N-Q 1 centerstonenq.htm N-Q Blu Giant, LLC

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 811-23128

 

Centerstone Investors Trust

(Exact name of registrant as specified in charter)

 

17605 Wright Street, Suit 2 Omaha, NE 68130

(Address of principal executive offices) (Zip code)

 

James Ash, Gemini Fund Services, LLC.

80 Arkay Drive, Suite 110 Hauppauge NY 11788

(Name and address of agent for service)

 

Registrant's telephone number, including area code: 631-470-2619

 

Date of fiscal year end: 3/31

 

Date of reporting period: 6/30/16

 

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 Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.

 

Item 1. Schedule of Investments.

 

Centerstone Investors Fund
PORTFOLIO OF INVESTMENTS (Unaudited)
June 30, 2016
Shares   Security       Market Value
             
    COMMON STOCK - 56.26 %    
    CANADA - 2.71 %    
6,100   TransCanada Corp.        $                              274,587
4,500   Metro, Inc.       155,960
            430,547
    DENMARK - 2.72 %    
14,300 Matas A/S      242,362
4,045   Topdanmark A/S *       95,737
2,535   ISS A/S       95,089
                                             433,188
    FINLAND - 1.34 %    
8,960   Tikkurila Oyj                                        161,854
1,245   Cargotec Oyj                                          50,374
            212,228
    FRANCE - 8.15 %    
5,765   Schneider Electric SE                                        339,829
2,950   Air Liquide SA       308,263
2,750   Danone SA       193,725
1,095   LVMH Moet Hennessy Louis Vuitton SE       165,443
1,445   Sodexo SA       155,331
1,370   Eiffage SA       97,728
790   Valeo SA       35,220
            1,295,539
    GERMANY - 1.23 %    
3,375   Fraport AG Frankfurt Airport Services Worldwide       180,068
1,050   Hamburger Hafen und Logistik AG       15,684
            195,752
    HONG KONG - 1.86 %    
17,300   Hongkong Land Holdings Ltd.                                        105,357
74,000   Mandarin Oriental International Ltd.                                        100,270
20,300   Hysan Development Co. Ltd.                                          90,144
                                             295,771
    INDONESIA - 0.35 %        
43,300   Indocement Tunggal Prakarsa Tbk PT       55,303
             
    ITALY - 0.24 %        
2,390   Interpump Group SpA       37,332
             
    JAPAN - 3.44 %        
10,300   Nagaileben Co. Ltd.       246,983
4,000   Aica Kogyo Co. Ltd.       90,652
580   Shimano, Inc.       87,800
3,350   Mitsubishi Estate Co. Ltd.       61,161
375   FANUC Corp.       60,441
            547,037
    MEXICO - 1.24 %        
24,570   Grupo Televisa SAB       126,957
3,220   Fresnillo PLC       70,766
            197,723
    PERU - 0.34 %        
1,985   Southern Copper Corp.       53,555
             
    SINGAPORE - 2.46 %        
87,500   ComfortDelGro Corp. Ltd.       178,784
35,100   SATS Ltd.       107,186
16,400   Oversea-Chinese Banking Corp. Ltd.       105,889
            391,859
    SWEDEN - 3.65 %        
13,200   Loomis AB       320,469
7,830   ICA Gruppen AB       260,332
            580,801

 

 

Centerstone Investors Fund
PORTFOLIO OF INVESTMENTS (Unaudited) (Continued)
June 30, 2016
Shares   Security       Market Value
             
