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OMB Number: 3235-0570
Expires: August 31, 2011
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hours per response: 18.9
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-22162
---------------------------------------------
The RAM Funds
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
2331 Far Hills Avenue, Suite 200 Dayton, Ohio 45419
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Tina H. Bloom, Esq.
Ultimus Fund Solutions, LLC 225 Pictoria Drive, Suite 450 Cincinnati, Ohio 45246
- --------------------------------------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: (937) 643-1000
---------------------------
Date of fiscal year end: November 30, 2009
---------------------------
Date of reporting period: May 31, 2009
---------------------------
Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
================================================================================
THE RAM FUNDS
The RAM Small/Mid Cap Fund
The RAM Small Cap Fund
SEMI-ANNUAL REPORT
May 31, 2009
(Unaudited)
INVESTMENT ADVISER
Riazzi Asset Manager, LLC
Dayton, OH
================================================================================
RIAZZI ASSET MANAGEMENT, LLC
July 24, 2009
Dear Fellow Shareholders,
During the RAM Small/Mid Cap Fund and RAM Small Cap Fund's semi-annual period
ended May 31, 2009, equity markets proved incredibly volatile with the March
market lows reflecting the potential collapse of the U.S. financial system, a
surge in unemployment, and continuing U.S. housing related issues. From the
early spring depths, markets ultimately recovered through May as investors began
to embrace less negative economic trends.
During the period from the inception of the RAM Small/Mid Cap Fund on December
22, 2008 until May 31, 2009, the total return of Class A shares was 12.01%,
significantly outperforming the Russell 2500 Value Index - the Fund's primary
benchmark - which was up 2.75% during that period. Performance benefited from
our portfolio allocation overweight to Consumer Discretionary (RAM 21.8% vs.
Index 11.7%) as well as Energy (RAM 18.8% vs. Index 2.8%) and our underweight to
the Financials Sector (RAM 25.8% vs. Index 32.9%). Conversely, our underweight
in Information Technology (RAM 5.2% vs. Index 8.1%) names was a detractor from
performance.
During the period from the inception of the RAM Small Cap Fund on December 22,
2008 until May 31, 2009, the total return of Class A shares was 4.28%, slightly
outperforming the Russell 2000 Value Index - the Fund's primary benchmark -
which was down 1.62% during that period. Performance benefited from our
portfolio allocation overweight to Consumer Discretionary (RAM 25.7% vs. Index
13.1%) and Energy (RAM 14.7% vs. Index 1.8%), as well as our underweight to the
Financials Sector (RAM 26.3% vs. Index 36.6%). Conversely, our underweight in
Materials (RAM 4.6% vs. Index 9.6%) was a detractor from performance.
From a security selection standpoint for the RAM Small/Mid Cap Fund, McDermott
International (Symbol: MDR) and Global Industries (Symbol: GLBL) advanced 145%
and 134%, respectively, from a renewed focus on energy infrastructure projects
as oil prices recovered from the low thirties to sixty and seventy dollars a
barrel, while Wright Express (Symbol: WXS) was up 119% due in part to the
improvement of future credit loss expectations. UIL (Symbol: UIL) was the
biggest decliner with performance down 28%, as electricity demand slowed and the
company received a less than favorable rate case adjustment. Parkway Properties
(Symbol: PKY) declined 25% as a result of concerns over future office demand.
Finally, ZEP (Symbol: ZEP) declined 24% as it struggled in this weak industrial
demand environment despite positive steps by management to right the company
going forward.
From a security selection standpoint for the RAM Small Cap Fund, Wright Express
(Symbol: WXS) was up 112% due in part to the improvement of future credit loss
expectations while Global Industries (Symbol: GLBL) advanced 109% from renewed
interest in energy infrastructure as oil prices recovered from the low thirties
to sixty and seventy dollars a barrel. Genco Shipping & Trading (Symbol: GNK)
increased 103% as a result of improvements in seaborne trade and credit
improvements. Diamond Hill (Symbol: DHIL) was the biggest decliner with
performance down 37% reflecting decreased assets under management and the
subsequent leveraged effect on earnings. UIL (Symbol: UIL) also declined
significantly with performance down 28%, as electricity demand slowed and the
company received a less than favorable rate case adjustment.
1
To summarize our outlook we offer the following:
There are encouraging signs that the deterioration of the global economy is
losing steam. In our opinion, this is likely enough to begin the bottoming
process for global commodity demand and equity markets overall.
The U.S. housing market has peaked in terms of inventories, but prices will
likely fall at a decelerating rate until balance is achieved. We continue in our
belief that the housing market will remain a headwind for the economic recovery.
Specifically, with nearly 20% of residential mortgages under water, housing
inventories well above normal and unemployment approaching 10%, we expect
mortgage defaults and foreclosures to persist, leading to continued weakness in
many markets.
Expect disappointing spending trends from consumers and businesses given the
tight credit markets, rising unemployment, and falling home prices. We find it
infeasible to expect consumer spending to rebound to previous peak levels in the
foreseeable future. Instead, we believe the U.S. consumer will be keenly focused
on repairing his/her balance sheet over the coming quarters. It follows, with
70% of Gross Domestic Product derived from consumer spending, that our outlook
is for a slow and tepid economic recovery.
As we search the investment landscape for opportunities to make money, we will
incorporate these expectations into our forecasts.
We thank you for your continued support.
/s/ Michelle Stevens /s/ John Riazzi
Michelle Stevens, CFA John Riazzi, CFA
The Letter to Shareholders seeks to describe some of the Adviser's current
opinions and views of the financial markets. Although the Adviser believes it
has a reasonable basis for any opinions or views expressed, actual results may
differ, sometimes significantly so, from those expected or expressed.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. INVESTMENT RESULTS AND
PRINCIPAL VALUE WILL FLUCTUATE SO THAT SHARES, WHEN REDEEMED, MAY BE WORTH MORE
OR LESS THAN THEIR ORIGINAL COST. FEE WAIVERS HAVE POSITIVELY IMPACTED THE
FUND'S PERFORMANCE OVER THE RELEVANT PERIODS AND WITHOUT SUCH WAIVERS, FUND
PERFORMANCE WOULD HAVE BEEN LOWER. FOR THE FUND'S CURRENT EXPENSE RATIO
INFORMATION PLEASE SEE THE FINANCIAL HIGHLIGHTS TABLE INCLUDED IN THIS REPORT.
CURRENT PERFORMANCE MAY BE HIGHER OR LOWER THAN THE PERFORMANCE DATA QUOTED.
PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH-END, ARE AVAILABLE BY CALLING
1-888-884-8099
AN INVESTOR SHOULD CONSIDER THE INVESTMENT OBJECTIVES, RISKS, CHARGES AND
EXPENSES OF THE FUND CAREFULLY BEFORE INVESTING. THE FUND'S PROSPECTUS CONTAINS
THIS AND OTHER IMPORTANT INFORMATION. TO OBTAIN A COPY OF THE FUND'S PROSPECTUS
PLEASE VISIT WWW.THERAMFUNDS.COM OR CALL 1-888-884-8099 AND A COPY WILL BE SENT
TO YOU FREE OF CHARGE. PLEASE READ THE PROSPECTUS CAREFULLY BEFORE YOU INVEST.
THE RAM FUNDS ARE DISTRIBUTED BY ULTIMUS FUND DISTRIBUTORS, LLC.
