UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF
REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number: 811-21958
Exact name of registrant
as specified in charger: DGHM Investment Trust
Address of principal
executive offices: 8730 Stony Point Parkway, Suite 205
Richmond, VA 23235
Name and address
of agent for service: The Corporation Trust Company
1209 Orange Street
Wilmington, DE 19801
with a copy to:
John H. Lively
Husch Blackwell Sanders LLP
4801 Main Street, Suite 1000
Kansas City, MO 64112
Registrant's telephone number,
including area code: 800-653-2839
Date of fiscal year end: Last day of February
Date of reporting period: August 31st
Item #1. Reports to Stockholders.
Dear Shareholders:
I am pleased to inform you that your Fund's Class A shares returned 32.9%* and
your Fund's Class C shares returned 32.4%* for the period March 1, 2009 through
August 31, 2009. This return slightly trailed that of the Russell 3000 Value
Index that was up 44.7% during the same period. While we are never happy with
an outcome that falls short of our benchmark index, we do not view any
particular six month period as being that relevant to a long-term investing
approach. Since inception for the period 6/20/07 through 8/31/09 your Fund's
Class A shares returned (7.9%) and your Fund's Class C shares returned (8.6%).
These numbers compare quite favorably to the (20.0%) return of the Russell 3000
Value Index for the same period. We believe that this period is a more relevant
one to measure a manager's performance given the extraordinary volatility of
the stock market during this period.
Looking back at the prior six months, our performance was driven by strong
stock selection in Energy and Real Estate. The sectors that materially
detracted from performance during the past six months were Banks and Basic
Materials. Both of these sectors were negatively impacted by poor stock
selection. Stocks that did particularly well in the Bank sector were those that
had underlying credit concerns in their loan portfolios or concerns over
capital adequacy. Given our style of investing, which is described below, we
tend to avoid these riskier situations. As we always seek to be fully invested,
the average cash position was approximately 2% during the period.
With all of the issues currently creating volatility in the stock market from
sub-prime mortgages to government bailouts to when is the recession going to
end, I would like to remind all of our shareholders of the investment strategy
that guides our stock picking:
- - We invest with a multi-year investment horizon rather than focusing on the
month or quarter end.
- - We do not attempt to make macroeconomic calls. (i.e., predict economic
growth, interest rates, currency levels, commodity prices etc.)
- - We do not predict the direction of the stock market.
- - We use a bottom-up selection process to attempt to identify companies that
appear to be selling at a discount to our assessment of their potential value.
- - We focus on the cash flows, historical profitability, projected future
earnings, and financial condition of individual companies in identifying which
stocks we may purchase.
- - We also consider the following factors in deciding which companies may appear
attractive:
. Quality of the business franchise
. Competitive advantage
. Economic or market conditions
. Deployment of capital
. Reputation, experience, and competence of the company's management
- --------
* Not annualized.
- - We believe that stocks purchased at prices below their potential value not
only protect capital, but also offer significant price appreciation once the
market recognizes a particular stock's potential value.
- - Generally, stocks are sold when the characteristics and factors used to
select the security change or the stock has appreciated to the point where it
is no longer attractive versus other potential opportunities.
As I commented on in last year's shareholder letter, the volatility and
weakness in the market has presented us with numerous opportunities to purchase
stocks that adhere to our investment strategy across multiple sectors.
We appreciate the opportunity to serve as your Fund's Investment Adviser.
Yours truly,
Jeffrey C. Baker, CFA
Chief Investment Officer
Important Disclosure
The Fund's prospectus contains important information about the Fund's
investment objectives, potential risks, management fees, charges and expenses,
and other information and should be read and considered carefully before
investing. The Fund's past performance does not guarantee future results. The
investment return and principal value of an investment in the Fund will
fluctuate so that an investor's shares, when redeemed, may be worth more or
less than their original cost. You may obtain a current copy of the Fund's
prospectus by calling 1-800-653-2839. Distributed by First Dominion Capital
Corp., Richmond, VA.
Current performance of the Fund may be lower or higher than the performance
quoted. Performance data current to the most recent month end may be obtained
by calling 1-800-653-2839.
Information provided with respect to the Fund's Portfolio Holdings, Sector
Weightings, Number of Holdings and Expense Ratios are as of August 31, 2009 and
are subject to change at any time.
The opinions presented in this document are those of the portfolio manager at
the time of this report and may change at any time. Information contained in
this document was obtained from sources deemed to be reliable, but no guarantee
is made as to the accuracy of such information. Nothing presented in this
document may be construed as an offer to purchase or sell any security.
Index Definition
The Russell 3000(R) Value Index is generally considered to be representative of
the performance of unmanaged common stocks that comprise the broad value
segment of the U.S. securities markets. You cannot invest directly in this
index. This index does not have an investment advisor and does not pay any
commissions, expenses, or taxes. If this index did pay commissions, expenses,
or taxes, its returns would be lower. The index is not adjusted to reflect
expenses that the SEC requires to be reflected in the Fund's performance.