    COMMON STOCK - 56.26 % (continued)    
    SWITZERLAND - 4.91 %        
3,236   Cie Financiere Richemont SA        $                              188,506
2,175   Novartis AG       178,943
520   Roche Holding AG       136,699
2,275   Nestle SA       175,494
350   Swatch Group AG       101,673
            781,315
    THAILAND - 1.20 %        
23,700   Bangkok Bank PCL (NVDR)       106,900
75,000   Thai Beverage PCL       50,710
4,000   Siam City Cement PCL (NVDR)       33,694
            191,304
    UNITED KINGDOM - 2.26 %    
1,715   British American Tobacco PLC       111,031
31,100   Rotork PLC       90,009
3,510   Spectris PLC       85,632
3,770   Weir Group PLC       72,623
            359,295
    UNITED STATES - 18.16 %    
4,475   Colgate-Palmolive Co.       327,570
1,675   3M Co.       293,326
4,080   Sonoco Products Co.       202,613
2,500   Wal-Mart Stores, Inc.       182,550
2,150   Omnicom Group, Inc.       175,203
3,335   Emerson Electric Co.       173,954
1,950   Procter & Gamble Co.       165,106
2,750   EnerSys       163,542
2,300   Target Corp.       160,586
1,300   McDonald's Corp.       156,442
545   WW Grainger, Inc.       123,851
1,675   Scotts Miracle-Gro Co.       117,099
1,050   United Technologies Corp.       107,677
4,075   Mosaic Co.       106,683
1,110   CVS Health Corp.       106,271
670   Snap-on, Inc.       105,739
1,890   CarMax, Inc. *       92,667
935   TJX Cos., Inc.       72,210
845   Comcast Corp.       55,085
            2,888,174
             
    TOTAL COMMON STOCK (Cost - $8,877,664)       8,946,723

 

 

Centerstone Investors Fund
PORTFOLIO OF INVESTMENTS (Unaudited) (Continued)
June 30, 2016
Principal   Security   Coupon Maturity Market Value
             
    BONDS & NOTES - 15.50 %    
    NETHERLANDS - 0.94%        
 $       138,000   LyondellBasell Industries NV   5.000% 4/15/2019  $                              149,458
             
    UNITED KINGDOM - 0.47%        
70,000   Vodafone Group PLC   4.625% 7/15/2018 73,878
             
    UNITED STATES - 14.09%        
342,000   Men's Wearhouse, Inc.   7.000% 7/1/2022 288,990
250,000   PHI, Inc.   5.250% 3/15/2019 232,500
215,000   ADT Corp.   6.250% 10/15/2021 229,513
217,000   Kindred Healthcare, Inc.   8.000% 1/15/2020 217,000
150,000   Advanced Disposal Services, Inc.   8.250% 10/1/2020 152,250
160,000   Infor US, Inc.   6.500% 5/15/2022 151,901
147,000   Ford Motor Credit Co. LLC   2.551% 10/5/2018 149,799
146,000   Wells Fargo & Co.   2.020% 3/4/2021 149,044
139,000   Bank of America Corp.   5.650% 5/1/2018 149,024
145,000   Verizon Communications, Inc.   2.406% 9/14/2018 148,666
130,000   Anthem, Inc.   7.000% 2/15/2019 147,226
140,000   HRG Group, Inc.   7.875% 7/15/2019 147,175
75,000   Qwest Corp.   6.500% 6/1/2017 77,906
            2,240,994
             
             
    TOTAL BONDS & NOTES (Cost - $2,457,419)       2,464,330
             
Shares            
    COMMODITY - 3.06 %    
3,850   SPDR Gold Shares *       487,102
             
    TOTAL COMMODITY (Cost - $470,964)       487,102
             
    REAL ESTATE INVESTMENT TRUSTS - 1.65 %    
19,800   Monmouth Real Estate Investment Corp.       262,548
             
    TOTAL REAL ESTATE INVESTMENT TRUSTS (Cost - $235,412)     262,548

 

 

Centerstone Investors Fund
PORTFOLIO OF INVESTMENTS (Unaudited) (Continued)
June 30, 2016
Principal   Security   Coupon Maturity Market Value
    U.S. GOVERNMENT & AGENCY OBLIGATIONS - 12.69 %      
    U.S. TREASURY NOTES - 12.69 %        
 $       650,000   United States Treasury Note   0.750% 4/30/2018  $                              651,905
1,350,000   United States Treasury Note   1.625% 5/15/2026 1,366,559
            2,018,464
             