2
THE RAM SMALL/MID CAP FUND
SUPPLEMENTARY PORTFOLIO INFORMATION
MAY 31, 2009 (UNAUDITED)
- --------------------------------------------------------------------------------
TEN LARGEST EQUITY HOLDINGS
----------------------------------------------------------
% OF
COMPANY NET ASSETS
----------------------------------------------------------
FTI Consulting, Inc. 3.3%
PetroHawk Energy Corp. 3.3%
Cogent, Inc. 3.0%
Aegean Marine Petroleum Network, Inc. 2.9%
Superior Energy Services, Inc. 2.9%
Omega Healthcare Investors, Inc. 2.8%
HCC Insurance Holdings, Inc. 2.7%
Genco Shipping & Trading Ltd. 2.7%
LTC Properties, Inc. 2.6%
Cabot Oil & Gas Corp. 2.5%
ASSET ALLOCATION
----------------------------------------------------------
% OF
SECTOR NET ASSETS
----------------------------------------------------------
Consumer Discretionary 4.6%
Consumer Staples 4.0%
Energy 16.2%
Financials 16.8%
Industrials 15.6%
Information Technology 8.6%
Materials 2.9%
Telecommunication Services 1.8%
Utilities 5.5%
Cash Equivalents, Other Assets and Liabilities 24.0%
------
100.0%
======
3
THE RAM SMALL CAP FUND
SUPPLEMENTARY PORTFOLIO INFORMATION
MAY 31, 2009 (UNAUDITED)
- --------------------------------------------------------------------------------
TEN LARGEST EQUITY HOLDINGS
----------------------------------------------------------
% OF
COMPANY NET ASSETS
----------------------------------------------------------
FTI Consulting, Inc. 4.6%
EZCORP, Inc. - Class A 4.3%
Omega Healthcare Investors, Inc. 4.1%
Aegean Marine Petroleum Network, Inc. 3.5%
Cogent, Inc. 3.5%
Genco Shipping & Trading Ltd. 3.4%
LTC Properties, Inc. 3.4%
HCC Insurance Holdings, Inc. 3.2%
Hanesbrands, Inc. 3.1%
Zep, Inc. 2.9%
ASSET ALLOCATION
----------------------------------------------------------
% OF
SECTOR NET ASSETS
----------------------------------------------------------
Consumer Discretionary 7.2%
Consumer Staples 4.3%
Energy 20.1%
Financials 21.4%
Industrials 17.6%
Information Technology 9.7%
Materials 4.9%
Telecommunication Services 2.1%
Utilities 1.5%
Cash Equivalents, Other Assets and Liabilities 11.2%
------
100.0%
======
4
THE RAM SMALL/MID CAP FUND
SCHEDULE OF INVESTMENTS
MAY 31, 2009 (UNAUDITED)
================================================================================
COMMON STOCKS -- 76.0% SHARES VALUE
- --------------------------------------------------------------------------------
CONSUMER DISCRETIONARY - 4.6%
HOUSEHOLD DURABLES - 1.3%
Jarden Corp.* 888 $ 15,789
------------
MEDIA - 1.3%
John Wiley & Sons, Inc. - Class A 502 15,868
------------
TEXTILES, APPAREL & LUXURY GOODS - 2.0%
Hanesbrands, Inc.* 1,361 23,001
------------
CONSUMER STAPLES - 4.0%
FOOD PRODUCTS - 2.5%
Dean Foods Co.* 1,583 29,760
------------
PERSONAL PRODUCTS - 1.5%
Chattem, Inc.* 299 17,859
------------
ENERGY - 16.2%
ENERGY EQUIPMENT & SERVICES - 6.1%
Global Industries Ltd.* 1,959 13,713
Pride International, Inc.* 1,013 24,535
Superior Energy Services, Inc.* 1,477 34,059
------------
72,307
------------
OIL, GAS & CONSUMABLE FUELS - 10.1%
Cabot Oil & Gas Corp. 859 30,177
Comstock Resources, Inc.* 550 21,906
Holly Corp. 820 19,836
PetroHawk Energy Corp.* 1,535 38,682
StealthGas, Inc. 1,785 8,836
------------
119,437
------------
FINANCIALS - 16.8%
CONSUMER FINANCE - 2.3%
EZCORP, Inc. - Class A* 2,258 27,435
------------
INSURANCE - 6.6%
Fidelity National Financial, Inc. - Class A 1,496 20,854
HCC Insurance Holdings, Inc. 1,313 32,418
PartnerRe Ltd. 367 23,950
------------
77,222
------------
REAL ESTATE INVESTMENT TRUSTS (REITS) - 7.9%
Annaly Capital Management, Inc. 1,448 20,185
LTC Properties, Inc. 1,506 31,340
Omega Healthcare Investors, Inc. 2,075 33,138
Parkway Properties, Inc. 695 9,063
------------
93,726
------------
5
THE RAM SMALL/MID CAP FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
================================================================================
COMMON STOCKS -- 76.0% (CONTINUED) SHARES VALUE
- --------------------------------------------------------------------------------
INDUSTRIALS - 15.6%
COMMERCIAL SERVICES & SUPPLIES - 2.0%
Republic Services, Inc. 1,052 $ 23,975
------------
INDUSTRIAL CONGLOMERATES - 2.5%
McDermott International, Inc.* 1,322 29,044
------------
MARINE - 3.4%
Genco Shipping & Trading Ltd. 1,216 31,798
Omega Navigation Enterprises, Inc. - Class A 1,766 8,000
------------
39,798
------------
PROFESSIONAL SERVICES - 4.8%
FTI Consulting, Inc.* 772 38,770
Navigant Consulting, Inc.* 1,535 18,282
------------
57,052
------------
TRANSPORTATION INFRASTRUCTURE - 2.9%
Aegean Marine Petroleum Network, Inc. 2,152 34,324
------------
INFORMATION TECHNOLOGY - 8.6%
COMPUTERS & PERIPHERALS - 0.6%
Hypercom Corp.* 5,105 6,892
------------
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS - 3.0%
Cogent, Inc.* 3,503 35,205
------------
IT SERVICES - 3.7%
Lender Processing Services, Inc. 743 21,584
Wright Express Corp.* 878 21,836
------------
43,420
------------
SOFTWARE - 1.3%
Fair Isaac Corp. 898 15,787
------------
MATERIALS - 2.9%
CHEMICALS - 2.9%
Terra Industries, Inc. 762 21,176
Zep, Inc. 1,100 13,387
------------
34,563
------------
TELECOMMUNICATION SERVICES - 1.8%
DIVERSIFIED TELECOMMUNICATION SERVICES - 1.8%
Frontier Communications Corp. 2,886 21,010
------------
6
THE RAM SMALL/MID CAP FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
================================================================================
COMMON STOCKS -- 76.0% (CONTINUED) SHARES VALUE
- --------------------------------------------------------------------------------
UTILITIES - 5.5%
ELECTRIC UTILITIES - 3.2%
Allete, Inc. 733 $ 19,366
UIL Holdings Corp. 869 18,014
------------
37,380
------------
MULTI-UTILITIES - 2.3%
CMS Energy Corp. 2,451 27,795
------------
TOTAL COMMON STOCKS (Cost $833,257) $ 898,649
------------
================================================================================
MONEY MARKET FUNDS -- 16.3% SHARES VALUE
- --------------------------------------------------------------------------------
AIM Short-Term Investments Trust (The) - Treasury
Portfolio - Institutional Class, 0.158%(a)
(Cost $193,255) 193,255 $ 193,255
------------
TOTAL INVESTMENTS AT VALUE -- 92.3% (Cost $1,026,512) $ 1,091,904
OTHER ASSETS IN EXCESS OF LIABILITIES -- 7.7% 91,688
------------
NET ASSETS -- 100.0% $ 1,183,592
============
* Non-income producing security.
