-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, H9O9C5sgvTYwraVbb6Pb2Ou8wOXy8MKYVnzpGu2aCjUI7BE5wkW2Lil11Gzrd1i1 W7W8J7GjNv8t+JUq41Dh8w== 0001111830-09-000520.txt : 20090508 0001111830-09-000520.hdr.sgml : 20090508 20090508114355 ACCESSION NUMBER: 0001111830-09-000520 CONFORMED SUBMISSION TYPE: N-CSRS PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20090228 FILED AS OF DATE: 20090508 DATE AS OF CHANGE: 20090508 EFFECTIVENESS DATE: 20090508 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Destination Funds CENTRAL INDEX KEY: 0001314387 IRS NUMBER: 202230500 FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: N-CSRS SEC ACT: 1940 Act SEC FILE NUMBER: 811-21701 FILM NUMBER: 09808621 BUSINESS ADDRESS: STREET 1: 1277 TREAT BOULEVARD STREET 2: #200 CITY: WALNUT CREEK STATE: CA ZIP: 94597 BUSINESS PHONE: 513-587-3400 MAIL ADDRESS: STREET 1: C/O ULTIMUS FUND SOLUTIONS, LLC STREET 2: 225 PICTORIA DRIVE, SUITE 450 CITY: CINCINNATI STATE: OH ZIP: 45246 0001314387 S000001541 Destination Select Equity Fund C000004188 Destination Select Equity Fund DSEQX N-CSRS 1 ncsrs-0209.txt DESTINATION FUNDS - N-CSRS ------------------------- OMB APPROVAL ------------------------- OMB Number: 3235-0570 Expires: August 31, 2011 Estimated average burden hours per response: 18.9 ------------------------- 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 811-21701 --------------------------------------------- The Destination Funds - -------------------------------------------------------------------------------- (Exact name of registrant as specified in charter) 2001 North Main Street, Suite 270 Walnut Creek, California 94596 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip code) Wade R. Bridge, 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: (925) 935-2900 ---------------------------- Date of fiscal year end: August 31, 2009 ----------------------------- Date of reporting period: February 28, 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. ================================================================================ DESTINATION FUNDS Destination Select Equity Fund SEMI-ANNUAL REPORT February 28, 2009 (Unaudited) INVESTMENT ADVISOR Destination Capital Management, Inc. Walnut Creek, CA ================================================================================ DESTINATION SELECT EQUITY FUND SUPPLEMENTARY PORTFOLIO INFORMATION FEBRUARY 28, 2009 (UNAUDITED) ================================================================================ DESTINATION SELECT EQUITY FUND VS S&P 500 INDEX SECTOR DIVERSIFICATION (% OF NET ASSETS) [BAR CHART OMITTED] Destination Select Equity Fund S&P 500 Index ----------- ------------- Consumer Discretionary 10.31% 8.40% Consumer Staples 17.56% 13.39% Energy 4.80% 13.84% Financials 12.59% 9.82% Health Care 13.81% 15.61% Industrials 5.47% 9.79% Information Technology 19.15% 17.44% Materials 0.00% 3.13% Telecommunication Services 4.86% 4.06% Utilities 0.00% 4.51% Cash Equivalents 11.45% 0.00% TOP 10 EQUITY HOLDINGS - -------------------------------------------------------------------------------- SECURITY DESCRIPTION % OF NET ASSETS - --------------------------------------- --------------- MasterCard, Inc. - Class A 5.1% Wal-Mart Stores, Inc. 4.9% Vodafone Group plc - ADR 4.9% McDonald's Corp. 4.8% Johnson & Johnson 4.8% Microsoft Corp. 4.8% Exxon Mobil Corp. 4.8% Procter & Gamble Co. (The) 4.0% Berkshire Hathaway, Inc. - Class B 3.9% Automatic Data Processing, Inc. 3.8% 1 DESTINATION SELECT EQUITY FUND SCHEDULE OF INVESTMENTS FEBRUARY 28, 2009 (UNAUDITED) ================================================================================ SHARES COMMON STOCKS - 88.5% VALUE - -------------------------------------------------------------------------------- AEROSPACE & DEFENSE - 1.1% 200 United Technologies Corp. $ 8,166 ------------ BEVERAGES - 1.8% 320 Coca-Cola Co. (The) 13,072 ------------ CAPITAL MARKETS - 2.7% 1,500 Legg Mason, Inc. 19,245 ------------ COMMERCIAL BANKS - 2.4% 1,210 U.S. Bancorp 17,315 ------------ COMMUNICATIONS EQUIPMENT - 2.4% 1,850 Nokia Corp. - ADR 17,316 ------------ DIVERSIFIED FINANCIAL SERVICES - 0.2% 100 Moody's Corp. 1,795 ------------ FOOD & STAPLES RETAILING - 8.4% 585 Costco Wholesale Corp. 24,769 