N-Q 1 pennavenq.htm SEC FILING

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM N-Q

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED

MANAGEMENT INVESTMENT COMPANY

 

Investment Company Act file number 811-21253

 

Pennsylvania Avenue Funds

(Exact name of registrant as specified in charter)

260 Water St ,  Brooklyn, NY  11201

(Address of principal executive offices) (Zip code)

 

Registrant’s telephone number, including area code:(202) 294-8887

Date of fiscal year end: 12/31

Date of reporting period: 9/30/2009

 

Form N-Q is to be used by management investment companies, other than small business investment companies registered on Form N-5 (§§ 239.24 and 274.5 of this chapter), to file reports with the Commission, not later than 60 days after the close of the first and third fiscal quarters, pursuant to rule 30b1-5 under the Investment Company Act of 1940 (17 CFR 270.30b1-5). The Commission may use the information provided on Form N-Q in its regulatory, disclosure review, inspection, and policymaking roles.

A registrant is required to disclose the information specified by Form N-Q, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-Q 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 the 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. § 3507.

Item 1. Schedule of Investments.

      

 

 

Pennsylvania Avenue Fund

 

  
  

Schedule of Investments

   

 

 

September 30, 2009 (Unaudited)

 

  
      

Shares

  

Value

  
      

COMMON STOCKS - 56.93%

   
      

Apparel, Footwear & Accessories - 0.39%

   

5,000

 

Heelys, Inc. *

$                    10,600

  
      

Business Services - 2.39%

   

3,976

 

infoGROUP, Inc. *

27,872

  

4,000

 

iPass, Inc. *

5,520

  

3,000

 

Life Sciences Research, Inc. * +

23,880

  

500

 

SoftBrands, Inc. * +

0

  

3,000

 

Strategic Environmental & Energy Resources † *

                       7,200

  
   

64,472

  

Chemicals & Allied Products - 2.87%

   

6,500

 

Huntsman Corp.

59,215

  

167,850

 

Inyx, Inc. *

285

  

600,000

 

MZT Holdings, Inc. *

                     18,000

  
   

77,500

  

Communications - 1.64%

   

4,000

 

Centennial Communications Corp. *

31,920

  

1,050

 

Warwick Valley Telephone Co.

                     12,401

  
   

44,321

  

Electric, Gas & Sanitary Services - 2.10%

   

13,720

 

Pinnacle Gas Resources, Inc. * +

5,735

  

2,018

 

Sunpower Corp. Class-B * +

                     50,914

  
   

56,649

  

Electronic & Other Electric Equipment - 3.14%

   

2,000

 

Bel Fuse, Inc. Class-B +

38,060

  

65,000

 

Computer Horizons Corp. *

5,519

  

26,500

 

Mathstar, Inc. *

39,750

  

28,991

 

Three Five Systems, Inc. *

                       1,450

  
   

84,779

  

Finance, Insurance & Real Estate - 3.75%

   

1,363

 

American Community Properties Trust *

11,245

  

1,000

 

CNB Financial Corp. *

9,850

  

4,302

 

Cowlitz Bancorp. *

5,076

  

1,400

 

FX Real Estate & Entertainment, Inc. *

126

  

2,528

 

First Intercontenental Bank *

7,275

  

525

 

First National Bancshares, Inc. *

646

  

3,700

 

Sobieski Bancorp, Inc. *

735

  

4,000

 

Specialty Underwriters Alliance, Inc.

26,400

  

6,000

 

Specialty Underwriters Alliance, Inc. +

                     39,600

  
   

100,953

  

Healthcare - 10.52%

    

30,000

 

Avigen, Inc. *

44,700

  

28,000

 

Cadus Corp. *

43,120

  

6,936

 

Schering-Plough Corp. +

                    195,942

  
   

283,762

  

Heavy Construction - 0.32%

   

25,000

 

Startech Environmental Corp. * +

8,750

  
      

Laboratory Analytical Instruments - 1.89%

   

1,000

 

Varian, Inc. * +

51,060

  
      

Meat Products - 1.08%

   

6,700

 

Cagles, Inc. Class-A *

29,006

  
      

Mining - 0.62%

     

5,000

 

Forsys Metals Corp. *

16,668

  
      

Packaging & Containers - 0.34%

   

3,500

 

Intertape Polymer Group, Inc. *

9,275

  
      

Patent Owners & Lessors - 3.68%

   

2,000

 

Marvel Entertainment, Inc. *

99,240

  
      

Personal Products - 1.85%

   

6,930

 

CCA Industries, Inc.

