Note 1 – Organization
EuroPac International Value Fund (the ‘‘International Value Fund’’), EuroPac International Bond Fund (the “International Bond Fund”), EuroPac Hard Asset Fund (the “Hard Asset Fund”), EP China Fund (formerly known as EPH China Fund) (the “China Fund”), EP Asia Small Companies Fund (the “Asia Small Companies Fund”), EP Latin America Fund (the “Latin America Fund”), and EP Strategic US Equity Fund (the “Strategic US Equity Fund”) (each a “Fund” and collectively the ‘‘Funds’’)
are organized as a diversified series of Investment Managers Series Trust, a Delaware statutory trust (the “Trust”) which is registered as an open-end management investment company under the Investment Company Act of 1940, as amended (the “1940 Act”).
The International Value Fund commenced operations on April 7, 2010, and its primary investment objective is to provide income and long-term capital appreciation. The International Bond Fund commenced operations on November 15, 2010, and its primary investment objective is to provide current income and capital appreciation. The Hard Asset Fund commenced operations on June 30, 2011, and its primary investment objective is appreciation of capital and protection against inflation. The China Fund commenced operations on July 31, 2009, and its primary investment objective is long-term capital appreciation. The China Fund’s fiscal year end was changed to October 31
st
as of July 1, 2011. The Asia Small Companies Fund commenced operations on December 1, 2010, and its primary investment objective is to provide long-term capital appreciation. The Latin America Fund commenced operations on November 1, 2011, and its primary investment objective is to provide long-term capital appreciation. The Strategic US Equity Fund commenced operations on March 1, 2012, and its primary investment objective is to provide long-term capital appreciation.
Note 2 – Accounting Policies
The following is a summary of the significant accounting policies consistently followed by the Funds in the preparation of its financial statements. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from these estimates.
(a) Valuation of Investments
The Funds value equity securities at the last reported sale price on the principal exchange or in the principal over the counter (“OTC”) market in which such securities are traded, as of the close of regular trading on the NYSE on the day the securities are being valued or, if there are no sales, at the mean between the last available bid and asked prices on that day. Securities traded on the NASDAQ are valued at the NASDAQ Official Closing Price (“NOCP”). Debt securities are valued at the mean between the last available bid and asked prices for such securities, or if such prices are not available, at prices for securities of comparable maturity, quality and type. All other types of securities, including restricted securities and securities for which market quotations are not readily available, are valued at fair value as determined in accordance with procedures established in good faith by the Board of Trustees. Short-term securities with remaining maturities of sixty days or less are valued at amortized cost, which approximates market value.
A Fund’s assets are valued at their fair market value. If a market quotation is not readily available for a portfolio security, the security will be valued at fair value (the amount which the Fund might reasonably expect to receive for the security upon its current sale) as determined in good faith by the Fund’s advisor, subject to review and approval by the Valuation Committee, pursuant to procedures adopted by the Board of Trustees. The actions of the Valuation Committee are subsequently reviewed by the Board at its next regularly scheduled board meeting. The Valuation Committee meets as needed. The Valuation Committee is comprised of all the Trustees but action may be taken by any one of the Trustees.
Foreign securities traded in countries outside the U.S. are fair valued by utilizing the quotations of an independent pricing service or from a brokerage firm. The pricing service or broker will use a statistical analyses and quantitative models to adjust local prices using factors such as subsequent movement and changes in the prices of indexes, securities and exchange rates in other markets in determining fair value as of the time the Fund calculates the NAVs. The Board reviews the independent third party fair valuation analysis report quarterly.
Euro Pacific Funds
NOTES TO FINANCIAL STATEMENTS – Continued
April 30, 2013 (Unaudited)
(b) Investment Transactions, Investment Income and Expenses
Investment transactions are accounted for on the trade date. Realized gains and losses on investments are determined on the identified cost basis. Dividend income is recorded net of applicable withholding taxes on the ex-dividend date and interest income is recorded on an accrual basis. Withholding taxes on foreign dividends have been provided for in accordance with the Funds’ understanding of the applicable country’s tax rules and rates. Discounts or premiums on debt securities are accreted or amortized to interest income over the lives of the respective securities using the effective interest method. Expenses incurred by the Trust with respect to more than one fund are allocated in proportion to the net assets of each fund except where allocation of direct expenses to each Fund or an alternative allocation method can be more appropriately made.
Offering costs incurred with the start up of the Funds were amortized on a straight line basis over a period of twelve months from commencement of operations. The Strategic US Equity Fund incurred offering costs of approximately $17,877.
(c) Foreign Currency Translation
The Funds’ records are maintained in U.S. dollars. The value of securities, currencies and other assets and liabilities denominated in currencies other than U.S. dollars are translated into U.S. dollars based upon foreign exchange rates prevailing at the end of the reporting period. The currencies are translated into U.S. dollars by using the exchange rates quoted at the close of the London Stock Exchange prior to when the Funds’ NAV is next determined. Purchases and sales of investment securities, income and expenses are translated on the respective dates of such transactions.
The Funds do not isolate that portion of its net realized and unrealized gains and losses on investments resulting from changes in foreign exchange rates from the impact arising from changes in market prices. Such fluctuations are included with net realized and unrealized gain or loss from investments and foreign currency.