725 Wal-Mart Stores, Inc. 35,699 ------------ 60,468 ------------ FOOD PRODUCTS - 3.4% 915 Campbell Soup Co. 24,495 ------------ HEALTH CARE EQUIPMENT & SUPPLIES - 6.6% 530 Baxter International, Inc. 26,982 625 Stryker Corp. 21,044 ------------ 48,026 ------------ HOTELS, RESTAURANTS & LEISURE - 4.8% 670 McDonald's Corp. 35,008 ------------ HOUSEHOLD PRODUCTS - 4.0% 595 Procter & Gamble Co. (The) 28,661 ------------ INDUSTRIAL CONGLOMERATES - 2.3% 1,935 General Electric Co. 16,467 ------------ INSURANCE - 7.3% 11 Berkshire Hathaway, Inc. - Class B (a) 28,204 1,355 Marsh & McLennan Cos., Inc. 24,295 ------------ 52,499 ------------ IT SERVICES - 11.9% 810 Automatic Data Processing, Inc. 27,661 235 MasterCard, Inc. - Class A 37,137 1,900 Western Union Co. 21,204 ------------ 86,002 ------------ MACHINERY - 2.1% 875 Graco, Inc. 14,858 ------------ 2 DESTINATION SELECT EQUITY FUND SCHEDULE OF INVESTMENTS (CONTINUED) ================================================================================ SHARES COMMON STOCKS - 88.5% (CONTINUED) VALUE - -------------------------------------------------------------------------------- MEDIA - 5.5% 550 Comcast Corp. - Class A $ 7,183 830 DreamWorks Animation SKG, Inc. - Class A (a) 16,011 100 McGraw-Hill Cos., Inc. (The) 1,973 850 Walt Disney Co. (The) 14,254 ------------ 39,421 ------------ OIL, GAS & CONSUMABLE FUELS - 4.8% 510 Exxon Mobil Corp. 34,629 ------------ PHARMACEUTICALS - 7.1% 700 Johnson & Johnson 35,000 1,350 Pfizer, Inc. 16,619 ------------ 51,619 ------------ SOFTWARE - 4.8% 2,160 Microsoft Corp. 34,884 ------------ WIRELESS TELECOMMUNICATION SERVICES - 4.9% 1,975 Vodafone Group plc - ADR 35,056 ------------ TOTAL COMMON STOCKS (Cost $861,026) $ 639,002 ------------ ================================================================================ SHARES SHORT TERM INVESTMENTS - 23.6% VALUE - -------------------------------------------------------------------------------- 31,447 AIM Liquid Assets Portfolio (The), 0.955% (b) $ 31,447 31,456 AIM Short Term Investments Company Prime Portfolio (The), 0.352% (b) 31,456 31,500 Fidelity Institutional Money Market Government Portfolio - Class I, 0.601% (b) 31,500 30,818 Fidelity Institutional Money Market Portfolio - Select Class, 1.12% (b) 30,818 31,500 First American Prime Obligations Fund - Class Y, 0.56% (b) 31,500 13,417 First American Treasury Obligations Fund - Class Y, 0.26% (b) 13,417 ------------ TOTAL SHORT TERM INVESTMENTS (Cost $170,138) $ 170,138 ------------ TOTAL INVESTMENTS AT VALUE - 112.1% (Cost $1,031,164) $ 809,140 LIABILITIES IN EXCESS OF OTHER ASSETS - (12.1%) (87,508) ------------ TOTAL NET ASSETS - 100.0% $ 721,632 ============ (a) Non-income producing security. (b) Variable rate security. The rate shown is the effective 7-day effective yield as of February 28, 2009. ADR - American Depositary Receipt See accompanying notes to financial statements. 3 DESTINATION SELECT EQUITY FUND STATEMENT OF ASSETS AND LIABILITIES FEBRUARY 28, 2009 (UNAUDITED) ================================================================================ ASSETS Investments in securities: At acquisition cost $ 1,031,164 ============ At value $ 809,140 Dividends receivable 1,957 Receivable from Advisor (Note 4) 12,114 Other assets 8,924 ------------ Total assets 832,135 ------------ LIABILITIES Accrued liabilities: Payable for investment securities purchased 101,248 Payable to Administrator (Note 4) 4,605 Other accrued expenses 4,650 ------------ Total liabilities 110,503 ------------ NET ASSETS $ 721,632 ============ NET ASSETS CONSIST OF: Paid-in capital $ 995,309 Accumulated undistributed net investment income 1,416 Accumulated net realized losses from security transactions (53,069) Net unrealized depreciation on investments (222,024) ------------ NET ASSETS $ 721,632 ============ Shares of beneficial interest outstanding (unlimited number of shares authorized, no par value) 97,409 ============ Net asset value, offering price and redemption price per share (a) $ 7.41 ============ (a) Redemption price may differ from the net asset value per share depending upon the length of time the shares are held (Note 2). See accompanying notes to financial statements. 