N-Q 1 centerstonenq.htm 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 811-231128

 

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: 12/31/18

 

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)
December 31, 2018
Shares   Security       Market Value
             
    COMMON STOCK - 77.28 %    
    BRAZIL - 0.98 %    
 1,495,611   Cielo SA        $3,430,557
             
    CANADA - 2.94 %    
 166,812   TransCanada Corp.        5,956,699
 124,268   Metro, Inc.        4,309,147
             10,265,846
    CHILE - 1.18 %        
 130,374   Cia Cervecerias Unidas SA        3,276,299
 102,546,552   Vina San Pedro Tarapaca SA        854,801
             4,131,100
    DENMARK - 2.05 %    
 161,237   ISS A/S        4,514,120
 295,388   Matas A/S        2,632,929
             7,147,049
    FINLAND - 0.86 %    
 218,149   Tikkurila Oyj        3,002,332
             
    FRANCE - 6.56 %    
 52,039   Air Liquide SA        6,461,980
 153,064   Cie Plastic Omnium SA        3,532,748
 33,080   Sodexo SA        3,392,536
 44,379   Schneider Electric SE        3,010,285
 28,962   Danone SA        2,041,318
 57,327   Valeo SA        1,671,977
 17,666   Eiffage SA        1,477,006
 4,402   LVMH Moet Hennessy Louis Vuitton SE        1,288,800
             22,876,650
    GERMANY - 5.54 %    
 119,249   Brenntag AG        5,205,124
 48,082   Bayerische Motoren Werke AG        3,899,699
 158,054   Hamburger Hafen und Logistik AG        3,133,840
 57,806   Hornbach Holding AG & Co. KGaA        2,728,727
 30,013   Fraport AG Frankfurt Airport Services Worldwide        2,147,973
 11,392   Continental AG        1,586,176
 31,679   Hornbach Baumarkt AG *        618,488
             19,320,027
    HONG KONG - 2.98 %    
 3,905,926   Kerry Logistics Network Ltd.        5,803,533
 403,000   Hongkong Land Holdings Ltd.        2,538,900
 381,900   Hysan Development Co. Ltd.        1,816,081
 119,952   Mandarin Oriental International Ltd.        244,702
             10,403,216
    INDONESIA - 0.79 %        
 2,134,262   Indocement Tunggal Prakarsa Tbk PT        2,740,971
             
    IRELAND - 1.16 %        
 104,004   Perrigo Co. PLC        4,030,155
             
    ISRAEL - 0.73 %        
 448,400   Israel Chemicals Ltd.        2,549,639
             
    JAPAN - 4.93 %        
 284,275   Mitsubishi Estate Co. Ltd.        4,472,643
 165,051   Nagaileben Co. Ltd. *        3,556,173
 466,995   Ichiyoshi Securities Co. Ltd. *        3,424,053
 55,073   Aica Kogyo Co. Ltd. *        1,841,558
 83,917   Sekisui Jushi Corp. *        1,476,278
 9,752   Shimano, Inc.        1,374,714
 6,896   FANUC Corp.        1,046,535
             17,191,954
    MALAYSIA - 1.02 %        
 2,420,000   Genting Bhd.        3,570,185
             
    MEXICO - 0.56 %        
 178,482   Fresnillo PLC        1,961,187
             
    NETHERLANDS - 1.94 %        
 148,793   Koninklijke Vopak NV        6,747,520
             

 

Centerstone Investors Fund
PORTFOLIO OF INVESTMENTS (Unaudited) (Continued)
December 31, 2018
Shares   Security       Market Value
             
    COMMON STOCK - 77.28 % (continued)    
    SINGAPORE - 0.58 %        
 245,369   Oversea-Chinese Banking Corp. Ltd.        $2,029,591
             