Net realized foreign currency transaction gains and losses arise from sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions, and the differences between the amounts of dividends, interest, and foreign withholding taxes recorded on the Funds’ books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign currency translation gains and losses arise from changes in the value of assets and liabilities, other than investments in securities, resulting from changes in the exchange rates.
(d) Federal Income Taxes
The Funds intend to comply with the requirements of Subchapter M of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its net investment income and any net realized gains to its shareholders. Therefore, no provision is made for federal income or excise taxes. Due to the timing of dividend distributions and the differences in accounting for income and realized gains and losses for financial statement and federal income tax purposes, the fiscal year in which amounts are distributed may differ from the year in which the income and realized gains and losses are recorded by the Funds.
Accounting for Uncertainty in Income Taxes
(the “Income Tax Statement”) requires an evaluation of tax positions taken (or expected to be taken) in the course of preparing a Fund’s tax returns to determine whether these positions meet a “more-likely-than-not” standard that, based on the technical merits, have a more than fifty percent likelihood of being sustained by a taxing authority upon examination. A tax position that meets the “more-likely-than-not” recognition threshold is measured to determine the amount of benefit to recognize in the financial statements. The Fund recognizes interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the Statements of Operations.
The Income Tax Statement requires management of the Fund to analyze tax positions taken in the prior three open tax years, if any, and tax positions expected to be taken in the Fund’s current tax year, as defined by the IRS statute of limitations for all major jurisdictions, including federal tax authorities and certain state tax authorities. As of and during the period ended April 30, 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 they are reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
Euro Pacific Funds
NOTES TO FINANCIAL STATEMENTS – Continued
April 30, 2013 (Unaudited)
(e) Distributions to Shareholders
The International Value Fund, Hard Asset Fund, China Fund, Asia Small Companies Fund, Latin America Fund and Strategic US Equity Fund, respectively, will make distributions of net investment income quarterly and capital gains, if any, at least annually. The International Bond Fund will make distributions of net investment income monthly and net capital gains, if any, at least annually. Distributions to shareholders are recorded on the ex-dividend date. The amount and timing of distributions are determined in accordance with federal income tax regulations, which may differ from GAAP.
The character of distributions made during the year from net investment income or net realized gains may differ from the characterization for federal income tax purposes due to differences in the recognition of income, expense and gain/(loss) items for financial statement and tax purposes. Where appropriate, reclassifications between net asset accounts are made for such differences that are permanent in nature.
Note 3 – Investment Advisory and Other Agreements
The Trust, on behalf of the Funds, entered into an Investment Advisory Agreement (the “Agreement”) with Euro Pacific Asset Management, LLC (the “Advisor”). Under the terms of the Agreement, the International Value Fund, International Bond Fund, Hard Asset Fund, China Fund, Asia Small Companies Fund, Latin America Fund and Strategic US Equity Fund pay a monthly investment advisory fee to the Advisor at the annual rate of 1.15%, 0.60%, 1.15%, 1.15%, 1.15%, 1.15% and 0.75% of each Funds average daily net assets, respectively. The Advisor has contractually agreed to waive its fee and, if necessary, to absorb other operating expenses (excluding any acquired fund fees and expenses, interest, taxes, dividend and interest expense on short positions, brokerage commissions and extraordinary expenses such as litigation expenses) in order to limit total annual operating expenses to 1.75%, 1.15%, 1.75%, 1.75%, 1.75%, 1.75% and 1.25% of each Funds average daily net assets until March 1, 2014, respectively.
Effective March 15, 2011, the Trust, on behalf of the China Fund, entered into an Investment Advisory Agreement (the “Agreement”) with Euro Pacific Asset Management, LLC (the “Advisor”). Under the terms of the Agreement, the Fund pays a monthly investment advisory fee to the Advisor at the annual rate of 1.15% of the Fund’s average daily net assets, respectively. The Advisor has contractually agreed to waive its fee and, if necessary, to absorb other operating expenses in order to limit total annual operating expenses to 1.75% of the Fund’s average daily net assets until March 1, 2014. Prior to March 15, 2011, the Fund’s investment advisor was Euro Pacific Halter Asia Management, Inc.
For the period July 1, 2010 through March 14, 2011, the China Fund paid advisory fees in the amount of $635,809 to Euro Pacific Halter Asia Management, Inc. and $303,365 to Euro Pacific Asset Management, LLC for the period March 15, 2011 through June 30, 2011.
The China Fund, Asia Small Companies Fund and Latin America Fund, respectively, are sub-advised by New Sheridan Advisors, Inc. (the “Sub-advisor”). Pursuant to a sub-advisory agreement the Advisor pays a portion of the annual advisory fee of 1.15% of average daily net assets of the Fund to the Sub-advisor.