4 DESTINATION SELECT EQUITY FUND STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED FEBRUARY 28, 2009 (UNAUDITED) ================================================================================ INVESTMENT INCOME Dividend income $ 10,246 ------------ EXPENSES Professional fees 16,344 Fund accounting fees (Note 4) 14,034 Administration fees (Note 4) 11,200 Trustees' fees and expenses (Note 4) 8,585 Compliance fees (Note 4) 6,000 Transfer agent fees (Note 4) 6,000 Insurance expense 3,789 Investment advisory fees (Note 4) 2,864 Custody and bank service fees 2,831 Postage and supplies 1,549 Registration fees 563 Other expenses 3,327 ------------ Total expenses 77,086 Less fees waived and expenses reimbursed by the Advisor (Note 4) (72,313) ------------ Net expenses 4,773 ------------ NET INVESTMENT INCOME 5,473 ------------ REALIZED AND UNREALIZED LOSSES ON INVESTMENTS Net realized losses from security transactions (6,240) Net change in unrealized appreciation/depreciation on investments (304,824) ------------ NET REALIZED AND UNREALIZED LOSSES ON INVESTMENTS (311,064) ------------ NET DECREASE IN NET ASSETS FROM OPERATIONS $ (305,591) ============ See accompanying notes to financial statements. 5
DESTINATION SELECT EQUITY FUND STATEMENTS OF CHANGES IN NET ASSETS ================================================================================================ SIX MONTHS ENDED FEBRUARY 28, YEAR ENDED 2009 AUGUST 31, (UNAUDITED) 2008 - ------------------------------------------------------------------------------------------------ FROM OPERATIONS Net investment income $ 5,473 $ 7,965 Net realized losses from security transactions (6,240) (46,396) Net change in unrealized appreciation/depreciation on investments (304,824) 32,498 ------------ ------------ Net decrease in net assets from operations (305,591) (5,933) ------------ ------------ DISTRIBUTIONS TO SHAREHOLDERS From net investment income (8,998) (6,828) From net realized gains from security transactions -- (24,947) ------------ ------------ Decrease in net assets from distributions to shareholders (8,998) (31,775) ------------ ------------ CAPITAL SHARE TRANSACTIONS Proceeds from shares sold 114,588 82,619 Net asset value of shares issued in reinvestment of distributions to shareholders 8,998 31,775 Payments for shares redeemed (10,108) (15,172) ------------ ------------ Net increase in net assets from capital share transactions 113,478 99,222 ------------ ------------ TOTAL INCREASE (DECREASE) IN NET ASSETS (201,111) 61,514 NET ASSETS Beginning of period 922,743 861,229 ------------ ------------ End of period $ 721,632 $ 922,743 ============ ============ ACCUMULATED UNDISTRIBUTED NET INVESTMENT INCOME $ 1,416 $ 4,941 ============ ============ CAPITAL SHARE ACTIVITY Shares sold 14,698 7,380 Shares reinvested 1,004 2,725 Shares redeemed (1,337) (1,299) ------------ ------------ Net increase in shares outstanding 14,365 8,806 Shares outstanding at beginning of period 83,044 74,238 ------------ ------------ Shares outstanding at end of period 97,409 83,044 ============ ============
See accompanying notes to financial statements. 6
DESTINATION SELECT EQUITY FUND FINANCIAL HIGHLIGHTS PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD ============================================================================================================================ SIX MONTHS ENDED FEBRUARY 28, YEAR ENDED YEAR ENDED PERIOD ENDED 2009 AUGUST 31, AUGUST 31, AUGUST 31, (UNAUDITED) 2008 2007 2006 (a) - --------------------------------------------------------------------------------------------------------------------------- Net asset value at beginning of period $ 11.11 $ 11.60 $ 10.20 $ 10.00 ---------- ---------- ---------- ---------- Income (loss) from investment operations: Net investment income 0.06 0.10 0.09 0.03 Net realized and unrealized gains (losses) on investments (3.65) (0.16) 1.44 0.17 ---------- ---------- ---------- ---------- Total from investment operations (3.59) (0.06) 1.53 0.20 ---------- ---------- ---------- ---------- Less distributions: From net investment income (0.11) (0.09) (0.07) -- From net realized gains from security transactions -- (0.34) (0.06) -- ---------- ---------- ---------- ---------- Total distributions (0.11) (0.43) (0.13) -- ---------- ---------- ---------- ---------- Net asset value at end of period $ 7.41 $ 11.11 $ 11.60 $ 10.20 ========== ========== ========== ========== Total return (b) (32.51%)(c) (0.72%) 14.97% 2.00%(c) ========== ========== ========== ========== Net assets at end of period $ 721,632 $ 922,743 $ 861,229 $ 512,139 ========== ========== ========== ========== RATIOS/SUPPLEMENTARY DATA: Ratio of gross expenses to average net assets 20.18%(e) 17.87% 22.23% 42.55%(e) Ratio of net expenses to average net assets (d) 1.25%(e) 1.25% 1.25% 1.24%(e) Ratio of net investment income to average net assets (d) 1.43%(e) 0.90% 0.81% 0.80%(e) Portfolio turnover rate 11%(c) 17% 34% 22%(e)
(a) Represents the period from the commencement of operations (December 29, 2005) through August 31, 2006. (b) Total return is a measure of the change in value of an investment in the Fund over the periods covered, which assumes any dividends or capital gains distributions are reinvested in shares of the Fund. The 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) Ratio was determined after advisory fee reductions and expense reimbursements. (e) Annualized. See accompanying notes to financial statements. 7 DESTINATION SELECT EQUITY FUND NOTES TO FINANCIAL STATEMENTS FEBRUARY 28, 2009 (UNAUDITED) - -------------------------------------------------------------------------------- 1. ORGANIZATION The Destination Select Equity Fund (the "Fund") is a diversified series of The Destination Funds (the "Trust"), an open-end investment company established as an Ohio business trust under a Declaration of Trust dated December 14, 2004. On April 11, 2005, 10,000 shares of the Fund were issued for cash, at $10.00 per share, to YCMNET Advisors, Inc., an affiliate of the investment advisor to the Fund. The Fund commenced operations on December 29, 2005. The investment objective of the Fund is long-term capital appreciation. 2. SIGNIFICANT ACCOUNTING POLICIES The following is a summary of the Fund's significant accounting policies: SECURITIES VALUATION - The Fund's portfolio securities are valued as of the close of business of the regular session of the New York Stock Exchange (normally 4:00 p.m., Eastern time). Common stocks and other equity-type securities that are traded on a securities exchange are valued at the last quoted sales price at the close of regular trading on the day the valuation is made, or, if not traded on a particular day, at the closing bid price. Securities which are quoted by NASDAQ are valued at the NASDAQ Official Closing Price. Price information on listed stocks is taken from the exchange where the security is primarily traded. Securities and other assets that do not have market quotations readily available or are considered to be unreliable due to market or other events will be valued at their fair values as determined under procedures adopted by the Fund's Board of Trustees. When fair value pricing is employed, the prices of securities used by the Fund to calculate its NAV may differ from quoted or published prices for the same 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 the Fund's investments. These inputs are summarized in the three broad levels listed below: o Level 1 - quoted prices in active markets for identical securities o Level 2 - other significant observable inputs o 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 February 28, 2009, all of the inputs used to value the investments of the Fund were level 1. 8 DESTINATION SELECT EQUITY FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) - -------------------------------------------------------------------------------- SHARE VALUATION - The net asset value per share of the Fund is calculated daily by dividing the total value of the Fund's assets, less liabilities, by the number of shares outstanding. The offering price and redemption price per share of the Fund is equal to the net asset value per share, except that shares of the Fund are subject to a redemption fee of 2% if redeemed within 90 days of the date of purchase. During the periods ended February 28, 2009 and August 31, 2008, no redemption fees were collected. INVESTMENT INCOME - Dividend income is recorded on the ex-dividend date. Interest income is accrued