 5.58%
Consumer Price
Index(4) -1.95% -0.62% 5.62% 13.20% 28.05% 37.36% -0.62% 1.84% 2.51% 2.50% 1.67%
1 PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. Investment return
and principal value will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their original cost. The
performance information presented in the graph and table above does not
reflect the deduction of taxes that a shareholder would pay on Fund
distributions or the redemption of Fund shares. All performance assumes
the reinvestment of dividends and capital gain distributions and includes
the Fund's maximum 3.00% sales charge. Distributions of the Fund's income
and capital gains may be subject to state and local taxes.
2 The Fund's inception date is February 26, 1990. Benchmark returns are for
the periods beginning February 28, 1990.
3 The Barclays Capital General Obligation Index is an unmanaged index
reflecting general municipal bond market performance. The Barclays Capital
Prerefunded Municipal Bond Index, an unmanaged index, is a subcomponent of
the general Barclays Capital Municipal Bond Index, and contains only bonds
from that index that have been prerefunded or escrowed to maturity.
Benchmark returns do not reflect expenses or sales charges that have been
deducted from the Fund's returns.
4 The Consumer Price Index is a widely used measure of inflation.
5
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NORTH AMERICAN GOVERNMENT BOND FUND -
ISI CLASS A PERFORMANCE COMPARISON (1)
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NORTH AMERICAN GOVERNMENT BOND FUND - ISI CLASS A SHARES, BARCLAYS
CAPITAL INTERMEDIATE TREASURY INDEX, BARCLAYS CAPITAL EMERGING
AMERICAS INDEX: MEXICO SECTION / CITIGROUP US BROAD INVESTMENT-GRADE
BOND INDEX MEXICO SECTOR AND CONSUMER PRICE INDEX: VALUE OF A
$10,000 INVESTMENT (FOR 10 YEARS ENDED APRIL 30, 2009)
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[LINE GRAPH OMITTED]
Barclays Capital
Emerging
Americas Index:
Mexico Section /
Citigroup US
North American Barclays Capital Broad
Government Bond Intermediate Investment-Grade Consumer
Fund - ISI Treasury Bond Index Price
Class A Shares Index Mexico Sector Index
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4/30/1999 $ 9,700 $10,000 $10,000 $10,000
4/30/2000 10,033 10,223 11,222 10,307
4/30/2001 11,084 11,361 12,543 10,644
4/30/2002 11,821 12,147 14,572 10,818
4/30/2003 13,034 13,228 16,909 11,059
4/30/2004 13,009 13,352 17,646 11,312
4/30/2005 13,849 13,707 19,187 11,709
4/30/2006 14,180 13,798 20,101 12,124
4/30/2007 15,248 14,633 22,340 12,347
4/30/2008 16,733 16,048 23,244 12,870
4/30/2009 17,250 17,142 21,204 12,805
6
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NORTH AMERICAN GOVERNMENT BOND FUND -
PERFORMANCE COMPARISON(1) (CONTINUED)
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CUMULATIVE TOTAL RETURNS (WITH LOAD) AVERAGE ANNUAL TOTAL RETURNS (WITH LOAD)
----------------------------------------------------------- ------------------------------------------------
PERIODS ENDED SINCE SINCE
APRIL 30, 2009 6 MONTHS 1 YEAR 3 YEARS 5 YEARS 10 YEARS INCEPTION(2) 1 YEAR 3 YEARS 5 YEARS 10 YEARS INCEPTION(2)
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North American
Government Bond
Fund - ISI Class
A Shares 4.05% -0.03% 18.03% 28.58% 72.52% 147.99% -0.03% 5.68% 5.16% 5.60% 5.73%
North American
Government
Bond Fund - ISI
Class C Shares(3) 5.89% 1.46% 19.36% 28.41% -- 23.97% 1.46% 6.08% 5.13% -- 3.67%
Barclays Capital
Intermediate
Treasury
Index(4) 4.27% 6.80% 24.24% 28.39% 71.42% 148.85% 6.80% 7.50% 5.12% 5.54% 5.77%
Barclays Capital
Emerging Americas
Index: Mexico
Section /
Citigroup US Broad
Investment-Grade
Bond Index
Mexico Sector(5) 20.46% -8.76% 5.49% 20.16% 112.04% 313.00% -8.76% 1.80% 3.74% 7.81% 9.12%
Consumer Price
Index(6) -1.95% -0.62% 5.62% 13.20% 28.05% 37.36% -0.62% 1.84% 2.51% 2.50% 1.97%
1 PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. Investment return
and principal value will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their original cost. The
performance information presented in the graph and table above does not
reflect the deduction of taxes that a shareholder would pay on Fund
distributions or the redemption of Fund shares. All performance assumes
the reinvestment of dividends and capital gain distributions and includes
sales charges, if applicable. ISI Class A shares have a maximum 3.00%
sales charge. ISI Class C Shares have a maximum 1.00% contingent deferred
sales charge in the first year, which is eliminated thereafter.
2 ISI Class A Shares inception date is January 15, 1993. Benchmark returns
are for the periods beginning January 31, 1993.
3 ISI Class C Shares inception date is May 16, 2003. Cumulative and
annualized returns for the Barclays Capital Intermediate Treasury Index
from May 31, 2003 through April 30, 2009 were 27.67% and 4.22%,
respectively.
4 The Barclays Capital Intermediate Treasury Index is an unmanaged index
reflecting the performance of US Treasury securities in the
intermediate-term Treasury sector. Benchmark returns do not reflect
expenses or sales charges that have been deducted from the Fund's returns.
5 Reflects the performance of the Barclays Capital Emerging Americas Index:
Mexico Section through October 31, 2004 and the Citigroup US Broad
Investment-Grade Bond Index Mexico Sector from that date through October
31, 2006 and the Barclays Capital Global Aggregate Index: Mexico from
October 31, 2006 through April 30, 2009. The Barclays Capital Emerging
Americas Index: Mexico Section has been discontinued. Barclays Capital
Emerging Americas Index: Mexico Section was an unmanaged sub-index of the
Barclays Capital Emerging Americas Index reflecting the performance of
selected Mexican debt instruments with maturities of one year or more. The
Citigroup US Broad Investment-Grade Bond Index Mexico Sector is an
unmanaged sub-index of the Citigroup US Broad Investment-Grade Bond Index
reflecting the performance of selected Mexican debt instruments with
maturities of one year or more. The Barclays Capital Global Aggregate
Index: Mexico Section is an unmanaged sub-index of Barclays Capital Global
Aggregate Index which provides broad-based measure of global
investment-grade fixed income markets. The Mexico Section reflects the US
dollar performance of selected Mexican government peso-denominated debt
instruments with maturities of one year or more. Benchmark returns do not
reflect expenses or sales charges that have been deducted from the Fund's
returns.
6 The Consumer Price Index is a widely used measure of inflation.
7
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ISI STRATEGY FUND -
PERFORMANCE COMPARISON(1)
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ISI STRATEGY FUND, DOW JONES WILSHIRE 5000 (FULL CAP) INDEX,
AND CONSUMER PRICE INDEX: VALUE OF A $10,000 INVESTMENT (FOR
10 YEARS ENDED APRIL 30, 2009)
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[LINE GRAPH OMITTED]
ISI Dow Jones Consumer
Strategy Wilshire 5000 Price
Fund (Full Cap) Index Index
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4/30/1999 $ 9,700 $10,000 $10,000
4/30/2000 10,295 11,181 10,307
4/30/2001 9,698 9,605 10,644
4/30/2002 9,316 8,656 10,818
4/30/2003 8,620 7,480 11,059
4/30/2004 10,084 9,430 11,312
4/30/2005 10,629 10,090 11,709
4/30/2006 12,339 11,992 12,124
4/30/2007 13,900 13,733 12,347
4/30/2008 13,528 13,081 12,870
4/30/2009 9,871 8,584 12,805
8
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ISI STRATEGY FUND -
PERFORMANCE COMPARISON(1) (CONTINUED)
- -------------------------------------------------------------------------------
CUMULATIVE TOTAL RETURNS (WITH LOAD) AVERAGE ANNUAL TOTAL RETURNS (WITH LOAD)
----------------------------------------------------------- ------------------------------------------------
PERIODS ENDED SINCE SINCE
APRIL 30, 2009 6 MONTHS 1 YEAR 3 YEARS 5 YEARS 10 YEARS INCEPTION(2) 1 YEAR 3 YEARS 5 YEARS 10 YEARS INCEPTION(2)
- ------------------------------------------------------------------------------------------------------------------------------------
ISI Strategy Fund -6.04% -29.23% -22.38% -5.06% -1.32% 25.19% -29.23% -8.10% -1.03% -0.13% 1.95%
Dow Jones
Wilshire 5000
(Full Cap)
Index(3) -6.97% -34.38% -28.42% -8.97% -14.16% 87.26% -34.38% -10.55% -1.86% -1.52% 5.11%
Consumer Price
Index(4) -1.95% -0.62% 5.62% 13.20% 28.05% 37.36% -0.62% 1.84% 2.51% 2.50% 2.56%
Lipper Flexible
Portfolio
Funds Average(5) 0.65% -26.77% 15.79% 3.76% 5.21% 49.21% -26.77% 5.57% 0.74% 0.51% 3.23%
1 PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. Investment return
and principal value will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their original cost. The
performance information presented in the graph and table above does not
reflect the deduction of taxes that a shareholder would pay on Fund
distributions or the redemption of Fund shares. All performance assumes
the reinvestment of dividends and capital gain distributions and includes
the Fund's maximum 3.00% sales charge.
2 The Fund's inception date is September 16, 1997. Benchmark returns are for
the periods beginning September 30, 1997.
3 The Dow Jones Wilshire 5000 (Full Cap) Index is an unmanaged index that
represents the broadest measure of the US equity market. Benchmark returns
do not reflect expenses or sales charges that have been deducted from the
Fund's returns.
4 The Consumer Price Index is a widely used measure of inflation.
5 Lipper figures represent the average total returns by all mutual funds
designated by Lipper as falling into the category indicated. The Lipper
Flexible Portfolio Funds category includes funds that allocate their
investment across various asset classes, including domestic common stocks,
bonds and money market instruments with a focus on total return.
9
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SHAREHOLDER EXPENSE EXAMPLES (UNAUDITED)
- -------------------------------------------------------------------------------
As a shareholder of the Fund, you incur two types of cost: (1) transaction
costs, including sales charges (loads); and (2) ongoing costs, including
management fees, Rule 12b-1 distribution/shareholder service fees and other Fund
expenses. This example is intended to help you understand your ongoing costs (in
dollars) of investing in each 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 tables
below are based on an investment of $1,000 made at the beginning of the period
shown (November 1, 2008) and held for the entire period (April 30, 2009).
ACTUAL EXPENSES - "Actual Return" in the following table provides information
about actual account values and actual expenses. You may use the information
here, together with the amount you invested, to estimate the expenses that you
paid over the period. 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 in the "Expenses Paid During Period" column to estimate the expenses
you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES - "Hypothetical Returns" in the
following table provides information about hypothetical account values and
hypothetical expenses based on each Fund's actual expense ratio and an assumed
rate of return of 5% per year before expenses, which is not the actual return of
each Fund. The hypothetical account values and expenses may not be used to
estimate the actual ending account balance or expenses you paid for the period.
You may use this information to compare the ongoing cost of investing in a Fund
and other funds. To do so, compare this 5% hypothetical example with the 5%
hypothetical examples that appear in the shareholder reports of other funds.
Expenses shown in the tables are meant to highlight your ongoing costs only and
do not reflect any transactional costs, such as sales charges (loads).
Therefore, "Hypothetical Returns" in the table are useful in comparing ongoing
costs only, and will not help you determine the relative total costs of owning
different funds. If these transactional costs were included, your costs would
have been higher.
10
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SHAREHOLDER EXPENSE EXAMPLE (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
TOTAL RETURN US TREASURY FUND
BEGINNING ENDING ANNUALIZED
ACCOUNT VALUE ACCOUNT VALUE EXPENSES PAID EXPENSE
NOVEMBER 1, 2008 APRIL 30, 2009 DURING PERIOD(1) RATIO
- ------------------------------------------------------------------------------------------------------------
Based on Actual Fund Return .......... $1,000.00 $1,087.90 $4.14 0.80%
Based on Hypothetical 5% Return ...... $1,000.00 $1,020.83 $4.01 0.80%
- ------------------------------------------------------------------------------------------------------------
MANAGED MUNICIPAL FUND
BEGINNING ENDING ANNUALIZED
ACCOUNT VALUE ACCOUNT VALUE EXPENSES PAID EXPENSE
NOVEMBER 1, 2008 APRIL 30, 2009 DURING PERIOD(1) RATIO
- ------------------------------------------------------------------------------------------------------------
Based on Actual Fund Return.. ........ $1,000.00 $1,087.80 $5.02 0.97%
Based on Hypothetical 5% Return ...... $1,000.00 $1,019.98 $4.86 0.97%
- ------------------------------------------------------------------------------------------------------------
NORTH AMERICAN GOVERNMENT BOND FUND - CLASS A
BEGINNING ENDING ANNUALIZED
ACCOUNT VALUE ACCOUNT VALUE EXPENSES PAID EXPENSE
NOVEMBER 1, 2008 APRIL 30, 2009 DURING PERIOD(1) RATIO
- ------------------------------------------------------------------------------------------------------------
Based on Actual Fund Return.. ........ $1,000.00 $1,072.20 $5.75 1.12%
Based on Hypothetical 5% Return ...... $1,000.00 $1,019.24 $5.61 1.12%
- ------------------------------------------------------------------------------------------------------------
NORTH AMERICAN GOVERNMENT BOND FUND - CLASS C
BEGINNING ENDING ANNUALIZED
ACCOUNT VALUE ACCOUNT VALUE EXPENSES PAID EXPENSE
NOVEMBER 1, 2008 APRIL 30, 2009 DURING PERIOD(1) RATIO
- ------------------------------------------------------------------------------------------------------------
Based on Actual Fund Return.. ........ $1,000.00 $1,068.90 $9.03 1.76%
Based on Hypothetical 5% Return ...... $1,000.00 $1,016.07 $8.80 1.76%
- ------------------------------------------------------------------------------------------------------------
ISI STRATEGY FUND
BEGINNING ENDING ANNUALIZED
ACCOUNT VALUE ACCOUNT VALUE EXPENSES PAID EXPENSE
NOVEMBER 1, 2008 APRIL 30, 2009 DURING PERIOD(1) RATIO
- ------------------------------------------------------------------------------------------------------------
Based on Actual Fund Return.. ........ $1,000.00 $ 968.80 $5.66 1.16%
Based on Hypothetical 5% Return ...... $1,000.00 $1,019.04 $5.81 1.16%
- ------------------------------------------------------------------------------------------------------------
(1) Equals the Fund's annualized expense ratio for the period, multiplied by
the average account value over the period, multiplied by the number of
days in the most recent fiscal half-year, divided by 365 to reflect the
half-year period.
