0001162044-13-000389.txt : 20130403 0001162044-13-000389.hdr.sgml : 20130403 20130403103641 ACCESSION NUMBER: 0001162044-13-000389 CONFORMED SUBMISSION TYPE: N-CSRS PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20130131 FILED AS OF DATE: 20130403 DATE AS OF CHANGE: 20130403 EFFECTIVENESS DATE: 20130403 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMM FUNDS CENTRAL INDEX KEY: 0001368578 IRS NUMBER: 000000000 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-CSRS SEC ACT: 1940 Act SEC FILE NUMBER: 811-21927 FILM NUMBER: 13738211 BUSINESS ADDRESS: STREET 1: PO BOX 675203 STREET 2: 14249 RANCHO SANTA FE FARMS RD CITY: RANCHO SANTA FE STATE: CA ZIP: 92067 BUSINESS PHONE: 1-888-999-1395 MAIL ADDRESS: STREET 1: PO BOX 675203 STREET 2: 14249 RANCHO SANTA FE FARMS RD CITY: RANCHO SANTA FE STATE: CA ZIP: 92067 FORMER COMPANY: FORMER CONFORMED NAME: FALLEN ANGELS FAMILY OF FUNDS DATE OF NAME CHANGE: 20070611 FORMER COMPANY: FORMER CONFORMED NAME: American Money Management Funds DATE OF NAME CHANGE: 20060710 0001368578 S000013533 Fallen Angels Value Fund C000036720 Fallen Angels Value Fund 0001368578 S000013534 Fallen Angels Income Fund C000036721 Fallen Angels Income Fund N-CSRS 1 ammncsrs.htm N-CSRS Filing

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: 811-21927


AMM Funds

(Exact Name of Registrant as Specified in Charter)


PO Box 675203

14249 Rancho Santa Fe Farms Road

Rancho Santa Fe, CA 92067

(Address of Principal Executive Offices)  (Zip Code)


Gabriel B. Wisdom

PO Box 675203

14249 Rancho Santa Fe Farms Road

Rancho Santa Fe, CA 92067

 (Name and Address of Agent for Service)


With copy to:

JoAnn M. Strasser, Thompson Hine LLP

312 Walnut Street, 14th Floor, Cincinnati, Ohio  45202


Registrant’s Telephone Number, including Area Code:  858-755-0909


Date of fiscal year end: July 31


Date of reporting period: January 31, 2013


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. § 3507.


Item 1.  Reports to Stockholders.


















SEMI-ANNUAL REPORT



AMM FUNDS


THE FALLEN ANGELS VALUE FUND

THE FALLEN ANGELS INCOME FUND



January 31, 2013


(UNAUDITED)

















AMM FUNDS

THE FALLEN ANGELS VALUE FUND

PORTFOLIO ANALYSIS

JANUARY 31, 2013 (UNAUDITED)



The following chart gives a visual breakdown of the Fund by the industry sectors the underlying securities represent as a percentage of the portfolio of investments.

[ammncsrs002.jpg]








AMM FUNDS

THE FALLEN ANGELS INCOME FUND

PORTFOLIO ANALYSIS

JANUARY 31, 2013 (UNAUDITED)



The following chart gives a visual breakdown of the Fund by the industry sectors the underlying securities represent as a percentage of the portfolio of investments.

[ammncsrs004.jpg]







 

 

Fallen Angels Value Fund

 

  

Schedule of Investments

 

 

 

January 31, 2013 (Unaudited)

 

    

Shares

  

Value

    

COMMON STOCKS - 88.60%

 
    

Consumer Discretionary - 15.37%

 

20,000

 

Activision Blizzard, Inc. *

$          228,000

6,000

 

Apollo Group, Inc. Class A *

121,320

8,000

 

DeVry, Inc.

201,360

5,000

 

McGraw-Hill Companies, Inc.

287,600

15,000

 

Staples, Inc.

202,275

5,000

 

Time Warner, Inc.

252,600

3,000

 

Viacom, Inc. Class B

            181,050

   

          1,474,205

Energy - 2.10%

 

6,000

 

Alpha Natural Resources, Inc. *

53,160

2,000

 

National Oilwell Varco, Inc.

            148,280

   

            201,440

Financials - 16.22%

 

4

 

Berkshire Hathaway, Inc. Class A *

583,500

3,000

 

Berkshire Hathaway, Inc. Class B *

290,790

30,000

 

Gleacher & Company, Inc. *

              23,100

8,000

 

JP Morgan Chase & Co.

            376,400

4,000

 

Wells Fargo & Co.

            139,320

10,000

 

Western Union Co.

            142,300

   

          1,555,410

Healthcare - 6.16%

 

6,000

 

AmerisourceBergen Corp.

            272,220

8,400

 

Teva Pharmaceutical Industries Ltd. ADR

            319,116

   

            591,336

Industrials - 14.58%

 

20,000

 

Exelis, Inc.

            219,800

25,000

 

General Electric Co.

            557,000

6,000

 

General Motors Corp. *

            168,540

4,000

 

Raytheon Co.

            210,720

20,000

 

SAIC, Inc.

            242,000

   

          1,398,060

Information Technology - 29.66%

 

        30,000

 

Applied Materials, Inc.

            387,300

          4,000

 

BMC Software, Inc. *

            166,200

        14,000

 

Cisco Systems, Inc.

            287,980

        14,000

 

Dell, Inc.

            185,360

        25,000

 

Entropic Communications, Inc. *

            131,000

             400

 

Google, Inc. Class A *

            302,276

        25,000

 

GT Advanced Technologies, Inc. *

              78,750

        12,500

 

Hewlett-Packard Co.

            206,375

          6,000

 

Intel Corp.

            126,240

          8,000

 

Lender Processing Services, Inc.

            192,320

        26,000

 

Marvell Technology Group Ltd.

            240,500

        10,000

 

Microsoft Corp.

            274,500

          7,500

 

Oracle Corp.

            266,325

   

          2,845,126

Materials - 4.51%

 

        25,000

 

Alcoa, Inc.

            221,000

          6,000

 

Freeport McMoran Copper & Gold, Inc.

            211,500

   

            432,500

    

TOTAL FOR COMMON STOCKS (Cost $9,517,565) - 88.60%

          8,498,077

    

SHORT TERM INVESTMENTS - 9.21%

 

883,093

 

First American Treasury Obligation Fund Class Z 0.00% **

            883,093

    

TOTAL SHORT TERM INVESTMENTS (Cost $883,093) - 9.21%

            883,093

    

TOTAL INVESTMENTS (Cost $10,400,658) - 97.81%

          9,381,170

    

OTHER ASSETS LESS LIABILITIES - 2.19%

            210,335

    

NET ASSETS - 100.00%

$        9,591,505

    

* Non-income producing security during the period.

 

** Variable rate security; the coupon rate shown represents the yield at January 31, 2013.

ADR - American Depository Receipt

 

The accompanying notes are an integral part of these financial statements.

 


Various inputs are used in determining the value of the Fund's investments.  These inputs are summarized in the three broad levels listed below:

 

Level 1 - Unadjusted quoted prices in active markets for identical assets or liabilities that the Fund has the ability to access.

        

Level 2 - Observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly.  These inputs may include quoted prices for the identical instrument on an active market, price for similar instruments, interest rates, prepayment speeds, yield curves, default rates and similar data.

 

Level 3 - Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available, representing the Fund's own assumptions about the assumptions a market participant would use in valuing the asset or liability, and would be based on the best information available.

 

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

 

The following is a summary of inputs used as of January 31, 2013 in valuing the Fund’s investments carried at value:


Investments in Securities

Level 1

Level 2

Level 3

Total

     

    Common Stocks

 $      8,498,077

-

-

 $    8,498,077

    Short-Term Investments:

    

      First American Treasury Obligation Fund Class Z

883,093

-

-

883,093

     
 

 $      9,381,170

-

-

 $    9,381,170


The Fund did not hold any Level 3 assets during the six months ended January 31, 2013. There were no significant transfers into or out of Level 1 or Level 2 during the period. It is the Fund’s policy to recognize transfers into and out of Level 1 and Level 2 at the end of the reporting period.


The accompanying notes are an integral part of these financial statements.







 

 

Fallen Angels Income Fund

 

  

Schedule of Investments

 

 

 

January 31, 2013 (Unaudited)

 

    

Shares

  

Value

    

CLOSED END FUNDS - 6.33%

 

47,900

 

BlackRock Income Trust

$        344,401

13,670

 

Templeton Emerging Markets Income Fund

          236,354

   

          580,755

    

TOTAL FOR CLOSED END FUNDS (Cost $455,787) - 6.33%

          580,755

    

COMMON STOCKS - 64.62%

 
    

Consumer Discretionary - 4.30%

 

2,100

 

McDonalds Corp.

          200,109

4,300

 

Molson Coors Brewing Co. Class B

          194,274

   

          394,383

Consumer Staples - 10.65%

 

3,900

 

Kraft Foods Group, Inc.