    SOUTH KOREA - 0.57 %        
 21,700   KT&G Corp. *        1,975,711
             
    SPAIN - 1.59 %        
 2,495,743   Prosegur Cash SA        5,534,313
             
    SWEDEN - 5.35 %        
 654,479   Mekonomen AB *        6,719,904
 185,254   ICA Gruppen AB        6,618,028
 164,836   Loomis AB        5,313,472
             18,651,404
    SWITZERLAND - 5.07 %        
 51,173   Novartis AG        4,382,674
 14,999   Roche Holding AG        3,723,635
 56,284   Cie Financiere Richemont SA        3,629,622
 43,050   Nestle SA        3,494,058
 8,401   Swatch Group AG        2,451,897
             17,681,886
    THAILAND - 4.18 %        
 8,502,100   Thai Beverage PCL        3,811,332
 6,318,000   Krung Thai Bank PCL        3,727,714
 565,160   Siam City Cement PCL        3,559,611
 484,400   Bangkok Bank PCL        3,083,221
 65,350   Bangkok Bank PCL (NVDR)        407,854
             14,589,732
    UNITED KINGDOM - 2.18 %        
 1,563,763   Merlin Entertainments PLC        6,334,139
 43,174   Spectris PLC        1,254,676
             7,588,815
    UNITED STATES - 23.54 %    
 95,294   Henry Schein, Inc. *        7,482,485
 53,009   Mohawk Industries, Inc. *        6,199,933
 89,716   Colgate-Palmolive Co.        5,339,896
 165,856   Mosaic Co.        4,844,654
 124,963   Tapestry, Inc.        4,217,501
 150,000   Versum Materials, Inc.        4,158,000
 106,500   Dentsply Sirona, Inc.        3,962,865
 11,208   O'Reilly Automotive, Inc. *        3,859,251
 37,900   Carlisle Cos, Inc.        3,809,708
 56,000   State Street Corp.        3,531,920
 49,918   Target Corp.        3,299,081
 52,240   Scotts Miracle-Gro Co.        3,210,670
 269,794   NOW, Inc. *        3,140,402
 29,455   United Technologies Corp.        3,136,368
 51,700   Emerson Electric Co.        3,089,075
 400,000   General Electric Co.        3,028,000
 13,629   3M Co.        2,596,870
 46,826   Sonoco Products Co.        2,487,865
 8,592   Grainger, Inc.        2,426,037
 53,106   TJX Cos, Inc.        2,375,962
 35,558   CarMax, Inc. *        2,230,553
 10,536   McDonald's Corp.        1,870,878
 9,750   FleetCor Technologies, Inc. *        1,810,770
             82,108,744
             
    TOTAL COMMON STOCK (Cost - $293,700,425)        269,528,584
             
Principal   Security   Coupon Maturity Market Value
    BONDS & NOTES - 6.01 %    
    NETHERLANDS - 0.20 %        
 $701,000   LyondellBasell Industries NV   5.00% 4/15/2019  $701,763
             
    SWITZERLAND - 0.20 %        
 700,000   UBS Group Funding Switzerland AG, Quarterly US LIBOR +1.7800 144A** 4.13% 4/14/2021  711,224
             

 

Centerstone Investors Fund
PORTFOLIO OF INVESTMENTS (Unaudited) (Continued)
December 31, 2018
Principal   Security   Coupon Maturity Market Value
             
    BONDS & NOTES - 6.01 % (Continued)    
    UNITED STATES - 5.61 %        
 $4,550,000   PHI, Inc.   5.25% 3/15/2019  $3,116,750
 2,083,000   American Electric Power Co., Inc.   2.15% 11/13/2020  2,041,453
 2,000,000   Apple, Inc., Quarterly US LIBOR +0.5000 **   3.10% 2/9/2022  1,998,918
 1,700,000   Goldman Sachs Group, Inc., Quarterly US LIBOR +1.6000 ** 4.31% 11/29/2023  1,684,724
 1,500,000   CVS Health Corp., Quarterly US LIBOR +0.6300 **   3.40% 3/9/2020  1,497,276
 1,500,000   Xilinx, Inc.   2.13% 3/15/2019  1,496,651
 1,500,000   JM Smucker Co.   2.50% 3/15/2020  1,485,207
 1,500,000   Ford Moror Credit Co. LLC   2.68% 1/9/2020  1,475,151
 1,146,000   Wells Fargo & Co., Quarterly US LIBOR +1.3400 **   4.08% 3/4/2021  1,157,976
 1,000,000   Synchrony Financial   2.60% 1/15/2019  999,659
 1,000,000   United Technologies Corp.   1.90% 5/4/2020  981,338
 800,000   Mondelez International, Inc., Quarterly US LIBOR +0.5200 ** 3.06% 2/1/2019  800,011
 500,000   Wells Fargo & Co., Quarterly US LIBOR +0.6800 **   3.20% 1/30/2020  500,997
 350,000   Clear Channel Worldwide Holdings, Inc.   7.63% 3/15/2020  341,250
             19,577,361
             