11
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PORTFOLIO PROFILES (UNAUDITED)
- --------------------------------------------------------------------------------
PORTFOLIO PROFILES (AS A % OF NET ASSETS) APRIL 30, 2009
TOTAL RETURN US TREASURY FUND ISI STRATEGY FUND
US Treasury Obligations 98.59% Consumer Discretionary 9.85%
Repurchase Agreement 0.71% Consumer Staples 8.46%
Other Assets and Liabilities 0.70% Energy 8.67%
------- Financials 10.93%
100.00% Health Care 11.48%
Industrials 6.56%
MANAGED MUNICIPAL FUND Information Technology 15.83%
Materials 2.38%
Aaa Municipal Obligations* 70.34% Telecommunication Services 1.53%
Aa Municipal Obligations* 20.21% Utilities 4.26%
US Treasury Obligations 1.50% US Treasury Obligations 18.80%
Repurchase Agreement 10.00% Repurchase Agreement 1.21%
Other Assets and Liabilities (2.05%) Other Assets and Liabilities 0.04%
------- -------
100.00% 100.00%
* Ratings are from Moody's Investors Service, Inc.
NORTH AMERICAN GOVERNMENT BOND FUND
Canadian Securities 16.89%
Mexican Securities 7.63%
US Treasury Obligations 73.88%
Repurchase Agreement 0.64%
Other Assets and Liabilities 0.96%
-------
100.00%
12
- --------------------------------------------------------------------------------
TOTAL RETURN US TREASURY FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS APRIL 30, 2009 (UNAUDITED)
INTEREST MATURITY PRINCIPAL MARKET
SECURITY RATE DATE AMOUNT VALUE
- --------------------------------------------------------------------------------
US TREASURY OBLIGATIONS - 98.59%
US Treasury Bonds 8.125% 08/15/19 $12,500,000 $ 17,525,400
US Treasury Bonds 8.750% 08/15/20 11,300,000 16,623,362
US Treasury Bonds 7.875% 02/15/21 1,000,000 1,395,313
US Treasury Bonds 6.375% 08/15/27 16,000,000 20,722,512
US Treasury Notes 5.500% 05/15/09 10,500,000 10,524,202
US Treasury Notes 4.625% 07/31/09 6,500,000 6,574,653
US Treasury Notes 3.500% 08/15/09 6,200,000 6,262,006
US Treasury Notes 4.000% 09/30/09 13,050,000 13,256,973
US Treasury Notes 2.000% 02/28/10 9,800,000 9,928,243
US Treasury Notes 1.250% 11/30/10 10,700,000 10,784,027
US Treasury Notes 3.750% 11/15/18 6,370,000 6,698,966
------------
TOTAL US TREASURY OBLIGATIONS (COST $119,514,393) ................ $120,295,657
------------
PRINCIPAL MARKET
SECURITY AMOUNT VALUE
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENT - 0.71%
JPMORGAN CHASE, N.A.
Dated 04/30/09, 0.10%, principal and
interest in the amount of $865,002 due
05/01/09, collateralized by US
Treasury Note, par value $860,000 due
08/15/09 with a value of $885,297
(COST $865,000) ............................. $ 865,000 $ 865,000
------------
TOTAL INVESTMENTS - 99.30% (COST $120,379,393) * ............... $121,160,657
OTHER ASSETS IN EXCESS OF LIABILITIES - 0.70% .................. 858,756
------------
NET ASSETS - 100.00% ........................................... $122,019,413
============
- --------------------------------------------------------------------------------
* Cost for Federal income tax purposes is $120,379,393 and net unrealized
appreciation on a tax basis consists of:
Gross Unrealized Appreciation .......... $ 1,518,235
Gross Unrealized Depreciation .......... (736,971)
------------
Net Unrealized Appreciation ............ $ 781,264
============
See Notes to Financial Statements.
13
- --------------------------------------------------------------------------------
ISI MANAGED MUNICIPAL FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS APRIL 30, 2009 (UNAUDITED)
RATINGS
INTEREST MATURITY (MOODY'S/ PRINCIPAL MARKET
SECURITY RATE DATE S&P) 1 AMOUNT VALUE
- -------------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS - 90.55%
GENERAL OBLIGATION - 63.25%
Alexandria, VA, Capital Improvements .. 4.250% 06/15/21 Aaa/AAA $ 3,300,000 $ 3,446,289
Arlington County, VA,
State Aid Withholding .............. 5.000% 10/01/14 Aaa/AAA 1,080,000 1,094,040
Arlington County, VA,
State Aid Withholding .............. 4.500% 01/15/28 Aaa/AAA 2,000,000 2,020,980
Cary, NC .............................. 5.000% 03/01/18 Aaa/AAA 2,000,000 2,118,900
Dallas, TX ............................ 4.000% 02/15/16 Aa1/AA+ 2,450,000 2,548,955
Delaware State, Series A .............. 4.200% 01/01/20 Aaa/AAA 1,675,000 1,719,639
Delaware State, Series B .............. 3.250% 01/01/21 Aaa/AAA 2,000,000 1,965,740
Du Page County, IL, Jail Project ...... 5.600% 01/01/21 Aaa/AAA 1,600,000 1,864,240
Florida State, Board of Education,
Public Education, Series I ......... 4.125% 06/01/21 Aa1/AAA 3,000,000 3,008,940
Georgia State, Series B ............... 3.000% 04/01/27 Aaa/AAA 1,000,000 820,040
Georgia State, Series G ............... 4.125% 10/01/23 Aaa/AAA 2,000,000 2,062,260
Gwinnett County, GA, School District .. 5.000% 02/01/36 Aaa/AAA 1,500,000 1,553,670
Henrico County, VA,
Public Improvements ................ 4.250% 07/15/24 Aaa/AAA 2,830,000 2,910,598
Maryland State, Capital
Improvements, Series A ............. 4.000% 02/15/20 Aaa/AAA 4,000,000 4,174,040
Mecklenburg County, NC,
Public Improvements, Series A ...... 4.000% 02/01/20 Aaa/AAA 3,000,000 3,109,200
Missouri State, Fourth State
Building, Series A ................. 4.125% 10/01/19 Aaa/AAA 2,000,000 2,070,120
Montgomery County, MD,
Public Improvements, Series A ...... 4.000% 05/01/21 Aaa/AAA 2,450,000 2,510,760
Prince Georges County, MD,
Public Improvements ................ 4.125% 07/15/26 Aa1/AAA 2,000,000 1,952,880
Salt Lake City, UT, School District,
School Board Guaranty, Series A .... 4.500% 03/01/20 Aaa/NR 2,240,000 2,337,418
South Carolina State, Highway, Series B 5.000% 04/01/19 Aaa/AA+ 1,000,000 1,045,650
Tennessee State, Series A ............. 5.000% 05/01/26 Aa1/AA+ 500,000 532,545
Tennessee State, Series A ............. 5.000% 05/01/27 Aa1/AA+ 2,075,000 2,195,516
Utah State, Series A .................. 3.000% 07/01/18 Aaa/AAA 1,000,000 1,016,050
Virginia State, Series B .............. 4.250% 06/01/26 Aaa/AAA 2,500,000 2,535,075
Washington State, Series F ............ 4.500% 07/01/27 Aa1/AA+ 2,500,000 2,515,150
Washington, MD, Suburban
Sanitation District, Water Supply .. 4.250% 06/01/26 Aaa/AAA 2,500,000 2,535,075
------------
$ 55,663,770
------------
See Notes to Financial Statements.
14
- --------------------------------------------------------------------------------
ISI MANAGED MUNICIPAL FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED) APRIL 30, 2009 (UNAUDITED)
RATINGS
INTEREST MATURITY (MOODY'S/ PRINCIPAL MARKET
SECURITY RATE DATE S&P) 1 AMOUNT VALUE
- -------------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS - 90.55% (CONTINUED)
REVENUE - 10.94%
Fairfax County, VA, Water Authority
Water Revenue ...................... 4.500% 04/01/27 Aaa/AAA $ 2,500,000 $ 2,536,525
Florida Water Pollution Control
Financing, Series A ................ 5.000% 01/15/29 Aaa/AAA 500,000 503,020
Florida Water Pollution Control
Financing, Series A ................ 5.100% 01/15/29 Aaa/AAA 550,000 557,530
Texas, Water Development Board
Revenue, State Revolving Fund-Senior
Lien, Series A ..................... 4.750% 07/15/20 Aaa/AAA 3,000,000 3,003,330
Virginia State Resources Authority
Cleaning Water Revenue ............. 4.500% 10/01/28 Aaa/AAA 3,000,000 3,024,750
------------
$ 9,625,155
------------
PREREFUNDED ISSUES 2 - 16.36%
Charlotte, NC, Water & Sewer System
Revenue, 06/01/09 @ 101 ............ 5.250% 06/01/24 Aa1/AAA 1,600,000 $ 1,622,704
Chesterfield County, VA, 01/15/10 @ 100 5.625% 01/15/14 Aaa/AAA 1,350,000 1,399,140
Chesterfield County, VA, 01/15/11 @ 100 5.000% 01/15/20 Aaa/AAA 1,000,000 1,068,740
Florida State, Board of Education,
Public Education Capital Outlay,
Series A, 06/01/10 @ 101 ........... 5.125% 06/01/21 Aaa/AAA 1,000,000 1,059,610
Georgia State, Refundable Balance,
Series D, 10/01/10 @ 100 ........... 5.000% 10/01/17 Aaa/AAA 390,000 414,129
Guilford County, NC, Series B,
10/01/10 @ 102 ..................... 5.250% 10/01/16 Aa1/AAA 3,000,000 3,256,140
Gwinnett County, GA, Water & Sewer
Authority, 08/01/12 @ 100 .......... 5.250% 08/01/24 Aaa/AAA 1,500,000 1,689,360
Minnesota State, 06/01/10 @ 100 ....... 5.500% 06/01/18 Aa1/AAA 2,000,000 2,105,200
South Carolina State, State Institutional,
Series A, 03/01/10 @ 101 ........... 5.300% 03/01/17 Aaa/AA+ 1,700,000 1,784,762
------------
$ 14,399,785
------------
TOTAL MUNICIPAL BONDS (COST $76,244,335)...................................................... $ 79,688,710
------------
See Notes to Financial Statements.
15
- --------------------------------------------------------------------------------
ISI MANAGED MUNICIPAL FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED) APRIL 30, 2009 (UNAUDITED)
INTEREST MATURITY PRINCIPAL MARKET
SECURITY RATE DATE AMOUNT VALUE
- --------------------------------------------------------------------------------
US TREASURY OBLIGATIONS - 1.50%
US Treasury Notes 4.625% 07/31/09 $ 500,000 $ 505,743
US Treasury Notes 4.000% 08/31/09 800,000 810,344
------------
TOTAL US TREASURY OBLIGATIONS (COST $1,310,754) ................. $ 1,316,087
------------
PRINCIPAL MARKET
SECURITY AMOUNT VALUE
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENT - 10.00%
JPMORGAN CHASE, N.A.
Dated 04/30/09, 0.10%, principal and
interest in the amount of $8,806,024
due 05/01/09, collateralized by US
Treasury Note, par value of $8,730,000
due 08/15/09 with a value of
$8,986,794 (COST $8,806,000) ................ $8,806,000 $ 8,806,000
------------
TOTAL INVESTMENTS - 102.05% (COST $86,361,089) * ............... $ 89,810,797
LIABILITIES IN EXCESS OF OTHER ASSETS - (2.05%) ................ (1,805,439)
------------
NET ASSETS - 100.00% ........................................... $ 88,005,358
============
- --------------------------------------------------------------------------------
1 Moody's Municipal Bond Ratings:
Aaa Judged to be of the best quality.
Aa Judged to be of high quality by all standards. Issues are
sometimes denoted with a 1, 2 or 3, which denote a high,
medium or low ranking within the rating.]
S&P Municipal Bond Ratings:
AAA Of the highest quality.
AA The second strongest capacity of payment of debt services.
Those issues determined to possess very strong safety
characteristics are denoted with a plus (+) sign.
NR Bond is not rated by this Agency.
2 Prerefunded Issues: Bonds which are prerefunded are collateralized by US
Treasury securities which are held in escrow and are used to pay principal
and interest on tax-exempt issues and to retire the bonds in full at the
earliest refunding date.
* Cost for Federal income tax purposes is $86,361,089 and net unrealized
appreciation on a tax basis consists of:
Gross Unrealized Appreciation .......... $ 3,472,522
Gross Unrealized Depreciation .......... (22,814)
------------
Net Unrealized Appreciation ............ $ 3,449,708
============
See Notes to Financial Statements.