2
DGHM ALL-CAP VALUE FUND
FUND EXPENSES (unaudited)
Fund Expenses Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, including front-end sales charges (Class A Shares) and deferred sales
charges on certain redemptions made within one year of purchase (Class C
Shares) and (2) ongoing costs, including management fees, distribution (12b-1)
fees and other Fund expenses. This example is intended to help you understand
your ongoing costs (in dollars) of investing in the Fund and to compare these
costs with the ongoing costs of investing in other mutual funds. The example is
based on an investment of $1,000 invested at the beginning of the period,
March 1, 2009, and held for the six months ended August 31, 2009.
Actual Expenses Example
The first line of the table below provides information about actual account
values and actual expenses. You may use the information in this line, together
with the amount you invested, to estimate the expenses that you paid over the
period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
in the first line under the heading entitled "Expenses Paid During the Period"
to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table below provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is
not the Fund's actual return. The hypothetical account values and expenses may
not be used to estimate the actual ending account balance or expenses you paid
for the period. You may use this information to compare the ongoing costs of
investing in the Fund and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder
reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads) and contingent deferred sales charges on certain redemptions.
Therefore, the second line of the table is useful in comparing ongoing costs
only, and will not help you determine the relative total costs of owning
different funds. In addition, if these transactional costs were included, your
costs would have been higher.
- -----------------------------------------------------------------------------------------------------
Expenses Paid During
Period*
Beginning Account March 1, 2009
Value Ending Account Value through August 31,
CLASS A March 1, 2009 August 31, 2009 2009
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
Actual $ 1,000.00 $ 1,329.10 $ 10.21
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,016.30 $ 8.84
- -----------------------------------------------------------------------------------------------------
3
- -----------------------------------------------------------------------------------------------------
Expenses Paid During
Period*
Beginning Account March 1, 2009
Value Ending Account Value through August 31,
CLASS C March 1, 2009 August 31, 2009 2009
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
Actual $ 1,000.00 $ 1,324.20 $ 14.59
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,012.55 $ 12.63
- -----------------------------------------------------------------------------------------------------
* Expenses are equal to the Fund's annualized expense ratio of 1.74% for
Class A and 2.49% for Class C, multiplied by the average account value for
the period, multiplied by 184 days in the most recent fiscal half year
divided by 365 days in the current year (to reflect the one-half year
period).
DGHM ALL-CAP VALUE FUND
PORTFOLIO HOLDINGS, BY SECTOR, AS PERCENTAGE OF NET ASSETS
AS OF AUGUST 31, 2009
(UNAUDITED)
[CHART]
Percentage of Net
Industry Sector Assets
--------------- -----------------
Aerospace/Defense 2.97%
Banks 7.02%
Computers 5.80%
Diversified Financial Services 8.36%
E-Commerce 3.17%
Electric 5.45%
Food 5.10%
Healthcare 6.10%
Insurance 5.59%
Investment Companies 2.12%
Media 5.30%
Miscellaneous Manufacturing 14.33%
Oil & Gas Services 15.33%
Real Estate Investment Trust 3.14%
Retail 4.33%
Savings & Loans 2.49%
Telecommunications 3.33%
4
DGHM ALL-CAP VALUE FUND
SCHEDULE OF INVESTMENTS
August 31, 2009 (unaudited)
Number
of % of Fair
Shares Security Description Net Assets Value
------ -------------------- ---------- -----
COMMON STOCKS 97.81%
AEROSPACE/DEFENSE 2.97%
17,856 General Dynamics Corporation $ 1,056,897
-------------
BANKS 7.01%
21,320 City National Corporation 842,140
61,310 Old National Bancorp 652,338
42,850 SunTrust Banks, Inc. 1,001,404
-------------
2,495,882
-------------
COMPUTERS 5.80%
7,545 International Business Machines Corporation 890,687
43,615 Teradata Corporation* 1,174,552
-------------
2,065,239
-------------
DIVERSIFIED FINANCIAL SERVICES 8.36%
33,930 Federated Investors Inc. "B" 890,662
52,595 Invesco Limited 1,091,346
22,835 JPMorgan Chase & Co. 992,409
-------------
2,974,417
-------------
E-COMMERCE 3.17%
51,000 e-Bay, Incorporated* 1,129,140
-------------
ELECTRIC 5.45%
19,485 Exelon Corporation 974,640
30,510 Public Service Enterprise Group, Inc. 966,252
-------------
1,940,892
-------------
FOOD 5.10%
22,140 H.J. Heinz Company 852,390
20,400 Kellogg Company 960,636
-------------
. 1,813,026
-------------
5
Number