          180,258

6,800

 

Mondelez International, Inc.

          188,972

2,600

 

PepsiCo, Inc.

          189,410

3,000

 

Procter & Gamble Co.

          225,480

6,100

 

Sysco Corp.

          193,797

   

          977,917

Energy - 9.80%

 

5,000

 

BP Plc. ADR

          222,600

1,600

 

Chevron Corp.

          184,240

3,800

 

ConocoPhillips

          220,400

10,181

 

Nexen, Inc.

          272,444

   

          899,684

Financials - 12.14%

 

7,900

 

Bank of New York Co., Inc.

          214,564

1,000

 

Blackrock, Inc.

          236,280

4,800

 

JP Morgan Chase & Co.

          225,840

4,900

 

Oaktree Capital Group, LLC

          235,396

5,800

 

Wells Fargo & Co.

          202,014

   

       1,114,094

Healthcare - 12.41%

 

2,000

 

Abbott Laboratories

           67,760

5,300

 

AbbVie Inc. *

          194,457

3,200

 

Johnson & Johnson

          236,544

2,900

 

Novartis AG ADR *

          196,678

10,000

 

Pfizer, Inc.

          272,800

4,500

 

Teva Pharmaceutical Industries Ltd. ADR

          170,955

   

       1,139,194

Industrials - 9.66%

 

16,600

 

Exelis, Inc.

          182,434

9,200

 

General Electric Co.

          204,976

2,200

 

Lockheed Martin Corp.

          191,114

2,000

 

Norfolk Southern Corp.

          137,740

1,300

 

Union Pacific Corp.

          170,898

   

          887,162

Information Technology - 5.66%

 

7,800

 

Intel Corp.

          164,112

6,400

 

Microsoft Corp.

          175,680

5,500

 

Paychex, Inc.

          179,575

   

          519,367

    

TOTAL FOR COMMON STOCKS (Cost $5,250,481) - 64.62%

       5,931,801

    

CORPORATE BONDS - 15.12%

 

108,000

 

Apria Healthcare Group, Inc. 12.375%, 11/01/14

          106,785

148,000

 

Arch Coal, Inc. 7.25%, 10/01/20

          132,460

95,000

 

Brown Shoe Co., Inc. 7.125%, 05/15/19

           99,275

143,000

 

Caesars Entertainment Operating Co., Inc. 12.75%, 04/15/18

          109,395

110,000

 

Gymboree Corp. 9.125%, 12/01/18

          103,400

148,000

 

JC Penney Corp. 5.65%, 06/01/20

          123,025

100,000

 

Jefferies Group, Inc. 5.125%, 04/13/18

          106,500

95,000

 

Jones Group, Inc. 6.875%, 03/15/19

           99,156

240,000

 

MBIA, Inc. 6.40%, 08/15/22

          192,000

205,000

 

NRG Energy, Inc. 7.625%, 05/05/19

          219,350

100,000

 

Nuveen Investments, Inc. 5.5% 09/15/15

           97,000

    

TOTAL FOR CORPORATE BONDS (Cost $1,383,851) - 15.12%

       1,388,346

    

EXCHANGE TRADED FUND-FIXED INCOME - 3.07%

 

11,200

 

PowerShares Senior Loan Port

          281,568

    

TOTAL FOR EXCHANGE TRADED FUND-FIXED INCOME (Cost $279,998) - 3.07%

          281,568

    

LIMITED PARTNERSHIP - 2.46%

 

4,800

 

Energy Transfer Partners L.P.

          225,552

    

TOTAL FOR LIMITED PARTNERSHIP (Cost $220,224) - 2.46%

          225,552

    

MORTGAGE BACKED SECURITIES - 0.62%

 

39,113

 

Credit Suisse Mortgage Capital Certificate 2006-C1 Class A3 5.711% 02/15/39

           39,507

4,442

 

CSFB Mortgage Securities Corp. 2005-C5 Class A3 5.10% 08/15/38

             4,447

11,074

 

GMAC Commercial Mortgage Securities, Inc. 2004-C3 Class A4 4.55% 12/10/41

           11,112

2,239

 

JPMorgan Chase 2005-Cb13 Class A2 5.25% 01/12/43

             2,254

    

TOTAL FOR MORTGAGE BACKED SECURITIES (Cost $56,817) - 0.62%

           57,320

    

PREFERRED SECURITIES - 1.98%

 

3,760

 

SLM Corp. 6.97% Series A

          182,172

    

TOTAL FOR PREFERRED SECURITIES (Cost $161,372) - 1.98%

          182,172

    

REAL ESTATE INVESTMENT TRUST - 1.44%

 

5,261

 

Hospitality Property Trust 7.00%

          131,978

    

TOTAL FOR REAL ESTATE INVESTMENT TRUST (Cost $130,128) - 1.44%

          131,978

    

UNCLASSIFIED - 0.00%

 

45,000

 

Sea Containers Ltd. Class A (Bermuda) *

                   0

    

TOTAL FOR UNCLASSIFIED (Cost $48,230) - 0.00%

                   0

    

SHORT TERM INVESTMENTS - 5.09%

 

467,060

 

First American Treasury Obligation Fund Class Z 0.00% **

          467,060

    

TOTAL SHORT TERM INVESTMENTS (Cost $467,060) - 5.09%

          467,060

    

TOTAL INVESTMENTS (Cost $8,453,948) - 100.73%

       9,246,552

    

LIABILITIES IN EXCESS OF OTHER ASSETS - (0.73)%

         (66,856)

    

NET ASSETS - 100.00%

$     9,179,696

    

ADR - American Depository Receipt.

 

† This security has been valued according to the fair value pricing policies of the Fund.

 

* Non-income producing security during the period.

 

** Variable rate security; the coupon rate shown represents the yield at January 31, 2013.

 

The accompanying notes are an integral part of these financial statements.

 








Fallen Angels Income Fund

Schedule of Call Options Written

January 31, 2013 (Unaudited)

    

CALL OPTIONS WRITTEN *

   
    

Underlying Security

 Shares Subject

  

Expiration Date/Exercise Price

 to Call

Value

 
    

BlackRock, Inc.

   

February 2013 Call@ $240.00

1,000

$          1,750

 
    

BP Plc.

   

February 2013 Call@ $45.00

5,000

              450

 
    

JPMorgan Chase & Co.

   

March 2013 Call@ $48.00

4,800

            3,936

 
    

Lockheed Martin Corp.

   

February 2013 Call@ $92.50

2,200

              242

 
    

McDonald's Corp.

   

February 2013 Call@ $95.00

2,100

            2,100

 
    

Mondelez International, Inc.

   

February 2013 Call@ $28.00

6,800

            1,972

 
    

Total (Premiums Received $14,127)

 

$        10,450

 


* Non-income producing securities during the period.

The accompanying notes are an integral part of these financial statements.

 

Various inputs are used in determining the value of the Fund's investments.  These inputs are summarized in the three broad levels listed below:

 

Level 1 - Unadjusted quoted prices in active markets for identical assets or liabilities that the Fund has the ability to access.

        

Level 2 - Observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly.  These inputs may include quoted prices for the identical instrument on an active market, price for similar instruments, interest rates, prepayment speeds, yield curves, default rates and similar data.

 

Level 3 - Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available, representing the Fund's own assumptions about the assumptions a market participant would use in valuing the asset or liability, and would be based on the best information available.

 

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

 

The following is a summary of inputs used as of  January 31, 2013 in valuing the Fund’s investments carried at value:


Investments in Securities (Assets)

Level 1

Level 2

Level 3

Total

     

    Closed End Funds

 $         580,755

-

-

 $     580,755

    Common Stocks

          5,931,801

-

-

     5,931,801

    Corporate Bonds

          1,388,346

  

     1,388,346

    Exchange Traded Fund

            281,568

  

        281,568

    Limited Partnership

            225,552

-

-

        225,552

    Mortgage Backed Securities

              57,320

-

-

         57,320

    Preferred Securities

            182,172

-

-

        182,172

    Real Estate Investment Trust

            131,978

  

        131,978

    Short-Term Investments:

    

         First American Treasury Obligation Fund Class Z

467,060

-

-

467,060

     

Total

 $       9,246,552

-

-

 $  9,246,552

     

Investments in Securities Sold Short and Written Options (Liabilities)

Level 1

Level 2

Level 3

Total

    

    

    Call Options

 $           10,450

-

-

 $       10,450

     

Total

 $           10,450

-

-

 $       10,450


The Fund did not hold any Level 3 assets during the six months ended January 31, 2013. There were no significant transfers into or out of Level 1 or Level 2 during the period. It is the Fund’s policy to recognize transfers into and out of Level 1 and Level 2 at the end of the reporting period.


The accompanying notes are an integral part of these financial statements.