28,067

  

3,216

 

Zygo Corp. *

                     21,804

  
   

49,871

  

Printing & Publishing - 1.93%

   

25,920

 

Merisel, Inc. *

12,960

  

5,000

 

TM Entertainment & Media, Inc. *

                     39,100

  
   

52,060

  

Radio & Tv Broadcasting & Communication - 0.66%

   

3,000

 

EDCI Holdings, Inc. *

17,820

  
      

Retail Trade - 0.33%

    

900

 

Pep Boys-Manny, Moe & Jack

8,793

  
      

Services - 13.07%

    

5,100

 

Charlotte Russe Holding, Inc. *

89,250

  

7,000

 

CKX, Inc. *

46,970

  

50,000

 

Goldleaf Financial Solutions, Inc.

48,900

  

4,800

 

Hiland Partners L.P. *

36,720

  

10,000

 

Image Entertainment, Inc. *

8,500

  

994

 

Mac-Gray Corp. *

10,715

  

6,000

 

MSCS Software Corp.

50,460

  

80,000

 

ON2 Technologies, Inc. * +

47,200

  

15,000

 

Trans World Entertainment Corp. *

                     13,650

  
   

352,365

  

Technical & System Software - 2.07%

   

25,000

 

Network 1 Security Solutions, Inc. *

28,500

  

3,000

 

Sun Microsystems, Inc. *

                     27,270

  
   

55,770

  
      

TOTAL FOR COMMON STOCKS (Cost $2,061,640) - 56.93%

$               1,473,714

  
      

CORPORATE BONDS - 12.16%

   

200,000

 

Beazer Homes USA 6.875% 07/15/2015

151,316

  

100,000

 

GGP L.P. 3.980% Convertible 04/15/2027

64,030

  

25,000

 

Infinity Capital Group 7.000% 08/30/2009

25,000

  

100,000

 

Rouse Co. 5.375% 11/26/2013

84,625

  

3,928

 

United Airlines 7.811% 10/01/2009

                       2,986

  
      

TOTAL FOR CORPORATE BONDS (Cost $289,689) - 12.16%

$                  327,957

  
      

ESCROWED RIGHTS - 0.00%

   

15,000

 

Lev Pharmaceuticals Escrow *

0

  

20,000

 

Mirant Corp. Escrow *

0

  

2,100

 

Pearson PLC Escrow *

0

  

200

 

Petrolcorp, Inc. Escrow *

                             0

  
      

TOTAL FOR ESCROWED RIGHTS (Cost $0) - 0.00%

$                           0

  
      

PERFERRED STOCKS - 4.60%

   
      

1,000

 

Fannie Mae Preferred Series F *

2,550

  

311

 

JP Morgan Preferred 5.490%  *+

13,504

  

3,000

 

US Bancorp Float Rate Shares Series B +

53,820

  

2,000

 

Volkswagen AG Preferred ADR *

46,160

  

1,000

 

Washington Mutual, Inc. *

                       7,800

  
      

TOTAL FOR PREFERRED STOCKS (Cost $98,782) - 4.60%

$                  123,834

  
      

SHORT TERM INVESTMENTS - 41.83%

   

486,176

 

Fidelity Institutional Money Market Portfolio 0.47% ** (Cost $486,176)

486,176

  

5,588

 

Huntington Treasury Money Market IV 0.01% ** (Cost $5,588)

5,588

  

636,241

 

Dreyfus Money Market Funds Class B 0.004% ** (Cost $636,241)

                    636,241

  
      

TOTAL SHORT TERM INVESTMENTS (Cost $1,128,005) - 41.83%

$               1,128,005

  
      

TOTAL INVESTMENTS (Cost $3,541,902) - 113.23%

$               3,053,510

  
      

LIABILITES IN EXCESS OF OTHER ASSETS - (13.23)%

(356,759)

  
      

NET ASSETS - 100.00%

$               2,696,751

  
      

* Non-income producing securities during the period.

   

** Variable rate security; the coupon rate shown represents the yield at September 30, 2009.

   

Restricted

     

+ Pledged as collateral for securities sold short

   
      

NOTES TO FINANCIAL STATEMENTS

   

Pennsylvania Avenue Fund

   

1. SECURITY TRANSACTIONS

   

At September 30, 2009, the net unrealized depreciation on investments, based on cost for federal income

  

tax purposes of $3,541,902 amounted to $427,916, which consisted of aggregate gross unrealized appreciation of

  

$301,089 and aggregate gross unrealized depreciation of $729,004.