(a) The rate shown is the 7-day effective yield as of May 31, 2009.
See accompanying notes to financial statements.
7
THE RAM SMALL CAP FUND
SCHEDULE OF INVESTMENTS
MAY 31, 2009 (UNAUDITED)
================================================================================
COMMON STOCKS -- 88.8% SHARES VALUE
- --------------------------------------------------------------------------------
CONSUMER DISCRETIONARY - 7.2%
HOUSEHOLD DURABLES - 2.4%
Jarden Corp.* 449 $ 7,983
------------
MEDIA - 1.7%
John Wiley & Sons, Inc. - Class A 176 5,563
------------
TEXTILES, APPAREL & LUXURY GOODS - 3.1%
Hanesbrands, Inc.* 625 10,563
------------
CONSUMER STAPLES - 4.3%
FOOD PRODUCTS - 2.5%
Dean Foods Co.* 449 8,441
------------
PERSONAL PRODUCTS - 1.8%
Chattem, Inc.* 97 5,794
------------
ENERGY - 20.1%
ENERGY EQUIPMENT & SERVICES - 9.5%
Global Industries Ltd.* 733 5,131
Gulf Island Fabrication, Inc. 401 6,376
Helix Energy Solutions Group, Inc.* 585 6,581
Parker Drilling Co.* 1,099 5,143
Superior Energy Services, Inc.* 374 8,625
------------
31,856
------------
OIL, GAS & CONSUMABLE FUELS - 10.6%
Comstock Resources, Inc.* 180 7,169
DHT Maritime, Inc. 1,229 7,091
Goodrich Petroleum Corp.* 331 8,844
Holly Corp. 331 8,007
StealthGas, Inc. 866 4,287
------------
35,398
------------
FINANCIALS - 21.4%
CAPITAL MARKETS - 1.4%
Diamond Hill Investment Group, Inc.* 119 4,721
------------
CONSUMER FINANCE - 4.3%
EZCORP, Inc. - Class A* 1,171 14,228
------------
INSURANCE - 7.1%
American Safety Insurance Holdings Ltd.* 481 5,998
Fidelity National Financial, Inc. - Class A 517 7,207
HCC Insurance Holdings, Inc. 431 10,641
------------
23,846
------------
8
THE RAM SMALL CAP FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
================================================================================
COMMON STOCKS -- 88.8% (CONTINUED) SHARES VALUE
- --------------------------------------------------------------------------------
FINANCIALS - 21.4% (CONTINUED)
REAL ESTATE INVESTMENT TRUSTS (REITS) - 8.6%
LTC Properties, Inc. 550 $ 11,446
Omega Healthcare Investors, Inc. 855 13,654
Parkway Properties, Inc. 277 3,612
------------
28,712
------------
INDUSTRIALS - 17.6%
AEROSPACE & DEFENSE - 2.1%
Axsys Technologies, Inc.* 144 7,068
------------
MARINE - 4.8%
Genco Shipping & Trading Ltd. 438 11,454
Omega Navigation Enterprises, Inc. - Class A 967 4,380
------------
15,834
------------
PROFESSIONAL SERVICES - 7.2%
FTI Consulting, Inc.* 305 15,317
Navigant Consulting, Inc.* 722 8,599
------------
23,916
------------
TRANSPORTATION INFRASTRUCTURE - 3.5%
Aegean Marine Petroleum Network, Inc. 737 11,755
------------
INFORMATION TECHNOLOGY - 9.7%
COMPUTERS & PERIPHERALS - 0.7%
Hypercom Corp.* 1,697 2,291
------------
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS - 4.8%
Cogent, Inc.* 1,150 11,557
I.D. Systems, Inc.* 1,128 4,535
------------
16,092
------------
IT SERVICES - 2.2%
Wright Express Corp.* 302 7,511
------------
SOFTWARE - 2.0%
Fair Isaac Corp. 381 6,698
------------
MATERIALS - 4.9%
CHEMICALS - 4.9%
Terra Industries, Inc. 237 6,586
Zep, Inc. 801 9,748
------------
16,334
------------
TELECOMMUNICATION SERVICES - 2.1%
DIVERSIFIED TELECOMMUNICATION SERVICES - 2.1%
Frontier Communications Corp. 977 7,113
------------
9
THE RAM SMALL CAP FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
================================================================================
COMMON STOCKS -- 88.8% (CONTINUED) SHARES VALUE
- --------------------------------------------------------------------------------
UTILITIES - 1.5%
ELECTRIC UTILITIES - 1.5%
UIL Holdings Corp. 244 $ 5,058
------------
TOTAL COMMON STOCKS (Cost $278,484) $ 296,775
------------
================================================================================
MONEY MARKET FUNDS -- 6.4% SHARES VALUE
- --------------------------------------------------------------------------------
AIM Short-Term Investments Trust (The) - Treasury
Portfolio - Institutional Class, 0.158%(a)
(Cost $21,450) 21,450 $ 21,450
------------
TOTAL INVESTMENTS AT VALUE -- 95.2% (Cost $299,934) $ 318,225
OTHER ASSETS IN EXCESS OF LIABILITIES -- 4.8% 16,127
------------
NET ASSETS -- 100.0% $ 334,352
============
* Non-income producing security.
(a) The rate shown is the 7-day effective yield as of May 31, 2009.
See accompanying notes to financial statements.
10
THE RAM FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
MAY 31, 2009 (UNAUDITED)
=====================================================================================================
THE RAM THE RAM
SMALL/MID CAP SMALL CAP
FUND FUND
- -----------------------------------------------------------------------------------------------------
ASSETS
Investments in securities:
At acquisition cost $ 1,026,512 $ 299,934
============ ============
At value (Note 1) $ 1,091,904 $ 318,225
Receivable for investment securities sold -- 6,242
Receivable for capital shares sold 202,702 --
Receivable from Adviser (Note 2) 22,895 16,717
Dividends receivable 433 48
Other assets 5,837 6,416
------------ ------------
TOTAL ASSETS 1,323,771 347,648
------------ ------------
LIABILITIES
Payable for investment securities purchased 127,280 3,851
Payable to Administrator (Note 2) 6,000 4,600
Accrued distribution fees (Note 2) 103 --
Other accrued expenses 6,796 4,845
------------ ------------
TOTAL LIABILITIES 140,179 13,296
------------ ------------
NET ASSETS $ 1,183,592 $ 334,352
============ ============
NET ASSETS CONSIST OF:
Paid-in capital $ 1,115,524 $ 316,131
Accumulated undistributed net investment income 1,557 1,118
Accumulated net realized gains (losses) from security transactions 1,119 (1,188)
Net unrealized appreciation on investments 65,392 18,291
------------ ------------
NET ASSETS $ 1,183,592 $ 334,352
============ ============
PRICING OF CLASS A SHARES
Net assets applicable to Class A shares $ 1,072,077 $ 334,352
============ ============
Shares of beneficial interest outstanding (unlimited
number of shares authorized, no par value) 95,937 32,110
============ ============
Net asset value and redemption price per share (Note 1) $ 11.17 $ 10.41
============ ============
Maximum offering price per share (Note 1) $ 11.64 $ 10.84
============ ============
PRICING OF CLASS I SHARES
Net assets applicable to Class I shares $ 111,515
============
Shares of beneficial interest outstanding (unlimited
number of shares authorized, no par value) 9,974
============
Net asset value, offering price and redemption price per share (Note 1) $ 11.18
============
See accompanying notes to financial statements.