AMM Funds

Statements of Assets and Liabilities

January 31, 2013 (Unaudited)

    

Assets:

 

Value Fund

Income Fund

       Investments in Securities, at Value (Cost $10,400,658 and $8,453,948)

$        9,381,170

$      9,246,552

       Receivables:

  

           Dividends and Interest

4,875

40,273

           Securities Sold

217,773

5,279

           Shareholder Purchases

                     -

7,045

        Prepaid Expenses

              10,810

            11,108

                     Total Assets

         9,614,628

        9,310,257

Liabilities:

   

       Call Options Written  (premiums received $14,127)

                     -

10,450

       Payables:

  

           Management Fees

8,166

7,763

           Administrative Fees

2,042

1,941

           Distribution Fees

2,035

1,917

           Securities Purchased

                     -

92,753

           Trustee Fees

270

270

           Shareholder Redemptions

                     -

4,988

           Other Expenses

              10,610

            10,479

                     Total Liabilities

              23,123

          130,561

Net Assets

 

$        9,591,505

$      9,179,696

    

Net Assets Consist of:

  

    Paid In Capital

$      13,179,860

$    13,370,552

    Accumulated Undistributed Net Investment Income (Loss)

           (14,931)

          196,243

    Accumulated Realized Loss on Investments

       (2,553,936)

     (5,183,380)

    Unrealized Appreciation (Depreciation) in Value of Investments

       (1,019,488)

          796,281

Net Assets, for 1,141,610 and 1,099,722 Shares Outstanding

$        9,591,505

$      9,179,696

    

Net Asset Value Per Share

$               8.40

$              8.35

    

The accompanying notes are an integral part of these financial statements.








AMM Funds

Statements of Operations

For the six months ended January 31, 2013 (Unaudited)

    
    

Investment Income:

Value Fund

Income Fund

       Dividends (net of foreign withholding of $777 and $238, respectively)

$        105,312

$        159,368

       Interest

 

                    2

            71,648

            Total Investment Income

          105,314

          231,016

    

Expenses:

   

       Advisory Fees (Note 3)

            49,511

            46,508

       Administrative Fees (Note 3)

            12,378

            11,627

       Distribution (12b-1) Fees (Note 3)

            12,378

            11,627

       Transfer Agent Fees

            15,276

            15,276

       Registration Fees

            11,418

            11,135

       Custodian Fees

              3,193

              4,293

       Audit Fees

              5,634

              6,439

       Legal Fees

              6,786

              6,737

       Trustee Fees

              2,017

              2,017

       Printing and Mailing Fees

                159

                157

       Miscellaneous Fees

              1,002

                982

       Insurance Fees

                493

                479

            Total Expenses

          120,245

          117,277

    

Net Investment Income (Loss)

         (14,931)

          113,739

    

Realized and Unrealized Gain on:

  

   Realized Gain on Investments

          219,745

          138,214

   Realized Gain on Options

                   -

              4,792

   Capital Gain Distributions from Portfolio Companies

                   -

                   -

   Net Change in Unrealized Appreciation on:

  

        Investments

          498,695

          250,585

        Options

 

                   -

              4,925

Net Realized and Unrealized Gain on Investments

          718,440

          398,516

    

Net Increase in Net Assets Resulting from Operations

$        703,509

$        512,255

    
    

The accompanying notes are an integral part of these financial statements.








Fallen Angels Value Fund

Statements of Changes in Net Assets

 

 

 

 

    
  

(Unaudited)

 
  

Six Months

 
  

      Ended

Year Ended

  

1/31/2013

7/31/2012

Increase (Decrease) in Net Assets From Operations:

  

    Net Investment Loss

$       (14,931)

$     (28,450)

    Net Realized Gain on Investments

         219,745

         45,872

    Unrealized Appreciation (Depreciation) on Investments

         498,695

     (870,445)

    Net Increase (Decrease) in Net Assets Resulting from Operations

         703,509

     (853,023)

    

Distributions to Shareholders:

  

    Net Investment Income

                -   

               -   

    Realized Gains

                -   

               -   

    Total Distributions Paid to Shareholders

                -   

               -   

    

Capital Share Transactions

    (1,212,169)

   (1,876,873)

    

Total Decrease in Net Assets

       (508,660)

   (2,729,896)

    

Net Assets:

   

Beginning of Period

     10,100,165

   12,830,061

    

End of Period (Including Undistributed Net Investment Loss

  

    of $14,931 and $0, respectively)

$     9,591,505

$  10,100,165

    
    

The accompanying notes are an integral part of these financial statements.








Fallen Angels Income Fund

Statements of Changes in Net Assets

 

 

 

 

    
  

(Unaudited)

 
  

Six Months

 
  

     Ended

Year Ended

  

1/31/2013

7/31/2012

Increase (Decrease) in Net Assets From Operations:

  

    Net Investment Income

$      113,739

$      312,465

    Net Realized Gain on Investments & Options

        143,006

        101,817

    Capital Gain Distributions from Portfolio Companies

                 -

         23,123

    Unrealized Appreciation on Investments & Options

        255,510

         76,442

    Net Increase in Net Assets Resulting from Operations

        512,255

        513,847

    

Distributions to Shareholders:

  

    Net Investment Income

       (75,965)

     (288,230)

    Realized Gain

                 -

                 -

    Total Distributions Paid to Shareholders

       (75,965)

     (288,230)

    

Capital Share Transactions

     (580,716)

   (1,968,322)

    

Total Decrease in Net Assets

     (144,426)

   (1,742,705)

    

Net Assets:

   

Beginning of Period

     9,324,122

   11,066,827

    

End of Period (Including Undistributed Net Investment Income of $196,188 and $158,469, respectively)

  

$   9,179,696

$   9,324,122

    

The accompanying notes are an integral part of these financial statements.








Fallen Angels Value Fund

Financial Highlights

Selected data for a share outstanding throughout the period.

         
  

(Unaudited)

      
  

Six Months

      
  

   Ended

   

Years Ended

 
  

1/31/2013

 

7/31/2012

7/31/2011

7/31/2010

7/31/2009

7/31/2008

         

Net Asset Value, at Beginning of Period

$          7.82

 

$       8.35

$       7.77

$       7.59

$       9.14

$     10.32

         

Income From Investment Operations:

       

  Net Investment Income (Loss) *

         (0.01)

 

      (0.02)

      (0.06)

      (0.08)

      (0.04)

         0.01

  Net Gain (Loss) on Securities (Realized and Unrealized)

            0.59

 

      (0.51)

         0.64

         0.27

      (1.51)

      (1.10)

     Total from Investment Operations

            0.58

 

      (0.53)

         0.58

         0.19

      (1.55)

      (1.09)

         

Distributions:

        

  Net Investment Income

                -

 

             -

             -

      (0.01)

             -

      (0.09)

  Realized Gains

                -

 

             -

             -

             -

             -

             -

     Total from Distributions

                -

 

             -

             -

      (0.01)

             -

      (0.09)

         

Net Asset Value, at End of Period

$          8.40

 

$       7.82

$       8.35

$       7.77

$       7.59

$       9.14

         

Total Return **

        7.42%

 

   (6.35)%

     7.46%

     2.45%

 (16.96)%

 (10.63)%

         

Ratios/Supplemental Data:

       

  Net Assets at End of Period (Thousands)

$        9,592

 

$    10,100

$    12,830

$    13,077

$    14,087

$    18,507

  Before Waivers

       

     Ratio of Expenses to Average Net Assets

2.43%

2.25%

2.17%

2.19%

2.18%

1.99%

     Ratio of Net Investment Income (Loss) to Average Net Assets

(0.30)%

(0.26)%

(0.68)%

(0.96)%

(0.57)%

0.13%

  After Waivers

       

     Ratio of Expenses to Average Net Assets

2.43%

2.25%

2.17%

2.19%

2.18%

1.99%

     Ratio of Net Investment Income (Loss) to Average Net Assets

(0.30)%

(0.26)%

(0.68)%

(0.96)%

(0.57)%

0.13%

  Portfolio Turnover

3.37%

 

49.23%

118.43%

286.18%

215.67%

451.20%

         
         
         

* Per share net investment income (loss) has been determined on the basis of average shares outstanding during the period.

** Assumes reinvestment of dividends. Not annualized for periods of less than one year.

† Annualized

        

The accompanying notes are an integral part of these financial statements.

 








Fallen Angels Income Fund

Financial Highlights

Selected data for a share outstanding throughout the period.