For the six-months ended April 30, 2013, the Advisor waived fees and absorbed other expenses as follows:
|
|
|
Advisory fees
|
|
|
Other expenses
|
|
|
Total
|
|
|
International Value Fund
|
|
$
|
31,776
|
|
|
$
|
-
|
|
|
$
|
31,776
|
|
|
International Bond Fund
|
|
|
22,085
|
|
|
|
-
|
|
|
|
22,085
|
|
|
Hard Asset Fund
|
|
|
44,767
|
|
|
|
-
|
|
|
|
44,767
|
|
|
China Fund
|
|
|
88,050
|
|
|
|
-
|
|
|
|
88,050
|
|
|
Asia Small Companies Fund
|
|
|
83,034
|
|
|
|
-
|
|
|
|
83,034
|
|
|
Latin America Fund
|
|
|
54,784
|
|
|
|
-
|
|
|
|
54,784
|
|
|
Strategic US Equity Fund
|
|
|
34,410
|
|
|
|
21,189
|
|
|
|
55,599
|
|
|
|
|
$
|
358,906
|
|
|
$
|
21,189
|
|
|
$
|
380,095
|
|
Euro Pacific Funds
NOTES TO FINANCIAL STATEMENTS – Continued
April 30, 2013 (Unaudited)
The Advisor may recover from each Fund fees and/or expenses previously waived and/or absorbed, if the Funds’ expense ratio, including the recovered expenses, falls below the expense limit at which they were waived. The Advisor is permitted to seek reimbursement from each Fund for a period of three fiscal years following the fiscal year in which such reimbursements occurred. The advisor may recapture a portion of the amounts no later than the dates stated below:
|
|
|
International
|
|
|
International
|
|
|
Hard Asset
|
|
|
|
|
Value Fund
|
|
|
Bond Fund
|
|
|
Fund
|
|
|
October 31, 2013
|
|
$
|
101,799
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
October 31, 2014
|
|
|
95,974
|
|
|
|
95,046
|
|
|
|
77,697
|
|
|
October 31, 2015
|
|
|
117,848
|
|
|
|
109,368
|
|
|
|
132,344
|
|
|
October 31, 2016
|
|
|
31,776
|
|
|
|
22,085
|
|
|
|
44,767
|
|
|
Total
|
|
$
|
347,397
|
|
|
$
|
226,499
|
|
|
$
|
254,808
|
|
|
|
|
|
|
|
Asia Small
|
|
|
Latin America
|
|
|
|
|
China Fund‡
|
|
|
Companies Fund
|
|
|
Fund
|
|
|
June 30, 2013
|
|
$
|
172,040
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
June 30, 2014
|
|
|
120,421
|
|
|
|
-
|
|
|
|
-
|
|
|
October 31, 2014
|
|
|
59,642
|
|
|
|
142,239
|
|
|
|
-
|
|
|
October 31, 2015
|
|
|
190,733
|
|
|
|
208,947
|
|
|
|
152,559
|
|
|
October 31, 2016
|
|
|
88,050
|
|
|
|
83,034
|
|
|
|
54,784
|
|
|
Total
|
|
$
|
630,886
|
|
|
$
|
434,220
|
|
|
$
|
207,343
|
|
|
|
|
Strategic US
Equity Fund
|
|
|
October 31, 2014
|
|
$
|
-
|
|
|
October 31, 2015
|
|
|
87,136
|
|
|
October 31, 2016
|
|
|
55,599
|
|
|
Total
|
|
$
|
142,735
|
|
‡The China Fund’s fiscal year end was changed to October 31
st
as of July 1, 2011.
On January 1, 2013, IMST Distributors, LLC succeeded Grand Distribution Services, LLC as the Fund’s distributor; UMB Fund Services, Inc. (“UMBFS”), serves as the Fund’s fund accountant, transfer agent and co-administrator; and Mutual Fund Administration Corporation (“MFAC”) serves as the Fund’s other co-administrator. UMB Bank, n.a., an affiliate of UMBFS, serves as the Fund’s custodian.
Certain trustees and officers of the Trust are employees of UMBFS or MFAC. The Funds do not compensate trustees and officers affiliated with the Funds’ co-administrators. For the six-months ended April 30, 2013, the Funds’ allocated fees incurred for Trustees who are not affiliated with the Fund’s co-administrators are reported on the Statement of Operations.
Cipperman & Co. provides Chief Compliance Officer (“CCO”) services to the Trust. The Funds’ allocated fees incurred for CCO services for the six-months ended April 30, 2013, are reported on the Statement of Operations.