of % of Fair
Shares Security Description Net Assets Value
------ -------------------- ---------- -----
HEALTHCARE 6.10%
14,850 Express Scripts, Inc.* $ 1,072,467
20,320 Quest Diagnostics 1,096,467
-------------
2,168,934
-------------
INSURANCE 5.59%
19,690 The Travelers Companies, Inc. 992,770
20,380 Transatlantic Holdings, Inc. 995,767
-------------
1,988,537
-------------
MEDIA 5.31%
38,970 The DIRECTV Group, Inc.* 964,897
25,400 Omnicom Group, Inc. 922,528
-------------
1,887,425
-------------
MISCELLANEOUS MANUFACTURING 14.33%
20,780 3M Company 1,498,238
30,910 Allegheny Technologies, Inc. 938,737
26,430 Dover Corporation 914,214
21,000 Nucor Corporation 935,340
17,895 Teleflex Incorporated 810,643
-------------
5,097,172
-------------
OIL & GAS SERVICES 15.33%
25,500 Baker Hughes Incorporated 878,475
21,600 EnCana Corporation 1,122,984
42,120 Plains Exploration & Production Company* 1,105,650
34,740 Suncor Energy, Inc. 1,064,434
26,388 Whiting Petroleum Corporation* 1,280,874
-------------
5,452,417
-------------
REAL ESTATE INVESTMENT TRUST 3.14%
19,444 Vornado Realty Trust 1,118,419
-------------
RETAIL 4.33%
15,230 Dollar Tree, Inc.* 760,586
39,640 The Gap, Inc. 778,926
-------------
1,539,512
-------------
6
Number
of % of Fair
Shares Security Description Net Assets Value
------ -------------------- ---------- -----
SAVINGS & LOANS 2.49%
55,180 People's United Financial $ 886,191
------------
TELECOMMUNICATIONS 3.33%
49,950 NII Holdings, Inc.* 1,184,314
------------
TOTAL COMMON STOCKS 97.81%
(Cost: $31,509,120) 34,798,414
------------
INVESTMENT COMPANIES 2.12%
753,882 Evergreen Institutional Treasury Money Market
Fund .06%** 753,882
------------
(Cost: $753,882)
TOTAL INVESTMENTS
(Cost: $32,263,002) 99.93% 35,552,296
Other assets, net of liabilities 0.07% 23,892
------ ------------
NET ASSETS 100.00% $ 35,576,188
====== ============
/*/Non-incomeproducing (security is considered non-income producing if at least
one dividend has not been paid during the last year preceding the
date of the Fund's related balance sheet).
/**/Effective 7 day yield as of August 31, 2009
See Notes to Financial Statements
7
DGHM ALL-CAP VALUE FUND
STATEMENT OF ASSETS AND LIABILITIES
August 31, 2009 (unaudited)
- --------------------------------------------------------------------------------
ASSETS
Investments at fair value (identified cost of $32,263,002) (Note 1) $ 35,552,296
Receivable for capital stock sold 41,960
Dividends receivable 70,340
Interest receivable 52
Prepaid expenses 36,939
------------
TOTAL ASSETS 35,701,587
------------
LIABILITIES
Payable for capital stock purchased 47,820
Accrued investment management fees 33,698
Accrued 12b-1 fees 19,481
Accrued administration, accounting and transfer agent fees 2,750
Other accrued expenses 21,650
------------
TOTAL LIABILITIES 125,399
------------
NET ASSETS $ 35,576,188
============
Net Assets Consist of:
Paid-in-capital applicable to 4,281,162 $0.01 par value shares of beneficial
interest outstanding $ 39,898,543
Accumulated net investment income (loss) 89,101
Accumulated net realized gain (loss) on investments (7,700,750)
Net unrealized appreciation (depreciation) of investments 3,289,294
------------
Net Assets $ 35,576,188
============
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE
Class A
($33,661,414 / 4,048,012 shares outstanding) $ 8.32
============
MAXIMUM OFFERING PRICE PER SHARE ($8.32 X 100/95) $ 8.76
============
NET ASSET VALUE, REDEMPTION AND MAXIMUM OFFERING
PRICE PER SHARE
Class C
($1,914,774 / 233,150 shares outstanding)/(a)/ $ 8.21
============
/(a)/May be subject to a contingent deferred sales charge if redeemed within
one year of purchase (see Note 1)
See Notes to Financial Statements
8
DGHM ALL-CAP VALUE FUND
STATEMENT OF OPERATIONS
For the six months ended August 31, 2009 (unaudited)
- --------------------------------------------------------------------------------
INVESTMENT INCOME
Dividend (net of foreign tax withheld of $3,622) $ 391,295
Interest 747
------------
Total investment income 392,042
------------
EXPENSES
Investment management fees (Note 2) 147,266
12b-1 fees, Class A (Note 2) 46,918
12b-1 fees, Class C (Note 2) 8,684
Recordkeeping and administrative services (Note 2) 19,636
Accounting fees (Note 2) 9,818
Custodian fees 5,133
Transfer agent fees (Note 2) 15,255
Professional fees 21,567
Filing and registration fees (Note 2) 29,185
Trustee fees 5,437
Compliance fees 4,974
Shareholder servicing and reports (Note 2) 15,312
Other 19,018
------------
Total expenses 348,203
------------
Net investment income (loss) 43,839
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) on investments (2,323,224)
Net increase (decrease) in unrealized appreciation (depreciation) of investments 13,471,542
------------
Net realized and unrealized gain (loss) on investments 11,148,318
------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS $ 11,192,157
============
See Notes to Financial Statements