16
- --------------------------------------------------------------------------------
ISI NORTH AMERICAN GOVERNMENT BOND FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS APRIL 30, 2009 (UNAUDITED)
INTEREST MATURITY PRINCIPAL MARKET
SECURITY RATE DATE AMOUNT 1 VALUE
- --------------------------------------------------------------------------------
CANADIAN SECURITIES - 16.89%
Canadian Government Bonds 3.750% 06/01/12 CAD 7,500,000 $ 6,727,501
Canadian Government Bonds 3.500% 06/01/13 3,100,000 2,770,050
Canadian Government Bonds 3.000% 06/01/14 2,270,000 1,991,338
Canadian Government Bonds 4.000% 06/01/17 12,500,000 11,405,962
Canadian Government Bonds 5.000% 06/01/37 5,300,000 5,325,759
------------
TOTAL CANADIAN SECURITIES (COST $30,330,273) .................... $ 28,220,610
------------
MEXICAN SECURITIES - 7.63%
Mexican Bono 2 9.000% 12/24/09 MXP 20,500,000 $ 1,518,606
Mexican Bono 2 9.000% 12/22/11 20,161,500 1,574,419
Mexican Bono 2 9.000% 12/20/12 31,782,400 2,496,565
Mexican Bono 2 9.500% 12/18/14 24,700,000 1,987,130
Mexican Bono 2 8.000% 12/17/15 49,017,000 3,668,205
Mexican Bono 2 7.250% 12/15/16 21,000,000 1,506,596
------------
TOTAL MEXICAN SECURITIES (COST $14,737,363) ..................... $ 12,751,521
------------
US TREASURY OBLIGATIONS - 73.88%
US Treasury Bonds 8.125% 08/15/19 $10,500,000 $ 14,721,336
US Treasury Bonds 8.500% 02/15/20 11,000,000 15,860,625
US Treasury Bonds 8.750% 08/15/20 2,300,000 3,383,516
US Treasury Bonds 7.875% 02/15/21 650,000 906,953
US Treasury Bonds 6.375% 08/15/27 9,600,000 12,433,507
US Treasury Notes 4.875% 05/15/09 5,500,000 5,511,605
US Treasury Notes 4.875% 06/30/09 5,000,000 5,040,630
US Treasury Notes 4.625% 07/31/09 600,000 606,891
US Treasury Notes 3.500% 08/15/09 9,800,000 9,898,010
US Treasury Notes 4.000% 08/31/09 2,500,000 2,532,325
US Treasury Notes 4.000% 09/30/09 13,200,000 13,409,352
US Treasury Notes 1.250% 11/30/10 6,500,000 6,551,045
US Treasury Notes 8.750% 05/15/17 12,800,000 17,969,011
US Treasury Notes 8.875% 08/15/17 10,300,000 14,616,349
------------
TOTAL US TREASURY OBLIGATIONS (COST $123,992,591) ............... $123,441,155
------------
See Notes to Financial Statements.
17
- --------------------------------------------------------------------------------
ISI NORTH AMERICAN GOVERNMENT BOND FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED) APRIL 30, 2009 (UNAUDITED)
PRINCIPAL MARKET
SECURITY AMOUNT VALUE
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENT - 0.64%
JPMORGAN CHASE, N.A.
Dated 04/30/09, 0.10%, principal and
interest in the amount of $1,069,003
due 05/01/09, collateralized by US
Treasury Note, par value $1,060,000
due 08/15/09 with a value of
$1,091,180 (COST $1,069,000) ................ $1,069,000 $ 1,069,000
------------
TOTAL INVESTMENTS - 99.04% (COST $170,129,227) * ............... $165,482,286
OTHER ASSETS IN EXCESS OF LIABILITIES - 0.96% .................. 1,604,721
------------
NET ASSETS - 100.00% ........................................... $167,087,007
============
- --------------------------------------------------------------------------------
CAD Canadian dollar
MXP Mexican Peso
1 Principal Amount is shown in US dollars unless otherwise noted.
2 Bonos are fixed rate, local currency-denominated coupon bonds issued by
the Mexican government.
* Cost for Federal income tax purposes is $170,129,227 and net unrealized
depreciation on a tax basis consists of:
Gross Unrealized Appreciation .......... $ 756,579
Gross Unrealized Depreciation .......... (5,403,520)
------------
Net Unrealized Depreciation ............ $ (4,646,941)
============
See Notes to Financial Statements.
18
- --------------------------------------------------------------------------------
ISI STRATEGY FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED) APRIL 30, 2009 (UNAUDITED)
MARKET
SECURITY SHARES VALUE
- --------------------------------------------------------------------------------
COMMON STOCKS - 79.95%
CONSUMER DISCRETIONARY - 9.85%
AUTO COMPONENTS - 0.14%
Johnson Controls, Inc. ............................ 3,560 $ 67,676
------------
DISTRIBUTORS - 0.10%
Genuine Parts Co. ................................. 1,450 49,242
------------
DIVERSIFIED CONSUMER SERVICES - 0.32%
Career Education Corp. * .......................... 4,000 88,160
Jackson Hewitt Tax Service, Inc. .................. 4,000 19,560
Sotheby's ......................................... 4,000 46,440
------------
154,160
------------
HOTELS, RESTAURANTS & LEISURE - 1.31%
Burger King Holdings, Inc. ........................ 5,000 81,700
McDonald's Corp. .................................. 10,100 538,229
------------
619,929
------------
HOUSEHOLD DURABLES - 0.44%
Fortune Brands, Inc. .............................. 5,000 196,550
Harman International Industries, Inc. ............. 600 10,914
------------
207,464
------------
INTERNET & CATALOG RETAIL - 0.46%
Amazon.com, Inc. * ................................ 1,000 80,520
Expedia, Inc. * ................................... 2,543 34,610
NutriSystem, Inc. ................................. 4,000 54,960
Stamps.com, Inc. * ................................ 5,000 46,800
------------
216,890
------------
MEDIA - 2.30%
CBS Corp. - Class B ............................... 15,000 105,600
DIRECTV Group, Inc. (The) * ....................... 10,000 247,301
DreamWorks Animation
SKG, Inc. - Class A * .......................... 3,439 82,570
Interpublic Group of Cos., Inc. * ................. 1,900 11,894
Liberty Media Corp. -
Entertainment - Series A * ..................... 7,500 182,625
Marvel Entertainment, Inc. * ...................... 5,000 149,200
McGraw-Hill Cos., Inc. (The) ...................... 600 18,090
New York Times Co.
(The) - Class A ................................ 5,000 26,900
News Corp. - Class A .............................. 604 4,989
MARKET
SECURITY SHARES VALUE
- --------------------------------------------------------------------------------
MEDIA - 2.30% (CONTINUED)
Time Warner Cable, Inc. ........................... 786 $ 25,333
Time Warner, Inc. ................................. 3,133 68,393
Virgin Media, Inc. ................................ 7,600 58,672
Walt Disney Co. (The) ............................. 5,000 109,500
------------
1,091,067
------------
MULTI-LINE RETAIL - 0.48%
Macy's, Inc. ...................................... 7,500 102,600
Sears Holdings Corp. * ............................ 1,200 74,964
Target Corp. ...................................... 1,198 49,429
------------
226,993
------------
SPECIALTY RETAIL - 4.30%
Aaron's, Inc. ..................................... 4,000 134,240
American Eagle Outfitters, Inc. ................... 6,700 99,294
AnnTaylor Stores Corp. * .......................... 7,500 55,425
Barnes & Noble, Inc. .............................. 9,400 245,528
Bed Bath & Beyond, Inc. * ......................... 5,300 161,226
Best Buy Co., Inc. ................................ 456 17,501
Cato Corp. (The) - Class A ........................ 5,500 105,710
Christopher & Banks Corp. ......................... 5,000 27,800
Dick's Sporting Goods, Inc. * ..................... 12,233 232,427
Foot Locker, Inc. ................................. 12,800 152,192
Gap, Inc. (The) ................................... 7,500 116,550
Home Depot, Inc. (The) ............................ 5,000 131,600
Hot Topic, Inc. * ................................. 5,000 61,200
Lowe's Cos., Inc. ................................. 4,000 86,000
O'Reilly Automotive, Inc. * ....................... 4,000 155,400
Stage Stores, Inc. ................................ 5,600 68,600
Systemax, Inc. * .................................. 4,000 67,440
Tween Brands, Inc. * .............................. 6,500 18,980
Williams-Sonoma, Inc. ............................. 7,500 105,000
------------
2,042,113
------------
CONSUMER STAPLES - 8.46%
BEVERAGES - 0.60%
Coca-Cola Co. (The) ............................... 5,100 219,555
PepsiCo, Inc. ..................................... 1,284 63,892
------------
283,447
------------
FOOD & STAPLES RETAILING - 2.42%
Costco Wholesale Corp. ............................ 2,860 138,996
CVS Caremark Corp. ................................ 4,000 127,120
See Notes to Financial Statements.
19
- --------------------------------------------------------------------------------
ISI STRATEGY FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED) APRIL 30, 2009 (UNAUDITED)
MARKET
SECURITY SHARES VALUE
- --------------------------------------------------------------------------------
COMMON STOCKS - 79.95% (CONTINUED)
CONSUMER STAPLES - 8.46% (CONTINUED)
FOOD & STAPLES RETAILING - 2.42% (CONTINUED)
Walgreen Co. ...................................... 5,000 $ 157,150
Wal-Mart Stores, Inc. ............................. 14,366 724,046
------------
1,147,312
------------
FOOD PRODUCTS - 1.64%
General Mills, Inc. ............................... 5,100 258,519
Hershey Co. (The) ................................. 5,000 180,700
Hormel Foods Corp. ................................ 10,000 312,900
McCormick & Co., Inc. -
Non-Voting Shares .............................. 1,000 29,450
------------
781,569
------------
HOUSEHOLD PRODUCTS - 1.12%
Procter & Gamble Co. (The) ........................ 10,744 531,183
------------
PERSONAL PRODUCTS - 1.33%
Avon Products, Inc. ............................... 5,000 113,800
Herbalife Ltd. .................................... 26,200 519,284
------------
633,084
------------
TOBACCO - 1.35%
Altria Group, Inc. ................................ 12,171 198,752
Philip Morris International, Inc. ................. 6,971 252,351
Reynolds American, Inc. ........................... 5,000 189,900
------------
641,003
------------
ENERGY - 8.67%
ENERGY EQUIPMENT & SERVICES - 0.35%
Halliburton Co. ................................... 5,000 101,100
Superior Energy Services, Inc. * .................. 3,275 62,913
------------
164,013
------------
OIL, GAS & CONSUMABLE FUELS - 8.32%
Chevron Corp. ..................................... 9,428 623,191
ConocoPhillips .................................... 8,750 358,750
Continental Resources, Inc. * ..................... 4,000 93,400
Denbury Resources, Inc. * ......................... 5,000 81,400
Exxon Mobil Corp. ................................. 26,624 1,775,022
Hess Corp. ........................................ 3,539 193,902
Kinder Morgan
Management, LLC * .............................. 5,756 235,084
Marathon Oil Corp. ................................ 9,000 267,300
MARKET
SECURITY SHARES VALUE
- --------------------------------------------------------------------------------
OIL, GAS & CONSUMABLE FUELS - 8.32% (CONTINUED)
Newfield Exploration Co. * ........................ 1,400 $ 43,652
Williams Cos., Inc. ............................... 7,600 107,160
XTO Energy, Inc. .................................. 5,000 173,300
------------
3,952,161
------------
FINANCIALS - 10.93%
CAPITAL MARKETS - 2.63%
Bank of New York
Mellon Corp. (The) ............................. 842 21,454
BGC Partners, Inc. - Class A ...................... 5,000 12,950
BlackRock, Inc. - Class A ......................... 2,340 342,858
Charles Schwab Corp. (The) ........................ 14,100 260,568
E*TRADE Financial Corp. * ......................... 5,600 8,008
FCStone Group, Inc. * ............................. 9,700 29,973
Invesco Ltd. ...................................... 4,400 64,768
Janus Capital Group, Inc. ......................... 4,600 46,138
Knight Capital
Group, Inc. - Class A * ........................ 5,000 77,450
Penson Worldwide, Inc. * .......................... 5,000 50,700
SEI Investments Co. ............................... 6,400 89,792
State Street Corp. ................................ 5,300 180,889
SWS Group, Inc. ................................... 5,000 63,950
------------
1,249,498
------------
COMMERCIAL BANKS - 1.89%
Colonial BancGroup, Inc. (The) .................... 200 152
Columbia Banking System, Inc. ..................... 4,400 43,560
Cullen/Frost Bankers, Inc. ........................ 5,100 240,158
F.N.B. Corp. ...................................... 5,100 38,352
First Commonwealth
Financial Corp. ................................ 9,400 81,498
First Financial Bancorp ........................... 4,000 43,160
Frontier Financial Corp. .......................... 700 994
Glacier Bancorp, Inc. ............................. 5,000 76,600
Hancock Holding Co. ............................... 5,000 189,350
Prosperity Bancshares, Inc. ....................... 5,000 138,850
Regions Financial Corp. ........................... 546 2,452
Susquehanna Bancshares, Inc. ...................... 5,000 40,300
United Community Banks, Inc. ...................... 37 239
Zions Bancorp ..................................... 100 1,093
------------
896,758
------------
See Notes to Financial Statements.