as earned. Other non-cash dividends are recognized as investment income at the fair value of the property received. SECURITY TRANSACTIONS - Security transactions are accounted for on the trade date. Gains and losses on securities sold are determined on a specific identification basis. DISTRIBUTIONS TO SHAREHOLDERS - Distributions to shareholders arising from net investment income and net realized capital gains, if any, are distributed at least once each year. The amount of distributions from net investment income and net realized gains are determined in accordance with federal income tax regulations, which may differ from accounting principles generally accepted in the United States of America. The tax character of distributions paid during the six months ended February 28, 2009 was $8,998 of ordinary income. The tax character of distributions paid during the year ended August 31, 2008 was $24,969 of ordinary income and $6,806 of long-term capital gains. Dividends and distributions to shareholders are recorded on the ex-dividend date. ESTIMATES - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates. FEDERAL INCOME TAX - It is the Fund's policy to comply with the special provisions of Subchapter M of the Internal Revenue Code applicable to regulated investment companies. As provided therein, in any fiscal year in which 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 is required. In order to avoid imposition of the excise tax applicable to regulated investment companies, it is also the Fund's intention to declare as dividends in each calendar year at least 98% of its net investment income (earned during the calendar year) and 98% of its net realized capital gains (earned during the twelve months ended October 31) plus undistributed amounts from prior years. 9 DESTINATION SELECT EQUITY FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) - -------------------------------------------------------------------------------- The following information is computed on a tax basis for each item as of February 28, 2009: Tax cost of portfolio investments $ 1,031,164 ============ Gross unrealized appreciation $ 33,735 Gross unrealized depreciation (255,759) ------------ Net unrealized depreciation $ (222,024) Accumulated ordinary income 1,416 Capital loss carryforward (65) Post-October losses (46,764) Other losses (6,240) ------------ Accumulated deficit $ (273,677) ============ As of August 31, 2008, the Fund had a capital loss carryforward of $65 which expires August 31, 2016. In addition, the Fund had net realized losses of $46,764 during the period November 1, 2007 through August 31, 2008, which are treated for federal income tax purposes as arising during the Fund's tax year ending August 31, 2009. These capital loss carryforwards and "post-October" losses may be utilized in the current and future years to offset net realized capital gains, if any, prior to distributing such gains to shareholders. 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 Fund's tax returns to determine whether the tax positions are "more-likely-than-not" of being sustained by the applicable tax authority. Tax positions not deemed to meet the "more-likely-than-not" threshold would be recorded as a tax benefit or expense in the current year. Based on management's analysis, the application of FIN 48 does not have a material impact on these financial statements. The statute of limitations on the Fund's tax returns remains open for the tax years ended August 31, 2006 through August 31, 2008. 3. INVESTMENT TRANSACTIONS During the six months ended February 28, 2009, cost of purchases and proceeds from sales of investment securities, other than short-term investments, was $191,498 and $76,167, respectively. 4. TRANSACTIONS WITH AFFILIATES INVESTMENT ADVISORY AGREEMENT Destination Capital Management, Inc. (the "Advisor") serves as the investment advisor to the Fund. For its services, the Fund pays the Advisor, on a monthly basis, an investment advisory fee at the annual rate of 0.75% of its average daily net assets. The Advisor has contractually agreed to reduce its advisory fees and to reimburse the Fund's operating expenses to the extent necessary so that the Fund's ordinary operating expenses do not exceed an amount equal to 1.25% annually of its average net assets. This expense limitation agreement remains in effect until at least December 31, 2018. During the six months ended February 28, 2009, the Advisor waived its entire investment advisory fee of $2,864 and reimbursed other Fund expenses totaling $69,449. 