9
DGHM ALL-CAP VALUE FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
For the
six months ended
August 31, 2009 Year ended
(unaudited) February 28, 2009
---------------- -----------------
Increase (decrease) in Net Assets
OPERATIONS
Net investment income (loss) $ 43,839 $ 112,490
Net realized gain (loss) on investments (2,323,224) (5,341,499)
Change in net unrealized appreciation
(depreciation) on investments 13,471,542 (9,928,493)
------------- -------------
Increase (decrease) in net assets from operations 11,192,157 (15,157,502)
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income
Class A -- (67,228)
Class C -- --
------------- -------------
Decrease in net assets from distributions -- (67,228)
------------- -------------
CAPITAL STOCK TRANSACTIONS (NOTE 5)
Shares sold
Class A 6,760,032 50,251,494
Class C 147,032 821,970
Distributions reinvested
Class A -- 6,887
Class C -- --
Shares redeemed
Class A (16,032,491) (5,523,582)
Class C (159,788) (766,553)
------------- -------------
Increase (decrease) in net assets from capital
stock transactions (9,285,215) 44,790,216
------------- -------------
NET ASSETS
Increase (decrease) during period 1,906,942 29,565,486
Beginning of period 33,669,246 4,103,760
------------- -------------
End of period (including undistributed net
investment income of $89,101 and $45,262,
respectively) $ 35,576,188 $ 33,669,246
============= =============
See Notes to Financial Statements
10
DGHM ALL-CAP VALUE FUND
FINANCIAL HIGHLIGHTS
SELECTED PER SHARE DATA THROUGHOUT EACH PERIOD
- --------------------------------------------------------------------------------
Class A Shares
--------------------------------------------------
Six months ended Period June 20,
August 31, 2009 Year ended 2007/*/ to
(unaudited) February 28, 2009 February 29, 2008
---------------- ----------------- -----------------
Net asset value, beginning of period $ 6.26 $ 9.26 $ 10.00
-------- -------- -------
Investment activities
Net investment income (loss) 0.01 0.02 0.01
Net realized and unrealized gain (loss)
on investments 2.05 (3.01) (0.75)
-------- -------- -------
Total from investment activities 2.06 (2.99) (0.74)
-------- -------- -------
Distributions
Net investment income -- (0.01) --
-------- -------- -------
Total distributions -- (0.01) --
-------- -------- -------
Net asset value, end of period $ 8.32 $ 6.26 $ 9.26
======== ======== =======
Total Return/(A)/ 32.91%/***/ (32.26%) (7.40%)/***/
Ratios/Supplemental Data
Ratio to average net assets
Expenses, net 1.74%/**/ 1.75%/(B)/ 1.75%/**(B)/
Net investment income (loss) 0.26%/**/ 0.71%/(B)/ 0.20%/**(B)/
Portfolio turnover rate 51.23%/***/ 90.97% 80.71%/***/
Net assets, end of period (000's) $ 33,661 $ 32,223 $ 2,066
*Commencement of operations
**Annualized
***Not annualized
/(A)/Total return does not reflect sales charges, if any.
/(B)/Ratios reflect the effect of the management fee waivers and reimbursement
of expenses. Management fee waivers and reimbursement of expenses reduced the
expense ratio and increased net investment income ratio by 0.72% for the year
ended February 28, 2009 and by 6.77% for the period June 20, 2007 to
February 29, 2008.
See Notes to Financial Statements
11
DGHM ALL-CAP VALUE FUND
FINANCIAL HIGHLIGHTS
SELECTED PER SHARE DATA THROUGHOUT EACH PERIOD
- --------------------------------------------------------------------------------
Class C Shares
---------------------------------------------------
Six months ended Period June 20,
August 31, 2009 Year ended 2007* to
(unaudited) February 28, 2009 February 29, 2008
---------------- ----------------- -----------------
Net asset value, beginning of period $ 6.20 $ 9.22 $ 10.00
------- ------- -------
Investment activities
Net investment income (loss) (0.02) (0.00)/(C)/ (0.03)
Net realized and unrealized gain (loss)
on investments 2.03 (3.02) (0.75)
------- ------- -------
Total from investment activities 2.01 (3.02) (0.78)
------- ------- -------
Distributions
Net investment income -- -- --
Net realized gain -- -- --
------- ------- -------
Total distributions -- -- --
------- ------- -------
Net asset value, end of period $ 8.21 $ 6.20 $ 9.22
======= ======= =======
Total Return/(A)/ 32.42%/***/ (32.75%) (7.80%)/***/
Ratios/Supplemental Data
Ratio to average net assets
Expenses, net 2.49% /**/ 2.50%/(B)/ 2.50% /**(B)/
Net investment income (loss) (0.49%)/**/ (0.04%)/(B)/ (0.55%)/**(B)/
Portfolio turnover rate 51.23% /***/ 90.97% 80.71% /***/
Net assets, end of period (000's) $ 1,915 $ 1,446 $ 2,038
*Commencement of operations
**Annualized
***Not annualized
/(A)/Total return does not reflect sales charges, if any.
/(B)/Ratios reflect the effect of the management fee waivers and reimbursement
of expenses. Management fee waivers and reimbursement of expenses reduced the
expense ratio and increased net investment income ratio by 0.72% for the year
ended February 28, 2009 and by 6.77% for the period June 20, 2007 to
February 29, 2008.