11
THE RAM FUNDS
STATEMENTS OF OPERATIONS
FOR THE PERIOD ENDED MAY 31, 2009(a) (UNAUDITED)
=====================================================================================================
THE RAM THE RAM
SMALL/MID CAP SMALL CAP
FUND FUND
- -----------------------------------------------------------------------------------------------------
INVESTMENT INCOME
Dividends $ 4,625 $ 2,945
------------ ------------
EXPENSES
Investment advisory fees (Note 2) 1,643 959
Fund accounting fees (Note 2) 11,456 10,652
Administration fees (Note 2) 8,516 8,516
Transfer agent fees - Class A (Note 2) 5,323 5,323
Transfer agent fees - Class I (Note 2) 2,000 --
Custody and bank service fees 6,240 3,832
Compliance service fees (Note 2) 5,000 5,000
Professional fees 4,900 4,900
Registration fees - Common 680 956
Registration fees - Class A 1,000 --
Registration fees - Class I 500 --
Trustees' fees 1,000 1,000
Insurance expense 808 808
Distribution expense - Class A (Note 2) 459 282
Other expenses 5,802 4,889
------------ ------------
TOTAL EXPENSES 55,327 47,117
Fee reductions and expense reimbursements by the Adviser (Note 2):
Common (47,339) (45,650)
Class A (3,000) --
Class I (2,500) --
------------ ------------
NET EXPENSES 2,488 1,467
------------ ------------
NET INVESTMENT INCOME 2,137 1,478
------------ ------------
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS
Net realized gains (losses) from security transactions 1,119 (1,188)
Net change in unrealized appreciation (depreciation) on investments 65,392 18,291
------------ ------------
NET REALIZED AND UNREALIZED GAINS ON INVESTMENTS 66,511 17,103
------------ ------------
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 68,648 $ 18,581
============ ============
(a) Represents the period from the commencement of operations (December 22,
2008) through May 31, 2009.
See accompanying notes to financial statements.
12
THE RAM SMALL/MID CAP FUND
STATEMENT OF CHANGES IN NET ASSETS
=====================================================================================
PERIOD
ENDED
MAY 31,
2009(a)
(UNAUDITED)
- -------------------------------------------------------------------------------------
FROM OPERATIONS
Net investment income $ 2,137
Net realized gains from security transactions 1,119
Net change in unrealized appreciation (depreciation) on investments 65,392
------------
Net increase in net assets from operations 68,648
------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
From net investment income, Class A (580)
------------
FROM CAPITAL SHARE TRANSACTIONS
CLASS A
Proceeds from shares sold 1,082,050
Reinvestment of distributions to shareholders 580
Payments for shares redeemed (71,697)
------------
Net increase in net assets from Class A capital share transactions 1,010,933
------------
CLASS I
Proceeds from shares sold 104,591
------------
TOTAL INCREASE IN NET ASSETS 1,183,592
NET ASSETS
Beginning of period --
------------
End of period $ 1,183,592
============
ACCUMULATED UNDISTRIBUTED NET INVESTMENT INCOME $ 1,557
============
SUMMARY OF CAPITAL SHARE ACTIVITY
CLASS A
Shares sold 103,029
Shares issued in reinvestment of distributions to shareholders 55
Shares redeemed (7,147)
------------
Net increase in shares outstanding 95,937
Shares outstanding, beginning of period --
------------
Shares outstanding, end of period 95,937
============
CLASS I
Shares sold 9,974
Shares outstanding, beginning of period --
------------
Shares outstanding, end of period 9,974
============
(a) Represents the period from the commencement of operations (December 22,
2008 for Class A shares and April 1, 2009 for Class I shares) through May
31, 2009.
See accompanying notes to financial statements.
13
THE RAM SMALL CAP FUND
STATEMENT OF CHANGES IN NET ASSETS
=====================================================================================
PERIOD
ENDED
MAY 31,
2009(a)
(UNAUDITED)
- -------------------------------------------------------------------------------------
FROM OPERATIONS
Net investment income $ 1,478
Net realized losses from security transactions (1,188)
Net change in unrealized appreciation (depreciation) on investments 18,291
------------
Net increase in net assets from operations 18,581
------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
From net investment income (360)
------------
FROM CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold 315,811
Reinvestment of distributions to shareholders 360
Payments for shares redeemed (40)
------------
Net increase in net assets from capital share transactions 316,131
------------
TOTAL INCREASE IN NET ASSETS 334,352
NET ASSETS
Beginning of period --
------------
End of period $ 334,352
============
ACCUMULATED UNDISTRIBUTED NET INVESTMENT INCOME $ 1,118
============
SUMMARY OF CAPITAL SHARE ACTIVITY
Shares sold 32,080
Shares issued in reinvestment of distributions to shareholders 34
Shares redeemed (4)
------------
Net increase in shares outstanding 32,110
Shares outstanding, beginning of period --
------------
Shares outstanding, end of period 32,110
============
(a) Represents the period from the commencement of operations (December 22,
2008) through May 31, 2009.
See accompanying notes to financial statements.
14
THE RAM SMALL/MID CAP FUND - CLASS A
FINANCIAL HIGHLIGHTS
================================================================================
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD:
- --------------------------------------------------------------------------------
PERIOD
ENDED
MAY 31,
2009(a)
(UNAUDITED)
- --------------------------------------------------------------------------------
Net asset value at beginning of period $ 10.00
------------
Income from investment operations:
Net investment income 0.05
Net realized and unrealized gains on investments 1.15
------------
Total from investment operations 1.20
------------
Less distributions:
From net investment income (0.03)
------------
Net asset value at end of period $ 11.17
============
Total return (b) 12.01%(c)
============
Net assets at end of period (000's) $ 1,072
============
Ratio of net expenses to average net assets (d) 1.30%(e)
Ratio of net investment income to average net assets 1.13%(e)
Portfolio turnover rate 6%(c)
(a) Represents the period from the commencement of operations (December 22,
2008) through May 31, 2009.
(b) Total return is a measure of the change in value of an investment in the
Fund over the period covered, which assumes any dividends or capital gains
distributions are reinvested in shares of the Fund. The return shown does
not reflect the deduction of taxes a shareholder would pay on Fund
distributions or the redemption of Fund shares. Total return shown does
not include the effect of applicable sales loads.
(c) Not annualized.
(d) Absent fee reductions and expense reimbursements by the Adviser, the ratio
of expenses to average net assets would have been 27.32%(e).
(e) Annualized.
See accompanying notes to financial statements.
