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 811-231128

 

Centerstone Investors Trust

(Exact name of registrant as specified in charter)

 

135 5th Avenue, New York, NY 10010

(Address of principal executive offices) (Zip code)

 

Philip Santopadre, Gemini Fund Services, LLC

80 Arkay Drive, Hauppauge, NY 11788

(Name and address of agent for service)

 

Registrant's telephone number, including area code: 212-503-5789

 

Date of fiscal year end: 3/31

 

Date of reporting period: 6/30/17

 

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, 2017
Shares   Security       Fair Value
             
    COMMON STOCK - 68.59 %    
    CANADA - 2.85 %    
53,123   TransCanada Corp.        $                                      2,532,437
46,773   Metro, Inc.       1,539,383
            4,071,820
    CHILE - 1.02 %        
55,365   Cia Cervecerias Unidas SA       1,452,778
             
    DENMARK - 2.75 %    
55,884   Topdanmark A/S *       1,784,587
81,457   Matas A/S                                                         1,288,728
21,927   ISS A/S       861,203
                                                              3,934,518
    FINLAND - 0.94 %    
61,892   Tikkurila Oyj       1,338,162
             
    FRANCE - 7.40 %    
22,096   Air Liquide SA       2,730,640
28,572   Schneider Electric SE                                                         2,195,258
178,251   Havas SA       1,874,245
8,097   Sodexo SA       1,046,873
9,566   Eiffage SA       869,258
11,030   Danone SA       829,069
2,857   LVMH Moet Hennessy Louis Vuitton SE       712,340
4,958   Valeo SA       334,048
            10,591,731
    GERMANY - 4.13 %    
17,434   Fraport AG Frankfurt Airport Services Worldwide       1,539,218
65,255   Hamburger Hafen und Logistik AG       1,425,034
15,281   Bayerische Motoren Werke AG       1,418,597
12,345   Hornbach Holding AG & Co. KGaA       1,061,014
13,033   Hornbach Baumarkt AG       470,387
            5,914,250
    HONG KONG - 3.57 %    
1,217,226   Kerry Logistics Network Ltd.                                                         1,799,152
736,517   Mandarin Oriental International Ltd.                                                         1,473,034
143,000   Hongkong Land Holdings Ltd.                                                         1,052,480
163,900   Hysan Development Co. Ltd.                                                            781,981
                                                              5,106,647
    INDONESIA - 0.98 %        
1,008,562   Indocement Tunggal Prakarsa Tbk PT       1,396,208
             
    JAPAN - 5.46 %        
255,736   Ichiyoshi Securities Co. Ltd.       2,144,112
70,151   Nagaileben Co. Ltd.       1,627,865
75,975   Mitsubishi Estate Co. Ltd.       1,414,125
25,673   Aica Kogyo Co. Ltd.       780,633
38,230   Sekisui Jushi Corp.       700,529
4,352   Shimano, Inc.       687,962
2,396   FANUC Corp.       461,306
            7,816,532
    MEXICO - 1.11 %        
226,456   Grupo Televisa SAB       1,104,907
25,040   Fresnillo PLC       484,634
            1,589,541
    NETHERLANDS - 0.03 %        
1,943   Koninklijke Ahold Delhaize NV       37,149
             
    PERU - 0.73 %        
30,284   Southern Copper Corp.       1,048,735
             
    SINGAPORE - 1.16 %        
121,869   Oversea-Chinese Banking Corp. Ltd.       955,124
425,366   ComfortDelGro Corp. Ltd.       710,617
            1,665,741
    SWEDEN - 3.09 %        
68,392   ICA Gruppen AB       2,545,815
52,443   Loomis AB       1,879,923
            4,425,738
             
             

 

Centerstone Investors Fund
PORTFOLIO OF INVESTMENTS (Unaudited) (Continued)
June 30, 2017
Shares   Security       Fair Value
             
