N-Q 1 d235247dnq.htm FORM N-Q Form N-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-Q

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED

MANAGEMENT INVESTMENT COMPANY

Investment Company Act file number 811-22264

The Motley Fool Funds Trust

 

(Exact name of registrant as specified in charter)

Motley Fool Asset Management, LLC

2000 Duke Street, Suite 175

Alexandria, VA 22314

 

(Address of principal executive offices) (Zip code)

Peter E. Jacobstein

Motley Fool Asset Management, LLC

2000 Duke Street, Suite 175

Alexandria, VA 22314

 

(Name and address of agent for service)

Registrant’s telephone number, including area code: (703) 302-1100

Date of fiscal year end: October 31

Date of reporting period: July 31, 2011

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

A registrant is required to disclose the information specified by Form N-Q, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-Q unless the Form displays a currently valid Office of Management and Budget (“OMB”) control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to the Secretary, Securities and Exchange Commission, 100 F Street, NE, Washington, DC 20549. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.

Item 1. Schedule of Investments.

The Schedule(s) of Investments is attached herewith.

The Motley Fool Funds Trust

Motley Fool Independence Fund

Schedule of Investments

at July 31, 2011

(Unaudited)

 

 

  Issues

 

   

Shares

 

     

Value

 

  
   

Equity Securities — 90.21%

      

Building Products — 1.87%

      

Sung Kwang Bend Co., Ltd. (South Korea)

      190,672       $ 3,926,535   
     

 

 

  

Capital Markets — 0.62%

      

INTL FCStone, Inc. (United States)*

      56,513         1,298,669   
     

 

 

  

Chemicals — 1.86%

      

Innophos Holdings, Inc. (United States)

      81,164         3,912,105   
     

 

 

  

Commercial Banks — 1.39%

      

Qatar Islamic Bank (Qatar)

      138,050         2,922,482   
     

 

 

  

Commercial Services & Supplies — 2.00%

      

De La Rue PLC (United Kingdom)

      167,400         2,137,481   

Multiplus SA (Brazil)

      119,600         2,070,645   
     

 

 

  
        4,208,126   
     

 

 

  

Communications Equipment — 1.72%

      

Infinera Corp. (United States)*

      561,100         3,607,873   
     

 

 

  

Construction & Engineering — 0.41%

      

KHD Humboldt Wedag International AG (Germany)*

      99,586         856,440   
     

 

 

  

Containers & Packaging — 0.73%

      

Crown Holdings, Inc. (United States)*

      40,000         1,536,400   
     

 

 

  

Diversified Financial Services — 1.02%

      

Hellenic Exchanges SA (Greece)

      307,622         2,156,793   
     

 

 

  

Diversified Telecommunication Services — 4.27%

      

PT Telekomunikasi Indonesia Tbk (Indonesia)(a)

      60,174         2,100,072   

Telefonica SA (Spain)(a)

      308,359         6,882,573   
     

 

 

  
        8,982,645   
     

 

 

  

Electric Utilities — 3.65%

      

Brookfield Infrastructure Partners LP (Bermuda)

      119,127         2,996,044   

Entergy Corp. (United States)

      17,664         1,179,955   

Otter Tail Corp. (United States)

      70,725         1,469,666   

Tokyo Electric Power Co., Inc. (Japan)

      367,000         2,036,710   
     

 

 

  
        7,682,375   
     

 

 

  

 

See Notes to Schedules of Investments.
 

 

Motley Fool Independence Fund

    1

 

  Issues

 

   

Shares

 

     

Value

 

  
   

Equity Securities (continued)

  

Electrical Equipment — 0.02%

      

Legrand SA (France)

      1,209       $ 47,057   
     

 

 

  

Electronic Equipment & Instruments — 0.67%

      

Compagnie Industrielle Et Financiere d Ingenierie- Ingenico SA (France)

      33,270         1,402,115   
     

 

 

  

Food & Staples Retailing — 3.36%

      

Costco Wholesale Corp. (United States)

      29,558         2,312,914   

Olam International Ltd. (Singapore)

      1,586,139         3,467,257   

Wal-Mart de Mexico SAB de CV, Series V (Mexico)

      468,098         1,292,551   
     

 

 

  
        7,072,722   
     

 

 

  

Food Products — 5.05%

      

BRF - Brasil Foods SA (Brazil)(a)

      132,204         2,552,859   

Cresud SACIF y A (Argentina)(a)

      250,596         3,806,553   

Nestle SA (Switzerland)

      38,694         2,464,869   

PT Nippon Indosari Corpindo Tbk (Indonesia)

      4,395,000         1,806,268   
     

 

 

  
        10,630,549   
     

 

 

  

Health Care Equipment & Supplies — 5.89%

      

Beckton, Dickinson and Co. (United States)

      43,950         3,674,659   

Covidien PLC (Ireland)

      41,000         2,082,390   

Natus Medical, Inc. (United States)*

      122,500         1,412,425   

Nihon Kohden Corp. (Japan)

      133,481         3,710,035   

Zimmer Holdings, Inc. (United States)*

      25,000         1,500,500   
     

 

 

  
        12,380,009   
     

 