    TOTAL U.S. GOVERNMENT & AGENCY OBLIGATIONS (Cost $1,981,047)   2,018,464
             
    SHORT-TERM INVESTMENTS - 10.91 %    
    U.S. TREASURY BILL - 3.46 %        
550,000   United States Treasury Bill   0.000% 8/11/2016 549,832
             
Shares            
    MONEY MARKET FUND - 7.45 %    
1,184,561   SSgA U.S. Treasury Money Market Fund Class N, 0.10% ^     1,184,561
             
             
    TOTAL SHORT-TERM INVESTMENTS (Cost - $1,734,393)     1,734,393
             
    TOTAL INVESTMENTS - 100.07 % (Cost - $15,756,899) (a)      $           15,913,560
    CASH AND OTHER ASSETS LESS LIABILITIES - (0.07) %     (10,835)
    NET ASSETS - 100.00 %        $           15,902,725
             
NVDR-Non-Voting Depositary Receipt        
* Non-income producing security        
^ Interest rate reflects seven-day effective yield on June 30, 2016        
 (a) Represents cost for financial reporting purposes. Aggregate cost for federal tax purposes is $15,756,899 and differs from market value by
net unrealized appreciation of:        
    Unrealized appreciation:    $                          344,415
  Unrealized depreciation:   (187,754)
  Net unrealized appreciation:    $                          156,661

 

 

Centerstone Investors Fund
PORTFOLIO OF INVESTMENTS (Unaudited) (Continued)
June 30, 2016
             
As of June 30, 2016 the following Forward Currency Exchange Contracts were open:    
             
Forward Currency Contracts          
Foreign Currency   Settlement Date   Counterparty Local Currency Amount
Purchased/Sold		 U.S. $ Equivalent

U.S. $ Value at

June 30, 2016

 Unrealized Appreciation/
(Depreciation) *
To Buy:            
British Pound 11/25/2016 State Street Bank                            27,600  $                36,807  $                      36,948  $                      141
             
To Sell:            
British Pound 11/25/2016 State Street Bank                            70,000  $              101,961  $                      93,710  $                   8,251
Canadian Dollar 11/25/2016 State Street Bank                          165,000                  127,368                        127,069                          299
Danish Krone   8/31/2016 State Street Bank                          665,000                  100,819                          99,534                       1,285
Euro   8/22/2016 State Street Bank                          265,000                  298,390                        294,975                       3,415
Euro   8/25/2016 State Street Bank                          160,000                  181,047                        178,118                       2,929
Japanese Yen   8/22/2016 State Street Bank                       5,000,000                    48,036                          48,821                        (785)
Japanese Yen   8/25/2016 State Street Bank                     16,000,000                  145,851                        156,243                   (10,392)
Singapore Dollar   8/25/2016 State Street Bank                          250,000                  182,325                        185,677                     (3,352)
Swedish Krona   8/25/2016 State Street Bank                       1,500,000                  182,100                        177,484                       4,616
Swiss Franc 11/25/2016 State Street Bank                          210,000                  216,123                        217,434                     (1,311)
         $           1,584,020  $                 1,579,065  $                   4,955
___________            
* The amount represents fair value derivative instruments subject to foreign currency risk exposure as of June 30, 2016.

 

Sector Allocation (based on total value of investments as of June 30, 2016)
Industrials         19.39%
Consumer Discretionary       14.80%
Consumer Staples         11.79%
Materials         7.91%
Financials         7.08%
Health Care         5.82%
Energy         3.19%
Telecommunication Services       1.89%
Information Technology       1.49%
Gold         3.06%
Treasury Notes         12.68%
Short-Term Investments       10.90%
Total         100.00%
___________          
Percentages may differ from Portfolio of Investments which are based on Fund net assets.  