Euro Pacific Funds
NOTES TO FINANCIAL STATEMENTS – Continued
April 30, 2013 (Unaudited)
Note 4 – Federal Income Taxes
At April 30, 2013, gross unrealized appreciation and depreciation of investments and foreign currency translations, based on cost for federal income tax purposes were as follows:
federal income tax purposes were as follows:
|
|
|
International
Value Fund
|
|
|
International
Bond Fund
|
|
|
Hard Asset
Fund
|
|
|
China
Fund
|
|
|
Asia Small
Companies Fund
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of investments
|
|
$
|
77,265,678
|
|
|
$
|
92,195,701
|
|
|
$
|
37,371,675
|
|
|
$
|
31,064,661
|
|
|
$
|
27,104,326
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross unrealized appreciation
|
|
$
|
11,634,944
|
|
|
$
|
1,657,413
|
|
|
$
|
1,587,559
|
|
|
$
|
10,581,011
|
|
|
$
|
12,989,408
|
|
|
Gross unrealized depreciation
|
|
|
(5,882,391
|
)
|
|
|
(1,013,481
|
)
|
|
|
(6,303,162
|
)
|
|
|
(1,020,434
|
)
|
|
|
(72,285
|
)
|
|
Net unrealized appreciation(depreciation) on foreign currency translations
|
|
|
12,148
|
|
|
|
(19,413
|
)
|
|
|
(1,061
|
)
|
|
|
-
|
|
|
|
67
|
|
|
Net unrealized appreciation(depreciation) on investments and foreign currency translations
|
|
$
|
5,764,701
|
|
|
$
|
624,519
|
|
|
$
|
(4,716,664
|
)
|
|
$
|
9,560,577
|
|
|
$
|
12,917,190
|
|
|
|
|
Latin America
Fund
|
|
|
Strategic US
Equity Fund
|
|
|
|
|
|
|
|
|
|
|
Cost of investments
|
|
$
|
14,236,590
|
|
|
$
|
12,398,997
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross unrealized appreciation
|
|
$
|
3,040,310
|
|
|
$
|
1,027,328
|
|
|
Gross unrealized depreciation
|
|
|
(193,810
|
)
|
|
|
(696,305
|
)
|
|
Net unrealized appreciation(depreciation) on foreign currency translations
|
|
|
737
|
|
|
|
-
|
|
|
Net unrealized appreciation(depreciation) on investments and foreign currency translations
|
|
$
|
2,847,237
|
|
|
$
|
331,023
|
|
The difference between cost amounts for financial statement and federal income tax purposes is due primarily to wash sale loss deferrals and passive foreign investment companies (“PFICs”).
Euro Pacific Funds
NOTES TO FINANCIAL STATEMENTS – Continued
April 30, 2013 (Unaudited)
As of October 31, 2012 the components of accumulated earnings (deficit) on a tax basis were as follows:
|
|
|
International
Value Fund
|
|
|
International
Bond Fund
|
|
|
Hard Asset
Fund
|
|
|
China
Fund
|
|
|
Asia Small
Companies Fund
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Undistributed ordinary income
|
|
$
|
643,886
|
|
|
$
|
688,566
|
|
|
$
|
334,623
|
|
|
$
|
352,929
|
|
|
$
|
413,028
|
|
|
Undistributed long-term gains
|
|
|
-
|
|
|
|
51,414
|
|
|
|
43,419
|
|
|
|
-
|
|
|
|
-
|
|
|
Tax accumulated earnings
|
|
|
643,886
|
|
|
|
739,980
|
|
|
|
378,042
|
|
|
|
352,929
|
|
|
|
413,028
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated capital and other losses
|
|
$
|
(4,782,037
|
)
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
(10,932,321
|
)
|
|
$
|
(4,833,894
|
)
|
|
Unrealized appreciation (depreciation) on investments
|
|
|
4,990,883
|
|
|
|
(321,555
|
)
|
|
|
(728,350
|
)
|
|
|
3,581,157
|
|
|
|
5,714,759
|
|
|
Total accumulated earnings (deficit)
|
|
$
|
852,732
|
|
|
$
|
418,425
|
|
|
$
|
(350,308
|
)
|
|
$
|
(6,998,235
|
)
|
|
$
|
1,293,893
|
|
|
|
|
Latin America
Fund
|
|
|
Strategic US
Equity Fund
|
|
|
|
|
|
|
|
|
|
|
Undistributed ordinary income
|
|
$
|
67,139
|
|
|
$
|
608
|
|
|
Undistributed long-term gains
|
|
|
-
|
|
|
|
-
|
|
|
Tax accumulated earnings
|
|
|
67,139
|
|
|
|
608
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated capital and other losses
|
|
$
|
(1,515,178
|
)
|
|
$
|
-
|
|
|
Unrealized appreciation (depreciation) on investments
|
|
|
1,138,104
|
|
|
|
24,464
|
|
|
Total accumulated earnings (deficit)
|
|
$
|
(309,935
|
)
|
|
$
|
25,072
|
|
The tax character of distributions paid during the fiscal years ended October 31, 2012 and 2011 were as follows:
|
|
|
International Value Fund
|
|
|
International Bond Fund
|
|
|
Hard Asset Fund
|
|
|
|
|
Year
|
|
|
Year
|
|
|
Year
|
|
|
Year
|
|
|
Year
|
|
|
Year
|
|
|
|
|
Ended
|
|
|
Ended
|
|
|
Ended
|
|
|
Ended
|
|
|
Ended
|
|
|
Ended
|
|
|
|
|
October 31,
|
|
|
October 31,
|
|
|
October 31,
|
|
|
October 31,
|
|
|
October 31,
|
|
|
October 31,
|