    TOTAL BONDS & NOTES (Cost - $22,355,926)        20,990,348
             
Shares            
    EXCHANGE TRADED FUND - COMMODITY - 1.95 %    
 56,077   SPDR Gold Shares *        6,799,336
             
    TOTAL EXCHANGE TRADED FUND - COMMODITY (Cost - $6,410,955)    6,799,336
             
        Coupon Maturity  
    PREFERRED STOCK - 2.82 %        
 185,458   Bank of America Corp., Quarterly US LIBOR +0.5000 **   4.00% 9/9/2018  3,879,781
 196,003   Goldman Sachs Group, Quarterly US LIBOR +0.7500 **   4.00% 9/9/2018  3,586,855
 83,489   Pacific Gas & Electric Co.   5.50% Perpetual  1,431,836
 59,349   Pacific Gas & Electric Co.   5.00% Perpetual  934,747
             
    TOTAL PREFERRED STOCK - (Cost - $11,816,174)        9,833,219
             
    PRIVATE INVESTMENT FUND - 2.53 %        
 8,389,676   Coast Capital Mercury Fund LP *#        8,809,160
             
    TOTAL PRIVATE INVESTMENT FUND (Cost - $11,100,000)      8,809,160
             
    REAL ESTATE INVESTMENT TRUSTS - 2.92 %    
 65,590   Ventas, Inc.        3,842,918
 24,729   Unibail-Rodamco-Westfield        3,826,680
 204,068   Monmouth Real Estate Investment Corp.        2,530,443
             
    TOTAL REAL ESTATE INVESTMENT TRUSTS (Cost - $11,976,110)      10,200,041
             
Principal       Coupon Maturity  
             
    US GOVERNMENT & AGENCY OBLIGATIONS - 3.53 %      
    US TREASURY NOTES - 3.53 %        
 $6,700,000   United States Treasury Note   1.38% 7/31/2019  6,654,199
 3,000,000   United States Treasury Note   1.25% 8/31/2019  2,972,930
 2,700,000   United States Treasury Note   1.38% 9/30/2019  2,675,004
             
    TOTAL US GOVERNMENT & AGENCY OBLIGATIONS (Cost - $12,398,072)    12,302,133
             

 

Centerstone Investors Fund
PORTFOLIO OF INVESTMENTS (Unaudited) (Continued)
December 31, 2018
Shares   Security       Market Value
    SHORT-TERM INVESTMENT - 2.87 %    
    MONEY MARKET FUND - 2.87 %    
 10,005,732   State Street Institutional Treasury Plus Money Market Fund, Trust Class, 2.25% ^    $10,005,732
             
    TOTAL SHORT-TERM INVESTMENTS (Cost - $10,005,732)      10,005,732
             
    TOTAL INVESTMENTS - 99.91 % (Cost - $379,763,394)      $348,468,553
    OTHER ASSETS IN EXCESS OF LIABILITES - 0.09 %      312,503
    NET ASSETS - 100.00 %        $348,781,056
             
NVDR-Non-Voting Depository Receipt        
PCL-Public Company Limited        
PLC-Public Limited Company        
* Non-income producing security        
** Floating rate security          
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 $711,224 or 0.20% of net assets
# Security fair valued as of December 31, 2018 in accordance with procedures approved by the Board of Trustees. Total value of all such securities as of December 31, 2018 amounted to to $8,809,160, which represents approximately 2.53% of the net assets of the Fund. FirstGroup PLC (a security traded on the London Stock Exchange) is the main underlying holding of Coast Capital Mercury Fund LP.
^ Interest rate reflects seven-day effective yield on December 31, 2018.        