10 DESTINATION SELECT EQUITY FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) - -------------------------------------------------------------------------------- The Advisor has concurrently entered into an agreement with the Fund which permits the Advisor to recover fee reductions and expense reimbursements on behalf of the Fund, but only for a period of three years after such reduction or reimbursement, and only if such recovery will not cause the Fund's expense ratio to exceed the annual rate of 1.25%. As of February 28, 2009, the Advisor may in the future recoup fee reductions and expense reimbursements totaling $439,115. The Advisor may recoup a portion of this amount no later than the dates as stated below: August 31, 2009 August 31, 2010 August 31, 2011 February 28, 2012 --------------- --------------- --------------- ----------------- $66,364 $152,777 $147,661 $72,313 The Chief Compliance Officer to the Trust is an officer of the Advisor. The Fund reimburses the Advisor $12,000 annually for compliance services provided to the Trust. TRUSTEE FEES The Fund pays each Trustee who is not affiliated with the Advisor a per meeting fee of $1,000. Trustees who are affiliated with the Advisor do not receive compensation. ADMINISTRATION AGREEMENT Under the terms of an Administration Agreement with the Trust, Ultimus Fund Solutions, LLC ("Ultimus") provides internal regulatory compliance services and executive and administrative services for the Fund. Ultimus supervises the preparation of tax returns, reports to shareholders of the Fund, reports to and filings with the Securities and Exchange Commission and state securities commissions and materials for meetings of the Board of Trustees. For these services, the Fund pays to Ultimus, on a monthly basis, a fee equal to 0.15% per annum of the Fund's average daily net assets up to $50 million, 0.125% of such assets from $50 million to $100 million, 0.10% of such assets from $100 million to $250 million, 0.075% of such assets from $250 million to $500 million and 0.05% of such assets in excess of $500 million, provided, however, that the minimum fee is $2,000 per month. Effective January 1, 2009, Ultimus agreed to discount the foregoing fee by 20% through December 31, 2009. FUND ACCOUNTING AGREEMENT Under the terms of a Fund Accounting Agreement, Ultimus calculates the daily net asset value per share and maintains the financial books and records of the Fund. For these services, the Fund pays to Ultimus a base fee of $2,500 per month, plus an asset-based fee at the annual rate of 0.01% of the Fund's average daily net assets up to $500 million and 0.005% of such assets in excess of $500 million. In addition, the Fund pays all costs of external pricing services. Effective January 1, 2009, Ultimus agreed to discount the foregoing base fee by 20% through December 31, 2009. TRANSFER AGENT AND SHAREHOLDER SERVICES AGREEMENT Under the terms of a Transfer Agent and Shareholder Services Agreement, Ultimus maintains the records of each shareholder's account, answers shareholders' inquiries concerning their accounts, processes purchases and redemptions of the Fund's shares, acts as dividend and distribution disbursing agent and performs other shareholder service functions. For these services, Ultimus receives from the Fund per account fees (currently at the rate of $20 per year) subject to a monthly minimum fee. The minimum fee is $1,500 per month if the Fund has over 100 shareholder accounts; $1,250 if the Fund has between 25 and 100 shareholder accounts; and $1,000 if the Fund has less than 25 shareholder accounts. In addition, the Fund pays out-of-pocket expenses, including, but not limited to, postage and supplies. 