   
      

2. SECURITY VALUATION

   

Equity securities are valued by using market quotations, but may be valued on the basis of prices furnished by a pricing service when the Adviser believes such prices accurately reflect the fair market value of such securities. Securities that are traded on any stock exchange or on the NASDAQ over the counter market are generally valued by the pricing service at its last bid price except for short positions, for which the last quoted price is used. When market quotations are not readily available, when the Adviser determines that the market quotation or the price provided by the service does not accurately reflect the current market value, or when restricted or illiquid securities are being valued, such securities are valued as determined in good faith by the Board of Trustees. The Board has adopted guidelines for the good faith pricing, and has delegated the Adviser the responsibility for determining fair value prices, subject to review by the Board of Trustees.

  
      

Fixed income securities generally are valued by using market quotations, but may be valued on the basis of prices furnished by a pricing service when the Adviser believes such prices accurately reflect the fair market value of such securities. A pricing service utilized electronic data processing techniques based on yield spreads relating to securities with similar characteristics to determine prices for normal institutional-size trading units of debt securities without regard to sale or bid prices. If the Adviser decides that a price provided by the pricing service does not accurately reflect the fair market value of the securities, when the prices are not readily available from a pricing service, or when restricted or illiquid securities are being valued, securities are valued at fair value as determined in good faith by the Adviser, subject to review of the Board of Trustees. Short-term investments in fixed income securities with maturities of less than 60 days when acquired, or which subsequently are within 60 days of maturity, are valued by using the amortized cost method of valuation, which the Board has determined will represent fair value, except when such a security is in default.

  
      

The Funds adopted Financial Accounting Standards Board Statement of Financial Accounting Standards No. 157, Fair Value Measurements (“FAS 157”), effective January 1, 2008. In accordance with FAS 157, fair value is defined as the price that the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. FAS 157 also establishes a framework for measuring fair value, and a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability. The three-tier hierarchy of inputs is summarized below.

  
  

Level 1 – quoted prices in active markets for identical investments

   
      
  

Level 2 – other significant observable inputs (including quoted prices for similar investments, interest

  
  

rates, prepayment speeds, credit risk, etc.)

   
      
  

Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments)

  
      

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.

  
      

The following table summarizes the valuation of the Funds investments by the above fair value hierarchy levels as of September 30, 2009:

  
      

Valuation Inputs of Assets

 

Level 1

Level 2

Level 3

Total

Common Stock

 

$1,473,714

              $0

              $0

$1,473,714

Preferred Stock

 

$123,834

              $0

              $0

$123,834

Convertible Bonds

$0

$327,957

              $0

$327,957

Cash Equivalents

$1,128,005

              $0

              $0

$1,128,005

Total

 

$2,601,719

$327,957

       $0

$3,053,510

      

 

 

Pennsylvania Avenue Fund

 

  
  

Schedule of Securities Sold Short

   

 

 

September 30, 2009 (Unaudited)

 

  
      

Shares

  

Value

  
      

SECURITIES SOLD SHORT

   
      

1,500

 

Walt Disney Co.

$                    41,190

  

3,000

 

Electro Scientific Industries, Inc.

40,170

  

4,000

 

Merck & Co., Inc.

126,520

  

2,000

 

Sunpower Corp. Class-A

59,780

  

2,800

 

Tower Group, Inc.

68,292

  

3,000

 

US Bancorp 7.875% Preferred 04/15/2013

81,450

  

400

 

Volkswagen AG  ADR

                     13,292

  
      

TOTAL FOR SECURITIES SOLD SHORT (Cost $443,460)

$                  430,694

  
      

ADR - American Depository Receipt

   





Item 2. Controls and Procedures.

(a) Thomas Kirchner, the President of the Pennsylvania Avenue Funds (the "Fund"), has concluded that the Fund’s disclosure controls and provide reasonable assurances that material information relating to the Fund is made known to him, based on his evaluation of these controls and procedures as of a date within 90 days of the filing date of this report.

(b) None.

Item 3. Exhibits.

The certification is attached as an exhibit hereto.

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.

Pennsylvania Avenue Funds

By /s/ THOMAS KIRCHNER

Thomas Kirchner, President

Date 11/27/2009

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 /s/ THOMAS KIRCHNER

Thomas Kirchner, President

Date 11/27/2009