 

 

Centerstone Investors Fund
PORTFOLIO OF INVESTMENTS (Unaudited) (Continued)
December 31, 2018
               
As of December 31, 2018 the following Forward Foreign Currency Contracts were open:    
               
FORWARD FOREIGN CURRENCY CONTRACTS        
              Unrealized
  Settlement       Local Currency Amount US $ US $ Appreciation/
Foreign Currency Date   Counterparty Purchased/Sold Equivalent Value at December 31, 2018 (Depreciation) *
To Buy:              
Canadian Dollar 4/18/2019   State Street Bank  775,000  $570,643  $569,027  $(1,616)
Danish Krone 1/9/2019   State Street Bank  6,000,000  954,270  921,261  (33,009)
Euro 1/9/2019   State Street Bank  2,500,000  2,862,440  2,865,906  3,466
Japanese Yen 1/24/2019   State Street Bank  75,000,000  677,235  685,457  8,222
           $5,064,588  $5,041,651  $(22,937)
               
To Sell:              
Canadian Dollar 4/18/2019   State Street Bank  2,300,000  $1,772,656  $1,688,725  $83,931
Danish Krone 1/9/2019   State Street Bank  6,000,000  954,768  921,261  33,507
Euro 1/9/2019   State Street Bank  7,275,000  8,623,421  8,339,787  283,634
Japanese Yen 1/24/2019   State Street Bank  236,500,000  2,150,471  2,161,473  (11,002)
           $13,501,316  $13,111,246  $390,070
               

* The amount represents fair value derivative instruments subject to foreign currency risk exposure as of December 31, 2018.

 

Sector Allocation (based on total value of investments as of December 31, 2018) ^

  
         
Consumer Staples           23.77%  
Consumer Discretionary     23.07%  
Industrial     14.48%  
Financials     13.70%  
Materials     8.82%  
Energy     5.44%  
US Government & Agency Obligations     3.53%  
Short-Term Investments     2.87%  
Gold     1.95%  
Utilities     1.27%  
Technology     1.00%  
Communication Services     0.10%  
Total           100.00%  
               
^ Percentages may differ from Portfolio of Investments which are based on Fund net assets.    

 

 

Centerstone International Fund
PORTFOLIO OF INVESTMENTS (Unaudited)
December 31, 2018
Shares   Security       Market Value
    COMMON STOCK - 82.89 %    
    BRAZIL - 1.46 %        
 1,081,365   Cielo SA        $2,480,381
             
    CANADA - 4.67 %        
 124,383   TransCanada Corp.        4,441,599
 101,264   Metro, Inc.        3,511,455
             7,953,054
    CHILE - 1.95 %        
 103,883   Cia Cervecerias Unidas SA        2,610,580
 84,677,397   Vina San Pedro Tarapaca SA        705,848
             3,316,428
    DENMARK - 3.05 %        
 113,242   ISS A/S        3,170,414
 225,755   Matas A/S        2,012,258
             5,182,672
    FINLAND - 1.38 %        
 170,168   Tikkurila Oyj        2,341,981
             
    FRANCE - 11.05 %        
 39,706   Air Liquide SA        4,930,521
 26,728   Sodexo SA        2,741,103
 108,969   Cie Plastic Omnium SA        2,515,026
 35,997   Schneider Electric SE        2,441,723
 23,159   Eiffage SA        1,936,261
 24,582   Danone SA        1,732,604
 44,419   Valeo SA        1,295,507
 4,147   LVMH Moet Hennessy Louis Vuitton SE        1,214,142
             18,806,887
    GERMANY - 8.37 %        
 86,234   Brenntag AG        3,764,045
 38,856   Bayerische Motoren Werke AG        3,151,423
 113,082   Hamburger Hafen und Logistik AG        2,242,151
 39,815   Hornbach Holding AG & Co. KGaA        1,879,464
 21,382   Fraport AG Frankfurt Airport Services Worldwide        1,530,269
 8,819   Continental AG        1,227,922
 22,938   Hornbach Baumarkt AG *        447,832
             14,243,106
    HONG KONG - 4.46 %        
 2,556,377   Kerry Logistics Network Ltd.        3,798,336
 303,350   Hongkong Land Holdings Ltd.        1,911,105
 353,900   Hysan Development Co. Ltd.        1,682,930
 95,948   Mandarin Oriental International Ltd.        195,734
             7,588,105
    INDONESIA - 1.07 %        
 1,418,313   Indocement Tunggal Prakarsa Tbk PT        1,821,499
             