11 DESTINATION SELECT EQUITY FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) - -------------------------------------------------------------------------------- DISTRIBUTION AGREEMENT Under the terms of a Distribution Agreement, Ultimus Fund Distributors, LLC (the "Distributor") serves as principal underwriter to the Fund. The Distributor receives no compensation from the Fund for acting as principal underwriter. However, the Distributor receives annual compensation of $6,000 from the Advisor for such services. Certain Trustees and officers of the Fund are directors and officers of the Advisor, or of Ultimus, or of the Distributor. 5. CONTINGENCIES AND COMMITMENTS The Fund indemnifies the Trust's officers and Trustees for certain liabilities that might arise from their performance of their duties to the Fund. Additionally, in the normal course of business the Fund enters into contracts that contain a variety of representations and warranties and which provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Fund that have not yet occurred. However, based on experience, the Fund expects the risk of loss to be remote . 12 DESTINATION SELECT EQUITY FUND ABOUT YOUR FUND'S EXPENSES (UNAUDITED) - -------------------------------------------------------------------------------- We believe it is important for you to understand the impact of costs on your investment. As a shareholder of the Fund, you incur two types of costs: (1) transactions costs, including redemption fees; 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 Fund and to compare these costs with the ongoing costs of investing in other mutual funds. A mutual fund's ongoing costs are expressed as a percentage of its average net assets. This figure is known as the expense ratio. The expenses in the table below are based on an investment of $1,000 made at the beginning of the most recent semi-annual period (September 1, 2008) and held until the end of the period (February 28, 2009). The table below illustrates the Fund's costs in two ways: ACTUAL FUND RETURN - This section helps you to estimate the actual expenses that you paid over the period. The "Ending Account Value" shown is derived from the Fund's actual return, and the third column shows the dollar amount of operating expenses that would have been paid by an investor who started with $1,000 in the Fund. You may use the information here, together with the amount you invested, to estimate the expenses that you paid over the period. To do so, simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number given for the Fund under the heading "Expenses Paid During Period." HYPOTHETICAL 5% RETURN - This section is intended to help you compare the Fund's costs with those of other mutual funds. It assumes that the Fund had an annual return of 5% before expenses during the period shown, but that the expense ratio is unchanged. In this case, because the return used is not the Fund's actual return, the results do not apply to your investment. The example is useful in making comparisons because the Securities and Exchange Commission requires all mutual funds to calculate expenses based on a 5% return. You can assess the Fund's costs by comparing this hypothetical example with the hypothetical examples that appear in shareholder reports of other funds. Note that expenses shown in the table are meant to highlight and help you compare ongoing costs only. The Fund does not charge any sales loads. However, a redemption fee of 2% is imposed on the sale of shares within 90 days of the date of purchase. The calculations assume no shares were bought or sold during the period. Your actual costs may have been higher or lower, depending on the amount of your investment and the timing of any purchases or redemptions. More information about the Fund's expenses, including annualized expense ratios, can be found in this report. For additional information on operating expenses and other shareholder costs, please refer to the Fund's prospectus. 13 DESTINATION SELECT EQUITY FUND ABOUT YOUR FUND'S EXPENSES (UNAUDITED) (CONTINUED) - --------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------- Beginning Ending Expenses Paid Account Value Account Value During September 1, 2008 February 28, 2009 Period* - ----------------------------------------------------------------------------------------- Based on Actual Fund Return $1,000.00 $ 674.90 $5.19 Based on Hypothetical 5% Return (before expenses) $1,000.00 $1,018.60 $6.26 - -----------------------------------------------------------------------------------------