    COMMON STOCK - 68.59 % (continued)    
    SWITZERLAND - 5.41 %        
5,015   Swatch Group AG        $                                      1,851,926
21,020   Cie Financiere Richemont SA       1,731,755
18,263   Novartis AG       1,519,853
16,607   Nestle SA       1,445,254
4,653   Roche Holding AG       1,184,965
            7,733,753
    THAILAND - 3.77 %        
222,260   Siam City Cement PCL       2,126,420
2,500,000   Krung Thai Bank PCL       1,383,574
189,400   Bangkok Bank PCL       1,098,375
662,100   Thai Beverage PCL       432,824
65,350   Bangkok Bank PCL (NVDR)       355,895
            5,397,088
    UNITED KINGDOM - 1.11 %        
246,242   Rotork PLC       754,970
23,205   Weir Group PLC       523,166
9,620   Spectris PLC       316,121
            1,594,257
    UNITED STATES - 23.08 %    
20,460   WW Grainger, Inc.       3,693,644
12,940   3M Co.       2,693,979
35,322   Colgate-Palmolive Co.       2,618,420
114,039   Mosaic Co.       2,603,510
47,346   Coach Inc.       2,241,360
42,476   Target Corp.       2,221,070
27,497   CVS Health Corp.       2,212,409
19,850   Omnicom Group, Inc.       1,645,565
95,755   NOW, Inc. *       1,539,740
29,379   Sonoco Products Co.       1,510,668
20,314   EnerSys       1,471,749
24,500   Emerson Electric Co.       1,460,690
9,485   McDonald's Corp.       1,452,723
11,212   Scotts Miracle-Gro Co.       1,003,025
7,999   United Technologies Corp.       976,758
6,091   Snap-on, Inc.       962,378
10,511   Wal-Mart Stores, Inc.       795,472
12,593   CarMax, Inc. *       794,115
8,853   TJX Cos, Inc.       638,921
12,754   Comcast Corp.       496,386
            33,032,582
             
    TOTAL COMMON STOCK (Cost - $91,050,040)       98,147,230
             

 

Centerstone Investors Fund
PORTFOLIO OF INVESTMENTS (Unaudited) (Continued)
June 30, 2017
Principal   Security   Coupon Maturity Fair Value
             
    BONDS & NOTES - 10.02 %    
    LUXEMBOURG - 0.42 %        
 $              600,000   Actavis Funding SCS   2.35% 3/12/2018  $                                         602,505
             
    NETHERLANDS - 0.51 %        
                 701,000   LyondellBasell Industries NV   5.00% 4/15/2019 732,854
             
    SWITZERLAND - 0.51 %        
                 700,000   UBS Group Funding Switzerland AG - 144A   2.94% 4/14/2021 724,841
             
    UNITED KINGDOM - 0.20 %        
                 276,000   Vodafone Group PLC   4.63% 7/15/2018 283,830
             
    UNITED STATES - 8.38 %        
              1,500,000   Xilinx, Inc.   2.13% 3/15/2019 1,506,731
              1,000,000   Synchrony Financial   2.60% 1/15/2019 1,005,340
                 939,000   Bank of America Corp.   5.65% 5/1/2018 968,487
                 961,000   Kraft Heinz Foods Co.   2.00% 7/2/2018 963,433
                 812,000   Ford Motor Credit Co. LLC   2.55% 10/5/2018 817,345
                 800,000   Mondelez International, Inc.   1.69% 2/1/2019 803,112
                 881,000   Men's Wearhouse, Inc.   7.00% 7/1/2022 770,875
                 700,000   Anthem, Inc.   7.00% 2/15/2019 753,192
                 750,000   United Technologies Corp.   1.78% 5/4/2018 750,962
                 700,000   Goldman Sachs Group, Inc.   2.80% 11/29/2023 722,557
                 550,000   PHI, Inc.   5.25% 3/15/2019 508,750
                 500,000   Talen Energy Supply LLC   6.50% 5/1/2018 505,000
                 500,000   Wells Fargo & Co.   1.85% 1/30/2020 503,254
                 420,000   Kindred Healthcare, Inc.   8.00% 1/15/2020 441,000
                 350,000   Clear Channel Worldwide Holdings, Inc.   7.63% 3/15/2020 348,250
                 245,000   Verizon Communications, Inc.   2.99% 9/14/2018 249,433
                 146,000   Wells Fargo & Co.   2.56% 3/4/2021 150,176
                 140,000   HRG Group, Inc.   7.88% 7/15/2019 143,500
                   80,000   Spectra Energy Partners LP   2.95% 9/25/2018 80,901
            11,992,298
             
    TOTAL BONDS & NOTES (Cost - $14,376,935)       14,336,328
             
Shares            
    EXCHANGE TRADED FUND - COMMODITY - 3.00 %    
36,394   SPDR Gold Shares *       4,295,220
             