20
- --------------------------------------------------------------------------------
ISI STRATEGY FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED) APRIL 30, 2009 (UNAUDITED)
MARKET
SECURITY SHARES VALUE
- --------------------------------------------------------------------------------
COMMON STOCKS - 79.95% (CONTINUED)
FINANCIALS - 10.93% (CONTINUED)
CONSUMER FINANCE - 0.42%
AmeriCredit Corp. * ............................... 4,000 $ 40,680
Discover Financial Services ....................... 6,240 50,731
First Cash Financial
Services, Inc. * ............................... 5,000 82,200
SLM Corp. * ....................................... 5,600 27,048
------------
200,659
------------
DIVERSIFIED FINANCIAL SERVICES - 1.71%
Bank of America Corp. ............................. 19,360 172,885
CIT Group, Inc. ................................... 4,100 9,102
Citigroup, Inc. ................................... 20,202 61,616
CME Group, Inc. ................................... 800 177,080
Financial Federal Corp. ........................... 7,500 184,575
Moody's Corp. ..................................... 6,974 205,872
------------
811,130
------------
INSURANCE - 2.49%
AFLAC, Inc. ....................................... 100 2,889
Cincinnati Financial Corp. ........................ 4,600 110,170
eHealth, Inc. * ................................... 4,600 88,274
Horace Mann Educators Corp. ....................... 5,000 43,900
Loews Corp. ....................................... 7,700 191,653
MBIA, Inc. * ...................................... 6,200 29,326
Meadowbrook Insurance
Group, Inc. .................................... 8,700 51,765
MetLife, Inc. ..................................... 10,000 297,500
Old Republic
International Corp. ............................ 4,000 37,480
Prudential Financial, Inc. ........................ 5,000 144,400
Selective Insurance Group, Inc. ................... 5,000 73,800
StanCorp Financial Group, Inc. .................... 100 2,743
Torchmark Corp. ................................... 200 5,866
Unitrin, Inc. ..................................... 6,000 102,000
------------
1,181,766
------------
REAL ESTATE INVESTMENT TRUSTS - 0.88%
Boston Properties, Inc. ........................... 5,200 256,984
Franklin Street Properties Corp. .................. 8,500 113,475
ProLogis .......................................... 5,000 45,550
------------
416,009
------------
MARKET
SECURITY SHARES VALUE
- --------------------------------------------------------------------------------
REAL ESTATE MANAGEMENT & DEVELOPMENT - 0.21%
Forestar Group, Inc. * ............................ 7,900 $ 101,594
------------
THRIFTS & MORTGAGE FINANCE - 0.70%
Bank Mutual Corp. ................................. 5,200 53,404
Brookline Bancorp, Inc. ........................... 5,000 49,600
First Niagara Financial
Group, Inc. .................................... 5,000 67,700
MGIC Investments Corp. ............................ 6,300 16,128
PMI Group, Inc. (The) ............................. 1,200 756
Provident Financial
Services, Inc. ................................. 5,000 53,350
TrustCo Bank Corp. ................................ 15,000 90,000
------------
330,938
------------
HEALTH CARE - 11.48%
BIOTECHNOLOGY - 1.74%
Amgen, Inc. * ..................................... 7,400 358,678
Biogen Idec, Inc. * ............................... 4,100 198,194
Genzyme Corp. * ................................... 5,100 271,983
------------
828,855
------------
HEALTH CARE EQUIPMENT & SUPPLIES - 1.51%
AngioDynamics, Inc. * ............................. 5,000 63,350
Baxter International, Inc. ........................ 500 24,250
Beckman Coulter, Inc. ............................. 100 5,256
DENTSPLY International, Inc. ...................... 4,000 114,480
Hologic, Inc. * ................................... 5,000 74,300
IDEXX Laboratories, Inc. * ........................ 5,000 196,500
Immucor, Inc. * ................................... 4,000 65,160
Medtronic, Inc. ................................... 2,670 85,440
Meridian Bioscience, Inc. ......................... 5,000 86,900
------------
715,636
------------
HEALTH CARE PROVIDERS & SERVICES - 2.08%
Aetna, Inc. ....................................... 1,400 30,814
AmerisourceBergen Corp. ........................... 10,100 339,764
Express Scripts, Inc. * ........................... 5,100 326,247
Health Net, Inc. * ................................ 2,500 36,100
McKesson Corp. .................................... 2,700 99,900
UnitedHealth Group, Inc. .......................... 6,548 154,009
------------
986,834
------------
See Notes to Financial Statements.
21
- --------------------------------------------------------------------------------
ISI STRATEGY FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED) APRIL 30, 2009 (UNAUDITED)
MARKET
SECURITY SHARES VALUE
- --------------------------------------------------------------------------------
COMMON STOCKS - 79.95% (CONTINUED)
HEALTH CARE - 11.48% (CONTINUED)
LIFE SCIENCES TOOLS & SERVICES - 1.27%
Affymetrix, Inc. * ................................ 4,000 $ 18,760
Covance, Inc. * ................................... 5,000 196,400
Life Technologies Corp. * ......................... 10,000 373,000
PerkinElmer, Inc. ................................. 1,000 14,570
------------
602,730
------------
PHARMACEUTICALS - 4.88%
Abbott Laboratories ............................... 4,435 185,605
Allergan, Inc. .................................... 420 19,597
Bristol-Myers Squibb Co. .......................... 2,247 43,142
Eli Lilly & Co. ................................... 2,396 78,876
Forest Laboratories, Inc. * ....................... 10,000 216,900
Johnson & Johnson ................................. 12,706 665,286
King Pharmaceuticals, Inc. * ...................... 7,400 58,312
Pfizer, Inc. ...................................... 57,163 763,698
Schering-Plough Corp. ............................. 4,500 103,590
ViroPharma, Inc. * ................................ 5,000 28,150
Wyeth ............................................. 3,630 153,912
------------
2,317,068
------------
INDUSTRIALS - 6.56%
AEROSPACE & DEFENSE - 1.73%
Goodrich Corp. .................................... 1,100 48,708
Honeywell International, Inc. ..................... 3,500 109,235
L-3 Communications
Holdings, Inc. ................................. 4,100 312,216
Northrop Grumman Corp. ............................ 4,200 203,070
United Technologies Corp. ......................... 3,000 146,520
------------
819,749
------------
AIR FREIGHT & LOGISTICS - 0.85%
FedEx Corp. ....................................... 5,100 285,396
Pacer International, Inc. ......................... 27,900 118,296
------------
403,692
------------
AIRLINES - 0.18%
Southwest Airlines Co. ............................ 12,200 85,156
------------
BUILDING PRODUCTS - 0.14%
Apogee Enterprises, Inc. .......................... 5,000 67,000
------------
MARKET
SECURITY SHARES VALUE
- --------------------------------------------------------------------------------
COMMERCIAL SERVICES & SUPPLIES - 0.49%
Copart, Inc. * .................................... 5,000 $ 156,950
Herman Miller, Inc. ............................... 5,000 74,350
------------
231,300
------------
ELECTRICAL EQUIPMENT - 0.31%
Advanced Battery
Technologies, Inc. * ........................... 14,400 39,600
Rockwell Automation, Inc. ......................... 3,439 108,638
------------
148,238
------------
INDUSTRIAL CONGLOMERATES - 1.67%
3M Co. ............................................ 2,400 138,240
General Electric Co. .............................. 51,834 655,700
------------
793,940
------------
MACHINERY - 0.50%
Flow International Corp. * ........................ 5,000 9,100
Illinois Tool Works, Inc. ......................... 1,138 37,326
Joy Global, Inc. .................................. 5,000 127,500
Manitowoc Co., Inc. (The) ......................... 9,700 57,715
Timken Co. ........................................ 300 4,824
------------
236,465
------------
ROAD & RAIL - 0.16%
Kansas City Southern * ............................ 5,000 76,250
------------
TRADING COMPANIES & DISTRIBUTORS - 0.53%
Fastenal Co. ...................................... 5,200 199,472
Titan Machinery, Inc. * ........................... 5,000 50,650
------------
250,122
------------
INFORMATION TECHNOLOGY - 15.83%
COMMUNICATIONS EQUIPMENT - 1.76%
Cisco Systems, Inc. * ............................. 41,157 795,153
Juniper Networks, Inc. * .......................... 1,795 38,862
------------
834,015
------------
COMPUTERS & PERIPHERALS - 4.65%
Apple, Inc. * ..................................... 5,948 748,437
Hewlett-Packard Co. ............................... 10,000 359,800
International Business
Machines Corp. ................................. 8,522 879,556
Novatel Wireless, Inc. * .......................... 7,500 51,375
Teradata Corp. * .................................. 10,000 167,200
------------
2,206,368
------------
See Notes to Financial Statements.
22
- --------------------------------------------------------------------------------
ISI STRATEGY FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED) APRIL 30, 2009 (UNAUDITED)
MARKET
SECURITY SHARES VALUE
- --------------------------------------------------------------------------------
COMMON STOCKS - 79.95% (CONTINUED)
INFORMATION TECHNOLOGY - 15.83% (CONTINUED)
ELECTRONIC EQUIPMENT, INSTRUMENTS
& COMPONENTS - 0.43%
Agilent Technologies, Inc. * ...................... 5,105 $ 93,217
Cognex Corp. ...................................... 4,827 67,916
Methode Electronics, Inc. ......................... 7,500 45,150
------------
206,283
------------
INTERNET SOFTWARE & SERVICES - 2.70%
Akamai Technologies, Inc. * ....................... 5,000 110,100
eBay, Inc. * ...................................... 2,840 46,775
Google, Inc. - Class A * .......................... 2,300 910,731
Yahoo!, Inc. * .................................... 15,000 214,350
------------
1,281,956
------------
IT SERVICES - 0.78%
CIBER, Inc. * ..................................... 15,700 50,711
Fidelity National Information
Services, Inc. ................................. 279 4,980
Heartland Payment
Systems, Inc. .................................. 27,400 220,296
Hewitt Associates, Inc. -
Class A * ...................................... 2,940 92,198
Lender Processing Services, Inc. .................. 139 3,984
------------
372,169
------------
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT - 2.14%
Broadcom Corp. - Class A * ........................ 6,950 161,171
Integrated Device
Technology, Inc. * ............................. 1,400 7,602
Intel Corp. ....................................... 9,874 155,812
International Rectifier Corp. * ................... 1,000 16,880
Linear Technology Corp. ........................... 5,600 121,968
LSI Corp. * ....................................... 15,000 57,600
Marvell Technology
Group Ltd. * ................................... 7,400 81,252
MEMC Electronic
Materials, Inc. * .............................. 5,000 81,000
Micron Technology, Inc. * ......................... 5,000 24,400
NVIDIA Corp. * .................................... 5,000 57,400
Skyworks Solutions, Inc. * ........................ 800 7,072
MARKET
SECURITY SHARES VALUE
- --------------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT - 2.14% (CONTINUED)
Teradyne, Inc. * .................................. 5,000 $ 29,700
Texas Instruments, Inc. ........................... 10,000 180,599
Volterra Semiconductor Corp. * .................... 3,000 34,470
------------
1,016,926
------------
SOFTWARE - 3.37%
Adobe Systems, Inc. * ............................. 5,000 136,750
ANSYS, Inc. * ..................................... 5,000 138,100
Electronic Arts, Inc. * ........................... 10,000 203,500
Microsoft Corp. ................................... 30,346 614,810
Oracle Corp. ...................................... 13,100 253,354
Sonic Solutions * ................................. 3,100 6,820
Symantec Corp. * .................................. 5,600 96,600
Synchronoss Technologies, Inc. * .................. 5,000 66,400
Synopsys, Inc. * .................................. 630 13,721
Take-Two Interactive
Software, Inc. * ............................... 7,500 68,100
------------
1,598,155
------------
MATERIALS - 2.38%
CHEMICALS - 1.88%
Ashland, Inc. ..................................... 5,000 109,800
Dow Chemical Co. (The) ............................ 7,600 121,600
FMC Corp. ......................................... 2,700 131,571
International Flavors &
Fragrances, Inc. ............................... 6,500 202,800
Sensient Technologies Corp. ....................... 5,000 116,900
W.R. Grace & Co. * ................................ 23,700 209,271
------------
891,942
------------
METALS & MINING - 0.50%
Newmont Mining Corp. .............................. 5,100 205,224
Titanium Metals Corp. ............................. 5,000 33,950
------------
239,174
------------
TELECOMMUNICATION SERVICES - 1.53%
DIVERSIFIED TELECOMMUNICATION SERVICES - 1.53%
AT&T, Inc. ........................................ 16,039 410,919
CenturyTel, Inc. .................................. 5,000 135,750
Fairpoint Communications, Inc. .................... 771 802
Frontier Communications Corp. ..................... 7,500 53,325
PAETEC Holding Corp. * ............................ 900 2,763
See Notes to Financial Statements.
23
- --------------------------------------------------------------------------------
ISI STRATEGY FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED) APRIL 30, 2009 (UNAUDITED)
MARKET
SECURITY SHARES VALUE
- --------------------------------------------------------------------------------
COMMON STOCKS - 79.95% (CONTINUED)
TELECOMMUNICATION SERVICES - 1.53% (CONTINUED)
DIVERSIFIED TELECOMMUNICATION SERVICES - 1.53%
(CONTINUED)
tw telecom, inc. * ................................ 6,600 $ 60,654
Verizon Communications, Inc. ...................... 688 20,874
Windstream Corp. .................................. 5,000 41,500
------------
726,587
------------
UTILITIES - 4.26%
ELECTRIC UTILITIES - 2.69%
Allegheny Energy, Inc. ............................ 7,200 186,624
DPL, Inc. ......................................... 26,300 589,909
Exelon Corp. ...................................... 7,600 350,588
PPL Corp. ......................................... 5,000 149,550
------------
1,276,671
------------
MARKET
SECURITY SHARES VALUE
- --------------------------------------------------------------------------------
GAS UTILITIES - 0.89%
Energen Corp. ..................................... 7,200 $ 260,064
National Fuel Gas Co. ............................. 5,000 163,550
------------
423,614
------------
INDEPENDENT POWER PRODUCERS &
ENERGY TRADERS - 0.38%
Constellation Energy
Group, Inc. .................................... 7,500 180,600
------------
MULTI-UTILITIES - 0.30%
MDU Resources Group, Inc. ......................... 5,000 87,850
TECO Energy, Inc. ................................. 5,000 52,950
------------
140,800
------------
TOTAL COMMON STOCKS
(COST $45,610,472) ............................. $ 37,955,953
------------
See Notes to Financial Statements.
24
- --------------------------------------------------------------------------------
ISI STRATEGY FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED) APRIL 30, 2009 (UNAUDITED)
INTEREST MATURITY PRINCIPAL MARKET
SECURITY RATE DATE AMOUNT VALUE
- --------------------------------------------------------------------------------
US TREASURY OBLIGATIONS - 18.80%
US Treasury Bonds 8.125% 08/15/19 $ 2,750,000 $ 3,855,587
US Treasury Bonds 8.750% 08/15/20 400,000 588,438
US Treasury Bonds 7.125% 02/15/23 500,000 670,625
US Treasury Notes 3.500% 08/15/09 200,000 202,000
US Treasury Notes 2.000% 02/28/10 1,300,000 1,317,012
US Treasury Notes 1.250% 11/30/10 1,200,000 1,209,424
US Treasury Notes 3.875% 10/31/12 1,000,000 1,080,469
-----------
TOTAL US TREASURY OBLIGATIONS (COST $8,928,452) ................. $ 8,923,555
-----------
PRINCIPAL MARKET
SECURITY AMOUNT VALUE
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENT - 1.21%
JPMORGAN CHASE, N.A.