 

  

Health Care Providers & Services — 3.03%

      

Sinopharm Group Co., Ltd. (China)

      14,000         40,764   

WellPoint, Inc. (United States)

      93,697         6,329,232   
     

 

 

  
        6,369,996   
     

 

 

  

Hotels, Restaurants & Leisure — 3.69%

      

McDonald’s Corp. (United States)

      19,177         1,658,427   

Penn National Gaming, Inc. (United States)*

      52,083         2,183,840   

Yum! Brands, Inc. (United States)

      74,132         3,915,652   
     

 

 

  
        7,757,919   
     

 

 

  

Household Products — 1.63%

      

Unicharm Corp. (Japan)

      75,800         3,422,582   
     

 

 

  

Insurance — 8.00%

      

Berkshire Hathaway, Inc. (United States)*

      33         3,679,500   

 

See Notes to Schedules of Investments.
 

 

2

    Motley Fool Independence Fund

 

  Issues

 

   

Shares

 

     

Value

 

  
   

Equity Securities (continued)

      

Insurance (continued)

      

Berkshire Hathaway, Inc., Class B (United States)*

      4,600       $ 341,182   

Enstar Group Ltd. (Bermuda)*

      22,510         2,377,957   

HCC Insurance Holdings, Inc. (United States)

      80,200         2,416,426   

Loews Corp. (United States)

      98,190         3,914,835   

Markel Corp. (United States)*

      10,200         4,084,284   
     

 

 

  
        16,814,184   
     

 

 

  

Internet Software & Services — 2.15%

      

Google, Inc. (United States)*

      7,500         4,527,675   
     

 

 

  

IT Services — 1.42%

      

Paychex, Inc. (United States)

      105,702         2,983,967   
     

 

 

  

Leisure Equipment & Products — 1.43%

      

Shimano, Inc. (Japan)

      57,000         3,000,270   
     

 

 

  

Machinery — 1.31%

      

Flowserve Corp. (United States)

      27,700         2,752,826   
     

 

 

  

Metals & Mining — 4.33%

      

POSCO (South Korea)(a)

      70,491         7,739,912   

Terra Nova Royalty Corp. (Canada)

      174,514         1,357,719   
     

 

 

  
        9,097,631   
     

 

 

  

Multi-Utilities — 1.68%

      

GDF Suez (France)

      61,518         2,011,704   

RWE AG (Germany)

      29,000         1,520,323   
     

 

 

  
        3,532,027   
     

 

 

  

Oil, Gas & Consumable Fuels — 6.07%

      

Denbury Resources, Inc. (United States)*

      244,200         4,717,944   

Lukoil OAO (Russia)(a)

      79,350         5,328,352   

Occidental Petroleum Corp. (United States)

      22,645         2,223,286   

Total Gabon (Gabon)

      984         497,841   
     

 

 

  
        12,767,423   
     

 

 

  

Pharmaceuticals — 3.50%

      

Astrazeneca PLC (United Kingdom)(a)

      40,100         1,945,251   

Dr. Reddy’s Laboratories Ltd. (India)(a)

      90,177         3,215,712   

Santen Pharmaceutical Co., Ltd. (Japan)

      1,250         50,319   

Teva Pharmaceutical Industries Ltd. (Israel)(a)

      46,000         2,145,440   
     

 

 

  
        7,356,722   
     

 

 

  

 

See Notes to Schedules of Investments.
 

 

Motley Fool Independence Fund

    3

 

  Issues

 

   

Shares

 

     

Value

 

  
   

Equity Securities (continued)

      

Professional Services — 1.81%

      

Huron Consulting Group, Inc. (United States)*

      117,518       $ 3,804,058   
     

 

 

  

Real Estate Investment Trusts — 2.98%

      

Annaly Capital Management, Inc. (United States)

      219,989         3,691,415   

DuPont Fabros Technology, Inc. (United States)

      101,000         2,574,490   
     

 

 

  
        6,265,905   
     

 

 

  

Real Estate Management & Development — 3.92%

      

Brookfield Asset Management, Inc. (Canada)

      56,374         1,777,472   

Cheung Kong Holdings Ltd. (Hong Kong)

      120,337         1,834,759   

Henderson Land Development Co., Ltd. (Hong Kong)

      556,764         3,524,569   

Swire Pacific Ltd. (Hong Kong)

      78,114         1,098,844   
     

 

 

  
        8,235,644   
     

 

 

  

Semiconductors & Semiconductor Equipment — 1.05%

      

Formfactor, Inc. (United States)*

      231,000         2,122,890   

NVIDIA Corp. (United States)*

      7,000         96,810   
     

 

 

  
        2,219,700   
     

 

 

  

Software — 2.45%

      

DuzonBizon Co., Ltd. (South Korea)*

      155,000         1,591,724   

Fundtech Ltd. (Israel)

      93,102         1,759,628   

Wemade Entertainment Co., Ltd. (South Korea)

      47,507         1,809,895   
     

 

 

  
        5,161,247   
     

 

 

  

Specialty Retail — 0.09%

      

Best Buy Co., Inc. (United States)

      7,000         193,200   
     

 

 

  

Textiles, Apparel & Luxury Goods — 1.56%

      

Under Armour, Inc. (United States)*

      44,705         3,281,794   
     

 

 

  

Tobacco — 1.02%

      

Philip Morris International, Inc. (United States)

      30,072         2,140,224   
     

 

 

  

Wireless Telecommunication Services — 2.56%

      

American Tower Corp. (United States)*

      59,686         3,135,306   

China Mobile Ltd. (Hong Kong)(a)

      45,340         2,259,292   
     

 

 

  
        5,394,598   
     

 

 

  

Total Equity Securities (Cost $ 168,694,152)

         189,702,487   
     

 

 

  

 

See Notes to Schedules of Investments.
 