    TOTAL EXCHANGE TRADED FUND - COMMODITY (Cost - $4,319,629)       4,295,220
             
    REAL ESTATE INVESTMENT TRUSTS - 1.73 %    
5,904   Unibail-Rodamco SE       1,487,900
65,652   Monmouth Real Estate Investment Corp.       988,063
             
    TOTAL REAL ESTATE INVESTMENT TRUSTS (Cost - $2,282,196)     2,475,963
             
Principal            
             
    US GOVERNMENT & AGENCY OBLIGATIONS - 10.27 %      
    US TREASURY NOTES - 10.27 %        
 $         12,500,000   United States Treasury Note   1.12% 4/30/2019 12,497,400
              2,200,000   United States Treasury Note   1.19% 1/31/2019 2,202,965
             
    TOTAL US GOVERNMENT & AGENCY OBLIGATIONS (Cost - $14,706,420)   14,700,365
             
             

 

Centerstone Investors Fund
PORTFOLIO OF INVESTMENTS (Unaudited) (Continued)
June 30, 2017
Shares   Security       Fair Value
    SHORT-TERM INVESTMENTS - 8.04 %    
    MONEY MARKET FUND - 8.04 %    
11,501,045   State Street Institutional Treasury Plus Money Market Fund, Trust Class, 0.80% ^    $                             11,501,045
    TOTAL SHORT-TERM INVESTMENTS (Cost - $11,501,045)     11,501,045
             
    TOTAL INVESTMENTS - 101.65 % (Cost - $138,236,265) (a)  $                          145,456,151
    LIABILITIES LESS OTHER ASSETS - (1.65) %                    (2,361,550)
    NET ASSETS - 100.00 %        $                          143,094,601
             
NVDR-Non-Voting Depository Receipt        
144A - Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be sold in transactions exempt from registration, normally to qualified institutional buyers. The aggregate value of such securities is $724,841 or 0.5% of net assets
* Non-income producing security        
^ Interest rate reflects seven-day effective yield on June 30, 2017  
 (a) Represents cost for financial reporting purposes. Aggregate cost for federal tax purposes is $138,639,110 and differs from fair value by net unrealized appreciation of:
             
        Gross unrealized appreciation:    $                                8,418,667
        Gross unrealized depreciation:   (1,601,626)
        Net unrealized appreciation:    $                                6,817,041

 

Centerstone Investors Fund
PORTFOLIO OF INVESTMENTS (Unaudited) (Continued)
June 30, 2017
               
As of June 30, 2017 the following Forward Foreign Currency Exchange Contracts were open:    
               
FORWARD FOREIGN CURRENCY CONTRACTS        
              Unrealized
  Settlement       Local Currency Amount US $ US $ Appreciation/
Foreign Currency Date   Counterparty Purchased/Sold Equivalent Value at June 30, 2017 (Depreciation) *
To Buy:              
British Pound 7/3/2017   State Street Bank                            68,389  $                88,806  $                      89,083  $                      277
Canadian Dollar 7/6/2017   State Street Bank                          326,291                  251,278                        251,643                          365
Danish Krone 7/3/2017   State Street Bank                          710,690                  109,021                        109,182                          161
Euro 7/3/2017   State Street Bank                          457,211                  521,985                        522,292                          307
Swedish Krona 7/3/2017   State Street Bank                       2,925,532                  345,487                        347,320                       1,833
Swiss Franc 7/3/2017   State Street Bank                          216,572                  225,967                        225,901                          (66)
           $           1,542,544  $                 1,545,421  $                   2,877
               
To Sell:              
Canadian Dollar 7/24/2017   State Street Bank                          860,000  $              630,107  $                    663,498  $               (33,391)
Chilean Peso 12/15/2017   State Street Bank                   390,000,000                  585,663                        584,318                       1,345
Danish Krone 8/17/2017   State Street Bank                       4,500,000                  656,405                        693,108                   (36,703)
Euro 7/25/2017   State Street Bank                       3,125,000               3,416,231                     3,574,244                 (158,013)
Japanese Yen 8/17/2017   State Street Bank                   116,500,000               1,042,529                     1,037,970                       4,559
Singapore Dollar 8/17/2017   State Street Bank                          615,000                  435,053                        447,049                   (11,996)
Swedish Krona 7/25/2017   State Street Bank                       7,200,000                  814,133                        855,935                   (41,802)
Swiss Franc 8/17/2017   State Street Bank                          790,000                  792,963                        826,457                   (33,494)
           $           8,373,084  $                 8,682,579  $             (309,495)
               