    IRELAND - 0.74 %        
 32,696   Perrigo Co. PLC        1,266,970
             
    ISRAEL - 1.02 %        
 304,127   Israel Chemicals Ltd.        1,729,291
             
    JAPAN - 7.70 %    
 214,525   Mitsubishi Estate Co. Ltd.        3,375,231
 129,024   Nagaileben Co. Ltd. *        2,779,939
 302,605   Ichiyoshi Securities Co. Ltd.  *        2,218,729
 46,442   Aica Kogyo Co. Ltd. *        1,552,950
 8,438   Shimano, Inc.        1,189,482
 65,333   Sekisui Jushi Corp. *        1,149,346
 5,514   FANUC Corp.        836,803
             13,102,480
    MALAYSIA - 1.51 %        
 1,738,000   Genting Bhd.        2,564,042
             
    MEXICO - 0.93 %        
 144,240   Fresnillo PLC        1,584,930
             
    NETHERLANDS - 2.57 %        
 96,257   Koninklijke Vopak NV        4,365,098

 

Centerstone International Fund
PORTFOLIO OF INVESTMENTS (Unaudited) (Continued)
December 31, 2018
Shares   Security       Market  Value
    COMMON STOCK - 82.89 % (continued)    
    SINGAPORE - 1.24 %    
 255,901   Oversea-Chinese Banking Corp. Ltd.        $2,116,708
             
    SOUTH KOREA - 1.02 %        
 19,100   KT&G Corp.        1,738,990
             
    SPAIN - 2.42 %        
 1,856,578   Prosegur Cash SA        4,116,964
             
    SWEDEN - 7.75 %        
 133,626   ICA Gruppen AB        4,773,666
 131,349   Loomis AB        4,234,022
 406,882   Mekonomen AB *        4,177,686
             13,185,374
    SWITZERLAND - 7.41 %        
 32,952   Novartis AG        2,822,150
 10,963   Roche Holding AG        2,721,662
 40,695   Cie Financiere Richemont SA        2,624,324
 32,332   Nestle SA        2,624,155
 6,200   Swatch Group AG        1,809,518
             12,601,809
    THAILAND - 6.13 %        
 6,546,200   Thai Beverage PCL        2,934,539
 4,391,000   Krung Thai Bank PCL        2,590,755
 390,300   Bangkok Bank PCL        2,484,272
 384,204   Siam City Cement PCL        2,419,875
             10,429,441
    UNITED KINGDOM - 3.02 %        
 1,020,552   Merlin Entertainment PLC        4,133,822
 34,548   Spectris PLC        1,003,997
             5,137,819
    UNITED STATES - 1.97 %        
 114,878   Mosaic, Co.        3,355,586
             
    TOTAL COMMON STOCK (Cost - $157,943,127)        141,029,615
             
    PRIVATE INVESTMENT FUND - 2.74 %        
 4,435,630   Coast Capital Mercury Fund LP *#        4,657,411
             
    TOTAL PRIVATE INVESTMENT FUND (Cost - $5,900,000)        4,657,411
             
    REAL ESTATE INVESTMENT TRUSTS - 1.79 %    
 19,641   Unibail-Rodamco-Westfield        3,039,339
             