 

 

 

 

Centerstone International Fund
PORTFOLIO OF INVESTMENTS (Unaudited)
June 30, 2016
Shares   Security       Market Value
             
    COMMON STOCK - 68.54 %    
    CANADA - 4.98 %        
7,200   TransCanada Corp.        $                              324,103
5,400   Metro, Inc.       187,152
            511,255
    DENMARK - 4.41 %        
13,670   Matas A/S                                        231,685
4,680   Topdanmark A/S *       110,766
2,951   ISS A/S       110,693
            453,144
    FINLAND - 2.27 %        
10,070   Tikkurila Oyj       181,905
1,255   Cargotec Oyj       50,778
            232,683
    FRANCE - 14.64 %        
6,670   Schneider Electric SE       393,177
3,420   Air Liquide SA       357,376
1,285   LVMH Moet Hennessy Louis Vuitton SE       194,150
3,185   Danone SA       224,368
1,675   Sodexo SA       180,055
1,590   Eiffage SA       113,421
920   Valeo SA       41,016
            1,503,563
    GERMANY - 1.84 %        
3,200   Fraport AG Frankfurt Airport Services Worldwide       170,731
1,230   Hamburger Hafen und Logistik AG       18,372
            189,103
    HONG KONG - 3.25 %        
19,100   Hongkong Land Holdings Ltd.                                        116,319
81,500   Mandarin Oriental International Ltd.                                        110,432
24,100   Hysan Development Co. Ltd.       107,019
            333,770
    INDONESIA - 0.65 %        
52,000   Indocement Tunggal Prakarsa Tbk PT       66,414
            66,414
    ITALY - 0.42 %    
2,775   Interpump Group SpA       43,345
             
    JAPAN - 6.16 %    
11,950   Nagaileben Co. Ltd.                                        286,548
4,700   Aica Kogyo Co. Ltd.                                        106,516
635   Shimano, Inc.                                          96,126
475   FANUC Corp.                                          76,558
3,650   Mitsubishi Estate Co. Ltd.       66,639
            632,387
    MEXICO - 2.08 %        
25,025   Grupo Televisa SAB                                        129,308
3,820   Fresnillo PLC                                          83,952
            213,260
    PERU - 0.62 %        
2,350   Southern Copper Corp.       63,403
             
    SINGAPORE - 4.54 %    
103,800   ComfortDelGro Corp. Ltd.                                        212,089
19,700   Oversea-Chinese Banking Corp. Ltd.                                        127,196
41,500   SATS Ltd.                                        126,729
            466,014
    SWEDEN - 6.61 %        
15,275   Loomis AB                                        370,846
9,270   ICA Gruppen AB                                        308,209
            679,055

 

 

Centerstone International Fund
PORTFOLIO OF INVESTMENTS (Unaudited) (Continued)
June 30, 2016
Shares   Security       Market Value
    COMMON STOCK - 68.54 % (continued)    
    SWITZERLAND - 8.84 %        
3,745   Cie Financiere Richemont SA        $                              218,157
2,515   Novartis AG                                        206,916
2,640   Nestle SA                                        203,650
605   Roche Holding AG                                        159,044
412   Swatch Group AG                                        119,684
            907,451
    THAILAND - 2.03 %        
27,000   Bangkok Bank PCL (NVDR)       121,784
6,000   Siam City Cement PCL (NVDR)                                          50,541
54,000   Thai Beverage PCL       36,511
            208,836
    UNITED KINGDOM - 3.99 %    
2,035   British American Tobacco PLC                                        131,748
33,500   Rotork PLC                                          96,955
3,875   Spectris PLC                                          94,537
4,470   Weir Group PLC       86,107
            409,347
    UNITED STATES - 1.21 %        
4,750   Mosaic Co.       124,355
             
    TOTAL COMMON STOCK (Cost - $7,010,756)       7,037,385

 

 