* The amount represents fair value derivative instruments subject to foreign currency risk exposure as of June 30, 2017.
Sector Allocation (based on total value of investments as of June 30, 2017)  
Consumer Discretionary         20.86%  
Industrials           15.48%  
Consumer Staples           14.67%  
Financials           11.37%  
US Government & Agency Obligations     10.11%  
Materials           7.16%  
Communications           4.13%  
Energy           3.20%  
Technology         1.04%  
Real Estate Investment Trusts         0.67%  
Utilities           0.35%  
Diversified           0.10%  
Gold         2.95%  
Short-Term Investments         7.91%  
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, 2017
Shares   Security       Fair Value
             
    COMMON STOCK - 75.32 %    
    CANADA - 4.42 %        
43,096   TransCanada Corp.        $                           2,054,438
42,690   Metro, Inc.       1,405,004
            3,459,442
    CHILE - 1.53 %        
45,536   Cia Cervecerias Unidas SA       1,194,865
             
    DENMARK - 4.25 %        
44,244   Topdanmark A/S *                                     1,412,878
71,997   Matas A/S       1,139,062
19,692   ISS A/S       773,421
            3,325,361
    FINLAND - 1.76 %        
63,806   Tikkurila Oyj       1,379,544
             
    FRANCE - 12.84 %        
20,840   Air Liquide SA       2,575,423
26,194   Schneider Electric SE       2,012,550
131,488   Havas SA       1,382,549
15,918   Danone SA       1,196,476
3,855   LVMH Moet Hennessy Louis Vuitton SE       961,173
9,135   Eiffage SA       830,093
6,164   Sodexo SA       796,953
4,354   Valeo SA       293,353
            10,048,570
    GERMANY - 6.01 %        
13,572   Fraport AG Frankfurt Airport Services Worldwide       1,198,248
12,761   Bayerische Motoren Werke AG       1,184,655
53,259   Hamburger Hafen und Logistik AG       1,163,066
8,669   Hornbach Holding AG & Co. KGaA       745,073
11,509   Hornbach Baumarkt AG       415,382
            4,706,424
    HONG KONG - 5.30 %        
932,577   Kerry Logistics Network Ltd.       1,378,419
592,083   Mandarin Oriental International Ltd.       1,184,166
169,900   Hysan Development Co. Ltd.                                        810,607
105,050   Hongkong Land Holdings Ltd.                                        773,168
            4,146,360
    INDONESIA - 1.41 %        
797,113   Indocement Tunggal Prakarsa Tbk PT       1,103,488
             
    JAPAN - 8.90 %    
215,764   Ichiyoshi Securities Co. Ltd.                                     1,808,984
61,824   Nagaileben Co. Ltd.                                     1,434,636
63,825   Mitsubishi Estate Co. Ltd.                                     1,187,976
26,142   Aica Kogyo Co. Ltd.                                        794,893
4,138   Shimano, Inc.                                        654,133
32,620   Sekisui Jushi Corp.                                        597,731
2,514   FANUC Corp.       484,025
            6,962,378
    MEXICO - 1.68 %        
193,558   Grupo Televisa SAB                                        944,393
19,217   Fresnillo PLC                                        371,934
                                          1,316,327
    NETHERLANDS - 0.03 %        
1,113   Koninklijke Ahold Delhaize NV                                          21,280
             
    PERU - 1.06 %        
23,919   Southern Copper Corp.       828,315
             
    SINGAPORE - 2.00 %    
122,501   Oversea-Chinese Banking Corp. Ltd.                                        960,077
362,634   ComfortDelGro Corp. Ltd.                                        605,817
                                          1,565,894
    SWEDEN - 5.14 %        
65,668   ICA Gruppen AB                                     2,444,418
43,956   Loomis AB                                     1,575,690
            4,020,108
             

 