         
  

(Unaudited)

      
  

Six Months

      
  

   Ended

  

Years Ended

  
  

1/31/2013

 

7/31/2012

7/31/2011

7/31/2010

7/31/2009

7/31/2008

         

Net Asset Value, at Beginning of Period

$          7.96

 

$      7.74

$      7.36

$      6.64

$      7.81

$      9.54

         

Income From Investment Operations:

       

  Net Investment Income *

            0.10

 

        0.24

        0.23

        0.24

        0.30

        0.56

  Net Gain (Loss) on Securities (Realized and Unrealized)

            0.36

 

        0.20

        0.40

        0.72

   (1.26)

   (1.61)

     Total from Investment Operations

            0.46

 

        0.44

        0.63

        0.96

      (0.96)

      (1.05)

         

Distributions:

        

  Net Investment Income

         (0.07)

 

      (0.22)

      (0.25)

      (0.24)

      (0.21)

      (0.62)

  Realized Gains

              -   

 

          -   

          -   

          -   

          -   

   (0.06)

     Total from Distributions

         (0.07)

 

      (0.22)

      (0.25)

      (0.24)

      (0.21)

      (0.68)

         

Net Asset Value, at End of Period

$          8.35

 

$      7.96

$      7.74

$      7.36

$      6.64

$      7.81

         

Total Return **

        5.78%

 

     5.93%

     8.63%

   14.62%

 (12.10)%

 (11.65)%

         

Ratios/Supplemental Data:

       

  Net Assets at End of Period (Thousands)

$        9,180

 

$     9,324

$   11,067

$   12,325

$   11,925

$   15,822

Before Waivers

       

     Ratio of Expenses to Average Net Assets

2.52%

2.33%

2.27%

2.20%

2.37%

2.09%

     Ratio of Net Investment Income (Loss) to Average Net Assets

2.45%

3.19%

3.01%

3.29%

4.87%

6.35%

  After Waivers

       

     Ratio of Expenses to Average Net Assets

2.52%

2.33%

2.27%

2.20%

2.37%

2.09%

     Ratio of Net Investment Income  to Average Net Assets

2.45%

3.19%

3.01%

3.29%

4.87%

6.35%

  Portfolio Turnover

22.78%

 

69.06%

19.62%

37.83%

99.76%

138.49%

         
         

* Per share net investment income has been determined on the basis of average shares outstanding during the period.

** Assumes reinvestment of dividends. Not annualized for period of less than one year.

 

† Annualized

        

The accompanying notes are an integral part of these financial statements.

 









AMM FUNDS

THE FALLEN ANGELS VALUE FUND

THE FALLEN ANGELS INCOME FUND

NOTES TO FINANCIAL STATEMENTS

JANUARY 31, 2013 (UNAUDITED)


Note 1. Organization

The Fallen Angels Value Fund (“Value Fund”) and the Fallen Angels Income Fund (“Income Fund”) (each a “Fund” and collectively, the “Funds”) are diversified series of AMM Funds (the “Trust”), an open-end investment company that was organized as an Ohio business trust on June 20, 2006.  The Funds commenced operations on November 10, 2006. The Trust is permitted to issue an unlimited number of shares of beneficial interest of separate series. The Funds are the only series currently authorized by the Board of Trustees (“the Board”).  The investment adviser to the Funds is American Money Management, LLC (the “Advisor”).


The Value Fund’s investment objective is to seek long-term capital appreciation. The Income Fund’s investment objective is to seek high current income with the potential for capital appreciation.


Note 2. Summary of Significant Accounting Policies

The following is a summary of the significant accounting policies followed by the Funds in the preparation of their financial statements.  These policies are in conformity with accounting principles generally accepted in the United States of America.


Security Valuation- Each Funds’ assets are generally valued at their market value using market quotations. If market prices are not available or, in the Advisor’s opinion, market prices do not reflect fair value, or if an event occurs after the close of trading on the domestic or foreign exchange or market on which the security is principally traded (but prior to the time the NAV is calculated) that materially affects fair value, the Advisor will value the Funds’ assets at their fair value in accordance with policies approved by the Funds’ Board of Trustees (the “Board”). For example, fair value pricing may be used if an event occurs after the close of the foreign market that could have an impact on the foreign securities value. The Board has adopted guidelines for good faith pricing, and has delegated to the Advisor the responsibility for determining fair value prices, subject to review by the Board.


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 Advisor believes such prices accurately reflect the fair market value of such securities.  A pricing service utilizes 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 Advisor decides that a price provided by the pricing service does not accurately reflect the fair market value of the securities, when 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 Advisor, in conformity with guidelines adopted by and 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.


In accordance with the Trust’s good faith pricing guidelines, the Advisor is required to consider all appropriate factors relevant to the value of securities for which it had determined other pricing sources are not available or reliable as described above.  No single standard for determining fair value controls, since fair value depends upon the circumstances of each individual case.  As a general principle, the current fair value of an issue of securities being valued by the Advisor would appear to be the amount which the owner might reasonably expect to receive for them upon their current sale.  Methods which are in accord with this principle may, for example, be based on (i) a multiple of earnings; (ii) a discount from market of a similar freely traded security (included a derivative security or a basket of securities traded on other markets, exchanges or among dealers); or (iii) yield to maturity with respect to debt issues, or a combination of these and other methods.


Fair Valuation- The investment in 45,000 shares of Sea Containers Ltd., in the Income Fund, has been valued at $.00 per share.  This security has been valued according to the fair value pricing policies of the Funds.  


Option Writing- When either Fund writes an option, an amount equal to the premium received by the Fund is recorded as a liability and is subsequently adjusted to the current fair value of the option written. Premiums received from writing options that expire unexercised are treated by a Fund on the expiration date as realized gains from investments. The difference between the premium and the amount paid on effecting a closing purchase transaction, including brokerage commissions, is also treated as a realized gain, or, if the premium is less than the amount paid for the closing purchase transaction, as a realized loss. If a call option is exercised, the premium is added to the proceeds from the sale of the underlying security or currency in determining whether a Fund has realized a gain or loss. If a put option is exercised, the premium reduces the cost basis of the securities purchased by the Fund. A Fund as writer of an option bears the market risk of an unfavorable change in the price of the security underlying the written option.

Repurchase Agreements- In connection with transactions in repurchase agreements, it is the Funds’ policy that its custodian take possession of the underlying collateral securities, the fair value of which exceeds the principal amount of the repurchase transaction, including accrued interest, at all times. If the seller defaults, and the fair value of the collateral declines, realization of the collateral by a Fund may be delayed or limited.


Financial Futures Contracts- The Funds may invest in financial futures contracts solely for the purpose of hedging its existing portfolio securities, or securities that the Fund intends to purchase, against fluctuations in fair value caused by changes in prevailing market interest rates. Upon entering into a financial futures contract, a Fund is required to pledge to the broker an amount of cash, U.S. government securities, or other assets, equal to a certain percentage of the contract amount (initial margin deposit). Subsequent payments, known as “variation margin,” are made or received by a Fund each day, depending on the daily fluctuations in the fair value of the underlying security. A Fund recognizes a gain or loss equal to the daily variation margin. Should market conditions move unexpectedly, A Fund may not achieve the anticipated benefits of the financial futures contracts and may realize a loss. The use of futures transactions involves the risk of imperfect correlation in movements in the price of futures contracts, interest rates, and the underlying hedged assets.


Short Sales- The Funds may sell a security that they do not own in anticipation of a decline in the fair value of that security. When a Fund sells a security short, it must borrow the security sold short and deliver it to the broker-dealer through which it made the short sale. A gain, limited to the price at which a Fund sold the security short, or a loss, unlimited in size, will be recognized upon the termination of a short sale.


Income Taxes - The Funds intend to continue to qualify each year as a “regulated investment company” under Subchapter M of the Internal Revenue Code of 1986, as amended. By so qualifying, the Funds will not be subject to federal income taxes to the extent that they distribute substantially all of their net investment income and any realized capital gains. It is the Funds’ policy to distribute annually, prior to the end of the calendar year, dividends sufficient to satisfy excise tax requirements of the Internal Revenue Service. This Internal Revenue Service requirement may cause an excess of distributions over the book year-end accumulated income.


In addition, GAAP requires management of the Funds to analyze all open tax years, fiscal years 2009-2012, as defined by IRS statute of limitations for all major industries, including federal tax authorities and certain state tax authorities.  As of and during the period ended January 31, 2013, the Funds did not have a liability for any unrecognized tax benefits.  The Funds have no examination in progress and are not aware of any tax positions for which it is reasonably possible that the total tax amounts of unrecognized tax benefits will significantly change in the next twelve months.


Share Valuation The price (net asset value) of the shares of each Fund is normally determined as of 4:00 p.m. Eastern time on each day the Funds are open for business and on any other day on which there is sufficient trading in the Funds’ securities to materially affect the net asset value. Each Fund is normally open for business on every day except Saturdays, Sundays and the following holidays: New Year’s Day, Martin Luther King Day, Presidents Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas.


Security Transaction Timing Security transactions are recorded on the dates transactions are entered into (the trade dates).  Dividend income and distributions to shareholders are recognized on the ex-dividend date.  Interest income is recognized on an accrual basis.  Each Fund uses the identified cost basis in computing gain or loss on sale of investment securities.  Discounts and premiums on securities purchased are amortized over the life of the respective securities.  Withholding taxes on foreign dividends are provided for in accordance with the Funds’ understanding of the applicable country’s tax rules and rates.