Centerstone International Fund
PORTFOLIO OF INVESTMENTS (Unaudited) (Continued)
June 30, 2016
Principal   Security   Coupon Maturity Market Value
    BONDS & NOTES - 0.51 %    
    UNITED KINGDOM - 0.51 %        
 $         50,000   Vodafone Group PLC   4.625% 7/15/2018  $                           52,770
             
    TOTAL BONDS & NOTES (Cost - $53,060)       52,770
             
             
Shares            
    COMMODITY - 3.08 %    
2,500   SPDR Gold Shares *       316,300
             
    TOTAL COMMODITY (Cost - $303,675)       316,300
             
Principal            
             
    U.S. GOVERNMENT & AGENCY OBLIGATIONS - 21.08%      
    U.S. TREASURY NOTES - 21.08%        
 $    1,300,000   United States Treasury Note   0.750% 4/30/2018 1,303,809
850,000   United States Treasury Note   1.625% 5/15/2026 860,426
            2,164,235
             
    TOTAL U.S. GOVERNMENT & AGENCY OBLIGATIONS (Cost $2,134,946)   2,164,235
             
    SHORT-TERM INVESTMENTS - 6.45 %    
    U.S. TREASURY BILL - 2.92 %        
300,000   United States Treasury Bill   0.000% 8/11/2016 299,906
             
Shares            
    MONEY MARKET FUND - 3.53 %    
361,852   SSgA U.S. Treasury Money Market Fund Class N, 0.10% ^     361,852
    TOTAL SHORT-TERM INVESTMENTS (Cost - $661,758)     661,758
             
    TOTAL INVESTMENTS - 99.66 % (Cost - $10,164,195) (a)      $             10,232,448
    CASH AND OTHER ASSETS LESS LIABILITIES - 0.34 %     35,152
    NET ASSETS - 100.00 %        $             10,267,600
             
NVDR-Non-Voting Depositary Receipt        
* Non-income producing security        
^ Interest rate reflects seven-day effective yield on June 30, 2016        
 (a) Represents cost for financial reporting purposes. Aggregate cost for federal tax purposes is $10,164,195 and differs from market value by
net unrealized appreciation of:        
    Unrealized appreciation:    $                              231,093
    Unrealized depreciation:   (162,840)
  Net unrealized appreciation:    $                                68,253

 

 

Centerstone International Fund
PORTFOLIO OF INVESTMENTS (Unaudited) (Continued)
June 30, 2016
             
As of June 30, 2016 the following Forward Currency Exchange Contracts were open:    
             
Forward Currency Contracts          
Foreign Currency   Settlement Date   Counterparty Local Currency Amount
Purchased/Sold		 U.S. $ Equivalent

U.S. $ Value at

June 30, 2016

 Unrealized Appreciation/
(Depreciation) *
To Buy:            
British Pound 11/25/2016 State Street Bank                            32,400  $         43,208  $                      43,374  $                         166
             
To Sell:            
British Pound 11/25/2016 State Street Bank                            82,730  $       120,426  $                    110,753  $                      9,673
Canadian Dollar 11/25/2016 State Street Bank                          199,930        153,698                        153,969                           (271)
Danish Krone   8/31/2016 State Street Bank                          714,762         108,442                        106,981                          1,461
Euro 8/22/2016 State Street Bank                          267,860     301,610                        298,159                          3,451
Euro 8/25/2016 State Street Bank                          225,000        254,299                        250,478                          3,821
Japanese Yen 8/22/2016 State Street Bank                       5,000,000         48,036                          48,821                           (785)
Japanese Yen 8/25/2016 State Street Bank                     18,427,200        168,625                        179,944                      (11,319)
Singapore Dollar 8/25/2016 State Street Bank                          291,660         213,481                        216,618                        (3,137)
Swedish Krona 8/25/2016 State Street Bank                       1,776,375         215,413                        210,185                          5,228
Swiss Franc 11/25/2016 State Street Bank                          249,400           256,285                        258,228                        (1,943)
         $   1,840,315  $                 1,834,136  $                      6,179
___________            
* The amount represents fair value derivative instruments subject to foreign currency risk exposure as of June 30, 2016.