15
THE RAM SMALL/MID CAP FUND - CLASS I
FINANCIAL HIGHLIGHTS
================================================================================
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD:
- --------------------------------------------------------------------------------
PERIOD
ENDED
MAY 31,
2009(a)
(UNAUDITED)
- --------------------------------------------------------------------------------
Net asset value at beginning of period $ 9.94
------------
Income from investment operations:
Net investment income 0.00(b)
Net realized and unrealized gains on investments 1.24
------------
Total from investment operations 1.24
------------
Net asset value at end of period $ 11.18
============
Total return (c) 12.47%(d)
============
Net assets at end of period (000's) $ 112
============
Ratio of net expenses to average net assets (e) 1.05%(f)
Ratio of net investment income to average net assets 0.21%(f)
Portfolio turnover rate 6%(d)
(a) Represents the period from the commencement of operations (April 1, 2009)
through May 31, 2009.
(b) Amount rounds to less than $0.01 per share.
(c) Total return is a measure of the change in value of an investment in the
Fund over the period covered, which assumes any dividends or capital gains
distributions are reinvested in shares of the Fund. The return shown does
not reflect the deduction of taxes a shareholder would pay on Fund
distributions or the redemption of Fund shares.
(d) Not annualized.
(e) Absent fee reductions and expense reimbursements by the Adviser, the ratio
of expenses to average net assets would have been 43.66%(f).
(f) Annualized.
See accompanying notes to financial statements.
16
THE RAM SMALL CAP FUND - CLASS A
FINANCIAL HIGHLIGHTS
================================================================================
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD:
- --------------------------------------------------------------------------------
PERIOD
ENDED
MAY 31,
2009(a)
(UNAUDITED)
- --------------------------------------------------------------------------------
Net asset value at beginning of period $ 10.00
------------
Income from investment operations:
Net investment income 0.05
Net realized and unrealized gains on investments 0.38
------------
Total from investment operations 0.43
------------
Less distributions:
From net investment income (0.02)
------------
Net asset value at end of period $ 10.41
============
Total return (b) 4.28%(c)
============
Net assets at end of period (000's) $ 334
============
Ratio of net expenses to average net assets (d) 1.30%(e)
Ratio of net investment income to average net assets 1.30%(e)
Portfolio turnover rate 19%(c)
(a) Represents the period from the commencement of operations (December 22,
2008) through May 31, 2009.
(b) Total return is a measure of the change in value of an investment in the
Fund over the period covered, which assumes any dividends or capital gains
distributions are reinvested in shares of the Fund. The return shown does
not reflect the deduction of taxes a shareholder would pay on Fund
distributions or the redemption of Fund shares. Total return shown does
not include the effect of applicable sales load.
(c) Not annualized.
(d) Absent fee reductions and expense reimbursements by the Adviser, the ratio
of expenses to average net assets would have been 41.42%(e).
(e) Annualized.
See accompanying notes to financial statements.
17
THE RAM FUNDS
NOTES TO FINANCIAL STATEMENTS
MAY 31, 2009 (UNAUDITED)
================================================================================
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
The RAM Small/Mid Cap Fund and the RAM Small Cap Fund (individually a "Fund,"
collectively, the "Funds") are each a diversified series of The RAM Funds (the
"Trust"), an open-end management investment company established as an Ohio
business trust under a Declaration of Trust dated December 20, 2007. Class A
shares of the Funds commenced operations on December 22, 2008. Class I shares of
the RAM Small/Mid Cap Fund commenced operations on April 1, 2009.
Each Fund seeks to achieve long-term capital appreciation.
The RAM Small/Mid Cap Fund offers two classes of shares: Class A shares (sold
subject to a maximum front-end sales load of 4% and a distribution fee of up to
0.25% of the average daily net assets attributable to Class A shares) and Class
I shares (sold without any sales loads or distribution fees). Each class of
shares represents an interest in the same assets of the Fund, has the same
rights and is identical in all material respects except that: (1) Class A shares
bear the expenses of distribution fees; (2) certain other class-specific
expenses will be borne solely by the class to which such expenses are
attributable; (3) each class has exclusive voting rights with respect to matters
relating to its own distribution arrangements; and (4) Class I shares require an
initial investment of $100,000.
The following is a summary of the Funds' significant accounting policies:
VALUATION OF SECURITIES
The Funds' portfolio securities are valued at market value as of the close of
regular trading on the New York Stock Exchange ("NYSE") (normally, 4:00 p.m.
Eastern time) on each business day the NYSE is open. Securities listed on the
NYSE or other exchanges are valued on the basis of their last sale prices on the
exchanges on which they are primarily traded. If there are no sales on that day,
the securities are valued at the closing bid price on the NYSE or other primary
exchange for that day. NASDAQ listed securities are valued at the NASDAQ
Official Closing Price. If there are no sales on that day, the securities are
valued at the last bid price as reported by NASDAQ. Securities traded in the
over-the-counter market are valued at the last sales price, if available,
otherwise at the mean of the closing bid and ask prices. In the event that
market quotations are not readily available, securities and other assets are
valued at fair value as determined in good faith in accordance with procedures
adopted by the Board of Trustees of the Trust. Debt securities will be valued at
their current market value when available or at their fair value, which for
securities with remaining maturities of 60 days or less has been determined in
good faith by the Board of Trustees to be represented by amortized cost value,
absent unusual circumstances.
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.
As of May 31, 2009, all of the inputs used to value the Funds' investments were
Level 1; therefore, neither Fund held any Level 2 or Level 3 securities.
18
THE RAM FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
SHARE VALUATION
The net asset value per share of each class of shares of each Fund is calculated
daily by dividing the total value of the assets attributable to that class, less
liabilities attributable to that class, by the number of shares of that class
outstanding, rounded to the nearest cent. The maximum offering price per share
of Class A shares of each Fund is equal to the net asset value per share plus a
sales load equal to 4.17% of the net asset value (or 4% of the offering price).
The offering price of Class I shares is equal to the net asset value per share.
The redemption price per share of each class of shares of each Fund is equal to
the net asset value per share.
INVESTMENT INCOME
Dividend income is recorded on the ex-dividend date. Interest income is
recognized on the accrual basis. Discounts and premiums on fixed income
securities purchased are amortized using the interest method.
SECURITY TRANSACTIONS
Security transactions are accounted for on the trade date. Gains and losses on
securities sold are determined on a specific identification basis.
DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders arising from net investment income and net
realized capital gains, if any, are declared and paid annually by each Fund in
December. The amount of distributions from net investment income and net
realized gains are determined in accordance with federal income tax regulations
which may differ from accounting principles generally accepted in the United
States of America and are recorded on the ex-dividend date. During the period
ended May 31, 2009, the RAM Small/Mid Cap Fund and the RAM Small Cap Fund paid
ordinary dividends of $580 and $360, respectively.
ALLOCATIONS BETWEEN CLASSES
Investment income earned, realized capital gains and losses, and unrealized
appreciation and depreciation are allocated daily to each class of shares based
upon its proportionate share of total net assets of the Fund. Class specific
expenses are charged directly to the class incurring the expense. Common
expenses which are not attributable to a specific class are allocated daily to
each class of shares based upon its proportionate share of total net assets of
the Fund.
ESTIMATES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities at the date of
the financial statements and the reported amounts of income and expenses during
the reporting period. Actual results could differ from those estimates.
FEDERAL INCOME TAX
It is each Fund's policy to comply with the special provisions of Subchapter M
of the Internal Revenue Code applicable to regulated investment companies. As
provided therein, in any fiscal year in which a Fund so qualifies and
distributes at least 90% of its taxable net income, the Fund (but not the
shareholders) will be relieved of federal income tax on the income distributed.