/(C)/Less than $0.01 per share.
See Notes to Financial Statements
12
DGHM ALL-CAP VALUE FUND
NOTES TO FINANCIAL STATEMENTS
August 31, 2009 (unaudited)
- --------------------------------------------------------------------------------
NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The DGHM All-Cap Value Fund (the "Fund") is a series of the DGHM
Investment Trust (the "Trust"). The Trust was organized as a Delaware statutory
trust and is registered under the Investment Company Act of 1940, as amended
(the "1940 Act"), as a diversified open-end management company. The Fund
commenced operations on June 20, 2007.
The investment objective of the Fund is to provide long-term capital
appreciation through investments that Dalton, Greiner, Hartman, Maher & Co.,
LLC, the Fund's investment advisor ("Advisor"), believes are undervalued.
The following is a summary of significant accounting policies
consistently followed by the Fund. The policies are in conformity with
accounting principles generally accepted in the United States of America
("GAAP").
Security Valuation
The Fund's securities are valued at current market prices. Investments
traded on a principal exchange (U.S. or foreign) or included in the NASDAQ
National Market System are valued at the last reported sales price on the
exchange on which the securities are traded as of the close of business on the
last day of the period or, lacking any sales, at the last available bid price.
In cases where securities are traded on more than one exchange, the securities
are valued on the exchange designated by or under the authority of the Fund's
Board of Trustees (the "Trustees"). Short-term debt securities (less than 60
days to maturity) are valued at their fair market value using amortized cost.
Securities traded in the over-the-counter market are valued at the last
available sale price in the over-the-counter market prior to time of valuation.
Securities traded in the over-the-counter market and listed securities for
which no sale was reported on that date are valued at the most recent bid
price. Securities for which market quotations are not readily available are
valued on a consistent basis at fair value as determined in good faith under
procedures approved by the Fund's Trustees. Fair value pricing may be used, for
example, in situations where (i) a portfolio security is so thinly traded that
there have been no transactions for that security over an extended period of
time; (ii) the exchange on which the portfolio security is principally traded
closes early; or (iii) trading of the portfolio security is halted during the
day and does not resume prior to the Fund's net asset value calculation. A
portfolio security's "fair value" price may differ from the price next
available for that portfolio security using the Fund's normal pricing
procedures. Investment companies are valued at net asset value. If values of
foreign securities have been materially affected by events occurring after the
close of a foreign market, foreign securities may be valued by another method
that the Trustees believe reflects fair value. Generally, trading in corporate
bonds, U.S. government securities and money market instruments is substantially
completed each day at various times before the scheduled close of the New York
Stock Exchange. The value of these securities used in computing the Fund's net
asset value is determined as of such times.
13
Various inputs are used in determining the value of the Fund's
investments. GAAP established a three-tier hierarchy of inputs to establish a
classification of fair value measurements for disclosure purposes. Level 1
includes quoted prices in active markets for identical securities. Level 2
includes other significant observable inputs (including quoted prices for
similar securities, interest rates, prepayment speeds, credit risk, etc.)
Level 3 includes significant unobservable inputs (including the Fund's own
assumptions in determining fair value of investments).
The inputs or methodology used for valuing securities are not necessarily
an indication of the risk associated with investing in those securities.
The following is a summary of the inputs used to value the Fund's
investments as of August 31, 2009:
Level 2
Other Level 3
Level 1 Significant Significant
Quoted Observable Unobservable
Prices Inputs Inputs Total
------------ ----------- ------------ ------------
Common Stocks $ 34,798,414 $ -- $ -- $ 34,798,414
Investment Companies 753,882 -- -- 753,882
------------ --------- --------- ------------
$ 35,552,296 $ -- $ -- $ 35,552,296
============ ========= ========= ============
Refer to the Fund's Schedule of Investments for a listing of securities
by security type and industry. The Fund held no Level 3 securities at any time
during the period.
On January 1, 2009, the Fund adopted FASB Statement No. 161, "Disclosures
about Derivative Instruments and Hedging Activities" ("SFAS 161"). SFAS 161
amends and expands disclosures about derivative instruments and hedging
activities. SFAS 161 requires qualitative disclosures about the objectives and
strategies of derivative instruments, quantitative disclosures about the fair
value amounts of and gains and losses on derivative instruments, and
disclosures of credit-risk-related contingent features in hedging activities.
Management has determined that the adoption of SFAS 161 had no impact on the
Fund's financial statements.
Security Transactions and Income
Security transactions are accounted for on the trade date. The cost of
securities sold is determined generally on a specific identification basis.
Dividends are recorded on the ex-dividend date. Interest income is recorded on
an accrual basis and includes amortization of discounts and premiums.
Cash and Cash Equivalents
Cash and cash equivalents, if any, consist of overnight deposits with the
custodian bank which earn interest at the current market rate.
14
Accounting Estimates
In preparing financial statements in conformity with accounting
principles generally accepted in the United States of America, management makes
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 the net assets during the reporting period. Actual results could differ from
those estimates.