    TOTAL REAL ESTATE INVESTMENT TRUSTS (Cost - $4,469,697)      3,039,339
             
Principal       Coupon Maturity  
    US GOVERNMENT & AGENCY OBLIGATIONS - 6.88 %    
    US TREASURY NOTE - 6.88 %        
 $5,000,000   United States Treasury Note   1.38% 7/31/2019  4,965,820
 4,500,000   United States Treasury Note   1.25% 8/31/2019  4,459,395
 2,300,000   United States Treasury Note   1.38% 9/30/2019  2,278,707
             11,703,922
             
    TOTAL US GOVERNMENT & AGENCY OBLIGATIONS (Cost - $11,796,830)      11,703,922
             
             

 

Centerstone International Fund
PORTFOLIO OF INVESTMENTS (Unaudited) (Continued)
December 31, 2018
Shares   Security       Market  Value
    SHORT-TERM INVESTMENT - 5.89 %    
    MONEY MARKET FUND - 5.89 %    
 10,029,653   State Street Institutional Treasury Plus Money Market Fund, Trust Class, 2.25% ^      $10,029,653
             
    TOTAL SHORT-TERM INVESTMENTS (Cost - $10,029,653)        10,029,653
             
    TOTAL INVESTMENTS - 100.19 % (Cost - $190,139,307)      $170,459,940
    LIABILITITES IN EXCESS OF OTHER ASSETS   - (0.19) %        (326,660)
    NET ASSETS - 100.00 %        $170,133,280
             
PCL-Public Company Limited        
PLC-Public Limited Company        
* Non-income producing security        
# Security fair valued as of December 31, 2018 in accordance with procedures approved by the Board of Trustees. Total value of all such securities as of December 31, 2018 amounted to
amounted to $4,657,411, which represents approximately 2.74% of the net assets of the Fund. FirstGroup PLC (a security traded on the London Stock Exchange) is the main
of Coast Capital Mercury Fund LP.        
^ Interest rate reflects seven-day effective yield on December 31, 2018.        

 

 

 

Centerstone International Fund
PORTFOLIO OF INVESTMENTS (Unaudited) (Continued)
December 31, 2018
               
As of December 31, 2018 the following Forward Foreign Currency Contracts were open:    
               
FORWARD FOREIGN CURRENCY CONTRACTS        
              Unrealized
  Settlement       Local Currency Amount US $ US $ Appreciation/
Foreign Currency Date   Counterparty Purchased/Sold Equivalent Value at December 31, 2018 (Depreciation) *
To Buy:              
Canadian Dollar 4/18/2019   State Street Bank  2,000,000  $1,502,936  $1,468,456  $(34,480)
Euro 1/9/2019   State Street Bank  5,900,000  6,722,714  6,763,539  40,825
Danish Krone 1/9/2019   State Street Bank 4,500,000  715,703  690,946  (24,757)
Japanese Yen 1/24/2019   State Street Bank 220,000,000  1,950,564  2,010,672  60,108
           $10,891,917  $10,933,613  $41,696
               
To Sell:              
Canadian Dollar 4/18/2019   State Street Bank  2,000,000  $1,541,440  $1,468,456  $72,984
Euro 1/9/2019   State Street Bank  5,900,000  6,993,565  6,763,539  230,026
Danish Krone 1/9/2019   State Street Bank  4,500,000  716,076  690,946  25,130
Japanese Yen 1/24/2019   State Street Bank  220,000,000  2,000,438  2,010,672  (10,234)
           $11,251,519  $10,933,613  $317,906
               
* The amount represents fair value derivative instruments subject to foreign currency risk exposure as of December 31, 2018

 

Sector Allocation (based on total value of investments as of December 31, 2018) ^

  
Consumer Staples     25.63%  
Consumer Discretionary     21.09%  
Industrial     12.67%  
Financial     11.39%  
Materials     11.30%  
US Government & Agency Obligations     6.87%  
Short-Term Investments     5.88%  
Energy     5.17%  
Total           100.00%  
               
^ Percentages may differ from Portfolio of Investments which are based on Fund net assets    

 

 

Centerstone Funds
PORTFOLIO OF INVESTMENTS (Unaudited) (Continued)
December 31, 2018
           
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 US 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-US) markets. Centerstone Investors, LLC (the “Advisor”), manages the Funds. The Funds’ inception date was May 3, 2016.