Centerstone International Fund
PORTFOLIO OF INVESTMENTS (Unaudited) (Continued)
June 30, 2017
Shares   Security       Fair  Value
    COMMON STOCK - 75.32 % (continued)    
    SWITZERLAND - 8.65 %        
4,443   Swatch Group AG        $                      1,640,699
19,011   Cie Financiere Richemont SA                                     1,566,242
14,181   Nestle SA                                     1,234,127
4,577   Roche Holding AG                                     1,165,610
13,961   Novartis AG                                     1,161,839
            6,768,517
    THAILAND - 5.94 %        
188,804   Siam City Cement PCL       1,806,338
2,200,000   Krung Thai Bank PCL       1,217,545
163,400   Bangkok Bank PCL                                        947,595
621,200   Thai Beverage PCL       406,087
49,450   Bangkok Bank PLC (NVDR)       269,304
            4,646,869
    UNITED KINGDOM- 1.67 %        
193,023   Rotork PLC                                        591,802
11,560   Spectris PLC       379,871
15,008   Weir Group PLC       338,362
            1,310,035
    UNITED STATES - 2.73 %        
93,471   Mosaic, Co.       2,133,943
             
    TOTAL COMMON STOCK (Cost - $53,555,107)       58,937,720
             
Principal       Coupon Maturity  
    BONDS & NOTES - 0.16 %    
    UNITED KINGDOM - 0.16 %        
 $       124,000   Vodafone Group PLC   4.63% 7/15/2018 127,518
             
    TOTAL BONDS & NOTES (Cost - $128,049)       127,518
             
Shares            
    EXCHANGE TRADED FUND - COMMODITY - 2.96 %    
19,649   SPDR Gold Shares *       2,318,975
             
    TOTAL EXCHANGE TRADED FUND - COMMODITY (Cost - $2,307,043)   2,318,975
             
    REAL ESTATE INVESTMENT TRUSTS - 1.51 %    
4,684   Unibail-Rodamco SE       1,180,441
             
    TOTAL REAL ESTATE INVESTMENT TRUSTS (Cost - $1,121,610)     1,180,441
Principal            
    US GOVERNMENT & AGENCY OBLIGATIONS - 14.06 %    
    US TREASURY NOTE - 14.06 %      
 $    8,500,000   United States Treasury Note   1.12% 4/30/2019 8,498,232
       2,500,000   United States Treasury Note   1.19% 1/31/2019 2,503,370
            11,001,602
             
    TOTAL US GOVERNMENT & AGENCY OBLIGATIONS (Cost - $11,004,557) 11,001,602
             
    SHORT-TERM INVESTMENTS - 7.37 %    
    US TREASURY BILL - 1.70 %        
1,340,000   United States Treasury Bill   0.75% 4/30/2018 1,334,138
             
Shares            
    MONEY MARKET FUND - 5.67 %    
4,436,131   State Street Institutional Treasury Plus Money Market Fund, Trust Class, 0.80% ^ 4,436,131
             
    TOTAL SHORT-TERM INVESTMENTS (Cost - $5,775,565)   5,770,269
             
    TOTAL INVESTMENTS - 101.38 % (Cost - $73,891,931) (a)    $                   79,336,525
    LIABILITIES LESS OTHER ASSETS - (1.38) %                               (1,085,814)
    NET ASSETS - 100.00 %        $                   78,250,711
             
NVDR-Non-Voting Depository Receipt        
* Non-income producing security        
^ Interest rate reflects seven-day effective yield on June 30, 2017    
 (a) Represents cost for financial reporting purposes. Aggregate cost for federal tax purposes is $74,019,259 and differs from fair value by net unrealized appreciation of:
        Gross unrealized appreciation:    $                     5,818,997
        Gross unrealized depreciation:   (501,731)
        Net unrealized appreciation:    $                     5,317,266

 

 

Centerstone International Fund
PORTFOLIO OF INVESTMENTS (Unaudited) (Continued)
June 30, 2017
               
As of June 30, 2017 the following Forward Foreign Currency Exchange Contracts were open:    
               
FORWARD FOREIGN CURRENCY CONTRACTS        
              Unrealized
  Settlement       Local Currency Amount US $ US $ Appreciation/
Foreign Currency Date   Counterparty Purchased/Sold Equivalent Value at June 30, 2017 (Depreciation) *
To Buy:              
Euro 7/3/2017   State Street Bank                          135,173  $                      154,431  $                    154,414  $                         (17)
Hong Kong Dollar 7/3/2017   State Street Bank                          669,422                            85,754                          85,750                               (4)
Japanese Yen 7/3/2017   State Street Bank                     41,113,036                          365,002                        365,581                             579
Mexican Peso 7/5/2017   State Street Bank                       1,278,163                            70,718                          70,366                           (352)
Swedish Krona 7/3/2017   State Street Bank                          944,593                          111,177                        112,143                             966
Swiss Franc 7/3/2017   State Street Bank                          156,820                          163,806                        163,575                           (231)
           $                      950,888  $                    951,829  $                         941
               