|
|
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
|
|
Distributions paid from:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary Income
|
|
$
|
1,592,231
|
|
|
$
|
1,229,860
|
|
|
$
|
1,618,934
|
|
|
$
|
1,012,617
|
|
|
$
|
206,613
|
|
|
$
|
-
|
|
|
Net long-term capital gains
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Total taxable distributions
|
|
|
1,592,231
|
|
|
|
1,229,860
|
|
|
|
1,618,934
|
|
|
|
1,012,617
|
|
|
|
206,613
|
|
|
|
-
|
|
|
Total distributions paid
|
|
$
|
1,592,231
|
|
|
$
|
1,229,860
|
|
|
$
|
1,618,934
|
|
|
$
|
1,012,617
|
|
|
$
|
206,613
|
|
|
$
|
-
|
|
Euro Pacific Funds
NOTES TO FINANCIAL STATEMENTS – Continued
April 30, 2013 (Unaudited)
|
|
|
China Fund
|
|
|
Asia Small Companies Fund
|
|
|
|
|
Year
|
|
|
Year
|
|
|
Year
|
|
|
Year
|
|
|
Year
|
|
|
|
|
Ended
|
|
|
Ended
|
|
|
Ended
|
|
|
Ended
|
|
|
Ended
|
|
|
|
|
October 31,
|
|
|
October 31,
|
|
|
June 30,
|
|
|
October 31,
|
|
|
October 31,
|
|
|
|
|
2012
|
|
|
2011
|
|
|
2011*
|
|
|
2012
|
|
|
2011
|
|
|
Distributions paid from:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary Income
|
|
$
|
1,059,363
|
|
|
$
|
-
|
|
|
$
|
1,387,081
|
|
|
$
|
115,322
|
|
|
$
|
-
|
|
|
Net long-term capital gains
|
|
|
1,896,428
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Total taxable distributions
|
|
|
2,955,791
|
|
|
|
-
|
|
|
|
1,387,081
|
|
|
|
115,322
|
|
|
|
-
|
|
|
Total distributions paid
|
|
$
|
2,955,791
|
|
|
$
|
-
|
|
|
$
|
1,387,081
|
|
|
$
|
115,322
|
|
|
$
|
-
|
|
|
|
|
Latin America Fund
|
|
|
Strategic US Equity Fund
|
|
|
|
|
Year
|
|
|
Year
|
|
|
|
|
Ended
|
|
|
Ended
|
|
|
|
|
October 31,
|
|
|
October 31,
|
|
|
|
|
2012
|
|
|
2012
|
|
|
Distributions paid from:
|
|
|
|
|
|
|
|
Ordinary Income
|
|
$
|
-
|
|
|
$
|
16,391
|
|
|
Net long-term capital gains
|
|
|
-
|
|
|
|
-
|
|
|
Total taxable distributions
|
|
|
-
|
|
|
|
16,391
|
|
|
Total distributions paid
|
|
$
|
-
|
|
|
$
|
16,391
|
|
At October 31, 2012, the Funds had accumulated capital loss carryforwards as follows:
|
|
|
International
Value Fund
|
|
|
International
Bond Fund
|
|
|
Hard Asset
Fund
|
|
|
China
Fund
|
|
|
Asia Small
Companies Fund
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For losses expiring October 31,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
2018
|
|
|
1,647
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
2019
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,608,933
|
|
|
Not Subject to Expiration
|
|
|
4,780,390
|
|
|
|
-
|
|
|
|
-
|
|
|
|
10,932,321
|
|
|
|
1,224,961
|
|
|
Total
|
|
$
|
4,782,037
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
10,932,321
|
|
|
$
|
4,833,894
|
|
|
|
|
Latin America Fund
|
|
|
Strategic US
Equity Fund
|
|
|
|
|
|
|
|
|
|
|
For losses expiring October 31,
|
|
|
|
|
|
|
|
2017
|
|
$
|
-
|
|
|
$
|
-
|
|
|
2018
|
|
|
-
|
|
|
|
-
|
|
|
2019
|
|
|
-
|
|
|
|
-
|
|
|
Not Subject to Expiration
|
|
|
1,515,178
|
|
|
|
-
|
|
|
Total
|
|
$
|
1,515,178
|
|
|
$
|
-
|
|
Euro Pacific Funds
NOTES TO FINANCIAL STATEMENTS – Continued
April 30, 2013 (Unaudited)
As of October 31, 2012, EuroPac International Value Fund, EP China Fund, EP Asia Small Companies Fund and EP Latin America Fund had non-expiring short-term capital loss carryforwards of $835,646, $9,096,092, $1,224,961 and $1,515,178, respectively; and non-expiring long-term capital loss carryforwards of $3,944,744, $1,836,299, $0 and $0, respectively.
To the extent that a fund may realize future net capital gains, those gains will be offset by any of its unused capital loss carryforward. Future capital loss carryover utilization in any given year may be subject to Internal Revenue
Code limitations. During the year ended October 31, 2012, the International Bond Fund and Hard Asset Fund utilized $902 and $36,189 of their capital loss carryovers.
Under the
Regulated Investment Company Modernization Act of 2010
(the "Act"), the Funds are permitted to carryforward capital losses incurred in taxable years beginning after December 22, 2010, for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital losses that are carried forward will retain their character as either short-term or long-term capital losses rather than being considered all short-term as under previous law.
