N-Q 1 oceanstonenq.htm N-Q Filing

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549



FORM N-Q


QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED

 MANAGEMENT INVESTMENT COMPANY


Investment Company Act file number 811-21930


Oceanstone Fund

(Exact name of registrant as specified in charter)


13453 El Presidio Trail

San Diego, CA 92130

(Address of principal executive offices)

(Zip code)


James J. Wang

P.O. Box 130982

Carlsbad, CA 92013

 (Name and address of agent for service)



Registrant's telephone number, including area code: (858) 481-4123


Date of fiscal year end: June 30


Date of reporting period: September 30, 2013


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

A registrant is required to disclose the information specified by Form N-Q, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-Q unless the Form displays a currently valid Office of Management and Budget ("OMB") control number.  Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to the Secretary, Securities and Exchange Commission, and 450 Fifth Street, NW, Washington, DC 20549-0609.  The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. ss. 3507.


ITEM 1. SCHEDULE OF INVESTMENTS.




 

 

 

Oceanstone Fund

 

 

 

 

Schedule of Investments

 

 

 

 

September 30, 2013 (Unaudited)

 

 

 

 

 

 

 

Shares

 

 

Value

 

 

 

 

 

COMMON STOCK - 30.06%

 

 

 

 

 

 

 

Commodity Contracts Brokers & Dealers - 1.37%

 

 

45,000

 

Gain Capital Holdings, Inc.

$       566,550

 

 

 

 

 

 

Footwear (No Rubber) - 2.15%

 

 

51,000

 

Rocky Brands, Inc.

887,910

 

 

 

 

 

 

General Building Contractors-Residential Buildings - 1.46%

 

 

100,000

 

Xinyuan Real Estate Co., Ltd.

601,000

 

 

 

 

 

 

Retail-Drug Stores & Propriety Stores - 11.54%

 

 

1,000,000

 

Rite Aid Corp. *

4,760,000

 

 

 

 

 

 

Services-Educational Services - 13.53%

 

 

180,000

 

ITT Educational Services, Inc. *

5,580,000

 

 

 

 

 

TOTAL FOR COMMON STOCKS (Cost $4,943,810) - 30.06%

$   12,395,460

 

 

 

 

 

SHORT TERM INVESTMENTS - 70.10%

 

 

28,905,391

 

Huntington U.S. Treasury Money Market Fund Trust Shares 0.03% ** (Cost $28,905,391)

     28,905,391

 

 

 

 

 

TOTAL INVESTMENTS (Cost $33,849,201) - 100.16%

$   41,300,851

 

 

 

 

 

LIABILITIES IN EXCESS OF OTHER ASSETS - (0.16%)

(66,116)

 

 

 

 

 

NET ASSETS - 100.00%

 

 

$   41,234,735

 

 

 

 

 

 

* Non-income producing securities during the period.

 

 

** Variable rate security; the coupon rate shown represents the yield at September 30, 2013.

 



NOTES TO FINANCIAL STATEMENTS

 

 

 

Oceanstone Fund

 

 

 

 

 

1. SECURITY TRANSACTIONS

 

 

 

 

At September 30, 2013, the net unrealized appreciation on investments, based on cost for federal income tax purposes of $33,849,201, amounted to $7,451,650, which consisted of aggregate gross unrealized appreciation of $7,457,281 and aggregate gross unrealized depreciation of $5,631.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2. SECURITY VALUATION

 

 

 

 

 

The Fund’s assets are valued at the market value using market quotations. Common stocks in the Fund’s portfolio are valued at the last quoted sale price on the day the valuation is made. Those common stocks that are not traded on the valuation date are valued at the last bid price. When the market quotation of a stock is either not readily available or not reliable, the Adviser will determine the fair value of the stock in accordance with the guideline approved by the Fund’s Board of Trustees. As a general principle, the fair value of a stock is the price that the Fund may reasonably expect to receive for the stock upon its current sale.

 

 

In September 2006, Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" ("SFAS 157"). In accordance with SFAS 157, fair value is defined as the price that the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date.  SFAS 157 also establishes a framework for measuring fair value, and a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability.  Inputs may be observable or unobservable and refer broadly to the assumptions that market participants would use in pricing the asset or liability. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Fund. Unobservable inputs reflect the Fund's own assumptions about the assumptions that market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. Each investment is assigned a level based upon the observability of the inputs which are significant to the overall valuation. The three-tier hierarchy of inputs is summarized below:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Level 1 - quoted prices in active markets for identical investments

 

 

 

 

 

 

 

 

 

 

 

Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment)

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

The following table summarizes the valuation of the Fund's investments by the above fair value hierarchy levels as of September 30, 2013:

 

 

 

 

 

 

 


Valuation Inputs of Assets

 

Level 1

Level 2

Level 3

Total

Common Stock

 

$12,395,460

              $0

              $0

$12,395,460

Cash Equivalents

 

$28,905,391

              $0

              $0

$28,905,391

Total

 

$41,300,851

       $0

       $0

$41,300,851





ITEM 2. CONTROLS AND PROCEDURES.


(a)

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES. The Registrant maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Registrant's filings under the Securities Exchange Act of 1934 and the Investment Company Act of 1940 is recorded, processed, summarized and reported within the periods specified in the rules and forms of the Securities and Exchange Commission. Such information is accumulated and communicated to the Registrant's management, including its principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. The Registrant's management, including the principal executive officer and the principal financial officer, recognizes that any set of controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

Within 90 days prior to the filing date of this Quarterly Schedule of Portfolio Holdings on Form N-Q, the Registrant had carried out an evaluation, under the supervision and with the participation of the Registrant's management, including the Registrant's principal executive officer and the Registrant's principal financial officer, of the effectiveness of the design and operation of the Registrant's disclosure controls and procedures. Based on such evaluation, the Registrant's principal executive officer and principal financial officer concluded that the Registrant's disclosure controls and procedures are effective.

(b)

CHANGES IN INTERNAL CONTROLS. There have been no significant changes in the Registrant's internal controls or in other factors that could significantly affect the internal controls subsequent to the date of their evaluation in connection with the preparation of this Quarterly Schedule of Portfolio Holdings on Form N-Q.


ITEM 3. EXHIBITS.


Certifications pursuant to Rule 30a-2(a) under the 1940 Act and Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto.


SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


Oceanstone Fund


By /s/James J. Wang

     James J. Wang

     President and Treasurer


Date November 15, 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/James J. Wang

     James J. Wang

     President and Treasurer


Date November 15, 2013