To Sell:              
Canadian Dollar 7/24/2017   State Street Bank                          774,930  $                      571,324  $                    597,866  $                  (26,542)
Chilean Peso 12/15/2017   State Street Bank                   310,000,000                          465,527                        464,457                          1,070
Danish Krone 8/17/2017   State Street Bank                       4,075,000                          604,185                        627,648                      (23,463)
Euro 7/25/2017   State Street Bank                       2,800,000                       3,074,198                     3,202,523                    (128,325)
Japanese Yen 8/17/2017   State Street Bank                     90,000,000                          807,837                        801,609                          6,228
Singapore Dollar 8/17/2017   State Street Bank                          550,000                          389,013                        399,800                      (10,787)
Swedish Krona 7/25/2017   State Street Bank                       5,700,000                          644,378                        677,616                      (33,238)
Swiss Franc 8/17/2017   State Street Bank                          709,400                          712,061                        742,138                      (30,077)
           $                   7,268,523  $                 7,513,657  $                (245,134)
               
* The amount represents fair value derivative instruments subject to foreign currency risk exposure as of June 30, 2017.
Sector Allocation (based on total value of investments as of June 30, 2017)  
Consumer Staples           17.32%  
Consumer Discretionary         15.15%  
US Government & Agency Obligations     13.87%  
Industrials           13.52%  
Financials           11.83%  
Materials           10.94%  
Communications           3.09%  
Energy           2.59%  
Real Estate Investment Trusts         1.49%  
Gold           2.93%  
Short-Term Investments         7.27%  
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, 2017
           
Note 1 - Organization and Significant Accounting Policies
           

The Centerstone Investors Fund and the Centerstone International Fund (each a “Fund” and collectively the “Funds”) are each 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 their financial statements. These policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The Funds are investment companies and accordingly follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standard Codification Topic 946 "Financial Services – Investment Companies" including FASB Accounting Standard Update ASU 2013-08.

 

Investment Valuation – In determining each Fund’s Net Asset Value (“NAV”) per share, securities traded on one or more securities exchanges 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 may be valued at fair value as determined by the Board (or its delegate).  Securities not traded or dealt in on any securities exchange and for which over-the-counter market (whether domestic or foreign) quotations are readily available generally shall be valued at the last sale price or, in the absence of a sale, at the current bid price on such over-the-counter market.  Debt securities not traded on an exchange may be valued at prices supplied by the relevant pricing agent(s) based on broker or dealer supplied valuations or matrix pricing, a method of valuing securities by reference to the value of other securities with similar characteristics, such as rating, interest rate and maturity. Absent special circumstances, valuations for a specific type of instrument will all be made through the same pricing agent.  The value of foreign currencies and of foreign securities whose value is quoted or calculated in a foreign currency shall be converted into U.S. dollars based on foreign exchange rates provided by a major banking institution(s) or currency dealer(s) selected by the pricing agent providing such price at 4:00 p.m. Eastern Time (“ET”).  Short-term debt securities with a remaining maturity of 60 days or less are valued at amortized cost, provided such valuations represent fair value.

 

Forward contracts are valued at the current cost of covering or offsetting such contacts by reference to forward currency rates at the time the NYSE closes (normally 4:00 pm ET).Securities in which the Funds invest may be traded in markets that close before 4:00 pm ET. Normally, developments that occur between the close of the foreign markets and 4:00 pm ET will not be reflected in a Fund’s NAV. However, the Funds may determine that such developments are significant that they will affect the value of a Fund’s securities, and the Fund may adjust the previous local closing prices to reflect fair value for these securities as of 4:00 pm ET.

 

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 trustees of the Underlying Funds.

 

Fair Valuation Process - If market quotations are not readily available, or if, in the opinion of the Advisor, the prices or values available do not represent fair value, securities will be valued at their fair market value as determined in good faith by the Trust’s 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) Advisor. 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, the Committee is composed of one or more representatives from each of the (i) Trust, (ii) Administrator, and (iii) Advisor.  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 Advisor, the prices or values available do not represent the fair value of the instrument.  Factors which may cause the Advisor 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 Advisor 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 Advisor 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.
Level 2 – Observable inputs other than quoted prices included in level 1 that are observable for the asset or liability, either directly or indirectly.  These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates and similar data.