Distributions to Shareholders- Each Fund typically will distribute substantially all of its net investment income in the form of dividends and capital gains to its shareholders. The Value Fund will distribute dividends and capital gains annually, and expects that distributions will consist primarily of capital gains. The Income Fund will distribute dividends monthly and capital gains annually, and expects that distributions will consist primarily of ordinary income. Distributions will be recorded on ex-dividend date.


Use of Estimates- The preparation of financial statements in conformity with generally accepted accounting principles 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 increase and decreases in net assets from operations during the reporting period. Actual results could differ from these estimates.  

Subsequent Events - Management has evaluated the impact of all subsequent events through the date the financial statements were issued and has determined that there were no subsequent events requiring recognition or disclosure in these financial statements.  


Note 3. Investment Management and Service Agreements

The Trust has a management agreement (the “Management Agreement”) with the Advisor pursuant to which the Advisor, subject to the supervision of the Board, provides or arranges to be provided to the Funds such investment advice as it deems advisable and will furnish or arrange to be furnished a continuous investments program for the Funds consistent with each Funds investment objective and policies.  Under the Management Agreement, each Fund will pay the Advisor a monthly fee based on the Fund’s average daily net assets at the annual rate of 1.00% per Fund. For the six months ended January 31, 2013, the Advisor earned a fee of $49,511 and $46,508 for the Value Fund and Income Fund, respectively. The Funds owed the Advisor management fees of $8,166 and $7,763 for the Value Fund and Income Fund, respectively, as of January 31, 2013.


The Trust also has an administration agreement with the Advisor to furnish sponsorship, administrative and supervisory services as may from time to time be reasonably requested by the Trust and in general to provide supervision of the overall operations of the Trust. Under this agreement, each Fund pays the Advisor a monthly fee based on the Fund’s average daily net assets at the annual rate of 0.25%. For the six months ended January 31, 2013, the Advisor earned a fee of $12,378 and $11,627 from the Value Fund and Income Fund, respectively.  The Funds owed the Advisor administrative fees of $2,042 and $1,941 for the Value Fund and Income Fund, respectively, as of January 31, 2013.


The Funds have adopted a Plan pursuant to Rule 12b-1 under the 1940 Act whereby the Funds pay the Advisor for certain distribution and promotion expenses activities which are primarily intended to result in the sale of the Funds’ shares, including, but not limited to: advertising, printing of prospectuses and reports for prospective shareholders, preparation and distribution of advertising materials and sales literature, and payments to dealers and shareholder servicing agents who enter into agreements with the Funds. The Funds’ incur such distribution expenses at the rate of 0.25% per annum of the Funds average net assets. For the six months ended January 31, 2013, distribution (12b-1) fees of the Plan accrued fees of $12,378 and $11,627 under the plan from the Value Fund and Income Fund, respectively. The Funds owed the Advisor $2,035 and $1,917 for the Value Fund and Income Fund, respectively as of January 31, 2013.


Note 4. Related Party Transactions

Gabriel B. Wisdom is the control person of the Advisor and also serves as a trustee and officer of the Trust.  Mr. Wisdom receives benefits from the Advisor resulting from management, administration and distribution (12b-1) fees paid to the Advisor by the Funds.


Note 5. Options

Transactions in written call options for the Income Fund during the six months ended January 31, 2013 were as follows:


 

Number of

 

Premiums

Received

 

Contracts

 

Options outstanding at July 31, 2012

39

 

$        2,964

Options written

445

 

41,013

Options exercised

(116)

 

(14,504)

Options expired

(102)

 

(9,501)

Options terminated in closing purchase transaction

          (47)

 

       (5,845)

Options outstanding at January 31, 2013

           219

 

$      14,127



Realized and unrealized gains and losses on derivatives contracts entered into during the year ended January 31, 2013, by the Income Fund, are recorded in the following locations in the Statement of Operations:


 

Location

Realized

Gain/(Loss)

Location

Unrealized

Gain/(Loss)

Call options Written & Purchased

Realized Gain on Options

$4,792

Change in Unrealized Appreciation on Options

$4,925


The selling of written call options may tend to reduce the volatility of the Income Fund because the premiums received from selling the options will reduce any losses on the underlying securities, but only by the amount of the premiums. However, selling the options may also limit the Income Fund’s gain on the underlying securities.  Written call options expose the Income Fund to minimal counterparty risk since they are exchange-traded and the exchange’s clearing house guarantees the options against default.


Note 6. Capital Share Transactions

The Funds are authorized to issue an unlimited number of shares with no par value of separate series.  Paid in capital at January 31, 2013 was $13,179,860 and $13,370,552 representing 1,141,610 and 1,099,722 shares outstanding for the Value Fund and Income Fund, respectively.


Transactions in capital stock for the period ended January 31, 2013 were as follows:


 

Value Fund

Income Fund

 

Shares

Amount

Shares

Amount

Shares Sold

33,293

$     269,662

63,719

$      517,061

Shares issued in reinvestment of distributions

-

            -

9,337

         75,156

Shares redeemed

     (182,598)

 (1,481,831)

      (144,327)

  (1,172,933)

Net Increase (decrease)

     (149,305)

$(1,212,169)

        (71,271)

$   (580,716)


Transactions in capital stock for the fiscal year ended July 31, 2012 were as follows:


 

Value Fund

Income Fund

 

Shares

Amount

Shares

Amount

Shares Sold

75,593

$     605,084

87,379

$      672,955

Shares issued in reinvestment of distributions

-

-

37,625

         285,468

Shares redeemed

     (321,349)

 (2,481,957)

      (384,362)

  (2,926,745)

Net Increase (decrease)

     (245,756)

$(1,876,873)

      (259,358)

$(1,968,322)


Note 7. Investment Transactions

For the six months ended January 31, 2013, purchases and sales of investment securities other than U.S. Government obligations aggregated $299,990 and $1,808,932 for the Value Fund and $2,128,722 and $1,900,153 for the Income Fund, respectively. Purchases and sales of U.S. Government obligations aggregated $0 and $0 for the Value Fund and $507,943 and $263,000 for the Income Fund.


Note 8. Tax Matters

The Funds tax basis capital gains and losses are determined only at the end of each fiscal year.  For tax purposes, at July 31, 2012, the following represents the tax basis capital gains and losses:


  

Value Fund

  

Income Fund

      

Undistributed ordinary income

$

-0-

 

$

213,080

      

Capital loss carryforward expiring 7/31/2017+


$

1,094,601

 

$

2,826,776

Capital loss carryforward expiring 7/31/2018+



 

1,647,626

  

2,126,805

Capital loss carryforward expiring 7/31/2019+



 

      -0-

  

   329,037

 

$    

2,742,227

 

$

5,282,618

      

Post-October capital loss deferrals

     

   realized between 11/1/11 and 7/31/12*

$

31,455

 

$

-


As of January 31, 2013, the tax basis components of distributable earnings, unrealized appreciation (depreciation) and cost of investment securities for each of the Funds were as follows:


Gross unrealized appreciation on investment securities

$

917,778

 

$

954,789

Gross unrealized depreciation on investment securities

      

 (1,937,266)

  

(158,508)

Net unrealized appreciation on investment securities

$

(1,019,488)

 

$

    796,281

      

Cost of investment securities, including short-term investments**

$

10,400,658

 

$

8,453,948


*These deferrals are considered incurred in the subsequent year.

** The difference between book and tax cost represents disallowed wash sales for tax purposes.

+ The capital loss carryforward will be used to offset any capital gains realized by the Funds in future years through the expiration date. The Funds will not make distributions from capital gains while a capital loss carryforward remains.


The Income Fund paid distributions in the amount of $75,965, from ordinary income, for the six months ended January 31, 2013.


The Income Fund paid distributions in the amount of $288,230, from ordinary income, for the year ended July 31, 2012.


Permanent book and tax differences relating to shareholder distributions may result in reclassifications to paid in capital and may affect the per-share allocation between net investment income and realized and unrealized gain/loss.  Undistributed net investment income and accumulated undistributed net realized gain/loss on investment transactions may include temporary book and tax differences which reverse in subsequent periods.  Any taxable income or gain remaining at fiscal year end is distributed in the following year.


Note 9.  The Regulated Investment Company Modernization Act of 2010

The Regulated Investment Company Modernization Act of 2010 (the “Act”) was enacted on December 22, 2010. The Act makes changes to several tax rules impacting the Funds. In general, some provisions of the Act, not including the changes to capital loss carryforwards, are effective for the Funds’ fiscal year ending July 31, 2012. Although the Act provides several benefits, including the unlimited carryover of future capital losses, there may be a greater likelihood that all or a portion of the Funds’ pre-enactment capital loss carryovers may expire without being utilized due to the fact that post-enactment capital losses get utilized before pre-enactment capital loss carryovers.


Note 10. Control and Ownership

The beneficial ownership, either directly or indirectly, of more than 25% of the voting securities of a fund creates a presumption of control of the fund, under Section 2(a)(9) of the Investment Company Act of 1940 as amended. As of January 31, 2013, Charles Schwab for the benefit of its customers owned, in aggregate, approximately 90.91% and 88.15% of the Value Fund and Income Fund, respectively, and may be deemed to control the Funds.