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. The Funds are investment companies and accordingly follow 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.

 

The following is a summary of significant accounting policies followed by the Funds in preparation of their financial statements.
           

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 at a Valuation Time, the Board has approved the use of a fair valuation pricing committee (the “Fair Value Committee”), to which it has delegated certain responsibilities. 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 mean price on such over-the-counter market, (and if there is only a bid or only an ask price on such date, valuation will be at such bid or ask price for long or short positions, respectively). Debt securities, whether listed on an exchange or traded in the over-the-counter market for which market quotations are readily available, are generally priced at the current bid price. Debt securities 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 US 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, or by the Fair Value Committee in the case of securities for which the Fair Value Committee provides a fair value determination, at 4:00 pm Eastern Time (“ET”) or the nearest time prior to the close of the New York Stock Exchange (“NYSE”), currently 4:00 pm ET, at which such foreign currency quotations are available.

 

Money market-type instruments that have a remaining maturity of 60 days or less are valued at bid prices from a pricing vendor, unless the Fair Value Committee believes another valuation is more appropriate.

 

Forward currency contracts shall be valued at the forward currency contract rates, determined at 4:00 pm ET or the nearest time prior to the close of the NYSE, provided by a bank or dealer that the pricing agent or, if applicable, the Fair Value Committee believes to be reliable.

 

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. The Trustees have authorized the use of an independent fair valuation service. If the movement in a designated US market index, after foreign markets close, is greater than predetermined levels, the Funds may use a systematic valuation model to fair value its foreign securities. The values assigned to a Fund’s foreign securities therefore may differ on occasion from reported market values.

 

The Trustees and the Advisor believe relying on the procedures as just described will result in prices that are more reflective of the actual market value of portfolio securities held by the Funds as of 4:00 pm ET.
 

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 in accordance with procedures approved by the Board and evaluated by the Board as to the reliability of the fair value method used. The Fair Value Committee is composed of (a) the following standing members: (i) the Trust’s Treasurer or Assistant Treasurer, and (ii) a representative of the Administrator, and (b) on an ad hoc basis, a representative of the Advisor. The Fair Value Committee, at its discretion, may also include the Trust’s Chief Compliance Officer. 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 Fair Value 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.

 

The Fair Value Committee is generally composed of representatives of the Trust, Administrator, and Advisor. The Trust’s CCO may also be included at the Fair Value Committee’s discretion. 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 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 opinion of the Advisor, the prices or values available do not represent the fair value of the instrument based upon factors that may include, but are not limited to, the following: only a bid price or an ask price is available; the spread between bid and ask prices; the frequency of sales; the thinness of the market; the size of reported trades; and actions of the securities markets or regulators, 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 subsequent to the determination of the closing prices on the principal exchange on which they are traded, but prior to the Funds’ calculation of its net asset value; (v) stale prices – securities whose prices have been stale for 20 or more consecutive business days; (vi) mutual funds that do not provide timely NAV information; (vii) interests in a commodity pool or a managed futures pool; and (viii) restricted securities, such as private investments or non-traded securities. The Fair Value Committee may determine the fair value of such restricted security using the following factors: (a) the type of security; (b) the cost at date of purchase; (c) the size and nature of the Funds’ holdings; (d) the discount from market value of unrestricted securities of the same class at the time of purchase and subsequent thereto; (e) information as to any transactions or offers with respect to the security; (f) the nature and duration of restrictions on disposition of the security and the existence of any registration rights as well as any estimation of the cost of registration or otherwise qualifying the security for public sale, including commissions; (g) how the yield of the security compares to similar securities of companies of similar or equal creditworthiness; (h) the level of recent trades of similar or comparable securities; (i) the liquidity characteristics of the security; (j) current market conditions; (k) the market value of any securities into which the security is convertible or exchangeable; (l) the security’s embedded option values; and (m) information about the financial condition of the issuer and it’s prospects.                                                 
 

 

Centerstone Funds
PORTFOLIO OF INVESTMENTS (Unaudited) (Continued)
December 31, 2018

 

The Funds utilize various methods to measure the fair value of most of their 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.