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

 

The availability of observable inputs can vary from security to security and is affected by a wide variety of factors, including, for example, the type of security, whether the security is new and not yet established in the marketplace, the liquidity of markets and other characteristics particular to the security. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment.  Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3.

 

 

Centerstone Funds
PORTFOLIO OF INVESTMENTS (Unaudited) (Continued)
June 30, 2017

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.  

 

The following is a summary of the inputs used as of June 30, 2017 in valuing the Funds' assets and liabilities carried at fair value:
           
Centerstone Investors Fund        
Assets   Level 1 Level 2 Level 3 Total
Common Stock  $                 98,147,230  $                           -     $                               -     $                         98,147,230
Bonds & Notes  -          14,336,328  -           14,336,328
Exchange Traded Fund - Commodity                      4,295,220                      -                         -             4,295,220
Real Estate Investment Trusts                     2,475,963                     -                    -             2,475,963
US Government & Agency Obligations                      -         14,700,365                   -           14,700,365
Short-Term Investments                    11,501,045     -                        -           11,501,045
Forward Foreign Currency Contracts  *    -     8,847  -                    8,847
Total  $              116,419,458  $           29,045,540  $                              -     $              145,464,998
Liabilities - Derivatives          
Forward Foreign Currency Contracts  *  $                              -     $                315,465  $                              -     $                     315,465
           
           
Centerstone International Fund      
Assets   Level 1 Level 2 Level 3 Total
Common Stock  $                    58,937,720  $                              -     $                               -     $                   58,937,720
Bonds & Notes    -                    127,518        -                     127,518
Exchange Traded Fund - Commodity  2,318,975       -                       -                     2,318,975
Real Estate Investment Trusts                 1,180,441                 1,180,441
US Government & Agency Obligations                     -                   11,001,602     -               11,001,602
Short-Term Investments  4,436,131  1,334,138                      -                5,770,269
Forward Foreign Currency Contracts  *       -     8,843   -                8,843
Total  $                  66,873,267  $                  12,472,101  $                              -     $                   79,345,368
Liabilities - Derivatives          
Forward Foreign Currency Contracts  *  $                                -     $                       253,036  $                              -     $                        253,036
           
* Forward Foreign Currency Contracts are valued at gross unrealized appreciation (depreciation) on the investment.

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 period. It is the Funds' policy to recognize transfers into or out of any Level at the end of the reporting period.

 

Foreign Currency Translations – The books and records of the Funds are maintained in US dollars. The market values of securities which are not traded in US currency are recorded in the financial statements after translation to US dollars based on the applicable exchange rates at the end of the period. The costs of such securities are translated at exchange rates prevailing when acquired. Related interest, dividends and withholding taxes are accrued at the rates of exchange prevailing on the respective dates of such transactions.

 

The net assets of each of the Funds are presented at the foreign exchange rates and market values at the close of the period. The Funds do not isolate that portion of gains and losses on investments which is due to changes in foreign exchange rates from that which is due to changes in market prices of the securities. Accordingly, such foreign currency gains (losses) are included in the reported net realized and unrealized gains (losses) on investment transactions on the Statements of Operations. However, for federal income tax purposes each Fund does isolate the effect of changes in foreign exchange rates from the changes in market prices for realized gains and losses on debt obligations.

 

Forward Currency Contracts - As foreign securities are purchased and sold, the Funds may enter into forward currency exchange contracts in order to hedge against foreign currency exchange rate risks. The market value of the contracts fluctuate with changes in currency exchange rates. The contract is marked-to-market daily and the change in market value is recorded by the Funds as an unrealized gain or loss. As foreign securities are sold, a portion of the contract is generally closed and the Funds record 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. The Funds may also enter into forward currency contracts as an investment strategy consistent with the Fund’s investment objective.

 

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.

 

The notional value of the derivative instruments outstanding as of June 30, 2017, as disclosed in the Portfolio of Investments serve as indicators of the volume of derivative activity for the Funds.

 

 

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 8/29/17

 

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 8/29/17

 

By

/s/ Philip Santopadre

Philip Santopadre, Principal Financial Officer/Treasurer

 

Date 8/29/17