Note 11. New Accounting Pronouncement.

In December 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (“ASU”) No. 2011-11 (the “Pronouncement”) related to disclosures about offsetting assets and liabilities.  The amendments in this ASU require an entity to disclose information about offsetting and related arrangements to enable users of its financial statements to understand the effect of those arrangements on its financial position.  The ASU is effective for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods.  The Pronouncement requires retrospective application for all comparative periods presented.  Management is currently evaluating the impact that this Pronouncement may have on the Fund’s financial statements.







AMM Funds

Expense Illustration

January 31, 2013 (Unaudited)

    

Expense Example

    

As a shareholder of the Funds, you incur ongoing costs which typically consist of management fees, 12b-1 distribution and/or service fees and other Fund expenses. This Example is 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.

    

The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period, August 1, 2012 through January 31, 2013.

    

Actual Expenses

    

The first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period.

    

Hypothetical Example for Comparison Purposes

    

The second line of the table below provides information about hypothetical account values and hypothetical expenses based on each Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in these funds and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

    

Value Fund

   
 

Beginning Account Value

Ending Account Value

Expenses Paid During the Period *

 

August 1, 2012

January 31, 2013

August 1, 2012 to January 31, 2013

    

Actual

$1,000.00

$1,074.17

$12.70

Hypothetical (5% Annual

   

Return before expenses)

$1,000.00

$1,012.96

$12.33

    

* Expenses are equal to the Fund's annualized expense ratio of 2.43%, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).

    

Income Fund

   
 

Beginning Account Value

Ending Account Value

Expenses Paid During the Period *

 

August 1, 2012

January 31, 2013

August 1, 2012 to January 31, 2013

    

Actual

$1,000.00

$1,057.83

$13.07

Hypothetical (5% Annual

   

Return before expenses)

$1,000.00

$1,012.50

$12.78

    

* Expenses are equal to the Fund's annualized expense ratio of 2.52%, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).








AMM FUNDS

THE FALLEN ANGELS VALUE FUND

THE FALLEN ANGELS INCOME FUND

TRUSTEES AND OFFICERS

JANUARY 31, 2013 (UNAUDITED)



TRUSTEES AND OFFICERS


The following table provides information regarding each Trustee who is not an “interested person” of the Trust, as defined in the Investment Company Act of 1940, as amended.  Each Trustee serves as a Trustee until the termination of the Trust unless the Trustee dies, resigns, retires or is removed.







Name, Address and Age

Position & Length of Time Served with the Trust

Number of Portfolios Overseen

Principal Occupations During Past 5 Years and Directorships

Kelly C. Huang

c/o American Money Management

P.O. Box 675203

Rancho Santa Fe, CA 92067

Age: 46

Trustee since August 2006.

2

Management Consultant, self-employed (2002-present); Instructor, UCSD Extension (2009-present)

Ingram S. Chodorow

P.O. Box 675167, Rancho Santa Fe, CA 92067

Age: 73

Trustee since August 2006.

2

President/CEO, Elsac Group, Inc.(2009), (investments), President/CEO, Placontrol, Inc. (1973-2009) (oral care products)

Linda J. Rock

1946 Zapo St.

Del Mar, CA  92014

Age: 55

Trustee since August 2006.

2

Management consultant, self-employed (1990-present)

Miro Copic

c/o American Money Management

P.O. Box 675203

Rancho Santa Fe, CA 92067

Age: 51

Trustee since August 2006.

2

President/CEO, BottomLine Marketing (2001-present) (marketing)



The following table provides information regarding each Trustee who is an “interested person” of the Trust, as defined in the Investment Company Act of 1940 as amended, and each officer of the Trust.


Name, Address, and Age

Position and Length of Time Served with the Trust

Number of Portfolios Overseen

Principal Occupations During Past 5 Years and Directorships

Gabriel B. Wisdom1

P.O. Box 675203

Rancho Santa Fe, CA 92067

Age: 63

Trustee since June 2006; President since August 2006.

2

Chief Executive Officer and Managing Director, American Money Management, LLC (1999 to present)

Michael J. Moore

P.O. Box 675203

Rancho Santa Fe, CA 92067

Age: 36

Treasurer since August 2006; Secretary since March 2012.

N/A

Chief Investment Officer, American Money Management (2001 to present)



1 Gabriel B. Wisdom is considered an "Interested” Trustee as defined in the Investment Company Act of 1940, as amended, because he is an officer of the Trust and President of the Funds' investment adviser.








AMM FUNDS

THE FALLEN ANGELS VALUE FUND

THE FALLEN ANGELS INCOME FUND

ADDITIONAL INFORMATION

JANUARY 31, 2013 (UNAUDITED)




Additional Information


The Funds’ Statement of Additional Information ("SAI") includes additional information about the trustees and is available, without charge, upon request.  You may call toll-free (866) 663-8023 to request a copy of the SAI or to make shareholder inquiries.


Proxy Voting


The Funds’ Advisor is responsible for exercising the voting rights associated with the securities held by the Funds.  A description of the policies and procedures used by the Advisor in fulfilling this responsibility is available without charge by calling (866) 663-8023.  It is also included in the Funds’ SAI, which is available on the Securities and Exchange Commission’s website at http://www.sec.gov.


A description of the policies and procedures that the Funds use to determine how to vote proxies relating to portfolio securities and information regarding how the Funds voted proxies during the most recent 12-month period ended July 31, are available without charge upon request by (1) calling the Funds at (800) 595-4866 and (2) from Fund documents filed with the Securities and Exchange Commission ("SEC") on the SEC's website at www.sec.gov.


Portfolio Holdings


The Funds file a complete schedule of investments with the SEC for the first and third quarter of each fiscal year on Form N-Q.  The Funds’ first and third fiscal quarters end on April 30 and October 31. The Funds’ Forms N-Q are available on the SEC’s website at http://sec.gov, or they may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC (call 1-800-732-0330 for information on the operation of the Public Reference Room).  You may also obtain copies by calling the Funds at (866) 663-8023.


Management Agreement Renewal


At an in person Board meeting, held September 25, 2012, the Trustees conducted deliberations relating to the renewal of the Management Agreement between the Adviser and the Trust.  Trust counsel and the Trustees reviewed a memorandum provided to the Trustees noting the review must include, but not be limited to:  (1) investment performance of each Fund and the Adviser; (2) the nature, extent and quality of services provided to the Funds; (3) costs of the services and profits of the Adviser (including any affiliates); (4) economies of scale realized as the Funds grow; and (5) whether fees indicate that the Funds benefit or share in the economies of scale.  The Trustees' review was informed by a memorandum provided by the Adviser as well as by supplemental information provided by the Adviser.  As part of its deliberations, the Board also considered and relied upon the information about the Funds and the Adviser that the Trustees had received throughout the year as part of their ongoing oversight of the Funds and their operations.


Performance


As to each Fund's performance, the Trustees reviewed performance information relative-to-index and peer group for each Fund over varying time periods, including 3-month, 1-year, 3-year, 5-year and since-inception periods provided by the Adviser, which was derived, in part, from a Morningstar mutual fund database.  The Trustees noted the total return of the Value Fund for each of the periods presented was lower than the S&P 500 Index.  Similarly, the Value Fund's total return was lower than the peer group of Morningstar Large Blend similar-sized funds employing a similar investment strategy.  However, performance of the peer group for the since-inception was not available.  Additionally, the Trustees noted that the total return of the Value Fund for the 1-year period ended July 31, 2012 of -6.35%, which was 15.48% and 22.80% below the index and peer group, respectively.  They further noted this performance gap was larger than past performance gaps.  Nonetheless, the Trustees stated that the Adviser's re-focused investment strategy was promising.  Specifically, they noted the Adviser is re-emphasizing "fallen angel" value issuers that are typically smaller, fast-growing or recovering companies with strong or improving balance sheets and reducing allocation to low-yielding cash equivalents.  They stated they concurred with the Adviser's view that these fallen angels should provide compelling expected gains or income opportunities for the Fund.  Additionally, they noted the Adviser has been restructuring the Value Fund's portfolio and that 90% of the Fund holdings were less than 2 years old.  Overall, the Trustees concluded that even though the Fund's performance had been below expectations, the Adviser's re-focused strategy was compelling and merited further time to come to fruition.