 

4

    Motley Fool Independence Fund

 

  Issues

 

   

 

Shares

 

     

 

Value

 

  
   

Participatory Note — 1.16%

      

Food Products — 1.16%

      

Almarai Co. (Saudi Arabia)

      100,000       $ 2,433,204   
     

 

 

  

Total Participatory Note (Cost $ 2,514,464)

         2,433,204   
     

 

 

  

Other Investments — 9.66%

      

Temporary Cash Investment — 9.66%

      

BNY Mellon Cash Reserve

      20,326,447         20,326,447   

Total Other Investments (Cost $ 20,326,447)

         20,326,447   
     

 

 

  

Total Investment Portfolio (Cost 191,535,063) — 101.03%

         212,462,138   

Liabilities in Excess of Other Assets — (1.03)%

         (2,174,587 ) 
     

 

 

  

NET ASSETS — 100.00%

      

(Applicable to 14,038,252 shares outstanding)

       $  210,287,551   
     

 

 

  
     

 

 

  

* Non-income producing security.

(a) ADR — American Depositary Receipts

LP — Limited Partnership

PLC — Public Limited Company

 

See Notes to Schedules of Investments.
 

 

Motley Fool Independence Fund

    5

The following tables show the top 11 holdings and countries and top 10 sectors in which the Fund was invested at July 31, 2011. Portfolio holdings are subject to change without notice.

The Motley Fool Independence Fund has begun using the Global Industry Classification StandardSM (“GICS SM”) as the basis for the classification of securities on the Schedule of Investments (“SOI”).We believe that this change makes the SOI classifications more standard with the rest of the industry. This change in classification method does not impact the values of the securities, the Net Assets of the Fund, or the value of the shares outstanding.

 

  Top Eleven Holdings*

 

   

 

% of Net  

Assets  

 

       

POSCO

        3.68 %  

Telefonica SA

        3.27    

Wellpoint, Inc.

        3.01    

Lukoil OAO

        2.53    

Denbury Resources, Inc.

        2.25    

Google, Inc.

        2.15    

Markel Corp.

        1.95    

Sung Kwang Bend Co., Ltd.

        1.87    

Innophos Holdings, Inc.

        1.86    

Loews Corp.

        1.86    

Yum! Brands, Inc.

        1.86    
    

 

 

    
       26.29 %  
    

 

 

    
    

 

 

    
* As of the date of the report the fund had a holding of — 9.66% in the - BNY Mellon Cash Reserve.

 

  Top Ten Sectors

 

   

 

% of Net  
Assets  

 

       

Financials

        17.93 %  

Health Care

        12.41    

Consumer Staples

        12.22    

Information Technology

        9.46    

Industrials

        7.42    

Materials

        6.92    

Telecommunication Services

        6.84    

Consumer Discretionary

        6.77    

Energy

        6.07    

Utilities

        5.33    
    

 

 

    
       91.37 %  
    

 

 

    
    

 

 

    

 

See Notes to Schedules of Investments.
 

 

6

    Motley Fool Independence Fund

  Top Eleven Countries

 

 

   

% of Net  
Assets  

 

 

 

       

United States*

        42.17 %  

South Korea

        7.17    

Japan

        5.81    

Hong Kong

        4.14    

Spain

        3.27    

Bermuda

        2.56    

Russia

        2.53    

Brazil

        2.20    

United Kingdom

        1.94    

Indonesia

        1.86    

Israel

        1.86    
    

 

 

    
       75.51 %  
    

 

 

    
    

 

 

    

 

* As of the date of the report the fund had a holding of — 9.66% in the - BNY Mellon Cash Reserve.

 

See Notes to Schedules of Investments.
 