Dated 04/30/09, 0.10%, principal and
interest in the amount of $574,002
due 05/01/09, collateralized by US
Treasury Note, par value $570,000
due 8/15/09 with a value of $586,767
(COST $574,000) ............................. $ 574,000 $ 574,000
------------
TOTAL INVESTMENTS - 99.96% (COST $55,112,924) ** ............... $ 47,453,508
OTHER ASSETS IN EXCESS OF LIABILITIES - 0.04% .................. 16,911
------------
NET ASSETS - 100.00% ........................................... $ 47,470,419
============
- --------------------------------------------------------------------------------
* Non-income producing security.
** Cost for Federal income tax purposes is $55,195,746 and net unrealized
depreciation on a tax basis consists of (Note 3):
Gross Unrealized Appreciation .......... $ 4,109,413
Gross Unrealized Depreciation .......... (11,851,651)
------------
Net Unrealized Depreciation ............ $ (7,742,238)
============
See Notes to Financial Statements.
25
- --------------------------------------------------------------------------------
ISI FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES APRIL 30, 2009 (UNAUDITED)
TOTAL RETURN MANAGED
US TREASURY MUNICIPAL
FUND FUND
- ------------------------------------------------------------------------------------------
ASSETS
Investments in securities:
At cost ......................................... $ 120,379,393 $ 86,361,089
============== ==============
At value (Note 1) ............................... $ 121,160,657 $ 89,810,797
Cash ............................................... 126 440
Interest receivable ................................ 1,272,316 866,800
Receivable for capital shares sold ................. 1,189 451,299
Other assets ....................................... 22,662 26,500
-------------- --------------
TOTAL ASSETS .................................... 122,456,950 91,155,836
-------------- --------------
LIABILITIES
Distributions payable .............................. 107,974 98,969
Payable for securities purchased ................... -- 2,747,313
Payable for capital shares redeemed ................ 248,444 235,592
Accrued investment advisory fees (Note 2) .......... 24,327 28,962
Accrued distribution expenses (Note 2) ............. 25,576 18,101
Accrued administration fees (Note 2) ............... 12,000 8,500
Accrued transfer agent fees (Note 2) ............... 2,800 1,100
Other accrued expenses and liabilities ............. 16,416 11,941
-------------- --------------
TOTAL LIABILITIES ............................... 437,537 3,150,478
-------------- --------------
NET ASSETS ............................................ $ 122,019,413 $ 88,005,358
============== ==============
NET ASSETS CONSIST OF:
Paid-in capital .................................... $ 115,311,170 $ 84,372,975
Undistributed (distributions in excess of) net
investment income ............................... (1,023,856) 566
Accumulated net realized gains
from security transactions ...................... 6,950,835 182,109
Net unrealized appreciation on investments ......... 781,264 3,449,708
-------------- --------------
Net assets ............................................ $ 122,019,413 $ 88,005,358
============== ==============
Shares of capital stock outstanding of $0.001 par value
ISI Shares (115,000,000 and 55,000,000 shares
authorized, respectively) .......................... 11,888,283 8,263,654
============== ==============
Net asset value and redemption price per share ........ $ 10.26 $ 10.65
============== ==============
Maximum offering price value per share
(100/97) x Net asset value per share ............... $ 10.58 $ 10.98
============== ==============
See Notes to Financial Statements.
26
- --------------------------------------------------------------------------------
ISI FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES APRIL 30, 2009 (UNAUDITED)
NORTH AMERICAN ISI
GOVERNMENT BOND STRATEGY
FUND FUND
- ----------------------------------------------------------------------------------------
ASSETS
Investments in securities:
At cost ....................................... $ 170,129,227 $ 55,112,924
============== ==============
At value (Note 1) ............................. $ 165,482,286 $ 47,453,508
Cash ............................................. 4,009 876
Dividends and interest receivable, at value ...... 2,423,908 100,725
Receivable for capital shares sold ............... 287,319 72,226
Other assets ..................................... 40,057 72,934
-------------- --------------
TOTAL ASSETS .................................. 168,237,579 47,700,269
-------------- --------------
LIABILITIES
Distributions payable ............................ 269,036 --
Payable for capital shares redeemed .............. 715,499 123,832
Accrued investment advisory fees (Note 2) ........ 55,269 15,324
Accrued distribution fees (Note 2) ............... 62,274 9,578
Accrued shareholder servicing fees (Note 2) ...... 5,003 --
Accrued administration fees (Note 2) ............. 16,200 4,500
Accrued transfer agent fees (Note 2) ............. 5,800 1,900
Other accrued expenses and liabilities ........... 21,491 74,716
-------------- --------------
TOTAL LIABILITIES ............................. 1,150,572 229,850
-------------- --------------
NET ASSETS .......................................... $ 167,087,007 $ 47,470,419
============== ==============
NET ASSETS CONSIST OF:
Paid-in capital .................................. $ 167,288,507 $ 58,988,616
Undistributed (distributions in excess of) net
investment income ............................. (2,614,497) 3,286
Accumulated net realized gains (losses)
from security and foreign currency transactions 7,038,934 (3,862,067)
Net unrealized depreciation
on investments and foreign currencies ......... (4,625,937) (7,659,416)
-------------- --------------
Net assets .......................................... $ 167,087,007 $ 47,470,419
============== ==============
See Notes to Financial Statements.
27
- --------------------------------------------------------------------------------
ISI FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED) APRIL 30, 2009 (UNAUDITED)
NORTH AMERICAN ISI
GOVERNMENT BOND STRATEGY
FUND FUND
- ---------------------------------------------------------------------------------------------
SHARES OF CAPITAL STOCK
OUTSTANDING OF $0.001 PAR VALUE
ISI Class A Shares (50,000,000 shares authorized) ...... 18,851,310 --
============== ==============
ISI Class C Shares (5,000,000 shares authorized) ....... 3,258,270 --
============== ==============
ISI Shares (25,000,000 shares authorized) .............. -- 5,128,489
============== ==============
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE
ISI Class A Shares (based on net assets of $142,494,621) $ 7.56 $ --
============== ==============
ISI Class C Shares (based on net assets of $24,592,386)* $ 7.55 $ --
============== ==============
ISI Shares ............................................. $ -- $ 9.26
============== ==============
MAXIMUM OFFERING PRICE VALUE PER SHARE
(100/97) X NET ASSET VALUE PER SHARE
ISI Class A Shares ..................................... $ 7.79 $ --
============== ==============
ISI Shares ............................................. $ -- $ 9.55
============== ==============
* Contingent deferred sales charge of 1.00% is imposed on the sale of shares
if redeemed within the first year of purchase.
See Notes to Financial Statements.
28
- --------------------------------------------------------------------------------
ISI FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS SIX MONTHS ENDED APRIL 30, 2009 (UNAUDITED)
TOTAL RETURN MANAGED
US TREASURY MUNICIPAL
FUND FUND
- -----------------------------------------------------------------------------------
INVESTMENT INCOME
Interest ......................................... $ 1,726,084 $ 1,701,196
------------ ------------
EXPENSES
Investment advisory fees (Note 2) ................ 149,510 163,609
Distribution fees (Note 2) ....................... 158,970 102,256
Administration fees (Note 2) ..................... 74,472 48,067
Professional fees ................................ 35,637 27,399
Registration fees ................................ 14,541 17,168
Transfer agent fees (Note 2) ..................... 17,318 6,264
Compliance consulting fees (Note 2) .............. 11,722 7,248
Directors' fees and expenses ..................... 10,054 6,423
Custodian fees ................................... 8,153 4,845
Other expenses ................................... 28,327 13,473
------------ ------------
TOTAL EXPENSES ................................ 508,704 396,752
------------ ------------
NET INVESTMENT INCOME ............................... 1,217,380 1,304,444
------------ ------------
REALIZED AND UNREALIZED
GAINS ON INVESTMENTS
Net realized gains from security transactions .... 6,950,835 182,071
Net change in unrealized appreciation/depreciation
on investments ................................ 2,652,338 5,290,988
------------ ------------
NET REALIZED AND UNREALIZED
GAINS ON INVESTMENTS ............................. 9,603,173 5,473,059
------------ ------------
NET INCREASE IN
NET ASSETS FROM OPERATIONS ....................... $ 10,820,553 $ 6,777,503
============ ============
See Notes to Financial Statements.
29
- --------------------------------------------------------------------------------
ISI FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS SIX MONTHS ENDED APRIL 30, 2009 (UNAUDITED)
NORTH AMERICAN ISI
GOVERNMENT BOND STRATEGY
FUND FUND
- ----------------------------------------------------------------------------------------
INVESTMENT INCOME
Dividends ............................................ $ -- $ 455,759
Interest ............................................. 2,649,681 141,176
------------ ------------
TOTAL INVESTMENT INCOME ........................ 2,649,681 596,935
------------ ------------
EXPENSES
Investment advisory fees (Note 2) .................... 338,060 93,407
Distribution fees (Note 2):
ISI Class A Shares ................................ 291,417 --
ISI Class C Shares ................................ 87,457 --
ISI Shares ........................................ -- 58,379
Administration fees (Note 2) ......................... 98,975 27,286
Professional fees .................................... 43,523 20,236
Transfer agent fees (Note 2):
ISI Class A Shares ................................ 30,271 --
ISI Class C Shares ................................ 5,220 --
ISI Shares ........................................ -- 11,610
Shareholder servicing fees (Note 2):
ISI Class C Shares ................................ 29,152 --
Registration fees .................................... 9,602 16,234
Registration fees - ISI Class A Shares ............... 9,026 --
Registration fees - ISI Class C Shares ............... 5,550 --
Compliance consulting fees (Note 2) .................. 15,763 4,887
Directors' fees and expenses ......................... 13,005 3,839
Custodian fees ....................................... 10,992 3,310
Other expenses ....................................... 36,826 31,730
------------ ------------
TOTAL EXPENSES ................................. 1,024,839 270,918
------------ ------------
NET INVESTMENT INCOME ................................... 1,624,842 326,017
------------ ------------
REALIZED AND UNREALIZED GAINS (LOSSES)
ON INVESTMENTS AND FOREIGN
CURRENCIES (NOTES 1 AND 5)
Net realized gains (losses) from:
Security transactions ............................. 7,944,463 (2,783,361)
Foreign currency transactions ..................... (905,529) --
Net change in unrealized appreciation/depreciation on:
Investments ....................................... 2,743,042 347,918
Foreign currency translation ...................... 127,645 --
------------ ------------
NET REALIZED AND UNREALIZED GAINS
(LOSSES) ON INVESTMENTS AND
FOREIGN CURRENCIES ................................... 9,909,621 (2,435,443)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS ...................................... $ 11,534,463 $ (2,109,426)
============ ============
See Notes to Financial Statements.
30
- --------------------------------------------------------------------------------
ISI TOTAL RETURN US TREASURY FUND
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
SIX MONTHS
ENDED YEAR
APRIL 30, ENDED
2009 OCTOBER 31,
(UNAUDITED) 2008
- ---------------------------------------------------------------------------------------------
FROM OPERATIONS
Net investment income ................................. $ 1,217,380 $ 3,508,326
Net realized gains from security transactions ......... 6,950,835 1,336,175
Net change in unrealized appreciation/
depreciation on investments ........................ 2,652,338 713,946
-------------- --------------
Net increase in net assets from operations ............... 10,820,553 5,558,447
-------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income ............................ (1,217,380) (3,593,392)
From net realized gains from security transactions .... -- (802,706)
In excess of net investment income .................... (928,704) --
-------------- --------------
Decrease in net assets from distributions to shareholders (2,146,084) (4,396,098)
-------------- --------------
FROM CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold ............................. 5,755,733 9,736,141
Net asset value of shares issued in reinvestment
of distributions to shareholders ................... 1,473,173 3,006,912
Payments for shares redeemed .......................... (13,856,660) (18,700,781)
-------------- --------------
Net decrease in net assets from capital share transactions (6,627,754) (5,957,728)
-------------- --------------
TOTAL INCREASE (DECREASE) IN NET ASSETS .................. 2,046,715 (4,795,379)
NET ASSETS
Beginning of period ................................... 119,972,698 124,768,077
-------------- --------------
End of period ......................................... $ 122,019,413 $ 119,972,698
============== ==============
DISTRIBUTIONS IN EXCESS OF
NET INVESTMENT INCOME ................................. $ (1,023,856) $ (95,152)
============== ==============
CAPITAL SHARE ACTIVITY
Sold .................................................. 561,982 994,698
Reinvested ............................................ 141,418 309,350
Redeemed .............................................. (1,325,756) (1,921,166)
-------------- --------------
Net decrease in shares outstanding .................... (622,356) (617,118)
Shares outstanding, beginning of period ............... 12,510,639 13,127,757
-------------- --------------
Shares outstanding, end of period ..................... 11,888,283 12,510,639
============== ==============
See Notes to Financial Statements.
31
- --------------------------------------------------------------------------------
ISI MANAGED MUNICIPAL FUND
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
SIX MONTHS
ENDED YEAR
APRIL 30, ENDED
2009 OCTOBER 31,
(UNAUDITED) 2008
- ----------------------------------------------------------------------------------------
FROM OPERATIONS
Net investment income ................................ $ 1,304,444 $ 2,594,704
Net realized gains from security transactions ........ 182,071 124,614
Net change in unrealized appreciation/
depreciation on investments ....................... 5,290,988 (3,752,876)
------------ ------------
Net increase (decrease) in net assets from operations ... 6,777,503 (1,033,558)
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income ........................... (1,303,878) (3,320,777)
From net realized gains from security transactions ... (124,238) (302,252)
------------ ------------
Decrease in net assets from distributions to shareholders (1,428,116) (3,623,029)
------------ ------------
FROM CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold ............................ 12,608,511 14,259,928
Net asset value of shares issued in reinvestment
of distributions to shareholders .................. 749,777 1,901,352
Payments for shares redeemed ......................... (5,774,276) (9,470,677)
------------ ------------
Net increase in net assets from
capital share transactions ........................... 7,584,012 6,690,603
------------ ------------
TOTAL INCREASE IN NET ASSETS ............................ 12,933,399 2,034,016
NET ASSETS
Beginning of period .................................. 75,071,959 73,037,943
------------ ------------
End of period ........................................ $ 88,005,358 $ 75,071,959
============ ============
UNDISTRIBUTED NET INVESTMENT INCOME ..................... $ 566 $ --
============ ============
CAPITAL SHARE ACTIVITY
Sold ................................................. 1,207,228 1,370,154
Reinvested ........................................... 71,883 181,645
Redeemed ............................................. (549,231) (903,279)
------------ ------------
Net increase in shares outstanding ................... 729,880 648,520
Shares outstanding, beginning of period .............. 7,533,774 6,885,254
------------ ------------
Shares outstanding, end of period .................... 8,263,654 7,533,774
============ ============
See Notes to Financial Statements.