 

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 inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The following tables summarize the inputs used for the period ended as of December 31, 2018, for the Funds’ assets and liabilities measured at fair value:
           
Centerstone Investors Fund      
Assets *   Level 1 Level 2 Level 3 ^ Total
Common Stock #  $110,097,219  $159,431,365  $-     $269,528,584
Bonds & Notes  -     20,990,348  -     20,990,348
Exchange Traded Fund - Commodity  6,799,336  -     -     6,799,336
Preferred Stock    9,833,219  -     -     9,833,219
Private Investment Fund    -     8,809,160  -     8,809,160
Real Estate Investment Trusts  6,373,362  3,826,679  -     10,200,041
US Government & Agency Obligations  -     12,302,133  -     12,302,133
Short-Term Investment  10,005,732  -     -     10,005,732
Forward Foreign Currency Contracts **  -     412,760  -     412,760
Total  $143,108,868  $205,772,445  $-     $348,881,313
Liabilities - Derivatives          
Forward Foreign Currency Contracts **  $-     $45,627  $-     $45,627
           
Centerstone International Fund      
Assets *   Level 1 Level 2 Level 3 ^ Total
Common Stock #  $22,806,554  $118,223,061  $-     $141,029,615
Private Investment Fund    -     4,657,411  -     4,657,411
Real Estate Investment Trusts  -     3,039,339  -     3,039,339
US Government & Agency Obligations  -     11,703,922  -     11,703,922
Short-Term Investment  10,029,653  -     -     10,029,653
Forward Foreign Currency Contracts **  -     429,073  -     429,073
Total  $32,836,207  $138,052,806  $-     $170,889,013
Liabilities - Derivatives          
Forward Foreign Currency Contracts **  $-     $69,471  $-     $69,471
           
* Refer to the Portfolio of Investments for country classification.
^ The Funds did not hold any level 3 securities during the period.
# As of December 31, 2018, the level 2 common stock securities were mainly classified as level 2 due to fair value factor pricing by ICE.
** Forward Foreign Currency Contracts are valued at gross unrealized appreciation (depreciation) on the investment.  
           

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.

 

Net realized gains and losses on foreign currency transactions represent net gains and losses from currency realized between the trade and settlement dates on securities transactions and the difference between income accrued versus income received. The effects of changes in foreign currency exchange rates on investments in securities are included with the net realized and unrealized gain or loss on investment securities.

 

Centerstone Funds
PORTFOLIO OF INVESTMENTS (Unaudited) (Continued)
December 31, 2018
           

Forward Foreign 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. As of December 31, 2018, the amount of unrealized gain on forward foreign currency exchange contracts subject to currency price risk amounted to $367,133 and $359,602 for the Centerstone Investors Fund and Centerstone International Fund, respectively.

 

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 foreign currency contracts outstanding, as of December 31, 2018, are listed after each Fund’s Portfolio of Investments. For the period ended December 31, 2018, the average monthly outstanding currency purchased or sold in US dollars for forward foreign currency contracts totaled $20,853,678 and $20,085,7960 for the Centerstone Investors Fund and Centerstone International Fund, respectively.
           
Aggregate Unrealized  Appreciation and Depreciation - Tax Basis
Represents cost for financial reporting purposes and is substantially identical for both book and federal income tax purposes.  Net unrealized appreciation (depreciation) consisted of:
           
Centerstone Investors Fund      
Gross unrealized appreciation:   $11,163,728      
Gross unrealized depreciation:   (42,458,569)      
Net unrealized depreciation:   ($31,294,841)      
           
Centerstone International Fund      
Gross unrealized appreciation:   $3,446,917      
Gross unrealized depreciation:   (23,126,284)      
Net unrealized depreciation:   ($19,679,367)      

 

 

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 2/27/2019

 

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 2/27/2019

 

By

/s/ Philip Santopadre

Philip Santopadre, Principal Financial Officer/Treasurer

 

Date 2/27/2019