Accordingly, no provision for income taxes has been made.
In order to avoid imposition of the excise tax applicable to regulated
investment companies, it is also each Fund`s intention to declare and pay as
dividends in each calendar year at least 98% of its net investment income
(earned during the calendar year) and 98% of its net realized capital gains
(earned during the twelve months ended October 31) plus undistributed amounts
from prior years.
19
THE RAM FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
The following information is computed on a tax basis for each item as of May 31,
2009:
- --------------------------------------------------------------
The RAM The RAM
Small/Mid Cap Small Cap
Fund Fund
- --------------------------------------------------------------
Cost of portfolio investments $ 1,027,302 $ 300,477
============ ============
Gross unrealized appreciation $ 97,179 $ 39,719
Gross unrealized depreciation (32,577) (21,971)
------------ ------------
Net unrealized appreciation 64,602 17,748
Accumulated ordinary income 3,466 1,118
Other losses -- (645)
------------ ------------
Distributable earnings $ 68,068 $ 18,221
============ ============
The difference between the federal income tax cost of portfolio investments and
the financial statement cost for each Fund is due to timing differences in the
recognition of capital gains or losses under income tax regulations and
accounting principles generally accepted in the United States of America. These
"book/tax" differences are temporary in nature and are due to the tax deferral
of losses on wash sales.
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 the Funds' tax
returns to determine whether the tax positions are "more-likely-than-not" of
being sustained by the applicable tax authority. Tax positions not deemed to
meet the "more-likely-than-not" threshold would be recorded as a tax benefit or
expense in the current year. Based on management's analysis, the application of
FIN 48 does not have a material impact on these financial statements.
2. INVESTMENT ADVISORY AGREEMENT AND TRANSACTIONS WITH RELATED PARTIES
Certain Trustees and officers of the Trust are affiliated with Riazzi Asset
Management, LLC (the "Adviser"), or with Ultimus Fund Solutions, LLC
("Ultimus"), the Funds' administrator, transfer agent and fund accounting agent,
and Ultimus Fund Distributors, LLC (the "Distributor"), the Funds' principal
underwriter.
INVESTMENT ADVISORY AGREEMENT
Under the terms of an Investment Advisory Agreement between the Trust and the
Adviser, the Adviser serves as the investment adviser to each Fund. For its
services, each Fund pays the Adviser a monthly fee computed at the annual rate
of 0.85% of its average daily net assets. The Adviser has contractually agreed
for a period of three years from the Funds' commencement of operations to reduce
its investment advisory fees and to reimburse expenses to the extent necessary
to limit annual ordinary operating expenses of the RAM Small/Mid Cap Fund's
Class A and Class I shares to 1.30% and 1.05%, respectively, of average daily
net assets and to limit annual ordinary operating expenses of the Ram Small Cap
Fund to 1.30% of average daily net assets. This contractual obligation expires
on December 22, 2011. For the period ended May 31, 2009, the Adviser waived its
entire investment advisory fee of $1,643 and reimbursed $45,696 of common
expenses, $3,000 of Class A expenses and $2,500 of Class I expenses with respect
to the RAM Small/Mid Cap Fund; and the Adviser waived its entire investment
advisory fee of $959 and reimbursed $44,691 of common expenses with respect to
the RAM Small Cap Fund.
20
THE RAM FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
Any such fee reductions or expense reimbursements by the Adviser are subject to
recovery by the Adviser for a period of three years after such fees and expenses
were incurred, provided that the recovery does not cause the Fund's ordinary
operating expenses to exceed the foregoing expense limits. As of May 31, 2009,
the Adviser may in the future recover fee reductions and expense reimbursements
totaling $52,839 and $45,650 for the RAM Small/Mid Cap Fund and the RAM Small
Cap Fund, respectively. The Adviser may recover these amounts no later than May
31, 2012.
ADMINISTRATION AGREEMENT
Under the terms of an Administration Agreement, Ultimus supplies non-investment
related administrative and compliance services for each Fund. Ultimus supervises
the preparation of tax returns, reports to shareholders, reports to and filings
with the Securities and Exchange Commission and state securities commissions and
materials for meetings of the Board of Trustees. For these services, Ultimus
receives a monthly fee from each Fund at an annual rate of 0.15% of its average
daily net assets up to $50 million; 0.125% of such assets between $50 million
and $100 million; 0.10% of such assets between $100 million and $250 million;
0.075% of such assets between $250 million and $500 million; and 0.05% of such
assets in excess of $500 million, subject to a minimum monthly fee of $2,000.
The fee payable to Ultimus is discounted by 20% during the first year of each
Fund's operations and 15% during the second year of operations, or until such
time as a Fund's net assets reach $20 million, but in no event later than two
years from the date of commencement of operations.
ACCOUNTING SERVICES AGREEMENT
Under the terms of an Accounting Services Agreement, Ultimus calculates the
daily net asset value per share and maintains the financial books and records of
each Fund. For these services, the RAM Small/Mid Cap Fund pays Ultimus a base
fee of $3,000 per month plus an asset-based fee of 0.01% of average daily net
assets and the RAM Small Cap Fund pays Ultimus a base fee of $2,500 per month
plus an asset-based fee of 0.01%. The base fee payable to Ultimus is discounted
by 20% during the first year of each Fund's operations and 15% during the second
year of operations, or until such time as a Fund's net assets reach $20 million,
but in no event later than two years from the date of commencement of
operations. In addition, the Funds pay all costs of external pricing services.
TRANSFER AGENT AGREEMENT
Under the terms of a Transfer Agent and Shareholder Services Agreement, Ultimus
maintains the records of each shareholder's account, answers shareholders'
inquiries concerning their accounts, processes purchases and redemptions of 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 at an annual rate of $20 per shareholder account, subject to a
monthly minimum fee of $1,500 for a share class with 100 or more shareholder
accounts. For a share class with 25 accounts or less the minimum fee is $1,000
per month and the minimum fee is $1,250 for a share class with more than 25 but
less than 100 shareholder accounts. In addition, the Funds reimburse Ultimus for
out-of-pocket expenses including, but not limited to, postage and supplies.
DISTRIBUTION AGREEMENT
Under the terms of a Distribution Agreement, the Distributor provides
distribution services to the Trust and serves as principal underwriter to the
Funds. The Distributor is a wholly owned subsidiary of Ultimus. The Distributor
receives annual compensation of $6,000 for such services. In addition, during
the period ended May 31, 2009, the Distributor earned $417 and $0 of
underwriting commissions on the sale of Class A shares of the RAM Small/Mid Cap
Fund and RAM Small Cap Fund, respectively.
21
THE RAM FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
PLANS OF DISTRIBUTION
The Trust has adopted a plan of distribution (the "Plan") under which Class A
shares of the Funds may directly incur or reimburse the Adviser or the
Distributor for certain expenses related to the distribution of Class A shares.
The annual limitation for payment of expenses pursuant to the Plan is 0.25% of
each Fund's average daily net assets attributable to Class A shares. During the
period ended May 31, 2009, the Class A shares of RAM Small/Mid Cap Fund and RAM
Small Cap Fund incurred distribution related expenses of $459 and $282,
respectively, under the Plan.