Note 5 – Redemption Fee
The Funds may impose a redemption fee of 2.00% of the total redemption amount on all shares redeemed within 30 days of purchase. For the six months ended April 30, 2013, redemption fees were as follows:
|
International Value Fund
|
|
$
|
417
|
|
|
International Bond Fund
|
|
|
42,244
|
|
|
Hard Asset Fund
|
|
$
|
3,286
|
|
|
China Fund
|
|
|
435
|
|
|
Asia Small Companies Fund
|
|
|
340
|
|
|
Latin America Fund
|
|
|
30
|
|
|
Strategic US Equity Fund
|
|
|
72
|
|
Note 6 –
Investment Transactions
For the six-months ended April 30, 2013, purchases and sales of investments, excluding short-term investments
, were as follows:
|
|
|
Purchases
|
|
|
Sales
|
|
|
International Value Fund
|
|
$
|
20,090,133
|
|
|
$
|
20,076,826
|
|
|
International Bond Fund
|
|
|
36,452,057
|
|
|
|
25,454,661
|
|
|
Hard Asset Fund
|
|
|
8,548,912
|
|
|
|
1,333,772
|
|
|
China Fund
|
|
|
12,891,660
|
|
|
|
16,681,122
|
|
|
Asia Small Companies Fund
|
|
|
12,915,243
|
|
|
|
10,881,397
|
|
|
Latin America Fund
|
|
|
8,044,139
|
|
|
|
3,869,854
|
|
|
Strategic US Equity Fund
|
|
|
7,033,483
|
|
|
|
1,189,397
|
|
Note 7 – Distribution Plan
The Trust, on behalf of the Funds’, has adopted a Distribution Plan (the “Plan”) pursuant to Rule 12b-1 under the 1940 Act, that allows the Fund to pay distribution fees for the sale and distribution of its shares. The Plan provides for the payment of distribution fees at the annual rate of up to 0.25% of average daily net assets.
For the six-months ended April 30, 2013, distribution fees incurred are disclosed on the Statement of Operations.
Euro Pacific Funds
NOTES TO FINANCIAL STATEMENTS – Continued
April 30, 2013 (Unaudited)
Note 8 – Indemnifications
In the normal course of business, the Funds enter into contracts that contain a variety of representations which provide general indemnifications. The Funds’ maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Funds that have not yet occurred. However, the Funds expect the risk of loss to be remote.
Note 9 – Fair Value Measurements and Disclosure
Fair Value Measurements and Disclosures
defines fair value, establishes a framework for measuring fair value in accordance with GAAP, and expands disclosure about fair value measurements. It also provides guidance on determining when there has been a significant decrease in the volume and level of activity for an asset or liability, when a transaction is not orderly, and how that information must be incorporated into a fair value measurement.
Under
Fair Value Measurements and Disclosures
, various inputs are used in determining the value of each Fund’s investments. These inputs are summarized into three broad Levels as described 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 inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, 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 Funds’ 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 availability of observable inputs can vary from security to security and is affected by a wide variety of factors, including, for example, the type of security, whether the security is new and not yet established in the marketplace, the liquidity of markets, and other characteristics particular to the security. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3.
The inputs used to measure fair value may fall into different Levels of the fair value hierarchy. In such cases, for disclosure purposes, the Level in the fair value hierarchy within which the fair value measurement falls in its entirety, is determined based on the lowest Level input that is significant to the fair value measurement in its entirety.
In addition, the Fund has adopted Accounting Standards Update No. 2011-04
Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs
which amends
Fair Value Measurements and Disclosures
to establish common requirements for measuring fair value and for disclosing information about fair value measurements in accordance with U.S. GAAP and International Financial Reporting Standards. Enhanced disclosure is required to detail any transfers in to and out of Level 1 and Level 2 measurements and Level 2 and Level 3 measurements and the reasons for the transfers.
The inputs or methodology used for valuing investments are not an indication of the risk associated with investing in those investments. The following is a summary of the inputs used, as of April 30, 2013, in valuing the Funds’ assets carried at fair value:
Euro Pacific Funds
NOTES TO FINANCIAL STATEMENTS – Continued
April 30, 2013 (Unaudited)
|
International Value Fund
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3*
|
|
|
Total
|
|
|
Investments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stocks
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic Materials
|
|
$
|
13,831,792
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
13,831,792