 

Motley Fool Independence Fund

    7

The Motley Fool Funds Trust

Motley Fool Great America Fund

Schedule of Investments

at July 31, 2011

(Unaudited)

 

 

  Issues

 

   

Shares

 

     

Value

 

  
   

Equity Securities — 92.24%

      

Auto Components — 1.21%

      

Drew Industries, Inc. (United States)

      28,811       $ 613,674   

TRW Automotive Holdings Corp. (United States)*

      2,000         100,940   
     

 

 

  
        714,614   
     

 

 

  

Automobiles — 2.09%

      

Thor Industries, Inc. (United States)

      49,988         1,236,203   
     

 

 

  

Beverages — 1.55%

      

Heckmann Corp. (United States)*

      152,000         916,560   
     

 

 

  

Capital Markets — 2.76%

      

Diamond Hill Investment Group, Inc. (United States)

      11,453         889,555   

INTL FCStone, Inc. (United States)*

      32,300         742,254   
     

 

 

  
        1,631,809   
     

 

 

  

Chemicals — 1.10%

      

Innophos Holdings, Inc. (United States)

      13,500         650,700   
     

 

 

  

Communications Equipment — 4.62%

      

Cisco Systems, Inc. (United States)

      87,000         1,389,390   

Infinera Corp. (United States)*

      209,490         1,347,021   
     

 

 

  
        2,736,411   
     

 

 

  

Construction & Engineering — 0.30%

      

Orion Marine Group, Inc. (United States)*

      20,500         178,145   
     

 

 

  

Containers & Packaging — 2.91%

      

Crown Holdings, Inc. (United States)*

      44,800         1,720,768   
     

 

 

  

Diversified Telecommunication Services — 2.59%

      

Level 3 Communications, Inc. (United States)*

      703,760         1,534,197   
     

 

 

  

Energy Equipment & Services — 1.19%

      

Dresser-Rand Group, Inc. (United States)*

      13,180         704,076   
     

 

 

  

Health Care Equipment & Supplies — 5.54%

      

Intuitive Surgical, Inc. (United States)*

      3,420         1,369,881   

Natus Medical, Inc. (United States)*

      165,700         1,910,521   
     

 

 

  
        3,280,402   
     

 

 

  

Health Care Providers & Services — 6.55%

      

Laboratory Corp. of America Holdings (United States)*

      8,920         809,579   

Quest Diagnostics, Inc. (United States)

      24,000         1,296,240   

 

See Notes to Schedules of Investments.
 

 

Motley Fool Great America Fund

    1

 

  Issues

 

   

Shares

 

     

Value

 

  
   

Equity Securities (continued)

      

Health Care Providers & Services (continued)

      

WellPoint, Inc. (United States)

      26,200       $ 1,769,810   
     

 

 

  
        3,875,629   
     

 

 

  

Hotels, Restaurants & Leisure — 5.91%

      

International Speedway Corp. (United States)

      23,760         664,567   

Penn National Gaming, Inc. (United States)*

      30,617         1,283,771   

Red Robin Gourmet Burgers, Inc. (United States)*

      45,000         1,548,900   
     

 

 

  
        3,497,238   
     

 

 

  

Household Durables — 1.01%

      

Kid Brands, Inc. (United States)*

      130,300         598,077   
     

 

 

  

Insurance — 9.33%

      

Berkshire Hathaway, Inc. (United States)*

      17         1,895,500   

Berkshire Hathaway, Inc., Class B (United States)*

      3,000         222,510   

HCC Insurance Holdings, Inc. (United States)

      53,200         1,602,916   

Markel Corp. (United States)*

      4,500         1,801,890   
     

 

 

  
        5,522,816   
     

 

 

  

Internet Software & Services — 1.78%

      

Google, Inc. (United States)*

      1,750         1,056,457   
     

 

 

  

IT Services — 2.19%

      

Paychex, Inc. (United States)

      46,000         1,298,580   
     

 

 

  

Machinery — 6.17%

      

Flow International Corp. (United States)*

      316,900         1,080,629   

Flowserve Corp. (United States)

      4,950         491,931   

Trimas Corp. (United States)*

      86,800         2,080,596   
     

 

 

  
        3,653,156   
     

 

 

  

Metals & Mining — 3.28%

      

Horsehead Holding Corp. (United States)*

      174,000         1,943,580   
     

 

 

  

Multiline Retail — 4.00%

      

Big Lots, Inc. (United States)*

      68,000         2,368,440   
     

 

 

  

Oil, Gas & Consumable Fuels — 3.46%

      

Denbury Resources, Inc. (United States)*

      106,100         2,049,852   
     

 

 

  

Paper & Forest Products — 3.74%

      

KapStone Paper and Packaging Corp. (United States)*

      41,200         642,308   

Schweitzer-Mauduit International, Inc. (United States)

      28,000         1,571,080   
     

 

 

  
        2,213,388   
     

 

 

  

Personal Products — 1.01%

      

Female Health Co. (United States)

      129,500         596,995   
     

 

 

  

 

See Notes to Schedules of Investments.
 

 

2

    Motley Fool Great America Fund

 

  Issues

 

 

   

 

Shares

 

     

 

Value

 

  
   

Equity Securities (continued)

      

Professional Services — 2.89%

      

Barrett Business Services, Inc. (United States)

      46,200       $ 689,304   

Huron Consulting Group, Inc. (United States)*

      31,550         1,021,273   
     

 

 

  
        1,710,577   
     

 

 

  

Real Estate Investment Trusts — 5.77%

      

Annaly Capital Management, Inc. (United States)

      39,000         654,421   

DuPont Fabros Technology, Inc. (United States)

      47,550         1,212,050   

Retail Opportunity Investments Corp. (United States)

      139,560         1,551,907   
     

 

 

  
        3,418,378   
     

 

 

  

Semiconductors & Semiconductor Equipment — 1.09%

      