3. BENEFICIAL OWNERSHIP OF FUND SHARES
The beneficial ownership, either directly or indirectly, of more than 25% of the
voting securities of a Fund creates a presumption of control of the Fund under
Section 2(a)(9) of the Investment Company Act of 1940. As of May 31, 2009,
Michelle E. Stevens owned 50.43% of the outstanding shares of Class I shares of
the RAM Small/Mid Cap Fund and 62.39% of the outstanding shares of the RAM Small
Cap Fund.
4. INVESTMENT TRANSACTIONS
During the period ended May 31, 2009, cost of purchases and proceeds from sales
and maturities of investment securities, other than short-term investments and
U.S. government securities, amounted to $858,177 and $26,039, respectively, for
the RAM Small/Mid Cap Fund and $324,208 and $44,535, respectively, for the RAM
Small Cap Fund.
5. CONTINGENCIES AND COMMITMENTS
The Funds indemnify the Trust's officers and Trustees for certain liabilities
that might arise from their performance of their duties to the Funds.
Additionally, in the normal course of business each Fund enters into contracts
that contain a variety of representations and warranties and which provide
general indemnifications. The Funds' maximum exposure under these arrangements
is unknown, as this would involve future claims that may be made against the
Funds that have not yet occurred. However, based on experience, the Funds expect
the risk of loss to be remote.
22
THE RAM FUNDS
ABOUT YOUR FUNDS' EXPENSES (UNAUDITED)
================================================================================
We believe it is important for you to understand the impact of costs on your
investment. As a shareholder of the Funds, you incur two types of costs: (1)
transaction costs, possibly including front-end sales loads and (2) ongoing
costs, including management fees and other Fund expenses. The following examples
are intended to help you understand your ongoing costs (in dollars) of investing
in the Funds and to compare these costs with the ongoing costs of investing in
other mutual funds.
A mutual fund's ongoing costs are expressed as a percentage of its average net
assets. This figure is known as the expense ratio. The ongoing costs reflected
in the tables below are based on an investment of $1,000 made at the beginning
of the period and held until the end of the period (May 31, 2009).
The tables that follow illustrate each Fund's costs in two ways:
ACTUAL FUND RETURN - This section helps you to estimate the actual expenses that
you paid over the period. The "Ending Account Value" shown is derived from each
Fund's actual return, and the third column shows the dollar amount of operating
expenses that would have been paid by an investor who started with $1,000 in the
Funds. You may use the information here, together with the amount you invested,
to estimate the expenses that you paid over the period.
To do so, simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
given for the Fund under the heading "Expenses Paid During Period."
HYPOTHETICAL 5% RETURN - This section is intended to help you compare the Funds'
costs with those of other mutual funds. It assumes that each Fund had an annual
return of 5% before expenses during the period shown, but that the expense ratio
is unchanged. In this case, because the return used is not the Funds' actual
return, the results do not apply to your investment. The example is useful in
making comparisons because the Securities and Exchange Commission requires all
mutual funds to calculate expenses based on a 5% return. You can assess each
Fund's costs by comparing this hypothetical example with the hypothetical
examples that appear in shareholder reports of other funds.
Note that expenses shown in the table are meant to highlight and help you
compare ongoing costs only. The calculations below assume no shares were bought
or sold during the period. Your actual costs may have been higher or lower,
depending on the amount of your investment and the timing of any purchases or
redemptions.
More information about each Fund's expenses, including annualized expense
ratios, can be found in this report. For additional information on operating
expenses and other shareholder costs, please refer to the Funds' prospectus.
- --------------------------------------------------------------------------------
Beginning Ending Expenses
Account Value Account Value Paid
December 22, May 31, During
THE RAM SMALL/MID CAP FUND-CLASS A 2008 2009 Period*
- --------------------------------------------------------------------------------
Based on Actual Fund Return $1,000.00 $1,120.10 $ 6.04
Based on Hypothetical 5% Return $1,000.00 $1,016.22 $ 5.74
- --------------------------------------------------------------------------------
* Expenses are equal to the RAM Small/Mid Cap Fund - Class A's annualized
expense ratio of 1.30% for the period, multiplied by the average account
value over the period, multiplied by 160/365 (to reflect the period
covered by this report).
23
THE RAM FUNDS
ABOUT YOUR FUNDS' EXPENSES (UNAUDITED) (CONTINUED)
================================================================================
- --------------------------------------------------------------------------------
Beginning Ending Expenses
Account Value Account Value Paid
April 1, May 31, During
THE RAM SMALL/MID CAP FUND-CLASS I 2009 2009 Period*
- --------------------------------------------------------------------------------
Based on Actual Fund Return $1,000.00 $1,124.70 $ 1.83
Based on Hypothetical 5% Return $1,000.00 $1,006.49 $ 1.73
- --------------------------------------------------------------------------------
* Expenses are equal to the RAM Small/Mid Cap Fund - Class I's annualized
expense ratio of 1.05% for the period, multiplied by the average account
value over the period, multiplied by 60/365 (to reflect the period covered
by this report).
- --------------------------------------------------------------------------------
Beginning Ending Expenses
Account Value Account Value Paid
December 22, May 31, During
THE RAM SMALL CAP FUND 2008 2009 Period*
- --------------------------------------------------------------------------------
Based on Actual Fund Return $1,000.00 $1,042.80 $ 5.82
Based on Hypothetical 5% Return $1,000.00 $1,016.22 $ 5.74
- --------------------------------------------------------------------------------
* Expenses are equal to the RAM Small Cap Fund's annualized expense ratio of
1.30% for the period, multiplied by the average account value over the
period, multiplied by 160/365 (to reflect the period covered by this
report).
OTHER INFORMATION (UNAUDITED)
A description of the policies and procedures that the Funds use to vote proxies
relating to portfolio securities is available without charge upon request by
calling toll-free 1-888-884-8099, or on the Securities and Exchange Commission's
("SEC") website at http://www.sec.gov. Information regarding how the Funds voted
proxies relating to portfolio securities during the most recent 12-month period
ended June 30 is also available without charge upon request by calling toll-free
1-888-884-8099, or on the SEC's website at http://www.sec.gov.
The Trust files a complete listing of portfolio holdings for each of the Funds
with the SEC as of the first and third quarters of each fiscal year on Form N-Q.
These filings are available free of charge, upon request, by calling
1-888-884-8099. Furthermore, you may obtain a copy of these filings on the SEC's
website at http://www.sec.gov. The Trust's Forms N-Q may also be reviewed and
copied at the SEC's Public Reference Room in Washington, DC, and information on
the operation of the Public Reference Room may be obtained by calling
1-800-SEC-0330.
24
THE RAM FUNDS
APPROVAL OF INVESTMENT ADVISORY AGREEMENTS (UNAUDITED)
================================================================================
The Board of Trustees, including the Independent Trustees voting separately,
reviewed and approved each Fund's Investment Advisory Agreement with Riazzi
Asset Management, LLC (the "Adviser") at an in-person meeting held on October
23, 2008, at which all of the Trustees were present.
In the course of their deliberations, the Independent Trustees were advised by
independent counsel of their obligations in determining to approve the
Investment Advisory Agreements. The Trustees received and reviewed a substantial
amount of information provided by the Adviser in response to requests of the
Trustees and counsel.
In considering the Investment Advisory Agreements and reaching their conclusions
with respect thereto, the Trustees reviewed and analyzed various factors that
they determined were relevant, including the factors described below.