|
|
|
Communications
|
|
|
11,369,783
|
|
|
|
-
|
|
|
|
-
|
|
|
|
11,369,783
|
|
|
Consumer, Cyclical
|
|
|
3,720,537
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,720,537
|
|
|
Consumer, Non-cyclical
|
|
|
13,267,154
|
|
|
|
-
|
|
|
|
-
|
|
|
|
13,267,154
|
|
|
Diversified
|
|
|
1,298,600
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,298,600
|
|
|
Energy
|
|
|
13,015,644
|
|
|
|
-
|
|
|
|
-
|
|
|
|
13,015,644
|
|
|
Financial
|
|
|
4,958,424
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,958,424
|
|
|
Industrial
|
|
|
4,192,574
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,192,574
|
|
|
Utilities
|
|
|
7,902,034
|
|
|
|
-
|
|
|
|
-
|
|
|
|
7,902,034
|
|
|
Short-Term Investments
|
|
9,461,689
|
|
|
|
-
|
|
|
|
-
|
|
|
|
9,461,689
|
|
|
Total Investments
|
|
$
|
83,018,231
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
83,018,231
|
|
|
International Bond Fund
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3*
|
|
|
Total
|
|
|
Investments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bonds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic Materials
|
|
$
|
—
|
|
|
$
|
3,283,590
|
|
|
$
|
—
|
|
|
$
|
3,283,590
|
|
|
Communications
|
|
|
—
|
|
|
|
8,960,187
|
|
|
|
—
|
|
|
|
8,960,187
|
|
|
Consumer, Cyclical
|
|
|
—
|
|
|
|
3,997,340
|
|
|
|
—
|
|
|
|
3,997,340
|
|
|
Consumer, Non-cyclical
|
|
|
—
|
|
|
|
5,678,587
|
|
|
|
—
|
|
|
|
5,678,587
|
|
|
Diversified
|
|
|
—
|
|
|
|
1,589,143
|
|
|
|
—
|
|
|
|
1,589,143
|
|
|
Energy
|
|
|
—
|
|
|
|
2,066,998
|
|
|
|
—
|
|
|
|
2,066,998
|
|
|
Financial
|
|
|
—
|
|
|
|
10,314,493
|
|
|
|
—
|
|
|
|
10,314,493
|
|
|
Government
|
|
|
—
|
|
|
|
45,840,206
|
|
|
|
—
|
|
|
|
45,840,206
|
|
|
Industrial
|
|
|
—
|
|
|
|
4,312,412
|
|
|
|
—
|
|
|
|
4,312,412
|
|
|
Utilities
|
|
|
—
|
|
|
|
3,289,650
|
|
|
|
—
|
|
|
|
3,289,650
|
|
|
Short-Term Investments
|
|
|
3,507,027
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3,507,027
|
|
|
Total Investments
|
|
$
|
3,507,027
|
|
|
$
|
89,332,606
|
|
|
$
|
—
|
|
|
$
|
92,839,633
|
|
|
Hard Asset Fund
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3*
|
|
|
Total
|
|
|
Investments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stocks
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic Materials
|
|
$
|
9,433,449
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
9,433,449
|
|
|
Consumer, Non-cyclical
|
|
|
2,150,831
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,150,831
|
|
|
Energy
|
|
|
11,188,501
|
|
|
|
—
|
|
|
|
—
|
|
|
|
11,188,501
|
|
|
Exchange-Traded Fund
|
|
|
7,210,918
|
|
|
|
—
|
|
|
|
—
|
|
|
|
7,210,918
|
|
|
Short-Term Investments
|
|
|
2,672,373
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,672,373
|
|
|
Total Investments
|
|
$
|
32,656,072
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
32,656,072
|
|
|
China Fund
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
Investments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stocks
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic Materials
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
208,757
|
|
|
$
|
208,757
|
|
|
Communications
|
|
|
450,560
|
|
|
|
754,147
|
|
|
|
—
|
|
|
|
1,204,707
|
|
|
Consumer, Cyclical
|
|
|
—
|
|
|
|
7,596,894
|
|
|
|
—
|
|
|
|
7,596,894
|
|
|
Consumer, Non-cyclical
|
|
|
1,743,531
|
|
|
|
3,130,004
|
|
|
|
—
|
|
|
|
4,873,535
|
|
|
Diversified
|
|
|
—
|
|
|
|
3,271,254
|
|
|
|
—
|
|
|
|
3,271,254
|
|
|
Energy
|
|
|
—
|
|
|
|
2,729,075
|
|
|
|
—
|
|
|
|
2,729,075
|
|
|
Financial
|
|
|
—
|
|
|
|
6,835,593
|
|
|
|
—
|
|
|
|
6,835,593
|
|
|
Industrial
|
|
|
891,585
|
|
|
|
7,513,514
|
|
|
|
—
|
|
|
|
8,405,099
|
|
|
Technology
|
|
|
—
|
|
|
|
1,966,782
|
|
|
|
—
|
|
|
|
1,966,782
|
|
|
Utilities
|
|
|
—
|
|
|
|
3,507,857
|
|
|
|
—
|
|
|
|
3,507,857
|
|
|
Short-Term Investments
|
|
|
25,685
|
|
|
|
—
|
|
|
|
—
|
|
|
|
25,685
|
|
|
Total Investments
|
|
$
|
3,111,361
|
|
|
$
|
37,305,120
|
|
|
$
|
208,757
|
|
|
$
|
40,625,238
|
|
Euro Pacific Funds
NOTES TO FINANCIAL STATEMENTS – Continued
April 30, 2013 (Unaudited)
|
Asia Small Companies Fund
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3*
|
|
|
Total
|
|
|
Investments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stocks
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Communications
|
|
$
|
—
|
|
|
$
|
1,809,865
|
|
|
$
|
—
|
|
|
$
|
1,809,865
|
|
|
Consumer, Cyclical
|
|
|
—
|
|
|
|
5,926,201
|
|
|
|
—
|
|
|
|
5,926,201
|
|
|
Consumer, Non-cyclical
|
|
|
1,983,102
|
|
|
|
7,692,425
|
|
|
|
—
|
|
|
|
9,675,527
|
|
|
Diversified
|
|
|
—
|
|
|
|
864,847
|
|
|
|
—
|
|
|
|
864,847
|
|
|
Energy
|
|
|
—
|
|
|
|
1,493,547
|
|
|
|
—
|
|
|
|
1,493,547
|
|
|
Financial
|
|
|
1,734,353
|
|
|
|
7,619,107
|
|
|
|
—
|
|
|
|
9,353,460
|
|
|
Industrial
|
|
|
684,519
|
|
|
|
6,549,207
|
|
|
|
—
|
|
|
|
7,233,726
|
|
|
Utilities
|
|
|
649,903
|
|