Formfactor, Inc. (United States)*

      70,000         643,300   
     

 

 

  

Specialty Retail — 3.12%

      

Men’s Wearhouse, Inc. (United States)

      34,500         1,131,255   

Tractor Supply Co. (United States)

      10,900         718,528   
     

 

 

  
        1,849,783   
     

 

 

  

Textiles, Apparel & Luxury Goods — 3.00%

      

Joe’s Jeans, Inc. (United States)*

      376,300         304,841   

Under Armour, Inc. (United States)*

      20,000         1,468,200   
     

 

 

  
        1,773,041   
     

 

 

  

Wireless Telecommunication Services — 2.08%

      

SBA Communications Corp. (United States)*

      32,250         1,230,982   
     

 

 

  

Total Equity Securities (Cost $ 53,434,369)

         54,604,154   
     

 

 

  

Other Investments — 8.78%

      

Temporary Cash Investment — 8.78%

      

BNY Mellon Cash Reserve

      5,199,653         5,199,653   
     

 

 

  

Total Other Investments (Cost $ 5,199,653)

         5,199,653   
     

 

 

  

Total Investment Portfolio (Cost 58,634,022) — 101.02%

         59,803,807   

Liabilities in Excess of Other Assets — (1.02)%

         (604,422 ) 
     

 

 

  

NET ASSETS — 100.00%

      

(Applicable to 5,140,036 shares outstanding)

       $ 59,199,385   
     

 

 

  

 

* Non-income producing security.

 

See Notes to Schedules of Investments.
 

 

Motley Fool Great America Fund

    3

The following tables show the top 11 holdings and top 10 sectors in which the Fund was invested at July 31, 2011. Portfolio holdings are subject to change without notice.

 

 

  Top Eleven Holdings*

 

   

 

% of Net  

Assets  

 

 

Big Lots, Inc.

      4.00 %   

Trimas Corp.

      3.51     

Denbury Resources, Inc.

      3.46     

Horsehead Holding Corp.

      3.28     

Natus Medical, Inc.

      3.23     

Berkshire Hathaway, Inc.

      3.20     

Markel Corp.

      3.05     

WellPoint, Inc.

      2.99     

Crown Holdings, Inc.

      2.91     

HCC Insurance Holdings, Inc.

      2.71     

Schweitzer-Mauduit International, Inc.

      2.65     
  

 

 

    
     34.99 %   
  

 

 

    
  

 

 

    

 

* As of the date of the report the fund had a holding of 8.78% in the BNY Mellon Cash Reserve.

 

 

  Top Ten Sectors

 

   

 

% of Net  

Assets  

 

 

Consumer Discretionary

      20.33 %   

Financials

      17.86     

Health Care

      12.09     

Materials

      11.03     

Information Technology

      9.69     

Industrials

      9.36     

Telecommunication Services

      4.67     

Energy

      4.65     

Consumer Staples

      2.56     
  

 

 

    
     92.24 %   
  

 

 

    

 

See Notes to Schedules of Investments.
 

 

4

    Motley Fool Great America Fund

Notes to Schedules of Investments

1. Security Valuation:

Securities held by the Trust are generally valued at -fair value as of the close of regular trading on each business day (generally 4 pm Eastern time) -that the New York Stock Exchange (“NYSE”) is open. Securities, other than stock options, listed on the NYSE or other exchanges are valued on the basis of the last quoted sale price on the exchange on which they are primarily traded. However, if the last sale price on the NYSE is different from the last sale price on any other exchange, the NYSE price will be used. If there are no sales on that day, then the securities are valued at the bid price on the NYSE or other primary exchange for that day. Securities traded in the OTC market are valued on the basis of the last sales price as reported by NASDAQ. If there are no sales on that day, then the securities are valued at the mean between the closing bid and asked prices as reported by NASDAQ. Stock options and stock index options traded on national securities exchanges or on NASDAQ are valued at the mean between the latest bid and asked prices for such options. Securities for which market quotations are not readily available or whose values have been affected by events occurring before the Funds’ pricing time but after the close of the securities markets, and other assets are valued at fair value as determined pursuant to procedures adopted in good faith by the Board of Trustees (the “Board”). Debt securities that mature in fewer than 60 days are valued at amortized cost (unless the Board determines that this method does not represent fair value), if their original maturity was 60 days or less or by amortizing the value as of the 61st day before maturity, if their original term to maturity exceeded 60 days.

When fair value pricing is employed, the prices of securities used by a fund to calculate its net asset value (the “NAV”) may differ from quoted or published prices for the same securities.