32
- --------------------------------------------------------------------------------
ISI NORTH AMERICAN GOVERNMENT BOND FUND
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
SIX MONTHS
ENDED YEAR
APRIL 30, ENDED
2009 OCTOBER 31,
(UNAUDITED) 2008
- --------------------------------------------------------------------------------------------
FROM OPERATIONS
Net investment income ................................ $ 1,624,842 $ 4,535,624
Net realized gains from security and
foreign currency transactions ..................... 7,038,934 2,096,946
Net change in unrealized appreciation/depreciation
on investments and foreign currency translation ... 2,870,687 (6,447,206)
-------------- --------------
Net increase in net assets from operations .............. 11,534,463 185,364
-------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income
ISI Class A Shares ................................ (1,424,986) (3,389,286)
ISI Class C Shares ................................ (199,856) (348,008)
From net realized gains from security transactions
ISI Class A Shares ................................ -- (2,557,037)
ISI Class C Shares ................................ -- (357,527)
Return of capital
ISI Class A Shares ................................ -- (569,757)
ISI Class C Shares ................................ -- (79,664)
In excess of net investment income
ISI Class A Shares ................................ (2,036,586) --
ISI Class C Shares ................................ (285,633) --
-------------- --------------
Decrease in net assets from distributions to shareholders (3,947,061) (7,301,279)
-------------- --------------
FROM CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold
ISI Class A Shares ................................ 21,117,783 43,826,856
ISI Class C Shares ................................ 5,729,551 8,998,180
Net asset value of shares issued in reinvestment
of distributions to shareholders
ISI Class A Shares ................................ 1,981,393 3,405,028
ISI Class C Shares ................................ 324,632 531,357
Payments for shares redeemed
ISI Class A Shares ................................ (27,564,142) (32,470,695)
ISI Class C Shares ................................ (3,051,953) (4,808,955)
-------------- --------------
Net increase (decrease) in net assets from
capital share transactions ........................... (1,462,736) 19,481,771
-------------- --------------
TOTAL INCREASE IN NET ASSETS ............................ 6,124,666 12,365,856
NET ASSETS
Beginning of period .................................. 160,962,341 148,596,485
-------------- --------------
End of period ........................................ $ 167,087,007 $ 160,962,341
============== ==============
DISTRIBUTIONS IN EXCESS OF
NET INVESTMENT INCOME ................................ $ (2,614,497) $ (292,278)
============== ==============
See Notes to Financial Statements.
33
- --------------------------------------------------------------------------------
ISI NORTH AMERICAN GOVERNMENT BOND FUND
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
SIX MONTHS
ENDED YEAR
APRIL 30, ENDED
2009 OCTOBER 31,
(UNAUDITED) 2008
- --------------------------------------------------------------------------------
CAPITAL SHARE ACTIVITY
Sold
ISI Class A Shares ....................... 2,769,444 5,760,050
ISI Class C Shares ....................... 751,641 1,176,213
Reinvested
ISI Class A Shares ....................... 260,844 447,131
ISI Class C Shares ....................... 42,815 69,882
Redeemed
ISI Class A Shares ....................... (3,617,452) (4,273,002)
ISI Class C Shares ....................... (398,913) (624,903)
Net increase (decrease) in shares outstanding
ISI Class A Shares ....................... (587,164) 1,934,179
ISI Class C Shares ....................... 395,543 621,192
Shares outstanding, beginning of period
ISI Class A Shares ....................... 19,438,474 17,504,295
ISI Class C Shares ....................... 2,862,727 2,241,535
Shares outstanding, end of period
ISI Class A Shares ....................... 18,851,310 19,438,474
ISI Class C Shares ....................... 3,258,270 2,862,727
See Notes to Financial Statements.
34
- --------------------------------------------------------------------------------
ISI STRATEGY FUND
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
SIX MONTHS
ENDED YEAR
APRIL 30, ENDED
2009 OCTOBER 31,
(UNAUDITED) 2008
- ----------------------------------------------------------------------------------------
FROM OPERATIONS
Net investment income ................................ $ 326,017 $ 736,224
Net realized losses from security transactions ....... (2,783,361) (971,359)
Net change in unrealized appreciation/
depreciation on investments ....................... 347,918 (23,945,840)
------------ ------------
Net decrease in net assets from operations .............. (2,109,426) (24,180,975)
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income ........................... (357,186) (738,026)
From net realized gains from security transactions ... -- (4,289,022)
------------ ------------
Decrease in net assets from distributions to shareholders (357,186) (5,027,048)
------------ ------------
FROM CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold ............................ 1,882,431 11,373,856
Net asset value of shares issued in reinvestment
of distributions to shareholders .................. 319,408 4,465,374
Payments for shares redeemed ......................... (5,509,625) (13,921,636)
------------ ------------
Net increase (decrease) in net assets from
capital share transactions ........................... (3,307,786) 1,917,594
------------ ------------
TOTAL DECREASE IN NET ASSETS ............................ (5,774,398) (27,290,429)
NET ASSETS
Beginning of period .................................. 53,244,817 80,535,246
------------ ------------
End of period ........................................ $ 47,470,419 $ 53,244,817
============ ============
UNDISTRIBUTED NET INVESTMENT INCOME ..................... $ 3,286 $ 34,455
============ ============
CAPITAL SHARE ACTIVITY
Sold ................................................. 212,677 882,661
Reinvested ........................................... 35,381 334,700
Redeemed ............................................. (647,277) (1,122,582)
------------ ------------
Net increase (decrease) in shares outstanding ........ (399,219) 94,779
Shares outstanding, beginning of period .............. 5,527,708 5,432,929
------------ ------------
Shares outstanding, end of period .................... 5,128,489 5,527,708
============ ============
See Notes to Financial Statements.
35
- --------------------------------------------------------------------------------
ISI TOTAL RETURN US TREASURY FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
SELECTED PER SHARE DATA AND RATIOS FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
SIX MONTHS
ENDED
APRIL 30, YEARS ENDED OCTOBER 31,
2009 ----------------------------------------------------------------------
(UNAUDITED) 2008 2007 2006 2005 2004
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value at
beginning of period .............. $ 9.59 $ 9.50 $ 9.42 $ 9.33 $ 9.57 $ 9.92
---------- ---------- ---------- ---------- ---------- ----------
INCOME (LOSS) FROM
INVESTMENT OPERATIONS:
Net investment income (a).. ...... 0.10 0.28 0.35 0.32 0.29 0.24
Net realized and unrealized gains
(losses) on investments.. ..... 0.74 0.16 0.08 0.12 (0.16) 0.19
---------- ---------- ---------- ---------- ---------- ----------
Total from investment operations .... 0.84 0.44 0.43 0.44 0.13 0.43
---------- ---------- ---------- ---------- ---------- ----------
LESS DISTRIBUTIONS:
Dividends from net
investment income ............. (0.10) (0.28) (0.34) (0.35) (0.25) (0.23)
Distributions from net
realized gains ................ -- (0.07) (0.00)* -- (0.03) (0.33)
Return of capital ................ -- -- (0.01) -- (0.09) (0.22)
In excess of net investment income (0.07) -- -- -- -- --
---------- ---------- ---------- ---------- ---------- ----------
Total distributions ................. (0.17) (0.35) (0.35) (0.35) (0.37) (0.78)
---------- ---------- ---------- ---------- ---------- ----------
Net asset value at end of period .... $ 10.26 $ 9.59 $ 9.50 $ 9.42 $ 9.33 $ 9.57
========== ========== ========== ========== ========== ==========
TOTAL RETURN(b) ..................... 8.79%(d) 4.61% 4.66% 4.83% 1.38% 4.64%
========== ========== ========== ========== ========== ==========
Net assets at end of period (000's) . $ 122,019 $ 119,973 $ 124,768 $ 153,784 $ 165,974 $ 194,790
========== ========== ========== ========== ========== ==========
Ratio of expenses to
average net assets ............... 0.80%(e) 0.79% 0.79% 0.76%(c) 0.70% 0.69%
Ratio of net investment income to
average net assets ............... 1.91%(e) 2.86% 3.68% 3.44%(c) 3.01% 2.56%
Portfolio turnover rate ............. 91%(d) 70% 29% 51% 16% 31%
- -------------------------------------------------------------------------------------------------------------------------------
(a) Calculated using the average shares outstanding for the period.
(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. Returns shown do not
reflect the deduction of taxes a shareholder would pay on Fund
distributions or the redemption of Fund shares.
(c) The October 31, 2006 ratios of expenses and net investment income to
average net assets were unaffected by the waiver of distribution fees
during the year.
(d) Not annualized.
(e) Annualized.
* Amount less than $0.005 per share.
See Notes to Financial Statements.
36
- --------------------------------------------------------------------------------
ISI MANAGED MUNICIPAL FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
SELECTED PER SHARE DATA AND RATIOS FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
SIX MONTHS
ENDED
APRIL 30, YEARS ENDED OCTOBER 31,
2009 ----------------------------------------------------------------------
(UNAUDITED) 2008 2007 2006 2005 2004
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value at
beginning of period .............. $ 9.96 $ 10.61 $ 10.80 $ 10.68 $ 10.91 $ 10.89
---------- ---------- ---------- ---------- ---------- ----------
INCOME (LOSS) FROM
INVESTMENT OPERATIONS:
Net investment income (a). ...... 0.16 0.36 0.38 0.39 0.40 0.38
Net realized and unrealized gains
(losses) on investments.. ..... 0.71 (0.50) (0.14) 0.10 (0.27) 0.08
---------- ---------- ---------- ---------- ---------- ----------
Total from investment operations .... 0.87 (0.14) 0.24 0.49 0.13 0.46
---------- ---------- ---------- ---------- ---------- ----------
LESS DISTRIBUTIONS:
Dividends from net
investment income ............. (0.16) (0.47) (0.34) (0.34) (0.36) (0.44)
Distributions from net
realized gains ................ (0.02) (0.04) (0.09) (0.03) -- --
---------- ---------- ---------- ---------- ---------- ----------
Total distributions ................. (0.18) (0.51) (0.43) (0.37) (0.36) (0.44)
---------- ---------- ---------- ---------- ---------- ----------
Net asset value at end of period .... $ 10.65 $ 9.96 $ 10.61 $ 10.80 $ 10.68 $ 10.91
========== ========== ========== ========== ========== ==========
TOTAL RETURN(b) ..................... 8.78%(c) (1.44%) 2.29% 4.68% 1.19% 4.26%
========== ========== ========== ========== ========== ==========
Net assets at end of period (000's) . $ 88,005 $ 75,072 $ 73,038 $ 82,880 $ 94,027 $ 113,844
========== ========== ========== ========== ========== ==========
Ratio of expenses to
average net assets ............... 0.97%(d) 0.96% 0.94% 0.91% 0.86% 0.88%
Ratio of net investment income
to average net assets ............ 3.18%(d) 3.48% 3.57% 3.63% 3.64% 3.53%
Portfolio turnover rate ............. 7%(c) 7% 5% 7% 7% 17%
- -------------------------------------------------------------------------------------------------------------------------------
(a) Calculated using the average shares outstanding for the period.
(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. Returns shown do not
reflect the deduction of taxes a shareholder would pay on Fund
distributions or the redemption of Fund shares.
(c) Not annualized.
(d) Annualized.
See Notes to Financial Statements.
37
- --------------------------------------------------------------------------------
ISI NORTH AMERICAN GOVERNMENT BOND FUND - CLASS A
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
SELECTED PER SHARE DATA AND RATIOS FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
SIX MONTHS
ENDED
APRIL 30, YEARS ENDED OCTOBER 31,
2009 ----------------------------------------------------------------------
(UNAUDITED) 2008 2007 2006 2005 2004
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value at
beginning of period .............. $ 7.22 $ 7.53 $ 7.41 $ 7.34 $ 7.41 $ 7.73
---------- ---------- ---------- ---------- ---------- ----------
INCOME (LOSS) FROM
INVESTMENT OPERATIONS:
Net investment income (a) ....... 0.08 0.23 0.26 0.25 0.26 0.24
Net realized and unrealized
gains (losses) on investments
and foreign currencies ........ 0.44 (0.18) 0.22 0.18 0.06 0.03
---------- ---------- ---------- ---------- ---------- ----------
Total from investment operations .... 0.52 0.05 0.48 0.43 0.32 0.27
---------- ---------- ---------- ---------- ---------- ----------
LESS DISTRIBUTIONS:
Dividends from net
investment income ............. (0.08) (0.19) (0.35) (0.30) (0.31) (0.16)
Distributions from
net realized gains ............ -- (0.14) -- (0.01) (0.03) (0.08)
Return of capital ................ -- (0.03) (0.01) (0.05) (0.05) (0.35)
In excess of net investment income (0.10) -- -- -- -- --
---------- ---------- ---------- ---------- ---------- ----------
Total distributions ................. (0.18) (0.36) (0.36) (0.36) (0.39) (0.59)
---------- ---------- ---------- ---------- ---------- ----------
Net asset value at end of period .... $ 7.56 $ 7.22 $ 7.53 $ 7.41 $ 7.34 $ 7.41
========== ========== ========== ========== ========== ==========
TOTAL RETURN(b) ..................... 7.22%(d) 0.51% 6.71% 6.04% 4.39% 3.62%
========== ========== ========== ========== ========== ==========
Net assets at end of period (000's) . $ 142,495 $ 140,326 $ 131,748 $ 146,854 $ 177,101 $ 204,266
========== ========== ========== ========== ========== ==========
Ratio of expenses to
average net assets ............... 1.12%(e) 1.11% 1.11% 1.06%(c) 1.04% 1.05%
Ratio of net investment income
to average net assets ............ 2.01%(e) 2.97% 3.54% 3.47%(c) 3.55% 3.22%
Portfolio turnover rate ............. 106%(d) 108% 49% 53% 66% 47%
- -------------------------------------------------------------------------------------------------------------------------------
(a) Calculated using the average shares outstanding for the period.