|
|
1,348,268
|
|
|
|
—
|
|
|
|
1,998,171
|
|
|
Short-Term Investments
|
|
|
1,666,105
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,666,105
|
|
|
Total Investments
|
|
$
|
6,717,982
|
|
|
$
|
33,303,467
|
|
|
$
|
—
|
|
|
$
|
40,021,449
|
|
|
Latin America Fund
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3*
|
|
|
Total
|
|
|
Investments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stocks
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Communications
|
|
$
|
185,996
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
185,996
|
|
|
Consumer, Cyclical
|
|
|
3,307,286
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3,307,286
|
|
|
Consumer, Non-cyclical
|
|
|
4,892,223
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4,892,223
|
|
|
Energy
|
|
|
459,692
|
|
|
|
—
|
|
|
|
—
|
|
|
|
459,692
|
|
|
Financial
|
|
|
5,240,788
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5,240,788
|
|
|
Industrial
|
|
|
921,760
|
|
|
|
—
|
|
|
|
—
|
|
|
|
921,760
|
|
|
Technology
|
|
|
605,407
|
|
|
|
—
|
|
|
|
—
|
|
|
|
605,407
|
|
|
Utilities
|
|
|
771,094
|
|
|
|
—
|
|
|
|
—
|
|
|
|
771,094
|
|
|
Short-Term Investments
|
|
|
698,844
|
|
|
|
—
|
|
|
|
—
|
|
|
|
698,844
|
|
|
Total Investments
|
|
$
|
17,083,090
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
17,083,090
|
|
|
Strategic US Equity Fund
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3*
|
|
|
Total
|
|
|
Investments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stocks
1
|
|
$
|
11,050,316
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
11,050,316
|
|
|
Exchange Traded Funds
|
|
|
277,581
|
|
|
|
—
|
|
|
|
—
|
|
|
|
277,581
|
|
|
Short-Term Investments
|
|
|
1,402,123
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,402,123
|
|
|
Total Investments
|
|
$
|
12,730,020
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
12,730,020
|
|
|
*
|
The Fund did not hold any Level 3 securities at period end.
|
|
1
|
All common stocks held in the Fund are Level 1 securities. For a detailed break-out of common stocks by major industry classification, please refer to the Schedule of Investments.
|
Euro Pacific Funds
NOTES TO FINANCIAL STATEMENTS – Continued
April 30, 2013 (Unaudited)
Transfers are recognized at the end of the reporting period.
As of April 30, 2013, certain of the China Fund and the Asia Small Companies Fund securities transferred Levels due to the Funds performing a fair value adjustment.
The following is a reconciliation of transfers between Levels for the Funds from October 31, 2012 to April 30, 2013, represented by recognizing the April 30, 2013 market value of securities:
|
|
|
China Fund
|
|
|
Asia Small Companies Fund
|
|
|
Transfers into Level 1
|
|
$
|
1,681,616
|
|
|
$
|
2,980,959
|
|
|
Transfers out of Level 1
|
|
|
-
|
|
|
|
(2,116,802
|
)
|
|
Net transfers in (out) of Level 1
|
|
$
|
1,681,616
|
|
|
$
|
864,157
|
|
|
|
|
|
|
|
|
|
|
|
|
Transfers into Level 2
|
|
$
|
-
|
|
|
$
|
2,116,802
|
|
|
Transfers out of Level 2
|
|
|
(1,681,616
|
)
|
|
|
(2,980,959
|
)
|
|
Net transfers in (out) of Level 2
|
|
$
|
(1,681,616
|
)
|
|
$
|
(864,157
|
)
|
The following is a reconciliation of Level 3 assets for the China Fund, which significant unobservable inputs were used to determine fair value:
|
|
|
Investments, at Value
|
|
|
Other
Financial
Instruments
|
|
|
Balance as of 10/31/12
|
|
$
|
209,031
|
|
|
$
|
-
|
|
|
Realized gain (loss)
|
|
|
-
|
|
|
|
-
|
|
|
Change in unrealized appreciation (depreciation)
|
|
|
(274
|
)
|
|
|
-
|
|
|
Net purchase (sales)
|
|
|
-
|
|
|
|
-
|
|
|
Transfers in and/or out of Level 3
|
|
|
-
|
|
|
|
-
|
|
|
Balance as of 4/30/13
|
|
$
|
208,757
|
|
|
$
|
-
|
|
Following is a description of the valuation techniques and significant inputs used in determining the value of the Fund’s securities classified as Level 3:
The investment advisor considers relevant indications of value that are reasonably and timely available to it in determining the fair value to be assigned to a particular security, such as the type and cost of the security; contractual or legal restrictions on resale of the security; relevant financial or business developments of the issuer; actively traded related securities; conversion or exchange rights on the security; related corporate actions; significant events occurring after the close of trading in the security; and changes in overall market conditions. The Fund’s use of fair value pricing may cause the net asset value of Fund shares to differ from the net asset value that would be calculated using market quotations. Fair value pricing involves subjective judgments and it is possible that the fair value determined for a security may be materially different than the value that could be realized upon the sale of that security.
Euro Pacific Funds
NOTES TO FINANCIAL STATEMENTS – Continued
April 30, 2013 (Unaudited)