The values of securities held by the Funds and other assets used in computing NAV are generally determined as of the time trading in such securities is completed each day, which, in the case of foreign securities, generally occurs at various times before the close of the NYSE. Trading in securities listed on foreign securities exchanges are valued at the last sale or, if no sales are reported, at the bid price as of the close of the exchange, subject to possible adjustment as described in the Prospectus. Foreign currency exchange rates are also generally determined before the close of the NYSE. On occasion, the values of such securities and exchange rates may be affected by events occurring between the time as of which determinations of such values or exchange rates are made and the close of the NYSE. When such events materially affect the value of securities held by the Funds or their liabilities, such securities and liabilities will be valued at fair value in accordance with procedures adopted in good faith by the Board. In this regard, the Trust has retained a third party fair value pricing service to quantitatively analyze the price movement of the Funds’ holdings on foreign exchanges and to automatically fair value if the variation from the prior day’s closing price exceeds specified parameters. As of July 31, 2011, such price movements for certain securities had exceeded specified parameters and the third party fair value service quantitatively fair valued the affected securities. The Board will review and monitor the methods used by

 

 
 

 

The Motley Fool Funds Trust

    1

the service to assure itself that securities are valued at their fair values. The values of any assets and liabilities initially expressed in foreign currencies will be converted to U.S. dollars based on exchange rates supplied by a quotation service.

Fair Value Measurements

The Financial Accounting Standards Board (“FASB”) “Fair Value Measurements and Disclosures” defines fair value as the price that a Fund would receive upon selling an investment in an orderly transaction to an independent buyer in the principal market, or in the absence of a principal market, the most advantageous market for the investment. Valuation techniques should maximize the use of observable market data and minimize the use of unobservable inputs. Inputs refer broadly to the assumptions that market participants would use in pricing an asset. Inputs may be observable or unobservable. Observable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs are inputs that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.

Fair value measurements utilize a hierarchy based on the observability of inputs used to establish fair value.

Investment assets reported at fair value are classified based on the lowest level input that is significant to fair value:

Level 1 – quoted prices in active markets for identical securities

Investments whose values are based on quoted market prices in active markets, and whose values are therefore classified as Level 1 prices, include active listed domestic and foreign equity securities.

Level 2 – observable inputs other than Level 1 -(including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)

Investments that trade in markets that are not considered to be active, but whose values are based on quoted market prices, dealer quotations or valuations provided by alternative pricing sources supported by observable inputs are classified as Level 2 prices. These generally include investment grade corporate bonds and less liquid listed domestic and foreign equity securities.

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

Investments whose values are classified as Level 3 prices have significant unobservable inputs, as they may trade infrequently or not at all.

 

 
 

 

2

    The Motley Fool Funds Trust

The Funds did not have any significant transfers between Level 1 and Level 2 during the six months ended July 31, 2011.

 

     

 

Independence
Fund

 

  
   

  Valuation Inputs

 

   

 

Value

 

  
   

Level 1 — Quoted Prices

         

U.S. Common Stocks

    $ 76,029,812   

Foreign Common Stocks

      67,191,480   

Temporary Cash Investment

      20,326,447   

Level 2 — Other Significant Observable Inputs

         

Foreign Common Stocks

      46,481,195   

Participatory Note

      2,433,204   

Level 3 — Significant Unobservable Inputs

      —   

Total Value of Investments

    $ 212,462,138   

 

     

 

Great America
Fund

 

  
   

 

  Valuation Inputs

 

   

 

Value

 

  
   

Level 1 — Quoted Prices

         

U.S. Common Stocks

      $54,604,154   

Temporary Cash Investment

      5,199,653   

Level 2 — Other Significant Observable Inputs

      —   

Level 3 — Significant Unobservable Inputs

      —   

Total Value of Investments

      $59,803,807   

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

2. Investment Policies and Practices:

The sections below describe some of the different types of investments that may be made by the Funds and the investment practices in which the Funds may engage.

Foreign Securities

The Independence Fund invests, and the Great America Fund may invest, in equity and fixed-income securities of foreign companies, including companies located in both developed and emerging-market countries. Investment in foreign securities may include the purchase of American Depositary Receipts (“ADRs”) and other depositary receipts

 

 
 

 

The Motley Fool Funds Trust

    3

(European Depository Receipts (“EDRs”) and Global Depository Receipts (“GDRs”)) that represent indirect interests in securities of foreign issuers. A significant portion of a Fund’s exposure to foreign investments may be composed of such investments. Investments in foreign securities are affected by risk factors generally not associated with investments in the securities of U.S. companies in the U.S. With respect to such securities, there may be more limited information publicly available concerning the issuer than would be the case with respect to domestic securities, foreign issuers may use different accounting standards, and foreign trading markets may not be as liquid as are U.S. markets. Foreign securities also involve such risks as currency risks, possible imposition of withholding or confiscatory taxes, possible currency transfer restrictions, expropriation or other adverse political or economic developments, and the difficulty of enforcing obligations in other countries. These risks may be greater in emerging-market countries and in less developed countries.

The purchase of securities denominated in foreign currencies will subject the value of the Funds’ investments in those securities to fluctuations caused by changes in foreign exchange rates. To hedge against the effects of changes in foreign exchange rates, the Funds may enter into forward foreign currency exchange contracts (“forward contracts”). These contracts represent agreements to exchange an amount of currency at an agreed-upon future date and rate. The Funds will generally use forward contracts only to “lock in” the price in U.S. dollars of a foreign security that a Fund plans to purchase or to sell, but in certain limited cases, it may use such contracts to hedge against an anticipated substantial decline in the price of a foreign currency against the U.S. dollar that would adversely affect the U.S. dollar value of foreign securities held by the Fund. Forward contracts will not be used in all cases and, in any event, cannot completely protect the Funds against all changes in the values of foreign securities resulting from fluctuations in foreign exchange rates. The Funds will not enter into a forward contract if, as a result, forward contracts would represent more than 20% of a Fund’s total assets. For hedging purposes, the Funds may also use options on foreign currencies, which expose the Funds to certain risks.