The Trustees noted the total return of the Income Fund for the 1-year period ended July 31, 2012, of 5.93% was 3.89% above the Dow Jones US Moderate Portfolio index but 4.72 % below the peer group of Morningstar Moderate Allocation similar-sized funds employing a similar investment strategy.  Furthermore, the Trustees noted that the Fund lagged the index over the 3-year, 5-year and since-inception periods while the Fund outperformed in the peer group over the 3-year period but underperformed slightly over the 5-year period.  However, performance of the peer group for the since-inception was not available.  They further noted the Fund's performance is generally improving based on the Adviser's re-focused investment strategy that is increasing allocation to high yield debt securities, de-emphasizing lower-yielding U.S. Treasury securities and generation additional returns through cover call writing.  Furthermore, they noted the Adviser is seeking opportunistic investments including income-paying securities of "fallen angel" issuers that are typically smaller, fast-growing or recovering companies with strong or improving balance sheets.  They stated they concurred with the Adviser's view that the revised strategy should provide compelling expected gains or income opportunities for the Fund.  Overall, the Trustees concluded that even though the Fund's performance had generally been below expectations, the Adviser's re-focused strategy was producing favorable results and merited further time to produce a longer track record.


After further discussion, it was the consensus of the Trustees that while each Fund's performance had generally been below expectations, in light of the Adviser's plans to improve performance, satisfactory, subject to quarterly or more frequent monitoring on an as-needed basis.


Nature, Extent and Quality of Services


As to the nature, extent, and quality of the services provided by the Adviser, the Board considered the Adviser's investment philosophy and strategy.  In addition, the Trustees reviewed the Adviser's Form ADV Part I and Part II which described the operations and policies of the Adviser.  The Trustees also reviewed a description of the organizational structure of the Adviser, including a description of each employee's title, responsibilities and position within the reporting hierarchy of the Adviser.  The Trustees observed that the Adviser had expanded its portfolio management staff by adding Mr. Busch to serve as one of the portfolio managers for the Income Fund and to provide general investment support for the Funds.  The Trustees noted that the Adviser is adequately staffed relative to its responsibilities and obligations to the Funds.  They also observed that the Adviser's operational and compliance processes are well-designed and give the Trustees confidence that the Funds will be managed in conformity with their respective investment objectives and restrictions.


Additionally, the Trustees noted some of the prominent features of the Adviser's investment process, including periodic meetings of its investment committee, which reviews financial market developments and the Adviser's approved investments.  The Trustees also noted that the extent of services provided to the Funds is greater than most funds in that the Adviser expends significant resources and personnel time promoting the Funds via radio and promotional investment seminars.  In particular, the Trustees noted total compensation paid to financial intermediaries and other distribution-related expenses such as advertising, exceeded 12b-1 fees collected from the Funds, and the Adviser bears those excess expenses.  They also noted the Adviser certified that it had complied with the Trust's Code of Ethics.  The Board also reviewed the Adviser's unaudited financial statements.  Mr. Wisdom discussed the Adviser's personnel and their Fund-related responsibilities.  The Board discussed the compliance activities of Mr. Moore who serves as Chief Compliance Officer of the Fund and Adviser.  Based on the information in the report and their discussions with Mr. Wisdom, Mr. Moore, and Mr. Busch, the Trustees concluded that the Adviser has generally provided high quality advisory services to the Funds, and that the nature and extent of services provided by the Adviser were consistent with the Board's expectations.


Costs of Services and Profits


The Trustees then reviewed information comparing the expense ratio of each Fund to those of its peer group.  Mr. Wisdom informed the Board that the Income Fund and the Value Fund had expense ratios (including acquired fund fees and expenses) of approximately 2.58% and 2.27%, respectively, and each had advisory fees of 1.00%.  They also discussed the 0.25% administration fee paid by each Fund to the Adviser and the indirect benefits to the Adviser from the Rule 12b-1 fees.  The Trustees noted that while each Fund's expenses, including management fees, were above those of their Morningstar peer group, they were in a range of reasonable expectations when compared to the peer group of funds with similar investment objectives and similar asset sizes.  Additionally, the Trustees noted that while each Fund's management fee was above those of the respective Morningstar peer group, they were within the range of management fees paid by the peer group funds, although the Income Fund management fees were at the upper end of the range.  The Trustees concluded the each Fund's management fee was fair and reasonable particularly considering the small size of each Fund.


As to per-Fund costs incurred by and profits realized by the Adviser, the Board reviewed information regarding the Adviser's per-Fund income from management, 12b-1 and administrative fees and related per-Fund expenses.  The Trustees observed that the Adviser generates modest profits from management and administrative services and no profits from 12b-1 fees.  The Trustees discussed the reasonableness of the Adviser's expense allocation method across the three sources of revenue and determined the Adviser does not appear to have an excessively high profit margin.  After discussion regarding the Adviser's financial position, the Board concluded that the Adviser has adequate resources to fulfill its responsibilities to the Funds.  The Trustees determined that the Adviser was not excessively profitable.


Economies of Scale


The Trustees discussed economies of scale for each Fund and mechanisms by which these economies might be shared with the Funds.  The Trustees concluded that means of sharing these economies was not yet relevant at this time due to the small size of the Funds, but that the issue would be considered again on a Fund specific basis as the Funds grow.


Conclusion


The Trustees determined that the overall arrangement for each Fund provided under the terms of the Management Agreement was a reasonable business arrangement and that renewal of the Management Agreement was in the best interests of the Trust and each Fund's shareholders.












Board of Trustees

Ingram S. Chodorow

Miro Copic

Kelly C. Huang

Linda J. Rock

Gabriel B. Wisdom


Investment Adviser

American Money Management, LLC

P.O. Box 675203

Rancho Santa Fe, CA 92067


Dividend Paying Agent,

Shareholders’ Servicing Agent,

Transfer Agent

Mutual Shareholder Services, LLC


Custodian

U.S. Bank, NA


Independent Registered Public Accounting Firm

Sanville & Company


Legal Counsel

Thompson Hine LLP



This report is provided for the general information of the shareholders of the AMM Funds. This report is not intended for distribution to prospective investors in the Funds, unless preceded or accompanied by an effective prospectus.








Item 2. Code of Ethics.


(a) As of the end of the period covered by this report, the registrant has adopted a code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party.


(b) For purposes of this item, “code of ethics” means written standards that are reasonably designed to deter wrongdoing and to promote:


(1) Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;

(2) Full, fair, accurate, timely, and understandable disclosure in reports and documents that a registrant files with, or submits to, the Commission and in other public communications made by the registrant;

(3) Compliance with applicable governmental laws, rules, and regulations;

(4) The prompt internal reporting of violations of the code to an appropriate person or persons identified in the code; and

(5) Accountability for adherence to the code.


(c) Amendments:  During the period covered by the report, there have not been any amendments to the provisions of the code of ethics.


(d) Waivers:  During the period covered by the report, the registrant has not granted any express or implicit waivers from the provisions of the code of ethics.


(e) The Code of Ethics is not posted on registrant’s website.


(f) A copy of the Code of Ethics is attached as an exhibit.


Item 3. Audit Committee Financial Expert.


(a) The registrant’s Board of Trustees has determined that it does not have an audit committee financial expert serving on its audit committee.  At this time, the registrant believes that the experience provided by each member of the audit committee together offer the registrant adequate oversight for the registrant’s level of financial complexity.

Item 4. Principal Accountant Fees and Services.  Not applicable.


Item 5. Audit Committee of Listed Companies.  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 Funds.  Not applicable.


Item 8.  Portfolio Managers of Closed-End Funds.  Not applicable.


Item 9.  Purchases of Equity Securities by Closed-End Funds.  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) The registrant’s president and chief financial officer concluded that the disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940 (the “Act”)) were effective as of a date within 90 days of the filing date of this report, based on the evaluation of these controls and procedures required by Rule 30a-3(b) under the Act.

(b) There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Act) that occurred during the registrant’s 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.  


(a)(1)

EX-99.CODE ETH.  Filed herewith.


(a)(2)

EX-99.CERT.  Filed herewith.


(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)

EX-99.906CERT.  Filed herewith.



SIGNATURES


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.



AMM Funds


By /s/ Gabriel B. Wisdom, President

     Gabriel B. Wisdom

     President


Date: April 3, 2013


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/ Gabriel B. Wisdom, President

      Gabriel B. Wisdom

      President


Date April 3, 2013


By /s/ Michael Moore

      Michael Moore

      Secretary


Date April 3, 2013





EX-99.CERT 2 exhibit99rev.htm EX-99 Cert

I, Gabriel B. Wisdom, certify that:


1. I have reviewed this report on Form N-CSR of the AMM 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: April 3, 2013

/s/ Gabriel B. Wisdom

Gabriel B. Wisdom

President






I, Michael Moore, certify that:


1. I have reviewed this report on Form N-CSR of the AMM 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: April 3, 2013

/s/ Michael Moore

Michael Moore

Treasurer



EX-99.906 CERT 3 ex906.htm EX-99

EX-99.906CERT



CERTIFICATION

Gabriel B. Wisdom, President, and Michael Moore, Treasurer of  AMM Funds (the “Registrant”), each certify to the best of his or her knowledge that:

1.

The Registrant’s periodic report on Form N-CSR for the period ended January 31, 2013 (the “Form N-CSR”) fully complies with the requirements of Sections 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.