 

Sector Allocation (based on total value of investments as of June 30, 2016)
Industrials         19.31%
Consumer Discretionary       12.91%
Consumer Staples         10.67%
Materials         9.07%
Health Care         6.38%
Financials         6.35%
Energy         3.17%
Information Technology       0.92%
Telecommunication Services       0.51%
Gold         3.09%
Treasury Notes         21.15%
Short-Term Investments       6.47%
Total         100.00%
___________          
Percentages may differ from Portfolio of Investments which are based on Fund net assets.  

 

 

 

Centerstone Funds
PORTFOLIO OF INVESTMENTS (Unaudited) (Continued)
June 30, 2016
           
Note 1 - Organization and Significant Accounting Policies
           
Each of the Centerstone Investors Fund and the Centerstone International Fund (each a “Fund” and collectively the “Funds”) is a series of Centerstone Investors Trust, (the “Trust”) a Delaware statutory trust. The Trust is an open-ended management investment company registered under the Investment Company Act of 1940, as amended (“1940 Act”). The Trust is governed by its Board of Trustees (the “Board” or “Trustees”). Each Fund is a diversified series of the Trust. The Centerstone Investors Fund seeks long-term growth of capital by investing in a range of securities and asset classes from markets around the world, including the U.S. market. The Centerstone International Fund seeks long-term growth of capital by investing in a range of securities and asset classes primarily from foreign (non-U.S.) markets.
 
The following is a summary of significant accounting policies followed by the Funds in preparation of its financial statements. These policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The Funds follow the specialized accounting and reporting requirements under GAAP that are applicable to investment companies.
 
Securities Valuation – In determining each Fund’s Net Asset Value (“NAV”) per share, equity securities for which market quotations are readily available are valued at current market value using the last reported sales price. NASDAQ traded securities are valued using the NASDAQ official closing price (“NOCP”). If no sale price is reported, the mean between the current bid and ask is used. If market quotations are not readily available, then securities are valued at fair value as determined by the Board (or its delegate). U.S. Government and agency securities are valued at the mean between the most recent bid and asked prices. Short-term debt instruments with a remaining maturity of more than 60 days, intermediate and long-term bonds, convertible bonds, and other debt securities are generally valued at prices supplied by the relevant pricing agent based on broker or dealer supplied valuations or matrix pricing. Where such prices are not available, valuations will be obtained from brokers who are market makers for such securities. However, in circumstances where the Adviser deems it appropriate to do so, the mean of the bid and asked prices for over-the-counter securities or the last available sale price for exchange-traded debt securities may be used. Where no last sale price for exchange traded debt securities is available, the mean of the bid and asked prices may be used. Short-term debt securities with a remaining maturity of 60 days or less are valued at amortized cost, provided such valuations represent fair value.
 
Valuation of Fund of Funds – The Funds may invest in portfolios of open-end or closed-end investment companies (the “Underlying Funds”). The Underlying Funds value securities in their portfolios for which market quotations are readily available at their market values (generally the last reported sale price) and all other securities and assets at their fair value to the methods established by the board of directors of the Underlying Funds.
 
Fair Valuation Process – If market quotations are not readily available, securities will be valued at their fair market value as determined in good faith by the Fair Value Committee (the “Committee”) in accordance with procedures approved by the Board and evaluated by the Board as to the reliability of the fair value method used. The Committee is composed of one or more representatives from each of the (i) Trust, (ii) Administrator, and (iii) Adviser. The procedures consider, among others, the following factors to determine a security’s fair value: the nature and pricing history (if any) of the security; whether any dealer quotations for the security are available; and possible valuation methodologies that could be used to determine the fair value of the security. The Committee may also enlist third party consultants such as a valuation specialist at a public accounting firm, valuation consultant, or financial officer of a security issuer on an as-needed basis to assist in determining a security-specific fair value. The Board reviews and ratifies the execution of this process and the resultant fair value prices at least quarterly to assure the process produces reliable results.
 