Some foreign securities are traded in the U.S. in the form of ADRs. ADRs are receipts typically issued by a U.S. bank or trust company evidencing ownership of the underlying securities of foreign issuers. EDRs and GDRs are receipts typically issued by foreign banks or trust companies, evidencing ownership of underlying securities issued by either a foreign or U.S. issuer. Generally, depositary receipts in registered form are designed for use in the U.S. and depositary receipts in bearer form are designed for use in securities markets outside the U.S. Depositary receipts may not necessarily be denominated in the same currency as the underlying securities into which they may be converted. Depositary receipts generally involve the same risks as other investments in foreign securities. However, holders of ADRs and other depositary receipts may not have all the legal rights of shareholders and may experience difficulty in receiving shareholder communications.

 

 
 

 

4

    The Motley Fool Funds Trust

Types of Fixed-Income Securities

A Fund may invest in bonds and other types of debt obligations of U.S. and foreign issuers. Fixed income securities purchased by a Fund may include, among others, bonds, notes and debentures issued by corporations; debt securities issued or guaranteed by the U.S. government or one of its agencies or instrumentalities (“U.S. Government Securities”); municipal securities; mortgage-backed and asset-backed securities; and debt securities issued or guaranteed by foreign governments, their agencies, instrumentalities, or political subdivisions, or by government-owned,—controlled, or -sponsored entities, including central banks. These investments also include money market instruments and other types of obligations. Investors should recognize that, although securities ratings issued by Standard & Poor’s(R) Ratings Services (“S&P”), a division of The McGraw-Hill Companies, Inc., and Moody’s Investors Services(C), Inc. (“Moody’s”), provide a generally useful guide as to credit risks, they do not offer any criteria to evaluate interest rate risk. Changes in interest rate levels generally cause fluctuations in the prices of fixed-income securities and will, therefore, cause fluctuations in the NAV per share of a Fund. Subsequent to the purchase of a fixed-income security by a Fund, the ratings or credit quality of such security may deteriorate. Any such subsequent adverse changes in the rating or quality of a security held by a Fund would not require a Fund to sell the security. -

Participatory Notes

A participatory note, as used by a Fund, is an instrument used by investors to obtain exposure to an equity investment, including common stocks and warrants, in a local market where direct ownership is not permitted. In countries where direct ownership by a foreign investor, such as -a Fund, is not allowed by local law, such as Saudi Arabia, an investor may gain exposure to the market through a participatory note, which derives its value from a group of underlying equity securities. A participatory note is intended (disregarding the effect of any fees and expenses) to reflect the performance of the underlying equity securities on a one-to-one basis so that investors will not normally gain more in absolute terms than they would have made had they invested in the underlying securities directly, and will not normally lose more than they would have lost had they invested in the underlying securities directly.

In addition to providing access to otherwise closed markets, participatory notes can also provide a less expensive option to direct investment (where ownership by foreign investors is permitted) by reducing registration and transaction costs in acquiring and selling local registered shares. The Funds’ investment manager also believes that participatory notes can offer greater liquidity in markets that restrict the ability of the Funds to dispose of an investment by either restricting transactions by size or requiring registration and/or regulatory approvals.

The purchase of participatory notes involves risks that are in addition to the risks normally associated with a direct investment in the underlying securities. The Fund is subject to the risk that the issuer of the participatory note (i.e., the issuing bank or

 

 
 

 

The Motley Fool Funds Trust

    5

broker-dealer), which is the only responsible party under the note, is unable or refuses to perform under the terms of the participatory note, also known as counterparty risk.

While the holder of a participatory note is entitled to receive from the bank or broker-dealer any dividends or other distributions paid on the underlying securities, the holder is not entitled to the same rights as an owner of the underlying securities, such as voting rights.

Participatory notes are also not traded on exchanges, are privately issued, and may be illiquid. To the extent a participatory note is determined to be illiquid, it would be subject to the Fund’s limitation on investments in illiquid securities. There can be no assurance that the trading price or value of participatory notes will equal the value of the underlying value of the equity securities they seek to replicate.

Real Estate Investment Trusts

Real estate investment trusts (“REITs”) are pooled investment vehicles that manage a portfolio of real estate or real estate-related loans to earn profits for their shareholders. REITs are generally classified as equity REITs, mortgage REITs, or a combination of equity and mortgage REITs. Investing in REITs involves certain unique risks in addition to those risks associated with investing in the real estate industry in general. Equity REITs may be affected by changes in the value of the underlying property owned by the REITs, while mortgage REITs may be affected by the quality of the borrower on any credit extended. REITs are dependent upon management skills, may not be diversified geographically or by property type, and are subject to heavy cash-flow dependency, default by borrowers, and self-liquidation. REITs must also meet certain requirements under the Internal Revenue Code of 1986, as amended (the “Code”), to avoid entity level tax and be eligible to pass through certain tax attributes of their income to shareholders. REITs are consequently subject to the risk of failing to meet these requirements for favorable tax treatment and of failing to maintain their exemptions from registration under the 1940 Act. REITs are also subject to the risks of changes in the Code, affecting their tax status.