(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. Returns shown do not
reflect the deduction of taxes a shareholder would pay on Fund
distributions or the redemption of Fund shares.
(c) The October 31, 2006 ratios of expenses and net investment income to
average net assets were unaffected by the waiver of distribution fees
during the year.
(d) Not annualized.
(e) Annualized.
See Notes to Financial Statements.
38
- --------------------------------------------------------------------------------
ISI NORTH AMERICAN GOVERNMENT BOND FUND - CLASS C
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
SELECTED PER SHARE DATA AND RATIOS FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
SIX MONTHS
ENDED
APRIL 30, YEARS ENDED OCTOBER 31,
2009 ----------------------------------------------------------------------
(UNAUDITED) 2008 2007 2006 2005 2004
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value at
beginning of period .............. $ 7.21 $ 7.52 $ 7.40 $ 7.33 $ 7.40 $ 7.72
---------- ---------- ---------- ---------- ---------- ----------
INCOME (LOSS) FROM
INVESTMENT OPERATIONS:
Net investment income (a).. ...... 0.05 0.18 0.21 0.21 0.21 0.19
Net realized and unrealized
gains (losses) on investments
and foreign currencies ........ 0.45 (0.18) 0.22 0.17 0.06 0.02
---------- ---------- ---------- ---------- ---------- ----------
Total from investment operations .... 0.50 0.00 0.43 0.38 0.27 0.21
---------- ---------- ---------- ---------- ---------- ----------
LESS DISTRIBUTIONS:
Dividends from net
investment income ............. (0.05) (0.14) (0.30) (0.25) (0.26) (0.14)
Distributions from
net realized gains ............ -- (0.14) -- (0.01) (0.03) (0.08)
Return of capital ................ -- (0.03) (0.01) (0.05) (0.05) (0.31)
In excess of net investment income (0.11) -- -- -- -- --
---------- ---------- ---------- ---------- ---------- ----------
Total distributions ................. (0.16) (0.31) (0.31) (0.31) (0.34) (0.53)
---------- ---------- ---------- ---------- ---------- ----------
Net asset value at end of period .... $ 7.55 $ 7.21 $ 7.52 $ 7.40 $ 7.33 $ 7.40
========== ========== ========== ========== ========== ==========
TOTAL RETURN(b) ..................... 6.89%(c) (0.12%) 6.03% 5.35% 3.73% 2.91%
========== ========== ========== ========== ========== ==========
Net assets at end of period (000's) . $ 24,592 $ 20,636 $ 16,848 $ 15,579 $ 15,944 $ 18,616
========== ========== ========== ========== ========== ==========
Ratio of expenses to
average net assets ............... 1.76%(d) 1.73% 1.74% 1.72% 1.69% 1.77%
Ratio of net investment income
to average net assets ............ 1.37%(d) 2.34% 2.93% 2.81% 2.89% 2.50%
Portfolio turnover rate ............. 106%(c) 108% 49% 53% 66% 47%
- -------------------------------------------------------------------------------------------------------------------------------
(a) Calculated using the average shares outstanding for the period.
(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. Returns shown do not
reflect the deduction of taxes a shareholder would pay on Fund
distributions or the redemption of Fund shares.
(c) Not annualized.
(d) Annualized.
See Notes to Financial Statements.
39
- --------------------------------------------------------------------------------
ISI STRATEGY FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
SELECTED PER SHARE DATA AND RATIOS FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
SIX MONTHS
ENDED
APRIL 30, YEARS ENDED OCTOBER 31,
2009 ----------------------------------------------------------------------
(UNAUDITED) 2008 2007 2006 2005 2004
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value at
beginning of period .............. $ 9.63 $ 14.82 $ 13.54 $ 12.12 $ 11.21 $ 10.50
---------- ---------- ---------- ---------- ---------- ----------
INCOME (LOSS) FROM
INVESTMENT OPERATIONS:
Net investment income (a).. ...... 0.06 0.13 0.17 0.15 0.16 0.10
Net realized and unrealized
gains (losses) on investments
and foreign currencies ........ (0.36) (4.39) 1.65 1.42 0.91 0.70
---------- ---------- ---------- ---------- ---------- ----------
Total from investment operations .... (0.30) (4.26) 1.82 1.57 1.07 0.80
---------- ---------- ---------- ---------- ---------- ----------
LESS DISTRIBUTIONS:
Dividends from net
investment income ............. (0.07) (0.13) (0.17) (0.15) (0.16) (0.09)
Distributions from
net realized gains ............ -- (0.80) (0.37) -- -- --
---------- ---------- ---------- ---------- ---------- ----------
Total distributions ................. (0.07) (0.93) (0.54) (0.15) (0.16) (0.09)
---------- ---------- ---------- ---------- ---------- ----------
Net asset value at end of period .... $ 9.26 $ 9.63 $ 14.82 $ 13.54 $ 12.12 $ 11.21
========== ========== ========== ========== ========== ==========
TOTAL RETURN(b) ..................... (3.12%)(c) (30.49%) 13.79% 13.01% 9.59% 7.71%
========== ========== ========== ========== ========== ==========
Net assets at end of period (000's) . $ 47,470 $ 53,245 $ 80,535 $ 69,438 $ 60,205 $ 44,920
========== ========== ========== ========== ========== ==========
Ratio of net expenses
to average net assets ............ 1.16%(d) 0.99% 0.96% 0.95% 0.94% 1.12%
Ratio of net investment income
to average net assets ............ 1.40%(d) 1.02% 1.21% 1.17% 1.33% 0.92%
Portfolio turnover rate ............. 34%(c) 42% 62% 41% 30% 66%
- -------------------------------------------------------------------------------------------------------------------------------
(a) Calculated using the average shares outstanding for the period.
(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. Returns shown do not
reflect the deduction of taxes a shareholder would pay on Fund
distributions or the redemption of Fund shares.
(c) Not annualized.
(d) Annualized.
See Notes to Financial Statements.
40
- --------------------------------------------------------------------------------
ISI FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 2009 (UNAUDITED)
NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
A. ORGANIZATION
Total Return US Treasury Fund, Inc. ("Total Return"), Managed Municipal
Fund, Inc. ("Managed Municipal"), North American Government Bond Fund, Inc.
("North American") and ISI Strategy Fund, Inc. ("Strategy") (each a "Fund" and
collectively, the "Funds") are registered under the Investment Company Act of
1940 as open-end management investment companies. The Funds are organized as
corporations under the laws of the State of Maryland.
Total Return's investment objective is to achieve a high level of total
return with relative stability of principal and, secondarily, high current
income consistent with an investment in securities issued by the United States
Treasury. Managed Municipal's investment objective is to provide a high level of
total return with relative stability of principal and, secondarily, high current
income exempt from Federal income tax through investment in a portfolio
consisting primarily of tax-free municipal obligations. North American's
investment objective is designed to provide a high level of current income,
consistent with prudent investment risk. Strategy's investment objective is to
maximize total return through a combination of long-term growth of capital and
current income.
Total Return, Managed Municipal and Strategy each currently offer a single
class of shares (ISI Shares) to investors. North American offers two classes of
shares - ISI Class A Shares and ISI Class C Shares. ISI Shares and ISI Class A
Shares are subject to a maximum front-end sales charge equal to 3.00%. A
contingent deferred sales charge of 1.00% is imposed on the sale of ISI Class C
Shares if redeemed within the first year of purchase.
Total Return, Managed Municipal and Strategy are authorized to issue
115,000,000, 55,000,000 and 25,000,000 shares, respectively, of ISI Shares at
$0.001 par value. North American is authorized to issue 50,000,000 ISI Class A
Shares and 5,000,000 ISI Class C Shares at $0.001 par value.
B. VALUATION OF SECURITIES
Exchange traded securities and over-the-counter securities listed on the
NASDAQ National Market System for which market quotations are readily available
are valued each Fund business day using the last reported sales price or the
NASDAQ Official Closing Price ("NOCP") provided by independent pricing services
as of the close of trading on the New York Stock Exchange (normally 4:00 p.m.
Eastern time). In the absence of a sale price or NOCP, such securities are
valued at the mean of the last bid and the last asked prices. Non-exchange
traded securities for which quotations are readily available are generally
valued at the mean between the last bid and the last asked prices. Money market
instruments that mature in 60 days or less may be valued at amortized cost
unless the Fund's investment advisor believes another valuation is more
appropriate.
41
- --------------------------------------------------------------------------------
ISI FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
When valuing securities for which market quotations are not readily
available or for which the market quotations that are readily available are
considered unreliable, the Funds determine a fair value in good faith under
procedures established by and under the general supervision of the Funds' Boards
of Directors (the "Board"). The Funds may use these procedures to establish the
fair value of securities when, for example, a significant event occurs between
the time the market closes and the calculation of the net asset value per share,
and the event is likely to affect the Fund's net asset value per share. Fair
valuation may also be used for securities that are subject to legal or
contractual restrictions on resale, securities for which no or limited trading
activity has occurred for a period of time, or securities that are otherwise
deemed to be illiquid (i.e., securities that cannot be disposed of within seven
days at approximately the price at which the security is currently priced by the
Funds).
If a fair value is required, the investment advisor, or the sub-advisor in
the case of Strategy, determines the value of the security until the Board meets
to establish the fair value of the security.
As of April 30, 2009, there were no fair valued securities.
The Financial Accounting Standards Board's ("FASB") Statement on Financial
Accounting Standards 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.
Various inputs are used in determining the value of each 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 Funds'
investments as of April 30, 2009:
MANAGED NORTH
TOTAL RETURN MUNICIPAL AMERICAN STRATEGY
- ---------------------------------------------------------------------------------------
Level 1 - Quoted prices $ 865,000 $ 8,806,000 $ 1,069,000 $ 38,529,953
Level 2 - Other significant
observable inputs 120,295,657 81,004,797 164,413,286 8,923,555
Level 3 - Significant
unobservable inputs -- -- -- --
------------ ------------ ------------ ------------
Total $121,160,657 $ 89,810,797 $165,482,286 $ 47,453,508
============ ============ ============ ============
42
- --------------------------------------------------------------------------------
ISI FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
C. SECURITIES TRANSACTIONS AND INVESTMENT INCOME
Securities transactions are recorded on trade date. Realized gains and
losses are determined by comparing the proceeds of a sale or the cost of a
purchase with a specific offsetting transaction. Dividend income is recorded on
the ex-dividend date. Interest income, including amortization of premiums and
accretion of discounts, is accrued daily. Estimated expenses are also accrued
daily. With respect to North American, income, gains (losses) and common
expenses are allocated to each class based on its respective net assets. Class
specific expenses are charged directly to each class.
D. DISTRIBUTIONS
Total Return declares distributions daily, and North American declares
monthly distributions at fixed rates approved by the Board. These distributions
are paid monthly. To the extent that a Fund's net investment income is less than
an approved fixed rate, some of its distributions may be designated as a return
of capital. Managed Municipal declares and pays dividends monthly from its net
investment income. Strategy declares and pays dividends quarterly from its net
investment income. Net realized capital gains, if any, are distributed at least
annually. The Funds record dividends and distributions on the ex-dividend date.
E. FEDERAL INCOME TAXES
Each Fund has a policy to qualify as a regulated investment company under
subchapter M of the Internal Revenue Code. As provided therein in any fiscal
year in which a Fund so qualifies and distributes at least 90% of all of its net
taxable income, the Fund (but not its shareholders) will be relieved of Federal
income tax on the income distributed. In addition, by distributing in each
calendar year substantially all of its net investment income and net realized
capital gains, a Fund will not be subject to Federal excise taxes. Accordingly,
no Federal income or excise taxes have been accrued.
F. FOREIGN CURRENCY TRANSLATION
The Funds maintain their accounting records in U.S. dollars. North
American determines the U.S. dollar value of foreign currency-denominated
assets, liabilities and transactions by using prevailing exchange rates. In
valuing security transactions, the receipt of income and the payment of
expenses, North American uses the prevailing exchange rate on the transaction
date.
Net realized gains and losses on foreign currency transactions shown on
North American's financial statements result from the sale of foreign
currencies, currency gains or losses realized between the trade and settlement
dates on securities transactions, and from the difference between the amounts of
interest recorded on North American's books and the U.S. dollar equivalent of
the amounts actually received or paid. That portion of realized gains (losses)
from security transactions that results from fluctuation in foreign currency
exchange rates relating to the sale of foreign securities is not separately
disclosed but is included in net realized gains (losses) from security
transactions. That portion of unrealized gains and losses on investments that
results from
43
- --------------------------------------------------------------------------------
ISI FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
fluctuations in foreign currency exchange rates is not separately disclosed but
is included in the net change in unrealized appreciation/depreciation on
investments.
G. FORWARD FOREIGN CURRENCY CONTRACTS
North American may use forward foreign currency contracts to manage
foreign exchange rate risk. The Fund may use these contracts to fix the U.S.
dollar value of securities transactions for the period between the date of the
transaction and the date the security is received or delivered or to hedge the
U.S. dollar value of securities that it already owns. The use of forward foreign
currency contracts does not eliminate fluctuations in the prices of the
underlying securities, but does establish a rate of exchange that can be
achieved in the future.
North American determines the net U.S. dollar value of the forward foreign
currency contracts using prevailing exchange rates. As of April 30, 2009, there
were no open forward currency contracts.
H. REPURCHASE AGREEMENTS
Each Fund may make short-term investments in repurchase agreements that
are fully collateralized by U.S. government securities. Under the terms of a
repurchase agreement, a financial institution sells U.S. government securities
to a Fund and agrees to buy them back on a specified day in return for the
principal amount of the original sale plus accrued interest. The custodial bank
holds the collateral in a separate account until the agreement matures. If the
value of the securities falls below the principal amount of the repurchase
agreement plus accrued interest, the financial institution deposits additional
collateral by the following business day. If the financial institution either
fails to deposit the required additional collateral or fails to repurchase the
securities as agreed, a Fund has the right to sell the securities and recover
any resulting loss from the financial institution. If the financial institution
enters into bankruptcy, a Fund's claim on the collateral may be subject to legal
proceedings.