As noted above, the Committee is composed of one or more representatives from each of the (i) Trust, (ii) Administrator, and (iii) Adviser. The applicable investments are valued collectively via inputs from each of these groups. For example, fair value determinations are required for the following securities: (i) securities for which market quotations are insufficient or not readily available on a particular business day (including securities for which there is a short and temporary lapse in the provision of a price by the regular pricing source), (ii) securities for which, in the judgment of the Adviser, the prices or values available do not represent the fair value of the instrument. Factors which may cause the Adviser to make such a judgment include, but are not limited to, the following: only a bid price or an asked price is available; the spread between bid and asked prices is substantial; the frequency of sales; the thinness of the market; the size of reported trades; and actions of the securities markets, such as the suspension or limitation of trading; (iii) securities determined to be illiquid; (iv) securities with respect to which an event that will affect the value thereof has occurred since the closing prices were established on the principal exchange on which they are traded, but prior to the Funds’ calculation of its net asset value; (v) restricted securities, such as private investments or non-traded securities are valued via inputs from the Adviser based upon the current bid for the security from two or more independent dealers or other parties reasonably familiar with the facts and circumstances of the security (who should take into consideration all relevant factors as may be appropriate under the circumstances). If the Adviser is unable to obtain a current bid from such independent dealers or other independent parties, the Committee may determine the fair value of such security using the following factors: (i) the type of security; (ii) the cost at date of purchase; (iii) the size and nature of the Funds’ holdings; (iv) the discount from market value of unrestricted securities of the same class at the time of purchase and subsequent thereto; (v) information as to any transactions or offers with respect to the security; (vi) the nature and duration of restrictions on disposition of the security and the existence of any registration rights; (vii) how the yield of the security compares to similar securities of companies of similar or equal creditworthiness; (viii) the level of recent trades of similar or comparable securities; (ix) the liquidity characteristics of the security; (x) current market conditions; and (xi) the market value of any securities into which the security is convertible or exchangeable.
 
The Funds utilize various methods to measure the fair value of most of its investments on a recurring basis.  GAAP establishes a hierarchy that prioritizes inputs to valuation methods. The three levels of input are:
 
Level 1 – Unadjusted quoted prices in active markets for identical assets and liabilities that the Funds have 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 Fund's own assumptions about the assumptions a market participant would use in valuing the asset or liability, and would be based on the best information available.
 
The 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. The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.  

 

 

Centerstone Funds
PORTFOLIO OF INVESTMENTS (Unaudited) (Continued)
June 30, 2016
The following is a summary of the inputs used as of June 30, 2016 in valuing the Funds' assets carried at fair value:
           
Centerstone Investors Fund      
Assets   Level 1 Level 2 Level 3 Total
Common Stock  $                 8,946,723  $                                -     $                          -     $             8,946,723
Bonds & Notes                      -                            2,464,330         -                     2,464,330
Commodity             487,102                -            -                        487,102
Real Estate Investment Trusts             262,548                -            -                        262,548
U.S. Government & Agency Obligations         -                            2,018,464         -                     2,018,464
Short-Term Investments          1,184,561               549,832         -                     1,734,393
Unrealized Appreciation on Open Forward Currency Contracts         -           20,936         -                          20,936
Total  $                10,880,934  $                     5,053,562  $                          -     $            15,934,496
Liabilities          
Unrealized Depreciation on Open Forward Currency Contracts  $                               -     $                         15,840  $                          -     $                   15,840
           