* Expenses are equal to the Fund's annualized expense ratio of 1.25% for the period, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). OTHER INFORMATION (UNAUDITED) - -------------------------------------------------------------------------------- A description of the policies and procedures that the Fund uses to vote proxies relating to portfolio securities is available without charge upon request by calling toll-free 1-866-738-1128, or on the Securities and Exchange Commission's ("SEC") website at http://www.sec.gov. Information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is also available without charge upon request by calling toll-free 1-866-738-1128, or on the SEC's website at http://www.sec.gov. The Trust files a complete listing of portfolio holdings for the Fund with the SEC as of the end of the first and third quarters of each fiscal year on Form N-Q. These filings are available upon request by calling 1-866-738-1128. Furthermore, you may obtain a copy of the 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. 14 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 trustees. 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 Destination Funds ------------------------------------------------------------------- By (Signature and Title)* /s/ Michael A. Yoshikami -------------------------------------------------- Michael A. Yoshikami, President Date May 1, 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/ Michael A. Yoshikami -------------------------------------------------- Michael A. Yoshikami, President Date May 1, 2009 ------------------------- By (Signature and Title)* /s/ Mark J. Seger -------------------------------------------------- Mark J. Seger, Treasurer Date May 1, 2009 ------------------------- * Print the name and title of each signing officer under his or her signature. EX-99.CERT 2 ex99cert.txt CERTIFICATIONS REQUIRED BY RULE 30A-2(A) EX-99.CERT CERTIFICATIONS -------------- I, Michael A. Yoshikami, certify that: 1. I have reviewed this report on Form N-CSR of The Destination Funds; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: May 1, 2009 /s/ Michael A. Yoshikami -------------------------------------------- Michael A. Yoshikami, President CERTIFICATIONS -------------- I, Mark J. Seger, certify that: 1. I have reviewed this report on Form N-CSR of The Destination Funds; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: May 1, 2009 /s/ Mark J. Seger -------------------------------------------- Mark J. Seger, Treasurer EX-99.906 CERT 3 ex99906cert.txt CERTIFICATIONS REQUIRED BY RULE 30A-2(B) EX-99.906CERT CERTIFICATIONS -------------- Michael A. Yoshikami, Chief Executive Officer, and Mark J. Seger, Chief Financial Officer, of The Destination Funds (the "Registrant"), each certify to the best of his knowledge that: 1. The Registrant's periodic report on Form N-CSR for the period ended February 28, 2009 (the "Form N-CSR") fully complies with the requirements of section 13(a) or section 15(d) of the Securities Exchange Act of 1934, as amended; and 2. The information contained in the Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of the Registrant. CHIEF EXECUTIVE OFFICER CHIEF FINANCIAL OFFICER The Destination Funds The Destination Funds /s/ Michael A. Yoshikami /s/ Mark J. Seger - ---------------------------------- -------------------------------- Michael A. Yoshikami, President Mark J. Seger, Treasurer Date: May 1, 2009 Date: May 1, 2009 A SIGNED ORIGINAL OF THIS WRITTEN STATEMENT REQUIRED BY SECTION 906, OR OTHER DOCUMENT AUTHENTICATING, ACKNOWLEDGING OR OTHERWISE ADOPTING THE SIGNATURE THAT APPEARS IN TYPED FORM WITHIN THE ELECTRONIC VERSION OF THIS WRITTEN STATEMENT REQUIRED BY SECTION 906, HAS BEEN PROVIDED TO THE DESTINATION FUNDS AND WILL BE RETAINED BY THE DESTINATION FUNDS AND FURNISHED TO THE SECURITIES AND EXCHANGE COMMISSION OR ITS STAFF UPON REQUEST. This certification is being furnished to the Securities and Exchange Commission solely pursuant to 18 U.S.C. 1350 and is not being filed as part of the Form N-CSR filed with the Commission. -----END PRIVACY-ENHANCED MESSAGE-----