I. ESTIMATES
In preparing its financial statements in conformity with U.S. generally
accepted accounting principles, management makes estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the period. Actual results
may be different.
NOTE 2 - FEES AND TRANSACTIONS WITH AFFILIATES
International Strategy & Investment, Inc. ("ISI") is the Funds' investment
advisor. As compensation for its advisory services, Total Return pays ISI an
annual fee based on the Fund's average daily net assets, which is calculated
daily and paid monthly at the following annual rates: 0.20% of the first $100
million, 0.18% of the next $100 million, 0.16% of the next $100 million, 0.14%
of the next $200 million and 0.12% of the amount over $500 million. In addition,
Total Return pays ISI 1.50% of the Fund's gross
44
- --------------------------------------------------------------------------------
ISI FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
interest income. Managed Municipal, North American and Strategy each pay
ISI a fee, which is calculated daily and paid monthly, at the annual rate of
0.40% of such Fund's average daily net assets.
ISI has contractually agreed to waive its advisory fees and/or reimburse
expenses of North American through February 28, 2010 to the extent necessary to
limit the annual ordinary operating expenses of ISI Class C Shares to 1.85% of
the average daily net assets attributable to such shares. During the six months
ended April 30, 2009, ISI was not required to waive any advisory fees.
Los Angeles Capital Management and Equity Research, Inc. is Strategy's
Sub-Advisor and is responsible for managing the common stocks in Strategy's
portfolio. The Sub-Advisor is paid by ISI, not Strategy.
International Strategy &?Investment Group, Inc. ("ISI Group"), an
affiliate of ISI, is the distributor for the Funds. Total Return, Managed
Municipal and Strategy each pay ISI Group a distribution/shareholder service
fee, pursuant to Rule 12b-1, that is calculated daily and paid monthly at the
annual rate up to 0.25% of their average daily net assets. North American's ISI
Class A Shares and ISI Class C Shares pay ISI Group a distribution/shareholder
service fee, pursuant to Rule 12b-1, that is calculated daily and paid monthly
at the annual rate up to 0.40% and 1.00% (which may include up to 0.25% for
shareholder servicing fees for each class) of their average daily net assets,
respectively. During the six months ended April 30, 2009, North American Class A
shares did not pay any shareholder servicing fees.
During the six months ended April 30, 2009, ISI Group earned commissions
on sales of ISI Shares of Total Return, Managed Municipal and Strategy of
$7,764, $11,000 and $2,025, respectively, and earned commissions of $10,810 on
sales of ISI Class A Shares of North American. ISI Group retained $6,208 of
contingent deferred sales charges on redemptions of ISI Class C Shares of North
American during the six months ended April 30, 2009.
Ultimus Fund Solutions, LLC ("Ultimus") is the administrator and fund
accountant for the Funds pursuant to the terms of a Mutual Fund Services
Agreement. Ultimus supplies internal regulatory compliance services and
executive and administrative services. Ultimus supervises the preparation of tax
returns, reports to shareholders of the Funds, reports to and filings with the
SEC and state securities commissions, and materials for meetings of the Board.
Ultimus also calculates the net asset value per share of each Fund and provides
information necessary to prepare the Funds' financial statements and tax
returns. For the performance of these services, the Funds pay Ultimus a fee at
the annual rate of 0.10% of the combined average value of their daily net assets
up to $500 million, 0.075% of such assets from $500 million to $1 billion, and
0.06% of such assets in excess of $1 billion, subject to an annual minimum fee
of $500,000.
Ultimus also maintains the records of each shareholder's account, answers
shareholders' inquiries concerning their accounts, processes purchases and
redemptions
45
- --------------------------------------------------------------------------------
ISI FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
of each Fund's shares, acts as dividend and distribution disbursing agent and
performs other shareholder service functions. For these services, Ultimus
receives a monthly fee from each Fund at an annual rate of $20 for each direct
account and $15 for certain accounts established through financial
intermediaries; provided, however, that the minimum monthly fee is $1,000. In
addition, the Funds reimburse Ultimus for its out-of-pocket expenses including,
but not limited to, postage and supplies.
EJV Financial Services, LLC ("EJV") provides certain compliance services
to the Funds. Edward J. Veilleux, Vice President and Chief Compliance Officer of
the Funds, is also a principal of EJV Financial Services, LLC. The Funds pay EJV
$18,750 quarterly for providing CCO?services. In addition, the Funds reimburse
EJV for any reasonable out-of-pocket expenses relating to these compliance
services.
NOTE 3 - FEDERAL INCOME TAX
The Funds may periodically make reclassifications among certain capital
accounts as a result of differences in the characterization and allocation of
certain income and capital gain distributions determined annually in accordance
with Federal tax regulations, which may differ from U.S. generally accepted
accounting principles. These book/tax differences may be either temporary or
permanent in nature. To the extent they are permanent, they are charged or
credited to paid-in-capital, undistributed net investment income or accumulated
net realized gains, as appropriate, in the period that the differences arose.
The reclassifications have no impact on the net assets or net asset value per
share of the Funds.
The Funds determine their net investment income and capital gain
distributions in accordance with income tax regulations, which may differ from
U.S. generally accepted accounting principles.
During the periods ended April 30, 2009 and October 31, 2008, the tax
character of distributions paid by each of the Funds was as follows:
ORDINARY TAX-EXEMPT LONG-TERM RETURN OF
INCOME INCOME CAPITAL GAINS CAPITAL
------------------------ ----------------------- ----------------------- -----------------------
APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31,
2009 2008 2009 2008 2009 2008 2009 2008
Total Return $2,146,084* $3,921,060 $ -- $ -- $ -- $ 475,038 $ -- $ --
Managed Municipal 9,779 94,841 1,294,099 3,241,083 124,238 287,105 -- --
North American 3,947,061* 5,382,558 -- -- -- 1,269,300 -- 649,421
Strategy 357,186 809,371 -- -- -- 4,217,677 -- --
* A portion of the ordinary income is short-term gains that are taxed as
ordinary income for tax purposes. However, these short-term gains may be
offset by losses incurred through October 31, 2009 and therefore could be
treated as return of capital.
FASB'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
each Fund's tax returns to
46
- --------------------------------------------------------------------------------
ISI FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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 booked 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. The statute
of limitations on each Fund's tax returns remains open for the years ended
October 31, 2006 through October 31, 2008.
As of April 30, 2009, the components of distributable earnings
(accumulated losses) on a tax basis were as follows:
TOTAL MANAGED NORTH
RETURN MUNICIPAL AMERICAN STRATEGY
- ----------------------------------------------------------------------------------------------
Undistributed ordinary income . $ 2,559,096 $ 98,826 $ 2,175,386 $ --
Undistributed tax-exempt income -- 747 -- --
Accumulated undistributed
long-term capital gains .... 3,475,857 182,071 2,518,087 --
Capital loss carryforwards .... -- -- -- (989,548)
Net unrealized appreciation
(depreciation) ............. 781,264 3,449,708 (4,625,937) (7,742,238)
Other losses .................. -- -- -- (2,786,411)
Other temporary differences ... (107,974) (98,969) (269,036) --
------------ ------------ ------------ ------------
Total ......................... $ 6,708,243 $ 3,632,383 $ (201,500) $(11,518,197)
============ ============ ============ ============
As of October 31, 2008, Strategy had a capital loss carryforward of
$989,548, which expires October 31, 2016. This capital loss carryforward may be
utilized in the current and future years to offset net realized capital gains,
if any, prior to distributing such gains to shareholders.
The difference between the federal income tax cost of portfolio
investments and the financial statement cost for Strategy is due to certain
timing differences in the recognition of capital gains or losses under income
tax reporting regulations and accounting principles generally accepted in the
United States of America. These "book/tax" differences are temporary in nature
and are primarily due to the tax deferral of losses on wash sales.
NOTE 4 - INVESTMENT TRANSACTIONS
The aggregate cost of purchases and proceeds from sales of investments,
other than short-term obligations, for the six months ended April 30, 2009 were
as follows:
NON-US GOVERNMENT OBLIGATIONS US GOVERNMENT OBLIGATIONS
----------------------------- ------------------------------
PURCHASES SALES PURCHASES SALES
- --------------------------------------------------------------------------------
Total Return $ -- $ -- $ 87,675,091 $101,682,158
Managed Municipal 9,738,001 5,100,000 -- --
North American 9,345,234 3,371,541 119,062,289 129,728,422
Strategy 6,446,994 7,459,387 9,065,535 9,591,656
47
- --------------------------------------------------------------------------------
ISI FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 5 - MARKET AND CREDIT RISK
North American invests in Canadian and Mexican government securities.
Investing in Canadian and Mexican government securities may have different risks
than investing in U.S. government securities. An investment in Canada or Mexico
may be affected by developments unique to those countries. These developments
may not affect the U.S. economy or the prices of U.S. government securities in
the same manner. In addition, the value of bonds issued by non-U.S. governments
may be affected by adverse international political and economic developments
that may not impact the value of U.S. government securities.
NOTE 6 - CONTRACTUAL OBLIGATIONS
In the ordinary course of business, the Funds enter into contracts that
contain a variety of indemnifications. Each Fund's maximum exposure under these
arrangements is unknown. However, the Funds have not had prior claims or losses
pursuant to these indemnification provisions and believe the risk of loss
thereunder to be remote.
48
- --------------------------------------------------------------------------------
NOTICE TO SHAREHOLDERS (UNAUDITED)
- --------------------------------------------------------------------------------
PROXY VOTING POLICIES AND PROCEDURES
A description of the policies and procedures that Strategy uses to determine how
to vote proxies relating to securities held in Strategy's portfolio is
available, without charge and upon request, by calling (800) 955-7175.
Information regarding how Strategy voted proxies relating to portfolio
securities during the most recent twelve-month period ended June 30 is
available, without charge, upon request, by calling (800) 955-7175 or on the
Security and Exchange Commission's ("SEC") website at http://www.sec.gov.
AVAILABILITY OF QUARTERLY PORTFOLIO SCHEDULE
The Funds file their complete schedule of portfolio holdings with the SEC for
the first and third quarters of each fiscal year on Form N-Q. Each Fund's Form
N-Q is available on the SEC's website at http://www.sec.gov or may be reviewed
and copied at the SEC's Public Reference Room in Washington, DC. Information on
the operation of the Public Reference Room may be obtained by calling
800-SEC-0330.
ISI INTERNATIONAL STRATEGY AND INVESTMENT
PRIVACY NOTICE FOR ISI MUTUAL FUNDS
PRIVACY POLICY
The mutual funds in the ISI Fund Complex ("the Funds") believe that your privacy
is extremely important. We are firmly committed to protecting any personal or
financial information you provide to us as well as information about your
transactions with us, such as transaction amounts, account balance and account
holdings ("Personal Information"). We use Personal Information only to develop
and deliver products and services that you request and to fulfill any applicable
legal and regulatory requirements. We do not disclose Personal Information about
you or our former customers except to our affiliates and service providers. We
require our employees, affiliates and service providers to maintain appropriate
safeguards to ensure the security of your non-public information.
LIMITS OF USE OF PERSONAL INFORMATION
We limit the use, collection and retention of customer information to what is
necessary to provide personal financial services and related products. We have
security practices and procedures in place to ensure the confidentiality and
security of your Personal Information.
ACCURACY OF PERSONAL INFORMATION
We strive to keep your personal and financial information accurate. If our
records are incorrect or out-of-date, please notify us immediately by contacting
the Service Center listed on your account statement.
CHANGE TO OUR POLICIES
If you have any privacy or security questions, please contact us at
800-882-8585. We may, at our discretion, change this Privacy Policy at any time.
If we make material changes to the policy, we will provide you with notice of
these changes.
49
- --------------------------------------------------------------------------------
ISI International
Strategy &
Investment
- --------------------------------------------------------------------------------
LOUIS E. LEVY EDWARD J. VEILLEUX
CHAIRMAN VICE PRESIDENT
CHIEF COMPLIANCE OFFICER
W. MURRAY JACQUES
DIRECTOR THOMAS D. STEVENS*
VICE PRESIDENT
EDWARD A. KUCZMARSKI
DIRECTOR STEPHEN V. KILLORIN
VICE PRESIDENT
R. ALAN MEDAUGH
PRESIDENT MARGARET M. BEELER
DIRECTOR VICE PRESIDENT
SECRETARY
NANCY LAZAR
VICE PRESIDENT MARK J. SEGER
TREASURER
CARRIE L. BUTLER
VICE PRESIDENT EDWARD S. HYMAN
SENIOR ECONOMIC ADVISOR
* Thomas D. Stevens is an officer
for only the ISI Strategy Fund.
- --------------------------------------------------------------------------------
INVESTMENT ADVISOR
- --------------------------------------------------------------------------------
ISI, INC.
40 WEST 57TH STREET, 18TH FLOOR
NEW YORK, NY 10019
(800) 955-7175
- --------------------------------------------------------------------------------
SHAREHOLDER SERVICING AGENT
- --------------------------------------------------------------------------------
ULTIMUS FUND SOLUTIONS, LLC
P.O. BOX 460707
CINCINNATI, OH 45246-0707
- --------------------------------------------------------------------------------
DISTRIBUTOR
- --------------------------------------------------------------------------------
ISI GROUP, INC.
40 WEST 57TH STREET, 18TH FLOOR
NEW YORK, NY 10019
(800) 955-7175
- --------------------------------------------------------------------------------
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 has not adopted procedures by which shareholders may recommend
nominees to the registrant's board of directors.
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) North American Government Bond Fund, Inc.
-------------------------------------------------------------------
By (Signature and Title)* /s/ R. Alan Medaugh
--------------------------------------------------
R. Alan Meduagh, President
Date June 29, 2009
---------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ R. Alan Medaugh
--------------------------------------------------
R. Alan Medaugh, President
Date June 29, 2009
---------------------------
By (Signature and Title)* /s/ Mark J. Seger
--------------------------------------------------
Mark J. Seger, Treasurer
Date June 29, 2009
---------------------------
* Print the name and title of each signing officer under his or her signature.