           
Centerstone International Fund      
Assets   Level 1 Level 2 Level 3 Total
Common Stock  $                  7,037,385  $                                -     $                          -     $              7,037,385
Bonds & Notes         -           52,770         -                          52,770
Commodity             316,300                -            -                        316,300
U.S. Government & Agency Obligations         -                            2,164,235         -                     2,164,235
Short-Term Investments             361,852               299,906         -                        661,758
Unrealized Appreciation on Open Forward Currency Contracts         -           23,800         -                          23,800
Total  $                 7,715,537  $                     2,540,711  $                          -     $            10,256,248
Liabilities          
Unrealized Depreciation on Open Forward Currency Contracts  $                             -     $                         17,455  $                          -     $                   17,455
           
The Funds did not hold any level 3 securities during the period.
There were no transfers into or out of Level 1, Level 2, and Level 3 during the current period presented.
It is the Funds' policy to record transfers into or out of any Level at the end of the reporting period.
     
Foreign Currency Translations – The accounting records of the Funds are maintained in U.S. dollars. Investment securities and other assets and liabilities denominated in a foreign currency, and income receipts and expense payments, are translated into U.S. dollars using the prevailing exchange rate at the London market close. Purchases and sales of securities are translated into U.S. dollars at the contractual currency rates established at the approximate time of the trade.
 
Forward Currency Contracts - In connection with portfolio purchases and sales of securities denominated in foreign currencies, each Fund may enter into forward currency contracts. The Funds enter into foreign currency contracts primarily to manage and/or gain exposure to certain foreign currencies. The Funds’ currency transactions include portfolio hedging on portfolio positions. Portfolio hedging is the use of a forward contract (or other cash management position) with respect to one or more portfolio security positions denominated or quoted in a particular currency. Forward currency contract transactions involve currencies of different countries that the Funds invest in and serve as hedges against possible variations in the exchange rates between these currencies and the U.S. dollar. Each Fund may engage in portfolio hedging with respect to the currency of a particular country in amounts approximating actual or anticipated positions in securities denominated in that currency. Hedging can reduce exposure to currency exchange movements, but cannot eliminate that exposure. It is possible to lose money under a hedge.
 
Funds investing in foreign exchange contracts are exposed to risk if the value of the currency changes unfavorably, if the counterparties to the contracts are unable to meet the terms of their contracts or if the Fund is unable to enter into a closing position. Forward currency contracts outstanding at period end, if any, are listed after each Fund’s portfolio.
 
The market value of the forward currency contract fluctuates with changes in currency exchange rates. The contract is marked-to-market daily and the change in market value is recorded by a Fund as an unrealized gain or loss. As foreign securities are sold, a portion of the contract is generally closed and the Fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed.
 
Exchange Traded Funds - The Funds may invest in exchange traded funds (“ETFs”).  ETFs are a type of fund bought and sold on a securities exchange.  An ETF trades like common stock and represents a fixed portfolio of securities designed to track the performance and dividend yield of a particular domestic or foreign market index.  A Fund may purchase an ETF to temporarily gain exposure to a portion of the U.S. or a foreign market while awaiting purchase of underlying securities.  The risks of owning an ETF generally reflect the risks of owning the underlying securities they are designed to track, although the lack of liquidity on an ETF could result in it being more volatile.  Additionally, ETFs have fees and expenses that reduce their value.  

 

 
 

 

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”)) are effective, as of a date within 90 days of the filing date of this report that includes the disclosure required by this paragraph, based on their evaluation of the controls and procedures required by Rule 30a-3(b) under the 1940 Act and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934, as amended.

 

(b) There were no significant changes in the registrant’s internal control over financial reporting 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 required by Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)) (and Item 3 of Form N-Q) are filed herewith.

 

 

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.

 

Centerstone Investors Trust

 

By

/s/ Abhay Deshpande

Abhay Deshpande, Principal Executive Officer/President

 

Date 8/2/16

 

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/ Abhay Deshpande

Abhay Deshpande, Principal Executive Officer/President

 

Date 8/2/16

 

By

/s/ Philip Santopadre

Philip Santopadre, Principal Financial Officer/Treasurer

 

Date 8/2/16