Federal Income Taxes
The Fund intends to comply with the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute all of its
taxable income to its shareholders. The Fund also intends to distribute
sufficient net investment income and net capital gains, if any, so that it will
not be subject to excise tax on undistributed income and gains. Therefore, no
federal income tax or excise provision is required.
Management has analyzed the Fund's tax positions, and has concluded that
no liability for unrecognized tax benefits should be recorded related to
uncertain tax positions expected to be taken in the Fund's 2009 tax returns.
The Fund has no examinations in progress and management is not aware of any tax
positions for which it is reasonably possible that the total amounts of
unrecognized tax benefits will significantly change in the next six months. The
Fund's Federal tax returns filed in the two-year period ended February 28, 2009
remain subject to examination by the Internal Revenue Service. Interest and
penalties, if any, associated with any federal or state income tax obligations,
are recorded as income tax expense.
Reclassification of Capital Accounts
Accounting principles generally accepted in the United States of America
require that certain components of net assets relating to permanent differences
be reclassified between financial and tax reporting. These reclassifications
have no effect on net assets or net asset value per share. At August 31, 2009,
there were no reclassifications.
Class Net Asset Values and Expenses
The Fund has two classes of shares: Class A shares and Class C shares.
Each class of shares has equal rights as to assets of the Fund, and the classes
are identical except for differences in their sales charge structures and
ongoing distribution and service fees. Income, expenses (other than
distribution and service fees), and realized and unrealized gains or losses on
investments are allocated to each class of shares based upon its relative net
assets. Both classes have equal voting privileges, except where otherwise
required by law or when the Board of Trustees determines that the matter to be
voted on affects only the interests of the shareholders of a particular class.
The Fund's Class C shares are sold without an initial sales charge; however,
both Class A and C shares are subject to a contingent deferred sales charge.
Class A shares sold are subject to a maximum initial sales charge of 5%, as
well as a contingent deferred sales charge of 0.5% imposed on transactions over
$1,000,000 that are redeemed within one year of the purchase date. Class C
shares impose a 1% contingent deferred sales charge on proceeds that are
redeemed within one year of the purchase date. The contingent deferred sales
charge is payable to the Distributor of the Trust. Class C shares automatically
convert into Class A shares after seven years.
15
NOTE 2 - INVESTMENT ADVISORY AND DISTRIBUTION AGREEMENTS AND OTHER TRANSACTIONS
WITH AFFILIATES
Pursuant to an Investment Advisory Agreement, the Advisor provides
investment advisory services for an annual fee of 0.75% on the average daily
net assets of the Fund. For the six months ended August 31, 2009, the Advisor
earned $147,266 in advisory fees. As of August 31, 2009, the Advisor was due
$33,698 from the Fund.
In the interest of limiting the operating expenses of the Fund, the
Advisor has contractually agreed to waive or reduce its fees and to assume
other expenses of the Fund through April 30, 2010, if necessary, in amounts
that limit the Fund's total operating expenses to 1.50% of average daily net
assets of the Fund. The limit does not apply to interest, taxes, brokerage
commissions, other expenditures capitalized in accordance with GAAP, other
extraordinary expenses not incurred in the ordinary course of the Fund's
business, dividend expense on short sales and amounts, if any, payable pursuant
to a plan adopted in accordance with Rule 12b-1 of the 1940 Act. In determining
the Fund's total operating expenses, expenses that the Fund would have incurred
but did not actually pay because of expense offset or brokerage/services
arrangements shall be added to the aggregate expenses so as not to benefit the
Advisor. Additionally, fees reimbursed to the Fund relating to
brokerage/services arrangements shall not be taken into account in determining
the Fund's total operating expenses so as to benefit the Advisor. Finally,
these expense limitation arrangements exclude any "acquired fund fees and
expenses" as that term is described in the prospectus of the Fund. In addition,
the Advisor may be entitled to reimbursement of fees waived or remitted by the
Advisor to the Fund after March 1, 2009. The total amount of reimbursement
shall be the sum of all fees previously waived or reduced by the Advisor and
all other payments remitted by the Advisor to the Fund during any of the
previous three fiscal years (beginning March 1, 2009), less any reimbursement
previously paid by the Fund to the Advisor with respect to such waivers,
reductions and payments. Amounts reimbursed may not cause the Fund to exceed
expense limits that were in place at the time such fees and expenses were
waived and/or reimbursed.
The Fund has adopted plans of distribution in accordance with Rule 12b-1
under the 1940 Act (each a "Plan" and collectively, the "Plans"). Pursuant to
the Plans, the Fund compensates the Fund's principal underwriter for services
rendered and expenses borne in connection with activities primarily intended to
result in the sale of the Fund's shares. The Plans provide that the Fund will
pay the annual rate of up to 0.25% of the average daily net assets of the
Fund's Class A Shares and 1.00% of the average daily net assets of the Fund's
Class C Shares for activities primarily intended to result in the sale of those
shares. These activities include reimbursement to entities for providing
distribution and shareholder servicing with respect to the Fund's shares. The
0.25% fee for the Class A Shares is a service fee. The 1.00% fee for the Class
C Shares is comprised of a 0.25% service fee and a 0.75% distribution fee. The
Fund incurred $46,918 and $8,684, in 12b-1 fees under the Plans with respect to
Class A Shares and Class C Shares, respectively, for the six months ended
August 31, 2009.