REITs (especially mortgage REITs) are also subject to interest rate risks. When interest rates decline, the value of a REIT’s investment in fixed-rate obligations can be expected to rise. Conversely, when interest rates rise, the value of a REIT’s investment in fixed-rate obligations can be expected to decline. In contrast, as interest rates on adjustable-rate mortgage loans are reset periodically, yields on a REIT’s investments in such loans will gradually align themselves to reflect changes in market interest rates, causing the value of such investments to fluctuate less dramatically in response to interest rate fluctuations than would investments in fixed-rate obligations.

The management of a REIT may be subject to conflicts of interest with respect to the operation of the business of the REIT and may be involved in real estate activities competitive with the REIT. REITs may own properties through joint ventures or in

 

 
 

 

6

    The Motley Fool Funds Trust

other circumstances in which a REIT may not have control over its investments. REITs may use significant amounts of leverage. -

REITs often do not provide complete tax information until after the end of the calendar year. Consequently, because of the delay, it may be necessary for a -Fund, if invested in REITs, to request permission to extend the deadline for issuance of Forms 1099-DIV beyond January 31. Alternatively, amended Forms 1099-DIV may be sent. During the -six months ended -July 31, 2011, both Funds invested in REITs.

Temporary Investments

During periods of adverse market or economic conditions, a Fund may temporarily invest all or a substantial portion of its assets in high-quality, fixed-income securities, money market instruments, and shares of money market mutual funds, or it may hold cash. At such times, a Fund would not be pursuing its stated investment objective with its usual investment strategies. A Fund may also hold these investments for liquidity purposes. Fixed-income securities will be deemed to be of high quality if they are rated “A” or better by S&P or Moody’s or, if unrated, are determined to be of comparable quality by the Adviser. Money market instruments are high-quality, short-term fixed income - obligations (which generally have remaining maturities of one year or less), and may include U.S. Government Securities, commercial paper, certificates of deposit and banker’s acceptances issued by domestic branches of United States banks that are members of the Federal Deposit Insurance Corporation, and repurchase agreements for US. Government Securities. In lieu of purchasing money market instruments, a Fund may purchase shares of money market mutual funds that invest primarily in U.S. Government Securities and repurchase agreements involving those securities, subject to certain limitations imposed by the 1940 Act. A Fund, as an investor in a money market fund, will indirectly bear the fees and expenses of the money market fund. These indirect fees and expenses will be in addition to the fees and expenses of the Funds. Repurchase Agreements involve certain risks not associated with direct investments in debt securities.

3. Federal Income Taxes:

At July 31, 2011, the aggregate cost of investment securities for federal income tax purposes (excluding foreign currency, securities sold short and derivative related items) and the net unrealized appreciation from investments for those securities having an excess of value over cost and net unrealized depreciation from investments for those securities having an excess of cost over value (based on cost for federal income tax purposes) were as follows:

 

 
 

 

The Motley Fool Funds Trust

    7

 

  Independence Fund

 

                   
 

 

Federal Tax Cost

 

  

 

Net Unrealized
Appreciation
(Depreciation)

 

    

 

Appreciated
Securities

 

    

 

Depreciated
Securities

 

 
    $191,535,063     $20,927,075        $24,450,710      $(3,523,635)

 

 

  Great America Fund

 

                   
 

Federal Tax Cost

 

  

 

Net Unrealized
Appreciation
(Depreciation)

 

    

Appreciated
Securities

 

    

Depreciated
Securities

 

 
    $58,634,022     $1,169,785        $4,835,917      $(3,666,132)

4. Subsequent Events:

Subsequent events have been evaluated through the date that the -financial statements were available to be issued. All subsequent events determined to be relevant and material to the financial statements have been appropriately recorded or disclosed.

 

 
 

 

8

    The Motley Fool Funds Trust

Item 2. Controls and Procedures.

 

  (a) The registrant’s principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”) (17 CFR 270.30a-3(c))) are effective, as of a date within 90 days of the filing date of the report that includes the disclosure required by this paragraph, based on their evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or 240.15d-15(b)).

 

  (b) There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR 270.30a-3(d)) that occurred during the registrant’s last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.

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.

 

(Registrant)  

     The Motley Fool Funds Trust

By (Signature and Title)*  

      /s/ Peter E. Jacobstein

            Peter E. Jacobstein, President
            (principal executive officer)
Date  

             9-26-2011

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

By (Signature and Title)*  

     /s/ Peter E. Jacobstein

           Peter E. Jacobstein, President
           (principal executive officer)
Date  

             9-26-2011

By (Signature and Title)*  

      /s/ Phil Biedronski

            Phil Biedronski, Treasurer
            (principal financial officer)
Date  

             9-26-2011

* Print the name and title of each signing officer under his or her signature.