President

Treasurer

Fallen Angels Family of Funds

Fallen Angels Family of Funds



/s/ Gabriel B. Wisdom

/s/ Michael Moore

Gabriel B. Wisdom

Michael Moore

Date: April 3, 2013

Date: April 3, 2013



A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to AMM Funds and will be retained by AMM Funds and furnished to the Securities and Exchange Commission (the “Commission”) or its staff upon request.


This certification is being furnished to the 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


EX-99.CODE ETH 4 codeofethics.htm Code of Ethics – Principal Executive and Senior Officers

Code of Ethics – Principal Executive and Senior Officers


I.

Covered Officers/Purpose of the Code


This code of ethics (this “Code”) for the Trust applies to the Trust’s Principal Executive Officer and Principal Financial Officer (the “Covered Officers” each of whom is set forth in Exhibit A) for the purpose of promoting:


·

honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;

·

full, fair, accurate, timely and understandable disclosure in reports and documents that the Trust files with, or submits to, the SEC  and in other public communications made by the Trust;

·

compliance with applicable laws and governmental rules and regulations;

·

the prompt internal reporting of violations of this Code to an appropriate person or persons identified in this Code; and

·

accountability for adherence to this Code.


Each Covered Officer should adhere to a high standard of business ethics and should be sensitive to situations that may give rise to actual as well as apparent conflicts of interest.


II.

Covered Officers Should Handle Ethically Actual and Apparent Conflicts of Interest


Overview.  A “conflict of interest” occurs when a Covered Officer’s private interests interfere with the interests of, or the Covered Officer’s service to, the Trust.  For example, a conflict of interest would arise if a Covered Officer, or a member of the Covered Officer’s family, receives improper personal benefits as a result of the Covered Officer’s position with the Trust.


Certain conflicts of interest arise out of the relationships between Covered Officers and the Trust and already are subject to conflict of interest provisions in the 1940 Act (“Investment Company Act”) and the Investment Advisers Act of 1940 (“Investment Advisers Act”).  For example, Covered Officers may not individually engage in certain transactions (such as the purchase or sale of securities or other property) with the Trust because of their status as “affiliated persons” of the Trust.  This Code does not, and is not intended to, repeat or replace any compliance programs and procedures of the Trust or the investment adviser designed to prevent, or identify and correct, violations of the Investment Company Act and the Investment Advisers Act.  


Although typically not presenting an opportunity for improper personal benefit, conflicts arise from, or as a result of, the contractual relationship between the Trust and the investment adviser or the administrator of which a Covered Officer is also an officer or employee.  As a result, this Code recognizes that the Covered Officers will, in the normal course of their duties, whether formally for the Trust and/or for the adviser or the administrator, be involved in establishing policies and implementing decisions that will have different effects on the adviser or the administrator and the Trust.  The participation of the Covered Officers in such activities is inherent in the contractual relationship between the Trust and the adviser or the administrator and is consistent with the performance by the Covered Officers of their duties as officers of the Trust.  Thus, if performed in conformity with the provisions of the Investment Company Act and the Investment Advisers Act, such activities will be deemed to have been handled ethically.  In addition, it is recognized by the Trust’s Board of Trustees (“Board”) that the Covered Officers may also be officers or employees of one or more investment companies covered by other codes.  


Other conflicts of interest are covered by this Code, even if such conflicts of interest are not subject to provisions in the Investment Company Act and the Investment Advisers Act.  The following list provides examples of conflicts of interest under this Code, but Covered Officers should keep in mind that these examples are not exhaustive.  The overarching principle is that the personal interest of a Covered Officer should not be placed improperly before the interest of the Trust.


Each Covered Officer must:


·

not use personal influence or personal relationships improperly to influence investment decisions or financial reporting by the Trust whereby the Covered Officer would benefit personally to the detriment of the Trust;

·

not cause the Trust to take action, or fail to take action, for the individual personal benefit of the Covered Officer rather than the benefit of the Trust;

·

not use material non-public knowledge of portfolio transactions made or contemplated for the Trust to trade personally or cause others to trade personally in contemplation of the market effect of such transactions;

·

report at least annually any affiliations or other relationships related to conflicts of interest that the Trust’s Trustees and Officers Questionnaire covers.


There are some conflict of interest situations that should always be discussed with the compliance officer of the Trust appointed by the Board (the “Compliance Officer”), if material.  Examples of these include:


·

service as a director on the board of any public company;

·

the receipt of any non-nominal gifts;

·

the receipt of any entertainment from any company with which the Company has current or prospective business dealings unless such entertainment is business-related, reasonable in cost, appropriate as to time and place, and not so frequent as to raise any questions of impropriety;

·

any ownership interest in, or any consulting or employment relationship with, any of the Trust’s service providers, other than its investment adviser, principal underwriter, administrator or any affiliated person thereof; and

·

a direct or indirect financial interest in commissions, transaction charges or spreads paid by the Trust for effecting portfolio transactions or for selling or redeeming shares other than an interest arising from the Covered Officer’s employment, such as compensation or equity ownership.


III.

Disclosure and Compliance


·

Each Covered Officer should familiarize himself with the disclosure requirements generally applicable to the Trust.

·

Each Covered Officer should not knowingly misrepresent, or cause others to misrepresent, facts about the Trust to others, whether within or outside the Trust, including to the Trust’s directors and auditors, and to governmental regulators and self-regulatory organizations.

·

Each Covered Officer should, to the extent appropriate within the Covered Officer’s area of responsibility, consult with other officers and employees of the Trust and of the adviser or the administrator with the goal of promoting full, fair, accurate, timely and understandable disclosure in the reports and documents the Trust files with, or submits to, the SEC and in other public communications made by the Trust.

·

It is the responsibility of each Covered Officer to promote compliance with the standards and restrictions imposed by applicable laws, rules and regulations.  


IV.

Reporting and Accountability


Each Covered Officer must:


·

upon adoption of this Code (or thereafter as applicable, upon becoming a Covered Officer), affirm in writing to the Board , in substantially the form set forth on Exhibit B, that the Covered Officer has received, read, and understands this Code;

·

annually thereafter affirm to the Board, in substantially the form set forth on Exhibit C, that the Covered Officer has complied with the requirements of this Code;

·

not retaliate against any other Covered Officer or any employee of the Trust or their affiliated persons for reports of potential violations that are made in good faith; and

·

notify the Compliance Officer for the Trust promptly if the Covered Officer knows of any violation of this Code.  Failure to do so is itself a violation of this Code.  

The Compliance Officer for the Trust is responsible for applying this Code to specific situations in which questions are presented under it and has the authority to interpret this Code in any particular situation.  However, any approvals or waivers sought by a Covered Officer will be considered by the Audit Committee (the “Committee”), which will make recommendations to the Board.


The Trust will follow these procedures in investigating and enforcing this Code:


·

the Compliance Officer for the Trust will take all appropriate action to investigate any potential violations reported to the Compliance Officer;

·

the Compliance Officer will review with the outside legal counsel to the Trust the findings and conclusions of such investigation;

·

if, after such investigation and review, the Compliance Officer believes that no violation has occurred, the Compliance Officer is not required to take any further action;

·

any matter that the Compliance Officer believes is a violation will be reported to the Committee;

·

if the Committee concurs that a violation has occurred, it will inform and make a recommendation to the Board, which will consider appropriate action, which may include review of, and appropriate modifications to, applicable policies and procedures (including changes to this Code); notification of the violation to appropriate personnel of the investment adviser or the administrator or its board; or a recommendation to take disciplinary action against the Covered Officer, which may include, without limitation, dismissal;

·

the Board will be responsible for granting waivers, as appropriate; and

·

any changes to or waivers of this Code will, to the extent required, be disclosed as provided by SEC rules.


V.  

Other Policies and Procedures


This Code shall be the sole code of ethics adopted by the Trust for purposes of Section 406 of the Sarbanes-Oxley Act and the rules and forms applicable to registered investment companies thereunder.  Insofar as other policies or procedures of the Trust, the Trust’s adviser, principal underwriter, the administrator or other service providers govern or purport to govern the behavior or activities of the Covered Officers who are subject to this Code, they are superseded by this Code to the extent that they overlap or conflict with the provisions of this Code.  The Trust’s and its investment adviser’s and principal underwriter’s codes of ethics under Rule 17j-1 under the Investment Company Act are separate requirements applying to the Covered Officers and others, and are not part of this Code.  



VI.  

Amendments


Any amendments to this Code, other than amendments to Exhibit A, must be approved or ratified by a majority vote of the Board, including a majority of independent trustees.


VII.  

Confidentiality


 To the extent possible, all records, reports and other information prepared, maintained or acquired pursuant to this Code will be treated as confidential, it being understood that it may be necessary or advisable, that certain matters be disclosed to third parties (e.g., to the board of directors or officers of the adviser or the administrator).  


VIII.  

Internal Use


This Code is intended solely for the internal use by the Trust and does not constitute an admission, by or on behalf of the Trust, as to any fact, circumstance, or legal conclusion.



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