First Dominion Capital Corporation ("FDCC") acts as the Fund's principal
underwriter and distributor. For the six months ended August 31, 2009, FDCC
received $412 in commissions and underwriting fees from the sale of Fund
shares. In addition, FDCC receives a contingent deferred sales charge ("CDSC")
of 0.50% of certain Class A share redemptions and 1% of Class C share
redemptions occurring within one year of purchase. Shares redeemed subject to a
CDSC will receive a lower redemption value per share. For the six months ended
August 31, 2009, FDCC received $21 of CDSC fees.
16
Commonwealth Shareholder Services, Inc. ("CSS"), provides shareholder,
recordkeeping, administrative and blue-sky filing services as the
administrative agent for the Fund. For such administrative services, CSS
receives 0.10% per annum of average daily net assets of the Fund on the first
$75 million and 0.07% per annum of the average daily net assets over $75
million. For the six months ended August 31, 2009, CSS earned $19,636 for its
services and at August 31, 2009, was due $1,405 from the Fund.
Commonwealth Fund Services, Inc. ("CFSI") is the Fund's transfer and
dividend disbursing agent. For such services, CFSI receives the greater of a)
0.06% of the Fund's average daily net assets up to $50 million plus 0.04% of
average daily net assets in excess of $50 million or b) $16 per open account
and $3 per closed account, subject to a $10,000 minimum per year. CFSI earned
$15,255 for its services for the six months ended August 31, 2009 and at
August 31, 2009, was due $654 from the Fund.
Commonwealth Fund Accounting ("CFA") is the Fund's pricing agent. CFA
earned $9,818 for its services for the six months ended August 31, 2009 and at
August 31, 2009, was due $691 from the Fund.
One Trustee and certain officers of the Trust are also officers of the
Advisor. Certain officers of the Fund are also officers and/or directors of
FDCC, CSS, CFA and CFSI.
NOTE 3 - INVESTMENTS
The cost of purchases and proceeds from the sales of securities other
than short-term notes for the six months ended August 31, 2009, were
$19,317,145 and $29,213,919, respectively.
NOTE 4 - DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF CAPITAL
Distributions from net investment income and realized gains, if any, are
recorded on the ex-dividend date. Income distributions and capital gain
distributions are determined in accordance with income tax regulations, which
may differ from GAAP.
The tax character of distributions during the six months ended August 31,
2009 and the year ended February 28, 2009 were as follows:
Six months ended
August 31, 2009 Year ended
(unaudited) February 28, 2009
---------------- -----------------
Distributions paid from:
Ordinary income $ -- $ 67,228
--------- --------
$ -- $ 67,228
========= ========
Cost of securities for Federal Income tax purpose is $32,263,002 and the
related tax-based net unrealized appreciation (depreciation) consists of:
Gross unrealized appreciation $ 4,470,914
Gross unrealized depreciation (1,181,620)
------------
Net unrealized appreciation (depreciation) $ 3,289,294
============
17
NOTE 5 - CAPITAL STOCK TRANSACTIONS
Capital stock transactions for the Fund were:
Class A Shares Class C Shares
Six months ended Six months ended
August 31, 2009 August 31, 2009
(unaudited) (unaudited)
-------------------------- --------------------
Shares Value Shares Value
------ ----- ------ -----
Shares sold 929,733 $ 6,760,032 20,549 $ 147,032
Shares reinvested -- -- -- --
Shares redeemed (2,031,464) (16,032,491) (20,610) (159,788)
----------- ------------- -------- ----------
Net increase (decrease) (1,101,731) $ (9,272,459) (61) $ (12,756)
=========== ============= ======== ==========
Class A Shares Class C Shares
Year ended Year ended
February 28, 2009 February 28, 2009
-------------------------- --------------------
Shares Value Shares Value
------ ----- ------ -----
Shares sold 5,682,757 $ 50,251,494 98,672 $ 821,970
Shares reinvested 971 6,887 -- --
Shares redeemed (757,159) (5,523,582) (86,607) (766,553)
----------- ------------- -------- ----------
Net increase (decrease) 4,926,569 $ 44,734,799 12,065 $ 55,417
=========== ============= ======== ==========
NOTE 6 - COMMITMENTS AND CONTINGENCIES
Under the Trust's organizational documents, its officers and Trustees are
indemnified against certain liabilities arising out of the performance of their
duties to the Fund. In addition, in the normal course of business, the Trust
entered into contracts with its vendors, on behalf of the Fund, and others that
provide for general indemnifications. The Fund's maximum exposure under these
arrangements is unknown, as this would involve future claims that may be made
against the Fund. The Fund expects that risk of loss to be remote.