NATURE, EXTENT AND QUALITY OF SERVICES
- --------------------------------------
The Trustees considered various data and information regarding the nature,
extent and quality of services provided by the Adviser, including the Adviser's
most recent investment adviser registration form ("Form ADV"). They noted that
they were familiar with the qualifications, background and responsibilities of
Michelle E. Stevens, who will oversee the day-to-day investment management and
operations of the Funds. The Trustees reviewed the performance record of Ms.
Stevens during her management of the Transamerica Small/Mid Cap Value Fund and
the Transamerica Premier Institutional Small Cap Value Fund and compared such
performance against the returns of the Russell 2500 Value Index and the Russell
2000 Value Index, respectively. The Trustees were mindful that the investment
process that will be used by the Adviser in managing the Small/Mid Cap Fund and
the Small Cap Fund is similar to that used in managing the Transamerica Funds
and they were satisfied with the performance record achieved by the Transamerica
Funds. The Trustees noted Ms. Stevens' proficiency in small- and mid-cap value
investing and her reputation within the investment community. The Trustees were
also mindful that the portfolio management team utilized by Ms. Stevens and the
research available in managing the Small/Mid Cap Fund and the Small Cap Fund is
the same as was used in managing the Transamerica Funds. The Board concluded
that it was satisfied with the nature, extent and quality of the investment
advisory services to be provided to the Funds by the Adviser.
EXPENSES AND PERFORMANCE
- ------------------------
The Board of Trustees considered statistical information regarding each Fund's
projected expense ratio and its various components, including projected advisory
fees and fee reductions and/or expense reimbursements. It also considered
comparisons of these fees to the expense information for each Fund's peer group,
as determined by the Adviser. The Small/Mid Cap Fund's overall expense ratio,
after contractual fee reductions, was compared to funds within the Morningstar
category of "mid cap value funds." The Trustees noted that the overall expense
ratio of Class A shares of the Small/Mid Cap Fund, after contractual fee
reductions, will be lower than the average expense ratio of mid cap value funds
within its Morningstar category. The Small Cap Fund's overall expense ratio,
after contractual fee reductions, was compared to funds within the Morningstar
category of "small cap value funds." The Trustees noted that the overall expense
ratio of Class A shares of the Small Cap Fund, after fee reductions, will be
lower than the average expense ratio of small cap value funds within its
Morningstar category. The Trustees also observed that, under the Expense
Limitation Agreements with the Adviser, shareholders of each Fund are guaranteed
a competitive expense ratio during the infancy stages (first three years) of the
Funds. The Trustees noted that because the Funds have yet not commenced
operations, they do not have a performance record to consider.
25
THE RAM FUNDS
APPROVAL OF INVESTMENT ADVISORY AGREEMENTS (UNAUDITED)
(CONTINUED)
================================================================================
INVESTMENT ADVISORY FEE RATES
- -----------------------------
The Trustees reviewed and considered the proposed contractual investment
advisory fee rate payable by each Fund to the Adviser for investment advisory
services. Additionally, the Trustees received and considered information
comparing the advisory fee rate of each Fund with those of the other funds in
its relevant peer group, as defined above. The Trustees found that although the
advisory fee rate for the Small/Mid Cap Fund (0.85% per annum) was slightly
higher than the average rate presented for its peer group (0.74% per annum), the
advisory fee rate was appropriate given the portfolio manager's performance
record. The Trustees noted that the advisory fee rate for the Small Cap Fund
(0.85% per annum) was lower than the average rate presented for its peer group
(0.87% per annum).
PROFITABILITY
- -------------
The Board reviewed the balance sheet of the Adviser for its most recent fiscal
year and was satisfied with the Adviser's financial condition. The Trustees
discussed the level of Fund assets necessary for the Adviser to earn a profit
with respect to its activities on behalf of the Funds, the projected profits of
the Adviser and the other ancillary benefits that the Adviser may receive with
regard to providing advisory services to the Funds and concluded that, in light
of the fact that the Funds are new, with limited assets, these factors are not
significant to their deliberations at this time.
ECONOMIES OF SCALE
- ------------------
The Trustees discussed economies of scale, noting that at this stage, the Funds
have not had an opportunity to recognize any economies of scale. The Trustees
observed that as the Funds grow in assets, this factor will become more relevant
to their consideration process.
CONCLUSION
- ----------
After full consideration of the above factors as well as other factors, the
Trustees, including all of the Independent Trustees, unanimously concluded that
approval of the Investment Advisory Agreements was in the best interest of each
Fund and its shareholders.
26
ITEM 2. CODE OF ETHICS.
Not required
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not required
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not required
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable
ITEM 6. SCHEDULE OF INVESTMENTS.
Not applicable [schedule filed with Item 1]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The registrant's Committee of Independent Trustees shall review shareholder
recommendations to fill vacancies on the registrant's board of trustees if such
recommendations are submitted in writing, addressed to the Committee at the
registrant's offices and meet any minimum qualifications adopted by the
Committee. The Committee may adopt, by resolution, a policy regarding its
procedures for considering candidates for the board of trustees, including any
recommended by shareholders.
ITEM 11. CONTROLS AND PROCEDURES.
(a) Based on their evaluation of the registrant's disclosure controls and
procedures (as defined in Rule 30a-3(c) under the Investment Company Act of
1940) as of a date within 90 days of the filing date of this report, the
registrant's principal executive officer and principal financial officer have
concluded that such disclosure controls and procedures are reasonably designed
and are operating effectively to ensure that material information relating to
the registrant, including its consolidated subsidiaries, is made known to them
by others within those entities, particularly during the period in which this
report is being prepared, and that the information required in filings on Form
N-CSR is recorded, processed, summarized, and reported on a timely basis.
(b) There were no changes in the registrant's internal control over financial
reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940)
that occurred during the second fiscal quarter of the period covered by this
report that have materially affected, or are reasonably likely to materially
affect, the registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
File the exhibits listed below as part of this Form. Letter or number the
exhibits in the sequence indicated.
(a)(1) Any code of ethics, or amendment thereto, that is the subject of the
disclosure required by Item 2, to the extent that the registrant intends to
satisfy the Item 2 requirements through filing of an exhibit: Not required
(a)(2) A separate certification for each principal executive officer and
principal financial officer of the registrant as required by Rule 30a-2(a) under
the Act (17 CFR 270.30a-2(a)): Attached hereto
(a)(3) Any written solicitation to purchase securities under Rule 23c-1 under
the Act (17 CFR 270.23c-1) sent or given during the period covered by the report
by or on behalf of the registrant to 10 or more persons: Not applicable
(b) Certifications required by Rule 30a-2(b) under the Act (17 CFR
270.30a-2(b)): Attached hereto
Exhibit 99.CERT Certifications required by Rule 30a-2(a) under the Act
Exhibit 99.906CERT Certifications required by Rule 30a-2(b) under the Act
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) The RAM Funds
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By (Signature and Title)* /s/ John C. Riazzi
--------------------------------------------------
John C. Riazzi, President
Date July 30, 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/ John C. Riazzi
--------------------------------------------------
John C. Riazzi, President
Date July 30, 2009
---------------------------
By (Signature and Title)* /s/ Mark J. Seger
-----------------------------------------------------
Mark J. Seger, Treasurer
Date July 30, 2009
---------------------------
* Print the name and title of each signing officer under his or her signature.