NOTE 7 - RECENT ACCOUNTING PRONOUNCEMENT
In June 2009, the Financial Accounting Standards Board ("FASB") issued
FASB Statement No. 168, "The FASB Accounting Standards Codification(TM) and the
Hierarchy of Generally Accepted Accounting Principles - a replacement of FASB
Statement No. 162" ("SFAS 168"). On the effective date of this standard, FASB
Accounting Standards Codification(TM) ("Codification") will become the source
of authoritative U.S. accounting and reporting standards for nongovernmental
entities, in addition to guidance issued by the Securities and Exchange
Commission. All guidance contained in the Codification carries an equal level
of authority. On the effective date of SFAS 168, the Codification will
supersede all then-existing non-SEC accounting and reporting standards. All
other non-grandfathered non-SEC accounting literature not included in the
Codification will become nonauthoritative. SFAS 168 is effective for financial
statements issued for interim and annual periods ending after September 15,
2009. Management is currently evaluating the impact the adoption of SFAS 168
will have on the reporting of the Fund's financial statements.
18
NOTE 8 - SUBSEQUENT EVENTS
Management has evaluated all transactions and events subsequent to the
date of the balance sheet through October 30, 2009, the date on which these
financial statements were available. Except as already included in the notes to
these financial statements, no additional items require disclosure.
19
DGHM Investment Trust
(the "Trust")
SUPPLEMENTAL INFORMATION (unaudited)
VOTING PROXIES ON FUND PORTFOLIO SECURITIES
A copy of the Trust's Proxy Voting and Disclosure Policy and the Advisor's
Proxy Voting and Disclosure Policy are included as Appendix B to the Fund's
Statement of Additional Information and is available, without charge, (1) upon
request, by calling 1-800-653-2839 and (2) on the SEC's website at
http://www.sec.gov. Information regarding how the Fund voted proxies relating
to portfolio securities during the most recent 12-month period ended June 30 is
available without charge, (1) upon request, by calling the Fund at the number
above and (2) on the SEC's website at http://www.sec.gov.
QUARTERLY PORTFOLIO HOLDINGS
The Fund files with the SEC a complete schedule of its portfolio holdings, as
of the close of the first and third quarters of its fiscal year, on "Form N-Q".
These filings are available on the SEC's website at http://www.sec.gov. The
Fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room
in Washington, D.C. Information on the operation of the Public Reference Room
may be obtained by calling 1-800-SEC-0330.
20
Investment Adviser:
Dalton, Greiner, Hartman, Maher & Co., LLC
565 Fifth Avenue, Suite 2101
New York, New York 10017-2413
Distributor:
First Dominion Capital Corp.
8730 Stony Point Parkway, Suite 205
Richmond, Virginia 23235
Independent Registered Public Accounting Firm:
Briggs, Bunting & Dougherty, LLP
1835 Market Street, 26/th/ Floor
Philadelphia, Pennsylvania 19103
Legal Counsel:
Husch Blackwell Sanders LLP
4801 Main Street
Suite 1000
Kansas City, Missouri 64112
Transfer Agent:
For account information, wire purchase or redemptions, call or write to DGHM
All-Cap Value Fund's Transfer Agent:
Commonwealth Fund Services, Inc.
8730 Stony Point Parkway, Suite 205
Richmond, Virginia 23235
(800) 653-2839 Toll Free
[LOGO]
Semi-Annual Report to Shareholders
DGHM ALL-CAP VALUE FUND
A series of the DGHM Investment Trust A "Series" Investment Company
For the Six Months Ended August 31, 2009 (unaudited)
ITEM 2. CODE OF ETHICS.
Not applicable when filing a semi-annual report to shareholders.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable when filing a semi-annual report to shareholders.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable when filing a semi-annual report to shareholders.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable when filing a semi-annual report to shareholders.
ITEM 6. INVESTMENTS.
Please see Schedule of Investments contained in the Report to Shareholders
included under Item 1 of this Form N-CSR.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT
COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive and principal financial officers,
or persons performing similar functions, have concluded that the registrant's
disclosure controls and procedures (as defined in Rule 30a-3(c) under the
Investment Company Act of 1940, as amended (the "1940 Act") (17 CFR
270.30a-3(c)) are effective, as of a date within 90 days of the filing date of
the report that includes the disclosure required by this paragraph, based on
their evaluation of these controls and procedures required by Rule 30a-3(b)
under the 1940 Act (17 CFR 270.30a-3(b)) and Rules 13a- 15(b) or 15d-15(b) under
the Securities Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or
240.15d-15(b)).
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR
270.30a-3(d)) that occurred during the second fiscal quarter of the period
covered by the report that has materially affected or is reasonably likely to
materially affect, the registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
(a)(1) Code of ethics. Not applicable when filing a semi-annual report to
shareholders.
(a)(2) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
attached hereto.
(a)(3) Not applicable.
(b) Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant): DGHM Investment Trust
By: /s/ Jeffrey C. Baker
---------------------
Jeffrey C. Baker
President and Principal Executive Officer
Date: November 5, 2009
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/ Jeffrey C. Baker
---------------------
Jeffrey C. Baker
President and Principal Executive Officer,
DGHM Investment Trust
Date: November 5, 2009
By: /s/ Thomas F. Gibson
---------------------
Thomas F. Gibson
Principal Financial Officer,
DGHM Investment Trust
Date: November 4, 2009